Exhibit 10.13
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
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THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Agreement"), dated
for reference purposes only as of December 29, 1998 by and between OLD KENT BANK
("Bank"), with its place of business at 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxx, XX
00000, and LANTE CORPORATION, an Illinois corporation ("Borrower"), with its
principal place of business at 000 X. Xxxxx Xxxxxx, Xxxxxxx, XX 00000.
RECITALS:
A. Bank has heretofore agreed to make financial accommodations to
Borrower pursuant to the terms of two certain Business Loan Agreements, each
dated as of August 8, 1997, by and between Borrower and Bank (collectively, the
"Existing Loan Agreements").
B. Borrower has requested that Bank increase the amount of the credit
facility provided pursuant to the Existing Loan Agreements, and Borrower and
Bank deem it to be in their best interest to amend and restate the Existing Loan
Agreement, as set forth herein.
NOW THEREFORE, in consideration of any loan, advance, extension of credit
and/or other financial accommodation at any time made by Bank to or for the
benefit of Borrower, and of the promises set forth herein, the parties hereto
agree as follows:
1. DEFINITIONS AND TERMS
1.1. The following words, terms and/or phrases shall have the meanings
set forth thereafter and such meanings shall be applicable to the singular and
plural form thereof, giving effect to the numerical difference; whenever the
context so requires, the use of "it" in reference to Borrower shall mean
Borrower as identified at the beginning of this Agreement:
(a) "Account Debtor": any Person who is and/or may become obligated to
Borrower under or on account of Accounts.
(b) "Accounts": the definition ascribed to this term in Section 4.1.
(c) "Acquisition": the definition ascribed to this term in Section 9.5.
(d) "Advance": any loan of monies made by Bank to Borrower upon Borrower's
request pursuant to Section 2.1 (a).
(e) "Affiliate": any Person (i) in which Borrower, one or more equity
interest holders owning twenty-five percent (25%) or more of the total equity
interest of Borrower, any Subsidiary, and/or any Parent, individually, jointly
and/or severally, now or at any time or times hereafter, has or have an equity
or other ownership interest equal to or in excess of twenty five percent (25%)
of the total equity of or other ownership interest in such Person; and/or (ii)
which directly or indirectly through one or more intermediaries controls or is
controlled by, or is under common control with Borrower. For purposes of this
definition, "control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of Stock, by contract or otherwise.
(f) "Agreement": this Loan and Security Agreement, together with all
amendments, modifications, extensions, supplements and restatements hereto or
hereof.
(g) "and/or": one or the other or both, or any one or more or all, of the
things or Persons in connection with which the conjunction is used.
(h) "Assets": any and all real, personal and intangible property of
Borrower, including, without limitation Accounts, chattel paper, contract
rights, letters of credit, instruments and documents, Equipment, General
Intangibles, Inventory, Leases, Options, licenses, and Real Property, whether
now existing or hereafter acquired or arising.
(i) "Bank": Old Kent Bank and its successors and assigns.
(j) "Borrower": Lante Corporation, an Illinois corporation and its
permitted successors and assigns.
(k) "Borrower's Liabilities": all obligations and liabilities of Borrower
to Bank under the terms of this Agreement and the other Loan Documents, and all
extensions and renewals or refinancing thereof, whether such obligation or
liability is direct or indirect, secured or unsecured, joint or several,
absolute or contingent, due or to become due, whether for payment or
performance, whether heretofore arising, now existing or hereafter arising,
however evidenced, created, incurred, acquired or owing and whether or not now
contemplated. Without limitation of the foregoing, such liability and
obligations include the principal amount of Loans, interest, fees, indemnities
or expenses under this Agreement and all other Loan Documents, and all
extensions, renewals and refinancing thereof, whether or not such Loans were
made in compliance with the terms and conditions of this Agreement or in excess
of the obligation of Bank to lend. Borrower's Liabilities shall remain
Borrower's Liabilities, notwithstanding any assignment or transfer or any
subsequent assignment or transfer of any of the Borrower's Liabilities or any
interest therein.
(l) "Borrower's Obligations": all terms, conditions, warranties,
representations, agreements, undertakings, covenants and provisions (other than
Borrower's Liabilities) to be performed, discharged, kept, observed or complied
with by Borrower to or for the benefit of Bank under the terms of this Agreement
and all other Loan Documents, and all extensions and renewals or refinancing
thereof, whether such obligation is direct or indirect, secured or unsecured,
joint or several, absolute or contingent, due or to become due, whether
heretofore arising, now existing or hereafter arising, however evidenced,
created, incurred, acquired or owing and whether or not now contemplated.
Borrower's Obligations shall remain Borrower's Obligations, notwithstanding any
assignment or transfer or any subsequent assignment or transfer of any of the
Borrower's Obligations or any interest therein.
(m) "Borrowing Base Report": the report delivered monthly in accordance
with Section 9.2(c)(iii).
(n) "Business Day": for all purposes other than as covered by clause (ii)
hereof, any day, other than a Saturday, Sunday, a day that is a legal holiday
under the laws of the State of Illinois or any other day on which banking
institutions located in Chicago, Illinois are authorized or required by law or
other governmental action to close.
(o) "Capital Funds": at the time of determination, an amount equal to (i)
total Shareholder's Equity (including capital stock, additional paid in capital
and retained earnings after deducting treasury stock) of Borrower plus the
Subordinated Debt and deferred interest thereon, less the sum of the total
amount of intangible assets, which for purposes of this definition, shall
include, without limitation, General Intangibles, prepaid expenses, security
deposits, any unamortized debt, discount and expense, unamortized deferred
charges and goodwill, and any officer, shareholder or employee advances and
receivables all as determined in accordance with generally accepted accounting
practices.
(p) "Charges": all national, federal, state, county, city, municipal
and/or other governmental (or any instrumentality, division, agency, body or
department thereof, including without limitation the Pension Benefit Guaranty
Corporation) taxes, levies, assessments, charges, liens, claims or encumbrances
upon and/or relating to the Collateral, Borrower's Liabilities, Borrower's
Obligations, Borrower's business, Borrower's ownership and/or use of any of its
assets, and/or Borrower's income and/or gross receipts.
(q) "Collateral": the definition ascribed to this term in Section 4.1.
(r) "Debt Service Ratio": is an amount equal to: (i) earnings before
interest and taxes minus dividends, income taxes and distributions to (ii)
interest actually paid on all Indebtedness plus scheduled principal payments
during the next twelve (12) months, excluding any balloon payment due on a
revolving credit facility which Borrower reasonably expects to extend or
refinance.
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(s) "Default Rate": interest at the rate of three percent (3%) per annum
plus the Index Rate.
(t) "Designated Person": any Person identified as a "Designated Person" on
Borrower's Officer's Certificate, as amended or superseded from time to time.
(u) "Eligible Accounts" those Accounts included in an Borrowing Base
Report which, as of the date of such Borrowing Base Report and at all times
thereafter: (i) satisfy the requirements for eligibility as described in Section
5.1; (ii) do not violate the negative covenants and other provisions of this
Agreement and do satisfy the affirmative covenants, warranties and other
provisions of this Agreement; and (iii) Bank, in its reasonable credit judgment
and in the exercise of good faith, deems to be Eligible Accounts.
(v) "Environmental Laws": any Federal, state or local law, rule,
regulation, ordinance, order, code or statute applicable to the Borrower or its
property, in each case as amended (whether now existing or hereafter enacted or
promulgated), controlling, governing or relating to the pollution or
contamination of the air, water or land or concerning hazardous, special or
toxic materials, wastes or substances, or any judicial or administrative
interpretation of such laws, rules or regulations, including, without
limitation, the Water Pollution Control Act (33 U.S.C. (S) 1251 et seq.),
Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.), Safe
Drinking Water Act (42 U.S.C. (S) 3000(f) et seq.), Toxic Substances Control Act
(15 U.S.C. (S) 2601 et seq.), Clean Air Act (42 U.S.C. (S) 7401 et seq.), and
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
(S) 9601 et seq.).
(w) "Equipment": the definition ascribed to this term in Section 4.1.
(x) "Equipment Leases": all leases or similar agreements pursuant to which
Borrower leases Equipment.
(y) "Event of Default": the definition ascribed to this term in Section
10.1.
(z) "Financials": those financial statements of Borrower, heretofore,
concurrently herewith or hereafter delivered by or on behalf of Borrower to
Bank, including but not limited to those financial statements and reports
delivered by Borrower to Bank pursuant to Section 9.2(c).
(aa) "General Intangibles": the definition ascribed to this term in Section
4.1.
(bb) "Guaranty Equivalent": any agreement, document or instrument pursuant
to which a Person directly or indirectly guarantees, becomes surety for,
endorses, assumes, agrees to indemnify the obligee of any other Person against,
or otherwise agrees, becomes or remains liable (contingently or otherwise) for,
such obligation, other than by endorsements of instruments in the ordinary
course of business. Without limitation, a Guaranty Equivalent shall be deemed to
exist if a Person agrees, becomes or remains liable (contingently or otherwise),
directly or indirectly: (i) to purchase or assume, or to supply funds for the
payment, purchase or satisfaction of, an obligation; (ii) to make any loan,
advance, capital contribution or other investment in, or a purchase or lease of
any property or services from, a Person; (iii) to maintain the solvency of such
Person; (iv) to enable such Person to meet any other financial condition; (v) to
enable such Person to satisfy any obligation or to make any payment; (vi) to
assure the holder of an obligation against loss; (vii) to purchase or lease
property or services from such Person regardless of the non-delivery of or
failure to furnish of such property or services; or (viii) in respect of any
other transaction the effect of which is to assure the payment or performance
(or payment of damages or other remedy in the event of nonpayment or
nonperformance) of any obligation.
(cc) "Index Rate": the per annum rate of interest announced or published
publicly from time to time by Old Kent Bank at its principal place of business
in Chicago, Illinois as its index or equivalent rate of interest. The Index Rate
is a designated rate and is not necessarily the lowest rate of interest charged
by Old Kent Bank with respect to commercial loans.
(dd) "Indebtedness": with respect to any Person, at a particular time, (i)
indebtedness for borrowed money or for the deferred purchase price of property
or services in respect of which such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise or any commitment by which such
Person assures a creditor against loss,
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(ii) obligations under leases which shall have been or should be, in accordance
with generally accepted accounting principles, recorded as capital leases in
respect of which obligations such Person is liable, contingently or otherwise,
as obligor, guarantor or otherwise, or in respect of which obligations such
Person assures a creditor against loss, (iii) all obligations and liabilities
with respect to unfunded vested benefits under any "employee benefit plan" or
with respect to withdrawal liabilities incurred under ERISA by the Borrower or
any ERISA Affiliate to a "multiemployer plan," as such terms are defined under
the Employee Retirement Income Security Act of 1974, and (iv) any and all
accounts payable, accruals and other items characterized as Indebtedness in
accordance with generally accepted accounting principles.
(ee) "Intellectual Property Rights": the definition ascribed to this term
in Section 8.1(g).
(ff) "Inventory": the definition ascribed to this term in Section 4.1.
(gg) "Leases": the definition ascribed to this term in Section 4.1.
(hh) "Leaseholds": all estates and interests in land and improvements
created by any Lease.
(ii) "Letter of Credit": any and all commercial or standby letters of
credit issued by Bank for the account of Borrower in accordance with the terms
of Section 2.1(b).
(jj) "Letter of Credit Fee": the fee described in Section 2.7.
(kk) "Letter of Credit Obligations": shall mean, at any time, the sum of
(i) the aggregate undrawn face amount of all Letters of Credit outstanding at
such time, (ii) the aggregate amount of all drawings under Letters of Credit for
which Bank has not at such time been reimbursed (either by Borrower, or by a
Loan made by Bank), and (iii) the aggregate amount of all payments made by Bank
with respect to a Letter of Credit for which Borrower has not at such time
reimbursed the Bank, whether by way of the Revolving Loans or otherwise.
(ll) "Loan": any and all loans, advances, extensions of credit and/or
other financial accommodations of any kind or nature made by Bank at any time
to, for the benefit or at the request of Borrower pursuant to this Agreement
and/or any of the Other Agreements.
(mm) "Loan Account": the definition ascribed to this term in Section 3.1.
(nn) "Loan Availability": the sum of: (i) seventy-five percent (75%) of
Eligible Accounts, plus (ii) an over formula advance equal to $500,000.
(oo) "Loan Documents": this Agreement and the Other Agreements.
(pp) "Lock Box": the lock box heretofore established between Bank and
Borrower, as described in Section 3.3.
(qq) "Maturity Date": the earlier of January 1, 2001, or such earlier date
as all Secured Obligations shall be due and payable by acceleration or
otherwise.
(rr) "Maximum Principal Amount": shall mean the principal portion of
Borrower's Liabilities hereunder, calculated in accordance with the first
sentence of Section 2.2.
(ss) "Monthly Report": those Reports delivered to Bank in accordance with
Section 9.2(c)(ii).
(tt) "Note": the Revolving Promissory Note delivered by Borrower to Bank
in accordance with Section 2.1(a).
(uu) "Operating Account": the account established pursuant to Section 3.3.
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(vv) "Options": the definition ascribed to this term in Section 4.1.
(ww) "Organizational Document": the Articles of Incorporation, By-Laws or
any resolutions of Borrower.
(xx) "Other Agreements": all agreements, instruments and documents,
including, without limitation, bond agreements, loan agreements, security
agreements, guaranties, mortgages, deeds of trust, notes, applications and
agreements for letters of credit, advances of credit, bankers acceptances,
pledges, powers of attorney, consents, assignments, contracts, notices, leases,
financing statements and all other written matter heretofore, now and/or from
time to time hereafter executed by and/or on behalf of Borrower and delivered to
Bank, or issued by Bank upon the application and/or other request of, and on
behalf of, Borrower.
(yy) "Paid in Full" or any similar term(s) with respect to any liability
means the indefeasible satisfaction and final payment in full of such liability
in cash or cash equivalents reasonably acceptable to the payee, the performance
in full of all obligations (including contingent obligations), and the
termination of any obligation on the part of the holder of such liability to
make any loans or to afford any financial accommodation to the Borrower.
(zz) "Parent": any Person, now or at any time or times hereafter, owning
or controlling (alone or with Borrower, any Subsidiary and/or any other Person)
at least a majority of the issued and outstanding Stock or other ownership
interest of Borrower or any Subsidiary (hereinafter defined). For purposes of
this definition, "control" shall have the same meaning ascribed to this term in
Section 1.1(d).
(aaa) "Permitted Liens": (i) the liens created in favor of Bank, whether
pursuant to this Agreement or any of the Other Agreements or otherwise; (ii)
liens for Charges which are not yet due and payable or which are expressly
permitted pursuant to the terms hereof, or claims and unfunded liabilities under
ERISA not yet due and payable or which are being contested in good faith; (iii)
liens arising in connection with worker's compensation, unemployment insurance,
old age pensions, social security benefits, liens of landlord's, carriers,
mechanics, materialmen and other liens imposed by law which are not overdue or
are being contested in good faith by appropriate proceedings diligently pursued,
provided that in the case of any such contest any proceedings commenced for the
enforcement of such liens shall have been duly suspended and such provision for
the payment of such liens has been made on the books of Borrower as may be
required by generally accepted accounting principles; (iv) liens incurred in the
ordinary course of business to secure the performance of statutory obligations
arising in connection with progress payments or advance payments due under
contracts with the United States Government or any agency thereof entered into
in the ordinary course of business; and (v) additional liens expressly permitted
from time to time in writing by Bank, (vi) liens permitted pursuant to Section
9.5, and (vii) those liens disclosed on Schedule 1.1(zz), if any.
(bbb) "Person": any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (whether national, federal, state,
county, city, municipal or otherwise, including without limitation any
instrumentality, division, agency, body or department thereof).
(ccc) "Records": the definition ascribed to this term in Section 4.1.
(ddd) "Report": any financial statement, Monthly Report or Borrowing Base
Report delivered to Bank in accordance with Section 9.2(c).
(eee) "Secured Obligations": all Borrower's Liabilities and Borrower's
Obligations.
(fff) "Securities": shall have the meaning ascribed to that term in the
Securities Act of 1934.
(ggg) "Special Collateral": any Collateral which is evidenced by or
consists of any chattel paper, letters of credit, instrument, certificate or
document, including, without limitation, promissory notes, documents of title,
securities and warehouse receipts.
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(hhh) "Stock": all shares, interests, participations or other equivalents
(however designated) of or in a corporation, whether voting or non-voting,
including, but not limited to, common stock, warrants, preferred stock,
convertible debentures and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
(iii) "Subordinated Debt" means all indebtedness evidenced by the
Subordinated Notes.
(jjj) "Subordinate Notes" means those certain Convertible Subordinated
Note Due 2007, a true, accurate and complete schedule of which is attached
hereto as Schedule 7.1.
(kkk) "Subsidiary": any Person at least a majority of whose issued and
outstanding Stock or other ownership interests now or at any time hereafter is
owned by Borrower and/or one or more Subsidiaries.
(lll) "Supplemental Documentation": any and all financing statements,
notices, disclosures, agreements, instruments, documents or other written
matter, in each case other than any mortgage on any Leasehold, which Bank may
from time to time deem necessary to maintain or create a valid and perfected
security interest in the Collateral.
(mmm) "Unmatured Default": any event or condition which, with the
passage of time or the giving of notice or both, would constitute an Event of
Default hereunder.
1.2. Definitions. Except as otherwise defined in this Agreement or the
Other Agreements, all words, terms and/or phrases used herein and therein shall
be defined by the applicable definition therefor (if any) in the Uniform
Commercial Code as adopted by the State of Illinois. Any accounting term not
expressly defined herein shall be deemed to be defined in accordance with
generally accepted accounting principles.
