EXHIBIT 10.1
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LOAN AND SECURITY AGREEMENT NUMBER 1506
THIS LOAN AND SECURITY AGREEMENT is made by ThinkEngine Networks, Inc.,
a Delaware Corporation ("Debtor"), and VENCORE SOLUTIONS LLC, a Delaware Limited
Liability Company ("Lender"). In consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
1.1 Defined Terms. As used in this Agreement the following terms have
the following defined meanings, unless the context otherwise requires (such
terms to be equally applicable to both singular and plural forms of the terms
defined):
"Agreement", "hereof", "hereto", "hereunder" and words of similar
import shall mean this Loan and Security Agreement, as the same may
from time to time be amended, modified or supplemented.
"Business Day" means a day other than a Saturday, Sunday or legal
holiday under the laws of the State of Oregon.
"Chattel Paper" has the meaning assigned to it in the Code.
"Closing Date" means each date on which a Loan is made pursuant hereto.
"Code" means the Uniform Commercial Code as from time to time in effect
in the State of Oregon.
"Collateral" means any of Debtor's assets which are pledged to secure
this Agreement and as identified on Schedule I.
"Commencement Date" means the beginning of the contracted term under
each Loan. The Commencement Date of each Loan will be the 10th which
immediately follows the Disbursal Date.
"Commitment" means the obligation of Lender to make the Loans in the
aggregate principal amount specified in Section 2.1.
"Default" shall mean any event which with notice, lapse of time,
and/or any further condition, event or act would constitute an Event of
Default.
"Disbursal Date" means the date each Loan is countersigned by both
Debtor and Lender and funds are disbursed under the terms of each Loan.
"Disbursed Principal" means the original amount borrowed on each Loan.
"Event of Default" has the meaning set forth in Section 7.
"Final Payment" means a payment fee (in addition to and not a
substitution for the regular monthly payments of principal plus accrued
interest) due on the earlier to occur of the Maturity Date for the
Loans or Prepayment and will equal the original principal amount of the
Loan(s) multiplied by the Final Payment Percentage.
"Final Payment Percentage" means for each Loan, ten percent (10%).
"Financial Statements" means Debtor's financial statements and shall be
comprised of at least a balance sheet and profit and loss statement and
may include a cash flow statement.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any
other state or federal bankruptcy or insolvency law (including any
receivership or
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like proceeding), assignments for the benefit of creditors, formal or
informal moratoria, compositions, extensions generally with creditors,
or proceedings seeking reorganization, arrangement, or other similar
relief.
"Interim Interest" means interest that is paid on the Disbursed
Principal for that period of time between the Disbursal Date and the
Commencement Date. Interim Interest shall be paid at a daily rate equal
to the Interest Rate divided by 365.
"Interest Rate" is a fixed per annum rate per each Loan equal to 13.00%
"Liens" means liens, mortgages, security interests, pledges, title
retentions, charges, financing statements or other encumbrances of any
kind whatsoever on the Collateral.
"Loan" means each loan made by Lender pursuant to this Agreement.
"Loan Documents" means this Agreement, the Notes, the Supplements, any
other note executed by Debtor in connection with this Agreement, and
any other agreement entered into, now or in the future, by Debtor and
Lender or any guarantor in connection herewith, but shall not include
the Common Stock Warrant Issued by the Debtor to the Lender on the date
of the Agreement.
"Note" means each promissory note of Debtor evidencing a Loan, as
described in Section 2.2, substantially in the form of Exhibit A
hereto, as the same may from time to time be amended, modified or
supplemented.
"Obligations" means (i) the aggregate unpaid principal amount of, and
accrued interest on, the Notes; (ii) all other obligations and
liabilities of Debtor, now existing or hereafter incurred, under,
arising out of or in connection with this Agreement, or any Note or any
other Loan Document; and (iii) any and all other present and future
indebtedness, obligations and liabilities of any kind whatsoever of
Debtor to Lender, whether direct or indirect, joint or several,
absolute or contingent, liquidated or unliquidated, secured or
unsecured, matured or unmatured and whether originally contracted with
Lender or otherwise acquired by Lender or from time to time reduced and
thereafter increased.
"Payment Due Date" shall be the 10th day of each month and the first
scheduled payment shall be due on the 10th day of the month immediately
following the Commencement Date.
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business
trusts, or other organizations, irrespective of whether they are legal
entities, and governments and agencies and political subdivisions
thereof.
"Prepayment" means the Debtor can terminate Loans prior to their
maturities by paying Lender an amount equal to the sum of i) all
accrued interest, charges and fees, ii) all remaining unpaid principal,
and iii) the Final Payment.
"Proceeds" has the meaning assigned to it in the Code.
"Supplement" means each Supplement executed and delivered by Debtor in
substantially the form of Exhibit B attached hereto.
