Greyrock
Business
Credit
A NationsBank Company
Loan and Security Agreement
Borrower: Interactive Magic, Inc. and
iMagic Online Corporation
Address: 000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Date: April 30, 1998
This Loan and Security Agreement is entered into on the above date between
GREYROCK BUSINESS CREDIT, a Division of NationsCredit Commercial Corporation
("GBC"), whose address is 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000 and the borrower named above ("Borrower"),* whose chief
executive office is located at the above address ("Borrower's Address"). The
Schedule to this Agreement (the "Schedule") being signed concurrently is an
integral part of this Agreement. (Definitions of certain terms used in this
Agreement are set forth in Section 8 below.)
*All references to "Borrower" herein shall mean and be each of Interactive
Magic, Inc. ("IMI") and U.S. Related Company (as defined in Section 8 below).
1. LOANS.
1.1 Loans. GBC will make loans to Borrower (the "Loans"), in amounts
determined by GBC in its sole discretion, up to the amounts (the "Credit Limit")
shown on the Schedule, provided no Default or Event of Default has occurred and
is continuing. If at any time or for any reason the total of all outstanding
Loans and all other Obligations exceeds the Credit Limit, Borrower shall
immediately pay the amount of the excess to GBC, without notice or demand.
1.2 Interest. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth to
the contrary in this Agreement or in another written agreement signed by GBC and
Borrower. Interest shall be payable monthly, on the last day of the month.
Interest may, in GBC's discretion, be charged to Borrower's loan account, and
the same shall thereafter bear interest at the same rate as the other Loans.
1.3 Fees. Borrower shall pay GBC the fee(s) shown on the Schedule, which
are in addition to all interest and other sums payable to GBC and are not
refundable.
2. SECURITY INTEREST.
2.1 Security Interest. To secure the payment and performance of all of the
Obligations when due, Borrower hereby grants to GBC a security interest in all
of Borrower's interest in the following, whether now owned or hereafter
acquired, and wherever located (collectively, the "Collateral"): All Inventory,
Receivables, Investment Property and General Intangibles, including, without
limitation, all of Borrower's Deposit Accounts, all money, all
collateral in which GBC is granted a security interest pursuant to any other
present or future agreement, all property now or at any time in the future in
GBC's possession, and all proceeds (including proceeds of any insurance
policies, proceeds of letters of credit, proceeds of proceeds and claims against
third parties), all products of the foregoing, and all books and records related
to any of the foregoing.*
*Borrower's payment and performance of all of the Obligations when due
shall be secured also by the Additional Collateral.
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3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
In order to induce GBC to enter into this Agreement and to make Loans,
Borrower represents and warrants to GBC as follows, and Borrower covenants that
the following representations will continue to be true, and that Borrower will
at all times comply with all of the following covenants:
3.1 Corporate Existence and Authority. Borrower, if a corporation, is and
will continue to be, duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation. Borrower is and will continue
to be qualified and licensed to do business in all jurisdictions in which any
failure to do so would have a material adverse effect on Borrower. The
execution, delivery and performance by Borrower of this Agreement, and all other
documents contemplated hereby (i) have been duly and validly authorized, (ii)
are enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors'
rights generally), (iii) do not violate Borrower's articles or certificate of
incorporation, or Borrower's by-laws, or any law or any material agreement or
instrument which is binding upon Borrower or its property, and (iv) do not
constitute grounds for acceleration of any material indebtedness or obligation
under any material agreement or instrument which is binding upon Borrower or its
property.
3.2 Name; Trade Names and Styles. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule are all
prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give GBC 30 days'prior written notice before changing its name or
doing business under any other name. Borrower has complied, and will in the
future comply, with all laws relating to the conduct of business under a
fictitious business name.
3.3 Place of Business; Location of Collateral. The address set forth in the
heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth on the Schedule. Borrower will give GBC at least 30 days' prior
written notice before opening any additional place of business, changing its
chief executive office, or moving any of the Collateral to a location other than
Borrower's Address or one of the locations set forth on the Schedule.
3.4 Title to Collateral; Permitted Liens. Borrower is now, and will at all
times in the future be, the sole owner of all the Collateral, except for items
of Equipment which are leased by Borrower. The Collateral now is and will remain
free and clear of any and all liens, charges, security interests, encumbrances
and adverse claims, except for Permitted Liens. GBC now has, and will continue
to have, a first-priority perfected and enforceable security interest in all of
the Collateral, subject only to the Permitted Liens, and Borrower will at all
times defend GBC and the Collateral against all claims of others. So long as any
Loan is outstanding which is a term loan, none of the Collateral now is or will
be affixed to any real property in such a manner, or with such intent, as to
become a fixture. * prohibit, restrain or impair Borrower's right to remove any
Collateral from the leased premises. Whenever any Collateral is located upon
premises in which any third party has an interest (whether as owner, mortgagee,
beneficiary under a deed of trust, lien or otherwise), Borrower shall, whenever
requested by GBC, use its best efforts to cause such third party to execute and
deliver to GBC, in form acceptable to GBC, such waivers and subordinations as
GBC shall specify, so as to ensure that GBC's rights in the Collateral are, and
will continue to be, superior to the rights of any such third party. Borrower
will keep in full force and effect, and will comply with all the terms of, any
lease of real property where any of the Collateral now or in the future may be
located.
* Borrower will not store Inventory valued at more than $50,000 in any property
leased by Borrower where such lease would
3.5 Maintenance of Collateral. Borrower will maintain the Collateral in
good working condition, ordinary wear and tear excepted, and Borrower will not
use the Collateral for any unlawful purpose. Borrower will immediately advise
GBC in writing of any material loss or damage to the Collateral. Borrower will
maintain the validity of, and otherwise maintain, preserve and protect, its
patents, trademarks, copyrights and other intellectual property in accordance
with prudent business practices.
3.6 Books and Records. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.
3.7 Financial Condition, Statements and Reports. All financial statements
now or in the future delivered to GBC have been, and will be, prepared in
conformity with generally accepted accounting principles and now and in
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the future will completely and fairly reflect the financial condition of
Borrower, at the times and for the periods therein stated. Between the last date
covered by any such statement provided to GBC and the date hereof, there has
been no material adverse change in the financial condition or business of
Borrower. Borrower is now and will continue to be solvent.
3.8 Tax Returns and Payments; Pension Contributions. Borrower has timely
filed, and will timely file, all tax returns and reports required by applicable
law, and Borrower has timely paid, and will timely pay, all applicable taxes,
assessments, deposits and contributions now or in the future owed by Borrower.
Borrower may, however, defer payment of any contested taxes, provided that
Borrower (i) in good faith contests Borrower's obligation to pay the taxes by
appropriate proceedings promptly and diligently instituted and conducted, (ii)
notifies GBC in writing of the commencement of, and any material development in,
the proceedings, and (iii) posts bonds or takes any other steps required to keep
the contested taxes from becoming a lien upon any of the Collateral. Borrower is
unaware of any claims or adjustments proposed for any of Borrower's prior tax
years which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid, and shall continue to pay all amounts necessary to
fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not and will not withdraw
from participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could result
in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or any other governmental agency. Borrower shall, at all
times, utilize the services of an outside payroll service providing for the
automatic deposit of all payroll taxes payable by Borrower.
3.9 Compliance with Law. Borrower has complied, and will comply, in all
material respects, with all provisions of all applicable laws and regulations,
including, but not limited to, those relating to Borrower's ownership of real or
personal property, the conduct and licensing of Borrower's business, and all
environmental matters.
3.10 Litigation. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of Borrower's
knowledge) threatened by or against or affecting Borrower in any court or before
any governmental agency (or any basis therefor known to Borrower) which may
result, either separately or in the aggregate, in any material adverse change in
the financial condition or business of Borrower, or in any material impairment
in the ability of Borrower to carry on its business in substantially the same
manner as it is now being conducted. Borrower will promptly inform GBC in
writing of any claim, proceeding, litigation or investigation in the future
threatened or instituted by or against Borrower involving any single claim of
$50,000 or more, or involving $100,000 or more in the aggregate.
3.11 Use of Proceeds. All proceeds of all Loans shall be used solely for
lawful business purposes.
4. RECEIVABLES AND INVESTMENT PROPERTY.
4.1 Representations Relating to Receivables. Borrower* represents and
warrants to GBC that each Receivable with respect to which Loans are requested
by Borrower shall, on the date each Loan is requested and made, represent an
undisputed, bona fide, existing, unconditional obligation of the Account Debtor
created by the sale, delivery, and acceptance of goods or the rendition of
services, in the ordinary course of Borrower's business**.
