<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-19092
------------------------
ROSS SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
CALIFORNIA TWO CONCOURSE PARKWAY 94-2170198
(State of incorporation) SUITE 800 (I.R.S. Employer
ATLANTA, GEORGIA 30328 Identification No.)
(770) 351-9600
(Address and telephone of
principal executive offices)
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<S> <C>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
None None
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, no par value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES /X/ NO / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
The aggregate market value of the Registrant's voting stock held by
non-affiliates of the Registrant, based upon the closing sale price of the
Common Stock on September 12, 1997 in the over-the-counter market as reported by
NASDAQ, was approximately $70,980,352. Shares of voting stock held by each
officer and director and by each person who owns 5% or more of the outstanding
Common Stock have been excluded in that such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
As of September 12, 1997, the Registrant had outstanding 19,248,909 shares
of Common Stock and 107 shares of Series E Redeemable Convertible Preferred
Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the Proxy Statement for the Registrant's 1997 Annual Meeting of
Shareholders to be held November 19, 1997 are incorporated by reference in Part
III of this Form 10-K Report.
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This 10-K/A is being filed to include new Exhibits. Other than the
Exhibits being filed herewith, all other information included in the initial
filing is unchanged.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment on Form
10-K/A to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on the 29th day of
April, 1998.
ROSS SYSTEMS, INC.
By: /s/ DENNIS V. VOHS
-----------------------------------------
Dennis V. Vohs, Chairman Of The Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
Chairman of the Board,
/s/ DENNIS V. VOHS Chief
- ------------------------------ Executive Officer and April 29, 1998
Dennis V. Vohs Director (Principal
Executive Officer)
Corporate Controller
/s/ JAMES RILEY (Principal April 29, 1998
- ------------------------------ Financial and
James Riley Accounting Officer)
and Assistant Secretary
* MARIO M. ROSATI
- ------------------------------ Director April 29, 1998
Mario M. Rosati
* BRUCE J. RYAN
- ------------------------------ Director April 29, 1998
Bruce J. Ryan
* J. PATRICK TINLEY
- ------------------------------ President, Chief Operating April 29, 1998
J. Patrick Tinley Officer and Director
/s/ DENNIS V. VOHS
- ------------------------------ April 29, 1998
Dennis V. Vohs
(Attorney-In-Fact)
2
<PAGE>
ROSS SYSTEMS, INC.
AMENDMENT TO ANNUAL REPORT ON FORM 10-K/A
YEAR ENDED JUNE 30, 1997
ROSS SYSTEMS, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
3.1 Article of Incorporation, as amended (1)
3.2 Certificate of Determination of Rights, Preferences and Privileges of Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock of Ross Systems, Inc. (2)
3.3 Bylaws, as amended (3)
3.4 Certificate of Determination of Rights, Preferences and Privileges of Series E Preferred Stock of Ross
Systems, Inc. (4)
10.1 Subscription Agreement dated December 29, 1995 between Registrant and Fletcher International Limited (5)
10.2 Subscription Agreement dated June 28, 1996 between Registrant and Fletcher International Limited (6)
10.3 Amendment No. 1 dated July 8, 1996 to the December 29, 1995 Subscription Agreement and the June 28, 1996
Subscription Agreement between Registrant and Fletcher International Limited (6)
10.4 Amendment No. 2 dated June 10, 1997 to the December 29, 1995 Subscription Agreement and the June 28, 1996
Subscription Agreement between Registrant and Fletcher International Limited*
10.5A Extension Agreement and Amendment to Loan Documents dated March 21, 1997 between Registrant and Coast
Business Credit, a division of Southern Pacific Thrift and Loan Association
10.5B Extension Agreement and Amendment to Loan Documents dated August 18, 1995 between Registrant and CoastFed
Business Credit Corporation ("Coast")
10.5C First Amendment to Loan and Security Agreement dated June 30, 1995 between Registrant and Coast
10.5D Loan and Security Agreement dated October 11, 1994 between Registrant and Coast
11.1 Statement regarding Computation of Per Share Earnings*
21.1 Listing of Subsidiaries of Registrant*
23.1 Consent of Coopers & Lybrand LLP
23.2 Consent of KPMG
23.3 Consent of KPMG Peat Marwick LLP
24.1 Power of Attorney*
27 Financial Data Schedule*
</TABLE>
- ------------------------
(1) Incorporated by reference to the exhibit filed with the Registrant's
Quarterly Report on Form 10-Q for the period ended December 31, 1995, as
amended by the exhibits filed by the Registrant's Current Report on Form 8-K
dated February 13, 1996. Additional amendment previously filed as an
exhibit to the Annual Report on Form 10-K for the year ended June 30,
1997 filed on September 29, 1997.
(2) Incorporated by reference to the exhibit filed with the Registrant's
Quarterly Report on Form 10-Q for the period ended March 31, 1996 filed May
6, 1996.
(3) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-K filed September 27, 1993.
3
<PAGE>
(4) Incorporated by reference to the exhibit filed with the Registrant's
Quarterly Report on Form 10-Q for the period ended December 31, 1996 filed
February 13, 1997.
(5) Incorporated by reference to the exhibit filed with the Registrant's
Quarterly Report on Form 10-Q for the period ended December 31, 1995 filed
February 14, 1996.
(6) Incorporated by reference to the exhibit filed with the Registrant's
Quarterly Report on Form 10-Q for the period ended September 30, 1996 filed
November 8, 1996.
* Previously filed.
4
<PAGE>
EXHIBIT 10.5(a)
COAST
EXTENSION AGREEMENT AND
AMENDMENT TO LOAN DOCUMENTS
BORROWER: ROSS SYSTEMS, INC.
ADDRESS: 555 TWIN DOLPHIN DR.
REDWOOD CITY, CALIFORNIA
DATE: MARCH 21, 1997
THIS EXTENSION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS is entered into
between COAST BUSINESS CREDIT, a division of Southern Pacific Thrift & Loan
Association ("Coast"), whose address is 12121 Wilshire Blvd., Suite 1111, Los
Angeles, California and the borrower named above (the "Borrower").
The Parties agree to amend, effective as of the date hereof the
following: (1) the Loan and Security Agreement between them, dated October
11, 1994 (as amended by the First Amendment to Loan and Security Agreement
dated October 11, 1994, by the Extension Agreement and Amendment to Loan
Documents dated August 18, 1995 and as the same may have been otherwise
amended, the "Loan Agreement"); (2) that certain Accounts Collateral Security
Agreement between them, dated October 11, 1994 (as amended by the First
Amendment to Loan and Security Agreement dated October 11, 1994, by the
Extension Agreement and Amendment to Loan Documents dated August 18, 1995 and
as the same may have been otherwise amended, the "Accounts Agreement"); and
(3) that certain Secured Promissory Note dated October 11, 1994, as amended
by that by the Extension Agreement and Amendment to Loan Documents dated
August 18, 1995 (the "Note"), as set forth herein. (This Amendment, the Loan
Agreement, the Accounts Agreement, the Note, any prior written amendments to
said agreements signed by Coast and the Borrower, and all other written
documents and agreements between Coast and the Borrower are referred to
herein collectively as the "Loan Documents". Capitalized terms used but not
defined in this Amendment, shall have the meanings set forth in the Loan
Agreement.)
1. REFERENCES TO COASTFED. All references to CoastFed Business
Corporation in the Loan Documents are hereby amended to be references to
Coast Business Credit, a division of Southern Pacific Thrift & Loan
Association (formerly known as CoastFed Business Corporation); and the
defined term of CoastFed in all the Loan Documents is hereby amended to be
"Coast."
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COAST BUSINESS CREDIT EXTENSION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS
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2. INCREASE IN CREDIT LINE AMOUNT. The last sentence of Section 1.1 of
the Loan Agreement which now reads "Notwithstanding anything herein or in any
Collateral Agreement to the contrary, in no event shall the Borrower permit
the total balance of all Loans and all other Obligations outstanding at any
one time to exceed $10,000,000; and, if for any reason they do, Borrower
shall immediately pay the amount of such excess to Coast in immediately
available funds." is hereby deleted and replaced with the following:
"Notwithstanding anything herein or in any Collateral Agreement to the
contrary, in no event shall the Borrower permit the total balance of all
Loans and all other Obligations outstanding at any one time to exceed
$15,000,000; and, if for any reason they do, Borrower shall immediately
pay the amount of such excess to Coast in immediately available funds."
3. EXTENSION OF MATURITY DATE. The Maturity Date "October 31, 1997"
set forth in Section 8 of the Loan Agreement is amended to read as follows:
"October 31, 2000".
4. MODIFIED SECTION 2.1. Section 2.1 of the Accounts Agreement is
hereby amended in its entirety to read as follows:
"2.1 AMOUNT OF LOANS. Provided no Event of Default has occurred, Coast
agrees to make Loans to Borrower, repayable on demand, in amounts up to
(I) 75% of the Net Amount of each Account, which Coast in its sole and
absolute discretion deems eligible for borrowing PLUS (II) the lesser
of 75% of the Net Amount of each UK Account (as defined below and with
respect to which Coast in its sole and absolute discretion deems
eligible for borrowing) or $1,000,000 outstanding at any one time;
PROVIDED, HOWEVER, that:
(a) In no event may the outstanding Loans with respect to Accounts
representing 'Maintenance Receivables' exceed the 'Maintenance
Receivables Sublimit'. As used herein, 'Maintenance Receivables' means
receivables arising from invoices presented to Borrower's customers for
future services that Borrower may render, on account of future
maintenance, to such customers outstanding no more than 120 days from
their due date. As used herein, 'Maintenance Receivables Sublimit'
shall be, as of the end of each of Borrower's fiscal quarters, equal to
the lesser of (I) $7,000,000 or (II) Borrower's total revenues during
the four fiscal quarters ended on such date, divided by $71,265,000,
and then multiplying the resulting number by $4,000,000.
The Borrower shall provide to Coast the information necessary to compute
the adjustment to the Maintenance Receivables Sublimit at the time
Borrower submits to Coast its quarterly and annual financial statements
under Section 3.8 of the Loan Agreement, and the adjustment to the
Maintenance Receivables Sublimit shall go into effect on Coast's
completion of its review of
-2-
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COAST BUSINESS CREDIT EXTENSION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS
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said financial statements (which shall be completed by Coast within five
business days after receipt of the same).
(b) Coast shall have the right to reserve from Loans which would
otherwise be available to the Borrower in each month an amount equal to
the maximum amount payable to Argonaut Information Systems of
California, Inc. ("Argonaut") during the following month, under the
Intercreditor Agreement among Borrower, Coast and Argonaut dated as of
June 30, 1995. The term "Net Amount" of an Account, as used herein,
shall mean the gross amount of the Account, minus all applicable sales,
use, excise and other similar taxes and minus all discounts, credits and
allowances of any nature at any time issued, owing, granted, outstanding,
available or claimed.
(c) Without limitation that the determination regarding which Accounts
are deemed eligible for borrowing purposes hereunder is in sole
discretion of Coast, Accounts (other than UK Accounts) outstanding for
greater than 120 days from their due date shall not be considered
eligible for borrowing purposes hereunder. Further, if more than 25% of
the Accounts owing from an account debtor are outstanding more than 120
days from their due date (without regard to unapplied credits) or are
otherwise not eligible Accounts, then all Accounts owing from that
account debtor will be deemed ineligible for borrowing.
(d) Without limitation that the determination regarding which UK
Accounts are deemed eligible for borrowing purposes hereunder is in sole
discretion of Coast, UK Accounts outstanding for greater than 60 days
from their due date shall not be considered eligible for borrowing
purposes hereunder. Further, if more than 25% of the UK Accounts owing
from an account debtor are outstanding more than 60 days from their due
date (without regard to unapplied credits) or are otherwise not
eligible UK Accounts, then all UK Accounts owing from that account
debtor will be deemed ineligible for borrowing.
(d) As used herein the term "UK Accounts" shall mean those accounts,
contract rights, chattel paper, and instruments, and all other
obligations now or hereafter owing to Ross Systems (UK) Limited.
(e) All Loans pursuant hereto are subject to the credit limit set forth
in the last sentence of Section 1.1 of the Loan Agreement.
5. UK ACCOUNTS. Borrower hereby acknowledges and agrees that all
representations, warranties and covenants set forth in the Accounts Agreement
with respect to Accounts are hereby deemed made by the Borrower as to the UK
Accounts, with the understanding that such representations, warranties and
covenants are considered modified (a) to refer to obligations owing to Ross
Systems (UK) Limited rather than obligations owing to the Borrower and (b)
that the account debtors relating thereto may be located outside of the
United States.
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COAST BUSINESS CREDIT EXTENSION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS
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6. CHANGE IN INTEREST RATE. Section 1.2 of the Loan Agreement is
hereby amended in its entirety to read as follows:
"1.2 INTEREST. Unless specifically provided to the contrary in any
Collateral Agreement, all Loans shall bear interest at a rate equal to
the "Prime Rate" (as hereinafter defined), plus 2% per annum,
calculated on the basis of a 360-day year for the actual number of days
elapsed.
