Exhibit 10.07
NINTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
AND WAIVER OF DEFAULTS
This Amendment, dated as of March 29, 2005, is made by and among SANZ
INC., formerly known as Storage Area Networks, Inc., a Colorado corporation
("SANZ" or a "Borrower"), SOLUNET STORAGE, INC., a Delaware corporation
("Solunet" or a "Borrower"), and XXXXX FARGO BUSINESS CREDIT, INC., a Minnesota
corporation (the "Lender").
Recitals
SANZ and the Lender are parties to a Credit and Security Agreement dated
as of May 31, 2001, as amended by (i) the First Amendment to Credit and Security
Agreement and Waiver of Defaults dated as of January 17, 2002; (ii) the Second
Amendment to Credit and Security Agreement dated as of July 1, 2002; (iii) the
Third Amendment to Credit and Security Agreement dated as of August 15, 2002;
(iv) the Fourth Amendment to Credit and Security Agreement and Waiver of
Defaults dated as of March 31, 2003; (v) the Fifth Amendment to Credit and
Security Agreement and Waiver of Defaults dated as of September 22, 2003; (vi)
the Sixth Amendment to Credit and Security Agreement dated as of February 12,
2004; (vii) the Seventh Amendment to Credit and Security Agreement and Waiver of
Defaults dated as of September 3, 2004; and (viii) the Eighth Amendment to
Credit and Security Agreement and Waiver of Defaults dated as of October 29,
2004 (as so amended, the "Credit Agreement"). Capitalized terms used in these
recitals have the meanings given to them in the Credit Agreement unless
otherwise specified.
SANZ has requested that Solunet be added to the Credit Agreement as a
Borrower and that certain amendments be made to the Credit Agreement, which
addition of Solunet as a Borrower and amendments the Lender is willing to make
pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. The opening paragraph of the Credit Agreement is hereby amended to read
in its entirety as follows:
"SANZ INC., formerly known as Storage Area Networks, Inc., a
Colorado corporation ("SANZ" or a "Borrower"), SOLUNET STORAGE, INC., a
Delaware corporation ("Solunet" or a "Borrower") and XXXXX FARGO BUSINESS
CREDIT, INC., a Minnesota corporation (the "Lender"), hereby agree as
follows:"
2. Defined Terms. Capitalized terms used in this Amendment which are
defined in the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein. In addition, Section 1.1 of the Credit
Agreement is amended by adding or amending as the case may be, the following
definitions:
"Availability" means SANZ Availability plus Solunet Availability,
which amount shall not exceed at any time the Maximum Line less the
aggregate outstanding balance of the Revolving Note.
"Borrower" means individually or together SANZ and Solunet.
"Borrowing Base" means the SANZ Borrowing Base plus the Solunet
Borrowing Base.
"Collateral" means all of the Borrower's Accounts, Receivables,
chattel paper and electronic chattel paper, deposit accounts, documents,
Equipment, General Intangibles, goods, instruments, Inventory, Investment
Property, letter-of-credit rights, letters of credit, all sums on deposit
in any Collateral Account including the Solunet Collateral Account, and
any items in any Lockbox including the Solunet Lockbox; together with (i)
all substitutions and replacements for and products of any of the
foregoing; (ii) in the case of all goods, all accessions; (iii) all
accessories, attachments, parts, equipment and repairs now or hereafter
attached or affixed to or used in connection with any goods; (iv) all
warehouse receipts, bills of lading and other documents of title now or
hereafter covering such goods; (v) all collateral subject to the lien of
any Security Document; (vi) any money, or other assets of the Borrower
that now or hereafter come into the possession, custody, or control of the
Lender; (vii) proceeds of any and all of the foregoing; (viii) books and
records of the Borrower, including all mail or electronic mail addressed
to Borrower; and (ix) all of the foregoing, whether now owned or existing
or hereafter acquired or arising or in which the Borrower now has or
hereafter acquires any rights.
"Collection Account Agreement" means the Collection Account
Agreement by and among Solunet, the Lender and Xxxxx Fargo.
"Guarantor(s)" means SAN Holdings, Inc., SANZ, Solunet and any other
Person now or hereafter guarantying the Obligations.
"Interest Rate Margin" means, effective as of January 1, 2005, five
percent (5.0%), provided, however, that, if no Event of Default then
exists (numbers appearing between "( )" are negative):
(i) if the Borrower's Net Income for the three months ending
March 31, 2005 is equal to or greater than ($171,242), then the
Interest Rate Margin shall equal four percent (4.0%);
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(ii) if the Borrower's Net Income for the six months ending
June 30, 2005 is (a) equal to or greater than ($132,906), then the
Interest Rate Margin shall equal three and one half percent (3.5%)
and (b) equal to or greater than ($171,242) but less than
($132,906), then the Interest Rate Margin shall equal four percent
(4.0%);
(iii) if the Borrower's Net Income for the nine months ending
September 30, 2005 is (a) equal to or greater than $97,504, then the
Interest Rate Margin shall equal two and one half percent (2.5%),
(b) equal to or greater than ($132,906) but less than $97,504, then
the Interest Rate Margin shall equal three and one half percent
(3.5%) and (c) equal to or greater than ($171,242) but less than
($132,906), then the Interest Rate Margin shall equal four percent
(4.0%); and
(iv) if the Borrower's Net Income for the twelve months ending
December 31, 2005 is (a) equal to or greater than $543,000, then the
Interest Rate Margin shall equal one percent (1.0%), (b) equal to or
greater than $300,000 but less than $543,000, then the Interest Rate
Margin shall equal one and one half percent (1.5%), (c) equal to or
greater than $97,504 but less than $300,000, then the Interest Rate
Margin shall equal two and one half percent (2.5%), (d) equal to or
greater than ($132,906) but less than $97,504, then the Interest
Rate Margin shall equal three and one half percent (3.5%) and (e)
equal to or greater than ($171,242) but less than ($132,906), then
the Interest Rate Margin shall equal four percent (4.0%).
Any increase in the Interest Rate Margin shall be effective on the
first day of the month in which the Lender receives the Borrower's monthly
financial statements. Any decrease in the Interest Rate Margin shall be
effective on the first day of the month following the month in which the
Lender receives the Borrower's monthly financial statements. If the Lender
does not receive the Borrower's monthly financial statements on the date
that they are due, then the Interest Rate Margin shall equal five percent
(5.0%), and shall be effective on the first day of that month.
If at any time the Interest Rate Margin has been decreased and any
of the Borrower's financial statements show that the Borrower was not
entitled to such decrease, then the Interest Rate Margin shall be
increased to the Interest Rate Margin to which the Borrower is entitled,
such increase to be effective retroactively to the date of such decrease.
If at any time the Interest Rate Margin has been decreased and an Event of
Default occurs, then the Interest Rate Margin shall equal five percent
(5.0%), and shall be effective on the first day of the month in which the
Event of Default occurs.
"Lockbox Agreement" means the Lockbox and Collection Agreement by
and among SANZ, Xxxxx Fargo, Regulus West LLC and the Lender, of even date
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herewith or the Wholesale Lockbox and Collection Account Agreement by and
among SANZ, Xxxxx Fargo and the Lender, whichever may be in effect at the
time.
"Obligations" means each Note and each and every other debt,
liability and obligation of every type and description which the Borrower
may now or at any time hereafter owe to the Lender, whether such debt,
liability or obligation now exists or is hereafter created or incurred,
whether it arises in a transaction involving the Lender alone or in a
transaction involving other creditors of the Borrower, and whether it is
direct or indirect, due or to become due, absolute or contingent, primary
or secondary, liquidated or unliquidated, or sole, joint, several or joint
and several, and including all indebtedness of the Borrower arising under
any Loan Document between the Borrower and the Lender, whether now in
effect or hereafter entered into and all Xxxxx Fargo Obligations.
"Revolving Note" means the SANZ Revolving Note and the Solunet
Revolving Note.
"SANZ Availability" means the difference of (i) the SANZ Borrowing
Base and (ii) the outstanding principal balance of the SANZ Revolving
Note.
"SANZ Borrowing Base" means, at any time and subject to change from
time to time in the Lender's sole discretion, the lesser of:
(a) the Maximum Line; or
(b) the sum of:
(i) 85% of SANZ Eligible Accounts, plus
(ii) the lesser of (A) 80% of Accounts owed by the U.S.
Government which are not SANZ Eligible Accounts because they
do not meet the requirements of paragraph (iv) in the
definition thereof or (B) $500,000, plus
(iii) the lesser of (A) 35% of Accounts (which are not
otherwise ineligible) owed by account debtors to SANZ pursuant
to a maintenance contract or similar type of agreement or (B)
$1,000,000 less the outstanding principal balance of the
Solunet Revolving Note advanced to Solunet based on Accounts
(which are not otherwise ineligible) owed by account debtors
to Solunet pursuant to a maintenance contract or similar type
of agreement, less
(iv) the Xxxxx Fargo Obligations Reserve, less
(v) the Rebate Reserve.
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"SANZ Revolving Note" means SANZ's revolving promissory note,
payable to the order of the Lender in substantially the form of Exhibit
A-1 hereto and any note or notes issued in substitution therefor, as
the same may hereafter be amended, supplemented or restated from time
to time.
"Security Documents" means this Agreement, the Lockbox
Agreement, the Solunet Lockbox Agreement, the Collection Account
Agreement, the Patent and Trademark Security Agreement by SANZ, the
Patent and Trademark Security Agreement by Solunet and any other
document delivered to the Lender from time to time to secure the
Obligations.
"Solunet Availability" means the difference of (i) the Solunet
Borrowing Base and (ii) the outstanding principal balance of the
Solunet Revolving Note.
"Solunet Borrowing Base" means, at any time and subject to
change from time to time in the Lender's sole discretion, the lesser
of:
(a) the Maximum Line; or
(b) the sum of:
(i) 85% of Solunet Eligible Accounts, plus
(ii) the lesser of (A) 80% of Accounts owed by the U.S.
Government which are not Solunet Eligible Accounts because they do
not meet the requirements of paragraph (iv) in the definition
thereof or (B) $500,000, less
(iii) the lesser of (A) 35% of Accounts (which are not
otherwise ineligible) owed by account debtors to Solunet pursuant to
a maintenance contract or similar type of agreement or (B)
$1,000,000 less the outstanding principal balance of the SANZ
Revolving Note advanced to SANZ based on Accounts (which are not
otherwise ineligible) owed by account debtors to SANZ pursuant to a
maintenance contract or similar type of agreement, less
(iv) the Xxxxx Fargo Obligations Reserve, less
(v) the Rebate Reserve.
"Solunet Collateral Account" means the "Lender Account" as defined
in the Solunet Lockbox Agreement.
"Solunet Lockbox" means "Lockbox" as defined in the Solunet Lockbox
Agreement.
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"Solunet Lockbox Agreement" means the Wholesale Lockbox and
Collection Account Agreement by and among Solunet, Xxxxx Fargo and the
Lender.
"Solunet Revolving Note" means Solunet's revolving promissory note,
payable to the order of the Lender in substantially the form of Exhibit
A-2 hereto and any note or notes issued in substitution therefor, as the
same may hereafter be amended, supplemented or restated from time to time.
"Xxxxx Fargo Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by the
Borrower or its Subsidiaries to Xxxxx Fargo with respect to Xxxxx Fargo
Products, whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter
arising, whether or not Borrower is obligated to reimburse said amounts to
the Lender as a result of the Lender purchasing participations from or
agreeing to indemnify or reimburse Xxxxx Fargo for any loss or
indebtedness arising with respect to Xxxxx Fargo Products provided to the
Borrower or its Subsidiaries.
"Xxxxx Fargo Obligations Reserve" means, as of any date of
determination, the dollar amount that the Lender then determines is a
reasonable determination of the credit exposure with respect to Xxxxx
Fargo Obligations and which is available for payment of Xxxxx Fargo
Obligations.
"Xxxxx Fargo Products" means any service or facility extended to the
Borrower or its Subsidiaries by Xxxxx Fargo Bank including but not limited
to: (a) credit cards, (b) credit card processing services, (c) debit
cards, (d) purchase cards, (e) cash management or related services
including the Automated Clearing House processing of electronic funds
transfers, (f) controlled disbursement accounts or services, and (g) any
agreement which provides for an interest rate, credit, commodity or equity
swap, cap, floor, collar, forward foreign exchange transaction, currency
swap, cross currency rate swap, currency option, or any combination of, or
option with respect to, these or similar transactions, for the purpose of
hedging the Borrower's or its Subsidiaries' exposure to fluctuations in
interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.
3. Section 2.1. Section 2.1 is amended and restated in its entirety
to read as follows:
"Section 2.1 Revolving Advances. The Lender agrees, on the terms and
subject to the conditions herein set forth, to make advances to SANZ or
Solunet from time to time from the date all of the conditions set forth in
Section 4.1 are satisfied or waived in writing by the Lender (the "Funding
Date") to the Termination Date (the "Revolving Advances"). The Lender
shall have no obligation to make a Revolving Advance to SANZ to the extent
the amount of the requested Revolving Advance exceeds SANZ Availability.
The Lender shall have no obligation to make a Revolving Advance to Solunet
to the extent the amount of the requested Revolving Advance exceeds
Solunet Availability. The Lender shall have no obligation to make a
Revolving Advance to either Borrower to the extent the amount of the
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requested Revolving Advance exceeds Availability. The Borrower's
obligation to pay the Revolving Advances shall be evidenced by the
Revolving Note and shall be secured by the Collateral as provided in
Article III. Within the limits set forth in this Section 2.1, the Borrower
may borrow and reborrow and prepay pursuant to Section 2.6. The Borrower
agrees to comply with the following procedures in requesting Revolving
Advances under this Section 2.1:"
4. Section 2.9. Section 2.9 is amended and restated in its entirety to
read as follows:
"Section 2.9 Payment. All payments to the Lender shall be made in
immediately available funds and shall be applied to the Obligations one
(1) Banking Day after receipt by the Lender. The Lender may hold all
payments not constituting immediately available funds for three (3)
additional days before applying them to the Obligations. Notwithstanding
anything in Section 2.1, the Borrower hereby authorizes the Lender, in its
discretion at any time or from time to time without the Borrower's request
and even if the conditions set forth in Section 4.2 would not be
satisfied, (a) to make a Revolving Advance in an amount equal to the
portion of the Obligations from time to time due and payable, and (b) to
deliver the proceeds of any such Revolving Advance to Xxxxx Fargo to pay
any unpaid Xxxxx Fargo Obligations."
5. Grant of Security Interest. Section 3.1 of the Credit Agreement is
amended and restated in its entirety to read as follows:
"Section 3.1 Grant of Security Interest. The Borrower hereby
pledges, assigns and grants to the Lender, for the benefit of itself and
as agent for Xxxxx Fargo with respect to Xxxxx Fargo Obligations, a lien
and security interest (collectively referred to as the "Security
Interest") in the Collateral, as security for the payment and performance
of the Obligations. Upon request by the Lender, the Borrower will grant
the Lender, for the benefit of itself and Xxxxx Fargo, with respect to any
Xxxxx Fargo Obligations, a security interest in all commercial tort claims
it may have against any Person."
6. Section 3.6. Section 3.6 of the Credit Agreement is amended and
restated in its entirety to read as follows:
"Section 3.6. Financing Statements. The Borrower authorizes the
Lender to file from time to time, such financing statements against
collateral described as "all personal property" or "all assets" or
describing specific items of collateral including commercial tort claims
as the Lender deems necessary or useful to perfect the Security Interest.
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All financing statements filed before the date hereof to perfect the
Security Interest were authorized by the Borrower and are hereby
re-authorized. A carbon, photographic or other reproduction of this
Agreement or of any financing statements signed by the Borrower is
sufficient as a financing statement and may be filed as a financing
statement in any state to perfect the security interests granted hereby.
For this purpose, the Borrower represents and warrants that the following
information regarding the Borrower is true and correct:
Name and address of Debtor:
SANZ Inc.
0000 Xx. Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000-0000
Federal Employer Identification No. 00-0000000
Organizational Identification No. CO 19871719611
Solunet Storage, Inc.
0000 Xx. Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000-0000
Federal Employer Identification No. 00-0000000
Organizational Identification No. DE 3568856
Name and address of Secured Party:
Xxxxx Fargo Business Credit, Inc.
MAC C7300-210
0000 Xxxxxxxx
Xxxxxx, Xxxxxxxx, 00000"
7. Section 5.1. Section 5.1 of the Credit Agreement is amended and
restated in its entirety to read as follows:
"Section 5.1 Existence and Power; Name; Chief Executive Office;
Inventory and Equipment Locations; Federal Employer Identification Number
and Organizational Identification Number. SANZ is a corporation, duly
organized, validly existing and in good standing under the laws of the
State of Colorado and is duly licensed or qualified to transact business
in all jurisdictions where the character of the property owned or leased
or the nature of the business transacted by it makes such licensing or
qualification necessary. Solunet is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware and
is duly licensed or qualified to transact business in all jurisdictions
where the character of the property owned or leased or the nature of the
business transacted by it makes such licensing or qualification necessary.
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The Borrower has all requisite power and authority to conduct its
business, to own its properties and to execute and deliver, and to perform
all of its obligations under, the Loan Documents. During its existence,
the Borrower has done business solely under the names set forth in
Schedule 5.1. The Borrower's chief executive office and principal place of
business is located at the address set forth in Schedule 5.1, and all of
the Borrower's records relating to its business or the Collateral are kept
at that location. All Inventory and Equipment is located at that location
or at one of the other locations listed in Schedule 5.1. The Borrower's
federal employer identification number and organization identification
number are correctly set forth in Section 3.6."
8. Section 6.10. Section 6.10 of the Credit Agreement is amended and
restated in its entirety to read as follows:
"Section 6.10 Lockbox; Collateral Account.
(a) SANZ shall irrevocably direct all present and future
account debtors and other Persons obligated to make payments
constituting Collateral to make such payments directly to the
Lockbox. Upon the written request of the Lender, Solunet shall
irrevocably direct all present and future account debtors and other
Persons obligated to make payments constituting Collateral to make
such payments directly to the Solunet Lockbox, at which time the
Solunet Lockbox Agreement shall automatically become effective and
be in full force and effect and the Lender will take the necessary
steps to terminate the Collection Account Agreement. Until such
request from the Lender, the Collection Account Agreement shall be
effective and in full force and effect. With respect to Solunet, at
all times after the Solunet Lockbox Agreement becomes effective, and
with respect to SANZ, at all times, all of the Borrower's invoices,
account statements and other written or oral communications
directing, instructing, demanding or requesting payment of any
Account or any other amount constituting Collateral shall
conspicuously direct that all payments be made to the Lockbox or the
Solunet Lockbox, as the case may be, and shall include the Lockbox
address or the Solunet Lockbox address, as the case may be. (All
payments received in the Lockbox shall be processed to the
Collateral Account, and all payments received in the Solunet Lockbox
shall be processed to the Solunet Collateral Account).
(b) The Borrower agrees to deposit in the Collateral Account
or the Solunet Collateral Account, as the case may be, or, at the
Lender's option, to deliver to the Lender all collections on
Accounts, contract rights, chattel paper and other rights to payment
constituting Collateral, and all other cash proceeds of Collateral,
which the Borrower may receive directly notwithstanding its
direction to account debtors and other obligors to make payments to
the Lockbox or the Solunet Lockbox, as the case may be, immediately
upon receipt thereof, in the form received, except for the
Borrower's endorsement when deemed necessary. Until delivered to the
Lender or deposited in the Collateral Account or the Solunet
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Collateral Account, all proceeds or collections of Collateral shall
be held in trust by the Borrower for and as the property of the
Lender and shall not be commingled with any funds or property of the
Borrower. All such collections shall constitute proceeds of
Collateral and shall not constitute payment of any Obligation.
(c) Amounts deposited in the Collateral Account or the Solunet
Collateral Account shall not bear interest and shall not be subject
to withdrawal by the Borrower, except after full payment and
discharge of all Obligations.
(d) All deposits in the Collateral Account or the Solunet
Collateral Account shall constitute proceeds of Collateral and shall
not constitute payment of the Obligations. The Lender from time to
time at its discretion may, after allowing two (2) Banking Days,
apply deposited funds in the Collateral Account or the Solunet
Collateral Account to the payment of the Obligations, in any order
or manner of application satisfactory to the Lender, by transferring
such funds to the Lender's general account.
(e) All items deposited in the Collateral Account or the
Solunet Collateral Account shall be subject to final payment. If any
such item is returned uncollected, the Borrower will immediately pay
the Lender, or, for items deposited in the Collateral Account or the
Solunet Collateral Account, as the case may be, the bank maintaining
such account, the amount of that item, or such bank at its
discretion may charge any uncollected item to the Borrower's
commercial account or other account. The Borrower shall be liable as
an endorser on all items deposited in the Collateral Account or the
Solunet Collateral Account, whether or not in fact endorsed by the
Borrower."
9. Section 6.12. Section 6.12 of the Credit Agreement is amended and
restated in its entirety to read as follows:
"Section 6.12 Minimum Net Income. The Borrower will maintain, during
each period described below, its Net Income, determined as at the end of
each quarter, at an amount not less than the amount set forth opposite
such period (numbers appearing between "( )" are negative):
Period Minimum Net Income
Three months ending March 31, 2005 ($300,000)
Six months ending June 30, 2005 ($250,000)
Nine months ending September 30, 2005 $0
Twelve months ending December 31, 2005 $300,000
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If quarterly Net Income, determined as at the end of each quarter
(beginning with the quarter ending March 31, 2005), is negative, then the
Borrower shall provide the Lender evidence, in form and substance
acceptable to the Lender in its sole discretion, that it has received a
cash infusion (in the form of equity or Subordinated Debt) in an amount
equal to or greater than the absolute value of the negative quarterly Net
Income, such cash infusion to be made no later than 30 days after the
monthly financial statements for such quarter are due to the Lender,
provided, however, that:
(a) if year-to-date Net Income, determined as at the end of such
quarter, is positive, no such cash infusion shall be required, and
(b) if quarterly Net Income and year-to-date Net Income, determined
as at the end of such quarter, are both negative, then the Borrower shall
provide the Lender evidence, in form and substance acceptable to the
Lender in its sole discretion, that it has received a cash infusion (in
the form of equity or Subordinated Debt) in an amount equal to or greater
than the lesser of:
(i) the absolute value of the negative quarterly Net Income,
and
(ii) the absolute value of the negative year-to-date Net
Income
such cash infusion to be made no later than 30 days after the monthly
financial statements for such quarter are due to the Lender, provided,
further, however, that if the Borrower shall provide the Lender evidence,
in form and substance acceptable to the Lender in its sole discretion,
that it has received prior cash infusions (in the form of equity or
Subordinated Debt) for such fiscal year in an amount equal to or greater
than the absolute value of the negative year-to-date Net Income, no
additional cash infusion shall be required.
