EXHIBIT 10.35
AMENDED AND RESTATED BUSINESS LOAN AGREEMENT
This Amended and Restated Business Loan Agreement (this "Agreement") dated
as of April 30, 2001, is between Bank of America, N.A. (the "Bank"), IMPCO
Technologies, Inc. (the "Borrower") and Quantum Technologies, Inc. (the
"Subsidiary Borrower").
RECITALS
A. The Borrower and the Bank have heretofore entered into a Business
Loan Agreement dated as of September 13, 1999 (as previously amended, the
"Existing Loan Agreement").
B. The Subsidiary Borrower is a wholly-owned direct subsidiary of the
Borrower, and the parties desire for the Subsidiary Borrower to become a
borrower under the Existing Loan Agreement, with (i) the right to make direct
borrowings in an aggregate principal amount not to exceed $5,000,000 under the
revolving line of credit established as Facility No. 1 under the Existing Loan
Agreement subject to the terms and conditions set forth therein, and (ii) joint
and several liability for all of the loans and other credit accommodations
extended thereunder.
C. In order to add the Subsidiary Borrower as a borrower and to
further amend the Existing Loan Agreement, the parties hereto agree to amend and
restate the Existing Loan Agreement in its entirety as herein provided.
D. It is anticipated that following the date hereof the Borrower may
elect to sell the Subsidiary Borrower or substantially all of its assets to a
third party. In such event, concurrently with the repayment of all outstanding
obligations of the Subsidiary Borrower hereunder, the Bank shall release the
Subsidiary Borrower from its guaranty of the obligations of the Borrower
hereunder.
In consideration of the foregoing and of the mutual covenants and
agreements herein contained, the parties hereto covenant and agree as follows:
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth
below:
"Borrower" means IMPCO Technologies, Inc. and, at such times as
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Quantum Technologies, Inc. is a Subsidiary Borrower hereunder, shall be
deemed to include Quantum Technologies, Inc. as the context requires.
"Capital Expenditures" means any expenditures which are properly
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treated as capital expenditures under generally accepted accounting
principles, including any expenditures in respect of capital lease
obligations.
"Core EBITDA" means, as of each date of determination, Borrower's
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consolidated net income for the four fiscal quarter period ending on that
date from continuing operations and investments, determined in accordance
with generally
accepted accounting principles consistently applied, plus, to the extent
deducted (or subtracted) in arriving at such net income, Borrower's
consolidated income tax expense or credit, interest expense, minority
interest, depreciation and amortization, provided that in computing "Core
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EBITDA" the results of operations of the Subsidiary Borrower shall be
excluded.
"Debt Service Coverage Ratio" means, as of each date of determination,
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the ratio of (a) Core EBITDA less taxes less unfinanced Capital
Expenditures for the four fiscal quarter period ending on that date, to (b)
the sum of (I) the current portion of Borrower's consolidated indebtedness
for borrowed money and capital lease obligations, in each case having a
then remaining life to maturity, plus (ii) Borrower's consolidated interest
expense for the same period, in each case, determined in accordance with
generally accepted accounting principles, consistently applied.
"Funded Debt to EBITDA Ratio" means, as of each date of determination,
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the ratio of (a) Borrower's consolidated indebtedness for borrowed money
and capital lease obligations as of that date, plus the undrawn amounts of
any outstanding letters of credit, to (b) Core EBITDA for the four fiscal
quarter period ending on that date.
"Offshore Margin" means during each Pricing Period, the interest rate
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margin set forth in the Pricing Matrix in the column so headed opposite the
Funded Debt to EBITDA in effect as of the last day of the fiscal quarter of
the Borrower ending two months prior to the first day of such Pricing
Period, provided that during the Pricing Period in which the date of this
Agreement occurs, Offshore Margin shall be Pricing Level II.
"Pricing Matrix" means the following pricing matrix:
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Unused
Funded Debt to Commitment
Pricing Level EBITDA Ratio Fee Offshore Margin Prime Rate Margin
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I Greater or equal to 0.35% 2.25% 0.50%
2.25:1.00
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II Less than 2.25:1.00 or
greater than or equal to 0.35% 2.00% 0.375%
1.75:1:00
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III Less than 1.75:1.00 or
greater than or equal to 0.30% 1.75% 0.250%
1.25:1:00
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IV Less than 1.25:1.00 0.30% 1.50% 0.00%
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"Pricing Period" means the successive three month periods beginning on
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the first day of each July, October, January and April.
"Prime Rate" means the rate of interest publicly announced from time
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to time by the Bank as its Prime Rate. The Prime Rate is set by the Bank
based on various factors, including the Bank's costs and desired return,
general economic conditions and
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other factors, and is used as a reference point for pricing some loans. The
Bank may price loans to its customers at, above, or below the Prime Rate.
Any change in the Prime Rate shall take effect at the opening of business
on the day specified in the public announcement of a change in the Prime
Rate.
"Prime Rate Margin" means during each Pricing Period, the interest
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rate margin set forth in the Pricing Matrix in the column so headed
opposite the Funded Debt to CORE EBITDA ratio in effect as of the last day
of the fiscal quarter of the Borrower ending two months prior to the first
day of such Pricing Period, provided that during the Pricing Period in
which the date of this Agreement occurs, the Prime Rate Margin shall be
Pricing Level II.
"Unused Commitment Fee Rate" means during each Pricing Period, the
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rate margin set forth in the Pricing Matrix in the column so headed
opposite the Funded Debt to EBITDA in effect as of the last day of the
fiscal quarter of the Borrower ending two months prior to the first day of
such Pricing Period, provided that during the Pricing Period in which the
date of this Agreement occurs, the Unused Commitment Fee Rate shall be
based upon Pricing Level II
1. FACILITY NO. 1: REVOLVING LINE OF CREDIT AMOUNT AND TERMS
1.1 Line of Credit Amount.
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(a) During the availability period described below, the Bank will
provide a line of credit ("Facility No. 1") to the Borrower. The amount of
the line of credit (the "Facility No. 1 Commitment") is Fifteen Million
Dollars ($15,000,000). The Subsidiary Borrower shall be entitled to request
direct loans under Facility No. 1, the aggregate outstanding amount of
which do not exceed $5,000,000 at any time.
(b) This is a revolving line of credit with a within line facility for
letters of credit. During the availability period, the Borrower and
Subsidiary Borrower may prepay principal amounts and reborrow them.
(c) The Borrower agrees not to permit the outstanding principal
balance of advances under the line of credit plus the outstanding amounts
of any letters of credit and not yet reimbursed to exceed the Facility No.
1 Commitment.
1.2 Availability Period. The line of credit is available between the date
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of this Agreement and September 30, 2001 (the "Revolving Line Expiration Date")
unless the Borrower or the Subsidiary Borrower is in default, provided that in
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no event shall the Subsidiary Borrower be entitled to request advances hereunder
following its sale or the sale of any material portion of its assets.
1.3 Repayment Terms.
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(a) The Borrower and Subsidiary Borrower will pay interest with
respect to Facility No. 1 monthly on the last business day of each calendar
month until payment in full of all outstanding principal.
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(b) The Borrower and the Subsidiary Borrower will repay in full all
principal and any unpaid interest or other charges outstanding under this
line of credit no later than the Revolving Line Expiration Date. Any amount
bearing interest at an optional interest rate (as described below) may be
repaid at the end of the applicable interest period, which shall be no
later than the Revolving Line Expiration Date. Notwithstanding the
provisions of this clause (b), all obligations of the Subsidiary Borrower
shall be repaid on the date upon which it is sold or any material portion
of its assets are sold.
