EXHIBIT 10.1
AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT, as amended,
restated, extended or otherwise modified by the parties hereto, their successors
and assigns, from time to time, including, without limitation, all exhibits,
schedules and attachments hereto ("Agreement"), is made and entered into this
30th day of April, 2004, by and between iGAMES ENTERTAINMENT, INC., a
corporation organized and existing under the laws of Nevada with a principal
place of business located at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, ("iGames"), AVAILABLE MONEY, INC., a Nevada corporation with a
principal place of business at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Available Money", and collectively with iGames, the
"Borrowers") and MERCANTILE CAPITAL, L.P., with offices located at ▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ("Lender").
WITNESSETH:
BACKGROUND
iGames is engaged in the business of providing check cashing, credit
card advances, POS Debit, ATM and related financial and business services in
casinos and other business locations (the "Services"). Pursuant to the terms of
that certain Loan and Security Agreement between iGames and Lender dated
November 26, 2003 (the "Loan Agreement"), Lender made certain loans, advances
and extensions of credit to and for the benefit of iGames from time to time up
to a limit of $250,000. The loans made under the Loan Agreement are evidenced by
a Demand Note dated November 26, 2003 (the "Demand Note", and, collectively with
the Loan Agreement, and all related agreements, instruments and documents, the
"November 2003 Loan Documents").
As collateral security for all of iGames' existing and future
indebtedness, liabilities and obligations to Lender pursuant to the Loan
Agreement, iGames granted to Lender and Lender holds a lien on and security
interest in all tangible and intangible assets of iGames. To further induce
Lender to extend loans, advances and extensions of credit under the Loan
Agreement, Money Centers of America, Inc., a Delaware corporation with a
principal place of business at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("MCA"), guaranteed, as surety, all obligations of iGames to
Lender. To further induce Lender to make the loans and advances under the Loan
Agreement, iGames pledged to Lender one million shares (1,000,000) of
unregistered common stock.
iGames has acquired Available Money, and in order to provide capital to
meet its obligations principally arising out of the acquisition of Available
Money, Borrowers have requested that Lender amend the Loan Agreement to extend a
twelve (12) month term loan ("Term Loan") to Borrowers. The Term Loan shall be
in the amount of Two Million, Fifty Thousand Dollars ($2,050,000.00), and shall
be secured by the Collateral, as such term is defined in Section 3 herein.
Lender is willing to amend the Loan Agreement to extend the Term Loan upon the
terms and conditions hereinafter set forth.
IN CONSIDERATION of the mutual covenants and undertakings contained
herein, and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
1. DEFINITIONS. All terms defined in Schedule 1 and all other capitalized terms
defined in this Agreement, shall have the meanings ascribed to them herein when
used in the Loan Documents, unless otherwise defined therein.
2. JOINDER AND ASSUMPTION. Available Money hereby joins in, assumes the
Obligations under, and agrees to be bound by all terms, covenants and conditions
set forth in the Loan Agreement, the November 2003 Loan Documents and all other
documents, agreements and instruments related thereto as if Available Money were
an original party to the Loan Agreement and each such document, agreement and
instrument. Accordingly, effective immediately, Available Money is a "Borrower"
under the Loan Agreement and each of the other November 2003 Loan Documents.
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3. ACKNOWLEDGEMENT OF EXISTING INDEBTEDNESS. Borrowers hereby agree that in
addition to all amounts that may be loaned or advanced by Lender to Borrowers
hereunder, there remains outstanding and uncollected advances and loans made by
Lender, as the case may be, under the Loan Agreement and the Demand Note (the
"Outstanding Balance"). Borrowers hereby further acknowledge that Borrowers
remain jointly and severally liable for payment in full of the Outstanding
Balance, and this Agreement, in addition to securing all amounts advanced
hereunder, secures the payment in full of the Outstanding Balance. The
Outstanding Balance is hereby part of the Obligations under this Agreement.
4. THE LOAN.
4.1 The Term Loan. Subject to the terms and limitations hereof, Lender
shall advance to Borrowers, and Borrowers shall borrow from Lender, the sum of
Two Million Fifty Thousand Dollars ($2,050,000.00).
4.2 The Term Loan Note. The Term Loan is evidenced by a promissory note
(the "Term Loan Note") in the form of Exhibit "B". The Term Loan Note does not
supersede or extinguish, and is not in replacement of, the Demand Note, which
remains in full force and effect.
4.3 Disbursement of the Loan. The Lender will credit the proceeds of
the Loans to or for the benefit of Borrowers via wire transfer or ACH to such
accounts as instructed by Borrowers, except for the payment of amounts due to or
for the benefit of Lender hereunder which shall be made directly to Lender.
4.4 Interest Rates and Payments of Interest. Interest will accrue at
the rate of seventeen percent (17%) per annum and shall be calculated on the
basis of a 360-day year, counting the actual number of days elapsed, on the
principal balance of the Loans from time to time outstanding, and shall be
payable on the first (1st) day of each month commencing on the first (1st) day
of the first month after the Closing Date and continuing on the same day of each
month thereafter until all Obligations are satisfied in full.
4.5 Fees and Expenses. Borrowers hereby agree to pay, at Closing, a
facility fee equal to two percent (2%) of the principal amount of the Term Loan
(i.e. $41,000.00). The Borrowers shall promptly pay to or on behalf of Lender
from time to time the reasonable fees and expenses of Lender's counsel,
appraisers, environmental consultants, auditors and other expenses of Lender in
connection with this Agreement and the Obligations.
5. COLLATERAL SECURITY.
5.1 Grant of Security Interests. As security for the timely
satisfaction of all Obligations, Borrowers hereby grant Lender a continuing lien
on and security interest in and to the Collateral, as defined in Schedule 1
attached hereto, which, together with all of Borrowers' other property of any
kind held by Lender, shall stand as one general, continuing collateral security
for all Obligations of the Borrowers to Lender and may be retained by Lender
until all Obligations have been satisfied in full.
5.2 Priority of Liens. Lender's Liens in and to the Collateral shall be
first and prior Liens to all Liens against the Collateral now existing or
hereafter arising ("Lender's Prior Security Interest").
5.3 Financing Statements. Borrowers hereby: (a) authorize Lender to
file any financing statements (including amendments thereto and continuation
statements thereof) in form satisfactory to Lender as Lender may specify; (b)
agree to take such other steps as Lender may direct, including the noting of
Lender's lien on the Collateral and on any certificates or documents of title
therefor, all to perfect Lender's liens on and security interests in the
Collateral; and (c) agree to pay or reimburse Lender for all costs and taxes of
filing or recording the same in such public offices as Lender may designate. In
addition to the foregoing, and not in limitation thereof, a carbon,
photographic, or other reproduction of this Agreement shall be sufficient as a
financing statement and may be filed in any appropriate office in lieu thereof.
Borrower hereby irrevocably appoints Lender as its attorney-in-fact (without
requiring Lender to act as such) to execute any financing statements, including
amendments thereto and continuation statements thereof in the name of Borrower,
and to perform all other acts and deeds that Lender deems appropriate to perfect
and continue its security interest in, and to protect and preserve, the
Collateral.
5.4 Lender's Special Rights. Lender (through any of its officers,
employees, auditors or agents) shall have the right in its sole discretion and
without notice to Borrowers at any time or times hereafter to: (a) confirm
Payment Receivable balances and verify the validity of Payment Receivables or
any other matter relating to any Payment Receivable by mail, telephone, or
otherwise, in the name of Borrowers or Lender or any other name Lender
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so chooses; (b) notify all Payment Parties that Lender has a security interest
in the Payment Receivables; (c) direct all Payment Parties to make payment to
Lender of all Payment Receivables; (d) enforce payment and collect, by legal
proceedings or otherwise, any Payment Receivables in the name of Lender; and (e)
during Borrower's usual business hours, or during the usual business hours of
any third party having control over the Records of Borrower, (i) conduct such
audits Lender deems appropriate of Borrower's books and Records, and (ii)
inspect and verify Borrower's books and Records in order to verify the amount or
condition of, or any other matter relating to, the Collateral and Borrowers'
financial condition.
5.5 Insecurity Clause. Borrowers agree that if any of the Collateral
shall at any time be insufficient or otherwise unsatisfactory to Lender,
Borrowers shall either (a) within five (5) days of notice of such Collateral
deficiency, reduce the amount of the outstanding Obligations to an amount such
that the value of the Collateral in relation to the outstanding Obligations is
satisfactory to Lender, or (b) after such five (5) day period, on demand,
forthwith pledge, assign, transfer or grant Lender a continuing lien on and
security interest in and to, or deposit with Lender as part of the Collateral,
additional property satisfactory to Lender.
6. OTHER PROVISIONS.
6.1 Collections. Lender may at any time, following an Event of Default,
take control of the Collateral, and charge the collection costs and expenses to
Borrowers, but, unless and until Lender does so or gives Borrowers other written
instructions, the collection of the Collateral shall be in accordance with the
terms and conditions of this Agreement. The receipt of any wire transfer of
funds, check, or other item of payment by Lender shall be applied to
conditionally reduce the Obligations, but shall not be considered a payment on
account unless such wire transfer is of immediately available federal funds and
is made to the Operating Account or unless and until such check or other item of
payment is honored when presented for payment.
6.1.1 The costs of all collection and enforcement proceedings,
including reasonable attorney's fees and out-of-pocket expenses, shall be borne
solely by Borrowers whether incurred by Lender or by Borrowers.