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles.
SECTION 2. AMOUNT AND TERMS OF LOAN.
2.1 Commitment. Subject to the terms and conditions of this Agreement,
Lender agrees to make Loans, from time to time, to Debtor in an aggregate
principal amount not to exceed One Million Five Hundred Thousand Dollars and
00/100 ($1,500,000.00). Each Loan shall be in an amount which is not less than
Sixty Thousand Dollars and 00/100 ($60,000.00). The obligation of Lender to make
Loans hereunder shall terminate on March 31, 2007. Debtor shall give Lender at
least five (5) Business Days prior written notice of the date and amount of each
proposed Loan. No Loan which is repaid may be reborrowed.
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2.2 The Notes. Each Loan shall be evidenced by a promissory note of
Debtor substantially in the form of Exhibit A hereto, with appropriate
insertions therein as to amounts, dates and interest rate, in each case, as
determined by Lender. Debtor's obligation to repay the Notes and all other
amounts payable hereunder is absolute and unconditional under any and all
circumstances and shall not be affected by any circumstances of any character
whatsoever. Each Note shall (i) be dated the date on which the Loan evidenced
thereby is made; (ii) be for the term specified in such Note; and (iii) be
stated to be paid in consecutive monthly installments of principal plus
interest, on the dates and in the amounts set forth in such Note. If any amount
is not paid within ten days of when due under the Notes, Debtor shall pay to
Lender a late charge of five percent (5%) of the subject amount. Such late
charge shall be immediately assessed and due.
2.3 Use of Proceeds. Working Capital.
2.4 Permitted Prepayment of Loans. Debtor shall have the option to
prepay all, but not less than all, of the Loans hereunder, provided Debtor (a)
provides written notice to Lender of its election to prepay the Loan at least
thirty (30) days prior to such prepayment, and (b) pays, on the date of such
prepayment (i) all outstanding principal plus accrued interest, (ii) the Final
Payment, and (iii) all other sums, if any, that shall have become due and
payable hereunder.
SECTION 3. CONDITIONS OF BORROWING.
3.1 Conditions of Each Loan. Lender shall not be required to make any
Loan hereunder (including the initial Loan) unless on the Closing Date of such
Loan:
(a) Note. The Note evidencing such Loan shall have been duly
executed and delivered to Lender.
(b) Security Interest. All filings deemed necessary or desirable
by Lender to establish, protect, preserve and perfect its security
interest in any of Debtor's assets that are pledged as security for
such Loan as a valid perfected security interest shall have been duly
effected, and all fees, taxes and other charges relating to such
filings and recordings shall have been paid by Debtor.
(c) Representations. (i) The representations and warranties
contained in this Agreement shall be true and correct in all respects
on and as of the date of the making of such Loan with the same effect
as if made on and as of such date; (ii) no Default or Event of Default
shall be in existence on the date of the making of such Loan or shall
occur as a result of such Loan; and (iii) the acceptance by Debtor of
each Loan shall constitute a representation by Debtor that the
statements contained in clauses (i) and (ii) above are true and correct
on the date of such Loan.
(d) Other Documents and Information. Lender shall have received
from Debtor, in form and substance satisfactory to Lender, such other
documents and information as Lender shall reasonably request.
(e) Legal Matters. All legal matters with respect to and all legal
documents executed in connection with the transactions contemplated by
this Agreement shall be satisfactory to counsel for Lender.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
To induce Lender to enter into this Agreement and to make each Loan,
Debtor represents and warrants to Lender that:
4.1 Organization. Debtor is a corporation duly organized or formed,
validly existing and in good standing under the laws of Delaware, has the
necessary authority and power to pledge its assets as and to transact the
business in which it is engaged.
4.2 Power and Authority. Debtor has full power, authority and legal
right to execute and deliver this Agreement and the Notes, to perform its
obligations hereunder and thereunder, to borrow hereunder and to grant the
security interest created by this Agreement.
4.3 Consents and Permits. No consent of any other party, and no
consent, license, approval or authorization of, exemption by, or registration or
declaration with, any governmental body, authority, bureau or agency is required
in
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connection with (i) the execution, delivery or performance by Debtor of this
Agreement or the Notes; or (ii) the validity or enforceability of this Agreement
or the Notes.
4.4 No Legal Bar. The execution, delivery and performance by Debtor of
this Agreement and the Notes do not and will not violate any provision of any
applicable law or regulation or of any judgment, award, order, writ or decree of
any court or governmental instrumentality, will not violate any provision of the
organizational documents of Debtor and will not violate any provision of or
cause a default under any mortgage, indenture, contract, agreement or other
undertaking to which Debtor is a party or which purports to be binding upon
Debtor or upon any of its assets, and will not result in the creation or
imposition of any lien on any of the assets of Debtor other than the security
interest intended to be created hereby.
