EXHIBIT 10.1
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
THE INDEBTEDNESS EVIDENCED BY AND CREATED PURSUANT TO THIS AGREEMENT IS
SUBORDINATED TO THE "SENIOR DEBT" (AS DEFINED IN THE SUBORDINATION AGREEMENT
HEREINAFTER REFERRED TO) PURSUANT TO, AND TO THE EXTENT PROVIDED IN, THE
SUBORDINATION AGREEMENT DATED AS OF EVEN DATE HEREWITH BY THE MAKER HEREOF AND
PAYEE NAMED HEREIN AND OTHERS IN FAVOR OF THE "SENIOR LENDER" REFERRED TO IN
SUCH SUBORDINATION AGREEMENT.
INTERVISUAL BOOKS, INC.
LOAN AND SECURITY AGREEMENT
DATED AS OF MAY 13, 1999
This LOAN AND SECURITY AGREEMENT is entered into as of May 13, 1999, by
and between ZINDART LIMITED, a Hong Kong corporation ("LENDER"), on the one
hand, and INTERVISUAL BOOKS, INC. a California corporation ("IBI"), and FFM
ACQUISITION CORP., a California corporation to be known as Fast Forward
Marketing, Inc. ("FFM"), on the other hand. IBI and FFM are sometimes
individually and collectively referred to as "Borrower," and the
representations, warranties, covenants and agreements of "Borrower" contained in
this Agreement, as well as the liability in respect of the Obligations (as
defined below) shall apply to IBI and FFM on a joint and several basis unless
expressly stated otherwise.
RECITALS
Borrower wishes to obtain credit from time to time from Lender, and
Lender desires to extend credit to Borrower. This Agreement sets forth the terms
on which Lender will advance credit to Borrower, and Borrower will repay the
amounts owing to Lender.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following definitions:
"ACCOUNTS" means all presently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by
Borrower, whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.
"ADVANCE" or "ADVANCES" means a loan advance under the Committed
Revolving Line.
"AFFILIATE" means, with respect to any Person, any Person that
owns or controls directly or indirectly such Person, any Person that controls or
is controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors, partners and, for any Person that
is a limited liability company, such Persons, managers and members.
"BORROWER'S BOOKS" means all of Borrower's books and records
including, without limitation: ledgers; records concerning Borrower's assets or
liabilities, the Collateral, business operations or financial condition; and all
computer programs, or tape files, and the equipment, containing such
information.
"BUSINESS DAY" means any day that is not a Saturday, Sunday, or
other day on which banks in the State of California are authorized or required
to close.
"CLOSING DATE" means the date on which Lender is obligated to
make the initial Advance pursuant to the conditions precedent set forth in
SECTION 3.1.
"CODE" means the California Uniform Commercial Code.
"COLLATERAL" means the property described on EXHIBIT A attached
hereto.
"COMMITTED REVOLVING LINE" means, at any time, a revolving credit
facility of Two Million Three Hundred Thousand Dollars ($2,300,000) or, if such
amount is reduced pursuant to SECTION 2.1(C), the amount to which so reduced and
in effect at such time.
"CONTINGENT OBLIGATION" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term "Contingent Obligation" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.
"COPYRIGHTS" means any and all copyright rights, copyright
applications, copyright registrations and like protections in each work or
authorship and derivative work thereof, whether published or unpublished and
whether or not the same also constitutes a trade secret, now or hereafter
existing, created, acquired or held; provided, however, that the term
"Copyrights" shall include the foregoing property solely in connection with the
75 titles which have generated the highest contribution to gross revenues of
Borrower during the twelve months immediately preceding the Closing Date and, in
the event that Borrower elects to deliver an Extension Notice, during the twelve
months immediately preceding the date on which the Extension Notice is
delivered.
"EQUIPMENT" means all present and future machinery, equipment,
tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments
in which Borrower has any interest.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"FAST FORWARD" means Fast Forward Marketing, Inc., a California
corporation.
"GAAP" means generally accepted accounting principles as in
effect in the United States from time to time.
"INDEBTEDNESS" means (a) all indebtedness for borrowed money or
the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.
"INSOLVENCY PROCEEDING" means any proceeding commenced by or
against any person or entity under any provision of the United States Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
"INTELLECTUAL PROPERTY COLLATERAL" MEANS
(a) Copyrights, Trademarks and Patents;
(b) Any and all trade secrets, and any and all
intellectual property rights in computer software and computer software products
now or hereafter existing, created, acquired or held;
(c) Any and all design rights which may be available to
Borrower now or hereafter existing, created, acquired or held;
(d) Any and all claims for damages by way of past, present
and future infringement of any of the rights included above, with the right, but
not the obligation, to xxx for and collect such damages for said use or
infringement of the intellectual property rights identified above;
(e) All licenses or other rights to use any of the
Copyrights, Patents or Trademarks, and all license fees and royalties arising
from such use to the extent permitted by such license or rights;
(f) All amendments, renewals and extensions of any of the
Copyrights, Trademarks or Patents; and
(g) All proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.
"INVENTORY" means all present and future inventory in which
Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above.
"INVESTMENT" means any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.
"LENDER EXPENSES" means all reasonable costs or expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
the administration and enforcement of the Loan Documents; and Lender's
reasonable attorneys' fees and expenses incurred in amending, enforcing or
defending the Loan Documents, (including fees and expenses of appeal or review,
or those incurred in any Insolvency Proceeding) whether or not suit is brought.
"LIBOR RATE" means, for any period, the London Interbank Offered
Rate as set forth in the Money Rate Section of the West Coast Edition of The
Wall Street Journal. When a range of rates is published, the highest of the
rates shall apply. For the period from the Closing Date until the day next
preceding the first Payment Date the LIBOR Rate shall be determined as of the
Closing Date and the rate as so determined shall be deemed to apply throughout
such period. The LIBOR Rate shall be determined at each Payment Date thereafter
and the rate as so determined shall be deemed to apply throughout the period
commencing on such Payment Date and ending on the earlier of (i) the day
immediately prior to the next succeeding Payment Date and (ii) the Maturity
Date.
"LIEN" means any mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance.
"LOAN DOCUMENTS" means, collectively, this Agreement, any note or
notes executed by Borrower, the Subordination Agreement, the Warrant, and any
other present or future agreement entered into between Borrower and/or for the
benefit of Lender in connection with this Agreement, all as amended, extended or
restated from time to time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i)
the business operations, condition (financial or otherwise) or prospects of
Borrower and its Subsidiaries taken as a whole or (ii) the ability of Borrower
to repay the Obligations or otherwise perform its obligations under the Loan
Documents.
"MATURITY DATE" means the first anniversary of the date of this
Agreement or, if such date is extended from time to time pursuant to SECTION
2.6, any later date to which so extended.
"MERGER AGREEMENT" means the Agreement and Plan of Merger, dated
as of March 29, 1999, by and among IBI, FFM, Fast Forward, Xxxxxx X. Xxxx and
Xxxxxx X. Xxxx and Xxxxxx Xxxxx as trustees of the Xxxxxx Xxxx and Xxxxxx Xxxxx
Revocable Family Trust.
"NEGOTIABLE COLLATERAL" means all of Borrower's present and
future letters of credit of which it is a beneficiary, notes, drafts,
instruments, securities, documents of title, and chattel paper.
"OBLIGATIONS" means all debt, principal, interest, Lender
Expenses and other amounts owed to Lender by Borrower pursuant to this Agreement
or any other agreement, whether absolute or contingent, due or to become due,
now existing or hereafter arising, including any interest that accrues after the
commencement of an Insolvency Proceeding and including any debt, liability, or
obligation owing from Borrower to others that Lender may have obtained by
assignment or otherwise.
"PATENTS" means all patents, patent applications and like
protections including without limitation improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same.