6.2 Power of Attorney. Borrowers hereby irrevocably authorize and
empower Lender, grant a power of attorney, coupled with an interest to, and
appoint Lender, or any officer, director or employee of Lender, as
attorney-in-fact for Borrowers, with full authority for and on behalf of
Borrowers, and in their name, place and ▇▇▇▇▇, upon an Event of Default
hereunder, to take any action which Borrowers or any officer or director of
Borrowers could do if then present, as may, in the opinion of Lender, be
necessary or advisable, to: (a) cause any amounts on deposit in any Deposit
Account into which amounts of Borrowers related to the provision of Services are
deposited with any bank or other depository ("Depository") to be transferred to
Lender including, without limitation, the power and authority to sign, seal,
execute and deliver for and on behalf of Borrowers, and in their name, place and
▇▇▇▇▇, any agreement, document or instrument of any nature, including, without
limitation, any Blocked Account Agreements, deposit agreements, signature cards,
corporate resolutions or as may otherwise be required by any Depository at which
Borrowers maintain any account of any nature, to cause such Depository to
transfer to Lender, all amounts of Borrowers now or hereafter on deposit with
such Depository; (b) cause such Depository to provide to Lender all information
in possession of such Depository with respect to any accounts of Borrowers, of
any nature, on deposit with such Depository, including, without limitation,
account balances, account statements, checks, drafts or other items drawn on
such account, deposit and withdraw tickets; (c) change the name of any such
account to the name of Lender; (d) give orders to any Depository with respect to
any such accounts, including, without limitation, orders to transfer the
balances in any such accounts to Lender; and (e) take such other action as may
in the opinion of Lender, be necessary to cause all accounts now or hereafter on
deposit in any such Depository to be transferred to Lender.
6.2.1 Upon an event of Default, Borrowers do hereby
irrevocably designate, make, constitute and appoint Lender (and any of Lender's
officers, employees or agents designated by Lender) as Borrowers' true and
lawful attorney in fact (without requiring them to act as such) coupled with an
interest, with full power of substitution, hereby ratifying and confirming all
acts and deeds in connection herewith, with power, without notice to Borrowers,
and at such time or times hereafter as Lender may in its sole election
determine, and at Borrowers' expense: (a) to execute in the name of Borrowers
any schedules, assignments, instruments, documents, notices, and statements that
Borrowers are obligated to give Lender hereunder; (b) to exercise all of
Borrowers' rights and remedies with respect to the collection of Collateral; (c)
to settle, adjust, compromise, extend or renew any Payment Receivables; (d) to
settle, adjust or compromise any legal proceedings brought to collect Payment
Receivables; (e) to sell or assign any Payment Receivables upon such terms, for
such amounts and at such time or times as Lender
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deems advisable; (f) to discharge and release any Payment Receivables; (g) to
take control in any manner of any item of payment or proceeds of Payment
Receivables and for this purpose to notify any Payment Party to change the
Deposit Account into which payment is made to such Deposit Account as Lender may
designate; and (h) to do all other acts necessary or desirable to protect
Borrowers' interest in the Payment Receivables.
6.2.2 Borrowers release Lender from any and all causes of
action or claims which Borrowers may now or hereafter have for any asserted loss
or damage to Borrowers claimed to be caused by or arising from: (a) any failure
of Lender to protect, enforce or collect in whole or in part any Collateral; (b)
Lender's notification to any Payment Parties of Lender's security interests in
any of the Payment Receivables; (c) Lender's directing any Payment Parties to
pay any sums owing to Borrowers directly to Lender; and (d) any other act or
omission to act on the part of Lender and any of its officers, employees or
agents designated by Lender except for gross negligence, willful misconduct or
conduct in violation of the terms of this Agreement.
6.3 Depository Account. Borrowers shall establish a commercial checking
account (the "Depository Account") for purposes of receiving payment of all
Payment Receivables from Payment Parties. Borrowers shall direct all Payment
Parties to make payment of Payment Receivables into the Depository Account and
Borrowers shall deposit all cash, checks or other funds received into the
Depository Account.
6.4 Cash Collateral. Until such time as the amounts now or hereafter on
deposit in any account are delivered to the Lender in accordance with the
provisions set forth in this Agreement, such amounts shall be deemed to be held
by the Borrowers for the benefit of the Lender in express trust and such amounts
together with all amounts now or hereafter on deposit in the Concentration
Account shall be deemed to be "Cash Collateral" under Section 363 of the
Bankruptcy Code. In the event that either Borrower files a voluntary petition in
Bankruptcy or is made subject to any involuntary Bankruptcy proceeding, such
Borrower may not use such Cash Collateral without the consent of the Lender
and/or an order of any the Bankruptcy Court pursuant to 11 U.S.C. ss. 363(b)(2).
The Borrowers hereby waive any right it may have to assert that the Lender's
liens on and security interests in and to such amounts and other like Collateral
does not constitute Cash Collateral.
6.5 Additional Deposit Accounts. Except for Deposit Accounts subject to
a Blocked Account Agreement, including the Depository Account, Borrower shall
not, without the prior written consent of Lender, open or maintain any Deposit
Accounts of any nature with any Depository into which any funds related to the
Services or the Transactions are deposited.
6.6 Payments. All payments of interest on and principal of the Loans,
all fees and all other sums payable to the Lender hereunder shall be paid
directly to the Lender in immediately available funds, in such currency of the
United States of America as is, at the time of payment, legal tender for the
payment of public and private debts. Borrowers shall make each payment hereunder
not later than 12:00 p.m., local time, on the day when due, at the office of the
Lender at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇. Should any payment of principal or interest or fees become due and
payable on a Saturday, Sunday or legal holiday under the laws of the
Commonwealth of Pennsylvania, the payment date thereof shall be extended to the
next succeeding business day and such extension of time shall in such case be
included in computing such interest or fees, as the case may be. Any such
payments or prepayments made shall be applied, first to the payment of unpaid
costs and charges due including late fees, then to interest due and payable
under the Term Loan Note and then to the reduction of the outstanding principal
balance thereof. All payments of principal, interest, costs, fees and expenses
due to the Lender in connection with this Agreement, the Loan Documents and the
Loans shall be made as follows:
6.6.1 Unless payments are made in the required amount in
immediately available funds at the place where the Term Loan Note is payable,
remittances in payment of all or any part of the Obligations shall not,
regardless of any receipt or credit issued therefor, constitute payment until
the required amount is actually received by Lender in funds immediately
available at the place where the Term Loan Note is payable (or any other place
as Lender, in Lender's sole discretion, may have established by delivery of
written notice thereof to Borrowers) and shall be made and accepted subject to
the condition that any check or draft may be handled for collection in
accordance with the practice of the collecting bank or banks. Acceptance by
Lender of any payment in an amount less than the amount then due shall be deemed
an acceptance on account only, and the failure to pay the entire amount then due
shall be and continue to be an Event of Default (as hereinafter defined).
6.6.2 The balance of the Obligations, if any, shall be payable
as and when provided in this Agreement or other Loan Documents or in any other
agreements relating to such Obligation and, if not specified,
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then on the Term Loan Maturity Date. Unless expressly specified otherwise herein
or in other Loan Documents, any of such Obligations not paid when due shall bear
interest from the due date until paid at the interest rate specified in
Paragraph 2.3 hereof.
6.6.3 Anything herein to the contrary notwithstanding,
Borrowers hereby authorize Lender, without further order or authorization of
Borrowers, to charge any Borrowers' Deposit Account(s) monthly, on the due date
therefor, for all payments of principal and interest and all other amounts due
hereunder and under the Note. Lender shall notify Borrowers of any charge to
Borrowers' account(s) promptly after such charge is made.
6.7 Statements of Amount Due. At least once each month, Lender shall
render to Borrowers a statement of Borrowers' Indebtedness to Lender hereunder
plus interest accrued thereon, which statements shall be considered correct and
accepted by Borrowers and conclusively binding upon Borrowers unless Borrowers
notify Lender to the contrary within ten (10) days from the date such statement
is delivered setting forth any error claimed by Borrowers.
6.8 Increased Costs. If after the date of this Agreement, Lender shall
have determined that its costs of agreeing to make, or making, funding or
maintaining the Loans or Lender's obligations under this Agreement have
increased, then Lender shall so notify Borrowers and within 15 days after
receipt of such notice from Lender, Borrowers shall pay to Lender, from time to
time as specified by Lender, additional amounts that in the aggregate shall be
sufficient to compensate Lender for such increased cost. A certificate as to
such increase in costs showing the manner of calculation thereof shall be
submitted by Lender to Borrowers and shall, in the absence of manifest error, be
conclusive as to the amount thereof. This covenant shall survive the termination
of this Agreement and payment of the Term Loan Note.
7. CONDITIONS PRECEDENT.
Any obligation of Lender to make any of the Loans hereunder is subject
to the following conditions precedent:
7.1 Payments. On or before the Closing Date, Borrowers shall have paid:
(a) the fee described in Paragraph 4.5; (b) all charges, taxes and fees for
recording, insurance, title insurance, appraisals, environmental assessments and
other items required under this Agreement; and (c) all costs and expenses of
Lender in establishing the Loans and perfecting its interest in the Collateral,
including, without limitation, the fees and disbursements of Lender's counsel.
