BUSINESS LOAN AGREEMENT
Principal Loan Date Maturity Loan No Call/coll Account Officer Initials
$9,000,000.00 12-31-2002 12-31-2003 3030600000 4A0/71 321 /s/CC
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
Any item above containing "***" has been omitted due to text length limitations.
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Borrower: I/O MAGIC CORPORATION Lender: CHINATRUST BANK [USA]
0000 XXXXXXX XXXXXX XXXXXXXXX XXXXXXX
XXXXX XXX, XX 00000 00000 XXXX XXXXXX # 000
XXXX XX XXXXXXXX, XX 00000
THIS BUSINESS LOAN AGREEMENT DATED DECEMBER 31, 2002, IS MADE AND EXECUTED
BETWEEN I/OMAGIC CORPORATION ("BORROWER") AND CHINATRUST BANK [USA] ("LENDER")
ON THE FOLLOWING TERMS AND CONDITIONS. BORROWER HAS RECEIVED PRIOR COMMERCIAL
LOANS FROM LENDER OR HAS APPLIED !O LENDER FOR A COMMERCIAL LOAN OR LOANS OR
OTHER FINANCIAL ACCOMMODATIONS, INCLUDING THOSE WHICH MAY BE DESCRIBED ON ANY
EXHIBIT OR SCHEDULE ATTACHED TO THIS AGREEMENT ("LOAN"). XXXXXXXX UNDERSTANDS
AND AGREES THAT: (A) IN GRANTING, RENEWING, OR EXTENDING ANY LOAN, XXXXXX IS
RELYING UPON BORROWER'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS AS SET FORTH
IN THIS AGREEMENT; (B) THE GRANTING, RENEWING, OR EXTENDING AT ANY LOAN BY
LENDER AT ALL TIMES SHALL BE SUBJECT TO XXXXXX'S SOLE JUDGMENT AND DISCRETION;
AND (C) ALL SUCH LOANS SHALL BE AND REMAIN SUBJECT TO THE TERMS AND CONDITIONS
OF THIS AGREEMENT.
TERM. This Agreement shall be effective as of December 31, 2002, and shall
continue in full force and effect until such time as all of Borrower's Loans in
favor of Lender have been paid in full, including principal, interest, costs,
expenses, attorneys' fees, and other fees and charges, or until such time as the
parties may agree in writing to terminate this Agreement.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Xxxxxx's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.
LOAN DOCUMENTS. Borrower shall provide to Lender the following documents
for the Loan: (1) the Note; (2) Security Agreements granting to Lender security
interests in the Collateral; (3) financing statements and all other documents
perfecting Lender's Security Interests; (4) evidence of Insurance as required
below; (5) together with all such Related Documents as Lender may require for
the Loan; all in form and substance satisfactory to Lender and Lender's counsel.
XXXXXXXX'S AUTHORIZATION. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents. In addition, Borrower shall have provided such other
resolutions, authorizations, documents and instruments as Lender or its counsel,
may require.
PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in this
Agreement or any Related Document.
REPRESENTATIONS AND WARRANTIES. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
NO EVENT OF DEFAULT. There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under this Agreement or
under any Related Document.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the xxxx of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
ORGANIZATION. Borrower is a corporation for profit which Is, and at all times
shall be, duly organized, validly existing, and in good standing under and by
virtue of the laws of the State of California. Borrower is duly authorized to
transact business in all other states in which Borrower is doing business,
having obtained all necessary filings, governmental licenses and approvals for
each state in which Borrower is doing business. Specifically, Borrower is, and
at all limes shall be, duly qualified as a foreign corporation in all states in
which the failure to so qualify would have a material adverse effect on its
business or financial condition. Borrower has the full power and authority to
own its properties and to transact the business in which it is presently engaged
or presently proposes to engage. Xxxxxxxx maintains an office at 0000 XXXXXXX
XXXXXX, XXXXX XXX, XX 00000. Unless Borrower has designated otherwise in
writing, the principal office is the office at which Borrower keeps its books
and records including its records concerning the Collateral. Borrower will
notify Lender prior to any change in the location of Borrower's state of
organization or any change In Borrower's name. Borrower shall do all things
necessary to preserve and to keep in full force and effect its existence, rights
and privileges, and shall comply with all regulations, rules, ordinances,
statutes, orders and decrees of any governmental or quasi-governmental authority
or court applicable to Borrower and Xxxxxxxx's business activities.
ASSUMED BUSINESS NAMES. Xxxxxxxx has filed or recorded all documents or filings
required by law relating to all assumed business names used by Xxxxxxxx.
Excluding the name of Xxxxxxxx, the following is a complete list of all assumed
business names under which Borrower does business: NONE.
AUTHORIZATION. Borrower's execution, delivery, and performance of this Agreement
and all the Related Documents have been duly authorized by all necessary action
by Borrower and do not conflict with, result in a violation of, or constitute a
default under (1) any provision of Borrower's articles of Incorporation or
organization, or bylaws, or any agreement or other instrument binding upon
Borrower or (2) any law, governmental regulation, court decree, or order
applicable to Borrower or to Borrower's properties.
FINANCIAL INFORMATION. Each of Xxxxxxxx's financial statements supplied to
Xxxxxx truly and completely disclosed Xxxxxxxx's financial condition as of the
date of the statement, and there has been no material adverse change in
Xxxxxxxx's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement
Borrower is required to give under this Agreement when delivered will constitute
legal, valid, and binding obligations of Borrower enforceable against Borrower
in accordance with their respective terms.
PROPERTIES. Except as contemplated by this Agreement or as previously disclosed
in Xxxxxxxx's financial statements or in writing to Lender and as accepted by
Xxxxxx, and except for property tax liens for taxes not presently due and
payable, Borrower owns and has good title to all of Borrower's properties free
and clear of all Security Interests, and has not executed any security documents
or financing statements relating to such properties. All of Xxxxxxxx's
properties are titled in Borrower's legal name, and Xxxxxxxx has not used or
filed a financing statement under any other name for at least the last five (5)
years.
