EXHIBIT 10.11
CUSTOMER NO. 1293
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT dated as of July 8, 1999, is made by
Repeater Technologies, Inc. (the "Borrower"), a California corporation having
its principal place of business and chief executive office at 0000 Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxx, 00000, in favor of Transamerica Business Credit
Corporation, a Delaware corporation (the "Lender"), having its principal office
at 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000 and having an
office at 00 Xxxxxxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000.
WHEREAS, the Borrower has requested that the Lender make a Loan to the
Borrower; and
WHEREAS, the Lender has agreed to make such Loan on the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the
Lender to extend credit, the Borrower hereby agrees with the Lender as follows:
SECTION 1. DEFINITIONS.
As used herein, the following terms shall have the following meanings,
and shall be equally applicable to both the singular and plural forms of the
terms defined:
Agreement shall mean this Loan and Security Agreement together with all
schedules and exhibits hereto, as amended, supplemented, or otherwise modified
from time to time.
Applicable Law shall mean the laws of the State of Illinois (or any
other jurisdiction whose laws are mandatorily applicable notwithstanding the
parties' choice of Illinois law) or the laws of the United States of America,
whichever laws allow the greater interest, as such laws now exist or may be
changed or amended or come into effect in the future.
Business Day shall mean any day other than a Saturday, Sunday, or
public holiday or the equivalent for banks in New York City.
Cash Equivalents means (i) securities issued, guaranteed or insured by
the United States or any of its agencies with maturities of not more than one
year from the date acquired; (ii) certificates of deposit with maturities of not
more than one year from the date acquired, issued by any U.S. federal or state
chartered commercial bank of recognized standing which has capital and
unimpaired surplus in excess of $100,000,000; (iii) investments in money market
funds registered under the Investment Company Act of 1940; (iv) mutual funds, at
least 90% of the assets of which constitute Cash Equivalents of the kinds
described in clauses (i)-(iii) of this definition; and (v) other instruments,
commercial paper or investments acceptable to the Lender in its sole discretion.
Closing Date means the date first set forth above.
Code shall have the meaning specified in Section 8(d).
Collateral shall have the meaning specified in Section 2.
Collateral Access Agreement shall mean any landlord waiver, mortgage
waiver, bailee letter, or similar acknowledgement of any warehouseman or
processor in possession of any Collateral.
Contingent Obligation means any direct, indirect, contingent or
non-contingent guaranty or obligation for the indebtedness of another Person,
except endorsements in the ordinary course of business.
Effective Date shall mean the date on which all of the conditions
specified in Section 3.3 shall have been satisfied.
Event of Default shall mean any event specified in Section 7.
Financial Statements shall have the meaning specified in Section 6.1.
GAAP shall mean generally accepted accounting principles in the United
States of America, as in effect from time to time.
Loans shall mean the loans and financial accommodations made by the
Lender to the Borrower in accordance with the terms of this Agreement and any
Note delivered hereunder.
Loan Documents shall mean, collectively, this Agreement, the Notes, and
all other present and future documents, agreements, certificates, instruments,
and opinions delivered by the Borrower under, in connection with or relating to
this Agreement, or any other present or future instrument or agreement between
Lender and Borrower, as each of the same may be amended, modified, extended,
restated or supplemented from time to time.
Material Adverse Change shall mean, with respect to any Person, a
material adverse change in the business, operations, results of operations,
assets, liabilities, or financial condition of such Person taken as a whole.
Material Adverse Effect shall mean, with respect to any Person, a
material adverse effect on the business, operations, results of operations,
assets, liabilities, or financial condition of such Person taken as a whole.
Note shall mean each Promissory Note, in substantially the form
attached hereto, made by the Borrower in favor of the Lender, as amended,
supplemented, or otherwise modified from time to time.
Obligations shall mean and include all loans (including the Loans),
advances, debts, liabilities, obligations, covenants and duties owing by
Borrower to Lender of any kind or nature, present or future, whether or not
evidenced by the Note or any note, guaranty or other instrument, whether or not
arising under or in connection with, this Agreement any other Loan Document or
any other present or future instrument or agreement, whether or not for the
payment of money, whether arising by reason of an extension of credit, opening,
guaranteeing or confirming of a letter of credit, loan, guaranty,
indemnification or in any other manner, whether direct or indirect (including
those acquired by assignment, purchase, discount or otherwise), whether absolute
or contingent, due or to become due, now due or hereafter arising and however
acquired (including without limitation all loans previously made by Lender to
Borrower). The term includes, without limitation, all interest (including
interest accruing on or after a bankruptcy, whether or not an allowed claim),
charges, expenses, commitment, facility, closing and collateral management fees,
letter of credit fees, reasonable attorneys' fees, taxes and any other sum
properly chargeable to Borrower under this Agreement, the other Loan Documents
or any other present or future agreement between Lender and Borrower.
Permitted Liens shall mean such of the following as to which no
enforcement, collection, execution, levy, or foreclosure proceeding shall have
been commenced: (a) liens for taxes, assessments, and other governmental charges
or levies or the claims or demands of landlords, carriers, warehousemen,
mechanics, laborers, materialmen, and other like Persons arising by operation of
law in the ordinary course of business for sums which are not yet due and
payable, or liens which are being contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves are
maintained to the extent required by GAAP; (b) deposits or pledges to secure the
payment of worker's compensation, unemployment insurance, or other social
security benefits or obligations, public or statutory obligations, surety or
appeal bonds, bid or performance bonds, or other
2
obligations of a like nature incurred in the ordinary course of business;
(c) licenses, leases, restrictions, or covenants for or on the use of the
Collateral which do not materially impair either the use of the Collateral in
the operation of the business of the Borrower or the value of the Collateral;
(d) attachment or judgment liens that do not constitute an Event of Default;
(e) liens on any item of equipment created substantially simultaneously with the
acquisition of such equipment for the purpose of financing such acquisition,
provided that such lien shall attach only to the equipment acquired and
provided such lien does not secure indebtedness for such equipment in excess of
$1,300,000; and (f) future liens on any item of equipment created substantially
simultaneously with the acquisition of such equipment for the purpose of
financing such acquisition, provided that such lien shall attach only to the
equipment financed and provided that such lien does not secure indebtedness for
such equipment in excess of $500,000 in any twelve (12) month period.
Person shall mean any individual, sole proprietorship, partnership,
limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution,
entity, party, or government (including any division, agency, or department
thereof), and the successors, heirs, and assigns of each.
Receivable shall have the meaning set forth in Section 8(e).
Schedule shall mean Schedule A hereto containing information
pertaining to the Borrower.
Solvent means, with respect to any Person, that as of the date as to
which such Person's solvency is measured:
(a) the fair saleable value of its assets is in excess of the total
amount of its liabilities (including contingent liabilities as valued in
accordance with GAAP) as they become absolute and matured;
(b) it has sufficient capital to conduct its business; and
(c) it is able generally to meet its debts as they mature.
Taxes shall have the meaning specified in Section 5.5.
SECTION 2. CREATION OF SECURITY INTEREST: COLLATERAL. The Borrower hereby
assigns and grants to the Lender a continuing general, lien on, and security
interest in, all the Borrower's right, title, and interest in and to the
collateral described in the next sentence (the "Collateral") to secure the
payment and performance of all the Obligations, subject only to Permitted Liens.
Collateral means Receivables, Investment Property, Inventory, Equipment, and
Other Property and all additions and accessions thereto and substitutions and
replacements therefor and improvements thereon, and all proceeds (whether cash
or other property) and products thereof, including, without limitation, all
proceeds of insurance covering the same and all tort claims in connection
therewith, and all records, files, computer programs and files, data and
writings relating to the foregoing, and all equipment containing the foregoing.
Equipment means all machinery, equipment, furniture, fixtures,
conveyors, tools, materials, storage and handling equipment, hydraulic presses,
cutting equipment, computer equipment and hardware, including central processing
units, terminals, drives, memory units, printers, keyboards, screens,
peripherals and input or output devices, molds, dies, stamps, vehicles, and
other equipment of every kind and nature and wherever situated now or hereafter
owned by Borrower or in which Borrower may have any interest as lessee or
otherwise (to the extent of such interest), together with all additions and
accessions thereto, all replacements and all accessories and parts therefor, all
manuals, blueprints, know-how, warranties and records in connection therewith,
all rights against suppliers, warrantors, manufacturers, sellers or others in
connection therewith, and together with all substitutes for any of the
foregoing; and
Inventory means all present and future goods intended for sale,
lease or other disposition by Borrower including, without limitation, all raw
materials, work in process, finished goods and other retail inventory, goods in
the possession of outside processors or other third parties, goods consigned to
Borrower to the extent of its interest therein as consignee, materials and
supplies of any kind, nature or description which are or
3
might be used in connection with the manufacture, packing, shipping,
advertising, selling or finishing of any such goods, and all documents of title
or documents representing the same; and
Investment Property means any and all investment property of
Borrower, including all securities, whether certificated or uncertificated,
security entitlements, securities accounts, commodity contracts and commodity
accounts, and all financial assets held in any securities account or otherwise,
wherever located, and whether now existing or hereafter acquired or arising; and
Other Property means all present and future instruments,
documents, documents of title, securities, bonds, notes, promissory notes,
drafts, acceptances, letters of credit and rights to receive proceeds of letters
of credit, deposit accounts, chattel paper, certificates, insurance policies,
insurance proceeds, leases, computer tapes, causes of action, judgments, claims
against third parties, leasehold rights in any personal property, books,
ledgers, files and records, general intangibles (including without limitation,
all contract rights, tax refunds, rights to receive tax refunds, patents, patent
applications, copyrights (registered and unregistered), royalties, licenses,
permits, franchise rights, authorizations, customer lists, rights of
indemnification, contribution and subrogation, computer programs, discs and
software, trade secrets, computer service contracts, trademarks, trade names,
service marks and names, logos, goodwill, deposits, chooses in action, designs,
blueprints, plans, know-how, telephone numbers and rights thereto, credits,
reserves, and all forms of obligations whatsoever now or hereafter owing to
Borrower), all property at any time in the possession or under the control of
Lender, and all security given by Borrower to Lender pursuant to any other loan
document or agreement; and
Receivables means all present and future accounts and accounts
receivable, together with all security therefor and guaranties thereof and all
rights and remedies relating thereto, including any right of stoppage in
transit.
SECTION 3. THE CREDIT FACILITY.
