AMENDED AND RESTATED CREDIT AGREEMENT
Exhibit
10.1
AMENDED
AND RESTATED CREDIT AGREEMENT
This
Amended and Restated Credit Agreement is made as of April 30, 2007, which amends
and restates that certain Credit Agreement dated December 27th, 2005, as amended
(this “Credit
Agreement”)
among
CASTLE PINES CAPITAL LLC, a Delaware limited liability company (“CPC”),
having
its chief executive office located at 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxx 00000; INX
INC.,
a Delaware corporation, (“INX”
or
“Reseller”),
having
its chief executive office located at 0000 Xxxxx Xxxx Xxxxxxx, Xxxxxxx, Xxxxx
00000
and
VALERENT, INC., a Delaware corporation, having its chief executive office
located at Xxxxx Xxxx Xxxxxxx, Xxxxxxx, Xxxxx 00000 (“VALERENT”).
Unless
otherwise defined within this Credit Agreement, capitalized terms have the
meaning set forth in Section
25,
below.
WHEREAS,
Reseller
has applied to CPC for a credit facility; and
WHEREAS,
CPC is
willing to accommodate the request for credit upon and subject to the terms,
conditions and provisions of the Documents (defined below); and
WHEREAS,
Reseller
has informed CPC that all of the assets of Valerent, have been sold and as
such,
Valerent should no longer be a party to this Credit Agreement, and CPC is
willing to release Valerent as a party to this Credit Agreement, subject to
the
terms and conditions set forth herein;
NOW,
THEREFORE,
in
consideration of the premises and for other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, Reseller and CPC
hereby mutually covenant and agree as follows:
1. Extensions
of Credit.
Subject
to the terms of this Credit Agreement together with the attached Financial
Covenants Amendment to Credit Agreement and Paydown Amendment to Credit
Agreement (collectively, this “Agreement”),
CPC
has made a discretionary line of credit up to a maximum aggregate amount of
$50,000,000 outstanding funded indebtedness (the “Line
of
Credit”)
available to Reseller. The Line of Credit may be used to enable Reseller to
purchase inventory from CPC approved vendors (“Vendors”).
Up to
a maximum aggregate amount of $10,000,000 of the Line of Credit may be used
at
Reseller’s election, to pay for Financed Inventory on the Extended Payment Due
Date or may be used for revolving credit loans for general working capital
purposes (the “Revolving
Credit Commitment”).
CPC's
decision to advance funds shall be made by CPC in its reasonable discretion.
CPC
may combine all of CPC's advances to Reseller or on Reseller's behalf, whether
under this Agreement or any other agreement between CPC and Reseller, together
with all finance charges, fees and expenses related thereto, to make one debt
owed by Reseller.
2. Financing
Terms.
(a) |
Financed
Inventory - General.
Upon the terms and conditions set forth herein, CPC agrees to
finance:
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Reseller’s
purchases of Inventory from Vendors (“Financed
Inventory”),
for
which payment shall be due on the Payment Due Date;
Upon
agreeing to finance an item of Financed Inventory, CPC will send Reseller a
TS,
identifying such Financed Inventory and if not otherwise provided herein, the
interest rate applicable to such Financed Inventory.
Upon
Reseller’s election to pay for Financed Inventory on the Extended Payment Due
Date, CPC will send Reseller a CPC Extended Pay Notification.
Reseller
may elect to remit payment for Financed Inventory on the Extended Payment Due
Date up to the maximum amount available under the Revolving Credit Commitment
(i.e., the Revolving Credit Commitment minus
all
outstanding Revolving Credit Loans), which Indebtedness qualifying thereunder
shall be assessed interest at the Extended Payment Rate.
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(b) |
Revolving
Credit Loans.
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(i)
General
Terms.
Subject
to the terms of this Agreement, during the availability period described in
subsection 2(d) below, CPC will make an advance (individually a “Revolving
Credit Loan”
and,
collectively, the “Revolving
Credit Loans”)
from
time to time, in an aggregate principal amount not to exceed the lesser of
(A)
the Revolving Credit Commitment or (B) the Borrowing Base (as defined in
subsection 2(b)(ii) below) (the “Revolving
Credit Availability”).
During
the availability period, Reseller must repay principal amounts borrowed as
provided in subsection 2(f) below. Principal repaid may be reborrowed. CPC
may
apply payments received from Reseller under this subsection to the Indebtedness
in the order and the manner as CPC, in its discretion, may
determine.
(ii)
Borrowing
Base.“Borrowing
Base”
means
an
amount, determined by CPC from time to time, equal to the sum of:
(A)
85% of
the total outstanding balance owed with respect to Eligible Accounts,
plus
(B)
100%
of the value of all Financed Inventory; plus
(C)
75% of
other Accounts approved by CPC in its sole discretion.
In
determining the value of Financed Inventory to be included in the Borrowing
Base, CPC will use the lower of (X) Reseller’s cost, or (Y) Reseller’s estimated
market value.
(c) |
Availability
Period.
Revolving Credit Loans are available between the date of this Agreement
and the Termination Date (as defined in Section
17
below).
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(d) |
Conditions
to Availability of Revolving Credit Loans.
In
addition to the items required to be delivered to CPC under Section
5,
“Covenants” and Section
7,
“Financial Information and Notices” of this Agreement, contemporaneously
with a request for Revolving Credit Loans, or at such times as may
be
requested by CPC, Reseller shall promptly deliver to CPC a Borrowing
Base
Certificate setting forth the Eligible Accounts, all Financed Inventory.
All Revolving Credit Loans made under this Agreement shall be conclusively
presumed to have been made to, at the request of, and for the benefit
of
Reseller when deposited to the credit of Reseller or otherwise disbursed
in accordance with the instruction of Reseller in accordance with
the
terms and conditions of this
Agreement.
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(e) |
Interest
Rate (Revolving Credit Loans).
The
interest rate applicable to Revolving Credit Loans is equal to the
Prime
Rate plus One-Half of One Percent
(0.50%).
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(f) |
Repayment
Terms (Revolving Credit
Loans).
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(i)
Reseller will pay interest on any outstanding Indebtedness under the Revolving
Credit Loans each
month, commencing April, 2007, as billed by CPC.
(ii)
Reseller will repay in full, all principal and any unpaid interest or other
charges outstanding under the Revolving Credit Loans no later than the
Termination Date; except with respect to any Advance as an Overline (defined
in
subsection 2(h) below).
(iii)
Reseller may prepay the Revolving Credit Loans in full or in part at any time
without any penalty or premium. The prepayment will be applied to the most
remote payment of principal due under this Agreement.
(g) |
Overlines.
Reseller may request and CPC may be willing in its sole and absolute
discretion to make Advances to Reseller in excess of the Line of
Credit
(each an “Overline”
and collectively, the “Overlines”).
The aggregate amount of permitted Overlines and the duration of time
such
Overlines may be available to Reseller shall be communicated to Reseller
via a separate written communication from CPC, the terms of which
shall be
incorporated herein by reference.
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3. Security
Interest. Reseller
hereby grants to CPC a security interest in all of the Collateral as security
for all Indebtedness.
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4. Representations
and Warranties.
Reseller
represents and warrants to CPC on the date hereof, and shall be deemed to
represent and warrant to CPC on each date on which an Advance is made to
Reseller hereunder, that:
(a)
Reseller (i) is in good standing in its state of organization identified in
the
preamble to the Credit Agreement, (ii) is qualified to transact business as
a
foreign organization, and is in good standing under the laws of, all
jurisdictions in which it is required by applicable law to maintain such
qualification and good standing except to the extent that the failure to qualify
or maintain good standing could not reasonable be expected to have a Material
Adverse Effect, (iii) does not conduct business under any trade styles or trade
name(s) except as listed in Exhibit
B
attached
hereto, (iv) has all the necessary authority to enter into and perform this
Credit Agreement, and such agreement and performance will not violate Reseller’s
Organizational Documents or any law, regulation or agreement binding upon
it;
(b)
Reseller (i) keeps its records respecting accounts and chattel paper at its
chief executive office or at such other office of Reseller located in the State
of Texas which Reseller has identified to CPC in writing, (ii) maintains
Collateral solely at Permitted Locations;
(c)
this
Agreement correctly sets forth (i) Reseller’s true legal name, (ii) the type of
Reseller’s organization, and (iii) Reseller’s state of
organization;
(d)
all
information supplied by Reseller in writing to CPC in connection with this
Agreement, including all information within the Documents, regarding Accounts,
financial, credit or accounting statements and application for credit, is true,
correct and complete in all material respects; all financial statements
furnished to CPC in connection with such application or hereunder have been
prepared in accordance with GAAP and fairly present in all material respects
the
financial condition and results of operations of Reseller as of the dates and
for the period indicated herein; Reseller has no material, contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments,
or
unrealized or anticipated losses from any unfavorable commitments except as
referred to or reflected in such financial statements; there has been no
material adverse changes in the business, condition (financial or otherwise),
operations, prospects, or properties of Reseller since the effective date of
the
most recent financial statements referred to in Section
7;
(e)
all
advances and other transactions hereunder are for lawful commercial
purposes;
(f)
Reseller has good title to all Collateral;
(g)
Reseller is not an “investment company” within the meaning of the Investment
Company Act of 1940, as amended;
(h)
there
are no actions or proceedings pending or threatened against Reseller which
could
reasonably be expected to have a Material Adverse Effect;
(i)
Reseller has provided CPC with a copy of Reseller’s Organizational Documents,
and will provide any subsequent amendments thereto bearing indicia of filing
from the appropriate governmental authority, if applicable, and such other
documents as CPC may reasonably request from time to time;
(j)
none
of the proceeds resulting from this Agreement, and (ii) those loans described
in
Section
2(b)(i),
will be
used directly or indirectly to fund a personal loan to or for the benefit of
a
director or executive officer of Reseller; and
(k)
there
is no fact which Reseller has not disclosed to CPC in writing which could
materially adversely affect the properties, business or financial condition
of
Reseller, or any of the Collateral, or which it is necessary to disclose in
order to keep the foregoing representations from being misleading.
