EXHIBIT 10.15
CREDIT AGREEMENT
This Credit Agreement (the "Agreement") is made and entered into this 24
day of January, 1997, by and between SANWA BANK CALIFORNIA (the "Bank") and OPTO
SENSORS, INC., UDT SENSORS, INC. RAPISCAN SECURITY PRODUCTS (U.S.A.), INC. and
XXXXXX OPTICS, INC. (each a "Borrower" and together, the "Borrowers"), on the
terms and conditions that follow:
SECTION 1.
DEFINITIONS
1.01 Certain Defined Terms: Unless elsewhere defined in this Agreement,
the following terms shall have the following meanings (such meanings to be
generally applicable to the singular and plural forms of the terms defined):
(a) "ADVANCE": shall mean an advance to any Borrower under the Line of
Credit.
(b) "BUSINESS DAY": shall mean a day, other than a Saturday or Sunday, on
which commercial banks are open for business in California.
(c) "COLLATERAL": shall mean the property described in Section 3.01,
together with any other personal or real property in which the Bank may be
granted a lien or security interest to secure payment of the Obligations.
(d) "DEBT": shall mean all liabilities of each Borrower less Subordinated
Debt.
(e) "EFFECTIVE TANGIBLE NET WORTH": shall mean each Borrower's stated net
worth plus Subordinated Debt but less the book value of all intangible assets of
such Borrower (i.e., goodwill, trademarks, patents, copyrights, organization
expense and similar intangible items including, but not limited to investments
in and all amounts due from affiliates, officers or employees).
(f) "ERISA": shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, including (unless the context otherwise
requires) any rules or regulations promulgated thereunder.
(g) "EQUIPMENT": shall mean equipment as defined in the California Uniform
Commercial Code.
(h) "EVENT OF DEFAULT": shall have the meaning set forth in Section 7.
(i) "EXPIRATION DATE": shall mean November 30, 1998 or the date of
termination of the Bank's commitment to lend under this Agreement pursuant to
Section 8, whichever shall occur first.
(j) "INDEBTEDNESS": shall mean, with respect to each Borrower, (i) all
indebtedness for borrowed money or for the deferred purchase price of property
or services in respect of which any Borrower is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which Borrower
otherwise assures a creditor against loss and (ii) obligations under leases
which shall have been or should be,
1
in accordance with generally accepted accounting principles, reported as capital
leases in respect of which any Borrower is liable, contingently or otherwise, or
in respect of which any Borrower otherwise assures a creditor against loss.
(k) "LINE OF CREDIT": shall mean the credit facility described in Section
2.01.
(l) "OBLIGATIONS": shall mean all amounts owing by each Borrower to the
Bank pursuant to this Agreement including, but not limited to, the unpaid
principal amount of Advances.
(m) "PERMITTED LIENS": shall mean: (i) liens and security interests
securing indebtedness owed by each Borrower to the Bank; (ii) liens for taxes,
assessments or similar charges either not yet due or being contested in good
faith; (iii)liens of materialmen, landlords, mechanics, warehousemen, or
carriers or other like liens arising in the ordinary course of business and
securing obligations which are not yet delinquent; (iv) purchase money liens or
purchase money security interests upon or in any property acquired or held by
each Borrower in the ordinary course of business to secure Indebtedness
outstanding on the date hereof or permitted to be incurred under Section 6.10
hereof; (v) liens and security interests which, as of the date hereof, have been
disclosed to and approved by the Bank in writing; and (vi) those liens and
security interests which in the aggregate constitute an immaterial and
insignificant monetary amount with respect to the net value of each Borrower's
assets; (vii) liens against UDT Sensors, Inc. ("UDI") which may hereafter be
granted in favor of the United States of America as set forth in that certain
Stipulation for Consent Judgment referred to in and executed pursuant to that
certain Criminal Plea and Sentencing Agreement between UDT and the United States
Attorney's Office for the Central District of California, provided that such
liens, if granted to the United States of America, shall be subordinated to
those of the Bank pursuant to a subordination agreement in form and substance
satisfactory to the Bank.
(n) "REFERENCE RATE": shall mean an index for a variable interest rate
which is quoted, published or announced from time to time by the Bank as its
reference rate and as to which loans may be made by the Bank at, below or above
such reference rate.
(o) "SUBORDINATED DEBT": shall mean such liabilities of each Borrower which
have been subordinated to those owed to the Bank in a manner acceptable to the
Bank.
(p) "VALUE": shall mean the lesser of: the invoice cost of the Equipment
(including taxes, license fees, transportation costs, insurance premiums, and
installation and connection expenses, fees and costs); or the book value of the
Equipment; or the liquidation value of the Equipment as reasonably determined by
the Bank.
1.02 Accounting Terms: All references to financial statements, assets,
liabilities, and similar accounting items not specifically defined herein shall
mean such financial statements or such items prepared or determined in
accordance with generally accepted accounting principles consistently applied
and, except where otherwise specified, all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.
1.03 Other Terms: Other terms not otherwise defined shall have the
meanings attributed to such terms in the California Uniform Commercial Code.
2
SECTION 2.
THE LINE OF CREDIT
2.01 The Line of Credit: On terms and conditions as set forth
herein, the Bank agrees to make Advances to each Borrower from time to time from
the date hereof to the Expiration Date, provided the aggregate amount of such
Advances outstanding at any time does not exceed $10,000,000 (the "Line of
Credit"). Within the foregoing limits, each Borrower may borrow, partially or
wholly prepay, and reborrow under this Section 2.01.
(a) Making Line Advances: Each Advance shall be conclusively deemed
to have been made at the request of and for the benefit of any Borrower (i) when
credited to any deposit account of either Borrower maintained with the Bank or
(ii) when paid in accordance with such Borrower's written instructions.
(b) Line Account: The Bank shall maintain on its books a record of
account in which the Bank shall make entries for each Advance and such other
debits and credits as shall be appropriate in connection with the Line of Credit
(the "Line Account"). The Bank shall provide the Borrowers with a monthly
statement of the Borrowers' Line Account, which statement shall be considered to
be correct and conclusively binding on the Borrowers unless any Borrower
notifies the Bank to the contrary within 18 months after such Borrower's receipt
of any such statement which it deems to be incorrect. Each Borrower hereby
authorizes the Bank, if and to the extent payment owed to the Bank under the
Line of Credit is not made when due, to charge, from time to time, against any
or all of any Borrower's deposit accounts with the Bank any amount so due.
(c) Mandatory Repayments: On the Expiration Date, each Borrower
hereby jointly and severally promises and agrees to pay to the Bank in full the
aggregate unpaid principal amount of all Advances then outstanding, together
with all accrued and unpaid interest thereon.
(d) Interest on Advances: Interest shall accrue from the date of each
Advance under the Line of Credit at one of the following rates, as quoted by the
Bank and as elected by any Borrower below:
1. Variable Rate Advances: A variable rate per annum equivalent to
----------------------
the Reference Rate plus .25% (the "Variable Rate"). Interest shall be adjusted
concurrently with any change in the Reference Rate. An Advance based upon the
Variable Rate is hereinafter referred to as a "Variable Rate Advance".
2. LIBOR Advances: A fixed rate quoted by the Bank for 1, 2, 3, or 6
--------------
months or for such other period of time that the Bank may quote and offer
(provided that any such period of time does not extend beyond the Expiration
Date) [the "LIBOR" Interest Period"] for Advances in the minimum amount of
$500,000 and in $100,000 increments thereafter. Such interest rate shall be a
percentage approximately equivalent to 2.25% in excess of the Bank's LIBOR Rate
which is that rate determined by the Bank's Treasury Desk as being the
arithmetic mean (rounded upwards, if necessary, to the nearest whole multiple of
one-sixteenth of one percent (1/16%) of the U.S. dollar London Interbank Offered
Rates for such period appearing on page 3750 (or such other page as may replace
page 3750) of the Telerate screen at or about 11:00 a.m. (London time) on the
second Business Day prior to the first days of such period (adjusted for any and
all assessments, surcharges and reserve requirements) [the "LIBOR" Rate"]. An
Advance based upon the LIBOR Rate is hereinafter referred to as a "LIBOR
Advance".
Interest on any Advance shall be computed on the basis of 360 days per
year, but charged on the
3
actual number of days elapsed.
Interest on Variable Rate Advances and LIBOR Advances shall be paid
monthly commencing on the first day of the month following the date of the first
such Advance and continuing on the first day of each month thereafter.
(e) Notice of Borrowing: Upon telephonic notice which shall be
received by the Bank at or before 2:00 p.m. (California time) on a Business Day,
each Borrower may borrow under the Line of Credit by requesting:
1. A Variable Rate Advance. A Variable Rate Advance may be made on
the day notice is received by the Bank; provided, however, that if the Bank
shall not have received notice at or before 2:00 p.m. on the day such Advance is
requested to be made, such Variable Rate Advance may, at the Bank's option, be
made on the next Business Day.
2. A LIBOR Advance. Notice of any LIBOR Advance shall be received by
the Bank no later than two Business Days prior to the day (which shall be a
Business Day) on which the Borrower requests such LIBOR Advance to be made.
(f) Notice of Election to Adjust Interest Rate: The Borrowers may
elect:
1. That interest on a Variable Rate Advance shall be adjusted to
accrue at the LIBOR Rate; provided, however, that such notice shall be received
by the Bank no later than two Business Days prior to the day (which shall be a
Business Day) on which any Borrower requests that interest be adjusted to accrue
at the LIBOR Rate.