SECTION 3.1. BORROWINGS. The Lender, subject to the terms and
conditions of this Agreement, agrees to make a Loan to Borrower, at Borrower's
request, in a principal amount not to exceed $5,000,000. Notwithstanding
anything herein to the contrary, the Lender shall be obligated to make such Loan
only after the Lender, in its sole discretion, determines that the applicable
conditions for borrowing contained in Sections 3.3 and 3.4 are satisfied. The
timing and financial scope of Lender's obligation to make Loans hereunder are
limited as set forth in a commitment letter executed by Lender and Borrower,
dated as of June 8, 1999 and attached hereto as Exhibit A (the "Commitment
Letter").
SECTION 3.2. APPLICATION OF PROCEEDS. The Borrower shall use the
proceeds of the Loans for its general working capital purposes.
SECTION 3.3. CONDITIONS TO LOAN.
(a) The obligation of the Lender to make the Loan is subject to the
Lender's receipt of the following, on or before the Closing Date, each dated the
date of the Loan or as of an earlier date acceptable to the Lender, in form and
substance reasonably satisfactory to the Lender and its counsel:
(i) completed requests for information (Form UCC-11) listing all
effective Uniform Commercial Code financing statements naming the
Borrower as debtor and all tax lien, judgment, and litigation searches
for the Borrower as the Lender shall deem necessary or desirable;
(ii) acknowledgement copies of Uniform Commercial Code financing
statements (naming the Lender as secured party and the Borrower as
debtor), duly filed in all jurisdictions that the Lender deems
necessary or desirable to perfect and protect the security interests
created hereunder, and evidence that all other filings, registrations
and recordings have been made in the appropriate governmental offices,
and all other action has been taken, which shall be necessary to
create, in favor of the Lender, a perfected first priority Lien on the
Collateral;
(iii) a Note duly executed by the Borrower evidencing the amount
of such Loan;
(iv) an Intellectual Property Security Agreement, in form and
substance satisfactory
4
to the Lender and its counsel, duly executed by the Borrower,
specifically identifying and granting to the Lender a security
interest in all of the Borrower's intellectual property;
(v) if requested by the Lender, a Collateral Access Agreement
duly executed by the lessor or mortgagee, as the case may be, of each
premises where the equipment Collateral is located;
(vi) a Notice of Security Interest, in form and substance
satisfactory to the Lender and its counsel, to each financial
institution at which any deposit accounts of Borrower are maintained;
(vii) the warrants described in the Commitment Letter, if any;
(viii) certificates of insurance required under Section 5.4 of
this Agreement together with loss payee endorsements for all such
policies naming the Lender as lender loss payee and as an additional
insured;
(ix) a certificate of the Secretary or an Assistant Secretary of
the Borrower ("Secretary's Certificate") certifying (A) that attached
to the Secretary's Certificate is a true, complete, and accurate copy
of the resolutions of the Board of Directors of the Borrower (or a
unanimous consent of directors in lieu thereof) authorizing the
execution, delivery, and performance of this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, and
that such resolutions have not been amended or modified since the date
of such certification and are in full force and effect; (B) the
incumbency, names, and true signatures of the officers of the Borrower
authorized to sign the Loan Documents to which it is a party; (C) that
attached to the Secretary's Certificate is a true and correct copy of
the Articles or Certificate of Incorporation of the Company, as
amended, which Articles or Certificate of Incorporation have not been
further modified, repealed or rescinded and are in full force and
effect; (D) that attached to the Secretary's Certificate of the
Borrower is a true and correct copy of the Bylaws, as amended, which
Bylaws of the Company have not been further modified, repealed or
rescinded and are in full force and effect; and (E) that attached to
the Secretary's Certificate is a valid Certificate of Good Standing
issued by the Secretary of the State of the Borrower's state of
incorporation;
(xi) the opinion of counsel for the Borrower covering such
matters incident to the transactions contemplated by this Agreement as
the Lender may reasonably require;
(xii) evidence of the consent or authorization of, filing with or
other act by or in respect of any governmental agency or authority or
any other Person required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, or the
other Loan Documents or the consummation of the transactions
contemplated hereby or thereby; and
(xiii) such other documents, agreements and instruments as the
Lender deems necessary in its sole and absolute discretion in
connection with the transactions contemplated hereby.
(b) The security interests in the Collateral granted in favor of the
Lender under this Agreement shall have been duly perfected and shall constitute
first priority liens, except for Permitted Liens.
SECTION 3.4. ADDITIONAL CONDITIONS PRECEDENT. The obligation of
the Lender to make the Loan is subject to the satisfaction of the following
additional conditions precedent:
(a) There shall be no pending or, to the knowledge of the Borrower
after due inquiry, threatened litigation, proceeding, inquiry, or other action
(i) seeking an injunction or other restraining order,
5
damages, or other relief with respect to the transactions contemplated by this
Agreement or the other Loan Documents or thereby or (ii) which affects or is
reasonably likely to affect the business, prospects, operations, assets,
liabilities, or condition (financial) of the Borrower, except, in the case of
clause (ii), where such litigation, proceeding, inquiry, or other action could
not be expected to have a Material Adverse Effect in the reasonable judgment of
the Lender;
(b) all representations and warranties contained in this Agreement and
the other Loan Documents shall be true and correct on and as of the date of such
Loan as if then made, other than representations and warranties that expressly
relate solely to an earlier date, in which case they shall have been true and
correct as of such earlier date;
(c) no Event of Default or event which with the giving of notice or
the passage of time, or both, would constitute an Event of Default shall have
occurred and be continuing or would result from the making of the requested Loan
as of the date of such request; and
(d) the Borrower shall be deemed to have hereby reaffirmed and
ratified all security interests, liens, and other encumbrances heretofore
granted by the Borrower to the Lender hereunder.
SECTION 3.5. INTEREST RATE REPAYMENT. The interest rate
applicable to the Loan made by the Lender hereunder, and the repayment date for
such Loan, are as set forth in the Note evidencing such Loan.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
SECTION 4.1. GOOD STANDING; QUALIFIED TO DO BUSINESS. The
Borrower (a) is duly organized, validly existing, and in good standing under the
laws of the State of its organization, (b) has the power and authority to own
its properties and assets and to transact the businesses in which it is
presently, or proposes to be, engaged, and (c) is duly qualified and authorized
to do business and is in good standing in every jurisdiction in which the
failure to be so qualified could have a Material Adverse Effect on (i) the
Borrower, (ii) the Borrower's ability to perform its obligations under the Loan
Documents, or (iii) the rights of the Lender hereunder.
SECTION 4.2. DUE EXECUTION, ETC. The execution, delivery, and
performance by the Borrower of each of the Loan Documents to which it is a party
are within the powers of the Borrower, do not contravene the organizational
documents, if any, of the Borrower, and do not (a) violate any law or
regulation, or any order or decree of any court or governmental authority, (b)
conflict with or result in a breach of, or constitute a default under, any
material indenture, mortgage, or deed of trust or any material lease, agreement,
or other instrument binding on the Borrower or any of its properties, or (c)
require the consent, authorization by, or approval of or notice to or filing or
registration with any governmental authority or other Person, except as may be
set forth in the Schedule. The Agreement is, and each of the other Loan
Documents to which the Borrower is or will be a party, when delivered hereunder
or thereunder, will be, the legal, valid, and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally and by general principles of equity.
SECTION 4.3. SOLVENCY; NO LIENS. The Borrower is Solvent and will
be Solvent upon the completion of all transactions contemplated to occur
hereunder (including, without limitation, the Loan to be made on the Effective
Date); the security interests granted herein constitute and shall at all times
constitute the first and only liens on the Collateral other than Permitted
Liens; and the Borrower is, or will be at the time additional Collateral is
acquired by it, the absolute owner of the Collateral with full right to pledge,
sell, consign, transfer, and create a security interest therein, free and clear
of any and all claims or liens in favor of any other Person other than Permitted
Liens.
SECTION 4.4. NO JUDGMENTS, LITIGATION. No judgments are
outstanding against the Borrower nor is there now pending or, to the best of the
Borrower's knowledge, threatened any litigation, contested claim, or
governmental proceeding by or against the Borrower except judgments and pending
or
6
threatened litigation, contested claims, and governmental proceedings which
would not, in the aggregate, have a Material Adverse Effect on the Borrower.
SECTION 4.5. NO DEFAULTS. The Borrower is not in default or has
not received a notice of default under any material contract, lease, or
commitment to which it is a party or by which it is bound. The Borrower knows of
no dispute regarding any contract, lease, or commitment which could have a
Material Adverse Effect on the Borrower.
SECTION 4.6. COLLATERAL LOCATIONS. The address of the principal
place of business and chief executive office of Borrower is, and the books and
records of Borrower and all of its chattel paper and records relating to
Collateral are maintained exclusively in the possession of Borrower at, the
address of Borrower specified in the heading of this Agreement. Borrower has
places of business, and Collateral is located, only at such address and at the
addresses set forth in the Schedule and at any additional locations reported to
the Lender as provided in Section 5.7 as to which the Lender has taken all
necessary action to perfect and protect its security interests in the Collateral
at any such locations.
SECTION 4.7. CORPORATE AND TRADE NAMES; FEDERAL TAX ID. During
the past five years, Borrower has not been known by or used any other corporate,
trade or fictitious name except for its name as set forth on the signature page
of this Agreement and the other names specified in the Schedule. The Borrower's
Federal Tax ID number is as set forth in the Schedule.
SECTION 4.8. NO EVENTS OF DEFAULT. No Event of Default has
occurred and is continuing nor has any event occurred which, with the giving of
notice or the passage of time, or both, would constitute an Event of Default.
SECTION 4.9. NO LIMITATION ON LENDER'S RIGHTS. Except as
permitted herein, none of the Collateral is subject to contractual obligations
that may restrict or inhibit the Lender's rights or abilities to sell or dispose
of the Collateral or any part thereof after the occurrence of an Event of
Default.
SECTION 4.10. PERFECTION AND PRIORITY OF SECURITY INTEREST. This
Agreement creates a valid and, upon completion of all required filings of
financing statements, perfected, and first priority and exclusive, security
interest in the Collateral, except for any Permitted Liens, securing the payment
of all the Obligations.
SECTION 4.11. INTELLECTUAL PROPERTY. Set forth in the Schedule is
a complete and accurate list of all patents, trademarks, trade names, service
marks and copyrights (registered and unregistered), and all applications
therefor and licenses thereof, of Borrower. Borrower owns or licenses all
material patents, trademarks, service-marks, logos, tradenames, trade secrets,
know-how, copyrights, or licenses and other rights with respect to any of the
foregoing, which are necessary or advisable for the operation of its business as
presently conducted or proposed to be conducted. To the best of its knowledge
after due inquiry, Borrower has not infringed any patent, trademark,
service-xxxx, tradename, copyright, license or other right owned by any other
Person by the sale or use of any product, process, method, substance, part or
other material presently contemplated to be sold or used, where such sale or use
would reasonably be expected to have a Material Adverse Effect and no claim or
litigation is pending, or to the best of Borrower's knowledge, threatened
against or affecting Borrower that contests its right to sell or use any such
product, process, method, substance, part or other material.
