Letter of Credit Agreement - Comerica Bank-California, Internet Capital Group Inc., ICG Holdings Inc. and Internet Capital Group Operations Inc.
INTERNET CAPITAL GROUP, INC.
ICG HOLDINGS, INC.
INTERNET CAPITAL GROUP OPERATIONS, INC.
LETTER OF CREDIT AGREEMENT
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This LETTER OF CREDIT AGREEMENT is entered into as of September 30,
2002, by and between COMERICA BANK-CALIFORNIA ("Bank") and INTERNET CAPITAL
GROUP, INC. ("ICG"), ICG HOLDINGS, INC. ("ICG Holdings") and INTERNET CAPITAL
GROUP OPERATIONS, INC. ("ICG Operations") (ICG; ICG Holdings and ICG Operations
are sometimes referred to, individually, as a "Borrower" and collectively, as
the "Borrowers").
RECITALS
Borrowers wish to obtain credit from time to time from Bank, and Bank
desires to extend credit to Borrowers. This Agreement sets forth the terms on
which Bank will advance credit to Borrowers, and Borrowers will repay the
amounts owing to Bank.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall
have the following definitions:
"Affiliate" means, with respect to any Person, any Person that
owns or controls directly or indirectly such Person, any Person that controls or
is controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors, and partners.
"Application" has the meaning assigned in Section 2.1(b)(i).
"Bank Expenses" means all: reasonable documented costs or
expenses (including reasonable attorneys' fees and expenses) incurred by Bank in
connection with the preparation, negotiation, administration, and enforcement of
the Loan Documents;; and Bank's reasonable attorneys' fees and expenses incurred
in amending, enforcing or defending the Loan Documents (including fees and
expenses of appeal), incurred before, during and after an Insolvency Proceeding,
whether or not suit is brought.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which banks in the State of California or the Commonwealth of
Pennsylvania are authorized or required to close.
"Charter Documents" means, as to each Borrower, its
certificate of incorporation and bylaws.
"Closing Date" means the date of this Agreement.
"Code" means the California Uniform Commercial Code in effect
from time to time.
"Collateral" has the meaning assigned in Section 4.1.
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any obligations with respect to undrawn letters of credit issued
for the account of that Person other than Letters of Credit; and (ii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term "Contingent Obligation" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in
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respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.
"Credit Extension" means each Letter of Credit issued by Bank
for the benefit of one or more Borrowers hereunder.
"Daily Balance" means the amount of the Obligations owed at
the end of a given day.
"Event of Default" has the meaning assigned in Article 8.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"Indebtedness" means (a) all indebtedness for borrowed money
or the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.
"Insolvency Proceeding" means any proceeding commenced by or
against any person or entity under any provision of the United States Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"Investment" means any beneficial ownership of (including
stock, partnership interest or other equity securities) any Person, or any loan,
advance or capital contribution to, any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.
"Letters of Credit" has the meaning assigned in Section 2.1.
"Letter of Credit Fees" has the meaning assigned in Section
2.1.
"Letter of Credit Line" means aggregate Credit Extensions of
up to Twenty Million Dollars ($20,000,000).
"Lien" means any mortgage, lien, deed of trust, charge,
pledge, security interest or other encumbrance.
"Loan Documents" means, collectively, this Agreement, any
letter of credit applications executed by any Borrower, and any other agreement
required to be entered into between any Borrower and Bank in connection with
this Agreement, all as amended or extended from time to time.
"Material Adverse Effect" means a material adverse effect on
(i) the business operations or condition (financial or otherwise) of the
Borrowers, taken as a whole, (ii) the ability of a Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents, or
(iii) the value of, or priority of Bank's security interest in, the Collateral.
"Obligations" means all principal, interest, Bank Expenses and
other amounts owed to Bank by a Borrower pursuant to any of the Loan Documents,
whether absolute or contingent, due or to become due, now existing or hereafter
arising, including any interest that accrues after the commencement of an
Insolvency Proceeding.
"Periodic Payments" means all installments or similar
recurring payments that a Borrower may now or hereafter become obligated to pay
to Bank pursuant to the terms and provisions of any of the Loan Documents.
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"Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or governmental agency.
"Portfolio Company" or "Portfolio Companies" means Persons in
which a Borrower proposes to make, or has made and retains, Investments.
"Prime Rate" means the variable rate of interest, per annum,
most recently announced by Bank, as its "prime rate," whether or not such
announced rate is the lowest rate available from Bank.
