CUSTOMER NO. 1148
FIRST AMENDMENT TO MASTER
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT to MASTER LOAN AND SECURITY AGREEMENT (the
"Amendment"), dated as of June 7, 1999, by and between SONOMA SYSTEMS, INC.
(the "Borrower"), a California Corporation, having its principal place of
business and chief executive office at 0000 Xxxxxxxxx Xxx, Xxxxx 000, Xxxxxx
xxx Xxx, Xxxxxxxxxx, 00000, and TRANSAMERICA BUSINESS CREDIT CORPORATION (the
"Lender"), a Delaware Corporation, having its principal office at Riverway II,
West Office Tower, 0000 Xxxx Xxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx, 00000.
W I T N E S S E T H
WHEREAS, the Borrower and the Lender are parties to a Master Loan and
Security Agreement, dated as of July 8, 1998 (as amended, the "Loan Agreement";
capitalized terms used herein shall have the meanings assigned to such terms in
the Loan Agreement unless otherwise defined herein); and
WHEREAS, the parties hereto desire to amend the Loan Agreement in the
manner set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the Borrower and Lender hereby agree as follows:
1. AMENDMENT TO LOAN AGREEMENT. Effective as of the date this
Amendment is fully executed by the Lender and Borrower hereof, and subject to
the satisfaction of the Borrower of conditions as determined by Lender, the
Loan Agreement is hereby amended as follows:
(a) Section 3.1, Borrowings, is hereby deleted in its entirety
and the following is inserted in lieu thereof:
SECTION 3.1. BORROWINGS. Each Loan shall be in an amount not less
than $50,000, and in no event shall the sum of the aggregate Loans made exceed
the amount of the Lender's written commitment to the Borrower in effect from
time to time. Notwithstanding anything herein to the contrary, the Lender shall
be obligated to make the initial Loan and each other Loan only after the
Lender, in its sole discretion, determines that the applicable conditions for
borrowing contained in Sections 3.3 and 3.4 are satisfied. The timing and
financial scope of Lender's obligation to make Loans hereunder are limited as
set forth in a commitment letter executed by Lender and Borrower, dated as of
June 12, 1998 and May 21, 1999 and attached hereto as EXHIBITS A AND B
(collectively the "Commitment Letters").
(b) The definitions of "Loan Documents" and "Obligations" are
deleted in their entirety and the following definitions are inserted in lieu
thereof, respectively:
LOAN DOCUMENTS shall mean, collectively, this Agreement, the Notes,
and all other present and future documents, agreements, certificates,
instruments, and opinions delivered by the Borrower under, in connection with
or relating to this Agreement, or any other present or future instrument or
agreement between Lender and Borrower, as each of the same may be amended,
modified, extended, restated or supplemented from time to time.
OBLIGATIONS shall mean and include all loans (including the Loans),
advances, debts, liabilities, obligations, covenants and duties owing by
Borrower to Lender of any kind or nature, present or future, whether or not
evidenced by the Note or any note, guaranty or other instrument, whether or not
arising under or in connection with, this Agreement, any other Loan Document or
any other present or future instrument or agreement, whether or not for the
payment of money, whether arising by reason of an extension of credit, opening,
guaranteeing or confirming of a letter of credit, loan, guaranty,
indemnification or in any other manner, whether direct or indirect (including
those acquired by assignment, purchase, discount or otherwise), whether
absolute or contingent, due or to become due, now due or hereafter arising and
however acquired (including without limitation all loans previously made by
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Lender to Borrower). The term includes, without limitation, all interest
(including interest accruing on or after an bankruptcy, whether or not an
allowed claim), charges, expenses, commitment, facility, closing and
collateral management fees, letter of credit fees, reasonable attorneys'
fees, taxes and any other sum properly chargeable to Borrower under this
Agreement, the other Loan Documents or any other present or future agreement
between Lender and Borrower.
(c) In Section 3.3, Conditions to Initial Loan, subsection
(v) is hereby deleted in its entirety and the following inserted in lieu
thereof:
(v) a certificate of the Secretary or an Assistant Secretary
of the Borrower ("Secretary's Certificate") certifying (A) that attached to
the Secretary's Certificate is a true, complete, and accurate copy of the
resolutions of the Board of Directors of the Borrower (or a unanimous consent
of directors in lieu thereof) authorizing the execution, delivery, and
performance of this Agreement, the other Loan Documents, and the transactions
contemplated hereby and thereby, and that such resolutions have not been
amended or modified since the date of such certification and are in full
force and effect; (B) the incumbency, names, and true signatures of the
officers of the Borrower authorized to sign the Loan Documents to which it is
a party; (C) that attached to the Secretary's Certificate is a true and
correct copy of the Articles or Certificate of Incorporation of the Company,
as amended, which Articles or Certificate of Incorporation have not been
further modified, repealed or rescinded and are in full force and effect; (D)
that attached to the Secretary's Certificate of the Borrower is a true and
correct copy of the Bylaws, as amended, which Bylaws of the Company have not
been further modified, repealed or rescinded and are in full force and
effect; and (E) that attached to the Secretary's Certificate is a valid
Certificate of Good Standing issued by the Secretary of the State of the
Borrower's state of incorporation; and
2. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants as follows:
(a) Since July 8, 1998, there has occurred no development,
event or change that has had or could reasonably be expected to have a
Material Adverse Effect.
(b) No Default or Event of Default has occurred and is
continuing.
(c) The representations and warranties of such Borrower
contained in Section 4.1 of the Loan Agreement are true and correct in all
material respects on the date hereof as though made on and as the date
hereof, except to the extent that such representation and warranties
expressly relate solely to an earlier date (in which case such
representations and warranties were true and correct on and as of such
earlier date).
(d) This Amendment constitutes the legal, valid and binding
obligation of such Borrower, enforceable against the Borrower in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency and other laws affecting creditors' rights generally and by
general principles of equity.
3. EXPENSES. The Borrower shall pay for all of the reasonable
costs and expenses incurred by the Lender in connection with the transactions
contemplated by the Amendment, including, without limitation, the reasonable
fees and expenses of counsel to the Lender.
4. MISCELLANEOUS.
(a) Except as expressly amended herein, all of the terms and
provisions of the Loan Agreement and the other Loan Documents are ratified
and confirmed in all respects and shall remain in full force and effect.
