Exhibit 10.1
LOAN AND SECURITY AGREEMENT
Dated as of April 11, 2001
among
INTERPLAY ENTERTAINMENT CORP.,
INTERPLAY OEM, INC.
and
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
as Co-Borrowers
and
LaSALLE BUSINESS CREDIT, INC.,
as Lender
$15,000,000
TABLE OF CONTENTS
Page
1. DEFINITIONS............................................................................... 1
2. REVOLVING LOANS........................................................................... 15
3. INTENTIONALLY DELETED..................................................................... 16
4. LETTERS OF CREDIT......................................................................... 16
5. INTEREST, FEES AND CHARGES................................................................ 16
6. LOAN ADMINISTRATION....................................................................... 21
7. GRANT OF SECURITY INTEREST TO LASALLE..................................................... 22
8. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY
INTERESTS THEREIN22
9. POSSESSION OF COLLATERAL AND RELATED MATTERS.............................................. 23
10. COLLECTIONS............................................................................... 23
11. SCHEDULES AND REPORTS..................................................................... 25
12. TERM...................................................................................... 27
13. REPRESENTATIONS AND WARRANTIES............................................................ 28
14. COVENANTS................................................................................. 33
15. CONDITIONS PRECEDENT...................................................................... 37
16. DEFAULT................................................................................... 39
17. REMEDIES UPON AN EVENT OF DEFAULT......................................................... 40
18. INDEMNIFICATION........................................................................... 41
19. NOTICES................................................................................... 42
20. CHOICE OF GOVERNING LAW AND CONSTRUCTION.................................................. 42
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement") is made as of this 11/th/ day of
April, 2001, by and between LaSALLE BUSINESS CREDIT, INC., a Delaware
corporation ("LaSalle"), with its principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and INTERPLAY ENTERTAINMENT CORP., a Delaware
corporation, INTERPLAY OEM, INC., a California corporation, and ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇,
INC., a Delaware corporation (each a "Borrower" and collectively, "Borrowers"),
each with its principal office at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
WITNESSETH:
WHEREAS, from time to time Borrowers may request LaSalle to make loans
and advances to and extend certain credit accommodations to Borrowers, and the
parties wish to provide for the terms and conditions upon which such loans,
advances and credit accommodations shall be made;
NOW, THEREFORE, in consideration of any loans, advances and credit
accommodations (including any loans by renewal or extension) hereafter made to
Borrowers by LaSalle, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by Borrowers, the parties agree
as follows:
1. DEFINITIONS.
(1) General Definitions
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"Account," "Account Debtor," "Chattel Paper," "Documents,"
"Equipment," "General Intangibles," "Goods," "Instruments," and "Inventory,"
shall have the respective meanings assigned to such terms, as of the date of
this Agreement, in the Illinois Uniform Commercial Code.
"Affiliate" shall mean, with respect to any Person, any other Person
(i) directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person or (ii) directly or indirectly owning
or holding five percent (5%) or more of the equity interest in such Person. For
purposes of this definition, "control" when used with respect to any Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Bank" shall mean LaSalle National Bank, Chicago, Illinois, a national
banking association.
"Bankruptcy Code" shall mean the United States Bankruptcy Code (11
U.S.C.(S).101, et seq.).
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"Benefit Plan" shall mean an employee pension benefit plan of any
Borrower or an ERISA Affiliate, as defined in Section 3(2) of ERISA, which is
subject to Title IV of ERISA.
"Borrowing Base" shall have the meaning specified in paragraph 2(b)(i)
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hereof.
"Business Day" shall mean any day other than a Saturday, Sunday, or
such other day as banks in Chicago, Illinois are authorized or required to be
closed for business.
"Capital Expenditures" shall mean, with respect to any period, the
aggregate of all expenditures (whether paid in cash or accrued as liabilities
and including expenditures for capitalized lease obligations) by Borrowers
during such period that are required by GAAP to be included in or reflected by
the property, plant or equipment or similar fixed asset accounts (or in
intangible accounts subject to amortization) in the balance sheet of Borrowers.
"Change of Control" shall mean, with respect to IEC, (a) at any time
the members of the Board of Directors of IEC on the date hereof shall not
constitute a majority of the Board of Directors; or (b) any Person or group
(within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended), other than ▇▇▇▇▇ Interactive SA or ▇▇▇▇▇ ▇▇▇▇▇, or Persons
controlled by any of them, shall at any time have acquired direct or indirect
beneficial ownership of a percentage equal to or more than thirty percent (30%)
of the outstanding voting stock of IEC; and with respect to Interplay OEM, IEC
shall cease to be the Parent of OEM.
"Closing Agenda" shall have the meaning specified in paragraph
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15(a)(i) hereof.
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"Closing Date" shall mean the date upon which the initial Loan is
made.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all of the personal property of each of the
Borrowers described in paragraph 7 hereof, and all other real or personal
property of any Obligor or any other Person now or hereafter pledged to LaSalle
to secure, either directly or indirectly, repayment of any of the Liabilities.
"Default" shall mean any event, condition or default which with the
giving of notice, the lapse of time or both would be an Event of Default.
"Dilution" shall mean, with respect to any period, the percentage
obtained by dividing: (a) the sum of non-cash credits against Accounts of
Borrowers for such period, plus pending or probable, but not yet applied, non-
cash credits against Accounts of Borrowers for such period, as reasonably
determined by LaSalle, by (b) gross invoiced sales of Borrowers for such period.
"EBITDA" shall mean, with respect to any period, net income after
taxes for such period (excluding any after-tax gains or losses on the sale of
assets and excluding other after-tax extraordinary gains or losses) plus
----
interest expense, income tax expense, depreciation and
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amortization for such period, less gains and losses attributable to any fixed
----
asset sales made during such period, minus interest income, plus or minus any
----- ---- -----
other non-cash charges or gains which have been subtracted or added in
calculating net income after taxes for such period, all as determined in
accordance with GAAP.
"Eligible Account" shall mean an Account owing to either Borrower
which is acceptable to LaSalle in its sole discretion for lending purposes.
LaSalle shall, in general, consider an Account to be an Eligible Account if it
meets, and so long as it continues to meet, the following requirements:
(1) it is genuine and in all respects is what it purports to be;
(2) it is owned by either Borrower and such Borrower has the
right to subject it to a security interest in favor of LaSalle;
(3) it arises from (A) the performance of services by a Borrower
and such services have been fully performed and acknowledged and accepted by the
Account Debtor thereunder; or (B) the sale of Goods by a Borrower, and such
Goods have been completed in accordance with the Account Debtor's specifications
(if any) and delivered to and accepted by the Account Debtor, such Account
Debtor has not refused to accept and has not returned any of the Goods, or has
not refused to accept any of the services, which are the subject of such
Account, and such Borrower has possession of, or has delivered to LaSalle at
LaSalle's request, shipping and delivery receipts evidencing delivery of such
Goods;
(4) it is evidenced by an invoice rendered to the Account Debtor
thereunder, is due and payable within one hundred twenty (120) days after the
stated invoice date thereof and does not remain unpaid more than ninety (90)
days past the stated due date thereof; provided, however, that if more than
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fifty percent (50%) of the aggregate dollar amount of invoices owing by a
particular Account Debtor remain unpaid for more than one hundred twenty (120)
days past the respective invoice dates thereof or ninety (90) days after the
stated due date, then all Accounts owing to either Borrower by that Account
Debtor shall be deemed ineligible;
(5) it is not subject to any prior assignment, claim, lien,
security interest or encumbrance whatsoever, other than Permitted Liens;
(6) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor thereunder, and is not subject to setoff,
counterclaim, credit, allowance or adjustment by such Account Debtor, or to any
claim by such Account Debtor denying liability thereunder in whole or in part;
(7) it does not arise out of a contract or order which fails in
any material respect to comply with the requirements of applicable law;
(8) the Account Debtor thereunder is not a director, officer,
employee or agent of either Borrower, or a Subsidiary, Parent or Affiliate of
either Borrower;
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(9) it is not an Account with respect to which the Account
Debtor is the United States of America or any department, agency or
instrumentality thereof, unless Borrower assigns its right to payment of such
Account to LaSalle pursuant to, and in full compliance with, the Assignment of
Claims Act of 1940, as amended;
(10) it is not an Account with respect to which the Account
Debtor is located in a state which requires Borrower, as a precondition to
commencing or maintaining an action in the courts of that state, either to (A)
receive a certificate of authority to do business and be in good standing in
such state, or (B) file a notice of business activities report or similar report
with such state's taxing authority, unless (x) Borrower has taken one of the
actions described in clauses (A) or (B), (y) the failure to take one of the
actions described in either clause (A) or (B) may be cured retroactively by
Borrower at its election, or (z) Borrower has proven, to LaSalle's reasonable
satisfaction, that it is exempt from any such requirements under any such
state's laws;
(11) it is an Account which arises out of a sale made in the
ordinary course of Borrower's business;
(12) the Account Debtor is a resident or citizen of, and is
located within, the United States of America or Canada;
(13) it is not an Account with respect to which the Account
Debtor's obligation to pay is conditional upon the Account Debtor's approval of
the Goods or services or is otherwise subject to any repurchase obligation or
return right, as with sales made on a ▇▇▇▇-and-hold, guaranteed sale, sale on
approval, sale or return or consignment basis;
(14) it is not an Account (A) with respect to which any
representation or warranty contained in this Agreement is untrue in a material
respect or (B) which violates in a material respect any of the covenants of
Borrowers contained in this Agreement;
(15) it is not an Account which, when added to a particular
Account Debtor's other indebtedness to Borrowers, exceeds the lesser of twenty
percent (20%) of the aggregate of Borrowers' Accounts (except for Account
Debtors listed on Schedule 1(xv) annexed hereto) or a credit limit determined by
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LaSalle in its reasonable credit judgment for that Account Debtor, provided,
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however, that Accounts excluded from Eligible Accounts solely by reason of this
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paragraph 1(a)(xv) shall be Eligible Accounts to the extent of such credit
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limit.
(16) it is not an Account with respect to which the prospect of
payment or performance by the Account Debtor is or will be impaired, as
determined by LaSalle in its sole discretion.
(17) it is not an Account arising from progress ▇▇▇▇▇▇▇▇,
invoices for deposits, samples or tooling
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(18) it is not an Account with respect to which the sale is on
an installment basis, lease or other extended payment basis
(19) it is not the portion of an Account representing licensing
fees (except for Interplay OEM, Inc.), late fees, service charges or interest.
"Eligible Inventory" shall mean that portion of the Inventory of a
Borrower which is acceptable to LaSalle in its sole discretion. Without limiting
LaSalle's discretion, LaSalle shall, in general, consider Inventory to be
Eligible Inventory if it meets, and so long as it continues to meet, the
following requirements:
(20) it is owned by a Borrower and such Borrower has the right
to subject it to a first and prior security interest in favor of LaSalle;
(21) it is located on the premises listed on Exhibit A and is
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not in transit;
(22) it is not subject to any prior assignment, claim, lien,
security interest or encumbrance whatsoever, other than Permitted Liens;
(23) it is finished goods held for sale by a Borrower, normally
and currently saleable in the ordinary course and not raw materials or work in
process and is held for sale or furnishing under contracts of service, it is
(except as LaSalle may otherwise consent in writing) new and unused of good and
merchantable quality and free from defects which would, in LaSalle's sole
determination, affect its market value;
(24) it is not stored with a bailee, consignee, warehouseman,
processor or similar party unless LaSalle has given its prior written approval
and any Borrower has caused any such bailee, consignee, warehouseman, processor
or similar party to issue and deliver to LaSalle, in form and substance
reasonably acceptable to LaSalle, such UCC financing statements, warehouse
receipts, waivers and other documents as LaSalle shall reasonably require;
(25) LaSalle has determined in accordance with LaSalle's
customary business practices that it is not unacceptable due to age, type,
category or quantity and is not listed as a "reserve" on Borrower's general
ledger; and
(26) it is not Inventory (A) with respect to which any of the
representations and warranties contained in this Agreement are untrue in any
material respect or (B) which violates in any material respect any of the
covenants of Borrowers contained in this Agreement.
Eligible Inventory shall not include any of the following: (a)
catalogs and other promotional materials of any kind; (b) damaged, defective or
recalled items; (c) obsolete items; (d) items used as demonstrators, prototypes
or salesmen's samples; (e) items of Inventory which have been consigned to
Borrowers or as to which a Person claims a security interest, prior assignment
claim or encumbrances whatsoever other than liens of the type set forth in
clauses (i), (ii) and (iv) of the definition of Permitted Liens; (f) packing and
shipping materials; (g) Inventory located on
5
premises leased by a Borrower from a landlord with whom Landlord has not entered
into a landlord's waiver on terms reasonably satisfactory to Lender; (h)
Inventory which in the reasonable judgment of Lender is considered to be slow
moving or otherwise not merchantable; and (i) Inventory which is subject to a
license agreement which prohibits the assignment thereof or which contains
restrictions which would impair Lender's ability to sell any Inventory subject
to such license agreement unless Lender shall have entered into a licensor
consent letter with the licensor in form and substance reasonably satisfactory
to Lender.
"Environmental Laws" shall mean all federal, state, district, local
and foreign laws, rules, regulations, ordinances, and consent decrees relating
to health, safety, hazardous substances, pollution and environmental matters, as
now or at any time hereafter in effect, applicable to Borrowers' business or
facilities owned or operated by Borrowers, including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contamination,
chemicals, or hazardous, toxic or dangerous substances, materials or wastes into
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and all references to sections thereof shall include such
sections and any predecessor and successor provisions thereto.
"ERISA Affiliate" shall mean any member of a controlled group of
entities as determined under Section 414(b), (c), (m), or (o) of the IRC, of
which the Borrowers are a member.
"Eurocurrency Reserve Requirements" for any day, as applied to a LIBOR
Loan, shall mean the aggregate (without duplication) of the maximum rates of
reserve requirements (expressed as a decimal fraction) in effect with respect to
LaSalle and/or any present or future lender or participant on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under Regulation D or any other applicable regulations of the Board of
Governors of the Federal Reserve System or other governmental authority having
jurisdiction with respect thereto, as now and from time to time in effect,
dealing with reserve requirements prescribed for Eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of such Board)
maintained by LaSalle and/or any such lenders or participants (such rate to be
adjusted to the nearest one sixteenth of one percent (1/16 of 1%) or, if there
is not a nearest one sixteenth of one percent (1/16 of 1%), to the next higher
one sixteenth of one percent (1/16 of 1%)).
"Event of Default" shall have the meaning specified in paragraph 16
hereof.
"Excess Availability" shall mean, as of any date of determination by
LaSalle, the excess, if any, of (i) the Borrowing Base over (ii) the outstanding
Revolving Loans and Letter of Credit Obligations, in each case as of the close
of business on such date. For purposes of calculating Borrowers' Excess
Availability and the amount of the Borrowing Base relating thereto, all of
Borrowers' trade payables and outstanding debt, other than the Liabilities
hereunder, which remain
6
unpaid more than ninety (90) days past invoice date excluding special
arrangements, shall, on the date of the determination of Excess Availability, be
deemed to have been paid by Borrowers.
"Exhibit A" shall mean the exhibit entitled Exhibit A -Business and
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Collateral Locations, which is attached hereto and made a part hereof.
"Exhibit B" shall mean the exhibit entitled Exhibit B - Officer's
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Certificate, which is attached hereto and made a part hereof.
"Fiscal Year" shall mean with respect to each Borrower, the twelve
(12) month accounting period of such Borrower commencing January 1st of each
calendar year and ending December 31st of such calendar year.
"GAAP" shall mean generally accepted accounting principles and
policies in the United States as in effect from time to time.
"Guarantor" shall mean ▇▇▇▇▇ ▇▇▇▇▇ or any other guarantor of the
Liabilities, from time to time.
