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EXHIBIT 10.53
PURCHASE OF ACCOUNTS AND SECURITY AGREEMENT
THIS PURCHASE OF ACCOUNTS AND SECURITY AGREEMENT (this "AGREEMENT") is
made as of the ____ day of ________, 2001, by and between TRANSCAP MANUFACTURING
SERVICES, INC., an Illinois corporation ("LENDER") and BAM! ENTERTAINMENT, INC.,
a Delaware corporation ("BORROWER").
R E C I T A L S:
Borrower is in the business of selling video game software to its
customers ("CUSTOMERS").
In order to operate its business, Borrower desires to borrow funds and
obtain other financial accommodations from Lender, and Lender is willing to
purchase certain accounts and provide other financial accommodations to Borrower
upon the terms and conditions set forth herein and in the other documents
executed and delivered in connection herewith.
In consideration of the terms and conditions contained in this
Agreement, and of any account purchases or extensions of credit made or to be
made to or for the benefit of Borrower by Lender, the parties, therefore, agree
as follows:
1. DEFINITIONS
The following terms shall have the following meanings:
1.1 "ACCOUNTS" shall mean all amounts due and to become due to Borrower
from the Customers and other accounts, contract rights, chattel paper,
instruments and documents, whether now owned or to be acquired by Borrower,
provided that the same arise in connection with the inventory purchase financing
provided to Borrower by Transcap Trade Finance ("TTF") pursuant to that certain
Master Purchase Order Assignment Agreement dated February 25, 2000 (the
"Assignment Agreement "), between the Borrower and TTF.
1.2 "ACCOUNT DEBTOR" shall mean the Customers and any other Person who
is or who may become obligated to Borrower under, with respect to, or on account
of an Account.
1.3 "ADVANCED AMOUNT" shall mean the amount advanced from time to time
by Lender to Borrower with respect to the purchase of Accounts pursuant to
Section 2.1.
1.4 "AFFILIATE" shall mean any and all Persons which, in the sole and
absolute judgment of Lender, directly or indirectly, own or control, are
controlled by or are under common control with Borrower, and any and all Persons
from whom, in the sole and absolute judgment of Lender, Borrower has not or is
not likely to exhibit independence of decision or action. For the purpose of
this definition, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
1.5 "ANCILLARY AGREEMENTS" shall mean the Security Documents and all
other agreements, instruments and documents, including without limitation,
notes, guaranties, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, leases, financing statements,
subordination agreements, trust account agreements, and all other written matter
whether now or to be executed by or on behalf of Borrower or any other Person or
delivered to Lender with respect to this Agreement.
1.6 "APPLICABLE DAILY RATE" shall mean the prime rate as in effect from
time to time
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at the American National Bank, Chicago, Illinois, plus 4.0%, divided by 365.
1.7 "BORROWER'S RESERVE ACCOUNT" shall mean the reserve account created
for the benefit of Borrower on Lender's books and records initially equal to
forty percent (40%) of the aggregate face amount of the Eligible Accounts
pursuant to Section 2.2.
1.8 "BUSINESS DAY" shall mean any day other than a Saturday or Sunday
on which the main lobby of the Depository Bank is open for business with the
general public.
1.9 "CHARGES" shall mean all national, federal, state, county, city,
municipal, or other governmental taxes, levies, assessments, charges, liens,
claims or encumbrances upon or relating to (i) the Collateral, (ii) the
Liabilities, (iii) Borrower's employees, payroll, income or gross receipts, (iv)
Borrower's ownership or use of any of its assets, or (v) any other aspect of
Borrower's business.
1.10 "COLLATERAL" shall mean all of the property and interests in
property described in Section 5.1 and all other property and interests in
property which shall, from time to time, secure any part of the Liabilities.
1.11 "COMMITMENT FEE" shall mean a fee in the amount of Seventy
Thousand Dollars ($70,000) that is payable to the Lender by the Borrower on the
terms set forth in Section 2.6.
1.12 "DAILY MAINTENANCE FEE" shall mean an amount payable to Lender
equal to the Advanced Amount multiplied by 0.067% for that number of days from
the date that Lender purchases an Account through and including the date that
Lender is paid in full.
1.13 "DEFAULT" shall mean the occurrence or existence of any one or
more of the events described in Section 9.1.
1.14 "DEPOSITORY BANK" shall mean the banking institution which is
referred to in Section 4.1.
1.15 "DISCOUNT AMOUNT" initially shall mean zero percent (0.0%) of the
face amount of all of the Accounts purchased by Lender.
1.16 "ELIGIBLE ACCOUNTS" shall mean the net amount which Lender, in its
sole and absolute credit judgment, decides to purchase.
1.17 "EQUIPMENT" shall mean all equipment and fixtures now owned or to
be acquired by Borrower, including without limitation, computer hardware and
software, furniture, machinery, vehicles and trade fixtures, together with any
and all accessories, parts, substitutions and replacements.
1.18 "EVENT OF DEFAULT" shall mean any event or condition which, with
the passage of time or the giving of notice or both, would constitute a Default.
1.19 "GENERAL INTANGIBLES" shall mean all choses in action, general
intangibles, causes of action and all other intangible personal property of
Borrower of every kind and nature (other than Accounts) now owned or to be
acquired by Borrower. Without in any way limiting the generality of the
foregoing, General Intangibles specifically includes, without limitation, all
corporate or other business records, deposit accounts, inventions, computer
software, designs, patents, patent applications, trademarks, trademark
applications, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises and tax refund claims owned by Borrower.
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1.20 "INDEBTEDNESS" shall mean all of Borrower's liabilities,
obligations and indebtedness to any Person of any and every kind and nature,
whether primary, secondary, direct, indirect, absolute, contingent, fixed, or
otherwise, now or to be owing, due, or payable, however evidenced, created,
incurred, acquired or owing and however arising, whether under written or oral
agreement, by operation of law, or otherwise. Without in any way limiting the
generality of the foregoing, Indebtedness specifically includes (i) the
Liabilities, (ii) all obligations or liabilities of any Person that are secured
by any lien, claim, encumbrance, or security interest upon property owned by
Borrower, even though Borrower has not assumed or become liable for the payment,
(iii) all obligations or liabilities created or arising under any lease of real
or personal property, or conditional sale or other title retention agreement
with respect to property used or acquired by Borrower, even though the rights
and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property, (iv) all unfunded pension fund obligations and
liabilities and (v) deferred taxes.
1.21 "INVOICE" shall mean the invoice or other statement rendered by
Borrower to a Customer with respect to an Account.
1.22 "INVOICE AMOUNT" shall mean the full amount reflected on
Borrower's invoices to the Customers with respect to an Account.
