EXHIBIT 99.3
SECURED LINE OF CREDIT NOTE
$2,000,000.00 August 9, 2000
FOR VALUE RECEIVED, eGames, Inc., a Pennsylvania corporation with an
address at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (referred
to herein as the Borrower), promises to pay to the order of SUMMIT BANK, with an
office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ (the Lender),
at such office of Lender or at such other place as Lender may designate from
time to time in writing, the principal sum of TWO MILLION ($2,000,000.00)
DOLLARS lawful money of the United States of America, or, if less, the
outstanding principal balance on all loans and advances made by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, together with interest thereon from the date of each advance at the
rates hereinafter provided, and both payable as hereinafter provided.
1. Interest.
(a) The principal sum outstanding from time to time hereunder
shall bear interest at a floating rate equal to the Prime Rate (as hereinafter
defined) plus one-half of one percent (.50%). A Prime Rate refers to the
commercial lending rate of interest per annum as fixed from time to time by the
management of Lender at its main office and designated as its "Prime Rate"
whether or not such rate is published or otherwise made known to Borrower. The
interest rate shall change automatically as of the effective date of each change
in the Prime Rate. When the Prime Rate changes on a day other than the first day
of a calendar month, interest for the month in which such change or changes are
made shall be calculated on a per diem basis with the various Prime Rates in
effect for that month plus one-half of one percent (.50%).
(b) Notwithstanding anything to the contrary contained herein,
the effective rate of interest hereunder shall not exceed the maximum effective
rate of interest permitted by applicable law or regulation. Borrower hereby
agrees to give ▇▇▇▇▇▇ written notice in the event Borrower has actual knowledge
that any interest payment made to Lender with respect to this Note will cause
the total interest payments collected in any one year to be usurious under
applicable law, and ▇▇▇▇▇▇ hereby agrees not to collect knowingly any interest
from Borrower in the form of fees or otherwise which will render the Loan
usurious and agrees to give Borrower written notice in the event ▇▇▇▇▇▇ has
actual knowledge that any interest payment made to Lender with respect to this
Note will cause the total interest payments collected in any one year to be
usurious under applicable law. In the event that such interest would be usurious
in ▇▇▇▇▇▇'s opinion, ▇▇▇▇▇▇ reserves the right to reduce the interest payable by
Borrower. This provision shall survive the repayment of this Note.
(c) The annual interest rate shall be calculated on
the basis of 365/366 day years over the actual number of days elapsed.
2. Payments of Principal and Interest.
(a) Commencing on September 1, 2000, and continuing on the
first day of each successive calendar month until October 31, 2001 (the Advance
Period), Borrower shall make monthly installments of interest as accrued on the
unpaid principal balance due hereunder, calculated in accordance with the
provisions of paragraph 1(a), above.
(b) Absent an Event of Default, the entire unpaid principal
sum then outstanding together with all accrued and unpaid interest and other
charges shall become immediately due and payable without further notice or
demand on October 31, 2001 (the Maturity Date) and no further advances shall be
made subsequent to the Maturity Date, unless extended or renewed by ▇▇▇▇▇▇, in
its sole discretion.
3. Line of Credit Advances.
(a) Subject to the terms and conditions and relying upon the
representations and warranties set forth in this Note and the other Loan
Documents pertaining thereto, the Lender agrees to make loans (the Line of
Credit Loan) to Borrower at any time or from time to time during the Advance
Period in an aggregate principal amount not exceeding TWO MILLION
($2,000,000.00) DOLLARS (Line of Credit Loan Limit) at any one time outstanding
in order to support working capital and short-term borrowing needs of Borrower.
Within the limits of time and amount set forth in this Section 3, and subject to
the provisions of this Note, including, without limitation, the Lenders right to
demand repayment of the Line of Credit Loan upon the occurrence of an Event of
Default, the Borrower may borrow, repay (without premium or penalty) and
reborrow in any amount or amounts subject to the maximum amount of availability
under this credit facility. Borrower shall submit to Lender a Borrowing Base
Certificate, in form and substance reasonably satisfactory to Lender, at the
time of each request for an advance under the Line of Credit Loan.
