EXHIBIT 10.6
LOAN AND SECURITY AGREEMENT
BETWEEN
XXXXXXX CENTRAL HOLDINGS, INC.
SC HOLDING, INC.
XXXXXXX CENTRAL NATIONAL, LLC
XXXXXXX CENTRAL CONSULTING, INC.
XXXXXXX ACQUISITION CORPORATION
AND
SILICON VALLEY BANK
DATED SEPTEMBER 3, 1999
TABLE OF CONTENTS
Page
1. DEFINITIONS AND CONSTRUCTION............................................1
1.1. Definitions.......................................................1
1.2. Accounting and Other Terms........................................8
2. LOAN AND TERMS OF PAYMENT...............................................8
2.1. Advances..........................................................8
2.1.1. Revolving Advances.............................................8
2.2. Overadvances......................................................9
2.3. Interest Rates, Payments, and Calculations........................9
2.4. Crediting Payments................................................9
2.5. Fees.............................................................10
2.6. Additional Costs.................................................10
2.7. Term.............................................................11
3. CONDITIONS OF LOANS....................................................11
3.1. Conditions Precedent to Initial Advance..........................11
3.2. Conditions Precedent to all Advances.............................11
4. CREATION OF SECURITY INTEREST..........................................12
4.1. Grant of Security Interest.......................................12
4.2. Delivery of Additional Documentation Required....................12
4.3. Right to Inspect.................................................12
5. REPRESENTATIONS AND WARRANTIES.........................................12
5.1. Due Organization and Qualification...............................12
5.2. Due Authorization; No Conflict...................................12
5.3. No Prior Encumbrances............................................13
5.4. Bona Fide Eligible Accounts......................................13
5.5. Merchantable Inventory...........................................13
5.6. Intellectual Property............................................13
5.7. Name; Location of Chief Executive Office.........................13
5.8. Litigation.......................................................13
5.9. No Material Adverse Change in Financial Statements...............13
5.10. Solvency.........................................................14
5.11. Regulatory Compliance............................................14
5.12. Environmental Condition..........................................14
5.13. Taxes............................................................14
5.14. Subsidiaries.....................................................14
5.15. Government Consents..............................................14
5.16. Full Disclosure..................................................15
6. AFFIRMATIVE COVENANTS..................................................15
6.1. Good Standing....................................................15
6.2. Government Compliance............................................15
6.3. Financial Statements, Reports, Certificates......................15
6.4. Inventory; Returns...............................................16
6.5. Taxes............................................................16
6.6. Insurance........................................................17
6.7. Principal Depository.............................................17
6.8. Profitability....................................................18
6.9 Further Assurances..............................................18
6.10 Registration of Intellectual Property Rights.....................18
7. NEGATIVE COVENANTS.....................................................19
7.1. Dispositions.....................................................19
7.2. Changes in Business, Ownership, or Management, Business
Locations.....................................................19
7.3. Mergers or Acquisitions..........................................19
7.4. Indebtedness.....................................................19
7.5. Encumbrances.....................................................19
7.6. Distributions....................................................20
7.7. Investments......................................................20
7.8. Transactions with Affiliates.....................................20
7.9. Subordinated Debt................................................20
7.10. Inventory........................................................20
7.11. Compliance.......................................................20
8. EVENTS OF DEFAULT......................................................20
8.1. Payment Default..................................................20
8.2. Covenant Default.................................................20
8.3. Material Adverse Change..........................................21
8.4. Attachment.......................................................21
8.5. Insolvency.......................................................21
8.6. Other Agreements.................................................21
8.7. Subordinated Debt................................................21
8.8. Judgments........................................................22
8.9. Misrepresentations...............................................22
9. BANK'S RIGHTS AND REMEDIES.............................................22
9.1. Rights and Remedies..............................................22
9.2. Power of Attorney................................................23
9.3. Accounts Collection..............................................24
9.4. Bank Expenses....................................................24
9.5. Bank's Liability for Collateral..................................24
9.6. Remedies Cumulative..............................................24
9.7. Demand; Protest..................................................24
10. NOTICES.............................................................24
11. CHOICE OF LAW AND VENUE.............................................25
12. GENERAL PROVISIONS..................................................26
12.1. Successors and Assigns...........................................26
12.2. Indemnification..................................................26
12.3. Time of Essence..................................................26
12.4. Severability of Provisions.......................................26
12.5. Amendments in Writing, Integration...............................26
12.6. Counterparts.....................................................26
12.7. Survival.........................................................27
12.8. Joint and Several................................................27
This LOAN AND SECURITY AGREEMENT is entered into as of September 3,
1999, by and between SILICON VALLEY BANK ("Bank"); and XXXXXXX CENTRAL HOLDINGS,
INC., a Delaware corporation having as its principal address 0000 Xxxxxx Xxxxx
Xxxx, Xxxxxxx, Xxxxxxx 00000 ("Borrower") and the wholly owned subsidiaries of
Borrower listed in Schedule A hereto (collectively "Subsidiaries", individually
a "Subsidiary") (Borrower and Subsidiaries are sometimes collectively referred
to as "Borrowers").
RECITALS
Borrowers wish to obtain credit from time to time from Bank, and Bank
desires to extend credit to Borrowers. This Agreement sets forth the terms on
which Bank will advance credit to Borrowers, and Borrowers will repay the
amounts owing to Bank.
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 Borrowers
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
Borrowers, 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 Borrowers and Borrowers' 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.
"Bank Expenses" means all reasonable costs or expenses (including
reasonable attorneys' fees and expenses) incurred in connection with the
preparation, negotiation, administration, and enforcement of the Loan Documents;
and Bank'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.
"Borrowers' Books" means all of Borrowers' books and records
including, without limitation: ledgers; records concerning Borrowers' assets or
liabilities, the Collateral, business operations or financial condition; and all
computer programs, or tape files, and the equipment, containing such
information.
"Borrowing Base" means an amount equal to seventy-five percent (75%)
of Eligible Accounts as determined by Bank with reference to the most recent
Borrowing Base Certificate delivered by Borrowers.
"Business Day" means any day that is not a Saturday, Sunday, or other
day on which banks in the State of Georgia are authorized or required to close.
"Closing Date" means the date of this Agreement.
"Code" means the Georgia or other applicable states' Uniform
Commercial Code.
"Collateral" means the property described on Exhibit A attached
hereto.
"Committed Revolving Line" means a credit extension of up to Five
Million and No/100 Dollars ($5,000,000).
"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.
"Current Assets" means, as of any applicable date, all amounts that
should, in accordance with GAAP, be included as current assets on the
consolidated balance sheet of Borrower and its Subsidiaries as at such date.
"Current Liabilities" means, as of any applicable date, all amounts
that should, in accordance with GAAP, be included as current liabilities on the
consolidated balance sheet of Borrower and its Subsidiaries, as at such date,
plus, to the extent not already included therein, all outstanding Credit
Extensions made under this Agreement, including all Indebtedness that is payable
upon demand or within one year from the date of determination thereof unless
such Indebtedness is renewable or extendable at the option of Borrower or any
Subsidiary to a date more than one year from the date of determination, but
excluding Subordinated Debt.
