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EXHIBIT 10.1
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CREDIT AGREEMENT
DATED AS OF MAY 31, 2000
BY AND BETWEEN
NETZEE, INC.
AND
THE INTERCEPT GROUP, INC.
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TABLE OF CONTENTS
Page
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ARTICLE 1.- DEFINITIONS..........................................................................................1
SECTION 1.01 DEFINITIONS.....................................................................................1
ARTICLE 2 - REVOLVING CREDIT FACILITY...........................................................................10
SECTION 2.01. REVOLVING LOANS................................................................................10
SECTION 2.02. REPAYMENT OF REVOLVING LOANS...................................................................12
SECTION 2.03. PREPAYMENTS....................................................................................12
SECTION 2.04. VOLUNTARY REDUCTIONS OF THE REVOLVING COMMITMENT...............................................13
ARTICLE 3 - INTEREST, FEES AND OTHER PROVISIONS.................................................................13
SECTION 3.01. RATES AND PAYMENT OF INTEREST ON LOANS.........................................................13
SECTION 3.02. UNUSED FACILITY FEE............................................................................13
SECTION 3.03. PAYMENTS.......................................................................................13
SECTION 3.04. COMPUTATIONS...................................................................................14
SECTION 3.05. USURY..........................................................................................14
SECTION 3.06. AGREEMENT REGARDING INTEREST AND CHARGES.......................................................14
SECTION 3.07. TAXES..........................................................................................14
ARTICLE 4 -CONDITIONS PRECEDENT.................................................................................15
SECTION 4.01. CONDITIONS PRECEDENT TO INITIAL LOAN...........................................................15
SECTION 4.02. CONDITIONS PRECEDENT TO ALL LOANS..............................................................17
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES......................................................................17
SECTION 5.01. REPRESENTATIONS AND WARRANTIES.................................................................17
SECTION 5.02. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC................................................22
ARTICLE 6 - AFFIRMATIVE COVENANTS...............................................................................23
SECTION 6.01. PRESERVATION OF CORPORATE EXISTENCE AND SIMILAR MATTERS........................................23
SECTION 6.02. COMPLIANCE WITH APPLICABLE LAW AND MATERIAL CONTRACTS..........................................23
SECTION 6.03. MAINTENANCE OF PROPERTY/CONDUCT OF BUSINESS....................................................23
SECTION 6.04. PAYMENT OF TAXES AND CLAIMS....................................................................23
SECTION 6.05. USE OF PROCEEDS................................................................................23
SECTION 6.06. ERISA..........................................................................................24
SECTION 6.07. INSPECTION OF BOOKS, RECORDS, PROPERTIES.......................................................24
SECTION 6.08. INSURANCE......................................................................................24
SECTION 6.09 ENVIRONMENTAL MATTERS..........................................................................24
ARTICLE 7 - INFORMATION.........................................................................................25
SECTION 7.01 FINANCIAL STATEMENTS, COMPLIANCE CERTIFICATE AND INCOME TAX RETURNS............................25
SECTION 7.02. DEFAULT; NOTICES UNDER OTHER AGREEMENTS........................................................26
SECTION 7.03. LITIGATION; JUDGMENT...........................................................................26
SECTION 7.04. MATERIAL CHANGE................................................................................26
SECTION 7.05. OTHER NOTICES..................................................................................26
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SECTION 7.06. DEBT INSTRUMENTS...............................................................................27
SECTION 7.07. ERISA..........................................................................................27
SECTION 7.08 COPIES OF OTHER REPORTS........................................................................28
SECTION 7.09. OTHER INFORMATION..............................................................................28
ARTICLE 8 - NEGATIVE COVENANTS..................................................................................28
SECTION 8.01. FINANCIAL RATIOS...............................................................................28
SECTION 8.02. DEBT...........................................................................................29
SECTION 8.03. GUARANTEES.....................................................................................29
SECTION 8.04. INVESTMENTS....................................................................................29
SECTION 8.05. LIENS; AGREEMENTS REGARDING LIENS; OTHER MATTERS...............................................30
SECTION 8.06. FISCAL YEAR....................................................................................30
SECTION 8.07. DIVIDENDS AND STOCK REPURCHASE.................................................................30
SECTION 8.08. PRESERVATION OF EXISTENCE, ETC.; MERGER, CONSOLIDATION AND SALE OF ASSETS......................31
SECTION 8.09. TRANSACTIONS WITH AFFILIATES...................................................................31
SECTION 8.10. CREATION OF SUBSIDIARIES.......................................................................32
SECTION 8.11. DISPOSAL OF ASSETS OR SUBSIDIARY STOCK.........................................................33
SECTION 8.14. ISSUANCE OF CAPITAL STOCK......................................................................33
SECTION 8.14. CAPITAL EXPENDITURES...........................................................................34
SECTION 8.15. MANAGEMENT FEES AND COMPENSATION...............................................................34
ARTICLE 9 - DEFAULT.............................................................................................34
SECTION 9.01. EVENTS OF DEFAULT..............................................................................34
SECTION 9.02. REMEDIES.......................................................................................36
SECTION 9.03. APPLICATION OF PROCEEDS........................................................................37
SECTION 9.04. PERFORMANCE BY LENDER..........................................................................37
SECTION 9.05. RIGHTS CUMULATIVE..............................................................................37
ARTICLE 10 - MISCELLANEOUS......................................................................................38
SECTION 10.01. NOTICES.......................................................................................38
SECTION 10.02. EXPENSES......................................................................................38
SECTION 10.03. STAMP, INTANGIBLE AND RECORDING TAXES.........................................................39
SECTION 10.04. LITIGATION....................................................................................39
SECTION 10.05. SUCCESSORS AND ASSIGNS........................................................................40
SECTION 10.06. AMENDMENTS....................................................................................40
SECTION 10.07. INDEMNIFICATION...............................................................................40
SECTION 10.08. GOVERNING LAW.................................................................................42
SECTION 10.09. SETOFF........................................................................................42
SECTION 10.10. TERMINATION; SURVIVAL OF PROVISIONS...........................................................42
SECTION 10.11. COUNTERPARTS..................................................................................42
SECTION 10.12. LIMITATION OF LIABILITY.......................................................................42
SECTION 10.13. ENTIRE AGREEMENT..............................................................................43
SECTION 10.14. TITLES AND CAPTIONS...........................................................................43
SECTION 10.15. SEVERABILITY OF PROVISIONS....................................................................43
SECTION 10.16. OBLIGATIONS WITH RESPECT TO LOAN PARTIES......................................................43
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SECTION 10.17. MARSHALING; PAYMENTS SET ASIDE................................................................43
SECTION 10.18. INDEPENDENT NATURE OF LENDER'S RIGHTS.........................................................43
SECTION 10.19. NO FIDUCIARY RELATIONSHIP.....................................................................44
SECTION 10.20. CONSTRUCTION..................................................................................44
SECTION 10.21. BENEFITS......................................................................................44
SCHEDULES
Schedule 5.01(b) Ownership Structure
Schedule 5.01(d) Liens
Schedule 5.01(e) Debt
Schedule 5.01(f) Litigation
Schedule 5.01(j) ERISA
Schedule 5.01(k) Affiliate Transactions
Schedule 5.01(q) Intellectual Property
Schedule 8.03 Guarantees
Schedule 8.04 Investments
Schedule 8.14 Management Fees and Compensation
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Pledge Agreement
Exhibit D Form of Security Agreement
Exhibit E Form of Guaranty
Exhibit F Form of Opinion of Counsel to Loan Parties
Exhibit G Form of Compliance Certificate Exhibit
Exhibit H Form of Accession Agreement
Exhibit I Form of Patent Security Agreement
Exhibit J Form of Trademark Security Agreement
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THIS CREDIT AGREEMENT dated as of May 31, 2000 (the "Agreement"), by
and between NETZEE, INC. (the "Borrower"), a Georgia corporation, and THE
INTERCEPT GROUP, INC. (the "Lender").
WHEREAS, the Lender desires to make available to the Borrowers certain
financial accommodations on the terms and conditions contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto agree as follows:
ARTICLE 1. DEFINITIONS
SECTION 1.01. DEFINITIONS. For the purposes of this Agreement:
"Accession Agreement" means the Accession Agreement executed in
connection with Section 8.10 and substantially in the form of Exhibit H.
"Affiliate" means any Person (other than the Lender): (a) directly or
indirectly controlling, controlled by, or under common control with, the
Borrower; (b) directly or indirectly owning or holding five percent (5.0%) or
more of any equity interest in the Borrower; or (c) five percent (5.0%) or more
of whose voting stock or other equity interest is directly or indirectly owned
or held by the Borrower. For purposes of this definition, "control" (including
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with") means the possession directly or indirectly of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities or by contract or otherwise.
"Applicable Law" means all applicable provisions of constitutions,
statutes, laws, rules, regulations and orders of all governmental bodies and all
orders, rulings and decrees of all courts and arbitrators.
"Asset Disposition" means the disposition whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise of any of the
following: (a) any of the stock or equity interests of the Borrower's
Subsidiaries or (b) any or all of the assets of the Borrower or its Subsidiaries
(other than sales of inventory and licensing of copyrights, patents and
trademarks in the ordinary course of business and sale of the Encumbered Asset).
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act.
"Business Day" means any day other than a Saturday, Sunday or other day
on which banks in Atlanta, Georgia are authorized or required to close.
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"Business Unit" means the assets constituting the business or a
division or operating unit thereof of any Person.
"Capital Expenditures" means, with respect to any Person, without
duplication, all expenditures made and liabilities incurred for the acquisition
of assets which are not, in accordance with GAAP, treated as expense items for
such Person in the year made or incurred or as a prepaid expense applicable to a
future year or years, and shall include all Capitalized Lease Obligations.
"Capitalized Lease Obligation" means Debt represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP, and the amount of such Debt is the capitalized
amount of such obligations determined in accordance with GAAP.
"Cash Equivalents" means: (a) securities issued, guaranteed or insured
by the United States of America or any of its agencies with maturities of not
more than one year from the date acquired; (b) certificates of deposit with
maturities of not more than one year from the date acquired issued by a United
States federal or state chartered commercial bank of recognized standing, which
has capital and unimpaired surplus in excess of $500,000,000.00 and which bank
or its holding company has a short-term commercial paper rating of at least A-2
or the equivalent by Standard & Poor's Rating Group, a division of ▇▇▇▇▇▇-▇▇▇▇,
Inc. ("S&P") or at least P-2 or the equivalent by ▇▇▇▇▇'▇ Investors Services,
Inc. ("Moody's"); (c) reverse repurchase agreements with terms of not more than
seven days from the date acquired, for securities of the type described in
clause (a) above and entered into only with commercial banks having the
qualifications described in clause (b) above; (d) commercial paper issued by any
Person incorporated under the laws of the United States of America or any State
thereof and rated at least A-2 or the equivalent thereof by S&P or at least P-2
or the equivalent thereof by Moody's, in each case with maturities of not more
than one year from the date acquired; and (e) investments in money market funds
registered under the Investment Company Act of 1940, which have net assets of at
least $500,000,000.00 and at least 85% of whose assets consist of securities and
other obligations of the type described in clauses (a) through (d) above.
"Change of Control" means the occurrence of any of the following: (1)
the sale, transfer, conveyance or other disposition (other than by way of merger
or consolidation), in one or a series of related transactions, or all or
substantially all of the assets of the Borrower and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act); (2) the adoption of a plan relating to the liquidation or dissolution of
the Borrower; (3) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above) other than a Permitted Holder becomes the Beneficial
Owner, directly or indirectly, of more than 30% of the Voting Stock of the
Borrower, measured by voting power rather than the number of shares; (4) the
first day on which a majority of the members of the Board of Directors of the
Borrower are not Continuing Directors; or (5) the Borrower consolidates with, or
merges with or into, any Person, or any Person consolidates with, or merges with
or into, the Borrower, in any such event pursuant to a transaction in which any
of the outstanding Voting Stock of the Borrower is converted into or exchanged
for cash, securities or other property, other than any such transaction where
the Voting Stock of the Borrower outstanding immediately prior to such
transaction is converted into or exchanged for
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Voting Stock of the surviving or transferee Person constituting a majority of
the outstanding shares of such Voting Stock of such surviving or transferee
Person immediately after giving effect to such issuance.
"Collateral" means and includes all property and assets of any Person
now or hereafter pledged to the Lender as security for the Obligations,
including but not limited to the Collateral (as defined in the Security
Agreement) and the Pledged Stock (as defined in the Pledge Agreement).
"Collateral Assignment Agreement" shall mean that certain Collateral
Assignment Agreement of Rights under Affiliate Loan Documents dated as of May
31, 2000, by and between the Lender and First Union National Bank.
"Consolidated Tangible Net Worth" of Borrower shall mean the Borrower's
Total Assets less the Borrower's Consolidated Total Liabilities.
"Consolidated Total Liabilities" of the Borrower shall mean the total
of all items and categories of indebtedness, obligations and liabilities of the
Borrower and its Subsidiaries and Affiliates, which, in accordance with GAAP,
would be included in determining total liabilities as shown on the liabilities
side of the Borrower's balance sheet at the date as of which total liabilities
are to be determined (including without limitation, all indebtedness owed to
officers, shareholders and employees of such entity, all capitalized leases and
all reserves for deferred taxes and other deferred sums).
"Continuing Directors" means, as for any date of determination, any
member of the Board of Directors of the Borrower who: (1) was a member of such
Board of Directors on the date hereof; or (2) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Debt" as applied to a Person means, without duplication, (a)
obligations of such Person in respect of money borrowed; (b) obligations of such
Person (other than trade debt incurred in the ordinary course of business),
whether or not for money borrowed (i) represented by notes payable, or drafts
accepted, in each case representing extensions of credit, (ii) evidenced by
bonds, debentures, notes or similar instruments, or (iii) constituting purchase
money indebtedness, conditional sales contracts, title retention debt
instruments or other similar instruments, upon which interest charges are
customarily paid or that are issued or assumed as full or partial payment for
property; (c) Capitalized Lease Obligations of such Person; (d) all
reimbursement obligations of such Person under any letters of credit or
acceptances (whether or not the same have been presented for payment); (e) any
Off Balance Sheet Liabilities; and (f) all Debt of other Persons which (i) such
Person has Guaranteed or is otherwise recourse to such Person but only to the
extent of the amount Guaranteed or (ii) is secured by a Lien on any property of
such Person.
"Default" means any of the events specified in Section 9.01, whether or
not there has been satisfied any requirement for the giving of notice, the lapse
of time or both.
