Exhibit 10.8
BUSINESS LOAN/SECURITY AGREEMENT
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NATIONSBANK, N.A.
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000-0000
The undersigned, MICROSTRATEGY INCORPORATED, a Delaware corporation
(hereinafter referred to as "Debtor"), with principal place of business located
at 0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, requests that
NATIONSBANK, N.A. ("Bank") extend financial accommodations, subject to the terms
and conditions hereof and evidenced by Debtor's promissory notes referenced
below. In consideration of Bank's extending such accommodations, Debtor makes
the representations and warranties to Bank contained herein and, as long as this
Agreement has not been terminated, agrees as follows:
1. COMMITMENT.
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(a) Subject to the provisions of this Agreement, Bank shall
extend to Debtor: (i) a secured revolving line of credit (the "Revolving
Credit"), in the amount of Six Million Four Hundred Thousand Dollars
($6,400,000.00), or so much thereof as shall be advanced or readvanced, bearing
interest and being payable in accordance with the terms of that certain
Revolving Promissory Note of even date herewith, made by Debtor, and payable to
the order of Bank in the original principal amount of Six Million Four Hundred
Thousand Dollars ($6,400,000.00), or so much thereof as shall be advanced or
readvanced, and all extensions, renewals and/or modifications thereof and/or
substitutions therefor (collectively the "Revolving Note"); and (ii) a secured
revolving equipment line of credit (the "Equipment Line"), in the amount of Two
Million Dollars ($2,000,000.00), or so much thereof as shall be advanced or
readvanced, bearing interest and being payable in accordance with the terms of
one or more Term Promissory Notes to be made from time to time by Debtor, and
payable to the order of Bank, each of which shall be substantially in the form
of Exhibit "A" attached hereto and incorporated herein by this reference, and
all extensions, renewals and modifications thereof and/or substitutions therefor
(individually an "Equipment Note" and collectively the "Equipment Notes").
(b) The Revolving Credit and/or the Equipment Line are sometimes
herein individually and/or collectively referred to as the "Loan", and the
Revolving Note and/or any one or more or all of the Equipment Notes are
sometimes herein individually and/or collectively referred to as the "Note".
(c) Debtor hereby authorizes Bank (at any time upon or after
prior notice shall have been sent by Bank to Debtor) to charge Debtor's
operating account maintained at Bank for the payment of any and all of the
"Obligations" (hereinafter defined) as and when the same fall due.
(d) Bank agrees that it shall not charge any line of credit
and/or commitment fees to Debtor in connection with the Loan on or before
December 31, 1997, except with the prior written consent of Debtor.
Notwithstanding the foregoing, Bank and Debtor understand and agree that the
foregoing does not relate to, among other things, any (i) applicable late
charges, prepayment fees, other prepayment-related amounts and/or attorneys'
fees incurred by Bank in connection with the occurrence of any "Event of
Default" (as hereinafter defined), that may become owing under the Loan, and/or
(ii) fees for issuance and/or renewal by Bank of any of the "Letters of Credit"
(as hereinafter defined).
2. SECURITY. As collateral security for the Loan and the
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"Applications" (hereinafter defined), as well as for any and all other
liabilities and obligations of Debtor to Bank under this Agreement and/or the
Note, whether now existing or hereafter created or arising, direct or indirect,
matured or unmatured, and whether absolute or contingent, joint, several, or
joint and several, and no matter how the same may be evidenced or shall arise,
including without limitation all sums now or hereafter owing under the Note
and/or in connection with the Loan (all of which are hereinafter collectively
called the "Obligations"), Debtor hereby grants and conveys to Bank a first-lien
security interest in:
(a) all of Debtor's present and future accounts, contract
rights, chattel paper, notes, drafts, acceptances, chattel mortgages,
conditional sales contracts, bailment leases, security agreements and other
forms of obligations now or hereafter arising out of or acquired in the course
of Debtor's business, together with all liens, guarantees, securities, rights,
remedies and privileges pertaining to any of the foregoing, now existing or
hereafter arising (all of the foregoing being hereinafter collectively called
"Receivables");
(b) all of Debtor's inventory, including goods, wares,
merchandise and other tangible personal property now owned or hereafter acquired
by Debtor which are held for sale or lease or are furnished (or are to be
furnished) under a contract for services, and raw materials, work in process and
materials used or consumed or to be used or consumed in Debtor's business (all
of the foregoing being hereinafter collectively called "Inventory");
(c) all of Debtor's present and future furniture, fixtures and
equipment of every type and nature, together with all parts, attachments,
additions, accessories, improvements, replacements, substitutions and accessions
thereto;
(d) all of Debtor's present and future "general intangibles", as
such term is defined in the Uniform Commercial Code as adopted in Virginia (the
"UCC"), now owned or hereafter acquired by Debtor or in which Debtor now has or
hereafter acquires any right, title or interest, including, without limitation
(i) all of Debtor's choses in action, things in action, suits, actions, causes
of action and claims of every kind and nature, whether at law or in equity, (ii)
all condemnation awards and insurance proceeds, (iii) tax refunds, rights and
claims thereto and other payments from any local, state or federal government
authority or agency, (iv) all contract rights, licenses (but, with respect to
each license, only to the extent that the grant of a security interest in such
license is not prohibited by the agreement(s) creating such license), permits,
zoning approvals, rights, agreements and all other private or governmental
documents of every kind or character whatsoever and (v) all customer lists,
servicing rights, patents and patent rights (whether or not registered),
licenses, permits, uncertified/uncertificated securities, trade marks, service
marks, trade names, logos, copyrights, computer programs and software and
goodwill (all of the foregoing being hereinafter collectively called "General
Intangibles");
(e) all property, goods and chattels of the same classes as
those described above, acquired by Debtor subsequent to the effective date of
this Agreement and prior to its termination;
(f) all cash and non-cash proceeds of any or all of the
foregoing; and
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(g) all increases, substitutions, replacements, additions and
accessions thereto (the foregoing (a), (b), (c), (d), (e), (f) and (g) being
hereinafter collectively called the "Collateral").
