LOAN AND SECURITY AGREEMENT
NOTICE - CONTAINS WAIVER OF TRIAL BY JURY
THIS LOAN AND SECURITY AGREEMENT is entered into as of June 18, 1999,
by and between PHOTOMATRIX, INC., a California corporation ("Borrower"), and
CELTIC CAPITAL CORPORATION ("Lender").
1. CERTAIN RULES OF CONSTRUCTION; CERTAIN DEFINITIONS. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles and practices
consistently applied. All references herein to the singular or plural shall
also mean the plural or singular, respectively. All terms used herein which
are defined in the California Uniform Commercial Code (as amended from time
to time) shall have the meanings ascribed thereto therein unless otherwise
defined in this Agreement. As used herein, the following terms shall have
the following meanings:
1.1 "ACCOUNT DEBTOR" - the obligor on any Account.
1.2 "ACCOUNT" - an account receivable arising in the
ordinary course of Borrower's business.
1.3 "ADVANCES" - A/R Advances and/or Inventory Advances, as
applicable.
1.3A "AFFILIATES" - Photomatrix, Inc., a California
corporation; Photomatrix Imaging Corporation, a Nevada corporation; I-PAC
Manufacturing, Inc., a California corporation; IPAC Precision Machining,
Inc., a California corporation; National Metal Technologies, a California
corporation.
1.4 "AGREEMENT" - this Loan and Security Agreement, together
with all exhibits and schedules hereto, as the same may be amended from time
to time in accordance with the terms hereof.
1.5 "ALLOWABLE AMOUNT" - the A/R Allowable Amount or the
Inventory Allowable Amount, as applicable.
1.6 "ANNIVERSARY DATE" - the date which is two years from
the date of the first Credit Accommodation hereunder.
1.7 "A/R ADVANCES" - advances made pursuant to the first
sentence in subsection 2.1.1.
1.8 "A/R ALLOWABLE AMOUNT" - the lesser of the A/R Borrowing
Base and the A/R Maximum Commitment.
1.9 "A/R BORROWING BASE" - eighty percent (80%) of the Net
Face Amount of Eligible Accounts.
1.10 "A/R COLLATERAL MANAGEMENT FEE" - two-tenths of one
percent (.2%) per month, of the average monthly balance of gross face amount
of the Accounts outstanding.
1.11 "A/R MAXIMUM COMMITMENT" - at any time of determination,
the amount, if any, by which $1,200,000.00 exceeds the aggregate principal
amount of any advances or other extensions of credit outstanding from Lender
to or on behalf of any of the Affiliates other than Borrower for the purpose
of financing accounts receivable.
1.12 "AVAILABILITY RESERVES" - shall mean, as of any date of
determination, such amounts as Lender may from time to time establish and
revise in good faith reducing the amount of Advances which would otherwise be
available to Borrower hereunder: (a) to reflect events, conditions,
contingencies or risks which, as determined by Lender in good faith, do or
may affect either (i) the Collateral or any other property which is security
for the Obligations or its value, (ii) the assets, business or prospects of
Borrower or any Obligor, or (iii) the security interest and other rights of
Lender in the Collateral (including the enforceability, perfection and
priority thereof), or (b) to reflect Lender's good faith belief that any
Collateral report or financial information furnished by or on behalf of
Borrower or any Obligor to Lender is or may have been incomplete, inaccurate
or misleading in any material respect, or (c) in respect of any state of
facts which Lender determines in good faith constitutes an Event of Default
or may, with notice or passage of time or both, constitute an Event of
Default.
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1.13 "BORROWER'S ACCOUNT" - the deposit account of Borrower,
account number 0000-000-000 maintained by Borrower with Imperial Bank at its
office located at 000 X Xxxxxx, Xxx Xxxxx, XX 00000.
1.14 "BORROWING BASE" - the A/R Borrowing Base or the
Inventory Borrowing Base, as applicable.
1.15 "CLOSING DATE" - the date of this Agreement.