SECTION 4.12. CONSENTS AND FILINGS. No consent, authorization or
approval of, or filing with or other act by, any shareholders of Borrower or any
governmental authority or other Person is required in connection with the
execution, delivery, performance, validity or enforceability of this Agreement
or any other Loan Document, the consummation of the transactions contemplated
hereby or thereby or the continuing operations of Borrower following such
consummation, except (i) those that have been obtained or made, (ii) the filing
of financing statements under the Code and (iii) any necessary filings with U.S.
Copyright Office and the U.S. Patent and Trademark Office.
7
SECTION 4.13. YEAR 2000 COMPLIANCE. The Borrower has (i)
initiated a review and assessment of all areas within its business and
operations (including those affected by suppliers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Borrower (or its suppliers and vendors) may be unable
to recognize and perform properly date-sensitive functions involving certain
dates prior to and any date after December 31, 1999), (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (iii) to
date, implemented that plan in accordance with that timetable. The Borrower
reasonably believes that all computer applications (including those of its
suppliers and vendors) that are material to its business and operations will on
a timely basis be able to perform properly date-sensitive functions for all
dates before and after January 1, 2000 (that is, be "Year 2000 compliant"),
except to the extent that a failure to do so could not reasonably be expected to
have Material Adverse Effect.
SECTION 4.14. TAXES. Borrower has properly completed and timely
filed all income tax returns it is required to file, and all Taxes, assessments,
fees and other governmental charges for periods beginning prior to the date of
this Agreement have been timely paid (or, if not yet due or being disputed in
good faith, adequate reserves therefor have been established in accordance with
GAAP) and Borrower has no liability for Taxes in excess of the amounts so paid
or reserves so established. No-deficiencies for Taxes have been claimed,
proposed or assessed by any taxing or other governmental agency or authority
against Borrower and no notice of any tax lien has been filed. There are no
pending or (to the best knowledge of Borrower) threatened audits, investigations
or claims for or relating to any liability for Taxes and there are no matters
under discussion with any governmental agency or authority which could result in
an additional material liability for Taxes.
SECTION 4.15. FINANCIAL STATEMENTS. Borrower has provided to the
Lender complete and accurate Financial Statements, which have been prepared in
accordance with GAAP (except for the absence of footnotes and subject to normal
year-end adjustments with respect to unaudited financial statements)
consistently applied throughout the periods involved and fairly present the
financial position and results of operations of Borrower for each of the periods
covered, subject, in the case of any quarterly financial statements, to normal
year-end adjustments and the absence of notes. Borrower has no Contingent
Obligation or liability for Taxes, unrealized losses, unusual forward or
long-term commitments or long-term leases, which is not reflected in such
Financial Statements or the footnotes thereto. Since the last date covered by
such Financial Statements, there has been no sale, transfer or other disposition
by Borrower of any material part of its business or property and no purchase or
other acquisition of any business or property (including any capital stock of
any other Person) material in relation to the financial condition of Borrower at
said date. Since said date, (i) there has been no change, occurrence,
development or event which has had or could reasonably be expected to have a
Material Adverse Effect and (ii) none of the capital stock of Borrower has been
redeemed, retired, purchased or otherwise acquired for value by Borrower.
STOCK 4.16. ACCURACY AND COMPLETENESS OF INFORMATION. All data,
reports, and information heretofore, contemporaneously, or hereafter furnished
by or on behalf of the Borrower in writing to the Lender or for purposes of or
in connection with this Agreement or any other Loan Document, or any
transaction contemplated hereby or thereby, are or will be true and accurate in
all material respects on the date as of which such data, reports, and
information are dated or certified and not incomplete by omitting to state any
material fact necessary to make such data, reports, and information not
misleading at such time. There are no facts now known to the Borrower which
individually or in the aggregate would reasonably be expected to have a
Material Adverse Effect and which have not been specified herein, in the
Financial Statements, or in any certificate, opinion, or other written
statement previously furnished by the Borrower to the Lender.
SECTION 5. COVENANTS OF THE BORROWER.
SECTION 5.1. EXISTENCE, ETC. The Borrower shall: (a) retain its
existence and its current yearly accounting cycle, (b) maintain in full force
and effect all licenses, bonds, franchises, leases, trademarks, patents,
contracts, and other rights necessary or desirable to the profitable conduct of
its business unless the failure to do so could not reasonably be expected to
have a Material Adverse Effect on the Borrower, (c) continue in and limit its
operations to, the same general lines of business as those presently conducted
by it, and
8
(d) comply with all applicable laws and regulations of any federal, state, or
local governmental authority, except for such laws and regulations the
violations of which would not, in the aggregate, have a Material Adverse Effect
on the Borrower.
SECTION 5.2. NOTICE TO THE LENDER. As soon as possible, and in
any event within five days after the Borrower learns of the following, the
Borrower will give written notice to the Lender of the following:
(a) any proceeding instituted or threatened to be instituted by
or against the Borrower in any federal, state, local, or foreign court or
before any commission or other regulatory body (federal, state, local, or
foreign) involving a sum, together with the sum involved in all other similar
proceedings, in excess of $100,000 in the aggregate,
(b) any contract that us terminated or amended and which has had
or could reasonable be expected to have a Material Adverse Effect on the
Borrower;
(c) the occurrence of any Material Adverse Change with respect
to the Borrower;
(d) the occurrence of any Event of Default or Event or condition
which, with notice or lapse of time or both, would constitute an Event of
Default, together with a statement of the action which the Borrower has taken
or proposes to take with respect thereto;
(e) of any discovery or determination by Borrower that any
computer application (including those of its suppliers and vendors) that is
material to its business and operations will not be Year 2000 compliant on a
timely basis, except to the extent that such failure could not reasonably be
expected to have a Material Adverse Effect;
(f) of any material damage to, the destruction of or any other
material loss to any Collateral owned or used by Borrower other than any such
Collateral with a net book value (individually or in the aggregate) less than
$10,000 or any condemnation, confiscation or other taking, in whole or in part,
or any event that otherwise diminishes so as to render impracticable or
unreasonable the use of such Collateral owned or used by Borrower together with
the amount of the damage, destruction, loss or diminution in value;
(g) of any copyright registration made by it, any rights
Borrower may obtain to any copyrightable works, new trademarks or any new
patentable inventions, and of any renewal or extension of any trademark
registration, or if it shall otherwise become entitled to the benefit of any
patent or patent application or trademark or trademark application; and
(h) of the opening of any new bank account or other deposit
account, and any new securities account.
SECTION 5.3. MAINTENANCE OF BOOKS AND RECORDS. Borrower shall (i)
maintain adequate books and records (including computer records) pertaining to
the Collateral in such detail, form and scope as is customary for companies in
similar businesses in similar situations and (ii) provide the Lender and its
agents access to the premises of Borrower at any time and from time to time
following notice, during normal business hours and upon reasonable notice under
the circumstances but in no event more than twice a year unless an Event of
Default has occurred and is continuing, and at any time on and after the
occurrence and during the existence of an Event of Default, or event or
condition which, with notice or lapse of time or both, would constitute an
Event of Default, for the purposes of (A) inspecting and verifying the
Collateral, (B) inspecting and copying (at Borrower's expense) any and all
records pertaining thereto, and (C) discussing the affairs, finances and
business of Borrower with any officer, employee or director of Borrower or with
Borrower's accountants. Borrower shall reimburse the Lender for the reasonable
travel and related expenses of the Lender's employees or, at the Lender's
option, of such outside accountants or examiners as may be retained by the
Lender to verify or inspect Collateral, records or documents of Borrower on a
regular basis or for a special inspection if the Lender deems the same
appropriate. If
9
the Lender's own employees are used, Borrower shall also pay therefor $600 per
person per day (or such other amount as shall represent the Lender's then
current standard charge for the same), or, if outside examiners or accountants
are used, Borrower shall also pay the Lender such reasonable sum as the Lender
may be obligated to pay as fees therefor.
SECTION 5.4. INSURANCE. Borrower shall maintain public liability
insurance, business interruption insurance, third party property damage
insurance and replacement value insurance on its assets (including the
Collateral) under such policies of insurance, with such insurance companies, in
such amounts and covering such risks as are at all times reasonably
satisfactory to the Lender in its commercially reasonable judgment, all of
which policies covering the Collateral shall name the Lender as an additional
insured and lender loss payee in case of loss, and contain other provisions as
the Lender may reasonably require to protect fully the Lender's interest in the
Collateral and any payments to be made under such policies.
SECTION 5.5. TAXES. The Borrower will pay, when due, all taxes,
assessments, claims, and other charges ("Taxes") lawfully levied or assessed
against the Borrower or the Collateral other than taxes that are being
diligently contested in good faith by the Borrower by appropriate proceedings
promptly instituted and for which an adequate reserve is being maintained by the
Borrower in accordance with GAAP. If any Taxes remain unpaid after the date
fixed for the payment thereof, or if any lien shall be claimed therefor, then,
without notice to the Borrower, but on the Borrower's behalf, the Lender may pay
such Taxes, and the amount thereof shall be included in the Obligations.
SECTION 5.6. BORROWER TO DEFEND COLLATERAL AGAINST CLAIMS; FEES
ON COLLATERAL. The Borrower will defend the Collateral against all claims and
demands of all Persons at any time claiming the same or any interest therein.
The Borrower will not permit any notice creating or otherwise relating to liens
on the Collateral or any portion thereof to exist or be on file in any public
office other than Permitted Liens. The Borrower shall promptly pay, when
payable, all transportation, storage, and warehousing charges and license fees,
registration fees, assessments, charges, permit fees, and taxes (municipal,
state, and federal) which may now or hereafter be imposed upon the ownership,
leasing, renting, possession, sale, or use of the Collateral, other than taxes
on or measured by the Lender's income and fees, assessments, charges, and taxes
which are being contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves are maintained to the
extent required by GAAP.