HAZARDOUS SUBSTANCES. Except as disclosed to and acknowledged by Xxxxxx in
writing, Borrower represents and warrants that: (1) During the period of
Borrower's ownership of Borrower's Collateral, there has bean no use,
generation, manufacture, storage, treatment, disposal, release or threatened
release of any Hazardous Substance by any person on, under, about or from any of
the Collateral, (2) Borrower has no knowledge of, or reason to believe that
there has been (a) any breach or violation of any Environmental Laws: (b) any
use, generation, manufacture, storage, treatment, disposal, release or
threatened release of any Hazardous Substance on, under, about or from the
Collateral by any prior owners or occupants of any of the Collateral; or (c) any
actual or threatened litigation or claims of any kind by any person relating to
such matters. (3) Neither Borrower nor any tenant, contractor, agent or other
authorized user of any of the Collateral shall use, generate, manufacture,
store, treat, dispose of or release any Hazardous Substance on, under, about or
from any of the Collateral; and any such activity shall be conducted in
compliance with all applicable federal, state, and local laws, regulations, and
ordinances, including without limitation all Environmental Laws. Borrower
authorizes Lender and its agents to enter upon the Collateral to make such
inspections and tests as Lender may deem appropriate to determine compliance of
the Collateral with this section of the Agreement. Any Inspections or tests made
by Lender shall be at Borrower's expense and for Lender's purposes only and
shall not be construed to create any responsibility or liability on the part of
Lender to Borrower or to any other person. The representations and warranties
contained herein are based on Borrower's due diligence in investigating the
Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1)
releases and waives any future claims against Lender for indemnity or
contribution in the event Borrower becomes liable for cleanup or other costs
under any such laws, and (2) agrees to indemnify and hold harmless Lender
against any and all claims, losses, liabilities, damages, penalties, and
expenses which Lender may directly or indirectly sustain or suffer resulting
from a breach of this section of the Agreement or as a consequence of any use,
generation, manufacture, storage, disposal, release or threatened release of a
hazardous waste or substance on the Collateral. The provisions of this section
of the Agreement, including the obligation to indemnify, shall survive the
payment of the Indebtedness and the termination, expiration or satisfaction of
this Agreement and shall not be affected by Xxxxxx's acquisition of any interest
in any of the Collateral, whether by foreclosure or otherwise.
LITIGATION AND CLAIMS. No litigation, claim, investigation, administrative
proceeding or similar action (Including those for unpaid taxes) against Borrower
is pending or threatened, and no other event has occurred which may materially
adversely affect Borrower's financial condition or properties, other than
litigation, claims, or other events, if any, that have been disclosed to and
acknowledged by Xxxxxx in writing.
TAXES. To the best of Xxxxxxxx's knowledge, all of Xxxxxxxx's tax returns and
reports that are or were required to be filed, have been filed, and all taxes,
assessments and other governmental charges have been paid in full, except those
presently being or to be contested by Borrower in good faith in the ordinary
course of business and for which adequate reserves have been provided.
LIEN PRIORITY. Unless otherwise previously disclosed to Lender in writing,
Xxxxxxxx has not entered into or granted any Security Agreements, or permitted
the filing or attachment of any Security Interests on or affecting any of the
Collateral directly or indirectly securing repayment of Borrower's Loan and
Note, that would be prior or that may in any way be superior to Xxxxxx's
Security Interests and rights in and to such Collateral.
BINDING EFFECT. This Agreement, the Note, all Security Agreements (if any), and
all Related Documents are binding upon the signers thereof, as well as upon
their successors, representatives and assigns, and are legally enforceable in
accordance with their respective terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Xxxxxx that, so long
as this Agreement remains In effect, Borrower will:
NOTICES OF CLAIMS AND LITIGATION. Promptly inform Xxxxxx in writing of (1) all
material adverse changes in Borrower's financial condition, and (2) all existing
and all threatened litigation, claims, investigations, administrative
proceedings or similar actions affecting Borrower or any Guarantor which could
materially affect the financial condition of Borrower or the financial condition
of any Guarantor.
FINANCIAL RECORDS. Maintain its books and records in accordance with GAAP,
applied on a consistent basis, and permit Xxxxxx to examine and audit Xxxxxxxx's
books and records at all reasonable times.
FINANCIAL STATEMENTS. Furnish Lender with such financial statements and other
related Information at such frequencies and In such detail as Lender may
reasonably request.
ADDITIONAL INFORMATION. Furnish such additional information and statements, as
Xxxxxx may request from time to time.
INSURANCE. Maintain fire and other risk insurance, public liability insurance,
and such other insurance as Lender may require with respect to Borrower's
properties and operations, in form, amounts, coverages and with insurance
companies acceptable to Lender. Borrower, upon request of Xxxxxx, will deliver
to Lender from time to time the policies or certificates of insurance in form
satisfactory to Lender, including stipulations that coverages will not be
cancelled or diminished without at least ten (10) days prior written notice to
Lender. Each insurance policy also shall include an endorsement providing that
coverage in favor of Lender will not be impaired In any way by any act, omission
or default of Borrower or any other person. In connection with all policies
covering assets in which Lender holds or is offered a security Interest for the
Loans, Borrower will provide Lender with such lender's loss payable or other
endorsements as Lender may require.
INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on each
existing insurance policy showing such information as Lender may reasonably
request, including without limitation the following: (1) the name of the
insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties
insured; (5) the then current property values on the basis of which Insurance
has been obtained, and the manner of determining those values; and (6) the
expiration date of the policy. In addition, upon request of Lender (however not
more often than annually), Borrower will have an Independent appraiser
satisfactory to Lender determine, as applicable, the actual cash value or
replacement cost of any Collateral. The cost of such appraisal shall be paid by
Borrower.
OTHER AGREEMENTS. Comply with all terms and conditions of all other agreements,
whether now or hereafter existing, between Borrower and any other party and
notify Lender immediately in writing of any default in connection with any other
such agreements.
LOAN PROCEEDS. Use all Loan proceeds solely for Xxxxxxxx's business operations,
unless specifically consented to the contrary by Xxxxxx in writing.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of Its indebtedness and
obligations, including without limitation all assessments, taxes. governmental
charges, levies and liens, of every kind and nature, imposed upon Borrower or
its properties, income, or profits, prior to the date on which penalties would
attach, and all lawful claims that, if unpaid, might become a lien or charge
upon any of Borrower's properties, income, or profits.
