EXHIBIT 10.47
AMENDED AND RESTATED
LOAN AGREEMENT
This AMENDED AND RESTATED LOAN AGREEMENT (as amended, restated,
supplemented and modified from time to time, the "Loan Agreement") is made as of
the 20th day of April, 1999, by and between: National Wireless Holdings Inc., a
Delaware Corporation having an office at 000 Xxxxx Xxxx Xxx, Xxxxx 000, Xxxx
Xxxxx, XX 00000 ("National"); and Electronic Data Submission Systems, Inc., a
Delaware Corporation having its principal office at 0000 Xxxxxxxxx, Xxxxx 000,
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000 ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower is the successor in interest by merger with
Electronic Data Submission Systems, Inc., a Colorado corporation, and has
assumed all obligations of such predecessor in interest, including the
obligations under that certain Loan Agreement with National dated as of June 9,
1995 (as amended, restated, supplemented and modified through but excluding the
date hereof, the "Original Loan Agreement") and the obligations under the
Borrower Security Agreement dated as of June 9, 1995 (as amended, restated,
supplemented and modified from time to time, the "Borrower Security Agreement");
and
WHEREAS, the Borrower wishes to obtain additional loans from National
up to the aggregate principal sum, including loans made under the Original Loan
Agreement, of up to One Million Eight Hundred Thousand Dollars ($1,800,000), and
National is willing to lend such sum and to make such loans to the Borrower on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and other valuable consideration, the parties hereto agree as
follows:
ARTICLE 1. DEFINITIONS.
Section 1.0. AMENDMENT AND RESTATEMENT.
This Agreement amends and restates in its entirety the Original Loan
Agreement and such Original Loan Agreement shall be consolidated with and into
and superseded by this Agreement, except with respect to the provisions relating
to the grant of a security interest in the "Collateral" (as hereinafter defined)
which provisions shall remain in full force and effect as modified by the
granting provisions contained in this Agreement. Borrower hereby confirms that
it has assumed all covenants, representations and warranties made by its
predecessor in interest under the Borrower Security Agreement, and agree that
all such covenants, representations and warranties shall be deemed to have been
remade as of the effective date of this Agreement, other than any
representations and warranties that were made as of a certain date which were
true and correct as of such date. Borrower hereby further confirms that all
references to the "Loan Agreement" in the Borrower Security Agreement shall
refer to this loan agreement, as amended,
restated, supplemented and modified from time to time. Schedule II to the
Borrower Security Agreement is hereby amended in its entirety as set forth in
Exhibit J hereto.
Section 1.1. GENERAL TERMS.
As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" - as to any person, any other Person which directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), provided that, in any
event: (i) any Person which owns directly or indirectly 5% or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or 5% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person; and
(ii) each shareholder in the Borrower shall be deemed to be an Affiliate of the
Borrower.
"Borrower" - shall mean Electronic Data Submission Systems, Inc.,
incorporated in Colorado on January 7, 1991 and re-incorporated by merger in
Delaware on September 9, 1997, and all permitted successors and assigns.
"Borrower Security Agreement" - as defined in the first whereas clause
hereof.
"Borrowing Date" - the date of the initial Loan and each date of each
subsequent Loan.
"Borrowing Notice" - as defined in subsection 2.2(a) hereof.
"Business Day" - any day other than Saturday, Sunday or other day on
which commercial banks in New York are authorized or required to close under the
laws of the State of New York.
"Capital Expenditures" - for any period, the aggregate amount of all
payments made by the Borrower directly or indirectly for the purpose of
acquiring, constructing or maintaining fixed assets, real property or equipment
which, in accordance with generally accepted accounting principles, would be
added as a debit to the fixed asset account of the Borrower, including, without
limitation, all amounts with respect to Capitalized Lease obligations, and
interest which are required to be capitalized in accordance with generally
accepted accounting principles.
"Capitalized Lease" - any Lease the obligations to pay rent or other
amounts under which constitute Capitalized Lease obligations.
"Capitalized Lease Obligations" - as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under generally accepted accounting principles and, for
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purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with generally accepted
accounting principles.
"Cash" - as to any Person, such Person's cash and cash equivalents, as
defined in accordance with generally accepted accounting principles consistently
applied.
"Code" - the Internal Revenue Code of 1986, as it may from time to time
be amended.
"Collateral" - as defined in the Security Documents.
"Collateral Assignment of Insurance" - as defined in Section 2.13
hereof.
"Commitment" the obligation of National to make Loans hereunder in the
aggregate principal amount at any one time outstanding of up to One Million
Eight Hundred Thousand Dollars ($1,800,000).
"Commitment Termination Date" - May 31, 2001, except as provided in
Section 9.13.
"Compliance Certificate" - a certificate executed by the president of
the Borrower to the effect that, as of the effective date of the certificate, no
Default or Event of Default under this Agreement exists or would exist after
giving effect to the action intended to be taken by the Borrower, as described
in such certificate.
"Controlled Group" - all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code and Section 4001(a)(2) of ERISA.
"Credit Period" - as defined in Section 2.1 hereof.
"Debt Instrument" - as defined in Section 8.4(a) hereof.
"Default" - an event which with notice or lapse of time or both would
constitute an Event of Default.
"Dollars" - and "$" - lawful money of the United States of America.
"Environmental Laws and Regulations" - all federal, state and local
environmental, health and safety laws, regulations, resolutions, and ordinances
applicable to the Borrower or any other Loan Party, or any of their respective
assets or properties, including, without limitation: (i) all regulations,
resolutions, ordinances, decrees, and other similar documents and instruments of
all courts and governmental authorities, bureaus and agencies, domestic and
foreign, whether issued by environmental regulatory agencies or otherwise, and
(ii) all laws, regulations, resolutions, ordinances and decrees relating to
Environmental Matters.
"Environmental Liability" - any liability under any applicable law for
any release of a
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hazardous substance caused by the seeping, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing of hazardous wastes or other chemical substances, pollutants or
contaminants into the environment, and any liability for the costs of any
clean-up or other remedial action including, without limitation, costs arising
out of security fencing, alternative water supplies, temporary evacuation and
housing and other emergency assistance undertaken by any environmental
regulatory body having jurisdiction over the Borrower or any other Loan Party to
prevent or minimize any actual or threatened release by the-Borrower or any
other Loan Party of any hazardous wastes or other chemical substances,
pollutants and contaminants into the environment which would endanger the public
health or the environment.
"Environmental Matter(s)" - a release of any toxic or hazardous waste
or other chemical substance, pollutant or contaminant into the environment or
the generation, treatment, storage or disposal of any toxic or hazardous wastes
or other chemical substances.
"Environmental Proceeding" - any judgment, action, proceeding or
investigation pending before any court or governmental authority, bureau or
agency, including, without limitations, any environmental regulatory body, with
respect to or threatened against or affecting the Borrower or any other Loan
Party or relating to the assets or liabilities of any of them, including,
without limitations, in respect of any "facility" owned, leased or operated by
any of them under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or under any state, local or municipal
statute, ordinance or regulation in respect thereof, in connection with any
release of any toxic or hazardous waste or chemical substance, pollutant or
contaminant into the environment, or with the generation, storage or disposal of
any toxic or hazardous wastes or other chemical substances.
"ERISA" - the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time, and the regulations thereunder.
"Event of Default" - as defined in Article 8 hereof.
"Financial Statements" - the compiled balance sheets as of December 31,
1997, 1996, 1995, 1994, 1993 and 1992 of the Borrower, together with the related
compiled income statements for the twelve month periods then ended.
"Guarantor(s)" - as defined in Section 2.12 hereof.
"Guaranty(ies)" - as defined in Section 2.12 hereof.
"Indebtedness" - with respect to any Person, all (i) liabilities or
obligations, direct and contingent, which in accordance with generally accepted
accounting principles would be included in determining total liabilities as
shown on the liability side of a balance sheet of such Person at the date as of
which Indebtedness is to be determined, including, without limitation,
contingent liabilities which, in accordance with such principles, would be
referred to in a footnote to such balance sheet, and Capitalized Lease
Obligations of such Person; (ii) liabilities
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or obligations of others for which such Person is directly or indirectly liable,
by way of guaranty (whether by direct guaranty, suretyship, discount,
endorsement, take-or-pay agreement, agreement to purchase or advance or keep in
funds or other agreement having the effect of a guaranty) or otherwise; and
(iii) liabilities or obligations secured by Liens on any assets of such Person,
whether or not such liabilities or obligations shall have been assumed by it.
"Investment" - in any Person by the Borrower:
(a) the amount paid or committed to be paid, or the value of property
or services contributed or committed to be contributed, by the Borrower for or
in connection with the acquisition by the Borrower of any stock, bonds, notes,
debentures, partnership or other ownership interests or other securities of such
Person, and
(b) the amount of any advance, loan or extension of credit to, or
guaranty or other similar obligation with respect to any Indebtedness of, such
Person by the Borrower other than any such advance, loan or extension of credit
having a term not exceeding 90 days made by the Borrower to trade customers of
the Borrower (including Affiliates of the Borrower in respect of transactions
not prohibited by Section 7.14 hereof) in the ordinary course of the Borrower's
business and (without duplication) any amount committed to be advanced, loaned,
contributed or extended to, or the payment of which is committed to be assured
by a guaranty or similar obligation for the benefit of, such Person by the
Borrower.
"IRS" - Internal Revenue Service.
"Leases" - leases and subleases (other than the leases or subleases the
obligation to pay rent or other amounts under which is a Capitalized Lease
Obligation), licenses for the use of real property, easements, grants, and other
rights and similar instruments under which the Borrower has the right to use
real or personal property or rights of way.
"Lien" - any mortgage, deed of trust, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature of a grant of a security interest or lien, and the filing of
or agreement to give any financing statement under the Uniform Commercial Code
of any jurisdiction).
"Loan(s)" - as defined in Section 2.1 hereof.
"Loan Agreement" - as defined in the preamble hereof.
"Loan Documents" - this Agreement, the Note, the Security Documents,
the Guaranty, Stock Pledge Agreement and all other documents heretofore, now or
hereafter executed and delivered in connection herewith or therewith, including
all amendments, modifications and supplements of or to all such documents.
"Loan Party" - any Person (other than National) which is a party to a
Loan Document.
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"National" shall have the meaning ascribed to such terms in the
preamble hereof.
"Note"- as defined in subsection 2.4(a) hereof.
"Obligations" - all Indebtedness, liabilities and obligations of the
Borrower to National, whether now existing or hereafter arising, including,
without limitation, the Indebtedness, liabilities and obligations of the
Borrower to National under this Agreement, the Note, the Security Documents (as
hereinafter defined), and all agreements, documents and instruments executed in
connection with or pursuant to any of the foregoing.
"Original Loan Agreement" - as defined in the first whereas clause
hereof.
"PBGC" - as defined in subsection 3.18(a) hereof.
"Permitted Liens" - (i) pledges or deposits by the Borrower under
workers, compensation laws, unemployment insurance laws, social security laws,
or similar legislation, or good faith deposits in connection with bids, tenders,
contracts (other than for the payment of Indebtedness of the Borrower), or
leases to which the Borrower is a party, or deposits to secure public or
statutory obligations of the Borrower or deposits of cash or U.S. Government
Bonds to secure surety, appeal, performance or other similar bonds to which the
Borrower is a party, or deposits as security for contested taxes or import
duties or for the payment of rent; (ii) Liens imposed by law, such as carriers',
warehousemen's, materialmen's, mechanics, and landlords' Liens; (iii) Liens for
taxes not yet subject to penalties for non-payment and Liens for taxes the
payment of which is being contested as permitted by Section 6.6 hereof; (iv)
encumbrances consisting of zoning restrictions, easements or other restrictions
on the use of real property, provided that such items do not materially impair
the use of such property for the purposes intended, and none of which are
violated in any material respect by existing or proposed structures or land use,
all of which Liens do not in the aggregate materially detract from the value of
the properties to which they relate or materially impair their use in the
operation of the business of the Borrower; and (v) Liens in favor of National.
