[LOGO]
IMPERIAL BANK
Member FDIC
SECURITY AND LOAN AGREEMENT
(ACCOUNTS RECEIVABLE AND/OR INVENTORY)
This Agreement is entered into between IMAGING TECHNOLOGIES CORPORATION, ET. AL.
(SEE EXHIBIT "A1" ATTACHED HERETO)
, A CORPORATIONS
(herein called "Borrower") and IMPERIAL BANK (herein called "Bank").
1. Bank hereby commits, subject to all the terms and conditions of this
Agreement and prior to the termination of its commitment as hereinafter
provided, to make loans to Borrower from time to time in such amounts as
may be determined by Bank up to, but not exceeding in the aggregate
unpaid principal balance, the following Borrowing Base:
* % of Eligible Accounts
* % of the Value of Inventory
and in no event more than $ 2,500,000.00
2. The amount of each loan made by Bank to Borrower hereunder shall be
debited to the loan ledger account of Borrower maintained by Bank
(herein called "Loan Account") and Bank shall credit the Loan Account
with all loan repayments made by Borrower. Borrower promises to pay
Bank (a) the unpaid balance of Borrower's Loan Account on demand and
(b) on or before the tenth day of each month, interest on the average
daily unpaid balance of the Loan Account during the immediately
preceding month at the rate of THREE QUARTERS OF ONE percent (0.750%)
per annum in excess of the rate of interest which Bank has announced
as its prime lending rate ("Prime Rate") which shall vary concurrently
with any change in such Prime Rate. Interest shall be computed at the
above rate on the basis of the actual number of days during which the
principal balance of the loan account is outstanding divided by 360,
which shall for interest computation purposes be considered one year.
Bank at its option may demand payment of any or all of the amount due
under the Loan Account including accrued but unpaid interest at any
time. Such notice may be given verbally or in writing and should be
effective upon receipt by Borrower. The amount of interest payable each
month by Borrower shall not be less than a minimum monthly charge of
$250.00 Bank is hereby authorized to charge Borrower's deposit account(s)
with Bank for all sums due Bank under this Agreement.
3. Requests for loans hereunder shall be in writing duly executed by
Borrower in a form satisfactory to Bank and shall contain a
certification setting forth the matters referred to in Section 1,
which shall disclose that Borrower is entitled to the amount of loan
being requested.
4. As used in this Agreement, the following terms shall have the following
meanings:
A. "Accounts" means any right to payment for goods sold or leased,
or to be sold or to be leased, or for services rendered or to
be rendered no matter how evidenced, including accounts
receivable, contract rights, chattel paper, instruments,
purchase orders, notes, drafts, acceptances, general
intangibles and other forms of obligations and receivables.
B. "Inventory" means all of the Borrower's goods, merchandise and
other personal property which are held for sale or lease,
including those held for display or demonstration or out on
lease or consignment or to be furnished under a contract of
service or are raw materials, work in process or materials
used or consumed, or to be used or consumed in Borrower's
business, and shall include all property rights, patents,
plans, drawings, diagrams, schematics, assembly and display
materials relating thereto.
C. "Collateral" means any and all personal property of Borrower
which is assigned or hereafter is assigned to Bank as security
or in which Bank now has or hereafter acquires a security
interest.
D. "Eligible Accounts" means all of Borrower's Accounts
excluding, however, (1) all Accounts under which payment is
not received within 90 days from any invoice date, (2) all
Accounts against which the account debtor or any other person
obligated to make payment thereon asserts any defense, offset,
counterclaim or other right to avoid or reduce the liability
represented by the Account and (3) any Accounts if the account
debtor or any other person liable in connection therewith is
insolvent, subject to bankruptcy or receivership proceedings
or has made an assignment for the benefit of creditors or
whose credit standing is unacceptable to Bank and Bank has so
notified Borrower. Eligible Accounts shall only include such
accounts as Bank in its sole discretion shall determine are
eligible from time to time.
E. "Value of Inventory" means the value of Borrower's Inventory
determined in accordance with generally accepted accounting
principles consistently applied excluding, however, the amount
of progress payments, pre-delivery payments, deposits and any
other sums received by Borrower in anticipation of the sale
and delivery of Inventory, all Inventory on consignment or
lease to others, and all property on consignment or lease from
others to Borrower.
5. Borrower hereby assigns to Bank all Borrower's present and future
Accounts, including all proceeds due thereunder, all guaranties and
security therefor and all merchandise giving rise thereto, and hereby
grants to Bank a continuing security interest in all Borrower's
Inventory and in all proceeds and products thereof, whether now owned
or hereafter existing or acquired, including all moneys in the
Collateral Account referred to in Section 6 hereof, as security for
any and all obligations of Borrower to Bank, whether now owing or
hereafter incurred and whether direct, indirect, absolute or
contingent. So long as Borrower is indebted to Bank or Bank is
committed to extend credit to Borrower, Borrower will execute and
deliver to Bank such assignments, including Bank's standard forms of
Specific or General Assignment covering individual Accounts, notices,
financing statements, and other documents and papers as Bank may
require in order to affirm, effectuate or further assure the
assignment to Bank of the Collateral or to give any third party,
including the account debtors obligated on the Accounts, notice of
Bank's interest in the Collateral.
