Exhibit 4.20
Loan Schedule
Borrower: PC DYNAMICS OF TEXAS, INC.
Address: 00000 XX 000 Xxxx
Xxxxxx, Xxxxx 00000
Date: March 25, 1999
This Loan Schedule forms an integral part of the Loan and Security Agreement
between the above Borrower and FINOVA Capital Corporation dated the above
date, and all references herein and therein to "this Agreement" shall be
deemed to refer to said Agreement, this Loan Schedule and the attached
Definition Schedule.
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TOTAL FACILITY:
$2,035,000.00
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LOANS:
Revolving Credit Loans: A revolving tine of credit consisting of loans
against Borrowers Eligible Receivables ("Receivable Loans") and
against Borrowers Eligible Inventory ("Inventory Loans") (the
Receivable Loans and the Inventory Loans shall be collectively
referred to as the "Revolving Credit Loans") in an aggregate
outstanding principal amount not to exceed the lesser of (a) or (b)
below:
(a) One Million Five Hundred Thousand Dollars ($1,500,000.00)
(the "Revolving Credit Limit", any Loan Reserves, or
(b) the sum of
(i) an amount equal to (A) eighty percent (80%) of the net
amount of Eligible Receivables, less (B) the aggregate
undrawn face amount of all Letters of Credit issued under
this Agreement; plus
(ii) an amount not to exceed the lesser of (A) fifty
percent (50%) of the value of Borrowers Eligible Inventory,
calculated at the lower of cost or market value and
determined on a first-in, first-out basis, or (B) Two
Hundred Thousand Dollars ($200,000), provided that,
notwithstanding the foregoing, advances against raw
materials inventory shall never exceed one hundred thousand
dollars ($100,000.00) less
(iii) any Loan Reserves.
Term Loans: one or more term loans against the value of Borrowers
machinery and equipment ("Term Loans") in an aggregate outstanding
principal amount not to exceed Three Hundred Sixty Thousand Dollars
($360,000.00); provided, that the Terms Loans, if any, shall be in
such amounts and on such terms as are set forth on separate promissory
notes of Borrower from time to time, each in form and substance
satisfactory to FINOVA in its sole discretion. All Term Loans shall be
amortized over five years, but due and payable at the end of the
second year.
Capital Expenditure Loan: one or more term loans against seventy-five
percent (75%) of the Borrower's hard cost of the Equipment purchased,
and contingent upon covenant compliance ("Capital Expenditure Loans")
in an aggregate outstanding principal amount not to exceed One Hundred
Seventy Five Thousand Dollars ($175,000.00); provided, that the
Capital Expenditure Loans, if any, shall be in such amounts and on
such terms as are set forth on separate promissory notes of Borrower
from time to time, each in form and substance satisfactory to FINOVA
in its sole discretion. All Capital Expenditure Loans shall be
interest only for the first year, then amortized over four years, but
due and payable at the end of the second year.
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INTEREST AND FEES:
Revolving Interest Rate. Borrower shall pay FINOVA interest on the
daily outstanding balance of Borrowers Revolving Credit Loans at a per
annum rate of three percent (3%) in excess of the rate of interest
announced publicly by Citibank, N.A., (or any successor thereto), from
time to time as its "prime rate" (the "Prime Rate") which may not be
such institution's lowest rate. The interest rate chargeable hereunder
in respect of the Revolving Credit Loans (herein, the "Revolving
Interest Rate") shall be increased or decreased, as the case may be,
without notice or demand of any kind, upon the announcement of any
change in the Prime Rate. Each change in the Prime Rate shall be
effective hereunder on the first day following the announcement of
such change. Interest charges and all other fees and charges herein
shall be computed on the basis of a year of 360 days and actual days
elapsed and shall be payable to FINOVA in arrears on the first day of
each calendar month.
