LOAN AND SECURITY AGREEMENT
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This LOAN AND SECURITY AGREEMENT, is entered into as of September 27, 1999
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between ▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. ("Borrower"), having a place of business at 300
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▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ and AEROFUND FINANCIAL INC having
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a place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
("Lender").
RECITALS
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A. The Borrower has requested that Lender provide financial
accommodation to Borrower as more fully set forth herein and in the Loan
Documents.
B. The Borrower has requested that the Guarantor guaranty the
Obligations.
C. This Agreement is entered into and will be performed in the State of
California.
NOW, THEREFORE, in consideration of the premises, and intending to be
legally bound hereby, the Parties hereby agree as follows:
AGREEMENT
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D. Certain Definitions and Index to Definitions.
1. ACCOUNTING TERMS. Unless otherwise specified herein, all accounting
terms used herein shall be interpreted, all accounting determinations hereunder
shall be made, and all financial statements required to be delivered hereunder
shall be prepared in accordance with generally accepted accounting principles
and practices consistently applied.
2. DEFINITIONS. The following terms shall have the following
respective meanings:
a. "ACCOUNT DEBTOR" - the obligor on an Account.
b. "ACCOUNTS" - means all currently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods or the rendition of services by
Borrower, irrespective of whether earned by performance, and any and all credit
insurance, guaranties, or security therefor.
c. "ADVANCES" - advances made by Lender to Borrower under Section 2.1
hereof.
d. "AGREEMENT" - means this Loan and Security Agreement and any
extensions, riders, supplements, notes, amendments, or modifications to or in
connection with this Loan and Security Agreement.
e. "AUDIT FEE" - waived.
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f. "AVERAGE UNUSED PORTION OF MAXIMUM AMOUNT" - means the Maximum
Amount less the average Obligations that were outstanding during the immediately
preceding month.
g. "BORROWER" - see Preamble.
h. "BORROWER'S ACCOUNT" - any general deposit account of Borrower.
i. "BORROWER'S BOOKS" - means all of Borrower's books and records
including ledgers, records indicating, summarizing, or evidencing Borrower's
properties or assets or liabilities, all information relating to Borrower's
business operations or financial condition, and all computer programs, disc or
tape files, printouts, runs, or other computer prepared information, and the
equipment containing such information.
j. "BORROWING BASE" - 80% (EIGHTY PERCENT) percent of the Net Face
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Amount of Borrower's Eligible Accounts.
k. "BORROWING BASE CERTIFICATE" - a request for an Advance, in the form
annexed hereto. (Exhibit D.2.L)
l. "BUSINESS DAY" - means any day which is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close.
m. "CLEARANCE DAYS" - 5 (FIVE) Business Days.
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n. "CLEARANCE DAY PAYMENTS" - payments received by Lender, in whatever
form and from whatever source, in reduction of the Obligations.
o. "CLOSING DATE" - means the date on which this Agreement is accepted
by Lender.
p. "COLLATERAL" - any collateral now or hereafter described in any form
UCC-1 filed against Borrower naming Lender as the secured party and any
negotiable collateral (as defined below), and all of Borrower's right, title and
interest in and to the following property, now owned and hereafter acquired:
(1) All accounts, interests in goods represented by accounts, returned,
reclaimed or repossessed goods with respect thereto and rights as an unpaid
vendor, contract rights, chattel paper, general intangibles, including, but not
limited to, tax and duty refunds, registered and unregistered patents,
trademarks, service marks, copyrights, trade names, applications for the
foregoing, trade secrets, goodwill, processes, drawings, blueprints, customer
lists, licenses, whether as license or licensee, chooses in action and other
claims, and existing and future leasehold interests in equipment, and fixtures,
documents, notes, letters of credit, deposit accounts, certificates of deposit,
securities, bankers' acceptances or guaranties, credits, and all other interests
in Borrower's property now or hereafter held in any capacity by Lender or any
entity which at any time participates in Lender's financing of Borrower, and all
agreements or other property securing or relating to any of the items listed
above; and
(2) All goods, including, but not limited to the following:
(a) All Inventory;
(b) All Equipment;
(c) All consumer goods, farm products, crops growing or to be grown,
timber to be cut, minerals or the like (including, but not limited to, oil and
gas), wherever located and of whatever kind, nature or description; and
(3) All real and other personal property in or upon which Lender has or
may hereafter have a security interest, lien or right of setoff; and
(4) All Borrower's Books; and
(5) All products and proceeds of the foregoing, in whatever form and
wherever located, including, but not limited to, all insurance proceeds, all
claims against third parties for loss or destruction of or damage to any of the
foregoing, and all income from the lease or rental of any of the foregoing.
q. "COMMITMENT FEE" - waived.
r. "DEBTOR (ACCOUNT DEBTOR) SET-UP FEE" - waived.
s. "DEFAULT RATE" - 20% (TWENTY PERCENT) per annum in excess of the
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Interest Rate.
t. "EQUIPMENT" - means all of Borrower's present and hereafter acquired
machinery, machine tools, motors, equipment, furniture, furnishings, fixtures,
vehicles (including motor vehicles and trailers), tools, parts, dies, jigs,
goods (other than consumer goods, farm products, or Inventory), wherever
located, and any interest of Borrower in any of the foregoing, and all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located.
u. "EVENT OF DEFAULT" - see Section 11.
v. "FEIN" - means Federal Employer Identification Number.
w. "GAAP" - means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
x. "GUARANTOR(S)" - ▇▇▇▇ ▇▇▇▇▇▇▇▇.
y. "INTEREST RATE" - 28% annual percentage rate.
z. "INVENTORY" - means all present and future inventory in which
Borrower has any interest, including goods held for sale or lease or to be
furnished under contract of service and all of Borrower's present and future raw
materials, work in process, finished goods, and packing and shipping materials,
wherever located, and any documents of title representing any of the above.
aa. "LOAN DOCUMENTS" - means this Agreement, any other note or notes
executed by Borrower and payable to Lender, and any other agreement entered into
in connection with this Agreement.
bb. "MAINTENANCE FEE" - waived.
cc. "MAXIMUM AMOUNT" - $750,000.
