LOAN AND SECURITY AGREEMENT
This is a Loan and Security Agreement made this 6th day of February, 1997,
between SUMMIT BANK ("Lender"), a banking corporation of the State of New
Jersey, having an address at 000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000, and
BOGEN COMMUNICATIONS, INC., a corporation of the State of Delaware, having its
principal place of business at 00 Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000
("Borrower").
RECITAL:
WHEREAS, Borrower and Lender, wish to enter into a commercial lending
arrangement whereby Lender shall make loans to Borrower on a revolving basis and
Borrower shall repay same under the terms and conditions set forth herein; and
WHEREAS, the loans and other financial accommodations to be provided to
Borrower by Lender are to be secured by substantially all of the assets of
Borrower including, without limitation, all accounts receivable, equipment,
inventory and the other personal property of Borrower; and
WHEREAS, by this writing Borrower and Lender wish to set forth the terms
and conditions of the lending arrangement between Borrower and Lender.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
1. DEFINITIONS:
For the purposes of this Agreement, the following definitions shall apply
to the terms set forth below:
A. The term "Account Debtor" shall mean and include all customers of
Borrower or other Persons who are indebted to Borrower.
B. The term "Acceptable Conditional Sales" shall mean sales to Sprint or
other Account Debtors who are satisfactory to Lender in its
commercially reasonable discretion, who are allowed to return certain
merchandise which remains unsold by such Account Debtor for six (6)
months after delivery of the merchandise and who receive credit for
the value of the returned merchandise against future Inventory
purchases, but who also are required to pay Borrower, in the ordinary
course of business, the entire amount invoiced by Borrower for such
merchandise in accordance with the terms of the invoice.
C. The term "Accounts Receivable" shall mean all accounts as defined in
the Uniform Commercial Code of the State of New Jersey, and, in
addition, any and all obligations of any kind at any time due and/or
owing to Borrower and all rights of Borrower to receive payment or any
other consideration (whether classified under the Uniform Commercial
Code of the State of New Jersey or any other State as accounts,
accounts receivable, contract rights, chattel paper, General
Intangibles, or otherwise) including without limitation, invoices,
contract rights, accounts receivable, choses in action, notes, drafts,
acceptances, instruments and all other debts, obligations and
liabilities in whatever form owing to Borrower from any Person, firm,
governmental authority, corporation or any other entity, all security
therefor, and all Borrower's rights to goods sold (whether delivered,
undelivered, in transit or returned), which may be represented
thereby, whether now existing or hereafter arising, together with all
proceeds and products of any and all of the foregoing.
D. The term "Advances" shall mean all loans made to Borrower pursuant to
Section 2.1 hereof.
E. The term "Advance Limit" shall mean the maximum amount of the
Revolving Loans and Advances Borrower may request of Lender based upon
the percentages and/or amounts of Advance with respect to Borrower's
Qualified Accounts Receivable and Qualified Inventory against which
Lender is willing to make Revolving Loans.
F. The term "Affiliate" shall mean and include any Person in which one or
more of the stockholders owning ten percent (10%) or more of Borrower,
any subsidiary and/or any parent, now or at any time or times
hereafter hold, individually, jointly or severally, an equity or other
ownership interest in excess of ten percent (10%) of the total equity
or ownership interest in such Person.
G. The term "Agreement" shall mean this Loan and Security Agreement and
any extensions or renewals thereof or modifications or amendments
thereto.
H. The term "Banking Day" shall mean any day other than a Saturday,
Sunday or other day on which Lender is closed for a United States of
America or any state declared bank holiday.
I. The term "Borrower" shall mean Bogen Communications, Inc., a
corporation of the State of Delaware.
J. The term "Borrowing Base Certificate" shall mean a certificate,
substantially in the form of Exhibit "A" attached hereto and made a
part hereof, which shall be completed and signed by a authorized
officer of Borrower and shall be utilized by
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Borrower and Lender to calculate the sums available to be borrowed as
Revolving Loans.
K. The term "Collateral" shall mean and include Borrower's Accounts
Receivable, Inventory, General Intangibles, Machinery, Equipment,
returned or repossessed merchandise, and all other property of
Borrower or others, which or in which Lender, by this Agreement or
otherwise, is given a security interest or the right to hold as
security for or to apply to the payment of Borrower's Obligations and
all proceeds of same, all as more fully described on Schedule 1.K
hereto.
L. The term "Equipment" shall mean all equipment as defined in the
Uniform Commercial Code of the State of New Jersey and, in addition,
all equipment, machinery, furniture, fixtures, and all other tangible
assets, and all replacements, repairs, modifications, alterations,
additions, controls and operating accessories therefor, all
substitutions and replacements therefor, and all accessions and
additions thereto and all proceeds and products of the foregoing now
owned or hereafter acquired by Borrower.
M. The term "Event of Default" shall mean a default as set forth in
Section 11 of this Agreement.
N. The term "GAAP" shall mean generally accepted accounting principles.
O. The term "General Intangibles" shall mean and include all of
Borrower's now owned or hereafter acquired choses in action, causes of
action and all other intangible personal property including, without
limitation, corporate or other business records, inventions, designs,
patents, patent applications, trademarks, trademark applications,
trade names, trade secrets, good will, registrations, copyrights,
licenses, franchises, customer lists, tax refunds, tax refund claims,
insurance claims, rights and claims against carriers and shippers and
rights to indemnification.
P. The term "Guarantors" shall mean Bogen Communications International,
Inc., Bogen Corporation and any other Person who shall at any time
agree to be a guarantor and/or surety for Borrower.
Q. The term "Inventory" shall mean all items described in the Uniform
Commercial Code of the State of New Jersey definition thereof and all
of the following, whether or not so described (in all cases whether
now owned or hereafter acquired by Borrower and wherever located): all
goods, merchandise or other personal property held by Borrower for
sale or lease or to be furnished under labels and other devices, names
or marks affixed thereto for purposes of selling or identifying the
same or the seller or manufacturer thereof, and all right, title and
interest of Borrower therein and thereto; all raw materials, work or
goods in
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process; and all materials and supplies of any kind or description
used or usable in connection with the manufacture, packaging,
shipping, advertisement, sale or finishing of any of the foregoing,
together with all proceeds and products of any of the foregoing.
R. The term "Lender" shall mean Summit Bank, a banking corporation
organized and existing under the laws of the State of New Jersey, its
successors and assigns.
S. The term "Letter of Credit" shall mean any and all irrevocable
documentary or stand-by letters of credit issued by Lender for the
account and at the request of Borrower which shall not exceed Seven
Hundred Thousand ($700,000.00) Dollars in aggregate undrawn face
amounts at any time.
T. The term "Line of Credit" shall mean the maximum amount Lender could
be requested to lend to Borrower under the terms and conditions of
this Agreement as evidenced by the face amount of the Secured
Revolving Note in effect from time to time.
U. The term "Machinery" shall mean and include, without limitation, all
inanimate mechanisms for utilizing or applying power, including the
appurtenances thereto, used by or for Borrower in the operation of its
business and all accessories, substitutions, additions, replacements
and parts thereof, whether now owned or hereafter acquired.
V. The term "Obligation" or "Obligations" shall mean all indebtedness,
obligations, liabilities, and agreements of every kind and nature of
Borrower to or with Lender, or to or with any affiliate of Lender, or
any guaranty of Borrower of any other Person's indebtedness,
liabilities and agreements to or with Lender, or to or with any
affiliate of Lender, now existing or hereafter arising, and now or
hereafter contemplated, pursuant to this Agreement, the Relevant
Documents (as hereinafter defined) or otherwise, whether in the form
of refinancing, letters of credit, bankers acceptances, guarantees,
loans, interest, charges, expenses or otherwise, direct or indirect,
(including without limitation, any participation or interest of Lender
[or of any affiliate of Lender] in any obligations of Borrower to
others), acquired outright, conditionally or as collateral security
from another, absolute or contingent, joint or several, liquidated or
unliquidated, secured or unsecured, arising by operation of law or
otherwise, including without limitation any future advances, renewals,
extensions or changes in form of, or substitutions for, any of said
indebtedness, obligations or liabilities, the other sums and charges
to be paid to Lender pursuant to Sections 2, 3 and 4 hereof, and all
interest and late charges on any of the foregoing.
W. The term "Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, limited liability
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company, corporation, institution, entity, party or government
(including any political subdivision thereof).
X. The term "Qualified Account", "Qualified Accounts" or "Qualified
Accounts Receivable" shall mean the Accounts Receivable as to which
Borrower has furnished to Lender information adequate to identify the
same, at such times and in such form as has been or, from time to time
may be, requested by Lender, which meet all of the following criteria
on the origination date of the said Accounts and continuing thereafter
until collected, and which are in all other respects acceptable to
Lender:
(i) Borrower is the sole owner of the Accounts Receivable and has not
sold, assigned, mortgaged or hypothecated, nor released from
Lender's security interest, all or any portion thereof, nor are
they subject to any claim, lien or security interest of any
Persons or entities, including without limitation the United
States, or any agencies or instrumentalities thereof;
(ii) They shall be valid and legally enforceable, owing to Borrower
for the performance of services or the sale of goods arising in
the ordinary course of business for which Borrower has delivered
or, at the time of origination of the said Accounts, if required
by Lender, will deliver to the Lender invoices, xxxxxxxx and
shipping documents and other documents evidencing the obligation
of the Borrower's customer to pay the Account Receivable;
(iii)They do not represent a conditional sale (except Acceptable
Conditional Sales which must be disclosed as such on each
Borrowing Base Certificate), sale on consignment, xxxx and hold
or other sale on a basis other than that of absolute sale, are
not evidenced by any note, instrument, chattel paper or like
document, and do not arise out of a contract with the United
States or any of its departments, agencies, or instrumentalities,
unless accepted by Lender and Borrower has complied with the
Federal Assignment of Claims Act in all respects to assign such
Account to Lender;
(iv) No financing statement covering any Account Receivable or its
proceeds, except in favor of Lender, is on file in any public
office, and neither Borrower nor Lender has received any notice
of any proposed acquisition, of any Account Receivable security
interest therein;
(v) The goods or services were shipped or supplied on the invoice
date and the invoice for the Account Receivable is dated less
than ninety (90) days or, as Lender in its discretion may allow
from time to time with respect to Accounts Receivable with
extended terms, dated less than one-hundred twenty (120) days
prior to the date on which the amount of the Accounts Receivables
are being determined;
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(vi) If the aggregate amount of an Account Debtor's indebtedness to
Borrower in calculating the Advance Limit exceeds twenty (20%)
percent of Borrower's total Accounts at the time outstanding,
then such excess shall not be eligible to be classified as a
Qualified Account Receivable;
(vii) They are not subject to any offsets, credits, allowances or
adjustments due the Account Debtor except usual and customary
prompt payment discounts, nor has any Account Debtor returned the
goods or indicated any dispute or complaint concerning them and
the Account is not otherwise subject to any right of set-off;
(viii) Not more than fifty (50%) percent of the total amount of the
Accounts Receivable due from the Account Debtor has been
classified not Qualified by Lender;
(ix) Borrower has not received any notice, nor has it any knowledge of
any facts which adversely affect the credit of the Account
Debtor;
(x) The Account Debtor is not a Subsidiary or other Affiliate of
Borrower nor a director or officer of Borrower or an Affiliate of
any director or officer;
(xi) The Account Debtor is located in the United States of America or
Canada;
(xii)The Account Receivable does not arise from the sale of the Friday
Home Office Receptionist Line; and
(xiii)Lender has not notified Borrower that either the Account
Receivable or the Account Debtor is not qualified.
Y. The term "Qualified Inventory" shall mean the Inventory which has been
identified and described to Lender's satisfaction, is represented by
Borrower (by its acceptance of Revolving Loans thereon) as meeting all
of the following criteria on the date of any Revolving Loan based
thereon and thereafter while any of the Obligations are outstanding
and is in all other respects acceptable to Lender:
(i) Borrower is the sole owner of the Inventory; none of the
Inventory is being held by Borrower on a consignment basis;
Borrower has not sold, assigned or otherwise transferred all or
any portion thereof, and none thereof is subject to any claim,
lien or security interest;
(ii) If any of the Inventory is represented or covered by any document
of title, instrument or chattel paper, Borrower is the sole owner
of all such documents, instruments and paper, all thereof are in
the possession of the
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Lender, none thereof has been sold, assigned or otherwise
transferred and none thereof is subject to any claim, lien or
security interest;
(iii)The Inventory shall consist of saleable raw materials and
finished goods manufactured or acquired by Borrower in the
ordinary course of Borrower's business, subject to its contract
or sole possession, stored in locations with respect to which
landlord or warehousemen waivers, as applicable, satisfactory to
Lender have been obtained; and
(iv) The Inventory does not constitute part of the Friday Home Office
Receptionist Line.
Z. The term "Relevant Documents" shall mean any and all documents and
instruments executed or delivered by Borrower to Lender pursuant or
incident to this Agreement, or heretofore or hereafter executed or
delivered by Borrower with respect to its Revolving Loan and other
financial accommodations extended to Borrower by Lender.