4.5 No Defaults. Debtor is not in default, and no event or condition
exists which after the giving of notice or lapse of time or both would
constitute an event of default, under any material mortgage, indenture,
contract, agreement, judgment or other undertaking to which Debtor is a party or
which purports to be binding upon Debtor or upon any of its assets.
4.6 Enforceability. This Agreement has been duly authorized, executed
and delivered by Debtor and constitutes a legal, valid and binding obligation of
Debtor enforceable in accordance with its terms, subject to applicable
bankruptcy or insolvency laws. When executed and delivered, each Note shall have
been duly authorized, executed and delivered by Debtor and shall constitute a
legal, valid and binding obligation of Debtor enforceable in accordance with its
terms, subject to applicable bankruptcy or insolvency laws.
4.7 No Litigation. There is no action, suit, investigation or
proceeding (whether or not purportedly on behalf of Debtor) pending or, to
Debtor's knowledge, threatened against or affecting Debtor or any of its assets
which could have an adverse effect upon the transactions contemplated by this
Agreement or a material adverse effect on the business, operations or financial
condition of Debtor.
4.8 Taxes. Debtor has filed all Federal, state and local income tax
returns that are required to be filed, and has paid (or provided for the payment
of) all taxes as shown on said returns and all assessments received by it to the
extent that such taxes and assessments have become due, and Debtor does not have
any knowledge or any actual or proposed deficiency or additional assessment in
connection therewith. The charges, accruals and reserves on the books of Debtor
in respect of Federal, state and local taxes for all open years, and for the
current fiscal year, make adequate provision for all unpaid tax liabilities for
such periods.
4.9 Financial Statements. All financial statements for Debtor delivered
to Lender are true and accurate as of the dates thereof, and, except as
disclosed to lender, there has not been any adverse change in Debtor's or any
guarantor's financial condition since the date of the most recent financial
statements submitted to Lender.
4.10 Full Disclosure. No written representation, warranty or other
statement of Debtor in any certificate, agreement or other document given to
Lender, as of the date such representations, warranties, or other statements
were made, taken together with all such written certificates, agreements and
other document statements given to Lender, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained in the certificates or statements not misleading.
SECTION 5. COVENANTS.
Debtor covenants and agrees that from and after the date hereof and so
long as the Commitment or any Obligation is outstanding:
5.1 Notices. Debtor will give timely written notice to Lender of (i)
the occurrence of any Default or Event of Default; (ii) the commencement or
threat of any material litigation or proceedings affecting Debtor; and (iii) any
dispute between Debtor and any governmental regulatory body or other party that
might materially interfere with the normal business operations of Debtor.
5.2 Laws; Obligations; Operations. Debtor will (i) duly observe and
conform to all requirements of any governmental authorities relating to the
conduct of its business or to its properties or assets, except for any such
requirements for which the results of non-compliance, individually or in the
aggregate, would not affect Debtor's ability to perform its
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obligations under the Agreement or result in a Lien upon any of the Collateral;
(ii) maintain its existence as a legal entity and obtain and keep in full force
and effect all rights, franchises, licenses and permits which are necessary to
the proper conduct of its business; and (iii) obtain or cause to be obtained as
promptly as possible any governmental, administrative or agency, approval and
make any filing or registration therewith which at the time shall be required
with respect to the performance of its obligations under this Agreement or the
operation of its business.
5.3 Inspection. Lender or its authorized representative may, upon
reasonable notice during normal business hours inspect the Collateral and the
books and records of Debtor related thereto.
5.4 Further Assurances. Debtor will promptly, at any time and from time
to time, at its sole expense, execute and deliver to Lender such further
instruments and other documents, and take such further action, as Lender may
from time to time reasonably request to further carry out the intent and purpose
of this Agreement. and to establish and protect the rights, interests and
remedies created, or intended to be created, in favor of Lender hereby,
including, without limitation, any and all security agreements, assignments,
endorsements of certificates of title, and all other documents that Lender may
reasonably request, in form and substance satisfactory to Lender, to create,
perfect and continue to perfect or to better perfect the Lender's Liens in the
Collateral. Debtor will pay, or reimburse Lender for any and all reasonable
fees, costs and expenses of whatever kind or nature incurred in connection with
the creation, preservation and, upon the occurrence of an Event of Default which
is continuing, protection of Lender's security interest in the Collateral.
5.5 No Disposition of Collateral. Without the prior written consent of
Lender, Debtor will not sell, convey, transfer, exchange, lease or otherwise
relinquish possession or dispose of any of the Collateral other than sales or
other actions in the ordinary course of business.
5.6 No Liens. Debtor will not create, assume or suffer to exist any
Lien of any kind upon the Collateral except for the security interest created
hereby and liens on accounts receivable in favor of a future lender.