2. That interest on a LIBOR Advance shall continue to accrue at a
newly quoted LIBOR Rate or shall be adjusted to commence to accrue at the
Variable Rate; provided, however, that such notice shall be received by the Bank
no later than two Business Days prior to the last day of the LIBOR Interest
Period pertaining to such LIBOR Advance. If the Bank shall not have received
notice (as prescribed herein) of any Borrower's election that interest on any
LIBOR Advance shall continue to accrue at the newly quoted LIBOR Rate, such
Borrower shall be deemed to have elected that interest thereon shall be adjusted
to accrue at the Variable Rate upon the expiration of the LIBOR Interest Period
pertaining to such Advance.
(g) Prepayment. The Borrowers may prepay any Advance under the Line
of Credit in whole or in part, at any time and without penalty, provided,
however, that: (i) any Partial prepayment shall first be applied, at the Bank's
option, to accrued and unpaid interest and next to the outstanding principal
balance under the Line of Credit; and (ii) during any period of time in which
interest is accruing on any Advance on the basis of the LIBOR Rate, no
prepayment shall be made except on a day which is the last day of the LIBOR
Interest Period pertaining thereto. If the whole or any part of any LIBOR
Advance is prepaid by reason of acceleration or otherwise, the Borrowers shall,
jointly and severally, upon the Bank's request, promptly pay to and indemnify
the Bank for all costs, expenses and any loss (including loss of future interest
income) actually incurred by the Bank and any loss (including loss or profit
resulting from the re-employment of funds) deemed sustained by the Bank as a
consequence of such prepayment.
The Bank shall be entitled to fund all or any portion of its Advances
in any manner it may determine in its sole discretion, but all calculations and
transactions hereunder shall be conducted as though the Bank actually funded all
Advances through the purchase of dollar deposits in the London Interbank Market
in the
4
amount of the relevant Advance and in maturities corresponding to the date of
such purchase to the Expiration Date hereunder.
(h) Indemnification of LIBOR Rate Costs: During any period of time
in which interest on any Advance is accruing on the basis of the LIBOR Rate, the
Borrowers shall, jointly and severally, upon the Bank's request, promptly pay to
and reimburse the Bank for all costs incurred and payments made by the Bank by
reason of any future assessment reserve, deposit or similar requirement or any
surcharge, tax or fee imposed upon the Bank or as a result of the Bank's
compliance with any future directive or requirement of any regulatory authority
pertaining or relating to funds used by the Bank in quoting and determining the
LIBOR Rate.
(i) Conversion from LIBOR Rate to Variable Rate: In the event that
the Bank shall at any time determine that the accrual of interest on the basis
of the LIBOR Rate (i) is infeasible because the Bank is unable to determine the
LIBOR Rate due to the unavailability of U.S. dollar deposits, contracts or
certificates of deposit in an amount approximately equal to the amount of the
relevant Advance and for a period of time approximately equal to relevant LIBOR
Interest Period or (ii) is or has become unlawful or infeasible by reason of the
Bank's compliance with any new law, rule, regulation, guideline or order, or any
new interpretation of any present law, rule, regulation, guideline or order,
then the Bank shall give telephonic notice thereof (confirmed in writing) to the
Borrowers, in which event any Advance bearing interest at the LIBOR Rate, shall
thereafter be deemed to be a Variable Rate Advance and interest shall thereupon
immediately accrue at the Variable Rate.
2.02 Letters of Credit: The Bank agrees to issue commercial and
stand-by letters of credit (each a "Letter of Credit") on behalf of the
Borrower, provided, however, at no time shall the total face amount of all
Letters of Credit outstanding less any partial draws paid by the Bank and not
reimbursed by the Borrower exceed the sum of $10,000,000.00, and provided
further, at no time shall the total undrawn amount of all Letters of Credit
outstanding plus any partial draws paid by the Bank and not reimbursed by the
Borrowers, together with the total principal amount of all Advances outstanding
exceed the Line of Credit.
(a) Upon the Bank's request, each Borrower shall, jointly and
severally, promptly pay to the Bank issuance fees and such other fees,
commissions, costs and any out-of-pocket expenses charged or incurred by the
Bank with respect to any Letter of Credit.
(b) The commitment by the Bank to issue Letters of Credit shall unless
earlier terminated in accordance with the terms of the Agreement, automatically
terminate on the Expiration Date and no Letter of Credit shall expire on a date
which is after the Expiration Date.
(c) Each Letter of Credit shall be in form and substance and in favor
of beneficiaries satisfactory to the Bank, provided that the Bank may refuse to
issue a Letter of Credit due to the nature of the transaction or its terms or in
connection with any transaction where the Bank, due to the beneficiary or the
nationality or residence of the beneficiary, would be prohibited by any
applicable law, regulation or order from issuing such Letter of Credit.
(d) Prior to the issuance of each Letter of Credit but in no event
later than 9:00 a.m. (California time) on the day such Letter of Credit is to be
issued (which shall be a Business Day), the relevant Borrower shall deliver to
the Bank International Department a duly executed form of the Bank's standard
form of application for issuance of letter of credit with proper insertions.
(e) The Borrowers shall, jointly and severally, upon the Bank's
request, promptly pay
5
to and reimburse the Bank for all costs incurred and payments made by the Bank
by reason of any future assessment, reserve, deposit or similar requirement or
any surcharge, tax or fee imposed upon the Bank or as a result of the Bank's
compliance with any future directive or requirement of any regulatory authority
pertaining or relating to any Letter of Credit.
2.03 Acceptance Facility: Any Borrower may from time to time request
the Bank to accept one or more drafts drawn on the Bank for the account of the
Borrowers (each an "Acceptance"). At no time, however, shall the total
principal balance of all Acceptances outstanding, together with the total face
amount of all outstanding Letters of Credit less any partial draws paid by the
Bank and the total principal balance of all Advances outstanding, exceed the
Line of Credit.
(a) Requests for Acceptances: Each request for an Acceptance shall be
made in writing or by telephone confirmed in writing (each a "Request"), shall
be irrevocable, and shall involve one or more drafts as described below. Each
Request shall be delivered or communicated to the Bank no later than 12:00 p.m.
(California time) on the day (which shall be a business day) on which the
creation of an Acceptance is requested. By making any such Request, the
Borrower agrees that all matters relating to each such Acceptance shall be
governed by the terms hereof and the Borrower restates all warranties and
representations made by the Borrower herein as if made on the date of the
Request and on the date that the Acceptance is created.
(b) Acceptances: Each Acceptance shall be created upon a Request by
the Bank's acceptance of a draft in form and substance satisfactory to the Bank
(each a "Draft"). Each Draft shall: (i) be drawn on the Bank by or on behalf or
for the account of the Borrowers in accordance with the provisions hereof, (ii)
have a minimum face amount of $100,000; (iii) be for the purpose of financing
only those transactions permitted by paragraph 7 of Section 13 of the Federal
Reserve Act, as amended from time to time; and (iv) mature not more than 90 days
after the date thereof (provided that, if such date is not a business day, the
maturity shall be extended to the next succeeding business day). However, no
Draft shall mature more than 90 days after the Expiration Date. Each Borrower
hereby warrants that any Acceptances relating to the importation or exportation
of goods or relating to the domestic shipment of goods shall: (i) not have a
term in excess of the period of time which is usual and reasonably necessary to
finance transactions of the character of the underlying import or export
transaction or the underlying domestic shipment; (ii) not, together with all
other Acceptances relating to any such shipment have an aggregate face amount
exceeding the CIF value of such shipment; and (iii) not be created more than 30
days after the date of shipment of goods to which such Acceptance relates.
Acceptances relating to the storage of goods shall be subject to the further
conditions that: (i) at the time such Acceptance is created, the goods being
stored are covered by a warehouse receipt issued by a bonded warehouse
independent of the Borrower and acceptable to the Bank; (ii) the goods covered
by the warehouse receipt are readily marketable staples (as such term is defined
in Section 13 of the Federal Reserve Act by the Board of Governors of the
Federal Reserve System or by Federal Reserve Bulletins) held pending a
reasonably immediate sale, distribution or shipment; and (iii) the face amount
of the Acceptance relating to such goods does not exceed the fair market value
of the goods.
(c) Acceptance Liability: Each Borrower is obligated, and hereby
jointly and severally promises and agrees to pay the Bank, on the maturity date
of each Acceptance or on such earlier date as may be required pursuant hereto,
the face amount of each such Acceptance.
(d) Acceptance Commissions: Each Borrower agrees, jointly and
severally, upon acceptance by the Bank of each Draft and as a condition
precedent to such Acceptance, to pay to the Bank a fee (the "Commission") in an
amount equal to 1.5% per annum of the face amount of each Acceptance calculated
on the basis of 360 days per year for the actual number of days (including the
first day but
6
excluding the last day) during the period which is for the term of the Draft.
(e) Discount of Acceptances: The Bank agrees to discount any
Acceptance that is created and presented to the Bank for discount at a rate
quoted by the Bank at the time the Acceptance is presented to the Bank for
discount and for a similar dollar amount and a similar maturity as the Draft
being presented to the Bank by the Borrower for acceptance (the "Acceptance
Discount Rate"). On the date any such Acceptance is presented for discount, the
Bank shall: (i) cause the aggregate discounted amount (less any Commission then
payable by the Borrowers to the Bank hereunder) to be made available to the
Borrowers by crediting such amount to any Borrower's demand deposit account
maintained with the Bank, unless the Acceptance is created by a beneficiary
under a Letter of Credit, in which event the Bank will cause the amount to be
paid to such beneficiary and will notify the Borrowers as to the creation of the
Acceptance; and (ii) advise the Borrowers of the Acceptance Discount Rate at
which the Bank discounted such Acceptance. The Bank shall have the right, in
its sole discretion, to sell, rediscount, hold or otherwise deal with or dispose
of any such Acceptance discounted by it.
