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Exhibit B
Loan and Security Agreement, dated as of May 5, 1997,
between PICO Holdings, Inc. and PC Quote, Inc.
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PICO HOLDINGS, INC., A CALIFORNIA CORPORATION
LOAN TO
PC QUOTE, INC., A DELAWARE CORPORATION
LOAN AND SECURITY AGREEMENT
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TABLE OF CONTENTS
Page
1. DEFINITIONS AND CONSTRUCTION.................................................................. 1
1.1 Definitions.......................................................................... 1
1.2 Accounting Terms..................................................................... 6
2. LOAN AND TERMS OF PAYMENT..................................................................... 6
2.1 Advances............................................................................. 6
2.2 Overadvances......................................................................... 6
2.3 Interest Rates and Payments.......................................................... 6
2.4 Crediting Payments................................................................... 7
2.5 Fees................................................................................. 7
2.6 Term................................................................................. 7
3. CONDITIONS OF LOANS........................................................................... 7
3.1 Conditions Precedent to Initial Advance.............................................. 7
3.2 Conditions Precedent to all Advances................................................. 8
4. CREATION OF SECURITY INTEREST................................................................. 8
4.1 Grant of Security Interest........................................................... 8
4.2 Delivery of Additional Documentation Required........................................ 8
4.3 Lender's Rights Upon Default......................................................... 9
4.4 Right to Inspect..................................................................... 9
5. REPRESENTATIONS AND WARRANTIES................................................................ 9
5.1 Due Organization and Qualification................................................... 9
5.2 Due Authorization; No Conflict....................................................... 9
5.3 No Prior Encumbrances................................................................ 9
5.4 Name; Location of Chief Executive Office............................................. 9
5.5 Litigation........................................................................... 9
5.6 No Material Adverse Change in Financial Statements................................... 9
5.7 Regulatory Compliance................................................................ 10
5.8 Taxes................................................................................ 10
5.9 Government Consents.................................................................. 10
5.10 Full Disclosure...................................................................... 10
6. AFFIRMATIVE COVENANTS......................................................................... 10
6.1 Good Standing........................................................................ 10
6.2 Government Compliance................................................................ 10
6.3 Financial Statements, Reports, Certificates.......................................... 11
6.4 Taxes................................................................................ 11
6.5 Insurance............................................................................ 12
6.6 Principal Depository................................................................. 12
6.7 Quick Ratio.......................................................................... 12
6.8 Current Ratio........................................................................ 12
6.9 Registration of Intellectual Property Rights......................................... 12
6.10 Further Assurances................................................................... 12
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7. NEGATIVE COVENANTS............................................................................ 12
7.1 Dispositions......................................................................... 12
7.2 Change in Business................................................................... 13
7.3 Mergers or Acquisitions.............................................................. 13
7.4 Encumbrances......................................................................... 13
7.5 Distributions........................................................................ 13
7.6 Investments.......................................................................... 13
7.7 Transactions with Affiliates......................................................... 13
7.8 Subordinated Debt.................................................................... 13
7.9 Compliance........................................................................... 13
8. EVENTS OF DEFAULT............................................................................. 14
8.1 Payment Default...................................................................... 14
8.2 Covenant Default..................................................................... 14
8.3 Budget Default....................................................................... 14
8.4 Material Adverse Change.............................................................. 14
8.5 Attachment........................................................................... 14
8.6 Insolvency........................................................................... 15
8.7 Litigation........................................................................... 15
8.8 Subordinated Debt.................................................................... 15
8.9 Judgments............................................................................ 15
8.10 Misrepresentations................................................................... 15
9. LENDER'S RIGHTS AND REMEDIES.................................................................. 15
9.1 Rights and Remedies.................................................................. 15
9.2 Power of Attorney.................................................................... 16
9.3 Accounts Collection.................................................................. 16
9.4 Lender Expenses...................................................................... 16
9.5 Lender's Liability for Collateral.................................................... 17
9.6 Remedies Cumulative.................................................................. 17
9.7 Demand; Protest...................................................................... 17
10. NOTICES....................................................................................... 17
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.................................................... 18
12. GENERAL PROVISIONS............................................................................ 18
12.1 Successors and Assigns............................................................... 18
12.2 Indemnification...................................................................... 18
12.3 Time of Essence...................................................................... 18
12.4 Severability of Provisions........................................................... 18
12.5 Amendments in Writing, Integration................................................... 18
12.6 Counterparts......................................................................... 18
12.7 Survival............................................................................. 19
12.8 Confidentiality...................................................................... 19
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement") is entered into as of
May 5, 1997, by and between PICO HOLDINGS, INC., a California corporation
("Lender") and PC QUOTE, INC., a Delaware corporation ("Borrower").
RECITALS
Borrower wishes to obtain credit from time to time from Lender, and
Lender desires to extend credit to Borrower. This Agreement sets forth the
terms on which Lender will extend credit to Borrower in a principal amount of
up to One Million Dollars ($1,000,000), and Borrower will repay the amounts
owing to Lender.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions. As used in this Agreement, the
following terms shall have the following definitions:
"Accounts" means all presently existing and hereafter
arising accounts, contract rights, and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods (including, without
limitation, the licensing of software and other technology) or the rendering of
services by Borrower, whether or not earned by performance, and any and all
credit insurance, guaranties, and other security therefor, as well as all
merchandise returned to or reclaimed by Borrower and Borrower's Books relating
to any of the foregoing.
"Advance" or "Advances" means an Advance under the
Revolving Facility.
"Affiliate" means, with respect to any Person, any Person
that owns or controls directly or indirectly such Person, any Person that
controls or is controlled by or is under common control with such Person, and
each of such Person's senior executive officers, directors, and partners.
"Borrower's Books" means all of Borrower's books and
records including: ledgers; records concerning Borrower's assets or liabilities,
the Collateral, business operations or financial condition; and all computer
programs, or tape files, and the equipment, containing such information.
"Business Day" means any day that is not a Saturday,
Sunday, or other day which is a legal holiday in the State of Illinois.
"Closing Date" means the date of this Agreement.
"Code" means the Illinois Uniform Commercial Code.
"Collateral" means the property described on Exhibit A
attached hereto.
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"Committed Line" means the credit available to Borrower
under the Revolving Facility in an amount of up to One Million Dollars
($1,000,000).
"Contingent Obligation" means, as applied to any Person,
any direct or rect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term "Contingent Obligation" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.
"Current Assets" means, as of any applicable date, all
amounts that should, in accordance with GAAP, be included as current assets on
the consolidated balance sheet of Borrower and its Subsidiaries as at such date.
"Current Liabilities" means, as of any applicable date,
all amounts that should, in accordance with GAAP, be included as current
liabilities on the consolidated balance sheet of Borrower and its Subsidiaries,
as at such date, plus, to the extent not already included therein, all
outstanding Advances made under this Agreement, including all Indebtedness that
is payable upon demand or within one year from the date of determination thereof
unless such Indebtedness is renewable or extendable at the option of Borrower or
any Subsidiary to a date more than one year from the date of determination, but
excluding Subordinated Debt.