PERFORMANCE. Perform and comply, in a timely manner, with all terms, conditions,
and provisions set forth in this Agreement, in the Related Documents, and in all
other instruments and agreements between Borrower and Lender. Borrower shall
notify Xxxxxx immediately in writing of any default in connection with any
agreement.
OPERATIONS. Maintain executive and management personnel with substantially the
same qualifications and experience as the present executive and management
personnel; provide written notice to Lender of any change in executive and
management personnel; conduct its business affairs in a reasonable and prudent
manner.
ENVIRONMENTAL STUDIES. Promptly conduct and complete, at Borrower's expense, all
such investigations, studies, samplings and testings as may be requested by
Lender or any governmental authority relative to any substance, or any waste or
by-product of any substance defined as toxic or a hazardous substance under
applicable federal, state, or local law, rule, regulation, order or directive,
at or affecting any property or any facility owned, leased or used by Borrower.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Comply with all laws, ordinances, and
regulations, now or hereafter In effect, of all governmental authorities
applicable to the conduct of Borrower's properties, businesses and operations,
and to the use or occupancy of the Collateral, including without limitation, the
Americans With Disabilities Act. Borrower may contest in good faith any such
law, ordinance, or regulation and withhold compliance during any proceeding,
including appropriate appeals, so long as Borrower has notified Lender in
writing prior to doing so and so long as, in Xxxxxx's sole opinion, Xxxxxx's
interests in the Collateral are not jeopardized. Lender may require Borrower to
post adequate security or a surety bond, reasonably satisfactory to Lender, to
protect Xxxxxx's interest.
INSPECTION. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Xxxxxxxx's other
properties and to examine or audit Xxxxxxxx's books, accounts, and records and
to make copies and memoranda of Xxxxxxxx's books, accounts, and records. If
Borrower now or at any time hereafter maintains any records (Including without
limitation computer generated records and computer software programs for the
generation of such records) in the possession of a third party, Borrower, upon
request of Xxxxxx, shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies of any records
it may request, all at Borrower's expense.
COMPLIANCE CERTIFICATES. Unless waived in writing by Xxxxxx, provide Lender at
least annually, with a certificate executed by Xxxxxxxx's chief financial
officer, or other officer or person acceptable to Lender, certifying that the
representations and warranties set forth in this Agreement are true and correct
as of the date of the certificate and further certifying that, as of the date of
the certificate, no Event of Default exists under this Agreement.
ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all respects with
any and all Environmental Laws; not cause or permit to exist, as a result of an
Intentional or unintentional action or omission on Borrower's part or on the
part of any third party, on property owned and/or occupied by Borrower, any
environmental activity where damage may result to the environment, unless such
environmental activity is pursuant to and in compliance with the conditions of a
permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within thirty
(30) days after receipt thereof a copy of any notice, summons, lien, citation,
directive, letter or other communication from any governmental agency or
Instrumentality concerning any intentional or unintentional action or omission
on Borrower's part In connection with any environmental activity whether or not
there Is damage to the environment and/or other natural resources.
ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, assignments, financing
statements, instruments, documents and other agreements as Lender or its
attorneys may reasonably request to evidence and secure the Loans and to perfect
all Security Interests.
XXXXXX'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Xxxxxx's interest in the Collateral or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrower's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security Interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Xxxxxxxx. All such expenses will become a
part of the indebtedness and, at Lender's option, will (A) be payable on demand;
(B) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
INDEBTEDNESS AND LIENS. (1) Except for trade debt incurred in the normal course
of business and indebtedness to Lender contemplated by this Agreement, create,
incur or assume indebtedness for borrowed money, including capital leases, (2)
sell, transfer, mortgage, assign, pledge, lease, grant a security interest in,
or encumber any of Borrower's assets (except as allowed as Permitted Liens), or
(3) sell with recourse any of Borrower's accounts, except to Xxxxxx.
CONTINUITY OF OPERATIONS. (1) Engage In any business activities substantially
different than those In which Borrower is presently engaged, (2) cease
operations, liquidate, merge, transfer, acquire or consolidate with any other
entity, change its name, dissolve or transfer or sell Collateral out of the
ordinary course of business, or (3) pay any dividends on Borrower's stock (other
than dividends payable in its stock), provided, however that notwithstanding the
foregoing, but only so long as no Event of Default has occurred and is
continuing or would result from the payment of dividends, if Borrower Is a
"Subchapter S Corporation" (as defined in the Internal Revenue Code of 1986, as
amended), Borrower may pay cash dividends on Its stock to its shareholders from
time to time in amounts necessary to enable the shareholders to pay income taxes
and make estimated income tax payments to satisfy their liabilities under
federal and state law which arise solely from their status as Shareholders of a
Subchapter S Corporation because of their ownership of shares of Borrower's
stock, or purchase or retire any of Borrower's outstanding shares or alter or
amend Borrower's capital structure.
LOANS, ACQUISITIONS AND GUARANTIES. (1) Loan, invest in or advance money or
assets, (2) purchase, create or acquire any interest in any other enterprise or
entity, or (3) incur any obligation as surety or guarantor other than in the
ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(A) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes
incompetent or becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse
change in Borrower's financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; or (D) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the Loan or any other loan with Lender; or (E) Lender in
good xxxxx xxxxx itself insecure, even though no Event of Default shall have
occurred.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Xxxxx accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Xxxxxx, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts.
DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:
PAYMENT DEFAULT. Xxxxxxxx fails to make any payment when due under the Loan.
OTHER DEFAULTS. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in any of the
Related Documents or to comply with or to perform any term, obligation, covenant
or condition contained in any other agreement between Lender and Borrower.
DEFAULT IN FAVOR OF THIRD PARTIES. Borrower or any Grantor defaults under any
loan, extension of credit, security agreement, purchase or sales agreement, or
any other agreement, in favor of any other creditor or person that may
materially affect any of Borrower's or any Grantor's property or Borrower's or
any Grantor's ability to repay the Loans or perform their respective obligations
under this Agreement or any of the Related Document.