"PAYMENT DATE" means the last Business Day of each calendar
quarter commencing on the first such date after the Closing Date and ending on
the last such date prior to the Maturity Date.
"PERMITTED INDEBTEDNESS" means:
(a) Indebtedness of Borrower in favor of Lender arising
under this Agreement or any other Loan Document;
(b) Indebtedness of Borrower in favor of Senior Lender
under the Senior Loan Agreement or any other Senior Loan Document; (c)
Indebtedness existing on the Closing Date and disclosed in the SCHEDULE;
(d) Indebtedness to suppliers incurred in the ordinary
course of business; and
(e) Indebtedness secured by Permitted Liens.
"PERMITTED INVESTMENT" means:
(a) Investments existing on the Closing Date disclosed in
the SCHEDULE;
(b) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one (1) year from
the date of acquisition thereof, (ii) commercial paper maturing no more than one
(1) year from the date of creation thereof and currently having the highest
rating obtainable from either Standard & Poor's Corporation or Xxxxx'x Investors
Service, Inc., and (iii) certificates of deposit maturing no more than one (1)
year from the date of investment therein issued by Lender; and
(c) loans and advances to employees and directors in the
ordinary course of business in an outstanding aggregate amount at any time not
to exceed $150,000.
"PERMITTED LIENS" means the following:
(a) Any Liens existing on the Closing Date and disclosed
in the SCHEDULE or arising under this Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or other
governmental charges or levies, either not delinquent or being contested in good
faith by appropriate proceedings and as to which adequate reserves are
maintained on Borrower's Books in accordance with GAAP, provided the same have
no priority over any of Lender's security interests;
(c) Liens in favor of the Senior Lender to secure the
obligations of Borrower to Senior Lender under the Senior Loan Documents;
(d) Liens in Accounts or Inventory securing Indebtedness
of Borrower permitted pursuant to clause (d) of the definition of "Permitted
Indebtedness;"
(e) Liens incurred in connection with the extension,
renewal or refinancing of the indebtedness secured by Liens of the type
described in clauses (a) and (d) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and, except for Liens permitted pursuant to clause (d) of this definition,
the principal amount of the indebtedness being extended, renewed or refinanced
does not increase.
"PERSON" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.
"RESPONSIBLE OFFICER" means each of the Chief Executive Officer,
the President, the Chief Financial Officer and the Senior Vice President of
Finance of Borrower.
"SCHEDULE" means the schedule of exceptions attached hereto, if
any.
"SENIOR LENDER" means Santa Xxxxxx Bank or its successors or
permitted assigns, or a replacement senior lender satisfactory to Lender.
"SENIOR LOAN AGREEMENT" means that Loan and Security Agreement,
dated as of the date of this Agreement, between Santa Xxxxxx Bank, on the one
hand, and IBI and FFM, on the other hand, as amended, supplemented or otherwise
modified from time to time, or any replacement loan agreement or loan and
security agreement to which a Senior Lender that is a
replacement Senior Lender is a party, which replacement Senior Loan Agreement
shall be on terms and conditions satisfactory to Lender.
"SENIOR LOAN DOCUMENTS" means the Senior Loan Agreement, any note
or notes executed by Borrower thereunder, the Subordination Agreement, any
security agreement and any other present or future agreement entered into
between Borrower and/or for the benefit of Senior Lender in connection with the
Senior Loan Agreement, all as amended, supplemented or otherwise modified from
time to time, or any of the foregoing agreements or instruments entered into
between Borrower and/or for the benefit of a Senior Lender that is a replacement
Senior Lender.
"SUBORDINATION AGREEMENT" means the Subordination Agreement,
dated as of the date of this Agreement, among Lender, Senior Lender, IBI and
FFM, as amended, supplemented or otherwise modified from time to time, or any
replacement subordination agreement entered into among Lender, any Senior Lender
that is a replacement Senior Lender, IBI and FFM, which replacement
subordination agreement shall be satisfactory to Lender.
"SUBSIDIARY" means with respect to any Person, corporation,
partnership, company association, joint venture, or any other business entity of
which more than fifty percent (50%) of the voting stock or other equity
interests is owned or controlled, directly or indirectly, by such Person or one
or more Affiliates of such Person.
"TRADEMARKS" means any trademark and servicemark rights, whether
registered or not, applications to register and registrations of the same and
like protections, and the entire goodwill of the business of Assignor connected
with and symbolized by such trademarks.
1.2 ACCOUNTING AND OTHER TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all calculations
and determinations made hereunder shall be made in accordance with GAAP. When
used herein, the term "financial statements" shall include the notes and
schedules thereto. The terms "including"/"includes" shall always be read as
meaning "including (or includes) without limitation", when used herein or in any
other Loan Document.
2. LOAN AND TERMS OF PAYMENT. Borrower promises to pay to the order of Lender,
in lawful money of the United States of America, the aggregate unpaid principal
amount of all Advances made by Lender to Borrower hereunder. Borrower also shall
pay interest on the unpaid principal amount of such Advances at rates in
accordance with the terms hereof.
2.1 COMMITTED REVOLVING LINE. Subject to and upon the terms and
conditions of this Agreement, Lender agrees to make Advances to Borrower in an
aggregate outstanding amount not to exceed the Committed Revolving Line. Each
advance shall be in a minimum amount of $100,000 and increments of $100,000 in
excess thereof. Subject to the terms and conditions of this Agreement, amounts
borrowed pursuant to this SECTION 2.1 may be repaid and re-borrowed at any time
during the term of this Agreement.
(a) Whenever Borrower desires an Advance, Borrower will
notify Lender by facsimile transmission or E-Mail transmission (in either case
with confirmation of transmission) no later than 5:00 p.m. Pacific time, not
fewer than ten calendar days prior to the date on which Borrower proposes to
make an Advance. Each such notification shall be confirmed promptly by a
Payment/Advance Form in substantially the form of EXHIBIT B attached hereto and
incorporated herein by this reference. Lender is authorized to make Advances
under this Agreement, based upon instructions received from a Responsible
Officer or a designee of a Responsible Officer, or without instructions if in
Lender's discretion such Advances are necessary to meet Obligations which have
become due and remain unpaid. Lender shall be entitled to rely on any telephonic
notice given by an individual whom Lender reasonably believes to be a
Responsible Officer or a designee thereof, and Borrower shall indemnify and hold
Lender harmless for any damages or loss suffered by Lender as a result of such
reliance. Lender will disburse the amount of Advances made under this SECTION
2.1 by wire transfer of immediately available funds to Borrower's deposit
account designated in the Payment/Advance Form.
(b) The Committed Revolving Line shall terminate on the
Maturity Date, at which time all Advances under this SECTION 2.1 and other
amounts due under this Agreement (except as otherwise expressly specified
herein) shall be immediately due and payable.
(c) Borrower, at its option, from time to time may elect
to reduce permanently the amount of the Committed Revolving Line in whole or in
part upon 10 days' written notice; provided, however, that the amount of any
such reduction shall be at least $100,000 and increments of $100,000 in excess
thereof.
2.2 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations owed by Borrower to Lender pursuant to SECTION 2.1 of this Agreement
is greater than the Committed Revolving Line Borrower shall immediately pay to
Lender, in cash, the amount of such excess.
2.3 INTEREST RATES, PAYMENTS, AND CALCULATIONS.
(a) INTEREST RATE. Except as set forth in SECTION 2.3(B),
any Advances shall bear interest, on the average daily balance thereof, at a per
annum rate equal to the five percent (5.00%) above the LIBOR Rate.
(b) DEFAULT RATE. All Obligations shall bear interest,
from and after the occurrence of an Event of Default, at a rate equal to five
percent (5.00%) above the interest rate applicable immediately prior to the
occurrence of the Event of Default.