7.2 Documents Required for the Closing. On or before the Closing Date,
Borrowers shall have duly delivered to Lender duly executed original
counterparts of the following, all in form and content acceptable to Lender:
7.2.1 This Agreement;
7.2.2 The Term Loan Note;
7.2.3 A Perfection Certificate from each Borrower;
7.2.4 A Reaffirmation of Obligations from Money Centers of
America, Inc.;
7.2.5 A Pledge Agreement from ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
pledging the stock of iGames;
7.2.6 The UCC-1 financing statements as required by Lender;
7.2.7 UCC-3 Termination Statements with respect to any
security interest of record in any of the Collateral prior to the date hereof in
favor of any Person other than Lender;
7.2.8 Blocked Account Agreement for the Depository Account and
any other Deposit Accounts of Borrowers;
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7.2.9 A certified (as of the date of the Closing) copy of
resolutions of iGames' board of directors authorizing the execution, delivery
and performance of this Agreement, the Term Loan Note, the Loan Documents and
each other document to be delivered pursuant hereto;
7.2.10 A certified (as of the date of the Closing) copy of
resolutions of Available Money's board of directors authorizing the execution,
delivery and performance of this Agreement, the Term Loan Note, the Loan
Documents and each other document to be delivered pursuant hereto
7.2.11 A certificate (dated the date of the Closing) of each
Borrowers' corporate secretary or other authorized officer as to the incumbency
and signatures of the officers of Borrower signing this Agreement, the Term Loan
Note, the Loan Documents and each other document to be delivered pursuant
hereto;
7.2.12 A copy, certified as of the most recent date
practicable by the Secretary of the State of each Borrower's state of formation,
of each Borrower's certificate of incorporation, together with a certificate
(dated the Closing Date) of each Borrower's corporate secretary to the effect
that such certificate of incorporation has not been amended since the date of
the aforesaid certification;
7.2.13 Certificates, as of the most recent dates practicable,
of the aforesaid Secretary of State and the Secretary of State of each state in
which each Borrower is qualified as a foreign corporation as to the good
standing of each Borrower;
7.2.14 A certified (as of the date of the Closing) copy of
resolutions of each corporate Surety's board of directors authorizing the
execution, delivery and performance of the Surety Agreement, the Guarantor
Security Agreement, and the Collateral and Loan Document to which it is a party
and to be delivered pursuant hereto
7.2.15 Stock certificates of iGames, to be delivered by
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇;
7.2.16 A certified (as of the date of the Closing) copy of
resolutions of the boards of directors of each of iGames and MCA authorizing the
execution, delivery and performance of the Pledge Agreements and the delivery of
stock certificate pursuant thereto;
7.2.17 A written opinion of Borrowers' counsel dated the
Closing Date and addressed to Lender, containing language substantially in the
form of Schedule 3;
7.2.18 Lien satisfactions as may be necessary to provide
Lender a first Lien on and security interest in the Collateral; and
7.2.19 Such other agreements, documents or instruments
required by Lender, or its counsel, to evidence the transactions described in
this Agreement and perfects the Liens and security interests of Lender in the
Collateral.
7.3 Miscellaneous Conditions.
7.3.1 Lender shall have received UCC, Lien, tax, judgment and
other searches required by Lender; and
7.3.2 Lender shall have received copies of all filing receipts
and acknowledgments issued by any governmental authority to evidence any
recordation or filing necessary to perfect the Lien of the Lender on the
Collateral and evidence in a form acceptable to the Lender that such Lien
constitutes the Lender's Prior Security Interest and is a valid and perfected
lien subject only to the Liens set forth on Schedule 2 attached hereto, as
approved by Lender ("Permitted Liens").
7.4 Legal Matters. At the time of Closing and each subsequent
disbursement, all legal matters incidental thereto shall be reasonably
satisfactory to Lender and its counsel.
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8. REPRESENTATIONS AND WARRANTIES.
8.1 Corporate Existence, etc. To induce Lender to enter into this
Agreement, Borrowers represents and warrants to Lender as follows:
8.1.1 Borrowers are duly organized and validly existing, and
in good standing under the laws of the State of Nevada and have the lawful power
to own, lease, encumber and operate their Assets and properties and to provide
the Services, and are duly qualified and in good standing as a foreign
corporation in the jurisdictions wherein the nature of the business transacted
by them or property owned by them makes such qualification necessary. The
addresses of all places of business of Borrowers are as set forth in the
Perfection Certificate. Borrowers have no Subsidiaries or other entities
constituent of Borrowers, or Affiliates except as described in the Perfection
Certificate. Borrowers, except as disclosed to Lender, have not changed their
name, been the surviving entity in a merger, acquired any business, or changed
its principal executive offices within five (5) years and one (1) month prior to
the date hereof;
8.1.2 Borrowers have the requisite power and authority,
corporate, partnership, limited liability company or otherwise, to enter into
and perform this Agreement, the Term Loan Note and the Loan Documents to which
each is a party and to incur the Obligations herein and therein provided for and
have taken all proper and necessary action to authorize the execution, delivery
and performance of this Agreement, the Term Loan Note and the Loan Documents
which are duly and validly executed and constitute legal, valid, and binding
obligations of Borrowers enforceable in accordance with their respective terms;
8.1.3 Borrowers are not in default with respect to any of
their existing Indebtedness or under any agreement, commitment, lease, contract,
deed of trust, mortgage, note or other Instrument, and the making and
performance of this Agreement, the Term Loan Note and the Loan Documents will
not immediately, with the passage of time, with the giving of notice or both:
(a) violate the charter, by-laws, partnership agreement, operating agreement, or
other organizational documents of Borrowers or, in any material respect, violate
any Laws, rule, regulation, order, writ, judgment, injunction, decree,
determination or award applicable to Borrowers; or (b) result in a default under
any contract, agreement, indenture, note, loan or credit agreement, license,
lease or instrument to which Borrower is a party or by which it or its property
is bound; or result in the creation or imposition of any security interest in or
Lien or encumbrance upon any of the Assets of Borrowers except such as are in
favor of Lender;
8.1.4 No holder of any Indebtedness of Borrowers has given
notice of any asserted default thereunder. No liquidation or dissolution of
Borrowers and no receivership, insolvency, bankruptcy, reorganization or other
similar proceeding relative to Borrowers or their properties is pending or, to
the knowledge of Borrower, threatened against them;
8.1.5 Except as described in Schedule 2, there are no pending
orders, notices, litigation, actions, claims, suits, proceedings or
investigations pending, or, to the knowledge of Borrowers, threatened or
reasonably anticipated against or affecting Borrower at law or in equity or
before or by any governmental instrumentality or agency (domestic or foreign),
commission, board, bureau, arbitrator or arbitration panel which may be expected
to result in any Material Adverse Change in the business, operations, prospects,
properties or Assets (including, without limitation, the Collateral), or
condition (financial or otherwise) of Borrowers. There is no judgment, liability
or award, which may be expected to result in any Material Adverse Change in the
business, operations, prospects, properties or Assets (including, without
limitation, the Collateral), or condition (financial or otherwise) of Borrowers.
Borrowers are not in default with respect to any judgment, order, writ,
injunction, decree, rule, award or regulation of any court, governmental
instrumentality or agency, commission, board, bureau, or arbitrator or
arbitration panel;
8.1.6 Borrowers do not have any direct or contingent liability
or Indebtedness known to Borrowers which was not previously disclosed to Lender,
nor do Borrowers know of or anticipate any Material Adverse Change in the
Assets, liabilities, properties, business, or condition (financial or otherwise)
of Borrowers;
8.1.7 Borrowers have good and marketable title to the
Collateral, subject to no security interest, encumbrance or Lien, or the claim
of any third person;
7
8.1.8 The Financial Statements presented and to be presented
to Lender, including any related schedules and notes appended thereto, have been
and will be prepared in accordance with GAAP and fully and fairly present in all
material respects the financial condition of each Borrower at the dates thereof
and the results of operations for the periods covered thereby. There have been
no Material Adverse Changes in the financial condition or business of each
Borrower from the date such Financial Statements were presented to Lender to the
date hereof;
8.1.9 As of the date hereof, Borrowers do not have any
material Indebtedness of any nature, including, without limitation, liabilities
for taxes and any interest or penalties relating thereto, except to the extent
reflected (in a footnote or otherwise) and reserved against in the Financial
Statements of Borrowers delivered to Lender prior to the date hereof or as
disclosed in Schedule 2. Borrower does not know and has no reasonable grounds to
know of any basis for the assertion against Borrowers of any material
Indebtedness of any nature not fully reflected and reserved against in its
Financial Statements;
8.1.10 Borrowers have filed or caused to be filed all federal,
state and local tax returns and other reports it is required by Law to file
prior to the date hereof and which are material to the conduct of its business,
and have paid or caused to be paid all taxes, assessments and other governmental
charges due and payable prior to the date hereof, and have made adequate
provision for the payment of such taxes, assessments or other charges accruing
but not yet payable. Borrowers do not have any knowledge of any deficiency or
additional assessment in a material amount in connection with any taxes,
assessments or charges not provided for on its books and Records;
8.1.11 Borrowers have complied in all material respects with
all applicable Laws with respect to: (a) any restrictions, specifications or
other requirements pertaining to the Services it performs; (b) the conduct of
its business and (c) the use, maintenance and operation of the real and personal
properties owned or leased by it in the operation of its business; and Borrowers
have not received, and has no knowledge of, any order or notice of any
governmental investigation or of any violation or claim of violation of any Law,
or of any fact, set of circumstances or condition which, if known to any
Governmental Authority would give rise to any such violation of Law;
8.1.12 All Permits required under applicable Law for he
conduct of Borrowers' business (including without limitation the provision of
the Services) have been duly issued and are in full force and effect, and it is
not in default, nor has any event occurred which with the passage of time or the
giving of notice, or both, would constitute a default, under any of the terms or
provisions of any part thereof, or under any order, decree, ruling, regulation,
or other decision or instrument of any Governmental Authority having
jurisdiction over Borrowers, which default would have a Material Adverse Effect
on Borrowers.
8.1.13 No representation, warranty or statement by Borrowers
contained herein or in any certificate or other document furnished pursuant
hereto contains any untrue statement of material fact or omits to state a
material fact necessary to make such representation or warranty not misleading
in light of the circumstances under which it was made;
8.1.14 No recording, filing, registration, notice or other
similar action is required in order to insure the legality, validity, binding
effect or enforceability of this Agreement or the Term Loan Note or the other
documents and instruments executed hereunder as against all persons, other than
such filings as may be required under the UCC to perfect Lender's interest in
all Collateral;
8.1.15 Except as described on Schedule 2, there are no Liens
or security interests in any of the Collateral and Borrowers do not know of any
circumstances which might lead to the imposition of any Lien;
8.1.16 Borrowers are in compliance in all material respects
with all applicable provisions of ERISA;
8.1.17 Borrowers do not have any Defined Benefit Pension Plan,
as that term is defined in ERISA;
8.1.18 Except as disclosed in the Financial Statements, or in
the ordinary course of Borrowers' business, no officer of either Borrower, and
no other Affiliate of either Borrower is currently a party to any
8
transaction with Borrowers, including, without limitation, any contract,
agreement or other arrangement providing for the employment of, furnishing of
advisory or other services by, rental of real or personal property from, or
otherwise requiring payments to, any such officer or Affiliate;
8.1.19 No Event of Default has occurred and is continuing or
is about to occur;
8.1.20 The Obligations and Indebtedness of Borrowers under
this Agreement, the Term Loan Note and any other Loan Document are not
subordinated in right of payment or otherwise to any other obligation of
Borrowers or to the rights of others;
8.1.21 Borrowers' federal tax returns for its fiscal year
ended 2003 have been filed with the Internal Revenue Service;
8.1.22 Borrowers are not party to or bound by any agreement or
instrument or subject to any corporate or other restriction the performance or
observance of which now has or, as far as Borrowers can reasonably foresee, may
have a Material Adverse Effect, financial or otherwise, upon the Collateral or
business of Borrowers.