Notwithstanding the foregoing, subsequent to the first
anniversary date, the interest rate will be reduced to two and one-
half percent (2.5%), provided that Borrower maintains the following:
(i) continued profitability for the year ending December 31, 1999;
(ii) meets or exceeds eighty percent (80%) of its profitability
projections; (iii) no Event of Default has occurred; and (iv) FINOVA
has received reviewed financial statements from a Certified Public
Accountant acceptable to FINOVA.
Term Interest Rate: Borrower shall pay FINOVA interest on the daily
outstanding balance of Borrower's Term Loans at a per annum rate of
three percent (3%) in excess of the rate of interest announced
publicly by Citibank, NA., (or any successor thereto), from time to
time as its "prime rate" (the "Prime Rate") which may not be such
institution's lowest rate. The interest rate chargeable hereunder in
respect of the Term Loans (herein, the "Term Interest Rate") shall be
increased or decreased, as the case may be, without notice or demand
of any kind, upon the announcement of any change in the Prime Rate.
Each change in the Prime Rate shall be effective hereunder on the
first day following the announcement of such change. Interest charges
and all other fees and charges herein shall be computed on the basis
of a year of 360 days and actual days elapsed and shall be payable to
FINOVA in arrears on the first day of each calendar month.
Notwithstanding the foregoing, subsequent to the first
anniversary date, the interest rate will be reduced to two and one-
half percent (2.5%). provided that Borrower maintains the following:
(i) continued profitability for the year ending December 31, 1999;
(ii) meets or exceeds eighty percent (80%) of its profitability
projections; (iii) no Event of Default has occurred; and (iv) FINOVA
has received reviewed financial statements from a Certified Public
Accountant acceptable to FINOVA.
Default Interest Rate. Upon the occurrence and during the continuation
of an Event of Default, Borrower shall pay FINOVA interest on the daily
outstanding balance of the Obligations at a rate per annum which is
four percent (4%) in excess of the rate which would otherwise be
applicable thereto pursuant to this Loan Schedule
Collateral Monitoring Fee. At the closing of this transaction and on
the first day of each calendar month thereafter, Borrower shall pay
FINOVA a collateral monitoring fee of Seven Hundred Fifty Dollars
($750.00) ("Collateral Monitoring Fee") provided however, that Borrower
agrees and acknowledges that each Loan Year a full year's fee shall be
deemed earned at the beginning of the respective Loan Year.
Facility Fee. Borrower shall pay to FINOVA a facility fee equal to one
percent (1%) per annum of the amount of the Total Facility ("Facility
Fee"). The Facility Fee shall be deemed fully earned at the time when
due and is otherwise due and payable annually, commencing upon the
first anniversary of the date of this Agreement and continuing on each
subsequent anniversary thereof.
Examination Fee. Borrower agrees to pay to FINOVA an examination fee in
the amount of Seven Hundred Fifty Dollars ($750.00) per person per day
in connection with each audit or examination of Borrower performed by
FINOVA prior to or after the date hereof, plus all costs and expenses
incurred in connection therewith (the "Examination Fee"). Without
limiting the generality of the foregoing. Borrower shall pay to FINOVA
an initial Examination Fee in an amount equal to Seven Hundred Fifty
Dollars ($750.00) per person per day, plus all costs and expenses
incurred in connection therewith. Such initial Examination Fee shall be
deemed fully earned at the time of payment and due and payable on the
Closing Date, and shall be deducted from any good faith deposit paid by
Borrower to FINOVA prior to the date of this Agreement.
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CLOSING CONDITIONS:
(1) Minimum Excess Availability. Borrower shall have Excess
Availability as of the Closing Date and not calculated on a thirty (30)
day average under the Revolving Credit Loans of not less than One
Hundred Fifty Thousand Dollars ($150,000.00) after giving effect to (i)
the initial advance hereunder, (ii) any applicable Loan Reserves
against borrowing availability under the Revolving Credit Loans, and
(iii).payment in full of all of Borrowers accounts payable outstanding
thirty (30) days or more from due date and all book overdrafts.