If the Borrower shall provide the Lender evidence, in form and
substance acceptable to the Lender in its sole discretion, that it has
received the cash infusion (in the form of equity or Subordinated Debt) in
the amounts and in the time periods required pursuant to this Section
6.12, then (i) any default under this Section 6.12 for such quarter shall
be deemed to have been automatically waived by the Lender and (ii) any
default under Section 6.13 due solely to such negative quarterly Net
Income for such quarter shall be deemed to have been automatically waived
by the Lender."
10. Section 6.13. Section 6.13 of the Credit Agreement is amended and
restated in its entirety to read as follows:
"Section 6.13 Minimum Book Net Worth Plus Subordinated Debt. The
Borrower will maintain, during each period described below, its Book Net
Worth plus Subordinated Debt, determined as at the end of each month, at
an amount not less than the amount set forth opposite such period:
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Period Minimum Book Net Worth Plus
Subordinated Debt
March 31, 2005 $26,231,447
April 30, 2005 $25,845,023
May 31, 2005 $25,370,393
June 30, 2005 $26,281,447
July 31, 2005 $26,041,364
August 31, 2005 $25,645,398
September 30, 2005 $26,531,447
October 31, 2005 $26,277,279
November 30, 2005 $25,910,771
December 31, 2005 and each month thereafter $26,831,447"
11. Section 6.14. Section 6.14 of the Credit Agreement is amended and
restated in its entirety to read as follows:
"Section 6.14 Minimum Average Availability. The Borrower will
maintain during each month, determined as at the end of each month,
average Availability (which calculation will be based on a trailing
three-month average) during the month of not less than $500,000, which
amount may be adjusted at the sole discretion of the Lender."
12. Section 6.15. Section 6.15 of the Credit Agreement is amended and
restated in its entirety to read as follows:
"Section 6.15 New Covenants. On or before November 30, 2005, the
Borrower and the Lender shall agree on new covenant levels for Sections
6.12, 6.13, 6.14, 7.4(c) and 7.10 for periods after such date. The new
covenant levels will be based on the Borrower's projections for such
periods and shall be no less stringent than the present levels, but if the
Borrower and the Lender do not agree, the Lender may designate the
required amounts in its sole discretion and the failure by the Borrower to
maintain the designated amounts shall constitute an Event of Default."
13. Section 7.4. Section 7.4 of the Credit Agreement is amended by adding
a new subsection (c) thereto to read in its entirety as follows:
"(c) SANZ will not make any payments to Solunet other than payments
reimbursing Solunet for corporate operating expenses in the ordinary
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course of business, such as payroll, lease and rent expenses, utilities,
etc., which payments shall not exceed $9,000,000 in the aggregate during
SANZ's fiscal year ending December 31, 2005, and shall be zero during any
fiscal year thereafter. Before SANZ makes any payment to Solunet otherwise
permitted under this Section 7.4(c), and immediately after making any such
payment, SANZ Availability shall not be less than $250,000 and SANZ shall
have positive Book Net Worth."
14. Section 7.10. Section 7.10 of the Credit Agreement is amended and
restated in its entirety to read as follows:
"Section 7.10 Capital Expenditures. The Borrower will not incur or
contract to incur Capital Expenditures of more than $1,500,000 in the
aggregate during any fiscal year."
15. Section 9.14. Article IX of the Credit Agreement is amended by adding
a new Section 9.14 to read in its entirety as follows:
"Section 9.14 Joint and Several Liability. All obligations of SANZ
and Solunet under this Agreement (including the Obligations), the Note,
the other Loan Documents, and any other instrument, agreement or document
delivered to the Lender by any of SANZ and Solunet, shall be (a) joint and
several and (b) the primary obligation of each of SANZ and Solunet. All
references to the term "Borrower" herein shall refer to each of SANZ and
Solunet separately and to all of them jointly and all such Persons shall
be bound both severally and jointly with the others. The Obligations shall
include all debts, liabilities and obligations owed to the Lender by any
of SANZ and Solunet solely or by all or any of them jointly or jointly and
severally. Each SANZ and Solunet acknowledges and agrees that its joint
and several liability on the Obligations is absolute and unconditional and
shall not in any manner be affected or impaired by any acts or omissions
whatsoever by the Lender, and without limiting the generality of the
foregoing, the joint and several liability of each of SANZ and Solunet on
the Obligations shall not be impaired by any acceptance by the Lender of
any other security for or guarantors upon the Obligations or by any
failure, neglect or omission on the Lender's part to resort to any one or
all of SANZ and Solunet's payment of the Obligations or to realize upon or
protect any collateral security therefor. The joint and several liability
of each of SANZ and Solunet on the Obligations shall not in any manner be
impaired or affected by who receives or uses the proceeds of the Advances
or for what purposes such credits and financial accommodations are used,
and each of SANZ and Solunet waives notice of Advance requests issued by,
and Advances made to, any of SANZ and Solunet. Such joint and several
liability of each of SANZ and Solunet shall also not be impaired or
affected by (and the Lender, without notice to anyone, is hereby
authorized to make from time to time) any sale, pledge, surrender,
compromise, settlement, release, renewal, extension, indulgence,
alteration, substitution, exchange, change in, modification or disposition
of any collateral security for the Obligations or of any guaranty thereof.
-13-
In order to enforce payment of the Obligations, foreclose or otherwise
realize on any Collateral, or exercise any other rights granted hereunder
or under any other Loan Document or under applicable law, the Lender shall
be under no obligation at any time to first resort to any Collateral,
Liens, or any other property, rights or remedies whatsoever, and the
Lender shall have the right to enforce the Obligations irrespective of
whether or not other proceedings or steps are pending, seeking resort to
or realization upon or from any of the foregoing. Each of SANZ and Solunet
hereby agrees not to exercise or enforce any right of exoneration,
contribution, reimbursement, recourse, or subrogation available to such
Person against any other Person liable for payment of any Obligations, or
as to any security therefor, unless and until the Obligations have been
paid and satisfied in full, release by the Lender of the Security Interest
and termination of the Credit Facility. By its acceptance below, each of
SANZ and Solunet hereby expressly waives and surrenders any defense to its
joint and several liability on the Obligations based upon any of the
foregoing. All property described in the definition of "Collateral" shall
be included as Collateral, whether it is owned jointly by all or any of
SANZ and Solunet or is owned in whole or in part by one (or more) of them.
Notwithstanding anything herein to the contrary, the right of recovery
against each of SANZ and Solunet under this Agreement shall not exceed
$1.00 less than the lowest amount which would render such Person's
obligation under this Agreement void or voidable under applicable law,
including without limitation, fraudulent conveyance law. Notices from the
Lender to any of SANZ and Solunet shall constitute notice to all.
Directions, instructions, actions, representations, warranties or
covenants, including Advance requests, made by any of SANZ and Solunet to
the Lender shall be binding on all and the Lender shall be entitled to
conclusively presume that any action by any of SANZ and Solunet hereunder
or under any Loan Document is taken on behalf of any one or more of them,
as the case may be, whether or not such Person so indicates."
16. Schedule 5.1. Schedule 5.1 of the Credit Agreement is hereby amended
by adding the following Trade Names for Solunet:
"SANZ Federal
Stornet Solutions"
17. Schedule 5.4. Schedule 5.4 of the Credit Agreement is hereby amended
by adding the following:
"Solunet Storage, Inc. is a wholly owned subsidiary of SANZ Inc.
SANZ Inc. has no other subsidiaries. Solunet Storage, Inc. has no
subsidiaries."
18. Exhibit A. Exhibit A of the Credit Agreement is amended and restated
in its entirety and replaced with Exhibit A-1 and Exhibit A-2 attached hereto.
19. Exhibit B. Exhibit B of the Credit Agreement is amended and restated
in its entirety and replaced with Exhibit B attached hereto.
-14-
20. No Other Changes. Except as explicitly amended by this Amendment, all
of the terms and conditions of the Credit Agreement shall remain in full force
and effect and shall apply to any advance thereunder.
21. Waiver of Defaults. The Borrower is in default under Section 6.14
Minimum Average Availability as of November 30, 2004, Section 7.4 Investments
and Subsidiaries during fiscal year 2004 as a result of advances from SANZ Inc.
to Solunet Storage, Inc., and Section 7.10 Capital Expenditures as of November
30, 2004 and December 31, 2004 (the "Existing Defaults"). Upon the terms and
subject to the conditions set forth in this Amendment, the Lender hereby waives
the Existing Defaults. This waiver shall be effective only in this specific
instance and for the specific purpose for which it is given, and this waiver
shall not entitle the Borrower to any other or further waiver in any similar or
other circumstances.
22. Cash Management Agreements. On or before April 30, 2005, the Borrowers
shall deliver to the Lender four executed originals of each of the following, a
form of each of which, if applicable, is attached hereto as an Exhibit as
indicated below (the "Cash Management Agreements"):
(a) The Solunet Lockbox Agreement (Exhibit C);
(b) The Collection Account Agreement (Exhibit D);
(c) The Wholesale Lockbox and Collection Account Agreement by and
among the Lender, Xxxxx Fargo and SANZ (Exhibit E);
(d) Control agreement with Xxxxx Fargo for each deposit account
maintained by a Borrower at Xxxxx Fargo (Exhibit F);
(e) Control agreements with each bank, other than Well Fargo, at
which a Borrower maintains deposit accounts.
23. Solunet Advances. The Lender shall have no obligation to make a
Revolving Advance to Solunet until the Lender receives background searches on
Xxxxxx X. Xxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxxxx and Solunet Storage Holding
Corp., satisfactory to the Lender as determined in its sole discretion and
Solunet delivers to the Lender (i) fully executed copies of each of the Cash
Management Agreements, (ii) evidence satisfactory to the Lender as determined in
its sole discretion that each of the following UCC-1s have been terminated: (a)
UCC-1, filing number 30219702, filed with the Delaware Secretary of State's
Office on January 27, 2003, naming Solunet as debtor and Sun Capital Partners
II, LP as secured party, (b) UCC-1, filing number 32131541, filed with the
Delaware Secretary of State's Office on August 15, 2003, naming Solunet as
debtor and Xxxxxx Trust and Savings Bank as secured party, (c) UCC-1, filing
number 22452831, filed with the Delaware Secretary of State's Office on
September 30, 2002, naming Solunet Storage Holding Corp. as debtor and Sun
Solunet, LLC as secured party, (d) UCC-1, filing number 30145287, filed with the
-15-
Delaware Secretary of State's Office on January 16, 2003, naming Stornet
Solutions as debtor and The CIT Group/Business Credit, Inc. as secured party,
and (iii) evidence satisfactory to the Lender as determined in its sole
discretion that there are no Liens, other than Permitted Liens, in effect
against Solunet Storage Holding Corp. and (e) evidence satisfactory to the
Lender as determined in its sole discretion that Solunet is duly licensed or
qualified to transact business in Texas. The Lender acknowledges that, until the
Borrower delivers the evidence set forth in subsection (e) of the preceding
sentence, Solunet's representation in Section 5.1 of the Credit Agreement is
made with the exception that Solunet is not duly licensed or qualified to
transact business in Texas.
24. Accommodation Fee. The Borrowers shall pay the Lender as of the date
hereof a fully earned, non-refundable fee in the amount of $10,000 in
consideration of the Lender's execution and delivery of this Amendment.
25. Conditions Precedent. This Amendment, and the waiver set forth in
Paragraph 21 hereof, shall be effective when the Lender shall have received an
executed original hereof, together with each of the following, each in substance
and form acceptable to the Lender in its sole discretion:
(a) The Revolving Note, duly executed on behalf of each Borrower.
(b) The Acknowledgment and Agreement of Guarantor and the
Acknowledgment and Agreement of Subordinated Creditor set forth at the end
of this Amendment, duly executed by the Guarantor and the Subordinated
Creditor.
(c) A certificate of Solunet's Secretary or Assistant Secretary
certifying that attached to such certificate are (i) the resolutions of
Solunet's Directors and, if required, Owners, authorizing the execution,
delivery and performance of the Loan Documents, (ii) true, correct and
complete copies of Solunet's Constituent Documents, and (iii) examples of
the signatures of Solunet's Officers or agents authorized to execute and
deliver the Loan Documents and other instruments, agreements and
certificates, including Revolving Advance requests, on Solunet's behalf.
(d) A current certificate issued by the Secretary of State of
Delaware certifying that Solunet is in compliance with all applicable
organizational requirements of the State of Delaware.
(e) Evidence that Solunet is duly licensed or qualified to transact
business in all jurisdictions where the character of the property owned or
leased or the nature of the business transacted by it makes such licensing
or qualification necessary.
(f) An opinion of Solunet's counsel as to the matters set forth in
Paragraphs 26(a) and 26(b) hereof with respect to Solunet and as to such
other matters as the Lender shall require.
(g) The Patent and Trademark Security Agreement by Solunet.
-16-
(h) The Subordination Agreement made by SAN Holdings, Inc. for the
benefit of the Lender and acknowledged by Solunet.
(i) Current searches of appropriate filing offices showing that (i)
no Liens have been filed and remain in effect against Solunet except
Permitted Liens and (ii) the Lender has duly filed all financing
statements necessary to perfect the Security Interest, to the extent the
Security Interest is capable of being perfected by filing.
(j) The separate guaranty of SANZ, pursuant to which SANZ
unconditionally guarantees the full and prompt payment of all Obligations
of Solunet.
(k) The separate guaranty of Solunet, pursuant to which Solunet
unconditionally guarantees the full and prompt payment of all Obligations
of SANZ.
(l) Evidence that 100% of Solunet's outstanding stock was
contributed by SAN Holdings, Inc. to SANZ Inc., with the necessary
documentations and opinions as deemed necessary by the Lender's counsel.
(m) A Customer Identification Information form and such other forms
and verification as Lender may need to comply with the U.S.A. Patriot Act.
(n) Payment of the fee described in Paragraph 24.
(o) Such other matters as the Lender may require.
26. Representations and Warranties. Each Borrower hereby represents and
warrants to the Lender as follows:
(a) Each Borrower has all requisite power and authority to execute
this Amendment and the Revolving Note and to perform all of its
obligations hereunder, and this Amendment and the Revolving Note have been
duly executed and delivered by each Borrower and constitutes the legal,
valid and binding obligation of each Borrower, enforceable in accordance
with its terms.
(b) The execution, delivery and performance by each Borrower of this
Amendment and the Revolving Note have been duly authorized by all
necessary corporate action and does not (i) require any authorization,
consent or approval by any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, (ii) violate any
provision of any law, rule or regulation or of any order, writ, injunction
or decree presently in effect, having applicability to either Borrower, or
the articles of incorporation or by-laws of either Borrower, or (iii)
result in a breach of or constitute a default under any indenture or loan
or credit agreement or any other agreement, lease or instrument to which
either Borrower is a party or by which either Borrower or its properties
may be bound or affected.
-17-
(c) All of the representations and warranties contained in Article V
of the Credit Agreement are correct on and as of the date hereof as though
made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date.
27. References. All references in the Credit Agreement to "this Agreement"
shall be deemed to refer to the Credit Agreement as amended hereby; and any and
all references in the Security Documents to the Credit Agreement shall be deemed
to refer to the Credit Agreement as amended hereby.
28. No Other Waiver. Except as set forth in Paragraph 21 hereof, the
execution of this Amendment and acceptance of the Revolving Note and any
documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement or breach, default or event of
default under any Security Document or other document held by the Lender,
whether or not known to the Lender and whether or not existing on the date of
this Amendment.
29. Release. Each Borrower, and the Guarantor by signing the
Acknowledgment and Agreement of Guarantor set forth below, and the Subordinated
Creditor by signing the Acknowledgment and Agreement of Subordinated Creditor
set forth below, each hereby absolutely and unconditionally releases and forever
discharges the Lender, and any and all participants, parent corporations,
subsidiary corporations, affiliated corporations, insurers, indemnitors,
successors and assigns thereof, together with all of the present and former
directors, officers, agents and employees of any of the foregoing, from any and
all claims, demands or causes of action of any kind, nature or description,
whether arising in law or equity or upon contract or tort or under any state or
federal law or otherwise, which such Borrower or such Guarantor or such
Subordinated Creditor has had, now has or has made claim to have against any
such person for or by reason of any act, omission, matter, cause or thing
whatsoever arising from the beginning of time to and including the date of this
Amendment, whether such claims, demands and causes of action are matured or
unmatured or known or unknown.
30. Costs and Expenses. Each Borrower hereby reaffirms its agreement under
the Credit Agreement to pay or reimburse the Lender on demand for all costs and
expenses incurred by the Lender in connection with the Loan Documents, including
without limitation all reasonable fees and disbursements of legal counsel.
Without limiting the generality of the foregoing, each Borrower specifically
agrees to pay all fees and disbursements of counsel to the Lender for the
services performed by such counsel in connection with the preparation of this
Amendment and the documents and instruments incidental hereto. Each Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by such Borrower, make a loan to
such Borrower under the Credit Agreement, or apply the proceeds of any loan, for
the purpose of paying any such fees, disbursements, costs and expenses and the
fee required under Paragraph 24 hereof.
-18-
31. Joint and Several Liability. All obligations of SANZ and Solunet under
this Amendment shall be joint and several. All references to the term "Borrower"
herein shall refer to each of them separately and to both or all of them jointly
and each such Person shall be bound both severally and jointly with the other.
Each of SANZ and Solunet is responsible for all of the Borrower obligations
under this Amendment. Notices from the Lender to either Borrower shall
constitute notice to both. Directions, instructions, representations, warranties
or covenants made by either Borrower to the Lender shall be binding on both.
32. Miscellaneous. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.
[The remainder of this page intentionally left blank.]
-19-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
XXXXX FARGO BUSINESS CREDIT, INC. SANZ INC.
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxx Xxxxxxx
------------------------- ----------------
Name: Xxxxxx X. Xxxxxxx Name: Xxxx Xxxxxxx
Its: Vice President Its: President
SOLUNET STORAGE, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------
Name: Xxxxxx X. Xxxxx
Its: Chief Financial Officer
ACKNOWLEDGMENT AND AGREEMENT OF GUARANTOR
The undersigned, a guarantor of the indebtedness of SANZ Inc., formerly
known as Storage Area Networks, Inc., ("SANZ") to Xxxxx Fargo Business Credit,
Inc. (the "Lender") pursuant to a separate Guaranty dated as of May 31, 2001
(the "Guaranty"), hereby (i) acknowledges receipt of the foregoing Amendment;
(ii) consents to the addition of Solunet Storage, Inc. ("Solunet") as a Borrower
under the Credit Agreement and Guaranty and agrees and acknowledges that the
Guaranty extends to the obligations of Solunet to the Lender to the same extent,
in the same manner and on the same terms as to SANZ; (iii) consents to the terms
(including without limitation the release set forth in Paragraph 29 of the
Amendment and to the addition of Solunet as a Borrower) and execution thereof;
(iv) reaffirms its obligations to the Lender pursuant to the terms of its
Guaranty; and (v) acknowledges that the Lender may amend, restate, extend, renew
or otherwise modify the Credit Agreement and any indebtedness or agreement of
the Borrower, or enter into any agreement or extend additional or other credit
accommodations, without notifying or obtaining the consent of the undersigned
and without impairing the liability of the undersigned under its Guaranty for
all of the Borrower's present and future indebtedness to the Lender.
SAN HOLDINGS, INC.
By: /s/ Xxxx Xxxxxxx
----------------
Name: Xxxx Xxxxxxx
Its: President
ACKNOWLEDGMENT AND AGREEMENT OF SUBORDINATED CREDITOR
The undersigned, a subordinated creditor of SANZ Inc., formerly known as
Storage Area Networks, Inc., (the "Borrower") to Xxxxx Fargo Business Credit,
Inc. (the "Lender") pursuant to a Subordination Agreement dated as of January
17, 2002 (the "Subordination Agreement"), hereby (i) acknowledges receipt of the
foregoing Amendment; (ii) consents to the terms (including without limitation
the release set forth in Paragraph 29 of the Amendment) and execution thereof;
(iii) reaffirms its obligations to the Lender pursuant to the terms of its
Subordination Agreement; and (iv) acknowledges that the Lender may amend,
restate, extend, renew or otherwise modify the Loan Documents and any
indebtedness or agreement of the Borrower, or enter into any agreement or extend
additional or other credit accommodations, without notifying or obtaining the
consent of the undersigned and without impairing the obligations of the
undersigned under its Subordination Agreement.
SAN HOLDINGS, INC.
By: /s/ Xxxx Xxxxxxx
----------------
Name: Xxxx Xxxxxxx
Its: President
Exhibit A-1 to Credit and Security Agreement
AMENDED AND RESTATED REVOLVING NOTE
$12,000,000 Denver, Colorado
March 29, 2005
For value received, the undersigned, SANZ INC., a Colorado corporation (the
"Borrower"), hereby promises to pay on the Termination Date under the Credit
Agreement (defined below), to the order of XXXXX FARGO BUSINESS CREDIT, INC., a
Minnesota corporation (the "Lender"), at its main office in Denver, Colorado, or
at any other place designated at any time by the holder hereof, in lawful money
of the United States of America and in immediately available funds, the
principal sum of Twelve Million Dollars ($12,000,000) or, if less, the aggregate
unpaid principal amount of all Revolving Advances made by the Lender to the
Borrowers under the Credit Agreement (defined below) together with interest on
the principal amount hereunder remaining unpaid from time to time, computed on
the basis of the actual number of days elapsed and a 360-day year, from the date
hereof until this Note is fully paid at the rate from time to time in effect
under the Credit and Security Agreement dated as of May 31, 2001 (as the same
has been and may hereafter be amended, supplemented or restated from time to
time, the "Credit Agreement") by and among the Lender, the Borrower and Solunet
Storage, Inc. The principal hereof and interest accruing thereon shall be due
and payable as provided in the Credit Agreement. This Note may be prepaid only
in accordance with the Credit Agreement.
