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EXHIBIT 10.2
GENERAL SECURITY AGREEMENT
This General Security Agreement dated May 16, 2000 is by ELITE
INFORMATION SYSTEMS, INC., a California corporation ("Borrower"), in favor of
MELLON BANK, N.A. ("Bank").
W I T N E S S E T H
WHEREAS, Bank has entered or is about to enter into certain
financing arrangements with Borrower pursuant to which Bank may make loans and
provide other financial accommodations to Borrower; and
WHEREAS, Bank has conditioned its providing loans and other
financial accommodations to Borrower on Borrower's granting a security interest
in substantially all of its assets in favor of Bank to secure Borrower's
obligations to Bank under the Credit Agreement;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
Section 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9
of the Uniform Commercial Code shall have the meanings given therein unless
otherwise defined in this Agreement. All references to the plural herein shall
also mean the singular and to the singular shall also mean the plural. All
references to Borrower and Bank pursuant to the definitions set forth in the
recitals hereto, or to any other person herein, shall include their respective
successors and assigns. The words "hereof", "herein", "hereunder", "this
Agreement" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not any particular provision of this Agreement
and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced. An Event of Default shall
exist or continue or be continuing until such Event of Default is cured or
waived in accordance with Section 7.3. Any accounting term used herein unless
otherwise defined in this Agreement shall have the meanings customarily given to
such term in accordance with GAAP. For purposes of this Agreement, the following
terms shall have the respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of
Borrower to payment for goods sold or leased or for services rendered, which are
not evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.2 "Collateral" shall have the meaning set forth in Section 2
hereof.
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1.3 "Credit Agreement" shall mean the Credit Agreement of even
date herewith by and between Borrower, EIG and Bank, as the same now exists and
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.4 "Equipment" shall mean all of Borrower's now owned and
hereafter acquired equipment, machinery, computers and computer hardware and
software (whether owned or licensed), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.
1.5 "Event of Default" shall have the meaning set forth in
Section 6.1 hereof.
1.6 "Financing Agreements" shall mean, collectively, the Credit
Agreement, this Agreement, and all notes, guarantees, security agreements and
other agreements, documents and instruments now or at any time hereafter
executed and/or delivered by Borrower or any Obligor in connection with the
Credit Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.7 "GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Boards which are applicable to the
circumstances as of the date of determination consistently applied.
1.8 "Inventory" shall mean all of Borrower's now owned and
hereafter existing or acquired raw materials, work in process, finished goods
and all other inventory of whatsoever kind or nature, wherever located.
1.9 "Obligations" shall mean any and all obligations, liabilities
and indebtedness of every kind, nature and description owing by Borrower to Bank
and/or its affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, whether arising under the Credit Agreement, this Agreement or
under any of the other Financing Agreements, whether now existing or hereafter
arising, whether arising before, during or after the initial or any renewal term
of the Credit Agreement or after the commencement of any case with respect to
Borrower under the United States Bankruptcy Code or any similar statute
(including, without limitation, the payment of interest and other amounts which
would accrue and become due but for the commencement of such case), whether
direct or indirect, absolute or contingent, joint or several, due or not due,
primary or secondary, liquidated or unliquidated, secured or unsecured, and
however acquired by Bank.
1.10 "Obligor" shall mean any other guarantor, endorser,
acceptor, surety or other person liable on or with respect to the Obligations or
who is the owner of any property which is security for the Obligations, other
than Borrower.
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1.11 "Person" or "person" shall mean any individual, sole
proprietorship, limited liability company, limited liability partnership,
corporation (including, without limitation, any corporation which elects
subchapter S status under the Internal Revenue Code of 1986, as amended),
business trust, unincorporated association, joint stock corporation, trust,
joint venture or other entity or any government or any agency or instrumentality
or political subdivision thereof.
1.12 "Records" shall mean all of Borrower's present and future
books of account of every kind or nature, purchase and sale agreements,
invoices, ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including any rights of Borrower with
respect to the foregoing maintained with or by any other person).