"Responsible Officer" means each of the individuals or
officers of each of the Borrowers listed on Schedule 1 attached hereto (as the
same may be modified from time to time).
"Revolving Facility" means the facility under which a Borrower
may request Bank to issue Letters of Credit, as specified in Section 2.1 hereof.
"Revolving Maturity Date" means the day before the first
anniversary of the Closing Date.
"Schedule" means the schedule of exceptions attached hereto.
"Unused Facility Fees" has the meaning assigned to it in
Section 2.4(b).
1.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP and all calculations made
hereunder shall be made in accordance with GAAP. When used herein, the terms
"financial statements" shall include the notes and schedules thereto.
2. LETTERS OF CREDIT AND TERMS OF PAYMENT.
2.1 Letters of Credit. Subject to the terms and conditions of this
Agreement, Bank agrees to issue or cause to be issued letters of credit for the
account of any of the Borrowers, including a letter of credit issued by Bank
prior to the date hereof for the account of ICG (each, a "Letter of Credit" and
collectively, the "Letters of Credit") in an aggregate outstanding face amount
not to exceed the Letter of Credit Line. All Letters of Credit shall be, in form
and substance, acceptable to Bank in its reasonable discretion and shall be
subject to the terms and conditions of Bank's form of standard application and
letter of credit agreement (the "Application"), which Borrower hereby agrees to
execute. Bank's fee for each Letter of Credit ("Letter of Credit Fees") shall be
equal to either (A) one-half of one percent (0.5%) per annum, billed quarterly,
in arrears, of the face amount of each Letter of Credit for which the
reimbursement obligation is secured by the Collateral (defined below) maintained
by Bank , or (B) one and one-half percent (1.5%) per annum, billed quarterly, in
arrears, of the face amount of each Letter of Credit for which the reimbursement
obligation is secured by Collateral maintained by Monarch Funds. The obligation
of Borrower to reimburse Bank for drawings made under Letters of Credit shall be
absolute, unconditional and irrevocable, and shall be performed in accordance
with the terms of this Agreement, the Application, and such Letters of Credit.
Borrower shall indemnify, defend, protect, and hold Bank harmless from any loss,
cost, expense or liability, including, without limitation, reasonable attorneys'
fees, arising out of or in connection with any Letters of Credit, other than as
a result of the Bank's gross negligence or willful misconduct. Borrower shall
use the Letters of Credit to support the business operations of Borrower and its
Affiliates and obligations of the Portfolio Companies
2.2 Payments. Bank shall, at its option, charge all amounts due in
connection with any Letter of Credit, all Bank Expenses, and all Periodic
Payments against the Collateral and/or any of a Borrower's deposit accounts with
Bank. Bank shall credit a wire transfer of funds, check or other item of payment
to such deposit account or Obligation as Borrowers specify. After the occurrence
and during the continuance of an Event of Default, the receipt by Bank of any
wire transfer of funds, check, or other item of payment shall be immediately
applied to conditionally reduce Obligations, but shall not be considered a
payment on account unless such payment is of immediately available federal funds
or unless and until such check or other item of payment is honored when
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presented for payment at which time such payment shall be applied to reduce the
Obligations unconditionally. Notwithstanding anything to the contrary contained
herein, any wire transfer or payment received by Bank after 12:00 noon Pacific
time shall be deemed to have been received by Bank as of the opening of business
on the immediately following Business Day. Whenever any payment to Bank under
the Loan Documents would otherwise be due (except by reason of acceleration) on
a date that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.
2.3 Fees. Borrowers shall pay to Bank the following:
(a) Bank Expenses. On the Closing Date, all Bank Expenses
incurred through the Closing Date, including reasonable attorneys' fees and
expenses and, after the Closing Date, all Bank Expenses, including reasonable
attorneys' fees and expenses, as and when they become due.
(b) Unused Facility Fees. Within ten (10) days of the last day
of each fiscal quarter, a fee equal to one quarter of one percent (0.25%) of the
difference between the Letter of Credit Line and the average Daily Balance
during such quarter (the "Unused Facility Fees"), provided that Bank waives such
fee for each quarter in which the Borrowers maintain an aggregate daily average
deposit balance with Bank of at least $2,500,000 above the level required under
Section 3.2(b).
