EXHIBIT 10.33(a)
LOAN AGREEMENT
Dated as of July 5, 1995
between
IOMEGA CORPORATION
and
XXXXX FARGO BANK, N.A.,
COMMERCIAL FINANCE DIVISION
TABLE OF CONTENTS
SECTION PAGE
Section 1. DEFINITIONS. . . . . . . . . . . . . . . . . 1
1.1 "Accounts". . . . . . . . . . . . . . . . . 1
1.2 "Availability Reserves" . . . . . . . . . . 1
1.3 "Cash Collateral Account" . . . . . . . . . 2
1.4 "Closing Date". . . . . . . . . . . . . . . 2
1.5 "Collateral". . . . . . . . . . . . . . . . 2
1.6 "Eligible Accounts" . . . . . . . . . . . . 2
1.7 "Equipment" . . . . . . . . . . . . . . . . 4
1.8 "Event of Default". . . . . . . . . . . . . 4
1.9 "Facility A". . . . . . . . . . . . . . . . 4
1.10 "Facility A Revolving Credit Note". . . . . 4
1.11 "Facility B". . . . . . . . . . . . . . . . 4
1.12 "Facility B Term Note". . . . . . . . . . . 4
1.13 "GAAP". . . . . . . . . . . . . . . . . . . 4
1.14 "General Intangibles" . . . . . . . . . . . 5
1.15 "Information Certificate" . . . . . . . . . 5
1.16 "Inventory" . . . . . . . . . . . . . . . . 5
1.17 "Letters of Credit" . . . . . . . . . . . . 5
1.18 "Letter of Credit Agreement". . . . . . . . 5
1.19 "Letter of Credit Obligations". . . . . . . 5
1.20 "Loan Documents". . . . . . . . . . . . . . 5
1.21 "Loans" . . . . . . . . . . . . . . . . . . 5
1.22 "Maximum Amount". . . . . . . . . . . . . . 5
1.23 "Net Amount of Eligible Accounts" . . . . . 5
1.24 "Notes" . . . . . . . . . . . . . . . . . . 6
1.25 "Obligations" . . . . . . . . . . . . . . . 6
1.26 "Obligor" . . . . . . . . . . . . . . . . . 6
1.27 "Pledge Agreement". . . . . . . . . . . . . 6
1.28 "Prime Rate". . . . . . . . . . . . . . . . 6
1.29 "Records" . . . . . . . . . . . . . . . . . 6
1.30 "Revolving Loans" . . . . . . . . . . . . . 6
1.31 "Rights to Payment" . . . . . . . . . . . . 7
1.32 "Security Agreement". . . . . . . . . . . . 7
1.33 "Tangible Net Worth". . . . . . . . . . . . 7
1.34 "Term Loans". . . . . . . . . . . . . . . . 7
1.35 "Value" . . . . . . . . . . . . . . . . . . 7
1.36 "Working Capital" . . . . . . . . . . . . . 7
Section 2. CREDIT FACILITIES. . . . . . . . . . . . . . 7
2.1 Facility A. . . . . . . . . . . . . . . . . 7
2.2 Facility B. . . . . . . . . . . . . . . . . 8
2.3 Letters of Credit . . . . . . . . . . . . . 9
2.4 Overadvance . . . . . . . . . . . . . . . . 10
2.5 Availability Reserves . . . . . . . . . . . 10
Section 3. INTEREST AND FEES. . . . . . . . . . . . . . 10
3.1 Interest. . . . . . . . . . . . . . . . . . 10
3.2 Maximum Interest. . . . . . . . . . . . . . 11
3.3 Payments . . . . . . . . . . . . . . . . . 11
3.4 Closing Fee. . . . . . . . . . . . . . . . 12
3.5 Unused Line Fee. . . . . . . . . . . . . . 12
3.6 Audit Fees . . . . . . . . . . . . . . . . 12
3.7 Computation and Payment. . . . . . . . . . 12
Section 4. CONDITIONS PRECEDENT . . . . . . . . . . . 12
4.1 Initial Credit . . . . . . . . . . . . . . 12
4.2 Subsequent Credit. . . . . . . . . . . . . 14
Section 5. GRANT OF SECURITY INTEREST . . . . . . . . 15
Section 6. COLLECTION AND ADMINISTRATION . . . . . . . 15
6.1 Cash Collateral Account. . . . . . . . . . 15
6.2 Statements . . . . . . . . . . . . . . . . 16
6.3 Payments . . . . . . . . . . . . . . . . . 16
6.4 Use of Proceeds. . . . . . . . . . . . . . 17
Section 7. REPRESENTATIONS AND WARRANTIES . . . . . . 17
7.1 Legal Status . . . . . . . . . . . . . . . 17
7.2 Authorization and Validity . . . . . . . . 18
7.3 No Violation . . . . . . . . . . . . . . . 18
7.4 No Claims. . . . . . . . . . . . . . . . . 18
7.5 Correctness of Financial Statement . . . . 18
7.6 Income Tax Returns . . . . . . . . . . . . 18
7.7 No Subordination . . . . . . . . . . . . . 18
7.8 Permits, Franchises. . . . . . . . . . . . 18
7.9 ERISA. . . . . . . . . . . . . . . . . . . 19
7.10 Other Obligations. . . . . . . . . . . . . 19
7.11 Environmental Matters. . . . . . . . . . . 19
7.12 No Default . . . . . . . . . . . . . . . . 19
7.13 Priority of Liens. . . . . . . . . . . . . 19
Section 8. AFFIRMATIVE COVENANTS. . . . . . . . . . . 19
8.1 Punctual Payments. . . . . . . . . . . . . 20
8.2 Records and Premises . . . . . . . . . . . 20
8.3 Collateral Reporting . . . . . . . . . . . 20
8.4 Financial Statements . . . . . . . . . . . 21
8.5 Compliance . . . . . . . . . . . . . . . . 22
8.6 Insurance. . . . . . . . . . . . . . . . . 22
8.7 Facilities . . . . . . . . . . . . . . . . 22
8.8 Taxes and Other Liabilities. . . . . . . . 22
8.9 Litigation . . . . . . . . . . . . . . . . 22
8.10 Financial Condition. . . . . . . . . . . . 22
8.11 Notice to Lender . . . . . . . . . . . . . 23
8.12 Further Assurances . . . . . . . . . . . . 23
Section 9. NEGATIVE COVENANTS . . . . . . . . . . . . 23
9.1 Other Indebtedness . . . . . . . . . . . . 23
9.2 Merger, Consolidation, Transfer of
Assets . . . . . . . . . . . . . . . . . 24
9.3 Guaranties . . . . . . . . . . . . . . . . 24
9.4 Loans, Advances, Investments . . . . . . . 24
9.5 Dividends, Distributions . . . . . . . . . 24
9.6 Pledge of Assets . . . . . . . . . . . . . 24
9.7 New Collateral Location. . . . . . . . . . 24
Section 10. EVENTS OF DEFAULT . . . . . . . . . . . . . 25
10.1 Events of Default . . . . . . . . . . . . . 25
10.2 Remedies . . . . . . . . . . . . . . . . . 26
Section 11. TERM OF AGREEMENT AND MISCELLANEOUS . . . . 27
11.1 Term . . . . . . . . . . . . . . . . . . . 27
11.2 No Waiver. . . . . . . . . . . . . . . . . 28
11.3 Notices. . . . . . . . . . . . . . . . . . 28
11.4 Costs, Expenses and Attorneys' Fees. . . . 29
11.5 Successors, Assignment . . . . . . . . . . 29
11.6 Entire Agreement, Amendment. . . . . . . . 30
11.7 No Third Party Beneficiaries . . . . . . . 30
11.8 Time . . . . . . . . . . . . . . . . . . . 30
11.9 Severability of Provisions . . . . . . . . 30
11.10 Governing Law . . . . . . . . . . . . . . . 30
11.11 Confidentiality . . . . . . . . . . . . . . 30
LOAN AGREEMENT
(LINE OF CREDIT)
This Loan Agreement dated July 5, 1995 is entered into by
and between Xxxxx Fargo Bank, National Association, a national
banking association ("Lender") and Iomega Corporation, a Delaware
corporation ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender enter into
certain financing arrangements with Borrower pursuant to which
Lender may make loans and provide other financial accommodations
to Borrower; and
WHEREAS, Lender is willing to make such loans and provide
such financial accommodations on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1. DEFINITIONS
All terms used herein which are defined in Article 1 or
Article 9 of the Uniform Commercial Code shall have the meanings
given therein unless otherwise defined in this Agreement. Any
accounting term used herein unless otherwise defined or set forth
in this Agreement shall have the meanings customarily given to
such term in accordance with GAAP. For purposes of this
Agreement, the following terms shall have the respective meanings
given to them below:
1.1 "Accounts" shall mean all present and future rights of
Borrower to payment for goods sold or leased or for services
rendered, which are not evidenced by instruments or chattel
paper, and whether or not earned by performance.