"Guaranty" shall mean the Guaranty executed and delivered by Guarantor
to LaSalle, as amended, modified or supplemented from time to time.
"Hazardous Materials" shall mean any hazardous, toxic or dangerous
substance, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials or wastes
that are or become regulated under any Environmental Law (including, without
limitation, any that are or become classified as hazardous or toxic under any
Environmental Law).
"Indebtedness" shall mean all obligations of each Borrower which in
accordance with GAAP would be classified upon a balance sheet as liabilities
(except capital stock and surplus earned or otherwise) and in any event, without
limitation by reason of enumeration, shall include all indebtedness, debt and
other similar monetary obligations of each Borrower whether direct or
guaranteed, and all premiums, if any, due at the required prepayment dates of
such indebtedness, and all indebtedness secured by a lien on assets owned by
each Borrower, whether or not such indebtedness actually shall have been
created, assumed or incurred by such Borrower, whether or not such indebtedness
of such Borrower resulting from the acquisition by such Borrower of any assets
subject to any lien shall be deemed, for the purpose hereof, to be the
equivalent of the creation, assumption and incurring of the indebtedness secured
thereby, whether or not actually so created, assumed or incurred.
"Indemnified Party" shall have the meaning specified in paragraph 18
hereof.
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"Interest Coverage Ratio" shall mean, with respect to any period, the
ratio of (i) EBITDA for such period, to (ii) interest expense as calculated in
the determination of net income for such period of Borrowers on a consolidated
basis for such period.
"Interest Period" shall mean:
(27) with respect to any initial request by the Borrowers for a
LIBOR Loan, a one month, two month, three month or six month period commencing
on the borrowing or conversion date with respect to a LIBOR Loan and ending one,
two, three or six months thereafter, as applicable; and
(28) thereafter with respect to any continuation of, or
conversion to, a LIBOR Loan, at the option of the Borrowers, any one month, two
month, three month or six month period commencing on the last day of the
immediately preceding Interest Period applicable to such LIBOR Loan and ending
one, two, three or six months thereafter, as applicable;
provided that, the foregoing provisions relating to Interest Periods are subject
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to the following:
1. if any Interest Period would otherwise end on a day which is not a
Business Day, that Interest Period shall be extended to the next succeeding
Business Day, unless the result of such extension would extend such payment into
another calendar month in which event such Interest Period shall end on the
immediately preceding Business Day;
2. any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month, at the end of such Interest Period) shall end on the last
Business Day of a calendar month; and
3. for purposes of determining the availability of Interest Periods, such
Interest Periods shall be deemed available if (x) the Bank quotes an applicable
rate or LaSalle determines LIBOR, as provided in the definition of LIBOR, (y)
the LIBOR determined by the Bank or LaSalle will adequately and fairly reflect
the cost of maintaining or funding its loans bearing interest at LIBOR, for such
Interest Period, and (z) such Interest Period will end on or before the last day
of the then current term of this Agreement. If a requested Interest Period shall
be unavailable in accordance with the foregoing sentence, Borrowers shall
continue to pay interest on the Liabilities at the applicable per annum rate
based upon the Prime Rate.
"Investment Property" shall mean all of Borrowers' present and future
investment property, including all certificated and uncertificated securities,
securities entitlements, securities accounts, commodity accounts and commodity
contracts.
"Letter of Credit Obligations" shall mean, as of any date of
determination, the sum of (i) the aggregate undrawn face amount of all Letters
of Credit and (ii) the aggregate unreimbursed amount of all drawn Letters of
Credit not already converted to a Loan hereunder.
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"Letters of Credit" shall mean those documentary or stand-by letters
of credit issued for a Borrower's account in accordance with the terms of
paragraph 4 hereof.
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"Liabilities" shall mean any and all obligations, liabilities and
indebtedness of either Borrower to LaSalle or to any parent, affiliate or
subsidiary of LaSalle of any and every kind and nature, howsoever created,
arising or evidenced and howsoever owned, held or acquired, whether now or
hereafter existing, whether now due or to become due, whether primary,
secondary, direct, indirect, absolute, contingent or otherwise (including,
without limitation, obligations of performance), whether several, joint or joint
and several, and whether arising or existing under written or oral agreement or
by operation of law.
"Loan" or "Loans" shall mean any and all Revolving Loans made by
LaSalle to Borrowers pursuant to paragraph 2 hereof and all other loans,
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advances and financial accommodations now or hereafter made by LaSalle to or on
behalf of a Borrower hereunder.
"LIBOR" shall mean, at any time of determination, and subject to
availability, for each applicable Interest Period, a variable rate of interest
equal to: (a) at LaSalle's election (i) the applicable LIBOR quoted to LaSalle
by the Bank, or (ii) the rate of interest determined by LaSalle at which
deposits in U.S. dollars are offered for the relevant Interest Period based on
information presented on Telerate Systems at Page 3750 as of 11:00 A.M. (London
time) on the day which is two (2) Business Days prior to the first day of such
Interest Period, provided that, if at least two such offered rates appear on the
Telerate System at Page 3750 in respect of such Interest Period, the arithmetic
mean of all such rates (as determined by LaSalle) will be the rate used; divided
by (b) a number equal to 1.0 minus the aggregate (but without duplication) of
the rates (expressed as a decimal fraction) of Eurocurrency Reserve Requirements
in effect on the day which is two (2) Business Days prior to the beginning of
such Interest Period.
"LIBOR Lending Office" shall mean the office of the Bank, maintained
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
"LIBOR Loan" shall mean any loans made pursuant to this Agreement
which are made or maintained at a rate of interest based upon LIBOR, provided
that (i) no Default or Event of Default has occurred hereunder, which has not
been waived in writing by LaSalle, and (ii) no LIBOR Loan shall be made with an
Interest Period that ends subsequent to the then current term of this Agreement.
"Lock Box" and "Blocked Account" shall have the meanings specified in
paragraph 10 hereof.
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"Material Adverse Effect" shall mean with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of the
business, property, assets, operations, condition (financial or otherwise) or
prospects of Borrowers, on a consolidated basis.
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"Multiemployer Plan" shall mean a plan described in Section 4001(a)(3)
of ERISA which covers employees of any Borrower or any ERISA Affiliate.
"Note" shall mean the Revolving Note, as the same may be amended from
time to time.
"Obligor" shall mean each Borrower and each Person who is or shall
become primarily or secondarily liable for any of the Liabilities; provided,
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however, that such term shall not include any Account Debtor.
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"Other Agreements" shall mean all agreements, instruments and
documents including, without limitation, guaranties, mortgages, trust deeds,
pledges, powers of attorney, consents, assignments, contracts, notices, security
agreements, leases, financing statements and all other writings heretofore, now
or from time to time hereafter executed by or on behalf of any Borrower or any
other Person and delivered to LaSalle or to any parent, affiliate or subsidiary
of LaSalle in connection with the Liabilities or the transactions contemplated
hereby.
"Parent" shall mean any Person now or at any time or times hereafter
owning or controlling (alone or with any other Person) at least a majority of
the issued and outstanding voting stock or other similar ownership interest of
any Borrower or any Subsidiary.
"Permitted Liens" shall mean (i) statutory liens of landlords,
carriers, warehousemen, mechanics, materialmen or suppliers incurred in the
ordinary course of business and securing amounts not yet due or declared to be
due by the claimant thereunder, (ii) liens or security interests in favor of
LaSalle, (iii) zoning restrictions and easements, rights of way, licenses,
covenants and other restrictions affecting the use of real property that do not
individually or in the aggregate have a Material Adverse Effect on Borrowers'
ability to use such real property for its intended purpose in connection with
Borrowers' business, (iv) liens securing the payment of taxes or other
governmental charges not yet delinquent or being contested in good faith and by
appropriate proceedings, (v) liens incurred or deposits made in the ordinary
course of Borrowers' business in connection with capitalized leases or purchase
money security interests for purchase of, and applying only to, Equipment
included in the permitted borrowings under paragraph 13(q) or permitted as
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Capital Expenditures under paragraph 14(n), the documents relating to such liens
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to be in form and substance reasonably acceptable to LaSalle, (vi) liens
securing indebtedness owing by any Subsidiary to any Borrower to the extent such
indebtedness is permitted under paragraph 14(q), or to any other Subsidiary of
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any Borrower, (vii) deposits to secure performance of bids, trade contracts,
leases and statutory obligations (to the extent not excepted elsewhere herein);
(viii) liens specifically permitted by LaSalle in writing as set forth on
Schedule 1(a) attached hereto; (ix) any lien arising out of the refinancing,
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extension, renewal or refunding of any indebtedness secured by any lien
permitted by any of the foregoing subparagraphs (i) through (viii) inclusive;
--------------------------------
provided, that (a) such indebtedness is not secured by any additional assets,
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and (b) the amount of such indebtedness is not increased, (x) pledges or
deposits in connection with worker's compensation, unemployment insurance and
other social security legislation, (xi) rights of setoff, banker's lien and
other similar rights arising solely by operation of law and (xii) judgment liens
that shall not have been in existence for a period longer than thirty (30) days
after the creation thereof or, if a stay or execution shall have been obtained,
for a
10
period longer than thirty (30) days after the expiration of such stay; and
(xiii) liens securing indebtedness (other than indebtedness permitted pursuant
to Section 13(i)) of the Borrowers in an amount not to exceed $250,000).
--------------
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company venture, trust, unincorporated organization,
association, corporation, institution, entity, party or foreign or United States
government (whether federal, state, county, city, municipal or otherwise),
including, without limitation, any instrumentality, division, agency, body or
department thereof.
"Prime Rate" shall mean the publicly announced prime rate of Bank in
effect from time to time. The Prime Rate is not intended to be the lowest or
most favorable rate of Bank in effect at any time.
"Prime Rate Loans" shall mean any loans or advances made pursuant to
this Agreement made or maintained at a rate of interest based upon the Prime
Rate.
"Revolving Loans" shall have the meaning specified in paragraph 2
-----------
hereof.
"Revolving Loan Commitment" shall mean the sum of $15,000,000.
"Revolving Note" shall mean the promissory note in the original
principal amount of $15,000,000, executed by Borrowers to the order of LaSalle,
dated as of the Closing Date.
"Subordinated Creditor" shall mean collectively ▇▇▇▇▇ ▇▇▇▇▇, and his
successors and assigns, and Microsoft Corporation, and its successors and
assigns.
"Subordinated Debt Documents" shall mean all documents evidencing debt
from Borrowers or any one of them to Subordinate Creditor or any one of them as
they may be amended, modified or supplemented from time to time.
"Subordination Agreement" shall mean that certain Subordination
Agreement and Intercreditor Agreement dated as of the Closing Date between
LaSalle and Subordinated Creditor pursuant to which the indebtedness evidenced
by the Subordinated Debt Documents is subordinated to the Liabilities and the
liens in favor of LaSalle, which agreement shall be in form and substance
acceptable to LaSalle.
"Subsidiary" shall mean any corporation of which more than fifty
percent (50%) of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time stock of any other class of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at the
time, directly or indirectly, owned by any Borrower or by any partnership or
joint venture of which more than fifty percent (50%) of the outstanding equity
interests are at the time, directly or indirectly, owned by any Borrower.
11
"Tangible Net Worth" shall mean with respect to any applicable fiscal
period, the following for Borrowers, each calculated on a consolidated basis,
for such period: shareholders' equity (including retained earnings), less the
book value of all intangible assets and less prepaid expenses, reasonably
determined by LaSalle on a consistent basis, plus the amount of any debt
subordinated to LaSalle on terms and conditions acceptable to LaSalle in its
sole judgment.
"Term" shall have the meaning specified in paragraph 12 hereof.
------------
"Total Credit Facility" shall mean the sum of $15,000,000.
(2) Accounting Terms and Definitions. Unless otherwise defined or
--------------------------------
specified herein, all accounting terms used in this Agreement shall be construed
in accordance with GAAP, applied on a basis consistent in all material respects
with the financial statements delivered by Borrowers to LaSalle on or before the
Closing Date. All accounting determinations for purposes of determining
compliance with the financial covenants contained in paragraph 14(n) shall be
---------------
made in accordance with GAAP as in effect on the Closing Date and applied on a
basis consistent in all material respects with the audited financial statements
delivered to LaSalle by Borrowers on or before the Closing Date. The financial
statements required to be delivered hereunder from and after the Closing Date,
and all financial records, shall be maintained in accordance with GAAP. If GAAP
shall change from the basis used in preparing the audited financial statements
delivered to LaSalle by Borrowers on or before the Closing Date, the
certificates required to be delivered pursuant hereto demonstrating compliance
with the covenants contained herein shall include, at the election of Borrowers
or upon the request of LaSalle, calculations setting forth the adjustments
necessary to demonstrate how Borrowers are in compliance with the financial
covenants based upon GAAP as in effect on the Closing Date.
(3) (i) The liability of each Borrower for all amounts due to
LaSalle under Agreement shall be joint and several regardless of which Borrower
actually receives any extensions of credit hereunder or on its books and
records. Each Borrower's Liabilities with respect to the Loans made to it and
related fees, costs and expenses, and each Borrower's obligations arising as a
result of the joint and several liability of each Borrower hereunder, together
with the related fees, costs and expenses, shall be separate and distinct
obligations, all of which are primary obligations of each Borrower.
Each Borrower's Liabilities arising as a result of the joint and
several liability of the Borrowers hereunder with respect to extensions of
credit made to the other Borrower hereunder shall, to the fullest extent
permitted by law, be unconditional irrespective of (i) the validity,
enforceability, avoidance or subordination of the Liabilities of the other
Borrower or of any promissory note or other documents evidencing all or any part
of the Liabilities from the other Borrower, any other guarantor, or any other
security therefor, or the absence of any other action to enforce the same, (ii)
the waiver, consent, extension, forbearance or granting of any indulgence by
LaSalle with respect to any provision of any instrument evidencing the
Liabilities of the other Borrower, or any part thereof, or any other agreement
now or hereafter executed by the other Borrower, and delivered to LaSalle, (iii)
the failure by LaSalle to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for the
12
Liabilities of the other Borrower, (iv) LaSalle's election, in any proceeding
instituted under the Bankruptcy Code, of the application of Section 1111(b)(2)
of the Bankruptcy Code, (v) any borrowing or granting of a security interest by
the other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy
Code, (vi) the disallowance of all or any portion of LaSalle's claim(s) for
repayment of the Liabilities of the other Borrower under Section 502 of the
Bankruptcy Code, or (vii) any other circumstance which might constitute a legal
or equitable discharge or defense of a guarantor or the other Borrower. With
respect to each Borrower's Liabilities arising as a result of the joint and
several liability of each Borrower hereunder with respect to loans or other
extensions of credit made to the other Borrower hereunder, such Borrower waives,
until the Liabilities shall have been indefeasibly paid in full and this
Agreement shall have been terminated, any right to enforce any right of
subrogation or any remedy which LaSalle now has or may hereafter have against
any Borrower, any endorser or any guarantor of all or any part of the
Liabilities, and any benefit of, and any right to participate in, any security
or collateral given to LaSalle, whether any such right arises by way of
suretyship or otherwise. Each Borrower hereby further waives, to the fullest
extent permitted by law, all suretyship or similar defense in respect of LaSalle
and the transactions contemplated herein.
Upon any Event of Default, LaSalle may, at its sole election, proceed
directly and at once, without notice, against any Borrower to collect and
recover the full amount, or any portion of the Liabilities, without first
proceeding against any other Borrower or any other person, against any security
or collateral for the Liabilities. Each Borrower consents and agrees that
LaSalle shall not be under any obligation to marshal any assets in favor of such
Borrower or against or in payment of any or all of the Liabilities.