1.16 "COLLATERAL" -
1.16.1 all of the following present and future assets
of Borrower, together with all collateral now or hereafter described in any
form UCC-1 filed against Borrower naming Lender as the secured party:
1.16.1.1 Accounts, returned, reclaimed or
repossessed goods with respect thereto and rights as an unpaid vendor;
contract rights; chattel paper; general intangibles (including, but not
limited to, tax and duty refunds, registered and unregistered patents,
trademarks, service marks, copyrights, trade names, and applications for the
foregoing, trade secrets, goodwill, processes, drawings, blueprints, customer
lists, licenses, whether as licensor or licensee, choses in action and other
claims, and existing and future leasehold interests in equipment, and
fixtures); documents; instruments; letters of credit, deposits accounts;
1.16.1.2 goods, including, but not limited to:
1.16.1.2.1 inventory, wherever located,
including raw materials, work-in-process, finished goods, and all names or
marks affixed to or to be affixed thereto for purposes of selling same by the
seller, manufacturer, lessor or licensor thereof;
1.16.1.2.2 equipment and fixtures,
including, without limitation, all motor vehicles, furniture, and any and all
additions, substitutions, replacements (including spare parts), and
accessions thereof and thereto (the foregoing items described in this
subsection 1.11.1.2.2 only shall be referred to collectively as "Equipment");
1.16.2 any goods in Borrower's possession, custody, or
control;
1.16.3 books and records relating to any of the above
including, without limitation, all computer programs, printed output and
computer readable data in the possession or control of the Borrower, any
computer service bureau or other third party;
1.16.4 products and proceeds of the foregoing in
whatever form and wherever located, including, without limitation, all
insurance proceeds, all claims against third parties for loss or destruction
of or damage to any of the foregoing, and all income from the lease or rental
of any of the foregoing.
1.16.5 any claim of Borrower on any policy of
insurance, including claims for premium refund under any workmen's
compensation policy, or claims under any business interruption or similar
coverage.
1.16.6 all investment property, but specifically not
including any real property owned by Borrower.
1.17 "COLLATERAL MANAGEMENT FEE" - collectively, the A/R
Collateral Management Fee and the Inventory Collateral Management Fee .
1.18 "CREDIT ACCOMMODATION" - any advance or other extension
of credit by Lender to or on behalf of Borrower hereunder or under any
Evidence of Special Credit Accommodation.
1.19 "DEFAULT RATE" - five percentage points (5.0%) per annum
in excess of the Interest Rate. To the extent the Default Rate is calculated
with reference to the Prime Rate, any change in the Default Rate shall be
effective as of the date of any change in Prime Rate.
1.20 "DELINQUENT ACCOUNTS" - Accounts which remain
uncollected more than ninety days from invoice date.
1.21 "DOCUMENTS" - this Agreement, the Term Note, any riders,
supplements and amendments thereto, and all other documents, instruments or
agreements now or hereafter executed and/or delivered in connection with this
Agreement, including but not limited to any Evidences of Special Credit
Accommodations, mortgages, Security Agreements, assignments, pledges,
Subordination Agreements, and Guaranties.