1.2 "Availability Reserves" shall mean, as of any date of
determination, such amounts as Lender may from time to time
establish and revise in good faith and in a commercially
reasonable manner reducing the amount of Revolving Loans and
Letters of Credit which would otherwise be available to Borrower
under the lending formula(s) provided for herein: (a) to reflect
events, conditions, contingencies or risks which, as determined
by Lender in good faith, do or may affect either (i) the
Collateral or its value, (ii) the assets, business or prospects
of Borrower or any Obligor or (iii) the security interests and
other rights of Lender in the Collateral (including the
enforceability, perfection and priority thereof) or (b) to
reflect Lender's good faith belief that any collateral report or
financial information furnished by or on behalf of Borrower or
any Obligor to Lender is or may have been incomplete, inaccurate
or misleading in any material respect or (c) in respect of any
state of facts which Lender determines in good faith constitutes
an Event of Default or may, with notice or passage of time or
both, constitute an Event of Default.
1.3 "Cash Collateral Account" shall have the meaning set
forth in Section 6.1 hereof.
1.4 "Closing Date" shall mean the date on which all of the
conditions precedent set forth in Section 4 hereof have been
satisfied to Lender's satisfaction.
1.5 "Collateral" shall mean all the property in which
Borrower or an Obligor grants or is required to grant to Lender a
security interest or lien, as described in Section 5 hereof.
1.6 "Eligible Accounts" shall mean Accounts created by
Borrower which are and continue to be acceptable to Lender in its
reasonable discretion based on the criteria set forth below. In
general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide
sale and delivery of goods by Borrower or rendition of services
by Borrower in the ordinary course of its business which
transactions are completed in accordance with the terms and
provisions contained in any documents related thereto;
(b) such Accounts are not unpaid more than [ninety
(90)] days after the date of the original invoice for them;
(c) such Accounts comply with the terms and
conditions applicable thereto contained in the Security Agreement
executed in connection therewith;
(d) such Accounts do not arise from sales on
consignment, guaranteed sale, sale and return, sale on approval,
or other terms under which payment by the account debtor may be
conditional or contingent;
(e) the chief executive office of the account debtor
with respect to such Accounts is located in the United States of
America, or, at Lender's option, if: (i) the account debtor has
delivered to Borrower an irrevocable letter of credit issued or
confirmed by a bank satisfactory to Lender, sufficient to cover
such Account, in form and substance satisfactory to Lender and,
if required by Lender, the original of such letter of credit has
been delivered to Lender or Lender's agent and the issuer thereof
notified of the assignment of the proceeds of such letter of
credit to Lender, or (ii) such Account is subject to credit
insurance payable to Lender issued by an insurer and on terms and
in an amount acceptable to Lender, or (iii) such Account is
otherwise acceptable in all respects to Lender (subject to such
lending formula with respect thereto as Lender may determine);
(f) such Accounts do not consist of progress
xxxxxxxx, xxxx and hold invoices or retainage invoices;
(g) the account debtor with respect to such Accounts
has not asserted a counterclaim, defense or dispute and does not
have, and does not engage in transactions which are likely to
give rise to, any right of setoff against such Accounts;
(h) there are no facts, events or occurrences which
would impair the validity, enforceability or collectability of
such Accounts or reduce the amount payable or delay payment
thereunder;
(i) such Accounts are subject to the first priority,
valid and perfected security interest of Lender and any goods
giving rise thereto are not, and were not at the time of the sale
thereof, subject to any liens except those permitted in this
Agreement;
(j) neither the account debtor nor any officer or
employee of the account debtor with respect to such Accounts is
an officer, employee or agent of or affiliated with Borrower
directly or indirectly by virtue of family membership, ownership,
control, management or otherwise;
(k) the account debtors with respect to such Accounts
are not any foreign government, the United States of America, any
State, political subdivision, department, agency or
instrumentality thereof, unless, if the account debtor is the
United States of America, any State, political subdivision,
department, agency or instrumentality thereof, upon Lender's
request, the Federal Assignment of Claims Act of 1940, as
amended, or any similar State or local law, if applicable, has
been complied with in a manner satisfactory to Lender;
(l) there are no proceedings or actions which are
threatened or pending against the account debtors with respect to
such Accounts which might result in any material adverse change
in any such account debtor's financial condition;
(m) such Accounts of a single account debtor or its
affiliates do not constitute more than twenty-five percent (25%)
of all otherwise Eligible Accounts (but the portion of the
Accounts not in excess of such percentage may be deemed Eligible
Accounts);
(n) such Accounts are not owed by an account debtor
who has Accounts unpaid more than ninety (90) days after the date
of the original invoice for them which constitute more than fifty
percent (50%) of the total Accounts of such account debtor;
(o) such Accounts are owed by account debtors whose
total indebtedness to Borrower does not exceed the credit limit
with respect to such account debtors as determined by Lender from
time to time (but the portion of the Accounts not in excess of
such credit limit may still be deemed Eligible Accounts); and
(p) such Accounts are owed by account debtors deemed
creditworthy at all times by Lender, as determined by Lender.
General criteria for Eligible Accounts may be established and
revised from time to time by Lender in good faith. Any Accounts
which are not Eligible Accounts shall nevertheless be part of the
Collateral.
1.7 "Equipment" shall mean all of Borrower's now owned and
hereafter acquired equipment, machinery, computers and computer
hardware and software (whether owned or licensed, but only to the
extent assignable), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed
thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located.
1.8 "Event of Default" shall mean the occurrence or
existence of any event or condition described in Section 10.1
hereof.
1.9 "Facility A" shall mean a line of credit under which
Lender agrees to make Revolving Loans and issue Letters of
Credit, subject to the terms and conditions of this Agreement.
1.10 "Facility A Revolving Credit Note" shall have the
meaning set forth in Section 2.1 hereof.
1.11 "Facility B" shall mean the term loan facility made
available by Lender to Borrower as set forth in Section 2.2
hereof, which Facility B shall be a sub-facility of Facility A.
1.12 "Facility B Term Note" shall have the meaning set
forth in Section 2.2 hereof.
1.13 "GAAP" shall mean generally accepted accounting
principles in the United States of America as in effect from time
to time as set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Boards which
are applicable to the circumstances as of the date of
determination consistently applied, except that, for purposes of
Section 8.10 hereof, 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 Lender prior to the date hereof.
1.14 "General Intangibles" shall mean general intangibles
(including, but not limited to, tax and duty refunds, registered
and unregistered patents, trademarks, service marks, copyrights,
trade names, applications for the foregoing, trade secrets,
goodwill, processes, drawings, blueprints, customer lists,
licenses (whether as licensor or licensee), choses in action and
other claims, and existing and future leasehold interests in
equipment).
1.15 "Information Certificate" shall mean the Information
Certificate of Borrower constituting Exhibit A hereto containing
material information with respect to Borrower, its business and
assets, provided by or on behalf of Borrower to Lender in
connection with the preparation of this Agreement and the other
Loan Documents and the financing arrangements provided for
herein.
1.16 "Inventory" shall mean all of Borrower's now owned and
hereafter existing or acquired raw materials, work in process,
finished goods and all other inventory of whatsoever kind or
nature, wherever located.
1.17 "Letters of Credit" shall mean commercial letters of
credit issued by Lender from time to time under Facility A.
1.18 "Letter of Credit Agreement" shall have the meaning
set forth in Section 2.3(c) hereof.
1.19 "Letter of Credit Obligations" shall mean at any time,
the aggregate amount available to be drawn, plus amounts drawn
and not yet reimbursed, under Letters of Credit.
1.20 "Loan Documents" shall mean, collectively, this
Agreement, the Facility A Revolving Credit Note, the Facility B
Term Note, the Letter of Credit Agreement, the Security
Agreement, the Pledge Agreement and all other notes, guarantees,
landlord waivers, security agreements, subordination agreements,
and other agreements, documents and instruments now or at any
time hereafter executed and/or delivered by Borrower or any
Obligor in connection with this Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.21 "Loans" shall mean, collectively, the Term Loans and
the Revolving Loans.
1.22 "Maximum Amount" shall mean the amount of $60,000,000.
1.23 "Net Amount of Eligible Accounts" shall mean the gross
amount of Eligible Accounts less (a) sales, excise or similar
taxes included in the amount thereof and (b) returns, discounts,
claims, credits and allowances of any nature at any time issued,
owing, granted, outstanding, available or claimed with respect
thereto.
1.24 "Notes" shall mean, collectively, the Facility A
Revolving Credit Note and the Facility B Term Note.
1.25 "Obligations" shall mean all Loans, Letter of Credit
Obligations and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest,
fees and other charges thereon, owing, arising, due or payable
from Borrower to Lender of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other
instrument, whether arising under this Agreement or any of the
other Loan Documents or otherwise, whether direct or indirect
(including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or
hereafter arising and however acquired.
