CREDIT AND SECURITY AGREEMENT BY AND BETWEEN OREGON MICRO SYSTEMS, INC. AND WELLS FARGO BUSINESS CREDIT, INC. May 28, 2002
EXECUTION COPY
CREDIT AND SECURITY AGREEMENT
BY AND BETWEEN
OREGON MICRO SYSTEMS, INC.
AND
XXXXX FARGO BUSINESS CREDIT, INC.
May 28, 2002
Table of Contents
Page | |
ARTICLE I DEFINITIONS.................................................................................................... | 1 |
Section 1.1 Definitions......................................................................................................... | 1 |
Section 1.2 Other Definitional Terms; Rules of Interpretation................................................ | 11 |
ARTICLE II AMOUNT AND TERMS OF THE CREDIT FACILITY............................... | 12 |
Section 2.1 Revolving Advances.......................................................................................... | 12 |
Section 2.2 Procedures for Requesting Advances................................................................ | 12 |
Section 2.3 Letters of Credit............................................................................................... | 12 |
Section 2.4 Special Account................................................................................................ | 13 |
Section 2.5
Payment of Amounts Drawn Under Letters of Credit; Obligation of Reimbursement............................................................................................... |
13 |
Section 2.6 Obligations Absolute......................................................................................... | 14 |
Section 2.7
Interest; Minimum Interest Charge; Default Interest; Participations; Clearance Days; Usury....................................................................................... |
15 |
Section 2.8 Fees.................................................................................................................. | 16 |
Section 2.9
Time for Interest Payments; Payment on Non-Banking Days; Computation of Interest and Fees........................................................................................... |
17 |
Section 2.10 Lockbox; Collateral Account; Application of Payments...................................... | 17 |
Section 2.11 Voluntary Prepayment; Termination of the Credit Facility by the Borrower.......... | 18 |
Section 2.12 Mandatory Prepayment..................................................................................... | 18 |
Section 2.13 Revolving Advances to Pay Obligations............................................................. | 18 |
Section 2.14 Use of Proceeds................................................................................................ | 19 |
Section 2.15 Liability Records............................................................................................... | 19 |
ARTICLE III SECURITY INTEREST; OCCUPANCY; SETOFF....................................... | 19 |
Section 3.1 Grant of Security Interest................................................................................... | 19 |
Section 3.2 Notification of Account Debtors and Other Obligors.......................................... | 19 |
Section 3.3 Assignment of Insurance.................................................................................... | 19 |
Section 3.4 Occupancy........................................................................................................ | 20 |
Section 3.5 License............................................................................................................. | 20 |
Section 3.6 Financing Statement........................................................................................... | 20 |
Section 3.7 Setoff................................................................................................................ | 21 |
Section 3.8 Power of Attorney............................................................................................. | 21 |
ARTICLE IV CONDITIONS OF LENDING........................................................................ | 22 |
Section 4.1 Conditions Precedent to the Initial Advances and Letter of Credit....................... | 22 |
Section 4.2 Conditions Precedent to All Advances and Letters of Credit............................... | 24 |
ARTICLE V REPRESENTATIONS AND WARRANTIES................................................. | 25 |
Section 5.1
Existence and Power; Name; Chief Executive Office; Inventory and Equipment
Locations; Federal Employer Identification Number............................................ |
25 |
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Section 5.2 Capitalization..................................................................................................... | 25 |
Section 5.3 Authorization of Borrowing; No Conflict as to Law or Agreements..................... | 25 |
Section 5.4 Legal Agreements.............................................................................................. | 25 |
Section 5.5 Subsidiaries....................................................................................................... | 26 |
Section 5.6 Financial Condition; No Adverse Change........................................................... | 26 |
Section 5.7 Litigation........................................................................................................... | 26 |
Section 5.8 Regulation U..................................................................................................... | 26 |
Section 5.9 Taxes................................................................................................................ | 26 |
Section 5.10 Titles and Liens................................................................................................. | 26 |
Section 5.11 Intellectual Property Rights................................................................................ | 26 |
Section 5.12 Plans................................................................................................................. | 27 |
Section 5.13 Default.............................................................................................................. | 28 |
Section 5.14 Environmental Matters....................................................................................... | 28 |
Section 5.15 Submissions to Lender....................................................................................... | 29 |
Section 5.16 Financing Statements......................................................................................... | 29 |
Section 5.17 Rights to Payment.............................................................................................. | 29 |
Section 5.18 Eligible Accounts............................................................................................... | 29 |
Section 5.19 Eligible Inventory............................................................................................... | 30 |
Section 5.20 Equipment......................................................................................................... | 30 |
Section 5.21 Fraudulent Transfer........................................................................................... | 30 |
ARTICLE VI COVENANTS................................................................................................... | 31 |
Section 6.1 Reporting Requirements..................................................................................... | 31 |
Section 6.2 Financial Covenants........................................................................................... | 35 |
Section 6.3 Permitted Liens; Financing Statements................................................................ | 35 |
Section 6.4 Indebtedness..................................................................................................... | 36 |
Section 6.5 Guaranties......................................................................................................... | 36 |
Section 6.6 Investments and Subsidiaries.............................................................................. | 36 |
Section 6.7 Dividends and Distributions................................................................................ | 37 |
Section 6.8 Salaries............................................................................................................. | 37 |
Section 6.9 Books and Records; Inspection and Examination............................................... | 37 |
Section 6.10 Account Verification.......................................................................................... | 37 |
Section 6.11 Compliance with Laws...................................................................................... | 38 |
Section 6.12 Payment of Taxes and Other Claims.................................................................. | 38 |
Section 6.13 Maintenance of Properties................................................................................. | 38 |
Section 6.14 Insurance.......................................................................................................... | 38 |
Section 6.15 Preservation of Existence................................................................................... | 39 |
Section 6.16 Delivery of Instruments, etc................................................................................ | 39 |
Section 6.17 Sale or Transfer of Assets; Suspension of Business Operations........................... | 39 |
Section 6.18 Consolidation and Merger; Asset Acquisitions.................................................... | 39 |
Section 6.19 Sale and Leaseback.......................................................................................... | 39 |
Section 6.20 Restrictions on Nature of Business..................................................................... | 40 |
Section 6.21 Accounting........................................................................................................ | 40 |
Section 6.22 Discounts, etc.................................................................................................... | 40 |
Section 6.23 Plans................................................................................................................. | 40 |
Section 6.24 Place of Business; Name................................................................................... | 40 |
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Section 6.25 Constituent Documents; S Corporation Status.................................................... | 40 |
Section 6.26 Transactions With Affiliates................................................................................ | 40 |
Section 6.27 Performance by the Lender................................................................................ | 40 |
ARTICLE VII EVENTS OF DEFAULT, RIGHTS AND REMEDIES................................ | 41 |
Section 7.1 Events of Default............................................................................................... | 41 |
Section 7.2 Rights and Remedies......................................................................................... | 44 |
Section 7.3 Disclaimer of Warranties.................................................................................... | 46 |
Section 7.4 Compliance With Laws..................................................................................... | 46 |
Section 7.5 No Marshalling.................................................................................................. | 46 |
Section 7.6 Borrower to Cooperate..................................................................................... | 46 |
Section 7.7 Application of Proceeds.................................................................................... | 46 |
Section 7.8 Remedies Cumulative........................................................................................ | 47 |
Section 7.9 Lender Not Liable For The Collateral................................................................ | 47 |
ARTICLE VIII MISCELLANEOUS...................................................................................... | 47 |
Section 8.1 No Waiver........................................................................................................ | 47 |
Section 8.2 Amendments, Etc.............................................................................................. | 47 |
Section 8.3 Addresses for Notices; Requests for Accounting................................................ | 47 |
Section 8.4 Further Documents............................................................................................ | 48 |
Section 8.5 Costs and Expenses.......................................................................................... | 48 |
Section 8.6 Indemnity.......................................................................................................... | 48 |
Section 8.7 Participants................................................................................................. ...... | 49 |
Section 8.8 Advertising and Promotion................................................................................. | 49 |
Section 8.9 Execution in Counterparts; Telefacsimile Execution............................................. | 49 |
Section 8.10 Retention of Borrower's Records................................................................... ... | 49 |
Section 8.11 Binding Effect; Assignment; Complete Agreement; Exchanging Information......... | 50 |
Section 8.12 Severability of Provisions................................................................................... | 50 |
Section 8.13 Revival and Reinstatement of Obligations........................................................... | 50 |
Section 8.14 Headings........................................................................................................... | 50 |
Section 8.15 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial................................... | 50 |
ARTICLE IX JOINT AND SEVERAL LIABILITY.............................................................. | 51 |
Section 9.1 Joint and Several Liability.................................................................................. | 51 |
Section 9.2 Primary Obligation; Waiver of Marshalling......................................................... | 51 |
Section 9.3 Continuing Liability............................................................................................ | 51 |
Section 9.4 Additional Waivers............................................................................................ | 52 |
Section 9.5 Settlement or Releases....................................................................................... | 54 |
Section 9.6 No Election....................................................................................................... | 54 |
Section 9.7 Indefeasible Payment......................................................................................... | 54 |
Section 9.8 Financial Condition of the Affiliate Borrower...................................................... | 55 |
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Dated as of May 28, 2002
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of this Agreement, except as otherwise expressly provided, the following terms shall have the meanings assigned to them in this Section or in the Section referenced after such term:
"Account Debtor" means any Person who is or who may become obligated under, with respect to, or on account of, an Account, chattel paper, or a General Intangible.
"Accounts" means all of Borrower's now owned or hereafter acquired right, title, and interest with respect to "accounts" (as that term is defined in the UCC), and any and all supporting obligations in respect thereof.
"Advance" means a Revolving Advance.