* and U.K. Related Company
** or U.K. Related Company's business (except as disclosed to and approved by
GBC)
4.2 Representations Relating to Documents and Legal Compliance. Borrower*
represents and warrants to GBC as follows: All statements made and all unpaid
balances appearing in all invoices, instruments and other documents evidencing
the Receivables are and shall be true and correct and all such invoices,
instruments and other documents and all of Borrower's ** books and records are
and shall be genuine and in all respects what they purport to be, and all
signatories and endorsers have the capacity to contract. All sales and other
transactions underlying or giving rise to each Receivable shall comply with all
applicable laws and governmental rules and regulations. All signatures and
indorsements on all documents, instruments, and agreements relating to all
Receivables are and shall be genuine, and all such documents, instruments and
agreements are and shall be legally enforceable in accordance with their terms.
* and U.K. Related Company each
** (or U.K. Related Company's, as the case may be)
4.3 Schedules and Documents Relating to Receivables and Investment
Property. Borrower shall deliver to GBC transaction reports and loan requests,
schedules and assignments of all Receivables, and schedules of collections, all
on GBC's standard forms; provided, however, that Borrower's failure to execute
and deliver the same shall not affect or limit GBC's security interest and other
rights in all of Borrower's*
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Receivables, nor shall GBC's failure to advance or lend against a specific
Receivable affect or limit GBC's security interest and other rights therein.
Together with each such schedule and assignment, or later if requested by GBC,
Borrower shall furnish GBC with copies (or, at GBC's request, originals) of all
contracts, orders, invoices, and other similar documents, and all original
shipping instructions, delivery receipts, bills of lading, and other evidence of
delivery, for any goods the sale or disposition of which gave rise to such
Receivables, and Borrower warrants the genuineness of all of the foregoing.
Borrower shall also furnish to GBC an aged accounts receivable trial balance in
such form and at such intervals as GBC shall request. **, Borrower shall deliver
to GBC the originals of all instruments, chattel paper, security agreements,
guarantees and other documents and property evidencing or securing any
Receivables, and in the same form as received, with all necessary indorsements,
and, upon the request of GBC, Borrower shall deliver to GBC all letters of
credit and also all certificated securities with respect to any Investment
Property, with all necessary indorsements, and obtain such account control
agreements with securities intermediaries and take such other action with
respect to any Investment Property, as GBC shall request, in form and substance
satisfactory to GBC. Upon request of GBC Borrower additionally shall obtain
consents from any letter of credit issuers with respect to the assignment to GBC
of any letter of credit proceeds.
* and U.K. Related Company's
** Upon request
4.4 Collection of Receivables and Investment Property Income. Borrower*
shall have the right to collect all Receivables and retain all Investment
Property payments and distributions, unless and until a Default or an Event of
Default has occurred. Borrower shall hold all payments on, and proceeds of, and
distributions with respect to, Receivables and Investment Property in trust for
GBC, and Borrower shall deliver all such payments, proceeds and distributions to
GBC, within one business day after receipt of the same, in their original form,
duly endorsed, to be applied to the Obligations in such order as GBC shall
determine.** Upon the request of GBC, any such distributions and payments with
respect to any Investment Property held in any securities account shall be held
and retained in such securities account as part of the Collateral.
* and U.K. Related Company each
** Except to the extent otherwise provided in the Schedule or as otherwise
agreed with GBC, U.K. Related Company shall hold all payments on, and proceeds
of, and distributions with respect to, U.K. Related Company's Receivables in
trust for GBC, and U.K. Related Company shall deliver all such payments,
proceeds and distributions to GBC, within one business day after receipt of the
same, in their original form, duly endorsed, to be applied to the Obligations in
such order as GBC shall determine.
4.5 Disputes. Borrower* shall notify GBC promptly of all disputes or claims
relating to Receivables on the regular reports to GBC. Borrower shall not
forgive, or settle any Receivable for less than payment in full, or agree to do
any of the foregoing**, except that*** Borrower may do so, provided that: (i)
Borrower**** does so in good faith, in a commercially reasonable manner, in the
ordinary course of business, and in arm's length transactions, which are
reported to GBC on the regular reports provided to GBC; (ii) no Default or Event
of Default has occurred and is continuing; and (iii) taking into account all
such settlements and forgiveness, the total outstanding Loans and other
Obligations will not exceed the Credit Limit.
* and U.K. Related Company each
** (nor shall U.K. Related Company agree to do any of the foregoing)
*** each of U.K. Related Company and
**** or U.K. Related Company, as the case may be,
4.6 Returns. Provided no Event of Default has occurred and is continuing,
if any Account Debtor returns any Inventory to Borrower in the ordinary course
of its business, Borrower shall promptly determine the reason for such return
and promptly issue a credit memorandum to the Account Debtor in the appropriate
amount (sending a copy to GBC).
4.7 Verification. GBC may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to
the Receivables, by means of mail, telephone or otherwise, in the name of
Borrower* or GBC or such other name as GBC may choose, and GBC or its designee
may, at any time, notify Account Debtors that it has a security
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interest in the Receivables.
* , U.K. Related Company
4.8 No Liability. GBC shall not under any circumstances be responsible or
liable for any shortage or discrepancy in, damage to, or loss or destruction of,
any goods, the sale or other disposition of which gives rise to a Receivable, or
for any error, act, omission, or delay of any kind occurring in the settlement,
failure to settle, collection or failure to collect any Receivable, or for
settling any Receivable in good faith for less than the full amount thereof, nor
shall GBC be deemed to be responsible for any of Borrower's* obligations under
any contract or agreement giving rise to a Receivable. Nothing herein shall,
however, relieve GBC from liability for its own gross negligence or willful
misconduct.
* or U.K. Related Company's
5. ADDITIONAL DUTIES OF THE BORROWER.
5.1 Insurance. Borrower shall, at all times, insure all of the tangible
personal property Collateral* and carry such other business insurance, with
insurers reasonably acceptable to GBC, in such form and amounts as GBC may
reasonably require, and Borrower shall provide evidence of such insurance to
GBC, so that GBC is satisfied that such insurance is, at all times, in full
force and effect. All such insurance policies shall name GBC as an additional
loss payee, and shall contain a lenders loss payee endorsement in form
reasonably acceptable to GBC. Upon receipt of the proceeds of any such
insurance, GBC shall apply such proceeds in reduction of the Obligations as GBC
shall determine in its sole discretion, except that, provided no Default or
Event of Default has occurred and is continuing, GBC shall release to Borrower
insurance proceeds with respect to Equipment totaling less than $100,000, which
shall be utilized by Borrower for the replacement of the Equipment with respect
to which the insurance proceeds were paid. GBC may require reasonable assurance
that the insurance proceeds so released will be so used. If Borrower fails to
provide or pay for any insurance, GBC may, but is not obligated to, obtain the
same at Borrower's expense. Borrower shall promptly deliver to GBC copies of all
reports made to insurance companies.
* (but not with respect to any Receivable)
5.2 Reports. Borrower, at its expense, shall provide GBC with the written
reports set forth in the Schedule, and such other written reports with respect
to Borrower* (including budgets, sales projections, operating plans and other
financial documentation), as GBC shall from time to time reasonably specify.
* and U.K. Related Company
5.3 Access to Collateral, Books and Records. At reasonable times, and on
one business day's notice, GBC, or its agents, shall have the right to inspect
the Collateral, and the right to audit and copy Borrower's* books and records.
GBC shall take reasonable steps to keep confidential all information obtained in
any such inspection or audit, but GBC shall have the right to disclose any such
information to its auditors, regulatory agencies, and attorneys, and pursuant to
any subpoena or other legal process. The foregoing inspections and audits shall
be at Borrower's expense and the charge therefor shall be $600 per person per
day (or such higher amount as shall represent GBC's then current standard charge
for the same), plus reasonable out-of-pockets expenses. Borrower shall not be
charged more than $3,000 per audit (plus reasonable out-of-pockets expenses),
nor shall audits be done more frequently than four times per calendar year,
provided that the foregoing limits shall not apply **, nor shall they restrict
GBC's right to conduct audits at its own expense (whether or not a Default or
Event of Default has occurred). Borrower will not enter into any agreement with
any accounting firm, service bureau or third party to store Borrower's books or
records at any location other than Borrower's Address, without first obtaining
GBC's written consent, which may be conditioned upon such accounting firm,
service bureau or other third party agreeing to give GBC the same rights with
respect to access to books and records and related rights as GBC has under this
Agreement.
* and U.K. Related Company's
** while Borrower is in Default
5.4 Remittance of Proceeds. All proceeds arising from the sale or other
disposition of any Collateral shall be delivered, in kind, by Borrower* to GBC
in the original form in which received by Borrower not later than the following
business day after receipt by Borrower**, to be applied to the Obligations in
such order as GBC shall determine; provided that, if no Default or Event of
Default has occurred and is continuing, and if no term loan is outstanding
hereunder, then Borrower shall not be obligated to remit to GBC the proceeds of
the sale of Equipment which is sold in the ordinary course of business, in a
good-faith arm's length transaction. Except for the proceeds of the sale of
Equipment as set forth above***, Borrower**** shall not commingle proceeds of
Collateral with any of Borrower's* other funds or property, and shall hold such
proceeds separate and apart from such other funds and property and in an express
trust for GBC. Nothing in this Section limits the restrictions on disposition of
Collateral set forth elsewhere in this Agreement.