1.3 Interest Rate. Facility No. 1 shall bear interest in the manner
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provided in Section 5 of this Agreement.
1.4 Letters of Credit. This line of credit may be used for financing:
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(i) commercial letters of credit with a maximum maturity of 180 days
but not to extend more than 90 days beyond the Revolving Line Expiration
Date. Each commercial letter of credit will require drafts payable at
sight.
(ii) standby letters of credit with a maximum maturity of one (1)
year but not to extend more than 12 months beyond the Revolving Line
Expiration Date.
(iii) The amount of the letters of credit outstanding at any one time
(including amounts drawn on letters of credit and not yet reimbursed) may
not exceed One Million Dollars ($1,000,000) for commercial letters of
credit and Seven Hundred Fifty Thousand Dollars ($750,000) for standby
letters of credit.
(iv) The following letters of credit are outstanding from the Bank for
the account of the Borrower:
Letter of Credit Number Amount
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LASB #3020698 $15,000
As of the date of this Agreement, this letter of credit shall be deemed to
be outstanding under this Agreement, and shall be subject to all the terms
and conditions stated in this Agreement, except that this letter of credit
may expire no later than September 30, 2002.
The Borrower agrees:
(a) any sum drawn under a letter of credit may, at the option of the
Bank, be added to the principal amount outstanding under this Agreement.
The amount will bear interest and be due as described elsewhere in this
Agreement.
(b) if there is a default under this Agreement, to immediately prepay
and make the Bank whole for any outstanding letters of credit.
(c) the issuance of any letter of credit and any amendment to a
letter of credit is subject to the Bank's written approval and must be in
form and content satisfactory to the Bank and in favor of a beneficiary
acceptable to the Bank.
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(d) to sign the Bank's form Application and Agreement for Commercial
Letter of Credit or Application and Agreement for Standby Letter of Credit.
(e) to pay any issuance and/or other fees that the Bank notifies the
Borrower will be charged for issuing and processing letters of credit for
the Borrower.
(f) to allow the Bank to automatically charge its checking account
for applicable fees, discounts, and other charges.
(g) to pay the Bank a non-refundable fee equal to 1.25% per annum of
the outstanding undrawn amount of each standby letter of credit, payable
annually in advance, calculated on the basis of the face amount outstanding
on the day the fee is calculated.
2. FACILITY NO. 2: TERM LOAN AMOUNT AND TERMS
2.1 Outstanding Term Loans. As of the date of this Agreement, term loans
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in the aggregate principal amount of $6,394,284.78 and $2,500,000 in advances
under Facility No. 6 Non-Revolving Capital Expenditures Line of Credit are
outstanding under the Existing Loan Agreement, which are hereby consolidated as
a Term Loan Facility No. 2 hereunder in the amount of $8,894,284.78.
2.2 Interest Rate. Facility No. 2 shall bear interest in the manner
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provided in Section 5 of this Agreement.
2.3 Repayment Terms.
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(a) The Borrower will pay interest monthly on the last business day of
each calendar month until payment in full of any principal outstanding on
Facility No.
(b) The Borrower will repay principal in fourteen (14) successive
quarterly installments of Six Hundred Thirty Five Thousand Three Hundred
Six Dollars ($635,306) each commencing June 30, 2001. On September 30,
2004, the Borrower will repay the remaining principal balance plus any
interest then due.
(c) The Borrower may prepay the loan in full or in part at any time.
The prepayment will be applied to the most remote installment of principal
due under this Agreement.
3. FACILITY NO. 3: NON-REVOLIVING CAPITAL EXPENDITURES LINE OF CREDIT AMOUNT
AND TERMS
3.1 Line of Credit Amount.
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(a) During the availability period described below, the Bank will
provide a line of credit to the Borrower. The amount of the line of credit
(the "Facility No. 3 Commitment") is One Million Seven Hundred Fifty
Thousand Dollars ($1,750,000).
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(b) This is a non-revolving line of credit with a term repayment
option, and providing for cash advances. Any amount borrowed, even if repaid
before the end of the availability period, permanently reduces the remaining
available line of credit.
(c) The Borrower agrees not to permit the outstanding principal
balance of advances under the line of credit to exceed the Facility No. 3
Commitment.
3.2 Availability Period. The line of credit is available between the date
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of this Agreement and September 30, 2001, unless Borrower is in default.
3.3 Interest Rate. Facility No. 3 shall bear interest in the manner
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provided in Section 5 of this Agreement.
3.4 Repayment Terms.
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(a) The Borrower will pay interest monthly on the last day of each
calendar month until payment in full of any principal outstanding under
this line of credit.
(b) The Borrower will repay the principal amount outstanding on
Facility No. 3 in sixteen (16) successive equal quarterly installments,
each equal to 1/16 of the principal amount outstanding, payable commencing
December 31, 2001. On September 30, 2005, the Borrower will repay the
remaining principal balance plus any interest then due.
(c) The Borrower may prepay the loan in full or in part at any time.
The prepayment will be applied to the most remote payment of principal due
under this Agreement.
4. FACILITY NO. 4: STANDBY LETTER OF CREDIT
4.1 Letter of Credit. There is outstanding a standby letter of credit
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issued by the Bank for the benefit of Hong Kong Shanghai Banking Corp. with an
initial maturity of April 30, 2000, the maturity of which has heretofore been
extended to April 30, 2002. This standby letter of credit includes a provision
providing that the maturity date will be automatically extended each year for an
additional year unless the Bank gives written notice to the contrary. This
letter of credit includes a final maturity date of April 30, 2004, which will
not be subject to automatic extension. As of the date of this Agreement, this
letter of credit shall be deemed to be outstanding as Facility No. 4 under this
Agreement, and shall be subject to all the terms and conditions stated in this
Agreement.
4.2 Amount. The amount of the letter of credit (including the drawn and
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unreimbursed amounts of the letter of credit) may not exceed One Million Three
Hundred Fifty Thousand Dollars ($1,350,000.00).
4.3 Other Terms. The Borrower agrees:
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(a) if there is a default under this Agreement, to immediately prepay
and make the Bank whole for the outstanding letter of credit.
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(b) the issuance of the letter of credit and any amendment to the
letter of credit is subject to the Bank's written approval and must be in form
and content satisfactory to the Bank and in favor of a beneficiary acceptable to
the Bank.
(c) to sign the Bank's form Application and Agreement for Standby
Letter of Credit.
(d) to pay any issuance and/or other fees that the Bank notifies the
Borrower will be charged for issuing and processing the letter of credit for the
Borrower.
(e) to allow the Bank to automatically charge its checking account
for applicable fees, discounts, and other charges.
(f) to pay the Bank a non-refundable fee equal to 1.00% per annum of
the outstanding undrawn amount of the letter of credit, payable annually in
advance, calculated on the basis of the face amount outstanding on the day the
fee is calculated. If there is a default under this Agreement, at the Bank's
option, the amount of the fee shall be increased to 1.5% per annum, effective
starting on the day the Bank provides notice of the increase to the Borrower."
5. INTEREST RATES
5.1 Prime Rate Loans. Unless the Borrower elects an optional interest
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rate as described in Section 5.2, the interest rate payable with respect to
loans under each of the Facilities described herein is the Prime Rate plus the
Prime Rate Margin.