(2) Fees. Borrower shall have paid all fees payable by it on the
Closing Date pursuant to this Agreement.
(3) No Material Adverse Changes. Prior to the Closing Date, there
shall have occurred no material adverse change in the financial
condition of Seller or Borrower, or in the condition of the assets of
Seller, from that shown on the draft financial statements for Seller
dated December 31, 1998. At the closing, Borrower shall deliver to
FINOVA an officers certification confirming that Borrower is unaware of
the existence of any such material adverse change in Seller's financial
condition.
(4) Material Agreements. FINOVA shall have received, reviewed and
approved all material agreements to which Borrower shall be a party,
including any agreements between Seller and Borrower.
(5) Transaction Costs. Borrower shall provide to FINOVA a complete,
itemized summary of all transaction costs paid or incurred by any
Person in connection with the making of the Loan, including any
acquisition costs, as well as appropriate documentation evidencing
such costs and the payment thereof. All such information must be
acceptable to FINOVA, in FINOVA's sole discretion, exercised in good
faith.
(6) Other Matters. All other documents and legal matters in connection
with the transactions contemplated by this Agreement shall have been
delivered, executed and recorded and shall be in form and substance
satisfactory to FINOVA and its counsel.
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BORROWER INFORMATION:
Borrower's State of Incorporation: Texas
Borrower's copyrights, patents trademarks, and licenses:
[Borrower to Supply on Separate Exhibit].
Fictitious Names/Prior Corporate Names:
Prior Corporate Names: None
Fictitious Names: None
Borrower Locations:
00000 XX 000 Xxxx, Xxxxxx, Xxxxx 00000
Borrowers Federal Tax Identification Number 00-0000000
Permitted Encumbrances:
Indebtedness between Borrower and Seller that has been
Subordinated to the Borrower
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FINANCIAL COVENANTS
Borrower shall comply with all of the following covenants. Compliance
shall be determined as of the end of each month, except as otherwise
specifically provided below:
Current Ratio. Borrower shall maintain a ratio of Current Assets to
Current Liabilities of not less than 1.0 to 1.0;
Net Worth. Borrower shall maintain Net Worth of not less than the
following:
(i) One Hundred Thousand Dollars ($100,000.00) from April 1, 1999
up to and through June 29, 1999;
(ii) Two Hundred Seventy Five Thousand Dollars ($275,000.00) from
June 30, 1999 up to and through September 29, 1999;
(iii) Four Hundred Fifty Thousand Dollars ($450,000.00) from
September 30, 1999 up to and through December 30, 1999;
(iv) Six Hundred Thousand Dollars ($600,000.00) from December 31,
1999 up to and through March 30, 2000;
(v) Seven Hundred Fifty Thousand Dollars ($750000.00) from March
31, 2000 up to and through June 29, 2000;
(vi) Nine Hundred-Thousand Dollars ($900,000.00) from June 30,
2000 up to and through September 29, 2000;
(vii) One Million Fifty Thousand Dollars ($1,050,000.00) from
September 30, 2000 up to and through December 30, 2000;
(viii) One Million Two Hundred Thousand Dollars ($1,200,000.00)
from December 31, 2000 and thereafter.
Senior Debt Service Coverage Ratio. As of the last day of each calendar
quarter ended March 31. June 30, September 30 or December 31,
Borrower's Operating Cash Flow/Actual for the consecutive
12-month period ending as of such last day must be at least
1.25 times the amount necessary to meet Borrower's Senior
Contractual Debt Service for such 12-month period;
Total Debt Service Coverage Ratio. As of the last day of each calendar
quarter ended March 31, June 30, September 30 or December 31,
Borrower's Operating Cash Flow/Actual for the consecutive
12-month period ending as of such last day must be at least
1.10 times the amount necessary to meet Borrower's Total
Contractual Debt Service for such 12-month period;
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NEGATIVE COVENANTS:
Employee Advances: Borrower shall not make any loans or advances to
Employees except in the ordinary course of business and
consistent with past practices of Borrower in an
aggregate amount not exceeding at any time Ten Thousand
Dollars ($(10,000.00).