(f) Acceptance Collateral: Each Draft accepted by the Bank in
accordance with the above shall be secured by a security interest in the goods
(as defined in the California Uniform Commercial Code) involved in the
transaction out of which the Acceptance arose to the extent that such a security
interest is either required by the Bank or in order that the relevant Acceptance
conform to the requirements of Section 13 of the Federal Reserve Act.
(g) Reserves: Each Borrower shall, jointly and severally, upon the
Bank's request promptly pay to and reimburse the Bank for all costs incurred and
payments made by the Bank by reason of any future assessment, reserve, deposit
or similar requirement or any surcharge, tax or fee imposed upon the Bank or as
a result of the Bank's compliance with any future directive or requirement of
any regulatory authority pertaining or relating to any Acceptance.
2.04 Foreign Exchange Faculty: The Borrowers may from time to time
request Bank to purchase or sell foreign currency in a specified amount, at a
fixed price, and for delivery at a future date no greater than 365 days from the
date of purchase (each a "Foreign Exchange Contract"). At no time, however,
shall 10% of the aggregate of the settlement price of all Foreign Exchange
Contracts outstanding exceed $750,000 as determined by Bank at the time of
entering into each Foreign Exchange Contract, and provided further, that all
outstanding Advances, Letters of Credit and Acceptances and 10% of the aggregate
of the settlement price of the Foreign Exchange Contracts outstanding may not
exceed the Line of Credit.
(a) Requests for Foreign Exchange Contracts: Each request for a
Foreign Exchange Contract shall be made by telephone or rapifax, confirmed in
writing (each a "Request"). Each Request shall be delivered or communicated to
the Bank no later than 3:00 p.m. (California time) on the day (which shall be a
business day) on which the Foreign Exchange Contract is requested. By making
any such Request, each Borrower agrees that all matters relating to each such
Foreign Exchange Contract shall be governed hereby and each Borrower restates
all warranties and representations made by Borrower herein as if made on the
date the Foreign Exchange Contract is entered into.
(b) Expiration Date: The commitment by the Bank to enter into Foreign
Exchange Contracts shall, unless earlier terminated in accordance with this
Agreement, automatically terminate on the Expiration Date and no Foreign
Exchange Contract shall expire on a date which is after the Expiration Date.
(c) Availability: Bank may refuse to enter into a Foreign Exchange
Contract with the Borrower where the Bank, in its sole discretion, determines
that such foreign currency is unavailable, or
7
where Bank would be prohibited by any applicable law, regulation or order from
purchasing such foreign currency.
(d) Purpose: The Foreign Exchange Contract shall be used to hedge
foreign exchange exposure and/or risk.
(e) Payment: Payment is due on the settlement date of any Foreign
Exchange Contract (the "Payment Date"). Bank is hereby authorized by each
Borrower to charge the full settlement price of any Foreign Exchange Contract
against the depository account or accounts maintained by each Borrower with Bank
on the Payment Date.
(f) Reserves: The Borrowers shall, jointly and severally, upon the
Bank's request, promptly pay to and reimburse the Bank for all costs incurred
and payments made by the Bank by reason of any future assessment, reserve,
deposit, capital maintenance or similar requirement or any surcharge, tax or fee
imposed upon the Bank or as a result of the Bank's compliance with any future
directive or requirement of any regulatory authority pertaining or relating to
any Foreign Exchange Contract.
2.05 Equipment Purchase Facility: The Bank hereby agrees to make
loans and Advances to assist each Borrower in purchasing items of Equipment,
upon a written request therefor made by any Borrower to the Bank prior to
November 30, 1997 (the "Equipment Purchase Facility"). Each Advance made
hereunder shall be in an amount not to exceed 80% of the Value of the item(s) of
Equipment being purchased; provided, however, that at no time shall the total
aggregate outstanding principal amount of Advances made hereunder exceed the sum
of $1,000,000; and provided further that the amount of any Advance made
hereunder which is repaid in whole or in part, may not be reborrowed.
(a) Equipment Account: The Bank shall maintain on its books a record
of account in which the Bank shall make entries for each Advance and such other
debits and credits as shall be appropriate in connection with the Equipment
Purchase Facility (the "Equipment Account"). The Bank shall provide the
Borrowers with a monthly statement of the Borrowers' Equipment Account, which
statement shall be considered to be correct and conclusively binding on the
Borrower unless any Borrower notifies the Bank to the contrary within 18 months
after such Borrower's receipt of any such statement which it deems to be
incorrect.
(b) Interest on Advances: Interest shall accrue from the date of each
Advance under the Equipment Purchase Facility at one of the following rates, as
quoted by the Bank and as elected by any Borrower below:
1. Variable Rate Advances: A variable rate per annum equivalent to
----------------------
the Variable Rate plus .25% ("Equipment Variable Rate"). Interest shall be
adjusted concurrently with any change in the Reference Rate. An Advance based
upon the Variable Rate plus .25% is hereinafter referred to as an Equipment
Variable Rate Advance".
2. Fixed Rate Advances: A fixed rate quoted by the Bank for at least
-------------------
30 days or for such other period of time that the Bank may quote and offer
(provided that any such period of time does not extend beyond November 30, 1997)
[the "Interest Period"] for Advances in the minimum amount of $100,000. Such
interest rate shall be a percentage approximately equivalent to 2.5% per annum
in excess of the rate which the Bank determines in its sole and absolute
discretion to be equal to the Bank's cost of acquiring funds (adjusted for any
and all assessments, surcharges and reserve requirements pertaining to the
borrowing or purchase by the Bank of such funds) in an amount approximately
equal to the amount of the
8
relevant Advance and for a period of time approximately equal to the relevant
Interest Period (the "Fixed Rate"). Advances based upon the Fixed Rate are
hereinafter referred to as "Fixed Rate Advances".
Interest on any Advance shall be computed on the basis of 360 days per
year, but charged on the actual number of days elapsed.
Interest on Equipment Variable Rate Advances and Fixed Rate Advances
shall be paid in monthly installments commencing on the first day of the month
following the date of the first such Advance and continuing on the first day of
each month thereafter.
(c) Notice of Borrowing: Upon telephonic notice which shall be
received by the Bank at or before 2:00 p.m. (California time) on a business day,
each Borrower may borrow under the Equipment Purchase Facility by requesting an
Equipment Variable Rate Advance or a Fixed Rate Advance. An Equipment Variable
Rate Advance or a Fixed Rate Advance may be made on the day notice is received
by the Bank; provided, however, that if the Bank shall not have received notice
at or before 2:00 p.m. on the day such Advance is requested to be made, such
Equipment Variable Rate Advance or Fixed Rate Advance may, at the Bank's option,
be made on the next Business Day.
(d) Notice of Election to Adjust Interest Rate: The Borrowers may
elect:
1. That interest on a Equipment Variable Rate Advance shall be
adjusted to accrue at the Fixed Rate, provided, however, that such notice shall
be received by the Bank no later than 2:00 p.m. on the Business Day on which
such Borrower requests that interest be adjusted to accrue at the Fixed Rate.
2. That interest on a Fixed Rate Advance shall continue to accrue at
a newly quoted Fixed Rate or shall be adjusted to commence to accrue at the
Equipment Variable Rate; provided, however, that such notice shall be received
by the Bank no later than 2:00 p.m. on the last day of the Interest Period
pertaining to such Fixed Rate Advance. If the Bank shall not have received
notice (as prescribed herein) of any Borrower's election that interest on any
Fixed Rate Advance shall continue to accrue at the newly quoted Fixed Rate such
Borrower shall be deemed to have elected that interest thereon shall be adjusted
to accrue at the Equipment Variable Rate upon the expiration of the Interest
Period pertaining to such Advance.
(e) Prepayment: The Borrowers may prepay any Advance under the
Equipment Purchase Facility in whole or in part, at any time and without
penalty, provided, however, that: (i) any partial prepayment shall first be
applied, at the Bank's option, to accrued and unpaid interest and next to the
outstanding principal balance under the Equipment Purchase facility, and (ii)
during any period of time in which interest is accruing on any Advance on the
basis of the Fixed Rate, no prepayment shall be made except on a day which is
the last day of the Interest Period pertaining thereto. If the whole or any
part of any Fixed Rate Advance is prepaid by reason of acceleration or
otherwise, each Borrower shall, jointly and severally, upon the Bank's request,
promptly pay to and indemnify the Bank for all costs, expenses and any loss
(including loss of future interest income) actually incurred by the Bank and any
loss (including loss of profit resulting from the re-employment of funds) deemed
sustained by the Bank as a consequence of such prepayment.
The Bank shall be entitled to fund all or any portion of its Advances
in any manner it may determine in its sole discretion, but all calculations and
transactions hereunder shall be conducted as though the Bank actually funded all
Advances through the purchase of dollar deposits earning interest at a rate
equal to the
9
interest rate payable on U.S. Treasury securities in the amount of the relevant
Advance and in maturities corresponding to the date of such purchase to November
30, 1997.
(f) Indemnification for Fixed Rate Costs: During any period of time
in which interest on any Advance is accruing on the basis of the Fixed Rate each
Borrower shall, jointly and severally, upon the Bank's request, promptly pay to
and reimburse the Bank for all costs incurred and payments made by the Bank by
reason of any future assessment, reserve, deposit or similar requirement or any
surcharge, tax or fee imposed upon the Bank or as a result of the Bank's
compliance with any future directive or requirement of any regulatory authority
pertaining or relating to funds used by the Bank in quoting and determining the
Fixed Rate.