2.4 Term. This Agreement shall become effective on the Closing Date
and, subject to Section 13.7, shall continue in full force and effect for so
long as any Obligations are outstanding. Borrowers may terminate this Agreement
at any time without penalty upon written notice to Bank and satisfaction of all
outstanding Obligations. Notwithstanding the foregoing, Bank shall have the
right to terminate its obligation to make Credit Extensions under this Agreement
immediately and without notice upon the occurrence and during the continuance of
an Event of Default. Notwithstanding termination, Bank's Lien on the Collateral
shall remain in effect for so long as any Obligations are outstanding. Borrower
may terminate this Agreement upon satisfaction of all outstanding Obligations
(including Letters of Credit) and confirmation that Bank has no further
obligation to make Credit Extensions hereunder.
3. CONDITIONS OF CREDIT EXTENSIONS.
3.1 Conditions Precedent to Initial Credit Extension. The obligation of
Bank to make the initial Credit Extension is subject to the condition precedent
that Bank shall have received, in form and substance reasonably satisfactory to
Bank, the following:
(a) this Agreement, executed by Borrowers;
(b) a certificate of a Responsible Officer of each Borrower
with respect to incumbency and resolutions authorizing the execution and
delivery of this Agreement;
(c) a copy of the Certificate of Incorporation of each
Borrower, certified by the Secretary of State of such Borrower's incorporation;
(d) a good standing certificate for each Borrower, issued by
the Secretary of State of the state of such Borrower's incorporation;
(e) an opinion of counsel to Borrowers;
(f) payment of the Bank Expenses then due and payable as
specified in Section 2.3 hereof; and
(g) such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.
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3.2 Conditions Precedent to all Credit Extensions. The obligation of
Bank to make each Credit Extension, including the initial Credit Extension, is
further subject to the following conditions:
(a) timely receipt by Bank of the Application as provided in
Section 2.1(b)(i);
(b) the value of the Collateral equals or exceeds to the
proposed Credit Extension; and
(c) the representations and warranties contained in Section 5
shall be true and correct in all material respects on and as of the date of such
Payment/Advance Form and on the effective date of each Credit Extension as
though made at and as of each such date, and no Event of Default shall have
occurred and be continuing, or would exist after giving effect to such Credit
Extension.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Borrower shall maintain (i) a deposit
account with Bank, (ii) one or more certificates of deposit issued by Bank, or
(iii) other mutually acceptable forms of property in an amount equal to or
greater than 100 percent of the aggregate face amount of all outstanding Letters
of Credit. Such deposit account, certificates or certificates of deposit and
property, together with all proceeds thereof, interest paid thereon, and
substitutions therefor, and all accounts, securities, instruments, securities
entitlements and financial assets arising out of any of the foregoing, including
without limitation Account No. xxxxx maintained with Bank and one or more
accounts maintained by Monarch Funds, shall constitute the "Collateral".
Borrower grants and pledges to Bank a continuing security interest in all
presently existing and hereafter acquired or arising Collateral, in order to
secure prompt repayment of any and all Obligations. Borrower authorizes Bank to
execute and/or file such documents, and take such actions, as Bank determines
reasonable to perfect its security interest in the Collateral. Such security
interest constitutes a valid, first priority security interest in the
Collateral, and will constitute a valid, first priority security interest in
Collateral acquired after the date hereof. Upon maturity of the Collateral in
accordance with its terms, or in the event the Collateral otherwise becomes
payable during the term of this Agreement, such maturing Collateral may be
presented for payment, exchange, or otherwise marketed by Bank on behalf of
Borrower and the proceeds therefrom used to purchase a certificate of deposit
issued by Bank in which Bank has a first priority security interest, provided
that, as long as an Event of Default is not then continuing, Bank shall pay such
proceeds to Borrower as long as the aggregate value of the Collateral that
remains in an account with Bank or an Affiliate of Bank in which Bank retains a
first priority security interest is at least equal to 100% of the aggregate face
amount of the outstanding Letters of Credit. Subject to the preceding sentence,
Bank shall retain such successor collateral as Collateral securing the
Obligations for so long as any Obligations are outstanding.
4.2 Delivery of Additional Documentation Required. Borrower shall from
time to time execute and deliver to Bank, at the request of Bank, all financing
statements and other documents that Bank may reasonably request, in form
reasonably satisfactory to Bank, to perfect and continue perfected Bank's
security interests in the Collateral and in order to fully consummate all of the
transactions contemplated under the Loan Documents.
5. REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants as follows:
5.1 Due Organization and Qualification. Borrower is a corporation duly
existing under the laws of Delaware and qualified and licensed to do business in
any state in which the conduct of its business or its ownership of property
requires that it be so qualified except where the failure to be so qualified or
licensed could not reasonably be expected to result in a Material Adverse
Effect.