"Person" - an individual, a corporation, a partnership, a limited
liability company, a joint venture, a trust or unincorporated organization, a
joint stock company or other similar organization, a government or any political
subdivision thereof, a court, or any other legal entity, whether acting in an
individual fiduciary or other capacity.
"Material Agreement" - as defined in Section 3.15 hereof.
"Plan" - at any time an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards under the Code
and is either (i) maintained by the Borrower or any member of the Controlled
Group for employees of the Borrower, or by the Borrower for any other member of
such Controlled Group or (ii) maintained pursuant to a collective bargaining
agreement or any other arrangement under which more than one employer makes
contributions and to which the Borrower or any member of the Controlled Group is
then making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions.
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"Post-Default Rate" - as defined in subsection 2.6(b) hereof.
"Prime Rate" - the interest rate published from time to time by the
Wall Street Journal as the prime lending rate. Each change of interest rate
provided for herein based upon the Prime Rate shall take effect as of the date
such change in the Prime Rate is published by the Wall Street Journal.
"Principal Office" - the principal office of National presently located
at 000 Xxxxx Xxxx Xxx, Xxxxx 000, Xxxx Xxxxx, XX, 00000.
"Pro Forma Balance Sheet" - the balance sheet of the Borrower as of the
date hereof, prepared on a pro forma basis, as if the initial Loan had been
consummated.
"Projections" - the projections of the Borrower for the twelve calendar
months beginning April 1, 1999 and ending March 31, 2000, and when prepared by
the Borrower, the projections of the Borrower for the twelve month periods
ending March 31, 2001, March 31, 2002 and March 31, 2003.
"Purchase Money Security Interest" - as defined in subsection 7.2(c)
hereof.
"Security Documents" - as defined in Section 2.13(b) hereof.
"Stock Pledge Agreement" - as defined in subsection 2.13(b)(i) hereof.
"Subordination Agreement" - as defined in Section 2.14 hereof.
"Subsidiary" - with respect to any Person, corporation, limited
liability company, partnership or joint venture whether now existing or
hereafter organized or acquired: (i) in the case of a corporation, of which a
majority of the securities having ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) are at the time owned by such Person and/or one or
more Subsidiaries of such Person or (ii) in the case of a partnership, joint
venture or limited liability company in which such Person is a general partner
or joint venturer or of which a majority of the partnership or other ownership
interests are at the time owned by such Person and/or one or more of its
Subsidiaries. Unless the context otherwise requires, references in this
Agreement to "Subsidiary" or "Subsidiaries" shall be ` deemed to be references
to a Subsidiary or Subsidiaries of the Borrower.
"System(s)" - the electronic data transmission systems owned by the
Borrower.
Section 1.2. ACCOUNTING TERMS.
Any accounting terms used in this Agreement or any other Loan Document
which are not specifically defined shall have the meanings customarily given to
them in accordance with generally accepted accounting principles as in effect on
the date of this Agreement, except that references in Article 5 to such
principles shall be deemed to refer to such principles as in effect on the date
of the financial statements delivered pursuant thereto.
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ARTICLE 2. COMMITMENTS; LOANS; GUARANTIES; COLLATERAL
Section 2.1. LOANS.
Subject to the terms and conditions set forth in this Agreement,
National has, and shall continue to lend to the Borrower and the Borrower shall
continue to borrow from National, during the period (the "Credit Period") from
June 9, 1995 to and including the Business Day immediately preceding the
Commitment Termination Date, an aggregate principal amount outstanding up to but
not exceeding the Commitment as then in effect (individually, a "Loan" and
collectively, the "Loans"). Subject to the terms and conditions of this
Agreement, the Loans may be repaid at any time and from time to time, in whole
or in part, without premium or penalty, and any amounts so repaid may, subject
to the terms and conditions hereof, including the borrowing limitation imposed
by the Commitment and by this Section 2.1, be reborrowed during the Credit
Period.
Section 2.2. NOTICES RELATING TO LOANS.
(a) The Borrower shall give National irrevocable written
notice of each borrowing of a Loan (a "Borrowing Notice") not later than 12:00
noon, Illinois time, on the date which is three (3) Business Days prior to the
date of the related borrowing. Each Borrowing Notice shall be in the form of
Schedule A annexed hereto and shall specify, inter alia, the amount (subject to
Section 2.1 hereof) of Loans to be borrowed, the date of borrowing, which shall
be a Business Day, and the purpose of the Loan; provided, however, that each
Borrowing Notice shall be in an amount which is not in excess of the unused
portion of the Commitment. Should any amount required to be paid as interest or
fees hereunder, or as fees or other charges under this Agreement or any other
Obligation, become due, the same shall be deemed a request for a Loan as of the
date of such payment is due, in the amount required to pay in full such interest
fee, charge or obligation under this Agreement or any other agreement with
National.
(b) Each Borrowing Notice shall be in a minimum amount of
$10,000.
Section 2.3. DISBURSEMENT OF LOAN PROCEEDS.
After receipt by National of a Borrowing Notice as set forth in Section
2.2 hereof, and subject to the fulfillment (to the satisfaction of National) by
the Borrower of the conditions set forth in Article 4 hereof, National shall
make available the amount of the Loan to be made by it on such date by
depositing the proceeds thereof, in immediately available funds, in an account
of the Borrower designated by the Borrower.
Section 2.4. NOTE.
(a) The Loans shall be evidenced by a single promissory note
of the Borrower in substantially the form of Exhibit A annexed hereto (the
"Note"), dated the date hereof, payable to the order of National, in a principal
amount equal to the Commitment as originally in effect and otherwise duly
completed.
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(b) All Loans made by National hereunder and all payments and
prepayments made on account of the principal thereof, shall be recorded by
National on the schedule attached to the Note (provided that any failure by
National to make any such notation shall not affect the obligations of the
Borrower hereunder or under the Note in respect of the Loans).
Section 2.5. PAYMENT OF LOANS.
(a) Subject to earlier prepayment as herein provided, the
Borrower shall pay to National the aggregate principal amount of the Loans
outstanding on the Commitment Termination Date, in twenty-three (23) consecutive
equal monthly installments commencing on the Commitment Termination Date and on
the last day of each month thereafter to and including March 31, 2003, when all
principal with respect to the Loans shall be due and payable.
(b) If (i) there are then no uncured Events of Default under
the provisions of this Agreement, and (ii) National has received and approved
the Borrower's Projections for the next twelve month period, Borrower may extend
the Commitment Termination Date for a period of one year by giving National
written notice of its intention to extend not less than 10 days prior to the
scheduled Commitment Termination Date. Similarly, Borrower may extend the
Commitment Termination Date a second time for a period of one year if there are
then no uncured events of Default under the provisions of this Agreement, by
giving National written notice of its intention to extend not less than 10 days
prior to the scheduled Commitment Termination Date. No extension of Commitment
Termination Date shall affect the final maturity of the Loans on March 31, 2003.
(c) National shall not fail to extend the Commitment
Termination Date as set forth in Section 2.5 (b) if there are any Events of
Default for which the Borrower is entitled to effect a cure, if as to such Event
of Default:
(i) Notice of Event of Default has been given; and
(ii) The time permitted to cure the Event of Default
has not expired.
Section 2.6. INTEREST.
(a) The Borrower shall pay to National interest on the unpaid
principal amount of each Loan for the period commencing on the date of such Loan
until such Loan is paid in full at a rate per annum equal to eight (8%) percent
or the Prime Rate, whichever is greater. Except as provided in the next
sentence, interest shall be payable (i) quarterly in arrears on the last day of
each calendar quarter with respect to the principal amount of the Loans
outstanding during the calendar quarter then ended until payment in full of the
Note; (ii) the nature of the action required to effect the cure precludes the
cure from occurring within the permitted time, but the Borrower has begun to
take action to effect the cure and demonstrates to the reasonable satisfaction
of National that the cure will be completed in due course; (provided however,
with respect to any calendar quarter ending prior to the Commitment Termination
Date, so long as no Default or Event of Default shall be in existence, the
interest shall be paid by means of a Loan hereunder as of the due date of such
interest, which Loan shall accrue interest and be payable
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pursuant to the terms of this Agreement) and (iii) upon the payment or
prepayment thereof (but only on the principal so paid or prepaid). All accrued
but unpaid interest, fees and all other amounts payable under the Original Loan
Agreement shall be paid on the date of this Agreement by means of the making of
a Loan under this Agreement. Interest which is payable at the Post-Default Rate
(hereinafter defined) shall be payable from time to time on demand of National.
(b) The foregoing notwithstanding, the Borrower shall pay
interest on the Loans or any installment thereof, and on any other amount
payable by the Borrower hereunder (to the extent permitted by law) which shall
not be paid in full when due (whether at stated maturity, by acceleration or
otherwise) for the period commencing on the due date thereof until the same is
paid in full at a rate per annum equal to the greater of eighteen (18%) percent
per annum or the Prime Rate plus six percent (the "Post-Default Rate");
provided, however, in no event shall interest be charged or payable hereunder in
excess of the maximum rate permitted to be charged and payable under applicable
laws.
(c) References in this Section 2.6 to each Loan shall be
deemed to refer, as applicable, to portions of such Loan.
Section 2.7. PAYMENTS; FEES.
All payments of principal, interest and other amounts payable by the
Borrower hereunder will be made in Dollars, in immediately available funds, to
National at the Principal Office, on the date on which such payment shall become
due prior to 12:00 noon, New York time. National shall use its best efforts to
give the Borrower prior notice of the amounts of the payments which will become
due hereunder; provided, however, that neither the failure of National to give
any such notice, nor any error in any such notice, shall affect the obligations
of the Borrower, or the rights and remedies of National, hereunder or under the
Note. If any payment of principal or interest becomes due on a day other than a
Business Day, such payment may be made on the next succeeding Business Day and
such extension shall be included in computing interest in connection with such
payment. All payments hereunder and under the Note shall be made without set-off
or counterclaim and in such amounts as may be necessary in order that all such
payments shall not be less than the amounts otherwise specified to be paid under
this Agreement and the Note (after withholding for or on account of (i) any
present or future taxes, levies, imposts, duties or other similar charges of
whatever nature imposed by any government or any political subdivision or taxing
authority thereof, other than any tax (except those referred to in clause (ii)
below) on or measured by the net income of National to which any such payment is
due pursuant to applicable federal, state and local income tax laws, and (ii)
deduction of amounts equal to the taxes on or measured by the net income of
National payable by National with respect to the amount by which the payments
required to be made under this sentence exceed the amounts otherwise specified
to be paid in this Agreement and the Note). Upon payment in full of any Note,
National shall xxxx such Note "Paid" and return it to the Borrower. Any funds
expended by National due to Borrower's failure to perform or comply with its
obligations under this Agreement or any other Loan Document may be charged to
Borrower as a Loan and added to the Obligations.
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Section 2.8. PREPAYMENTS; REDUCTION OF COMMITMENT.
(a) The Borrower shall have the right to prepay the Loans from
time to time in whole or in part, provided that: (i) the Borrower shall give
National notice of each prepayment as provided in Section 2.9 hereof; and (ii)
partial prepayments (other than prepayments which exhaust the full remaining
amount of the Loan) shall be in an aggregate principal amount equal to $10,000
or an integral multiple thereof.
(b) All prepayments of the Loans shall be made together with
payment of all interest accrued on the amount prepaid through the date of
prepayment, without premium or penalty.
Section 2.9. PURPOSELY DELETED.
Section 2.10. COMPUTATIONS.