(b) Upon the effectiveness of this Amendment, all references
in the Loan Documents to the Loan Agreement shall mean the Loan Agreement as
amended by this Amendment and all references in the Loan Agreement to the
"this Agreement", "hereof", "herein", or similar terms, shall mean and refer
to the Loan Agreement as amended by this Amendment.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate an as
amendment to or waiver of any right, power or remedy of the Lender under any
of the Loan Documents, or constitute an amendment or waiver of any provision
of any of the Loan Documents.
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(d) This Amendment may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which
shall be an original and all of which shall constitute one and the same
agreement. This Amendment may be executed and delivered by telecopier with
the same force and effect as if the same were a fully executed and delivered
original manual counterpart.
(e) This Amendment shall constitute a Loan Document.
5. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF
THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.
IN WITNESS WHEREOF, other parties hereto have caused this Amendment to
be duly executed and delivered by their respective duly authorized officers
as of the date first above written.
BORROWER
SONOMA SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President Finance and CFO
Herunto Duly Authorized
LENDER
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By:
--------------------------------
Name:
Title:
Hereunto Duly Authorized
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SECRETARY'S CERTIFICATE
I, _________________________, hereby state that I am the duly
elected, acting and qualified Secretary Sonoma Systems, Inc., a California
corporation (the "Company"), and that:
(a) Through a unanimous consent in lieu of a Board of Directors
meeting of the Company, proposed in accordance with its bylaws and the laws
of said State on the ____ day of __________________, 199_, signed by a quorum
for the transaction of business, the following resolutions were duly and
regularly adopted:
RESOLVED, that the form, terms and provisions of all of the
documents and instruments executed by the Company with and/or in favor of
Transamerica Business Credit Corporation (the "Agreements"), and the
transactions contemplated thereby be, and the same are, in all respects
approved, and that the President, each Vice President and each other officer
of the Company (the "Authorized Persons"), or any of them, be, and they
hereby are, authorized, empowered, and directed to execute and deliver the
Agreements and any and all other agreements, documents, instruments and
certificates required or desirable in connection therewith, if necessary or
advisable, with such changes as they may deem in the best interest of the
Company, and their execution and delivery of the Agreements, and all such
other agreements, documents, instruments and certificates, shall be deemed to
be conclusive evidence that the same are in all respects authorized and
approved; and be it further
RESOLVED, that the actions of any Authorized Person heretofore
taken in furtherance of the Agreements be, and hereby are, approved, adopted
and ratified in all respects.
(i) The above resolutions: (a) are not contrary to the Articles or
Certificate of Incorporation or bylaws of the Company and (b)
have not been amended, modified, rescinded or revoked and are in
full force and effect on the date hereof.
(ii) That attached hereto as EXHIBIT A is a true and correct copy of
the Articles or Certificate of Incorporation of the Company, as
amended, which Articles or Certificate of Incorporation have not
been further modified, repealed or rescinded and are in full
force and effect of the date hereof.
(iii) That attached hereto as EXHIBIT B is a true and correct copy of
the Bylaws, as amended, which Bylaws of the Company have not been
further modified, repealed or rescinded and are in full force and
effect of the date hereof.
(iv) That attached hereto as EXHIBIT C is a valid Certificate of
Good Standing issued by the Secretary of the State of the
Company's state of incorporation.
The following persons are duly qualified and acting officers of the Company,
duly elected to the offices set forth opposite their respective names, and the
signature appearing opposite the name of each such officer is his authentic
signature:
Name Office Signature
---------------------- ---------------------- ---------------------
---------------------- ---------------------- ---------------------
---------------------- ---------------------- ---------------------
IN WITNESS WHEREOF, I have executed this Certificate, this ____ day of
___________, 1999.
--------------------------------
Secretary
[CORPORATE SEAL]
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MASTER LOAN AND SECURITY AGREEMENT
THIS AGREEMENT dated as of July 8, 1998, is made by Sonoma Systems, Inc.
(the "Borrower"), a California corporation having its principal place of
business and chief executive office at 0000 Xxxxxxxxx Xxx, Xxxxxx xxx Xxx,
Xxxxxxxxxx, 00000-0000 in favor of Transamerica Business Credit Corporation, a
Delaware corporation (the "Lender"), having its principal office at Riverway
II, West Office Tower, 0000 Xxxx Xxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000.
WHEREAS, the Borrower has requested that the Lender make Loans to it
from time to time; and
WHEREAS, the Lender has agreed to make such Loans on the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the
Lender to extend credit, the Borrower hereby agrees with the Lender as
follows:
SECTION 1. DEFINITIONS.
As used herein, the following terms shall have the following meanings,
and shall be equally applicable to both the singular and plural forms of the
terms defined:
AGREEMENT shall mean this Master Loan and Security Agreement together with
all schedules and exhibits hereto, as amended, supplemented, or otherwise
modified from time to time.
APPLICABLE LAW shall mean the laws of the State of Illinois (or any other
jurisdiction whose laws are mandatorily applicable notwithstanding the
parties' choice of Illinois law) or the laws of the United States of America,
whichever laws allow the greater interest, as such laws now exist or may be
changed or amended or come into effect in the future.
BUSINESS DAY shall mean any day other than a Saturday, Sunday, or public
holiday or the equivalent for banks in New York City.
CODE shall have the meaning specified in Section 8(d).
COLLATERAL shall have the meaning specified in Section 2.
EFFECTIVE DATE shall mean the date on which all of the conditions specified
in Section 3.3 shall have been satisfied.
EQUIPMENT shall have the meaning specified in Section 2.
EVENT OF DEFAULT shall mean any event specified in Section 7.
FINANCIAL STATEMENTS shall have the meaning specified in Section 6.1.
GAAP shall mean generally accepted accounting principles in the United States
of America, as in effect from time to time.
LOANS shall mean the loans and financial accommodations made by the Lender to
the Borrower in accordance with the terms of this Agreement and the Notes.
LOAN DOCUMENTS shall mean, collectively, this Agreement, the Notes, and all
other documents, agreements,
certificates, instruments, and opinions executed and delivered in connection
herewith and therewith, as the same may be modified, extended, restated, or
supplemented from time to time.
MATERIAL ADVERSE CHANGE shall mean, with respect to any Person, a material
adverse change in the business, prospects, operations, results of operations,
assets, liabilities, or condition (financial or otherwise) of such Person
taken as a whole.
MATERIAL ADVERSE EFFECT shall mean, with respect to any Person, a material
adverse effect on the business, prospects, operations, results of operations,
assets, liabilities, or condition (financial or otherwise) of such Person
taken as a whole.
NOTE shall mean each Promissory Note made by the Borrower in favor of the
Lender, as amended, supplemented, or otherwise modified from time to time.