5. Covenants.
From
the
date hereof and until the payment and performance in full of all of the
Indebtedness, Reseller covenants with CPC that:
a. |
Until
sold as permitted by this Agreement, Reseller shall own all Financed
Inventory and Accounts free and clear of all liens, security interests,
claims and other encumbrances, whether arising by agreement or operation
of law (collectively "Liens")
other than (i) Liens in favor of other persons with respect to which
CPC
shall have first consented in writing, (ii) any Liens existing on
the
Closing Date with respect to leased equipment, (iii) Liens for taxes,
fees, assessments or other governmental charges or levies, either
not
delinquent or being contested in good faith by appropriate
proceedings
and
for which Reseller maintains adequate reserves,
provided the same have no priority over any of CPC’s security interests,
(iv) Liens arising from judgments, decrees or attachments arising
from
circumstances that do not constitute a Default hereunder, for which
Reseller maintains adequate reserves and are inferior to any lien
of CPC,
(v) other Liens not described above arising in the ordinary course
of
business and not having or not reasonably likely to have a material
adverse effect on Reseller and which are inferior to any lien of
CPC,
(clauses (i) through (v) above, collectively, “Permitted
Liens”).
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b. |
Reseller
will: (1) keep all Collateral at Permitted Locations and keep all
tangible
Collateral in good order, repair and operating condition and insured
as
required herein; (2) promptly file all tax returns required by law
and
promptly pay all taxes, fees, and other governmental charges for
which it
is liable, including without limitation all governmental charges
against
the Collateral; (3) permit CPC and its designees, upon reasonable
advance
notice, to inspect the Collateral during normal business hours and
at any
other time CPC deems desirable (provided, however, that upon a Default,
CPC may inspect the Collateral at such times as CPC determines is
necessary or desirable in its sole discretion); (4) keep complete
and
accurate records of its business, including inventory and sales,
and
permit CPC and its designees to inspect and copy such records upon
request; (5) furnish CPC with such additional information regarding
the
Collateral and Reseller's business and financial condition as CPC
may from
time to time reasonably request (including without limitation financial
statements and projections more frequently than set forth above);
(6)
immediately notify CPC of any material adverse change in Reseller's
business or condition (financial or otherwise) or in any Collateral;
(7)
execute all documents CPC requests to perfect and maintain CPC's
security
interest in the Collateral; (8) at all times be duly organized, existing,
in good standing, qualified and licensed to do business in each
jurisdiction in which the nature of its business or property so requires;
(9) notify CPC of the commencement of any material legal proceedings
against Reseller or any guarantor; (10) use the proceeds of the Revolving
Credit Facility only to refinance an existing line of credit or to
provide
general working capital finance; and (11) comply with all applicable
laws,
rules and regulations.
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c. |
Lockbox.
Commencing on the date of this Credit Agreement, Reseller shall cause
to
be deposited directly all cash, checks, notes, drafts or other similar
items relating to or constituting proceeds of or payment made in
respect
of any and all Accounts into lock boxes or lock box accounts in Reseller’s
or CPC’s name (collectively, the “Lock
Box Accounts”)
by notifying each account debtor in writing to send each such payment
directly to such lock box. On or before the date of this Credit Agreement,
each bank at which the Lock Box Accounts are held, shall have entered
into
tri-party lock box agreements (the “Lock
Box Account Agreements”)
with CPC and Reseller, in form and substance acceptable to CPC. Each
such
Lock Box Account Agreement shall provide, among other things, that
such
bank executing such agreement has no rights of setoff or any other
claim
against such Lock Box Account, other than for payment of its service
fees
and other charges directly related to the administration of such
account;
and
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Deposit
Account Control Agreement.
Reseller
may maintain in its name, deposit accounts (“Operating
Accounts”)
at a
bank or banks reasonably acceptable to CPC in which CPC will perfect the
security interest granted under the terms of this Credit Agreement. On or before
the date of this Credit Agreement, each bank in which Reseller maintains an
Operating Account shall have entered into a tri-party Deposit Account Control
agreement (each, a “Deposit
Account Control Agreement”)
with
CPC and Reseller, in form and substance acceptable to CPC.
Each
of
the Lock Box Account Agreement and the
Deposit
Account Control Agreement shall contain provisions which permit CPC to assert
“control” (as such term is defined in the UCC) upon an event of
Default.
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d. |
Reseller
will not: (1) use (except for demonstration for sale), rent, lease,
sell,
transfer, consign, license, encumber or otherwise dispose of Collateral
except for sales of inventory in the ordinary course of Reseller's
business or to dispose of obsolete inventory; (2) sell inventory
to an
affiliate; (3) make any change in the principal nature of its business,
(4) be a party to a merger, consolidation or wherein Reseller is
not the
surviving entity; (5) change its name or conduct business under a
trade
style or trade name other than those listed in Exhibit
A without
giving CPC at least 30 days' prior written notice thereof; (6) change
its
chief executive office or office where it keeps its records with
respect
to accounts or chattel paper; (7) change the state in which it is
organized (except upon giving CPC at least 30 days' prior written
notice
thereof); (8) grant a security interest to any third party in any
Financed
Inventory that is superior or pari passu with the security interest
granted to CPC under this Agreement; (9) grant a security interest
to any
third party in any Accounts, other than a Permitted Lien; or (10)
store
Financed Inventory with any third party, except in
the ordinary course of business consistent with Reseller’s past
practices
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e. |
Reseller
will notify CPC promptly of any change in the truth or accuracy of
any
representation or warranty in Section
4
hereof.
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f. |
At
the time of each advance of credit under the terms of this Agreement,
each
representation and warranty set forth in Section
4
hereof will be true and correct.
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6. Insurance.
Reseller
will keep the Collateral insured for its full insurable value under an “all
risk” property insurance policy with a company acceptable to CPC, naming CPC as
a loss payee as its interest may appear. All insurance proceeds received by
CPC
in
respect
of inventory which is damaged, lost or stolen may
be
retained by CPC, in its sole discretion, for application to the payment of
any
of the principal or interest on the Indebtedness then due and owing in
respect
of the inventory damaged, lost or stolen.
7. Financial
Statements and
Certificates.
Reseller
will deliver to CPC:
a.
as soon as available and in any event within 60 days after the end of each
quarterly period, except the last, of each fiscal year, the quarterly report
on
Form 10-Q of INX as prescribed by and filed with the Securities and Exchange
Commission (or any successor agency);
b.
as soon as available and in any event within 90 days after the last day of
each
fiscal year, the annual report on Form 10-K of INX as prescribed by and filed
with the Securities and Exchange Commission (or any successor agency);
c.
as
soon as
available and in any event within 30 days after the end of each fiscal month
of
Reseller other than the last month of Reseller’s fiscal year, consolidated
balance sheets of the Reseller and its subsidiaries (if any) as of the end
of
such fiscal month and the related consolidated statements of income, retained
earnings and cash flows for such fiscal month and for the portion of the
Reseller’s fiscal year ended at the end of such fiscal month, setting forth in
each case in comparative form, (i) the figures for the corresponding fiscal
month and the corresponding portion of Reseller’s fiscal year and (ii)
Reseller’s budgeted projections for such fiscal quarter and for the portion of
Reseller’s fiscal year ended at the end of such fiscal quarter, all in
reasonable detail and satisfactory to CPC and certified (subject to normal
year-end adjustments and footnote disclosures) on behalf of Reseller and the
Subsidiaries as to fairness of presentation, GAAP and consistency by Reseller’s
chief financial officer (“Financial
Officer”);
d.
within
the
period provided in paragraphs (a) and (b) above, the written statement of the
Reseller, signed by a Financial Officer, showing the calculations necessary
to
determine compliance with this Agreement and stating that the signed thereof
has
re examined the terms and provisions of this Agreement and at the date of said
statement no Default has occurred or if the signer is aware of any such Default,
he shall disclose in such statement the nature thereof;
e.
within
15
days after the end of each fiscal month of Reseller, or upon any request for
borrowing under the Revolving Credit Facility, and if any outstanding
Indebtedness exists under the Revolving Credit Facility on a weekly basis,
to be
delivered no later than the Friday of each week during such period: (i) a
statement showing the age and a reconciliation of Reseller’s Accounts and
accounts payable for the preceding month and a status of Inventory showing
location, components and value, in such form and detail as CPC may reasonably
request, and (ii) documentation to support the statement of Accounts described
in subparagraph (c)(i) above, including, but not limited to, sales reports,
cash
receipts reports, credit and debit journals;
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f.