"Affiliate" means, as applied to any Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of stock, by contract, or otherwise; provided, however, that, in any event: (a) any Person which owns directly or indirectly 10% or more of the securities having ordinary voting power for the election of directors or other members of the governing body of a Person or 10% or more of the partnership or other ownership interests of a Person (other than as a limited partner of such Person) shall be deemed to control such Person, (b) each director (or comparable manager) of a Person shall be deemed to be an Affiliate of such Person, and (c) each partnership or joint venture in which a Person is a partner or joint venturer shall be deemed to be an Affiliate of such Person.
"Agreement" means this Credit and Security Agreement.
"Affiliate Borrower" means Micro Motors, Inc., a Colorado corporation.
"Affiliate Credit Agreement" means that certain Credit and Security Agreement, dated as of even date herewith, between the Affiliate Borrower and the Lender, as the same may be amended or restated from time to time.
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"Affiliate Loan Documents" means the "Loan Documents" as such term is defined in the Affiliate Credit Agreement.
"Affiliate Obligations" means the "Obligations" as such term is defined in the Affiliate Credit Agreement.
"Applicable Margin" means the margin set forth in the table below opposite the applicable average outstanding Advances, calculated as of the date of determination:
Average Outstanding Advances |
Applicable Margin |
$2,100,000 for 60 consecutive days |
1.50 percentage points (150 basis points) |
$2,400,000 for 60 consecutive days |
1.25 percentage points (125 basis points) |
$3,000,000 for 60 consecutive days |
1.00 percentage points (100 basis points) |
"Availability" means the difference of (i) the Borrowing Base and (ii) the sum of (A) the outstanding principal balance of the Revolving Note, (B) the L/C Amount, and (C) the Affiliate Obligations.
"Banking Day" means a day on which the Federal Reserve Bank of New York is open for Business.
"Bankruptcy Code" means the United States Bankruptcy Code, as in effect from time to time.
"Base Rate" means the rate of interest publicly announced from time to time by Xxxxx Fargo Bank National Association at its principal office in San Francisco as its "prime rate", with the understanding that the "prime rate" is one of Xxxxx Fargo's base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for loans making reference thereto.
"Book Net Worth" means the aggregate of the common and preferred stockholders' equity in the Borrower, determined in accordance with GAAP.
"Borrowing Base" means at any time the lesser of:
(a) the Maximum Line; or
(b) 85% of Eligible Accounts less the amount, if any, of the Dilution Reserve.
Provided, however, the Lender may reduce the advance rates or create additional reserves against the Eligible Accounts, in its sole and absolute discretion, without declaring an Event of Default if it reasonably determines that there has occurred a Material Adverse Effect.
"Capital Expenditures" means for a period, any expenditure of money during such period for the purchase or construction of assets, or for improvements or additions thereto, which are capitalized on the Borrower's balance sheet.
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"Change of Control" means the occurrence of any of the following events:
(a) any Person or "group" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a Person will be deemed to have "beneficial ownership" of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 25% of the voting power of all classes of voting stock of the Borrower.
(c) Xxxxx X. Xxxxx shall cease to actively manage the Borrower's day-to-day business activities.
"Collateral" means all of the Borrower's Accounts, chattel paper, deposit accounts, documents, Equipment, General Intangibles, goods, instruments, Inventory, Investment Property, letter-of-credit rights, letters of credit, all sums on deposit in any Collateral Account, and any items in any Lockbox; together with (i) all substitutions and replacements for and products of any of the foregoing; (ii) in the case of all goods, all accessions; (iii) all accessories, attachments, parts, equipment and repairs now or hereafter attached or affixed to or used in connection with any goods; (iv) all warehouse receipts, bills of lading and other documents of title now or hereafter covering such goods; (v) all collateral subject to the Lien of any Security Document; (vi) any money, or other assets of the Borrower that now or hereafter come into the possession, custody, or control of the Lender; (vii) all sums on deposit in the Special Account; and (viii) proceeds of any and all of the foregoing.
"Collateral Account" means the "Lender Account" as defined in the Lockbox and Collection Account Agreement.
"Commitment" means the Lender's commitment to make Advances to, and to cause the Issuer to issue Letters of Credit for the account of, the Borrower pursuant to Article II.
"Constituent Documents" means with respect to any Person, as applicable, such Person's certificate of incorporation, articles of incorporation, by-laws, certificate of formation, articles of organization, limited liability company agreement, management agreement, operating agreement, shareholder agreement, partnership agreement or similar document or agreement governing such Person's existence, organization or management or concerning disposition of ownership interests of such Person or voting rights among such Person's owners.
"Copyright Security Agreement" means the Copyright Security Agreement by the Borrower in favor of the Lender of even date herewith.
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"Daily Balance" means, with respect to each day during the term of this Agreement, the amount of an Obligation owed at the end of such day.
"Default" means an event that, with giving of notice or passage of time or both, would constitute an Event of Default.
"Default Period" means any period of time beginning on the day a Default or Event of Default occurs and ending on the date the Lender notifies the Borrower in writing that such Default or Event of Default has been cured or waived.
"Default Rate" means an annual interest rate equal to three percent (3%) over the Floating Rate, which interest rate shall change when and as the Floating Rate changes.
"Dilution" means, as of any date of determination, a percentage, based upon the experience of the calendar year-to-date period ending on the date of determination, that is the result of dividing the Dollar amount of (a) bad debt writeβdowns, discounts, advertising allowances, credits, or other dilutive items with respect to the Accounts during such period, by (b) Borrower's sales during such period (excluding extraordinary items) plus the Dollar amount of clause (a).
"Dilution Reserve" means, as of any date of determination, an amount sufficient to reduce the advance rate against Eligible Accounts by one percentage point for each percentage point by which Dilution is in excess of 5%.
"Director" means a director if the Borrower is a corporation, a manager if the Borrower is a limited liability company, or a general partner if the Borrower is a partnership.
"Dollars" or "$" means lawful currency of the United States of America.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means any trade or business (whether or not incorporated) that is a member of a group which includes the Borrower and which is treated as a single employer under Section 414 of the IRC.
"Earnings Before Taxes" means from operations but including extraordinary losses.
"Eligible Accounts" means those Accounts created by the Borrower in the ordinary course of its business, that arise out of the Borrower's sale of goods or rendition of services, that comply with each of the representations and warranties respecting Eligible Accounts made by the Borrower in the Loan Documents, and that are not excluded as ineligible by virtue of one or more of the criteria set forth below; provided, however, that such criteria may be fixed and revised from time to time by the Lender in the Lender's sole and absolute discretion to address the results of any audit performed by the Lender from time to time after the Closing Date. In determining the amount to be included, Eligible Accounts shall be calculated net of customer deposits and unapplied cash remitted to the Borrower. Eligible Accounts shall not include the following:
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(i) That portion of Accounts unpaid 90 days or more after the invoice date;
(ii) That portion of Accounts that is disputed or subject to a claim of offset or a contra account;
(iii) That portion of Accounts not yet earned by the final delivery of goods or rendition of services, as applicable, by the Borrower to the customer, including progress xxxxxxxx;
(iv) Accounts constituting proceeds of copyrightable material unless such copyrightable material shall have been registered with the United States Copyright Office and shall be covered by a duly executed copyright security agreement, in form and substance satisfactory to the Lender, and filed in the United States Copyright Office;
(v) Accounts owed by an Account Debtor that is not Solvent, the subject of an Insolvency Proceeding or has gone out of business;
(vi) Accounts owed by an Owner, Subsidiary, Affiliate, Officer or employee of the Borrower;
(vii) Accounts not subject to a duly perfected security interest in the Lender's favor or which are subject to any Lien other than a Permitted Lien;
(viii) That portion of Accounts that has been restructured, extended, amended or modified;
(ix) That portion of Accounts that constitutes advertising, finance charges, service charges or sales or excise taxes;
(x) Accounts owed by an Account Debtor (or an Affiliate of such Account Debtor), regardless of whether otherwise eligible, to the extent that the balance of such Accounts exceeds 15% of the aggregate amount of all Accounts (or 25% if the Account Debtor is Applied Materials);
(xi) Accounts owed by an Account Debtor (or an Affiliate of such Account Debtor), regardless of whether otherwise eligible, if 25% or more of the total amount due under Accounts from such Account Debtor is ineligible under clauses (i), (ii)or (x) above;
(xii) Accounts arising in a transaction wherein goods are placed on consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a xxxx and hold, or any other terms by reason of which the payment by the Account Debtor may be conditional;
(xiii) Accounts that are not payable in Dollars;
(xiv) Accounts with respect to which the Account Debtor either (i) does not maintain its chief executive office in the United States, or (ii) is not organized under the laws of the United States or any state thereof, or (iii) is the government of any foreign country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof, unless (y) the Account is supported by an irrevocable letter of credit satisfactory to the Lender (as to form, substance, and issuer or domestic confirming bank) that has been delivered to Lender and is directly drawable by the Lender, or (z) the Account is covered by credit insurance in form, substance, and amount, and by an insurer, satisfactory to the Lender;
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(xv) Accounts with respect to which the Account Debtor is either (i) the United States or any department, agency, or instrumentality of the United States (exclusive, however, of Accounts with respect to which the Borrower has complied, to the reasonable satisfaction of the Lender, with the Assignment of Claims Act, 31 USC Β§ 3727), or (ii) any state of the United States (exclusive, however, of (y) Accounts owed by any state that does not have a statutory counterpart to the Assignment of Claims Act, or (z) Accounts owed by any state that does have a statutory counterpart to the Assignment of Claims Act as to which the Borrower has complied to the Lender's satisfaction);
(xvi) Accounts with respect to which the Account Debtor is located in the states of New Jersey, Minnesota, or West Virginia (or any other state that requires a creditor to file a business activity report or similar document in order to bring suit or otherwise enforce its remedies against such Account Debtor in the courts or through any judicial process of such state), unless Borrower has qualified to do business in New Jersey, Minnesota, West Virginia, or such other states, or has filed a business activities report with the applicable division of taxation, the department of revenue, or with such other state offices, as appropriate, for the then-current year, or is exempt from such filing requirement; and
(xvii) Accounts, or portions thereof, of poor quality credit or otherwise deemed ineligible by the Lender in its sole discretion.