(g) Conversion from Fixed Rate to Equipment Variable Rate: In the
event that the Bank shall at any time determine that the accrual of interest on
the basis of the Fixed Rate (i) is infeasible because the Bank is unable to
determine the Fixed Rate due to the unavailability of U.S. dollar deposits,
contracts or certificates of deposit in an amount approximately equal to the
amount of the relevant Advance and for a period of time approximately equal to
the relevant Interest Period or (ii) is or has become unlawful or infeasible by
reason of the Bank's compliance with any new law, rule, regulation, guideline or
order, or any new interpretation of any present law, rule, regulation, guideline
or order, then the Bank shall give telephonic notice thereof (confirmed in
writing) to the Borrowers, in which event any Advance bearing interest at the
Fixed Rate, shall thereafter be deemed to be a Equipment Variable Rate Advance
and interest shall thereupon immediately accrue at the Equipment Variable Rate.
(h) Maturity: On November 30, 1997, each Borrower hereby jointly and
severally promises and agrees to pay to the Bank in full the aggregate unpaid
principal amount of all Advances then outstanding under the Equipment Purchase
Facility, together with all accrued and unpaid interest thereon.
(i) Conversion to Term Loan: It is hereby agreed that the Borrowers
may at least 15 days prior to November 30, 1997, convert the principal balance
of all Advances outstanding hereunder as of November 30, 1997 to be payable on a
term loan basis. The term loan shall be in the amount of such outstanding
principal balance and shall be evidenced by a promissory note in form and
substance of the promissory note attached hereto as Exhibit "1" (the "Term
Note"). Accrued and unpaid interest hereunder shall be paid to the Bank
concurrently with the Borrowees execution of the Term Note. Interest shall
accrue and principal and interest shall be paid in accordance with the terms and
provisions of the Term Note, provided however that principal shall be payable
over a period of up to 60 months if the term loan conversion is elected.
2.06 Term Loan: The Bank agrees to lend to the Borrowers, upon the
Borrowers' request made prior to January __, 1997, up to the maximum amount of
$2,500,000 (the "Term Loan").
(a) Purpose: Proceeds from the Term Loan shall be used to refinance
existing Indebtedness.
(b) Term Loan Account: The Bank shall maintain on its books a record
of account in which the Bank shall make entries setting forth all payments made,
the application of such payments to interest and principal, accrued and unpaid
interest (if any) and the outstanding principal balance under the Term Loan (the
"Term Loan Account"). The Bank shall provide the Borrowers with a monthly
statement of the Borrowers' Term Loan Account, which statement shall be
considered to be correct and conclusively binding on the Borrower unless any
Borrower notifies the Bank to the contrary within 18 months after such Borrowees
receipt of any such statement which it deems to be incorrect.
10
(c) Interest: Interest shall accrue on the Term Loan at one of the
following rates, as quoted by the Bank and as elected by any Borrower below.
1. Variable Rate Balances: The outstanding principal balance or a
portion thereof of the Term Loan ("Term Balance") shall bear interest at a rate
per annum equal to the Equipment Variable Rate. A Term Balance bearing interest
at the Equipment Variable Rate is hereinafter referred to as a Variable Rate
Balance.
2. Fixed Rate Balances: At the Fixed Rate for such period of time
that the Bank may quote and offer, provided that any such period of time shall
be for the Interest Period as defined hereinabove and provided further that any
such period of time does not extend beyond the maturity date of the Term Loan.
The Term Balance bearing interest at the Fixed Rate is hereinafter referred to
as "Fixed Rate Balances".
Each Borrower hereby jointly and severally promises and agrees to pay
interest on any Fixed Rate Balances and any Variable Rate Balance in arrears on
the first calendar day of each month. Interest shall be calculated on the basis
of a year of 360 days for actual days elapsed.
(d) Notice of Election to Adjust Interest Rate: Upon telephonic
notice which shall be received by the Bank at or before 2:00 p.m. (California
time) on a Business Day, the Borrowers may elect:
(1) That interest on a Variable Rate Balance shall be adjusted to
accrued at the Fixed Rate; provided, however, that such notice shall be received
by the Bank no later than two Business Days prior to the day (which shall be a
Business Day) on which any Borrower requests that interest be adjusted to accrue
at the Fixed Rate.
(2) That interest on a Fixed Rate Balance shall continue to accrue at
a newly quoted Fixed Rate or shall be adjusted to commence to accrue at the
Equipment Variable Rate; provided, however that such notice shall be received by
the Bank no later than two Business Days prior to the last day of the Interest
Period pertaining to such Fixed Rate Balance. If the Bank shall not have
received notice as prescribed herein of such Borrower's election that interest
on any Fixed Rate Balance shall continue to accrue at the Fixed Rate, such
Borrower shall be deemed to have elected that interest thereon shall be adjusted
to accrue at the Equipment Variable Rate upon the expiration of the Interest
Period pertaining to such Term Balance.
(e) Prohibition Against Prepayment of Fixed Rate Balances: The
Borrowers may prepay the Term Loan in whole or in part, at any time and without
penalty, provided, however, that: (i) any partial prepayment shall first be
applied, at the Bank's option, to accrued and unpaid interest and next to the
outstanding principal balance under the Term Loan; and (ii) during any period of
time in which interest is accruing on any Term Balance on the basis of the Fixed
Rate, no prepayment shall be made except on a day which is the last day of the
Interest Period pertaining thereto. If the whole or any part of any Fixed Rate
Balance is prepaid by reason of acceleration or otherwise, each Borrower shall,
jointly and severally, upon the Bank's request, promptly pay to and indemnify
the Bank for all costs, expenses and any loss (including loss of future interest
income) actually incurred by the Bank and any loss (including loss of profit
resulting from the re-employment of funds) deemed sustained by the Bank as a
consequence of such prepayment.
The Bank shall be entitled to fund all or any portion of its Term Loan
in any manner it may determine in its sole discretion, but all calculations and
transactions hereunder shall be conducted as though the Bank actually funded the
Term Loan through the purchase of dollar deposits earning interest at a rate
equal to the
11
interest rate payable on U.S. Treasury securities in the amount of the relevant
Term Loan Balance and in maturities corresponding to the date of such purchase
to the maturity date of the Term Loan.
(f) Indemnification for Fixed Rate Costs: During any period of time
in which interest on any Term Balance is accruing on the basis of the Fixed
Rate, each Borrower shall, jointly and severally, upon the Bank's request,
promptly pay to and reimburse the Bank for all costs incurred and payments made
by the Bank by reason of any future assessment, reserve, deposit or similar
requirements or any surcharge, tax or fee imposed upon the Bank or as a result
of the Bank's compliance with any future directive or requirement of any
regulatory authority pertaining or relating to funds used by the Bank in quoting
and determining the Fixed Rate.
(g) Conversion from Fixed Rate to Equipment Variable Rate: In the
event that the Bank shall at any time determine that the accrual of interest on
the basis of the Fixed Rate (i) is infeasible because the Bank is unable to
determine the Fixed Rate due to the unavailability of U.S. dollar deposits,
contracts or certificates of deposit in an amount approximately equal to the
amount of the relevant Term Balance and for a period of time approximately equal
to the relevant Interest Period; or (ii) is or has become unlawful or infeasible
by reason of the Banks compliance with any new law, rule, regulation, guideline
or order, or any new interpretation of any present law, rule, regulation,
guideline or order, then the Bank shall give telephonic notice thereof
(confirmed in writing) to the Borrowers, in which event any Fixed Rate Balance
shall thereafter be deemed to be a Variable Rate Balance and interest shall
thereupon immediately accrue at the Equipment Variable Rate.
(h) Principal: Each Borrower hereby jointly and severally promises
and agrees to pay principal in 47 equal installments of $52,083 per installment
commencing on April 1, 1997, and continuing on the ___________________ day of
each month thereafter up to and including ________________________, 2001. On
_____________________, 2001, each Borrower hereby jointly and severally promises
and agrees to pay to the Bank the entire unpaid principal balance, together with
accrued and unpaid interest.
2.07 Stock Purchase Facility: The Bank hereby agrees to make loans
and Advances to assist the Borrowers in the repurchase of the stock of Opto
Sensors, Inc., upon a written request therefor made by the Borrowers to the Bank
prior to June 30, 1997 (the "Stock Purchase Facility"). At no time shall the
total aggregate outstanding principal amount of Advances made hereunder exceed
the sum of $1,500,000; and provided further that the amount of any Advance made
hereunder which is repaid, in whole or in part, may not be reborrowed.
(a) Stock Account: The Bank shall maintain on its books a record of
account in which the Bank shall make entries for each Advance and such other
debits and credits as shall be appropriate in connection with the Stock Purchase
Facility (the "Stock Account"). The Bank shall provide the Borrowers with a
monthly statement of the Borrower's Stock Account, which statement shall be
considered to be correct and conclusively binding on the Borrower unless the
Borrower notifies the Bank to the contrary within 18 months after any Borrower's
receipt of any such statement which it deems to be incorrect.
(b) Interest on Advances: Interest shall accrue from the date of each
Advance under the Equipment Purchase Facility at one of the following rates, as
quoted by the Bank and as elected by the Borrower below:
1. Stock Variable Rate Advances: A variable rate per annum
----------------------------
equivalent to the Variable Rate plus .75% ("Stock Variable Rate"). Interest
shall be adjusted concurrently with any change in the Reference Rate. An
Advance based upon the Stock Variable Rate is hereinafter referred to as an
"Stock
12
Variable Rate Advance".
