REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement (the "Agreement")
is made and entered into by and between ARI Network
Services, Inc. ("ARI") and Xxxxxx & Xxxxxxxx
Corporation ("BSC") as of the date set forth in the
last page of this Agreement.
ARTICLE I - LOANS
1.1. Loans. Prior to April 30, 1999 (the
"Termination Date"), or such earlier date as BSC
demands payment of any loans made hereunder in
accordance with Article III hereof, BSC shall, subject
to the terms hereof, make loans to ARI from time to
time up to the aggregate principal amount outstanding
of the lesser of (a) $250,000 or (b) such lesser amount
as may be available hereunder pursuant to Section 1.4
hereof. Each loan made hereunder shall be evidenced by
a promissory note (the "Note") of Borrower payable to
the order of BSC substantially in the form of the Note
attached hereto as Exhibit A. The Note shall be
expressed to be payable on the earlier of the
Termination Date or the date demand for payment is made
by BSC and shall bear interest on the outstanding
balance at the Prime Rate (as defined below) plus 2.0%
payable monthly on the first day of each month. For
purposes hereof, "Prime Rate" means the fluctuating per
annum rate of interest published from time to time in
the Midwest Edition of The Wall Street Journal under
the "Money Rates" caption as the "Prime Rate" (and if
more than one such "Prime Rate" shall be so published
on any date, the highest of such rates for such date),
which rate shall change effective as of the date of any
published change in such published "Prime Rate."
1.2. Advances and Paying Procedure. Each request
for a loan may be made by telephone, specifying the
date of the requested loan and the amount thereof and
shall be made by an authorized officer of ARI. Upon
request of BSC, ARI shall promptly confirm each
telephonic request for a loan by delivering appropriate
written confirmation of such request to BSC. ARI shall
be obligated to repay all loans hereunder
notwithstanding the failure of BSC to receive any such
confirmation and notwithstanding the fact that any
person requesting a loan was not in fact authorized to
do so. Upon fulfillment of the applicable conditions
set forth in Section 1.3 below, BSC shall disburse the
amount of the requested loan in accordance with ARI's
directions.
1.3. Conditions to Borrowing. BSC's obligation to
make any loans hereunder shall be subject to the
following:
(i) BSC has received (a) duly executed copies of
this Agreement and the Note, and (b) a duly executed
Selective Business Security Agreement substantially in
the form of Exhibit B attached hereto (the "Security
Agreement") together with executed UCC financing
statements necessary to perfect the security interest
in favor of BSC created thereunder;
(ii) the representations and warranties contained
in Article II hereof are correct on and as of the day
of such loan as though made on such date;
(iii) ARI shall be in compliance with the
covenants contained in Article II hereof;
(iv) ARI shall not have any further availability
for borrowing pursuant to the terms of its credit
facility with WITECH Corporation ("WITECH") or any
other existing credit facility; and
(v) WITECH shall have executed and delivered to
BSC a release of its security interest in the
collateral securing the Note pursuant to the Security
Agreement.
1.4. Reduction of Facility Amount.
Notwithstanding anything herein to the contrary, in the
event ARI issues additional shares of its common stock
after the date hereof, other than the issuance of stock
(i) to employees of ARI under employee benefit plans,
(ii) to officers and directors under stock option plans
or (iii) pursuant to outstanding warrants for the
purchase of such stock, the amount available for
borrowing hereunder shall be reduced, dollar for
dollar, by an amount equal to the aggregate amount of
net cash proceeds of such sales of stock, but only to
the extent such aggregate net cash proceeds exceed
Eight Hundred Thousand Dollars ($800,000) plus accrued
interest on the WITECH facility.
ARTICLE II - WARRANTIES AND COVENANTS
During the term of this Agreement, and while any
obligations of Borrower to BSC are outstanding, ARI
warrants and agrees as follows:
2.1. Organization and Authority; Litigation. ARI
is a validly existing corporation, in good standing
under the laws of the State of Wisconsin, and has all
requisite power and authority, corporate or otherwise,
and possesses all licenses necessary, to conduct its
business and own its properties. The execution,
delivery and performance of this Agreement and the
other loan documents (i) are within ARI's power; (ii)
have been duly authorized by proper corporate action;
(iii) do no require the approval of any governmental
agency; and (iv) will not violate any law, agreement or
restriction by which ARI is bound. This Agreement and
the other loan documents are the legal, valid and
binding obligations of ARI, enforceable against ARI in
accordance with their terms.