5.2 Due Authorization; No Conflict. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in any of Borrowers' Charter Document, nor will they
constitute an event of default under any material agreement to which Borrower is
a party or by which Borrower is bound. Except as
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disclosed in the Schedule, Borrower is not in default under any agreement to
which it is a party or by which it is bound, which default could reasonably be
expected to result in a Material Adverse Effect.
5.3 No Prior Encumbrances. Borrower has good and marketable title to
the Collateral free and clear of Liens.
5.4 Charter Documents. On the Closing Date, each Charter Document is in
full force and effect in the form presented to Bank.
5.5 Name; Location of Chief Executive Office. Except as disclosed in
the Schedule, Borrower has not done business under any name other than that
specified on the signature page hereof. The chief executive office of Borrower
is located at the address indicated in Section 10 hereof.
5.6 Litigation. Except as set forth in the Schedule, there are no
actions or proceedings pending by or against Borrower before any court or
administrative agency in which an adverse decision could have a Material Adverse
Effect.
5.7 No Material Adverse Change in Financial Statements. All
consolidated financial statements of ICG that Bank has received fairly present
in all material respects ICG's consolidated financial condition as of the date
thereof and ICG's consolidated results of operations for the period then ended.
There has not been a Material Adverse Effect since the date of the most recent
of such financial statements submitted to Bank.
5.8 Solvency, Payment of Debts. Borrower is solvent and able to pay its
debts (including trade debts) as they mature.
5.9 Regulatory Compliance. Borrower is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. Borrower is not engaged principally,
or as one of the important activities, in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulations T and U of the Board of Governors of the Federal Reserve System).
Borrower has not violated any statutes, laws, ordinances or rules applicable to
it, violation of which could reasonably be expected to result in a Material
Adverse Effect.
5.10 Taxes. Borrower has filed or caused to be filed all material tax
returns required to be filed, and has paid, or has made adequate provision for
the payment of, all taxes reflected therein, except where the failure to file,
pay or make adequate provision could not reasonably be expected to result in a
Material Adverse Effect.
5.11 Government Consents. Borrower has obtained all consents, approvals
and authorizations of, made all declarations or filings with, and given all
notices to, all governmental authorities that are necessary for the continued
operation of Borrower's business as currently conducted, except where the
failure to obtain such consents, approvals and authorizations, make such
declarations or filings or give such notices could not reasonably be expected to
result in a Material Adverse Effect.
5.12 Full Disclosure. No representation, warranty or other statement
made by Borrower in any certificate or written statement furnished to Bank
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained in such certificates or
statements not misleading in light of the circumstances in which they were made
(it being recognized by Bank that the projections and forecasts provided by
Borrower in good faith and based upon reasonable assumptions are not to be
viewed as facts and that actual results during the period or periods covered by
any such projections and forecasts may differ from the projected or forecasted
results).
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6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Bank may have any commitment to make
a Credit Extension hereunder, such Borrower shall do all of the following:
6.1 Good Standing. Borrower shall maintain its corporate existence in
its jurisdiction of incorporation and maintain qualification in each
jurisdiction in which the failure to so qualify could reasonably be expected to
result in a Material Adverse Effect. Borrower shall maintain in force all
licenses, approvals and agreements, the loss of which could reasonably be
expected to result in a Material Adverse Effect.
6.2 Government Compliance. Borrower shall comply with all statutes,
laws, ordinances and government rules and regulations to which it is subject,
noncompliance with which could reasonably be expected to result in a Material
Adverse Effect.
6.3 Financial Statements, Reports, Certificates. ICG shall deliver to
Bank:
(a) as soon as available, but in any event within sixty (60)
days after the last day of each fiscal quarter ending March 31, June 30 and
September 30, Form 10-Q filed or required to be filed with the Securities and
Exchange Commission;
(b) as soon as available, but in any event within one hundred
(100) days after the end of ICG's fiscal year, Form 10-K filed or required to be
filed with the Securities and Exchange Commission;
(c) copies of all statements, reports and notices sent or made
available generally by ICG to its security holders or to the Securities and
Exchange Commission or any other department or agency of the United States;
(d) with each filing delivered under Section 6.3(a) or (b), a
Compliance Certificate in substantially the form of Exhibit A attached hereto
(e) promptly upon receipt of notice thereof, a report of any
legal actions pending or to ICG's knowledge threatened, against any Borrower
that is reasonably likely to result in damages or costs to such Borrower of Five
Million Dollars ($5,000,000) or more; and
(f) such other financial information as Bank may reasonably
request from time to time.
