EXHIBIT 10.03
LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
FIFTH THIRD BANK
AS LENDER
AND
▇▇▇▇▇▇▇▇.▇▇▇
AS BORROWER
DATED: FEBRUARY 19, 2004
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS................................................................................. 1
SECTION 2. CREDIT FACILITY............................................................................. 21
2.1 REVOLVING LOANS............................................................................. 21
2.2 NOTE........................................................................................ 22
SECTION 3. INTEREST.................................................................................... 22
3.1 INTEREST.................................................................................... 22
3.2 CHANGES IN LAWS AND INCREASED COSTS OF LOANS................................................ 23
SECTION 4. CONDITIONS PRECEDENT........................................................................ 24
4.1 CONDITIONS PRECEDENT TO INITIAL LOANS....................................................... 24
4.2 CONDITIONS PRECEDENT TO ALL LOANS........................................................... 26
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST................................................... 27
5.1 GRANT OF SECURITY INTEREST.................................................................. 27
5.2 PERFECTION OF SECURITY INTERESTS............................................................ 29
SECTION 6. COLLECTION AND ADMINISTRATION............................................................... 30
6.1 BORROWER'S LOAN ACCOUNT..................................................................... 30
6.2 STATEMENTS.................................................................................. 30
6.3 PAYMENTS.................................................................................... 30
6.4 AUTHORIZATION TO MAKE LOANS................................................................. 31
6.5 USE OF PROCEEDS............................................................................. 31
SECTION 7. COLLATERAL REPORTING AND COLLATERAL COVENANTS............................................... 32
7.1 COLLATERAL REPORTING........................................................................ 32
7.2 ACCOUNTS COVENANTS.......................................................................... 32
7.3 EQUIPMENT AND REAL PROPERTY COVENANTS....................................................... 32
7.4 POWER OF ATTORNEY........................................................................... 33
7.5 RIGHT TO CURE............................................................................... 33
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7.6 ACCESS TO PREMISES.......................................................................... 34
SECTION 8. REPRESENTATIONS AND WARRANTIES.............................................................. 34
8.1 CORPORATE EXISTENCE; POWER AND AUTHORITY.................................................... 34
8.2 NAME; STATE OF ORGANIZATION; CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS................... 35
8.3 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE............................................ 35
8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES...................................................... 36
8.5 TAX RETURNS................................................................................. 36
8.6 LITIGATION.................................................................................. 36
8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS........................................ 36
8.8 ENVIRONMENTAL COMPLIANCE.................................................................... 37
8.9 EMPLOYEE BENEFITS........................................................................... 37
8.10 BANK ACCOUNTS............................................................................... 38
8.11 INTELLECTUAL PROPERTY....................................................................... 38
8.12 SUBSIDIARIES; AFFILIATES; CAPITALIZATION; SOLVENCY.......................................... 39
8.13 LABOR DISPUTES.............................................................................. 39
8.14 RESTRICTIONS ON SUBSIDIARIES................................................................ 40
8.15 MATERIAL CONTRACTS.......................................................................... 40
8.16 PAYABLE PRACTICES........................................................................... 40
8.17 ACCURACY AND COMPLETENESS OF INFORMATION.................................................... 40
8.18 SURVIVAL OF WARRANTIES; CUMULATIVE.......................................................... 40
8.19 INVESTMENT COMPANY ACT; REGULATION.......................................................... 41
8.20 RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT.......................................... 41
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS.......................................................... 41
9.1 MAINTENANCE OF EXISTENCE.................................................................... 41
9.2 NEW COLLATERAL LOCATIONS.................................................................... 42
9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC...................................................... 42
9.4 PAYMENT OF TAXES AND CLAIMS................................................................. 43
9.5 INSURANCE................................................................................... 43
9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION.................................................. 44
9.7 SALE OF ASSETS, CONSOLIDATION MERGER, DISSOLUTION, ETC...................................... 46
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9.8 ENCUMBRANCES................................................................................ 46
9.9 INDEBTEDNESS................................................................................ 47
9.10 LOANS, INVESTMENTS, ETC..................................................................... 47
9.11 TRANSACTIONS WITH AFFILIATES................................................................ 48
9.12 COMPLIANCE WITH ERISA....................................................................... 48
9.13 END OF FISCAL YEARS; FISCAL QUARTERS........................................................ 48
9.14 CHANGE IN BUSINESS.......................................................................... 48
9.15 LIMITATION OF RESTRICTIONS AFFECTING SUBSIDIARIES........................................... 49
9.16 TOTAL SENIOR DEBT/TANGIBLE ADJUSTED NET WORTH RATIO......................................... 49
9.17 EBITDA...................................................................................... 49
9.18 TOTAL SENIOR DEBT/EBITDA RATIO.............................................................. 49
9.19 LIQUIDITY................................................................................... 49
9.20 LICENSE AGREEMENTS.......................................................................... 50
9.21 COSTS AND EXPENSES.......................................................................... 50
9.22 DEPOSITORY ACCOUNTS......................................................................... 51
9.23 FURTHER ASSURANCES.......................................................................... 51
9.24 REGULATION U................................................................................ 51
SECTION 10. EVENTS OF DEFAULT AND REMEDIES.............................................................. 52
10.1 EVENTS OF DEFAULT........................................................................... 52
10.2 REMEDIES.................................................................................... 54
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW................................ 57
11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL WAIVER....................... 57
11.2 WAIVER OF NOTICES........................................................................... 59
11.3 AMENDMENTS AND WAIVERS...................................................................... 59
11.4 WAIVER OF COUNTERCLAIMS..................................................................... 59
11.5 INDEMNIFICATION............................................................................. 59
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS............................................................ 60
12.1 TERM........................................................................................ 60
12.2 INTERPRETATIVE PROVISIONS................................................................... 61
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12.3 NOTICES..................................................................................... 63
12.4 PARTIAL INVALIDITY.......................................................................... 64
12.5 SUCCESSORS.................................................................................. 64
12.6 ENTIRE AGREEMENT............................................................................ 64
12.7 COUNTERPARTS, ETC........................................................................... 64
12.8 CONFIDENTIALITY............................................................................. 65
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INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Compliance Certificate
Schedule 1.48 Permitted Dispositions
Schedule 1.49 Permitted Holders
Schedule 1.50 Permitted Indebtedness
Schedule 1.51 Permitted Loans, Advances and Investments
Schedule 1.52 Permitted Liens
Schedule 1.57 Proposed Reorganization
Schedule 5.2 Deposit Accounts
Schedule 8.2 Locations
Schedule 8.4 Liens and Security Interests
Schedule 8.6 Litigation
Schedule 8.11 Intellectual Property
Schedule 8.12 Subsidiaries
Schedule 8.15 Material Contracts
Schedule 9.9 Indebtedness
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated February 19, 2004, is entered
into by and between Fifth Third Bank, an Ohio banking corporation ("Lender") and
▇▇▇▇▇▇▇▇.▇▇▇, a Nevada corporation ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender enter into financing
arrangements with Borrower pursuant to which Lender may make loans to Borrower;
and
WHEREAS, Lender is willing to make such loans on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of Borrower to
payment of a monetary obligation, whether or not earned by performance, which is
not evidenced by chattel paper or an instrument, (a) for property that has been
or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for
services rendered or to be rendered, (c) for a secondary obligation incurred or
to be incurred, or (d) arising out of the use of a credit or charge card or
information contained on or for use with the card.
1.2 "Affiliate" shall mean, with respect to a specified Person, any
other Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes (a) any Person which
beneficially owns or holds fifteen (15%) percent or more of any class of Voting
Stock of such Person or other equity interests in such Person, (b) any Person of
which such Person beneficially owns or holds fifteen (15%) percent or more of
any class of Voting Stock or in which such Person beneficially owns or holds
fifteen (15%) percent or more of the equity interests and (c) any director or
executive officer of such Person. For the purposes of this definition, the term
"control" (including with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of Voting Stock, by agreement or otherwise.
1.3 "Agreement" shall mean, this Loan and Security Agreement, as the
same now exists or may be amended, supplemented, restated, replaced, or
otherwise modified from time to time.
1.4 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of Florida, or the State of Ohio, and a day on which the
Lender is open for the transaction of business, except that if a determination
of a Business Day shall relate to any Loans, the term Business Day shall also
exclude any day on which banks are closed for dealings in Dollar deposits in the
London interbank market or other applicable LIBOR market.
1.5 "Capital Leases" shall mean, as applied to any Person, any lease of
(or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a Capital Lease liability or funded indebtedness on
the balance sheet of such Person.
1.6 "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's capital stock or partnership, limited liability company or other
equity interests at any time outstanding, and any and all rights, warrants or
options exchangeable for or convertible into such capital stock or other
interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
1.7 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of ninety (90) days or less issued or directly
and fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof; provided, that, the full faith and credit of the United
States of America is pledged in support thereof; (b) certificates of deposit or
bankers' acceptances with a maturity of ninety (90) days or less of any
financial institution that is a member of the Federal Reserve System having
combined capital and unimpaired surplus of not less than $1,000,000,000; (c)
commercial paper (including variable rate demand notes) with a maturity of
ninety (90) days or less issued by a corporation (except an Affiliate of
Borrower) organized under the laws of any State of the United States of America
or the District of Columbia and rated at least A-1 by Standard & Poor's Ratings
Service, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or at least P-1 by
▇▇▇▇▇'▇ Investors Service, Inc.; (d) repurchase obligations with a term of not
more than thirty (30) days for underlying securities of the types described in
clause (a) above entered into with any financial institution having combined
capital and unimpaired surplus of not less than $1,000,000,000; (e)
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repurchase agreements and reverse repurchase agreements relating to marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or issued by any governmental agency thereof and backed by the full
faith and credit of the United States of America, in each case maturing within
ninety (90) days or less from the date of acquisition; provided, that, the terms
of such agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions with Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October 31, 1985; and (f)
investments in money market funds and mutual funds that are registered under the
Investment Company Act of 1940 as amended which invest substantially all of
their assets in securities of the types described in clauses (a) through (e)
above.
1.8 "Change of Control" shall mean (a) the transfer (in one transaction
or a series of transactions) of all or substantially all of the assets of
Borrower to any Person or group (as such term is used in Section 13(d)(3) of the
Exchange Act); (b) the liquidation or dissolution of Borrower or the adoption of
a plan by the stockholders of Borrower relating to the dissolution or
liquidation of Borrower; (c) in one transaction or a series of related
transactions, the acquisition by any Person or group (as such term is used in
Section 13(d)(3) of the Exchange Act), of beneficial ownership, directly or
indirectly, of a majority of the voting power of the total outstanding Voting
Stock of Borrower or the Board of Directors of Borrower; (d) during any fiscal
year, individuals who after the date hereof and at the beginning of such period
constituted the Board of Directors of Borrower (together with any new directors
who have been appointed by any Permitted Holder, or whose nomination for
election by the stockholders of Borrower, as the case may be, was approved by a
vote of at least a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of Borrower then still in office, other than
for death or disability.
1.9 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules and regulations thereunder or related
thereto.
1.10 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.11 "Collateral Access Agreement" shall mean an agreement in writing,
in form and substance satisfactory to Lender, by a lessor of premises to
Borrower, or any other person to whom any Collateral (including Inventory,
Equipment, bills of lading or other documents of title) is consigned or who has
custody, control or possession of any such Collateral or is otherwise the owner
or operator of any premises on which any of such Collateral is located, in favor
of Lender waiving or
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subordinating any rights of such lessor other person with respect to the
Collateral and granting Lender certain rights.
1.12 "Commitment" shall mean that certain Commitment Letter dated
August 18, 2003 from Lender to Borrower as accepted and agreed to in writing by
Borrower.
1.13 "Consistent Basis" means in reference to the application of GAAP,
that the accounting principles observed in the current period are comparable in
all material respects to those applied in the preceding period.
1.14 "Default" shall mean an act, condition or event which with notice
or passage of time or both would constitute an Event of Default.
1.15 "EBITDA" shall mean with respect to Borrower and its Subsidiaries
net income for any accounting period plus (i) the amount of the provision for
federal, state and local income tax for such period, plus (ii) the amount of
interest expense during such period under GAAP, plus (iii) the amount of the
provision for depreciation and amortization and other non-cash charges for such
period determined in accordance with GAAP, plus (iv) in respect of any
acquisition of any Person, all or substantially all of the assets of such Person
or any division or business unit of such Person, the EBITDA of such Person,
division or unit, as applicable, for the six (6) months preceding such
acquisition (divided by six (6), then multiplied by twelve (12)), and, in the
case of amounts described in clauses (i), (ii) and (iii), only to the extent
deducted in determining net income for such period.
1.16 "Environmental Laws" shall mean all foreign, Federal, State and
local laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between Borrower and any
Governmental Authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. The term "Environmental Laws" includes (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the Federal Solid
Waste Disposal and the Federal Toxic Substances Control Act, the Federal
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Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws, and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
1.17 "Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment, wherever located, including machinery, data processing and
computer equipment and computer hardware and software, whether owned or
licensed, and including embedded software, vehicles, tools, furniture, fixtures,
all attachments, accessions and property now or hereafter affixed thereto or
used in connection therewith, and substitutions and replacements thereof,
wherever located.
1.18 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, together with all rules and regulations thereunder or
related thereto.
1.19 "ERISA Affiliate" shall mean any person required to be aggregated
with Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.20 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a "prohibited
transaction" with respect to which Borrower or any of its Subsidiaries is a
"disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which Borrower or any of its Subsidiaries could otherwise be liable
if such liability is reasonably likely to have a Material Adverse Effect; (f) a
complete or partial withdrawal by the Borrower or any ERISA Affiliate from a
Multiemployer Plan or a cessation of operations which is treated as such a
withdrawal or notification that a Multiemployer Plan is in reorganization; (g)
the filing of a notice of intent to terminate, the treatment of a Plan amendment
as a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan; (h)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan; (i) the imposition of any liability under Title
IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due
but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA
Affiliate in
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excess of $1,000,000; and (j) any other event or condition with respect to a
Plan including any Plan subject to Title IV of ERISA maintained, or contributed
to, by any ERISA Affiliate that could reasonably be expected to result in
liability of Borrower in excess of $1,000,000.
1.21 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.22 "Exchange Act" shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.
1.23 "Excluded Property" means any of the following:
(a) any interest of Borrower in any contract right,
license, Receivable, general intangibles, Intellectual
Property agreement, any lease pertaining to real or personal
property or any other document, instrument or agreement, if
the granting of a security interest, lien or encumbrance
therein by Borrower to Lender is prohibited (i) by the terms
and provisions of the written agreement, document or
instrument creating or evidencing such Excluded Property or
rights related thereto, (ii) by applicable law, (iii) by a
valid and effective restriction or limitation imposed by
applicable law, regulation, rule, order or other directive of
any governmental body, agency or authority, or the order of
any court of competent jurisdiction, or (iv) or in the case of
any such Excluded Property, such item of Excluded Property
would be subject to loss or forfeiture upon the grant or
creation of a security interest, lien or encumbrance therein
(any of the foregoing, a "Valid Restriction"); provided,
however, Lender will be deemed to have, and at all times from
and after the date hereof to have had, a security interest in
the proceeds of such Excluded Property to the extent that
proceeds of such Excluded Property have come into the
possession of the Lender or otherwise constitute a portion of
the Collateral;
(b) any Equipment or Inventory that is subject to a
purchase money security interest or Capital Lease that
contains a Valid Restriction;
(c) Inventory or other property held pursuant to
consignment arrangements in which a Borrower is the consignee;
(d) any motor vehicles owned or leased by Borrower;
(e) any Exempt DDA;
(f) any stock or other interest in any Subsidiary;
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(g) any life insurance in which Borrower has an interest;
or
(h) any interest in real property.
1.24 "Executive Officers" shall mean Borrower's Chief Executive
Officer, Chief Financial Officer and Vice President Finance.
1.25 "Exempt DDA" means any depository account maintained by Borrower
used solely (i) for ▇▇▇▇▇ cash purposes; (ii) for payroll; (iii) for charitable
contributions; or (iv) for medical, pension, benefits, VEBA, employees, taxes,
stock options and like special purpose accounts.
1.26 "Financing Agreements" shall mean, collectively, this Agreement,
the Commitment, the Note, and all other notes, guarantees, security agreements,
deposit account control agreements, investment property control agreements,
intercreditor agreements, and all other agreements, documents and instruments
now or at any time hereafter executed and/or delivered by Borrower or any
Obligor in connection with this Agreement.
1.27 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Sections 9.17, 9.18 and 9.19 hereof, GAAP shall be determined on
the basis of such principles in effect on the date hereof and consistent with
those used in the preparation of the most recent audited financial statements
delivered to Lender prior to the date hereof.