4. Prepayments.
(a) Any prepayment shall be applied first to any accrued and
unpaid interest hereunder to the date of such prepayment, then to any other sums
which may be payable to Lender under the Loan Documents (as hereinafter
defined), up to the date of such prepayment and then to the principal sum
hereunder. The acceptance of any such prepayment when there is an Event of
Default in existence hereunder shall not constitute a waiver, release or accord
and satisfaction thereof or of any rights with respect thereto by ▇▇▇▇▇▇.
5. Collateral and Loan Documents. This Note, and the due performance by
Borrower of all of its obligations hereunder, is evidenced and secured by: (a) a
Security Agreement, (b) UCC-1 Financing Statements, (c) a Loan Agreement; and
(d) all collateral documents pursuant thereto or hereto, including but not
limited to, instruments of pledge, mortgage, assignment, transfer or delivery,
as well as any and all related agreements, instruments and public filings which
are referred to collectively as the Loan Documents. Any collateral securing any
of Borrower's obligations under any of the Loan Documents are hereinafter
referred to collectively as the Collateral.
6. Late Charge. In the event that any payment of principal or interest
due to Lender hereunder shall not be paid within ten (10) calendar days after
the due date, in addition to and not in limitation of any other rights or
remedies which Lender may have in respect thereof under any of the Loan
Documents or in respect of any Collateral, Borrower shall pay Lender on demand a
late charge computed at the rate of five cents ($.05) for each dollar (or part
thereof) of the amount not paid, to cover the extra expense and inconvenience to
Lender ensuring payment of such delinquent amount. Borrower acknowledges that
its failure to pay any amount due hereunder promptly within ten (10) calendar
days when due will result in Lender incurring additional expense in servicing
the loan evidenced by this Note, the loss of the use of the money due and
frustration to Lender in meeting its loan commitments, that the damages to
Lender in connection with such late payment are extremely difficult and
impractical to ascertain, and that a sum equal to five cents ($.05) for each
dollar which is not paid when due is a reasonable estimate of the damages
incurred by ▇▇▇▇▇▇ in connection with any such late payment. The amount of any
such late charge not paid promptly following demand therefor shall be deemed
outstanding and payable pursuant to this Note.
7. Events of Default. The occurrence of an Event of Default under the
Loan Agreement or the Loan Documents shall constitute an Event of Default
hereunder.
8. Remedies. Upon the occurrence of any Event of Default, then the
entire unpaid principal sum hereunder plus all interest accrued thereon plus all
other sums due and payable to Lender under the Loan Documents shall, at the
option of Lender, become due and payable immediately without presentment,
demand, notice of nonpayment, protest, notice of protest or other notice of
dishonor, all of which are hereby expressly waived by Borrower unless and except
to the extent any such notice is specifically provided for herein.
In addition to the foregoing, upon the occurrence of any Event of Default
Lender may forthwith exercise singly, concurrently, successively or otherwise
any and all rights and remedies available to Lender under any of the Loan
Documents or with respect to any Collateral, or available to Lender by law,
equity, statute or otherwise.