Capital Expenditures: Borrower shall not make or incur any unfinanced
Capital Expenditure if, after giving effect thereto, the
aggregate amount of all Capital Expenditures by Borrower
in any fiscal year (beginning with the 1999 fiscal year)
would exceed Fifty Thousand Dollars ($50,000.00).
Compensation: Borrower shall not pay total compensation, including
salaries, withdrawals, fees, bonuses, commissions,
drawing accounts and other payments, whether directly or
indirectly, in money or otherwise, during any fiscal
year to all of Borrowers executives, officers and
directors (or any relative thereof in an amount in
excess of 115% of such total compensation paid in the
immediately preceding fiscal year.
Indebtedness: Borrower shall not create, incur, assume or permit to
exist any Indebtedness for Borrowed Money in excess of
Fifty Thousand ($50,000.00) other than (i) the
Obligations, (ii) other Indebtedness existing on the
date of this Agreement and reflected in Permitted
Encumbrances listed in this Schedule (other than
Indebtedness paid on the date of this Agreement from
proceeds of the initial advances hereunder).
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REPORTING REQUIREMENTS:
Borrower shall provide FINOVA with:
1. Monthly agings aged by invoice date and reconciliations of
Receivables within ten (10) days after the end of each month.
2. Monthly accounts payable agings aged by invoice date, outstanding
or held check registers and inventory certificates within ten (10)
clays after the end of each month.
3. Monthly perpetual inventory reports for the Inventory valued on a
first-in, first-out basis at the lower of cost or market (in
accordance with GAAP) or such other inventory reports as are
reasonably requested by FINOVA, all within ten (10) days after the
end of each month.
4. Monthly unaudited financial statements within thirty (30) days
after the end of each month.
5. Quarterly compilation financial statement within thirty (30) days
after the end of each fiscal quarter.
6. Audited consolidated and consolidating fiscal financial statements
within one hundred twenty (12O) days after the end of each fiscal
year, and with an opinion issued by a Certified Public Accountant
which is acceptable to FINOVA.
7. Annual operating budgets (including income statements, balance
sheets and cash flow statements, by month) for the upcoming fiscal
year of Borrower within thirty (30) days prior to the end of each
fiscal year of Borrower.
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TERM:
The initial term of this Agreement shall be two (2) year(s) from the
date hereof (the "Initial Term") and shall be automatically renewed for
successive periods of one (1) year each (each, a "Renewal Term"), unless
earlier terminated as provided elsewhere in this Agreement.
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TERMINATION FEE:
(A) Revolving Credit Loans Facility. The Termination Fee applicable to
the Revolving Credit Loans facility shall be an amount equal to the
following percentage of the Revolving Credit Limit:
(i) five percent (5%), if such early termination occurs on or
prior to the first anniversary of the date of this Agreement;
(ii) two percent (2%), if such early termination occurs after the
first anniversary of the date of this Agreement.
(B) Term Loans. The Termination Fee applicable to the Term Loans shall
be equal to:
(i) five percent (5%) of the amount prepaid if such prepayment is
made during the Loan Year beginning on the Closing Date;
(ii) two percent (2%) of the amount prepaid if such prepayment is
made during the Loan Year beginning on the first anniversary of
the Closing Date.
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DISBURSEMENT:
Unless and until Borrower otherwise directs FINOVA in writing, all
loans shall be wired to Borrower's following operating account:
Compass Bank - Frisco Banking Center
0000 Xxxx Xxxx
Xxxxxx, Xxxxx 00000
000-000-0000
Fax: 000-000-0000
Account # [ deleted for confidentiality ]
Contacts: Xxx Xxxxx. Bank Manager or Xxxxxx Xxxxxxxxx
ABA# [ deleted for confidentiality ]
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BORROWER: FINOVA:
PC DYNAMICS OF TEXAS, INC. FINOVA CAPITAL
CORPORATION
By /s/ By: /s/
-------------------------- -----------------------------
D. Xxxxxx Xxxxx, President Xxxx Xxxxxxxx, Vice-President
STATE OF TEXAS )
) ss:
COUNTY OF DALLAS )
BEFORE ME, a Notary Public, in and for said county and state,
personally appeared the above-named PC Dynamics of Texas, Inc., a
Texas corporation, by d. Xxxxxx Xxxxx, its President who acknowledged
that he did sign the foregoing agreement and that the same is his free
act and deed and the free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal at
Dallas, Dallas County, Texas, this 25th day of March, 1999.