5.7 No Changes in Debtor. Without the prior written consent of Lender,
Debtor will not (i) enter into any merger or consolidation other than a merger
with a wholly-owned subsidiary in which the Debtor is the surviving entity and
the Debtor's capital structure is not materially changed; (ii) liquidate or
dissolve; (iii) sell, transfer or otherwise dispose of all or substantially all
of its assets; (iv) change the form of organization of its business or state of
organization or formation; or (v) without thirty (30) days prior written notice
to Lender, change its name or its chief place of business.
5.8 Financial Statements. Debtor will prepare Financial Statements on a
monthly basis and will provide Lender with copies of such Financial Statements
not more than thirty (30) days after the end of each calendar month. For any
Debtors that are also Public Companies, Debtor will make available to Lender its
Financial Statements included in its 10-Q, 10-K and 8-K filings with the
Securities and Exchange Commission, within ten (10) days after each filing.
SECTION 6. SECURITY INTEREST.
6.1 Grant of Security Interest. As collateral security for the prompt
and complete payment and performance when due of all the Obligations and to
induce Lender to enter into this Agreement and make the Loans in accordance with
the terms hereof, Debtor hereby assigns, conveys, mortgages, pledges and
hypothecates to Lender, and hereby grants to Lender a security interest in, all
Debtor's right, title and interest in and to the Collateral.
6.2 Filing of Financing Statements. Debtor authorizes Lender to prepare
and file any financing statement necessary or desirable to perfect Lender's
security interest in the Collateral, and any continuation statement or amendment
with respect thereto, in any appropriate filing office. Debtor hereby ratifies
the filing of any financing statement filed without the signature of Debtor
prior to the date hereof.
6.3 Lender Appointed as Attorney-in-Fact. For so long as Debtor has any
financial obligations to Lender under the Loan Documents, Debtor hereby
irrevocably makes, constitutes, and appoints Lender (and any of Lender's
officers, employees, or agents designated by Lender) as Debtor's true and lawful
attorney, with power to (i) if Debtor refuses to, or fails timely to execute and
deliver any of the documents requested by Lender pursuant to Section 5.4, sign
Debtor's name on any such document; (ii) endorse Debtor's name on any of its
payment items that may come into Lender's possession. The appointment of Lender
as Debtor's attorney, and each and every one of its rights and powers, being
coupled with an interest, is irrevocable.
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SECTION 7. EVENTS OF DEFAULT.
The following events shall each constitute an event of default ("Event
of Default") under this Agreement:
(a) Debtor shall fail to pay any Obligation within ten (10) days
after the same becomes due (whether at the stated maturity, by
acceleration or otherwise);
(b) Any representation or warranty made by Debtor in this
Agreement or in
connection with any Loan, or by Debtor in any document, certificate or
financial or other statement now or hereafter furnished by Debtor to
Lender in connection with this Agreement shall at any time prove to be
untrue or misleading in any material respect as of the time when made;
(c) Debtor shall fail to observe any covenant, condition or
agreement contained in Section 5 and such failure shall continue
unremedied for a period of ten (10) days;
(d) Debtor shall fail to observe or perform any other covenant,
condition or agreement contained in this Agreement or any other Loan
Documents, and such failure shall continue unremedied for a period of
ten (10) days or more;
(e) Any parent or subsidiary of Debtor shall (i) (A) default in
the payment of any obligation to Lender or to any of Lender's
subsidiaries or other affiliates, beyond the period of grace, if any,
provided with respect thereto, or (B) default in the payment of any
material obligation to any Person other than Lender or its subsidiaries
or other affiliates, whether such obligation is for borrowed money,
under any lease, under any guarantee or similar accommodation, or for
the deferred purchase price of property including interest thereon,
beyond the period of grace, if any, provided with respect thereto,
provided, however, that there shall be excluded herefrom, trade and
other accounts and accrued expenses payable in the ordinary course of
business in accordance with customary trade terms and which are not
overdue in accordance with such terms for a period of more than sixty
(60) days, or, if overdue for more than sixty (60) days, as to which a
dispute exists and adequate reserves in conformity with generally
accepted accounting principles have been established on Debtor's books;
or (ii) default in the performance or observance of any other term,
condition or agreement contained in any such material obligation or in
any agreement relating thereto, beyond the period of grace, if any,
provided with respect thereto, if the effect of such default is to
cause, or permit the holder or holders of such obligation (or a trustee
on behalf of such holder or holders) to cause, such obligation to
become due prior to its stated maturity or to realize upon any
collateral given as security therefore;
(f) If an Insolvency Proceeding shall have been commenced by
Debtor or any subsidiary of Debtor;
(g) If an Insolvency Proceeding shall have been commenced against
Debtor or any subsidiary of Debtor, and any of the following events
occur: (i) Debtor or such subsidiary shall have acquiesced or consented
to the institution of such Insolvency Proceeding against it; (ii) the
petition commencing the Insolvency Proceeding shall not have been
timely controverted; provided, however, that, during the pendency of
such period, Lender shall be relieved of its Commitment to extend
credit hereunder; (iii) the petition commencing the Insolvency
Proceeding shall not have been dismissed within forty-five (45)
calendar days of the date of the filing thereof; provided, however,
that, during the pendency of such period, Lender shall be relieved of
its Commitment to extend credit hereunder; or (iv) an order for relief
shall have been entered therein;
(h) Any material adverse change in the financial condition and/or
ownership of Debtor wherein the security interest of Lender is
materially jeopardized or diminished or Debtor's ability to repay
Lender is materially jeopardized or diminished.