6. Until Bank exercises its rights to collect the Accounts and Inventory
proceeds pursuant to paragraph 10, Borrower will collect with
diligence all Borrower's Accounts and Inventory proceeds, provided
that no legal action shall be maintained thereon or in connection
therewith without Bank's prior written consent. Any collection of
Accounts or Inventory proceeds by Borrower, whether in the form of
cash, checks, notes, or other instruments for the payment of money
(properly endorsed or assigned where required to enable Bank to
collect same), shall be in trust for Bank, and Borrower shall keep all
such collections separate and apart from all other funds and property
so as to be capable of identification as the property of Bank and
deliver said collections, together with the proceeds of all cash
sales, daily to Bank in the identical form received. The proceeds of
such collections when received by Bank may be applied by Bank directly
to the payment of Borrower's Loan Account or any other obligation
secured hereby. Any credit given by Bank upon receipt of said proceeds
shall be conditional credit subject to collection. Returned items at
Bank's option may be charged to Borrower's general account. All
collections of the Accounts and inventory proceeds shall be set forth
on an itemized schedule, showing the name of the account debtor, the
amount of each payment and such other information as Bank may request.
7. Until Bank exercises its rights to collect the Accounts or Inventory
proceeds pursuant to paragraph 10, Borrower may continue its present
policies with respect to returned merchandise and adjustments.
However, Borrower shall immediately notify Bank of all cases involving
returns, repossessions, and loss or damage of or to merchandise
represented by the Accounts or constituting inventory and of any
credits, adjustments or disputes arising in connection with the goods
or services represented by the Accounts or constituting Inventory and,
in any of such events, Borrower will immediately pay to bank from its
own funds (and not from the proceeds of Accounts or Inventory) for
application to Borrower's Loan Account or any other obligation secured
hereby the amount of any credit for such returned or repossessed
merchandise and adjustments made to any of the Accounts. Until payment
is made as provided herein or until release by Bank from its security
interest, all merchandise returned to or repossessed by Borrower shall
be set aside and identified as the property of Bank and Bank shall be
entitled to enter upon any premises where such merchandise is located
and take immediate possession thereof and remove same.
8. Borrower represents and warrants to Bank: (i) If Borrower is a
corporation, that Borrower is duly organized and existing in the State
of its incorporation and the execution, delivery and performance
hereof are within Borrower's corporate powers, have been duly
authorized and are not in conflict with law or the terms of any
charter, by-law or other incorporation papers, or of any indenture,
agreement or undertaking to which Borrower is a party or by which
Borrower is found or affected; (ii) Borrower is, or at the time the
Collateral becomes subject to Bank's security interest will be, the
true and lawful owner of and has, or at the time the Collateral
becomes subject to Bank's security interest will have, good and clear
title to the Collateral, subject only to Bank's rights therein; (iii)
Each Account is, or at the time the Account comes into existence will
be, a true and correct statement of a bona fide indebtedness incurred
by the debtor named therein in the amount of the Account for either
merchandise sold or delivered (or being held subject to Borrower's
delivery instructions) to, or services rendered, performed and
accepted by, the account debtor; (iv) That there are or will be no
defenses, counterclaims, or setoffs which may be asserted against the
Accounts; and (v) any and all financial information, including
information relating to the Collateral, submitted by Borrower to Bank,
whether previously or in the future, is or will be true and correct.
9. Borrower will: (i) Furnish Bank from time to time such financial statements
and information as Bank may reasonably request and inform Bank immediately
upon the occurrence of a material adverse change therein; (ii) Furnish Bank
periodically, in such form and detail and at such times as Bank may
require, statements showing aging and reconciliation of the Accounts and
collections thereon, and reports as to the Inventory and sales thereof;
(iii) Permit representatives of Bank to inspect the Inventory and
Borrower's books and records relating to the Collateral and make extracts
therefrom at any reasonable time and to arrange for verification of the
Accounts, under reasonable procedures, acceptable to Bank, directly with
the account debtors or otherwise at Borrower's expense; (iv) Promptly
notify Bank of any attachment or other legal process levied against any of
the Collateral and any information received by Borrower relative to the
Collateral, including the Accounts, the account debtors or other persons
obligated in connection therewith, which may in any way affect the value of
the Collateral or the rights and remedies of Bank in respect thereto; (v)
Reimburse Bank upon demand for any and all legal costs, including
reasonable attorneys' fees, and other expense incurred in collecting any
sums payable by Borrower under Borrower's Loan Account or any other
obligation secured hereby, enforcing any term or provision of this Security
Agreement or otherwise or in the checking, handling and collection of the
Collateral and the preparation and enforcement of any agreement relating
thereto; (vi) Notify Bank of each location at which the Inventory is or
will be kept, other than for temporary processing, storage or similar
purposes, and of any removal thereof to a new location and of each office
of Borrower at which records of Borrower relating to the Accounts are kept;
(vii) Provide, maintain and deliver to Bank policies insuring the
Collateral against loss or damage by such risks and in such amounts, forms
and companies as Bank may require and with loss payable solely to Bank,
and, in the event Bank takes possession of the Collateral, the insurance
policy or policies and any unearned or returned premium thereon shall at
the option of Bank become the sole property of Bank, such policies and the
proceeds of any other insurance covering or in any way relating to the
Collateral, whether now in existence or hereafter obtained, being hereby
assigned to Bank; (viii) Do all acts necessary to maintain, preserve and
protect all Inventory, keep all Inventory in good condition and repair and
not to cause any waste or unusual or unreasonable depreciation thereof, and
(ix) In the event the unpaid balance of Borrower's Loan Account shall
exceed the maximum amount of outstanding loans to which Borrower is
entitled under Section 1 hereof, Borrower shall immediately pay to Bank,
from its own funds and not from the proceeds of Collateral, for credit to
Borrower's Loan Account the amount of such excess.