Except for Debtor's sale or lease of Inventory to its customers in the
ordinary course of business and except as otherwise permitted as provided for
immediately below, the Collateral will be kept at Debtor's principal place of
business. Notwithstanding the foregoing, from time to time, portions of the
tangible Collateral may be kept at locations other than Debtor's principal place
of business so long as and to the extent that the aggregate fair market value
thereof shall not any time exceed Two Hundred Fifty Thousand Dollars
($250,000.00). Debtor warrants that it owns or will own the Collateral free and
clear of all liens, taxes and other adverse claims, and that upon demand Debtor
will provide Bank with such additional documents and/or further assurances of
title as Bank may request in order to perfect Bank's first-lien security
interest therein. Upon and at any time after reasonable notice shall have been
sent by Bank to Debtor, Debtor will permit Bank and/or its agents, during normal
business hours, to enter upon Debtor's premises and to inspect the Collateral as
well as the books and records pertaining thereto. For the further security of
Bank, Debtor grants to Bank a security interest and a special property interest
in all books and records of Debtor pertaining to Receivables. Whenever required
pursuant to paragraphs 6(c) and/or 9(e) of this Agreement and/or during the
continuance of any Event of Default, Debtor shall, at its own cost and expense,
deliver all such books, account ledgers and records to Bank or its designated
agents at any time(s) upon request. Bank and such agents shall keep all such
books, account ledgers and records at Debtor's principal place of business
unless (A) Debtor shall not make available to Bank and/or any such agents at
such place such of Debtor's personnel, supplies, equipment and or space as may
be reasonably necessary in order to audit, check, inspect, examine as well as
make abstracts and copies of the same and/or (B) any Event of Default shall then
exist.
3. ADVANCES.
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(a) Letters of Credit. Debtor and Bank contemplate that, from
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time to time, Debtor may request that Bank issue one (1) or more Irrevocable
Letters of Credit for the account of Debtor. Each such request shall be made in
writing, using Bank's then standard form of Application and Agreement for
Irrevocable Stand-By and/or Commercial Letter of Credit (whatever the actual
name of such form may be at such time), and shall be executed and delivered to
Bank by Debtor. All such Applications are hereinafter individually called an
"Application" and collectively called the "Applications". All Irrevocable
Stand-By and/or Commercial Letters of Credit issued by Bank pursuant to any of
the Applications are hereinafter individually called a "Letter of Credit" and
collectively called the "Letters of Credit". None of the Applications shall
request (and none of the Letters of Credit shall provide for) any expiry date
for the related Letter of Credit, whether by automatic renewal or otherwise,
later than December 31, 1997, unless agreed to by Bank in writing. Subject to
the provisions of this Agreement, Bank shall issue each requested Letter of
Credit pursuant to its related Application if at the time Bank would fund an
advance or readvance under the Revolving Credit in an amount equal to the amount
requested for such Letter of Credit. All amounts from time to time outstanding
and (if all drawing conditions were satisfied) available to be drawn under any
and all of the Letters of Credit in the aggregate (the "Maximum Drawable
Amount") shall reduce the amounts otherwise available under the Revolving
Credit. Notwithstanding anything to the contrary set forth in
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any of the Applications, so long as the Revolving Credit shall not have matured
(whether by acceleration or otherwise), after giving full effect to any
extensions, renewals, modifications and/or substitutions thereof and/or
therefor, all amounts, if any, from time to time drawn under any one or more or
all of the Letters of Credit and not immediately reimbursed in full to Bank by
Debtor shall be conclusively deemed immediately thereafter to be evidenced by,
advanced and/or readvanced under, bearing interest and repayable according to
the provisions of the Revolving Note. If the Revolving Credit shall have matured
(by acceleration or otherwise), after giving full effect to any extensions,
renewals, modifications and/or substitutions thereof and or therefor, then, all
such amounts shall be governed by the provisions of the respective Applications.
(b) Revolving Credit Advances. The Revolving Credit, the
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principal balance of which shall not at any time exceed the lesser of: (i) the
then current value of the hereinafter referenced Borrowing Base, or (ii)(A)
$6,400,000.00 minus (B) the Maximum Drawable Amount, shall be advanced or
readvanced or extended to or for the benefit of Debtor by advances or readvances
made by Bank to Debtor. Requests for advances under the Revolving Note may be
made telephonically or in writing (and, if made telephonically, confirmed in
writing within three (3) business days) not more frequently than daily, and
shall be preceded by the "Borrowing Base/Non-Default Certificate" hereinafter
referenced. The provisions of the immediately foregoing sentence shall not apply
to advances and/or readvances under the Revolving Note that relate to any draws
under any of the Letters of Credit. Among other things, the "Borrowing Base/Non-
Default Certificate" shall confirm all advances and readvances since the
preceding "Borrowing Base/Non-Default Certificate". All sums so requested shall
be in the minimum amounts from time to time specified by Bank. All advances and
readvances (other than those relating to any draws under any of the Letters of
Credit) may be made into Debtor's operating account maintained at Bank and only
on the basis of a then current "Borrowing Base/Non-Default Certificate"
delivered to Bank.
(c) Revolving Credit Borrowing Base. Each Borrowing Base/Non-
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Default Certificate shall certify, among other things, the dollar amount of the
Borrowing Base as of the date of such Certificate. At any particular time, the
dollar amount of the Borrowing Base shall be equal to eighty percent (80%) of
the then current amount of the "Net Outstanding Amount of Domestic Trade
Accounts Receivable" (hereinafter defined), less the Maximum Drawable Amount.
At any particular time, the dollar amount of the "Net Outstanding Amount of
Domestic Trade Accounts Receivable" shall be equal to: (i) Total Domestic Trade
Accounts Receivable as to which Debtor shall then have title, the existence of
which shall have been reported to Bank, which are valid and bona fide in all
respects, represent money due for goods sold and/or services performed by
Debtor, which shall have been billed by Debtor, for which the account debtor is
located in the United States of America, with respect to which there is no
offset or counterclaim or defense of any nature whatsoever and which shall then
be less than ninety (90) calendar days old from the original invoice date (it
being understood and agreed that any such Receivable with respect to which there
is any offset, counterclaim or defense affecting (x) fifty percent (50%) or more
of the amount of such Receivable, shall be excluded in its entirety, including
in such exclusion the portion, if any, not affected thereby, and (y) less than
fifty percent (50%) of the amount of such Receivable, may be included, but only
to the extent of the portion not affected thereby)("Total Domestic Trade
Accounts Receivable"); less (ii) any of the Total Domestic Trade Accounts
Receivable which are not acceptable to Bank in its
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reasonable discretion; less (iii) the net amount of any deposits paid on account
to Debtor by account debtors against any of the Total Domestic Trade Accounts
Receivable. Debtor shall submit a monthly Borrowing Base/Non-Default Certificate
to Bank on or before the fifteenth (15th) calendar day of each month and prior
to each request for an advance under the Revolving Credit.
