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EXHIBIT 10.51
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CREDIT AGREEMENT
by and between
JALATE LIMITED, INC., A CALIFORNIA CORPORATION
and
XXXXX FARGO HSBC TRADE BANK, N.A.
Dated as of
May 31, 1997
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Exhibit A - Addendum To Agreement
Exhibit B - Facility Supplement(s)
Exhibit C - Collateral/Credit Support Document
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XXXXX FARGO HSBC TRADE BANK CREDIT AGREEMENT
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JALATE LIMITED, INC., a California corporation ("Borrower"), organized under the
laws of the State of California whose chief executive office is located at the
address specified after its signature to this Agreement ("Borrower's Address")
and XXXXX FARGO HSBC TRADE BANK, N.A. ("Trade Bank"), whose address is specified
after its signature to this Agreement, have entered into this CREDIT AGREEMENT
as of May 31, 1997 ("Effective Date"). All references to this "Agreement"
include those covenants included in the Addendum ("Addendum") attached as
Exhibit A hereto.
I. CREDIT FACILITIES
1.1 THE FACILITIES. Subject to the terms and conditions of this
Agreement, Trade Bank will make available to Borrower each of those credit
facilities ("Facilities") for which a Facility Supplement ("Supplement") is
attached as Exhibit B hereto, Additional terms for each individual Facility (and
each subfacility thereof ("Subfacility")) are set forth in the Supplement for
that Facility. Each Facility will be available from the closing Date until the
Facility Termination Date for that Facility. Collateral and credit support
required for each Facility are also set forth in the Supplement for each
Facility. Definitions for those capitalized terms not otherwise defined are
contained in Article 8 below.
1.2 CREDIT EXTENSION LIMIT. The aggregate outstanding amount of all
Credit Extensions may at no time exceed Four Million Dollars ($4,000,000)
("Overall Credit Limit"). The aggregate outstanding amount of all Credit
Extensions outstanding at any time under any Facility may not exceed that amount
specified as the "Credit Limit" in the Supplement for that Facility, and the
aggregate outstanding amount of all Credit Extensions outstanding at any time
under each Subfacility (or any subcategory thereof) may not exceed that amount
specified as the "Credit Sublimit" in the Supplement for the relevant Facility.
An amount equal to 100% of each unfunded Credit Extension shall be used in
calculating the outstanding amount of Credit Extensions under this Agreement.
1.3 REPAYMENT; INTEREST AND FEES. Each funded Credit Extension shall be
repaid by Borrower, and shall bear interest from the date of disbursement at
those per annum rates and such interest shall be paid, at the times specified in
the applicable Supplement, Note or Facility Document. With respect to each
Facility, Borrower agrees to pay to Trade Bank the fees specified in the related
Supplement as well as those fees specified in the relevant Facility
Document(s). Interest and fees will be calculated on the basis of a 360 day
year, actual days elapsed. Any overdue payments of principal (and interest to
the extent permitted by law) shall bear interest at a per annum floating rate
equal to the Prime Rate plus 5.0%.
1.4 PREPAYMENTS. Credit Extensions under any Facility may only be
prepaid in accordance with the terms of the related Supplement. At the time of
any prepayment (including, but not limited to, any prepayment which is a result
of the occurrence of an Event of Default and an acceleration of the Obligations)
Borrower will pay to Trade Bank all interest accrued on the amount so prepaid to
the date of such prepayment and all costs, expenses and fees specified in the
Loan Documents.
II. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Trade Bank that the following
representations and warranties are true and correct:
2.1 LEGAL STATUS. Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction indicated in this Agreement, and is
qualified or licensed to do business in all jurisdictions in which such
qualification or licensing is required and in which the failure to so qualify or
to be so licensed could have a material adverse affect on Borrower.
2.2 AUTHORIZATION AND VALIDITY. The execution, delivery and performance
of this Agreement, and all other Loan Documents to which Borrower is a party,
have been duly and validly authorized, executed and delivered by Borrower and
constitute legal, valid and binding agreements of Borrower, and are enforceable
against Borrower in accordance with their respective terms.
2.3 BORROWER'S NAME. The name of Borrower set forth at the end of this
Agreement is its correct name. If Borrower is conducting business under a
fictitious business name, Borrower is in compliance with all laws relating to
the conduct of such business under such name.
2.4 FINANCIAL CONDITION AND STATEMENTS. All financial statements of
Borrower delivered to Trade Bank have been prepared in conformity with GAAP,
and completely and accurately reflect the financial condition of Borrower (and
any consolidated Subsidiaries) at the times and for the periods stated in such
financial statements. Neither Borrower nor any Subsidiary has any material
contingent liability not reflected in the aforesaid financial statement. Since
the date of the financial statements delivered to Trade Bank for the last
fiscal period of Borrower to end before the Effective Date, there has been no
material adverse change in the financial condition, business or prospects of
Borrower. Borrower is solvent.
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2.5 LITIGATION. Except as disclosed in writing to Trade Bank prior to
the Effective Date, there is no action, claim, suit, litigation, proceeding or
investigation pending or (to best of Borrower's knowledge) threatened by or
against or affecting Borrower or any Subsidiary in any court or before any
governmental authority, administrator or agency which may result in (a) any
material adverse change in the financial condition or business of Borrower, or
(b) any material impairment of the ability of Borrower to carry on its business
in substantially the same manner as it is now being conducted.
2.6 OTHER OBLIGATIONS. Except as disclosed in writing to Trade Bank
prior to the Effective Date, neither Borrower nor any Subsidiary are in default
of any obligation for borrowed money, any purchase money obligation or any
material lease, commitment, contract, instrument or obligation.
2.7 NO DEFAULTS. No Event of Default, and event which with the giving
of notice or the passage of time or both would constitute an Event of Default,
has occurred and is continuing.
2.8 INFORMATION PROVIDED TO TRADE BANK. The information provided to the
Trade Bank concerning Borrower's business is true and correct.
2.9 ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in
writing prior to the Effective Date, Borrower (as well as any Subsidiary) is
each in compliance in all material respects with all applicable Federal or state
environmental, hazardous waste, health and safety statutes, and any rules or
regulations adopted pursuant thereto, which govern or affect any of Borrower's
or any Subsidiary's operations and/or properties, including without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal
Resource Conservation and Recovery Act of 1976, the Federal Toxic Substances
Control Act and the California Health and Safety Code, as any of the same may be
amended, modified or supplemented from time to time. None of the operations of
Borrower or of any Subsidiary is the subject of any Federal or state
investigation evaluating whether any remedial action involving a material
expenditure is needed to respond to a release of any toxic or hazardous waste or
substance into the environment.
III. CONDITIONS TO EXTENDING FACILITIES
3.1 Conditions to Initial Credit Extension. The obligation of Trade
Bank to make the first Credit Extension is subject to the fulfillment to Trade
Bank's satisfaction of the following conditions:
(a) APPROVAL OF TRADE BANK COUNSEL. All legal matters relating
to making the Facilities available to Borrower must be
satisfactory to counsel for Trade Bank.
(b) DOCUMENTATION. Trade Bank must have received, in form and
substance satisfactory to Trade Bank, the following
documents and instruments duly executed and in full force
and effect:
(1) a corporate borrowing resolution and incumbency
certificate if Borrower is a corporation, a partnership
or joint venture borrowing certificate if Borrower is a
partnership or joint venture, and a limited liability
company borrowing certificate if Borrower is a limited
liability company;
(2) the Facility Documents for each Facility, including,
but not limited to, note(s) ("Notes") for any Revolving
Credit or Term Loan Facility, Trade Bank's standard
Continuing Commercial Letter of Credit Agreement or
Continuing Standby Letter of Credit Agreement for any
letter of credit Facility;
(3) those guarantees, security agreements, deeds of trust,
subordination agreements, intercreditor agreements,
factoring agreements, tax service contracts, and other
Collateral Documents required by Trade Bank to evidence
the collateral/credit support specified in the
Supplement;
(4) if an audit or inspection of any books, records or
property is specified in the Supplement for any
Facility, an audit or inspection report from Xxxxx
Fargo or another auditor or inspector acceptable to
Trade Bank reflecting values and property conditions
satisfactory to Trade Bank;
(5) if an appraisal of any real property is specified in
any Facility Supplement, an appraisal from an appraiser
acceptable to Trade Bank reflecting values satisfactory
to Trade Bank;
(6) if a policy of title insurance is specified in any
Facility Supplement, an ALTA policy containing the
endorsements, and issued by a company, acceptable to
Trade Bank; and
(7) if insurance is required in the Addendum, the insurance
policies specified in the Addendum (or other
satisfactory proof thereof) from insurers acceptable to
Trade Bank.