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1.22 "ELIGIBLE ACCOUNT" - an Account, excluding the following:
1.22.1 A Delinquent Account;
1.22.2 An Account due from an Account Debtor which has
suffered a business failure or the termination of its existence, or as to
which a dissolution, insolvency or bankruptcy proceeding has been commenced,
any assignment for the benefit of creditors has been made, or a trustee,
receiver or conservator has been appointed for all or any part of the assets
of such Account Debtor;
1.22.3 An Account due from an Account Debtor affiliated
with Borrower in any manner, including, without limitation, as stockholder,
owner, officer, director, agent or employee;
1.22.4 An Account with respect to which payment is or
may be conditional;
1.22.5 An Account due from an Account Debtor who is not
a resident or citizen of, located in, or subject to service of process in,
the United States of America;
1.22.6 An Account due from an Account Debtor who is any
national government including, without limitation, any instrumentality,
division, agency, body or department thereof EXCEPT if the Account Debtor is
the United States of America ("USA") and the USA, Lender and Borrower all
enter into an assignment of claims agreement in form and substance
satisfactory to Lender;
1.22.7 An Account arising from progress xxxxxxxx or
retainages or "xxxx and hold" sales or any other similar arrangements;
1.22.8 An Account due from an Account Debtor as to
which twenty-five percent or more of the aggregate dollar amount of all
outstanding Accounts owing from such Account Debtor are Delinquent Accounts;
1.22.9 That portion of an Account due from an Account
Debtor which is in excess of fifteen percent of the aggregate dollar amount
of all outstanding accounts receivable of the Affiliates, with the exception
of Xxxx Disney Imagineering, Artecon, Alliant Techsystems Inc., Palomar
Technological and subsidiaries, Primex Technology and Scan-optics, Inc. who
shall not exceed twenty-five percent of the aggregate dollar amount of all
outstanding accounts receivable of the Affiliates, or other entities
submitted by Borrower and approved by Lender;
1.22.10 An Account as to which Borrower is or may
become liable to the Account Debtor for any reason to the extent of such
liability;
1.22.11 An Account which is not free of all liens,
encumbrances, charges, rights and interest of any kind;
1.22.12 An Account which is supported or represented by
a promissory note, post-dated check or letter of credit unless such
instrument is actually delivered to Lender;
1.22.13 An Account which is unsuitable for purposes of
determining the Borrowing Base, as determined by Lender in its sole
discretion.
1.23 "ELIGIBLE INVENTORY" - means Inventory which:
1.23.1 is free of all liens, encumbrances, charges,
rights and interest of any kind (other than those in favor of Lender);
1.23.2 is permanently located at locations at which
Borrower conducts business in the State of California (or such other states
as to which Lender shall give its advance consent in writing), and is not
covered by a negotiable document of title or warehouse receipt (unless such
document has been delivered to Lender and Lender has given its advance
consent in writing thereto);
1.23.3 in Lender's opinion, is not obsolete, unsalable,
damaged, or unfit for further processing;
1.23.4 does not consist of miscellaneous supplies,
display items, packing and shipping materials, discontinued or slow-moving
items, or finished goods of substandard quality;
1.23.5 is not placed by Borrower on consignment;
1.23.6 is of a type held for sale in the ordinary
course of Borrower's business; and
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1.23.7 is otherwise suitable for purposes of
determining the Inventory Borrowing Base, as determined by Lender in its sole
discretion.
1.24 "EVENTS OF DEFAULT" - see Section 10.1 hereof.
1.25 "EVIDENCE OF SPECIAL CREDIT ACCOMMODATION" - see Section
2.1.3 hereof.
1.26 "GUARANTORS" - all entities now or hereafter
guaranteeing the Obligations.
1.27 "GUARANTY" - a continuing guaranty in form and substance
acceptable to Lender by which a Guarantor guarantees the Obligations.
1.28 "INTEREST RATE" - the greater of: (a) four percent
(4%), per annum, in excess of the Prime Rate; and (b) eleven percent (11.0%)
per annum. To the extent the Interest Rate is calculated with reference to
the Prime Rate, any change in the Interest Rate shall be effective as of the
first day of the month following the date of any change in Prime Rate.
1.29 "INVENTORY ADVANCES" - advances made pursuant to the
second sentence of subsection 2.1.1.
1.29A "INVENTORY ALLOWABLE AMOUNT" - the lesser of the
Inventory Borrowing Base and the Inventory Maximum Commitment.
1.30 "INVENTORY BORROWING BASE" - zero percent (0%) of
Eligible Inventory.
1.31 "INVENTORY COLLATERAL MANAGEMENT FEE" - zero percent
(0%) per month of the average monthly Inventory of Borrower, as determined by
Lender in its sole discretion.
