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Exhibit 10.10
Loan and Security Agreement
Borrower: SkillSoft Corporation
Address: 00 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Date: June 18, 1999
This Loan and Security Agreement is entered into on the above date between
GREYROCK CAPITAL, a Division of NationsCredit Commercial Corporation ("GC"),
whose address is 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx
00000 and the borrower named above ("Borrower"), whose chief executive office is
located at the above address ("Borrower's Address"). NationsCredit Commercial
Corporation is hereinafter referred to as "GC". The Schedule to this Agreement
(the "Schedule") being signed concurrently is an integral part of this
Agreement. (Definitions of certain terms used in this Agreement are set forth in
Section 8 below.)
1. LOANS.
1.1 LOANS. GC will make loans to Borrower (the "Loans"), up to the amounts
(the "Credit Limit") shown on the Schedule, provided no Default or Event of
Default has occurred and is continuing. If at any time or for any reason the
total of all outstanding Loans and all other Obligations exceeds the Credit
Limit, Borrower shall pay the amount of the excess to GC, without notice or
demand*.
*WITHIN ONE BUSINESS DAY
1.2 INTEREST. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth to
the contrary in this Agreement or in another written agreement signed by GC and
Borrower. Interest shall be payable monthly, on the last day of the month.
Interest may, in GC's discretion, be charged to Borrower's loan account, and the
same shall thereafter bear interest at the same rate as the other Loans.
1.3 FEES. Borrower shall pay GC the fee(s) shown on the Schedule, which
are in addition to all interest and other sums payable to GC and are not
refundable.
2. SECURITY INTEREST.
2.1 SECURITY INTEREST. To secure the payment and performance of all of the
Obligations when due, Borrower hereby grants to GC a security interest in all of
Borrower's interest in the following, whether now owned or hereafter acquired,
and
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wherever located (collectively, the "Collateral"): All Inventory, Equipment,
Receivables, Investment Property and General Intangibles, including, without
limitation, all of Borrower's Deposit Accounts, all money, all collateral in
which GC is granted a security interest pursuant to any other present or future
agreement, all property now or at any time in the future in GC's possession, and
all proceeds (including proceeds of any insurance policies, proceeds of letters
of credit, proceeds of proceeds and claims against third parties), all products
of the foregoing, and all books and records related to any of the foregoing.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
In order to induce GC to enter into this Agreement and to make Loans,
Borrower represents and warrants to GC as follows, and Borrower covenants that
the following representations will continue to be true,* and that Borrower will
at all times comply with all of the following covenants:
*(EXCEPT AS EXPRESSLY PROVIDED BELOW FOR CHANGES PURSUANT TO WRITTEN NOTICE
BY BORROWER TO GC)
3.1 CORPORATE EXISTENCE AND AUTHORITY. Borrower, if a corporation, is and
will continue to be, duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation. Borrower is and will continue
to be qualified and licensed to do business in all jurisdictions in which any
failure to do so would have a material adverse effect on Borrower. The
execution, delivery and performance by Borrower of this Agreement, and all other
documents contemplated hereby (i) have been duly and validly authorized, (ii)
are enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors'
rights generally), (iii) do not violate Borrower's articles or certificate of
incorporation, or Borrower's by-laws, or* any law or any material indebtedness
or obligation under any material agreement or instrument which is binding upon
Borrower or its property, and (iv) do not constitute grounds for acceleration of
any material agreement or instrument which is binding upon Borrower or its
property.
*TO BORROWER'S KNOWLEDGE
3.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule are all
prior names of Borrower and all of Borrower's present and prior trade names.
Borrower
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shall give GC 30 days prior written notice before changing its name or doing
business under any other name. Borrower has complied, and will in the future
comply, with all laws relating to the conduct of business under a fictitious
business name.
3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in
the heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth on the Schedule *. Borrower will give GC at least 30 days' prior
written notice before opening any additional place of business, changing its
chief executive office, or moving any of the Collateral** other than Borrower's
Address or one of the locations set forth on the Schedule.
*(EXCEPT FOR SALES OFFICES AT WHICH NOT MORE THAN $50,000 OF COLLATERAL IS
LOCATED)
**TO ANY NEW LOCATION NOT PREVIOUSLY REPORTED TO GC
3.4 TITLE TO COLLATERAL; PERMITTED LIENS. Borrower is now, and will at all
times in the future be, the sole owner of all the Collateral, except for items
of Equipment which are leased by Borrower. The Collateral now is and will remain
free and clear of any and all liens, charges, security interests, encumbrances
and adverse claims, except for Permitted Liens. GC now has, and will continue to
have, a first- priority perfected and enforceable security interest in all of
the Collateral, subject only to the Permitted Liens, and borrower will at all
times defend GC and the Collateral against all claims of others*. So long as any
Loan is outstanding which is a term loan, none of the Collateral now is or will
be affixed to any real property in such a manner, or with such intent, as to
become a fixture. Borrower is not and will not become a lessee under any real
property lease pursuant to which the lessor may obtain any rights in any of the
Collateral** and no such lease now prohibits, restrains, impairs or will
prohibit, restrain or impair Borrower's right to remove any Collateral from the
leased premises**. Whenever any Collateral is located upon premises in which any
third party has an interest (whether as owner, mortgagee, beneficiary under a
deed of trust, lien or otherwise), Borrower shall, whenever requested by GC, use
its*** best efforts to cause such third party to execute and deliver to GC, in
form acceptable to GC, such waivers and subordinations as GC shall specify, so
as to ensure that GC's rights in the Collateral are, and will continue to be,
superior to the rights of any such third party. Borrower will keep in full force
and effect, and will comply with all the**** terms of, any lease of real
property where any of the Collateral now or in the future may be located+.
*WITH RESPECT TO THE COLLATERAL (EXCEPT FOR THOSE HOLDING PERMITTED LIENS)
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**(UNLESS BORROWER PROVIDES GC WITH A LANDLORD WAIVER WITH RESPECT THERETO
IN FORM AND SUBSTANCE SATISFACTORY TO GC, IF SO REQUESTED BY GC, OR UNLESS THE
SAME IS A SALES OFFICE AT WHICH NOT MORE THAN $50,000 OF COLLATERAL IS LOCATED)
***REASONABLE
****MATERIAL
+EXCEPT FOR LEASES OF SALES OFFICES AT WHICH NOT MORE THAN $50,000 OF
COLLATERAL IS LOCATED
3.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the *Collateral in
good working condition, ordinary wear and tear excepted, and Borrower will not
use the Collateral for any unlawful purpose. Borrower will immediately advise GC
in writing of any material loss or damage to the Collateral. Borrower will
maintain the validity of, and otherwise maintain, preserve and protect, its
patents, trademarks, copyrights and other intellectual property in accordance
with prudent business practices.**
*EQUIPMENT AND OTHER TANGIBLE
**HOWEVER, NOTHING CONTAINED IN THIS SECTION 3.5 WILL BE DEEMED TO PROHIBIT
BORROWER FROM DISPOSING OF OBSOLETE EQUIPMENT AND OTHER TANGIBLE COLLATERAL,
PROVIDED BORROWER REPLACES SAID EQUIPMENT WITH EQUIPMENT OF SUBSTANTIALLY
SIMILAR FUNCTION.
3.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at
Borrower's Address books and records* an accounting system in accordance with
generally acceptable accounting principles.
*WHICH ARE COMPLETE AND ACCURATE IN ALL MATERIAL RESPECTS AND WHICH
COMPRISE
3.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial statements
now or in the future delivered to GC have been, and will be, prepared in
conformity with generally accepted accounting principles and now and in the
future will fairly reflect the financial condition of Borrower, at the times and
for the periods therein stated. Between the last date covered by any such
statement provided to GC and the date hereof, there has been no material adverse
change in the financial condition or business of Borrower. Borrower is now and
will continue to be solvent.
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely
filed, and will timely file, all tax returns and reports required by applicable
law, and
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Borrower has timely paid, and will timely pay, all applicable taxes,
assessments, deposits and contributions now or in the future owed by Borrower*.
Borrower may, however, defer payment of any contested taxes, provided that
Borrower (i) in good faith contests Borrower's obligation to pay the taxes by
appropriate proceedings promptly and diligently instituted and conducted, (ii)
notifies GC in writing of the commencement of, and any material development in,
the proceedings, and (iii) posts bonds or takes any other steps required to keep
the contested taxes from becoming a lien upon any of the Collateral. Borrower is
unaware of any claims or adjustments proposed for any of Borrower's prior tax
years which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid, and shall continue to pay all amounts necessary to
fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not and will not withdraw
from participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could result
in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or any other governmental agency. Borrower shall, at all
times, utilize the services of an outside payroll service providing for the
automatic deposit of all payroll taxes payable by Borrower.
*(EXCEPT WHERE FAILURE TO DO SO WOULD NOT HAVE A MATERIAL ADVERSE EFFECT ON
BORROWER AND WOULD NOT RESULT IN A LIEN ON ANY OF THE COLLATERAL, BUT ONLY SO
LONG AS THE BORROWER MAINTAINS ADEQUATE RESERVES WITH RESPECT TO SUCH
LIABILITIES IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
CONSISTENTLY APPLIED)
3.9 COMPLIANCE WITH LAW. Borrower has complied, and will comply, in all
material respects, with all provisions of all applicable laws and regulations,
including, but not limited to, those relating to Borrower's ownership of real or
personal property, the conduct and licensing of Borrower's business, and all
environmental matters*.