(1) In order to utilize the borrowing powers of the Borrowers in
the most efficient and economical manner, and in order to facilitate the
handling of the accounts of the Borrowers on LaSalle's books, the Borrowers have
requested, and LaSalle has agreed to handle accounts of the Borrowers on
LaSalle's books on a combined basis, all in accordance with the following
provisions: (i) in lieu of maintaining separate accounts on LaSalle's books in
the name of each of the Borrowers, LaSalle shall maintain one account under the
name: Interplay Entertainment Corp. (herein the "Collective Account").
Confirmatory assignments of Accounts will continue to be made to LaSalle by each
of the Borrowers. Loans and advances made by LaSalle to any of the Borrowers
will be charged to the Collective Account indicated above, along with any
charges and expenses under this Agreement. The Collective Account will be
credited, with all amounts received by LaSalle from any of the Borrowers or from
others for their account including all amounts received by LaSalle in payment of
Accounts assigned to LaSalle as provided in this Agreement; (ii) each month
LaSalle will render to the Borrowers one extract of the combined Collective
Account, which shall be deemed to be an account stated as to each of the
Borrowers and which will be deemed correct and accepted by all of the Borrowers
unless LaSalle receives a written statement of exceptions from them within
thirty (30) days after such extract has been rendered by LaSalle. It is
expressly understood and agreed by each of the Borrowers that LaSalle shall have
no obligation to account separately to any of the Borrowers; (iii) requests for
loans and advances may be made by Interplay Entertainment Corp. ("IEC") as agent
for the Borrowers and LaSalle is hereby authorized and directed to accept, honor
and rely on such instructions and requests, subject to the limitation and
provisions set forth in this Agreement. It is expressly understood and agreed by
each of the
13
Borrowers that LaSalle shall have no responsibility to inquire into the
correctness of the apportionment, allocation, or disposition of (x) any loans
and advances made to any of the Borrowers or (y) any of LaSalle's expenses and
charges relating thereto. All loans and advances are made for the Collective
Account; (iv) the Borrowers jointly and severally unconditionally guarantee to
LaSalle the prompt payment in full of (A) all loans and advances made and to be
made by LaSalle to any of them under this Agreement, as well as (B) all other
Liabilities of the Borrowers to LaSalle and hereby expressly confirm in all
respects the guaranties executed by each of the Borrowers in LaSalle's favor as
more fully set forth therein; (v) all Accounts assigned to LaSalle by any of the
Borrowers and any other collateral security now or hereafter given to LaSalle by
any of the Borrowers (be it Accounts or otherwise), shall secure all loans and
advances made by LaSalle to any of the Borrowers, and shall be deemed to be
pledged to LaSalle as security for any and all other Liabilities of the
Borrowers to LaSalle as set forth under this Agreement, the guaranties, or any
other agreements between LaSalle and any of the Borrowers; (vi) It is understood
that the handling of the accounts of the Borrowers in a combined fashion, as
more fully set forth herein, is done solely as an accommodation to the Borrowers
and at their request, and that LaSalle shall incur no liability to the Borrowers
as a result hereof. To induce LaSalle to do so, and in consideration thereof,
each of the Borrowers hereby agrees to indemnify LaSalle and hold LaSalle
harmless against any and all liability, expense, loss or claim of damage or
injury, made against LaSalle by any of the Borrowers or by any third party
whosoever, arising from or incurred solely by reason of (1) the method of
handling the accounts of the Borrowers as herein provided, (2) LaSalle relying
on any instructions of any of the Borrowers, or (3) any other action taken by
LaSalle in accordance with this subparagraph of this Agreement. The foregoing
request was made because the Borrowers are engaged in an integrated operation
that requires financing on a basis permitting the availability of credit from
time to time to each of the Borrowers as required for the continued successful
operation of each of the Borrowers. Each of the Borrowers expects to derive
benefit, directly or indirectly, from such availability since the successful
operation of each of the Borrowers is dependent on the continued successful
performance of the functions of the integrated group. In addition, the Companies
have informed LaSalle that:
(1) IEC, in order to increase the efficiency and productivity of the
other Borrower, has centralized in itself a cash management system
which entails, in part, central disbursement and operating accounts in
which it provides the working capital needs of the other Borrower and
manages and timely pays the accounts payable of the other Borrower;
(2) IEC is further enhancing the operating efficiencies of the other
Borrower by purchasing, or causing to be purchased, in its name for
its account all materials, supplies, inventory and services required
by the other Borrower which will result in reducing the operating
costs of the other Borrower; and
(3) Since each of the Borrowers is now engaged in an integrated
operation that requires financing on an integrated basis and since
each Borrower expects to benefit from the continued successful
performance of such integrated operations and in order to best utilize
the borrowing powers of each Borrower in the most effective and cost
efficient manner and to avoid adverse effects on the operating
efficiencies of each
14
Borrower and the existing back-office practices of the Borrowers, each
Borrower has requested that all Revolving Loans and advances be
disbursed solely upon the request of IEC and to bank accounts managed
solely by IEC and that IEC will manage for the benefit of each
Borrower the expenditure and usage of such funds.
2. REVOLVING LOANS
Subject to the terms and conditions of this Agreement and the Other
Agreements, during the Term, absent the existence of an Event of Default:
(1) LaSalle shall make such revolving loans and advances (the
"Revolving Loans") to Borrowers as Borrowers shall from time to time request, in
accordance with the terms of paragraph 2(b) hereof. The aggregate unpaid
principal amount of all Revolving Loans outstanding at any one time made to
Borrowers shall not exceed the lesser of (i) the Borrowing Base or (ii) the
Revolving Loan Commitment. All Revolving Loans shall be repaid in full upon the
earlier to occur of (A) the end of the Term, if either LaSalle or Borrowers
elects to terminate this Agreement as of the end of any such term and (B) the
acceleration of the Liabilities pursuant to paragraph 17 of this Agreement. If
at any time the outstanding principal balance of the Revolving Loans made to
Borrowers exceeds (i) the Borrowing Base or (ii) the Revolving Loan Commitment,
in each case less the outstanding Letter of Credit Obligations, Borrowers shall
immediately, and without the necessity of a demand by LaSalle, pay to LaSalle
such amount as may be necessary to eliminate such excess, and LaSalle shall
apply such payment against the outstanding principal balance of the Revolving
Loans. In addition, if at any time the sum of (A) the outstanding principal
balance of the Loans and (B) the outstanding Letter of Credit Obligations
exceeds the Total Credit Facility, Borrowers shall immediately and without the
necessity of a demand by LaSalle pay to LaSalle such amount as may be necessary
to eliminate such excess, and LaSalle shall apply such payment against the
outstanding principal balance of the Loans in such order as LaSalle shall
determine in its sole discretion. Borrowers hereby authorize LaSalle to charge
any of Borrowers' accounts to make any payments of principal or interest
required by this Agreement. All Revolving Loans shall, in LaSalle's sole
discretion, be evidenced by one or more promissory notes in form and substance
satisfactory to LaSalle. However, if such Revolving Loans are not so evidenced,
such Revolving Loans may be evidenced solely by entries upon the books and
records maintained by LaSalle.
(2) LaSalle shall make Revolving Loans to Borrowers up to the lesser
of the following amounts, the amount calculated pursuant to subparagraph (i)
----------------
below being the "Borrowing Base":
(1) an amount equal to the sum of: (A) up to sixty-five percent
(65%) of the face amount of Eligible Accounts plus, (B) the lesser of (x) up to
----
sixty-five percent (65%) of the value of Eligible Inventory, calculated on the
basis of the lower of cost or market value on a first-in, first-out basis, and
(y) Three Million Dollars ($3,000,000), in each case, less such reasonable
reserves as LaSalle elects to establish from time to time in the exercise of its
sole discretion minus the outstanding amount of all Letter of Credit
Obligations; or
--
15
(2) the Revolving Loan Commitment, minus the outstanding amount
-----
of all Letter of Credit Obligations.
(3) Discretionary Rights. The percentages set forth above may be
--------------------
increased or decreased by Lender and reserves may be imposed by Lender at any
time and from time to time if in its sole discretion, Lender determines that a
diminution or dilution in the value of the Accounts or Inventory has occurred or
is imminent. Each Borrower acknowledges that decreasing the percentages set
forth above or imposing reserves may limit or restrict Loans requested by
Borrowers.
3. INTENTIONALLY DELETED.
4. LETTERS OF CREDIT.
Subject to the terms and conditions of this Agreement, and the Other
Agreements, during the Term LaSalle shall, absent the existence of an Event of
Default, from time to time cause the issuance of and co-sign for, upon
Borrowers' request, Letters of Credit; provided, that the standby Letters of
--------
Credit shall be in form and substance acceptable to LaSalle in its sole
discretion and that the aggregate undrawn face amount of all such Letters of
Credit shall at no time exceed Three Million Dollars ($3,000,000); and provided
--------
further, that no Letter of Credit shall have an expiry date (i) more than 180
-------
days from the date of issuance or (ii) beyond five (5) days prior to the
expiration of the Term. Borrowers' reimbursement obligation in respect of the
Letters of Credit shall automatically reduce, dollar for dollar, the amount
which Borrowers may borrow based upon the Revolving Loan Commitment and the
Borrowing Base. Any payment made by LaSalle to any Person on account of any
Letter of Credit shall constitute a Revolving Loan hereunder. At no time shall
the aggregate sum of direct Revolving Loans by LaSalle to Borrowers plus the
contingent liability of LaSalle under the outstanding Letters of Credit be in
excess of the Revolving Loan Commitment or the Borrowing Base.
5. INTEREST, FEES AND CHARGES.
(1) Rates of Interest. Interest accrued on all Loans shall be due on
-----------------
the earliest of: (i) the first day of each month (for the immediately preceding
month), computed through the last calendar day of the preceding month; (ii) the
occurrence of an Event of Default in consequence of which LaSalle elects to
accelerate the maturity and payment of the Liabilities; or (iii) termination of
this Agreement pursuant to paragraph 12 hereof. At Borrowers' election, interest
------------
shall accrue on: the principal amount of the Revolving Loans made to Borrower
outstanding at the end of each day at (i) a fluctuating rate per annum equal to
the Prime Rate, or (ii) at a rate per annum equal to two and one-half percent
(2.5%) above LIBOR determined for each Interest Period. The rate of interest
payable on Prime Rate Loans shall increase or decrease by an amount equal to any
increase or decrease in the Prime Rate, effective as of the opening of business
on the day that any such change in the Prime Rate occurs. Upon and after the
occurrence of an Event of Default, and during the continuation thereof, the
principal amount of all Loans shall bear interest on demand at a rate per annum
equal to the rate of interest then in effect plus two percent (2%).
16
(2) Computation of Interest and Fees. Interest and collection charges
--------------------------------
hereunder shall be calculated daily and shall be computed on the actual number
of days elapsed over a year consisting of three hundred and sixty (360) days.
For the purpose of computing interest hereunder, all items of payment received
by LaSalle shall be deemed applied by LaSalle on account of the Liabilities
(subject to final payment of such items) on the first Business Day after receipt
by LaSalle of good funds in LaSalle's account located in Chicago, Illinois.
(3) Maximum Interest. It is the intent of the parties that the rate
----------------
of interest and the other charges to Borrowers under this Agreement shall be
lawful; therefore, if for any reason the interest or other charges payable under
this Agreement are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which LaSalle may lawfully charge Borrowers,
then the obligation to pay interest and other charges shall automatically be
reduced to such limit and, if any amount in excess of such limit shall have been
paid, then such amount shall be refunded to Borrowers.
(4) Letter of Credit Fees. Borrowers shall remit to LaSalle a Letter
---------------------
of Credit fee equal to one percent (1%) per annum on the aggregate undrawn face
amount of all outstanding Letters of Credit issued for the account of Borrowers,
which fee shall be payable monthly in arrears on each day that interest is
payable hereunder. Borrowers shall also pay on demand the normal and customary
administrative charges for issuance, amendment, negotiation, renewal or
extension of any Letter of Credit imposed by the bank issuing such Letter of
Credit. Upon the occurrence and during the continuance of an Event of Default,
all Letter of Credit fees shall be payable on demand at a rate equal to two
percent (2%) per annum in excess of rate in existence in the absence of an Event
of Default on the aggregate undrawn face amount thereof.
(5) Closing Fee. Borrowers shall pay to LaSalle a closing fee of One
-----------
Hundred Twenty-Five Thousand Dollars ($125,000), which shall be fully earned and
payable on the Closing Date. No additional closing fee shall be payable in the
event the Revolving Loan Commitment is increased in an amount up to $25,000,000.
(6) Unused Line Fee. Borrowers shall pay to LaSalle a fee equal to
---------------
one quarter of one percent (.25%) per annum of the average monthly amount by
which the Revolving Loan Commitment exceeds the sum of the outstanding principal
balance of the Loans. The unused line fee shall be payable monthly in arrears on
the first day of each month thereafter.
(7) Fixed, Examination Fees. Intentionally deleted.
-----------------------
(8) Collateral Management Fee. Borrowers shall pay to LaSalle, on
-------------------------
the Closing Date and on each anniversary date of the Closing Date thereafter, a
collateral management fee in the amount of $40,000 per annum, which sum shall be
fully earned on the Closing Date and on each anniversary date thereof and shall
be payable quarterly in arrears on the first day of each consecutive calendar
quarter after the Closing Date. Such fee shall include the cost of LaSalle's
field examinations of Borrower's books and records and the Collateral and such
other matters as LaSalle shall deem appropriate in its reasonable commercial
judgment. Borrowers hereby consent to four (4) field examinations in all Fiscal
Years, provided that after and during the continuation of an Event
17
of Default, there shall be no such limit and Borrowers shall be liable for the
costs of all additional examinations.
(9) Success Fee. Borrowers shall pay to LaSalle the sum of $100,000
-----------
at the earlier of: (i) termination of this Agreement for any reason whatsoever
(unless LaSalle terminates this Agreement on or before April 30, 2002; or (ii)
two (2) years from the Closing Date.
(10) Capital Adequacy Charge. If LaSalle shall have determined that
-----------------------
the adoption of any law, rule or regulation regarding capital adequacy, or any
change therein or in the interpretation or application thereof, or compliance by
LaSalle with any request or directive regarding capital adequacy (whether or not
having the force of law) from any central bank or governmental authority enacted
after the Closing Date, does or shall have the effect of reducing the rate of
return on LaSalle's capital as a consequence of its obligations hereunder to a
level below that which LaSalle could have achieved but for such adoption, change
or compliance (taking into consideration LaSalle's policies with respect to
capital adequacy) by a material amount, then from time to time, after submission
by LaSalle to Borrowers of a written demand therefor ("Capital Adequacy Demand")
together with the certificate described below, Borrowers shall pay to LaSalle
such additional amount or amounts ("Capital Adequacy Charge") as will compensate
LaSalle for such reduction, such Capital Adequacy Demand to be made with
reasonable promptness following such determination. A certificate of LaSalle
claiming entitlement to payment as set forth above shall be conclusive in the
absence of manifest error. Such certificate shall set forth the nature of the
occurrence giving rise to such reduction, the amount of the Capital Adequacy
Charge to be paid to LaSalle, and the method by which such amount was
determined. In determining such amount, LaSalle may use any reasonable averaging
and attribution method, applied on a non-discriminatory basis.