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* or U.K. Related Company's
** or U.K. Related Company
*** and except as provided in the Schedule as to U.K. Related Company
**** and U.K. Related Company
5.5 Negative Covenants. Except as may be permitted in the Schedule,
Borrower shall not, without GBC's prior written consent, do any of the
following: (i) merge or consolidate with another corporation or entity*; (ii)
acquire any assets, except in the ordinary course of business; (iii) enter into
any other transaction outside the ordinary course of business; (iv) sell or
transfer any Collateral, except that, provided no Default or Event of Default
has occurred and is continuing, Borrower may (a) sell finished Inventory in the
ordinary course of Borrower's business, (b) if no term loan is outstanding
hereunder, sell Equipment in the ordinary course of business, in good-faith
arm's length transactions, and (c) license or sublicense intellectual property
in the ordinary course of Borrower's business; (v) store any Inventory or other
Collateral with any warehouseman or other third party**; (vi) sell any Inventory
on a sale-or-return, guaranteed sale, consignment, or other contingent basis***;
(vii) make any loans of money or other assets****; (viii) incur any debts,
outside the ordinary course of business, which would have a material, adverse
effect on Borrower or on the prospect of repayment of the Obligations; (ix)
guarantee or otherwise become liable with respect to the obligations of another
party or entity*****; (x) pay or declare any dividends on Borrower's stock
(except for dividends payable solely in stock of Borrower)+; (xi) redeem,
retire, purchase or otherwise acquire, directly or indirectly, any of Borrower's
stock; (xii) make any change in Borrower's capital structure which would have a
material adverse effect on Borrower or on the prospect of repayment of the
Obligations; or (xiii) dissolve or elect to dissolve; or (xiv) agree to do any
of the foregoing.
* (except that Borrower may merge into another corporation for purposes of
effecting a reincorporation into another state after GBC has notified Borrower
in writing that all steps necessary to protect the validity and perfection of
GBC's first-priority security interest in the Collateral, subject to Permitted
Liens, have been taken)
** except as disclosed to and approved by GBC and after delivery to GBC of such
documents as GBC may reasonably require
*** , except in accordance with Borrower's normal business practices as
disclosed to GBC
**** , other than to employees in the ordinary course of business or any
software developer not exceeding $100,000 in the aggregate
***** which is not a Subsidiary of Borrower
+ other than to U.K. Related Company
5.6 Litigation Cooperation. Should any third-party suit or proceeding be
instituted by or against GBC with respect to any Collateral or in any manner
relating to Borrower, Borrower shall, without expense to GBC, make available
Borrower and its officers, employees and agents, and Borrower's books and
records, without charge, to the extent that GBC may deem them reasonably
necessary in order to prosecute or defend any such suit or proceeding.
5.7 Notification of Changes. Borrower will promptly notify GBC in writing
of any change in its officers or directors, the opening of any new bank account
or other deposit account, the opening of any new securities account, and any
material adverse change in the business or financial affairs of Borrower.
5.8 Further Assurances. Borrower agrees, at its expense, on request by GBC,
to execute all documents and take all actions, as GBC may deem reasonably
necessary or useful in order to perfect and maintain GBC's perfected security
interest in the Collateral, and in order to fully consummate the transactions
contemplated by this Agreement.
5.9 Indemnity. Borrower hereby agrees to indemnify GBC and hold GBC
harmless from and against any and all claims, debts, liabilities, demands,
obligations, actions, causes of action, penalties, costs and expenses (including
attorneys' fees), of every nature, character and description, which GBC may
sustain or incur based upon or arising out of any of the Obligations, any actual
or alleged failure to collect and pay over any withholding or other tax relating
to Borrower or its employees, any relationship or agreement between GBC and
Borrower, any actual or alleged failure of GBC to comply with any writ of
attachment or other legal process relating to Borrower or any of its property,
or any other matter, cause or thing whatsoever occurred, done, omitted or
suffered to be done by GBC relating to Borrower or the Obligations (except any
such amounts sustained or incurred as the result of the gross negligence or
willful misconduct of GBC or any of its directors, officers, employees, agents,
attorneys, or any other person affiliated with or representing GBC).
Notwithstanding any provision in this Agreement to the
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contrary, the indemnity agreement set forth in this Section shall survive any
termination of this Agreement and shall for all purposes continue in full force
and effect.
6. TERM.
6.1 Maturity Date. This Agreement shall continue in effect until the
maturity date set forth on the Schedule (the "Maturity Date"); provided that the
Maturity Date shall automatically be extended, and this Agreement shall
automatically and continuously renew, for successive additional terms of one
year each, unless one party gives written notice to the other, not less than
sixty days prior to the next Maturity Date, that such party elects to terminate
this Agreement effective on the next Maturity Date.
6.2 Early Termination. This Agreement may be terminated prior to the
Maturity Date as follows: (i) by Borrower, effective three business days after
written notice of termination is given to GBC; or (ii) by GBC at any time after
the occurrence of an Event of Default, without notice, effective immediately. If
this Agreement is terminated by Borrower or by GBC under this Section 6.2,
Borrower shall pay to GBC a termination fee (the "Termination Fee") in the
amount shown on the Schedule. The Termination Fee shall be due and payable on
the effective date of termination and thereafter shall bear interest at a rate
equal to the highest rate applicable to any of the Obligations.
6.3 Payment of Obligations. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether or
not all or any part of such Obligations are otherwise then due and payable.
Without limiting the generality of the foregoing, if on the Maturity Date, or on
any earlier effective date of termination, there are any outstanding letters of
credit issued based upon an application, guarantee, indemnity or similar
agreement on the part of GBC, then on such date Borrower shall provide to GBC
cash collateral in an amount equal to 110% of the face amount of all such
letters of credit plus all interest, fees and costs due or (in GBC's estimation)
likely to become due in connection therewith, to secure all of the Obligations
relating to said letters of credit, pursuant to GBC's then standard form cash
pledge agreement. Notwithstanding any termination of this Agreement, all of
GBC's security interests in all of the Collateral and all of the terms and
provisions of this Agreement shall continue in full force and effect until all
Obligations have been paid and performed in full; provided that, without
limiting the fact that Loans are subject to the discretion of GBC, GBC may, in
its sole discretion, refuse to make any further Loans after termination. No
termination shall in any way affect or impair any right or remedy of GBC, nor
shall any such termination relieve Borrower of any Obligation to GBC, until all
of the Obligations have been paid and performed in full. Upon payment and
performance in full of all the Obligations and termination of this Agreement,
GBC shall promptly deliver to Borrower termination statements, requests for
reconveyances and such other documents as may be reasonably required to
terminate GBC's security interests.
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 Events of Default. The occurrence of any of the following events shall
constitute an "Event of Default" under this Agreement, and Borrower shall give
GBC immediate written notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to GBC by Borrower or any
Guarantor or any of Borrower's or any Guarantor's officers, employees or agents,
now or in the future, shall be untrue or misleading in a material respect; or
(b) Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation; or (c) the total Loans and other Obligations
outstanding at any time shall exceed the Credit Limit; or (d) Borrower shall
fail to perform any non-monetary Obligation which by its nature cannot be cured;
or (e) Borrower shall fail to perform any other non-monetary Obligation, which
failure is not cured within * days after the date performance is due; or (f) any
levy, assessment, attachment, seizure, lien or encumbrance (other than a
Permitted Lien) is made on all or any part of the Collateral which is not cured
within 10* days after the occurrence of the same; or (g) any default or event of
default occurs under any obligation secured by a Permitted Lien, which is not
cured within any applicable cure period or waived in writing by the holder of
the Permitted Lien**; or (h) Borrower or any Guarantor breaches any material
contract or obligation, which has or may reasonably be expected to have a
material adverse effect on Borrower's or such Guarantor's business or financial
condition***; or (i) dissolution, termination of existence, insolvency or
business failure of Borrower or any Guarantor; or appointment of a receiver,
trustee or custodian, for all or any part of the property of, assignment for the
benefit of creditors by, or the commencement of any proceeding by Borrower or
any Guarantor under any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect; or (j) the commencement of any
proceeding against Borrower or any Guarantor under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect,
which is not cured by the dismissal thereof within 45 days after the date
commenced; or (k) revocation or termination of, or limitation or denial of
liability upon, any guaranty of the
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Obligations or any attempt to do any of the foregoing or any defined "Event of
Default" shall occur under any Security Agreement entered into by any Guarantor
in favor of GBC; or (l) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset pledged by any other Person to secure any or all of the
Obligations, or any attempt to do any of the foregoing, or commencement of
proceedings by or against any such Person under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect; or (m) Borrower or
any Guarantor makes any payment on account of any indebtedness or obligation
which has been subordinated to the Obligations other than as permitted in the
applicable subordination agreement, or if any Person who has subordinated such
indebtedness or obligations terminates or in any way limits or terminates its
subordination agreement; or (n) there shall be a change in the record or
beneficial ownership of an aggregate of more than 20% of the outstanding shares
of stock of **** in one or more transactions, compared to the ownership of
outstanding shares of stock of **** in effect on the date hereof, without the
prior written consent of GBC*****; or (o) Borrower or any Guarantor shall
generally not pay its debts as they become due, or Borrower or any Guarantor
shall conceal, remove or transfer any part of its property, with intent to
hinder, delay or defraud its creditors, or make or suffer any transfer of any of
its property which may be fraudulent under any bankruptcy, fraudulent conveyance
or similar law; or (p) there shall be a material adverse change in Borrower's or
any Guarantor's business or financial condition. GBC may cease making any Loans
hereunder during any of the above cure periods, and thereafter if an Event of
Default has occurred.