Interest on all Loans shall be computed, for actual days elapsed, as if
each full calendar year consisted of 365 days.
Section 2.11. USE OF PROCEEDS;
The proceeds of the Loans hereunder shall be used by the Borrower as
follows: For working capital purposes of the Borrower in connection with the
construction, development, marketing, acquisition and operation of the
Borrower's Systems all in accordance with the Borrower's Projections.
Section 2.12. GUARANTY.
In connection with the execution and delivery of this Agreement, Xxxxxx
X. Xxxxxxxxx ("Xxxxxxxxx" or "Guarantor") shall, by the execution and delivery
to National of a Guaranty in form and substance satisfactory to National (the
"Guaranty"), guaranty, on a limited basis as set forth in the Guaranty, the due
payment and performance of the Obligations.
Section 2.13. SECURITY.
In order to secure the due payment and performance by the Borrower of
all of the Obligations, in connection with the execution and delivery of this
Agreement:
(a) The Borrower has, in connection with the Original Loan Agreement,
and shall continue to, in connection with the Agreement:
(i) Grant to National a first Lien on and security interest in
all of the Borrower's personal properties and assets, whether now owned or
hereafter acquired, and wheresoever located tangible and intangible, by the
execution and delivery to National of the Borrower Security Agreement in form
and substance satisfactory to National;
(ii) Grant to National a first Lien on such interests in real
property, and all
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improvements located thereon, now or hereafter owned by the Borrower, whether
fee or leasehold interests, as National shall require, by the execution and
delivery to National of mortgages or deeds of trust in form and substance
satisfactory to National (collectively, the "Borrower Deeds of Trust");
(iii) Execute and deliver or cause to be executed and
delivered such other agreements, instruments and documents as National may
reasonably require in order to effect the purposes of the Borrower Security
Agreement, the Borrower Deeds of Trust, this subsection 2.13(a) and this
Agreement;
(b) Guarantor shall:
(i) Grant to National a Lien on and security interest in, and
pledge with National, 2,000 shares of the Series B Preferred Stock of Borrower
and 1,345 shares of the Common Stock of the Borrower owned by Guarantor, by the
execution and delivery to National of a Stock Pledge Agreement in form and
substance satisfactory to National (the "Stock Pledge Agreement").
(ii) Execute and deliver, or cause to be executed and
delivered, the stock certificates with respect to the Stock Pledge Agreement and
such other agreements, instruments and documents, as National may reasonably
require, in order to effect the purposes of the Stock Pledge Agreement, and this
Agreement.
(c) Borrower shall (i) maintain a key-person life insurance policy in
the amount of $1,000,000 or more on the life of Xxxxxx X. Xxxxxxxxx for the
benefit of Borrower, and (ii) promptly apply the first $1,000,000 of any
proceeds received under such policy to satisfy the Indebtedness.
The Borrower Security Agreement, the Borrower Deeds of Trust, the Stock Pledge
Agreement, and the aforesaid agreements, instruments and documents are sometimes
hereinafter referred to collectively as the "Security Documents."
Section 2.14. SUBORDINATION.
In connection with the execution and delivery of this Agreement, the
Borrower and Xxxxxxxxx shall execute and deliver to National a subordination
agreement in form and substance satisfactory to National (the "Subordination
Agreement") pursuant to which any and all indebtedness, liabilities and
obligations of the Borrower to Xxxxxx X. Xxxxxxxxx shall, to the extent set
forth in the Subordination Agreement, be subject to the prior payment in full of
the Obligations.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants to National that:
Section 3.1. ORGANIZATION.
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(a) The Borrower is a corporation duly organized and validly
existing under the laws of the State of Delaware and has the power to own its
assets and to transact the business in which it is presently engaged and in
which it proposes to be engaged. Exhibit B annexed hereto accurately and
completely lists: (i) the state of incorporation of the Borrower and the states
in which each of the Borrower is qualified to do business, and (ii) the classes
and number of authorized and outstanding shares of capital stock of the
Borrower, and the owners of such outstanding shares of capital stock. All of the
foregoing shares which are issued and outstanding have been duly and validly
issued and are fully paid and non-assessable, and are owned by the Persons
referred to on Exhibit B, free and clear of any Lien except as otherwise
provided for herein. Except as set forth on Exhibit B, there are not outstanding
any warrants, options, contracts or commitments of any kind entitling any Person
to purchase or otherwise acquire any shares of capital stock of the Borrower nor
are there outstanding any securities which are convertible into or exchangeable
for any shares of capital stock of the Borrower. Except as set forth on Exhibit
B, the Borrower has no Subsidiary.
(b) The Borrower is in good standing in the State of Colorado
and in each state in which it is qualified to do business. There are no
jurisdictions other than as set forth on Exhibit B hereto in which the character
of the properties owned or proposed to be owned by the Borrower or in which the
transaction of the business of the Borrower as now conducted or as proposed to
be conducted requires or will require the Borrower to qualify to do business and
as to which failure so to qualify could have a material adverse effect on the
business, operations, financial condition or properties of the Borrower.
Section 3.2. POWER, AUTHORITY, CONSENTS.
(i) The Borrower and each other Loan Party has the power,
authority and legal right to execute, deliver and perform the Loan Documents to
be executed by it, (ii) the Borrower has the power, authority and legal right to
borrow hereunder and has taken all necessary action to authorize the borrowing
hereunder on the terms and conditions of this Agreement, and (iii) the Borrower
and each other Loan Party has taken all necessary action to authorize the
execution, delivery and performance of the Loan Documents to be executed by it.
No consent or approval of any Person (including, without limitation, any
shareholder of the Borrower), no consent or approval of any landlord or
mortgagee, no waiver of any Lien or right of distraint or other similar right
and no consent, license, approval, authorization or declaration of any
governmental authority, bureau or agency, is or will be required in connection
with the execution, delivery or performance by the Borrower or any other Loan
Party, or the validity, enforcement or priority, of the Loan Documents or any
Lien created and granted thereunder, except as set forth on Exhibit C annexed
hereto, each of which either has been duly and validly obtained on or prior to
the date hereof and is now in full force and effect, or is designated on Exhibit
C as waived by National.
Section 3.3. NO VIOLATION OF LAW OR AGREEMENTS.
The execution and delivery by the Borrower and each other Loan Party of
each Loan Document to which it is a party and performance by it hereunder and
thereunder, will not violate
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any provision of law and will not conflict with or result in a breach of any
order, writ, injunction, ordinance, resolution, decree, or other similar
document or instrument of any court or governmental authority, bureau or agency,
domestic or foreign, including, without limitation, any ordinance, rule,
regulation or order of the FCC, or create (with or without the giving of notice
or lapse of time, or both) a default under or breach of any agreement, bond,
note or indenture to which the Borrower or any other Loan Party is a party, or
by which any of them is bound or any of their respective properties or assets is
affected, or result in the imposition of any Lien of any nature whatsoever upon
any of the properties or assets owned by or used in connection with the business
of the Borrower or any other Loan Party, except for the Liens created and
granted pursuant to the Security Documents.
Section 3.4. DUE EXECUTION, VALIDITY, ENFORCEABILITY.
This Agreement and each other Loan Document to which any Loan Party is
a party has been duly executed and delivered by the Loan Party which is a party
thereto and constitutes the valid and legally binding obligation of the Borrower
or such Loan Party, enforceable in accordance with its terms, except (a) as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or other similar laws, now or hereafter in effect, relating to or
affecting the enforcement of creditors' rights generally and (b) that the remedy
of specific performance and other equitable remedies are subject to judicial
discretion; but such laws shall not materially interfere with the practical
realization of the benefits of the Security Documents to which the Borrower or
such Loan Party is a party or the security interests or Liens created thereby,
except for (i) possible delay, (ii) situations which may arise under Chapter 11
of the Bankruptcy Code, and (iii) orders of the Bankruptcy Court.
Section 3.5. PROPERTIES, PRIORITY OF LIENS.
All of the properties and assets owned by the Borrower and each other
Loan Party which is executing a Security Document are owned by each of them,
respectively, free and clear of any Lien of any nature whatsoever, except as
provided for in the Security Documents and as permitted by Section 7.2 hereof.
The Liens which, simultaneously with the execution and delivery of this
Agreement, have been created and granted by the Security Documents constitute
valid, first, perfected Liens on the properties and assets covered thereby,
subject to no prior or equal Lien except as permitted by Section 7.2 hereof,
and, except those, if any, referred to on Exhibit D annexed hereto as being
prior or equal to such Liens so created and granted by the Security Documents.
Section 3.6. JUDGMENTS, ACTIONS, PROCEEDINGS.
Except as set forth on Exhibit E annexed hereto, there are no
outstanding judgments, actions or proceedings including, without limitation, any
Environmental Proceeding, pending before any court or governmental authority,
bureau or agency, with respect to or, to the best of the Borrower's knowledge,
threatened against or affecting the Borrower, or any other Loan Party, nor are
there any such actions or proceedings in which the Borrower or any other Loan
Party is a plaintiff or complainant.
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Section 3.7. NO DEFAULTS; COMPLIANCE WITH LAWS.
Neither the Borrower nor any other Loan Party is in default under any
agreement, ordinance, resolution, decree, bond, note, indenture, order or
judgment to which it is a party or by which it is bound, or any other agreement
or other instrument by which any of the properties or assets owned by it or used
in the conduct of its business is affected, which default could have a material
adverse effect on the business, operations, financial condition or properties of
the Borrower or any other Loan Party, or on the ability of the Borrower or any
other Loan Party to perform its obligations under the Loan Documents to which it
is a party. The Borrower has complied and is in compliance in all material
respects with all applicable laws, ordinances and regulations noncompliance with
which could have a material adverse effect on the business, operations,
financial condition or properties of the Borrower or on the ability of the
Borrower to perform its obligations under the Loan Documents to which it is a
party.
Section 3.8. BURDENSOME DOCUMENTS.
Except as set forth on Exhibit F annexed hereto, the Borrower is not a
party to or bound by, nor are any of the properties or assets owned by the
Borrower used in the conduct its business affected by, any agreement, ordinance,
resolution, decree, bond, note, indenture, order or judgment, including, without
limitation, any of the foregoing relating to any Environmental Matter, which
materially and adversely affects its business, assets or condition, financial or
otherwise.
Section 3.9. FINANCIAL STATEMENTS; PRO FORMA BALANCE SHEET; PROJECTIONS.
(a) Each of the Financial Statements is correct and complete
and presents fairly the consolidated financial position of the Borrower and the
results of the Borrower's operations and changes in financial position, as at
the dates and for the periods referred to therein, and has been prepared in
accordance with generally accepted accounting principles. The Borrower has no
material obligation, liability or commitment, direct or contingent, which is not
reflected in the Financial Statements. There has been no material adverse change
in the financial position or operations the Borrower since the date of the
latest balance sheet of the Borrower.
(b) The Pro Forma Balance Sheet presents fairly the financial
position of the Borrower as at its date on a pro forma basis, as if the initial
Loan had been consummated, and has been prepared in accordance with generally
accepted accounting principles. The Borrower's fiscal year is the twelve-month
period ending on December 31 in each year.
(c) The Projections have been prepared on the basis of the
assumptions accompanying them and reflect as of the date thereof the Borrower's
good faith projections, after reasonable analysis, of the matters set forth
therein, based on such assumptions. After consultation with, and subject to the
approval of National, the Projections may be revised by the Borrower to reflect
changes in circumstances in the Borrower's industry or markets.
Section 3.10. TAX RETURNS.