/s/
------------------------------------
Notary Public for the State of Texas
[ SEAL APPEARS HERE ]
XXXXXXXXX XXX XXXXXXXX
Notary Public
STATE OF TEXAS
My Comm Exp. O8/15/200O
DEFINITION SCHEDULE
Borrower: PC Dynamics of Texas, Inc.
Date: March 25, 1999
This Definition Schedule forms an integral part of the Loan and Security
Agreement between the above Borrower and FINOVA Capital Corporation dated
the above date, and all references herein and therein to "this Agreement"
shall be deemed to refer to said Agreement, this Definition Schedule, and
the Loan Schedule.
"Capital Expenditures" means all expenditures made and liabilities
incurred in accordance with GAAP for the acquisition of any fixed asset or
improvement, replacement, substitution or addition thereto which has a
useful life of more than one year and including, without limitation, those
arising in connection with Capital Leases.
"Capital Lease" means any lease of property by Borrower that, in
accordance with GAAP. should be capitalized for financial reporting
purposes and reflected as a liability on the balance sheet of Borrower.
"Closing Date" means the date of the initial advance made by FINOVA
pursuant to this Agreement.
"Eligible Inventory" means Inventory which FINOVA, in its Permitted
Discretion, deems Eligible Inventory, based on such considerations as
FINOVA may from time to time deem appropriate. Without limiting the
generality of the foregoing, no Inventory shall be Eligible Inventory
unless, in FINOVA's Permitted Discretion, such Inventory (i) consists of
raw materials and finished goods, in good, new and salable condition which
are not obsolete, unmerchantable, slow moving, returned, damaged and/or
defective, (ii) are not comprised of work in process, packaging materials
or supplies; (iii) meets all standards imposed by any governmental agency
or authority; (iv) conforms in all respects to the warranties and
representations set forth herein; (v) is at all times subject to FINOVA's
duly perfected, first priority security interest; and (vi) is situated at
a location in compliance with this Agreement.
"Eligible Receivables" means Receivables arising in the ordinary
course of Borrowers business from the sale of goods or rendition of
services, which FINOVA, in its Permitted Discretion, shall deem eligible
based on such considerations as FINOVA may from time to time deem
appropriate. Without limiting the foregoing, a Receivable shall not be
deemed to be an Eligible Receivable if (i) the account debtor has failed
to pay the Receivable within a period of ninety (90) days after invoice
date, to the extent of any amount remaining unpaid after such period; (ii)
the account debtor has failed to pay more than twenty five percent (25%)
of all outstanding Receivables owed by it to Borrower within ninety (90)
days, after invoice date; (iii) the account debtor is an affiliate of
Borrower; (iv) the goods relating thereto are placed on consignment,
guaranteed sale, "xxxx and hold," "COD" or other terms pursuant to which
payment by the account debtor may be conditional; (v) the account debtor
is not located in the United States or Ontario or Alberta, Canada, unless
the Receivable is supported by a letter of credit or other form of
guaranty or security, in each case in form and substance satisfactory to
FINOVA; (vi) the account debtor is the United States or any department,
agency or instrumentality thereof or any State, city or municipality of
the United States, except as otherwise agreed to in writing by FINOVA;
(vii) Borrower is or may become liable to the account debtor for goods
sold or services rendered by the account debtor to Borrower; (viii) the
account debtor's total obligations to Borrower exceed fifteen percent
(15%) of all Eligible Receivables, to the extent of such excess, except
that (a) Receivables due from Rockwell International shall not exceed
sixty percent (60%) of all Eligible Receivables provided such Receivables
are within sixty (60) days from invoice date, (b) Receivables due from
Lockheed Martins shall not exceed twenty-five percent (25%) provided such