OBLIGATIONS shall mean all indebtedness, obligations, and liabilities of the
Borrower under the Notes and under this Agreement, whether on account of
principal, interest, indemnities, fees (including, without limitation,
attorneys' fees, remarketing fees, origination fees, collection fees, and all
other professionals' fees), costs, expenses, taxes, or otherwise.
PERMITTED LIENS shall mean such of the following as to which no enforcement,
collection, execution, levy, or foreclosure proceeding shall have been
commenced: (a) liens for taxes, assessments, and other governmental charges
or levies or the claims or demands of landlords, carriers, warehousemen,
mechanics, laborers, materialmen, and other like Persons arising by operation
of law in the ordinary course of business for sums which are not yet due and
payable, or liens which are being contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves
are maintained to the extent required by GAAP; (b) deposits or pledges to
secure the payment of worker's compensation, unemployment insurance, or other
social security benefits or obligations, public or statutory obligations,
surety or appeal bonds, bid or performance bonds, or other obligations of
a like nature incurred in the ordinary course of business; (c) licenses,
restrictions, or covenants for or on the use of the Equipment which do not
materially impair either the use of the Equipment in the operation of the
business of the Borrower or the value of the Equipment; and (d) attachment or
judgment liens that do not constitute an Event of Default.
PERSON shall mean any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, entity,
party, or government (including any division, agency, or department thereof),
and the successors, heirs, and assigns of each.
SCHEDULE shall mean each Schedule in the form of Schedule A hereto delivered
by the Borrower to the Lender from time to time.
SOLVENT means, with respect to any Person, that as of the date as to which
such Person's solvency is measured:
(a) the fair saleable value of its assets is in excess of the total
amount of its liabilities (including contingent liabilities as valued in
accordance with GAAP) as they become absolute and matured;
(b) it has sufficient capital to conduct its business; and
(c) it is able generally to meet its debts as they mature.
TAXES shall have the meaning specified in Section 5.5.
SECTION 2. CREATION OF SECURITY INTEREST; COLLATERAL. The Borrower
hereby assigns and grants to the Lender a continuing general, first priority
lien on, and security interest in, all the Borrower's right, title, and
interest in and to the collateral described in the next sentence (the
"Collateral") to secure the payment and performance of all the Obligations.
The Collateral consists of all equipment set forth on all the
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Schedules delivered from time to time under the terms of this Agreement (the
"Equipment"), together with all present and future additions, parts,
accessories, attachments, substitutions, repairs, improvements, and
replacements thereof or thereto, and any and all proceeds thereof, including,
without limitation, proceeds of insurance and all manuals, blueprints,
know-how, warranties, and records in connection therewith, all rights against
suppliers, warrantors, manufacturers, sellers, or others in connection
therewith, and together with all substitutes for any of the foregoing.
SECTION 3. THE CREDIT FACILITY.
SECTION 3.1. BORROWINGS. Each Loan shall be in an amount not
less than $50,000, and in no event shall the sum of the aggregate Loans made
exceed the amount of the Lender's written commitment to the Borrower in
effect from time to time. Notwithstanding anything herein to the contrary,
the Lender shall be obligated to make the initial Loan and each other Loan
only after the Lender, in its sole discretion, determines that the applicable
conditions for borrowing contained in Sections 3.3 and 3.4 are satisfied. The
timing and financial scope of Lender's obligation to make Loans hereunder are
limited as set forth in a commitment letter executed by Lender and Borrower,
dated as of June 12, 1998 and attached hereto as Exhibit A (the "Commitment
Letter").
SECTION 3.2. APPLICATION OF PROCEEDS. The Borrower shall not
directly or indirectly use any proceeds of the Loans, or cause, assist,
suffer, or permit the use of any proceeds of the Loans, for any purpose other
than for the purchase, acquisition, installation, or upgrading of Equipment
or the reimbursement of the Borrower for its purchase, acquisition,
installation, or upgrading of Equipment.
SECTION 3.3. CONDITIONS TO INITIAL LOAN.
(a) The obligation of the Lender to make the initial Loan is subject
to the Lender's receipt of the following, each dated the date of the initial
Loan or as of an earlier date reasonably acceptable to the Lender, in form
and substance reasonably satisfactory to the Lender and its counsel:
(i) completed requests for information (Form UCC-11) listing
all effective Uniform Commercial Code financing statements naming the
Borrower as debtor and all tax lien, judgment, and litigation searches
for the Borrower as the Lender shall deem reasonably necessary or
desirable;
(ii) Uniform Commercial Code financing statements (Form UCC-1)
duly executed by the Borrower (naming the Lender as secured party and the
Borrower as debtor and in form acceptable for filing in all jurisdictions
that the Lender deems reasonably necessary or desirable to perfect the
security interests granted to it hereunder) and, if applicable,
termination statements or other releases duly filed in all jurisdictions
that the Lender reasonably deems necessary or desirable to perfect and
protect the priority of the security interests granted to it hereunder
in the Equipment related to such initial Loan;
(iii) a Note duly executed by the Borrower evidencing the
amount of such Loan;
(iv) certificates of insurance required under Section 5.4 of
this Agreement together with loss payee endorsements for all such
policies naming the Lender as lender loss payee and as an additional
insured;
(v) a copy of the resolutions of the Board of Directors of
the Borrower (or a unanimous consent of directors in lieu thereof)
authorizing the execution, delivery, and performance of this Agreement,
the other Loan Documents, and the transactions contemplated hereby and
thereby, attached to which is a certificate of the Secretary or an
Assistant Secretary of the Borrower certifying (A) that the copy of the
resolutions is true, complete, and accurate, that such resolutions have
not been amended or modified since the date of such certification and
are in full force and effect and (B) the incumbency, names, and true
signatures of the officers of the
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Borrower authorized to sign the Loan Documents to which it is a party;
(vi) such other agreements and instruments as the Lender deems
necessary in its good faith business judgment in connection with the
transactions contemplated hereby.
(b) There shall be no pending or, to the knowledge of the Borrower
after due inquiry, threatened litigation, proceeding, inquiry, or other
action (i) seeking an injunction or other restraining order, damages, or
other relief with respect to the transactions contemplated by this Agreement
or the other Loan Documents or thereby or (ii) which affects or could affect
the business, prospects, operations, assets, liabilities, or condition
(financial or otherwise) of the Borrower, except, in the case of clause (ii),
where such litigation, proceeding, inquiry, or other action could not be
expected to have a Material Adverse Effect in the good faith business
judgment of the Lender.
(c) The Borrower shall have paid all fees and expenses required to be
paid by it to the Lender as of such date.