SECTION 5.7. CHANGE OF LOCATION, STRUCTURE, OR IDENTITY. The
Borrower will give Lender at least 30 days prior written notice of any change
of Borrower's chief executive office or of the opening of any additional place
of business. The Borrower will not move or permit the movement of any item of
Collateral from the locations specified in the Schedule, except that the
Borrower keep Collateral at other locations within the United States provided
that the Borrower has delivered to the Lender (i) prior written notice thereof
and (ii) duly executed financing statements and other agreements and instruments
(all in form and substance satisfactory to the Lender) necessary or, in the
opinion of the Lender, desirable to perfect and maintain in favor of the Lender
a first priority security interest in the Collateral. Notwithstanding anything
to the contrary in the immediately preceding sentence, the Borrower may keep any
Collateral consisting of motor vehicles or rolling stock at any location in the
United States provided that the Lender's security interest in any such
Collateral is conspicuously marked on the certificate of title thereof and the
Borrower has complied with the provisions of Section 5.9.
SECTION 5.8. USE OF COLLATERAL; LICENSES; REPAIR. The Collateral
shall be operated by competent, qualified personnel in connection with the
Borrower's business purposes, for the purpose for which the Collateral was
designed and in accordance with applicable operating instructions, laws and
government regulations, and the Borrower shall use every reasonable precaution
to prevent loss or damage to the Collateral from fire and other hazards. The
Borrower shall procure and maintain in effect all orders, licenses,
certificates, permits, approvals, and consents required by federal, state, or
local laws or by any governmental body, agency, or authority in connection with
the delivery, installation, use, and operation of the Collateral.
SECTION 5.9. FURTHER ASSURANCES. The Borrower will, promptly
upon request by the Lender, execute and deliver or use its best efforts to
obtain any document reasonably required by the Lender
10
(including, without limitation, warehouseman or processor disclaimers,
mortgagee waivers, landlord disclaimers, or subordination agreements with
respect to the Obligations and the Collateral), give any notices, execute and
file any financing statements, mortgages, or other documents (all in form and
substance reasonably satisfactory to the Lender), xxxx any chattel paper,
deliver any chattel paper or instruments to the Lender, and take any other
actions that are necessary or, in the opinion of the Lender, desirable to
perfect or continue the perfection and the first priority of the Lender's
security interest in the Collateral, to protect the Collateral against the
rights, claims, or interests of any Persons, or to effect the purposes of this
Agreement. The Borrower hereby authorizes the Lender to file one or more
financing or continuation statements, and amendments thereto, relating to all
or any part of the Collateral without the signature of the Borrower where
permitted by law. A carbon, photographic, or other reproduction of this
Agreement or any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where permitted by law. To
the extent required under this Agreement, the Borrower will pay all costs
incurred in connection with any of the foregoing.
SECTION 5.10. NO DISPOSITION OF COLLATERAL. The Borrower will
not in any way hypothecate or create or permit to exist any lien, security
interest, charge, or encumbrance on or other interest in any of the Collateral,
except for the lien and security interest granted hereby and Permitted Liens.
In the event the Collateral, or any part thereof, is sold, transferred,
assigned, exchanged, or otherwise disposed of in violation of this Agreement,
the security interest of the Lender shall continue in such Collateral or part
thereof notwithstanding such sale, transfer, assignment, exchange, or other
disposition, and the Borrower will hold the proceeds thereof in a separate
account for the benefit of the Lender. Following such a sale, the Borrower will
transfer such proceeds to the Lender in kind.
SECTION 5.11. NO LIMITATION ON LENDER'S RIGHTS. The Borrower
will not enter into any contractual obligations which may restrict or inhibit
the Lender's rights or ability to sell or otherwise dispose of the Collateral
or any part thereof.
SECTION 5.12. PROTECTION OF COLLATERAL. Upon notice to the
Borrower (provided that if an Event of Default has occurred and is continuing
the Lender need not give any notice), the Lender shall have the right at any
time to make any payments and do any other acts the Lender may deem necessary
to protect its security interests in the Collateral, including, without
limitation, the rights to satisfy, purchase, contest, or compromise any
encumbrance, charge, or lien which, in the reasonable judgment of the Lender,
appears to be prior to or superior to the security interests granted hereunder,
and appear in, and defend any action or proceeding purporting to affect its
security interests in, or the value of, any of the Collateral. The Borrower
hereby agrees to reimburse the Lender for all payments made and expenses
incurred under this Agreement including reasonable fees, expenses, and
disbursements of attorneys and paralegals (including the allocated costs of
in-house counsel) acting for the Lender, including any of the foregoing
payments under, or acts taken to protect its security interests in, any of the
Collateral, which amounts shall be secured under this Agreement, and agrees it
shall be bound by any payment made or act taken by the Lender hereunder absent
the Lender's gross negligence or willful misconduct. The Lender shall have no
obligation to make any of the foregoing payments or perform any of the
foregoing acts.
SECTION 5.13. DELIVERY OF ITEMS. The Borrower will (a) promptly
(but in no event later than one Business Day) after its receipt thereof,
deliver to the Lender any documents or certificates of title issued with
respect to any property included in the Collateral, and any promissory notes,
letters of credit or instruments related to or otherwise in connection with any
property included in the Collateral, which in any such case come into the
possession of the Borrower, or shall cause the issuer thereof to deliver any of
the same directly to the Lender, in each case with any necessary endorsements
in favor of the Lender and (b) deliver to the Lender as soon as available copies
of any and all press releases and other similar communications issued by the
Borrower.
SECTION 5.14. SOLVENCY. The Borrower shall be and remain Solvent
at all times.
SECTION 5.15. INTELLECTUAL PROPERTY. Borrower shall do and cause
to be done all things necessary to preserve, maintain and keep in full force
and effect all of its registrations of trademarks, service marks and other
marks, trade names and other trade rights, patents, copyrights and other
intellectual property in accordance with prudent business practices, except to
the extent that the failure to preserve or maintain any of the
11
foregoing would not reasonably be expected to have a Material Adverse Effect.
Without limiting the generality of the foregoing, Borrower agrees promptly,
and in any event not later than 30 days after the date hereof, to have any of
its currently unregistered copyrightable software, computer programs and other
materials registered with the U.S. Copyright Office in Washington, D.C. (the
"Copyright Office") and to promptly provide TBCC with evidence of such
registration. Borrower will, on an ongoing basis, promptly register any future
unregistered copyrightable software, computer programs and other materials with
the Copyright Office.
SECTION 5.16. FUNDAMENTAL CHANGES. The Borrower shall not (a)
amend or modify its name, unless the Borrower delivers to the Lender twenty
days prior to any such proposed amendment or modification written notice of
such amendment or modification and within ten days before such amendment or
modification delivers executed Uniform Commercial Code financing statements (in
form and substance satisfactory to the Lender) or (b) merge or consolidate with
any other entity or make any material change in its capital structure, in each
case without the Lender's prior written consent which shall not be unreasonably
withheld.
SECTION 5.17. CONTINGENT OBLIGATIONS. Borrower will not, directly
or indirectly, incur, assume, or suffer to exist any Contingent Obligation,
excluding indemnities given in connection with this Agreement or the other Loan
Documents in favor of the Lender or in connection with the sale of inventory or
other asset dispositions permitted hereunder, except Contingent Obligations and
other similar third party credit support relating to obligations of vendors and
suppliers of Borrower in respect of transactions entered into in the normal
course of business, provided that the aggregate amount of any such guarantees
and other similar third party credit support shall not exceed $100,000 at any
time outstanding, and provided further that no Default or Event of Default shall
exist either immediately prior to or after giving effect to the making of the
foregoing guarantees or the entering into any third party credit support
transactions.
SECTION 5.18. CHANGE IN NATURE OF BUSINESS. Borrower will not at
any time make any material change in the lines of its business as carried on at
the date of this Agreement or enter into any new line of business; provided
that Borrower may enter businesses reasonably related or incidental to its
current lines of business.
SECTION 5.19. SALES OF ASSETS. Borrower will not, directly or
indirectly, in any fiscal year, sell, transfer or otherwise dispose of any
assets, or grant any option or other right to purchase or otherwise acquire any
assets other than (i) equipment with an aggregate value of less than $25,000 the
proceeds of which shall be paid to the Lender and applied to the Obligations,
(ii) sales of inventory in the ordinary course of business and (iii) licenses or
sublicenses on a non-exclusive basis of intellectual property in the ordinary
course of Borrower's business.
SECTION 5.20. LOANS TO OTHER PERSONS. Borrower will not at any
time make loans or advance any credit (except to trade debtors in the ordinary
course of business) to any Person in excess of $25,000 in the aggregate at any
time for all such loans, except that Borrower may make cashless advances of
credit to senior members of Borrower's management team to purchase restricted
stock of Borrower.
SECTION 5.21. DIVIDENDS, STOCK REDEMPTIONS. Borrower will not,
directly or indirectly, pay any dividends or distributions on, purchase, redeem
or retire any shares of any class of its capital stock or any warrants, options
or rights to purchase any such capital stock, whether now or hereafter
outstanding ("Stock"), or make any payment on account of or set apart assets
for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of its Stock, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of Borrower, except for dividends paid solely in
stock of the Borrower and repurchases of stock owned by employees, directors
and consultants of Borrower pursuant to terms of employment, consulting or
other stock restrictions agreements at such time as any such employee, director
or consultant terminates his or her affiliations with the Borrower, provided
that no Default or Event of Default shall exist either immediately prior to or
after giving effect to such repurchase, and provided further that the total
amount paid in connection therewith by Borrower shall not exceed $50,000 in any
consecutive 12-month period.
12
SECTION 5.22. INVESTMENTS IN OTHER PERSONS. Borrower will not directly
or indirectly, at any time make or hold any Investment in any Person (whether
in cash, securities or other property of any kind) other than investments in
Cash Equivalents.
SECTION 5.23. ACQUISITION OF STOCK OR ASSETS. Borrower will not acquire
or commit or agree to acquire all or any stock, securities or assets of any
other Person other than inventory and equipment acquired in the ordinary course
of business.
SECTION 5.24. PARTNERSHIPS; SUBSIDIARIES; JOINT VENTURES; MANAGEMENT
CONTRACTS. Borrower will not at any time create any direct or indirect
Subsidiary, enter into any joint venture or similar arrangement (other than
joint ventures or strategic partnerships consisting of non-exclusive licensing
of technology or the providing of technical support) or become a partner in any
general or limited partnership or enter into any management contract (other than
an employment contract for the employment of an officer or employee entered
into in the regular course of Borrower's business) permitting third party
management rights with respect to Borrower's business.