AA. The term "Revolving Loan" or "Revolving Loans" shall mean the loans
made pursuant to Section 2 of this Agreement and the indebtedness of
Borrower to Lender incurred pursuant to this Agreement.
BB. The term "Secured Revolving Note" shall mean the Secured Revolving
Promissory Note executed contemporaneously herewith and any renewal,
extension, modification or amendment thereto or substitution therefor.
CC. The term "Subsidiary" shall mean any Person at least a majority of
whose issued and outstanding equity now or at any time or times
hereafter is owned by the Borrower and/or one or more Subsidiaries
thereof.
DD. The term "Summit Bank Floating Base Rate" shall mean the rate of
interest established from time to time by Lender as its "floating base
rate". This rate of interest is determined from time to time by Lender
as a means of pricing some loans to its customers and is neither tied
to any external rate of interest or index, nor does it necessarily
reflect the lowest rate of interest actually charged by Lender to any
particular class or category of customers of Lender.
2. REVOLVING LOAN:
2.1 (a) Amount. During the term of this Agreement, provided there has not
occurred an Event of Default hereunder (as hereinafter defined) or an event
which, with the giving of notice or the lapse of time, or both, would become an
Event of Default hereunder, Lender will provide, at one time or from time to
time, at the request of Borrower, Revolving Loans to
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Borrower in an aggregate amount up to but not in excess of the Borrower's
Advance Limit, which Revolving Loans may be borrowed, repaid and reborrowed
pursuant to the terms of this Agreement and which Revolving Loans shall be
payable, in full together with all accrued and unpaid interest, fees and costs,
if any, on February 5, 1999. If the outstanding aggregate amount of the
Revolving Loans shall exceed the Advance Limit at any time, such excess shall be
deemed secured by the Collateral (as hereinbefore defined), shall be payable
immediately upon demand and shall be subject to the terms of this Agreement.
(b) Advance Request Procedure. Each Advance under the Revolving Loan shall
be requested telephonically, not later than 2:00 P.M. Eastern Time on any
Banking Day, by a Person authorized in writing by Borrower to make Advance
requests, and each such request shall be confirmed in writing, via facsimile
transfer, prior to the close of business on such Banking Day.
(c) Advance Limit. The Advance Limit shall not in the aggregate at any time
outstanding exceed the lesser of:
(i) Seven Million ($7,000,000.00) Dollars; or
(ii) The result of the following calculation: (x) eighty-five percent
(85%) of the face amount of Borrower's Qualified Accounts Receivable, plus
(y) the lesser of (A) thirty-five percent (35%) of the value (at
the lower of cost or market values then prevailing) of Borrower's
Qualified Inventory consisting of raw materials, not to exceed Three
Hundred Fifty Thousand ($350,000.00) Dollars plus fifty percent (50%)
of the value (at the lower of cost or market values then prevailing)
of Borrower's Qualified Inventory consisting of finished goods, or (B)
Two Million ($2,000,000.00) Dollars; minus
(z) the aggregate of the undrawn face amounts of all outstanding
Letters of Credit plus unreimbursed time drafts and/or bankers
acceptances, if any, which sum shall not exceed Five Hundred Thousand
($500,000.00) Dollars at any time; provided also, however,
(iii) Loans outstanding with respect to Acceptable Conditional Sales
shall not exceed One Hundred Seventy-Five Thousand ($175,000.00) Dollars,
in the aggregate, at any time.
(d) Lender shall have the right, from time to time, in its commercially
reasonable discretion, to increase and/or decrease the percentages or amounts of
advance or amount of the Advance Limit and/or establish such reserves as it
shall deem necessary from time to time; and the sums advanced pursuant thereto
shall nevertheless be secured by the Collateral and subject to the terms of this
Agreement.
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(e) It is understood that the total of the aggregate outstanding principal
balance of Revolving Loans plus the aggregate of the undrawn face amounts of
Letters of Credit unreimbursed time drafts and/or bankers acceptances, if any,
shall not, at any time, exceed Seven Million ($7,000,000.00) Dollars.
2.2 Collateral and Proceeds of Collateral. (a) Borrower shall promptly
deliver or cause to be delivered to Lender or to a dominion account or lockbox,
over which Lender shall have the sole power of withdrawal, all proceeds of the
Collateral, in the form received. Upon receipt thereof, Lender shall deposit
said proceeds to a cash collateral account over which Lender shall have the sole
power of withdrawal. In the event any proceeds are received directly by
Borrower, such proceeds shall be deposited, in the form received, to a
collection account to be opened with Lender.
(b) Such cash collateral account and collection account, if any, shall be
swept daily and the amount of each such sweep shall be applied to the
Obligations, notwithstanding that the sums credited may constitute uncollected
funds. All such credits shall be conditioned upon final payment to Lender of the
items giving rise to them and, if any items are not so paid, the amount of any
credit given shall be charged as a debit to Borrower's Revolving Loan account
(or to any deposit account of Borrower with Lender) whether or not the item is
returned. The Borrower shall not commingle any proceeds of the Collateral with
any other funds or property of the Borrower, and shall hold such proceeds
separate and apart therefrom and upon an express trust for Lender until
deposited in the cash collateral account. Credit for the proceeds deposited in
the cash collateral account shall be conditioned upon final payment of the
deposited item, notwithstanding the application by Lender of the proceeds of the
Collateral to the Obligations.
2.3 Determination of Loan Balance.
(a) In determining the Borrower's outstanding Revolving Loan balance, the
following shall govern:
(i) Domestic checks received by the Lender on or before 12:00 Noon of
any Banking Day, shall be credited against the balance of the Obligations
on such Banking Day;
(ii) Domestic checks received by the Lender after 12:00 Noon of any
Banking Day, shall be credited against the balance of the Obligations on
the following Banking Day;
(iii) Any other form of proceeds received by the Lender shall be
credited against the balance of the Obligations when the Lender has
received notification of collection (it being understood, that if the
Lender receives notice of collection on or before 12:00 Noon of any such
Banking Day, such proceeds shall be deemed to have been received by the
Lender on such day, and if Lender receives notice of collection after 12:00
Noon of any such Banking Day, such proceeds shall be deemed to have been
received by the Lender as of the following Banking Day);
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(iv) Such credits shall be conditioned upon final payment to Lender at
its own office in cash or solvent credits of the items giving rise to them
and if any item is not so paid, the amount of any credit given for it shall
be charged to the Revolving Loan balance whether or not the item is
returned.
(b) For the purpose of computing interest on the Revolving Loan, interest
shall continue to accrue on the amount of any domestic checks received by the
Lender for a period of two (2) Banking Days after receipt (it being understood
that if a domestic check is received on or before 12:00 Noon of any Banking Day,
it shall be deemed received by the Lender on such Banking Day, and if received
after 12:00 Noon of such Banking Day, it shall be deemed received by the Lender
on the following Banking Day), notwithstanding that the Lender has credited the
amount thereof against the outstanding Revolving Loan balance on the Banking Day
of receipt.
2.4 Monthly and Interim Statements. Once each month Lender shall render a
statement of account to Borrower showing the current status of the Revolving
Loan account and the interest thereon. If these statements or any interim
statements indicate that the outstanding balance of the Revolving Loan exceeds
the Advance Limit, such excess shall at all times be governed and secured by
this Agreement and Borrower forthwith either shall furnish additional
collateral, which shall be satisfactory to Lender in its sole discretion, or pay
the difference in cash. The statement of account rendered by Lender shall be
considered correct, accepted by Borrower and conclusively binding upon the
Borrower, unless Borrower gives notice to Lender to the contrary in writing
within twenty (20) Banking Days after the sending of said statement by the
Lender. If Borrower disputes the correctness of Lender's statement, Borrower's
notice shall specify in detail the particulars of why it contends Lender's
statement of account is incorrect.
2.5 Negative Balances. In the event Borrower's operating account(s) with
Lender contain a negative balance at any time, then Lender shall be deemed to
have made an Advance to Borrower in the amount of such deficiency, pursuant to
the terms hereof, on the Lender's Banking Day immediately preceding the day on
which such deficiency occurs. Nothing contained herein shall be deemed or be
construed to (a) obligate the Lender to honor any items presented to Lender for
payment against any account of Borrower in which a deficiency exists, whether or
not it has ever done so in the past; or (b) relieve Borrower of its obligations
to pay usual and customary charges of Lender imposed generally with respect to
such deficiencies in addition to the interest accrued as the result of any
Advances made pursuant to this subsection.
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3. LETTERS OF CREDIT:
3.1 Issuance of Letters of Credit. From time to time, subject to
satisfaction by Borrower of the terms and conditions hereinafter set forth,
Lender may, at its discretion, upon the request of Borrower, issue one or more
Letters of Credit for the account of Borrower. Each Letter of Credit shall be in
form and substance satisfactory to Lender. Without limiting the generality of
the preceding sentence, issuance of all Letters of Credit shall be on the
following terms and conditions:
(a) Stated Amount. The aggregate undrawn face amount(s) of all
outstanding Letters of Credit plus outstanding time drafts and/or bankers
acceptance shall not exceed the sum of Seven Hundred Thousand ($700,000.00)
Dollars at any one time.
(b) Term. No Letter of Credit shall have a stated term of more than
one (1) year as to stand-by Letters of Credit and ninety (90) days as to
documentary Letters of Credit.
(c) Application. Each Letter of Credit shall be issued in accordance
with Lender's then current practices relating to the issuance by Lender of
standby or documentary letters of credit, including, but not limited to,
the payment by Borrower of all applicable fees and other charges as
customarily imposed by Lender generally upon the issuance of Letters of
Credit. Each Letter of Credit shall be issued only after receipt by Lender
of its then current application and agreement for a standby or documentary
letter of credit, properly completed and executed by Borrower and delivered
to Lender at least three (3) Banking Days prior to the requested issuance
date.
(d) Requests for Letters of Credit; Conditions Precedent. Letters of
Credit may be requested by the Borrower at any time during which this
Agreement is in effect so long as (i) no Event of Default has occurred, and
(ii) no demand for payment has been made by Lender. Once requested, Letters
of Credit will be issued, at Lender's discretion, only after all conditions
precedent to the issuance thereof, have been satisfied, and all fees have
been paid.
(e) No Violation of Advance Limit. At no time may a Letter of Credit
be issued if such issuance would cause Borrower to be in violation of the
Advance Limit.
(f) Payment Obligations. The payment obligations of Borrower under
this Section 3 shall be absolute, unconditional and irrevocable and shall
be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances:
(i) the existence of any claim, set-off, defense or other right
which Borrower may have at any time against any beneficiary, or any
transferee, of any Letter of Credit (or any persons or entities for
whom any such beneficiary or any such transferee may be
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acting), or Lender or any other person or entity, whether in
connection with this Agreement, the transactions contemplated herein
or any unrelated transaction;
(ii) any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iii) payment by Lender under any Letter of Credit against
presentation of a draft or certificate which does not comply with the
terms of such Letter of Credit, except payment where a court of
competent jurisdiction determines in a final, non-appealable judgment
to have resulted primarily and directly from the gross negligence or
willful misconduct of Lender; and
(iv) any other circumstances or occurrences whatsoever, whether
or not similar or dissimilar to any one or more of the foregoing,
except circumstances or occurrences which a court of competent
jurisdiction determines in a final, non-appealable judgment to have
resulted primarily and directly from the gross negligence or willful
misconduct of Lender.
(v) Supplemental Provisions. The provisions of any application
and agreement for any Letter of Credit are supplemental to, and not in
derogation of, any rights and remedies of Lender under this Agreement,
at law, in equity, by arbitration or otherwise.
3.2. Payments Under Letters of Credit
(a) Payments upon Draw. Upon the occurrence of any draw on any Letter of
Credit, Borrower hereby agrees to repay immediately to Lender on the same day
such draw is honored by Lender, in immediately available funds, the amount of
such draw, together with any and all costs or expenses which Lender may incur in
connection with such Letter of Credit, without any requirement of notice,
presentment or demand by Lender, all of which are hereby waived by Borrower. In
order to implement the foregoing, upon the occurrence of a draw under any Letter
of Credit, unless Lender is immediately so reimbursed by Borrower, Borrower
hereby irrevocably authorizes and directs Lender to treat such draw as a request
for a Revolving Loan in the amount of such draw, and Borrower hereby irrevocably
authorizes and directs Lender to make a Revolving Loan, bearing interest as set
forth in this Agreement, in the aggregate amount of such draw. Borrower further
hereby irrevocably authorizes and directs Lender to retain the proceeds of any
such Revolving Loan and credit such proceeds so as to immediately eliminate the
liability of Borrower to Lender pertaining to such draw.