Receivables are within sixty (60) days from invoice date, and (c)
Receivables due from Honeywell, Inc. shall not exceed twenty-five percent
(25%) of all Eligible Receivables provided such Receivables are within
sixty (60) days from invoice date; (ix) the account debtor disputes
liability or makes any claim with respect thereto (up to the amount of
such liability or claim), or is subject to any insolvency or bankruptcy
proceeding, or becomes insolvent, fails or goes out of a material portion
of its business; (x) the amount thereof consists of late charges or
finance charges; (xi) the amount thereof consists of a credit balance more
than ninety (90) days past due; (xii) the face amount thereof exceeds
Seventy Thousand Dollars ($70,000.00) unless accompanied by evidence of
shipment of the goods relating thereto satisfactory to FINOVA in its
Permitted Discretion; (xiii) the invoice constitutes a progress billing on
a project not yet completed, except that the final billing at such time as
the matter has been completed and delivered to the customer may be deemed
an Eligible Receivable; (xiv) the amount thereof is not yet represented by
an invoice or xxxx issued in the name of the applicable account debtor;
(xv) the amount thereof is denominated in or payable with any currency
other than U.S. Dollars; or (xvi) such Receivable is not at all times
subject to FINOVA's duly perfected first priority security interest.
"Equipment" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment,
furnishings, fixtures, trade fixtures, motor vehicles, tools, parts, dyes,
jigs, goods and other tangible personal property (other than Inventory) of
every kind and description used in Borrower's operations or owned by
Borrower and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions or
improvements to any of the foregoing, wherever located.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Boards which are
applicable to the circumstances as of the date of determination
consistently applied, except that, for the financial covenants set forth
in this Agreement, GAAP shall be determined on the basis of such
principles in effect on the date hereof and consistent with those used in
the preparation of the audited financial statements delivered to FINOVA
prior to the date hereof.
"Guarantor" means D. Xxxxxx Xxxxx, Performance Interconnect
Corporation, Associates Funding Group, Inc., Winterstone Management, Inc.,
and JH & BC Corporation.
"Indebtedness" means all of Borrower's present and future
obligations, liabilities, debts, claims and indebtedness, contingent,
fixed or otherwise, however evidenced, created, incurred, acquired, owing
or arising, whether underwritten or oral agreement, operation of law or
otherwise, and includes, without limiting the foregoing (i) the
Obligations, (ii) obligations and liabilities of any Person secured by a
lien, claim, encumbrance or security interest upon property owned by
Borrower, even though Borrower has not assumed or become liable therefor,
(iii) obligations and liabilities created or arising under any lease
(including Capital Leases) or conditional sales contract or other title
retention agreement with respect to property used or acquired by Borrower,
even though the rights and remedies of the lessor, seller or lender are
limited to repossession, (iv) all unfunded pension fund obligations and
liabilities and (v) deferred tax liabilities.
"Indebtedness for Borrowed Money" means without duplication, all
Indebtedness: (i) in respect of borrowed money (including, without
limitation, pursuant to the Loan Documents or any Capital Leases), (ii)
evidenced by a note, debenture, or other like written obligation to pay
money (including, without limitation, all interest on the Obligations),
(iii) for the deferred purchase price of property (other than trade
payables arising in the ordinary course of business), or (iv) in respect
of obligations under conditional sales or other title retention
agreements; and all guaranties of any or all of the foregoing.