SECTION 5.25. RIGHT OF FIRST AND LAST REFUSAL. If and when, during the
term of the Loan, Borrower seeks accounts receivable and/or inventory
financing, Borrower will so notify Lender and permit Lender to make a proposal
to provide such financing. Lender must reply to Borrower's notice within 15
days of the date of such notice, indicating whether Lender accepts or declines
to make such proposal. Borrower will be required to accept Lender's proposal
if the terms and conditions of the proposal are no less favorable to Borrower
than any other proposal received by Borrower. Subject to the foregoing Right
of First and Last Refusal, if Lender does not provide the additional financing,
Lender will subordinate priority of its security interest in accounts
receivable and inventory for up to $2,000,000 in revolving debt financing
provided by other lenders. Said first and last refusal requirement shall be in
effect through December 31, 1999.
SECTION 5.26. ADDITIONAL REQUIREMENTS. The Borrower shall take all such
further actions and execute all such further documents and instruments as the
Lender may reasonably request.
SECTION 6. FINANCIAL STATEMENTS. Until the payment and satisfaction
in full of all Obligations, the Borrower shall deliver to the lender the
following financial information:
SECTION 6.1. ANNUAL FINANCIAL STATEMENTS. As soon as available, but not
later than 120 days after the end of each fiscal year of the Borrower and its
consolidated subsidiaries, the consolidated balance sheet, income statement,
and statements of cash flows and shareholders equity for the Borrower and its
consolidated subsidiaries (the "Financial Statements") for such year, reported
on by independent certified public accountants without an adverse
qualification; and
SECTION 6.2. QUARTERLY FINANCIAL STATEMENTS. As soon as available, but
not later than 30 days after the end of each of the first three fiscal quarters
in any fiscal year of the Borrower and its consolidated subsidiaries, the
Financial Statements for such fiscal quarter, together with a certification
duly executed by a responsible officer of the Borrower that such Financial
Statements have been prepared in accordance with GAAP and are fairly stated in
all material respects (subject to normal year-end audit adjustments).
SECTION 7. EVENTS OF DEFAULT. The occurrence of any of the following
events shall continue an Event of Default hereunder:
(a) the Borrower shall fail to pay when due any principal, interest,
fee or other amount required to be paid by the Borrower under or in connection
with any Note and this Agreement;
(b) any representation or warranty made by the Borrower under or in
connection with any Loan Document or any Financial Statement shall prove to
have been false or incorrect in any material respect when made;
13
(c) the Borrower shall fail to perform or observe (i) any of the
terms, covenants or agreements contained in Sections 5.4, 5.7, 5.10, 5.14 or
5.16 through 5.25 hereof or (ii) any other term, covenant, or agreement
contained in any Loan Document (other than the other Events of Default
specified in this Section 7) and such failure remains unremedied for the
earlier of ten days from (A) the date on which the Lender has given the
Borrower written notice of such failure and (B) the date on which the Borrower
knew of such failure;
(d) any defined "Event of Default" shall occur under any other Loan
Document; or Borrower or any Person shall deny or disaffirm its obligations
under any of the Loan Documents or any Liens granted in connection therewith or
shall otherwise challenge any of its obligations under any of the Loan
Documents; or any Liens granted in any of the Collateral shall be determined to
be void, voidable or invalid, are subordinated or are not given the priority
contemplated by this Agreement; or any Loan Document shall for any reason cease
to create a valid and perfected Lien on the Collateral purported to be covered
thereby, of first priority (except for Permitted Liens);
(e) dissolution, liquidation, winding up, or cessation of the
Borrower's business, failure of the Borrower generally to pay its debts as they
mature, admission in writing by the Borrower of its inability generally to pay
its debts as they mature, or calling of a meeting of the Borrower's creditors
for purposes of compromising any of the Borrower's debts;
(f) the commencement by or against the Borrower of any bankruptcy,
insolvency, arrangement, reorganization, receivership, or similar proceedings
under any federal or state law and, in the case of any such involuntary
proceeding, such proceeding remains undismissed or unstayed for thirty days
following the commencement thereof, or any action by the Borrower is taken
authorizing any such proceedings;
(g) an assignment for the benefit of creditors is made by the
Borrower, whether voluntary or involuntary, the appointment of a trustee,
custodian, receiver, or similar official for the Borrower or for any
substantial property of the Borrower, or any action by the Borrower authorizing
any such proceeding;
(h) the Borrower shall default in (i) the payment of principal or
interest on any indebtedness in excess of $100,000 (other than the Obligations)
beyond the period of grace, if any, provided in the instrument or agreement
under which such indebtedness was created, and such payment default has not
been cured within any applicable grace period unless such default has been
waived by such Person; or (ii) the observance or performance of any other
agreement or condition relating to any such indebtedness or contained in any
instrument or agreement relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such indebtedness to cause, with
the giving of notice if required, such indebtedness to become due prior to its
stated maturity, and such default has not been cured within any applicable
grace period unless such default has been waived by such Person; or (iii) any
loan or other agreement under which the Borrower has received financing from
Transamerica Corporation or any of its affiliates;
(i) the Borrower suffers or sustains a Material Adverse Change;
(j) any tax lien, other than a Permitted Lien, is filed of record
against the Borrower and is not bonded or discharged within ten Business Days;
(k) any judgment or order for the payment of money in excess of
$50,000 and not otherwise covered by applicable insurance shall be rendered
against the Borrower and such judgement or order shall not be stayed, vacated,
bonded, or discharged within thirty days;
(l) any material covenant, agreement, or obligation, as determined
in the good faith business judgement of the Lender, made by the Borrower and
contained in or evidenced by any of the Loan Documents shall cease to be
enforceable, or shall be determined to be unenforceable, in accordance with its
terms; the Borrower shall deny or disaffirm the Obligations under any of the
Loan Documents or any liens granted in connection therewith; or any liens
granted on any of the Collateral in favor of the Lender shall be determined to
be void, voidable, or invalid, or shall not be given the priority contemplated
by this Agreement; or
14
(n) there is a change, which change results from a single
transaction or series of related transactions, but not from the sale of newly
issued securities to investors, in more than 35% of the ownership of any equity
interests of the Borrower on the date hereof or more than 35% of such interests
become subject to any contractual, judicial, or statutory lien, charge,
security interest, or encumbrance.
SECTION 8. REMEDIES. If any Event of Default shall have occurred and be
continuing:
(a) The Lender may, without prejudice to any of its other rights
under any Loan Document or Applicable Law, declare all Obligations to be
immediately due and payable (except with respect to any Event of Default set
forth in Section 7(f) hereof, in which case all Obligations shall automatically
become immediately due and payable without necessity of any declaration)
without presentment, representation, demand of payment, or protest, which are
hereby expressly waived.
(b) The Lender may take possession of the Collateral and, for that
purpose may enter, with the aid and assistance of any person or persons, any
premises where the Collateral or any part hereof is, or may be placed, and
remove the same.
(c) The obligation of the Lender, if any, to make additional Loans
or financial accommodations of any kind to the Borrower shall immediately
terminate.
(d) The Lender may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein (or in any Loan
Document) or otherwise available to it, all the rights and remedies of a
secured party under the applicable Uniform Commercial Code (the "Code") whether
or not the Code applies to the affected Collateral and also may (i) require the
Borrower to, and the Borrower hereby agrees that it will at its expense and
upon request of the Lender forthwith, assemble all or part of the Collateral as
directed by the Lender and make it available to the Lender at a place to be
designated by the Lender that is reasonably convenient to both parties and
(ii) without notice except as specified below, sell the Collateral, or any part
thereof in one or more parcels at public or private sale, at any of the
Lender's offices or elsewhere, for cash, on credit, or for future delivery, and
upon such other terms as the Lender may deem commercially reasonable.
(e) The Lender may accelerate or extend the time of payment,
compromise, issue credits, or bring suit on all accounts receivable
("Receivables") and other Collateral (in the name of Borrower or the Lender)
and otherwise administer and collect the Receivables and other Collateral.
(f) The Lender may collect, receive, dispose of and realize upon any
investment property Collateral, including withdrawal of any and all funds from
any securities accounts.
(g) The Lender may (i) settle or adjust disputes or claims directly
with account debtors for amounts and upon terms which it considers advisable,
and (ii) notify account debtors on the Receivables and other Collateral that
the Receivables and Collateral have been assigned to the Lender, and that
payments in respect thereof shall be made directly to the Lender. If an Event
of Default has occurred and is continuing, Borrower hereby irrevocably
authorizes and appoints the Lender, or any Person the Lender may designate, as
its attorney-in-fact, at Borrower's sole cost and expense, to exercise, all of
the following powers, which are coupled with an interest and are irrevocable,
until all of the Obligations have been indefeasibly paid and satisfied in full
in cash: (A) to receive, take, endorse, sign, assign and deliver, all in the
name of the Lender or Borrower, any and all checks, notes, drafts, and other
documents or instruments relating to the Collateral; (B) to receive, open and
dispose of all mail addressed to Borrower and to notify postal authorities to
change the address for delivery thereof to such address as the Lender may
designate; and (C) to take or bring, in the name of the Lender or Borrower, all
steps, actions, suits or proceedings deemed by the Lender necessary or desirable
to enforce or effect collection of Receivables and other Collateral or file and
sign Borrower's name on a proof of claim in bankruptcy or similar document
against any obligor of Borrower.
(h) The Borrower agrees that, to the extent notice of sale shall be
required by law, at
15
least ten days' notice to the Borrower of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. The Lender shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Lender may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Borrower recognizes
that the Lender may be unable to make a public sale of any or all of any
investment property Collateral, by reason of prohibitions contained in
applicable securities laws or otherwise, and expressly agrees that a private
sale to a restricted group of purchasers for investment and not with a view to
any distribution thereof shall be considered a commercially reasonable sale.
(i) Unless expressly prohibited by any licensor thereof, the Lender
is hereby granted a license to use all computer software programs, data bases,
processes, trademarks, tradenames and materials used by Borrower in connection
with its businesses or in connection with the Collateral.
(j) All cash proceeds received by the Lender in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Lender, be held by the Lender as
collateral for, or then or at any time thereafter applied in whole or in part by
the Lender against, all or any part of the Obligations in such order as the
Lender shall elect. Any surplus of such cash or cash proceeds held by the
Lender and remaining after the full and final payment of all the Obligations
shall be paid over to the Borrower or to such other Person to which the Lender
may be required under applicable law, or directed by a court of comperent
jurisdiction, to make payment of such surplus.
SECTION 9. MISCELLANEOUS PROVISIONS.