(d) The security interests in the Equipment related to the initial
Loan granted in favor of the Lender under this Agreement shall have been duly
perfected by the Lender and shall constitute first priority liens.
SECTION 3.4. CONDITIONS PRECEDENT TO EACH LOAN. The obligation
of the Lender to make each Loan is subject to the satisfaction of the
following conditions precedent:
(a) the Lender shall have received the documents, agreements, and
instruments set forth in Section 3.3(a)(i) through (v) applicable to such
Loan, each in form and substance reasonably satisfactory to the Lender and
its counsel and each dated the date of such Loan or as of an earlier date
reasonably acceptable to the Lender;
(b) the Lender shall have received a Schedule of the Equipment
related to such Loan, in form and substance reasonably satisfactory to the
Lender and its counsel, and the security interests in such Equipment related
to such Loan granted in favor of the Lender under this Agreement shall have
been duly perfected by the Lender and shall constitute first priority liens;
(c) all representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct on and as of the date
of such Loan as if then made, other than representations and warranties that
expressly relate solely to an earlier date, in which case they shall have
been true and correct as of such earlier date;
(d) no Event of Default or event which with the giving of notice or
the passage of time, or both, would constitute an Event of Default shall have
occurred and be continuing or would result from the making of the requested
Loan as of the date of such request; and
(e) the Borrower shall be deemed to have hereby reaffirmed and
ratified all security interests, liens, and other encumbrances heretofore
granted by the Borrower to the Lender.
SECTION 4. THE BORROWER'S REPRESENTATIONS AND WARRANTIES.
SECTION 4.1 GOOD STANDING; QUALIFIED TO DO BUSINESS. The
Borrower (a) is duly organized, validly existing, and in good standing under
the laws of the State of its organization, (b) has the corporate power and
authority to own its properties and assets and to transact the businesses in
which it is presently, or proposes to be, engaged, and (c) is duly qualified
and authorized to do business and is in good standing in every jurisdiction
in which the failure to be so qualified could have a Material Adverse Effect
on (i) the Borrower, (ii) the Borrower's ability to perform its obligations
under the Loan Documents, or (iii) the rights of the Lender hereunder.
SECTION 4.2. DUE EXECUTION, ETC. The execution, delivery, and
performance by
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the Borrower of each of the Loan Documents to which it is a party are within
the corporate powers of the Borrower, do not contravene the organizational
documents, if any, of the Borrower, and do not (a) to the Borrower's
knowledge violate any law or regulation, or any order or decree of any court
or governmental authority to which the Borrower is subject, (b) conflict with
or result in a breach of, or constitute a default under, any material
indenture, mortgage, or deed of trust or any material lease, agreement, or
other instrument binding on the Borrower or any of its properties, or (c)
require the consent, authorization by, or approval of or notice to or filing
or registration with any governmental authority or other Person. This
Agreement is, and each of the other Loan Documents to which the Borrower is or
will be a party, when delivered hereunder or thereunder, will be, the legal,
valid, and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally and by general principles of equity.
SECTION 4.3. SOLVENCY; NO LIENS. The Borrower is Solvent and
will be Solvent upon the completion of all transactions contemplated to occur
hereunder on the Effective Date (including, without limitation, the Loan to be
made on the Effective Date); to the Borrower's knowledge, the security
interests granted herein constitute the first and only liens on the
Collateral other than Permitted Liens; and the Borrower is the absolute owner
of the Collateral with full right to pledge, sell, consign, transfer, and
create a security interest therein, free and clear of any and all claims or
liens in favor of any other Person other than Permitted Liens.
SECTION 4.4. NO JUDGMENTS, LITIGATION. No judgments are
outstanding against the Borrower nor is there now pending or, to the
Borrower's knowledge, threatened any litigation, contested claim, or
governmental proceeding by or against the Borrower except judgments and
pending or threatened litigation, contested claims, and governmental
proceedings which would not, in the aggregate, have a Material Adverse Effect
on the Borrower.
SECTION 4.5. NO DEFAULTS. The Borrower has not received a
notice of default or, to its knowledge, is not in default under any material
contract, lease, or commitment to which it is a party or by which it is
bound. The Borrower knows of no dispute regarding any contract, lease, or
commitment which could have a Material Adverse Effect on the Borrower.
SECTION 4.6. COLLATERAL LOCATIONS. On the date hereof, each
item of the Collateral is located at the place of business specified in the
applicable Schedule.
SECTION 4.7. NO EVENTS OF DEFAULT. No Event of Default has
occurred and is continuing nor has any event occurred which, with the giving
of notice or the passage of time, or both, would constitute an Event of
Default.
SECTION 4.8. NO LIMITATION ON LENDER'S RIGHTS. To the
Borrower's knowledge, except as permitted herein, none of the Collateral is
subject to contractual obligations that may restrict or inhibit the Lender's
rights or abilities to sell or dispose of the Collateral or any part thereof
after the occurrence of an Event of Default.
SECTION 4.9. PERFECTION AND PRIORITY OF SECURITY INTEREST. This
Agreement creates a valid and, upon completion of all required filings of
financing statements by the Lender, perfected first priority and exclusive
security interest in the Collateral, securing the payment of all the
Obligations.
SECTION 4.10. MODEL AND SERIAL NUMBERS. The Schedules set forth
the true and correct model number and serial number of each item of Equipment
that constitutes Collateral.
SECTION 4.11. ACCURACY AND COMPLETENESS OF INFORMATION. All
data, reports, and information heretofore, contemporaneously, or hereafter
furnished by or on behalf of the Borrower in writing to the Lender for
purposes of or in connection with this Agreement or any other Loan Document,
or any transaction contemplated hereby or thereby, are or will be true and
accurate in all material respects on the date as of which such data, reports,
and information are dated or certified and not incomplete by omitting to
state any material fact
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necessary to make such data, reports, and information not misleading at such
time. There are no facts now known to the Borrower which individually or in
the aggregate would reasonably be expected to have a Material Adverse Effect
and which have not been specified herein, in the Financial Statements, or in
any certificate, opinion, or other written statement previously furnished by
the Borrower to the Lender.
SECTION 4.12. PRICE OF EQUIPMENT. To the Borrower's knowledge,
the cost of each item of Equipment does not exceed the fair and usual price
for such type of equipment purchased in like quantity and reflects all
discounts, rebates and allowances for the Equipment (including, without
limitation, discounts for advertising, prompt payment, testing, or other
services) given to the Borrower by the manufacturer, supplier, or any other
person.