10. Bank may at any time, without prior notice to Borrower, collect the
Accounts and Inventory proceeds and may give notice of assignment to any
and all account debtors, and Borrower does hereby make, constitute and
appoint Bank its irrevocable, true and lawful attorney with power to
receive, open and dispose of all mail addressed to Borrower, to endorse the
name of Borrower upon any checks or other evidences of payment that may
come into the possession of Bank upon the Accounts or as proceeds of
inventory; to endorse the name of the undersigned upon any document or
instrument relating to the Collateral; in its name or otherwise, to demand,
xxx for, collect and give acquittances for any and all moneys due or to
become due upon the Accounts; to compromise, prosecute or defend any
action, claim or proceeding with respect thereto; and to do any and all
things necessary and proper to carry out the purpose herein contemplated.
11. Until Borrower's Loan Account and all other obligations secured hereby
shall have been repaid in full, Borrower shall not sell, dispose of or
grant a security interest in any of the Collateral other than to Bank, or
execute any financing statements covering the Collateral in favor of any
secured party or person other than Bank.
12. Should: (i) Default be made in the payment of any obligation, or breach be
made in any warranty, statement, promise, term or condition, contained
herein or hereby secured; (ii) Any statement or representation made for the
purpose of obtaining credit hereunder prove false; (iii) Bank deem the
Collateral inadequate or unsafe or in danger of misuse; (iv) Borrower
become insolvent or make an assignment for the benefit of creditors; or (v)
Any proceeding be commenced by or against Borrower under any bankruptcy,
reorganization, arrangement, readjustment of debt or moratorium law or
statute; then in any such event, Bank may, at its option and without demand
first made and without notice to Borrower, do any one or more of the
following: (a) Terminate its obligation to make loans to Borrower as
provided in Section 1 hereof; (b) Declare all sums secured hereby
immediately due and payable; (c) immediately take possession of the
collateral wherever it may be found, using all necessary force so to do, or
require Borrower to assemble the Collateral and make it available to Bank
at a place designated by Bank which is reasonably convenient to Borrower
and Bank, and Borrower waives all claims for damages due to or arising from
or connected with any such taking; (d) Proceed in the foreclosure of Bank's
security interest and sale of the Collateral in any manner permitted by
law, or provided for herein; (e) Sell, lease or otherwise dispose of the
Collateral at public or private sale, with or without having the Collateral
at the place of sale, and upon terms and in such manner as Bank may
determine, and Bank may purchase same at any such sale; (f) Retain the
Collateral in full satisfaction of the obligations secured thereby; (g)
Exercise any remedies of a secured party under the Uniform Commercial Code.
Prior to any such disposition, Bank may, at as option, cause any of the
Collateral to be repaired or reconditioned in such manner and to such
extent as Bank may deem advisable, and any sums expended therefor by Bank
shall be repaid by Borrower and secured hereby. Bank shall have the right
to enforce one or more remedies hereunder successively or concurrently, and
any such action shall not estop or prevent Bank from pursuing any further
remedy which it may have hereunder or by law. If a sufficient sum is not
realized from any such disposition of Collateral to pay all obligations
secured by this Security Agreement, Borrower hereby promises and agrees to
pay Bank any deficiency.
13. If any writ of attachment, garnishment, execution or other legal process be
issued against any property of Borrower, or if any assessment for taxes
against Borrower, other than real property, is made by the Federal or State
government or any department thereof, the obligation of Bank to make loans
to Borrower as provided in Section 1 hereof shall immediately terminate and
the unpaid balance of the Loan Account, all other obligations secured
hereby and all other sums due hereunder shall immediately become due and
payable without demand, presentment or notice.
14. Borrower authorizes Bank to destroy all invoices, delivery receipts,
reports and other types of documents and records submitted to Bank in
connection with the transactions contemplated herein at any time subsequent
to four months from the time such items are delivered to Bank.
15. Nothing herein shall in any way limit the effect of the conditions set
forth in any other security or other agreement executed by Borrower, but
each and every condition hereof shall be in addition thereto.
16. Should default be made in the payment of principal or interest when due, or
in the performance or observance, when due, of any item, covenant or
condition of this Agreement, any deed of trust, security agreement or other
agreement (including amendments or extensions thereof) securing or
pertaining to this Agreement, at the option of the holder hereof and
without notice or demand, the entire balance of principal and accrued
interest then remaining unpaid shall (a) become immediately due and
payable, and (b) thereafter bear interest, until paid in full, at the
increased rate of 5% per year in excess of the rate provided for above, as
it may vary from time to time.
17. If any installment payment, interest payment, principal payment or
principal balance payment due hereunder is delinquent twenty (20) or more
days, Borrower agrees to pay Bank a late charge in the amount of 5% of the
payment so due and unpaid, in addition to the payment; but nothing in this
paragraph is to be construed as any obligation on the part of the Bank to
accept payment of any payment past due or less than the total unpaid
principal balance after maturity.