"Eligible Accounts" means those Accounts that arise in the ordinary
course of Borrowers' business that comply with all of Borrowers' representations
and warranties to Bank set forth in Section 5.4; provided, that standards of
eligibility may be fixed and revised from time to time by Bank in Bank's
reasonable judgment and upon notification thereof to Borrowers in accordance
with the provisions hereof. Unless otherwise agreed to by Bank in writing,
Eligible Accounts shall not include the following:
(a) Accounts that the account debtor has failed to pay within ninety
(90) days of invoice date;
(b) Accounts with respect to an account debtor, fifty percent (50%) of
whose Accounts the account debtor has failed to pay within ninety (90) days of
invoice date;
(c) Accounts with respect to an account debtor, including Affiliates,
whose total obligations to Borrowers exceed twenty-five percent (25%) of all
Accounts, to the extent such obligations exceed the aforementioned percentage,
except as approved in writing by Bank;
(d) Accounts with respect to which the account debtor does not have
its principal place of business in the United States;
(e) Accounts with respect to which the account debtor is a federal,
state, or local governmental entity or any department, agency, or
instrumentality thereof;
(f) Accounts with respect to which any Borrower is liable to the
account debtor, for goods sold or services rendered by the account debtor to
Borrower, but only to the extent of any amounts owing to the account debtor
(sometimes referred to as "contra" accounts, e.g. accounts payable, customer
deposits, credit accounts, contract xxxxxxxx, advance xxxxxxxx, etc.) against
amounts owed to Borrower;
(g) Accounts generated by demonstration or promotional equipment, or
with respect to which goods are placed on consignment, guaranteed sale, sale or
return, sale on approval, xxxx and hold, or other terms by reason of which the
payment by the account debtor may be conditional;
(h) Accounts with respect to which the account debtor is an Affiliate,
officer, employee, or agent of any Borrower;
(i) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Bank believes, in
good faith, that there may be a basis for dispute (but only to the extent of the
amount subject to such dispute or claim), or is subject to any Insolvency
Proceeding, or becomes insolvent, or goes out of business; and
(j) Accounts the collection of which Bank reasonably determines to be
doubtful by reason of the account debtor's financial condition.
"Equipment" means all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which any Borrower has any interest.
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended, and the regulations thereunder.
"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, Patents, and Mask Works;
(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 any 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, Trademarks, or Mask Works, 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, Patents, or Mask Works; 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 any
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 a 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.
"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 any Borrower, and any other present or future agreement
entered into between any Borrower and/or for the benefit of Bank in connection
with this Agreement, all as amended, extended or restated from time to time.
"Mask Works" means all mask work or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired.
"Material Adverse Effect" means a material adverse effect on (i) the
business operations or condition (financial or otherwise) of Borrower and its
Subsidiaries taken as a whole or (ii) the ability of Borrowers to repay the
Obligations or otherwise perform its obligations under the Loan Documents.
"Negotiable Collateral" means all of Borrowers' present and future
letters of credit of which it is a beneficiary, notes, drafts, instruments,
securities, documents of title, and chattel paper.
"Net Income (Loss)" shall mean, for any fiscal period of Borrower, the
net income (or loss) of Borrowers and their Subsidiaries on a consolidated basis
for such period (taken as a single accounting period) determined in conformity
with GAAP, less the increase in capitalized software costs.
"Obligations" means all debt, principal, interest, Bank Expenses and
other amounts owed to Bank by any Borrower (whether joint, several or
contingent) 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 any
Borrower to others that Bank 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 third (3rd) calendar day of each month
commencing on the first such date after the Closing Date and ending on the
Revolving Maturity Date.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrowers in favor of Bank arising under this
Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed in the
Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors 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; and
(b) (i) 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 Bank.
"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 Borrowers' Books
in accordance with GAAP, provided the same have no priority over any of Bank's
security interests;
(c) Liens (i) upon or in any Equipment acquired or held by Borrower or
any of its Subsidiaries to secure the purchase price of such Equipment or
indebtedness incurred solely for the purpose of financing the acquisition of
such Equipment, or (ii) existing on such equipment at the time of its
acquisition, provided that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment;
(d) Leases or subleases and licenses or sublicenses granted to others
in the ordinary course of any Borrower's business not interfering in any
material respect with the business of Borrower and its Subsidiaries taken as a
whole, and any interest or title of a lessor, licensor or under any lease or
license provided that such leases, subleases, licenses and sublicenses do not
prohibit the grant of the security interest granted hereunder;
(e) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in
clauses (a) through (c) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase; and
(f) The Security Agreement between Mestek, Inc. and Xxxxxxx Central
Holdings, Inc. attached as Schedule 1.1.
"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.
"Prime Rate" means the variable rate of interest, per annum, most
recently announced by Bank, as its "prime rate," whether or not such announced
rate is the lowest rate available from Bank.
"Quick Assets" means, as of any applicable date, the consolidated
cash, cash equivalents, accounts receivable and investments with maturities of
fewer than 90 days of Borrowers determined in accordance with GAAP.
"Responsible Officer" means each of the Chief Executive Officer, the
President and the Chief Financial Officer of Borrower.
"Revolving Maturity Date" means September 3, 2000.
"Schedule" means the schedule of exceptions attached hereto, if any.
"Subordinated Debt" means any debt incurred by any Borrower that is
subordinated to the debt owing by Borrowers to Bank on terms acceptable to Bank
(and identified as being such by Borrowers and Bank).
"Subsidiary" means with respect to any Person, corporation,
partnership, company association, limited liability company, 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, including, but not
limited to the Subsidiaries.
"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 Borrower 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
2.1. Advances. Borrowers, jointly and severally, promise to pay to the
order of Bank, in lawful money of the United States of America, the aggregate
unpaid principal amount of all Advances made by Bank to any Borrower hereunder.
Borrowers shall also pay interest on the unpaid principal amount of such
Advances at rates in accordance with the terms hereof.
2.1.1. Revolving Advances.
(a) Subject to and upon the terms and conditions of this Agreement,
Bank agrees to make Advances to any Borrower in an aggregate outstanding amount
not to exceed the Committed Revolving Line or the Borrowing Base, whichever is
less. Subject to the terms and conditions of this Agreement, amounts borrowed
pursuant to this Section 2.1 may be repaid and reborrowed at any time during the
term of this Agreement. (b) Whenever a Borrower desires an Advance, such
Borrower will notify Bank by facsimile transmission or telephone no later than
3:00 p.m. Eastern time, on the Business Day that the Advance is to be made. Each
such notification shall be promptly confirmed by a Transaction Report and Loan
Request Form in substantially the form of Exhibit B hereto. Bank 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 Bank's discretion such Advances are necessary to meet
Obligations which have become due and remain unpaid. Bank shall be entitled to
rely on any telephonic notice given by a person who Bank reasonably believes to
be a Responsible Officer or a designee thereof, and Borrowers, jointly and
severally, shall indemnify and hold Bank harmless for any damages or loss
suffered by Bank as a result of such reliance. Bank will credit the amount of
Advances made under this Section 2.1 to such Borrower's deposit account. (c) The
Committed Revolving Line shall terminate on the Revolving 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.
2.2. Overadvances. If, at any time or for any reason, the amount of
Obligations owed by Borrowers to Bank pursuant to Section 2.1.1 of this
Agreement is greater than the lesser of (i) the Committed Revolving Line or (ii)
the Borrowing Base, Borrowers shall immediately pay to Bank, 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 two (2) percentage points above the Prime Rate.
(b) Default Rate. All Obligations shall bear interest, from and after
the occurrence of an Event of Default and the continuance thereof, at a rate
equal to three (3) percentage points above the interest rate applicable
immediately prior to the occurrence of the Event of Default.
(c) Payments. Interest on the Committed Revolving Line shall be due
and payable on each Payment Date. Borrowers hereby authorizes Bank to debit any
accounts with Bank, including, without limitation, Account Number _____ for
payments of principal and interest due on the Obligations and any other amounts
owing by any Borrower to Bank. Bank will notify Borrowers promptly of all debits
which Bank has made against any Borrower's accounts. Any such debits against any
Borrower's accounts in no way shall be deemed a set-off. Any interest not 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. In the event the Prime Rate is changed from time to
time hereafter, the applicable rate of interest hereunder shall be increased or
decreased effective as of 12:01 a.m. on the day the Prime Rate is changed, by an
amount equal to such change in the Prime Rate. 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. Subject to Section 6.7(b) relating to the
Collateral Account, prior to the occurrence of an Event of Default, Bank shall
credit a wire transfer of funds, check or other item of payment to such deposit
account or Obligation as Borrowers specify. Subject to Section 6.7(b) relating
to the Collateral Account, after the occurrence of an Event of Default, the
receipt by Bank of any wire transfer of funds, check, or other item of payment,
whether directed to a Borrower's deposit account with Bank or to the Obligations
or otherwise, shall be immediately applied to conditionally reduce Obligations,
but shall not be considered a payment in respect of the Obligations unless such
payment is of immediately available federal funds or unless and until such check
or other item of payment is honored when presented for payment. Subject to
Section 6.7(b) relating to the Collateral Account, any wire transfer or payment
received by Bank after 12:00 noon Eastern time shall be deemed to have been
received by Bank as of the opening of business on the immediately following
Business Day. Whenever any payment to Bank 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 fees or interest, as the case may be, shall accrue and be payable for
the period of such extension.