The interest rate applicable to all Loans shall be adjusted monthly as
of the first day of each month, and the interest to be charged for that
month shall be based on the highest "Prime Rate" in effect during said
month, but in no event shall the rate of interest charged on any Loans
in any month be less than 9% per annum. "Prime Rate" is defined as the
actual "Reference Rate" or the substitute therefor of the Bank of
America NT & SA ("B of A") whether or not that rate is the lowest
interest rate charged by B of A. If the Prime Rate, as defined, is
unavailable, "Prime Rate" shall mean the highest of the prime rates
published in the Wall Street Journal on the first business day of the
month, as the base rate on corporate loans at large U.S. money center
commercial banks."
7. TERMINATION FEE. Section 8 of the Loan Agreement is hereby amended
by replacing the sentence which presently reads "If termination occurs under
subparagraph (b), (c) or (d) above, Borrower shall pay to Coast a termination
fee in an amount equal to $10,000 for each month (or portion thereof) from
the effective date of termination to the date which would have been the next
renewal date had this Loan Agreement not been terminated, provided that if
the total $200,000 loan fee under the Extension Agreement and Amendment to
Loan Documents between Borrower and Coast dated as of August 18, 1995 has
been paid in full by Borrower, then the following limitations on the
termination fee shall apply: if termination is effective during the month of
November 1996, the termination fee shall be a total of $20,000, if
termination is effective during the month of December 1996, the termination
fee shall be a total of $10,000, and if termination is effective after
December 31, 1996, there shall be no termination fee." with the following:
"If termination occurs under subparagraph (b), (c) or (d) above,
Borrower shall pay to Coast a termination fee in an amount equal to
$10,000 for each month (or portion thereof) from the effective date of
termination to the date which would have been the next renewal date had
this Loan Agreement not been terminated, provided that if the total of
$300,000 in loan fees (that is, each of the three fees of $100,000)
under section 9 of the Extension Agreement and Amendment to Loan
Documents between Borrower and Coast dated as of March 21, 1997 has
been paid in full by Borrower, then the following limitations on the
termination fee shall apply: if termination is effective during the
month of November 1999, the termination fee shall be a total of
$20,000, if termination is effective during the month of December 1999,
the termination fee shall be a total of $10,000,
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COAST BUSINESS CREDIT EXTENSION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS
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and if termination is effective after December 31, 1999, there shall be
no termination fee."
8. NOTE MODIFICATION. The second paragraph of the Secured Promissory
Note dated October 11, 1994 ("Note"), made by the Borrower to Coast, as
amended, is hereby deleted and replaced with the following:
"This Note shall bear interest on the unpaid principal balance hereof
from time to time outstanding at a rate equal to the "Prime Rate" (as
hereinafter defined) plus 2% per annum, but in no event shall the
interest rate in any month be less than 9% per annum. Interest shall be
calculated on the basis of a 360-day year for the actual number of days
elapsed. As used herein, the term "Prime Rate" shall mean the actual
"Reference Rate" or the substitute therefor of the Bank of America NT &
SA whether or not that rate is the lowest interest rate charged by said
bank. The interest rate applicable to this Note shall be adjusted
monthly, as of the first day if each month, and the interest rate
charged during each month shall be based on the highest Prime Rate in
effect during said month. If the Prime Rate is unavailable, "Prime Rate"
shall mean the highest of the prime rates published in the Wall Street
Journal on the first business day of the month, as the base rate of
corporate loans at large U.S. money center banks. Accrued interest
shall be payable monthly, in addition to the principal payments provided
above, commencing on March 31, 1997, and continuing on the last day of
each succeeding month."
All other terms and conditions of the Note shall remain the same.
9. FEE. In consideration for Coast entering into this Extension and
Amendment, the Borrower shall pay Coast an annual loan fee in the amount of
$100,000, which shall be non-refundable and in addition to all interest and
other fees payable to Coast under the Loan Documents. Said fee shall be
payable on November 1, 1997, November 1, 1998 and November 1, 1999. Coast is
authorized to charge said fee to Borrower's loan account.
10. REPRESENTATIONS TRUE. Borrower represents and warrants to Coast
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
11. GENERAL PROVISIONS. This Amendment, the Loan Agreement, and the
other Loan Documents set forth in full all of the representations and
agreements of the parties with respect to the subject matter hereof and
supersede all prior discussions, representations, agreements and
understandings between the parties with respect to the
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COAST BUSINESS CREDIT EXTENSION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS
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subject hereof. Except as herein expressly amended, all of the terms and
provisions of the Loan Agreement and the other Loan Documents shall continue
in full force and effect and the same are hereby ratified and confirmed.
Borrower: Coast:
ROSS SYSTEMS, INC. COAST BUSINESS CREDIT
CORPORATION, a division of Southern
Pacific Thrift & Loan Association
By /s/ James P. Tinley By /s/ [Illegible]
----------------------------- ------------------------------
President or Vice President Title
----------------------------
By /s/ James A. Watts
-----------------------------
Secretary or Ass't Secretary
-6-
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COAST BUSINESS CREDIT EXTENSION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS
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CONSENT
The undersigned, guarantor, acknowledges that its consent to the
foregoing Agreement is not required, but the undersigned nevertheless does
hereby consent to the foregoing Agreement and to the documents and agreements
referred to therein and to all future modifications and amendments thereto,
and any termination thereof, and to any and all other present and future
documents and agreements between or among the foregoing parties. Nothing
herein shall in any way limit any of the terms or provisions of the Guarantee
of the undersigned, which is hereby ratified and affirmed.
ROSS SYSTEMS (UK) LIMITED
By /s/ James P. Tinley
----------------------------
Title Director
----------------------------
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<PAGE>
EXHIBIT 10.5(b)
COAST
EXTENSION AGREEMENT AND
AMENDMENT TO LOAN DOCUMENTS
BORROWER: ROSS SYSTEMS, INC.
ADDRESS: 555 TWIN DOLPHIN DR.
REDWOOD CITY, CALIFORNIA
DATE: AUGUST 18, 1995
THIS EXTENSION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS is entered
into between COASTFED BUSINESS CREDIT CORPORATION ("Coast"), whose address is
12121 Wilshire Blvd., Suite 1111, Los Angeles, California and the borrower
named above (the "Borrower").
The Parties agree to amend the Loan and Security Agreement between them,
dated October 11, 1994 (as amended by the First Amendment to Loan and
Security Agreement dated October 11, 1994 and as the same may have been
otherwise amended, the "Loan Agreement"), and that certain Accounts
Collateral Security Agreement between them, dated October 11, 1994 (as
amended by the First Amendment to Loan and Security Agreement dated October
11, 1994 and as the same may have been otherwise amended, the "Accounts
Agreement"), as set forth herein. (This Amendment, the Loan Agreement, the
Accounts Agreement, any prior written amendments to said agreements signed by
Coast and the Borrower, and all other written documents and agreements
between Coast and the Borrower are referred to herein collectively as the
"Loan Documents". Capitalized terms used but not defined in this Amendment,
shall have the meanings set forth in the Loan Agreement.)
1. EXTENSION OF MATURITY DATE. The Maturity Date "October 31, 1995"
set forth in Section 8 of the Loan Agreement is amended to read as follows:
"October 31, 1997".
2. ADVANCE RATE.
2.1 MAINTENANCE RECEIVABLES. Section B of the First Amendment to
Loan and Security Agreement dated October 11, 1994, which states that after
payment in full of the payments referred to therein, the Maintenance Accounts
(as defined therein) will no longer constitute Accounts that qualify for
Loans, is hereby deleted.
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COAST BUSINESS CREDIT EXTENSION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS
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2.2 MAINTENANCE RECEIVABLES SUBLIMIT. Section 2.1 of the Accounts
Agreement is amended by replacing the first sentence thereof, which presently
reads "Provided no Event of Default has occurred, CoastFed agrees to make
Loans to Borrower, repayable on demand, in amounts up to 75% of the Net
Amount of each Account, which CoastFed in its sole and absolute discretion
deems eligible for borrowing." with the following:
"Provided no Event of Default has occurred, CoastFed agrees to make
Loans to Borrower, repayable on demand, in amounts up to 75% of the
Net Amount of each Account, which CoastFed in its sole and absolute
discretion deems eligible for borrowing; provided, however, that:
"(a) Commencing September 1, 1995, in no event may the outstanding
Loans with respect to Accounts representing 'Maintenance Receivables'
exceed the 'Maintenance Receivables Sublimit'. As used herein,
'Maintenance Receivables' means receivables arising from invoices
presented to Borrower's customers for future services that Borrower may
render, on account of future maintenance, to such customers. As used
herein, 'Maintenance Receivables Sublimit' shall mean the sum of
$4,000,000, subject to adjustment as follows: The 'Maintenance
Receivables Sublimit' shall be adjusted as of the end of each of
Borrower's fiscal quarters, commencing with the fiscal quarter ending
September 30, 1995, to an amount equal to the Borrower's total revenues
during the four fiscal quarters ended on such date, divided by
$71,265,000, and multiplying the resulting number by $4,000,000;
provided that
(i) the Maintenance Receivables Sublimit shall not be less
than $4,000,000 and
(ii) the Maintenance Receivables Sublimit shall not be
greater than:
$5,000,000 during the period from November 1, 1995 to
October 31, 1996; or
$6,000,000 during the period from November 1, 1996 to
October 31, 1997.
The Borrower shall provide to CoastFed the information necessary to
compute the adjustment to the Maintenance Receivables Sublimit at the
time Borrower submits to CoastFed its quarterly and annual financial
statements under Section 3.8 of the Loan Agreement, and the adjustment
to the Maintenance Receivables Sublimit shall go into effect on
CoastFed's completion of its review of said financial statements (which
shall be completed by CoastFed within five business days after receipt
of the same).
-2-
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COAST BUSINESS CREDIT EXTENSION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS
- -------------------------------------------------------------------------------
"(b) CoastFed shall have the right to reserve from Loans which
would otherwise be available to the Borrower in each month an amount
equal to the maximum amount payable to Argonaut Information Systems of
California, Inc. ("Argonaut") during the following month, under the
Intercreditor Agreement among Borrower, CoastFed and Argonaut dated as of
June 30, 1995.
"All Loans pursuant hereto are subject to the credit limit set forth in
the last sentence of Section 1.1 of the Loan Agreement."
2.3 REMOVAL OF TIME LIMIT ON PERMITTED OVERADVANCE. The asterisk
portion of Section 2.1 of the Accounts Agreement is hereby amended by
deleting the phrase "provided that the Overadvance shall remain outstanding
during not more than 15 calendar days in each calendar month".
3. CHANGE IN INTEREST RATE. Section 1.2 of the Loan Agreement is
hereby amended in its entirety to read as follows:
"1.2 INTEREST. Unless specifically provided to the contrary in any
Collateral Agreement, all Loans shall bear interest at a rate equal to
the "Prime Rate" (as hereinafter defined), plus 3% per annum,
calculated on the basis of a 360-day year for the actual number of days
elapsed, subject to the following adjustments:
"(a) The interest rate shall be decreased by 0.50% for each
$500,000 of net income realized by Borrower in any fiscal quarter,
commencing with the fiscal quarter ending September 30, 1995, but
in no event shall the interest rate be decreased as a result of this
subsection (a) by more than 1% in any fiscal quarter (on a
noncumulative basis).
"(b) The interest rate shall be increased by 0.50% for each
$500,000 of net loss incurred by Borrower in any fiscal quarter,
commencing with the fiscal quarter ending September 30, 1995, but
in no event shall the interest rate be increased as a result of this
subsection (b) by more than 1% in any fiscal quarter (on a
noncumulative basis), and in no event shall the interest rate be
increased as a result of this subsection (b) to more than the Prime
Rate plus 3% per annum.
"(c) The interest rate shall be decreased by 0.50% for each
$3,000,000 of cash equity capital received by Borrower in any
fiscal quarter, commencing with the fiscal quarter ending September
30, 1995, but in no event shall the interest rate be decreased as a
result of this subsection (c) by more than 1% in any fiscal quarter
(on a noncumulative basis).
"(d) In no event shall the total of the interest rate decreases
under subsections (a) and (c) above, combined, be more than 1.5% in
any
-3-
<PAGE>
COAST BUSINESS CREDIT EXTENSION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS
- -------------------------------------------------------------------------------
fiscal year. In no event shall the total of the interest rate
increases under subsection (b) above, combined, be more than 1.5%
in any fiscal year.
"(e) Notwithstanding the above provisions, in no event shall the
interest rate be reduced to below a rate equal to the Prime Rate
plus 1% per annum.
"(f) Notwithstanding the above provisions, in the event
Borrower's shareholder equity is, at any fiscal quarter end, less
than $12,064,000, then the interest rate shall be increased to a
rate equal to the Prime Rate plus 3% per annum.
