1
EXHIBIT 10.20
IMPERIAL BANK
Member FDIC
SECURITY AND LOAN AGREEMENT
(ACCOUNTS RECEIVABLE)
This Agreement is entered into between PORTABLE SOFTWARE CORPORATION,
a Washington Corporation
(herein called "Borrower") and IMPERIAL BANK (herein called "Bank").
1. Bank hereby commits, subject to all the terms and conditions of this
Agreement and prior to the termination of its commitment as hereinafter
provided, to make loans to Borrower from time to time up to, but not
exceeding in the aggregate unpaid principal balance, the following
Borrowing Base:
80% of Eligible Accounts
and in no event more than $2,000,000.00. Amounts repaid may be reborrowed.
2. The amount of each loan made by Bank to Borrower hereunder shall be debited
to the loan ledgers account of Borrower maintained by Bank (herein called
"Loan Account") and Bank shall credit the Loan Account with all loan
repayments made by Borrower. Borrower promises to pay Bank (a) the unpaid
balance of Borrower's Loan Account at maturity, unless accelerated
according to the terms herein and (b) on or before the tenth day of each
month, interest on the average daily unpaid balance of the Loan Account
during the immediately preceding month at the rate of One & 500/1000ths
percent (1.500%) per annum in excess of the rate of interest which Bank
has announced as its prime lending rate ("Prime Rate") which shall vary
concurrently with any change in such Prime Rate. Interest shall be computed
at the above rate on the basis of the actual number of days during which
the principal balance of the loan account is outstanding divided by 360,
which shall for interest corporation purposes be considered one year. Such
notice may be given verbally or in writing and should be effective upon
receipt by Borrower. Bank is hereby authorized to charge Borrower's deposit
account(s) with Bank for all sums due Bank under this Agreement.
3. Requests for loans hereunder shall be in writing duly executed by Borrower
in a form satisfactory to Bank and shall contain a certification setting
forth the matters referred to in Section 1, which shall disclose that
Borrower is entitled to the amount of loan being requested.
4. As used in this Agreement, the following terms shall have the following
meanings:
A. "Accounts" means any right to payment for goods sold or leased, or to
be sold or to be leased, or for services rendered or to be rendered no
matter how evidenced, including accounts receivable, contract rights,
chattel paper, instruments, purchase orders, notes, drafts,
acceptances, general intangibles and other forms of obligations and
receivables.
B. "Collateral" means any and all personal property of Borrower which is
assigned or hereafter is assigned to Bank as security or in which Bank
now has or hereafter acquires a security interest.
C. "Eligible Accounts" means all of Borrower's Accounts excluding,
however, (1) all Accounts under which payment is not received within
90 days from any invoice date, (2) all Accounts against which the
account debtor or any other person obligated to make payment thereon
asserts any defense, offset, counterclaim or other right to avoid or
reduce the liability represented by the Account to the extent of the
amount subject to such defense, offset, counterclaim, or other right
to avoid or reduce the liability, and (3) any Accounts if the account
debtor or any other person liable in connection therewith is
insolvent, subject to bankruptcy or receivership proceedings or has
made an assignment for the benefit of creditors or whose credit
standing is unacceptable to Bank and Bank has so notified Borrower.
Eligible Accounts shall only include such accounts as Bank in its sole
discretion shall determine are eligible from time to time.
5. Borrower hereby assigns to Bank all Borrower's present and future Accounts,
including all proceeds due thereunder, all guaranties and security
therefor, and hereby grants to Bank a continuing security interest in all
moneys in the Collateral Account referred to in Section 6 hereof as
security for any and all obligations of Borrower to Bank, whether now owing
or hereafter incurred and whether direct, indirect, absolute or contingent.
So long as Borrower is indebted to Bank or bank is committed to extend
credit to Borrower, Borrower will execute and deliver to Bank such
assignments, including Bank's standard forms of Specific or General
Assignment covering individual Accounts, notices, financing statements, and
other documents and papers as Bank may require in order to affirm,
effectuate or further assure the assignment to Bank of the Collateral or to
give any third party, including the account debtors obligated on the
Accounts, notice of Bank's interest in the Collateral.
6. Until Bank exercises its rights to collect the Accounts pursuant to
paragraph 10, Borrower will collect with diligence all Borrower's Accounts.