1.28 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
1.29 "Guarantor" shall mean (i) any parent company of Borrower formed
pursuant to the Proposed Reorganization, (ii) all domestic wholly-owned
Subsidiaries of Borrower including, without limitation, Miva Corporation, and
(iii) all other domestic Subsidiaries of Borrower provided that a Subsidiary
shall not be required to become a Guarantor hereunder in the event that the
constituent documents of such Subsidiary, at the time of investment by the
Borrower, prohibit a guarantee of the Obligations by the Subsidiary.
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1.30 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.31 "Indebtedness" shall mean, (without duplication) with respect to
any Person, any liability, whether or not contingent, (a) in respect of borrowed
money (whether or not the recourse of the lender is to the whole of the assets
of such Person or only to a portion thereof) or evidenced by bonds, notes,
debentures or similar instruments; (b) representing the balance deferred and
unpaid of the purchase price of any property or services (except (i) any such
balance that constitutes an account payable to a trade creditor (whether or not
an Affiliate) created, incurred, assumed or guaranteed by such Person in the
ordinary course of business of such Person in connection with obtaining goods,
materials or services or other accrued expenses, and (ii) any conditional
"earnout" or other deferred payments owed or to be owed by Borrower in
connection with any investment or acquisition not prohibited by this Agreement);
(c) all obligations as lessee under leases which have been, or should be, in
accordance with GAAP recorded as Capital Leases; (d) any contractual obligation,
contingent or otherwise, of such Person to pay or be liable for the payment of
any indebtedness described in this definition of another Person, including,
without limitation, any such indebtedness, directly or indirectly guaranteed, or
any agreement to purchase, repurchase, or otherwise acquire such indebtedness,
obligation or liability or any security therefor, or to provide funds for the
payment or discharge thereof, or to maintain solvency, assets, level of income,
or other financial condition; (e) all reimbursement obligations and other
liabilities of such Person with respect to surety bonds (whether bid,
performance or otherwise), letters of credit, banker's acceptances, drafts or
similar documents or instruments issued for such Person's account; (f) all
indebtedness of such Person in respect of indebtedness of another Person for
borrowed money or indebtedness of another Person otherwise described in this
definition which is secured by any consensual lien, security interest,
collateral assignment, conditional sale, mortgage, deed of trust, or other
encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person, all as of such time; and (g) all obligations, liabilities and
indebtedness of such Person (marked to market) arising under swap agreements,
cap agreements and collar agreements and other agreements or arrangements
designed to protect such person against fluctuations in interest rates or
currency or commodity values.
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1.32 "Intellectual Property" shall mean Borrower's now owned and
hereafter arising or acquired: patents, patent rights, patent applications,
copyrights, works which are the subject matter of copyrights, copyright
registrations, copyright applications, trademarks, service marks, trade names,
trade styles, trademark and service ▇▇▇▇ applications, and licenses and rights
to use any of the foregoing; all extensions, renewals, reissues, divisions,
continuations, and continuations-in-part of any of the foregoing; all rights to
▇▇▇ for past, present and future infringement of any of the foregoing;
inventions, trade secrets, formulae, processes, compounds, drawings, designs,
blueprints, surveys, reports, manuals, and operating standards; goodwill
(including any goodwill associated with any trademark or the license of any
trademark); customer and other lists in whatever form maintained; and trade
secret rights, copyright rights, rights in works of authorship, domain names and
domain name registrations; software and contract rights relating to software, in
whatever form created or maintained.
1.33 "Interest Rate" shall mean as to Prime Rate Loans, a rate equal to
the Prime Rate, and as to LIBOR Loans, the floating LIBOR per annum, as
hereinafter defined, plus 275 basis points. For purposes of this Agreement, the
term "LIBOR" shall mean the "one month" London Interbank Offered Rates, being
the average of interbank rates for dollar deposits in the London market, all as
published in the Wall Street Journal, on the first business day of each month.
Any change in LIBOR shall change the rate of interest charged hereunder
effective at 12:01 A.M. on the day any such change in LIBOR is published,
provided, however, that said interest rate shall never exceed the maximum rate
allowed, from time to time, by law and shall change only once a month pursuant
to the term of the next sentence. It is the intent that any changes in the
interest rate charged hereunder based upon changes in LIBOR shall occur only
once a month, based upon the LIBOR rate on the first business day of the month.
If at anytime LIBOR is no longer published regularly in the Wall Street Journal,
Lender may select a reasonably comparable rate.
1.34 "Inventory" shall mean all of Borrower's now owned and hereafter
existing or acquired goods, wherever located, which (a) are leased by Borrower
as lessor; (b) are held by Borrower for sale or lease or to be furnished under a
contract of service; (c) are furnished by Borrower under a contract of service;
or (d) consist of raw materials, work in process, finished goods or materials
used or consumed in its business.
1.35 "Investment Property Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Lender, by and among Lender,
Borrower and any securities intermediary, commodity intermediary or other person
who has custody, control or possession of any investment property of Borrower
acknowledging that such securities intermediary, commodity intermediary or other
person has custody, control or possession of such investment property on behalf
of Lender, that it will comply with entitlement orders originated by Lender with
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respect to such investment property, or other instructions of Lender, and
including such other terms and conditions as Lender may require.
1.36 "Lender Payment Account" shall mean such account of Lender as
Lender may from time to time designate to Borrower as the Lender Payment Account
for purposes of this Agreement.
1.37 "LIBOR Rate Loans" shall mean any loans or portion thereof on
which interest is payable based on the LIBOR rate in accordance with the terms
thereof. "LIBOR" is defined in the definition of Interest Rate.
1.38 "License Agreements" shall have the meaning set forth in Section
8.11 hereof.
1.39 "Line of Business" shall mean developer and provider of
performance-based marketing services for the Internet and any business
incidental thereto.
1.40 "Loans" shall mean the Revolving Loans.
1.41 "Material Adverse Effect" shall have the meaning assigned in the
Material Contract definition.
1.42 "Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements), written or oral, of Borrower involving
monetary liability of or to any Person in an amount in excess of $1,000,000 in
any month and (b) any other contract or other agreement (other than the
Financing Agreements), whether written or oral, to which Borrower is a party as
to which the breach, nonperformance, cancellation or failure to renew by any
party thereto is reasonably likely to have a material adverse effect on the
business, assets, condition (financial or otherwise) or results of operations of
Borrower or the validity or enforceability of this Agreement, any of the other
Financing Agreements, or any of the rights and remedies of Lender hereunder or
thereunder (a "Material Adverse Effect").
1.43 "Maximum Credit" shall mean the amount of $10,000,000.
1.44 "Merger Agreement" shall mean that certain Amended and Restated
Agreement and Plan of Merger among Borrower, Who Merger Corp., a wholly-owned
direct Subsidiary of Borrower and Espotting Media Inc. dated February 9, 2004;
or, subject to Lender's approval which shall not unreasonably be withheld, such
Agreement as amended, supplemented restated, replaced or otherwise materially
modified.
1.45 "Multiemployer Plan" shall mean a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year
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or the immediately preceding six (6) years contributed to by Borrower or any
ERISA Affiliate.
1.46 "Obligations" shall mean any and all Revolving Loans, and all
other obligations, liabilities and indebtedness of every kind, nature and
description owing by Borrower to Lender and/or its subsidiaries or other
affiliates, including principal, interest, charges, fees, costs and expenses,
however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, whether arising under this Agreement or otherwise, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement or after the commencement of any
case with respect to Borrower under the United States Bankruptcy Code or any
similar statute (including the payment of interest and other amounts which would
accrue and become due but for the commencement of such case, whether or not such
amounts are allowed or allowable in whole or in part in such case), whether
direct or indirect, absolute or contingent, joint or several, due or not due,
primary or secondary, liquidated or unliquidated, secured or unsecured, and
however acquired by Lender.
1.47 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrower.
1.48 "Permitted Disposition" means any of the following:
(a) licenses of Intellectual Property of Borrower, any
Obligor, or any Subsidiary in the ordinary course of business;
(b) leases or subleases of leases of property of
Borrower;
(c) sales, assignments, transfers, conveyances or other
dispositions of any or all of the property specified in
Schedule 1.48 hereof;
(d) (i) the sale of any property, land or building
(including any related receivables or other intangible assets)
to any Person not an Affiliate, or (ii) the sale of the entire
capital stock (or other equity interests) and Indebtedness of
any Subsidiary owned by Borrower to any Person not an
Affiliate, or (iii) the consummation of any other asset sale
with a Person who is not an Affiliate, provided that:
A. the consideration for such transaction represents
fair value, and at least 75% of such consideration
consists of cash;
B. the aggregate consideration for all such transactions
completed in any fiscal year does not exceed
$500,000;
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C. the aggregate consideration for all such transactions
completed after the closing date does not exceed
$1,000,000; and
D. other than in connection with a transaction, the
aggregate consideration for which is equal to an
amount less than $250,000, at least five (5) Business
Days prior to the date of completion of such
transaction Borrower shall have delivered to Lender
an officer's certificate executed on behalf of such
Obligor by an Executive Officer of such Obligor,
which certificate shall contain a description of the
proposed transaction, the date such transaction is
scheduled to be consummated, the estimated purchase
price or other consideration for such transaction,
financial information pertaining to compliance with
the preceding clause (A), and which shall (if
requested by Lender) include a certified copy of the
draft or definitive documentation pertaining thereto.
1.49 "Permitted Holders" shall mean the persons listed on Schedule 1.49
hereto and their respective successors and assigns.
1.50 "Permitted Indebtedness" means any of the following:
(a) Indebtedness incurred under this Agreement and the
other Loan Documents;
(b) Indebtedness incurred in connection with the
acquisition of Equipment;
(c) Indebtedness consisting of all obligations of
Borrower or any Subsidiary (i) as lessee under a Capital Lease
or (i) under any lease which is accounted for by the lessee as
an operating lease and under which the lessee is intended to
be the "owner" of the leased property for Federal income tax
purposes;
(d) Indebtedness of Borrower or any Obligor under
derivative, swap or hedge agreements in respect of any
Indebtedness arising under this Agreement;
(e) Indebtedness listed on Schedule 1.50 hereof;
(f) Indebtedness to sellers in connection with
acquisitions permitted hereunder;
(g) intercompany Indebtedness between or among Borrower
and any Subsidiary of Borrower; and
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(h) Indebtedness subordinated to Lender pursuant to any
indenture, instrument, subordination agreement or other
agreement reasonably satisfactory of Lender;
(i) Indebtedness of any Person acquired by Borrower under
an acquisition not prohibited by this Agreement;
(j) Indebtedness incurred in connection with financing
insurance premiums; and
(k) Indebtedness arising out of the refinancing,
extension, renewal or refunding of any Indebtedness referred
to above or otherwise permitted under this Agreement.
1.51 "Permitted Investments" means each of the following:
(a) direct obligations of, or obligations the principal
of and interest on which are unconditionally guaranteed by,
the United States of America (or by any agency thereof to the
extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing
not more than one year from the date of acquisition thereof;
(b) investments in commercial paper maturing not more
than one year from the date of acquisition thereof and having,
at such date of acquisition, the highest credit rating
obtainable from Standard & Poors or from ▇▇▇▇▇'▇ Investment
Services, Inc.;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing not more than one year
from the date of acquisition thereof issued or guaranteed by
or placed with, and money market deposit accounts issued or
offered by, any domestic office of any financial institution
organized under the laws of the United States of America or
any State thereof that has a combined capital and surplus and
undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a
term of not more than 30 days for securities described in
clause (a) above (without regard to the limitation on maturity
contained in such clause) and entered into with a financial
institution satisfying the criteria described in clause (c)
above;
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(e) marketable direct obligations issued by any state of
the United States of America or any political subdivision of
any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at
the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poors or from ▇▇▇▇▇'▇
Investment Services, Inc.;
(f) investments in money market funds, substantially all
the assets of which are comprised of securities of the types
described in clauses (a) through (e) above;
(g) investments in money market funds access to which is
provided as part of any "sweep" account;
(h) investments acquired by Borrower or any Subsidiary
(i) in exchange for any other investment held by such Person
in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such other
investment, or (ii) as a result of a foreclosure by such
Person with respect to any secured investment or other
transfer of title with respect to any secured investment in
default; provided, that, the original of any such stock or
instrument evidencing such obligations shall be promptly
delivered to Lender, upon Lender's request, together with such
stock power, assignment or endorsement by Borrower as Lender
may request;
(i) investments in any Subsidiary including without
limitation any acquisitions permitted hereunder;
(j) to the extent not permitted by the foregoing clauses,
existing investments in any Subsidiaries (and any increases
thereof attributable to increases in retained earnings);
(k) investments of Borrower or any Subsidiary in
derivative, swap or hedge agreements in connection with
Indebtedness arising under this Agreement;
(l) investments of any Person which are outstanding at
the time such Person becomes a Subsidiary as a result of an
acquisition permitted hereunder, but not any increase in the
amount thereof;
(m) any other investments (whether in the form of cash or
contribution of property, and if in the form of a contribution
of property, such property shall be valued for purposes of
this clause at the fair value thereof as reasonably determined
by the relevant Loan
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Party) in any corporation, partnership, limited liability
company, joint venture or other business entity, which is not
itself a Subsidiary of a Borrower or owned or controlled by
any director, officer or employee of a Borrower or any of its
Subsidiaries, not otherwise permitted by the foregoing
clauses, made after the date of this Agreement, shall be
permitted to be incurred if (i) no Event of Default shall have
occurred and be continuing, or would result therefrom, and
(ii) the aggregate cumulative amount of such investments after
the date of this Agreement does not exceed $500,000;
(n) Cash or Cash Equivalents;
(o) Obligations of account debtors to Borrower arising
from accounts which are past due evidenced by a promissory
note made by such account debtor payable to Borrower;
(p) the endorsement of instruments for collection or
deposit in the ordinary course of business; and
(q) to the extent not permitted by the foregoing clauses,
the existing loans, advances and investments described on
Schedule 1.51 hereto and any refinancing thereof; provided
that, as to any such loans and advances, (i) Borrower shall
not, directly or indirectly, amend, modify, alter or change
the terms of such loans and advances or any agreement,
document or instrument related thereto in a manner adverse to
Borrower except as otherwise permitted in any collateral
assignment or pledge to Lender applicable to such loan or
advance, and (ii) Borrower shall furnish to Lender all notices
or demands in connection with such loans and advances either
received by Borrower or on its behalf, promptly after the
receipt thereof, or sent by Borrower or on its behalf,
concurrently with the sending thereof, as the case may be;
1.52 "Permitted Lien" means any of the following:
(a) liens or encumbrances for taxes not yet delinquent or
which are being contested in good faith by appropriate
proceedings, provided that adequate reserves in accordance
with GAAP (and in the good faith judgment of the management of
such Obligor with respect thereto are maintained on the books
of such Obligor;
(b) liens or encumbrances in respect of property or
assets imposed by law in the ordinary course of business, such
as carrier's, warehousemen's, processor's mechanics',
materialmen's, repairmen's, landlord's or similar encumbrances
which do not in the aggregate
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materially detract from the value of such property or assets
or materially impair the use thereof in the operation of the
business of such Person or which are being contested in good
faith by such Person, by appropriate proceedings diligently
instituted and conducted and without danger of any material
risk to the Collateral and such reserve or other appropriate
provision, if any, as shall be required in conformity with
GAAP shall have been made therefor;
(c) liens, encumbrances, pledges or deposits in
connection with workers' compensation, unemployment and social
security;
(d) deposits, liens or encumbrances, to secure the
performance of tenders, bids, sales, trade and government
contracts, leases, statutory obligations, surety, appeal bonds
and supersedes, warranty, advance payment, appeal, customs,
performance and return-of-money bonds and other obligations of
a like nature in the ordinary course of business whether
pursuant to statutory requirements, common law or consensual
arrangements;
(e) any lien or encumbrance, UCC financing statement,
interest or title of a lessor under any lease entered into in
the ordinary course of business; or any interest or title of
any lessee under any leases or subleases of real property;
(f) rights of consignors of goods, whether or not
perfected by the filing of a financing statement under the
UCC;
(g) liens and encumbrances arising from judgments,
decrees or attachments with respect to which execution has
been stayed, with respect to which payment in excess of any
applicable deductible is covered by insurance or a bond, or in
circumstances not constituting an Event of Default hereunder;
(h) defects and irregularities in titles, survey
exceptions, encumbrances, licenses, covenants, restrictions,
easements or reservations of others for rights-of-way, roads,
pipelines, railroad crossings, services, utilities or other
similar purposes; outstanding mineral rights or reservations
(including rights with respect to the removal of material
resource) which do not materially diminish the value of the
surface estate, assuming usage of such surface estate similar
to that being carried on by any Person as of the effective
date;
(i) liens or encumbrances created by this Agreement or
the other loan documents executed in connection herewith;
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(j) liens and encumbrances listed on Schedule 1.52,
annexed hereto;
(k) liens or encumbrances which are placed upon equipment
or machinery or improvements to real property (including the
associated real property) used in the ordinary course of
business of Borrower or any Subsidiary contemporaneously with
the acquisition of such equipment or machinery or the
completion of such improvements by such Person to secure
Indebtedness incurred to pay or finance all or a portion of
the purchase price or other cost thereof and any such liens or
encumbrances which arise in connection with a refinance of any
such Indebtedness;
(l) liens or encumbrances securing reimbursement
obligations with respect to commercial letters of credit;
(m) liens or encumbrances on any of Borrower's interest
in life insurance on any officer, director of employee;
(n) any lien or encumbrances securing Indebtedness
assumed in connection with, or continuing to exist after but
not incurred in connection with, an acquisition permitted
hereunder, which liens were in effect prior to the
consummation of such acquisition;
(o) any lien or encumbrance created in connection with
the financing of insurance premiums; and
(p) any lien or encumbrance in connection with any
refinancing, refunding extension or renewal of any
Indebtedness permitted pursuant to this Agreement.