(d) Equipment Line Advances. The Equipment Line shall be used
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by Debtor to finance Debtor's purchases of equipment. The aggregate principal
balance outstanding under the Equipment Line shall not at any time exceed Two
Million Dollars ($2,000,000.00). Each request for an advance thereunder shall be
made by Debtor in writing and delivered to Bank at least ten (10) calendar days
prior to the desired funding date accompanied by receipts evidencing the cost of
the equipment in question and a written statement from Debtor setting forth the
amount requested to be advanced, the desired term of the related Equipment Note,
which of the two (2) interest rate options provided for below that Debtor has
chosen with respect to such request and such other related information as Bank
may reasonably require. Each such request will be evidenced by a separate
Equipment Note. The maximum amount advanced with respect to each such asset
shall not exceed eighty percent (80%) of the cost thereof. The last date for
funding any such request shall be December 31, 1997. Each Equipment Note shall
provide for a term of either three (3) or four (4) years and monthly payments of
principal and interest commencing one (1) month after the date thereof that
shall be payable in amounts described below. In no event shall any Equipment
Note have a maturity date later than December 31, 2001.
With respect to each such request, Debtor shall have the option
of selecting either the "Floating Rate" (hereinafter defined) or the "Fixed
Rate" (hereinafter defined) as the rate of interest applicable to such request.
As used herein, the "Floating Rate" means a rate that is at all times equal to
the sum of Bank's "Prime Rate" (hereinafter defined), plus 1/2 of one percent
(1/2 of 1%) per annum and if applicable it shall be adjusted as and when each
change in Bank's Prime Rate shall occur. As used herein, Bank's "Prime Rate"
means the floating and fluctuating per annum prime rate of interest of Bank as
established and declared at any time and from time to time by Bank, but which
does not necessarily represent the lowest or best rate of interest offered or
charged by Bank to its borrowers. As used herein, the "Fixed Rate" means a rate
that is at the time it shall become applicable equal to the sum of the
applicable "Treasury Bond Yield" (hereinafter defined), plus the applicable
"Spread" (hereinafter defined), and if applicable it shall be determined at the
time it shall become applicable and shall remain fixed until the end of the term
of repayment. As used herein, the "Treasury Bond Yield" means either (i) with
regard to an Equipment Note having an original term of three (3) years, the
average yield in percent per annum of the Treasury Constant Maturities for a
U.S. Treasury Bond(s) scheduled to mature on or most closely to the date that
would be three (3) years after the date on which the Fixed Rate will become
applicable, or (ii) with regard to an Equipment Note having an original term of
four (4) years, the average yield in percent per annum of the Treasury Constant
Maturities for a U.S. Treasury Bond(s) scheduled to mature on or most closely to
the date that would be four (4) years after the date on which the Fixed Rate
will become applicable, as such yields are published in Federal Reserve
Statistical Release H.I5 (519) for the week immediately preceding such
applicable date. If Federal Reserve Statistical Release H.I5 (519) ceases to be
published, then the Treasury Bond Yield shall be based upon then current market
yields of U.S. Treasury securities or an index that, in Bank's sole but
reasonable judgment, most readily corresponds to the average yield of the
Treasury Constant Maturities. As used herein, the applicable
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"Spread" means either (x) two and 65/100 percent (2.65%) per annum with regard
to an Equipment Note having an original term of three (3) years or (y) two and
85/100 percent (2.85%) per annum with regard to an Equipment Note having an
original term of four (4) years. Interest on the Equipment Line shall be
calculated on the basis of a 360-day year and shall be paid for the actual
number of days elapsed.
If Debtor selects the Floating Rate with respect to a particular
request, then, for so long as the Floating Rate shall continue to be applicable,
the Equipment Note related thereto shall be payable in consecutive monthly
installments in curtailment and reduction of principal each in an amount
determined by dividing the original principal amount advanced by Bank by the
number of months in the term of repayment, plus all accrued and unpaid interest
(at the Floating Rate) thereon.
Alternatively, if Debtor selects the Fixed Rate with respect to a
particular request, then, the related Equipment Note shall be payable in equal
consecutive monthly installments of principal and interest (at the Fixed Rate)
each in an amount sufficient to pay such interest and amortize fully the
original principal amount advanced by Bank over the term of repayment.
At any time, Debtor can elect (by delivering to Bank at least two
(2) business days' prior written notice) to change the rate of interest
applicable to any Equipment Notes from the Floating Rate to the Fixed Rate. Once
any Equipment Note has the Fixed Rate as its applicable interest rate, then, as
to such Equipment Note, such Fixed Rate may not be changed to the Floating Rate.
At any time, Debtor can elect (by delivering to Bank at least two
(2) business days' prior written notice) to prepay some or all of any one or
more or all of the Equipment Notes, but only with respect to such Notes that are
then subject to the Floating Rate, and, in such cases, Debtor shall not be
obligated to pay to Bank any amounts (in the nature of a prepayment fee and/or
penalty) to compensate Bank for any or all losses, costs, expenses and/or
liabilities incurred and/or sustained as a result of any such prepayments.
At any time, Debtor may prepay some or all of any one or more or
all of the Equipment Notes that are subject to the Fixed Rate; provided,
however, that, if there is any such prepayment, whether made voluntarily,
because of acceleration or otherwise, then, in each instance, Debtor will owe
and pay to Bank (together with each such prepayment) all amounts sufficient to
compensate Bank for any and all losses, costs, expenses and liabilities incurred
and/or sustained as a result of such prepayment, including, but not limited to,
the amount of any interest paid by Bank to make or carry the loan evidenced by
the Equipment Note related thereto, less the amount of any interest earned by
Bank in connection with the reemployment of such funds. For the purposes of
calculating such amounts owing only, it shall be assumed that Bank actually
funded or committed to fund such loan through the purchase of an underlying
deposit in an amount equal to the original principal amount of such loan and for
a term equal to the original term of such loan, and such determination of such
amounts shall be made by Bank and shall be conclusive, absent a manifest error
in computation.
(e) Purchase Money Advances. If any of the proceeds of the Loan
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is for purchase money, Bank, at its option, may pay the proceeds directly to the
seller of the Collateral.
4. BUSINESS AND STATUS OF DEBTOR, AUTHORIZATION. Debtor's business
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is that of _________________________________,
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and Debtor is and will remain a duly organized, legally existing corporation
under the laws of Delaware, in good standing and qualified to do business as a
foreign corporation in the Commonwealth of Virginia and all other jurisdictions
where such qualification may be necessary, licensed and in full compliance in
all material respects with all applicable laws and regulations. Debtor has full
power and authority to enter into this Agreement and the transactions
contemplated hereby and Debtor's execution of this Agreement is duly authorized
and will not, in any material respect, contravene any agreement, order or
regulation to which Debtor is subject. The proceeds of the Loan will be used
only in connection with Debtor's business; there is no litigation, legal or
administrative proceeding, investigation or other action pending or, to Debtor's
knowledge, threatened against, or affecting Debtor or the "Guarantor"
(hereinafter defined); there is no outstanding or unpaid judgment against Debtor
or the Guarantor other than as have been disclosed to Bank in writing; and, as
of the execution date of this Agreement, Debtor has no subsidiaries, other than
MicroStrategy Limited, an incorporated private limited company of England and
Wales ("Limited"), MicroStrategy, Iberica, S.A., a Spanish corporation
("Iberica"), MicroStrategy Deutschland GmbH, a German limited liability company
("GmbH"), and Microstrategy France, a societe a responsabilite limitee
("France")(the "Existing Subsidiaries"). Debtor represents and warrants to Bank
that, as of the execution date hereof, no stock certificate or other evidence of
ownership of interests in certain of the Existing Subsidiaries exists for GmbH
or France.