2. LOANS: GENERAL TERMS
2.1. The Loan.
(a) Subject to the terms and provisions hereof, Bank shall make available
to Borrower Loans, in an aggregate principal amount not to exceed, at any time
outstanding, the Maximum Principal Amount. Subject to the provisions hereof, the
outstanding principal amount of Loans may be borrowed, repaid (without any
premium or penalty) and reborrowed again, from time to time in whole or in part.
The unpaid principal balance of the Loan, and all portions thereof, shall bear
interest at the Index Rate. The Loan shall be further evidenced by the Note to
be delivered concurrently herewith.
(b) Subject to the terms and conditions of this Agreement during the term
hereof, and to and excluding the Maturity Date, Bank shall issue Letters of
Credit hereunder at the request of Borrower and for its account, in an maximum
aggregate face amount of $1,000,000 and with expiry dates no later than April
30, 2001); provided that Bank shall not be obligated to issue any Letter of
Credit for the account of Borrower if at the time of such requested issuance (a)
the face amount of such requested Letter of Credit, when added to the aggregate
outstanding principal amount of the Loans made to Borrower and all Letter of
Credit Obligations of Borrower then outstanding would cause such Loans and
Letter of Credit Obligations to exceed the Maximum Principal Amount; or (b) the
face amount of such Letter of Credit when added to the Letter of Credit
Obligations then outstanding, would exceed $1,000,000; or (c) any order,
judgment or decree of any governmental authority having jurisdiction over Bank
shall purport by its terms to enjoin or restrain Bank from issuing such Letter
of Credit, or any law or governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the Bank shall prohibit, or request that Bank
refrain from, the issuance of Letters of Credit in particular or shall impose
upon Bank with respect to any Letter of Credit any restriction or reserve or
capital requirement (for which Bank is not otherwise compensated) or any
unreimbursed loss, cost or expense which was not in effect as of the date of
this Agreement and which Bank in good xxxxx xxxxx material to it.
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2.2. Maximum Principal Amount. Notwithstanding anything to the contrary
contained herein or in any other Loan Document, the principal amount available
to be borrowed pursuant to Section 2.1(a) outstanding at any one time during the
term hereof ("Maximum Principal Amount") shall not exceed lesser of (i)
$3,500,000 minus Letter of Credit Obligations or (ii) Loan Availability minus
Letter of Credit Obligations.
2.3. Termination of Loans. The Bank's obligation to make any Advance to
Borrower pursuant to the provisions hereof shall be in effect until the Maturity
Date, unless sooner terminated by Bank upon the occurrence of an Event of
Default, an Unmatured Default, or pursuant to the terms hereof.
2.4. Interest Rate. Unless an Event of Default has occurred and is
continuing, Borrower's Liabilities shall bear interest at the Index Rate.
Interest, computed on a 360-day year for the actual number of days elapsed.
After the occurrence of an Event of Default and during the continuation thereof,
all Loans shall bear interest at the Default Rate.
2.5. Terms of Letters of Credit. Each Letter of Credit issued pursuant
hereto shall be in a form and substance acceptable to Bank. Borrower shall
execute the Bank's standard form of application and reimbursement agreement for
each Letter of Credit to be issued for Borrower's account. All Letters of Credit
issued hereunder shall expire no later than six months after the Maturity Date.
2.6. Unused Facility Fee. Borrower shall pay to Bank an unused facility
fee in an amount equal to .25% of the difference between $3,500,000 minus the
average daily outstanding principal balance hereunder, payable semi-annually in
arrears on September 30 and March 31 during the term hereof.
2.7. Letter of Credit Fee. Borrower will pay to Bank a Letter of Credit
Fee equal to 1.5% per annum of the face amount of each Letter of Credit issued
pursuant to the terms hereof, payable quarterly in advance.
3. PAYMENT TERMS
3.1. Loan Account; Method of Making Payments. Bank shall maintain a Loan
Account on its books in which shall be recorded (i) all Loans made by Bank to
Borrower pursuant to this Agreement, (ii) all payments made by Borrower on all
Loans and (iii) all other appropriate debits and credits as provided in this
Agreement, including, without limitation, all fees, charges, expenses and
interest. All entries in the Loan Account shall be made in accordance with
Bank's customary accounting practices, in effect from time to time. Unless
otherwise agreed to in writing from time to time hereafter, all payments which
Borrower is required to make to Bank under this Agreement or under any of the
Other Agreements may be made by appropriate debits to the Operating Account of
Borrower established pursuant to Section 3.3. Bank may, in its reasonable
discretion, elect to xxxx Borrower for such amounts, in which case the amount
shall become due and payable in accordance with the applicable provisions of
this Agreement and the Other Agreements.
3.2. Place of Payment; Excess Liabilities. All payments to Bank
hereunder and under the Other Agreements shall be payable at Bank's place of
business specified at the beginning of this Agreement or at such other place or
places as Bank may designate in writing to Borrower. All of such payments to
Persons other than Bank shall be payable at such place or places as Bank may
designate in writing to Borrower. Borrower's Liabilities will be payable as set
forth in the Note, this Agreement, and the Other Agreements. If at any time the
outstanding principal balance of all Loans exceeds the Maximum Principal Amount,
Borrower shall immediately pay to Bank such amount as is necessary to eliminate
such excess.
3.3. Lock Box and Operating Account. Borrower has established a Lock Box
with Bank pursuant to Bank's customary lock box documentation. Borrower shall
maintain its primary depository and operating accounts (the "Operating Account")
with Bank. All payments received by Bank and deposited into the Lock Box at any
time when no Event of Default has occurred and remains uncured shall be
transferred by Bank to the Operating Account.
3.4. Interest Payments; Payment on Maturity and Prepayment. Borrower
shall pay accrued but unpaid interest monthly in arrears on the first day of
each month during the term hereof, commencing on February 1, 1999 and
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on the first day of each month thereafter. On the Maturity Date, whether by
acceleration or otherwise, Borrower shall pay to Bank, in full, in cash or other
immediately available funds, the outstanding amount of all Secured Obligations.
The Secured Obligations may be prepaid in whole or in part at any time without
premium or penalty.
3.5. Application of Payments and Collections.
(a) All Advances by Bank to Borrower under this Agreement shall constitute
one loan and all indebtedness and obligations of Borrower to Bank under this
Agreement and the Other Agreements shall constitute one general obligation
secured by the Collateral.
(b) Bank shall have the sole, exclusive and unreviewable right
unilaterally (and without notice to or the consent of any person) to allocate
any and all payments which may be received by or tendered to Bank made by the
Borrower or any other Person at any time or from time to time and which relate
in any way to the Loans or any other Secured Obligations then due and payable in
any order of priority as Bank in its sole and exclusive discretion shall elect,
as follows: (i) to the payment of any costs and expenses reasonably incurred by
Bank to enforce any rights under this Agreement or under the Other Agreements or
to preserve or protect the Collateral; (ii) to accrued but unpaid interest,
penalties and late payment fees; and (iii) to principal. Borrower (y)
irrevocably waives the right to direct the application of payments and
collections received by Bank from or on behalf of Borrower, and (z) agrees that
Bank shall have the continuing exclusive right to apply and reapply any and all
such payments and collections against the Loan or any other Secured Obligations
then due and payable in such manner as Bank may deem appropriate,
notwithstanding any entry by Bank upon any of its books and records.
(c) To the extent that Bank receives any payment on account of the Secured
Obligations, or any proceeds of Collateral are applied on account of the Secured
Obligations, and any such payment(s) and/or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
subordinated and/or required to be repaid to a trustee, receiver or any other
Person under any bankruptcy act, state or federal law, common law or equitable
cause, then, to the extent of such payment(s) or proceeds received, the Secured
Obligations or part thereof intended to be satisfied shall be revived and
continue in full force and effect, as if such payment(s) and/or proceeds had not
been received by Bank and applied on account of the Secured Obligations.
3.6. Monthly Statements. All Advances to Borrower and all other debits
and credits provided for in this Agreement, shall be evidenced by entries made
by Bank in its internal data control systems showing the date, amount and reason
for each such debit or credit. Until such time as Bank shall have rendered to
Borrower written statements of account as provided herein, the balance in the
Loan Account, as set forth on Bank's most recent statement, shall be rebuttably
presumptive evidence of the amounts due and owing to Bank by Borrower. Bank
shall render a monthly statement to Borrower setting forth the balance of the
Loan Account, including principal, interest, expenses and fees. Each such
statement shall be subject to subsequent adjustment by Bank and Bank's right to
reapply payments in accordance with Section 3.5, but shall, as to statements of
principal and interest then due or having been paid, absent manifest errors or
omissions, be presumed correct and presumed binding upon Borrower and shall
constitute an account stated unless, within one hundred and twenty (120) days
after receipt of any statement from Bank, Borrower shall deliver to Bank written
objection thereto, specifying the error or errors, if any, contained in such
statement.
4. COLLATERAL: GENERAL TERMS
4.1. Grant of Security Interest. To secure the prompt payment to Bank of
Borrower's Liabilities and the prompt, full and faithful performance by Borrower
of Borrower's Obligations, Borrower hereby grants to Bank a security interest in
and to, and hereby mortgages, conveys, transfers, assigns and pledges to Bank,
all of Borrower's now existing and/or owned and hereafter arising and/or
acquired:
(a) accounts, accounts receivable, chattel paper, contract rights, letters
of credit, notes, instruments and documents, which shall include, without
limitation, amounts due or to become due in the future ("Accounts"), and all
goods whose sale, lease or other disposition by Borrower have given rise to
Accounts and have been returned to or repossessed or stopped in transit by
Borrower;
8
(b) patents, copyrights and trademarks, and all applications for and
registrations of the foregoing including, but not limited to those patents and
registered trademarks identified as being owned by Borrower on Schedule 8.1(g),
along with any and all divisions, renewals or reissues thereof, and variations
or modifications and new applications of the technology covered thereby, all
contract rights, franchise rights, trade names, art work, goodwill, beneficial
interests, rights to tax refunds, claims, warranties, guarantees, claims against
any supplier of any Inventory, including claims arising out of purchases of
defective goods or overpayments to or undershipments by suppliers, any claims
which Borrower may have against any vendor or lessor of Equipment or Inventory
and all other general intangibles of any kind or nature whatsoever (the "General
Intangibles");
(c) all materials and inventories of Borrower, and finished goods,
wherever located, whether in transit, held by others for Borrower's account,
covered by warehouse receipts, purchase orders and contracts, or in the
possession of any carriers, forwarding agents, truckers, warehousemen, vendors,
customers on a consignment basis or other Persons, including, without
limitation, all raw materials, work in process, finished merchandise, supplies,
goods, stores, incidentals, office supplies and packaging materials
("Inventory");
(d) all equipment, machinery, fixtures and appliances (including but not
limited to furniture, office equipment, motor vehicles, aircraft, boats and
vessels, trade fixtures, and non-structural additions or improvements located in
or on, or attached to, and used or intended to be used in connection with or the
operation of any real property or Leaseholds) and all other personal property of
every kind or nature, together with all extensions, additions, improvements,
substitutions and replacements to any of any of the foregoing ("Equipment");
(e) monies, reserves, deposits, certificates of deposit and deposit
accounts and interest or dividends thereon, securities, cash, cash equivalents
and other property now or at any time or times hereafter in the possession or
under the control of Bank or its bailee;
(f) all books, records, computer records, ledger cards, programs and other
computer materials, customer and supplier lists, invoices, orders and other
property and general intangibles at any time evidencing or relating to the
Collateral ("Records");
(g) all rights of Borrower under all leases, licenses, occupancy
agreements, concessions or other agreements entered into by Borrower as tenant
or lessee or licensee or concessionaire thereunder, whether written or oral,
whether now existing or entered into at any time hereafter, whereby Borrower is
granted the right, either exclusively or in common with others, to use, possess,
or occupy real estate (the "Leases");
(h) all options, rights of first refusal, grants, contracts, agreements,
or rights to purchase, lease, license, or otherwise acquire any interest in
real property, whether now existing or hereafter acquired ("Options");
(i) all accessions to any of the Collateral and all substitutions,
renewals, improvements and replacements of and additions thereto;
(j) all other property of Borrower, real and/or personal, in which
Borrower heretofore, now and/or from time to time hereafter has granted or
grants to Bank a security interest, assignment, lien, claim or other
encumbrance; and
(k) all products and proceeds of the foregoing (whether such proceeds are
in the form of cash, cash equivalents, proceeds of insurance policies,
condemnation proceeds, Accounts, General Intangibles, Inventory, Equipment,
Records or otherwise).
All of the foregoing is referred to herein individually and collectively as the
"Collateral." It is the intent of the parties that the Collateral shall include
all property of the Borrower, real, personal or intangible, whether now existing
or hereafter acquired or arising, whether specifically enumerated herein or not,
and that the broadest possible interpretation should be given to the term
Collateral. Borrower shall make appropriate entries upon its financial
statements and Records disclosing Bank's security interest in and assignment and
pledge of the Collateral.
9
4.2. Inspection of Collateral; Audit of Records.
(a) Inspect Collateral. Bank (by any of its officers, accountants,
employees and/or agents) shall have the right, at any time or times during
Borrower's usual business hours, after not less than two Business Days prior
notice during normal business hours (unless an Unmatured Default or Event of
Default then exists, in which event no notice shall be required) to inspect the
Collateral (and the premises upon which it is located) and all related Records
and to verify the amount and condition of or any other matter relating to the
Collateral. In addition to the foregoing rights, Bank (by any of its officers,
employees or agents) shall have the right, at any time or times during
Borrower's usual business hours, after at least two (2) Business Days prior
notice (unless an Event of Default or Unmatured Default has occurred and is
continuing in which event no prior notice shall be required) to perform field
audits of Borrower's books and records, at Borrower's sole cost and expense.
(b) Audit Records. In addition to the right to inspect set forth herein,
Bank (by any of its officers, accountants, employees and/or agents) shall have
the right to audit the books and Records of Borrower. All reasonable costs, fees
and expenses incurred by Bank, or for which Bank becomes obligated, in
connection with such inspection, verification or audit shall constitute part of
Borrower's Liabilities, payable by Borrower to Bank within five (5) days after
demand therefor; provided that, Borrower shall not be liable to Bank for
reimbursement of any amounts pursuant to this Section 4.2(b), (i) in an amount
in excess of $1,000 per annum if no Event of Default or Unmatured Default has
occurred and is continuing or (ii) in excess of $5,000 per annum if an Event of
Default or Unmatured Default has occurred during such year.
4.3. Maintain Perfection; Supplemental Documentation. Borrower shall
perform all the acts requested by Bank which are reasonably necessary to
maintain a valid security interest in the Collateral other than obtaining third-
party consents, including but not limited to, executing and/or delivering to
Bank, at any time and from time to time hereafter, any and all Supplemental
Documentation that Bank may request, in form and substance reasonably acceptable
to Bank, to perfect and maintain perfected Bank's security interest, lien and/or
encumbrance in and/or assignment and pledge of the Collateral and to consummate
the transactions contemplated in or by this Agreement and/or the Other
Agreements. Borrower agrees that Bank, to the extent permitted by applicable
law, may execute, on behalf and in the name of Borrower, any Supplemental
Documentation covering all or any of the Collateral and file the same in each
and every appropriate jurisdiction.
4.4. Perfected Security Interest; Location of Collateral. Borrower
hereby warrants and represents to and covenants with Bank that: (a) subject to
the provisions of Section 9.5, Bank's security interest in the Collateral is now
and at all times hereafter shall be perfected and have a first priority; and (b)
the offices and/or locations where Borrower keeps the Collateral and the Records
are at the locations specified on Schedule 4.4 (as amended from time to time by
written notice from Borrower to Bank). Borrower has no other offices or
locations and Borrower shall not remove such Records and/or the Collateral from
such locations and shall not keep any such Records and/or the Collateral at any
other office or location unless Borrower gives Bank at least thirty (30) days
prior written notice and the locations are all within the continental United
States of America; provided that Borrower shall have the right to maintain
Collateral with a value not to exceed $500,000 at any one time outside of the
continental United States, so long as: (i) such Collateral does not constitute
Records (unless duplicate copies of such Records are maintained at Borrower's
principal place of business in Chicago, Illinois and (ii) no accounts are billed
from any office other than Borrower's principal place of business in Chicago,
Illinois.
4.5. Collateral in Bank's Control; Sale of Collateral. Bank, now or at
any time hereafter, in its reasonable discretion, may take control of, in any
manner, and may endorse Borrower's name to any of the items of payment or
proceeds deposited into the Lock Box. Unless an Event of Default has occurred
and is continuing, Bank shall deposit all proceeds deposited with Bank pursuant
to the Lock Box into the Operating Account. Upon the occurrence of an Event of
Default and during the continuation thereof, Bank shall have the right, but not
the obligation, to apply amounts deposited into the Lock Box to and on account
of the Secured Obligations. Regardless of the adequacy of any Collateral, any
deposits or other sums at any time credited by or payable or due from Bank or
any bailee of Bank to Borrower, or any monies, cash, cash equivalents,
certificates of deposit, securities, instruments, documents or other assets of
Borrower in the possession or control of Bank or its bailee for any purpose may
at any time be reduced to cash and applied by Bank to, or setoff by Bank
against, the Secured Obligations which are then currently due hereunder.
10
4.6. Payment of Claims. Bank, in its reasonable discretion, without
waiving or releasing any of the Secured Obligations or any Event of Default,
may, but shall be under no obligation to, (i) upon the occurrence of an Event of
Default and during the continuation thereof, pay, acquire and/or accept an
assignment of any security interest, lien, encumbrance or claim asserted by any
Person against the Collateral and (ii) at all times during the term hereof, to
pay, acquire and/or accept an assignment of any security interest, lien,
encumbrance or claim asserted by any Person against the Collateral which lien is
superior in priority to the lien granted to Bank. All sums paid by Bank in
respect thereof and all reasonable costs, fees and expenses, including
reasonable attorneys' fees, court costs, expenses and other charges relating
thereto incurred by Bank or for which Bank becomes obligated on account thereof
shall be part of the Secured Obligations payable by Borrower to Bank on demand.