1.32 "INVENTORY MAXIMUM COMMITMENT" - at any time of
determination, the amount, if any, by which $0 exceeds the aggregate
principal amount of any advances or other extensions of credit outstanding
from Lender to or on behalf of any of the Affiliates other than Borrower for
the purpose of financing inventory.
1.33 "KEY EMPLOYEES" - none.
1.34 "LENDING OFFICE" - Lender's office described in Section
21.1 hereof.
1.35 "LIEN" - any lien, mortgage, security interest, pledge,
encumbrance, or charge of any kind, including, but not limited to, any
conditional sale or other title retention arrangement or similar preferential
arrangement.
1.36 "LOAN FEE" - $0.
1.37 "MAXIMUM COMMITMENT" - the A/R Maximum Commitment or the
Inventory Maximum Commitment, as applicable.
1.38 "MINIMUM MONTHLY CHARGE" - $6,000.00.
1.39 AMISDIRECTED PAYMENT FEE@ - Fifteen percent (15%)
percent of the amount of any payment on an account where said payment has
been received by Borrower and not delivered in kind by Borrower to Lender
within five (5) business days of receipt thereof.
1.40 "MONETARY COLLATERAL" - cash, checks or other proceeds
of Collateral in tangible form.
1.41 "NEGOTIABLE COLLATERAL" - see Section 5.6.1 hereof.
1.42 "NET FACE AMOUNT" - with respect to an Account , the
gross face amount of such Account less all trade discounts or other
deductions to which the Account Debtor is entitled.
1.43 "OBLIGATED PARTY" - see Section 5.2 hereof.
1.44 "OBLIGATIONS" - all present and future obligations owing
by Borrower to Lender whether or not for the payment of money, whether or not
evidenced by any note or other instrument, whether direct or indirect,
absolute or contingent, due or to become due, joint or several, primary or
secondary, liquidated or unliquidated, secured or unsecured, original or
renewed or extended, whether arising before, during or after the commencement
of any case with respect to Borrower under the United States Bankruptcy Code
or any similar statute, including but not limited to: the Revolving Credit
Facility, the Term Loan, the Term Note, any guaranty executed by Borrower in
respect of the obligations of any Affiliates to Lender, any obligations
arising pursuant to letters of credit or acceptance transactions or any other
financial accommodations; and all
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principal, interest, fees, charges, expenses, attorneys' fees and
accountants' fees chargeable to Borrower or incurred by Lender in connection
with this Agreement and/or the transaction(s) related thereto.
1.45 "OBLIGORS" - Borrower and all Guarantors.
1.46 "PRIME RATE" - at any time any determination thereof is
to be made, the "prime rate", base rate or reference rate announced by Xxxxx
Fargo Bank, N.A. at its head office in San Francisco, California.
1.47 "REVOLVING CREDIT FACILITY" - see Section 2.1 hereof.
1.48 "SECURITY AGREEMENT" - any security agreement which
grants or purports to grant Lender a security interest in the Collateral.
1.49 "SPECIAL CREDIT ACCOMMODATION" - see Section 2.1.3
hereof.
1.50 "SPECIAL CREDIT ACCOMMODATION FEE" - three percent (3%)
of the original amount of any Special Credit Accommodation.
1.51 "STANDARD FEE SCHEDULE" - the schedule of Lender's
standard fees for services. 1.52 "SUBORDINATING CREDITOR" -
any Affiliate, or any individual or legal entity that holds any direct or
indirect equity interest in any Affiliate, that extends any credit to
Borrower.
1.53 "SUBORDINATION AGREEMENT" - a subordination agreement in
form and substance acceptable to Lender whereby a subordinating creditor
subordinates in favor of Lender obligations owed to it by Borrower.
1.54 "TERM LOAN" - see Section 2.2 hereof.
1.55 "TERM LOAN TERMINATION DATE" - the earlier of (i) the
date Lender may accelerate the Term Loan pursuant to Lender's rights under
Section 10.2 hereof, or (ii) June 1, 2001.