SECTION 9.1. NOTICES. Except as otherwise provided herein, all
notices, approvals, consents, correspondence, or other communications required
or desired to be given hereunder shall be given in writing and shall be
delivered by overnight courier, hand delivery, or certified or registered mail,
postage prepaid, if to the Lender, then to at 00 Xxxxxxxxx Xxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxxxxx 00000, with a copy to the Lender at Riverway II, West
Office Tower, 0000 Xxxx Xxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000, and if to the
Borrower, then to 0000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, or such other
address as shall be designated by the Borrower or the Lender to the other party
in accordance herewith. All such notices and correspondence shall be effective
when received.
SECTION 9.2. HEADINGS. The headings in this Agreement are for
purposes of reference only and shall not affect the meaning or construction of
any provision of this Agreement.
SECTION 9.3. ASSIGNMENTS AND PARTICIPATIONS. The Borrower shall
not have the right to assign any Note or this Agreement or any interest therein
unless the Lender shall have given the Borrower prior written consent and the
Borrower and its assignee shall have delivered assignment documentation in form
and substance satisfactory to the Lender in its sole discretion. The Lender may
assign (without the consent of Borrower) to one or more Persons all or a portion
of its rights and obligations under this Agreement and the other Loan Documents
(provided that such Person shall not be a direct or indirect competitor of the
Borrower). The Lender may sell participations in or to all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of any Loans); provided, however, that the Lender's obligations
under this Agreement shall remain unchanged. The Lender may, in connection with
any permitted assignment or participation or proposed assignment or
participation pursuant to this Agreement, disclose to the assignee or
participant or proposed assignee or participant any information relating to
Borrower furnished to the Lender by or on behalf of Borrower.
SECTION 9.4. AMENDMENTS, WAIVERS, AND CONSENTS. Any amendment
or waiver of any provision of this Agreement and any consent to any departure
by the Borrower from any provision of this Agreement shall be effective only by
a writing signed by the Lender and shall bind and benefit the Borrower and the
Lender and their respective successors and assigns, subject, in the case of the
Borrower, to the first sentence of Section 9.3.
SECTION 9.5. INTERPRETATION OF AGREEMENT. Time is of the
essence in each
16
provision of this Agreement of which time is an element. All terms not defined
herein or in a Note shall have the meaning set forth in the applicable Code,
except where the context otherwise requires. To the extent a term of provision
of this Agreement conflicts with any Note, or any term or provision thereof, and
is not dealt with herein with more specificity, this Agreement shall control
with respect to the subject matter of such term or provision. Acceptance of or
acquiescence in a course of performance rendered under this Agreement shall not
be relevant in determining the meaning of this Agreement even though the
accepting or acquiescing party had knowledge of the nature of the performance
and opportunity for objection.
SECTION 9.6. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall (i) remain in full
force and effect until the indefeasible payment in full of the Obligations,
(ii) be binding upon the Borrower and its successors and assigns and (iii)
inure, together with the rights and remedies of the Lender hereunder, to the
benefit of the Lender and its successors, transferees, and assigns.
SECTION 9.7. REINSTATEMENT. To the extent permitted by law, this
Agreement and the rights and powers granted to the Lender hereunder and under
the Loan Documents shall continue to be effective or be reinstated if at any
time any amount received by the Lender in respect of the Obligations is
rescinded or must otherwise be restored or returned by the Lender upon the
insolvency, bankruptcy, dissolution, liquidation, or reorganization of the
Borrower or upon the appointment of any receiver, intervenor, conservator,
trustee, or similar official for the Borrower or any substantial part of its
assets, or otherwise, all as though such payments had not been made.
SECTION 9.8. SURVIVAL OF PROVISIONS. All representations, warranties, and
covenants of the Borrower contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the full and final
payment and performance by the Borrower of the Obligations secured hereby.
SECTION 9.9. INDEMNIFICATION. The Borrower agrees to indemnify and hold
harmless the Lender and its directors, officers, agents, employees, and counsel
from and against any and all costs, expenses, claims, or liability incurred by
the Lender or such Person hereunder and under any other Loan Document or in
connection herewith or therewith, unless such claim or liability shall be due to
willful misconduct or gross negligence on the part of the Lender or such Person.
In addition and without limiting the generality of the foregoing, Borrower
shall, upon demand, pay to the Lender all reasonable costs and expenses incurred
by the Lender (including the reasonable fees and disbursements of counsel and
other professionals) in connection with the preparation, execution, delivery,
administration, modification and amendment of the Loan Documents, and pay to the
Lender all reasonable costs and expenses (including the reasonable fees and
disbursements of counsel and other professionals) paid or incurred by the Lender
in order to enforce or defend any of its rights under or in respect of this
Agreement, any other Loan Document or any other document or instrument now or
hereafter executed and delivered in connection herewith, collect the Obligations
or otherwise administer this Agreement, foreclose or otherwise realize upon the
Collateral or any part thereof, prosecute actions against, or defend actions by,
account debtors; commence, intervene in, or defend any action or proceeding;
initiate any complaint to be relieved of the automatic stay in bankruptcy; file
or prosecute any probate claim, bankruptcy claim, third-party claim, or other
claim; examine, audit, copy, and inspect any of the Collateral or any of
Borrower's books and records; protect, obtain possession of, lease, dispose of,
or otherwise enforce the Lender's security interest in the Collateral; and
otherwise represent the Lender in any litigation relating to Borrower.
SECTION 9.10. COUNTERPARTS; SIGNATURES BY FACSIMILE. This Agreement may
be executed in counterparts, each of which when so executed and delivered shall
be an original, but both of which shall together constitute one and the same
instrument. This Agreement and each of the other Loan Documents and any notices
given in connection herewith or therewith may be executed and delivered by
facsimile transmission all with the same force and effect as if the same was a
fully executed and delivered original manual counterpart.
SECTION 9.11. SEVERABILITY. In case any provision in or obligation
under this Agreement or any Note or any other Loan Document shall be invalid,
illegal, or unenforceable in any jurisdiction, the validity, legality, and
enforceability of the remaining provisions or obligations, or of such provision
or
17
obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
SECTION 9.12. DELAYS; PARTIAL EXERCISE OF REMEDIES. No delay or omission
of the Lender to exercise any right or remedy hereunder, whether before or
after the happening of any Event of Default, shall impair any such right or
shall operate as a waiver thereof or as a waiver of any such Event of
Default. No single or partial exercise by the Lender of any right or remedy
shall preclude any other or further exercise thereof, or preclude any other
right or remedy.
SECTION 9.13. ENTIRE AGREEMENT. The Borrower and the Lender agree that
this Agreement, the Schedule hereto, and the Commitment Letter are the complete
and exclusive statement and agreement between the parties with respect to the
subject matter hereof, superseding all proposals and prior agreements, oral or
written, and all other communications between the parties with respect to the
subject matter hereof. Should there exist any inconsistency between the terms
of the Commitment Letter and this Agreement, the terms of this Agreement shall
prevail.
SECTION 9.14. SETOFF. In addition to and not in limitation of all rights
of offset that the Lender may have under Applicable Law, and whether or not the
Lender has made any demand or the Obligations of the Borrower have matured, the
Lender shall have the right to appropriate and apply to the payment of the
Obligations of the Borrower all deposits and other obligations then or
thereafter owing by the Lender to or for the credit or the account of the
Borrower.
SECTION 9.15. JOINT AND SEVERAL LIABILITY. If Borrower consists of more
than one Person, their liability shall be joint and several, and the compromise
of any claim with, or the release of, any Borrower shall not constitute a
compromise with, or a release of, any other Borrower.
SECTION 9.16. MAXIMUM RATE. Notwithstanding anything to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the
parties hereto hereby agree that all agreements between them under this
Agreement and the other Loan Documents, whether now existing or hereafter
arising and whether written or oral, are expressly limited so that in no
contingency or event whatsoever shall the amount paid, or agreed to be paid, to
the Lender for the use, forbearance, or detention of the money loaned to
Borrower and evidenced hereby or thereby or for the performance or payment of
any covenant or obligation contained herein or therein, exceed the maximum
non-usurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Obligations, under
the laws of the State of Illinois (or the laws of any other jurisdiction whose
laws may be mandatorily applicable notwithstanding other provisions of this
Agreement and the other Loan Documents), or under applicable federal laws which
may presently or hereafter be in effect and which allow a higher maximum
non-usurious interest rate than under the laws of the State of Illinois (or such
other jurisdiction), in any case after taking into account, to the extent
permitted by applicable law, any and all relevant payments or charges under this
Agreement and the other Loan Documents executed in connection herewith, and any
available exemptions, exceptions and exclusions (the "Highest Lawful Rate"). If
due to any circumstance whatsoever, fulfillment of any provisions of this
Agreement or any of the other Loan Documents at the time performance of such
provision shall be due shall exceed the Highest Lawful Rate, then,
automatically, the obligation to be fulfilled shall be modified or reduced to
the extent necessary to limit such interest to the Highest Lawful Rate, and if
from any such circumstance the Lender should ever receive anything of value
deemed interest by applicable law which would exceed the Highest Lawful Rate,
such excessive interest shall be applied to the reduction of the principal
amount then outstanding hereunder or on account of any other then outstanding
Obligations and not to the payment of interest, or if such excessive interest
exceeds the principal unpaid balance then outstanding hereunder and such other
then outstanding Obligations, such excess shall be refunded to Borrower. All
sums paid or agreed to be paid to the Lender for the use, forbearance, or
detention of the Obligations and other indebtedness of Borrower to the Lender
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such indebtedness, until
payment in full thereof, so that the actual rate of interest on account of all
such indebtedness does not exceed the Highest Lawful Rate throughout the entire
term of such indebtedness. The terms and provisions of this Section shall
control every other provision of this Agreement, the other Loan Documents and
all other agreements between the parties hereto.
18
SECTION 9.17. WAIVER OF JURY TRIAL. THE BORROWER AND
THE LENDER IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY
OTHER LOAN DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 9.18. GOVERNING LAW, THE VALIDITY,
INTERPRETATION, AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 9.19. VENUE; SERVICE OF PROCESS. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS SITUATED IN XXXX COUNTY,
OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. THE BORROWER HEREBY IRREVOCABLY WAIVES,
IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING, (a) ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND
(b) THE RIGHT TO INTERPOSE ANY NONCOMPULSORY SETOFF, COUNTERCLAIM, OR
CROSS-CLAIM. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
BORROWER AT THE ADDRESS FOR IT SPECIFIED IN SECTION 9.1 HEREOF. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE BORROWER IN ANY OTHER JURISDICTION, SUBJECT IN EACH INSTANCE TO THE
PROVISIONS HEREOF WITH RESPECT TO RIGHTS AND REMEDIES.