All payments shall be applied first to any late charges owing, then to
interest and the remainder, if any, to principal.
18. Reference Provision.
A. Other than (i) non-judicial foreclosure and all matters in
connection therewith regarding security interests in real or
personal property; or (ii) the appointment of a receiver, or the
exercise of other provisional remedies (any and all of which may be
initiated pursuant to applicable law), each controversy, dispute or
claim between the parties arising out of or relating to this
document ("Agreement"), which controversy, dispute or claim is not
settled in writing within thirty (30) days after the "Claim Date"
(defined as the date on which a party subject to the Agreement
gives written notice to all other parties that a controversy,
dispute or claim exists), will be settled by a reference proceeding
in California in accordance with the provisions of Section 638 et
seq. of the California Code of Civil Procedure, or their successor
section ("CCP") which shall constitute the exclusive remedy for the
settlement of any controversy, dispute or claim concerning this
Agreement, including whether such controversy, dispute or claim is
subject to the reference proceeding and except as set forth above,
the parties waive their rights to initiate any
legal proceedings against each other in any court or jurisdiction
other than the Superior Court in the County where the Real Property,
if any, is located or Los Angeles County if none (the "Court"). The
referee shall be a retired Judge of the Court selected by mutual
agreement of the parties, and if they cannot so agree within
forty-five (45) days after the Claim Date, the referee shall be
promptly selected by the Presiding Judge of the Court (or his
representative). The referee shall be appointed to sit as a temporary
judge, with all of the powers of a temporary judge, as authorized by
law, and upon selection should take and subscribe to the oath of
office as provided for in Rule 244 of the California Rules of Court
(or any subsequently enacted Rule). Each party shall have one
peremptory challenge pursuant to CCP Section 170.6. The referee shall
(a) be requested to set the matter for hearing within sixty (60) days
after the Claim Date and (b) try any and all issues of law or fact and
report a statement of decision upon them, if possible, within ninety
(90) days of the Claim Date. Any decision rendered by the referee will
be final, binding and conclusive and judgment shall be entered
pursuant to CCP Section 644 in any court in the State of California
having jurisdiction. Any party may apply for a reference proceeding at
any time after thirty (30) days following notice to any other party of
the nature of the controversy, dispute or claim, by filing a petition
for a hearing and/or trial. All discovery permitted by this Agreement
shall be completed no later than fifteen (15) days before the first
hearing date established by the referee. The referee may extend such
period in the event of a party's refusal to provide requested
discovery for any reason whatsoever, including, without limitation,
legal objections raised to such discovery or unavailability of a
witness due to absence or illness. No party shall be entitled to
"priority" in conducting discovery. Depositions may be taken by either
party upon seven (7) days written notice, and request for production
or inspection of documents shall be responded to within ten (10) days
after service. All disputes relating to discovery which cannot be
resolved by the parties shall be submitted to the referee whose
decision shall be final and binding upon the parties. Pending
appointment of the referee as provided herein, the Superior Court is
empowered to issue temporary and/or provisional remedies, as
appropriate.
B. Except as expressly set forth in this Agreement, the referee shall
determine the manner in which the reference proceeding is conducted
including the time and place of all hearings, the order of
presentation of evidence, and all other questions that arise with
respect to the course of the reference proceeding. All proceedings and
hearings conducted before the referee, except for trial, shall be
conducted without a court reporter, except that when any party so
requests, a court reporter will be used at any hearing conducted
before the referee. The party making such a request shall have the
obligation to arrange for and pay for the court reporter. The costs of
the court reporter at the trial shall be borne equally by the parties.
C. The referee shall be required to determine all issues in accordance
with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in
the State of California will be applicable to the reference
proceeding. The referee shall be empowered to enter equitable as well
as legal relief, to provide all temporary and/or provisional remedies
and to enter equitable orders that will be binding upon the parties.
The referee shall issue a single judgment at the close of the
reference proceeding which shall dispose of all of the claims of the
parties that are the subject of the reference. The parties hereto
expressly reserve the right to contest or appeal from the final
judgment or any appealable order or appealable judgment entered by the
referee. The parties hereto expressly reserve the right to findings of
fact, conclusions of law, a written statement of decision, and the
right to move for a new trial or a different judgment, which new
trial, if granted, is also to be a reference proceeding under this
provision.
D. In the event that the enabling legislation which provides for
appointment of a referee is repealed (and no successor statute is
enacted), any dispute between the parties that would otherwise be
determined by the reference procedure herein described will be
resolved and determined by arbitration. The arbitration will be
conducted by a retired judge of the Court, in accordance with the
California Arbitration Act, Section 1280 through Section 1294.2 of the
CCP as amended from time to time. The limitations with respect to
discovery as set forth hereinabove shall apply to any such arbitration
proceeding.
19. Additional Provisions: *SEE ATTACHED (EXIMBANK FACILITY).
/X/ if checked, the Addendum or Exhibit "A" attached (and all amendments
thereto and replacements therefor) is incorporated herein by this
reference.