(c) PAYMENTS. Interest hereunder shall be due and payable
on each Payment Date and on the Maturity Date. All payments of principal,
interest and fees shall be made by Borrower to Lender in immediately available
funds. Any interest not so paid when due shall be compounded by becoming a part
of the Obligations, and such interest shall thereafter accrue interest at the
rate then applicable hereunder.
(d) COMPUTATION. All interest chargeable under the Loan
Documents shall be computed on the basis of a three hundred sixty (360) day year
for the actual number of days elapsed.
2.4 CREDITING PAYMENTS. Notwithstanding anything to the contrary
contained herein, any wire transfer or payment received by Lender after 12:00
noon Pacific time shall be deemed to have been received by Lender as of the
opening of business on the immediately following Business Day. Whenever any
payment to Lender under the Loan Documents would otherwise be due (except by
reason of acceleration) on a date that is not a Business Day, such payment shall
instead be due on the next Business Day, and additional interest shall accrue
and be payable for the period of such extension.
2.5 FACILITY FEE. Borrower shall pay to Lender a non-refundable facility
fee equal to Forty-Seven Thousand Five Hundred Dollars ($47,500), which fee
shall be due on the Closing Date and shall be fully earned and non-refundable
(the "FACILITY FEE"), the proceeds of which shall be used to offset Lender's
financial, accounting and legal fees and costs associated with documenting and
closing this transaction.
2.6 TERM; RIGHT TO EXTEND TERM. Except as otherwise set forth herein,
this Agreement shall become effective upon execution and delivery by each party
hereto and, subject to SECTION 12.7, shall continue in full force and effect for
a term ending on the Maturity Date. Notwithstanding the foregoing, Lender shall
have the right to terminate its obligation to make Advances under this Agreement
immediately and without notice upon the occurrence and during the continuance of
an Event of Default. Notwithstanding termination of this Agreement, Lender's
lien on the Collateral shall remain in effect for so long as any Obligations are
outstanding.
By delivery of written notice (the "EXTENSION NOTICE") no later than the
thirtieth (30th) Business Day prior to May 13 2000 (the "EXTENSION DATE")
Borrower may request Lender to extend the Maturity Date of the Committed
Revolving Line until May 13, 2001 in the amount of $2,300,000 or such lesser
amount as Borrower shall designate in the Extension Notice; provided, however,
that Borrower's right to so extend the Committed Revolving Line shall not be
exercisable if a Default or Event of Default shall have occurred and be
continuing at the time of delivery of the Extension Notice or a Default or Event
of Default occurs between the time of delivery of the Extension Notice and May
13, 2000. In consideration of Lender's granting Borrower any extension of the
Maturity Date of the Committed Revolving Line requested by Borrower as described
in the previous sentence, and as a condition precedent to the effectiveness of
any such extension, Borrower agrees:
(i) to execute and deliver to Lender on or prior to May 13, 2000 a
warrant to purchase the common stock of Borrower substantially in the form of
Exhibit A (the "WARRANT") initially exercisable for that number of shares of
Borrower's no par value common stock (the "COMMON STOCK") set forth below
opposite the dollar amounts for which Borrower elects to extend the Committed
Revolving Line:
NUMBER OF SHARES AMOUNT OF COMMITTED REVOLVING LINE
---------------- ----------------------------------
110,000 < $1,000,000
125,000 > $1,000,000 < $1,500,000
140,000 > $1,500,000 < $2,000,000
150,000 > $2,000,000 < $2,300,000
and
(ii) to provide written information sufficient to fully and accurately
update the disclosure set forth in SECTION 5.15 as of the date on which the
Warrant is delivered to Lender;
(iii) the exercise price or stock purchase price for the Warrant shall
be determined on the Extension Date as follows:
(A) If traded on a securities exchange or through the Nasdaq
National Market, the exercise price or stock purchase price shall be the average
of the closing prices of the securities on such quotation system over the twenty
(20) day period prior to the Extension Date;
(B) If traded over-the-counter, the value shall be deemed to be
the average of the closing bid or sale prices (whichever is applicable) over the
twenty (20) day period prior to the Extension Date; and
(C) If there is no active public market, the value shall be the
fair market value thereof, as determined in good faith by the Board of
Directors.
3. CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of Lender to
make the INITIAL Advance is subject to the condition precedent that Lender shall
have received, in form and substance satisfactory to Lender, the following:
(a) this Agreement (including all Schedules hereto);
(b) a certificate of the Secretary of Borrower with
respect to articles, bylaws, incumbency and resolutions authorizing the
execution and delivery of this Agreement;
(c) an intellectual property security agreement executed
by IBI and an intellectual property security agreement executed by FFM
(including all Schedules to each of them);
(d) the Subordination Agreement, in form and substance
satisfactory to Lender;
(e) financing statements (Forms UCC-1);
(f) insurance certificate;
(g) payment of the Facility Fee;
(h) a good standing certificate from Borrower's
jurisdiction of incorporation (together with tax good standing) and certificates
of foreign qualification from all jurisdictions in which the nature of
Borrower's business requires Borrower to be qualified as a foreign corporation;
(i) a written strategic plan including a specification of
the means for implementing such plan, in form and substance satisfactory to
Lender;
(j) a copy of the Senior Loan Agreement and the other
Senior Loan Documents, pursuant to which Senior Lender will make available to
Borrower a credit facility in the minimum amount of $2,000,000 for a period
until May 1, 2000, with each Senior Loan Document in form and substance
satisfactory to Lender (and the closing of the transactions contemplated
thereunder shall have occurred or shall occur concurrently with the closing of
the transactions under this Agreement);
(k) consolidated financial statements for Borrower's 1998
fiscal year;
(l) evidence that all required consents (including
consents from Borrower's board of directors and shareholders and contractual
counterparties), approvals and permits (including qualifications or permits
required from governmental authorities in order to render inapplicable any usury
or other limitation upon the amounts in the nature of interest to be charged
under the Loan Documents);
(m) An executed copy of the Merger Agreement certified by
an officer of IBI and FFM to be a true and correct counterpart of the Merger
Agreement, including all amendments, modifications, exhibits and schedules
thereto;
(n) evidence acceptable to Lender that FFM and Fast
Forward have completed their merger on terms and conditions acceptable to
Lender, in its sole discretion, that FFM is the surviving entity in connection
with such merger, that all consents, approvals and authorizations required in
connection with such merger have been obtained, and that all required filings
and registrations have been completed; and
(o) such other documents, and completion of due diligence
and such other matters, as Lender may deem necessary or appropriate.
3.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of Lender to
make each Advance, including the initial Advance, is further subject to the
following conditions:
(a) timely receipt by Lender of the Payment/Advance Form
as provided in SECTION 2.1; and
(b) the representations and warranties contained in
SECTION 5 shall be true and correct in all material respects on and as of the
date of such Payment/Advance Form and on the
effective date of each Advance as though made at and as of each such date, and
no Event of Default shall have occurred and be continuing, or would result from
such Advance. The making of each Advance shall be deemed to be a representation
and warranty by Borrower on the date of such Advance as to the accuracy of the
facts referred to in this SECTION 3.2(b).
4. CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST. Borrower grants and pledges to Lender a
continuing security interest in all presently existing and hereafter acquired or
arising Collateral in order to secure prompt payment of any and all Obligations
and in order to secure prompt performance by Borrower of each of its covenants
and duties under the Loan Documents. Other than the security interest in favor
of Senior Lender granted pursuant to the Senior Loan Documents, such security
interest constitutes a valid, first priority security interest in the presently
existing Collateral, and will constitute a valid, first priority security
interest in Collateral acquired after the date hereof. Notwithstanding
termination of this Agreement, Lender's Lien on the Collateral shall remain in
effect for so long as any Obligations are outstanding.