"Daily Balance" means the amount of the Obligations owed
at the end of a given day.
"Equipment" means all present and future machinery,
equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and
attachments in which Borrower has any interest.
"ERISA" means the Employment Retirement Income Security
Act of 1974, as amended, and the regulations thereunder.
"GAAP" means generally accepted accounting principles as
in effect from time to time.
"Indebtedness" means (a) all indebtedness for borrowed
money or the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced
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by notes, bonds, debentures or similar instruments, (c) all capital lease
obligations and (d) all Contingent Obligations.
"Insolvency Proceeding" means any proceeding commenced by
or against any person or entity under any provision of the United States
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, formal or informal
moratoria, compositions, extension generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief.
"Inventory" means all present and future inventory in
which Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above, and Borrower's Books relating
to any of the foregoing.
"Investment" means any beneficial ownership of (including
stock, partnership interest or other securities) any Person, or any loan,
advance or capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as ded,
and the regulations thereunder.
"Lien" means any mortgage, lien, deed of trust, charge,
pledge, security interest or other encumbrance.
"Loan Documents" means, collectively, this Agreement, any
note or notes executed by Borrower, and any other agreement entered into between
Borrower and Lender in connection with this Agreement, all as amended or
extended from time to time.
"Material Adverse Effect" means a material adverse effect
on (i) the business operations or condition (financial or otherwise) of Borrower
and its Subsidiaries taken as a whole or (ii) the ability of Borrower to repay
the Obligations or otherwise perform its obligations under the Loan Documents.
"Maturity Date" means September 30, 1997.
"Negotiable Collateral" means all of Borrower's present
and future letters of credit of which it is a beneficiary, notes, drafts,
instruments, securities, documents of title, and chattel paper, and Borrower's
Books relating to any of the foregoing.
"Obligations" means all debt, principal, interest,
Expenses and other amounts owed to Lender by Borrower pursuant to this Agreement
or any other agreement, whether absolute or contingent, due or to become due,
now existing or hereafter arising, including any interest that accrues after the
commencement of an Insolvency Proceeding and including any debt, liability, or
obligation owing from Borrower to others that Lender may have obtained by
assignment or otherwise.
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"Periodic Payments" means all installments or similar
recurring payments that Borrower may now or hereafter become obligated to pay to
Lender pursuant to the terms and provisions of any instrument, or agreement now
or hereafter in existence between Borrower and Lender.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Lender arising
under this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and
disclosed in the Schedule;
(c) Subordinated Debt; and
(d) Indebtedness to trade creditors incurred in the
ordinary course of business.
"Permitted Investment" means:
(a) Investments existing on the Closing Date
disclosed in the Schedule; and
(b) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one (1) year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one (1) year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Corporation or Xxxxx'x Investors Service, Inc., and (iii)
certificates of deposit maturing no more than one (1) year from the date of
investment therein issued by Lender.
"Permitted Liens" means the following:
(a) Any Liens existing on the Closing Date and disclosed
in the Schedule or arising under this Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or other
governmental charges or levies, either not delinquent or being contested in good
faith by appropriate proceedings, provided the same have no priority over any of
Lender's security interests;
(c) Liens (i) upon or in any equipment acquired or
held by Borrower or any of its Subsidiaries to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the time of
its acquisition, provided that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment;
(d) Liens incurred in connection with the extension,
renewal or refinancing of the indebtedness secured by Liens of the type
described in clauses (a) through (c) above, provided that any extension, renewal
or replacement Lien shall be limited to the property
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encumbered by the existing Lien and the principal amount of the indebtedness
being extended, renewed or refinanced does not increase.
"Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or governmental agency.
"Expenses" means all: reasonable costs or expenses
(including reasonable attorneys' fees and expenses) incurred by Lender in
connection with the preparation, negotiation, administration, and enforcement of
the Loan Documents; and Lender's reasonable attorneys' fees and expenses
incurred in amending, enforcing or defending the Loan Documents, whether or not
suit is brought.
"Quick Assets" means, at any date as of which the amount
thereof shall be determined, the consolidated cash, cash-equivalents, accounts
receivable and investments, with maturities not to exceed 90 days, of Borrower
determined in accordance with GAAP.
"Responsible Officer" means each of the Chief Executive
Officer, the Chief Financial Officer and the Controller of Borrower.
"Revolving Facility" means the facility under which
Borrower may request Lender to issue cash advances, as specified in Section 2.1
hereof.
"Schedule" means the schedule of exceptions attached
hereto.
"Subordinated Debt" means any debt incurred by Borrower
that is subordinated to the debt owing by Borrower to Lender on terms acceptable
to Lender (and identified as being such by Borrower and Lender).
"Subsidiary" means any corporation in which one hundred
percent (100%) of the stock of which is, at the time as of which any
determination is being made, owned by Borrower.
"Tangible Net Worth" means at any date as of which the
amount thereof shall be determined, the consolidated total assets of Borrower
and its Subsidiaries minus, without duplication, (i) the sum of any amounts
attributable to (a) goodwill, (b) intangible items such as unamortized debt
discount and expense, patents, trade and service marks and names, copyrights and
research and development expenses except prepaid expenses, and (c) all reserves
not already deducted from assets, and (ii) Total Liabilities.
"Total Liabilities" means at any date as of which the
amount thereof shall be determined, all obligations that should, in accordance
with GAAP be classified as liabilities on the consolidated balance sheet of
Borrower, including in any event all Indebtedness, but specifically excluding
Subordinated Debt.
"Weekly Budget" means the budget prepared weekly by
Borrower, and approved by Lender, setting forth (i) Borrower's income and
expense projections for a seven-day period commencing on a Sunday and ending on
the following Saturday, and (ii) adjustments or corrections as to income and
expense projections contained in the previous Weekly Budget for
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actual income received and expenses incurred by Borrower. The Weekly Budget
must be certified by Xxxxx Xxxxxx, Xxxxxxx Xxxxx and Xxxxxx Xxxxxxx as being
true, accurate and complete, to the bet of their knowledge, exercise in good
faith. In the event any of the foregoing persons is no longer employed by
Borrower, the certification shall be made by the persons employed by Borrower
performing similar functions and duties.
1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all calculations
made hereunder shall be made in accordance with GAAP. When used herein, the
terms "financial statements" shall include the notes and schedules thereto.
2. LOAN AND TERMS OF PAYMENT
2.1 Advances. Subject to and upon the terms and conditions of
this Agreement, and provided that no uncured Event of Default exists, Lender
agrees to make Advances to Borrower in an amount equal to the cash needed (such
amount not to exceed the difference by which disbursements exceed revenue)
under the applicable Weekly Budget, provided the Advances shall not exceed an
aggregate amount in excess of the Committed Line. Lender shall not be obligated
to make an Advance for any amount in excess of the cash needs of Borrower
supported by the applicable Weekly Budget. Subject to the terms and conditions
of this Agreement, amounts borrowed pursuant to this Section 2.1 may be repaid
and reborrowed at any time during the term of this Agreement.