Section 2. GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations, Borrower
hereby grants to Bank a continuing security interest in, a lien upon, and a
right of set off against, and hereby assigns to Bank as security, the following
property and interests in property, whether now owned or hereafter acquired or
existing, and wherever located (collectively, the "Collateral"):
2.1 Accounts and other indebtedness owed to Borrower;
2.2 all present and future contract rights, general intangibles
(including, but not limited to, tax and duty refunds, registered and
unregistered patents, trademarks, service marks, copyrights, trade names,
applications for the foregoing, trade secrets, goodwill, processes, drawings,
blueprints, customer lists, licenses, whether as licensor or licensee, choses in
action and other claims and existing and future leasehold interests in
equipment, real estate and fixtures), chattel paper, documents, instruments,
investment property, letters of credit, proceeds of letters of credit, bankers'
acceptances and guaranties;
2.3 all present and future monies, securities, credit balances,
deposits, deposit accounts and other property of Borrower now or hereafter held
or received by or in transit to Bank or its affiliates or at any other
depository or other institution from or for the account of Borrower, whether for
safekeeping, pledge, custody, transmission, collection or otherwise, and all
present and future liens, security interests, rights, remedies, title and
interest in, to and in respect of Accounts and other Collateral, including,
without limitation, (a) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other insurance
related to the Collateral, (b) rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, (c) goods described in invoices, documents, contracts
or instruments with respect to, or otherwise representing or evidencing,
Accounts or other Collateral, including, without limitation, returned,
repossessed and reclaimed goods, and (d) deposits by and property of account
debtors or other persons securing the obligations of account debtors;
2.4 Inventory;
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2.5 Equipment;
2.6 Records; and
2.7 all products and proceeds of the foregoing, in any form,
including, without limitation, insurance proceeds and any claims against third
parties for loss or damage to or destruction of any or all of the foregoing.
Section 3. COLLATERAL COVENANTS
3.1 Accounts Covenants.
(a) Bank shall have the right at any time or times, in
Bank's name or in the name of a nominee of Bank, to verify the validity, amount
or any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
(b) Borrower shall deliver or cause to be delivered to
Bank, with appropriate endorsement and assignment, with full recourse to
Borrower, all chattel paper and instruments which Borrower now owns or may at
any time acquire promptly upon Borrower's receipt thereof, except as Bank may
otherwise agree.
(c) In the event any account debtor returns Inventory when
an Event of Default exists or has occurred and is continuing, Borrower shall
upon Bank's request, (i) hold the returned Inventory in trust for Bank, (ii)
segregate all returned Inventory from all of its other property, (iii) dispose
of the returned Inventory solely according to Bank's instructions, and (iv) not
issue any credits, discounts or allowances with respect thereto without Bank's
written consent.
(d) Bank may, at any time or times that an Event of
Default exists or has occurred and is continuing, (i) notify any or all account
debtors that the Accounts have been assigned to Bank and that Bank has a
security interest therein and Bank may direct any or all accounts debtors to
make payment of Accounts directly to Bank, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts or such other obligations, but without any duty
to do so, and Bank shall not be liable for its failure to collect or enforce the
payment thereof nor for the negligence of its agents or attorneys with respect
thereto and (iv) take whatever other action Bank may deem necessary or desirable
for the protection of its interests. At any time that an Event of Default exists
or has occurred and is continuing, at Bank's request, all invoices and
statements sent to any account debtor shall state that the Accounts and such
other obligations have been assigned to Bank and are payable directly and only
to Bank and Borrower shall deliver to Bank such originals of documents
evidencing the sale and delivery of goods or the performance of services giving
rise to any Accounts as Bank may require.