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3.2 CONDITIONS TO MAKING EACH CREDIT EXTENSION. The obligation of Trade
Bank to make each Credit Extension is subject to the fulfillment to Trade Bank's
satisfaction of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in this Agreement, the Facility
Documents and the Collateral Documents will be true and
correct on as of the date of the Credit Extension with the
same effect as though such representations and warranties
had been made on and as of such date;
(b) DOCUMENTATION. Trade Bank must have received, in form and
substance satisfactory to Trade Bank, the following
documents and instruments duly executed and in full force
and effect:
(1) if the Credit Extension is the issuance of a Commercial
Letter of Credit, Trade Bank's standard Application For
Commercial Letter of Credit or standard Application and
Agreement For Commercial Letter of Credit;
(2) if the Credit Extension is the issuance of a Standby
Letter of Credit, Trade Bank's standard Application For
Standby Letter of Credit or standard Application and
Agreement For Standby Letter of Credit;
(3) if a Borrowing Base Certificate is required for the
Credit Extension, a Borrowing Base Certificate
demonstrating compliance with the requirements for such
Credit Extension.
(c) FEES. Trade Bank must have received any fees required by the
Loan Documents to be paid at the time such Credit Extension
is made.
IV. AFFIRMATIVE COVENANTS
Borrower covenants that so long as Trade Bank remains committed to make
Credit Extensions to Borrower, and until payment of all Obligations and Credit
Extensions, Borrower will comply with each of the following covenants: (For
purposes of this Article IV, and Article V below, reference to "Borrower" may
also extend to Borrower's subsidiaries, if so specified in the Addendum.)
4.1 PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees and
other Obligations due under this Agreement or under any Loan Document at the
time and place and in the manner specified herein or therein.
4.2 NOTIFICATION TO TRADE BANK. Promptly, but in no event more than 5
calendar days after the occurrence of each such event, provide written notice in
reasonable detail of each of the following:
(a) OCCURRENCE OF A DEFAULT. The occurrence of any Event of
Default or any event which with the giving of notice or the
passage of time or both would constitute an Event of
Default;
(b) BORROWER'S TRADE NAMES; PLACE OF BUSINESS. Any change of
Borrower's (or any Subsidiary's) name, trade name or place
of business, or chief executive officer;
(c) LITIGATION. Any action, claim, proceeding, litigation or
investigation threatened or instituted by or against or
affecting Borrower (or any Subsidiary) in any court or
before any government authority, administrator or agency
which may materially and adversely affect Borrower's (or any
Subsidiary's) financial condition or business or Borrower's
ability to carry on its business in substantially the same
manner as it is now being conducted;
(d) UNINSURED OR PARTIALLY UNINSURED LOSS. Any uninsured or
partially uninsured loss through liability or property
damage or through fire, theft or any other cause affecting
Borrower's (or any Subsidiary's) property in excess of the
aggregate amount required hereunder;
(e) REPORTS MADE TO INSURANCE COMPANIES. Copies of all material
reports made to insurance companies; and
(f) ERISA. The occurrence and nature of any Reportable Event or
Prohibited Transaction, each as defined in ERISA, or any
funding deficiency with respect to any Plan.
4.3 BOOKS AND RECORDS. Maintain at Borrower's address books and records
in accordance with GAAP, and permit any representative of Trade Bank, at any
reasonable time, to inspect, audit and examine such books and records, to make
copies of them, and to inspect the properties of Borrower.
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4.4 TAX RETURNS AND PAYMENTS. Timely file all tax returns and reports
required by foreign, federal, state and local law, and timely pay all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by
Borrower. Borrower may, however, defer payment of any contested taxes, provided
that Borrower (i) in good faith contests Borrower's obligation to pay the taxes
by appropriate proceedings promptly instituted and diligently conducted, (ii)
notifies Trade Bank in writing of the commencement of, and any material
development in, the proceedings, (iii) posts bonds or takes any other steps
required to keep the contested taxes from becoming a lien upon any of the
Collateral, and (iv) makes provision, to Trade Bank's satisfaction, for eventual
payment of such taxes in the event Borrower is obligated to make such payment.
4.5 COMPLIANCE WITH LAWS. Comply in all material respects with the
provisions of all foreign, federal, state and local laws and regulations
relating to Borrower, including, but not limited to, those relating to
Borrower's ownership of real or personal property, the conduct and licensing of
Borrower's business, and health and environmental matters.
4.6 INSURANCE. Maintain and keep in force insurance of the types and in
amounts customarily carried in lines of business similar to that of Borrower,
including, but not limited to, fire, extended coverage, public liability, flood,
property damage and workers' compensation, with all such insurance to be in
amounts satisfactory to Trade Bank and to be carried with companies approved by
Trade Bank before such companies are retained, and deliver to Trade Bank from
time to time at Trade Bank's request schedules setting forth all insurance then
in effect. All insurance policies shall name Trade Bank as an additional loss
payee, and shall contain a lenders loss payee endorsement in form reasonably
acceptable to Trade Bank. (Upon receipt of the proceeds of any such insurance,
Trade Bank shall apply such proceeds in reduction of the outstanding funded
Credit Extensions and shall hold any remaining proceeds as collateral for the
outstanding unfunded Credit Extensions, as Trade Bank shall determine in its
sole discretion, except that, provided no Event of Default has occurred, Trade
Bank shall release to Borrower insurance proceeds with respect to equipment
totaling less than $100,000, which shall be utilized by Borrower for the
replacement of the equipment with respect to which the insurance proceeds were
paid, if Trade Bank receives reasonable assurance that the insurance proceeds so
released will be so used.) If Borrower fails to provide or pay for any
insurance, Trade Bank may, but is not obligated to, obtain the insurance at
Borrower's expense.
4.7 FURTHER ASSURANCES. At Trade Bank's request and in form and substance
satisfactory to Trade Bank, execute all documents and take all such actions at
Borrower's expense as Trade Bank may deem reasonably necessary or useful to
perfect and maintain Trade Bank's perfected security interest in the Collateral
and in order to fully consummate all of the transactions contemplated by the
Loan Documents.
V. NEGATIVE COVENANTS
Borrower covenants that so long as Trade Bank remains committed to make
any Credit Extensions to Borrower and all Obligations and Credit Extensions have
been paid, Borrower will not:
5.1 MERGE OR CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with any other entity; make any substantial change in the nature of
Borrower's business as conducted as of the date hereof; acquire all or
substantially all of the assets of any other entity; nor sell, lease, transfer
or otherwise dispose of all or a substantial or material portion of Borrower's
assets except in the ordinary course of its business.
5.2 LIENS. Except for Permitted Liens, mortgage, pledge, grant or
permit to exist a security interest in, or lien upon, all or any portion of
Borrower's assets now owned or hereafter acquired.
5.3 USE OF PROCEEDS. Borrower will not use the proceeds of any Credit
Extension except for the purposes, if any, specified for such Credit Extension
in the Supplement covering the Facility under which such Credit Extension is
made.
VI. EVENTS OF DEFAULT AND REMEDIES
6.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "Event of Default":
(a) FAILURE TO MAKE PAYMENTS WHEN DUE. Borrower's failure to pay
principal, interest, fees or other amounts when due under
any Loan Document.
(b) FAILURE TO PERFORM OBLIGATIONS. Any failure by Borrower to
comply with any covenant or obligation in this Agreement or
in any Loan Document (other than those referred to in
subsection (a) above), and such default shall continue for a
period of twenty calendar days from the earlier of (i)
Borrower's failure to notify Trade Bank of such Event of
Default pursuant to Section 4.2(a) above, or (ii) Trade
Bank's notice to Borrower of such Event of Default.
(c) UNTRUE OR MISLEADING WARRANTY OR STATEMENT. Any warranty,
representation, financial statement, report or certificate
made or delivered by Borrower under any Loan Document is
untrue or misleading in any material respect when made or
delivered.
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(d) DEFAULTS UNDER OTHER LOAN DOCUMENTS. Any "Event of Default"
occurs under any other Loan Document; any Guaranty is no
longer in full force and effect (or any claim thereof made
by Guarantor) or any failure of a Guarantor to comply with
the provisions thereof; or any breach of the provisions of
any Subordination Agreement or Intercreditor Agreement by
any party other than the Trade Bank.
(e) DEFAULTS UNDER OTHER AGREEMENTS OR INSTRUMENTS. Any default
in the payment or performance of any obligation, or the
occurrence of any event of default, under the terms of any
other agreement or instrument pursuant to which Borrower,
any Subsidiary or any Guarantor or general partner of
Borrower has incurred any debt or other material liability
to any person or entity.