SECTION 5. COVENANTS OF THE BORROWER.
SECTION 5.1. EXISTENCE, ETC. The Borrower shall: (a) retain its
existence and its current yearly accounting cycle, (b) maintain in full force
and effect all licenses, bonds, franchises, leases, trademarks, patents,
contracts, and other rights necessary or desirable to the profitable conduct
of its business unless the failure to do so could not reasonably be expected
to have a Material Adverse Effect on the Borrower, (c) continue in, and limit
its operations to, the same general lines of business as those presently
conducted by it, and (d) comply with all applicable laws and regulations of
any federal, state, or local governmental authority, except for such laws and
regulations the violations of which would not, in the aggregate, have a
Material Adverse Effect on the Borrower.
SECTION 5.2. NOTICE TO THE LENDER. As soon as possible, and in
any event within five days after the Borrower learns of the following, the
Borrower will give written notice to the Lender of (a) any proceeding
instituted or threatened to be instituted by or against the Borrower in any
federal, state, local, or foreign court or before any commission or other
regulatory body (federal, state, local, or foreign) involving a sum, together
with the sum involved in all other similar proceedings, in excess of $50,000
in the aggregate, (b) any contract that is terminated or amended and which
has had or could reasonably be expected to have a Material Adverse Effect on
the Borrower, (c) the occurrence of any Material Adverse Change with respect
to the Borrower, and (d) the occurrence of any Event of Default or event or
condition which, with notice or lapse of time or both, would constitute an
Event of Default, together with a statement of the action which the Borrower
has taken or proposes to take with respect thereto.
SECTION 5.3. MAINTENANCE OF BOOKS AND RECORDS. The Borrower will
maintain books and records pertaining to the Collateral in such detail, form,
and scope as the Lender shall require in its commercially reasonable
judgment. The Borrower agrees that the Lender or its agents may enter upon
the Borrower's premises at any time and from time to time upon reasonable
notice and during normal business hours, and at any time upon the occurrence
and continuance of an Event of Default, for the purpose of inspecting the
Collateral and any and all records pertaining thereto.
SECTION 5.4. INSURANCE. The Borrower will maintain insurance on
the Collateral under such policies of insurance, with such insurance
companies, in such amounts, and covering such risks as are at all times
reasonably satisfactory to the Lender. All such policies shall be made
payable to the Lender, in case of loss, under a standard non-contributory
"lender" or "secured party" clause and are to contain such other provisions
as the Lender may reasonably require to protect the Lender's interests in the
Collateral and to any payments to be made under such policies. Certificates
of insurance policies are to be delivered to the Lender, premium prepaid,
with the loss payable endorsement in the Lender's favor, and shall provide
for not less than thirty days' prior written notice to the Lender, of any
alteration or cancellation of coverage. If the Borrower fails to maintain
such insurance, the Lender may arrange for (at the Borrower's expense and
without any responsibility on the Lender's part for) obtaining the insurance.
Unless the Lender shall otherwise agree with the Borrower in writing, the
Lender shall have the sole right, in the name of the Lender or the Borrower,
to file claims under any insurance policies, to receive and give acquittance
for any payments that may be payable thereunder, and to execute any
endorsements, receipts, releases, assignments, reassignments, or other
documents that may be necessary to effect the collection, compromise, or
settlement of any claims under any such insurance policies relating to the
Collateral.
6
SECTION 5.5. TAXES. The Borrower will pay, when due, all
taxes, assessments, claims, and other charges ("Taxes") lawfully levied or
assessed against the Borrower or the Collateral other than taxes that are
being diligently contested in good faith by the Borrower by appropriate
proceedings promptly instituted and for which an adequate reserve is being
maintained by the Borrower in accordance with GAAP. If any Taxes remain unpaid
after the date fixed for the payment thereof, or if any lien shall be claimed
therefor, then, without notice to the Borrower, but on the Borrower's behalf,
the Lender may pay such Taxes, and the amount thereof shall be included in
the Obligations.
SECTION 5.6. BORROWER TO DEFEND COLLATERAL AGAINST CLAIMS;
FEES ON COLLATERAL. The Borrower will defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any
interest therein. The Borrower will not permit any notice creating or
otherwise relating to liens on the Collateral or any portion thereof to exist
or be on file in any public office other than Permitted Liens. The Borrower
shall promptly pay, when payable, all transportation, storage, and
warehousing charges and license fees, registration fees, assessments,
charges, permit fees, and taxes (municipal, state, and federal) which may now
or hereafter be imposed upon the ownership, leasing, renting, possession,
sale, or use of the Collateral, other than taxes on or measured by the
Lender's income and fees, assessments, charges, and taxes which are being
contested in good faith by appropriate proceedings diligently conducted and
with respect to which adequate reserves are maintained to the extent required
by GAAP.
SECTION 5.7. NO CHANGE OF LOCATION, STRUCTURE, OR IDENTITY.
The Borrower will not (a) change the location of its chief executive office
or establish any place of business other than those specified herein or (b)
move or permit the movement of any item of Collateral from the location
specified in the applicable Schedule, except that the Borrower may change its
chief executive office, establish any place of business and keep Collateral
at other locations within the United States provided that the Borrower has
delivered to the Lender (i) prior written notice thereof and (ii) duly
executed financing statements and other agreements and instruments (all in
form and substance reasonably satisfactory to the Lender) necessary or, in
the good faith business judgment of the Lender, desirable to perfect and
maintain in favor of the Lender a first priority security interest in the
Collateral. Notwithstanding anything to the contrary in the immediately
preceding sentence, the Borrower may keep any Collateral consisting of motor
vehicles or rolling stock at any location in the United States provided that
the Lender's security interest in any such Collateral is conspicuously marked
on the certificate of title thereof and the Borrower has complied with the
provisions of Section 5.9.
SECTION 5.8. USE OF COLLATERAL; LICENSES; REPAIR. The
Collateral shall be operated by competent, qualified personnel in connection
with the Borrower's business purposes, for the purpose for which the
Collateral was designed and in accordance with applicable operating
instructions, laws, and government regulations, and the Borrower shall use
every reasonable precaution to prevent loss or damage to the Collateral from
fire and other hazards. The Collateral shall not be used or operated for
personal, family, or household purposes. The Borrower shall procure and
maintain in effect all orders, licenses, certificates, permits, approvals,
and consents required by federal, state, or local laws or by any governmental
body, agency, or authority in connection with the delivery, installation,
use, and operation of the Collateral. The Borrower shall keep all of the
Equipment in a satisfactory state of repair and satisfactory operating
condition in accordance with industry standards, and will make all repairs
and replacements when and where necessary and practical. The Borrower will
not waste or destroy the Equipment or any part thereof, and will not be
negligent in the care or use thereof. The Equipment shall not be annexed or
affixed to or become part of any realty without the Lender's prior written
consent.