(11) Borrowers may request LIBOR Loans on the following terms and
conditions:
(1) Borrowers may elect, subsequent to the Closing Date and from
time to time thereafter (i) to request any loan made hereunder to be a LIBOR
Loan as of the date of such loan or (ii) to convert Prime Rate Loans to LIBOR
Loans, and may elect from time to time to convert LIBOR Loans to Prime Rate
Loans by giving LaSalle at least three (3) Business Days' prior irrevocable
notice of such election, provided that any such conversion of LIBOR Loans to
--------
Prime Rate Loans shall only be made, subject to the second following sentence,
on the last day of an Interest Period with respect thereto. Should Borrowers
elect to convert Prime Rate Loans to LIBOR Loans, they shall give LaSalle at
least four (4) Business Days' prior irrevocable notice of such election. If the
last day of an Interest Period with respect to a loan that is to be converted is
not a Business Day, then such conversion shall be made on the next succeeding
Business Day, and during the period from such last day of an Interest Period to
such succeeding Business Day, such loan shall bear interest as if it were a
Prime Rate Loan. All or any part of outstanding Prime Rate Loans then
outstanding may be converted to LIBOR Loans as provided herein, provided that
partial conversions shall be in multiples of $100,000 in an aggregate principal
amount of $1,000,000 or more.
(2) Any LIBOR Loans may be continued as such upon the expiration
of an Interest Period, provided Borrowers so notify LaSalle, at least three (3)
Business Days' prior to the
18
expiration of said Interest Period, and provided further that no LIBOR Loan may
be continued as such upon the occurrence of any Default or Event of Default
under this Agreement, but shall be automatically converted to a Prime Rate Loan
on the last day of the Interest Period during which occurred such Default or
Event of Default. Absent such notification, LIBOR Rate Loans shall convert to
Prime Rate Loans on the last day of the applicable Interest Period. Each notice
of election, conversion or continuation furnished by Borrowers pursuant hereto
shall specify whether such election, conversion or continuation is for a one,
two, or three month period. Notwithstanding anything to the contrary contained
herein, LaSalle (or any participant, if applicable) shall not be required to
purchase United States Dollar deposits in the London interbank market or from
any other applicable LIBOR Rate market or source or otherwise "match fund" to
fund LIBOR Rate Loans, but any and all provisions hereof relating to LIBOR Rate
Loans shall be deemed to apply as if LaSalle (and any participant, if
applicable) had purchased such deposits to fund any LIBOR Rate Loans.
(3) Borrowers may request a LIBOR Loan, convert any Prime Rate
Loan or continue any LIBOR Loan provided there is then no Default or Event of
Default in effect.
(12) (i) If all or a portion of the outstanding principal amount of
the Liabilities shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such outstanding amount, to the extent it is a LIBOR
Loan, shall be converted to a Prime Rate Loan at the end of the last Interest
Period therefor.
(1) Borrowers may not have more than three (3) LIBOR Loans
outstanding at any given time.
(13) In the event that LaSalle (or any financial institution which may
become a participant hereunder) shall have determined in the exercise of its
reasonable business judgement (which determination shall be conclusive and
binding upon Borrower) that by reason of circumstances affecting the interbank
LIBOR market, adequate and reasonable means do not exist for ascertaining LIBOR
applicable for any Interest Period with respect to: (a) a proposed loan that
Borrowers have requested be made as a LIBOR Loan; (b) a LIBOR Loan that will
result from the requested conversion of a Prime Rate Loan into a LIBOR Loan; or
(c) the continuation of LIBOR Loans beyond the expiration of the then current
Interest Period with respect thereto, LaSalle shall forthwith give written
notice of such determination to Borrowers at least one day prior to, as the case
may be, the requested borrowing date for such LIBOR Loan, the conversion date of
such Prime Rate Loan or the last day of such Interest Period. If such notice is
given (i) any requested LIBOR Loan shall be made as a Prime Rate Loan, (ii) any
Prime Rate Loan that was to have been converted to a LIBOR Loan shall be
continued as a Prime Rate Loan, and (iii) any outstanding LIBOR Loan shall be
converted, on the last day of then current Interest Period with respect thereto,
to a Prime Rate Loan. Until such notice has been withdrawn by LaSalle, no
further LIBOR Loan shall be made nor shall Borrowers have the right to convert a
Prime Rate Loan to a LIBOR Loan.
(14) If any payment on a LIBOR Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day unless the result of such extension would be to extend
such payment into another calendar month in which event such payment shall be
made on the immediately preceding Business Day.
19
(15) Notwithstanding any other provisions herein, if any law,
regulation, treaty or directive or any change therein or in the interpretation
or application thereof, shall make it unlawful for LaSalle to make or maintain
LIBOR Loans as contemplated herein, the then outstanding LIBOR Loans, if any,
shall be converted automatically to Prime Rate Loans as of the end of such
month, or within such earlier period as required by law. Borrowers hereby agree
promptly to pay LaSalle, upon demand, any additional amounts necessary to
compensate LaSalle for any costs incurred by LaSalle in making any conversion in
accordance with this subsection including, but not limited to, any interest or
fees payable by LaSalle to lenders of funds obtained by LaSalle in order to make
or maintain LIBOR Loans hereunder.
(16) Borrowers agree to indemnify and to hold LaSalle (including any
participant) harmless from any loss or expense which LaSalle or such participant
may sustain or incur as a consequence of: (a) Default by Borrowers in payment of
the principal amount of or interest on any LIBOR Loans, as and when the same
shall be due and payable in accordance with the terms of this Agreement,
including, but not limited to, any such loss or expense arising from interest or
fees payable by LaSalle or such participant to lenders of funds obtained by it
in order to maintain the LIBOR Loans hereunder; (b) default by Borrowers in
making a borrowing or conversion after Borrowers have given a notice in
accordance with subsection (k) above; (c) any prepayment of LIBOR Loans on a day
which is not the last day of the Interest Period applicable thereto, including,
without limitation, prepayments arising as a result of the application of the
proceeds of Collateral to the Revolving Loans; and (d) default by Borrowers in
making any prepayment after Borrowers have given notice to LaSalle thereof. The
determination by LaSalle of the amount of any such loss or expense, when set
forth in a written notice to Borrowers, containing LaSalle's calculations
thereof in reasonable detail, shall be conclusive on Borrowers in the absence of
manifest error. Calculation of all amounts payable under this paragraph with
regard to LIBOR Loans shall be made as though LaSalle had actually funded the
LIBOR Loans through the purchase of deposits in the relevant market and
currency, as the case may be, bearing interest at the rate applicable to such
LIBOR Loans in an amount equal to the amount of the LIBOR Loans and having a
maturity comparable to the relevant interest period; provided, however, that
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LaSalle may fund each of the LIBOR Loans in any manner LaSalle sees fit and the
foregoing assumption shall be used only for calculation of amounts payable under
this paragraph. In addition, notwithstanding anything to the contrary contained
herein, LaSalle shall apply all proceeds of Collateral and all other amounts
received by it from or on behalf of Borrowers (i) initially to the Prime Rate
Loans and (ii) subsequently to LIBOR Loans; provided, however, (x) upon the
-------- -------
occurrence of an Event of Default or (y) in the event the aggregate amount of
outstanding LIBOR Rate Loans exceeds Availability or the applicable maximum
levels set forth therefor, LaSalle may apply all such amounts received by it to
the payment of Liabilities in such manner and in such order as LaSalle may elect
in its reasonable business judgment. In the event that any such amounts are
applied to Revolving Loans which are LIBOR Loans, such application shall be
treated as a prepayment of such loans and LaSalle shall be entitled to
indemnification hereunder. This covenant shall survive termination of this
Agreement and payment of the outstanding Liabilities.
(17) Notwithstanding anything to the contrary in this Agreement, in
the event that, by reason of any Regulatory Change (for purposes hereof
"Regulatory Change" shall mean, with
20
respect to LaSalle, any change after the date of this Agreement, in United
States federal, state or foreign law or regulations (including, without
limitation, Regulation D) or the adoption or making after such date of any
interpretation, directive or request applying to a class of banks including
LaSalle of or under any United States federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful), LaSalle either (a) incurs any material
additional costs based on or measured by the excess above a specified level of
the amount of a category of deposits or other liabilities of such bank which
includes deposits by reference to which the interest rate on LIBOR Loans is
determined as provided in this Agreement or a category of extensions of credit
or other assets of LaSalle which includes LIBOR Loans, or (b) becomes subject to
any material restrictions on the amount of such a category of liabilities or
assets which it may hold, then, if LaSalle so elects by notice to Borrowers, the
obligation of LaSalle to make or continue, or to convert Prime Rate Loans into
LIBOR Loans hereunder shall be suspended until such Regulatory Change ceases to
be in effect.
6. LOAN ADMINISTRATION.
(1) Loan Requests. A request for a Revolving Loan shall be made or
-------------
shall be deemed to be made, each in the following manner: (i) a Borrower shall
give LaSalle same day notice, no later than 11:30 A.M. (Chicago time) of such
day, of its intention to borrow a Revolving Loan, in which notice such Borrower
shall specify the amount of the proposed borrowing and the proposed borrowing
date; provided, however, that no such request may be made at a time when there
-------- -------
exists a Default or an Event of Default; and (ii) the coming due of any amount
required to be paid under this Agreement or any Note, whether on account of
interest or for any other Liability, shall be deemed irrevocably to be a request
for a Revolving Loan on the due date thereof in the amount required to pay such
interest or other Liability. As an accommodation to Borrowers, LaSalle may
permit telephone requests for Revolving Loans and electronic transmittal of
instructions, authorizations, agreements or reports to LaSalle by Borrowers.
Unless Borrowers specifically direct LaSalle in writing not to accept or act
upon telephonic or electronic communications from Borrowers, LaSalle shall have
no liability to Borrowers for any loss or damage suffered by Borrowers as a
result of LaSalle's good faith honoring of any requests, execution of any
instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically or electronically and purporting to have been
sent to LaSalle by Borrowers or any one of them and LaSalle shall have no duty
to verify the origin of any such communication or the authority of the Person
sending it. Each notice of borrowing shall be irrevocable by and binding on
Borrowers.
(2) Disbursement. Borrowers hereby irrevocably authorize LaSalle to
------------
disburse the proceeds of each Revolving Loan requested by any Borrower, or
deemed to be requested by any Borrower, as follows: (i) the proceeds of each
Revolving Loan requested under paragraph 6(a)(i) shall be disbursed by LaSalle
in lawful money of the United States of America in immediately available funds,
in the case of the initial borrowing, in accordance with the terms of the
written disbursement letter from Borrowers, and in the case of each subsequent
borrowing, by wire transfer to such bank account as may be agreed upon by
Borrowers and LaSalle from time to time, or elsewhere if pursuant to a written
direction from any Borrower; and (ii) the proceeds of each Revolving Loan
requested under paragraph 6(a)(ii) shall be disbursed by LaSalle by way of
------------------
direct payment of the relevant interest or other Liability.
21
(3) Mandatory Prepayments for Sale, Damage, Destruction, etc. If any
---------------------------------------------------------
Borrower sells any Equipment for $50,000 or more, or if any material portion of
the Collateral is damaged, destroyed or taken by condemnation, Borrowers shall
pay to Lender, unless otherwise specifically provided herein or otherwise agreed
to by Lender, as and when received by any Borrower and as a mandatory prepayment
of the Loans, to be applied first against the Revolving Loans, subject to
Borrowers' ability to reborrow Revolving Loans in accordance with the terms
hereof (or, at Lender's option, such of the other Liabilities of Borrower as
Lender may elect), a sum equal to the proceeds received by any Borrower from (i)
such sale or (ii) such damage, destruction or condemnation.
7. GRANT OF SECURITY INTEREST TO LASALLE.
As security for the payment of all Loans now or in the future made by
LaSalle to Borrowers hereunder and for the payment or other satisfaction of all
other Liabilities, each of the Borrowers hereby assigns to LaSalle and grants to
LaSalle a continuing security interest in the following property of Borrowers,
whether now or hereafter owned, existing, acquired or arising and wherever now
or hereafter located: (a) all Accounts (whether or not Eligible Accounts) and
all Goods whose sale, lease or other disposition by any Borrower has given rise
to Accounts and have been returned to or repossessed or stopped in transit by
any Borrower; (b) all Chattel Paper, Investment Property, Instruments, Documents
and General Intangibles (including, without limitation, all patents, patent
applications, trademarks, trademark applications, tradenames, trade secrets,
goodwill, copyrights, registrations, licenses, franchises, customer lists, tax
refund claims, claims against carriers and shippers, guarantee claims, contracts
rights, security interests, security deposits and any rights to
indemnification); (c) all Inventory; (d) all Goods (other than Inventory)
including, without limitation, Equipment, vehicles and fixtures; (e) all
deposits and cash and any other property of each Borrower now or hereafter in
the possession, custody or control of LaSalle or any agent or any parent,
affiliate or subsidiary of LaSalle or any participant with LaSalle in the Loans
for any purpose (whether for safekeeping, deposit, collection, custody, pledge,
transmission or otherwise); and (f) all additions and accessions to,
substitutions for, and replacements, products and proceeds of the foregoing
property, including, without limitation, proceeds of all insurance policies
insuring the foregoing property, and all of Borrowers' books and records
relating to any of the foregoing and to Borrowers' business.
8. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS
THEREIN.
Each Borrower shall, at LaSalle's request, at any time and from time
to time, execute and deliver to LaSalle such financing statements, documents and
other agreements and instruments (and pay the cost of filing or recording the
same in all public offices deemed reasonably necessary or desirable by LaSalle)
and do such other acts and things as LaSalle may reasonably deem necessary or
desirable in order to establish and maintain a valid, attached and perfected
security interest in the Collateral in favor of LaSalle (free and clear of all
other liens, claims and rights of third parties whatsoever, whether voluntarily
or involuntarily created, except Permitted Liens) to secure payment of the
Liabilities, and in order to facilitate the collection of the Collateral. Each
Borrower irrevocably hereby makes, constitutes and appoints LaSalle (and all
Persons designated by LaSalle
22
for that purpose) as Borrower's true and lawful attorney and agent-in-fact to
execute such financing statements, documents and other agreements and
instruments and do such other reasonable acts and things as may be necessary to
preserve and perfect LaSalle's security interest in the Collateral. Each
Borrower further agrees that a carbon, photographic, photostatic or other
reproduction of this Agreement or of a financing statement shall be sufficient
as a financing statement.
9. POSSESSION OF COLLATERAL AND RELATED MATTERS.
Until an Event of Default has occurred, each Borrower shall have the
right, except as otherwise provided in this Agreement, in the ordinary course of
each Borrower's business, to (a) sell, lease or furnish under contracts of
service any of each Borrower's Inventory normally held by each Borrower for any
such purpose, and (b) use and consume any raw materials, work in process or
other materials normally held by each Borrower for such purpose; provided,
however, that a sale in the ordinary course of business shall not include any
transfer or sale in satisfaction, partial or complete, of a debt owed by any
Borrower.