8.1.23 All software utilized in the conduct of Borrowers'
business has appropriate capabilities and compatibility for operation of
Borrowers' business.
8.1.24 Borrowers are not now and will not be engaged
principally or, as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying or trading in any margin stocks
or margin securities (within the meaning of Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System) or other securities, and no part of
the proceeds of the Loans hereunder has been or will be applied for the purpose
of purchasing or carrying or trading in any such stock or securities or of
refinancing any credit previously extended, or of extending credit to others,
for the purpose of purchasing or carrying any such margin stock, margin
securities or other securities in contravention of such Regulations.
8.1.25 Borrowers do not operate or do business under any
assumed, trade or fictitious names except as described in the Perfection
Certificate.
8.2 Solvency. Borrowers have sufficient capital to carry on all
businesses and transactions in which it now engages or is about to engage, is
solvent and will continue to be solvent after incurring the Loans and creating
security interests of Lender in the Collateral.
8.3 Investment Company. Neither Borrower is an "investment company," or
a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
8.4 Survival. All of the representations and warranties set forth in
Paragraph 6.1 shall survive until all Obligations are satisfied in full.
8.5 Names and addresses of Borrower.
8.5.1 The addresses of all places of business of Borrowers and
each trade name and trade style utilized by Borrowers and the address related to
each such name are as set forth in the Perfection Certificate.
8.5.2 The addresses where Borrowers keep the Collateral and
its books and Records concerning the Collateral are as set forth in the
Perfection Certificate.
9. BORROWERS' COVENANTS.
9.1 Affirmative Covenants. Borrowers do hereby covenant and agree with
Lender that, so long as any of the Obligations remain unsatisfied, they will:
9.1.1 Furnish Lender: (a) within twenty (20) days after the
close of each monthly accounting period in each fiscal year of Borrower, a
balance sheet and income statement of Borrowers as of the end of such monthly
accounting period, prepared by the Authorized Financial Officer of Borrowers,
all in reasonable detail and
9
subject to year-end adjustments, all prepared in accordance with GAAP, together
with such other financial statements prepared by Borrowers for management during
such monthly period; (b) within forty-five (45) days after the close of each
quarterly accounting period in each fiscal year of Borrowers, Consolidated and
consolidating income statements and balance sheets and statements of changes in
financial position of Borrowers and their Affiliates, if any, all as of the end
of such quarterly period, prepared by the Authorized Financial Officer of
Borrowers, all in reasonable detail, and prepared in accordance with GAAP; (c)
within ninety (90) days after the close of each fiscal year of Borrowers: (i)
Consolidated and consolidating income statements and balance sheets of
Borrowers, and their Affiliates, if any, all as of the end of such fiscal year;
and (ii) Consolidated and consolidating statement of stockholders' equity and a
statement of changes in financial position; all in reasonable detail, including
supporting schedules and comments, such annual statements, to be prepared by
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Associates, independent public accountants, or ither
independent certified public accountants satisfactory to Lender, which shall be
accompanied by an unqualified opinion of such accountants, to the effect that
the same have been prepared in accordance with GAAP and fairly present the
financial condition of Borrowers and the results of its operations as of the
relevant dates thereof. Lender shall have the right, from time to time, to
discuss Borrowers' financial affairs directly with Borrowers' independent
certified public accountants; (d) contemporaneously with each (i) monthly and
quarterly report required by the foregoing paragraphs, a certificate of the
Authorized Financial Officer of Borrowers, and (ii) year end financial reports
required by the foregoing paragraphs, a certificate by Borrowers' independent
certified public accountant, in each case stating that the signer of such
certificate has individually reviewed the provisions of this Agreement and that
a review of the activities of Borrowers during such monthly, quarterly or yearly
period, as the case may be, has been made by or under the supervision of the
signer of such certificate with a view to determining whether Borrowers have
kept, observed, performed and fulfilled all their obligations under this
Agreement, and that, to the best of his/her knowledge, Borrowers has observed
and performed each and every undertaking contained in this Agreement and is not
at the time in default in the observance or performance of any of the terms and
conditions hereof or, if Borrowers shall be so in default, specifying all such
defaults and events of which he/she may have knowledge and the proposed cure of
such defaults; (e) at Lender's request, copies of all receipts, if available or
other evidence of the payment, of United States withholding, FICA and other
applicable state and local payroll taxes, as such payments are made, and copies
of each quarterly, or as otherwise required by the Internal Revenue Service,
FICA and FUTA income tax withholding forms filed by Borrowers, and Borrowers
hereby acknowledge that Borrowers are responsible for the timely payment, when
due, of all such taxes; (f) no later than 12 p.m., Philadelphia time, on each
Business Day a "cash roll report" covering the period from the day after the
date of the last cash roll report delivered to Lender through the end of the
prior day; (g) within five (5) days after the close of each calendar month, and
at Lender's reasonable request, an update and list of all changes to the master
address list of Borrowers' Payment Parties; (h) within ten (10) days after
filing, copies of the federal income tax returns filed (together with all
schedules) or extensions requested by Borrower; and (i) such additional
financial information regarding Borrower and its operations and financial
condition as Lender may, from time to time, reasonably require;
9.1.2 Cause the Sureties, if any, to furnish to Lender: (a)
not later than ninety (90) days after the close of each calendar year, financial
statements of each Surety, in form and content acceptable to Lender; (b) within
10 days of filing, copies of such Surety's federal tax returns (together with
all schedules) or extensions requested by such Surety; and (c) such other
financial information regarding each Surety as Lender may, from time to time,
require;
9.1.3 Maintain or cause to be maintained, take out, pay for
and keep in effect or cause to be taken out, paid for, and kept in effect, so
long as the Obligations remain unsatisfied, such insurance against risks, and
coverage against such other hazards, as are customarily insured against by
companies in the same or similar business, and such other hazards as Lender may,
from time to time reasonably require, all in amounts and with such insurance
carriers as may be satisfactory to Lender, and will deliver to Lender, upon
their issuance, insurance policies for all insurance then in force.
9.1.4 Pay or cause to be paid when due, all taxes, assessments
and charges or levies imposed upon them or on any of their property or which
they are required to withhold and pay over, except where contested in good faith
by appropriate proceedings with adequate reserves therefor having been set aside
on their books; but Borrower shall pay or cause to be paid all such taxes,
assessments, charges or levies forthwith whenever foreclosure on any lien that
attaches (or security therefor) appears imminent;
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9.1.5 [INTENTIONALLY LEFT BLANK]
9.1.6 Keep accurate and complete in all material respects,
books and Records relating to the Collateral and its business affairs consistent
with sound accounting practices; keep complete and accurate Records (including
all books of original and final entry, computer programs, software, stored
material and data banks associated with or arising out of their business,
operations and/or record keeping) and make all necessary entries therein to
reflect the transactions and facts giving rise to Collateral, and all payments,
debits, credits and adjustments applicable thereto;
9.1.7 Use the proceeds of the Term Loan solely for the
purposes stated under this Agreement;
9.1.8 Maintain financial records in accordance with GAAP and,
upon reasonable notice by Lender, permit any authorized representative
designated by Lender to visit at reasonable times and inspect any of the
Properties of Borrowers (including, without limitation, their books of account,
Records, correspondence and other papers and to make extracts therefrom) and to
discuss their affairs, finances and accounts with its officers and its
independent certified public accountants or other parties preparing statements
for or on behalf of Borrowers;
9.1.9 Maintain their corporate existence in good standing;
make no material change in the nature or character of their business and not
engage in any business which is materially different from the business in which
they are currently engaged; maintain and keep in full force and effect all
licenses and Permits necessary to the proper conduct of their business; and
operate their business strictly in accordance with applicable Law;
9.1.10 Execute such other and further documents as may, from
time to time, in the reasonable opinion of Lender or Lender's counsel, be
necessary to perfect, confirm, establish, reestablish, continue or complete
Lender's security interest in the Collateral and the purposes and intentions of
this Agreement, it being the intention of Borrowers to provide hereby a full and
absolute warranty of further assurance to Lender. If Borrowers fail to execute
any such documents within thirty (30) days of being reasonably requested to do
so by Lender, Borrowers hereby appoint Lender or any officer of Lender as
Borrowers' attorney-in-fact for purposes of executing such documents in
Borrowers' place and stead, which power of attorney shall be considered to be
coupled with an interest and irrevocable;
9.1.11 Notify Lender immediately of the occurrence of any
Event of Default hereunder, under the agreements, documents or instruments,
evidencing Loans by Lender to Borrowers or of any fact, condition or event that
only with the giving of notice and/or passage of time, or both would become an
Event of Default, or of the failure of Borrowers to observe any of their
undertakings hereunder;
9.1.12 Notify Lender ninety (90) days in advance of any change
in the location of any of its places of business or of the establishment of any
new or the discontinuance of any existing place of business and furnish to
Lender any new or replacement UCC-1 financing statements, duly signed by
Borrowers necessary to keep perfected Lender's security interest in the
Collateral;
9.1.13 Permit Lender, its officers, employees, designees and
agents, without hindrance or delay, at such times as Lender deems reasonably
appropriate and upon 48 hours prior notice to Borrowers, to have access to,
audit, inspect, and make copies of or extracts from all of Borrowers' books and
Records including, without limitation, all journals, orders, receipts and
correspondence and any other books and Records pertaining to Borrowers' business
which Lender may request, wherever located;
9.1.14 Cause all Persons to make all such books and Records in
their possession available to Lender, its officers, employees, designees and
agents. If deemed necessary by Lender, in Lender's sole discretion, upon the
occurrence of an Event of Default, Lender may remove them from any Borrower's
place of business or any other place where the same may be found for the
purposes of examining, auditing or reproducing the same. Any books or Records so