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dd. "MONETARY COLLATERAL" - cash, checks or other proceeds of
Collateral in tangible form.
ee. "NEGOTIABLE COLLATERAL" - means all of Borrower's present and
future letters of credit, notes, drafts, instruments, certificated and
uncertificated securities (including the shares of stock of subsidiaries of
Borrower), documents, personal property leases (wherein Borrower is the lessor),
chattel paper, and Borrower's Books relating to any of the foregoing.
ff. "NET FACE AMOUNT" - with respect to an Account, the gross face
amount of such Account less all trade discounts or other deductions to which the
Account Debtor is entitled.
gg. "OBLIGATIONS" - all present and future obligations owing by
Borrower to Lender whether or not for the payment of money, whether or not
evidenced by any note or other instrument, whether direct or indirect, absolute
or contingent, due or to become due, joint or several, primary or secondary,
liquidated or unliquidated, secured or unsecured, original or renewed or
extended, whether arising before, during or after the commencement of any
bankruptcy case in which Borrower is a debtor, and all principal, interest,
fees, charges, expenses, attorney's fees and accountant's fees chargeable to
Borrower or incurred by Lender in connection with this Agreement and/or the
transaction(s) related thereto;
hh. "OVERAVAILABILITY FEE" - 18% (EIGHTEEN PERCENT) per annum
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multiplied by the amount by which the average outstanding balance of the
Obligations exceeds the Borrowing Base.
ii. "PERMITTED LIENS" - means:
(1) liens and security interests held by Lender;
(2) liens for unpaid taxes that are not yet due and payable;
(3) liens and security interests set forth on the schedule attached
hereto;
(4) mechanics', materialmen's, warehousemen's, or similar liens.
jj. "PRIME RATE" - the Prime Rate as reflected in The Wall Street
Journal (Western Edition). If such rate is shown as a range, then the Prime
Rate shall be the highest value in such range.
kk. "RENEWAL DATE" - the date which is TWELVE MONTHS from the Closing
Date.
ll. "TERMINATION DATE" - the earlier of the expiration of this
Agreement by its terms or the date on which the Lender elects to terminate this
Agreement pursuant to the terms herein.
mm. "UNUSED LINE FEE" - waived.
nn. "WIRE FEE" - waived.
E. CREDIT FACILITIES.
1. Subject to the terms and conditions of this Agreement, from the date
on which this Agreement becomes effective until the Termination Date Lender,
upon the request of Borrower, shall from time to time make Advances to Borrower.
2. Each request from Borrower for an Advance shall be accompanied by
Borrowing Base Certificate, completed and signed by Borrower.
3. GENERAL. All advances by Lender may be made by transferring funds
to Borrower's Account.
4. AUTHORIZATION FOR ADVANCES. Lender is authorized to make Advances:
(1) upon telephonic, facsimile or other instructions received from anyone
purporting to be an officer, employee, or representative of Borrower, or (2) at
the sole discretion of Lender, and notwithstanding any other provisions in this
Agreement, if necessary to meet any Obligations, including but not limited to
any interest not paid when due.
5. CONDITIONS OF LENDER'S OBLIGATIONS. All conditions of Lender's
obligations to make Advances are imposed solely and exclusively for the benefit
of Lender and may be freely waived or modified in whole or in part by Lender at
any time.
6. LIMITATIONS ON CREDIT FACILITIES. Notwithstanding anything to the
contrary contained herein, Lender shall not be obligated to make an Advance if,
before or as a result thereof the Obligations shall exceed either the Borrowing
Base or the Maximum Amount.
F. PAYMENTS BY BORROWER.
1. IN GENERAL.
a. No checks, drafts or other instruments received by Lender
purportedly in satisfaction of any of the Obligations shall constitute payment
thereof unless and until such instruments have actually been collected.
b. Borrower shall have the right to make payments at any time in
reduction of the Obligations, in whole or in part, without premium or penalty;
provided, however, that Lender debtor may apply any payments received by
Borrower to any of the Obligations, or portion thereof, in any manner and in any
order as Lender may determine in its sole discretion, notwithstanding contrary
instructions received from the payor.
c. Borrower shall promptly make payments, without demand or notice, in
reduction of the Obligations in the amount by which the Obligations exceeds the
lesser of the Borrowing Base or the Maximum Amount.
2. INTEREST AND FEE PAYMENTS.
a. INTEREST.
(1) The interest on the Obligations shall be computed at the Interest
Rate, shall be due on the first day of each month following the accrual thereof,
and shall be computed on the basis of a 360-day year for actual days elapsed.
For any month in which the interest paid by Borrower to Lender hereunder is less
than the Minimum Monthly Charge, the difference shall be added to Obligations as
of the first day of the following month, until the date on which all Obligations
have been fully repaid (whether or not this Agreement has heretofore been
terminated).
(2) Lender is authorized to debit Borrower's Account on the first
business day of each month for interest accrued hereunder on the daily
Obligations during the preceding month at the Interest Rate;
(3) Any interest not paid when due (whether by acceleration or
otherwise, and before as well as after judgment) shall accrue at the Default
Rate.
b. UNUSED LINE FEE. Borrower shall pay Lender on the first day of each
month the Unused Line Fee for the Average Unused Portion, less than half of the
Maximum Amount.
c. ADMINISTRATIVE FEE. Borrower shall pay the Administrative Fee to
Lender immediately upon the creation of an Account. The administrative fee each
month for the term of this agreement shall be no less than the Minimum Monthly
Charge.
d. COMMITMENT FEE. Borrower shall pay lender the Commitment Fee
immediately upon lender's acceptance of this agreement. Borrower shall also
lender the Commitment Fee for any increase in the maximum amount during the term
of this contract. waived - see page 2
e. MAINTENANCE FEE. Borrower shall pay the Maintenance Fee on the
first day of each month, computed on the average outstanding balance of Accounts
for the preceding month.
f. DEBTOR SET-UP FEE. Borrower shall pay lender the Debtor Set-Up Fee
immediately upon the set-up of each new.
g. OVERAVAILABILITY FEE. Borrower shall pay the Overavailability Fee
to lender each month for the computed average balance of the advanced amount
which is in excess of the eligible amount.
h. WIRE FEE. Borrower shall pay Lender the Wire Fee for each wire
transfer of funds. Borrower shall receive two wires per week at no charge.