*WHICH ARE BINDING ON BORROWER
3.10 LITIGATION. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of Borrower's
knowledge) threatened by or against or affecting Borrower in any court or before
any governmental agency (or any basis therefor known to Borrower) which* result,
either separately or in the aggregate, in any material adverse change in the
financial condition or business of Borrower, or in any material impairment in
the ability of Borrower to carry on its business in substantially the same
manner as it is now being conducted. Borrower will promptly inform GC to writing
of any claim, proceeding, litigation or investigation in the future, threatened
or instituted by or against Borrower**.
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*IS REASONABLY LIKELY TO
**WHICH, IF DETERMINED ADVERSELY TO THE BORROWER, WOULD BE REASONABLY
LIKELY TO RESULT IN (I) A JUDGMENT, LOSS OR PAYMENT OF $50,000 OR MORE, OR
$100,000 OR MORE IN THE AGGREGATE, OR (II) A MATERIAL ADVERSE CHANGE IN THE
BUSINESS OR CONDITION OF BORROWER, OR A MATERIAL IMPAIRMENT IN THE ABILITY OF
BORROWER TO CARRY ON ITS BUSINESS IN SUBSTANTIALLY THE SAME MANNER AS IT IS NOW
BEING CONDUCTED
3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes.
3.12 YEAR 2000 COMPLIANCE. The Borrower has (i) initiated a review and
assessment of all areas within its and each of its subsidiaries' business and
operations (including those affected by suppliers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Borrower or any of its subsidiaries (or its suppliers
and vendors) may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (ii) developed a plan and timeline for addressing the Year 2000 Problem
on a timely basis, and (iii) to date, implemented that plan in accordance with
that timetable. The Borrower reasonably believes that all computer applications
(including those of its suppliers and vendors) that are material to its or any
of its subsidiaries' business and operations will on a timely basis be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "Year 2000 compliant"), except to the extent that such
failure to do so could not reasonably be expected to have a material adverse
effect. The Borrower will promptly notify GC in the event the Borrower discovers
or determines that any computer application (including those of its suppliers
and vendors) that is material to its or any of its subsidiaries' business and
operations will not be Year 2000 compliant on a timely basis, except to the
extent that such failure could not reasonably be expected to have a material
adverse effect.
4. RECEIVABLES AND INVESTMENT PROPERTY.
4.1 REPRESENTATIONS RELATING TO RECEIVABLES. Borrower represents and
warrants to GC that each Receivable with respect to which Loans are requested by
Borrower shall, on the date each Loan is requested and made, represent an
undisputed, bona fide, existing, unconditional obligation of the Account Debtor
created by the sale, delivery, and acceptance of goods* or the rendition of
services, in the ordinary course of Borrower's business**.
*, THE LICENSING OF SOFTWARE,
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**(EXCEPT AS DISCLOSED TO AND APPROVED BY GC)
4.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE. Borrower
represents and warrants to GC as follows: All statements made and all unpaid
balances appearing in all invoices, instruments and other documents evidencing
the Receivables are and shall be true and correct and all such invoices,
instruments and other documents and all of Borrower's books and records are and
shall be genuine and in all respects what they purport to be, and all
signatories and endorsers* have the capacity to contract. All sales and other
transactions underlying or giving rise to each Receivable shall comply with all
applicable laws and governmental rules and regulations. All signatures and
indorsements on all documents, instruments and agreements relating to all
Receivables* are and shall be genuine, and all such documents, instruments and
agreements are and shall be legally enforceable in accordance with their terms.
*(TO THE BEST OF BORROWER'S KNOWLEDGE, FOR PARTIES OTHER THAN BORROWER)
4.3 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES AND INVESTMENT
PROPERTY. Borrower shall deliver to GC transaction reports and loan requests,
schedules and assignments of all Receivables, and schedules of collections, all
on GC's standard forms*; provided, however, that Borrower's failure to execute
and deliver the same shall not affect or limit GC's security interest and other
rights in all of Borrower's Receivables, nor shall GC's failure to advance or
lend against a specific Receivable affect or limit GC's security interest and
other rights therein. Together with each such schedule and assignment, or later
if requested by GC, Borrower shall furnish GC with copies (or, at GC's request,
originals) of all contracts, orders, invoices, and other similar documents, and
all original shipping instructions, delivery receipts, bills of lading, and
other evidence of delivery, for any goods the sale or disposition of which gave
rise to such Receivables, and Borrower warrants the genuineness of all of the
foregoing. Borrower shall also furnish to GC an aged accounts receivable trial
balance in such form and at such intervals as GC shall** request***. In
addition, Borrower shall deliver to GC the originals of all instruments, chattel
paper, security agreements, guarantees and other documents and property
evidencing or securing any Receivables, immediately upon receipt thereof and in
the same form as received, with all necessary indorsements, and, upon the
request of GC, Borrower shall deliver to GC all letters of credit and also all
certificated securities with respect to any Investment Property, with all
necessary indorsements, and obtain such account control agreements with
securities intermediaries and take such other action with respect to any
Investment Property, as GC shall request, in form and substance satisfactory to
GC. Upon request of GC Borrower additionally shall obtain consents from any
letter of credit issuers with respect to the assignment to GC of any letter of
credit proceeds.
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*,AS GC SHALL REASONABLE REQUEST
**REASONABLY
***, PROVIDED THAT IF NO EVENT OF DEFAULT EXISTS, GC MAY NOT REQUEST THE
FOREGOING MORE THAN ONCE A MONTH.
4.4 COLLECTION OF RECEIVABLES AND INVESTMENT PROPERTY INCOME. Borrower
shall have the right to collect all Receivables and retain all Investment
Property payments and distributions, unless and until a Default or an Event of
Default has occurred. Borrower shall hold all payments on, and proceeds of, and
distributions with respect to, Receivables and Investment Property in trust for
GC, and Borrower shall deliver all such payments, proceeds and distributions to
GC, within one business day after receipt of the same, in their original form,
duly endorsed, to be applied to the Obligations in such order as GC shall
determine*. Upon the request of GC, any such distributions and payments with
respect to any Investment Property held in any securities account shall be held
and retained in such securities account as part of the Collateral.
*,SUBJECT TO SECTION 7.5
4.5 DISPUTES. Borrower shall notify GC promptly of all disputes* or claims
relating to Receivables on the regular reports to GC. Borrower shall not
forgive, or settle any Receivable for less than payment in full, or agree to do
any of the foregoing, except that Borrower may do so, provided that: (i)
Borrower does so in good faith, in a commercially reasonable manner, in the
ordinary course of business, and in arm's-length transactions, which are
reported to GC on the regular reports provided to GC; (ii) no Default or Event
of Default has occurred and is continuing; and (iii) taking into account all
such settlements and forgiveness, the total outstanding Loans and other
Obligations will not exceed the Credit Limit.
*IN EXCESS OF $50,000
4.6 RETURNS. Provided no Event of Default has occurred and is continuing,
if any Account Debtor returns any Inventory to Borrower in the ordinary course
of its business, Borrower shall promptly determine the reason for such return
and promptly issue a credit memorandum to the Account Debtor in the appropriate
amount (sending a copy to GC). In the event any attempted return occurs after
the occurrence of any Event of Default, Borrower shall (i) not accept any return
without GC's prior written consent, (ii) hold the returned Inventory in trust
for GC, (iii) segregate all returned
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Inventory from all of Borrower's other property, (iv) conspicuously label the
returned Inventory as GC's property, and (v) immediately notify GC of the return
of any Inventory, specifying the reason for such return, the location and
condition of the returned Inventory, and on GC's request deliver such returned
Inventory to GC.
4.7 VERIFICATION. GC may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to
the Receivables, by means of mail, telephone or otherwise, either in the name of
Borrower or GC or such other name as GC may choose, and GC or its designee may,
at any time, notify Account Debtors that *has a security interest in the
Receivables.**
*GC
**IF NO EVENT OF DEFAULT EXISTS, GC WILL PROVIDE BORROWER WITH ONE WEEK'S
PRIOR WRITTEN NOTICE OF ANY SUCH VERIFICATION.
4.8 LIABILITY. GC shall not under any circumstances be responsible or
liable for any shortage or discrepancy in, damage to, or loss or destruction of,
any goods, the sale or other disposition of which gives rise to a Receivable, or
for any error, act, omission, or delay of any kind occurring in the settlement,
failure to settle, collection or failure to collect any Receivable, or for
settling any Receivable in good faith for less than the full amount thereof, nor
shall GC be deemed to be responsible for any of Borrower's obligations under any
contract or agreement giving rise to a Receivable. Nothing herein shall,
however, relieve GC from liability for its own gross negligence or willful
misconduct.