Executed this 23RD day of JUNE ,1998
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(Name of Borrower)
IMPERIAL BANK BY:
-----------------------------------
(Authorized Signature and Title)
SEE EXHIBIT "A1" ATTACHED HERETO
BY: Xxxxxxx X. Xxxxxxx Vice President BY:
------------------------------------ -----------------------------------
IMPERIAL BANK Title (Authorized Signature and Title)
EXHIBIT"A1"
Attachment to the Security and Loan Agreement between IMAGING TECHNOLOGIES
CORPORATION, PRIMA INTERNATIONAL, NEWGEN SYSTEMS ACQUISITIONS CORPORATION,
MCMICAN CORPORATION, COLOR SOLUTIONS, INC., ITEC EUROPE LIMITED, AMT ACCEL UK
LIMITED and IMPERIAL BANK DATED June 23, 1998.
Imaging Technologies Corporation
By: /s/ Xxxxx Xxxxx
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By: /s/ Xxxxx Xxxx Vice Pres
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Prima International
By: /s/ Xxxxx Xxxxx
--------------------------------
By: /s/ Xxxxx Xxxx Vice Pres
--------------------------------
Newgen Systems Acquisitions Corporation
By: /s/ Xxxxx Xxxxx
--------------------------------
By: /s/ Xxxxx Xxxxx Vice Pres
--------------------------------
Xx XxXxxxx Corporation
By: /s/ Xxxxx Xxxxx
--------------------------------
By: /s/ Xxxxx Xxxx Vice Pres
--------------------------------
Color Solutions, Inc.
By: /s/ Xxxxx Xxxxx
--------------------------------
By: /s/ Xxxxx Xxxx Vice Pres
--------------------------------
ITEC Europe Limited
By: /s/ Xxxxx Xxxxx
--------------------------------
By: /s/ Xxxxx Xxxx Vice Pres
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Amt Ascel UK Limited
By: /s/ Xxxxx Xxxxx
--------------------------------
By: /s/ Xxxxx Xxxx Vice Pres
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EXHIBIT "A"
(Eximbank Facility)
ADDENDUM TO SECURITY AND LOAN AGREEMENT ("Security and Loan Agreement") BETWEEN
IMAGING TECHNOLOGIES CORPORATION, PRIMA INTERNATIONAL, NEWGEN SYSTEMS
ACQUISITIONS CORPORATION, ITEC EUROPE LIMITED, AMIT ACCEL UK LIMITED, MCMICAN
CORPORATION, COLOR SOLUTIONS, INC., AND IMPERIAL BANK.
DATED: JUNE 23, 1998
This Addendum is made and entered into June 23, 1998 between IMAGING
TECHNOLOGIES CORPORATION, PRIMA INTERNATIONAL, NEWGEN SYSTEMS ACQUISITIONS
CORPORATION, ITEC EUROPE LIMITED, AMT ACCEL UK LIMITED, MCMICAN CORPORATION AND
COLOR SOLUTIONS, INC. ("Borrowers") hereby jointly and severally, and Imperial
Bank ("Bank"). This Addendum amends and supplements the Security and Loan
Agreement. In the event of any inconsistency between the terms herein and the
terms of the Security and Loan Agreement, the terms herein shall in all cases
govern and control. All capitalized terms herein, unless otherwise defined
herein, shall have the meaning set forth in the Security and Loan Agreement.
1. Any commitment of Bank, pursuant to the terms of the Security and Loan
Agreement, to make advances against Eligible Accounts shall expire on
September 30, 1999, subject to Bank's right to renew said commitment at its
sole discretion. Any renewal of the commitment shall not be binding upon
the Bank unless it is in writing and signed by an officer of the Bank.
2. Borrowers represent and warrant that:
a. LITIGATION. There is no litigation or other proceeding pending or
threatened against or affecting Borrowers, and Borrowers are not in
default with respect to any order, writ, injunction, decree or demand
of any court or other governmental or regulatory authority.
b. FINANCIAL CONDITION. The consolidated balance sheet of Borrowers as of
March 31, 1998, and the related consolidated profit and loss statement
on that date, a copy of which has heretofore been delivered to Bank by
Borrowers, and all other statements and data submitted in writing by
Borrowers to Bank in connection with this request for credit are true
and correct, and said balance sheet and profit and loss statement
truly present the financial condition of Borrowers as of the date
thereof and the results of the operations of Borrowers for the period
covered thereby, and have been prepared in accordance with generally
accepted accounting principles on a basis consistently maintained.
Since such date, there have been no material adverse changes in the
financial condition or business of Borrowers. Borrowers have no
knowledge of any liabilities, contingent or otherwise, at such date
not reflected in said balance sheet, and Borrowers have not entered
into any special commitments or substantial contracts which are not
reflected in said balance sheet, other than in the ordinary and normal
course of its business, which may have a material adverse effect upon
its financial condition, operations or business as now conducted.
c. TRADEMARKS, PATENTS. Borrowers, as of the date hereof, possesses all
necessary trademarks, trade names, copyrights, patents, patent rights,
and licenses to conduct its business as now operated, without any
known conflict with valid trademarks, trade names, copyrights patents
and license rights of others.
d. TAX STATUS., Borrowers have no liability for any delinquent state,
local or federal taxes, and, if Borrowers have contracted with any
government agency, Borrowers have no liability for re-negotiation of
profits.