SECTION 8. REMEDIES.
8.1 Termination: Acceleration. If an Event of Default specified in
Section 7(f) or (g) shall occur, then, and in any such event, the Commitment
shall immediately terminate and the Loans and all other Obligations shall become
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immediately due and payable without any notice or other action by Lender. If any
other Event of Default shall occur and be continuing, then, and in any such
event, Lender may, without any notice or demand, (i) terminate forthwith the
Commitment and/or (ii) declare the Loans and all other Obligations to be
immediately due and payable.
8.2 Additional Remedies. If an Event of Default shall occur and be
continuing, Lender may exercise, in addition to all other rights and remedies
granted to it in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Obligations, all rights and remedies of
a creditor, whether secured or unsecured, under the Code or under any other
applicable law. Without limiting the generality of the foregoing, Debtor agrees
that in any such event, Lender, without notice or demand of any kind (except the
notice specified below of the time and place of public or private sale) to or
upon Debtor or any other Person (all and each of which demands and/or notices
are hereby expressly waived), may forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase or otherwise dispose of and
deliver the Collateral (or contract to do so), or any part thereof, in one or
more parcels at public or private sale or sales, at any exchange or broker's
board or at any of Lender's offices or elsewhere at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. Lender shall have the right upon any such public sale or sales, to
the extent permitted by law, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in Debtor, which right or
equity is hereby expressly released. Lender shall apply the net proceeds of any
such collection, recovery, receipt, appropriation, realization, disposition or
sale (after deducting all reasonable costs and expenses of every kind incurred
by Lender or incidental to the sale, disposition, care, safekeeping, preparation
for sale or otherwise of any or all of the Collateral or in any way relating to
the rights of Lender hereunder, including reasonable attorneys' fees and legal
expenses) to the payment in whole or to part of the Obligations, in such order
as Lender may elect and only after so applying such net proceeds and after the
payment by Lender of any other amount required by any provision of law, shall
Lender account for the surplus, if any, to Debtor. To the extent permitted by
applicable law, Debtor waives all claims, damages, and demands against Lender
arising out of the repossession, retention or sale of the Collateral. Debtor
agrees that Lender need not give more than ten (10) days notice (which
notification shall be deemed given when mailed in accordance with Section 9.2)
of the time and place of any public sale or of the time after which a private
sale may take place and that such notice is reasonable notification of such
matters. Debtor shall be liable for any deficiency if the proceeds of any sale
or disposition of the Collateral are insufficient to pay the Obligations and all
other amounts to which Lender is entitled.
8.3 Cumulative Remedies. Lender's rights and remedies under this
Agreement and the other Loan Documents are cumulative and may be exercised
singularly or concurrently. Lender has all rights and remedies provided under
this Agreement, the Code, by law, or in equity. Lender's exercise of any right
or remedy is not an election, and no failure or delay on the part of Lender in
exercising any right, remedy, power or privilege hereunder or under any Note
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder or thereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege.
8.4 Waiver by Debtor. Debtor hereby waives presentment, demand, protest
or any notice, except as expressly provided in Section 8 (to the extent
permitted by applicable law) of any kind in connection with this Agreement or
any Collateral. To the extent permitted by the Code or other applicable law,
Debtor waives any rights now or hereafter conferred by statute or otherwise
which limit or modify any of Lender's rights or remedies under this Agreement.
SECTION 9. MISCELLANEOUS.
9.1 Joint and Several Obligations. If Debtor consists of more than one
person or entity, all Obligations of Debtor under this Agreement shall be joint
and several, and all references to Debtor shall mean each and every Debtor.