1.23 "LIABILITIES" shall mean all the amounts paid by Lender for the
Accounts under this Agreement, the amounts advanced by Lender to Borrower or on
Borrower's behalf and all other Borrower's liabilities, obligations and
indebtedness to Lender of any and every kind and nature, whether primary,
secondary, direct, absolute, contingent, fixed, or otherwise (including, without
limitation, interest, charges, expenses, attorneys' fees and other sums
chargeable to Borrower by Lender, future advances made to or for the benefit of
Borrower and obligations of performance), whether arising under this Agreement,
under any of the Ancillary Agreements or acquired by Lender from any other
source, whether now or hereafter owing, arising, due, or payable from Borrower
to Lender, however evidenced, created, incurred, acquired or owing and however
arising, whether under written or oral agreement, operation of law, or
otherwise.
1.24 "PERMITTED LIENS" shall mean those liens scheduled on Exhibit A to
this Agreement.
1.25 "PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party, or government (whether national,
federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).
1.26 "SECURITY DOCUMENTS" shall mean this Agreement and all other
agreements, instruments, documents, financing statements, warehouse receipts,
bills of lading, notices of assignment, schedules, assignments, mortgages and
other written matter necessary or requested by Lender to create, perfect and
maintain perfected Lender's security interest in the Collateral.
1.27 "SERVICE CHARGE" shall mean an amount payable to Lender equal to
the Advanced Amount multiplied by the Applicable Daily Rate for that number of
days from the date that Lender makes and advance to Borrower in connection with
an Account purchased from Borrower through and including the date that Lender is
paid in full.
1.28 "TERM" shall have the meaning ascribed to it in Section 2.4.
1.29 ACCOUNTING TERMS. Any accounting terms used in this Agreement
which are not specifically defined shall have the meanings customarily given
them in accordance with generally accepted accounting principles.
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1.30 OTHER TERMS. All other terms contained in this Agreement which are
not otherwise defined in this Agreement shall, unless the context indicates
otherwise, have the meanings provided for by the Uniform Commercial Code of the
State of Illinois.
2. ADVANCES AND RESERVES
2.1 PURCHASE OF ACCOUNTS. Upon the submission of an Invoice certified
by Borrower as being true and correct, Lender may, in its sole and absolute
discretion, purchase the Eligible Account reflected on the Invoice by paying to
Borrower or on Borrower's behalf an aggregate amount equal to one hundred
percent (100%) of the Eligible Account reflected on the Invoice, less the
deduction by Lender of such reserves and payment of such amounts pursuant to
Section 2.2 as Lender deems proper and necessary. Notwithstanding anything in
this Agreement to the contrary, the Lender shall have no obligation to purchase
an Eligible Account if the aggregate of the face amounts of all then outstanding
Eligible Accounts purchased by Lender is more than $7,000,000.
Borrower agrees that any and all purchases of Accounts shall
be made "WITH RECOURSE" to the Borrower. The Borrower represents and warrants to
Lender that each of the Accounts so purchased are Accounts due and payable
within sixty (60) days after the date the Customer receives the goods shipped by
the Borrower with respect to such Account. If all or any part of any Account
which has been purchased by Lender is not paid in full within the earlier of
seventy-five (75) days after the date of purchase by Lender or fifteen (15) days
following the invoice due date, then upon demand of Lender, the Borrower agrees
to immediately repurchase the Account from Lender for an amount equal to the
Invoice Amount of the account, plus any Service Charges that are due with
respect to such Account, and less the amount that was credited to Borrower's
Reserve Account with respect to such Account.
Nothing contained in this Agreement shall, at any time,
require Lender to make account purchases or other extensions of credit to
Borrower and the making and amount of such account purchases or other extensions
of credit to Borrower under this Agreement shall at all times be in Lender's
sole and absolute discretion. Lender may, in the exercise of such discretion, at
any time and from time to time, increase or decrease the percentages to be
applied to purchase the Eligible Accounts which are contained in this Section
2.1. In the event such percentages are decreased, such decrease shall become
effective immediately for the purpose of calculating the amount which Lender may
be willing to advance, or allow to remain outstanding, against Eligible
Accounts.
2.2 RESERVE CREDITS AND DISBURSEMENTS. Simultaneously with each
advance on Eligible Accounts and upon receipt of payments from or on account of
Customers, Borrower authorizes and directs Lender to:
(a) credit to Borrower's Reserve Account on Lender's books an
amount which, when added to the then balance of Borrower's Reserve Account
initially shall equal forty percent (40%) of the then aggregate balance of
Eligible Accounts (subject to Lender's sole and absolute discretion to increase
or decrease such percentage at any time);
(b) credit or pay Lender one hundred percent (100%) of the
amount of the Accounts which are no longer Eligible Accounts or other charges,
charge backs or deductions by the Customers;
(c) pay to Lender any unpaid fees or charges and any costs or
fees incurred in enforcing or administering this Agreement; and
(d) at Lender's election, pay the balance to Borrower.
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2.3 APPLICATION OF PAYMENTS. When Lender receives payments from or
on account of Customers with respect to any particular Account, after
application of the provisions of Section 2.2, the proceeds will be applied in
the following manner and priority:
(a) First, the aggregate amount of the Daily Maintenance Fee
that has accrued with respect to the Accounts will be paid to and retained by
the Lender;
(b) Second, the aggregate amount of the Service Charges that
have accrued with respect to the Accounts and any other fees and charges due to
Lender will be paid to and retained by the Lender;
(c) Third, the Discount Amount shall be paid to and retained
by Lender as discount fees to Lender;
(d) Fourth, an amount equal to the Advanced Amount will be
paid to and retained by the Lender; and
(e) The balance will be paid to the Borrower and credited
against Borrower's Reserve Account.
2.4 TERM OF AGREEMENT. This Agreement shall be in effect from the
date hereof until January 31, 2002 (the "Term"); provided, however, that either
party shall have the right to terminate this Agreement by giving the other party
at least ten (10) days' prior notice of such termination. This Agreement may
also be terminated by Lender upon the occurrence of a Default as provided in
Section 9. Upon the effective date of termination, all of the Liabilities shall
become immediately due and payable without notice or demand. Notwithstanding any
termination, until all of the Liabilities shall have been fully paid and
satisfied, Lender shall be entitled to retain its security interest in the
Collateral. Borrower shall continue to remit collections of Accounts and
proceeds of Collateral as provided in this Agreement, and Lender shall retain
all of its rights and remedies under this Agreement.