1.56 "TERM NOTE" - the promissory note substantially in the
form of Exhibit "C" hereto, executed by Borrower in favor of Lender to
evidence the Term Loan.
1.57 "TERMINATION DATE" - the earlier of the next Anniversary
Date (unless extended pursuant to the terms hereof) or the date on which
Lender elects to terminate this Agreement pursuant to the terms herein.
1.58 "TERMINATION CHARGES" -
1.58.1 the greater of: (i) the monthly average of all
interest and fees paid by Borrower to Lender hereunder for the 180 days (or
portion thereof if obligations have not been outstanding for at least 180
days) preceding the date which this calculation is to be made, for the period
from the date on which this determination is to be made to the next
Anniversary Date, or (ii) the Minimum Monthly Charge for the period from the
date on which this determination is to be made to the next Anniversary Date.
1.58.2 Notwithstanding the foregoing, if either (i) any
entity acquires at least twenty-five percent (25%) of the equity of Borrower
and the proceeds of such equity investment are used to pay in full the
Obligations, or (ii) a commercial bank refinances the Obligations in full,
then the Termination Charges shall be, either, two percent (2%) of the A/R
Maximum Commitment and the Inventory Maximum Commitment, if said refinance
occurs within twelve months of the first Credit Accommodation hereunder, or
one percent (1%) of the A/R Maximum Commitment and the Inventory Maximum
Commitment, if said refinance occurs between the thirteenth and eighteenth
months of the first Credit Accommodation hereunder, or one-half of one
percent (.5%) of the A/R Maximum Commitment and the Inventory Maximum
Commitment, if said refinance occurs between the nineteenth and twenty-fourth
months of the first Credit Accommodation hereunder.
2. CREDIT FACILITIES.
2.1 REVOLVING CREDIT FACILITY. Subject to the terms and
conditions of this Agreement, from the date on which this Agreement becomes
effective and until termination pursuant to the terms hereof:
2.1.1 ADVANCES. Lender shall, from time to time make
A/R Advances to Borrower, less any Availability Reserves, so long as, before
and after such A/R Advance, the Obligations relating only to the A/R Advances
do not exceed the A/R Allowable Amount. In addition, Lender shall, from time
to time make Inventory Advances to Borrower, less any Availability Reserves,
so long as, before and after such Inventory Advances, the Obligations
relating only to the Inventory Advances do not exceed the Inventory Allowable
Amount; provided, however, that the aggregate advances and other extensions
of credit by Lender to the Affiliates for the purpose of financing inventory
may not exceed 0% of the aggregate advances and other extensions of credit by
Lender to the Affiliates for the purpose of financing accounts receivable.
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2.1.2 REDUCTION OF BORROWING BASE. Lender may, in its
discretion, from time to time, upon not less than five (5) days prior notice
to Borrower, reduce the A/R Borrowing Base to the extent that Lender
determines in good faith that: (a) the dilution with respect to the Accounts
for any period (based on the ratio of (i) the aggregate amount of reductions
in Accounts other than as a result of payments in cash to (ii) the aggregate
amount of total sales) has increased in any material respect or may be
reasonably anticipated to increase in any material respect above historical
levels, or (b) the general creditworthiness of Account Debtors has declined.
In determining whether to reduce the A/R Borrowing Base, Lender may consider
events, conditions, contingencies or risks which are also considered in
determining Eligible Accounts or in establishing Availability Reserves.
2.1.3 SPECIAL CREDIT ACCOMMODATIONS. Lender may in its
sole and absolute discretion, from time to time, extend Credit Accommodations
to Borrower in excess of the Allowable Amount (any Credit Accommodation
extended to Borrower pursuant to this Section being a "Special Credit
Accommodation"). Each Special Credit Accommodation shall be evidenced by a
writing in form and substance satisfactory to Lender in its sole discretion
(any such writing, an "Evidence of Special Credit Accommodation").