1.53 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which elects
subchapter S status under the Code), limited liability company, limited
liability partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.54 "Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA) covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code which Borrower sponsors, maintains, or
to which it makes, is making, or is obligated to make contributions, or in the
case of a Multiemployer Plan has made contributions at any time during the
immediately preceding six (6) plan years.
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1.55 "Prime Rate" shall mean the rate from time to time publicly
announced by Lender, or its successors, as its prime rate, whether or not such
announced rate is the best rate available at such bank.
1.56 "Prime Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.57 "Proposed Reorganization" means the corporate reorganization set
forth in Schedule 1.57 attached hereto.
1.58 "Real Property" shall mean all now owned and hereafter acquired
real property of Borrower, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located.
1.59 "Receivables" shall mean all of the following now owned or
hereafter arising or acquired property of Borrower: (a) all Accounts; (b) all
interest, fees, late charges, penalties, collection fees and other amounts due
or to become due or otherwise payable in connection with any Account; (c) all
payment intangibles of Borrower and other contract rights, chattel paper,
instruments, notes, and other forms of obligations owing to Borrower, whether
from the sale and lease of goods or other property, licensing of any property
(including Intellectual Property or other general intangibles), rendition of
services or from loans or advances by Borrower or to or for the benefit of any
third person (including loans or advances to any Affiliates or Subsidiaries of
Borrower) or otherwise associated with any Accounts, Inventory or general
intangibles of Borrower (including, without limitation, choses in action, causes
of action, tax refunds, tax refund claims, any funds which may become payable to
Borrower in connection with the termination of any Plan or other employee
benefit plan and any other amounts payable to Borrower from any Plan or other
employee benefit plan, rights and claims against carriers and shippers, rights
to indemnification, business interruption insurance and proceeds thereof, and
casualty or any similar types of insurance and any proceeds thereof.
1.60 "Records" shall mean all of Borrower's present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of Borrower with respect to the
foregoing maintained with or by any other person).
1.61 "Reserves" shall mean as of any date of determination, such
amounts as Lender may from time to time establish and revise in good faith
reducing the amount of Revolving Loans which would otherwise be available to
Borrower under
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the lending formula(s) provided for herein: (a) to reflect events, conditions,
contingencies or risks which, as determined by Lender in good faith, adversely
affect, or would have a reasonable likelihood of adversely affecting, either (i)
the Collateral or any other property which is security for the Obligations or
its value, (ii) the assets, business or prospects of Borrower or any Obligor or
(iii) the security interests and other rights of Lender in the Collateral
(including the enforceability, perfection and priority thereof) or (b) to
reflect Lender's good faith belief that any collateral report or financial
information furnished by or on behalf of Borrower or any Obligor to Lender is or
may have been incomplete, inaccurate or misleading in any material respect or
(c) in respect of any state of facts which Lender determines in good faith
constitutes a Default or an Event of Default. The amount of any Reserve
established by Lender shall have a reasonable relationship to the event,
condition or other matter which is the basis for such reserve as determined by
Lender in good faith.
1.62 "Revolving Loan Limit" shall mean $10,000,000.
1.63 "Revolving Loans" shall mean the loans now or hereafter made by
Lender to or for the benefit of Borrower on a revolving basis (involving
advances, repayments and readvances) as set forth in Section 2.1 hereof.
1.64 "Solvent" shall mean, at any time with respect to any Person, that
at such time such Person (a) is able to pay its debts as they mature and has
(and has a reasonable basis to believe it will continue to have) sufficient
capital (and not unreasonably small capital) to carry on its business consistent
with its practices as of the date hereof, and (b) the assets and properties of
such Person at a fair valuation (and including as assets for this purpose at a
fair valuation all rights of subrogation, contribution or indemnification
arising pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability). The determination
of whether a Person is Solvent shall take into account all such Person's
properties and liabilities regardless of whether, or the amount at which, any
such property or liability is included on a balance sheet of such Person
prepared in accordance with GAAP, including properties such as contingent
contribution or subrogation rights, business prospects, distribution channels
and goodwill. The determination of the sum of a Person's properties at a fair
valuation or the present fair saleable value of a Person's properties shall be
made on a going concern basis, unless at the time of such determination the
liquidation of the business in which such properties are used or useful is in
process or is demonstrably imminent. In computing the amount of contingent or
unrealized properties or contingent or unliquidated liabilities at any time,
such properties and liabilities will be computed
-19-
at the amounts which, in light of all the facts and circumstances existing at
such time, represent the amount that reasonably can be expected to become
realized properties or matured liabilities, as the case may be. In computing the
amount that would be required to pay a Person's probable liability on its
existing debts as they become absolute and matured, reasonable valuation
techniques, including a present value analysis, shall be applied using such
rates over such periods as are appropriate under the circumstances, and it is
understood that, in appropriate circumstances, the present value of contingent
liabilities may be zero.
1.65 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or other
business entity of which an aggregate of at least a majority of the outstanding
Capital Stock or other interests entitled to vote in the election of the board
of directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), managers, trustees
or other controlling persons, or an equivalent controlling interest therein, of
such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more subsidiaries of such Person.
1.66 "Tangible Adjusted Net Worth" shall mean in respect of Borrower
and its Subsidiaries an amount equal to total assets, plus goodwill attributable
to cash paid in connection with the acquisition of any business otherwise
permitted hereunder, minus Total Intangible Assets, minus total liabilities,
calculated in accordance with GAAP applied on a Consistent Basis.
1.67 "Total Intangible Assets" of any Person shall be determined in
accordance with GAAP applied on a Consistent Basis, but in any event shall be
deemed to include the excess of costs over the assets of acquired businesses,
formulae, trademarks, patents, patent rights and deferred expenses (including,
but not limited to, organization expense, experimental and developmental
expenses, but excluding prepaid expenses, investments in Subsidiaries and
unamortized debt discount and expense).
1.68 "Total Senior Debt" shall mean any and all Indebtedness described
in clauses (a), (b) and (c) of the definition of Indebtedness and equity not
fully subordinated to debt of Borrower to Lender and shall include, without
limitation, sums and obligations owed to Lender arising out of any of the
Financing Agreements.
1.69 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of Florida, and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of Florida on the date hereof shall continue to have
the same
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meaning notwithstanding any replacement or amendment of such statute except as
Lender may otherwise determine).
1.70 "Voting Stock" shall mean with respect to any Person, (a) one (1)
or more classes of Capital Stock of such Person having general voting powers to
elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
SECTION 2. CREDIT FACILITY
Revolving Loans.
(a) Subject to and upon the terms and conditions
contained herein, Lender agrees to make Revolving Loans to Borrower from time to
time in amounts requested by Borrower up to the Revolving Loan Limit.
(b) Except in Lender's discretion, the aggregate amount
of the Revolving Loans outstanding at any time shall not exceed the Revolving
Loan Limit; provided, however, that notwithstanding anything in this Agreement
to the contrary, the aggregate principal balance of the outstanding Revolving
Loans shall not exceed $5,000,000 for a single period of not less than thirty
consecutive days during the first 12 months from the date of funding of the
initial Loans hereunder. In the event that the outstanding amount of any
component of the Loans exceeds the amount available pursuant to the Revolving
Loan Limit, such event shall not limit, waive or otherwise affect any rights of
Lender in that circumstance or on any future occasions and Borrower shall, upon
demand by Lender, which may be made at any time or from time to time,
immediately repay to Lender the entire amount of any such excess(es) for which
payment is demanded.
(c) Borrower may from time to time request Loans and each
such request from Borrower shall specify the amount of the Loan requested.
Subject to the terms and conditions contained herein, two (2) Business Days
after receipt by Lender of such a request from Borrower, such Loan shall be
made, provided, that, (i) no Default or Event of Default shall exist or have
occurred and be continuing, (ii) no party hereto shall have sent any notice of
termination of this Agreement, (iii) Borrower shall have complied with such
customary procedures as are established by Lender and specified by Lender to
Borrower from time to time for requests by Borrower for Loans, (iv) the amount
of the Loan must be in an amount not less than $250,000 or an integral multiple
of $50,000 in excess thereof, and (v) Lender shall have determined that the
Interest Rate can be readily determined as of the date of the request. Any
request by Borrower for Loans shall be irrevocable.
-21-
Notwithstanding anything to the contrary contained herein, Lender shall not be
required to purchase United States Dollar deposits in the London interbank
market or other applicable market to fund Loans, but the provisions hereof shall
be deemed to apply as if Lender had purchased such deposits to fund the Loans.
2.2 Note. The obligation to repay the Loans is
evidenced by this Agreement and a Revolving Credit Note of even date herewith
(the "Note").
SECTION 3. INTEREST
3.1 Interest.
(a) Borrower shall pay to Lender interest on the
outstanding principal amount of the Loans at the Interest Rate. All interest
accruing hereunder on and after the date of any Event of Default or termination
hereof shall be payable on demand.
(b) Borrower may from time to time request LIBOR Loans or
may request that Prime Rate Loans be converted to LIBOR Loans. Such request from
Borrower shall specify the amount of the LIBOR Loans or the amount of the Prime
Rate Loans to be converted to LIBOR Loans. Subject to the terms and conditions
contained herein, two (2) Business Days after receipt by Lender of such a
request from Borrower, such LIBOR Loans shall be made or Prime Rate Loans shall
be converted to LIBOR Loans provided, that, (i) no Default or Event of Default
shall exist or have occurred and be continuing, (ii) no party hereto shall have
sent any notice of termination or non-renewal of this Agreement, (iii) Borrower
shall have complied with such customary procedures as are established by Lender
and specified by Lender to Borrower from time to time for requests by Borrower
for LIBOR Loans, and (iv) Lender shall have determined that the LIBOR is
available to Lender and can be readily determined as of the date of the request
for such LIBOR Loan by Borrower. Any request by Borrower for LIBOR Loans or to
convert Prime Rate Loans to LIBOR Loans shall be irrevocable. Notwithstanding
anything to the contrary contained herein, Lender shall not be required to
purchase United States Dollar deposits in the London interbank market or other
applicable LIBOR market to fund any LIBOR Loans, but the provisions hereof shall
be deemed to apply as if Lender had purchased such deposits to fund the LIBOR
Loans.
(c) Any LIBOR Loans shall, at Lender's option, upon
notice by Lender to Borrower, convert to Prime Rate Loans in the event that this
Agreement shall terminate or not be renewed. Borrower shall pay to Lender, upon
demand by Lender (or Lender may, at its option, charge any loan account of
Borrower) any amounts required to compensate Lender, or any participant with
Lender for any loss (including loss of anticipated profits), cost or expense
incurred by such person, as a result of the conversion of LIBOR Loans to Prime
Rate Loans pursuant to the foregoing.
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(d) Interest shall be payable by Borrower to Lender
monthly in arrears not later than the first day of each calendar month and shall
be calculated on the basis of a three hundred sixty (360) day year and actual
days elapsed. The interest rate on non-contingent obligations (other than LIBOR
Loans) shall increase or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the first day of the month after any
change in such Prime Rate is announced based on the Prime Rate in effect on the
last day of the month in which any such change occurs. In no event shall charges
constituting interest payable by Borrower to Lender exceed the maximum amount or
the rate permitted under any applicable law or regulation, and if any such part
or provision of this Agreement is in contravention of any such law or
regulation, such part or provision shall be deemed amended to conform thereto.
3.2 Changes in Laws and Increased Costs of Loans.
(a) If after the date hereof, either (i) any change in,
or in the interpretation of, any law or regulation is introduced, including,
without limitation, with respect to reserve requirements, applicable to Lender
or any banking or financial institution from whom Lender borrows funds or
obtains credit (a "Funding Bank"), or (ii) a Funding Bank or Lender complies
with any future guideline or request from any central bank or other Governmental
Authority, or (iii) a Funding Bank or Lender determines that the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof has or would have the effect described
below, or a Funding Bank or Lender complies with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, and in the case of any event set
forth in this clause (iii), such adoption, change or compliance has or would
have the direct or indirect effect of reducing the rate of return on Lender's
capital as a consequence of its obligations hereunder to a level below that
which Lender could have achieved but for such adoption, change or compliance
(taking into consideration the Funding Bank's or Lender's policies with respect
to capital adequacy) by an amount deemed by Lender to be material, and the
result of any of the foregoing events described in clauses (i), (ii) or (iii) is
or results in an increase in the cost to Lender of funding or maintaining the
Loans, then Borrower shall from time to time upon demand by Lender pay to Lender
additional amounts sufficient to indemnify Lender against such increased cost on
an after-tax basis (after taking into account applicable deductions and credits
in respect of the amount indemnified). A certificate as to the basis and amount
of such increased cost shall be submitted to Borrower by Lender and shall be
conclusive, absent manifest error.
(b) If (i) Lender shall have determined in good faith
(which determination shall be conclusive and binding upon Borrower) that, by
reason of
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circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the LIBOR Rate, (ii) Lender determines that the LIBOR
Rate determined or to be determined will not adequately and fairly reflect the
cost to Lender of making or maintaining LIBOR Loans, or (iii) Dollar deposits in
the principal amounts of the LIBOR Loans are not generally available in the
London interbank market, Lender shall give telecopy or telephonic notice thereof
to Borrower as soon as practicable thereafter, and will also give prompt written
notice to Borrower when such conditions no longer exist. If such notice is
given, each outstanding LIBOR Loan shall be converted to a Prime Rate Loan.
Until such notice has been withdrawn by Lender, no further LIBOR Loans shall be
made, nor shall Borrower have the right to convert Prime Rate Loans to LIBOR
Rate Loans.
(c) Notwithstanding any other provision herein, if the
adoption of or any change in any law, treaty, rule or regulation or final,
non-appealable determination of an arbitrator or a court or other Governmental
Authority or in the interpretation or application thereof occurring after the
date hereof shall make it unlawful for Lender to make or maintain LIBOR Loans as
contemplated by this Agreement, (i) Lender shall promptly give written notice of
such circumstances to Borrower (which notice shall be withdrawn whenever such
circumstances no longer exist), (ii) the commitment of Lender hereunder to make
LIBOR Loans and continue LIBOR Loans as such shall forthwith be canceled until
such time as it shall no longer be unlawful for Lender to make or maintain LIBOR
Loans The commitment of Lender hereunder to make LIBOR Loans shall forthwith be
cancelled and, until such time as it shall no longer be unlawful for Lender to
make or maintain LIBOR Loans, Lender shall then have a commitment only to make a
Prime Rate Loan when a LIBOR Loan is requested and Loans then outstanding as
LIBOR Loans shall be converted automatically to Prime Rate Loans.