5. ADDITIONAL DUTIES OF THE BORROWER.
5.1 INSURANCE. Borrower shall, at all times, insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to GC, in such form and amounts as GC may
reasonable require*, and Borrower shall provide evidence of such insurance to
GC, so that GC is satisfied that such insurance is, at all times, in full force
and effect. All such insurance policies shall name GC as an additional loss
payee, and shall contain a lenders loss payee endorsement in form reasonably
acceptable to GC. Upon receipt of the proceeds of any such insurance, GC shall
apply such proceeds in reduction of the Obligations as GC shall determine in its
sole discretion, except that, provided no Default or Event of Default has
occurred and is continuing, GC shall release to Borrower** insurance proceeds
with respect to Equipment totaling less than $100,000, which shall be utilized
by Borrower for the replacement of the Equipment with respect to which the
insurance proceeds were paid***. GC may require reasonable assurance that the
insurance
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proceeds so released will be so used. If Borrower fails to provide or pay for
any insurance, GC may, but is not obligated to, obtain the same at Borrower's
expense. Borrower shall promptly deliver to GC copies of all**** reports made to
insurance companies.
*IN ACCORDANCE WITH APPLICABLE LAW
**(i)
***AND (ii) INSURANCE PROCEEDS WITH RESPECT TO INVENTORY TOTALING LESS THAN
$100,000 WHICH SHALL BE UTILIZED BY BORROWER FOR THE REPLACEMENT OF THE
INVENTORY WITH RESPECT TO WHICH THE INSURANCE PROCEEDS WERE PAID.
****MATERIAL
5.2 REPORTS. Borrower, at its expense, shall provide GC with the written
reports set forth in the Schedule, and such other written reports with respect
to Borrower (including budgets, sales projections, operating plans and other
financial documentation), as GC shall from time to time reasonably specify.
5.3 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and on
one business day's notice, GC, or its agents, shall have the right to inspect
the Collateral, and the right to audit and copy Borrower's books and records*.
GC shall take reasonable steps to keep confidential all information obtained in
any such inspection or audit, but GC shall have the right to disclose any such
information to its auditors, regulatory agencies, and attorneys, and pursuant to
any subpoena or other legal process. The foregoing inspections and audits shall
be at Borrower's expense and the charge therefor shall be $600 per person per
day (or such higher amount as shall represent GC's then current standard charge
for the same), plus reasonable out-of-pockets expenses. Borrower shall not be
charged more than $3,000 per audit (plus reasonable out-of-pockets expenses),
nor shall audits be done more frequently than four times per calendar year**,
provided that the foregoing limits shall not apply after the occurrence of a
Default or Event of Default, nor shall they restrict GC's right to conduct
audits at its own expense (whether or not a Default or Event of Default has
occurred). Borrower will not enter into any agreement with any accounting firm,
service bureau or third party to store Borrower's books or records at any
location other than Borrower's Address, without first obtaining GC's written
consent, which may be conditioned upon such accounting firm, service bureau or
other third party agreeing to give GC the same rights with respect to access to
books and records and related rights as GC has under this Agreement.
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*ANY SUCH INSPECTION SHALL BE CONDUCTED BY GC, OR ITS AGENTS, WITHOUT
MATERIAL HINDRANCE OR INTERRUPTION OF BORROWER'S BUSINESS.
**OR MORE THAN ONCE DURING ANY TWO MONTH PERIOD IN ANY CALENDAR YEAR
5.4 REMITTANCE OF PROCEEDS. All proceeds arising from the sale or other
disposition of any Collateral shall be delivered, in kind, by Borrower to GC* in
the original form in which received by Borrower not later than the following
business day after receipt by Borrower**, to be applied to the Obligations in
such order as GC shall determine***; provided that, if no Default or Event of
Default has occurred and is continuing, and if no term loan is outstanding
hereunder, then Borrower shall not be obligated to remit to GC the proceeds of
the sale of Equipment which is sold in the ordinary course of business, in a
good-faith arm's-length transaction****. Except for the proceeds of the sale of
Equipment as set forth above, Borrower shall not commingle proceeds of
Collateral with any of Borrower's other funds or property, and shall hold such
proceeds separate and apart from such other funds and property and in an express
trust for GC. Nothing in this Section limits the restrictions on disposition of
Collateral set forth elsewhere in this Agreement.
*(OR, AT GC'S REQUEST, INTO A LOCKBOX ACCOUNT, OR OTHER BLOCKED ACCOUNT,
ESTABLISHED PURSUANT TO AN AGREEMENT ACCEPTABLE TO GC, AND WITH A BANK SELECTED
BY BORROWER WHICH IS ACCEPTABLE TO GC)
**(EXCEPT WIRE TRANSFER REMITTANCES RECEIVED BY BORROWER SHALL BE
TRANSMITTED TO GC IN TOTAL THE DAY FOLLOWING POSTING TO BORROWER'S BANK ACCOUNT)
***(SUBJECT TO SECTION 7.5)
****NOR SHALL BORROWER BE OBLIGATED TO REMIT TO GC ANY SUCH PROCEEDS UNLESS
THE AGGREGATE AMOUNT THEREOF RECEIVED AND HELD BY THE BORROWER EQUALS OR EXCEEDS
$25,000
5.5 NEGATIVE COVENANTS. Except as may be permitted in the Schedule,
Borrower shall not, without GC's prior written consent, do any of the following:
(i) merge or consolidate with another corporation or entity*; (ii) acquire any
assets, except in the ordinary course of business**; (iii) enter into any***,
(iv) sell or transfer any Collateral, except that, provided no Default or Event
of Default has occurred and is continuing, Borrower may (a) sell finished
Inventory in the ordinary course of Borrower's business, (b) if no term loan is
outstanding hereunder, sell Equipment in the ordinary course of business, in
good-faith arm's-length transactions, and (c) license or sublicense on a
non-exclusive basis intellectual property in the ordinary course of Borrower's
business; (v) store any Inventory or other Collateral with any
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warehouseman or other third party****; (vi) sell any Inventory on a
sale-or-return, guaranteed sale, consignment, or other contingent basis; (vii)
make any loans of any money or other assets*****; (viii) incur any debts,
outside the ordinary course of business, which would have a material adverse
effect on Borrower or on the prospect of repayment of the Obligations; (ix)
guarantee or otherwise become liable with respect to the obligations of another
party or entity+; (x) pay or declare any dividends on Borrower's stock (except
for dividends payable solely in stock of Borrower); (xi) redeem, retire,
purchase or otherwise acquire, directly or indirectly, any of Borrower's
stock++; (xii) make any change in Borrower's capital structure which would have
a material adverse effect on Borrower or on the prospect of repayment of the
Obligations; or (xiii) dissolve or elect to dissolve; or (xiv) agree to do any
of the foregoing.
*(EXCEPT IN A TRANSACTION IN WHICH (A) THE CURRENT MAJORITY SHAREHOLDERS OF
THE BORROWER HOLD AT LEAST 51% OF THE COMMON STOCK AND ALL OTHER CAPITAL STOCK
OF THE SURVIVING CORPORATION IMMEDIATELY AFTER SUCH MERGER OR CONSOLIDATION, (B)
THE BORROWER IS THE SURVIVING CORPORATION AND (C) NO DEFAULT OR EVENT OF DEFAULT
SHALL EXIST EITHER IMMEDIATELY PRIOR TO OR AFTER GIVING EFFECT TO THE
TRANSACTION, AND EXCEPT THAT BORROWER MAY MERGE INTO ANOTHER CORPORATION FOR
PURPOSES OF EFFECTING A REINCORPORATION INTO ANOTHER STATE AFTER GC HAS NOTIFIED
BORROWER IN WRITING THAT ALL STEPS NECESSARY TO PROTECT THE VALIDITY AND
PERFECTION OF GC'S FIRST-PRIORITY SECURITY INTEREST IN THE COLLATERAL, SUBJECT
TO PERMITTED LIENS, HAVE BEEN TAKEN)
**(EXCEPT IN A TRANSACTION OR A SERIES OF TRANSACTIONS NOT INVOLVING THE
PAYMENT OF AN AGGREGATE AMOUNT IN EXCESS OF $100,000, PROVIDED THAT NO DEFAULT
OR EVENT OF DEFAULT SHALL EXIST EITHER IMMEDIATELY PRIOR TO OR AFTER GIVING
EFFECT TO THE TRANSACTION)
***BUSINESS SUBSTANTIALLY DIFFERENT FROM THAT PRESENTLY ENGAGED IN
****, UNLESS SUCH WAREHOUSEMAN OR OTHER THIRD PARTY ENTERS INTO A BAILEE
AGREEMENT WITH GC ON TERMS SATISFACTORY TO GC IN ITS SOLE DISCRETION
*****, EXCEPT (A) ADVANCES TO SUBSIDIARIES OF THE BORROWER AND CUSTOMERS OR
SUPPLIERS, IN EACH CASE, IF CREATED, ACQUIRED OR MADE IN THE ORDINARY COURSE OF
BUSINESS, (B) TRAVEL ADVANCES IN THE ORDINARY COURSE OF BUSINESS, (C) EMPLOYEE
RELOCATION LOANS IN THE ORDINARY COURSE OF BUSINESS, (D) OTHER EMPLOYEE LOANS
AND ADVANCES IN THE ORDINARY COURSE OF BUSINESS, (E) LOANS TO EMPLOYEES,
OFFICERS AND DIRECTORS FOR THE PURPOSE OF PURCHASING EQUITY SECURITIES OF THE
BORROWER, (F) OTHER LOANS TO OFFICERS AND EMPLOYEES APPROVED BY THE BOARD OF
DIRECTORS OF THE BORROWER AND (G) OTHER LOANS OR EXTENSIONS OF CREDIT NOT
OTHERWISE PERMITTED HEREUNDER, PROVIDED THAT THE AGGREGATE AMOUNT OF ALL OF THE
FOREGOING ITEMS SET FORTH IN (A), (B), (D), (E), (F) AND (G) SHALL NOT EXCEED
$1,000,000 AT ANY ONE TIME OUTSTANDING EXCEPT THAT
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ANY LOANS MADE PRIOR TO THE DATE HEREOF PURSUANT TO ITEM (A) SHALL NOT BE
INCLUDED IN SAID $1,000,000 LIMIT, AND PROVIDED, FURTHER, THAT NO DEFAULT OR
EVENT OF DEFAULT SHALL EXIST EITHER IMMEDIATELY PRIOR TO OR AFTER GIVING EFFECT
TO THE MAKING OF ANY OF THE FOREGOING ADVANCES, LOANS OR OTHER EXTENSIONS OF
CREDIT IN CLAUSES (A) THROUGH (G)
+EXCEPT THAT BORROWER MAY ISSUE GUARANTEES OF ITS SUBSIDIARIES' OBLIGATIONS
IN THE ORDINARY COURSE OF ITS BUSINESS IN AN AGGREGATE AMOUNT AT ANY ONE TIME
OUTSTANDING NOT TO EXCEED $250,000
++(EXCEPT THAT BORROWER MAY REPURCHASE OR REDEEM SHARES OF ITS CAPITAL
STOCK (A) PURSUANT TO EMPLOYEE OPTION PLANS FOR AN AGGREGATE PURCHASE PRICE NOT
TO EXCEED $100,000 PER FISCAL YEAR, ON A NON-CUMULATIVE BASIS AND (B) IF A
CAPITAL CONTRIBUTION TO BORROWER HAS BEEN MADE PRIOR TO ANY SUCH PURCHASE OR
REDEMPTION IN AN AGGREGATE AMOUNT AT LEAST EQUAL TO THE AMOUNT OF THE PURCHASE
OR REDEMPTION)
5.6 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against GC with respect to any Collateral or in any manner
relating to Borrower, Borrower shall, without expense to GC, make available
Borrower and its officers, employees and agents, and Borrower's books and
records, without charge, to the extent that GC may deem them reasonably
necessary in order to prosecute or defend any such suit or proceeding.