(b) Payment Upon Bankruptcy Etc. If any Event of Default occurs,
specifically including those pursuant to Section 11.5, and at such time there
are outstanding unexpired Letters of Credit, Borrower hereby irrevocably
authorizes and directs Lender to make a Revolving Loan in the amount of the
aggregate undrawn face amount(s) of such unexpired Letters of Credit, the
proceeds of which Revolving Loan shall be placed in an interest-bearing
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deposit account for the sole benefit of and under the sole dominion and control
of Lender (the "Reimbursement Deposit Amount"), which shall be used to reimburse
Lender for draws upon any such unexpired Letters of Credit. If from time to
time, as draws on outstanding Letters of Credit have been honored and as
outstanding Letters of Credit expire, funds remain in the Reimbursement Deposit
Account in excess of the then aggregate undrawn face amount(s) of the remaining
Letters of Credit, those funds shall be returned to Lender and shall be applied
by Lender to reduce the outstanding Obligations.
(c) Payments After Termination of Facility. If all Obligations have been
paid and this Agreement terminated for any reason, Borrower shall either
immediately cause to be issued a standby letter of credit for the benefit of
Lender which shall be in all respects acceptable to Lender in its sole
discretion or immediately upon demand by Lender, deposit into, and keep on
deposit in, the Reimbursement Deposit Account, for the sole benefit of and under
the sole dominion and control of Lender, an amount equal to at least 105% of the
aggregate undrawn face amount(s) of all outstanding Letters of Credit, for the
purpose of providing Lender with a means of repayment of draws under any of the
Letters of Credit. At such time as Lender shall have no further obligations
under and pursuant to any Letter of Credit, Lender, after reimbursing itself for
all draws under any Letter of Credit and any customary fees or other expenses
due and owing in connection therewith, shall promptly remit the balance of the
Reimbursement Deposit Account, if any, to the order of Borrower.
(d) Reserve to Revolving Loan/Advances Not Discretionary. (i) Anything in
this Agreement to the contrary notwithstanding, the Advance Limit shall be
reduced at all times by the aggregate amounts to be drawn upon plus the
aggregate amounts drawn and remaining unpaid under all Letters of Credit; and
(ii) in no event shall any Revolving Loan made by Lender pursuant to and in
compliance with the terms and provisions of this Section 3 be deemed to be
discretionary or voluntary and Borrower covenants and agrees to pay, protect,
indemnify and hold harmless Lender from and against any and all costs and
expenses, including but not limited to, reasonable attorneys' fees and experts'
costs and expenses, incurred by Lender as a result of the allegation by any
Person or entity that the Revolving Loan in question was discretionary or
voluntary on the part of Lender.
3.3 Uniform Customs and Practices for Documentary Credits. Each Letter of
Credit shall be governed by, construed and enforced in accordance with the
Uniform Customs and Practices for Documentary Credits, 1993 Revision, ICC
Publication No. 500 as amended, updated or superseded from time to time (the
"UCP"). Anything in this Agreement to the contrary notwithstanding, in no event
shall Lender have any obligation to (a) issue a revolving documentary credit;
(b) issue an authenticated teletransmission or pre-advice of any Letter of
Credit; or (c) issue any Letter of Credit if Lender determines, which
determination shall be final and conclusive and binding on Borrower, that the
terms and conditions of the Letter of Credit sought by Borrower are not in
compliance with the internal policies of Lender, including, but not limited to,
if Lender determines that the use of proceeds of the Letter of Credit being
sought by Borrower, if drawn upon, are not in compliance with such internal
policies.
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4. INTEREST AND OTHER CHARGES:
4.1 Interest Rate. Except as herein provided, the Revolving Loan shall bear
interest during each calendar month at a fluctuating interest rate per annum
equal at all times to the Summit Bank Floating Base Rate plus one-half (1/2)
percentage point per annum. Each change in such rate shall take effect
contemporaneously with the corresponding change in the Summit Bank Floating Base
Rate, without notice to Borrower. Interest shall be calculated on a daily basis
upon the unpaid balance with each day representing 1/360th of a year.
4.2 Payment of Interest. Interest on the Revolving Loan shall be calculated
as at the end of each calendar month, is due on the fifth Banking Day of the
following month and shall be charged by Lender to any checking or loan account
maintained by Borrower. Any failure or delay by Lender in submitting invoices
for interest payments shall not discharge or relieve Borrower of the obligation
to make such interest payments.
4.3 Default Rate. Anything herein to the contrary notwithstanding, upon the
occurrence and during the continuance of an Event of Default hereunder, the
interest rate charged to Borrower on the Revolving Loan shall, at Lender's
discretion, be increased by two and three-quarters (2.75) percentage points per
annum in excess of the then applicable rate.
4.4 Maximum Rate. In no event shall the interest rate charged under this
Agreement be higher than the maximum lawful rate. In the event the interest rate
exceeds the maximum lawful rate, any such excess received by Lender shall be
deemed and applied as a payment of the principal balance.
4.5 Late Charge. Any payment of interest or principal due hereunder which
is received more than ten (10) days after the date due shall be subject to a
late charge of five (5%) percent of the amount of such payment which shall not
be less than $25.00 nor more than $2,500.00. Such late charge represents
reimbursement of various costs incurred by Lender in processing such late
payments and shall not be deemed to be additional interest hereunder.
4.6 Collateral Management Fee. Borrower shall pay to Lender a collateral
management fee in the sum of Fifteen Thousand ($15,000.00) Dollars per annum
which shall be deemed fully earned and non-refundable upon receipt. Such fee
shall be due and payable upon the execution hereof and annually, upon each
anniversary date hereof thereafter during the term of this Agreement.
4.7 Letter of Credit Fees. There shall be due and payable upon the issuance
and renewal of each standby Letter of Credit a fee of one (1%) percent of the
face amount of each such Letter of Credit together with the customary fees
generally charged to Lender's customers and upon issuance of each documentary
Letter of Credit, such customary fees only.
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5. SECURITY INTEREST:
5.1 Security Interest. (a) As collateral security for (i) the due and
punctual payment of the Revolving Loan, all interest thereon and any and all
extensions, renewals, substitutions and changes in form thereof; (ii) all other
Obligations of Borrower to Lender; and (iii) all costs and expenses incurred or
paid by Lender to enforce its rights pursuant to this Agreement, the Relevant
Documents or otherwise (including without limitation attorney's fees), Borrower
hereby pledges, transfers, assigns, sets over and grants to Lender, a security
interest in the Collateral, whether now existing or hereafter created and
whether now owned or hereafter acquired, wherever located, and all accessions
and additions thereto, replacements and substitutions therefor and proceeds and
products thereof.
(b) All Collateral heretofore, herein or hereafter given to the Lender
shall secure payment of the Revolving Loan and all of the Borrower's other
Obligations to Lender. Lender shall be under no obligation to proceed against
any or all of the Collateral before proceeding directly against Borrower, any
Guarantor or against any item of Collateral prior to any other item of
Collateral.
5.2 Continuation of Security Interest. The security interest granted in
this Agreement shall continue in full force and effect until the Borrower has
fully paid and discharged all Obligations.
5.3 Further Assurances. Borrower shall take such steps and execute and
deliver such financing statements and other documents all in form and substance
satisfactory to Lender relating to the creation, validity or perfection of the
security interests provided for herein, under the Uniform Commercial Code or
other laws of the State of New Jersey or of any other state or states as Lender
may from time to time request.
6. REPRESENTATIONS AND WARRANTIES:
6.1 Organization and Qualification. Borrower hereby represents and warrants
to Lender, knowing and intending that Lender shall rely thereon in making the
Loans contemplated hereby, that:
(a) Borrower has been and will continue to be a corporation duly
organized and validly existing and in good standing under the laws of the
State of Delaware and is and will continue to be qualified and in good
standing in all jurisdictions wherein the character of the property owned
or the nature of the business transacted by Borrower makes licensing or
qualification as a foreign entity necessary.
(b) A true, accurate and complete copy of Borrower's valid resolution
authorizing the transaction contemplated herein, and Borrower's certificate
of incorporation and by-laws all
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as in effect on the date hereof and certified by the Secretary of Borrower
have heretofore been delivered to Lender.
6.2 Due Authorization; No Default. (a) The execution, delivery and
performance of this Agreement and the Relevant Documents has been duly
authorized by all necessary action on the part of Borrower; is not inconsistent
with its certificate of incorporation, by-laws and other governing documents;
does not contravene any law, governmental rule, regulation or order applicable
to Borrower; and does not and will not contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument or any order, writ, injunction or decree to which Borrower is a party
or by which it or its properties or assets are bound.
(b) This Agreement and the Relevant Documents, upon their execution and
delivery, will constitute the legal, valid and binding agreements of Borrower,
enforceable in accordance with their terms.
6.3 No Governmental Consent Necessary. No consent or approval of, giving of
notice to, registration with or taking of any other action in respect of any
governmental authority or agency is required with respect to the execution,
delivery and performance by Borrower of this Agreement and the Relevant
Documents.
6.4 No Proceedings. There are no actions, suits, or proceedings pending or,
to the best of Borrower's knowledge, threatened against or affecting Borrower in
any court or before any governmental commission, board or authority which, if
adversely determined, will have an adverse effect on the ability of Borrower to
perform its responsibilities under this Agreement or the Relevant Documents; the
Borrower is not in default with respect to any order of any court, arbitrator or
governmental or non-governmental body; and the Borrower is not subject to or a
party to any order of any court or governmental or non-governmental body arising
out of any action, suit or proceeding under any statute or other law respecting
antitrust, monopoly, restraint of trade, unfair competition or similar matters.
6.5 Financial Statements. (a) Subject to any limitation stated therein, all
balance sheets, income statements and other financial data which have been or
shall hereafter be furnished to Lender to induce it to enter into this
Agreement, and to continue to provide financing under this Agreement or
otherwise in connection herewith, do and will truly and accurately represent the
financial condition of Borrower as at the respective dates thereof and the
results of its operations for the periods for which the same are furnished to
Lender. All other information, reports and other papers and data furnished to
Lender are, or will be at the time the same are so furnished, true, accurate and
complete in all material respects to the best of Borrower's knowledge. All such
financial statements and other information have been, or will have been at the
time of issuance: (i) as to annual financial statements, prepared by certified
public accountants in accordance with GAAP consistently applied; and (ii) as to
all other financial statements, internally prepared generally in accordance with
GAAP consistently applied.
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(b) Except as shown on the most recent financial statements which have been
delivered to Lender and are set forth on Schedule 6.5 annexed hereto and made
part hereof, Borrower has no other liabilities as of the date hereof which would
materially and adversely affect the financial condition of Borrower or the
Collateral.
6.6 Changes in Financial Condition. (a) There has been no material change
in Borrower's financial condition since the date of its last financial
statements as are set forth on Schedule 6.5.
(b) Borrower's assets, at fair valuation, exceed Borrower's liabilities
(including without limitation contingent liabilities); Borrower is paying its
debts as they become due; and Borrower has capital and assets sufficient to
carry on its business.
6.7 Accounts Receivable. The most recent list of Accounts Receivable of
Borrower delivered to Lender is complete as of the date thereof, and contains an
accurate aging thereof. All of said Accounts Receivable are collectible subject
only to the reserves established by Borrower, are subject to no counterclaims or
setoffs of any nature whatsoever except for bona fide disputes arising in the
ordinary course of business, and require no further act on the Borrower's part
to make such accounts owing by the Account Debtors. None of the Accounts
Receivable include any conditional sales (unless disclosed as to such Lender),
consignments or sales on any basis other than that of absolute sale in the
ordinary and usual course of business, except as otherwise set forth on said
list. No agreement has been made under which any deductions or discounts may be
claimed as to any such account except customary discounts or rebates in the
ordinary course of business.
6.8 Inventory. Borrower's Inventory (except as to the values of obsolete
items, items below standard quality and items in the process of repair all of
which have been written down to realizable market value, or adequate reserves
have been provided therefore) consists of items of a quality and quantity usable
or saleable in the ordinary course of its business and the values carried on
Borrower's balance sheet are set at the lower of cost or market, in accordance
with GAAP consistently applied.
6.9 Taxes and Assessments. Borrower has paid and discharged when due all
taxes, assessments and other governmental charges which may lawfully be levied
or assessed upon its income and profits, or upon all or any portion of any
property belonging to it, whether real, personal or mixed, to the extent that
such taxes, assessments and other charges have become due. Borrower has filed
all tax returns, federal, state and local, and all related information, required
to be filed by it.
6.10 ERISA. Borrower is in compliance in all material respects with the
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the related provisions of the Internal Revenue Code, and with all
regulations and published interpretations issued thereunder by the United States
Treasury Department, the United States Department of Labor and the Pension
Benefit Guaranty Corporation ("PBGC"). Neither a reportable event as
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defined in Section 4043 of ERISA, nor a prohibited transaction as defined in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code, has occurred
and is continuing with respect to any employee benefit plan subject to ERISA
established or maintained, or to which contributions have been or may be made,
by Borrower or by any trade or business (whether or not incorporated) which
together with Borrower would be treated as a single employer under Section 4001
of ERISA (any such trade or business being referred to hereinafter as an "ERISA
Affiliate," and any such employee benefit plan being referred to hereinafter as
a "Plan"). No notice of intention to terminate a Plan has been filed nor has any
Plan been terminated; the PBGC has not instituted proceedings to terminate, or
to appoint a trustee to administer, any Plan, nor do circumstances exist that
constitute grounds for any such proceedings; and neither Borrower nor any ERISA
Affiliate has completely or partially withdrawn from any multiemployer Plan
described in Section 4001(a)(3) of ERISA. Borrower and each ERISA Affiliate has
met the minimum funding standards under ERISA with respect to each of its Plans;
no Plan of Borrower or of any ERISA Affiliate has an accumulated funding
deficiency or waived funding deficiency within the meaning of ERISA; and no
material liability to the PBGC under ERISA has been incurred by Borrower or any
ERISA Affiliate.