upon
the
request of CPC, copies of all of Reseller’s bank statements received during such
month and reconciliations thereof, including, but not limited to, statements
of
depository accounts maintained as a lock box;
g
as
soon as
available, each Current Report on Form 8-K of INX as prescribed by and filed
with the Securities and Exchange Commission (or any successor
agency);
h.
promptly
upon the mailing thereof to the shareholders of INX generally, copies of all
financial statements, reports and proxy statements so mailed;
i.
schedules
of Accounts in form and detail acceptable to CPC (which shall include current
addresses and telephone numbers of each of Reseller’s account debtors) as often
as requested by CPC;
j.
at
CPC's
request, copies (or, after the occurrence of an event of Default, originals)
of
all orders, invoices, and similar agreements and documents; all original
shipping instructions, delivery receipts, bills of lading, and other evidence
of
delivery of Inventory, the sale or disposition of which has resulted in
Accounts;
k.
at
CPC’s
request, the originals of all Instruments, Chattel Paper, security agreements,
guarantees and other documents and property evidencing or securing any Accounts;
in the same form as received and upon such request by CPC, immediately upon
the
receipt of each such document, with all necessary endorsements to enable CPC
to
enforce the same;
l.
at
CPC’s
request, copies of all of Reseller’s federal and state tax returns, including,
but not limited to, requests for extensions of such tax returns, when and as
filed;
m.
copies
of
any and all reports, examinations, notices, warnings and citations issued by
any
governmental or quasi-governmental (whether federal, state or local), unit,
agency, body or entity; and
n.
such
other
information as CPC from time to time reasonably requests.
8. Payment
Terms.
With
respect to Financed Inventory, Reseller will immediately pay CPC the principal
Indebtedness on the earliest occurrence of any of the following events: (a)
on
the Payment Due Date, (b) on the Extended Payment Due Date (for Financed
Inventory subject to the Extended Payment Due Date) and (c) immediately when
the
Inventory is lost, stolen or damaged (collectively, the “Loss
Date”).
All
payments
hereunder shall be made without setoff or counterclaim, prior to 11:00 a.m.,
Denver, Colorado time, on the Payment Due Date, the Extended Payment Due Date
or
the Loss Date, as applicable, in immediately available funds or by electronic
data interchange (“EDI”)
to the
CPC Account or as otherwise agreed between the parties (the “Due
Date”).
For
purposes of calculating interest, payment shall be deemed to have been applied
by CPC against the principal of and/or interest on any Indebtedness on the
Business Day, when before 11:00 a.m., good funds are received by CPC, whether
such payment is made by check, wire, EDI, ACH Debit or other means. Reseller
acknowledges that the date defined as the Payment Due Date and Extended Payment
Due Date falls on the same day of each week to establish a consistent payment
date. CPC may change the terms of any future financing and the date for
repayment of future Indebtedness by giving Reseller written notice specifying
such change. Any third party discount, rebate, bonus or credit granted to
Reseller for any Inventory will not reduce the Indebtedness Reseller owes CPC
until CPC has received payment therefore in cash. Reseller will: (A) pay CPC
even if any Inventory is defective or fails to conform to any warranties
extended by any third party; (B) not assert against CPC any claim or defense
Reseller has against any third party; and (C) indemnify and hold CPC harmless
against all claims and defenses asserted by any buyer of any Inventory. Reseller
waives all rights of setoff Reseller may have against CPC. CPC will have the
continuing exclusive right to apply and reapply any and all payments received
from Reseller or on Reseller’s behalf in such manner as CPC may deem advisable
notwithstanding any entry by CPC upon its books and records.
Notwithstanding
anything in this Agreement to the contrary, CPC agrees that: (i) the Extended
Payment Due Date and the Payment Due Date set forth in any TS shall not be
any
earlier than it is required to be pursuant to the terms of the agreement between
CPC and the applicable Vendor; and (ii) if CPC receives a notice from any Vendor
that the terms of the agreement between such Vendor and CPC has changed such
that the Extended Payment Due Date or the Payment Due Date of Reseller on any
future TS will be revised to be earlier than on any prior TS, CPC shall provide
Reseller with written notice of such change within one Business Day of CPC
receiving such notice from such Vendor.
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9. Calculation
of Charges.
The
outstanding principal balance of the Indebtedness and any other obligations
arising hereunder (collectively, “Obligations”)
shall
bear interest commencing on the day immediately succeeding any Due Date; each
at
the per annum rate equal to the Prime Rate plus 5.0%
(the
“Default
Rate”).
Interest will be calculated for the actual number of days elapsed on the basis
of a year consisting of 360 days. Interest is due and payable monthly in arrears
immediately upon receipt of a billing statement from CPC for such month. Upon
the occurrence and during the continuance of an event of Default, interest
shall
accrue at the Default Rate and shall be payable upon demand. CPC intends to
strictly conform to the usury laws. Regardless of any provision contained
herein, CPC shall never be deemed to have contracted for, charged, received,
collected or applied as interest, any amount in excess of the maximum amount
allowable by applicable law. If CPC ever receives interest in excess of the
maximum amount permitted by law, CPC will apply such excess amount to the
reduction of the outstanding unpaid principal balance, and then will pay any
excess to Reseller. In determining whether the interest paid or payable exceeds
the highest lawful rate, Reseller and CPC shall, to the maximum extent permitted
under applicable law, (1) characterize any non-principal payment (other than
payments which are expressly designated as interest payments hereunder) as
an
expense or fee rather than as interest, (2) exclude voluntary pre-payments
and
the effect thereof, and (3) spread the total amount of interest throughout
the
entire term of this Agreement so that the interest rate is uniform throughout
such term.
10. Monthly
Interest Billing Statement.
CPC
agrees to send to Reseller
a
monthly interest billing statement. Reseller
agrees to
pay interest arising from Indebtedness monthly in arrears in accordance with
the
terms of such monthly interest billing statement and this
Agreement..
11. Default.
The
occurrence of one or more of the following events shall constitute an event
of
default by Reseller (a "Default"):
(a)
Reseller shall fail to pay any Indebtedness when due; (b) any representation
made to CPC by Reseller, or by any guarantor, surety, issuer of a letter of
credit or any other person primarily or secondarily liable with respect to
any
Indebtedness (collectively, "Guarantor")
shall
not be true when made or if Reseller or any Guarantor shall breach any covenant,
warranty or agreement to or with CPC; (c) Reseller or any Guarantor shall become
insolvent or generally fail to pay its debts as they become due or, if a
business, shall cease to do business as a going concern; (d) any guaranty,
letter of credit, or other obligation of a guarantor,
surety, issuer of a letter of credit or any other person primarily or
secondarily liable with respect to any Indebtedness (collectively, "
Guarantor”)
to CPC with respect to any Indebtedness or Collateral shall terminate or not
be
renewed at least 30 days prior to its stated expiration or maturity; (e) any
Guarantor shall revoke, terminate or limit, or take any action purporting to
revoke, terminate or limit, any guaranty or other assurance of payment relating
to any Indebtedness; (f) Reseller or any Guarantor shall make an assignment
for
the benefit of creditors, or commence a proceeding under any bankruptcy,
reorganization, arrangement, insolvency, receivership, dissolution or
liquidation statute or similar law of any jurisdiction, or any such proceeding
shall be commenced against it or any of its property (an "Automatic
Default");
(g) an
attachment, sale or seizure shall be issued or shall be executed against any
assets of Reseller or of any Guarantor; (h) Reseller shall lose, or shall be
in
default of, any franchise, license or right to deal in any Financed Inventory;
(i) Reseller or any Guarantor shall file any correction or termination statement
with respect to any financing statement filed by CPC in connection herewith;
(j)
a material adverse change shall occur in the business, operations or condition
(financial or otherwise) of Reseller or any Guarantor or with respect to the
Collateral; (k) any debt for borrowed money of, or guaranteed by, Reseller
shall
become or any Guarantor becomes due by acceleration by reason of a default;
(l)
CPC in good faith believes the prospect of payment of any Indebtedness is
impaired.
7
12. Rights
and Remedies Upon Default.
