Exhibit 10.1
AMENDED AND RESTATED
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SENIOR SECURED LOAN AND SECURITY AGREEMENT
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Date: July 30, 2001
THIS AMENDED AND RESTATED SECURED LOAN AND SECURITY AGREEMENT (hereinafter,
the "Agreement") is made between Landmark Communications, Inc. (hereinafter,
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"Lender"), a corporation organized and existing under the laws of the State of
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Virginia having an office at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ inc. (hereinafter, "Borrower"), a Michigan corporation with its
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principal executive offices at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, in consideration of the mutual covenants contained herein and benefits to
be derived herefrom. This Agreement supersedes that certain Loan and Security
Agreement, dated as of June 14, 2001, by and between the Lender and the Borrower
(the "Original Agreement"). The Master Note that was made by the Borrower in
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favor of the Lender pursuant to the Original Agreement shall be amended and
restated in its entirety by the Borrower and the Lender on the terms and
conditions of the Senior Secured Note attached hereto as Exhibit A (the "Note").
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All capitalized terms shall have the respective meanings ascribed to them in
Exhibit B hereto.
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W I T N E S S E T H:
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ARTICLE 1.
THE LOAN
1.1. Initial Loan and Advances.
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(a) For value received Borrower unconditionally promises to pay to
the order of Lender on the Maturity Date (as defined below), without offset, the
original principal sum of Five Million Dollars ($5,000,000.00) (the "Original
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Principal Amount") with interest on the outstanding principal amount which shall
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accrue and compound thereon at the interest rates set forth below (the "Initial
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Loan") and as set forth in the Note.
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(b) For value received Borrower unconditionally promises to pay to
the order of Lender ON DEMAND, without offset, the unpaid principal amount of
any and all sums advanced to the Borrower at the Lender's sole discretion, from
time to time (an "Advance") and outstanding under that certain Commercial Demand
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Grid Note attached hereto as Exhibit C (the "Grid Note") together with interest
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on each and all such Advances from the date of any such Advance which shall
accrue and compound thereon at the interest rates set forth below (the Initial
Loan together with any and all Advances, the "Loan"). Notwithstanding the
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foregoing, the aggregate amount of any Advances under the Grid Note shall at no
time exceed Five Million Dollars ($5,000,000). Lender shall not be obligated to
make any Advance to Borrower at any time and should Lender, in its sole
discretion, make an Advance, the decision to evidence Borrower's repayment
obligation with respect thereto under the Grid Note shall also be at Lender's
sole discretion. The Grid Note shall be a demand obligation which shall be
payable by the Borrower at Lender's demand at any time and from time to time.
For purposes of this
Agreement, "Advance" shall be deemed to include any reimbursement obligation of
Borrower to Lender that Lender records as an advance under the Grid Note.
(c) As additional consideration for the Initial Loan, the Borrower
shall issue to the Lender a warrant to purchase common stock of the Borrower in
the form attached hereto as Exhibit D (the "Initial Warrant").
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1.2. Interest on the Initial Loan and Repayment.
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(a) The outstanding principal amount on the Initial Loan shall bear
interest at the rate of twelve percent (12%) per annum; provided, however, that
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if the First Tranche Closing as such term is defined in that certain Securities
Purchase Agreement, dated as of July 30, 2001, by and among the Borrower, the
Lender and Landmark Ventures VII, LLC (the "Purchase Agreement") is consummated,
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then from and after the date of such Closing the Initial Loan (including the
outstanding principal and interest that has then accrued) shall bear interest at
the rate of eight percent (8%) per annum. Interest shall be computed on the
actual number of days elapsed on the basis of a year consisting of 360 days. All
interest shall accrue and compound quarterly on: October 31, January 31, April
30 and July 31 of each year (each such date, a "Quarterly Payment Date"). Such
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accrued and compounded interest shall be added to the principal amount of the
Note.
(b) Notwithstanding the foregoing, any amount outstanding under the
Initial Loan shall bear interest from and after the Maturity Date at the rate of
sixteen (16%) per annum (the "Default Interest Rate"), increasing monthly by an
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annual rate which is one (1) percentage point above the then current Default
Interest Rate for each month that the Note remains overdue. Any interest on the
Initial Loan accruing after the Maturity Date shall accrue and be compounded
monthly (the date of such compounding, the "Monthly Compounding Date" and
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collectively with the Quarterly Payment Date, the "Compounding Date") until the
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obligation of Borrower, with respect to the payment of such interest, has been
discharged (whether before or after judgment). Such accrued and compounded
interest shall be added to the principal amount of the Note.
(c) Notwithstanding the foregoing, the effective annual rate under
the Initial Loan (including the Default Interest Rate) shall not exceed a
maximum annual rate of twenty-four (24%) percent or the maximum annual rate
permitted by law, whichever is less.
(d) The Initial Loan shall be paid in full on the Maturity Date.
Until the Initial Loan is paid in full, on each Compounding Date, in lieu of a
cash payment of the interest due, Borrower shall pay such interest "in-kind". In
lieu of delivering separately documented and certificated promissory notes (the
"Note PIK Payment") and warrants (the "Warrant PIK Payment") for such "in-kind"
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payments, the Note PIK Payment shall be effected by adding the accrued interest
to the principal amount of the Note (as described by the compounding in Sections
1.2(a) and 1.2(b) above) and the Warrant PIK Payment shall be effected through
the provision in the Initial Warrant which provides that for every dollar of
interest accrued, compounded and added to the principal amount of the Initial
Loan, the aggregate number of shares of Borrower's common stock that may be
purchased under the Initial Warrant shall be increased by two (2) (as such
number may be adjusted for dividends, splits, combinations and the
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like). The foregoing notwithstanding, no Warrant PIK Payment shall be required
until after the First Tranche Closing and then only in respect of interest
payments accruing thereafter under the Initial Loan. Lender acknowledges that
the amount of the Note PIK Payment shall be deemed an additional loan borrowed
from the Lender (it being further acknowledged by the Borrower that it shall not
receive additional funds in connection with any such loan).
(e) Borrower may not prepay the Initial Loan except as follows: On
or after the third anniversary of the date hereof, the Borrower may prepay the
Note if and only if (i) the Borrower has had earnings and positive cash flow
during the most recent four fiscal quarters prior to such payment, (ii) Borrower
has no Indebtedness outstanding other than the Initial Loan, the Senior Secured
Note and trade payables incurred in the ordinary course of business (none of
which shall be more than ninety (90) days past due), (iii) the Quick Ratio set
forth in 4.12 below, immediately after giving effect to the prepayment, will be
2 to 1 and the Working Capital, also immediately after giving effect to the
prepayment, will be a net positive of $3 million, and (iv) Borrower's chief
financial officer has certified to Lender in writing (including supporting
computations) that each of the foregoing conditions is satisfied.
1.3. Interest on any Advances.
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(a) The outstanding principal amount on any Advances hereunder shall
bear interest at the rate of eight percent (8%) per annum. Interest shall be
computed on the actual number of days elapsed on the basis of a year consisting
of 360 days.
(b) Any amounts outstanding under any Advances hereunder that shall
have been demanded by the Lender hereto and not paid shall bear interest from
and after the date of such applicable demand at the rate of sixteen (16%) per
annum (the "Demand Interest Rate"), increasing monthly by an annual rate which
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is one (1) percentage point above the then current Demand Interest Rate for each
month that the Grid Note remains overdue. Any interest on the Advances shall
accrue and be compounded monthly until the obligation of Borrower, with respect
to the payment of such interest, has been discharged (whether before or after
judgment).
(c) Notwithstanding the foregoing, the effective annual rate under
the Advances (including the Demand Interest Rate) shall not exceed a maximum
annual rate of twenty-four (24%) percent or the maximum annual rate permitted by
law, whichever is less.
(d) Borrower may prepay the Grid Note at any time and from time to
time.
1.4. Priority of Payment.
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(a) All payments under the Loan shall be made to Lender at its
address specific above, or at such other address as Lender may specify in
writing to Borrower. All payments received from Borrower hereunder shall be
applied, at the option of Lender, first in payment of any costs or expenses of
Lender due to Lender pursuant to the terms of this Agreement, second in payment
of interest accrued and unpaid on the Grid Note, third in payment of the
outstanding principal balance of the Grid Note, and, when prepayment is
permitted, fourth to the payment of interest accrued and unpaid on the Note, and
fifth, to reduce the principal balance of the Note.
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(b) At Lender's sole discretion, Lender may forgive any portion of
any principal or interest amounts due under the Grid Note and unpaid as
effective payment of any portion of the exercise price of any warrants to
purchase common stock of Borrower that Lender then holds and wishes to exercise.
Any payments of expenses, principal or interest shall be made in lawful money of
the United States of America.
1.5. Maturity Date of the Initial Loan. Borrower shall pay all outstanding
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principal and unpaid accrued interest on the Note in full on January 26, 2002
(the "Maturity Date"); provided, however, that, if the transactions contemplated
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under the Purchase Agreement are consummated, the Maturity Date of the Note
shall be June 30, 2006. Notwithstanding the foregoing if any amount under the
Initial Loan or any Advances are not paid in full when due or demanded, whether
at maturity, by acceleration or otherwise (the "Default Date"), the Maturity
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Date shall be the Default Date.
1.6. Change of Control. If at any time after the date of this Agreement
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and prior to the Maturity Date, Borrower shall undergo a Change of Control, then
the holder hereof shall have the option to accelerate the Maturity Date to the
date of the consummation of such Change of Control and demand payment of all
outstanding principal and unpaid accrued interest on the Note and the Grid Note
in full in lawful money of the United States of America payable at the principal
office of Lender, or at such other place as Lender may specify in writing to
Borrower.
1.7. Use of Proceeds. The proceeds of the Loan shall be used solely for
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general working capital purposes.
ARTICLE 2.
GRANT OF SECURITY INTEREST
2.1. Grant of Security Interest. To secure Borrower's prompt, punctual,
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and faithful performance of all and each of Borrower's Liabilities, Borrower
hereby grants to Lender a continuing security interest in and to, and assigns to
Lender, the following, and each item thereof, whether now owned or now due, or
in which Borrower has an interest, or hereafter acquired, arising, or to become
due, or in which Borrower obtains an interest, and all products, proceeds,
substitutions, and accessions of or to any of the following (all of which,
together with any other property in which Lender may in the future be granted a
security interest, is referred to herein as the "Collateral"):
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(a) All Accounts and Accounts Receivable (including health-care-
insurance receivables);
(b) All Inventory;
(c) All Contract Rights (or other rights to the payment of money);
(d) All General Intangibles (including without limitation all
intellectual property, payment intangibles, patents, patent applications,
trademarks, trademark applications, trade names, copyrights, copyright
applications, engineering drawings, service marks, and all licenses, permits,
agreements of any kind or nature pursuant to which Borrower possesses, uses
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or has authority to possess or use property (whether tangible or intangible) of
others or others possess, use or have authority to possess or use property
(whether tangible or intangible) of Borrower);
(e) All Investment Property;
(f) All Equipment (and any accessions thereto);
(g) All Goods;
(h) All Fixtures;
(i) All Chattel Paper (whether tangible or electronic);
(j) All books, records, and information relating to the Collateral
and/or to the operation of Borrower's business, and all rights of access to such
books, records, and information, and all property in which such books, records,
and information are stored, recorded and maintained;
(k) All software, computer programs, customer lists, tax refunds,
goodwill, trade secrets, and other recorded data, including without limitation
writings, plans, specifications and schematics, and all rights relating to the
foregoing;
(l) All Instruments (including promissory notes), Documents of
Title, Documents, policies and certificates of insurance, Securities and all
other investment property, supporting obligations, deposits, deposit accounts,
letter-of-credit rights (whether or not the letter of credit is evidenced by a
writing), commercial tort claims, general tort claims, impressed accounts,
compensating balances, money, cash, or other property;
(m) All insurance claims and proceeds, refunds and premium rebates,
including, without limitation, proceeds of fire and credit insurance, whether
any of such proceeds, refunds, and premium rebates arise out of any of the
foregoing ((a) - (1)) or otherwise; and
(n) All liens, guaranties, rights, remedies, and privileges
pertaining to any of the foregoing including the right of stoppage in
transit.