Whenever Borrower desires an Advance, Borrower will notify
Lender by facsimile transmission or telephone no later than 10:00 a.m.
California time, at least two days prior to the Business Day upon which the
Advance is to be made. Each such notification shall be promptly confirmed by an
Advance Request Form in substantially the form of Exhibit B hereto. Lender is
authorized to make Advances under this Agreement based upon instructions
received from a Responsible Officer. Lender shall be entitled to rely on any
telephonic notice given by a person who Lender reasonably believes to be a
Responsible Officer, and Borrower shall indemnify and hold Lender harmless for
any damages or loss suffered by Lender as a result of such reliance. Lender
will wire the amount of Advances made under this Section 2.1 to Borrower's.
The Revolving Facility shall terminate on the Maturity Date,
at which time all Advances under this Section 2.1 and other amounts due under
this Agreement shall be immediately due and payable.
2.2 Overadvances. If, at any time or for any reason, the
amount of Obligations owed by Borrower to Lender pursuant to Section 2.1 of
this Agreement is greater than the Committed Line, Borrower shall immediately
pay to Lender, in cash, the amount of such excess.
2.3 Interest Rates and Payments.
(a) Interest Rate. Except as set forth in Section
2.3(b), any Advances shall bear interest, on the Daily Balance, at a fixed rate
equal to fourteen percent (14%) per annum.
(b) Default Rate. All Obligations shall bear interest,
from and after the occurrence of an Event of Default, at a rate equal to
nineteen percent (19%) per annum.
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(c) Payments. Interest hereunder shall be due and
payable on the Maturity Date. Lender shall, at its option, charge all Expenses
against the Committed Line, in which case those amounts shall thereafter accrue
interest at the rate then applicable hereunder. Any interest not paid when due
shall be compounded by becoming a part of the Obligations, and such interest
shall thereafter accrue interest at the rate then applicable hereunder.
(d) Computation. All interest chargeable under
the Loan Documents shall be computed on the basis of a three hundred sixty (360)
day year for the actual number of days elapsed.
2.4 Crediting Payments. Any wire transfer or payment received
by Lender after 12:00 noon California time shall be deemed to have been
received by Lender as of the opening of business on the immediately following
Business Day. Whenever any payment to Lender under the Loan Documents would
otherwise be due (except by reason of acceleration) on a date that is not a
Business Day, such payment shall instead be due on the next Business Day, and
additional interest shall accrue and be payable for the period of such
extension.
2.5 Fees. Borrower shall pay to Lender the following:
(a) Facility Fee. A Facility Fee equal to Forty
Thousand Dollars ($40,000.00), which fee shall be due on the Closing Date and
shall be fully earned and nonrefundable. Borrower may defer payment of the
Facility Fee until the Maturity Date in which case the Facility Fee shall become
part of the Obligations and bear interest as set forth in Section 2.3 above from
the Closing Date until paid.
(b) Financial Examination and Appraisal Fees. Lender's
out-of-pocket expenses for Lender's audits of Borrower's Accounts, and for each
appraisal of Collateral and financial analysis and examination of Borrower
performed from time to time by Lender or its agents;
(c) Expenses. Upon the date hereof, all Expenses
incurred by Lender through the Closing Date, including reasonable attorneys'
fees and expenses, and, after the date hereof, all Expenses incurred by Lender,
including reasonable attorneys' fees and expenses, as and when they become due.
2.6 Term. This Agreement shall become effective on the
Closing Date and, subject to Section 12.7, shall continue in full force and
effect for a term ending on the Maturity Date. Notwithstanding the foregoing,
Lender shall have the right to terminate its obligation to make Advances under
this Agreement immediately and without notice upon the occurrence and during
the continuance of an Event of Default. Notwithstanding termination, Lender's
Lien on the Collateral shall remain in effect for so long as any Obligations
are outstanding.
3. CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Advance. The obligation
of Lender to make the initial Advance is subject to the condition precedent
that Lender shall have received, in form and substance satisfactory to Lender,
the following:
(a) this Agreement and any other loan documents
contemplated by this Agreement;
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(b) a certificate of the Secretary of Borrower with
respect to incumbency and resolutions authorizing the execution and delivery of
this Agreement;
(c) a warrant to purchase stock of Borrower, duly
executed, in the form of Exhibit E attached hereto.
(d) financing statements (Forms UCC-1);
(e) a first amendment in form and substance acceptable
to Lender, amending a certain Subordinated Debenture in favor of Physicians
Insurance Company of Ohio, an Ohio corporation;
(f) payment of the Lender Expenses then due specified
in Section 2.5 hereof; and
(g) such other documents, and completion of such other
matters, as Lender may reasonably deem necessary or appropriate.
3.2 Conditions Precedent to all Advances. The obligation of
Lender to make each Advance, including the initial Advance, is further subject
to the following conditions:
(a) timely receipt by Lender of the Advance
Request Form as provided
in Section 2.1; and
(b) timely receipt by Lender of the Weekly Budget, on or
before the first day of the week covered by any such Weekly Budget;
(c) the representations and warranties contained in
Section 5 shall be true and correct in all material respects on and as of the
date of such Advance Request Form and on the effective date of each Advance as
though made at and as of each such date, and no Event of Default shall have
occurred and be continuing, or would result from such Advance. The making of
each Advance shall be deemed to be a representation and warranty by Borrower on
the date of such Advance as to the accuracy of the facts referred to in this
Section 3.2(b).
4. CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest. Borrower grants and pledges
to Lender a continuing security interest in all presently existing and
hereafter acquired or arising Collateral in order to secure prompt repayment of
any and all Obligations and in order to secure prompt performance by Borrower
of each of its covenants and duties under the Loan Documents. Except as set
forth in the Schedule, such security interest constitutes a valid security
interest in the presently existing Collateral, junior in priority only to
Permitted Liens and such security interest will constitute a valid security
interest in Collateral acquired after the date hereof, junior in priority only
to Permitted Liens.
4.2 Delivery of Additional Documentation Required. Borrower
shall from time to time execute and deliver to Lender, at the request of
Lender, all Negotiable Collateral, all financing statements and other documents
that Lender may reasonably request, in form satisfactory to Lender, to perfect
and continue perfected Lender's security interests in the
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Collateral and in order to fully consummate all of the transactions
contemplated under the Loan Documents.
4.3 Lender's Rights Upon Default. In the event of a default
by the Borrower under this Agreement, Lender shall be entitled to exercise any
and all rights and remedies available to Lender under the Illinois Uniform
Commercial Code and all other rights and remedies at law in equity available to
secured creditors in the State of Illinois. Borrower further acknowledges that
five (5) days' notice of any public or private sale of the Collateral is
commercially reasonable under all circumstances.