4.2 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Borrower shall from
time to time execute and deliver to Lender, at the request of Lender, all
Negotiable Collateral (to the extent not prohibited by the Senior Loan Documents
or delivered to Senior Lender), all financing statements and other documents
that Lender may reasonably request, in form satisfactory to Lender, to perfect
and continue perfected Lender's security interests in the Collateral and in
order to fully consummate all of the transactions contemplated under the Loan
Documents.
4.3 RIGHT TO INSPECT. Lender (through any of its officers, employees, or
agents) shall have the right, upon reasonable prior notice, from time to time
during Borrower's usual business hours, to inspect Borrower's Books and to make
copies thereof and to check, test, and appraise the Collateral in order to
verify Borrower's financial condition or the amount, condition of, or any other
matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND QUALIFICATION. Borrower and each Subsidiary is
a corporation duly existing and in good standing under the laws of the
jurisdiction of its incorporation and qualified and licensed to do business in,
and is in good standing in, any jurisdiction in which the conduct of its
business or its ownership of property requires that it be so qualified.
5.2 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Certificate or Articles of Incorporation or
Bylaws, nor will they constitute an event of default under any material
agreement to which Borrower is a party or by which Borrower is bound.
Borrower is not in default under any agreement to which it is a party or by
which it is bound, which default could have a Material Adverse Effect.
5.3 ENCUMBRANCES. Borrower has good and indefeasible title to the
Collateral, free and clear of Liens, except for Permitted Liens.
5.4 INTELLECTUAL PROPERTY. Borrower is the sole owner of the
Intellectual Property Collateral used by Borrower in its business, except for
non-exclusive licenses granted by Borrower to its customers in the ordinary
course of business. Each of the Patents is valid and enforceable, and no part of
the Intellectual Property Collateral has been judged invalid or unenforceable,
in whole or in part, and no claim has been made that any part of the
Intellectual Property Collateral violates the rights of any third party. Except
for and upon the filing with the United States Patent and Trademark Office with
respect to the Patents and Trademarks and the Register of Copyrights with
respect to the Copyrights necessary to perfect the security interests created
hereunder, and except as has been already made or obtained, no authorization,
approval or other action by, and no notice to or filing with, any United States
governmental authority or United States regulatory body is required either (i)
for the grant by Borrower of the security interest granted hereby or for the
execution, delivery or performance of Loan Documents by Borrower in the United
States or (ii) for the perfection in the United States or the exercise by Lender
of its rights and remedies hereunder.
5.5 NAME; LOCATION OF CHIEF EXECUTIVE OFFICE. Except as disclosed in the
SCHEDULE, Borrower has not done business and will not without at least thirty
(30) days prior written notice to Lender do business under any name other than
that specified on the signature page hereof. The chief executive office of
Borrower is located at the address indicated in SECTION 10 hereof.
5.6 LITIGATION. Except as set forth in the SCHEDULE, there are no
actions or proceedings pending, or, to Borrower's knowledge, threatened by or
against Borrower or any Subsidiary before any court or administrative agency in
which an adverse decision could have a Material Adverse Effect or a material
adverse effect on Borrower's interest or Lender's security interest in the
Collateral.
5.7 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All consolidated
financial statements related to Borrower and any Subsidiary that have been
delivered by Borrower to Lender fairly present in all material respects
Borrower's consolidated financial condition as of the date thereof and
Borrower's consolidated results of operations for the period then ended. There
has not been a material adverse change in the consolidated financial condition
of Borrower since the date of the most recent of such financial statements
submitted to Lender on or about the Closing Date.
5.8 SOLVENCY. The fair saleable value of Borrower's assets (including
goodwill minus disposition costs) exceeds the fair value of its liabilities; the
Borrower is not left with unreasonably small capital after the transactions
contemplated by this Agreement; and Borrower is able to pay its debts (including
trade debts) as they mature.
5.9 REGULATORY COMPLIANCE. Borrower and each Subsidiary has met the
minimum funding requirements of ERISA with respect to any employee benefit plans
subject to ERISA. No event has occurred resulting from Borrower's failure to
comply with ERISA that is reasonably likely to result in Borrower's incurring
any liability that could have a Material Adverse Effect. Borrower is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940. Borrower is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations T and U of the Board of Governors of the Federal Reserve
System). Borrower has complied in all material respects with all the provisions
of the Federal Fair Labor Standards Act. Borrower has not violated any statutes,
laws, ordinances or rules applicable to it, violation of which could have a
Material Adverse Effect.
5.10 ENVIRONMENTAL CONDITION. None of Borrower's or any Subsidiary's
properties or assets has ever been used by Borrower or any Subsidiary or, to the
best of Borrower's knowledge, by previous owners or operators, in the disposal
of, or to produce, store, handle, treat, release, or transport, any hazardous
waste or hazardous substance other than in material compliance with applicable
law; to the best of Borrower's knowledge, none of Borrower's properties or
assets has ever been designated or identified in any manner pursuant to any
environmental protection statute as a hazardous waste or hazardous substance
disposal site, or a candidate for closure pursuant to any environmental
protection statute; no lien arising under any environmental protection statute
has attached to any revenues or to any real or personal property owned by
Borrower or any Subsidiary; and neither Borrower nor any Subsidiary has received
a summons, citation, notice, or directive from the Environmental Protection
Agency or any other federal, state or other governmental agency concerning any
action or omission by Borrower or any Subsidiary resulting in the release, or
other disposition of hazardous waste or hazardous substances into the
environment.
5.11 TAXES. Borrower and each Subsidiary has filed or caused to be filed
all tax returns or extensions thereof required to be filed on a timely basis,
and has paid, or has made adequate provision for the payment of, all taxes
reflected therein.
5.12 SUBSIDIARIES. Borrower does not own any stock, partnership interest
or other equity securities of any Person, except for Permitted Investments.
5.13 GOVERNMENT CONSENTS. Borrower and each Subsidiary has obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrower's business as currently conducted.
5.14 FULL DISCLOSURE. No representation, warranty or other statement
made by Borrower in any certificate or written statement furnished to Lender
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained in such certificates or
statements not misleading.
5.15 CAPITAL STRUCTURE. As of the Closing Date the authorized capital
stock of Borrower will consist of 10,000,000 shares of Common Stock, of which
5,885,115 shares will be issued and outstanding on a fully diluted basis (taking
into account all outstanding warrants, options and other rights to purchase
Common Stock). Except for the Warrant and except as disclosed in the SCHEDULE,
as of the Closing Date no Person has any rights to subscribe for or to purchase,
or any options or warrants for the purchase of, or any agreements providing for
the issuance (contingent or otherwise) of, or any calls, commitments or claims
of any other character relating to the issuance of, any shares of capital stock
of Borrower. Upon any delivery of the Warrant as provided herein, the shares for
which the Warrant is exercisable (i) together with all outstanding shares of
capital stock and shares of capital stock issuable upon exercise of any
outstanding warrants and options of Borrower will not exceed the number of
shares that have been authorized by Borrower's articles or certificate of
incorporation, (ii) will have been duly authorized and reserved for issuance by
all necessary corporate action on the part of Borrower (no consent or approval
of shareholders being required by law, the articles or certificate of
incorporation or bylaws of Borrower or otherwise) and (iii) will have been
reserved for issuance pursuant to the terms of the Warrant.
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until the latest of (i) the exercise
in full of the Warrant, (ii) payment in full of all outstanding Obligations and
(iii) for so long as Lender may have any commitment to make an Advance
hereunder, Borrower shall do all of the following:
6.1 GOOD STANDING. Borrower shall maintain its and each of its
Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify could have a Material Adverse Effect. Borrower shall
maintain, and shall cause each of its Subsidiaries to maintain, to the extent
consistent with prudent management of Borrower's business, in force all
licenses, approvals and agreements, the loss of which could have a Material
Adverse Effect.