1.26 "Obligor" shall mean any guarantor, endorser,
acceptor, surety or other person liable on or with respect to the
Obligations or who is the owner of any property which is security
for the Obligations, or any of them, other than Borrower.
1.27 "Pledge Agreement" shall mean that certain stock
pledge agreement of even date herewith between Borrower and
Lender relating to the stock of Borrower's domestic subsidiaries,
as it may be modified from time to time.
1.28 "Prime Rate" shall mean the rate of interest most
recently announced at Lender's principal office in San Francisco,
California as its Prime Rate, with the understanding that the
Prime Rate is one of Lender's base rates and serves as the basis
upon which effective rates of interest are calculated for those
loans making reference thereto, and is evidenced by the recording
thereof after its announcement in such internal publication or
publications as Lender may designate.
1.29 "Records" shall mean all of Borrower's present and
future books of account of every kind or nature, purchase and
sale agreements, invoices, ledger cards, bills of lading and
other shipping evidence, statements, correspondence, memoranda,
credit files and other data relating to the Collateral or any
account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets
or containers in or on which the foregoing are stored (including
any rights of Borrower with respect to the foregoing maintained
with or by any other person).
1.30 "Revolving Loans" shall mean advances made by Lender
to Borrower on a revolving basis under Facility A, as set forth
in Section 2.1 hereof.
1.31 "Rights to Payment" shall mean all Accounts, General
Intangibles, contract rights, chattel paper, documents,
instruments, letters of credit, bankers acceptances and
guaranties, all present and future liens, security interests,
rights, remedies, title and interest in, to and in respect of
Accounts and other Collateral (including, without limitation, (a)
rights and remedies under or relating to guaranties, contracts of
suretyship, letters of credit and credit and other insurance
related to the Collateral, (b) rights of stoppage in transit,
replevin, repossession, reclamation and other rights and remedies
of an unpaid vendor, lienor or secured party, (c) goods described
in invoices, documents, contracts or instruments with respect to,
or otherwise representing or evidencing, Accounts or other
Collateral, including, without limitation, returned, repossessed
and reclaimed goods, and (d) deposits by and property of account
debtors or other persons securing the obligations of account
debtors), all monies, securities, credit balances, deposits,
deposit accounts and other property of Borrower now or hereafter
held or received by or in transit to Lender or its affiliates or
at any other depository or other institution from or for the
account of Borrower, whether for safekeeping, pledge, custody,
transmission, collection or otherwise.
1.32 "Security Agreement" shall mean that certain security
agreement of even date herewith between Borrower and Lender, as
it may be modified from time to time.
1.33 "Tangible Net Worth" shall mean the aggregate of total
stockholders' equity plus subordinated debt less any intangible
assets, determined from Borrower's balance sheet prepared in
accordance with GAAP.
1.34 "Term Loans" shall mean term loans made by Lender to
Borrower under Facility B, as set forth in Section 2.2 hereof.
1.35 "Value" shall mean, as determined by Lender in good
faith, with respect to Inventory, the lower of (a) cost computed
on a first-in-first-out basis in accordance with GAAP or
(b) market value.
1.36 "Working Capital" shall mean total current assets less
total current liabilities, determined from Borrower's balance
sheet prepared in accordance with GAAP.
Section 2. CREDIT FACILITIES
2.1 Facility A
(a) Lending Formula. Subject to and upon the terms
and conditions contained herein, Lender agrees to make Revolving
Loans (pursuant to Section 2.1 hereof), Term Loans (pursuant to
Section 2.2 hereof), and issue Letters of Credit (pursuant to
Section 2.3 hereof) from time to time in amounts requested by
Borrower up to an aggregate outstanding principal amount equal to
the lesser of (1) the Maximum Amount, less the aggregate amount
of Term Loans then outstanding; or (2) an amount equal to:
(i) eighty percent (80%) of the Net Amount of
Eligible Accounts, less
(ii) the aggregate amount of Letter of Credit
Obligations then outstanding, and less
(iii) any Availability Reserves.
(b) Reduction of Lending Formula. Lender may, in its
discretion, from time to time, upon not less than five (5) days'
prior notice to Borrower, reduce the lending formula with respect
to Eligible Accounts to the extent that Lender determines in good
faith that: (A) the dilution with respect to the Accounts for any
period (based on the ratio of (1) the aggregate amount of
reductions in Accounts other than as a result of payments in cash
to (2) the aggregate amount of total sales) has increased in any
material respect or may be reasonably anticipated to increase in
any material respect above historical levels, or (B) the general
creditworthiness of account debtors has declined. In determining
whether to reduce the lending formula(s), Lender may consider
events, conditions, contingencies or risks which are also
considered in determining Eligible Accounts or in establishing
Availability Reserves.
(c) Facility A Revolving Credit Note. Borrower's
obligation to repay Revolving Loans made under Facility A shall
be evidenced by a promissory note executed by Borrower,
substantially in the form of Exhibit B hereto (the "Facility A
Revolving Credit Note").
2.2 Facility B.
(a) Lending Formula. Subject to and upon the terms
and conditions contained herein, Lender agrees to make Term Loans
from time to time in amounts requested by Borrower up to an
aggregate outstanding principal amount equal to the lesser of (1)
$10,000,000; or (2) eighty percent (80%) of the orderly
liquidation value of the Equipment up to a maximum of one hundred
percent (100%) of auction value of the Equipment, with such
values to be determined by Lender and subject to reduction from
time to time based on appraisals of the Equipment or otherwise in
Lender's discretion.
(b) Terms and Conditions of Draws Under Facility B.
Advances under Facility B shall be subject to a minimum
$1,000,000 per extension of credit and shall be available only
for a period of one hundred eighty (180) days from the Closing
Date. Each such draw under Facility B shall be amortized over a
period of three (3) years from the date of making the Term Loan,
with the outstanding principal amount of all Term Loans made
under Facility B due and payable one (1) year from the Closing
Date.
(c) Facility B Term Note. Borrower's obligation to
repay Term Loans under Facility B shall be evidenced by one or
more promissory notes executed by Borrower, substantially in the
form of Exhibit C hereto (the "Facility B Term Note").
(d) Third Party Term Lender. At Borrower's option,
Borrower may obtain term loan financing not to exceed $10,000,000
from a party other than Lender, which loans may be secured only
by purchase money liens on Equipment acquired concurrently with
or subsequent to the making of such loans and which loans, in the
aggregate with all loans outstanding under Facility B, do not
exceed $10,000,000. For purposes of this Section 2.2(d), the
Equipment which may be financed with another party includes,
without limitation, "3 Up" Servo Writers and any Servo Writers
hereafter acquired.
2.3 Letters of Credit.
(a) Issuance. Subject to, and upon the terms and
conditions contained herein, at the request of Borrower, Lender
agrees from time to time during the term of this Agreement to
issue Letters of Credit for the account of Borrower containing
terms and conditions acceptable to Lender, provided however that
no Letter of Credit shall have an expiration date beyond ninety
(90) days following the maturity date of the Obligations set
forth in Section 11.1 hereof.
(b) Letter of Credit Sublimits. No Letters of Credit
shall be issued unless, on the date of the proposed issuance of
any Letter of Credit, the Revolving Loans available to Borrower
(subject to the Maximum Amount and Availability Reserves) are
equal to 100% of the face amount of such Letters of Credit.
Effective on the issuance of each Letter of Credit, the amount of
Revolving Loans which would otherwise be available to Borrower
shall be reduced by the amount available to be drawn under such
Letter of Credit. Except in Lender's discretion, (i) the amount
of all Letter of Credit Obligations shall not at any time exceed
$10,000,000. At any time an Event of Default exists or has
occurred and is continuing, upon Lender's request, Borrower shall
furnish cash collateral to Lender for the Letter of Credit
Obligations, and in either case, the Revolving Loans otherwise
available to Borrower shall not be reduced as provided in this
Section 2.3(b) to the extent of such cash collateral.
(c) Letter of Credit Fees. Borrower shall pay to
Lender, for Letters of Credit, one and one-half percent (1.50%)
per annum of the aggregate face amount of such Letters of Credit
outstanding from time to time during the term of this Agreement,
plus all of Lender's normal and customary charges associated with
the issuance thereof, which fees and charges shall be deemed
fully earned upon issuance of each such Letter of Credit, shall
be due and payable on the first business day of each month and
shall not be subject to rebate or proration upon the termination
of this Agreement for any reason.
(d) Letter of Credit Agreement. Each Letter of
Credit shall be subject to the additional terms and conditions of
the Letter of Credit Agreement and related documents, if any,
required by Lender in connection with the issuance thereof (each,
a "Letter of Credit Agreement"). Each draft paid by Lender under
a Letter of Credit shall be deemed a Revolving Loan under
Facility A and shall be repaid by Borrower in accordance with the
terms and conditions of this Agreement applicable to such
Revolving Loans; provided however, that if Facility A is not
available, for any reason whatsoever, at the time any draft is
paid by Lender, or if Revolving Loans are not available under
Facility A at such time due to any limitation on borrowings set
forth herein, then the full amount of such draft shall be
immediately due and payable, together with interest thereon, from
the date such amount is paid by Lender to the date such amount is
fully repaid by Borrower, at the rate of interest applicable to
Revolving Loans. In such event, Borrower agrees that Lender, at
Lender's sole discretion, may debit Borrower's deposit account
with Lender for the amount of any such draft.