(d) Borrower shall indemnify Lender and agrees to hold
Lender harmless from any loss or expense which Lender may sustain as a
consequence of (i) default by Borrower in making a borrowing of or conversion
into LIBOR Loans after Borrower has given a notice requesting the same in
accordance with the provisions of this Agreement, and (ii) default by Borrower
in making any prepayment of a LIBOR Loan after Borrower has given a notice
thereof in accordance with the provisions of this Agreement. This covenant shall
survive the termination of this Agreement and the payment of the Obligations.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans. Each of
the following is a condition precedent to Lender making the initial Loans
hereunder:
(a) Lender shall have received, in form and substance
satisfactory to Lender, all releases, terminations and such other documents as
Lender may request to evidence and effectuate the termination by any existing
lenders other
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than Permitted Indebtedness to Borrower of their respective financing
arrangements with Borrower and the termination and release by it or them, as the
case may be, of any interest in and to any assets and properties of Borrower and
each Obligor, duly authorized, executed and delivered by it or each of them,
including, but not limited to, UCC termination statements for all UCC financing
statements previously filed by it or any of them or their predecessors, as
secured party and Borrower or any Obligor, as debtor;
(b) all requisite corporate action and proceedings in
connection with this Agreement and the other Financing Agreements shall be
satisfactory in form and substance to Lender, and Lender shall have received all
information and copies of all documents, including records of requisite
corporate action and proceedings which Lender may have requested in connection
therewith, such documents where requested by Lender or its counsel to be
certified by appropriate corporate officers or Governmental Authority (and
including a copy of the certificate of incorporation of Borrower certified by
the Secretary of State (or equivalent Governmental Authority) which shall set
forth the same complete corporate name of Borrower as is set forth herein and
such document as shall set forth the organizational identification number of
Borrower, if one is issued in its jurisdiction of incorporation);
(c) no material adverse change shall have occurred in the
assets, business or prospects of Borrower since the date of the Commitment and
no change or event shall have occurred which would impair the ability of
Borrower or any Obligor to perform its obligations hereunder or under any of the
other Financing Agreements to which it is a party or of Lender to enforce the
Obligations or realize upon the Collateral;
(d) Lender shall have completed a review of the Records
and such other information with respect to the Collateral as Lender may require;
(e) Lender shall have received, in form and substance
satisfactory to Lender, all consents, waivers, acknowledgments and other
agreements from third persons which Lender may deem reasonably necessary or
desirable in order to permit, protect and perfect its security interests in and
liens upon the Collateral or to effectuate the provisions or purposes of this
Agreement and the other Financing Agreements;
(f) Lender shall have received evidence, in form and
substance satisfactory to Lender, that Lender has a valid perfected first
priority security interest in all of the Collateral that can be perfected by a
UCC filing with Borrower's state of incorporation (other than Permitted Liens);
(g) Lender shall have received and reviewed lien and
judgment search results for the jurisdiction of incorporation or organization of
Borrower, the jurisdiction of the chief executive office of Borrower and all
jurisdictions in which
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assets of Borrower are located, which search results shall be in form and
substance satisfactory to Lender;
(h) Lender shall have received evidence of insurance and
loss payee endorsements required hereunder and under the other Financing
Agreements, in form and substance satisfactory to Lender, and certificates of
insurance policies and/or endorsements naming Lender as loss payee;
(i) Lender shall have received, in form and substance
satisfactory to Lender, such opinion letters of counsel to Borrower with respect
to the Financing Agreements and such other matters as Lender may request;
(j) Lender shall have received, in form and substance
satisfactory to Lender, a guarantee of the Obligations from each Guarantor;
(k) The Merger Agreement shall have been duly executed by
the parties thereto and delivered to Lender;
(l) Lender shall have received in form and substance
satisfactory to Lender, a Collateral Assignment and Pledge of Note in form and
substance satisfactory to Lender covering the promissory note to Borrower from
Espotting Media, Inc., dated February 9, 2004, in the principal amount of
$2,000,000;
(m) Lender shall have received, in form and substance
satisfactory to Lender, a Landlord Agreement from landlord of Borrower's
location at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇; and such other Collateral Access
Agreements as Lender shall request, each in form and substance satisfactory to
Lender; and
(n) the other Financing Agreements and all instruments
and documents hereunder and thereunder shall have been duly executed and
delivered to Lender, in form and substance satisfactory to Lender.
4.2 Conditions Precedent to All Loans. Each of the
following is an additional condition precedent to Lender making Loans to
Borrower, including the initial Loans and any future Loans:
(a) all representations and warranties contained herein
and in the other Financing Agreements shall be true and correct with the same
effect as though such representations and warranties had been made on and as of
the date of the making of each such Loan and after giving effect thereto, 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);
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(b) no law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or threatened in any court or before
any arbitrator or Governmental Authority, which (i) purports to enjoin,
prohibit, restrain or otherwise affect (A) the making of the Loans, or (B) the
consummation of the transactions contemplated pursuant to the terms hereof or
the other Financing Agreements or (ii) has or could reasonably be expected to
have a Material Adverse Effect on the assets, business or prospects of Borrower
or would impair the ability of Borrower to perform its obligations hereunder or
under any of the other Financing Agreements or of Lender to enforce any
Obligations or realize upon any of the Collateral;
(c) Lender shall have received, in form and substance
satisfactory to Lender, a guarantee of the Obligations from each Guarantor; and
(d) no Default or Event of Default shall exist or have
occurred and be continuing on and as of the date of the making of such Loan and
after giving effect thereto.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1 Grant of Security Interest. To secure payment and
performance of all Obligations, including, without limitation, the Revolving
Loans, Borrower hereby grants to Lender a continuing security interest in, a
lien upon, and a right of set off against, and hereby assigns to Lender as
security, all personal property and interests in property and fixtures of
Borrower, whether now owned or hereafter acquired or existing, and wherever
located other than Excluded Property (together with all other collateral
security for the Obligations at any time granted to or held or acquired by
Lender, collectively, the "Collateral"), including:
(a) all Accounts;
(b) all general intangibles, including, without
limitation, all Intellectual Property;
(c) all goods, including, without limitation, Inventory
and Equipment;
(d) all chattel paper (including all tangible and
electronic chattel paper);
(e) all instruments (including all promissory notes);
(f) all documents;
(g) all deposit accounts;
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(h) all letters of credit, banker's acceptances and
similar instruments and including all letter-of-credit rights;
(i) all supporting obligations and all present and future
liens, security interests, rights, remedies, title and interest in, to and in
respect of Receivables and other Collateral, including (i) rights and remedies
under or relating to guaranties, contracts of suretyship, letters of credit and
credit and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
(j) all (i) investment property (including securities,
whether certificated or uncertificated, securities accounts, security
entitlements, commodity contracts or commodity accounts) and (ii) monies, credit
balances, deposits and other property of Borrower now or hereafter held or
received by or in transit to Lender or its Affiliates or at any other depository
or other institution from or for the account of Borrower, whether for
safekeeping, pledge, custody, transmission, collection or otherwise;
(k) all commercial tort claims;
(l) to the extent not otherwise described above, all
Receivables;
(m) all Records; and
(n) all products and proceeds of the foregoing, in any
form, including insurance proceeds and all claims against third parties for loss
or damage to or destruction of or other involuntary conversion of any kind or
nature of any or all of the other Collateral.
This Agreement shall also serve as a "Security Agreement" within the
meaning of that term as used in the Uniform Commercial Code as adopted and in
force from time to time in the State of Florida, and shall be operative and
effective as a Security Agreement in addition to, and not in substitution for,
any other Security Agreement executed by Borrower in connection with the
extension of credit or loan transaction secured hereby. Borrower agrees to and
shall, upon the request of Lender, execute and deliver to Lender, in form
satisfactory to Lender, such financing statements, descriptions of property and
such further assurances as Lender, in its sole discretion, may from time to time
consider necessary to create, perfect, continue, and preserve the lien and
encumbrances hereof and the security interest granted herein upon and in such
Collateral. Lender, at the expenses of Borrower, may or shall cause such
statements, descriptions, and assurances to be
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recorded and re-recorded, filed and refiled, at such times and in such places as
may be required or permitted by law to so create, perfect and preserve the lien
and encumbrances hereof upon all of said collateral. In addition to any other
rights and remedies contained in this Agreement or any other documents executed
in connection with the Obligations, Lender shall have all the rights and
remedies of a secured party under the Uniform Commercial Code as adopted and in
force from time to time in the State of Florida or other applicable law, all of
which rights shall be cumulative and nonexclusive, to the extent permitted by
law.
5.2 Perfection of Security Interests.
(a) Borrower irrevocably and unconditionally authorizes
Lender (or its agent) to file at any time and from time to time such financing
statements with respect to the Collateral naming Lender or its designee as
secured party and Borrower as debtor, as Lender may require, and including any
other information with respect to Borrower or otherwise required by part 5 of
Article 9 of the Uniform Commercial Code of such jurisdiction as Lender may
determine, together with any amendment and continuations with respect thereto,
which authorization shall apply to all financing statements filed on, prior to
or after the date hereof. Borrower hereby ratifies and approves all financing
statements naming Lender or its designee as secured party and Borrower as debtor
with respect to the Collateral (and any amendments with respect to such
financing statements) filed by or on behalf of Lender prior to the date hereof
and ratifies and confirms the authorization of Lender to file such financing
statements (and amendments, if any). Borrower hereby authorizes Lender to adopt
on behalf of Borrower any symbol required for authenticating any electronic
filing. In the event that the description of the collateral in any financing
statement naming Lender or its designee as the secured party and Borrower as
debtor includes assets and properties of Borrower that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by Borrower to the extent of the Collateral
included in such description and it shall not render the financing statement
ineffective as to any of the Collateral or otherwise affect the financing
statement as it applies to any of the Collateral. In no event shall Borrower at
any time file, or permit or cause to be filed, any correction statement or
termination statement with respect to any financing statement (or amendment or
continuation with respect thereto) naming Lender or its designee as secured
party and Borrower as debtor.
(b) Borrower does not have any deposit accounts as of the
date hereof, except as set forth on Schedule 5.2.
(c) Borrower shall take any other actions reasonably
requested by Lender from time to time to cause the attachment, perfection and
first priority of, subject to Permitted Liens, and the ability of Lender to
enforce, the security interest of Lender in any and all of the Collateral,
including, without limitation, executing,
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delivering and, where appropriate, filing financing statements and amendments
relating thereto under the UCC or other applicable law, to the extent, if any,
that Borrower's signature thereon is required therefor.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrower's Loan Account. Lender shall maintain
one or more loan account(s) on its books in which shall be recorded (a) all
Loans and other Obligations and the Collateral, (b) all payments made by or on
behalf of Borrower and (c) all other appropriate debits and credits as provided
in this Agreement, including fees, charges, costs, expenses and interest. All
entries in the loan account(s) shall be made in accordance with Lender's
customary practices as in effect from time to time.
6.2 Statements. Lender shall render to Borrower each
month a statement setting forth the balance in the Borrower's loan account(s)
maintained by Lender for Borrower pursuant to the provisions of this Agreement,
including principal, interest, fees, costs and expenses. Each such statement
shall be subject to subsequent adjustment by Lender but shall, absent manifest
errors or omissions, be considered correct and deemed accepted by Borrower and
binding upon Borrower as an account stated except to the extent that Lender
receives a written notice from Borrower of any specific exceptions of Borrower
thereto within thirty (30) days after the date such statement has been mailed by
Lender. Until such time as Lender shall have rendered to Borrower a written
statement as provided above, the balance in Borrower's loan account(s) shall be
presumptive evidence of the amounts due and owing to Lender by Borrower.
6.3 Payments.
(a) All Obligations shall be payable to the Lender
Payment Account or such other place as Lender may designate from time to time.
Lender shall apply payments received or collected from Borrower or for the
account of Borrower (including the monetary proceeds of collections or of
realization upon any Collateral) as follows: first, to pay any fees, indemnities
or expense reimbursements then due to Lender from Borrower; second, to pay
interest due in respect of any Loans; third, to pay principal due in respect of
the Loans; fourth, to pay or prepay any other Obligations whether or not then
due, in such order and manner as Lender determines.
(b) At Lender's option, all principal, interest, fees,
costs, expenses and other charges provided for in this Agreement or the other
Financing Agreements may be charged directly to the loan account(s) of Borrower
when due after prior notice to Borrower. Borrower shall make all payments to
Lender on the Obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees,
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deductions, withholding, restrictions or conditions of any kind. If after
receipt of any payment of, or proceeds of Collateral applied to the payment of,
any of the Obligations, Lender is required to surrender or return such payment
or proceeds to any Person for any reason, then the Obligations intended to be
satisfied by such payment or proceeds shall be reinstated and continue and this
Agreement shall continue in full force and effect as if such payment or proceeds
had not been received by Lender. Borrower shall be liable to pay to Lender, and
does hereby indemnify and hold Lender harmless for the amount of any payments or
proceeds surrendered or returned. This Section 6.3 shall remain effective
notwithstanding any contrary action which may be taken by Lender in reliance
upon such payment or proceeds. This Section 6.3 shall survive the payment of the
Obligations and the termination of this Agreement.
6.4 Authorization to Make Loans. Lender is authorized
to make the Loans based upon telephonic or written instructions received from
anyone purporting to be one of the Executive Officers or, notwithstanding
anything to the contrary in this Agreement, at the discretion of Lender, if such
Loans are necessary to satisfy any Obligations. All requests for Loans hereunder
shall specify the date on which the requested advance is to be made (which day
shall be a Business Day) and the amount of the requested Loan. Requests received
after 1:00 p.m., Eastern Standard Time on any day shall be deemed to have been
made as of the opening of business on the immediately following Business Day.
All Loans under this Agreement shall be conclusively presumed to have been made
to, and at the request of and for the benefit of, Borrower when deposited to the
credit of Borrower or otherwise disbursed or established in accordance with the
instructions of Borrower or in accordance with the terms and conditions of this
Agreement.
6.5 Use of Proceeds. Borrower shall use the initial
proceeds of the Loans provided by Lender to Borrower hereunder only for: (a)
partial financing of Borrower's first acquisition after the date hereof, which
may but need not, include the acquisition of Espotting Media, Inc. pursuant to
the terms and conditions of the Merger Agreement, and (b) costs, expenses and
fees in connection with the preparation, negotiation, execution and delivery of
this Agreement and the other Financing Agreements. All other Loans made by
Lender to Borrower pursuant to the provisions hereof shall be used by Borrower
only for one or more strategic acquisitions of more than 50% of the voting
securities or substantially all the assets from one or more third parties
provided that the target of any such acquisition is engaged in the same or a
similar Line of Business, and further provided that no Event of Default has
occurred or is existing at the time of such acquisition. None of the proceeds
will be used, directly or indirectly, for the purpose of purchasing or carrying
any margin security or for the purposes of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Loans to be considered a "purpose
credit" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, as amended.
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SECTION 7. COLLATERAL REPORTING AND COLLATERAL COVENANTS
7.1 Collateral Reporting.
(a) Borrower shall, upon Lender's request, provide Lender
with such reports as to the Collateral as Lender shall reasonably request from
time to time.
(b) If any of Borrower's records or reports of the
Collateral are prepared or maintained by an accounting service, contractor,
shipper or other agent, Borrower hereby irrevocably authorizes such service,
contractor, shipper or agent to deliver such records, reports, and related
documents to Lender and to follow Lender's instructions with respect to further
services at any time that an Event of Default exists or has occurred and is
continuing.
7.2 Accounts Covenants.
(a) So long as no Event of Default exists or has occurred
and is continuing, Borrower shall settle, adjust or compromise any claim,
offset, counterclaim or dispute with any account debtor. At any time that an
Event of Default exists or has occurred and is continuing, Lender shall, at its
option, have the exclusive right to settle, adjust or compromise any claim,
offset, counterclaim or dispute with account debtors or grant any credits,
discounts or allowances.
(b) Lender shall have the right at any time or times, in
Lender's name or in the name of a nominee of Lender, to verify the validity,
amount or any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
7.3 Equipment and Real Property Covenants. With
respect to the Equipment and Real Property: (a) Borrower shall, at its expense,
at any time or times as Lender may reasonably request on or after an Event of
Default, deliver or cause to be delivered to Lender written appraisals as to the
Equipment and/or the Real Property in form, scope and methodology acceptable to
Lender and by an appraiser acceptable to Lender, addressed to Lender and upon
which Lender is expressly permitted to rely; (b) Borrower shall keep the
Equipment in good order, repair, running and marketable condition (ordinary wear
and tear excepted); (c) Borrower shall use the Equipment and Real Property with
all reasonable care and caution and in accordance with applicable standards of
any insurance and in conformity with all applicable laws except where the
failure to do so will not have a Material Adverse Effect; (d) the Equipment is
and shall be used in Borrower's business and not for personal, family, household
or farming use; (e) Borrower shall not remove any Equipment from the locations
set forth or permitted herein, except to the extent necessary to have any
Equipment repaired or maintained in the ordinary course of the business of
Borrower or to move Equipment directly from one
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location set forth or permitted herein to another such location and except for
the movement of motor vehicles used by or for the benefit of Borrower in the
ordinary course of business; (f) the Equipment is now and shall remain personal
property and Borrower shall not permit any of the Equipment to be or become a
part of or affixed to real property; and (g) Borrower assumes all responsibility
and liability arising from the use of the Equipment and Real Property.