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"EBITDA" shall mean and refer to earnings before interest, taxes,
depreciation and amortization and deferred stock compensation, as each such term
is defined in accordance with GAAP.
"Effective Date" means the later of: (a) the date hereof and (b) the
date on which all of the conditions precedent set forth in Section 4.01. shall
have been satisfied or waived in writing by the Lender.
"Encumbered Asset" shall mean an asset of the Borrower (other than
assets related to software) having a fair market value not in excess of
$1,750,000 which is subject to a purchase money security interest in favor of
another lender.
"Environmental Laws" means any Applicable Law relating to environmental
protection or the manufacture, storage, disposal or clean-up of Hazardous
Materials including, without limitation, the following: Clean Air Act, 42 U.S.C.
ss. 7401 et seq; Federal Water Pollution Control Act, 33 U.S.C. ss. 1251 et
seq.; ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇ U.S.C. ss. 6901 et seq.; Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et
seq.; National Environmental Policy Act, 42 U.S.C. ss. 4321 et seq.; regulations
of the Environmental Protection Agency and any applicable rule of common law and
any judicial interpretation thereof relating primarily to the environment or
Hazardous Materials.
"Equity Issuance" means any issuance or sale by any Loan Party of its
capital stock or any warrants, options or similar rights to acquire, or
securities convertible into or exchangeable for, such capital stock, other than
the exercise of employee and director stock options.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
in effect from time to time.
"ERISA Affiliate" means any entity required at any relevant time to be
aggregated with the Borrower or any Subsidiary under Sections 414(b) or (c) of
the Internal Revenue Code. In addition, for purposes of any provision of this
Agreement that relates to Section 412(n) of the Internal Revenue Code, the term
ERISA Affiliate shall mean any entity aggregated with the Borrower or any
Subsidiary under Sections 414(b), (c), (m) or (o) of the Internal Revenue Code.
"Event of Default" means any of the events specified in Section 9.01.
"Fees" means the fees and commissions provided for or referred to in
Article III and any other fees payable by the Borrower hereunder or under any
other Loan Document, or otherwise payable by the Borrower to the Lender in
connection with the transactions relating to this Agreement.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession.
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"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, bureau or entity or any arbitrator with authority to
bind a party at law.
"Guaranty", "Guaranteed" or to "Guarantee" as applied to any obligation
means and includes (a) a guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), directly or
indirectly, in any manner, of any part or all of such obligation, or (b) an
agreement, direct or indirect, contingent or otherwise, and whether or not
constituting a guaranty, the practical effect of which is to assure the payment
or performance (or payment of damages in the event of nonperformance) of any
part or all of such obligation whether by (i) the purchase of securities or
obligations, (ii) the purchase, sale or lease (as lessee or lessor) of property
or the purchase or sale of services primarily for the purpose of enabling the
obligor with respect to such obligation to make any payment or performance (or
payment of damages in the event of nonperformance) of or on account of any part
or all of such obligation, or to assure the owner of such obligation against
loss, (iii) the supplying of funds to or in any other manner investing in the
obligor with respect to such obligation, (iv) repayment of amounts drawn down by
beneficiaries of letters of credit, or (v) the supplying of funds to or
investing in a Person on account of all or any part of such Person's obligation
under a Guaranty of any obligation or indemnifying or holding harmless, in any
way, such Person against any part or all of such obligation. As the context
requires, "Guaranty" shall also mean each guaranty executed and delivered by
each Loan Party (excluding the Borrower) in substantially the form of Exhibit E
attached hereto.
"Hazardous Materials" means materials defined as "hazardous waste or
substances" under the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. ss.9601, et seq. and the Resource Conservation and
Recovery Act, 42 U.S.C. ss.6903 et seq., and other solid, semi-solid, liquid or
gaseous substances which are toxic, ignitable, corrosive, carcinogenic or
otherwise dangerous to human, plant or animal health and well being.
"InterCept" shall mean the Lender.
"InterCept Loan Agreement" means that certain Loan Agreement dated as
of April 28, 1998, by and among the Lender, InterCept Switch, Inc., Provesa,
Inc., Provesa Services, Inc., Lev Acquisition Corp., SBS Data Services, Inc. and
First Union National Bank (as such agreement may be amended, supplemented,
modified, restated, renewed, replaced, refinanced, or substituted for, in whole
or in part).
"Intellectual Property" has the meaning giving that term in Section
5.01(q).
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"Investment" means, with respect to any Person and whether or not such
investment constitutes a controlling interest in such Person:
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(a) the purchase or other acquisition of any share of capital
stock, evidence of Indebtedness or other security issued by any other Person;
(b) any loan, advance or extension of credit to, or contribution
(in the form of money or goods) to the capital of, any other Person;
(c) any other investment in any other Person; and
(d) any commitment or option to make an Investment in any other
Person.
"Lending Office" means, the office of the Lender located at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other office of
the Lender as the Lender shall designate in writing from time to time.
"Lien" means any security interest, lien, encumbrance, mortgage, deed
to secure debt, deed of trust, pledge, charge, conditional sale or other title
retention agreement, or other encumbrance of any kind covering any property of a
Person. For the avoidance of doubt, the licensing by any Person of any
copyrights, patents or trademarks owned or licensed to such Person shall not be
considered a "Lien" hereunder.
"Loan Documents" means this Agreement, the Note, the Security
Agreement, the Pledge Agreement, the Patent Security Agreement, the Trademark
Agreement and any other document or instrument executed and delivered by any
Borrower or any other Loan Party in connection herewith or therewith.
"Loan Party" means each Borrower and each of the Borrower's
Subsidiaries that is or becomes a party to any Loan Document.
"Material Adverse Effect" means a materially adverse effect on (a) the
business, properties, condition (financial or otherwise), results of operations
or performance of the Borrower and its Subsidiaries, taken as a whole, (b) the
ability of any Loan Party to perform its obligations under any Loan Document to
which it is a party, (c) the validity or enforceability of any of the Loan
Documents, or (d) the rights and remedies of the Lender under any of such Loan
Documents.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Borrowers or
any ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Proceeds" means, with respect to any Asset Sale or Equity
Issuance, the amount of cash, the principal amount of promissory notes or other
debt securities, and the fair market value of all other non-cash proceeds
received in connection therewith, net of reasonable costs incurred in connection
therewith, underwriting commissions and discount brokerage fees and, in
connection with the sale of assets, the payment of taxes incurred in connection
with such sale and the payment of Debt associated with Liens encumbering such
assets.
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"Net Profit" of an entity shall mean the excess of such entity's total
revenues over its total expenses after giving effect to taxes.
"Note" means a promissory note of the Borrower in favor of the Lender
in substantially the form of Exhibit A.
"Notice of Borrowing" means a notice in the form of Exhibit B to be
delivered to the Lender pursuant to Section 2.01(b) evidencing the Borrower's
request for a Revolving Credit Advance.
"Obligations" means, individually and collectively: (a) all Revolving
Credit Advances and the obligation of the Borrower to repay the same and the
accrued interest thereon in accordance with this Agreement; and (b) all
obligations of the Borrower and the other Loan Parties to the Lender of every
kind, nature and description, under or in respect of this Agreement or any other
Loan Document, including, without limitation, the Fees and indemnification
obligations, whether direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any note.
"Off Balance Sheet Liabilities" of a Person means (a) any liability
under any sale and leaseback transactions which do not create a liability on the
consolidated balance sheet of said person, (b) any liability under any financing
lease, tax retention operating lease or so-called "synthetic" lease transaction
or (c) any obligation, arising with respect to any other transaction which is
the functional equivalent of or takes the place of borrowing but which does not
constitute a liability on the consolidated balance sheet of said Person or its
Subsidiaries.
"Patent Security Agreement" means the Patent Security Agreement to be
executed by the Borrower and certain Loan Parties in favor of the Lender in
substantially the form of Exhibit I.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
agency.
"Permitted Acquisitions" means an acquisition by the Borrower or any
Subsidiary of the Borrower of the capital stock or all (or any substantial part)
of the property of another Person (including by merger or consolidation or by
incorporation of a new Subsidiary) for up to the fair market value of the
capital stock or property acquired; provided that (a) the capital stock or
property acquired in such acquisition relates to a line of business similar to
the business of the Borrower or any of its Subsidiaries engaged in on the
Effective Date; (b) the representations and warranties made by the Loan Parties
in each Loan Document shall be true and correct in all material respects at and
as of the date of such acquisition (as if made on such date after giving effect
to such acquisition) except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties shall be true and correct in all material respects at and as of such
earlier date); (c) the Lender shall have received all items in respect of the
capital stock or property acquired in such acquisition required to be delivered
by the terms of Section 8.10; (d) no Default or Event of Default shall have
occurred and be continuing immediately after giving effect to such acquisition;
and (e) the aggregate consideration (including cash, assumption of indebtedness
and non-cash consideration) shall not exceed $5,000,000 during any one fiscal
year.
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"Permitted Holder" means InterCept, and its successors and assigns.
"Permitted Liens" means: (a) Liens securing taxes, assessments and
other governmental charges or levies (excluding any Lien imposed pursuant to any
of the provisions of ERISA) not yet due and payable or the claims of
materialmen, mechanics, carriers, warehousemen or landlords for labor,
materials, supplies or rentals incurred in the ordinary course of business but
not yet due and payable; (b) Liens consisting of deposits or pledges made, in
the ordinary course of business, in connection with, or to secure payment of,
obligations under workmen's compensation, unemployment insurance or similar
legislation; (c) Liens consisting of encumbrances in the nature of zoning
restrictions, easements, and rights or restrictions of record on the use of real
property, which in the sole judgment of the Lender do not materially detract
from the value of such property or impair the use thereof in the business of the
Borrower; and (d) Liens in favor of the Lender; (e) Liens in connection with the
Encumbered Asset and (f) purchase money Liens securing Permitted Purchase
Obligations.
"Permitted Purchase Obligations" means purchase money obligations
(including capital leases) incurred in the ordinary course of business of the
Borrower which are not in excess of $1,000,000 during any fiscal year or
$3,000,000 during any period of three consecutive fiscal years.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Plan" means an employee benefit plan maintained for employees of the
Borrower or any of its Subsidiaries that is covered by Title IV of ERISA,
including such plans as may be established after the date hereof.
"Pledge Agreement" means the Pledge Agreement executed by the Borrower
and certain Loan Parties and substantially in the form of Exhibit C.
"Post-Default Rate" means, in respect of any principal of any Revolving
Credit Advance, a rate per annum equal to (i) one percent (1.0%) over the
interest rate as in effect from time to time for such principal if the Borrower
shall only fail to perform or observe any of the covenants set forth in Section
8.01 or (ii) two percent (2.0%) over the interest rate as in effect from time to
time for such principal for any other Event of Default.
"Prime Rate" means for any date of determination, the "Prime Rate" as
published on such date in the "Money Rates" column of the Eastern edition of The
Wall Street Journal.
"Reportable Event" has the meaning set forth in Section 4043(b) of
ERISA, but shall not include a Reportable Event as to which the provision for 30
days' notice to the PBGC is waived under applicable regulations.
"Revolving Commitment" means the Lender's obligation, subject to the
terms and conditions of this Agreement, to make Revolving Credit Advances
pursuant to Section 2.01. in an
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amount up to, but not exceeding, $15,000,000, as the same may be reduced from
time to time pursuant to Section 2.04.
"Revolving Credit Advance" has the meaning set forth in Section 2.01
hereof.
"Security Agreement" means the Security Agreement to be executed by the
Borrower and each Loan Party in favor of the Lender substantially in the form of
Exhibit D.
"Shareholder Notes" shall mean those certain promissory notes each
dated as of July 1, 1999 executed by each of ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ payable to the Borrower.
"Solvent" means, when used with respect to any Person, that (a) the
fair value and the fair salable value of its assets (excluding any Debt due from
any Affiliate of such Person) are each in excess of the fair valuation of its
total liabilities (including all contingent liabilities); and (b) such Person is
able to pay its debts or other obligations in the ordinary course as they mature
and (c) that the Person has capital not unreasonably small to carry on its
business and all business in which it proposes to be engaged.
"Subordinated Debt" means Debt for money borrowed of the Borrower or
any of its Subsidiaries that is subordinated in right of payment and otherwise
to the Revolving Credit Advances and the other Obligations in a manner
satisfactory to the Lender in its sole and absolute discretion.
"Subsidiary" means, for any Person, any corporation, partnership or
other entity of which at least a majority of the voting stock is at the time
directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.
"Termination Date" means May 31, 2003.
"Termination Event" means (a) a Reportable Event; (b) the filing of a
notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA or (c) the institution of proceedings to
terminate a Plan by the PBGC under Section 4042 of ERISA, or the appointment of
a trustee to administer any Plan.
"Total Assets" of an entity shall mean the total of all items and
categories of properties which, in accordance with GAAP, would be included in
determining total assets as shown on the assets side of such entity's balance
sheet (excluding any value for goodwill, trademarks, patents, copyrights,
organization expense, non-competition agreements and other similar intangible
items).
"Trademark Security Agreement" means the Trademark and Copyright
Collateral Assignment and Security Agreement to be executed by the Borrower and
certain Loan Parties in favor of the Lender substantially in the form of Exhibit
J.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
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Unless otherwise indicated, all accounting terms, ratios and measurements shall
be interpreted or determined in accordance with GAAP. References in this
Agreement to "Sections", "Articles", "Exhibits" and "Schedules" are to Sections,
Articles, exhibits and schedules herein and hereto unless otherwise indicated.
references in this Agreement to any document, instrument or agreement (a) shall
include all exhibits, schedules and other attachments thereto, (b) shall include
all documents, instruments or agreements issued or executed in replacement
thereof, to the extent permitted hereby and (c) shall mean such document,
instrument or agreement, or replacement or predecessor thereto, as amended,
supplemented, restated or otherwise modified from time to time to the extent
permitted hereby and in effect at any given time. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and plural, and pronouns stated in the masculine, feminine
or neuter gender shall include the masculine, the feminine and the neuter.
Unless explicitly set forth to the contrary, a reference to "Subsidiary" means a
Subsidiary of the Borrower or a Subsidiary of such Subsidiary and a reference to
an "Affiliate" means a reference to an Affiliate of the Borrower. Titles and
captions of Articles, Sections, subsections and clauses in this Agreement are
for convenience only, and neither limit nor amplify the provisions of this
Agreement. Unless otherwise indicated, all references to time are references to
Atlanta, Georgia time. All references in the Loan Documents to "reasonable
attorneys fees," "reasonable counsel fees" or similar words shall mean the
actual reasonable fees and disbursements of the applicable attorneys, and shall
not be deemed to be 15% of the outstanding Obligations or any other presumed or
fixed amount.