5. COLLATERAL: ACCOUNTS
5.1. Eligible Accounts. Upon Borrower's delivery to Bank of a Borrowing
Base Report, Bank shall determine, in its reasonable discretion and in the
exercise of good faith, which individual Accounts listed thereon are Eligible
Accounts. In making such determination, it is acknowledged by Borrower that the
following Accounts will not be deemed to be Eligible Accounts; provided that
nothing contained herein shall be deemed to limit Bank's discretion to
consideration of the following factors:
(a) Accounts with a due date of thirty (30) days from the invoice date and
which remain unpaid more than ninety (90) days after the invoice date;
(b) Accounts owing by a single Account Debtor or its Affiliate (if such
Affiliate is known by Borrower to be an affiliate of such Account Debtor),
including a currently scheduled Account, if twenty-five percent (25%) or more of
the balance owing by said Account Debtor or its Affiliate upon Accounts remains
unpaid more than ninety (90) days after invoice date;
(c) Accounts with respect to which the Account Debtor is a director,
officer, employee or agent of Borrower or is a Parent, a Subsidiary or an
Affiliate;
(d) Accounts with respect to which payment by the Account Debtor is or may
be conditional and Accounts commonly known as xxxx and hold or Accounts of a
similar or like arrangement;
(e) Accounts with respect to which the Account Debtor is not a resident or
citizen of or otherwise located in the continental United States of America or
Canada (other than Quebec), or with respect to which the Account Debtor is not
subject to service of process in the continental United States of America unless
payment of such Account is secured by a letter of credit reasonably acceptable
and assigned to Bank;
(f) Accounts with respect to which the Account Debtor is the United States
of America, any state, county, city, municipal and/or other governmental body,
or any department, agency or instrumentality thereof unless Borrower assigns its
right to payment of such Accounts to Bank pursuant to the Assignment of Claims
Act of 1940, as amended (31 U.S.C. (S)203, 41 U.S.C. (S)15, 41 C.F.R. (S)(S)1-
30, 700 et seq.), or any similar law or regulation relating to the assignment or
pledge of such Accounts;
(g) Accounts with respect to which Borrower is or may become liable to the
Account Debtor for goods sold or services rendered by such Account Debtor to
Borrower unless the Account Debtor executes and delivers a "no-offset" letter in
form and substance acceptable to Bank;
(h) Accounts with respect to which the goods giving rise thereto have not
been shipped and delivered to or have been affirmatively rejected as
unsatisfactory by the Account Debtor thereof or with respect to which the
services performed giving rise thereto have not been completed and accepted as
satisfactory by the Account Debtor thereof;
11
(i) Accounts with respect to which possession and/or control of the goods
sold giving rise thereto is held, maintained or retained by Borrower (or by any
agent or custodian of Borrower) for the account of or subject to further and/or
future direction from the Account Debtor thereof;
(j) Accounts arising from a "sale on approval" or a "sale or return";
(k) Accounts as to which Bank, at any time or times hereafter, determines,
in good faith, that the prospect of payment or performance by the Account Debtor
is or will be impaired;
(l) Accounts with respect to which the Account Debtor thereof is located
in the State of New Jersey or the State of Minnesota, unless Borrower has filed,
as applicable, a Notice of Business Activities Report with the New Jersey
Division of Taxation for the then current year, or is qualified to transact
business and in good standing for the then current year, or a Business Activity
Report with the Minnesota Department of Revenue for the then current year, or is
otherwise exempt from such reporting requirements under the laws of such state;
(m) Accounts with respect to which Bank's security interest is not
entitled to first priority; and
(n) Accounts owing from any Account Debtor which is insolvent or the
subject of any insolvency or bankruptcy proceedings.
5.2. Notice of Ineligibility of Accounts, Other Required Notices.
Borrower, immediately upon learning thereof, shall notify Bank that an Account
is no longer an Eligible Account. If, as a result of such Account having become
ineligible, the amount of Borrower's Liabilities relating to Loans exceeds the
maximum amount set forth in Section 2.2, Borrower shall immediately pay to Bank
an amount of money equal to the monies theretofore advanced by Bank to Borrower
upon such Account that is no longer an Eligible Account and Bank shall apply
such payment to and on account of the Loan. From and after Bank's request,
Borrower shall: (a) promptly upon Borrower's learning thereof, inform Bank, in
writing, of any material delay in Borrower's performance of any of its
obligations to any Account Debtor and of any assertion of any claims, offsets or
counterclaims by any Account Debtor and of any allowances, credits and/or other
monies granted by Borrower to any Account Debtor; (b) not permit or agree to any
extension, compromise or settlement or make any change or modification of any
kind or nature with respect to any Account, including any of the terms relating
thereto; and (c) promptly upon Borrower's receipt or learning thereof, furnish
to and inform Bank of all material adverse information relating to the financial
condition of any Account Debtor.
5.3. Representations and Warranties Specifically Relating to Accounts.
Borrower warrants and represents to Bank on each date that it delivers to Bank a
Borrowing Base Report that as of such date:
(a) the Accounts listed therein as Eligible Accounts satisfy the
requirements for eligibility set forth in Section 5.1, are genuine, are in all
material respects what they purport to be, are not reduced to a judgment and, if
evidenced by any instrument or item of chattel paper, are evidenced by only one
executed original instrument or item of chattel paper, and, such original has
been endorsed and delivered to Bank, are actually and absolutely owing to
Borrower and are not contingent for any reason, and no payments have been made
thereon; and
(b) Borrower has no knowledge of any other facts or circumstances which
would impair the (i) collectibility in any material respect or (ii) validity of
any of the Accounts listed therein as Eligible Accounts.
5.4. Verification of Accounts. Upon the occurrence of an Event of
Default or an Unmatured Default and during the continuation thereof, Bank's
nominee, together with any of Bank's officers, employees or agents shall have
the right, at any time or times hereafter, in the name of a nominee of Bank, to
verify the validity, amount or any other matter relating to any Accounts by
mail, telephone, telegraph or otherwise. All costs, fees and expenses relating
thereto reasonably incurred by Bank (or for which Bank becomes obligated),
including the costs of retaining Bank's nominee, shall be part of the Secured
Obligations, payable by Borrower to Bank within five (5) days after demand. Upon
the occurrence of an Event of Default or an Unmatured Default and during the
continuation thereof, Bank shall have the right, in its reasonable discretion,
without notice thereof to Borrower: (a) to notify any or all Account Debtors
that the Accounts and Special Collateral have been assigned to Bank and that
Bank has a security interest therein; (b) to direct
12
such Account Debtors to make all payments due from them to Borrower upon the
Accounts and Special Collateral directly to the Lock Box; (c) to enforce payment
of and collect, by legal proceedings or otherwise, the Accounts and Special
Collateral in the name of Bank and Borrower; and (d) to take control, in any
manner, of any item of payment or proceeds deposited into the Lock Box.. Bank
shall use commercially reasonable efforts to notify Borrower within a reasonable
period after taking any action under the provisions of this Section 5.4;
provided that, failure to so notify Borrower shall not be deemed a default of
Bank's obligations hereunder.
5.5. Appointment of Bank As Attorney-In-Fact After an Event of Default.
Borrower, irrevocably, hereby designates, makes, constitutes and appoints Bank
(and all Persons designated by Bank) as Borrower's true and lawful agent and
attorney-in-fact from and after an Event of Default and during the continuation
thereof, with power, without notice to Borrower and at such time or times
hereafter as Bank, in its reasonable discretion, may determine, in Borrower's or
Bank's name: (a) to demand payment of the Accounts and Special Collateral; (b)
to enforce payment of the Accounts and Special Collateral by legal proceedings
or otherwise; (c) to exercise all of Borrower's rights and remedies with respect
to the collection of the Accounts and Special Collateral; (d) to settle, adjust,
compromise, extend or renew the Accounts and Special Collateral; (e) to settle,
adjust or compromise any legal proceedings brought to collect the Accounts and
Special Collateral; (f) to sell or assign the Accounts and Special Collateral
upon such terms, for such amounts and at such time or times as Bank deems
advisable; (g) to discharge and release the Accounts and Special Collateral; (h)
to prepare, file and sign Borrower's name on any notice of lien, assignment or
satisfaction of lien or similar document in connection with the Accounts and
Special Collateral; (i) to prepare, file and sign Borrower's name on any proof
of claim in bankruptcy or similar document against any Account Debtor; (j) to do
all acts and things necessary, in Bank's reasonable discretion, to fulfill
Borrower's Obligations under this Agreement; and (k) to prepare, file and sign
Borrower's name on any notice of lien, assignment or satisfaction of lien or
similar document in connection with the Accounts and Special Collateral.
6. COLLATERAL: EQUIPMENT
6.1. Maintenance of Equipment. Borrower shall keep and maintain the
Equipment reasonably determined by Borrower to be necessary for the efficient
and effective conduct of its business in good operating condition and repair and
shall make all necessary replacements thereof and renewals thereto so that the
value and operating efficiency thereof shall at all times be maintained and
preserved. Borrower shall not permit any such items to become a fixture to real
estate or an accession to other personal property.
6.2. Sale of Equipment. Borrower shall not sell, transfer, lease, grant
a security interest in or otherwise dispose of or encumber (other than pursuant
to a Permitted Lien) the Equipment or any part thereof to any Person other than
Bank, without Bank's prior written consent, which may be withheld in the sole
discretion of Bank; provided that (i) Borrower may sell Equipment reasonably
determined by Borrower not to be necessary for the efficient and effective
conduct of its business in arms-length transactions for the fair market value
thereof, and (ii) Borrower can sell, transfer or otherwise dispose of (without
reference to the consideration paid, if any) Equipment reasonably determined by
Borrower not to be necessary for the efficient and effective conduct of its
business with a fair market value of less than $100,000 in the aggregate in any
year. In the event any Equipment is sold, transferred or otherwise disposed of
as permitted in this Section 6.2 for consideration paid in an amount in excess
of $100,000 in the aggregate in any one year, Borrower shall notify Bank of such
fact and deliver all of the cash proceeds of such sale, transfer or disposition
to Bank, which proceeds shall be applied to the repayment of the Secured
Obligations.
7. SUBORDINATE NOTES; AND OTHER COLLATERAL
7.1. Representations Relating to Subordinate Notes. Borrower hereby
represents and warrants to Senior Bank that: (i) attached hereto as Schedule 7.1
is a true, accurate and complete copy of all Subordinate Notes and there exists
no other instrument, document or agreement evidencing or securing obligations or
liabilities to the holders of the Subordinate Notes; (ii) the aggregate unpaid
principal balance on all Subordinate Notes as of the date hereof is $2,595,000;
(iii) this Agreement and all other Loan Documents executed in connection
therewith constitute Senior
13
Indebtedness (as defined in the Subordinate Notes); and (iv) payment and
performance of the Subordinate Notes is expressly subordinate to the Secured
Obligations.
7.2. Covenants of Borrower relating to Subordination Notes. Borrower
hereby covenants with Bank that until the Secured Obligations are Paid in Full:
(a) Borrower shall make no payment of principal, interest or any other
monies under or with respect to the Subordinate Notes, or any one of them,
without in each instance, Bank's prior written consent, which consent may be
withheld in Bank's sole and absolute discretion;
(b) Borrower shall not grant a security interest, lien or pledge in any
asset owned by Borrower to secure payment or performance of any liability or
obligation evidenced by the Subordinate Notes; and
(c) Borrower shall take any action necessary to enforce the provisions of
Article 4 of the Subordinate Notes for the benefit of Bank.
7.3. Collateral Assignment. Borrower hereby assigns to Bank as
collateral to secure payment and performance of all Secured Obligations, all of
Borrower's right, title and interest under Article 4 of the Subordinated Notes;
provided that nothing herein shall be deemed to be an assumption by Bank of any
obligation or liability of Borrower under the Subordinate Notes, all such
liability and obligation being hereby expressly disclaimed. Upon the occurrence
of an Event of Default, Borrower, irrevocably, hereby designates, makes,
constitutes and appoints Bank (and all persons designated by Bank) as Borrower's
true and lawful agent and attorney-in-fact, with power, without notice to
Borrower and at such time or times hereafter as Bank, in its reasonable
discretion, may determine in Borrower's or Bank's name to take any action to
enforce Borrower's rights under the Subordinate Notes, including but not limited
to Borrower's rights under Article 4 thereof.
7.4. Leases; Real Property. Borrower hereby represents and warrants
that: (a) as of the date hereof, Borrower is not a party to any Lease, either as
landlord or tenant, except as set forth on Schedule 7.4; (b) as of the date
hereof, Borrower has not entered into any Options, either as optionor or as
optionee to purchase real property; and (c) as of the date hereof, Borrower does
not own and has not entered into any contract to purchase real property.
7.5. Notice of Other Collateral. Except in connection with an
Acquisition as contemplated in Section 9.5, Borrower hereby covenants and agrees
to deliver to Bank notice before entering into any contract or agreement to
acquire any real property or acquiring or entering into any Lease. Subject to
the provisions of Section 9.5, Borrower hereby covenants and agrees to
immediately grant to Bank a first security interest, lien and mortgage, in form
and substance reasonably required by Bank, on any real property or Option
hereafter acquired, and Lease entered into after the date hereof.
8. GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS
8.1. General Representations and Warranties. Except as disclosed in
writing to Bank concurrently herewith, Borrower warrants and represents to and
covenants with Bank that:
(a) Organization. Borrower is and at all times during the term hereof
shall be a corporation duly organized, validly existing and in good standing
under the laws of the State of Illinois. Borrower is duly qualified to do
business as a foreign corporation and is in good standing in all jurisdictions
listed on Schedule 8.1(a) (which schedule lists all jurisdictions in which
Borrower has operations or owns property and which Schedule may be updated by
written notice from Borrower to Bank from time to time) and in all other
jurisdictions in which the failure to be so qualified could have an adverse
effect on Borrower's business, operations, condition (financial or otherwise),
Assets or Borrower's ability to pay or perform the Secured Obligations.
(b) Entity Power. Borrower has and at all times during the term hereof
shall have all corporate power and authority to own its property and to transact
the business in which it is engaged or proposes to engage. Borrower has
14
and at all times during the term hereof shall have all the corporate right,
power and capacity and is duly authorized and empowered to enter into, execute,
deliver and perform this Agreement and the other Loan Documents to which it is a
party, and all such action has been duly and validly authorized by all necessary
corporate proceedings on its part. Without limitation of the foregoing, Borrower
has the corporate power and authority to borrow pursuant to the Loan Documents
to the fullest extent permitted hereby and thereby from time to time, and has
taken all necessary corporate action to authorize such borrowings.
(c) Execution and Binding Effect. This Agreement and each other Loan
Document to which Borrower is a party and which is executed and delivered or
required to be executed and delivered on or before the date of which this
representation and warranty is made, or deemed made, has been duly and validly
executed and delivered by Borrower. This Agreement and each such other Loan
Document constitutes the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with its terms.
(d) Violation of Organizational Documents and Agreements. Neither the
execution and delivery of any Loan Document, nor consummation of the
transactions herein or therein contemplated, nor performance of or compliance
with the terms and conditions hereof or thereof, does or will at any time during
the term hereof: (i) violate or conflict with any Law in any manner which could
have a material adverse effect on Borrower's business, operations, Assets,
condition (financial or otherwise) or Borrower's ability to pay or perform the
Secured Obligations, or (ii) violate, conflict with or result in a breach of any
term or condition of, or constitute a default under, or result in (or give rise
to any right, contingent or otherwise, of any Person to cause) any termination,
cancellation, prepayment or acceleration of performance of, or result in the
creation or imposition of (or give rise to any obligation, contingent or
otherwise, to create or impose) any lien upon any property of Borrower (except
for any lien in favor of Bank securing the Secured Obligations) pursuant to, or
otherwise result in (or give rise to any right, contingent or otherwise, of any
Person to cause) any change in any right, power, privilege, duty or obligation
of Borrower under or in connection with (1) the Organizational Documents of
Borrower, (2) any agreement or instrument creating, evidencing or securing any
Indebtedness or Guaranty Equivalent to which Borrower is a party or by which it
or any of its properties (now owned or hereafter acquired) may be subject or
bound, or (3) any other agreement or instrument or arrangement to which Borrower
is a party or by which it or any of its properties (now owned or hereafter
acquired) may be subject or bound, except, in the case of the foregoing clause
(ii)(3), for (x) matters as to which a consent, waiver, amendment or agreement
has been duly obtained and is in full force and effect, and (y) matters that,
individually or in the aggregate, could not have a material adverse effect on
Borrower's business, operations, Assets, condition (financial or otherwise) or
Borrower's ability to pay or perform the Secured Obligations.
(e) Fictitious Names. Each of the fictitious names, if any, used by
Borrower during the five (5) year period preceding the date of this Agreement is
set forth on Schedule 8.1(e), attached hereto (which schedule may be amended by
written notice from Borrower to Bank) and none of such fictitious names are
registered trademarks or tradenames with the U.S. Patent and Trademark Office
except as disclosed on Schedule 8.1(g).
(f) Title. Except as permitted pursuant to Section 9.5, Borrower has and
at all times hereafter shall have good, indefeasible and merchantable title to
and ownership of the Collateral, free and clear of all liens, claims, security
interests and encumbrances, except the Permitted Liens.