5.2 Optional Interest Rates. Instead of the interest rate based on the
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Prime Rate, the Borrower may elect the optional interest rates listed below for
any one or more of Facility Xx. 0, Xxxxxxxx Xx. 0 or Facility No. 3 during
interest periods agreed to by the Bank and the Borrower. The optional interest
rate shall be subject to the terms and conditions described later in this
Agreement. Any principal amount bearing interest at an optional rate under this
Agreement is referred to as a "Portion." Borrower may select interest Portions
bearing reference to the IBOR Rate or to the LIBOR Rate each of which shall bear
interest at the selected rate plus the Offshore Margin in effect from time to
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time.
5.3 Optional Rates. Each optional interest rate is a rate per year.
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Interest will be paid on the last day of each interest period, and on the last
day of each month during the interest period. At the end of any interest
period, the interest rate will revert to the rate based on the Prime Rate,
unless the Borrower has designated another optional interest rate for the
Portion. No Portion will be converted to a different interest rate during the
applicable interest period. Upon the occurrence of an event of default under
this Agreement, the Bank may terminate the availability of optional interest
rates for interest periods commencing after the default occurs.
5.4 IBOR Rate. The election of IBOR Rates shall be subject to the
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following terms and requirements:
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(a) The interest period during which the IBOR Rate will be in effect
will be no shorter than 30 days and no longer than one year. The last day
of the interest period will be determined by the Bank using the practices
of the offshore dollar inter-bank market.
(b) Each IBOR Rate Portion will be for an amount not less than Five
Hundred Thousand Dollars ($500,000).
(c) The Borrower may not elect an IBOR Rate with respect to any
principal amount which is scheduled to be repaid before the last day of the
applicable interest period.
(d) The "IBOR Rate" means the interest rate determined by the
following formula, rounded upward to the nearest 1/100 of one percent. (All
amounts in the calculation will be determined by the Bank as of the first
day of the interest period.)
IBOR Rate = IBOR Base Rate
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(1.00 - Reserve Percentage)
Where,
(i) "IBOR Base Rate" means the interest rate at which the Bank's
Grand Cayman Branch, Grand Cayman, British West Indies, would offer
U.S. dollar deposits for the applicable interest period to other major
banks in the offshore dollar inter-bank market.
(ii) "Reserve Percentage" means the total of the maximum reserve
percentages for determining the reserves to be maintained by member
banks of the Federal Reserve System for Eurocurrency Liabilities, as
defined in Federal Reserve Board Regulation D, rounded upward to the
nearest 1/100 of one percent. The percentage will be expressed as a
decimal, and will include, but not be limited to, marginal, emergency,
supplemental, special, and other reserve percentages.
(e) Each prepayment of a IBOR Rate Portion, whether voluntary, by
reason of acceleration or otherwise, will be accompanied by the amount
of accrued interest on the amount prepaid, and a prepayment fee as
described below. A "prepayment" is a payment of an amount on a date
earlier than the scheduled payment date for such amount as required by
this Agreement.
(f) The prepayment fee shall be in an amount sufficient to compensate
the Bank for any loss, cost or expense incurred by it as a result of the
prepayment, including any loss of anticipated profits and any loss or
expense arising from the liquidation or reemployment of funds obtained by
it to maintain such Portion or from fees payable to terminate the deposits
from which such funds were obtained. The Borrower shall also pay any
customary administrative fees charged by the Bank in connection with the
foregoing. For purposes of this Section, the Bank shall be deemed to have
funded each Portion by a matching deposit or other borrowing in the
applicable interbank market, whether or not such Portion was in fact so
funded.
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(g) The Bank will have no obligation to accept an election for an IBOR
Rate Portion if any of the following described events has occurred and is
continuing:
(i) Dollar deposits in the principal amount, and for periods equal to
the interest period, of an IBOR Rate Portion are not available in the
offshore dollar inter-bank market; or
(ii) the IBOR Rate does not accurately reflect the cost of an IBOR
Rate Portion.
5.5 LIBOR Rate. The election of LIBOR Rates shall be subject to the
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following terms and requirements:
(a) The interest period during which the LIBOR Rate will be in effect
will be one, two, three, four, five, six, seven, eight, nine, ten, eleven, or
twelve months. The first day of the interest period must be a day other than a
Saturday or a Sunday on which the Bank is open for business in California, New
York and London and dealing in offshore dollars (a "LIBOR Banking Day"). The
last day of the interest period and the actual number of days during the
interest period will be determined by the Bank using the practices of the London
inter-bank market.
(b) Each LIBOR Rate portion will be for an amount not less than Five
Hundred Thousand Dollars ($500,000).
(c) The "LIBOR Rate" means the interest rate determined by the
following formula, rounded upward to the nearest 1/100 of one percent. (All
amounts in the calculation will be determined by the Bank as of the first day of
the interest period.)
LIBOR Rate = London Inter-Bank Offered Rate
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(1.00 - Reserve Percentage)
Where,
(i) "London Inter-Bank Offered Rate" means the average per annum
interest rate at which U.S. dollar deposits would be offered for the
applicable interest period by major banks in the London inter-bank market,
as shown on the Telerate Page 3750 (or such other page as may replace it)
at approximately 11:00 a.m. London time two (2) London Banking Days before
the commencement of the interest period. If such rate does not appear on
the Telerate Page 3750 (or such other page that may replace it), the rate
for that interest period will be determined by such alternate method as
reasonably selected by the Bank. A "London Banking Day" is a day on which
the Bank's London Branch is open for business and dealing in offshore
dollars.
(ii) "Reserve Percentage" means the total of the maximum reserve
percentages for determining the reserves to be maintained by member banks
of the Federal Reserve System for Eurocurrency Liabilities, as defined in
Federal Reserve Board Regulation D, rounded upward to the nearest 1/100 of
one percent. The percentage will be expressed as a decimal, and will
include, but not
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be limited to, marginal, emergency, supplemental, special, and other
reserve percentages.
(d) The Borrower shall irrevocably request a LIBOR Rate portion no
later than 12:00 noon San Francisco time on the LIBOR Banking Day preceding
the day on which the London Inter-Bank Offered Rate will be set, as
specified above.
(e) The Borrower may not elect a LIBOR Rate with respect to any
principal amount which is scheduled to be repaid before the last day of the
applicable interest period.
(f) Any portion of the principal balance already bearing interest at
the LIBOR Rate will not be converted to a different rate during its
interest period.
(g) Each prepayment of a LIBOR Rate portion, whether voluntary, by
reason of acceleration or otherwise, will be accompanied by the amount of
accrued interest on the amount prepaid and a prepayment fee as described
below. A "prepayment" is a payment of an amount on a date earlier than the
scheduled payment date for such amount as required by this Agreement. The
prepayment fee shall be equal to the amount (if any) by which:
(i) the additional interest which would have been payable during
the interest period on the amount prepaid had it not been prepaid,
exceeds
(ii) the interest which would have been recoverable by the Bank
by placing the amount prepaid on deposit in the domestic certificate
of deposit market, the eurodollar deposit market, or other appropriate
money market selected by the Bank, for a period starting on the date
on which it was prepaid and ending on the last day of the interest
period for such portion (or the scheduled payment date for the amount
prepaid, if earlier).
(h) The Bank will have no obligation to accept an election for a LIBOR
Rate portion if any of the following described events has occurred and is
continuing:
(i) Dollar deposits in the principal amount, and for periods equal
to the interest period, of a LIBOR Rate portion are not available in
the London inter-bank market; or
(ii) the LIBOR Rate does not accurately reflect the cost of a
LIBOR Rate portion.