2.5. Fees. Borrowers, jointly and severally, shall pay to Bank the
following:
(a) Facility Fee. A Facility Fee for the Committed Revolving Line
equal to Twenty-Five Thousand and No/100 Dollars ($25,000), which fee shall be
due on the Closing Date and shall be fully earned and non-refundable;
(b) Financial Examination and Appraisal Fees. Bank's fees and
out-of-pocket expenses for Bank's audits of Borrowers' Accounts, and for each
appraisal of Collateral and financial analysis and examination of Borrowers
performed from time to time by Bank or its agents, which fee shall be $500 per
day, per person, plus out of pocket expenses; provided, however, such fee shall
not exceed $7,500 per audit or examination.
(c) Collateral Handling Fee. A collateral handling fee of $2,500 per
month, to be paid on each Payment Date.
(d) Bank Expenses. Upon demand from Bank, including, without
limitation, upon the date hereof, all Bank Expenses incurred through the date
hereof, including reasonable attorneys' fees and expenses and, after the date
hereof, all Bank Expenses, including reasonable attorneys' fees and expenses, as
and when they become due.
2.6. Additional Costs. In case any law, regulation, treaty or official
directive or the interpretation or application thereof by any court or any
governmental authority charged with the administration thereof or the compliance
with any guideline or request of any central bank or other governmental
authority (whether or not having the force of law):
(a) subjects Bank to any tax with respect to payments of principal or
interest or any other amounts payable hereunder by Borrowers or otherwise with
respect to the transactions contemplated hereby (except for taxes on the overall
net income of Bank imposed by the United States of America or any political
subdivision thereof);
(b) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans by, Bank; or
(c) imposes upon Bank any other condition with respect to its
performance under this Agreement, and the result of any of the foregoing is to
increase the cost to Bank, reduce the income receivable by Bank or impose any
expense upon Bank with respect to any loans, Bank shall notify Borrowers
thereof. Borrowers (jointly and severally) agree to pay to Bank the amount of
such increase in cost, reduction in income or additional expense as and when
such cost, reduction or expense is incurred or determined, upon presentation by
Bank of a statement of the amount and setting forth Bank's calculation thereof,
all in reasonable detail, which statement shall be deemed true and correct
absent manifest error.
2.7. Term. Except as otherwise set forth herein, this Agreement shall
become effective on the Closing Date and, subject to Section 12.7, shall
continue in full force and effect for a term ending on the Revolving Maturity
Date. Notwithstanding the foregoing, Bank shall have the right to terminate its
obligation to make Credit Extensions under this Agreement immediately and
without notice upon the occurrence and during the continuance of an Event of
Default. Notwithstanding termination of this Agreement, Bank's lien on the
Collateral shall remain in effect for so long as any Obligations are
outstanding.
3. CONDITIONS OF LOANS
3.1. Conditions Precedent to Initial Advance. The obligation of Bank
to make the initial Advance is subject to the condition precedent that Bank
shall have received, in form and substance satisfactory to Bank, the following:
(a) this Agreement;
(b) a certificate of Secretary or Manager of each Borrower with
respect to articles of incorporation, bylaws, articles of organization,
operating agreement, as applicable, incumbency and resolutions authorizing the
execution and delivery of this Agreement;
(c) financing statements (Forms UCC-1);
(d) insurance certificates;
(e) payment of the fees and Bank Expenses then due specified in
Section 2.5 hereof; (f) Certificate(s) of Good Standing and Foreign
Qualification for each Borrower; (g) Certified Articles of Incorporation or
Organization of each Borrower; (h) Intellectual Property Security Agreement; (i)
such other documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate; and (j) all obligations of CareCentric
Solutions, Inc. to the Bank, including but not limited to a $1,500,000 revolving
line of credit, shall be paid in full.
3.2. Conditions Precedent to all Advances. The obligation of Bank to
make each Advance, including the initial Advance, is further subject to the
following conditions:
(a) timely receipt by Bank of the Transaction Report and Loan Request
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
Transaction Report and Loan Request 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
Borrowers 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. Borrowers grant and pledge to Bank 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 Borrowers of each of its covenants
and duties under the Loan Documents. Except as set forth in the Schedule, 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. Borrowers
acknowledge that Bank may place a "hold" on any Deposit Account pledged as
Collateral to secure the Obligations. Notwithstanding termination of this
Agreement, Bank's Lien on the Collateral shall remain in effect for so long as
any Obligations are outstanding.
4.2. Delivery of Additional Documentation Required. Borrowers shall
from time to time execute and deliver to Bank, at the request of Bank, all
Negotiable Collateral, all financing statements and other documents that Bank
may reasonably request, in form satisfactory to Bank, to perfect and continue
perfected Bank'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. Bank (through any of its officers, employees,
or agents) shall have the right, upon reasonable prior notice, from time to time
during Borrowers' usual business hours, to inspect Borrowers' Books and to make
copies thereof and to check, test, and appraise the Collateral in order to
verify Borrowers' financial condition or the amount, condition of, or any other
matter relating to, the Collateral and Bank shall receive the fee set forth in
Section 2.5(b) hereof.
5. REPRESENTATIONS AND WARRANTIES
Borrowers, jointly and severally, represents and warrants as follows:
5.1. Due Organization and Qualification. Borrower and each Subsidiary
is a corporation or limited liability company, duly existing and in good
standing under the laws of its state of organization and qualified and licensed
to do business in, and is in good standing in, any state in which the conduct of
its business or its ownership of property requires that it be so qualified.
Xxxxxxx Central, Inc. and Script Systems, Inc. are inactive corporations that do
not have any employees, assets, contract rights, other property or obligations.
5.2. Due Authorization; No Conflict. The execution, delivery, and
performance of the Loan Documents are within Borrowers' powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in any Borrower's Articles/Certificate of Organization,
Operating Agreement, Articles/Certificate of Incorporation or Bylaws as
applicable, nor will they constitute an event of default under any material
agreement to which a Borrower is a party or by which a Borrower is bound. Except
as set forth in Schedule 5.2, no Borrower is 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. No Prior Encumbrances. Each Borrower has good and indefeasible
title to the Collateral, free and clear of Liens, except for Permitted Liens.
5.4. Bona Fide Eligible Accounts. The Eligible Accounts are bona fide
existing obligations. The service or property giving rise to such Eligible
Accounts has been performed or delivered to the account debtor or to the account
debtor's agent for immediate shipment to and unconditional acceptance by the
account debtor. No Borrower has received notice of actual or imminent Insolvency
Proceeding of any account debtor whose accounts are included in any Borrowing
Base Certificate as an Eligible Account.
5.5. Merchantable Inventory. All Inventory is in all material respects
of good and marketable quality, free from all material defects.
5.6. Intellectual Property. Except as set forth in Schedule 5.6,
Borrowers are the sole owners of the Intellectual Property Collateral, except
for non-exclusive licenses granted by a 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 and Mask Works 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 Borrowers of the security interest granted
hereby or for the execution, delivery or performance of Loan Documents by
Borrowers in the United States or (ii) for the perfection in the United States
or the exercise by Bank of its rights and remedies hereunder.
5.7. Name; Location of Chief Executive Office. Except as disclosed in
the Schedule, Borrowers have not done business and will not without at least
thirty (30) days prior written notice to Bank do business under any name other
than that specified on the signature page hereof. The chief executive office of
all of the Borrowers is located at the address indicated in Section 10 hereof.
