THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENT (the
"Amendment"), dated as of August __________, 1997, is made by and between
GATEWAY DATA SCIENCES CORPORATION, an Arizona corporation and GATEWAY CREDIT
CORPORATION, an Arizona corporation ("collectively, the Borrower"), and NORWEST
BUSINESS CREDIT, INC., a Minnesota corporation (the "Lender").
RECITALS
The Borrower and the Lender have entered into a Credit and
Security Agreement dated as of February 21, 1997, as amended by a First
Amendment to Credit and Security Agreement dated as of April 23, 1997 and a
Second Amendment to Credit and Security Agreement dated as of June 10, 1997 and
forbearance letter agreement dated August 8, 1997(as so supplemented and
amended, the "Credit Agreement"). Capitalized terms used in these recitals have
the meanings given to them in the Credit Agreement unless otherwise specified.
Borrower has requested that Lender forbear for a period of
time from the exercise of its rights and remedies otherwise available to Lender
at law, in equity, by agreement or otherwise as a result of Borrower's defaults
under the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, it is agreed as follows:
1. Defined Terms. Capitalized terms used in this Amendment
which are defined in the Credit Agreement shall have the same meanings as
defined therein, unless otherwise defined herein.
1. Recitals. The recitals set forth above are true and
accurate in every respect.
2. No Offsets. Borrower and Guarantor acknowledge with respect
to the amounts owing to Lender that neither Borrower nor Guarantor has any
offset, defense or counterclaim with respect thereto, no claim or defense in the
abatement or reduction thereof, nor any other claim against Lender or with
respect to any document forming part of the transaction in respect of which the
Note was made or forming part of any other transaction under which Borrower and
Guarantor are indebted to Lender. Borrower and Guarantor acknowledge that all
interest imposed under the Note through the date hereof, and all fees and other
charges that have been collected from or imposed upon Borrower with respect to
the Loan evidenced by the Note were and are agreed to, and were properly
computed and collected, and that Lender has fully performed all obligations that
it may have had or now has to
Borrower or Guarantor, and that Lender has no obligation to make any additional
loan or extension of credit to or for the benefit of Borrower.
3. Acknowledgment of Default and Lender's Right to Accelerate.
Borrower and Guarantor acknowledge and agree that (i) a material Event of
Default exists and continues to exist under the Note and Loan Documents; (ii)
timely, adequate and proper notice of the occurrence of such Event of Default
has been received by Borrower and Guarantor; (iii) all grace periods, if any,
applicable to the cure of such Event of Default after receipt of such notice
have expired; (iv) such Event of Default is continuing without timely cure by
Borrower; (v) Lender has not waived in any respect such Event of Default or its
rights and remedies with respect thereto; (vi) on and as of the date hereof,
Lender has the right to accelerate and declare the indebtedness evidenced by the
Note to be immediately due and payable and to make demand upon Borrower and
Guarantor for the payment in full of all such indebtedness; (vii) such
acceleration and demand for payment, if made, would be in all respects adequate
and proper; and (viii) Borrower and Guarantor waive any and all further notice,
presentment, notice of dishonor or demand with respect to the indebtedness
evidenced by the Note.
4. Representations and Warranties of Borrower. To induce
Lender to enter into this Amendment and the arrangement contemplated by this
Amendment, Borrower represents and warrants to Lender as follows:
(a) The Borrower has all requisite power and
authority to execute this Amendment and to perform all of its obligations
hereunder, and this Amendment has been duly executed and delivered by the
Borrower and constitutes the legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms.
(b) The execution, delivery and performance by the
Borrower of this Amendment have been duly authorized by all necessary corporate
action and do not (i) require any authorization, consent or approval by any
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, (ii) violate any provision of any law, rule or regulation
or of any order, writ, injunction or decree presently in effect, having
applicability to the Borrower, or the articles of incorporation or by-laws of
the Borrower, or (iii) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which the Borrower is a party or by which it or its properties may
be bound or affected.
(c) All of the representations and warranties
contained in Article V, Paragraph 3 of the Credit Agreement are correct on and
as of the date hereof as though made on and as of such date, except to the
extent that such representations and warranties relate solely to an earlier
date.
5. Forbearance Period. For the period (the "Forbearance
Period"), commencing on the date hereof and terminating on the Termination Date
(as hereinafter defined), Lender shall forbear from exercising its rights and
remedies under the Credit
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Agreement until after the Termination Date. Because the Borrowers are in
default, pursuant to Section 4.2 of the Agreement, Lender has no obligation to
make any further Advance. Any Advances during the Forbearance Period shall be in
the sole discretion of Lender. For purposes hereof, the Termination Date shall
mean the earlier of (a) a default under this Amendment or any additional Default
under the Credit Agreement, the Note or any Security Documents, which
termination shall be automatic, or (b) October 31, 1997.
6. Termination of Forbearance Period. Upon the termination of
the Forbearance Period pursuant to Section 6 above, all forbearances, deferrals
and indulgences granted by Lender shall automatically terminate, and Lender
shall thereupon have, and shall be entitled to exercise, any and all rights and
remedies which Lender may have upon the occurrence of an Event of Default, and
the indebtedness evidenced by the Credit Agreement and Note and the Note shall
become immediately due and payable, without further notice of any kind.