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6. FEES, EXPENSES AND COSTS
6.1 Unused Commitment Fee. The Borrower agrees to pay a fee on any
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difference between the Facility No. 1 Commitment and the Facility No. 3
Commitment and the amount of credit it actually uses under such facilities,
determined by the weighted average credit outstanding during the specified
period at the Unused Commitment Fee Rate as in effect from time to time. The
fee shall be payable on May 31, 2001 and the last day of each following quarter
until the expiration date of the applicable facility.
6.2 Expenses. The Borrower agrees to immediately repay the Bank for
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expenses that include, but are not limited to, filing, recording and search
fees, appraisal fees, title report fees, and documentation fees.
6.3 Reimbursement Costs.
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(a) The Borrower agrees to reimburse the Bank for any expenses it
incurs in the preparation of this Agreement and any agreement or instrument
required by this Agreement. Expenses include, but are not limited to,
reasonable attorneys' fees, including any allocated costs of the Bank's in-
house counsel.
(b) The Borrower agrees to reimburse the Bank for the cost of periodic
audits and appraisals of the personal property collateral securing this
Agreement, at such intervals as the Bank may reasonably require. The
audits and appraisals may be performed by employees of the Bank or by
independent appraisers.
7. COLLATERAL
7.1 Personal Property. The Borrower's and the Subsidiary Borrower's
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respective obligations to the Bank under this Agreement will be secured by
personal property the Borrower and the Subsidiary Borrower now own or will own
in the future as listed below. The collateral is further defined in security
agreements executed by the Borrower and the Subsidiary Borrower. In addition,
all personal property collateral securing this Agreement shall also secure all
other present and future obligations of the Borrower and the Subsidiary Borrower
to the Bank (excluding any consumer credit covered by the federal Truth in
Lending law, unless the Borrower and or the Subsidiary Borrower have otherwise
agreed in writing). All personal property collateral securing any other present
or future obligations of the Borrower and the Subsidiary Borrower to the Bank
shall also secure this Agreement. Borrower and the Subsidiary Borrower hereby
confirm and regrant to the Bank a security interest in and to their respective
(a) Machinery, equipment, and fixtures;
(b) Inventory;
(c) Accounts, accounts Receivable;
(d) Patents, trademarks and other general intangibles; and
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and the products and proceeds thereof, to secure their respective obligations to
the Bank under this Agreement. Each of them agrees to assemble all such
collateral upon default at a location to be designated by the Bank.
8. DISBURSEMENTS, PAYMENTS AND COSTS
8.1 Requests for Credit. Each request for an extension of credit will be
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made in writing in a manner acceptable to the Bank, or by another means
acceptable to the Bank.
8.2 Disbursements and Payments. Each disbursement by the Bank and each
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payment by the Borrower will be:
(a) made at the Bank's branch (or other location) selected by the Bank
from time to time;
(b) made for the account of the Bank's branch selected by the Bank
from time to time;
(c) made in immediately available funds, or such other type of funds
selected by the Bank;
(d) evidenced by records kept by the Bank. In addition, the Bank may,
at its discretion, require the Borrower to sign one or more promissory
notes.
8.3 Telephone and Telefax Authorization.
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(a) The Bank may honor telephone or telefax instructions for advances
or repayments or for the designation of optional interest rates and telefax
requests for the issuance of letters of credit given by any one of the
individuals authorized to sign loan agreements on behalf of the Borrower
and or the Subsidiary Borrower, or any other individual designated by any
one of such authorized signers.
(b) Advances will be deposited in and repayments will be withdrawn
from the Borrower's account number 12331-16650 and Subsidiary Borrower's
account number 14593-08216, or such other of the Borrower's accounts with
the Bank as designated in writing by the Borrower. The Subsidiary Borrower
confirms that all advances made by the Bank for its account may be
deposited by the Bank in this manner.
(c) Each of the Borrower and the Subsidiary Borrower each indemnifies
and excuses the Bank (including its officers, employees, and agents) from
all liability, loss, and costs in connection with any act resulting from
telephone or telefax instructions it reasonably believes are made by any
individual authorized by the Borrower or the Subsidiary Borrower to give
such instructions. This indemnity and excuse will survive this Agreement's
termination.
11.4 Direct Debit (Pre-Billing).
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(a) Each of the Borrower and the Subsidiary Borrower agrees that the
Bank will debit the Borrower's deposit account number 12331-16650 and
Subsidiary Borrower's deposit account number 14593-08216, or such other of
the Borrower's
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accounts with the Bank as designated in writing by the Borrower (the
"Designated Account") on the date each payment of principal and interest
and any fees from the Borrower or the Subsidiary Borrower becomes due (the
"Due Date"). If the Due Date is not a banking day, the Designated Account
will be debited on the next banking day.
(b) Approximately 10 days prior to each Due Date, the Bank will mail
to the Borrower a statement of the amounts that will be due on that Due
Date (the "Billed Amount"). The calculation will be made on the assumption
that no new extensions of credit or payments will be made between the date
of the billing statement and the Due Date, and that there will be no
changes in the applicable interest rate.
(c) The Bank will debit the Designated Account for the Billed Amount,
regardless of the actual amount due on that date (the "Accrued Amount").
If the Billed Amount debited to the Designated Account differs from the
Accrued Amount, the discrepancy will be treated as follows:
(i) If the Billed Amount is less than the Accrued Amount, the
Billed Amount for the following Due Date will be increased by the
amount of the discrepancy. The Borrower will not be in default by
reason of any such discrepancy.
(ii) If the Billed Amount is more than the Accrued Amount, the
Billed Amount for the following Due Date will be decreased by the
amount of the discrepancy.
Regardless of any such discrepancy, interest will continue to accrue based
on the actual amount of principal outstanding without compounding. The
Bank will not pay the Borrower interest on any overpayment.
(d) The Borrower will maintain sufficient funds in the Designated
Account to cover each debit. If there are insufficient funds in the
Designated Account on the date the Bank enters any debit authorized by this
Agreement, the debit will be reversed.
8.5 Banking Days. Unless otherwise provided in this Agreement, a banking
------------
day is a day other than a Saturday or a Sunday on which the Bank is open for
business in California. For amounts bearing interest at an offshore rate (if
any), a banking day is a day other than a Saturday or a Sunday on which the Bank
is open for business in California and dealing in offshore dollars. All
payments and disbursements which would be due on a day which is not a banking
day will be due on the next banking day. All payments received on a day which
is not a banking day will be applied to the credit on the next banking day. For
amounts bearing interest at a LIBOR Rate, a banking day is a day other than a
Saturday or a Sunday on which the Bank is open for business in California, New
York and London and dealing in offshore dollars.
8.6 Taxes. If any payments to the Bank under this Agreement are made from
-----
outside the United States, the Borrower will not deduct any foreign taxes from
any payments it makes to the Bank. If any such taxes are imposed on any
payments made by the Borrower (including payments under this Section), the
Borrower will pay the taxes and will also pay to the Bank, at the time interest
is paid, any additional amount which the Bank specifies as necessary to preserve
the after-tax yield the Bank would have received if such taxes had not been
-13-
imposed. The Borrower will confirm that it has paid the taxes by giving the Bank
official tax receipts (or notarized copies) within 30 days after the due date.