removed by Lender shall be returned by Lender as soon as Lender shall have
completed its inspection, audit or reproduction thereof, but in no event later
than five (5) business days after their removal;
11
9.1.15 Comply with all present and future Laws applicable to
them in the operation of their business, and all material agreements to which
they are subject, except those with respect to which the failure to do so would
not have a Material Adverse Effect on Borrowers;
9.1.16 Do all acts and make all such filings as may be
necessary to ensure that Borrowers are duly qualified to do business in the
State of Nevada and any other states or jurisdictions in which the Borrowers
conduct their business;
9.1.17 ▇▇▇▇ their books and Records concerning Collateral in a
manner reasonably satisfactory to Lender to show Lender's security interest
therein;
9.1.18 Instruct Borrowers' outside computer service company
and accountants that Lender is irrevocably empowered to have full access to and
to have printouts and all information respecting Borrower's financial records
maintained by Borrowers' outside computer service company and/or accountants
respecting any and all financial Records now or hereafter maintained by the same
on account of Borrowers at Borrowers' expense and Lender will notify Borrowers
of any such contact;
9.1.19 Execute and deliver to Lender any instrument, document,
assignment or other writing which Lender deems necessary or desirable to carry
out the terms of this Agreement or to enable Lender to perfect or enforce its
Liens and security interests in the Collateral;
9.1.20 Pay Lender on demand the cost of collection or
enforcement, including reasonable attorney's fees, of all Payment Receivables or
other Collateral, if Lender undertakes such collection or enforcement together
with all taxes, charges and expenses of any nature paid or incurred by Lender
under or with respect to Loans hereunder or any of the Collateral therefor, or
Lender may charge any bank account of Borrowers of any nature for such amounts;
9.1.21 Indemnify and agree to protect, defend and hold
harmless Lender, any entity which "controls" Lender, within the meaning of
Section 15 of the Securities Act of 1933, as amended, or is under common control
with Lender and any member, partner, officer, director, official, agent,
employee or attorney of Lender, and their respective heirs, administrators,
executors, successors and assigns (collectively, the "Indemnified Parties"),
from and against any and all losses, damages, expenses or liabilities of any
kind or nature and from any suits, claims or demands, including reasonable
attorneys' fees incurred in defending such claim, suffered by any of them and
caused by, relating to, arising out of, resulting from, or in any way connected
with this Agreement, the Loan Documents or the transactions contemplated herein
and therein (unless determined by a final judgment of a court of competent
jurisdiction to have been caused by the gross negligence or willful misconduct
of the Indemnified Parties), including, without limitation, (a) any untrue
statement of a material fact contained in information submitted to Lender by
Borrowers or the omission of any material fact necessary to be stated therein in
order to make such statement not misleading or incomplete; (b) the failure of
Borrowers to perform any undertakings or obligations herein required to be
performed by Borrowers; (c) any breach of any covenant, warranty, representation
or other provision of this Agreement or the Loan Documents; (d) any encumbrance
or other disposition of any of the Collateral; (e) any alleged violation of any
Law by Borrowers; or (f) any claims against Borrowers, any Obligor or Lender
asserted by Equitex, Inc., Chex Services, Inc. or any of their respective
affiliates. Borrower further agrees to reimburse Lender for all reasonable
counsel fees and costs expended or incurred by Lender in connection with the
foregoing. This indemnification shall survive for the period of the applicable
statute of limitations, the termination of this Agreement.
9.1.22 In case any action shall be brought against Lender or
any other Indemnified Party in respect to which indemnity may be sought against
Borrowers, Lender or such other Indemnified Party shall promptly notify
Borrowers and Borrowers shall assume the defense thereof, including the
employment of counsel selected by Borrowers and satisfactory to Lender, the
payment of all reasonable costs and expenses and the right to negotiate and
consent to settlement. The failure of Lender to so notify Borrowers shall not
relieve Borrowers of any liability they may have under the foregoing
indemnification provisions from any liability which Borrowers may otherwise have
to Lender, or any of the other Indemnified Parties, except to the extent
materially prejudiced by such delay or failure of notice. In the event that
Borrowers shall not be proceeding diligently to defend such claim, Lender shall
have the right, at its sole option, to employ separate counsel in any such
action and to participate in the
12
defense thereof, all at Borrowers' sole cost and expense. Borrowers shall not be
liable for any settlement of any such action effected without the applicable
Person's consent (unless Borrowers fail to defend such claim), but if settled
with Borrowers' consent, or if there be a final judgment for the claimant in any
such action, Borrowers agrees to indemnify and save harmless Lender from and
against any loss or liability by reason of such settlement or judgment; and
9.2 Negative Covenants. Without the prior written consent of Lender,
Borrower shall not:
9.2.1 Change their name, their place of business, or, if more
than one, chief executive office or their mailing address, organizational
identification number, if it has one; change its type of organization,
jurisdiction of organization or other legal structure or enter into any merger,
consolidation, reorganization or recapitalization;
9.2.2 Grant, create, incur or permit to exist any mortgage,
pledge, a security interest in or Lien upon, or for any other purpose assign or
transfer, either absolutely or as collateral security, any of the Collateral
except in favor of Lender;
9.2.3 Instruct any Payment Party to make payment except to the
Depository Account;
9.2.4 Make or furnish Lender any financial statement,
representation, warranty, certificate or other document, statement or
information that will contain any untrue, incorrect or incomplete statement of
material fact or that will omit to state a material fact necessary to make it
not misleading in light of the circumstances under which it was furnished;
9.2.5 Directly or indirectly apply any part of the proceeds of
the Loan to the purchasing or carrying of any "margin stock" within the meaning
of Regulation G, T, X or U of the Board of Governors of the Federal Reserve
System, or any regulations, interpretations or rulings thereunder;
9.2.6 Store, locate, move or relocate all or any portion of
the Collateral or the Records related thereto in or to any other location except
upon thirty (30) days prior written notice to Lender; or
9.2.7 Change their ownership structure or the percentage of
ownership interest in Borrowers' stock held by ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, in any
material way.
10. DEFAULT.
10.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default" hereunder:
10.1.1 Any Obligor shall fail to pay when due, any installment
of principal or interest or fee payable hereunder or any Obligation when due;
10.1.2 Any Obligor shall fail to observe or perform any other
obligation or covenant required to be observed or performed by it hereunder,
under any of the Loan Documents, or under any other agreement between any
Obligor and Lender or the occurrence of an Event of Default under any other
agreement between any Obligor and Lender;
10.1.3 Any Obligor shall (a) fail to pay any secured
Indebtedness due any third Person and such failure shall continue beyond any
applicable grace periods, if such failure to pay results in a Material Adverse
Effect; (b) fail to pay any Indebtedness due any third Person and such failure
is not cured prior to any acceleration of such Indebtedness by the applicable
creditors, whichever is earlier, or the exercise of any remedies permitted under
any of the documents evidencing such Indebtedness, if such failure to pay
results in a Material Adverse Effect; or (c) any Obligor shall suffer to exist
any other event of default under any agreement binding upon any Obligor, if such
event of default results in a Material Adverse Effect, provided that the failure
of any Individual Surety to pay any non-material consumer debt shall not
constitute an Event of Default hereunder, provided further that Obligor shall be
entitled to fail to pay Indebtedness which is the subject of a bona fide dispute
between such Obligor and the creditor thereof which is being prosecuted
diligently by such Obligor;
13
10.1.4 Any Obligor shall make or furnish to Lender any
representation, warranty, statement or certificate in connection with this
Agreement, the Loan Documents or the Obligations which is not true and correct
when made or furnished, or shall be false, incorrect or incomplete when made;
10.1.5 Any Obligor shall admit its inability to pay its debts
as they mature, or shall make an assignment for the benefit of its creditors;
10.1.6 Proceedings in bankruptcy, or for reorganization of any
Obligor, or for the readjustment of any of its debts under Bankruptcy Code, as
amended, or any part thereof, or under any other laws, whether state or federal,
for the relief of debtors, now or hereafter existing, shall be commenced by or
against any Obligor and, if commenced against any Obligor, shall not be
discharged within thirty (30) days of their commencement;
10.1.7 A receiver or trustee shall be appointed for any
Obligor or for any substantial part of its Assets, or any proceedings shall be
instituted for the dissolution or the full or partial liquidation of any
Obligor, and such receiver or trustee shall not be discharged within thirty (30)
days of its appointment, or any Obligor shall discontinue business or materially
change the nature of its business;
10.1.8 The entry of any judgment against any Obligor which, if
adversely decided, would have a Material Adverse Effect, which remains
unsatisfied for thirty (30) days unless being contested by Obligor in good faith
with appropriate proceedings and with execution stayed; or a judgment creditor
of any Obligor shall obtain possession of any of the Collateral by any means,
including, but without limitation, levy, distraint, replevin or self-help;
10.1.9 Any Governmental Authority or instrumentality seizes,
appropriates, condemns or occupies all or a substantial part of the Properties
of any Obligor or interferes in any substantial manner with the operation of the
business of any Obligor;
10.1.10 If, in Lender's judgment, the value of the Collateral
so substantially deteriorates or diminishes that Lender reasonably deems the
Obligations to be inadequately secured, and Obligor neither reduces the amount
of the Obligations, nor provides additional Collateral;
10.1.11 The validity or enforceability of this Agreement, the
Term Loan Note or any of the Loan Documents, shall be contested by any Obligor
or any Obligor shall deny that it has any or further liability or obligation
hereunder or therewith;
10.1.12 The occurrence of any Material Adverse Change in the
financial condition of any Obligor;
10.1.13 A Change in Control of either Borrower;
10.1.14 Any material change in either Borrower's ownership
structure or the percentage of ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇'▇ ownership interest in
either Borrower's stock;
10.1.15 Any change in either Borrower's ownership structure
resulting from the exercise by ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ of any "put", "buyout"
or similar rights with respect to the stock of either Borrower;
10.1.16 Any default by Borrowers, MCA or ▇▇▇▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ under their respective agreements with Lender.