(g) Intellectual Property. All General Intangibles of Borrower, including
but not limited to trade secrets, Copyrights, Trademarks, licenses, patents,
software, tool kits, modules, modifications, derivative works and other
intangible, industrial or intellectual property of any type or nature which
Borrower uses, owns, has applied for, is developing, is licensed to use, is
franchised to use, services or which otherwise constitute a part of Borrower's
business shall be referred to in this Agreement collectively as "Intellectual
Property Rights". Attached hereto as Schedule 8.1(g) is a true, accurate and
complete list of all registered Trademarks or service marks, all registered
Copyrights and all other Intellectual Property Rights which individually (and
not in the aggregate) are material to the continued conduct of Borrower's
business (collectively, the "Material Intellectual Property Rights") of Borrower
on the date hereof. Borrower shall deliver to Bank an updated and revised
Schedule 8.1(g) from time to time during the term hereof as Borrower acquires
additional Material Intellectual Property Rights, within ten (10) Business Days
after Borrower's acquisition of such Material Intellectual Property Rights. All
Material Intellectual Property Rights are valid, subsisting, in good standing
and uncontested. Borrower either owns exclusive, full and clear title to the
Material Intellectual Property
15
Rights or has the legal, unencumbered right to use the Material Intellectual
Property Rights it licenses. No employees or former employees of Borrower or
independent contractors retained by Borrower have any claim to or title in any
Intellectual Property Rights owned or used by Borrower which are material to the
continued operation of Borrower's business. None of the Material Intellectual
Property Rights which are or could be a subject of any Patent, Copyright,
Trademark or other registration (whether in the United States or any other
governmental authority) has been judged to Borrower's knowledge to be invalid or
unenforceable in whole or in part. Borrower has taken all actions and
effectuated all registrations necessary to protect and to maintain its exclusive
title to the Material Intellectual Property Rights. Prior to utilizing any such
Intellectual Property Rights in any additional jurisdictions, Borrower shall
take all actions necessary to protect and/or register such Material Intellectual
Property Rights so that the use of such Material Intellectual Property Rights in
such jurisdiction will not jeopardize any of Borrower's ownership or other
rights or registrations in such Material Intellectual Property Rights. Upon
demand from Bank, Borrower shall deliver to Bank copies of all documents which
establish or evidence the Material Intellectual Property Rights in any way,
and/or shall schedule a brief description of all such Material Intellectual
Property Rights to this Agreement either as of the effective date, or as of such
subsequent date as Bank may request. Borrower owns all or possesses adequate
registrations of the Material Intellectual Property Rights with governmental
authorities necessary for Borrower to continue to operate its business, and
there exist no "blocking patents" which could require Borrower to execute any
such license in the future. Borrower did not obtain any Material Intellectual
Property Rights in any illegal fashion, and has not copied any Patent
applications, Copyrights, Trademarks or other intellectual property of any other
party. Borrower has implemented adequate procedures to maintain the
confidentiality and/or trade secret status of any Material Intellectual Property
Rights which are confidential and/or a trade secret in nature. The Material
Intellectual Property Rights do not infringe upon any Patents, Copyrights,
Trademarks, licenses, trade secrets or franchises which any other Person or
entity may own or claim. There is no claim or action pending or to Borrower's
knowledge threatened concerning any Material Intellectual Property Rights. None
of the Material Intellectual Property Rights contain any slanderous or
defamatory material.
(h) Adequate Licenses. Borrower possesses and at all times during the
term hereof Borrower shall possess adequate Assets, licenses, patents,
copyrights, trademarks and tradenames to continue to conduct its business as
previously conducted prior to the date hereof and as contemplated in the
foreseeable future, except such licenses, patents, copyrights, trademarks and
trade names the failure of which to obtain could not have a material adverse
effect on Borrower's business, operations, Assets, condition (financial or
otherwise) or Borrower's ability to pay or perform the Secured Obligations.
(i) Solvency. Borrower: (i) is now and at all times during the term
hereof shall be generally paying its debts as they mature; (ii) now owns, and at
all times during the term hereof shall own, property which, at a fair valuation,
is greater than the sum of its debt; and (iii) now has and at all times during
the term hereof shall have capital sufficient to carry on its business and
transactions and all business transactions in which it is about to engage.
(j) Proceedings. There are no actions or proceedings which are pending or
threatened against Borrower which might result in any material adverse change in
its financial condition or adversely affect Borrower's business, operations,
Assets, condition (financial or otherwise) or Borrower's ability to pay and
perform the Secured Obligations.
(k) Intentionally Deleted.
(l) Permits. Borrower has obtained and is and shall be at all times
during the term hereof, in substantial compliance with respect to all
governmental permits, certificates, consents and franchises necessary to
continue to conduct its business as previously conducted prior to the date
hereof and to own or lease and operate its properties as now owned or leased by
it. None of said permits, certificates, consents or franchises contain any term,
provision, condition or limitation more burdensome than such as are generally
applicable to Persons engaged in the same or similar business as Borrower.
(m) Restrictive Agreements. Borrower is not a party to any contract or
agreement or subject to any charge, restriction, judgment, decree or order
materially and adversely affecting its business, property, Assets, operations or
condition, financial or otherwise.
16
(n) Violation of Laws. Borrower is not in violation of any applicable
statute, regulation or ordinance of the United States of America, of any state,
city, town, municipality, county or of any other jurisdiction, or of any agency
thereof, (including, but not limited to any Environmental Law or any regulation
of the Federal Reserve Board) in any respect which might materially adversely
affect its business, operations, Assets, condition (financial or otherwise) or
Borrower's ability to pay or perform the Secured Obligations.
(o) Tax Returns.
(i) All tax and informational returns required to be filed by or on
behalf of Borrower have been properly prepared, executed and filed. All
taxes, assessments, fees and other Charges upon Borrower, or upon any of
its properties, incomes, sales or franchises which are due and payable have
been paid other than those not yet delinquent and payable without premium
or penalty, and except for those being diligently contested in good faith
by appropriate proceedings, and in each case adequate reserves and
provisions for taxes have been made on the books of Borrower. The reserves
and provisions for taxes on the books of Borrower are adequate for all open
years and for its current fiscal period.
(ii) Borrower does not know of any proposed additional assessment or
basis for any material assessment for additional taxes (whether or not
reserved against).
(iii) Borrower has paid all Charges shown to be due and payable on
said returns or on any assessments made against it or any of its property,
and all other Charges imposed on it or any of its properties by any
governmental authority.
(p) Indebtedness. Except for the Permitted Liens and Indebtedness
permitted pursuant to Section 9.5, (i) Borrower has no Indebtedness other than
Indebtedness arising in the ordinary course of its business since the dates
reflected in the most recent Financials which is not Indebtedness for borrowed
money; and (ii) Borrower has not guaranteed or entered into any Guaranty
Equivalent (other than as a result of the endorsement of any instrument of items
of payment for deposit or collection in the ordinary course of business or as
otherwise expressly permitted pursuant to the terms hereof) the obligations of
any Person.
(q) Undisclosed Liabilities. Borrower has no liability or obligation of
any nature whatsoever (whether absolute, accrued, contingent, or otherwise,
whether or not due) requiring disclosure by generally accepted accounting
principals, except (i) as disclosed in the Financials heretofore delivered by
Borrower to Bank; or (ii) liabilities, obligations, committals and losses
incurred since the date of the most recent Financials permitted pursuant to
Section 9.5 or incurred since the date of the most recent financials in the
ordinary course of business and consistent with past practices.
(r) Affiliate Debts. Borrower has no accounts from Affiliates, except as
heretofore disclosed in writing to Bank, as said information may be updated from
time to time by written notice from Borrower to Bank.
(s) Default Under Other Agreements. Borrower is not in default with
respect to any indenture, loan agreement, mortgage, deed or other similar
agreement relating to the borrowing of monies to which it is a party or by which
it is bound, which default could have a material adverse effect on Borrower,
Borrower's Assets, Borrower's condition (financial or otherwise) or Borrower's
ability to pay or perform the Secured Obligations.
(t) Insurance. Borrower maintains with financially sound and reputable
insurers acceptable to Bank and not related to or affiliated with Borrower
insurance with respect to its properties and business and against at least such
liabilities, casualties and contingencies and in at least such types and amounts
as is customary in the case of corporations engaged in the same or a similar
business or having similar properties similarly situated.
(u) Financials. The most recent Financials fairly and accurately present
the Assets, liabilities and financial conditions and results of operations of
Borrower and such other Persons, if any, described therein as of and for the
periods ending on such dates set forth therein and have been prepared in
accordance with generally accepted
17
accounting principles and such principles have been applied on a basis
consistently followed in all material respects throughout the periods involved.
(v) Adverse Change. There has been no material adverse change in
Borrower's business, operations, Assets, condition (financial or otherwise) or
Borrower's ability to pay or perform the Secured Obligations since the date of
the most recent Financials delivered by Borrower to Bank.
(w) REG U et al. Borrower's execution and delivery of this Agreement or
any of the other Loan Documents does not and will not at any time during the
term hereof directly or indirectly violate or result in a violation of the
Securities Exchange Act of 1934, as amended, and Regulations U, G, T and X of
the Board of Governors of the Federal Reserve System (12 CFR 221, 207, 220 and
224, respectively), and Borrower does not own or intend to purchase or carry any
"margin security", as defined in such Regulations.
(x) Subsidiaries. Except as permitted pursuant to Section 9.5, Borrower
has and during the term hereof shall have no Subsidiaries.
(y) Affiliates. Borrower has no Affiliates, except as permitted pursuant
to Section 9.5, or as heretofore or hereafter disclosed in writing to Bank.
(z) Shareholders. Schedule 8.1(z) (as said schedule may be updated by
written notice from Borrower to Bank) sets forth all classes of stock of
Borrower, the shareholders thereof, the number of shares owned and how the
shares are held as of the date hereof. As of the date hereof, Borrower will not
be subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital stock and all of the
outstanding shares of Borrower's capital stock will be validly issued, fully
paid and nonassessable. Borrower has not violated any applicable federal or
state securities laws in connection with the offer, sale and issuance of any of
its capital stock. There are no agreements between Borrower's stockholders with
respect to the voting or transfer of Borrower's capital stock, except as
disclosed on Schedule 8.1(2).
(aa) Real Property. Borrower does not now own or at no time in the last
five (5) years has owned, any real property. Subject to the provisions of
Section 9.5, Borrower shall give Bank no less than thirty (30) days prior
written notice before Borrower acquires any real property and shall,
concurrently with the acquisition thereof grant to Bank a first mortgage on such
real property to secured the Secured Obligations.
(bb) Fiscal Year End. At all times during the term hereof, Borrower's
fiscal year will end December 31.
(cc) Disclosure. Neither this Agreement nor any other Loan Document nor
any statement, list, certificate or other document or information, nor any
schedules to this Agreement or any other Loan Document, delivered or to be
delivered to Bank in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make statements contained herein
or therein, in light of the circumstances in which they are made, not
misleading. Borrower has disclosed to Bank in writing any fact or circumstance
known to Borrower which has, or which could have an adverse effect on Borrower's
business, operations, Assets, condition (financial or otherwise) or Borrower's
ability to pay or perform the Secured Obligations.
8.2. Reaffirmation of Warranties and Representation. Each request for an
Advance made by Borrower pursuant to this Agreement or the Other Agreements
shall constitute (i) an automatic warranty and representation by Borrower to
Bank that there does not then exist an Event of Default or an Unmatured Default,
and (ii) a reaffirmation as of the date of said request for Advance that each
and every warranty and representation of Borrower contained in this Article 9
and other sections of this Agreement and in the Other Agreements is true and
correct in all material respects, except where such representation or warranty
specifically relates to an earlier date.
8.3. Survival of Warranties and Representations. Borrower covenants,
warrants and represents to Bank that all representations and warranties of
Borrower contained in this Agreement and the Other Agreements shall be true at
the time of Closing, and shall survive the execution, delivery and acceptance
hereof and thereof by the parties thereto
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and the closing of the transactions described herein and therein or related
hereto or thereto. Unless expressly limited by the terms of this Article 9, each
representation and warranty shall be deemed to be remade concurrently with each
Advance hereunder.
8.4. Year 2000 Compliance.
(a) The computer and management information systems of Borrower are
adequate for the conduct of Borrower's business as presently conducted and as
proposed to be conducted and there are no material requirements for systems
integration, upgrade or replacement, and there are no facilities or software
inadequacies that could reasonably be expected to have a material adverse effect
on the business of Borrower.
(b) Borrower will be Year 2000 Compliant on or before December 31, 1998
and at all times thereafter. As used in the preceding sentence, "Year 2000
Compliant" means the ability of the software and other information processing
capabilities of Borrower to correctly interpret and process all data in whatever
form so as to avoid errors that may otherwise occur because of the inability of
software or other information processing capabilities to recognize accurately
the year 2000 or subsequent dates.
(c) Any reprogramming required to permit the proper functioning of the
computer and management information systems of Borrower during and following the
year 2000 will be completed by December 31, 1998 and the cost of such
reprogramming is not expected to have a material adverse effect on the business
of Borrower.
9. COVENANTS AND CONTINUING AGREEMENTS.
9.1. Financial Covenants. Borrower shall:
(a) have Capital Funds greater than $3,500,000 at all times during the
term hereof, and
(b) have a Debt Service Ratio of no less than 1.75 to 1.0 measured at
Borrower's fiscal year end.
9.2. Affirmative Covenants. Borrower warrants and represents to and
covenants with Bank that Borrower shall, unless Bank otherwise consents thereto
in writing, do all of the following during the term hereof:
(a) Representation and Warranties. To the extent any representation or
warranty contained herein refers to an event or state of facts which exists on
the date hereof and shall exist during the term hereof or at the time of each
Advance, said representation or warranty shall be deemed to be an affirmative
covenant by Borrower to take all actions, omit to take such actions or cause
such actions to be taken which shall be necessary or desirable to cause such
representation or warranty to be true and accurate at all times during the term
hereof. To the extent any representation, warranty or covenant herein (including
the negative covenants set forth in Section 9.3) relates to any other Person it
shall be deemed to be a covenant of Borrower to cause such Person to comply with
or otherwise perform such representation, warranty or covenant, whether or not
Borrower has the legal, corporate or other ability to cause such compliance or
performance.
(b) Insurance. Borrower will at all times maintain or cause to be
maintained on the Equipment, Inventory, real property and Borrower's other
tangible assets, insurance against such risks ordinarily insured against by
other owners or users of such properties in similar businesses similarly
situated and in any event the following:
(i) Property Insurance: insurance covering the Equipment, Inventory,
Real Property and Borrower's other tangible assets in the event of fire,
lightning, windstorm, vandalism, malicious mischief and all other risks
normally covered by "all risk" coverage policies in Illinois in an amount,
subject to commercially reasonable deductibles, equal to 100% of the
replacement value thereof;
(ii) Commercial General Liability Insurance: comprehensive general
public liability insurance (including coverage for elevators and
escalators, if any, contractual liability, explosion, underground property,
19
and broad form property damage endorsement, against claims for bodily
injury, death or property damage occurring or caused by events occurring
on, in or about any real estate leased by Borrower, and adjoining streets
and sidewalks), in such minimum combined single limit amount as Bank shall
reasonably require, subject to standard deductibles;
(iii) Errors and Omissions Insurance. Comprehensive liability
insurance against claims for errors or omissions by Borrower in the
performance of its services, in such minimum single limit amount as Bank
shall reasonably request.
(iv) Workers' Compensation Insurance: Worker's Compensation and
employer's liability insurance covering Borrower's employees in such
amounts as is required by law; and
(v) Contents Insurance: Fire and Extended Coverage Insurance
(contents broad form) and Sprinkler Leakage Insurance on Borrower's
tangible personal property located on the premises of Borrower, and on all
improvements or betterments constructed by Borrower thereon, in amounts
sufficient, subject to standard deductibles, to fully insure such tangible
personal property.
All policies of insurance on the Collateral or otherwise required hereunder
shall be in form and with companies reasonably satisfactory to Bank. Borrower
shall deliver to Bank the original (or certified copy) of each policy of
insurance and, upon the request of Bank, evidence of payment of all premiums
therefor that had become due and payable and shall deliver renewals of all such
policies to Bank at least ten (10) days prior to their expiration dates. Such
policies of insurance shall contain an endorsement, in form and substance
reasonably acceptable to Bank, showing all losses payable to Bank or, in Bank's
reasonable discretion, Borrower shall execute a separate assignment thereof, in
form and substance reasonably acceptable to Bank. Bank shall be named as loss
payee, mortgagee and secured party in all policies of property insurance and as
an additional insured in all policies of liability insurance. Such endorsement
shall provide that the insurance companies will give Bank at least thirty (30)
days' prior notice before any such policy shall be materially modified or
canceled and that no act or default of Borrower or any other Person (other than
Bank) shall affect the right of Bank to recover under such policy in case of
loss or damage. Borrower hereby directs all insurers under such policies to pay
all proceeds payable thereunder directly to Bank; provided that so long as no
Event of Default has occurred and is continuing, Bank shall make available to
Borrower all proceeds of insurance in an amount not to exceed $250,000 per
occurrence. During such times that an Event of Default has occurred and is
continuing, Borrower irrevocably makes, constitutes and appoints Bank (and all
officers, employees or agents designated by Bank) as Borrower's true and lawful
attorney and agent-in-fact for the purpose of making, settling and adjusting
claims under such policies, endorsing the name of Borrower in writing or by
stamp on any check, draft, instrument or other item of payment for the proceeds
of such policies and for making all determinations and decisions with respect to
such policies, in each such case. If Borrower shall fail to obtain or to
maintain any of the policies required by this Section 9.2(b) or to pay any
premium relating thereto or to renew any such policies and to deliver evidence
of such renewal to Bank no later than ten (10) days prior to the expiration of
the existing policy, then Bank, without waiving or releasing any obligation or
default by Borrower hereunder and without notice to Borrower, may (but shall be
under no obligation to do so) obtain and maintain such policies of insurance and
pay such premiums and take any other action with respect thereto which Bank
deems advisable. Borrower acknowledges that premiums paid by Bank may be
greater than those which Borrower may have been able to negotiate. All sums so
disbursed by Bank, including costs relating thereto, shall be payable by
Borrower to Bank on demand and shall be additional Borrower's Liabilities.