4.4 Right to Inspect. Lender (through any of its officers,
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower's usual business hours, to inspect Borrower's
Books and to make copies thereof and to check, test, and appraise the
Collateral in order to verify Borrower's financial condition or the amount,
condition of, or any other matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 Due Organization and Qualification. Borrower and each
Subsidiary is a corporation duly existing and in good standing under the laws
of its state of incorporation and qualified and licensed to do business in, and
is in good standing in, any state in which the conduct of its business or its
ownership of property requires that it be so qualified.
5.2 Due Authorization; No Conflict. The execution, delivery,
and performance of the Loan Documents are within Borrower's powers, have been
duly authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Articles of Incorporation or Bylaws, nor will
they constitute an event of default under any material agreement to which
Borrower is a party or by which Borrower is bound.
5.3 No Prior Encumbrances. Borrower has good and
indefeasible title to the Collateral, free and clear of Liens, except for
Permitted Liens.
5.4 Name; Location of Chief Executive Office. Except as
disclosed in the Schedule, Borrower has not done business under any name other
than that specified on the signature page hereof. The chief executive office of
Borrower is located at the address indicated in Section 10 hereof.
5.5 Litigation. Except as set forth in the Schedule and as
disclosed in Borrower's most recent Form 10K filing with the Securities and
Exchange Commission and in its 1996 audited statement, there are no actions or
proceedings pending by or against Borrower or any Subsidiary before any court
or administrative agency in which an adverse decision could have a Material
Adverse Effect or a material adverse effect on Borrower's interest or Lender's
security interest in the Collateral. Borrower does not have knowledge of any
such pending or threatened actions or proceedings.
5.6 No Material Adverse Change in Financial Statements. All
consolidated financial statements related to Borrower and any Subsidiary that
have been delivered by Borrower to Lender fairly present in all material
respects Borrower's consolidated financial
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condition as of the date thereof and Borrower's consolidated results of
operations for the period then ended. There has not been a material adverse
change in the consolidated financial condition of Borrower since the date of
the most recent of such financial statements submitted to Lender. The
representations and warranties contained in this Section 5.6 are made to the
best of Borrower's knowledge exercised in good faith.
5.7 Regulatory Compliance. Borrower and each Subsidiary has
met the minimum funding requirements of ERISA with respect to any employee
benefit plans subject to ERISA. No event has occurred resulting from Borrower's
failure to comply with ERISA that is reasonably likely to result in Borrower's
incurring any liability that could have a Material Adverse Effect. Borrower is
not an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940. Borrower is
not engaged principally, or as one of the important activities, in the business
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulations G, T and U of the Board of Governors of the
Federal Reserve System). Borrower has complied with all the provisions of the
Federal Fair Labor Standards Act. Borrower has not violated any statutes, laws,
ordinances or rules applicable to it, violation of which could have a Material
Adverse Effect.
5.8 Taxes. Borrower and each Subsidiary has filed or caused
to be filed all tax returns required to be filed, and has paid, or has made
adequate provision for the payment of, all taxes reflected therein.
5.9 Government Consents. Borrower and each Subsidiary has
obtained all consents, approvals and authorizations of, made all declarations
or filings with, and given all notices to, all governmental authorities that
are necessary for the continued operation of Borrower's business as currently
conducted.
5.10 Full Disclosure. To the best of Borrower's knowledge,
exercised in good faith, no representation, warranty or other statement made by
Borrower in any certificate or written statement furnished to Lender contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained in such certificates or
statements not misleading.
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until payment in full of
all outstanding Obligations, and for so long as Lender may have any commitment
to make an Advance hereunder, Borrower shall do all of the following:
6.1 Good Standing. Borrower shall maintain its and each of
its Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify could have a Material Adverse Effect. Borrower shall
maintain, and shall cause each of its Subsidiaries to maintain, to the extent
consistent with prudent management of Borrower's business, in force all
licenses, approvals and agreements, the loss of which could have a Material
Adverse Effect.
6.2 Government Compliance. Borrower shall meet, and shall
cause each Subsidiary to meet, the minimum funding requirements of ERISA with
respect to any employee benefit plans subject to ERISA. Borrower shall comply,
and shall cause each Subsidiary to
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comply, with all statutes, laws, ordinances and government rules and
regulations to which it is subject, noncompliance with which could have a
Material Adverse Effect or a material adverse effect on the Collateral or the
priority of Lender's Lien on the Collateral.
6.3 Financial Statements, Reports, Certificates. Borrower
shall deliver to Lender: (a) as soon as available, but in any event within
forty (40) days after the end of each month, a company prepared consolidated
balance sheet and income statement covering Borrower's consolidated operations
during such period; (b) as soon as available, but in any event within ninety
(90) days after the end of Borrower's fiscal year, audited consolidated
financial statements of Borrower prepared in accordance with GAAP, consistently
applied, together with an unqualified opinion on such financial statements of
an independent certified public accounting firm reasonably acceptable to
Lender; (c) within five (5) days upon becoming available, copies of all
statements, reports and notices sent or made available generally by Borrower to
its security holders or to any holders of Subordinated Debt and all reports on
Form 10-K and 10-Q filed with the Securities and Exchange Commission; (d)
promptly upon receipt of notice thereof, a report of any legal actions pending
or threatened against Borrower or any Subsidiary that could result in damages
or costs to Borrower or any Subsidiary of Fifty Thousand Dollars ($50,000) or
more; and (e) such budgets, sales projections, operating plans or other
financial information as Lender may reasonably request from time to time. Any
and all financial information to be provided hereunder by Borrower to Lender
shall be certified by Xxxxx Xxxxxx, Xxxxxxx Xxxxx and Xxxxxx Xxxxxxx, as true,
accurate and complete, to the best of their knowledge, exercise in good faith.
In the event that one or more of the foregoing persons is no longer employed by
Borrower, the certification shall be made by the persons employed by the
Borrower performing similar duties and functions.
On the first business day of each week in which this Revolving
Facility is outstanding, Borrower shall deliver to Lender a Weekly Budget
signed by a Responsible Officer in substantially the form of Exhibit C hereto.
Borrower shall deliver to Lender with the monthly financial statements
a Compliance Certificate signed by a Responsible Officer in substantially the
form of Exhibit D hereto.
Lender shall have a right from time to time hereafter to audit
Borrower's Accounts at Borrower's expense, provided that such audits will be
conducted no more often than every two (2) months unless an Event of Default
has occurred and is continuing.