(f) CONCERNING OR TRANSFERRING PROPERTY. Borrower conceals,
removes or transfers any part of its property with intent to
hinder, delay or defraud its creditors, or makes or suffers
any transfer of any of its property which may be fraudulent
under any bankruptcy, fraudulent conveyance or similar law.
(g) JUDGEMENTS AND LEVIES AGAINST BORROWER. The filing of a
notice of judgment lien against Borrower, or the recording
of any abstract of judgment against Borrower, in any county
in which Borrower has an interest in real property, or the
service of a notice of levy and/or of a writ of attachment
or execution, or other like process, against the assets of
Borrower, or the entry of a judgment against Borrower.
(h) EVENT OR CONDITION IMPAIRING PAYMENT OR PERFORMANCE. Any
event occurs or condition arises which Trade Bank in good
faith believes impairs or is substantially likely to impair
the prospect of payment or performance by Borrower of the
Obligations, including, but not limited to any material
adverse change in Borrower's financial condition, business
or prospects.
(i) VOLUNTARY INSOLVENCY. Borrower, any Subsidiary or any
Guarantor (i) becomes insolvent, (ii) suffers or consents to
or applies for the appointment of a receiver, trustee,
custodian or liquidator of itself or any of its property,
(iii) generally fails to pay its debts as they become due,
(iv) makes a general assignment for the benefit of
creditors, or (v) files a voluntary petition in bankruptcy,
or seeks reorganization, in order to effect a plan or other
arrangement with creditors or any other relief under the
Bankruptcy Reform Act, Title 11 of the United States Code,
as amended or recodified from time to time ("Bankruptcy
Code"), or under any state or Federal law granting relief
to debtors, whether now or hereafter in effect.
(j) INVOLUNTARY INSOLVENCY. Any involuntary petition or
proceeding pursuant to the Bankruptcy Code or any other
applicable state or federal law relating to bankruptcy,
reorganization or other relief for debtors is filed or
commenced against Borrower, any Subsidiary or Guarantor, or
(b) have an order for relief entered against it by any court
of competent jurisdiction under the Bankruptcy Code or any
other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors.
(k) CHANGE IN OWNERSHIP. Any change in the ownership of
Borrower, any general partner of Borrower or any Guarantor
which the Trade Bank determines, in its sole discretion, may
adversely affect the creditworthiness of Borrower or credit
support for the Obligations.
6.2 REMEDIES. Upon the occurrence of any Event of Default, or at any
time thereafter, Trade Bank, at its option, and without notice or demand of any
kind (all of which are hereby expressly waived by Borrower), may do any one or
more of the following: (a) terminate Trade Bank's obligation to make Credit
Extensions or to make available to Borrower the Facilities or other financial
accommodations; (b) accelerate and declare all or any part of the Obligations to
be immediately due, payable, and performable, notwithstanding any deferred or
installment payments allowed by any instrument evidencing or relating to any
Credit Extension; and/or (c) exercise all its rights, powers and remedies
available under the Loan Documents, or accorded by law, including, but not
limited to, the right to resort to any or all Collateral or other security for
any of the Obligations and to exercise any or all of the rights of a beneficiary
or secured party pursuant to applicable law. Notwithstanding the provisions in
the foregoing sentence, if any Event of Default set out in subsections (i) and
(j) of Section 6.1 above shall occur, then all the remedies specified in the
preceding sentence shall automatically take effect without notice or demand of
any kind (all of which are hereby expressly waived by Borrower) with respect to
any and all Obligations. All rights, powers and remedies of Trade Bank may be
exercised at any time by Trade Bank and from time to time after the occurrence
of an Event of Default, are cumulative and not exclusive, and shall be in
addition to any other rights, powers or remedies provided by law or equity.
VII. GENERAL PROVISIONS
7.1 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given personally or by regular first-class mail, by
certified mail return receipt requested, by a private delivery service which
obtains a signed receipt, or by facsimile transmission addressed to Trade Bank
or Borrower at the address indicated after their signature to this Agreement, or
at any other address designated in writing by one party to the other party.
Trade Bank is hereby authorized by Borrower to act on such instructions or
notices sent by facsimile transmission or telecommunications device which Trade
Bank believes come from Borrower. All notices shall be deemed to have been given
upon delivery, in the case of notices personally delivered or delivered by
private delivery service, upon the expiration of 3 calendar days following the
deposit of the notices in the United States mail, in the case of notices
deposited in the United States mail with postage prepaid, or upon receipt, in
the case of notices sent by facsimile transmission.
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7.2 WAIVERS. No delay or failure of Trade Bank in exercising any right,
power or remedy under any of the Loan Documents shall affect or operate as a
waiver of such right, power or remedy; nor shall any single or partial exercise
of any such right, power or remedy preclude, waive or otherwise affect any other
or further exercise thereof or the exercise of any other right, power or remedy.
Any waiver, consent or approval by Trade Bank under any of the Loan Documents
must be in writing and shall be effective only to the extent set out in such
writing.
7.3 BENEFIT OF AGREEMENT. The provisions of the Loan Documents shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, executors, administrators, beneficiaries and legal representatives of
Borrower and Trade Bank; provided, however, that Borrower may not assign or
transfer any of its rights under any Loan Document without the prior written
consent of Trade Bank, and any prohibited assignment shall be void. No consent
by Trade Bank to any assignment shall release Borrower from its liability for
the Obligations unless such release is specifically given by Trade Bank to
Borrower in writing. Trade Bank reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any interest in,
Trade Bank's rights and benefits under each of the Loan Documents. In connection
therewith, Trade Bank may disclose any information relating to the Facilities,
Borrower or its business, or any Guarantor or its business.
7.4 JOINT AND SEVERAL LIABILITY. If Borrower consists of more than one
person or entity, the liability of each of them shall be joint and several, and
the compromise of any claim with, or the release of, any one such Borrower shall
not constitute a compromise with, or a release of, any other such Borrower.
7.5 NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered
into for the sole protection and benefit of Borrower and Trade Bank and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, any of the Loan Documents to which it is not a
party.
7.6 GOVERNING LAW AND JURISDICTION. This Agreement shall, unless
provided differently in any Loan Document, be governed by, and be construed in
accordance with, the internal laws of the State of California, except to the
extent Trade Bank has greater rights or remedies under federal law whether as a
national bank or otherwise. Borrower and Trade Bank (a) agree that all actions
and proceedings relating directly or indirectly to this Agreement shall be
litigated in courts located within California; (b) consent to the jurisdiction
of any such court and consent to service of process in any such action or
proceeding by personal delivery or any other method permitted by law; and (c)
waive any and all rights Borrower may have to object to the jurisdiction of any
such court or to transfer or change the venue of any such action or proceeding.
7.7 SEVERABILITY. Should any provision of any Loan Document be
prohibited by, or invalid under applicable law, or held by any court of
competent jurisdiction to be void or unenforceable, such defect shall not
affect, the validity of the other provisions of the Loan Documents.
7.8 ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the other Loan
Documents are the final entire and complete agreement between Borrower and Trade
Bank concerning the Credit Extensions and the Facilities; supersede all prior
and contemporaneous negotiations and oral representations and agreements. There
are no oral understandings, representations or agreements between the parties
concerning the Credit Extensions or the Facilities which are not set forth in
the Loan Documents. This Agreement and the Supplements may not be waived,
amended or superseded except in a writing executed by Borrower and Trade Bank.
7.9 COLLECTION OF PAYMENTS. Unless otherwise specified in any Loan
Document, other than this Agreement or any Note, all principal, interest and any
fees due to Trade Bank by Borrower under this Agreement, the Addendum, any
Supplement, any Facility Document, any Collateral Document or any Note, will be
paid by Trade Bank having Xxxxx Fargo debit any of Borrower's accounts with
Xxxxx Fargo and forwarding such amount debited to Trade Bank, without
presentment, protest, demand for reimbursement or payment, notice of dishonor or
any other notice whatsoever, all of which are hereby expressly waived by
Borrower. Such debit will be made at the time principal, interest or any fee is
due to Trade Bank pursuant to this Agreement, the Addendum, any Supplement, any
Facility Document, any Collateral Document or any Note.
7.11 COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower will reimburse Trade
Bank for all costs and expenses, including, but not limited to, reasonable
attorneys' fees and expenses (which counsel may be Trade Bank or Xxxxx Fargo
employees), expended or incurred by Trade Bank in the preparation and
negotiation of this Agreement, the Notes, the Collateral Documents, the Addenda,
and the Facility Documents, in amending this Agreement, the Collateral
Documents, the Notes, the Addenda, or the Facility Documents, in collecting any
sum which becomes due Trade Bank on the Notes, under this Agreement, the
Collateral Documents, the Addenda, the Supplements, or any of the Facility
Documents, in the protection, perfection, preservation and enforcement of any
and all rights of Trade Bank in connection with this Agreement, the Notes, any
of the Collateral Documents, any of the Supplements, any of the Addenda, or any
of the Facility Documents, including, without limitation, the fees and costs
incurred in any out-of-court work out or a bankruptcy or reorganization
proceeding.