3.2 Inventory Covenants. With respect to the Inventory: (a)
Borrower shall at all times maintain inventory records reasonably satisfactory
to Bank, keeping correct and accurate records itemizing and describing the kind,
type, quality and quantity of Inventory, Borrower's cost therefor and daily
withdrawals therefrom and additions thereto; (b) Borrower shall conduct a
physical count
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of the Inventory at any time or times as Bank may request on or after an Event
of Default, and promptly following such physical inventory count shall supply
Bank with a report in the form and with such specificity as may be reasonably
satisfactory to Bank concerning such physical count; (c) Borrower shall not
remove any Inventory from the locations set forth or permitted herein, without
the prior written consent of Bank, except for sales of Inventory in the ordinary
course of Borrower's business and except to move Inventory directly from one
location set forth or permitted herein to another such location; (d) upon Bank's
request, Borrower shall, at its expense, at any time or times as Bank may
request on or after an Event of Default, deliver or cause to be delivered to
Bank written reports or appraisals as to the Inventory in form, scope and
methodology acceptable to Bank and by an appraiser acceptable to Bank, addressed
to Bank or upon which Bank is expressly permitted to rely; (e) Borrower shall
produce, use, store and maintain the Inventory, with all reasonable care and
caution and in accordance with applicable standards of any insurance and in
conformity with applicable laws (including, but not limited to, the requirements
of the Federal Fair Labor Standards Act of 1938, as amended and all rules,
regulations and orders related thereto); (f) Borrower assumes all responsibility
and liability arising from or relating to the production, use, sale or other
disposition of the Inventory; (g) Borrower shall not sell Inventory to any
customer on approval, or any other basis which entitles the customer to return
or may obligate Borrower to repurchase such Inventory; (h) Borrower shall keep
the Inventory in good and marketable condition; (i) Borrower shall not, without
prior written notice to Bank, acquire or accept any Inventory on consignment or
approval; and (j) upon the occurrence of an Event of Default, Borrower shall not
return any Inventory to its vendors without the prior written consent of Bank.
3.3 Equipment Covenants. With respect to the Equipment: (a) upon
Bank's request, Borrower shall, at its expense, at any time or times as Bank may
request on or after an Event of Default, deliver or cause to be delivered to
Bank written reports or appraisals as to the Equipment in form, scope and
methodology acceptable to Bank and by appraiser acceptable to Bank; (b) Borrower
shall keep the Equipment in good order, repair, running and marketable condition
(ordinary wear and tear excepted); (c) Borrower shall use the Equipment with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with all applicable laws; (d) the Equipment is and
shall be used in Borrower's business and not for personal, family, household or
farming use; (e) Borrower shall not remove any Equipment from the locations set
forth or permitted herein, except to the extent necessary to have any Equipment
repaired or maintained in the ordinary course of the business of Borrower or to
move Equipment directly from one location set forth or permitted herein to
another such location and except for the movement of motor vehicles used by or
for the benefit of Borrowers in the ordinary course of business; (f) the
Equipment is now and shall remain personal property and Borrower shall not
permit any of the Equipment to be or become a part of or affixed to real
property; and (g) Borrower assumes all responsibility and liability arising from
the use of the Equipment.
3.4 Power of Attorney. Borrower hereby irrevocably designates and
appoints Bank (and all persons designated by Bank) as Borrower's true and lawful
attorney-in-fact, and authorizes Bank, in Borrower's or Bank's name, to: (a) at
any time an Event of Default exists or has occurred and is continuing (i) demand
payment on Accounts or other proceeds of Inventory or other Collateral, (ii)
enforce payment of Accounts by legal proceedings or otherwise, (iii) exercise
all of
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Borrower's rights and remedies to collect any Account or other proceeds of
Collateral, (iv) sell or assign any Account upon such terms, for such amount and
at such time or times as the Bank deems advisable, (v) settle, adjust,
compromise, extend or renew an Account, (vi) discharge and release any Account
or other obligations included in the Collateral, (vii) prepare, file and sign
Borrower's name on any proof of claim in bankruptcy or other similar document
against an account debtor, (viii) notify the post office authorities to change
the address for delivery of Borrower's mail to an address designated by Bank,
and open and dispose of all mail addressed to Borrower, and (ix) do all acts and
things which are necessary, in Bank's determination, to fulfill Borrower's
obligations under this Agreement and the other Financing Agreements; and (b) at
any time to (i) take control in any manner of any item of payment or proceeds
thereof, (ii) have access to any lockbox or postal box into which Borrower's
mail is deposited, (iii) endorse Borrower's name upon any items of payment or
proceeds thereof and deposit the same in the Bank's account for application to
the Obligations, (iv) endorse Borrower's name upon any chattel paper, document,
instrument, invoice, or similar document or agreement relating to any Account or
any goods pertaining thereto or any other Collateral, and (v) sign Borrower's
name on any verification of Accounts and notices thereof to account debtors and
(vi) execute in Borrower's name and file any UCC financing statements or
amendments thereto. Borrower hereby releases Bank and its officers, employees
and designees from any liabilities arising from any act or acts under this power
of attorney and in furtherance thereof, whether of omission or commission,
except as a result of Bank's own gross negligence or willful misconduct as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction.