(c) Financial Reports. Borrower shall keep books of account and prepare
financial statements and furnish to Bank the following (all of the foregoing and
following to be kept and prepared in accordance with generally accepted
accounting principles, in each case consistent with the Financials heretofore
delivered by Borrower to Bank, unless Borrower's independent certified public
accountants concur in any changes therein and such changes are disclosed in
writing to Bank):
(i) Annual. As soon as available, but not later than one hundred and
twenty (120) days after the close of each fiscal year of Borrower:
20
(A) financial statements of Borrower (including a statement of
cash flow, a balance sheet and profit and loss statement with
supporting footnotes) as at the end of such year and for the year then
ended all in form and detail as reasonably required by Bank, reviewed
or audited by a firm of independent certified public accountants
selected by the Borrower and reasonably acceptable to Bank; and
(B) projections for the next fiscal year, in form and detail
reasonably acceptable to Bank, prepared by Borrower's chief financial
officer or president or chairman of the board of directions, setting
forth the projected operating expenses, operating income, capital
expenditures, profit and loss for the next fiscal year.
(ii) Monthly Reports. As soon as practicable, but in any event
within twenty (20) days after the close of business on the last day of each
calendar month from and after the date hereof, financial statements of
Borrower (including a statement of cash flow, a balance sheet and profit
and loss statement) as at the end of such month, all in form and detail as
reasonably required by Bank, prepared by the chief financial officer of
Borrower and, if requested by Bank, an accounts payable aging report
indicating the invoice dates thereof and which accounts payable remain
unpaid thirty (30), sixty (60), ninety (90) and one hundred twenty (120)
days from such invoice date and listing the names of all applicable
creditors.
(iii) Borrowing Base Report. Concurrently with each request for an
Advance under the Loan (if requested by Bank), but in no event less often
than once each month delivered on or before the 20th day of such month, a
Borrowing Base Report, prepared by the chief financial officer or president
of Borrower, setting forth in form and detail reasonably acceptable to Bank
and on Bank's standard form, which shall include, as of the last Business
Day of the preceding month (or the date of the last Borrowing Base Report)
a detailed aged trial balance of all then existing Accounts, indicating the
invoice dates thereof and which such Accounts remain unpaid thirty (30),
sixty (60) and ninety (90) days from such invoice date and listing the
names of all applicable Account Debtors.
(iv) Other Information. Such other data and information (financial
and otherwise) as Bank, from time to time, may reasonably request bearing
upon or related to the Collateral, Borrower's financial condition and/or
result of operations.
(d) Records. Borrower shall keep accurate and complete Records relating
to the Collateral and the operation of Borrower's business which Records shall
be made available to Bank upon notice to Borrower in accordance with Section 4.2
(unless an Event of Default or an Unmatured Default has occurred and is
continuing in which event no notice shall be required) for Bank's inspection,
copying, verification or otherwise. Upon the request of Bank, Borrower shall
furnish with respect to any Account identified on any schedule, certificate or
report provided pursuant to this Agreement (i) a true and correct copy of the
invoice evidencing such Account and (ii) evidence of shipment or performance.
Borrower shall also deliver to Bank, upon demand, a copy of all documents,
including, without limitation, repayment histories, present status reports and
shipment reports, relating to the Accounts and such other matters and
information relating to the status of then existing Accounts as Bank shall
reasonably request.
(e) Pay Debts. Borrower shall pay or discharge or otherwise satisfy all
Indebtedness at or before maturity or before the same becomes delinquent,
provided that Borrower shall not be required to pay any Indebtedness which is
unsecured while the same is being contested by it in good faith and by
appropriate proceedings so long as Borrower shall have set aside on its books
reserves in accordance with generally accepted accounting principles with
respect thereto and title to any property of Borrower is not jeopardized.
(f) Payment of Charges. Borrower shall pay promptly when due all of the
Charges, provided that notwithstanding the foregoing, Borrower may permit or
suffer the Charges to attach to Borrower's Assets and may dispute, without prior
payment thereof, the Charges, on the conditions that (A) Borrower, in good
faith, shall be contesting the same in an appropriate proceeding, (B)
enforcement thereof against any Assets of Borrower shall be stayed and (C)
appropriate reserves therefor shall have been established on the Records of
Borrower in accordance with generally accepted accounting principles. In the
event Borrower, at any time or times hereafter, shall fail to pay the
21
Charges required herein, Borrower shall so advise Bank thereof in writing; Bank
may, without waiving or releasing any of Borrower's Obligations or any Event of
Default hereunder, in its sole and absolute discretion, at any time or times
thereafter, make such payment, or any part thereof, and take any other action
with respect thereto which Bank deems advisable. All sums so paid by Bank and
any expenses, including reasonable attorneys' fees, court costs, expenses and
other charges relating thereto, shall be part of Borrower's Liabilities, payable
by Borrower to Bank on demand.
(g) Corporate Existence. Borrower shall preserve and maintain its
corporate existence, rights, privileges and franchises in the jurisdiction of
its incorporation or organization, and qualify and remain qualified to do
business in each other jurisdiction in which such qualification is necessary in
view of its business or operations.
(h) Stock Ownership. At all times during the term hereof, Xxxx Xxxxx or a
trust of which Xxxx Xxxxx is the sole trustee, shall own no less than 51% of the
issued, outstanding and voting stock of Borrower.
(i) Compliance with Laws. Borrower shall comply with all laws, rules,
regulations and governmental orders (federal, state and local), including all
Environmental Laws, having applicability to it or to the business or businesses
at any time conducted by it, where the failure to so comply would have a
material adverse effect, either individually or in the aggregate, on the
business, condition (financial or otherwise) and assets, operations or prospects
of Borrower.
(j) Perform Obligations. Borrower shall duly and punctually pay and
perform each of its obligations under this Agreement and the Other Agreements in
accordance with the terms thereof.
9.3. Negative Covenants. Borrower warrants and represents to and
covenants with Bank that Borrower shall not, without Bank's prior written
consent thereto, which consent Bank may or may not give in its sole discretion,
concurrently or hereafter to do any of the following:
(a) Sale of Collateral. Except as expressly permitted pursuant to Section
6.2 and Section 9.5, Borrower shall not sell, lease or transfer any of
Borrower's Assets or the Collateral to any Person.
(b) Encumbrances. Except as permitted pursuant to Section 9.5 and the
Permitted Liens, Borrower shall not encumber, pledge, mortgage, permit, grant or
suffer a lien upon any of Borrower's Assets.
(c) Attachment. Borrower shall not permit or suffer any levy, attachment
or restraint to be made affecting any of its assets or the Collateral which such
levy, attachment or restraint has not been released within a reasonable period
of time.
(d) Receivers. Borrower shall not permit or suffer any receiver, trustee
or assignee for the benefit of creditors, or any other custodian to be appointed
to take possession of all or any of Borrower's assets or any of the Collateral.
(e) Adverse Transactions. Borrower shall not enter into any transaction
not in the ordinary course of business which materially adversely affects
Borrower's ability to repay Borrower's Liabilities or Indebtedness, or adversely
affects the Collateral.
(f) Transactions With Affiliates. Except as permitted pursuant to Section
9.5, Borrower shall not enter into any transactions not previously disclosed to
Bank, including, without limitation, the purchase, sale or exchange of property
or the rendering of any services, with any Affiliate, or enter into, assume or
suffer to exist any employment, management, administration, advisory or
consulting contract with any Affiliate or any officer, director or partner of
any Affiliate, except a transaction or contract which is in the ordinary course
of business, is otherwise permitted by this Agreement and is upon fair and
reasonable terms, consistent with prior practices, no less favorable than would
be obtained in a comparable arms-length transaction with a Person not an
Affiliate.
22
(g) Issue Power of Attorney. Borrower shall not, except pursuant to this
Agreement and the Other Agreements, issue any power of attorney or other
contract or agreement giving any Person power or control over the day-to-day
operations of Borrower's business.
9.4. Required Notices. In addition to those notices required elsewhere
in this Agreement, Borrower shall notify Bank promptly after obtaining knowledge
of:
(a) except as otherwise previously disclosed, any event or occurrence
which Borrower has determined has caused a material loss or decline in value of
the Collateral due to casualty or any other adverse occurrence and the estimated
(or actual, if available) amount of such loss or decline;
(b) the institution of any suit or administrative proceeding which, if
determined adversely to Borrower, is reasonably likely to adversely affect the
operations, financial condition or business of Borrower or which is reasonably
likely to adversely affect Bank's security interest in the Collateral;
(c) Borrower's becoming subject to any Charge, restriction, judgment,
decree or order which materially and adversely affects it business operations,
property, assets or financial condition;
(d) the commencement of any lockout, strike or walkout relating to any
labor contract to which Borrower is a party;
(e) in the event of any material default under any material Lease or the
occurrence of any event which constitutes or, with the giving of notice of the
passage of time, or both, would constitute an event of default under the terms
of any such Lease;
(f) as soon as possible and in any event within five (5) days after
Borrower shall have obtained knowledge of the occurrence of an Event of Default
or Unmatured Default, the written statement of the chief financial officer of
Borrower setting forth the details of such event and the action which Borrower
proposes to take with respect thereto.
9.5. Mergers and Acquisitions. Subject only to the limitations, terms and
conditions set forth in Section 9.5(a) through (e), Borrower shall have the
right to (i) merge or consolidate with or acquire any Person, (ii) acquire the
stock of another Person, (iii) acquire any, all, or substantially all of the
assets of another Person, (iv) assume or guarantee the Indebtedness of another
Person in connection with an Acquisition, and (v) acquire assets of another
Person subject to a lien or capitalized lease. The transactions identified in
subsections (i), (ii) and (iii) above are collectively referred to herein as an
"Acquisition."
(a) Borrower shall give Bank notice within five (5) days after the closing
of: (i) any Acquisition effected by merger or consolidation with or into another
Person, (ii) any Acquisition in which the consideration paid is more than
$500,000, (iii) any Acquisition in which Borrower acquires assets outside of the
continental United States, (iv) any Acquisition of the stock of another Person,
(v) any Acquisition pursuant to which Borrower acquires real estate, (vi) any
Acquisition if Borrower assumes the Indebtedness of another Person in an amount
in excess of $100,000.
(b) In the event an Acquisition is effected by a merger or consolidation
with or into another Person, Borrower shall be the surviving entity.
(c) In the event as a consequence of an Acquisition Borrower acquires
assets which are subject to a lien in favor of another lender, such lien shall
be a Permitted Lien as defined herein; provided that: (i) Borrower shall take
all actions which are reasonable and necessary to insure that such lien in favor
of a secured party, other than Bank, does not extend to any asset of Borrower
other than those acquired in such Acquisition, (ii) that Bank has and continues
to have a first, perfected security interest in all of Borrower's assets, other
than those acquired in the Acquisition, and (iii) to the extent permitted
pursuant to the mortgage, security agreement or other document creating the lien
in favor of the other secured party, Borrower shall grant or cause to be granted
to Bank a subordinated lien on such Assets.
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(d) In the event Borrower assumes the Indebtedness of another Person in
connection with an Acquisition, such Indebtedness shall be in the form of a
capitalized lease or other term loan, shall not be a revolving credit facility
of any nature, and no additional borrowings shall be made under any such credit
facility, without Bank's prior written consent.
(e) At all times, both before and after an Acquisition, Borrower shall be
in compliance with the covenants set forth in Section 9.1. No Acquisition shall
be permitted hereunder which creates a default of the covenants set forth in
Section 9.1.
10. DEFAULT
10.1. Events of Default. The occurrence of any one of the following
events shall constitute a default ("Event of Default") under this Agreement:
(a) if Borrower fails to pay Borrower's Liabilities, or any part thereof
on the due date thereof.
(b) Borrower breaches the covenants set forth in Sections 9.1, 9.2 (a),
(b), (c), (g), or (h) and/or 9.3, 9.4 or 9.5.
(c) Borrower shall default in the performance or observance of any other
of Borrower's Obligations (not constituting an Event of Default under any other
clause of this Section 10.1) and such default shall continue unremedied for a
period of five (5) days after Bank shall have delivered written notice thereof
to Borrower.
(d) if any representation or warranty on the part of Borrower contained in
this Agreement or the Other Agreements, or any document, instrument or
certificate delivered pursuant hereto or thereto shall have been incorrect in
any material respect when made or deemed made.
(e) if the Collateral, or any portion thereof, is attached, seized,
subjected to a writ of distress, warrant, or are levied upon, or come within the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors and the same is not terminated or dismissed within thirty (30) days
thereafter.
(f) if a petition under any section or chapter of the Bankruptcy Reform
Act of 1978, as amended, or any similar law or regulation shall be filed by
Borrower or if Borrower shall make an assignment for the benefit of its
creditors or if any case or proceeding is filed by Borrower for its dissolution
or liquidation.
(g) if Borrower is enjoined, restrained or in any way prevented by court
order from conducting all or any material part of its business affairs or if a
petition under any section or chapter of the Bankruptcy Reform Act of 1978, as
amended, or any similar law or regulation is filed against Borrower or if any
case or proceeding is filed against Borrower for its dissolution or liquidation
and such injunction, restraint or petition is not dismissed or stayed within
thirty (30) days after the entry or filing thereof.
(h) if an application is made by any Person other than Borrower for the
appointment of a receiver, trustee, or custodian for the Collateral, or any
other material portion of Borrower's assets and the same is not dismissed or
stayed within thirty (30) days after the application therefor.
(i) except as expressly permitted herein, if a notice of any Charge is
filed of record with respect to all or any of Borrower's assets, or if any
Charge becomes a lien or encumbrance upon the Collateral or any other of
Borrower's assets and the same is not released within thirty (30) days after the
same becomes a lien or encumbrance;
(j) the occurrence of an Event of Default under any of the Other
Agreements, which is not cured within the time, if any, specified therefor in
such Other Agreement.
24
(k) if Borrower fails to maintain its primary banking relationship,
including maintaining deposit balances, with Bank at any time during the term
hereof.
(l) if one or more judgments or decrees shall be entered against Borrower,
involving, individually, or in the aggregate, a liability of $500,000 or more
and all such judgments or decrees shall not have been vacated, discharged or
stayed pending appeal within thirty (30) days from the entry thereof.
(m) if this Agreement or any of the Other Agreements shall cease for any
reason to be in full force and effect (other than by reason of the satisfaction
of all of Borrower's Liabilities or voluntary release by Bank of any Other
Agreement) or Borrower or any other Person (other than Bank) shall disavow its
obligations thereunder, or shall contest the validity or enforceability of any
thereof.
(n) if Bank's lien or security interest in any Collateral, the value of
which exceeds $100,000 in the aggregate, shall for any reason cease to be a
legal, valid, perfected or enforceable first priority lien on and security
interest in such Collateral (other than by reason of the payment in full of all
obligations secured thereby or voluntary release by Bank of such Collateral).
(o) If Borrower or any ERISA affiliate (1) shall effect a complete or
partial withdrawal (as defined in ERISA Sections 4203 or 4205) from a
Multiemployer Plan, if such withdrawal could subject either the Borrower or any
ERISA Affiliate to liability; (2) shall fail to pay when due an amount that is
payable by it to the PBGC or to an Employee Benefit Plan; (3) has instituted
against it by a fiduciary of any Multiemployer Plan an action to enforce ERISA
Section 515 and such proceedings shall not have been dismissed within thirty
(30) days thereafter; (4) has imposed against it any tax under Code Section
4980B(a); (5) has assessed against it by the Secretary of Labor a civil penalty
with respect to any Employee Benefit Plan under ERISA Section 502(c) or 502(l);
(6) shall apply for a waiver of the minimum funding standards of the Code; or
(7) shall permit any other event or condition to occur or exist with respect to
an Employee Benefit Plan that could subject either the Borrower or any ERISA
affiliate to liability.
(p) A default by Borrower shall occur under any agreement, document or
instrument (other than this Loan Agreement or any of the other Loan Documents)
now or hereafter existing, to which Borrower is a party and the effect of such
default is reasonably likely to have a material adverse effect on the financial
conditions or business operations of Borrower.
(q) If Borrower is in default in the payment of any Indebtedness for
borrowed money in an aggregate principal amount outstanding in excess of $50,000
under any agreement (other than the Loan Documents), or is in breach of any
agreement evidencing such Indebtedness (other than any Loan Document) and the
effect of such default or breach, as the case may be, is to enable the holder
thereof then to accelerate the maturity of such Indebtedness, unless the same is
waived or otherwise ceases to exist.
(r) If Borrower dissolves, liquidates, or fails to maintain its corporate
existence or amends its articles of incorporation or by-laws in any material
respect, which, in Bank's reasonable discretion, would materially adversely
impact Borrower's ability to perform its obligations hereunder or Bank's
exercise of any right or remedy hereunder.
10.2. Remedies Cumulative. All of Bank's rights and remedies under this
Agreement and the Other Agreements are cumulative and non-exclusive.
10.3. Acceleration. Upon the occurrence an Event of Default and the
continuation thereof, without notice by Bank to or demand by Bank to Borrower,
Bank shall have no further obligation to and may then forthwith cease advancing
monies or extending credit to or for the benefit of Borrower under this
Agreement and the Other Agreements. Upon an Event of Default, without notice by
Bank to or demand by Bank to Borrower, Borrower's Liabilities shall be due and
payable, forthwith.
10.4. Remedies. Upon the occurrence of an Event of Default and the
continuation thereof, Bank, in its sole and absolute discretion, may:
25
(a) exercise any one or more of the rights and remedies of a secured party
under the Uniform Commercial Code of the relevant state or states and any other
applicable law upon default by a debtor;
(b) enter, with or without process of law and without breach of the peace,
any premises where the Collateral is or may be located, and without charge or
liability to Bank therefor seize and remove the Collateral from said premises
and/or remain upon said premises and use the same for the purpose of collecting,
preparing and disposing of the Collateral;
(c) sell or otherwise dispose of the Collateral at public or private sale
for cash or credit, provided, however, that Borrower shall be credited with the
net proceeds of such sale only when such proceeds are actually received by Bank;
or
(d) exercise any or all rights or remedies under any of the Other
Agreements.