"Environmental Law" means any federal, state, local or other governmental statute, regulation, law or ordinance dealing with the protection of human health and the environment.
"Equipment" means all of the Borrower's equipment, as such term is defined in the UCC, whether now owned or hereafter acquired, including but not limited to all present and future machinery, vehicles, furniture, fixtures, manufacturing equipment, shop equipment, office and recordkeeping equipment, parts, tools, supplies, and including specifically the goods described in any equipment schedule or list herewith or hereafter furnished to the Lender by the Borrower.
"Event of Default" has the meaning specified in Section 7.1.
"Financial Covenants" means the covenants set forth in Section 6.2.
"Floating Rate" means an annual interest rate equal to the sum of the Base Rate plus (i) so long as there has not existed a Default Period for the prior six (6) month period, the Applicable Margin, and (ii) in all other cases, 1.75 percentage points (175 basis points), which interest rate shall, in each case, change when and as the Base Rate changes.
"Funding Date" has the meaning given in Section 2.1.
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"GAAP" means generally accepted accounting principles, applied on a basis consistent with the accounting practices applied in the financial statements described in Section 5.6.
"General Intangibles" means all of the Borrower's general intangibles, as such term is defined in the UCC, whether now owned or hereafter acquired, including all present and future Intellectual Property Rights, customer or supplier lists and contracts, manuals, operating instructions, permits, franchises, the right to use the Borrower's name, and the goodwill of the Borrower's business.
"Governmental Authority" means any federal, state, local, or other governmental or administrative body, instrumentality, department, or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body.
"Guarantor(s)" means ProβDex, Inc., a Colorado corporation, and any other Person now or hereafter guarantying the Obligations.
"Guaranty" means that certain Continuing Guaranty, dated as of even date herewith, by the Guarantor in favor of the Lender.
"Guaranty Security Agreement" means that certain Security Agreement, dated as of even date herewith, between the Guarantor and the Lender.
"Hazardous Substances" means pollutants, contaminants, hazardous substances, hazardous wastes, petroleum and fractions thereof, and all other chemicals, wastes, substances and materials listed in, regulated by or identified in any Environmental Law.
"Indebtedness" means of a Person as of a given date, all items of indebtedness or liability which in accordance with GAAP would be included in determining total liabilities as shown on the liabilities side of a balance sheet for such Person and shall also include the aggregate payments required to be made by such Person at any time under any lease that is considered a capitalized lease under GAAP.
"IRC" means the Internal Revenue Code of 1986.
"Infringe" means when used with respect to Intellectual Property Rights means any infringement or other violation of Intellectual Property Rights.
"Insolvency Proceeding" means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.
"Intangible Assets" means all intangible assets as determined in accordance with GAAP and including Intellectual Property Rights, goodwill, accounts due from Affiliates, Directors, Officers or employees, prepaid expenses, deposits, deferred charges or treasury stock or any securities or Indebtedness of the Borrower or any other securities unless the same are readily marketable in the United States of America, or entitled to be used as a credit against federal income tax liabilities, non-compete agreements and any other assets designated from time to time by the Lender, in its sole discretion.
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"Intellectual Property Rights" means all actual or prospective rights arising in connection with any intellectual property or other proprietary rights, including all rights arising in connection with copyrights, patents, service marks, trade dress, trade secrets, trademarks, trade names or mask works.
"Inventory" means all of the Borrower's inventory, as such term is defined in the UCC, whether now owned or hereafter acquired, whether consisting of whole goods, spare parts or components, supplies or materials, whether acquired, held or furnished for sale, for lease or under service contracts or for manufacture or processing, and wherever located.
"Investment Property" means all of the Borrower's investment property, as such term is defined in the UCC, whether now owned or hereafter acquired, including but not limited to all securities, security entitlements, securities accounts, commodity contracts, commodity accounts, stocks, bonds, mutual fund shares, money market shares and U.S. Government securities.
"Issuer" means the issuer of any Letter of Credit.
"L/C Amount" means the sum of (i) the aggregate face amount of any issued and outstanding Letters of Credit and (ii) the unpaid amount of the Obligation of Reimbursement.
"L/C Application" means an application and agreement for letters of credit in a form acceptable to the Issuer and the Lender.
"Letter of Credit" has the meaning specified in Section 2.3.
"Licensed Intellectual Property" has the meaning given in Section 5.11(c).
"Lien" means any security interest, mortgage, deed of trust, pledge, lien, charge, encumbrance, title retention agreement or analogous instrument or device, including the interest of each lessor under any capitalized lease and the interest of any bondsman under any payment or performance bond, in, of or on any assets or properties of a Person, whether now owned or hereafter acquired and whether arising by agreement or operation of law.
"Loan Documents" means this Agreement, the Note, the Guaranty, the Guaranty Security Agreement, the Security Documents, the Subordination Agreement and any L/C Application.
"Lockbox" means as defined in the Lockbox and Collection Account Agreement.
"Lockbox and Collection Account Agreement" means the Lockbox and Collection Account Agreement by and among the Borrower, Xxxxx Fargo Bank, N.A., Regulus West, LLC and the Lender, of even date herewith.
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"Material Adverse Effect" means any of the following:
(i) a material adverse effect on the business, operations, results of operations, prospects, assets, liabilities or financial condition of the Borrower or the Guarantor;
(ii) a material adverse effect on the ability of the Borrower or the Guarantor to perform its obligations under the Loan Documents;
(iii) a material adverse effect on the ability of the Lender to enforce the Obligations or to realize the intended benefits of the Security Documents, including a material adverse effect on the validity or enforceability of any Loan Document or of any rights against the Guarantor, or on the status, existence, perfection, priority (subject to Permitted Liens) or enforceability of any Lien securing payment or performance of the Obligations (other than any such material adverse effect caused solely by any act or omission by the Lender); or
(iv) any claim against the Borrower or the Guarantor or threat of litigation which if determined adversely to the Borrower or the Guarantor would cause the Borrower or the Guarantor to be liable to pay an amount exceeding $200,000 or would be an event described in clauses (i), (ii) and (iii) above.
"Maturity Date" means May 28, 2004.
"Maximum Line" means $3,000,000.
"Minimum Interest Charge" has the meaning given in Section 2.7(b).
"Multiemployer Plan" means a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to which the Borrower or any ERISA Affiliate contributes or is obligated to contribute.
"Net Income" and "Net Loss" mean fiscal year-to-date after-tax net income, or loss, as applicable, from continuing operations as determined in accordance with GAAP.
"Note" means the Revolving Note.
"Obligation of Reimbursement" has the meaning given in Section 2.5(a).
"Obligations" means (i) the Note, the Obligation of Reimbursement and each and every other debt, liability and obligation of every type and description which the Borrower may now or at any time hereafter owe to the Lender, whether such debt, liability or obligation now exists or is hereafter created or incurred, whether it arises in a transaction involving the Lender alone or in a transaction involving other creditors of the Borrower, and whether it is direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or sole, joint, several or joint and several, and including all indebtedness of the Borrower arising under any Credit Document or guaranty between the Borrower and the Lender, whether now in effect or hereafter entered into, and (ii) the "Obligations" as such term is defined in the Affiliate Credit Agreement.
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"Officer" means with respect to the Borrower, an officer if the Borrower is a corporation, a manager if the Borrower is a limited liability company, or a partner if the Borrower is a partnership.
"Owned Intellectual Property" has the meaning given in Section 5.11(a).
"Owner" means with respect to the Borrower, each Person having legal or beneficial title to an ownership interest in the Borrower or a right to acquire such an interest.
"Patent and Trademark Security Agreement" means the Patent and Trademark Security Agreement by the Borrower in favor of the Lender of even date herewith.
"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA) maintained for employees of the Borrower or any ERISA Affiliate and covered by Title IV of ERISA.
"Permitted Lien" has the meaning given in Section 6.3(a).
"Person" means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) maintained for employees of the Borrower or any ERISA Affiliate.
"Premises" means all premises where the Borrower conducts its business and has any rights of possession, including the premises legally described in Exhibit D attached hereto.
"Reportable Event" means a reportable event (as defined in Section 4043 of ERISA), other than an event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the Pension Benefit Guaranty Corporation.
"Revolving Advance" has the meaning given in Section 2.1.
"Revolving Note" means the Borrower's revolving promissory note, payable to the order of the Lender in substantially the form of Exhibit A hereto.
"Security Documents" means this Agreement, the Lockbox and Collection Account Agreement, the Patent and Trademark Security Agreement, and the Copyright Security Agreement, and any other document delivered to the Lender from time to time to secure the Obligations.
"Security Interest" has the meaning given in Section 3.1.
"Solvent" means, with respect to any Person on a particular date, that such Person is not insolvent (as such term is defined in the Uniform Fraudulent Transfer Act).
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"Special Account" means a specified cash collateral account maintained by a financial institution acceptable to the Lender in connection with Letters of Credit, as contemplated by Section 2.4.
"Subsidiary" means any corporation of which more than 50% of the outstanding shares of capital stock having general voting power under ordinary circumstances to elect a majority of the board of Directors of such corporation, irrespective of whether or not at the time stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency, is at the time directly or indirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries.