6.4 Taxes. Borrower shall make, and shall cause each
Subsidiary to make, due and timely payment or deposit of all material federal,
state, and local taxes, assessments, or contributions required of it by law,
and will execute and deliver to Lender, on demand, appropriate certificates
attesting to the payment or deposit thereof; and Borrower will make, and will
cause each Subsidiary to make, timely payment or deposit of all material tax
payments and withholding taxes required of it by applicable laws, including,
but not limited to, those laws concerning F.I.C.A., F.U.T.A., state disability,
and local, state, and federal income taxes, and will, upon request, furnish
Lender with proof satisfactory to Lender indicating that Borrower or a
Subsidiary has made such payments or deposits; provided that Borrower or a
Subsidiary need not make any payment if the amount or validity of such payment
is contested in good faith by appropriate proceedings and is reserved against
(to the extent required by GAAP) by Borrower.
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6.5 Insurance.
(a) Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as ordinarily insured against by
other owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain insurance
relating to Borrower's ownership and use of the Collateral in amounts and of a
type that are customary to businesses similar to Borrower's.
(b) All such policies of insurance shall be in such
form, with such companies, and in such amounts as reasonably satisfactory to
Lender. All such policies of property insurance shall contain a lender's loss
payable endorsement, in a form satisfactory to Lender, showing Lender as an
additional loss payee thereof and all liability insurance policies shall show
the Lender as an additional insured, and shall specify that the insurer must
give at least twenty (20) days notice to Lender before canceling its policy for
any reason. Upon Lender's request, Borrower shall deliver to Lender certified
copies of such policies of insurance and evidence of the payments of all
premiums therefor. All proceeds payable under any such policy shall, at the
option of Lender, be payable to Lender to be applied on account of the
Obligations.
6.6 Principal Depository. Borrower shall maintain its
principal depository and operating accounts with Lakeside Bank, an Illinois
banking corporation.
6.7 Quick Ratio. Borrower shall maintain, as of the last day
of each calendar month, a ratio of Quick Assets to Current Liabilities of at
least .1 to 1.0.
6.8 Current Ratio. Borrower shall maintain, as of the last
day of each calendar month, a ratio of Current Assets to Current Liabilities of
at least .12 to 1.0.
6.9 Registration of Intellectual Property Rights. If
Borrower registers or causes to be registered with the United States Patent and
Trademark Office or the United States Copyright Office, as applicable, any
intellectual property rights covered by the blanket description contained in
Exhibit A, Borrower shall notify Lender in writing before the effective date of
such registration, and Borrower shall execute and deliver such additional
instruments and documents from time to time as Lender shall reasonably request
to perfect Lender's security interest in such additional intellectual property
rights.
6.10 Further Assurances. At any time and from time to time
Borrower shall execute and deliver such further instruments and take such
further action as may reasonably be requested by Lender to effect the purposes
of this Agreement.
7. NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until payment in full of the outstanding
Obligations or for so long as Lender may have any commitment to make any
Advances, Borrower will not do any of the following:
7.1 Dispositions. Without the prior written consent of
Lender, which shall not be unreasonably withheld, convey, sell, lease, transfer
or otherwise dispose of (collectively, a "Transfer"), or permit any of its
Subsidiaries to Transfer, all or any part of its business or property, other
than: (i) Transfers of non-exclusive licenses and similar arrangements for the
use
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of the property of Borrower or its Subsidiaries; or (ii) Transfers of worn-out
or obsolete Equipment.
7.2 Change in Business. Engage in any business, or permit any
of its Subsidiaries to engage in any business, other than the businesses
currently engaged in by Borrower and any business substantially similar or
related thereto (or incidental thereto), or suffer a material change in
Borrower's ownership. Borrower will not, without thirty (30) days prior written
notification to Lender, relocate its chief executive office.
7.3 Mergers or Acquisitions. Merge or consolidate, or permit
any of its Subsidiaries to merge or consolidate, with or into any other
business organization, or acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another
Person.
7.4 Encumbrances. Create, incur, assume or suffer to exist
any Lien with respect to any of its property, or assign or otherwise convey any
right to receive income, including the sale of any Accounts, or permit any of
its Subsidiaries so to do, except for Permitted Liens.
7.5 Distributions. Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock.
7.6 Investments. Directly or indirectly acquire or own, or
make any Investment in or to any Person, or permit any of its Subsidiaries so to
do, other than Permitted Investments.
7.7 Transactions with Affiliates. Directly or indirectly
enter into or permit to exist any material transaction with any Affiliate of
Borrower except for transactions that are in the ordinary course of Borrower's
business, upon fair and reasonable terms that are no less favorable to Borrower
than would be obtained in an arm's length transaction with a nonaffiliated
Person.
7.8 Subordinated Debt. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Lender's prior written consent.
7.9 Compliance. Become an "investment company" controlled by
an "investment company," within the meaning of the Investment Company Act of
1940, or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance for such purpose. Fail
to meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur, fail to comply with the
Federal Fair Labor Standards Act or violate any law or regulation, which
violation could have a Material Adverse Effect or a material adverse effect on
the Collateral or the priority of Lender's Lien on the Collateral, or permit any
of its Subsidiaries to do any of the foregoing.
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8. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an
Event of Default by Borrower under this Agreement:
8.1 Payment Default. If Borrower fails to pay the principal
of, or any interest on, any Advances when due and payable; or fails to pay any
portion of any other Obligations not constituting such principal or interest,
including without limitation Lender Expenses, within thirty (30) days of
receipt by Borrower of an invoice for such other Obligations;
8.2 Covenant Default. If Borrower fails to perform any
obligation under Article 6 or violates any of the covenants contained in
Article 7 of this Agreement, or fails or neglects to perform, keep, or observe
any other material term, provision, condition, covenant, or agreement contained
in this Agreement, in any of the Loan Documents, or in any other present or
future agreement between Borrower and Lender and as to any default under such
other term, provision, condition, covenant or agreement that can be cured, has
failed to cure such default within ten (10) days after Borrower receives notice
thereof or any officer of Borrower becomes aware thereof; provided, however,
that if the default cannot by its nature be cured within the ten (10) day
period or cannot after diligent attempts by Borrower be cured within such ten
(10) day period, and such default is likely to be cured within a reasonable
time, then Borrower shall have an additional reasonable period (which shall not
in any case exceed thirty (30) days) to attempt to cure such default, and
within such reasonable time period the failure to have cured such default shall
not be deemed an Event of Default (provided that no Advances will be required
to be made during such cure period);
8.3 Budget Default. Borrower's actual weekly cash flow shall
be more than $20,000 less than that set forth in any Weekly Budget. Such Event
of Default shall not be curable.