8.7 Additional Costs. The Borrower will pay the Bank, on demand, for the
----------------
Bank's costs or losses arising from any statute or regulation, or any request or
requirement of a regulatory agency which is applicable to all national banks or
a class of all national banks. The costs and losses will be allocated to the
loan in a manner determined by the Bank, using any reasonable method. The costs
include the following:
(a) any reserve or deposit requirements; and
(b) any capital requirements relating to the Bank's assets and
commitments for credit.
8.8 Interest Calculation. Except as otherwise stated in this Agreement,
--------------------
all interest and fees, if any, will be computed on the basis of a 360-day year
and the actual number of days elapsed. This results in more interest or a
higher fee than if a 365-day year is used.
8.9 Default Rate. Upon the occurrence and during the continuation of any
------------
default under this Agreement, principal amounts outstanding under this Agreement
will at the option of the Bank bear interest at a rate which is two (2.00)
percentage points higher than the rate of interest otherwise provided under this
Agreement. This will not constitute a waiver of any default. Installments of
principal which are not paid when due under this Agreement shall continue to
bear interest until paid. Any interest, fees or costs which are not paid when
due shall bear interest at the Prime Rate plus two (2.00) percentage points.
This may result in compounding of interest.
9. CONDITIONS
The Bank must receive the following items, in form and content acceptable
to the Bank, before it is required to extend any credit to the Borrower under
this Agreement:
9.1 Authorizations. Evidence that the execution, delivery and performance
--------------
by the Borrower and the Subsidiary Borrower of this Agreement and any instrument
or agreement required under this Agreement have been duly authorized.
9.2 Security Agreements. Signed original security agreements,
-------------------
assignments, financing statements and fixture filings (together with collateral
in which the Bank requires a possessory security interest), which the Bank
requires. The Borrower and the Subsidiary Borrower hereby confirm the continued
effectiveness of each of the Security Agreements heretofore executed by them in
favor of the Bank.
9.3 Evidence of Priority. Evidence that security interests and liens in
--------------------
favor of the Bank are valid, enforceable, and prior to all others' rights and
interests, except those the Bank consents to in writing.
9.4 Insurance. Evidence of insurance coverage, as required in the
---------
"Covenants" section of this Agreement.
-14-
9.5 Guaranties.
----------
(a) A Continuing Guaranty (Multicurrency) executed by the Borrower in
the amount of Three Million U.S. Dollars (U.S. $3,000,000) guarantying the
obligations of Grupo I.M.P.C.O. Mexicano, S. de X.X. de C.V. arising in
connection with the Mexico Commitment together with Corporate Resolutions
Authorizing Execution of Guaranty (Multicurrency).
(b) A Continuing guaranty executed by the Subsidiary Borrower of the
obligations of the Borrower hereunder.
(c) A Continuing guaranty executed by the Borrower of the obligations
of the Subsidiary Borrower hereunder.
9.6 Amendment and Restatement Fee. Receipt by the Bank of an amendment
-----------------------------
fee of $25,000, which is fully earned when received and non-refundable.
9.7 Accounts Report. Receipt by the Bank of a report, in form and
---------------
substance acceptable to the Bank of Borrower's March 31, 2001 consolidated
accounts receivable and accounts payable, together with a detailed aging thereof
and a detailed inventory listing.
9.8 Cash Balance Reports. Receipt by the Bank of a monthly cash
--------------------
statement and budget detailing the remaining cash balance from Borrower's
secondary equity offering conducted in July, 2000 funding Quantum, detailing the
opening and closing cash balances for the month of March 31, 2001.
9.9 Other Items. Any other items that the Bank reasonably requires.
-----------
10. REPRESENTATIONS AND WARRANTIES
When the Borrower and the Subsidiary Borrower sign this Agreement, and
until the Bank is repaid in full, the Borrower and (at such times as it is a
party hereto), the Subsidiary Borrower make the following representations and
warranties. Each request for an extension of credit constitutes a renewed
representation:
10.1 Organization. Each of the Borrower and the Subsidiary Borrower is a
------------
corporation duly formed and existing under the laws of the state where
organized.
10.2 Authorization. This Agreement, and any instrument or agreement
-------------
required hereunder, are within the Borrower's and the Subsidiary Borrower's
powers, have been duly authorized, and do not conflict with any of its
organizational papers.
10.3 Enforceable Agreement. This Agreement is a legal, valid and binding
---------------------
agreement of the Borrower and the Subsidiary Borrower, enforceable in accordance
with its terms, and any instrument or agreement required hereunder, when
executed and delivered, will be similarly legal, valid, binding and enforceable.
-15-
10.4 Good Standing. In each state in which the Borrower and the Subsidiary
-------------
Borrower do business, they are properly licensed, in good standing, and, where
required, in compliance with fictitious name statutes.
10.5 No Conflicts. This Agreement does not conflict with any law,
------------
agreement, or obligation by which the Borrower, the Subsidiary Borrower or their
respective properties are bound.
10.6 Financial Information. All financial and other information that has
---------------------
been or will be supplied to the Bank is:
(a) sufficiently complete to give the Bank accurate knowledge of the
Borrower's and the Subsidiary Borrower's financial condition.
(b) in compliance with all government regulations that apply.
10.7 Lawsuits. There is no lawsuit, tax claim or other dispute pending or
--------
threatened against the Borrower or the Subsidiary Borrower which, if lost, would
impair the Borrower's or Subsidiary Borrower's financial condition or ability to
repay the loans and letters of credit contemplated herein, except as have been
disclosed in writing to the Bank.
10.8 Collateral. All collateral required in this Agreement is owned by the
----------
grantor of the security interest free of any title defects or any liens or
interests of others.
10.9 Permits, Franchises. The Borrower and Subsidiary Borrower possesses
-------------------
all permits, memberships, franchises, contracts and licenses required and all
trademark rights, trade name rights, patent rights and fictitious name rights
necessary to enable it to conduct the business in which it is now engaged.
10.10 Other Obligations. Neither the Borrower nor the Subsidiary Borrower
-----------------
is in default on any obligation for borrowed money, any purchase money
obligation or any other material lease, commitment, contract, instrument or
obligation.
10.11 Income Tax Returns. The Borrower has no knowledge of any pending
------------------
assessments or adjustments of its income tax for any year.
10.12 No Event of Default. There is no event which is, or with notice or
-------------------
lapse of time or both would be, a default under this Agreement.
10.13 Locations. The Borrower's and the Subsidiary Borrower's place of
---------
business (or its chief executive office) is located at the address listed under
their respective signatures on this Agreement.
11. COVENANTS
The Borrower and (at such times as it is a party hereto) the Subsidiary
Borrower agree, so long as credit is available under this Agreement and until
the Bank is repaid in full:
11.1 Use of Proceeds. To use the proceeds of (i) Facility No. 1 only for
---------------
the Borrower's and the Subsidiary Borrower's working capital and other general
corporate purposes; (ii) Facility
-16-
No. 2 to refinance the existing term loan outstandings under the Existing Loan
Agreement, (iii) Facility No. 3 only for financing capital expenditures, and
Facility No. 4 only for the issuance of the letter of credit described in such
facility.
11.2 Financial Information. To provide the following financial information
---------------------
and statements in form and content acceptable to the Bank, and such additional
information as requested by the Bank from time to time:
(a) Within 60 days of Borrower fiscal year end April 30, 2001, the
Borrower's annual financial statements. For each fiscal year thereafter,
within 90 days of each fiscal year end, the Borrower's annual financial
statements. These financial statements must be audited by a certified
public accountant acceptable to the Bank. The statements shall be prepared
on a consolidated and consolidating basis.