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VIII. DEFINITIONS
8.1 "AGREEMENT" means this Agreement and the Addendum attached hereto,
as corrected or modified from time to time by Trade Bank and Borrower.
8.2 "BANKING DAY" means each day except Saturday, Sunday and a day
specified as a holiday by federal or California statute.
8.3 "CLOSING DATE" means the date on which the first Credit Extension
is made.
8.4 "COLLATERAL" means all property securing the Obligations.
8.5 "COLLATERAL DOCUMENTS" means those security agreement(s), deed(s)
of trust, guarantee(s), subordination agreement(s), intercreditor agreement(s),
and other credit support documents and instruments required by the Trade Bank to
effect the collateral and credit support requirements set forth in the
Supplement with respect to the Facilities.
8.6 "CREDIT EXTENSION" means each extension of credit under the
Facilities (whether funded or unfunded), including, but not limited to, (a) the
issuance of sight or usance commercial letters of credit or commercial letters
of credit supported by backup letters of credit, (b) the issuance of standby
letters of credit, (c) the issuance of shipping guarantees, (d) the making of
loans against imports for letters of credit, (d) the making of clean import
loans outside letters of credit, (e) the making of advances against export
orders, (f) the making of advances against outgoing collections, (g) the making
of revolving credit working capital loans, (h) the making of term loans, (i) the
discounting of drafts or foreign receivables with recourse, (j) the discounting
or purchasing of promissory notes with recourse to Borrower, and (k) the entry
into foreign exchange contracts.
8.7 "CREDIT LIMIT" means, with respect to any Facility, the amount
specified under the column labeled "Credit Limit" in the Supplement for that
Facility.
8.8 "CREDIT SUBLIMIT" means, with respect to any Subfacility, the
amount specified after the name of that Subfacility under the column labeled
"Credit Sublimit" in the Supplement for the related Facility.
8.9 "DOLLARS" and "$" means United States dollars.
8.10 "FACILITY DOCUMENTS" means, with respect to any Facility, those
documents specified in the Supplement for that Facility, and any other documents
customarily required by Trade Bank for such Facility.
8.11 "FACILITY TERMINATION DATE" means, with respect to any Facility,
the date specified in the Supplement for that Facility after which no further
Credit Extensions will be made under that Facility.
8.12 "GAAP" means generally accepted accounting principles, which are
applicable to the circumstances, as of the date of determination, set out in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and in the statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession.
8.13 "LOAN DOCUMENTS" means this Agreement, the Addendum, the
Supplements, the Facility Documents and the Collateral Documents.
8.14 "NOTE" has the meaning specified in Section 3.1(b)(2) above.
8.15 "OBLIGATIONS" means (a) the obligation of Borrower to pay
principal, interest and fees on all funded Credit Extensions and fees on all
unfunded Credit Extensions, and (b) the obligation of Borrower to pay and
perform when due all other indebtedness, liabilities, obligations and covenants
required under the Loan Documents.
8.16 "PERMITTED LIENS" shall have the meaning provided in the Addendum.
8.17 "PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
8.18 "PRIME RATE" means the rate most recently announced by Xxxxx Fargo
at its principal office in San Francisco, California as its "Prime Rate", with
the understanding that the Prime Rate is one of Xxxxx Fargo's base rates and
serves as the basis upon which effective rates of interest are calculated for
those loans making reference thereto, and is evidenced by the recording thereof
after its announcement in such internal publication or publications as Xxxxx
Fargo may designate. Any change in an interest rate resulting from a change in
the Prime Rate shall become effective as of 12:01 a.m. of the Banking Day on
which each change in the Prime Rate is announced by Xxxxx Fargo.
Page 7 of 9
9
8.19 "SUBSIDIARY" means (i) any corporation at least the majority of
whose securities having ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) are at the time owned by Borrower and/or one or more Subsidiaries,
and (ii) any joint venture or partnership in which Borrower and/or one or more
Subsidiaries has a majority interest.
8.20 "XXXXX FARGO" means Xxxxx Fargo Bank, N.A.
IX. ARBITRATION
9.01 ARBITRATION. Upon the demand of any party, any Dispute shall be
resolved by binding arbitration (except as set forth in 9.05 below) in
accordance with the terms of this Agreement. A "Dispute" shall mean any action,
dispute, claim or controversy of any kind, whether in contract or tort,
statutory or common law, legal or equitable, now existing or hereafter arising
under or in connection with, or in any way pertaining to, any of the Loan
Documents or the Notes, or any past, present or future extensions of credit and
other activities, transactions or obligations of any kind related directly or
indirectly to any of the Loan Documents or the Notes, including without
limitation, any of the foregoing arising in connection with the exercise of any
self-help, ancillary or other remedies pursuant to any of the Loan Documents or
the Notes. Any party may by summary proceedings bring an action in court to
compel arbitration of a Dispute. Any party who fails or refuses to submit to
arbitration following a lawful demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
Dispute.
9.02 GOVERNING RULES. Arbitration proceedings shall be administered by
the American Arbitration Association ("AAA") or such other administrator as the
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the Loan
Documents. The arbitration shall be conducted at a location in California
selected by the AAA or other administrator. If there is any inconsistency
between the terms hereof and any such rules, the terms and procedures set forth
herein shall control. All statutes of limitation applicable to any Dispute shall
apply to any arbitration proceeding. All discovery activities shall be expressly
limited to matters directly relevant to the Dispute being arbitrated. Judgment
upon any award rendered in an arbitration may be entered in any court having
jurisdiction; provided however, that nothing contained herein shall be deemed to
be a waiver by any party that is a bank of the protections afforded to it under
12 U.S.C. Section 91 or any similar applicable state law.
9.03 NO WAIVER; PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No
provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary remedies,
including without limitation injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver, from a court of competent
jurisdiction before, after or during the pendency of any arbitration or other
proceeding. The exercise of any such remedy shall not waive the right of any
party to compel arbitration or reference hereunder.
9.04 ARBITRATOR QUALIFICATIONS AND POWERS; AWARDS. Arbitrators must be
active members of the California State Bar or retired judges of the state or
federal judiciary of California, with expertise in the substantive laws
applicable to the subject matter of the Dispute. Arbitrators are empowered to
resolve Disputes by summary rulings in response to motions filed prior to the
final arbitration hearing. Arbitrators (i) shall resolve all Disputes in
accordance with the substantive law of the state of California, (ii) may grant
any remedy or relief that a court of the state of California could order or
grant within the scope hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award recovery of all
costs and fees, to impose sanctions and to take such other actions as they deem
necessary to the same extent a judge could pursuant to the Federal Rules of
Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Any Dispute in which the amount in controversy is $5,000,000 or less shall
be decided by a single arbitrator who shall not render an award of greater than
$5,000,000 (including damages, costs, fees and expenses). By submission to a
single arbitrator, each party expressly waives any right or claim to recover
more than $5,000,000. Any Dispute in which the amount in controversy exceeds
$5,000,000 shall be decided by majority vote of a panel of three arbitrators;
provided however, that all three arbitrators must actively participate in all
hearings and deliberations.
9.05 JUDICIAL REVIEW. Notwithstanding anything herein to the contrary,
in any arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law. In such arbitrations (i) the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which
is based on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under the substantive law of the state of
California, and (iii) the parties shall have in addition to the grounds referred
to in the Federal Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (A) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (B) whether the
conclusions of law are erroneous under the substantive law of the state of
California. Judgment confirming an award in such a proceeding may be entered
only if a court determines the award is supported by substantial evidence and
not based on legal error under the substantive law of the state of California.
Page 8 of 9
10
9.06 REAL PROPERTY COLLATERAL; JUDICIAL REFERENCE. Notwithstanding
anything herein to the contrary, no Dispute shall be submitted to
arbitration if the Dispute concerns indebtedness secured directly or
indirectly, in whole or in part, by any real property unless (i) the holder
of the mortgage, lien or security interest specifically elects in writing
to proceed with the arbitration, or (ii) all parties to the arbitration
waive any rights or benefits that might accrue to them by virtue of the
single action rule statute of California, thereby agreeing that all
indebtedness and obligations of the parties, and all mortgages, liens and
security interests securing such indebtedness and obligations, shall remain
fully valid and enforceable. If any such Dispute is not submitted to
arbitration, the Dispute shall be referred to a referee in accordance with
California Code of Civil Procedure Section 638 et seq., and this general
reference agreement is intended to be specifically enforceable in
accordance with said Section 638. A referee with the qualifications
required herein for arbitrators shall be selected pursuant to the AAA's
selection procedures. Judgment upon the decision rendered by a referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.