(o) Any and all Bank Collateral and Additional Bank Collateral as
such terms are defined in Section 2(h) of the Forbearance and Reaffirmation
Agreement dated as of June 15, 2001, as amended July 27, 2001, by and between
American National Bank and Trust Company ("ANB") and the Borrower (the "ANB
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Forbearance Agreement").
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2.2. Extent and Duration of Security Interest. This grant of a security
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interest is in addition to, and supplemental of, any security interest
previously granted by Borrower to Lender, is applicable to all Liabilities, and
shall continue in full force and effect until all Liabilities have been paid
and/or satisfied in full and the security interest granted herein is
specifically terminated in writing by a duly authorized officer of Lender.
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ARTICLE 3.
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
To induce Lender to establish the loan arrangement contemplated herein and
to make loans and advances and to provide financial accommodations hereunder,
each of which loans shall be deemed to have been made in reliance thereupon,
Borrower, in addition to all other representations, warranties, and covenants
made by Borrower in any other Loan Document, makes the following
representations, warranties, and covenants.
3.1. Due Organization. Borrower presently is and shall hereafter remain in
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good standing as a corporation in its state of formation and is and shall
hereafter remain duly qualified and in good standing in every other State in
which, by reason of the nature or location of Borrower's assets or operation of
Borrower's business, such qualification may be necessary and the failure to be
so qualified would have a Material Adverse Effect on the Borrower or its
businesses.
3.2. Corporate Authorization. Borrower has all requisite corporate power
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and authority to execute and deliver to Lender all and each of the Loan
Documents to which Borrower is a party, and has and will hereafter retain all
requisite corporate power to perform all and singular of the Liabilities.
3.3. Enforceability. The Loan Documents have been duly executed and
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delivered by Borrower and are the legal, valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms.
3.4. Consents and Approvals; No Violations. The execution and delivery of
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the Loan Documents and the consummation of the transactions contemplated hereby
and thereby will not: (a) violate or conflict with any provision of the Charter
or bylaws of Borrower; or (b) breach, violate or constitute a material event of
default (or an event which with the lapse of time or the giving of notice or
both would constitute a material event of default) under, give rise to any right
of termination, cancellation, modification or acceleration under, or require any
consent or the giving of any notice under, any note, bond, indenture, mortgage,
security agreement, lease, license, franchise, permit, agreement or other
instrument or obligation to which Borrower is a party, or by which Borrower or
any of its properties or assets may be bound, or result in the creation of any
material lien, claim or encumbrance or other right of any third party of any
kind whatsoever upon the properties or assets of Borrower pursuant to the terms
of any such instrument or obligation (other than any breach, violation or
default that has been expressly waived in connection herewith) and other than
any liens granted pursuant to the Loan Documents. All of the representations and
warranties under the Original Agreement were and are, respectively, true and
correct in all respects at and as of the date of the Original Agreement and on
and as of the date hereof (as though made on and as of the date hereof).
3.5. Title to Properties; Security Interest. Borrower has good and valid
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title to all personal property, tangible or intangible, which Borrower purports
to own and which is pledged hereunder, including the properties reflected on the
Balance Sheet or acquired after the date thereof (other than properties and
assets sold or otherwise disposed of in the ordinary course of
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business and consistent with past practice since the Statement Date), free and
clear of any claims, liens, pledges, security interests or encumbrances of any
kind whatsoever, except those in favor of Lender, subject only to the prior
security interests granted to ANB and Midwest Guaranty Bank (solely with respect
to equipment leases). The security interests granted to Lender in the Collateral
constitute valid and perfected security interests in the Collateral.
3.6. Name; Location of Chief Executive Office; Location of Collateral.
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Except as disclosed on Schedule 3.6, Borrower has not done business and will
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not, without at least thirty (30) days prior written notice to Lender, do
business under any name other than that specified in the preamble above. The
chief executive office of Borrower is located at the address indicated in the
preamble above. Schedule 3.6 is a complete and accurate list of every location
at which any of the Collateral is located. Borrower shall not effect the Merger
contemplated under the Purchase Agreement unless and until (a) the surviving
corporation assumes all of Borrower's obligations hereunder and (b) Borrower
takes all steps required to preserve and maintain Lender's perfected security
interests in the Collateral, subject only to the prior security interests
granted to ANB and Midwest Guaranty Bank (solely with respect to equipment
leases).
3.7. Representations, Warranties, and Covenants Contained in Purchase
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Agreement. Borrower represents, warrants and covenants that all of the
representations, warranties, and covenants made by Borrower under the Purchase
Agreement are true and complete as of the date hereof, and agrees that such
representations, warrants and covenants are incorporated and made part of this
Agreement by reference and shall continue in full force and effect regardless of
any termination of such Purchase Agreement or any survival limitation therein.
3.8. Disclosure. No representation or warranty by Borrower contained in
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this Agreement or the Purchase Agreement and no statement contained in any
schedule, certificate or other document or instrument delivered or to be
delivered pursuant to the Loan Documents by Borrower or its representatives
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary to make the statements contained
therein not misleading when made.
ARTICLE 4.
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until payment in full of the
outstanding Liabilities or for so long as Lender may have any commitment to make
any loans or advances, Borrower will continue to do all of the following:
4.1. Payment of Obligations. Punctually pay the principal of and interest
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on the Liabilities, at the times and places, in the manner and in accordance
with the terms of this Agreement, the Note, the Grid Note, and the other Loan
Documents.
4.2. Conduct of Business and Maintenance of Existence. Continue to engage
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in business of the same general type as now being conducted by the Borrower, and
do and cause to be done all things necessary to maintain and keep in full force
and effect its corporate existence in good standing in each jurisdiction in
which it conducts business.
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4.3. Compliance with Laws, Etc. Comply in all material respects with all
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laws, statutes, ordinances, orders, rules or regulations applicable to the
Borrower or to the Collateral (or any part thereof) or to any other property
owned, leased, operated or used by the Borrower, including, without limitation,
environmental laws, the violation of which would have a material adverse effect
on the business, operations, properties or financial condition of the Borrower;
provided, Lender acknowledges that Borrower is currently not in compliance to
the extent described in Schedule 3.12 of the Purchase Agreement; and, provided,
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further that notwithstanding such acknowledgement Borrower shall use its best
efforts to promptly cure such non-compliance and nothing herein shall be deemed
or construed to excuse or otherwise modify Borrower's indemnification
obligations under the Purchase Agreement with respect to such matters.
4.4. Payment of Liabilities and Taxes. Pay, when due, all of its
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Indebtedness and liabilities, and pay and discharge promptly all taxes,
assessments and governmental charges and levies (including, without limitation,
F.I.C.A. payments and withholding taxes) upon the Borrower or upon the
Borrower's income, profits or property (including, without limitation, the
Collateral), except to the extent the amount or validity thereof is contested in
good faith by appropriate proceedings so long as adequate reserves have been set
aside therefor. It is acknowledged that existing payment defaults have been
disclosed under Schedule 3.8 of the Purchase Agreement and that such defaults
shall be cured in the manner described in Section 5.15 of the Purchase
Agreement.
4.5. Contractual Obligations. Comply with any agreement or undertaking to
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which the Borrower is a party and maintain in full force and effect all
contracts and leases to which the Borrower is or becomes a party unless the
failure to do so would not have a material adverse effect on the business,
operation, properties or financial condition of the Borrower.
4.6. Maintenance of Properties. Do all things necessary to maintain,
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preserve, protect and keep its properties in good repair, working order and
condition, and make all necessary and proper repairs, renewals and replacements
so that the Borrower's business may be properly conducted at all times, unless
the failure to do so would not have a material adverse effect on the business,
operation or financial condition of the Borrower. The Borrower shall promptly
notify the Lender of any event causing deterioration, loss or depreciation in
value of any substantial portion of the Collateral and the amount of such loss
or depreciation. The Borrower shall perform, observe, and comply with all of the
terms and provisions to be performed, observed or complied with by it under each
contract, agreement or obligation relating to the Collateral. The Lender shall
have no duty to, and the Borrower hereby releases the Lender from all claims for
loss or damage caused by the failure of the Lender to, collect, protect,
preserve or enforce any of the Collateral or preserve rights against account
debtors and prior parties to the Collateral.
4.7. Insurance.
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(a) Borrower, at its expense, shall keep the Collateral insured
against loss or damage by fire, theft, explosion, sprinklers, and all other
hazards and risks, and in such amounts, as ordinarily insured against by other
owners in similar businesses conducted in the locations where Borrower's
business is conducted. Borrower shall also maintain insurance relating to
Borrower's ownership and use of the Collateral in amounts and of a type that are
customary to
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businesses similar to Borrower's. Borrower shall also maintain liability
insurance and worker's compensation insurance.
(b) All such policies of insurance shall be in such form, with such
companies, and in such amounts as are reasonably satisfactory to Lender. All
such policies of property insurance shall contain a lender's loss payable
endorsement, in a form satisfactory to Lender, showing Lender as an additional
loss payee thereof and all liability insurance policies shall show the Lender as
an additional insured, and shall specify that the insurer must give at least
twenty (20) days notice to Lender before canceling its policy for any reason. At
Lender's request, Borrower shall deliver to Lender certified copies of such
policies of insurance and evidence of the payments of all premiums therefor. All
proceeds payable under any such policy shall, at the option of Lender, be
payable to Lender.
4.8. Inspection. Permit the Lender, by its representatives and agents, to
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inspect any of the properties, books and financial records of the Borrower, to
examine and make copies of the books of accounts and other financial records of
the Borrower, and to discuss the affairs, finances and accounts of the Borrower
with, and to be advised as to the same by, the Borrower (or its representatives)
at such reasonable times and intervals as the Lender may designate. In
connection with the foregoing, the Lender and its representatives and agents, at
the expense of the Borrower, shall have the right to (a) enter any business
premises of the Borrower or any other premises where the Collateral and the
records relating thereto may be located and to audit, appraise, examine and
inspect the Collateral and all records related thereto and to make extracts
therefrom and copies thereof, and (b) verify under reasonable procedures the
validity, amount, quality, quantity, value and condition of, and any other
matter relating to, the Collateral, including contacting account debtors or any
person possessing any of the Collateral.
4.9. Collection of Receivables Collateral. Collect its Receivables
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Collateral only in the ordinary course of business consistent with Borrower's
past practices, and shall not, without the Lender's prior written consent unless
done so in the ordinary course of business consistent with past practices made
known to the Lender in writing, compromise or adjust the amount of any
Receivable Collateral or extend the time for payment of any Receivable
Collateral.