(b) Beginning with the month of May 2001 and until the Subsidiary
Borrower is sold, monthly company prepared consolidated and consolidating
financials within 30 days of period end. Thereafter, within 30 days of each
fiscal quarter's end, the Borrower's quarterly financial statements. These
financial statements may be Borrower prepared. The statements shall be
prepared on a consolidated and consolidating basis.
(c) Within 90 days of each fiscal year end, copies of the Borrower's
Form 10-K Annual Report.
(d) Within 45 days of each fiscal quarter, copies of the Borrower's
Form 10-Q Quarterly Report.
(e) Within 90 days of each fiscal year end, consolidated and
consolidating projections for the then current fiscal year of the Borrower.
(f) Beginning with the month of May, 2001 and until the Subsidiary
Borrower is sold, monthly company prepared consolidated and consolidating
financials within 30 days of period end;
(g) Beginning with the month of April, 2001, monthly cash statements
(and budget) detailing the remaining cash balance from the July, 2000
secondary offering proceeds used for funding the continued operations of
the Subsidiary Borrower, including detailing the beginning and ending
balance for the month and use of proceeds between Operations, Capital
Expenditures and Other, within 15 days of period end;
(h) Not later than May 31, 2001, a detailed plan for funding the
continuing operations of the Subsidiary Borrower;
(i) Not later than May 15, 2001, copy of Borrower's engagement
agreement with Xxxxxxx Xxxxx for the sale of the Subsidiary Borrower;
(j) Any other such additional information as may be requested by Bank
from time to time; and
(k) Within the period(s) provided in subsections (a) and (b) above, a
compliance certificate signed by an authorized financial officer of the
Borrower setting
-17-
forth (i) the information and computations (in sufficient detail) to
establish that the Borrower is in compliance with all financial covenants
at the end of the period covered by the financial statements then being
furnished and (ii) whether there existed as of the date of such financial
statements and whether there exists as of the date of the certificate, any
default under this Agreement and, if any such default exists, specifying
the nature thereof and the action the Borrower is taking and proposes to
take with respect thereto.
11.3 Minimum EBITDA. Cause Core EBITDA for the period of four fiscal
--------------
quarters ending on the last day of each fiscal quarter, commencing with the
quarterly period beginning August 1, 2001, to be less than $9,500,000.
11.4 Debt Service Coverage Ratio. Cause the Debt Service Coverage
---------------------------
Ratio, as of the last day of each fiscal quarter, commencing with the quarterly
period beginning August 1, 2001, to be not less than 1.25:1.00.
11.5 Other Debts. Not to have outstanding or incur any direct or
-----------
contingent liabilities (other than those to the Bank and/or any other subsidiary
or affiliate of Bank of America Corporation), or become liable for the
liabilities of others without the Bank's written consent. This does not
prohibit:
(a) Acquiring goods, supplies, or merchandise on normal trade
credit, and incurring indebtedness for services rendered, similar in nature
and amount to such indebtedness incurred by the Borrower and Subsidiary
Borrower in the past.
(b) Endorsing negotiable instruments received in the usual course of
business.
(c) Obtaining surety bonds in the usual course of business.
(d) Liabilities in existence on the date of this Agreement disclosed
in writing to the Bank.
(e) For Borrower only, additional debts for purchase money
transactions including capital leases, conditional sales or other title
retention contracts with respect to property used or acquired, which do not
exceed a total principal amount of Three Hundred Thousand Dollars
($300,000) for each annual accounting period.
(f) a line of credit not in excess of $1,000,000 for IMPCO BV from
Fortis or another institution acceptable to the Bank.
11.6 Other Liens. Not to create, assume, or allow any security
-----------
interest or lien (including judicial liens) on property the Borrower or its
subsidiaries (including the Subsidiary Borrower) now or later own, except:
(a) Deeds of trust and security agreements in favor of the Bank.
(b) Liens for taxes not yet due.
-18-
(c) Additional purchase money security interests and similar liens
in property acquired after the date of this Agreement, to secure
transactions permitted under Section 11.5(e).
11.7 Notices to Bank. To promptly notify the Bank in writing of:
---------------
(a) any lawsuit over Five Hundred Thousand Dollars ($500,000)
against the Borrower.
(b) any substantial dispute between the Borrower or Subsidiary
Borrower and any government authority.
(c) any failure to comply with this Agreement.
(d) any material adverse change in the Borrower's or Subsidiary
Borrower's business condition (financial or otherwise), operations,
properties or prospects, or ability to repay the credit.
(e) any change in the Borrower's or Subsidiary Borrower's name,
legal structure, place of business, or chief executive office if the
Borrower has more than one place of business.
11.8 Books and Records. To maintain adequate books and records.
-----------------
11.9 Audits. To allow the Bank and its agents to inspect the
------
Borrower's and Subsidiary Borrower's properties and examine, audit and make
copies of books and records at any reasonable time. If any of the Borrower's
and Subsidiary Borrower's properties, books or records are in the possession of
a third party, the Borrower and Subsidiary Borrower each authorizes that third
party to permit the Bank or its agents to have access to perform inspections or
audits and to respond to the Bank's requests for information concerning such
properties, books and records.
11.10 Compliance with Laws. To comply with the laws (including any
--------------------
fictitious name statute), regulations, and orders of any government body with
authority over the Borrower's business.
11.11 Preservation of Rights. To maintain and preserve all rights,
----------------------
privileges, and franchises the Borrower now has.
11.12 Maintenance of Properties. To make any repairs, renewals, or
-------------------------
replacements to keep the Borrower's properties in good working condition.
11.13 Perfection of Liens. To help the Bank perfect and protect its
-------------------
security interests and liens, and reimburse it for related costs it incurs to
protect its security interests and liens.
11.14 Cooperation. To take any action reasonably requested by the
-----------
Bank to carry out the intent of this Agreement.
-19-
11.15 Insurance.
---------
(a) Insurance Covering Collateral. To maintain all risk property
-----------------------------
damage insurance policies covering the tangible property comprising the
collateral. Each insurance policy must be in an amount acceptable to the
Bank. The insurance must be issued by an insurance company acceptable to
the Bank and must include a lender's loss payable endorsement in favor of
the Bank in a form acceptable to the Bank.
(b) General Business Insurance. To maintain insurance satisfactory
--------------------------
to the Bank as to amount, nature and carrier covering property damage
(including loss of use and occupancy) to any of the Borrower's or
Subsidiary Borrower's properties, public liability insurance including
coverage for contractual liability, product liability and workers'
compensation, and any other insurance which is usual for the Borrower's
business.
(c) Evidence of Insurance. Upon the request of the Bank, to deliver
---------------------
to the Bank a copy of each insurance policy, or, if permitted by the Bank,
a certificate of insurance listing all insurance in force.
11.16 Capital Expenditures. Commencing for the fiscal year beginning
--------------------
May 1, 2001, make capital expenditures (on a consolidated basis, but exclusive
of Subsidiary Borrower) which are in excess of $2,500,000 during any fiscal year
of Borrower.
11.17 Additional Negative Covenants. Not to, without the Bank's
-----------------------------
written consent:
(a) engage in any business activities substantially different from
the Borrower's or Subsidiary Borrower's present business.
(b) liquidate or dissolve the Borrower's or Subsidiary Borrower's
business.
(c) enter into any consolidation, merger, or other combination, or
become a partner in a partnership, a member of a joint venture, or a member
of a limited liability company, for a total consideration (including
assumption of debt) which, when added to any consideration (including
assumption of debt) for transactions described in subsection (e) below,
would exceed One Million Dollars ($1,000,000).