FALSE STATEMENTS. Any warranty, representation or statement made or furnished to
Lender by Borrower or on Borrower's behalf under this Agreement or the Related
Documents is false or misleading in any material respect, either now or at the
time made or furnished or becomes false or misleading at any time thereafter.
INSOLVENCY. The dissolution or termination of Xxxxxxxx's existence as a going
business, the insolvency of Xxxxxxxx, the appointment of a receiver for any part
of Xxxxxxxx's property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
document to create a valid and perfected security Interest or lien) at any time
and for any reason.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the Loan. This includes a garnishment of any of
Xxxxxxxx's accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Xxxxxxxx as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Xxxxxx written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect to
any Guarantor of any of the indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
Guaranty of the indebtedness. In the event of a death, Lender, at its option,
may, but shall not be required to, permit the Guarantor's estate to assume
unconditionally the obligations arising under the guaranty in a manner
satisfactory to Lender, and, in doing so, cure any Event of Default.
CHANGE IN OWNERSHIP. Any change in ownership of twenty-five percent (25%) or
more of !he common stock of Borrower.
ADVERSE CHANGE. A material adverse change occurs in Borrowers financial
condition, or Xxxxxx believes the prospect of payment or performance of the Loan
is impaired.
INSECURITY. Lender In good faith believes itself Insecure.
RIGHT TO CURE. If any default, other than a default on Indebtedness, is curable
and if Borrower or Grantor, as the case may be, has not been given a notice of a
similar default within the preceding twelve (12) months, it may be cured (and no
Event of Default will have occurred) if Borrower or Grantor, as the case may be,
after receiving written notice from Lender demanding cure of such default: (1)
cure the default within fifteen (15) days; or (2) if the Cure requires more than
fifteen (15) days, immediately Initiate steps which Lender deems in Xxxxxx's
sole discretion to be sufficient to cure the default and thereafter continue and
complete all reasonable and necessary steps sufficient to produce compliance as
soon as reasonably practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided In this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
further Loan Advances or disbursements), and, at Lender's option, all
indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable Law, all of Lender's rights
and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Xxxxxx to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Xxxxxx's
right to declare a default and to exercise its rights and remedies.
COMPENSATING BALANCE. XXXXXXXX AGREES TO MAINTAIN A MINIMUM QUARTERLY COMBINED
AVERAGE COLLECTED COMPENSATING BALANCE OF $750,000.00, EXCLUDING TCD BALANCES.
IF THE MINIMUM QUARTERLY AVERAGE BALANCE IS NOT MAINTAINED, AN INTEREST RATE
EQUAL TO WSJ PRIME RATE PLUS 0.75% SHALL BE APPLIED TO THE SHORTFALL AND
XXXXXXXX'S ACCOUNT WILL BE CHARGED ACCORDINGLY.
REPORTING REQUIREMENTS. XXXXXXXX AGREES TO PROVIDE LENDER WITH THE FOLLOWING:
1) CPA AUDITED ANNUAL BUSINESS FINANCIAL STATEMENT TO BE SUBMITTED WITHIN 120
DAYS OF FISCAL YEAR-END.
2) ANNUAL BUSINESS TAX RETURN TO BE SUBMITTED WITHIN 30 DAYS OF FILING.
3) MONTHLY ACCOUNTS RECEIVABLES AGING REPORT, ACCOUNTS PAYABLE AGING REPORT AND
INVENTORY LISTING TO BE SUBMITTED WITHIN 15 DAYS FROM EACH MONTH END.
4) 10Q REPORT TO BE SUBMITTED WITHIN 60 DAYS OF EACH QUARTER-END.
5) 10K REPORT TO BE SUBMITTED WITHIN 90 DAYS FROM YEAR-END.
FINANCIAL COVENANT.
1) CURRENT RATIO SHALL BE MAINTAINED AT NO LESS THAN 1.25X.
(defined as total current assets divided by current liabilities).
2) EFFECTIVE TANGIBLE NET WORTH SHALL BE MAINTAINED AT $16,000,000.00.
(Defined as stated net worth includes redeemable convertible preferred stock
less intangibles, net loans to affiliate(s), net loans to shareholders/
principals/officers, plus subordinated debt).
3) EFFECTIVE DEBT/EQUITY RATIO SHALL BE MAINTAINED AT NO HIGHER THAN 2.0X.
(Defined as total liabilities less subordinated debt divided by stated net worth
less intangibles, net loans to affiliate(s), net loans to shareholders/
principals/officers, plus subordinated debt.)
OTHER TERMS AND CONDITIONS.
1) BORROWER SHALL MAINTAIN TOTAL BANKING RELATIONSHIP WITH CHINATRUST BANK
(U.S.A.); ANY ACCOUNTS ESTABLISHED OR TO BE ESTABLISHED AT OTHER FINANCIAL
INSTITUTIONS SHALL REQUIRE THE CONSENT OF CTBUSA WITH THE EXCEPTION OF EXISTING
ACCOUNTS AT XXXXX FARGO BANK.
2) BORROWER ACKNOWLEDGES THAT NO OTHER BANK BORROWING IS ALLOWED WITHOUT
XXXXXX'S PRIOR WRITTEN CONSENT.
3) XXXXXXXX AGREES AND AUTHORIZES XXXXXX TO CONDUCT ON-SITE FIELD AUDITS AS
DEEMED NECESSARY ON THE BORROWER'S ACCOUNTS RECEIVABLE, INVENTORY AND RELATED
BOOKS AND RECORDS THROUGH THE XXXXXX'S APPOINTED AUDITORS AT THE BORROWER'S
EXPENSE. NO CAP ON AUDIT FEES.
4) LOCKBOX ARRANGEMENT TO BE ESTABLISHED FOR COLLECTION OF 80% OF XXXXXXXX'S
ACCOUNT DEBTOR PAYMENTS OR 80% OF ACCOUNTS RECEIVABLES BALANCE, WHICHEVER IS
HIGHER. (100% OF PROCEEDS COLLECTED VIA LOCK BOX TO BE CREDITED TO BANK
CONTROLLED ACCOUNT #00000000 AND TO BE USED AS LOAN REPAYMENT).