4.10. Further Assurances. Defend the title of the Borrower to the
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Collateral and the security interest and lien thereon of the Lender against all
persons and against all security interests and liens on the Collateral adverse
to those of the Lender. The Borrower will, from time to time, at the expense of
the Borrower, execute, deliver, acknowledge and cause to be duly filed, recorded
or registered any statement, assignment, instrument, paper, agreement or other
document and take any other action that from time to time may be necessary or
desirable, or that the Lender may reasonably request, in order to create,
preserve, continue, perfect, confirm or validate the security interest and lien
of the Lender on the Collateral or to enable the Lender to obtain the full
benefits of this Agreement or to exercise and enforce any of its rights, powers
and remedies hereunder or under applicable laws. The Borrower shall pay all
costs of, and incidental to, the filing, recording or registration of any such
document as well as any recordation, transfer or other tax required to be paid
in connection with any such filing, recordation or registration. The Borrower
hereby covenants to save harmless and indemnify the Lender from and against any
liability resulting from the failure to pay any required documentary stamps,
recordation and transfer taxes and recording costs incurred by the Lender in
connection with this Agreement or
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the Collateral which covenant shall survive the termination of this Agreement
and the payment of all other Liabilities. The Borrower agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement signed by the Borrower in connection with this Agreement
shall be sufficient as a financing statement. If any Receivable Collateral
arises out of a contract with the United States of America or any state, county,
municipality or any department, agency or instrumentality thereof, the Borrower
shall immediately notify the Lender thereof and, if required by the Lender,
execute and deliver any agreements, notices and/or assignments and do such other
things as may be satisfactory to the Lender in order that all sums due or to
become due to the Borrower under such contract shall be duly assigned to the
Lender in accordance with the Federal Assignment of Claims Act and/or any other
applicable federal, state and local laws or regulations relating to the
assignment of governmental obligations. If, in the reasonable opinion of the
Lender, any Equipment is or may become a part of any real estate owned or leased
by the Borrower, the Borrower will, upon the request of the Lender, use its best
efforts to furnish to the Lender in form and content satisfactory to the Lender,
a landlord's waiver by the record owner of such real estate and a mortgagee's
waiver by any person who has a security interest or lien on such real estate
which is or may be superior to the security interest and lien of the Lender on
such Equipment.
4.11. Notice. Promptly give written notice to the Lender of (a) the
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occurrence of any Default or any event, development or circumstance which might
materially adversely effect the business, operations, properties or financial
condition of the Borrower, (b) any litigation instituted or threatened against
the Borrower or any judgment against the Borrower where claims against the
Borrower exceed $50,000 and are not covered in full by insurance, and (c) any
notice of a claim against, or investigation of, the Borrower, the Collateral or
any other property owned, leased, operated or used by the Borrower. Borrower
shall also promptly provide Lender with copies of all notices received from, or
required to be provided to, ANB or Midwest Guaranty Bank under the Forbearance
Agreements, or to any landlord from which the Borrower leases any real property
under any lease agreement.
4.12. Financial Covenants.
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(a) Performance Against Forecast. By e-mail dated July 27, 2001,
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Borrower delivered to Lender a "▇▇▇▇▇▇▇▇▇▇.▇▇▇ (Conservative Case) Cash Source &
Use Forecast 2001 (Jun 18 to Dec 31)" (the "Conservative Forecast") 7/27/01
---------------------
12:00 AM./1/ During each calendar month in 2001 and each calendar quarter in
2002, Borrower shall comply with each of the following:
(i) Borrower's Earned Cash ▇▇▇▇▇▇▇▇ (defined below) shall not
be less than the "Invoicing (Est.) cash" amount for the applicable month or the
"[number] quarter 2002 cash" amount for the applicable quarter as set forth in
Section II of the Conservative Forecast (e.g., $1,998,000 for September 2001);
___________________________
/1/ For purposes of identification, the Conservative Forecast indicates
Projected Cash (Requirement) of $1,316,357.69 at 31-Dec-01 and ($5,075,595.70)
at 4th Quarter 2002.
-10-
(ii) Borrower's actual Costs of Services and actual Marketing
expenses shall not exceed the "Cost of Services" and "Marketing" amounts,
respectively (each, a "Cost Threshold"), for the applicable month or quarter as
set forth in Sections VI and VII of the Conservative Forecast (e.g., $235,224.10
in Costs of Services and $478,696 in Marketing for September 2001) unless the
amount by which the applicable Cost Threshold is exceeded in the applicable
month or quarter is offset on a dollar-for-dollar basis by the amount by which
the Earned Cash ▇▇▇▇▇▇▇▇ exceed the "Invoicing (Est.) cash" amount in the
applicable month or quarter;
(iii) Borrower's actual capital expenditures shall be in an amount at
least equal to the "Capital Expenditure Budget" amount for the applicable month
or quarter as set forth in Section VII of the Conservative Forecast;
(iv) Borrower's actual accounts payable balance shall not exceed the
"Period Ending A/P balance" amount for the applicable month or quarter as set
forth in Section V of the Conservative Forecast by an amount more than the
lesser of (A) $100,000, or (B) 2% of the applicable "Period Ending A/P balance"
on the Conservative Forecast;
(v) Borrower's actual cash on hand shall not be less than 98% of
the "Projected Cash Requirement" amount for the applicable month or quarter as
set forth in Section IX of the Conservative Forecast; and
(vi) Borrower's bad debt experience with respect to the ▇▇▇▇▇▇▇▇
rendered in a month or quarter, as applicable, shall not be more than 3% of the
Earned Cash ▇▇▇▇▇▇▇▇ for such month or quarter.
Each item used or included for purposes of calculating an entry on the
Conservative Forecast (such as "Cost of Services") shall be consistently used
and included for purposes of calculating the "actual" amount of such entry in
the applicable test set forth above; provided, Earned Cash ▇▇▇▇▇▇▇▇ shall be
calculated as provided below.
(b) Minimum Working Capital and Ratio. Borrower shall maintain on a
---------------------------------
consolidated basis, as of the last day of each calendar month, Working Capital
(defined below) and a Quick Ratio (defined below) of at least the following
amounts at the following times:
Minimum Working Capital Quick Ratio Period
----------------------- ----------- ------
($4,500,000; deficit .3 to 1.0 through First Tranche Closing
increasing by $1,500,000 for
each month after 9/30/01 that
First Tranche Closing is
delayed)
$200,000 .4 to 1.0 First Tranche Closing through
Second Tranche Closing
$600,000 .5 to 1.0 Second Tranche Closing
through June 30, 2002
$750,000 1.0 to 1.0 July 1, 2002 through December
31, 2002
$2,000,000 1.3 to 1.0 At all times thereafter
-11-
(c) Total Indebtedness to Tangible Net Worth. Borrower shall
----------------------------------------
maintain on a consolidated basis, as of the last day of each calendar month, a
ratio of Total Indebtedness (defined below) to Tangible Net Worth (defined
below) of at least the following amounts at the following times:
Indebtedness/Net
----------------
Worth Ratio: Period
----------- ------
[N/A] through First Tranche Closing
8.0 to 1.0 First Tranche Closing through Second
Tranche Closing
2.0 to 1.0 Second Tranche Closing through first
four full fiscal quarters
thereafter
1.0 to 1.0 At all times thereafter
(d) Total Indebtedness to EBITDA. Borrower shall maintain on a
----------------------------
consolidated basis, as of the last day of each calendar month, a ratio of Total
Indebtedness to EBITDA (defined below) of at least the following amounts at the
following times:
Indebtedness/
------------
EBITDA Ratio: Period:
------------- ------
3.0 to 1.0 From and after December 31, 2002
(e) Compliance Certificate. Within fifteen (15) business days after
----------------------
the end of each calendar month and twenty (20) days after the end of each
quarter, as applicable,, Borrower shall deliver to Lender a compliance
certificate, executed by Borrower's president and its chief financial officer
(and in a form reasonably satisfactory to Lender) which certifies Borrower's
compliance with the financial covenants in this Section 4.12 for the immediately
preceding month and quarter, as applicable.
4.13. Commercial Tort Claims. If Borrower shall at any time hold or
----------------------
acquire a commercial tort claim, Borrower shall immediately notify Lender in a
writing signed by Borrower of the brief details thereof and grant to Lender in
such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance
satisfactory to Lender.
4.14. Newly Created Intellectual Property. Borrower will promptly notify
-----------------------------------
Lender of all new trademark, patent and copyright registrations and applications
for registration now or hereafter filed by Borrower.
ARTICLE 5.
NEGATIVE COVENANTS
Borrower covenants and agrees that, until payment in full of the
outstanding Liabilities, Borrower will not do any of the following:
-12-
5.1. Dispositions. Convey, sell, lease, transfer or otherwise dispose of
------------
(collectively, a "Transfer"), all or any part of its business or property, other
--------
than Transfers: (i) of inventory in the ordinary course of business, (ii) of
non-exclusive licenses and similar arrangements for the use of the property of
Borrower in the ordinary course of business; (iii) that constitute payment of
normal and usual operating expenses in the ordinary course of business; or (iv)
of worn-out or obsolete equipment.
5.2. Changes in Business. Engage in any business, other than the
-------------------
businesses currently engaged in by Borrower and any business substantially
similar or related thereto (or incidental thereto). The Company acknowledges
that excessive e-mail transmissions, while promoting short-term revenue
increases, could have detrimental effects on the long term financial prospects
of the Company. The Company agrees to monitor the member opt-out rate and to not
transmit excessive member e-mails that could cause such opt-out rate to exceed
3.5%.
5.3. Dividends or Investments. Borrower shall not, without the prior
------------------------
written consent of Lender:
(a) Pay any cash dividend or make any other distribution in respect
of any class of Borrower's capital stock (other than dividends paid in kind with
respect to Borrower's Series B Preferred Stock);
(b) Own, redeem, retire, purchase, or acquire any of Borrower's
capital stock;
(c) Invest in or purchase any stock or securities or rights to
purchase any such stock or securities, of any corporation or other entity;
(d) Merge or consolidate or be merged or consolidated with or into
any other corporation or other entity or acquire all or substantially all of the
assets of any corporation or other entity;
(e) Consolidate any of Borrower's operations with those of any
other corporation or other entity;
(f) Organize or create any Related Entity; or
(g) Subordinate any debts or obligations owed to Borrower by any
third party to any other debts owed by such third party to any other Person.
5.4. Restrictions on Indebtedness; Expenditures and Material Obligations.
-------------------------------------------------------------------
(a) Borrower shall not make any loans or advances to, nor acquire,
guarantee or otherwise become responsible for the Indebtedness of, any Person,
other than advance payments made to Borrower's suppliers in the ordinary course
or to Borrower's employees for travel and related expenses.
(b) Borrower shall not create, incur, assume or be or remain liable
with respect to Indebtedness, except for (i) Permitted Indebtedness and (ii)
trade indebtedness incurred in the ordinary course of business.
-13-
(c) Borrower shall not make any payment in respect of any
Indebtedness, except payments made in respect of (i) Permitted Indebtedness, to
the extent such payments are made in compliance with the terms of such Permitted
Indebtedness (and do not constitute prepayments, other than the prepayments
required under the terms of the Forbearance Agreements) and (ii) trade
indebtedness incurred in the ordinary course of business. Without limiting the
payments prescribed in the preceding sentence, Borrower shall not (A) make any
payment out of the ordinary course of business, (B) make any payment to any
shareholder or shareholder Affiliate (excluding payments made to Borrower and/or
its Affiliates) or any director, officer or employee (excluding employee
salaries, board fees and expense reimbursements in accordance with Borrower's
policies and procedures) or (C) make any payment that could cause Borrower to
breach the financial covenants made under this Agreement or prevent Borrower
from paying, when due, accrued dividends on its Series B Preferred Stock.
(d) Borrower shall not amend any provision contained in any
documentation relating to any Indebtedness (including Permitted Indebtedness)
without Lender's prior written consent.
(e) Borrower shall not make any material increases in annual salaries
of its employees outside of the ordinary course and consistent with past
practice.
(f) Borrower shall not enter into any material agreements, joint
venture agreements, license agreements, revenue sharing agreements, or other
arrangements which allocate revenues to a third party or obligate Borrower to
pay any kind of fees which, individually, would exceed $250,000 per year, or
$750,000 over the term such arrangement, or which when combined with all similar
arrangements would involve fees in excess of $2,000,000.
(g) Borrower shall not enter into any material agreements, joint
venture agreements, license agreements, revenue sharing agreements, alliances or
other arrangements which allocate revenues to a third party or obligate Borrower
to perform any services which on an arms length basis calculated at fair market
value, individually would exceed $250,000 per year, or $750,000 over the term of
such arrangement, or which when combined with all similar arrangements would
involve in kind services on an arms length basis calculated at fair market value
in excess of $2,000,000.