2.4 Overadvance. In the event that the outstanding amount
of any component of the Loans, or the aggregate amount of the
outstanding Loans and Letter of Credit Obligations, exceed the
amounts available under the lending formulas, the sublimits for
Letters of Credit set forth in Section 2.3(b) or the Maximum
Amount, as applicable, such event shall not limit, waive or
otherwise affect any rights of Lender in that circumstance or on
any future occasions and Borrower shall, upon demand by Lender,
which may be made at any time or from time to time, immediately
repay to Lender the entire amount of any such excess(es) for
which payment is demanded.
2.5 Availability Reserves. All Loans and Letters of
Credit otherwise available to Borrower pursuant to the lending
formulas, sublimits and subject to the Maximum Amount, and other
applicable limits hereunder shall be subject to Lender's
continuing right to establish and revise Availability Reserves.
Section 3. INTEREST AND FEES
3.1 Interest.
(a) Interest shall accrue on the principal amount of
the Revolving Loans outstanding at the end of each day at a
fluctuating rate per annum equal to one percent (1.0%) plus the
Prime Rate. At Borrower's option, Borrower may utilize the LIBOR
option as defined and set forth in the Facility A Revolving
Credit Note.
(b) Interest shall accrue on the principal amount of
the Term Loans outstanding at the end of each day at a
fluctuating rate per annum equal to one and one-quarter percent
(1.25%) plus the Prime Rate.
(c) Except as provided in the Facility A Revolving
Credit Note, upon and after the occurrence of an Event of
Default, and during the continuation thereof, the principal
amount of all Loans shall bear interest at a rate per annum equal
to two percent (2.0%) above the interest rate otherwise
applicable thereto (the "Default Rate").
The above rates of interest shall increase or decrease by an
amount equal to any increase or decrease in the Prime Rate,
effective as of the opening of business on the day that any such
change in the Prime Rate occurs. The interest and all fees shall
be calculated over a year of 360 days, actual days elapsed.
3.2 Maximum Interest. In no event whatsoever shall the
aggregate of all amounts deemed interest on the Loans and charged
or collected pursuant to the terms of this Agreement or pursuant
to the Facility A Revolving Credit Note or the Facility B Term
Note exceed the highest rate permissible under any law which a
court of competent jurisdiction shall, in a final determination,
deem applicable hereto. If any provisions of this Agreement, the
Facility A Revolving Credit Note or the Facility B Term Note are
in contravention of any such law, such provisions shall be deemed
amended to conform thereto.
3.3 Payments. Except where evidenced by notes or other
instruments issued or made by Borrower to Lender specifically
containing payment provisions which are in conflict with this
Section 3.3 or Section 6.3 (in which event the conflicting
provisions of said notes or other instruments shall govern and
control), the Loans shall be repayable as follows:
(a) Principal on Revolving Loans. Principal payable
on account of Revolving Loans made under Facility A shall be
payable by Borrower to Lender immediately upon the earliest of
(i) the receipt by Lender or Borrower of any proceeds of any of
the Collateral, to the extent of said proceeds, (ii) the
occurrence of an Event of Default in consequence of which Lender
elects to accelerate the maturity and payment of the Obligations,
or (iii) termination of this Agreement pursuant to Section 11
hereof.
(b) Principal on Term Loans. The entire outstanding
principal balance of all Term Loans made under Facility B shall
be due and payable upon the earliest of (i) June 30, 1996, (ii)
the occurrence of an Event of Default in consequence of which
Lender elects to accelerate the maturity and payment of the
Obligations, or (iii) termination of this Agreement pursuant to
Section 11 hereof. The Term Loans may be prepaid without a
prepayment or termination fee.
(c) Interest on All Loans. Interest accrued on the
Revolving Loans and the Term Loans shall be due on the earliest
of (i) the first calendar day of each month (for the immediately
preceding month), computed through the last calendar day of the
preceding month, (ii) the occurrence of an Event of Default in
consequence of which Lender elects to accelerate the maturity and
payment of the Obligations or (iii) termination of this Agreement
pursuant to Section 11 hereof.
3.4 Closing Fee. Borrower shall pay to Lender as a
closing fee the amount of $450,000, which shall be fully earned
as of and payable on the Closing Date.
3.5 Unused Line Fee. Borrower shall pay to Lender monthly
an unused line fee equal to a rate per annum of three-eights of
one percent (3/8 of 1%) of the amount by which the Maximum Amount
exceeds the average daily principal balance of the outstanding
Loans and Letter of Credit Obligations during the immediately
preceding month (or part thereof) while this Agreement is in
effect and for so long thereafter as any of the Loans or Letter
of Credit Obligations are outstanding, which fee shall be payable
on the first day of each month in arrears.
3.6 Audit Fees. In connection with each audit or
examination of Borrower performed by Lender prior to or after the
Closing Date, Borrower shall pay to Lender, on demand, a fee in
the amount of Lender's prevailing rate at the time of such audit
or examination (currently $600.00 per person, per day), plus all
other costs and expenses incurred by Lender in connection with
such audit or examination. Prior to the occurrence of an Event
of Default, Borrower shall not be liable for audit fees in excess
of $20,000 pursuant to this Section 3.6.
3.7 Computation and Payment. Interest and fees shall be
computed on the basis of a 360-day year, actual days elapsed.
Interest shall be payable at the times and place set forth in the
Facility A Revolving Credit Note and the Facility B Term Note.
Section 4. CONDITIONS PRECEDENT
4.1 Initial Credit. The obligation of Lender to extend
any credit contemplated by this Agreement is subject to the
fulfillment to Lender's satisfaction of all of the following
conditions on or prior to July 31, 1995:
(a) Approval of Lender's Counsel. All legal matters
incidental to the extension of credit by Lender shall be
satisfactory to counsel of Lender.
(b) Documentation. Lender shall have received, in
form and substance satisfactory to Lender, each of the following,
duly executed by the parties thereto and such additional
documents as Lender may require:
(i) This Agreement;
(ii) The Facility A Revolving Credit Note;
(iii) The Facility B Term Note;
(iv) The Letter of Credit Agreement;
(v) UCC-1 Financing Statement(s);
(vi) The Security Agreement;
(vii) Cash Collateral Account Agreement;
(viii) The Pledge Agreement (along with the
original stock certificates of Borrower's
domestic subsidiaries pledged thereunder
and appropriate stock powers therefor);
and
(ix) Corporate resolutions of Borrower,
certified by the secretary or assistant
secretary of Borrower, authorizing the
transactions contemplated by the Loan
Documents.
(c) Insurance. Borrower shall have delivered to
Lender evidence of insurance coverage on all Borrower's property,
covering risks, in amounts, issued by companies and in form and
substance satisfactory to Lender, with loss payable endorsements
in favor of Lender.
(d) Financial Condition. There shall have been since
the date of the latest audited financial statements delivered to
Lender prior to the Closing Date no material adverse change, as
determined by Lender in its reasonable discretion, in the
financial condition or business of Borrower or any Obligor, nor
any material decline, as determined by Lender in its reasonable
discretion, in the market value of any collateral required
hereunder or a substantial or material portion of the assets of
Borrower or any Obligor.
(e) Security Interests. Lender shall have received
evidence, in form and substance satisfactory to Lender, that
Lender has valid perfected and first priority security interests
in and liens upon the Collateral and any other property which is
intended to be security for the Obligations or the liability of
any Obligor in respect thereof, subject only to the security
interests and liens permitted herein or in the other Loan
Documents.
(f) Field Review. Lender shall have completed a
field review of the Records and such other information with
respect to the Collateral as Lender may require to determine the
amount of Revolving Loans available to Borrower, the results of
which shall be satisfactory to Lender.
(g) Appraisal. Lender shall have received and deemed
satisfactory the results of an appraisal of Borrower's Equipment,
which appraisal shall have been prepared by an appraiser
acceptable to Lender.
(h) Review of Books and Records. Lender shall have
performed and deemed satisfactory the results of an audit of
Borrower's books and records.
(i) Cash Collateral Account. The Cash Collateral
Account provided for in Section 6.1(a) shall have been opened.
(j) Other Documents. Lender shall have received, in
form and substance satisfactory to Lender, all consents, waivers,
acknowledgments and other agreements from third persons which
Lender may deem necessary or desirable in order to permit,
protect and perfect its security interests in and liens upon the
Collateral or to effectuate the provisions or purposes of this
Agreement and the other Loan Documents, including, without
limitation, acknowledgments by lessors, mortgagees and
warehousemen of Lender's security interests in the Collateral,
waivers by such persons of any security interests, liens or other
claims by such persons to the Collateral and agreements
permitting Lender access to, and the right to remain on, the
premises to exercise its rights and remedies and otherwise deal
with the Collateral.