This Note has been executed and delivered in substitution for and not in
repayment of (i) the Revolving Note of the Borrower dated May 31, 2001; (ii) the
Amended and Restated Revolving Note of the Borrower dated July 1, 2002; (iii)
the Amended and Restated Revolving Note of the Borrower dated March 31, 2003 and
(iii) the Amended and Restated Revolving Note of the Borrower dated September
22, 2003 and is issued pursuant, and is subject, to the Credit Agreement, which
provides, among other things, for acceleration hereof. This Note is the
Revolving Note referred to in the Credit Agreement. This Note is secured, among
other things, pursuant to the Credit Agreement and the Security Documents as
therein defined, and may now or hereafter be secured by one or more other
security agreements, mortgages, deeds of trust, assignments or other instruments
or agreements.
The Borrower hereby agrees to pay all costs of collection, including attorneys'
fees and legal expenses in the event this Note is not paid when due, whether or
not legal proceedings are commenced.
Presentment or other demand for payment, notice of dishonor and protest are
expressly waived.
SANZ INC.
By: /s/ Xxxx Xxxxxxx
----------------
Name: Xxxx Xxxxxxx
Its: President
X-0
Xxxxxxx X-0 to Credit and Security Agreement
REVOLVING NOTE
$12,000,000 Denver, Colorado
March 29, 2005
For value received, the undersigned, SOLUNET STORAGE, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay on the Termination Date
under the Credit Agreement (defined below), to the order of XXXXX FARGO BUSINESS
CREDIT, INC., a Minnesota corporation (the "Lender"), at its main office in
Denver, Colorado, or at any other place designated at any time by the holder
hereof, in lawful money of the United States of America and in immediately
available funds, the principal sum of Twelve Million Dollars ($12,000,000) or,
if less, the aggregate unpaid principal amount of all Revolving Advances made by
the Lender to the Borrowers under the Credit Agreement (defined below) together
with interest on the principal amount hereunder remaining unpaid from time to
time, computed on the basis of the actual number of days elapsed and a 360-day
year, from the date hereof until this Note is fully paid at the rate from time
to time in effect under the Credit and Security Agreement dated as of May 31,
2001 (as the same has been and may hereafter be amended, supplemented or
restated from time to time, the "Credit Agreement") by and among the Lender, the
Borrower and SANZ Inc. The principal hereof and interest accruing thereon shall
be due and payable as provided in the Credit Agreement. This Note may be prepaid
only in accordance with the Credit Agreement.
This Note is issued pursuant, and is subject, to the Credit Agreement, which
provides, among other things, for acceleration hereof. This Note is the
Revolving Note referred to in the Credit Agreement. This Note is secured, among
other things, pursuant to the Credit Agreement and the Security Documents as
therein defined, and may now or hereafter be secured by one or more other
security agreements, mortgages, deeds of trust, assignments or other instruments
or agreements.
The Borrower hereby agrees to pay all costs of collection, including attorneys'
fees and legal expenses in the event this Note is not paid when due, whether or
not legal proceedings are commenced.
Presentment or other demand for payment, notice of dishonor and protest are
expressly waived.
SOLUNET STORAGE, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Name: Xxxxxx X. Xxxxx
Its: Chief Financial Officer
A-2
Exhibit B to Credit and Security Agreement
COMPLIANCE CERTIFICATE
To: Xxxx Xxxxxxx-Xxxxxx
Xxxxx Fargo Business Credit, Inc.
Date: __________________, 200__
Subject: SANZ Inc. and Solunet Storage, Inc.
Financial Statements
In accordance with our Credit and Security Agreement dated as of May 31,
2001, as amended by (i) the First Amendment to Credit and Security Agreement and
Waiver of Defaults dated as of January 17, 2002; (ii) the Second Amendment to
Credit and Security Agreement dated as of July 1, 2002; (iii) the Third
Amendment to Credit and Security Agreement dated as of August 15, 2002; (iv) the
Fourth Amendment to Credit and Security Agreement and Waiver of Defaults dated
as of March 31, 2003; (v) the Fifth Amendment to Credit and Security Agreement
and Waiver of Defaults dated as of September 22, 2003; (vi) the Sixth Amendment
to Credit and Security Agreement dated as of February 12, 2004; (vii) the
Seventh Amendment to Credit and Security Agreement and Waiver of Defaults dated
as of September 3, 2004; (viii) the Eighth Amendment to Credit and Security
Agreement and Waiver of Defaults dated as of October 29, 2004; and (ix) the
Ninth Amendment to Credit and Security Agreement and Waiver of Defaults dated as
of March __, 2005 (as so amended, the "Credit Agreement"), attached are the
financial statements of SANZ Inc. and Solunet Storage, Inc. (together, the
"Borrower") as of and for ________________, 200__ (the "Reporting Date") and the
year-to-date period then ended (the "Current Financials"). All terms used in
this certificate have the meanings given in the Credit Agreement.
I certify that the Current Financials have been prepared in accordance
with GAAP, subject to year-end audit adjustments, and fairly present the
Borrower's financial condition and the results of its operations as of the date
thereof.
Events of Default. (Check one):
|_| The undersigned does not have knowledge of the occurrence of a Default
or Event of Default under the Credit Agreement.
|_| The undersigned has knowledge of the occurrence of a Default or Event
of Default under the Credit Agreement and attached hereto is a statement of the
facts with respect to thereto.
B-1
I hereby certify to the Lender as follows:
|_| The Reporting Date does not xxxx the end of one of the Borrower's
fiscal quarters, hence I am completing only paragraph __ below.
|_| The Reporting Date marks the end of one of the Borrower's fiscal
quarters, hence I am completing all paragraphs below except paragraph ___.
|_| The Reporting Date marks the end of the Borrower's fiscal year, hence
I am completing all paragraphs below.
Financial Covenants.
I further hereby certify as follows:
1. Minimum Net Income. Pursuant to Section 6.12 of the Credit Agreement,
as of the Reporting Date the Borrower's Net Income was $____________ which
satisfies does not satisfy the requirement that such amount be not less than
$_____________ on the Reporting Date as set forth in table below:
Period Minimum Net Income
Three months ending March 31, 2005 ($300,000)
Six months ending June 30, 2005 ($250,000)
Nine months ending September 30, 2005 $0
Twelve months ending December 31, 2005 $300,000
2. Minimum Cash Infusion. Pursuant to Section 6.12 of the Credit
Agreement, as of the Reporting Date the Borrower has received a cash infusion in
the amount of $____________ which satisfies does not satisfy the requirement
that such amount be not less than $_____________ on the Reporting Date as
calculated pursuant to that Section.
3. Minimum Book Net Worth Plus Subordinated Debt. Pursuant to Section 6.13
of the Credit Agreement, as of the Reporting Date, the Borrower's Book Net Worth
plus Subordinated Debt was $____________ which satisfies does not satisfy the
requirement that such amount be not less than $_____________ on the Reporting
Date as set forth in table below:
Period Minimum Book Net Worth Plus
Subordinated Debt
March 31, 2005 $26,231,447
April 30, 2005 $25,845,023
May 31, 2005 $25,370,393
June 30, 2005 $26,281,447
July 31, 2005 $26,041,364
August 31, 2005 $25,645,398
B-2
September 30, 2005 $26,531,447
October 31, 2005 $26,277,279
November 30, 2005 $25,910,771
December 31, 2005 and each month thereafter $26,831,447
4. Minimum Average Availability. Pursuant to Section 6.14 of the Credit
Agreement, the Borrower's average Availability (which calculation will be based
on a trailing three-month average) for the month ending on the Reporting Date
was $____________, which satisfies does not satisfy the requirement that such
amount be not less than $500,000 during such period, which amount may be
adjusted at the sole discretion of the Lender.
5. Payments from SANZ Inc. to Solunet Storage, Inc. Pursuant to Section
7.4(c) of the Credit Agreement, SANZ Inc. has made the following payments to
Solunet Storage, Inc. since the last Reporting Date, and as of the Reporting
Date, the Borrower is is not in compliance with Section 7.4(c) of the Credit
Agreement concerning payments from SANZ Inc. to Solunet Storage, Inc.
[Borrower to list each payment, the SANZ Availability and SANZ's
Book Net Worth after each payment]
6. Capital Expenditures. Pursuant to Section 7.10 of the Credit Agreement,
for the year-to-date period ending on the Reporting Date, the Borrower has
expended or contracted to expend during the _____________ year ended
______________, 20___, for Capital Expenditures, $__________________ in the
aggregate, which satisfies does not satisfy the requirement that such
expenditures not exceed $1,500,000 in the aggregate during such year.
7. Salaries. As of the Reporting Date, the Borrower is is not in
compliance with Section 7.17 of the Credit Agreement concerning salaries.
Attached hereto are all relevant facts in reasonable detail to evidence,
and the computations of the financial covenants referred to above. These
computations were made in accordance with GAAP.
SANZ INC.
SOLUNET STORAGE, INC.
By:
------------------------
Its: Chief Financial Officer
B-3
Exhibit C to Amendment
SOLUNET LOCKBOX AGREEMENT
WHOLESALE LOCKBOX AND COLLECTION ACCOUNT AGREEMENT
(Lender Collection Account - ACH Debit Entry Transfers)
This Wholesale Lockbox and Collection Account Agreement ("Agreement"), dated as
of the date specified at the end of this Agreement, by and among Solunet
Storage, Inc. ("Borrower"), Xxxxx Fargo Business Credit, Inc. ("Lender"), Xxxxx
Fargo Bank, National Association, in its capacity as lockbox processor ("Lockbox
Processor"), and Xxxxx Fargo Bank, National Association, in its capacity as
depository bank ("Depository Bank"), sets out (i) the terms and conditions under
which Lockbox Processor and Depository Bank will provide their lockbox service
("Lockbox Service") to Borrower and Lender with respect to the post office
lockbox of Borrower at Lockbox Processor (the "Lockbox"), (ii) the terms and
conditions under which Depository Bank will provide its collection account
service (the "Collection Account Service") to Borrower and Lender with respect
to Lender's wholesale demand deposit account specified at the end of this
document (the "Lender Account"), and (iii) the rights of Borrower and Lender,
and the obligations of Depository Bank and Lockbox Processor to Borrower and
Lender, with respect to the Lockbox and the Lender Account.
1. Origin of Lender's Interest in the Lockbox Remittances. Borrower has
entered into a financing agreement with Lender in which Borrower has
granted to Lender a security interest in Borrower's present and future
accounts receivable and all proceeds thereof, and Borrower has agreed that
all collections and proceeds of such accounts receivable shall be remitted
in kind to Lender. Accounts receivable will be sent by account debtors of
Borrower to the Lockbox for deposit by Lockbox Processor into the Lender
Account. (When such accounts receivable have been received in the Lockbox
they will be referred to in this Agreement as the "Remittances" and when
the Remittances have been deposited into the Lender Account as provided in
this Agreement they will be referred to in this Agreement, together with
all other proceeds of the collateral security granted to Lender that are
deposited in the Lender Account, as the "Account Funds"). Lender and
Borrower would like to use the Collection Account Service to block
Borrower's access to the Lender Account and to provide daily transfers of
ledger balances in the Lender Account to Lender's account with Xxxxx Fargo
Bank, National Association.
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2. Commencement of Lockbox Service. The Lockbox Service will start on the
date arranged by Depository Bank and Lockbox Processor with Lender if the
following events have occurred before such date:
(a) Lockbox Processor has assigned the Lockbox to Borrower with the
number and at the address specified by Lockbox Processor to
Depository Bank, Lender and Borrower;
(b) The Lender Account has been opened and is in good standing;
(c) Lender has designated to Lockbox Processor in Exhibit "A" the
acceptable names or designations of payees on checks deposited
through the Lockbox Service, the procedures for handling returned
checks and restrictive notations on checks, and the processing
options selected by Lender for the Lockbox Service; and
(d) Borrower and Lender have provided to Lockbox Processor and
Depository Bank such other information and documents as Lockbox
Processor or Depository Bank request to enable Lockbox Processor and
Depository Bank to commence and operate the Lockbox Service and the
Collection Account Service for Borrower and Lender.
3. Access to Remittances, Lockbox and Account Funds. Borrower will not have
access to any Remittances unless such access is specifically provided in
this Agreement or is specifically authorized by Lender in writing. Lockbox
Processor, as the agent of Lender, will have exclusive access to the
Lockbox. Lockbox Processor will give appropriate instructions concerning
the Lockbox and the Remittances to the United States Post Office where the
Lockbox is located, and will not revoke such instructions without the
prior written consent of Lender. All Account Funds shall be the sole and
exclusive property of Lender withdrawable from the Lender Account only by
Lender as provided in this Agreement or in the account documentation
pursuant to which the Lender Account was opened. Borrower will have no
interest in, or any control over, any Account Funds, and Account Funds
shall not bear interest. Except as provided in this Agreement, the Lender
Account will not be subject to deductions, setoff, banker's lien, or any
other right in favor of any person other than Lender.
4. Processing Lockbox Mail. Each day that Lockbox Processor offers the
Lockbox Service, Lockbox Processor or its subcontractor will pick up at,
and transport from, the Lockbox the Remittances, and, except as otherwise
specifically provided in this Agreement, Lockbox Processor will open such
Remittances and process such Remittances in accordance with the Lockbox
Processing Procedures attached to this Agreement as Exhibit "A"
("Processing Procedures"). Borrower agrees to instruct its customers and
other obligors not to send cash to the Lockbox. Lockbox Processor will not
comply with any instruction or request of Borrower altering the Procedures
unless such instruction or request is agreed to in writing by Lender or is
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supported by a court order. At the written request of Lender, with or
without the consent of Borrower, Lockbox Processor will stop processing
Remittances and will send all such Remittances unopened to Lender, or to
Borrower if Lender so instructs Lockbox Processor in writing. Lender and
Borrower agree that Lockbox Processor will have no liability whatsoever
with respect to Remittances after they are sent to Lender, or to Borrower
in accordance with Lender's written instructions.
5. Deposits and Confirmations. Borrower and Lender authorize Lockbox
Processor to endorse checks and other payment instruments received at the
Lockbox and to deposit such items into the Lender Account as provided in
the Processing Procedures, even though such checks and other payment
instruments may be made payable to Borrower. Lockbox Processor will
provide to Lender and to Borrower an advice of deposits credited to the
Lender Account at their respective addresses specified at the end of this
Agreement for advice of deposits and statements. Depository Bank will
provide to Lender and to Borrower Depository Bank's regular statement
covering deposits to and withdrawals from the Lender Account at their
respective addresses specified at the end of this Agreement for advice of
deposits and statements. Borrower and/or Lender agree to notify Depository
Bank's Service Center, whose address and telephone number will be given to
Borrower and Lender, (a) of any error in an advice of deposit within
thirty (30) calendar days after Borrower and/or Lender receive such advice
of deposit and (b) of any error in a bank statement within thirty (30)
calendar days after Borrower and/or Lender receive such bank statement.
The liability of Lockbox Processor and Depository Bank for such errors is
limited as provided in Section 21 of this Agreement.
6. Account Documentation. Borrower and Lender understand that this Agreement
covers the Lockbox Service and, except as specifically provided in this
Agreement, does not cover the handling of the Lender Account. Except as
otherwise specifically provided in this Agreement, the Lender Account will
be handled and items drawn on or deposited into the Lender Account will be
processed by Depository Bank, and not Lockbox Processor, as Depository
Bank would perform such responsibilities with respect to any other demand
deposit account maintained at Depository Bank. As a result, the Lender
Account will be subject to, and Depository Bank's operation of the Lender
Account will be in accordance with, the terms and provisions of Depository
Bank's deposit account opening documentation and other Depository Bank
account related documentation (collectively, "Account Documentation"),
including, but not limited to, Depository Bank's demand deposit account
disclosure statement for the Lender Account as in effect and delivered to
Lender from time to time, a copy of which Borrower and Lender acknowledge
having received. Notwithstanding any provisions of any Account
Documentation, however, all Account Funds shall be the sole and exclusive
property of Lender.
7. Customer Service. Borrower and Lender understand that Depository Bank, and
not Lockbox Processor, will provide customer service for the Lockbox
Service. As a result, any questions or problems that Borrower or Lender
have with respect to the Lockbox Service should be addressed to Depository
Bank's Service Center. Depository Bank will facilitate the resolution of
any problem between Borrower or Lender and Lockbox Processor, but Borrower
and Lender understand that Lockbox Processor will be solely responsible
for any problems caused by its performance or failure to perform the
Lockbox Service.
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8. Returned Items. All checks or other items credited to the Lender Account
and returned to Depository Bank unpaid for any reason will be handled by
Depository Bank in the following manner:
(a) Any check with a face amount less than One Thousand Dollars
($1,000.00) which is returned because of insufficient funds will
automatically be redeposited by Depository Bank a second time.
(b) Any check which has been returned a second time or which is returned
for reasons other than insufficient funds or which has a face amount
of One Thousand Dollars ($1,000.00) or more and is returned for
insufficient funds will be charged back to Borrower's wholesale
demand deposit account maintained with Depository Bank specified at
the end of this Agreement (the "Borrower Account").
(c) If there are insufficient funds in the Borrower Account to cover any
chargeback, Lender agrees that Depository Bank may charge the Lender
Account for the amount of the insufficiency, up to the amount of the
returned items. If there are insufficient funds in the Lender
Account, Borrower and Lender agree to pay the amount of the
chargeback to the Lender Account, in immediately available funds,
within one business day after receipt of physical evidence of said
chargeback sent by facsimile to Borrower and Lender at their
facsimile numbers specified below.
(d) Any returned checks and debit memos with respect to returned checks
will be sent to Borrower.
9. ACH Debit Transfers from Lender Account. On each day when Depository Bank
is open for business (a "Banking Day") during the term of this Agreement,
at the specific request of Lender, Depository Bank will process automated
clearing house debits to the Lender Account initiated by banks other than
Depository Bank for transfers of funds out of the Lender Account (each an
"ACH Debit") so long as any such ACH Debit does not exceed the ledger
balance in the Lender Account at the end of the Banking Day immediately
preceding the date on which the ACH Debit is initiated. These transfers
will be made to Lender if Lender's account is the transfer-to account
specified in the ACH Debits by the initiating bank. Lender agrees to pay
to Depository Bank immediately on demand, without setoff or counterclaim,
the amount of any overdraft in the Lender Account caused by an ACH Debit
exceeding the ledger balance in the Lender Account at the time such ACH
Debit settles.
10. Delays in Making ACH Debit Transfers. Lender and Borrower understand that
an ACH Debit transfer may be delayed or not made if (a) the transfer would
cause Depository Bank to exceed any limitation on its intra-day net funds
position established in accordance with Federal Reserve or other
regulatory guidelines or to violate any other Federal Reserve or other
regulatory risk control program, or (b) the funds transfer would otherwise
cause Depository Bank to violate any applicable law or regulation. If an
ACH Debit transfer cannot be made or will be delayed, Depository Bank will
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attempt to notify Lender by telephone. Notwithstanding anything to the
contrary in this Section 10, Depository Bank agrees that its response to
any court order or other legal process, to the claim of any party in
bankruptcy, or the adverse claim of any individual or entity not a party
to this Agreement shall be made in accordance with the provisions of
Sections 16 and 18 hereof.
11. Reliance on Account Number of ACH Debit Transfer Beneficiary. If the bank
initiating an ACH Debit out of the Lender Account indicates a name and an
identifying number for the bank of the person or entity to receive the ACH
Debit transfer, Lender and Borrower understand that Depository Bank will
rely on the number indicated by the initiating bank even if that number
identifies a bank different from the named bank. If the bank initiating an
ACH Debit out of the Lender Account indicates a name and an account number
for the person or entity to receive the ACH Debit transfer, Lender and
Borrower understand that Depository Bank and the initiating bank may rely
on the indicated account number even if that account number is not the
account number for the person or entity who is to receive the transfer.
12. Reporting Errors in Transfers. If Lender or Borrower learns of any error
in an ACH Debit transfer or any unauthorized funds transfer, then the
party learning of such error or unauthorized transfer (the "Informed
Party") must notify Depository Bank as soon as possible by telephone at
(800) AT-XXXXX (which is a recorded line), and provide written
confirmation to Depository Bank of such telephonic notice within two
Business Days at the address given for Depository Bank on the signature
page of this Agreement. In no case may such notice to Depository Bank by
an Informed Party be made more than thirty (30) calendar days after
Depository Bank's first confirmation of an ACH Debit transfer or other
funds transfer to such Informed Party, whether such first confirmation
consists of the regular monthly statement for the Lender Account or
otherwise. If a funds transfer is made in error and Depository Bank
suffers a loss because Lender or Borrower breached its agreement to notify
Depository Bank of such error within this thirty (30) calendar day period,
then the party or parties which breached this agreement shall be obligated
to reimburse Depository Bank for such loss promptly upon demand by
Depository Bank; provided, however, that in the event both Lender and
Borrower breach this notification requirement, Lender shall not be
obligated to reimburse Depository Bank for such loss unless Borrower fails
to satisfy Depository Bank's demand for such reimbursement within fifteen
(15) calendar days after such demand is made on Borrower.
13. Contacts. Any contacts regarding operational matters with any party to
this Agreement shall be made to the person and address specified below for
advice of deposits and statements.
14. Depository Bank Fees. Borrower agrees to pay the fees for the Collection
Account Service charged by Depository Bank (the "Depository Bank Fees"),
which fees will be based on the charges specified in the standard
collection account fee schedule current at the time the fees are charged.
As changes in Depository Bank's operating costs, procedural requirements
or service volumes affect future costs of processing, Depository Bank will
periodically review the Depository Bank Fees. Should the results of such
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periodic review warrant adjustment of the Depository Bank Fees, Borrower
and Lender will receive a minimum of thirty (30) calendar day's written
notice prior to implementing such adjustment. Depository Bank will collect
the Depository Bank Fees by debiting the Borrower Account for the amount
of the Depository Bank Fees, without prior notice to Borrower or Lender,
on the day such Depository Bank Fees are due. Lender agrees to pay the
Depository Bank Fees within thirty (30) calendar days after Lender
receives a billing statement from Depository Bank for such fees, without
setoff or counterclaim, to the extent that Depository Bank is unsuccessful
in any attempt to automatically debit such fees from the Borrower Account.