6.11 O.S.H.A/EPA. Borrower has duly complied with, and its facilities,
business assets, property, leaseholds and equipment are in compliance in all
material respects with, the provisions of the Federal Occupational Safety and
Health Act and the Environmental Protection Act, and all rules and regulations
thereunder and all similar state and local laws, rules and regulations; and
there have been no outstanding citations, notices or orders of noncompliance
issued to Borrower or relating to its business, assets, property, leaseholds or
equipment under any such laws, rules or regulations.
6.12 Environmental Matters. (a) Except as disclosed in Schedule 6.12 to
this Agreement, no property owned or used by Borrower and located in the State
of New Jersey is an "industrial establishment" within the meaning of the New
Jersey Industrial Site Recovery Act ("ISRA") or is or has been used for the
generation, manufacture, refining, transportation, treatment, storage, handling
or disposal of any "hazardous substances" or "hazardous wastes" within the
meaning of ISRA. The following are all of the Standard Industrial Classification
Codes applicable to the properties and operations of Borrower: 3651.
(b) Borrower is in compliance in all material respects with all applicable
federal, state and local statutes, rules, regulations, orders and other
provisions of law relating to air emissions, water discharge, noise emissions,
solid and liquid disposal, hazardous waste and substances, and other
environmental, health and safety matters.
6.13 No Other Violation. Borrower is not in violation of any term of its
certificate or articles of incorporation or by-laws and no event or condition
has occurred and is continuing which constitutes or results in, (or would
constitute or result in, with the giving of notice, lapse of time or other
condition):
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(a) A breach of or a default under any material agreement, undertaking or
instrument to which Borrower is a party or by which it may be affected; or
(b) The imposition of any lien, encumbrance or restriction on any property
of Borrower, except as noted in Schedule 6.16 hereof.
6.14 Margin Stock. No part of the proceeds of any Revolving Loan will be
used, directly or indirectly, to purchase or carry any "margin stock" (as
defined in Regulation U issued by the Board of Governors of the Federal Reserve
System), to extend credit to others for the purpose of purchasing or carrying
any such margin stock, or for any purpose that violates any provision of
Regulations G, T, U or X issued by the Board of Governors of the Federal Reserve
System.
6.15 Location of Collateral. As of the date hereof, none of the Collateral
to be granted to Lender pursuant to this Agreement or any Relevant Document, or
to be hereafter conveyed, is or will be located in or on any premises other than
those premises set forth on Schedule 6.15 annexed hereto and made part hereof.
Said Schedule contains an accurate record of all of the landlords of property
leased by and mortgagees of property owned by Borrower.
6.16 Other Liens. Borrower has good and marketable title to and owns all of
the Collateral and Inventory free and clear of any and all liens, encumbrances
or security interests whatsoever, except (a) those encumbrances created pursuant
to this Agreement; and (b) those encumbrances set forth on Schedule 6.16 annexed
hereto and made part hereof. None of the Collateral or Inventory is subject to
any prohibition against encumbering, pledging, hypothecating or assigning the
same or requires notice or consent prior to Borrower's doing of the same.
6.17 Books and Records. Borrower maintains its books and records relative
to the Collateral at 00 Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000.
6.18 Representations and Warranties True, Accurate, and Complete.
(a) None of the representations, warranties or statements made to Lender
pursuant hereto or in connection with this Agreement or the transactions
contemplated hereby contains any untrue statement of a material fact, or omits
or will omit to state a material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances in which they are
made, not misleading.
(b) All warranties and representations made herein or in the Relevant
Documents by Borrower will be true and accurate at the time it requests Lender
to make Advances to it hereunder.
6.19 Names; Location of Office. Schedule 6.19 annexed hereto and made part
hereof sets forth a complete and accurate list of:
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(a) All names by which the Borrower is known or under which the
Borrower is conducting business, including, without limitation, its
corporate names and all trade names; and
(b) All offices and locations at or out of which the Borrower conducts
any of its business or operations, said Schedule 6.19 identifies each of
Borrower's chief executive offices if there are more than one.
7. AFFIRMATIVE COVENANTS:
Until payment in full of all Obligations and the termination of this
Agreement, Borrower covenants and agrees that it will:
7.1 Notify Lender. Promptly inform Lender if any one or more of the
representations and warranties made by Borrower in this Agreement or in any
documents related hereto shall no longer be entirely true, accurate and
complete.
7.2 Pay Taxes and Liabilities; Comply with Agreements, Promptly pay, when
due, all indebtedness, sums and liabilities of any kind now or hereafter owing
by Borrower to any party however created, incurred, evidenced, acquired, arising
or payable, including without limitation the Obligations, income and excise
taxes and taxes with respect to any of the Collateral, or any wages or salaries
paid by Borrower or otherwise, except such taxes or liabilities which are being
disputed in good faith in an appropriate forum for which adequate reserves have
been set aside.
7.3 Observe Covenants. etc. Observe, perform and comply with the covenants,
terms and conditions of this Agreement, the Relevant Documents and any other
agreement or document entered into between Borrower and Lender.
7.4 Maintain Corporate Existence and Qualifications. Maintain and preserve,
and cause any Subsidiary to maintain and preserve, in full force and effect, its
corporate existence and rights, franchises, licenses and qualifications
necessary to continue its businesses, and comply in all material respects with
all applicable statutes, rules and regulations pertaining to the operation,
conduct and maintenance of its existence and business including, without
limitation, all federal, state and local laws relating to Benefit Plans,
environmental, safety, or health matters, and hazardous or liquid waste or
chemicals or other liquids (including use, sale, transport and disposal
thereof).
7.5 Information and Documents to Be Furnished to Lender. Borrower shall
furnish to Lender:
(a) Annual Financial Statements. As soon as delivered to any other
creditor, but in no event later than ninety-five (95) days after the end of
each fiscal year, Borrower's balance
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sheet as at the end of such fiscal year, Borrower's statements of cash flow
for such fiscal year and Borrower's income and surplus statements for such
fiscal year, all in reasonable detail, all prepared in accordance with GAAP
consistently applied, on a consolidated and consolidating basis with the
Guarantors, and all audited without qualification by independent certified
public accountants of recognized standing selected by Borrower and
reasonably satisfactory to Lender, all in the form of the Form 10K
delivered by Borrower to the Securities and Exchange Commission, and
certified by the Chief Financial Officer of Borrower, which certification
shall include evidence of the method of calculating compliance with
financial covenants (if applicable) and shall affirmatively state as to all
quarterly statements that (i) such statements are true, accurate and
correct, (ii) such statements were internally prepared generally in
accordance with GAAP applied on a consistent basis and will be subject to
revisions only to the extent of immaterial year-end adjustments imposed by
Borrower's accountants; and (iii) as of the date of such statements no
Event of Default or event which, but for the lapse of time or giving of
notice or both, would constitute an Event of Default existed, and in
addition to such statements, any supplementary information to the financial
reports as Lender shall reasonably require.
(b) Quarterly Financial Statements. As soon as delivered to any other
creditor but in no event later than sixty (60) days after the end of each
quarterly fiscal period of Borrower, except the fourth such period in any
fiscal year, Borrower's balance sheet as at the end of such period, and
Borrower's cumulative income and surplus statements for the period
beginning on the first day of such fiscal year and ended on the date of
such balance sheet, all in reasonable detail all internally prepared
generally in accordance with GAAP consistently applied, on a consolidated
and consolidating basis with the Guarantors, all in the form of Form 10Q
delivered by Borrower to the Securities and Exchange Commission, and
certified by the Chief Financial Officer of Borrower, which certification
shall include evidence of the method of calculating compliance with
financial covenants and shall affirmatively state that (i) such statements
are true, accurate and correct, (ii) such statements were internally
prepared generally in accordance with GAAP applied on a consistent basis
and will be subject to revisions only to the extent of immaterial year-end
adjustments imposed by Borrower's accountants; and (iii) as of the date of
such statements no Event of Default or event which, but for the lapse of
time or giving of notice or both, would constitute an Event of Default
existed, and in addition to such statements, any supplementary information
to the financial reports as Lender shall reasonably require.
(c) Accountant Privity Letter. Contemporaneous with the delivery of
each of the audited financial statements required by Subsection 7.5(a)
above, a written acknowledgment by the accountants auditing such statements
of Lender's reliance upon such statements in making the Revolving Loans and
other accommodations contemplated by this Agreement.
(d) Attestation Form. Contemporaneously with the delivery of each
financial statement required by Sections 7.5(a) and (b) above, an
attestation form substantially in the form of Exhibit "B" attached hereto
and made a part hereof, signed by an authorized officer of Borrower and
attesting to the truthfulness and accuracy of the information set forth in
such financial statements.
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(e) Borrowing Base Certificate. Not less than weekly, or more
frequently if Lender shall require at any time during the continuance of an
Event of Default and/or when the aggregate outstanding Revolving Loan
exceeds the Advance Limit, a complete, dated and signed Borrowing Base
Certificate in form and substance acceptable to Lender.
(f) Daily Reports. Daily, if Lender shall require at any time during
the continuance of an Event of Default and/or the aggregate outstanding
Revolving Loan exceeds the Advance Limit, reports of all sales and receipts
for the previous business day together with copies of all invoices
evidencing such sales.
(g) Inventory Reports. (i) On or before the tenth (10th) day of each
month (but on or before the thirtieth (30th) day of the last month in each
fiscal year only), or (ii) more frequently if Lender shall require at any
time during the continuance of an Event of Default and/or when the
aggregate outstanding Revolving Loan exceeds the Advance Limit, a report
satisfactory to Lender setting forth the type and value of Inventory (which
value shall be determined on the basis of the lower of cost of market
values then prevailing) and the location of said Inventory.
(h) Accounts Receivable Aging Reports. On or before the tenth (10th)
day of each month (but on or before the thirtieth (30th) day of the last
month in each fiscal year only), a detailed and summary aging report
setting forth the amount due and owing on Accounts Receivable on Borrower's
books as of the close of the preceding month, together with a
reconciliation report satisfactory to Lender showing all sales,
collections, payments and adjustments to Accounts Receivable on Borrower's
books and showing a reconciliation, substantially in the form of Exhibit
"C" attached hereto and made a part hereof to Borrower's bank statement(s),
all as of the close of the preceding month.
(i) Accounts Payable Reports. On or before the tenth (10th) day of
each month (but on or before the thirtieth (30th) day of the last month in
each fiscal year only), a detailed report setting forth the amount due and
owing on the Borrower's accounts payable on Borrower's books as of the
close of the preceding month, in a form satisfactory to Lender.
(j) Customer Lists. Within thirty (30) days of the execution hereof
and annually on the same date of each year thereafter, a detailed customer
list setting forth each of Borrower's customers to whom sales were made
during the immediately preceding twelve (12) month period, including the
address, telephone number and contact person for each.
(k) Income Tax Return. Within ten (10) days of filing with the
Internal Revenue Service, a true and complete copy of its signed Federal
income tax return and of the signed Federal income tax returns of the
Guarantors.
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(l) Change in Status, Immediately, notice of any change in the status
of an Account Receivable or Inventory from that which is Qualified to that
which is not, if such change would result in the outstanding Revolving Loan
exceeding the Advance Limit.
(m) Rejection, Delay, Claims. Immediately, notice of the rejection of
goods, delay in performance, or claims made in regard to Accounts
Receivable which, would result in the outstanding Revolving Loan exceeding
the Advance Limit.
(n) ERlSA Documents. All ERISA reports, notices, returns and all other
documents filed as required by or in compliance with ERISA, whether to the
Internal Revenue Service, the Department of Labor, the Pension Benefit
Guaranty Corporation or any other appropriate agency, and all documents and
information distributed to participants in any Plan.
(o) Notice of Environmental, Health or Safety Complaints. Within five
(5) Banking Days of receipt, notice or copies if written of all claims,
complaints, orders, citations or notices, whether formal or informal,
written or oral, from any governmental body or private person or entity,
relating to air emissions, water discharge, noise emission, solid or liquid
waste disposal, hazardous waste or materials, or any other environmental,
health or safety matter. Such notices shall include, among other
information, the name of the party who filed the claim, the potential
amount of the claim, and the nature of the claim.