5) BORROWER MAY NOT MAKE ADVANCES OR LOANS IN ANY FORM OR TO ANY PARTY,
INCLUDING BUT NOT LIMITED TO AFFILIATES OR NONAFFILIATES, WITHOUT PRIOR WRITTEN
CONSENT FROM CHINATRUST BANK (U.S.A.).
6) XXXXXXXX AGREES TO MAINTAIN A DEPOSIT ACCOUNT WITH XXXXXX AS ITS MAJOR
OPERATING ACCOUNT WHICH WILL BE SUBJECT TO ACCOUNT ANALYSIS CHARGES.
7) SATISFACTORY FIELD AUDIT TO BE CONDUCTED WITHIN TWO MONTHS OF 12/20/2002 AT
XXXXXXXX'S EXPENSE.
LINE OF CREDIT. LENDER AGREES AT ITS SOLE DISCRETION (AS MORE SPECIFICALLY SET
FORTH BELOW), TO MAKE AVAILABLE TO BORROWER A REVOLVING LINE OF CREDIT UP TO A
MAXIMUM AMOUNT OF NINE MILLION AND 00/100 U.S. DOLLARS ($9,000,000.00). EACH
ADVANCE OVER A TOTAL OUTSTANDING LINE BALANCE OF $4,000,000.00 WILL HAVE
MATURITIES AS DETAILED BELOW. THIS LINE OF CREDIT MAY BE USED AS FOLLOWS:
A) WITHIN THE LINE A SUB-LINE OF $8,000,000.00 IS AVAILABLE WITH THE FOLLOWING
SUB-LIMITS:
A.1) WITHIN THE SUB-LINE A SUB-LIMIT OF $8,000,000.00 IS AVAILABLE FOR:
1. ISSUANCE OF USANCE LETTERS OF CREDIT;
BUT ONLY UP TO 60 DAYS;
2. ISSUANCE OF SIGHT LETTERS OF CREDIT;
3. REFINANCING LETTERS OF CREDIT;
4. LOCAL PURCHASE FINANCING AGAINST INVOICE(S);
5. WORKING CAPITAL LOANS:
ITEMS 2-5 MAY HAVE MATURITIES OF UP TO 150 DAYS.
THE AVAILABILITY OF SUB-LIMIT (A.1) IS SUBJECT TO THE BORROWING BASE FORMULA
STATED BELOW.
B) WITHIN THE LINE, A SUBLINE OF $1,000,000.00 IS AVAILABLE FOR:
6. UNCOLLECTED FUNDS AVAILABILITY, AS SET FORTH BELOW.
XXXXXX AGREES TO MAKE AVAILABLE TO BORROWER AN UNCOLLECTED FUNDS PROTECTION
FACILITY IN THE AMOUNT OF ONE MILLION AND 00/100 U.S. DOLLARS ($1,000,000.00).
BORROWER MAY USE UP TO $1,000,000.00 OF UNCOLLECTED FUNDS DEPOSITED INTO
BORROWER'S BUSINESS CHECKING ACCOUNT. THE AGGREGATE UNCOLLECTED FUNDS
AVAILABILITY FOR ACCOUNT #00000000 SHALL NOT AT ANY TIME EXCEED $1,000,000.00.
(REFER TO "RIDER TO BUSINESS LOAN AGREEMENT" ATTACHED HERETO AND MADE A PART
HEREOF.)
BORROWER ACKNOWLEDGES THAT XXXXXX WILL NOT PERMIT AN OVERDRAFT STATUS IN
BORROWER'S CHECKING ACCOUNT. FURTHER XXXXXXXX AGREES TO MAKE AN IMMEDIATE
DEPOSIT TO COVER ANY RETURNED CHECK OR IN CLEARING CHECK OVERDRAFTS.
THE AGGREGATE OUTSTANDING SHALL NOT AT ANY TIME EXCEED $9,000,000.00. IN THE
EVENT THE AGGREGATE OUTSTANDING EVER EXCEEDS $9,000,000.00, BORROWER SHALL
IMMEDIATELY PAY DOWN THE LINE BY THE AMOUNT WHICH EXCEEDS $9,000,000.00.
FURTHER, IN THE EVENT SUB-LINE A OR SUB-LINE B EVER EXCEEDS THE AMOUNT PERMITTED
TO BE OUTSTANDING THEREUNDER, BORROWER SHALL IMMEDIATELY REPAY THE EXCESS
AMOUNT.
"THIS AGREEMENT REFLECTS THE BANK'S GENERAL WILLINGNESS TO EXTEND CREDIT TO YOU,
BUT DOES NOT INVOLVE ANY OBLIGATION ON THE PART OF THE BANK TO MAKE FUNDS
AVAILABLE THEREFORE, NO COMMITMENT OR FACILITY FEE WILL BE CHARGED."
BORROWING BASE FORMULA. THE BORROWING BASE FORMULA IS CALCULATED AS FOLLOWS:
65% OF ELIGIBLE ACCOUNT RECEIVABLES*';
*ELIGIBLE ACCOUNTS RECEIVABLE ARE DEFINED, BUT NOT LIMITED TO THE FOLLOWING:
1) THE ACCOUNTS RECEIVABLE CANNOT BE FROM CONDITIONAL SALES OR CONSIGNMENT
SALES;
2) NO FOREIGN RECEIVABLES (UNLESS COVERED BY CREDIT INSURANCE OR LETTER OF
CREDIT, SATISFACTORY TO BANK). ON A CASE BY CASE BASIS THE BANK MAY CONSIDER
FINANCING ON A WITH OR WITHOUT RECOURSE BASIS TO OUR BORROWERS, EXPORT SIGHT
DRAFTS DRAWN UNDER SIGHT LETTERS OF CREDIT AND/OR USANCE DRAFTS DRAWN ON THE
ISSUING BANK PROVIDING THE UNDERLYING LETTER OF CREDIT HAS BEEN ADVISED BY AND
LODGED WITH CTBUSA;
3) NOT SUBJECT TO OFFSET BY A CONTRA COUNT;
4) NOT AGED OVER 90 DAYS FROM INVOICE DATE, OR ALTERNATIVELY OVER 60 DAYS FROM
DUE DATE;
5) NOT BELONGING TO AN ACCOUNT THAT WHEN CROSS AGED, MORE THAN 50% OF THAT
SPECIFIC ACCOUNT RECEIVABLE IS MORE THAN 90 DAYS PAST INVOICE DATE, OR
ALTERNATIVELY 60 DAYS PAST DUE DATE. A DETERMINATION TO WAIVE THIS MAY BE DONE
ON A CASE-BY-CASE BASIS PROVIDED AN ANALYSIS BY THE BANK INDICATES THE
COLLECTIBILITY OF THE OTHER RECEIVABLES IS CERTAIN;
6) NOT AFFILIATED WITH BORROWER;
7) NO COD ACCOUNTS;
8) UNITED STATES GOVERNMENT RECEIVABLES UNLESS FORMAL ASSIGNMENT FROM N 138 AND
N 139 ARE OBTAINED;
9) NO STATE OR MUNICIPAL ACCOUNTS RECEIVABLE UNLESS SUPPORTED BY ACCEPTABLE
ASSIGNMENTS AND WHEREVER POSSIBLE THE BANK SHOULD BE INDICATED AS A JOINT PAYEE;
10) NOT PREVIOUSLY DECLINED BY A FACTOR FOR CREDIT REASONS.