7.4 Power of Attorney. Borrower hereby irrevocably
designates and appoints Lender (and all persons designated by Lender) as
Borrower's true and lawful attorney-in-fact, and authorizes Lender, in
Borrower's or Lender's name, to: (a) at any time an Event of Default exists or
has occurred and is continuing (i) demand payment on Receivables or other
Collateral, (ii) enforce payment of Receivables by legal proceedings or
otherwise, (iii) exercise all of Borrower's rights and remedies to collect any
Receivable or other Collateral, (iv) sell or assign any Receivable upon such
terms, for such amount and at such time or times as the Lender deems advisable,
(v) settle, adjust, compromise, extend or renew an Account, (vi) discharge and
release any Receivable, (vii) prepare, file and sign Borrower's name on any
proof of claim in bankruptcy or other similar document against an account debtor
or other obligor in respect of any Receivables or other Collateral, (viii)
notify the post office authorities to change the address for delivery of
remittances from account debtors or other obligors in respect of Receivables or
other proceeds of Collateral to an address designated by Lender; and (ix) do all
acts and things which are necessary, in Lender's determination, to fulfill
Borrower's obligations under this Agreement and the other Financing Agreements
and (b) at any time after the occurrence and during the continuance of an Event
of Default to (i) take control in any manner of any item of payment in respect
of Receivables or constituting Collateral or otherwise received by Lender, (ii)
endorse Borrower's name upon any items of payment in respect of Receivables or
constituting Collateral or otherwise received by Lender and deposit the same in
Lender's account for application to the Obligations, (iii) endorse Borrower's
name upon any chattel paper, document, instrument, invoice, or similar document
or agreement relating to any Receivable or any goods pertaining thereto or any
other Collateral, including any warehouse or other receipts, or bills of lading
and other negotiable or non-negotiable documents, and (iv) sign Borrower's name
on any verification of Receivables and notices thereof to account debtors or any
secondary obligors or other obligors in respect thereof.
7.5 Right to Cure. Lender may, at its option, (a)
upon notice to Borrower, cure any default by Borrower under any material
agreement with a third party that affects any material Collateral, its value or
the ability of Lender to collect, sell or otherwise dispose of such Collateral
or the rights and remedies of Lender therein or the ability of Borrower to
perform its obligations hereunder or under the other Financing Agreements, (b)
pay or bond on appeal any judgment entered against Borrower, (c) discharge
taxes, liens, security interests or other encumbrances at any time levied on or
existing with respect to the Collateral and
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(d) pay any amount, incur any expense or perform any act which, in Lender's
reasonable judgment, is necessary or appropriate to preserve, protect, insure or
maintain the Collateral and the rights of Lender with respect thereto. Lender
may add any amounts so expended to the Obligations and charge Borrower's account
therefor, such amounts to be repayable by Borrower on demand. Lender shall be
under no obligation to effect such cure, payment or bonding and shall not, by
doing so, be deemed to have assumed any obligation or liability of Borrower. Any
payment made or other action taken by Lender under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
accordingly.
7.6 Access to Premises. From time to time as
requested by Lender, at the cost and expense of Borrower, (a) Lender or its
designee shall have complete access to all of Borrower's premises during normal
business hours, or such other time as Borrower shall agree, and after
twenty-four (24) hour notice to Borrower, or at any time and without notice to
Borrower if an Event of Default exists or has occurred and is continuing, for
the purposes of inspecting, verifying and auditing the Collateral and all of
Borrower's books and records, including the Records, and (b) Borrower shall
promptly furnish to Lender such copies of such books and records or extracts
therefrom as Lender may reasonably request, and (c) Lender or its designee may
use during normal business hours or such other time as Borrower shall agree such
of Borrower's personnel, equipment, supplies and premises as may be reasonably
necessary for the foregoing and if an Event of Default exists or has occurred
and is continuing for the collection of Receivables and realization of other
Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Lender the following (which
shall survive the execution and delivery of this Agreement), the truth and
accuracy of which are a continuing condition of the making of Loans by Lender to
Borrower:
8.1 Corporate Existence; Power and Authority.
Borrower is a corporation duly organized and in good standing under the laws of
its state of incorporation and is duly qualified as a foreign corporation and in
good standing in all states or other jurisdictions where the nature and extent
of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the failure to
so qualify would not have a material adverse effect on Borrower's financial
condition, results of operation or business or the rights of Lender in or to any
of the Collateral. The execution, delivery and performance of this Agreement,
the other Financing Agreements and the transactions contemplated hereunder and
thereunder (a) are all within Borrower's corporate powers, (b) have been duly
authorized, (c) are not in contravention of law or the terms of Borrower's
articles of incorporation, by-laws, or other organizational documentation, or
any indenture, agreement or undertaking to
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which Borrower is a party or by which Borrower or its property are bound and (d)
will not result in the creation or imposition of, or require or give rise to any
obligation to grant, any lien, security interest, charge or other encumbrance
upon any property of Borrower. This Agreement and the other Financing Agreements
constitute legal, valid and binding obligations of Borrower enforceable in
accordance with their respective terms.
8.2 Name; State of Organization; Chief Executive
Office; Collateral Locations.
(a) The exact legal name of Borrower is as set forth on
the signature page of this Agreement. Borrower has not, during the five years
immediately prior to the date of this Agreement, been known by or used any other
corporate or fictitious name or been a party to any merger or consolidation, or
acquired all or substantially all of the assets of any Person, or acquired any
of its property or assets out of the ordinary course of business, except as
follows: In June 1999 the Borrower, then known as Collectibles America, Inc.,
merged with BeFirst Internet Corporation, a Delaware corporation and BeFirst
Internet Corporation became a wholly owned subsidiary of Borrower. On June 17,
1999, Borrower changed its name from Collectibles America, Inc. to ▇▇▇▇▇▇▇.▇▇▇.
In September 1999, Borrower changed its name from ▇▇▇▇▇▇▇.▇▇▇ to ▇▇▇▇▇▇▇▇.▇▇▇.
On January 1, 2004, Borrower's subsidiary, Close Reach Merger Corp., merged with
Miva Corporation, and Miva Corporation became a wholly owned subsidiary of
Borrower.
(b) Borrower is a Nevada corporation and the
organizational identification number of Borrower is C18533-1995.
(c) As of the date hereof, the chief executive office and
mailing address of Borrower and Borrower's Records concerning Accounts are
located only at the address set forth on the signature page of this Agreement,
and its only other places of business and the only other locations of
Collateral, if any, are the addresses set forth in Schedule 8.2, subject to the
right of Borrower to establish new locations in accordance with Section 9.2
below. Schedule 8.2 correctly identifies any of such locations which are not
owned by Borrower and sets forth the owners and/or operators thereof.
8.3 Financial Statements; No Material Adverse Change.
All financial statements, other than projections and pro forma statements,
relating to Borrower which have been delivered by Borrower to Lender have been
prepared in accordance with GAAP (except as to any interim financial statements,
to the extent such statements are subject to normal year-end adjustments and do
not include any notes) and fairly present the financial condition and the
results of operation of Borrower as at the dates and for the periods set forth
therein. Except as disclosed in any interim financial statements furnished by
Borrower to Lender prior to the date of this Agreement, there has been no
material adverse change in the assets,
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liabilities, properties and condition, financial or otherwise, of Borrower,
since the date of the most recent audited financial statements furnished by
Borrower to Lender prior to the date of this Agreement.
8.4 Priority of Liens; Title to Properties. The
security interests and liens granted to Lender under this Agreement and the
other Financing Agreements shall constitute valid and perfected first priority
liens and security interests in and upon the Collateral that can be perfected by
a UCC filing with the Secretary of State of Nevada subject only to the liens
indicated on Schedule 8.4, Permitted Liens and the other liens permitted under
Section 9.8 hereof. Borrower has good and marketable fee simple title to or
valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of its other properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Lender and such others as are specifically listed
on Schedule 8.4, Permitted Liens, or liens permitted under Section 9.8 hereof.
8.5 Tax Returns. Borrower has filed, or caused to be
filed, in a timely manner all tax returns, reports and declarations which are
required to be filed by it except where the failure to do so is not reasonably
likely to have a Material Adverse Effect. All information in such tax returns,
reports and declarations is complete and accurate in all material respects.
Borrower has paid or caused to be paid all taxes due and payable or claimed due
and payable in any assessment received by it, except taxes the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to Borrower and with respect to which adequate reserves have been
set aside on its books. Adequate provision has been made for the payment of all
accrued and unpaid Federal, State, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed.
8.6 Litigation. Except as set forth in Schedule 8.6,
(i) there is no present investigation by any Governmental Authority pending, or
to the best of Borrower's knowledge threatened, against or affecting Borrower,
its assets or business, and (ii) there is no action, suit, proceeding or claim
by any Person pending, or to the best of Borrower's knowledge threatened,
against Borrower or its assets or goodwill, or against or affecting any
transactions contemplated by this Agreement, which if adversely determined
against Borrower is reasonably likely to result in any material adverse change
in the assets, business or prospects of Borrower or would impair the ability of
Borrower to perform its obligations hereunder or under any of the other
Financing Agreements to which it is a party or of Lender to enforce any
Obligations or realize upon any Collateral.
8.7 Compliance with Other Agreements and Applicable
Laws. Borrower is not in default in any material respect under, or in violation
in any material respect of any of the terms of, any material agreement,
contract,
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instrument, lease or other commitment to which it is a party or by which it or
any of its assets are bound and Borrower is in compliance in all material
respects with all applicable provisions of laws, rules, regulations, licenses,
permits, approvals and orders of any foreign, Federal, State or local
Governmental Authority.
8.8 Environmental Compliance.
(a) Borrower has not generated, used, stored, treated,
transported, manufactured, handled, produced or disposed of any Hazardous
Materials, on or off its premises (whether or not owned by it) in any manner
which at any time violates any applicable Environmental Law or any license,
permit, certificate, approval or similar authorization thereunder and the
operations of Borrower complies in all material respects with all Environmental
Laws and all licenses, permits, certificates, approvals and similar
authorizations thereunder, except where any such noncompliance is not likely to
have a Material Adverse Effect.
(b) There has been no investigation, proceeding,
complaint, order, directive, claim, citation or notice by any Governmental
Authority or any other person nor is any pending or to the best of Borrower's
knowledge threatened, with respect to any non-compliance with or violation of
the requirements of any Environmental Law by Borrower or the release, spill or
discharge, threatened or actual, of any Hazardous Material or the generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials or any other environmental, health or safety
matter, which materially and adversely affects Borrower or its business,
operations or assets or any properties at which Borrower has transported, stored
or disposed of any Hazardous Materials.
(c) Borrower has no material liability (contingent or
otherwise) in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials.
(d) Borrower has all licenses, permits, certificates,
approvals or similar authorizations required to be obtained or filed in
connection with the operations of Borrower under any Environmental Law and all
of such licenses, permits, certificates, approvals or similar authorizations are
valid and in full force and effect, except where the failure to do so is not
reasonably likely to have a Material Adverse Effect.
8.9 Employee Benefits.
(a) Each Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Code and other federal or state
law. Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service and
to Borrower's
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knowledge, nothing has occurred which would cause the loss of such
qualification. Borrower and its ERISA Affiliates have made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or to Borrower's knowledge,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan. There has been no prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) the current value of each Plan's assets (determined in
accordance with the assumptions used for funding such Plan pursuant to Section
412 of the Code) are not less than such Plan's liabilities under Section
4001(a)(16) of ERISA; (iii) Borrower and its ERISA Affiliates have not incurred
and do not reasonably expect to incur, any liability under Title IV of ERISA
with respect to any Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) Borrower and its ERISA Affiliates have not incurred
and do not reasonably expect to incur, any material liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) Borrower and its ERISA Affiliates have not engaged
in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.
8.10 Bank Accounts. As of the date hereof, all of the
deposit accounts, investment accounts or other accounts in the name of or used
by Borrower maintained at any bank or other financial institution are set forth
in Schedule 5.2.
8.11 Intellectual Property. Borrower owns or licenses
or otherwise has the right to use all material Intellectual Property necessary
for the operation of its business as presently conducted or proposed to be
conducted. As of the date hereof, Borrower does not have any Intellectual
Property registered, or subject to pending applications, in the United States
Patent and Trademark Office or any similar office or agency in the United
States, any State thereof, any political subdivision thereof or in any other
country, other than those described in Schedule 8.11 hereto and has not granted
any licenses with respect thereto other than as set forth in Schedule 8.11.
Except as set forth in Schedule 8.11, no event has occurred which permits or
would permit after notice or passage of time or both, the revocation, suspension
or termination of material rights in the same. Except as set forth in Schedule
8.11, to Borrower's knowledge, no slogan or other advertising device, product,
process, method, substance or other Intellectual Property or goods bearing or
using any Intellectual Property presently contemplated to be sold by or employed
by Borrower infringes any patent, trademark, servicemark, tradename, copyright,
license or other Intellectual Property owned by any other Person
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presently and no claim or litigation is pending or threatened against or
affecting Borrower contesting its right to sell or use any such Intellectual
Property. Schedule 8.11 sets forth all of the agreements or other arrangements
of Borrower pursuant to which Borrower has a license or other right to use any
trademarks, logos, designs, representations or other Intellectual Property owned
by another person as in effect on the date hereof and the dates of the
expiration of such agreements or other arrangements of Borrower as in effect on
the date hereof (collectively, together with such agreements or other
arrangements as may be entered into by Borrower after the date hereof, the
"License Agreements" and individually, a "License Agreement."
8.12 Subsidiaries; Affiliates; Capitalization;
Solvency.
(a) Borrower does not have any direct or indirect
Subsidiaries or Affiliates and is not engaged in any joint venture or
partnership except as set forth in Schedule 8.12, as supplemented or amended
from time to time, and subject to the right of Borrower to form or acquire
Subsidiaries in accordance with Section 9.10 hereof.
(b) Borrower is the record and beneficial owner of the
issued and outstanding shares of Capital Stock of each of the Subsidiaries as
listed on Schedule 8.12 and there are no proxies, irrevocable or otherwise, with
respect to such shares and no equity securities of any of the Subsidiaries are
or may become required to be issued by reason of any options, warrants, rights
to subscribe to, calls or commitments of any kind or nature and there are no
contracts, commitments, understandings or arrangements by which any Subsidiary
is or may become bound to issue additional shares of it Capital Stock or
securities convertible into or exchangeable for such shares, except as set forth
on such Schedule.
(c) Borrower is Solvent and will continue to be Solvent
after the creation of the Obligations, the security interests of Lender and the
other transaction contemplated hereunder.
8.13 Labor Disputes.
(a) There are no collective bargaining or similar
agreements between or applicable to Borrower and any union, labor organization
or other bargaining agent in respect of the employees of Borrower on the date
hereof.
(b) As of the date hereof, (i) no significant unfair
labor practice complaint is pending against Borrower or, to Borrower's
knowledge, threatened against it, before the National Labor Relations Board, and
no significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is pending against Borrower or, to
Borrower's knowledge, threatened against it, and (ii) no significant strike,
labor dispute, slowdown or stoppage is pending against Borrower or, to
Borrower's knowledge, threatened against Borrower.
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8.14 Restrictions on Subsidiaries. Except for
restrictions contained in this Agreement or any other agreement with respect to
Indebtedness of Borrower permitted hereunder as in effect on the date hereof,
there are no contractual or consensual restrictions on Borrower or any of its
Subsidiaries which prohibit or otherwise restrict (a) the transfer of cash or
other assets (i) between Borrower and any of its Subsidiaries or (ii) between
any Subsidiaries of Borrower or (b) the ability of Borrower or any of its
Subsidiaries to incur Indebtedness or grant security interests to Lender in the
Collateral.
8.15 Material Contracts. As of the date hereof,
Schedule 8.15 sets forth all Material Contracts to which Borrower is a party or
is bound as of the date hereof. Borrower has delivered true, correct and
complete copies of such Material Contracts to Lender on or before the date
hereof, if requested by Lender. Borrower is not in breach of or in default under
any Material Contract and has not received any notice of the intention of any
other party thereto to terminate any Material Contract unless such breach or
default is not reasonably likely to have a Material Adverse Effect.
8.16 Payable Practices. Borrower has not made any
material change in the historical accounts payable practices from those in
effect immediately prior to the date hereof.
8.17 Accuracy and Completeness of Information. All
information furnished by or on behalf of Borrower in writing to Lender in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, is true and correct in all material
respects on the date as of which such information is dated or certified and does
not omit any material fact necessary in order to make such information not
misleading. No event or circumstance has occurred which has had or could
reasonably be expected to have a Material Adverse Effect on the business, assets
or prospects of Borrower, which has not been fully and accurately disclosed to
Lender in writing prior to the date hereof.