2.5 [INTENTIONALLY OMITTED]
2.6 COMMITMENT FEE. In order to compensate Lender for the cost of
being prepared to make funds available to Borrower hereunder, the Borrower
agrees to pay the Commitment Fee to Lender out of funds otherwise payable by
Lender to Borrower, whether under this Agreement or under any other financing
arrangement between Borrower and Lender or any affiliate of Lender. The
Commitment Fee is deemed by the parties to have been earned by the Lender upon
the signing of this Agreement, as of which date the Lender has reserved the
requisite funds. The Commitment Fee is in addition to any other fees and charges
and shall be paid to Lender upon termination of this Agreement if such
termination occurs before the Commitment Fee has been paid in full.
3. ELIGIBLE ACCOUNTS
3.1 ELIGIBLE ACCOUNTS. (a) In submitting its request to Lender
that Lender purchase from Borrower a Customer Account, Borrower shall provide
Lender with the following:
(i) The Assignment Schedule of Accounts in the form
attached hereto as Exhibit B;
(ii) A copy of the Invoice Borrower proposes Lender
purchase, including any detailed specifications of the products or services
provided or to be provided to the Customer;
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(iii) An estimate of the cost to the Borrower of providing
the products or services to the Customer;
(iv) A current Dun & Bradstreet report for Customer and
any prior payment history of the Customer; and
(v) Any other information requested by Lender.
(b) Lender shall determine, in its sole and absolute discretion,
whether the Account which Borrower proposes that Lender purchase is an Eligible
Account. In making this determination, Lender will consider the following
requirements, which Borrower hereby represents and warrants will be true and
correct as of the date of the purchase of the Account:
(i) The individual Customer Account is a valid, legally
enforceable obligation of the relevant Customer which is absolutely and not
contingently owing and such Customer has not asserted any offset, counterclaim
or defense denying liability, and Borrower is not aware of any facts or
circumstances which in any way would impair the validity or enforceability of
the Account;
(ii) The individual Account is not owing from an employee,
officer, agent, director or stockholder of Borrower or any Affiliate or from the
United States of America or any department, agency or instrumentality; and
(iii) Each of the warranties and representations set forth
in Section 8.2 has been reaffirmed with respect to such individual Account at
the time that the most recent Accounts Report was delivered to Lender.
4. DEPOSITS
4.1 COLLECTION OF ACCOUNTS AND PAYMENTS. Borrower will immediately
deposit or cause the deposit of all remittances and proceeds of the Collateral
in the identical form in which such payment was made, whether by cash or check,
in special lock box account number 77-6132 with AMERICAN NATIONAL BANK, DEPT.
77-6132, XXXXXXX, XX 00000-0000 ("DEPOSITORY BANK"). Borrower agrees that all
payments made to such special account or otherwise received by Lender, whether
on the Accounts or as proceeds of other Collateral or otherwise, will be the
sole and exclusive property of Lender and will be applied on account of the
Liabilities. On the same Business Day of Lender's receipt of funds eligible to
be wired from the Depository Bank, Lender will credit (conditional upon final
collection) all payments received against the Liabilities. Borrower and any
Affiliates, shareholders, directors, officers, employees, agents of Borrower and
all Persons acting for or in concert with Borrower shall, acting as trustee for
Lender, receive, as the sole and exclusive property of Lender, any monies,
checks, notes, drafts or any other payments relating to or proceeds of Accounts
or other Collateral which come into their possession or under their control and
immediately upon receipt, shall remit the same or cause the same to be remitted,
in kind, to Lender, at Lender's address set forth in Section 10.10. Borrower
agrees to pay to Lender any and all fees, costs and expenses (if any) which
Lender incurs in connection with opening and maintaining the special account and
depositing for collection by Lender any check or item of payment received or
delivered to Depository Bank or Lender on account of the Liabilities and
Borrower further agrees to reimburse Lender for any claims asserted by
Depository Bank in connection with the special account or any returned or
uncollected checks received by Depository Bank for deposit in the special
account.
4.2 APPLICATION OF DEPOSITS. To the extent that Borrower makes a
payment or payments to Lender or Lender receives any payment or proceeds of the
Collateral for Borrower's benefit, which payment(s) or proceeds (or any part
thereof) are subsequently invalidated,
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declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, receiver or any other party under any bankruptcy act, state or
federal law, common law or equitable cause, then to the extent of such payment
or proceeds received, the Liabilities intended to be satisfied shall be revived
and shall continue in full force and effect, as if such payments or proceeds had
not been received by Lender.
5. COLLATERAL - GENERAL TERMS
5.1 SECURITY INTEREST. To secure the prompt payment to Lender of the
Liabilities, the Borrower grants to Lender a continuing security interest in and
to all of the following property and interests in property of Borrower, whether
now owned or existing or to be acquired or arising and wherever located: (i) all
Accounts, Equipment, contract rights, General Intangibles, tax refunds, chattel
paper, instruments, letters of credit, documents and documents of title; (ii)
the Borrower's Reserve Account and all of the Borrower's deposit accounts
(general or special) with and credits and other claims against the Depository
Bank or Lender, or any other financial institutions with which Borrower
maintains deposits; (iii) all of Borrower's now owned or to be acquired monies,
and any and all other property of Borrower now or to be coming into the actual
possession, custody or control of Lender or any agent or affiliate of Lender in
any way or for any purpose (whether for safekeeping, deposit, custody, pledge,
transmission, collection or otherwise); (iv) all insurance proceeds of or
relating to any of the foregoing; (v) all of the Borrower's books and records
relating to any of the foregoing; and (vi) all accessions and additions to,
substitutions for, and replacements, products and proceeds of any of the
foregoing.
5.2 DISCLOSURE OF SECURITY INTEREST. Borrower shall make appropriate
entries upon its financial statements and books and records disclosing Lender's
security interest in the Collateral.
5.3 FURTHER ASSURANCES. At Lender's request, Borrower shall, from time
to time, (i) execute and deliver to Lender all Security Documents that Lender
may reasonably request, in form and substance acceptable to Lender, and pay the
costs of any recording or filing of the same and (ii) take such other actions as
Lender may request in order to fully effect the purposes of this Agreement and
to protect Lender's interest in the Collateral. Upon the occurrence of any
Default, Borrower irrevocably makes, constitutes and appoints Lender (and all
Persons designated by Lender for that purpose) as Borrower's true and lawful
attorney and agent-in-fact to sign the name of Borrower on any Security Document
and to delivery any Security Document to such Persons as Lender, in its sole
discretion, may elect. Borrower agrees that a carbon, photographic, photostatic,
or other reproduction of this Agreement or of a financing statement is
sufficient as a financing statement.