6.2 GOVERNMENT COMPLIANCE. Borrower shall meet, and shall cause each
Subsidiary to meet, the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject, noncompliance with
which could have a Material Adverse Effect or a material adverse effect on the
Collateral or the priority of Lender's Lien on the Collateral.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrower shall deliver
to Lender: (a) as soon as available, but in any event within thirty (30) days
after the end of each of the first two months of each fiscal quarter and within
forty-five (45) days after the third month of each fiscal quarter, a company
prepared consolidated balance sheet and income statement covering Borrower's
consolidated operations during such period, in a form and certified by an
officer of Borrower reasonably acceptable to Lender; (b) as soon as available,
but in any event within ninety (90) days after the end of Borrower's fiscal
year, audited consolidated financial statements of Borrower prepared in
accordance with GAAP, consistently applied, together with an unqualified opinion
on such financial statements of an independent certified public accounting
firm reasonably acceptable to Lender; (c) within five (5) days of filing, copies
of all statements, reports and notices sent or made available generally by
Borrower to its security holders or to any holders of Subordinated Debt and all
reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange
Commission; (d) promptly upon receipt of notice thereof, a report of any legal
actions pending or threatened against Borrower or any Subsidiary that could
result in damages or costs to Borrower or any Subsidiary of One Hundred Thousand
Dollars ($100,000) or more; (e) prompt notice of any material change in the
composition of the Intellectual Property Collateral, including, but not limited
to, any subsequent ownership right of the Borrower in or to any Copyright,
Patent or Trademark not specified in any intellectual property security
agreement between Borrower and Lender or knowledge of an event that materially
adversely effects the value of the Intellectual Property Collateral; and (f)
such budgets, sales projections, operating plans or other financial information
as Lender may reasonably request from time to time.
6.4 TAXES. Borrower shall make, and shall cause each Subsidiary to make,
due and timely payment or deposit of all material federal, state, and local
taxes, assessments, or contributions required of it by law; and Borrower will
make, and will cause each Subsidiary to make, timely payment or deposit of all
material tax payments and withholding taxes required of it by applicable laws,
including, but not limited to, those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes; provided that Borrower
or a Subsidiary need not make any payment if the amount or validity of such
payment is (i) contested in good faith by appropriate proceedings, (ii) is
reserved against (to the extent required by GAAP) by Borrower and (iii) no lien
other than a Permitted Lien results.
6.5 INSURANCE.
(a) Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as ordinarily insured against by
other owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain insurance
relating to Borrower's ownership and use of the Collateral in amounts and of a
type that are customary to businesses similar to Borrower's.
(b) All such policies of insurance shall be in such form,
with such companies, and in such amounts as are reasonably satisfactory to
Lender. All such policies of property insurance shall contain a lender's loss
payable endorsement, in a form satisfactory to Lender, showing Lender as a loss
payee thereof and all liability insurance policies shall show the Lender as an
additional insured, and shall specify that the insurer must give at least twenty
(20) days notice to Lender before canceling its policy for any reason. At
Lender's request, Borrower shall deliver to Lender certified copies of such
policies of insurance and evidence of the payments of all premiums therefor. All
proceeds payable under any such policy shall, at the option of Lender, be
payable to Lender to be applied on account of the Obligations.
6.6 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.
(a) Borrower shall file an application to register with
the United States Copyright Office those Copyrights that are not registered with
such office on the date hereof within thirty (30) days of the date of this
Agreement and shall use its best efforts to effect the prompt
registration of such Copyrights. Borrower shall register or cause to be
registered with the United States Patent and Trademark Office or the United
States Copyright Office, as applicable, those additional intellectual property
rights (to the extent such rights are material to Borrower's business as
conducted and as contemplated to be conducted) developed or acquired by Borrower
from time to time in connection with any product prior to the sale or licensing
of such product to any third party, including without limitation revisions or
additions to the intellectual property rights listed on such Exhibits A, B and C
and the Copyrights not registered on the date hereof.
(b) Borrower shall execute and deliver such additional
instruments and documents from time to time as Lender shall reasonably request
to perfect Lender's security interest in the Intellectual Property Collateral.
(c) Borrower shall (i) protect, defend and maintain the
validity and enforceability of the Trademarks, Patents and Copyrights which are
material to Borrower's business as conducted and as contemplated to be
conducted, (ii) use its best efforts to detect infringements of the Trademarks,
Patents and Copyrights and promptly advise Lender in writing of material
infringements detected and (iii) not allow any Trademarks, Patents or Copyrights
to be abandoned, forfeited or dedicated to the public without the written
consent of Lender, which shall not be unreasonably withheld, unless Lender
determines that reasonable business practices suggest that abandonment is
appropriate.
(d) Lender shall have the right, but not the obligation,
to take, at Borrower's sole expense, any actions that Borrower is required under
this Section 6.6 to take but which Borrower fails to take, after fifteen (15)
days' notice to Borrower. Borrower shall reimburse and indemnify Lender for all
reasonable costs and reasonable expenses incurred in the reasonable exercise of
its rights under this Section 6.6.
6.7 RESERVATION OF SHARES. After issuance of the Warrant, Borrower shall
at all times cause there to be reserved that number and class of shares for
which the Warrant is exercisable necessary to give full effect to the exercise
of the Warrant.
6.8 PRESS RELEASES. Borrower acknowledges and agrees that upon Closing
Lender may make a press release regarding the transactions under the Loan
Documents, and Lender's advisor may refer to such transactions in a standard
"tombstone" format in promotional material; provided, however, that each of
Lender and Borrower shall approve any such press releases and tombstone
advertisements prior to their release.
6.9 FURTHER ASSURANCES. At any time and from time to time Borrower shall
execute and deliver such further instruments and take such further action as may
reasonably be requested by Lender to effect the purposes of this Agreement.
7. NEGATIVE COVENANTS. Borrower covenants and agrees that until the latest of
(i) the exercise in full of the Warrant, (ii) payment in full of all outstanding
Obligations and (iii) for so long as Lender may have any commitment to make any
Advances, Borrower will not do any of the following:
7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise dispose of
(collectively, a "TRANSFER"), or permit any of its Subsidiaries to Transfer, all
or any part of its business or property, other than Transfers: (i) of inventory
in the ordinary course of business, (ii) of non-exclusive licenses and similar
arrangements for the use of the property of Borrower or its Subsidiaries in the
ordinary course of business; (iii) that constitute payment of normal and usual
operating expenses in the ordinary course of business; or (iii) of worn-out or
obsolete Equipment.
7.2 CHANGES IN BUSINESS, OWNERSHIP, OR MANAGEMENT, BUSINESS LOCATIONS.
Engage in any business, or permit any of its Subsidiaries to engage in any
business, other than the businesses currently engaged in by Borrower and any
business substantially similar or related thereto (or incidental thereto), or
permit Xxxxx X. Xxxx or the Xxxx Family Trust collectively to have beneficial
ownership of less than 10% of the issued and outstanding common stock of
Borrower containing ordinary voting rights for the election of directors of
Borrower. Borrower will not, without at least thirty (30) days prior written
notification to Lender, relocate its chief executive office or add any new
offices or business locations.
7.3 MERGERS OR ACQUISITIONS. (i) Merge or consolidate, or permit any of
its Subsidiaries to merge or consolidate, with or into any other business
organization other than the merger of any Subsidiary into IBI or FFM, or (ii)
acquire, or permit any of its Subsidiaries to acquire, all or substantially all
of the capital stock or property of another Person if, after giving effect to
such acquisition, the aggregate fair market value of consideration paid by
Borrower and its Subsidiaries in connection with all of such acquisitions
consummated after the Closing Date would exceed $2,500,000.
7.4 INDEBTEDNESS. Create, incur, assume or be or remain liable with
respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.