5.7 NOTIFICATION OF CHANGES. Borrower will promptly notify GC in writing
of any change in its* directors, the opening of any new bank account or other
deposit account, the opening of any new securities account, and any material
adverse change in the business or financial affairs of Borrower.
*EXECUTIVE OFFICERS OR
5.8 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by GC,
to execute all documents and take all actions, as GC may deem reasonably
necessary or useful in order to perfect and maintain GC's perfected security
interest in the Collateral, and in order to fully consummate the transactions
contemplated by this Agreement.
5.9 INDEMNITY. Borrower hereby agrees to indemnify GC and hold GC harmless
from and against any and all claims, debts, liabilities, demands, obligations,
actions, causes of action, penalties, costs and expenses (including attorneys'
fees), of every nature, character and description, which GC may sustain or incur
based upon or arising out of any of the Obligations, any actual or alleged
failure to collect and pay over any withholding or other tax relating to
Borrower or its employees, any relationship or agreement between GC and
Borrower, any actual or alleged failure of
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GC to comply with any writ of attachment or other legal process relating to
Borrower or any of its property, or any other matter, cause or thing whatsoever
occurred, done, omitted or suffered to be done by GC relating to Borrower or the
Obligations (except any such amounts sustained or incurred as the result of the
gross negligence or willful misconduct of GC or any of its directors, officers,
employees, agents, attorneys, or any other person affiliated with or
representing GC). Notwithstanding any provision in this Agreement to the
contrary, the indemnity agreement set forth in this Section shall survive any
termination of this Agreement and shall for all purposes continue in full force
and effect.
6. TERM.
6.1 MATURITY DATE. This Agreement shall continue in effect until the
maturity date set forth on the Schedule (the "Maturity Date"); provided that the
Maturity Date shall automatically be extended, and this Agreement shall
automatically and continuously renew, for successive additional terms of one
year each, unless one party gives written notice to the other, not less than
sixty days prior to the next Maturity Date, that such party elects to terminate
this Agreement effective on the next Maturity Date.
6.2 EARLY TERMINATION. This Agreement may be terminated prior to the
Maturity Date as follows: (i) by Borrower, effective three business days after
written notice of termination is given to GC; or (ii) by GC at any time after
the occurrence of an Event of Default, without notice, effective immediately. If
this Agreement is terminated by Borrower or by GC under this Section 6.2,
Borrower shall pay to GC a termination fee (the "Termination Fee") in the amount
shown on the Schedule. The Termination Fee shall be due and payable on the
effective date of termination and thereafter shall bear interest at a rate equal
to the highest rate applicable to any of the Obligations.
6.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether or
not all or any part of such Obligations are otherwise then due and payable.
Without limiting the generality of the foregoing, if on the Maturity Date, or on
any earlier effective date of termination, there are any outstanding letters of
credit issued based upon an application, guarantee, indemnity or similar
agreement on the part of GC, then on such date Borrower shall provide to GC cash
collateral in an amount equal to 110% of the face amount of all such letters of
credit plus all interest, fees and costs due or (in GC's* estimation) likely to
become due in connection therewith, to secure all of the Obligations relating to
said letters of credit, pursuant to GC's then standard form cash pledge
agreement.
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Notwithstanding any termination of this Agreement, all of GC's security
interests in all of the Collateral and all of the terms and provisions of this
Agreement shall continue in full force and effect until all Obligations have
been paid and performed in full; provided that, without limiting the fact that
Loans are subject to the discretion of GC, GC may, in its sole discretion,
refuse to make any further loans after termination. No termination shall in any
way affect or impair any right or remedy of GC, nor shall any such termination
relieve Borrower of any Obligation to GC, until all of the Obligations have been
paid and performed in full. Upon payment and performance in full of all the
Obligations and termination of this Agreement, GC shall promptly deliver to
Borrower termination statements, requests for reconveyances and such other
documents as may be reasonably required to terminate GC's security interests.
*REASONABLE
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "Event of Default" under this Agreement, and Borrower shall give
GC immediate written notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to GC by Borrower or any
Guarantor or any of Borrower's or any Guarantor's officers, employees or agents,
now or in the future, shall be untrue or misleading in a material respect; or
(b) Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation*; (c) the total Loans and other Obligations
outstanding at any time shall exceed the Credit Limit; or (d) Borrower shall
fail to perform any non-monetary Obligation which by its nature cannot be cured;
or (e) Borrower shall fail to perform any other non-monetary Obligation, which
failure is not cured within ** business days after the date performance is due;
or (f) any levy, assessment, attachment, seizure, lien or encumbrance (other
than a Permitted Lien) is made on all or any part of the Collateral which is not
cured within *** days after the occurrence of the same; or (g) any default or
event of default occurs under any obligation secured by a Permitted Lien, which
is not cured within any applicable cure period or waived in writing by the
holder of the Permitted Lien ****; or (h) Borrower or any Guarantor breaches any
material contract or obligation, which has or may reasonably be expected to have
a material adverse effect on Borrower's or such Guarantor's business or
financial condition; or (i) dissolution, termination of existence, insolvency or
business failure of Borrower or any Guarantor; or appointment of a receiver,
trustee or custodian, for all or any part of the property of, assignment for the
benefit of creditors by, or the commencement of any proceeding by Borrower or
any Guarantor under any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect; or (j) the commencement of any
proceeding
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against Borrower or any Guarantor under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect, which is not cured
by the dismissal thereof within 45 days after the date commenced; or (k)
revocation or termination of, or limitation or denial of liability upon, any
guaranty of the Obligations or any attempt to do any of the foregoing; or (l)
revocation or termination of, or limitation or denial of liability upon, any
pledge of any certificate of deposit, securities or other property or asset
pledged by any other Person to secure any or all of the Obligations, or any
attempt to do any of the foregoing, or commencement of proceedings by or against
any such Person under any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect; or (m) Borrower or any Guarantor
makes any payment on account of any indebtedness or obligation which has been
subordinated to the Obligations other than as permitted in the applicable
subordination agreement, or if any Person who has subordinated such indebtedness
or obligations terminates or in any way limits or terminates its subordination
agreement; or (n) there shall be a change in the record of beneficial
ownership*****; or (o) Borrower or any Guarantor shall generally not pay its
debts as they become due, or Borrower or any Guarantor shall conceal, remove or
transfer any part of its property, with intent to hinder, delay or defraud its
creditors, or make or suffer any transfer of any of its property which may be
fraudulent under any bankruptcy, fraudulent conveyance or similar law; or (p)
there shall be a material adverse change in Borrower's or any Guarantor's
business or financial condition. GC may cease making any Loans hereunder during
any of the above cure periods, and thereafter if an Event of Default has
occurred.