ARTICLE 2.-REVOLVING CREDIT FACILITY
SECTION 2.01. REVOLVING CREDIT ADVANCES.
(a) Generally Subject to the terms and conditions of this
Agreement, the Lender agrees to make loans ("Revolving Credit Advances") to the
Borrower from time to time during the period from the Effective Date through but
excluding the Termination Date; provided, however, that the maximum aggregate
principal amount of Revolving Credit Advances at any one time outstanding shall
not exceed the Revolving Commitment. Subject to the terms and conditions of this
Agreement, the Borrower may borrow, repay and reborrow Revolving Credit Advances
hereunder. The Revolving Credit Advances made by the Lender shall, in addition
to this Agreement, also be evidenced by the Note of the Borrower payable to the
order of the Lender in a principal amount equal to the amount of the Revolving
Commitment as originally in effect and otherwise duly completed.
(b) Requesting Revolving Credit Advances. The Borrower may request
Revolving Credit Advances hereunder in the minimum amount of $50,000 plus
integral multiples of $10,000 in excess thereof. The Borrower shall give the
Lender notice pursuant to a Notice of Borrowing or telephonic notice of each
borrowing of Revolving Credit Advances. Each Notice of Borrowing shall be
delivered to the Lender before 10:00 a.m. three Business Days prior to the date
of such borrowing. Any such telephonic notice shall include all information to
be specified in a written Notice of Borrowing and shall be promptly confirmed in
writing by the Borrower pursuant to a Notice of Borrowing sent to the Lender by
telecopy on the same day of the giving of such telephonic notice. Each Notice of
Borrowing or telephonic notice of each borrowing shall be irrevocable once given
and binding on the Borrower.
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(c) Disbursements of Revolving Credit Advance Proceeds. Provided
that the applicable conditions set forth in Article 4 for such borrowing are
fulfilled, no later than 2:00 p.m. on the date specified in the Notice of
Borrowing, the Lender will make available the proceeds of the Revolving Credit
Advance to be made by the Lender at the account specified by the Borrower in
such Notice of Borrowing.
(d) Records; Endorsement on Transfer. The date, amount and
interest rate of each Revolving Credit Advance made by the Lender to the
Borrower, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books. Prior to the transfer of any Note, the
Lender shall endorse such items on such Note or any allonge thereof; provided
that the failure of the Lender to make any such recordation or endorsement shall
not affect the obligations of the Borrower to make a payment when due of any
amount owing hereunder or under such Note in respect of the Revolving Credit
Advances evidenced by such Note.
(e) Obligation to Fund Conditioned on Availability of InterCept
Financing. The Borrower acknowledges that the Lender is not a commercial bank or
lending institution and that it must either borrow funds under the InterCept
Loan Agreement to make Revolving Credit Advances hereunder or, in its sole
discretion, make Revolving Credit Advances from any existing cash reserves. The
Borrower further acknowledges that the Lender's ability to borrow funds under
the InterCept Loan Agreement is subject to certain conditions contained therein
including that no default or event of default exists thereunder and that no
material adverse change (as may be determined by the lender (the "InterCept
Lender") under the InterCept Loan Agreement) in the business, operations, assets
or prospects of the Lender exist. Accordingly, the Lender shall not in any way
be liable for breach of contract, tort or any other "lender liability" or other
claim of any nature whatsoever by reason of the Lender's failure or inability to
make Revolving Credit Advances hereunder arising by reason of the InterCept
Lender's refusal, unwillingness or inability to make loans available to the
Lender under the InterCept Loan Agreement so long as the Lender uses its
commercially reasonable efforts to obtain such loans; provided, however, that if
the InterCept Lender is unwilling to make loans to the Lender by reason of the
occurrence of an event of default or material adverse change under the InterCept
Loan Agreement, the Lender shall have the right to obtain a waiver or amendment
with respect to, or otherwise deal with, such occurrence in its sole and
absolute discretion including, but not limited to, the right not to seek a
waiver or amendment with respect thereto; it being understood that, in the
exercise of commercially reasonable efforts to obtain loans, the Lender shall
not be obligated to pay additional fees or interest to the InterCept Lender to
obtain any such waiver or amendment and that it may (or may not) obtain any such
waiver or amendment upon whatever terms and conditions it desires (or not) to
negotiate. Further, in this connection, the obligation of the Lender to make
Revolving Credit Advances hereunder shall be suspended or terminated, as the
case may be, upon any suspension or termination of funding by the InterCept
Lender under the InterCept Loan Agreement. The Lender shall promptly notify the
Borrower of any such suspension and/or termination and the reasons therefor and
of the occurrence of any default or event of default under the InterCept Loan
Agreement. The Lender represents to the Borrower that, as of the date hereof, to
the knowledge of the Lender, no default or event of default under the InterCept
Loan Agreement exists. However, the Lender cannot give any assurance to the
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Borrower that no default or event of default under the InterCept Loan Agreement
or material adverse change of the Lender, will arise in the future.
SECTION 2.02. REPAYMENT OF REVOLVING CREDIT ADVANCES. The Borrower
shall repay the entire outstanding principal amount of, and all accrued but
unpaid interest on, and all other accrued but unpaid fees and charges with
respect to, the Revolving Credit Advances on the Termination Date.
SECTION 2.03. PREPAYMENTS.
(a) Optional. The Borrower may prepay any Revolving Credit Advance
in whole or in part at any time and from time to time without premium or
penalty.
(b) Mandatory.
(i) If at any time the aggregate principal amount of all
outstanding Revolving Credit Advances exceeds the Revolving Commitment,
the Borrower shall immediately pay to the Lender the amount of such
excess. Such payment shall be applied to pay all amounts of principal
outstanding on the Revolving Credit Advances in excess of the Revolving
Commitment.
(ii) The Borrower shall prepay an outstanding principal
amount of the Revolving Credit Advances, and the Revolving Commitment
shall be correspondingly immediately automatically and permanently
reduced, in an amount equal to 100% of the Net Proceeds of any Asset
Disposition (other than in connection with a disposal of Assets
permitted under Section 8.11 hereof or, in the case of a disposition of
the Shareholder Notes, the Borrower shall prepay the outstanding amount
of Revolving Credit Advances in an amount equal to 100% of the Net
Proceeds received upon such disposition, but the Revolving Commitment
shall not be permanently reduced). The Borrower shall make the required
mandatory prepayment hereunder on the date not later than three
calendar days after the receipt by the Borrower or such Subsidiary of
the Net Proceeds of such Asset Disposition (or, in the case any Net
Proceeds are not in the form of cash, or the date three calendar days
after the conversion of Net Proceeds into cash). In this connection,
neither the Borrower nor any Subsidiary shall engage in an Asset
Disposition without the consent of the Lender and, in any event, any
such Asset Disposition shall be for a consideration of at least 80% of
which shall be cash.
(iii) The Borrower shall prepay any outstanding principal
amount of the Revolving Credit Advances, and the Revolving Commitment
shall be correspondingly immediately, automatically and permanently
reduced, in an amount equal to 100% of the Net Proceeds of any issuance
of capital stock or other equity interests of the Borrower or any
Subsidiary other than (a) an issuance of capital stock or other equity
interests of the Borrower to the Borrower or a Subsidiary (b) an
issuance of capital stock or other equity interests of the Borrower
made in connection with an acquisition that is permitted under Section
8.04 or approved in writing by the Lender or (c) issuance by the
Borrower of Options exercisable for Common Stock pursuant to that
certain Netzee, Inc. 1999 Stock Option and Incentive Plan. The Borrower
shall make the required mandatory prepayment
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hereunder on the date not later than three calendar days after the
receipt by the Borrower or such Subsidiary of the Net Proceeds of such
issuance of capital stock.
SECTION 2.04. VOLUNTARY REDUCTIONS OF THE REVOLVING COMMITMENT. The
Borrower shall have the right to terminate or reduce the aggregate unused amount
of the Revolving Commitment at any time and from time to time upon not less than
5 Business Days prior written notice to the Lender of each such termination or
reduction. Any such notice shall specify the effective date and the amount of
any such reduction (which in the case of any partial reduction of the Revolving
Commitment shall not be less than $100,000 and integral multiples of $50,000 in
excess of that amount) and shall be irrevocable once given and effective only
upon receipt by the Lender. The Revolving Commitment once terminated or reduced
may not be increased or reinstated.
ARTICLE 3. INTEREST, FEES AND OTHER PROVISIONS
SECTION 3.01. RATES AND PAYMENT OF INTEREST ON REVOLVING CREDIT
ADVANCES.
(a) Rates. The Borrower promises to pay to the Lender interest on
the unpaid principal amount of each Revolving Credit Advance made by the Lender
for the period from and including the date of the making of such Revolving
Credit Advance to but excluding the date such Revolving Credit Advance shall be
paid in full, at a rate per annum equal to the Prime Rate plus two percent
(2.00%). Notwithstanding the foregoing, upon the occurrence and during the
continuance of an Event of Default, the Borrower shall pay to the Lender
interest at the Post-Default Rate on the outstanding principal amount of all
Revolving Credit Advances.
(b) Payment of Interest. Accrued interest on each Revolving Credit
Advance shall be payable (i) quarterly on the first Business Day of each
calendar quarter; (ii) upon the payment or prepayment of such Revolving Credit
Advance (but only on the principal amount so paid or prepaid) and (iii) on the
Termination Date. Interest payable at the Post-Default Rate shall be payable
from time to time on demand. All determinations by the Lender of an interest
rate hereunder shall be presumptively correct for all purposes, absent manifest
error.
SECTION 3.02. UNUSED FACILITY FEE. In consideration of the credit
facility made available to the Borrower hereunder, the Borrower agrees to pay to
the Lender an unused facility fee of one-quarter of one percent (1/4%) per annum
on the daily average unused amount of the Revolving Commitment during the period
this facility should be outstanding. Such commitment fee shall be payable
monthly in arrears on the first Business Day of each month.
SECTION 3.03. PAYMENTS. Unless otherwise set forth herein, all payments
to the Lender shall be made by the Borrower in United States dollars in
immediately available funds not later than 2:00 p.m. on the due date thereof to
the Lending Office. The Borrower shall, at the time of making each payment under
this Agreement or the Note, specify to the Lender the amounts payable by the
Borrower hereunder to which such payment is to be applied. If the due date of
any payment under this Agreement or any other Loan Document would otherwise fall
on a day which is not a Business Day such date shall be extended to the next
succeeding Business Day and interest shall be payable for the period of such
extension The payment obligations of the
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Borrower hereunder are absolute and unconditional and not subject to any offset,
deduction, counterclaim or withholding of any kind whatsoever.
SECTION 3.04. COMPUTATIONS. Unless otherwise expressly set forth
herein, any accrued interest on any Revolving Credit Advance and any Fees due
hereunder shall be computed on the basis of a year of 360 days and the actual
number of days elapsed.
SECTION 3.05. USURY. In no event shall the amount of interest due or
payable on the Revolving Credit Advances or other Obligations exceed the maximum
rate of interest allowed by Applicable Law and, if any such payment is paid by
the Borrower or received by the Lender, then such excess sum shall be credited
as a payment of principal, unless the Borrower shall notify the Lender in
writing that the Borrower elects to have such excess sum returned to it
forthwith. It is the express intent of the parties hereto that the Borrower not
pay and the Lender not receive, directly or indirectly, in any manner
whatsoever, interest in excess of that which may be lawfully paid by the
Borrower under Applicable Law.
SECTION 3.06. AGREEMENT REGARDING INTEREST AND CHARGES. The parties
hereto hereby agree and stipulate that the only charge imposed upon the Borrower
for the use of money in connection with this Agreement is and shall be the
interest specifically described in Section 3.01(a). Notwithstanding the
foregoing, the parties hereto further agree and stipulate that all facility
fees, underwriting fees, default charges, late charges, funding or "breakage"
charges, increased cost charges, attorneys' fees and reimbursement for costs and
expenses paid by the Lender to third parties or for damages incurred by the
Lender, are charges made to compensate the Lender for underwriting or
administrative services and costs or losses performed or incurred, and to be
performed or incurred, by the Lender in connection with this Agreement and shall
under no circumstances be deemed to be charges for the use of money pursuant to
Official Code of Georgia Annotated Sections 7-4-2 and 7-4-18. All charges other
than charges for the use of money shall be fully earned and nonrefundable when
due.
SECTION 3.07. TAXES. All payments by the Borrower of principal of, and
interest on, the Loans and all other Obligations shall be made free and clear of
and without deduction for any present or future excise, stamp or other taxes,
fees, duties, levies, imposts, charges, deductions, withholdings or other
charges of any nature whatsoever imposed by any taxing authority, but excluding
(i) franchise and excise taxes, (ii) any taxes (other than withholding taxes)
that would not be imposed but for a connection between the Lender and the
jurisdiction imposing such taxes (other than a connection arising solely by
virtue of the activities of the Lender pursuant to or in respect of this
Agreement or any other Loan Document), (iii) any withholding taxes payable with
respect to payments hereunder or under any other Loan Document under Applicable
Law in effect on the Agreement Date, and (iv) any taxes imposed on or measured
by the Lender's assets, net income, receipts or branch profits (such
non-excluded items being collective called "Taxes"). If any withholding or
deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any Applicable Law, then the Borrower will (i)
pay directly to the relevant Governmental Authority the full amount required to
be so withheld or deducted; (ii) promptly forward to the Lender an official
receipt or other documentation satisfactory to the Lender evidencing such
payment to such Governmental Authority; and (iii) pay to the Lender such
additional amount or amounts as is necessary to ensure that the net amount
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actually received by the Lender will equal the full amount that the Lender would
have received had no such withholding or deduction been required.
ARTICLE 4. CONDITIONS PRECEDENT
SECTION 4.01. CONDITIONS PRECEDENT TO INITIAL REVOLVING CREDIT ADVANCE.