10.5. Assemble Collateral. Upon the occurrence of an Event of Default
and the continuation thereof, Borrower, immediately upon demand by Bank, shall
assemble the Collateral and make it available to Bank at a place or places to be
designated by Bank which are reasonably convenient to Bank and Borrower.
Borrower recognizes that in the event Borrower fails to perform, observe or
discharge any of Borrower's Obligations, no remedy of law will provide adequate
relief to Bank, and agrees that Bank shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
10.6. Notice of Sale. Any notice required to be given by Bank of a sale,
lease, other disposition of the Collateral or any other intended action by Bank,
deposited in the United States mail, postage prepaid and duly addressed to
Borrower at its principal place of business specified in Section 11.16 not less
than ten (10) days prior to such proposed action, shall constitute commercially
reasonable and fair notice to Borrower thereof.
10.7. Postponement of Sale. Upon the occurrence of an Event of Default
and the continuation thereof, Borrower agrees that Bank may, if Bank deems it
reasonable, postpone or adjourn any such sale of the Collateral from time to
time by an announcement at the time and place of sale or by announcement at the
time and place of such postponed or adjourned sale, without being required to
give a new notice of sale. Borrower agrees that Bank has no obligation to
preserve rights against prior parties to the Collateral. Further, Borrower
waives and releases any cause of action and claim against Bank as a result of
Bank's possession, collection or sale of the Collateral, any liability or
penalty for failure of Bank to comply with any requirement imposed on Bank
relating to notice of sale, holding of sale or reporting of sale of the
Collateral, and, to the extent permitted by law, any right of redemption from
such sale.
10.8. Waiver of Bond. In the event Bank seeks possession of the
Collateral through replevin or other court process, Borrower hereby irrevocably
waives (a) any bond, surety or security required as an incident to such
possession, and (b) any demand for possession of the Collateral prior to
commencement of any suit or action to recover possession thereof.
10.9. Advances During Unmatured Default. Upon the occurrence of any
event set forth in Xxxxxxxx 00.0(x), (x), (x), (x), (x), (x), (x), (x), (x),
(x), or (p) (q) or (r) (without, in each of the foregoing, reference to any
notice or cure periods provided in such Sections, even though such event may not
yet constitute an Event of Default) or (ii) any other Event of Default, Bank
shall not be obligated to make any Advances, provided that, nothing contained
herein shall prohibit Bank from making any Advances.
10.10. Consent Does Not Create Custom. No authorization given by Bank
pursuant to this Agreement or the Other Agreements to sell any specified portion
of Collateral or any items thereof, and no waiver by Bank in connection
therewith shall establish a custom or constitute a waiver of the prohibition
contained in this Agreement against such sales, with respect to any portion of
the Collateral or any item thereof not covered by said authorization.
26
11. CONDITIONS PRECEDENT TO DISBURSEMENT
11.1. Necessary Actions. The obligation of Bank to make the Loans to
Borrower is subject to the further condition precedent that all proceedings
taken in connection with the transaction contemplated by this Agreement, and all
instruments, authorizations and other documents applicable thereto, shall be
reasonably satisfactory in form and substance to Bank and its counsel.
11.2. Conditions Precedent. In addition to the foregoing, prior to Bank
making of any and all Loans hereunder, all of the following shall have been
satisfied in a manner satisfactory to Bank:
(a) no change in the condition or operations, financial or otherwise, of
Borrower or any Affiliate, shall have occurred which change, in the reasonable
credit judgment of Bank, may have a material adverse effect on Borrower or such
Affiliate or on any of the Collateral;
(b) no litigation shall be outstanding or have been instituted or
threatened which Bank determines to be material against Borrower or any
Affiliate or any of the Collateral;
(c) all of the representations and warranties of Borrower set forth in
this Agreement and each of the Other Agreements to which Borrower as a party
shall be true and correct on the date of the contemplated Loan to the same
extent as originally made on such date;
(d) no Event of Default or Unmatured Default shall exist or be continuing;
and
(e) all UCC-1 financing statements and any other filings necessary to
perfect Bank's security interest in the Collateral shall have been filed in the
appropriate jurisdictions and Bank shall have received evidence, in form and
substance satisfactory to Bank thereof.
11.3. Attorneys' Fees and Expenses; Bank's Expenses. Borrower hereby
agrees that it shall reimburse Bank, as part of the Secured Obligations, for any
and all costs and expenses (including, without limitation, the reasonable fees
and expenses of any counsel, accountants, appraisers or other professionals)
reasonably incurred by Bank at any time, in connection with: (a) the
preparation, negotiation and execution of any amendment of or modification of
this Agreement or the Other Agreements; (b) any litigation, contest, dispute,
suit, proceeding or action (whether instituted by Bank, Borrower or any other
Person) in any way relating to the Collateral, this Agreement, the Other
Agreements, the Secured Obligations, or Borrower's affairs; (c) any attempt to
enforce any rights of Bank against Borrower or any other Person which may be
obligated to Bank by virtue of this Agreement or the Other Agreements,
including, without limitation, the Account Debtors; (d) any inspection,
verification, audit or appraisal of any of the Collateral to determine or verify
the existence of an Unmatured Default or Event of Default; (e) any cost or
expense reasonably incurred by Bank to administer the Loan hereunder or to
ascertain or verify the obligations and liabilities of the parties hereto; (f)
any action to protect, collect, sell, liquidate or otherwise dispose of the
Collateral; and (g) performing any of the obligations relating to or payment of
any Borrower's Liabilities or Borrower's Obligations hereunder in accordance
with the terms hereof.
12. MISCELLANEOUS
12.1. Modification. This Agreement and the Other Agreements may not be
modified, altered or amended except by an agreement in writing signed by
Borrower and Bank. Borrower may not sell, assign or transfer this Agreement or
the Other Agreements or any portion thereof, including, without limitation,
Borrower's rights, titles, interests, remedies, powers and/or duties thereunder.
Borrower hereby consents to Bank's sale, assignment, transfer or other
disposition, at any time and from time to time hereafter, of this Agreement or
the Other Agreements, or of any portion thereof, including, without limitation,
Bank's rights, titles, interests, remedies, powers and/or duties. Borrower
expressly agrees that for purposes of this Agreement and each and every other
Loan Document: (i) this Agreement and each and every other Loan Document shall
be a "credit agreement" under the Illinois Credit Agreements Act, 815 ILCS 160/1
et. seq. (the "Act"); (ii) the Act applies to this transaction including, but
not limited to, the execution of this
27
Agreement and each and every other Loan Document; and (iii) any action on or in
any way related to this Agreement and each and every other Loan Document shall
be governed by the Act.
12.2. Strict Compliance. Bank's failure at any time or times hereafter
to require strict performance by Borrower of any provision of this Agreement
shall not waive, affect or diminish any right of Bank thereafter to demand
strict compliance and performance therewith. Any suspension or waiver by Bank of
an Event of Default by Borrower under this Agreement or the Other Agreements
shall not suspend, waive or affect any other Event of Default by Borrower under
this Agreement or the Other Agreements, whether the same is prior or subsequent
thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of Borrower
contained in this Agreement or the Other Agreements and no Event of Default by
Borrower under this Agreement or the Other Agreements shall be deemed to have
been suspended or waived by Bank unless such suspension or waiver is by an
instrument in writing signed by an officer of Bank and directed to Borrower
specifying such suspension or waiver.
12.3. Severability. If any provision of this Agreement or the Other
Agreements or the application thereof to any Person or circumstance is held
invalid or unenforceable, the remainder of this Agreement and the Other
Agreements and the application of such provision to other Persons or
circumstances will not be affected thereby and the provisions of this Agreement
and the Other Agreements shall be severable in any such instance.
12.4. Successors and Assigns. This Agreement and the Other Agreements
shall be binding upon and inure to the benefit of the successors and assigns of
Borrower and Bank, provided that this Agreement and no interest or right
hereunder may be assigned by Borrower without prior written consent which may be
withheld in Bank's sole and exclusive discretion.
12.5. Loan Agreement Controls. The provisions of the Other Agreements
are incorporated in this Agreement by this reference thereto. Except as
otherwise provided in this Agreement and except as otherwise provided in the
Other Agreements by specific reference to the applicable provision of this
Agreement, if any provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in the Other Agreements, the provision
contained in this Agreement shall govern and control.
12.6. Termination. Except for the obligations set forth in Section 11.10
hereof and as may be expressly provided in any Other Agreement, this Agreement
and all of the covenants, agreements and obligations of Borrower set forth
herein and in the Other Agreements and the liens and security interests granted
Bank pursuant hereto and the Other Agreements shall automatically terminate when
all accrued but unpaid Secured Obligations hereunder have been paid in full and
either (a) the term hereof has expired, or (b) the Loan has been reduced to zero
and Bank's commitment to make additional Advances has been terminated. In
addition, Bank shall promptly take, at the sole cost and expense of Borrower,
such other actions, and shall execute and/or file such documents, as Borrower
may reasonably request from time to time to evidence the termination of the
liens granted hereunder and the payment in full of the Secured Obligations,
including, without limitation, the return to Borrower of any Special Collateral
or other Collateral in the Bank's possession, the filing of Uniform Commercial
Code termination statements, a termination of the Lock Box Agreement, releases
of the liens granted by the Other Agreements, cancellation of the Note and the
execution and delivery of notices to any Account Debtor or any lessor who has
received a notice of the liens granted hereunder.
12.7. Liability Prior to Termination. Except to the extent provided to
the contrary in this Agreement and in the Other Agreements, no termination or
cancellation (regardless of cause or procedure) of this Agreement or the Other
Agreements shall in any way affect or impair the powers, obligations, duties,
rights and liabilities of Borrower or Bank in any way or respect relating to any
transaction or event occurring prior to such termination or cancellation with
respect to Collateral and/or any of the undertakings, agreements, covenants,
warranties and representations of Borrower or Bank contained in this Agreement
or the Other Agreements.
12.8. Waiver of Notice. Except as otherwise specifically provided in
this Agreement, Borrower waives any and all notice or demand which Borrower
might be entitled to receive with respect to this Agreement or the Other
Agreements by virtue of any applicable statute or law, and waives presentment,
demand and protest and notice of presentment, protest, default, dishonor, non-
payment, maturity, release, compromise, settlement, extension or renewal
28
of any or all commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by Bank on which
Borrower may in any way be liable and hereby ratifies and confirms whatever Bank
may do in this regard.
12.9. Designated Person. Until Bank is notified by Borrower to the
contrary in accordance with Section 11.16, the signature upon this Agreement or
upon any of the Other Agreements of any partner, manager, employee or agent of
Borrower, or of any other Person designated in writing to Bank by any of the
foregoing, or of a "Designated Person" constituting one of the Other Agreements
shall bind Borrower and be deemed to be the duly authorized act of Borrower.
12.10. Indemnification. Borrower, upon demand, shall defend, indemnify
and hold harmless Bank, its successors, assigns, partners and affiliates and
each of their respective officers, shareholders, directors, agents, employees
and representatives (collectively the "Indemnitees"), from and against all
liabilities and reasonable expenses (including but not limited to attorneys'
fees), judgments, fines or penalties, which any Indemnitee may incur that
results from any claim, action, suit or proceeding (whether civil, criminal,
administrative or investigative, including any associated appeals) in or under
the laws of any Governmental Authority, whether or not such Indemnitee is a
party to the same, or is threatened to become a party to the same, which arise
due to: (i) the negotiation, execution, delivery or performance of any Loan
Document; (ii) any violation by Borrower, or any of its Affiliates, of any
Environmental Law; (iii) any Environmental Claim arising out of the management,
use, control, ownership or operation of property or Assets by Borrower or any of
its Affiliates, including, without limitation, all on site and off-site
activities, transportation and storage involving Materials of Environmental
Concern; (iv) the breach of any Loan Document, and/or the occurrence of any
Event of Default and (v) any third party claims relating to the conduct of the
Borrower's business. Borrower's obligations under this Section shall survive the
termination of the Loan Documents and the payment of the Obligations.
12.11. Prior Agreements. Except as otherwise provided herein, this
Agreement and the Other Agreements supersede in their entirety any other
agreement or understanding between Bank and Borrower with respect to loans and
advances made by Bank and all commitments of Bank in connection therewith.
12.12. Knowledge. As used herein the phrase "to the best of Borrower's
knowledge" or words of such import shall mean all knowledge, including, actual
knowledge and knowledge of matters which any reasonable person in such position
knew or should have known after due inquiry, of the respective officers,
directors and managers of Borrower or, if applicable, Seller.
12.13. Notice. Any and all notices given in connection with this
Agreement shall be deemed adequately given only if in writing and addressed to
the party for whom such notices are intended at the address set forth below. All
notices shall be sent by personal delivery, Federal Express or other overnight
messenger service, first class registered or certified mail, postage prepaid,
return receipt requested or by other means at least as fast and reliable as
first class mail. A written notice shall be deemed to have been given to the
recipient party on the earlier of (a) the date it shall be delivered to the
address required by this Agreement; (b) the date delivery shall have been
refused at the address required by this Agreement; or (c) with respect to
notices sent by mail, the date as of which the postal service shall have
indicated such notice to be undeliverable at the address required by this
Agreement. Any and all notices referred to in this Agreement, or which either
party desires to give to the other, shall be addressed as follows:
(a) If to Bank, at: Old Kent Bank
000 X. Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx,
Senior Vice President
29
(b) If to the Borrower, at: Lante Corporation
000 X. Xxxxx Xx.
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxx, President
The above addresses may be changed by notice of such change, mailed as
provided herein, to the last address designated.
12.14. Section Titles, etc. The Section titles and table of contents, if
any, contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto. All references herein to Section, paragraphs, clauses and other
subdivisions refer to the corresponding Sections, paragraphs, clauses and other
subdivisions of this Agreement; and the words "herein", "hereof", "hereby",
"hereto", "hereunder", and words of similar import refer to this Agreement as a
whole and not to any particular Section, paragraph, clause or subdivision
hereof. All Exhibits which are referred to herein or attached hereto are hereby
incorporated by reference.
12.15. Representation by Counsel. Borrower hereby represents that it has
been represented by competent counsel of its choice in the negotiation and
execution of this Agreement and the Other Agreements; that it has read and fully
understood the terms hereof; Borrower and its counsel have been afforded an
opportunity to review, negotiate and modify the terms of this Agreement, and
that it intends to be bound hereby. In accordance with the foregoing, the
general rule of construction to the effect that any ambiguities in a contract
are to be resolved against the party drafting the contract shall not be employed
in the construction and interpretation of this Agreement.
12.16. Plural, Singular. The singular shall be deemed to include the
plural and the plural to include the singular.
12.17. Waiver by Borrower. EXCEPT AS OTHERWISE PROVIDED FOR IN THIS
AGREEMENT OR REQUIRED BY LAW, BORROWER WAIVES (a) PRESENTMENT, DEMAND AND
PROTEST, NOTICE OF PROTEST, NOTICE OF PRESENTMENT, DEFAULT, NON-PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL
PAPER AND GUARANTIES AT ANY TIME HELD BY BANK ON WHICH BORROWER MAY IN ANY WAY
BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER BANK MAY DO IN THIS REGARD;
(b) ALL RIGHTS TO NOTICE AND A HEARING PRIOR TO BANK'S TAKING POSSESSION OR
CONTROL OF, OR TO BANK'S REPLEVY, ATTACHMENT OR LEVY UPON THE COLLATERAL OR ANY
BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING BANK TO
EXERCISE ANY OF BANK'S REMEDIES; AND (c) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT, EXTENSION AND EXEMPTION LAWS.
12.18. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED FOR ACCEPTANCE
BY BANK IN CHICAGO, ILLINOIS AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF ILLINOIS. BORROWER HEREBY (a) IRREVOCABLY SUBMITS,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS, OVER ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT; (b)
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT BORROWER MAY EFFECTIVELY DO SO, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT; (c) AGREES THAT, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTIONS BY SUIT
ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW; AND (d) TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR
PROCEEDING AGAINST BANK OR ANY OF BANK'S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS
OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT
IN ANY COURT OTHER THAN ONE LOCATED IN XXXX COUNTY, ILLINOIS. NOTHING IN THIS
SECTION SHALL AFFECT OR IMPAIR BANK'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER
PERMITTED BY LAW OR BANK'S RIGHT TO BRING
30
ANY ACTION OR PROCEEDING AGAINST BORROWER OR BORROWER'S PROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION.
12.19. Amendment. This Agreement amends, consolidates and restates in
their entirety the Existing Loan Agreements. The Borrower's Liabilities and
Borrower's Obligations evidenced hereby represent a continuation and restatement
of all liabilities and obligations of Borrower to Bank evidenced by the Existing
Loan Documents. The Borrower's Liabilities and Borrower's Obligations evidenced
by the Existing Loan Agreement shall be deemed to be a continuing indebtedness
and nothing contained herein shall be deemed to be payment, release and
satisfaction or novation of the indebtedness evidenced by the Existing Loan
Agreement or a release of any collateral heretofore pledged to secure payment
and performance on the indebtedness evidenced by the Existing Loan Agreement,
all such collateral hereby expressly pledged to secure the payment and
performance of the obligations hereunder as if fully set forth herein.