3. REPAYMENT OF OBLIGATIONS UPON TERMINATION. Upon the Termination
Date, the unpaid balance of the Obligations shall be due and payable without
demand or notice.
4. MINIMUM MONTHLY CHARGE. For any month in which the Administrative
Fee paid by Borrower to Lender hereunder is less than the Minimum Monthly
Charge, the difference shall be added to Obligations as of the first day of the
following month, until the date on which all Obligations have been fully repaid
(whether or not this Agreement has heretofore been terminated).
5. APPLICATION OF COLLECTIONS. Lender shall, for the purpose of the
computation of interest due hereunder, add the Clearance Days to any Clearance
Day Payments, which is acknowledged by the parties to constitute an integral
aspect of the pricing of Lender's facility to Borrower, and shall apply
irrespective of the characterization of whether receipts are owned by Borrower
or Lender. Should any check or item of payment not be honored when presented
for payment, then Borrower shall be deemed not to have made such payment, and
interest shall be recalculated accordingly.
G. CONDITIONS PRECEDENT TO ALL ADVANCES.
1. The representations and warranties contained in the Loan Documents
shall be true and correct in all respects on and as of the date of such Advance;
2. No Event of Default or event which the giving of notice or passage
of time would constitute an Event of Default shall have occurred and be
continuing on the date of such Advance;
3. No injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the making of such Advance shall have been
issued and remain in force by any governmental authority against Borrower or
Lender.
H. TERMINATION; AUTOMATIC RENEWAL; EARLY TERMINATION.
1. This Agreement shall become effective upon the execution and
delivery hereof by borrower and Lender and shall continue in full force and
effect for a term ending on the Renewal Date, and automatically shall be renewed
for successive years thereafter, unless sooner terminated pursuant to the terms
hereof.
2. Either party may terminate this Agreement effective on the Renewal
Date or on the anniversary hereof by giving the other party a written notice of
termination at least ninety days (90) prior to expiration by registered or
certified mail, return receipt requested. Contract will renew for one (1) year
from expiration date should notice not be given. The foregoing notwithstanding,
Lender shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3. If Borrower has sent a notice of termination under Section H.2
hereof but has failed to pay all Obligations on the date set forth in said
notice, then Lender may, but shall not be required to, renew this Agreement for
an additional twelve month period.
4. The provisions of this Agreement notwithstanding, Borrower shall
have the option, at any time upon ninety (90) days prior written notice to
Lender, to terminate this Agreement by paying to Lender, in cash the Obligations
and the Early Termination Premium.
5. If Lender terminates this Agreement upon the occurrence of an Event
of Default, in view of the impracticability and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Lender's lost profits as a result thereof, Borrower
shall pay to Lender upon the effective date of such termination, the Early
Termination Premium. The Early Termination Premium shall be presumed to be the
amount of damages sustained by Lender as the result of the early termination and
Borrower agrees that it is reasonable under the circumstances currently
existing.
I. SECURITY INTEREST.
1. Borrower hereby grants to Lender a continuing security interest in
the Collateral to secure prompt repayment of any and all Obligations and in
order to secure prompt performance by Borrower of each of its covenants and
duties under the Loan Documents.
2. Borrower shall immediately endorse and deliver Negotiable Collateral
to Lender.
J. COLLECTION AND ADMINISTRATION OF ACCOUNTS.
1. COLLECTION.
2. MONETARY COLLATERAL. Borrower shall, at Borrower's expense and in
the manner requested by Lender from time to time, direct that Monetary
Collateral be (or, if received by Borrower, shall cause same to be) (a) sent to
a post office box designated by and/or in the name of Lender, or in the name of
Borrower, but as to which access is limited solely to Lender and/or (b) paid
delivered to Lender. In connection therewith, Borrower shall execute such post
office box and/or blocked bank account agreements as Lender shall specify.
3. ELECTRONIC PROCEEDS OF COLLATERAL. In the event Borrower receives
proceeds of Collateral in the form of wire transfer or other intangible funds
transfer mechanism, Borrower shall immediately pay such proceeds to Lender.
4. POWER OF ATTORNEY. Borrower hereby appoints Lender and any designee
of Lender as Borrower's attorney-in-fact and authorizes Lender or such designee,
at Borrower's sole expense, to exercise at any times in Lender's or such
designee's discretion all or any of the following powers, which powers of
attorney, being coupled with an interest, are irrevocable until all of the
Obligations have been paid in full: (a) receive, take, endorse, assign, deliver,
accept and deposit, in the name of Lender or Borrower, any and all cash, checks,
commercial paper, drafts, remittances and other instruments and documents
relating to the Collateral or the proceeds thereof, (b) transmit to any Account
Debtor or any bailee notice of the interest of Lender in the Collateral or
request from any such entity, at any time, in the name of Borrower or Lender or
any designee of Lender, information concerning the Account and any amounts owing
with respect thereto, (c) notify any Account Debtor to make payment directly and
solely to Lender, or notify bailees as to the disposition of Collateral, (d)
take or bring, in the name of Lender or Borrower, all steps, actions, suits or
proceedings deemed by Lender necessary or desirable to effect collection of or
other realization upon any Collateral, (e) after an Event of Default, change the
address for delivery of mail to Borrower and to receive and open mail addressed
to Borrower, (f) after an Event of Default, upon any terms and conditions,
extend the time of payment of, compromise, or settle for cash, credit, return of
merchandise, any and all Accounts and discharge or release any Account Debtor
without affecting any of the Obligations, (g) execute in the name of Borrower
and file against Borrower in favor of Lender financing statements or amendments
with respect to any or all of the Collateral, and (h) execute in the name of
Borrower and file on behalf of Borrower with such governmental authorities as
are appropriate such documents (including, without limitation, applications,
certificates, and tax returns) as may be required for purposes of having
Borrower qualified to transact business in a particular state or geographic
location.
