LOAN AGREEMENT
First Union National Bank
000 Xxxxxxxxx Xxxxxx - XX0000
Xxxxxxx, Xxxxxxx 00000
(Hereinafter referred to as the "Bank")
M2Direct, Inc.
0000 Xxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
(Hereinafter referred to as the "Borrower")
This Loan Agreement ("Agreement") is entered into as of March 30, 1999, by and
between Bank and Borrower, a corporation (for profit) organized under the laws
of Georgia.
Borrower has applied to Bank for a loan or loans (individually and collectively,
the "Loan") evidenced by one or more promissory notes as follows:
Line of Credit - from the date hereof until written notice form the Bank that
the Sweep Plus arrangement is available, in the principal amount of
$3,000,000.00 (the "Commitment") which is evidenced by the Promissory Note dated
March 30, 1999 (the "Note"), under which Borrower may borrow, repay, and
reborrow, from time to time, so long as the total indebtedness outstanding at
any one time does not exceed the principal amount. The proceeds of advances
under the Line of Credit are to be used by Borrower solely for the refinancing
of existing indebtedness and for general corporate purposes.
Sweep Plus Revolving Line of Credit - following receipt of written notice from
the bank that the Sweep Plus arrangement is available, in the principal amount
of up to the Commitment which is evidenced by the Note, under and in accordance
with which loan advances and repayments will be made automatically to the
Borrower's bank account utilizing the Bank's Sweep Plus services. The proceeds
of advances under the Sweep Plus Revolving Line of Credit are to be used by
Borrower solely for general corporate purposes.
Bank's obligation to advance or readvance under the Note shall terminate if
there shall occur a Default and as otherwise provided in the Note.
This Agreement applies to the Loan and all Loan Documents. The terms "Loan
Documents" and "Obligations," as used in this Agreement, are defined in the
Note. The term "Loan Parties" shall mean the Borrower and its Subsidiaries, as
well as any other guarantors of the Obligations. As used in this Agreement as to
Borrower, "Subsidiary" shall mean any corporation of which more than 50% of the
issued and outstanding voting stock is owned directly or indirectly by Borrower.
Relying upon the covenants, agreements, representations and warranties contained
in this Agreement, Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions set forth herein, and Bank and Borrower agree as
follows:
REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations, and except as set forth on the
disclosure schedule attached hereto: Accurate Information. All information now
and hereafter furnished to Bank is and will be true, correct and complete. Any
such information relating to Loan Parties' financial condition will accurately
reflect Loan Parties' financial condition as of the date(s) thereof, (including
all contingent liabilities of every type), and Borrower further represents that
the financial condition of the Loan Parties has not changed materially or
adversely since December 31, 1998 (as such condition is represented on the draft
audited financial statements delivered to the Bank at closing). Authorization;
Non-Contravention. The execution, delivery and performance by each Loan Party of
this Agreement and other Loan Documents to which it is a party are within its
power, have been duly authorized by all necessary action taken by the duly
authorized officers of such Loan Party, and, if necessary, by making appropriate
filings with any governmental agency or unit and are the legal, binding, valid
and enforceable obligations of such Loan Party; and do not (i) contravene, or
constitute (with or without the giving of notice or lapse of time or both) a
violation of any provision of applicable law, a violation of the organizational
documents of such Loan Party, or a default under any agreement, judgment,
injunction, order, decree or other instrument binding upon or affecting such
Loan Party, (ii) result in the creation or imposition of any lien (other than
the lien(s) created by the Loan Documents) on any of such Loan Parties assets,
or (iii) give cause for the acceleration of any obligations of such Loan Party
to any other creditor. Asset Ownership. Each Loan Party has good and marketable
title to all of the properties and assets reflected on the balance sheets and
financial statements supplied Bank by Borrower, and all such properties and
assets are free and clear of mortgages, security deeds, pledges, liens, charges,
and all other encumbrances, except as otherwise disclosed to Bank by Borrower on
the disclosure schedule attached hereto ("Permitted Liens"). No default has
occurred under any Permitted Liens and no claims or interests adverse to any
Loan Party's present rights in its properties and assets have arisen. Discharge
of Liens and Taxes. Each Loan Party has duly filed, paid and/or discharged all
taxes or other claims which may become a lien on any of its property or assets,
except to the extent that such items are being appropriately contested in good
faith and an adequate reserve for the payment thereof is being maintained.