9.07 MISCELLANEOUS. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the Dispute with
the AAA. No arbitrator or other party to an arbitration proceeding may
disclose the existence, content or results thereof, except for disclosures
of information by a party required in the ordinary course of its business,
by applicable law or regulation, or to the extent necessary to exercise any
judicial review rights set forth herein. If more than one agreement for
arbitration by or between the parties potentially applies to a Dispute, the
arbitration provision most directly related to the Loan Documents or the
subject matter of the Dispute shall control. This arbitration provision
shall survive termination, amendment or expiration of any of the Loan
Documents, the Notes or any relationship between the parties.
Borrower and Trade Bank have caused this Agreement to be executed by their
duly authorized officers or representatives on the date specified below.
"BORROWER"
JALATE LIMITED, INC.
By: /s/ [SIG]
----------------------------------------------
Title: VP Finance & CEO
Borrower's Address:
0000 Xxxxxxxx
Xxxx xx Xxxxxxxx, XX. 00000
"LENDER"
XXXXX FARGO HSBC TRADE BANK,
NATIONAL ASSOCIATION
By: /s/ XXX XXXX-XXXXXXXX
---------------------------------------------
Xxx Xxxx-Xxxxxxxx
Title: Vice President
Lender's Address:
000 Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Page 9 of 9
11
EXHIBIT A
XXXXX FARGO HSBC TRADE BANK ADDENDUM TO CREDIT AGREEMENT
================================================================================
THIS ADDENDUM IS ATTACHED TO THE CREDIT AGREEMENT ("CREDIT AGREEMENT") BETWEEN
XXXXX FARGO HSBC TRADE BANK AND THE FOLLOWING BORROWER:
NAME OF BORROWER: JALATE LIMITED, INC.
ADDITIONAL AFFIRMATIVE COVENANTS
The following covenants are part of Article IV of the Credit Agreement:
REPORTS. Borrower will furnish the following information or deliver the
following reports to Trade Bank at the times indicated below:
o ANNUAL FINANCIAL STATEMENTS. Not later than ninety (90) calendar days after
and as of the end of each of Borrower's fiscal years, an annual audited
financial statement of Borrower prepared by a certified public accountant
acceptable to Trade Bank and prepared in accordance with GAAP, to include
balance sheet, income statement, statement of cash flow, and source and
application of funds statement.
o ANNUAL FORM 10-K STATEMENT. Not later than ninety (90) calendar days after
and as of the end of each of Borrower's fiscal years, a 10-K Statement.
o QUARTERLY FORM 10-Q STATEMENT. Not later than sixty (60) calendar days
after and as of the end of each of Borrower's fiscal quarters, a 10-Q
Statement.
o MONTHLY FINANCIAL STATEMENTS. Not later than thirty (30) calendar days
after and as of the end of each calendar month, a financial statement of
Borrower prepared by Borrower, to include balance sheet and income
statement.
CERTIFICATE OF ACCURACY AND NO EVENT OF DEFAULT. At the time each
financial statement of Borrower required above is delivered to Trade
Bank, a certificate of the president or chief financial officer of
Borrower that said financial statements are accurate and that there
exists no Event of Default under the Agreement nor any condition, act or
event which with the giving of notice or the passage of time or both
would constitute an Event of Default.
o ACCOUNT DEBTORS AGED LISTING: A list of the names, addresses and phone
numbers of all Borrower's account debtors and an aged listing of their
balances shall be due:
Not later than thirty (30) calendar days after and as of each month-end,
and aged listing of accounts receivable, including both factored and
unfactored accounts.
o INVENTORY LIST: Not later than thirty (30) calendar days after and as of
the end of each quarter, an inventory report showing the types, locations
and unit or dollar values of all the inventory collateral.
o COLLATERAL AUDIT: Collateral audit to be performed annually, by auditors
acceptable to Trade Bank.
o INSURANCE: Borrower will maintain in full force and effect insurance
coverage on all Borrower's property, including, but not limited to, the
following types of insurance coverage:
policies of fire insurance
marine cargo insurance
business personal property insurance
All the insurance referred to in the preceding sentence must be in form,
substance and amounts, and issued by companies, satisfactory to Trade
Bank, and cover risks required by Trade Bank and contain loss payable
endorsements in favor of Trade Bank.
FINANCIAL COVENANTS. Borrower will maintain the following (if Borrower has any
Subsidiaries which must be consolidated under GAAP, the following applies to
borrower and the consolidated Subsidiaries):
o CURRENT RATIO. Not at any time less than 1.25 to 1.0. ("CURRENT RATIO"
means total current assets divided by total current liabilities, and
"CURRENT ASSETS" and "CURRENT LIABILITIES" have the meanings given to them
in accordance with GAAP; provided, however, that "current liabilities" will
include indebtedness which is subordinated to the Obligations to Trade Bank
under a subordination agreement in form and substance acceptable to Trade
Bank or by subordination language acceptable to Trade Bank in the
instrument evidencing such indebtedness.)
o WORKING CAPITAL. Not at any time less than $2,000,000. ("WORKING CAPITAL"
means total current assets minus total current liabilities; provided,
however, that "current liabilities" will include indebtedness which is
subordinated to the Obligations to Trade Bank under a subordination
agreement in form and substance acceptable to Trade Bank or by
subordination language acceptable to Trade Bank in the instrument
evidencing such indebtedness.)
Page 1 of 2
12
o TANGIBLE NET WORTH. Not at any time less than $3,200,000 up to and
including September 29, 1997 and $4,000,000 thereafter, ("TANGIBLE NET
WORTH" means the excess of total assets over total liabilities determined
in accordance with GAAP, (a) excluding, however, in determining total
assets (i) all assets which would be classified as intangible assets under
GAAP, including, but not limited to, goodwill, licenses, patents,
trademarks, trade names, copyrights, capitalized software and
organizational costs, licenses and franchises, and (ii) assets which Trade
Bank determines in its business judgment would not be available or would be
of relatively small value in a liquidation of Borrower's business,
including, but not limited to, prepaid expenses, loans to officers or
affiliates and other items, and (b) including, in determining total
liabilities, indebtedness which is subordinated to the Obligations to Trade
Bank.)
o TOTAL LIABILITIES DIVIDED BY TANGIBLE NET WORTH. Not at any time greater
than 1.75 to 1.0 up to and including September 29, 1997 and 1.40 to 1.0
thereafter. ("Tangible Net Worth" has the meaning given to it above, and
"Total Liabilities" includes indebtedness which is subordinated to the
Obligations to Trade Bank under a subordination agreement in form and
substance acceptable to Trade Bank or by subordination language acceptable
to Trade Bank in the instrument evidencing such indebtedness.)
o PRE-TAX LOSS. Year-to-date pre-tax loss not to exceed $1,250,000 through
June 30, 1997; and not to exceed $500,000 through year to date September
30, 1997.
ADDITIONAL NEGATIVE COVENANTS
The following covenants are part of Article V of the Credit Agreement (Borrower
shall also cause any Subsidiary to comply with the following covenants):
o USE OF PROCEEDS. Borrower will not use the proceeds of any Credit Extension
except for the purposes, if any, specified for such Credit Extension in the
Supplement covering the Facility under which such Credit Extension is made.
o LIENS. Borrower will not create or permit any liens, charges, security
interests, encumbrances or adverse claims with respect to any of its
property or other assets except for the following "PERMITTED LIENS":
purchase money security interests in specific items of Borrower's
equipment;
additional security interests and liens consented to in writing by
Trade Bank in its sole discretion;
o ACQUISITIONS OF ASSETS. Borrower will not acquire any assets or enter into
any other transaction outside the ordinary course of Borrower's business.
o LOANS AND INVESTMENTS. Borrower will not make any loans or advances to, or
investments in, any person or entity except for accounts receivable created
in the ordinary course of Borrower's business.
o INDEBTEDNESS FOR BORROWED MONEY. Borrower will not incur any indebtedness
for borrowed money, except to Trade Bank and except for indebtedness
subordinated to the Obligations by an instrument or agreement in form
acceptable to Trade Bank.
o GUARANTEES. Borrower will not guarantee or otherwise become liable with
respect to the obligations of any other person or entity, except for
endorsement of instruments for deposit into Borrower's account in the
ordinary course of Borrower's business.
o DIVIDENDS AND DISTRIBUTIONS OF CAPITAL OF CORPORATION. If Borrower is a
corporation, Borrower will not pay or declare any dividends or make any
distribution of capital on Borrower's stock (except for dividends payable
solely in stock of Borrower).
o STOCK REDEMPTIONS. Borrower will not redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of Borrower's stock.
o INVESTMENTS IN, OR ACQUISITIONS OF, SUBSIDIARIES. Borrower will not make
any investments in, or form or acquire, any subsidiaries.
o CAPITAL EXPENDITURES. Borrower shall not, without the prior written consent
of Trade Bank, make any capital expenditures in any fiscal year in an
aggregate amount in excess of $750,000.
o COMPENSATION. Borrower will not, without the prior written consent of
Trade Bank, pay, accrue or obligate itself to pay, directly or indirectly,
any salaries, bonuses or other compensation or fees to its officers,
directors, shareholders or partners, or any members of their immediate
families, in any fiscal year in an aggregate amount in excess of
$2,500,000.