(p) Other Information. Immediately upon demand:
(i) Certificates of insurance for all policies of insurance to be
maintained by Borrower pursuant hereto;
(ii) An estoppel certificate executed by an authorized officer of
the Borrower indicating that there then exists no Event of Default and
no event which, with the giving of notice or lapse of time, or both,
would constitute an Event of Default under any agreement to which
Borrower is a party;
(iii) All original and other documents evidencing right to
payment, including but not limited to invoices, original orders,
shipping and delivery receipts;
(iv) All information received by Borrower indicating an adverse
change in the financial status or condition of any Account Debtor;
(v) Assignments, in form acceptable to Lender, of all Accounts
Receivable, and of the monies due or to become due on specific
contracts relating to the same in any instance where such an
assignment is required in order for Lender to act upon its security
interest in such Accounts; and
(vi) From time to time, such other information as Lender may
reasonably request.
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7.6 Access to Records and Property. At any time and from time to time, upon
request by Lender, give any representatives of Lender access during normal
business hours to, and permit any of them to examine, copy or make extracts
from, any and all books, records and documents in the possession of Borrower or
any independent contractor relating to Borrower's affairs and the Collateral,
and to inspect any of its properties wherever located.
7.7 Comply With Laws. Comply with the requirements of all applicable laws,
rules, regulations and orders of any governmental authority, compliance with
which is necessary to maintain its corporate existence or the conduct of its
business or noncompliance with which would materially and adversely affect its
ability to perform its responsibilities or any security given to secure its
Obligations.
7.8 Insurance Required. (a) Cause to be maintained, in full force and
effect on all property given as collateral security for all Obligations,
insurance in such amounts and against such risks as is satisfactory to Lender,
including, but without limitation, product liability, fire, boiler, theft,
burglary, pilferage, loss in transit, and hazard insurance. Said insurance
policy or policies shall:
(i) Be in a form and with insurers which are satisfactory to Lender;
(ii) Be for such risks and for such insured values as Lender or its
assigns may require in order to replace the property in the event of actual
or constructive total loss;
(iii) Designate Lender and its assignees, as additional insureds and
lender loss payees as their interests may from time to time appear;
(iv) Contain a "breach of warranty clause" whereby the insurer agrees
that a breach of the insuring conditions or any negligence by Borrower or
any other person shall not invalidate the insurance as to Lender and its
assigns; and
(v) Provide that they may not be canceled or materially altered
without thirty (30) days prior notice to the Lender and its assigns.
(b) Additional Insurance. Obtain such additional insurance as Lender may
reasonably require.
(c) Notice of Loss. In the event of loss or damage, forthwith notify Lender
and file proofs of loss with the appropriate insurer. Borrower hereby authorizes
Lender to endorse any checks or drafts constituting insurance proceeds.
(d) Policies and Proof of Payment. Upon demand, deliver to Lender the
original of each policy evidencing insurance required to be maintained under
this Agreement, together with evidence of payment of all premiums therefor.
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(e) Proceeds, Forthwith upon receipt of insurance proceeds endorse and
deliver the same to Lender.
(f) No Duty for Lender. In no event shall Lender be required either to (i)
ascertain the existence of or examine any insurance policy or (ii) advise
Borrower in the event such insurance coverage shall not comply with the
requirements of this Agreement.
7.9 Condition of Property; No Liens. Maintain all property conveyed to
Lender as collateral security for any Obligations in good condition and repair
at all times, preserve it against any loss, damage, or destruction of any nature
whatsoever relating to said property or its use, and keep said property free and
clear of any liens and encumbrances whatsoever, except those liens and
encumbrances created pursuant hereto or disclosed herein.
7.10 Payment of Proceeds. Forthwith upon receipt of all proceeds of
Collateral, pay such proceeds over to Lender in the form received, and such
proceeds shall thereupon become Lender's sole property.
7.11 Further Assurances. At any time or from time to time upon request of
Lender, execute and deliver such further documents and do such other acts and
things as Lender may reasonably request in order to effectuate more fully the
purposes of this Agreement, the Relevant Documents and any other instruments,
documents and agreements which shall be executed simultaneously herewith, or
which may hereafter be executed by Borrower with regard to the transactions
contemplated hereby.
7.l2 Pay Legal Fees and Expenses. Pay to Lender, upon demand, together with
interest at the rate set forth in Section 4.3 hereof, from the date when billed
or advanced by Lender until repaid by Borrower all costs, expenses or other sums
billed or advanced by Lender (including reasonable legal fees and disbursements)
to preserve, collect, protect its interest in or realize on the Collateral, and
to enforce Lender's rights as against Borrower, any Account Debtor or Guarantor,
or in the prosecution or defense of any action or proceeding related to the
subject matter of this Agreement or the Relevant Documents, including without
limitation legal fees, expenses and disbursements unless a court determines
otherwise. All such expenses, costs and other sums shall be deemed Obligations
secured by the Collateral.
7.13 Records. At all times keep accurate and complete records of the
Collateral and the status of each Account Receivable.
7.14 Banking Relationship. Borrower shall maintain its primary operating
account(s) at a branch of Lender.
7.15 Delivery of Documents. If any proceeds of Accounts Receivable shall
include or any of the Accounts Receivable shall be evidenced by notes, trade
acceptances or instruments or documents, or if any Inventory is covered by
documents of title or chattel paper, whether or not
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negotiable, Borrower shall immediately deliver them to Lender appropriately
endorsed. Borrower waives protest regardless of the form of the endorsement. If
Borrower fails to endorse any instrument or document, Lender is authorized to
endorse it on Borrower's behalf.
7.16 United States Contracts. If any of the Qualified Accounts Receivable
arise out of contracts with the United States or any of its departments,
agencies or instrumentalities, Borrower will notify Lender, and if required by
Lender, execute any necessary instruments in order that all money due or to
become due under such contract shall be assigned to Lender and proper notice of
the assignment given under the Federal Assignment of Claims Act.
8. NEGATIVE COVENANTS:
Until payment in full of all Obligations, Borrower covenants and agrees
that it will not:
8.1 No Consolidation, Merger, Acquisition. Consolidate with, merge with, or
acquire the stock or assets of any Person, firm, joint venture, partnership,
corporation, or other entity, whether by merger, consolidation, purchase of
stock or otherwise, provided, however, that Borrower (a) may merge with
Guarantor, Bogen Corporation, so long as: (i) Borrower is the survivor of such
merger; (ii) Borrower does not change its name; (iii) there are no encumbrances
on the assets of Bogen Corporation existing as of the effective date of such
merger; and (d) the consummation of such merger will not cause or result in the
occurrence of an Event of Default hereunder; and (b) may request Lender's
consent for acquisitions in the future which Lender shall consider on a
case-by-case basis and any such request shall be subject to Lender's consent.
8.2 Disposition of Assets or Collateral. Sell, lease, transfer, convey or
otherwise dispose of any or all of its assets or Collateral, other than the sale
or lease of Inventory in the ordinary course of business.
8.3 Other Liens Incur, create or permit to exist any mortgage, assignment,
pledge, hypothecation, security interest, lien or other encumbrance on any of
its property or assets, whether now owned or hereafter acquired, except (a)
liens for taxes not delinquent; (b) those liens in favor of Lender created by
this Agreement and Relevant Documents; and (c) those liens set forth on Schedule
6.16 annexed hereto and made part hereof.
8.4 Negative Pledges. Incur, create or permit to exist any negative pledge
in any other mortgage, security agreement, pledge, hypothecation or other
agreement entered into between Borrower with any other Person.
8.5 Other Liabilities, Incur, create, assume or permit to exist any
indebtedness or liability on account of either borrowed money or the deferred
purchase price of property, except (a) Obligations to Lender; or (b)
indebtedness subordinated to payment of the Obligations on terms approved by
Lender in writing; or (c) those liabilities existing on the date hereof.
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8.6 Loans. Make loans to any Person, except loans to Bogen Communications
International, Inc. which shall not, in the aggregate, exceed Three Hundred
Fifty Thousand ($350,000.00) Dollars per annum, so long as the making of such
loan does not cause or result in the occurrence of an Event of Default.
8.7 Guarantees. Except for the benefit of Lender, assume, guarantee,
endorse, contingently agree to purchase or otherwise become liable upon the
obligation of any Person, firm or entity except (a) by the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; or (b) contingent obligations under letters of
credit entered into in the ordinary course of business for the purchase of
merchandise for resale.
8.8 Remove Property. Remove, or cause or permit to be removed any of its
Collateral or assets from those premises set forth on Schedule 6.15 annexed
hereto and made part hereof, except for sales of Inventory in the ordinary
course of Borrower's business.
8.9 Transfers of Notes or Accounts Receivable. Sell, assign, transfer,
discount or otherwise dispose of any Accounts Receivable or any promissory note
payable to it with or without recourse, except for collection without recourse
in the ordinary course of business.
8.10 Dividends. Declare or pay any cash dividend or make any distribution
on, or redeem, retire or otherwise acquire directly or indirectly, any share of
its stock, including all payments to any Person of which Borrower or Borrower's
parent is a Subsidiary, whether characterized as management fees or interest, or
any other upstreaming of funds, however characterized except as expressly
permitted by Subsection 8.6 above.
8.11 Modification of Documents. Change, alter or modify, or permit any
change, alteration or modification of its certificate of incorporation, by-laws
or other governing documents.
8.12 Change Business. Materially change or alter the nature of its
business.
8.13 Settlements. Compromise, settle or adjust any claims in a material
amount relating to any of the Collateral.
8.14 Change Location or Name. Change the place where its books and records
are maintained or change its name or transact business under any other names.
8.15 Transactions With Affiliates. Enter into any transaction with an
Affiliate or Subsidiary on terms less advantageous to Borrower than those that
could be obtained from any other Person in an arms-length transaction.
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8.16 Sale of Inventory. Sell any of its Inventory on a xxxx-and-hold,
guaranteed sale, sale-and-return, sale on approval or consignment basis, or any
other basis subject to a repurchase obligation or right to return, except
Acceptable Conditional Sales.
8.17 Tangible Net Worth. Cause, suffer or permit Tangible Net Worth (as
hereinafter defined) to be or become less than Four Million ($4,000,000.00)
Dollars as at June 30, 1997, Six Million Seven Hundred Fifty Thousand
($6,750,000.00) Dollars as at December 31, 1997, and Six Million Nine Hundred
Thousand ($6,900,000.00) Dollars as at June 30, 1998, and as at the time of any
determination thereof thereafter. For the purposes of this Agreement the term
"Tangible Net Worth" shall mean, as of the time of any determination thereof,
the difference between (a) the sum of (i) the par value (or value stated on the
books of Borrower) of the capital stock of all classes of Borrower plus (or
minus in the case of a deficit) (ii) the amount of Borrower's surplus, whether
capital or earned, minus (b) the sum of treasury stock, unamortized debt
discount and expense, good will, trademarks, trade names, patents, deferred
charges and other intangible assets, and any write-up of the value of any
assets, all determined in accordance with GAAP applied on a consistent basis.
8.18 Leverage Ratio. Cause, suffer, or permit the ratio of Borrower's
Indebtedness (as hereinafter defined) to Borrower's Tangible Net Worth (as
hereinabove defined), as determined in accordance with GAAP applied on a
consistent basis, to exceed: 2.00 to 1.00 as at June 30, 1997, 1.50 to 1.00 as
at December 31, 1997; 1.25 to 1.00 as at June 30, 1998 and as at the time of any
determination thereof thereafter. For the purposes of this Agreement, the term
"Indebtedness" shall mean all obligations of Borrower, which, in accordance with
GAAP, should be classified upon the balance sheet of Borrower as liabilities, or
to which reference should be made by footnotes thereto, including without
limitation, in any event and whether or not so classified: all debt and similar
monetary obligations; all obligations arising or incurred under or in respect of
any guarantees (whether direct or indirect) of liabilities of any other Person;
all obligation arising or incurred under or in respect of any mortgage, lien,
pledge, charge, security interest or other encumbrance upon or in property owned
by Borrower for the benefit of any other Person, even though Borrower has not
assumed or become liable for the payment of the obligations secured thereby.
8.19 Pretax Profit. Cause, suffer or permit Borrower's net profit,
determined in accordance with GAAP applied on a consistent basis (but prior to
deductions for taxes and extraordinary items), to be or become less than Seven
Hundred Fifty Thousand ($750,000.00) Dollars as at June 30, 1997, One Million
Two Hundred Fifty Thousand ($1,250,000.00) Dollars as at December 31, 1997, and
Eight Hundred Fifty Thousand ($850,000.00) Dollars as at June 30, 1998 and as at
any time of the determination thereof thereafter.
8.20 Capital Expenditures. Enter into any agreements to purchase or pay for
or become obligated to pay for capital expenditures, long term leases, capital
leases and/or sale lease-backs during any fiscal year in an amount aggregating
in excess of One Million ($1,000,000.00) Dollars.
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9. MISCELLANEOUS RIGHTS AND DUTIES OF LENDER:
9.1 Charges Against Credit Balances. Lender, without demand and acting in
its sole and absolute discretion, in each instance, may charge and withdraw from
any credit balance which Borrower may then have with Lender or any of its
branches, or which Borrower may have with any affiliate of Lender, any amount
which shall become due from Borrower to the Lender under this Agreement.