2. Stock Fixed Rate Advances: A fixed rate quoted by the Bank for at
-------------------------
least 30 days or for such other period of time that the Bank may quote and offer
(provided that any such period of time does not extend beyond June 30, 1997)
[the "Stock Interest Period"] for Advances in the minimum amount of $100,000.
Such interest rate shall be a percentage approximately equivalent to 3% per
annum in excess of the rate which the Bank determines in its sole and absolute
discretion to be equal to the Bank's cost of acquiring funds (adjusted for any
and all assessments, surcharges and reserve requirements pertaining to the
borrowing or purchase by the Bank of such funds) in an amount approximately
equal to the amount of the relevant Advance and for a period of time
approximately equal to the relevant Stock Interest Period (the "Stock Fixed
Rate"). Advances based upon the Stock Fixed Rate are hereinafter referred to as
"Stock Fixed Rate Advances.
Interest on any Advance shall be computed on the basis of 360 days per
year, but charged on the actual number of days elapsed.
Interest on Stock Variable Rate Advances and Stock Fixed Rate Advances
shall be paid in monthly installments commencing on the first day of the month
following the date of the first such Advance and continuing on the first day of
each month thereafter.
(c) Notice of Borrowing: Upon telephonic notice which shall be
received by the Bank at or before 2:00 p.m. (California time) on a business day,
each Borrower may borrow under the Stock Purchase Facility by requesting a Stock
Variable Rate Advance or a Stock Fixed Rate Advance. An Stock Variable Rate
Advance or a Stock Fixed Rate Advance may be made on the day notice is received
by the Bank; provided, however, that if the Bank shall not have received notice
at or before 2:00 p.m. on the day such Advance is requested to be made, such
Stock Variable Rate Advance or Stock Fixed Rate Advance may, at the Bank's
option, be made on the next Business Day.
(d) Notice of Election to Adjust Interest Rate: The Borrowers may
elect:
1. That interest on a Stock Variable Rate Advance shall be adjusted
to accrue at the Stock Fixed Rate, provided, however, that such notice shall be
received by the Bank no later than 2:00 p.m. on the Business Day on which such
Borrower requests that interest be adjusted to accrue at the Stock Fixed Rate.
2. That interest on a Stock Fixed Rate Advance shall continue to
accrue at a newly quoted Stock Fixed Rate or shall be adjusted to commence to
accrue at the Stock Variable Rate; provided, however, that such notice shall be
received by the Bank no later than 2:00 p.m. on the last day of the Stock
Interest Period pertaining to such Stock Fixed Rate Advance. If the Bank shall
not have received notice (as prescribed herein) of any Borrower's election that
interest on any Stock Fixed Rate Advance shall continue to accrue at the newly
quoted Stock Fixed Rate such Borrower shall be deemed to have elected that
interest thereon shall be adjusted to accrue at the Stock Variable Rate upon the
expiration of the Stock Interest Period pertaining to such Advance.
(e) Prepayment: The Borrowers may prepay any Advance under the Stock
Purchase Facility in whole or in part, at any time and without penalty,
provided, however, that: (i) any partial prepayment shall first be applied, at
the Bank's option, to accrued and unpaid interest and next to the outstanding
principal balance under the Stock Purchase Facility, and (ii) during any period
of time in which interest is accruing on any Advance on the basis of the Stock
Fixed Rate, no prepayment shall be made except
13
on a day which is the last day of the Stock Interest Period pertaining thereto.
If the whole or any part of any Stock Fixed Rate Advance is prepaid by reason of
acceleration or otherwise, the Borrower shall, upon the Bank's request, promptly
pay to and indemnify the Bank for all costs, expenses and any loss (including
loss of future interest income) actually incurred by the Bank and any loss
(including loss of profit resulting from the re-employment of funds) deemed
sustained by the Bank as a consequence of such prepayment.
The Bank shall be entitled to fund all or any portion of its Advances
in any manner it may determine in its sole discretion, but all calculations and
transactions hereunder shall be conducted as though the Bank actually funded all
Advances through the purchase of dollar deposits earning interest at a rate
equal to the interest rate payable on U.S. Treasury securities in the amount of
the relevant Advance and in maturities corresponding to the date of such
purchase to June 30, 1997.
(f) Indemnification for Stock Fixed Rate Costs: During any period of
time in which interest on any Advance is accruing on the basis of the Stock
Fixed Rate each Borrower shall, jointly and severally, upon the Bank's request,
promptly pay to and reimburse the Bank for all costs incurred and payments made
by the Bank by reason of any future assessment, reserve, deposit or similar
requirement or any surcharge, tax or fee imposed upon the Bank or as a result of
the Bank's compliance with any future directive or requirement of any regulatory
authority pertaining or relating to funds used by the Bank in quoting and
determining the Stock Fixed Rate.
(g) Conversion from Stock Fixed Rate to Stock Variable Rate: In the
event that the Bank shall at any time determine that the accrual of interest on
the basis of the Stock Fixed Rate (i) is infeasible because the Bank is unable
to determine the Stock Fixed Rate due to the unavailability of U.S. dollar
deposits, contracts or certificates of deposit in an amount approximately equal
to the amount of the relevant Advance and for a period of time approximately
equal to the relevant Stock Interest Period or (ii) is or has become unlawful or
infeasible by reason of the Bank's compliance with any new law, rule,
regulation, guideline or order, or any new interpretation of any present law,
rule, regulation, guideline or order, then the Bank shall give telephonic notice
thereof (confirmed in writing) to the Borrowers, in which event any Advance
bearing interest at the Stock Fixed Rate, shall thereafter be deemed to be a
Stock Variable Rate Advance and interest shall thereupon immediately accrue at
the Stock Variable Rate.
(h) Maturity: On June 30, 1997, each Borrower hereby jointly and
severally promises and agrees to pay to the Bank in full the aggregate unpaid
principal amount of all Advances then outstanding, together with all accrued and
unpaid interest thereon.
(i) Conversion to Term Loan: It is hereby agreed that the Borrowers
may at least 2 days prior to June 30, 1997, convert the principal balance of all
Advances outstanding hereunder as of June 30, 1997 to be payable on a term loan
basis. The term loan shall be in the amount of such outstanding principal
balance and shall be evidenced by a promissory note in the form of the Term
Note. Accrued and unpaid interest hereunder shall be paid to the Bank
concurrently with the Borrowers' execution of the Term Note. Interest shall
accrue and principal and interest shall be paid in accordance with the terms and
provisions of the Term Note, provided however that principal shall be payable
over a period of up to 36 months if the term loan conversion is elected.
2.08 Late Payment: If any payment of principal (other than a
principal payment due on the Expiration Date) or interest, or any portion
thereof, under this Agreement is not paid within ten (10) calendar days after it
is due, a late payment charge equal to five percent (5%) of such past due
payment may be assessed and shall be immediately payable.
14
2.09 Joint Liability: Notwithstanding that Advances may be made to a
particular Borrower, each Borrower is jointly and severally liable for the
repayment to Bank of any and all monies, together with interest thereon,
disbursed under this Agreement. By each Borrower's respective execution of this
Agreement, each such Borrower, jointly and severally. unconditionally and
irrevocably promises to pay and guarantees the obligation for repayment of all
indebtedness incurred hereunder.
SECTION 3.
COLLATERAL
3.01 The Collateral: To secure payment and performance of all each
Borrower's Obligations under this Agreement and all other liabilities, loans,
guarantees, covenants and duties owed by the Borrower to the Bank, whether or
not evidenced by this or by any other agreement, absolute or contingent, due or
to become due, now existing or hereafter and howsoever created, each Borrower
hereby grants the Bank a security interest in and to all of the following
property (the "Collateral"):
(a) All goods now owned or hereafter acquired by each Borrower or in
which any Borrower now has or may hereafter acquire any ownership interest,
including, but not limited to, all machinery, equipment, furniture, furnishings,
fixtures, tools, supplies and motor vehicles of every kind and description, and
all additions, accessions, improvements, replacements and substitutions thereto
and thereof.
(b) All inventory now owned or hereafter acquired by either Borrower,
including, but not limited to, all raw materials, work in process, finished
goods, merchandise, parts and supplies of every kind and description, including
inventory temporarily out of either Borrower's custody or possession, together
with all returns on accounts.
(c) All accounts, contract rights and general intangibles now owned or
hereafter created or acquired by either Borrower, including, but not limited to,
all receivables, goodwill, trademarks, trade styles, trade names, patents,
patent applications, software, customer lists and business records.
(d) All documents, instruments and chattel paper now owned or
hereafter acquired by either Borrower.
(e) All monies, deposit accounts, certificates of deposit and
securities of each Borrower now or hereafter in the Bank's or its agents'
possession, excluding the securities and stock of any Borrower's foreign
affiliates or subsidiaries.
The Bank's security interest in the Collateral shall be a continuing
lien and shall include the proceeds and products of the Collateral including,
but not limited to, the proceeds of any insurance thereon.
SECTION 4.
CONDITIONS OF LENDING
4.01 Conditions Precedent to the Initial Advance: The obligation of
the Bank to make the initial Advance and the flat extension of credit to or on
account of any Borrower hereunder is subject to the conditions precedent that
the Bank shall have received before the date of such initial Advance and such
first
15
extension of credit all of the following, in form and substance satisfactory to
the Bank:
(a) Evidence that the execution, delivery and performance by each
Borrower of this Agreement and any document, instrument or agreement required
hereunder have been duty authorized.
(b) Continuing guaranty in favor of the Bank executed by Xxxxxx Xxxxxx
for $1,500,000 for the Stock Purchase Facility.