Any collection of Accounts by Borrower, whether in the form of cash,
checks, notes, or other instruments for payment of money (properly endorsed
or assigned where required to enable Bank to collect same), shall be in
trust for Bank. In the event of default, the proceeds of such collections
when received by Bank may be applied by Bank directly to the payment of
Borrower's Loan Account or any other obligation secured hereby. Any credit
given by Bank upon receipt of said proceeds shall be conditional credit
subject to collection. Returned items at Bank's option may be charged to
Borrower's general account. All collections of the Accounts shall be set
forth on an itemized schedule, showing the name of the account debtor, the
amount of each payment and such other information as Bank may request.
Page 1 of 3
2
7. Until Bank exercises its rights to collect the Accounts pursuant to
paragraph 10, Borrower may continue its present policies with respect to
returned merchandise and adjustments. However, Borrower shall immediately
notify Bank of all cases involving returns, repossessions, and loss or
damage of or to merchandise represented by the Accounts and of any
credits, adjustments or disputes arising in connection with the goods or
services represented by the Accounts and, in any of such events, Borrower
will immediately pay to Bank from its own funds (and not from the proceeds
of Accounts or Inventory) for application to Borrower's Loan Account or
any other obligation secured hereby the amount of any credit for such
returned or repossessed merchandise and adjustments made to any of the
Accounts.
8. Borrower represents and warrants to Bank: (i) If Borrower is a
corporation, that Borrower is duly organized and existing in the State of
its incorporation and the execution, delivery and performance hereof are
within Borrower's corporate powers, have been duly authorized and are not
in conflict with law or the terms of any charter, by-law or other
incorporation papers, or of any indenture, agreement or undertaking to
which Borrower is a party or by which Borrower is bound or affected;
(ii) Borrower is, or at the time the collateral becomes subject to Bank's
security interest will be, the true and lawful owner of and has, or at the
time the Collateral becomes subject to Bank's security interest will have,
good and clear title to the Collateral, subject only to Bank's rights
therein; (iii) Each Account is, or at the time the Account comes into
existence will be, a true and correct statement of a bond fide
indebtedness incurred by the debtor named therein in the amount of the
Account for either merchandise sold or delivered (or being held subject to
Borrower's delivery instructions) to, or services rendered, performed and
accepted by, the account debtor; (iv) That there are or will be no
defenses, counterclaims, or setoffs which may be asserted against the
Accounts; and (v) any and all financial information, including information
relating to the Collateral, submitted by Borrower to Bank, whether
previously or in the future, is or will be true and correct.
9. Borrower will: (i) Permit representatives of Bank to inspect Borrower's
books and records relating to the Collateral and make extracts therefrom at
any reasonable time and to arrange for verification of the Accounts, under
reasonable procedures, acceptable to Bank, directly with the account
debtors or otherwise at Borrower's expense; (ii) Promptly notify Bank of
any attachment or other legal process levied against any of the Collateral
and any information received by Borrower relative to the Collateral,
including the Accounts, the account debtors or other persons obligated in
connection therewith, which may in any way affect the value of the
Collateral or the rights and remedies of Bank in respect thereto; (iii)
Reimburse Bank upon demand for any and all legal costs, including
reasonable attorneys' fees, and other expense incurred in collecting any
sums payable by Borrower under Borrower's Loan Account or any other
obligation secured hereby, enforcing any term or provision of this Security
Agreement or otherwise or in the checking, handling and collection of the
Collateral and the preparation and enforcement of any agreement relating
thereto; (iv) Notify Bank of each location and of each office of Borrower
at which records of Borrower relating to the Accounts are kept; (v) In the
event the unpaid balance of Borrower's Loan Account shall exceed the
maximum amount of outstanding loans to which Borrower is entitled under
Section 1 hereof, Borrower shall immediately pay to Bank, from its own
funds or from the proceeds of Collateral, for credit to Borrower's Loan
Account the amount of such excess.