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The Borrower's federal tax identification number is 00-0000000. The
Borrower has filed all federal, state and local tax returns required to be filed
by it and has not failed to pay any taxes, or interest and penalties relating
thereto, on or before the due dates thereof. Except to the extent that reserves
therefor are reflected in the Pro Forma Balance Sheet, (a) there are no material
federal, state or local tax liabilities of the Borrower due or to become due for
any tax year ended on or prior to the date of the Pro Forma Balance Sheet,
whether incurred in respect of or measured by the income of such entity, which
are not properly reflected in the Pro Forma Balance Sheet, and (b) there are no
material claims pending or, to the knowledge of the Borrower, proposed or
threatened against the Borrower for past federal, state or local taxes.
Section 3.11. INTANGIBLE ASSETS.
All patents, trademarks, trademark rights, trade names, trade name
rights and copyrights owned or utilized by Borrower are set forth on Exhibit H.
The Borrower possesses or is licensed to use all necessary patents, trademarks,
trademark rights, trade names, trade name rights and copyrights to conduct its
business as now conducted and as proposed to be conducted, without any conflict
with the patents, trademarks rights, trade names, trade name rights and
copyrights of others.
Section 3.12. REGULATION U.
No part of the proceeds received by the Borrower from the Loans will be
used directly or indirectly for the purpose of purchasing or carrying, or for
payment in full or in part of Indebtedness which was incurred for the purposes
of purchasing or carrying, any margin stock as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System, 12 C.F.R.,
Chapter II, or any successor statute.
Section 3.13. NAME CHANGES; MERGERS; ACQUISITIONS; LOCATION OF COLLATERAL.
(a) Except as set forth on Exhibit G annexed hereto, the
Borrower has not within the six-year period immediately preceding the date of
this Agreement changed its name, been the surviving entity of a merger or
consolidation, or acquired all or substantially all of the assets of any Person.
(b) No Collateral constituting personal property having an
aggregate fair market value in excess of $50,000 covered by the Security
Documents has, at any time during the four-month period immediately preceding
the date hereof, been located anywhere other than at its location on the date
hereof.
Section 3.14. FULL DISCLOSURE.
None of the Financial Statements, Pro Forma Balance Sheet or the
Projections, nor any certificate, opinion, or any other statement made or
furnished in writing to National by or on behalf of the Borrower in connection
with this Agreement or the transactions contemplated herein, contains any untrue
statement of a material fact, or omits to state a material fact necessary in
order to make the statements contained therein or herein not materially
misleading, as of the
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date such statement was made. There is no material fact known to the Borrower
which has, or would in the now foreseeable future have, a material adverse
effect on the business, prospects or condition, financial or otherwise, of the
Borrower, or any of its properties or assets, which fact has not been set forth
herein, in the Pro Forma Balance Sheet, the Projections, or any certificate,
opinion, or other written statement so made or furnished to National.
Section 3.15. MATERIAL AGREEMENTS, SYSTEMS.
(a) Exhibit H annexed hereto accurately and completely lists
all material agreements, EDI Hub Agreements and Scanning Agreements to which the
Borrower is a party or which pertain to the Systems ("Material Agreements"), and
all of such Material Agreements are in full force and effect and constitute the
binding and enforceable obligations of the parties thereto in accordance with
their respective terms.
(b) The operation of the Systems prior to the date of this
Agreement have conformed and do conform in all material respects, with all
federal, state and local laws, ordinances, or regulations applicable thereto. No
default or any event which, with the lapse of time or the giving of notice, or
both would constitute a default, under any Material Agreement now exists, the
consequences of which could, singly or in the aggregate, materially and
adversely affect the operation by the Borrower of the Systems.
Section 3.16. CONDITION OF ASSETS.
All of the assets and properties of the Borrower that are reasonably
necessary for the operation of its business, are able to serve the function for
which they are currently being used, ordinary wear and tear excepted.
Section 3.17. EMPLOYEE GRIEVANCES.
There are no actions or proceedings pending or, to the best knowledge
of the Borrower, threatened against the Borrower, by or on behalf of, or with,
its employees, other than employee grievances arising in the ordinary course of
business which are not, in the aggregate, material.
Section 3.18. ERISA.
(a) The Borrower does not have and has never had any Plan in
connection with which there could arise a direct or contingent liability of the
Borrower to the Pension Benefit Guaranty Corporation ("PBGC"), the Department of
Labor or the IRS. The Borrower is not a participating employer (1) in any Plan
under which more than one employer makes contributions as described in Sections
4063 and 4064 of ERISA, or (2) in a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
(b) All references to the Borrower in this Section 3.18 or in
any other Section of this Agreement relating to ERISA, shall be deemed to refer
to the Borrower and all other
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entities which are, together with the Borrower, part of a Controlled Group.
Section 3.19 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties of Borrower contained in this
Agreement and any other Loan Document shall be true at the time of Borrower's
execution of this Agreement and any other Loan Document and shall survive the
execution of delivery and acceptance period by the parties thereto and the
closing of the transaction described herein and related thereto.
ARTICLE 4. CONDITIONS TO THE LOANS.
Section 4.1. CONDITIONS PRECEDENT TO INITIAL LOAN.
The obligation of National to make the initial Loan to be made by it
hereunder on or after the date hereof shall be subject to the fulfillment to the
satisfaction of National of the following conditions precedent:
(a) The Borrower shall have executed and delivered to National
the Note.
(b) The Borrower shall have (i) executed and delivered to
National the Borrower Security Agreement, (ii) duly filed appropriate Uniform
Commercial Code Financing Statements in order to enable National to perfect and
preserve its security interest in the Collateral covered by the Borrower
Security Agreement, (iii) delivered to National acknowledgement copies thereof
evidencing such filings, (iv) delivered to National the evidence of insurance on
such assets and properties and on the Borrower's liability insurance policies,
naming National as loss payee or additional insured as required by the Borrower
Security Agreement, (v) executed and delivered to National the Borrower Deeds of
Trust (if any) in proper form for recording, and delivered to National such
beneficiary or mortgagee title insurance policies, issued by such title
insurance companies, in such amounts and with only such exceptions, all as shall
be required by and satisfactory to National, and (vi) otherwise duly complied
with all of the terms and conditions of the Security Documents to be executed by
it.
(c) The Borrower and Xxxxxx X. Xxxxxxxxx shall have executed
and delivered to National a certification that the total amount owed by the
Borrower to Xxxxxxxxx is not more than $200,000.
(d) The Guarantor shall have executed and delivered to
National his Guaranty.
(e) Xxxxxx X. Xxxxxxxxx shall have executed and delivered to
National the Stock Pledge Agreement and shall have delivered to National
certificates evidencing the capital stock pledged by him pursuant thereto
together with stock powers endorsed in blank and irrevocable proxies relating
thereto, and shall otherwise have duly complied with all of the terms and
conditions thereof.
(f) National shall have received copies of the following:
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(i) The Financial Statements, the Pro Forma Balance
Sheet and the Projections;
(ii) All of the consents, approvals and waivers
referred to on Exhibit C annexed hereto, except only those which, as stated on
Exhibit C, shall not be delivered;
(iii) The certificate of incorporation of the
Borrower, certified by the Secretary
of State of Delaware;
(iv) The by-laws of the Borrower certified by its
Secretary or any Assistant Secretary;
(v) Copies of all corporate action taken by the
Borrower to authorize the execution, delivery and performance of each of the
Loan Documents to which each of them is a party pursuant hereto or in connection
herewith, certified by its secretary or any assistant secretary;
(vi) Good standing certificates or telegrams as of
dates not more than twenty (20) days prior to the date hereof, with respect to
the Borrower, from the Secretary of State of Delaware and each state in which
the Borrower is qualified to do business; and
(vii) An incumbency certificate with respect to the
Borrower certified by its secretary or any assistant secretary.
(g) The employment contract with Xxxxxxxxx (the "Xxxxxxxxx
Employment Agreement") shall be in full force and effect.
(h) Such of the employees of Borrower as may be required by
Lender shall have executed a Covenant Not to Compete with the business of
Borrower in form and substance acceptable to Lender. Also, Borrower shall have
executed a Covenant Not to Compete with the business of National in form and
substance acceptable to National.
(i) National shall have approved the form and content of any
incentive, bonus or stock option plans between Borrower and its employees, which
options shall not result in the issuance, in the aggregate, of more than 6.5% of
the shares of the Corporation, computed after said options are fully exercised.
(j) (i) The Borrower shall have complied and shall then be in
compliance with all of the terms, covenants and conditions of this Agreement;
(ii) There shall exist no Event of Default or
Default hereunder; and
(iii) The representations and warranties contained in
Article 3 hereof shall be true and correct on the date hereof;
and National shall have received a Compliance Certificate dated the date hereof
certifying, INTER ALIA, that the conditions set forth in this subsection 4.1(j)
are satisfied on such date.
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(k) All legal matters incident hereto shall be satisfactory to
counsel to National.
Section 4.2. CONDITIONS TO SUBSEQUENT LOANS.
The obligation of National to make each Loan subsequent to the initial
Loan shall, in addition to the conditions precedent set forth in Section 4.1
above, be subject to the fulfillment (to the satisfaction of National) of the
following conditions precedent:
(a) National shall have received a Borrowing Notice, as
provided for in Section 2.2 hereof, together with copies of the documents
specified in the Borrowing Notice relating to such Loan, each of which shall be
in form and substance satisfactory to National and certified as true and correct
by Borrower's President.
(b) National shall have received a Compliance Certificate
dated the date of such Loan and effective as of such date, and the matters
certified therein, including, without limitation, the absence of any Event of
Default or Default, shall be true as of such date.
(c) All legal matters incident to such Loan shall be
satisfactory to counsel to National.
ARTICLE 5. DELIVERY OF FINANCIAL REPORTS,
DOCUMENTS AND OTHER INFORMATION.
While the Commitment is outstanding, and, in the event any Loan remains
outstanding, so long as the Borrower is indebted to National, and until payment
in full of the Note and full and complete performance of all of its other
Obligations arising hereunder, the Borrower shall deliver to National:
Section 5.1. Annual Financial Statements of Borrower,
Annually, as soon as available, but in any event within ninety (90)
days after the last day of each of its fiscal years, a balance sheet of the
Borrower as at such last day of the fiscal year, and statements of income and
retained earnings and changes in financial position, for such fiscal year, each
prepared in accordance with generally accepted accounting principles
consistently applied, in reasonable detail, and certified without qualification
by a nationally recognized firm of independent certified public accountants, as
fairly presenting the financial position and the results of operations of the
Borrower as at and for the year ending on its date and as having been prepared
in accordance with generally accepted accounting principles.
Section 5.2. QUARTERLY FINANCIAL STATEMENTS.
As soon as available, but in any event within forty-five (45) days
after the end of the Borrower's first three fiscal quarterly periods in each
fiscal year, a balance sheet of the Borrower as of the last day of such quarter,
and statements of income and retained earnings and changes in financial
position, for such quarter and for the portion of the Borrower's fiscal year
ended at the
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end of such quarter, all in reasonable detail, and setting forth in each case in
comparative form the corresponding figures for the corresponding period(s) of
the Borrower's preceding fiscal year, each such statement to be certified in a
certificate of the president or the chief financial or accounting officer of the
Borrower as fairly presenting the financial position and the results of
operations of the Borrower as at its date and for such quarter and as having
been prepared in accordance with generally accepted accounting principles
consistently applied (subject to year-end audit adjustments) .
Section 5.3. COMPLIANCE INFORMATION.
Promptly after a written request therefor, such other financial data or
information evidencing compliance with the requirements of this Agreement, the
Note and the Security Documents, as National may reasonably request from time to
time but not more frequently than quarterly.
Section 5.4. NO DEFAULT CERTIFICATE.