(k) Opinion. Lender shall have received, in form and
substance satisfactory to Lender and its counsel, such opinion
letters of counsel to Borrower with respect to the Loan Documents
and such other matters as Lender may request.
4.2 Subsequent Credit. The obligation of Lender to make
each extension of credit requested by Borrower hereunder shall be
subject to the fulfillment to Lender's satisfaction of each of
the following conditions:
(a) Compliance. The representations and warranties
contained herein shall be true on and as of the date of the
signing of this Agreement and on the date of each extension of
credit by Lender pursuant hereto, with the same effect as though
such representations and warranties had been made on and as of
each such date, and on each such date, no Event of Default as
defined herein, and no condition, event or act which with the
giving of notice or the passage of time or both would constitute
such an Event of Default, shall have occurred and be continuing
or shall exist.
(b) No Adverse Change. There shall have been since
the date of the latest audited financial statements delivered to
Lender prior to the Closing Date, no material adverse change, as
determined by Lender in its reasonable discretion, in the
financial condition or business of Borrower or any Obligor, nor
any material decline, as determined by Lender in its reasonable
discretion, in the market value of any collateral required
hereunder or a substantial or material portion of the assets of
Borrower or any Obligor.
(c) Documentation. Lender shall have received all
additional documents which may be required in connection with
such extension of credit.
Section 5. GRANT OF SECURITY INTEREST
As security for the Obligations, Borrower has executed
contemporaneously herewith a Security Agreement and Pledge
Agreement granting and pledging to Lender a security interest in
the Collateral as defined therein.
Borrower shall reimburse Lender, immediately upon demand,
for all reasonable costs and expenses incurred by Lender in
connection with any of the foregoing security, including without
limitation, filing and recording fees and reasonable costs of
environmental studies, appraisals, audits and title insurance, if
applicable.
All Loans, Letter of Credit Obligations and all costs, fees
and expenses payable by Borrower hereunder shall constitute one
general Obligation of Borrower, and shall be secured by Lender's
lien upon all of the Collateral.
Section 6. COLLECTION AND ADMINISTRATION
6.1 Cash Collateral Account.
(a) Cash Collateral Account. Borrower shall, at
Borrower's expense and in the manner requested by Lender,
establish and maintain with First Security Bank a blocked account
and with Bank of America a lock box, acceptable to Lender, and
shall direct that remittances and all other collections and
proceeds of Accounts and other Collateral shall be deposited into
such blocked account or lock box and wire transferred daily to
Lender. In its discretion, Lender may replace the blocked
account arrangement with a lockbox account maintained in Lender's
name. In connection therewith, Borrower shall execute such
dominion account and lock box agreements as Lender shall require.
Borrower shall maintain with Lender, and Borrower hereby grants
to Lender a security interest in, a non-interest bearing deposit
account over which Borrower shall have no control ("Cash
Collateral Account") and into which the proceeds of all
Borrower's accounts and other rights to payment in which Lender
has a security interest shall be deposited immediately upon their
receipt.
(b) Calculations. For purposes of calculating
interest on the Obligations, such payments or other funds
received will be applied (conditional upon final collection) as a
principal reduction thereon one (1) business day following the
date of receipt thereof by Lender's Commercial Finance Division.
For purposes of calculating the amount of the Revolving Loans
available to Borrower such payments will be applied (conditional
upon final collection) to the Obligations on the business day of
receipt by the Commercial Finance Division, if such advices are
received within sufficient time (in accordance with Lender's
usual and customary practices as in effect from time to time) to
credit Borrower's loan account on such day, and if not, then on
the next business day.
(c) Immediate Deposit. Borrower and all of its
affiliates, subsidiaries, shareholders, directors, employees or
agents shall, acting as trustee for Lender, receive, as the
property of Lender, any monies, checks, notes, drafts, or any
other payment relating to and/or proceeds of Accounts or other
Collateral which come into their possession or under their
control and immediately upon receipt thereof, shall deposit or
cause the same to be deposited in the Cash Collateral Account, or
remit the same or cause the same to be remitted, in kind, to
Lender. In no event shall the same be commingled with Borrower's
own funds.
6.2 Statements. Lender shall render to Borrower each
month a statement setting forth the balance in Borrower's loan
account(s) maintained by Lender for Borrower pursuant to the
provisions of this Agreement, including principal, interest,
fees, costs and expenses. Each such statement shall be subject
to subsequent adjustment by Lender but shall, absent manifest
errors or omissions, be considered correct and deemed accepted by
Borrower and conclusively binding upon Borrower as an account
stated except to the extent that Lender receives a written notice
from Borrower of any specific exceptions of Borrower thereto
within thirty (30) days after the date such statement has been
mailed by Lender. Until such time as Lender shall have rendered
to Borrower a written statement as provided above, the balance in
Borrower's loan account(s) shall be presumptive evidence of the
amounts due and owing to Lender by Borrower.
6.3 Payments. All amounts due under Loan Documents shall
be payable to the Cash Collateral Account as provided in
Section 6.1 or such other place as Lender may designate from time
to time. Lender may apply payments received or collected from
Borrower or for the account of Borrower (including, without
limitation, the monetary proceeds of collections or of
realization upon any Collateral) to the Obligations, whether or
not then due, in such order and manner as Lender determines. At
Lender's option, all principal, interest, fees, costs, expenses
and other charges provided for in this Agreement or the other
Loan Documents may be charged directly to the loan account(s) of
Borrower. Borrower shall make all payments due Lender free and
clear of, and without deduction or withholding for or on account
of, any setoff, counterclaim, defense, duties, taxes, levies,
imposts, fees, deductions, withholding, restrictions or
conditions of any kind. If after receipt of any payment of, or
proceeds of Collateral applied to the payment of, any of
Borrower's obligations to Lender under this Agreement, Lender is
required to surrender or return such payment or proceeds to any
person or entity for any reason, then the obligations intended to
be satisfied by such payment or proceeds shall be reinstated and
continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by
Lender. Borrower shall be liable to pay to Lender, and does
hereby indemnify and hold Lender harmless for the amount of any
payments or proceeds surrendered or returned. This Section 6.3
shall remain effective notwithstanding any contrary action which
may be taken by Lender in reliance upon such payment or proceeds.
This Section 6.3 shall survive the payment of Borrower's
obligations under the Loan Documents and the termination of this
Agreement.
6.4 Use of Proceeds. Borrower shall use the initial
proceeds of the Revolving Loans provided by Lender to Borrower
hereunder only for: (a) payments to each of the persons listed
in the disbursement order furnished by Borrower to Lender on or
about the date hereof, and (b) costs, expenses and fees in
connection with the preparation, negotiation, execution and
delivery of this Agreement and the other Financing Agreements.
All other Revolving Loans made or Letters of Credit provided by
Lender to Borrower pursuant to the provisions hereof shall be
used by Borrower only for general operating, working capital and
other proper corporate purposes of Borrower not otherwise
prohibited by the terms of this Agreement. None of the proceeds
will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security or for the purposes of
reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for the any
other purpose which might cause any of the Revolving Loans to be
considered a "purpose credit" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, as
amended.
Section 7. REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties
to Lender, which representations and warranties shall survive the
execution of this Agreement and shall continue in full force and
effect until the full and final payment, and satisfaction and
discharge, of all obligations of Borrower to Lender subject to
this Agreement.
7.1 Legal Status. Borrower is a corporation duly
organized and existing and in good standing under the laws of the
State of Delaware, and is qualified or licensed to do business,
and is in good standing as a foreign corporation, if applicable,
in all jurisdictions in which such qualification or licensing is
required or in which the failure to so qualify or to be so
licensed could have a material adverse effect on Borrower.
7.2 Authorization and Validity. The Loan Documents have
been duly authorized, and upon their execution and delivery in
accordance with the provisions hereof will constitute legal,
valid and binding agreements and obligations of Borrower or the
party which executes the same, enforceable in accordance with
their respective terms.
7.3 No Violation. The execution, delivery and performance
by Borrower of each of the Loan Documents do not violate any
provision of any law or regulation, or contravene any provision
of Borrower's certificate of incorporation or bylaws, or result
in a breach of or constitute a default under any contract,
obligation, indenture or other instrument to which Borrower is a
party or by which Borrower may be bound.
7.4 No Claims. There are no pending, or to the best of
Borrower's knowledge threatened, actions, claims, investigations,
suits or proceedings before any governmental authority,
arbitrator, court or administrative agency which may adversely
affect the financial condition or operation of Borrower other
than those disclosed by Borrower to Lender in the Information
Certificate.