8.4 Material Adverse Change. If there occurs a material
adverse change in Borrower's business or financial condition, or if there is a
material impairment of the prospect of repayment of any portion of the
Obligations or a material impairment of the value or priority of Lender's
security interests in the Collateral;
8.5 Attachment. If any material portion of Borrower's assets
is attached, seized, subjected to a writ or distress warrant, or is levied upon,
or comes into the possession of any trustee, receiver or person acting in a
similar capacity and such attachment, seizure, writ or distress warrant or levy
has not been removed, discharged or rescinded within ten (10) days, or if
Borrower is enjoined, restrained, or in any way prevented by court order from
continuing to conduct all or any material part of its business affairs, or if a
judgment or other claim becomes a lien or encumbrance upon any material portion
of Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that no Advances will be required to be made during such cure period);
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8.6 Insolvency. If an Insolvency Proceeding is commenced by
Borrower, or if an Insolvency Proceeding is commenced against Borrower and is
not dismissed or stayed within ten (10) days (provided that no Advances will be
made prior to the dismissal of such Insolvency Proceeding);
8.7 Litigation. If Borrower is named as a defendant in any
legal action that could result in damages or costs to Borrower or any Subsidiary
of One Hundred Thousand Dollars ($100,000.00) or more;
8.8 Subordinated Debt. If Borrower makes any payment on
account of Subordinated Debt, except to the extent such payment is allowed under
any subordination agreement entered into with Lender;
8.9 Judgments. If a judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least Fifty Thousand
Dollars ($50,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of ten (10) days (provided that no
Advances will be made prior to the satisfaction or stay of such judgment); or
8.10 Misrepresentations. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Lender by any Responsible
Officer pursuant to this Agreement or to induce Lender to enter into this
Agreement or any other Loan Document.
9. LENDER'S RIGHTS AND REMEDIES
9.1 Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default, Lender may, at its election, without notice
of its election and without demand, do any one or more of the following, all of
which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
Section 8.5 all Obligations shall become immediately due and payable without any
action by Lender);
(b) Cease advancing money or extending credit to or for
the benefit of Borrower under this Agreement or under any other agreement
between Borrower and Lender;
(c) Settle or adjust disputes and claims directly with
account debtors for amounts, upon terms and in whatever order that Lender
reasonably considers advisable;
(d) Without notice to or demand upon Borrower, make such
payments and do such acts as Lender considers necessary or reasonable to protect
its security interest in the Collateral. Borrower agrees to assemble the
Collateral if Lender so requires, and to make the Collateral available to Lender
as Lender may designate. Borrower authorizes Lender to enter the premises where
the Collateral is located, to take and maintain possession of the Collateral, or
any part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Lender's determination appears to be prior or superior
to its security interest (other than Permitted Liens) and to pay all expenses
incurred in connection therewith. With respect to any of Borrower's owned
premises, Borrower hereby grants Lender a license to enter into
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possession of such premises and to occupy the same, without charge, in order to
exercise any of Lender's rights or remedies provided herein, at law, in equity,
or otherwise;
(e) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Lender is hereby granted a license or other right,
solely pursuant to the provisions of this Section 9.1, to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Lender's exercise of its rights under this Section 9.1,
Borrower's rights under all licenses and all franchise agreements shall inure to
Lender's benefit;
(f) Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as
Lender determines is commercially reasonable, and apply any proceeds to the
Obligations in whatever manner or order Lender deems appropriate;
(g) Lender may credit bid and purchase at any public
sale; and
(h) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.
9.2 Power of Attorney. Effective only upon the occurrence and
during the continuance of an Event of Default, Borrower hereby irrevocably
appoints Lender (and any of Lender's designated officers, or employees) as
Borrower's true and lawful attorney to: (a) send requests for verification of
Accounts or notify account debtors of Lender's security interest in the
Accounts; (b) endorse Borrower's name on any checks or other forms of payment or
security that may come into Lender's possession; (c) sign Borrower's name on any
invoice or xxxx of lading relating to any Account, drafts against account
debtors, schedules and assignments of Accounts, verifications of Accounts, and
notices to account debtors; (d) make, settle, and adjust all claims under and
decisions with respect to Borrower's policies of insurance; and (e) settle and
adjust disputes and claims respecting the accounts directly with account
debtors, for amounts and upon terms which Lender determines to be reasonable;
provided Lender may exercise such power of attorney to sign the name of Borrower
on any of the documents described in Section 4.2 regardless of whether an Event
of Default has occurred. The appointment of Lender as Borrower's attorney in
fact, and each and every one of Lender's rights and powers, being coupled with
an interest, is irrevocable until all of the Obligations have been fully repaid
and performed and Lender's obligation to provide advances hereunder is
terminated.
9.3 Accounts Collection. At any time from the date of this
Agreement, Lender may notify any Person owing funds to Borrower of Lender's
security interest in such funds and verify the amount of such Account. Borrower
shall collect all amounts owing to Borrower for Lender, receive in trust all
payments as Lender's trustee, and immediately deliver such payments to Lender
in their original form as received from the account debtor, with proper
endorsements for deposit.
9.4 Lender Expenses. If Borrower fails to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Lender may do any or all of the
following: (a) make payment of the same or
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any part thereof; or (b) set up such reserves under the Revolving Facility as
Lender deems necessary to protect Lender from the exposure created by such
failure. Any amounts so paid or deposited by Lender shall constitute Lender
Expenses, shall be immediately due and payable, and shall bear interest at the
then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by Lender shall not constitute a waiver by Lender
of any Event of Default under this Agreement.
9.5 Lender's Liability for Collateral. Lender shall not in
any way or manner be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage thereto occurring or arising in any manner
or fashion from any cause; (c) any diminution in the value thereof; or (d) any
act or default of any carrier, warehouseman, bailee, forwarding agency, or
other person whomsoever. All risk of loss, damage or destruction of the
Collateral shall be borne by Borrower.
9.6 Remedies Cumulative. Lender's rights and remedies under
this Agreement, the Loan Documents, and all other agreements shall be
cumulative. Lender shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by
Lender of one right or remedy shall be deemed an election, and no waiver by
Lender of any Event of Default on Borrower's part shall be deemed a continuing
waiver. No delay by Lender shall constitute a waiver, election, or acquiescence
by it. No waiver by Lender shall be effective unless made in a written document
signed on behalf of Lender and then shall be effective only in the specific
instance and for the specific purpose for which it was given.
9.7 Demand; Protest. Borrower waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Lender on which Borrower may in any way be
liable.
10. NOTICES
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized
overnight delivery service, certified mail, postage prepaid, return receipt
requested, or by telefacsimile to Borrower or to Lender, as the case may be, at
its addresses set forth below:
If to Borrower: PC QUOTE, INC.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Att'n: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
If to Lender: PICO HOLDINGS, INC.
0000 Xxxxxx xx xx Xxxxx
Xx Xxxxx, XX 00000
Att'n: Xxxx X. Xxxx
Fax: (000) 000-0000
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The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Illinois, without regard to
principles of conflicts of law. BORROWER AND LENDER EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND
AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO
ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.
Lender's Initials ______ Borrower's Initials ______
12. GENERAL PROVISIONS
12.1 Successors and Assigns. This Agreement shall bind and
inure to the benefit of the respective successors and permitted assigns of each
of the parties; provided, however, that neither this Agreement nor any rights
hereunder may be assigned by Borrower without Lender's prior written consent,
which consent may be granted or withheld in Lender's sole discretion.