9. CONFESSION OF JUDGMENT. ▇▇▇▇▇▇▇▇ HEREBY IRREVOCABLY AUTHORIZES AND
EMPOWERS ANY ATTORNEY OR ANY CLERK OF ANY COURT OF RECORD UPON THE OCCURRENCE OF
AN EVENT OF DEFAULT TO APPEAR FOR AND CONFESS JUDGMENT AGAINST BORROWER (A) FOR
SUCH OF THE OBLIGATIONS AS ARE DUE AND OWING AND/OR MAY BECOME DUE AND OWING
AND/OR (B) IN ANY ACTION OF REPLEVIN INSTITUTED BY ▇▇▇▇▇▇ TO OBTAIN POSSESSION
OF ANY COLLATERAL SECURING ANY OF THE OBLIGATIONS, IN EITHER CASE WITH OR
WITHOUT DECLARATION, WITH COSTS OF SUIT, WITHOUT STAY OF EXECUTION AND WITH
REASONABLE ATTORNEYS' FEES ACTUALLY INCURRED, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, BORROWER: (1) WAIVES THE RIGHT OF INQUISITION ON ANY REAL ESTATE
LEVIED ON, VOLUNTARILY CONDEMN THE SAME, AUTHORIZE THE PROTHONOTARY OR CLERK TO
ENTER UPON THE WRIT OF EXECUTION SAID VOLUNTARY CONDEMNATION AND AGREE THAT SAID
REAL ESTATE MAY BE SOLD ON A WRIT OF EXECUTION; (2) WAIVES AND RELEASES ALL
RELIEF FROM ANY AND ALL APPRAISEMENT, STAY, EXEMPTION OR APPEAL LAWS OF ANY
STATE NOW IN FORCE OR HEREAFTER ENACTED; AND (3) RELEASES ALL ERRORS IN SUCH
PROCEEDINGS. IF A COPY OF THIS AGREEMENT, VERIFIED BY AFFIDAVIT BY OR ON BEHALF
OF ▇▇▇▇▇▇, SHALL HAVE BEEN FILED IN SUCH ACTION, IT SHALL NOT BE NECESSARY TO
FILE THE ORIGINAL OF THIS AGREEMENT AS A WARRANT OF ATTORNEY. THE AUTHORITY AND
POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST BORROWER SHALL NOT BE EXHAUSTED
BY THE INITIAL EXERCISE THEREOF, AND THE SAME MAY BE EXERCISED FROM TIME TO
TIME, AS OFTEN AS LENDER SHALL DEEM NECESSARY AND DESIRABLE, AND THIS AGREEMENT
SHALL BE A SUFFICIENT WARRANT THEREFOR. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ▇▇▇▇▇▇ MAY ENTER ONE OR MORE JUDGMENTS IN THE SAME OR DIFFERENT COUNTIES
FOR ALL OR ANY PART OF THE OBLIGATIONS WITHOUT REGARD TO WHETHER JUDGMENT
ENTERED AGAINST BORROWER HEREUNDER IS STRICKEN OR OPENED UPON APPLICATION BY OR
ON ▇▇▇▇▇▇▇▇'S BEHALF FOR ANY SUBSEQUENT ENTRY OR ENTRIES OF JUDGMENT BY ▇▇▇▇▇▇
MAY ONLY BE DONE TO CURE ANY ERRORS IN PRIOR PROCEEDINGS, ONLY AND TO THE EXTENT
THAT SUCH ERRORS ARE SUBJECT TO CURE IN LATER PROCEEDINGS.
___TM____
Initial
(Borrower)
10. Remedies Cumulative, etc.
(a) No right or remedy conferred upon or reserved to Lender
under any of the Loan Documents, or with respect to any Collateral, now or
hereafter existing at law or in equity or by statute or other legislative
enactment, is intended to be exclusive of any other right or remedy, and each
and every such right or remedy shall be cumulative and concurrent, and shall be
in addition to every other such right or remedy, and may be pursued singly,
concurrently, successively or otherwise, at the sole discretion of Lender, and
shall not be exhausted by any one exercise thereof but may be exercised as often
as occasion therefor shall occur. No act of Lender shall be deemed or construed
as an election to proceed under any one such right or remedy to the exclusion of
any other such right or remedy; furthermore, each such right or remedy of Lender
shall be separate, distinct and cumulative and none shall be given effect to the
exclusion of any other. The failure to exercise or delay in exercising any such
right or remedy, or the failure to insist upon strict performance of any term of
any of the Loan Documents, shall not be construed as a waiver or release of the
same, or of any Event of Default thereunder, or of any obligation or liability
of Borrower thereunder.
(b) The recovery of any judgment by ▇▇▇▇▇▇ and/or the levy of
execution under any judgment upon any Collateral shall not affect in any manner
or to any extent the security interest under the Security Agreement in such
Collateral, or any rights, remedies or powers of Lender under any of the Loan
Documents or with respect to any Collateral, but such lien and such security
interest, and such rights, remedies and power of Lender shall continue
unimpaired as before. Further, the exercise by Lender of its rights and remedies
and the entry of any judgment by ▇▇▇▇▇▇ shall not affect in any way the interest
rate payable hereunder or under any of the other Loan Documents or any amounts
due to Lender but interest shall continue to accrue on such amounts at the
Default Rate (as hereinafter defined).