* 15
**, provided that if the amount involved is less than $25,000 then the same
shall not be an Event of Default unless and until the holder of the Permitted
Lien commences any action to enforce its lien against any Collateral
*** and such breach is not cured within 15 days
**** IMI
***** or there shall be a change in the record or beneficial ownership of either
Related Company such that IMI ceases to hold 100% of the common stock and all
other capital stock of either Related Company, in one or more transactions,
compared to the ownership of outstanding shares of stock of such Related Company
in effect on the date hereof, without the prior written consent of GBC (other
than in connection with any initial public offering)
7.2 Remedies. Upon the occurrence and during the continuance of any Event
of Default, GBC, at its option, and without notice or demand of any kind (all of
which are hereby expressly waived by Borrower), may do any one or more of the
following: (a) Cease making Loans or otherwise extending credit to Borrower
under this Agreement or any other document or agreement; (b) Accelerate and
declare all or any part of the Obligations to be immediately due, payable, and
performable, notwithstanding any deferred or installment payments allowed by any
instrument evidencing or relating to any Obligation; (c) Take possession of any
or all of the Collateral wherever it may be found, and for that purpose Borrower
hereby authorizes GBC without judicial process to enter onto any of Borrower's
premises without interference to search for, take possession of, keep, store, or
remove any of the Collateral, and remain on the premises or cause a custodian to
remain on the premises in exclusive control thereof, without charge for so long
as GBC deems it reasonably necessary in order to complete the enforcement of its
rights under this Agreement or any other agreement; provided, however, that
should GBC seek to take possession of any of the Collateral by Court process,
Borrower hereby irrevocably waives: (i) any bond and any surety or security
relating thereto required by any statute, court rule or otherwise as an incident
to such possession; (ii) any demand for possession prior to the commencement of
any suit or action to recover possession thereof; and (iii) any requirement that
GBC retain possession of, and not dispose of, any such Collateral until after
trial or final judgment; (d) Require Borrower to assemble any or all of the
Collateral and make it available to GBC at places designated by GBC which are
reasonably convenient to GBC and Borrower, and to remove the Collateral to such
locations as GBC may deem advisable; (e) Complete the processing, manufacturing
or repair of any Collateral prior to a disposition thereof and, for such purpose
and for the purpose of removal, GBC shall have the right to use Borrower's
premises, vehicles, hoists, lifts, cranes, equipment and all other property
without charge; (f) Sell, lease or otherwise dispose of any of the Collateral,
in its condition at the time GBC obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private sales,
in lots or in bulk, for cash, exchange or other property, or on credit, and to
adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. GBC shall have the right to conduct
such disposition on Borrower's premises without charge, for such time or times
as GBC deems reasonable, or on GBC's premises, or elsewhere and the Collateral
need not be located at the place of disposition. GBC may directly or through any
affiliated company purchase or lease any
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Collateral at any such public disposition, and if permissible under applicable
law, at any private disposition. Any sale or other disposition of Collateral
shall not relieve Borrower of any liability Borrower may have if any Collateral
is defective as to title or physical condition or otherwise at the time of sale;
(g) Demand payment of, and collect any Receivables and General Intangibles
comprising Collateral and, in connection therewith, Borrower irrevocably
authorizes GBC to endorse or sign Borrower's name on all collections, receipts,
instruments and other documents, to take possession of and open mail addressed
to Borrower and remove therefrom payments made with respect to any item of the
Collateral or proceeds thereof, and, in GBC's sole discretion, to grant
extensions of time to pay, compromise claims and settle Receivables, General
Intangibles and the like for less than face value; (h) Collect, receive, dispose
of and realize upon any Investment Property, including withdrawal of any and all
funds from any securities accounts; and (i) Demand and receive possession of any
of Borrower's federal and state income tax returns and the books and records
utilized in the preparation thereof or referring thereto. All reasonable
attorneys' fees, expenses, costs, liabilities and obligations incurred by GBC
with respect to the foregoing shall be added to and become part of the
Obligations, shall be due on demand, and shall bear interest at a rate equal to
the highest interest rate applicable to any of the Obligations.
7.3 Standards for Determining Commercial Reasonableness. Borrower and GBC
agree that a sale or other disposition (collectively, "sale") of any Collateral
which complies with the following standards will conclusively be deemed to be
commercially reasonable: (i) Notice of the sale is given to Borrower at least
seven days prior to the sale, and, in the case of a public sale, notice of the
sale is published at least seven days before the sale in a newspaper of general
circulation in the county where the sale is to be conducted; (ii) Notice of the
sale describes the collateral in general, non-specific terms; (iii) The sale is
conducted at a place designated by GBC, with or without the Collateral being
present; (iv) The sale commences at any time between 8:00 a.m. and 6:00 p.m; (v)
Payment of the purchase price in cash or by cashier's check or wire transfer is
required; (vi) With respect to any sale of any of the Collateral, GBC may (but
is not obligated to) direct any prospective purchaser to ascertain directly from
Borrower any and all information concerning the same. GBC shall be free to
employ other methods of noticing and selling the Collateral, in its discretion,
if they are commercially reasonable. Without limiting the generality of the
foregoing, Borrower recognizes that GBC may be unable to make a public sale of
any or all of the Investment Property, by reason of prohibitions contained in
applicable securities laws or otherwise, and expressly agrees that a private
sale to a restricted group of purchasers for investment and not with a view to
any distribution thereof shall be considered a commercially reasonable sale.
7.4 Power of Attorney. Upon the occurrence and during the continuance of
any Event of Default, without limiting GBC's other rights and remedies, Borrower
grants to GBC an irrevocable power of attorney coupled with an interest,
authorizing and permitting GBC (acting through any of its employees, attorneys
or agents) at any time, at its option, but without obligation, with or without
notice to Borrower, and at Borrower's expense, to do any or all of the
following, in Borrower's name or otherwise, but GBC agrees to exercise the
following powers in a commercially reasonable manner: (a) Execute on behalf of
Borrower any documents that GBC may, in its sole discretion, deem advisable in
order to perfect and maintain GBC's security interest in the Collateral, or in
order to exercise a right of Borrower or GBC, or in order to fully consummate
all the transactions contemplated under this Agreement, and all other present
and future agreements; (b) Execute on behalf of Borrower any document
exercising, transferring or assigning any option to purchase, sell or otherwise
dispose of or to lease (as lessor or lessee) any real or personal property which
is part of GBC's Collateral or in which GBC has an interest; (c) Execute on
behalf of Borrower, any invoices relating to any Receivable, any draft against
any Account Debtor and any notice to any Account Debtor, any proof of claim in
bankruptcy, any Notice of Lien, claim of mechanic's, materialman's or other
lien, or assignment or satisfaction of mechanic's, materialman's or other lien;
(d) Take control in any manner of any cash or non-cash items of payment or
proceeds of Collateral; endorse the name of Borrower upon any instruments, or
documents, evidence of payment or Collateral that may come into GBC's
possession; (e) Endorse all checks and other forms of remittances received by
GBC; (f) Pay, contest or settle any lien, charge, encumbrance, security interest
and adverse claim in or to any of the Collateral, or any judgment based thereon,
or otherwise take any action to terminate or discharge the same; (g) Grant
extensions of time to pay, compromise claims and settle Receivables and General
Intangibles for less than face value and execute all releases and other
documents in connection therewith; (h) Pay any sums required on account of
Borrower's taxes or to secure the release of any liens therefor, or both; (i)
Settle and adjust, and give releases of, any insurance claim that relates to any
of the Collateral and obtain payment therefor; (j) Instruct any third party
having custody or control of any books or records belonging to, or relating to,
Borrower to give GBC the same rights of access and other rights with respect
thereto as GBC has under this Agreement; (k) Execute and deliver to any
securities intermediary or other Person any entitlement order, account control
agreement or other notice, document or instrument with
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respect to any Investment Property; and (l) Take any action or pay any sum
required of Borrower pursuant to this Agreement and any other present or future
agreements. Any and all reasonable sums paid and any and all reasonable costs,
expenses, liabilities, obligations and reasonable attorneys' fees incurred by
GBC with respect to the foregoing shall be added to and become part of the
Obligations, shall be payable on demand, and shall bear interest at a rate equal
to the highest interest rate applicable to any of the Obligations. In no event
shall GBC's rights under the foregoing power of attorney or any of GBC's other
rights under this Agreement be deemed to indicate that GBC is in control of the
business, management or properties of Borrower.