2.2. Corporate Existence; Business Activities;
Assets. ARI shall (i) preserve its corporate
existence, rights and franchises; (ii) carry on its
business activities in substantially the manner such
activities are conducted as of the date of this
Agreement; (iii) not liquidate, dissolve, merge or
consolidate with or into another entity; and (iv) not
sell, lease, transfer or otherwise dispose of all or
substantially all of its assets.
2.3. Use of Proceeds; Margin Stock. Loans by BSC
hereunder shall be used exclusively by ARI for working
capital and other regular and valid purposes. ARI
shall not use any of the loan proceeds to purchase or
carry "margin" stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System).
2.4. Financial Statements and Reporting. Any
financial statements and other information previously
provided to BSC or provided to BSC in the future are or
shall be complete and accurate and prepared in
accordance with generally accepted accounting
principles. ARI shall (i) maintain accounting records
in accordance with generally accepted principles of
accounting consistently applied throughout the
accounting periods involved; and (ii) provide BSC with
such information concerning its business affairs and
financial condition as BSC may reasonably request.
ARTICLE III - DEFAULT AND ACCELERATION
3.1. Events of Default. Upon the occurrence of
any one or more of the following events of default:
(i) ARI fails to pay any amount when due
under this Agreement;
(ii) Any representation or warranty made
under this Agreement or information provided by
ARI in connection with this Agreement is or was
false or fraudulent in any material respect;
(iii) ARI fails to timely observe or perform
any of the covenants or duties contained in this
Agreement or in the Asset Purchase Agreement of
even date between ARI and BSC;
(iv) An event of default occurs under the
Security Agreement;
then at BSC's option, and upon notice written or verbal
to ARI, BSC's obligation to make loans under this
Agreement shall terminate and the total unpaid balance
shall immediately become due and payable without
presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by ARI.
3.2. Bankruptcy and Insolvency. BSC's obligation
to make loans under this Agreement shall automatically
and immediately terminate and the total unpaid balance
shall automatically and immediately become due and
payable in the event ARI becomes a subject of
bankruptcy or other insolvency proceedings.
ARTICLE IV - MISCELLANEOUS
4.1. Delay, Cumulative Remedies. No delay on the
part of BSC in exercising any right, power or privilege
shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege
preclude other or further exercise thereof or the
exercise of any other right, power or privilege.
4.2. Successors. The rights, options, powers and
remedies granted in this Agreement shall extend to BSC
and to its successors and assigns, shall be binding
upon ARI and its successors and assigns.
4.3. Payments. Payments due under the Note shall
be made in lawful money of the United States. All
payments may be applied by BSC to principal, interest
and other amounts due under this Agreement, the Note or
the Security Agreement in any order which BSC elects.
4.4. Applicable Law and Jurisdiction;
Interpretation and Modification. This Agreement, the
Note and the Security Agreement shall be governed by
and interpreted in accordance with the laws of the
State of Wisconsin. Invalidity of any provision of
this Agreement shall not affect the validity of any
other provision. The provisions hereof shall not be
altered, amended or waived without express written
consent of BSC (and ARI, when appropriate).
4.5 Dispute Resolution. All controversies or
claims between ARI and BSC arising out of or relating
to this Agreement, the Security Agreement or the Note
or the breach thereof, including any dispute as to the
existence or validity of this Agreement or the
arbitrability of any particular issue which cannot be
settled amicably by ARI and BSC, shall be finally
settled in an arbitration to be conducted under the
commercial arbitration rules of the American
Arbitration Association (the "AAA") by a single
arbitrator selected under the rules of the AAA. Any
such arbitration proceedings shall be conducted in
English and shall be held in Milwaukee, Wisconsin. The
decision of any such arbitrator shall be final and
binding upon ARI and BSC and may be enforced in any
court of competent jurisdiction, and neither ARI nor
BSC shall seek redress against each other in any court
or tribunal except solely for the purpose of obtaining
execution of any arbitral award or of obtaining a
judgment consistent therewith. The fees and expenses
of the arbitration proceedings shall be divided equally
between ARI and BSC; provided, that ARI and BSC each
shall pay the fees and expenses of its own legal
counsel and representatives incurred in connection with
the arbitration proceedings.
IN WITNESS WHEREOF, the undersigned have executed
this Line of Credit Agreement as of the 15th day of
September, 1998.
ARI NETWORK SERVICES, INC. XXXXXX & XXXXXXXX CORPORATION
By:/s/ Xxxx X. Xxxxxxx By:/s/ Xxxxxxx X. Xxxxxxxx
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