5.5. Transactions with Affiliates. Directly or indirectly enter into any
----------------------------
material transaction with any Affiliate of Borrower or permit to exist any such
material transaction other than as set forth on Schedule 5.5 (which shall only
------------
list transactions existing through the date hereof) except for transactions that
are in the ordinary course of Borrower's business, upon fair and reasonable
terms that are no less favorable to Borrower than would be obtained in an arm's
length transaction with a nonaffiliated Person.
5.6. Executive Management. Borrower shall not change its Chief Executive
--------------------
Officer, Chief Financial Officer, Chief Technology Officer, or Executive Vice
President, Business Development from those individuals occupying such positions
at the execution of this Agreement without the written consent of Lender.
-14-
5.7. Amendment to Forbearance Agreements; Additional Borrowings. Without
----------------------------------------------------------
the prior written consent of the Lender, the Borrower shall not (i) amend, alter
or terminate the ANB Forbearance Agreement or that certain Forbearance Agreement
between Midwest Guaranty Bank and the Borrower dated July 27, 2001, or that
certain Letter Agreement between 360 Michigan Trust and the Borrower dated June
14, 2001 (collectively, the "Forbearance Agreements") or (ii) incur any
----------------------
additional indebtedness from ANB or Midwest Guaranty Bank at any time, whether
under existing loan documents or otherwise.
5.8. Change in Control. Borrower shall not, without the prior written
-----------------
consent of Lender, change the ownership of the capital stock of Borrower such
that a Change of Control would result.
5.9. Changes in Business Locations or Incorporation. Borrower will not,
----------------------------------------------
without at least thirty (30) days prior written notification to Lender, relocate
its chief executive office or add any new offices or business locations or
create any Subsidiary or reincorporate in any other jurisdiction (excluding the
reincorporation contemplated by the Merger).
5.10. Encumbrances. Create, incur, assume or suffer to exist any Lien with
------------
respect to any of its property, or assign or otherwise convey any right to
receive income, including the sale of any Accounts, except for permitted
Encumbrances hereunder.
ARTICLE 6.
EVENTS OF DEFAULT
The occurrence of any event described in this Article 6 shall constitute an
"Event of Default" herein. Upon the occurrence of any Event of Default any and
----------------
all Liabilities shall become due and payable, without any further act on the
part of Lender. Upon the occurrence of any Event of Default, or the entry of
any order for relief with respect to Borrower under the Bankruptcy Code, any and
all Liabilities of Borrower to Lender shall become immediately due and payable,
at the option of Lender and without notice or demand. The occurrence of any
Event of Default shall also constitute, without notice or demand, a default
under all other agreements between Lender and Borrower and instruments and
papers given Lender by Borrower, whether such agreements, instruments, or papers
now exist or hereafter arise.
6.1. Failure to Pay the Loan. The failure by Borrower to pay, when due, any
-----------------------
amount under the Loan or any other Liability provided that such failure to pay
is not cured within five (5) business days.
6.2. Failure to Perform Covenant or Liability. Except for payment defaults
----------------------------------------
as set forth in Section 6.1, the failure by Borrower to promptly, punctually,
faithfully and timely to perform or discharge, or to comply with, any covenant
to or with Lender or any Liability, provided, however, that such failure or
breach is not cured within twenty (20) days from date of notice given by Lender
in the manner provided in Section 9.15; provided, further, that (a) no further
notice shall be required from Lender if Borrower has delivered to Lender a
certificate in which the breach or default is disclosed or is otherwise aware of
the breach or default as a result of written notices sent or received by
Borrower, and (b) the cure period under this Section 6.2 shall
-15-
be interpreted to run concurrently and not consecutively with Section 9.2(e) of
the Purchase Agreement.
6.3. Misrepresentation. The determination by Lender that any
-----------------
representation or warranty at any time made by Borrower to Lender, including
without limitation any representation and warranty made under the Original
Agreement, this Agreement or the Purchase Agreement, was not true or complete in
all material respects (in all respects to the extent the representation or
warranty is qualified by a materiality standard) when given or has otherwise
been breached; provided, however, to the extent the breach relates to a breach
of a representation and warranty under the Purchase Agreement (which would
otherwise trigger an Event of Default under this Agreement by virtue of being
incorporated by reference), then an Event of Default hereunder shall not be
deemed to exist unless under the terms of the Purchase Agreement, Borrower or
its Affiliate is entitled to be indemnified for any Losses (as defined in the
Purchase Agreement) (any such breach as excepted hereunder is hereafter a
"Representation and Warranty Exception").
6.4. Acceleration of Other Debt. The occurrence of any event such that any
--------------------------
Indebtedness of Borrower to any creditor other than Lender has been accelerated
and has not been cured within five (5) business days.
6.5. Default Under Other Agreements. The occurrence of any breach or
------------------------------
default under any agreement between Lender and Borrower (subject to
Representation and Warranty Exception) or under any of the Forbearance
Agreements (including for such purposes an event which, with or without notice
or the passage of time or both, would constitute a breach or default) including
without limitation any breach of a covenant, representation or warrant made
under this Agreement, the Forbearance Agreements, the Purchase Agreement, or any
instrument or paper given to Lender by Borrower, whether such agreement,
instrument, or paper now exists or hereafter arises (notwithstanding that Lender
may not have exercised its rights upon default under any such other agreement,
instrument or paper).
6.6. Termination of Purchase Agreement. The termination of the Purchase
---------------------------------
Agreement prior to the First Tranche Closing, by any party thereto, pursuant to
Section 9.2 of the Purchase Agreement.
6.7. Failure to Pay Dividends; Redemption of Series B Preferred Stock. The
----------------------------------------------------------------
failure of the Borrower to declare or pay dividends on the Borrower's Series B
Preferred Stock or to redeem any shares of the Series B Preferred Stock pursuant
to the Borrower's Charter.
6.8. Casualty Loss; Non-Ordinary Course Sales. The occurrence of any (a)
----------------------------------------
uninsured loss, theft, damage, or destruction of or to any material portion of
Borrower's assets, or (b) sale (other than sales in the ordinary course of
business) of the assets of Borrower.
6.9. Judgment; Restraint of Business.
-------------------------------
(a) The service of process upon Lender seeking to attach, by
trustee, mense, or other process, any of Borrower's funds on deposit with, or
assets of Borrower in the possession of, Lender.
-16-
(b) The entry of any judgment against Borrower, which judgment is not
satisfied (if a money judgment) or appealed from (with execution or similar
process stayed) within fifteen (15) days of its entry.
(c) The entry of any order or the imposition of any other process
having the force of law, the effect of which is to restrain in any material way
the conduct by Borrower of its business in the ordinary course.
6.10. Business Failure. Any act by, against, or relating to Borrower, or
----------------
its property or assets, which act constitutes the application for, consent to,
or sufferance of the appointment of a receiver, trustee, or other person,
pursuant to court action or otherwise, over all, or any part of Borrower's
property; the granting of any trust mortgage or execution of an assignment for
the benefit of the creditors of Borrower, or the occurrence of any other
voluntary or involuntary liquidation or extension of debt agreement for
Borrower; or the offering by or entering into by Borrower of any composition,
extension, or any other arrangement seeking relief from or extension of the
debts of Borrower, or the initiation of any other judicial or non-judicial
proceeding or agreement by, against, or including Borrower which seeks or
intends to accomplish a reorganization or arrangement with creditors (however,
it shall not be an Event of Default hereunder until the earlier of (x) the entry
of an order for relief against Borrower, or (y) the expiration of thirty (30)
days without dismissal of such complaint, application, or petition if such
complaint, application or petition filed against Borrower was not filed by or at
the direction of Borrower or any Related Entity, and is being diligently
contested).
6.11. Bankruptcy. The failure by Borrower to generally pay the debts of
----------
Borrower as they mature; adjudication of bankruptcy or insolvency relative to
Borrower; the entry of an order for relief or similar order with respect to
Borrower in any proceeding pursuant to the Bankruptcy Code or any other federal
bankruptcy law; the filing of any complaint, application, or petition by or
against Borrower initiating any matter in which Borrower is or may be granted
any relief from the debts of Borrower pursuant to Bankruptcy Code or any other
insolvency statute or procedure (however, it shall not be an Event of Default
hereunder until the earlier of (x) the entry of an order for relief against
Borrower, or (y) the expiration of thirty (30) days without dismissal of such
complaint, application, or petition of such complaint, application or petition
filed against Borrower was not filed by or at the direction of Borrower or any
Related Entity, and is being diligently contested).
6.12. Michigan Law. The opt-in or adoption by Borrower of any provisions
------------
whether in the Borrower's Charter, Bylaws or otherwise contained in Sections 7A
or 7B of the Michigan Business Corporation Act.
ARTICLE 7.
RIGHTS AND REMEDIES UPON DEFAULT
In addition to all of the rights, remedies, powers, privileges, and
discretions which Lender is provided prior to the occurrence of an Event of
Default, Lender shall, at its election, without notice of its election and
without demand, have the following rights and remedies upon the occurrence of
any Event of Default and at any time thereafter.
-17-
7.1. Rights of Enforcement. Lender shall have all of the rights and
---------------------
remedies of a secured party upon default under the UCC, in addition to which
Lender shall have all and each of the following rights and remedies, upon seven
(7) days notice to the Borrower:
(a) To collect the Receivables Collateral with or without the taking
of possession of any of the Collateral;
(b) To apply the Receivables Collateral or the proceeds of the
Collateral towards (but not necessarily in complete satisfaction of) the
Liabilities;
(c) To take possession of all or any portion of the Collateral;
(d) To sell, lease, or otherwise dispose of any or all of the
Collateral, in its then condition or following such preparation or processing as
Lender deems advisable and with or without the taking of possession of any of
the Collateral; and
(e) To exercise all or any of the rights, remedies, powers,
privileges, and discretions under all or any of the Loan Documents.
7.2. Sale of Collateral.
------------------
(a) Any sale or other disposition of the Collateral may be at public
or private sale upon such terms and in such manner as Lender deems advisable,
having due regard to compliance with any statute or regulation which might
affect, limit, or apply to Lender's disposition of the Collateral.
(b) Unless the Collateral is perishable or threatens to decline
speedily in value, or is of a type customarily sold on a recognized market (in
which event Lender shall provide Borrower with such notice as may be practicable
under the circumstances), Lender shall give Borrower at least seven (7) days
prior written notice of the date, time, and place of any proposed public sale,
and of the date after which any private sale or other disposition of the
Collateral may be made. Borrower agrees that such written notice shall satisfy
all requirements for notice to Borrower which are imposed under the UCC or other
applicable law with respect to Lender's exercise of Lender's rights and remedies
upon default.
(c) Lender may purchase the Collateral, or any portion of it at any
sale held under this Article.
(d) Lender shall apply the proceeds of any exercise of Lender's
Rights and Remedies under this Article 7 towards the Liabilities in such manner,
and with such frequency, as Lender determines.
7.3. Collection of Accounts. Upon the occurrence and during the
----------------------
continuance of an Event of Default, Lender may notify any Person owing funds to
Borrower of Lender's security interest in such funds and verify the amount of
such funds. Borrower shall collect all amounts owing to Borrower for Lender,
receive in trust all payments as Lender's trustee, and if requested or required
by Lender immediately deliver such payments to Lender in their original form as
received from the account debtor, with proper endorsements for deposit.
-18-
7.4. Occupation of Business Location. In connection with Lender's exercise
-------------------------------
of Lender's rights under this Article, Lender may enter upon, occupy, and use
any premises owned or occupied by Borrower, and may exclude Borrower from such
premises or portion thereof as may have been so entered upon, occupied, or used
by Lender. Lender shall not be required to remove any of the Collateral from any
such premises upon Lender's taking possession thereof, and may render any
Collateral unusable to Borrower. In no event shall Lender be liable to Borrower
for use or occupancy by Lender of any premises pursuant to this Article, nor for
any charge (such as wages for Borrower's employees and utilities) incurred in
connection with Lender's exercise of Lender's Rights and Remedies.