BY SIGNING HERE BORROWER AGREES TO THE DESIGNATED PROVISIONS IN THIS ADDENDUM:
/s/ [SIG]
--------------------------------------
(SIGNATURE)
Page 2 of 2
13
EXHIBIT B
XXXXX FARGO HSBC TRADE BANK SIGHT COMMERCIAL LETTERS OF CREDIT SUPPLEMENT
================================================================================
THIS SUPPLEMENT IS AN INTEGRAL PART OF THE CREDIT AGREEMENT BETWEEN XXXXX FARGO
HSBC TRADE BANK AND THE FOLLOWING BORROWER:
NAME OF BORROWER: JALATE LIMITED, INC.
FACILITY TERMINATION DATE: December 1, 1997
CREDIT LIMIT FOR THIS SIGHT COMMERCIAL LETTERS OF CREDIT FACILITY AND SUBLIMITS:
CREDIT LIMIT: $4,000,000
CREDIT SUBLIMITS
---------------------------------------
o GOODS CONSIGNED TO, OR CONTROLLED BY, TRADE BANK $4,000,000
THE AGGREGATE AMOUNT OF CREDIT EXTENSIONS OUTSTANDING UNDER THIS FACILITY AND
THE FOLLOWING OTHER FACILITIES MAY NOT AT ANY
ONE TIME EXCEED $4,000,000:
1. LOANS UNDER THE LOANS AGAINST IMPORTS FOR LETTER OF CREDIT REIMBURSEMENT
SUPPLEMENT
1. GUARANTEES UNDER THE SHIPPING GUARANTEES SUPPLEMENT
FACILITY DESCRIPTION:
Trade Bank will issue sight commercial letters of credit (each a "Sight
Commercial Credit") for the account of Borrower as indicated under the heading
"Facility Purpose" below. Subject to the credit sublimits specified above, these
Sight Commercial Credits will be transferable or not transferable and have the
goods related to them consigned to or not consigned to, or controlled by or not
controlled by, Trade Bank, The Facility Credit Limit specified above refers to
the aggregate undrawn amount of all Sight Commercial Credits which may be at any
one time outstanding under this Facility together with the aggregate amount of
all drafts drawn under such Sight Commercial Credits which have not been
reimbursed as provided below at such time. The Facility Credit Sublimits
specified above refer to the aggregate undrawn amount of all Sight Commercial
Credits which may be at any one time outstanding under each subcategory under
this Facility together with the aggregate amount of all drafts drawn under such
Sight Commercial Credits which have not been reimbursed as provided below at
such time.
FACILITY PURPOSE: The Facility may only be used for the following purpose(s):
Assist Borrower in its business of importing, manufacturing and wholesaling of
women's and children's apparel.
FACILITY DOCUMENTS:
Before the first Sight Commercial Credit is issued:
Trade Bank's standard form Continuing Commercial Letter of Credit
Agreement (Form TB 020)
Before each Sight Commercial Credit is issued:
Trade Bank's standard form Application For Commercial Letter of Credit
(Form TB 002)
Before each Sight Commercial Credit is amended:
Trade Bank's standard form Application For Amendment To Letter of Credit
(Form TB 010)
SUBFACILITY DOCUMENTS:
o GOODS CONSIGNED TO, OR CONTROLLED BY, TRADE BANK: See Exhibit C -
Collateral/Credit Support Document.
TERM: No Sight Commercial Credit may expire more than one hundred twenty (120)
calendar days after the date it is issued.
REIMBURSEMENTS FOR DRAWINGS:
The amount of each drawing paid by Trade Bank under a Sight Commercial Credit
will be reimbursed to Trade Bank as follows:
o By Trade Bank having Xxxxx Fargo Bank, N.A. debit any of Borrower's
accounts with Xxxxx Fargo Bank, N.A. and forwarding such amount debited to
Trade Bank.
o Immediately on demand of Trade Bank.
o By treating such amount drawn as an advance to Borrower to be repaid at the
end of any term specified by Trade Bank to Borrower in writing.
Page 1 of 2
14
FEES: The following fees will apply to the Sight Commercial Credits:
o FACILITY FEE: Borrower will pay the following Facility Fee to Trade Bank
before any Facility, including this Facility, is made available to
Borrower: $5,000.
o ISSUANCE FEES/FEES FOR INCREASING CREDIT AMOUNTS OR EXTENDING EXPIRATION
DATES: (Minimum $50) 1/8 of 1% for every 120-day period or fraction thereof
of the term of each Sight Commercial Credit on the amount of each Sight
Commercial Credit and of any increase in such amount.
PAYABLE: At the time each Sight Commercial Credit is issued or increased
and at the time the expiration date of any Sight Commercial Credit is
extended.
o AMENDMENT FEES: (Minimum $50)
$50 for each amendment, unless the amendment is an increase in the Sight
Commercial Credit amount or an extension of the expiration date, in which
case the Issuance Fee above will substitute for any Amendment Fee.
PAYABLE: At the time each amendment is issued.
o NEGOTIATION PAYMENT/EXAMINATION FEES: (Minimum $75)
1/8 of 1% of the face amount of each drawing under each Sight
Commercial Credit.
PAYABLE: At the time any draft or other documents are
negotiated, paid or examined.
INTEREST RATE:
All drawings under Sight Commercial Credits not reimbursed on the day they are
paid by Trade Bank will bear interest at the following rate from the date they
are paid by Trade Bank to the date such payment is fully reimbursed:
o PRIME RATE: The Prime Rate plus 5% per annum.
o INTEREST PAYMENT DATES: Interest on unreimbursed drawings under Sight
Commercial Credits will be paid on the date the unreimbursed drawing is
fully reimbursed.
COLLATERAL/CREDIT SUPPORT DOCUMENTS: See Exhibit C - Collateral/Credit Support
Document.
BY INITIALING HERE BORROWER AGREES TO ALL THE TERMS OF THIS SUPPLEMENT: /s/ INIT
--------
Page 2 of 2
15
EXHIBIT B
LOANS AGAINST IMPORTS
XXXXX FARGO HSBC TRADE BANK FOR LETTER OF CREDIT REIMBURSEMENT SUPPLEMENT
================================================================================
THIS SUPPLEMENT IS AN INTEGRAL PART OF THE CREDIT AGREEMENT BETWEEN XXXXX FARGO
HSBC TRADE BANK AND THE FOLLOWING BORROWER:
NAME OF BORROWER: JALATE LIMITED, INC.
FACILITY TERMINATION DATE: DECEMBER 1, 1997
CREDIT LIMIT FOR THIS LOANS AGAINST IMPORTS FOR LETTER OF CREDIT FACILITY AND
SUBLIMITS: CREDIT LIMIT: $2,000,000
CREDIT SUBLIMITS
-----------------------------------------
SUPPORTED BY GUARANTEE OR INSURANCE OR
OTHER COLLATERAL $2,000,000
Floating Interest Rate
No Borrowing Base
THE AGGREGATE AMOUNT OF CREDIT EXTENSIONS OUTSTANDING UNDER THIS FACILITY AND
THE FOLLOWING OTHER FACILITIES MAY NOT AT ANY
ONE TIME EXCEED $2,000,000:
1. GUARANTEES UNDER THE SHIPPING GUARANTEES SUPPLEMENT
FACILITY DESCRIPTION:
Trade Bank will make loans to Borrower solely for the purpose of financing
Borrower's obligations to reimburse Trade Bank for amounts paid by Trade Bank
under Sight and usance Commercial Credits issued by Trade Bank for the account
of Borrower in connection with Borrower's imports. At the time of request for a
loan under this Facility, Borrower will provide to Trade Bank evidence of any
related supplier financing available to Borrower for goods or other property
shipped to Borrower under sight and usance Commercial Credits. Loans made by
Trade Bank under this Facility cannot be used by Borrower to repay outstanding
clean import loans that have matured. Subject to the credit sublimits specified
above, these loans may be supported by (i) a standby letter of credit in favor
of Trade Bank or (ii) a guarantee or other collateral.