7.5 Correctness of Financial Statement. The financial
statement of Borrower dated April 2, 1995, heretofore delivered
by Borrower to Lender is complete and correct and presents fairly
the financial condition of Borrower; discloses all liabilities of
Borrower that are required to be reflected or reserved against
under GAAP, whether liquidated or unliquidated, fixed or
contingent; and has been prepared in accordance with generally
accepted accounting principles consistently applied. Since the
date of such financial statement there has been no material
adverse change in the financial condition of Borrower, nor has
Borrower mortgaged, pledged or granted a security interest in or
encumbered any of its assets or properties except as permitted by
this Agreement.
7.6 Income Tax Returns. Except as set forth in the
Information Certificate, Borrower has no knowledge of any pending
assessments or adjustments of its income tax payable with respect
to any year.
7.7 No Subordination. There is no agreement, indenture,
contract or instrument to which Borrower is a party or by which
Borrower may be bound that requires the subordination in right of
payment of any of Borrower's obligations subject to this
Agreement to any other obligation of Borrower.
7.8 Permits, Franchises. Borrower possesses, and will
hereafter possess, all permits, memberships, franchises,
contracts and licenses required and all trademark rights, trade
names, trade name rights, patents, patent rights and fictitious
name rights necessary to enable it to conduct the business in
which it is now engaged without conflict with the rights of
others.
7.9 ERISA. Borrower is in compliance in all material
respects with all applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended from time to
time (ERISA); Borrower has not violated any provision of any
defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a "Plan"); no
Reportable Event as defined in ERISA has occurred and is
continuing with respect to any Plan initiated by Borrower;
Borrower has met its minimum funding requirements under ERISA
with respect to each Plan; and each Plan will be able to fulfill
its benefit obligations as they come due in accordance with the
Plan documents.
7.10 Other Obligations. Borrower is not in default on any
obligation for borrowed money, any purchase money obligation or
any other material lease, commitment, contract, instrument or
obligation.
7.11 Environmental Matters. Except as disclosed by
Borrower to Lender in writing prior to the date hereof, Borrower
is in compliance in all material respects with all applicable
environmental, hazardous waste, health and safety statutes and
regulations governing its operations and/or properties, including
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA), the Superfund
Amendments and Reauthorization Act of 1986 (XXXX), the Federal
Resource Conservation and Recovery Act of 1976, the Federal Toxic
Substances Control Act and the California Health and Safety Code.
None of the operations of Borrower is the subject of any federal
or state investigation evaluating whether any remedial action
involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the
environment. Borrower has no material contingent liability in
connection with any release of any toxic or hazardous waste or
substance into the environment.
7.12 No Default. As of the Closing Date, no Event of
Default and no condition, event or act which with the giving of
notice or the passage of time or both would constitute such an
Event of Default, shall have occurred and be continuing or shall
exist.
7.13 Priority of Liens. There exist no liens or
encumbrances on any property of Borrower other than Lender's
liens, such other liens or encumbrances as are permitted in the
Loan Documents and such liens described on Schedule 1 hereto.
Section 8. AFFIRMATIVE COVENANTS. Borrower covenants that so
long as Lender remains committed to extend credit to Borrower
pursuant to the terms of this Agreement or any liabilities
(whether direct or contingent, liquidated or unliquidated) of
Borrower to Lender under any of the Loan Documents remain
outstanding, and until payment in full of all obligations of
Borrower subject hereto, Borrower shall:
8.1 Punctual Payments. Punctually pay the interest and
principal on each of the Loan Documents requiring any such
payments at the times and place and in the manner specified
therein, and any fees or other liabilities due under any of the
Loan Documents at the times and place and in the manner specified
therein, and immediately upon demand by Lender, the amount by
which the outstanding principal balance of the Obligations is at
any time in excess of any limitation on borrowings hereunder.
8.2 Records and Premises. Maintain proper books and
records in which true and complete entries shall be made of all
dealings or transactions of or in relation to Collateral and the
business of Borrower in accordance with GAAP. From time to time
as requested by Lender, at the cost and expense of Borrower
(provided that prior to an Event of Default, and except as
provided in Section 3.6, Borrower shall not be liable for costs
and expenses of more than two visits per year from and after the
date hereof), allow Lender or its designee complete access to all
of Borrower's premises during normal business hours and after
notice to Borrower, or at any time and without notice to Borrower
if an Event of Default exists or has occurred and is continuing,
for the purposes of inspecting, verifying and auditing the
Collateral and all of Borrower's books and records, including,
without limitation, the Records, and promptly furnish to Lender
such copies of such books and records or extracts therefrom as
Lender may request, and allow Lender during normal business hours
to use such of Borrower's personnel, equipment, supplies and
premises as may be reasonably necessary for the foregoing and if
an Event of Default exists or has occurred and is continuing for
the collection of Accounts and realization of other Collateral.
8.3 Collateral Reporting. Borrower shall provide Lender
with the following documents in a form satisfactory to Lender:
(a) on a regular basis as required by Lender, a
schedule of Accounts, including without limitation, daily sales,
credit and adjustment journals and cash receipts;
(b) on or before the tenth (10th) day after and as of
the end of each month, (or more frequently as Lender may
request), (i) perpetual inventory reports, (ii) inventory reports
by category and (iii) agings of accounts payable,
(c) upon Lender's request, (i) copies of customer
statements and credit memos, remittance advices and reports, and
copies of deposit slips and bank statements, (ii) copies of
shipping and delivery documents, and (iii) copies of purchase
orders, invoices and delivery documents for Inventory and
Equipment acquired by Borrower;
(d) agings of accounts receivable on or before the
tenth (10th) day after and as of the end of each month or more
frequently as Lender may request;
(e) upon Lender's request, Borrower shall, at its
expense, no more than once in any twelve (12) month period, but
at any time or times as Lender may request on or after an Event
of Default, deliver or cause to be delivered to Lender written
reports or appraisals as to the Collateral in form, scope and
methodology acceptable to Lender and by an appraiser acceptable
to Lender, addressed to Lender or upon which Lender is expressly
permitted to rely; and
(f) such other reports as to the Collateral as Lender
shall request from time to time. If any of Borrower's records of
the Collateral are prepared or maintained by an accounting
service, contractor, shipper or other agent, Borrower hereby
irrevocably authorizes such service, contractor, shipper or agent
to deliver such records, reports, and related documents to Lender
and to follow Lender's instructions with respect to further
services at any time that an Event of Default exists or has
occurred and is continuing.
8.4 Financial Statements. Provide to Lender all of the
following, in form and detail satisfactory to Lender:
(a) not later than one-hundred twenty (120) days
after and as of the end of each fiscal year, an audited financial
statement of Borrower, prepared in accordance with GAAP by a
certified public account acceptable to Lender;
(b) not later than thirty (30) days after and as of
the end of each month, a financial statement of Borrower prepared
by Borrower in accordance with GAAP, together with a
certification of Borrower's chief financial officer;
(c) contemporaneously with each annual and monthly
financial statement of Borrower required hereby, a certificate of
the president or chief financial officer of Borrower that the
financial statements delivered pursuant thereto are accurate and
that there exists no Event of Default nor any condition, act or
event which with the giving of notice or the passage of time or
both would constitute an Event of Default;
(d) promptly upon their becoming available (but not
later than concurrently with the delivery thereof to the
Securities and Exchange Commission), copies of all registration
statements and regular periodic reports (including Forms 10-K and
10-Q) which Borrower or any of its subsidiaries, direct or
indirect, shall have made to or filed with the Securities and
Exchange Commission or any national securities exchange; and
(e) from time to time such other information as
Lender may reasonably request, which may include, without
limitation, budgets, forecasts, projections and other information
respecting the Collateral and the business of Borrower.
8.5 Compliance. Maintain all licenses, permits,
governmental approvals, rights, privileges and franchises
necessary for the conduct of its business; conduct its business
in an orderly and regular manner; and comply with the provisions
of all documents pursuant to which Borrower is organized and/or
which govern Borrower's continued existence and with the
requirements of all laws, rules, regulations and orders of any
governmental authority applicable to Borrower or its business.
8.6 Insurance. Maintain and keep in force insurance of
the types and in amounts customarily carried in lines of business
similar to Borrower's, including but not limited to fire,
extended coverage, public liability, property damage and workers'
compensation, carried with companies and in amounts satisfactory
to Lender, and deliver to Lender from time to time at Lender's
request schedules setting forth all insurance then in effect. At
its option, Lender may apply any insurance proceeds received by
Lender at any time to the cost of repairs or replacement of
Collateral and/or to payment of the Borrower's Obligations to
Lender under this Agreement, whether or not then due, in any
order and in such manner as Lender may determine or hold such
proceeds as cash collateral for such Obligations.
8.7 Facilities. Keep all Borrower's properties useful or
necessary to Borrower's business in good repair and condition,
and from time to time make necessary repairs, renewals and
replacements thereto so that Borrower's properties shall be fully
and efficiently preserved and maintained.