5.4 INSPECTION. Lender (by any of its officers, employees or agents)
shall have the right, at any time or times during usual business hours, without
prior notice, to inspect the Collateral, all records related thereto (and to
make extracts from such records) and the premises upon which any of the
Collateral is located, to discuss Borrower's affairs and finances with any
Person and to verify the amount, quality, value and condition of, or any other
matter relating to, the Collateral.
5.5 LOCATION OF COLLATERAL. The chief executive office and principal
place of business for Borrower is 000 Xxxxx Xxxxxxxx Xxxxxx, Xxx Xxxx,
Xxxxxxxxxx 00000, which is the location of the Collateral and books and related
records (including, without limitation, computer programs, printouts and other
computer materials and records concerning the Collateral). Borrower shall not
remove its books and records or the Collateral from such location and shall not
open any new offices or relocate any of its books and records or the Collateral
except within the continental United States of America with at least thirty (30)
days' prior written notice to Lender.
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5.6 LENDER'S PAYMENT OF CLAIMS ASSERTED AGAINST BORROWER. Lender may,
but shall not be obligated to, at any time or times hereafter, in its sole
discretion, and without waiving any Default or waiving or releasing any
obligation, liability or duty of Borrower under this Agreement or the Ancillary
Agreements, pay, acquire or accept an assignment of any security interest, lien,
claim or other encumbrance asserted by and Person against the Collateral. All
sums paid by Lender under this Section 5.6, including all costs, fees (including
without limitation reasonable attorney's and paralegals' fees and court costs),
expenses and other related charges, shall be payable by Borrower to Lender on
demand and shall be additional Liabilities secured by the Collateral.
6. COLLATERAL: ACCOUNTS
6.1 VERIFICATION OF ACCOUNTS. Any of Lender's officers, employees or
agents shall have the right, at any time or times hereafter, in Lender's or
Borrower's name or in the name of a firm of independent certified public
accountants acceptable to Lender, to verify the validity, amount or any other
matters relating to any Accounts by mail, telephone, telegraph or otherwise.
6.2 DIRECTION TO PAY. Simultaneously with the execution of this
Agreement, Borrower shall direct those Customers whose Accounts have been
purchased by Lender to direct all payments on behalf of Borrower directly to the
Depository Bank and to cooperate with Lender in connection with the billing,
administration and collection of the Accounts.
6.3 ASSIGNMENTS, RECORDS AND REPORTS. Borrower shall keep accurate and
complete records of its Accounts and as frequently as Lender shall require,
Borrower shall deliver to Lender formal written assignments of all Accounts,
together with the supporting details.
Borrower shall further deliver or cause to be delivered to Lender as
frequently as Lender shall require, a report setting forth the aging of all
Accounts.
6.4 SALE OR ENCUMBRANCE OF ACCOUNTS. Borrower shall not, without the
prior written consent of Lender, sell, transfer, grant a security interest in or
otherwise dispose of or encumber any of its Accounts to any Person other than
Lender, except for the Permitted Liens.
7. COLLATERAL: EQUIPMENT
7.1 MAINTENANCE OF THE EQUIPMENT. Borrower shall keep and maintain the
Equipment in good operating condition and repair and shall make all necessary
replacements so that the value, utility and operating efficiency shall at all
times be maintained and preserved and shall promptly inform Lender of any
additions to or deletions from the Equipment. Borrower shall not permit any such
items to become affixed to real estate in such manner that such items of
Equipment will become a fixture or an accession to other personal property.
7.2 EVIDENCE OF OWNERSHIP OF EQUIPMENT. Borrower shall, upon Lender's
request, deliver to Lender all evidence of ownership of the Equipment
(including, without limitation, bills of sale, certificates of title and
applications for title).
7.3 PROCEEDS OF THE EQUIPMENT. Borrower shall not sell, transfer,
lease, grant a security interest in or otherwise dispose of or encumber the
Equipment to any Person other than Lender. In the event any Equipment is sold,
transferred or otherwise disposed of as permitted in this Section 7.3, Borrower
shall promptly notify Lender of such fact and deliver all of the cash proceeds
of such sale, transfer or disposition to Lender, which proceeds shall be applied
to the repayment of the Liabilities; provided, however, that with the Lender's
prior consent Borrower may use the proceeds of such sale, transfer or
disposition to finance the purchase of replacement Equipment. Borrower shall
deliver to Lender written evidence of the use of the proceeds for such purchase.
All replacement Equipment shall be free and clear of all liens, claims, security
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interests and other encumbrances, except for the security interest granted to
Lender, purchase money security interests consented to in writing by Lender, and
the Permitted Liens.
8. WARRANTIES AND REPRESENTATIONS
8.1 GENERAL WARRANTIES AND REPRESENTATIONS. Borrower warrants and
represents that:
(A) Borrower is a corporation duly organized and validly
existing and in good standing under the laws of the state of its incorporation,
and is qualified or licensed as a foreign corporation to do business in all
other countries, states and provinces in which the laws required Borrower to be
so qualified or licensed;
(B) Borrower has not used, during the five (5) year period
preceding the date of this Agreement, and does not intend to use, any other
corporation or fictitious name;
(C) Borrower has the right and power and is duly authorized
and empowered to enter into, execute, deliver and perform this Agreement and the
Ancillary Agreements;
(D) The execution, delivery and performance by Borrower of
this Agreement and the Ancillary Agreements shall not, by their execution or
performance, the lapse of time, the giving of notice or otherwise, constitute a
violation of any applicable law, rule, regulation, judgment, order or decree or
a breach of any provision contained in Borrower's charter documents or by-laws
or contained in any agreement, instrument, indenture or other document to which
Borrower is not a party or by which it or any of its property is bound;
(E) Borrower's use of the proceeds of any advances made by
Lender are, and will continue to be, legal and proper corporate uses (duly
authorized by its board of directors, in accordance with any applicable law,
rule or regulation) and such uses are, and will continue to be, consistent with
all applicable laws, rules and regulations;
(F) Borrower has, and is current and in good standing with
respect to, all governmental approvals, permits, certificates, inspections,
consents and franchises necessary to conduct and to continue to conduct its
business as conducted by it and to own or lease and operate its properties as
now owned or leased and operated by it;
(G) None of said approvals, permits, certificates, consents or
franchises contains any term, provision, condition or limitation more burdensome
than such as are generally applicable to Persons engaged in the same or similar
business as Borrower;
(H) Borrower now has capital sufficient to carry on its
business and transactions and all businesses and transactions in which it is
about to engage and is now solvent and able to pay its debts as they mature and
Borrower now owns property the fair saleable value of which is greater than the
amount needed to repay Borrower's debts;
(I) Except as disclosed on Exhibit C, Borrower has no
litigation pending or, to the best of its knowledge, threatened, and no
Indebtedness except for the Indebtedness shown on Exhibit D. Borrower has not
guaranteed the obligations of any other Person;
(J) Borrower (i) is not a party to any contract or agreement
or subject to any charge, restriction, judgment, decree or order materially and
adversely affecting its business, property, assets, operations or condition,