7.5 Application of Proceeds. All proceeds realized as the result of any
sale or other disposition of the Collateral shall be applied by GBC first to the
reasonable costs, expenses, liabilities, obligations and attorneys' fees
incurred by GBC in the exercise of its rights under this Agreement, second to
the interest due upon any of the Obligations, and third to the principal of the
Obligations, in such order as GBC shall determine in its sole discretion. Any
surplus shall be paid to Borrower or other persons legally entitled thereto;
Borrower shall remain liable to GBC for any deficiency. If, GBC, in its sole
discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale of Collateral, GBC shall have
the option, exercisable at any time, in its sole discretion, of either reducing
the Obligations by the principal amount of purchase price or deferring the
reduction of the Obligations until the actual receipt by GBC of the cash
therefor.
7.6 Remedies Cumulative. In addition to the rights and remedies set forth
in this Agreement, GBC shall have all the other rights and remedies accorded a
secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between GBC and Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise by
GBC of one or more of its rights or remedies shall not be deemed an election,
nor bar GBC from subsequent exercise or partial exercise of any other rights or
remedies. The failure or delay of GBC to exercise any rights or remedies shall
not operate as a waiver thereof, but all rights and remedies shall continue in
full force and effect until all of the Obligations have been fully paid and
performed.
8. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"Account Debtor" means the obligor on a Receivable.
"Additional Collateral" means all property and interests in property and
proceeds thereof described as collateral in the U.K. Related Company Security
Agreement.
"Affiliate" means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.
"Agreement" and "this Agreement" means this Loan and Security Agreement and
all modifications and amendments thereto, extensions thereof, and replacements
therefor.
"Business Day" means a day on which GBC is open for business.
"Code" means the Uniform Commercial Code as adopted and in effect in the
State of California from time to time.
"Collateral" has the meaning set forth in Section 2.1 above.
"Default" means any event which with notice or passage of time or both,
would constitute an Event of Default.
"Deposit Account" has the meaning set forth in Section 9105 of the Code.
"Eligible Receivables" means unconditional Receivables arising in the
ordinary course of Borrower's* business from the completed sale of goods or
rendition of services, which GBC, in its sole judgment, shall deem eligible for
borrowing, based on such considerations as GBC may from time to time deem
appropriate.
* or U.K. Related Company's
"Equipment" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.
"Event of Default" means any of the events set forth in Section 7.1 of this
Agreement.
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"General Intangibles" means all general intangibles of Borrower, whether
now owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, Deposit Accounts, inventions, designs, drawings, blueprints, patents,
patent applications, trademarks and the goodwill of the business symbolized
thereby, names, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, security and other deposits, rights in all
litigation presently or hereafter pending for any cause or claim (whether in
contract, tort or otherwise), and all judgments now or hereafter arising
therefrom, all claims of Borrower against GBC, rights to purchase or sell real
or personal property, rights as a licensor or licensee of any kind, royalties,
telephone numbers, proprietary information, purchase orders, and all insurance
policies and claims (including life insurance, key man insurance, credit
insurance, liability insurance, property insurance and other insurance), tax
refunds and claims, computer programs, discs, tapes and tape files, claims under
guaranties, security interests or other security held by or granted to Borrower,
all rights to indemnification and all other intangible property of every kind
and nature (other than Receivables).
"Guarantor" means any Person who has guaranteed any of the Obligations.
"Inventory" means all of Borrower's now owned and hereafter acquired goods,
merchandise or other personal property, wherever located, to be furnished under
any contract of service or held for sale or lease (including all raw materials,
work in process, finished goods and goods in transit), and all materials and
supplies of every kind, nature and description which are or might be used or
consumed in Borrower's business or used in connection with the manufacture,
packing, shipping, advertising, selling or finishing of such goods, merchandise
or other personal property, and all warehouse receipts, documents of title and
other documents representing any of the foregoing.
"Investment Property" means any and all investment property of Borrower,
including all securities, whether certificated or uncertificated, security
entitlements, securities accounts, commodity contracts and commodity accounts,
and all financial assets held in any securities account or otherwise, wherever
located, and whether now existing or hereafter acquired or arising.
"Obligations" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to GBC, whether evidenced by this Agreement or any note
or other instrument or document, whether arising from an extension of credit,
opening of a letter of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by GBC in
Borrower's debts owing to others), absolute or contingent, due or to become due,
including, without limitation, all interest, charges, expenses, fees, attorney's
fees, expert witness fees, audit fees, letter of credit fees, loan fees,
termination fees, minimum interest charges and any other sums chargeable to
Borrower under this Agreement or under any other present or future instrument or
agreement between Borrower and GBC.
"Permitted Liens" means the following: (i) purchase money security
interests in specific items of Equipment; (ii) leases of specific items of
Equipment; (iii) liens for taxes not yet payable; (iv) additional security
interests and liens which are subordinate to the security interest in favor of
GBC and are consented to in writing by GBC (which consent shall not be
unreasonably withheld); (v) security interests being terminated substantially
concurrently with this Agreement; (vi) liens of materialmen, mechanics,
warehousemen, carriers, or other similar liens arising in the ordinary course of
business and securing obligations which are not delinquent; (vii) liens incurred
in connection with the extension, renewal or refinancing of the indebtedness
secured by liens of the type described above in clauses (i) or (ii) above,
provided that any extension, renewal or replacement lien is limited to the
property encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; (viii)
Liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods. GBC will have the
right to require, as a condition to its consent under subparagraph (iv) above,
that the holder of the additional security interest or lien sign an
intercreditor agreement on GBC's then standard form, acknowledge that the
security interest is subordinate to the security interest in favor of GBC, and
agree not to take any action to enforce its subordinate security interest so
long as any Obligations remain outstanding, and that Borrower agree that any
uncured default in any obligation secured by the subordinate security interest
shall also constitute an Event of Default under this Agreement.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"Prime Rate" means the actual "Reference Rate" or the substitute therefor
of Bank of America NT & SA ("B of A") whether or not that rate is the lowest
interest rate charged by B of A. If the Prime Rate, as so defined, is
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unavailable on any date of determination, "Prime Rate" shall mean the highest of
the prime rates published in the Wall Street Journal, on such date of
determination, as the base rate on corporate loans at large United States money
center commercial banks, as determined in good faith by GBC, which determination
shall be conclusive absent manifest error.
"Receivables" means all of Borrower's* now owned and hereafter acquired
accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, documents and all other forms of obligations
at any time owing to Borrower**, all guaranties and other security therefor, all
merchandise returned to or repossessed by Borrower**, and all rights of stoppage
in transit and all other rights or remedies of an unpaid vendor, lienor or
secured party.
* or U.K. Related Company's
** or U.K. Related Company
"Related Company" means, collectively, U.K. Related Company and U.S.
Related Company.
"U.K. Related Company" means Interactive Magic (UK) LTD, a corporation
organized under the laws of England, which is a subsidiary of Borrower.
"U.K. Related Company Guaranty" means a guaranty of U.K. Related Company,
in form and substance satisfactory to GBC, pursuant to which U.K. Related
Company guarantees the Obligations.
"U.K. Related Company Security Agreement" means a debenture between U.K.
Related Company and GBC, in form and substance satisfactory to GBC, pursuant to
which U.K. Related Company pledges to GBC, and grants to GBC a security interest
in, U.K. Related Company's accounts receivable and other property and interests
in property described therein as security for the Obligations.
"U.S. Related Company" means iMagic Online Corporation, a corporation
organized under the laws of North Carolina, which is a subsidiary of Borrower.
"U.S. Related Company Guaranty" means a guaranty of U.S. Related Company,
in form and substance satisfactory to GBC, pursuant to which U.S. Related
Company guarantees the Obligations.
Other Terms. All accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings given to such terms in accordance with
generally accepted accounting principles, consistently applied. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meanings
provided by the Code, to the extent such terms are defined therein.
9. GENERAL PROVISIONS.*
* Each reference to Borrower in Sections 9.5 through 9.17 below shall be deemed
to include a reference to the U.K. Related Company.
9.1 Interest Computation. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by GBC (including
proceeds of Receivables and payment of the Obligations in full) shall be deemed
applied by GBC on account of the Obligations three Business Days after receipt
by GBC of immediately available funds. GBC shall not, however, be required to
credit Borrower's account for the amount of any item of payment which is
unsatisfactory to GBC in its discretion, and GBC may charge Borrower's Loan
account for the amount of any item of payment which is returned to GBC unpaid.