*AND IN THE CASE OF ANY AMOUNT OTHER THAN PRINCIPAL, SUCH DEFAULT SHALL
CONTINUE FOR THREE BUSINESS DAYS
**20
***30
****, PROVIDED THAT IF THE AMOUNT INVOLVED IS LESS THAN $50,000 THEN THE
SAME SHALL NOT BE AN EVENT OF DEFAULT UNLESS AND UNTIL THE HOLDER OF THE
PERMITTED LIEN COMMENCES ANY ACTION TO ENFORCE ITS LIEN AGAINST ANY COLLATERAL;
*****(WITHIN THE MEANING OF RULE 13D-3 UNDER THE SECURITIES AND EXCHANGE
ACT OF 1934) OF SECURITIES OF THE BORROWER REPRESENTING EFFECTIVE CONTROL OVER
THE ELECTION OF A MAJORITY OF THE BOARD OF DIRECTORS OF THE BORROWER
7.2 REMEDIES. Upon the occurrence and during the continuance of any Event
of Default,* GC, at its option, and without notice or demand of any kind (all of
which
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are hereby expressly waived by Borrower), may do any one or more of the
following**: (a) Cease making Loans or otherwise extending credit to Borrower
under this Agreement or any other document or agreement; (b) Accelerate and
declare all or any part of the Obligations to be immediately due, payable, and
performable, notwithstanding any deferred or installment payments allowed by any
instrument evidencing or relating to any Obligation; (c) Take possession of any
or all of the Collateral wherever it may be found, and for that purpose Borrower
hereby authorizes GC without judicial process to enter onto any of Borrower's
premises without interference to search for, take possession of, keep, store, or
remove any of the Collateral, and remain on the premises or cause a custodian to
remain on the premises in exclusive control thereof, without charge for so long
as XX xxxxx it reasonably necessary in order to complete the enforcement of its
rights under this Agreement or any other agreement; provided, however, that
should GC seek to take possession of any of the Collateral by Court process,
Borrower hereby irrevocably waives: (i) any bond and any surety or security
relating thereto required by any statute, court rule or otherwise as an incident
to such possession; (ii) any demand for possession prior to the commencement of
any suit or action to recover possession thereof; and (iii) any requirement that
GC retain possession of, and not dispose of, any such Collateral until after
trial or final judgment; (d) Require Borrower to assemble any or all of the
Collateral and make it available to GC at places designated by GC which are
reasonably convenient to GC and Borrower, and to remove the Collateral to such
locations as GC may deem advisable; (e) Complete the processing, manufacturing
or repair of any Collateral prior to a disposition thereof and, for such purpose
and for the purpose of removal, GC shall have the right to use Borrower's
premises, vehicles, hoists, lifts, cranes, equipment and all other property
without charge; (f) Sell, lease or otherwise dispose of any of the Collateral,
in its condition at the time GC obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private sales,
in lots or in bulk, for cash, exchange or other property, or on credit, and to
adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. GC shall have the right to conduct
such disposition on Borrower's premises without charge, for such time or times
as XX xxxxx reasonable, or on GC's premises, or elsewhere and the Collateral
need not be located at the place of disposition. GC may directly or through any
affiliated company purchase or lease any Collateral at any such public
disposition, and if permissible under applicable law, at any private
disposition. Any sale or other disposition of Collateral shall not relieve
Borrowers of any liability Borrower may have if any Collateral is defective as
to title or physical condition or otherwise at the time of sale; (g) Demand
payment of, and collect any Receivables and General Intangibles comprising
Collateral and, in connection therewith, Borrower irrevocably authorizes GC to
endorse or sign Borrower's name on all collections, receipts, instruments and
other documents, to take possession of and open mail addressed to Borrower and
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remove therefrom payments made with respect to any item of the Collateral or
proceeds thereof, and, in GC's sole discretion, to grant extensions of time to
pay, compromise claims and settle Receivables, General Intangibles and the like
for less than face value; (h) Collect, receive, dispose of and realize upon any
Investment Property, including withdrawal of any and all funds from any
securities accounts; and (i) Demand and receive possession of any of Borrower's
federal and state income tax returns and the books and records utilized in the
preparation thereof or referring thereto. All reasonable attorneys' fees,
expenses, costs, liabilities and obligations incurred by GC with respect to the
foregoing shall be added to and become part of the Obligations, shall be due on
demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations.
*AND AT ANY TIME THEREAFTER, WHILE SUCH EVENT OF DEFAULT IS CONTINUING
**(EXCEPT THAT, PRIOR TO OR CONCURRENTLY WITH THE TAKING OF THE FIRST OF
ANY OF THE FOLLOWING ACTIONS, GC SHALL GIVE BORROWER ONE GENERAL WRITTEN NOTICE
STATING THAT GC IS "PROCEEDING TO EXERCISE ITS RIGHTS AND REMEDIES" OR WORDS TO
THAT EFFECT)
7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and GC
agree that a sale or other disposition (collectively, "sale") of any Collateral
which complies with the following standards will conclusively be deemed to be
commercially reasonable: (i) Notice of the sale is given to Borrower at least
*days prior to the sale, and, in the case of a public sale, notice of the sale
is published at least *days before the sale in a newspaper of general
circulation in the county where the sale is to be conducted; (ii) Notice of the
sale describes the collateral in general, non-specific terms; (iii) The sale is
conducted at a place designated by GC, with or without the Collateral being
present; (iv) The sale commences at any time between 8:00 a.m. and 6:00 p.m.;
(v) Payment of the purchase price in cash or by cashier's check or wire transfer
is required; (vi) With respect to any sale of any of the Collateral, GC may (but
is not obligated to) direct any prospective purchaser to ascertain directly from
Borrower any and all information concerning the same. GC shall be free to employ
other methods of noticing and selling the Collateral, in its discretion, if they
are commercially reasonable. Without limiting the generality of the foregoing,
Borrower recognizes that GC may be unable to make a public sale of any or all of
the Investment Property, by reason of prohibitions contained in applicable
securities laws or otherwise, and expressly agrees that a private sale to a
restricted group of purchasers for investment and not with a view to any
distribution thereof shall be considered a commercially reasonable sale.
*TEN
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7.4 POWER OF ATTORNEY. Upon the occurrence and during the continuance of
any Event of Default, without limiting GC's other rights and remedies, Borrower
grants to GC an irrevocable power of attorney coupled with an interest,
authorizing and permitting GC (acting through any of its employees, attorneys or
agents) at any time*, at its option, but without obligation, with or without
notice to Borrower, and at Borrower's expense, to do any or all of the
following, in Borrower's name or otherwise, but GC agrees to exercise the
following powers in a commercially reasonable manner: (a) Execute on behalf of
Borrower any documents that GC may, in its sole discretion, deem advisable in
order to perfect and maintain GC's security interest in the Collateral, or in
order to exercise a right of Borrower or GC, or in order to fully consummate all
the transactions contemplated under this Agreement, and all other present and
future agreements; (b) Execute on behalf of Borrower any document exercising,
transferring or assigning any option to purchase, sell or otherwise dispose of
or to lease (as lessor or lessee) any real or personal property which is part of
GC's Collateral or in which GC has an interest; (c) Execute on behalf of
Borrower, any invoices relating to any Receivable, any draft against any Account
Debtor and any notice to any Account Debtor, any proof of claim in bankruptcy,
any Notice of Lien, claim of mechanic's, materialman's or other lien, or
assignment or satisfaction of mechanic's materialman's or other lien; (d) Take
control in any manner of any cash or non-cash items of payment or proceeds of
Collateral; endorse the name of Borrower upon any instruments, or documents,
evidence of payment or Collateral that may come into GC's possession, (e)
Endorse all checks and other forms of remittances received by GC; (f) Pay,
contest or settle any lien, charge, encumbrance, security interest and adverse
claim in or to any of the Collateral, or any judgment based thereon, or
otherwise take any action to terminate or discharge the same; (g) Grant
extensions of time to pay, compromise claims and settle Receivables and General
Intangibles for less than face value and execute all releases and other
documents in connection therewith; (h) Pay any sums required on account of
Borrower's taxes or to secure the release of any liens therefor, or both; (i)
Settle and adjust, and give releases of, any insurance claim that relates to any
of the Collateral and obtain payment therefor; (j) Instruct any third party
having custody or control of any books or records belonging to, or relating to,
Borrower to give GC the same rights of access and other rights with respect
thereto as GC has under this Agreement; (k) Execute and deliver to any
securities intermediary or other Person any entitlement order, account control
agreement or other notice, document or instrument with respect to any Investment
Property; and (l) Take any action or pay any sum required of Borrower pursuant
to this Agreement and any other present or future agreements. Any and all
reasonable sums paid and any and all reasonable costs, expenses, liabilities,
obligations and reasonable attorneys' fees incurred by GC with respect to the
foregoing shall be added to and become part of the Obligations, shall be payable
on demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations. In no event shall GC's rights under the
foregoing
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power of attorney or any of GC's other rights under this Agreement be deemed to
indicate that GC is in control of the business, management or properties of
Borrower.
*DURING THE CONTINUANCE OF SUCH EVENT OF DEFAULT
7.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any
sale or other disposition of the Collateral shall be applied by GC first to the
reasonable costs, expenses, liabilities, obligations and attorneys' fees
incurred by GC in the exercise of its rights under this Agreement, second to the
interest due upon any of the Obligations, and third to the principal of the
Obligations, in such order as GC shall determine in its sole discretion. Any
surplus shall be paid to Borrower or other persons legally entitled thereto;
Borrower shall remain liable to GC for any deficiency. If, GC, in its sole
discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale of Collateral, GC shall have
the option, exercisable at any time, in its sole discretion, of either reducing
the Obligations by the principal amount of purchase price or deferring the
reduction of the Obligations until the actual receipt by GC of the cash
therefor.
