an amount equal to (I)
the Accounts Availability minus (II) the Reserves.
The amount derived at any
time from Section 2(a)(i)(y)(I) minus 2(a)(i)(y)(II) shall be referred to as the
"Formula Amount".
Company shall execute and deliver to Laurus on the Closing
Date a Minimum Borrowing Note and a Secured Convertible Revolving Note
evidencing the Loans funded on the Closing Date.
From time to time thereafter,
Company shall execute and deliver to Laurus immediately prior to the final
funding of each additional $250,000 tranche of Loans (calculated on a cumulative
basis for each such tranche) an additional Minimum Borrowing Note evidencing
such tranche, in the form of Note delivered by Company to Laurus on the Closing
Date.
(II)
NOTWITHSTANDING THE LIMITATIONS SET FORTH
ABOVE, IF REQUESTED BY THE COMPANY, LAURUS RETAINS THE RIGHT TO LEND TO COMPANY
FROM TIME TO TIME SUCH AMOUNTS IN EXCESS OF SUCH LIMITATIONS AS LAURUS MAY
DETERMINE IN ITS SOLE DISCRETION.
(III)
COMPANY ACKNOWLEDGES THAT THE EXERCISE OF LAURUS'
DISCRETIONARY RIGHTS HEREUNDER MAY RESULT DURING THE TERM IN ONE OR MORE
INCREASES OR DECREASES IN THE ADVANCE PERCENTAGES USED IN DETERMINING ACCOUNTS
AVAILABILITY AND COMPANY HEREBY CONSENTS TO ANY SUCH INCREASES OR DECREASES
WHICH MAY LIMIT OR RESTRICT ADVANCES REQUESTED BY COMPANY.
(IV)
IF COMPANY DOES NOT PAY ANY INTEREST, FEES, COSTS
OR CHARGES TO LAURUS WHEN DUE, COMPANY SHALL THEREBY BE DEEMED TO HAVE
REQUESTED, AND LAURUS IS HEREBY AUTHORIZED AT ITS DISCRETION TO MAKE AND CHARGE
TO COMPANY'S ACCOUNT, A LOAN TO COMPANY AS OF SUCH DATE IN AN AMOUNT EQUAL TO
SUCH UNPAID INTEREST, FEES, COSTS OR CHARGES.
(V)
IF COMPANY AT ANY TIME FAILS TO PERFORM OR
OBSERVE ANY OF THE COVENANTS CONTAINED IN THIS AGREEMENT OR ANY ANCILLARY
AGREEMENT, LAURUS MAY, BUT NEED NOT, PERFORM OR OBSERVE SUCH COVENANT ON BEHALF
AND IN THE NAME, PLACE AND STEAD OF COMPANY (OR, AT LAURUS' OPTION, IN LAURUS'
NAME) AND MAY, BUT NEED NOT, TAKE ANY AND ALL OTHER ACTIONS WHICH LAURUS MAY
DEEM NECESSARY TO CURE OR CORRECT SUCH FAILURE (INCLUDING THE PAYMENT OF TAXES,
THE SATISFACTION OF LIENS, THE PERFORMANCE OF OBLIGATIONS OWED TO ACCOUNT
DEBTORS, LESSORS OR OTHER OBLIGORS, THE PROCUREMENT AND MAINTENANCE OF
INSURANCE, THE EXECUTION OF ASSIGNMENTS, SECURITY AGREEMENTS AND FINANCING
STATEMENTS, AND THE ENDORSEMENT OF INSTRUMENTS).
THE AMOUNT OF ALL MONIES
EXPENDED AND ALL COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES AND LEGAL
EXPENSES) INCURRED BY LAURUS IN CONNECTION WITH OR AS A RESULT OF THE
PERFORMANCE OR OBSERVANCE OF SUCH AGREEMENTS OR THE TAKING OF SUCH ACTION BY
LAURUS SHALL BE CHARGED TO COMPANY'S ACCOUNT AS A LOAN AND ADDED TO THE
OBLIGATIONS.
TO FACILITATE LAURUS' PERFORMANCE OR OBSERVANCE OF SUCH COVENANTS
OF COMPANY, COMPANY HEREBY IRREVOCABLY APPOINTS LAURUS, OR LAURUS' DELEGATE,
ACTING ALONE, AS COMPANY'S ATTORNEY IN FACT (WHICH APPOINTMENT IS COUPLED WITH
AN INTEREST) WITH
2
the right (but not the duty) from time to time to create, prepare, complete,
execute, deliver, endorse or file in the name and on behalf of Company any