9.2 Remittances. Borrower covenants and agrees (a) to receive in trust for
Lender, all payments for the sale of goods or the performance of services and in
each case, whether by cash, checks, drafts, notes, acceptances or other forms of
payment; and (b) deliver such payments to Lender in the identical form in which
received.
9.3 Collections; Modification of Terms. Lender may, in its sole and
absolute discretion, and at any time after the occurrence or during the
continuance of an Event of Default, with respect to any of the Collateral,
demand, xxx for, collect or receive any money or property, at any time payable
or receivable on account of or in exchange for, or make any compromises it deems
desirable including without limitation extending the time of payment, arranging
for payment in installments, or otherwise modifying the terms or rights with
respect to any of the Collateral, all of which may be effected without notice to
or consent by Borrower and without otherwise discharging or affecting the
Obligations, the Collateral or the security interests granted hereunder.
9.4 Notification of Account Debtors. At any time after the occurrence and
during the continuance of an Event of Default, Lender may notify the Account
Debtors on any of the Accounts Receivable to make payment directly to Lender,
and Lender may endorse all items of payment received by it which are payable to
Borrower. Borrower, at the request of Lender, shall notify the Account Debtors
of Lender's security interest in its Accounts Receivable. Until such time as
Lender elects to exercise its right of notification, Borrower is authorized to
collect and enforce the Accounts Receivable under the terms and conditions set
forth in Section 9.2 hereof.
9.5 Uniform Commercial Code. At all times prior and subsequent to an Event
of Default, Lender shall be entitled to all the rights and remedies of a secured
party under the Uniform Commercial Code as enacted in New Jersey, as the same
may be amended from time to time, (N.J.S.A. 12A:9-101 et seq.), with respect to
all Collateral.
9.6 Preservation of Collateral. At all times prior and subsequent to an
Event of Default hereunder, Lender may take any and all action which in its sole
and absolute discretion is necessary and proper to preserve its interest in the
Collateral, including without limitation the payment of debts of Borrower which
might in Lender's sole and absolute discretion, impair the Collateral or
Lender's security interest therein, purchasing insurance on the Collateral,
repairing the Collateral, or paying taxes or assessments thereon, and the sums
so expended by Lender shall be secured by the Collateral, shall be added to the
amount of the Obligation due Lender and shall
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be payable on demand with interest at the rate set forth in Section 4.3 hereof
from the date expended by Lender until repaid by Borrower.
9.7 Mails. From and after an Event of Default, Lender is authorized to (and
Borrower shall, upon request of Lender) notify the postal authorities to deliver
all mail, correspondence or parcels addressed to Borrower to Lender at such
address as Lender may direct, provided, however, that Lender shall promptly
forward all mail to Borrower which is unrelated to the Collateral.
9.8 Lender's Right to Cure. In the event Borrower shall fail to perform any
of its responsibilities hereunder or under any of the Relevant Documents, then
Lender, in addition to all of its rights and remedies hereunder, may perform the
same, but shall not be obligated to do so, at the cost and expense of Borrower.
In any such event, Borrower shall promptly reimburse Lender together with
interest at the rate set forth in Section 4.3 hereof from the date such sums are
expended until repaid by Borrower.
9.9 Test Verifications. Lender shall have the right to make test
verifications of any and all Accounts Receivable in any manner, whether oral or
written, and through any medium, including telephonically, which Lender
considers advisable, and Borrower shall render any necessary assistance to
Lender.
9.10 Power of Attorney. Lender is hereby irrevocably appointed by Borrower
as its lawful attorney and agent in fact to execute financing statements and
other documents and agreements as Lender may deem necessary for the purpose of
perfecting any security interests, mortgages or liens under any applicable law.
Further, Lender is hereby authorized to file on behalf of Borrower, in its name,
and at its expense, such financing statements, documents or agreements in any
appropriate governmental office. Borrower hereby grants a Power of Attorney to
Lender to endorse Borrower's names on checks, notes, acceptances, drafts and any
other instruments requiring Borrower's endorsement, to change the address where
Borrower's mail should be sent and to open all mail and to do such other acts
and things necessary to effectuate the purposes of this Agreement. All acts by
the Lender or its designee are hereby ratified and approved, and neither the
Lender, nor its designee shall be liable for any acts of omission or commission,
or for any error of judgment or mistake, except for gross negligence or willful
misconduct. Borrower hereby grants a Power of Attorney to Lender to file proofs
of loss respecting the Collateral with the appropriate insurer and to endorse
any checks or drafts constituting insurance proceeds. The powers of attorney
granted to Lender in this Agreement are coupled with an interest and are
irrevocable so long as this Agreement is in force or any Obligation shall remain
unpaid. Although fully vested hereby as Borrower's attorney-in-fact, Lender
shall refrain from exercising such powers unless and until an Event of Default
occurs hereunder.
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10. CONDITIONS TO MAKING EXTENSIONS OF CREDIT:
10.1 Initial Extension of Credit. The obligation of Lender to make the
first Advance hereunder is subject to the satisfaction of each of the following
conditions precedent:
(a) Loan Documents. Receipt by Lender of a fully executed copy of this
Agreement with complete Schedules and all Related Documents.
(b) Financing Statements. Receipt by Lender of verification that all
required Uniform Commercial Code Financing Statements requested by it have
been filed in the appropriate jurisdiction(s).
(c) Landlord's Waivers. Receipt by Lender of landlord's waivers for
each real property location occupied by Borrower, executed by the owner
and/or lessor of such location.
(d) Guaranty Agreement. Receipt by Lender of a guaranty agreement
executed by the Guarantors in form and substance acceptable to Lender and
its counsel and any Relevant Document to be delivered in connection
therewith.
(e) Deposit Account; Lockbox Agreements. Receipt by Lender of (i)
evidence satisfactory to it that Borrower has opened a deposit account with
Lender, and (ii) the fully executed lockbox agreement.
(f) Insurance. Receipt by Lender of copies of Borrower's insurance
policies containing a long-form lender loss payable endorsement
satisfactory to Lender and which in all other respects comply with the
requirements hereof.
(g) Searches. Receipt by Lender of lien, judgment and standing
searches with respect to Borrower and each Guarantor satisfactory to
Lender.
(h) Inventory Appraisal. Receipt by Lender of Inventory appraisals for
all locations operated by Borrower in form and substance satisfactory to
Lender.
(i) Field Examination. Completion by Lender of its field examinations
of Borrower's Accounts and Inventory, with results satisfactory to Lender.
(j) Accountant Review Letter. Receipt by Lender of a written review by
Borrower's accountant, of Borrower's financial statement for the third
quarterly fiscal period of 1996.
(k) Completion of Due Diligence. Receipt by Lender of all information
requested from Borrower in connection with Lender's due diligence review of
Borrower and all other parties, and completion of such review by Lender,
with results satisfactory to Lender.
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(l) Officer's Certificate. Receipt by Lender of an officer's
certificate for Borrower and each Guarantor, showing the names of the
officers, directors and shareholders (except for any public company) of
such Person with their respective titles and appending as exhibits all
governing documents and enabling resolutions for this transaction.
(m) Opinion of Counsel. Receipt by Lender of an opinion of the counsel
to Borrower and the Guarantors, addressed to Lender and in all respects
satisfactory to Lender and its counsel including, without limitation,
confirmation of the status of the outstanding accounts payable to
Borrower's supplier, Reshef, Inc.
(n) Borrowing Base Certificate. Receipt by Lender of a Borrowing Base
Certificate, dated as of the date hereof and executed by an authorized
officer of Borrower, evidencing sufficient availability to support the
initial Advance requested hereunder.
(o) Payoff Letters/Termination. Receipt by Lender of (i) pay-off
letters from each existing lender to Borrower whose loans are being repaid
with proceeds of the Loans in form satisfactory to Lender; and (ii) receipt
of all UCC Termination Statements and other documents and instruments of
termination and release necessary so that the security interests granted to
Lender pursuant to this Agreement and the Relevant Documents are first and
prior liens and security interests.
(p) Fees. Receipt by Lender of all fees and expenses which are payable
to Lender, its counsel, or to third-party providers of services related to
the closing of this transaction.
(q) Existing Lockbox. Receipt by Lender, within forty-five (45) days
of the date hereof, written confirmation that Borrower's lockbox at PNC
Bank, N.A. has been closed.
(r) Miscellaneous. Receipt by Lender of such other documents,
instruments, records, opinions, assurances and papers as Lender or its
counsel may reasonably require, all in form and substance satisfactory to
Lender and its counsel.
10.2 Conditions to All Advances.
(a) Lender's obligation to advance any Revolving Loan or to issue any
Letter of Credit is subject to the condition that, as of the date of such
advance or issuance, no Event of Default or event which, for the lapse of time
or giving of notice or both would constitute an Event of Default, shall have
occurred and be continuing.
(b) Borrower's acceptance of each Revolving Loan under this Agreement shall
constitute reaffirmation of all representations and warranties set forth herein.
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11. DEFAULT:
The occurrence of any of the following shall constitute an Event of Default:
11.1 Failure to Pay. Borrower fails to pay, when due any payment of
principal, interest or other charges due and owing to Lender pursuant to any
Obligations of Borrower to Lender including, without limitation, those
Obligations arising pursuant to this Agreement or any Relevant Document, or
under any other agreement for the payment of monies then due and payable to
Lender;
11.2 Failure to Perform. Borrower's failure to perform or observe any
covenant, term or condition of this Agreement or under any Relevant Documents to
be performed or observed by Borrower;
11.3 Cross Default; Default on Other Debt. A default on any of the
Obligations (with the exception of defaults covered by Subsection 11.1 and 11.2
above) or any default on any other obligation or indebtedness of Borrower or any
Guarantor to any Person so that the holder of such indebtedness declares such
indebtedness due prior to its date of maturity because of Borrower's or such
Guarantor's default thereunder;
11.4 False Representation or Warranty. Borrower or any Guarantor shall have
made any statement, representation or warranty in this Agreement or in any
document or certificate executed by Borrower incident to this Agreement, which
is at any time found to have been false in any material respect at the time such
representation or warranty was made;
11.5 Petition by or Against Borrower. Borrower or any Guarantor ceases to
do business as a going concern, or there is filed by or against Borrower or any
Guarantor, any petition with respect to its own financial condition under any
bankruptcy law or any amendment thereto (including without limitation a petition
for reorganization, arrangement or extension) or under any other insolvency laws
providing for the relief of debtors and, in the case of involuntary proceedings
only, such proceeding is not stayed or dismissed within forty-five (45) days of
its filing;
11.6 Appointment of Receiver. A receiver, custodian, trustee, conservator
or liquidator is appointed for Borrower or any Guarantor, or all or a
substantial part of its assets; or Borrower or any Guarantor shall be
adjudicated bankrupt, insolvent or in need of any relief provided to debtors by
any court;
11.7 Judgments; Levies. If any final judgment or judgments (except those
covered by insurance), or any levy, sequestration, or attachment, which in the
aggregate exceed $25,000.00, against Borrower or its property, remains unpaid,
undischarged, unsatisfied, unbonded or undismissed for a period of thirty (30)
days after Borrower has received notification of the entry thereof;
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11.8 Change in Condition. There occurs any material and adverse change in
the condition or affairs, financial or otherwise, of Borrower or of any
Guarantor which, in the opinion of Lender, impairs Lender's security or
increases its risk;
11.9 Change in Ownership/Management. At any time there is any change in the
ownership of a controlling or significant interest (more than 30%) of the issued
and outstanding voting stock of Borrower or any material and adverse change (as
reasonably determined by Lender) in the management of Borrower;
11.10 Liquidation or Dissolution. The liquidation and/or dissolution of
Borrower or any Guarantor;
11.11 Environmental Claim. At any time the Lender determines that an
environmental claim will have a potentially material adverse effect on the
financial condition of Borrower; or
11.12 Failure to Notify. If at any time the Borrower fails to provide
Lender immediately with notice or copies, if written, of all complaints, orders,
citations or notices with respect to environmental, health or safety complaints
as required by Section 7.5.
12. REMEDIES:
12.1 Acceleration; Proceed Against Collateral. Upon the occurrence of an
Event of Default:
(a) The total amount (the "Default Amount") of (i) the aggregate
amount of all Obligations for principal and interest, including late
charges thereon, and all other sums which are then due and unpaid; and (ii)
an amount equal to the aggregate amount of all principal remaining to be
repaid on all Obligations; and (iii) interest on the foregoing sums, at the
rate provided for in Section 4.3 hereof, from said occurrence until paid in
full shall, at the option of Lender, become immediately due and payable
without notice or demand; and
(b) Lender may forthwith give written notice to Borrower, whereupon
Borrower shall, at its expense, promptly deliver any or all Collateral to
such place as Lender may designate, or Lender shall have the right to enter
upon the premises where the Collateral is located and take immediate
possession of and remove the Collateral without liability to Lender except
such as is occasioned by the gross negligence of Lender, its employees or
agents. In the event Lender obtains possession of the Collateral, Lender
may sell, lease or otherwise dispose of any or all of the Collateral at
public or private sale, at such price or prices as Lender may deem best,
either for cash, on credit, or for future delivery, in bulk or in parcels
and/or lease or retain the Collateral repossessed using it or keeping it
idle. Notice of any sale or other disposition shall be given to the
Borrower at least ten (10) days before the time of any intended sale or
disposition of the Collateral is to be made, which the Borrower hereby
agrees shall be reasonable notice of such sale or other disposition. Lender
may also elect to retain the Collateral or any part thereof
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in satisfaction of Borrower's Obligations. The proceeds, if any, of any
such sale or leasing by Lender shall be applied: First, to the payment of
all fees and expenses incurred by Lender, including without limitation any
reasonable legal fees and expenses; Second, to pay the Default Amount to
the extent not previously paid by Borrower; and Third, to pay any excess
remaining thereafter to Borrower.