9.2 Application of Payments. All payments with respect to the Obligations
may be applied, and in GBC's sole discretion reversed and reapplied, to the
Obligations, in such order and manner as GBC shall determine in its sole
discretion.
9.3 Charges to Account. GBC may, in its discretion, require that Borrower
pay monetary Obligations in cash to GBC, or charge them to Borrower's Loan
account, in which event they will bear interest at the same rate applicable to
the Loans.
9.4 Monthly Accountings. GBC shall provide Borrower monthly with an account
of advances, charges, expenses and payments made pursuant to this Agreement.
Such account shall be deemed correct, accurate and binding on Borrower and an
account stated (except for reverses and reapplications of payments made and
corrections of errors discovered by GBC), unless Borrower notifies GBC in
writing to the contrary within sixty days after each account is rendered,
describing the nature of any alleged errors or admissions.
9.5 Notices. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service, or by facsimile, or by regular first-class mail, or certified mail
return receipt requested, addressed to GBC or Borrower at the addresses shown in
the heading to this Agreement, or at any other address designated in writing by
one party to the other party. All notices shall be deemed to have been given
upon delivery in the case of notices personally delivered, or at the expiration
of one business day following delivery to the private delivery service, or one
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day after the date sent by facsimile, or two business days following the deposit
thereof in the United States mail, with postage prepaid*.
* (or seven days following the deposit thereof in the English mail, with postage
prepaid)
9.6 Severability. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
9.7 Integration. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between Borrower and GBC and supersede all
prior and contemporaneous negotiations and oral representations and agreements,
all of which are merged and integrated in this Agreement. There are no oral
understandings, representations or agreements between the parties which are not
set forth in this Agreement or in other written agreements signed by the parties
in connection herewith.
9.8 Waivers. The failure of GBC at any time or times to require Borrower to
strictly comply with any of the provisions of this Agreement or any other
present or future agreement between Borrower and GBC shall not waive or diminish
any right of GBC later to demand and receive strict compliance therewith. Any
waiver of any default shall not waive or affect any other default, whether prior
or subsequent, and whether or not similar. None of the provisions of this
Agreement or any other agreement now or in the future executed by Borrower and
delivered to GBC shall be deemed to have been waived by any act or knowledge of
GBC or its agents or employees, but only by a specific written waiver signed by
an authorized officer of GBC and delivered to Borrower. Borrower waives demand,
protest, notice of protest and notice of default or dishonor, notice of payment
and nonpayment, release, compromise, settlement, extension or renewal of any
commercial paper, instrument, account, General Intangible, document or guaranty
at any time held by GBC on which Borrower is or may in any way be liable, and
notice of any action taken by GBC, unless expressly required by this Agreement.
9.9 Amendment. The terms and provisions of this Agreement may not be waived
or amended, except in a writing executed by Borrower and a duly authorized
officer of GBC.
9.10 Time of Essence. Time is of the essence in the performance by Borrower
of each and every obligation under this Agreement.
9.11 Attorneys' Fees and Costs. Borrower shall reimburse GBC for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by GBC, pursuant to, or in
connection with, or relating to this Agreement (whether or not a lawsuit is
filed), including, but not limited to, any reasonable attorneys' fees and costs
GBC incurs in order to do the following: prepare and negotiate this Agreement
and the documents relating to this Agreement; obtain legal advice in connection
with this Agreement or Borrower; enforce, or seek to enforce, any of its rights;
prosecute actions against, or defend actions by, Account Debtors; commence,
intervene in, or defend any action or proceeding; initiate any complaint to be
relieved of the automatic stay in bankruptcy; file or prosecute any probate
claim, bankruptcy claim, third-party claim, or other claim; examine, audit,
copy, and inspect any of the Collateral or any of Borrower's books and records;
protect, obtain possession of, lease, dispose of, or otherwise enforce GBC's
security interest in, the Collateral; and otherwise represent GBC in any
litigation relating to Borrower. If either GBC or Borrower files any lawsuit
against the other predicated on a breach of this Agreement, the prevailing party
in such action shall be entitled to recover its reasonable costs and attorneys'
fees, including (but not limited to) reasonable attorneys' fees and costs
incurred in the enforcement of, execution upon or defense of any order, decree,
award or judgment. All attorneys' fees and costs to which GBC may be entitled
pursuant to this Paragraph shall immediately become part of Borrower's
Obligations, shall be due on demand, and shall bear interest at a rate equal to
the highest interest rate applicable to any of the Obligations.
9.12 Benefit of Agreement. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and GBC; provided, however,
that Borrower may not assign or transfer any of its rights under this Agreement
without the prior written consent of GBC, and any prohibited assignment shall be
void. No consent by GBC to any assignment shall release Borrower from its
liability for the Obligations.
9.13 Joint and Several Liability. If Borrower consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.
9.14 Limitation of Actions. Any claim or cause of action by Borrower
against GBC, its directors, officers, employees, agents, accountants or
attorneys, based upon, arising from, or relating to this Agreement, or any other
present or future document or agreement, or any other
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Xxxxxxxx Xxxxxxxx Credit Loan and Security Agreement
--------------------------------------------------------------------------------
transaction contemplated hereby or thereby or relating hereto or thereto, or any
other matter, cause or thing whatsoever, occurred, done, omitted or suffered to
be done by GBC, its directors, officers, employees, agents, accountants or
attorneys, shall be barred unless asserted by Borrower by the commencement of an
action or proceeding in a court of competent jurisdiction by the filing of a
complaint within one year after the first act, occurrence or omission upon which
such claim or cause of action, or any part thereof, is based, and the service of
a summons and complaint on an officer of GBC, or on any other person authorized
to accept service on behalf of GBC, within thirty (30) days thereafter. Borrower
agrees that such one-year period is a reasonable and sufficient time for
Borrower to investigate and act upon any such claim or cause of action. The
one-year period provided herein shall not be waived, tolled, or extended except
by the written consent of GBC in its sole discretion. This provision shall
survive any termination of this Agreement or any other present or future
agreement.
9.15 Paragraph Headings; Construction. Paragraph headings are only used in
this Agreement for convenience. Borrower and GBC acknowledge that the headings
may not describe completely the subject matter of the applicable paragraph, and
the headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. The term "including,"
whenever used in this Agreement, shall mean "including (but not limited to)."
This Agreement has been fully reviewed and negotiated between the parties and no
uncertainty or ambiguity in any term or provision of this Agreement shall be
construed strictly against GBC or Borrower under any rule of construction or
otherwise.
9.16 Governing Law; Jurisdiction; Venue. This Agreement and all acts and
transactions hereunder and all rights and obligations of GBC and Borrower shall
be governed by the laws of the State of California. As a material part of the
consideration to GBC to enter into this Agreement, Borrower (i) agrees that all
actions and proceedings relating directly or indirectly to this Agreement shall,
at GBC's option, be litigated in courts located within California, and that the
exclusive venue therefor shall be Los Angeles County; (ii) consents to the
jurisdiction and venue of any such court and consents to service of process in
any such action or proceeding by personal delivery or any other method permitted
by law; and (iii) waives any and all rights Borrower may have to object to the
jurisdiction of any such court, or to transfer or change the venue of any such
action or proceeding.
9.17 Mutual Waiver of Jury Trial. BORROWER AND GBC EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN GBC AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF GBC OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH GBC OR BORROWER, IN ALL
OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
Borrower:
INTERACTIVE MAGIC, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------------
Title: President
------------------------------------------
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Title: Secretary
------------------------------------------
iMAGIC ONLINE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------------
Title: Vice President
------------------------------------------
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Title: Secretary
------------------------------------------
GBC:
GREYROCK BUSINESS CREDIT,
a Division of NationsCredit Commercial Corporation
By: /s/ Xxxx Xxxxxx
---------------------------------------------
Title: Vice President
------------------------------------------
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Xxxxxxxx Xxxxxxxx Credit Loan and Security Agreement
--------------------------------------------------------------------------------
RELATED COMPANY CONSENT
Interactive Magic (UK) LTD., a corporation organized under the laws of
England ("U.K. Related Company"), hereby approves of, agrees to and consents to
all of the terms and provisions of the foregoing agreement as they relate to
U.K. Related Company, and agrees to be bound thereby.
INTERACTIVE MAGIC (UK) LTD.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------------
Title: Director
------------------------------------------
By: /s/ Nina Xx X. Xxxxxxxx
---------------------------------------------
Title: Secretary
------------------------------------------
Greyrock
Business
Credit
A NationsBank Company
Schedule to
Loan and Security Agreement
Borrower: Interactive Magic, Inc. and
iMagic Online Corporation
Address: 000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Date: April 30, 1998
This Schedule is an integral part of the Loan and Security Agreement between
Greyrock Business Credit, a Division of NationsCredit Commercial Corporation
("GBC") and the borrower named above ("Borrower") of even date. All references
to "Borrower" herein shall mean and be each of Interactive Magic, Inc. ("Parent
Company") and iMagic Online Corporation ("U.S. Related Company"), individually
and collectively, and the successors and assigns of each.