"Tangible Net Worth" means the result of (i) Book Net Worth, plus (ii) amounts due from the Borrower to its Affiliates, minus (iii) Intangible Assets, and minus (iv) amounts due to the Borrower from its Affiliates.
"Termination Date" means the earliest of (i) the Maturity Date, (ii) the date the Borrower terminates the Credit Facility, or (iii) the date the Lender demands payment of the Obligations after an Event of Default pursuant to Section 7.2.
"UCC" means the Uniform Commercial Code as in effect in the state designated in Section 8.15 as the state whose laws shall govern this Agreement, or in any other state whose laws are held to govern this Agreement or any portion hereof.
"Xxxxx Fargo Bank Minnesota" means Xxxxx Fargo Bank Minnesota, National Association.
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ARTICLE II
AMOUNT AND
TERMS OF THE CREDIT FACILITY
Section 2.3 Letters of Credit.[1]
(a) The Lender agrees, on the terms and subject to the conditions herein set forth, to cause an Issuer to issue, from the Funding Date to the Termination Date, one or more irrevocable standby or documentary letters of credit (each, a "Letter of Credit") for the Borrower's account by guaranteeing payment of the Borrower's obligations or being a co-applicant. The Lender shall have no obligation to cause an Issuer to issue any Letter of Credit if the face amount of the Letter of Credit to be issued would exceed the lesser of:
____________________________________
[1] As of the Closing Date, the Lender has not agreed to cause the Issuer to issue any Letters of Credit. The terms of Sections 2.3, 2.4, 2.5 and 2.6 (and the related definitions) shall not be effective until the Lender gives written notice to the Borrower that such Sections shall be effective.
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(i) $0 less the L/C Amount, or
(ii) Availability.
Each Letter of Credit, if any, shall be issued pursuant to a separate L/C Application entered into between the Borrower and the Lender for the benefit of the Issuer, completed in a manner satisfactory to the Lender and the Issuer. The terms and conditions set forth in each such L/C Application shall supplement the terms and conditions hereof, but if the terms of any such L/C Application and the terms of this Agreement are inconsistent, the terms hereof shall control.
(b) No Letter of Credit shall be issued with an expiry date later than the Termination Date in effect as of the date of issuance.
Section 2.5 Payment of Amounts Drawn Under Letters of Credit; Obligation of Reimbursement. The Borrower acknowledges that the Lender, as co-applicant, will be liable to the Issuer for reimbursement of any and all draws under Letters of Credit and for all other amounts required to be paid under the applicable L/C Application. Accordingly, the Borrower shall pay to the Lender any and all amounts required to be paid under the applicable L/C Application, when and as required to be paid thereby, and the amounts designated below, when and as designated:
(a) The Borrower shall pay to the Lender on the day a draft is honored under any Letter of Credit a sum equal to all amounts drawn under such Letter of Credit plus any and all reasonable charges and expenses that the Issuer or the Lender may pay or incur relative to such draw and the applicable L/C Application, plus interest on all such amounts, charges and expenses as set forth below (the Borrower's obligation to pay all such amounts is herein referred to as the "Obligation of Reimbursement").
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(b) Whenever a draft is submitted under a Letter of Credit, the Borrower authorizes the Lender to make a Revolving Advance in the amount of the Obligation of Reimbursement and to apply the proceeds of such Revolving Advance thereto. Such Revolving Advance shall be repayable in accordance with and be treated in all other respects as a Revolving Advance hereunder.
(c) If a draft is submitted under a Letter of Credit when the Borrower is unable, because a Default Period exists or for any other reason, to obtain a Revolving Advance to pay the Obligation of Reimbursement, the Borrower shall pay to the Lender on demand and in immediately available funds, the amount of the Obligation of Reimbursement together with interest, accrued from the date of the draft until payment in full at the Default Rate. Notwithstanding the Borrower's inability to obtain a Revolving Advance for any reason, the Lender is irrevocably authorized, in its sole discretion, to make a Revolving Advance in an amount sufficient to discharge the Obligation of Reimbursement and all accrued but unpaid interest thereon.
Section 2.6 Obligations Absolute. The Borrower's obligations arising under Section 2.5 shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of Section 2.5, under all circumstances whatsoever, including (without limitation) the following circumstances:
(a) any lack of validity or enforceability of any Letter of Credit or any other agreement or instrument relating to any Letter of Credit (collectively the "Related Documents");
(b) any amendment or waiver of or any consent to departure from all or any of the Related Documents;
(c) the existence of any claim, setoff, defense or other right which the Borrower may have at any time, against any beneficiary or any transferee of any Letter of Credit (or any persons or entities for whom any such beneficiary or any such transferee may be acting), or other person or entity, whether in connection with this Agreement, the transactions contemplated herein or in the Related Documents or any unrelated transactions;
(d) any statement or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever;
(e) payment by or on behalf of the Issuer under any Letter of Credit against presentation of a draft or certificate which does not strictly comply with the terms of such Letter of Credit; or
(f) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.
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Section 2.8 Fees.
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Section 2.10 Lockbox; Collateral Account; Application of Payments.
(a) Lockbox and Collateral Account.
(i) The Borrower shall instruct all Account Debtors to pay all Accounts directly to the Lockbox. If, notwithstanding such instructions, the Borrower receives any payments on Accounts, the Borrower shall deposit such payments into the Collateral Account. The Borrower shall also deposit all other cash proceeds of Collateral directly to the Collateral Account. Until so deposited, the Borrower shall hold all such payments and cash proceeds in trust for and as the property of the Lender and shall not commingle such property with any of its other funds or property. All deposits in the Collateral Account shall constitute proceeds of Collateral and shall not constitute payment of the Obligations.
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(b) Application of Payments.
(i) The Borrower may, from time to time, in accordance with the Lockbox and Collection Account Agreement, cause funds in the Collateral Account to be transferred to the Lender's general account for payment of the Obligations. Except as provided in the preceding sentence, amounts deposited in the Collateral Account shall not be subject to withdrawal by the Borrower, except after full payment and discharge of all Obligations.
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ARTICLE III
SECURITY
INTEREST; OCCUPANCY; SETOFF
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Section 3.4 Occupancy.
(a) The Borrower hereby irrevocably grants to the Lender the right to take exclusive possession of the Premises at any time during a Default Period.
(b) The Lender may use the Premises only to hold, process, manufacture, sell, use, store, liquidate, realize upon or otherwise dispose of goods that are Collateral and for other purposes that the Lender may in good xxxxx xxxx to be related or incidental purposes.
(c) The Lender's right to hold the Premises shall cease and terminate upon the earlier of (i) payment in full and discharge of all Obligations and termination of the Credit Facility, and (ii) final sale or disposition of all goods constituting Collateral and delivery of all such goods to purchasers.
Section 3.6 Financing Statement. The Borrower authorizes the Lender to file from time to time where permitted by law, such financing statements against collateral described as "all personal property" or describing specific items of collateral including commercial tort claims as the Lender deems necessary or useful to perfect the Security Interest. A carbon, photographic or other reproduction of this Agreement or of any financing statements signed by the Borrower is sufficient as a financing statement and may be filed as a financing statement in any state to perfect the security interests granted hereby. For this purpose, the following information is set forth:
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Name and address of Debtor:
Oregon Micro Systems, Inc.
0000 XX 000xx Xxxxx, Xxxx. X000
Xxxxxxxxx, Xxxxxx 00000
Federal Employer Identification No. 93β0894151
Organizational Identification No. 208152
Name and address of Secured Party:
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ARTICLE IV
CONDITIONS OF
LENDING
Section 4.1 Conditions Precedent to the Initial Advances and Letter of Credit. The Lender's obligation to make the initial Advances or to cause any Letters of Credit to be issued shall be subject to the condition precedent that the Lender shall have received all of the following, each in form and substance satisfactory to the Lender:
(a) This Agreement, duly executed by the Borrower.
(b) The Note, duly executed by the Borrower.
(c) A true and correct copy of any and all leases pursuant to which the Borrower is leasing the Premises, together with a landlord's disclaimer and consent with respect to each such lease.
(d) A true and correct copy of any and all mortgages pursuant to which the Borrower has mortgaged the Premises, together with a mortgagee's disclaimer and consent with respect to each such mortgage.
(e) A true and correct copy of any and all agreements pursuant to which the Borrower's property is in the possession of any Person other than the Borrower, together with, in the case of any goods held by such Person for resale, (i) a consignee's acknowledgment and waiver of Liens, (ii) UCC financing statements sufficient to protect the Borrower's and the Lender's interests in such goods, and (iii) UCC searches showing that no other secured party has filed a financing statement against such Person and covering property similar to the Borrower's other than the Borrower, or if there exists any such secured party, evidence that each such secured party has received notice from the Borrower and the Lender sufficient to protect the Borrower's and the Lender's interests in the Borrower's goods from any claim by such secured party.
(f) An acknowledgment and waiver of Liens from each warehouse in which the Borrower is storing Inventory.
(g) A true and correct copy of any and all agreements pursuant to which the Borrower's property is in the possession of any Person other than the Borrower, together with, (i) an acknowledgment and waiver of Liens from each subcontractor who has possession of the Borrower's goods from time to time, (ii) UCC financing statements sufficient to protect the Borrower's and the Lender's interests in such goods, and (iii) UCC searches showing that no other secured party has filed a financing statement covering such Person's property other than the Borrower, or if there exists any such secured party, evidence that each such secured party has received notice from the Borrower and the Lender sufficient to protect the Borrower's and the Lender's interests in the Borrower's goods from any claim by such secured party.
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(h) The Lockbox and Collection Account Agreement, duly executed by the Borrower and Xxxxx Fargo Bank, N.A.
(i) Control agreements, duly executed by the Borrower and each bank at which the Borrower maintains deposit accounts.