9.2 Notices. All notices, requests and demands to or upon any party
hereto shall be deemed to have been duly given or made upon receipt when sent by
registered or certified mail, addressed to such party as follows, or to such
other address as may be hereafter designated in writing by such party to the
other party hereto: (i) three (3) Business Days after being deposited in the
United States mail, proper postage prepaid; (ii) as of the Business Day after
the day delivered to overnight courier when delivered to such courier by sender
in timely fashion so as to permit next-day delivery; (iii) upon delivery, when
personally delivered; and (iv) upon dispatch when sent by facsimile machine with
confirmation of transmittal completion received by sender:
Debtor: ThinkEngine Networks, a Delaware Corporation
000 Xxxxxxxxx Xxxx
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Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Fax: (000) 000-0000
Lender: VENCORE SOLUTIONS LLC
0000 XX Xxxxx Xxx, Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Xxx Xxxxxxx
Fax: (000) 000-0000
9.3 Indemnity.
(a) Debtor agrees to pay, and to indemnify and save Lender
harmless from any delay in paying, all taxes, including, without
limitation, sales, use, stamp and personal property taxes (other than
any corporate income, capital, franchise or similar taxes payable by
Lender with respect to the payments made to Lender hereunder or
thereunder) and all license, filing, and registration fees and
assessments and other charges, if any, which may be payable or
determined to be payable in connection with the execution, delivery and
performance of this Agreement or the Notes or any modification thereof.
(b) Debtor hereby further agrees to pay, indemnify, and hold
Lender harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, claims, actions, judgments,
suits, out-of-pocket costs, expenses (including legal expenses) or
disbursements of any kind or nature whatsoever arising out of or
relating to this Agreement, provided, that Debtor shall have no
obligation hereunder with respect to indemnified liabilities arising
from the gross negligence or willful misconduct of Lender, as finally
determined by a court of competent jurisdiction.
9.4 Payment of Lender's Costs. Debtor agrees to pay upon demand all of
Lender's out-of-pocket expenses, including attorneys' fees, incurred in
connection with the negotiation and preparation of the Loan Documents, including
any amendments or modifications thereto. If an Event of Default shall occur and
be continuing, Debtor agrees to reimburse Lender for its reasonable attorney's
fees, court costs and collection costs, whether or not any litigation is
commenced by Lender, which are incurred by Seller to enforce or interpret any of
the Loan Documents or collect any Obligations due to Lender, including, without
limitation, (i) the reasonable costs and fees of a collection agency; and (ii)
attorney's fees and costs incurred at trial, on appeal and in any mediation,
arbitration or bankruptcy proceeding. All such amounts shall, until paid by
Debtor to Lender, constitute Obligations of Debtor secured by the Collateral and
shall be payable on demand.
9.5 Survival of Representations and Warranties. All representations and
warranties made in this Agreement and any certificates delivered pursuant hereto
or thereto shall survive the execution and delivery of this Agreement and the
making of the Loans hereunder, and the agreements contained in Section 9.3 shall
survive payment of the Notes.
9.6 Amendment; Waivers. No provision of this Agreement, the Notes, or
any related agreements, may be amended or modified in any way, nor may
noncompliance therewith be waived, except pursuant to a written instrument
executed by Lender and Debtor.
9.7 Counterparts. This Agreement may be executed by the parties hereto
on any number of separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
9.8 Headings. The headings of the Sections and paragraphs are for
convenience only, are not part of this Agreement and shall not be deemed to
affect the meaning or construction of any of the provisions hereof.
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9.9 Successors or Assigns. THIS AGREEMENT SHALL BE BINDING UPON AND
INURE TO THE BENEFIT OF DEBTOR AND LENDER AND THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS, EXCEPT THAT DEBTOR MAY NOT ASSIGN OR TRANSFER ITS RIGHTS HEREUNDER OR
ANY INTEREST.
9.10 Entire Agreement. This Agreement, including all Notes and
Supplements related hereto, contains the complete, final and exclusive statement
of the terms of the agreement between Lender and Debtor relating to the
transactions hereby contemplated.
9.11 Choice of Law and Venue; Jury Trial Waiver.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF OREGON.
(b) DEBTOR IRREVOCABLY SUBMITS TO THE PERSONAL JURISDICTION OF ANY
STATE OR FEDERAL COURT IN THE STATE OF OREGON, WITH VENUE IN MULTNOMAH COUNTY,
OREGON, PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION AGAINST DEBTOR
OR THE COLLATERAL IN ANY OTHER JURISDICTION. EACH OF THE PARTIES HERETO
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND EACH OF THE PARTIES HERETO HEREBY WAIVES
ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS. EACH OF THE PARTIES HERETO HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO IT AT THE
ADDRESS SET FORTH HEREIN, AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF SUCH PARTY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE U.S. MAIL, PROPER POSTAGE PREPAID.