12.20. Release of Claims. Borrower releases Bank from any and all causes
of action or claims which Borrower may now or hereafter have for any asserted
loss or damage to Borrower claimed to be caused by or arising from: (a) any
failure of Bank to protect, enforce or collect in whole or in part any of the
Collateral; (b) Bank's notification to any Account Debtor of Agent's security
interests in the Accounts and Special Collateral; (c) Bank's ' directing any
Account Debtor to pay any sums owing to Borrower directly to Bank; and (d) any
other act or omission to act on the part of Bank, its officers, agents or
employees, except for willful misconduct or gross negligence. Borrower hereby
acknowledges, agrees and affirms that it possesses no claims, defenses, offsets,
recoupment or counterclaims of any kind or nature against or with respect to the
enforcement of the Existing Loan Agreement, or any other Loan Document or any
amendments thereto (collectively, the "Claims"), nor does Borrower now have
knowledge of any facts that would or might give rise to any Claims. If facts
now exist which would or could give rise to any Claim against or with respect to
the enforcement of the Existing Agreement, or any other Loan Document, as
amended by the amendments thereto, Borrower hereby unconditionally, irrevocably
and unequivocally waives and fully releases any and all such Claims as if such
Claims were the subject of a lawsuit, adjudicated to final judgment from which
no appeal could be taken and therein dismissed with prejudice.
12.21. Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY LAW,
BORROWER AND BANK EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER AGREEMENTS OR
ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF EITHER PARTY IN CONNECTION HEREWITH. BORROWER HEREBY
EXPRESSLY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR BANK TO
MAKE THE LOAN.
THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK
31
IN WITNESS WHEREOF, this Amended and Restated Loan Agreement is dated for
reference purposes only as of December 29, 1998.
BORROWER:
--------
LANTE COOPERATION
/s/ Xxxx Xxxxx
By:________________________________________
Xxxx Xxxxx, President
BANK:
----
OLD KENT BANK
/s/ Xxxxx X. Xxxxxxx
By:________________________________________
Xxxxx X. Xxxxxxx, Senior Vice President
32
FIRST AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment") is
dated for reference purposes only as of June 15, 1999 by and between Old Kent
Bank, a national banking association ("Bank") and Lante Corporation
("Borrower").
RECITALS:
---------
A. Bank has made financial accommodations to Borrower evidenced by that
certain Amended and Restated Loan and Security Agreement dated as of December
29, 1998 (the "Existing Loan Agreement").
B. Borrower intends enter into a series of transactions described below.
C. Borrower has requested that Bank consent to such transactions and
amend the Existing Loan Agreement to reflect the revised capital structure and
other modifications made necessary as a result of such transactions.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Incorporation of Recitals. Borrower hereby represents and warrants to
Bank that the foregoing Recitals are (a) true and accurate, (b) an integral part
of this Amendment, and (c) hereby incorporated into this Amendment and made a
part hereof. All terms capitalized but not expressly defined herein shall, for
purposes hereof, have the respective meanings set forth in the Existing Loan
Agreement.
2. Amendment to Existing Loan Agreement.
(a) Section 1.1(o) is hereby deleted in its entirety and the
following is substituted therefor:
(o) "Capital Funds": at the time of determination, an amount
equal to (i) total Shareholder's equity (including capital stock, preferred
stock, additional paid in capital and retained earnings after deducting
treasury stock) of Borrower, less the sum of the total amount of intangible
assets, which for purposes of this definition, shall include, without
limitation, General Intangibles, prepaid expenses, security deposits, any
unamortized debt, discount and expense, unamortized deferred charges and
goodwill, and any
officer, shareholder or employee advances and receivables all as determined
in accordance with generally accepted accounting practices.
(b) Sections 7.1, 7.2 and 7.3 are hereby deleted in their entirety.
Borrower hereby represents and warrants that no later than five (5) Business
Days after the date hereof, all Subordinated Notes shall be paid in full.
(c) Schedule 8.1(z) and Schedule 8.1(2) are hereby deleted in their
entirety and Schedule 8.1(z) hereto is substituted therefor.
(d) Section 9.1(a) is hereby deleted in its entirety and the
following is substituted therefor:
(a) have Capital Funds in an amount equal to no less than
$3,500,000 at all times during the term hereof prior to June 15, 1999 and
have Capital Funds in an amount no less than $7,500,000 on June 30, 1999
and at all times thereafter, (Capital Funds will not be measured during the
period June 15, 1999 through and including June 29, 1999); and
(e) Section 9.2.(h) is hereby deleted in its entirety.
3. Consent. Borrower has concurrently herewith described a series of
transactions to be effected, including inter alia: (i) a distribution to its
shareholders, including a distribution of cash and accounts receivable, (ii)
amendment of Borrower's capital structure to authorize one class of common stock
and one class of preferred stock, (iii) the sale of a portion of the preferred
stock so authorized, and (iv) amendment of Borrower's articles of incorporation,
by-laws, the termination of the existing shareholder's agreement and entering
into a new shareholder's agreement, all as more fully described in the
resolutions of Borrower's directors and shareholders attached hereto as Exhibit
A. Bank hereby consents to such transactions, and acknowledges that the entering
into and performance of agreements effecting such transactions shall not be an
Event of Default under any provision of the Existing Loan Agreement, including
but not limited to Sections 8.1(p), 8.1(q), 8.1(r), 8.1(z), 9.1(a), 9.2(h) or
9.3(f). Within ten (10) Business Days after the date hereof, Borrower shall
deliver to Bank a true, accurate and complete copy of all material documents
relating to and effecting the transactions described above.
4. Expenses. Upon demand by Bank therefor, Borrower shall reimburse Bank
for all reasonable costs, fees and expenses incurred by Bank or for which Bank
becomes obligated, in connection with the negotiation, preparation and
conclusion of this Amendment, including without limitation, reasonable
attorney's fees, costs
2
and expenses, search fees, title insurance policy fees, costs and expenses,
filing and recording fees and all taxes payable in connection with this
Amendment.
5. Waiver of Claims. Borrower hereby acknowledges, agrees and affirms
that it possess no claims, defenses, offsets, recoupment or counterclaims of any
kind or nature against or with respect to the enforcement of the Loan Agreement
or any other Loan Document or any amendments thereto (collectively, the
"Claims"), nor does Borrower now have knowledge of any facts that would or might
give rise to any Claims. If facts now exist which would or could give rise to
any Claim against or with respect to the enforcement of the Loan Agreement or
any other Loan Document, as amended by the amendments thereto, Borrower hereby
unconditionally, irrevocably and unequivocally waive and fully releases any and
all such Claims as if such Claims were the subject of a lawsuit, adjudicated to
final judgment from which no appeal could be taken and therein dismissed with
prejudice.
6. Amendment Supplementary. This Amendment is supplementary to the
Existing Loan Agreement and the other Loan Documents, as amended by the
amendments thereto. All of the provisions of the Loan Documents, including
without limitation, the right to declare principal and accrued interest due for
any cause specifically in the Loan Documents, shall remain in full force and
effect except as herein or concurrently herewith expressly modified. The Loan
Documents and all rights and powers created thereby and thereunder are in all
respects ratified and confirmed. From and after the date hereof, the Existing
Loan Agreement shall be deemed to be amended and modified as herein provided,
but, except as so amended and modified, the Existing Loan Agreement shall
continue in full force and effect and the Existing Loan Agreement and this
Amendment shall be read, taken and construed as one and the same instrument. On
and after the date hereof, the term "Loan Agreement" or "Loan and Security
Agreement" and all references to amendments thereof as used in the notes and the
other Loan Documents shall mean the Existing Loan Agreement as amended hereby.
7. Jurisdictions. THIS AMENDMENT HAS BEEN DELIVERED FOR ACCEPTANCE BY
BANK IN CHICAGO, ILLINOIS AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) OF THE
STATE OF ILLINOIS. BORROWER HEREBY (i) IRREVOCABLY SUBMITS, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED IN CHICAGO, ILLINOIS, OVER ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY MATTER ARISING FROM OR RELATED TO THIS AMENDMENT; (ii) IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT BORROWER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT; (iii) AGREES THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, A
FINAL JUDGMENT IN ANY SUCH ACTION
3
OR PROCEEDING IN ANY SUCH COURT SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW; AND (iv) TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AGREES NOT TO
INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST BANK OR ANY OF BANK'S
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY, CONCERNING ANY MATTER
ARISING OUT OF OR RELATING TO THIS AMENDMENT IN ANY COURT OTHER THAN ANY STATE
OR FEDERAL COURT LOCATED IN XXXX COUNTY, ILLINOIS. NOTHING IN THIS SECTION SHALL
AFFECT OR IMPAIR BANK'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY
LAW OR BANK'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR
BORROWER'S PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
8. Trial by Jury. TO THE EXTENT PERMITTED BY LAW, BORROWER AND BANK EACH
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AMENDMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY IN CONNECTION
HEREWITH. BORROWER HEREBY EXPRESSLY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT FOR BANK TO MAKE THE LOANS.
9. Representations. This Amendment shall be binding upon and inure to
the benefit of the parties hereby and their respective successors and assigns.
To induce Bank to enter into this Amendment, Borrower hereby represent and
warrant to Bank that:
(a) the execution and delivery of this Amendment, and the performance by
Borrower of its obligations under this Amendment and the other Loan Documents as
amended, are within each Borrower's corporate and limited liability company
powers, as applicable, have been duly authorized by all necessary corporate and
limited liability company action, as applicable, have received all necessary
governmental approval (if any shall be required) and do not and will not
contravene or conflict with any provisions of law or the Articles of
Incorporation, By-Laws, Articles of Organization of Operating agreement of any
Borrower (as applicable) or of any other agreement binding upon Borrower;
(b) this Amendment, and each other instrument executed by Borrower
concurrently herewith, is the legal, valid and binding obligation of Borrower,
enforceable against Borrower in accordance with their respective terms, except
as enforcement thereof may be subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights
4
generally, and to the general principles of equity (regardless of whether such
enforcement is sought in a proceeding in equity or at law);
(c) all of the representations and warranties of Borrower made in the Loan
Documents are true and correct as of the date hereof, except where such
representation or warranty specifically relates to an earlier date; and
(d) as of the date hereof no Event of Default or Unmatured Default under
the Loan Documents exists.
THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK.
5
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Loan
Agreement dated for reference purposes only as of June 15, 1999.
BORROWER:
Lante Corporation
/s/ Xxxx Xxxxx
By:________________________________________
President
Title:_____________________________________
BANK:
Old Kent Bank
/s/ Xxxxx X. Xxxxxxx
By:________________________________________
Xxxxx X. Xxxxxxx, Xx. V.P.
Title:_____________________________________
6
EXHIBIT A
WRITTEN CONSENT OF THE BOARD OF DIRECTORS
OF
LANTE CORPORATION
The undersigned, being all of the members of the Board of Directors of
Lante Corporation, an Illinois corporation (the "Company"), do hereby
unanimously consent and agree to the adoption of the following recitals and
resolutions pursuant to Section 8.45 of the Business Corporation Act of 1983 of
the State of Illinois, in lieu of holding a special meeting of the Board of
Directors:
Amendment to Articles of Incorporation and Recapitalization
-----------------------------------------------------------
WHEREAS, the Board of Directors deems it desirable and in the best
interests of the Company and its shareholders that the Articles of Incorporation
of the Company be amended to, among other things, change the capital stock
structure of the Company to authorize one class of common stock and one class of
preferred stock; and
WHEREAS, in connection therewith, the Board of Directors deem it desirable
and in the best interests of the Company and its shareholders that the issued
and outstanding shares of voting Class A Common Stock, $.01 par value per share
of the Company (the "Class A Common"), and the non-voting Class B Common
Stock, $.01 par value per share (the "Class B Common"), be converted into and
exchanged for shares of the Common Stock, $0.01 par value per share (the "New
Common") on a one for one basis.
NOW, THEREFORE, BE IT RESOLVED, that the Articles of Incorporation of the
Company be amended to, among other things, change the capital stock structure
of the Company one class of common stock and one class of preferred stock.
FURTHER RESOLVED, that the Amendment to the Articles of Incorporation of
the Company, in substantially the form attached hereto as Exhibit A (the.
"Amendment"), is hereby approved.
FURTHER RESOLVED, that President or any Vice President, together with the
Secretary or any Assistant Secretary of the Company be, and each of them hereby
is, authorized, empowered and directed, in the name and on behalf of the
Company, to execute, deliver and file or cause to be filed with the Illinois
Secretary of State the Amendment, in substantially the form approved herein,
with such changes therein as the signing officers shall approve, the approval of
which shall be conclusively evidenced by the execution, delivery and filing
thereof.
FURTHER RESOLVED, that the appropriate officers of the Company are hereby
authorized, empowered and directed, in the name and on behalf of the Company, to
arrange for the recording of the Amendment with the Xxxx County Recorder.
FURTHER RESOLVED, that upon filing of the Amendment, each issued and
outstanding share of Class A Common shall be converted into and exchanged for
one share of New Common.
FURTHER RESOLVED, that upon filing of the Amendment, each issued and
outstanding share of Class B Common shall be converted into and exchanged for
one share of New Common.
FURTHER RESOLVED, that upon receipt by the Company of the certificates
representing the issued and outstanding Class A Common and Class B Common from
the holders thereof, the proper officers of the Company shall execute and
deliver to each such holder a new certificate or certificates representing the
ownership of the New Common into which the outstanding Class A Common and Class
B Common have been converted, and the New Common represented by such certificate
or certificates shall be deemed to be fully paid and non-assessable.
FURTHER RESOLVED, that there shall be no change to the paid-in capital of
the Company in connection with the foregoing Amendment and conversion of shares.
FURTHER RESOLVED, that the foregoing recitals and resolutions shall be,
presented to the shareholders of the Company for their approval and adoption.
Equity Financing
----------------
WHEREAS, the Company desires to enter into that certain Series A
Convertible Preferred Stock Purchase Agreement (the "Agreement") by and among
the Company and the investors named herein (the "Investors"), pursuant to
which the Company will sell to the Investors, and the Investors will purchase
from the Company, 3,536,069 shares of Series A Convertible Preferred Stock, par
value $0.01 per share, of the Company (the "Convertible Preferred") for an
aggregate purchase price of $25,000,000, upon the terms and conditions set
forth in the Agreement; and
WHEREAS, it is condition precedent to the consummation of the Agreement
that the Company creates a new series of preferred stock, to be known as the
"Series A Convertible Preferred Stock"; and
WHEREAS, it is condition precedent to the consummation of the Agreement,
that the Company enter into that certain Second Shareholders Agreement by and
among the Company and the shareholders of the Company (the "Second
Shareholders Agreement"); and
WHEREAS, it is condition precedent to the consummation of the Agreement,
that the Company enter into that certain Registration Agreement by and among the
Company and the Investors (the "Registration Agreement"); and
WHEREAS, the Board of Directors deem it desirable and in the best interests
that the Company enter into the Agreement, the Second Shareholders Agreement and
the Registration Agreement.
NOW, THEREFORE, BE IT RESOLVED, that the Agreement, in the form attached
hereto as Exhibit B, is hereby approved.
FURTHER RESOLVED, that the creation of the "Series A Convertible Preferred
Stock" on terms and conditions set forth on Exhibit C is hereby authorized and
approved.
FURTHER RESOLVED, that the Second Shareholders Agreement, in the form
attached hereto as Exhibit D. is hereby approved.
FURTHER RESOLVED, that the Registration Agreement, in the form attached
hereto as Exhibit E, is hereby approved.
FURTHER RESOLVED, that the Company is hereby authorized to enter into,
execute, deliver and perform each of the Agreement, the Second Shareholders
Agreement and the Registration Agreement (collectively, the "Equity Documents"),
each in substantially the form approved herein.
FURTHER RESOLVED, that the appropriate officers of the Company are hereby
authorized, empowered and directed, in the name and on behalf of the Company, to
enter into, execute, deliver and perform each of the Equity Documents, each in
substantially the form approved herein, with such changes therein as the signing
officer shall approve, the approval of which shall be conclusively evidenced by
his or her execution and delivery thereof.
FURTHER RESOLVED, that the issuance of Convertible Preferred, in the
amounts and to the Investors as set forth in the Equity Documents, is hereby
authorized and approved, and upon issuance, such shares shall be deemed to be
fully paid and non-assessable.
FURTHER RESOLVED, in connection with the issuance of the Convertible
Preferred, the Company shall reserve for issuance at all times at least
that number of shares of New Common as is necessary to convert all of the
shares of Convertible Preferred that are issued and outstanding into
shares of New Common according to the terms set forth in the Amended
Articles of Incorporation of the Company.
Form of Stock Certificates
--------------------------
RESOLVED, that the forms of stock certificates attached hereto as Exhibit F
are hereby approved and adopted as the form of stock certificate to be used in
connection with the issuance of the New Common and Convertible Preferred
respectively,
Amendment to Bylaws
-------------------
WHEREAS, the Board of Directors deems it necessary and desirable to amend
and restate the Bylaws of the Company in order to affect (i) the size of the
board and the method for altering the size of the board, (ii) the requirements
for calling a shareholders' meeting, (iii) the ability of any director to call a
meeting of the board of directors and (iv) the frequency of required board
meetings.
NOW, THEREFORE, BE IT RESOLVED, that the Amended and Restated Bylaws of the
Company in the form attached hereto as Exhibit G are hereby adopted and
approved.
Establishment of Committees
---------------------------
WHEREAS, the Board of Directors has determined that it is in the best
interests of the Company to establish each of (i) an Executive Committee, (ii) a
committee to assist with audit matters, (iii) a committee to handle compensation
matters and (iv) a committee to handle the search for a Chief Executive Officer
of the Company.
NOW, THEREFORE, BE IT RESOLVED, that there is hereby constituted an
Executive Committee of the Board of Directors, consisting of three directors,
which Executive Committee shall have and may exercise such powers in the
management of the business and affairs of the Corporation [as the Board of
Directors may from time to time delegate or assign].
FURTHER RESOLVED, that the initial members of such Executive Committee
shall be Xxxx Xxxxxx, Xxxx Xxxxx and Xxxxx Xxxxx, each of whom shall serve until
his respective successor is appointed by the Board.
FURTHER RESOLVED, that two members shall constitute a quorum at a meeting for
transacting business of the Executive Committee.