At the same time as it delivers the financial statements required under
the provisions of Sections 5.1 and 5.2, a certificate signed by the president of
the Borrower to the effect that no Event of Default hereunder and that no
default under any other material agreement to which the Borrower is a party or
by which it is bound, or by which any of its properties or assets, may be
materially affected, and no event which, with the giving of notice or the lapse
of time, or both, would constitute such an Event of Default, has occurred, or,
if such cannot be so certified, specifying in reasonable detail the exceptions,
if any, to such statement. Such certificate shall be accompanied by a detailed
calculation indicating compliance with the covenants contained in Article 6
hereof.
Section 5.5. INTERNAL ACCOUNTING REPORTS.
Copies of internally generated income and expense reports no less
frequently than monthly.
Section 5.6. OTHER ACCOUNTANTS' REPORTS.
Promptly upon receipt thereof, copies of all financial reports
submitted to the Borrower by its independent accountants in connection with any
annual or interim audit of the books of the Borrower made by such accountants.
Section 5.7. COPIES OF DOCUMENTS.
Promptly upon their becoming available, copies of any non-routine
correspondence or official notices received by the Borrower from any federal,
state or local governmental authority which regulates the operations of the
Borrower.
Section 5.8. NOTICES OF DEFAULTS.
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Promptly, notice of the occurrence of any Default or Event of Default
hereunder, or event which would constitute or cause a material adverse change in
the condition, financial or otherwise, or the operations of the Borrower.
Section 5.9. ERISA NOTICES.
(a) Concurrently with such filing, a copy of each annual
report which is filed with respect to each Plan with the Secretary of Labor or
the PBGC; and
(b) Promptly, upon their becoming available, copies of: (i)
all non-routine correspondence with the PBGC, the Secretary of Labor or any
representative of the IRS with respect to any Plan; (ii) copies of all actuarial
valuations received by the Borrower with respect to any Plan; and (iii) copies
of any notices of Plan termination filed by any Plan Administrator (as those
terms are used in ERISA) with the PBGC and of any notices from PBGC to the
Borrower with respect to the intent of the PBGC to institute involuntary
termination proceedings.
ARTICLE 6. AFFIRMATIVE COVENANTS.
While the Commitment is outstanding, and, in the event any Loan remains
outstanding, so long as the Borrower is indebted to National, and until payment
in full of the Note and full and complete performance of all of its other
Obligations arising hereunder, the Borrower shall:
Section 6.1. BOOKS AND RECORDS.
Keep proper books of record and account in a manner reasonably
satisfactory to National in which full, true and correct entries shall be made
of all dealings or transactions in relation to its business and activities.
Section 6.2. INSPECTIONS AND AUDITS.
Permit National to make or cause to be made after the occurrence of and
during the continuance of an Event of Default, at the Borrower's expense,
inspections and audits of any books, records and papers of the Borrower and to
make extracts therefrom and copies thereof, or to make inspections and
examinations of any properties and facilities of the Borrower, all at such
reasonable times and as often as National may reasonably require, in order to
assure that the Borrower is and will be in compliance with its obligations under
the Loan Documents or to evaluate National's investment in the Note.
Section 6.3. COMPLIANCE WITH LAW; MAINTENANCE OF ASSETS.
Comply, in connection with any and all aspects of the Borrower's
ownership and operation of each System with all applicable laws, ordinances,
regulations and orders, in each case if non-compliance therewith could have a
material adverse effect on the business, operations or financial condition of
the Borrower or its ability to perform its obligations under the Loan Documents,
and maintain in good repair, working order and condition, subject to normal wear
and tear, all material properties and assets from time to time owned by it and
make all reasonable
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repairs, replacements, additions and improvements thereto.
Section 6.4. CONTINUANCE OF BUSINESS.
Do, or cause to be done, all things reasonably necessary to preserve
and keep in full force and effect its corporate existence and all permits,
licenses, rights and privileges necessary for the proper conduct of its
business, and continue to engage in the same line of business.
Section 6.5. COPIES OF CORPORATE DOCUMENTS.
Subject to the prohibitions set forth in Section 7.11 hereof, promptly
deliver to National copies of any amendments or modifications to its articles of
incorporation and by-laws, certified with respect to the articles of
incorporation by the Secretary of State of Delaware, and, with respect to the
by-laws, by its Secretary or any Assistant Secretary.
Section 6.6. PERFORM OBLIGATIONS.
Pay and discharge, all of its obligations and liabilities, including,
without limitation, all taxes, assessments and governmental charges upon its
income and properties, when due, unless and to the extent only that such
obligations, liabilities, taxes, assessment and governmental charges shall be
contested in good faith and by appropriate proceedings and that, to the extent
required by generally accepted accounting principles then in effect, proper and
adequate book reserves relating thereto are established by the Borrower, and
then only to the extent that a bond is filed in cases where the filing of a bond
is necessary to avoid the creation of a Lien against any of its properties.
Section 6.7. NOTICE OF LITIGATION.
Promptly notify National in writing of any litigation, legal proceeding
or dispute, other than disputes in the ordinary course of business or, whether
or not in the ordinary course of business, involving amounts in excess of Fifty
Thousand ($50,000) Dollars, affecting the Borrower whether or not fully covered
by insurance, and regardless of the subject matter thereof (excluding, however,
any actions relating to workers, compensation claims or negligence claims
relating to the use of motor vehicles, if fully covered by insurance, subject to
deductibles).
Section 6.8. INSURANCE.
(a) (i) Maintain with responsible insurance companies such
insurance on such of its properties, in such amounts and against such risks as
is customarily maintained by similar businesses; (ii) file with National upon
its request a detailed list of the insurance then in effect, stating the names
of the insurance companies, the amounts and rates of the insurance, dates of the
expiration thereof and the properties and risks covered thereby; and (iii)
within 10 days after notice in writing from National, obtain such additional
insurance as National may reasonably request;
(b) Carry all insurance available through the PBGC or any
private insurance
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companies covering any obligations to the PBGC; and
Section 6.9. FINANCIAL COVENANTS.
Beginning June 30, 1999 and at the end of each calendar month
thereafter during the term of this Agreement, Borrower shall have achieved at
least 80% of the revenue projections set forth in the Projections for each
quarter and shall not have exceeded the expense projections set forth in the
Projections for such quarter.
Section 6.10. REPORTABLE EVENTS.
(a) Promptly notify National in writing of the occurrence of
any Reportable Event, as defined in ERISA, if a notice of such Reportable Event
is required under ERISA to be delivered to the PBGC, together with a description
of such Reportable Event and a statement of the action the Borrower intends to
take with respect thereto, together with a copy of the notice thereof given to
the PBGC.
(b) Promptly notify National in writing if the Borrower or any
other Loan Party receives: (i) any notice of any violation or administrative or
judicial complaint or order having been filed or about to be filed against the
Borrower or such other Loan Party alleging violations of any Environmental Law
and Regulation, or (ii) any notice from any governmental body or any other
Person alleging that the Borrower or such other Loan Party is or may be subject
to any Environmental Liability; and promptly upon receipt thereof, provide
National with a copy of such notice together with a statement of the action the
Borrower or such other Loan Party intends to take with respect thereto.
Section 6.11. COMPLY WITH ERISA.
Comply with all applicable provisions of ERISA now or hereafter in
effect.
Section 6.12. ENVIRONMENTAL COMPLIANCE.
Operate all property owned or leased by it such that no obligation,
including a clean-up obligation, shall arise under any Environmental Law and
Regulation, which obligation would constitute a Lien or charge (prior to that in
favor of National) on any property of the Borrower or any other Loan Party;
provided, however, that in the event that any such claim is made or any such
obligation arises, the Borrower or such other Loan Party shall, at its own cost
and expense, immediately satisfy such claim or obligation.
ARTICLE 7. NEGATIVE COVENANTS.
While the Commitments are outstanding, and, in the event any Loan
remains outstanding, so long as the Borrower is indebted to National, and until
payment in full of the Note and full and complete performance of all of its
other Obligations arising hereunder, the Borrower shall not do, agree to do, or
permit to be done, any of the following:
Section 7.1. INDEBTEDNESS.
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Create, incur, permit to exist or have outstanding any Indebtedness,
except:
(a) Indebtedness of the Borrower to National under this
Agreement and the Note;
(b) Taxes, assessments and governmental charges, non-interest
bearing accounts payable and accrued liabilities, in any case not more than 90
days past due from the original due date thereof, and non-interest bearing
deferred liabilities other than for borrowed money (e.g., deferred compensation
and deferred taxes), in each case incurred and continuing in the ordinary course
of business;
(c) Indebtedness secured by the security interests referred to
in subsection 7.2(c) hereof and Capitalized Lease Obligations; and
(d) As set forth on Exhibit I annexed hereto.
Section 7.2. LIENS.
Create, or assume or permit to exist, any Lien on any of the properties
or assets of the Borrower, whether now owned or hereafter acquired, except:
(a) Those created and granted by the Security Documents;
(b) Permitted Liens;
(c) Purchase money mortgages or security interests,
conditional sale arrangements and other similar security interests, on motor
vehicles, supplies and equipment acquired by the Borrower (hereinafter referred
to individually as a "Purchase Money Security Interest") with the proceeds of
Indebtedness referred to in subsection 7.1(c) hereof; provided, however, that:
(i) the aggregate amount of Purchase Money Security
Interests shall not exceed $500,000;
(ii) the transaction in which any Purchase Money
Security Interest is proposed to be created is not then prohibited by this
Agreement;
(iii) any Purchase Money Security Interest shall
attach only to the property or asset acquired in such transaction and shall not
extend to or cover any other assets or properties of the Borrower; and
(iv) the Indebtedness secured or covered by any
Purchase Money Security Interest shall not exceed the lesser of the cost or fair
market value of the property or asset acquired and shall not be renewed,
extended or prepaid from the proceeds of any borrowing by the Borrower;
(d) The interests of the lessor under any Capitalized Lease
permitted
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hereunder; and
(e) As set forth on Exhibit D annexed hereto.
Section 7.3. GUARANTIES.
Assume, endorse, be or become liable for, or guarantee, the obligations
of any Person, except by the endorsement of negotiable instruments for deposit
or collection in the ordinary course of business. For the purposes hereof, the
term "guarantee" shall include any agreement, whether such agreement is on a
contingency or otherwise, to purchase, repurchase or otherwise acquire
Indebtedness of any other Person, or to purchase, sell or lease, as lessee or
lessor, property or services in any such case primarily for the purpose of
enabling another person to make payment of Indebtedness, or to make any payment
(whether as an advance, capital contribution, purchase of an equity interest or
otherwise) to assure a minimum equity, asset base, working capital or other
balance sheet or financial condition, in connection with the Indebtedness of
another Person or to supply funds to or in any manner invest in another Person
in connection with such Person's Indebtedness.
Section 7.4. MERGERS, ACQUISITIONS.
Merge or consolidate with any Person (whether or not the Borrower is
the surviving entity), or acquire all or substantially all of the assets or any
of the capital stock of any Person or acquire any assets of any Person.
Notwithstanding the foregoing, National acknowledges Borrower may wish to
acquire substantially all of the assets of one or more businesses. Upon delivery
and review of documentation detailing such acquisition, in form and substance
satisfactory to National, National will not unreasonably refuse to consent to
such acquisitions or such a merger.
Section 7.5. STOCK ISSUANCE.
Issue any additional shares or any right or option to acquire any
shares, or any security convertible into any shares, of the capital stock of the
Borrower, except (i) in connection with the stock dividends as permitted under
subsection 7.15(b) hereof, and (ii) distributions of Stock to Employees as
provided in Schedule 3 attached hereto.
Section 7.6. CHANGES IN BUSINESS AND SALE OF ASSETS.
Make any change in its business or in the nature of its operation which
has a material adverse affect on the business, or liquidate or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, assets or business except
in the ordinary course of business (or for the sale or other disposition of
worn-out or obsolete property) and for a fair consideration or dispose of any
shares of stock or any Indebtedness, whether now owned or hereafter acquired, or
discount, sell, pledge, hypothecate or otherwise dispose of accounts receivable.