3. Borrowers agree that so long as they are indebted to Bank or so long as
Bank has any obligation to extend credit to Borrowers, they WILL NOT,
without Bank's WRITTEN CONSENT:
a. TYPE OF BUSINESS, MANAGEMENT. Make any substantial change in the
character of their business; or make any change in its executive
management.
b. OUTSIDE INDEBTEDNESS. Create, incur, assume or permit to exist any
indebtedness for borrowed moneys other than loans from Bank except
obligations now existing as shown in financial statement dated March
31, 1998, excluding those being refinanced by Bank; or sell or
transfer, either with or without recourse, any accounts or notes
receivable or any moneys due to become due.
c. Liens and Encumbrances. Create, incur, assume any mortgage, pledge,
encumbrance, lien or charge of any kind (including the charge upon
property at any time purchased or acquired under conditional sale or
other title retention agreement) upon any asset now owned or hereafter
acquired by them, other than liens for taxes not delinquent and liens
in Bank's favor.
d. LOANS, INVESTMENTS, SECONDARY LIABILITIES. Make any loans or advances
to any person or other entity other than in the normal and ordinary
course of their business as now conducted or make any investment in
the securities of any person or other entity other than the United
States Government; or guarantee or otherwise become liable upon the
obligation of any person or other entity, except by endorsement of
negotiable instruments for deposit or collection in the ordinary and
normal course of their business.
e. ACQUISITION OR SALE OF BUSINESS; MERGER OR CONSOLIDATION. Purchase or
otherwise acquire the assets or business of any person or other
entity; or liquidate, dissolve, merge or consolidate, or commence any
proceedings therefore; or sell any assets except in the ordinary and
normal course of their business as now conducted; or sell, lease,
assign, or transfer any substantial part of their business or fixed
assets, or any property or other assets necessary for the continuance
of their business as now conducted, including without limitation the
selling of any property or other asset accompanied by leasing back of
same.
4. Should there be a default under the Security and Loan Agreement, the
General Security Agreement or under the Note, all obligations, loans and
liabilities of Borrowers to Bank, due or to become due, whether now
existing or hereafter arising, shall at the option of the Bank, become
immediately due and payable without notice or demand, and Bank shall
thereupon have the right to exercise all of its default rights and
remedies.
5. Pursuant to the provisions in the Security and Loan Agreement and this
exhibit, Eligible Accounts shall only include such accounts as Bank in its
sole discretion shall determine are eligible from time to time (eligible
Foreign Accounts Receivable shall mean those trade accounts from the sale
of items due and payable to Borrower in the United States and any notes,
drafts, letters of credit, or insurance proceeds supporting payments
thereof, for goods or services which are intended for export). Advance
rates for eligible accounts will be as follows:
Foreign
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Imaging Technology Corp. 90%
PCPI Technologies Corp. 90%
Prima International Corp. 90%
Newgen Imaging Systems Corp. 80%
"Eligible Accounts" shall also NOT include any of the following:
a. Accounts with respect to which the account debtor is an officer,
director, shareholder, employee, subsidiary or affiliate of any
Borrower
b. Accounts with respect to which 25% or more of the account debtor's
total accounts or obligations outstanding to any Borrower are more
than 90 days from invoice date.
c. For accounts representing more than 20% of total accounts
receivable, the balance in excess of the 20% is not eligible.
However, the Bank may deem, at its sole discretion, the entire
amount, or any portion thereof, eligible.
d. Credit balances greater than 90 days from invoice date.
e. Government receivables, unless assigned to the Bank.
f. All accounts sold to and purchased from a company of common
name/ownership, whereby a potential offset exists.
g. Accounts over 90 calendar days from invoice date.
h. Consignment or guaranteed sales.
i. Xxxx and hold accounts.
j. Equipment rental offsets.
k. Collection accounts.
1. C.O.D. accounts more than 30 days from invoice date.
m. Any account evidenced by a letter of credit, until the date of
shipment of the items covered by such letter of credit;
n. Any account which the Bank or EXIMBANK in its reasonable judgement,
deems uncollectible for any reason;
o. Accounts payable in a currency other than U.S. dollars, except as
may be approved in writing by EXIMBANK;
p. Accounts from a military buyer, except as may be approved in writing
by EXIMBANK;
q. Any account due and collectible outside the United States, except as
may be approved in writing by EXIMBANK;
r. Accounts in the name of a buyer located in a country in which
EXIMBANK is legally prohibited from doing business as designated in
the country limitation schedule;
s. Accounts from buyers in a country where EXIMBANK coverage is not
available for commercial reasons as designated in the country
limitation schedule (as defined in the EXIMBANK agreement mentioned
in 8.n below) unless and only to the extent that such items are to
be sold to such country on terms of a letter of credit confirmed by
a bank acceptable to EXIMBANK.
6. Borrower may borrow against eligible inventory deemed acceptable to
Bank, up to a $1,250,000 sublimit within the line of credit, not to
exceed 50% of the balance outstanding on the line of credit,
contingent upon Borrowing Base availability, and substantiated by
monthly inventory certification submitted by Borrower to Bank.