(c) DEBTOR AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. DEBTOR AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS WAIVER
AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
9.12 Severability; Intent to Limit Charges to Maximum Lawful Rate. If a
court of competent jurisdiction finds any provision of this Agreement or other
Loan Documents to be invalid or unenforceable as to any person or circumstance,
such finding shall not render that provision invalid or unenforceable as to any
other persons or circumstances. If feasible, any such offending provision shall
be deemed to be modified to be within the limits of enforceability or validity;
however, if the offending provision cannot be so modified, it shall be stricken
and all other provisions of this Agreement in all other respects shall remain
valid and enforceable. In no event shall the interest rate or rates payable
under the Notes, plus any other amounts paid in connection herewith or
therewith, exceed the highest rate permissible under any law that a court of
competent jurisdiction shall, in a final determination, deem applicable. Debtor
and Lender, in executing and delivering this Agreement and the Notes, intend
legally to agree upon the rate or rates of interest and manner of payment stated
therein; provided, however, that, anything contained herein to the contrary
notwithstanding, if said rate or rates of interest or manner of payment exceeds
the maximum allowable under applicable law, then as of the date of this
Agreement, Debtor is and shall be liable only for the payment of such maximum as
allowed by law, and payment received from Debtor in excess of such legal
maximum, whenever received, shall be applied to reduce the principal balance of
the Obligations owing by it to the extent of such excess.
Page 9 of 15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date countersigned by Lender below.
Agreed and consented to by LENDER: DEBTOR:
VENCORE SOLUTIONS LLC, THINKENGINE NETWORKS, INC., A
A DELAWARE LIMITED LIABILITY COMPANY DELAWARE CORPORATION
By: /s/ Xxx Xxxxxxxxx By: X /s/ Xxxxxxx Xxxxxxxx
Name: Xxx Xxxxxxxxx Name: XXXXXXX XXXXXXXX
Title: Asst. Vice President Title: CEO
Date: 1/18/07 Date: X January 16, 2007
Page 10 of 15
Supplement Number 1
EXHIBIT A
Promissory Note Number 01
Hereby made a part of Loan and Security Agreement Number 1506
$1,500,000.00
FOR VALUE RECEIVED, ThinkEngine Networks, Inc., a Delaware Corporation.
("Debtor") promises to pay to the order of VENCORE SOLUTIONS LLC, a Delaware
Limited Liability Company ("Lender"), at such address as Lender may designate by
notice to Debtor, in lawful money of the United States, the principal sum of One
Million Five Hundred Thousand Dollars and 00/100 ($1,500,000.00) together with
interest, calculated at 13.00% per annum, in Six (6) consecutive interest only
installments of not less than Sixteen Thousand Two Hundred Fifty Dollars and
00/100 ($16,250.00) each, beginning on March 10, 2007 followed by Thirty
consecutive installments of not less than Fifty-Eight Thousand Eight Hundred
Thirty-Two Dollars and 00/100 ($58,832.00) and continuing on the same day of
each month thereafter through and including February 10, 2010. In addition to
the principal and interest payments, a final payment of One Hundred Fifty
Thousand Dollars and 00/100 ($150,000.00) ("Final Payment") shall be due on the
earlier to occur of February 10, 2010 or Prepayment).
This Note is one of the Notes referred to in the Loan and Security
Agreement Number 1506 between Debtor and Lender (as the same may from time to
time be amended, supplemented or otherwise modified, the "Agreement"), is
secured as provided in the Agreement, and is subject to the terms and provisions
thereof. Capitalized terms used herein shall have the respective meanings given
them in the Agreement unless otherwise defined herein or unless the context
otherwise requires.
If a payment is more than ten (10) days late, Debtor will be assessed a
late fee and charged five percent (5%) of such payment.
Upon the occurrence and continuance of any one or more of the Events of
Default specified in the Agreement, the amounts then remaining unpaid on this
Note, together with any interest accrued, may be declared to be (or, with
respect to certain Events of Default, automatically shall become) immediately
due and payable in the sum of all existing delinquent and accrued interest, late
fees and charges plus the remaining unpaid principal due under the Note.
Interest shall accrue on the accelerated balance at the lesser of eighteen
percent (18%) per annum or the highest rate allowed under applicable law.
In the event that Lender or any holder of this Note shall institute any
action for the enforcement or the collection of this Note, there shall be
immediately due and payable, in addition to the unpaid balance hereof, all costs
and expenses of such action, including reasonable attorneys' fees and costs,
whether incurred at trial, on appeal or in any bankruptcy proceeding.