5. PURPOSE OF LOAN. Debtor agrees that the proceeds of (a) the
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Revolving Credit will be used only for working capital purposes and/or in
connection with the Letters of Credit and (b) the Equipment Line will be used
only to support Debtor's purchase of equipment.
6. FINANCIAL STATEMENTS.
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(a) All consolidated and consolidating financial statements of
Debtor (and its subsidiaries) which have been or may be delivered to Bank are or
will be complete and do or will fully and fairly reflect the consolidated and
consolidating financial conditions of Debtor (and its subsidiaries) as of the
date(s) thereof. Debtor (and/or its subsidiaries) has or will have good
marketable title, as of the date(s) thereof, to all assets reflected in such
financial statements, except as stated therein. Debtor will maintain (and will
cause its subsidiaries to maintain) books and financial records in accordance
with generally accepted accounting principles consistently applied. Debtor
agrees to deliver promptly to Bank such additional financial statements
concerning its business (and the businesses of its subsidiaries)(including
profit and loss statements, balance sheets, etc.), prepared by accountants
satisfactory to Bank, and such other financial information, prepared in
accordance with generally accepted accounting principles consistently applied,
as Bank may from time to time request.
(b) In furtherance of the foregoing, Debtor shall provide Bank:
(i) annual consolidated and consolidating financial statements of Debtor (and
its subsidiaries), which consolidated statements shall be audited and certified
by an independent certified public accountant acceptable to Bank, and all of
which financial statements are to be submitted within ninety (90) calendar days
after the close of each of Debtor's fiscal years; (ii) annual consolidated and
consolidating projections for Debtor (and its subsidiaries), including a balance
sheet and income statement, within thirty (30) calendar days after the close of
each of Debtor's fiscal years, with such projections to be prepared by Debtor;
(iii) quarterly unaudited consolidated and consolidating financial statements of
Debtor
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(and its subsidiaries) not later than forty-five (45) calendar days after the
close of each of Debtor's fiscal quarters, with such quarterly statements to be
prepared by Debtor; and (iv) monthly Borrowing Base Non-Default Certificates not
later than the fifteenth (15th) calendar day of each month and prior to each
request for any advance under the Revolving Credit and to be prepared by Debtor.
Additionally, Debtor shall also cause the Guarantor to provide Bank, annually
within one hundred twenty (120) calendar days after the end of each of Debtor's
fiscal years, the Guarantor's true and complete personal financial statement
dated as of a date not prior to the last day of the Debtor's fiscal year
theretofore most recently ended and signed by the Guarantor.
(c) Debtor agrees at all reasonable times, and upon and after
reasonable notice shall have been sent by Bank to Debtor, to permit a
representative of Bank to examine and audit Debtor's books and records and to
keep Bank fully advised of any litigation involving any one or more or all of
the "Obligors" (as hereinafter defined in subparagraph 14(a) of this Agreement).
(d) Debtor hereby authorizes Bank and its agents, at any time
and from time to time, during the continuance of an "Event of Default"
(hereinafter defined), to contact account debtors for the purpose of validating
the information provided to Bank by Debtor with reference to the Collateral.
7. INSURANCE. In addition to any other agreement between Bank and
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Debtor with reference to insurance, Debtor will at all times carry adequate
insurance with responsible companies satisfactory to Bank in such amounts and
against such risks as is usually carried by similar businesses and by owners of
similar property in the same general area. Debtor will obtain and keep in force
such additional insurance as Bank may from time to time reasonably require. All
policies covering any tangible portion of the Collateral shall name Bank as loss
payee under a "standard" loss payee clause. Policies and endorsements or
satisfactory evidence thereof are to be delivered to Bank.
8. TAXES. Debtor represents and warrants that it has filed all
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U.S., state and local tax returns required to be filed and has paid or made
provision for payment of all taxes due pursuant thereto. Debtor agrees to pay
when due all taxes, assessments and similar levies including income, franchise
and sales taxes imposed on Debtor, any of the Collateral and/or any other of
Debtor's property, and Debtor agrees that, upon Bank's request, Debtor shall
provide Bank with satisfactory evidence of full payment of such taxes.
9. AFFIRMATIVE COVENANTS OF DEBTOR. Debtor covenants and agrees
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that, until this Agreement has been terminated, Debtor shall:
(a) Pay all of the Obligations as and when due, and pay all of
its other obligations generally as and when the same come due.
(b) To the extent that the Collateral consists of tangible
property, keep the Collateral (except as otherwise provided in this Agreement)
at Debtor's principal place of business and not remove any of the Collateral
therefrom (except for Debtor's sale or lease of Inventory to its customers in
the usual course of Debtor's business).
(c) Retain possession of the Collateral (except for Debtor's
sale or lease of Inventory to its customers in the usual course of Debtor's
business) and keep it in good order and repair, ordinary wear and tear excepted,
and not waste the same,
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and make the same available for inspection by Bank at all reasonable times.
(d) If any Collateral has been attached to or is to be attached
to real estate, furnish Bank with a disclaimer of any interest in the Collateral
which is prior to Bank's interest, signed by all persons having an interest in
the real estate.
(e) Keep Debtor's books and records at the address specified in
the introductory paragraph of this Agreement, and pay the reasonable fees and
disbursements of any accountants or other agents of Bank selected by Bank for
any examinations and/or audits of said books and records undertaken by Bank
pursuant to subparagraph 6(c) hereof; provided, that Debtor shall not be
required to pay for more than one (1) examination or audit in any consecutive
twelve (12)-month period unless an Event of Default shall exist at the time the
same was commenced or concluded; provided, further, that it is contemplated that
an initial audit thereof will be commenced, within sixty (60) calendar days
after the date of this Agreement, by accountants and/or other agents of Bank
selected by Bank for the same, the costs of which shall be at Bank's expense,
unless, at the commencement or conclusion thereof, an Event of Default shall
exist, in which case the costs thereof shall be paid for by Debtor.
(f) Remain liable for any deficiency resulting from a sale of
any or all of the Collateral and/or from the collection of any or all of the
Receivables and pay any such deficiency (including, without double-counting, the
Maximum Drawable Amount)forthwith on demand.