IN WITNESS WHEREOF, the undersigned Borrower has
caused this Agreement to be duly executed and delivered by its proper and duly
authorized officer as of the date first set forth above.
REPEATER TECHNOLOGIES, INC.
By: /s/ XXX XXXXXXXX
-------------------------
Name:
Title: President and CEO
Accepted as of the
day of July, 1999
---
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ XXXX X. XXXX
--------------------------------------
Name: Xxxx X. Xxxx
Title: Senior Vice President
19
SCHEDULE A
TO
LOAN AND SECURITY AGREEMENT
Consents and Approvals (Section 4.2):
Other Places of Business and Locations of Collateral (Section 4.16):
Prior Names of Obligor (Section 4.7):
Prior Trade Names of Obligor (Section 4.7):
Existing Trade Names of Obligor (Section 4.7):
Federal Tax ID (Section 4.7):
Registered and Unregistered Patents (Section 4.11):
Registered and Unregistered Trademarks (Section 4.11):
Registered Copyrights (Section 4.11):
[TRANSAMERICA BUSINESS CREDIT LETTERHEAD]
EXHIBIT A
FINAL REVISION
June 8, 1999
Xx. Xxxx X. Xxxxxx
Chief Financial Officer
Repeater Technologies, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Xxxx:
Transamerica Business Credit Corporation - Technology Finance Division
("Lender") is pleased to offer financing described in this letter to Repeater
Technologies, Inc. ("Borrower"). This Commitment supersedes all prior
correspondence, proposals, and oral or other communications relating to
financing arrangements between Borrower and Lender.
The outline of this offer is as follows:
Lender: Transamerica Business Credit Corporation -
Technology Finance Division and/or its
affiliates, successors or assigns.
Borrower: Repeater Technologies, Inc.
Amount of Loans: Term Loan not to exceed $5,000,000 in the
aggregate.
Collateral: To secure the loans, Lender will require a
first priority security interest in all
assets of Borrower, including intellectual
property, now owned or hereafter acquired,
including, but not limited to, cash,
accounts receivable, inventory, machinery,
equipment, furniture, fixtures, tools,
copyrights, patents, licenses, trademarks,
tradenames, leases, leasehold improvements,
general intangibles, and all other assets
(the "Collateral"). Lender's lien and
security interest shall be junior only to
existing liens under leases against
particular equipment securing debt used to
finance such equipment in an amount not to
exceed $1,300,000 and to future liens under
leases against particular equipment securing
debt used to finance such equipment in an
amount not to exceed $500,000 per annum.
Location of Collateral: California
Right of First and If and when, during the term of the Loan,
Last Refusal: Borrower seeks accounts receivable and/or
inventory financing, Borrower will so notify
Lender and permit Lender to make a proposal
to provide such financing. Lender must reply
to Borrower's notice within 15 days of the
date of such notice, indicating whether
Lender accepts or declines to make such
proposal. Borrower will be required to
accept Lender's proposal if the terms and
conditions of the proposal received by
Borrower. Subject to the foregoing Right of
First and Last Refusal, if Lender does not
provide the additional financing, Lender
will subordinate priority of its security
interest in accounts receivable and
inventory for up to $2,000,000 in revolving debt
financing provided by other lenders. Said first and
last refusal requirement shall be in effect through
December 31, 1999.
Availability: $3,000,000 must be drawn at the time of closing this
transaction. The remaining $2,000,000 will be made
available and must be drawn down upon the Borrower
closing a purchase contract with Sprint, which
contract shall be reviewed by Lender to insure
contract is consistent with information previously
supplied to Lender, and provided that the purchase
contract closes prior to September 30, 1999.
Drawn-Down Expiration: A required funding of $1,500,000 of the initial
$3,000,000 Availability will take place prior to June
30, 1999 or within 30 days of closing this
transaction. The balance of the initial $3,000,000
Availability will fund no later than March 31, 2000.
Interest and Repayments Interest will accrue at a rate of 13% per annum.
Terms: Interest-only payments shall be paid monthly in
arrears for the first 6 months, followed by 30
payments of principal and interest (equal to 3.922%)
shall be paid monthly in arrears.
Lender reserves the right to increase the rate set
forth above as of the date each Loan Term commences
proportionally to the change in the weekly average of
the interest rates of three-year U.S. Treasury
Securities (as published in the Wall Street Journal)
from the week ending March 12, 1999 (5.10%) to the
week preceding the commencement of that Loan Term. As
of the date each Loan Term commences, the Monthly
Payment will be fixed for that entire Loan Term. A
schedule of actual monthly payment amounts will be
provided by the Lender following commencement of each
Loan Term.
Interim Payment: An Interim Payment will accrue from the date of funding
each Loan until the next following first day of a month
(unless the Loan is funded on the first day of a
month). The Interim Payment will be calculated at the
daily equivalent of the currently adjusted Monthly
Payment.
Prepayment: Borrower will have the right to prepay the Loan at any
time after the first 12 months of each Loan Term. The
amount of any prepayment will be equal to the present
value of the remaining payments due under the Loan
discounted, on a simple interest basis, at the rate of
6% per annum during months 13-18, 7% per annum during
months 19-24, and 8% per annum during months 25-36.
Warrants: As an inducement to the Lender to provide financing on
the terms generally outlined herein, Borrower will
grant to Lender Warrants to purchase 100,000 shares of
common stock of the Borrower at an exercise price
equal to $5.50 per share. The Warrants will be
exercisable for a period of seven (7) years. The
Lender will have the option to exercise the Warrants
without payment of the exercise price and receive only
that number of shares which represents the value of
the difference between the fair market value of the
shares and the exercise price (i.e., "net issuance" or
"cashless exercise").
2
Insurance: Prior to any funding, the Borrower will furnish
confirmation of insurance acceptable to the Lender
covering the Collateral including primary, all risk,
physical damage, property damage and bodily injury with
appropriate loss payee and additional insured
endorsements in favor of the Lender.
Conditions Precedent Each Loan will be subject to the following:
to Lending: 1. No material adverse change in the financial
condition, operations or prospects of the Borrower
prior to funding. The Lender reserves the right to
rescind any unused portion of its commitment in the
event of a material adverse change in the financial
condition, operation or prospects of the Borrower.
2. Completion of the documentation and final terms of
the proposed financing satisfactory to Lender and
Lender's counsel.
3. Results of all due diligence, including lien,
judgment and tax search and other matters Lender may
request shall be satisfactory to Lender and Lender's
counsel.
4. Receipt by Lender of duly executed loan
documentation in form and substance satisfactory to
Lender and its counsel.
5. Lender shall receive a valid and perfected first
priority lien and security interest in the
Collateral and Lender shall have received
satisfactory evidence that there are no liens on the
Collateral except as expressly permitted herein.
6. Satisfactory review of March 30, 1999 audited
financial statements by Lender prior to funding.
7. Satisfactory review of convertible note agreement by
Lender's counsel.
Additional There will be no actual or threatened conflict with,
Covenants: or violation of, any regulatory statute, standard or
rule relating to the Borrower, its present or future
operations, or the Collateral.
Borrower will be required to provide quarterly
financial information. All information supplied by the
Borrower will be correct and will not omit any
statement necessary to make the information supplied
not be misleading. There will be no material breach of
the representations and warranties of the Borrower in
the loan.
Expenses: All costs and expenses incurred by the Lender in
connection with the underwriting and closing of the
Loans will be paid by the Borrower whether or not any
Loans are consummated and funds are advanced by the
Lender.
Law: This letter and the proposed Loan are intended to be
governed by and construed in accordance with Illinois
law without regard to its conflict of law provisions.
Indemnity: Borrower agrees to indemnify and to hold harmless
Lender, and its officers, directors and employees
against all claims, damages, liabilities and expenses
which may be incurred by or asserted against any such
person in connection with or arising out of this letter
and the transactions contemplated hereby, other than
claims, damages, liability, and expense
3
resulting from such person's gross negligence or
willful misconduct.
Confidentiality: This letter is delivered to you with the
understanding that neither it nor its substance
shall be disclosed publicly or privately to any
third person except those who are in a
confidential relationship to you (such as your
legal counsel and accountants), or where the same
is required by law and then only on the basis that
it not be further disclosed, which conditions
Borrower and its agents agree to be bound by upon
acceptance of this letter.
Without limiting the generality of the foregoing,
none of such persons shall use or refer to Lender
or to any affiliate name in any disclosures made
in connection with any of the transactions without
Lender's prior written consent.
Upon completion of the initial takedown by
Borrower, the Borrower will no longer be required
to obtain Lender's prior written consent to
disclose the transaction contemplated hereby. In
addition, the Borrower agrees to provide camera
ready artwork of typestyles and logos of the
Borrower for use in promotional material by the
Lender.
Conditions of Acceptance: This Commitment Letter is intended to be a summary
of the most important elements of the agreement to
enter into a loan transaction with Borrower, and
it is subject to all requirements and conditions
contained in Loan documentation proposed by Lender
or its counsel in the course of closing the Loans
described herein. Not every provision that imposes
duties, obligations, burdens, or limitations on
Borrower is contained herein, but shall be
contained in the final Loan documentation
satisfactory to Lender and its counsel.
EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY SUIT, ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATED TO THIS LETTER OR THE
TRANSACTION DESCRIBED IN THIS LETTER.
Application Fee: The $35,000 Application Fee previously paid by the
Borrower shall be applied first to expenses
incurred by Lender and the balance will be applied
to the non-refundable Commitment Fee.
Commitment Fee: A non-refundable Commitment Fee equal to $50,000
will be due the Lender upon acceptance of this
commitment.
4
Commitment Expiration: This commitment shall expire on June 15, 1999 unless
prior thereto either extended in writing by the Lender
or accepted as provided below by the Borrower.
Should you have any questions, please call me. If you wish to accept this
Commitment, please so indicate by signing and returning the enclosed duplicate
copy of this letter to me by June 15, 1999.
Yours truly,
TRANSAMERICA BUSINESS CREDIT
CORP-TECHNOLOGY FINANCE
DIVISION
By /s/ XXXXXX X. XXXXXXX
-------------------------------
Xxxxxx X. Xxxxxxx
Senior Vice President-Marketing
Accepted this 9th day of June, 1999.
REPEATER TECHNOLOGIES, INC.
By /s/ XXXX XXXXXX
------------------
Name: Xxxx Xxxxxx
Title: V.P. & CFO
5
AMENDMENT TO LOAN DOCUMENTS
BORROWER: REPEATER TECHNOLOGIES, INC.