(j) The Patent and Trademark Security Agreement, duly executed by the Borrower.
(k) The Guaranty and the Guaranty Security Agreement, each duly executed by the Guarantor,
(l) The Copyright Security Agreement, duly executed by the Borrower.
(m) The Subordination Agreement, duly executed by the Guarantor and acknowledged by the Borrower.
(n) Current searches of appropriate filing offices showing that (i) no Liens have been filed and remain in effect against the Borrower except Permitted Liens or Liens held by Persons who have agreed in writing that upon receipt of proceeds of the initial Advances, they will satisfy, release or terminate such Liens in a manner satisfactory to the Lender, and (ii) the Lender has duly filed all financing statements necessary to perfect the Security Interest, to the extent the Security Interest is capable of being perfected by filing.
(o) A certificate of the Borrower's Secretary or Assistant Secretary certifying that attached to such certificate are (i) the resolutions of the Borrower's Directors and, if required, Owners, authorizing the execution, delivery and performance of the Loan Documents, (ii) true, correct and complete copies of the Borrower's Constituent Documents, and (iii) examples of the signatures of the Borrower's Officers or agents authorized to execute and deliver the Loan Documents and other instruments, agreements and certificates, including Advance requests, on the Borrower's behalf.
(p) A current certificate issued by the Secretary of State of Oregon, certifying that the Borrower is in compliance with all applicable organizational requirements of the State of Oregon.
(q) Evidence that the Borrower is duly licensed or qualified to transact business in all jurisdictions where the character of the property owned or leased or the nature of the business transacted by it makes such licensing or qualification necessary.
(r) A certificate of an Officer of the Borrower confirming, in his personal capacity, the representations and warranties set forth in Article V.
(s) An opinion of counsel to the Borrower and the Guarantor, addressed to the Lender.
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(t) Certificates of the insurance required hereunder, with all hazard insurance containing a lender's loss payable endorsement in the Lender's favor and with all liability insurance naming the Lender as an additional insured.
(u) Payment of the fees and commissions due under Section 2.13 through the date of the initial Advance or Letter of Credit and expenses incurred by the Lender through such date and required to be paid by the Borrower under Section 8.6, including all legal expenses incurred through the date of this Agreement.
(v) Evidence that after making the initial Revolving Advance, satisfying all trade payables older than 60 days from invoice date, book overdrafts and closing costs, Availability shall be not less than $500,000.
(w) Evidence satisfactory to the Lender that there has been no Material Adverse Effect since the date of the last financial statements provided by the Borrower to the Lender, or any material variance from the Borrower's projections previously provided by the Borrower to the Lender.
(x) A Collateral audit, satisfactory to the Lender.
(y) The results of the Lender's due diligence with respect to the Borrower, including background checks on the senior officers of the Borrower, satisfactory to the Lender.
(z) True and complete copies of all license agreements pursuant to which the Borrower licenses any Intellectual Property Rights, together with a consent to assignment to the Lender or its nominee from each licensor thereof (including without limitation, from Xxxxxx X. Xxxx).
(aa) Such other documents as the Lender in its sole discretion may require.
Section 4.2 Conditions Precedent to All Advances and Letters of Credit. The Lender's obligation to make each Advance and to cause each Letter of Credit to be issued shall be subject to the further conditions precedent that:
(a) the representations and warranties contained in Article V are correct on and as of the date of such Advance or issuance of a Letter of Credit as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date;
(b) no event has occurred and is continuing, or would result from such Advance or issuance of a Letter of Credit which constitutes a Default or an Event of Default; and
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ARTICLE V
REPRESENTATIONS
AND WARRANTIES
The Borrower represents and warrants to the Lender as follows:
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Section 5.5 Subsidiaries. Except as set forth in Schedule 5.5 hereto, the Borrower has no Subsidiaries.
Section 5.11 Intellectual Property Rights.
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Section 5.14 Environmental Matters.
(a) To the Borrower's best knowledge, there are not present in, on or under the Premises any Hazardous Substances in such form or quantity as to create any material liability or obligation for either the Borrower or the Lender under common law of any jurisdiction or under any Environmental Law, and no Hazardous Substances have ever been stored, buried, spilled, leaked, discharged, emitted or released in, on or under the Premises in such a way as to create any such material liability.
(b) To the Borrower's best knowledge, the Borrower has not disposed of Hazardous Substances in such a manner as to create any material liability under any Environmental Law.
(c) There are not and there never have been any requests, claims, notices, investigations, demands, administrative proceedings, hearings or litigation, relating in any way to the Premises or the Borrower, alleging material liability under, violation of, or noncompliance with any Environmental Law or any license, permit or other authorization issued pursuant thereto. To the Borrower's best knowledge, no such matter is threatened or impending.
(d) To the Borrower's best knowledge, the Borrower's businesses are and have in the past always been conducted in accordance with all Environmental Laws and all licenses, permits and other authorizations required pursuant to any Environmental Law and necessary for the lawful and efficient operation of such businesses are in the Borrower's possession and are in full force and effect. No permit required under any Environmental Law is scheduled to expire within 12 months and there is no threat that any such permit will be withdrawn, terminated, limited or materially changed.
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(e) To the Borrower's best knowledge, the Premises are not and never have been listed on the National Priorities List, the Comprehensive Environmental Response, Compensation and Liability Information System or any similar federal, state or local list, schedule, log, inventory or database.
Section 5.18 Eligible Accounts. The Eligible Accounts are bona fide existing payment obligations of Account Debtors created by the sale and delivery of Inventory or the rendition of services to such Account Debtors in the ordinary course of the Borrower's business, owed to the Borrower without defenses, disputes, offsets, counterclaims, or rights of return or cancellation. As to each Eligible Account, such Account is not:
(i) owed by an employee, Affiliate, or agent of Borrower,
(ii) on account of a transaction wherein goods were placed on consignment or were sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a xxxx and hold, or on any other terms by reason of which the payment by the Account Debtor may be conditional;
(iii) payable in a currency other than Dollars,
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(iv) owed by an Account Debtor that has or has asserted a right of setoff, has disputed its liability, or has made any claim with respect to its obligation to pay the Account,
(v) owed by an Account Debtor that is subject to any Insolvency Proceeding or is not Solvent or as to which Borrower has received notice of an imminent Insolvency Proceeding or a material impairment of the financial condition of such Account Debtor,
(vi) on account of a transaction as to which the goods giving rise to such Account have not been shipped and billed to the Account Debtor or the services giving rise to such Account have not been performed and accepted by the Account Debtor,
(viii) an Account that has not been billed to the customer.
Section 5.19 Eligible Inventory. All Eligible Inventory is of good and merchantable quality, free from defects. As to each item of Eligible Inventory, such Inventory is
(i) owned by the Borrower free and clear of all Liens other than Liens in favor of the Lender or Permitted Liens,
(ii) not goods that have been returned or rejected by the Borrower's customers, and
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ARTICLE VI
COVENANTS
31
(c) Collateral Reports. The Borrower will deliver to the Lender the following documents at the following times in form satisfactory to Lender:
Daily |
(a) a report of cash collections, sales assignments, credit memos/adjustments and deposits, and a calculation of the Borrowing Base as of such date, and (b) notice of all returns, disputes, or claims.
|
Monthly (not later than the 15th day of each month) |
(c) a detailed calculation of the Borrowing Base (including detail regarding those Accounts that are not Eligible Accounts or Eligible Foreign Accounts, and Inventory that is not Eligible Inventory), (d) a detailed listing and aging, by total, of the Accounts, together with a reconciliation to the detailed calculation of the Borrowing Base previously provided to Lender, |
|
(e) a summary aging, by vendor, of Borrower's accounts payable and any book overdraft, together with a reconciliation to the Borrower's general ledger and monthly financial statements delivered pursuant to Section 6.1(b), (f) an Inventory stock status report, by type and by location, |
|
(g) an Inventory slow moving report, and (h) an Inventory certification and perpetual report by location, including Inventory turnover by item number, together with a reconciliation to the Borrower's general ledger and monthly financial statements delivered pursuant to Section 6.1(b).
|
Semi-Annually |
(i) a detailed list of Borrower's customers
|
Upon request by Lender |
(j) copies of invoices in connection with the Accounts, credit memos, remittance advices, deposit slips, shipping and delivery documents in connection with the Accounts and, for Inventory and Equipment acquired by Borrower, purchase orders and invoices, and |
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(l) Intellectual Property.
(i) The Borrower will give the Lender 30 days prior written notice of its intent to acquire material Intellectual Property Rights; except for transfers permitted under Section 6.17, the Borrower will give the Lender 30 days prior written notice of its intent to dispose of material Intellectual Property Rights; and upon request, shall provide the Lender with copies of all applicable documents and agreements.
(ii) Promptly upon knowledge thereof, the Borrower will deliver to the Lender notice of (A) any material Infringement of its Intellectual Property Rights by others, (B) claims that the Borrower is Infringing another Person's Intellectual Property Rights and (C) any threatened cancellation, termination or material limitation of its Intellectual Property Rights.
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Section 6.2 Financial Covenants.
(a) Minimum Tangible Net Worth. The Borrower will maintain its Tangible Net Worth, as at the end of each month, at an amount not less than the amount set forth in the table below opposite the applicable period:
Test Date/Period |
Minimum Tangible Net Worth |
$950,000 |
|
$950,000 |
|
6/30/2002 and each month end thereafter |
$950,000 |
|
|
(b) Minimum Net Income. The Borrower will achieve during each period described below, measured quarterly on a fiscal-year-to-date basis, minimum Net Income (or maximum Net Loss, as applicable), of not less than the amount set forth in the table below opposite the applicable period:
Minimum Net Income (or Maximum Net Loss) |
|
6/30/2002 |
-$800,000 |
|
|
Section 6.3 Permitted Liens; Financing Statements.