Upon the
occurrence of a Default, CPC shall have all rights and remedies of a secured
party under the UCC and other applicable law as well as all the rights and
remedies set forth in this Agreement. CPC may terminate any obligations it
has
under this Agreement and any outstanding credit approvals immediately and/or
declare any and all Indebtedness immediately due and payable without notice
or
demand. Reseller waives notice of intent to accelerate, and of acceleration
of
Indebtedness. CPC may enter any premises of Reseller, with or without process
of
law, without force, to search for, take possession of, and remove the
Collateral, or any part thereof. If CPC requests, Reseller shall cease
disposition of and shall assemble the Collateral and make it available to CPC,
at Reseller's expense, at a convenient place or places designated by CPC. CPC
may take possession of the Collateral or any part thereof on Reseller's premises
at Reseller's expense, and store said Collateral upon Reseller’s premises
pending sale or other disposition. Reseller agrees that the sale of Inventory
by
CPC to a person who is liable to CPC under an agreement to repurchase inventory
(a “Repurchase
Agreement”)
shall
not be deemed to be a transfer subject to UCC §9-618(a) or any similar provision
of any other applicable law, and Reseller waives any provision of such laws
to
that effect. Reseller agrees that the repurchase of Inventory by a Vendor
pursuant to a Repurchase Agreement shall be deemed a commercially reasonable
method of disposition. Reseller shall be liable to CPC for any deficiency
resulting from CPC's disposition, including without limitation a repurchase
by a
Vendor pursuant to a Repurchase Agreement, regardless of any subsequent
disposition thereof. Reseller is not a beneficiary of, and has no right to
require CPC to enforce, any Repurchase Agreement. Any notice of a disposition
shall be deemed reasonably and properly given if sent to Reseller at least
10
days before such disposition. If Reseller fails to perform any of its
obligations under this Agreement, CPC may perform the same in any form or manner
CPC, in its discretion, deems necessary or desirable, and all monies paid by
CPC
in connection therewith shall be additional Indebtedness and shall be
immediately due and payable without notice together with interest payable on
demand at the Default Rate. All of CPC's rights and remedies shall be
cumulative. At CPC's request, or without request in the event of an Automatic
Default, Reseller shall pay all Vendor Credits to CPC as soon as the same are
received for application to Indebtedness. Reseller authorizes CPC to collect
Vendor Credits directly from Vendors and, upon request of CPC, shall instruct
Vendors to pay CPC directly. Reseller irrevocably waives any requirement that
CPC retain possession and not dispose of any Collateral until after an
arbitration hearing, arbitration award, confirmation, trial or final judgment.
CPC's election to extend or not extend credit to Reseller is solely at CPC's
discretion and does not depend on the absence or existence of a
Default.
13. Power
of Attorney.
Reseller
grants CPC an irrevocable power of attorney, as Reseller's attorney-in-fact,
to:
(a) execute or endorse on Reseller's behalf any checks, financing statements,
instruments, and certificates of title and statements of origin pertaining
to
the Collateral; (b) supply any omitted information and correct errors in any
documents between CPC and Reseller; initiate and resolve any insurance claim
pertaining to the Collateral; and (c) do anything to protect and preserve the
Collateral and CPC's rights and interest therein. Upon the occurrence of a
Default, Reseller grants
CPC the
additional power, as Reseller’s attorney-in-fact, to change the address for
delivery of mail and open mail for Reseller in connection with any property
of
Reseller.
This
power of attorney and any other powers of attorney granted herein or elsewhere
by Reseller to CPC are irrevocable and coupled with an interest.
14. Costs,
Expenses and Taxes.
Reseller
agrees to pay all fees and expenses of counsel to CPC and paralegals) in
connection with the enforcement of the Documents and the Loans, including,
but
not limited to (a) reasonable attorney fees and costs incurred upon an Automatic
Default, and (b) CPC’s standard wire transfer and check return fees, all as may
be established and changed by CPC from time to time. Without limitation of
the
foregoing, Reseller acknowledges and agrees that CPC's field audit and out
of
pocket expenses relating to field audits shall be charged to Reseller. In
addition, Reseller shall pay any and all stamp, transfer and other taxes payable
or determined to be payable in connection with the execution and delivery of
the
Documents and agrees to hold CPC harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission
to
pay such taxes. If any suit or proceeding arising from any of the foregoing
is
brought against CPC, Reseller, to the extent and in the manner directed by
CPC,
will resist and defend such suit or proceeding or cause the same to be resisted
and defended by counsel approved by CPC. If Reseller shall fail to do any act
or
thing which it has covenanted to do under this Agreement or any representation
or warranty on the part of Reseller contained in this Agreement shall be
breached, CPC may, in its sole and absolute discretion, after 10 days written
notice having been sent to Reseller, do the same or cause it to be done or
remedy any such breach, and may expend its funds for such purpose; any and
all
amounts so expended by CPC shall be repayable to CPC by Reseller immediately
upon CPC's demand therefore, with interest at a rate equal to the highest
interest rate set forth in this Agreement in effect from time to time during
the
period from and including the date funds are so expended by CPC to the date
of
repayment, and any such amounts due and owing CPC shall be deemed to be part
of
the Indebtedness secured hereunder. The obligations of Reseller under this
Section shall survive the termination of this Agreement and the discharge of
the
other obligations of Reseller under the Documents.
8
15. Information.
Reseller
irrevocably authorizes CPC to investigate and make inquiries of former or
current creditors or other persons (including obtaining personal credit bureau
reports) regarding or relating to Reseller (including, to the extent permitted
by law, any equity holders of Reseller). CPC may provide to any
third
parties (including, without limitation, any Vendors to or suppliers or customers
of Reseller)
any
financial, credit or other information regarding Reseller that CPC may at any
time possess, whether such information was supplied by Reseller to CPC or
otherwise obtained by CPC. Further, Reseller irrevocably authorizes and
instructs any third parties (including, without limitation, any Vendors to
or
suppliers or customers of Reseller) to provide to CPC any credit, financial
or
other information regarding Reseller that such third parties may at any time
possess, whether such information was supplied by Reseller to such third parties
or otherwise obtained by such third parties.
16. Reseller's
Claims Against Vendors.
Reseller
will not assert against CPC any claim or defense Reseller may have against
Vendors whether for breach of warranty, misrepresentation, failure to ship,
lack
of authority, or otherwise, including without limitation claims or defenses
based upon charge backs, credit memos, rebates, price protection payments or
returns. Any such claims or defenses or other claims or defenses Reseller may
have against Vendors shall not affect Reseller's liabilities or obligations
to
CPC.
17. Terms
and Termination.
The term
of this Agreement, unless sooner terminated in accordance with this Agreement,
shall be for a period of one year from the date of this Agreement (the
“Termination
Date”),
provided, however, that (a) this Agreement shall automatically renew for one
(1)
year periods from year to year thereafter unless terminated or at the end of
any
subsequent annual anniversary of the Termination Date by the Reseller upon
at
least 90 days prior written notice; and (b) CPC may terminate this Agreement
(i)
immediately (A) by written notice to Reseller if Reseller shall lose or
relinquish any right to sell or deal in any Financed Inventory or (B) upon
a
Default, or (ii) at any time by at least 60 days prior written notice by CPC
to
Reseller, however where Reseller requests further time be provided within the
60
day notice period CPC may agree to an extension of 30 more days. Upon
termination of this Agreement, all Indebtedness owed to CPC shall become
immediately due and payable without notice or demand. Upon any termination,
Reseller shall remain liable to CPC for all Indebtedness to CPC, including
without limitation interest, fees, charges and expenses arising prior to or
after the effective date of termination, and all of CPC's rights and remedies
and its security interest shall continue until all Indebtedness to CPC is
indefeasibly paid in full and all obligations of Reseller are
performed.
18. Binding
Effect. Reseller
cannot assign its interest in this Agreement without CPC's prior written
consent. CPC may assign or participate CPC's interest, in whole or in part,
without Reseller's consent. This Agreement will protect and bind CPC's and
Reseller's respective heirs, representatives, successors and assigns, as the
case may be.
19. Notices.
Except
as
otherwise stated herein, all notices, arbitration claims, responses, requests
and documents will be sufficiently given or served if mailed or delivered:
(a)
to Reseller, at the Chief Executive Office; and (b) to CPC, at 0000 Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, Attention: General Counsel, or such
other address as the parties may hereafter specify in writing.
20. Severability.
If any
provision of this Agreement or its application is invalid or unenforceable,
the
remainder of this Agreement will not be impaired or affected and will remain
binding and enforceable.
21. Receipt
of Agreement.
Reseller
acknowledges that it has received a true and complete copy of this Agreement.
Reseller has read and understands this Agreement. Notwithstanding anything
herein to the contrary, CPC may rely on any facsimile copy, electronic data
transmission, or electronic data storage of: this Agreement, any TS, billing
statement, financing statement, authorization to pre-file financing statements,
invoice from a Vendor, financial statements or other reports, each of which
will
be deemed an original, and the best evidence thereof for all
purposes.
9
22. Miscellaneous.
(a) Time
is of the essence regarding the performance by the parties of their respective
obligations under this Agreement. Reseller's liability to CPC is direct and
unconditional and will not be affected by the release or nonperfection of any
security interest granted hereunder. CPC may refrain from or postpone
enforcement of this Agreement or any other agreements between CPC and Reseller
without prejudice, and the failure to strictly enforce these agreements will
not
create a course of dealing which waives, amends or modifies such agreements.
The
express terms of this Agreement will not be modified by any course of dealing,
usage of trade, or custom of trade which may deviate from the terms hereof.
Section titles used herein are for convenience only, and do not define or limit
the contents of any Section. This Agreement may be validly executed and
delivered by fax or other electronic transmission and in one or more multiple
counterpart signature pages. This Agreement shall be construed without
presumption for or against any party who drafted all or any portion of this
Agreement; and (b) the parties hereto agree that Valerent is hereby released
from the terms of this Credit Agreement as if Valerent were never a party to
the
Credit Agreement.