12.2 Set-off.
(a) Upon the occurrence of an Event of Default, Lender shall have the
right, immediately and without notice or other action to set-off against any of
the Borrower's liabilities to Lender any money owed by Lender (or any affiliate
of Lender) in any capacity to Borrower, whether or not due, and Lender shall be
deemed to have exercised such right of set-off and to have made a charge against
any such money immediately upon the occurrence of such Event of Default even
though the actual book entries may be made at a time subsequent thereto.
(b) If other lenders have participated with the Lender with respect to the
Lender's making loans to the Borrower pursuant to the terms hereof, then,
Borrower hereby authorizes such other participating lenders, upon the occurrence
of an Event of Default, immediately and without notice or other action, at the
request of Lender, to set off against any of the Borrower's liabilities to
Lender any money owed by such participating lenders in any capacity to Borrower,
whether or not due, and to remit the monies set off to the Lender.
12.3 Cumulative Remedies; Waivers. No remedy referred to herein is intended
to be exclusive, but each shall be cumulative and in addition to any other
remedy referred to above or otherwise available to Lender at law or in equity.
No express or implied waiver by Lender of any default or Event of Default
hereunder shall in any way be, or be construed to be, a waiver of any future or
subsequent default or Event of Default. The failure or delay of Lender in
exercising any rights granted it hereunder upon any occurrence of any of the
contingencies set forth herein shall not constitute a waiver of any such right
upon the continuation or recurrence of any such contingencies or similar
contingencies and any single or partial exercise of any particular right by
Lender shall not exhaust the same or constitute a waiver of any other right
provided herein. The Events of Default and remedies thereon are not restrictive
of and shall be in addition to any and all other rights and remedies of Lender
provided for by this Agreement and applicable law.
12.4 WAIVE JURY TRIAL. LENDER AND BORROWER HEREBY WAIVE ALL RIGHT TO A
TRIAL BY JURY IN ANY LITIGATION RELATING TO THIS AGREEMENT, THE RELEVANT
DOCUMENTS OR OTHER AGREEMENTS OR INSTRUMENTS BETWEEN THEM.
12.5 Costs and Expenses. Borrower shall be liable for all costs, charges
and expenses, including reasonable attorney's fees and disbursements, incurred
by Lender by reason of the occurrence of any Event of Default or the exercise of
the Lender's remedies with respect thereto.
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12.6 No Marshalling. Lender shall be under no obligation whatsoever to
proceed first against any of the Collateral before proceeding against any other
of the Collateral. It is expressly understood and agreed that all of the
Collateral stands as equal security for all Obligations, and that Lender shall
have the right to proceed against any or all of the Collateral in any order, or
simultaneously, as in its sole and absolute discretion it shall determine. It is
further understood and agreed that Lender shall have the right, as it in its
sole and absolute discretion shall determine, to sell any or all of the
Collateral in any order or simultaneously.
l3. WAIVERS, CONSENTS:
13.1 Waivers. Borrower waives demand, presentment, notice of dishonor or
protest of any instruments either of Borrower or others which may be included in
the Collateral or which may evidence the Obligations.
l3.2 Consents. Borrower consents:
(a) To any extension, postponement of time of payment, indulgence or
to any substitution, exchange or release of Collateral.
(b) To any addition to, or release of, any party or persons primarily
or secondarily liable, or acceptance of partial payments on any Accounts
Receivable or instruments and the settlement, compromising or adjustment
thereof which shall be in compliance with Section 9.3 at all times.
14. SURVIVAL;
All representations and warranties made herein or in any certificate or
instrument contemplated hereby shall survive any independent investigation made
by Lender and the execution and delivery of this Agreement, and said
certificates or instruments and shall continue so long as any Obligations are
outstanding and unsatisfied, applicable statutes of limitation to the contrary
notwithstanding.
15. EFFECT OF HOLIDAYS:
If any payment pursuant to this Agreement becomes due and payable on a
Saturday, Sunday or legal holiday under the laws of the State of New Jersey, the
maturity thereof shall be extended to the next succeeding Banking Day.
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16. NOTICES:
16.1 Written; Effective Date. All notices and other communications
hereunder shall be in writing, shall be deemed to have been duly given either
when sent, postage prepaid, by certified mail, return receipt requested or when
deposited with a recognized overnight courier and shall be deemed received three
(3) Banking Days after deposit with the United States Postal Service and one (1)
Banking Day after deposit with a recognized overnight courier. Any notification
of a sale or other disposition of Collateral or any other action by Lender
required to be given by Lender shall be sufficient if given not less than ten
(10) days prior to the days on which such sale or other disposition would be
made, and such notification shall be deemed reasonable notice.
16.2 To Lender. Notices to Lender shall be directed to the following
address:
Summit Bank
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn: Asset-Based Lending
16.3 To Borrower. Notice to Borrower shall be directed to the following
address:
Bogen Communications, Inc
00 Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Chief Financial Officer
17. TERMINATION OF AGREEMENT:
17.1 Termination by Lender. Lender may terminate this Agreement at any time
on or after February 5, 1999, whereupon the Obligations shall be due and payable
immediately.
17.2 Termination by Borrower. (a) Borrower may terminate this Agreement
without premium or penalty at any time on or after February 5, 1999, upon not
less than ninety (90) days' prior written notice to Lender. Upon giving such
notice, this Agreement shall thereafter terminate if and only if the Borrower
has paid to the Lender in full all of the Obligations.
(b) Anything contained in Subsection 17.2(a) above to the contrary
notwithstanding, Borrower may terminate this Agreement at any time by repaying,
in full, all of the Obligations accompanied by a prepayment fee calculated as
follows:
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(i) If this Agreement is terminated at any time prior to February 5,
1998, then there shall be due a prepayment fee equal to one and one-half
(1 1/2%) percent of the Line of Credit; and
(ii) If this Agreement is terminated at any time on or after February
5, 1998 but prior to February 5, 1999, or at any time thereafter with less
than ninety (90) days' prior written notice, then there shall be due a
prepayment fee of one-half (1/2%) percent of the Line of Credit.
(c) No prepayment fee shall be due (i) upon any termination of this
Agreement in conjunction with Borrower's refinancing of the Revolving Loans with
another department of Lender; or (ii) upon payment in full upon the maturity
date whether or not prior written notice is given.
17.3 Rights Upon Termination. Notwithstanding the termination of this
Agreement as herein provided, Lender's security interest, rights and remedies
herein set forth shall remain in full force and effect until all Borrower's
Obligations are paid in full.
18. INDEMNITIES BY BORROWER:
18.1 (a) Yield Protection. If any statute or governmental regulation, or
the interpretation or application thereof by any court or any governmental
authority charged with the administration thereof, or the compliance with any
guideline or request from any central bank or other governmental authority,
whether or not having the force of law:
(i) subjects the Lender to any tax, levy, impost, charge, fee, duty,
deduction or withholding of any kind hereunder (other than any tax imposed
or based upon the income of the Lender and payable to any governmental
authority or taxing authority of the United States of America or any state
thereof) or changes the basis of taxation of the Lender with respect to
payments by the Borrower of principal, interest or other amounts due from
the Borrower hereunder (other than any change which affects, and to the
extent that it affects, the taxation by the United States of America or any
state thereof of the total net income of the Lender); or
(ii) imposes, modifies or deems applicable any reserve, special
deposit, special assessment or similar requirements against assets held by,
deposits with or for the account or credit extended by the Lender; or
(iii) imposes upon the Lender any other condition with respect to this
Agreement, and the result of any of the foregoing is to increase the cost
to the Lender, reduce the income receivable by the Lender, reduce the rate
of return on the Lender's capital or impose any expense upon the Lender by
an amount which the Lender in its discretion deems to be material, the
-38-
Lender shall from time to time notify the Borrower of the amount determined
by the Lender (which determination, absent manifest error, shall be
conclusive) to be reasonably necessary to compensate the Lender (on an
after-tax basis) for such increase in cost, reduction in income, reduction
in rate of return or additional expense, setting forth the calculations
therefor, and the Borrower shall pay such amount to the Lender, as
additional consideration hereunder, within ten (10) days of the Borrower's
receipt of such notice. All such amounts shall be part of the Obligations
and shall bear interest at the rate set forth in Section 4.3 if not paid
when due.
(b) Method of Calculation. In determining the amount due the Lender
hereunder by reason of the application of this Subsection, the Lender may use
any reasonable averaging or attribution method; provided, however, that the
Lender must use reasonable efforts to minimize such losses and costs.
18.2 Capital Adequacy. If (a) any adoption of, change in or interpretation
of any statute or governmental regulation applicable to Lender, or (b)
compliance with any guideline, request or direction of any central bank or other
governmental authority or quasi-governmental authority exercising control over
banks or financial institutions generally, or any court requires the agreements
of Lender hereunder be treated as an asset or otherwise be included for purposes
of calculating the appropriate amount of capital to be maintained by the Lender
or any corporation controlling the Lender (a "Capital Adequacy Event"), the
result of which is to reduce the rate of return on the Lender's capital as a
consequence of such requirement to a level below that which the Lender could
have achieved but for such Capital Adequacy Event, taking into consideration the
Lender's policies with respect to capital adequacy, by an amount which the
Lender deems to be material, the Lender shall promptly deliver to the Borrower a
statement of the amount necessary to compensate the Lender for the reduction in
the rate of return on its capital attributable to such commitments (the "Capital
Compensation Amount"). The Lender shall determine the Capital Compensation
Amount in good faith, using reasonable attribution and averaging methods. The
Lender shall from time to time notify the Borrower of the amount so determined
(which determination, absent manifest error, shall be conclusive). Such amount
shall be due and payable by the Borrower to the Lender ten (10) business days
after such notice is given. All such amounts shall be part of the Obligations
and shall bear interest at the rate set forth in Subsection 4.3 if not paid when
due.
18.3 Indemnification of Lender. Borrower hereby covenants and agrees to
indemnify, defend and hold harmless Lender and its officers, directors,
employees and agents from and against any and all claims, damages, liabilities,
costs and expenses (including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel) which may be incurred by or asserted against
Lender or any such other individual or entity, except as a result of their gross
negligence or willful misconduct in connection with:
(a) any investigation, action or proceeding arising out of or in any
way relating to this Agreement, any Relevant Documents, any of the
Revolving Loans, any of the Collateral, or any act or omission relating to
any of the foregoing; or
-39-
(b) any taxes (except taxes imposed with reference to Lender's income
or continued corporate existence), liabilities, claims or damages relating
to the Collateral or Lender's liens thereon; or
(c) the correctness, validity or genuineness of any instruments or
documents that may be released or endorsed to Borrower by Lender (which
shall automatically be deemed to be without recourse to Lender in any
event), or the existence, character, quantity, quality, condition, value or
delivery of any goods purporting to be represented by any such documents;
or
(d) any broker's commission, finder's fee or similar charge or fee in
connection with the transactions contemplated in this Agreement.
18.4 Claims by Borrower Limited. To the extent permitted by applicable law,
no claims may be made by Borrower or any other person against Lender or any of
its Affiliates, directors, officers, employees, agents, attorneys or consultants
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract, tort or any other theory of liability arising out
of or related to the transactions contemplated by this Agreement or any act,
omission or event occurring in connection therewith except those arising as a
result of the gross negligence or willful misconduct of Lender or any of its
affiliates, directors, officers, employees, agents, attorneys or consultants;
and Borrower hereby waives, releases and agrees not to xxx upon any claim for
any such damages, whether or not accrued and whether or not known or suspected
to exist in its favor. Neither Lender nor any of its Affiliates, directors,
officers, employees or agents shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this Agreement or the
transactions contemplated hereby, except for its or their own gross negligence
or willful misconduct.
19. AMENDMENTS AND MISCELLANEOUS:
19.1 Amendment. The terms of this Agreement shall not be waived, altered,
modified, amended, supplemented or terminated in any manner whatsoever except by
a written instrument signed by Lender and Borrower.
19.2 Binding on Successors. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
19.3 Invalidity. Any provision of this Agreement which may be determined by
competent authority to be prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
-40-
19.4 Gender. Throughout this Agreement, the masculine shall include the
feminine and vice versa and the singular shall include the plural and vice
versa, unless the context of this Agreement indicates otherwise.