The obligation of the Lender to make the initial Revolving Credit Advance is
subject to the condition precedent that the Lender shall have received all of
the following, each of which shall be satisfactory in form and substance to the
Lender and its counsel:
(a) Counterparts of this Agreement executed by each of the parties
hereto;
(b) The Note executed and delivered by the Borrower;
(c) Favorable UCC, tax, judgment and lien search reports with
respect to the Borrower and each Subsidiary, in all necessary or appropriate
jurisdictions and under all legal and appropriate trade names indicating that
there are no prior liens on any of the Collateral other than Permitted Liens or
Liens to be terminated prior to the Effective Date;
(d) The Security Agreement executed by the Borrower and the Loan
Parties;
(e) The Guaranty executed by each Subsidiary of the Borrower;
(f) The Pledge Agreement executed by the Borrower and any
Subsidiary as applicable, and all certificates, if any, representing all of the
issued and outstanding capital stock and other equity interest of each
Subsidiary, together with stock powers duly endorsed in blank relating to all
such certificates;
(g) Uniform Commercial Code financing statements naming the
Borrower and each Subsidiary as debtor, the Lender as secured party, and
covering the Collateral described in the Security Agreement and the Pledge
Agreement, as applicable, to be filed in each jurisdiction where the filing of
such financing statements may be necessary or appropriate as determined by the
Lender;
(h) a certificate executed by the chief executive officer and
chief financial officer of the Borrower, stating that: (a) on such date, and
after giving effect to the transactions contemplated hereby, no Default or Event
of Default has occurred and is continuing and (b) the representations and
warranties set forth in Article 5 are true and correct in all material respects
on and as of such date with the same effect as though made on and as of such
date.
(i) A signed opinion of ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special
counsel to the Loan Parties, addressed to the Lender, substantially in the form
of Exhibit F and dated the date hereof;
(j) The articles or certificate of incorporation or organization
of each Loan Party certified as of a recent date by the Secretary of State of
the State of formation of such Loan Party;
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(k) A certificate of good standing or certificate of similar
meaning with respect to each Loan Party issued as of a recent date by the
Secretary of State of the State of formation of each such Loan Party and
certificates of qualification to transact business or other comparable
certificates issued as of a recent date by each Secretary of State of each state
in which the failure to be so qualified or authorized reasonably could be
expected to have a Material Adverse Effect such Loan Party is required to be so
qualified;
(l) A certificate of incumbency signed by the Secretary or
Assistant Secretary (or other individual performing similar functions) of each
Loan Party with respect to each of the officers of such Loan Party authorized to
execute and deliver the Loan Documents to which such Loan Party is a party, and
in the case of the Borrower, authorized to give Notices of Borrowing;
(m) Copies certified by the Secretary or Assistant Secretary of
each Loan Party (or other individual performing similar functions) of the
by-laws of such Loan Party;
(n) Certified copies (certified by the respective Secretary or
Assistant Secretary of each Loan Party, or other individual performing similar
functions) of all corporate or other necessary action taken by each Loan Party
to authorize the execution, delivery and performance of the Loan Documents to
which it is a party;
(o) A Notice of Borrowing for the initial Revolving Credit
Advance;
(p) Copies of the financial statements described in Section
5.01(i) and meeting the requirements thereof;
(q) Copies of each of the policies of insurance covering any of
the tangible insurable Collateral or a certificate of insurance summarizing the
coverage provided thereby in form and substance satisfactory to the Lender,
together with loss payable clauses in favor of the Lender, which comply with the
terms of the relevant Loan Documents;
(r) Copies of all consents, approvals, authorizations,
registrations or filings required to be made or obtained by the Borrower and its
Subsidiaries in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby;
(s) The Fees, if any, then due under Article 3, and any other Fees
payable to the Lender and its counsel;
(t) Evidence satisfactory to the Lender of the release and
termination of (or agreement to release and terminate) all liens other than
Permitted Liens;
(u) The Patent Security Agreement executed by the Borrower and
any Subsidiary as applicable;
(v) The Trademark Security Agreement executed by the Borrower
and any Subsidiary as applicable; and
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(w) Such other documents and instruments as the Lender may reasonably
request.
SECTION 4.02. CONDITIONS PRECEDENT TO ALL REVOLVING CREDIT ADVANCES.
The obligation of the Lender to make any Revolving Credit Advance is
subject to the further condition precedent that, as of the date of the making of
such Revolving Credit Advance and after giving effect thereto: (a) no Default or
Event of Default shall have occurred and be continuing, whether or not as a
result thereof, (b) the representations and warranties made or deemed made by
the Borrower and each other Loan Party in the Loan Documents to which it is a
party, shall be true and correct on and as of the date of the making of such
Revolving Credit Advance with the same force and effect as if made on and as of
such date except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such representations
and warranties shall have been true and accurate on and as of such earlier date)
and (c) no material adverse change in the business, properties, condition
(financial or otherwise), results of operations or performance of the Borrower
and its Subsidiaries, taken as a whole, (all as reasonably determined by the
Lender) since the date hereof has occurred or is continuing.
ARTICLE 5.-REPRESENTATIONS AND WARRANTIES
SECTION 5.01. REPRESENTATIONS AND WARRANTIES. The Borrower represents
and warrants to the Lender as follows:
(a) Organization; Power; Qualification. Each Loan Party is a
corporation, duly organized, validly existing and in good standing under the
jurisdiction of its incorporation, has the power and authority to own its
properties and to carry on its business as now being and hereafter proposed to
be conducted and is duly qualified and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization and where the failure to
be so qualified or authorized reasonably could be expected to have, in each
instance, a Material Adverse Effect.
(b) Ownership Structure. Schedule 5.01.(b) correctly sets forth
(i) the organizational structure, ownership interests and correct legal name of
each Loan Party (other than the ownership interests of the Borrower), (ii) all
of its respective Subsidiaries and the correct legal name of each Subsidiary,
and (iii) the shareholders holding equity interests in such Loan Party and their
percentage equity or voting interest in such Loan Party (other than the
shareholders holding equity interests in the Borrower). Except as set forth in
such Schedule:
(i) neither such Loan Party (other than the Borrower) has
issued to any third party any securities convertible into such Loan
Party's capital stock or any options, warrants or other rights to
acquire any securities convertible into such capital stock, and
(ii) the outstanding stock and securities of or other
equity interests, as applicable, in such Loan Party (other than the
Borrower) are owned by the Persons indicated on such Schedule, free and
clear of all Liens, warrants, options and rights of others of any kind
whatsoever.
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(c) Authorization of Loan Documents and Borrowings/Compliance with
Laws/Contravention with Other Documents. Each Loan Party has the right and
power, and has taken all necessary corporate action to authorize it, to execute,
deliver and perform the Loan Documents to which it is a party in accordance with
their respective terms. The Loan Documents have been duly executed and delivered
by the duly authorized officers of the respective Loan Party a party thereto,
and each is a legal, valid and binding obligation of each Loan Party a party
thereto enforceable in accordance with its terms. Each Loan Party is in
compliance with all Applicable Laws binding upon it and its properties,
including, without limitation any state or federal banking law, rule and
regulation relating to the activities of any Loan Party except for any such
failure to comply which could not reasonably be expected to have a Material
Adverse Effect. The execution and delivery by the each Loan Party of the Loan
Documents to which it is a party do not require any Governmental Approval (other
than filings and recordations contemplated by the Loan Documents) and do not
conflict with, and will not result in a breach of, any material contract,
agreement or other document or instrument to which any Loan Party is a party or
with the Articles of incorporation or by-laws of any Loan Party.
(d) Liens. None of the properties and assets of the Borrower or
any Loan Party is, as of the date hereof, subject to any Lien, except Permitted
Liens.
(e) Debt. Schedule 5.01(e) is a complete and correct listing of
all Debt of the Borrower and each Loan Party. As of the date hereof, each Loan
Party has performed and is in compliance with all of the terms of such Debt and
all instruments and agreements relating thereto, and no default or event of
default, or event or condition which with the giving of notice, the lapse of
time, a determination of materiality, the satisfaction of any other condition or
any combination of the foregoing, would constitute such a default or event of
default, exists with respect to such Debt.
(f) Litigation. Except as set forth on Schedule 5.01(f), as of the
date hereof, there are no actions, suits or proceedings pending (nor, to the
knowledge of any Loan Party, threatened) against or in any other way relating
adversely to or affecting any Loan Party or any of its respective property in
any court or before any arbitrator of any kind or before or by any governmental
body which, if adversely determined, reasonably could be expected to have a
Material Adverse Effect, and there are no strikes, slow downs, work stoppages or
walkouts or other labor disputes in progress or threatened relating to any Loan
Party.
(g) Tax Returns and Payments/Filings. All material federal, state
and other taxes, assessments and other governmental charges or levies upon any
Loan Party and its properties, income, profits and assets which are due and
payable have been paid. Each Loan Party has filed all federal and state tax
returns which are required to be filed under Applicable Law. None of the United
States income tax returns of any Loan Party are under audit as of the date
hereof. As of the date hereof, no tax liens have been filed and no claims are
being asserted with respect to any such taxes. All charges, accruals and
reserves on the books of each Loan Party and each of its Subsidiaries in respect
of any taxes or other governmental charges are in accordance with GAAP.
(h) Financial Statements. The Borrower has furnished to the Lender
copies of the consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at December 31, 1999, and the related statements of operations
and cash flows for the periods covered thereby,
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each certified by the President or Chief Financial Officer of the Borrower to
be, in his or her opinion, in compliance with the next sentence. Such balance
sheet and statements (including in each case related schedules and notes) are
complete and correct and present fairly in all material respects, in accordance
with GAAP consistently applied throughout the periods involved, the consolidated
financial position of the Borrower and its consolidated Subsidiaries as at their
respective dates and the results of operations and the cash flows of the
Borrower and its consolidated Subsidiaries for such periods, subject to normal
year-end audit adjustments and the absence of notes. None of the Borrower nor
any of its consolidated Subsidiaries has on the date hereof any material
contingent liabilities, liabilities, liabilities for taxes, unusual or long-term
commitments or unrealized or forward anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in said
financial statements. From December 31, 1999 to the date hereof, there has been
no material adverse change in the consolidated financial condition, operations,
business or prospects of the Borrower and its consolidated Subsidiaries taken as
a whole. Each of the Loan Parties is Solvent.
(i) ERISA. As of the date hereof:
(i) No Other Plans. No Loan Party, nor any ERISA
Affiliate maintains or contributes to, or has any obligation under, any
Plan other than those identified on Schedule 5.01(j). The Borrower has
provided the Lender accurate and complete copies of all contracts,
agreements and documents described on such Schedule.
(ii) ERISA and Internal Revenue Code Compliance and
Liability. Each Loan Party, and each ERISA Affiliate is in compliance
with all applicable provisions of ERISA and the regulations and
published interpretations thereunder with respect to all Plans except
where failure to comply would not result in a material liability to any
Loan Party and except for any required amendments for which the
remedial amendment period as defined in Section 401(b) of the Internal
Revenue Code has not yet expired. Each Plan that is intended to be
qualified under Section 401(a) of the Internal Revenue Code has been
determined by the Internal Revenue Service to be so qualified, and each
trust related to such plan has been determined to be exempt under
Section 501(a) of the Internal Revenue Code. No material liability has
been incurred by any Loan Party or ERISA Affiliate which remains
unsatisfied for any taxes or penalties with respect to any Plan or any
Multiemployer Plan.
(iii) Funding. No Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the
Internal Revenue Code) been incurred (without regard to any waiver
granted under Section 412 of the Internal Revenue Code), nor has any
funding waiver from the Internal Revenue Service been received or
requested with respect to any Plan, nor has any Loan Party or any ERISA
Affiliate failed to make any contributions or to pay any amounts due
and owing as required by Section 412 of the Internal Revenue Code,
Section 302 of ERISA or the terms of any Plan prior to the due dates of
such contributions under Section 412 of the Internal Revenue Code or
Section 302 of ERISA, nor has there been any event requiring any
disclosure under Section 4041(c)(3)(C), 4063(a) or 4068(f) of ERISA
with respect to any Plan.
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(iv) Prohibited Transactions and Payments. No Loan Party
nor any ERISA Affiliate has: (1) engaged in a nonexempt prohibited
transaction described in Section 406 of ERISA or Section 4975 of the
Internal Revenue Code except where such engagement would not result in
any material liability to any Loan Party; (2) incurred any liability to
the PBGC which remains outstanding other than the payment of premiums
and there are no prepayments which are due and unpaid; (3) failed to
make a required contribution or payment to a Multiemployer Plan; or (4)
failed to make a required installment or other required payment under
Section 412 of the Internal Revenue Code.
(v) No ERISA Termination Event. No Termination Event has
occurred or is reasonably expected to occur.
(vi) ERISA Litigation. No material proceeding, claim,
lawsuit and/or investigation is existing or, to the best knowledge any
Loan Party after due inquiry, threatened concerning or involving any
(1) employee welfare benefit plan (as defined in Section 3(1) of ERISA)
currently maintained or contributed to by any Loan Party, or any ERISA
Affiliate other than a claim made in the ordinary course of the
operation of such Plan, (2) Plan or (3) Multiemployer Plan.
(j) Hazardous Materials. Each of the Loan Parties has obtained all
Governmental Approvals which are required under Environmental Laws and is in
compliance with all terms and conditions of such Governmental Approvals which
the failure to obtain or to comply with could reasonably be expected to have a
Material Adverse Effect. Each of the Loan Parties is also in compliance with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables contained in the
Environmental Laws the failure to comply with which could reasonably be expected
to have a Material Adverse Effect. Except for any of the following matters that
could not be reasonably expected to have a Material Adverse Effect, the Loan
Parties are not aware of, and have not received notice of, any past, present, or
future events, conditions, circumstances, activities, practices, incidents,
actions, or plans which, with respect to the Loan Parties, may interfere with or
prevent compliance or continued compliance with Environmental Laws, or may give
rise to any common-law or legal liability, or otherwise form the basis of any
claim, action, demand, suit, proceeding, hearing, study, or investigation, based
on or related to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling or the emission, discharge, release or
threatened release into the environment, of any pollutant, contaminant,
chemical, or industrial, toxic, or other Hazardous Material.
(k) Affiliate Transactions; Restrictions on Dividend, Etc. Except
as permitted by Section 8.09 or as set forth on Schedule 5.01(k), none of the
Loan Parties is subject to or bound by any agreement or arrangement (whether
oral or written) with any Affiliate of any of the Loan Parties. None of the Loan
Parties is a party to any agreement or arrangement which contains or imposes
encumbrances or restrictions prohibited by Section 8.05.
(l) Absence of Defaults. No Loan Party is in default under its
articles of incorporation or its bylaws, and no event has occurred, which has
not been remedied, cured or waived: (i) which constitutes a Default or an Event
of Default; or (ii) which constitutes, or which with the passage of time, the
giving of notice or any combination of the foregoing, would
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constitute, a default or event of default by such Loan Party under any agreement
(other than this Agreement) or judgment, decree or order to which such Loan
Party is a party or by which such Loan Party or any of its properties may be
bound where such default or event of default could reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.