23. Limitation
of Damages.
CPC and
Reseller agree that if there is any dispute relating to or arising out of or
otherwise relating in any respect to this Agreement, any Collateral, any
transactions or events described herein or contemplated hereby or otherwise
occurring, or any party's actions or inactions in connection with any of the
foregoing, the aggrieved party shall not be entitled to exemplary or punitive
or
consequential damages.
24. Amendments.
References in this Agreement to a particular agreement, instrument or document
also shall be deemed to refer to and include all renewals, extensions and
modifications of such agreement, instrument or document. All addenda, exhibits
and schedules attached to this Agreement are a part hereof for all
purposes.
25. Definitions.
Terms
defined in this Agreement in the singular are to have a corresponding meaning
when used in the plural and vice versa. All words used herein shall be
understood and construed to be of such number and gender as the circumstances
may require. In addition to the terms defined elsewhere in this Agreement,
when
used in this Agreement, the following terms shall have the following meanings
(such meanings shall be equally applicable to the singular and plural forms
of
the terms used, as the contact requires):
Account
has the
meaning set forth in the UCC.
Advance
means (a)
the financing of an item of Financed Inventory, (b) the election by Reseller
to
pay for Financed Inventory on the Extended Payment Due Date or (c) a revolving
credit loan.
Automatic
Default has
the
meaning set forth in Section
11.
Borrowing
Base has
the
meaning set forth in Section
2(c)(ii).
Borrowing
Base Certificate
means a
certificate in the form attached hereto as Exhibit
A,
(a) duly
executed by an authorized officer of Reseller, or if delivered electronically,
deemed executed by an authorized officer of Reseller, or (b) determined by
CPC
based upon such information as may be provided by Reseller or otherwise
available to CPC.
Business
Day
means
each day on which the Denver, Colorado office of the Federal Reserve Bank of
Kansas City is open for business.
Cisco
Capital Accounts
means
Accounts from obligations owed by Cisco Systems Capital
Corporation.
Cisco
Rebate Receivables
means
Accounts to which Reseller is entitled arising from Reseller’s participation in
certain rebate incentive programs offered by Cisco Systems, Inc., or its
affiliates known as the Opportunity Incentive Program, Solutions Incentive
Program and Value Incentive Program or any other incentive program offered
by
Cisco Systems, Inc. or its affiliates from time to time which Accounts are
quantified on Reseller’s balance sheet.
Collateral
means all
personal property of Reseller, whether such property or Reseller's right, title
or interest therein or thereto is now owned or existing or hereafter acquired
or
arising, and wherever located, including by way of example and not of
limitation, all Accounts, Chattel Paper (whether tangible or electronic),
Deposit Accounts, documents, Equipment, General Intangibles (including, without
limitation, Payment Intangibles, Software, tax refunds, licenses and
intellectual property, in each case, regardless of whether characterized as
general intangibles under the UCC), Goods, Instruments (including, without
limitation, Promissory Notes and Vendor Credits), Inventory, Investment
Property, Letter-of-Credit Rights and Supporting Obligations; and all Products
and Proceeds of the foregoing. As used herein and correspondingly wherever
used
in this Agreement, capitalized terms not otherwise defined in this Agreement
shall have the meaning given to such terms in Article 9 of the UCC.
10
Collateral
Reports
means
reports prepared by Reseller detailing (a) aging and reconciliation of Accounts,
(b) work in process and (c) value incentive program balances.
CPC
has the
meaning set forth in the introductory paragraph.
CPC
Account
means
that certain bank account designated by CPC, information for which has been
separately provided to Reseller.
CPC
Extended Pay Notification
means a
communication sent via electronic mail messaging providing confirmation of
CPC’s
acceptance of an item of Financed Inventory for application of the Extended
Payment Due Date. Each CPC Extended Pay Notification shall be incorporated
into
this Agreement by reference.
Credit
Agreement has
the
meaning set forth in the introductory paragraph.
Credit
Information has
the
meaning set forth in Section
2(b).
Default
has the
meaning set forth in Section
11.
Default
Rate
has the
meaning set forth in Section
9.
Documents
means,
collectively, the Agreement and any amendments hereto, EDI transmissions,
Deposit Account Control Agreement(s), Lockbox Account Agreement(s) each TS,
each
CPC Extended Pay Notification and any other instruments or documents currently
or hereafter required or contemplated hereunder.
Due
Date has
the
meaning set forth in Section
8.
EDI
has
the
meaning set forth in Section
8.
Eligible
Accounts
means an
Account which satisfies the following requirements:
(a)
The
Account has resulted from the sale of goods or the performance of services
by
Reseller in the ordinary course of Reseller's business and without any further
obligation on the part of Reseller to service, repair, or maintain any such
goods sold.
(b)
There
are no conditions which must be satisfied before Reseller is entitled to receive
payment of the Account. Accounts arising from COD sales, consignments or
guaranteed sales are not acceptable.
(c)
The
debtor upon the Account does not claim any defense to payment of the Account,
whether well founded or otherwise.
(d)
The
Account arises out of a sale made or services performed outside of the United
States or Canada (excluding the Province of Quebec) or that is owed by an
account debtor located outside the United States or Canada (excluding the
Province of Quebec), provided such Account is (i) supported by a letter of
credit or other form of guaranty, security or credit support acceptable to
CPC
or (ii) otherwise acceptable to CPC in its sole discretion;
(e)
The
account balance does not include the amount of any counterclaims or setoffs
which have been or may be asserted against Reseller by the account debtor
(including setoffs for any "contra accounts" owed by Reseller to the account
debtor for goods purchased by Reseller or for services performed for Reseller).
To the extent any counterclaims, setoffs, or contra accounts exist in favor
of
the debtor, such amounts shall be deducted from the account
balance.
11
(f)
The
Account represents a genuine obligation of the debtor for goods sold and
accepted by the debtor, or for services performed for and accepted by the
debtor. To the extent any credit balances exist in favor of the debtor, such
credit balances shall be deducted from the account balance.
(g)
Reseller has sent an invoice to the debtor in the amount of the
Account.
(h)
Reseller is not prohibited by the laws of the state where the account debtor
is
located from bringing an action in the courts of that state to enforce the
debtor's obligation to pay the Account. Reseller has taken all appropriate
actions to ensure access to the courts of the state where the account debtor
is
located, including, where necessary, the filing of a Notice of Business
Activities Report or other similar filing with the applicable state agency
or
the qualification by Reseller as a foreign corporation authorized to transact
business in such state.
(i)
The
Account is owned by Reseller free of any title defects or any liens or interests
of others except the security interest in favor of CPC or security interests
that are subordinated to the security interest of CPC.
(j)
The
debtor upon the Account is not any of the following:
(i)
an
employee, affiliate, parent or subsidiary of Reseller;
(ii)
any
person or entity located in a foreign country.
(k)
The
Account is not in default. An Account will be considered in default if any
of
the following occur:
(i)
The
Account is not paid within 90 days from its invoice date;
except
with respect to accounts of obligors who are (A) the United States, a State,
a
local municipality, school district or any department, agency or instrumentality
of same, where such Account(s) are not paid within 120 days from the applicable
invoice date, (B) participating in the E-Rate Program, where such Account(s)
are
not paid within 120 days from the applicable invoice date or (C) Cisco Capital
Accounts, where such Account(s) are not paid within 120 days from the applicable
invoice date;
(ii)
The
debtor obligated upon the Account suspends business, makes a general assignment
for the benefit of creditors, or fails to pay its debts generally as they come
due; or
(iii)
Any
petition is filed by or against the debtor obligated upon the Account under
any
bankruptcy law or any other law or laws for the relief of debtors;
(l)
The
Account is not the obligation of a debtor who is in default (as defined above)
on 50% or more of the Accounts upon which such debtor is obligated.
(m)
The
Account does not arise from the sale of goods which remain in Reseller's
possession or under Reseller's control.
(n)
The
Account is not evidenced by a promissory note or chattel paper, nor is the
Account debtor obligated to Reseller under any other obligation which is
evidenced by a promissory note.
E-Rate
Program
means
that certain program offered by the United States described as the “E-Rate
Program (Schools and Libraries Universal Service Support Mechanism)” in which
the account debtor is the United States, a State, a local municipality, or
any
department, agency or instrumentality of same.
Extended
Payment Due Date
means
that date identified as the “Extended Payment Due Date” on the CPC Extended Pay
Notification.
The
Extended Payment Due Date is calculated by CPC using a communized date which
is
approximately 60 days after the original Payment Due Date.
Extended
Payment Rate
means the
Prime Rate plus One-Half of One Percent (0.50%).
Financed
Inventory has
the
meaning set forth in Section
2(a)(i).
Financial
Officer
has the
meaning set forth in Section
7(c).
12
GAAP
means, at
any time, generally accepted accounting principles at such time in the United
States.
Guarantor
means any
guarantor, surety, issuer of a letter of credit or any other person primarily
or
secondarily liable with respect to any Indebtedness.
Indebtedness
means all
present and future indebtedness and obligations of Reseller to CPC arising
under
this Agreement, of whatever kind, now due or to become due, absolute or
contingent, and whether joint, several or joint and several.