financial or otherwise, and is not a party to any labor dispute; and (ii) there
are no lockouts, strikes or walkouts relating to any labor contracts and no such
contract is scheduled to expire during the Term. Borrower is not in default
under any material contract, agreement, or understanding to which Borrower is a
party or by which
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Borrower is bound, nor is Borrower aware of any facts or circumstances which
could give rise to any such default (whether by the passage of time, the giving
or notice, or otherwise); and to the best of Borrower's knowledge, no other
party is in default under any such contract, agreement, or understanding, nor is
Borrower aware of any facts or circumstances which could give rise to any such
default (whether by the passage of time, the giving or notice, or otherwise);
(K) Borrower has good, indefeasible and merchantable title to,
and ownership of, the Collateral, free and clear of all liens, claims, security
interests and other encumbrances;
(L) Borrower is not in violation of any applicable statute,
rule, regulation or ordinance of any governmental entity, including, without
limitation, the United States of America, any state, city, town, municipality,
county or of any other jurisdiction, or of any agency thereof, in any respect
materially and adversely affecting the Collateral or Borrower's business,
property, assets, operations or conditions, financial or other;
(M) Borrower is not in default under any indenture, loan
agreement, mortgage, lease, trust deed, deed of trust or other similar agreement
relating to the borrowing of monies to which it is a party or by which it is
bound;
(N) Borrower has disclosed to Lender in writing all material
facts respecting Borrower's business and financial affairs. There are no
omissions or other facts or circumstances which are or may be material; there
exist no equity or long term investments in or outstanding advances to any
Person; and there are no actions or proceedings which are pending or, to the
best of Borrower's knowledge, threatened against Borrower or any other Person
which might result in any material adverse change in Borrower's financial
condition or materially and adversely affect Borrower's operations, its assets
or the Collateral;
(O) Borrower has filed all federal, state and local tax
returns and other reports which Borrower is required by law, rule or regulation
to file, and all Charges that are due and payable have been paid;
8.2 AUTOMATIC WARRANTY AND REPRESENTATION AND REAFFIRMATION OF
WARRANTIES AND REPRESENTATIONS. Each request for an advance made by Borrower
pursuant to this Agreement or the Ancillary Agreements shall constitute (i) an
automatic warranty and representation by Borrower to Lender that there does not
then exist a Default or an Event of Default and (ii) a reaffirmation as of the
date of said request of all of the warranties and representations of Borrower
contained in this Agreement and in the Ancillary Agreements.
8.3 SURVIVAL OF WARRANTIES AND REPRESENTATIONS. Borrower covenants,
warrants and represents to Lender that all representations and warranties of
Borrower contained in this Agreement and the Ancillary Agreements shall be true
at the time of Borrower's execution of this Agreement and the Ancillary
Agreements, and shall survive the execution, delivery and acceptance by the
parties and the closing of the transactions described in this Agreement. The
Borrower expressly agrees that any misrepresentation or breach of any
representation or warranty whatsoever contained in this Agreement or in any of
the Ancillary Agreements shall be deemed material.
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8.4 COVENANTS AND CONTINUING AGREEMENTS. Borrower agrees to:
(A) Pay to Lender, on demand, any and all fees, costs or
expenses which Lender pays to a bank or other similar institution arising out of
or in connection with (i) the forwarding to Borrower or any other Person on
behalf of Borrower, by Lender, of proceeds of loans made by Lender to Borrower
pursuant to this Agreement, and (ii) the depositing for collection, by Lender,
of any check or item of payment received or delivered to Lender on account of
the Liabilities;
(B) Promptly upon Borrower's learning, notify Lender of any
material delay in Borrower's performance of any of its obligations to any
Account Debtor and of any assertion of any claims, offsets, defenses or
counterclaims by any Account Debtor and of any allowances or credits granted or
other monies advanced by Borrower to any Account Debtor;
(C) Keep books of account and prepare financial statements and
furnish to Lender the following (all of the foregoing and following to be kept
and prepared in accordance with generally accepted accounting principles applied
on a basis consistent, unless Borrower's independent certified public
accountants concur in any changes and such changes are disclosed to Lender and
are consistent with the then generally accepted accounting principles):
(i) as soon as available, but not later than one
hundred twenty (120) days after the close of each fiscal year of Borrower,
financial statements of Borrower (including a balance sheet and profit and loss
statement with supporting footnotes) as of the end of such year and for the year
then ended all in reasonable detail as requested by Lender and examined by a
firm of independent certified public accountants of recognized national standing
selected by Borrower and containing the unqualified opinion of such independent
certified public accountants with respect to the financial statements;
(ii) as soon as available, but no later than
thirty (30) days after the end of each month, (A) an unaudited financial
statement of Borrower (including a statement of profit and loss and of surplus
for the month then ended and a balance sheet as of the end of such month) as of
the end of the portion of Borrower's fiscal year then elapsed, all in reasonable
detail as requested by Lender and certified by Borrower's principal financial
officer as prepared in accordance with generally accepted accounting principles
and fairly presenting the financial position and results of operations of
Borrower for such period and (B) a cash flow projection for the following
three-month period, together with appropriate supporting documents reasonably
acceptable to Lender;
(iii) as soon as available, but not later than
sixty (60) days before the beginning of each fiscal year, a cash flow projection
for such fiscal year, together with appropriate supporting document reasonably
acceptable to Lender; and
(iv) such other data and information (financial
and otherwise) as Lender from time to time may reasonably request, bearing upon
or related to the Collateral, Borrower's financial condition or results of its
operations, or the financial condition of any Person who is a guarantor of any
of the Liabilities;
(D) Notify Lender promptly upon, but in no event later than,
five (5) days after Borrower's learning, that any Eligible Account has ceased to
be an Eligible Account and the reason(s) for such ineligibility;
(E) Notify Lender promptly upon Borrower's learning of (i) any
litigation affecting Borrower, whether or not the claim is considered by
Borrower to be covered by insurance; and (ii) the institution of any suit or
administrative proceeding which may materially and adversely affect the
operations, financial condition or business of Borrower or which may
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affect Lender's security interest in the Collateral;
(F) Maintain such types and amounts of insurance coverage
(including without limitation credit insurance) with respect to Borrower's
business operations as Borrower may reasonably require, such insurance to name
Lender as an insured in the manner and to the extent required by Lender from
time to time;
(G) Provide Customers with all service warranties (whether
expressed or implied);
(H) Cause its books and records to accurately reflect that it
has granted to Lender a valid and perfected lien in and to all of its Accounts,
free and clear of all other liens, claims, and encumbrances; and
(I) Deliver to Lender in kind, immediately upon receipt, all
monies, checks, items of payment and proceeds of accounts.