(a) The Borrower will not create, incur or suffer to exist any Lien upon or of any of its assets, now owned or hereafter acquired, to secure any indebtedness; excluding, however, from the operation of the foregoing, the following (collectively, "Permitted Liens"):
(i) in the case of any of the Borrower's property which is not Collateral, covenants, restrictions, rights, easements and minor irregularities in title which do not materially interfere with the Borrower's business or operations as presently conducted;
(ii) Liens in existence on the date hereof and listed in Schedule 6.3 hereto, securing indebtedness for borrowed money permitted under Section 6.4;
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(iii) the Security Interest and Liens created by the Security Documents; and
(iv) purchase money Liens relating to the acquisition of machinery and equipment of the Borrower not exceeding the lesser of cost or fair market value thereof, not exceeding $50,000 for any one purchase or $100,000 in the aggregate during any fiscal year, and so long as no Default Period is then in existence and none would exist immediately after such acquisition.
Section 6.4 Indebtedness. The Borrower will not incur, create, assume or permit to exist any Indebtedness or liability on account of deposits or advances or any Indebtedness for borrowed money or letters of credit issued on the Borrower's behalf, or any other Indebtedness or liability evidenced by notes, bonds, debentures or similar obligations, except:
(a) Indebtedness arising hereunder;
(c) Indebtedness relating to Permitted Liens.
Section 6.5 Guaranties. The Borrower will not assume, guarantee, endorse or otherwise become directly or contingently liable in connection with any obligations of any other Person, except:
(a) the endorsement of negotiable instruments by the Borrower for deposit or collection or similar transactions in the ordinary course of business; and
Section 6.6 Investments and Subsidiaries. The Borrower will not purchase or hold beneficially any stock or other securities or evidences of indebtedness of, make or permit to exist any loans or advances to, or make any investment or acquire any interest whatsoever in, any other Person, including any partnership or joint venture, except:
(a) investments in direct obligations of the United States of America or any agency or instrumentality thereof whose obligations constitute full faith and credit obligations of the United States of America having a maturity of one year or less, commercial paper issued by U.S. corporations rated "A-1" or "A-2" by Standard & Poors Corporation or "P-1" or "P-2" by Xxxxx'x Investors Service or certificates of deposit or bankers' acceptances having a maturity of one year or less issued by members of the Federal Reserve System having deposits in excess of $100,000,000 (which certificates of deposit or bankers' acceptances are fully insured by the Federal Deposit Insurance Corporation);
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(b) travel advances or loans to the Borrower's Officers and employees not exceeding at any one time an aggregate of $5,000;
(c) advances in the form of progress payments, prepaid rent not exceeding three (3) months or security deposits; and
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Section 6.11 Compliance with Laws.
(a) The Borrower will (i) comply with the requirements of applicable laws and regulations, the non-compliance with which would materially and adversely affect its business or its financial condition and (ii) use and keep the Collateral, and require that others use and keep the Collateral, only for lawful purposes, without violation of any federal, state or local law, statute or ordinance.
Section 6.13 Maintenance of Properties.
(a) The Borrower will keep and maintain the Collateral and all of its other properties necessary or useful in its business in good condition, repair and working order (normal wear and tear excepted) and will from time to time replace or repair any worn, defective or broken parts; provided, however, that nothing in this Section 6.13 shall prevent the Borrower from discontinuing the operation and maintenance of any of its properties if such discontinuance is, in the Borrower's judgment, desirable in the conduct of the Borrower's business and not disadvantageous in any material respect to the Lender. The Borrower will take all commercially reasonable steps necessary to protect and maintain its Intellectual Property Rights.
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Section 6.22 Discounts, etc.
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ARTICLE VII
EVENTS OF DEFAULT,
RIGHTS AND REMEDIES
Section 7.1 Events of Default. "Event of Default", wherever used herein, means any one of the following events:
(a) Default in the payment of any Obligations when they become due and payable;
(b) Default in the performance, or breach, of any covenant or agreement of the Borrower contained in this Agreement
(c) A Change of Control shall occur;
(d) Any Financial Covenant shall become inapplicable due to the lapse of time and the failure to amend any such covenant to cover future periods;
(e) An Insolvency Proceeding is commenced by the Borrower or any Guarantor;
(f) An Insolvency Proceeding is commenced against the Borrower, or any Guarantor, and any of the following events occur: (a) the Borrower or such Guarantor consents to the institution of such Insolvency Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency Proceeding is not dismissed within 45 calendar days of the date of the filing thereof; provided, however, that, during the pendency of such period, the Lender shall be relieved of its obligations to extend credit hereunder, (d) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, the Borrower or any such Guarantor, or (e) an order for relief shall have been entered therein;
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(g) Any material portion of the Borrower's or any Guarantor's assets is attached, seized, subjected to a writ or distress warrant, levied upon, or comes into the possession of any third Person;
(h) The Borrower or any Guarantor is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs;
(i) A notice of Lien, levy, or assessment is filed of record with respect to any of the Borrower's or any Guarantor's assets by the United States, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, or if any taxes or debts owing at any time hereafter to any one or more of such entities becomes a Lien, whether xxxxxx or otherwise, upon any of the Borrower's or any Guarantor's assets and the same is not paid before such payment is delinquent;
(j) This Agreement or any other Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien on or security interest in the Collateral covered hereby or thereby;
(k) Any provision of any Loan Document shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by Borrower, or a proceeding shall be commenced by Borrower, or by any Governmental Authority having jurisdiction over Borrower, seeking to establish the invalidity or unenforceability thereof, or Borrower shall deny that Borrower has any liability or obligation purported to be created under any Loan Document.
(l) Any representation or warranty made by the Borrower in this Agreement, by any Guarantor in any guaranty delivered to the Lender, or by the Borrower (or any of its Officers) or any Guarantor in any agreement, certificate, instrument or financial statement or other statement contemplated by or made or delivered pursuant to or in connection with this Agreement or any such guaranty shall prove to have been incorrect in any material respect when deemed to be effective;
(m) The rendering against the Borrower of an arbitration award, final judgment, decree or order for the payment of money in excess of $200,000 and the continuance of such arbitration award, judgment, decree or order unsatisfied and in effect for any period of 30 consecutive days without a stay of execution;
(n) A default under any bond, debenture, note or other evidence of material Indebtedness of the Borrower owed to any Person other than the Lender, or under any indenture or other instrument under which any such evidence of Indebtedness has been issued or by which it is governed, or under any material lease or other contract, and the expiration of the applicable period of grace, if any, specified in such evidence of Indebtedness, indenture, other instrument, lease or contract;
42
(o) Any Reportable Event, which the Lender determines in good faith might constitute grounds for the termination of any Pension Plan or for the appointment by the appropriate United States District Court of a trustee to administer any Pension Plan, shall have occurred and be continuing 30 days after written notice to such effect shall have been given to the Borrower by the Lender; or a trustee shall have been appointed by an appropriate United States District Court to administer any Pension Plan; or the Pension Benefit Guaranty Corporation shall have instituted proceedings to terminate any Pension Plan or to appoint a trustee to administer any Pension Plan; or the Borrower or any ERISA Affiliate shall have filed for a distress termination of any Pension Plan under Title IV of ERISA; or the Borrower or any ERISA Affiliate shall have failed to make any quarterly contribution required with respect to any Pension Plan under Section 412(m) of the IRC, which the Lender determines in good faith may by itself, or in combination with any such failures that the Lender may determine are likely to occur in the future, result in the imposition of a Lien on the Borrower's assets in favor of the Pension Plan; or any withdrawal, partial withdrawal, reorganization or other event occurs with respect to a Multiemployer Plan which results or could reasonably be expected to result in a material liability of the Borrower to the Multiemployer Plan under Title IV of ERISA.
(p) An event of default shall occur under any Security Document;
(q) The Borrower shall liquidate, dissolve, terminate or suspend its business operations or otherwise fail to operate its business in the ordinary course, or sell or attempt to sell all or substantially all of its assets;
(r) Default in the payment of any amount owed by the Borrower to the Lender other than any Indebtedness arising hereunder;
(s) Any Guarantor or person signing a support agreement in favor of the Lender shall repudiate, purport to revoke or fail to perform his obligations under his guaranty or support agreement in favor of the Lender, any individual Guarantor shall die or any other Guarantor shall cease to exist;
(t) The Borrower shall take or participate in any action which would be prohibited under the provisions of any Subordination Agreement or make any payment on the Subordinated Indebtedness (as defined in the Subordination Agreement) that any Person was not entitled to receive under the provisions of the Subordination Agreement;
(u) Any event or circumstance with respect to the Borrower shall occur such that the Lender shall believe in good faith that the prospect of payment of all or any part of the Obligations or the performance by the Borrower under the Loan Documents is impaired or any material adverse change in the business or financial condition of the Borrower shall occur;
(v) Any Event of Default under the Affiliate Credit Agreement shall occur, or any other breach, default or event of default by or attributable to any Affiliate under any agreement between such Affiliate and the Lender shall occur; or
(w) Any other Material Adverse Effect shall occur.