8.18 Survival of Warranties; Cumulative. All
representations and warranties contained in this Agreement or any of the other
Financing Agreements shall survive the execution and delivery of this Agreement
and shall be deemed to have been made again to Lender on the date of each
additional borrowing or other credit accommodation hereunder, 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 shall be presumed to have
been relied on by Lender regardless of any investigation made or information
possessed by Lender. The representations and warranties set forth herein shall
be cumulative and in addition to any other representations or warranties which
Borrower shall now or hereafter give, or cause to be given, to Lender.
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8.19 Investment Company Act; Regulation. (a) Neither
the Borrower nor any of its Subsidiaries is an "investment company" or an
"affiliated person" of an "investment company," or a company "controlled" by an
"investment company," and neither the Borrower nor any of its Subsidiaries is an
"investment advisor" or an affiliated person" of an "investment advisor," and as
each of the quoted terms is defined or used in the Investment Company Act of
1940, as amended, (b) neither the Borrower nor any of its Subsidiaries is
subject to regulation under any state or local public utilities code or any
federal, state, or local statute or regulation limiting its ability to incur
Indebtedness or to pledge assets of the type contemplated hereunder.
8.20 Racketeer Influenced and Corrupt Organizations
Act. Neither the Borrower, or any Subsidiary has ever been or is now engaged,
directly or indirectly, in any pattern of "racketeering activity" or in any
"collection of any unlawful debt," as each of the noted terms or phrases is
defined or used by the Racketeer Influenced and Corrupt Organization (s) Act of
either the United States or the ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code,
Section 1961 et seq.; Chapter 895, Florida Statutes, respectively, as each act
now exists or is hereafter amended (the "RICO Lien Acts"). None of the real
property of the Borrower, or any Subsidiary, none of the Borrower's or any
Subsidiary's interest or interests of any kind, including any beneficial
interest or interests, mortgages and leases, in or on real property and none of
the Borrower's or any Subsidiary's personal property, including money, has ever
been, is now, or is in any way reasonably anticipated by the Borrower to become,
subject to any lien, notice, civil investigative demand, action, suit or other
proceeding pursuant to the RICO Lien Acts.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence.
(a) Borrower shall at all times preserve, renew and keep
in full force and effect its corporate existence and rights and franchises with
respect thereto and maintain in full force and effect all permits, licenses,
trademarks, tradenames, approvals, authorizations, leases and contracts
necessary to carry on the business as presently or proposed to be conducted,
except where the failure to do so is not reasonably likely to have a Material
Adverse Effect.
(b) Borrower shall not change its name unless each of the
following conditions is satisfied: (i) Lender shall have received not less than
fifteen (15) days prior written notice from Borrower of such proposed change in
its corporate name, which notice shall accurately set forth the new name; and
(ii) Lender shall have received a copy of the amendment to the Certificate of
Incorporation of Borrower providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation or organization of
Borrower as soon as it is available.
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(c) Borrower shall not change its chief executive office
or its mailing address or organizational identification number (or if it does
not have one, shall not acquire one) unless Lender shall have received not less
than fifteen (15) days' prior written notice from Borrower of such proposed
change, which notice shall set forth such information with respect thereto as
Lender may require and Lender shall have received such agreements as Lender may
reasonably require in connection therewith. Borrower shall not change its type
of organization, jurisdiction of organization or other legal structure.
9.2 New Collateral Locations. Borrower may only
establish new locations of its business or Collateral so long as Borrower (a)
gives Lender fifteen (15) days prior written notice from Borrower of the
intended opening of any such new location and (b) executes and delivers, or
causes to be executed and delivered, to Lender such agreements, documents, and
instruments as Lender may deem reasonably necessary or desirable to protect its
interests in the Collateral at such location.
9.3 Compliance with Laws, Regulations, Etc.
(a) Borrower shall, and shall cause any Subsidiary to, at
all times, comply in all material respects with all laws, rules, regulations,
licenses, permits, approvals and orders applicable to it and duly observe all
requirements of any foreign, Federal, State or local Governmental Authority.
(b) Borrower shall give written notice to Lender
immediately upon Borrower's receipt of any notice of, or Borrower's otherwise
obtaining knowledge of, (i) the occurrence of any event involving the release,
spill or discharge, threatened or actual, of any Hazardous Material or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any material non-compliance with or material
violation of any applicable Environmental Law by Borrower or (B) the release,
spill or discharge, threatened or actual, of any Hazardous Material other than
in the ordinary course of business and other than as permitted under any
applicable Environmental Law. Copies of all environmental surveys, audits,
assessments, feasibility studies and results of remedial investigations shall be
promptly furnished, or caused to be furnished, by Borrower to Lender. Borrower
shall take prompt and appropriate action to respond to any material
non-compliance with any of the Environmental Laws and shall regularly report to
Lender on such response.
(c) Without limiting the generality of the foregoing,
whenever Lender reasonably determines that there is material non-compliance, or
any condition which requires any action by or on behalf of Borrower in order to
avoid any material non-compliance, with any Environmental Law, Borrower shall,
at Lender's request and Borrower's expense: (i) cause an independent
environmental engineer reasonably acceptable to Lender to conduct such tests of
the site where
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such non-compliance or alleged non-compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Lender a report as
to such non-compliance setting forth the results of such tests, a proposed plan
for responding to any material environmental problems described therein, and an
estimate of the costs thereof and (ii) provide to Lender a supplemental report
of such engineer whenever the scope of such non-compliance, or Borrower's
response thereto or the estimated costs thereof, shall change in any material
respect.
(d) Except to the extent any claim, loss or liability
arises directly from the acts of Lender or its agents, Borrower shall indemnify
and hold harmless Lender, its directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all losses,
claims, damages, liabilities, costs, and expenses (including attorneys' fees and
legal expenses) directly or indirectly arising out of or attributable to the
use, generation, manufacture, reproduction, storage, release, threatened
release, spill, discharge, disposal or presence of a Hazardous Material,
including the costs of any required or necessary repair, cleanup or other
remedial work with respect to any property of Borrower and the preparation and
implementation of any closure, remedial or other required plans. All
representations, warranties, covenants and indemnifications in this Section 9.3
shall survive the payment of the Obligations and the termination of this
Agreement.
9.4 Payment of Taxes and Claims. Borrower shall, and
shall cause any Subsidiary to, duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes the validity of which are being contested in good faith
by appropriate proceedings diligently pursued and available to Borrower or such
Subsidiary, as the case may be, and with respect to which adequate reserves have
been set aside on its books. Borrower shall be liable for any tax or penalties
imposed on Lender as a result of the financing arrangements provided for herein
and Borrower agrees to indemnify and hold Lender harmless with respect to the
foregoing, and to repay to Lender on demand the amount thereof, and until paid
by Borrower such amount shall be added and deemed part of the Loans, provided,
that, nothing contained herein shall be construed to require Borrower to pay any
income or franchise taxes attributable to the income of Lender from any amounts
charged or paid hereunder to Lender. The foregoing indemnity shall survive the
payment of the Obligations and the termination of this Agreement.
9.5 Insurance. Borrower shall, and shall cause any
Subsidiary to, at all times, maintain with financially sound and reputable
insurers insurance with respect to the Collateral against loss or damage and all
other insurance of the kinds and in the amounts customarily insured against or
carried by corporations of established reputation engaged in the same or similar
businesses and similarly situated. Said policies of insurance shall be
reasonably satisfactory to Lender as to form, amount and insurer. Borrower shall
furnish certificates, policies
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or endorsements to Lender as Lender shall require as proof of such insurance,
and, if Borrower fails to do so, Lender is authorized, but not required, to
obtain such insurance at the expense of Borrower. All policies of Borrower shall
provide for at least thirty (30) days prior written notice to Lender of any
cancellation or reduction of coverage. Lender may act as attorney for Borrower
in obtaining, and at any time an Event of Default exists or has occurred and is
continuing, adjusting, settling, amending and canceling such insurance. Borrower
shall cause Lender to be named as a loss payee and an additional insured (but
without any liability for any premiums) under such insurance policies, and
Borrower shall obtain non-contributory lender's loss payable endorsements to all
insurance policies in form and substance satisfactory to Lender. At its option
after the occurrence and continuance of an Event of Default, Lender may apply
any insurance proceeds received by Lender at any time to the cost of repairs or
replacement of Collateral and/or to payment of the Obligations, whether or not
then due, in any order and in such manner as Lender may determine or hold such
proceeds as cash collateral for the Obligations. Otherwise, Borrower shall have
the right to use such proceeds to rebuild or restore the affected Collateral.
9.6 Financial Statements and Other Information.
(a) Borrower shall keep proper books and records in which
true and complete entries shall be made of all dealings or transactions of or in
relation to the Collateral and the business of Borrower and its Subsidiaries in
accordance with GAAP. Borrower shall promptly furnish to Lender all such
financial and other information as Lender shall reasonably request relating to
the Collateral and the assets, business and operations of Borrower, and shall
notify the auditors and accountants of Borrower that Lender is authorized to
obtain such information directly from them provided that Lender cannot obtain
any such information from Borrower. Without limiting the foregoing, Borrower
shall furnish or cause to be furnished to Lender, the following: (i) within
forty-five (45) days after the end of each fiscal quarter, quarterly unaudited
consolidated financial statements and unaudited consolidating financial
statements (including in each case balance sheets, statements of income and
loss, and statements of cash flow), all in reasonable detail, fairly presenting
the financial position and the results of the operations of Borrower and
Subsidiaries as of the end of and through such fiscal quarter, certified to be
correct by the chief financial officer of Borrower, subject to normal year-end
adjustments and accompanied by a Compliance Certificate substantially in the
form of Exhibit A hereto, along with a schedule in form reasonably satisfactory
to Lender of the calculations used in determining, as of the end of such
quarter, compliance with the covenants set forth in Sections 9.16, 9.17, 9.18,
and 9.19 of this Agreement for such quarter and (ii) within seventy-five (75)
days after the end of each fiscal year, audited consolidated financial
statements and audited consolidating financial statements of Borrower (including
in each case balance sheets, statements of income and loss, and statements of
cash flow), and the accompanying notes thereto, all in reasonable detail, fairly
presenting the financial position and the results of
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the operations of Borrower and Subsidiaries as of the end of and for such fiscal
year, together with the unqualified opinion of independent certified public
accountants, which accountants shall be an independent accounting firm selected
by Borrower and reasonably acceptable to Lender, that such financial statements
have been prepared in accordance with GAAP, and present fairly the results of
operations and financial condition of Borrower and Subsidiaries as of the end of
and for the fiscal year then ended.
(b) Borrower shall promptly notify Lender in writing of
the details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to the Collateral or any other property which is security for the
Obligations or which is reasonably likely to result in any material adverse
change in Borrower's business, properties, assets, goodwill or condition,
financial or otherwise, (ii) any Material Contract of Borrower being terminated
or amended or any new Material Contract entered into (in which event Borrower
shall provide Lender with a copy of such Material Contract upon Lender's request
therefor), (iii) any order, judgment or decree in excess of $1,000,000 shall
have been entered against Borrower or any of its properties or assets, (iv) any
notification of violation of laws or regulations received by Borrower, (v) any
ERISA Event, and (vi) the occurrence of any Default or Event of Default.
(c) Borrower shall promptly, and in any event within five
(5) days after the filing thereof, furnish or cause to be furnished to Lender
copies of all nonconfidential reports which Borrower sends to its stockholders
generally and copies of all reports and registration statements which Borrower
files with the Securities and Exchange Commission, any national securities
exchange or the National Association of Securities Dealers, Inc. and, promptly
upon request by Lender therefor, copies of any financial statements which the
Borrower files annually with any federal, state or local regulatory agency or
agencies.
(d) Borrower shall furnish or cause to be furnished to
Lender such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrower, as Lender may, from time to time,
reasonably request. Lender is hereby authorized to deliver a copy of any
financial statement or any other information relating to Borrower to any court
or other Governmental Authority, to any Affiliate of Lender or to any
participant or assignee or prospective participant or assignee approved by
Borrower pursuant to the terms of this Agreement. Provided that Lender cannot
obtain any such information from Borrower, Borrower hereby irrevocably
authorizes and directs all accountants or auditors to deliver to Lender, at
Borrower's expense, copies of the financial statements of Borrower and any
reports or management letters prepared by such accountants or auditors on behalf
of Borrower and to disclose to Lender such information as they may have
regarding the business of Borrower. Any documents, schedules, invoices or other
papers delivered to Lender may be destroyed or
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returned to Borrower by Lender one (1) year after the same are delivered to
Lender, except as otherwise designated by Borrower to Lender in writing.
9.7 Sale of Assets, Consolidation, Merger,
Dissolution, Etc. Except as permitted pursuant to Section 6.5 of this Agreement
and Permitted Dispositions, Borrower shall not, and shall not permit any
Subsidiary to (and Lender does not authorize Borrower to), directly or
indirectly,
(a) except for the Proposed Reorganization and any merger
or liquidation of a Subsidiary into Borrower or a Guarantor, merge into or with
or consolidate with any other Person or permit any other Person to merge into or
with or consolidate with it;
(b) sell, issue, assign, lease, license, transfer,
abandon or otherwise dispose of any Indebtedness to any other Person or any of
its assets to any other Person, except for Permitted Dispositions and (i) sales
of Inventory in the ordinary course of business, (ii) the disposition of
worn-out or obsolete Equipment so long as (A) any proceeds are paid to Lender
and (B) such sales do not involve Equipment having an aggregate fair market
value in excess of $250,000 for all such Equipment disposed of in any fiscal
year of Borrower; or
(c) wind up, liquidate or dissolve.
9.8 Encumbrances. Borrower shall not, and shall not
permit any Subsidiary to, create, incur, assume, suffer or permit to exist any
security interest, mortgage, pledge, lien, charge or other encumbrance of any
nature whatsoever on any of its assets or properties, including the Collateral,
or file or permit the filing of, or permit to remain in effect, any financing
statement or other similar notice of any security interest or lien with respect
to any such assets or properties other than Permitted Liens, except: (a) the
security interests and liens of Lender; (b) liens securing the payment of taxes
not in excess of $100,000, either not yet overdue or the validity of which are
being contested in good faith by appropriate proceedings diligently pursued and
available to Borrower or such Subsidiary, as the case may be and with respect to
which adequate reserves have been set aside on its books; (c) non-consensual
statutory liens (other than liens securing the payment of taxes) arising in the
ordinary course of Borrower's or such Subsidiary's business to the extent: (i)
such liens secure Indebtedness which is not overdue or (ii) such liens secure
Indebtedness relating to claims or liabilities which are insured and being
defended at the primary cost and expense and at the primary risk of the insurer
or being contested in good faith by appropriate proceedings diligently pursued
and available to Borrower or such Subsidiary, in each case prior to the
commencement of foreclosure or other similar proceedings and with respect to
which adequate reserves have been set aside on its books; (d) zoning
restrictions, easements, licenses, covenants and other restrictions affecting
the use of Real Property which do not interfere in any material respect with the
use of such Real Property or
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ordinary conduct of the business of Borrower or such Subsidiary as presently
conducted thereon or materially impair the value of the Real Property which may
be subject thereto; (e) purchase money security interests in Equipment
(including Capital Leases) and purchase money mortgages on Real Property to
secure Indebtedness permitted under Section 9.9(b) hereof; and (f) the security
interests and liens set forth on Schedule 8.4.
9.9 Indebtedness. Borrower shall not, and shall not
permit any Subsidiary to, incur, create, assume, become or be liable in any
manner with respect to, suffer or permit to exist, any Indebtedness other than
Permitted Indebtedness, except:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital
Leases) arising after the date hereof to the extent secured by purchase money
security interests in Equipment (including Capital Leases) and purchase money
mortgages on Real Property not to exceed the principal sum of $3,000,000 in the
aggregate at any time outstanding so long as such security interests and
mortgages do not apply to any property of Borrower or any Subsidiary other than
the Equipment or Real Property so acquired, and the Indebtedness secured thereby
does not exceed the cost of the Equipment or Real Property so acquired, as the
case may be;
(c) guarantees by any Subsidiaries or Borrower of the
Obligations in favor of Lender, any Permitted Indebtedness or Indebtedness
permitted by this Agreement;
(d) Indebtedness under interest swap agreements, interest
rate cap agreements, interest rate collar agreements, interest rate exchange
agreements and similar contractual agreements entered into for the purpose of
protecting a Person against fluctuations in interest rates; provided, that, such
arrangements are with banks or other financial institutions that have combined
capital and unimpaired surplus of not less than $1,000,000,000 and are not for
speculative purposes;
(e) the Indebtedness set forth on Schedule 9.9 and any
refinancing or refunding thereof; and
(f) any Indebtedness issued in connection with any
investment not prohibited by this Agreement, including without limitation,
convertible Indebtedness.