Indebtedness. The disclosure schedule attached hereto contains a true and
correct list, as of the date of this Agreement, of all indebtedness of the Loan
Parties. Investments. The disclosure schedule attached hereto contains a true
and correct list, as of the date of this Agreement, of all Subsidiaries of each
Loan Party, all deposits with, or loans or other advances to any other party.
Sufficiency of Capital. None of the Loan Parties is, and after consummation of
this Agreement and after giving effect to all indebtedness incurred and liens
created by such Loan Parties in connection with the Loan, will be, insolvent
within the meaning of 11 U.S.C. Section 101(32). Compliance with Laws. Each Loan
Party is in compliance in all material respects with all federal, state and
local laws, rules and regulations applicable to its properties, operations,
business, and finances, including, without limitation, any federal or state laws
relating to liquor (including 18 U.S.C. Section 3617, et seq.) or narcotics
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(including 21 U.S.C. Section 801, et seq.) and/or any commercial crimes; all
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applicable federal, state and local laws and regulations intended to protect
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the environment; and the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), if applicable. Organization and Authority. Each Loan Party is
duly organized, validly existing and in good standing under the laws of the
state of its organization, and has all powers, governmental licenses,
authorizations, consents and approvals required to operate its business as now
conducted. Each Loan Party is duly qualified, licensed and in good standing in
each jurisdiction where qualification or licensing is required by the nature of
its business or the character and location of its property, business or
customers, and in which the failure to so qualify or be licensed, as the case
may be, in the aggregate, could have a material adverse effect on the business,
financial position, results of operations, properties or prospects of such Loan
Party. No Litigation. There are no pending or threatened suits, claims or
demands against any Loan Party. Regulation U. None of the proceeds of the Loan
made pursuant to the Note or this Agreement shall be used directly or indirectly
for the purpose of purchasing or carrying any margin stock in violation of any
of the provisions of Regulation U of the Board of Governors of the Federal
Reserve System ("Regulation U"), or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry margin stock or
for any other purchase which might render the Loan a "Purpose Credit" within the
meaning of Regulation U. ERISA. Each employee pension benefit plan, as defined
in ERISA, maintained by any Loan Party meets, as of the date hereof, the minimum
funding standards of ERISA and all applicable regulations thereto and
requirements thereof, and of the Internal Revenue Code of 1954, as amended. No
"Prohibited Transaction" or "Reportable Event" (as both terms are defined by
ERISA) has occurred with respect to any such plan. No Default. None of the Loan
Parties is presently in breach of any of its obligations under any material
agreement with any third party.
AFFIRMATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will, and will cause each of the other Loan Parties
to: Business Continuity. Conduct its business in exclusively in the fields of
direct marketing, electronic commerce and technology that is reasonably related
thereto. Maintain Properties. Maintain, preserve and keep its property in good
repair, working order and condition, making all needed replacements, additions
and improvements thereto, to the extent allowed by this Agreement. Access to
Books & Records. Allow Bank, or its agents, during normal business hours, access
to the books, records and such other documents of the Loan Parties as Bank shall
reasonably require, and allow Bank to make copies thereof. Insurance. Maintain
adequate insurance coverage with respect to its properties and business against
loss or damage of the kinds and in the amounts customarily insured against by
companies of established reputation engaged in the same or similar businesses
including, without limitation, commercial general liability insurance, workers
compensation insurance, and business interruption insurance; all acquired in
such amounts and from such companies as Bank may reasonably require. Notice of
Default and Other Notices. (a) Notice of Default. Furnish to Bank immediately
upon becoming aware of the existence of any condition or event which constitutes
a Default (as defined in the Loan Documents) or any event which, upon the giving
of notice or lapse of time or both, may become a Default, written notice
specifying the nature and period of existence thereof and the action which the
applicable Loan Party is taking or proposes to take with respect thereto. (b)
Other Notices. Promptly notify Bank in writing of (i) any material adverse
change in its financial condition or its business; (ii) any default under any
material agreement, contract or other instrument to which it is a party or by
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which any of its properties are bound, or any acceleration of the maturity of
any secured indebtedness owing by any Loan Party; (iii) any material adverse
claim against or affecting any Loan Party or any part of its properties; (iv)
the commencement of, and any material determination in, any litigation with any
third party or any proceeding before any governmental agency or unit affecting
any Loan Party; and (v) at least 30 days prior thereto, any change in any Loan
Party's name or address as shown above, and/or any change in any Loan Party's
structure. Compliance with Other Agreements. Comply with all terms and
conditions contained in this Agreement, and any other Loan Documents, and swap
agreements, if applicable, as defined in the Note. Payment of Debts. Pay and
discharge when due, and before subject to penalty or further charge, and
otherwise satisfy before maturity or delinquency, all obligations, debts, taxes,
and liabilities of whatever nature or amount, except those which the Borrower or
such other Loan Party, as applicable, in good faith disputes. Reports and
Proxies. Deliver to Bank, promptly, a copy of all financial statements, reports,
notices, and proxy statements, sent by Borrower to stockholders, and all regular
or periodic reports required to be filed by Borrower with any governmental
agency or authority. Other Financial Information. Deliver promptly such other
information regarding the operation, business affairs, and financial condition
of Borrower and the other Loan Parties which Bank may reasonably request. Non-
Default Certificate From Borrower. Deliver to Bank, with the Financial
Statements required herein, a certificate signed by a principal financial
officer of Borrower warranting that no "Default" as specified in the Loan
Documents nor any event which, upon the giving of notice or lapse of time or
both, would constitute such a Default, has occurred. Estoppel Certificate.