6.4 Taxes. Each Borrower shall make, due and timely payment or deposit
of all material federal, state, and local taxes, assessments, or contributions
required of it by law, and will execute and deliver to Bank, on demand,
appropriate certificates attesting to the payment or deposit thereof; and each
Borrower will make timely payment or deposit of all material tax payments and
withholding taxes required of it by applicable laws, and will, upon request,
furnish Bank with proof satisfactory to Bank indicating that such Borrower has
made such payments or deposits; provided that such Borrower need not make any
payment if the amount or validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by GAAP)
by such Borrower.
6.5 Insurance. Borrower shall maintain insurance relating to Borrower's
business in amounts and of a type that are customary to businesses similar to
Borrower's. All such policies of insurance shall be in such form, with such
companies and in such amounts as may be reasonably satisfactory to Bank.
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7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, until payment in full of the
outstanding Obligations or for so long as Bank may have any commitment to make
any Credit Extensions, such Borrower will not do any of the following without
the prior consent of Bank:
7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose of
(collectively, a "Transfer") all or any part of the Collateral.
7.2 Change in Business; Change in Control or Executive Office. Engage
in any business other than the businesses currently engaged in by such Borrower
and any business substantially similar or related thereto (or incidental
thereto); or change its state of incorporation.
7.3 Mergers or Acquisitions. Merge or consolidate with or into any
other business organization where the Borrower is not the surviving entity, or
acquire all or substantially all of the capital stock or property of another
Person other than Portfolio Companies. Notwithstanding the foregoing, this
Section 7.3 shall not apply to (i) transactions in which all outstanding
Obligations are satisfied in full concurrent with the closing of that
transaction, and any commitment by Bank to make any additional Credit Extensions
is terminated, and (ii) cash investments into and acquisition of Portfolio
Companies made in the ordinary course of such Borrower's businesses.
7.4 Encumbrances. Create, incur, assume or suffer to exist any Lien
with respect to any of the Collateral.
7.5 Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower except
for transactions that are in the ordinary course of such Borrower's business or
as disclosed in the Schedule, upon fair and reasonable terms that are no less
favorable to such Borrower than would be obtained in an arm's length transaction
with a non-affiliated Person.
7.6 Compliance. Become an "investment company" or be controlled by an
"investment company," within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Credit Extension for such
purpose; or fail to comply with, or violate any, law or regulation, which
failure or violation could reasonably be expected to have a Material Adverse
Effect.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an Event of
Default under this Agreement:
8.1 Payment Default. If a Borrower fails to pay, within five (5)
Business Days of the date due, any of the Obligations hereunder,
8.2 Covenant Default. If a Borrower fails to perform any obligation
under Article 6 or violates any of the covenants contained in Article 7 of this
Agreement, or fails or neglects to perform, keep, or observe any other term,
provision, condition, covenant, or agreement contained in this Agreement, in any
of the Loan Documents, and as to any default under such other term, provision,
condition, covenant or agreement that can be cured, has failed to cure such
default within twenty (20) days after Borrower receives written notice thereof;
8.3 Borrower Composition. If a Borrower is dissolved or any action is
taken to effect such dissolution, or if a Borrower's existence is otherwise
terminated or any action is taken to effect such termination;
8.4 Material Adverse Effect. If any circumstance occurs that could
reasonably be expected to have a Material Adverse Effect;
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8.5 Attachment. If any portion of the Collateral is attached, seized,
subjected to a writ or distress warrant, or is levied upon, or comes into the
possession of any trustee, receiver or person acting in a similar capacity and
such attachment, seizure, writ or distress warrant or levy has not been removed,
discharged or rescinded within ten (10) days, or if a Borrower is enjoined,
restrained, or in any material way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon the Collateral, or if a notice of
lien, levy, or assessment is filed of record with respect to any of the
Collateral by the United States Government, or any department, agency, or
instrumentality thereof, or by any state, county, municipal, or governmental
agency, and the same is not paid within ten (10) days after a Borrower receives
written notice thereof, provided that none of the foregoing shall constitute an
Event of Default where such action or event is stayed or an adequate bond has
been posted pending a good faith contest by a Borrower (provided that no Credit
Extensions will be required to be made during such cure period);
8.6 Insolvency or Bankruptcy. If a Borrower becomes insolvent, or if an
Insolvency Proceeding is commenced by a Borrower, or if an Insolvency Proceeding
is commenced against a Borrower and is not dismissed or stayed within thirty
(30) days (provided that no Credit Extensions will be made prior to the
dismissal of such Insolvency Proceeding);
8.7 Other Agreements. Except as disclosed in the Schedule, if there is
a default in any agreement to which a Borrower is a party with a third party or
parties resulting in a right by such third party or parties, whether or not
exercised, to accelerate the maturity of any Indebtedness in an amount in excess
of Two Million Dollars ($2,000,000) or that could have a Material Adverse
Effect;
8.8 Judgments. If a judgment or judgments for the payment of money in
an amount, individually or in the aggregate, of at least Five Million Dollars
($5,000,000) shall be rendered against a Borrower and shall remain unsatisfied
and unstayed for a period of ten (10) days (provided that no Credit Extensions
will be made prior to the satisfaction or stay of such judgment); or
8.9 Misrepresentations. If any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set forth
herein or in any certificate delivered to Bank by any Responsible Officer
pursuant to this Agreement or to induce Bank to enter into this Agreement or any
other Loan Document.