10. COLLECTIONS.
(1) Each Borrower shall direct all of its Account Debtors to make all
payments on the Accounts directly to a post office box ("Lock Box") with a
financial institution reasonably acceptable to, and in the name and under
exclusive control of, LaSalle. Each Borrower shall establish an account
("Blocked Account") in LaSalle's name for the benefit of such Borrower with a
financial institution reasonably acceptable to LaSalle, into which all payments
received in the Lock Box shall be deposited, and into which each Borrower will
immediately deposit all payments made for Inventory or services sold or rendered
by each Borrower and received by each Borrower in the identical form in which
such payments were made, whether by cash or check. If any Borrower, any
Affiliate or Subsidiary of Borrower, or any shareholder, officer, director,
employee or agent of any Borrower or any Affiliate or Subsidiary, or any other
Person acting for or in concert with any Borrower shall receive any monies,
checks, notes, drafts or other payments relating to or as proceeds of Accounts
or other Collateral, each Borrower and each such Person shall receive all such
items in trust for, and as the sole and exclusive property of, LaSalle and,
immediately upon receipt thereof, shall remit the same (or cause the same to be
remitted) in kind to the Blocked Account. Each financial institution with which
a Lock Box and Blocked Account are established shall acknowledge and agree, in a
manner reasonably satisfactory to LaSalle, that the amounts on deposit in such
Lock Box and Blocked Account are the sole and exclusive property of LaSalle,
that such financial institution has no right to setoff against such Lock Box or
Blocked Account or against any other account maintained by such financial
institution into which the contents of such Blocked Account are transferred, and
that such financial institution shall wire, or otherwise transfer in immediately
available funds in a manner reasonably satisfactory to LaSalle, funds deposited
in the Blocked Account on a daily basis as such funds are collected. Each
Borrower agrees that all payments made to the Blocked Account established by
Borrowers or otherwise received by LaSalle, whether in respect of the Accounts
of Borrowers or as proceeds of other Collateral of Borrowers or otherwise, will
be applied on account of the Liabilities of Borrowers in accordance with the
terms of this Agreement. Each Borrower agrees to pay all fees, costs and
expenses which any Borrower incurs in connection with opening and maintaining a
Lock Box and Blocked Account. All of such fees, costs
23
and expenses which remain unpaid by Borrowers pursuant to any Lock Box or
Blocked Account Agreement with any Borrower, to the extent same shall have been
paid by LaSalle hereunder, shall constitute Revolving Loans hereunder, shall be
payable to LaSalle by Borrowers upon demand, and, until paid, shall bear
interest at the highest rate then applicable to Revolving Loans hereunder. All
checks, drafts, instruments and other items of payment or proceeds of Collateral
delivered to LaSalle in kind shall be endorsed by any Borrower to LaSalle, and,
if that endorsement of any such item shall not be made for any reason, LaSalle
is hereby irrevocably authorized to endorse the same on each Borrower's behalf.
For the purpose of this paragraph, each Borrower irrevocably hereby makes,
constitutes and appoints LaSalle (and all Persons designated by LaSalle for that
purpose) as each Borrower's true and lawful attorney and agent-in-fact (i) to
endorse each Borrower's name upon said items of payment and/or proceeds of
Collateral of any Borrower and upon any Chattel Paper, document, instrument,
invoice or similar document or agreement relating to any Account of any Borrower
or goods pertaining thereto; (ii) to take control in any manner of any item of
payment or proceeds thereof; (iii) to have access to any lock box or postal box
into which any of Borrower's mail is deposited; and (iv) open and process all
mail addressed to any Borrower and deposited therein; provided, however, that
-------- -------
LaSalle shall not exercise any such powers described in subparagraphs (i), (ii)
-----------------------
(except for routine Lock Box payments/proceeds) and (iv) unless and until an
Event of Default has occurred and is continuing.
(2) LaSalle may, at any time and from time to time after the
occurrence of and during the continuance of an Event of Default, whether before
or after notification to any Account Debtor and whether before or after the
maturity of any of the Liabilities, (i) enforce collection of any of Borrower's
Accounts or contract rights by suit or otherwise; (ii) exercise all of any
Borrower's rights and remedies with respect to proceedings brought to collect
any Accounts; (iii) surrender, release or exchange all or any part of any
Accounts of any Borrower, or compromise or extend or renew for any period
(whether or not longer than the original period) any indebtedness thereunder;
(iv) sell or assign any Account of any Borrower upon such terms, for such amount
and at such time or times as LaSalle deems advisable; (v) prepare, file and sign
each Borrower's name on any proof of claim in bankruptcy or other similar
document against any Account Debtor indebted on an Account of any Borrower; and
(vi) do all other acts and things which are necessary, in LaSalle's sole
discretion, to fulfill any Borrower's obligations under this Agreement and to
allow LaSalle to collect the Accounts. In addition to any other provision
hereof, LaSalle may at any time on or after the occurrence of and during the
continuance of an Event of Default, at Borrowers' expense, notify any parties
obligated on any of the Accounts of any Borrower to make payment directly to
LaSalle of any amounts due or to become due thereunder.
(3) For the purpose of determining Borrowers' Borrowing Base
hereunder, LaSalle shall, upon receipt by LaSalle at its office in Chicago,
Illinois, of cash or other immediately available funds from collections of items
of payment and proceeds of any Collateral, apply the whole or any part of such
collections or proceeds against the Liabilities in such order as LaSalle shall
determine in its sole discretion.
(4) In its sole credit judgment, without waiving or releasing any
obligation, liability or duty of Borrowers under this Agreement or the Other
Agreements or any Event of Default, at any time or times hereafter, LaSalle may
(but shall not be obligated to) pay, acquire or
24
accept an assignment of any security interest, lien, encumbrance or claim
asserted by any Person in, upon or against the Collateral. All sums paid by
LaSalle in respect thereof and all costs, fees and expenses (including, without
limitation, reasonable attorney fees for both inside and outside counsel, all
court costs and all other charges relating thereto) incurred by LaSalle shall
constitute Revolving Loans, payable by Borrowers to LaSalle on demand and, until
paid, shall bear interest at the highest rate then applicable to Revolving Loans
hereunder.
(5) Immediately upon any Borrower's receipt of any portion of the
Collateral evidenced by an agreement, Instrument or Document including, without
limitation, any Chattel Paper, each Borrower shall deliver the original thereof
to LaSalle together with an appropriate endorsement or other specific evidence
of assignment thereof to LaSalle (in form and substance acceptable to LaSalle).
If an endorsement or assignment of any such items shall not be made for any
reason, LaSalle is hereby irrevocably authorized, as each Borrower's attorney
and agent-in-fact, to endorse or assign the same on each Borrower's behalf.
11. SCHEDULES AND REPORTS.
Each Borrower shall furnish or cause to be furnished to LaSalle the
following:
(1) Daily Reports. Borrowers shall provide LaSalle with a written
-------------
report each day hereafter, reflecting the activity of Borrowers with respect to
sales, collections of Accounts and credits issued by Borrowers for the
immediately preceding day. Such report shall be in a form and with such
specificity as is satisfactory to LaSalle and shall contain such additional
information as LaSalle may reasonably require concerning Accounts and Inventory
included, described or referred to in such daily report and any other documents
in connection therewith requested by LaSalle, including without limitation but
only if specifically requested by LaSalle, copies of all invoices prepared in
connection with such Accounts.
(2) Monthly Financial Statements. Intentionally deleted.
----------------------------
(3) Monthly Reports. In addition to any other reports, as soon as
---------------
practicable and in any event: (i) within fifteen (15) days after the end of each
month, (a) a detailed trial balance of each Borrower's Accounts aged per invoice
date, in form and substance reasonably satisfactory to LaSalle including,
without limitation, the names and addresses of all Account Debtors of each
Borrower, (b) a summary and detail of accounts payable (such Accounts and
accounts payable divided into such time intervals as LaSalle may require in its
sole discretion), including a listing of any held checks; and (2) within fifteen
(15) days after the end of each month, the general ledger inventory account
balance, a perpetual inventory report and LaSalle's standard form of Inventory
report then in effect or the form most recently requested from each Borrower by
LaSalle, for each Borrower by each category of Inventory, together with a
description of the monthly change in each category of Inventory; and (c) a
"flash" report of each of the Borrower's revenues and profit margins in form and
substance reasonably satisfactory to LaSalle, substantially in the form of
Exhibit C annexed hereto.
---------
25
(4) Quarterly Financial Statements. As soon as practicable and in any
------------------------------
event within forty-five (45) days following the end of each calendar quarter:
(1) consolidated statements of income and statements of cash flow of Borrowers
for each such quarter and for the period from beginning of the then current
Fiscal Year of Borrowers to the end of such quarter, (2) consolidated balance
sheets of Borrowers as of the end of such quarter, and (3) with respect to such
statements of income and balance sheets, in comparative form, figures for the
corresponding periods in the preceding Fiscal Year of Borrowers, all in
reasonable detail and certified by the chief financial officer of Borrowers that
such statements fairly present the financial condition of Borrowers in
accordance with GAAP, subject to changes resulting from normal year-end
adjustments, including computations of each Borrowers/ compliance with the
covenants set forth in this Agreement.
(5) Annual Financial Statements. As soon as practicable and in any
---------------------------
event within ninety (90) days after the end of each Fiscal Year of Borrowers:
(a) consolidated statements of income of Borrowers for such Fiscal Year, and a
consolidated balance sheet of Borrowers as of the end of such Fiscal Year, and
(2) consolidated statements of cash flow of Borrowers for such Fiscal Year, such
statements to be presented in accordance with GAAP and certified by independent
certified public accountants of recognized national standing selected by
Borrowers and satisfactory to LaSalle, whose opinion shall be unqualified, in
form and substance reasonably satisfactory to LaSalle. Commencing with the
Fiscal Year ending on December 31, 2001, such financial statements shall set
forth in comparative form, corresponding figures for the period covered by the
preceding annual audit and as of the end of the preceding Fiscal Year of
Borrowers.
(6) Annual Projections. As soon as practicable and in any event at
------------------
least thirty (30) days prior to the beginning of each Fiscal Year of each
Borrower, projected balance sheets, statements of income and cash flow for each
Borrower, for each of the twelve (12) months during such Fiscal Year, which
shall include the assumptions used therein, together with appropriate supporting
details as reasonably requested by LaSalle.
(7) Accountant's Reports. As soon as practicable and in any event
--------------------
within ten (10) days of delivery to Borrowers, a copy of any letter issued by
Borrowers' independent public accountants or other management consultants with
respect to each Borrower's financial or accounting systems or controls,
including all so-called `management letters".
(8) Explanation of Budgets and Projections. In conjunction with the
--------------------------------------
delivery of the annual presentation of projections or budgets referred to in
paragraph 11(e) above, a letter signed by the President or a Vice President of
---------------
each Borrower and by the Treasurer or Chief Financial Officer of each Borrower,
describing, comparing and analyzing, in detail, all changes and developments
between the anticipated financial results included in such projections or
budgets and the historical financial statements of each Borrower.
(9) Other Information. With reasonable promptness, such other
-----------------
business or financial data, reports, appraisals and projections as LaSalle may
reasonably request.
(10) Accompanying Certificates. All financial statements delivered to
-------------------------
LaSalle pursuant to the requirements of this paragraph (except where otherwise
expressly indicated) shall be
26
prepared in accordance with GAAP as provided in this Agreement. Together with
each delivery of financial statements required by paragraph 11(b) and (d) above,
-----------------------
each Borrower shall deliver to LaSalle an officer's certificate in the form
attached hereto as Exhibit B, which, in the case of quarterly and annual
---------
statements, shall include a calculation of financial covenants in the schedule
attached to such officer's certificate in form satisfactory to LaSalle.
(11) Internal Revenue Service Audit. Simultaneously with the delivery
------------------------------
or receipt thereof, as applicable, all correspondence, filings, documents,
findings, briefs, reports and all other communications between or among
Borrowers, the Internal Revenue Service, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, KPMG and counsel for
Borrowers (to the extent such communication is not privileged) with respect to
the pending Internal Revenue Service audit and investigation arising out of the
Letters dated March 23, 1999.
(12) Shareholder Reports, Etc. Promptly after sending or filing
------------------------
thereof, as the case may be, copies of any proxy statements, financial
statements or reports which Borrower has made available to its shareholders and
copies of any regular, periodic and special reports or registration statements
which Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any national
securities exchange;
(13) ERISA Reports. Upon request by LaSalle, copies of any annual
-------------
report to be filed pursuant to the requirements of ERISA in connection with each
plan subject thereto.
12. TERM.
(1) This Agreement shall be in effect from the date hereof until
April 30, 2004, provided, however, that LaSalle shall have the right to
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terminate this Agreement on or before April 30, 2002 and on any anniversary date
thereof, in its sole discretion, upon notice to Borrowers, at which time the
Term of this Agreement shall expire and all Liabilities shall be paid and
satisfied in full ("Term"), unless the due date of the Liabilities is
accelerated pursuant to paragraph 17 hereof. This Agreement shall terminate on
------------
the date that the Liabilities are paid in full; provided, however, that the
-------- -------
security interests and liens created under this Agreement and the Other
Agreements shall survive such termination until the date upon which payment and
satisfaction in full of the Liabilities shall have occurred. At such time as
Borrowers have repaid all of the Liabilities and this Agreement has terminated,
(i) Borrowers shall deliver to LaSalle a release, in form and substance
reasonably satisfactory to LaSalle, of all obligations and liabilities of
LaSalle and its officers, directors, employees, agents, parents, subsidiaries
and affiliates to Borrowers, and if any Borrower is obtaining new financing from
another lender, such Borrower shall deliver such lender's indemnification of
LaSalle, in form and substance reasonably satisfactory to LaSalle, for checks
which LaSalle has credited to such Borrower's account, but which subsequently
are dishonored for any reason and (ii) upon such Borrower's request, LaSalle
shall deliver to such Borrower a release in form and substance reasonably
satisfactory to such Borrower.
(2) If, for any reason, this Agreement is terminated prior to the end
of the Term including, in the sole discretion of LaSalle, if an effective
termination results from Borrowers prepaying all or substantially all of the
Liabilities, Borrowers agree to pay to LaSalle, as a
27
prepayment fee, in addition to the payment of all other Liabilities owing by
Borrowers, an amount equal to: (i) two percent (2%) of the Total Credit Facility
if this Agreement is terminated during the first year of the Original Term; (ii)
one percent (1%) of the Total Credit Facility if this Agreement is terminated
during the second year of the Original Term; and (iii) one-half of one percent
(.5%) of the Total Credit Facility if this Agreement is terminated during the
third year of the Term, provided, however, that if LaSalle terminates this
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Agreement on or before April 30, 2002, the amount of such fee shall be one
percent (1%) of the Total Credit Facility. In light of the extreme difficulty of
accurately calculating actual damages arising out of any early termination,
LaSalle and Borrowers have agreed that the prepayment fee provided for above is
a reasonable estimate of actual damages that would be incurred.