"(g) Interest rate adjustments under subsections (a) and (b)
and (f) shall go into effect on the first day of the month
following the date the applicable financial statements have been
delivered to CoastFed. Interest rate adjustments under subsection
(c) shall go into effect on the first day of the month following
the month in which the cash equity capital was received by Borrower.
"The interest rate applicable to all Loans shall be adjusted monthly as
of the first day of each month, and the interest to be charged for that
month shall be based on the highest "Prime Rate" in effect during said
month, but in no event shall the rate of interest charged on any Loans
in any month be less than 8% per annum. "Prime Rate" is defined as the
actual "Reference Rate" or the substitute therefor of the Bank of
America NT & SA ("B of A") whether or not that rate is the lowest
interest rate charged by B of A. If the Prime Rate, as defined, is
unavailable, "Prime Rate" shall mean the highest of the prime rates
published in the Wall Street Journal on the first business day of the
month, as the base rate on corporate loans at large U.S. money center
commercial banks."
4. REDUCTION IN TERMINATION FEE. Section 8 of the Loan Agreement is
hereby amended by replacing the sentence which presently reads "If termination
occurs under subparagraph (b), (c) or (d) above, Borrower shall pay to
CoastFed a termination fee in an amount equal to $10,000 for each month (or
portion thereof) from the effective date of termination to the date which
would have been the next renewal date had this Loan Agreement not been
terminated." with the following:
"If termination occurs under subparagraph (b), (c) or (d) above, Borrower
shall pay to CoastFed a termination fee in an amount equal to $10,000
for each month (or portion thereof) from the effective date of
termination to the date which would have been the next renewal date
had this Loan Agreement not been terminated, provided that if the total
$200,000 loan fee under the Extension Agreement and Amendment to Loan
Documents between Borrower and CoastFed dated as of August 18, 1995 has
been paid in full by Borrower, then the following limitations on the
termination
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<PAGE>
COAST BUSINESS CREDIT EXTENSION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS
- -------------------------------------------------------------------------------
fee shall apply; if termination is effective during the month of
November 1996, the termination fee shall be a total of $20,000, if
termination is effective during the month of December 1996, the
termination fee shall be a total of $10,000, and if termination is
effective after December 31, 1996, there shall be no termination fee.
5. TERM NOTE INCREASE. The original principal amount of the Secured
Promissory Note dated October 11, 1994 ("Note"), made by the Borrower to
Coast, which is presently $450,000, is hereby increased to $500,000, and the
number "$450,000" wherever it appears in the Note is hereby amended to read
"$500,000". All other terms and conditions of the Note remain the same,
including without limitation the monthly principal payment of $12,500 per
month. Coast shall, substantially concurrently, advance to the Borrower an
additional amount sufficient to bring the unpaid principal balance of the
Note to $500,000.
6. FEE. In consideration for Coast entering into this Extension and
Amendment, the Borrower shall pay Coast a fee in the amount of $200,000,
which shall be non-refundable and in addition to all interest and other fees
payable to Coast under the Loan Documents. Said fee shall be payable $100,000
on 11/1/95 and $100,000 on the earlier of November 1, 1996 or termination of
the Loan Agreement. Coast is authorized to charge said fee to Borrower's loan
account.
7. REPRESENTATIONS TRUE. Borrower represents and warrants to Coast
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
8. GENERAL PROVISIONS. This Amendment, the Loan Agreement, and the
other Loan Documents set forth in full all of the representations and
agreements of the parties with respect to the subject matter hereof and
supersede all prior discussions, representations, agreements and
understandings between the parties with respect to the subject hereof. Except
as herein expressly amended, all of the terms and provisions of the Loan
Agreement and the other Loan Documents shall continue in full force and
effect and the same are hereby ratified and confirmed.
Borrower: Coast:
ROSS SYSTEMS, INC. COASTFED BUSINESS CREDIT
CORPORATION
By /s/ Selby F. Little III By /s/ [Illegible]
----------------------------- -----------------------------
President or Vice President Title Senior Vice President
-----------------------------
By /s/ Anne Rockhold
-----------------------------
Secretary or Ass't Secretary
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<PAGE>
COAST BUSINESS CREDIT EXTENSION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS
- -------------------------------------------------------------------------------
CONSENT
The undersigned, guarantor, acknowledges that its consent to the
foregoing Agreement is not required, but the undersigned nevertheless does
hereby consent to the foregoing Agreement and to the documents and agreements
referred to therein and to all future modifications and amendments thereto,
and any termination thereof, and to any and all other present and future
documents and agreements between or among the foregoing parties. Nothing
herein shall in any way limit any of the terms or provisions of the Guarantee
of the undersigned, which is hereby ratified and affirmed.
ROSS SYSTEMS (UK) LIMITED
By /s/ Selby F. Little III
------------------------------
Title Director
---------------------------
42,931-3
-6-
<PAGE>
EXHIBIT 10.5(c)
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
This first amendment ("First Amendment") to the Loan and Security
Agreement dated October 11, 1994 is entered into between CoastFed Business
Credit Corporation ("Coast") and Ross Systems, Inc. ("Borrower").
The parties contract with reference to the following facts:
1. The parties have entered into a Loan and Security Agreement and
related Collateral Agreements all dated October 11, 1994 (collectively the
"Loan Agreement"). All capitalized terms not defined herein shall have the
meaning attributed thereto in the Loan Agreement.
2. Coast, Borrower and Argonaut Information Systems of California, Inc.
("Argonaut") are entering into an Intercreditor Agreement dated June 30, 1995
(the "Intercreditor Agreement") in order to make it possible for Borrower and
Argonaut to settle an extant dispute between them.
3. The parties intend, by this First Amendment, to amend the Loan
Agreement to provide that after remittance of the amounts required to be
received by Argonaut under Paragraph 4 of the Intercreditor Agreement: (a)
the "Maintenance Accounts" (defined in the Intercreditor Agreement) shall not
qualify as eligible Collateral and (b) the Borrower shall have no right to
the Overadvance.
NOW, THEREFORE, the parties agree as follows:
A. The following provision that is contained in Section 2.1 of the
October 11, 1994 Accounts Collateral Security Agreement is deleted effective
upon the receipt by Argonaut of all remittances to which it is entitled under
Paragraph 4 of Intercreditor Agreement:
"Subject to the credit limit set forth in the
last sentence of Section 1.1 of the Loan Agreement,
and without limiting CoastFed's discretion with
respect to Loans, the amount of the Loans pursuant to
this Section 2.1 may, in Coast's discretion, be
increased above the percentage limit set forth above
in this Section 2.1 (the "Overadvance") by an amount
not to exceed $1,000,000, provided that the Overadvance
shall remain outstanding during not more than 15 calendar
days in each calendar month."
No Overadvance shall be permitted after receipt, by Argonaut, of
all the remittances to which it is entitled under Paragraph 4 of the
Intercreditor Agreement.
B. After remittance in full of the payments referred to in Paragraph 4
of the Intercreditor Agreement, the Maintenance Accounts shall no longer
constitute Accounts that qualify as, nor shall there be any loans or advances
made against, the Maintenance Accounts, but the Maintenance Accounts shall
still constitute Collateral for the payment and performance in full of the
Obligations.
<PAGE>
C. Except to the extent amended herein, the Loan Agreement remains in
full force and effect and is hereby ratified and confirmed. The execution of
this First Amendment shall not operate as a waiver of any provision of the
Loan Agreement.
Dated: June 30, 1995 COASTFED BUSINESS CREDIT CORPORATION
By: /s/ [ILLEGIBLE]
------------------------------
Its: SVP
------------------------------
Dated: June 30, 1995 ROSS SYSTEMS, INC.
By: /s/ Selby F. Little, III
------------------------------
Vice President &
Its: Chief Financial Officer
------------------------------
-2-
<PAGE>
EXHIBIT 10.5(d)
COAST
LOAN AND SECURITY AGREEMENT
BORROWER: ROSS SYSTEMS, INC.
ADDRESS: 555 TWIN DOLPHIN DR.
REDWOOD CITY, CALIFORNIA
DATE: OCTOBER 11, 1994
THIS LOAN AND SECURITY AGREEMENT ("Loan Agreement"), dated the above date, is
entered into at Los Angeles, California, between COASTFED BUSINESS CREDIT
CORPORATION ("CoastFed"), a California corporation, with offices at 12121
Wilshire Boulevard, Suite 1111, Los Angeles, California 90025, and the
borrower named above ("Borrower"), whose chief executive office is located at
the above address ("Borrower's Address").
1. LOANS.
1.1 LOANS, COLLATERAL AGREEMENTS. Borrower has requested and may
hereafter request that CoastFed advance funds or otherwise extend credit to
or for the benefit of Borrower ("Loan(s)") in accordance with the terms and
provisions of this Loan Agreement and other written agreements ("Collateral
Agreement(s)"), including, but not limited to, any one or more of the
following described security agreements now or hereafter entered into between
Borrower and CoastFed: (a) Accounts Collateral Security Agreement; (b)
Inventory Collateral Security Agreement; (c) Equipment Collateral Security
Agreement; and (d) any promissory notes or guaranties. The amount and terms
of payment of any Loans by CoastFed to Borrower shall be determined in
accordance with the terms and provisions of this Loan Agreement and of any
executed Collateral Agreements. Notwithstanding anything herein or in any
Collateral Agreement to the contrary, in no event shall the Borrower permit
the total balance of all Loans and all other Obligations outstanding at any
one time to exceed $10,000,000; and, if for any reason they do, Borrower
shall immediately pay the amount of such excess to CoastFed in immediately
available funds.
1.2 INTEREST. Unless specifically provided to the contrary in any
Collateral Agreement, all Loans shall bear interest at a rate equal to the
"Prime Rate" (as hereinafter defined), plus 3% per annum, calculated on the
basis of a 360-day year for the actual number of days elapsed. The interest
rate applicable to all Loans shall be adjusted monthly as of the first day of
each month, and the interest to be charged for that month shall be based on
the highest "Prime Rate" in effect during said month, but in no event shall
the rate of interest charged on any Loans in any month be less than 8% per
annum. "Prime Rate" is defined as the actual "Reference Rate" or the
substitute therefor of the Bank of America NT & SA ("B of A") whether or not
that rate is the lowest interest rate charged by B of A. If the Prime Rate,
as defined, is unavailable, "Prime Rate" shall mean the highest of the prime
rates published in the Wall Street Journal on the first business day of the
month, as the base rate on corporate loans at large U.S. money center
commercial banks.
1.3 FEES. Borrower shall pay to CoastFed a loan origination fee in the
amount of $100,000 concurrently herewith, and an annual loan fee of N/A on
each anniversary of the date hereof during the term of this Loan Agreement.
Said fees are in addition to all other sums payable to CoastFed, are not
refundable for any reason, and shall bear interest from the date due to the
date paid at the highest interest rate applicable to any of the Obligations.
2. DEFINITIONS OF OBLIGATIONS AND COLLATERAL; GRANT OF SECURITY INTEREST.
2.1 OBLIGATIONS. The term "Obligations" as used in this Loan Agreement,
and any and all Collateral Agreements, shall mean and include each and all of
the following: the obligation to pay all Loans and all interest thereon when
due and to pay and perform when due all other indebtedness, liabilities,
obligations, guarantees, covenants, agreements, warranties and
representations of Borrower to CoastFed, whether heretofore, now or hereafter
existing, owing or arising; whether primary, secondary, direct, acquired from
a third party, absolute, contingent, fixed, secured or unsecured; joint or
several, written or oral, monetary or non-monetary; and whether created
pursuant to, or caused by Borrower's breach of, this Loan Agreement, a
Collateral Agreement or any other present or future agreement or instrument,
or created by operation of law or otherwise.