Section 7.7. PREPAYMENTS.
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Make any voluntary or optional prepayment of any Indebtedness for
borrowed money incurred or permitted to exist under the terms of this Agreement,
other than Indebtedness evidenced by the Note.
Section 7.8. INVESTMENTS.
Make, or suffer to exist, any Investment in any Person, including,
without limitation, any shareholder, director, officer or employee of the
Borrower, except Investments in:
(a) obligations issued or guaranteed by the United States of
America;
(b) certificates of deposit, time deposits, bankers
acceptances and other "money market instruments" issued by any bank or trust
company organized under the laws of the United States of America or any State
thereof and having capital and surplus in an aggregate amount not less than
$100,000,000;
(c) open market commercial paper bearing the highest credit
rating issued by Standard & Poor's Corp. or by another nationally recognized
credit rating firm;
(d) repurchase agreements entered into with any bank or trust
company organized under the laws of the United States of America or any State
thereof and having capital and surplus in an aggregate amount not less than
$100,000,000 relating to United States of America government obligations; and
(e) shares of "money market funds", each having net assets of
not less than $100,000,000 that invest solely in obligations issued or
guaranteed by the United States of America or an agency thereof;
in each case maturing or being due or payable in full not more than 180 days
after the Borrower's acquisition thereof.
Section 7.9. FISCAL YEAR AND ACCOUNTING CHANGES.
Change its fiscal year or make any changes in accounting treatment and
reporting practice except as required by generally accepted accounting
principles.
Section 7.10. ERISA OBLIGATIONS.
(a) Be or become obligated to the PBGC other than in respect
of annual premium payments not in excess of $50,000.
(b) Be or become obligated to the IRS with respect to excise
or other penalty taxes provided for in the Code, as in effect or hereafter
amended or supplemented, in excess of $50,000.
Section 7.11. AMENDMENT OF CORPORATE DOCUMENTS.
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Modify, amend, supplement or terminate, or agree to modify, amend,
supplement or terminate its certificate of incorporation or by-laws.
Section 7.12. PURPOSELY DELETED.
Section 7.13. PURPOSELY DELETED.
Section 7.14. TRANSACTIONS WITH AFFILIATES; MANAGEMENT AGREEMENTS.
(a) Except as expressly permitted by this Agreement, directly
or indirectly: (i) make any Investment in an Affiliate; (ii) transfer, sell,
lease, assign or otherwise dispose of any assets to an Affiliate; or (iii)
except as permitted by Section 7.4, merge into or consolidate with or purchase
or acquire assets from an Affiliate; or (iv) enter into any other transaction
directly or indirectly with or for the benefit of any Affiliate (including,
without limitation, any management agreement or similar agreement, and
guarantees and assumptions of obligations of an Affiliate).
(b) Pay, or become obligated to pay, any management or other
similar fees to any Person (whether or not a shareholder, director, officer or
employee of the Borrower) or any interest on any deferred obligation therefor,
except that the Borrower shall be permitted to pay compensation to Xxxxxxxxx as
provided in the Xxxxxxxxx Employment Agreement.
Section 7.15. REDEMPTIONS; DISTRIBUTIONS.
(a) Purchase, redeem, retire or otherwise acquire, directly or
indirectly, or make any sinking fund payments with respect to, any shares of any
class of stock of the Borrower now or hereafter outstanding or set apart any sum
for any such purposes; or,
(b) Declare or pay any dividends or make any distribution of
any kind on the Borrower's outstanding stock, or set aside any sum for any such
purpose, except that the Borrower may declare or pay any dividend payable solely
in shares of its common stock (which may only be made with the consent of
National).
Section 7.16. SUBSIDIARIES. Except as permitted by Section 7.4, form any
subsidiary.
ARTICLE 8. EVENTS OF DEFAULT.
Section 8.1. EVENTS OF DEFAULT
The occurrence of one or more of the following events shall constitute
an "Event of Default":
8.1.1. PAYMENT OF OBLIGATIONS
Borrower shall fail to pay any of the Obligations on
the due date thereof (whether due at stated maturity, on
demand, upon acceleration or otherwise); or
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8.1.2. COVENANTS.
Failure by Borrower to perform, keep or observe any
covenant contained in Section 6.9 or Article 7 hereof; or
8.1.3. OTHER COVENANTS.
Failure by the Borrower or any other Loan Party to
perform or observe any other term, condition or covenant of
this Agreement or of any of the other Loan Documents to which
it is a party, which shall remain unremedied for a period of
ten (10) days, or, if specified in such document, the
applicable grace period, after the occurrence of such failure;
or
8.1.4. OTHER DEFAULTS.
(a) Failure by the Borrower to perform or observe any
term, condition or covenant of any bond, note, debenture, loan
agreement, indenture, guaranty, trust agreement, mortgage or
similar instrument to which the Borrower is a party or by
which it is bound, or by which any of its properties or assets
may be affected (each, a "Debt Instrument"), so that, as a
result of any such failure to perform (assuming the giving of
appropriate notice thereof, if required), the Indebtedness
included therein or secured or covered thereby may be declared
due and payable prior to the date on which such Indebtedness
would otherwise become due and payable, and the aggregate
amount of all such Indebtedness, whether covered by one or
more Debt Instruments, is not less than $50,000; or
(b) Any event or condition referred to in any Debt
Instrument shall occur or fail to occur, so that, as a result
thereof, the Indebtedness included therein or secured or
covered thereby may be declared due and payable prior to the
date on which such Indebtedness would otherwise become due and
payable, and the aggregate amount of all such Indebtedness,
whether covered by one or more Debt Instruments, is not less
than $50,000.00; or
(c) Failure to pay any Indebtedness for borrowed
money due at final maturity or pursuant to demand under any
Debt Instrument, and the aggregate amount of all such
Indebtedness, whether covered by one or more Debt Instruments,
is not less than $50,000; or
8.1.5. REPRESENTATIONS AND WARRANTIES.
Any representation or warranty made in writing to
National in any of the Loan Documents or in connection with
the making of the Loans, or any certificate, statement or
report made or delivered in compliance with this Agreement,
shall have been false or misleading in any material respect
when
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made or delivered; or
8.1.6. INSOLVENCY AND RELATED PROCEEDINGS
Any Loan Party shall cease to be Solvent or shall
suffer the appointment of a receiver, trustee, custodian or
similar fiduciary, or shall make an assignment for the benefit
of creditors, or any petition for an order for relief shall be
filed by or against any Loan Party under the Bankruptcy Code
(if against Borrower, the continuation of such proceeding for
more than 45 days), or any Loan Party shall make any offer of
settlement, extension or composition to its unsecured
creditors generally.
8.1.7. BUSINESS DISRUPTION; CONDEMNATION
There shall occur a cessation of a substantial part of
the business of the Borrower, taken as a whole, for a period
which significantly affects the Borrower's capacity to
continue its business, on a profitable basis; or the Borrower
shall suffer the loss or revocation of any material license or
permit now held or hereafter acquired by the Borrower used or
useful in the operation of Borrower's business; or the
Borrower shall be enjoined, restrained or in any way for a
period in excess of 45 days prevented by court, governmental
or administrative order from conducting all or any material
part of its business affairs; or any material lease or
agreement pursuant to which the Borrower leases, uses or
occupies any Property shall be canceled or terminated prior to
the expiration of its stated term; or any part of the
Collateral shall be taken through condemnation or the value of
such Property shall be impaired through condemnation and as a
result the Borrower suffers a Material Adverse Effect.
8.1.8. ERISA
A Reportable Event shall occur which National, in its
sole discretion, shall determine in good faith constitutes
grounds for the termination by the PBGC of any Plan or for the
appointment by the appropriate United States district court of
a trustee for any Plan, or any Plan shall be terminated or any
such trustee shall be requested or appointed, or if Borrower
or any Subsidiary of Borrower (or any Loan Party) is in
"default" (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan resulting from
Borrower's or its Subsidiary's or any Loan Party's complete or
partial withdrawal from such Plan, and, in the case of any of
the foregoing, as a result thereof there is a likelihood of a
Material Adverse Effect.
8.1.9. CHALLENGE TO AGREEMENT.
Any Loan Party or any Affiliate shall challenge or
contest in any action, suit or proceeding the validity or
enforceability of this Agreement or any of the
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other Loan Documents, the legality or enforceability of any of
the Obligations or the perfection or priority of any Lien
granted to National.
8.1.10. CRIMINAL FORFEITURE.
Borrower shall be criminally indicted or convicted
under any law that could lead to a forfeiture of any material
property of the Borrower and such indictment or conviction is
not dismissed within ten (10) days thereof.
8.1.11. JUDGMENTS.
Any money judgment, writ of attachment or similar
process is filed against Borrower or any of its property, if
the amount thereof not covered by insurance is in excess of
$250,000 and such judgment, attachment or process remains
unstayed, unpaid or undischarged for 30 consecutive days.
8.1.12. UNINSURED LOSSES.
Any material loss, theft, damage or destruction of
any of the collateral having a value in excess of $50,000 not
fully covered (subject to such deductibles as National shall
have permitted) by insurance.
8.1.13. DISSOLUTION.
There shall occur a termination or dissolution of
Borrower pursuant to its Certificate of Incorporation, or
applicable law.
8.1.14. MANAGEMENT.
Xxxxxxxxx shall cease for any reason whatsoever,
other than death, to be, and continuously perform the duties
of, the President of the Borrower. Upon such death or such
disability, the name of Xxxxxxxxx'x successor shall be deemed
to have been inserted in place of Xxxxxxxxx in this Section.
Section 8.2. ACCELERATION OF THE OBLIGATIONS.
Without in any way limiting the right of National to demand payment of
any portion of the Obligations payable on demand in accordance with this
Agreement, upon (i) the occurrence and during the continuance of an Event of
Default, (ii) completion of a registered primary initial public offering by
Borrower of its equity securities, or (iii) the occurrence of a Warrant Trigger
Event (as such term is defined in the EDSS Warrant Agreement dated as of
________ , 1999; all or any portion of the Obligations shall, at the option of
the National and without presentment, demand, protest or further notice by
National, become at once due and payable and Borrower shall forthwith pay to
National, the full amount of such Obligations, PROVIDED, that upon the
occurrence of an Event of Default specified in subsection 8.1.6 hereof, all of
the Obligations shall become automatically due and payable without declaration,
notice or demand by National.
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Section 8.3. OTHER REMEDIES.
Upon the occurrence and during the continuance of an Event of Default,
National shall have and may exercise from time to time the following rights and
remedies:
8.3.1 All of the rights and remedies of a secured party under
the Uniform Commercial Code or under other applicable law, and
all other legal and equitable rights to which National may be
entitled, all of which rights and remedies shall be cumulative
and shall be in addition to any other rights or remedies
contained in this Agreement or any of the other Loan
Documents, and none of which shall be exclusive.
8.3.2 The right to take immediate possession of the
Collateral, and to (i) require Borrower to assemble the
Collateral, at Borrower's expense, and make it available to
National at a place designated by National which is reasonably
convenient to both parties, and (ii) enter any premises where
any of the Collateral shall be located and to keep and store
the Collateral on said premises until sold (and if said
premises be the property of Borrower, Borrower agrees not to
charge National for storage thereof).