"Inventory" means all of Borrower's now owned and hereafter acquired
goods, merchandise or other personal property, wherever located, to be
furnished under any contract of service or held for sale or lease, all raw
materials, work in process, finished goods and materials and supplies of
any kind, nature or description which are or might be used or consumed in
Borrower's business or used in connection with the manufacture, packing,
shipping, advertising, selling or finishing of such goods, merchandise or
other personal property, and all documents of title or other documents
representing them.
"Lien" means any mortgage pledge, assignment, lien, charge,
encumbrance or security interest of any kind, or the interest of a vendor
or lessor under any conditional sale agreement, Capitalized Lease or title
retention agreement.
"Loan Documents" means, collectively, this Agreement, any note or
notes executed by Borrower and payable to FINOVA, and any other present or
future agreement entered into in connection with this Agreement, together
with all alterations, amendments, changes, extensions, modifications,
refinancings, refundings, renewals, replacements, restatements, or
supplements, of or to any of the foregoing.
"Loan Party" means Borrower, each Guarantor, each Subordinating
Creditor and each other party ( other than FINOVA) to any Loan Document.
"Loan Year" means each twelve month period commencing on the Closing
Date and applicable anniversary dates of the Closing Date.
"Net Worth" at any date means the Borrower's net worth as determined
in accordance with GAAP.
"Obligations" means all present and future loans, advances, debts,
liabilities, obligations, covenants, duties and indebtedness at any time
owing by Borrower to FINOVA, whether arising from an extension of credit,
opening of a letter of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including,
without limitation, those acquired by assignment and any participation by
FINOVA in Borrower's debt's owing to others), absolute or contingent, due
or to become due, including, without limitation, all interest, charges,
expenses, fees, attorney's fees, expert witness fees, Examination Fees,
Collateral Monitoring Fees, Closing Fees, Facility Fees, Termination Fees,
and any other sums chargeable to Borrower hereunder or under any other
agreement with FINOVA.
"Operating Cash Flow/Actual" means, for any period, Borrower's net
income or loss (excluding the effect of any extraordinary gains or
losses), determined in accordance with GAAP, plus or minus each of the
following items, to the extent deducted from or added to the revenues of
Borrower in the calculation of net income or loss: (i) depreciation; (ii)
amortization and other non-cash charges; (iii) interest and fee expenses
paid or accrued; (iv) total federal and state income tax expense
determined as the accrued liability of Borrower in respect of such period,
regardless of what portion of such expense has actually been paid by
Borrower in respect of such period; (v) gain or loss on sale of property,
plant or Equipment of Borrower; and after deduction for each of (a)
federal and state income taxes, to the extent actually paid during such
period; (b) any non-cash income; and (c) all actual Capital Expenditures
made during such period and not financed.
"Permitted Discretion" means FINOVA's judgment exercised in good
faith based upon its consideration of any factor which FINOVA believes in
good faith: (i) will or could adversely affect the value of any
Collateral, the enforceability or priority of FINOVA's liens thereon or
the amount which FINOVA would be likely to receive (after giving
consideration to delays in payment and costs of enforcement) in the
liquidation of such Collateral; (ii) suggests that any collateral report
or financial information delivered to FINOVA by any Person on behalf of
the Borrower is incomplete, inaccurate or misleading in any material
respect; (iii) materially increases the likelihood of a bankruptcy,
reorganization or other Insolvency proceeding involving the Borrower, any
Loan Party or any of the Collateral, or (iv) creates or reasonably could
be expected to create an Event of Default. In exercising such judgment,
FINOVA may consider such factors already included in or tested by the
definition of Eligible Receivables or Eligible inventory, as well as any
of the following: (i) the financial and business climate of the Borrower's
industry and general macroeconomic conditions, (ii) changes in collection
history and dilution with respect to the Receivables, (iii) changes in
demand for, and pricing of, Inventory. (iv) changes in any concentration
of risk with respect to Receivables and/or Inventory, and (v) any other
factors that change the credit risk of lending to the Borrower on the
security of the Receivables and Inventory. The burden of establishing lack
of good faith hereunder shall be on the Borrower.