43
Section 7.2 Rights and Remedies. During any Default Period, the Lender may exercise any or all of the following rights and remedies, all of which the Borrower acknowledges and agrees are commercially reasonable:
(a) the Lender may, by notice to the Borrower, declare the Commitment to be terminated, whereupon the same shall forthwith terminate;
(b) the Lender may, by notice to the Borrower, declare the Obligations to be forthwith due and payable, whereupon all Obligations shall become and be forthwith due and payable, without presentment, notice of dishonor, protest or further notice of any kind, all of which the Borrower hereby expressly waives;
(c) the Lender may, without notice to the Borrower and without further action, apply any and all money owing by the Lender to the Borrower to the payment of the Obligations;
(d) the Lender may settle or adjust disputes and claims directly with Account Debtors for amounts and upon terms which the Lender considers advisable, and in such cases, the Lender will credit the Obligations with only the net amounts received by the Lender in payment of such disputed Accounts after deducting all expenses incurred or expended by the Lender in connection therewith;
(e) the Lender may cause the Borrower to hold all returned Inventory in trust for the Lender, segregate all returned Inventory from all other assets of the Borrower or in the Borrower's possession and conspicuously label said returned Inventory as the property of the Lender;
(f) without notice to or demand upon the Borrower or any Guarantor, the Lender may make such payments and do such acts as the Lender considers necessary or reasonable to protect its security interests in the Collateral. The Borrower agrees to assemble the Collateral if the Lender so requires, and to make the Collateral available to the Lender at a place that the Lender may designate which is reasonably convenient to both parties. The Borrower authorizes Lender to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any Lien that in the Lender's determination appears to conflict with the Lender's Liens and to pay all expenses incurred in connection therewith and to charge the Obligations therefor. With respect to any of the Borrower's owned or leased premises, the Borrower hereby grants the Lender a license to enter into possession of such premises and to occupy the same, without charge, in order to exercise any of the Lender's rights or remedies provided herein, at law, in equity, or otherwise;
(g) without notice to Borrower (such notice being expressly waived), and without constituting a retention of any collateral in satisfaction of an obligation (within the meaning of the UCC), the Lender may set off and apply to the Obligations any and all (i) balances and deposits of the Borrower held by the Lender (including any amounts received in the Lockbox), or (ii) Indebtedness at any time owing to or for the credit or the account of the Borrower held by Lender;
44
(h) the Lender may hold, as cash collateral, any and all balances and deposits of the Borrower held by the Lender, and any amounts received in the Lockbox, to secure the full and final repayment of all of the Obligations;
(i) the Lender may ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral;
(j) the Lender may sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including the Borrower's premises) as the Lender determines is commercially reasonable. It is not necessary that the Collateral be present at any such sale;
(k) the Lender shall give notice of the disposition of the Collateral as follows:
(i) The Lender shall give the Borrower a notice in writing of the time and place of public sale, or, if the sale is a private sale or some other disposition other than a public sale is to be made of the Collateral, the time on or after which the private sale or other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed, postage prepaid, to the Borrower as provided in Section 8.3, at least 10 days before the earliest time of disposition set forth in the notice; no notice needs to be given prior to the disposition of any portion of the Collateral that is perishable or threatens to decline speedily in value or that is of a type customarily sold on a recognized market;
(l) the Lender may credit bid and purchase at any public sale;
(m) the Lender may seek the appointment of a receiver or keeper to take possession of all or any portion of the Collateral or to operate same and, to the maximum extent permitted by law, may seek the appointment of such a receiver without the requirement of prior notice or a hearing;
(n) If the Lender sells any of the Collateral on credit, the Obligations will be reduced only to the extent of payments actually received. If the purchaser fails to pay for the Collateral, the Lender may resell the Collateral and shall apply any proceeds actually received to the Obligations;
(o) the Lender shall have no obligation to attempt to satisfy the Obligations by collecting them from any third Person which may be liable for them or any portion thereof, and the Lender may release, modify or waive any collateral provided by any other Person as security for the Obligations or any portion thereof, all without affecting the Lender's rights against the Borrower. The Borrower waives any right it may have to require the Lender to pursue any third Person for any of the Obligations;
(p) the Lender may make demand upon the Borrower and, forthwith upon such demand, the Borrower will pay to the Lender in immediately available funds for deposit in the Special Account pursuant to Section 2.4 an amount equal to the aggregate maximum amount available to be drawn under all Letters of Credit then outstanding, assuming compliance with all conditions for drawing thereunder;
45
(q) the Lender may exercise and enforce its rights and remedies under the Loan Documents; and
(r) the Lender may exercise any other rights and remedies available to it by law or agreement.
Section 7.3 Disclaimer of Warranties.
Section 7.4 Compliance With Laws.
Section 7.5 No Marshalling.
Section 7.6 Borrower to Cooperate.
Section 7.7 Application of Proceeds. All proceeds realized as the result of any sale of the Collateral shall be applied by the Lender:
FIRST to the costs, expenses, liabilities, obligations and attorneys' fees incurred by the Lender in the exercise of its rights under this Agreement;
SECOND to the interest and fees due upon any of the Obligations; and
46
ARTICLE VIII
MISCELLANEOUS
47
Section 8.6 Indemnity. In addition to the payment of expenses pursuant to Section 8.5, the Borrower shall indemnify, defend and hold harmless the Lender, and any of its participants, parent corporations, subsidiary corporations, affiliated corporations, successor corporations, and all present and future officers, directors, employees, attorneys and agents of the foregoing (the "Indemnitees") from and against any of the following (collectively, "Indemnified Liabilities"):
(i) any and all transfer taxes, documentary taxes, assessments or charges made by any governmental authority by reason of the execution and delivery of the Loan Documents or the making of the Advances;
(ii) any claims, loss or damage to which any Indemnitee may be subjected if any representation or warranty contained in Section 5.14 proves to be incorrect in any respect or as a result of any violation of the covenant contained in Section 6.11(b); and
(iii) any and all other liabilities, losses, damages, penalties, judgments, suits, claims, costs and expenses of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel) in connection with the foregoing and any other investigative, administrative or judicial proceedings, whether or not such Indemnitee shall be designated a party thereto, which may be imposed on, incurred by or asserted against any such Indemnitee, in any manner related to or arising out of or in connection with the making of the Advances and the Loan Documents or the use or intended use of the proceeds of the Advances.
48
Section 8.8 Advertising and Promotion.
49
Section 8.15 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial. The Loan Documents shall be governed by and construed in accordance with the substantive laws (other than conflict laws) of the State of California. The parties hereto hereby (i) consent to the personal jurisdiction of the state and federal courts located in the State of California in connection with any controversy related to this Agreement; (ii) waive any argument that venue in any such forum is not convenient, (iii) agree that any litigation initiated by the Lender or the Borrower in connection with this Agreement or the other Loan Documents may be venued in either the State or Federal courts located in Los Angeles County, California; and (iv) agree that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
50
ARTICLE IX
JOINT AND
SEVERAL LIABILITY
51
Section 9.4 Additional Waivers.
(a) The Borrower absolutely, unconditionally, knowingly, and expressly waives:
(i) (1) notice of acceptance hereof; (2) notice of any Advances or other financial accommodations made or extended under the Affiliate Credit Agreement or the Affiliate Loan Documents or the creation or existence of any Obligations; (3) notice of the amount of the Obligations, subject, however, to the Borrower's right to make inquiry of the Lender to ascertain the amount of the Obligations at any reasonable time; (4) notice of any adverse change in the financial condition of the Affiliate Borrower or of any fact that might increase the Borrower's risk hereunder; (5) notice of presentment for payment, demand, protest, and notice thereof as to any instruments among the Affiliate Loan Documents; (6) notice of any Event of Default or Default under the Affiliate Credit Agreement; and (7) all other notices (except if such notice is specifically required to be given to the Borrower hereunder or under the Loan Documents to which the Borrower is a party) and demands to which the Borrower might otherwise be entitled.
(ii) its right, under Sections 2845 or 2850 of the California Civil Code, or otherwise, to require the Lender to institute suit against, or to exhaust any rights and remedies which the Lender has or may have against the Affiliate Borrower or any third Person, or against any collateral for the Obligations provided by the Affiliate Borrower or any third Person. The Borrower further waives any defense arising by reason of any disability or other defense (other than the defense that the Obligations shall have been fully and finally performed and indefeasibly paid) of any third party or by reason of the cessation from any cause whatsoever of the liability of any third party in respect thereof.
(iii) any rights to assert against the Lender any defense (legal or equitable), set-off, counterclaim, or claim which the Borrower may now or at any time hereafter have against the Affiliate Borrower or any other party liable to the Lender; (2) any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Obligations or any security therefor; (3) any defense the Borrower has to performance hereunder, and any right The Borrower has to be exonerated, provided by Sections 2819, 2822, or 2825 of the California Civil Code, or otherwise, arising by reason of: the impairment or suspension of the Lender's rights or remedies against the Affiliate Borrower or any third Person; the alteration by the Lender of the Obligations; any discharge of the Affiliate Borrower or any third Person's obligations to the Lender by operation of law as a result of the Lender's intervention or omission; or the acceptance by the Lender of anything in partial satisfaction of the Obligations; and (4) the benefit of any statute of limitations affecting the Affiliate Borrower or such third Person's liability hereunder or the enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations applicable to the Obligations shall similarly operate to defer or delay the operation of such statute of limitations applicable to the Borrower's liability hereunder.
(iv) The Borrower hereby absolutely, unconditionally, knowingly, and expressly waives: (i) any right of subrogation the Borrower has or may have as against the Affiliate Borrower or any third Person with respect to the Obligations; (ii) any right to proceed against the Affiliate Borrower or any third Person, now or hereafter, for contribution, indemnity, reimbursement, or any other suretyship rights and claims, whether direct or indirect, liquidated or contingent, whether arising under express or implied contract or by operation of law, which the Borrower may now have or hereafter have as against the Affiliate Borrower or any third Person with respect to the Obligations; and (iii) any right to proceed or seek recourse against or with respect to any property or asset of the Affiliate Borrower or any third Person.