5. RELEASE. Borrower hereby releases and exculpates Lender, its
officers, employees, agents, designees, attorneys, and accountants from any
liability arising from any acts under this Agreement or in furtherance thereof,
whether as attorney-in-fact or otherwise, whether of omission or commission, and
whether based upon any error of judgment or mistake of law or fact, except for
gross negligence or willful misconduct. In no event shall Lender have any
liability to Borrower for lost profits or other special or consequential
damages.
6. NO AMENDMENTS. After written notice by Lender to Borrower, and
automatically, without notice, after an Event of Default, Borrower shall not,
without the prior written consent of Lender in each instance, (a) grant any
extension of time for payment of any Account, (b) compromise or settle any
Account for less than the full amount thereof, (c) release in whole or in part
any Account Debtor, or (d) grant any credits, discounts, allowances, deductions,
return authorizations or the like with respect to my Account.
8. DELIVERY OF COLLATERAL. At such times as Lender may request and in
the manner specified by Lender, Borrower shall deliver to Lender or Lender's
representative original invoices, agreements, proof of rendition of services and
delivery of goods and other documents evidencing or relating to the transactions
which gave rise to any of the Collateral, together with customer statements,
schedules describing the Accounts and/or statements of accounts and confirmatory
assignments to Lender of the Accounts in form and substance satisfactory to
Lender and duly executed by Borrower. Without limiting the provisions of any
other section of this Agreement, Borrower will promptly notify Lender, in
writing, of Borrower's granting of credits, discounts, allowances, deductions,
return authorizations or the like with respect to any Accounts. In no event
shall any such schedule or confirmatory assignment (or the absence thereof or
omission of any Accounts therefrom) limit or in any way be construed as a
waiver, limitation, or modification of the Liens or rights of Lender or the
warranties, representations, and covenants of Borrower under this Agreement.
Any documents, schedules, invoices or other paper delivered to Lender by
Borrower may be destroyed or otherwise disposed of by Lender six (6) months
after receipt by Lender, unless Borrower requests their return in writing in
advance and makes prior arrangements for their return, at Borrower's expense.
K. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Lender as follows:
1. Borrower has good and indefeasible title to the Collateral, free and
clear of liens, claims, security interests, or encumbrances, except for
Permitted Liens.
2. The Eligible Accounts are and will remain bona fide existing
obligations created by the sale and delivery of Inventory or the rendition of
services to Account Debtors in the ordinary course of Borrower's business,
unconditionally owed to Borrower without defenses, disputes, offsets,
counterclaims, or rights of return or cancellation. At the time of the creation
of an Eligible Account Borrower has not received notice of actual or imminent
bankruptcy, insolvency, or material impairment of the financial condition of any
applicable Account Debtor regarding such Eligible Account.
3. The Inventory and Equipment are not stored with a bailee,
warehouseman, or similar party (without Lender's prior written consent) and are
located only at the locations identified on the attached exhibit.
4. Borrower now keeps, and hereafter at all times shall keep, correct
and accurate records itemizing and describing the kind, type, quality, and
quantity of the Inventory, and Borrower's cost therefor.
5. The chief executive office of Borrower is located at the address
indicated in the preamble to this Agreement Accounts and Borrower's FEIN is
▇▇-▇▇▇▇▇▇▇.
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6. There are no actions or proceedings pending by or against Borrower
before any court or administrative agency and Borrower does not have knowledge
or belief of any pending, threatened, or imminent litigation, governmental
investigations, or claims, complaints, actions, or prosecutions involving
Borrower or any guarantor of the Obligations, except for ongoing collection
matters in which Borrower is the plaintiff.
7. All financial statements relating to Borrower or any guarantor of
the Obligations that have been delivered by Borrower to Lender have been
prepared in accordance with GAAP and fairly present Borrower's (or such
guarantor's, as applicable) financial condition as of the date thereof and
Borrower's results of operations for the period then ended. There has not been
a material adverse change in the financial condition of Borrower (or such
guarantor, as applicable) since the date of the latest financial statements
submitted to Lender on or before the Closing Date.
L. AFFIRMATIVE COVENANTS. Until full payment of the Obligations and
termination of this Agreement, Borrower shall:
1. FINANCIAL STATEMENTS, REPORTS AND CERTIFICATIONS. Furnish to
Lender, inform and substance satisfactory to Lender:
a. ANNUAL FINANCIAL STATEMENTS. As soon as possible after the end of
each fiscal year of Borrower, and in any event within sixty (60) days
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thereafter: (a) a complete copy of Borrower's financial statements, including
but not limited to (i) the management letter, if any, (ii) the balance sheet as
of the close of the fiscal year, and (iii) the income statement for such year,
together with a statement of cash flows, compiled by accountants selected by
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Borrower and satisfactory to Lender, and (b) a statement certified by the chief
financial officer of Borrower is in compliance with all the terms, conditions,
covenants and warranties of this Agreement; and
b. OTHER FINANCIAL STATEMENTS/TAX PAYMENTS AND STATEMENTS. No later
than 14 days after the close of each quarter (an "Accounting Period"),
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Borrower's balance sheet as of the close of such Accounting Period and its
income statement for that portion of the then current fiscal year through the
end of such Accounting Period and Borrower's Tax Payments and appropriate
statements through the end pay of such Accounting Period certified by Borrower's
chief financial officer as being complete, correct, and fairly representing its
financial condition and results of operations.
2. INSPECTIONS. Permit Lender or any representatives thereof, during
usual business hours, without notice to Borrower, to periodically (a) inspect
Borrower's tangible assets and (b) inspect, audit, make copies of, and make
extracts from Borrower's Books, and pay Lender the Audit Fee. In addition to
the foregoing, Borrower hereby permits Lender at any time to access
electronically information concerning any accounts maintained by Borrower with
any bank or other financial institution so long as such access is in furtherance
of, or to monitor compliance with, the terms of this Agreement. Borrower is
obligated to pay lender the Audit Fee a maximum at twice per year, and in the
event of default.