"Permitted Encumbrance" means each of the liens, mortgages and other
security interests set forth on the Loan Schedule.
"Permitted Liens" means any of the following Liens (i) Liens in the
Collateral granted to FINOVA; (ii) Liens for taxes or assessments and
similar charges, which either are (a) not delinquent or (b) being
contested diligently and in good faith by appropriate proceedings, and as
to which Borrower has set aside reserves on its books in accordance with
GAAP; (iii) statutory Liens, such as mechanic's, materialman's,
warehouseman's, carriers or other like Liens, incurred in good faith in
the ordinary course of business, provided that the underlying obligations
relating to such Liens are paid in the ordinary course of business, or are
being contested diligently and in good faith by appropriate proceedings
and as to which Borrower has set aside reserves on its books in accordance
with GAAP, or the payment of which obligations are otherwise secured in a
manner satisfactory to FINOVA; (iv) zoning ordinances, easements,
licenses, reservations. provisions, covenants, conditions, waivers or
restrictions on the use of Property and other title exceptions, in each
case, that are acceptable to FINOVA; (v) Liens to secure payment of
insurance premiums (a) to be paid in accordance with applicable laws in
the ordinary course of business relating to payment of worker's
compensation, or (b) that are required for the participation in any fund
in connection with worker's. compensation, unemployment insurance, old-age
pensions or other social security programs; and (vi) Permitted
Encumbrances.
"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association,
corporation, limited liability company, government, or any agency or
political division thereof, or any other entity.
"Receivables" means all of Borrower's now owned and hereafter
acquired accounts (whether or not earned by performance), proceeds of any
letters of credit naming Borrower as beneficiary, contract rights, chattel
paper, instruments, documents and all other forms of obligations at any
time owing to Borrower, all guaranties and other security therefor,
whether secured or unsecured, all merchandise returned to or repossessed
by Borrower, and all rights of stoppage in transit and all other rights or
remedies of an unpaid vendor, lienor or secured party.
"Seller" means PC Dynamics, Inc. and M-Wave, Inc.
"Seller Noncompete Agreement" means that certain noncompete agreement
between Seller, Borrower, and Performance Interconnect Corporation, dated
as of the same date as this schedule
"Seller Subordinated Notes" means any and all indebtedness owed by
Borrower to Seller.
"Senior Contractual Debt Service" means, for any period, the sum of
payments made or required to be made by Borrower during such period for
(i) interest, fees and scheduled principal payments due on the Term Loans
(excluding voluntary prepayment and payments made from Borrower's Excess
Cash Flow, as required pursuant to the Loan Schedule), and (ii) interest
only payments due on the Revolving Credit Loans facility plus the
Collateral Monitoring Fee, the Facility Fee, the Examination Fee, and the
Unused Line Fee, and (iii) interest and scheduled principal payments due
on any and all other Indebtedness for Borrowed Money, excluding the
Subordinated Debt.
"Subordinated Debt" means liabilities of Borrower the repayment of
which is subordinated, to the payment and performance of the Obligations.
pursuant to a subordination agreement acceptable to FINOVA in its sole
discretion, including without limitation the indebtedness of Borrower
described in the Subordination Agreements.
"Subordinating Creditor" means M-Wave, Inc.
"Total Contractual Debt Service" means, for any period, the sum of
payments made (or. as to clause (i) of this sentence, required to be made)
by Borrower during such period for (i) Senior Contractual Debt Service,
(ii) pursuant to the Seller Subordinated Note and/or Seller Noncompete
Agreement, and (iii) interest and scheduled principal payments due on any
and all other Indebtedness for Borrowed Money of Borrower, including
without limitation the Subordinated Debt.
Other Terms. All accounting terms used in this Agreement, unless
otherwise indicated, shall have the meanings given to such terms in
accordance with GAAP. All other terms contained in this Agreement, unless
otherwise indicated, shall have the meanings provided by the applicable
Uniform Commercial Code or equivalent statute, to the extent such terms
are defined therein.
