EXHIBIT 10.6
REAFFIRMATION OF SUBORDINATION AGREEMENT AND PLEDGE AGREEMENT
This Reaffirmation of Subordination Agreement and Pledge Agreement
("Agreement") is made as of ____________ __, 2001 by and among SILICON VALLEY
BANK, a California banking corporation ("SVB"), and DCDC Merge ("Merger
Subsidiary"), a California corporation.
RECITALS
A. IMSI is indebted to SVB pursuant to a Loan and Security Agreement
dated November 3, 1998 ("SVB Loan Agreement").
The obligations under the SVB Loan Agreement ("SVB Obligations") are
secured by all assets of IMSI described in said agreement
("Collateral").
In addition the SVB Obligations are secured by the terms of an
Intellectual Property Security Agreement ("IMSI IP Security
Agreement") executed by IMSI dated November 3, 1999 and by the assets
described therein ("IP Collateral").
In addition the SVB Obligations are secured by the terms of a Pledge
Agreement ("Pledge Agreement") executed by IMSI encumbering all
shares of stock in ArtToday which are owned by IMSI.
B. IMSI was obligated to Union Bank of California ("UBOC") pursuant to
the terms of the First Amended and Restated Loan Agreement dated as
of April 23, 1999, between IMSI and UBOC, including any promissory
notes issued thereto and all documents executed in connection
therewith, as amended and modified (collectively, "UBOC Loan
Agreement").
The obligations under the UBOC Loan Agreement ("UBOC Obligations")
are secured by the Collateral.
In addition the UBOC Obligations are secured by the terms of the
Intellectual Property Security Agreement executed by IMSI dated
November 3, 1999 and by the IP Collateral.
In addition the UBOC Obligations are secured by the terms of the
Pledge Agreement encumbering all shares of stock in ArtToday which
are owned by Borrower.
C. Prior hereto IMSI and SVB and other parties entered into a
Restructure Agreement, dated as of October 9, 2001 which restructured
and reduced the monetary obligations owed by IMSI under the SVB Loan
Agreement.
D. On October 9, 2001 IMSI executed as maker a promissory note ("Revised
Promissory Note") in the original principal sum of $1,200,000 which
reflects the reduction of the monetary obligations of IMSI under the
SVB Loan Agreement.
E. Prior hereto DCDC purchased the UBOC Loan Agreement; and subordinated
the repayment of the UBOC Loan Agreement to the repayment of the SVB
Loan Agreement and subordinated all liens which secure the UBOC Loan
Agreement to the liens which secure the repayment of the SVB Loan
Agreement, and pledged the UBOC Loan Agreement as collateral to
secure such subordination.
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J. Digital Creative Development Corporation ("DCDC") intends to merge
with a wholly owned subsidiary of IMSI ("Merger Subsidiary") in such
a manner that Merger Subsidiary acquires all assets and obligations
of DCDC (the "Merger Transaction"). As a result of the Merger
Transaction Merger Subsidiary shall acquire the UBOC Loan Agreement
and all liens related thereto subject to the subordination agreed to
by DCDC.
AGREEMENT
NOW THEREFORE, in consideration of the above recitals and the covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
Reaffirmation. Merger Subsidiary hereby reaffirms the DCDC Subordination
Agreement and each and every covenant, representation and warranty
contained therein as if it were made by Merger Subsidiary in the
original document.
Acknowledgment of Pledge Agreement. Merger Subsidiary hereby recognizes
and agrees that it is obligated as pledgor under the Pledge Agreement
and bound by all of the terms thereof.
Enforceability and No Defenses. Merger Subsidiary hereby confirms that
the DCDC Subordination Agreement and the Pledge Agreement remain in full
force and effect and that there are no defenses, offsets or
counter-claims to its liability thereunder.
Acknowledgment of Liens Under Pledge Agreement. Merger
Subsidiary hereby recognizes and agrees that the security
provisions of the DCDC Pledge Agreement continue to secure the
performance of all obligations under the DCDC Subordination
Agreement;
Effectiveness of Reaffirmation. This Reaffirmation Agreement
is effective upon completion of the Merger Transaction.
Controlling Provisions. To the extent that there is any inconsistency or
conflict between the terms, conditions and provisions of the DCDC Pledge
Agreement or the Pledge Agreement and this Agreement, the terms,
conditions and provisions of this Agreement will prevail.
Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and
assigns; provided, however, that Merger Subsidiary may not assign this
Agreement or any rights and duties or obligations of them hereunder
without the prior written consent of SVB. SVB may assign this Agreement
with the assignment of the SVB Loan Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
____________________., SILICON VALLEY BANK,
a California corporation a California corporation
By: /s/ XXXXXX XXXX III By: /s/ XXXXX XXXXXXXX XxXXX
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Its: CEO Its: Vice President
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