2.2 COLLATERAL. As security and collateral for all Obligations.
Borrower hereby grants to CoastFed a
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<PAGE>
COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
- --------------------------------------------------------------------------------
continuing security interest in, and assigns to CoastFed, all of Borrower's
interest in the types of property described below, whether now owned or
hereafter acquired and wherever located, together with all proceeds
(including insurance proceeds), substitutions, accessions and products
thereof (collectively referred to as "Collateral"):
2.2(a) ACCOUNTS. All accounts, contract rights, chattel paper, and
instruments, and all other obligations now or hereafter owing to Borrower
(hereinafter sometimes collectively referred to as "Accounts"), including,
but not limited to, those described in any Accounts Collateral Security
Agreement executed by Borrower, and all right, title and interest of Borrower
in, and all of Borrower's rights and remedies with respect to, all goods, the
sale or other disposition of which gives rise to any Account, including,
without limitation, all returned, reclaimed and repossessed goods and all
rights of stoppage in transit, replevin, reclamation, and all rights as an
unpaid vendor; and
2.2(b) INVENTORY. All inventory, goods, merchandise, materials, raw
materials, work in process, finished goods, advertising, packaging and
shipping materials, supplies, and all other tangible personal property which
is held for sale or lease or furnished under contracts of service or consumed
in Borrower's business, including, without limitation, any and all of the
foregoing which are returned, repossessed, reclaimed or stopped in transit,
and including, but not limited to, those described in any Inventory
Collateral Security Agreement executed by Borrower, and all warehouse
receipts and other documents or instruments now or hereafter issued with
respect to any of the foregoing; and
2.2(c) EQUIPMENT. All equipment, goods (other than inventory),
machinery, fixtures, trade fixtures, vehicles, furnishings, furniture,
supplies, materials, tools, machine tools, office equipment, appliances,
apparatus, parts, dies, jigs, and chattels, including, but not limited to,
those described in any Equipment Collateral Security Agreement executed by
Borrower; and
2.2(d) INTANGIBLES. All deposit accounts and general intangibles
(including, but not limited to, tax refunds, goodwill, name, drawings,
trademarks, blueprints, trade names, trade secrets, customer lists, patents,
patent applications, copyrights, security deposits, loan commitment fees,
royalties, licenses, processes, and all other rights, privileges and
franchises); and
All personal property of Borrower which comes into CoastFed's
possession, custody or control; and all tangible and intangible personal
property in which CoastFed now has or hereafter acquires a security interest
to secure any or all of the Obligations; and all substitutions, additions and
accessions to any or all of the foregoing items of Collateral; and all
guaranties of and security for any and all of the foregoing; and all books
and records relating to any and all of the foregoing and the equipment
containing said books and records. Payment and performance of the Obligations
are collateralized by the Collateral and by any security interest created in
any other agreement now or hereafter existing between CoastFed and Borrower
unless such other agreement is a deed of trust or other security instrument
having real property or rents from real property as its subject matter and
expressly provides to the contrary.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.
To induce CoastFed to enter into this Loan Agreement and now and
hereafter to enter into any Collateral Agreement, Borrower represents and
warrants that each of the following representations and warranties now is and
hereafter will continue to be true and correct in all respects and Borrower
has and will timely perform each of the following covenants:
3.1 CORPORATE EXISTENCE AND POWER. Borrower, if a corporation, is and
will continue to be, duly authorized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Borrower is and will
continue to be qualified and licensed to do business in all jurisdictions in
which the nature of the business transacted by it, or the ownership or
leasing of its property, makes such qualification or licensing necessary,* and
Borrower has and will continue to have all requisite power and authority to
carry on its business as it is now, or may hereafter be, conducted.
*AND WHERE THE FAILURE TO BE SO QUALIFIED WOULD HAVE A MATERIAL ADVERSE
EFFECT ON THE BORROWER
3.2 AUTHORITY. Borrower is, and will continue to be, authorized to
enter into, to grant security interests in its property pursuant to, and to
perform its obligations under, this Loan Agreement, any Collateral Agreement
and all other instruments and transactions contemplated herein. The
execution, delivery and performance by Borrower of this Loan Agreement, any
Collateral Agreement and all other instruments and transactions contemplated
herein have been validly authorized, are enforceable against the Borrower in
accordance with their terms, and do not violate any law or any provision of
Borrower's** of Incorporation, By-Laws and any Shareholder Agreements.*
*NOR DO THEY VIOLATE ANY MATERIAL PROVISION OF, NOR WILL THEY RESULT IN
ACCELERATION UNDER, ANY MATERIAL AGREEMENT, INDENTURE, NOTE OR INSTRUMENT
WHICH IS BINDING UPON BORROWER, OR ANY OF ITS PROPERTY
**CERTIFICATE
3.3 NAME; TRADE NAMES AND STYLES. Borrower has set forth above its
correct name. Listed on the Schedule hereto are all prior names of Borrower
and each fictitious name, trade name and trade style by which Borrower has
been, or is now, known. Borrower shall provide CoastFed with fifteen (15)
days' advance written notice prior to doing business under any other name,
fictitious name, trade name or trade style. Borrower has complied, and will
hereafter comply, with all laws relating to the conduct of business under,
the ownership of property in, and the renewal or
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<PAGE>
COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
- ------------------------------------------------------------------------------
continuation of the right to use, a corporate, fictitious or trade name or
trade style.
3.4 PLACE OF BUSINESS; LOCATION OF COLLATERAL. Borrower's sole place of
business; or, if Borrower has more than one place of business. Borrower's
chief executive office; or, if Borrower is an individual and does not have a
separate place of business, Borrower's residence is, and will continue to be,
located at Borrower's Address and all of Borrower's books and records,
including, but not limited to, the books and records relating to Borrower's
Accounts, are and will be maintained at Borrower's Address unless and until
CoastFed shall otherwise consent in writing. In addition to Borrower's
Address, Borrower has places of business and Collateral is located only at
the locations shown on the Schedule hereto. Borrower will provide CoastFed
with at least fifteen (15) days advance written notice if Borrower moves any
of the Collateral**, or obtains any additional sites for the conduct of
Borrower's business or the location of any Collateral.
**TO ANY NEW LOCATION NOT PREVIOUSLY REPORTED TO COASTFED
3.5 TITLE TO COLLATERAL; LIENS. Borrower is now, and will at all times
hereafter be, the lawful and sole owner of all the Collateral. With the
exception of the security interest granted CoastFed, the Collateral now is
and will remain free and clear of any and all liens, charges, security
interests, encumbrances and adverse claims*. Without limiting any of
CoastFed's other rights and remedies, if Borrower grants any third party a
lien or encumbrance on or security interest** in any of the Collateral,
CoastFed, in its sole discretion, shall have the right to treat such action
as a notice of termination by Borrower to CoastFed under Paragraph 8(d)
hereof, as of any date subsequent to such grant selected by CoastFed, in its
sole discretion, and to charge Borrower the termination fee therein provided.
CoastFed now has, and will have, a perfected and enforceable first priority
security interest in all of the Collateral***, and Borrower will at all times
defend CoastFed and the Collateral against all claims of others. Borrower is
not and will not become a lessee under any real property lease pursuant to
which the lessor may obtain any rights in any of the Collateral and no such
lease now prohibits, restrains, impairs or will prohibit, restrain or impair
Borrower's right to remove any Collateral from the leased premises****.
Whenever any Collateral is located upon premises in which any third party has
an interest (whether as owner, mortgagee, beneficiary under a deed of trust,
lien or otherwise), Borrower shall, whenever requested by CoastFed, use its
best efforts to cause such third party to execute and deliver to CoastFed, in
form acceptable to CoastFed, whatever waivers and subordinations that
CoastFed specifies, so as to ensure that CoastFed's rights in the Collateral
are, and will continue to be, superior to the rights of any such third party.
Borrower will keep in full force and effect, and will comply with all the
terms of, any lease of real property where any of the Collateral now or in
the future may be located****.
*("LIENS"), OTHER THAN PERMITTED LIENS. AS USED HEREIN "PERMITTED LIENS"
MEANS (i) ANY LIENS EXISTING AS OF THE DATE HEREOF AND DISCLOSED IN SCHEDULE
A HERETO; (ii) LIENS FOR TAXES, FEES, ASSESSMENTS OR OTHER GOVERNMENTAL
CHARGES OR LEVIES, EITHER NOT DELINQUENT OR BEING CONTESTED IN GOOD FAITH BY
APPROPRIATE PROCEEDINGS, PROVIDED THE SAME HAVE NO PRIORITY OVER ANY OF
COASTFED'S SECURITY INTERESTS; (iii) LIENS OF MATERIALMEN, MECHANICS,
WAREHOUSEMEN, CARRIERS, OR EMPLOYEES OR OTHER LIKE LIENS ARISING IN THE
ORDINARY COURSE OF BUSINESS AND SECURING OBLIGATIONS EITHER NOT DELINQUENT
MORE THAN 45 DAYS OR BEING CONTESTED IN GOOD FAITH BY APPROPRIATE
PROCEEDINGS; (iv) ANY JUDGMENT, ATTACHMENT OR SIMILAR LIEN, UNLESS THE
JUDGMENT IT SECURES IS NOT FULLY COVERED BY INSURANCE AND HAS NOT BEEN
DISCHARGED OR EXECUTION THEREOF EFFECTIVELY STAYED AND BONDED AGAINST PENDING
APPEAL WITHIN 30 DAYS OF THE ENTRY THEREOF PROVIDED THAT, IF THE JUDGMENT IS
NOT FULLY COVERED BY INSURANCE OR EXECUTION THEREOF HAS NOT BEEN SO STAYED
AND BONDED, COASTFED SHALL NOT BE REQUIRED TO MAKE ANY LOANS OR OTHERWISE
EXTEND CREDIT TO OR FOR THE BENEFIT OF BORROWER; (v) LIENS (a) UPON OR IN ANY
EQUIPMENT ACQUIRED OR TO BE ACQUIRED, HELD OR LEASED BY THE BORROWER TO
SECURE THE PURCHASE PRICE OF SUCH EQUIPMENT OR INDEBTEDNESS INCURRED SOLELY
FOR THE PURPOSE OF FINANCING THE ACQUISITION OF SUCH EQUIPMENT OR (b)
EXISTING ON SUCH EQUIPMENT AT THE TIME OF ITS ACQUISITION OR LEASE, PROVIDED
THAT THE LIEN IS CONFINED SOLELY TO THE EQUIPMENT SO ACQUIRED AND
IMPROVEMENTS THEREON; (vi) LEASES OR SUBLEASES AND LICENSES OR SUBLICENSES
GRANTED TO OTHERS NOT INTERFERING IN ANY MATERIAL RESPECT WITH THE BUSINESS
OF BORROWER; (vii) ENCUMBRANCES SECURING REIMBURSEMENT OBLIGATIONS OF
BORROWER WITH RESPECT TO COMMERCIAL LETTERS OF CREDIT, PROVIDED THAT SUCH
ENCUMBRANCES SHALL ATTACH ONLY TO DOCUMENTS OR OTHER PROPERTY RELATING TO
SUCH LETTERS OF CREDIT AND PRODUCTS AND PROCEEDS THEREOF THAT ARE NOT
COLLATERAL UNDER THIS AGREEMENT OR ANY OF THE COLLATERAL AGREEMENTS
SUBSEQUENT TO THE DELIVERY OF SUCH PROPERTY TO BORROWER; (viii) LIENS
INCURRED IN CONNECTION WITH THE EXTENSION, RENEWAL OR REFINANCING OF THE
INDEBTEDNESS SECURED BY LIENS OF THE TYPE DESCRIBED IN CLAUSES (i) AND (v)
ABOVE, PROVIDED THAT ANY EXTENSION, RENEWAL OR REPLACEMENT LIEN SHALL BE
LIMITED TO THE PROPERTY ENCUMBERED BY THE EXISTING LIEN AND THE PRINCIPAL
AMOUNT OF THE INDEBTEDNESS BEING EXTENDED, RENEWED OR REFINANCED DOES NOT
INCREASE; (ix) LIENS SECURING DEBT JUNIOR IN PERFECTION AND PRIORITY TO THE
LIEN OF COASTFED WHICH ARE EXPRESSLY SUBORDINATED TO COASTFED ON TERMS
SATISFACTORY TO COASTFED (INCLUDING A PROVISION STATING THAT THE SECURED
PARTY SHALL NOT TAKE ACTION TO ENFORCE ITS LIEN SO LONG AS ANY OF THE
OBLIGATIONS REMAIN OUTSTANDING); (x) LIENS IN FAVOR OF CUSTOMS AND REVENUE
AUTHORITIES WHICH SECURE PAYMENT OF CUSTOMS DUTIES IN CONNECTION WITH THE
IMPORTATION OF GOODS; AND (xi) LIENS WHICH CONSTITUTE RIGHTS OF SET-OFF OF A
CUSTOMARY NATURE OR BANKERS' LIENS ON AMOUNTS ON DEPOSIT, WHETHER ARISING BY
CONTRACT OR BY OPERATION OF LAW, IN CONNECTION WITH ARRANGEMENTS ENTERED INTO
WITH DEPOSITORY INSTITUTIONS IN THE ORDINARY COURSE OF BUSINESS.
-3-
<PAGE>
COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
- -------------------------------------------------------------------------------
**(OTHER THAN A PERMITTED LIEN)
***(OTHER THAN COLLATERAL SUBJECT TO A PERMITTED LIEN) TO THE EXTENT THAT
SUCH SECURITY INTEREST CAN BE PERFECTED BY THE FILING OF STATEMENTS.
****EXCEPT FOR LEASES OF SALES OFFICES AT WHICH NOT MORE THAN $100,000 IN
COLLATERAL IS LOCATED
3.6 MAINTENANCE OF COLLATERAL. Borrower has maintained and will maintain
the Collateral and all of its assets in good working condition, at Borrower's
expense. Borrower will not use the Collateral or any of its other properties
for any unlawful purpose and will not secrete or abandon the Collateral*.
Borrower will immediately advise CoastFed in writing of any material loss or
depreciation of the Collateral.