FURTHER RESOLVED, that the Executive Committee shall (i) keep regular
minutes of its proceedings and report same to the Board of Directors and (ii)
fix its own rules of procedures.
FURTHER RESOLVED, that the Executive Committee shall meet from time to time
on call of any of its members at stated times. Notice of any meeting of the
Executive Committee shall be given not less than twenty-four (24) hours before
the time of the meeting by mail, telegraph, facsimile, electronic mail or
telephone and no such notice need state the business proposed to be transacted
at the meeting. No notice of the time or place of any meeting of the Executive
Committee need be given to any member thereof who attends in person or who, in a
writing, executed and filed with the records of the meeting, either before or
after the holding thereof, waives such notice.
FURTHER RESOLVED, that there is hereby constituted a committee to assist
with audit matters (an "Audit Committee"), the functions of which shall be as
follows:
1. To recommend the independent public accountants to the Board of
Directors;
2. To review the scope of the independent public accountants'
examinations;
3. To review the compensation of the independent public
accountants;
4. To consider the results of the independent public accounts' review of
internal accounting controls and suggestions for improvements;
5. To discuss matters of concern to the independent public accounts
resulting from the audit;
6. To review changes in accounting principles in the financial
statements; and
7. To review non-auditing services performed for the corporation by
the independent public accountants.
FURTHER RESOLVED, that the initial members of such Audit Committee shall be
Xxxx Xxxxxxxx, Xxxx Xxxxxx and Xxxx Xxxxxxx each of whom shall serve until his
respective successor is appointed by the Board.
FURTHER RESOLVED, that there is hereby constituted a committee to
handle compensation matters (a "Compensation Committee"), the functions of
which shall be as follows:
1. To review and make recommendations upon proposals by management as to
compensation, bonuses, officers' severance arrangements and other
benefits and policies respecting such matters for the officers of the
corporation.
2. To serve as the committee to administer the 1998 Stock Option Plan.
FURTHER RESOLVED, that the initial members of such Compensation Committee
shall be Xxxx Xxxxx, Xxxxxx Xxxxxxxx and Xxxx Xxxxxxx, each of whom shall serve
until his respective successor is appointed and shall have qualified.
FURTHER RESOLVED, that there is hereby constituted a committee to
assist in the search for a Chief Executive Officer of the Company (a "CEO
Search Committee"), the functions of which shall be to review and make
recommendations upon proposals by management as to potential CEO candidates
for the corporation.
FURTHER RESOLVED, that the initial members of such CEO Search Committee
shall be Xxxx Xxxxxx, Xxxx Xxxxx, Xxxx Xxxxxxxx and Xxxxx Xxxxx, each of
whom shall serve until his or her respective successor is appointed by the
Board.
Plan of Recapitalization
------------------------
WHEREAS, the Board of Directors has determined that It is in the best
interests of the Company that the Company exchange each of its outstanding
Convertible Subordinated Notes Due 2007 (the "Notes") for shares of New Common
of the Company.
FURTHER RESOLVED, that the Company is hereby authorized to enter into,
execute, deliver and perform the Plan of Recapitalization in the form attached
as Exhibit H, by and among the Company and each holder of the outstanding Notes,
in order to effectuate the exchange of Notes for shares of New Common, in
substantially the form approved herein.
FURTHER RESOLVED, that the appropriate officers of the Company are hereby
authorized, empowered and directed, in the name and on behalf of the Company, to
enter into, execute, deliver and perform the Company's obligations under the
Plan of Recapitalization, in substantially the form approved herein, with such
changes therein as the signing officer shall approve, the approval of which
shall be conclusively evidenced by his or her execution and delivery thereof.
FURTHER RESOLVED, that the issuance of New Common, in the amounts and to
the holders of the Notes as set forth in the Plan of Recapitalization, is hereby
authorized and approved, and upon issuance, such shares shall be deemed to be
fully paid and non-assessable.
Acceleration of Vesting under Certain Option Agreements
--------------------------------------------------------
WHEREAS, the Board of Directors deems it to be in the best interests of the
Company, in the event of a Change of Control (as such term is defined in the
Shareholders Agreement), to accelerate the vesting options held by directors,
advisors and certain employees.
NOW, THEREFORE, BE IT RESOLVED, that in the event of a Change of Control
(as such is defined in the Second Shareholders Agreement) of the Company, all of
stock options of the Company now held by Xxxxx Smaller, Xxxxx Xxxxxxx, Xxxx Xxxx
and any member of the Board or any member of the Company's Advisory Board, shall
automatically become immediately fully vested and fully exercisable.
FURTHER RESOLVED, that the Company is hereby authorized to enter into,
execute, deliver and perform each Amendment to Nonqualified Stock Option
Agreement in the form attached as Exhibit I, by and among the Company and each
such option holder in substantially the form approved herein.
FURTHER RESOLVED, that the appropriate officers of the Company are hereby
authorized, empowered and directed, in the name and on behalf of the Company, to
enter into, execute, deliver and perform the Company's obligations under each
Amendment to Nonqualified Stock Option Agreement in substantially the form
approved herein, with such changes therein as the signing officer shall approve,
the approval of which shall be conclusively evidenced by his or her execution
and delivery thereof.
Acceleration of Vesting, under Certain Restricted Stock Agreements
-----------------------------------------------------------------
WHEREAS, the Board of Directors deems it to be in the best interests of the
Company, in the event of a Change of Control (as such term is defined in the
Second Shareholders Agreement), to accelerate the vesting of certain restricted
stock held by directors and advisors.
FURTHER RESOLVED, that the Amendment to Restricted Stock Agreement for each
of Xxxxxx Xxxxxxxx, Xxxx Xxxxx, Xxxxxxx Xxxx, Xxxxxx Xxxxxxxx, Xxxx Xxxxxxxx and
Xxxx Xxxxxx, which provide that in the event of a Change of Control (as such
term is defined in the Shareholders Agreement) of the Company, all restricted
shares of the Company held by each of the aforementioned individuals shall
automatically become immediately and fully vested.
FURTHER RESOLVED, that the Company is hereby authorized to enter into,
execute, deliver and perform each Amendment to Restricted Stock Agreement in the
form attached as Exhibit J, by and among the Company and each such option holder
in substantially the form approved herein.
FURTHER RESOLVED, that the appropriate officers of the Company are hereby
authorized, empowered and directed, in the name and on behalf of the Company, to
enter into, execute deliver and perform the Company's obligations under each of
the Amendment to Restricted Stock Agreements in substantially the form approved
herein, with such changes therein as the signing officer shall approve, the
approval of which shall be conclusively evidenced by his or her execution and
delivery thereof.
Distribution of Funds for Tax Liabilities
-----------------------------------------
WHEREAS, the Company is currently treated as an Subchapter S corporation
under the Code; and
WHEREAS, the Company has resolved to distribute sufficient funds to all
shareholders to pay the shareholders' resulting tax liabilities as a result of
the Company's Subchapter S corporation status.
NOW, THEREFORE, BE IT RESOLVED, that the Company pay up to $400,000 in
dividends to its shareholders of record as June 17, 1999 in order to pay their
resulting tax liability as a result of the Company's prior performance and the
Company's Subchapter S Corporation status.
FURTHER RESOLVED, that the appropriate persons are authorized and directed
to take such actions as may be necessary or appropriate to implement such
distribution.
Noncompete Agreement with Xxxx Xxxxx
------------------------------------
WHEREAS, it is condition precedent to the consummation of the Agreement,
that the Company enter into that certain Confidentiality and Noncompete
Agreement by and among the Company and Xxxx Xxxxx (the "Xxxxx Noncompete
Agreement"); and
WHEREAS, the Board of Directors deem it desirable and in the best interests
that the Company enter into the Xxxxx Noncompete Agreement.
NOW, THEREFORE, BE IT RESOLVED, that the Xxxxx Noncompete Agreement, in the
form attached hereto as Exhibit K, is hereby approved.
General Authority
-----------------
FURTHER RESOLVED, that the appropriate officers of the Company are hereby
authorized, empowered and directed, in the name and on behalf of the Company to
take such steps and do all acts and things, including, without limitation, the
execution and delivery of any additional agreement, document, certificate or
instrument, that is contemplated under, or necessary or appropriate in
connection with, the foregoing recitals and resolutions and the transactions
contemplated thereby, each such additional agreement, document, certificate or
instrument to be in form and content acceptable to the signing officer, his or
her approval of which shall be conclusively evidenced by his or her execution
and delivery thereof.
Ratification of Acts
--------------------
FURTHER RESOLVED, that any and all actions taken by any officer or director
of the Company in the name and on behalf of the Company in negotiating,
executing, attesting or acknowledging any agreement, document, instrument or
arrangement in connection with the transactions contemplated in the foregoing
recitals and resolutions are hereby ratified, approved and confirmed.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Counterparts
------------
FURTHER RESOLVED, that this consent may be signed in any number of
counterparts, each of which shall be deemed an original, and all of which when
taken together shall be deemed to be a single document.
Dated: June __, 1999
------------------------------ ------------------------------
Xxxx Xxxxxx Xxxx Xxxxxxxx
------------------------------ ------------------------------
Xxxx Xxxxx Xxxxxx Xxxxxxxx
Being all of the Members of the Board of Directors
WRITTEN CONSENT OF THE SHAREHOLDERS
OF
LANTE CORPORATION
-----------------
The undersigned, being shareholders of Lante Corporation, an Illinois
corporation (the "Company"), do hereby consent and agree to the adoption of the
following recitals and resolutions pursuant to Section 7.10(a)(i) of the
Business Corporation Act of 1983 of the State of Illinois, in lieu of holding a
special meeting of the shareholders:
Amendment to Articles of Incorporation and Recapitalization
-----------------------------------------------------------
WHEREAS, the Board of Directors has determined that it is in the best
interests of the Company and its shareholders that the Articles of Incorporation
of the Company be amended to, among other things, change the capital stock
structure of the Company to authorize one class of common stock and one class of
preferred stock; and
WHEREAS, in connection therewith, the Board of Directors has determined
that it is in the best interests of the Company and its shareholders that the
issued and outstanding shares of the voting Class A Common Stock, $.01 par value
per share of the Company (the "Class A Common"), and the non-voting Class B
Common Stock, $.01 par value per share (the "Class B Common"), be converted into
and exchanged for shares of the Common Stock, $0.01 par value per share (the
"New Common") on a one for one basis; and
WHEREAS, the shareholders deem it desirable and in their best interests
that the Articles of Incorporation of the Company be amended as recommended by
the Board of Directors.
NOW, THEREFORE, BE IT RESOLVED, that the Articles of Incorporation of the
Company be amended to, among other things, change the capital stock structure of
the Company to authorize one class of common stock and one class of preferred
stock.
FURTHER RESOLVED, that the Amendment to the Articles of Incorporation of
the Company, in substantially the form attached hereto as Exhibit A (the
"Amendment"), is hereby approved.
FURTHER RESOLVED, that President or any Vice President, together with the
Secretary or any Assistant Secretary of the Company be, and each of them hereby
is, authorized, empowered and directed, in the name and on behalf of the
Company, to execute, deliver and file or cause to be filed with the Illinois
Secretary of State the Amendment, in substantially the form approved herein,
with such changes therein as the signing officers shall approve, the approval of
which shall be conclusively evidenced by the execution, delivery and filing
thereof.
FURTHER RESOLVED, that the appropriate officers of the Company are hereby
authorized, empowered and directed, in the name and on behalf of the Company, to
arrange for the recording of the Amendment with the Xxxx County Recorder.
FURTHER RESOLVED, that upon filing of the Amendment, each issued and
outstanding share of Class A Common shall be converted into and exchanged for
one share of New Common.
FURTHER RESOLVED, that upon filing of the Amendment, each issued and
outstanding share of Class B Common shall be converted into and exchanged for
one share of New Common.
FURTHER RESOLVED, that upon receipt by the Company of the certificates
representing the issued and outstanding Class A Common and Class B Common from
the holders thereof, the proper officers of the Company shall execute and
deliver to each such holder a new certificate or certificates representing the
ownership of the New Common into which the outstanding Class A Common and Class
B Common have been converted, and the New Common represented by such certificate
or certificates shall be deemed to be fully paid and non-assessable.
FURTHER RESOLVED, that there shall be no change to the paid-in capital of
the Company in connection with the foregoing Amendment and conversion of shares.
General Authority
-----------------
FURTHER RESOLVED, that the appropriate officers are hereby authorized,
empowered and directed to take all steps and do all acts and things, including,
without limitation, the execution and delivery of documents, as are or may
become necessary or appropriate to effect the purposes and intents of the
foregoing recitals and resolutions and the transactions contemplated thereby.
Ratification of Acts
--------------------
FURTHER RESOLVED, that any and all actions taken by any officer or
director of the Company in the name and on behalf of the Company in negotiating,
executing, attesting or acknowledging any agreement, document, instrument or
arrangement in connection with the transactions contemplated in the foregoing
recitals and resolutions are hereby ratified, approved and confirmed.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Counterparts
------------
FURTHER RESOLVED, that this Written Consent may be signed in any number
of counterparts, each of which shall be deemed an original, and all of which
when taken together shall be deemed to be a single document.
Dated: June __, 1999
-------------------------------------- --------------------------------------
Xxxxx Smaller Xxxxxxxx Xxxxxxxxxx
-------------------------------------- --------------------------------------
Xxxx Xxxxxx Xxxxxx Xxxxxxxx
-------------------------------------- --------------------------------------
Xxxx Xxxxx Xxxx Xxxxxx
-------------------------------------- --------------------------------------
Xxxxxxx Xxxx Xxxx Xxxxxx
-------------------------------------- --------------------------------------
Xxxx Xxxxxxxx Xxx Xxxxx
-------------------------------------- --------------------------------------
Xxxx Xxxxxxxx Xxxx Xxxxx
-------------------------------------- --------------------------------------
Xxxx Xxxxx, individually and Xxxxx or Xxxx Xxxxx
as Trustee of each of the Xxxx Xxxxx
Irrevocable Trust and the Xxxxxx Xxxxx
Irrevocable Trust
-Being shareholders of the Company-
Exhibit A
---------
Amendment to Articles of Incorporation
--------------------------------------
EXHIBIT A
---------
Article Four of the Corporation's Articles of Incorporation is deleted and
the following is inserted in lieu thereof:
ARTICLE FOUR:
Paragraph 1. The authorized shares shall be:
Class Par Value Per Share Number of Shares Authorized
----- ------------------- ---------------------------
Common $.01 50,000,000
Preferred $.01 10,000,000
Paragraph 2. The preferences, qualifications, limitations and restrictions
and the special or relative rights of the shares of each class are:
Common Shares
-------------
Each Common Share shall be entitled to one (1) vote in each matter
submitted to a vote of shareholders. Subject to the rights of holders of any
class or series of Preferred Shares, the board of directors of the corporation
may declare a dividend on the Common Shares and the holders of Common Shares
will share ratably in such dividend in proportion to the number of shares held
by each. Subject to the right of holders of any class or series of Preferred
Shares, in the event of any voluntary or involuntary liquidation, dissolution,
or winding up of the corporation, and after distribution in full of the
preferential amounts to be paid to the holders of any class or series of
Preferred Shares, the remaining assets of the corporation shall be distributed
ratably among the holders of Common Shares in proportion to the number of shares
held by each.
Preferred Shares
----------------
The Preferred Shares authorized in Paragraph 1 of this Article Four may be
issued from time to time in one or more series with such distinctive serial
designations; and
(a) may have such voting powers, full or limited, or may be without
voting powers and may have such sinking fund provisions;
(b) may be subject to redemption at such time or times and at such
prices;
(c) may be entitled to receive such dividends (which may be cumulative
or noncumulative) at such rate or rates, on such conditions, and at such
times, and payable in preference to, or in such relation to, the dividends
payable on any other class or classes or series of shares;
(d) may have such rights and preferences upon dissolution of, or upon
any distribution of the assets of, the corporation;
(e) may be made convertible into, or exchangeable for, shares of any
other class or classes or of any other series of the same or any other
class or classes or series of shares of the corporation, at such price or
prices or at such rates of exchange, and with such adjustments; and
(f) shall have such other designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof,
as shall be permitted by statute and hereafter be stated and expressed in the
resolution or resolutions providing for the issue of such Preferred Shares from
time to time adopted by the board of directors pursuant to authority so to do
which is hereby vested in the board of directors."
SCHEDULE 8.1(z)
Schedule of Shareholders of Lante Corporation following consummation of
all transactions contemplated in Section 3.
--------------------------------------------------------
Series A Convertible Preferred Stock holders:
Frontenac VII Limited Partnership - 2,492,086 shares
Frontenac Masters VII Limited Partnership - 124,604 shares
Dell USA, L.P. - 707,214 shares
Total Series A Convertible Preferred Stock issued - 3,323,904 shares
--------------------------------------------------------
Common Stock holders:
Xxxx Xxxxx - 6,912,500 shares
Xxxx Xxxxx Irrevocable Trust - 656,250 shares
Xxxxxx Xxxxx Irrevocable Trust - 656,250 shares
Xxxx Xxxxx - 196,875 shares
Xxxxx Smaller - 188,737 shares
Xxxxx and Xxxx Xxxxx - 50,000 shares
Xxxxxxxx Xxxxxxxxxx - 1,000,000 shares
Xxxx Xxxxxx - 500,000 shares
Xxxxxx Xxxxxxxx - 400,000 shares
Xxxx Xxxxx - 302,000 shares
Xxxx Xxxxxx - 200,000 shares
Xxxxxxx Xxxx - 300,000 shares
Xxxx Xxxxxx - 200,000 shares
Xxxx Xxxxxxxx - 300,000 shares
Xxx Xxxxx - 100,000 shares
Xxxx Xxxxxxxx - 100,000 shares
Total Common Stock issued - 12,062,612 shares
----------------------------------------------------