12.2 Indemnification. Borrower shall defend, indemnify and
hold harmless Lender and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Lender Expenses in any way suffered, incurred, or paid by
Lender as a result of or in any way arising out of, following, or consequential
to transactions between Lender and Borrower whether under this Agreement, or
otherwise (including without limitation reasonable attorneys fees and
expenses), except for losses caused by Lender's gross negligence or willful
misconduct.
12.3 Time of Essence. Time is of the essence for the
performance of all obligations set forth in this Agreement.
12.4 Severability of Provisions. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
12.5 Amendments in Writing, Integration. This Agreement
cannot be amended or terminated orally. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement and the Loan Documents.
12.6 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed
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and delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement.
12.7 Survival. All covenants, representations and warranties
made in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Lender
with respect to the expenses, damages, losses, costs and liabilities described
in Section 12.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Lender have run,
provided that so long as the obligations set forth in the first sentence of
this Section 12.7 have been satisfied, and Lender has no commitment to make any
Advances or to make any other loans to Borrower, Lender shall release all
security interests granted hereunder and redeliver all Collateral held by it in
accordance with applicable law.
12.8 Confidentiality. In handling any confidential
information Lender shall exercise the same degree of care that it exercises
with respect to its own proprietary information of the same types to maintain
the confidentiality of any non-public information thereby received or received
pursuant to this Agreement except that disclosure of such information may be
made (i) to the subsidiaries or affiliates of Lender in connection with their
present or prospective business relations with Borrower, (ii) to prospective
transferees or purchasers of any interest in the Loans, provided that they have
entered into a comparable confidentiality agreement in favor of Borrower and
have delivered a copy to Borrower, (iii) as required by law, regulations, rule
or order, subpoena, judicial order or similar order, (iv) as may be required in
connection with the examination, audit or similar investigation of Lender and
(v) as Lender may determine in connection with the enforcement of any remedies
hereunder. Confidential information hereunder shall not include information
that either: (a) is in the public domain or in the knowledge or possession of
Lender when disclosed to Lender, or becomes part of the public domain after
disclosure to Lender through no fault of Lender; or (b) is disclosed to Lender
by a third party, provided Lender does not have actual knowledge that such
third party is prohibited from disclosing such information.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
PC QUOTE, INC., PICO HOLDINGS, INC., a California
a Delaware corporation corporation
By: /s/ XXXXX X. XXXXXX By:
------------------------------- -------------------------------
Xxxxx X. Xxxxxx, Chairman
------------------------------- -------------------------------
[Print Name and Office [Print Name and Office
of Person Signing] of Person Signing]
Attested
By: /s/ XXXXXXX X. XXXXX
--------------------------------------
Xxxxxxx X. Xxxxx, Corp. Secratary
--------------------------------------
[Print Name and Office of Person Signing]
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EXHIBIT A
The Collateral shall consist of all right, title and interest of
Borrower in and to the following:
(a) All goods and equipment now owned or hereafter acquired,
including, without limitation, all machinery, fixtures, vehicles (including
motor vehicles and trailers), and any interest in any of the foregoing, and all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located;
(b) All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds,
including insurance proceeds, resulting from the sale or disposition of any of
the foregoing and any documents of title representing any of the above, and
Borrower's Books relating to any of the foregoing;
(c) All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind, including,
but not limited to any trade secrets, source codes, computer software and other
intellectual property used by the Company in connection with its internet web
page;
(d) All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and
any and all credit insurance, guaranties, and other security therefor, as well
as all merchandise returned to or reclaimed by Borrower and Borrower's Books
relating to any of the foregoing;
(e) All documents, cash, deposit accounts, securities, letters of
credit, certificates of deposit, instruments and chattel paper now owned or
hereafter acquired and Borrower's Books relating to the foregoing;
(f) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter
acquired; all trade secret rights, including all rights to unpatented
inventions, know-how, operating manuals, license rights and agreements and
confidential information, now owned or hereafter acquired; all mask work or
similar rights available for the protection of semiconductor chips, now owned
or hereafter acquired; all claims for damages by way of any past, present and
future infringement of any of the foregoing; and
(g) Any and all claims, rights and interests in any of the above
and all substitutions for, additions and accessions to and proceeds thereof.
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EXHIBIT B
LOAN ADVANCE REQUEST FORM
TO: DATE:
---------------------------------
FAX#: TIME:
---------------------------------
FROM:
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(BORROWER)
REQUESTED BY:
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AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:
---------------------------------------------------------
PHONE NUMBER:
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TO ACCOUNT #
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REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
PRINCIPAL INCREASE (ADVANCE) $
------------------------
OTHER INSTRUCTIONS:
-----------------------------------------------------------
-----------------------------------------------------------------------------
All representations and warranties of Borrower stated in the Loan
Agreement are true, correct and complete in all material respects as of the
date of the telephone request for and Advance confirmed by this Borrowing
Certificate; provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date.
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26
EXHIBIT C
WEEKLY BUDGET
[Sample Form]
22
27
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: PICO HOLDINGS, INC.
FROM: PC QUOTE, INC.
The undersigned authorized officer of ___________________ hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Lender (the "Agreement"), (i) Borrower
is in complete compliance for the period ending _____________ with all required
covenants except as noted below and (ii) all representations and warranties of
Borrower stated in the Agreement are true and correct in all material respects
as of the date hereof. Attached herewith are the required documents supporting
the above certification. The Officer further certifies that these are prepared
in accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- ----------
[Monthly] financial statements [Monthly] within 30 days Yes No
Annual (CPA Audited) [(CPA REVIEWED)] FYE within 90 days Yes No
A/R & A/P Agings Monthly within 15 days Yes No
A/R Audit Initial and Semi-Annual Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ ----------
Maintain on a Monthly [QUARTERLY] Basis:
Minimum Quick Ratio _____:1.0 _____:1.0 Yes No
Minimum Current Ratio _____:1.0 _____:1.0 Yes No
$________ $________ Yes No
Maximum Debt/Tangible Net Worth _____:1.0 _____:1.0 Yes No
COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely,
-----------------------------------------------------
SIGNATURE
-----------------------------------------------------
TITLE
-----------------------------------------------------
DATE
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DISBURSEMENT REQUEST AND AUTHORIZATION
BORROWER: PC QUOTE INC. LENDER: PICO HOLDINGS, INC.
================================================================================
LOAN TYPE. This is a Fixed Rate, Revolving Line of Credit of a principal
amount up to $1,000,000.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for business.
SPECIFIC PURPOSE. The specific purpose of this loan is: Short Term Working
Capital.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Lender's conditions for making the loan have been
satisfied. Please disburse the loan proceeds as follows:
Revolving Line
--------------
Amount paid to Borrower directly: $
-------------
Undisbursed Funds $
-------------
Principal $
-------------
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
Prepaid Finance Charges Paid in Cash: $
-------------
$ Loan Fee
--------------
Other Charges Paid in Cash: $
-------------
$ UCC Filing Fees
--------------
$ Outside Counsel Fees and
-------------- Expenses (Estimate)
Total Charges Paid in Cash $
-------------
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION AS
DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS
AUTHORIZATION IS DATED AS OF _______________ , 19___.