(g) Promptly execute and delivery such financing statements,
continuation statements and other papers as may be necessary or advisable to
comply with the Assignment of Claims Act of l940 (as amended) and to perfect or
continue any security interests granted to Bank hereby and pay all costs of
filing in connection therewith, and execute and deliver such further documents
as Bank may from time to time reasonably request to more fully carry out the
intent of this Agreement.
(h) Maintain a consolidated ratio of its (and its subsidiaries')
(Total Liabilities less Unearned Revenue) to their consolidated Tangible Net
Worth which shall at no time exceed 1.5 to 1. As used herein, "Total
Liabilities" and "Unearned Revenue" shall be defined as they are by Generally
Accepted Accounting Principles. As used herein, "Tangible Net Worth" shall be
defined as net worth (less all intangible assets, including, but not limited to,
amounts due and/or owing from any officers, stockholders and/or affiliates, and
other intangible assets). This ratio will be measured quarterly.
(i) Maintain a consolidated cash flow coverage ratio for Debtor
(and its subsidiaries) of at least 1.2 x coverage. As used herein, such "cash
flow coverage ratio" is defined and calculated as the quantity, the numerator of
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which is [Income, plus Depreciation, plus Interest Expense, minus Dividends],
and the denominator of which is [Current Maturities of Long Term Debt, plus
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Current Portions of Capital Leases, plus Interest Expense, plus any capitalized
software costs and capitalized research and development costs], and where each
component of such numerator and of such denominator shall, at any particular
time, be for the portion of the current fiscal year then ended, on a year-to-
date basis. This ratio will also be measured quarterly.
(j) Maintain a consolidated ratio of Debtor's (and its
subsidiaries') "Funded Debt" (as hereinafter defined) to
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"EBITDA" (as hereinafter defined) that shall at no time exceed 2.0 to 1.0. As
used herein, "Funded Debt" means debt owing to any and all banks, including, but
not limited to, Bank, plus Capital Leases. As used herein, "EBITDA" means
earnings before interest, taxes, depreciation and amortization. This ratio shall
also be measured quarterly, but on a rolling twelve (12)-months basis.
(k) Deliver to Bank, on or before the fifteenth (15th) day of
each calendar month and prior to each request for an advance under the Revolving
Credit, a "Borrowing Base/Non-Default Certificate" each in the form of Exhibit
"B" attached hereto and incorporated herein by this reference, duly completed
and certified by an appropriate officer of Debtor.
(l) Pay cash to Bank, if at any time the sum of the outstanding
principal balance of the Revolving Credit and the Maximum Drawable Amount exceed
the Borrowing Base, or pledge, assign and transfer to Bank additional
Collateral, in such amount as may be necessary to eliminate any such excess, all
as Bank shall require in Bank's sole discretion.
(m) Promptly notify Bank in writing of: (i) the occurrence of
any "Event of Default" (hereinafter defined) or any event that, upon the giving
of any required notice and/or the lapse of time, or both, would constitute an
Event of Default as defined herein; (ii) any material adverse change in the
financial condition of any of the Obligors; and (iii) the commencement of any
legal process against any of the Obligors, or against any of the assets owned by
any of them where the amount in controversy exceeds Two Hundred Thousand Dollars
($200,000.00). Debtor further agrees to keep Bank fully advised of any
litigation involving any of the Obligors, as applicable.
(n) If any of the Receivables are or should become evidenced by
promissory notes, trade acceptances or other instruments, immediately notify
Bank of same in writing and upon request by Bank to deliver the same to Bank
appropriately endorsed or assigned with recourse to Bank's order.
(o) Perform when due and observe all of Debtor's other
agreements under this Agreement, the Applications, the Note and/or the other
"Loan Documents" (as hereinafter defined).
10. NEGATIVE COVENANTS OF DEBTOR. Debtor covenants and agrees that,
----------------------------
until this Agreement has been terminated, and without the prior written consent
of Bank, Debtor will not:
(a) Sell, exchange, assign, loan, deliver, lease or otherwise
dispose of any of its assets (nor enter into any sale-leaseback arrangements
with respect to any of its assets), except (i) for Debtor's sales and/or leases
of its Inventory to its customers in the ordinary course of its business, (ii)
sales of assets (other than those then a part of the Borrowing Base and/or
financed under the Equipment Line) that are obsolete or no longer useful, (iii)
transfers of assets (other than those then a part of the Borrowing Base and/or
financed under the Equipment Line) to or between Debtor and/or any of its
subsidiaries, but then only subject to the provisions set forth at the end of
this subparagraph (a), and (iv) sales of other assets (other than those then a
part of the Borrowing Base and/or financed under the Equipment Line), but, in
any particular year, the aggregate value of all such other assets, as of the
times of such sales, shall not exceed One Hundred Thousand Dollars
($100,000.00). With regard to subpart (iii) immediately above, so long as none
of the transfers of assets described below in this subparagraph (a) results in
any other violation of any of the other provisions of
-10-
this Agreement, transfers of assets (other than those then a part of the
Borrowing Base and/or financed under the Equipment Line) may be made: (1) to
Debtor; (2) from any subsidiary of Debtor not then obligated for any of the
Obligations to another subsidiary of Debtor, whether or not the latter
subsidiary is then (or simultaneously therewith becomes) obligated for all of
the Obligations; and (3) from Debtor and/or any subsidiary of Debtor then
obligated for any of the Obligations to another subsidiary of Debtor, but only
if such latter subsidiary (A) is then (or simultaneously therewith becomes)
obligated for the Obligations in a manner and pursuant to documentation
satisfactory to Bank in all respects in its sole but reasonable judgment and (B)
simultaneously therewith (x) if such latter subsidiary has its principal place
of business in the United States of America, executes and delivers to Bank a new
Security Agreement and related UCC Financing Statements the filing of which will
perfect a first lien in favor of Bank on all of the transferred assets, (y) if
such latter subsidiary has its principal place of business in the United States
of America, executes and/or delivers to Bank such additional and/or related
documentation and materials (including, but not limited to, hazard insurance
materials) as Bank may require in its sole but reasonable judgment (all of which
Security Agreement, UCC Financing Statements, additional and/or related
documentation and related materials must be satisfactory to Bank in all respects
in its sole but reasonable judgment) and (z) irrespective of where such latter
subsidiary has its principal place of business, pays to Bank all reasonable
costs and expenses incurred by Bank related thereto, including, but not limited
to, the reasonable fees and disbursements of Bank's attorneys for preparation
and/or review of such documents and related materials, and if such latter
subsidiary has its principal place of business in the United States of America,
lien search fees and recordation fees. Subject to the assumptions and conditions
set forth below in this subparagraph (a), Bank agrees that such attorneys' fees,
with regard to each subsidiary of Debtor that is to become obligated for the
----
Obligations and has its principal place of business outside the United States of
-------
America, shall not exceed Four Hundred Dollars ($400.00). Such assumptions and
conditions are as follows: (I) such subsidiary's true and correct name and
Organizational Documents (as amended to such date) shall have been delivered to
Bank and Bank's attorneys before preparation of necessary documents shall begin;
(II) the only documents required for the same shall be (AA) an Agreement in
Bank's then standard from whereby, among other things (i) such subsidiary shall
undertake liability for, become personally obligated for and subject itself to
payment and performance when due and observance of each and all of the
Obligations and all of the provisions of all of the documents relating thereto,
jointly and severally with all of the other Obligors, (ii) all of the other
Obligors shall join in and not be released and (iii) it shall be made clear that
a purpose thereof is to add such subsidiary as an Obligor and not to release or
change any of the liabilities of any of the previously existing Obligors and
(BB) an Authority Resolution to Borrow and Certification in Bank's then standard
form; (III) without limiting the generality of the foregoing, no Security
Agreement, UCC Financing Statements, hazard insurance materials and/or lien
search shall be required in connection therewith; (IV) except to correct patent
factual errors, none of the required documents shall be negotiated, commented on
or otherwise changed; and (V) the attorneys preparing the same shall have a
reasonable amount of time within which to do so, which in no event shall be less
than four (4) full business days.