7.5 ENCUMBRANCES. Create, incur, assume or suffer to exist any Lien with
respect to any of its property, or assign or otherwise convey any right to
receive income, including the sale of any Accounts, or permit any of its
Subsidiaries so to do, except for Permitted Liens.
7.6 DISTRIBUTIONS. Pay any dividends or make any other distribution
(other than dividends payable solely in Common Stock) or payment on account of
or in redemption, retirement or purchase of any capital stock.
7.7 INVESTMENTS. Except as permitted by Section 7.3, directly or
indirectly acquire or own, or make any Investment in or to any Person, or permit
any of its Subsidiaries so to do, other than Permitted Investments.
7.8 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower except
for transactions that are in the ordinary course of Borrower's business, upon
fair and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm's length transaction with a nonaffiliated Person.
7.9 INTELLECTUAL PROPERTY AGREEMENTS. Borrower shall not permit the
inclusion in any material contract to which it becomes a party of any provisions
that could or might in any way prevent the creation of a security interest in
Borrower's rights and interests in any property included within the definition
of the Intellectual Property Collateral acquired under such contracts, except to
the extent that such provisions are necessary in Borrower's exercise of its
reasonable business judgement.
7.10 INVENTORY. Store the Inventory with a bailee, warehouseman, or
similar party unless Lender has received a pledge of any warehouse receipt
covering such Inventory other than with printers and distributers of Borrower in
the ordinary course of business. Except for Inventory sold in the ordinary
course of business and except for such other locations as Lender may approve in
writing, Borrower shall keep the Inventory only at the location set forth in
SECTION 10 hereof, other locations of printers and distributers of Borrower in
the ordinary course of business and such other locations of which Borrower gives
Lender prior written notice and as to which Borrower signs and files a financing
statement where needed to perfect Lender's security interest.
7.11 COMPLIANCE. Become an "investment company" or a company controlled
by an "investment company," within the meaning of the Investment Company Act of
1940, or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance for such purpose; fail
to meet the minimum funding requirements of ERISA; permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur; fail to comply in all
material respects with the Federal Fair Labor Standards Act or violate any other
law or regulation, which violation could have a Material Adverse Effect or a
material adverse effect on the Collateral or the priority of Lender's Lien on
the Collateral; or permit any of its Subsidiaries to do any of the foregoing.
8. EVENTS OF DEFAULT. Any one or more of the following events shall constitute
an Event of Default by Borrower under this Agreement:
8.1 PAYMENT DEFAULT. If Borrower fails to pay the principal when due or
interest or any of the other Obligations within 5 Business Days after such the
date when due.
8.2 COVENANT DEFAULT.
(a) If Borrower fails to perform any obligation under
SECTIONS 6.3, 6.6, 6.7 or 6.8 or violates any of the covenants contained in
Article 7 of this Agreement, or
(b) If Borrower fails or neglects to perform, keep, or
observe any other material term, provision, condition, covenant, or agreement
contained in this Agreement, in any of the Loan Documents, or in any other
present or future agreement between Borrower and Lender and as to any default
under such other term, provision, condition, covenant or agreement that can be
cured, has failed to cure such default within ten (10) days after the occurrence
thereof; provided, however, that if the default cannot by its nature be cured
within the ten (10) day period or cannot after diligent attempts by Borrower be
cured within such ten (10) day period, and such default is
likely to be cured within a reasonable time, then Borrower shall have an
additional reasonable period (which shall not in any case exceed thirty (30)
days) to attempt to cure such default, and within such reasonable time period
the failure to have cured such default shall not be deemed an Event of Default
(provided that no Advances will be required to be made during such cure period);
8.3 MATERIAL ADVERSE CHANGE. If there (i) occurs a material adverse
change in the business, operations, condition (financial or otherwise) or
prospects of Borrower, or (ii) is a material impairment of the prospect of
repayment of any portion of the Obligations or (iii) is a material impairment of
the value or priority of Lender's security interests in the Collateral;
8.4 ATTACHMENT. If any material portion of Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within thirty (30) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within thirty (30)
days after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that no Advance will be required to be made during such cure period);
8.5 INSOLVENCY. If Borrower becomes insolvent, or if an Insolvency
Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced
against Borrower and is not dismissed or stayed within 45 days (provided that no
Advances will be made prior to the dismissal of such Insolvency Proceeding);
8.6 OTHER AGREEMENTS. If there is a default in any agreement to which
Borrower is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount in excess of One Hundred Thousand Dollars
($200,000) or that could have a Material Adverse Effect including, without
limitation, a default under any Senior Loan Document;
8.7 JUDGMENTS. If a judgment or judgments for the payment of money not
covered by insurance in an amount, individually or in the aggregate, of at least
Fifty Thousand Dollars ($50,000) shall be rendered against Borrower and shall
remain unsatisfied and unstayed for a period of ten (10) days (provided that no
Advances will be made prior to the satisfaction or stay of such judgment); or
8.8 MISREPRESENTATIONS. If any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set forth
herein or in any certificate or writing delivered to Lender by Borrower or any
Person acting on Borrower's behalf
pursuant to this Agreement or to induce Lender to enter into this Agreement or
any other Loan Document.
9. LENDER'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES. Upon the occurrence and during the continuance
of an Event of Default, Lender may, at its election, without notice of its
election and without demand, do any one or more of the following, all of which
are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
SECTION 8.5 all Obligations shall become immediately due and payable without any
action by Lender);
(b) Cease advancing money or extending credit to or for
the benefit of Borrower under this Agreement or under any other agreement
between Borrower and Lender;
(c) Settle or adjust disputes and claims directly with
account debtors for amounts, upon terms and in whatever order that Lender
reasonably considers advisable;
(d) Without notice to or demand upon Borrower, make such
payments and do such acts as Lender considers necessary or reasonable to protect
its security interest in the Collateral. Borrower agrees to assemble the
Collateral if Lender so requires, and to make the Collateral available to Lender
as Lender may designate. Borrower authorizes Lender to enter the premises where
the Collateral is located, to take and maintain possession of the Collateral, or
any part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Lender's determination appears to be prior or superior
to its security interest and to pay all expenses incurred in connection
therewith. With respect to any of Borrower's premises, Borrower hereby grants
Lender a license to enter such premises and to occupy the same, without charge
in order to exercise any of Lender's rights or remedies provided herein, at law,
in equity, or otherwise;
(e) Without notice to Borrower set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by Lender, or
(ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by Lender;
(f) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Lender is hereby granted a non-exclusive,
royalty-free license or other right, solely pursuant to the provisions of this
SECTION 9.1, to use, without charge, Borrower's labels, patents, copyrights,
mask works, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any property of a similar nature, as
it pertains to the Collateral, in completing production of, advertising for
sale, and selling any Collateral and, in connection with Lender's exercise of
its rights under this SECTION 9.1, Borrower's rights under all licenses and all
franchise agreements shall inure to Lender's benefit;
(g) Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as
Lender determines is commercially reasonable, and apply the proceeds thereof to
the Obligations in whatever manner or order it deems appropriate;
(h) Lender may credit bid and purchase at any public sale,
or at any private sale as permitted by law; and
(i) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.
(j) Lender shall have a non-exclusive, royalty-free
license to use the Intellectual Property Collateral to the extent reasonably
necessary to permit Lender to exercise its rights and remedies upon the
occurrence of an Event of Default.