8. No Further Default. During the Forbearance Period, Borrower
shall comply with, and not violate the terms and provisions of, the Credit
Agreement and the Security Documents, all of which are incorporated herein by
reference, and shall fully comply with all of the terms of this Amendment. In
addition, Borrower shall not allow any other Default to occur during the
Forbearance Period. Should any additional Default occur during the Forbearance
Period, including, but not limited to, the filing of a tax lien by any
governmental authority, the Forbearance Period shall automatically terminate
without notice or demand.
9. Loan Balance. At no time during the Forbearance Period
shall the indebtedness owed to Lender exceed $3,000,000, including any and all
overadvances.
10. Reduction of Overadvance Amount. Borrower shall by August
22, 1997 reduce the overadvance to $750,000. Any and all overadvance shall be
paid in full by September 19, 1997. Furthermore, Borrower shall pay in full all
amounts due under the Credit Agreement on or before October 31, 1997.
11. Maximum Overadvance Per Week. Between August 22, 1997 and
September 19, 1997, the maximum overadvance per week shall not exceed $50,000
plus the prior week's actual total cumulative overadvance. For example, as of
August 22, 1997, the total cumulative overadvance shall not exceed $750,000. For
the next week ending August 29, 1997, the total overadvance shall not exceed
$50,000 more than the actual overadvance as of the end of the prior week, but in
no event more than $800,000. Notwithstanding anything to contrary contained
herein, the maximum overadvance prior to the payment in full of the overadvance
on September 19, 1997 shall be no more than $950,000.
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12. Amendment Fee. Simultaneously with the execution of this
Amendment, the Borrower shall pay the Lender a fully earned, non-refundable
forbearance fee in the amount of $_______ (the "Forbearance Fee"), which shall
not be applied to reduce the principal indebtedness of Borrower under the Loan.
13. Conditions Precedent. This Amendment shall be effective
when the Lender has received an executed original hereof, together with the
Forbearance Fee.
14. References. All references in the Credit Agreement to "the
Credit Agreement" shall be deemed to refer to the Credit Agreement as amended
hereby; and any and all references in the Security Documents and the amendments
referred to in the Recitals hereto to the Credit Agreement shall be deemed to
refer to the Credit Agreement as amended hereby.
15. No Waiver. The execution of this Amendment shall not be
deemed to be a waiver of any Default or Event of Default under the Credit
Agreement or breach, default or event of default under any Security Document or
other document held by the Lender, whether or not known to the Lender and
whether or not existing on the date of this Amendment.
16. Release. The Borrower, and each Guarantor by signing the
Acknowledgment and Agreement of Guarantors set forth below, each hereby
absolutely and unconditionally releases and forever discharges the Lender, and
any and all participants, parent corporations, subsidiary corporations,
affiliated corporations, insurers, indemnitors, successors and assigns thereof,
together with all of the present and former directors, officers, agents and
employees of any of the foregoing, from any and all claims, demands or causes of
action of any kind, nature or description, whether arising in law or equity or
upon contract or tort or under any state or federal law or otherwise, which the
Borrower or such Guarantors have had, now has or has made claim to have against
any such person for or by reason of any act, omission, matter, cause or thing
whatsoever arising from the beginning of time to and including the date of this
Amendment, whether such claims, demands and causes of action are matured or
unmatured or known or unknown.
17. Costs and Expenses. The Borrower hereby reaffirms its
agreement under the Credit Agreement to pay or reimburse the Lender on demand
for all costs and expenses incurred by the Lender in connection with the Credit
Agreement, the Security Documents and all other documents contemplated thereby,
including without limitation all reasonable fees and disbursements of legal
counsel. Without limiting the generality of the foregoing, the Borrower
specifically agrees to pay all fees and disbursements of counsel to the Lender
for the services performed by such counsel in connection with the preparation of
this Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to the
Borrower under the Credit Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees,
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disbursements, costs and expenses and the Forbearance Fee required under
paragraph ___ hereof.
18. Counterparts. This Amendment and the Acknowledgment and
Agreement of Guarantors may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original and all of
which counterparts, taken together, shall constitute one and the same
instrument.
19. Voluntary Agreement. Borrower, and each Guarantor by
signing the Acknowledgment and Agreement of Guarantors set forth below,
represents and warrants to Lender that (i) each has had an opportunity to be
represented by legal counsel of its choice in regard to the transaction provided
for by this Amendment; (ii) each is fully aware and clearly understands all of
the terms and provisions contained in this Amendment; (iii) each has
voluntarily, with full knowledge and without coercion or duress of any kind,
entered into this Amendment and the documents executed in connection with this
Amendment; (iv) neither Borrower nor Guarantors is relying on any
representations, either written or oral, express or implied, made to it by
Lender other than as set forth in this Amendment; and (v) the consideration
received by Borrower and Guarantors to enter into this Amendment and the
arrangement contemplated by this Amendment has been actual and adequate.
20. No Other Changes. Except as explicitly amended by this
Amendment, all of the terms and conditions of the Credit Agreement shall remain
in full force and effect and shall apply to any advance or letter of credit
thereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first written above.
BORROWER:
GATEWAY DATA SCIENCES
CORPORATION, an Arizona corporation
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
----------------------------
Title: President
---------------------------
GATEWAY CREDIT CORPORATION,
an Arizona corporation
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
----------------------------
Title: President
---------------------------
LENDER:
NORWEST BUSINESS CREDIT, INC.,
a Minnesota corporation
By:___________________________
Name:_________________________
Title:________________________
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