*EXCEPT FOR THE ABANDONMENT OF WORN-OUT OR OBSOLETE EQUIPMENT OR INVENTORY
IN THE ORDINARY COURSE OF BUSINESS
3.7 BOOKS AND RECORDS. Borrower has maintained and will maintain at
Borrower's Address books and records * an accounting system in accordance
with generally accepted accounting principles. ** Borrower has not and will
not in the future enter into any agreement with any accounting firm, service
bureau or third party to prepare or store Borrower's books and records at any
location other than Borrower's Address, without first obtaining CoastFed's
written consent, which may be conditioned upon such accounting firm, service
bureau or other third party agreeing to give CoastFed the same rights with
respect to access to books and records and related rights as CoastFed has
under Paragraph 4.3 of this Loan Agreement.
*WHICH ARE COMPLETE AND ACCURATE IN ALL MATERIAL RESPECTS AND WHICH
COMPRISE
**WITH THE EXCEPTION OF BOOKS AND RECORDS MORE THAN THREE YEARS OLD,
3.8 FINANCIAL CONDITION AND STATEMENTS. All financial statements now or
hereafter delivered to CoastFed have been, and will be, prepared in
conformity with generally accepted accounting principles and now and
hereafter will * reflect the financial condition of Borrower, at the times
and for the periods therein stated. Since the last date covered by any such
statement, there has been no material adverse change in the financial
condition, operations or any other status of the Borrower. Borrower is now
and will continue to be solvent in both the "equity" and "bankruptcy" sense.
Borrower will deliver to CoastFed a copy of all ** prepared with respect to
Borrower no later than five (5) days after the preparation or receipt thereof
by Borrower. Borrower will cause to be prepared, and will provide CoastFed
(i) within *** days following the end of each fiscal quarter ****, complete
quarterly financial statements reviewed by independent certified public
accountants acceptable to CoastFed, and (ii) within ***** days following the
end of Borrower's fiscal year, complete annual financial statements,
certified by independent certified public accountants acceptable to CoastFed.
*FAIRLY
**FINAL FINANCIAL STATEMENTS LISTED BELOW
***50 DAYS
****OTHER THAN THE FOURTH QUARTER
*****95 DAYS
3.9 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely
filed, and will timely file, all tax returns and reports required by foreign,
federal, state or local law. Borrower has timely paid, and will timely pay,
all foreign, federal, state and local taxes, assessments, deposits and
contributions now or hereafter owed by Borrower. Borrower may defer payment
of any contested taxes provided that Borrower (i) in good faith contests
Borrower's obligation to pay such taxes by appropriate proceedings promptly
and diligently instituted and conducted, (ii) notifies CoastFed in writing of
the commencement of and any material development in such proceedings, and
(iii) posts bonds or takes any other steps required to keep such contested
taxes from becoming a lien against or charge upon any of the Collateral or
other properties of Borrower. Borrower is unaware of any claims or
adjustments proposed for any of Borrower's prior tax years which could result
in additional taxes becoming due and payable by Borrower. Borrower has paid,
and shall continue to pay all amounts necessary to fund all present and
future pension, profit sharing and deferred compensation plans in accordance
with their terms, and Borrower has not and will not withdraw from
participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could
result in any liability of Borrower, including, without limitation, any
liability to the Pension Benefit Guaranty Corporation or its successors or
any other governmental agency. When requested, Borrower will furnish CoastFed
with proof satisfactory to CoastFed of Borrower's making the payment or
deposit of all such taxes and contributions, such proof to be delivered
within five (5) days after the due date established by law for each such
payment or deposit. If Borrower fails or is unable to pay or deposit such
taxes or contributions, CoastFed may, but is not obligated to, pay the same
and treat all such advances as additional Obligations of Borrower. Such
advances shall bear interest at the highest interest rate applicable to any
of the Obligations.
3.10 COMPLIANCE WITH LAW. *Borrower has complied, and will comply, with
all provisions of all foreign, federal, state and local laws and regulations
relating to Borrower, including, but not limited to, those relating to
Borrower's ownership of real or personal property, conduct and licensing of
Borrower's business and employment of Borrower's personnel.
*UNLESS NONCOMPLIANCE WOULD NOT MATERIALLY ADVERSELY AFFECT (I) BORROWER'S
FINANCIAL CONDITION AS REFLECTED IN ITS FINANCIAL STATEMENTS PREVIOUSLY
DELIVERED TO COASTFED; (II) BORROWER'S OPERATIONS; OR (III) BORROWER'S
BUSINESS,
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COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
- ------------------------------------------------------------------------------
3.11 LITIGATION. + is no claim, suit, litigation, proceeding or
investigation pending or threatened by or against or affecting Borrower in
any court or before any regulatory commission, board or other governmental
agency (or any basis therefor known to Borrower) which * result, either
separately or in the aggregate, in any ** adverse change in the business or
condition of Borrower, or in any impairment in the ability of Borrower to
carry on its business in substantially the same manner as it is now being
conducted. Borrower will immediately inform CoastFed in writing of any claim,
proceeding, litigation or investigation hereafter threatened or instituted by
or against Borrower ***.
+EXCEPT AS SET FORTH ON THE SCHEDULE, THERE
*IS REASONABLY LIKELY TO
**MATERIAL
***IN EXCESS OF $250,000
3.12 USE OF PROCEEDS. Borrower is not purchasing or carrying any "margin
stock" (as defined in Regulation G of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan will be used to
purchase or carry any "margin stock" or to extend credit to others for the
purpose of purchasing or carrying any "margin stock." All proceeds of all
Loans shall be used solely for lawful business purposes.
3.13 CONTINUING EFFECT. All representations, warranties and covenants of
Borrower contained in this Loan Agreement and any Collateral Agreement and
any other agreement with CoastFed shall be true and correct at the time of
the effective date of each such agreement and shall be deemed continuing and
shall remain true, correct and in full force and effect until payment and
satisfaction in full of all of the Obligations, and Borrower acknowledges that
CoastFed is and will be expressly relying on such representations, warranties
and covenants in making Loans to Borrower.
4. ADDITIONAL DUTIES OF BORROWER.
4.1 INSURANCE. Borrower shall, at all times, at Borrower's expense,
insure all of the Collateral and carry such other business insurance with
insurers * acceptable to CoastFed, in such form and amounts as CoastFed may *
require. All such insurance policies shall name CoastFed as an additional
loss payee, shall provide that proceeds payable thereunder be payable
directly to CoastFed unless written authority to the contrary is obtained,
and shall also provide that no act or default of Borrower or any other person
shall affect the right of CoastFed to recover thereunder and shall contain a
lenders loss payee endorsement in form acceptable to CoastFed. Upon receipt of
the proceeds of any such insurance, CoastFed shall apply such proceeds in
reduction of the Obligations as CoastFed shall determine in its sole and
absolute discretion **. If Borrower fails to provide or pay for any such
insurance, CoastFed may, but is not obligated to, procure the same at
Borrower's expense. Borrower agrees to deliver to CoastFed, promptly as
rendered, copies of all *** reports made to all insurance companies.
*REASONABLY
**PROVIDED THAT IF NO EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, AND
THE PROCEEDS ARE LESS THAN $1,000,000 COASTFED SHALL RELEASE THE SAME TO THE
BORROWER FOR THE REPAIR OR REPLACEMENT OF THE PROPERTY AFFECTED
***MATERIAL
4.2 REPORTS. At its expense, Borrower shall report, in form satisfactory
to CoastFed, such information as CoastFed may from time to time * specify
regarding Borrower or the Collateral; such reports shall be rendered with
such frequency as CoastFed may * specify. All reports furnished CoastFed shall
be complete and accurate in all ** respects.
*REASONABLY **MATERIAL
4.3 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At any time CoastFed, or
its agents, shall have immediate access to the Collateral and any other
property of Borrower, wherever located*. CoastFed shall have the right to
audit and copy Borrower's books and records and accounts including
accountants' reports wherever located (hereinafter collectively the
"Records"). Borrower hereby irrevocably authorizes and directs any of the
officers, agents, accountants and attorneys having possession or control of
any of the Records (including computer records) to physically deliver or make
same available to CoastFed upon CoastFed's request. CoastFed shall have the
right to possession of, or to move to the premises of CoastFed or any agent
of CoastFed, for so long as CoastFed may desire, all or any part of the
Records.**
*PROVIDED THAT IF NO EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, SUCH
ACCESS SHALL BE ON ONE BUSINESS DAY'S NOTICE AND DURING NORMAL BUSINESS HOURS
**ALL OF THE RIGHTS OF COASTFED UNDER THIS SECTION 4.3 SHALL BE SUBJECT TO
THE PROVISIONS OF SECTION 14.11 OF THIS AGREEMENT.
4.4 PROHIBITED TRANSACTIONS. Borrower shall not without CoastFed's prior
written consent; merge, consolidate, dissolve, acquire any other corporation;
enter into any transaction not in its usual course of business; guarantee or
otherwise become in any way liable with respect to the obligations of another
party or entity (except by endorsements of instruments or items of payment
for deposit to the general account of Borrower or which are transmitted or
turned over to CoastFed on account of the Obligations+); pay or declare any
dividends upon Borrower's stock++,; redeem, retire, purchase or otherwise
acquire +++, directly or indirectly, any of Borrower's stock; make any change
in Borrower's name, identity, corporate or capital structure*; sell or
transfer any Collateral, except for the sale of finished inventory in the
ordinary course of Borrower's business**; lend or distribute any of
Borrower's property or assets, or incur any debts***, outside of the
ordinary course of Borrower's business.
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COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
- ------------------------------------------------------------------------------
+EXCEPT THAT BORROWER MAY ISSUE GUARANTEES IN THE ORDINARY COURSE OF ITS
BUSINESS IN AN AGGREGATE AMOUNT AT ANY ONE TIME OUTSTANDING NOT TO EXCEED
$500,000.
++[OMITTED]
+++(EXCEPT THAT BORROWER MAY REPURCHASE OR REDEEM SHARES OF ITS CAPITAL
STOCK PURSUANT TO EMPLOYEE OPTION PLANS FOR AN AGGREGATE PURCHASE PRICE, NOT
TO EXCEED $100,000 PER FISCAL YEAR, ON A NON-CUMULATIVE BASIS)
*(EXCEPT THAT BORROWER MAY ISSUE COMMON STOCK UPON EXERCISE OF STOCK
OPTIONS, SELL SHARES OF ITS CAPITAL STOCK FOR CASH, AND ISSUE CONVERTIBLE
DEBENTURES SUBORDINATE IN ALL RESPECTS TO THE OBLIGATIONS PURSUANT TO
SUBORDINATION PROVISIONS ACCEPTABLE TO COASTFED IN ITS DISCRETION)
**[OMITTED]
***EXCEPT FOR (II) INDEBTEDNESS FOR BORROWED MONEY EXISTING ON THE DATE OF
THIS AGREEMENT, LISTED AND DESCRIBED, BUT ONLY TO THE EXTENT SO LISTED AND
DESCRIBED, ON SCHEDULE ATTACHED HERETO; (III) INDEBTEDNESS WITH RESPECT TO
CAPITALIZED LEASES OR FOR THE PURCHASE PRICE OF CAPITAL ASSETS INCURRED IN
THE ORDINARY COURSE OF BUSINESS SO LONG AS THE AGGREGATE AMOUNT OF
INDEBTEDNESS PERMITTED BY THIS CLAUSE (III) SHALL NOT EXCEED $1,000,000 IN
ANY FISCAL YEAR; (IV) INDEBTEDNESS OF BORROWER TO SUBSIDIARIES INCURRED IN
THE ORDINARY COURSE OF BUSINESS AND CONSISTENT WITH THE PAST PRACTICES; (V)
INDEBTEDNESS OF BORROWER TO VIRTUAL DISCORP OR ROSS SYSTEMS SALES CORPORATION
INCURRED IN THE ORDINARY COURSE OF BUSINESS AND CONSISTENT WITH PAST
PRACTICES (PROVIDED THAT SUCH INDEBTEDNESS MAY NOT BE REPAID BY ROSS WITHOUT
THE PRIOR WRITTEN CONSENT OF THE COASTFED); AND (VI) EXTENSIONS,
REFINANCINGS, MODIFICATIONS, AMENDMENTS AND RESTATEMENTS OF ANY OF THE ITEMS
OF PERMITTED INDEBTEDNESS SET FORTH IN CLAUSES (I) THROUGH (V) ABOVE,
PROVIDED THAT THE AMOUNT THEREFOR IS NOT INCREASED AND THE TERMS THEREOF ARE
NOT MODIFIED TO IMPOSE MORE BURDENSOME TERMS UPON BORROWER. "SUBSIDIARY" FOR
PURPOSES OF THE FOREGOING MEANS ANY CORPORATION MORE THAN 50% OF THE
OUTSTANDING VOTING STOCK OF WHICH IS OWNED, DIRECTLY OR INDIRECTLY, BY THE
BORROWER.