13. REPRESENTATIONS AND WARRANTIES.
Each Borrower hereby makes the following representations,
warranties and covenants:
(1) the consolidated financial statements delivered or to be
delivered by Borrowers to LaSalle at or prior to the date of this Agreement
including, but not limited to those dated December 31, 2000, taken as a whole
and at all times subsequent thereto accurately reflect in all material respects
the financial condition of Borrowers as of the respective dates thereof, and
since the date of the Borrower's financial statements delivered to LaSalle most
recently prior to the date of this Agreement, no event or condition has occurred
which has had, or is reasonably likely to have, a Material Adverse Effect;
(2) the office where Borrowers keeps their books, records and
accounts (or copies thereof) concerning the Collateral, Borrowers' principal
place of business and all of Borrowers' other places of business, locations of
Collateral and post office boxes are as set forth in Exhibit A; each Borrower
shall promptly (but in no event less than thirty (30) days prior thereto) advise
LaSalle in writing of the proposed opening of any new place of business, the
closing of any existing place of business, any change in the location of any
Borrower's books, records and accounts (or copies thereof) or the opening or
closing of any post office box of any Borrower;
(3) the Collateral, including without limitation the Equipment
(except any part thereof which prior to the date of this Agreement Borrowers
shall have advised LaSalle in writing consists of Collateral normally used in
more than one state) is and shall be kept, or, in the case of vehicles, based,
only at the addresses set forth on the first page of this Agreement or on
Exhibit A, and at other locations within the continental United States of which
LaSalle has been advised by Borrowers in writing;
(4) each Borrower shall immediately give written notice to
LaSalle of any use of any such Goods by any Borrower in any state other than a
state in which Borrowers have previously advised LaSalle such Goods shall be
used, and such Goods shall not, unless LaSalle shall otherwise consent in
writing, be used by any Borrower outside of the continental United States;
28
(5) no security agreement, financing statement or analogous
instrument exists or shall exist with respect to any of the Collateral other
than any security agreement, financing statement or analogous instrument
evidencing Permitted Liens;
(6) each Account or item of Inventory which Borrowers shall,
expressly or by implication, request LaSalle to classify as an Eligible Account
or as Eligible Inventory, respectively, shall, as of the time when such request
is made, conform in all respects to the requirements of such classification as
set forth in the respective definitions of Eligible Account and Eligible
Inventory and as otherwise reasonably established by LaSalle from time to time,
and Borrowers shall promptly notify LaSalle in writing if any such Eligible
Account or Eligible Inventory shall subsequently become ineligible;
(7) each Borrower is and shall at all times during the Term be the
lawful owner of all Collateral now purportedly owned or hereafter purportedly
acquired by each Borrower, free from all liens, claims, security interests and
encumbrances whatsoever, whether voluntarily or involuntarily created and
whether or not perfected, other than the Permitted Liens;
(8) each Borrower has the right and power and is duly authorized and
empowered to enter into, execute and deliver this Agreement and the Other
Agreements and perform its obligations hereunder and thereunder; except with
respect to Greyrock Capital f/k/a Greyrock Business Credit whose loans will be
satisfied out of the proceeds of the Loans on the Closing Date, each Borrower's
execution, delivery and performance of this Agreement and the Other Agreements
does not and shall not conflict with the provisions of any statute, regulation,
ordinance or rule of law, or any agreement, contract or other document which may
now or hereafter be binding on such Borrower, and each Borrower's execution,
delivery and performance of this Agreement and the Other Agreements shall not
result in the imposition of any lien or other encumbrance upon any of Borrowers'
property under any existing indenture, mortgage, deed of trust, loan or credit
agreement or other agreement or instrument by which any Borrower or any of its
respective property may be bound or affected;
(9) except as otherwise disclosed on Schedule 13 (i), there are no
---------------
actions or proceedings which are pending or, to the best of either Borrower's
knowledge, threatened against either Borrower which are reasonably likely to
have a Material Adverse Effect and Borrowers shall, promptly upon becoming aware
of any such pending or threatened action or proceeding, give written notice
thereof to LaSalle;
(10) each Borrower has obtained all governmental licenses,
authorizations, approvals and permits, the lack of which would have a Material
Adverse Effect on the operation of its business, and each Borrower is and shall
remain in compliance in all material respects with all applicable federal,
state, local and foreign statutes, orders, regulations, rules and ordinances
(including, without limitation, Environmental Laws and statutes, orders,
regulations, rules and ordinances relating to taxes, employer and employee
contributions and similar items, securities, ERISA or employee health and
safety), the failure to comply with which would have a Material Adverse Effect
on its business, property, assets, operations or condition, financial or
otherwise;
29
(11) all written information now, heretofore or hereafter furnished
by Borrowers to LaSalle is and shall be true and correct in all material
respects as of the date with respect to which such information was or is
furnished (except for financial projections, which have been prepared in good
faith based upon reasonable assumptions);
(12) no Borrower is conducting, permitting or suffering to be
conducted, nor shall any Borrower conduct, permit or suffer to be conducted, any
activities pursuant to or in connection with which any of the Collateral is now,
or will (while any Liabilities remain outstanding) be owned by any Affiliate
(other than another Borrower);
(13) each Borrower's name has always been as set forth on the first
page of this Agreement and no Borrower uses any tradenames or division names in
the operation of its business, except as otherwise disclosed in writing to
LaSalle and set forth on Schedule 13(m); each Borrower shall notify LaSalle in
--------------
writing within ten (10) days of the change of its name or the use of any
tradenames or division names not previously disclosed to LaSalle in writing;
(14) Schedule 13(n) is a correct and complete description of the name
--------------
and ownership, to Borrowers' knowledge, of each of Borrower's capital stock in
existence on the date hereof with respect to holders of five percent (5%) or
more of each Borrower's stock.
(15) this Agreement and the Other Agreements to which Borrowers are a
party are the legal, valid and binding obligations of Borrowers and are
enforceable against Borrowers in accordance with their respective terms;
(16) each Borrower is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business, now owns
property having a value both at fair valuation and at present fair saleable
value greater than the amount required to pay its debts, and will not be
rendered insolvent by the execution and delivery of this Agreement or any of the
Other Agreements or by completion of the transactions contemplated hereunder or
thereunder;
(17) no Borrower is now obligated, whether directly or indirectly,
for any loans or other indebtedness for borrowed money other than (i) the
Liabilities; (ii) indebtedness disclosed to LaSalle on Schedule 13 (q); (iii)
---------------
unsecured indebtedness to trade creditors arising in the ordinary course of each
Borrower's business, (iv) unsecured indebtedness arising from the endorsement of
drafts and other instruments for collection, in the ordinary course of each
Borrower's business; (v) indebtedness secured by Permitted Liens, (vi) unsecured
net indebtedness as between the Borrowers in the maximum amount of $2,000,000
outstanding at any time, approved in writing in advance by LaSalle, evidenced by
inter-company promissory notes pledged and delivered to LaSalle; and (vii)
indebtedness to third parties hereafter arising provided that such indebtedness
is unsecured and subordinate to the Liabilities pursuant to a subordination
agreement in form and substance reasonably satisfactory to LaSalle and is
approved in writing in advance by LaSalle.
(18) no Borrower owns any margin securities, and none of the proceeds
of the Loans hereunder shall be used for the purpose of purchasing or carrying
any margin securities or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase any
30
margin securities or for any other purpose not permitted by Regulation G or
Regulation U of the Board of Governors of the Federal Reserve System as in
effect from time to time;
(19) except as otherwise disclosed on Schedule 13(s), no Borrower has
--------------
any Parents, Subsidiaries or divisions, nor is any Borrower engaged in any joint
venture or partnership with any other Person;
(20) no Borrower is duly organized and in good standing in its state
of organization and each Borrower is duly qualified and in good standing in all
states where the nature and extent of the business transacted by it or the
ownership of its assets makes such qualification necessary, except for such
other states in which the failure to so qualify would not have a Material
Adverse Effect;
(21) no Borrower is in default under any material contract, lease or
commitment to which it is a party or by which it is bound, nor does any Borrower
know of any dispute regarding any contract, lease or commitment which would
result in a Material Adverse Effect on any Borrower;
(22) there are no controversies pending or threatened between any
Borrower and any of its employees, other than employee grievances arising in the
ordinary course of business which are not, in the aggregate, material to the
continued financial success and well-being of such Borrower, and each Borrower
is in compliance in all material respects with all federal and state laws
respecting employment and employment terms, conditions and practices including,
but not limited to, health and other Benefit Plans specified on Schedule 13(v)
--------------
attached hereto, except where the failure to so comply would not have a Material
Adverse Effect;
(23) Schedule 13(w) lists all of each Borrower's material licenses,
--------------
patents, patent applications, copyrights, service marks, trademarks, trademark
applications, tradestyles and tradenames and Borrower shall continue to possess
all adequate licenses, patents, patent applications, copyrights, service marks,
trademarks, trademark applications, tradestyles and tradenames to continue to
conduct its business as heretofore conducted by it.
(24) except as set forth on Schedule 13(x), no Benefit Plan is in
--------------
violation in any material respect of any of the provisions of ERISA or any of
the qualification requirements of Section 401(a) of the IRC within the
immediately preceding five (5) year period; no Prohibited Transaction or
Reportable Event has occurred with respect to any Benefit Plan has been the
subject of a waiver of the minimum funding standard under Section 412 of the
IRC, no Benefit Plan has experienced an accumulated funding deficiency under
Section 412 of the IRC, no lien has been imposed upon such Borrower or any ERISA
Affiliate of such Borrower under Section 412(n) of the IRC, no Benefit Plan has
been amended in such a way that the security requirements of Section 401(a)(29)
of the IRC apply; no notice of intent to terminate a Benefit Plan has been
distributed to affected parties or filed with the PBGC under Section 4041 of
ERISA; the PBGC has not instituted proceedings to terminate, or appoint a
trustee to administer, a Benefit Plan and no event has occurred or condition
exists which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Benefit plan;
neither Borrowers nor any ERISA Affiliate of Borrowers would be liable for any
amount in the aggregate in excess of $5,000 pursuant to Sections 4062, 4063 or
4064 of ERISA if all Benefit Plans terminated as of the most recent
31
valuation dates of such Benefit Plans; neither Borrowers nor any ERISA Affiliate
of Borrowers maintains any employee welfare benefit plan, as defined in Section
3(1) of ERISA, which provides any benefits to an employee or the employee's
dependents with respect to claims incurred after the employee separates from
service other than is required by applicable law; and neither Borrowers nor any
ERISA Affiliate of Borrowers has incurred or expects to incur any withdrawal
liability to any Multiemployer Plan.
(25) (i) no Borrower has generated, used, stored, treated,
transported, manufactured, handled, produced or disposed of any Hazardous
Materials, on or off its premises (whether or not owned by it) in any manner
which at any time violates any Environmental Law or any license, permit,
certificate, approval or similar authorization thereunder and the operations of
the Borrowers comply in all material respects with all Environmental Laws and
all licenses, permits, certificates, approvals and similar authorizations
thereunder; (ii) there has been no investigation, proceeding, complaint, order,
directive, claim, citation or notice by any governmental authority or any other
Person, nor is any pending or to the best of the Borrowers' knowledge
threatened, and Borrowers shall immediately notify LaSalle upon becoming aware
of any such investigation, proceeding, complaint, order, directive, claim,
citation or notice and take prompt and appropriate actions to respond thereto,
with respect to any non-compliance with or violation of the requirements of any
Environmental Law by the Borrowers or the release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials or any other environmental, health or safety
matter, which affects the Borrowers or their respective businesses, operations
or assets or any properties at which any Borrower has transported, stored,
disposed of any Hazardous Materials; (iii) no Borrower has any material
liability (contingent or otherwise) in connection with a release, spill or
discharge, threatened or actual, of any Hazardous Materials or the generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials; and (iv) without limiting the generality of
the foregoing, Borrowers shall, following the determination by LaSalle that
there is non-compliance, or any condition which requires any action by or on
behalf of any Borrower in order to avoid any non-compliance, with any
Environmental Law, at Borrowers' expense, cause an independent environmental
engineer acceptable to LaSalle to conduct such tests of the relevant site(s) as
are appropriate and prepare and deliver a report setting forth the result of
such tests, a proposed plan for remediation and an estimate of the costs
thereof; and
(26) except as otherwise disclosed on Schedule 13(z), all federal,
--------------
state and local tax returns and other reports required by applicable law to be
filed by each Borrower have been filed and all taxes, assessments and other
governmental charges imposed upon each Borrower or on any property of each
Borrower have been paid in full, except for taxes being contested in good faith
and for which adequate reserves have been created on Borrowers' consolidated
financial statements.
Each Borrower represents, warrants and covenants to LaSalle that all
representations, warranties and covenants of Borrowers contained in this
Agreement (whether appearing in paragraphs 13 or 14 hereof or elsewhere) shall
-------------------
be true at the time of Borrowers' execution of this Agreement, shall survive the
execution, delivery and acceptance hereof by the parties hereto and the closing
of the transactions described herein or related hereto, shall remain true until
the repayment in full of all of the Liabilities and termination of this
Agreement, and shall be remade by Borrowers at
32
the time each Revolving Loan is made and each Letter of Credit is issued
pursuant to this Agreement.
14. COVENANTS.
Until payment or satisfaction in full of all Liabilities and
termination of this Agreement, unless Borrowers obtain LaSalle's prior written
consent waiving or modifying any of Borrowers' covenants hereunder in any
specific instance, each Borrower agrees as follows:
(1) each Borrower shall at all times keep accurate and complete
books, records and accounts with respect to all of such Borrower's business
activities, in accordance with sound accounting practices and GAAP consistently
applied, and shall keep such books, records and accounts, and any copies
thereof, only at the addresses indicated for such purpose on Exhibit A;
---------
(2) each Borrower agrees to deliver to LaSalle the financial
information required in paragraph 11 hereof;
(3) LaSalle, or any Persons designated by it, shall have the right,
at any time (on reasonable notice to Borrowers prior to an Event of Default), in
the exercise of its commercially reasonable credit judgment, to call at
Borrowers' places of business at any reasonable times (during normal business
hours prior to an Event of Default), and, without hindrance or delay, to inspect
the Collateral and to inspect, audit, check and make extracts from Borrowers'
books, records, journals, orders, receipts and any correspondence and other data
relating to each Borrower's business, the Collateral or any transactions between
the parties hereto, and shall have the right to make such verification
concerning each Borrower's business as LaSalle may consider reasonable under the
circumstances. Each Borrower shall furnish to LaSalle such information relevant
to LaSalle's rights under this Agreement as LaSalle shall at any time and from
time to time reasonably request. Each Borrower authorizes LaSalle to discuss the
affairs, finances and business of Borrowers with any officers or directors of
Borrowers or any Affiliate, or with those employees of Borrowers with whom
LaSalle has determined in its commercially reasonable judgment to be necessary
or desirable to converse, and to discuss the financial condition of Borrowers
with Borrowers' independent public accountants. Any such discussions shall be
without liability to LaSalle or to such accountants. Borrowers shall pay to or
reimburse LaSalle for all reasonable fees, costs, and out-of-pocket expenses
incurred by LaSalle in the exercise of its rights hereunder (in addition to the
annual Collateral Management Fee payable by Borrowers pursuant to paragraph 5(h)
--------------
hereof in connection with LaSalle's examination of Borrowers' books and records
and Collateral) and all of such costs, fees and expenses shall constitute
Revolving Loans hereunder, shall be payable on demand and, until paid, shall
bear interest at the highest rate then applicable to Loans hereunder;
(4) (i) each Borrower shall: keep the Collateral properly housed and
shall keep the Collateral insured against such risks and in such amounts as are
customarily insured against by Persons engaged in businesses similar to that of
Borrowers with such companies, in such amounts and under policies in such form
as shall be reasonably satisfactory to LaSalle. Originals or certified copies of
such policies of insurance have been delivered to LaSalle together with evidence
of payment of all premiums therefor, and shall contain an endorsement, in form
and substance
33
acceptable to LaSalle, showing loss under such insurance policies payable to
LaSalle as loss payee. Such endorsement, or an independent instrument furnished
to LaSalle, shall provide that the insurance company shall give LaSalle at least
thirty (30) days written notice before any such policy of insurance is altered
or cancelled and that no act, whether willful or negligent, or default of any
Borrower or any other Person shall affect the right of LaSalle to recover under
such policy of insurance in case of loss or damage. Each Borrower hereby directs
all insurers under such policies of insurance to pay all proceeds payable
thereunder directly to LaSalle. Each Borrower irrevocably, makes, constitutes
and appoints LaSalle (and all officers, employees or agents designated by
LaSalle) as Borrower's true and lawful attorney (and agent-in-fact) for the
purpose of making, settling and adjusting claims under such policies of
insurance, endorsing the name of each Borrower on any check, draft, instrument
or other item of payment for the proceeds of such policies of insurance and
making all determinations and decisions with respect to such policies of
insurance; provided, however, that LaSalle shall exercise such rights only upon
-------- -------
the occurrence of an Event of Default;
(1) each Borrower shall maintain, at its expense, such public
liability and third party property damage insurance as is customary for Persons
engaged in businesses similar to that of Borrowers with such companies and in
such amounts, with such deductibles and under policies in such form as shall be
reasonably satisfactory to LaSalle and originals or certified copies of such
policies prior to the Closing Date, shall be, delivered to LaSalle together with
evidence of payment of all premiums therefor; each such policy shall contain an
endorsement showing LaSalle as additional insured thereunder and providing that
the insurance company shall give LaSalle at least thirty (30) days written
notice before any such policy shall be altered or cancelled; and
(2) if any Borrower at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay any
premium in whole or in part relating thereto, then LaSalle, without waiving or
releasing any obligation or default by Borrowers hereunder, may (but shall be
under no obligation to) obtain and maintain such policies of insurance and pay
such premiums and take such other actions with respect thereto as LaSalle
reasonably deems advisable. All sums disbursed by LaSalle in connection with any
such actions, including, without limitation, court costs, expenses, other
charges relating thereto and reasonable attorneys' fees, shall constitute
Revolving Loans hereunder and, until paid, shall bear interest at the highest
rate then applicable to Revolving Loans hereunder;
(5) no Borrower shall use the Collateral, or any part thereof, in any
unlawful business or for any unlawful purpose or use or maintain any of the
Collateral in any manner that does or could result in material damage to the
environment or a violation of any applicable environmental laws, rules or
regulations; each Borrower shall keep the Collateral in good condition, repair
and order, ordinary wear and tear excepted; neither Borrower shall permit the
Collateral, or any part thereof, to be levied upon under execution, attachment,
distraint or other legal process; neither Borrower shall sell, lease, grant a
security interest in or otherwise dispose of any of the Collateral except as
expressly permitted by this Agreement; and neither Borrower shall secrete or
abandon any of the Collateral, or remove or permit removal of any of the
Collateral from any of the locations listed on Exhibit A or in any written
---------
notice to LaSalle pursuant to paragraph 13(c) hereof, except for the removal of
---------------
Inventory sold in the ordinary course of each Borrower's business as permitted
herein;
34
(6) all monies and other property obtained by Borrowers from LaSalle
pursuant to this Agreement will be used solely for business purposes of
Borrowers;
(7) each Borrower shall, at the request of LaSalle, indicate on its
records concerning the Collateral a notation, in form satisfactory to LaSalle,
of the security interest of LaSalle hereunder, and neither Borrower shall
maintain duplicates or copies of such records at any address other than in such
Borrower's principal place of business set forth on the first page of this
Agreement; provided, however, that each Borrower, in the ordinary course of its
-------- -------
respective business, may furnish copies of such records to its accountants,
attorneys and other agents or advisors as it may determine to be necessary or
desirable, in the exercise of its commercially reasonable judgment;
(8) each Borrower shall file all required tax returns and pay all of
its taxes when due, including, without limitation, taxes imposed by federal,
state or municipal agencies, and shall cause any liens for taxes to be promptly
released; provided, that each Borrower shall have the right to contest the
payment of such taxes in good faith by appropriate proceedings so long as (i)
the amount so contested is disclosed on such Borrower's financial statements in
accordance with GAAP, (ii) the contesting of any such payment does not give rise
to a lien for taxes, (iii) upon the occurrence of an Event of Default, such
Borrower keeps on deposit with LaSalle (such deposit to be held without
interest) an amount of money which, in the reasonable judgment of LaSalle, is
sufficient to pay such taxes and any interest or penalties that may accrue
thereon, and (iv) if any Borrower fails to prosecute such contest with
reasonable diligence, LaSalle may apply the money so deposited in payment of
such taxes. If any Borrower fails to pay any such taxes and in the absence of
any such contest by such Borrower, LaSalle may (but shall be under no obligation
to) advance and pay any sums required to pay any such taxes and/or to secure the
release of any lien therefor, and any sums so advanced by LaSalle shall
constitute Revolving Loans hereunder, shall be payable by Borrowers to LaSalle
on demand, and, until paid, shall bear interest at the highest rate then
applicable to Revolving Loans hereunder;
(9) no Borrower shall (i) incur, create, assume or suffer to exist
any indebtedness other than (A) indebtedness arising under this Agreement, (B)
unsecured indebtedness owing in the ordinary course of business to trade
suppliers, and (C) any other indebtedness described in paragraph 13(q) hereof;
---------------
or (ii) assume, guarantee or endorse, or otherwise become liable in connection
with, the obligations of any Person, except by endorsement of instruments for
deposit or collection or similar transactions in the ordinary course of
business;
(10) no Borrower shall enter into any merger or consolidation, or
sell, lease or otherwise dispose of all or substantially all of its respective
assets; neither Borrower shall create any new Subsidiary or Affiliate or issue
any shares of, or warrants or other rights to receive or purchase any shares of,
any class of its stock; neither Borrower shall enter into any transaction
outside the ordinary course of such Borrower's business;
(11) no Borrower shall (i) declare or pay any dividend (other than
dividends paid wholly in shares of a Borrower's stock) or other distribution
(whether in cash or in kind) on, purchase, redeem or retire any shares of any
class of its stock, or make any payment on account of, or set apart assets for
the repurchase, redemption, defeasance or retirement of, any class of its stock;
35
or (ii) make any optional payment or prepayment on or redemption (including
without limitation by making payments to a sinking fund or analogous fund) or
repurchase of any indebtedness for borrowed money other than indebtedness
pursuant to this Agreement.