15. Lockbox Processor Fees. Borrower agrees to pay the fees for the Lockbox
Service charged by Lockbox Processor (the "Lockbox Processor Fees"), which
fees for the standard lockbox processing procedures will be based on the
charges specified in that standard Lockbox Fee Schedule of Lockbox
Processor current at the time the fees are charged. As changes in Lockbox
Processor's operating costs, procedural requirements or service volumes
affect future costs of processing, Lockbox Processor will periodically
review the Lockbox Processor Fees. Should the results of such periodic
review warrant adjustment of the Lockbox Processor Fees, Borrower and
Lender will receive a minimum of thirty (30) calendar day's written notice
prior to implementing such adjustment. Depository Bank will collect the
Lockbox Processor Fees on behalf of Lockbox Processor by debiting the
Borrower Account for the amount of the Lockbox Processor Fees, without
prior notice to Borrower or Lender, on the day such Lockbox Processor Fees
are due. Lender agrees to pay the Lockbox Processor Fees within thirty
(30) calendar days after Lender receives a billing statement from
Depository Bank for such fees, without setoff or counterclaim, to the
extent that Depository Bank is unsuccessful in any attempt to
automatically debit such fees from the Borrower Account.
16. Court Order. If Lockbox Processor or Depository Bank is served with a
court order which affects the Lockbox or the Lender Account, Lockbox
Processor or Depository Bank, as the case may be, will act in accordance
with such court order. Subject to the provisions of Section 18, neither
Lockbox Processor nor Depository Bank shall, in response to the adverse
claim of Borrower or any third party, have the right to place a hold, nor
will it place a hold, on funds in, or in the process of being deposited
to, the Lockbox or the Lender Account, and Lockbox Processor and
Depository Bank will process the Remittances and Account Funds in strict
accordance with the terms and conditions of this Agreement, unless and
until either Lockbox Processor or Depository Bank, as the case may be,
receives a court order to the contrary, whether issued by a U.S.
Bankruptcy Court or any other court of competent jurisdiction. Lender
represents, warrants, and agrees that upon filing of voluntary or
involuntary proceedings under the U.S. Bankruptcy Code involving Borrower,
Lender shall at all times comply with applicable bankruptcy statutes,
rules, and other laws as they may relate to the Remittances and Account
Funds.
17. Ownership of Specifications, Records, Systems and Programs. Borrower and
Lender agree that any specifications, records, systems and programs,
including, among other things, computer software programs, which are
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utilized or developed by Lockbox Processor or Depository Bank in
connection with the Service or this Agreement are and will remain the sole
property of Lockbox Processor and Depository Bank.
18. Claims, Legal Process and Notices. If Depository Bank or Lockbox Processor
receives any claim, notice, legal process or court order relating to the
Remittances, the Lockbox, the Account Funds or the Lender Account,
Depository Bank or Lockbox Processor, as the case may be, will notify
Lender and Borrower of such receipt, unless Depository Bank or Lockbox
Processor know that Lender, with respect to so notifying Lender, or
Borrower, with respect to so notifying Borrower, are already aware of such
claim, notice, legal process or court order. Depository Bank or Lockbox
Processor, as the case may be, will notify Lender of such process, claim
or notice prior to its compliance. Lender and Borrower understand and
agree that Depository Bank and Lockbox Processor will comply with any such
legal process, legal notice or court order it receives (including, without
limitation, any summons, subpoena, levy, garnishment, or withholding
order) if Depository Bank or Lockbox Processor determines in its sole
discretion that such legal process, legal notice or court order is legally
binding on it. If any claim or notice received by Depository Bank or
Lockbox Processor is not legally binding on it, as determined in its sole
discretion, Depository Bank and Lockbox Processor agree to follow any
instructions of Lender to comply or not comply with such claim or notice
if (a) such instructions are given promptly after Lender is notified of
such claim or notice and (b) such instructions do not require Depository
Bank or Lockbox Processor to violate any applicable law, regulation or
court order. Borrower hereby irrevocably agrees that Depository Bank and
Lockbox Processor are to follow any such instructions of Lender with
respect to any such non-binding claim or notice even if such claim or
notice is from Borrower. If Depository Bank or Lockbox Processor do not
receive prompt instructions from Lender regarding compliance or
non-compliance with any such non-binding claim or notice, Lender and
Borrower agree that Depository Bank or Lockbox Processor may determine in
its sole discretion to comply or not to comply with such claim or notice,
except that neither Depository Bank nor Lockbox Processor will comply with
any such claim or notice from Borrower conflicting with the terms of this
Agreement.
19. Indemnification for Following Instructions. Lender and Borrower each agree
that, notwithstanding any other provision of this Agreement, neither
Depository Bank nor Lockbox Processor will be liable to Lender or Borrower
for any losses, liabilities, damages, claims (including, but not limited
to, third party claims), demands, obligations, actions, suits, judgments,
penalties, costs or expenses, including, but not limited to, attorneys'
fees, (collectively, "Losses and Liabilities") suffered or incurred by
Lender or Borrower as a result of, or in connection with, (a) Depository
Bank or Lockbox Processor following any instruction of Lender to comply or
not comply with any non-binding claim or notice referred to in Section 18
of this Agreement, (b) if no such instruction from Lender is promptly
received, Depository Bank or Lockbox Processor complying or not complying,
as determined in its sole discretion, with any such non-binding claim or
notice, (c) Depository Bank or Lockbox Processor following any other
instruction or request of Lender, or (d) Depository Bank or Lockbox
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Processor complying with its obligations under this Agreement. Further,
Borrower, and to the extent not paid by Borrower within fifteen (15)
calendar days after demand, Lender, will indemnify Depository Bank and
Lockbox Processor against any Losses and Liabilities Depository Bank or
Lockbox Processor suffer or incur as a result of, or in connection with,
any of the circumstances referred to in subsections (a) through (d) in the
preceding sentence.
20. No Representations or Warranties of Lockbox Processor or Depository Bank.
Depository Bank and Lockbox Processor will perform their obligations under
this Agreement in a manner consistent with the quality provided when
Depository Bank and Lockbox Processor perform similar services for their
own account. However, neither Lockbox Processor nor Depository Bank, nor
any subcontractor of either party, can be responsible for the errors, acts
or omissions of others, such as communications carriers, correspondents or
clearinghouses through which Lockbox Processor or Depository Bank may
perform their obligations under this Agreement or receive or transmit
information in performing their obligations under this Agreement. Further,
neither Lockbox Processor nor Depository Bank, nor any subcontractor of
either party, can be responsible for any loss, liability or delay caused
by wars, failures in communications networks, labor disputes, work
stoppages, legal constraints, fires, power surges or failures,
earthquakes, civil disturbances, acts or omissions of the U.S. Postal
Service, or other events beyond its control. NEITHER LOCKBOX PROCESSOR NOR
DEPOSITORY BANK MAKES ANY EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES
WITH RESPECT TO THE LOCKBOX SERVICE, THE COLLECTION ACCOUNT SERVICE, OR
ANY OTHER SERVICE IT IS TO PERFORM UNDER THIS AGREEMENT OTHER THAN THOSE
EXPRESSLY SPECIFIED IN THIS AGREEMENT.
21. Limitation of Liability. Borrower and Lender understand and agree that
Lockbox Processor shall utilize a subcontractor to perform the Lockbox
Service. If any party to this Agreement suffers or incurs any Losses and
Liabilities as a result of, or in connection with, its or any other
party's performance or failure to perform its obligations under this
Agreement, the affected parties will negotiate in good faith in an effort
to reach a mutually satisfactory allocation of such Losses and
Liabilities, it being understood that neither Lockbox Processor nor
Depository Bank will be responsible for any Losses and Liabilities due to
any cause other than its own negligence or breach of this Agreement (or
the negligence or breach of its subcontractor), in which case (a) if such
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negligence or breach is a failure by Lockbox Processor to deposit any
check which should have been deposited pursuant to this Agreement, the
liability of Lockbox Processor and its subcontractor liability shall be
limited to direct money damages in an amount not to exceed interest on the
amount of such check at a rate equal to the cost of funds (at a reserve
adjusted daily interest rate which Depository Bank will determine) for the
time period such amount is not in the Lender Account, which time period
for the purpose of calculating such interest will not extend beyond the
end of the thirty (30) calendar day notice period referred to in Section 5
of this Agreement, and (b) if such negligence or breach results from any
other action or failure to act by Lockbox Processor or Depository Bank, or
any subcontractor of either party, the liability of Lockbox Processor and
Depository Bank, and any subcontractor of either party, shall be limited
to direct money damages in an amount not to exceed ten (10) times all the
Lockbox Processor Fees, in the case of the liability of Lockbox Processor
and its subcontractor, or the Depository Bank Fees, in the case of the
liability of Depository Bank and its subcontractor, charged or incurred
during the calendar month immediately preceding the calendar month in
which such Losses and Liabilities occurred (or, if no Lockbox Processor
Fees or Depository Bank Fees were charged or incurred in the preceding
month, the Lockbox Processor Fees or Depository Bank Fees, as the case may
be, charged or incurred in the month in which the Losses and Liabilities
occurred). Borrower, and to the extent not paid by Borrower within fifteen
(15) calendar days after demand Lender within thirty (30) calendar days
after demand, will indemnify Lockbox Processor and Depository Bank against
any Losses and Liabilities suffered or incurred by Lockbox Processor or
Depository Bank as a result of third party claims to the extent such
Losses and Liabilities exceed the liability limitations specified in the
preceding sentence. The limitation of Lockbox Processor's liability and
Borrower's and Lender's indemnification of Lockbox Processor set forth
above shall not be applicable to the extent any Losses and Liabilities of
any party to this Agreement are directly caused by Lockbox Processor's
gross negligence or willful misconduct. The limitation of Depository
Bank's liability and Borrower's and Lender's indemnification of Depository
Bank set forth above shall not be applicable to the extent any Losses and
Liabilities of any party to this Agreement are directly caused by
Depository Bank's gross negligence or willful misconduct. IN NO EVENT WILL
LOCKBOX PROCESSOR, DEPOSITORY BANK OR LENDER, OR ANY SUBCONTRACTOR OF ANY
SUCH PARTY, BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, INDIRECT
OR PUNITIVE DAMAGES, WHETHER ANY CLAIM IS BASED ON CONTRACT OR TORT,
WHETHER THE LIKELIHOOD OF SUCH DAMAGES WAS KNOWN TO LOCKBOX PROCESSOR,
DEPOSITORY BANK OR LENDER, OR ANY SUBCONTRACTOR OF ANY SUCH PARTY, AND
REGARDLESS OF THE FORM OF THE CLAIM OR ACTION, INCLUDING, BUT NOT LIMITED
TO, ANY CLAIM OR ACTION ALLEGING GROSS NEGLIGENCE, WILLFUL MISCONDUCT,
FAILURE TO EXERCISE REASONABLE CARE OR FAILURE TO ACT IN GOOD FAITH. Any
action against Lockbox Processor or Depository Bank by Borrower or Lender
under or related to this Agreement or the Lockbox Service or the
Collection Account Service must be brought within twelve (12) months after
the cause of action accrues.
22. Amendments, Successors and Assigns. With the exception of price changes,
which require written notice to Borrower and Lender, and changes to the
funds transfer instructions in Section 9 of this Agreement, which require
the written approval of only Lender, this Agreement, including the
Processing Procedures, may not be modified or any provision thereof
waived, except in a writing signed by all the parties to this Agreement.
This Agreement shall be binding on the parties and their successors or
assigns.
23. Termination. This Agreement, the Lockbox Service, and the other services
to be provided under this Agreement may be terminated by Lender, Lockbox
Processor or Depository Bank at any time by any of them giving thirty (30)
calendar days prior written notice of such termination to the other
parties to this Agreement at their contact addresses specified at the end
of this Agreement; provided, however, that this Agreement, the Lockbox
Service, the Collection Account Service, and the other services to be
provided under this Agreement may be terminated immediately (a) upon
written notice from Lockbox Processor or Depository Bank to the other and
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to Borrower and Lender should Lender fail to make any payment when due to
Lockbox Processor or Depository Bank under the terms of this Agreement, or
(b) upon written confirmation by Lockbox Processor or Depository Bank to
the other and to Lender of receipt by Lockbox Processor or Depository
Bank, as the case may be, of written notice from Lender requesting
immediate termination of this Agreement. Borrower and Lender agree that
the Lender Account may be closed as provided in the Account Documentation.
The rights of Lockbox Processor and Depository Bank and the obligations of
Borrower and Lender under Sections 6, 16, 18, 19, 20, 21 and 23 of this
Agreement will survive the termination of this Agreement and/or the
closure of the Lender Account, and any liability of any party to this
Agreement, as determined under the provisions of this Agreement, with
respect to acts or omissions of such party prior to such termination or
closure will also survive such termination or closure. Upon any such
termination or closure, (a) Lockbox Processor will close the Lockbox, (b)
Lockbox Processor will dispose of the mail addressed to the Lockbox in the
manner instructed by Lender for a period of three months after the
termination date, unless arranged otherwise between Lender and Lockbox
Processor, with Lockbox Processor's fees with respect to such disposition
being prepaid directly to Lockbox Processor at the time of such
termination by a check made payable to Lockbox Processor, and (c) all
ledger balances in the Lender Account on the date of the closure of the
Lender Account will be transferred to Lender as requested by Lender in
writing to Depository Bank. Notice of termination shall be transmitted by
Certified Mail, Return Receipt Requested, courier, or by personal delivery
to the notice address designated at the end of this Agreement. No such
termination shall impair the rights of any party with respect to items
processed prior to the effective date of termination. Borrower may not
terminate this Agreement without prior written consent of Lender.
24. Notices. All notices from one party to another shall be in writing, or be
made by a telecommunications device capable of creating a written record,
shall be delivered to Borrower, Lender, Lockbox Processor and/or
Depository Bank at their addresses for all notices specified at the end of
this Agreement, or any other address of any party notified to the other
parties in writing, and shall be effective upon receipt. Any notice sent
by one party to this Agreement to another party shall also be sent to the
other parties to this Agreement. Lockbox Processor and Depository Bank are
authorized by Borrower and Lender to act on any instructions and notices
received by Lockbox Processor or Depository Bank if (a) such instructions
or notices purport to be made in the name of Lender, (b) Lockbox Processor
or Depository Bank reasonably believes that they are so made, and (c) they
do not conflict with the terms of this Agreement, including, but not
limited to, the Processing Procedures, as such terms may be amended from
time to time, unless such conflicting instructions or notices are
supported by a court order.
25. Usury. It is never the intention of Depository Bank or Lockbox Processor
to violate any applicable usury or interest rate laws. Depository Bank
does not agree to, or intend to contract for, charge, collect, take,
reserve or receive (collectively, "charge or collect") any amount in the
nature of interest or in the nature of a fee, penalty or other charge
which would in any way or event cause Depository Bank to charge or collect
more than the maximum Depository Bank would be permitted to charge or
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collect by any applicable federal or state law. Lockbox Processor does not
agree to, or intend to contract for, charge or collect any amount in the
nature of interest or in the nature of a fee, penalty or other charge
which would in any way or event cause Lockbox Processor to charge or
collect more than the maximum Lockbox Processor would be permitted to
charge or collect by any applicable federal or state law. Any such excess
interest or unauthorized fee shall, notwithstanding anything stated to the
contrary in this Agreement, be applied first to reduce the amount owed, if
any, and then any excess amounts will be refunded.
26. Successors and Assigns. Neither Borrower nor Lender may assign or transfer
its rights or obligations under this Agreement to any person or entity
without the prior written consent of Lockbox Processor and Depository
Bank, which consent will not be unreasonably withheld. Neither Depository
Bank nor Lockbox Processor may assign its rights or obligations under this
Agreement to any person or entity without the prior written consent of
Lender, which consent will not be unreasonably withheld; provided,
however, that no such consent will be required if, in the case of
Depository Bank, the assignee is a bank affiliate of Depository Bank or,
in the case of Lockbox Processor, the assignee is a subcontractor hired by
Lockbox Processor to perform some or all of the Remittance processing
obligations of Lockbox Processor under this Agreement.
27. Governing Law. Borrower and Lender understand that Lockbox Processor's
provision of the Lockbox Service and Depository Bank's provision of the
Collection Account Service and the other services it is to provide under
this Agreement are subject to federal laws and regulations. To the extent
that such federal laws and regulations are not applicable, this Agreement
shall be governed by and be construed in accordance with the laws of the
State of California.
28. Severability. To the extent that this Agreement, the Lockbox Service or
the other services to be provided under this Agreement are inconsistent
with, or prohibited or unenforceable under, any applicable law or
regulation, they will be deemed ineffective only to the extent of such
prohibition or unenforceability and be deemed modified and applied in a
manner consistent with such law or regulation. Any provision of this
Agreement which is deemed unenforceable or invalid in any jurisdiction
shall not affect the enforceability or validity of the remaining
provisions of this Agreement or the same provision in any other
jurisdiction.
29. Entire Agreement. This Agreement, together with the Account Documentation,
contains the entire and only agreement among any or all of the parties to
this Agreement with respect to (a) the services to be provided by Lockbox
Processor and Depository Bank under this Agreement, (b) the interest of
Lender and Borrower in the Remittances, the Lockbox, the Account Funds and
the Lender Account, and (c) the obligations of Lockbox Processor and
Depository Bank to Lender and Borrower in connection with the Remittances,
the Lockbox, the Account Funds and the Lender Account, except that Lender
and Borrower may have one or more agreements between themselves concerning
such subject matter, which shall not be binding on, or affect Lockbox
Processor or Depository Bank in any way, and with which neither Lockbox
Processor nor Depository Bank need be concerned.
[SIGNATURE PAGE FOLLOWS]
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This Agreement has been signed by the duly authorized officers or
representatives of each of the parties to this Agreement on the date specified
below.
Date: March __, 2005
Lender Account Number: Account No. [ ], ABA No. 000000000
Borrower Account Number: Account No. [ ], ABA No. 000000000
SOLUNET STORAGE, INC. XXXXX FARGO BUSINESS CREDIT, INC.
By: By:
------------------------------------------------ ----------------------------------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer Title: Vice President
Address: Address:
0000 Xx. Xxxxxxx Xx., Xxxxx 000 MAC C7300-210
Xxxxxxxxx, XX 00000 0000 Xxxxxxxx
Telephone: (000) 000-0000 Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000
XXXXX FARGO BANK, N.A., as XXXXX FARGO BANK, N.A., as Depository Bank
Lockbox Processor
By: By:
------------------------------------------------ ----------------------------------------------------
Name: Name:
---------------------------------------------- --------------------------------------------------
Title: Title:
--------------------------------------------- -------------------------------------------------
Address: Address:
MAC C301-037 MAC C301-037
0000 Xxxxxxxx 0000 Xxxxxxxx
Xxxxxx, XX 00000 Xxxxxx, XX 00000
Telephone: Telephone:
----------------------------------------- ---------------------------------------------
Facsimile: Facsimile:
----------------------------------------- ---------------------------------------------
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FOUR PARTY WHOLESALE LOCKBOX PROCESSING PROCEDURES
(Lender Collection Account - Exhibit "A")
THESE ARE THE PROCESSING PROCEDURES FOLLOWED BY THE LOCKBOX PROCESSOR ("LOCKBOX
PROCESSOR") IN PERFORMING ITS LOCKBOX SERVICE. TERMS USED IN THESE PROCEDURES
WILL HAVE THE MEANINGS GIVEN TO THEM IN THE WHOLESALE LOCKBOX AND COLLECTION
ACCOUNT AGREEMENT.
1. Disposition of Remittance Materials. On each day that Lockbox Processor
offers the Lockbox Service (a "Business Day"), Lockbox Processor will
collect from the Lockbox the envelopes and other contents of the Lockbox.
Lockbox Processor will open the envelopes and inspect any Remittances,
Remittance statements, invoices, correspondence, checks, cash, papers,
documents and other items in the envelopes. Unless otherwise requested by
Lender and agreed to by Lockbox Processor, if cash is sent to the Lockbox
with any materials sent to the Lockbox ("Remittance Materials"), the cash
will be removed from the envelope containing the Remittance Materials and
a credit advice of the amount of the cash will be placed in such envelope
with the remainder of the envelope's contents. Except as otherwise
specifically provided in these Procedures or in the Wholesale Lockbox and
Collection Account Agreement signed by Lender (the "Agreement"), or as
specifically requested by Lender and agreed to by Lockbox Processor,
Lockbox Processor will not reconcile the checks, cash or other items in
the envelopes to invoices, to Remittance statements or to any other
documents or papers in the envelopes or elsewhere. After inspection,
Lockbox Processor will process the checks and any cash in the envelopes as
provided in this Section 1 and in Section 2 of these Procedures and, if
provided in this Section 1 or Section 2, deposit such checks and cash in
the Lender Account.
(a) Checks Not to Be Deposited. Unless otherwise requested by Lender
and agreed to by Lockbox Processor, Lockbox Processor will not deposit
checks falling into any of the following five categories or checks which
Lender has specifically instructed Lockbox Processor in writing not to
deposit:
(i) Unacceptable Payees. Checks where the name or designation
of the payee is not the name or designation specified as provided in
these Procedures by Lender in writing to Lockbox Processor for
acceptable payees or a reasonable variation of such name or
designation.
(ii) Postdated and Staledated Checks. Checks which are
postdated three or more days after the date they are collected from
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the Lockbox, postdated checks that would not be paid on
presentation, and checks dated six months or more prior to the date
they are collected from the Lockbox.
(iii) Indeterminable Amount. Checks where the correct amount
of the check cannot be determined from the check and the documents
accompanying the check or where the numerical and written amounts of
the check are not the same and the envelope containing the check did
not contain an invoice or a remittance statement or, if such were
included, the amount of such invoice or remittance statement did not
match either the numerical or written amount on the check.
(iv) Unidentified Drawer. Checks which do not bear the
drawer's signature.
(v) Alterations. Checks with alterations; provided, however,
that Lockbox Processor will only use its best efforts to catch such
alterations and prevent deposits. As a result, Lockbox Processor
will have no liability whatsoever, despite anything to the contrary
in the Agreement, for its deposit of any check containing an
alteration, unless such deposit results directly from the willful
misconduct of Lockbox Processor's officers or employees.