10. Bank may at any time after and during the continuance of an Event of
Default without prior notice to Borrower, collect the Accounts and may
give notice of assignment to any and all account debtors, and Borrower
does hereby make, constitute and appoint Bank its irrevocable, true and
lawful attorney with power to receive, open and dispose of all mail
addressed to Borrower, to endorse the name of Borrower upon any checks or
other evidences of payment that may come into the possession of Bank upon
the Accounts; to endorse the name of the undersigned upon any document or
instrument relating to the Collateral; in its name or otherwise, to
demand, xxx for, collect and give acquittance for any and all moneys due
or to become due upon the Accounts; to compromise, prosecute or defend any
action, claim or proceeding with respect thereto; and to do any and all
things necessary and proper to carry out the purpose herein contemplated.
11. Until Borrower's Loan Account and all other obligations secured hereby
shall have been repaid in full, Borrower shall not sell, dispose of or
grant a security interest in any of the Collateral other than to Bank, or
execute any financing statements covering the Collateral in favor of any
secured party or person other than Bank.
12. Should: (i) Default be made in the payment of any obligation, or breach be
made in any warranty, statement, promise, term or condition, contained
herein or hereby secured; (ii) Any statement or representation made for
the purpose of obtaining credit hereunder prove false; (iii) Bank deem the
Collateral inadequate or unsafe or in danger of misuse; (iv) Borrower
become insolvent or make an assignment for the benefit of creditors; or
(v) Any proceeding be commended by or against Borrower under any
bankruptcy, reorganization, arrangement, readjustment of debt or
moratorium law or statute; then in any such event, Bank may, at its option
and without demand first made and without notice to Borrower, do any one or
more of the following: (a) Terminate its obligation to make loans to
Borrower as provided in Section 1 hereof; (b) Declare all sums secured
hereby immediately due and payable; (c) Immediately take possession of the
Collateral wherever it may be found, using all necessary force so to do,
or require Borrower to assemble the Collateral and make it available to
Bank at a place designated by Bank which is reasonably convenient to
Borrower and Bank, and Borrower waives all claims for damages due to or
arising from or connected with any such taking except for gross negligence
or willful misconduct (d) Proceed in the foreclosure of Bank's security
interest and sale of the Collateral in any manner permitted by law, or
provided for herein; (e) Sell, lease or otherwise dispose of the Collateral
at public or private sale, with or without having the Collateral at the
place of sale, and upon terms and in such manner as Bank may determine,
and Bank may purchase same at any such sale; (f) Retain the Collateral in
full satisfaction of the obligations secured thereby; (g) Exercise any
remedies of a secured party under the Uniform Commercial Code. Prior to
any such disposition, Bank may at its option, cause any of the Collateral
to be repaired or reconditioned in such manner and to such extent as Bank
may deem advisable, and any sums expended therefor by Bank shall be repaid
by Borrower and secured hereby. Bank shall have the right to enforce one
or more remedies hereunder successively or concurrently, and any such
action shall not estop or prevent Bank from pursuing any further remedy
which it may have hereunder or by law. If a sufficient sum is not realized
from any such disposition of Collateral to pay all obligations secured by
this Security Agreement, Borrower hereby promises and agrees to pay Bank
any deficiency.
Page 2 of 3
3
13. If any writ of attachment, garnishment, execution or other legal process
be issued against any property of Borrower in excess of $50,000, or if any
recording or filing of a lien for taxes against Borrower, other than real
property, is made by the Federal or State government or any department
thereof, the obligation of Bank to make loans to Borrower as provided in
Section 1 hereof shall immediately terminate and the unpaid balance of the
Loan Account, all other obligations secured hereby and all other sums due
hereunder shall immediately become due and payable without demand,
presentment or notice.
14. Borrower authorizes Bank to destroy all invoices, delivery receipts,
reports and other types of documents and records submitted to Bank in
connection with the transactions contemplated herein at any time
subsequent to four months from the time such items are delivered to Bank.
15. Nothing herein shall in any way limit the effect of the conditions set
forth in any other security or other agreement executed by Borrower, but
each and every condition hereof shall be in addition thereto.
16. Additional Provisions: Subject to the attached Addendum to Security and
Loan Agreement dated September 3, 1997.
Executed this 3rd day of September, 1997
PORTABLE SOFTWARE CORPORATION
-----------------------------------
(Name of Borrower)
IMPERIAL BANK By: [SIG]
--------------------------------
(Authorized Signature and Title)
By: [SIG] By: [SIG]
---------------------------------- --------------------------------
(Title) (Authorized Signature and Title)
Page 3 of 3