10.2 Acceleration. Immediately and without notice upon the occurrence
and during the continuation of any Event of Default, all Obligations, whether
hereunder or otherwise, shall immediately become due and payable without further
action of any kind; and, notwithstanding any outstanding commitment of Lender to
Borrowers to make additional and further Loans to Borrowers, upon the occurrence
of any Event of Default, any such commitment shall immediately become null and
void and of no force and effect whatsoever.
10.3 Remedies.
14
10.3.1 After any acceleration due to an Event of Default,
interest on the principal balance of the Obligations outstanding from time to
time shall accrue and is payable at the interest rate set forth in Schedule 2
attached hereto plus five percent (5%) per annum from the date of such
acceleration until all such Obligations are satisfied in full and whether or not
any judgment is entered hereon (the sum of both rates, the "Default Rate"). In
addition to the rights and remedies given it by this Agreement and the Loan
Documents, Lender shall have all those allowed by all applicable laws,
including, but without limitation, the Uniform Commercial Code as enacted in any
jurisdiction in which any Collateral may be located and Lender may enforce such
rights and pursue such remedies without demand of performance and without other
notice. Without limiting the generality of the foregoing, Lender may
immediately, without demand of performance and without other notice (except as
specifically required by this Agreement or the Loan Documents) or demand
whatsoever to any Obligor, all of which are hereby expressly waived, and without
advertisement, take possession of the Collateral, exercise the Warrant of
Attorney contained in Section 9.17 herein, retain all of Borrowers' Records,
sell at public or private sale or otherwise realize upon in Pennsylvania, or
elsewhere, the whole or, from time to time, any part of the Collateral or any
interest which any Obligor may have therein. After deducting from the Proceeds
of sale or other disposition of the Collateral all expenses (including all
expenses for legal services), Lender shall apply such Proceeds toward the
satisfaction of the Obligations. Any remainder of the Proceeds after
satisfaction in full of the Obligations shall be distributed as required by
applicable Laws. Notice of any sale or other disposition shall be given to
Borrowers at least ten (10) days before the time of any intended public sale or
of the time after which any intended private sale or other disposition of the
Collateral is to be made, which Borrower hereby agrees shall be reasonable
notice of such sale or other disposition. At any such sale or other disposition,
Lender may, to the extent permissible under applicable laws, purchase the whole
or any part of the Collateral, free from any right of redemption on the part of
any Obligor, which right is hereby waived and released. Without limiting the
generality of any of the rights and remedies conferred upon Lender under this
paragraph, Lender may, to the full extent permitted by applicable Laws: (a)
enter upon the premises of Borrowers, exclude therefrom Borrowers or any
Affiliate thereof, and take immediate possession of the Collateral, either
personally or by means of a receiver appointed by a court of competent
jurisdiction, using all necessary force to do so; (b) at Lender's option, use,
operate, manage and control the Collateral in any lawful manner; (c) collect and
receive all rents, income, revenue, earnings, issues and profits therefrom; and
(d) maintain, repair, renovate, alter or remove the Collateral as Lender may
determine in its discretion.
11. MISCELLANEOUS.
11.1 Construction. The provisions of this Agreement shall be in
addition to those of any guaranty, surety, hypothecation, pledge or security
agreement, note, or other evidence of liability held by Lender, and any other
agreement between Borrowers and any entity constituent of Borrowers as guarantor
or otherwise, and Lender, all of which shall be construed as complementary to
each other. Nothing herein contained shall prevent Lender from enforcing any or
all other notes, guaranty, surety, hypothecation, pledge or security agreements
in accordance with their respective terms.
11.2 Term of Agreement. This Agreement shall terminate after payment in
full of the Term Loan Note and the discharge of all obligations and undertakings
of Borrowers to Lender, whether arising hereunder or otherwise. Lender's
agreement hereunder to make the Loans shall terminate on the earliest of: (a)
the occurrence of an Event of Default; (b) the Term Loan Maturity Date; or (c)
on the date specified in the notice given by Lender pursuant to this Agreement;
provided that certain agreements of Borrowers hereunder shall continue in full
force and effect beyond the Term Loan Maturity Date or other termination hereof.
11.2.1 On the effective termination date of this Agreement,
all of the Obligations shall be immediately due and payable. The termination of
this Agreement shall not affect the rights, liabilities and obligations of the
parties with respect to the Obligations as of the date of termination, or the
Collateral which secures and is to secure the Obligations, which Collateral
shall remain subject to the liens and security interests granted hereunder until
all of the Obligations are satisfied in full. The failure of Lender to enforce
any of the terms and provisions hereof or failure to declare default hereunder
shall apply only in a particular instance, and shall not operate as a continuing
waiver.
11.3 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP, except as otherwise stated
herein.
11.4 Stamp or Excise Tax. Should any stamp or excise tax be payable in
respect of this Agreement, the Term Loan Note and other documents to be
delivered hereunder, or any modification hereof or thereof, Borrowers
15
shall pay the same and shall hold Lender harmless from any and all liabilities
with respect to or resulting from any delay in paying or any failure to pay such
taxes.
11.5 Further Assurance. From time to time, Borrowers will execute and
deliver to Lender such additional documents and will provide such additional
information as Lender may reasonably require to carry out the terms of this
Agreement and be informed of Borrowers' status and affairs.
11.6 Enforcement and Waiver by Lender. Lender shall have the right at
all times to enforce the provisions of this Agreement and the Loan Documents in
strict accordance with the terms hereof and thereof, notwithstanding any conduct
or custom on the part of Lender in refraining from so doing at any time or
times. The failure of Lender at any time or times to enforce its rights under
such provisions strictly in accordance with the same shall not be construed as
having created a custom in any way or manner contrary to specific provisions of
this Agreement or as having in any way or manner modified or waived the same.
All rights and remedies of Lender are cumulative and the occurrence and the
exercise of one right or remedy shall not be deemed a waiver or release of any
other right or remedy.
11.7 Expenses of Lender. Borrowers will pay all expenses including the
fees and expenses of legal counsel for Lender, incurred in connection with the
administration, amendment, modification or enforcement of this Agreement and the
Loan Documents and the collection or attempted collection of the Obligations,
the Term Loan Note and the Collateral.
11.8 Notice. Any notices or consents required or permitted by this
Agreement shall be in writing and shall be delivered in person or sent by first
class or certified mail, return receipt requested, postage prepaid, by reputable
overnight carrier, or by fax, as follows, unless such address is changed by
written notice hereunder:
If to Borrowers:
iGAMES ENTERTAINMENT, INC.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to Lender:
Mercantile Capital, LP
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
11.8.1 Notices shall be deemed to have been received if hand
delivered, when delivered, if sent by certified mail or first class mail, three
(3) calendar days after the date deposited in the United States Mail, if by
overnight courier, on the date scheduled for delivery, and if by fax, when
transmitted. Any party may change the name and address of the person to whom
notices hereunder are to be sent by giving notice to such other party as
specified hereunder.
11.9 Waiver and Release by Borrowers. To the maximum extent permitted
by applicable Laws, Borrowers waive notice after acceleration in the manner
herein provided before exercise by Lender of the remedies of self-help, set-off,
or of other summary procedures permitted by any applicable laws, or by any
agreement with Borrowers, and, except where required hereby or by any applicable
laws, notice of any other action taken by Lender; and release Lender and its
officers, attorneys, agents and employees from any and all claims for loss or
damages caused by any act or omission on the part of any of them except willful
misconduct.
11.10 Applicable Law. The internal laws of the Commonwealth of
Pennsylvania shall govern the construction of this Agreement, the Loan Documents
and the rights and remedies of the parties hereto, without regard to its
conflict of laws principles.
16
11.11 Consent to Jurisdiction, Service and Venue. For the purpose of
any suit, action or proceeding arising out of or relating to this Agreement, the
Term Loan Note or the Loan Documents, Borrowers hereby irrevocably consents and
submits to the jurisdiction and venue any of the Courts of the Commonwealth of
Pennsylvania or any Federal court located in the Eastern District of
Pennsylvania including, without limitation, the Court of Common Pleas of
▇▇▇▇▇▇▇▇▇▇ County and the United States District Court for the Eastern District
of Pennsylvania, regardless of the convenience of such forum, and Borrowers
further agree and consent to accept and acknowledge all service of the process
carried out by means of registered mail, return receipt requested in connection
with any such matter. The provision of this Section shall not limit or otherwise
affect the right of Lender to institute and conduct action in any other
appropriate manner, jurisdiction or court.
11.12 Binding Effect, Assignment and Entire Agreement. This Agreement
shall inure to the benefit of and shall be binding upon the respective
successors and permitted assigns of the parties hereto. Borrowers do not have
any right to assign any of its rights or obligations hereunder without the prior
written consent of Lender; provided, however, that Lender shall be permitted to
assign all of its rights, privileges and obligations hereunder at any time. This
Agreement and the Loan Documents executed and delivered pursuant hereto,
constitute the entire agreement between the parties and may be amended only by a
writing signed on behalf of each party.
11.13 Severability. If any provision of this Agreement shall be held
invalid under any applicable Laws, such invalidity shall not affect any other
provision of this Agreement that can be given effect without the invalid
provision, and to this end, the provisions hereof are severable.
11.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.
11.15 Seal. This Agreement is intended to take effect as an instrument
under seal.