8.5 NEGATIVE COVENANTS. Borrower agrees that it will not, directly
or indirectly:
(A) incur or permit to exist any Indebtedness except (i) the
Liabilities, (ii) current accounts payable arising in the ordinary course of
business, and (iii) other Indebtedness outstanding on the date hereof and set
forth on Exhibit D hereto;
(B) purchase or redeem any shares of Borrower's capital stock
or any options or warrants which respect thereto, declare or pay any dividends
thereon, make any distribution or payment to shareholders or holders of options
or warrants in respect of the Borrower's capital stock or for any other funds
for any purpose. The Borrower will not create or acquire any subsidiary or pay
any bonus to any shareholder or Affiliate thereof;
(C) create or permit to exist any lien with respect to any of
the Collateral now owned or hereafter acquired by the Borrower;
(D) become or be a guarantor or surety of, or otherwise become
or be responsible in any manner (whether by agreement to purchase any
obligations, stock, assets, goods or services, or otherwise) with respect to any
undertaking of any other Person, or make or permit to exist any loans or
advances to, or investments in, any other Person;
(E) make any material change in the nature of its business
carried on as of this date or modify, amend, supplement or terminate, or agree
to modify, amend, supplement or terminate, its certificate of incorporation or
by-laws without the Lender's prior written consent, which consent shall not be
unreasonably withheld if such modification, amendment or supplement would not
adversely affect the Lender;
(F) be a party to any merger, consolidation or exchange of
stock, or purchase or otherwise acquire all or substantially all of the assets
or stock of any class of, or any partnership or joint venture interest in, any
other Person, or sell, transfer, convey or lease any of its assets;
(G) enter into any transaction with any Affiliate unless such
transaction is in the ordinary course of business and on terms and conditions at
least as favorable to the Borrower as the terms and conditions that would apply
in a similar transaction with a Person who is not an Affiliate;
(H) enter into any agreement containing any provision which
would be violated or breached by the performance of the Borrower's obligations
hereunder or under any
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instrument or document delivered or to be delivered by it hereunder or in
connection herewith or which would violate or breach any provision hereof or of
any such instrument or document; or
(I) violate any of the requirements of applicable laws, rules,
regulations, and orders of all governmental authorities (federal, state, local
or foreign, and including, without limitation, environmental laws, rules,
regulations and orders), a breach of which would materially and adversely affect
Borrower's business, credit, operations, financial condition or prospects.
9. DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
9.1 DEFAULT. The occurrence of any one or more of the following
events shall constitute a Default:
(A) Borrower fails to pay any part of the Liabilities on the
date due and payable or declared due and payable by Lender;
(B) If all or any part of any Account which has been purchased
by Lender is not paid in full within the earlier of seventy-five (75) days after
the date of purchase by Lender or fifteen (15) days following the invoice due
date;
(C) Borrower or any guarantor of the Liabilities fails or
neglects to perform, keep or observe any other term, provision, condition or
covenant contained in this Agreement, or in the Ancillary Agreements, which is
required to be performed, kept or observed by Borrower or such Affiliate or
guarantor and the same is not cured to Lender's satisfaction within five (5)
days after Lender gives Borrower notice identifying such default;
(D) A default shall occur under any agreement, document or
instrument, other than this Agreement or any of the Ancillary Agreements, now or
hereafter existing, to which Borrower is a party or by which any of Borrower's
property is bound;
(E) Any statement, warranty, representation, report, financial
statement, or certificate made or delivered by Borrower, or any of its officers,
employees or agents, to Lender is not true and correct in any respect;
(F) There shall occur any material uninsured damage to or
loss, theft, or destruction of any of the Collateral;
(G) The Collateral or any of Borrower's other assets are
attached, seized, levied upon or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian or assignee for
the benefit or creditors and the same is not cured within thirty (30) days
thereafter;
(H) An application is made by any Person other than Borrower
for the appointment of a receiver, trustee, or custodian for any of the
Collateral or any of Borrower's other assets and the same is not dismissed
within thirty (30) days after the application therefor;
(I) An application is made by Borrower for the appointment of
a receiver, trustee or custodian for any of the Collateral or any of Borrower's
other assets; or a petition under any section or chapter of the Bankruptcy Code
or any similar law or regulation is filed by or against Borrower or any
guarantor of the Liabilities and, if filed against Borrower or any guarantor, is
not dismissed within thirty (30) days after filing; or Borrower makes an
assignment for the benefit of its creditors or any case or proceeding is filed
by or against Borrower for its dissolution, liquidation, or termination; or
Borrower ceases to conduct its business as now conducted or is enjoined,
restrained or in any way prevented by court order from conducting all
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or any material part of its business affairs; or
(J) Borrower becomes insolvent or fails generally to pay its
debts as they become due.
Upon the happening of any Default, the Borrower agrees to pay the
Lender a daily late payment fee in an amount equal to 0.067% of the amount due
and owing the Lender from the date of such Default until all amounts due and
owing the Lender have been paid and satisfied in full.