Furnish, within 15 days after request by Bank, a written statement duly
acknowledged of the amount due under the Loan and whether offsets or defenses
exist against the Obligations. Year 2000 Compliance. Cause, on or prior to
September 30, 1999 and at all times thereafter, all software and other
processing capabilities of the Loan Parties to have the ability to correctly
interpret and manipulate all data, in whatever form, including, but not limited
to, printed form, screen displays, financial records, calculations and loan-
related data, so as to avoid errors in processing that may otherwise occur
because of the inability of the software or other processing capabilities to
recognize accurately the year 2000 or subsequent dates. New Subsidiaries. Cause
each entity that hereafter becomes a new Subsidiary of the Borrower or any other
Loan Party, whether as a result of such entity being newly formed or acquired,
promptly following the formation or acquisition thereof (but in any event,
within fifteen (15) days of such formation or acquisition) (i) to execute a
joinder agreement, in form and substance satisfactory to the Bank, pursuant to
which such new Subsidiary shall become a party to the guaranty and the security
agreement executed by the existing Subsidiaries, pursuant to which, among other
things, such new Subsidiary shall guaranty the obligations of the Borrower
hereunder and shall grant to the Bank a perfected, first priority security
interest in all of its assets, subject only to Permitted Liens, and (ii) to
execute such UCC-1 financing statements as may be necessary or desirable to
ensure that the Bank has a first priority security interest in such new
Subsidiary' s assets, subject only to Permitted Liens, and (iii) to execute and
deliver such other agreements, documents and instruments and the Bank may
reasonably require to ensure that the Bank has a perfected, first priority
security interest in the assets of such new Subsidiary, subject only to
Permitted Liens.
NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing,
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Borrower will not, nor will it cause or permit any other Loan Party to: Default
on Other Contracts or Obligations. Default on any material contract with or
obligation when due to a third party or default in the performance of any
obligation to a third party incurred for money borrowed in an amount in excess
of $25,000.00. Judgment Entered. Permit the entry of any monetary judgment or
the assessment against, the filing of any tax lien against, or the issuance of
any writ of garnishment or attachment against any property of or debts due
Borrower in an amount in excess of $25,000.00 and that is not discharged or
execution is not stayed within thirty (30) days of entry. Government
Intervention. Permit the assertion or making of any seizure, vesting or
intervention by or under authority of any government by which the management of
any Loan Party is displaced of its authority in the conduct of its respective
business or such business is curtailed or materially impaired. Prepayment of
Other Debt. Prepay any debt owing to Sirrom Investments, Inc., a Tennessee
corporation ("Sirrom"), or any other debt, in advance of its legal obligation to
do so, other than, so long as there shall not then exist a Default, out of the
proceeds of the issuance of equity securities of the Borrower. Retire or
Repurchase Capital Stock. Retire or otherwise acquire any of its capital stock.