(12) Except as expressly permitted under this Agreement, no Borrower
shall make any loans to, or investment in, any Person, whether in cash,
securities or other property of any kind, other than investments that are direct
obligations of the United States;
(13) no Borrower shall amend its organizational documents or change
its Fiscal Year;
(14) each Borrower shall maintain and keep in full force and effect
each of the financial covenants set forth below. The calculation and
determination of each such financial covenant, and all accounting terms
contained therein, shall be so calculated and construed in accordance with GAAP,
applied on a basis consistent with the financial statements of Borrowers
delivered on or before the Closing Date:
(1) Tangible Consolidated Net Worth. Borrowers and their
-------------------------------
Subsidiaries, on a consolidated basis, shall, on a pro forma basis, have a
Tangible Consolidated Net Worth of no less than ($4,000,000.00) as of March 31,
2001. Said covenant shall be set by the parties for all subsequent periods no
later than April 25, 2001.
(2) Consolidated Interest Coverage Ratio. Borrowers and their
------------------------------------
Subsidiaries, on a consolidated basis, shall maintain as of the end of each
fiscal quarter, commencing with the fiscal quarter ending December 31, 2001,
calculated on a rolling twelve (12) month basis thereafter, an Interest Coverage
Ratio of not less than 1.25 to 1.00;
(3) Consolidated Capital Expenditures. Borrowers and their
---------------------------------
Subsidiaries, on a consolidated basis, shall not make Capital Expenditures in an
aggregate amount of more than $2,500,000.00 in any Fiscal Year of Borrowers;
(4) Minimum EBITDA. Borrowers and their Subsidiaries, on a
--------------
consolidated basis, shall maintain EBITDA of at least the following amounts for
the following time periods:
[a] six (6) month period from January 1, 2001 through June ($7,239,000)
30, 2001
[b] nine (9) month period from January 1, 2001 through ($3,516,000)
September 30, 2001
[c] during any consecutive twelve (12) month period from $ 7,687,000
and after January 1, 2001 (for calendar year 2002, to
be determined by LaSalle after receipt of the Borrowers'
2001 audited financial statements);
36
(15) Borrowers shall reimburse LaSalle for all costs and expenses
including, without limitation, legal expenses and reasonable attorneys' fees
(both in-house and outside counsel), incurred by LaSalle in connection with the
documentation and consummation of this transaction and any amendments or
modifications of this Agreement or the Other Agreements or other transactions
between Borrowers and LaSalle, including, without limitation, Uniform Commercial
Code and other public record searches, lien filings, Federal Express or similar
express or messenger delivery, appraisal costs, surveys, title insurance and
environmental audit or review costs, and in seeking to collect, protect or
enforce any rights in or to the Collateral or incurred by LaSalle in seeking to
collect any Liabilities and to administer and enforce any of LaSalle's rights
under this Agreement. Borrowers shall also pay all normal service charges with
respect to accounts maintained by LaSalle for the benefit of any Borrower. All
such costs, expenses and charges shall constitute Revolving Loans hereunder,
shall be payable by Borrowers to LaSalle on demand, and, until paid, shall bear
interest at the highest rate then applicable to Revolving Loans hereunder;
(16) neither Borrower shall pay any management or consulting fees to
any Persons, or make any loan to any Person except travel advances made to
employees in the ordinary course of business and loans to employees not
exceeding One Hundred Thousand Dollars ($100,000) to any single Person and Five
Hundred Thousand Dollars ($500,000) in the aggregate outstanding for all Persons
at any one time; provided, that no Event of Default shall have occurred prior
--------
to, or would occur as a result of, any such payment;
(17) neither Borrower shall enter into or be a party to, or permit any
Subsidiary to enter into or be a party to, any transaction with any Affiliate of
either Borrower except in the ordinary course of business in a manner and to an
extent consistent with past practices of Borrowers and necessary or desirable
for the prudent operation of their respective businesses, for fair consideration
and on terms no less favorable to Borrowers or such Subsidiary as are available
from unaffiliated third parties; and
(18) Borrowers shall promptly advise LaSalle in writing of any
Material Adverse Effect or the occurrence of any Default or Event of Default.
15. CONDITIONS PRECEDENT.
(1) The obligation of LaSalle to fund the initial Revolving Loan and
to co-sign as applicant for the initial Letter of Credit, is subject to the
satisfaction or waiver on or before the Closing Date of the following conditions
precedent:
(1) LaSalle shall have received each of the agreements,
opinions, reports, approvals, consents, certificates and other documents set
forth on the closing document list attached hereto as Schedule 15(a)(i) (the
-----------------
"Closing Agenda");
(2) Since December 31, 2000, no event shall have occurred which
has had or could reasonably be expected to have a Material Adverse Effect, as
determined by LaSalle in its sole discretion;
37
(3) LaSalle shall have received payment in full of all fees and
expenses payable to it by Borrowers on or before the Closing Date;
(4) LaSalle shall have determined that immediately after giving
effect to (A) the making of the initial Loans requested to be made on the
Closing Date, (B) the issuance of the initial Letter of Credit, if any,
requested to be made on the Closing Date and (C) the payment or reimbursement by
Borrowers of LaSalle for all closing costs and expenses incurred in connection
with the transactions contemplated hereby, on a pro forma basis the Excess
--- -----
Availability of Borrowers shall not be less than One Million Seven Hundred
Thousand Dollars ($1,700,000);
(5) LaSalle shall have received a certificate from each
Borrower's chief executive officer or chief financial officer, pursuant to which
such officer shall certify that in calculating the Excess Availability described
in clause (iv) above, each Borrower's outstanding trade payables were (and are)
current and not more than ninety (90) days past invoice date;
(6) The Obligors shall have executed and delivered to LaSalle
all documents which LaSalle determines are reasonably necessary to consummate
the transactions contemplated hereby, including, without limitation, Guarantor's
execution and delivery of the Guaranty;
(7) LaSalle shall have received proof, satisfactory to it, in
its sole discretion, that (x) the net proceeds, in the aggregate, of Borrowers'
private placement, in the amount of not less than $10,700,000.00, (y) proceeds
of an advance from Microsoft Corporation in the amount of $5,000,000.00 and (z)
$3,000,000.00 from ▇▇▇▇▇ ▇▇▇▇▇ to satisfy all of Borrowers' obligations to ▇▇▇▇▇
Interactive SA have all been received by Borrowers; and
(8) LaSalle shall have received all subordination and
intercreditor agreements from all Subordinating Creditors in form and substance
satisfactory to LaSalle;
(2) After the Closing Date, the obligation of LaSalle to make any
requested Revolving Loan or to co-sign as applicant for any requested Letter of
Credit is subject to the satisfaction of the conditions precedent set forth
below. Each such request shall constitute a representation and warranty that
such conditions are satisfied:
(1) All representations and warranties contained in this
Agreement and the Other Agreements shall be true and correct on and as of the
date of such request, as if then made, other than representations and warranties
that relate solely to an earlier date; and
(2) No Default or Event of Default shall have occurred, or would
result from the making of the requested Revolving Loan or the issuance of the
requested Letter of Credit, which has not been waived;
16. DEFAULT.
38
The occurrence of any one or more of the following events shall
constitute an "Event of Default" hereunder:
(1) the failure of any Obligor to pay when due, declared due, or
demanded by LaSalle in accordance with the terms hereof, any of the Liabilities;
(2) the failure of any Obligor to perform, keep or observe any of the
covenants, conditions, promises, agreements or obligations of such Obligor under
this Agreement or any of the Other Agreements;
(3) the making or furnishing by any Obligor to LaSalle of any
representation, warranty, certificate, schedule, report or other communication
within or in connection with this Agreement or the Other Agreements or in
connection with any other agreement between such Obligor and LaSalle, which is
untrue or misleading in any respect, or the failure of any Obligor to perform,
keep or observe any of the covenants, conditions, promises, agreement of such
Obligor under any other agreement with any Person if such failure has or is
reasonably likely to have a Material Adverse Effect;
(4) the creation (whether voluntary or involuntary) of, or any
attempt to create, any lien or other encumbrance upon any of the Collateral,
other than the Permitted Liens, or the making or any attempt to make any levy,
seizure or attachment thereof;
(5) the commencement of any proceedings (i) in bankruptcy by or
against any Obligor, (ii) for the liquidation or reorganization of any Obligor,
(iii) alleging that such Obligor is insolvent or unable to pay its debts as they
mature, or (iv) for the readjustment or arrangement of any Obligor's debts,
whether under the United States Bankruptcy Code or under any other law, whether
state or federal, now or hereafter existing for the relief of debtors, or the
commencement of any analogous statutory or non-statutory proceedings involving
any Obligor; provided, however, that if such commencement of proceedings against
-------
such Obligor is involuntary, such action shall not constitute an Event of
Default unless such proceedings are not dismissed within forty-five (45) days
after the commencement of such proceedings;
(6) the appointment of a receiver or trustee for any Obligor, for any
of the Collateral or for any substantial part of any Obligor's assets or the
institution of any proceedings for the dissolution, or the full or partial
liquidation, or the merger or consolidation, of any Obligor which is a
corporation or a partnership; provided, however, that if such appointment or
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commencement of proceedings against such Obligor is involuntary, such action
shall not constitute an Event of Default unless such appointment is not revoked
or such proceedings are not dismissed within forty-five (45) days after the
commencement of such proceedings;
(7) the entry of any judgment or order in excess of $100,000 against
any Obligor which remains unsatisfied or undischarged and in effect for forty-
five (45) days after such entry without a stay of enforcement or execution;
39
(8) the occurrence of an event of default under, or the revocation or
termination of, any agreement, instrument or document executed and delivered by
any Person to LaSalle pursuant to which such Person has guaranteed to LaSalle
the payment of all or any of the Liabilities or has granted LaSalle a security
interest in or lien upon some or all of such Person's real and/or personal
property to secure the payment of all or any of the Liabilities;
(9) the occurrence of an event of default under any other agreement
or instrument evidencing indebtedness for borrowed money in excess of $100,000
executed or delivered by either Borrower or pursuant to which agreement or
instrument either Borrower or its respective properties is or may be bound;
(10) a Change of Control shall have occurred; or
(11) if any Reportable Event shall have occurred or any Benefit Plan
shall be terminated within the meaning of title IV of ERISA, or a trustee shall
be appointed by the appropriate United States District Court to administer any
Benefit Plan, the PBGC shall institute proceedings to terminate any Benefit
Plan, or there shall be a withdrawal from any Multiemployer Plan, and there
shall be a Material Adverse Effect in the case of any event described in this
paragraph 16(k);
---------------
(12) the occurrence of any event or condition which has or is
reasonably likely to have a Material Adverse Effect; or
(13) Borrowers do not upgrade or replace their current Platinum
computer business applications software with new software reasonably
satisfactory to LaSalle within one year from the Closing Date.
17. REMEDIES UPON AN EVENT OF DEFAULT.
(1) Upon the occurrence of an Event of Default described in paragraph
---------
16(e) hereof, all of the Liabilities shall immediately and automatically become
-----
due and payable, without notice of any kind. Upon the occurrence of any other
Event of Default, all of the Liabilities may, at the option of LaSalle, and
without demand, notice or legal process of any kind, be declared, and
immediately shall become, due and payable.