8.3.3 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further
manufacturing or processing thereof, at public or private sale
or sales, with such notice as may be required by law, in lots
or in bulk, for cash or on credit, all as National, in its
sole discretion, may deem advisable. Borrower agrees that 10
days written notice to Borrower of any public or private sale
or other disposition of Collateral shall be reasonable notice
thereof, and such sale shall be at such locations as National
may designate in said notice. National shall have the right to
conduct such sales on Borrower's premises, without charge
therefor, and such sales may be adjourned from time to time in
accordance with applicable law. National shall have the right
to sell, lease or otherwise dispose of the Collateral, or any
part thereof, for cash, credit or any combination thereof, and
National may purchase all or any part of the Collateral at
public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount
of such price against the Obligations. The proceeds realized
from the sale of any Collateral may be applied, after allowing
2 Business Days for collection, first to the costs, expenses
and attorneys' fees incurred by National in collecting the
Obligations, in enforcing the rights of National under the
Loan Documents and in collecting, retaking, completing,
protecting, removing, storing, advertising for sale, selling
and delivering any Collateral, second to the interest due upon
any of the Obligations; and third, to the principal of the
Obligations. If any deficiency shall arise, Borrower shall
remain liable to National therefor.
8.3.4 National is hereby granted a license or other right to
use, without
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charge, Borrower's labels, patents, copyrights, rights of use
of any name, trade secrets, tradenames, trademarks and
advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in advertising for sale and
selling any Collateral and Borrower's rights under all
licenses and all franchise agreements shall inure to
National's benefit.
Section 8.4. REMEDIES CUMULATIVE; NO WAIVER.
All covenants, conditions, provisions, warranties, guaranties,
indemnities, and other undertakings of Borrower contained in this Agreement and
the other Loan Documents, or in any document referred to herein or contained in
any agreement supplementary hereto or in any schedule given to National or
contained in any other agreement between or among National and Borrower,
heretofore, concurrently, or hereafter entered into, shall be deemed cumulative
to and not in derogation or substitution of any of the terms, covenants,
conditions, or agreements of Borrower herein contained. The failure or delay of
National to require strict performance by Borrower of any provision of this
Agreement or to exercise or enforce any rights, Liens, powers, or remedies
hereunder or under any of the aforesaid agreements or other documents or
security or Collateral shall not operate as a waiver of such performance by
Borrower, and all such requirements, Liens, rights, powers, and remedies shall
continue in full force and effect until all Loans and all other Obligations
owing or to become owing from Borrower to National shall have been fully
satisfied. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or any of the other Loan
Documents and no Event of Default by Borrower under this Agreement or any other
Loan Documents shall be deemed to have been suspended or waived by National,
unless such suspension or waiver is by an instrument in writing specifying such
suspension or waiver and is signed by a duly authorized representative of
National and directed to Borrower.
ARTICLE 9. MISCELLANEOUS PROVISIONS.
Section 9.1. FEES AND EXPENSES: INDEMNITY.
The Borrower will promptly pay all costs of National in preparing the
Loan Documents and all costs and expenses of the issue of the Note and of the
Borrower's and the other Loan Parties, performance of and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with (including, without limitation, all costs of filing or recording
any assignments, mortgages, financing statements and other documents), and the
reasonable fees and expenses and disbursements of counsel to National, in
connection with the preparation, execution and delivery, administration,
interpretation and enforcement of any of the Loan Documents, the consummation of
the transactions contemplated by all such documents, the negotiation,
preparation, and execution and delivery of any amendment, modification or
supplement of or to, or any consent or waiver under, any such document (or any
such instrument which is proposed but not executed and delivered) and with any
claim or action threatened, made or brought against National arising out of or
relating to any extent to any of the Loan Documents or the transactions
contemplated hereby or thereby. In addition, the Borrower will promptly pay
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all costs and expenses (including, without limitation, reasonable fees and
disbursements of counsel) suffered or incurred by National in connection with
its enforcement of the payment of the Note or any other sum due to it under this
Agreement or any of the other Loan Documents or any of its other rights
hereunder or thereunder. In addition to the foregoing, the Borrower shall
indemnify National against, and hold it harmless from, any loss, liabilities,
damages, claims, costs and expenses (including reasonable attorneys' fees and
disbursements) suffered or incurred by National arising out of, resulting from
or in any manner, connected with, any of the Loan Documents or any transaction
related hereto or thereto, including, without limitation, losses, liabilities,
damages, claims, costs and expenses suffered by National arising out of or
related to any Environmental Matter, Environmental Liability or Environmental
Proceeding. The provisions of this Section 9.1 shall survive the payment of the
Note and the termination of this Agreement.
Section 9.2. TAXES.
If, under any law in effect on the date of the closing of any Loans
hereunder, or under any retroactive provision of the law subsequently enacted,
it shall be determined that any federal, state or local tax is payable in
respect of the issuance of the Note, or in connection with the filing or
recording of any assignments, mortgages, financing statements, or other
documents (whether measured by the amount of Indebtedness secured or otherwise)
as contemplated by this Agreement, then the Borrower will pay any such tax and
all interest and penalties, if any, and will indemnify National against and save
it harmless from any loss or damage resulting from or arising out of the
nonpayment or delay in payment of any such tax. If any such tax or taxes shall
be assessed or levied against National, then National may notify the Borrower
and make immediate payment thereof, together with interest or penalties in
connection therewith, and shall thereupon be entitled to and shall receive
immediate reimbursement therefor from the Borrower. Notwithstanding any other
provision contained in this Agreement, the covenants and agreements of the
Borrower in this Section 9.2. shall survive payment of the Note and the
termination of this Agreement.
Section 9.3. PURPOSELY DELETED.
Section 9.4. SURVIVAL OF AGREEMENTS AND REPRESENTATIONS; WAIVER OF TRIAL
BY JURY.
All agreements, representations and warranties made herein shall
survive the delivery of this Agreement and the Note. The Borrower waives trial
by jury in any litigation in any court with respect to, in connection with, or
arising out of, any of the Loan Documents or any instrument or document
delivered pursuant thereto, or the validity, protection, interpretation,
collection or enforcement thereof.
Section 9.5. MODIFICATIONS, CONSENTS AND WAIVERS; ENTIRE AGREEMENT.
No modification, amendment or waiver of or with respect to any
provision of any of the Loan Documents or any other agreements, instruments or
documents delivered pursuant hereto or thereto, nor consent to any departure by
the Borrower from any of the terms or conditions thereof, shall in any event be
effective unless it shall be in writing and signed by National. Any
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such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No consent to or demand on the Borrower in any case
shall, of itself, entitle it to any other or further notice or demand in similar
or other circumstances. This Agreement embodies the entire agreement and
understanding between National and the Borrower relating to the subject matter
hereof and supersedes all prior agreements and understandings relating to the
subject matter hereof.
Section 9.6. REMEDIES CUMULATIVE.
Each and every right granted to National hereunder or under any other
document delivered hereunder or in connection herewith, or allowed it by law or
equity, shall be cumulative and may be exercised from time to time. No failure
on the part of National or the holder of any Note to exercise, and no delay in
exercising, any right shall operate as a waiver thereof, nor shall any single or
partial exercise of any right preclude any other or future exercise thereof or
the exercise of any other right. The due payment and performance of the
Obligations shall be without regard to any counterclaim, right of offset or any
other claim whatsoever which the Borrower may have against National and without
regard to any other obligation of any nature whatsoever which National may have
to the Borrower, and no such counterclaim or offset shall be asserted by the
Borrower in any action, suit or proceeding instituted by National for payment or
performance of the obligations.
Section 9.7. FURTHER ASSURANCES.
At any time and from time to time, upon the request of National, the
Borrower shall execute, deliver and acknowledge or cause to be executed,
delivered and acknowledged, such further documents and instruments and do such
other acts and things as National may reasonably request in order to fully
effect the purposes of any of the Loan Documents and any other agreements,
instruments and documents delivered pursuant hereto or in connection with the
Loans, including, without limitation, the execution and delivery to National of
deeds of trust or mortgages in form and substance satisfactory to National
covering all real property or interests therein acquired by the Borrower, and
all leases of real property entered into by the Borrower as tenant or lessee,
after the date of this Agreement, promptly after such acquisition or the
entering into of any such lease.
Section 9.8. NOTICES.
Any notices or other communications required or permitted to be given
hereunder (except for routine reports delivered in compliance with Article 5
hereof which may be sent by ordinary first-class mail) shall be in writing and
shall be either personally delivered by the party delivering such notice (or by
reputable same day messenger or courier service), sent by reputable overnight
messenger or courier service for overnight delivery, sent by facsimile, with a
confirming copy sent by first class mail, or sent by United States mail,
registered or certified mail, postage prepaid, return receipt requested, and
addressed as follows:
(a) If to National:
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National Wireless Holdings Inc.
000 Xxxxx Xxxx Xxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxx, CEO
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
and to: NWH, Inc.
000 X. 00xx Xx., Xxxxx. 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxxxx, CEO
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
with a copy to:
Xxxx & Hessen LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxx, Esq.
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
(b) If to the Borrower:
Electronic Data Submission Systems, Inc.
0000 Xxxxxxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
or such other address as either party may from time to time specify in writing
to the other in the manner aforesaid. If personally delivered, such notices or
other communications shall be deemed delivered upon delivery. If sent by
reputable overnight messenger or courier service for overnight delivery, such
notices or other communications shall be deemed delivered on the business day
following the date of the delivery of such notices or other communications to
the reputable overnight messenger or courier service. If sent by facsimile, with
a confirming copy sent by first class mail, such notices or other communications
shall be deemed delivered on the first business day following the date of the
facsimile. If sent by United States mail, registered or certified mail, postage
prepaid, return receipt requested, such notices or other communications shall be
deemed delivered upon delivery or refusal to accept delivery as indicated on the
return receipt.
Any party may change the person or address to whom or which notices are to be
given hereunder, by notice duly given hereunder, provided, however, that any
such notice shall be deemed to have been given hereunder only when actually
received by the party to which it is
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addressed.
Section 9.9. COUNTERPARTS.
This Agreement may be signed in any number of counterparts which, when
taken together, shall constitute one and the same document.
Section 9.10. CONSTRUCTION; GOVERNING LAW; CONSENT TO JURISDICTION.
(a) The headings used in this agreement are for convenience
only and shall not be deemed to constitute a part hereof. All uses herein of the
masculine gender or of singular or plural terms shall be deemed to include uses
of the feminine or neuter gender or plural or singular terms, as the context may
require. The loan documents and all other documents and instruments executed and
delivered in connection herewith and therewith, shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New York.
(b) The Borrower irrevocably consents that any legal action or
proceeding against it under, arising out of or in any manner relating to any of
the Loan Documents may be brought in any court of the State of New York or in
the United States District Court for the Southern District of New York. The
Borrower, by the execution and delivery of this agreement, expressly and
irrevocably assents and submits to the personal jurisdiction of any of such
courts in any such action or proceeding. The Borrower further irrevocably
consents to the service of any complaint, summons, notice or other process
relating to any such action or proceeding by delivery thereof to it by hand or
by mail in the manner provided for in Section 9.8 hereof. The Borrower hereby
expressly and irrevocably waives any claim or defense in any such action or
proceeding based on any alleged lack of personal jurisdiction, improper venue or
forum non conveniens or any similar basis. The Borrower shall not be entitled in
any such action or proceeding to assert any defense given or allowed under the
laws of any state other than the State of New York unless such defense is also
given or allowed by the laws of the State of New York. Nothing in this Section
9.10 shall affect or impair in any manner or to any extent the right of National
to commence legal proceedings or otherwise proceed against the Borrower in any
jurisdiction or to serve process in any manner permitted by law.
Section 9.11. SEVERABILITY.
The provisions of this Agreement are severable, and if any clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision in this Agreement in any jurisdiction. Each of the
covenants, agreements and conditions contained in this Agreement is independent
and compliance by the Borrower with any of them shall not excuse non-compliance
by the Borrower with any other. The Borrower shall not take any action the
effect of which shall constitute a breach or violation of any provision of this
Agreement.
Section 9.12. BINDING EFFECT; NO ASSIGNMENT OR DELEGATION.