SECTION 5.9. FURTHER ASSURANCES. The Borrower will, promptly
upon request by the Lender, execute and deliver or use its best efforts to
obtain any document reasonably required by the Lender (including, without
limitation, warehouseman or processor disclaimers, mortgagee waivers,
landlord disclaimers, or subordination agreements with respect to the
Obligations and the Collateral), give any notices, execute any financing
statements, mortgages, or other documents (all in form and substance
reasonably satisfactory to the Lender), xxxx any chattel paper, deliver any
chattel paper or instruments to the Lender, and take any other actions that
are necessary or, in the good faith business judgment of the Lender,
desirable to permit the Lender to perfect or continue the perfection and the
first priority of the Lender's security interest in the Collateral, to
protect the
7
Collateral against the rights, claims, or interests of any Persons, or to
effect the purposes of this Agreement. The Borrower hereby authorizes the
Lender to file one or more financing or continuation statements, and
amendments thereto, relating to all or any part of the Collateral without the
signature of the Borrower where permitted by law. A carbon, photographic, or
other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law. To the extent required under this Agreement, the
Borrower will pay all costs incurred in connection with any of the foregoing.
SECTION 5.10. NO DISPOSITION OF COLLATERAL. The Borrower will
not in any way hypothecate or create or permit to exist any lien, security
interest, charge, or encumbrance on or other interest in any of the
Collateral, except for the lien and security interest granted hereby and
Permitted Liens which are junior to the lien and security interest of the
Lender, and the Borrower will not sell, transfer, assign, pledge,
collaterally assign, exchange, or otherwise dispose of any of the Collateral.
In the event the Collateral, or any part thereof, is sold, transferred,
assigned, exchanged, or otherwise disposed of in violation of these
provisions, the security interest of the Lender shall continue in such
Collateral or part thereof notwithstanding such sale, transfer, assignment,
exchange, or other disposition, and the Borrower will hold the proceeds
thereof in a separate account for the benefit of the Lender. Following such a
sale, the Borrower will transfer such proceeds to the Lender in kind.
SECTION 5.11. NO LIMITATION ON LENDER'S RIGHTS. The Borrower
will not enter into any contractual obligations which could reasonably be
expected to restrict or inhibit the Lender's rights or ability to sell or
otherwise dispose of the Collateral or any part thereof.
SECTION 5.12. PROTECTION OF COLLATERAL. Upon reasonable notice
to the Borrower (provided that if an Event of Default has occurred and is
continuing the Lender need not give any notice), the Lender shall have the
right at any time to make any payments and do any other acts the Lender may
deem necessary to protect its security interests in the Collateral,
including, without limitation, the rights to satisfy, purchase, contest, or
compromise any encumbrance, charge, or lien which, in the reasonable judgment
of the Lender, appears to be prior to or superior to the security interests
granted hereunder, and appear in, and defend any action or proceeding
purporting to affect its security interests in, or the value of, any of the
Collateral. The Borrower hereby agrees to reimburse the Lender for all
payments made and expenses incurred under this Agreement including fees,
expenses, and disbursements of attorneys and paralegals (including the
allocated costs of in-house counsel) acting for the Lender, including any of
the foregoing payments under, or acts taken to protect its security interests
in, any of the Collateral, which amounts shall be secured under this
Agreement, and agrees it shall be bound by any payment made or act taken by
the Lender hereunder absent the Lender's gross negligence or willful
misconduct. The Lender shall have no obligation to make any of the foregoing
payments or perform any of the foregoing acts.
SECTION 5.13. DELIVERY OF ITEMS. The Borrower will (a)
promptly (but in no event later than three Business Days) after its receipt
thereof, deliver to the Lender any documents or certificates of title issued
with respect to any property included in the Collateral, and any promissory
notes, letters of credit or instruments related to or otherwise in connection
with any property included in the Collateral, which in any such case come
into the possession of the Borrower, or shall cause the issuer thereof to
deliver any of the same directly to the Lender, in each case with any
necessary endorsements in favor of the Lender and (b) deliver to the Lender
as soon as available copies of any and all press releases and other similar
communications issued by the Borrower.
SECTION 5.14. SOLVENCY. The Borrower shall be and remain
Solvent at all times.
SECTION 5.15. FUNDAMENTAL CHANGES. The Borrower shall not (a)
amend or modify its name, unless the Borrower delivers to the Lender thirty
days prior to any such proposed amendment or modification written notice of
such amendment or modification and within ten days before such amendment or
modification delivers executed Uniform Commercial Code financing statements
(in form and substance reasonably satisfactory to the Lender) or (b) merge or
consolidate with any other entity without the Lender's prior written consent
which will not be unreasonably withheld; or (c) permit a change, other than a
change which results from the sale of newly issued securities to investors,
in more than 35% of the ownership of any equity interests of the Borrower
without the Lender's prior written consent, which shall not unreasonably be
withheld. In the event that the Lender withholds its consent to a proposed
merger, consolidation or change in ownership, the Borrower shall
8
have the right to prepay all Obligations without penalty.
SECTION 5.16. ADDITIONAL REQUIREMENTS. The Borrower shall take
all such further actions and exercise all such further documents and
instruments as the Lender may reasonably request.
SECTION 6. FINANCIAL STATEMENTS. Until the payment and satisfaction
in full of all Obligations, the Borrower shall deliver to the Lender the
following financial information:
SECTION 6.1. ANNUAL FINANCIAL STATEMENTS. As soon as
available, but not later than 120 days after the end of each fiscal year of
the Borrower and its consolidated subsidiaries, the consolidated balance
sheet, income statement, and statements of cash flows and shareholders equity
for the Borrower and its consolidated subsidiaries (the "Financial
Statements") for such year, reported on by independent certified public
accountants without an adverse qualification; and
SECTION 6.2. QUARTERLY FINANCIAL STATEMENTS. As soon as
available, but not later than 60 days after the end of each of the first
three fiscal quarters in any fiscal year of the Borrower and its consolidated
subsidiaries, the Financial Statements for such fiscal quarter, together with
a certification duly executed by a responsible officer of the Borrower that
such Financial Statements have been prepared in accordance with GAAP and are
fairly stated in all material respects (subject to normal year-end audit
adjustments).