7.5. Grant of Nonexclusive License. Borrower hereby grants to Lender a
-----------------------------
royalty-free, nonexclusive, irrevocable license to use, apply, and affix any
trademark, trade name, logo, or the like in which Borrower now or hereafter has
rights, such license being with respect to Lender's exercise of the rights
hereunder including, without limitation, in connection with any completion of
the manufacture of Inventory or sale or other disposition of Inventory.
7.6. Assembly of Collateral. Lender may require Borrower to assemble the
----------------------
Collateral and make it available to Lender at Borrower's sole risk and expense
at a place or places which are reasonably convenient to both Lender and
Borrower.
7.7. Rights and Remedies. The rights, remedies, powers, privileges, and
-------------------
discretions of Lender hereunder (herein, the "Lender's Rights and Remedies")
----------------------------
shall be cumulative and not exclusive of any rights or remedies which it would
otherwise have. No delay or omission by Lender in exercising or enforcing any
of Lender's Rights and Remedies shall operate as, or constitute, a waiver
thereof. No waiver by Lender of any Event of Default or of any default under
any other agreement shall operate as a waiver of any other default hereunder or
under any other agreement. No single or partial exercise of any of Lender's
Rights or Remedies, and no express or implied agreement or transaction of
whatever nature entered into between Lender and any person, at any time, shall
preclude the other or further exercise of Lender's Rights and Remedies. No
waiver by Lender of any of Lender's Rights and Remedies on any one occasion
shall be deemed a waiver on any subsequent occasion, nor shall it be deemed a
continuing waiver. All of Lender's Rights and Remedies and all of Lender's
rights, remedies, powers, privileges, and discretions under any other agreement
or transaction are cumulative, and not alternative or exclusive, and may be
exercised by Lender at such time or times and in such order of preference as
Lender in its sole discretion may determine. Lender's Rights and Remedies may be
exercised without resort or regard to any other source of satisfaction of the
Liabilities.
ARTICLE 8.
TERM OF AGREEMENT
8.1. Termination of Loan. The Loan shall terminate upon the earlier of (i)
-------------------
the Maturity Date of the Initial Loan, (ii) after the occurrence of an Event of
Default or (iii) after a demand under the Grid Note that is not immediately paid
by the Lender. Upon such termination, all Liabilities under the Loan (and the
Note and Grid Note) shall be immediately due and payable in full.
-19-
ARTICLE 9.
GENERAL
9.1. Delivery of Additional Documentation Required. Borrower shall from
----------------------------------------------
time to time execute and deliver to Lender, at the request of Lender, all
Collateral, and all financing statements and other documents that Lender may
request, in form satisfactory to Lender, to perfect and continue to perfect
Lender's security interests in the Collateral (and ensure the priority thereof)
and in order to fully consummate all of the transactions contemplated under the
Loan Documents.
9.2. Successors and Assigns.
----------------------
(a) This Agreement shall be binding upon Borrower and Borrower's
representatives, successors, and assigns and shall inure to the benefit of
Lender and Lender's successors and assigns, provided, however, no trustee or
-------- -------
other fiduciary appointed with respect to Borrower shall have any rights
hereunder.
(b) Lender shall have the unrestricted right at any time or from
time to time, and without Borrower's or any guarantor's consent, to assign all
or any portion of its rights and obligations hereunder to any of its affiliates
(each, an "Assignee"), and Borrower and each guarantor agrees that it shall
--------
execute, or cause to be executed, such documents, including without limitation,
amendments to this Agreement and to any other documents, instruments and
agreements executed in connection herewith as Lender shall deem necessary to
effect the foregoing. In addition, at the request of Lender and any such
Assignee, Borrower shall issue one or more new promissory notes, as applicable,
to any such Assignee and, if Lender has retained any of its rights and
obligations hereunder following such assignment, to Lender, which new promissory
notes shall be issued in replacement of, but not in discharge of, the liability
evidenced by the promissory note or notes held by Lender prior to such
assignment and shall reflect the amount of the respective commitments and loans
held by such Assignee and Lender after giving effect to such assignment. Upon
the execution and delivery of appropriate assignment documentation, amendments
and any other documentation required by Lender in connection with such
assignment, and the payment by Assignee of the purchase price agreed to by
Lender and such Assignee, such Assignee shall be a party to this Agreement and
shall have all of the rights and obligations of Lender hereunder (and under any
and all other guaranties, documents, instruments and agreements executed in
connection herewith) to the extent that such rights and obligations have been
assigned by Lender pursuant to the assignment documentation between Lender and
such Assignee, and Lender shall be released from its obligations hereunder and
thereunder to a corresponding extent.
(c) Lender may transfer any investment securities held by Lender as
Collateral into Lender's name or that of its nominee and may receive the income
and any distributions thereon and hold the same as Collateral for the
Liabilities, or apply the same to any Liability, whether or not a default or an
Event of Default has occurred.
9.3. Severability. Any determination that any provision of this Agreement
------------
or any application thereof is invalid, illegal, or unenforceable in any respect
in any instance shall not
-20-
affect the validity, legality, or enforceability of such provision in any other
instance, or the validity, legality, or enforceability of any other provision of
this Agreement.
9.4. Amendments; Course of Dealing. This Agreement and the other Loan
-----------------------------
Documents incorporate all discussions and negotiations between Borrower and
Lender, either express or implied, concerning the matters included herein and in
such other instruments, any custom, usage, or course of dealings to the contrary
notwithstanding. No such discussions, negotiations, custom, usage, or course of
dealings shall limit, modify, or otherwise affect the provisions thereof. No
failure by Lender to give noticed to Borrower of Borrower's having failed to
observe and comply with any warranty or covenant included in any Loan Document
shall constitute a waiver of such warranty or covenant or the amendment of the
subject Loan Document. This Agreement may be amended only with the written
consent of all parties hereto.
9.5. Power of Attorney. In connection with all powers of attorney included
-----------------
in this Agreement, Borrower hereby grants unto Lender full power to do any and
all things necessary or appropriate in connection with the exercise of such
powers as fully and effectually as Borrower might or could do, hereby ratifying
all that said attorney shall do or cause to be done by virtue of this Agreement.
No power of attorney set forth in this Agreement shall be affected by any
disability or incapacity suffered by Borrower and each shall survive the same.
All powers conferred upon Lender by this Agreement, being coupled with an
interest, shall be irrevocable until this Agreement is terminated.
9.6. Lender's Costs and Expenses. Borrower shall pay on demand all Costs
---------------------------
of Collection and all reasonable expenses of Lender in connection with the
preparation, execution, and delivery of this Agreement, and any and all
documents, instruments and agreements delivered to Lender in connection
herewith, whether evidencing the Liabilities, or granting Lender certain rights
with respect to Borrower, or its shares of stock, and of any Loan Documents,
whether now existing or hereafter arising, and all other reasonable expenses
which may be incurred by Lender in preparing or amending this Agreement and all
other agreements, instruments, and documents related thereto, or otherwise
incurred with respect to the Liabilities. Borrower specifically authorizes
Lender to pay all such fees and expenses.
9.7. Copies and Facsimiles. This Agreement and all documents which relate
---------------------
thereto, which have been or may be hereinafter furnished Lender may be
reproduced by Lender by any photographic, microfilm, xerographic, digital
imaging, or other process, and Lender may destroy any document so reproduced.
Any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made in the regular course of
business).
9.8. Governing Law. This Agreement and all rights and obligations
-------------
hereunder, including matters of construction, validity, and performance, shall
be governed by the laws of the State of Illinois.
9.9. Consent to Jurisdiction. Borrower agrees that any legal action,
-----------------------
proceeding, case, or controversy against Borrower with respect to any Loan
Document may be brought in the City of Norfolk in the Commonwealth of Virginia,
as Lender may elect in Lender's sole discretion. By execution and delivery of
this Agreement, Borrower, for itself and in respect of its property,
-21-
accepts, submits, and consents generally and unconditionally, to the
jurisdiction of the aforesaid courts.
9.10. Indemnification. Borrower shall indemnify, defend, and hold Lender
---------------
and any employee, officer, or agent of Lender (each, an "Indemnified Person")
------------------
harmless of and from any claim brought or threatened against any Indemnified
Person by Borrower, any guarantor or endorser of the Liabilities, or any other
Person (as well as from attorneys' reasonable fees and expenses in connection
therewith) on account of Lender's relationship with Borrower or any other
guarantor or endorser of the Liabilities (each of which may be defended,
compromised, settled, or pursued by the Indemnified Person with counsel of
Lender's selection, but at the expense of Borrower) other than any claim as to
which a final determination is made in a judicial proceeding (in which Lender
and any other Indemnified Person has had an opportunity to be heard), which
determination includes a specific finding that the Indemnified Person seeking
indemnification had acted in a grossly negligent manner or in actual bad faith.
The within indemnification shall survive payment of the Liabilities and/or any
termination, release, or discharge executed by Lender in favor of Borrower.
9.11. Agreement Controlling. The Loan Documents shall be construed and
---------------------
interpreted in a harmonious manner, provided, however, that in the event of any
inconsistency between the provisions of this Agreement and any other Loan
Document, the provisions of this Agreement shall govern and control.
9.12. Right of Set-Off. Borrower and any guarantor hereby grant to Lender
----------------
a lien, security interest and right of setoff as security for all Liabilities
and obligations to Lender, whether now existing or hereafter arising upon and
against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Lender or any entity under the
control of Lender, or in transit to any of them. At any time without demand or
notice, Lender or any entity under control of Lender may set off the same or any
part thereof and apply the same to any liability or obligation of Borrower and
any guarantor even though unmatured and regardless of the adequacy of any other
collateral securing the loan. ANY AND ALL RIGHTS TO REQUIRE LENDER TO EXERCISE
ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE
LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS,
CREDITS OR OTHER PROPERTY OF BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED.
9.13. Waivers.
-------
(a) Borrower (and all guarantors, endorsers, and sureties of the
Liabilities) make each of the waivers included in Section 9.13(b), below,
knowingly, voluntarily, and intentionally, and understands that Lender, in
entering into the financial arrangements contemplated hereby and in providing
loans and other financial accommodations to or for the account of Borrower as
provided herein, whether now or in the future, is relying on such waivers.
-22-
(b) BORROWER, AND EACH SUCH GUARANTOR, ENDORSER, AND SURETY
RESPECTIVELY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE FOLLOWING:
------
(i) Except as otherwise specifically required hereby, notice
of non-payment, demand, presentment, protest and all forms of demand and
notice, both with respect to the Liabilities;
(ii) Except as otherwise specifically required hereby, the
right to notice and/or hearing prior to Lender's exercising of Lender's
rights upon default; and
(iii) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR
CONTROVERSY IN WHICH LENDER IS OR BECOMES A PARTY (WHETHER SUCH CASE OR
CONTROVERSY IS INITIATED BY OR AGAINST LENDER OR IN WHICH LENDER IS JOINED
AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN
RESPECT OF, ANY RELATIONSHIP AMONGST OR BETWEEN BORROWER OR ANY OTHER
PERSON AND LENDER (AND LENDER LIKEWISE WAIVES THE RIGHT TO A JURY IN ANY
TRIAL OR ANY SUCH CASE OR CONTROVERSY). THIS WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR LENDER TO ACCEPT THIS AGREEMENT AND MAKE THE LOANS AND
ADVANCES HEREUNDER.