9.2 REMEDIES. Upon and after the occurrence of a Default, Lender
shall have all of the following rights and remedies:
(A) All of the rights and remedies of a secured party under
the Illinois Uniform Commercial Code or other applicable law, all of which
rights and remedies shall be cumulative and non-exclusive to the extent
permitted by law, and in addition to any other rights and remedies contained in
this Agreement and in any of the Ancillary Agreements;
(B) The right to (i) peacefully enter upon the premises of
Borrower or any other place or places where the Collateral is located and kept,
without any obligation to Borrower or any other person, through self-help and
without judicial process or first obtaining a final judgment or giving Borrower
notice and opportunity for a hearing on the validity of Lender's claim, and
remove the Collateral from such premises and places to the premises of Lender or
any agent of Lender, for such time as Lender may require to collect or liquidate
the Collateral, and/or (ii) require Borrower to assemble and deliver the
Collateral to Lender at a place to be designated by Lender;
(C) The right to open Borrower's mail and collect any and all
amounts due from Account Debtors;
(D) The right to sell, lease or otherwise dispose of any of
the Collateral in its then condition, or after any further manufacturing or
processing, at public or private sale or sales, with such notice as provided in
lots or in bulk, for cash or on credit, all as Lender, in its sole discretion,
may deem advisable. At any such sale or sales of the Collateral, the Collateral
need not be in view of those present and attending the sale, nor at the same
location at which the sale is being conducted. Lender shall have the right to
conduct such sales on Borrower's premises or elsewhere and shall have the right
to use Borrower's premises without charge for such sales for such time or times
as Lender may see fit. Lender is granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral, and Borrower's rights under all licenses
and all franchise agreements shall inure to Lender's benefit but Lender shall
have no obligations thereunder. Lender may purchase all or any part of the
Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set-off the amount of such price
against the Liabilities. The proceeds realized from the sale of any Collateral
shall be applied first to the reasonable costs, expenses and attorneys' and
paralegals' fees and expenses incurred by Lender for collection and for
acquisition, completion, protection, removal, storage, sale and delivery of the
Collateral; second to interest due upon any of the Liabilities; third to any
unpaid fees or charges due hereunder; and fourth to the principal of the
Liabilities. Lender shall account to Borrower for any surplus. If any deficiency
shall arise, Borrower shall remain liable to Lender.
9.3 NOTICE. Borrower agrees that any notice required to be given by
Lender of a sale, lease, other disposition of any of the Collateral or any other
intended action by Lender, which is personally delivered to Borrower or which is
deposited in the United States mail, postage prepaid
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and duly addressed to Borrower at the address set forth in Section 10.10, at
least ten (10) days prior to any such public sale, lease or other disposition or
other action being taken, or the time after which any private sale of the
Collateral is to be held, shall constitute commercially reasonable and fair
notice thereof to Borrower.
10. MISCELLANEOUS
10.1 APPOINTMENT OF LENDER AS BORROWER'S LAWFUL ATTORNEY-IN-FACT.
Borrower irrevocably designates, makes, constitutes and appoints Lender (and all
persons designated by Lender) as Borrower's true and lawful attorney and agent
in-fact and Lender, or Lender's agent, may without notice to Borrower:
(A) At any time endorse by writing or stamping Borrower's name
on any checks, notes, drafts or any other payment relating to and/or proceeds of
the Collateral which come into the possession of Lender or under Lender's
control and deposit the same to the account of Lender for application to the
Liabilities;
(B) At any time after the occurrence of a Default, in
Borrower's or Lender's name: (i) demand payment of the Collateral; (ii) enforce
payment of the Collateral, by legal proceedings or otherwise; (iii) exercise all
of Borrower's rights and remedies with respect to the collection of the
Collateral; (iv) settle, adjust, compromise, extend or renew the Accounts; (v)
settle, adjust or compromise any legal proceedings brought to collect the
Collateral; (vi) if permitted by applicable law, sell or assign the Collateral
upon such terms, for such amounts and at such time or times as Lender deems
advisable; (vii) satisfy and release the Accounts; (viii) prepare, file and sign
Borrower's name on any proof of claim in Bankruptcy or similar document against
any Account Debtor; (ix) prepare, file and sign Borrower's name on any notice of
lien, assignment or satisfaction of lien or similar document in connection with
the Collateral; (x) do all acts and things necessary, in Lender's sole
discretion, to fulfill Borrower's obligations under this Agreement; and (xi) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Collateral to which Borrower has
access; and
(C) Notify the post office authorities to change the address
for delivery of Borrower's mail to an address designated by Lender and receive,
open and dispose of all mail addressed to Borrower.
10.2 MODIFICATION OF AGREEMENT; SALE OF INTEREST. This Agreement and
the Ancillary Agreements may not be modified, altered or amended, except by an
agreement in writing signed by Borrower and Lender. Borrower may not sell,
assign or transfer this Agreement or the Ancillary Agreements, including,
without limitation, Borrower's right, title, interest, remedies, powers, or
duties. Borrower consents to Lender's participation, sale, assignment, transfer
or other disposition, at any time or times hereafter, of this Agreement or the
Ancillary Agreements, including, without limitation, Lenders's right, title,
interest, remedies, powers, or duties hereunder or thereunder.
10.3 ATTORNEYS' FEES AND EXPENSES; LENDER'S OUT-OF-POCKET EXPENSES. If,
at any time or times, and regardless of the existence of a Default or an Event
of Default, Lender incurs costs and expenses (including, without limitation,
escrow fees, filing fees, recording fees, credit report fees and UCC lien search
fees) or employs counsel, accountants or other professionals for advice or other
representation or services in connection with:
(A) The preparation, negotiation and execution of this
Agreement and the Ancillary Agreements;
(B) Any litigation, contest, dispute, suit, proceeding or
action (whether
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instituted by Lender, Borrower or any other Person) in any way relating to the
Collateral, this Agreement, the Ancillary Agreements or Borrower's affairs;
(C) Any attempt to enforce any rights of Lender or any
participant against Borrower or any other Person which may be obligated to
Lender or such participant by virtue of this Agreement or the Ancillary
Agreements, including, without limitation, the Account Debtors;
(D) Any attempt to inspect, verify, protect, collect, sell,
liquidate or otherwise dispose of any of the Collateral; or
(E) Any inspection, verification, protection, collection,
sale, liquidation or other disposition of any of the Collateral, including
without limitation, Lender's periodic or special audits of Borrower's books and
records; then, in any such event, the reasonable attorneys' and paralegals' fees
and expenses arising from such services and all reasonably incurred expenses,
costs, charges and other fees of or paid by Lender in any way or respect arising
in connection with or relating to any of the events or actions described in this
Section 10.3 shall be payable by Borrower to Lender upon demand and shall be
additional Liabilities. Without limiting and generality of the foregoing, such
expenses, costs, charges and fees may include accountants' fees, costs and
expenses; court costs, fees and expenses; photocopying and duplicating expenses;
court reporter fees, costs and expenses; long distance telephone charges; air
express charges; telegram charges; secretarial overtime charges; and expenses
for travel, lodging and food paid or incurred in connection with the performance
of all such services.
10.4 WAIVER BY LENDER. Lender's failure, at any time or times, to
require strict performance by Borrower of any provision of this Agreement or of
any Ancillary Agreement shall not constitute a waiver, or affect or diminish any
right of Lender thereafter to demand strict compliance and performance. Any
suspension or waiver by Lender of a Default under this Agreement or any
Ancillary Agreement shall not suspend, waive or affect any other Default under
this Agreement or the Ancillary Agreements, whether the same is prior or
subsequent thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of Borrower
contained in this Agreement or the Ancillary Agreements and no Default under
this Agreement or the Ancillary Agreements shall be deemed to have been
suspended or waived by Lender, unless such suspension or waiver is by an
instrument in writing signed by an officer of Lender and directed to Borrower
specifying such suspension or waiver.