TERM OUT. UPON MATURITY OF THE LINE (12-31-2003) BORROWER MAY CHOOSE ONE OF THE
FOLLOWING OPTIONS:
A) PAYOUT THE EXISTING LIEN OF CREDIT WITH XXXXXX, OR;
B) CONVERT THE EXISTING LINE OF CREDIT WITH XXXXXX. TO A (6) MONTH TERM LOAN, ON
TERMS AND CONDITIONS SATISFACTORY TO LENDER, PROVIDED HOWEVER, THE PAYMENT
SCHEDULE WILL BE AS FOLLOWS:
BORROWER WILL REPAY TERM LOAN IN PRINCIPAL PAYMENTS EQUAL TO 1/6TH OF THE THEN
TOTAL OUTSTANDING PRINCIPAL BALANCE OF THE LINE. XXXXXXXX'S FIRST PRINCIPAL
PAYMENT IS DUE 01-31-2004, AND ALL SUBSEQUENT PRINCIPAL PAYMENTS ARE DUE ON THE
SAME DAY OF EACH MONTH AFTER THAT. IN ADDITION, BORROWER WILL PAY REGULAR
MONTHLY PAYMENTS OF ALL ACCRUED UNPAID INTEREST DUE AS OF EACH PAYMENT DATE,
BEGINNING 01-31-2004, WITH ALL SUBSEQUENT INTEREST PAYMENTS TO BE DUE ON THE
SAME DAY OF EACH MONTH AFTER THAT. XXXXXXXX'S FINAL PAYMENT DUE 06-30-3004, WILL
BE FOR ALL PRINCIPAL AND ALL ACCRUED INTEREST NOT YET PAID, UNLESS OTHERWISE
AGREED OR REQUIRED BY APPLICABLE LAW, PAYMENTS WILL BE APPLIED FIRST TO ACCRUED
UNPAID INTEREST, THEN TO PRINCIPAL, AND ANY REMAINING AMOUNT TO ANY UNPAID
COLLECTION COSTS AND LATE CHARGES. THE ANNUAL INTEREST RATE SHALL BE COMPUTED ON
A 365/360 BASIS; THAT IS, BY APPLYING THE RATIO OF THE ANNUAL INTEREST RATE OVER
A YEAR OF 360 DAYS, MULTIPLIED BY THE OUTSTANDING PRINCIPAL BALANCE, MULTIPLIED
BY THE ACTUAL NUMBER OF DAYS THE PRINCIPAL BALANCE IS OUTSTANDING. XXXXXXXX WILL
PAY LENDER AT XXXXXX'S ADDRESS SHOWN ABOVE OR AT SUCH OTHER PLACE AS XXXXXX MAY
DESIGNATE IN WRITING.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents, constitutes the
entire understanding and agreement of the parties as to the matters set forth in
this Agreement. No alteration of or amendment to this Agreement shall be
effective unless given in writing and signed by the party or parties sought to
be charged or bound by the alteration or amendment.
ARBITRATION. XXXXXXXX AND XXXXXX AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE,
ARISING FROM THIS AGREEMENT OR OTHERWISE, INCLUDING WITHOUT LIMITATION CONTRACT
AND TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO THE RULES OF THE AMERICAN
ARBITRATION ASSOCIATION IN EFFECT AT THE TIME THE CLAIM IS FILED, UPON REQUEST
OF EITHER PARTY. NO ACT TO TAKE OR DISPOSE OF ANY COLLATERAL SHALL CONSTITUTE A
WAIVER OF THIS ARBITRATION AGREEMENT OR BE PROHIBITED BY THIS ARBITRATION
AGREEMENT. THIS INCLUDES, WITHOUT LIMITATION, OBTAINING INJUNCTIVE RELIEF OR A
TEMPORARY RESTRAINING ORDER; INVOKING A POWER OF SALE UNDER ANY DEED OF TRUST OR
MORTGAGE; OBTAINING A WRIT OF ATTACHMENT OR IMPOSITION OF A RECEIVER; OR
EXERCISING ANY RIGHTS RELATING TO PERSONAL PROPERTY, INCLUDING TAKING OR
DISPOSING OF SUCH PROPERTY WITH OR WITHOUT JUDICIAL PROCESS PURSUANT TO ARTICLE
9 OF THE UNIFORM COMMERCIAL CODE. ANY DISPUTES, CLAIMS, OR CONTROVERSIES
CONCERNING THE LAWFULNESS OR REASONABLENESS OF ANY ACT, OR EXERCISE OF ANY
RIGHT, CONCERNING ANY COLLATERAL, INCLUDING ANY CLAIM TO RESCIND, REFORM, OR
OTHERWISE MODIFY ANY AGREEMENT RELATING TO THE COLLATERAL, SHALL ALSO BE
ARBITRATED, PROVIDED HOWEVER THAT NO ARBITRATOR SHALL HAVE THE RIGHT OR THE
POWER TO ENJOIN OR RESTRAIN ANY ACT OF ANY PARTY. XXXXXXXX AND XXXXXX AGREE THAT
IN THE EVENT OF AN ACTION FOR JUDICIAL FORECLOSURE PURSUANT TO CALIFORNIA CODE
OF CIVIL PROCEDURE SECTION 726, OR ANY SIMILAR PROVISION IN ANY OTHER STATE, THE
COMMENCEMENT OF SUCH AN ACTION WILL NOT CONSTITUTE A WAIVER OF THE RIGHT TO
ARBITRATE AND THE COURT SHALL REFER TO ARBITRATION AS MUCH OF SUCH ACTION,
INCLUDING COUNTERCLAIMS, AS LAWFULLY MAY BE REFERRED TO ARBITRATION. JUDGMENT
UPON ANY AWARD RENDERED BY ANY ARBITRATOR MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION. NOTHING IN THIS AGREEMENT SHALL PRECLUDE ANY PARTY FROM SEEKING
EQUITABLE RELIEF FROM A COURT OF COMPETENT JURISDICTION. THE STATUTE OF
LIMITATIONS, ESTOPPEL, WAIVER, LACHES, AND SIMILAR DOCTRINES WHICH WOULD
OTHERWISE BE APPLICABLE IN AN ACTION BROUGHT BY A PARTY SHALL BE APPLICABLE IN
ANY ARBITRATION PROCEEDING, AND THE COMMENCEMENT OF AN ARBITRATION PROCEEDING
SHALL BE DEEMED THE COMMENCEMENT OF AN ACTION FOR THESE PURPOSES. THE FEDERAL
ARBITRATION ACT SHALL APPLY TO THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
OF THIS ARBITRATION PROVISION.