9.10 Loans, Investments, Etc.(a) Borrower shall, and
shall cause any Subsidiary to, directly or indirectly, make, or suffer or permit
to exist, any loans or advances of money or property to any person, or any
investments in (by capital contribution, dividend or otherwise), or any purchase
or repurchase of the Capital Stock or Indebtedness or all or a substantial part
of the assets or property of
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any Person, only to or from Persons engaged in a reasonably similar or
incidental Line of Business, other than Permitted Investments.
9.11 Transactions with Affiliates. Borrower shall
not, directly or indirectly, (a) purchase, acquire or lease any property from,
or sell, transfer or lease any property to, any officer, director, agent or
other person affiliated with Borrower, except in the ordinary course of and
pursuant to the reasonable requirements of Borrower's business and upon fair and
reasonable terms no less favorable to the Borrower than Borrower would obtain in
a comparable arm's length transaction with an unaffiliated person or (b) make
any payments of management, consulting or other fees for management or similar
services, or of any Indebtedness owing to any officer, employee, shareholder,
director or other Affiliate of Borrower except reasonable compensation to
officers, employees and directors for services rendered to Borrower in the
ordinary course of business.
9.12 Compliance with ERISA. Borrower shall and shall
cause each of its ERISA Affiliates to: (a) maintain each Plan (other than a
Multiemployer Plan) in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal and State law; (b) cause each
Plan which is qualified under Section 401(a) of the Code to maintain such
qualification; (c) not terminate any of such Plans so as to incur any liability
to the Pension Benefit Guaranty Corporation; (d) not allow or suffer to exist
any prohibited transaction involving any of such Plans or any trust created
thereunder which would subject Borrower or such ERISA Affiliate to a tax or
penalty or other liability on prohibited transactions imposed under Section 4975
of the Code or ERISA in excess of $1,000,000 in the aggregate; (e) make all
required contributions to any Plan which it is obligated to pay under Section
302 of ERISA, Section 412 of the Code or the terms of such Plan; (f) not allow
or suffer to exist any accumulated funding deficiency, whether or not waived,
with respect to any such Plan; or (g) not allow or suffer to exist any
occurrence of a reportable event or any other event or condition which presents
a material risk of termination by the Pension Benefit Guaranty Corporation of
any such Plan that is a single employer plan, which termination could result in
any liability to the Pension Benefit Guaranty Corporation.
9.13 End of Fiscal Years; Fiscal Quarters. Borrower
shall, for financial reporting purposes, cause its, and each of its
Subsidiaries' (a) fiscal years to end on December 31 of each year and (b) fiscal
quarters to end on March 31, June 30, September 30 and December 31 of each year.
9.14 Change in Business. Borrower shall not engage in
any business other than the business of Borrower on the date hereof and any
business reasonably related, ancillary or complimentary to the business in which
Borrower is engaged on the date hereof.
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9.15 Limitation of Restrictions Affecting
Subsidiaries. Borrower shall not, directly, or indirectly, create or otherwise
cause or suffer to exist any encumbrance or restriction which prohibits or
limits the ability of any Subsidiary of Borrower to (a) pay dividends or make
other distributions or pay any Indebtedness owed to Borrower or any Subsidiary
of Borrower; (b) make loans or advances to Borrower or any Subsidiary of
Borrower, (c) transfer any of its properties or assets to Borrower or any
Subsidiary of Borrower; or (d) create, incur, assume or suffer to exist any lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, other than encumbrances and restrictions arising under (i) applicable
law, (ii) this Agreement, (iii) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of Borrower or any of its
Subsidiaries, (iv) customary restrictions on dispositions of real property
interests found in reciprocal easement agreements of Borrower or its Subsidiary,
(v) any agreement relating to Permitted Indebtedness incurred by a Subsidiary of
Borrower prior to the date on which such Subsidiary was acquired by Borrower and
outstanding on such acquisition date, and (vi) the extension or continuation of
contractual obligations in existence on the date hereof; provided, that, any
such encumbrances or restrictions contained in such extension or continuation
are no less favorable to Lender than those encumbrances and restrictions under
or pursuant to the contractual obligations so extended or continued.
9.16 Total Senior Debt/Tangible Adjusted Net Worth
Ratio. The ratio of Borrower and its Subsidiaries' Total Senior Debt to Tangible
Adjusted Net Worth shall be less than 2.75:1 as of the end of each fiscal
quarter during the term of this Agreement.
9.17 EBITDA. Borrower and its Subsidiaries shall not,
in any fiscal quarter during the term of this Agreement, permit their cumulative
EBITDA to be less than $3,000,000.
9.18 Total Senior Debt/EBITDA Ratio. The ratio of the
Borrower's and its Subsidiaries' Total Senior Debt to EBITDA shall be less than
1.00:1 at all times during the term of this Agreement. Total Senior Debt shall
be calculated as of the end of each fiscal quarter and EBITDA shall be
calculated as of such date for the twelve consecutive month period ending on
such date.
9.19 Liquidity. If liquidity of Borrower and its
Subsidiaries is at any time less than $7,000,000, Borrower shall make no
acquisition, investment (other than a Permitted Investment) or redemption and
shall issue no dividend without the prior written consent of Lender.
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9.20 License Agreements.
(a) Borrower shall (i) promptly and faithfully observe
and perform all of the material terms, covenants, conditions and provisions of
the material License Agreements in excess of $1,000,000 in any month to be
observed and performed by it, at the times set forth therein, if any, (ii) not
do, permit, suffer or refrain from doing anything could reasonably be expected
to result in a default under or breach of any of the terms of any such material
License Agreement, (iii) not cancel, surrender, modify, amend, waive or release
any such material License Agreement in any material respect or any term,
provision or right of the licensee thereunder in any material respect, or
consent to or permit to occur any of the foregoing; except, that, subject to
Section 9.20(b) below, Borrower may cancel, surrender or release any such
material License Agreement in the ordinary course of the business of Borrower;
provided, that, Borrower shall give Lender not less than fifteen (15) days prior
written notice of its intention to so cancel, surrender and release any such
material License Agreement, (iv) give Lender prompt written notice of any
material breach of any obligation, or any default, by any party under any
material License Agreement, which is reasonably likely to have a Material
Adverse Effect, and (v) furnish to Lender, promptly upon the request of Lender,
such information and evidence as Lender may require from time to time concerning
the observance, performance and compliance by Borrower or the other party or
parties thereto with the terms, covenants or provisions of any material License
Agreement.
(b) Except to the extent that failure to renew or extend
is not reasonably likely to have a Material Adverse Effect, Borrower will
exercise any option to renew or extend the term of each material License
Agreement in such manner as will cause the term of such material License
Agreement to be effectively renewed or extended for the period provided by such
option.
9.21 Costs and Expenses. Borrower shall pay to Lender
on demand all reasonable costs, expenses, filing fees and taxes paid or payable
in connection with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) costs and expenses and fees for insurance premiums, environmental audits,
surveys, assessments, engineering reports and inspections, appraisal fees and
search fees, costs and expenses of remitting loan
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proceeds, collecting checks and other items of payment, (c) costs and expenses
of preserving and protecting the Collateral; (d) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Lender, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Lender arising out of the transactions contemplated hereby and thereby
(including preparations for and consultations concerning any such matters); and
(e) the fees and disbursements of counsel (including legal assistants) to Lender
in connection with any of the foregoing. Notwithstanding any provision of this
Agreement, Borrower's obligation to reimburse Lender for legal fees and expenses
incurred through the date of this Agreement shall be limited to Twenty-Five
Thousand Dollars ($25,000).
9.22 Depository Accounts. Until the Loans are paid in
full, Borrower shall maintain one or more deposit accounts with Lender and,
without limiting the foregoing, shall maintain depository accounts with the
Lender with an aggregate minimum balance of $1,000,000 at all times during the
term of this Agreement pursuant to a Treasury Management Agreement between
Borrower and Lender in form and substance satisfactory to Lender.
9.23 Further Assurances. At the request of Lender at
any time and from time to time, Borrower shall, at its expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be reasonably necessary or proper to evidence, perfect, maintain and enforce the
security interests and the priority thereof in the Collateral and to otherwise
effectuate the provisions or purposes of this Agreement or any of the other
Financing Agreements. Lender may at any time and from time to time request a
certificate from an officer of Borrower representing that all conditions
precedent to the making of Loans contained herein are satisfied. In the event of
such request by Lender, Lender may, at its option, cease to make any further
Loans until Lender has received such certificate and, in addition, Lender has
determined that such conditions are satisfied.
9.24 Regulation U. Borrower will not permit any part
of the proceeds of the loan or loans made pursuant to this Agreement to be used
to purchase or carry or to reduce or retire any loan incurred to purchase or
carry any margin stock (within the meaning of Regulation U 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, or to be used for any
other purpose which violates, or which would be inconsistent with, the
provisions of Regulation U or other applicable regulation. Borrower covenants
that it is not engaged and will not become engaged as one of its principal or
important activities in extending credit for the purpose of purchasing or
carrying such margin stock. If requested by Lender, Borrower will furnish to
Lender in connection with any Loan hereunder, a
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statement in conformity with the requirements of Federal Reserve Form U-1
referred to in said Regulation. In addition, Borrower covenants that no part of
the proceeds of the Loans hereunder will be used for the purchase of commodity
future contracts (or margins therefore for short sales) for any commodity not
required for the normal raw material inventory of Borrower.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence
of any one or more of the following events are referred to herein individually
as an "Event of Default", and collectively as "Events of Default":
(a) Borrower (i) fails to pay within three (3) Business
Days of when due any of the Obligations, or (ii) fails to perform any of the
other terms, covenants, conditions or provisions contained in this Agreement,
any of the other Financing Agreements, or any agreement, schedule, confirmatory
assignment or otherwise with respect to any other Obligations within twenty (20)
Business Days of when such failure first becomes known to any Executive Officer;
(b) any representation, warranty or statement of fact
made by Borrower or any Obligor to Lender in this Agreement, the other Financing
Agreements or any other agreement, schedule, confirmatory assignment or
otherwise with respect to any other Obligations shall when made or deemed made
be false or misleading in any material respect;
(c) any Obligor revokes or terminates, or purports to
revoke or terminate, or fails to perform any of the terms, covenants, conditions
or provisions of, any guarantee, endorsement or other agreement (other than this
Agreement or the Note) of such party in favor of Lender and Borrower fails to
provide, in Lender's sole discretion, adequate substitution or assurance of the
performance of the same within ten (10) Business Days of Lender's notification
to Borrower of such revocation, termination or failure;
(d) any judgment for the payment of money is rendered
against Borrower or any Obligor in excess of $1,000,000 in any one case or in
the aggregate and shall remain undischarged or unvacated for a period in excess
of thirty (30) days or execution shall at any time not be effectively stayed, or
any judgment other than for the payment of money, or injunction, attachment,
garnishment or execution is rendered against Borrower or any Obligor or any of
their assets;
(e) Borrower or any Obligor, which is a partnership,
limited liability company, limited liability partnership or a corporation,
dissolves or suspends or discontinues doing business;
(f) Borrower or any Obligor becomes not solvent, makes an
assignment for the benefit of creditors, or makes or sends notice of a bulk
transfer;
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(g) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against Borrower or all or any part of its properties and
such petition or application is not dismissed within thirty (30) days after the
date of its filing or Borrower or any Obligor shall file any answer admitting or
not contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief
requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by Borrower or any Obligor or for all or any part of its
property; or
(i) any default in respect of any Indebtedness of
Borrower or any Obligor (other than Indebtedness owing to Lender), in any case
in an amount in excess of $1,000,000, which default continues for more than the
applicable cure period, if any, with respect thereto, or any default by Borrower
or any Obligor under any Material Contract, which default continues for more
than the applicable cure period, if any, with respect thereto;
(j) any material provision hereof or of any of the other
Financing Agreements shall for any reason cease to be valid, binding and
enforceable with respect to any party hereto or thereto (other than Lender) in
accordance with its terms, or any such party shall challenge the enforceability
hereof or thereof, or shall assert in writing, or take any action or fail to
take any action based on the assertion that any provision hereof or of any of
the other Financing Agreements has ceased to be or is otherwise not valid,
binding or enforceable in accordance with its terms, or any security interest
provided for herein or in any of the other Financing Agreements shall cease to
be a valid and perfected first priority security interest in any of the
Collateral that can be perfected by a UCC filing with the Secretary of State of
Nevada and that is purported to be subject thereto (except as otherwise
permitted herein or therein or as a result of Lender's actions or omissions;
(k) an ERISA Event shall occur which results in or could
reasonably be expected to result in liability of Borrower in an aggregate amount
in excess of $1,000,000;
(l) any Change of Control;
(m) the indictment by any Governmental Authority, or as
Lender may reasonably and in good faith determine, the threatened indictment by
any Governmental Authority of Borrower or any Obligor of which Borrower, any
Obligor
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or Lender receives notice, in either case, as to which there is a reasonable
possibility of an adverse determination, in the good faith determination of
Lender, under any criminal statute, or commencement or threatened commencement
of criminal or civil proceedings against Borrower pursuant to which statute or
proceedings the penalties or remedies sought or available include forfeiture of
(i) any of the Collateral having a value in excess of $1,000,000 or (ii) any
other property of Borrower, the absence of which is reasonably likely to result
in a Material Adverse Effect; or
(n) there shall be a change in the business, assets or
prospects of Borrower after the date hereof that is reasonably likely to have a
Material Adverse Effect.
10.2 Remedies. At any time an Event of Default exists
or has occurred and is continuing:
(a) Lender shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the UCC and other applicable
law, all of which rights and remedies may be exercised without notice to or
consent by Borrower or any Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Lender's discretion, alternatively, successively,
or concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by Borrower of this Agreement or any of
the other Financing Agreements. Lender may, at any time or times, proceed
directly against Borrower or any Obligor to collect the Obligations without
prior recourse to any Obligor or any of the Collateral.
(b) Without limiting the foregoing, at any time an Event
of Default exists or has occurred and is continuing, Lender may, in its
discretion and, without limitation, (i) accelerate the payment of all
Obligations and demand immediate payment thereof to Lender (provided, that, upon
the occurrence of any Event of Default described in Sections 10.1(g) and
10.1(h), all Obligations shall automatically become immediately due and
payable), (ii) with or without judicial process or the aid or assistance of
others, enter upon any premises on or in which any of the Collateral may be
located and take possession of the Collateral or complete processing,
manufacturing and repair of all or any portion of the Collateral, (iii) require
Borrower, at Borrower's expense, to assemble and make available to Lender any
part or all of the Collateral at any place and time designated by Lender, (iv)
collect, foreclose, receive, appropriate, setoff and realize upon any and all
Collateral, (v) remove any or all of the Collateral from any premises on or in
which the same may be located for the purpose of effecting the sale, foreclosure
or other disposition thereof or for any other purpose, (vi) sell, lease,
transfer, assign, deliver or
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otherwise dispose of any and all Collateral (including entering into contracts
with respect thereto, public or private sales at any exchange, broker's board,
at any office of Lender or elsewhere) at such prices or terms as Lender may deem
reasonable, for cash, upon credit or for future delivery, with the Lender having
the right to purchase the whole or any part of the Collateral at any such public
sale, all of the foregoing being free from any right or equity of redemption of
Borrower, which right or equity of redemption is hereby expressly waived and
released by Borrower and/or (vii) terminate this Agreement. If any of the
Collateral is sold or leased by Lender upon credit terms or for future delivery,
the Obligations shall not be reduced as a result thereof until payment therefor
is finally collected by Lender. If notice of disposition of Collateral is
required by law, ten (10) days prior notice by Lender to Borrower designating
the time and place of any public sale or the time after which any private sale
or other intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and Borrower waives any other notice. In the event
Lender institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, Borrower waives the posting of any bond
which might otherwise be required.