(c) Executed UCC-1 financing statement(s) describing the Collateral,
together with evidence of the recordation of such statement(s).
(d) A loan fee of $10,000.
(e) The executed intercreditor agreement by and between Bank and Xxxxx
Fargo HSBC Trade Bank, National Association.
(f) Such other evidence as the Bank may request to establish the
consummation of the transaction contemplated hereunder and compliance with the
conditions of this Agreement.
4.02 Conditions Precedent to All Advances: The obligation of the
Bank to make each Advance and each other extension of credit to or on account of
either Borrower (including the initial Advance and the flat extension of credit)
shall be subject to the further conditions precedent that, on the date of each
Advance or each extension of credit and after the making of such Advance or
extension of credit:
(a) The Bank shall have received such supplemental approvals, opinions
or documents as the Bank may reasonably request
(b) The representations contained in Section 5 and in any other
document, instrument or certificate delivered to the Bank hereunder are correct.
(c) No event has occurred and is continuing which constitutes, or,
with the lapse of time or giving of notice or both, would constitute an Event of
Default.
(d) The security interest in the Collateral has been duly authorized,
created and perfected and is in full force and effect.
Each Borrower's acceptance of the proceeds of any Advance or the
Borrower's execution of any document or instrument evidencing or creating any
Obligation hereunder shall be deemed to constitute such Borrower's
representation and warranty that all of the above statements are true and
correct.
SECTION 5.
REPRESENTATIONS AND WARRANTIES
Each Borrower hereby makes the following representations and warranties to the
Bank, which representations and warranties are continuing:
5.01 Status: Each Borrower is a corporation, duly organized and
validly existing under the laws
16
of the State of California and is properly licensed and is qualified to do
business and in good standing in, and, where necessary to maintain each
Borrower's rights and privileges, has complied with the fictitious name statute
of every jurisdiction in which the Borrower is doing business.
5.02 Authority: The execution, delivery and performance by each
Borrower of this Agreement and any instrument, document or agreement required
hereunder have been duly authorized and do not and will not: (i) violate any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having application to either
Borrower; (ii) result in a breach of or constitute a default under any material
indenture or loan or credit agreement or other material agreement, lease or
instrument to which either Borrower is a party or by which it or its properties
may be bound or affected; or (iii) require any consent or approval of its
stockholders or violate any provision of its articles of incorporation or by-
laws.
5.03 Legal Effect: This Agreement constitutes, and any instrument,
document or agreement required hereunder when delivered hereunder will
constitute, legal, valid and binding obligations of each Borrower enforceable
against such Borrower in accordance. with their respective terms.
5.04 Fictitious Trade Styles: There are no fictitious trade styles
used by any Borrower in connection with its business operations. Each Borrower
shall notify the Bank not less than 30 days prior to effecting any change in the
matters described herein or prior to using any other fictitious trade style at
any future date, indicating the trade style and state(s) of its use.
5.05 Financial Statements: All financial statements, information and
other data which may have been or which may hereafter be submitted by the
Borrowers to the Bank are true, accurate and correct and have been or will be
prepared in accordance with generally accepted accounting principles
consistently applied and accurately represent the financial condition or, as
applicable, the other information disclosed therein. Since the most recent
submission of such financial information or data to the Bank each Borrower
represents and warrants that no material adverse change in such Borrower's
financial condition or operations has occurred which has not been fully
disclosed to the Bank in writing.
5.06 Litigation: Except as have been disclosed to the Bank in
writing, there are no actions, suits or proceedings pending or, to the,
knowledge of each Borrower, threatened against or affecting any Borrower or any
Borrower's properties before any court or administrative agency which, if
determined adversely to such Borrower, would have a material adverse effect on
such Borrower's financial condition or operations or on the Collateral.
5.07 Title to Assets: Each Borrower has good and marketable title to
all of its assets (including, but not limited to, the Collateral) and the same
are not subject to any security interest, encumbrance, lien or claim of any
third person except for Permitted Liens.
5.08 ERISA. If any Borrower has a pension, profit sharing or
retirement plan subject to ERISA, such plan has been and will continue to be
funded in accordance with its terms and otherwise complies with and continues to
comply with the requirements of ERISA.
5.09 Taxes: Each Borrower has filed all tax returns required to be
filed and paid all taxes shown thereon to be due, including interest and
penalties, other than such taxes which are currently payable without penalty or
interest or those which are being duly contested in good faith.
5.10 Margin Stock: The proceeds of any Advance will not be used to
purchase or carry margin
17
stock as such term is defined under Regulation U of the Board of Governors of
the Federal Reserve System.
5.11 Environmental Compliance: Each Borrower has implemented and
complied in all material respects with all applicable federal, state and local
laws, ordinances, statutes and regulations with respect to hazardous or toxic
wastes, substances or related materials, industrial hygiene or environmental
conditions. There are no suits, proceedings, claims or disputes pending or, to
the knowledge of any Borrower, threatened against or affecting any Borrower or
its property claiming violations of any federal, state or local law, ordinance,
statute or regulation relating to hazardous or toxic wastes, substances or
related materials.
SECTION 6.
COVENANTS
Each Borrower covenants and agrees that, during the term of this Agreement, and
so long thereafter as either Borrower is indebted to the Bank under this
Agreement, the Borrower will, unless the Bank shall otherwise consent in
writing:
6.01 Preservation of Existence; Compliance with Applicable Laws:
Maintain and preserve its existence and all rights and privileges now enjoyed;
not liquidate or dissolve, merge or consolidate with or into, or acquire any
other business organization; and conduct its business and operations in
accordance with all applicable laws, rules and regulations.
6.02 Maintenance of Insurance: Maintain insurance in such amounts
and covering such risks as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which each
Borrower operates and maintain such other insurance and coverages as may be
required by the Bank. All such insurance shall be in form and amount and with
companies satisfactory to the Bank. With respect to insurance covering
properties in which the Bank maintains a security interest or lien, such
insurance shall name the Bank as loss payee pursuant to a loss payable
endorsement satisfactory to the Bank and shall not be altered or canceled except
upon 10 days' prior written notice to the Bank. Upon the Bank's request, each
Borrower shall furnish the Bank with the original policy or binder of all such
insurance.
6.03 Maintenance of Collateral and Other Properties: Except for
Permitted Liens, keep and maintain the Collateral free and clear of all levies,
liens, encumbrances and security interests (including, but, not limited to, any
lien of attachment, judgment or execution) and defend the Collateral against any
such xxxx, xxxx encumbrance or security interest; comply with all laws, statutes
and regulations pertaining to the Collateral and its use and operation; execute,
file and record such statements, notices and agreements, take such actions and
obtain such certificates and other documents as necessary to perfect, evidence
and continue the Bank's security interest in the Collateral and the priority
thereof, maintain accurate and complete records of the Collateral which show all
sales, claims and allowances; and properly care for, house, store and maintain
the Collateral in good condition, free of misuse, abuse and deterioration, other
than normal wear and tear. Each Borrower shall also maintain and preserve all
its properties in good working order and condition in accordance with the
general practice of other businesses of similar character and size, ordinary
wear and tear excepted.
6.04 Payment of Obligations and Taxes: Make timely payment of all
assessments and taxes and all of its liabilities and obligations including, but
not limited to, trade payables, unless the same are being contested in good
faith by appropriate proceedings with the appropriate court or regulatory
agency. For purposes hereof, any Borrower's issuance of a check, draft or
similar instrument without delivery to the intended payee shall not constitute
payment.
18
6.05 Inspection Rights: At any reasonable time and from time to
time, permit the Bank or any representative thereof to examine and make copies
of the records and visit the properties of any Borrower and discuss the business
and operations of such Borrower with any employee or representative thereof. If
any Borrower shall maintain any records (including, but not limited to, computer
generated records or computer programs for the generation of such records) in
the possession of a third party, each Borrower hereby agrees to notify such
third party to permit the Bank free access to such records at all reasonable
times and to provide the Bank with copies of any records which it may request,
all at the Borrowers' expense, the amount of which shall be payable immediately
upon demand. In addition, the Bank may, at any reasonable time and from time to
time, conduct inspections and audits of the Collateral and each Borrower's
accounts payable, the cost and expenses of which shall be paid by the Borrowers
to the Bank upon demand.
6.06 Reporting and Certification Requirements: Deliver or cause to
be delivered to the Bank in form and detail satisfactory to the Bank:
(a) Not later than 120 days after the end of each Borrower's fiscal
year, a copy of the annual audited consolidated financial report of the
Borrowers for such year, prepared by a firm of certified public accountants
acceptable to Bank.
(b) Not later than 30 days after the end of the first three fiscal
quarters of each year, the Borrowers' consolidated and consolidating financial
statement for such quarter.
(c) Upon the Bank's request, such other information pertaining to the
Borrower, the Collateral or any guarantor hereunder as the Bank may reasonably
request.
6.07 Redemption or Repurchase of Stock: Not redeem or repurchase
any class of each Borrower's stock now or hereafter outstanding other than stock
repurchased under the Stock Purchase Facility.
6.08 Additional Indebtedness: Except as otherwise provided herein,
not, after the date hereof, create, incur or assume, directly or indirectly, any
additional Indebtedness other than (i) indebtedness owed or to be owed to the
Bank or (ii) indebtedness to trade creditors incurred in the ordinary course of
any Borrower's business or (iii) indebtedness owed or to be owed to the Xxxxx
Fargo HSBC Trade Bank.
6.09 Loans: Not make any loans or advances or extend credit to any
third person, including, but not limited to, directors, officers, partners, or
employees of any Borrower, except for credit extended in the ordinary course of
each Borrower's business as presently conducted and except credit extended to
any Borrower's affiliated entities and subsidiaries.