Debtor and any other person who signs, guarantees or endorses this
Note, to the extent allowed by law, waive presentment, demand for payment,
protest and notice of dishonor. Upon any change in the terms of this Note, and
unless otherwise expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser, shall be released
from liability. All such parties agree that Lender may renew, or extend
(repeatedly and for any length of time) this loan, or release any party or
guarantor or collateral; fail to realize upon or perfect Lender's security
interest in the collateral; or take any other action deemed reasonably necessary
by Lender without the consent of or notice to anyone,
Signature Page to Promissory Note 01 to Follow:
Page 11 of 15
Signature Page to Promissory Note 01
LENDER: DEBTOR:
VENCORE SOLUTIONS LLC, THINKENGINE NETWORKS, INC., A
A DELAWARE LIMITED LIABILITY COMPANY DELAWARE CORPORATION
By: /s/ Xxx Xxxxxxxxx By: X /s/ Xxxxxxx Xxxxxxxx
Name: Xxx Xxxxxxxxx Name: XXXXXXX XXXXXXXX
Title: Asst. Vice President Title: CEO
Date: 1/18/07 Date: X January 16, 2007
Page 12 of 15
EXHIBIT B
Supplement Number 1
Hereby made a part of Loan and Security Agreement Number 1506
and Promissory Note Number 01
This Supplement is executed and delivered by ThinkEngine Networks,
Inc., a Delaware Corporation ("Debtor") pursuant to the terms of a Loan and
Security Agreement Number 1506 between Debtor and VENCORE SOLUTIONS LLC, a
Delaware Limited Liability Company ("Lender"), as the same may from time to time
be amended, supplemented or otherwise modified (the "Agreement"). Capitalized
terms used herein shall have the respective meanings given them in the Agreement
unless otherwise defined herein or unless the context otherwise requires.
1. Debtor hereby affirms that (i) the representations and warranties
set forth in Section 4 of the Agreement are true and correct in
all material respects as of the date hereof; and (ii) no Default
or Event of Default has occurred and is continuing.
2. Upon the funding thereof, Debtor hereby affirms that Lender will
have made a Loan to it for the purpose above described, which
Loan is evidenced by a Note, in the principal amount of One
Million Five Hundred Thousand Dollars and 00/100 ($1,500,000.00).
LENDER: DEBTOR:
VENCORE SOLUTIONS LLC, THINKENGINE NETWORKS, INC., A
A DELAWARE LIMITED LIABILITY COMPANY DELAWARE CORPORATION
By: /s/ Xxx Xxxxxxxxx By: X /s/ Xxxxxxx Xxxxxxxx
Name: Xxx Xxxxxxxxx Name: XXXXXXX XXXXXXXX
Title: Asst. Vice President Title: CEO
Date: 1/18/07 Date: X January 16, 2007
Page 13 of 15
SCHEDULE I
Hereby made a part of Loan and Security Agreement Number 1506
and Promissory Note Number 01
DESCRIPTION OF COLLATERAL:
All personal property of Debtor of every kind, whether presently existing or
hereafter created or acquired, and wherever located, including but not limited
to: accounts, equipment, machinery, furniture, fixtures, tools and supplies,
inventory, general intangibles, deposit accounts, investment property,
securities, financial assets, customer lists, and the proceeds thereof.
Collateral shall not include the following:
(a) Any and all copyright rights, copyright applications, copyright
registrations and like protection in each work or authorship and derivative work
thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret, now or hereafter existing, created, acquired or held
(collectively, the "Copyrights");
(b) Any and all trade secrets, and any and all intellectual property
rights in computer software and computer software products now or hereafter
existing, created, acquired or held;
(c) Any and all design rights which may be available to Debtor now or
hereafter existing, created, acquired or held;
(d) All patents, patent applications and like protections, including,
without limitation, improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same, including, without limitation,
the patents and patent applications (collectively, the "Patents");
(e) Any trademark and servicemark rights, whether registered or not,
applications to register and registrations of the same and like protections, and
the entire goodwill of the businesses of Debtor connected with and symbolized by
such trademarks (collectively, the "Trademarks");
(f) Any and all claims for damages by way of past, present and future
infringements of any of the rights included above, with the right, but not the
obligation, to xxx for and collect such damages for said use or infringement of
the intellectual property rights identified above;
(g) All licenses or other rights to use any of the Copyrights, Patents
or Trademarks and all license fees and royalties arising from such use to the
extent permitted by such license or rights;
(h) All amendments, extensions, renewals and extensions of any of the
Copyrights, Patents or Trademarks.
Lender will subordinate its Security Interest in accounts to Borrower's existing
or future Accounts Receivable lender.
Signature Page to Schedule I to follow:
Page 14 of 15
Signature Page to Schedule I
LENDER: DEBTOR:
VENCORE SOLUTIONS LLC, THINKENGINE NETWORKS, INC., A
A DELAWARE LIMITED LIABILITY COMPANY DELAWARE CORPORATION
By: /s/ Xxx Xxxxxxxxx By: X /s/ Xxxxxxx Xxxxxxxx
Name: Xxx Xxxxxxxxx Name: XXXXXXX XXXXXXXX
Title: Asst. Vice President Title: CEO
Date: 1/18/07 Date: X January 16, 2007
Page 15 of 15