Indemnified
Claims
means any
and all claims, demands, actions, causes of action, judgments, liabilities,
damages and consequential damages, penalties, fines, reasonable
costs,
reasonable fees, reasonable expenses and disbursements (including, without
limitation, reasonable fees and expenses of attorneys and other professional
consultants and experts in connection with any investigation or defense) of
every kind, known or unknown, existing or hereafter arising, foreseeable or
unforeseeable, which may be imposed upon, threatened or asserted against or
incurred or paid by any Indemnified Person at any time and from time to time,
because of, resulting from or arising out the breach of any term or condition
of
this Agreement by Reseller (including but not limited to (i) enforcement of
CPC’s rights thereunder or the defense of CPC’s actions thereunder and (ii)
Reseller’s access to or use of the Portal), excluding with respect to any
Indemnified Persons, any of the foregoing directly caused by such Indemnified
Person's gross negligence or willful misconduct.
Indemnified
Persons
means
CPC, its successors and assigns and their respective officers, directors,
shareholders, members, managers, employees, attorneys, representatives and
Affiliates.
Inventory
has the
meaning set forth in the UCC.
Inventory
Limit has
the
meaning set forth in Section
1.
Liens
has
the
meaning set forth in Section
5(a).
Line
of Credit has
the
meaning set forth in Section
1.
Loss
Date has
the
meaning set forth in Section
8.
Material
Adverse Effect
means (a)
a material adverse effect on the properties, assets, liabilities, business,
operations, prospects, income or condition (financial or otherwise) of Reseller,
(b) material impairment of the ability of Reseller to perform any of its
obligations under this Agreement or any other Document or (c) material
impairment of the enforceability of the rights of, or benefits available to
CPC
under this Agreement or any other Document.
Organizational
Documents
means,
relative to any entity, its certificate and articles of incorporation or
organization and its by-laws, operating or partnership agreements, as
applicable.
Overline
has the
meaning set forth in Section
2(h).
Patriot
Act
means the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, P.L. 107-56, as
amended.
Payment
Due Date
means
that date identified as the “Payment Due Date” on the TS.
Permitted
Liens has
the
meaning set forth in Section
5(a).
Permitted
Locations
means,
collectively, the chief executive office of Reseller together with (a) such
locations identified in Exhibit
B,
attached
hereto, and (b) such additional locations in the United States as determined
by
Reseller from time to time; provided, however, that if any additional location
is not owned by Reseller and the Collateral located at such location has a
value
in excess of $500,000, then Reseller must provide CPC and at least 30 days
prior
written notice of its intent to keep Collateral at such additional
location.
Person
means any
individual, corporation, joint venture, partnership, trust, limited liability
company, unincorporated organization or governmental entity or
agency.
Portal
has the
meaning assigned to such term in Section
29.
13
Prime
Rate
means the
rate of interest published in the Wall Street Journal as the “prime rate” or, if
the Wall Street Journal ceases to publish a rate so designated, any similar
successor rate designated by CPC. Any change in an interest rate resulting
from
a change in the Prime Rate shall become effective on the date of such change.
Prime Rate is not necessarily the lowest rate charged by CPC and CPC may charge
rates at, below or above the Prime Rate.
Repurchase
Agreement
has the
meaning set forth in Section
12.
Reseller
has the
meaning set forth in the introductory paragraph.
Revolving
Credit Availability has
the
meaning set forth in Section
2(c)(i).
Revolving
Credit Commitment
has the
meaning set forth in Section
1.
Revolving
Credit Loan has
the
meaning set forth in Section
2(c)(i).
Shipment
will be
deemed to have occurred, for purposes of Financed Inventory upon shipment by
the
Vendor.
Subsidiary
means,
with respect to any person at any date, any corporation, limited liability
company, partnership, association or other entity the accounts of which would
be
consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP
as
of such date, as well as any other corporation, limited liability company,
partnership, association or other entity of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power is or, in the case of a partnership, more than 50% of
the
general partnership interests are, as of such date, owned, controlled or held
by
the parent or one or more subsidiaries of the parent.
TS
means
“Transaction Statement”, which is sent by CPC to Reseller upon the financing of
each item of Financed Inventory or
the
making of any Revolving Credit Loan,
identifying in each instance: (a) the item of Financed Inventory and (b) the
Payment Due Date. Each TS shall be incorporated into this Agreement by
reference.
UCC
means the
Uniform Commercial Code as in effect in the State of Colorado or, when the
context implies, the Uniform Commercial Code as in effect from time to time
in
any other applicable jurisdiction.
Vendors
has the
meaning set forth in Section
1.
Vendor
Credits
means all
of Reseller's rights to any price protection payments, rebates, discounts,
credits, factory holdbacks, incentive payments and other amounts which at any
time are due Reseller from a Vendor.
26. Irreparable
Harm; Right to Injunction.
Reseller
acknowledges that in the event that Reseller commits any act or omission that
prevents or unreasonably interferes with:
§ CPC's
exercise of the rights and privileges arising under the power of attorney
granted in Section 13
of this
Credit Agreement; or
§ CPC's
perfection of or after a Default, levy upon the security interest granted in
the
Collateral, including any seizure of any Collateral,
such
conduct will cause immediate, severe, incalculable and irreparable harm and
injury, and Reseller agrees that such conduct shall constitute sufficient
grounds to entitle CPC to an injunction, writ of possession, or other applicable
relief in equity, and to make such application for such relief in any court
of
competent jurisdiction.
27. Cumulative
Remedies.
All
rights, remedies and powers granted to CPC in this Agreement, or in any other
instrument or agreement given by Reseller to CPC or otherwise available to
CPC
in equity or at law, are cumulative and may be exercised singularly or
concurrently with such other rights as CPC may have. These rights may be
exercised from time to time as to all or any part of the Collateral as CPC
in
its discretion may determine. The making of an Advance by CPC during the
continuation of a Default shall not obligate CPC to make any further Advances
during the continuation of such Default. No amendment of any provision of this
Agreement shall be effective unless it is in writing and signed by CPC and
Reseller.
14
28. Indemnity.
Reseller
hereby indemnifies and agrees to hold harmless and defend all Indemnified
Persons from and against any and all Indemnified Claims. THE
FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH INDEMNIFIED CLAIMS
ARE
IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY
OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT
OR
OMISSION OF ANY INDEMNIFIED PERSON.
Upon
notification and demand, Reseller agrees to provide defense of any Indemnified
Claim and to pay all reasonable costs and expenses of counsel reasonably
acceptable to such Indemnified Person in respect thereof. Any Indemnified Person
against whom any Indemnified Claim may be asserted reserves the right to settle
or compromise any such Indemnified Claim as such Indemnified Person may
determine in its sole discretion, and the obligations of such Indemnified
Person, if any, pursuant to any such settlement or compromise shall be deemed
included within the Indemnified Claims. Except as specifically provided in
this
section, Reseller waives all notices from any Indemnified Person. The provisions
of this Section 28
shall
survive the termination of this Agreement.
29. Portal.
CPC may,
from time to time at its sole option, permit Reseller to access and use one
or
more internet web sites (the “Portal”)
to:
obtain items or information and take other actions in connection with this
Agreement, subject to the following:
(a)
|
Reseller
shall access and use the Portal solely through duly authorized employees
of Reseller to whom CPC has issued a user name and password (an
“Authorized
Employee”);
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(b)
|
submission
of a user name and password to access and use the Portal, constitutes
Reseller’s, and the applicable Authorized Employee’s, representation that
the person submitting such user name and password is the specific
person
identified by such user name and password and that such person is,
at the
time of such access and use, Reseller’s employee duly authorized to act
for and on behalf of Reseller; and
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(c) |
CPC
may, from time to time at its sole option and without notice or liability,
|
1. |
amend
the terms for use of the Portal by posting amended terms on the Portal
(and such amended terms shall automatically be effective upon posting)
and
|
2.
|
suspend
or revoke Reseller’s and/or an Authorized Employee’s access to, and use of
the Portal and/or modify, update or discontinue all or any portion
of the
Portal.
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30. BINDING
ARBITRATION.
(a) |
Arbitrable
Claims.
Except as otherwise specified below, all actions, disputes, claims
and
controversies under common law, statutory law or in equity of any
type or
nature whatsoever, whether arising before or after the date of this
Agreement, and whether directly or indirectly relating to this Agreement,
the Documents and/or any amendments and addenda hereto, or the breach,
invalidity or termination hereof; (collectively the "Disputes"),
will be subject to and resolved by binding arbitration. Notwithstanding
the foregoing, the parties agree that either party may pursue claims
against the other that do not exceed $15,000 in the aggregate in
a court
of competent jurisdiction. Service of arbitration claims shall be
acceptable if made by U.S. mail or overnight delivery to the address
for
the party described herein.
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(b) |
Administrative
Body.
All arbitration hereunder will be conducted in accordance with the
Commercial Arbitration Rules of: (a) The American Arbitration Association
(“AAA”).
The arbitration rules are currently found at xxx.xxx.xxx for AAA.