SECTION 7. EVENTS OF DEFAULT. The occurrence of any of the
following events shall constitute an Event of Default hereunder:
(a) the Borrower shall fail to pay within two days following
receipt of notice of failure to pay when due any amount required to be paid
by the Borrower under or in connection with any Note and this Agreement;
(b) any representation or warranty made or deemed made by the
Borrower under or in connection with any Loan Document or any Financial
Statement shall prove to have been false or incorrect in any material respect
when made;
(c) the Borrower shall fail to perform or observe (i) any of
the terms, covenants or agreements contained in Sections 5.4, 5.7, 5.10,
5.14, or 5.15 hereof or (ii) any other term, covenant, or agreement
contained in any Loan Document (other than the other Events of Default
specified in this Section 7) and such failure remains unremedied for the
earlier of thirty days from (A) the date on which the Lender has given the
Borrower written notice of such failure and (B) the date on which the
Borrower knew or should have known of such failure;
(d) any material provision of any Loan Document to which the
Borrower is a party shall for any reason cease to be valid and binding on the
Borrower, or the Borrower shall so state;
(e) dissolution, liquidation, winding up, or cessation of the
Borrower's business, failure of the Borrower generally to pay its debts as
they mature, admission in writing by the Borrower of its inability generally
to pay its debts as they mature, or calling of a meeting of the Borrower's
creditors for purposes of compromising any of the Borrower's debts;
(f) the commencement by or against the Borrower of any
bankruptcy, insolvency, arrangement, reorganization, receivership, or similar
proceedings under any federal or state law and, in the case of any such
involuntary proceeding, such proceeding remains undismissed or unstayed for
forty-five days following the commencement thereof, or any action by the
Borrower is taken authorizing any such proceedings;
(g) an assignment for the benefit of creditors is made by the
Borrower, whether voluntary or involuntary, the appointment of a trustee,
custodian, receiver, or similar official for the Borrower or for any
substantial property of the Borrower, or any action by the Borrower
authorizing any such proceeding;
9
(h) the Borrower shall default in (i) the payment of principal
or interest on any indebtedness in excess of $50,000 (other than the
Obligations) beyond the period of grace, if any, provided in the instrument
or agreement under which such indebtedness was created; or (ii) the
observance or performance of any other agreement or condition relating to any
such indebtedness or contained in any instrument or agreement relating
thereto, or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or holders of such indebtedness to cause, with the giving of notice if
required, such indebtedness to become due prior to its stated maturity; or
(iii) any loan or other agreement under which the Borrower has received
financing from Transamerica Corporation or any of its affiliates;
(i) the Borrower suffers or sustains a Material Adverse Change;
(j) any tax lien, other than a Permitted Lien, is filed of
record against the Borrower and is not bonded or discharged within five
Business Days;
(k) any judgment which has had or could reasonably be expected
to have a Material Adverse Effect on the Borrower and such judgment shall not
be stayed, vacated, bonded, or discharged within sixty days;
(l) any material covenant, agreement, or obligation, as
determined in the good faith business judgment of the Lender, made by the
Borrower and contained in or evidenced by any of the Loan Documents shall
cease to be enforceable, or shall be determined to be unenforceable, in
accordance with its terms; the Borrower shall deny or disaffirm the
Obligations under any of the Loan Documents or any liens granted in
connection therewith; or any liens granted on any of the Collateral in favor
of the Lender shall be determined to be void, voidable, or invalid, or shall
not be given the priority contemplated by this Agreement; or
(m) more than 35% of the equity interests of the Borrower
become subject to any contractual, judicial, or statutory lien, charge,
security interest, or encumbrance.
SECTION 8. REMEDIES. If any Event of Default shall have occurred
and be continuing:
(a) The Lender may, without prejudice to any of its other
rights under any Loan Document or Applicable Law, declare all Obligations to
be immediately due and payable (except with respect to any Event of Default
set forth in Section 7(f) hereof, in which case all Obligations shall
automatically become immediately due and payable without necessity of any
declaration) without presentment, representation, demand of payment, or
protest, which are hereby expressly waived.
(b) The Lender may take possession of the Collateral and, for
that purpose may enter, with the aid and assistance of any person or persons,
any premises where the Collateral or any part hereof is, or may be placed,
and remove the same.
(c) The obligation of the Lender, if any, to make additional
Loans or financial accommodations of any kind to the Borrower shall
immediately terminate.
(d) The Lender may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein (or in any Loan
Document) or otherwise available to it all the rights and remedies of a
secured party under the applicable Uniform Commercial Code (the "Code")
whether or not the Code applies to the affected Collateral and also may (i)
require the Borrower to, and the Borrower hereby agrees that it will at its
expense and upon request of the Lender forthwith, assemble all or part of the
Collateral as directed by the Lender and make it available to the Lender at a
place to be designated by the Lender that is reasonably convenient to both
parties and (ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any of the Lender's offices or elsewhere, for cash, on credit, or
for future delivery, and upon such other terms as the Lender may deem
commercially reasonable. The Borrower agrees that to the extent notice of
sale shall be required by law, at least ten days' notice to the Borrower of
the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. The
10
Lender shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Lender may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
(e) All cash proceeds received by the Lender in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Lender, be held by the Lender as
collateral for, or then or at any time thereafter applied in whole or in part
by the Lender against, all or any part of the Obligations in such order as
the Lender shall elect. Any surplus of such cash or cash proceeds held by the
Lender and remaining after the full and final payment of all the Obligations
shall be paid over to the Borrower or to such other Person to which the Lender
may be required under applicable law, or directed by a court of competent
jurisdiction, to make payment of such surplus.
SECTION 9. MISCELLANEOUS PROVISIONS.
SECTION 9.1. NOTICES. Except as otherwise provided herein,
all notices, approvals, consents, correspondence, or other communications
required or desired to be given hereunder shall be given in writing and shall
be delivered by overnight courier, hand delivery, or certified or registered
mail, postage prepaid, if to the Lender, then to Transamerica Technology
Finance Division, 00 Xxxxxxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000,
Attention: Assistant Vice President, Lease Administration, with a copy to the
Lender at Riverway II, West Office Tower, 0000 Xxxx Xxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxx 00000, Attention: Legal Department, and if to the Borrower, then to
Sonoma Systems, Inc., 0000 Xxxxxxxxx Xxx, Xxxxx 000, Xxxxxx xxx Xxx,
Xxxxxxxxxx 00000-0000, Attention: Chief Financial Officer or such other
address as shall be designated by the Borrower or the Lender to the other
party in accordance herewith. All such notices and correspondence shall be
effective when received.