ATTORNEYS' FEES; EXPENSES. Xxxxxxxx agrees to pay upon demand all of Xxxxxx's
costs and expenses, including Xxxxxx's attorneys' fees and Xxxxxx's legal
expenses, incurred in connection with the enforcement of this Agreement. Lender
may hire or pay someone else to help enforce this Agreement, and Borrower shall
pay the costs and expenses of such enforcement. Costs and expenses include
Xxxxxx's attorneys' fees and legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Borrower also
shall pay all court costs and such additional fees as may be directed by the
court.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement.
CONSENT TO LOAN PARTICIPATION. Xxxxxxxx agrees and consents to Xxxxxx's sale or
transfer, whether now or later, of one or more participation interests in the
Loan to one or more purchasers, whether related or unrelated to Lender. Lender
may provide, without any limitation whatsoever, to any one or more purchasers,
or potential purchasers, any information or knowledge Lender may have about
Borrower or about any other matter relating to the Loan, and Borrower hereby
waives any rights to privacy Borrower may have with respect to such matters.
Borrower additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such participation
interests. Xxxxxxxx also agrees that the purchasers of any such participation
interests will be considered as the absolute owners of such interests in the
Loan and will have all the rights granted under the participation agreement or
agreements governing the sale of such participation interests. Borrower further
waives all rights of offset or counterclaim that it may have now or later
against Lender or against any purchaser of such a participation interest and
unconditionally agrees that either Lender or such purchaser may enforce
Xxxxxxxx's obligation under the Loan irrespective of the failure or insolvency
of any holder of any interest in the Loan. Xxxxxxxx further agrees that the
purchaser of any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may have against
Xxxxxx.
GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF CALIFORNIA. THIS
AGREEMENT HAS BEEN ACCEPTED BY XXXXXX IN THE STATE OF CALIFORNIA.
CHOICE OF VENUE. If there is a lawsuit, Xxxxxxxx agrees upon Xxxxxx's request to
submit to the jurisdiction of the courts of LOS ANGELES County, State of
California.
NO WAIVER BY XXXXXX. Lender shall not be deemed to have waived any rights under
this Agreement unless such waiver is given in writing and signed by Xxxxxx. No
delay or omission on the part of Lender in exercising any right shall operate as
a waiver of such right or any other right. A waiver by Xxxxxx of a provision of
this Agreement shall not prejudice or constitute a waiver of Lender's right
otherwise to demand strict compliance with that provision or any other provision
of this Agreement. No prior waiver by Xxxxxx, nor any course of dealing between
Xxxxxx and Borrower, or between Lender and any Grantor, shall constitute a
waiver of any of Lender's rights or of any of Borrower's or any Grantor's
obligations as to any future transactions. Whenever the consent of Lender is
required under this Agreement, the granting of such consent by Lender in any
instance shall not constitute continuing consent to subsequent instances where
such consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
NOTICES. Any notice required to be given under this Agreement shall be given in
writing, and shall be effective when actually delivered, when actually received
by telefacsimile (unless otherwise required by law), when deposited with a
nationally recognized overnight courier, or, if mailed, when deposited in the
United States mail, as first class, certified or registered mail postage
prepaid, directed to the addresses shown near the beginning of this Agreement.
Any party may change its address for notices under this Agreement by giving
formal written notice to the other parties, specifying that the purpose of the
notice is to change the party's address. For notice purposes, Xxxxxxxx agrees to
keep Xxxxxx informed at all times of Xxxxxxxx's current address. Unless
otherwise provided or required by law, if there is more than one Borrower, any
notice given by Lender to any Borrower is deemed to be notice given to all
Borrowers.
SEVERABILITY. If a court of competent jurisdiction finds any provision of this
Agreement to be illegal, invalid, or unenforceable as to any circumstance, that
finding shall not make the offending provision illegal, invalid, or
unenforceable as to any other circumstance. If feasible, the offending provision
shall be considered modified so that it becomes legal, valid and enforceable. If
the offending provision cannot be so modified, it shall be considered deleted
from this Agreement. Unless otherwise required by law, the illegality,
invalidity, or unenforceability of any provision of this Agreement shall not
affect the legality, validity or enforceability of any other provision of this
Agreement.
SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of any
provisions of this Agreement makes it appropriate, including without limitation
any representation, warranty or covenant, the word "Borrower" as used in this
Agreement shall include all of Borrower's subsidiaries and affiliates.
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Lender to make any Loan or other financial
accommodation to any of Borrower's subsidiaries or affiliates.