9.14. Usury Laws. All agreements between Borrower and any guarantor and
-----------
Lender are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the indebtedness
evidenced hereby or otherwise, shall the amount paid or agreed to be paid to
Lender for the use or the forbearance of the indebtedness evidenced hereby
exceed the maximum permissible under applicable law. As used herein, the term
"applicable law" shall mean the law in effect as of the date hereof provided,
however, that in the event there is a change in the law which results in a
higher permissible rate of interest, then this Agreement shall be governed by
such new law as of its effective date. In this regard, it is expressly agreed
that it is the intent of Borrower and Lender in the execution, delivery and
acceptance of this Agreement to contract in strict compliance with the laws of
the State of Illinois from time to time in effect. If, under or from any
circumstances whatsoever, fulfillment of any provision hereof or of any of the
Loan Documents at the time of performance of such provision shall be due, shall
involve transcending the limit of such validity prescribed by applicable law,
then the obligation to be fulfilled shall automatically be reduced to the limits
of such validity, and if under or from circumstances whatsoever Lender should
ever receive as interest an amount which would exceed the highest lawful rate,
such amount which would be excessive interest shall be applied to the reduction
of the principal balance evidenced hereby and not to the payment of interest.
This provision shall control every other provision of all agreements between
Borrower and any guarantor and Lender.
9.15. Notices. All communications under this Agreement shall be in writing
-------
and shall be delivered by hand or facsimile or mailed by overnight courier or by
registered mail or certified mail, postage prepaid:
-23-
(a) if to Landmark, at Landmark Communications, Inc., ▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (facsimile: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: ▇▇▇
▇. ▇▇▇▇▇▇▇▇, III, Executive Vice President and General Counsel, or at such other
address or facsimile number as Landmark may have furnished the Company in
writing, with a copies to: (i) ▇▇▇▇▇▇▇ & Savage, P.C., ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (facsimile: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇; and (ii) ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇ (facsimile: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.; and
(b) if to the Company, at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (facsimile: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, or at
such other address or facsimile number as it may have furnished Landmark in
writing, with a copy to Jaiffe, ▇▇▇▇▇, Heuer & ▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (facsimile: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: ▇▇▇▇▇
Sugar.
(c) Any notice so addressed shall be deemed to be given: if
delivered by hand or facsimile, on the date of such delivery; if mailed by
courier, on the first business day following the date of such mailing; and if
mailed by registered or certified mail, on the third business day after the date
of such mailing.
9.16. Definitions. All capitalized terms herein shall have the meaning
-----------
attributed thereto in EXHIBIT B attached hereto.
9.17. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -
SIGNATURE PAGE FOLLOWS]
-24-
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
Borrower:
▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ inc.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇
----------------------------
Title: President
---------------------------------
Lender:
Landmark Communications, Inc.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇, III
------------------------------------
Print Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇, III
----------------------------
Title: Executive Vice President
---------------------------------
-25-
EXHIBITS
--------
The following Exhibits to this Loan and Security Agreement are respectively
described in the Section indicated below. Those schedules for which no
information has been inserted or provided shall be deemed to read "None."
-26-
EXHIBIT A
---------
SENIOR SECURED NOTE
-------------------
Original Aggregate Principal Amount: $5,000,000
Chicago, Illinois
July 30, 2001
FOR VALUE RECEIVED, the undersigned, ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ inc., a Michigan
corporation with its principal offices at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Borrower"), promises to pay to the order of Landmark
Communications, Inc., a Delaware corporation with an office at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter, with any subsequent holder, the
"Lender") at an office of Lender, on the Maturity Date (defined below), without
offset, the principal sum of Five Million and no/100 Dollars ($5,000,000),
adjusted as provided below, together with interest as provided below. This note
(the "Note") evidences the Initial Loan made by Lender to Borrower pursuant to
the Amended and Restated Senior Secured Loan and Security Agreement of even date
(as such may be amended hereafter) (the "Loan Agreement"). As additional
consideration for the Initial Loan, Borrower is issuing to Lender a warrant to
purchase common stock as described in and attached to the Loan Agreement (the
"Initial Warrant"). The payment of this Note is secured by the Loan Agreement
and the collateral described therein. All capitalized terms not defined herein
shall have the meaning ascribed to them in the Loan Agreement. All obligations
under this Note shall be pari passu with the Grid Note, consistent with the Loan
Agreement.
The outstanding principal amount on this Note shall bear interest at the
rate of twelve percent (12%) per annum and shall commence from the date hereof
and shall continue on the outstanding principal; provided, however, that if the
-------- -------
First Tranche Closing, as such term is defined in the Purchase Agreement, is
consummated, then from and after the date of such closing this Note (including
the outstanding principal and interest that has then accrued) shall bear
interest at the rate of eight percent (8%) per annum. Interest shall be computed
on the actual number of days elapsed on the basis of a year consisting of 360
days. All interest shall accrue and compound quarterly on: October 31, January
31, April 30 and July 31 each year (each such date, a "Quarterly Payment Date").
Such accrued and compounded interest shall be added to the principal amount of
the Note.
Notwithstanding the foregoing, any amount outstanding under this Note shall
bear interest from and after the Maturity Date at the rate of sixteen (16%) per
annum (the "Default Interest Rate"), increasing monthly by an annual rate which
is one (1) percentage point above the then current Default Interest Rate for
each month that the Note remains overdue. Any interest on this Note accruing
after the Maturity Date shall accrue and be compounded monthly (the date of such
compounding, the "Monthly Compounding Date" and collectively with the Quarterly
Payment Date, the "Compounding Date") until the obligation of Borrower, with
respect to the payment of such interest, has been discharged (whether before or
after judgment).
Notwithstanding the foregoing, the effective annual rate under the Loan
(including the Default Interest Rate) shall not exceed a maximum annual rate of
twenty-four (24%) percent or the maximum annual rate permitted by law, whichever
is less.
1
This Note shall be paid in full on the Maturity Date. Until this Note is
paid in full, on each Compounding Date, in lieu of a cash payment of the
interest due, Borrower shall pay such interest "in-kind". In lieu of delivering
separately documented and certificated promissory notes (the "Note PIK Payment")
and warrants (the "Warrant PIK Payment") for such "in-kind" payments, the Note
PIK Payment shall be effected by adding the accrued interest to the principal
amount of this Note (as described by the compounding set forth above) and the
Warrant PIK Payment shall be effected through the provision in the Initial
Warrant which provides that for every dollar of interest accrued, compounded and
added to the principal amount of this Note, the aggregate number of shares of
Borrower's common stock that may be purchased under the Initial Warrant shall be
increased by two (2) (as such number may be adjusted for dividends, splits,
combinations and the like). The foregoing notwithstanding, no Warrant PIK
Payment shall be required until after the First Tranche Closing and then only in
respect of interest payments accruing thereafter under this Note. Lender
acknowledges that the amount of the Note PIK Payment shall be deemed an
additional loan borrowed from the Lender (it being further acknowledged by the
Borrower that it shall not receive additional funds in connection with any such
loan).
Borrower may not prepay this Note except as follows: On or after the third
anniversary of the date hereof, the Borrower may prepay the Note if and only if
(a) the Borrower has had earnings and positive cash flow for at least 365
consecutive days in the one year period prior to such payment, (b) the Borrower
has no Indebtedness outstanding other than the Initial Loan, the Grid Note and
trade payables in the ordinary course of business, and (c) the Quick Ratio set
forth in Section 4.12 of the Loan Agreement is 2 to 1 and the Working Capital is
a net positive of $3 million.
All payments shall be made to Lender at its address specified above, or at
such other address as Lender may specify in writing to Borrower. All payments
received from Borrower hereunder shall be applied first, to the payment of any
expenses due to Lender pursuant to the terms of the Loan Agreement, second, to
the payment of interest accrued and unpaid on the Note, and third, to reduce the
principal balance hereunder. Any payments of expenses, principal or interest
shall be made in lawful money of the United States of America.
The Borrower shall pay all outstanding principal and unpaid accrued
interest on the Note in full on January 26, 2002 (the "Maturity Date");
provided, however, that, if the transactions contemplated under the Purchase
-------- -------
Agreement are consummated, the Maturity Date shall be June 30, 2006.
Notwithstanding the foregoing if any amount under the Note is not paid in full
when due, whether at maturity, by acceleration or otherwise (the "Default
Date"), the Maturity Date shall be the Default Date.
Within ten (10) days of each Compounding Date, or as reasonably requested
by the Holder, the Company shall issue to the Holder a certificate executed by
the Company's chief financial officer or other executive officer setting forth
the aggregate outstanding principal amount of the Note as of such date and the
amount of the interest accrued, compounded and added to the Initial Loan.
This Note is secured by the Collateral defined and described in the Loan
Agreement. In addition, any and all deposits or other sums at any time credited
by or due to Borrower from
2
Lender or any of its banking or lending affiliates or any bank acting as a
participant under any loan arrangement between Lender of Borrower, and any cash,
securities, instruments, or other property of Borrower in the possession of
Lender, or any of its banking or lending affiliates, and any bank acting as a
participant under any loan arrangement between Lender and Borrower, whether for
safekeeping, or otherwise, or in transit to or from Lender or any of its banking
or lending affiliates or any such participant, or in the possession of any third
party acting on Lender's behalf (regardless of the reason Lender had received
same or whether Lender has conditionally released the same) shall at all times
constitute security for any and all Liabilities, and may be applied or set off
against such Liabilities at any time, whether or not the Liabilities are then
due or whether or not other collateral is available to Lender.
Any Event of Default under the Loan Agreement shall constitute an event of
default under this Note. Upon an event of default, the entire principal amount
then outstanding, and all accrued and unpaid interest, and all other sums
required under this Note and the Loan Agreement shall, notwithstanding the
stated maturity in this Note, become immediately due and payable, without notice
or demand to Borrower. Upon default, Lender shall have the right, immediately
and without notice to Borrower or the taking of any other action, to set-off
against this Note, all liabilities of Lender to Borrower and all obligations for
money or money's worth owed by Lender to Borrower, whether or not due, without
notice to Borrower (such liabilities and obligations including, without
limitation, all money, stocks, bonds or other security or property of any kind
or nature held by or in the possession of Lender to or for the credit of
Borrower); and Lender shall be deemed to have made a charge against any such
liabilities or obligations immediately upon the occurrence of any event of
default under this Note even though such charge is subsequently made or entered
on the behalf of Lender. The remedies provided in this Note upon default and in
other agreement between Lender and Borrower are cumulative and not exclusive of
any other remedies provided under the Loan Agreement or at law or in equity.
No delay or omission by Lender in exercising or enforcing any of Lender's
powers, rights, privileges, remedies, or discretions hereunder shall operate as
a waiver thereof on that occasion nor on any other occasion. No waiver of any
default hereunder shall operate as a waiver of any other default hereunder, nor
as a continuing waiver.
Borrower, and each endorser and guarantor, if any, of this Note, shall
indemnify, defend, and hold Lender harmless against any claim brought or
threatened against Lender by Borrower (other than a claim which is finally
judicially determined against Lender), by any endorser or guarantor, or by any
other person (as well as from attorneys' reasonable fees and expenses in
connection therewith) on account of Lender's relationship with Borrower or any
endorser or guarantor hereof (each of which may be defended, compromised,
settled or pursued by Lender with counsel of Lender's selection, but at the
expense of Borrower and any endorser and/or guarantor).
Borrower will pay on demand all attorneys' reasonable fees and out-of-
pocket expenses incurred by Lender in the administration of all Liabilities and
obligations of Borrower to Lender, including, without limitation, costs and
expenses associated with travel on behalf of Lender. Borrower will also pay on
demand, without limitation, all attorneys' reasonable fees, out-of-pocket
expenses incurred by Lender's attorneys and all costs incurred by Lender,
including, without limitation, costs and expenses associated with travel on
behalf of Lender, which costs
3
and expenses are directly or indirectly related to the protection or enforcement
of any of Lender's rights against Borrower or any such endorser or guarantor and
against any collateral given Lender to secure this Note or any other Liabilities
of Borrower or such endorser and guarantor to Lender (whether or not suit is
instituted by or against Lender).