(m) Title to Properties/Necessary Agreements, Licenses,
Permits/Adverse Contracts. Each Loan Party (i) has good and marketable title to
its assets and properties except as disclosed in the consolidated financial
statements of the Borrower delivered to the Lender, (ii) is in compliance with
all real and personal property leases where the failure to so be in compliance
would have a Material Adverse Effect and (iii) possesses all necessary and
appropriate agreements, contracts, franchise arrangements, patents, trademarks,
licenses, permits and other intellectual property rights free from burdensome or
undue restriction and (iv) has not infringed upon or otherwise violated any
trademark, patent, license or other intellectual property agreement where such
infringement would have a Material Adverse Effect. None of the Loan Parties and
none of their respective Subsidiaries has assumed liability under or is a party
to nor is it or any of its property subject to or bound by any forward purchase
contract, futures contract, covenant not to compete, unconditional purchase,
take or pay or other agreement which restricts its ability to conduct its
business and, either individually or in the aggregate, has a Material Adverse
Effect or could reasonably be expected to have a Material Adverse Effect.
(n) Use of Proceeds. All proceeds of the Loans will be used only
in accordance with Section 6.05.
(o) Investment Company; Public Utility Holding Company. No Loan
Party is (i) an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
(ii) a "holding company" or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or (iii) subject to any other Applicable Law which purports to
regulate or restrict its ability to borrow money or to consummate the
transactions contemplated by this Agreement or to perform its obligations under
any Loan Document to which it is a party.
(p) Intellectual Property. Each Loan Party owns, is licensed to
use or otherwise has the legal right to use, all patents, trademarks, trade
names, copyrights, technology, know-how and processes used in or necessary for
the conduct of its business as currently conducted that are material to the
condition (financial or other), business or operations of such Person
(collectively called "Intellectual Property"). All such Intellectual Property
existing as of the date hereof is identified on Schedule 5.01(q) and fully
protected and/or duly and properly registered, filed or issued in the
appropriate office and jurisdictions for such registrations, filing or
issuances. All Intellectual Property that is registered or for which application
for registration is pending is identified on such Schedule. Except as disclosed
in such Schedule, no material claim has been asserted by any Person with respect
to the use of any Intellectual Property, or challenging or questioning the
validity or effectiveness of any Intellectual Property. Except as disclosed in
such Schedule, the use of such Intellectual Property by the Loan Parties, does
not infringe on the rights of any Person, subject to such claims and
infringements as do not, in the aggregate, give rise to any liabilities on the
part of the Loan Parties that could reasonably be expected to have a Material
Adverse Effect.
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26
(q) Accuracy and Completeness of Information. All written
information, reports and other papers and data furnished to the Lender by, on
behalf of, or at the direction of, the any Loan Party were, at the time the same
were so furnished, complete and correct in all material respects, to the extent
necessary to give the recipient a true and accurate knowledge of the subject
matter, or, in the case of financial statements, present fairly in all material
respects, in accordance with GAAP consistently applied throughout the periods
involved, the financial position of the Persons involved as at the date thereof
and the results of operations for such periods. No fact is known to the Borrower
which has had, or may in the future have (so far as the Borrower can reasonably
foresee), a Material Adverse Effect which has not been set forth in the
financial statements referred to in Section 5.01(i) or in such information,
reports or other papers or data or otherwise disclosed in writing to the Lender
prior to the Effective Date. No document furnished or written statement made to
the Lender in connection with the negotiation, preparation or execution of this
Agreement or any of the other Loan Documents contains or will contain any untrue
statement of a fact material to the creditworthiness of any Loan Party or omits
or will omit to state a material fact necessary in order to make the statements
contained therein not misleading.
(r) Margin Stock. No Loan Party is engaged principally, or as one
of its important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of buying or carrying
"margin stock" within the meaning of Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
SECTION 5.02. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC.
All statements contained in any certificate, financial statement or
other instrument delivered by or on behalf of any Loan Party to the Lender
pursuant to or in connection with this Agreement or any of the other Loan
Documents (including, but not limited to, any such statement made in or in
connection with any amendment thereto or any statement contained in any
certificate, financial statement or other instrument delivered by or on behalf
of the Loan Parties prior to the Agreement Date and delivered to the Lender in
connection with closing the transactions contemplated hereby) shall constitute
representations and warranties made by the Borrower under this Agreement. All
representations and warranties made under this Agreement shall be deemed to be
made at and as of the date hereof and the Effective Date and at and as of the
date of any borrowing, except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date) and except for changes in factual circumstances specifically
permitted hereunder.
ARTICLE 6. - AFFIRMATIVE COVENANTS
For so long as any of the Obligations remains unpaid or unperformed, or
this Agreement is in effect, the Borrower shall:
SECTION 6.01. PRESERVATION OF CORPORATE EXISTENCE AND SIMILAR MATTERS.
Preserve and maintain, and cause each other Loan Party to preserve and maintain,
its corporate existence, rights, franchises, licenses and privileges in the
jurisdiction of its incorporation and qualify and remain qualified as a foreign
corporation and authorized to do business in each jurisdiction in
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which the character of its properties or the nature of its businesses require
such qualification or authorization, except to the extent that the failure to
preserve any such rights, franchises, licenses and privileges could not
reasonably be expected to result in a Material Adverse Effect, and except to the
extent that any failure to preserve and maintain it corporate existence results
from the merger of a Loan Party into another Loan Party permitted by Section
8.08.
SECTION 6.02. COMPLIANCE WITH APPLICABLE LAW AND MATERIAL CONTRACTS.
Comply with, and cause each other Loan Party to comply with, (a) all Applicable
Law, including the obtaining of all Governmental Approvals required for the
conduct of its business and (b) all terms and conditions of all material
contracts to which it is a party, except in each case to the extent that the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 6.03. MAINTENANCE OF PROPERTY/CONDUCT OF BUSINESS. In addition
to, and not in derogation of, the requirements of any of the Loan Documents,
protect and preserve, and cause each other Loan Party to protect and preserve,
all its respective properties, and maintain in good repair, working order and
condition all of its respective tangible properties, except to the extent that
the failure to do so would not have a Material Adverse Effect. Each Borrower
shall engage, and shall cause each Loan Party to engage, only in businesses in
substantially the same field as the businesses conducted by it on the date
hereof, businesses reasonably related thereto and reasonable extensions thereof.
SECTION 6.04. PAYMENT OF TAXES AND CLAIMS. Pay or discharge when due,
and cause each other Loan Party to pay or discharge when due: (a) all taxes,
assessments and governmental charges or levies imposed upon it or upon any
properties belonging to the Borrower or such other Loan Party and (b) all lawful
claims of materialmen, mechanics, carriers, warehousemen and landlords for
labor, materials, supplies and rentals which, if unpaid, might become a Lien on
any properties of any Loan Party; provided, however, that this Section shall not
require the payment or discharge of any such tax, assessment, charge, levy or
claim which is being contested in good faith by appropriate proceedings which
operate to suspend the collection thereof and for which adequate reserves have
been established on the books of such Loan Party in accordance with GAAP.
SECTION 6.05. USE OF PROCEEDS. Use the proceeds of the Revolving Credit
Advances for their general corporate purposes in the ordinary course of business
of the Borrower. The Borrower shall not, directly or indirectly, use any part of
such proceeds to purchase or carry, or to reduce or retire or refinance any
credit incurred to purchase or carry, any margin stock (within the meaning of
Regulation T, U or X of the Board of Governors of the Federal Reserve System) or
to extend credit to others for the purpose of purchasing or carrying any such
margin stock.
SECTION 6.06. ERISA. Fund, and cause each of the other Loan Parties to
fund, all current service pension liabilities as they are incurred by the
Borrower or such other Loan Party under the provisions of all Plans from time to
time in effect, and comply in all material respects, and cause each of the other
Loan Parties to comply, with all applicable provisions of ERISA with respect to
all Plans.
SECTION 6.07. INSPECTION OF BOOKS, RECORDS, PROPERTIES. Allow the
Lender, and cause each other Loan Party to allow the Lender, during normal
business hours and upon reasonable
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prior notice, to inspect the books, records and properties of the Borrower and
each other Loan Party and to discuss the business and financial affairs of the
Borrower and each other Loan Party with executive officers of the Borrower or
such other Loan Party. Maintain, and cause each Loan Party to maintain, books
and records pertaining to its business operations in such detail, form and scope
as is consistent with good business practice.
SECTION 6.08. INSURANCE. In addition to, and not in derogation of, the
requirements of any of the other Loan Documents, maintain, and cause each Loan
Party to maintain, insurance with financially sound and reputable insurance
companies against such risks and in such amounts as is customarily maintained by
similar businesses or as may be required by Applicable Law, and from time to
time deliver to the Lender upon its request a detailed list, together with
copies of all policies of the insurance then in effect, stating the names of the
insurance companies, the amounts and rates of the insurance, the dates of the
expiration thereof and the properties and risks covered thereby. The Borrower
shall provide written notice to the Lender of the occurrence of any of the
following events within five Business Days after the occurrence of such event:
any asset or property owned or used by the Loan Parties and having a value in
excess of $150,000 is (i) materially damaged or destroyed, or suffers any other
loss, or (ii) is condemned, confiscated or otherwise taken, in whole or in part,
or the use thereof is otherwise diminished so as to render impracticable or
unreasonable the use of such asset or property for the purposes to which such
asset or property were used immediately prior to such condemnation, confiscation
or taking, by exercise of the powers of condemnation or eminent domain or
otherwise, and in either case the amount of the damage, destruction, loss or
diminution in value which is in excess of $150,000 (collectively, a "Casualty
Loss").
SECTION 6.09. ENVIRONMENTAL MATTERS. Comply, and cause all Loan Parties
to comply, with all Environmental Laws the failure with which to comply would
have a Material Adverse Effect. If any Loan Party shall (a) receive notice that
any violation of any Environmental Law may have been committed or is about to be
committed by such Person, (b) receive notice that any administrative or judicial
complaint or order has been filed or is about to be filed against the Loan Party
alleging violations of any Environmental Law or requiring the Loan Party to take
any action in connection with the release of Hazardous Materials or (c) receive
any notice from a Governmental Authority or private party alleging that the Loan
Party may be liable or responsible for costs associated with a response to or
cleanup of a release of a Hazardous Materials or any damages caused thereby, and
such notices, individually or in the aggregate, reasonably could be expected to
have a Material Adverse Effect, the Borrower shall provide the Lender with a
copy of such notice within 30 days after the receipt thereof by the Loan Party.
The Borrower shall promptly take all actions necessary to prevent the imposition
of any Liens on any of their respective properties arising out of or related to
any Environmental Laws.
ARTICLE 7. - INFORMATION
For so long as any of the Obligations remains unpaid or unperformed, or
this Agreement is in effect, the Borrower will furnish to the Lender:
SECTION 7.01. FINANCIAL STATEMENTS, COMPLIANCE CERTIFICATE AND INCOME
TAX RETURNS.
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(a) Audited Year-End Statements. As soon as available and in any
event within 90 days after the end of each fiscal year of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such fiscal year and the related consolidated statements of operations and cash
flows of the Borrower and its Subsidiaries for such fiscal year with any
supporting schedules, setting forth in comparative form the figures as at the
end of and for the previous fiscal year, all of which shall be certified by (i)
the chief financial officer of the Borrower, in his or her opinion, to present
fairly, in all material respects and in accordance with GAAP, the consolidated
financial position of the Borrower and its Subsidiaries as at the date thereof
and the consolidated result of operations for such period and (ii) the
Borrower's current independent certified public accountants or other independent
certified public accountants of recognized national standing reasonably
acceptable to the Lender, whose certificate shall be unqualified and in scope
and substance reasonably satisfactory to the Lender and who shall have
authorized the Borrower to deliver such financial statements and certification
thereof to the Lender pursuant to this Agreement; provided, however, the
delivery of the Borrower's annual filings on Form 10-K made with the Securities
and Exchange Commission, or any successor agency, shall satisfy this
requirement.
(b) Quarterly Unaudited Statements. As soon as available and in
any event within 45 days after the close of each of the first, second and third
fiscal quarters of the Borrower, the unaudited consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries as at the end of such period
and the related consolidated and consolidating statements of operations and
consolidated statements of cash flows of the Borrower and its Subsidiaries for
such period, setting forth in each case in comparative form the figures for the
corresponding periods of the previous fiscal year, all of which shall be
certified by the chief financial officer of the Borrower in his or her opinion,
to present fairly, in accordance with GAAP, the consolidated and consolidating,
as applicable, financial position of the Borrower and its Subsidiaries as at the
date thereof and the results of operations for such period (subject to normal
year-end audit adjustments and absence of full footnote disclosures); provided,
however, the delivery of the Borrower's quarterly filings on Form 10-Q made with
the Securities and Exchange Commission, or any successor agency, shall satisfy
this requirement.
(c) Compliance Certificate. Simultaneously with the delivery of
each set of financial statements referred to in the immediately preceding
clauses (a) and (b), a certificate of the chief financial officer of the
Borrower substantially in the form of Exhibit G (i) setting forth in reasonable
detail the calculations required to establish whether the Borrower was in
compliance with the requirements of Section 8.01 on the date of such financial
statements, and (ii) stating whether any Default or Event of Default exists on
the date of such certificate and, if any Default or Event of Default then
exists, setting forth the details thereof and the action which the Borrower is
taking or propose to take with respect thereto.
(d) Income Tax Returns. As soon as available and in any event
within 30 days after their filing, complete copies of all federal income tax
returns filed by the Borrower and its Subsidiaries, each of which shall be
certified by the chief financial officer of each of the Borrower and its
Subsidiaries to be true, complete and correct copies of such income tax returns.
If any Loan Party shall file an extension request relating to the filing of any
federal income tax return, such Borrower shall deliver a copy of such extension
request to the Lender within 30 days of its filing.
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(e) Reports. Promptly upon transmission or receipt thereof, copies
of all filings and registrations with, and reports to or from, the Securities
and Exchange Commission, or any successor agency, and copies of all publicly
available financial statements, proxy statements, waivers, amendments or other
modifications which could have an adverse effect on the Borrower or any other
Loan Party, notices of non-compliance or default and reports as the Borrower or
any other Loan Party may send to its shareholders.
SECTION 7.02. DEFAULT; NOTICES UNDER OTHER AGREEMENTS. Prompt notice of
the occurrence of (a) any Default or Event of Default; (b) any default or event
of default, or event or condition which with the giving of notice, the lapse of
time, or both, would constitute such a default or event of default, with respect
to any Debt of any of the Loan Parties or (c) any material amendment to the
Articles of Incorporation or bylaws of any Loan Party.
SECTION 7.03. LITIGATION; JUDGMENT. Prompt written notice of (a) any
action, suit, claim or proceeding instituted against the Borrower or any other
Loan Party seeking damages in excess of $250,000 or which, if adversely
determined, would have a Material Adverse Effect or (b) any order, judgment or
decree in excess of $100,000 having been entered against any other Loan Party or
any of its properties or assets.