Eligible Inventory shall
only include Inventory as Bank in its sole discretion shall determine are
eligible from time to time. The advance rates on eligible inventory will
be as follows:
Foreign
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Imaging Technology Corp. 50%
PCPI Technologies Corp. 50%
Prima International Corp. 50%
Newgen Imaging Systems Corp. 60%
Inventory eligible for advance under the Security and Loan agreement
shall NOT include the following:
a. any Inventory which is not located in the United States;
b. any demonstration Inventory or Inventory sold on consignment;
c. any Inventory consisting of proprietary software;
d. any Inventory which is damaged, obsolete, returned, defective,
recalled or unfit for further processing;
e. any Inventory which has been previously exported from the United
States;
f. any Inventory which constitutes defense articles or defense
services;
g. any Inventory which is to be incorporated into items destined for
shipment to a Buyer located in a country in which Eximbank is
legally prohibited from doing business as designated in the Country
Limitation Schedule;
h. any Inventory which is to be incorporated into items destined for
shipment to a buyer located in a country in which Eximbank
coverage is not available for commercial reasons as designated in
the Country Limitation Schedule, unless and only to the extent
that such items are to be sold to such country on terms of a
Letter of Credit confirmed by a bank acceptable to Eximbank;
i. any Inventory which would result in an ineligible Account;
j. Inventory reserve amounts;
k. Inventory not insured, naming Bank loss payee;
1. Inventory with no liquidation value due to various causes, i.e.,
service requirements, warranty requirements, etc.;
m. Inventory located in areas making it difficult to verify its
existence, or which will cause undue expense in liquidation due
to transportation costs, or other logistical reasons;
n. Inventory other than finished goods (i.e. raw materials and work in
process).
7. All financial covenants and financial information referenced herein
shall be interpreted and prepared in accordance with generally
accepted accounting principles applied on a basis consistent with
previous years. Compliance with financial covenants shall be
calculated and monitored on a quarterly basis. All financial reports
and statements and calculation of financial covenants will be on a
consolidated basis.
8. Borrowers affirmatively covenant that so long as any loans,
obligations or liabilities remain outstanding or unpaid to Bank, or so
long as Bank has any obligation to extend credit to borrowers, they
WILL:
a. Have and maintain a minimum effective tangible net worth (meaning
net worth plus subordinated debt, less intangible assets
including but not limited to goodwill, patents, copyrights, and
organization expenses), of not less than $12,500,000 beginning
with the period ending 6/30/98.
b. Have and maintain a trading ratio trading assets (accounts
receivable and inventory) to trading liabilities (accounts
payable and bank lines outstanding) of at least 1.30 to 1.00
beginning with the period ending 6/30/98, and thereafter.
c. Have and maintain a maximum ratio of total debt (less
subordinated debt), to tangible net worth (plus subordinated
debt) not to exceed 1.75 to 1.00, beginning with the period
ending 6/30/97, and thereafter.
d. Have and maintain trading capital (trading assets minus trading
liabilities as defined in 8.b above) of not less than $6,000,000
for the period ending 6/30/98, and thereafter.
e. Have and maintain a minimum debt service coverage (EBIDA / P&I) of
2.50: 1.
f. Borrowers shall maintain all significant bank accounts and banking
relationship with Bank.
g. Within 10 days from each month-end, deliver to Bank an accounts
receivable aging reconciled to the general ledger of Borrower's,
a detailed accounts payable aging reconciled to the Borrower's
general ledger and setting forth the amount of any book overdraft
or the amount of checks issued but not sent, and an inventory
certification outlining both inventory composition and activity
for the month. All the foregoing will be in form satisfactory to
the Bank. Also provide the Bank on a quarterly basis or more
frequent if demanded by Bank, a complete address list of all
active customers.
h. Within 45 days after the end of each quarter end, deliver to Bank a
profit and loss statement and a balance sheet in form satisfactory
to Bank all certified by an officer of Borrowers.
i. Within 90 days after end of Borrower's fiscal year, deliver to
Bank the same financial statements as otherwise provided
quarterly together with Changes in Financial Position Statement,
reviewed by an independent certified public accountant selected
by Borrower but acceptable to Bank.
j. RIGHTS AND FACILITIES. Maintain and preserve all rights,
franchises and other authority adequate for the conduct of its
business; maintain its properties, equipment and facilities in
good order and repair; conduct its business in an orderly manner
without voluntary interruption and, if a corporation or
partnership, maintain and preserve its existence.
k. INSURANCE Maintain public liability, property damage and workers'
compensation insurance and insurance on all its insurable
property against fire and other hazards with responsible
insurance carriers to the extent usually maintained by similar
businesses. Borrower shall provide evidence of property insurance
in amounts and types acceptable to the Bank. Bank to be named as
loss payee.
1. TAXES AND OTHER LIABILITIES. Pay and discharge, before the same
become delinquent and before penalties accrue thereon, all taxes,
assessments and governmental changes upon or against it or any of
its properties, and any of its liabilities at any time existing,
except to the extent and so long as:
(a) The same are being contested in good faith and by appropriate
proceedings in such manner as not to cause any material adverse
effect upon its financial
condition or the loss of any right of redemption from any sale
thereunder; and
(b) It shall have set aside on its books reserves (segregated to the
extent required by generally accepted accounting practice) deemed
adequate with respect thereto.
m. RECORDS AND REPORTS. Maintain a standard and modern system of
accounting in accordance with generally accepted accounting principles
on a basis consistently maintained; permit Bank's representatives to
have access to, and to examine its properties, books and records at
all reasonable times.
n. EXIMBANK AGREEMENT. Comply with all terms of the Export-Import Bank of
the United States Working Capital Guarantee Program Borrower Agreement
dated as of 6/15/98 executed by Borrower and acknowledged by Bank
("Eximbank Agreement").