10.5 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable laws, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
10.6 PARTIES; ENTIRE AGREEMENT. This Agreement and the Ancillary
Agreements shall be binding upon and inure to the benefit of the respective
successors and assigns of Borrower and Lender. Borrower's successors and assigns
shall include, without limitation, a trustee, receiver or debtor-in-possession
of or for Borrower. Nothing contained in this Section 10.6 shall be deemed to
modify Section 10.2. This Agreement is the complete statement of the agreement
by and between Borrower and Lender and supersedes all prior negotiations,
understandings and representations between them with respect to the subject
matter of this Agreement.
10.7 CONFLICT OF TERMS. The provisions of the Ancillary Agreements are
incorporated in this Agreement by this reference. Except as otherwise provided
in this Agreement and except as otherwise provided in the Ancillary Agreement,
by specific reference to the applicable provision of this Agreement, if any
provision contained in this Agreement is in conflict with, or inconsistent with,
any provision in any Ancillary Agreement, the provision contained in this
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Agreement shall govern and control.
10.8 WAIVER BY BORROWER. Except as otherwise specifically provided for
in this Agreement, Borrower waives (i) presentment, demand and protest, notice
of protest, notice of presentment, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Lender on which Borrower may in any way be liable and hereby
ratifies and confirms whatever Lender may do in this regard; (ii) all rights to
notice and a hearing prior to Lender's taking possession or control of, or to
Lender's replevy, attachment or levy upon the Collateral or any bond or security
which might be required by any court prior to allowing Lender to exercise any of
Lender's remedies; and (iii) the benefit of all valuation, appraisement,
extension and exemption laws. Borrower acknowledges that it has been advised by
its own counsel with respect to this Agreement and the transactions evidenced by
this Agreement.
10.9 WAIVER AND GOVERNING LAW. THE FINANCIAL ACCOMMODATIONS EVIDENCED
BY THIS AGREEMENT HAVE BEEN MADE, AND THIS AGREEMENT HAS BEEN DELIVERED, AT
CHICAGO, ILLINOIS, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF
ILLINOIS. BORROWER (i) WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION TO
ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT OR ANY OF
THE ANCILLARY AGREEMENTS; (ii) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED IN XXXX COUNTY, ILLINOIS, OVER ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS
AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS; (iii) IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT BORROWER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING; (iv) AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW; AND (v) AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR
PROCEEDING AGAINST LENDER OR ANY OF LENDER'S DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS IN ANY COURT OTHER THAN ONE LOCATED
IN XXXX COUNTY, ILLINOIS. BORROWER WAIVES PERSONAL SERVICE OF THE SUMMONS AND
COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT OR ANY OF
THE ANCILLARY AGREEMENTS, AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT,
OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED
TO BORROWER AT THE ADDRESS SET FORTH IN SECTION 10.10. SHOULD BORROWER FAIL TO
APPEAR OR ANSWER ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SERVED WITHIN THIRTY
(30) DAYS AFTER THE MAILING THEREOF, IT SHALL BE DEEMED IN DEFAULT AND AN ORDER
AND/OR JUDGMENT MAY BE ENTERED AGAINST IT AS DEMANDED OR PRAYED FOR IN SUCH
SUMMONS, COMPLAINT, PROCESS OR PAPERS. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR
IMPAIR LENDER'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW OR
LENDER'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
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10.10 NOTICE. Except as otherwise provided herein, any notice required
hereunder shall be in writing and shall be deemed to have been validly served,
given or delivered upon receipt if sent by commercial overnight courier service,
personal delivery, telecopy or United States certified or registered mail, with
proper postage prepaid, addressed to the party to be notified as follows:
(a) If to Lender, at:
Transcap Manufacturing Services, Inc.
000 Xxxxxx Xxxx.
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxx
Telecopy No. 000-000-0000
with a copy to:
Schoenberg, Fisher, Xxxxxx & Xxxxxxxxx, Ltd.
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Telecopy No. (000) 000-0000
(b) If to Borrower, at:
BAM! Entertainment, Inc.
000 Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxx Xxxxx
Telecopy No. ________
or to such other address as each party may designate for itself by like notice.
10.11 CONDITIONS PRECEDENT. As conditions precedent to the obligations
of the Lender hereunder and under any Ancillary Agreement, (i) Lender shall have
received from certain of Borrower's Affiliates a Guaranty in form and substance
satisfactory to Lender, (ii) Lender shall have received from Borrower's counsel
a legal opinion in form and substance satisfactory to Lender, and (iii) Borrower
shall have issued to an affiliate of Lender a Warrant for the purchase of
________ shares of the common stock of Borrower at an exercise price of
$________ per shares, which Warrant shall contain such other terms as are
acceptable to Lender.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the day and year first above written.
TRANSCAP MANUFACTURING SERVICES INC.
By: ______________________________
Xxxxxxx Xxxx, Executive Vice President,
BAM! ENTERTAINMENT, INC.
By: ______________________________
Name: ______________________________
Title: ______________________________
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EXHIBIT A
EXISTING PERMITTED LIENS
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EXHIBIT B
ASSIGNMENT SCHEDULE OF ACCOUNTS
[BORROWER]
[ADDRESS]
[ADDRESS]
Assignment Number: _____________ Date: _____________
To: Transcap Manufacturing Services, Inc.
We hereby deliver to you the following:
Duplicate invoices numbered as listed on the attached schedule.
Reference is made to the Purchase of Accounts and Security Agreement between
Transcap Manufacturing Services, Inc. ("Lender") and us, as the same may be in
effect from time to time, including any amendments, supplements, modifications,
extensions and renewals thereof ("Agreement").
For value received, the receipt and sufficiency of which is hereby acknowledged,
we have sold, assigned, transferred and set over and do hereby sell, assign,
transfer, and set over to the Lender, its successors and assigns, all of our
right title and interest in and to and the attached invoices, all of which
constitute Accounts (as defined in the Agreement).
We further confirm that in respect of such Accounts (i) the representations and
warranties made by us in the Agreement are true and correct to the same extent
as if said representations and warranties were made herein on and as of the date
hereof; and (ii) our rights and obligations and those of the Lender shall be
subject to the terms and provisions of the Agreement.
Total amount of Invoices attached $________________
[BORROWER]
By: ______________________________
Title: ______________________________
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EXHIBIT C
LITIGATION
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EXHIBIT D
PERMITTED INDEBTEDNESS
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