Change of Control. With respect to Borrower only, suffer to occur a change in
the composition of the board of directors of Borrower as a result of which fewer
than one-half of the incumbent directors are directors who either (a) had been
directors of Borrower 24 months prior to such change; or (b) were elected, or
nominated for election, to the board with the affirmative votes of at least a
majority of the directors who had been directors of the Borrower 24 months prior
to such change and who were still in office at the time of the election or
nomination. Guarantees. Guaranty or otherwise become responsible for obligations
of any other person or entity, other than the endorsement of checks and drafts
for collection in the ordinary course of business. Encumbrances. Create, assume,
or permit to exist any mortgage, security deed, deed of trust, pledge, lien,
charge or other encumbrance on any of its assets, whether now owned or hereafter
acquired, other than: (i) security interests required by the Loan Documents;
(ii) liens for taxes contested in good faith; (iii) liens accruing by law for
employee benefits; (iv) liens securing indebtedness owing by the Loan Parties to
Sirrom, which have been subordinated to the liens securing the obligations of
the Loan Parties under the Loan Documents on terms and conditions satisfactory
to the Bank, or (iv) Permitted Liens. Investments. Purchase any stock,
securities, or evidence of indebtedness of any other person or entity except
investments in direct obligations of the United States Government and
certificates of deposit of United States commercial banks having a tier 1
capital ratio of not less than 6% and then in an amount not exceeding 10% of the
issuing bank's unimpaired capital and surplus, or except as otherwise expressly
permitted herein.
PERMITTED ACQUISITIONS. So long as no Default has occurred and is continuing
hereunder or would result therefrom, the Borrower may acquire all or
substantially all of the assets or all of the capital stock of another entity,
so long as (i) the Borrower provides written notice of its intent to acquire
such capital stock or assets at least five (5) business days prior to such
acquisition, (ii) the Borrower complies with the provision relating to new
Subsidiaries hereunder, (iii) immediately after giving effect to such
acquisition, the Borrower is in compliance with all covenants contained in this
Agreement and the other Loan Documents (including all relevant provisions in
this Agreement and the other Loan Documents to ensure that the Bank has a
perfected, first priority security interest in any new assets and capital stock
acquired or created in connection with such acquisition, except for Permitted
Liens), and (iv) the consideration
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payable in respect of any one acquisition (other than consideration payable in
the form of capital stock of the Borrower)does not exceed $5,000,000, or the
consideration payable in respect of all acquisitions (other than consideration
payable in the form of capital stock of the Borrower) occurring after the date
hereof does not exceed $7,000,000.
FINANCIAL COVENANTS. Borrower agrees to the following provisions from the date
hereof until final payment in full of the Obligations, unless Bank shall
otherwise consent in writing, and all financial covenants shall be calculated on
a consolidated basis, using the consolidated, and consolidating (to the extent
required below), financial information for Borrower, its subsidiaries,
affiliates and its holding or parent company, as applicable, in each case
calculated in accordance with generally accepted accounting principles as in
effect on the date hereof: Effective Tangible Net Worth. Borrower and its
consolidated Subsidiaries shall, from closing until December 30, 1999, maintain
an Effective Tangible Net Worth of not less than $750,000. From fiscal-year end
December 31, 1999, through the maturity of the facility, the minimum required
Effective Tangible Net Worth shall increase by not less than 50% of net income.
"Effective Tangible Net Worth" shall mean total assets minus Total Liabilities.
For purposes of this computation, the aggregate amount of any intangible assets
of Borrower and its consolidated Subsidiaries including without limitation,
goodwill, franchises, licenses, patents, trademarks, trade names, copyrights,
service marks, and brand names, shall be subtracted from total assets. "Total
Liabilities" shall mean all liabilities of Borrower and its consolidated
Subsidiaries, excluding debt fully subordinated to Bank on terms and conditions
acceptable to Bank, and including capitalized leases and all reserves for
deferred taxes and other deferred sums appearing on the liabilities side of a
balance sheet, in accordance with generally accepted accounting principles
applied on a consistent basis. Senior Funded Debt to EBITDA Ratio. Borrower and
its consolidated Subsidiaries shall at all times maintain a ratio of Senior
Funded Debt to EBITDA Ratio of not more than 2.80 to 1.00. "Senior Funded Debt
to EBITDA" shall mean the sum of all Senior Funded Debt divided by the sum of
earnings before interest, taxes, depreciation and amortization, calculated for
the previous four quarter period. "Senior Funded Debt" shall mean, as applied to
any person or entity, the sum of all indebtedness for borrowed money, including,
without limitation, capital lease obligations and unreimbursed drawings under
letters of credit, whether any such indebtedness for borrowed money is evidenced
by a note, bond, debenture or other agreement of that person or entity,
excluding any debt fully subordinated to Bank on terms and conditions acceptable
to Bank. Capital Expenditures. Borrower shall not during any fiscal year expend
on gross fixed assets (including gross leases to be capitalized under generally
accepted accounting principles and leasehold improvements) an amount exceeding
$200,000.00 in the aggregate. Leases. Borrower shall not, during any fiscal
year, incur, create, or assume any direct or indirect liability for the payment
of rent or otherwise, under any lease or rental arrangement (excluding
capitalized leases) if immediately thereafter the sum of such lease or rental
payments to be made by Borrower during any 12-month period, when combined with
all other direct or indirect liabilities for the payment of rent or otherwise
under any lease or rental arrangement incurred, created or assumed during such
fiscal year, is increased by $200,000.00 in the aggregate. Limitation on Debt.