7.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set forth
in this Agreement, GC shall have all the other rights and remedies accorded a
secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between GC and Borrower, and all of such rights and remedies
are cumulative and none is exclusive. Exercise or partial exercise by GC of one
or more of its rights or remedies shall not be deemed an election, nor bar GC
from subsequent exercise or partial exercise of any other rights or remedies.
The failure or delay of GC to exercise any rights or remedies shall not operate
as a waiver thereof, but all rights and remedies shall continue in full force
and effect until all of the Obligations have been fully paid and performed.
8. DEFINITIONS. (As used in this agreement, the following terms have the
following meanings:
"ACCOUNT DEBTOR" means the obligor on a Receivable.
"AFFILIATE" means, with respect to any Person, a relative, partner*,
shareholder, director, **officer of such Person, or any parent or subsidiary of
such Person, or any Person controlling, controlled by or under common control
with such Person.
*FIVE PERCENT
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**OR
"AGREEMENT" and "THIS AGREEMENT" means this Loan and Security Agreement and
all modifications and amendments thereto, extensions thereof, and replacements
therefor.
"BUSINESS DAY" means a day on which GC is open for business.
"CODE" means the Uniform Commercial Code as adopted and in effect in the
State of California from time to time.
"COLLATERAL" has the meaning set forth in Section 2.1 above.
"DEFAULT" means any event which with notice or passage of time or both,
would constitute an Event of Default.
"DEPOSIT ACCOUNT" has the meaning set forth in Section 9105 of the Code.
"ELIGIBLE RECEIVABLES" means unconditional Receivables arising in the
ordinary course of Borrower's business from the completed sale of goods or
rendition of services*, which GC, in its sole judgment, shall deem eligible for
borrowing, based on such considerations as GC may from time to time deem
appropriate.
*OR THE LICENSING OR SOFTWARE
"EQUIPMENT" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.
"EVENT OF DEFAULT" means any of the events set forth in Section 7.1 of this
Agreement.
"GENERAL INTANGIBLES" means all general intangibles of Borrower, whether
now owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, Deposit Accounts, inventions, designs, drawings, blueprints, patents,
patent applications, trademarks and the goodwill of the business symbolized
thereby, names, trade names,
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trade secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, security and other deposits, rights in all litigation presently
or hereafter pending for any cause or claim (whether in contract, tort or
otherwise) and all judgments now or hereafter arising therefrom, all claims of
Borrower against GC, rights to purchase or sell real or personal property,
rights as a licensor or licensee of any kind, royalties, telephone numbers,
proprietary information, purchase orders, and all insurance policies and claims
(including life insurance, key man insurance, credit insurance, liability
insurance, property insurance and other insurance), tax refunds and claims,
computer programs, discs, tapes and tape files, claims under guaranties,
security interests or other security held by or granted to Borrower, all rights
to indemnification and all other intangible property of every kind and nature
(other than Receivables)*.
*PROVIDED THAT THE INSURANCE POLICIES DESIGNATED IN THE SCHEDULE SHALL BE
EXCLUDED HEREFROM
"GUARANTOR" means any Person who has guaranteed any of the Obligations.
"INVENTORY" means all of Borrower's now owned and hereafter acquired goods,
merchandise or other personal property, wherever located, to be furnished under
any contract of service or held for sale or lease (including all raw materials,
work in process, finished goods and goods in transit), and all materials and
supplies of every kind, nature and description which are or might be used or
consumed in Borrower's business or used in connection with the manufacture,
packing, shipping, advertising, selling or finishing of such goods, merchandise
or other personal property, and all warehouse receipts, documents of title and
other documents representing any of the foregoing.
"INVESTMENT PROPERTY" means any and all investment property of Borrower,
including all securities, whether certificated or uncertificated, security
entitlements, securities accounts, commodity contracts and commodity accounts,
and all financial assets held in any securities account or otherwise, wherever
located, and whether now existing or hereafter acquired or arising.
"LIBOR RATE" means (i) the one-month London Interbank Offered Rate for
deposits in U.S. dollars, as shown each day in The Wall Street Journal (Eastern
Edition) under the caption "Money Rates - London Interbank Offered Rates
(LIBOR)"; or (ii) if the Wall Street Journal does not publish such rate, the
offered one-month rate for deposits in U.S. dollars which appears on the Reuters
Screen LIBO Page as of 10:00 a.m., New York time, each day, PROVIDED that if at
least two rates appear on the Reuters Screen LIBO Page on any day, the "LIBOR
Rate" for such day shall be the arithmetic mean of such rates; or (iii) if the
Wall Street Journal does not publish such
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rate on a particular day and no such rate appears on the Reuters Screen LIBO
Page on such day, the rate per annum at which deposits in U.S. dollars are
offered to the principal London office of Bank of America N.T.&S.A. (or its
successor) in the London interbank market at approximately 11:00 A.M., London
time, on such day in an amount approximately equal to the outstanding principal
amount of the Loans, for a period of one month, in each of the foregoing cases
as determined in good faith by GC, which determination shall be conclusive
absent manifest error.
"OBLIGATIONS" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to GC, whether evidenced by this Agreement or any note or
other instrument or document, whether arising from an extension of credit,
opening of a letter of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by GC in
Borrower's debts owing to others), absolute or contingent, due or to become due,
including, without limitation, all interest, charges, expenses, fees, attorneys'
fees, expert witness fees, audit fees, letter of credit fees, loan fees,
termination fees, minimum interest charges and any other sums chargeable to
Borrower under this Agreement or under any other present or future instrument or
agreement between Borrower and GC.
"PERMITTED LIENS" means the following: (i) purchase money security
interests in specific items of Equipment; (ii) leases of specific items of
Equipment; (iii) liens for taxes*; (iv) additional security interests and liens
which are subordinate to the security interest in favor of GC and are consented
to in writing by GC (which consent shall not be unreasonably withheld); (v)
security interests being terminated substantially concurrently with this
Agreement; (vi) liens of materialmen, mechanics, warehousemen, carriers, or
other similar liens arising in the ordinary course of business and securing
obligations which are not delinquent**; (vii) liens incurred in connection with
the extension, renewal or refinancing of the indebtedness secured by liens of
the type described above in clauses (i) or (ii) above, provided that any
extension, renewal or replacement lien is limited to the property encumbered by
the existing lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase; (viii) Liens in favor of customs and
revenue authorities which secure payment of customs duties in connection with
the importation of goods***. GC will have the right to require, as a condition
to its consent under subparagraph (iv) above, that the holder of the additional
security interest or lien sign an intercreditor agreement on GC's then standard
form, acknowledge that the security interest is subordinate to the security
interest in favor of GC, and agree not to take any action to enforce its
subordinate security interest so long as any Obligations remain outstanding, and
that Borrower agree that any uncured default in any obligation
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secured by the subordinate security interest shall also constitute an Event of
Default under this Agreement.
*, OR GOVERNMENTAL FEES, ASSESSMENTS OR OTHER GOVERNMENTAL CHARGES OR
LEVIES, EITHER NOT DELINQUENT OR BEING CONTESTED IN GOOD FAITH BY APPROPRIATE
PROCEEDINGS, PROVIDED THE SAME HAVE NO PRIORITY OVER ANY OF GC'S SECURITY
INTERESTS AND THE BORROWER MAINTAINS ADEQUATE RESERVES THEREFOR IN ACCORDANCE
WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, CONSISTENTLY APPLIED.
**MORE THAN 45 DAYS, OR ARE BEING CONTESTED IN GOOD FAITH (PROVIDED SUCH
LIEN IS NOT FORECLOSED)
***; (IX) ANY JUDGMENT, ATTACHMENT OR SIMILAR LIEN, UNLESS THE JUDGMENT IT
SECURES IS NOT FULLY COVERED BY INSURANCE AND HAS NOT BEEN DISCHARGED OR
EXECUTION THEREOF EFFECTIVELY STAYED AND BONDED AGAINST PENDING APPEAL WITHIN 45
DAYS OF THE ENTRY THEREOF PROVIDED THAT, IF THE JUDGMENT IS NOT FULLY COVERED BY
INSURANCE OR EXECUTION THEREOF HAS NOT BEEN SO STAYED AND BONDED, GC SHALL NOT
BE REQUIRED TO MAKE ANY LOANS OR OTHERWISE EXTEND CREDIT TO OR FOR THE BENEFIT
OF BORROWER; (X) LICENSES OR SUBLICENSES GRANTED TO OTHERS NOT INTERFERING IN
ANY MATERIAL RESPECT WITH THE BUSINESS OF BORROWER; AND (XI) LIENS WHICH
CONSTITUTE RIGHTS OF SET-OFF OF A CUSTOMARY NATURE OR BANKER'S LIENS ON AMOUNTS
ON DEPOSIT, WHETHER ARISING BY CONTRACT OR BY OPERATION OF LAW, IN CONNECTION
WITH ARRANGEMENTS ENTERED INTO WITH DEPOSITORY INSTITUTIONS IN THE ORDINARY
COURSE OF BUSINESS
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"RECEIVABLES" means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, documents and all other forms of obligations
at any time owing to Borrower, all guaranties and other security therefor, all
merchandise returned to or repossessed by Borrower, and all rights of stoppage
in transit and all other rights or remedies of an unpaid vendor, lienor or
secured party.