9.2 POWER OF ATTORNEY. Effective only upon the occurrence and during the
continuance of an Event of Default, Borrower hereby irrevocably appoints Lender
(and any of Lender's designated officers, or employees) as Borrower's true and
lawful attorney to: (a) send requests for verification of Accounts or notify
account debtors of Lender's security interest in the Accounts; (b) endorse
Borrower's name on any checks or other forms of payment or security that may
come into Lender's possession; (c) sign Borrower's name on any invoice or xxxx
of lading relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account
debtors; (d) make, settle, and adjust all claims under and decisions with
respect to Borrower's policies of insurance; and (e) settle and adjust disputes
and claims respecting the accounts directly with account debtors, for amounts
and upon terms which Lender determines to be reasonable; (f) to modify, in its
sole discretion, any intellectual property security agreement entered into
between Borrower and Lender without first obtaining Borrower's approval of or
signature to such modification by amending Exhibit A, Exhibit B, Exhibit C, and
Exhibit D, thereof, as appropriate, to include reference to any right, title or
interest in any Copyrights, Patents and Trademarks acquired by Borrower after
the execution hereof or to delete any reference to any right, title or interest
in any Copyrights, Patents or Trademarks in which Borrower no longer has or
claims any right, title or interest; (g) to file, in its sole discretion, one or
more financing or continuation statements and amendments thereto, relative to
any of the Collateral without the signature of Borrower where permitted by law;
and (h) to transfer the Intellectual Property Collateral into the name of Lender
or a third party to the extent permitted under the California Uniform Commercial
Code provided Lender may exercise such power of attorney to sign the name of
Borrower on any of the documents described in SECTION 4.2 regardless of whether
an Event of Default has occurred. The appointment of Lender as Borrower's
attorney in fact, and each and every one of Lender's rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have been
fully repaid and performed and Lender's obligation to provide advances hereunder
is terminated.
9.3 LENDER EXPENSES. If Borrower fails to pay any amounts or furnish any
required proof of payment due to third persons or entities, as required under
the terms of this Agreement, then Lender may do any or all of the following: (a)
make payment of the same or any part thereof; (b) set up such reserves under the
Committed Revolving Line as Lender deems
necessary to protect Lender from the exposure created by such failure; or (c)
obtain and maintain insurance policies of the type discussed in SECTION 6.5 of
this Agreement, and take any action with respect to such policies as Lender
deems prudent. Any amounts so paid or deposited by Lender shall constitute
Lender Expenses, shall be immediately due and payable, and shall bear interest
at the then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by Lender shall not constitute an agreement by
Lender to make similar payments in the future or a waiver by Lender of any Event
of Default under this Agreement.
9.4 LENDER'S LIABILITY FOR COLLATERAL. So long as Lender complies with
commercially reasonable practices, Lender shall not in any way or manner be
liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss
or damage thereto occurring or arising in any manner or fashion from any cause;
(c) any diminution in the value thereof; or (d) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other person whomsoever.
All risk of loss, damage or destruction of the Collateral shall be borne by
Borrower.
9.5 REMEDIES CUMULATIVE. Lender's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Lender shall have all other rights and remedies not expressly set forth herein
as provided under the Code, by law, or in equity. No exercise by Lender of one
right or remedy shall be deemed an election, and no waiver by Lender of any
Event of Default on Borrower's part shall be deemed a continuing waiver. No
delay by Lender shall constitute a waiver, election, or acquiescence by it. No
waiver by Lender shall be effective unless made in a written document signed on
behalf of Lender and then shall be effective only in the specific instance and
for the specific purpose for which it was given.
9.6 DEMAND; PROTEST. Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension, or
renewal of accounts, documents, instruments, chattel paper, and guarantees at
any time held by Lender on which Borrower may in any way be liable.
10. NOTICES. Unless otherwise provided in this Agreement, all notices or demands
by any party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by a recognized overnight
delivery service, by certified mail, postage prepaid, return receipt requested,
or by facsimile to Borrower or to Lender, as the case may be, at its addresses
set forth below:
If to Borrower: 0000 Xxxxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx Xxxxxx, XX 00000
Attn: Xxx Xxxxxx
FAX: (000) 000-0000
If to Lender: Zindart Limited
Xxxx X&X, 00/X., Xxxxx 0
Xxxxxxx Xxxxxxxxxx Xxxxxx
57 Xxxx Xxx Road
Tai Po, N.T.
Hong Kong
Attn: Feather X. X. Xxx
E-Mail: xxxxxxxx@xxxxxxx.xxx
FAX: 000-000-0000-0000
With a copy to: ChinaVest
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
FAX: (000) 000-0000
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
11. CHOICE OF LAW AND VENUE. The Loan Documents shall be governed by, and
construed in accordance with, the internal laws of the State of California,
without regard to principles of conflicts of law. Each of Borrower and Lender
hereby submits to the exclusive jurisdiction of the state and Federal courts
located in the County of Los Angeles, State of California. BORROWER AND LENDER
EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY
RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
12. GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the
benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights hereunder
may be assigned by Borrower without Lender's prior written consent, which
consent may be granted or withheld in Lender's sole discretion. Lender shall
have the right, with the consent of Borrower, not to be unreasonably withheld
(provided that during such time as a Default or Event of Default shall have
occurred and be continuing no such consent shall be required), to sell,
transfer, negotiate, or grant participation in all or any part of, or any
interest in, Lender's obligations, rights and benefits hereunder.
12.2 INDEMNIFICATION. Borrower shall, indemnify ,defend, protect and
hold harmless Lender and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by the Loan Documents;
and (b) all losses or Lender Expenses in any way suffered, incurred, or paid by
Lender as a result of or in any way arising out of, following, or consequential
to transactions between Lender and Borrower whether under the Loan Documents, or
otherwise (including without limitation reasonable attorneys fees and expenses),
except for losses caused by Lender's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE. Time is of the essence for the performance of all
obligations set forth in this Agreement.
12.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION. This Agreement cannot be
amended or terminated except by a writing signed by Borrower and Lender. All
prior agreements, understandings, representations, warranties, and negotiations
between the parties hereto with respect to the subject matter of this Agreement,
if any, are merged into this Agreement and the Loan Documents.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
12.7 SURVIVAL. All covenants, representations and warranties made in
this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Lender
with respect to the expenses, damages, losses, costs and liabilities described
in SECTION 12.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Lender have run.
13. SURETY WAIVERS. In the event IBI or FFM or both are deemed to be guarantors
of all or a portion of the Obligations, then IBI and FFM each agrees as follows:
13.1 LENDER'S DIRECT RIGHTS.
(a) GUARANTY OF PAYMENT. Borrower guarantees payment and
performance of any such Obligations, not merely collection. In the event that
payment or performance of any of the Obligations is not made in a timely manner,
Lender may enforce its rights, without first seeking to obtain payment or
performance from or without resorting to (i) Borrower for the Obligations
(meaning that Lender may delay, in Lender's sole and complete discretion, in the
exercise of rights against Borrower); (ii) any other guarantor; (iii) any
collateral Lender may hold as security for the Obligations; or (iv) any other
remedy or right that Lender may have.
(b) WAIVER OF PRIORITY OF COLLECTION. Borrower waives any
rights it may have to require Lender to proceed against any other party or to
pursue any other remedy in Lender's power which Borrower could not pursue which
would lighten Borrower's burden, as guarantor. In addition, Borrower waives any
right it may have to benefit from every security which now or hereafter exists
for the performance of the Obligations or for the performance of any other
guarantor's obligations owing to Lender. If Lender decides to proceed first to
exercise any other remedy or right, or to proceed against another person or any
collateral, Lender retains any and all of its rights created under this Section.
13.2 CONTINUING GUARANTY AND REVOCATION. If Borrower is deemed a
guarantor of all or any portion of the Obligations, then such guaranty shall
apply to all such Obligations, including existing Obligations as well as all
future Obligations. Borrower shall also guarantee all future liability under
successive transactions which either continue such Obligations or from time to
time renew some or all of them after having been satisfied and, to that extent,
the guaranty of Borrower shall be continuing in nature. Borrower may not
terminate or revoke such guaranty. Borrower irrevocably waives any right it has,
including any rights under California Civil Code Section 2815, to terminate or
revoke the continuing nature of its guaranty and its application to any
Obligations arising after any attempt to terminate such guaranty.