4.5 NOTIFICATION OF CHANGES. Borrower will promptly notify CoastFed in
writing of any change of its officers, directors, the death of any partner or
joint venturer, any purchase * out of the regular course of Borrower's
business, the opening of any new bank account or other deposit account, and
any adverse or material change in the business or financial affairs of
Borrower.
*IN EXCESS OF $500,000
4.6 CHARGES. Borrower shall pay all charges assessed by CoastFed, in
accordance with CoastFed's schedule of charges in effect from time to time,
and such charges shall be part of the Obligations and shall be payable on
demand.
4.7 LITIGATION COOPERATION. Should any suit or proceeding be instituted
by or against CoastFed with respect to any Collateral or for the collection or
enforcement of any Account, or in any manner relating to Borrower, Borrower
shall, without expense to CoastFed, and wherever and whenever designated by
CoastFed, make available Borrower and its officers, employees and agents and
Borrower's Records to the extent that CoastFed may deem * necessary in order
to prosecute or defend any such suit or proceeding **.
*REASONABLY
** ; PROVIDED THAT THE FOREGOING PROVISIONS OF THIS SECTION 4.7 WILL NOT
APPLY TO ANY CLAIM ASSERTED BY COASTFED AGAINST BORROWER.
4.8 REMITTANCE OF PROCEEDS. All proceeds arising from the disposition of
the Collateral shall be delivered, in kind, by Borrower to CoastFed in the
original form in which received by Borrower not later than the following
business day after receipt by Borrower*. Borrower agrees that it will not
commingle proceeds of Collateral with any of Borrower's other funds or
property, but will hold such proceeds separate and apart from such other
funds and property and in an express trust for CoastFed. CoastFed may from
time to time verify directly with the respective account debtors the
validity, amount and any other matters relating to the Accounts by means of
mail, telephone or otherwise either in the name of Borrower or CoastFed or
such other name as CoastFed may choose.
*EXCEPT WIRE TRANSFER REMITTANCES RECEIVED BY BORROWER SHALL BE
TRANSMITTED TO COASTFED IN TOTAL THE DAY FOLLOWING POSTING TO BORROWER'S BANK
ACCOUNT
4.9 EXECUTE ADDITIONAL DOCUMENTATION. Borrower agrees, at its expense,
on demand by CoastFed, to execute all documents in form satisfactory to
CoastFed, as CoastFed, in its sole discretion, may deem * necessary or useful
in order to perfect and maintain CoastFed's perfected first-priority or any
other security interest in the Collateral, and in order to fully consummate
all of the transactions contemplated under this Loan Agreement and under any
Collateral Agreement.
*REASONABLY
5. APPLICATION OF PAYMENTS.
All forms of payments delivered to CoastFed on account of the Obligations
constitute conditional payment only until such items are actually paid in
cash to CoastFed; solely for the purpose of computing interest earned by
CoastFed, credit therefor and for bank wire transfers shall be given as of
the * business day after receipt by CoastFed in order to allow for clearance,
bookkeeping and computer entries. All payments made by Borrower may be
applied, and in CoastFed's sole discretion reversed and re-applied, in whole or
in part to any of the Obligations, in such order and manner as CoastFed shall
determine in its sole discretion.
*THIRD
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<PAGE>
COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
- ------------------------------------------------------------------------------
6. EVENTS OF DEFAULT AND REMEDIES.
6.1 EVENTS OF DEFAULT. If any of the following events shall occur, such
an occurrence shall constitute an "Event of Default" and Borrower shall
provide CoastFed with immediate written notice thereof: (a) Any warranty,
representation, statement, report or certificate made or delivered to
CoastFed by Borrower or any of Borrower's officers, employees or agents now
or hereafter shall be incorrect, false, untrue or misleading in any material
respect; or (b) Borrower shall fail to repay when due part or all of any Loan
or to pay any interest thereon when due; or (c) Borrower shall fail to
perform when due any term or condition contained in this Loan Agreement or in
any Collateral Agreement, or any other agreement between CoastFed and
Borrower; or (d) Borrower shall fail to pay or perform any other Obligation
when due *****; or (e) Any loss, theft, or substantial damage to, or
destruction of, any or all of the Collateral (unless within five (5) days
after the occurrence of any such event. Borrower furnishes CoastFed with
evidence satisfactory to CoastFed that the amount of any such loss, theft,
damage to or destruction of the Collateral is fully insured under policies
designating CoastFed as the exclusive additional named insured*); or (f) A
material impairment of the prospect of payment or performance of the
Obligations or a material impairment of the value of the Collateral or any
impairment in the priority of CoastFed's security interest; or (g) Any event
shall arise which may result or actually results in the acceleration of the
maturity of the indebtedness of Borrower to others + under any loan or other
agreement or undertaking; or (h) Any levy, assessment, attachment, seizure,
lien or encumbrance ** for any cause or reason whatsoever, upon all or any
part of the Collateral or any other asset of Borrower (unless discharged by
payment, release or fully bonded against not more than ten (10) days after
such event has occurred); or (i) Dissolution, termination of existence,
insolvency or business failure of Borrower; or appointment of a receiver,
trustee or custodian, for all or any part of the property of, assignment for
the benefit of creditors by, or the commencement of any proceeding by or
against, Borrower under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction, now or hereafter in effect; or entry of a court or
governmental order which enjoins, restrains or in any way prevents Borrower
from conducting all or any part of its business; or failure to pay any
foreign, federal, state or local tax or other debt of Borrower unless, with
respect to any such tax, Borrower complies with the provisions of Paragraphs
3.9 (i), (ii), and (iii); or (j) A notice of lien, levy or assessment is
filed of record with respect to any of Borrower's assets by the United
States or any department, agency or instrumentality thereof, or by any state,
county, municipal or other governmental agency, or if any taxes or debts now
or hereafter owing to any one or more of them becomes a lien ** upon all or
any of the Collateral or any other assets of Borrower (other than a lien for
real property taxes which are not yet due and payable); or (k) Death,
insolvency or incompetency of any guarantor of the Obligations; appointment
of a conservator or guardian of the person of any such guarantor;
appointment of a conservator, guardian, trustee, custodian or receiver of all
or any part of the assets, property or estate of, any such guarantor;
revocation or termination of, or limitation of liability upon, any guaranty
of the Obligations; or commencement of proceedings by or against any
guarantor or surety for Borrower under any bankruptcy or insolvency law; or
(l) Borrower makes any payment on account of any indebtedness or obligation
which has been subordinated to the Obligations *** or if any person who has
subordinated such indebtedness or obligations terminates or in any way limits
his subordination agreement; or (m) Borrower shall generally not pay its
debts as they become due or shall enter into any agreement (whether written
or oral), or offer to enter into any such agreement, with all or a
significant number of its creditors regarding any moratorium or other
indulgence with respect to its debts or the participation of such creditors
or their representatives in the supervision, management or control of the
business of Borrower; or Borrower shall conceal, remove or transfer any part
of its property, with intent to hinder, delay or defraud its creditors,
or make or suffer any transfer of any of its property which may be fraudulent
under any bankruptcy, fraudulent conveyance or similar law, or shall make any
transfer of its property to or for the benefit of any creditor at a time when
other creditors similarly situated have not been paid ****.
+IN EXCESS OF $1,000,000
*OTHER THAN LESSORS OF REAL PROPERTY TO BORROWER
**(OTHER THAN PERMITTED LIENS)
***IN VIOLATION OF THE APPLICABLE SUBORDINATION AGREEMENT
****(EXCEPT FOR INDIVIDUALLY NEGOTIATED EXTENSIONS OF TRADE DEBT, LEASES
OR OTHER OBLIGATIONS)
*****OR WITHIN ANY APPLICABLE GRACE PERIOD
6.2 REMEDIES. Upon the occurrence of any Event of Default, and at any
time thereafter, CoastFed, at its option, and without notice or demand of any
kind (all of which are hereby expressly waived by Borrower)*, may do any one
or more of the following: (a) Cease advancing money or extending credit to or
for the benefit of Borrower under this Loan Agreement, any Collateral
Agreement, and any other document or agreement; (b) Accelerate and declare
all or any part of the Obligations to be immediately due, payable, and
performable notwithstanding any deferred or installment payments allowed by
any instrument evidencing or relating to any Obligation; (c) Take possession
of any or all of the Collateral wherever it may be found, and for that
purpose Borrower hereby authorizes CoastFed without judicial process to enter
onto any of the Borrower's premises without hindrance to search for, take
possession of, keep, store, or remove any of the Collateral and remain on
such premises or cause a custodian to remain thereon in exclusive control
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<PAGE>
COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
- --------------------------------------------------------------------------------
thereof without charge for so long as CoastFed deems necessary in order to
complete the enforcement of its rights under this Loan Agreement or any
Collateral Agreement, or any other agreement; provided, however, that should
CoastFed seek to take possession of any or all of the Collateral by Court
process. Borrower hereby irrevocably waives: (i) any bond and any surety or
security relating thereto required by any statute, court rule or otherwise as
an incident to such possession; (ii) any demand for possession prior to the
commencement of any suit or action to recover possession thereof; and (iii)
any requirement that CoastFed retain possession of and not dispose of any
such Collateral until after trial or final judgment; (d) Require Borrower to
assemble any or all of the Collateral and make it available to CoastFed at a
place or places to be ***designated by CoastFed which are reasonably
convenient to CoastFed and Borrower, and to remove the Collateral to such
locations as CoastFed may deem advisable; (e) Complete processing,
manufacturing or repair of all or any portion of the Collateral prior to a
disposition thereof and, for such purpose and for the purpose of removal,
CoastFed shall have the right to use Borrower's premises, vehicles, hoists,
lifts, cranes, equipment and all other property without charge. Without
limiting any security interest granted CoastFed in other provisions of this
Loan Agreement or in any Collateral Agreement or other agreement, for the
purpose of completing manufacturing, processing or repair of Collateral and
the disposition thereof. CoastFed is hereby granted a security interest in,
and CoastFed and any purchaser from CoastFed may use without charge, all of
the Borrower's plant, machinery, equipment, labels, licenses, processes,
patents, patent applications, copyrights, names, trade names, trademarks,
trade secrets, logos, advertising material and all other assets, and may also
utilize all of Borrower's rights under any license or franchise agreement;
(f) Sell, ship, reclaim, lease or otherwise dispose of all or any portion of
the Collateral in its condition at the time CoastFed obtains possession or
after further manufacturing, processing or repair, at any one or more public
and/or private sales (including execution sales), in lots or in bulk, for
cash, exchange or other property or on credit and to adjourn any such sale
from time to time without notice other than oral announcement at the time
scheduled for sale. CoastFed shall have the right to conduct such disposition
on Borrower's premises without charge for such time or times as CoastFed
deems fit, or on CoastFed's premises, or elsewhere and the Collateral need
not be located at the place of disposition. CoastFed may directly or through
any affiliated company purchase or lease any Collateral at any such public
disposition and if permissible under applicable law, at any private
disposition. Any sale or other disposition of Collateral shall not relieve
Borrower of any liability Borrower may have if any Collateral is defective as
to title or physical condition or otherwise at the time of sale; (g) Demand
payment of, and collect any Accounts and general intangibles comprising part
or all of the Collateral and, in connection therewith, Borrower irrevocably
authorizes CoastFed to endorse or sign Borrower's name on all collections,
receipts, instruments and other documents, to take possession of and open
mail addressed to Borrower and remove therefrom payments made with respect to
any item of the Collateral or proceeds thereof, and, in CoastFed's sole
discretion, to grant extensions of time to pay, compromise claims and settle
Accounts and the like for less than face value; (h) Demand and receive
possession of any of Borrower's federal and state income tax returns and the
Records utilized in the preparation thereof or referring thereto. All
attorney's fees, expenses, costs, liabilities and obligations incurred by
CoastFed with respect to the foregoing shall be added to and become part of
the Obligations, shall be due on demand, and shall bear interest at a rate
equal to the highest interest rate applicable to any of the Obligations.
*(EXCEPT THAT, PRIOR TO OR CONCURRENTLY WITH THE TAKING OF THE FIRST OF
ANY OF THE FOLLOWING ACTIONS, COASTFED SHALL GIVE BORROWER ONE GENERAL
WRITTEN NOTICE STATING THAT COASTFED IS "PROCEEDING TO EXERCISE ITS RIGHTS
AND REMEDIES" OR WORDS TO THAT EFFECT)
**[OMITTED]
***REASONABLY
6.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and
CoastFed agree that the following conduct by CoastFed with respect to any
disposition of Collateral shall conclusively be deemed commercially
reasonable (but other conduct by CoastFed, including, but not limited to,
CoastFed's use in its sole discretion of other or different times, places and
manners of noticing and conducting any disposition of Collateral shall not be
deemed unreasonable): Any public or private disposition as to which on no
later than the *calendar day prior thereto written notice thereof is mailed
or personally delivered to Borrower and, with respect to any public
disposition, on no later than the *calendar day prior thereto notice thereof
describing in general non-specific terms, the Collateral to be disposed of is
published once in a newspaper of general circulation in the county where the
sale is to be conducted, at any place designated by CoastFed, with or without
the Collateral being present, and which commences at any time between 8:00
a.m. and 5:00 p.m. Without limiting the generality of the foregoing, Borrower
expressly agrees that, with respect to any disposition of Accounts,
instruments and general intangibles (collectively "Receivables"), it shall be
commercially reasonable for CoastFed to direct any prospective acquirer
thereof to ascertain directly from Borrower any and all information (and
CoastFed shall not be required to maintain records of, or answer any
inquiries) concerning the Receivables offered for disposition, including, but
not limited to, the terms of payment, aging and delinquency, if any, of the
Receivables, the financial condition of any obligor or account debtor thereon
or guarantor thereof, any collateral therefor and the condition and location
of the goods, if any, that are the subject of any of the Receivables.