3. EXPENSES.
a. GENERALLY. Pay all reasonable out-of-pocket expenses of Lender
(including, but not limited to, fees and disbursements of Lender's counsel)
incident to (whether by judicial proceedings or otherwise, and whether any
resulting dispute resolution procedure involving tort, contract or other
claims):
(1) the preparation, negotiation, execution, administration and
enforcement of the Loan Documents, any amendments, extensions and renewals
thereof, and any other documents prepared in connection with any transactions
between Borrower and Lender, whether or not executed;
(2) any expenses incurred by Lender (whether or not for the benefit of
Borrower) under this Agreement, including, without limitation, all expenses for
postage relating to the mailing of statements, invoices, and verifications, and
all expenses relating to any audits of all or any portion of the Collateral;
(3) the protection of Lender's rights under the Loan Documents;
(4) defending against any and all claims against Lender relating to any
of its acts of commission or omission directly or indirectly relating to the
Loan Documents;
(5) or in any way arising out of a bankruptcy proceeding commenced by
or against Borrower, including but not limited to expenses incurred in enforcing
or defending Lender's claims against Borrower or the Collateral, defending any
avoidance actions, and expenses related to the administration of said
proceeding;
4. TAXES AND EXPENSES REGARDING BORROWER'S ASSETS. Make timely payment
or deposit of all taxes, assessments or contributions required of Borrower. If
Borrower fails to make any such payment or deposit or furnish the required
proof, Lender may, in its sole discretion and without notice to Borrower, (a)
make payment of the same or any part thereof, or (b) set up such reserves
against the Obligations as Lender deems necessary to satisfy the liability
therefore, or both. Lender may conclusively rely on statements of the amount
owing or other official statements issued by the appropriate governmental
agency. Any payment made by Lender shall constitute neither (i) an agreement by
Lender to make similar payments in the future, nor (ii) a waiver by Lender of
any default under the Loan Documents. Lender need not inquire into, nor contest
the validity of, any expense, tax, security interest, encumbrance or lien, and
the receipt of the usual official notice requiring the payment thereof shall be
conclusive evidence that the same was validly due and owing.
5. LOCATION OF COLLATERAL. Give Lender written notice immediately upon
forming an intention to change the location of its chief place of business or
any of the Collateral.
6. CHANGE IN NAME. Give Lender written notice immediately upon forming
an intention to change its name or form of business organization.
7. INSURANCE. At all times maintain, with financially sound and
reputable insurers, casualty insurance with respect to the Collateral and other
assets. All such insurance policies shall be in such form, substance, amounts
and coverage as may be satisfactory to Lender and shall provide for thirty (30)
days prior written notice to Lender of cancellation or reduction of coverage.
Borrower hereby irrevocably appoints Lender and any designee of Lender as
attorney-in-fact for Borrower to obtain at Borrower's expense, and, after an
Event of Default, to adjust or settle any claim or other matter under or arising
pursuant to such insurance or to amend or cancel such insurance. Borrower shall
deliver to Lender evidence of such insurance and a Lender's loss payable
endorsement naming Lender as loss payee as to all existing and future insurance
policies relating to the Collateral. Borrower shall deliver to Lender, in kind,
all instruments representing proceeds of insurance received by Borrower. Lender
may apply any and all insurance proceeds received at any time to the cost of
repairs to or replacement of any portion of the Collateral and/or, at Lender's
option, to the payment of or as security for any of the Obligations, whether or
not due, in any order or manner as Lender determines.
8. TAX RETURNS. Deliver to Lender copies of each of Borrower's federal
income tax returns, and any amendments thereto, within thirty (30) days of the
filing thereof with the Internal Revenue Service.
M. NEGATIVE COVENANTS. Until full payment of the Obligations and
termination of this Agreement, Borrower will not:
1. Create, incur, assume, or permit to exist, directly or indirectly,
any lien on or with respect to any of its property or assets of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens;
2. Enter into any transaction not in the ordinary and usual course of
Borrower's business, including the sale, lease, or other disposition of, moving,
relocation, or transfer, whether by sale or otherwise, of any of Borrower's
properties, assets (other than sales of Inventory to buyers in the ordinary
course of Borrower's business as currently conducted).
3. Change Borrower's name, FEIN, business structure, or identity, or
add any new fictitious name.
4. Suspend or go out of a substantial portion of its business.
5. Without thirty (30) days prior written notification to Lender,
relocate its chief executive office to a new location and so long as, at the
time of such written notification, Borrower provides any financing statements or
fixture filings necessary to perfect and continue perfected Lender's security
interests and also provides to Lender a landlord's waiver in form and substance
similar party without Lender's prior written consent.
N. EVENTS OF DEFAULT. Each of the following events or conditions shall
constitute an "Event of Default":
1. Borrower defaults in the payment of any Obligations when due,
whether at maturity, upon acceleration, or otherwise;
2. Borrower is in default with respect to the Loan Documents;
3. Borrower or any Guarantor (i) fails to pay any Indebtedness for
borrowed funds when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), or (ii) fails to perform or observe any
term, covenant, or condition of any agreement relating to any such Indebtedness,
if the effect of such failure to perform or observe is the acceleration of the
maturity of such Indebtedness, whether or not such failure is waived by the
obligee of such Indebtedness; or any such Indebtedness is declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
4. An order for relief is entered against Borrower or any Guarantor by
any United States Bankruptcy Court; or Borrower or any Guarantor does not
generally pay is debts as they become due (within the meaning of 11 U.S.C.