8.8 Taxes and Other Liabilities. Pay and discharge when
due any and all indebtedness, obligations, assessments and taxes,
both real or personal and including federal and state income and
payroll taxes, except such as Borrower may in good faith contest
or as to which a bona fide dispute may arise, provided provision
is made to the satisfaction of Lender for eventual payment
thereof in the event that it is found that the same is an
obligation of Borrower.
8.9 Litigation. Promptly give notice in writing to Lender
of any litigation pending or threatened in writing against
Borrower seeking in excess of $1,000,000.
8.10 Financial Condition. Maintain Borrower's financial
condition as follows:
(a) As of the end of each fiscal quarter, Borrower's
Working Capital shall not be less than $10,000,000.
(b) As of the end of each fiscal quarter, Borrower's
Tangible Net Worth shall not be less than $42,500,000.
8.11 Notice to Lender. Promptly (but in no event more than
five (5) days after the occurrence of each such event or matter)
give written notice to Lender in reasonable detail of: (a) the
occurrence of any Event of Default, or any condition, event or
act which with the giving of notice or the passage of time or
both would constitute such an Event of Default; (b) the
occurrence and nature of any Reportable Event or Prohibited
Transaction, each as defined in ERISA, or any funding deficiency
with respect to any Plan; (c) any termination or cancellation of
any insurance policy which Borrower is required to maintain, or
any loss through liability or property damage, or through fire,
theft or any other cause affecting Borrower's property in excess
of $500,000. Borrower shall provide no less than thirty (30)
days prior notice of any change in the name or the organizational
structure of Borrower.
8.12 Further Assurances. At the request of Lender at any
time and from time to time, duly execute and deliver, or cause to
be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such
further acts as may be necessary or proper to evidence, perfect,
maintain and enforce the security interests and the priority
thereof in the Collateral and to otherwise effectuate the
provisions or purposes of this Agreement or any of the other Loan
Documents, at Borrower's expense. Lender may at any time and
from time to time request a certificate from an officer of
Borrower representing that all conditions precedent to the making
of Revolving Loans and issuing Letters of Credit contained herein
are satisfied. In the event of such request by Lender, Lender
may, at its option, cease to make any further Revolving Loans or
provide any further Letters of Credit until Lender has received
such certificate and, in addition, Lender has determined that
such conditions are satisfied. Where permitted by law, Borrower
hereby authorizes Lender to execute and file one or more UCC
financing statements signed only by Lender. Lender may, at
Borrower's sole expense, commission an appraisal of Borrower's
Inventory, from an appraiser acceptable to Lender.
Section 9. NEGATIVE COVENANTS. Borrower further covenants that
so long as Lender remains committed to Borrower pursuant to the
terms of this Agreement or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Lender
under any of the Loan Documents remain outstanding, and until
payment in full of all obligations of Borrower subject hereto,
Borrower will not without the prior written consent of Lender:
9.1 Other Indebtedness. Create, incur, assume or permit
to exist any indebtedness or liabilities in excess of $500,000 in
the aggregate at any time outstanding resulting from borrowings,
loans or advances, whether secured or unsecured, matured or
unmatured, liquidated or unliquidated, joint or several, except
as permitted by Section 2.2(d) hereof and except the liabilities
of Borrower to Lender and any other liabilities of Borrower
existing as of, and disclosed to Lender in the Information
Certificate prior to, the date hereof.
9.2 Merger, Consolidation, Transfer of Assets. Merge into
or consolidate with any corporation or other entity; make any
substantial change in the conduct or nature of Borrower's
business; acquire all or substantially all of the assets of any
corporation or other entity; nor sell, lease, transfer or
otherwise dispose of all or a substantial or material part of its
assets except in the ordinary course of business.
9.3 Guaranties. Guarantee or become liable in any way as
surety, endorser (other than as endorser of negotiable
instruments for deposit or collection in the ordinary course of
business), accommodation endorser or otherwise for, nor pledge or
hypothecate any assets of Borrower as security for, any
liabilities or obligations of any other person or entity, except
as disclosed in the Information Certificate.
9.4 Loans, Advances, Investments. Except as permitted in
Sections 9.1 and 9.2, make any loans or advances to or
investments in any person or entity except for:
(a) loans and advances to Borrower's employees in the
ordinary course of Borrower's business in an amount not to exceed
$500,000 at any time outstanding, and
(b) provided no Event of Default has occurred and is
continuing, investments not to exceed $10,000,000 outstanding at
any one time in the aggregate provided any single investment
shall not exceed $5,000,000.
9.5 Dividends, Distributions. Declare or pay any dividend
or distribution either in cash, stock or any other property on
Borrower's stock now or hereafter outstanding; nor redeem,
retire, repurchase or otherwise acquire any shares of any class
of Borrower's stock now or hereafter outstanding.
Notwithstanding anything to the contrary herein or in Section
9.1, Borrower may effect a stock split of outstanding shares and
may issue up to $100,000,000 in gross proceeds of preferred stock
or subordinated unsecured debt provided that if an Event of
Default has occurred and while it is continuing, Borrower may not
pay interest or dividends on such preferred stock or subordinated
debt.
9.6 Pledge of Assets. Mortgage, pledge, grant or permit
to exist a security interest in, or lien upon, any of its assets
of any kind, now owned or hereafter acquired, except any of the
foregoing in favor of Lender, except as permitted in Section
2.2(d), and except as set forth in the Information Certificate.
9.7 New Collateral Location. Open any new location unless
Borrower (a) gives Lender thirty (30) days prior written notice
of the intended opening of any such new location and (b) executes
and delivers, or causes to be executed and delivered, to Lender
such agreements, documents, and instruments as Lender may deem
reasonably necessary or desirable to protect its interests in the
Collateral at such location, including, without limitation, UCC
financing statements. Notwithstanding the foregoing, Borrower
may transfer, to another location and without Bank's consent, the
existing "3 UP" Servo Writers and any Servo Writers hereafter
acquired, and may further transfer any newly acquired equipment
which is (a) financed with a third party to the extent permitted
under Section 2.2(d) hereof and (b) which is shipped immediately
out of the United States.
Section 10. EVENTS OF DEFAULT
10.1 Events of Default. The occurrence of any of the
following shall constitute an "Event of Default" under this
Agreement:
(a) Borrower shall fail to pay within five (5) days
of when due or upon maturity any principal, interest, fees or
other amounts payable under any of the Loan Documents.
(b) Any financial statement or certificate (including
the Information Certificate) furnished to Lender in connection
with this Agreement or any representation or warranty made by
Borrower hereunder shall prove to be false, incorrect or
incomplete in any material respect when furnished or made.
(c) Any default in the performance of or compliance
with any obligation, agreement or other provision contained in
Sections 6.1, 6.3, 8.1, 8.2, 8.3, 8.9, 8.10 or 8.11 of this
Agreement or any other default which shall continue for more than
10 days after the occurrence thereof.
(d) Any default in the payment or performance of any
obligation, or any defined event of default, under the terms of
any contract or instrument (other than any of the Loan Documents)
pursuant to which Borrower or any Obligor has incurred any debt
for borrowed money and as a result of which maturity thereof has
been accelerated.
(e) Any default in the payment or performance of any
obligation, or any defined event of default, in either case after
the expiration of any applicable grace period, under any of the
Loan Documents other than this Agreement which shall continue for
more than 10 days after the occurrence of such default.
(f) The filing of a notice of judgment lien against
Borrower or any Obligor; or the recording of any abstract of
judgment against Borrower or any Obligor in any county in which
Borrower or such Obligor has an interest in real property; or the
service of a notice of levy and/or of a writ of attachment or
execution, or other like process, against the assets of Borrower
or any Obligor; or the entry of a judgment against Borrower or
any Obligor; and with respect to any of the foregoing, the amount
in dispute is in excess of $1,000,000 and has not been stayed or
bonded within thirty (30) days provided that as to a levy, writ
of attachment, execution or other like process, Bank shall have
no obligation to advance funds during the foregoing 30 day
period.
(g) Borrower or any Obligor shall become insolvent,
or shall suffer or consent to or apply for the appointment of a
receiver, trustee, custodian or liquidator of itself or any of
its property, or shall generally fail to pay its debts as they
become due, or shall make a general assignment for the benefit of
creditors; Borrower or any Obligor shall file a voluntary
petition in bankruptcy, or seeking reorganization, in order to
effect a plan or other arrangement with creditors or any other
relief under the Bankruptcy Reform Act, Title 11 of the United
States Code, as amended or recodified from time to time
("Bankruptcy Code"), or under any state or federal law granting
relief to debtors, whether now or hereafter in effect; or any
involuntary petition or proceeding pursuant to said Bankruptcy
Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors is filed
or commenced against Borrower or any Obligor, or Borrower or any
Obligor shall file an answer admitting the jurisdiction of the
court and the material allegations of any involuntary petition;
or Borrower or any Obligor shall be adjudicated a bankrupt, or an
order for relief shall be entered by any court of competent
jurisdiction under said Bankruptcy Code or any other applicable
state or federal law relating to bankruptcy, reorganization or
other relief for debtors.