5.8. Litigation. Except as set forth in the Schedule, there are no
actions or proceedings pending, or, to Borrowers' 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 Borrowers' interest or Bank's security interest in the
Collateral
5.9. No Material Adverse Change in Financial Statements. All
consolidated financial statements related to Borrowers and any Subsidiary that
have been delivered by Borrowers to Bank fairly present in all material respects
Borrowers' consolidated financial condition as of the date thereof and
Borrowers' consolidated results of operations for the period then ended. There
has not been a material adverse change in the consolidated financial condition
of Borrowers since the date of the most recent of such financial statements
submitted to Bank on or about the Closing Date.
5.10. Solvency. The fair saleable value of Borrowers' assets
(including goodwill minus disposition costs) exceeds the fair value of its
liabilities; the Borrowers are not left with unreasonably small capital after
the transactions contemplated by this Agreement; and Borrowers are able to pay
their debts (including trade debts) as they mature.
5.11. Regulatory Compliance. Borrowers 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 a Borrower's failure to
comply with ERISA that is reasonably likely to result in a Borrower incurring
any liability that could have a Material Adverse Effect. No Borrower is an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940. No Borrower is 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 G, T and U of the Board of Governors of the Federal
Reserve System). Each Borrower has complied with all the provisions of the
Federal Fair Labor Standards Act. No Borrower has violated any statutes, laws,
ordinances or rules applicable to it, violation of which could have a Material
Adverse Effect.
5.12. Environmental Condition. None of Borrowers' or any Subsidiary's
properties or assets has ever been used by any Borrower or any Subsidiary or, to
the best of Borrowers' 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 accordance with applicable
law; to the best of Borrowers' knowledge, none of Borrowers' or Subsidiaries'
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 any Borrower or any Subsidiary; and neither any 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 any Borrower or any
Subsidiary resulting in the release, or other disposition of hazardous waste or
hazardous substances into the environment.
5.13. Taxes. Borrowers and each Subsidiary have filed or caused to be
filed all tax returns required to be filed on a timely basis, and has paid, or
has made adequate provision for the payment of, all taxes reflected therein.
5.14. Subsidiaries. No Borrower owns any stock, partnership interest
or other equity securities or interests of any Person, except for Permitted
Investments.
5.15. Government Consents. Borrowers and each Subsidiary have each
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 Borrowers' business as currently
conducted.
5.16. Full Disclosure. No representation, warranty or other statement
made by Borrowers in any certificate or written statement furnished to Bank
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.
6. AFFIRMATIVE COVENANTS
Borrowers, jointly and severally, covenant and agree that, until
payment in full of all outstanding Obligations, and for so long as Bank may have
any commitment to make a Credit Extension hereunder, Borrowers shall do all of
the following:
6.1. Good Standing.
Each Borrower shall maintain its and each of its Subsidiaries'
existence as a corporation or limited liability company, as the case may be, and
good standing in its jurisdiction of organization and maintain qualification in
each jurisdiction in which the failure to so qualify could have a Material
Adverse Effect. Each Borrower shall maintain, and shall cause each of its
Subsidiaries to maintain, to the extent consistent with prudent management of
each Borrowers' business, in force all licenses, approvals and agreements, the
loss of which could have a Material Adverse Effect.
6.2. Government Compliance.
Each 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. Each 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 Bank's
Lien on the Collateral.
6.3. Financial Statements, Reports, Certificates. Borrowers shall
deliver to Bank: (a) as soon as available, but in any event within thirty (30)
days after the end of each month (other than a month which is the last month of
a fiscal quarter in which case subparagraph (b) below shall govern), a company
prepared consolidated balance sheet and income statement covering Borrowers'
consolidated operations during such period, in a form and certified by an
officer of Borrower reasonably acceptable to Bank; (b) as soon as available, but
in any event within forty-five (45) days after the end of each calendar quarter,
a Company prepared consolidated balance sheet and income statement covering
Borrowers' consolidated operations during such period, in a form and certified
by an officer of Borrowers; (c) as soon as available, but in any event within
ninety (90) days after the end of each Borrowers' fiscal year, audited
consolidated financial statements of Borrowers 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 Bank; (d) within one (1) day of filing, copies of all statements,
reports and notices sent or made available generally by each 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 any 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; and (e) such budgets, sales projections, operating plans or
other financial information as Bank may reasonably request from time to time.
Within thirty (30) days after the last day of each month, Borrowers
shall deliver to Bank a Borrowing Base Certificate signed by a Responsible
Officer in substantially the form of Exhibit C hereto, together with aged
listings of accounts receivable and accounts payable.
Borrowers shall deliver to Bank with the monthly or quarterly
financial statements a Compliance Certificate signed by a Responsible Officer in
substantially the form of Exhibit D hereto.
Borrowers shall deliver weekly transaction reports, and each time an
Advance is requested, for the purpose of reporting sales, audit memos and other
collateral adjustments.
Bank shall have a right from time to time hereafter to audit Accounts
of the Borrowers at Borrowers' expense, as set forth in Section 2.5(b) hereof.
Initially it is intended that such audit will be quarterly. The first Advance
shall not be made until completion of an audit of Borrowers' Accounts.
6.4. Inventory; Returns. Borrowers shall keep all Inventory in good
and marketable condition, free from all material defects. Returns and
allowances, if any, as between any Borrower and its account debtors shall be on
the same basis and in accordance with the usual customary practices of
Borrowers, as they exist at the time of the execution and delivery of this
Agreement. Borrowers shall promptly notify Bank of all returns and recoveries
and of all disputes and claims, where the return, recovery, dispute or claim
involves more than One Hundred Thousand Dollars ($100,000).
6.5. Taxes. Borrowers 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 will
execute and deliver to Bank, on demand, appropriate certificates attesting to
the payment or deposit thereof; and Borrowers 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, and will, upon request, furnish Bank with proof
satisfactory to Bank indicating that a Borrower or a Subsidiary has made such
payments or deposits; provided that such 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 Borrowers and (iii) no lien other than a Permitted Lien
results.
6.6. Insurance.
Borrowers, at their 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 Borrowers' business is
conducted on the date hereof. Borrowers shall also maintain insurance relating
to Borrowers' ownership and use of the Collateral in amounts and of a type that
are customary to businesses similar to Borrowers'.
All such policies of insurance shall be in such form, with such
companies, and in such amounts as are reasonably satisfactory to Bank. All such
policies of property insurance shall contain a lender's loss payable
endorsement, in a form satisfactory to Bank, showing Bank as an additional loss
payee thereof and all liability insurance policies shall show the Bank as an
additional insured, and shall specify that the insurer must give at least twenty
(20) days notice to Bank before canceling its policy for any reason. At Bank's
request, Borrowers shall deliver to Bank 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 Bank, be payable to Bank
to be applied on account of the Obligations.
6.7. Principal Depository. Borrowers shall each maintain their
principal depository and operating accounts with Bank. Borrowers may maintain a
money market and xxxxx cash account, provided they are subject to an Account
Control Agreement agreeable to Bank. (b) Borrowers shall open and maintain with
Bank an account (the "Collateral Account") into which funds received by
Borrowers from account debtors shall immediately be deposited. Borrowers shall
direct all account debtors to mail or deliver all checks or other forms of
payment for amounts owing to Borrowers to a post office box designated by Bank,
over which Bank shall have exclusive and unrestricted access. Bank shall collect
the mail delivered to such post office box, open such mail, and endorse and
credit all items to the Collateral Account. Borrowers shall direct all account
debtors or other persons owing money to any Borrower who makes payments by
electronic transfer of funds to wire such funds directly to the Collateral
Account. Borrowers shall hold in trust for Bank all amounts that any Borrower
receives despite the directions to make payments to the post office box or
Collateral Account, and immediately deliver such payments to Bank in their
original form as received from the account debtor with proper endorsements for
deposit into the Collateral Account. Borrower irrevocably authorizes Bank to
transfer to the Collateral Account any funds that have been deposited into any
other accounts or that Bank has otherwise received. Borrowers shall not
establish or maintain any accounts with any person other than Bank except for
accounts opened in the ordinary course of business from which all funds are
transferred on a daily basis to the Collateral Account or as set forth in
subsection (a) above. Bank shall have all right, title and interest in all of
the items from time to time in the Collateral Account and their proceeds. Bank
shall have the right from time to time in its sole discretion to apply all
amounts in the Collateral Account against outstanding Obligations of Borrowers
and collections will be applied three (3) Business Days after receipt. At such
time, neither Borrower nor any person claiming through Borrowers shall have any
right in or control over the use of, or any right to withdraw any amount from
the Collateral Account, which shall be under the sole control of Bank.