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This Agreement shall be binding upon and inure to the benefit of the
Borrower and its successors and to the benefit of National and its successors
and assigns. The rights and obligations of the Borrower under this Agreement
shall not be assigned or delegated without the prior written consent of
National, and any purported assignment or delegation without such consent shall
be void.
Section 9.13. TERMINATION OF COMMITMENT BY BORROWER.
At any time that the Borrower has fully paid all Obligations then
outstanding pursuant to this Agreement or any Loan Document, Borrower may
terminate the Commitment upon written notice to National.
Section 9.14. COUNSEL.
Each of the parties (i) acknowledges that Xxxx & Hessen LLP has acted,
and from time to time continues to act, as counsel to Borrower, or affiliates
thereof, as well as to National, (ii) consents to the representation of the
Borrower and such other representation of National by Xxxx & Hessen LLP and
(iii) waives any conflicts of interest claim which may arise therefrom.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first above written.
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
Its President
NATIONAL WIRELESS HOLDINGS INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
Its President
-38-
EXHIBIT A
TO AMENDED AND RESTATED LOAN AGREEMENT
BY AND BETWEEN
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
AND NATIONAL WIRELESS HOLDINGS INC.
FORM OF
AMENDED AND RESTATED NOTE
New York, New York
March __, 1999
$1,800,000
FOR VALUE RECEIVED, the undersigned, Electronic Data Submission
Systems, Inc., a Delaware Corporation, (the "Borrower"), hereby promises to pay
to the order of National Wireless Holdings Inc., a Delaware Corporation
("National"), at the Principal Office of National or at such other place as
National may from time to time designate to Borrower in writing, (a) the lesser
of (i) the principal sum of ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS
($1,800,000.00) or (ii) the aggregate principal amount of all Loans outstanding
under the Loan Agreement hereinafter referred to, in lawful money of the United
States of America and in immediately available funds, on the dates and pursuant
to the terms of the Loan Agreement, but in any event no later than March 31,
2003, and (b) interest on the unpaid principal amount of each Loan, in like
money and funds, for the period commencing on the date of such Loan until such
Loan shall be paid in full, at the rates per annum and on the dates provided in
the Loan Agreement. In no event shall interest exceed the maximum interest rate
permitted by law. The Commitment Termination Date with respect to this Note may
be extended pursuant to the Loan Agreement.
The Borrower shall pay interest on the Loans or any installment
thereof, and on any other amount payable by the Borrower hereunder (to the
extent permitted by law) which shall not be paid in full when due (whether by
demand, by acceleration or otherwise) for the period commencing on the due date
thereof until the same is paid in full at the applicable Post Default Rate (as
defined in the Loan Agreement) and all such interest shall be payable upon
demand.
National is hereby authorized by the Borrower to record on the schedule
annexed to this Note (or on a supplemental schedule thereto) the amount of each
Loan made by National under the Loan Agreement and the amount of each payment or
prepayment of principal of each Loan received by National, it being understood,
however, that failure to make any such notation shall not affect the rights of
National or the obligations of the Borrower hereunder or under the Loan
Agreement in respect of such Loans.
This Note is the Note referred to in the Amened and Restated Loan
Agreement (as amended, restated, modified and supplemented, the "Loan
Agreement") dated the date hereof by
A-1
and between the Borrower and National and evidences Loans made by National
thereunder. This Note is secured in the manner described in the Loan Agreement
and in the Security Agreement. Capitalized terms used in this Note have the
respective meanings assigned to them in the Loan Agreement.
This Note amends and restates in its entirety and is given in
substitution for (but not in satisfaction of) that certain Note dated as of June
9, 1995, executed by Borrower in favor of Lender in the original principal
amount of $1,000,000.
If an Event of Default occurs which has not been cured within any
applicable cure period, the principal hereof accrued interest and all accrued
fees hereon shall become, or may be declared to be, forthwith due and payable in
the manner, upon the conditions and with the effect provided in the Loan
Agreement.
The Borrower may at its option prepay all or any part of the principal
of this Note before maturity upon the terms provided in the Loan Agreement.
The Borrower agrees to pay costs of collection and reasonable
attorneys' fees and disbursements in case default occurs in the payment of this
Note.
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
By
Its President
A-2
SCHEDULE TO NOTE
This Note evidences Loans made under the within described Loan
Agreement, in the principal amounts and on the dates set forth below, subject to
the payments or prepayments of principal set forth below:
Principal Principal Amount Balance
Date Made Amount of Loan Paid or Prepaid Outstanding
--------- -------------- --------------- -----------
A-3
EXHIBIT B
TO
LOAN AGREEMENT
BY AND BETWEEN
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
AND
NATIONAL WIRELESS HOLDINGS INC.
STATES OF QUALIFICATION;
SUBSIDIARIES: CAPITALIZATION: SHAREHOLDERS
SECTION 3.1(A)
1. STATE OF INCORPORATION: Delaware
2. STATES IN WHICH BORROWER HAS
QUALIFIED TO DO BUSINESS Colorado
Florida
Illinois
New Mexico
Texas
Wyoming
3. CLASSES OF STOCK: Common
Series A Convertible Preferred
Series B Convertible Preferred
4. NUMBER OF AUTHORIZED SHARES: 100,000 Common
12,000 Series A
2,000 Series B
5. NUMBER OF ISSUED SHARES: 11,632 Common
12,000 Series A
2,000 Series B
6. SHAREHOLDERS: National Wireless Holdings Inc. - 6,403 Common shares
12,000 Series A shares
Xxxx X. Xxxxxx - 177 Common shares
Xxxxxx X. Xxxxxxxxx - 4,092 Common shares
2,000 Series B shares
Xxxxxx Xxxxxx - 293 Common shares
Specchio Family Foundation - 197 Common shares
Xxxxxxx Xxxxxxx - 293 Common shares
Xxxx Xxxxxxxx - 177 Common shares
B-1
7. LIENS: None
8. OUTSTANDING WARRANTS, OPTIONS, None
CONTRACTS OR COMMITMENTS:
9. SUBSIDIARY CORPORATIONS: None
B-2
EXHIBIT C
TO
LOAN AGREEMENT
BY AND BETWEEN
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
AND
NATIONAL WIRELESS HOLDINGS INC.
CONSENTS
SECTION 3.2
(a) Consent of National to Xxxxxxxxx stock pledge.
(b) Consent of EDSS to Xxxxxxxxx stock pledge.
C-1
EXHIBIT D
TO
LOAN AGREEMENT
BY AND BETWEEN
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
AND NATIONAL WIRELESS HOLDINGS INC.
PERMITTED AND EXISTING LIENS
SECTION 3.5
1. Prior Liens:
(a) Borrower has granted a purchase money security interest in some
projection equipment to Busey Bank, Urbana, Illinois. The amount of the loan is
approximately $14,000.
D-1
EXHIBIT E
TO
LOAN AGREEMENT
BY AND BETWEEN
ELECTRONIC DATA SUBMISSION SYSTEMS, INC
AND
NATIONAL WIRELESS HOLDINGS INC.
LITIGATION AND DEFAULTS
SECTION 3.6
None
E-1
EXHIBIT F
TO
LOAN AGREEMENT
BY AND BETWEEN
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
AND
NATIONAL WIRELESS HOLDINGS INC.
BURDENSOME DOCUMENTS
SECTION 3.8
None
F-1
EXHIBIT G
TO
LOAN AGREEMENT
BY AND BETWEEN
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
AND
NATIONAL WIRELESS HOLDINGS INC.
NAME CHANGES, MERGERS AND ACQUISITIONS
SECTION 3.13
On September 9, 1997, Electronic Data Submission Systems, Inc., a
Colorado Corporation, merged with and into Electronic Data Submission Systems,
Inc., a Delaware corporation.
G-1
EXHIBIT H
TO LOAN AGREEMENT
BY AND BETWEEN
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
AND
NATIONAL WIRELESS HOLDINGS INC.
FRANCHISES, AGREEMENTS, ORDINANCES, ETC.
SECTION 3.11
1. TRADEMARK AND SERVICE MARKS: Borrower is the owner of the "HECET"
Systems(R)" trademark. [Borrower is the owner of the "WinHECET Systems"
trademark. An application for federal registration of the "WinHECET"
Systems" trademark has been prepared and will be filed with the U.S.
Patent and Trademark Office.]
2. COPYRIGHTS: Borrower asserts a copyright in all of its computer
software programs. Borrower protects its computer software programs by
indicating the copyright symbol "(C)"on the initial user screens. In
the future, Borrower may register its copyright in some or all of its
software programs with the U.S.
Copyright Office.
SECTION 3.15(B)
A list of Material Agreements is attached.
H-1
SCHEDULE C
TO LOAN AGREEMENT
BY AND BETWEEN
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
AND
NATIONAL WIRELESS HOLDINGS INC.
Terms for Issuance of Stock to Employees of Borrower:
1. Not more than 6.5% of the issued and outstanding common stock in the
aggregate.
2. Stock that is issued must be non-voting.
3. Stock that is issued must not have any preemptive rights.
4. Employees to whom shares are issued must sign a Stock Transfer
Agreement, restricting transfer upon terms and conditions acceptable to
National.
EXHIBIT I
TO
LOAN AGREEMENT
BY AND BETWEEN
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
AND
NATIONAL WIRELESS HOLDINGS INC.
PERMITTED DEBT
$14,000 Promissory Note to Busey Bank.
EXHIBIT J
TO
LOAN AGREEMENT
BY AND BETWEEN
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
AND
NATIONAL WIRELESS HOLDINGS INC.
REVISED SCHEDULE II
TO SECURITY AGREEMENT
CHIEF PLACE OF BUSINESS OF BORROWER:
Electronic Data Submission Systems, Inc.
0000 Xxxxxxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Offices Where Records
AND BOOKS OF ACCOUNT ARE KEPT:
Electronic Data Submission Systems, Inc.
0000 Xxxxxxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Other Locations Where
COLLATERAL IS STORED. USED OR LOCATED:
Electronic Data Submission Systems, Inc.
000 X. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx, 00000
Business and Trade Names
USED BY BORROWER:
HECET Systems(R)
WinHECET Systems(TM)
SCHEDULE A
TO
LOAN AGREEMENT BY AND BETWEEN
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
AND
NATIONAL WIRELESS HOLDINGS INC.
FORM OF BORROWING NOTICE
1) Amount of Original Commitment $1,800,000.00
2) Aggregate Principal Amount of Advances $
Previously Made
3) Aggregate Principal Amount of Loan Repaid $
4) Remaining Commitment Available for Loan
(Line (1) Less Line (2) Plus Line (3))
5) Amount of this Loan $
6) Date of Proposed Loan (3 days after the date
of this Borrowing Notice)
Attached hereto is a schedule of the proposed use of the proceeds from
this advance. The undersigned agrees to use such proceeds solely for the
purposes permitted under the Loan Agreement hereinafter referred to, as set
forth in said schedule and hereby warrants and represents that such proceeds
shall be used solely for such purposes. All capitalized terms used herein
without definition shall have the respective meanings ascribed thereto in the
Amended and Restated Loan Agreement dated ___________ (as amended, restated,
modified and supplemented, the "Loan Agreement") by and between the undersigned
and National Wireless Holdings Inc.
The undersigned certifies that (a) there has been no breach of the
Section 6.9 of the Loan Agreement, (b) on the date hereof (as set forth below)
the warranties and representations contained in Article 3 of the Loan Agreement
are true and correct as if made on the date hereof, and no Default or Event of
Default under the Loan Agreement exists; and (c) except for the security
interest created by the Borrower Security Agreement and except as permitted
under the Loan Agreement, no part of the Systems is subject to any lien or
security interest in favor of any person, firm or corporation.
Date: ________________, 199_
ELECTRONIC DATA SUBMISSION SYSTEMS, INC.
By
Its President