9. INTEREST RATE. The rate of interest applicable to the Loan Accounts shall
be .75% above the rate of interest which Bank has announced as its prime
lending rate ("Prime Rate") which shall vary concurrently with any change
in such Prime Rate. Interest shall be computed at the above rate on the
basis of the actual number of days during which the principal balance of
the Loan Account is outstanding divided by 360, which shall, for interest
computation purposes, be considered one year. Bank at its option may demand
payment of any or all of the amount due under the Loan Account including
accrued but unpaid interest, at any time. Notice of such demand may be
given verbally or in writing and should be effective upon receipt by
Borrower.
10. NOTICE OF DEFAULT. Borrowers shall promptly notify Bank in writing of the
occurrence of any event of default hereunder or any event which upon notice
and lapse of time would be an event of default.
11. JOINT AND SEVERAL LIABILITY OF BORROWERS. The liability of each Borrower
under the Security and Loan Agreement, this Addendum and all other
documents executed pursuant to the transaction contemplated herein is join
and several. Discharge of any Borrower except for full payment, or any
extension, forbearance, change of rate of interest, or acceptance, release
or substitution of any Collateral, or any impairment or suspension of
Bank's rights against any Borrower, or any transfer of a Borrower's
interest to another shall not affect the liability of any other Borrower.
All Borrowers waive: (a) any right to require the Bank to proceed against
any Borrower before any other, or to pursue any other remedy: (b)
presentment, protest and notice of protest, demand and notice of
nonpayment, demand or performance, notice of sale and advertisement of
sale; (c) any right to the benefit of or to direct the application of any
Collateral until all obligations of Borrowers to Bank are repaid in full;
(d) any and all right of subrogation to Bank until all obligations of
Borrowers to Bank are repaid in full.
12. MISCELLANEOUS PROVISIONS. Failure or Indulgence Not Waiver. No failure or
delay on the part of Bank or any holder of Notes issued hereunder, in the
exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof or of any
other right, power or privilege. All rights and remedies existing under
this agreement or any not issued in connection with a loan that Bank may
make hereunder are cumulative to, not exclusive of, any rights or remedies
otherwise available.
13. The terms and conditions of this Addendum and the Security and Loan
Agreement extend to all obligations of Borrower to Bank and the Borrower
agrees to comply with all such terms and conditions until all obligations
of Borrower to Bank are repaid in full. Should there be a default under the
Security and Loan Agreement, this Addendum, any General Security Agreement
executed by Borrower, under any note executed by Borrower, or under any
other obligations of Borrower to Bank, or the provisions of any documents
executed by Borrower in relation to any such obligation (and Borrower shall
have failed to cure such default within any applicable cure period), all
obligations, loans and
liabilities of Borrower to Bank, due or to become due, whether now existing
or hereafter arising, shall at the option of the Bank, become immediately
due and payable without notice or demand, and Bank shall thereupon have the
right to exercise all of its default rights and remedies.
14. This Addendum is executed by and on behalf of the parties as of the date
first above written.
IMAGING TECHNOLOGIES CORPORATION, "BORROWER"
By: /s/ Xxxxx Xxxxx
-------------------------------------
Title: CEO
----------------------------------
By: /s/ Xxxxx Xxxx
-------------------------------------
Title: Vice President
----------------------------------
PRIMA INTERNATIONAL "Borrower"
By: /s/ Xxxxx Xxxxx
-------------------------------------
Title: CEO
----------------------------------
By: /s/ Xxxxx Xxxx
-------------------------------------
Title: Vice President
----------------------------------
NEWGEN SYSTEMS ACQUISITIONS CORPORATION, "BORROWER"
By: /s/ Xxxxx Xxxxx
-------------------------------------
Title: CEO
----------------------------------
By: /s/ Xxxxx Xxxx
-------------------------------------
Title: Vice President
----------------------------------
ITEC EUROPE LIMITED "BORROWER"
By: /s/ Xxxxx Xxxxx
-------------------------------------
Title: CEO
----------------------------------
By: /s/ Xxxxx Xxxx
-------------------------------------
Title: Vice President
----------------------------------
AMT ACCEL UK LIMITED, "Borrower"
By: /s/ Xxxxx Xxxxx
-------------------------------------
Title: CEO
----------------------------------
By: /s/ Xxxxx Xxxx
-------------------------------------
Title: Vice President
----------------------------------
McMICAN CORP., "BORROWER"
By: /s/ Xxxxx Xxxxx
-------------------------------------
Title: CEO
----------------------------------
By: /s/ Xxxxx Xxxx
-------------------------------------
Title: Vice President
----------------------------------
COLOR SOLUTIONS, INC. "BORROWER"
By: /s/ Xxxxx Xxxxx
-------------------------------------
Title: CEO
----------------------------------
By: /s/ Xxxxx Xxxx
-------------------------------------
Title: Vice President
----------------------------------
IMPERIAL BANK "BANK"
By: /s/ Xxxxx Xxxxx
-------------------------------------
Title: Vice President
----------------------------------