*TENTH
6.4 APPLICATION OF PROCEEDS. All proceeds realized as the result of any
disposition of the Collateral shall be applied by
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COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
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CoastFed first to the costs, expenses, liabilities, obligations and
attorneys' fees incurred by CoastFed in the exercise of its rights under this
Loan Agreement and any Collateral Agreement, second to the interest due upon
any of the Obligations and third to the principal of the Obligations in any
order determined by CoastFed in its sole discretion. The surplus, if any,
shall be paid to Borrower; if any deficiency shall arise, Borrower shall
remain liable to CoastFed therefor. If, as a result of the disposition of any
of the Collateral, CoastFed directly or indirectly enters into a credit
transaction with any third party, CoastFed shall have the option, exercisable
at any time, in its sole discretion, of either reducing the Obligations by
the principal amount of such credit transaction or deferring the reduction
thereof until the actual receipt by CoastFed of cash therefor from such third
party.
6.5 REMEDIES CUMULATIVE. In addition to the rights and remedies set
forth in this Loan Agreement and any Collateral Agreement, CoastFed shall
have all the other rights and remedies accorded a secured party under the
California Uniform Commercial Code and under any and all other applicable
laws and in any other instrument or agreement now or hereafter entered into
between CoastFed and Borrower and all of such rights and remedies are
cumulative and none is exclusive. Exercise or partial exercise by CoastFed
of one or more of its rights or remedies shall not be deemed an election, nor
bar CoastFed from subsequent exercise or partial exercise of any other rights
or remedies. The failure or delay of CoastFed to exercise any rights or
remedies shall not operate as a waiver thereof, but all rights and remedies
shall continue in full force and effect until all of the Obligations have
been fully paid and performed.
7. POWER OF ATTORNEY.
Borrower grants to CoastFed an irrevocable power of attorney coupled with
an interest, authorizing and permitting CoastFed (acting through any of its
employees, attorneys or agents) at any time, at its option, but without
obligation, with or without notice to Borrower, and at Borrower's expense, to
do any or all of the following, in Borrower's name or otherwise: (a) Execute
on behalf of Borrower any documents that CoastFed may, in its sole and
absolute discretion, deem advisable in order to perfect, maintain or improve
CoastFed's security interest in the Collateral or other real or personal
property intended to constitute Collateral, or in order to exercise a right
of Borrower or CoastFed, or in order to fully consummate all the transactions
contemplated under this Loan Agreement, any Collateral Agreement and all
other present and future agreements; (b) At any time after the occurrence of
an Event of Default, to execute on behalf of Borrower any document
exercising, transferring or assigning any option to purchase, sell or
otherwise dispose of or to lease (as lessor or lessee) any real or personal
property which is part of CoastFed's Collateral or in which CoastFed has an
interest; (c) Execute on behalf of Borrower, any invoices relating to any
Account, any draft against any Account debtor and any notice to any Account
debtor, any proof of claim in bankruptcy, any Notice of Lien, claim of
mechanic's, materialman's or other lien, or assignment or satisfaction of
mechanic's, materialman's or other lien; (d) * Take control in any manner of
any cash or non-cash items of payment or proceeds of Collateral; endorse the
name of Borrower upon any instruments, or documents, evidence of payment or
Collateral that may come into CoastFed's possession; (e) Upon the occurrence
of any Event of Default, to receive and open all mail addressed to Borrower;
(f) Endorse all checks and other forms of remittances received by CoastFed
"Pay to the Order of CoastFed Business Credit Corporation," or in such other
manner as CoastFed may designate; (g) ** Pay, contest or settle any lien,
charge, encumbrance, security interest and adverse claim in or to any of the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (h) **Grant extensions of time to pay,
compromise claims and settle Accounts and the like for less than face value
and execute all releases and other documents in connection therewith; (i) Pay
any sums required on account of Borrower's taxes or to secure the release of
any liens therefor, or both; (j) Settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain payment
therefor; (k) Instruct any third party having custody or control of any books
or records belonging to, or relating to, Borrower to give CoastFed the same
rights of access and other rights with respect thereto as CoastFed has under
Paragraph 4.3 of this Loan Agreement; and (I) Take any action or pay any sum
required of Borrower pursuant to this Loan Agreement, any Collateral
Agreement and any other present or future agreements. Any and all sums paid
and any and all costs, expenses, liabilities, obligations and attorneys' fees
incurred by CoastFed with respect to the foregoing shall be added to and
become part of the Obligations, shall be payable on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of
the Obligations. In no event shall CoastFed's rights under the foregoing
power of attorney or any of CoastFed's other rights under this Loan Agreement
or any Collateral Agreement be deemed to indicate that CoastFed is in control
of the business, management or properties of Borrower.
*SUBJECT TO THE TERMS OF THIS AGREEMENT AND ANY COLLATERAL AGREEMENTS
**AFTER AN EVENT OF DEFAULT
8. TERMINATION.
This Loan Agreement and all Collateral Agreement(s) shall continue in
effect until OCTOBER 31, 1995 (the "initial renewal date") and shall
thereafter automatically and continuously renew for successive additional
terms of ONE year(s) each unless terminated as to future transactions as
hereinafter provided. (The initial renewal date and each subsequent date on
which the terms of this Loan Agreement and the Collateral Agreement(s)
automatically renew are hereinafter referred to as "renewal dates.") This
Loan
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<PAGE>
COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
- ------------------------------------------------------------------------------
Agreement and any Collateral Agreement may be terminated, as to future
transactions only, as follows: (a) By written notice from either CoastFed or
Borrower to the other, not less than sixty (60) days prior to the next
renewal date, in which event termination shall be effective on the next
renewal date; or (b) By CoastFed at any time after the occurrence of an Event
of Default, without notice, in which event termination shall be effective
immediately; or (c) By sixty (60) days' prior written notice from Borrower to
CoastFed, in which event, termination shall be effective on the sixtieth day
after such notice is given; or (d) By the grant by Borrower to any third
party of a lien or encumbrance on, or security interest in, any of the
Collateral *, as provided in Paragraph 3.5, in which event termination shall
be effective on the date selected by CoastFed pursuant to Paragraph 3.5. On
the effective date of termination, Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether
or not all or any part or such Obligations are otherwise then due and
payable. If Borrower attempts to terminate this Loan Agreement under
subparagraph (a) or (c) above, but does not pay and perform all Obligations
in full on the effective date of termination, then CoastFed may elect, by
written notice to Borrower, to continue this Loan Agreement and all
Collateral Agreement(s) in full force and effect until the next renewal date
and in that event this Loan Agreement and all Collateral Agreement(s) shall
automatically renew thereafter as provided above. If termination occurs under
subparagraph (b), (c) or (d) above, Borrower shall pay to CoastFed a
termination fee in an amount equal to $10,000 for each month (or portion
thereof) from the effective date of termination to the date which would have
been the next renewal date had this Loan Agreement not been terminated. Said
termination fee shall be included in the Obligations, shall be payable on the
effective date of termination, and shall bear interest at a rate equal to the
highest interest rate applicable to any of the Obligations. Notwithstanding
any termination of this Loan Agreement or any Collateral Agreement, all of
CoastFed's security interest in all of the Collateral and all of the terms
and provisions of this Loan Agreement and all Collateral Agreement(s) shall
continue in full force and effect until all Obligations have been paid and
performed in full, and no termination shall in any way affect or impair any
right or remedy of CoastFed, nor shall any such termination relieve Borrower
of any Obligation to CoastFed until all of the Obligations have been paid and
performed in full. Without limiting the fact that all Loans are discretionary
on the part of CoastFed, CoastFed may, in its sole discretion, refuse to make
any further Loans after termination. Upon payment and performance in full of
all the Obligations, CoastFed shall promptly deliver to Borrower termination
statements, request for reconveyances and such other documents as may be
required to fully terminate any of CoastFed's security interests.
*OTHER THAN PERMITTED LIENS
9. NOTICES
All notices to be given hereunder shall be in writing and shall be served
either personally * or by depositing the same in the United States mail,
postage prepaid, by regular first-class mail, or by certified mail, return
receipt requested, addressed to CoastFed or Borrower at the addresses shown
above, or at any other address as shall be designated by one party in a
written notice to the other party. Any such notice shall be deemed to have
been given upon delivery in the case of notices personally delivered to
Borrower or to an officer of CoastFed, ** or at the expiration of ***
business days following the deposit thereof in the United States mail, with
postage prepaid (except that any notice of disposition referred to in
Paragraph 6.3 hereof that is mailed shall be deemed given at the time of
deposit thereof in the United States mail, with postage prepaid). If there is
more than one Borrower, notice to any Borrower shall constitute notice to
all; if Borrower is a corporation, the service upon any member of the Board
of Directors, officer, employee or agent shall constitute service upon the
corporation.
*OR BY FEDERAL EXPRESS OR OTHER RECOGNIZED PRIVATE DELIVERY SERVICE
("PRIVATE DELIVERY")
**OR AT THE EXPIRATION OF ONE (1) BUSINESS DAY AFTER THE DATE SENT BY
PRIVATE DELIVERY,
***THREE (3)
10. GENERAL WAIVERS.
The failure of CoastFed at any time or times hereafter to require Borrower
to strictly comply with any of the provisions of this Loan Agreement or any
Collateral Agreement or any other present or future agreement between
Borrower and CoastFed shall not waive or diminish any right of CoastFed
thereafter to demand and receive strict compliance therewith. Any waiver of
any default shall not waive or affect any other default, whether prior or
subsequent thereto. None of the provisions of this Loan Agreement or any
Collateral Agreement or other agreement now or hereafter executed by Borrower
and delivered to CoastFed shall be deemed to have been waived by any act or
knowledge of CoastFed or its agents or employees, but only by a specific
written waiver signed by an officer of CoastFed and delivered to Borrower.
Borrower waives the benefit of all statute(s) of limitations in any action or
proceeding based upon or arising out of this Loan Agreement or any Collateral
Agreement or any other present or future instrument or agreement between
CoastFed and Borrower. Borrower waives any and all notices or demands which
Borrower might be entitled to receive with respect to this Loan Agreement,
any Collateral Agreement, or any other agreement by virtue of any applicable
law. Borrower hereby waives demand, protest, notice of protest and notice of
default or dishonor, notice of payment and nonpayment, release, compromise,
settlement, extension or renewal of any commercial paper, instrument, Account,
general intangible, document or guaranty at any time held by CoastFed on
which Borrower is or may in any way be liable, and notice of any action taken
by CoastFed unless expressly required by this Loan Agreement or any
Collateral Agreement. Borrower hereby ratifies and confirms
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<PAGE>
COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
- --------------------------------------------------------------------------------
whatever CoastFed may do *pursuant to this Loan Agreement and any Collateral
Agreement and agrees that CoastFed shall not be liable for (a) the
safekeeping of the Collateral or any loss or damage thereto, or diminution in
value thereof, from any cause whatsoever**, or (b) any act or omission of any
carrier, warehouseman, bailee, forwarding agent or other person, or (c) any
act of commission or any omission by CoastFed or its officers, employees,
agents, or attorneys, or any of its or their errors of judgment or mistakes
of fact of law***.
*IN A COMMERCIALLY REASONABLE MANNER
**UNLESS ANY DAMAGE THERETO IS CAUSED BY COASTFED'S GROSS NEGLIGENCE OR
WILFUL MISCONDUCT
***EXCEPT FOR COASTFED'S GROSS NEGLIGENCE OR WILFUL MISCONDUCT
11. ATTACHMENT WAIVERS.
To the extent that CoastFed, in its sole and absolute discretion,
determines, prior to the disposition of all of the Collateral, that the
amount to be realized by CoastFed from the disposition of all of the
Collateral may be less than the amount of the Obligations, and to the full
extent of any such anticipated deficiency, Borrower waives the benefit of
Section 483.010 (b) of the California Code of Civil Procedure and of any and
all other statutes requiring CoastFed to first resort to and exhaust all of
the Collateral before seeking or obtaining any attachment remedy against
Borrower, and Borrower expressly agrees that, to the extent of such
anticipated deficiency, CoastFed shall have all of the rights of an unsecured
creditor, including, but not limited to, the right of CoastFed, prior to the
disposition of all of the Collateral, to obtain a temporary protective order
and writ of attachment or other available remedy. CoastFed shall have no
liability to Borrower if the actual deficiency realized by CoastFed is less
than the anticipated deficiency on the basis of which CoastFed obtained a
temporary protective order or writ of attachment. In the event CoastFed
should seek a temporary protective order, or writ of attachment, or both,
Borrower hereby irrevocably waives any bond and any surety or security
relating thereto required by any statute, court rule or otherwise as an
incident or condition precedent to the issuance of any temporary protective
order or writ of attachment.