6.9. Profitability.
Borrowers on a consolidated basis shall have minimum Net Income or
maximum Net Loss for each quarter, as set forth below:
Time Period Maximum Net Loss or
Minimum Net Income
July 1, 1999 - Sept. 30, 1999 ($4,000,000)
Oct. 1, 1999 - Dec. 31, 1999 ($2,000,000)
January 1, 2000 - March 31, 2000 ($1,500,000)
Thereafter $1.00
6.9 Further Assurances. At any time and from time to time Borrowers
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Bank to effect the purposes of this Agreement.
6.10 Registration of Intellectual Property Rights. Borrowers shall
register or cause to be registered (to the extent not already registered) with
the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, those intellectual property rights listed on Exhibits A,
B, C and D to the Intellectual Property Security Agreement delivered to Bank by
Borrowers in connection with this Agreement within thirty (30) days of the date
of this Agreement. Borrowers 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 developed or
acquired by Borrowers 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, C and D. (b) Borrowers shall execute and deliver such
additional instruments and documents from time to time as Bank shall reasonably
request to perfect Bank's security interest in the Intellectual Property
Collateral. (c) Borrowers shall (i) protect, defend and maintain the validity
and enforceability of the Trademarks, Patents, Copyrights, and Mask Works, (ii)
use its best efforts to detect infringements of the Trademarks, Patents,
Copyrights and Mask Works and promptly advise Bank in writing of material
infringements detected and (iii) not allow any Trademarks, Patents, Copyrights,
or Mask Works to be abandoned, forfeited or dedicated to the public without the
written consent of Bank, which shall not be unreasonably withheld, unless Bank
determines that reasonable business practices suggest that abandonment is
appropriate. (d) Bank shall have the right, but not the obligation, to take, at
Borrowers' sole expense, any actions that Borrowers is required under this
Section 6.10 to take but which Borrower fails to take, after fifteen (15) days'
notice to Borrower. Borrower shall reimburse and indemnify Bank for all
reasonable costs and reasonable expenses incurred in the reasonable exercise of
its rights under this Section 6.10.
7. NEGATIVE COVENANTS
Borrowers (jointly and severally) covenant and agree that, so long as
any Advance hereunder shall be available and until payment in full of the
outstanding Obligations or for so long as Bank may have any commitment to make
any Advances, no Borrower will do any of the following without the Bank's prior
written consent:
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).
No Borrower will, without at least thirty (30) days prior written notification
to Bank, relocate its chief executive office or add any new offices or business
locations.
7.3. Mergers or Acquisitions. Merge or consolidate, or permit any of
its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock, assets or property of another Person;
provided, however, such merger or acquisition shall be permitted without the
Bank's consent if: (a) (i) any stock or convertible securities (on an as
converted basis) issued in such transaction by Borrowers is less than thirty
percent (30%) of the outstanding capital stock of the Borrowers prior to such
closing; or (ii) if Borrowers are paying less than $2,000,000 in consideration
for such transaction (provided, however, if Borrowers on a consolidated basis
for the immediately preceding fiscal quarter prior to such transaction have a
ratio of Quick Assets to Current Liabilities of at least 1.25 to 1.00, such
threshold shall be $5,000,000); and. (b) Such transaction will not cause an
Event of Default hereunder, including, but not limited to a breach of a
financial covenant hereunder.
Notwithstanding anything herein to the contrary, Bank consents to the
acquisition of MCS, Inc. by Borrowers in accordance with Agreement and Plan of
Merger dated May 26, 1999; provided, MCS must be made a co-Borrower hereunder at
the time of such acquisition.
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
or payment on account of or in redemption, retirement or purchase of any capital
stock, except as set forth on Schedule 7.6. Notwithstanding anything herein to
the contrary, no Borrower shall transfer any assets, property or rights to, or
on behalf of, or guarantee any obligations of Xxxxxxx Central, Inc. or Script
Systems, Inc.
7.7. Investments. 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 Borrowers
except for transactions that are in the ordinary course of Borrowers' business,
upon fair and reasonable terms that are no less favorable to Borrowers than
would be obtained in an arm's length transaction with a non-affiliated Person.
7.9. Subordinated Debt. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Bank's prior written consent.
7.10. Inventory. Store the Inventory with a bailee, warehouseman, or
similar party unless Bank has received a pledge of any warehouse receipt
covering such Inventory. Except for Inventory sold in the ordinary course of
business and except for such other locations as Bank may approve in writing,
Borrowers shall keep the Inventory only at the location set forth in Section 10
hereof and such other locations of which Borrowers give Bank prior written
notice and as to which Borrowers sign and file a financing statement where
needed to perfect Bank'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 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 Bank'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 Borrowers under this Agreement:
8.1. Payment Default. If any Borrower fails to pay, when due, any of
the Obligations.
8.2. Covenant Default. (a) If any Borrower fails to perform any
obligation under Sections 6.3, 6.6, 6.7, 6.8, 6.9 or 6.10, or violates any of
the covenants contained in Article 7 of this Agreement, or
(b) If any 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 any Borrower and Bank 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 thirty (30) 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 Borrowers be cured
within such ten (10) day period, and such default is likely to be cured within a
reasonable time, then Borrowers 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, or condition (financial or otherwise) of any
Borrower, or (ii) is, based upon a reasonable standard, 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 Bank's security interests in the
Collateral;
8.4. Attachment. If any material portion of any 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 ten (10) days, or if any 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 any
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of any 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 ten (10) days after any 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 any Borrower (provided that no Advances will be required to be made during
such cure period);
8.5. Insolvency. If any Borrower becomes insolvent, or if an
Insolvency Proceeding is commenced by any Borrower, or if an Insolvency
Proceeding is commenced against any Borrower and is not dismissed or stayed
within 30 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
any 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 ($100,000) or that could have a Material Adverse Effect;
8.7. Subordinated Debt. If any Borrower makes any payment on account
of Subordinated Debt, except to the extent such payment is allowed under any
subordination agreement entered into with Bank;
8.8. Judgments. If a judgment or judgments for the payment of money in
an amount, individually or in the aggregate, of at least One Hundred Thousand
Dollars ($100,000) shall be rendered against any Borrower and shall remain
unsatisfied and unstayed for a period of thirty (30) days (provided that no
Advances will be made prior to the satisfaction or stay of such judgment);
8.10. 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 Bank by any
Borrower or any Person acting on any Borrower's behalf pursuant to this
Agreement or to induce Bank to enter into this Agreement or any other Loan
Document.
9. BANK'S RIGHTS AND REMEDIES
9.1. Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default, Bank 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 Borrowers:
(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 Bank);
(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
Bank;
(c) Settle or adjust disputes and claims directly with account debtors
for amounts, upon terms and in whatever order that Bank reasonably considers
advisable;
(d) Without notice to or demand upon any Borrower, make such payments
and do such acts as Bank considers necessary or reasonable to protect its
security interest in the Collateral. Borrowers agree to assemble the Collateral
if Bank so requires, and to make the Collateral available to Bank as Bank may
designate. Borrowers authorize Bank 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 Bank'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 Borrowers' premises, Borrowers hereby grant Bank a license to
enter such premises and to occupy the same, without charge in order to exercise
any of Bank's rights or remedies provided herein, at law, in equity, or
otherwise;
(e) Without notice to Borrowers set off and apply to the Obligations
any and all (i) balances and deposits of any Borrower held by Bank, or (ii)
indebtedness at any time owing to or for the credit or the account of any
Borrower held by Bank;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Collateral. Bank 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, any 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 Bank's exercise of its rights under this
Section 9.1, any Borrower's rights under all licenses and all franchise
agreements shall inure to Bank'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 Borrowers' premises) as Bank determines is
commercially reasonable, and apply the proceeds thereof to the Obligations in
whatever manner or order it deems appropriate;
(h) Bank 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
Borrowers.