(c) Unless and except to the extent notice is specifically
provided for herein, Borrower hereby waives presentment, demand, notice of
nonpayment, protest, notice of protest or other notice of dishonor, and any and
all other notices in connection with any Event of Default in the payment of, or
any enforcement of the payment of, all amounts due under the Loan Documents. To
the extent permitted by law, ▇▇▇▇▇▇▇▇ waives the right to any stay of execution
and the benefit of all exemption laws now or hereafter in effect. Borrower
further waives and releases all procedural errors, defects and imperfections in
any proceedings instituted by ▇▇▇▇▇▇ under the terms of any Loan Document or
with respect to any Collateral.
(d) ▇▇▇▇▇▇▇▇ agrees that Lender may release, compromise,
forbear with respect to, waive, suspend, extend or renew any of the terms of the
Loan Documents (and Borrower hereby waives any notice of any of the foregoing),
and that the Loan Documents may be amended, supplemented or modified by Lender
and the other signatory parties and that Lender may resort to any Collateral in
such order and manner as it may think fit, or accept the assignment,
substitution, exchange, pledge, or release of all or any portion of any
Collateral, for such consideration, or none, as it may require, without in any
way affecting the validity of any liens over or other security interest in the
remainder of any such Collateral (or the priority thereof or the position of any
subordinate holder of any lien or other security interest with respect thereto);
and any action taken by Lender pursuant to the foregoing shall in no way be
construed as a waiver or release of any right or remedy of Lender, or of any
Event of Default, or of any liability or obligation of the Borrower, under any
of the Loan Documents.
(e) Borrower agrees that any action or proceeding against it
to enforce this Note may be commenced in state or federal court or in any county
in the Commonwealth of Pennsylvania in which Lender or subsequent note holder
has an office, and ▇▇▇▇▇▇▇▇ waives personal service of process and agrees that a
summons and complaint commencing an action or proceeding in any such court shall
be properly served if served by registered or certified mail in accordance with
the notice provisions set forth herein and Borrower expressly waives any and all
defenses to an exercise of personal jurisdiction by any such court.
11. Default Rate. To the extent permitted by law, whenever there is an
Event of Default under this Note, or non-payment upon demand, the rate on the
unpaid principal balance shall, at the option of Lender, be three (3%) percent
per annum in excess of the interest rate set forth in paragraph 1(a) hereof
("Default Rate"). Borrower acknowledges that: (i) such additional rate is a
material inducement to Lender to make the loan evidenced by this Note; (ii)
Lender would not have made the loan evidenced by this Note in the absence of the
agreement of the Borrower to pay such additional rate upon an Event of Default;
(iii) such additional rate represents compensation for increased risk to Lender
that this Note will not be repaid; and (iv) such rate is not a penalty and
represents a reasonable estimate of (a) the cost to Lender in allocating its
resources (both personnel and financial) to the on-going review, monitoring,
administration (following an Event of Default) and collection of the loan
evidenced by this Note and (b) compensation to Lender for losses that are
difficult to ascertain.
12. Costs and Expenses. Borrower shall pay upon demand all reasonable
costs and expenses (including all reasonable amounts paid to attorneys,
accountants, real estate brokers and other advisors employed by ▇▇▇▇▇▇) incurred
by ▇▇▇▇▇▇ in the preparation, revision or extension of the Loan Documents and
exercise of any of its rights, remedies or powers under any of the Loan
Documents or with respect to any Collateral with respect to such Event of
Default (including but not limited to such sums incurred by ▇▇▇▇▇▇ after
▇▇▇▇▇▇▇▇ has filed a Petition in Bankruptcy), and any amount thereof not paid
promptly following demand therefor shall be added to the principal sum hereunder
and shall bear interest at the Default Rate from the date of such demand until
paid in full, and shall be secured by the Collateral. In connection with, and as
part of the foregoing, in the event that any of the Loan Documents is placed in
the hands of an attorney for the collection of any sum payable thereunder,
▇▇▇▇▇▇▇▇ agrees to pay reasonable attorneys' fees for the collection of the
amount being claimed under the Loan Document, as well as all costs,
disbursements and allowances provided by law, the payment of which sums shall be
secured by the Collateral. Nothing in this Paragraph 12 shall limit the
obligation of Borrower to pay any and all costs and expenses for which Borrower
is otherwise liable under any of the Loan Documents.