(2) Upon the occurrence of an Event of Default, LaSalle may exercise
from time to time any rights and remedies available to it under the Uniform
Commercial Code and any other applicable law in addition to, and not in lieu of,
any rights and remedies expressly granted in this Agreement or in any of the
Other Agreements and all of LaSalle's rights and remedies shall be cumulative
and non-exclusive to the extent permitted by law. In particular, but not by way
of limitation of the foregoing, LaSalle may, without notice, demand or legal
process of any kind, take possession of any or all of the Collateral (in
addition to Collateral of which it already has possession), wherever it may be
found, and for that purpose may pursue the same wherever it may be found, and
may enter into any of Borrowers' premises where any of the Collateral may be,
and search for, take possession of, remove, keep and store any of the Collateral
until the same shall be sold or
40
otherwise disposed of, and LaSalle shall have the right to store the same at any
of Borrowers' premises without cost to LaSalle. At LaSalle's request, Borrowers
shall, at Borrowers' expense, assemble the Collateral and make it available to
LaSalle at one or more places to be designated by LaSalle and reasonably
convenient to LaSalle and Borrowers. Borrowers recognize that if Borrowers fail
to perform, observe or discharge any of their respective obligations under this
Agreement or the Other Agreements, no remedy at law will provide adequate relief
to LaSalle, and Borrowers agree that LaSalle shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages. Any notification of intended disposition of any of the
Collateral required by law will be deemed reasonably and properly given if given
at least ten (10) calendar days before such disposition. Any proceeds of any
disposition by LaSalle of any of the Collateral may be applied by LaSalle to the
payment of expenses in connection with the Collateral including, without
limitation, legal expenses and reasonable attorneys' fees (both in-house and
outside counsel) and any balance of such proceeds may be applied by LaSalle
toward the payment of such of the Liabilities, and in such order of application,
as LaSalle may from time to time elect.
18. INDEMNIFICATION.
Borrowers agree to defend (with counsel reasonably satisfactory to
LaSalle), protect, indemnify and hold harmless LaSalle, each affiliate or
subsidiary of LaSalle, and each of their respective officers, directors,
employees, attorneys and agents (each an "Indemnified Party") from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature (including, without limitation, the disbursements and the reasonable fees
of counsel for each Indemnified Party in connection with any investigative,
administrative or judicial proceeding, whether or not the Indemnified Party
shall be designated a party thereto), which may be imposed on, incurred by, or
asserted against, any Indemnified Party (whether direct, indirect or
consequential and whether based on any federal, state or local laws or
regulations including, without limitation, securities, environmental and
commercial laws and regulations, under common law or in equity, or based on
contract or otherwise) in any manner relating to or arising out of this
Agreement or any Other Agreement, or any act, event or transaction related or
attendant thereto, the making and the management of the Loans or any Letters of
Credit or the use or intended use of the proceeds of the Loans or any Letters of
Credit; provided, however, that Borrowers shall not have any obligation
-------- -------
hereunder to any Indemnified Party with respect to matters caused by or
resulting from the willful misconduct or gross negligence of such Indemnified
Party. To the extent that the undertaking to indemnify set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, Borrowers shall satisfy such undertaking to the maximum extent
permitted by applicable law. Any liability, obligation, loss, damage, penalty,
cost or expense covered by this indemnity shall be paid to each Indemnified
Party on demand, and, failing prompt payment, shall, together with interest
thereon at the highest rate then applicable to Revolving Loans hereunder from
the date incurred by each Indemnified Party until paid by Borrowers, be added to
the Liabilities of Borrowers and be secured by the Collateral. The provisions of
this paragraph 18 shall survive the satisfaction and payment of the other
Liabilities and the termination of this Agreement.
41
19. NOTICES.
All written notices and other written communications with respect to
this Agreement shall be sent by ordinary, certified or overnight mail, by
telecopy or delivered in person, and in the case of LaSalle shall be sent to it
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: District
Credit Manager (if by telecopy to (▇▇▇) ▇▇▇-▇▇▇▇), and in the case of Borrowers
shall be sent to Borrowers at their principal place of business as set forth on
the first page of this Agreement, Attn: Chief Executive Officer and Chief
Financial Officer (if by telecopy to (▇▇▇) ▇▇▇-▇▇▇▇).
20. CHOICE OF GOVERNING LAW AND CONSTRUCTION
This Agreement and the Other Agreements are submitted by Borrowers to
LaSalle for LaSalle's acceptance or rejection at LaSalle's principal place of
business as an offer by Borrowers to borrow monies from LaSalle now and from
time to time hereafter, and shall not be binding upon LaSalle or become
effective until accepted by LaSalle, in writing, at said place of business. If
so accepted by LaSalle, this Agreement and the Other Agreements shall be deemed
to have been made at said place of business. THIS AGREEMENT AND THE OTHER
AGREEMENTS SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS AS TO INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND
IN ALL OTHER RESPECTS, INCLUDING, WITHOUT LIMITATION, THE LEGALITY OF THE
INTEREST RATE AND OTHER CHARGES, BUT EXCLUDING PERFECTION OF THE SECURITY
INTERESTS IN THE COLLATERAL, WHICH SHALL BE GOVERNED AND CONTROLLED BY THE LAWS
OF THE RELEVANT JURISDICTION. If any provision of this Agreement shall be held
to be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or remaining provisions of this
Agreement.
21. FORUM SELECTION AND SERVICE OF PROCESS.
To induce LaSalle to accept this Agreement, each Borrower irrevocably
agrees that, subject to LaSalle's sole and absolute election, ALL ACTIONS OR
PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO
THIS AGREEMENT, THE OTHER AGREEMENTS OR THE COLLATERAL SHALL BE LITIGATED IN
COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. EACH BORROWER
HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL
COURTS LOCATED WITHIN SAID CITY AND STATE. Each Borrower hereby irrevocably
appoints and designates the Secretary of State of Illinois, whose address is
Springfield, Illinois (or any other person having and maintaining a place of
business in such state whom Borrowers may from time to time hereafter designate
upon ten (10) days written notice to LaSalle and who LaSalle has agreed in its
sole discretion in writing is satisfactory and who has executed an agreement in
form and substance satisfactory to LaSalle agreeing to act as such attorney and
agent), as such Borrower's true and lawful attorney and duly authorized agent
for acceptance of service of legal process. Each Borrower
42
agrees that service of such process upon such person shall constitute personal
service of such process upon such Borrower. EACH BORROWER HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT
AGAINST BORROWER BY LASALLE IN ACCORDANCE WITH THIS PARAGRAPH.
22. MODIFICATION AND BENEFIT OF AGREEMENT
This Agreement and the Other Agreements may not be modified, altered
or amended except by an agreement in writing signed by Borrowers and LaSalle.
Borrowers may not sell, assign or transfer this Agreement, or the Other
Agreements or any portion thereof including, without limitation, Borrowers'
rights, titles, interest, remedies, powers or duties thereunder. Each Borrower
hereby consents to LaSalle's sale, assignment, transfer or other disposition, at
any time and from time to time hereafter, of this Agreement, or the Other
Agreements, or of any portion thereof, or participations therein including,
without limitation, LaSalle's rights, titles, interest, remedies, powers and/or
duties thereunder. Each Borrower agrees that it shall execute and deliver such
documents as LaSalle may request in connection with any such sale, assignment,
transfer or other disposition.
23. HEADINGS OF SUBDIVISIONS.
The headings of subdivisions in this Agreement are for convenience of
reference only, and shall not govern the interpretation of any of the provisions
of this Agreement.
24. POWER OF ATTORNEY.
Each Borrower acknowledges and agrees that its appointment of LaSalle
as its attorney and agent-in-fact for the purposes specified in this Agreement
is an appointment coupled with an interest and shall be irrevocable until all of
the Liabilities are paid in full and this Agreement is terminated.
25. WAIVER OF JURY TRIAL; OTHER WAIVERS; CONFIDENTIALITY.
(1) LASALLE AND EACH BORROWER HEREBY WAIVE ALL RIGHTS TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT, ANY OF THE OTHER AGREEMENTS, THE LIABILITIES, THE COLLATERAL, ANY
ALLEGED TORTIOUS CONDUCT OF ANY BORROWER OR LASALLE OR WHICH, IN ANY WAY,
DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP BETWEEN ANY
BORROWER AND LASALLE. IN NO EVENT SHALL LASALLE BE LIABLE FOR LOST PROFITS OR
OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
(2) EACH BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF
ANY KIND PRIOR TO THE EXERCISE BY LASALLE OF ITS RIGHTS TO REPOSSESS THE
COLLATERAL OF BORROWERS OR ANY ONE OF THEM WITHOUT JUDICIAL PROCESS OR TO
REPLEVY, ATTACH OR LEVY UPON SUCH COLLATERAL WITHOUT PRIOR NOTICE OR HEARING.
43
(3) Each Borrower hereby waives demand, presentment, protest and
notice of nonpayment, and further waives the benefit of all valuation, appraisal
and exemption laws.
(4) LaSalle's failure, at any time or times hereafter, to require
strict performance by Borrowers of any provision of this Agreement or any of the
Other Agreements shall not waive, affect or diminish any right of LaSalle
thereafter to demand strict compliance and performance therewith. Any suspension
or waiver by LaSalle of an Event of Default under this Agreement or any default
under any of the Other Agreements shall not suspend, waive or affect any other
Event of Default under this Agreement or any other default under any of the
Other Agreements, whether the same is prior or subsequent thereto and whether of
the same or of a different kind or character. No delay on the part of LaSalle in
the exercise of any right or remedy under this Agreement or any Other Agreement
shall preclude other or further exercise thereof or the exercise of any right or
remedy. None of the undertakings, agreements, warranties, covenants and
representations of Borrowers contained in this Agreement or any of the Other
Agreements and no Event of Default under this Agreement or default under any of
the Other Agreements shall be deemed to have been suspended or waived by LaSalle
unless such suspension or waiver is in writing, signed by a duly authorized
officer of LaSalle and directed to Borrowers specifying such suspension or
waiver.
(5) Each Borrower has furnished and will furnish to LaSalle certain
information concerning such Borrower which such Borrower has advised is non-
public, proprietary or confidential in nature ("Confidential Information").
------------------------
LaSalle confirms to the Borrowers that it is LaSalle's policy and practice to
maintain in confidence all Confidential Information which is provided to it
under agreements providing for the extension of credit and which is identified
to it as such, and that it will protect the confidentiality of Confidential
Information submitted to it with respect to Borrowers under this Agreement,
commensurate with its efforts to maintain the confidentiality of its own
Confidential Information, provided, however, that (i) nothing contained herein
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shall prevent LaSalle from disclosing Confidential Information (A) to its
Affiliates and their respective directors, officers, and employees and to any
legal counsel, auditors, appraisers, consultants or other persons retained by it
or its Affiliates as professional advisors, on the condition that such
information not be further disclosed except in compliance with this paragraph
---------
25(e); (B) under color of legal authority, including, without limitation, to any
-----
regulatory authority having jurisdiction over it or its operations or to, or
under the authority of, any court deemed by it to be of competent jurisdiction;
(C) to any actual or potential assignee of or participant in LaSalle's rights
and obligations under this Agreement to the extent such actual potential
assignee or participant has agreed to maintain such information in confidence on
the basis set forth in this paragraph 25(e); and (D) as necessary in connection
---------------
with the exercise of its remedies under this Agreement or any of the Other
Agreements; (ii) the terms of this paragraph 25(e) shall be inapplicable to any
---------------
information furnished to it which is in possession prior to the delivery to it
of such information by Borrowers or any other authorized Person, or otherwise
has been obtained by it on a non-confidential basis, or which was or becomes
available to the public or otherwise part of the public domain (other than as a
result of LaSalle's failure or any prospective participant's or assignee's
failure to abide hereby), or which was not non-public, proprietary or
confidential when Borrowers or any other authorized Person delivered it to
LaSalle; and (iii) the determination by LaSalle as to the application of any of
44
the circumstances described in the foregoing clauses (i) and (ii) will be
conclusive and binding if made in good faith.
(6) Notwithstanding subparagraph (e) above, Borrowers consent to
----------------
LaSalle publishing a tombstone or similar advertising material relating to the
financing transaction contemplated by this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
45
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day first above written.
LaSALLE BUSINESS CREDIT, INC.
By:____________________________
Name: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇
Title: Vice President
INTERPLAY ENTERTAINMENT CORP.
By:_____________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Signatory
INTERPLAY OEM, INC.
By:_____________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Signatory
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:_____________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Signatory
46
EXHIBIT A
BUSINESS AND COLLATERAL LOCATIONS FOR BORROWERS:
A. The principal business location and location of where all originals and
copies of books, records and accounts are kept as follows:
B. The other locations of Collateral are only as follows:
EXHIBIT B
OFFICER'S CERTIFICATE
THIS CERTIFICATE is submitted pursuant to paragraph 11(i) of the Loan
and Security Agreement dated March ___, 2001 ("Loan Agreement") among LaSalle
Business Credit, Inc. ("LaSalle") and Interplay Entertainment Corp., a Delaware
corporation and Interplay OEM, Inc., a California corporation, and
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation (collectively and individually, as
the context case may require, "Borrower").
The undersigned hereby certifies to LaSalle that as of the date of this
Agreement:
1. The undersigned is the __________ of the Borrower.
2. There exits no event or circumstance which is or which with the
passage of time, the giving of notice, or both would constitute an Event of
Default, as that term is defined in the Loan Agreement, or , if such an event or
circumstance exists, a writing attached hereto specifies the nature thereof, the
period of existence thereof and the action that Borrower has taken or proposes
to take with respect thereto.
3. No material adverse change in the condition, financial or
otherwise, business, property, or results of operations of Borrower has occurred
since ____________________, or, if such a change has occurred, a writing
attached hereto specifies the nature thereof and the action that Borrower has
taken or proposes to take with respect thereto.
4. All insurance premiums due as of such date have been paid.
5. All taxes due as of such date have been paid or, for those taxes
which have not been paid, a writing attached hereto describes the nature and
amount of such taxes, and sets forth Borrower's rationale for not paying such
taxes and the action that Borrower has taken or proposes to take with respect
thereto.
6. To the best of the undersigned's knowledge, after appropriate
inquiry, except as previously disclosed to LaSalle in writing, no litigation,
investigation or proceeding, or injunction writ or restraining order is pending
or threatened against the Borrower or, if any litigation, investigation or
proceeding, or injunction, writ or restraining order is pending or threatened
against the Borrower, a writing attached hereto specifies the nature thereof and
the action that Borrower has taken or proposes to take with respect thereto.
7. Borrower is in compliance with the representations, warranties
and covenants in the Loan Agreement, or, if Borrower is not in compliance with
any representations, warranties or covenants in the Loan Agreement, a writing
attached hereto specifies the nature thereof, the period of existence thereof
and the action that Borrower has taken or proposes to take with respect thereto.
8. Attached hereto is a true and correct calculation of the
financial covenants contained in paragraph 14(n) of the Loan Agreement.
---------------
9. Borrower is solvent and is able to pay its debts as they become
due.
-----------------------------------
Name:
Title:
[ATTACH FINANCIAL COVENANT CALCULATIONS]
SCHEDULE 1 (a) - PERMITTED LIENS
SCHEDULE 13(i) - LITIGATION
SCHEDULE 13(n) - STOCKHOLDERS
SCHEDULE 13(q) -INDEBTEDNESS
SCHEDULE 13 (s) - PARENTS, SUBSIDIARIES, JOINT VENTURES AND
PARTNERSHIPS
SCHEDULE 13(v) - HEALTH BENEFIT PLANS
SCHEDULE 13(w) - TRADEMARKS, ETC.
SCHEDULE 13(x) - BENEFIT PLANS - NON-COMPLIANCE
SCHEDULE 13(z) - EXCEPTIONS TO TAX COMPLIANCE
SCHEDULE 15(a)(i) - CLOSING AGENDA