Borrower, and each endorser and guarantor of this Note, respectively waives
presentment, demand, notice, and protest, and also waives any delay on the part
of the holder hereof. Each assents to any extension or other indulgence
(including, without limitation, the release or substitution of collateral)
permitted Borrower or any endorser or guarantor by Lender with respect to this
Note and/or any collateral given to secure this note or any extension or other
indulgence, as described above, with respect to any other liability or any
collateral given to secure any other liability of Borrower or any endorser or
guarantor to Lender.
This Note shall be binding upon Borrower and each endorser and guarantor
hereof and upon their respective heirs, successors, assigns, and
representatives, and shall inure to the benefit of Lender and its successors,
endorsees, and assigns.
The liabilities of Borrower and any endorser or guarantor of this Note are
joint and several; provided, however, that the release by Lender of Borrower or
any one or more endorser or guarantor shall not release any other person
obligated on account of this Note. Each reference in this Note to Borrower, any
endorser, and any guarantor, is to such person individually and also to all such
persons jointly. No person obligated on account of this Note may seek
contribution from any other person also obligated unless and until all
liabilities, obligations and indebtedness to Lender of the person from whom
contribution is sought have been satisfied in full.
Borrower and each endorser and guarantor hereof each authorizes Lender to
complete this Note if delivered incomplete in any respect.
This Note is delivered to Lender at its offices at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, shall be governed by the laws of the State of
Illinois, and shall take effect as a sealed instrument. Borrower and each
endorser and guarantor of this Note each submits to the jurisdiction of the
courts of the State of Illinois for all purposes with respect to this Note, any
collateral given to secure their respective liabilities, obligations and
indebtedness to Lender, and their respective relationships with Lender. Any
determination that any provision of this Note or any application thereof is
invalid, illegal, or unenforceable in any respect in any instance shall not
affect the validity, legality or enforceability of such provision in any other
instance, or the validity, legality or enforceability of any other provision of
this Note.
The undersigned makes the following waiver knowingly, voluntarily, and
intentionally, and understands that Lender, in the establishment and maintenance
of Lender's relationship with Borrower contemplated by the within Note, is
relying thereon. THE UNDERSIGNED, TO THE EXTENT ENTITLED THERETO, WAIVES ANY
------
PRESENT OR FUTURE RIGHT OF THE UNDERSIGNED, OR OF ANY GUARANTOR OR ENDORSER OF
THE UNDERSIGNED OR OF ANY OTHER PERSON LIABLE TO LENDER ON ACCOUNT OF OR IN
RESPECT TO THE LIABILITIES, TO A TRIAL BY JURY IN ANY CASE OR CONTROVERSY IN
WHICH LENDER IS OR BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS
INITIATED BY OR AGAINST LENDER OR IN WHICH LENDER IS
4
JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF, OR IS IN
RESPECT TO, ANY RELATIONSHIP AMONGST OR BETWEEN THE UNDERSIGNED, ANY SUCH
PERSON, AND LENDER.
Borrower has read all of the terms and conditions of this Note and
acknowledges receipt of an exact copy of it.
WITNESS ▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ inc.
Signed in my Presence
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------- ----------------------------------
Print Name: ▇▇▇▇ ▇. ▇▇▇▇▇ Name: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------
Title: President
-------------------------------
5
EXHIBIT B
---------
DEFINITIONS
-----------
As herein used, the following terms have the following meanings or are
defined in the section of the within Agreement so indicated:
"Account Debtor": has the meaning given that term in the UCC (as defined
below).
"Accounts" and "Accounts Receivable" include, without limitation,
"accounts" as defined in the UCC, and also all: accounts, accounts
receivable, credit card receivables, notes, drafts, acceptances, and
other forms of obligations and receivables and rights to payment for
credit extended and for goods sold or leased, or services rendered,
whether or not yet earned by performance.
"Advance": has the meaning set forth in Section 1.1(a).
"Affiliate": means, with respect to any two Persons, a relationship in
which (a) one holds, directly or indirectly, not less than Twenty Five
Percent (25%) of the capital stock, beneficial interests, partnership
interest, or other equity interests of the other; or (b) one has,
directly or indirectly, Control of the other; or (c) not less than
Twenty Five Percent (25%) of their respective ownership is directly or
indirectly held by the same third Person.
"Agreement": is defined in the Preamble.
"ANB": is defined in Section 2.1(o).
"ANB Forbearance Agreement": is defined in Section 2.1(o).
"Assignee": is defined in Section 9.2(b).
"Balance Sheet": has the meaning given such term under the Purchase
Agreement.
"Bankruptcy Code": Title 11, U.S.C., as amended from time to time.
"Borrower": is defined in the Preamble.
"Business Day": any day other than (a) a Saturday, Sunday; or (b) a day
which shall be in the State of New York a legal holiday or day on
which banking institutions are required or authorized to close.
"Capital Lease": any lease which may be capitalized in accordance with
GAAP.
"Change of Control": shall mean (i) the sale, lease or transfer of all or
substantially all of the assets of the Company to any "Person" or
"group" (within the meaning of Sections 13(d)(3) and 14(d)(2) of the
Exchange Act, or any successor provision to either of the foregoing,
including any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under
the Exchange Act), (ii) the approval by the requisite stockholders of
the Company of a plan of liquidation or dissolution of the Company,
(iii) any "Person" or "group" (within the meaning of Sections 13(d)
and 14(d)(2) of the Exchange Act, or any successor provision to either
of the foregoing, including any group acting for the purpose of
acquiring, holding or disposing of securities within the meaning
1
of Rule 13d- 5(b)(1) under the Exchange Act) becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of more than
50% of the total voting power of all classes of the voting stock of
the Company and/or warrants or options to acquire such voting stock,
calculated on a fully diluted basis, unless, as a result of such
transaction, the ultimate direct or indirect ownership of the Company
is substantially the same immediately after such transaction as it was
immediately prior to such transaction, or (iv) any consolidation or
merger of the Company pursuant to which the Company Common Stock would
be converted into cash, securities or other property, in each case
other than a consolidation or merger of the Company in which the
holders of Company Common Stock and other capital stock of the Company
entitled to vote in the election of directors of the Company,
immediately prior to the consolidation or merger have, directly or
indirectly, at least a majority of the total voting power in the
aggregate of capital stock entitled to vote in the election of
directors of the continuing or surviving corporation immediately after
the consolidation or merger. Notwithstanding the foregoing, the
transactions contemplated by the Purchase Agreement shall not
constitute a Change of Control.
"Charter": shall mean the Articles of Incorporation of the Borrower, as
amended or the Certificate of Incorporation of the Borrower's wholly
owned subsidiary, Newco, after the consummation of the Merger (as such
term is defined in the Purchase Agreement).
"Chattel Paper": has the meaning given that term in the UCC.
"Collateral": is defined in Section 2.1.
"Compounding Date": is defined in Section 1.2(b).
"Conservative Forecast": is defined in Section 4.12(a).
"Contingent Obligation": shall mean, as applied to any Person, any direct
or indirect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or
other obligation of another, including, without limitation, any such
obligation directly or indirectly guaranteed, endorsed, co-made or
discounted or sold with recourse by that Person, or in respect of
which that Person is otherwise directly or indirectly liable; (ii) any
obligations with respect to undrawn letters of credit issued for the
account of that Person; and (iii) all obligations arising under any
interest rate, currency or commodity swap agreement, interest rate cap
agreement, interest rate collar agreement, or other agreement or
arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided,
however, that the term "Contingent Obligation" shall not include
endorsements for collection or deposit in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to
be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event
2
exceed the maximum amount of the obligations under the guarantee or
other support arrangement.
"Contract Rights": includes, without limitation, "contract rights" as now
or formerly defined in the UCC and also any right to payment under a
contract not yet earned by performance and not evidenced by an
instrument or Chattel Paper.
"Control": Person(s) shall be deemed to Control another Person if such
Person(s) directly or indirectly possess the power to direct or cause
the direction of the management and policies of such other Person,
whether through ownership of voting securities, by contract, or
otherwise.
"Cost Threshold": is defined in Section 4.12(a)(ii).
"Costs of Collection" includes, without limitation, all attorneys'
reasonable fees and reasonable out-of-pocket expenses incurred by
Lender's attorneys, and all reasonable costs incurred by Lender in the
administration of the Liabilities and/or the Loan Documents,
including, without limitation, reasonable costs and expenses
associated with travel on behalf of Lender, which costs and expenses
are directly or indirectly related to or in respect of Lender's:
administration and management of the Liabilities; negotiation,
documentation, and amendment of any Loan Document; or efforts to
preserve, protect, collect, or enforce the Collateral, the
Liabilities, and/or Lender's Rights and Remedies and/or any of
Lender's rights and remedies against or in respect of any guarantor or
other person liable in respect to the Liabilities (whether or not suit
is instituted in connection with such efforts). The Costs of
Collection are Liabilities, and at Lender's option may bear interest
at the highest post-default rate which Lender may charge Borrower
hereunder as if such had been lent, advanced, and credited by Lender
to, or for the benefit of, Borrower.
"Current Assets": shall mean, as of any applicable date, all amounts that
should, in accordance with GAAP, be included as current assets on the
consolidated balance sheet of Borrower and its Subsidiaries as at such
date less all inventory and non-recurring items including without
limitation tax credits.
"Current Liabilities": means, as of any applicable date, all amounts that
should, in accordance with GAAP, be included as current liabilities on
the consolidated balance sheet of Borrower and its Subsidiaries, as at
such date, plus, to the extent not already included therein, all
Advances made under this Agreement or by Lender for Borrower's benefit
under the Forbearance Agreements, including all Indebtedness that is
payable upon demand or within one year from the date of determination
thereof unless such Indebtedness is renewable or extendable at the
option of Borrower or any Subsidiary to a date more than one year from
the date of determination, including all current maturities of long
term debt.
"Default Date": is defined in Section 1.4.
"Default Interest Rate": is defined in Section 1.2(b).
"Demand Interest Rate": is defined in Section 1.3(b).
"Documents": has the meaning given that term in the UCC.
3
"Documents of Title": has the meaning given that term in the UCC.
"Earned Cash ▇▇▇▇▇▇▇▇": means, with respect to an applicable monthly or
quarterly measurement pursuant to Section 4.12(a), the sum of:
(i) the aggregate amount of all of Borrower's billed and unpaid
invoices to Eligible Debtors for services rendered during the
month or quarter;
minus (ii) the aggregate amount of all credit memos and other negative
-----
adjustments with respect to such period;
minus (iii) the aggregate amount of all advanced ▇▇▇▇▇▇▇▇ (e.g.,
-----
unearned revenue) included in such invoices;
plus (iv) all deferred revenue from prior periods that is earned in
----
the period being measured (to the extent not included in (i)
above);
plus (v) all royalties earned from Eligible Debtors (to the extent not
----
included in (i) above);
minus (vi) all amounts relating to barter; and
-----
minus (vii) all positive adjustments and invoices relating to prior
-----
periods.
"EBITDA": means earnings before income taxes, depreciation and
amortization.
"Eligible Debtors": means those invoiced customers of Borrower that as of
the applicable measurement date are not indebted to Borrower with
respect to an account receivable that is more than ninety (90) days
past due, are not subject to any pending or threatened bankruptcy or
insolvency proceeding, are not subject to any event or circumstance
that gives Borrower reason to believe that the collectability of their
account may be impaired, and have not asserted a claim against
Borrower or disputed any amount that is then due and owing.
"Encumbrance": each of the following:
(a) security interest, mortgage, pledge, hypothecation, lien,
attachment, or charge of any kind (including any agreement to give any
of the foregoing); conditional sale or other title retention
agreement; sale of accounts receivable or chattel paper; or other
arrangement pursuant to which any Person is entitled to any preference
or priority with respect to the property or assets of another Person
or the income or profits of such other Person or which constitutes an
interest in property to secure an obligation; each of the foregoing
whether consensual or non-consensual and whether arising by way of
agreement, operation of law, legal process or otherwise.