(b) Checks to Be Deposited. Unless Lender specifies otherwise in
writing to Lockbox Processor, checks which do not fall into one of the
five categories listed in Section 1(a) above will be deposited as provided
in Section 2 below in the Lender Account, and checks falling into either
of the following two categories will be deposited in the Lender Account
after being processed as provided below, unless they also fall into one of
the five categories listed in Section 1(a) above, in which case they will
not be deposited.
(i) Discrepancies in Amount. Checks where the numerical and
written amounts of the check are not the same, in which case the
amount deposited will be that amount which corresponds to the amount
on the invoice or Remittance statement enclosed in the envelope with
the check. If the numerical and written amounts on any check are the
same, but do not correspond to the amount on the invoice or
Remittance statement enclosed in the envelope with the check, the
check amount will be deposited.
(ii) Missing Date. Checks which are not dated, in which case
the check will be deposited after being dated by Lockbox Processor
as of the date it is collected from the Lockbox.
(c) Restrictive Notations. Checks bearing restrictive notations,
such as "Paid in Full," will be handled on a best efforts basis in
accordance with the written request of Lender as agreed to by Lockbox
Processor. As Lockbox Processor can only use its best efforts to comply
with such instructions, Lockbox Processor will have no liability
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whatsoever, despite anything to the contrary in the Agreement, for its
failure to comply with such instructions, unless such failure results
directly from the willful misconduct of Lockbox Processor's officers or
employees.
(d) Foreign Checks. Checks drawn on a foreign bank or in a currency
other than United States dollars may, at Lockbox Processor's sole
discretion, be deposited.
2. Deposit of Checks and Cash. During each Business Day which is also a
Banking Day Lockbox Processor will make deposits of the acceptable checks
and cash received in the Lockbox by crediting the Lender Account for the
amount of such checks and cash. Except as otherwise specifically provided
in the Agreement, the normal and customary laws, rules, practices and
procedures for handling deposits to checking accounts will apply to these
Procedures and the Lockbox Service.
3. Advice of Deposits. Lockbox Processor will notify Lender and Borrower of
each credit to the Lender Account by sending Lender and Borrower an advice
of deposit to the Lender Account. If an advice of a deposit is inaccurate
in any way when such advice is first received by Lender or Borrower, or if
an advice of deposit for the Lender Account does not confirm a credit
which should have been made during the time period covered by such advice,
the party receiving the advice must notify Lockbox Processor of such
inaccuracy or omission within thirty (30) calendar days after the date
such advice of deposit is received.
4. Mailing Remittance Materials to Lender. Unless otherwise specified by
Lender in writing to Lockbox Processor, (a) if an envelope sent to the
Lockbox contains cash or checks which are deposited, Lockbox Processor
will mail such envelope and the Remittance Materials enclosed in such
envelope, including, but not limited to, photocopies, computer listings
and deposit advices, to Borrower; and (b) if an envelope sent to the
Lockbox contains checks which are not deposited, or no cash or checks at
all, Lockbox Processor will mail such envelope and the Remittance
Materials and any checks in such envelope to Lender. On a Banking Day when
Lockbox Processor collects no cash or checks from the Lockbox, Lockbox
Processor will send a statement to that effect to Lender and Borrower if
Lender and/or Borrower so requests in writing.
5. Changes in Names or Designations of Payees. Borrower may at any time upon
ten (10) calendar days prior written notice to Lockbox Processor request
that a name or designation on the list of acceptable payees sent to
Lockbox Processor be deleted or added, and Lockbox Processor will add or
delete the name or designation if the request is acceptable to Lockbox
Processor and is approved by Lender in writing. Listed below are the
acceptable payees as directed by Lender:
Solunet Storage, Inc.
SANZ Federal
Stornet Solutions
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Exhibit D to Amendment
COLLECTION ACCOUNT AGREEMENT
COLLECTION ACCOUNT AGREEMENT
(Lender Collection Account - ACH Debit Entry Transfers)
This Collection Account Agreement (the "Agreement"), dated as of the date
specified at the end of this Agreement, is entered into among Solunet Storage,
Inc. ("Company"), Xxxxx Fargo Business Credit, Inc. ("Lender") and Xxxxx Fargo
Bank, National Association ("Bank"), and sets forth the rights of Lender and the
obligations of Bank with respect to the deposit account of Lender at Bank
identified at the end of this Agreement as the "Collection Account".
1. Lender's Interest in Collection Account. Lender represents that it is
either (i) a lender who has extended credit to Company and has been
granted a security interest in the Collection Account or (ii) such a
lender and the agent for a group of such lenders (the "Lenders"). Company
hereby confirms, and Bank hereby acknowledges, the security interest
granted by Company to Lender in all of Company's right, title and interest
in and to the Collection Account and all sums now or hereafter on deposit
in or payable or withdrawable from the Collection Account (the "Account
Funds"). Except as specifically provided otherwise in this Agreement,
Company has given Lender complete control over the Account Funds. Once
deposited to the Collection Account, all Account Funds belong exclusively
to Lender, and Company retains no further interest in them. Company and
Lender would like to use the Collection Account Service of Bank described
in this Agreement (the "Service") to further the arrangements between
Lender and Company regarding the Collection Account and the Account Funds.
2. Access to Collection Account. Company agrees that it will not be able to
make debits or withdrawals from the Collection Account, that it will not
have access to the Collection Account or any Account Funds, and that
Lender will have exclusive access to the Collection Account and Account
Funds, except as specifically provided in this Agreement or as
specifically agreed by Lender in writing.
3. Balance Reports. Bank agrees, at the telephone request of Lender on any
Business Day (a day on which Bank is open to conduct its regular banking
business, other than a Saturday, Sunday or public holiday), to make
available to Lender a report ("Balance Report") showing the opening
available balance in the Collection Account as of the beginning of such
Business Day, either on-line or by facsimile transmission, at Bank's
option. Lender and Company understand and agree that the opening available
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balance in the Collection Account at the beginning of any Business Day
will be determined after deducting from the Collection Account the face
amount of all Returned Items (as defined in Section 8 of this Agreement).
4. Transfers to Lender. At the specific request of Lender, Bank agrees that
it will process each automated clearing house debit entry (each an "ACH
Debit") initiated by a financial institution other than Bank for transfer
of funds out of the Collection Account if (i) the electronic file
information for such ACH Debit identifies the debiting entity by the same
company code which Lender previously furnished to Depository Bank in
writing, in which case the ACH Debit in question, for purposes of this
Agreement, will be deemed to have been duly authorized by Lender,
regardless of whether in fact it was so authorized, so long as Bank
processes the ACH Debit in good faith, and (ii) such ACH Debit does not
exceed the ledger balance in the Collection Account at the time the ACH
Debit is to settle. Lender agrees to pay to Bank immediately on demand,
without setoff or counterclaim, the amount of any overdraft in the
Collection Account caused by an ACH Debit exceeding the ledger balance in
the Collection Account at the time such ACH Debit settles. Bank, Lender
and Company each agree that Bank will comply with instructions given to
Bank by Lender directing disposition of funds in the Collection Account
without further consent by Company, subject otherwise to the terms of this
Agreement and Bank's standard policies, procedures and documentation in
effect from time to time governing the type of disposition requested.
Except as otherwise required by law, Bank will not agree with any third
party to comply with instructions for disposition of funds in the
Collection Account originated by such third party.
5. Delays in Making Funds Transfers. Lender and Company understand that an
ACH Debit transfer may be delayed or not made if (a) the transfer would
cause Bank to exceed any limitation on its intra-day net funds position
established in accordance with Federal Reserve or other regulatory
guidelines or to violate any other Federal Reserve or other regulatory
risk control program, or (b) the ACH Debit transfer would otherwise cause
Bank to violate any applicable law or regulation. If an ACH Debit transfer
cannot be made or will be delayed, Bank will notify Lender by telephone.
6. Reliance on Identifying Numbers. If the financial institution ("ODFI")
initiating an ACH Debit out of the Collection Account indicates a name and
an identifying number for the financial institution ("RDFI") of the person
or entity to receive the ACH Debit transfer, Lender and Company understand
and agree that Bank may rely on the number indicated by the ODFI even if
that number identifies an RDFI different than the one that has been named.
If the ODFI indicates a name and an account number for the person or
entity to receive the ACH Debit transfer, Lender and Company understand
and agree that Bank may rely on the indicated account number even if that
number is not the account number for the person or entity who is to
receive the transfer.
7. Reporting Errors in Transfers. If Lender or Company learns of any
erroneous or unauthorized ACH Debit transfer from the Collection Account,
then the party learning of such erroneous or unauthorized transfer (the
"Informed Party") must notify Bank as soon as possible by telephone at
(800) AT-XXXXX (which is a recorded line), and provide written
confirmation to Bank of such telephonic notice within two Business Days at
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the address given for Bank on the signature page of this Agreement. In no
case may such notice to Bank by an Informed Party be made more than
fourteen (14) calendar days after such Informed Party learns of the
erroneous or unauthorized transfer. If an ACH Debit transfer is made in
error or without authorization and Bank suffers a loss because an Informed
Party breached its agreement to notify Bank of such error within the time
limits specified in this Section 7, then such Informed Party shall
reimburse Bank for the loss promptly upon demand by Bank; provided,
however, that in the event both Lender and Company breach this
notification requirement, Lender shall not be obligated to reimburse Bank
for the loss unless Company fails to satisfy Bank's demand for
reimbursement within fifteen (15) calendar days after demand is made on
Company.
8. Returned Item Amounts. Lender and Company understand and agree that the
face amount ("Returned Item Amount") of each Returned Item will be paid by
Bank debiting the Collection Account, without prior notice to Lender or
Company. As used in this Agreement, the term "Returned Item" means (i) any
item deposited to the Collection Account and returned unpaid, whether for
insufficient funds or for any other reason, and without regard to the
timeliness of such return or the occurrence or timeliness of any drawee's
notice of non-payment; (ii) any item subject to a claim against Bank of
breach of transfer or presentment warranty under the Uniform Commercial
Code, as adopted in the applicable state; (iii) any automated clearing
house ("ACH") entry credited to the Collection Account and returned unpaid
or subject to an adjustment entry under applicable clearing house rules,
whether for insufficient funds or for any other reason, and without regard
to the timeliness of such return or adjustment; (iv) any credit to the
Collection Account from a merchant card transaction, against which a
contractual demand for chargeback has been made; and (v) any credit to the
Collection Account made in error. Company agrees to pay all Returned Item
Amounts immediately on demand, without setoff or counterclaim, to the
extent there are not sufficient funds in the Collection Account to cover
the Returned Item Amounts on the day they are to be debited from the
Collection Account. Lender agrees to pay all Returned Item Amounts within
thirty (30) calendar days after demand, without setoff or counterclaim, to
the extent the Returned Item Amounts are not paid in full by Company
within fifteen (15) calendar days after demand on Company by Bank, and to
the extent Lender received proceeds from the corresponding Returned Items.
9. Bank Fees. Company agrees to pay all Bank's fees and charges for the
maintenance and administration of the Collection Account and for the
treasury management and other account services provided with respect to
the Collection Account (collectively "Bank Fees"), including, but not
limited to, the fees for (a) the Balance Reports provided on the
Collection Account, (b) the wire transfer services received with respect
to the Collection Account, (c) Returned Items, (d) funds advanced to cover
overdrafts in the Collection Account (but without Bank being in any way
obligated to make any such advances), and (e) duplicate bank statements on
the Collection Account. The Bank Fees will be paid by Bank debiting one or
more of the demand deposit operating accounts of Company at Bank specified
at the end of this Agreement (the "Operating Accounts"). All such debits
will be made on the Business Day that the Bank Fees are due without notice
to Lender or Company. If there are not sufficient funds in the Operating
Accounts to cover fully the Bank Fees on the Business Day they are debited
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from the Operating Accounts, or if no Operating Accounts are indicated at
the end of this Agreement, such shortfall or the amount of such Bank Fees
will be paid by Company sending Bank a check in the amount of such
shortfall or such Bank Fees, without setoff or counterclaim, within
fifteen (15) calendar days after demand of Bank. Lender agrees to pay the
Bank Fees within thirty (30) calendar days after demand, without setoff or
counterclaim, to the extent such Bank Fees are not paid in full by Company
by check within fifteen (15) calendar days after demand on Company by
Bank. Bank may, in its discretion, change the Bank Fees upon thirty (30)
calendar days prior written notice to Company and Lender.
10. Account Documentation. Lender and Company agree that, except as
specifically provided in this Agreement, the Collection Account will be
subject to, and Bank's operation of the Collection Account will be in
accordance with, the terms and provisions of Bank's deposit account
agreement governing the Collection Account ("Account Agreement"), a copy
of which Company and Lender acknowledge having received.
11. Bank Statements. Bank will, if so indicated on the signature page of this
Agreement, send to Lender by United States mail, at the address indicated
for Lender after its signature to this Agreement, duplicate copies of all
bank statements on the Collection Account which are sent to Company.
Company and/or Lender will have thirty (30) calendar days after receipt of
a bank statement to notify Bank of an error in such statement. Bank's
liability for such errors is limited as provided in the "Limitation of
Liability" section of this Agreement.
12. Waiver of Rights. Bank hereby waives any right which Bank may have or
acquire to apply any Account Funds against the payment of any indebtedness
from time to time owing to Bank from Company, except for debits to the
Collection Account permitted under this Agreement for the payment of
Returned Item Amounts or Bank Fees.
13. Bankruptcy Notice; Effect of Filing. If Bank at any time receives notice
of the commencement of a bankruptcy case or other insolvency or
liquidation proceeding by or against Company (a "Bankruptcy Notice"), Bank
will continue to comply with its obligations under this Agreement, except
to the extent that any action required of Bank under this Agreement is
prohibited under applicable bankruptcy laws or regulations or is stayed
pursuant to the automatic stay imposed under the United States Bankruptcy
Code or by order of any court or agency. With respect to any obligation of
Lender hereunder which requires prior demand upon Company, the
commencement of a bankruptcy case or other insolvency or liquidation
proceeding by or against Company shall automatically eliminate the
necessity of such demand upon Company by Bank, and shall immediately
entitle Bank to make demand on Lender with the same effect as if demand
had been made upon Company and the time for Company's performance had
expired.
14. Legal Process, Legal Notices and Court Orders. Bank will comply with any
legal process, legal notice or court order it receives if Bank determines
in its sole discretion that the legal process, legal notice or court order
is legally binding on it.
15. Indemnification for Following Instructions. Lender and Company each agree
that, notwithstanding any other provision of this Agreement, Bank will not
be liable to Lender or Company for any losses, liabilities, damages,
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claims (including, but not limited to, third party claims), demands,
obligations, actions, suits, judgments, penalties, costs or expenses,
including, but not limited to, attorneys' fees, (collectively, "Losses and
Liabilities") suffered or incurred by Lender or Company as a result of or
in connection with, (a) Bank complying with any binding legal process,
legal notice or court order referred to in Section 14 of this Agreement,
(b) Bank following any instruction or request of Lender, or (c) Bank
complying with its obligations under this Agreement. Further, Company, and
to the extent not paid by Company within fifteen (15) calendar days after
demand, Lender, will indemnify Bank against any Losses and Liabilities
Bank may suffer or incur as a result of or in connection with any of the
circumstances referred to in clauses (a) through (c) of the preceding
sentence.
16. No Representations or Warranties of Bank. Bank agrees to perform its
obligations under this Agreement in a manner consistent with the quality
provided when Bank performs similar services for its own account. However,
Bank will not be responsible for the errors, acts or omissions of others,
such as communications carriers, correspondents or clearinghouses through
which Bank may perform its obligations under this Agreement or receive or
transmit information in performing its obligations under this Agreement.
Lender and Company also understand that Bank will not be responsible for
any loss, liability or delay caused by wars, failures in communications
networks, labor disputes, legal constraints, fires, power surges or
failures, earthquakes, civil disturbances or other events beyond Bank's
control. BANK MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES
WITH RESPECT TO THE SERVICE OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS
AGREEMENT.
17. Limitation of Liability. In the event that Lender, Company or Bank suffers
or incurs any Losses and Liabilities as a result of, or in connection
with, its or any other party's performance or failure to perform its
obligations under this Agreement, the affected parties shall negotiate in
good faith in an effort to reach a mutually satisfactory allocation of
such Losses and Liabilities, it being understood that Bank will not be
responsible for any Losses and Liabilities due to any cause other than its
own negligence or breach of this Agreement, in which case its liability to
Lender and Company shall, unless otherwise provided by any law which
cannot be varied by contract, be limited to direct money damages in an
amount not to exceed ten (10) times all the Bank Fees charged or incurred
during the calendar month immediately preceding the calendar month in
which such Losses and Liabilities occurred (or, if no Bank Fees were
charged or incurred in the preceding month, the Bank Fees charged or
incurred in the month in which the Losses and Liabilities occurred).
Company will indemnify Bank against all Losses and Liabilities suffered or
incurred by Bank as a result of third party claims; provided, however,
that to the extent such Losses and Liabilities are directly caused by
Bank's negligence or breach of this Agreement such indemnity will only
apply to those Losses and Liabilities which exceed the liability
limitation specified in the preceding sentence. The limitation of Bank's
liability and the indemnification by Company set out above will not be
applicable to the extent any Losses and Liabilities of any party to this
Agreement are directly caused by Bank's gross negligence or willful
misconduct. IN NO EVENT WILL BANK BE LIABLE FOR ANY SPECIAL,
CONSEQUENTIAL, INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES, WHETHER ANY CLAIM
IS BASED ON CONTRACT OR TORT, WHETHER THE LIKELIHOOD OF SUCH DAMAGES WAS
D-5
KNOWN TO BANK AND REGARDLESS OF THE FORM OF THE CLAIM OR ACTION,
INCLUDING, BUT NOT LIMITED TO, ANY CLAIM OR ACTION ALLEGING GROSS
NEGLIGENCE, WILLFUL MISCONDUCT, FAILURE TO EXERCISE REASONABLE CARE OR
FAILURE TO ACT IN GOOD FAITH. Any action against Bank by Company or Lender
under or related to this Agreement must be brought within twelve months
after the cause of action accrues.
18. Termination. This Agreement and the Service may be terminated by Lender or
Bank at any time by either of them giving thirty (30) calendar days prior
written notice of such termination to the other two parties to this
Agreement at their contact addresses specified after their signatures to
this Agreement; provided, however, that this Agreement and the Service may
be terminated immediately upon written notice from Bank to Company and
Lender should Lender fail to make any payment when due to Bank from Lender
under the terms of this Agreement. Lender and Company agree that the
Collection Account may be closed by Bank as provided in the Account
Agreement. Company's and Lender's obligation to report errors in ACH Debit
transfers and bank statements and to pay the Bank Fees, as well as the
indemnifications made, and the limitations on the liability of Bank
accepted, by Company and Lender under this Agreement will continue after
the termination of this Agreement and/or the closure of the Collection
Account with respect to all the circumstances to which they are applicable
existing or occurring before such termination or closure, and any
liability of any party to this Agreement, as determined under the
provisions of this Agreement, with respect to acts or omissions of such
party prior to such termination or closure will also survive such
termination or closure. Upon any termination of this Agreement and the
Service or closure of the Collection Account all collected and available
balances in the Collection Account on the date of such termination or
closure will be transferred to Lender as requested by Lender in writing to
Bank.
19. Modifications, Amendments, and Waivers. This Agreement may not be modified
or amended, or any provision thereof waived, except in a writing signed by
all the parties to this Agreement; provided, however, that the Bank Fees
may be changed after thirty (30) calendar days prior written notice to
Company and Lender.
20. Notices. All notices from one party to another shall be in writing, or be
made by a telecommunications device capable of creating a written record,
shall be delivered to Company, Lender and/or Bank at their contact
addresses specified after their signatures to this Agreement, or any other
address of any party notified to the other parties in writing, and shall
be effective upon receipt. Any notice sent by one party to this Agreement
to another party shall also be sent to the third party to this Agreement.
Bank is authorized by Company and Lender to act on any instructions or
notices received by Bank if (a) such instructions or notices purport to be
made in the name of Lender, (b) Bank reasonably believes that they are so
made, and (c) they do not conflict with the terms of this Agreement as
such terms may be amended from time to time, unless such conflicting
instructions or notices are supported by a court order.
D-6
21. Successors and Assigns. Neither Company nor Lender may assign or transfer
its rights or obligations under this Agreement to any person or entity
without the prior written consent of Bank, which consent will not be
unreasonably withheld. Bank may not assign its rights or obligations under
this Agreement to any person or entity without the prior written consent
of Lender, which consent will not be unreasonably withheld; provided,
however, that no such consent will be required if the assignee is a bank
affiliate of Bank.
22. Governing Law. Company and Lender understand that Bank's provision of the
Service under this Agreement is subject to federal laws and regulations.
To the extent that such federal laws and regulations are not applicable
this Agreement shall be governed by and be construed in accordance with
the laws of the state in which the office of Bank that maintains the
Collection Account is located, without regard to conflict of laws
principles.
23. Severability. To the extent that this Agreement or the Service to be
provided under this Agreement are inconsistent with, or prohibited or
unenforceable under, any applicable law or regulation, they will be deemed
ineffective only to the extent of such prohibition or unenforceability and
be deemed modified and applied in a manner consistent with such law or
regulation. Any provision of this Agreement which is deemed unenforceable
or invalid in any jurisdiction shall not affect the enforceability or
validity of the remaining provisions of this Agreement or the same
provision in any other jurisdiction.
24. Usury. It is never the intention of Bank to violate any applicable usury
or interest rate laws. Bank does not agree to, or intend to contract for,
charge, collect, take, reserve or receive (collectively, "charge or
collect") any amount in the nature of interest or in the nature of a fee,
penalty or other charge which would in any way or event cause Bank to
charge or collect more than the maximum Bank would be permitted to charge
or collect by any applicable federal or state law. Any such excess
interest or unauthorized fee shall, notwithstanding anything stated to the
contrary in this Agreement, be applied first to reduce the amount owed, if
any, and then any excess amounts will be refunded.
25. Counterparts. This Agreement may be executed in any number of counterparts
each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
26. Entire Agreement. This Agreement, together with the Account Agreement,
contains the entire and only agreement among all the parties to this
Agreement and between Bank and Company, and Bank and Lender, with respect
to (a) the Service, (b) the interest of Lender and the Lenders in the
Account Funds and the Collection Account, and (c) Bank's obligations to
Lender and the Lenders in connection with the Account Funds and the
Collection Account.