(d) sell, lease, transfer or dispose of all or a substantial part
of the Borrower's business or the Borrower's assets except in an aggregate
amount not exceeding Two Hundred Thousand Dollars ($200,000) in any fiscal
year (other than the anticipated sale of the Subsidiary Borrower).
(e) for Borrower, acquire or purchase a business or its assets for
a consideration (including assumption of debt) which, when added to any
consideration (including assumption of debt) for transactions described in
subparagraph (c) above, would exceed One Million Dollars ($1,000,000).
(f) sell, assign, lease, transfer or otherwise dispose of any
assets for less than fair market value, or enter into any agreement to do
so.
-20-
(g) enter into any sale and leaseback agreement covering any of its
fixed or capital assets.
(h) voluntarily suspend its business for any period.
(i) make any investment in the Subsidiary Borrower which is not
existing as of the date of this Agreement (other than proceeds of the
secondary offering referred to above in an aggregate amount not to exceed
$14,000,000 and direct loans to the Subsidiary Borrower made pursuant to
Facility No. 1 hereunder).
(j) make any distributions to shareholders of Borrower or Subsidiary
Borrower(whether in cash or other property) or repurchase or acquire any
capital stock or other indebtedness of Borrower or Subsidiary Borrower from
such shareholders. Notwithstanding the provisions herein, this does not
prohibit any distributions of Borrower's interest in Subsidiary Borrower
pursuant to the planned sale of Subsidiary Borrower.
(k) fail to cause either the Borrower or the Subsidiary Borrower to
maintain a liquidity reserve, consisting of borrowing availability under
Facility No. 1 or cash and cash equivalents, in an aggregate amount which
is not less than $2,500,000 at any time.
(l) Make any new loans or additional advances covering any existing
outstandings as of the date of this Agreement, to officers or shareholders.
12. HAZARDOUS WASTE INDEMNIFICATION
The Borrower will indemnify and hold harmless the Bank from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance. This indemnity will apply
whether the hazardous substance is on, under or about the Borrower's property or
operations or property leased to the Borrower. The indemnity includes but is
not limited to attorneys' fees (including the reasonable estimate of the
allocated cost of in-house counsel and staff). The indemnity extends to the
Bank, its parent, subsidiaries and all of their directors, officers, employees,
agents, successors, attorneys and assigns. For these purposes, the term
"hazardous substances" means any substance, material, or waste which is or
becomes designated as "hazardous," "toxic," "pollutant,", or "contaminant" or a
similar designation or regulation under any federal, state or local law (whether
under common law, statute, regulation, or otherwise) or judicial interpretation
of such, including without limitation petroleum or natural gas. This indemnity
will survive repayment of the Borrower's obligations to the Bank.
13. DEFAULT
If any of the following events occurs, the Bank may do one or more of the
following: declare the Borrower and the Subsidiary Borrower to be in default,
stop making any additional credit available to the Borrower and the Subsidiary
Borrower, and require the Borrower and the Subsidiary Borrower to repay their
entire debt hereunder immediately and without prior notice and to provide cash
collateral for all letters of credit issued hereunder. If an event of default
occurs under Section 13.3 with respect to the Borrower or the Subsidiary
Borrower, then the entire debt outstanding under this Agreement will
automatically be due immediately.
-21-
13.1 Failure to Pay. The Borrower or the Subsidiary Borrower fails to
--------------
make a payment under this Agreement within 10 days after the date when due.
13.2 Lien Priority. The Bank fails to have an enforceable first lien
-------------
(except for any prior liens to which the Bank has consented in writing) on or
security interest in any property given as security for this loan.
13.3 False Information. The Borrower or the Subsidiary Borrower gives the
-----------------
Bank false or misleading information or representations.
13.4 Bankruptcy. The Borrower or the Subsidiary Borrower files a
----------
bankruptcy petition, a bankruptcy petition is filed against the Borrower or the
Subsidiary Borrower or either of them makes a general assignment for the benefit
of creditors. The default will be deemed cured if any such involuntary
bankruptcy petition is dismissed within a period of 60 days after the filing;
provided, however, that the Bank will not be obligated to extend any additional
credit to the Borrower or the Subsidiary Borrower during that period.
13.5 Receivers. A receiver or similar official is appointed for the
---------
Borrower's or the Subsidiary Borrower's business, or the business is terminated.
13.6 Lawsuits. Any lawsuit or lawsuits are filed on behalf of one or more
--------
trade creditors against the Borrower or the Subsidiary Borrower in an aggregate
amount of Five Hundred Thousand Dollars ($500,000) or more in excess of any
insurance coverage.
13.7 Judgments. Any judgments or arbitration awards are entered against
---------
the Borrower or the Subsidiary Borrower, or the Borrower or the Subsidiary
Borrower enters into any settlement agreements with respect to any litigation or
arbitration, in an aggregate amount of Five Hundred Thousand Dollars ($500,000)
or more in excess of any insurance coverage.
13.8 Government Action. Any government authority takes action that the
-----------------
Bank believes materially adversely affects the Borrower's or the Subsidiary
Borrower's financial condition or ability to repay the obligations hereunder.
13.9 Material Adverse Change. A material adverse change occurs in the
-----------------------
Borrower's business condition (financial or otherwise), operations, properties
or prospects, or ability to repay the credit on a consolidated basis.
13.10 Cross-default. Any default occurs under any agreement in connection
-------------
with any credit the Borrower or the Subsidiary Borrower has obtained from anyone
else or which the Borrower or the Subsidiary Borrower has guaranteed and such
default is not cured or waived within any cure period applicable thereto.
13.11 Default under Related Documents. Any guaranty, subordination
-------------------------------
agreement, security agreement, or other document required by this Agreement is
violated or no longer in effect.
13.12 Other Bank Agreements. The Borrower or the Subsidiary Borrower
---------------------
fails to meet the conditions of, or fails to perform any obligation under any
other agreement the Borrower or the Subsidiary Borrower has with the Bank or any
affiliate of the Bank.
-22-
13.13 Other Breach Under Agreement. The Borrower or the Subsidiary
----------------------------
Borrower fails to meet the conditions of, or fails to perform any obligation
under, any term of this Agreement not specifically referred to in this Article.
This includes any failure or anticipated failure by the Borrower or the
Subsidiary Borrower to comply with any financial covenants set forth in this
Agreement, whether such failure is evidenced by financial statements delivered
to the Bank or is otherwise known to the Borrower, the Subsidiary Borrower or
the Bank. If, in the Bank's opinion, the breach is capable of being remedied,
the breach will not be considered an event of default under this Agreement for a
period of thirty (30) days after the date on which the Bank gives written notice
of the breach to the Borrower and (if relevant) to the Subsidiary Borrower;
provided, however, that the Bank will not be obligated to extend any additional
credit to the Borrower or the Subsidiary Borrower during that period.
14. ENFORCING THIS AGREEMENT; MISCELLANEOUS
14.1 GAAP. Except as otherwise stated in this Agreement, all financial
----
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.
14.2 California Law. This Agreement is governed by California law.
--------------
14.3 Successors and Assigns. This Agreement is binding on the Borrower's
----------------------
and the Bank's successors and assignees. The Borrower each agrees that it may
not assign this Agreement without the Bank's prior consent. The Bank may sell
participations in or assign this loan, and may exchange financial information
about the Borrower and the Subsidiary Borrower with actual or potential
participants or assignees. If a participation is sold or the loan is assigned,
the purchaser will have the right of set-off against the Borrower and the
Subsidiary Borrower.