11.16 Time of the Essence. Time is of the essence in this Agreement.
11.17 WARRANT OF ATTORNEY. THE FOLLOWING PARAGRAPH SETS FORTH A WARRANT
OF AUTHORITY FOR ANY ATTORNEY TO CONFESS JUDGMENT AGAINST THE UNDERSIGNED
OBLIGORS. IN GRANTING THIS WARRANT OF ATTORNEY TO CONFESS JUDGMENT AGAINST THE
UNDERSIGNED OBLIGORS, THE UNDERSIGNED OBLIGORS, FOLLOWING CONSULTATION WITH
SEPARATE COUNSEL FOR THE UNDERSIGNED OBLIGORS AND WITH KNOWLEDGE OF THE LEGAL
EFFECT HEREOF, HEREBY KNOWINGLY, INTENTIONALLY, VOLUNTARILY AND UNCONDITIONALLY
WAIVE ANY AND ALL RIGHTS THE UNDERSIGNED OBLIGORS HAVE OR MAY HAVE TO PRIOR
NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND
LAWS OF THE UNITED STATES OF AMERICA, THE COMMONWEALTH OF PENNSYLVANIA, OR
ELSEWHERE. IT IS SPECIFICALLY ACKNOWLEDGED BY THE UNDERSIGNED THAT LENDER HAS
RELIED ON THIS WARRANT OF ATTORNEY IN ENTERING INTO THIS AGREEMENT AND AS AN
INDUCEMENT TO GRANT FINANCIAL ACCOMMODATIONS TO THE UNDERSIGNED OBLIGORS.
OBLIGORS HEREBY IRREVOCABLY AUTHORIZE AND EMPOWER ANY ATTORNEY OR ANY
CLERK OF ANY COURT OF RECORD, UPON FIVE (5) DAYS PRIOR WRITTEN NOTICE
TO BORROWERS, TO APPEAR FOR AND CONFESS JUDGMENT AGAINST OBLIGORS, (A)
FOR SUCH SUMS AS ARE DUE AND/OR MAY BECOME DUE ON THE OBLIGATIONS
EVIDENCED BY THIS AGREEMENT, AND/OR (B) IN ANY ACTION OF REPLEVIN
INSTITUTED BY LENDER TO OBTAIN POSSESSION OF ANY COLLATERAL SECURING
THE NOTE OR SECURING ANY OF THE OBLIGATIONS, IN EITHER CASE WITH OR
WITHOUT DECLARATION, WITH COSTS OF SUIT, WITHOUT STAY OF EXECUTION AND
WITH AN AMOUNT, FOR LIEN PRIORITY PURPOSES, EQUAL TO THE AMOUNT OF SUCH
JUDGMENT, PLUS ATTORNEYS' COLLECTION FEES. TO THE EXTENT PERMITTED BY
LAW, OBLIGORS: (1) WAIVE THE RIGHT OF INQUISITION ON ANY REAL ESTATE
LEVIED ON, VOLUNTARILY CONDEMN THE SAME, AUTHORIZE THE PROTHONOTARY OR
CLERK TO ENTER UPON THE WRIT OF EXECUTION; (2) WAIVE AND RELEASE ALL
RELIEF FROM ALL REDEMPTION, APPRAISEMENT, STAY, EXEMPTION, OR APPEAL
LAWS OF ANY STATE NOW IN FORCE OR HEREAFTER ENACTED; AND (3) RELEASE
ALL ERRORS IN SUCH PROCEEDINGS. IF A COPY OF THIS AGREEMENT, VERIFIED
BY AFFIDAVIT BY OR
17
ON BEHALF OF LENDER SHALL HAVE BEEN FILED IN SUCH ACTION, IT SHALL NOT
BE NECESSARY TO FILE THE ORIGINAL OF THIS AGREEMENT AS A WARRANT OF
ATTORNEY. THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT
AGAINST OBLIGORS SHALL NOT BE EXHAUSTED BY THE INITIAL EXERCISE
THEREOF, AND THE SAME MAY BE EXERCISED, FROM TIME TO TIME, AS OFTEN AS
LENDER MAY DEEM NECESSARY AND DESIRABLE, AND THIS AGREEMENT SHALL BE A
SUFFICIENT WARRANT THEREFOR. LENDER MAY ENTER ONE OR MORE JUDGMENTS IN
THE SAME OR DIFFERENT JURISDICTIONS FOR ALL OR PART OF OBLIGORS'
OBLIGATIONS, WITHOUT REGARD TO WHETHER JUDGMENT HAS THERETOFORE BEEN
ENTERED ON MORE THAN ONE OCCASION FOR THE SAME OBLIGATIONS. IN THE
EVENT ANY JUDGMENT ENTERED AGAINST OBLIGORS HEREUNDER IS STRICKEN OR
OPENED UPON APPLICATION BY OR ON OBLIGORS' BEHALF FOR ANY REASON
WHATSOEVER, LENDER IS HEREBY AUTHORIZED AND EMPOWERED TO AGAIN APPEAR
FOR AND CONFESS JUDGMENT AGAINST OBLIGORS FOR ANY PART OR ALL OF THE
OBLIGATIONS; SUBJECT, HOWEVER, TO THE LIMITATION THAT SUCH SUBSEQUENT
ENTRY OR ENTRIES OF JUDGMENT BY LENDER FOLLOWING ANY PROCEEDING TO OPEN
OR STRIKE MAY ONLY BE DONE TO CURE ANY ERRORS OR DEFECTS IN SUCH PRIOR
PROCEEDINGS, AND ONLY TO THE EXTENT THAT SUCH ERRORS OR DEFECTS ARE
SUBJECT TO CURE IN SUCH LATER PROCEEDINGS.
11.18 Usury. If the applicable interest rate from time to time shall
exceed the maximum rate of interest permitted by applicable law, then the
applicable interest rate during such time shall be reduced so as to equal the
maximum rate of interest permitted by applicable law, and, in the event a
payment is made by Borrowers or received by Lender in excess of the applicable
legal limits, the amount of such excess payment shall be credited to the account
of Borrowers as a payment of principal.
11.19 Gender, Etc. Whenever used herein, the singular shall include the
plural, the plural shall include the singular, and the use of the masculine,
feminine or neuter gender shall include all genders, as the context may require.
11.20 Headings. The Section and subsection headings of this Agreement
are for convenience of reference only, and shall not limit or otherwise affect
any of the terms hereof.
11.21 Signatures by Facsimile. Any facsimile signature of any party
hereto shall constitute a legal, valid and binding execution hereby by such
party.
11.22 WAIVER OF JURY TRIAL. BORROWERS ACKNOWLEDGE AND AGREE THAT (a)
ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT OR
INSTITUTED BY THE LENDER, BORROWERS OR ANY OTHER PARTY HERETO OR ANY SUCCESSOR
OR ASSIGN OF LENDER, BORROWERS OR ANY OTHER PARTY HERETO, ON OR WITH RESPECT TO
THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR THE OTHER DOCUMENTS REQUIRED
HEREUNDER OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO, OR THERETO, SHALL
BE TRIED ONLY BY A COURT AND NOT BY A JURY AND BORROWERS WAIVE THE RIGHT TO
TRIAL BY JURY; (b) BORROWERS WAIVE ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN
ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES; AND (c) THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS
AGREEMENT AND THE LENDER WOULD NOT EXTEND CREDIT TO THE BORROWERS IF THE WAIVERS
SET FORTH IN THIS SECTION WERE NOT A PART OF THIS AGREEMENT.
(SIGNATURES APPEAR ON FOLLOWING PAGE)
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
IGAMES ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Its: CEO
AVAILABLE MONEY, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Its: President
MERCANTILE CAPITAL, L.P.
By:
---------------------
▇▇▇ ▇. ▇▇▇▇▇, CEO
SURETY(IES) ACKNOWLEDGEMENT:
Money Centers of America, Inc., Surety under a Surety Agreement in favor of
Lender dated the 28th day of November 2003, hereby acknowledges receipt of this
Agreement and consents to its terms and conditions.
MONEY CENTERS OF AMERICA, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Chairman
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇., Surety under a Surety Agreement in favor of Lender
dated the ___th day of April 2004, hereby acknowledges receipt of this Agreement
and consents to its terms and conditions.
By: /s/▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇., Surety under a Surety Agreement in favor of Lender dated
the ___th day of April 2004, hereby acknowledges receipt of this Agreement and
consents to its terms and conditions.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
19
SCHEDULE 1
1) "General Intangibles," "Deposit Accounts," "Payment Intangibles," "Records,"
and "Proceeds" shall have the same respective meanings as are given to those
terms in the Uniform Commercial Code.
2) "Affiliate" shall mean any Person which, directly or indirectly, controls, is
controlled by or is under common control with the Borrowers, or any stockholder,
partner, owner or member of Borrower or any Person which controls any
stockholder, partner, owner or member of the Borrowers. For the purpose of this
definition, "control" means the possession, directly or indirectly, of the power
to direct or to cause the direction of management and policies or having the
ordinary voting power to elect the Board of Directors or other governing body,
whether through the ownership of voting securities, by contract, by agreement or
otherwise.
3) "Assets" means all assets that should, in accordance with GAAP, consistently
applied, be classified as assets on a balance sheet of the Borrower.
4) "Blocked Account Agreement" shall mean an agreement between Borrowers, Lender
and Borrowers' bank evidencing Lender's security interest in and control of
Borrower's bank account(s).
5) "Business Day" shall mean any day other than a Saturday, Sunday or other day
on which banking institutions in the Commonwealth of Pennsylvania are either
authorized or required to be and remain closed to the general public.
6) "Change in Control" shall mean the failure of ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ to
control at least 51% of the capital and voting stock of either Borrower. For
purposes hereof, "Control" shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of Borrower's management or policies,
whether through the ownership of securities, by contract or otherwise.
7) "Closing" means the receipt or waiver by Lender of all the agreements,
documents and instruments required hereunder in form and content acceptable to
Lender, and the satisfaction by Borrowers or waiver or extension by Lender of
all or part of the Conditions Precedent set forth in Section 5 hereof. "Closing
Date", means the date upon which Lender has elected to make the initial
disbursement of the Loan(s) to Borrowers. The Closing Date shall be April 12,
2004, unless otherwise extended by Lender.
8) "COBRA Violations" shall mean a failure by the Borrowers to comply with group
health plan continuation coverage requirements of Section 601 et seq. of ERISA.
9) "Collateral" shall mean: All tangible and intangible assets of iGames as
previously set forth in the Loan Agreement, and all tangible and intangible
assets of Available Money, whether real or personal, of any kind whatsoever
without limitation whether now owned or hereafter acquired, together with all
replacements therefor and all cash and non-cash Proceeds (including, but without
limitation, insurance Proceeds and Proceeds of Proceeds) thereof.