(j) Bank shall have a non-exclusive, royalty-free license to use the
Intellectual Property Collateral to the extent reasonably necessary to permit
Bank 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, each Borrower hereby irrevocably
appoints Bank (and any of Bank's designated officers, or employees) as any
Borrowers' true and lawful attorney to: (a) send requests for verification of
Accounts or notify account debtors of Bank's security interest in the Accounts;
(b) endorse any Borrowers' name on any checks or other forms of payment or
security that may come into Bank's possession; (c) sign any Borrowers' 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 any Borrowers' policies of insurance; and (e) settle
and adjust disputes and claims respecting the accounts directly with account
debtors, for amounts and upon terms which Bank determines to be reasonable; (f)
to modify, in its sole discretion, any intellectual property security agreement
entered into between any Borrower and Bank without first obtaining any
Borrowers' 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,
Trademarks, Mask Works acquired by any Borrower after the execution hereof or to
delete any reference to any right, title or interest in any Copyrights, Patents,
Trademarks, or Mask Works in which any 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 any Borrower where permitted by law; and
(h) to transfer the Intellectual Property Collateral into the name of Bank or a
third party to the extent permitted under the California Uniform Commercial
Code, provided Bank may exercise such power of attorney to sign the name of any
Borrower on any of the documents described in Section 4.2 regardless of whether
an Event of Default has occurred. The appointment of Bank as each of Borrower's
attorney in fact, and each and every one of Bank's rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have been
fully repaid and performed and Bank's obligation to provide advances hereunder
is terminated.
9.3. Accounts Collection. Upon the occurrence and during the
continuance of an Event of Default, Bank may notify any Person owing funds to
any Borrower of Bank's security interest in such funds and verify the amount of
such Account. Borrowers shall collect all amounts owing to any Borrower for
Bank, receive in trust all payments as Bank's trustee, and if requested or
required by Bank, immediately deliver such payments to Bank in their original
form as received from the account debtor, with proper endorsements for deposit.
9.4. Bank Expenses. If any 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 Bank 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 Bank deems necessary to protect
Bank from the exposure created by such failure; or (c) obtain and maintain
insurance policies of the type discussed in Section 6.6 of this Agreement, and
take any action with respect to such policies as Bank deems prudent. Any amounts
so paid or deposited by Bank shall constitute Bank 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 Bank shall not constitute an agreement by Bank to make similar payments in
the future or a waiver by Bank of any Event of Default under this Agreement.
9.5. Bank's Liability for Collateral. So long as Bank complies with
reasonable banking practices, Bank 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.
9.6. Remedies Cumulative. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank 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 Bank of one right
or remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on any Borrower's part shall be deemed a continuing waiver. No delay by
Bank shall constitute a waiver, election, or acquiescence by it. No waiver by
Bank shall be effective unless made in a written document signed on behalf of
Bank and then shall be effective only in the specific instance and for the
specific purpose for which it was given.
9.7. Demand; Protest. Each 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 Bank on which any 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 telefacsimile to Borrowers or to Bank, as the case may be, at its
addresses set forth below:
If to Borrowers: Xxxxxxx Central Holdings, Inc.
0000 Xxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attn.: Xxxxxx Xxxx
FAX: 000-000-0000
If to Bank: Silicon Valley Bank
0000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn.: Xxxxxx Xxxx
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 Georgia, without regard to principles of
conflicts of law. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWERS
AND BANK 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. THE BORROWERS AND THE BANK ALSO AGREE THAT ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
OR TO ENFORCE ANY JUDGMENT OBTAINED AGAINST ANY BORROWER IN CONNECTION WITH THIS
AGREEMENT OR SUCH OTHER LOAN DOCUMENT, MAY BE BROUGHT BY THE BANK OR BORROWERS
IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF THE STATE IN WHICH BANK'S
ADDRESS SHOWN IN SECTION 10 ABOVE IS LOCATED, OR IN ANY OTHER COURT TO THE
JURISDICTION OF WHICH SUCH BORROWER OR ANY OF ITS PROPERTY IS OR MAY BE SUBJECT.
EACH OF THE BORROWERS AND THE BANK IRREVOCABLY SUBMITS TO THE JURISDICTION OF
THE AFORESAID STATE AND FEDERAL COURTS, AND IRREVOCABLY WAIVES ANY PRESENT OR
FUTURE OBJECTION TO VENUE IN ANY SUCH COURT, AND ANY PRESENT OR FUTURE CLAIM
THAT ANY SUCH COURT IS AN INCONVENIENT FORUM, IN CONNECTION WITH ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
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 any Borrower without Bank's prior written consent, which
consent may be granted or withheld in Bank's sole discretion. Bank shall have
the right without the consent of any Borrower to sell, transfer, negotiate, or
grant participation in all or any part of, or any interest in, Bank's
obligations, rights and benefits hereunder. Bank shall provide notice of such
transfer to Borrowers in a reasonable time after the occurrence thereof.
12.2. Indemnification. Borrowers, jointly and severally, shall,
indemnify ,defend, protect and hold harmless Bank 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 Bank Expenses in any
way suffered, incurred, or paid by Bank as a result of or in any way arising out
of, following, or consequential to transactions between Bank and any Borrower
whether under the Loan Documents, or otherwise (including without limitation
reasonable attorneys fees and expenses), except for losses caused by Bank'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 Borrowers and Bank. 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 Borrowers to indemnify Bank
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 Bank have run.
12.8. Joint and Several. All obligations of Borrowers hereunder shall
be joint and several and all reference to "Borrower" or "Borrowers" hereunder
shall be deemed to refer to both Borrowers, jointly and individually. The
Borrowers acknowledge that all Advances hereunder shall inure to the benefit of
all Borrowers. The Obligations shall be deemed to include all joint or
individual indebtedness or obligations, contingent or otherwise, of each
Borrower owed to the Bank, which Obligations shall all be secured by the
Collateral.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, under seal, as of the date first above written.
XXXXXXX CENTRAL HOLDINGS, INC.
By:
Title:
[CORPORATE SEAL]
SC HOLDINGS, INC.
By:
Title:
[CORPORATE SEAL]
XXXXXXX CENTRAL NATIONAL, LLC
By: (SEAL)
Title:
(SIGNATURES CONTINUED ON THE FOLLOWING PAGE.)
(SIGNATURES CONTINUED FROM THE PREVIOUS PAGE.)
XXXXXXX CENTRAL CONSULTING, INC.
By:
Title:
[CORPORATE SEAL]
XXXXXXX ACQUISITION CORPORATION
By:
Title:
[CORPORATE SEAL]
SILICON VALLEY BANK
By:
Title:
EXHIBIT A
The Collateral consists of all of Borrowers' right, title and interest
in and to the following:
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;
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 Borrowers' 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;
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;
All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrowers
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrowers, 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 Borrowers;
All documents, cash, deposit accounts, securities, securities
entitlements, securities accounts, investment property, financial assets,
letters of credit, certificates of deposit, instruments and chattel paper now
owned or hereafter acquired and Borrowers' Books relating to the foregoing;
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
All Borrowers' 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
Transaction Report and Loan Request Form
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrowers: Xxxxxxx Central Holdings, Inc., SC Holdings, Inc., Xxxxxxx Central
National, LLC, Xxxxxxx Central Consulting, Inc., and Xxxxxxx Acquisition
Corporation
Commitment Amount: $5,000,000
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of ______ $__________
2. Additions (please explain on reverse)$__________
3. TOTAL ACCOUNTS RECEIVABLE $ $__________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
1. Amounts over 90 days due $__________
2. Balance of 50% over 90 day accounts $__________
3. Concentration Limits $__________
4. Foreign Accounts $__________
5. Governmental Accounts $__________
6. Contra Accounts $__________
7. Promotion or Demo Accounts $__________
8. Intercompany/Employee Accounts $__________
9. Other (please explain on reverse) $__________
10. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $__________
11. Eligible Accounts (#3 minus #13) $__________
12. LOAN VALUE OF ACCOUNTS (75% of #14) $__________
BALANCES
1. Maximum Loan Amount $__________
2. Total Funds Available [Lesser of #16 or #15] $__________
3. Present balance owing on Line of Credit $__________
4. Outstanding under Sublimits ( ) $__________
5. RESERVE POSITION (#17 minus #18 and #19) $__________
The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and Silicon Valley Bank.