[SIGNATURE PAGE FOLLOWS]
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This Agreement has been signed by the duly authorized officers or
representatives of Company, Lender and Bank on the date specified below.
Date: March __, 2005
Collection Account Number:
-------------------------------------------------------
Operating Account Number(s):
-------------------------------------------------------
Remote Account Number: N/A
-------------------------------------------------------
Bank of Remote Account: N/A
-------------------------------------------------------
Company is to be sent duplicate Bank Statements.
SOLUNET STORAGE, INC. XXXXX FARGO BUSINESS CREDIT, INC.
By: By:
----------------------------------------------------------- --------------------------------------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxxxx
----------------------------------------------------------- --------------------------------------------------------
Title: Chief Financial Officer Title: Vice President
----------------------------------------------------------- --------------------------------------------------------
Address for all Notices: Address for all Notices:
0000 Xx. Xxxxxxx Xx., Xxxxx 000 MAC C7300-210
----------------------------------------------------------- --------------------------------------------------------
Xxxxxxxxx, XX 00000-0000 0000 Xxxxxxxx
----------------------------------------------------------- --------------------------------------------------------
Xxxxxx, XX 00000
----------------------------------------------------------- --------------------------------------------------------
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By:
--------------------------------------------------
Name:
--------------------------------------------------
Title:
--------------------------------------------------
Address for all Notices:
MAC C301-037
--------------------------------------------------
0000 Xxxxxxxx
--------------------------------------------------
Xxxxxx, XX 00000
--------------------------------------------------
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Exhibit E to Amendment
WHOLESALE LOCKBOX AND COLLECTION ACCOUNT AGREEMENT
WHOLESALE LOCKBOX AND COLLECTION ACCOUNT AGREEMENT
(Lender Collection Account - ACH Debit Entry Transfers)
This Wholesale Lockbox and Collection Account Agreement ("Agreement"), dated as
of the date specified at the end of this Agreement, by and among SANZ Inc.
("Borrower"), Xxxxx Fargo Business Credit, Inc. ("Lender"), Xxxxx Fargo Bank,
National Association, in its capacity as lockbox processor ("Lockbox
Processor"), and Xxxxx Fargo Bank, National Association, in its capacity as
depository bank ("Depository Bank"), sets out (i) the terms and conditions under
which Lockbox Processor and Depository Bank will provide their lockbox service
("Lockbox Service") to Borrower and Lender with respect to the post office
lockbox of Borrower at Lockbox Processor (the "Lockbox"), (ii) the terms and
conditions under which Depository Bank will provide its collection account
service (the "Collection Account Service") to Borrower and Lender with respect
to Lender's wholesale demand deposit account specified at the end of this
document (the "Lender Account"), and (iii) the rights of Borrower and Lender,
and the obligations of Depository Bank and Lockbox Processor to Borrower and
Lender, with respect to the Lockbox and the Lender Account.
1. Origin of Lender's Interest in the Lockbox Remittances. Borrower has
entered into a financing agreement with Lender in which Borrower has
granted to Lender a security interest in Borrower's present and future
accounts receivable and all proceeds thereof, and Borrower has agreed that
all collections and proceeds of such accounts receivable shall be remitted
in kind to Lender. Accounts receivable will be sent by account debtors of
Borrower to the Lockbox for deposit by Lockbox Processor into the Lender
Account. (When such accounts receivable have been received in the Lockbox
they will be referred to in this Agreement as the "Remittances" and when
the Remittances have been deposited into the Lender Account as provided in
this Agreement they will be referred to in this Agreement, together with
all other proceeds of the collateral security granted to Lender that are
deposited in the Lender Account, as the "Account Funds"). Lender and
Borrower would like to use the Collection Account Service to block
Borrower's access to the Lender Account and to provide daily transfers of
ledger balances in the Lender Account to Lender's account with Xxxxx Fargo
Bank, National Association.
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2. Commencement of Lockbox Service. The Lockbox Service will start on the
date arranged by Depository Bank and Lockbox Processor with Lender if the
following events have occurred before such date:
(a) Lockbox Processor has assigned the Lockbox to Borrower with the
number and at the address specified by Lockbox Processor to
Depository Bank, Lender and Borrower;
(b) The Lender Account has been opened and is in good standing;
(c) Lender has designated to Lockbox Processor in Exhibit "A" the
acceptable names or designations of payees on checks deposited
through the Lockbox Service, the procedures for handling returned
checks and restrictive notations on checks, and the processing
options selected by Lender for the Lockbox Service; and
(d) Borrower and Lender have provided to Lockbox Processor and
Depository Bank such other information and documents as Lockbox
Processor or Depository Bank request to enable Lockbox Processor and
Depository Bank to commence and operate the Lockbox Service and the
Collection Account Service for Borrower and Lender.
3. Access to Remittances, Lockbox and Account Funds. Borrower will not have
access to any Remittances unless such access is specifically provided in
this Agreement or is specifically authorized by Lender in writing. Lockbox
Processor, as the agent of Lender, will have exclusive access to the
Lockbox. Lockbox Processor will give appropriate instructions concerning
the Lockbox and the Remittances to the United States Post Office where the
Lockbox is located, and will not revoke such instructions without the
prior written consent of Lender. All Account Funds shall be the sole and
exclusive property of Lender withdrawable from the Lender Account only by
Lender as provided in this Agreement or in the account documentation
pursuant to which the Lender Account was opened. Borrower will have no
interest in, or any control over, any Account Funds, and Account Funds
shall not bear interest. Except as provided in this Agreement, the Lender
Account will not be subject to deductions, setoff, banker's lien, or any
other right in favor of any person other than Lender.
4. Processing Lockbox Mail. Each day that Lockbox Processor offers the
Lockbox Service, Lockbox Processor or its subcontractor will pick up at,
and transport from, the Lockbox the Remittances, and, except as otherwise
specifically provided in this Agreement, Lockbox Processor will open such
Remittances and process such Remittances in accordance with the Lockbox
Processing Procedures attached to this Agreement as Exhibit "A"
("Processing Procedures"). Borrower agrees to instruct its customers and
other obligors not to send cash to the Lockbox. Lockbox Processor will not
comply with any instruction or request of Borrower altering the Procedures
unless such instruction or request is agreed to in writing by Lender or is
supported by a court order. At the written request of Lender, with or
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without the consent of Borrower, Lockbox Processor will stop processing
Remittances and will send all such Remittances unopened to Lender, or to
Borrower if Lender so instructs Lockbox Processor in writing. Lender and
Borrower agree that Lockbox Processor will have no liability whatsoever
with respect to Remittances after they are sent to Lender, or to Borrower
in accordance with Lender's written instructions.
5. Deposits and Confirmations. Borrower and Lender authorize Lockbox
Processor to endorse checks and other payment instruments received at the
Lockbox and to deposit such items into the Lender Account as provided in
the Processing Procedures, even though such checks and other payment
instruments may be made payable to Borrower. Lockbox Processor will
provide to Lender and to Borrower an advice of deposits credited to the
Lender Account at their respective addresses specified at the end of this
Agreement for advice of deposits and statements. Depository Bank will
provide to Lender and to Borrower Depository Bank's regular statement
covering deposits to and withdrawals from the Lender Account at their
respective addresses specified at the end of this Agreement for advice of
deposits and statements. Borrower and/or Lender agree to notify Depository
Bank's Service Center, whose address and telephone number will be given to
Borrower and Lender, (a) of any error in an advice of deposit within
thirty (30) calendar days after Borrower and/or Lender receive such advice
of deposit and (b) of any error in a bank statement within thirty (30)
calendar days after Borrower and/or Lender receive such bank statement.
The liability of Lockbox Processor and Depository Bank for such errors is
limited as provided in Section 21 of this Agreement.
6. Account Documentation. Borrower and Lender understand that this Agreement
covers the Lockbox Service and, except as specifically provided in this
Agreement, does not cover the handling of the Lender Account. Except as
otherwise specifically provided in this Agreement, the Lender Account will
be handled and items drawn on or deposited into the Lender Account will be
processed by Depository Bank, and not Lockbox Processor, as Depository
Bank would perform such responsibilities with respect to any other demand
deposit account maintained at Depository Bank. As a result, the Lender
Account will be subject to, and Depository Bank's operation of the Lender
Account will be in accordance with, the terms and provisions of Depository
Bank's deposit account opening documentation and other Depository Bank
account related documentation (collectively, "Account Documentation"),
including, but not limited to, Depository Bank's demand deposit account
disclosure statement for the Lender Account as in effect and delivered to
Lender from time to time, a copy of which Borrower and Lender acknowledge
having received. Notwithstanding any provisions of any Account
Documentation, however, all Account Funds shall be the sole and exclusive
property of Lender.
7. Customer Service. Borrower and Lender understand that Depository Bank, and
not Lockbox Processor, will provide customer service for the Lockbox
Service. As a result, any questions or problems that Borrower or Lender
have with respect to the Lockbox Service should be addressed to Depository
Bank's Service Center. Depository Bank will facilitate the resolution of
any problem between Borrower or Lender and Lockbox Processor, but Borrower
and Lender understand that Lockbox Processor will be solely responsible
for any problems caused by its performance or failure to perform the
Lockbox Service.
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8. Returned Items. All checks or other items credited to the Lender Account
and returned to Depository Bank unpaid for any reason will be handled by
Depository Bank in the following manner:
(a) Any check with a face amount less than One Thousand Dollars
($1,000.00) which is returned because of insufficient funds will
automatically be redeposited by Depository Bank a second time.
(b) Any check which has been returned a second time or which is returned
for reasons other than insufficient funds or which has a face amount
of One Thousand Dollars ($1,000.00) or more and is returned for
insufficient funds will be charged back to Borrower's wholesale
demand deposit account maintained with Depository Bank specified at
the end of this Agreement (the "Borrower Account").
(c) If there are insufficient funds in the Borrower Account to cover any
chargeback, Lender agrees that Depository Bank may charge the Lender
Account for the amount of the insufficiency, up to the amount of the
returned items. If there are insufficient funds in the Lender
Account, Borrower and Lender agree to pay the amount of the
chargeback to the Lender Account, in immediately available funds,
within one business day after receipt of physical evidence of said
chargeback sent by facsimile to Borrower and Lender at their
facsimile numbers specified below.
(d) Any returned checks and debit memos with respect to returned checks
will be sent to Borrower.
9. ACH Debit Transfers from Lender Account. On each day when Depository Bank
is open for business (a "Banking Day") during the term of this Agreement,
at the specific request of Lender, Depository Bank will process automated
clearing house debits to the Lender Account initiated by banks other than
Depository Bank for transfers of funds out of the Lender Account (each an
"ACH Debit") so long as any such ACH Debit does not exceed the ledger
balance in the Lender Account at the end of the Banking Day immediately
preceding the date on which the ACH Debit is initiated. These transfers
will be made to Lender if Lender's account is the transfer-to account
specified in the ACH Debits by the initiating bank. Lender agrees to pay
to Depository Bank immediately on demand, without setoff or counterclaim,
the amount of any overdraft in the Lender Account caused by an ACH Debit
exceeding the ledger balance in the Lender Account at the time such ACH
Debit settles.
10. Delays in Making ACH Debit Transfers. Lender and Borrower understand that
an ACH Debit transfer may be delayed or not made if (a) the transfer would
cause Depository Bank to exceed any limitation on its intra-day net funds
position established in accordance with Federal Reserve or other
regulatory guidelines or to violate any other Federal Reserve or other
regulatory risk control program, or (b) the funds transfer would otherwise
cause Depository Bank to violate any applicable law or regulation. If an
ACH Debit transfer cannot be made or will be delayed, Depository Bank will
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attempt to notify Lender by telephone. Notwithstanding anything to the
contrary in this Section 10, Depository Bank agrees that its response to
any court order or other legal process, to the claim of any party in
bankruptcy, or the adverse claim of any individual or entity not a party
to this Agreement shall be made in accordance with the provisions of
Sections 16 and 18 hereof.
11. Reliance on Account Number of ACH Debit Transfer Beneficiary. If the bank
initiating an ACH Debit out of the Lender Account indicates a name and an
identifying number for the bank of the person or entity to receive the ACH
Debit transfer, Lender and Borrower understand that Depository Bank will
rely on the number indicated by the initiating bank even if that number
identifies a bank different from the named bank. If the bank initiating an
ACH Debit out of the Lender Account indicates a name and an account number
for the person or entity to receive the ACH Debit transfer, Lender and
Borrower understand that Depository Bank and the initiating bank may rely
on the indicated account number even if that account number is not the
account number for the person or entity who is to receive the transfer.
12. Reporting Errors in Transfers. If Lender or Borrower learns of any error
in an ACH Debit transfer or any unauthorized funds transfer, then the
party learning of such error or unauthorized transfer (the "Informed
Party") must notify Depository Bank as soon as possible by telephone at
(800) AT-XXXXX (which is a recorded line), and provide written
confirmation to Depository Bank of such telephonic notice within two
Business Days at the address given for Depository Bank on the signature
page of this Agreement. In no case may such notice to Depository Bank by
an Informed Party be made more than thirty (30) calendar days after
Depository Bank's first confirmation of an ACH Debit transfer or other
funds transfer to such Informed Party, whether such first confirmation
consists of the regular monthly statement for the Lender Account or
otherwise. If a funds transfer is made in error and Depository Bank
suffers a loss because Lender or Borrower breached its agreement to notify
Depository Bank of such error within this thirty (30) calendar day period,
then the party or parties which breached this agreement shall be obligated
to reimburse Depository Bank for such loss promptly upon demand by
Depository Bank; provided, however, that in the event both Lender and
Borrower breach this notification requirement, Lender shall not be
obligated to reimburse Depository Bank for such loss unless Borrower fails
to satisfy Depository Bank's demand for such reimbursement within fifteen
(15) calendar days after such demand is made on Borrower.
13. Contacts. Any contacts regarding operational matters with any party to
this Agreement shall be made to the person and address specified below for
advice of deposits and statements.
14. Depository Bank Fees. Borrower agrees to pay the fees for the Collection
Account Service charged by Depository Bank (the "Depository Bank Fees"),
which fees will be based on the charges specified in the standard
collection account fee schedule current at the time the fees are charged.
As changes in Depository Bank's operating costs, procedural requirements
or service volumes affect future costs of processing, Depository Bank will
periodically review the Depository Bank Fees. Should the results of such
periodic review warrant adjustment of the Depository Bank Fees, Borrower
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and Lender will receive a minimum of thirty (30) calendar day's written
notice prior to implementing such adjustment. Depository Bank will collect
the Depository Bank Fees by debiting the Borrower Account for the amount
of the Depository Bank Fees, without prior notice to Borrower or Lender,
on the day such Depository Bank Fees are due. Lender agrees to pay the
Depository Bank Fees within thirty (30) calendar days after Lender
receives a billing statement from Depository Bank for such fees, without
setoff or counterclaim, to the extent that Depository Bank is unsuccessful
in any attempt to automatically debit such fees from the Borrower Account.
15. Lockbox Processor Fees. Borrower agrees to pay the fees for the Lockbox
Service charged by Lockbox Processor (the "Lockbox Processor Fees"), which
fees for the standard lockbox processing procedures will be based on the
charges specified in that standard Lockbox Fee Schedule of Lockbox
Processor current at the time the fees are charged. As changes in Lockbox
Processor's operating costs, procedural requirements or service volumes
affect future costs of processing, Lockbox Processor will periodically
review the Lockbox Processor Fees. Should the results of such periodic
review warrant adjustment of the Lockbox Processor Fees, Borrower and
Lender will receive a minimum of thirty (30) calendar day's written notice
prior to implementing such adjustment. Depository Bank will collect the
Lockbox Processor Fees on behalf of Lockbox Processor by debiting the
Borrower Account for the amount of the Lockbox Processor Fees, without
prior notice to Borrower or Lender, on the day such Lockbox Processor Fees
are due. Lender agrees to pay the Lockbox Processor Fees within thirty
(30) calendar days after Lender receives a billing statement from
Depository Bank for such fees, without setoff or counterclaim, to the
extent that Depository Bank is unsuccessful in any attempt to
automatically debit such fees from the Borrower Account.
16. Court Order. If Lockbox Processor or Depository Bank is served with a
court order which affects the Lockbox or the Lender Account, Lockbox
Processor or Depository Bank, as the case may be, will act in accordance
with such court order. Subject to the provisions of Section 18, neither
Lockbox Processor nor Depository Bank shall, in response to the adverse
claim of Borrower or any third party, have the right to place a hold, nor
will it place a hold, on funds in, or in the process of being deposited
to, the Lockbox or the Lender Account, and Lockbox Processor and
Depository Bank will process the Remittances and Account Funds in strict
accordance with the terms and conditions of this Agreement, unless and
until either Lockbox Processor or Depository Bank, as the case may be,
receives a court order to the contrary, whether issued by a U.S.
Bankruptcy Court or any other court of competent jurisdiction. Lender
represents, warrants, and agrees that upon filing of voluntary or
involuntary proceedings under the U.S. Bankruptcy Code involving Borrower,
Lender shall at all times comply with applicable bankruptcy statutes,
rules, and other laws as they may relate to the Remittances and Account
Funds.
17. Ownership of Specifications, Records, Systems and Programs. Borrower and
Lender agree that any specifications, records, systems and programs,
including, among other things, computer software programs, which are
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utilized or developed by Lockbox Processor or Depository Bank in
connection with the Service or this Agreement are and will remain the sole
property of Lockbox Processor and Depository Bank.
18. Claims, Legal Process and Notices. If Depository Bank or Lockbox Processor
receives any claim, notice, legal process or court order relating to the
Remittances, the Lockbox, the Account Funds or the Lender Account,
Depository Bank or Lockbox Processor, as the case may be, will notify
Lender and Borrower of such receipt, unless Depository Bank or Lockbox
Processor know that Lender, with respect to so notifying Lender, or
Borrower, with respect to so notifying Borrower, are already aware of such
claim, notice, legal process or court order. Depository Bank or Lockbox
Processor, as the case may be, will notify Lender of such process, claim
or notice prior to its compliance. Lender and Borrower understand and
agree that Depository Bank and Lockbox Processor will comply with any such
legal process, legal notice or court order it receives (including, without
limitation, any summons, subpoena, levy, garnishment, or withholding
order) if Depository Bank or Lockbox Processor determines in its sole
discretion that such legal process, legal notice or court order is legally
binding on it. If any claim or notice received by Depository Bank or
Lockbox Processor is not legally binding on it, as determined in its sole
discretion, Depository Bank and Lockbox Processor agree to follow any
instructions of Lender to comply or not comply with such claim or notice
if (a) such instructions are given promptly after Lender is notified of
such claim or notice and (b) such instructions do not require Depository
Bank or Lockbox Processor to violate any applicable law, regulation or
court order. Borrower hereby irrevocably agrees that Depository Bank and
Lockbox Processor are to follow any such instructions of Lender with
respect to any such non-binding claim or notice even if such claim or
notice is from Borrower. If Depository Bank or Lockbox Processor do not
receive prompt instructions from Lender regarding compliance or
non-compliance with any such non-binding claim or notice, Lender and
Borrower agree that Depository Bank or Lockbox Processor may determine in
its sole discretion to comply or not to comply with such claim or notice,
except that neither Depository Bank nor Lockbox Processor will comply with
any such claim or notice from Borrower conflicting with the terms of this
Agreement.
19. Indemnification for Following Instructions. Lender and Borrower each agree
that, notwithstanding any other provision of this Agreement, neither
Depository Bank nor Lockbox Processor will be liable to Lender or Borrower
for any losses, liabilities, damages, claims (including, but not limited
to, third party claims), demands, obligations, actions, suits, judgments,
penalties, costs or expenses, including, but not limited to, attorneys'
fees, (collectively, "Losses and Liabilities") suffered or incurred by
Lender or Borrower as a result of, or in connection with, (a) Depository
Bank or Lockbox Processor following any instruction of Lender to comply or
not comply with any non-binding claim or notice referred to in Section 18
of this Agreement, (b) if no such instruction from Lender is promptly
received, Depository Bank or Lockbox Processor complying or not complying,
as determined in its sole discretion, with any such non-binding claim or
notice, (c) Depository Bank or Lockbox Processor following any other
instruction or request of Lender, or (d) Depository Bank or Lockbox
Processor complying with its obligations under this Agreement. Further,
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Borrower, and to the extent not paid by Borrower within fifteen (15)
calendar days after demand, Lender, will indemnify Depository Bank and
Lockbox Processor against any Losses and Liabilities Depository Bank or
Lockbox Processor suffer or incur as a result of, or in connection with,
any of the circumstances referred to in subsections (a) through (d) in the
preceding sentence.
20. No Representations or Warranties of Lockbox Processor or Depository Bank.
Depository Bank and Lockbox Processor will perform their obligations under
this Agreement in a manner consistent with the quality provided when
Depository Bank and Lockbox Processor perform similar services for their
own account. However, neither Lockbox Processor nor Depository Bank, nor
any subcontractor of either party, can be responsible for the errors, acts
or omissions of others, such as communications carriers, correspondents or
clearinghouses through which Lockbox Processor or Depository Bank may
perform their obligations under this Agreement or receive or transmit
information in performing their obligations under this Agreement. Further,
neither Lockbox Processor nor Depository Bank, nor any subcontractor of
either party, can be responsible for any loss, liability or delay caused
by wars, failures in communications networks, labor disputes, work
stoppages, legal constraints, fires, power surges or failures,
earthquakes, civil disturbances, acts or omissions of the U.S. Postal
Service, or other events beyond its control. NEITHER LOCKBOX PROCESSOR NOR
DEPOSITORY BANK MAKES ANY EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES
WITH RESPECT TO THE LOCKBOX SERVICE, THE COLLECTION ACCOUNT SERVICE, OR
ANY OTHER SERVICE IT IS TO PERFORM UNDER THIS AGREEMENT OTHER THAN THOSE
EXPRESSLY SPECIFIED IN THIS AGREEMENT.