3.5 Right to Cure. Bank may, at its option, (a) cure any default
by Borrower under any agreement with a third party or pay or bond on appeal any
judgment entered against Borrower, (b) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and (c) pay any amount, incur any expense or perform any act
which, in Bank's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Bank with respect thereto.
Bank may add any amounts so expended to the Obligations and charge Borrower's
account therefor, such amounts to be repayable by Borrower on demand. Bank shall
be under no obligation to effect such cure, payment or bonding and shall not, by
doing so, be deemed to have assumed any obligation or liability of Borrower. Any
payment made or other action taken by Bank under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
accordingly.
3.6 Access to Premises. From time to time as reasonably requested
by Bank, at the cost and expense of Borrower, (a) Bank or its designee shall
have complete access to all of Borrower's premises during normal business hours
and after reasonable notice to Borrower, or at any time and without notice to
Borrower if an Event of Default exists or has occurred and is continuing, for
the purposes of inspecting, verifying and auditing the Collateral and all of
Borrower's books and records, including, without limitation, the Records, and
(b) Borrower shall promptly furnish to Bank such copies of such books and
records or extracts therefrom as Bank may request, and (c) use during normal
business hours such of Borrower's personnel, equipment, supplies and premises as
may be reasonably necessary for the foregoing and if an Event of Default exists
or has occurred and is continuing for the collection of Accounts and realization
of other Collateral.
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Section 4. REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Bank the following
(which shall survive the execution and delivery of this Agreement):
4.1 Corporate Existence, Power and Authority. Borrower is a
corporation duly organized and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a Material Adverse Effect. The execution, delivery and
performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder are all within Borrower's
corporate powers, have been duly authorized and are not in contravention of law
or the terms of Borrower's certificate of incorporation, by-laws, or other
organizational documentation, or any material indenture, agreement or
undertaking to which Borrower is a party or by which Borrower or its property
are bound. This Agreement and the other Financing Agreements constitute legal,
valid and binding obligations of Borrower enforceable in accordance with their
respective terms.
4.2 Chief Executive Office; Collateral Locations. The chief
executive office of Borrower and Borrower's Records concerning Accounts are
located only at the address set forth below and its only other places of
business and the only other locations of Collateral, if any, are the addresses
set forth in Schedule 4.2 hereto, subject to the right of Borrower to establish
new locations in accordance with Section 5.2 below.
4.3 Priority of Liens; Title to Properties. The security
interests and liens granted to Bank under this Agreement and the other Financing
Agreements constitute valid and perfected first priority liens and security
interests in and upon the Collateral subject only to the liens permitted under
Section 6.2(f) of the Credit Agreement. Borrower has good and marketable title
to all of its properties and assets subject to no liens, mortgages, pledges,
security interests, encumbrances or charges of any kind, except those granted to
Bank and such others as are specifically permitted under Section 6.2(f) of the
Credit Agreement.
4.4 Bank of Accounts. All of the deposit accounts, investment
accounts or other accounts in the name of or used by Borrower maintained at any
bank or other financial institution are set forth in Schedule 4.4 hereto,
subject to the right of Borrower to establish new accounts in accordance with
Section 5.4 below.
4.5 Accuracy and Completeness of Information. All information
furnished by or on behalf of Borrower in writing to Bank in connection with this
Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, is true and correct in all material respects on
the date as of which such information is dated or certified and does not omit
any material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be expected
to have a material adverse affect on the business, assets or prospects of
Borrower, which has not been fully and accurately disclosed to Bank in writing.
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4.6 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Bank on the date of each additional borrowing or
other credit accommodation under the Credit Agreement and shall be conclusively
presumed to have been relied on by Bank regardless of any investigation made or
information possessed by Bank. The representations and warranties set forth
herein shall be cumulative and in addition to any other representations or
warranties which Borrower shall now or hereafter give, or cause to be given, to
Bank.
Section 5. AFFIRMATIVE AND NEGATIVE COVENANTS
5.1 Maintenance of Existence. Borrower shall at all times
preserve, renew and keep in full, force and effect its corporate existence and
rights and franchises with respect thereto and maintain in full force and effect
all material permits, licenses, trademarks, tradenames, approvals,
authorizations, leases and contracts necessary to carry on the business as
presently or proposed to be conducted. Borrower shall give Bank thirty (30) days
prior written notice of any proposed change in its corporate name, which notice
shall set forth the new name and Borrower shall deliver to Bank a copy of the
amendment to the Certificate of Incorporation of Borrower providing for the name
change certified by the Secretary of State of the jurisdiction of incorporation
of Borrower as soon as it is available.