COMMENTS:
===========================================
BANK USE ONLY
Received By:____________________
Date:________________
Reviewed By:____________________
Compliance Status: Yes / No
===========================================
XXXXXXX CENTRAL HOLDINGS, INC.
SC HOLDINGS, INC.
XXXXXXX CENTRAL NATIONAL, LLC
XXXXXXX CENTRAL CONSULTING, INC.
XXXXXXX ACQUISITION
By: ____________________________
Authorized Signer
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: Xxxxxxx Central Holdings, Inc., SC Holdings, Inc., Xxxxxxx Central
National, LLC, Xxxxxxx Central Consulting, Inc., and Xxxxxxx
Acquisition Corporation
The undersigned authorized Officer and Member of XXXXXXX CENTRAL
HOLDINGS, INC., SC HOLDINGS, INC., XXXXXXX CENTRAL NATIONAL, LLC, XXXXXXX
CENTRAL CONSULTING, INC., AND XXXXXXX ACQUISITION CORPORATION hereby certifies
that in accordance with the terms and conditions of the Loan and Security
Agreement between each of the Borrowers and Bank (the "Agreement"), (i) each of
the Borrowers is in complete compliance for the period ending with all required
covenants except as noted below and (ii) all representations and warranties of
each of the Borrowers stated in the Agreement are true and correct in all
material respects as of the date hereof. Attached herewith are the required
documents supporting the above certification. The Officer and Member further
certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) and are consistently applied from one period to the
next except as explained in an accompanying letter or footnotes. The Officer and
Member expressly acknowledges that no borrowings may be requested by the
Borrower at any time or date of determination that Borrower is not in compliance
with any of the terms of the Agreement, and that such compliance is determined
not just at the date this certificate is delivered.
Please indicate compliance status by circling Yes/No under "Complies"
column.
Reporting Covenant Required Complies
Monthly financial statements Monthly within 30 days Yes No
Quarterly financial statements Quarterly within 45 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
10Q and 10K Within 1 day after filing with the SEC Yes No
A/R and A/P Monthly within 30 days Yes No
Borrowing Bank Certificate Monthly within 30 days Yes No
Financial Covenant Required Actual Complies
Maintain on a Quarterly Basis:
Minimum Net Income or
Maximum Net Loss Q3 99($4,000,000) $________ Yes No
Q4 99($2,000,000)
Q1 00($1,500,000)
Thereafter $1.00
===========================================
BANK USE ONLY
Received By:____________________
Date:________________
Reviewed By:____________________
Compliance Status: Yes / No
===========================================
Comments Regarding Exceptions:
Sincerely,
_______________________ Date:_______________
Signature
Title
DISBURSEMENT REQUEST AND AUTHORIZATION
Borrowers: XXXXXXX CENTRAL HOLDINGS, INC.
LOAN TYPE. This is a Variable Rate, Revolving Line of Credit of a principal
amount up to $5,000,000
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for business.
SPECIFIC PURPOSE. The specific purpose of this loan is: working capital
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Bank's conditions for making the loan have been
satisfied. Please disburse the loan proceeds as follows:
Revolving Line
Amount paid to Borrower directly: $__________
Undisbursed Funds $__________
Principal $__________
CHARGES PAID IN CASH. Borrowers have paid or will pay in cash as agreed the
following charges:
Prepaid Finance Charges Paid in Cash: $__________
$25,000 Loan Fee
$__________ Accounts Receivables Audit
Other Charges Paid in Cash: $__________
$__________ UCC Search Fees
$__________ UCC Filing Fees
$__________ Outside Counsel Fees and Expenses
Total Charges Paid in Cash
AUTOMATIC PAYMENTS. Borrower hereby authorizes Bank automatically to deduct from
Borrower's account numbered the amount of any loan payment. If the funds in the
account are insufficient to cover any payment, Bank shall not be obligated to
advance funds to cover the payment.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO BANK THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION AS
DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO BANK. THIS
AUTHORIZATION IS DATED AS OF SEPTEMBER 3, 1999.
BORROWER:
------------------------------------
Authorized Signature
AGREEMENT TO PROVIDE INSURANCE
Grantor: XXXXXXX CENTRAL HOLDINGS, INC.,
Bank: Silicon Valley Bank
INSURANCE REQUIREMENTS. XXXXXXX CENTRAL HOLDINGS, INC. ("Grantor")
understands that insurance coverage is required in connection with the extending
of a loan or the providing of other financial accommodations to Grantor by Bank.
These requirements are set forth in the Loan Documents. The following minimum
insurance coverages must be provided on the following described collateral (the
"Collateral"):
Collateral: All Inventory, Equipment and Fixtures.
Type: All risks, including fire, theft and liability.
Amount: Full insurable value.
Basis: Replacement value.
Endorsements: Loss payable clause to Bank with stipulation that
coverage will not be cancelled or diminished
without a minimum of twenty (20) days' prior
written notice to Bank.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance
company Grantor may choose that is reasonably acceptable to Bank. Grantor
understands that credit may not be denied solely because insurance was not
purchased through Bank.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Bank, on or
before closing, evidence of the required insurance as provided above, with an
effective date of September 3, 1999, or earlier. Grantor acknowledges and agrees
that if Grantor fails to provide any required insurance or fails to continue
such insurance in force, Bank may do so at Grantor's expense as provided in the
Loan and Security Agreement. The cost of such insurance, at the option of Bank,
shall be payable on demand or shall be added to the indebtedness as provided in
the security document. GRANTOR ACKNOWLEDGES THAT IF BANK SO PURCHASES ANY SUCH
INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE
TO THE COLLATERAL, UP TO THE BALANCE OF THE LOAN; HOWEVER, GRANTOR'S EQUITY IN
THE COLLATERAL MAY NOT BE INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE
ANY PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE
REQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral,
Grantor authorizes Bank to provide to any person (including any insurance agent
or company) all information Bank deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT
TO PROVIDE INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED SEPTEMBER
3, 1999.
GRANTOR:
x______________________________
Authorized Member
================================================================================
FOR BANK USE ONLY
INSURANCE VERIFICATION
DATE: PHONE:
AGENT'S NAME:
INSURANCE COMPANY:
POLICY NUMBER:
EFFECTIVE DATES:
COMMENTS:
================================================================================
AGREEMENT TO PROVIDE INSURANCE
Grantor: SC HOLDING, INC.
Bank: Silicon Valley Bank
INSURANCE REQUIREMENTS. SC HOLDING, INC. ("Grantor") understands that
insurance coverage is required in connection with the extending of a loan or the
providing of other financial accommodations to Grantor by Bank. These
requirements are set forth in the Loan Documents. The following minimum
insurance coverages must be provided on the following described collateral (the
"Collateral"):
Collateral: All Inventory, Equipment and Fixtures.
Type: All risks, including fire, theft and liability.
Amount: Full insurable value.
Basis: Replacement value.
Endorsements: Loss payable clause to Bank with stipulation that
coverage will not be cancelled or diminished
without a minimum of twenty (20) days' prior
written notice to Bank.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance
company Grantor may choose that is reasonably acceptable to Bank. Grantor
understands that credit may not be denied solely because insurance was not
purchased through Bank.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Bank, on or
before closing, evidence of the required insurance as provided above, with an
effective date of September 3, 1999, or earlier. Grantor acknowledges and agrees
that if Grantor fails to provide any required insurance or fails to continue
such insurance in force, Bank may do so at Grantor's expense as provided in the
Loan and Security Agreement. The cost of such insurance, at the option of Bank,
shall be payable on demand or shall be added to the indebtedness as provided in
the security document. GRANTOR ACKNOWLEDGES THAT IF BANK SO PURCHASES ANY SUCH
INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE
TO THE COLLATERAL, UP TO THE BALANCE OF THE LOAN; HOWEVER, GRANTOR'S EQUITY IN
THE COLLATERAL MAY NOT BE INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE
ANY PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE
REQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral,
Grantor authorizes Bank to provide to any person (including any insurance agent
or company) all information Bank deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT
TO PROVIDE INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED SEPTEMBER
3, 1999.