21. Limitation of Liability. Borrower and Lender understand and agree that
Lockbox Processor shall utilize a subcontractor to perform the Lockbox
Service. If any party to this Agreement suffers or incurs any Losses and
Liabilities as a result of, or in connection with, its or any other
party's performance or failure to perform its obligations under this
Agreement, the affected parties will negotiate in good faith in an effort
to reach a mutually satisfactory allocation of such Losses and
Liabilities, it being understood that neither Lockbox Processor nor
Depository Bank will be responsible for any Losses and Liabilities due to
any cause other than its own negligence or breach of this Agreement (or
the negligence or breach of its subcontractor), in which case (a) if such
negligence or breach is a failure by Lockbox Processor to deposit any
check which should have been deposited pursuant to this Agreement, the
liability of Lockbox Processor and its subcontractor liability shall be
limited to direct money damages in an amount not to exceed interest on the
amount of such check at a rate equal to the cost of funds (at a reserve
adjusted daily interest rate which Depository Bank will determine) for the
time period such amount is not in the Lender Account, which time period
for the purpose of calculating such interest will not extend beyond the
end of the thirty (30) calendar day notice period referred to in Section 5
of this Agreement, and (b) if such negligence or breach results from any
other action or failure to act by Lockbox Processor or Depository Bank, or
any subcontractor of either party, the liability of Lockbox Processor and
Depository Bank, and any subcontractor of either party, shall be limited
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to direct money damages in an amount not to exceed ten (10) times all the
Lockbox Processor Fees, in the case of the liability of Lockbox Processor
and its subcontractor, or the Depository Bank Fees, in the case of the
liability of Depository Bank and its subcontractor, charged or incurred
during the calendar month immediately preceding the calendar month in
which such Losses and Liabilities occurred (or, if no Lockbox Processor
Fees or Depository Bank Fees were charged or incurred in the preceding
month, the Lockbox Processor Fees or Depository Bank Fees, as the case may
be, charged or incurred in the month in which the Losses and Liabilities
occurred). Borrower, and to the extent not paid by Borrower within fifteen
(15) calendar days after demand Lender within thirty (30) calendar days
after demand, will indemnify Lockbox Processor and Depository Bank against
any Losses and Liabilities suffered or incurred by Lockbox Processor or
Depository Bank as a result of third party claims to the extent such
Losses and Liabilities exceed the liability limitations specified in the
preceding sentence. The limitation of Lockbox Processor's liability and
Borrower's and Lender's indemnification of Lockbox Processor set forth
above shall not be applicable to the extent any Losses and Liabilities of
any party to this Agreement are directly caused by Lockbox Processor's
gross negligence or willful misconduct. The limitation of Depository
Bank's liability and Borrower's and Lender's indemnification of Depository
Bank set forth above shall not be applicable to the extent any Losses and
Liabilities of any party to this Agreement are directly caused by
Depository Bank's gross negligence or willful misconduct. IN NO EVENT WILL
LOCKBOX PROCESSOR, DEPOSITORY BANK OR LENDER, OR ANY SUBCONTRACTOR OF ANY
SUCH PARTY, BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, INDIRECT
OR PUNITIVE DAMAGES, WHETHER ANY CLAIM IS BASED ON CONTRACT OR TORT,
WHETHER THE LIKELIHOOD OF SUCH DAMAGES WAS KNOWN TO LOCKBOX PROCESSOR,
DEPOSITORY BANK OR LENDER, OR ANY SUBCONTRACTOR OF ANY SUCH PARTY, AND
REGARDLESS OF THE FORM OF THE CLAIM OR ACTION, INCLUDING, BUT NOT LIMITED
TO, ANY CLAIM OR ACTION ALLEGING GROSS NEGLIGENCE, WILLFUL MISCONDUCT,
FAILURE TO EXERCISE REASONABLE CARE OR FAILURE TO ACT IN GOOD FAITH. Any
action against Lockbox Processor or Depository Bank by Borrower or Lender
under or related to this Agreement or the Lockbox Service or the
Collection Account Service must be brought within twelve (12) months after
the cause of action accrues.
22. Amendments, Successors and Assigns. With the exception of price changes,
which require written notice to Borrower and Lender, and changes to the
funds transfer instructions in Section 9 of this Agreement, which require
the written approval of only Lender, this Agreement, including the
Processing Procedures, may not be modified or any provision thereof
waived, except in a writing signed by all the parties to this Agreement.
This Agreement shall be binding on the parties and their successors or
assigns.
23. Termination. This Agreement, the Lockbox Service, and the other services
to be provided under this Agreement may be terminated by Lender, Lockbox
Processor or Depository Bank at any time by any of them giving thirty (30)
calendar days prior written notice of such termination to the other
parties to this Agreement at their contact addresses specified at the end
of this Agreement; provided, however, that this Agreement, the Lockbox
Service, the Collection Account Service, and the other services to be
provided under this Agreement may be terminated immediately (a) upon
written notice from Lockbox Processor or Depository Bank to the other and
to Borrower and Lender should Lender fail to make any payment when due to
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Lockbox Processor or Depository Bank under the terms of this Agreement, or
(b) upon written confirmation by Lockbox Processor or Depository Bank to
the other and to Lender of receipt by Lockbox Processor or Depository
Bank, as the case may be, of written notice from Lender requesting
immediate termination of this Agreement. Borrower and Lender agree that
the Lender Account may be closed as provided in the Account Documentation.
The rights of Lockbox Processor and Depository Bank and the obligations of
Borrower and Lender under Sections 6, 16, 18, 19, 20, 21 and 23 of this
Agreement will survive the termination of this Agreement and/or the
closure of the Lender Account, and any liability of any party to this
Agreement, as determined under the provisions of this Agreement, with
respect to acts or omissions of such party prior to such termination or
closure will also survive such termination or closure. Upon any such
termination or closure, (a) Lockbox Processor will close the Lockbox, (b)
Lockbox Processor will dispose of the mail addressed to the Lockbox in the
manner instructed by Lender for a period of three months after the
termination date, unless arranged otherwise between Lender and Lockbox
Processor, with Lockbox Processor's fees with respect to such disposition
being prepaid directly to Lockbox Processor at the time of such
termination by a check made payable to Lockbox Processor, and (c) all
ledger balances in the Lender Account on the date of the closure of the
Lender Account will be transferred to Lender as requested by Lender in
writing to Depository Bank. Notice of termination shall be transmitted by
Certified Mail, Return Receipt Requested, courier, or by personal delivery
to the notice address designated at the end of this Agreement. No such
termination shall impair the rights of any party with respect to items
processed prior to the effective date of termination. Borrower may not
terminate this Agreement without prior written consent of Lender.
24. Notices. All notices from one party to another shall be in writing, or be
made by a telecommunications device capable of creating a written record,
shall be delivered to Borrower, Lender, Lockbox Processor and/or
Depository Bank at their addresses for all notices specified at the end of
this Agreement, or any other address of any party notified to the other
parties in writing, and shall be effective upon receipt. Any notice sent
by one party to this Agreement to another party shall also be sent to the
other parties to this Agreement. Lockbox Processor and Depository Bank are
authorized by Borrower and Lender to act on any instructions and notices
received by Lockbox Processor or Depository Bank if (a) such instructions
or notices purport to be made in the name of Lender, (b) Lockbox Processor
or Depository Bank reasonably believes that they are so made, and (c) they
do not conflict with the terms of this Agreement, including, but not
limited to, the Processing Procedures, as such terms may be amended from
time to time, unless such conflicting instructions or notices are
supported by a court order.
25. Usury. It is never the intention of Depository Bank or Lockbox Processor
to violate any applicable usury or interest rate laws. Depository Bank
does not agree to, or intend to contract for, charge, collect, take,
reserve or receive (collectively, "charge or collect") any amount in the
nature of interest or in the nature of a fee, penalty or other charge
which would in any way or event cause Depository Bank to charge or collect
E-10
more than the maximum Depository Bank would be permitted to charge or
collect by any applicable federal or state law. Lockbox Processor does not
agree to, or intend to contract for, charge or collect any amount in the
nature of interest or in the nature of a fee, penalty or other charge
which would in any way or event cause Lockbox Processor to charge or
collect more than the maximum Lockbox Processor would be permitted to
charge or collect by any applicable federal or state law. Any such excess
interest or unauthorized fee shall, notwithstanding anything stated to the
contrary in this Agreement, be applied first to reduce the amount owed, if
any, and then any excess amounts will be refunded.
26. Successors and Assigns. Neither Borrower nor Lender may assign or transfer
its rights or obligations under this Agreement to any person or entity
without the prior written consent of Lockbox Processor and Depository
Bank, which consent will not be unreasonably withheld. Neither Depository
Bank nor Lockbox Processor may assign its rights or obligations under this
Agreement to any person or entity without the prior written consent of
Lender, which consent will not be unreasonably withheld; provided,
however, that no such consent will be required if, in the case of
Depository Bank, the assignee is a bank affiliate of Depository Bank or,
in the case of Lockbox Processor, the assignee is a subcontractor hired by
Lockbox Processor to perform some or all of the Remittance processing
obligations of Lockbox Processor under this Agreement.
27. Governing Law. Borrower and Lender understand that Lockbox Processor's
provision of the Lockbox Service and Depository Bank's provision of the
Collection Account Service and the other services it is to provide under
this Agreement are subject to federal laws and regulations. To the extent
that such federal laws and regulations are not applicable, this Agreement
shall be governed by and be construed in accordance with the laws of the
State of California.
28. Severability. To the extent that this Agreement, the Lockbox Service or
the other services to be provided under this Agreement are inconsistent
with, or prohibited or unenforceable under, any applicable law or
regulation, they will be deemed ineffective only to the extent of such
prohibition or unenforceability and be deemed modified and applied in a
manner consistent with such law or regulation. Any provision of this
Agreement which is deemed unenforceable or invalid in any jurisdiction
shall not affect the enforceability or validity of the remaining
provisions of this Agreement or the same provision in any other
jurisdiction.
29. Entire Agreement. This Agreement, together with the Account Documentation,
contains the entire and only agreement among any or all of the parties to
this Agreement with respect to (a) the services to be provided by Lockbox
Processor and Depository Bank under this Agreement, (b) the interest of
Lender and Borrower in the Remittances, the Lockbox, the Account Funds and
the Lender Account, and (c) the obligations of Lockbox Processor and
Depository Bank to Lender and Borrower in connection with the Remittances,
the Lockbox, the Account Funds and the Lender Account, except that Lender
and Borrower may have one or more agreements between themselves concerning
such subject matter, which shall not be binding on, or affect Lockbox
Processor or Depository Bank in any way, and with which neither Lockbox
Processor nor Depository Bank need be concerned.
E-11
[SIGNATURE PAGE FOLLOWS]
E-12
This Agreement has been signed by the duly authorized officers or
representatives of each of the parties to this Agreement on the date specified
below.
Date: March __, 2005
Lender Account Number: Account No. [ ], ABA No. 000000000
Borrower Account Number: Account No. [ ], ABA No. 000000000
SANZ INC. XXXXX FARGO BUSINESS CREDIT, INC.
By: By:
------------------------------------------------ ----------------------------------------------------
Name: Xxxx Xxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: President Title: Vice President
Address: Address:
0000 Xx. Xxxxxxx Xx., Xxxxx 000 MAC C7300-210
Xxxxxxxxx, XX 00000 0000 Xxxxxxxx
Telephone: (000) 000-0000 Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000
XXXXX FARGO BANK, N.A., as XXXXX FARGO BANK, N.A., as Depository Bank
Lockbox Processor
By: By:
------------------------------------------------ ----------------------------------------------------
Name: Name:
---------------------------------------------- --------------------------------------------------
Title: Title:
--------------------------------------------- -------------------------------------------------
Address: Address:
MAC C301-037 MAC C301-037
0000 Xxxxxxxx 0000 Xxxxxxxx
Xxxxxx, XX 00000 Xxxxxx, XX 00000
Telephone: Telephone:
----------------------------------------- ---------------------------------------------
Facsimile: Facsimile:
----------------------------------------- ---------------------------------------------
E-13
FOUR PARTY WHOLESALE LOCKBOX PROCESSING PROCEDURES
(Lender Collection Account - Exhibit "A")
THESE ARE THE PROCESSING PROCEDURES FOLLOWED BY THE LOCKBOX PROCESSOR ("LOCKBOX
PROCESSOR") IN PERFORMING ITS LOCKBOX SERVICE. TERMS USED IN THESE PROCEDURES
WILL HAVE THE MEANINGS GIVEN TO THEM IN THE WHOLESALE LOCKBOX AND COLLECTION
ACCOUNT AGREEMENT.
1. Disposition of Remittance Materials. On each day that Lockbox Processor
offers the Lockbox Service (a "Business Day"), Lockbox Processor will
collect from the Lockbox the envelopes and other contents of the Lockbox.
Lockbox Processor will open the envelopes and inspect any Remittances,
Remittance statements, invoices, correspondence, checks, cash, papers,
documents and other items in the envelopes. Unless otherwise requested by
Lender and agreed to by Lockbox Processor, if cash is sent to the Lockbox
with any materials sent to the Lockbox ("Remittance Materials"), the cash
will be removed from the envelope containing the Remittance Materials and
a credit advice of the amount of the cash will be placed in such envelope
with the remainder of the envelope's contents. Except as otherwise
specifically provided in these Procedures or in the Wholesale Lockbox and
Collection Account Agreement signed by Lender (the "Agreement"), or as
specifically requested by Lender and agreed to by Lockbox Processor,
Lockbox Processor will not reconcile the checks, cash or other items in
the envelopes to invoices, to Remittance statements or to any other
documents or papers in the envelopes or elsewhere. After inspection,
Lockbox Processor will process the checks and any cash in the envelopes as
provided in this Section 1 and in Section 2 of these Procedures and, if
provided in this Section 1 or Section 2, deposit such checks and cash in
the Lender Account.
(a) Checks Not to Be Deposited. Unless otherwise requested by Lender
and agreed to by Lockbox Processor, Lockbox Processor will not deposit
checks falling into any of the following five categories or checks which
Lender has specifically instructed Lockbox Processor in writing not to
deposit:
(i) Unacceptable Payees. Checks where the name or designation
of the payee is not the name or designation specified as provided in
these Procedures by Lender in writing to Lockbox Processor for
acceptable payees or a reasonable variation of such name or
designation.
(ii) Postdated and Staledated Checks. Checks which are
postdated three or more days after the date they are collected from
E-14
the Lockbox, postdated checks that would not be paid on
presentation, and checks dated six months or more prior to the date
they are collected from the Lockbox.
(iii) Indeterminable Amount. Checks where the correct amount
of the check cannot be determined from the check and the documents
accompanying the check or where the numerical and written amounts of
the check are not the same and the envelope containing the check did
not contain an invoice or a remittance statement or, if such were
included, the amount of such invoice or remittance statement did not
match either the numerical or written amount on the check.
(iv) Unidentified Drawer. Checks which do not bear the
drawer's signature.
(v) Alterations. Checks with alterations; provided, however,
that Lockbox Processor will only use its best efforts to catch such
alterations and prevent deposits. As a result, Lockbox Processor
will have no liability whatsoever, despite anything to the contrary
in the Agreement, for its deposit of any check containing an
alteration, unless such deposit results directly from the willful
misconduct of Lockbox Processor's officers or employees.
(b) Checks to Be Deposited. Unless Lender specifies otherwise in
writing to Lockbox Processor, checks which do not fall into one of the
five categories listed in Section 1(a) above will be deposited as provided
in Section 2 below in the Lender Account, and checks falling into either
of the following two categories will be deposited in the Lender Account
after being processed as provided below, unless they also fall into one of
the five categories listed in Section 1(a) above, in which case they will
not be deposited.
(i) Discrepancies in Amount. Checks where the numerical and
written amounts of the check are not the same, in which case the
amount deposited will be that amount which corresponds to the amount
on the invoice or Remittance statement enclosed in the envelope with
the check. If the numerical and written amounts on any check are the
same, but do not correspond to the amount on the invoice or
Remittance statement enclosed in the envelope with the check, the
check amount will be deposited.
(ii) Missing Date. Checks which are not dated, in which case
the check will be deposited after being dated by Lockbox Processor
as of the date it is collected from the Lockbox.
(c) Restrictive Notations. Checks bearing restrictive notations,
such as "Paid in Full," will be handled on a best efforts basis in
accordance with the written request of Lender as agreed to by Lockbox
Processor. As Lockbox Processor can only use its best efforts to comply
with such instructions, Lockbox Processor will have no liability
whatsoever, despite anything to the contrary in the Agreement, for its
E-15
failure to comply with such instructions, unless such failure results
directly from the willful misconduct of Lockbox Processor's officers or
employees.
(d) Foreign Checks. Checks drawn on a foreign bank or in a currency
other than United States dollars may, at Lockbox Processor's sole
discretion, be deposited.
2. Deposit of Checks and Cash. During each Business Day which is also a
Banking Day Lockbox Processor will make deposits of the acceptable checks
and cash received in the Lockbox by crediting the Lender Account for the
amount of such checks and cash. Except as otherwise specifically provided
in the Agreement, the normal and customary laws, rules, practices and
procedures for handling deposits to checking accounts will apply to these
Procedures and the Lockbox Service.
3. Advice of Deposits. Lockbox Processor will notify Lender and Borrower of
each credit to the Lender Account by sending Lender and Borrower an advice
of deposit to the Lender Account. If an advice of a deposit is inaccurate
in any way when such advice is first received by Lender or Borrower, or if
an advice of deposit for the Lender Account does not confirm a credit
which should have been made during the time period covered by such advice,
the party receiving the advice must notify Lockbox Processor of such
inaccuracy or omission within thirty (30) calendar days after the date
such advice of deposit is received.
4. Mailing Remittance Materials to Lender. Unless otherwise specified by
Lender in writing to Lockbox Processor, (a) if an envelope sent to the
Lockbox contains cash or checks which are deposited, Lockbox Processor
will mail such envelope and the Remittance Materials enclosed in such
envelope, including, but not limited to, photocopies, computer listings
and deposit advices, to Borrower; and (b) if an envelope sent to the
Lockbox contains checks which are not deposited, or no cash or checks at
all, Lockbox Processor will mail such envelope and the Remittance
Materials and any checks in such envelope to Lender. On a Banking Day when
Lockbox Processor collects no cash or checks from the Lockbox, Lockbox
Processor will send a statement to that effect to Lender and Borrower if
Lender and/or Borrower so requests in writing.
5. Changes in Names or Designations of Payees. Borrower may at any time upon
ten (10) calendar days prior written notice to Lockbox Processor request
that a name or designation on the list of acceptable payees sent to
Lockbox Processor be deleted or added, and Lockbox Processor will add or
delete the name or designation if the request is acceptable to Lockbox
Processor and is approved by Lender in writing. Listed below are the
acceptable payees as directed by Lender:
SANZ Inc.
SANZ
E-16
Exhibit F to Amendment
XXXXX FARGO CONTROL AGREEMENTS
DEPOSIT ACCOUNT CONTROL AGREEMENT
THIS DEPOSIT ACCOUNT CONTROL AGREEMENT (this "Agreement") is entered into
as of March__, 2005 by and among the following parties:
PARTIES:
XXXXX FARGO BUSINESS CREDIT, INC. ("Creditor")
SANZ INC. ("Customer")
XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Depository")
BACKGROUND:
Customer has granted to Creditor a security interest in a deposit account
maintained by Customer with Depository and in all funds now in, or hereafter
deposited into, that account, including any interest earned thereon. The parties
are entering into this Agreement to perfect Creditor's security interest in that
account.
NOW, THEREFORE, in consideration of their mutual covenants and promises,
the parties agree as follows:
AGREEMENT:
1. The Account. Depository represents and warrants to Creditor that:
(a) Customer maintains deposit account number _____________ with
Depository (said account and, if it is a certificate of deposit or other time
deposit, any renewal thereof shall be referred to as the "Account"). The Account
is a deposit account.
(b) As of the date of this Agreement Depository does not know of any claim
to or interest in the Account, except for claims and interests of the parties
hereto.
2. Control of Account by Creditor; Customer's Rights in Account.
(a) Depository will comply with written instructions ("Orders") originated
by Creditor for the disposition of funds in the Account without
F-1
further consent from Customer and without regard to any inconsistent or
conflicting Orders given to Depository by Customer. Depository shall have a
reasonable period of time to comply with any Order.
(b) The provisions of the paragraph checked below shall apply (only one of
the paragraphs below should be checked, and if none or both of them are checked,
then the provisions of the first paragraph titled "Account Not Restricted
Immediately" shall apply):
|X| Account Not Restricted Immediately. Notwithstanding the provisions
of Section 2(a) hereof, unless and until Creditor delivers to
Depository an Order directing Depository not to act on Customer's
Orders, Depository may continue to comply with Orders originated by
Customer, including Orders for the withdrawal of funds from the
Account, the payment of interest earned on the Account and the
renewal or closing of the Account.
|_| Account Restricted Immediately. Except as provided in this Agreement
or as otherwise agreed to by Creditor in writing, as of and after
the date of this Agreement Customer may not make debits to or
withdrawals from the Account and shall have no access to the
Account, and Creditor shall have exclusive access to the Account. If
the Account is a certificate of deposit or other time deposit, then
at the expiration of its term, unless Depository has received an
Order to the contrary from Creditor, the Account shall be renewed
for a term which is equal to the immediately preceding term.
(c) Before Creditor attempts to give Depository any Orders concerning the
Account, Creditor shall deliver to Depository such documentation as Depository
may from time to time reasonably request to evidence the authority of those
partners, officers, employees or agents whom Creditor may designate to give
Orders. Creditor and Depository agree and acknowledge that Xxxx Xxxxxxx-Xxxxxx
and Xxxxxx Xxxxxxx have authority to give Orders.
(d) Unless otherwise agreed in writing between Depository and Creditor,
Depository will transfer funds from the Account to Creditor in response to an
Order from Creditor in accordance with this Agreement on a Banking Day (a day on
which Depository is open to conduct its regular banking business, other than a
Saturday, Sunday or public holiday), if Depository receives the Order on such
Banking Day before the deadline established by Depository from time to time for
such transfer requests, and the amount requested to be transferred does not
exceed the collected and available balance in the Account at the beginning of
such Banking Day as determined by Depository after deducting the amount of all
Returned Items (as defined in Section 3(a) hereof).