5.2 New Collateral Locations. Borrower may open any new location
within the continental United States provided Borrower (a) gives Bank thirty
(30) days prior written notice of the intended opening of any such new location
and (b) executes and delivers, or causes to be executed and delivered, to Bank
such agreements, documents, and instruments as Bank may deem reasonably
necessary or desirable to protect its interests in the Collateral at such
location, including, without limitation, UCC financing statements and if
Borrower leases such new location, provides a favorable landlord waiver or
subordination.
5.3 Insurance. Borrower shall, at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and in
the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated. Said policies of insurance shall be satisfactory to Bank as to form,
amount and insurer. Borrower shall furnish certificates, policies or
endorsements to Bank as Bank shall require as proof of such insurance, and, if
Borrower fails to do so, Bank is authorized, but not required, to obtain such
insurance at the expense of Borrower. All policies shall provide for at least
thirty (30) days prior written notice to Bank of any cancellation or reduction
of coverage and that Bank may act as attorney for Borrower in obtaining, and at
any time an Event of Default exists or has occurred and is continuing,
adjusting, settling, amending and canceling such insurance. Borrower shall cause
Bank to be named as a loss payee and an additional insured (but without any
liability for any premiums) under such insurance policies and Borrower shall
obtain non-contributory lender's loss payable endorsements to all insurance
policies in form and substance satisfactory to Bank. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Bank as its interests may appear and further specify that Bank shall be paid
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regardless of any act or omission by Borrower or any of its affiliates. At its
option, Bank may apply any insurance proceeds received by Bank at any time to
the cost of repairs or replacement of Collateral and/or to payment of the
Obligations, whether or not then due, in any order and in such manner as Bank
may determine or hold such proceeds as cash collateral for the Obligations.
5.4 Additional Bank Accounts. Borrower shall not, directly or
indirectly, open, establish or maintain any deposit account, investment account
or any other account with any bank or other financial institution, other than
the accounts set forth in Schedule 4.4 hereto, except: (a) as to any new or
additional accounts which contain any Collateral or proceeds thereof, with the
prior written consent of Bank and subject to such conditions thereto as Bank may
establish and (b) as to any accounts used by Borrower to make payments of
payroll, taxes or other obligations to third parties, after prior written notice
to Bank.
5.5 Costs and Expenses. Borrower shall pay to Bank on demand all
reasonable costs, expenses, filing fees and taxes paid or payable in connection
with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Bank's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including, but not limited to: (a) all costs and expenses of filing or
recording (including Uniform Commercial Code financing statement filing taxes
and fees, documentary taxes, intangibles taxes and mortgage recording taxes and
fees, if applicable); (b) all costs, expenses and fees for title insurance and
other insurance premiums, environmental audits, surveys, assessments,
environmental reports and inspections, appraisal fees and search fees; (c) costs
and expenses of preserving and protecting the Collateral; (d) costs and expenses
paid or incurred in connection with obtaining payment of the Obligations,
enforcing the security interests and liens of Bank, selling or otherwise
realizing upon the Collateral, and otherwise enforcing the provisions of this
Agreement and the other Financing Agreements or defending any claims made or
threatened against Bank arising out of the transactions contemplated hereby and
thereby (including, without limitation, preparations for and consultations
concerning any such matters); and (e) the reasonable fees and disbursements of
counsel (including legal assistants) to Bank in connection with any of the
foregoing.
5.6 Further Assurances. At the request of Bank at any time and
from time to time, Borrower shall, at its expense, at any time or times duly
execute and deliver, or cause to be duly executed and delivered, such further
agreements, documents and instruments, and do or cause to be done such further
acts as may be necessary or proper to evidence, perfect, maintain and enforce
the security interests and the priority thereof in the Collateral and to
otherwise effectuate the provisions or purposes of this Agreement or any of the
other Financing Agreements. Where permitted by law, Borrower hereby authorizes
Bank to execute and file one or more UCC financing statements signed only by
Bank.