9. BANK'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence and during the continuance
of an Event of Default, Bank may, at its election, without notice of its
election and without demand, do any one or more of the following, all of which
are authorized by Borrowers:
(a) Declare all Obligations, whether evidenced by this
Agreement or by any of the other Loan Documents, immediately due and payable
(provided that upon the occurrence of an Event of Default described in Section
8.6, all Obligations shall become immediately due and payable without any action
by Bank); and
(b) Make such payments and do such acts as Bank considers
necessary or reasonable to protect its security interest in the Collateral.
Borrower agrees to assemble any documents evidencing the Collateral if Bank so
requires, and to make such documents available to Bank as Bank may designate;
(c) Set off and apply to the Obligations any and all (i)
Collateral, (ii) balances and deposits of Borrower held by Bank, or (iii)
indebtedness at any time owing to or for the credit or the account of Borrower
held by Bank;
(d) Dispose of the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as Bank
determines is commercially reasonable, and apply any proceeds to the Obligations
in whatever manner or order Bank deems appropriate; and
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(e) Cease advancing money or extending credit to or for the
benefit of a Borrower under this Agreement or under any other agreement between
a Borrower and Bank.
Any deficiency that exists after disposition of the Collateral as provided above
will be paid to Bank immediately by Borrowers.
9.2 Right of Setoff; Deposit Accounts. Upon and after the occurrence
and continuance of any Event of Default, Bank is hereby authorized by each
Borrower, at any time and from time to time, (a) to set off against, and to
appropriate and apply to the payment of, the Obligations any and all amounts
owing by Bank to a Borrower (whether payable in U.S. Dollars or any other
currency, whether matured or unmatured, and, in the case of deposits, whether
general or special, time or demand and however evidenced) and (b) pending any
such action, to the extent necessary, to hold such amounts as collateral to
secure such obligations and liabilities and to return as unpaid for insufficient
funds any and all checks and other items drawn against any deposits so held as
Bank in its sole discretion may elect.
9.3 Power of Attorney. Effective only upon the occurrence and during
the continuance of an Event of Default, each Borrower hereby irrevocably
appoints Bank (and any of Bank's designated officers, or employees) as
Borrower's true and lawful attorney to: (a) endorse Borrower's name on any
checks or other forms of payment or security that may come into Bank's
possession; and (b) dispose of any Collateral in accordance with Section 9.1;
and (c) to file, in its sole discretion, one or more financing or continuation
statements and amendments thereto, relative to any of the Collateral without the
signature of Borrower where permitted by law; provided Bank may exercise such
power of attorney to sign the name of Borrower on any of the documents described
in Section 4.2 regardless of whether an Event of Default has occurred. The
appointment of Bank as each Borrower's attorney in fact, and each and every one
of Bank's rights and powers, being coupled with an interest, is irrevocable
until all of the Obligations have been fully repaid and performed and Bank's
obligation to provide Credit Extensions hereunder is terminated.
9.4 Bank's Liability for Collateral. Bank shall not in any way or
manner be liable or responsible for: (a) the safekeeping of the Collateral; (b)
any loss or damage thereto occurring or arising in any manner or fashion from
any cause; (c) any diminution in the value thereof; or (d) any act or default of
any carrier, warehouseman, bailee, forwarding agency, or other person
whomsoever. All risk of loss, damage or destruction of the Collateral shall be
borne by Borrower.