OTHER TERMS. All accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings given to such terms in accordance with
generally accepted accounting principles, consistently applied. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meanings
provided by the Code, to the extent such terms are defined therein.
9. GENERAL PROVISIONS.
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9.1 INTEREST COMPUTATION. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by GC (including
proceeds of Receivables and payment of the Obligations in full) shall be deemed
applied by GC on account of the Obligations three Business Days after receipt by
GC of immediately available funds. GC shall not, however, be required to credit
Borrower's account for the amount of any item of payment which is unsatisfactory
to GC in its discretion, and GC may charge Borrower's Loan account for the
amount of any item of payment which is returned to GC unpaid.
9.2 APPLICATION OF PAYMENTS. * payments with respect to the Obligations
may be applied, and in GC's sole discretion reversed and reapplied, to the
Obligations, in such order and manner as GC shall determine in its sole
discretion.
*SUBJECT TO SECTION 7.5, ALL
9.3 CHARGES TO ACCOUNT. GC may, in its discretion, require that Borrower
pay monetary Obligations in cash to GC, or charge them to Borrower's Loan
account, in which event they will bear interest at the same rate applicable to
the Loans.
9.4 MONTHLY ACCOUNTINGS. GC shall provide Borrower monthly with an account
of advances, charges, expenses and payments made pursuant to this Agreement.
Such account shall be deemed correct, accurate and binding on Borrower and an
account stated (except for reverses and reapplications of payments made and
corrections of errors discovered by GC), unless Borrower notifies GC in writing
to the contrary within *days after each account is rendered, describing the
nature of any alleged errors or admissions.
*90
9.5 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service, or by facsimile, or by regular first-class mail, or certified mail
return receipt requested, addressed to GC or Borrower at the addresses shown in
the heading to this Agreement, or at any other address designated in writing by
one party to the other party. All notices shall be deemed to have been given
upon delivery in the case of notices personally delivered, or at the expiration
of one business day following delivery to the private delivery service, or one
day after the date sent by facsimile, or *
*UPON DELIVERY IN THE CASE OF NOTICES SENT BY MAIL
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9.6 SEVERABILITY. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
9.7 INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between Borrower and GC and supersede all
prior and contemporaneous negotiations and oral representations and agreements,
all of which are merged and integrated in this Agreement. There are no oral
understandings, representations or agreements between the parties which are not
set forth in this Agreement or in other written agreements signed by the parties
in connection herewith.
9.8 WAIVERS. The failure of GC at any time or times to require Borrower to
strictly comply with any of the provisions of this Agreement or any other
present or future agreement between Borrower and GC shall not waive or diminish
any right of GC later to demand and receive strict compliance therewith. Any
waiver of any default shall not waive or affect any other default, whether prior
or subsequent, and whether or not similar. None of the provisions of this
Agreement or any other agreement now or in the future executed by Borrower and
delivered to GC shall be deemed to have been waived by any act or knowledge of
GC or its agents or employees, but only by a specific written waiver signed by
an authorized officer of GC and delivered to Borrower. Borrower waives demand,
protest, notice of protest and notice of default or dishonor, notice of payment
and nonpayment, release, compromise, settlement, extension or renewal of any
commercial paper, instrument, account, General Intangible, document or guaranty
at any time held by GC on which Borrower is or may in any way be liable, and
notice of any action taken by GC, unless expressly required by this Agreement.
9.9 AMENDMENT. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by Borrower and a duly
authorized officer of GC.
9.10 TIME OF ESSENCE. Time is of the essence in the performance by Borrower
of each and every obligation under this Agreement.
9.11 ATTORNEYS' FEES AND COSTS. Borrower shall reimburse GC for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by GC, pursuant to, or in
connection with, or relating to this Agreement (whether or not a lawsuit is
filed), including, but not limited to, any reasonable attorneys' fees and costs
GC incurs in order to do the following: prepare and negotiate this Agreement and
the documents relating to this Agreement;
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obtain legal advice in connection with this Agreement or Borrower; enforce, or
seek to enforce, any of its rights; prosecute actions against, or defend actions
by, Account Debtors; commence, intervene in, or defend any action or proceeding;
initiate any complaint to be relieved of the automatic stay in bankruptcy; file
or prosecute any probate claim, bankruptcy claim, third-party claim, or other
claim; examine, audit, copy, and inspect any of the Collateral or any of
Borrower's books and records; protect, obtain possession of, lease, dispose of,
or otherwise enforce GC's security interest in, the Collateral; and otherwise
represent GC in any litigation relating to Borrower. If either GC or Borrower
files any lawsuit against the other predicated on a breach of this Agreement,
the prevailing party in such action shall be entitled to recover its reasonable
costs and attorneys' fees, including (but not limited to) reasonable attorneys'
fees and costs incurred in the enforcement of, execution upon or defense of any
order, decree, award or judgment. All attorneys' fees and costs to which GC may
be entitled pursuant to this Paragraph shall immediately become part of
Borrower's Obligations, shall be due on demand, and shall bear interest at a
rate equal to the highest interest rate applicable to any of the Obligations.
9.12 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and GC; provided, however,
that Borrower may not assign or transfer any of its rights under this Agreement
without the prior written consent of GC, and any prohibited assignment shall be
void. No consent by GC to any assignment shall release Borrower from its
liability for the Obligations.
9.13 JOINT AND SEVERAL LIABILITY. If Borrower consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.
9.14 LIMITATION OF ACTIONS. Any claim or cause of action by Borrower
against GC, its directors, officers, employees, agents, accountants or
attorneys, based upon, arising from, or relating to this Agreement, or any other
present or future document or agreement, or any other transaction contemplated
hereby or thereby or relating hereto or thereto, or any other matter, cause or
thing whatsoever, occurred, done, omitted or suffered to be done by GC, its
directors, officers, employees, agents, accountants or attorneys, shall be
barred unless asserted by Borrower by the commencement of an action or
proceeding in a court of competent jurisdiction by the filing of a complaint
within one year after* the act, occurrence or omission upon which such claim or
cause of action, or any part thereof, is based, and the service of a summons and
complaint on an officer of GC, or on any other person authorized to accept
service on behalf of GC, within thirty (30) days thereafter. Borrower agrees
that such one-year period is a
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reasonable and sufficient time for Borrower to investigate and act upon any such
claim or cause of action. The one-year period provided herein shall not be
waived, tolled, or extended except by the written consent of GC in its sole
discretion. This provision shall survive any termination of this Agreement or
any other present or future agreement.
*BORROWER LEARNS OF, OR IN THE EXERCISE OF REASONABLE DILIGENCE SHOULD HAVE
LEARNED OF,
9.15 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used in
this Agreement for convenience. Borrower and GC acknowledge that the headings
may not describe completely the subject matter of the applicable paragraph, and
the headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. The term "including,"
whenever used in this Agreement, shall mean "including (but not limited to)."
This Agreement has been fully reviewed and negotiated between the parties and no
uncertainty or ambiguity in any term or provision of this Agreement shall be
construed strictly against GC or Borrower under any rule of construction or
otherwise.
9.16 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and
transactions hereunder and all rights and obligations of GC and Borrower shall
be governed by the laws of the State of California. As a material part of the
consideration to GC to enter into this Agreement, Borrower (i) agrees that all
actions and proceedings relating directly or indirectly to this Agreement shall,
at GC's option, be litigated in courts located within California, and that the
exclusive venue therefor shall be Los Angeles County; (ii) consents to the
jurisdiction and venue of any such court and consents to service of process in
any such action or proceeding by personal delivery or any other method permitted
by law; and (iii) waives any and all rights Borrower may have to object to the
jurisdiction of any such court, or to transfer or change the venue of any such
action or proceeding.
9.17 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND GC EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN GC AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF GC OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH GC OR BORROWER, IN ALL OF
THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
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Borrower:
SkillSoft Corporation
/s/ Xxxxxx X. XxXxxxxx
By:___________________________
President or Vice President
/s/ Xxxxxx X. XxXxxxxx
By:___________________________
Secretary or Ass't Secretary
GC:
GREYROCK CAPITAL,
a Division of NationsCredit
Commercial Corporation
/s/
By:_________________________
SVP
Title:_______________________
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SCHEDULE TO
LOAN AND SECURITY AGREEMENT
Borrower: SkillSoft Corporation
Address: 00 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Date: June 18, 1999
This Schedule is an integral part of the Loan and Security Agreement between
GREYROCK CAPITAL, A DIVISION OF NATIONSCREDIT COMMERCIAL CORPORATION ("GC") and
the borrower named above ("Borrower") of even date.
1. CREDIT LIMIT
(Section 1.1): An amount not to exceed the lesser of (1) or (2)
below:
(1) $5,000,000 at any one time outstanding; or
(2) an amount equal to the sum of the following
(without duplication):
(i) an amount equal to 80% of the amount
of Borrower's Eligible Receivables (as
defined in Section 8 above), plus
(ii) the unpaid principal balance of the Term
Loans made by GC to Borrower up to an
original aggregate principal amount at
any time outstanding of $1,000,000 (the
"Term Loans") and will be evidenced by
the Secured Promissory Note (the "Term
Note") of even date herewith made by
Borrower to the order of GC.