Section 6. EVENTS OF DEFAULT AND REMEDIES
6.1 Events of Default. The occurrence or existence of any Event
of Default under the Credit
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Agreement is referred to herein individually as an "Event of Default", and
collectively as "Events of Default".
6.2 Remedies.
(a) At any time an Event of Default exists or has occurred
and is continuing, Bank shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by Borrower or any Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Bank hereunder, under any of the other Financing
Agreements, the Uniform Commercial Code or other applicable law, are cumulative,
not exclusive and enforceable, in Bank's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall include,
without limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by Borrower of this Agreement or any of
the other Financing Agreements. Bank may, at any time or times, proceed directly
against Borrower or any Obligor to collect the Obligations without prior
recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event
of Default exists or has occurred and is continuing, Bank may, in its discretion
and without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Bank (provided, that, upon the occurrence of any
Event of Default described in Section 7.1(f) of the Credit Agreement, all
Obligations shall automatically become immediately due and payable), (ii) with
or without judicial process or the aid or assistance of others, enter upon any
premises on or in which any of the Collateral may be located and take possession
of the Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrower, at Borrower's expense, to
assemble and make available to Bank any part or all of the Collateral at any
place and time designated by Bank, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including, without limitation,
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of Bank or elsewhere) at such prices or
terms as Bank may deem reasonable, for cash, upon credit or for future delivery,
with the Bank having the right to purchase the whole or any part of the
Collateral at any such public sale, all of the foregoing being free from any
right or equity of redemption of Borrower, which right or equity of redemption
is hereby expressly waived and released by Borrower and/or (vii) terminate the
Credit Agreement and the other Financing Agreements. If any of the Collateral is
sold or leased by Bank upon credit terms or for future delivery, the Obligations
shall not be reduced as a result thereof until payment therefor is finally
collected by Bank. If notice of disposition of Collateral is required by law,
ten (10) days prior notice by Bank to Borrower designating the time and place of
any public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable notice
thereof and Borrower waives any other notice. In the event Bank institutes an
action to recover any Collateral or seeks recovery of any Collateral by way of
prejudgment remedy,
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Borrower waives the posting of any bond which might otherwise be required.
(c) Bank may apply the cash proceeds of Collateral
actually received by Bank from any sale, lease, foreclosure or other disposition
of the Collateral to payment of the Obligations, in whole or in part and in such
order as Bank may elect, whether or not then due. Borrower shall remain liable
to Bank for the payment of any deficiency with interest at the highest rate
provided for in the Credit Agreement and all costs and expenses of collection or
enforcement, including reasonable attorneys' fees and legal expenses.
Section 7. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
7.1 Governing Law; Choice of Forum; Service of Process; Jury
Trial Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of California
(without giving effect to principles of conflicts of law).
(b) Borrower irrevocably consents and submits to the
non-exclusive jurisdiction of the Superior Court of the State of California,
County of Los Angeles and the United States District Court for the Central
District of California and waives any objection based on venue or forum non
conveniens with respect to any action instituted therein arising under this
Agreement, the Credit Agreement or any of the other Financing Agreements or in
any way connected or related or incidental to the dealings of Borrower and Bank
in respect of this Agreement or the other Financing Agreements or the
transactions related hereto or thereto, in each case whether now existing or
hereafter arising, and whether in contract, tort, equity or otherwise, and
agrees that any dispute with respect to any such matters shall be heard only in
the courts described above (except that Bank shall have the right to bring any
action or proceeding against Borrower or its property in the courts of any other
jurisdiction which Bank deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against Borrower or its
property).
(c) Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails, or,
at Bank's option, by service upon Borrower in any other manner provided under
the rules of any such courts.
(d) BORROWER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR
ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF BORROWER AND BANK IN RESPECT OF THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED
HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT
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TRIAL WITHOUT A JURY AND THAT BANK MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF BORROWER TO
THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
(e) Bank shall not have any liability to Borrower (whether
in tort, contract, equity or otherwise) for losses suffered by Borrower in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Bank that the losses were the
result of acts or omissions constituting gross negligence or willful misconduct.
7.2 Waiver of Notices. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on Borrower which Bank may elect to give shall entitle Borrower to
any other or further notice or demand in the same, similar or other
circumstances.