9.5 Remedies Cumulative. Bank's rights and remedies under the Loan
Documents shall be cumulative. Bank shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by Bank of one right or remedy shall be deemed an election, and no
waiver by Bank of any Event of Default on a Borrower's part shall be deemed a
continuing waiver. No delay by Bank shall constitute a waiver, election, or
acquiescence by it. No waiver by Bank shall be effective unless made in a
written document signed on behalf of Bank and then shall be effective only in
the specific instance and for the specific purpose for which it was given.
9.6 Demand; Protest. Each Borrower waives demand, protest, notice of
protest, dishonor, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees at any time held by Bank on which a
Borrower may in any way be liable.
10. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized
overnight delivery service, certified mail, postage prepaid, return receipt
requested, or by telefacsimile to Borrowers or to Bank, as the case may be, at
its addresses set forth below:
<PAGE>
If to any Borrower, such Borrower: c/o Internet Capital Group, Inc.
435 Devon Park Drive, Building 600
Wayne, PA 19087
Attn: Vice President, Taxes
FAX: (610) 989-0112
and
c/o ICG Holdings, Inc.
100 Lake Drive, Suite 4
Pencader Corporate Center
Newark, DE 19702
Attn: General Manager
FAX: (302) 292-3972
and
c/o Internet Capital Group
Operations, Inc.
435 Devon Park Drive, Building 600
Wayne, PA 19087
Attn: Vice President, Taxes
FAX: (610) 989-0112
If to Bank: COMERICA BANK - CALIFORNIA
226 Airport Parkway
San Jose, CA 95110-1024
Attn: Corporate Banking Center
FAX: (408) 451-8586
with a copy to: COMERICA BANK - CALIFORNIA
2420 Sand Hill Road, Suite 102
Menlo Park, CA 94025
Attn: Judith Erwin
FAX: (650) 233-3075
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other. A notice given to a party hereunder shall be effective regardless of
whether a copy of such notice is given to any other Person.
11. CO-BORROWERS
11.1 Primary Obligation. This Agreement is a primary and original
obligation of each Borrower and shall remain in effect notwithstanding future
changes in conditions, including any change of law or any invalidity or
irregularity in the creation or acquisition of any Obligations or in the
execution or delivery of any agreement between Bank and any Borrower. Each
Borrower shall be liable for existing and future Obligations as fully as if all
of the Credit Extensions were made to such Borrower. Bank may rely on any
certificate or representation made by any Borrower as made on behalf of, and
binding on, all Borrowers, including without limitation Applications.
11.2 Enforcement of Rights. Borrowers are jointly and severally liable
for the Obligations and Bank may proceed against one or more of the Borrowers to
enforce the Obligations without waiving its right to proceed against any of the
other Borrowers.
11.3 Borrowers as Agents. Each Borrower appoints the other Borrower as
its agent with all necessary power and authority to give and receive notices,
certificates or demands for and on behalf of all Borrowers and to apply to Bank
on behalf of each Borrower for Letters of Credit, any waivers and any consents.
This
<PAGE>
authorization cannot be revoked, and Bank need not inquire as to each Borrower's
authority to act for or on behalf of each other Borrower.
11.4 Subrogation and Similar Rights. Notwithstanding any other
provision of this Agreement or any other Loan Document, each Borrower
irrevocably waives all rights that it may have at law or in equity (including,
without limitation, any law subrogating the Borrower to the rights of Bank under
the Loan Documents) to seek contribution, indemnification, or any other form of
reimbursement from any other Borrower, or any other Person now or hereafter
primarily or secondarily liable for any of the Obligations, for any payment made
by the Borrower with respect to the Obligations in connection with the Loan
Documents or otherwise and all rights that it might have to benefit from, or to
participate in, any security for the Obligations as a result of any payment made
by the Borrower with respect to the Obligations in connection with the Loan
Documents or otherwise. Any agreement providing for indemnification,
reimbursement or any other arrangement prohibited under this Section 11.4 shall
be null and void. If any payment is made to a Borrower in contravention of this
Section 11.4, such Borrower shall hold such payment in trust for Bank and such
payment shall be promptly delivered to Bank for application to the Obligations.