52
(v) The Borrower absolutely, unconditionally, knowingly, and expressly waives any defense arising by reason of or deriving from (i) any claim or defense based upon an election of remedies by the Lender including any defense based upon an election of remedies by the Lender under the provisions of Sections 580a, 580b, 580d, and 726 of the California Code of Civil Procedure or any similar law of California or any other jurisdiction; or (ii) any election by the Lender under Section 1111(b) of the Bankruptcy Code to limit the amount of, or any collateral securing, its claim against the Affiliate Borrower. Pursuant to California Civil Code Section 2856(b):
The Borrower waives all rights and defenses arising out of an election of remedies by the Lender, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for the Obligations, has destroyed the Borrower's rights of subrogation and reimbursement against the Affiliate Borrower by the operation of Section 580(d) of the California Code of Civil Procedure or otherwise.
The Borrower waives all rights and defenses that the Borrower may have because the Obligations are secured by real property. This means, among other things: (1) the Lender may collect from the Borrower without first foreclosing on any real or personal property collateral pledged by the Affiliate Borrower; and (2) if the Lender forecloses on any real property collateral pledged by the Affiliate Borrower: (A) the amount of the Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price; and (B) the Lender may collect from the Borrower even if the Lender, by foreclosing on the real property collateral, has destroyed any right The Borrower may have to collect from the Affiliate Borrower. This is an unconditional and irrevocable waiver of any rights and defenses the Borrower may have because the Obligations are secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure.
(b) The Borrower also agrees that the "fair market value" provisions of Section 580a of the California Code of Civil Procedure shall have no applicability with respect to the determination of the Borrower's liability under this Agreement and the Loan Documents to which the Borrower is a party.
53
Section 9.5 Settlement or Releases. The Borrower consents and agrees that, without notice to or by the Borrower, and without affecting or impairing the liability of the Borrower hereunder, the Lender may, by action or inaction:
(a) compromise, settle, extend the duration or the time for the payment of, or discharge the performance of, or may refuse to or otherwise not enforce the Affiliate Credit Agreement or the Affiliate Loan Documents, or any part thereof, with respect to the Affiliate Borrower or any third Person;
(b) release the Affiliate Borrower any third Person or grant other indulgences to the Affiliate Borrower or any guarantor of the Obligations in respect thereof;
(c) amend or modify in any manner and at any time (or from time to time) any of the Affiliate Loan Documents or the Affiliate Credit Agreement; or
54
* * *
[remainder of this page intentionally left blank]
* * *
55
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.
Oregon Micro Systems,
Inc. |
OREGON MICRO SYSTEMS, INC.
By:
|
Xxxxx Fargo Business
Credit, Inc.
|
XXXXX FARGO BUSINESS CREDIT, INC.
By:
|
56
Table of Exhibits and Schedules
Exhibit A Form of Revolving Note
Exhibit B [Intentionally Omitted]
Exhibit C Compliance Certificate
Exhibit D Premises
Exhibit E Form of Notice of Borrowing
Schedule
5.1 Trade Names, Chief Executive
Office, Principal Place
of
Business, and Locations of Collateral
Schedule 5.2 Capitalization and Organizational Chart
Schedule 5.5 Subsidiaries
Schedule 5.11 Intellectual Property Disclosures
Schedule 6.3 Permitted Liens
Schedule 6.4 Permitted Indebtedness and Guaranties
Exhibit A to Credit and Security Agreement
REVOLVING NOTE
$3,000,000 Santa
Ana, California
May 28,
2002
For value received, the undersigned, OREGON MICRO SYSTEMS, INC., an Oregon corporation (the "Borrower"), jointly and severally with Micro Motors, Inc., a Colorado corporation, hereby promises to pay on the Termination Date under the Credit Agreement (defined below), to the order of XXXXX FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the "Lender"), at its main office in Minneapolis, Minnesota, or at any other place designated at any time by the holder hereof, in lawful money of the United States of America and in immediately available funds, the principal sum of Three Million Dollars ($3,000,000) or, if less, the aggregate unpaid principal amount of all Revolving Advances made by the Lender to the Borrower under the Credit Agreement (defined below) together with interest on the principal amount hereunder remaining unpaid from time to time, computed on the basis of the actual number of days elapsed and a 360-day year, from the date hereof until this Note is fully paid at the rate from time to time in effect under the Credit and Security Agreement of even date herewith (the "Credit Agreement") by and between the Lender and the Borrower. The principal hereof and interest accruing thereon shall be due and payable as provided in the Credit Agreement. This Note may be prepaid only in accordance with the Credit Agreement.
This Note is issued pursuant, and is subject, to the Credit Agreement, which provides, among other things, for acceleration hereof. This Note is the Revolving Note referred to in the Credit Agreement. This Note is secured, among other things, pursuant to the Credit Agreement and the Security Documents as therein defined, and may now or hereafter be secured by one or more other security agreements, mortgages, deeds of trust, assignments or other instruments or agreements.
The Borrower shall pay all costs of collection, including reasonable attorneys' fees and legal expenses if this Note is not paid when due, whether or not legal proceedings are commenced.
Presentment or other demand for payment, notice of dishonor and protest are expressly waived.
OREGON MICRO SYSTEMS, INC.
By
Xxxxx X.
Xxxxx, Director
Exhibit C to Credit and Security Agreement
Compliance Certificate
To: Xxxxx X.
Xxx
Xxxxx
Fargo Business Credit, Inc.
Date: __________________, 200___
Subject: Oregon Micro Systems, Inc.
Financial Statements
In accordance with our Credit and Security Agreement dated as of May 28, 2002 (the "Credit Agreement"), attached are the financial statements of Oregon Micro Systems, Inc. (the "Borrower") as of and for ________________, 20___ (the "Reporting Date") and the year-to-date period then ended (the "Current Financials"). All terms used in this certificate have the meanings given in the Credit Agreement.
Events of Default. (Check one):
ο¨ The undersigned does not have knowledge of the occurrence of a Default or Event of Default under the Credit Agreement except as previously reported in writing to the Lender.
Financial Covenants. I further hereby certify as follows:
1. Minimum Tangible Net Worth. Pursuant to Section 6.2(a) of the Credit Agreement, as of the Reporting Date, the Borrower's Tangible Net Worth was $____________, which ο¨ satisfies ο¨ does not satisfy the requirement that such amount be not less than $_____________ on the Reporting Date as set forth in table below:
1
Test Date/Period |
Minimum Tangible Net Worth |
$950,000 |
|
$950,000 |
|
6/30/2002 and each month end thereafter |
$950,000 |
2. Minimum Net Income. Pursuant to Section 6.2(b) of the Credit Agreement, the Borrower's Net Income (Net Loss) for the fiscal year-to-date period ending on the Reporting Date, was $____________, which ο¨ satisfies ο¨ does not satisfy the requirement that such amount be not less than $____________, as set forth in the table below:
Minimum Net Income (or Maximum Net Loss) |
|
6/30/2002 |
-$800,000 |
|
|
5. Salaries. As of the Reporting Date, the Borrower ο¨ is ο¨ is not in compliance with Section 6.8 of the Credit Agreement concerning salaries.
2
Attached hereto are all relevant facts in reasonable detail to evidence, and the computations of the financial covenants referred to above. These computations were made in accordance with GAAP.
OREGON MICRO SYSTEMS, INC.
By
Its Chief Financial
Officer
3
Exhibit D to Credit and Security Agreement
Premises
The Premises referred to in the Credit and Security Agreement are legally described as follows:
[_To be completed by Borrower_]
Exhibit E to Credit and Security Agreement
NOTICE OF BORROWING
_____________, _______
TO: Xxxxx
Fargo Business Credit, Inc.
000
X. Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxxxxxxx 00000
Telecopier: (626) 844β9063
Attention: Xxxxx
X. Xxx
We refer to that certain Credit and Security Agreement dated as of May 28, 2002 (as amended or modified to date, the "Credit Agreement") by and between Oregon Micro Systems, Inc. and Xxxxx Fargo Business Credit, Inc. Capitalized terms used herein but not otherwise defined shall have the same meanings assigned to them in the Credit Agreement.
Pursuant to Section 2.2(a) of the Credit Agreement, we hereby request or confirm our request for an Advance on the date, of the type(s) and in the amount(s) specified below.
Amount of Advance |
Date of Borrowing |
$ |
|
|
|
OREGON MICRO SYSTEMS, INC.
By
Its
Schedule 5.1 to Credit and Security Agreement
Trade Names, Chief
Executive Office, Principal Place of Business,
and Locations of Collateral
Trade Names
[_to be completed by Borrower_]
Chief Executive Office/Principal Place of Business
Other Inventory and Equipment Locations
[_to be completed by Borrower_]
Schedule 5.2 to Credit and Security Agreement
Capitalization and Organizational Chart
Holder |
Type of |
No. of shares (after |
Percent interest on |
|
|
|
|
|
|
|
|
Attach organizational chart showing the ownership structure of all Subsidiaries of the Borrower.
[_to be completed by Borrower_]
Schedule 5.5 to Credit and Security Agreement
Subsidiaries
[_to be completed by Borrower_]
Schedule 5.11 to Credit and Security Agreement
Intellectual Property Disclosures
[_to be completed by Borrower_]
Schedule 6.3 to Credit and Security Agreement
Permitted Liens
Creditor |
Collateral |
Jurisdiction |
Filing Date |
Filing No. |
|
|
|
|
|
|
|
|
|
|
[_to be completed by Borrower_]
Schedule 6.4 to Credit and Security Agreement
Permitted Indebtedness and Guaranties
Indebtedness |
||||
Creditor |
Principal |
Maturity |
Monthly |
Collateral |
|
|
|
|
|
|
|
|
|
|
[_to be completed by Borrower_]
Guaranties |
||
Primary Obligor |
Amount and
Description of |
Beneficiary of Guaranty |
|
|
|
|
|
|
[_To be completed by Borrower_]