13.3 NO NOTICE REQUIRED. Borrower, as guarantor, will not be released or
exonerated from its obligations as guarantor if Borrower, as guarantor, is not
notified by Lender of these events: (i) the failure of Lender to receive timely
payment of any amount owed under any of the Loan Documents or to receive payment
or performance of any of the other Obligations; (ii) any failure of any third
party to perform any other Obligation under any of the Loan Documents; (iii) any
adverse change in the financial condition or business of any party obligated in
connection with any of the Obligations; and (iv) all other notices to which
Borrower, as guarantor, might be entitled.
13.4 WAIVERS. Borrower, as guarantor, waives any right it may have to
require any of the following acts: demand; presentment; diligence; protest;
notice of dishonor; and any other notice to which it may be entitled. Without
limiting the generality of any waiver set forth in this Section 13, until such
time as the Obligations have been fully and finally repaid and satisfied,
Borrower expressly waives the benefit of California Civil Code Sections 2809,
2810, 2819, 2839, 2845, 2848, 2849, 2850, 2899 and 1432.
13.5 NO RELEASE. Lender may do or suffer any of the following, by action
or inaction, without releasing or exonerating Borrower, as guarantor, from its
responsibility to pay or perform any of the Obligations (and Lender need not
notify Borrower, as guarantor of any of the following): (i) renew, extend,
rearrange, alter, impair, suspend or otherwise modify any of the Obligations or
any of the rights or remedies of Lender under the Loan Documents; (ii) release
Borrower or any other guarantor from any of the Obligations; (iii) sell,
release, subordinate, impair, suspend, waive or otherwise fail to obtain,
perfect or realize upon (or continue the perfection of) a security interest in
any collateral for any of the Obligations or any other guaranty of the
Obligations; (iv) exercise Lender's rights in any Collateral for any of the
Obligations or any other collateral for any other guaranty of the Obligations in
any order that Lender may elect
in its sole discretion; (v) advance additional funds to or for the benefit of
Borrower, as borrower; (vi) foreclose on any Collateral for the Obligations, or
any portion thereof (including the collateral provided under a deed of trust) or
a guaranty of the Obligations, or any portion thereof in a manner that
diminishes, impairs or precludes the right of Borrower, as guarantor, to enjoy
any rights of subrogation against any other guarantor or third person, or to
obtain reimbursement, performance, or indemnification for payment or performance
under this Agreement (in this connection, Borrower, as guarantor, waives any
rights and defenses arising out of an election of remedies by Lender, even
though that election of remedies, such as nonjudicial foreclosure with respect
to security for the Obligations or any other guaranty, has destroyed Borrower's
rights, as guarantor, of subrogation and reimbursement against any other
guarantor or third person by operation of law and, in addition, Borrower, as
guarantor, waives any defenses arising under Uniform Commercial Code Sections
1103 and 9501 et seq.); (vii) permit or suffer the impairment of any of the
Obligations in a case under the Bankruptcy Code by or against Borrower; (viii)
permit or suffer the creation of secured or unsecured credit or debt under
Bankruptcy Code Section 364 in a case involving any of the Obligations; (ix)
permit or suffer the disallowance, avoidance or subordination of any of the
Obligations or Collateral; (x) fail to exercise any right or remedy Lender may
have with respect to the payment or performance of, any of the Loan Documents or
any of the Obligations; or (xi) fail to obtain a guaranty, other assurance of
payment, or credit enhancement from any other person.
13.6 WAIVER OF SUBROGATION, REIMBURSEMENT, PERFORMANCE AND
INDEMNIFICATION. Borrower, as guarantor, permanently waives and shall not seek
to exercise any of the following rights that it may have against any other
guarantor, third person or any collateral provided by any other guarantor or
third person for any amounts paid by Borrower, as guarantor, or acts performed
by Borrower, as guarantor, of any of the Obligations: (i) all rights that
Borrower, as guarantor, may have upon satisfying the Obligations, or any portion
thereof, to enforce any remedies which Lender then has against any other
guarantor or third person to contribute to the amount paid by Borrower, as
guarantor; (ii) all rights that Borrower, as guarantor, may have to the benefit
of any security for the performance of the Obligations or the performance by any
other guarantor or third person of the Obligations; (iii) all rights of
reimbursement for the amounts paid by Borrower, as guarantor, in connection with
the Obligations (including costs and expenses); (iv) any right to compel any
guarantor or other third person to perform the Obligations when due; or (v) all
rights of indemnification from any other guarantor or any other third party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
BORROWERS INTERVISUAL BOOKS, INC.,
a California corporation
By: /s/ XXXXX X. XXXX
---------------------------------------
Name: Xxxxx X. Xxxx
---------------------------------------
Title: Chairman and CEO
---------------------------------------
FFM ACQUISITION CORP.,
a California corporation to be known as
Fast Forward Marketing, Inc.
By: /s/ XXX X. XXXXXX
---------------------------------------
Name: Xxx X. Xxxxxx
---------------------------------------
Title: President
---------------------------------------
LENDER ZINDART LIMITED,
a Hong Kong corporation
By: /s/ XXXXXX XXXXXXX
---------------------------------------
Name: Xxxxxx Xxxxxxx
---------------------------------------
Title: Chairman
---------------------------------------
EXHIBIT A
The Collateral shall consist of all right, title and interest of
Borrower in and to the following:
(a) All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
(b) All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;
(c) All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
(d) All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;
(e) All documents, cash, deposit accounts, securities, investment
property, letters of credit, certificates of deposit, instruments and chattel
paper now owned or hereafter acquired and Borrower's Books relating to the
foregoing;
(f) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter acquired;
all trade secret rights, including all rights to unpatented inventions,
know-how, operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; all mask work or similar rights
available for the protection of semiconductor chips, now owned or hereafter
acquired; all claims for damages by way of any past, present and future
infringement of any of the foregoing; and
(g) All Borrower's Books relating to the foregoing and any and all
claims, rights and interests in any of the above and all substitutions for,
additions and accessions to and proceeds thereof.
EXHIBIT B
LOAN PAYMENT/ADVANCE REQUEST FORM
Date: ______________________
To: Zindart Limited
RE: LOAN AND SECURITY AGREEMENT DATED AS OF MAY 13, 1999, BY AND BETWEEN
ZINDART LIMITED, AS LENDER, AND INTERVISUAL BOOKS, INC., AS BORROWER
The undersigned refers to the Loan Agreement, the terms defined therein used
herein as defined, and hereby gives you notice, pursuant to Section 2.1(a) of
the Loan Agreement, of a requested Advance specified herein:
Amount of proposed Advance: $______________
The Business Day of the proposed Advance is: ______________
Funds to be disbursed by wire transfer to Borrower's account number: ___________
Borrower hereby certifies that the following statements are true on the date
hereof, and will be true on the date of the proposed Advance, before and after
giving effect thereto and to the application of the proceeds thereof:
(a) All representations and warranties of Borrower stated in the Loan
Agreement are true, correct and complete in all material respects as of the date
of this Advance Request; provided, however, that those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date;
(b) no Default or Event of Default has occurred and is continuing, or
would result from such proposed Advance; and
(c) the proposed Advance will not cause the aggregate principal amount
of all outstanding Advances to exceed the Committed Revolving Line.
BORROWER: INTERVISUAL BOOKS, INC.,
a California corporation
By: _______________________________________
Printed Name: _____________________________
Title: ____________________________________
FFM ACQUISITION CORP.,
a California corporation to be known as Fast Forward Marketing, Inc.
By: _______________________________________
Printed Name: _____________________________
Title: ____________________________________