(e) Unless otherwise agreed in writing between Depository and Creditor,
transfers of funds from the Account to Creditor shall be made using the Fedwire
system unless for any reason the Fedwire system is unavailable, in which case
Depository will determine the funds transfer system to be used in making such
transfer and the means by which such transfer will be made. Creditor shall
provide Depository with such information as Depository may require to make such
F-2
transfer, including the name and routing number of Creditor's bank and the
account number of Creditor's account at such bank to which the funds are to be
transferred. Customer and Creditor understand that a funds transfer by
Depository may be delayed or not made if the transfer would cause Depository to
violate any applicable law or regulation.
3. Priority of Creditor's Security Interest; Rights Reserved by Depository.
(a) All of Depository's present and future rights against the Account are
subordinate to Creditor's security interest therein; provided however, that
Creditor agrees that nothing herein subordinates or waives, and that Depository
expressly reserves, all of Depository's present and future rights (whether
described as rights of setoff, banker's lien, chargeback or otherwise, and
whether available to Depository under law or any other agreement between
Depository and Customer concerning the Account, or otherwise) with respect to:
(i) any item deposited to the Account and returned unpaid, whether for
insufficient funds or for any other reason, and without regard to the timeliness
of such return or the occurrence or timeliness of any drawee's notice of
non-payment; (ii) any item subject to a claim against Depository of breach of
transfer or presentment warranty under the Uniform Commercial Code, as adopted
in the applicable state; (iii) any automated clearing house ("ACH") entry
credited to the Account and returned unpaid or subject to an adjustment entry
under applicable clearing house rules, whether for insufficient funds or for any
other reason, and without regard to the timeliness of such return or adjustment;
(iv) any credit to the Account from a merchant card transaction, against which a
contractual demand for chargeback has been made; (v) any credit to the Account
made in error; and (vi) Depository's usual and customary charges for services
rendered in connection with the Account. Items, entries, and transactions
described in clauses (i) through (v) of this paragraph are hereinafter
collectively referred to as "Returned Items".
(b) Except as otherwise required by law, Depository will not agree with
any third party to comply with Orders originated by such third party.
4. Returned Item Amounts. Customer and Creditor understand and agree that
Depository will collect the amount of each Returned Item by debiting the
Account. Customer shall pay the amount of each Returned Item immediately upon
demand to the extent there are not sufficient funds in the Account to cover such
amount on the day of the debit. Creditor shall pay to Depository, within twenty
(20) days after demand on Creditor by Depository, any such amount that has not
been paid in full by Customer within ten (10) days after demand on Customer by
Depository to the extent that Creditor received proceeds from the corresponding
Returned Item; provided however, that if Depository is stayed from making such
demand upon Customer as a result of a bankruptcy or similar proceeding, then
Depository shall be deemed to have made such demand upon Customer at the
commencement of such proceeding. Depository agrees that any demand upon Creditor
for payment of such amount shall be made within one hundred twenty (120) days
after termination of this Agreement.
5. Statements; Notices of Adverse Claims. Depository will send copies of all
statements for the Account simultaneously to Customer and Creditor. Depository
may disclose to Creditor such other information concerning the Account as
Creditor may from time to time request; provided however, that Depository shall
F-3
have no duty or obligation to comply with any such request. Except as otherwise
required by law, Depository will use reasonable efforts promptly to notify
Creditor and Customer if Depository receives a notice that any other person
claims that it has a property interest in the Account. Customer and Creditor
shall have thirty (30) days after receipt of a statement of the Account to
notify Depository of an error in such statement. Depository's liability for any
such error is limited in accordance with Section 6 hereof.
6. Depository's Responsibility.
(a) Except for permitting a withdrawal in violation of Section 2 hereof,
Depository will not be liable to Creditor for complying with Orders from
Customer that are received by Depository before Depository receives and has a
reasonable opportunity to act on a contrary Order from Creditor.
(b) Depository will not be liable to Customer for complying with Orders
originated by Creditor, even if Customer notifies Depository that Creditor is
not legally entitled to issue Orders, unless Depository takes the action after
it is served with an injunction, restraining order, or other legal process
enjoining it from doing so, issued by a court of competent jurisdiction, and has
had a reasonable opportunity to act on the injunction, restraining order or
other legal process.
(c) This Agreement does not create any obligation of Depository except for
those expressly set forth herein. In particular, Depository need not investigate
whether Creditor is entitled under Creditor's agreements with Customer to give
Orders. Depository may rely on any and all notices and communications it
believes are given by the appropriate party.
(d) Depository will not have any liability to Customer or Creditor for
claims, losses, liabilities or damages resulting from any failure to comply with
Orders or delay in complying with Orders if such failure or delay is due to
circumstances beyond Depository's reasonable control.
(e) Depository will not have any liability to Customer or Creditor for
claims, losses, liabilities or damages suffered or incurred by Customer or
Creditor as a result of or in connection with this Agreement except to the
extent such losses, liabilities and damages directly result from Depository's
gross negligence or willful misconduct.
(f) In no event will Depository have any liability to Customer or
Creditor, and in no event will Creditor have any liability to Customer, in
connection herewith for any consequential, special, punitive or indirect loss or
damage whether or not any claim for such damages is based on tort or contract or
Depository knew or should have known the likelihood of such damages in any
circumstances.
7. Indemnity.
(a) Customer will indemnify Depository, its officers, directors,
employees, and agents against claims, demands, losses, liabilities, damages,
costs and expenses (including reasonable attorneys' fees and disbursements and
the reasonable estimate of the allocated costs and expenses of Depository's
F-4
in-house legal counsel and staff) arising out of this Agreement or Depository
following any Order or other instruction or request of Customer or Creditor in
connection with this Agreement, except to the extent the claims, liabilities,
costs and expenses are caused by Depository's gross negligence or willful
misconduct.
(b) Creditor will indemnify Depository, its officers, directors,
employees, and agents against claims, demands, losses, liabilities, damages,
costs and expenses (including reasonable attorneys' fees and disbursements and
the reasonable estimate of the allocated costs and expenses of Depository's
in-house legal counsel and staff), arising out of Depository following any Order
or other instruction or request of Creditor in connection with this Agreement,
except to the extent the claims, liabilities, costs and expenses are caused by
Depository's gross negligence or willful misconduct. Creditor will pay such
amount as may be due to Depository under this indemnity within twenty (20) days
of demand on Creditor by Depository to the extent such amount has not been paid
in full by Customer within ten (10) days after demand on Customer by Depository;
provided however, that if Depository is stayed from making such demand upon
Customer as a result of a bankruptcy or similar proceeding, then Depository
shall be deemed to have made such demand upon Customer at the commencement of
such proceeding.
(c) Creditor's and Customer's liabilities to Depository under this Section
are joint and several.
8. Termination; Survival.
(a) Creditor may terminate this Agreement by notice to Depository and
Customer. Depository may terminate this Agreement on thirty (30) day's notice to
Creditor and Customer; provided however that this Agreement may be terminated
immediately by notice from Depository to Creditor and Customer should Creditor
fail to make any payment when due to Depository hereunder.
(b) This Agreement shall terminate upon Depository's receipt of written
notice from Creditor expressly stating that Creditor no longer claims any
security interest in the Account.
(c) Sections 4, "Returned Item Amounts," 6, "Depository's Responsibility,"
and 7, "Indemnity," will survive termination of this Agreement.
9. Governing Law. This Agreement and the Account shall be governed by and
construed in accordance with the laws of the State of Colorado. Depository may
not change the law governing the Account without Creditor's express written
consent, which consent shall not be unreasonably withheld.
10. Entire Agreement. This Agreement is the entire agreement and supersedes any
prior agreements and contemporaneous oral agreements of the parties concerning
its subject matter.
11. Amendments; Waivers. This Agreement may be amended or modified only in
writing signed by all parties hereto, and no waiver of any right under this
Agreement will be binding unless it is in writing and signed by the party to be
charged.
F-5
12. Severability. To the extent a provision of this Agreement is unenforceable,
this Agreement will be construed as if the unenforceable provision were omitted.
13. Other Agreements. As long as this Agreement remains in effect, transactions
involving the Account shall be subject, except to the extent inconsistent
herewith, to the provisions of such deposit account agreements, disclosures, and
fee schedules as are in effect from time to time with respect to the Account.
14. Successors and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of Depository, Creditor and Customer and their
respective heirs, executors, administrators, legal representatives, successors
and permitted assigns.
15. Notices. All Orders, notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing (unless otherwise specifically provided) and
delivered to each party at the address or facsimile number set forth below its
signature, or to such other address or facsimile number as any party may
designate by written notice to all other parties. Each such Order, notice,
request or demand shall be effective on receipt.
F-6
16. Counterparts. This Agreement may be executed in counterparts, each of which
shall be an original, and all of which shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
LOAN NUMBER: N/A
-------------------------------------
CREDITOR: CUSTOMER:
XXXXX FARGO BUSINESS CREDIT, INC. SANZ INC.
By: By:
----------------------------------------------
Name: Xxxxxx Xxxxxxx Name: Xxxx Xxxxxxx
Its: Vice President Its: President
Address: Address:
MAC C7300-210 0000 Xx. Xxxxxxx Xxxxx, Xxxxx 000
1740 Broadway Englewood, Colorado 80112-2694
Xxxxxx, Xxxxxxxx, 00000 Facsimile: (000) 000-0000
Facsimile: (000) 000-0000 Telephone: (000) 000-0000
Telephone: (000) 000-0000
DEPOSITORY:
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By:_______________________________
Name:_____________________________
Its:______________________________
Address:
MAC C301-037
0000 Xxxxxxxx
Xxxxxx, XX 00000
Facsimile:________________________
Telephone:________________________
F-7
DEPOSIT ACCOUNT CONTROL AGREEMENT
THIS DEPOSIT ACCOUNT CONTROL AGREEMENT (this "Agreement") is entered into
as of March__, 2005 by and among the following parties:
PARTIES:
XXXXX FARGO BUSINESS CREDIT, INC. ("Creditor")
SOLUNET STORAGE, INC. ("Customer")
XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Depository")
BACKGROUND:
Customer has granted to Creditor a security interest in a deposit account
maintained by Customer with Depository and in all funds now in, or hereafter
deposited into, that account, including any interest earned thereon. The parties
are entering into this Agreement to perfect Creditor's security interest in that
account.
NOW, THEREFORE, in consideration of their mutual covenants and promises,
the parties agree as follows:
AGREEMENT:
1. The Account. Depository represents and warrants to Creditor that:
(a) Customer maintains deposit account number _____________ with
Depository (said account and, if it is a certificate of deposit or other time
deposit, any renewal thereof shall be referred to as the "Account"). The Account
is a deposit account.
(b) As of the date of this Agreement Depository does not know of any claim
to or interest in the Account, except for claims and interests of the parties
hereto.
2. Control of Account by Creditor; Customer's Rights in Account.
(a) Depository will comply with written instructions ("Orders") originated
by Creditor for the disposition of funds in the Account without further consent
from Customer and without regard to any inconsistent or conflicting Orders given
to Depository by Customer. Depository shall have a reasonable period of time to
comply with any Order.
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(b) The provisions of the paragraph checked below shall apply (only one of
the paragraphs below should be checked, and if none or both of them are checked,
then the provisions of the first paragraph titled "Account Not Restricted
Immediately" shall apply):
|X| Account Not Restricted Immediately. Notwithstanding the provisions
of Section 2(a) hereof, unless and until Creditor delivers to
Depository an Order directing Depository not to act on Customer's
Orders, Depository may continue to comply with Orders originated by
Customer, including Orders for the withdrawal of funds from the
Account, the payment of interest earned on the Account and the
renewal or closing of the Account.
|_| Account Restricted Immediately. Except as provided in this Agreement
or as otherwise agreed to by Creditor in writing, as of and after
the date of this Agreement Customer may not make debits to or
withdrawals from the Account and shall have no access to the
Account, and Creditor shall have exclusive access to the Account. If
the Account is a certificate of deposit or other time deposit, then
at the expiration of its term, unless Depository has received an
Order to the contrary from Creditor, the Account shall be renewed
for a term which is equal to the immediately preceding term.
(c) Before Creditor attempts to give Depository any Orders concerning the
Account, Creditor shall deliver to Depository such documentation as Depository
may from time to time reasonably request to evidence the authority of those
partners, officers, employees or agents whom Creditor may designate to give
Orders. Creditor and Depository agree and acknowledge that Xxxx Xxxxxxx-Xxxxxx
and Xxxxxx Xxxxxxx have authority to give Orders.
(d) Unless otherwise agreed in writing between Depository and Creditor,
Depository will transfer funds from the Account to Creditor in response to an
Order from Creditor in accordance with this Agreement on a Banking Day (a day on
which Depository is open to conduct its regular banking business, other than a
Saturday, Sunday or public holiday), if Depository receives the Order on such
Banking Day before the deadline established by Depository from time to time for
such transfer requests, and the amount requested to be transferred does not
exceed the collected and available balance in the Account at the beginning of
such Banking Day as determined by Depository after deducting the amount of all
Returned Items (as defined in Section 3(a) hereof).
(e) Unless otherwise agreed in writing between Depository and Creditor,
transfers of funds from the Account to Creditor shall be made using the Fedwire
system unless for any reason the Fedwire system is unavailable, in which case
Depository will determine the funds transfer system to be used in making such
transfer and the means by which such transfer will be made. Creditor shall
provide Depository with such information as Depository may require to make such
transfer, including the name and routing number of Creditor's bank and the
account number of Creditor's account at such bank to which the funds are to be
transferred. Customer and Creditor understand that a funds transfer by
Depository may be delayed or not made if the transfer would cause Depository to
violate any applicable law or regulation.
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3. Priority of Creditor's Security Interest; Rights Reserved by Depository.
(a) All of Depository's present and future rights against the Account are
subordinate to Creditor's security interest therein; provided however, that
Creditor agrees that nothing herein subordinates or waives, and that Depository
expressly reserves, all of Depository's present and future rights (whether
described as rights of setoff, banker's lien, chargeback or otherwise, and
whether available to Depository under law or any other agreement between
Depository and Customer concerning the Account, or otherwise) with respect to:
(i) any item deposited to the Account and returned unpaid, whether for
insufficient funds or for any other reason, and without regard to the timeliness
of such return or the occurrence or timeliness of any drawee's notice of
non-payment; (ii) any item subject to a claim against Depository of breach of
transfer or presentment warranty under the Uniform Commercial Code, as adopted
in the applicable state; (iii) any automated clearing house ("ACH") entry
credited to the Account and returned unpaid or subject to an adjustment entry
under applicable clearing house rules, whether for insufficient funds or for any
other reason, and without regard to the timeliness of such return or adjustment;
(iv) any credit to the Account from a merchant card transaction, against which a
contractual demand for chargeback has been made; (v) any credit to the Account
made in error; and (vi) Depository's usual and customary charges for services
rendered in connection with the Account. Items, entries, and transactions
described in clauses (i) through (v) of this paragraph are hereinafter
collectively referred to as "Returned Items".
(b) Except as otherwise required by law, Depository will not agree with
any third party to comply with Orders originated by such third party.
4. Returned Item Amounts. Customer and Creditor understand and agree that
Depository will collect the amount of each Returned Item by debiting the
Account. Customer shall pay the amount of each Returned Item immediately upon
demand to the extent there are not sufficient funds in the Account to cover such
amount on the day of the debit. Creditor shall pay to Depository, within twenty
(20) days after demand on Creditor by Depository, any such amount that has not
been paid in full by Customer within ten (10) days after demand on Customer by
Depository to the extent that Creditor received proceeds from the corresponding
Returned Item; provided however, that if Depository is stayed from making such
demand upon Customer as a result of a bankruptcy or similar proceeding, then
Depository shall be deemed to have made such demand upon Customer at the
commencement of such proceeding. Depository agrees that any demand upon Creditor
for payment of such amount shall be made within one hundred twenty (120) days
after termination of this Agreement.
5. Statements; Notices of Adverse Claims. Depository will send copies of all
statements for the Account simultaneously to Customer and Creditor. Depository
may disclose to Creditor such other information concerning the Account as
Creditor may from time to time request; provided however, that Depository shall
have no duty or obligation to comply with any such request. Except as otherwise
required by law, Depository will use reasonable efforts promptly to notify
Creditor and Customer if Depository receives a notice that any other person
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claims that it has a property interest in the Account. Customer and Creditor
shall have thirty (30) days after receipt of a statement of the Account to
notify Depository of an error in such statement. Depository's liability for any
such error is limited in accordance with Section 6 hereof.
6. Depository's Responsibility.
(a) Except for permitting a withdrawal in violation of Section 2 hereof,
Depository will not be liable to Creditor for complying with Orders from
Customer that are received by Depository before Depository receives and has a
reasonable opportunity to act on a contrary Order from Creditor.
(b) Depository will not be liable to Customer for complying with Orders
originated by Creditor, even if Customer notifies Depository that Creditor is
not legally entitled to issue Orders, unless Depository takes the action after
it is served with an injunction, restraining order, or other legal process
enjoining it from doing so, issued by a court of competent jurisdiction, and has
had a reasonable opportunity to act on the injunction, restraining order or
other legal process.
(c) This Agreement does not create any obligation of Depository except for
those expressly set forth herein. In particular, Depository need not investigate
whether Creditor is entitled under Creditor's agreements with Customer to give
Orders. Depository may rely on any and all notices and communications it
believes are given by the appropriate party.
(d) Depository will not have any liability to Customer or Creditor for
claims, losses, liabilities or damages resulting from any failure to comply with
Orders or delay in complying with Orders if such failure or delay is due to
circumstances beyond Depository's reasonable control.
(e) Depository will not have any liability to Customer or Creditor for
claims, losses, liabilities or damages suffered or incurred by Customer or
Creditor as a result of or in connection with this Agreement except to the
extent such losses, liabilities and damages directly result from Depository's
gross negligence or willful misconduct.
(f) In no event will Depository have any liability to Customer or
Creditor, and in no event will Creditor have any liability to Customer, in
connection herewith for any consequential, special, punitive or indirect loss or
damage whether or not any claim for such damages is based on tort or contract or
Depository knew or should have known the likelihood of such damages in any
circumstances.
7. Indemnity.
(a) Customer will indemnify Depository, its officers, directors,
employees, and agents against claims, demands, losses, liabilities, damages,
costs and expenses (including reasonable attorneys' fees and disbursements and
the reasonable estimate of the allocated costs and expenses of Depository's
in-house legal counsel and staff) arising out of this Agreement or Depository
following any Order or other instruction or request of Customer or Creditor in
connection with this Agreement, except to the extent the claims, liabilities,
costs and expenses are caused by Depository's gross negligence or willful
misconduct.
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(b) Creditor will indemnify Depository, its officers, directors,
employees, and agents against claims, demands, losses, liabilities, damages,
costs and expenses (including reasonable attorneys' fees and disbursements and
the reasonable estimate of the allocated costs and expenses of Depository's
in-house legal counsel and staff), arising out of Depository following any Order
or other instruction or request of Creditor in connection with this Agreement,
except to the extent the claims, liabilities, costs and expenses are caused by
Depository's gross negligence or willful misconduct. Creditor will pay such
amount as may be due to Depository under this indemnity within twenty (20) days
of demand on Creditor by Depository to the extent such amount has not been paid
in full by Customer within ten (10) days after demand on Customer by Depository;
provided however, that if Depository is stayed from making such demand upon
Customer as a result of a bankruptcy or similar proceeding, then Depository
shall be deemed to have made such demand upon Customer at the commencement of
such proceeding.
(c) Creditor's and Customer's liabilities to Depository under this Section
are joint and several.
8. Termination; Survival.
(a) Creditor may terminate this Agreement by notice to Depository and
Customer. Depository may terminate this Agreement on thirty (30) day's notice to
Creditor and Customer; provided however that this Agreement may be terminated
immediately by notice from Depository to Creditor and Customer should Creditor
fail to make any payment when due to Depository hereunder.
(b) This Agreement shall terminate upon Depository's receipt of written
notice from Creditor expressly stating that Creditor no longer claims any
security interest in the Account.
(c) Sections 4, "Returned Item Amounts," 6, "Depository's Responsibility,"
and 7, "Indemnity," will survive termination of this Agreement.
9. Governing Law. This Agreement and the Account shall be governed by and
construed in accordance with the laws of the State of Colorado. Depository may
not change the law governing the Account without Creditor's express written
consent, which consent shall not be unreasonably withheld.
10. Entire Agreement. This Agreement is the entire agreement and supersedes any
prior agreements and contemporaneous oral agreements of the parties concerning
its subject matter.
11. Amendments; Waivers. This Agreement may be amended or modified only in
writing signed by all parties hereto, and no waiver of any right under this
Agreement will be binding unless it is in writing and signed by the party to be
charged.
12. Severability. To the extent a provision of this Agreement is unenforceable,
this Agreement will be construed as if the unenforceable provision were omitted.
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13. Other Agreements. As long as this Agreement remains in effect, transactions
involving the Account shall be subject, except to the extent inconsistent
herewith, to the provisions of such deposit account agreements, disclosures, and
fee schedules as are in effect from time to time with respect to the Account.
14. Successors and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of Depository, Creditor and Customer and their
respective heirs, executors, administrators, legal representatives, successors
and permitted assigns.
15. Notices. All Orders, notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing (unless otherwise specifically provided) and
delivered to each party at the address or facsimile number set forth below its
signature, or to such other address or facsimile number as any party may
designate by written notice to all other parties. Each such Order, notice,
request or demand shall be effective on receipt.
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16. Counterparts. This Agreement may be executed in counterparts, each of which
shall be an original, and all of which shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
LOAN NUMBER: N/A
--------------------------
CREDITOR: CUSTOMER:
XXXXX FARGO BUSINESS CREDIT, INC. SOLUNET STORAGE, INC.
By: By:
----------------------------------- -------------------------------
Name: Xxxxxx Xxxxxxx Name: Xxxxxx X. Xxxxx
Its: Vice President Its: Chief Financial Officer
Address: Address:
MAC C7300-210 0000 Xx. Xxxxxxx Xxxxx, Xxxxx 000
1740 Broadway Englewood, Colorado 80112-2694
Xxxxxx, Xxxxxxxx, 00000 Facsimile: (000) 000-0000
Facsimile: (000) 000-0000 Telephone: (000) 000-0000
Telephone: (000) 000-0000
DEPOSITORY:
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By:____________________________
Name:__________________________
Its:___________________________
Address:
MAC C301-037
0000 Xxxxxxxx
Xxxxxx, XX 00000
Facsimile:_____________________
Telephone:_____________________
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