11.5 Waivers of Notice. Each Borrower waives notice of acceptance
hereof; notice of the existence, creation or acquisition of any of the
Obligations; notice of an Event of Default; notice of the amount of the
Obligations outstanding at any time; notice of intent to accelerate; notice of
acceleration; notice of any adverse change in the financial condition of any
other Borrower or of any other fact that might increase the Borrower's risk;
presentment for payment; demand; protest and notice thereof as to any
instrument; default; and all other notices and demands to which the Borrower
would otherwise be entitled except as expressly provided herein. Each Borrower
waives any defense arising from any defense of any other Borrower, or by reason
of the cessation from any cause whatsoever of the liability of any other
Borrower. Bank's failure at any time to require performance by any Borrower of
any provision of the Loan Documents shall not waive, alter or diminish any right
of Bank thereafter to demand strict compliance and performance therewith. Each
Borrower also waives any defense arising from any act or omission of Bank that
changes the scope of such Borrower's risk hereunder. Each Borrower waives any
right to assert against Bank any defense (legal or equitable), setoff,
counterclaim, or claims that such Borrower individually may now or hereafter
have against another Borrower or any other Person liable to Bank with respect to
the Obligations in any manner or whatsoever.
11.6 Subrogation Defenses. Each Borrower waives any defense based on
impairment or destruction of its subrogation or other rights against any other
Borrower and waives all benefits which might otherwise be available to it under
California Civil Code Sections 2809, 2810, 2819, 2839, 2845, 2848, 2849, 2850,
2899, and 3433 and California Code of Civil Procedure Sections 580a, 580b, 580d
and 726, as those statutory provisions are now in effect and hereafter amended,
and under any other similar statutes now and hereafter in effect.
11.7 Right to Settle, Release.
(a) The liability of Borrowers hereunder shall not be
diminished by (i) any agreement, understanding or representation that any of the
Obligations is or was to be guaranteed by another Person or secured by other
property, or (ii) any release or unenforceability, whether partial or total, of
rights, if any, which Bank may now or hereafter have against any other Person,
including another Borrower, or property with respect to any of the Obligations.
(b) Without notice to any Borrower and without affecting the
liability of any Borrower hereunder, Bank may (i) compromise, settle, renew,
extend the time for payment, , discharge the performance of, decline to enforce,
or release all or any of the Obligations with respect to a Borrower, (ii) grant
other indulgences to a Borrower in respect of the Obligations, (iii) agree with
Borrowers to modify in any manner any documents relating to the Obligations with
respect to Borrowers, (iv) release, surrender or exchange any deposits or other
property securing the Obligations, whether pledged by a Borrower or any other
Person, or (v) compromise, settle, renew, or extend the time for payment,
discharge the performance of, decline to enforce, or release all or any
obligations of any guarantor, endorser or other Person who is now or may
hereafter be liable with respect to any of the Obligations.
<PAGE>
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California, without regard to
principles of conflicts of law. Each Borrower and Bank hereby submit to the
jurisdiction of the state and Federal courts located in the County of Santa
Clara, State of California for purposes of this Agreement. BORROWERS AND BANK
EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY
RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
13. GENERAL PROVISIONS.
13.1 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights hereunder
may be assigned by a Borrower without Bank's prior written consent, which
consent may be granted or withheld in Bank's sole discretion. Bank shall have
the right without the consent of any Borrower to sell, transfer, negotiate, or
grant participation in all or any part of, or any interest in, Bank's
obligations, rights and benefits hereunder.
13.2 Indemnification. Borrowers shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank
as a result of or in any way arising out of, following, or consequential to
transactions between Bank and a Borrower under this Agreement (including without
limitation reasonable attorneys fees and expenses), except for losses caused by
Bank's gross negligence or willful misconduct.
13.3 Time of Essence. Time is of the essence for the performance of all
obligations set forth in this Agreement.
13.4 Severability of Provisions. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
13.5 Amendments in Writing, Integration. This Agreement cannot be
amended or terminated orally. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement and the Loan Documents. The Amendment and Assumption of Pledge
Agreement dated as of July 30, 2002 between ICG Holdings and Bank, the Letter of
Credit Application and Security Agreement dated as of June 28, 2002 between ICG
and Bank and the Letter of Credit issued for the benefit of Jamcracker Inc.'s
landlord shall be deemed made under, and subject to, this Agreement.
13.6 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
13.7 Survival. All covenants, representations and warranties made in
this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrowers to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described
in Section 13.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Bank have run.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
INTERNET CAPITAL GROUP, INC.
By: /s/ Henry N. Nassau
----------------------------------------
Title: Managing Director
ICG HOLDINGS, INC.
By: /s/ Henry N. Nassau
----------------------------------------
Title: Vice President and Secretary
INTERNET CAPITAL GROUP OPERATIONS, INC.
By: /s/ Henry N. Nassau
----------------------------------------
Title: Managing Director
COMERICA BANK-CALIFORNIA
By: /s/ Lafe Vittitoe
----------------------------------------
Title: Venture Banking Officer