All
arbitrator(s) selected will be attorneys with at least 5 years secured
transactions experience. A panel of 3 arbitrators shall hear all
claims
exceeding $1,000,000, exclusive of interest, costs and attorneys'
fees.
The arbitrator(s) will decide if any inconsistency exists between
the
rules of the applicable arbitral forum and the arbitration provisions
contained herein. If such inconsistency exists, the arbitration provisions
contained herein will control and supersede such rules. The arbitrator
shall follow the terms of this Agreement and the applicable law,
including
without limitation, the attorney-client privilege and the attorney
work
product doctrine.
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15
(c) |
Hearings.
Each party hereby consents to a documentary hearing for all arbitration
claims, by submitting the dispute to the arbitrator(s) by written
briefs
and affidavits, along with relevant documents. However, arbitration
claims
will be submitted by way of an oral hearing, if any party requests
an oral
hearing within 40 days after service of the claim, and that party
remits
the appropriate deposit for AAA's fees and arbitrator compensation
within
10 days of the arbitration association's statement for payment of
all fees
and arbitrator compensation relating to the oral hearing. Each party
agrees that failure to timely pay all fees and arbitrator compensation
billed to the party requesting the oral hearing will be deemed such
party's consent to submitting the Dispute to the arbitrator on documents
and such party's waiver of its request for an oral hearing. The site
of
all oral arbitration hearings will be in the Division of the Federal
Judicial District in which the arbitration association maintains
a
regional office that is closest to
Reseller.
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(d) |
Discovery.
Discovery permitted in any arbitration proceeding commenced hereunder
is
limited as follows. No later than 40 days after the filing and service
of
a claim for arbitration, the parties in contested cases will exchange
detailed statements setting forth the facts supporting the claim(s)
and
all defenses to be raised during the arbitration, and a list of all
exhibits and witnesses. No later than 21 days prior to the oral
arbitration hearing, the parties will exchange a final list of all
exhibits and all witnesses, including any designation of any expert
witness(es) together with a summary of their testimony; a copy of
all
documents and a detailed description of any property to be introduced
at
the hearing. Under no circumstances will the use of interrogatories,
requests for admission, requests for the production of documents
or the
taking of depositions be permitted. However, in the event of the
designation of any expert witness(es), the following will occur:
(a) all
information and documents relied upon by the expert witness(es) will
be
delivered to the opposing party; (b) the opposing party will be permitted
to depose the expert witness(es); (c) the opposing party will be
permitted
to designate rebuttal expert witness(es); and (d) the arbitration
hearing
will be continued to the earliest possible date that enables the
foregoing
limited discovery to be
accomplished.
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(e) |
Exemplary
or Consequential Damages.
The arbitrator(s) will not have the authority to award exemplary,
punitive
or consequential damages.
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(f) |
Confidentiality
of Awards.
All arbitration proceedings, including testimony or evidence at hearings,
will be kept confidential, although any award or order rendered by
the
arbitrator(s) pursuant to the terms of this Agreement may be confirmed
as
a judgment or order in any state or federal court of competent
jurisdiction within the federal judicial district which includes
the
residence of the party against whom such award or order was entered.
This
Agreement concerns transactions involving commerce among the several
states. The Federal Arbitration Act, Title 9 U.S.C. Sections 1 et
seq., as
amended (“FAA”)
will govern all arbitration(s) and confirmation proceedings
hereunder.
|
(g) |
Prejudgment
and Provisional Remedies.
Nothing herein will be construed to prevent CPC's or Reseller's use
of
bankruptcy, receivership, injunction, repossession, replevin, claim
and
delivery, sequestration, seizure, attachment, foreclosure, and/or
any
other prejudgment or provisional action or remedy relating to any
Collateral for any current or future debt owed by either party to
the
other. Any such action or remedy will not waive CPC's or Reseller's
right
to compel arbitration of any
Dispute.
|
(h) |
Attorneys'
Fees.
If
either Reseller or CPC brings any other action for judicial relief
with
respect to any Dispute (other than those permitted under Sections
30(a)
or
30(g)),
the party bringing such action will be liable for and immediately
pay all
of the other party's reasonable costs and expenses (including attorneys'
fees) incurred to stay or dismiss such action and remove or refer
such
Dispute to arbitration. If either Reseller or CPC brings or appeals
an
action to vacate or modify an arbitration award and such party does
not
prevail, such party will pay all reasonable costs and expenses, including
reasonable attorneys' fees, incurred by the other party in defending
such
action. Additionally, in any proceeding between the parties regarding
this
Agreement, the losing party will pay to the prevailing party all
reasonable expenses and costs, including reasonable attorneys’ fees
incurred by the prevailing party. A party will be considered the
prevailing party if: (1) it initiated the proceeding and substantially
obtains the relief it sought, either through arbitration award, judgment
or the losing party’s voluntary action before hearing or award; (2) the
other party withdraws its action without substantially obtaining
the
relief it sought; or (3) it did not initiate the litigation and an
award
or judgment is entered for either party, but without substantially
granting the relief sought.
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16
(i) |
Limitations.
Any arbitration proceeding must be instituted: (1) with respect to
any
Dispute for the collection of any debt owed by either party to the
other,
within 2 years after the date the last payment by or on behalf of
the
payor was received and applied in respect of such debt by the payee;
and
(2) with respect to any other Dispute, within 2 years after the date
the
incident giving rise thereto occurred, whether or not any damage
was
sustained or capable of ascertainment or either party knew of such
incident. Failure to institute an arbitration proceeding within such
period will constitute an absolute bar and waiver to the institution
of
any proceeding, whether arbitration or a court proceeding, with respect
to
such Dispute.
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(j) |
Survival
After Termination.
The agreement to arbitrate will survive the termination of this
Agreement.
|
31. JURY
TRIAL WAIVER; CONSENT TO JURISDICTION.
If this
Agreement is found to be not subject to arbitration, any legal proceeding with
respect to any dispute will be tried in a court of competent jurisdiction by
a
judge without a jury. Reseller and CPC waive any right to a jury trial in any
such proceeding. Similarly, if this Agreement or a particular dispute hereunder
is not subject to arbitration, Reseller hereby consents to the non-exclusive
jurisdiction of any local, state or federal court located within Colorado and
waives any objection which Reseller may have based on improper venue or forum
non conveniens to the conduct of any action or proceeding in any such court
and
waives personal service of any and all process upon it, and consents that all
such service of process be made by mail or messenger directed to it in the
same
manner as provided for notices to Reseller in this Agreement, and that service
so made shall be deemed to be completed upon the earlier of actual receipt
or 3
days after the same shall have been posted to Reseller or Reseller's agent
as
set forth herein. Nothing contained in this Section shall affect the right
of
CPC to serve legal process in any other manner permitted by law or affect the
right of CPC to bring any action or proceeding against Reseller or its property
in the courts of any other jurisdiction. Reseller waives, to the extent
permitted by law, any bond or surety or security upon such bond which might,
but
for this waiver, be required of CPC.
32. Governing
Law.
This
Agreement shall be construed in all respects in accordance with, and governed
by
the internal laws (as opposed to conflicts of law provisions) of the State
of
Colorado, except that (a) questions as to perfection of CPC's security interest
and the effect of perfection or non-perfection and priority of CPC's security
interest shall be governed by the law which would be applicable except for
this
Section, and (b) the provisions of the FAA shall govern all arbitration
proceedings hereunder.
33. USA
PATRIOT ACT NOTIFICATION.
The
following notification is provided to Reseller pursuant to Section 326 of the
USA Patriot Act of 2001, 31 U.S.C. Section 5318:
IMPORTANT
INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government
fight the funding of terrorism and money laundering activities, Federal law
requires all financial institutions to obtain, verify, and record information
that identifies each person or entity that opens an account, including any
deposit account, treasury management account, loan, other extension of credit,
or other financial services product. What this means for the Reseller: When
the
Reseller opens an account, if the Reseller is not an individual a financial
institution will ask for the Reseller's name, taxpayer identification number,
business address, and other information that will allow such financial
institution to
17
identify
the Reseller. A financial institution may also ask to see the Reseller's legal
organizational documents or other identifying documents.
[signature
page(s) to follow]
18
THIS
CREDIT AGREEMENT CONTAINS BINDING ARBITRATION, JURY WAIVER AND PUNITIVE DAMAGE
WAIVER PROVISIONS.
ATTEST:
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|
By:
/s/ Xxxxx Xxxxxxx
|
|
/s/
Xxxxxx X. Xxxxxxx
|
Name:
Xxxxx Xxxxxxx
|
Xxxxxx
X. Xxxxxxx, Secretary
|
Title:
Vice-President - CFO
|
ATTEST:
|
|
/s/
Xxxxx X. Xxxx
|
|
Xxxxx
X. Xxxx, Chief Executive Officer
|
|
CASTLE
PINES CAPITAL LLC
|
|
By:
/s/ Xxxx Xxxxxxx
|
|
Name:
Xxxx Xxxxxxx
|
|
Title:
Managing Partner
|
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19
FINANCIAL
COVENANTS AMENDMENT TO AMENDED AND RESTATED CREDIT
AGREEMENT
This
Financial Covenants Amendment is made to that certain Amended and Restated
Credit Agreement dated April 30, 2007 ("Agreement”),
between (“Reseller”)
and
Castle Pines Capital LLC, (“CPC”).