Borrower shall not, nor shall it permit any Loan Party to, directly or
indirectly, create, incur, assume or become liable for, any debt, contingent or
direct, if, giving effect to such additional debt on a pro forma basis, causes
the aggregate amount of the Loan Parties' debt, excluding obligations to Bank,
to exceed $8,500,000. Loans and Advances.
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Borrower shall not, nor shall it permit any Loan Party to, during any fiscal
year, make loans or advances, excepting ordinary course of business travel and
expense advances, to any person or entity, which total more than $50,000 in the
aggregate amount outstanding at any one time for all Loan Parties. Dividends.
Borrower shall not, during any fiscal year, declare or pay dividends.
ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 90 days
after the close of each fiscal year, audited financial statements reflecting the
operations of the Borrower and its consolidated subsidiaries during such fiscal
year, including, without limitation, a balance sheet, profit and loss statement
and statement of cash flows, with supporting schedules; all on a consolidated
and, to the extent otherwise prepared by the Borrower in the ordinary course of
its business, consolidating basis and in reasonable detail, prepared in
conformity with generally accepted accounting principles, applied on a basis
consistent with that of the preceding year. All such statements shall be
examined by an independent certified public accountant acceptable to Bank. The
opinion of such independent certified public accountant shall not be acceptable
to Bank if qualified due to any limitations in scope imposed by Borrower or its
Subsidiaries, if any. Any other qualification of the opinion by the accountant
shall render the acceptability of the financial statements subject to Bank's
approval.
PERIODIC FINANCIAL STATEMENTS. Borrower shall deliver to Bank unaudited
quarterly financial statements, including, without limitation, a balance sheet,
profit and loss statement and statement of cash flows, with supporting
schedules, as soon as available and in any event within 30 days after the close
of each such period; all in reasonable detail and prepared in conformity with
generally accepted accounting principles, applied on a basis consistent with
that of the preceding year, and subject to customary audit and year-end
adjustments and without notes. Such statements shall be certified as to their
correctness by a principal financial officer of Borrower.
COMPLIANCE CERTIFICATE. Together with the audited and unaudited financial
statements required to be delivered hereunder, the Borrower shall deliver to the
Bank a certificate of the chief financial officer of the Borrower, evidencing
whether the Borrower is in compliance with the financial covenants contained
herein, such certificate to be in the form attached hereto as Exhibit A.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete, and accurate.
CONDITIONS PRECEDENT. The obligations of Bank to make the Loan and any advances
pursuant to this Agreement are subject to the following conditions precedent:
Additional Documents. Receipt by Bank of such additional supporting documents as
Bank or its counsel may reasonably request. Financial Statements. Receipt and
review by the Bank of a draft of the unqualified, audited consolidated and
consolidating financial statements for the Borrower and its Subsidiaries for the
Borrower's fiscal year ending December 31, 1998, such financial statements to be
in form and substance satisfactory to the Bank in its sole discretion. No
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Default. Neither any Default nor any occurrence or condition which, with the
giving of notice or passage of time or both, would result in a Default shall
exist at the time of the making of such advance, or would result from the making
of such advance. Representations and Warranties. All of the representations and
warranties contained in this Agreement and the other Loan Documents shall be
true and correct as of the date of such advance. No Material Adverse Change.
Since December 31, 1998, (as represented by the draft financial statements
delivered by the Borrower at closing) there shall not have occurred any material
adverse change in the assets, liabilities, business, operations or condition
(financial or otherwise) of any Loan Party, or any event, condition or state of
facts which would be expected materially and adversely to affect the prospects
of any Loan Party subsequent to the making of such advance. Commitment Fee.
Receipt by the Bank in immediately available funds of the Commitment Fee
referred to in the Note, which fee shall be fully earned upon receipt by the
Bank and not subject to refund or rebate.