SECTION 9.2. HEADINGS. The headings in this Agreement are for
purposes of reference only and shall not affect the meaning or construction of
any provision of this Agreement.
SECTION 9.3. ASSIGNMENTS. The Borrower shall not have the
right to assign any Note or this Agreement or any interest therein unless the
Lender shall have given the Borrower prior written consent and the Borrower
and its assignee shall have delivered assignment documentation in form and
substance satisfactory to the Lender in its good faith business judgment. The
Lender will not withhold its consent to assignment if the assignee is a
successor in interest of Borrower in connection with a transaction to which
Lender consented pursuant to Section 5.15 hereof or if, in Lender's good
faith business judgment, where the assignment is effectively not made to a
third party. The Lender may assign its rights and delegate its obligations
under any Note or this Agreement.
SECTION 9.4. AMENDMENTS, WAIVERS, AND CONSENTS. Any amendment
or wavier of any provision of this Agreement and any consent to any departure
by the Borrower from any provision of this Agreement shall be effective only
by a writing signed by the Lender and shall bind and benefit the Borrower and
the Lender and their respective successors and assigns, subject, in the case
of the Borrower, to the first sentence of Section 9.3.
SECTION 9.5. INTERPRETATION OF AGREEMENT. Time is of the
essence in each provision of this Agreement of which time is an element. All
terms not defined herein or in a Note shall have the meaning set forth in the
applicable Code, except where the context otherwise requires. To the extent a
term or provision of this Agreement conflicts with any Note, or any term or
provision thereof, and is not dealt with herein with more specificity, this
Agreement shall control with respect to the subject matter of such term or
provision. Acceptance of or acquiescence in a course of performance rendered
under this Agreement shall not be relevant in determining the meaning of this
Agreement even though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.
SECTION 9.6. CONTINUING SECURITY INTEREST. This Agreement
shall create a continuing security interest in the Collateral and shall (i)
remain in full force and effect until the indefeasible payment in full of the
Obligations, (ii) be binding upon the Borrower and its successors and assigns
and (iii) inure,
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together with the rights and remedies of the Lender hereunder, to the benefit
of the Lender and its successors, transferees, and assigns.
SECTION 9.7. REINSTATEMENT. To the extent permitted by law,
this Agreement and the rights and powers granted to the Lender hereunder and
under the Loan Documents shall continue to be effective or be reinstated if
at any time any amount received by the Lender in respect of the Obligations
is rescinded or must otherwise be restored or returned by the Lender upon the
insolvency, bankruptcy, dissolution, liquidation, or reorganization of the
Borrower or upon the appointment of any receiver, intervenor, conservator,
trustee, or similar official of the Borrower or any substantial part of its
assets, or otherwise, all as though such payments had not been made.
SECTION 9.8. SURVIVAL OF PROVISIONS. All representations,
warranties, and covenants of the Borrower contained herein shall survive the
execution and delivery of this Agreement, and shall terminate only upon the
full and final payment and performance by the Borrower of the Obligations
secured hereby.
SECTION 9.9. INDEMNIFICATION. The Borrower agrees to
indemnify and hold harmless the Lender and its directors, officers, agents,
employees, and counsel from and against any and all costs, expenses, claims,
or liability incurred by the Lender or such Person hereunder and under any
other Loan Document or in connection herewith or therewith, unless such claim
or liability shall be due to willful misconduct or gross negligence on the
part of the Lender or such Person.
SECTION 9.10. COUNTERPARTS; TELECOPIED SIGNATURES. This
Agreement may be executed in counterparts, each of which when so executed and
delivered shall be an original, but both of which shall together constitute
one and the same instrument. This Agreement and each of the other Loan
Documents and any notices given in connection herewith or therewith may be
executed and delivered by telecopier or other facsimile transmission all with
the same force and effect as if the same was a fully executed and delivered
original manual counterpart.
SECTION 9.11. SEVERABILITY. In case any provision in or
obligation under this Agreement or any Note or any other Loan Document shall
be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality, and enforceability of the remaining provisions or obligations, or
of such provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.
SECTION 9.12. DELAYS; PARTIAL EXERCISE OF REMEDIES. No delay
or omission of the Lender to exercise any right or remedy hereunder, whether
before or after the happening of any Event of Default, shall impair any such
right or shall operate as a waiver thereof or as a waiver of any such Event
of Default. No single or partial exercise by the Lender of any right or
remedy shall preclude any other or further exercise thereof, or preclude any
other right or remedy.
SECTION 9.13. ENTIRE AGREEMENT. The Borrower and the Lender
agree that this Agreement, the Schedule hereto, and the Commitment Letter are
the complete and exclusive statement and agreement between the parties with
respect to the subject matter hereof, superseding all proposals and prior
agreements, oral or written, and all other communications between the parties
with respect to the subject matter hereof. Should there exist any
inconsistency between the terms of the Commitment Letter and this Agreement,
the terms of this Agreement shall prevail.
SECTION 9.14. SETOFF. In addition to and not in limitation of
all rights of offset that the Lender may have under Applicable Law, and
whether or not the Lender has made any demand or the Obligations of the
Borrower have matured, the Lender shall have the right to appropriate and
apply to the payment of the Obligations of the Borrower all deposits and
other obligations then or thereafter owing by the Lender to or for the credit
or the account of the Borrower.
SECTION 9.15. WAIVER OF JURY TRIAL. THE BORROWER AND THE
LENDER IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR
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COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 9.16. GOVERNING LAW. THE VALIDITY, INTERPRETATION, AND
ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 9.17. VENUE; SERVICE OF PROCESS. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS SITUATED IN XXXX COUNTY, OR OF
THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. THE BORROWER HEREBY IRREVOCABLY WAIVES,
IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING, (a) ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON COVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS AND (b) THE RIGHT TO INTERPOSE ANY NONCOMPULSORY SETOFF,
COUNTERCLAIM, OR CROSS-CLAIM. THE BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWER AT THE ADDRESS FOR IT SPECIFIED IN SECTION
9.1 HEREOF. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION, SUBJECT
IN EACH INSTANCE TO THE PROVISIONS HEREOF WITH RESPECT TO RIGHTS AND REMEDIES.
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed and delivered by its proper and duly authorized officer as of
the date first set forth above.
SONOMA SYSTEMS, INC.
by: Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President Finance &
Operations and Chief Financial
Officer
Federal Tax ID:
00-0000000
Accepted as of the
_____ day of July, 1998
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: _______________________________________________
Name:
Title:
Form 16
13