303(h) as at any time amended, or any successor statute thereto); or Borrower or
any Guarantor makes an assignment for the benefit of creditors; or Borrower any
Guarantor applies for or consents to the appointment of a custodian, receiver,
trustee, or similar officer for it or for all or any substantial part of its
property, or such custodian, receiver, trustee, or similar office is appointed
without application or consent of Borrower or any Guarantor; or Borrower or any
Guarantor institutes (by petition, application, answer, consent, or otherwise)
any bankruptcy, insolvency, reorganization, moratorium, arrangement,
readjustment of debt, dissolution, liquidation, or otherwise) against Borrower
or any Guarantor; or any judgment, writ, warrant of attachment, execution, or
similar process shall be issued or levied against a substantial portion of the
property of Borrower or any Guarantor;
5. An adverse change occurs with respect to the financial condition or
operations of Borrower which results in a material impairment of the prospect of
repayment of Borrower's Indebtedness;
6. A sale, hypothecation or other disposition is made of twenty percent
or more of the beneficial interest in any class of voting stock of Borrower;
7. Borrower fails to generate or provide accounts to Lender for a 30
day period;
8. Any provision of this Agreement or any of the Loan Documents ceases,
for any reason, to be valid and binding on Borrower;
9. Any Guarantor fails to perform or observe any of such Guarantor's
obligations under any Guaranty, or shall notify Lender of its intention to
rescind, modify, terminate or revoke the Guaranty with respect to future
transactions, or the Guaranty shall cease to be in full force and effect for any
reason whatever;
O. REMEDIES. Upon the occurrence of any Event of Default,
automatically, at Lender's option:
1. Lender's obligation to make any Advance available to Borrower shall
terminate;
2. All Obligations shall, without presentment, demand, protest, or
notice of any kind, all of which are hereby expressly waived, be forthwith due
and payable;
3. All Obligations shall accrue interest at the Default Rate; and
Lender may, immediately and without expiration of any period of grace, enforce
payment of all Obligations and exercise any and all other remedies granted to it
under the Loan Documents, at law, in equity, or otherwise, including but not
limited to the placement of Lender's agents or employees on Borrower's premises
to take all actions necessary to preserve the value of the Collateral.
P. NO LIEN TERMINATION WITHOUT RELEASE. In recognition of Lender's
right to have all its attorneys' fees and other expenses incurred in connection
with this Agreement secured by the Collateral, notwithstanding payment in full
of all Obligations by Borrower, Lender shall not be required to record any
terminations or satisfactions of any of its liens on the Collateral unless and
until Borrower and all Guarantors have executed and delivered to Lender general
releases which conform to California Civil Code '1541-2.
Q. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement,
provided that, this Agreement shall not become effective until all counterparts
hereof have been executed by all parties hereto.
R. SURVIVAL. All representations, warranties and agreements herein
contained shall be effective so long any portion of this Agreement remains
executory.
S. SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement is held to be invalid, illegal or unenforceable in
any respect, then such provision shall be ineffective only to the extent of such
prohibition or invalidity, and the validity, legality, and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
T. AMENDMENT. This Agreement shall not be changed, modified, amended,
or terminated except by a writing duly executed by all parties hereto.
U. WAIVER. No failure to exercise and no delay in exercising any
right, power, or remedy hereunder shall impair any right, power, or remedy which
Lender may have, nor shall any such delay be construed to be a waiver of any
breach or default of Borrower hereunder be deemed a waiver of any default or
breach subsequently occurring. All rights and remedies granted to Lender
hereunder shall remain in full force and effect notwithstanding any single or
partial exercise of, or any discontinuance of action begun to enforce, any such
right or remedy. The rights and remedies specified herein are cumulative and
not exclusive of each other or of any rights or remedies which Lender would
otherwise have. Any waiver, permit, consent or approval by Lender of any breach
or default hereunder must be in writing and shall be effective only to the
extent set forth in such writing and only as to that specific instance.
V. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
W. CHOICE OF LAW. This Agreement and all transactions contemplated
hereunder and/or evidenced hereby shall be governed by, construed under, and
enforced in accordance with the laws of the State of California.
X. STATUTE OF LIMITATIONS. Borrower waives the pleading of any statute
of limitations with respect to any and all actions in connection herewith.
Y. WAIVER OF TRIAL BY JURY. IN RECOGNITION OF THE HIGHER COSTS AND
DELAY WHICH MAY RESULT FROM A JURY TRIAL, THE PARTIES HERETO WAIVE ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING
HEREUNDER, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT HERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY 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 ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
FOR: ▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Printed Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------
Title: President
---------
AEROFUND FINANCIAL INC
By: _________________________
Title: ______________________
Addendum: $1,500.00 document processing fee due to AeroFund Financial Inc.
upon receipt of sign documents.
EXHIBIT 1.2.12 - Borrowing Base Certificate
------------------------------------------------
BORROWING BASE CERTIFICATE
TO: AEROFUND FINANCIAL INC ("Lender")
This Collateral report is submitted pursuant to that certain Loan and
Security Agreement dated September 28, 1999 (the "Agreement") between the
undersigned ("Borrower") and Lender.
By making this request, Borrower certifies that it is not in default under
the Agreement.
Date:
Advance Request for: $
Requested by:
Title:
FOR AFI USE ONLY:
Gross Accounts Receivable as of Date of Request :
+ Additional Accounts Receivable created since DOR :
- Reductions in Accounts Receivable since DOR :
- Ineligible Accounts Receivable as of Advance Date :
= Total Eligible Accounts Receivable :
Availability:
The lesser of (i) 80% of Total Eligible
Accounts Receivable, or (ii) $750,000 :
ADVANCE AMOUNT APPROVED :
Borrower, and its officer signing on its behalf below, certify that there does
not now exist an Event of Default (as defined in the Agreement) or an event or
condition which, with the giving of passage of time, or both, would be or become
an Event of Default.
▇▇▇▇▇▇▇▇▇.▇▇▇ Inc.
By: ___________________
Title: ________________
EXHIBIT 8.3 - List of Inventory and Equipment Location
--------------------------------------------------------------
Exhibit "A"
Acknowledgment of California Choice of Law and Santa ▇▇▇▇▇ County Venue
---------------------------------------------------------------------------
The parties expressly acknowledge their agreement that:
(1) California, as the state of the origin of the funding of this
lending on accounts and the state in which the lending on accounts is to be
consummated, is the place of performance of, and the state with the most
significant relationship with this agreement for lending on accounts and its
subject matter; and that
(2) California is the governing law applicable to this contract and its
interpretation as provided in this entire Loan and Security Agreement.
(3) Santa ▇▇▇▇▇ County, as the county of the origin of the funding of
this lending on accounts and the county in which the lending on accounts is to
be consummated, is the place of performance of, the situs of, and the county
with the most significant relationship with this agreement for lending on
accounts and its subject matter will be venue of choice applicable to this
contract and its interpretation as provided in this entire Loan and Security
Agreement.