FACILITY DOCUMENTS: Promissory Note
SUBFACILITY DOCUMENTS:
o SUPPORTED BY ACCOUNTS RECEIVABLE, INVENTORY OR OTHER COLLATERAL: See
Exhibit C - Collateral/Credit Support Document.
TERM: Each loan made under this Facility must be repaid within sixty (60)
calendar days after it is made.
Trade Bank, in its sole discretion, may deduct from the term of a loan made
under this Facility the number of days of financing period extended to Borrower
by the relevant supplier.
FEES: The following fees will apply to this Facility:
o FACILITY FEE: Borrower will pay the following Facility Fee to Trade Bank
before any Facility, including this Facility, is made available to
Borrower: $5,000.
INTEREST RATE: All advances under this Facility will bear interest at the
following rate:
o PRIME RATE: The Prime Rate plus .25% per annum.
INTEREST PAYMENT DATES: Interest on the outstanding advances under this Facility
will be paid at the maturity of each advance.
PREPAYMENTS: Prepayments of the outstanding loans under this Facility are
permitted in any amounts.
BORROWING BASE TERMS:
COLLATERAL/CREDIT SUPPORT DOCUMENTS: See Exhibit C - Collateral/Credit Support
Document.
BY INITIALING HERE BORROWER AGREES TO ALL THE TERMS OF THIS SUPPLEMENT: /s/ INIT
--------
Page 1 of 1
16
XXXXX FARGO HSBC TRADE BANK LOANS AGAINST IMPORTS NOTE
================================================================================
$2,000,000 May 31, 1997
FOR VALUE RECEIVED, the undersigned JALATE LIMITED, INC., a California
corporation (jointly and severally, if the undersigned be more than one)
("Borrower") hereby promises to pay to the order of XXXXX FARGO HSBC TRADE BANK,
N.A. ("Bank"), when due as provided herein, at its 000 Xxxxx Xxxxx Xxxxxx, 0xx
Xxxxx, Xxx Xxxxxxx, XX 00000 office, in lawful money of the United States and in
immediately available funds, the principal sum of Two Million Dollars
($2,000,000) or, if less, the aggregate unpaid principal amount of all advances
made by Bank to Borrower from time to time, as evidenced on the records of Bank,
together with interest thereon as hereinafter provided.
Borrower may from time to time from the date of this Note up to and including
December 1, 1997, borrow and partially or wholly repay its outstanding advances,
and reborrow, subject to all of the limitations, terms and conditions of this
Note and of that certain Credit Agreement between Borrower and Trade Bank dated
as of May 31, 1997, as amended from time to time ("Credit Agreement") executed
in connection with or governing this Note; provided that the total advances made
under this Note shall not exceed the principal amount stated above. The unpaid
principal balance of this obligation at any time shall be the total amounts
advanced hereunder by the holder hereof less the amount of principal payments
made hereon by or for any Borrower, which balance may be endorsed hereon from
time to time by the holder.
The principal amount and maturity of each advance shall be agreed upon by
Borrower and Bank prior to the making of each advance, and such terms, together
with the applicable interest rate of each advance and all payments of principal
and interest made on this Note shall be inscribed by Bank on its records. Each
advance shall be payable on the earlier of (i) the due date thereof, as
inscribed by Bank on its records, or (ii) 60 days after the date such advance is
made. All payments shall be made free of any setoff, counterclaims or
withholdings. Each entry set forth on Bank's records shall be the prima facie
evidence of the facts so set forth. No failure by Bank to make, or no error by
Bank in making, any inscription on its records shall affect Borrower's
obligation to repay the full principal amount advanced by Bank to or for the
account of Borrower, or Borrower's obligation to pay interest thereon at the
agreed upon rate.
Each advance shall bear interest at the Prime Rate (defined herein) plus
one-quarter of one percent (.25%). Interest will be calculated for each day at
1/360th of the applicable per annum rate, which will result in a higher
effective annual rate. Accrued interest shall be payable at such times and dates
as shall be agreed upon by Borrower and Bank prior to the making of each advance
and evidenced on the records of Bank, provided that, all accrued interest on an
advance shall be due and payable at the maturity (by acceleration or otherwise)
of such advance. After maturity, whether by acceleration or otherwise, accrued
interest shall be payable on demand. "Prime Rate" means the rate of interest
most recently announced by Xxxxx Fargo Bank, N.A. at its principal office in San
Francisco, California as its "Prime Rate", with the understanding that the Prime
Rate is one of Xxxxx Fargo Bank's base rates and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto, and is evidenced by the recording thereof after its announcement in
such internal publication or publications as Xxxxx Fargo Bank may designate.
Any change in an interest rate resulting from a change in the Prime Rate shall
become effective as of 12:01 a.m. of the Banking Day on which each change in the
Prime Rate is announced by Xxxxx Fargo Bank.
Advances hereunder, to the total amount of the principal sum stated above and up
to and including the date set forth in the receding paragraph, may be made by
the holder at the oral or written request of Xxxxxxxxx X. Fenway or Xxxxxx Xxxxx
any one acting alone, who are authorized to request advances and direct the
disposition of any advances until written notice of the revocation of such
authority is received by the holder at the office designated above, or (b) any
person, with respect to advances deposited to the credit of any account of any
Borrower with the holder, which advances, when so deposited, shall be
conclusively presumed to have been made to or for the benefit of each Borrower
regardless of the fact that persons other than those authorized to request
advances may have authority to draw against such account. The holder shall have
no obligation to determine whether any person requesting an advance is or has
been authorized by any Borrower.
Upon the occurrence of any Event of Default as defined in the Credit Agreement,
the holder of this Note, at the holder's option, may declare all sums of
principal and interest outstanding hereunder to be immediately due and payable
without presentment, demand, protest or notice of dishonor, all of which are
expressly waived by each Borrower, and the obligation, if any, of the holder to
extend any further credit hereunder shall immediately cease and terminate. Each
Borrower shall pay to the holder immediately upon demand the full amount of all
payments, advances, charges, costs and expenses, including reasonable attorneys'
fees (to include outside counsel fees and all allocated costs of the holder's
in-house counsel), incurred by the holder in connection with the enforcement of
the holder's rights and/or the collection of any amounts which become due to the
holder under this Note, and the prosecution or defense of any action in any way
related to this Note, including without limitation, any action for declaratory
relief, and including any of the foregoing incurred in connection with any
bankruptcy proceeding relating to any Borrower.
Page 1 of 4
17
Should more than one person or entity sign this Note as a Borrower, the
obligations of each such Borrower shall be joint and several.
This Note shall be governed by and construed in accordance with the laws of the
State of California, except to the extent Bank has greater rights or remedies
under Federal law, whether as a national bank or otherwise, in which case such
choice of California law shall not be deemed to deprive Bank of any such rights
and remedies as may be available under Federal law.
"BORROWER"
JALATE LIMITED, INC.
By: /s/ [SIG]
----------------------------------------
Title: VP Finance & CFO
Borrower's Address:
0000 Xxxxxxxx
Xxxx xx Xxxxxxxx, XX. 00000
Page 2 of 4
18
ADDENDUM TO PROMISSORY NOTE
THIS ADDENDUM is attached to and made a part of that certain promissory note
executed by JALATE LIMITED, INC., a California corporation ("Borrower") and
payable to XXXXX FARGO HSBC TRADE BANK, NATIONAL ASSOCIATION, or order, dated as
of May 31,1997, in the principal amount of Two Million Dollars ($2,000,000) (the
"Note").