================================================================================
1. CREDIT LIMIT An amount not to exceed the lesser of (1) or (2) below:
(Section 1.1):
(1) $5,000,000 at any one time outstanding; or
(2) an amount equal to the sum of the following
(without duplication):
(i) 65% of the amount of Borrower's Eligible
Receivables (as defined in Section 8 above), plus
(ii) 65% of the Eligible Receivables of U.K
Related Company (as defined in Section 8 above),
as calculated in U.S. Dollars, plus
(iii) an amount equal to the lesser of (A)
$1,500,000 at any one time outstanding or (B) 200%
of the Value of Borrower's Eligible Inventory (as
defined in Section 8 above). "Value," as used
herein, means the lower of cost or wholesale
market value.
The Credit Limit does not apply to Parent Company and
U.S. Related Company individually but rather applies to
all Loans to and Obligations of Parent Company and U.S.
Related Company in the aggregate. Accordingly,
notwithstanding anything in the Loan and Security
Agreement, in no event shall Parent Company and U.S.
Related Company permit the total combined balance of
all Loans to Parent Company and U.S. Related Company
and all other Obligations of Parent Company and U.S.
Related Company to GBC combined at any one time
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Greyrock Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
outstanding to exceed in the aggregate the Credit
Limit.
For purposes of requesting any Loans, receiving any
Loan proceeds and otherwise administering the Loan and
Security Agreement, U.S. Related Company hereby
irrevocably appoints, designates and authorizes Parent
Company to act on U.S. Related Company's behalf, and
the action of Parent Company in the name of U.S.
Related Company shall in each case bind U.S. Related
Company. GBC shall be fully entitled to rely upon and
act following receipt of any notice, request or
instructions by Parent Company on behalf of U.S.
Related Company.
Notwithstanding any provision to the contrary contained
herein, for so long as the Subordination Agreement
dated April 30, 1998 between GBC and Petra Capital, LLC
shall remain in effect, the total combined balance of
all Loans hereunder shall not exceed the aggregate
amount of $4,500,000.
================================================================================
2. INTEREST
Interest Rate The interest rate in effect throughout each calendar
(Section 1.2): month during the term of this Agreement shall be the
highest "Prime Rate" in effect during such month, plus
2.0% per annum, provided that the interest rate in
effect in each month shall not be less than the highest
Bank of America reference rate in effect during such
month, and provided further that the interest charged
for each month shall be a minimum of $7,500, regardless
of the amount of the Obligations outstanding. Interest
shall be calculated on the basis of a 360-day year for
the actual number of days elapsed. "Prime Rate" has the
meaning set forth in Section 8 above.
================================================================================
3. FEES (Section 1.3/Section 6.2):
Loan Fee: $50,000, payable $4,166.67 concurrently herewith and
$4,166.67 on the first day of each calendar month
thereafter until paid in full, with interest at the
rate provided in Section 1.2 above.
Termination Fee: $7,500 per month for each month (or portion thereof)
from the effective date of termination to the Maturity
Date
NSF Check Charge: $15.00 per item.
Wire Transfers: $15.00 per transfer.
================================================================================
4. MATURITY DATE April 30, 1999, subject to automatic renewal as
(Section 6.1): provided in Section 6.1 above, and early termination as
provided in Section 6.2 above.
================================================================================
5. REPORTING Parent Company shall provide GBC with the following:
(Section 5.2):
1. Annual financial statements, as soon as available,
and in any event within 90 days following the end
of Parent Company's fiscal year, certified by
independent certified public accountants
acceptable to GBC.
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Greyrock Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
2. Quarterly unaudited financial statements, as soon
as available, and in any event within 30 days
after the end of each fiscal quarter of Parent
Company.
3. Monthly unaudited financial statements as soon as
available and, in any event, no later than 30 days
after the end of each month.
4. Monthly Receivable agings, aged by invoice date,
within 10 days after the end of each month.
5. Monthly accounts payable agings, aged by invoice
date, and outstanding or held check registers
within 10 days after the end of each month.
6. Such financial statements as are prepared in the
ordinary course for each Related Company, as soon
as available.
7. Such information as GBC shall from time to time
reasonably request with respect to Receivables of
U.K. Related Company and such other information
reasonably requested by GBC relating thereto.
================================================================================
6. BORROWER INFORMATION:
Prior Names of
Borrower S.P. Enterprises, Inc.
(Section 3.2): Interactive Creations Acquisition Corp.
Prior Trade
Names of Borrower
(Section 3.2): N/A
Existing Trade
Names of Borrower
(Section 3.2): N/A
Other Locations and
Addresses (Section 3.3): See Annex attached hereto.
Material Adverse
Litigation (Section 3.10): See Annex attached hereto.
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Greyrock Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
================================================================================
7. COPYRIGHT REGISTRATION COVENANT
(Section 5.8): Borrower agrees promptly, and in any event not later
than 90 days after the date hereof (the "Registration
Completion Date"), to have any of its currently
unregistered copyrightable software and software titles
registered with the U.S. Copyright Office in
Washington, D.C. (the "Copyright Office") and to
promptly provide GBC with evidence of such
registration. Borrower will, on an ongoing basis,
promptly register any future unregistered copyrightable
software and software titles with the Copyright Office.
Until the Registration Completion Date Borrower may
request Loans notwithstanding any noncompliance with
Section 2(e) of the Security Agreement in Copyrighted
Works (the "Copyright Security Agreement") between
Borrower and GBC (which Section 2(e) requires
registration with the Copyright Office of any copyright
the sale, licensing or other disposition of which
results in any Receivable (a "Copyright Receivable")
with respect to which any Loan is requested). Effective
the Registration Completion Date, no Loan request may
be made with respect to any Copyright Receivables if
GBC has not made its filing with the Copyright Office
with respect to the copyright giving rise to such
Copyright Receivables.
================================================================================
8. ADDITIONAL PROVISIONS
(i) Additional Subsidiaries. (A) If Borrower proposes
to incorporate, create or acquire any additional
subsidiary, Borrower shall notify GBC thereof, and, if
required by the Loan and Security Agreement, obtain
GBC's consent thereto. After the incorporation,
creation or acquisition of any such subsidiary (subject
to obtaining any necessary GBC consent), within five
Business Days following receipt by Borrower from GBC of
a security agreement, in form and substance
satisfactory to GBC, and a guaranty of the Obligations
in form and substance satisfactory to GBC, Borrower
shall cause such subsidiary to execute and deliver such
guaranty and security agreement to GBC. GBC may elect
in its sole discretion to waive any such requirement in
the case of any non-U.S. subsidiary and any subsidiary
that will remain a dormant or shell subsidiary. (B)
Within five Business Days after receipt from GBC,
Borrower shall cause such subsidiary to have executed
and filed any UCC-1 financing statements furnished by
GBC in each jurisdiction in which such filing is
necessary to perfect the security interest of GBC in
the Collateral of such subsidiary and in which GBC
requests that such filing be made. (C) Additionally,
Borrower and such subsidiary shall have executed and
delivered to GBC such other items as reasonably
requested by GBC in connection with the foregoing,
including resolutions, incumbency and officers'
certificates, opinions of counsel, search reports and
other certificates and documents.
(ii) U.K. Related Company Receivables. (A) In order to
be Eligible Receivables, the U.K. Related Company's
Receivables (the "U.K. Related Company Receivables")
shall be billed from and payable to offices in England
(even though bills may be sent to, and payments may be
remitted from, other countries). Currencies in which
Receivables are denominated shall be acceptable to GBC
in its sole discretion. (B) Daily reporting of
transactions and daily schedules and assignments of
Receivables and schedules of collections, called for by
Section 4.3 of the Loan Agreement, will not be required
with respect to the Receivables of the U.K. Related
Company. Instead, Borrower will provide GBC
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Greyrock Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
with a monthly Borrowing Base Certificate, in such form
as GBC shall from time to time specify, within 10 days
after the end of each month, with respect to the U.K.
Related Company Receivables. In the event, as of the
end of any month, the total of all Loans and all other
Obligations secured by all Eligible Receivables (after
including the amount of all Eligible Receivables of the
U.K. Related Company therein) exceeds the Credit Limit
set forth above, Borrower shall immediately pay the
amount of the excess to GBC. (C) Delivery of the
proceeds of U.K. Related Company Receivables and other
Additional Collateral within one business day after
receipt, as called for by Sections 4.4 and 5.4 of the
Loan Agreement, will not be required. (D) The foregoing
provisions of this Section U.K. Related Company shall
immediately terminate if any Default or Event of
Default occurs and is continuing. Upon any such
termination, Borrower shall, then and thereafter,
provide GBC with the daily reporting of transactions
and daily schedules and assignments of U.K. Related
Company Receivables and schedules of collections, as
called for by Section 4.3 of the Loan Agreement, and
Borrower shall deliver all proceeds of U.K. Related
Company Receivables and other Additional Collateral to
GBC, within one business day after receipt, as called
for by Sections 4.4 and 5.4 of the Loan Agreement.