SECTION 7.04. MATERIAL CHANGE. Prompt written notice of any change in
the senior management or the business, properties, condition (financial or
otherwise), results of operations or performance of the Borrower or any
Subsidiary which has had, or could reasonably be expected to have, a Material
Adverse Effect.
SECTION 7.05. OTHER NOTICES. Prompt written notice of (a) any
notification of a material violation of any law or regulation or any inquiry
with respect thereto shall have been received by the Borrower or any other Loan
Party from any Governmental Authority; (b) the proposed sale, transfer or other
disposition of any material assets of any Loan Party to any Person; (c) any
strikes, slow downs, work stoppages or walkouts or other labor disputes in
progress or threatened relating to the Borrower, or any other Loan Party; or (d)
the suspension, termination or revocation or non-renewal of any permit material
to any Loan Party's business.
SECTION 7.06. DEBT INSTRUMENTS. Promptly upon request by the Lender, a
copy of each of the documents, instruments and agreements evidencing any of the
Debt described on Schedule 5.01(e).
SECTION 7.07. ERISA.
As soon as possible, and in any event within ten days after any Loan
Party knows or has reason to know that any of the events or conditions specified
below have occurred or exist, a statement signed by the chief financial officer
of the Borrower setting forth details respecting such event or condition and the
action, if any, which any Loan Party or its ERISA Affiliates proposes to take
with respect thereto (and a copy of any report or notice required to be filed
with or given to the PBGC by any Loan Party or any of its ERISA Affiliates as of
such date with respect to such event or condition):
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(a) any reportable event, as defined in Section 4043(b) of ERISA
and the regulations issued thereunder, with respect to a Plan of any Loan Party
or any of its ERISA Affiliates, as to which the PBGC has not by regulation
waived the requirement of Section 4043 (a) of ERISA that it be notified within
30 days of the occurrence of such event (provided that a failure to meet the
minimum funding standard of Section 412 of the Code or Section 302 of ERISA
shall be a reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code);
(b) the filing under Section 4041 of ERISA of a notice of intent
to terminate any Plan of any Loan Party or any of its ERISA Affiliates or the
termination of any such Plan;
(c) the institution by the PBGC of proceedings under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan of any Loan Party or any of its ERISA Affiliates, or the receipt by any
Loan Party or any of its ERISA Affiliates of a notice from a Multiemployer Plan
of any Loan Party or any of its ERISA Affiliates that such action has been taken
by the PBGC with respect to such Multiemployer Plan;
(d) the complete or partial withdrawal by any Loan Party or any of
its ERISA Affiliates under Section 4201 or 4204 of ERISA from a Multiemployer
Plan, or the receipt by any Loan Party or any such ERISA Affiliate of notice
from such a Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA, which in any such case could reasonably
be expected to result in the imposition of withdrawal liability upon any Loan
Party or any of its ERISA Affiliates;
(e) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against any Loan Party or any of its ERISA Affiliates to
enforce Section 515 of ERISA, which proceeding is not dismissed within 30 days;
and
(f) the fair market value of the assets of any Plan does not equal
or exceed the accumulated benefit obligations with respect to such Plan, as
disclosed on the most recent actuarial report with respect to such Plan.
SECTION 7.08. COPIES OF OTHER REPORTS. (a) No later than 60 days after
the beginning of each fiscal year of the Borrower, the business plan of the
Borrower for such year including the proposed budget of revenues and expenses of
the Borrower for such fiscal year; and
(b) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower or its respective Board of Directors by its
independent public accountants including, without limitation, any management
report (but excluding internal audit reports performed by such accountants,
unless such reports are requested by the Lender).
SECTION 7.09. OTHER INFORMATION. From time to time and promptly upon
each request, such data, certificates, reports, statements, documents or further
information regarding the business, properties, condition (financial or
otherwise), results of operations or performance of the Borrower, any Loan Party
and any other Subsidiary as the Lender may reasonably request.
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ARTICLE 8. - NEGATIVE COVENANTS
So long as any of the Obligations remain unpaid or unperformed, or this
Agreement is in effect, the Borrower shall not, directly or indirectly:
SECTION 8.01. FINANCIAL RATIOS. Permit at any time:
(a) EBITDA. EBITDA to be less than the number specified in the
table set forth below for such period:
From To and Including EBITDA
---- ---------------- ------
Effective Date March 31, 2000 $ -2,800,000
April 1, 2000 June 30, 2000 $ -2,900,000
July 1, 2000 September 30, 2000 $ -1,600,000
October 1, 2000 December 31, 2000 $ -500,000
January 1, 2001 March 31, 2001 $ 500,000
April 1, 2001 June 30, 2001 $ 1,400,000
July 1, 2001 September 30, 2001 $ 1,800,000
October 1, 2001 December 31, 2000 $ 2,000,000
(b) Consolidated Tangible Net Worth. Consolidated Tangible Net
Worth to be less than $ -20,000,000, on the date hereof, and such minimum
Consolidated Tangible Net Worth shall increase by 100% of its Net Profit for
each fiscal year thereafter.
SECTION 8.02. DEBT. Create, incur, assume, or permit or suffer to
exist, or permit any Subsidiary to create, incur, assume, or permit or suffer to
exist, any Debt other than the following:
(a) the Obligations;
(b) Debt in existence as of the date hereof and described on
Schedule 5.01.(e);
(c) intercompany Debt among or between the Borrower and its
Subsidiaries so long as such Debt is Subordinated Debt;
(d) Permitted Purchase Money Obligations;
(e) Guarantees of Debt to the extent permitted under Section
8.03.; and
(f) other unsecured Debt not in excess of $1,000,000 at any time.
Notwithstanding the foregoing, the Borrower shall not, and shall not permit any
other Loan Party to, create, incur or assume any Debt after the date hereof if
immediately prior to the creation, incurring or assumption thereof, or
immediately thereafter and after giving effect thereto, a Default or Event of
Default is or would be in existence.
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SECTION 8.03. GUARANTEES. Become or remain liable, or permit any
Subsidiary to become or remain liable, on or under any Guarantee other than (a)
Guarantees in existence as of the date hereof and set forth in Schedule 8.03 and
not required to be terminated as a condition precedent to the making of the
initial Revolving Credit Advances; (b) Guarantees executed by the Borrower or
any Subsidiary covering Debt permitted by Section 8.02; (c) Guarantees
constituting investments permitted under Section 8.04 and (d) the Guaranty.
SECTION 8.04. INVESTMENTS. (a) Acquire or purchase, or permit any
Subsidiary to acquire or purchase, after the date hereof, any Business Unit, (b)
acquire, make or purchase, or permit any Subsidiary to acquire, make or purchase
any Investment or (c) permit any Investment of the Loan Parties to be
outstanding on and after the date hereof, other than the following:
(i) Investments in Subsidiaries in existence on the date hereof;
(ii) Investments in Cash Equivalents;
(iii) Investments in existence on the date hereof and set forth on
Schedule 8.04;
(iv) intercompany Debt among the Borrower provided that such
Indebtedness is permitted by the terms of Section 8.02;
(v) Guarantees constituting Investments to the extent permitted
under Section 8.03;
(vii) loans and advances to employees for moving, entertainment,
travel and other similar expenses and other purposes in the ordinary course of
business consistent with past practices not to exceed $50,000 in the aggregate
at any one time outstanding; and
(viii) prior to the occurrence of an Event of Default, Permitted
Acquistions.
SECTION 8.05. LIENS; AGREEMENTS REGARDING LIENS; OTHER MATTERS.
(a) Create, assume, incur or permit or suffer to exist, or permit
any Subsidiary to create, assume, incur or permit to suffer to exist, any Lien
upon any of its respective properties, assets, income or profits of any
character whether now owned or hereafter acquired, other than Permitted Liens;
(b) Enter into or assume any agreement (other than the Loan
Documents), or permit, any Subsidiary to create, assume, incur or permit to
suffer to exist prohibiting the creation or assumption of any Lien upon its
respective properties or assets, whether now owned or hereafter acquired unless
such agreement permits Liens and security interests in any and all assets of the
Borrower and its Subsidiaries in favor of the Lender; or
(c) Except for the restrictions set forth in the Loan Documents,
create or otherwise cause or suffer to exist or become effective, or permit any
Subsidiary to create, assume, incur or permit to suffer to exist or become
effective, any consensual encumbrance or restriction of any kind on the ability
of any Subsidiary to: (i) pay dividends or make any other distribution on any of
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such Subsidiary's capital stock owned by the Borrower or any Subsidiary of the
Borrower; (ii) pay any Debt owed to the Borrower or any other Subsidiary; (iii)
make loans or advances to the Borrower or any other Subsidiary; or (iv) transfer
any of its property or assets to the Borrower or any other Subsidiary.
SECTION 8.06. FISCAL YEAR. Change its fiscal year from that in effect
as of the date hereof.
SECTION 8.07. DIVIDENDS AND STOCK REPURCHASE. (a) Declare or pay any
dividend or other distribution, direct or indirect, on account of any shares of
any common stock or other equity interest of the Borrower now or hereafter
outstanding, except (i) a dividend or distribution payable solely in shares of
that class of common stock or other equity interest to the holders of that class
or (ii) dividends payable to holders of shares of the Series A Preferred Stock
of the Borrower provided that the aggregate amount paid in respect of such
dividends shall not exceed $520,000 in any fiscal year of the Borrower; (b)
effect any redemption, conversion, exchange, retirement, sinking fund or similar
payment, purchase or any other acquisition for value, direct or indirect, of any
shares of any common stock or other equity interest of the Borrower now or
hereafter outstanding; (c) make or effect any payment or prepayment of principal
of, premium, if any, or interest on, redemption, conversion, exchange, purchase,
retirement, defeasance, sinking fund or similar payment with respect to, any
Debt which is subordinate in right of repayment to any of the Obligations; (d)
voluntarily prepay any Debtor otherwise pay any Debt prior to its then stated
maturity or (e) make any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any
common stock or other equity interest of the Borrower now or hereafter
outstanding.
SECTION 8.08. PRESERVATION OF EXISTENCE, ETC.; MERGER, CONSOLIDATION
AND SALE OF ASSETS. (a) Merge or consolidate with, or permit any other Loan
Party to merge or consolidate with, any other Person, (b) liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution) or permit any Loan
Party to do any of the foregoing or (c) convey, sell, lease, sublease, transfer
or otherwise dispose of, in one transaction or a series of transactions, all or
substantially all of its business or assets, or the capital stock of or other
equity interests in any of its Subsidiaries, whether now owned or hereafter
acquired or permit any Loan Party to do any of the foregoing; provided, however,
that:
(i) Subsidiaries of the Borrower or any Loan Party may
merge or consolidate with the Borrower or any other Loan Party;
(ii) a Subsidiary may sell, transfer or dispose of its
assets to the Borrower or any other Loan Party;
(iii) the Borrower or any Subsidiary may sell inventory or
other assets in the ordinary course of business, including sales of
credit card loans in the ordinary course of business consistent with
past practice; and
(iv) in connection with a Permitted Acquisition, (x) the
Borrower may merge or consolidate with any other Person if the Borrower
is the surviving corporation of the merger or consolidation and (y) any
other Loan Party may merge or consolidate with any
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35
other Person if the entity surviving the merger or consolidation
remains a Loan Party or becomes a Loan Party by delivering the
documents required by Section 8.10.
Further, no Loan Party shall enter into any sale-leaseback transactions or other
transaction by which such Loan Party shall remain liable as lessee (or the
economic equivalent thereof) of any real or personal property that it has sold
or leased to another Person.
SECTION 8.09. TRANSACTIONS WITH AFFILIATES. Effect, or permit any other
Loan Party to effect, any transaction with any Affiliate by which any of the
assets of any Loan Party are transferred to such Affiliate at less than the cost
or fair market value of such asset, or enter into any other transaction with an
Affiliate on terms more favorable to such Affiliate than would be reasonably
expected to be given in a similar transaction with an unrelated entity, except
in each case for transactions between or among the Borrower and the
Subsidiaries.
SECTION 8.10. CREATION OF SUBSIDIARIES. Incorporate, create or acquire
any Subsidiary other than Subsidiaries in existence as of the date hereof,
unless, on or before 5 days after the incorporation, creation or acquisition of
such Subsidiary, such Subsidiary executes and delivers to the Lender an
Accession Agreement to the Guaranty, Pledge Agreement (if applicable) and
Security Agreement, executed by the Borrower and such Subsidiary in favor of the
Lender, together with the following all in form and substance satisfactory to
the Lender:
(a) The articles or certificate of incorporation of such
Subsidiary certified as of a recent date by the Secretary of State of the State
of formation of such Subsidiary;
(b) A certificate of good standing or certificate of similar
meaning with respect to such Subsidiary issued as of a recent date by the
Secretary of State of the State of formation of such Subsidiary and certificates
of qualification to transact business or other comparable certificates issued as
of a recent date by each Secretary of State (and any state department of
taxation, as applicable) of each state in which such Subsidiary is so qualified;
(c) A certificate of incumbency signed by the Secretary or
Assistant Secretary (or other individual performing similar functions) of such
Subsidiary with respect to each of the officers of such Subsidiary authorized to
execute and deliver the Loan Documents to which such Subsidiary is a party;
(d) Copies certified by the Secretary or Assistant Secretary of
such Subsidiary (or other individual performing similar functions) of the
by-laws of such Subsidiary;
(e) Certified copies (certified by the respective Secretary or
Assistant Secretary of such Subsidiary, or other individual performing similar
functions) of all corporate or other necessary action taken by such Subsidiary
to authorize the execution, delivery and performance of the Loan Documents to
which it is a party;
(f) Favorable Uniform Commercial Code, tax, judgment and lien
search reports with respect to such Subsidiary in all necessary or appropriate
jurisdictions and under all legal and appropriate trade names indicating that
there are no prior liens on any of the Collateral other than Permitted Liens;
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(g) all certificates, if any, representing all of the issued and
outstanding capital stock and other equity interest of such Subsidiary, together
with stock powers duly endorsed in blank relating to all such certificates;
(h) Uniform Commercial Code financing statements naming such
Subsidiary as debtor, the Lender as secured party, and covering the Collateral
to be filed in each jurisdiction where the filing of such financing statements
may be necessary or appropriate as determined by the Lender;
(i) an opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special counsel
to Borrower, addressed to the Lender, and regarding, among other things, the
authority of such Subsidiary to execute, deliver and perform the Loan Documents
to which it is a party, the enforceability of such Loan Documents and the
perfection of security interests in the Collateral granted pursuant to such Loan
Documents, and such other matters as the Lender or its counsel may request;
(j) a certificate executed by the chief executive officer and
chief financial officer of the Borrower, stating that: (a) on such date, and
after giving effect to the transactions contemplated hereby, no Default or Event
of Default has occurred and is continuing and (b) the representations and
warranties set forth in Article 5 are true and correct in all material respects
on and as of such date with the same effect as though made on and as of such
date;
(k) Copies of each of the policies of insurance covering any of
the tangible insurable Collateral of such Subsidiary, together with loss payable
clauses in favor of the Lender, which comply with the terms of the relevant Loan
Documents;
(l) Copies of all consents, approvals, authorizations,
registrations or filings required to be made or obtained by such Subsidiary in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby;
(m) such other documents and instruments as the Lender may
reasonably request;
provided, however, that the foregoing shall not apply to any Subsidiary formed
solely for the purpose of acquiring the assets or stock of a Person until such
acquisition is consummated, so long as such Subsidiary holds only nominal assets
prior to the consummation of such acquisition. Further, and notwithstanding the
foregoing, Subsidiaries shall not own, after the date hereof, Total Assets of
the Borrower and its Subsidiaries, determined on a consolidated basis
("Consolidated Total Assets") in excess of that percentage of Consolidated Total
Assets owned by Subsidiaries on the date hereof.