The following arbitration provision is hereby incorporated into the
Note:
ARBITRATION:
(a) Arbitration. Upon the demand of any party, any Dispute shall be
resolved by binding arbitration (except as set forth in (e) below) in
accordance with the terms of this Note. A "Dispute" shall mean any action,
dispute, claim or controversy of any kind, whether in contract or tort,
statutory or common law, legal or equitable, now existing or hereafter
arising under or in connection with, or in any way pertaining to, this Note
and each other document, contract and instrument required hereby or now or
hereafter delivered to Bank in connection herewith (collectively, the
"Documents"), or any past, present or future extensions of credit and other
activities, transactions or obligations of any kind related directly or
indirectly to any of the Documents, including without limitation, any of the
foregoing arising in connection with the exercise of any self-help, ancillary
or other remedies pursuant to any of the Documents. Any party may by summary
proceedings bring an action in court to compel arbitration of a Dispute. Any
party who fails or refuses to submit to arbitration following a lawful demand
by any other party shall bear all costs and expenses incurred by such other
party in compelling arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be administered by
the American Arbitration Association ("AAA") or such other administrator as
the parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
Documents. The arbitration shall be conducted at a location in California
selected by the AAA or other administrator. If there is any inconsistency
between the terms hereof and any such rules, the terms and procedures set
forth herein shall control. All statutes of limitation applicable to any
Dispute shall apply to any arbitration proceeding. All discovery activities
shall be expressly limited to matters directly relevant to the Dispute being
arbitrated. Judgment upon any award rendered in an arbitration may be entered
in any court having jurisdiction; provided however, that nothing contained
herein shall be deemed to be a waiver by any party that is a bank of the
protections afforded to it under 12 U.S.C. Section 91 or any similar
applicable state law.
(c) No Waiver; Provisional Remedies, Self-Help and Foreclosure. No
provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary
remedies, including without limitation injunctive relief, sequestration,
attachment, garnishment or the appointment of a receiver, from a court of
competent jurisdiction before, after or during the pendency of any
arbitration or other proceeding. The exercise of any such remedy shall not
waive the right of any party to compel arbitration or reference hereunder.
(d) Arbitrator Qualifications and Powers; Awards. Arbitrators must be
active members of the California State Bar or retired judges of the state or
federal judiciary of California, with expertise in the substantive law
applicable to the subject matter of the Dispute. Arbitrators are empowered to
resolve Disputes by summary rulings in response to motions filed prior to the
final arbitration hearing. Arbitrators (i) shall resolve all Disputes in
accordance with the substantive law of the state of California, (ii) may
grant any remedy or relief that a court of the state of California could
order or grant within the scope hereof and such ancillary relief as is
necessary to make effective any award, and (iii) shall have the power to
award recovery of all costs and fees, to impose sanctions and to take such
other actions as they deem necessary to the same extent a judge could
pursuant to the Federal Rules of Civil Procedure, the California Rules of
Civil Procedure or other applicable law. Any Dispute in which the amount in
controversy is $5,000,000 or less shall be decided by a single arbitrator who
shall not render an award of greater than $5,000,000 (including damages,
costs, fees and expenses). By submission to a single arbitrator, each party
expressly waives any right or claim to recover more than $5,000,000. Any
Dispute in which the amount in controversy exceeds $5,000,000 shall be
decided by majority vote of a panel of three arbitrators; provided however,
that all three arbitrators must actively participate in all hearings and
deliberations.
(e) Judicial Review. Notwithstanding anything herein to the contrary, in
any arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law. In such arbitrations (A) the arbitrators shall not have
the power to make any award which is not supported by substantial evidence or
which is based on legal error, (B) an award shall not be binding upon the
parties unless the findings of fact are supported by substantial evidence and
the conclusions of law are not erroneous under the substantive law of the
state of California, and (C) the parties shall have in addition to the
grounds referred to in the Federal Arbitration Act for vacating, modifying or
correcting an award the right to judicial review of (1) whether the findings
of fact rendered by the arbitrators are supported by substantial evidence,
and (2) whether the conclusions of law are erroneous under the substantive
law of the state of California. Judgment confirming an award in such a
proceeding may be entered only if a court determines the award is supported
by substantial evidence and not based on legal error under the substantive
law of the state of California.
(f) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the Dispute with the
AAA. No
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arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a Dispute, the arbitration provision most
directly related to the Documents or the subject matter of the Dispute shall
control. This Note may be amended or modified only in writing signed by
Borrower. If any provision of this Note shall be held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or any remaining provisions of this Note. This arbitration
provision shall survive termination, amendment or expiration of any of the
Documents or any relationship between the parties.
IN WITNESS WHEREOF, this Addendum has been executed as of the same date as
the Note.
"BORROWER"
JALATE LIMITED, INC.
By: /s/ [SIG]
----------------------------------------
Title: VP Finance & CFO
Page 4 of 4
20
EXHIBIT B
XXXXX FARGO HSBC TRADE BANK SHIPPING GUARANTEES SUPPLEMENT
================================================================================
THIS SUPPLEMENT IS AN INTEGRAL PART OF THE CREDIT AGREEMENT BETWEEN XXXXX FARGO
HSBC TRADE BANK AND THE FOLLOWING BORROWER:
NAME OF BORROWER: JALATE LIMITED, INC.
FACILITY TERMINATION DATE: DECEMBER 1, 1997
CREDIT LIMIT FOR THIS SHIPPING GUARANTEE FACILITY AND SUBLIMITS: CREDIT LIMIT:
$500,000
CREDIT SUBLIMITS
------------------------------------------
o SHIPPING GUARANTEE FACILITY $500,000
THE AGGREGATE AMOUNT OF CREDIT EXTENSIONS OUTSTANDING UNDER THIS FACILITY AND
THE FOLLOWING OTHER FACILITIES MAY NOT AT ANY ONE TIME EXCEED $2,000,000:
1. LOANS UNDER THE LOANS AGAINST IMPORTS FOR LETTER OF CREDIT REIMBURSEMENT
SUPPLEMENT
FACILITY DESCRIPTION AND PURPOSE:
Trade Bank will issue shipping guarantees for the account of Borrower. These
shipping guarantees will be undertakings for delivery of cargo without surrender
of bills of lading, or any other undertakings, agreements, guarantees,
indemnities, releases, bonds, letters, documents or authorizations to or in
favor of a carrier or other person or entity in order to permit delivery to
Borrower of property. The Credit Limit specified above for this Facility refers
to the aggregate amount of all shipping guarantees which may be outstanding at
any one time.
FACILITY DOCUMENTS:
Indemnity For Undertakings In Connection With Deliveries of Goods or Issuance of
Duplicate Bills of Lading.
TERM:
No shipping guarantee issued by Trade Bank for Borrower will expire more than
ninety (90) calendar days after the date it is issued.
REIMBURSEMENTS FOR PAYMENTS UNDER GUARANTEES:
The amount of each payment made by Trade Bank under shipping guarantees issued
by Trade Bank for Borrower will be reimbursed to Trade Bank as follows:
o By Trade Bank having Xxxxx Fargo Bank, N.A. debit any of Borrower's
accounts with Xxxxx Fargo Bank, N.A. and forwarding such amount debited to
Trade Bank.
o Immediately on demand of Trade Bank.
o By treating such amount drawn as an advance to Borrower to be repaid at the
end of any term specified by Trade Bank to Borrower in writing.
FEES: The following fees will apply to this Facility and the issuance of each
shipping guarantee:
o FACILITY FEE: Borrower will pay the following Facility Fee to Trade Bank
before this Facility is made available to Borrower: $5,000.
o ISSUANCE FEE: Flat $75 for each issuance.
PAYABLE: At the time each shipping guarantee is issued.
INTEREST RATE:
All payments made by Trade Bank under shipping guarantees issued for Borrower
which are not reimbursed on THE day they are MADE by Trade Bank will bear
interest at the following rate from the date they are made to the date such
payment is fully reimbursed:
o PRIME RATE: The Prime Rate plus 5% per annum.
o INTEREST PAYMENT DATES: Interest on payments made by Trade Bank under this
Facility which are not reimbursed on the day they are made will be paid on
the date the payment is fully reimbursed.
Page 1 of 2
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PREPAYMENTS: Permitted in any amounts.
COLLATERAL/CREDIT SUPPORT DOCUMENTS: See Exhibit C - Collateral/Credit Support
Document.
BY INITIALING HERE BORROWER AGREES TO ALL THE TERMS OF THIS SUPPLEMENT: /s/ INIT
--------
Page 2 of 2
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EXHIBIT C
XXXXX FARGO HSBC TRADE BANK COLLATERAL/CREDIT SUPPORT DOCUMENT
================================================================================
o PERSONAL PROPERTY SECURITY FROM BORROWER:
First priority lien in the following assets of Borrower:
inventory
Second priority lien in the following assets of Borrower:
accounts receivable
COLLATERAL DOCUMENTS:
Security Agreement: Rights to Payment and Inventory
UCC-1 Financing Statement
UCC-3 Search
o INTERCREDITOR AGREEMENT: The creditor or creditors named below under the
heading "Collateral Documents" will enter into an intercreditor arrangement
with Trade Bank with respect to the Obligations under this Facility.
COLLATERAL DOCUMENTS:
Intercreditor Agreement with Xxxxxx Financial, Inc.
BY INITIALING HERE BORROWER AGREES TO ALL THE TERMS OF THIS EXHIBIT: /s/ INIT
------------
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