(b) Create, incur, assume or in any manner become liable in
respect to any indebtedness [in excess of One Hundred Thousand Dollars
($100,000.00) outstanding in the aggregate at any particular time], whether for
borrowed money, as deferred payment for the purchase of assets, or otherwise,
other than to
-11-
Bank, except for: (i) normal trade debts (including, but not limited to,
accounts payable) incurred in the ordinary course of Debtor's business; and (ii)
capital leases incurred in the ordinary course of Debtor's business.
(c) Create, incur, assume, or suffer to exist (whether
voluntarily or involuntarily) any security interest, lien, encumbrance or other
adverse claim of any kind upon any of Debtor's property or assets, nor lend
money to, guarantee, assume or otherwise become liable in respect to the
obligations of, any firm, person, company, corporation or other entity, except:
(i) by endorsement for deposit to Debtor's operating account maintained at Bank
of instruments or other items of payment; (ii) other guaranties or security
interests inuring directly to the benefit of Bank; (iii) Debtor may make
advances to any one or more or all of its subsidiaries [both to its "less
Restricted Subsidiaries" (as hereinafter defined) and/or its "more Restricted
Subsidiaries" (as hereinafter defined)]so long as: (A) none of such advances,
individually and/or in the aggregate, violates any other provision of this
Agreement; (B) the aggregate outstanding amount of all such advances (whether to
anyone or more or all of its Less restricted Subsidiaries and/or to anyone or
more or all of its More Restricted Subsidiaries) shall not at any time exceed
One Million Dollars($1,000,000.00); and (C) the aggregate outstanding amount of
all such advances to any one of the More Restricted Subsidiaries shall not at
any time exceed One Hundred Thousand Dollars ($100,000.00) and (2) to all of the
More Restricted Subsidiaries shall not at any time exceed Four Hundred Thousand
Dollars ($400,000.00); (iv) liens in respect of capital leases encumbering only
the leased property; (v) Debtor may incur or suffer to exist liens for taxes,
fees, assessments and other governmental charges so long as they are (A) junior
to the liens of Bank on the Collateral and (B) either not delinquent or are
being contested in good faith by appropriate proceedings, and liens in
connection with judgments so long as none of them constitutes an Event of
Default under Section 14 of this Agreement and all of them are being contested
in good faith by appropriate proceedings, and easements, rights of way, defects
in title, mechanics' liens and the like affecting real property and not
interfering in any material respect with the ordinary conduct of the business of
Debtor, and (vi) Debtor may suffer to exist liens existing on the date of this
Agreement as to which, on or before such date, Debtor has notified Bank in
writing and/or Bank otherwise has actual knowledge. As used herein, the term
"Less Restricted Subsidiaries" means, at any particular time, all present and/or
future subsidiaries of Debtor with respect to each of which Bank shall have
received (w) a duly executed Pledge Agreement(s) pledging at least sixty-five
percent (65%) of the outstanding shares of stock or other form of ownership
interests in such subsidiary, (x) a duly executed Irrevocable Stock Power(s)
(one (1) for each certificate representing any or all of such shares or other
form of ownership interests, if applicable), describing the shares or interests
covered thereby, but otherwise blank, (y) the original of each such certificate,
if applicable, and (2) legal opinions relating to the same, all of which must be
satisfactory to Bank in all respects in its sole but reasonable judgment. As
used herein, the term "More Restricted Subsidiaries" means, at any particular
time, all present and/or future subsidiaries of Debtor with respect to which any
one or more or all of the conditions to qualify as one of the Less restricted
Subsidiaries shall not have been satisfied.
(d) Merge or consolidate with any company or enterprise, nor
acquire or purchase any other company or enterprise, nor enter into any
partnership, joint venture or otherwise
-12-
substantially change its legal structure or the general character of its
business as it is presently conducted, nor dissolve or cease to be a going
concern, except that, so long as none of the transactions described below in
this subparagraph (d) results in any other violation of any of the other
provisions of this Agreement, (i) any subsidiary of Debtor may merge into
Debtor, (ii) any subsidiary of Debtor then obligated for any of the Obligations
may merge into another subsidiary of Debtor only if such latter subsidiary is
then (or simultaneously therewith becomes) obligated for the Obligations in a
manner and pursuant to documentation satisfactory to Bank in all respects in its
sole but reasonable judgment, (iii) any subsidiary of Debtor not then obligated
for any of the Obligations may merge into another subsidiary of Debtor, whether
or not such latter subsidiary is then (or simultaneously therewith becomes) so
obligated, (iv) Debtor may enter into a merger or consolidation with another
corporation so long as Debtor is the surviving corporation and (v) Debtor may
enter into a merger or consolidation with another corporation wherein Debtor
shall not be the surviving corporation, but only if (A) such merger or
consolidation is for the sole purpose of changing Debtor's state of
incorporation and (B) simultaneously therewith the surviving corporation (1)
executes and delivers to Bank an Assumption Agreement pursuant to which such
surviving corporation assumes all of Debtor's obligations in relation to the
Obligations and otherwise under all of the Loan Documents, (2) executes and
delivers to Bank a new Security Agreement and related UCC Financing Statements
the filing of which will perfect a first lien in favor of Bank on all of the
Collateral of Debtor that existed immediately prior thereto, (3) executes and/or
delivers to Bank such additional and/or related documentation and materials
(including, but not limited to, hazard insurance materials) as Bank may require
in its sole but reasonable judgment (and all of which Assumption Agreement,
Security Agreement, UCC Financing Statements, additional and/or related
documentation and materials must be satisfactory to Bank in all respects in its
sole but reasonable judgment) and (4) pays to Bank all reasonable costs and
expenses incurred by Bank related thereto, including, but not limited to, the
reasonable fees and disbursements of Bank's attorneys for preparation and/or
review of such documents and related materials, lien search fees and recordation
fees.