GRANTOR:
x______________________________
Authorized Member
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FOR BANK USE ONLY
INSURANCE VERIFICATION
DATE: PHONE:
AGENT'S NAME:
INSURANCE COMPANY:
POLICY NUMBER:
EFFECTIVE DATES:
COMMENTS:
================================================================================
AGREEMENT TO PROVIDE INSURANCE
Grantor: XXXXXXX CENTRAL NATIONAL, LLC
Bank: Silicon Valley Bank
INSURANCE REQUIREMENTS. XXXXXXX CENTRAL NATIONAL, LLC. ("Grantor")
understands that insurance coverage is required in connection with the extending
of a loan or the providing of other financial accommodations to Grantor by Bank.
These requirements are set forth in the Loan Documents. The following minimum
insurance coverages must be provided on the following described collateral (the
"Collateral"):
Collateral: All Inventory, Equipment and Fixtures.
Type: All risks, including fire, theft and liability.
Amount: Full insurable value.
Basis: Replacement value.
Endorsements: Loss payable clause to Bank with stipulation that
coverage will not be cancelled or diminished
without a minimum of twenty (20) days' prior
written notice to Bank.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance
company Grantor may choose that is reasonably acceptable to Bank. Grantor
understands that credit may not be denied solely because insurance was not
purchased through Bank.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Bank, on or
before closing, evidence of the required insurance as provided above, with an
effective date of September 3, 1999, or earlier. Grantor acknowledges and agrees
that if Grantor fails to provide any required insurance or fails to continue
such insurance in force, Bank may do so at Grantor's expense as provided in the
Loan and Security Agreement. The cost of such insurance, at the option of Bank,
shall be payable on demand or shall be added to the indebtedness as provided in
the security document. GRANTOR ACKNOWLEDGES THAT IF BANK SO PURCHASES ANY SUCH
INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE
TO THE COLLATERAL, UP TO THE BALANCE OF THE LOAN; HOWEVER, GRANTOR'S EQUITY IN
THE COLLATERAL MAY NOT BE INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE
ANY PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE
REQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral,
Grantor authorizes Bank to provide to any person (including any insurance agent
or company) all information Bank deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT
TO PROVIDE INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED SEPTEMBER
3, 1999.
GRANTOR:
x______________________________
Authorized Member
================================================================================
FOR BANK USE ONLY
INSURANCE VERIFICATION
DATE: PHONE:
AGENT'S NAME:
INSURANCE COMPANY:
POLICY NUMBER:
EFFECTIVE DATES:
COMMENTS:
================================================================================
AGREEMENT TO PROVIDE INSURANCE
Grantor: XXXXXXX CENTRAL CONSULTING, INC.
Bank: Silicon Valley Bank
INSURANCE REQUIREMENTS. XXXXXXX CENTRAL CONSULTING, INC. ("Grantor")
understands that insurance coverage is required in connection with the extending
of a loan or the providing of other financial accommodations to Grantor by Bank.
These requirements are set forth in the Loan Documents. The following minimum
insurance coverages must be provided on the following described collateral (the
"Collateral"):
Collateral: All Inventory, Equipment and Fixtures.
Type: All risks, including fire, theft and liability.
Amount: Full insurable value.
Basis: Replacement value.
Endorsements: Loss payable clause to Bank with stipulation that
coverage will not be cancelled or diminished
without a minimum of twenty (20) days' prior
written notice to Bank.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance
company Grantor may choose that is reasonably acceptable to Bank. Grantor
understands that credit may not be denied solely because insurance was not
purchased through Bank.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Bank, on or
before closing, evidence of the required insurance as provided above, with an
effective date of September 3, 1999, or earlier. Grantor acknowledges and agrees
that if Grantor fails to provide any required insurance or fails to continue
such insurance in force, Bank may do so at Grantor's expense as provided in the
Loan and Security Agreement. The cost of such insurance, at the option of Bank,
shall be payable on demand or shall be added to the indebtedness as provided in
the security document. GRANTOR ACKNOWLEDGES THAT IF BANK SO PURCHASES ANY SUCH
INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE
TO THE COLLATERAL, UP TO THE BALANCE OF THE LOAN; HOWEVER, GRANTOR'S EQUITY IN
THE COLLATERAL MAY NOT BE INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE
ANY PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE
REQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral,
Grantor authorizes Bank to provide to any person (including any insurance agent
or company) all information Bank deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT
TO PROVIDE INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED SEPTEMBER
3, 1999.
GRANTOR:
x______________________________
Authorized Member
================================================================================
FOR BANK USE ONLY
INSURANCE VERIFICATION
DATE: PHONE:
AGENT'S NAME:
INSURANCE COMPANY:
POLICY NUMBER:
EFFECTIVE DATES:
COMMENTS:
================================================================================
AGREEMENT TO PROVIDE INSURANCE
Grantor: XXXXXXX ACQUISITION CORPORATION
Bank: Silicon Valley Bank
INSURANCE REQUIREMENTS. XXXXXXX ACQUISITION CORPORATION. ("Grantor")
understands that insurance coverage is required in connection with the extending
of a loan or the providing of other financial accommodations to Grantor by Bank.
These requirements are set forth in the Loan Documents. The following minimum
insurance coverages must be provided on the following described collateral (the
"Collateral"):
Collateral: All Inventory, Equipment and Fixtures.
Type: All risks, including fire, theft and liability.
Amount: Full insurable value.
Basis: Replacement value.
Endorsements: Loss payable clause to Bank with stipulation that
coverage will not be cancelled or diminished
without a minimum of twenty (20) days' prior
written notice to Bank.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance
company Grantor may choose that is reasonably acceptable to Bank. Grantor
understands that credit may not be denied solely because insurance was not
purchased through Bank.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Bank, on or
before closing, evidence of the required insurance as provided above, with an
effective date of September 3, 1999, or earlier. Grantor acknowledges and agrees
that if Grantor fails to provide any required insurance or fails to continue
such insurance in force, Bank may do so at Grantor's expense as provided in the
Loan and Security Agreement. The cost of such insurance, at the option of Bank,
shall be payable on demand or shall be added to the indebtedness as provided in
the security document. GRANTOR ACKNOWLEDGES THAT IF BANK SO PURCHASES ANY SUCH
INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE
TO THE COLLATERAL, UP TO THE BALANCE OF THE LOAN; HOWEVER, GRANTOR'S EQUITY IN
THE COLLATERAL MAY NOT BE INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE
ANY PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE
REQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral,
Grantor authorizes Bank to provide to any person (including any insurance agent
or company) all information Bank deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT
TO PROVIDE INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED SEPTEMBER
3, 1999.
GRANTOR:
x______________________________
Authorized Member
================================================================================
FOR BANK USE ONLY
INSURANCE VERIFICATION
DATE: PHONE:
AGENT'S NAME:
INSURANCE COMPANY:
POLICY NUMBER:
EFFECTIVE DATES:
COMMENTS:
================================================================================
SCHEDULE A
LIST OF SUBSIDIARIES
XXXXXXX CENTRAL HOLDINGS, INC., a Delaware corporation ("SCH")
SC HOLDING, INC., a Georgia corporation ("SH")
XXXXXXX CENTRAL NATIONAL, LLC, a Georgia limited liability company ("LLC")
XXXXXXX CENTRAL CONSULTING, INC., a Georgia corporation ("SCC")
XXXXXXX ACQUISITION CORPORATION, a Delaware corporation ("SAC")
SCHEDULE 1.1
Security Agreement between
Mestek, Inc. and Xxxxxxx Central Holdings, Inc.
883222v1