Agreed,
Borrower: ▇▇▇▇▇▇▇▇▇.▇▇▇ Inc. Lender: AeroFund Financial Inc
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ _____________________
-------------------
Printed Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇ _____________________
--------------
Title: President _____________________
---------
Date: 9/28/99 _____________________
-------
H:ABCMASTER
-----------
PLEDGE AGREEMENT
-----------------
This Pledge Agreement is made and entered into on September 28, 1999, by
--
and between AeroFund Financial, Inc. ("AeroFund"), a California corporation, of
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇▇▇.▇▇▇ ("PhotoLoft"), a
Nevada corporation, of ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
RECITALS
WHEREAS, AltaVista Technology, Inc. ("AltaVista") sold its domain name to
Digital Equipment Corporation ("Digital") in exchange for payments under that
certain 7% Promissory Note, dated July 31, 1998, made by Digital and payable to
AltaVista, a copy of which is attached to this Pledge Agreement as Exhibit A
---------
(the "Note");
WHEREAS, AltaVista changed its name to ▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. upon the sale of
its domain name to Digital;
WHEREAS, ▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. entered into a reorganization with Data
Growth, Inc. in February 1999 and became a wholly-owned subsidiary of Data
Growth, Inc.;
WHEREAS, Data Growth, Inc. changed its name to ▇▇▇▇▇▇▇▇▇.▇▇▇;
WHEREAS, PhotoLoft and AeroFund wish to enter into a Loan and Security
Agreement under which PhotoLoft will borrow from AeroFund, and AeroFund will
lend to PhotoLoft, the sum of $419,200.00;
WHEREAS, PhotoLoft's obligations to AeroFund will be secured by the Note,
which is to be pledged as collateral for PhotoLoft's obligations under the Loan
and Security Agreement, in addition to other assets described in the Loan and
Security Agreement.
AGREEMENT
In consideration of the Recital above, and the mutual representations,
warranties and covenants set for below, the parties to this Pledge Agreement
hereby agree as follows:
1. PLEDGE. In consideration of any financial accommodations given or to be
given or construed to PhotoLoft by AeroFund, including, without limitation,
those under the Loan and Security Agreement, and as collateral security for the
payment of any indebtedness, obligation, or liability of PhotoLoft to AeroFund,
now or later existing, matured or to mature, absolute or contingent, and
wherever payable, PhotoLoft hereby assigns, transfers to, and deposits with,
AeroFund, the Note, and any additional property as may later be delivered by
PhotoLoft to AeroFund during the existence of this Pledge Agreement. PhotoLoft
shall also deliver with the Note a fully executed, but undated, endorsement of
the Note in the form attached as Exhibit B to this Pledge Agreement.
----------
2. WARRANTIES. PhotoLoft warrants and represents the following with
respect to Note:
(1) PhotoLoft is the absolute owner of the Note and the obligations
described in the Note are due and payable as stated in those documents, and the
obligor under the Note is not now in default in any respect as to any
obligations under the Note.
(2) The Note is not subject to any prior assignment, claim, lien, or
security interest, and PhotoLoft will not make any further assignment of the
Note or create any further security interest in the Note, and will not permit
its rights in the Note to be reached by attachment, levy, garnishment, or other
judicial process.
(3) The obligations of the obligor under the Note are not subject to any
claim for credits, allowances, or adjustments.
(4) PhotoLoft is not aware of, and has not received any notice of the
bankruptcy, insolvency, or financial difficulty of the obligor under the Note.
If PhotoLoft becomes aware of or receives any notice of any such development,
PhotoLoft will immediately notify AeroFund in writing of such development.
(5) PhotoLoft has maintained and will continue to maintain accurate and
complete records and accounts of all obligations under and payments made as to
the Note and agrees to permit AeroFund to inspect these records and accounts.
PhotoLoft further agrees to submit statement of these accounts to AeroFund in
any reasonable form prescribed by AeroFund.
3. SUBSTITUTION OF COLLATERAL. If, with the consent of AeroFund, PhotoLoft
substitutes or exchanges other collateral, including, but not limited to
securities or instruments, in the place of the Note, then all of the rights and
privileges of AeroFund and all of the obligations of PhotoLoft under the Loan
and Security Agreement and this Pledge Agreement apply to the substituted or
exchanged collateral, and shall be the same in all respects as the rights,
privileges, and obligations concerning the Note originally pledged.
4. COLLECTION OF NOTE. If PhotoLoft defaults in any of its obligations
under the Loan and Security Agreement or the Pledge Agreement, then, immediately
and without prior notice to PhotoLoft, AeroFund shall have the right to notify
the obligor under the Note to make payments directly to it and to take control
of all the proceeds of the Note, or any part of it, and to enforce any and all
of the obligations of the obligor under the Note. Until such time as AeroFund
elects to exercise these rights after default, PhotoLoft is authorized to
collect payments on behalf of AeroFund and to enforce all rights under the Note
concerning current and past-due payments, but is not authorized to collect any
prepayments without the prior written consent of AeroFund. The costs of
collection and enforcement, including attorneys' fees and legal expenses, shall
be at the expense of PhotoLoft. PhotoLoft will reimburse any costs or expenses,
including attorneys' fees and legal expenses, that are incurred by AeroFund.
5. DEFAULT. PhotoLoft shall be in default under this Pledge Agreement on
the occurrence of any of the following events or conditions:
(1) Default in the payment or performance of any of the obligations,
covenants, or liabilities secured by this Pledge Agreement, including, without
limitation, PhotoLoft's obligations under the Loan and Security Agreement.
(2) Any warranty, representation, or statement made or furnished to
AeroFund by or on behalf of PhotoLoft proves to have been false in any material
respect when made or furnished.
(3) Dissolution, termination of existence, insolvency, business failure,
appointment of a receiver, assignment for the benefit of creditors, or the
commencement of any proceeding under any bankruptcy or insolvency law by or
against PhotoLoft.
(4) Any default by the obligor under the terms of the Note.