14.4 Arbitration.
-----------
(a) This paragraph concerns the resolution of any controversies or
claims between the Borrower, the Subsidiary Borrower and the Bank,
including but not limited to those that arise from:
(i) This Agreement (including any renewals, extensions or
modifications of this Agreement);
(ii) Any document, agreement or procedure related to or
delivered in connection with this Agreement;
(iii) Any violation of this Agreement; or
(iv) Any claims for damages resulting from any business
conducted between the Borrower, the Subsidiary Borrower and the Bank,
including claims for injury to persons, property or business
interests (torts).
(b) At the request of the Borrower, the Subsidiary Borrower or the
Bank, any such controversies or claims will be settled by arbitration in
accordance with the United
-23-
States Arbitration Act. The United States Arbitration Act will apply even
though this Agreement provides that it is governed by California law.
(c) Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial rules of
arbitration.
(d) For purposes of the application of the statute of limitations,
the filing of an arbitration pursuant to this paragraph is the equivalent
of the filing of a lawsuit, and any claim or controversy which may be
arbitrated under this paragraph is subject to any applicable statute of
limitations. The arbitrators will have the authority to decide whether any
such claim or controversy is barred by the statute of limitations and, if
so, to dismiss the arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may be
submitted to any authorized court of law to be confirmed and enforced.
(g) The procedure described above will not apply if the controversy
or claim, at the time of the proposed submission to arbitration, arises
from or relates to an obligation to the Bank secured by real property
located in California. In this case, the Borrower, the Subsidiary Borrower
and the Bank must consent to submission of the claim or controversy to
arbitration. If both parties do not consent to arbitration, the controversy
or claim will be settled as follows:
(i) The Borrower, the Subsidiary Borrower and the Bank will
designate a referee (or a panel of referees) selected under the
auspices of the American Arbitration Association in the same manner
as arbitrators are selected in Association-sponsored proceedings;
(ii) The designated referee (or the panel of referees) will be
appointed by a court as provided in California Code of Civil
Procedure Section 638 and the following related sections;
(iii) The referee (or the presiding referee of the panel) will
be an active attorney or a retired judge; and
(iv) The award that results from the decision of the referee
(or the panel) will be entered as a judgment in the court that
appointed the referee, in accordance with the provisions of
California Code of Civil Procedure Sections 644 and 645.
(h) This provision does not limit the right of the Borrower, the
Subsidiary Borrower or the Bank to:
(i) exercise self-help remedies such as setoff;
(ii) foreclose against or sell any real or personal property
collateral; or
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(iii) act in a court of law, before, during or after the
arbitration proceeding to obtain:
(A) an interim remedy; and/or
(B) additional or supplementary remedies.
(i) The pursuit of or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, does not
constitute a waiver of the right of the Borrower, the Subsidiary Borrower
or the Bank, including the suing party, to submit the controversy or claim
to arbitration if the other party contests the lawsuit. However, if the
controversy or claim arises from or relates to an obligation to the Bank
which is secured by real property located in California at the time of the
proposed submission to arbitration, this right is limited according to the
provision above requiring the consent of both the Borrower, the Subsidiary
Borrower and the Bank to seek resolution through arbitration.
(j) If the Bank forecloses against any real property securing this
Agreement, the Bank has the option to exercise the power of sale under the
deed of trust or mortgage, or to proceed by judicial foreclosure.
14.5 Severability; Waivers. If any part of this Agreement is not
---------------------
enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights, even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default. Any consent or waiver under this Agreement must be
in writing.
14.6 Administration Costs. The Borrower and the Subsidiary Borrower shall
--------------------
pay the Bank for all reasonable costs incurred by the Bank in connection with
administering this Agreement.
14.7 Attorneys' Fees. The Borrower and the Subsidiary Borrower shall
---------------
reimburse the Bank for any reasonable costs and attorneys' fees incurred by the
Bank in connection with the enforcement or preservation of any rights or
remedies under this Agreement and any other documents executed in connection
with this Agreement, and including any amendment, waiver, "workout" or
restructuring under this Agreement. In the event of a lawsuit or arbitration
proceeding, the prevailing party is entitled to recover costs and reasonable
attorneys' fees incurred in connection with the lawsuit or arbitration
proceeding, as determined by the court or arbitrator. In the event that any case
is commenced by or against the Borrower or the Subsidiary Borrower under the
Bankruptcy Code (Title 11, United States Code) or any similar or successor
statute, the Bank is entitled to recover costs and reasonable attorneys' fees
incurred by the Bank related to the preservation, protection, or enforcement of
any rights of the Bank in such a case. As used in this paragraph, "attorneys'
fees" includes the allocated costs of the Bank's in-house counsel.
14.8 One Agreement. This Agreement and any related security or other
-------------
agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements between
the Bank, the Borrower and the Subsidiary Borrower concerning this credit;
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(b) replace any prior oral or written agreements between the Bank,
the Borrower and the Subsidiary Borrower concerning this credit; and
(c) are intended by the Bank, the Borrower and the Subsidiary
Borrower as the final, complete and exclusive statement of the terms agreed
to by them.
In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.
14.9 Indemnification. The Borrower and the Subsidiary Borrower will
---------------
indemnify and hold the Bank harmless from any loss, liability, damages,
judgments, and costs of any kind relating to or arising directly or indirectly
out of (a) this Agreement or any document required hereunder, (b) any credit
extended or committed by the Bank to the Borrower or the Subsidiary Borrower
hereunder, and (c) any litigation or proceeding related to or arising out of
this Agreement, any such document, or any such credit. This indemnity includes
but is not limited to attorneys' fees (including the allocated cost of in-house
counsel). This indemnity extends to the Bank, its parent, subsidiaries and all
of their directors, officers, employees, agents, successors, attorneys, and
assigns. This indemnity will survive repayment of the obligations hereunder to
the Bank. All sums due to the Bank hereunder shall be obligations of the
Borrower and the Subsidiary Borrower, due and payable immediately without
demand.
14.10 Notices. All notices required under this Agreement shall be
-------
personally delivered or sent by first class mail, postage prepaid, to the
addresses on the signature page of this Agreement, or to such other addresses as
the Bank, the Borrower may specify from time to time in writing.
14.11 Headings. Article and paragraph headings are for reference only and
--------
shall not affect the interpretation or meaning of any provisions of this
Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
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14.12 Counterparts. This Agreement may be executed in as many
------------
counterparts as necessary or convenient, and by the different parties on
separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
agreement.
This Agreement is executed as of the date stated at the top of the first
page.
BANK OF AMERICA, N.A. IMPCO TECHNOLOGIES, INC.
/S/ Xxxx Xxxx /s/ Xxxxxxx X. Xxxxx
By:_______________________________ By:________________________________
Xxxx Xxxx Chief Financial Officer
Title: Vice President Title:_____________________________
Address where notices to the Bank are Address where notices to the Borrower
to be sent: are to be sent:
000 X. Xxxxxx Xxxxxx, Mezzanine Level 00000 Xxxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000 Xxxxxxxx, XX 00000-0000
QUANTUM TECHNOLOGIES, INC.
/s/ Xxxxxxx X. Xxxxx
By:________________________________
Chief Financial Officer
Title:_____________________________
Address where notices to the
Subsidiary Borrower are to be sent:
C/O IMPCO TECHNOLOGIES
00000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
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