ADDRESS: 0000 XXXXX XXXXXX
XXXXXXXXX, XXXXXXXXXX 00000
DATED AS OF: OCTOBER 10, 2001
THIS AMENDMENT TO LOAN DOCUMENTS is entered into between TRANSAMERICA
BUSINESS CREDIT CORPORATION, a Delaware corporation, ("TBCC") having its
principal office at 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000
and having an office at 00 Xxxxxxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000
and Repeater Technologies, Inc. ("Borrower").
The parties hereto agree to amend the Senior Loan and Security Agreement,
dated January 25, 1999 and the Loan and Security Agreement, dated July 8, 1999
(as amended, the Senior Loan and Security Agreement and the Loan and Security
Agreement are collectively referred to herein as "Loan Agreement"), as follows,
effective as of the date hereof. (This Amendment, the Loan Agreement, any prior
written amendments to said agreements signed by TBCC and the Borrower, and all
other written documents and agreements between TBCC and the Borrower are
referred to herein collectively as the "Loan Documents". Capitalized terms used
but not defined in this Amendment shall have the meanings set forth in the Loan
Agreement.)
1. CONDITION PRECEDENT
(a) BANK AND INVESTMENT ACCOUNTS. Borrower represents and warrants
that all of its bank and other deposit accounts and all of its investment
accounts are maintained at the institutions identified on Exhibit A attached
hereto. Borrower acknowledges that the Collateral includes all of said
accounts. This Amendment is subject to receipt by Lender of the necessary
control agreements by October 29, 2001. Borrower and the institutions where
said accounts are maintained shall enter into control agreements in form and
substance reasonably satisfactory to TBCC with respect to said accounts. If
said condition precedent is not satisfied within said time period, the
provisions of Section 1(b) of this Amendment shall be of no force or effect.
(b) WAIVER OF DEFAULT. Upon execution of this Amendment by the
Borrower and the Borrower meeting the above conditions precedent, Lender hereby
agrees to waive the Borrower's Event of Default as set forth in the letter of
June 25, 2001, a copy of which is attached hereto as Exhibit B. Notwithstanding
the above, in the event that the Borrower fails to comply with any provisions
of this Amendment, the Loan Agreement or any other Loan Document, Lender
reserves the right to reinstitute the default and make demand for payment of
all Obligations.
(c) ACKNOWLEDGMENT OF DEFAULT. Borrower acknowledges that: (i) an
Event of Default has occurred and presently exists under the Loan Documents,
(ii) the unpaid principal balance of the Obligations is $1,856,962.27, as of
October 1, 2001, plus interest accruing after October 1, 2001, late charges,
costs and attorneys fees as set forth in the Loan Documents; (iii) the
Obligations have been validly accelerated and are immediately due and payable
and are due and owing from Borrower to TBCC in their entirety without any
defense, offset or counterclaim of any kind; (iv) pursuant to the Loan
Documents, TBCC has a valid perfected first priority security interest in all
of the Borrower's present and future accounts, general intangibles,
-1-
inventory, equipment, documents, instruments, and all other property and assets
of the Borrower and the proceeds and products thereof (collectively, the
"Collateral"); (v) subject to the conditional waiver of default set forth in
Section 1(b) above, TBCC has the right to take immediate possession of all of
the Collateral, pursuant to the Loan Documents and to exercise all other rights
and remedies granted to it under the Loan Documents and by law; and (vi) TBCC is
not obligated to make any additional Loans to the Borrower, under the Loan
Documents or otherwise.
2. PAYMENT OF LOAN BALANCE.
(a) BALANCE. Borrower acknowledges that the unpaid principal balance
of the Obligations under the Loan Agreement as of October 1, 2001 is
$1,856,962.27, plus interest accruing after October 1, 2001, plus late charges,
costs and attorneys fees as set forth in the Loan Documents, and the Obligations
are due and owing from Borrower to TBCC without any defense, offset or
counterclaim of any kind.
(b) PRINCIPAL PAYMENTS. Notwithstanding any provisions in the Loan
Agreement or the Note(s), the unpaid principal balance of the Obligations due
and owing to TBCC is hereby reamortized to five equal monthly installments of
$394,853.04 each, commencing on November 1, 2001 and continuing on the first day
of each succeeding month, until March 1, 2002 on which date the entire unpaid
principal balance of the Obligations, plus all accrued and unpaid interest,
shall be due and payable.
(c) INTEREST. The Obligations shall bear interest at a rate equal to
24.9% per annum, effective on the date hereof, and accrued interest shall
continue to be paid monthly in arrears on the first Business Day of each month.
If any installment of principal or interest is not paid within five days after
its due date, the Borrower agrees to pay TBCC a late charge, in addition to the
amount of such installment, in an amount equal to 5% of such installment.
3. GENERAL RELEASE. In consideration for TBCC entering into this
Amendment, the Borrower hereby irrevocably releases and forever discharges TBCC,
and its successors, assigns, agents, shareholders, directors, officers,
employees, agents, attorneys, parent corporations, subsidiary corporations,
affiliated corporations, affiliates, participants, and each of them, from any
and all claims, debts, liabilities, demands, obligations, costs, expenses,
actions and causes of action, of every nature and description, known and
unknown, which Borrower now has or at any time may hold, by reason of any
matter, cause or thing occurred, done, omitted or suffered to be done prior to
the date of this Agreement (collectively, the "Released Claims"). Borrower
hereby irrevocably waives the benefits of California Civil Code Section 1542
which provides: "A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement with
the debtor." This release is fully effective on the date hereof.
4. REPRESENTATIONS TRUE. Borrower represents and warrants to TBCC that
all representations and warranties set forth in the Loan Documents, as amended
hereby, are true and correct, except that any representations and warranties
made as of specified earlier date shall remain true and correct as of such
earlier date unless such representations and warranties are deemed to be have
been made as of a later date and, in such eventuality, they shall remain true
and correct as of such later date.
5. GENERAL PROVISIONS.
(a) This Amendment, the Loan Agreement, and the other Loan Documents
set forth in full all of the representations and agreements of the parties with
respect to the subject
-2-
matter hereof and supersede all prior discussions, representations, agreements
and understandings between the parties with respect to the subject hereof.
(b) Each of the parties acknowledges that it and its counsel have had
an adequate opportunity to make whatever investigation or inquiry they may deem
necessary or desirable in connection with the subject matter of this Agreement
prior to the execution hereof and the delivery and acceptance of the
consideration specified herein. Each party acknowledges that (i) each has been
represented by independent counsel of its own choice throughout all of the
negotiations which preceded the execution of this Agreement, (ii) each has
executed this Agreement with the consent and on the advice of such independent
legal counsel, and (iii) each has executed this Agreement voluntarily and
knowingly.
(c) The validity, interpretation and enforcement of this agreement and
the other Loan Documents and any dispute arising out of or in connection with
this Agreement or any of the other Loan Documents, whether sounding in contract,
tort, equity or otherwise, shall be governed by the internal laws and decisions
of the State of Illinois.
(d) This Amendment may be executed in any number of counterparts, all
of which when together shall constitute one and the same Amendment.
(e) Except as herein expressly amended, all of the terms and
provisions of the Loan Agreement and the other Loan Documents shall continue in
full force and effect and the same are hereby ratified and confirmed.
(f) All disputes between the Borrowers and TBCC, whether sounding in
contract, tort, equity or otherwise, shall be resolved only by state and federal
courts located in Chicago, Illinois; provided, however, that TBCC shall have the
right, to the extent permitted by applicable law, to proceed against the
Borrower or its property or the Collateral in any location selected by TBCC, or
to enforce a judgment or other court order in favor of TBCC. Borrower waives any
objection that it may have to the location of the court in which TBCC has
commenced a proceeding, including, without limitation, any objection to venue or
based on forum non conveniens. Borrower consents to service of process in any
action or proceeding brought against it by TBCC, by personal delivery, or by
mail addressed as set forth in the Loan Agreement, or by any other method
permitted by law.
(g) MUTUAL WAIVER OF RIGHT TO JURY TRIAL. EACH PARTY TO THIS AGREEMENT
HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO: (i) THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS; OR (ii) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR
AGREEMENT BETWEEN OR AMONG THEM; OR (iii) ANY CONDUCT, ACTS OR OMISSIONS OF ANY
PARTY TO THIS AGREEMENT OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH THEM; IN EACH OF THE FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
-3-
BORROWER: TBCC:
REPEATER TECHNOLOGIES, INC. TRANSAMERICA BUSINESS CREDIT CORPORATION
By /s/ Xxxxxxx X. Xxxxxxxx By /s/ XXXXX X. XXXXXX
--------------------------------- ------------------------------------
President or Vice President Xxxxx X. Xxxxxx
Title Vice President
By /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Secretary or Ass't Secretary
-4-
EXHIBIT A
BANK ACCOUNTS, OTHER DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS
SILICON VALLEY BANK
Cash Reserve account -
Account no - 401508870
Money Market account
Account no - 401508875
Checking account
Account no - 401508870
-5-
EXHIBIT B
[TRANSAMERICA BUSINESS CREDIT LETTERHEAD]
VIA FEDERAL EXPRESS
-------------------
June 25, 2001
Elif Kuvvetli
Corporate Controller
Repeater Technologies, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Re: Loan and Security Agreement dated July 8, 1999 executed by Repeater
Technologies, Inc. ("Repeater") and Transamerica Business Credit Corporation
("TBCC") (together with all documents and agreements executed in connection
therewith, hereinafter referred to as the "Loan Agreement"); all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Loan Agreement.
Dear Elif:
This letter shall serve as notice to Repeater Technologies, Inc. that it is in
default of its Obligations to TBCC under the Loan Agreement for the sale of
assets on or about April 1, 2001, without notice or approval, with a value of
approximately $968,000. The failure to observe this requirement of the Loan
Agreement is a default pursuant to Section 7 of the Loan Agreement.
Therefore, this letter shall serve as notice that TBCC hereby accelerates all
amounts due and owing and makes demand for all amounts due to TBCC pursuant to
the terms and conditions of the Loan Documents. The payoff amount due TBCC, as
of June 29, 2001, is $2,675,464.17.
If Repeater does not pay all such amounts in full by the close of business on
July 2, 2001, or make other arrangements satisfactory to TBCC, TBCC will seek
to enforce its rights and remedies under the Loan Documents, law and equity.
This letter is without prejudice to, and TBCC specifically reserves all of its
rights and remedies against, Repeater under the Loan Documents, law and equity.
If you would like to discuss this matter, please call me immediately.
Very truly yours,
TRANSAMERICA BUSINESS CREDIT CORPORATION
By /s/ Xxxxx X. Xxxxxx
---------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