13. Severability. In the event that for any reason one or more of the
provisions of this Note or their application to any person or circumstance shall
be held to be invalid, illegal or unenforceable in any respect or to any extent,
such provisions shall nevertheless remain valid, legal and enforceable in all
such other respects and to such extent as may be permissible. In addition, any
such invalidity, illegality or unenforceability shall not affect any other
provisions of this Note, but this Note shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
14. Successors and Assigns. This Note inures to the benefit of Lender
and binds Borrower, and their respective successors and assigns, and the words
Lender and Borrower whenever occurring herein shall be deemed and construed to
include such respective successors and assigns.
15. Definitions; Number and Gender. In the event Borrower consists of
more than one person or entity, the obligations and liabilities hereunder of
each such persons and entities shall be joint and several and the word Borrower
shall mean all or some or any of them. For purposes of this Note, the singular
shall be deemed to include the plural and the neuter shall be deemed to include
the masculine and feminine, as the context may require. The references herein to
the Loan Documents or any one of them shall include any supplements to or any
amendments of or restatements of such Loan Documents or any one of them.
16. Incorporation by Reference. All of the terms and provisions of the
Loan Documents, to the extent not inconsistent herewith, are hereby incorporated
herein by reference.
17. Captions. The captions or headings of the paragraphs in this Note
are for convenience only and shall not control or affect the meaning or
construction of any of the terms or provisions of this Note.
18. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
19. Waiver of Right to Jury Trial. ▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇, KNOWINGLY AND
WITH FULL CONSENT, DO HEREBY WAIVE AND RELEASE ALL RIGHTS TO A JURY TRIAL.
____TM____ ___DC___
Initial Initial
(Borrower) (Lender)
20. Damages. ▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇ AGREE THAT IN ANY ACTION, SUIT OR
PROCEEDING, AND IN RESPECT OF OR ARISING OUT OF THIS NOTE, OR ANY DOCUMENT
RELATING TO THIS LOAN TRANSACTION, EACH WAIVES TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.
____TM____ ___DC___
Initial Initial
(Borrower) (Lender)
21. Waiver of Automatic Stay. IN THE EVENT THAT A PROCEEDING UNDER ANY
BANKRUPTCY OR INSOLVENCY LAW IS COMMENCED BY OR AGAINST BORROWER AND AN ORDER
FOR RELIEF IS ENTERED AS A RESULT OF SUCH PETITION, BORROWER HEREBY CONSENTS TO
RELIEF FROM THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. '362 TO ALLOW LENDER TO
EXERCISE ITS RIGHTS AND REMEDIES HEREUNDER WITH RESPECT TO THE BORROWER'S
PROPERTY.
____TM____
Initial
(Borrower)
22. Representation by Counsel. ▇▇▇▇▇▇▇▇ ACKNOWLEDGES THAT ▇▇▇▇▇▇▇▇ HAS
BEEN REPRESENTED BY COUNSEL OF ▇▇▇▇▇▇▇▇'S OWN CHOICE AND KNOWINGLY AND
VOLUNTARILY GRANTED TO LENDER THE RIGHTS SET FORTH HEREIN INCLUDING BUT NOT
LIMITED TO THE RIGHTS SET FORTH IN PARAGRAPHS 9, 19, 20 AND 21 HEREOF.
____TM____
Initial
(Borrower)
23. Cross-Collateral and Cross-Default.This Note shall be cross
defaulted and cross collateralized with all other loans from Bank to Borrower
whether now existing or entered into at a later date. Any Event of Default
hereunder shall constitute an Event of Default under any and all other credit
facilities by and between Borrower and Lender whether now existing or hereafter
entered into and any and all Collateral shall be available to satisfy the
hereunder or thereunder.
IN WITNESS WHEREOF, Borrower has set its hand and seal to this Note the
day and year first above written.
eGames, Inc.
Attest:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------- -------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
VP of Finance and CFO
THIS NOTE CONTAINS A CONFESSION OF JUDGMENT PROVISION.
____TM____
Initial
(Borrower)