(e) Except as otherwise permitted above, make any advances to
any third parties, other than advances that are (i) to Debtor's employees, in
the ordinary course of business and only for business expenses of Debtor, in
which cases there is no limit or restriction on the amounts thereof and/or (ii)
for purposes other than that described in (i) immediately above, in which cases
the amounts thereof shall not, at any time, in the aggregate be in excess of
Fifty Thousand Dollars ($50,000.00).
(f) Relocate any place of business and/or any of the Collateral
without giving Bank at least thirty (30) days' prior written notice thereof.
(g) Compromise, modify or discount any of the Receivables,
except for (i) ordinary trade discounts or allowances for prompt payment, or
except (ii) in accordance with Debtor's usual practices and in each such case
Debtor must deduct or exclude from the value of such Receivables the value of
such compromise, modification or discount on the next due Borrowing Base/Non-
Default Certificate.
(h) Suffer or permit any of debtor's present and/or future
subsidiaries to incur additional debt of any kind, except for debt owing to
Debtor, and then only to the extent permitted under the provisions of
subparagraph 10(c) above.
-13-
11. ENVIRONMENTAL CERTIFICATION. Debtor hereby represents and
---------------------------
warrants and covenants and agrees that it is and shall remain in compliance, in
all material respects, with all applicable laws and regulations (local, state
and federal) regarding the use, disposal and storage of any hazardous waste
and/or environmentally hazardous materials and/or toxic substances.
12. LIMITED GUARANTY. Except as otherwise provided in the Limited
----------------
Guaranty of Payment hereinafter described, a portion of the Obligations shall be
personally and unconditionally guaranteed by Xxxxxxx X. Xxxxxx (the
"Guarantor"), who, concurrently with the execution and delivery hereof, shall
execute and deliver to Bank Bank's form of Limited Guaranty of Payment.
13. ERISA. Debtor represents and warrants that Debtor has not
-----
incurred: (a) any material accumulated funding deficiency within the meaning of
the Employee Retirement Income Security Act of 1974, as amended from time to
time ("ERISA"); or (b) any liability to the Pension Benefit Guaranty Corporation
established under ERISA, in connection with any "Plan" (hereinafter defined)
established or maintained by Debtor. As used herein, the term "Plan" shall mean
any plan subject to Title IV of ERISA and maintained for employees of Debtor, or
of any member of a controlled group of corporations as defined in Section 1563
of the Internal Revenue Code of 1986, as amended, of which Debtor is a part.
14. DEFAULT. Any one of the following events shall be considered and
-------
defined as an "Event of Default":
(a) If Debtor shall fail to pay when due any principal, or if
Debtor shall fail to pay within five (5) calendar days of when due any interest
or other sum owing on any of the Obligations, or if Debtor or any present and/or
future co-maker or obligor of any of the Obligations or any present and/or
future guarantor of any of the Obligations (in whole or in part) (Debtor, all
such co-makers, obligors and guarantors are hereinafter called the "Obligors")
shall fail to pay when due (after giving effect to any applicable grace periods)
any other obligation for borrowed money, whether owed to Bank or to any other
person or entity [but, if owing to any person or entity other than Bank, only if
the principal amount of such obligation is greater than Two Hundred Thousand
Dollars ($200,000.00)];
(b) If Debtor or any of the other parties named therein (other
than Bank or trustees for the benefit of Bank) shall fail to perform when due or
observe any other covenant or agreement in the Note, in any other of the
documents now and/or hereafter evidencing, securing, guaranteeing and/or
otherwise relating to any of the Obligations (the "Loan Documents") and/or
herein and/or if any other default or Event of Default shall occur under any of
the other Loan Documents, and any of the same shall continue uncured for more
than thirty (30) calendar days;
(c) If any of the Obligors shall fail to perform when due or
observe any covenant or agreement (other than as to payment) in any of the
documents now and/or hereafter evidencing, securing, guaranteeing and/or
otherwise relating to any other obligation of any of the Obligors to the Bank,
and any of the same shall continue uncured for more than thirty (30) calendar
days;
(d) If any warranty or representation of any of the Obligors now
or hereafter made to Bank and/or anything set forth in any of the Borrowing
Base/Non-Default Certificates shall be untrue or misleading in any material
respect;
-14-
(e) If a trustee or receiver is appointed for any of the
Obligors or for all or a substantial part of any of their respective assets;
(f) If any of the Obligors makes a general assignment for the
benefit of creditors;
(g) If any of the Obligors files for bankruptcy, or an
involuntary bankruptcy petition is filed against any of the Obligors (which
involuntary petition remains undismissed for sixty (60) calendar days);
(h) If any property of any of the Obligors and/or any deposit
account of any of the Obligors having an aggregate fair market value greater
than Two Hundred Thousand Dollars ($200,000.00)is levied upon or attached or
garnished and such levy or attachment or garnishment is not released within
thirty (30) calendar days;
(i) If the value of the Collateral, taken as a whole, has been
materially and adversely affected, or if there occurs any material adverse
change in the financial conditions of the Obligors, taken as a whole, as
determined by Bank in good faith;
(j) If any issuance or service of any attachment, levy or
garnishment against any of the Obligors or any of their respective property in
an aggregate amount (or having an aggregate fair market value) greater than Two
Hundred Thousand Dollars ($200,000.00) shall occur and not be released within
thirty (30) calendar days, or if any judgment(s) in an aggregate amount greater
than Two Hundred Thousand Dollars ($200,000.00) shall be entered against any of
the Obligors by a court of competent jurisdiction and remain undismissed for
thirty (30) calendar days;
(k) If any of the Obligors shall become insolvent or incompetent
or die, or in the case of an entity, shall dissolve or cease its operations;
(l) If Debtor shall fail to comply with any material federal,
state or local law regulating the operation of Debtor's business;
(m) If Xxxxxxx X. Xxxxxx shall cease to control, make, execute
and/or see to the execution of all material decisions of Debtor; and/or
(n) If formal charges shall be filed against any of the Obligors
under any state or federal law for which forfeiture is a potential penalty and
which charges are not stayed or dismissed within sixty (60) calendar days after
the original filing thereof.