(h) The dissolution or liquidation of Borrower or any
Obligor; or Borrower or any Obligor, or if any of its their
respective directors, stockholders or members, shall take action
seeking to effect the dissolution or liquidation of Borrower or
such Obligor.
(i) Any entity or individual, singly or collectively
with its affiliates, shall own more than 50% of the issued and
outstanding capital stock of Borrower.
(j) The indictment of Borrower or any Obligor under
any criminal statute, or commencement or threatened commencement
of criminal or civil proceedings against Borrower or any Obligor,
pursuant to which statute or proceedings the penalties or
remedies sought or available include forfeiture of any of the
property of Borrower or such Obligor.
10.2 Remedies. If an Event of Default shall occur, (a) any
indebtedness of Borrower under any of the Loan Documents, any
term thereof to the contrary notwithstanding, shall at Lender's
option and without notice become immediately due and payable
without presentment, demand, protest or notice of dishonor, all
of which are hereby expressly waived by Borrower; (b) the
obligation, if any, of Lender to permit further borrowings
hereunder shall immediately cease and terminate; and (c) Lender
shall have all the default rights, powers and remedies available
under each of the Loan Documents, or accorded by law, including
without limitation the right to resort to any or all security for
any credit accommodation from Lender subject hereto and to
exercise any or all of the rights of a beneficiary or secured
party pursuant to applicable law. All rights, powers and
remedies of Lender in connection with each of the Loan Documents
may be exercised at any time by Lender and from time to time
after the occurrence of an Event of Default, are cumulative and
not exclusive, and shall be in addition to any other rights,
powers or remedies provided by law or equity.
Section 11. TERM OF AGREEMENT AND MISCELLANEOUS
11.1 Term.
(a) Maturity Date. This Agreement and the other Loan
Documents shall become effective on the Closing Date and shall
continue in full force and effect for a term ending on June 30,
1996. Upon the date of termination of the Loan Documents,
Borrower shall pay to Lender, in full, all outstanding and unpaid
obligations under this Agreement and the other Loan Documents and
shall furnish cash collateral to Lender in such amounts as Lender
determines are reasonably necessary to secure Lender from loss,
cost, damage or expense, including attorneys' fees and legal
expenses, in connection with any contingent obligations,
including issued and outstanding Letters of Credit and checks or
other payments provisionally credited to the obligations and/or
as to which Lender has not yet received final and indefeasible
payment. Interest shall be due until and including the next
business day, if the amounts so paid by Borrower to the bank
account designated by Lender are received in such bank account
later than 12:00 noon, California time.
(b) Continuing Obligations. No termination of this
Agreement or the other Loan Documents shall relieve or discharge
Borrower of its respective duties, obligations and covenants
under this Agreement or the other Loan Documents until all
Borrower's obligations under this Agreement and the other Loan
Documents have been fully and finally discharged and paid, and
Lender's continuing security interest in the Collateral and the
rights and remedies of Lender hereunder, under the other Loan
Documents and applicable law, shall remain in effect until all
such obligations have been fully and finally discharged and paid.
(c) Early Termination Fee. If for any reason (other
than as set forth in paragraph 11.1(d)) this Agreement is
terminated prior to the end of the then current term of this
Agreement, in view of the impracticality and extreme difficulty
of ascertaining actual damages and by mutual agreement of the
parties as to a reasonable calculation of Lender's lost profits
as a result thereof, Borrower shall pay to Lender, upon the
effective date of such termination, an early termination fee in
the amount set forth below for the corresponding date of
termination.
Date of Termination Fee
Date hereof through January 31, 1996 $600,000
February 1 to February 28, 1996 $500,000
March 1 to March 31, 1996 $400,000
April 1 to April 30, 1996 $300,000
May 1 to May 31, 1996 $200,000
June 1 to June 29, 1996 $100,000
Such early termination fee shall be presumed to be the amount of
damages sustained by Lender as a result of such early termination
and Borrower agrees that it is reasonable under the circumstances
currently existing.
(d) No Early Termination Fee. No early termination
fee shall be payable if a group or division of Xxxxx Fargo Bank
(other than the workout group) or an affiliate of Xxxxx Fargo
Bank extends credit to Borrower, which credit refinances and/or
replaces in full the credit facilities granted under this
Agreement.
11.2 No Waiver. No delay, failure or discontinuance of
Lender in exercising any right, power or remedy under any of the
Loan Documents shall affect or operate as a waiver of such right,
power or remedy; nor shall any single or partial exercise of any
such right, power or remedy preclude, waive or otherwise affect
any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or
approval of any kind by Lender of any breach of or default under
any of the Loan Documents must be in writing and shall be
effective only to the extent set forth in such writing.
11.3 Notices. All notices, requests and demands which any
party is required or may desire to give to any other party under
any provision of this Agreement must be in writing delivered to
each party at the following address:
BORROWER: Iomega Corporation
0000 Xxxx Xxxxxx Xxx
Xxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, C.F.O.,
with a copy to Xxxxxx X. Xxxxxxxx,
Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
LENDER: XXXXX FARGO BANK, NATIONAL ASSOCIATION
Commercial Finance Division
0000 Xxxxx Xxxxx
Xx Xxxxx, Xxxxxxxxxx 00000
Attention: Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as any party may designate by written
notice to all other parties. Each such notice, request and
demand shall be deemed given or made as follows: (a) if sent by
hand delivery, upon delivery; (b) if sent by mail, upon the
earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent
by telecopy, upon receipt.
11.4 Costs, Expenses and Attorneys' Fees. Borrower shall
pay to Lender immediately upon demand the full amount of all
reasonable costs and expenses, including reasonable attorneys'
fees (to include outside counsel fees and all allocated costs of
Lender's in-house counsel), incurred by Lender in connection with
(a) the negotiation and preparation of this Agreement and each
other of the Loan Documents, Lender's continued administration
hereof and thereof, and the preparation of any amendments and
waivers hereto and thereto, (b) all reasonable out-of-pocket
expenses and costs heretofore and from time to time hereafter
incurred by Lender during the course of periodic field
examinations of the Collateral and Borrower's operations, plus a
per diem charge for Lender's examiners in the field and office at
Lender's Commercial Finance Division's rate in effect from time
to time as set forth herein, (c) the enforcement of Lender's
rights and/or the collection of any amounts which become due to
Lender under any of the Loan Documents, (d) the prosecution or
defense of any action in any way related to any of the Loan
Documents, including without limitation any action for
declaratory relief and (e) Lender's participation in any
bankruptcy or insolvency proceeding involving Borrower, whether
or not suit is filed.
11.5 Successors, Assignment. This Agreement shall be
binding on and inure to the benefit of the heirs, executors,
administrators, legal representatives, successors and assigns of
the parties; provided however, that Borrower may not assign or
transfer its interest hereunder without the prior written consent
of Lender. Lender reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any
interest in, Lender's rights and benefits under each of the Loan
Documents. In connection therewith, Lender may disclose all
documents and information which Lender now has or may hereafter
acquire relating to any credit extended by Lender to Borrower,
Borrower or its business, any Obligor or the business of any
Obligor, or any collateral required hereunder.
11.6 Entire Agreement, Amendment. This Agreement and each
other of the Loan Documents constitute the entire agreement
between Borrower and Lender with respect to any extension of
credit by Lender subject hereto and supersede all prior
negotiations, communications, discussions and correspondence
concerning the subject matter hereof. This Agreement may be
amended or modified only by a written instrument executed by each
party hereto.
11.7 No Third Party Beneficiaries. This Agreement is made
and entered into for the sole protection and benefit of the
parties hereto and their respective permitted successors and
assigns, and no other person or entity shall be a third party
beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any other of the Loan
Documents to which it is not a party.
11.8 Time. Time is of the essence of each and every
provision of this Agreement and each other of the Loan Documents.
11.9 Severability of Provisions. If any provision of this
Agreement shall be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such
prohibition or invalidity without invalidating the remainder of
such provision or any remaining provisions of this Agreement.
11.10 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of
California, except to the extent that Lender has greater rights
or remedies under Federal law, whether as a national bank or
otherwise, in which case such choice of California law shall not
be deemed to deprive Lender of such rights and remedies as may be
available under Federal law.
11.11 Confidentiality. Lender shall use reasonable efforts
to maintain the confidentiality of information it receives from
Borrower pursuant to the Loan Documents, except for disclosure to
(i) Lender's affiliates, (ii) prospective participants in or
assignees of all or any part of the Obligations, (iii) legal
counsel, accountants and other professional advisors to Lender,
(iv) regulatory officials, and (v) any person or entity as
required by law, regulation, or legal process; provided that
Lender shall instruct such persons or entities to treat the
information in a confidential manner.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first written
above.
IOMEGA CORPORATION XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By: /s/Xxx X. Edwards_________ By: /s/Xxxxxxx X. Baranowski__
Title: President & CEO________ Title: Vice President / RM____