SECTION 8.11. DISPOSAL OF ASSETS OR SUBSIDIARY STOCK. (a) Sell, lease,
transfer or otherwise dispose of any of its property, business or assets, or
grant any Person an option to acquire any such property, business or assets, or
permit any Subsidiary to do any of the foregoing except for: (i) bona fide sales
of inventory to customers for fair value in the ordinary course of business,
(ii) dispositions of equipment in the ordinary course of business and not used
or useful in the business, (iii) disposition of the Encumbered Asset, (iv) the
sale or other disposition of the Shareholder Notes and (v) the licensing of
copyrights, patents and trademarks in the ordinary course of business or (b)
sell, assign, pledge or otherwise encumber or dispose of any shares of
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capital stock or other equity securities or interests in the Loan Parties (other
than the issuance of common stock of the Borrower to the extent permitted under
Section 8.12) or any Subsidiary including warrants, rights or options to acquire
shares of other equity securities or interests of any of its Subsidiaries,
except to the Borrower or another Subsidiary of the Borrower. A Person who
acquires any assets of a Loan Party as the result of a disposition of such
assets by such Loan Party as permitted under this Section 8.11 shall take such
assets free and clear of the Lender's Lien therein.
SECTION 8.12. ISSUANCE OF CAPITAL STOCK. Issue any shares, interests,
warrants, participations or other equivalents (however designated) of any Loan
Party; except that (a) the Borrower may issue common stock or warrants or
options exercisable for common stock and (b) any Subsidiary of the Borrower may
issue shares of capital stock to the Borrower or any other Subsidiary.
SECTION 8.13. CAPITAL EXPENDITURES. Permit Capital Expenditures
incurred by the Borrower and its Subsidiaries to exceed $5,000,000 in any such
fiscal year.
SECTION 8.14. MANAGEMENT FEES AND COMPENSATION.
(A) Management Fees. The Borrower will not, and will not permit
any other Loan Party or any of their respective Subsidiaries to, pay any
management, consulting or similar fees to any Affiliate of the Borrower or to
any director, officer or employee of any Loan Party except as set forth on
Schedule 8.14(A).
(B) Compensation. The Borrower will not, and will not permit any
of its Subsidiaries to, make payments of salary or bonus or otherwise provide
compensation (including benefits) to its principal executive officers or
employees which are in excess of those customarily paid in the industry in which
the Borrower and its Subsidiaries is engaged.
SECTION 8.15 MANAGEMENT. Allow the Chief Executive Officer to cease to
be a "senior" or "executive" officer of the Board.
ARTICLE 9. - DEFAULT
SECTION 9.01. EVENTS OF DEFAULT. Each of the following shall constitute
an Event of Default:
(a) Default in Payment. The Borrower shall fail to pay (i) the
principal of any of the Revolving Credit Advances when and as due (whether upon
demand, at maturity, by reason of acceleration or otherwise) or (ii) the
interest on any Revolving Credit Advance payable hereunder, when and as due, and
such failure shall continue for three Business Days after such due date or (iii)
any other Obligations payable hereunder within 30 days after the date when
presented for payment hereunder.
(b) Misrepresentations. Any statement, representation or warranty
made by or on behalf of the Borrower or any other Loan Party under or pursuant
to any Loan Document or in any other writing or statement at any time furnished
or made by or on behalf on the Borrower or
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any other Loan Party to the Lender shall at any time prove to have been
incorrect or misleading in any material respect when furnished or made.
(c) Default in Performance. (i) The Borrower or any other Loan
Party shall fail to perform or observe any term, covenant, condition or
agreement on its part to be performed or observed and contained in Articles 7 or
8 of this Agreement or (ii) the Borrower or any other Loan Party shall fail to
perform or observe any term, covenant, condition or agreement contained in this
Agreement or any other Loan Document to which it is a party and not otherwise
mentioned in this Section and in the case of this clause (ii) only, such failure
shall continue for a period of 30 days after the earlier of (x) the date upon
which the president or chief financial officer of the Borrower obtains knowledge
of such failure of (y) the date upon which the Borrower has received written
notice of such failure from the Lender.
(d) Debt Cross-Default. (i) Any Loan Party shall fail to pay when
due and payable (following the expiration of any applicable cure periods) the
principal of, or interest on, any Debt (other than the Revolving Credit
Advances) having a principal amount outstanding individually or in the aggregate
of $250,000 or more; or (ii) the maturity of any such Debt shall have (x) been
accelerated in accordance with the provisions of any indenture, contract or
instrument evidencing, providing for the creation of or otherwise concerning
such Debt or (y) been required to be prepaid prior to the stated maturity
thereof; or (iii) any other event shall have occurred and be continuing which
would permit any holder or holders of any such Debt, any trustee or agent acting
on behalf of such holder or holders or any other Person, to accelerate the
maturity of any such Debt or require any such Debt to be prepaid prior to its
stated maturity.
(e) Other Cross-Default. Any default or event of default arising
from any Loan Party's failure to pay amounts due or failure to perform or
observe any term, covenant, condition or agreement on its part to be performed
or observed and contained in any note, loan agreement, indenture or other
contract entered into by such Loan Party with the Lender or any affiliate of the
Lender shall occur (following the expiration of any applicable cure periods).
(f) Voluntary Bankruptcy Proceeding. Any Loan Party shall: (i)
commence a voluntary case under the Bankruptcy Code of 1978, as amended or other
federal bankruptcy laws (as now or hereafter in effect); (ii) file a petition
seeking to take advantage of any other Applicable Laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts; (iii) consent to, or fail to contest in a timely and
appropriate manner, any petition filed against it in an involuntary case under
such bankruptcy laws or other Applicable Laws or consent to any proceeding or
action described in the immediately following subsection; (iv) apply for or
consent to, or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
or liquidator of itself or of a substantial part of its property, domestic or
foreign; (v) admit in writing its inability to pay its debts as they become due;
(vi) make a general assignment for the benefit of creditors; or (vii) take any
corporate or similar action for the purpose of effecting any of the foregoing.
(g) Involuntary Bankruptcy Proceeding. A case or other proceeding
shall be commenced against any Loan Party, in any court of competent
jurisdiction seeking: (i) relief under the Bankruptcy Code of 1978, as amended
or other federal bankruptcy laws (as now or
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hereafter in effect) or under any other Applicable Laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts; or (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of such Person, or of all or any substantial
part of the assets, domestic or foreign, of such Person, and such case or
proceeding shall continue undismissed or unstayed for a period of 60 consecutive
calendar days, or an order granting the remedy or other relief requested in such
case or proceeding against any Loan Party (including, but not limited to, an
order for relief under such Bankruptcy Code or such other federal bankruptcy
laws) shall be entered.
(h) Judgment. A judgment or judgments for the payment of money, in
excess of $100,000 in the aggregate shall be entered against any Loan Party by
any court or other tribunal and such judgment or order shall continue for a
period of 30 days without being stayed or dismissed through appropriate
appellate proceedings.
(i) Challenge of Loan Documents. Any Borrower or any other Loan
Party shall disavow, revoke or terminate or attempt to do any of the foregoing
with respect to any Loan Document to which it is a party or shall otherwise
challenge or contest in any action, suit or proceeding in any court or before
any Governmental Authority the validity or enforceability of this Agreement, the
Note or any other Loan Document.
(j) Loan Documents. An Event of Default (as defined therein) shall
occur under any of the other Loan Documents.
(k) Attachment. A warrant, writ of attachment, execution or
similar process which, together with all other warrants, writs of attachment,
execution or similar process, exceeds $100,000 shall be issued against any
property of any of the Loan Parties and such warrant, writ, execution or process
shall not be discharged, vacated, stayed or bonded for a period of 30 days.
(l) Change of Control. A Change of Control shall occur.
(m) ERISA. (i) Any Termination Event with respect to a Plan shall
occur; (ii) any Plan shall incur an "accumulated funding deficiency" (as defined
in Section 412 of the Internal Revenue Code or Section 302 of ERISA) for which a
waiver has not been obtained in accordance with the applicable provisions of the
Internal Revenue Code and ERISA; or (iii) any Loan Party is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from such Loan Party's complete or partial
withdrawal (as described in Section 4203 or 4205 of ERISA) from such
Multiemployer Plan.
(n) Injunction. The Loan Parties are enjoined, restrained or in
any way prevented by the order of any Governmental Authority from conducting all
or any material part of their respective businesses and such order continues for
more than 30 days.
(o) Failure of Security. The Lender does not have or ceases to
have a valid and perfected first priority security interest in the Collateral
(subject to Permitted Liens), in each case, for any reason other than the
failure of the Lender to take any action within its control.
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SECTION 9.02. REMEDIES. Upon the occurrence of an Event of Default, the
Lender may exercise any or all of the following rights and remedies:
(a) Acceleration. If any Event of Default shall have occurred and
be continuing, the Lender may: (i) declare the principal of, and accrued but
unpaid interest on, the Revolving Credit Advances at the time outstanding, and
all of the other Obligations, to be forthwith immediately due and payable,
whereupon the same shall immediately become due and payable without presentment,
demand, protest or other notice of any kind, all of which are expressly waived,
anything in any Loan Document or any other agreement evidencing any Obligations
to the contrary notwithstanding and (ii) terminate this Agreement and the making
of Revolving Credit Advances hereunder; provided, however, that if the Event of
Default set forth in Section 9.01(f) or 9.01(g) hereof shall have occurred, all
of the principal of, and accrued but unpaid interest on, the Revolving Credit
Advances and all other Obligations shall become automatically due and payable
and this Agreement and the making of Revolving Credit Advances shall
automatically terminate.
(b) Loan Documents. The Lender may exercise any and all of its
rights under any and all of the other Loan Documents.
(c) Applicable Law. The Lender may exercise all other rights and
remedies it may have under any Applicable Law.
(d) Appointment of Receiver. The Lender shall be entitled to the
appointment of a receiver for the assets and properties of the Borrower and any
other Loan Party, without notice of any kind whatsoever and without regard to
the adequacy of any security for the Obligations or the solvency of any party
bound for its payment, to take possession of all or any portion of the business
operations of the Borrower and the Loan Parties and to exercise such power as
the court shall confer upon such receiver.
SECTION 9.03. APPLICATION OF PROCEEDS. All proceeds from each sale of,
or other realization upon, all or any part of the Collateral following an Event
of Default shall be applied or paid over as follows: (a) First: to the payment
of all reasonable costs and expenses incurred in connection with such sale or
other realization, including reasonable attorneys' fees if the Lender endeavored
to collect the Obligations by or through an attorney at law; (b) Second: to the
payment of the interest due upon any of the Obligations, in any order which the
Lender may elect; (c) Third: to the payment of the principal due upon any of the
Obligations in any order which the Lender may elect; and (d) Fourth: the balance
(if any) of such proceeds shall be paid to whomever may be legally entitled
thereto.
SECTION 9.04. PERFORMANCE BY LENDER. If the Borrower shall fail to
perform any covenant, duty or agreement contained in any of the Loan Documents,
the Lender may perform or attempt to perform such covenant, duty or agreement on
behalf of the Borrower after the expiration of any cure or grace periods set
forth herein. In such event, the Borrower shall, at the request of the Lender,
promptly pay any amount reasonably expended by the Lender in such performance or
attempted performance to the Lender, together with interest thereon at the
applicable Post-Default Rate from the date of such expenditure until paid.
Notwithstanding the
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foregoing, the Lender shall not have any liability or responsibility whatsoever
for the performance of any obligation of the Borrower under this Agreement or
any other Loan Document.
SECTION 9.05. RIGHTS CUMULATIVE. The rights and remedies of the Lender
under the Loan Documents shall be cumulative and not exclusive of any rights or
remedies which it would otherwise have. In exercising its rights and remedies
the Lender may be selective and no failure or delay by the Lender in exercising
any right shall operate as a waiver of it, nor shall any single or partial
exercise of any power or right preclude its other or further exercise or the
exercise of any other power or right.
ARTICLE 10. - MISCELLANEOUS
SECTION 10.01. NOTICES. Unless otherwise provided herein,
communications provided for hereunder shall be in writing and shall be mailed,
telecopied or delivered as follows:
If to the Borrower:
Netzee, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
If to the Lender:
The InterCept Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
or, as to each party at such other address as shall be designated by such party
in a written notice to the other parties delivered in compliance with this
Section. All such notices and other communications shall be effective (i) if
mailed, when received; (ii) if telecopied, when transmission is confirmed; or
(iii) if hand delivered, when delivered. Notwithstanding the immediately
preceding sentence, all notices or communications to the Lender under Article 2
shall be effective only when actually received. The Lender shall not incur any
liability to the Borrower for acting upon any telephonic notice referred to in
this Agreement which the Lender believes in good faith to have been given by a
Person authorized to deliver such notice or for otherwise acting in good faith
under hereunder.