19.5 Cross Default/Cross Collateral. All other agreements between Borrower
and Lender and/or any of Lender's affiliates or subsidiaries are hereby amended
so that a default under this Agreement is a default under all other agreements
and a default under any one of the other agreements is a default under this
Agreement. Further, such agreements are amended so that the Collateral under
this Agreement secures the Obligations now or hereafter outstanding under all
other agreements of Borrower with Lender and/or Lender's affiliates or
subsidiaries and the collateral pledged under any other agreement with Lender
and/or its affiliates or subsidiaries secures the Obligations under this
Agreement.
19.6 Expenses of Lender. Borrower agrees to pay all costs and expenses of
the Lender in connection with the preparation, execution, delivery and
administration of this Agreement or any amendments, extensions or modifications
thereto and other instruments and documents to be executed contemporaneously
herewith, including reasonable attorney's fees and out of pocket expenses of
counsel for Lender, which fees and costs shall not, in the aggregate, exceed
Twenty Thousand ($20,000.00) Dollars for the documentation, negotiation and
closing of this Agreement.
19.7 Section and Paragraph Headings. Section and paragraph headings are for
convenience only and shall not be construed as part of this Agreement.
19.8 Law/Forum. (a) This Agreement shall be construed in accordance with,
and shall be governed by, the laws of the State of New Jersey.
(b) Lender and Borrower hereby consent to the jurisdiction of the State
Courts of the State of New Jersey or the Federal Courts of the District of New
Jersey and hereby agree that the defense of forum non conveniens shall not be
brought in response to any action brought in such Courts.
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed by their proper corporate officers and sealed with their seals the day
and year first above written.
ATTEST: BOGEN COMMUNICATIONS, INC.
BY: /s/ Xxxxx XxXxxxx BY: /s/ Xxxx X. Xxxxx
---------------------------------- ------------------------------
XXXXX XXXXXXX, Assistant Secretary XXXX X. XXXXX, Vice President,
Finance
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SUMMIT BANK
By: /s/ Xxxxxx Xxxxx
------------------------------
XXXXXX XXXXX, Vice President
-42-
SCHEDULE 1.K
Description of Collateral
(a) Accounts, as that term is defined by the Uniform Commercial Code of the
State of New Jersey and in addition thereto, all obligations of any kind at any
time due and/or owing to Borrower and all rights of Borrower to receive payment
or any other consideration (whether classified under the Uniform Commercial Code
of the State of New Jersey or any other state as accounts, contract rights,
chattel paper, General Intangibles, leases or otherwise) including without
limitation, invoices, contract rights, accounts receivable, General Intangibles,
leases choses-in-action, notes, drafts, acceptances, instruments, and all other
debts, obligations and liabilities in whatever form owing to Borrower from any
person, firm, governmental authority, corporation or any other entity, all
security therefor, and all Borrower's rights to goods sold (whether delivered,
undelivered, in transit or returned), which may be represented thereby, whether
now existing or hereafter arising, together with all proceeds and products of
any and all of the foregoing.
(b) Equipment, which shall mean, in addition to the definition thereof
contained in the Uniform Commercial Code of the State of New Jersey, all
equipment, machinery, furniture, fixtures, and all other tangible assets, and
all replacements, repairs, modifications, alterations, additions, controls and
operating accessories therefor, all substitutions and replacements therefor, and
all accessions and additions thereto and all proceeds and products of the
foregoing now owned or hereafter acquired by Borrower.
(c) General Intangibles, which shall mean and include all of the Borrower's
now owned or hereafter acquired choses in action, causes of action and all other
intangible personal property including, without limitation, corporate or other
business records, inventions, designs, patents, patent applications, trademarks,
trademark applications, trade names, trade secrets, good will, registrations,
copyrights, licenses, franchises, customer lists, tax refunds, tax refund
claims, insurance claims, rights and claims against carriers and shippers and
rights to indemnification.
(d) Inventory, which shall have the meaning set forth in the Uniform
Commercial Code of the State of New Jersey and in addition thereto, all goods,
merchandise or other tangible personal property held by Borrower for sale or
lease or to be furnished under labels and other devices, the names or marks
affixed thereto for purposes of selling or identifying the same or the seller or
manufacturer thereof, and all right, title and interest of Borrower therein and
thereto, all raw materials, work or goods in process, or materials and supplies
of every nature used, consumed or to be consumed in the Borrower's business, all
packaging and shipping materials, and all proceeds and products of any of the
foregoing, whether now owned or hereafter acquired by Borrower, and wherever
located.
(e) Machinery, which shall mean and include, without limitation, all
inanimate mechanisms for utilizing or applying power including the appurtenances
thereto used by or for
-43-
Borrower in the operation of its businesses and all accessories, substitutions,
additions, replacements and parts thereof, whether now owned or hereafter
acquired.
(f) Merchandise, which shall include all goods, inventory, chattels and
other personal property of Borrower, now owned or hereafter acquired.
(g) Any claims of Borrower against third parties for loss or damage to, or
destruction of, any and all of the foregoing, all guarantees, security and liens
for payment of any Accounts Receivable and documents of title, policies,
certificates of insurance, insurance proceeds, securities, chattel paper, and
other documents and instruments evidencing or pertaining thereto, and all files,
correspondence, computer programs, tapes, discs and related data processing
software owned by Borrower or in which Borrower has an interest which contain
information identifying any one or more of the items in (a), (b) and (c) above,
this subsection (d), or (e), (f) or (g) below, or any Account Borrower, showing
the amounts owed by each, payments thereon or otherwise necessary or helpful in
the realization thereon or the collection thereof.
(h) Any and all monies, securities, drafts, notes, contracts leases,
licenses, General Intangibles, and other property of Borrower, including
customer lists and all proceeds and products thereof, and all other assets of
Borrower, now or hereafter held or received by or in transit to the Lender from
or for Borrower, or which may now or hereafter be in the possession of Lender or
as to which Lender may now or hereafter control possession, by documents of
title or otherwise, whether for safekeeping, custody, pledge, transmission,
collection or otherwise, and any and all deposits, general or special, balances,
sums, proceeds and credits of Borrower, and all rights and remedies which the
Borrower might exercise with respect to any of the foregoing, but for the
execution of this Agreement in favor of Lender.
(i) All Borrower's right, title and interest throughout the world, in and
to the trade secrets' rights in the information regarding computer software
programs developed by or for the Borrower, including without limitation, the
right to prevent all persons, including Borrower, from using the programs or
from using and transferring the information contained therein without
authorization.
(j) All proceeds, including insurance proceeds, and products of the
Collateral.
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SCHEDULE 6.5
Financial Statements
September 30, 1996 10Q
-45-
SCHEDULE 6.12
Environmental Matters
NONE
-46-
SCHEDULE 6.15
Location of Collateral
00 Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
00000 Xxxxxxxxx 000xx
Xxxxxx, Xxxxxxxxxx 00000
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SCHEDULE 6.16
Other Liens
The lien of the CIT Group Credit Finance, Inc. in and to substantially all
assets of the Borrower as evidenced by various UCC financing statements (which
are to be terminated as a result of this transaction) as follows:
(a) Secretary of State of Washington
(i) No. 921430553 filed May 22, 1992,
(ii) No. 942100000 filed July 29, 1994
(b) Secretary of State of New Jersey
(i) No. 1584573 filed July 29, 1994;
(ii) No. 1273446 filed June 21, 1989
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SCHEDULE 6.19
Names, Locations of Officer
Names under which Borrower conducts business:
BOGEN COMMUNICATIONS, INC.
Locations where Borrower conducts Business or Operations:
Chief Executive Office:
00 Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Other locations.
00000 Xxxxxxxxx 000xx
Xxxxxx, Xxxxxxxxxx 00000
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ACCOUNTS RECEIVABLE AND INVESTORY BORROWING BASE CERTIFICATE
[SUMMIT BANK LOGO] [ ] Certificate No. __________
[ ] Your Date ________________
To induce Summit Bank - (herein called "Bank") to make a loan pursuant to the
Loan and Security Agreement between the undersigned and Bank, and any amendments
thereto, the undersigned hereby certifies, as of the above date, as follows:
A. Summary of Collateral:
1. Balance of Accounts Receivable previously certified to Bank .....$__________
a) Plus new sales since last certificate date __________
through______ ......................................$__________
b) Plus debit memos_____; other______ .................$__________
c) Less credits ____________; other _______ ...........$__________
d) Less returns and allowances ______; other _______ ..$__________
e) Less net receivable reductions since last
certificate ........................................$__________
2. Total of all Accounts Receivable now being certified to Bank ....$__________
3. Less total amount of unqualified Accounts Receivable
Dated __________ .........................................$__________
4. Net amount of qualified Accounts Receivable ..............$__________
5. Total loan value of Accounts Receivable @ ___% (of item 4) ......$__________
6. Value of Inventory as of ________________, 19__
a) Raw Materials .......$__________
b) Work in Process .....$__________
c) Finished Goods ......$__________
d) Other (+/-) .........$__________
e) Total Inventory .....$__________
f) Total Inventory value @ __% of item ___ or limit of $__________
whichever is lower $__________
7. Other Availability (Explain _________) Amount __________@ __% ...$__________
8. Other Availability (Explain _________) Amount __________@ __% ...$__________
9. Total loan value of Accounts Receivable (item 5) and Inventory
(item 6) and Other (items 7&8) ..................................$__________
B. Summary of Loan:
1. Previous loan balance ....................................$__________
2. Less collections: Deposits $__________
Wires .......$__________
Non-A/R .....$__________
Total ......................................$__________
3. Plus today's borrowing ...................................$__________
4. New principal loan balance ...............................$__________
5. Plus Bankers Acceptance ...$__________
6. Plus Letters of Credit ....$__________
7. Total loan outstandings (which may not exceed item A9 or
limit whichever is lower) .......................................$__________
8. Remaining Availability (item A9 less B7) ...........$__________
The undersigned certifies that they are not in default under the Security
Agreement and any amendments thereto, or on any of the loans made thereunder, or
on any other liability.
------------------------------ ------------------------------
(Prepared By) (Authorized Signature and Title)
EXHIBIT A
--------------------------------------------------------------------------------
STATEMENT ATTESTATION
TO: SUMMIT BANK
I hereby submit to Summit Bank (the "Bank"), on behalf of: _____________ BOGEN
COMMUNICATIONS. INC.________________ (the "Borrower"), Reviewed, Compilation,
House-prepared(1) financial statements dated ________ for the purpose of either
applying for credit of for supporting its continuing credit accommodations.
I am submitting this statement to the bank as being true, accurate and not
misleading as of the date it has been submitted and understand that the Bank
will rely on this statement in making its credit decision.
Company: BOGEN COMMUNICATIONS, INC.
------------------------------------------
Signature & Title
Date:
-------------------------------------
(1) The scope of the Statement listed above should be indicated by crossing out
options that do not apply.
--------------------------------------------------------------------------------
EXHIBIT B
Account Receivable & Loan Reconciliation
As of ___________
Company Name ______________________________________________________
Please furnish the information requested below which details should be in
agreement with the books and records of the company.
A. Accounts Receivable Reconciliation
Balance: Beginning of month ________________
Add: Sales (invoices) ________________
Miscellaneous Sales ________________
Other Debits ________________
Less: Credit Memos ________________
Less: Net Cash (Applied) ________________
Discounts, Allowances, etc. ________________
Others ________________
1) Balance: General Ledger as of End of Month ________________
2) Accounts Receivables Aging Balance at Month End
If there is a difference between A/R Aging & G/L, please explain:
___________________________________________________________________________
___________________________________________________________________________
3) Account Receivable balance reported to bank
at months end per BBCS _____________
If item (3) does not agree with item (1) & (2), please complete the
information below.
3a) Sales and/or debits reported to 3b) Accounts Receivables, credits or other
the Bank after month end: reductions reported to bank after
month end:
Certificate # ___________________ Certificate # ______________________
Certificate # ___________________ Certificate # ______________________
Certificate # ___________________ Certificate # ______________________
Certificate # ___________________ Certificate # ______________________
Certificate # ___________________ Certificate # ______________________
Total In-Transit Total In-Transit
sales are: ___________________ reductions are: ____________________
4) Adjusted Bank collateral figure: (Add (3) & (3a),
Less (3b) equals (4)) ________________
If there is a difference, please explain:
___________________________________________________________________________
___________________________________________________________________________
================================================================================
B) Inventory
Inventory value: End of Month _______________
Method of Computation
RM ________ FG ________ WIP ________ Other ________
================================================================================
C) Loan Reconciliation
As of ____________ loan balance per Bank Statement
As of ____________ loan balance per Company G/L
Difference between (1) & (2) and breakdown:
___________________________________________________________________________
___________________________________________________________________________
Other Liabilities
XXX XX(s) (if any):_________________ EOM BA's (if any):_________________
------------------------- -----------------
Prepared by; Name & Title Date
EXHIBIT C