SUCCESSORS AND ASSIGNS. AI! covenants and agreements contained by or on behalf
of Borrower shall bind Xxxxxxxx's successors and assigns and shall inure to the
benefit of Lender and its successors and assigns. Borrower shall not, however,
have the right to assign Xxxxxxxx's rights under this Agreement or any interest
therein, without the prior written consent of Lender.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Xxxxxxxx understands and agrees that
in extending Loan Advances, Lender is relying on all representations,
warranties, and covenants made by Borrower in this Agreement or in any
certificate or other instrument delivered by Borrower to Lender under this
Agreement or the Related Documents. Borrower further agrees that regardless of
any investigation made by Xxxxxx, all such representations, warranties and
covenants will survive the extension of Loan Advances and delivery to Lender of
the Related Documents, shall be continuing in nature, shall be deemed made and
redated by Xxxxxxxx at the time each Loan Advance is made, and shall remain in
full force and effect until such time as Borrower's indebtedness shall be paid
in full, or until this Agreement shall be terminated in the manner provided
above, whichever is the last to occur.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:
ADVANCE. The word "Advance" means a disbursement of Loan funds made, or to be
made, to Borrower or on Borrower's behalf on a line of credit or multiple
advance basis under the terms and conditions of this Agreement.
AGREEMENT. The word "Agreement" means this Business Loan Agreement, as this
Business Loan Agreement may be amended or modified from time to time, together
with all exhibits and schedules attached to this Business Loan Agreement from
time to time.
BORROWER. The word "Borrower" means I/OMAGIC CORPORATION only.
COLLATERAL. The word "Collateral" means all property and assets granted as
collateral security for a Loan, whether real or personal property, whether
granted directly or indirectly, whether granted now or in the future, and
whether granted in the form of a security interest, mortgage, collateral
mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien, charge, lien or title retention contract,
lease or consignment intended as a security device, or any other security or
lien interest whatsoever, whether created by law, contract, or otherwise.
ENVIRONMENTAL LAWS. The words "Environmental Laws" mean any and all state,
federal and local statutes, regulations and ordinances relating to the
protection of human health or the environment, including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments
and Reauthorization Act of 1986, Pub. L. No. 99-499 ("XXXX"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., The Resource
Conservation and Recovery Act, 42, U.S.C. Section 6901, et seq., Chapters 6.5
through 7.7 of Division 20 of the California Health and Safety Code, Section
25100, et seq., or other applicable state or federal laws, rules, or regulations
adopted pursuant thereto.
EVENT OF DEFAULT. The words "Event of Default" mean any of the events of default
set forth in this Agreement in the default section of this Agreement.
GAAP. The word "GAAP" means generally accepted accounting principles.
GRANTOR. The word "Grantor" means I/OMAGIC CORPORATION only.
GUARANTOR. The word "Guarantor" means I/OMAGIC CORPORATION only.
GUARANTY. The word "Guaranty" means the guaranty from Guarantor to Lender,
including without limitation a guaranty of all or part of the Note.
HAZARDOUS SUBSTANCES. The words "Hazardous Substances" mean materials that,
because of their quantity, concentration or physical, chemical or infectious
characteristics, may cause or pose a present or potential hazard to human health
or the environment when improperly used, treated, stored, disposed of,
generated, manufactured, transported or otherwise handled. The words "Hazardous
Substances" are used in their very broadest sense and include without limitation
any and all hazardous or toxic substances, materials or waste as defined by or
listed under the Environmental Laws. The term "Hazardous Substances" also
includes, without limitation, petroleum and petroleum by-products or any
fraction thereof and asbestos.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by the
Note or Related Documents, including all principal and interest together with
all other indebtedness and costs and expenses for which Borrower is responsible
under this Agreement or under any of the Related Documents.
LENDER. 'The word "Lender" means CHINATRUST BANK (USA), its successors and
assigns.
LOAN. The word "Loan" means any and all loans and financial accommodations from
Lender to Borrower whether now or hereafter existing, and however evidenced,
including without limitation those loans and financial accommodations described
herein or described on any exhibit or schedule attached to this Agreement from
time to time.
NOTE. The word "Note" means THAT CERTAIN PROMISSORY NOTE DATED APRIL 9, 2001 IN
THE ORIGINAL PRINCIPAL AMOUNT OF $8,000,000 AS AMENDED AND EXTENDED FROM TIME TO
TIME, INCLUDING PURSUANT TO THE CHANGE IN TERMS AGREEMENT OF EVEN DATE HEREWITH.
PERMITTED LIENS. The words "Permitted Liens" mean (1) liens and security
interests securing indebtedness owed by Borrower to Lender; (2) liens for taxes,
assessments, or similar charges either not yet due or being contested in good
faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other
like liens arising in the ordinary course of business and securing obligations
which are not yet delinquent; (4) purchase money liens or purchase money
security interests upon or in any property acquired or held by Borrower in the
ordinary course of business to secure indebtedness outstanding on the date of
this Agreement or permitted to be incurred under the paragraph of this Agreement
titled "Indebtedness and Liens"; (5) liens and security interests which, as of
the date of this Agreement, have been disclosed to and approved by the Lender in
writing; and (6) those liens and security interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to the
net value of Xxxxxxxx's assets.
RELATED DOCUMENTS. The words "Related Documents" mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Loan.
SECURITY AGREEMENT. The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements, understandings or
other agreements, whether created by law, contract, or otherwise, evidencing,
governing, representing, or creating a Security Interest.
SECURITY INTEREST. The words "Security Interest" mean, without limitation, any
and all types of collateral security, present and future, whether in the form of
a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment,
pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel
trust, factor's lien, equipment trust, conditional sale, trust receipt, lien or
title retention contract, lease or consignment intended as a security device, or
any other security or lien interest whatsoever whether created by law, contract,
or otherwise.
XXXXXXXX ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT AND XXXXXXXX AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS
DATED DECEMBER 31, 2002.
BORROWER:
I/OMAGIC CORPORATION
By: /s/ XXXX XXXXXXX
------------------
XXXX XXXXXXX, President/Secretary of I/OMAGIC
CORPORATION
LENDER:
CHlNATRUST BANK [USA]
BY:
Authorized Signer