(iii) Certain Conditions Precedent The availability of
Loans secured by Receivables of the U.K. Related
Company shall be subject to the condition precedent
that GBC shall have received each of the following, in
form and substance satisfactory to GBC and its counsel:
(i) the U.K. Related Company Security Agreement, duly
executed by GBC and U.K. Related Company;
(ii) the U.K. Related Company Guaranty, duly executed
by GBC and U.K. Related Company;
(iii)a certificate of the Secretary or other
appropriate officer of U.K. Related Company
certifying (A) copies of the articles of
incorporation and bylaws (or other applicable
organizational documents), of U.K. Related Company
and the resolutions and other actions taken or
adopted by U.K. Related Company authorizing the
execution, delivery and performance of the U.K.
Documents, and (B) the incumbency, authority and
signatures of each officer of U.K. Related Company
authorized to execute and deliver the U.K.
Documents and act with respect thereto;
(iv) a favorable legal opinion of U.K. counsel to U.K.
Related Company as to such matters as GBC may
reasonably request; and
(v) evidence that all filings, registrations and
recordings have been made in the appropriate
governmental offices, and all other action has
been taken, which shall be necessary to create, in
favor of GBC, a perfected first priority pledge of
and security interest in the Additional
Collateral.
(iv) Additional Conditions Precedent. Concurrently,
Borrower shall cause U.S. Related Company to execute
and deliver to GBC a guaranty with respect to all of
the Obligations, together with a security agreement
granting a security interest in the assets of U.S.
Related Company, each in form and substance
satisfactory to GBC. Additionally, Borrower shall cause
U.S. Related Company
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Greyrock Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
to have executed and filed any UCC-1 financing
statements furnished by GBC in each jurisdiction in
which such filing is necessary to perfect the security
interest of GBC in U.S. Related Company's assets and in
which GBC requests that such filing be made, and
Borrower and U.S. Related Company shall execute and
deliver to GBC such other items as reasonably requested
by GBC in connection with the foregoing, including
resolutions, incumbency and officers' certificates,
opinions of counsel, search reports and other
certificates and documents.
(v) Corporate Structure. Borrower represents and
warrants that its corporate structure is as follows:
Borrower owns 100% of the outstanding stock of each
Related Company. U.K. Related Company does not and will
not do business in the United States and does not and
will not own any assets in the United States. U.K.
Related Company has no subsidiaries other than
Interactive Magic GmbH. Borrower has no other
subsidiaries other than as set forth above.
(vi). Foreign Law Provisions. (A) Each of Borrower and
each Related Company (each an "Obligor") shall pay all
amounts of principal, interest, fees and other amounts
due under this Agreement and any and all related
instruments and agreements (collectively, the "Loan
Documents") free and clear of, and without reduction
for or on account of, any present and future taxes,
levies, imposts, duties, fees, assessments, charges,
deductions or withholdings and all liabilities with
respect thereto excluding, in the case of GBC, income
and franchise taxes imposed on it by the jurisdiction
under the laws of which GBC is organized or in which
its principal executive offices may be located or any
political subdivision or taxing authority thereof or
therein, and by the jurisdiction of GBC's lending
office and any political subdivision or taxing
authority thereof or therein (all such nonexcluded
taxes, levies, imposts, duties, fees, assessments,
charges, deductions, withholdings and liabilities being
hereinafter referred to as "Taxes"). If any Taxes shall
be required by law to be deducted or withheld from any
payment, Obligor shall increase the amount paid so that
GBC receives when due (and is entitled to retain),
after deduction or withholding for or on account of
such Taxes (including deductions or withholdings
applicable to additional sums payable under this
Section), the full amount of the payment provided for
in the Loan Documents. (B) If an Obligor makes any
payment hereunder in respect of which it is required by
law to make any deduction or withholding, it shall pay
the full amount to be deducted or withheld to the
relevant taxation or other authority within the time
allowed for such payment under applicable law and
promptly thereafter shall furnish to GBC an original or
certified copy of a receipt evidencing payment thereof,
together with such other information and documents as
GBC may reasonably request. If no Taxes are payable in
respect of any payment hereunder or in connection
herewith, the Obligor shall, upon request of GBC,
furnish to GBC a certificate from each appropriate
taxing authority, or an opinion of counsel acceptable
to GBC, in either case stating that such payment is
exempt from or not subject to Taxes. (C) If GBC is
required by law to make any payment on account of
Taxes, or any liability in respect of any Tax is
imposed, levied or assessed against GBC, the Obligor
shall indemnify GBC for and against such payment or
liability, together with any incremental taxes,
interest or penalties, and all costs and expenses,
payable or incurred in connection therewith, including
Taxes imposed on amounts payable under this Section 8,
whether or not such payment or liability was correctly
or legally asserted. A certificate of GBC as to the
amount of any such payment shall, in the absence of
manifest error, be conclusive and binding for all
purposes. (D) The Obligor
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Greyrock Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
agrees to indemnify GBC against and hold it harmless
from any and all present and future stamp, transfer,
documentary and other such taxes, levies, fees,
assessments and other charges made by any jurisdiction
by reason of the execution, delivery, performance and
enforcement of the Loan Documents. (E) Payment in U.S.
Dollars of all amounts due under the Loan Documents is
of the essence, and U.S. Dollars shall be the currency
of account in all events. The payment obligations of an
Obligor under the Loan Documents shall not be
discharged by an amount paid in another currency or in
another place, whether pursuant to a judgment or
otherwise, to the extent that the amount so paid on
conversion to U.S. Dollars and transfer to GBC under
normal banking procedures (after premium and costs of
exchange) does not yield the amount of U.S. Dollars due
under the Loan Documents. If, for the purposes of
obtaining judgment in any court, it is necessary to
convert a sum due hereunder or any other Loan Document
in U.S. Dollars into another currency (the "Other
Currency"), the rate of exchange used shall be that at
which in accordance with normal banking procedures GBC
could purchase U.S. Dollars with the Other Currency on
the Business Day preceding that on which final judgment
is given. The obligation of any Obligor in respect of
any such sum due from it to GBC under the Loan
Documents shall, notwithstanding any judgment in such
Other Currency, be discharged only to the extent that
on the Business Day following receipt by GBC of any sum
adjudged to be so due in the Other Currency, GBC may in
accordance with normal banking procedures purchase U.S.
Dollars with the Other Currency; if the U.S. Dollars so
purchased are less than the sum originally due to GBC
in U.S. Dollars, each Obligor agrees, as a separate and
independent obligation and notwithstanding any such
judgment, to indemnify GBC against such loss, and if
the U.S. Dollars so purchased exceed the sum originally
due to GBC in U.S. Dollars, GBC agrees to remit to
Borrower such excess.
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Greyrock Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
Borrower: GBC:
INTERACTIVE MAGIC, INC. GREYROCK BUSINESS CREDIT,
a Division of NationsCredit Commercial
Corporation
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxx Xxxxxx
-------------------------------- ---------------------------------
President or Vice President Title: Vice President
------------------------------
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Secretary
iMAGIC ONLINE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
President or Vice President
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Secretary
U.K. RELATED COMPANY CONSENT
INTERACTIVE MAGIC (UK) LTD.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Title: Director
-----------------------------
By: /s/ Nina Xx X. Xxxxxxxx
--------------------------------
Title: Secretary
-----------------------------
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Greyrock Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
Annex to
Schedule to Loan and Security Agreement
6. Borrower Information:
(a) Other Locations and Addresses (Section 3.3):
Interactive Magic, Inc.
000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
iMagic Online Corporation
0000 X. Xxxxxxxxx Xxx., Xxxxx 000
Xxxxxxxxx, XX 00000
Interactive Magic (UK) Ltd.
Ginger's Court
1st Floor
36 A Xxxx Xxxxxx
Xxxxxxxxx Xxxxxxxxx XX000XX
XX
Interactive Magic Germany GmbH
Xxxxxxxxxx. 00
X-000000 Xxxxxxxxx
Xxxxxxx
BB&T
000 X. Xxxxxxx Xxxxxx
Xxxx, XX 00000
First Charter Bankcard Division
00000 Xxxxxxxx Xxxxxxxxx
X. Xxx Xxxxxxx, XX 00000
First State Bank, Grapevine
0000 Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Saturn Solutions, Inc.
00 Xxxxx Xxxx
Xxxxx Xxxxxxxx, XX 00000
PBM Graphics, Inc.
0000 Xxxxx Xxx Xxxxxx Xxxx.
Xxxxxx, XX 00000
(b) Material Adverse Litigation (Section 3.10) Xxxxx Xxxx, on behalf of the
Public v. Interactive Magic, Inc. Suit No. 98-01228 (Contra Costa
County, March 23, 1998). False advertising Suit based on packaging of
Air Warrior III.
9