SECTION 10.02. EXPENSES. The Borrower agrees (a) to pay or reimburse
the Lender for all of its out-of-pocket costs and expenses incurred in
connection with the preparation, negotiation and execution of, and any
amendment, supplement or modification to, any of the Loan Documents (including
without limitation, reasonable due diligence, and travel expenses relating to
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closing), and the consummation of the transactions contemplated thereby,
including the reasonable fees and disbursements of counsel to the Lender; (b) to
pay or reimburse the Lender for all costs and expenses incurred in connection
with the enforcement or preservation of any rights under the Loan Documents or
the protection, preservation or exercise of rights with respect to any
collateral security provided for in any of the Loan Documents, including the
reasonable fees and disbursements of its counsel, (c) to pay, indemnify and hold
the Lender harmless from any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any failure to pay or delay in
paying, documentary, stamp, excise and other similar taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of any of the Loan Documents, or consummation of any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
any Loan Document and (d) to the extent not already covered by any of the
preceding subsections, to pay or reimburse the Lenders for all reasonable costs
and expenses incurred in connection with any bankruptcy or other proceeding of
the type described in Sections 9.01.(f) or (g), including the reasonable fees
and disbursements of counsel to the Lender, whether such fees and expenses are
incurred prior to, during or after the commencement of such proceeding or the
confirmation or conclusion of any such proceeding.
SECTION 10.03. STAMP, INTANGIBLE AND RECORDING TAXES. The Borrower will
pay any and all stamp, intangible, registration, recordation and similar taxes,
fees or charges and shall indemnify the Lender against any and all liabilities
with respect to or resulting from any delay in the payment or omission to pay
any such taxes, fees or charges, which may be payable or determined to be
payable in connection with the execution, delivery, recording, performance or
enforcement of this Agreement, the Note and any of the other Loan Documents or
the perfection of any rights or Liens thereunder.
SECTION 10.04. LITIGATION. (a) THE LENDER AND THE BORROWER ACKNOWLEDGE
AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS OR THE RELATIONSHIP OF ANY BORROWER AND THE LENDER ESTABLISHED
HEREBY AND THEREBY WOULD BE BASED UPON DIFFICULT AND COMPLEX ISSUES.
ACCORDINGLY, EACH OF THE LENDER AND EACH BORROWER HEREBY WAIVES ITS RESPECTIVE
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN
ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST ANY
BORROWER OR THE LENDER ARISING OUT OF ANY LOAN DOCUMENT, THE OBLIGATIONS OR ANY
OTHER DOCUMENT EXECUTED AND DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR IN
CONNECTION WITH THE COLLATERAL OR ANY ASSIGNMENT THEREOF OR BY REASON OF ANY
OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN ANY BORROWER AND LENDER OF ANY KIND OR
NATURE.
(b) THE BORROWER AND LENDER EACH HEREBY AGREE THAT THE FEDERAL
DISTRICT COURT OF THE NORTHERN DISTRICT OF GEORGIA OR, AT THE OPTION OF LENDER,
ANY STATE COURT LOCATED IN ATLANTA, GEORGIA SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY BORROWER AND THE LENDER,
PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE NOTE, ANY LOAN DOCUMENT
OR TO ANY MATTER ARISING THEREFROM, THE COLLATERAL OR
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ANY OTHER DOCUMENT EXECUTED AND DELIVERED IN CONNECTION HEREWITH OR THEREWITH.
EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS. THE EXCLUSIVE CHOICE OF FORUM
SET FORTH IN THIS PARAGRAPH SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF ANY
ACTION BY THE LENDER OR THE ENFORCEMENT BY THE LENDER OF ANY JUDGMENT OBTAINED
IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.
(c) THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF
COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF.
SECTION 10.05. SUCCESSORS AND ASSIGNS. All the provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower may not
assign or transfer any of their respective rights under this Agreement. The
Lender may assign to one or more Persons all or a portion of its rights and
obligations hereunder and under the Note and, in connection with any such
assignment may assign its rights and obligations under the other Loan Documents.
The Lender will be assigning to First Union National Bank all of its rights and
remedies with respect to this Agreement, the Note and the other Loan Documents
pursuant to the Collateral Assignment Agreement. The Lender may, in connection
with any assignment or proposed assignment disclose to the assignee or proposed
participant any information relating to the Borrower furnished to the Lender by
or on behalf of the Borrower. Furthermore, Borrower acknowledges that Lender
will be providing information relating to the Borrower furnished to the Lender
by or on behalf of the Borrower to First Union National Bank on a regular basis,
including, but not limited to, the financial and other information provided
pursuant to Article 7 hereof.
SECTION 10.06. AMENDMENTS. Except as otherwise expressly provided in
this Agreement, any consent or approval required or permitted by this Agreement
or in any Loan Document to be given by the Lender may be given, and any term of
this Agreement or of any other Loan Document may be amended, and the performance
or observance by the Borrower or any other Loan Party of any terms of this
Agreement or such other Loan Document or the continuance of any Default or Event
of Default may be waived (either generally or in a particular instance and
either retroactively or prospectively) with, but only with, the written consent
of the Lender (and, in the case of an amendment to any Loan Document, the
written consent of each Loan Party that is a party to such Loan Document).
SECTION 10.07. INDEMNIFICATION. (a) The Borrower shall and hereby
agrees to indemnify, defend and hold harmless the Lender and its directors,
officers, shareholders, agents, employees and counsel (each referred to herein
as an "Indemnified Party") from and against any and all losses, claims, damages,
liabilities, deficiencies, judgments or expenses of every kind and nature
(including, without limitation, amounts paid in settlement, court costs and the
reasonable fees and disbursements of counsel incurred in connection with any
litigation, investigation, claim or proceeding or any advice rendered in
connection therewith) (the foregoing items referred to herein as "Claims and
Expenses") incurred by an Indemnified Party arising out of or by reason of any
suit, cause of action, claim, arbitration, investigation or settlement, consent
decree or other
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proceeding by any third party (the foregoing referred to herein as an "Indemnity
Proceeding") which arise out of, or are in any way related directly or
indirectly to: (i) this Agreement or any other Loan Document or the transactions
contemplated thereby; (ii) the making of any Revolving Credit Advance hereunder;
(iii) any actual or proposed use by the Borrower of the proceeds of the
Revolving Credit Advances; (iv) the Lender's entering into this Agreement; (v)
the fact that the Lender has established the credit facility evidenced hereby in
favor of the Borrower; (vi) the fact that the Lender is a creditor of the
Borrower and has or is alleged to have information regarding the financial
condition, strategic plans or business operations of the Borrower and the other
Loan Parties; (vii) the fact that the Lender is a material creditor of the
Borrower and is alleged to influence directly or indirectly the business
decisions or affairs of the Borrower and the other Loan Parties or their
financial condition; (viii) the exercise of any right or remedy the Lender may
have under this Agreement or the other Loan Documents including, but not limited
to, the foreclosure upon, or seizure of, any Collateral or the exercise of any
other rights of a secured party; (ix) any violation or non-compliance by the
Borrower or any Loan Party of any Applicable Law (including any Environmental
Law) including, but not limited to, any Indemnity Proceeding commenced by (A)
the Internal Revenue Service or state taxing authority or (B) any Governmental
Authority or other Person under any Environmental Law, including any Indemnity
Proceeding commenced by a Governmental Authority or other Person seeking
remedial or other action to cause the Borrower or any Loan Party (or its
respective properties) (or the Lender as successor to the Borrower or any Loan
Party) to be in compliance with such Environmental Laws; provided, however, that
the Borrower or any Loan Party shall not be obligated to indemnify any
Indemnified Party for any acts or omissions of such Indemnified Party in
connection with matters described in this paragraph (a) that constitute gross
negligence or willful misconduct.
(b) This indemnification shall apply to all Indemnity Proceedings
arising out of, or related to, the foregoing whether or not an Indemnified Party
is a named party in such Indemnity Proceeding. In this connection, this
indemnification shall cover all costs and expenses of any Indemnified Party in
connection with any deposition of any Indemnified Party or compliance with any
subpoena (including any subpoena requesting the production of documents). This
indemnification shall, among other things, apply to any Indemnity Proceeding
commenced by other creditors of the Borrower or any Loan Party, any shareholder
of the Borrower or any Loan Party (whether such shareholder(s) are prosecuting
such Indemnity Proceeding in their individual capacity or derivatively on behalf
of the Borrower), any account debtor of the Borrower or any Loan Party or by any
Governmental Authority.
(c) All out-of-pocket fees and expenses of, and all amounts paid
to third-persons by, an Indemnified Party shall be advanced by the Borrower at
the request of such Indemnified Party notwithstanding any claim or assertion by
the Borrower that such Indemnified Party is not entitled to indemnification
hereunder upon receipt of an undertaking by such Indemnified Party that such
Indemnified Party will reimburse the Borrower if it is actually and finally
determined by a court of competent jurisdiction that such Indemnified Party is
not so entitled to indemnification hereunder.
(d) An Indemnified Party may conduct its own investigation and
defense of, and may formulate its own strategy with respect to, any Indemnified
Proceeding covered by this Section and, as provided above, all reasonable costs
and expenses incurred by the Indemnified Party shall be reimbursed by the
Borrower. No action taken by legal counsel chosen by an Indemnified Party
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in investigating or defending against any such Indemnified Proceeding shall
vitiate or in any way impair the obligations and duties of the Borrower
hereunder to indemnify and hold harmless each such Indemnified Party; provided,
however, that (i) if the Borrower is required to indemnify an Indemnified Party
pursuant hereto and (ii) the Borrower have provided evidence reasonably
satisfactory to such Indemnified Party that the Borrower have the financial
wherewithal to reimburse such Indemnified Party for any amount paid by such
Indemnified Party with respect to such Indemnified Proceeding, such Indemnified
Party shall not settle or compromise any such Indemnified Proceeding without the
prior written consent of the Borrower (which consent shall not be unreasonably
withheld or delayed).
(f) The Borrower's obligations hereunder shall survive any
termination of this Agreement and the other Loan Documents and the payment in
full of the Obligations, and are in addition to, and not in substitution of, any
other of their obligations set forth in this Agreement or any other Loan
Document to which it is a party.
SECTION 10.08. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
SECTION 10.09. SETOFF. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
the Lender is hereby authorized by the Borrower, at any time or from time to
time during the continuance of an Event of Default, without prior notice to the
Borrower or to any other Person, any such prior notice being hereby expressly
waived to set-off and to appropriate and to apply any and all indebtedness at
any time held or owing by the Lender or any affiliate of the Lender, to or for
the credit or the account of the Borrower against and on account of any of the
Obligations, irrespective of whether or not any or all of the Revolving Credit
Advances and all other Obligations have been declared to be, or have otherwise
become, due and payable as permitted under the Loan Documents, and although such
obligations shall be contingent or unmatured.
SECTION 10.10. TERMINATION; SURVIVAL OF PROVISIONS. At such time as (a)
the Revolving Commitment has been terminated, (b) the Lender is not obligated
under this Agreement to make any Revolving Credit Advances, and (c) all
Obligations (other than obligations which survive as provided in the following
sentence) have been paid and satisfied in full, this Agreement shall terminate.
Notwithstanding any termination of this Agreement, or of the other Loan
Documents, the indemnities to which the Lender is entitled under any of the
provisions of this Agreement and the other Loan Documents, and the waiver of
jury trial and submission to jurisdictions contained herein or therein, shall
continue in full force and effect and shall protect the Lender against events
arising after such termination as well as before.
SECTION 10.11. COUNTERPARTS. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one and the same instrument.
SECTION 10.12. LIMITATION OF LIABILITY. To the maximum extent permitted
by Applicable Law, neither the Lender nor any affiliate, officer, director,
employee, attorney, or agent of the Lender, shall have any liability with
respect to, and the Borrower hereby waive,
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release, and agree not to ▇▇▇ any of them upon, any claim for any special,
indirect, incidental, or consequential damages suffered or incurred by the
Borrower in connection with, arising out of, or in any way related to, this
Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Agreement or any of the other Loan Documents. The Borrower
hereby waives, releases, and agrees not to ▇▇▇ the Lender or any of its
affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or financed hereby.
SECTION 10.13. ENTIRE AGREEMENT. This Agreement, the Note, and the
other Loan Documents referred to herein embody the final, entire agreement among
the parties hereto with respect to the subject matter hereof and supersede any
and all prior commitments, agreements, representations, and understandings,
whether written or oral, relating to the subject matter hereof and may not be
contradicted or varied by evidence of prior, contemporaneous, or subsequent oral
agreements or discussions of the parties hereto.
SECTION 10.14. TITLES AND CAPTIONS. Titles and captions of Articles,
Sections, subsections and clauses in this Agreement are for convenience only,
and neither limit nor amplify the provisions of this Agreement.
SECTION 10.15. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating the remainder of such provision or the
remaining provisions or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 10.16. OBLIGATIONS WITH RESPECT TO LOAN PARTIES. The
obligations of the Borrower to direct or prohibit the taking of certain actions
by the other Loan Parties as specified herein shall be absolute and not subject
to any defense the Borrower may have that the Borrower do not control such Loan
Parties.
SECTION 10.17. MARSHALING; PAYMENTS SET ASIDE. The Lender shall not be
under any obligation to marshal any assets in favor of any Loan Party or any
other party or against or in payment of any or all of the Obligations. To the
extent that any Loan Party makes a payment or payments to the Lender, or the
Lender enforces its security interest or exercises its right of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then to the extent of such recovery, the Obligations or part thereof originally
intended to be satisfied, and all Liens, rights and remedies therefor, shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
SECTION 10.18. INDEPENDENT NATURE OF LENDER'S RIGHTS. Nothing contained
in any Loan Document and no action taken by the Lender or the Borrower or any
Loan Party pursuant hereto or thereto shall be deemed to constitute the Lender
and/or any Loan Party to be a partnership, an association, a joint venture or
any other kind of entity.
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SECTION 10.19. NO FIDUCIARY RELATIONSHIP. No provision in this
Agreement or in any of the other Loan Documents and no course of dealing between
the parties shall be deemed to create any fiduciary duty owing by the Lender to
the Borrower or any other Loan Party.
SECTION 10.20. CONSTRUCTION. The Borrower and the Lender acknowledge
that each of them has had the benefit of legal counsel of its own choice and has
been afforded an opportunity to review this Agreement and the other Loan
Documents with its legal counsel and that this Agreement and the other Loan
Documents shall be construed as if jointly drafted by the Borrower and the
Lender.
SECTION 10.21. BENEFITS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, except that the Borrower may not assign or
otherwise transfer any of its rights under this Agreement without the prior
written consent of the Lender. Applicable Law at any time sell or assign to one
or more banks or financial institutions all or any part of its rights and
obligations under this Agreement and the Note.
[Signature on Next Page]
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their authorized officers all as of the day and year
first above written.
BORROWER:
NETZEE, INC.
By:
---------------------------------
Name:
--------------------------
Title:
-------------------------
LENDER:
THE INTERCEPT GROUP, INC.
By:
---------------------------------
Name:
--------------------------
Title:
-------------------------
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