BORROWER:
-----------------------------------------------------
-----------------------------------------------------
Authorized Officer
================================================================================
29
AGREEMENT TO PROVIDE INSURANCE
GRANTOR: PC QUOTE, INC. LENDER: PICO HOLDINGS, INC.
================================================================================
INSURANCE REQUIREMENTS. PC QUOTE, INC. ("Grantor") understands that
insurance coverage is required in connection with the extending of a loan or
the providing of other financial accommodations to Grantor by Lender. These
requirements are set forth in the Loan Documents. The following minimum
insurance coverages must be provided on the following described collateral (the
"Collateral"):
Collateral: All Inventory, Equipment and Fixtures.
Type: All risks, including fire, theft and liability.
Amount: Full insurable value.
Basis: Replacement value.
Endorsements: Loss payable clause to Lender with
stipulation that coverage will not be
cancelled or diminished without a minimum
of twenty (20) days' prior written notice
to Lender.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance
company Grantor may choose that is reasonably acceptable to Lender. Grantor
understands that credit may not be denied solely because insurance was not
purchased through Lender.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Lender, on
or before closing, evidence of the required insurance as provided above, with an
effective date of ___________________ , 19___, or earlier. Grantor acknowledges
and agrees that if Grantor fails to provide any required insurance or fails to
continue such insurance in force, Lender may do so at Grantor's expense as
provided in the Loan and Security Agreement. The cost of such insurance, at the
option of Lender, shall be payable on demand or shall be added to the
indebtedness as provided in the security document. GRANTOR ACKNOWLEDGES THAT IF
LENDER SO PURCHASES ANY SUCH INSURANCE, THE INSURANCE WILL PROVIDE LIMITED
PROTECTION AGAINST PHYSICAL DAMAGE TO THE COLLATERAL, UP TO THE BALANCE OF THE
LOAN; HOWEVER, GRANTOR'S EQUITY IN THE COLLATERAL MAY NOT BE INSURED. IN
ADDITION, THE INSURANCE MAY NOT PROVIDE ANY PUBLIC LIABILITY OR PROPERTY DAMAGE
INDEMNIFICATION AND MAY NOT MEET THE REQUIREMENTS OF ANY FINANCIAL
RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral,
Grantor authorizes Lender to provide to any person (including any insurance
agent or company) all information Lender deems appropriate, whether regarding
the Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT
TO PROVIDE INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
___________________ , 19___.
GRANTOR:
PC QUOTE, INC.
-----------------------------------------------------
X
---------------------------------------------------
Authorized Officer
================================================================================
30
CORPORATE RESOLUTIONS TO BORROW
================================================================================
BORROWER: PC QUOTE, INC.
================================================================================
I, the undersigned Secretary or Assistant Secretary of PC QUOTE, INC.
("Corporation"), HEREBY CERTIFY that the Corporation is organized and existing
under and by virtue of the laws of the State of Delaware.
I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true
and complete copies of the Certificate of Incorporation and Bylaws of the
Corporation, each of which is in full force and effect on the date hereof.
I FURTHER CERTIFY that at a meeting of the Directors of the
Corporation, duly called and held, at which a quorum was present and voting (or
by other duly authorized corporate action in lieu of a meeting), the following
resolutions were adopted.
I FURTHER CERTIFY that Xxxxxx Xxxxxxx, one of the Directors of this
Corporation excused himself from the meeting and voting, because he has a
business, financial or professional relationship with PICO HOLDINGS, INC.
("Lender").
I FURTHER CERTIFY that the Directors of this Corporation adopted the
following resolutions with full knowledge that the Lender is affiliated with
Physicians Insurance Company of Ohio, a shareholder of this Corporation and the
holder of a Convertible Subordinated Debenture Due 2001.
I FURTHER CERTIFY that the corporate borrowing authorized hereby is on
as good of terms and conditions, or better, as is available to the Corporation
from any other sources.
BE IT RESOLVED, that ANY ONE (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:
NAMES POSITIONS ACTUAL SIGNATURES
----- --------- -----------------
----------------------- ---------------------- ----------------------------
----------------------- ---------------------- ----------------------------
----------------------- ---------------------- ----------------------------
acting for an on behalf of this Corporation and as its act and deed be, and
they hereby are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Lender, on such terms
as may be agreed upon between the officers, employees, or agents and Lender,
such sum or sums of money as in their judgment should be borrowed, without
limitation, including such sums as are specified in that certain Loan and
Security Agreement dated as of May 5, 1997 (the "Loan Agreement").
1
31
EXECUTE NOTES. To execute and deliver to Lender the promissory note or
notes of the Corporation, on Lender's forms, at such rates of interest and on
such terms as may be agreed upon, evidencing the sums of money so borrowed or
any indebtedness of the Corporation to Lender, and also to execute and deliver
to Lender one or more renewals, extensions, modifications, refinancings,
consolidations, or substitutions for one or more of the notes, or any portion
of the notes.
GRANT SECURITY. To grant a security interest to Lender in the
Collateral described in the Loan Agreement, which security interest shall
secure all of the Corporation's Obligations, as described in the Loan
Agreement.
NEGOTIATE ITEMS. To draw, endorse, and discount with Lender all
drafts, trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation or in which the Corporation may have
an interest, and either to receive cash for the same or to cause such proceeds
to be credited to the account of the Corporation with Lender, or to cause such
other disposition of the proceeds derived therefrom as they may deem advisable.
ISSUE WARRANTS. To issue warrants to purchase the Corporation's
capital stock, for such series and number, and on such terms, as an officer of
the Corporation shall deem appropriate.
FURTHER ACTS. In the case of lines of credit, to designate additional
or alternate individuals as being authorized to request advances thereunder,
and in all cases, to do and perform such other acts and things, to pay any and
all fees and costs, and to execute and deliver such other documents and
agreements as they may in their discretion deem reasonably necessary or proper
in order to carry into effect the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to
these resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full force
and effect and Lender may rely on these Resolutions until written notice of
their revocation shall have been delivered to and received by Lender. Any such
notice shall not affect any of the Corporation's agreements or commitments in
effect at the time notice is given.
I FURTHER CERTIFY that the officers, employees, and agents named above
are duly elected, appointed, or employed by or for the Corporation, as the case
may be, and occupy the positions set forth opposite their respective names;
that the foregoing Resolutions now stand of record on the books of the
Corporation; and that the Resolutions are in full force and effect and have not
been modified or revoked in any manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on _______________,
19___ and attest that the signatures set opposite the names listed above are
their genuine signatures.
CERTIFIED TO AND ATTESTED BY:
X
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