6. REMEDIES. On the occurrence of any event of default, and at any later
time, AeroFund may declare all the obligations and liabilities of PhotoLoft
under this Pledge Agreement to become immediately due and payable,
notwithstanding any credit or extension of time allowed to PhotoLoft by any
instrument evidencing any of these liabilities. In addition, AeroFund may
proceed to enforce payment and may exercise any and all of the rights and
remedies provided by the California Commercial Code as well as other rights and
remedies either at law or in equity possessed by AeroFund, including but not
limited to the following rights:
(1) AeroFund may retain the Note and collect all payments under it as
provided under the paragraph 4 above, until all of PhotoLoft's obligations to
AeroFund under the Loan and Security Agreement and this Pledge Agreement are
fully paid and performed, including, without limitation, payment or
reimbursement of all fees and expenses AeroFund may have incurred in so
collecting such payments.
(2) On notice to PhotoLoft as required by the California Commercial Code,
AeroFund may sell or otherwise dispose of the Note. The sale may be as a unit
or in parts, at any time and place and on any terms, provided AeroFund acts in
good faith and in a commercially reasonable manner. Out of the proceeds of any
sale, AeroFund may retain an amount equal to the principal and interest then due
under the Loan and Security Agreement, plus the amount of the expenses of the
sale, and shall pay any balance of the proceeds of any sale to PhotoLoft.
PhotoLoft agrees to pay to AeroFund, on demand whatever balance may be due and
owing on the indebtedness secured by this Pledge Agreement after the sale of the
Note and the application of the proceeds as provided by this paragraph and as
required by law.
(3) On notice as required by the California Commercial Code, AeroFund may
propose to retain the Note in satisfaction of all obligations of PhotoLoft
secured by this Pledge Agreement. If PhotoLoft or any other person entitled to
receive notice objects in writing within 21 days after notice was sent, AeroFund
must dispose of the Note under the terms and conditions provided in paragraph
(1), above, or as otherwise authorized by law. In the absence of any written
objection, AeroFund may retain the Note, without any right of redemption, in
full satisfaction of PhotoLoft's obligations and indebtedness to AeroFund.
7. TERMINATION; RENEWAL. This Pledge Agreement shall become effective upon
the execution and delivery hereof by PhotoLoft and shall continue in full force
and effect for a term ending on the Renewal Date. The parties hereto may agree
to renew this Pledge Agreement for successive terms hereafter by executing a
written amendment to this Pledge Agreement.
8. ATTORNEYS' FEES. In the event of any litigation between the parties to
this Pledge Agreement, regarding the rights and obligations of the parties under
this Pledge Agreement or any obligation secured by this Pledge Agreement, the
prevailing party will be entitled to recover its reasonable attorneys' fees and
legal expenses as determined by the court.
9. WAIVER OF RIGHTS BY PHOTOLOFT. PhotoLoft waives any right to require
AeroFund to (1) proceed against any person, (2) proceed or exhaust any
collateral, or (3) pursue any other remedy in AeroFund's power. PhotoLoft also
waives any defense arising from any disability or other defense of any other
person, or by reason of the cessation from any cause whatsoever of the liability
of any other person. PhotoLoft authorizes AeroFund to take and hold security,
other than the Note, for the payment of the indebtedness or any part of the
indebtedness, and exchange, enforce, waive, and release the Note or any other
security.
10. PRIOR AGREEMENTS SUPERSEDED. The Loan and Security Agreement and this
Pledge Agreement constitute the only agreement of the parties and supersedes any
prior understandings or written or oral agreements between the parties
respecting the subject matter of this Pledge Agreement. If there is a conflict
in the terms of the Loan and Security Agreement and the Pledge Agreement as to
the rights of the parties as to the Note, the terms of the Pledge Agreement
shall prevail. If there is a conflict in terms as to any other rights or
obligations of the parties or as to any other collateral, then the terms of the
Loan and Security Agreement shall prevail.
11. PARTIES BOUND. This Pledge Agreement is binding on and inures to the
benefit of the parties and their respective heirs, executors, administrators,
legal representatives, successors, and assigns as permitted by this Pledge
Agreement.
12. ASSIGNMENT. This assignment of a security interest in the Note shall
be for the benefit of AeroFund and its successors or assigns. If AeroFund
assigns, endorses, sells, transfers, or hypothecates to any other person or
entity the Note, or any other notes, evidences of indebtedness, bonds, stocks,
or other securities deposited under this Pledge Agreement or secured or intended
to be secured by this Pledge Agreement, or any part of it, the assignment or
transfer shall automatically constitute an assignment and transfer of this
Pledge Agreement and all of the rights granted by this Pledge Agreement. The
assignee, endorsee, transferee, or successor of AeroFund shall be granted and
shall have all of the rights and privileges given to AeroFund in accordance with
the terms of this Pledge Agreement.
13. TIME OF THE ESSENCE. Time is expressly declared to be of the essence
in this Pledge Agreement.
14. PAYMENTS AND NOTICES. All payments and notices under this Pledge
Agreement or otherwise required by law shall be made to ▇▇▇▇▇▇▇ ▇▇▇▇, President
of AeroFund at the address set forth above, and to PhotoLoft at the address set
forth above, or to any other address as the party entitled to payment or notice
may designate to the other party in writing.
15. SATISFACTION OF OBLIGATION. On the satisfaction of all obligations of
PhotoLoft to AeroFund, AeroFund shall return the Note to PhotoLoft along with
all other documents and securities given as collateral under this Pledge
Agreement, and shall, if necessary, endorse all instruments to PhotoLoft or its
order.
16. CALIFORNIA LAW TO APPLY. This Pledge Agreement shall be construed
under and in accordance with the Uniform Commercial Code as enacted in
California and other applicable laws of the State of California.
17. LEGAL CONSTRUCTION. If one or more of the provisions contained in this
Agreement shall for any reason be held invalid, illegal, or unenforceable in any
respect, the invalidity, illegality, or unenforceability of that provision shall
not affect any other provision of this Pledge Agreement, and this Pledge
Agreement shall be construed as if the invalid, illegal, or unenforceable
provision had never been contained in it.
18. DEFINITIONS. All terms used in this Pledge Agreement that are defined
in the California Commercial Code shall have the same meaning in this Pledge
Agreement as in the Code.
Executed on September __, 1999, at ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇.
PHOTOLOFT: AEROFUND:
▇▇▇▇▇▇▇▇▇.▇▇▇ AEROFUND FINANCIAL, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/
------------------- ---------------------
Title: President Title: Pres.
------------------- ---------------------