4
(b) The filing of any financing statement under the UCC or
comparable law of any jurisdiction.
"Equipment" includes, without limitation, "equipment" as defined in the
UCC, and also all motor vehicles, rolling stock, machinery, office
equipment, plant equipment, tools, dies, molds, store fixtures,
furniture, and other goods, property, and assets which are used and/or
were purchased for use in the operation or furtherance of Borrower's
business, and any and all accessions, additions thereto, and
substitutions therefore.
"Events of Default": is defined in Article 6.
"Exchange Act": is the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"Fixtures": has the meaning given that term in the UCC.
"Forbearance Agreements": is defined in Section 5.8.
"GAAP" or "Generally Accepted Accounting Principles": principles which are
consistent with those promulgated or adopted by the Financial
Accounting Standards Board and its predecessors (or successors) in
effect and applicable to that accounting period in respect of which
reference to GAAP or Generally Accepted Accounting Principles is being
made.
"General Intangibles" includes, without limitation, "general intangibles"
as defined in the UCC; and also all: rights to payment for credit
extended; deposits; amounts due to Borrower; credit memoranda in favor
of Borrower; warranty claims; tax refunds and abatements; insurance
refunds and premium rebates; all means and vehicles of investment or
hedging, including, without limitation, options, warrants, and futures
contracts; records; customer lists; telephone numbers; goodwill;
causes of action; judgments; payments under any settlement or other
agreement; literary rights; rights to performance; royalties; license
and/or franchise fees; rights of admission; licenses; franchises;
license agreements, including all rights of Borrower to enforce same;
permits, certificates of convenience and necessity, and similar rights
granted by any governmental authority; patents, patent applications,
patents pending, and other intellectual property; developmental ideas
and concepts; proprietary processes; blueprints, drawings, designs,
diagrams, plans, reports, and charts; catalogs; manuals; technical
data; computer software programs (including the source and object
codes therefor), computer records, computer software, rights of access
to computer record service bureaus, service bureau computer contracts,
and computer data; tapes, disks, semi-conductors chips and printouts;
trade secrets rights, copyrights, mask work rights and interests, and
derivative works and interests; user, technical reference, and other
manuals and materials; trade names, trademarks, service marks, and all
goodwill relating thereto; applications for registration of the
foregoing; and all other general intangible property of Borrower in
the nature of intellectual property; proposals; cost estimates, and
reproductions on paper, or otherwise, of any and all concepts or
ideas, and any matter related to, or connected with, the design,
development, manufacture, sale, marketing,
5
leasing, or use of any or all property produced, sold, or leased, by
Borrower or credit extended or services performed, by Borrower,
whether intended for an individual customer or the general business of
Borrower, or used or useful in connection with research by Borrower.
"Goods": has the meaning given that term in the UCC.
"Grid Note": is defined in Section 1.1(a).
"Indebtedness": all indebtedness and obligations (including without
limitation any Contingent Obligations) of or assumed by any Person
including, without limitation, any indebtedness or obligation: (i) in
respect of money borrowed (including any indebtedness which is non-
recourse to the credit of such Person but which is secured by an
Encumbrance on any asset of such Person) or evidenced by a promissory
note, bond, debenture or other written obligation to pay money; (ii)
for the payment, deferred or other written obligation to pay money;
(ii) for the payment, deferred for more than Thirty (30) days, of the
purchase price of goods or services (other than current trade
liabilities of such Person incurred in the ordinary course of business
and payable in accordance with customary practices); (iii) in
connection with any letters of credit or acceptance transaction
(including, without limitation, the face amount of all letters of
credit and acceptances issued for the account of such Person or
reimbursement on account of which such Person would be obligated);
(iv) in connection with the sale or discount of accounts receivable or
chattel paper of Borrower; (v) on account of deposits or advances; and
(vi) as lessee under Capital Leases. "Indebtedness" of any Person
shall also include: (x) Indebtedness of others secured by an
Encumbrance on any asset of such Person; (y) Any guaranty,
endorsement, suretyship or other undertaking pursuant to which that
Person may be liable on account of any obligation of any third party;
and (z) the Indebtedness of a partnership or joint venture in which
such Person is a general partner or joint venturer.
"Indemnified Person": is defined in Section 9.10.
"Initial Loan": is defined in Section 1.1(a).
"Initial Warrants": is defined in Section 1.1(b).
"Instruments": has the meaning given that term in the UCC.
"Inventory" includes, without limitation, "inventory" as defined in the UCC
and also all: packaging, advertising, and shipping materials related
to any of the foregoing, and all names or marks affixed or to be
affixed thereto for identifying or selling the same; Goods held for
sale or lease or furnished or to be furnished under a contract or
contracts of sale or service by Borrower, or used or consumed or to be
used or consumed in Borrower's business; Goods of said description in
transit: returned, repossessed and rejected Goods of said description;
and all documents (whether or not negotiable) which represent any of
the foregoing.
"Investment Property": has the meaning given that term in the UCC.
"Lender": is defined in Preamble.
"Lender's Rights and Remedies": is defined in Section 7.7.
6
"Liability" or "Liabilities" includes, without limitation, all and each of
the following, whether now existing or hereafter arising:
(a) Any and all direct and indirect liabilities, debts, and
obligations of Borrower to Lender, each of every kind, nature, and
description.
(b) Each obligation to repay any loan, advance, indebtedness,
note, obligation, overdraft, or amount now or hereafter owing by
Borrower to Lender (including all future advances whether or not made
pursuant to a commitment by Lender), whether or not any of such are
liquidated, unliquidated, primary, secondary, secured, unsecured,
direct, indirect, absolute, contingent, or of any other type, nature,
or description, or by reason of any cause of action which Lender may
hold against Borrower.
(c) All notes and other obligations of Borrower now or
hereafter assigned to or held by Lender, each of every kind, nature,
and description including, without limitation, the Note and Grid Note.
(d) All interest, fees, and charges and other amounts which
may be charged by Lender to Borrower and/or which may be due from
Borrower to Lender from time to time.
(e) All costs and expenses incurred or paid by Lender in
respect of any agreement between Borrower and Lender or instruments
furnished by Borrower to Lender (including, without limitation, Costs
of Collection, attorneys' reasonable fees, and all court and
litigation costs and expenses).
(f) Any and all covenants of Borrower to or with Lender and
any and all obligations of Borrower to act or to refrain from acting
in accordance with any agreement between Borrower and Lender or
instruments furnished by Borrower to Lender.
"Lien": any Encumbrance as defined herein.
"Loan": is defined in Section 1.1(a).
"Loan Account": the account maintained on Lender's books in which a record
will be kept of all loans and advances hereunder and payments thereon,
and all calculations of interest fees or other costs as provided
hereunder.
"Loan Documents": this Agreement, the Note, the Grid Note, and each
instrument and document executed and/or delivered in connection with
the arrangements contemplated hereby, as each may be amended from time
to time.
"Maturity Date": is defined in Section 1.4.
"Monthly Compounding Date": is defined in Section 1.2(b).
"Note": is defined in the Preamble.
"Note PIK Payment": is defined in Section 1.2(d).
7
"Original Agreement": is defined in the Preamble.
"Original Principal Amount": is defined in 1.1(a).
"Permitted Indebtedness": means:
(a) Indebtedness of Borrower in favor of Lender arising under this
Agreement or any other Loan Document;
(b) Indebtedness to ANB and Midwest Guaranty Bank, provided such
Indebtedness is limited to the Indebtedness described in the
applicable Forbearance Agreement;
(c) Subordinated Debt; and
(d) Indebtedness of Borrower under capital leases, provided, the
aggregate amount financed under all such capital leases
(including capital leases existing on the date hereof) shall not
exceed $3 million; and provided, further, Borrower shall not
incur a capital lease obligation to the extent immediately after
incurring such obligation Borrower would not be legally permitted
to declare and pay dividends on its Series B Preferred Stock.
"Person": any natural person, and any corporation, trust, partnership,
joint venture, or other enterprise or entity.
"Proceeds": include, without limitation, "Proceeds" as defined in the UCC,
and each type of property described in Section 2.1, above.
"Purchase Agreement": is defined in Section 1.2(a).
"Qualified Accounts Receivable": shall mean, as of any applicable date, all
amounts that should, in accordance with GAAP, be included as an
account receivable on the consolidated balance sheet of Borrower and
its Subsidiaries as of such date, but shall specifically exclude any
receivables that are unbilled (a) more than ninety (90) days past due
(b) owed by an officer or director (c) owed to an obligor that has any
accounts receivable with Borrower that are more than ninety (90) days
past due, or (d) that are disputed or challenged (or for which such
obligor has otherwise asserted a defense or right of offset with
respect to collection).
"Quarterly Payment Dates": is defined in Section 1.2(c).
"Quick Assets": shall mean, as of any applicable date, the Borrower's
consolidated cash, cash equivalents, investments with maturities of
fewer than ninety (90) days determined in accordance with GAAP, and
Qualified Accounts Receivable, but shall exclude all restricted and
regulated cash.
"Quick Ratio": shall mean the excess of Quick Assets over Current
Liabilities.
"Receivables Collateral": Borrower's Accounts, Accounts Receivable,
Contract Rights, General Intangibles, Chattel Paper, Instruments,
Documents of Title, Documents, Securities, letters of credit for the
benefit of Borrower, and bankers' acceptances held by Borrower, and
any rights to payment.
"Related Entity": refers to (a) any Affiliate; and (b) any corporation,
trust, partnership, joint venture, or other enterprise which: is a
parent, brother-sister, Subsidiary, or
8
Affiliate, of Borrower; could have such enterprise's tax returns or
financial statements consolidated with Borrower's; could be a member
of the same controlled Group of corporation (within the meaning of
Section 1563(a)(1), (2) and (3) of the Internal Revenue Code of 1986,
as amended from time to time) of which Borrower is a member; Controls
or is Controlled by Borrower or any Affiliate of Borrower.
"Securities": has the meaning given that term in the UCC.
"Securities Act": is the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"Series B Preferred Stock": has the meaning given such term under the
Purchase Agreement.
"Statement Date": has the meaning given such term under the Purchase
Agreement.
"Subordinated Debt": means any debt incurred by Borrower that is
subordinated to the debt owing by Borrower to Lender on terms
reasonably acceptable to Lender (and identified as being such by
Borrower and Lender).
"Subsidiary" means with respect to any Person, corporation, partnership,
company association, joint venture, or any other business entity of
which more than fifty percent (50%) of the voting stock or other
equity interests is owned or controlled, directly or indirectly, by
such Person or one or more Affiliates of such Person.
"Tangible Net Worth": shall mean (a) the aggregate amount of all assets of
Borrower as may be properly classified as such, other than (i) all
assets of Borrower which are properly classified as intangible assets
including, without limitation, franchises, licenses, permits, patents,
patent applications, copyrights, trademarks, trade names, goodwill,
experimental or organizational expense and other like intangibles,
including the excess paid for assets acquired over the respective book
values on the books of the corporation from which acquired, and (ii)
all investments in and loans to the shareholders, officers, directors,
employees, subsidiaries and affiliates, less (b) the aggregate amount
of all Indebtedness and Liabilities of Borrower, all determined in
accordance with GAAP consistently applied.
"Total Indebtedness" means all Indebtedness plus all Contingent
Obligations.
"Transfer" is defined in Section 5.1.
"UCC": is Uniform Commercial Code as adopted and in effect in the State of
Illinois, as amended from time to time.
"Warrant PIK Payment": is defined in Section 1.2(d).
"Working Capital" means the excess of Current Assets over Current
Liabilities.
9