6.10 Liens and Encumbrances: Not create, assume or permit to exist
any security interest, encumbrance, mortgage, deed of trust, or other lien
(including, but not limited to, a lien of attachment, judgment or execution)
affecting any of each Borrower's properties, or execute or allow to be filed any
financing statement or continuation thereof affecting any of such properties,
except for Permitted Liens or as otherwise provided in this Agreement.
6.11 Transfer Assets: Not, after the date hereof, sell, contract for
sale, convey, transfer, assign, lease or sublet any of its assets (including,
but not limited to, the Collateral) except in the ordinary course of business as
presently conducted by each Borrower and, then, only for full, fair and
reasonable consideration.
6.12 Change in Nature of Business: Not make any material change in
the nature of its business as existing or conducted as of the date hereof.
19
6.13 Financial Condition: Maintain at all times on a consolidated
basis:
(a) A minimum Effective Tangible Net Worth of at least $10,000,000
through March 31, 1997 and $11,000,000 thereafter.
(b) A ratio of Debt to Effective Tangible Net Worth of not more than
3.25 to 1 through March 31, 1997 and 3.00 to 1 thereafter.
(c) A ratio of current assets to current liabilities of not less than
1.20 to 1.
(d) A ratio of the sum of cash, cash equivalents and accounts
receivable to current liabilities of not less than .50 to 1 at March 31, 1997
and .60 to 1 thereafter.
6.14 Compensation of Employees: Compensate its employees for
services rendered at an hourly rate at least equal to the minimum hourly rate
prescribed by any applicable federal or state law or regulation.
6.15 Rentals: Not incur liability (in addition to that incurred as
of the date of this Agreement) for the payment of, or pay, rentals for the
renting, leasing or use of real or personal property in an amount greater than
$1,100,000 in any one fiscal year.
6.16 Capital Expense: Not make any fixed capital expenditure or any
commitment therefor, including, but not limited to, incurring liability for
leases which would be, in accordance with generally accepted accounting
principles, reported as capital leases, or purchase any real or personal
property in an amount greater than $1,750,000 in any one fiscal year.
6.17 Notice: Give the Bank prompt written notice of any and all (i)
Events of Default; (ii) litigation, arbitration or administrative proceedings to
which either Borrower is a party and in which the claim or liability exceeds
$150,000.00 or which affects the Collateral; and (iii) other matters which have
resulted in, or might result in a material adverse change in the Collateral or
the financial condition or business operations of any Borrower.
6.18 Environmental Compliance. Each Borrower shall:
(a) Implement and comply in all material respects with all applicable
federal, state and local laws, ordinances, statutes and regulations with respect
to hazardous or toxic wastes, substances or related materials, industrial
hygiene or to environmental conditions.
(b) Not own, use, generate, manufacture, store, handle, treat, release
or dispose of any hazardous or toxic wastes, substances or related materials
except in the ordinary course of the Borrower's business.
(c) Give prompt written notice of any discovery of or suit,
proceeding, claim, dispute, threat, inquiry or filing respecting hazardous or
toxic wastes, substances or related materials.
(d) At all times indemnify and hold harmless Bank from and against any
and all liability arising out of the use, generation, manufacture, storage,
handling, treatment, disposal or presence of hazardous or toxic wastes,
substances or related materials.
20
SECTION 7.
EVENTS OF DEFAULT
Any one or more of the following described events shall constitute an event of
default (an 'Event of Default') under this Agreement:
7.01 Non-Payment: Any Borrower shall fail to pay any Obligations
within 2 days of when due.
7.02 Performance Under This Agreement: Any Borrower shall fail in
any material respect to perform or observe any term, covenant or agreement
contained in this Agreement or in any document, instrument or agreement relating
to this Agreement and any such failure shall continue unremedied for more than
30 days after the occurrence thereof.
7.03 Other Agreements: If there is a default under any agreement to
which any Borrower is a party with a third party or parties resulting in a right
by such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in excess of $250,000.
7.04 Representations and Warranties; Financial Statements: Any
representation or warranty made by each Borrower under or in connection with
this Agreement or any financial statement given by such Borrower or any
guarantor shall prove to have been incorrect in any material respect when made
or given or when deemed to have been made or given.
7.05 Insolvency. Any Borrower shall: (i) become insolvent or be
unable to pay its debts as they mature; (ii) make an assignment for the benefit
of creditors or to an agent authorized to liquidate any substantial amount of
its properties and assets; (iii) file a voluntary petition in bankruptcy or
seeking reorganization or to effect a plan or other arrangement with creditors;
(iv) file an answer admitting the material allegations of an involuntary
petition relating to bankruptcy or reorganization or join in any such petition;
(v) become or be adjudicated a bankrupt; (vi) apply for or consent to the
appointment of, or consent that an order be made, appointing any receiver,
custodian or trustee, for itself or any of its properties, assets or businesses;
or (vii) any receiver, custodian or trustee shall have been appointed for all or
substantially all of its properties, assets or businesses and shall not be
discharged within 60 days after the date of such appointment.
7.06 Execution: Any writ of execution or attachment or any judgment
lien shall be issued against any property of any Borrower and shall not be
discharged or bonded against or released within 30 days after the issuance or
attachment of such writ or lien in excess of $100,000.
7.07 Revocation or Limitation of Guaranty. Any guaranty shall be
revoked or limited or its enforceability or validity shall be contested by any
guarantor, by operation of law, legal proceeding or otherwise or any guarantor
who is a natural person shall die.
7.08 Suspension: Any Borrower shall voluntarily suspend the
transaction of business or allow to be suspended terminated, revoked or expired
any permit, license or approval of any governmental body necessary to conduct
such Borrowers business as now conducted.
7.09 Change in Ownership: There shall occur a sale, transfer,
disposition or encumbrance (whether voluntary or involuntary), or an agreement
shall be entered into to do so, with respect to more than 10% of the issued and
outstanding capital stock of any Borrower owned by Xxxxxx Xxxxxx.
21
SECTION 8.
REMEDIES ON DEFAULT
Upon the occurrence of any Event of Default, the Bank may, at its sole and
absolute election, without demand and only upon such notice as may be required
by law:
8.01 Acceleration: Declare any or all of the Borrowers' indebtedness
owing to the Bank, whether under this Agreement or any other document,
instrument or agreement, immediately due and payable, whether or not otherwise
due and payable.
8.02 Cease Extending Credit: Cease making Advances or otherwise
extending credit to or for the account of each Borrower under this Agreement or
under any other agreement now existing or hereafter entered into between any
Borrower and the Banks
8.03 Termination: Terminate this Agreement as to any future
obligation of the Bank without affecting the Borrowers' obligations to the Bank
or the Bank's rights and remedies under this Agreement or under any other
document instrument or agreement.
8.04 Notification of Account Debtors:
(a) Notify any Account Debtor, any buyers or transferee of the
Collateral or any other persons of the Bank's interest in the Collateral and the
proceeds thereof.
(b) Sign any Borrower's name (which authority each Borrower hereby
irrevocably and unconditionally grants to the Bank) on any invoice or xxxx of
lading relating to accounts or other drafts against the Account Debtors, not
post office authorities to change the address for delivery of mail addressed to
such Borrower to such address as the Bank may designate and take possession of
and open mail addressed to any Borrower and remove therefrom, proceeds of and
payments on the Collateral, and demand, receive and endorse payment and give
receipts, releases and satisfactions for and xxx for all money payable to any
Borrower.
(c) Require each Borrower to indicate on the face of all invoices (or
such other documentation as may be specified by the Bank relating to the
services giving rise to the Account) that the Account has been assigned to the
Bank and that all payments are to be made directly to the Bank at such address
as the Bank may designate.
8.05 Protection of Security Interest: Make such payments and do such
acts as the Bank, in its sole judgment, considers necessary and reasonable to
protect its security interest or Hen in the Collateral. Each Borrower hereby
irrevocably authorizes the Bank to pay, purchase, contest or compromise any
encumbrance, lien or claim which the Bank, in its sole judgment, deems to be
prior or superior to its security interest. Further, each Borrower hereby
agrees to pay to the Bank, upon demand therefor, all expenses and expenditures
(including attorneys' fees) incurred in connection with the foregoing.
8.06 Foreclosure: Enforce any security interest or lien given or
provided for under this Agreement or under any security agreement, mortgage,
deed of trust or other document, in such manner and such order, as to all or any
part of the properties subject to such security interest or lien, as the Bank,
in its sole judgment, deems to be necessary or appropriate and each Borrower
hereby waives any and all rights, obligations or defenses now or hereafter
established by law relating to the foregoing. In the enforcement of
22
its security interest or lien, the Bank is authorized to enter upon the premises
where any Collateral is located and take possession of the Collateral or any
part thereof, together with each Borrower's records pertaining thereto, or the
Bank may require each Borrower to assemble the Collateral and records pertaining
thereto and make such Collateral and records available to the Bank at a place
designated by the Bank. The Bank may sell the Collateral or any portions
thereof, together with all additions, accessions and accessories thereto, giving
only such notices and following only such procedures as are required by law, at
either a public or private sale, or both, with or without having the Collateral
present at the time of the sale, which sale shall be on such terms and
conditions and conducted in such manner as the Bank determines in its sole
judgment to be commercially reasonable. Any deficiency which exists after the
disposition or liquidation of the Collateral shall be a continuing liability of
each Borrowers to the Bank and shall be immediately paid by each Borrower,
jointly and severally, to the Bank.