15. REMEDIES. If Debtor shall default in the performance or
--------
observance when due of any of the provisions of this Agreement, any of the
Applications, the Note and/or any other of the Loan Documents, Bank may perform
the same for Debtor's account and any monies expended in so doing shall be
chargeable with interest to Debtor (at the highest rate provided for in the
Note) and shall be added to the indebtedness secured hereby and the same shall
be immediately due and payable upon demand. During the existence of any Event
of Default and/or the existence of any act, event or condition that with notice
and/or the lapse of time would constitute an Event of Default, Bank may also, in
its sole discretion, not permit any further advances and/or readvances under
any or all of the Obligations and/or not issue any further Letters of Credit.
During the existence of any Event of
-15-
Default, Bank may also, in its sole discretion, do any one or more or all of the
following:
(a) Declare all principal, interest and other sums owing on all
of the Obligations as well as the entire Maximum Drawable Amount immediately due
and payable without demand, protest, notice of protest, notice of default,
presentment for payment or further notice of any kind, all of which are hereby
waived by Debtor;
(b) Offset against the Obligations and/or the Maximum Drawable
Amount, or seize, hold and/or impress any and all credits, stocks, bonds, or
other securities or property of any nature whatsoever on deposit with, or held
by, or in the possession of, Bank, to the credit of or for the account of
Debtor, without notice;
(c) To the extent that any of the Collateral consists of
tangible property, require Debtor to assemble the Collateral and make it
available to Bank at any reasonable place to be designated by Bank. Without
limiting the generality of the foregoing, Debtor agrees that Bank's address set
forth above is such a reasonable place;
(d) Enter upon Debtor's premises peaceably, by Bank's own means
with or without legal process, and take possession of any or all of the
Collateral, or render it unusable, or sell or otherwise dispose of the
Collateral on Debtor's premises or elsewhere, and Debtor agrees not to resist or
interfere. Unless the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, Bank will give
Debtor reasonable notice of the time and place of any public sale thereof or of
the time after which any private sale or any other intended disposition thereof
is to be made. The requirement of reasonable notice will be met if such notice
is mailed, postage prepaid, to the address of Debtor shown above, at least ten
(10) calendar days before the time of sale or disposition;
(e) Collect, demand, receive, xxx for and/or compromise, in
Bank's own name or in the name of Debtor, or otherwise, but at the expense and
cost of Debtor, any and all of the "Receivables", as that term is defined
herein, and give good and sufficient releases therefor, endorse any checks,
drafts or other orders for the payment of monies payable to Debtor in payment
thereof and, in its discretion, file any claims or take any action or
proceeding, either in Bank's own name or in the name of Debtor, or otherwise,
which Bank may deem necessary or advisable in connection with the foregoing. It
is expressly understood and agreed, however, that Bank shall not be required or
obligated in any manner to make any inquiries as to the nature or sufficiency of
any payment received by it or to present or file any claims or take any other
action to collect or enforce a payment of any amounts which may have been
assigned to Bank or to which Bank may be entitled hereunder at any time or
times;
(f) Perform any of the provisions of the Loan Documents for
Debtor's account, and any monies expended in so doing shall be added to the
Obligations and chargeable to Debtor with interest (at the highest rate
applicable to any of the Obligations) and the same shall be immediately due and
payable upon demand;
(g) Apply proceeds of the Collateral against any one or more or
all of the Obligations and/or hold the same as collateral security for the
Maximum Drawable Amount, but otherwise in Bank's sole and absolute discretion;
and/or
-16-
(h) Proceed to enforce such other and additional rights and
remedies as Bank may have hereunder or under any other agreements with Debtor,
under any of the other Loan Documents and/or as may be provided by law.
16. MISCELLANEOUS. Wherever used herein, and wherever the context
-------------
shall permit or require the same, the term "the Note" shall mean the Revolving
Note and/or any one or more or all of the Equipment Notes, in each instance as
the context may permit or require. All rights and remedies of Bank hereunder
are cumulative and not alternative. Indulgence by Bank with respect to any of
the terms and conditions herein contained or the failure of Bank to exercise any
of its rights hereunder shall not constitute a waiver thereof, and Debtor shall
remain liable for the strict performance and observance hereof until all of the
Obligations shall have been fully paid in accordance with the terms of the Note
or any other promissory note(s) evidencing any of the same, Debtor shall have no
further right to any advance and/or readvance under the Loan or any other of the
Obligations, all of the Letters of Credit shall have expired, Debtor shall not
have any right to the issuance of any further Letters of Credit and this
Agreement shall have been terminated. No provision hereof may be waived or
modified orally, but all such waivers or modifications shall be in writing.
This Agreement and the other written loan documents issued in conjunction
herewith or pursuant hereto constitute the entire agreement of the parties and
shall continue in full force and effect until all of the Obligations shall have
been fully paid in accordance with the terms of the Note or any other promissory
note(s) evidencing any of the same, Debtor shall have no further right to any
advance and/or readvance under the Loan or any other of the Obligations, all of
the Letters of Credit shall have expired, Debtor shall not have any right to the
issuance of any further Letters of Credit and this Agreement shall have been
terminated. All warranties, representations, covenants and agreements of Debtor
herein shall survive the making of the Loan and shall be deemed made and redated
by Debtor at the time of the making of each advance and/or readvance under the
Loan and/or any other of the Obligations, at the time of receipt by Bank of each
of the Applications and at the time of issuance (and, if applicable, renewal) by
Bank of each of the Letters of Credit. In addition to any other sums payable by
Debtor hereunder and/or under the Note and/or under any other documents
evidencing any of the Obligations, after the occurrence of any "Event of
Default", Debtor agrees to pay Bank's costs of collection and attorneys' fees
(as provided for in the Note, or, if not provided for in the Note, then,
reasonable attorneys' fees) incurred in the enforcement of any provision hereof,
whether suit be brought or not. To the extent that any provisions of this
Agreement shall conflict with or be expressly inconsistent with any provisions
of any of the other Loan Documents, then, the provisions of this Agreement shall
govern and prevail.
This Agreement: (a) may be executed and delivered by the various
parties hereto in any number of multiple counterparts, each of which shall be
deemed to be an original and all of which together shall constitute one and the
same Agreement; (b) shall be governed in all respects by the laws of the
Commonwealth of Virginia (expressly excluding, however, its choice of law
rules); and (c) shall be binding upon and shall
-17-
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and assigns.
This Agreement is signed, sealed and delivered effective as of this
10th day of December, 1996, but executed on September 30, 1997.
DEBTOR:
------
[Corporate Seal] MICROSTRATEGY INCORPORATED,
ATTEST: a Delaware corporation
By:/s/ Xxxxx Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
---------------------- ----------------------------------------
Name: Xxxxx Xxxxxx Name: Xxxxxxx X. Xxxxxx
-------------------- ----------------------------------
Title: COO Title: President and Chief
------------------ ---------------------------------
Executive Officer
---------------------------------
BANK:
----
NATIONSBANK, N.A.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxxx
------------------------------------
Title: Vice President
-----------------------------------
-18-