7.3 Amendments and Waivers. Neither this Agreement nor any
provision hereof shall be amended, modified, waived or discharged orally or by
course of conduct, but only by a written agreement signed by an authorized
officer of Bank. Bank shall not, by any act, delay, omission or otherwise be
deemed to have expressly or impliedly waived any of its rights, powers and/or
remedies unless such waiver shall be in writing and signed by an authorized
officer of Bank. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Bank of any right, power and/or
remedy on any one occasion shall not be construed as a bar to or waiver of any
such right, power and/or remedy which Bank would otherwise have on any future
occasion, whether similar in kind or otherwise.
7.4 Indemnification. Borrower shall indemnify and hold Bank, and
its directors, agents, employees and counsel ("Indemnified Persons"), harmless
from and against any and all losses, claims, damages, liabilities, costs or
expenses imposed on, incurred by or asserted against any of them in connection
with any litigation, investigation, claim or proceeding commenced or threatened
related to the negotiation, preparation, execution, delivery, enforcement,
performance or administration of this Agreement, any other Financing Agreements,
or any undertaking or proceeding related to any of the transactions contemplated
hereby or any act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs, and the
fees and expenses of counsel; provided, that, the Borrower shall have no
obligation hereunder arising from the gross negligence or willful misconduct of
such Indemnified Persons. If any claim is made, or any action, suit or
proceeding is brought, against any Indemnified Person, pursuant to this Section,
the Indemnified Person shall notify the Borrower within fifteen (15) days of the
Bank being notified in writing of the commencement of such action, suite or
proceeding, and the Borrower may, at its election, assume the defense of such
action, suit or proceeding, employing counsel selected by the Borrower and
reasonably
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satisfactory to the Indemnified Person, and pay the fees and expenses of such
counsel. To the extent that the undertaking to indemnify, pay and hold harmless
set forth in this Section 7.4 may be unenforceable because it violates any law
or public policy, Borrower shall pay the maximum portion which it is permitted
to pay under applicable law to Bank in satisfaction of indemnified matters under
this Section 7.4. The foregoing indemnity shall survive the payment of the
Obligations, the termination of this Agreement and the termination or
non-renewal of the Credit Agreement. All of the foregoing costs and expenses
shall be part of the Obligations and secured by the Collateral.
Section 8. MISCELLANEOUS
8.1 Notices. All notices, requests and demands hereunder shall be
made and given and be effective in accordance with Section 8.2 of the Credit
Agreement.
8.2 Partial Invalidity. If any provision of this Agreement is
held to be invalid or unenforceable, such invalidity or unenforceability shall
not invalidate this Agreement as a whole, but this Agreement shall be construed
as though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
8.3 Successors. This Agreement, the other Financing Agreements
and any other document referred to herein or therein shall be binding upon
Borrower and its successors and assigns and inure to the benefit of and be
enforceable by Bank and its successors and assigns, except that Borrower may not
assign its rights under this Agreement, the other Financing Agreements and any
other document referred to herein or therein without the prior written consent
of Bank. Bank may assign its rights and delegate its obligations under this
Agreement in accordance with Section 8.6 of the Credit Agreement.
8.4 Entire Agreement. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or documents
delivered or to be delivered in connection herewith or therewith represents the
entire agreement and understanding concerning the subject matter hereof and
thereof between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written.
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IN WITNESS WHEREOF, Borrower has caused these presents to be
duly executed as of the day and year first above written.
ELITE INFORMATION SYSTEMS, INC.
a California corporation
By:
Name:
Title:
CHIEF EXECUTIVE OFFICE:
0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
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SCHEDULE 4.2
Other Locations
New York, New York
Indianapolis, Indiana
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SCHEDULE 4.4
Bank Accounts
Mellon Bank
Elite AP Control Disbursement Account (ZBA) # 0000000 - ABA or Bank Routing
Number #000000000
Elite Lock Box Account (ZBA) # 0000000 - ABA or Bank Routing Number # 000000000
1st Business Bank - Los Angeles Commercial Checking Account # 050 602710
Fleet Bank
Elite Control Disbursement Account - Zero Balance Account # 9359613584
Elite Lock Box Account (ZBA) - #9401738883 - Bank Routing Number # 000000000
Fleet Bank Wire Transfer Agreement: Concentration Account # 0000000000
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