The Term Loans will be made in multiple
disbursements and repayable on the terms set forth
in the Term Note. Amounts outstanding under the
Term Note may be borrowed, prepaid and reborrowed
at any time prior to the Maturity Date.
31
2. INTEREST
INTEREST RATE (Section 1.2): The interest rate in effect throughout each
calendar month during the term of this
Agreement shall be the highest "LIBOR Rate"
in effect during such month, plus 4.875% per
annum. Interest shall be calculated on the
basis of a 360-day year for the actual number
of days elapsed. "LIBOR Rate" has the
meaning set forth in Section 8 above.
3. FEES (Section 1.3/Section 6.2):
LOAN FEE: $50,000, payable concurrently herewith.
TERMINATION FEE: None.
NSF CHECK CHARGE: $15.00 per item.
WIRE TRANSFERS: $15.00 per transfer.
4. MATURITY DATE June 30, 2000, subject to automatic renewal
as provided in Section 6.1 above, and early
termination as provided in Section 6.2 above.
5. REPORTING Borrower shall provide GC with the following:
(Section 5.2):
1. Annual financial statements, as soon as
available, and in any event within 90
days following the end of Borrower's
fiscal year, certified by independent
certified public accountants acceptable
to GC.
2. Quarterly unaudited financial
statements, as soon as available, and in
any event within 30 days after the end
of each fiscal quarter of Borrower.
3. Monthly unaudited financial statements
as soon as available and, in any event,
no later than 30 days after the end of
each month.
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4. Monthly Receivable agings, aged by
invoice date, within 10 days after the
end of each month.
5. Monthly accounts payable agings, aged by
invoice date, and outstanding or held
check registers within 10 days after the
end of each month.
6. BORROWER
INFORMATION:
PRIOR NAMES OF BORROWER -
(Section 3.2): N/A
---------------------------------------------
PRIOR TRADE NAMES OF
BORROWER -
(Section 3.2): N/A
---------------------------------------------
EXISTING TRADE NAMES OF
BORROWER -
(Section 3.2): _____________________________________________
OTHER LOCATIONS AND
ADDRESSES -
(Section 3.3): N/A
---------------------------------------------
MATERIAL ADVERSE LITIGATION -
(Section 3.10:) NATIONAL EDUCATION TRAINING GROUP, INC. V
SKILLSOFT CORPORATION, ET. AL.
CERTAIN EXCLUDED The following insurance policies:
COLLATERAL Certain insurance policies (nos. RNHLD1013,
(Section 8): Reliance Insurance; 28043644, The New
England; and VIBL015637, CNA) naming X.X.
Xxxxx as insured.
7. COPYRIGHT REGISTRATION COVENANT
(Section 5.8): Borrower agrees promptly, and in any event
not later than 60 days after the date hereof
(the
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33
"Registration Completion Date"), to have any
of its currently unregistered copyrightable
software, computer programs and other
materials registered with the U.S. Copyright
Office in Washington, D.C. (the "Copyright
Office") and to promptly provide GC with
evidence of such registration. Borrower will,
on an ongoing basis, promptly register any
future unregistered copyrightable software,
computer programs and other materials with
the Copyright Office. Until the Registration
Completion Date Borrower may request Loans
notwithstanding any noncompliance with
Section 2(f) of the Security Agreement in
Copyrighted Works (the "Copyright Security
Agreement") between Borrower and GC (which
Section 2(f) requires registration with the
Copyright Office of any copyright the sale,
licensing or other disposition of which
results in any Receivable (a "Copyright
Receivable") with respect to which any Loan
is requested). Effective the Registration
Completion Date, no Loan request may be made
with respect to any Copyright Receivables if
GC has not made its filing with the Copyright
Office with respect to the copyright giving
rise to such Copyright Receivables.
BORROWER: GC:
SKILLSOFT CORPORATION GREYROCK CAPITAL,
A DIVISION OF NATIONSCREDIT
COMMERCIAL CORPORATION
/s/ Xxxxxx X. XxXxxxxx /s/
BY: _________________________________ BY: _______________________________
PRESIDENT OR VICE PRESIDENT
SVP
TITLE: ____________________________
/s/ Xxxxxx X. XxXxxxxx
BY: _________________________________
SECRETARY OR ASS'T SECRETARY
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34
SECURED PROMISSORY NOTE
$1,000,000 Los Angeles, California June 18, 1999
FOR VALUE RECEIVED, the undersigned (the "Borrower") promises to pay to the
order of GREYROCK CAPITAL, A DIVISION OF NATIONSCREDIT COMMERCIAL CORPORATION
("GC"), at 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
or at such other address as the holder of this Note shall direct, the principal
sum of One Million Dollars ($1,000,000), or, if less, the aggregate principal
amount of the Term Loans made by GC to the Borrower pursuant to the Loan and
Security Agreement between the Borrower and GC dated June 18, 1999 (the "Loan
Agreement"), on the date the Loan and Security Agreement terminates by its terms
or is terminated by either party in accordance with its terms (the "Maturity
Date"). On the Maturity Date the entire remaining unpaid principal balance of
this Note, plus any and all accrued and unpaid interest, shall be due and
payable.
This Note shall bear interest on the unpaid principal balance hereof from
time to time outstanding at a rate equal to the following: The interest rate in
effect throughout each calendar month during the term of this Note shall be the
highest "LIBOR Rate" in effect during such month, plus 4.875% per annum.
Interest shall be calculated on the basis of a 360-day year for the actual
number of days elapsed. "LIBOR Rate" has the meaning set forth in the Loan
Agreement.
Accrued interest on this Note shall be payable monthly, in arrears,
commencing on the last day of the month in which the first Term Loan is made
under the Loan Agreement, and continuing on the last day of each succeeding
month. Any accrued interest not paid when due shall bear interest at the same
rate as the principal hereunder.
The principal hereof may be prepaid at any time, in whole or in part,
without any obligation to pay any prepayment fee or premium. Accrued interest on
any principal amount hereof prepaid shall be due on the prepayment date as to
the principal amount hereof prepaid.
Principal of and interest on this Note shall be payable in lawful money
of the United States of America. If a payment hereunder becomes due and payable
on a Saturday, Sunday or legal holiday, the due date thereof shall be extended
to the next succeeding business day, and interest shall be payable thereon
during such extension.
Upon the occurrence of and during the continuance of any Event of Default
(as defined in the Loan Agreement), GC may, at its option, at any time
thereafter, declare
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35
the entire unpaid principal balance of this Note plus all accrued interest to be
immediately due and payable, without notice or demand. The acceptance of any
installment of principal or interest by GC after the time when it becomes due,
as herein specified, shall not be held to establish a custom, or to waive any
rights of GC to enforce payment when due of any further installments or any
other rights, nor shall any failure or delay to exercise any rights be held to
waive the same.
All payments hereunder are to be applied first to costs and fees referred
to hereunder, second to the payment of accrued interest and the remaining
balance to the payment of principal. Any principal prepayment hereunder shall be
applied against principal payments in the inverse order of maturity. GC shall
have the continuing and exclusive right to apply or reverse and reapply any and
all payments hereunder. Principal and interest becoming due hereunder may, in
GC's discretion, be charged to Borrower's loan account under the Loan Agreement,
and the same shall thereafter bear interest at the same rate as the other Loans
under the Loan Agreement.
The Borrower agrees to pay all costs and expenses (including without
limitation reasonable attorneys' fees) incurred by GC in connection with or
related to this Note, or its enforcement, whether or not suit be brought. The
Borrower hereby waives presentment, demand for payment, notice of dishonor,
notice of nonpayment, protest, notice of protest, and any and all other notices
and demands in connection with the delivery, acceptance, performance, default,
or enforcement of this Note, and the Borrower hereby waives the benefits of any
statute of limitations with respect to any action to enforce, or otherwise
related to, this Note.
This Note is secured by the Loan Agreement and all other present and future
security agreements between the Borrower and GC. Nothing herein shall be deemed
to limit any of the terms or provisions of the Loan Agreement or any other
present or future document, instrument or agreement, between the Borrower and
GC, and all of GC's rights and remedies hereunder and thereunder are cumulative.
In the event any one or more of the provisions of this Note shall for any
reason be held to be invalid, illegal or unenforceable, the same shall not
affect any other provision of this Note and the remaining provisions of this
Note shall remain in full force and effect.
No waiver or modification of any of the terms or provisions of this Note
shall be valid or binding unless set forth in a writing signed by a duly
authorized officer of GC, and then only to the extent therein specifically set
forth. If more than one person executes this Note, their obligations hereunder
shall be joint and several.
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36
BORROWER HEREBY WAIVES, AND GC BY ITS ACCEPTANCE HEREOF WAIVES, THE RIGHT
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN
ANY WAY RELATING TO: (I) THIS NOTE; OR (II) ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN GC AND BORROWER; OR (III) ANY CONDUCT, ACTS OR
OMISSIONS OF GC OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH GC OR BORROWER; IN EACH
OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
This Note is payable in, and shall be governed by the laws of, the State of
California.
SKILLSOFT CORPORATION
/s/ Xxxxxx X. XxXxxxxx
BY ________________________________
VICE PRESIDENT
/s/ Xxxxxx X. XxXxxxxx
BY ________________________________
SECRETARY
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