(c) Lender may, at any time or times that an Event of
Default exists or has occurred and is continuing, enforce Borrower's rights
against any account debtor, secondary obligor or other obligor in respect of any
of the Accounts or other Receivables. Without limiting the generality of the
foregoing, Lender may at such time or times (i) notify any or all account
debtors, secondary obligors or other obligors in respect thereof that the
Receivables have been assigned to Lender and that Lender has a security interest
therein and Lender may direct any or all account debtors, secondary obligors and
other obligors to make payment of Receivables directly to Lender, (ii) extend
the time of payment of, compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any terms or conditions, any and all
Receivables or other obligations included in the Collateral and thereby
discharge or release the account debtor or any secondary obligors or other
obligors in respect thereof without affecting any of the Obligations, (iii)
demand, collect or enforce payment of any Receivables or such other obligations,
but without any duty to do so, and Lender shall not be liable for its failure to
collect or enforce the payment thereof nor for the negligence of its agents or
attorneys with respect thereto and (iv) take whatever other action Lender may
deem necessary or desirable for the protection of its interests. At any time
that an Event of Default exists or has occurred and is continuing, at Lender's
request, all invoices and statements sent to any account debtor shall state that
the Accounts and such other obligations have been assigned to Lender and are
payable directly and only to Lender and Borrower shall deliver to Lender such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Lender may require. In
the event any account debtor returns Inventory when an Event of Default exists
or has occurred and is continuing, Borrower shall, upon Lender's request, hold
the returned Inventory in trust for Lender, segregate all returned Inventory
from all of its other property, dispose of
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the returned Inventory solely according to Lender's instructions, and not issue
any credits, discounts or allowances with respect thereto without Lender's prior
written consent.
(d) At any time or times that an Event of Default exists
or has occurred and is continuing to the extent that applicable law imposes
duties on Lender to exercise remedies in a commercially reasonable manner (which
duties cannot be waived under such law), Borrower acknowledges and agrees that
it is not commercially unreasonable for Lender (i) to fail to incur expenses
reasonably deemed significant by Lender to prepare Collateral for disposition or
otherwise to complete raw material or work in process into finished goods or
other finished products for disposition, (ii) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not
required by other law, to fail to obtain consents of any Governmental Authority
or other third party for the collection or disposition of Collateral to be
collected or disposed of, (iii) to fail to exercise collection remedies against
account debtors, secondary obligors or other persons obligated on Collateral or
to remove liens or encumbrances on or any adverse claims against Collateral,
(iv) to exercise collection remedies against account debtors and other persons
obligated on Collateral directly or through the use of collection agencies and
other collection specialists, (v) to advertise dispositions of Collateral
through publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (vi) to contact other persons, whether or
not in the same business as Borrower for expressions of interest in acquiring
all or any portion of the Collateral, (vii) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the
collateral is of a specialized nature, (viii) to dispose of Collateral by
utilizing Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets, (ix) to dispose of assets in
wholesale rather than retail markets, (x) to disclaim disposition warranties,
(xi) to purchase insurance or credit enhancements to insure Lender against risks
of loss, collection or disposition of Collateral or to provide to Lender a
guaranteed return from the collection or disposition of Collateral, or (xii) to
the extent deemed appropriate by Lender, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist
Lender in the collection or disposition of any of the Collateral. Borrower
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Lender would not be commercially
unreasonable in Lender's exercise of remedies against the Collateral and that
other actions or omissions by Lender shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section. Without
limitation of the foregoing, nothing contained in this Section shall be
construed to grant any rights to Borrower or to impose any duties on Lender that
would not have been granted or imposed by this Agreement or by applicable law in
the absence of this Section.
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(e) At any time or times that an Event of Default exists
or has occurred and is continuing, for the purpose of enabling Lender to
exercise the rights and remedies hereunder, Borrower hereby grants to Lender, to
the extent assignable, an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to Borrower) to use, assign,
license or sublicense any of the trademarks, service-marks, trade names,
business names, trade styles, designs, logos and other source of business
identifiers and other Intellectual Property and general intangibles now owned or
hereafter acquired by Borrower, wherever the same maybe located, including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer programs used for the compilation
or printout thereof.
(f) Lender may, at any time or times that an Event of
Default exists or has occurred and is continuing, apply the cash proceeds of
Collateral actually received by Lender from any sale, lease, foreclosure or
other disposition of the Collateral to payment of the Obligations, in whole or
in part and in such order as Lender may elect, whether or not then due. Borrower
shall remain liable to Lender for the payment of any deficiency with interest at
the highest rate provided for herein and all costs and expenses of collection or
enforcement, including attorneys' fees and legal expenses.
(g) Without limiting the foregoing, upon the occurrence
of a Default or Event of Default, Lender may, at its option, without notice, (i)
cease making Loans or reduce the amounts of Revolving Loans available to
Borrower, (ii) terminate any provision of this Agreement providing for any
future Loans to be made by Lender to Borrower and/or (iii) establish such
Reserves as Lender determines without limitation or restriction, notwithstanding
anything to the contrary contained herein.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of
Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of Florida but
excluding any principles of conflicts of law or other rule of law that would
cause the application of the law of any jurisdiction other than the laws of the
State of Florida.
(b) Borrower and Lender irrevocably consent and submit to
the non-exclusive jurisdiction of the Twentieth Judicial Circuit and the United
States District Court for the Middle District of Florida, whichever Lender may
elect, and
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waive any objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Agreement or any of the other
Financing Agreements or in any way connected with or related or incidental to
the dealings of the parties hereto in respect of this Agreement or any of the
other Financing Agreements or the transactions related hereto or thereto, in
each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise, and agree that any dispute with respect to any such
matters shall be heard only in the courts described above (except that Lender
shall have the right to bring any action or proceeding against Borrower or its
property in the courts of any other jurisdiction which Lender deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against Borrower or its property).
(c) Borrower hereby waives personal service of any and
all process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth
herein and service so made shall be deemed to be completed ten (10) days after
the same shall have been so deposited in the U.S. mails, or, at Lender's option,
by service upon Borrower in any other manner provided under the rules of any
such courts. Within thirty (30) days after such service, Borrower shall appear
in answer to such process, failing which Borrower shall be deemed in default and
judgment may be entered by Lender against Borrower for the amount of the claim
and other relief requested.
(d) BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER
AND LENDER EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT
BORROWER OR LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to Borrower
(whether in tort, contract, equity or otherwise) for losses suffered by Borrower
in connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Lender, that the losses were
the result of acts or omissions constituting gross negligence or willful
misconduct of Lender. In any
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such litigation, Lender shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise of ordinary care
in the performance by it of the terms of this Agreement. Except as prohibited by
law, Borrower waives any right which it may have to claim or recover in any
litigation with Lender any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages. Borrower: (i)
certifies that neither Lender nor any representative, agent or attorney acting
for or on behalf of Lender has represented, expressly or otherwise, that Lender
would not, in the event of litigation, seek to enforce any of the waivers
provided for in this Agreement or any of the other Financing Agreements and (ii)
acknowledges that in entering into this Agreement and the other Financing
Agreements, Lender is relying upon, among other things, the waivers and
certifications set forth in this Section 11.1 and elsewhere herein and therein.
11.2 Waiver of Notices. Borrower hereby expressly
waives demand, presentment, protest and notice of protest and notice of dishonor
with respect to any and all instruments and chattel paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on Borrower which Lender may elect
to give shall entitle Borrower to any other or further notice or demand in the
same, similar or other circumstances.
11.3 Amendments and Waivers. Neither this Agreement
nor any provision hereof shall be amended, modified, waived or discharged orally
or by course of conduct, but only by a written agreement signed by an authorized
officer of Lender, and as to amendments, as also signed by an authorized officer
of Borrower. Lender shall not, by any act, delay, omission or otherwise be
deemed to have expressly or impliedly waived any of its rights, powers and/or
remedies unless such waiver shall be in writing and signed by an authorized
officer of Lender. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Lender of any right, power and/or
remedy on any one occasion shall not be construed as a bar to or waiver of any
such right, power and/or remedy which Lender would otherwise have on any future
occasion, whether similar in kind or otherwise.
11.4 Waiver of Counterclaims. Borrower waives all
rights to interpose any claims, deductions, setoffs or counterclaims of any
nature (other then compulsory counterclaims) in any action or proceeding with
respect to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.
11.5 Indemnification. Borrower shall indemnify and
hold Lender, and its directors, agents, employees and counsel, harmless from and
against any and all losses, claims, damages, liabilities, costs or expenses
imposed
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on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel. To the extent that the undertaking to indemnify, pay and hold harmless
set forth in this Section may be unenforceable because it violates any law or
public policy, Borrower shall pay the maximum portion which it is permitted to
pay under applicable law to Lender in satisfaction of indemnified matters under
this Section. To the extent permitted by applicable law, Borrower shall not
assert, and Borrower hereby waives, any claim against Lender, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any of the other Financing Agreements or any undertaking or
transaction contemplated hereby. The foregoing indemnity shall survive the
payment of the Obligations and the termination of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Term.
(a) This Agreement and the other Financing Agreements
shall become effective as of the date set forth on the first page hereof and
shall continue in full force and effect for a term ending on June 30, 2005. In
addition, Borrower may terminate this Agreement at any time upon ten (10) days
prior written notice to Lender (which notice shall be irrevocable) and Lender
may terminate this Agreement at any time on or after an Event of Default. Upon
the effective date of termination of this Agreement, Borrower shall pay to
Lender, in full, all outstanding and unpaid Obligations and shall furnish cash
collateral to Lender (or at Lender's option, a letter of credit issued for the
account of Borrower and at Borrower's expense, in form and substance
satisfactory to Lender, by an issuer acceptable to Lender and payable to Lender
as beneficiary) in such amounts as Lender determines are reasonably necessary to
secure (or reimburse) Lender from loss, cost, damage or expense, including
reasonable attorneys' fees and legal expenses, in connection with any contingent
Obligations, including checks or other payments provisionally credited to the
Obligations and/or as to which Lender has not yet received final and
indefeasible payment and any continuing obligations of Lender to any bank or
other financial institution under or pursuant to any Deposit Account Control
Agreement. Such payments in respect of the Obligations and cash collateral shall
be remitted by wire transfer in Federal funds to such bank account of Lender, as
Lender may, in its discretion, designate in writing to Borrower for such
purpose. Interest shall be due until and including the next business day, if the
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amounts so paid by Borrower to the bank account designated by Lender are
received in such bank account later than 12:00 noon, Eastern Standard time.
(b) No termination of this Agreement or the other
Financing Agreements shall relieve or discharge Borrower of its respective
duties, obligations and covenants under this Agreement or the other Financing
Agreements until all Obligations have been fully and finally discharged and
paid, and Lender's continuing security interest in the Collateral and the rights
and remedies of Lender hereunder, under the other Financing Agreements and
applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid. Accordingly, Borrower waives any rights
which it may have under the UCC to demand the filing of termination statements
with respect to the Collateral, and Lender shall not be required to send such
termination statements to Borrower, or to file them with any filing office,
unless and until this Agreement is terminated in accordance with its terms and
all of the Obligations are paid and satisfied in full in immediately available
funds. Once this Agreement is terminated in accordance with its terms and all
such Obligations are satisfied, Lender shall promptly release and terminate this
Agreement and all Collateral and return to Borrower all deposits or other funds
held pursuant to this Agreement.
12.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1
or Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
(b) All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural unless the context
otherwise requires.
(c) All references to Borrower and Lender pursuant to the
definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this
Agreement" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not any particular provision of this Agreement
and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement
shall mean "including, without limitation".
(f) All references to the term "good faith" used herein
when applicable to Lender shall mean, notwithstanding anything to the contrary
contained herein or in the UCC, honesty in fact in the conduct or transaction
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concerned. Borrower shall have the burden of proving any lack of good faith on
the part of Lender alleged by Borrower at any time.
(g) An Event of Default shall exist or continue or be
continuing until such Event of Default is waived in accordance with Section 11.3
or is cured in a manner satisfactory to Lender, if such Event of Default is
capable of being cured as determined by Lender.
(h) Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations hereunder shall be
computed unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied and using the same method for inventory valuation as
used in the preparation of the financial statements of Borrower most recently
received by Lender prior to the date hereof. Notwithstanding anything to the
contrary contained in GAAP or any interpretations or other pronouncements by the
Financial Accounting Standards Board or otherwise, the term "unqualified
opinion" as used herein to refer to opinions or reports provided by accountants
shall mean an opinion or report that is unqualified and does not contain any
comment concerning the ability of the applicable person to continue as a going
concern.
(i) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including", the words "to" and "until" each mean "to but excluding" and the word
"through" means "to and including".
(j) Unless otherwise expressly provided herein, (i)
references herein to any agreement, document or instrument shall be deemed to
include all subsequent amendments, modifications, supplements, extensions,
renewals, restatements or replacements with respect thereto, but only to the
extent the same are not prohibited by the terms hereof or of any other Financing
Agreement, and (ii) references to any statute or regulation are to be construed
as including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(l) This Agreement and other Financing Agreements may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are
the result of negotiations among and have been reviewed by counsel to Lender and
the
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other parties, and are the products of all parties. Accordingly, this Agreement
and the other Financing Agreements shall not be construed against Lender merely
because of Lender's involvement in their preparation.
12.3 Notices. All notices, requests and demands
hereunder shall be in writing and deemed to have been given or made: if
delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with instructions
to deliver the next Business Day, one (1) Business Day after sending; and if by
certified mail, return receipt requested, five (5) days after mailing. All
notices, requests and demands upon the parties are to be given to the following
addresses (or to such other address as any party may designate by notice in
accordance with this Section):
If to Borrower: ▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
Huntington Center
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender: Fifth Third Bank
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Holland & Knight LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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12.4 Partial Invalidity. If any provision of this
Agreement is held to be invalid or unenforceable, such invalidity or
unenforceability shall not invalidate this Agreement as a whole, but this
Agreement shall be construed as though it did not contain the particular
provision held to be invalid or unenforceable and the rights and obligations of
the parties shall be construed and enforced only to such extent as shall be
permitted by applicable law.
12.5 Successors. This Agreement, the other Financing
Agreements and any other document referred to herein or therein shall be binding
upon and inure to the benefit of and be enforceable by Lender, Borrower and
their respective successors and assigns, except that Borrower may not assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Lender. Lender may, after notice to Borrower, assign its rights and delegate its
obligations under this Agreement and the other Financing Agreements and further
may assign, or sell participations in, all or any part of the Loans, or any
other interest herein to another financial institution which is an Affiliate of
Lender or, with the prior written consent of Borrower, to another financial
institution which is not an Affiliate of Lender or other person on terms and
conditions acceptable to Lender.
12.6 Entire Agreement. This Agreement, the other
Financing Agreements, any supplements hereto or thereto, and any instruments or
documents delivered or to be delivered in connection herewith or therewith
represents the entire agreement and understanding concerning the subject matter
hereof and thereof between the parties hereto, and supersede all other prior
agreements, understandings, negotiations and discussions, representations,
warranties, commitments, proposals, offers and contracts concerning the subject
matter hereof, whether oral or written. In the event of any inconsistency
between the terms of this Agreement and any schedule or exhibit hereto, the
terms of this Agreement shall govern. In the event of an inconsistency between
the terms of the Commitment and any other Financing Agreement, the terms of such
other Financing Agreement shall govern.
12.7 Counterparts, Etc. This Agreement or any of the
other Financing Agreements may be executed in any number of counterparts, each
of which shall be an original, but all of which taken together shall constitute
one and the same agreement. Delivery of an executed counterpart of this
Agreement or any of the other Financing Agreements by telefacsimile shall have
the same force and effect as the delivery of an original executed counterpart of
this Agreement or any of such other Financing Agreements. Any party delivering
an executed counterpart of any such agreement by telefacsimile shall also
deliver an original executed counterpart, but the failure to do so shall not
affect the validity, enforceability or binding effect of such agreement.
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12.8 Confidentiality. Lender agrees to keep
information obtained by it pursuant hereto and any other loan documents
confidential in accordance with Lender's customary practices and agrees that it
will only use such information in connection with the transactions contemplated
by this Agreement and not disclose any of such information, other than (a) to
such Lender's employees, representatives and agents who are or are expected to
be involved in the evaluation of such information in connection with the
transactions contemplated by this Agreement, who are advised of the confidential
nature of such information and are bound by this confidentiality provision, (b)
to the extent disclosure is required by law, regulation or judicial order or
requested or required by bank regulators or auditors or any quasi-regulatory
authority, or (c) to assignees or participants or potential assignees or
participants (including any direct or indirect contractual counterparty in swap
agreements or such counterparty's professional advisors) who agree to be bound
by the provisions of this Section 12.8.
IN WITNESS WHEREOF, Lender and Borrower have caused these presents to
be duly executed as of the day and year first above written.
LENDER BORROWER
FIFTH THIRD BANK ▇▇▇▇▇▇▇▇.▇▇▇
By: /s/ ▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------- -----------------------------
Name: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------- Chief Financial Officer
Title: Senior Vice President
------------------------------ Principal Executive Office:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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