DEFAULT. If any of the following occurs, a default ("Default") under this
Agreement shall exist: Nonpayment; Nonperformance. The failure of timely payment
or performance of the Obligations or Default under the Note or any other Loan
Documents. False Warranty. A warranty or representation made or deemed made in
this Agreement or any of the other Loan Documents or furnished Bank in
connection with the loan evidenced by the Note proves materially false, or if of
a continuing nature, becomes materially false. Cross Default. Any default in
payment or performance of any obligation under any other loans of any Loan Party
in a principal amount equal to or greater than $50,000, including, without
limitation, any indebtedness or other obligations owing by any Loan Party to
Sirrom. Loan Documents. Any of the Loan Documents shall for any reason terminate
or otherwise fail to be in full force and effect, or any security granted
thereunder shall fail, or any Loan Party or any other person or entity shall
contest the enforceability or validity of any such Loan Document or any security
interest or lien purported to be granted to the Bank thereby. Cessation;
Bankruptcy. The dissolution of, termination of existence of, loss of good
standing status by, appointment of a receiver for, assignment for the benefit of
creditors of, or commencement of any bankruptcy or insolvency proceeding by or
against any Loan Party. Material Capital Structure or Business Alteration.
Without prior written consent of Bank, any of the following shall occur: (i) a
material alteration in the kind or type of Borrower's business or that of any
other Loan Party, other than as permitted hereunder; (ii) the sale of all or
substantially all of the business or assets of Borrower or any other Loan Party
or a material portion (10% or more) of such business or assets if such a sale is
outside the ordinary course of business of Borrower or such other Loan Party,
(iii) the sale of any of the outstanding capital stock or voting power of any of
Borrower's Subsidiaries; (iv) the acquisition of substantially all of the
business or assets or more than 50% of the outstanding stock or voting power of
any Loan Party; or (v) should Borrower or any other Loan Party enter into any
merger or consolidation, other than as expressly permitted hereunder.
REMEDIES UPON DEFAULT. If a Default occurs under this Agreement, either of the
Note or any other Loan Documents, Bank may at any time thereafter, take the
following actions: Acceleration Upon Default. Accelerate the maturity of the
Note and all other Obligations, and all of the Obligations shall be immediately
due and payable. Cumulative. Exercise any rights
8
and remedies as provided under the Note and other Loan Documents, or as provided
by law or equity.
INDEMNIFICATION OF BANK AND OTHERS.
From and at all times after the date of this Agreement, and in addition to
all of Bank's other rights and remedies against the Borrower, the Borrower
hereby defends, indemnifies and holds harmless Bank and each director, officer,
employee, agent, attorney and affiliate of Bank (all of whom are for purposes of
this Section collectively called the "Indemnified Parties") against and from any
and all claims, losses, damages, liabilities, costs and expenses of any kind or
nature whatsoever (including without limitation reasonable attorneys' fees,
costs and expenses actually incurred at both the trial and appellate levels)
incurred by any and all of the Indemnified Parties, from and after the date
hereof, whether direct, indirect or consequential, whether threatened or
initiated, as a result of or arising from or in any way relating to any suit,
action, claim, demand, or proceeding (including any inquiry or investigation)
(all of which suits, etc. are for purposes of this Section collectively called
"Claims") by any person or entity other than the Loan Parties asserting a claim
for any legal or equitable remedy against any person or entity under any statute
or regulation, including, but not limited to, any federal or state securities
laws, or under any common law or equitable cause or otherwise, arising from the
acts or omissions of the Loan Parties or any affiliate in connection with the
negotiation, preparation, execution or performance of this Agreement or the
other Loan Documents, or any transactions contemplated herein or therein,
whether or not such Indemnified Party is a party to any such claim.
The obligation of the Bank to indemnify the Indemnified Parties for a
Claim pursuant to this Section shall apply whether or not the Claim is
foreseeable, and such obligation includes the Indemnified Parties' reasonable
attorneys' and consultants' fees and court costs, in each case actually
incurred. Notwithstanding the foregoing, no Indemnified Party shall have the
right to be indemnified hereunder for any liability resulting from the gross
negligence, bad faith or willful misconduct of any Indemnified Party or the
breach or non-performance of any obligation of Bank hereunder or under any other
Loan Document. All of the foregoing losses, damages, costs and expenses of an
Indemnified Party shall be payable by the Borrower upon demand by Bank and shall
be additional Obligations hereunder. The Borrower's obligations under this
provision shall survive any termination of this Agreement or any other Loan
Document.
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IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written above,
have caused this Agreement to be executed under seal.
M2Direct, Inc.
CORPORATE By:/s/ Xxxxxxx X. Xxxx
SEAL ------------------------
Name:
Title:
First Union National Bank
By:/s/ Xxx Xxxxxxx
------------------------
Xxx Xxxxxxx, Vice President
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