10) "Collateral Documents" means all other agreements, documents or instruments
pursuant to which Lender obtains any Lien or other security interest in the
Collateral or any other property of Borrowers.
11) "Debt" shall mean all of Borrowers' Liabilities (determined in accordance
with GAAP).
12) "Dollars" and "$" means dollars in the lawful currency of the United States.
13) "ERISA" shall mean the Employee Retirement Income Security Act of 1974
(together with all rules and regulations promulgated thereunder), as amended,
supplemented, replaced, or modified from time to time.
14) "ERISA Affiliate" shall mean, as to Borrowers, any Person (whether or not
incorporated), which, together with Borrower, would be treated as a single
employer under Section 4001 of ERISA.
20
15) "Financial Statements" means the consolidated and consolidating balance
sheet, statements of income and retained earnings and statements of cash flow of
the Borrowers and their Subsidiaries and Affiliates and all other financial
statements of Borrowers and their Subsidiaries or Affiliates submitted and to be
submitted to Lender hereunder, and in form and content acceptable to Lender.
16) "GAAP" or "generally accepted accounting principles" shall mean generally
accepted accounting principles applied on a consistent basis, in accordance with
the Statement of Auditing Standards No. 69, "The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles in the Independent
Auditor's Report" (SAS 69) or superseding pronouncements, issued by the Auditing
Standards Board of the American Institute of Certified Public Accountants and/or
in statements of the Financial Accounting Standards Board and/or in such other
statements by such other entity as Lender may reasonably approve, which are
applicable in the circumstances as of the date in question. The requirement that
such principles be applied on a consistent basis shall mean that the accounting
principles observed in a current period are comparable in all material respects
to those applied in a preceding period, or, in the event of a material change in
any accounting principle from that observed in any previous period, (a)
financial reports covering preceding periods during the term of this Agreement
are restated to reflect such change and provide a consistent basis for
comparison among periods and (b) the financial covenants set forth in herein, if
any, shall be adjusted as determined by the Lender to reflect similar
performance standards as those measured by the existing covenants using the
previously observed accounting principles.
17) "Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
18) "Guarantor Security Agreement" means the security agreement entered into by
Lender and each corporate Surety to secure such Surety's obligations under the
Surety Agreement to guaranty the Obligations hereunder.
19) "Indebtedness" means, as to any Obligor, all Liabilities, indebtedness or
obligations of Borrowers to any Person of any kind or nature, now or hereafter
arising, due and payable, or to become due and payable, matured or unmatured,
liquidated or unliquidated, direct, secondary or contingent, fixed or otherwise,
joint or several.
20) "Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs or decrees of any Government Authority or agency thereof or
any court or similar entity established by any thereof.
21) "Liabilities" means all Indebtedness that, in accordance with GAAP, should
be classified as liabilities on a balance sheet of Borrower.
22) "Lien" means:
a) Any interest in real, personal and intangible property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute, or
contract, and including a security interest, charge, claim, or lien arising from
a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, agreement, security agreement, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes;
b) To the extent not included under clause (a), any reservation,
exception, encroachment, easement, right-of-way, covenant, condition,
restriction, lease or other title exception or encumbrance affecting property;
and
c) Any contingent or other agreement to provide any of the foregoing.
23) "Loan Documents" shall mean this Agreement, the Note, the Collateral
Documents, Surety Agreement, Pledge Agreement, Mortgage and/or any deed of
trust, mortgage, assignment of lease, note, contract, security instrument,
encumbrance, financing statement, certificate, assignment, pledge, report,
subordination, conditional sale, other title retention agreement, or other
document related to or delivered in connection with the transactions
contemplated by this Agreement.
21
24) "Material Adverse Change" shall mean any changes that could result in a
Material Adverse Effect.
25) "Material Adverse Effect" shall mean any set of circumstances or events
which
a) Has or could reasonably be expected to have any material adverse
effect whatsoever upon the validity or enforceability of this Agreement or any
other Loan Document,
b) Is or could reasonably be expected to be material and adverse to the
properties, Assets, condition (financial or otherwise) or business operations,
results of operations of the Borrowers, any Subsidiary or to the prospects of
Borrowers, or any Subsidiary,
c) Impairs materially or could reasonably be expected to impair
materially the ability of Borrowers, any Subsidiary to duly and punctually pay
or perform its Obligations or
d) Materially impairs or could reasonably be expected to materially
impair the ability of the Lender to enforce its legal remedies pursuant to this
Agreement or any other Loan Document.
26) "Mortgage" means the mortgage pursuant to which the Surety grants to Lender
a second Lien mortgage on the Surety's principal residence as collateral for the
Surety Agreement.
27) "Obligations" means the obligations of any Obligor:
a) To pay the principal of and all interest on all present and future
Loans and advances made hereunder in accordance with the terms hereof or
otherwise to or for the benefit of Borrowers and to satisfy all of its other
Indebtedness, obligations, liabilities, covenants, duties and Debts to Lender
for payment or performance, whether hereunder or otherwise, whether now existing
or hereafter incurred or arising, matured or unmatured, due or to become due,
absolute, direct or contingent, joint or several, primary or secondary,
including any extensions, modifications, renewals thereof and substitutions
therefor, whether or not evidenced by any note, agreement or other Instrument or
Document, whether arising from an extension of credit, opening of a Letter of
Credit, acceptance, loan, guaranty, indemnification, overdraft or otherwise
including all Indebtedness, liabilities or obligations arising from any Obligor
to others which the Lender may have obtained by purchase, negotiation, discount,
assignment or otherwise, including the Outstanding Balance;
b) To repay to Lender all amounts advanced by Lender hereunder or under
the Loan Documents or otherwise on behalf of (or for the benefit of) any Obligor
including, without limitation, advances for principal or interest payments to
prior or subordinate secured parties, mortgagees, or lienors, or for taxes,
levies, insurance, rent, repairs to, maintenance or storage of any of the
Collateral; and
c) To pay all of Lender's expenses and costs including without
limitation, all filing, recording and satisfaction fees, or taxes, and the fees
and expenses of its counsel in connection with the preparation, administration,
amendment, modification or enforcement of this Agreement and the documents
required hereunder, the perfection or maintenance of Lender's Liens on and
security interests in the Collateral, or any proceeding brought or threatened to
enforce payment of any of the Obligations referred to in the foregoing.
28) "Obligor" means Borrowers, Surety and any other Person directly or
indirectly obligated with respect to the Obligations.
29) "Payment Party" means a bank, financial institution, credit card issuer,
debit card issuer or credit/debit card payment processor that is obligated to
remit funds to Borrowers with respect to a Transaction or on which a check is
drawn.
30) "Payment Receivable" means the amount due from a Payment Party to Borrowers
with respect to a Transaction.
31) "Perfection Certificate" means the Perfection Certificate to be completed
and delivered by Borrowers prior
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to Closing in the form of Exhibit "A" attached hereto and made a part hereof
with appropriate insertions and signed by an Authorized Financial Officer of
Borrower.
32) "Permit" means any permit, license, registration, authorization or other
governmental approval required to be obtained and maintained under any
Environmental Law or other applicable law, rule or regulation of any
Governmental Authority.
33) "Person" means any individual, sole proprietorship, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture, limited liability company, court, Governmental
Authority, government or political subdivision or agency thereof or any other
entity.
34) "Pledge Agreement" means the Stock Pledge Agreement pursuant to which ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ pledges to Lender all of the capital stock of iGames.
35) "Records" means correspondence, memoranda, tapes, discs, CD-ROMS, papers,
books and other documents, or transcribed information of any type, whether
expressed in ordinary, computer, machine or electronic language and the
Equipment in which such information is stored or by which it is retrieved.
36) "Subsidiary" shall mean, as to Borrowers, any corporation of which Borrowers
directly or indirectly through one or more intermediaries owns or controls at
the time (i) at least a majority of the outstanding stock having, under ordinary
circumstances (not dependent upon the happening of a contingency), voting power
to elect a majority of the board of directors (in the case of a corporation
having directors), or (ii) a majority of the voting stock of any corporation not
having directors. The term "Subsidiary" shall also mean any general or limited
partnership or other entity of which more than fifty percent (50%) of the
outstanding partnership interests or ownership interests shall, at the time of
determination, be owned, directly or indirectly, through one or more
intermediaries, by Borrower.
37) "Surety" or "Sureties" means (i) ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, husband and wife, residing at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, and (ii) Money Centers of America, Inc., a Delaware corporation.
38) "Surety Agreement" means a duly authorized and executed surety agreement in
favor of Lender in form and content of Exhibit "E".
39) "Term Loan Maturity Date" means May 1, 2005, as set forth in the Term Loan
Note.
40) "Transaction" shall mean any ATM transaction, credit card advance, debit
card advance, check cashing or similar transaction conducted by Borrower in
providing Services.
41) "Uniform Commercial Code" or "UCC" shall mean the Uniform Commercial Code as
in effect in the Commonwealth of Pennsylvania or of any other state in which any
Collateral is located from time to time, (or any successor statute) the laws of
which are required, as a result thereof, to be applied in connection with the
perfection of security interest in the Collateral.
42) "Vault Cash" shall mean cash used for purposes of providing Services.
42) Other Definitional Provisions and Interpretive Provisions.
a) The meanings of defined terms are equally applicable to the singular
and plural forms of the defined terms.
b) The words "hereof," "herein," "hereunder" and similar words refer to
this Agreement as a whole and not to any particular provision of this Agreement;
and Paragraph, Subparagraph, Subsection, Section, Schedule and Exhibit
references are to this Agreement unless otherwise specified.
c) The term "documents" includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced.
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d) The term "including" is not limiting and means "including without
limitation."
e) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including", the words "to"
and "until" each mean "to but excluding" and the word "through" means "to and
including."
f) Unless otherwise expressly provided herein, (a) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (b) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
g) This Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
h) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Lender, the
Borrowers and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lender merely because of
the Lender's involvement in their preparation.
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