8.07 Letters of Credit and Acceptances: Require the Borrowers,
jointly and severally, to pay immediately to the Bank, for application against
drawings under any outstanding Letters of Credit and Acceptances, the
outstanding principal amount of any such Letters of Credit which have not
expired and the principal amount of any Acceptances which have not matured. Any
portion of the amount so paid to the Bank which is not applied to satisfy draws
under any such Letters of Credit or repayments on any such matured Acceptances
or any other obligations of the Borrower to the Bank shall be repaid to the
Borrowers without interest.
8.08 Foreign Exchange Contracts: Require the Borrowers, jointly and
severally, to pay immediately to the Bank, for application against the future
settlement price under any outstanding Foreign Exchange Contracts, the
outstanding face amount of any such Foreign Exchange Contracts which have not
matured or settled and Borrower hereby grants to Bank a security interest in and
to such funds. Any portion of the amount so paid to the Bank which is not
subsequently applied to satisfy repayment on any such matured Foreign Exchange
Contracts or any other obligations of the Borrower to the Bank shall be repaid
to the Borrowers without interest.
8.09 Non-Exclusivity of Remedies: Exercise one or more of the Bank's
rights set forth herein or seek such other rights or pursue such other remedies
as may be provided by law, in equity or in any other agreement now existing or
hereafter entered into between each Borrower and the Bank, or otherwise.
8.10 Application of Proceeds: All amounts received by the Bank as
proceeds from the disposition or liquidation of the Collateral shall be applied
to the Borrowers' indebtedness to the Bank as follows: first, to the costs and
expenses of collection, enforcement, protection and preservation of the Bank's
lien in the Collateral, including court costs and reasonable attorneys' fees,
whether or not suit is commenced by the Bank; next, to those costs and expenses
incurred by the Bank in protecting, preserving, enforcing, collecting,
liquidating, selling or disposing of the Collateral; next, to the payment of
accrued and unpaid interest on all of the Obligations; next, to the payment of
the outstanding principal balance of the Obligations; and last, to the payment
of any other indebtedness owed by any Borrower to the Bank. Any excess
Collateral or excess proceeds existing after the disposition or liquidation of
the Collateral will be returned or paid by the Bank to the Borrowers.
SECTION 9.
MISCELLANEOUS
9.01 Amounts Payable on Demand. If any Borrower shall fail to pay on
demand any amount so payable under this Agreement, the Bank may, at its option
and without any obligation to do so and without
23
waiving any default occasioned by the Borrower having so failed to pay such
amount, create an Advance under the Line of Credit in an amount equal to the
amount so payable, which Advance shall thereafter bear interest as provided
under the Line of Credit.
9.02 Default Interest Rate: If an Event of Default, or an event
which, with notice or passage of time could become an Event of Default, has
occurred and is continuing, each Borrower, jointly and severally, shall pay to
the Bank interest on any Indebtedness or amount payable under this Agreement at
a rate which is 3% in excess of the rate or rates then in effect under this
Agreement.
9.03 Disposal of Invoices: All documents, schedules, invoices or
other papers received by the Bank from the Borrowers may be destroyed or
disposed of 6 months after receipt by the Bank, unless any Borrower requests in
writing the return thereof, which shall be done at the Borrowers' expense.
9.04 Waiver of Jury Trial. EACH BORROWER AND THE BANK EACH WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS,
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. EACH BORROWER AND THE BANK EACH AGREE THAT ANY SUCH CLAIM OR CAUSE
OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
9.05 Reliance: Each warranty, representation, covenant, obligation
and agreement contained in this Agreement shall be conclusively presumed to have
been relied upon by the Bank regardless of any investigation made or information
possessed by the Bank and shall be cumulative and in addition to any other
warranties, representations, covenants and agreements which each Borrower now or
hereafter shall give, or cause to be given, to the Bank.
9.06 Attorneys' Fees: Each Borrower, jointly and severally, shall
pay to the Bank all costs and expenses, including but not limited to reasonable
attorneys fees, incurred by Bank in connection with the administration,
enforcement or any refinancing or restructuring in the nature of a "work-out",
of this Agreement or any document, instrument or agreement executed with respect
to, evidencing or securing the indebtedness hereunder.
9.07 Notices: All notices, payments, requests, information and
demands which either party hereto may desire, or may be required to give or make
to the other party hereto, shall be given or made to such party by hand delivery
or through deposit in the United States mail, postage prepaid, or by Western
Union telegram, addressed as set forth below or to such other address as may be
specified from time to time in writing by either party to the other.
24
To the Borrowers: To the Bank:
OPTO SENSORS, INC. SANWA BANK CALIFORNIA
/s/ Illegible /s/XXXXXX XXXXX
-------------------------------------- --------------------------------------
Xxxxxx Xxxxx, Vice President
--------------------------------------
UDT SENSORS, INC.
/s/ Illegible
--------------------------------------
--------------------------------------
RAPISCAN SECURITY PRODUCTS (U.S.A.), INC.
/s/ Illegible
--------------------------------------
--------------------------------------
XXXXXX OPTICS, INC.
/s/ Illegible
--------------------------------------
9.08 Waiver: Neither the failure nor delay by the Bank in exercising any
right hereunder or under any document instrument or agreement mentioned herein
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right hereunder or under any other document, instrument or agreement
mentioned herein preclude other or further exercise thereof or the exercise of
any other right; nor shall any waiver of any right or default hereunder, or
under any other document, instrument or agreement mentioned herein, constitute a
waiver of any other right or default or constitute a waiver of any other default
of the same or any other term or provision.
9.09 Conflicting Provisions: To the extent the provisions contained in
this Agreement are inconsistent with those contained in any other document,
instrument or agreement executed pursuant hereto, the terms and provisions
contained herein shall control. Otherwise, such provisions shall be considered
cumulative.
25
9.10 Binding Effect; Assignment: This Agreement shall be binding upon and
inure to the benefit of each Borrower and the Bank and their respective
successors and assigns, except that no Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Bank. The Bank may sell. assign or grant participation in all or
any portion of its rights and benefits hereunder. Each Borrower agrees that, in
connection with any such sale, grant or assignment, the Bank may deliver to the
prospective buyer, participant or assignee financial statements and other
relevant information relating to any Borrower and any guarantor.
9.11 Jurisdiction: This Agreement, any notes issued hereunder, the rights
of the parties hereunder to and concerning the Collateral, and any documents,
instruments or agreements mentioned or referred to herein shall be governed by
and construed according to the laws of the State of California, to the
jurisdiction of whose courts the parties hereby submit.
9.12 No Guaranty or Surety. If any Borrower hereunder is deemed to be a
surety or guarantor due to its joint and several liability hereunder such
Borrower hereby unconditionally and irrevocably acknowledges and agrees to the
matters set forth below:
(a) Each Borrower waives any defense based upon any Borrower's loss of
a right against any other Borrower(s) arising from the Bank's election of a
remedy on any indebtedness under bankruptcy or other debtor relief laws or under
any other laws, including, but not limited to, those purporting to reduce the
Bank's right against any Borrower in proportion to the principal obligation of
any indebtedness (as presently contained in Section 2809 of the California Civil
Code and as it may be amended or superseded in the future).
(b) Each Borrower waives the benefit of the statute of limitations
affecting such Borrower's liability hereunder or the enforcement hereof.
(c) Each Borrower waives all right to require the Bank to: (i)
proceed against any other Borrower(s), any endorser, cosigner, other guarantor
or other person liable on any indebtedness; (ii) join any endorser, cosigner,
other guarantor or other person liable on any indebtedness in any action or
actions that may be brought and prosecuted by the Bank solely and separately
against any Borrower(s) on any indebtedness; (iii) proceed against any item or
items of collateral securing any indebtedness or any guaranty thereof, or (iv)
pursue or refrain from pursuing any other remedy whatsoever in the Bank's power.
(d) Each Borrower waives any defense arising by reason of any
disability or other defense of any other Borrower(s), successors or any
endorser, cosigner, other guarantor or other person liable on any indebtedness.
Until all indebtedness has been paid in full, each Borrower shall not have any
right of subrogation and each Borrower waives any benefit of and right to
participate in any collateral now or hereafter held by the Bank. Each Borrower
waives all presentments, demands for performance, notices of nonperformance,
protests, notices of protest, notices of dishonor, notices of sale of any
collateral securing any indebtedness or any guaranty thereof, and notice of the
existence, creation or incurring of new or additional indebtedness.
9.13 Headings: The headings herein set forth are solely for the purpose of
identification and have no legal significance.
9.14 Entire Agreement: This Agreement and all documents, instruments and
agreements mentioned herein constitute the entire and complete understanding of
the parties with respect to the
26
transactions contemplated hereunder. All previous conversations, memoranda and
writings between the parties pertaining to the transactions contemplated
hereunder not incorporated or referenced in this Agreement or in such documents,
instruments and agreements are superseded hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first hereinabove written.
BANK: BORROWER:
SANWA BANK CALIFORNIA OPTO SENSORS, INC.
By: /s/XXXXXX XXXXX By: /s/ XXXX XXXXX
---------------------------------- -------------------------------
Xxxxxx Xxxxx, Vice President Xxxx Xxxxx, Chief Financial Officer
UDT SENSORS, INC.
By: /s/ XXXX XXXXX
-------------------------------
Xxxx Xxxxx, Chief Financial Officer
RAPISCAN SECURITY PRODUCTS (U.S.A.),
INC.
By: /s/ XXXX XXXXX
-------------------------------
Xxxx Xxxxx, Chief Financial Officer
XXXXXX OPTICS, INC.
By: /s/ XXXX XXXXX
-------------------------------
Xxxx Xxxxx, Chief Financial Officer
27