FOR
VALUE
RECEIVED, CPC and Reseller agree that the following paragraphs are incorporated
into the Agreement as if fully and originally set forth therein:
1.“Current
Ratio.
Reseller
will at all times maintain on a consolidated basis a ratio of current assets
to
Current Liabilities of at least 1.10:1.0.
For
purpose of this paragraph ‘Current
Liabilities’
includes
(a) all obligations classified as current liabilities under generally accepted
accounting principles, plus (b) all principal amounts outstanding under
revolving lines of credit, whether classified as current or long-term, which
are
not already included under (a) above. This ratio will be calculated at the
end
of each fiscal quarter, using fiscal year-to-date results on an annualized
basis.”
2.“Tangible
Net Worth.
Reseller
will at all times maintain on a consolidated basis tangible net worth equal
to
at least Eight Million Dollars ($8,000,000).
For
purpose of this paragraph: (i) ‘Tangible
Net Worth’
means
as
of any date the sum of Resellers’ (i) net worth as reflected on its last
twelve-month consolidated fiscal financial statements, plus
(ii) net
earnings since the end of such fiscal year, both after provision for taxes
and
with Inventory determined on a first in, first out basis, plus
(iii)
Subordinated Debt, minus
the sum
of Reseller’s (A) intangible assets, including, without limitation, deposits,
unamortized leasehold improvements, goodwill, deferred income taxes, franchises,
licenses, patents, trade names, copyrights, service marks, brand names,
covenants not to compete and any other asset which would be treated as an
intangible under generally accepted accounting principles, plus
(B)
prepaid expenses (however such item shall not include prepaid inventory),
plus
(C)
franchise fees, plus
(D)
notes, Accounts and other amounts owed to it by any Guarantor, affiliate or
employee of any Reseller plus
(E)
losses since the end of such fiscal year, plus
(F)
interest in the cash surrender value of officer’s or shareholder’s life
insurance policies; and (ii) ‘Subordinated
Debt’
means
liabilities subordinated to the Reseller’s obligations to CPC in a manner
acceptable to CPC, using CPC’s standard form. This covenant will be tested at
the end of each fiscal quarter.”
3.“Minimum
Working Capital.
Reseller
will at all times maintain a minimum working capital of Six Million Five Hundred
Thousand Dollars ($6,500,000). Working Capital shall be defined as Current
Assets minus Current Liabilities. Current Assets shall be defined as current
assets under generally accepted accounting principles. Current Liabilities
includes (a) all obligations classified as current liabilities under generally
accepted accounting principles, plus (b) all principal amounts outstanding
under
revolving lines of credit, whether classified as current or long-term, which
are
not already included under (a) above. This ratio will be calculated at the
end
of each INX Accounting Period.”
4.“Total
Liabilities to Tangible Net Worth Ratio.
Reseller
will at all times maintain on a consolidated basis a ratio of Total Liabilities
(excluding liabilities subordinated to the Reseller’s obligations to CPC in a
manner acceptable to CPC, using CPC’s standard form) to Tangible Net Worth not
exceeding 6.00:1.00.
For
purpose of this paragraph: (i) ‘Total
Liabilities’
means
the sum of current liabilities plus long term liabilities; and (ii)
‘Tangible
Net Worth’
means
as
of any date the sum of Resellers’ (i) net worth as reflected on its last
twelve-month consolidated fiscal financial statements, plus
(ii) net
earnings since the end of such fiscal year, both after provision for taxes
and
with Inventory determined on a first in, first out basis, plus
(iii)
Subordinated Debt, minus
the sum
of Reseller’s (A) intangible assets, including, without limitation, deposits,
unamortized leasehold improvements, goodwill, deferred income taxes, franchises,
licenses, patents, trade names, copyrights, service marks, brand names,
covenants not to compete and any other asset which would be treated as an
intangible under generally accepted accounting principles, plus
(B)
prepaid expenses (however such item shall not include prepaid inventory),
plus
(C)
franchise fees, plus
(D)
notes, Accounts and other amounts owed to it by any Guarantor, affiliate or
employee of any Reseller plus
(E)
losses since the end of such fiscal year, plus
(F)
interest in the cash surrender value of officer’s or shareholder’s life
insurance policies. This ratio will be calculated at the end of each fiscal
quarter, using fiscal year-to-date results on an annualized basis.”
Reseller
waives notice of CPC’s acceptance of this addendum.
All
other
terms and provisions of the Agreement, to the extent not inconsistent with
the
foregoing, are ratifies and remain unchanged and in full force and
effect.
IN
WITNESS
WHEREOF, Reseller and CPC have executed this Financial Covenants Amendment
on
this 30 day of April, 2007.
ATTEST:
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|
By:
/s/ Xxxxx Xxxxxxx
|
|
/s/
Xxxxxx X. Xxxxxxx
|
Name:
Xxxxx Xxxxxxx
|
Xxxxxx
X. Xxxxxxx, Secretary
|
Title:
Vice-President - CFO
|
ATTEST:
|
|
/s/
Xxxxx X. Xxxx
|
|
Xxxxx
X. Xxxx, Chief Executive Officer
|
|
CASTLE
PINES CAPITAL LLC
|
|
By:
/s/ Xxxx Xxxxxxx
|
|
Name:
Xxxx Xxxxxxx
|
|
Title:
Managing Partner
|
|
PAYDOWN
AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
This
Paydown Amendment is made to that certain Amended and Restated Credit Agreement
entered into by and between Reseller and Castle Pines Capital LLC (“CPC”)
on
April 30, 2007, (“Agreement”).
FOR
VALUE RECEIVED,
Reseller
and CPC agree to amend the Agreement to provide as follows: (capitalized terms
shall have the same meaning as defined in the Agreement unless otherwise
indicated):
Provided
that
no
Indebtedness is outstanding which is subject to the Extended Payment Due Date,
Reseller will forward to CPC a Collateral Report (as defined below) by the
15th
day of each month for the period consisting of the immediately preceding
month.
Provided
that Indebtedness is outstanding which is subject to the Extended Payment Due
Date, Reseller will forward to CPC a Collateral Report by Friday of each week
for the period consisting of the immediately preceding week.
1.Funded
Indebtedness Limitation.
Dealer
agrees not to permit the outstanding principal balance of advances under this
Credit Agreement to exceed the Line of Credit; and
2.Collateral
Value Limitation.
Regardless of the payment terms pertaining to any Collateral financed by CPC
or
anything contained in the Credit Agreement to the contrary, if at the time
of
any determination, Reseller’s total outstanding Indebtedness exceeds the
Collateral Liquidation Value (as defined below), Reseller will immediately
pay
CPC the sum of the following items: (i) Reseller's total outstanding
Indebtedness, minus
(ii) the
Collateral Liquidation Value.
The
term
“Collateral
Liquidation Value”
is
defined herein to mean the sum of: (i) one hundred percent (100%) of the total
aggregate wholesale invoice price of all of Reseller's Financed Inventory;
plus
(ii)
eighty five percent (85%) of the total outstanding balance of Reseller's
Eligible Accounts, plus
(iii)
seventy-five percent (75%) of other Accounts approved by CPC in its sole
discretion minus
(iv)
Third Party Debt.
The
term
“Collateral
Report”
is
defined herein to mean a report compiled by Reseller specifying the following
information: (a) the total aggregate wholesale invoice price of all of
Reseller's Financed Inventory that is unsold and in Reseller's possession and
control as of the date of such Report; and (b) the total outstanding balance
owed to Reseller on Reseller's Eligible Accounts as of the date of such Report,
in each case to the extent CPC has a first priority, fully perfected security
interest therein.
The
term
“Third
Party Debt”
is
defined herein to mean the principal portion owed to third party lenders having
a security interest in Reseller’s assets which is senior in priority to the
security interest of CPC.
If
Reseller from time to time is required to make immediate payment to CPC upon
review of a Collateral Report or at any other time, Reseller agrees that
acceptance of such payment by CPC shall not be construed to have waived or
amended the terms of its financing program.
Reseller
waives notice of CPC's acceptance of this Amendment. All other terms as they
appear in the Agreement, to the extent consistent with the foregoing, are
ratified and remain unchanged and in full force and effect.
SIGNATURES
COMMENCE ON NEXT PAGE
IN
WITNESS
WHEREOF, Reseller and CPC have executed this Paydown Amendment to Amended and
Restated Credit Agreement this 30 day of April, 2007.
ATTEST:
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|
By:
/s/ Xxxxx Xxxxxxx
|
|
/s/
Xxxxxx X. Xxxxxxx
|
Name:
Xxxxx Xxxxxxx
|
Xxxxxx
X. Xxxxxxx, Secretary
|
Title:
Vice-President - CFO
|
ATTEST:
|
|
/s/
Xxxxx X. Xxxx
|
|
Xxxxx
X. Xxxx, Chief Executive Officer
|
|
CASTLE
PINES CAPITAL LLC
|
|
By:
/s/ Xxxx Xxxxxxx
|
|
Name:
Xxxx Xxxxxxx
|
|
Title:
Managing Partner
|
|