12. ATTORNEYS' FEES AND COSTS.
Borrower shall forthwith pay to CoastFed the amount of all *attorneys'
fees and all filing, recording, publication, search and other costs incurred
by CoastFed pursuant to this Loan Agreement, any Collateral Agreement or any
other present or future agreement or in connection with any transaction
contemplated hereby, or with respect to the Collateral or the defense or
enforcement of its interests (whether or not CoastFed files a lawsuit against
Borrower). Without limiting the generality of the foregoing, Borrower shall,
with respect to each and all of the foregoing, pay all attorneys' fees and
costs CoastFed incurs in order to obtain legal advice; enforce, or seek to
enforce, any of its rights; prosecute actions against, or defend actions by,
Account debtors; commence, intervene in, respond to, or defend any action or
proceeding; initiate any complaint to be relieved of the effect of the
automatic stay in bankruptcy in order to commence or continue any foreclosure
or other disposition of the Collateral or to commence, defend or continue any
action or other proceeding in or out of bankruptcy against Borrower or
relating to the Collateral; file or prosecute a claim or right in any action
or proceeding, including, but not limited to, any probate claim, bankruptcy
claim, third-party claim, secured creditor claim or reclamation complaint;
examine, audit, count, test, copy, or otherwise inspect any of the Collateral
or any of Borrower's books and records; or protect, obtain possession of,
lease, dispose of, or otherwise enforce any security interest in or lien on,
the Collateral or represent CoastFed in any litigation with respect to
Borrower's affairs. Without limiting the generality of the foregoing,
Borrower shall reimburse CoastFed for its out of pocket costs in connection
with CoastFed's regular quarterly audits of Borrower and Borrower shall pay
CoastFed an audit fee of $1,250 for each such quarterly audit. If either
CoastFed or Borrower files any lawsuit against the other predicated on a
breach of this Loan Agreement or any Collateral Agreement, the prevailing
party in such action shall be entitled to recover its costs and attorneys'
fees, including, but not limited to, attorneys' fees and costs incurred in
the enforcement of, execution upon or defense of any order, decree, award or
judgment. All attorneys' fees and costs to which CoastFed may be entitled
pursuant to this Paragraph shall immediately become part of Borrower's
Obligations, shall be due on demand, and shall bear interest at a rate equal
to the highest interest rate applicable to any of the Obligations.
*REASONABLE
13. DESTRUCTION OF BORROWER'S DOCUMENTS; LIMITATION OF ACTIONS.
Any documents, schedules, invoices or other papers delivered to CoastFed
may be destroyed or otherwise disposed of by CoastFed six (6) months after
they are delivered to CoastFed unless Borrower makes written request therefor
and pays all expenses attendant to their return, in which event, CoastFed
shall return same when CoastFed's actual or anticipated need therefor has
terminated. Borrower agrees that any claim or cause of action by Borrower
against CoastFed, its directors, officers, employees, agents, accountants or
attorneys, based upon, arising from, or relating to this Loan Agreement, or
any Collateral Agreement, or any other present or future agreement, or any
other transaction contemplated hereby or thereby or relating hereto or
thereto, or any other matter, cause or thing whatsoever, occurred, done,
omitted or suffered to be done by CoastFed, its directors, officers,
employees, agents, accountants or attorneys, relating in any way to Borrower,
shall be barred unless asserted by Borrower by the * after the first act,
occurrence or omission upon which such claim or cause of action, or any part
thereof, is based,
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<PAGE>
COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
- -------------------------------------------------------------------------------
Borrower agrees that such ** period of time is a reasonable and sufficient
time for Borrower to investigate and act upon any such claim or cause of
action. The ** period provided herein shall not be waived, tolled, or
extended except by the written consent of CoastFed in its sole and absolute
discretion. This provision shall survive any termination, however arising, of
this Loan Agreement, any Collateral Agreement, and any other present or
future agreement.
*DELIVERY OF A SPECIFIC WRITTEN CLAIM SETTING FORTH IN REASONABLY SPECIFIC
DETAIL THE BORROWER'S CLAIM OR CAUSE OF ACTION WITHIN ONE YEAR
**ONE-YEAR
14. GENERAL PROVISIONS.
14.1 SEVERABILITY. Should any provision, clause or condition of this Loan
Agreement or any Collateral Agreement be held by any court of competent
jurisdiction to be void or unenforceable, such defect shall not affect the
remainder of this Loan Agreement or any Collateral Agreement.
14.2 INTEGRATION. This Loan Agreement and any Collateral Agreements and
such other agreements, documents and instruments as may be executed in
connection herewith shall be construed as the entire and complete agreement
between Borrower and CoastFed and shall supersede all prior negotiations, all
of which are merged and integrated herein.
14.3 AMENDMENT. The terms and provisions of this Loan Agreement and any
Collateral Agreement may not be waived or amended except in a writing
executed by Borrower and a duly authorized officer of CoastFed.
14.4 TIME OF ESSENCE. Time is of the essence in the performance by
Borrower of each and every obligation under this Loan Agreement and any
Collateral Agreement.
14.5 BENEFIT OF AGREEMENT. The provisions of this Loan Agreement and any
Collateral Agreement shall be binding upon and inure to the benefit of the
respective successors, assigns, heirs, beneficiaries and representatives of
the parties hereto; provided, however, that Borrower may not assign or
transfer any of its rights under this Loan Agreement or any Collateral
Agreement without the prior written consent of CoastFed, and any prohibited
assignment shall be void. No consent by CoastFed to any assignment shall
relieve Borrower or any guarantor from its liability for the Obligations.
14.6 JOINT AND SEVERAL LIABILITY. The liability of each Borrower shall
be joint and several and the compromise of any claim with, or the release of,
any Borrower shall not constitute a compromise with, or a release of, any
other Borrower.
14.7 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are used
herein for convenience only. * acknowledges that the same may not describe
completely the subject matter of the applicable paragraph, and the same
shall not be used in any manner to construe, limit, define or interpret any
term or provision hereof. This Loan Agreement and the Collateral Agreements
have been fully reviewed and negotiated between the parties and no
uncertainty or ambiguity in any term or provision of this Loan Agreement or
any Collateral Agreement shall be construed strictly against CoastFed or
Borrower under any rule of construction or otherwise.
*THE PARTIES
14.8 GOVERNING LAW; JURISDICTION; VENUE. This Loan Agreement and any
Collateral Agreement and all acts and transactions hereunder and all rights
and obligations of CoastFed and Borrower shall be governed by and in
accordance with the laws of the State of California. Any undefined term used
in this Loan Agreement or in any Collateral Agreement that is defined in the
California Uniform Commercial Code shall have the meaning therein assigned to
that term. As a material part of the consideration to CoastFed to enter into
this Agreement, Borrower (i) agrees that all actions and proceedings relating
directly or indirectly hereto shall, at CoastFed's option, be litigated in
courts located within California, and that the exclusive venue therefor
shall be Los Angeles County; (ii) consents to the jurisdiction and venue of
any such court and consents to service of process in any such action or
proceeding by personal delivery or any other method permitted by law; and
(iii) waives any and all rights Borrower may have to object to the
jurisdiction of any such court, or to transfer or change the venue of any
such action or proceeding.
14.9 EXECUTION BY COASTFED. This Loan Agreement and any Collateral
Agreement which has been executed and delivered by Borrower to CoastFed shall
not become effective unless and until executed by a duly authorized officer
of CoastFed.
14.10 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND COASTFED EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS LOAN AGREEMENT OR ANY
COLLATERAL AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT
BETWEEN COASTFED AND BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF COASTFED
OR BORROWER ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR
ANY OTHER PERSONS AFFILIATED WITH COASTFED OR BORROWER.
14.11 CONFIDENTIALITY. COASTFED COVENANTS AND AGREES, ON A CONTINUING
BASIS, TO USE REASONABLE EFFORTS (BUT IN NO EVENT LESS THAN THE SAME DEGREE
OF CARE THAT IT EXERCISES WITH RESPECT TO ITS OWN PROPRIETARY INFORMATION OF
THE SAME TYPES) TO MAINTAIN THE CONFIDENTIALITY OF AND NOT TO DISCLOSE TO ANY
PERSON OTHER THAN ITS OFFICERS, DIRECTORS, ATTORNEYS AND ACCOUNTANTS AND
AFFILIATES, AND SUCH OTHER PERSONS TO WHOM COASTFED SHALL AT ANY TIME BE
REQUIRED TO MAKE SUCH DISCLOSURE IN ACCORDANCE WITH APPLICABLE LAW, ANY AND
ALL PROPRIETARY, TRADE SECRET OR
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<PAGE>
COAST BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
- --------------------------------------------------------------------------------
confidential information provided to or received by CoastFed from or on
account of Borrower or any affiliate of Borrower, including business plans
and forecasts, non-public financial information, confidential or secret
processes, formulae, devices or contractual information, customer lists,
employee relation matters, and any other information the disclosure of which
could reasonably be expected to have a material adverse impact on the
business, finances or operations of Borrower or its affiliates, PROVIDED,
HOWEVER, the foregoing provisions shall not be effective regarding the
disposition of Collateral after an Event of Default.
Borrower:
ROSS SYSTEMS, INC.
By: /s/ Selby F. Little III
---------------------------------
President or Vice President
By:
---------------------------------
Secretary or Ass't Secretary
CoastFed:
COASTFED BUSINESS CREDIT CORPORATION
By: /s/ [Illegible]
---------------------------------
Title:
---------------------------------
SCHEDULE TO LOAN AND SECURITY AGREEMENT
Prior Names (Section 3.3):
Rossdata Corporation (1972-1991)
Fictitious Names, Trade Names, Trade Styles (Section 3.3):
See Attachment No. 1
Other Addresses (Section 3.4):
See Attachment No. 2
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<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of Ross Systems. Inc. on Forms S-8 (File Nos. 33-42036, 33-48226, 33-58584,
33-72108, 33-89128, 333-36745 and 333-44665) and Forms S-3 (File Nos.
33-89504, 333-19619, 333-06053, 333-44363 and 333-47877) of our report dated
August 21, 1997, on our audits of the consolidated financial statements and
financial statement schedules of Ross Systems, Inc. as of June 30, 1997 and
1996, and for the years ended June 30, 1997 and 1996, which report is
included in the Annual Report on Form 10-K for the year ended June 30, 1997.
We also consent to the references to our firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Atlanta, Georgia
April 30, 1998
<PAGE>
EXHIBIT 23.2
The Board of Directors
Ross Systems Inc.
We consent to the incorporation by reference in the registration statements
(File Nos. 33-42036, 33-48226, 33-56584, 33-72168, 33-89128, 333-36745 and
333-44665) on Form S-8 and the registration statements (File Nos. 33-89504,
333-19619, 333-06053, 333-44363 and 333-47877) on Form S-3 of Ross Systems
Inc. ("the Company") of our report dated September 26, 1996 relating to the
combined balance sheets of Ross Systems (UK) Limited, Ross Systems France
SA., Ross Systems Deutschland GmbH, Ross Systems Europe NV., and Ross Systems
Netherlands BV as of June 30, 1996 and the related combined statements of
operations and stockholders' equity for the year then ended and the related
schedule, which report appears in the June 30, 1997 annual report on Form
10-K/A of the Company.
Our report dated September 26, 1996 contains an explanatory paragraph that
states that the Company declined to present a statement of cash flows for the
year ended June 30, 1996. Presentation of such statement summarising the
Company's operating, investing and financing activities is required by
generally accepted accounting principles.
KPMG
Chartered Accountants
Registered Auditors
Bristol, United Kingdom
April 30, 1998
<PAGE>
The Board of Directors
Ross Systems, Inc.
We consent to incorporation by reference in the registration statements (File
Nos. 33-42036, 33-48226, 33-56584, 33-56584, 33-72168, 33-89128, 333-36745
and 333-44665) on Form S-8, and the registration statements (File Nos.
33-89504, 333-19619, 333-06053, 333-44363 and 333-47877) on Form S-3, of Ross
Systems, Inc. of our report dated August 18, 1995, except as to Note 14,
which is as of September 18, 1996, relating to the consolidated statements of
operations, shareholders' equity, and cash flows for the year ended June 30,
1995 of Ross Systems, Inc. and subsidiaries, and the related schedule, which
report appears in the June 30, 1997, annual report on Form 10-K of Ross
Systems, Inc.
KPMG Peat Marwick LLP
Mountain View, California
April 29, 1998