Notwithstanding the terms and provisions of any Evidence of Special Credit
Accommodation, each Special Credit Accommodation shall be payable upon demand
unless otherwise agreed by Borrower and Lender.
2.1.4 GENERAL PROVISIONS RELATING TO REVOLVING CREDIT
FACILITY.
2.1.4.1 CREDITING OF BORROWER'S ACCOUNT. All
Advances by Lender may be made by deposits or transfers to Borrower's Account.
2.1.4.2 AUTHORIZATION FOR CREDIT ACCOMMODATIONS.
Subject to the terms and conditions of this Agreement, Lender is authorized
to make Credit Accommodations:
2.1.4.2.1 upon telephonic, facsimile or
other instructions received from anyone purporting to be an officer, employee
or representative of Borrower; or
2.1.4.2.2 at the sole discretion of
Lender, and notwithstanding any other provision in this Agreement, if
necessary to meet any Obligations, including but not limited to any interest
not paid when due.
2.1.5 CONDITIONS OF LENDER'S OBLIGATIONS. All
conditions of Lender's obligation to make Advances hereunder are imposed
solely and exclusively for the benefit of Lender and may be freely waived or
modified in whole or in part by Lender at any time.
2.2 TERM LOAN. On or after the Closing Date, subject to
Section 6 hereof, Lender will make to Borrower a term loan in the original
principal amount of Zero dollars ($0) (the "Term Loan"). The Term Loan shall
be evidenced by the Term Note and shall be amortized and fully repaid in
accordance with the terms thereof on or before the Term Loan Termination Date.
2.2.1 INTEREST ON TERM LOAN. Interest on the
outstanding principal balance of the Term Loan shall accrue daily from the
date of disbursement of the Term Loan until paid in full at the Prime Rate
plus four percent (4%) per annum ("Term Loan Interest Rate"). Interest on
the Term Loan shall be payable as set forth in the Term Note.
3. PAYMENTS BY BORROWER.
3.1 IN GENERAL.
3.1.1 PLACE OF PAYMENTS. All payments hereunder shall
be made by Borrower to Lender at the Lending Office, or at such other place
as Lender may designate in writing.
3.1.2 CREDITING OF PAYMENTS.
3.1.2.1 INTEREST CALCULATIONS. Any payments
received by Lender from Account Debtors shall, for the purpose of computation
of interest on the A/R Advances under the Revolving Credit Facility, be
credited to the A/R Advances under the Revolving Credit Facility on the
fourth (4th) business day after receipt by Lender.
3.1.2.2 GENERALLY. No payments received by
Lender purportedly in satisfaction of any of the Obligations shall constitute
payment thereof unless and until final payment thereof.
3.1.3 PREPAYMENTS; APPLICATION OF PAYMENTS. Borrower
shall have the right to make payments at any time in reduction of the
Revolving Credit Facility, in whole or in part, provided, however, that
Lender may apply any payments received to the Revolving Credit Facility in
any manner and in any order as Lender may determine in its sole discretion,
notwithstanding contrary instructions. Borrower shall have the
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right to make payments at any time in reduction of the Term Loan, in whole or
in part, provided, however, that Lender may apply any payments received to
the Term Loan in any manner and in any order as Lender may determine in its
sole discretion, notwithstanding contrary instructions, PROVIDED HOWEVER that
if Borrower satisfies in full its obligations under the Revolving Credit
Facility, Borrower must concurrently satisfy in full its obligations under
the Term Loan.
3.2 INTEREST AND FEES.
3.2.1 LOAN FEE. Borrower shall pay the Loan Fee to
Lender on an annual basis without offset, deduction, demand or proration (i)
concurrently with the first Credit Accommodation hereunder ("Loan Fee Date")
and (ii) on each anniversary of such Loan Fee Date. Any portion not paid
when due shall accrue interest at the applicable interest rate set forth
herein.
3.2.2 BASIC INTEREST. Subject to Section 3.2.3 hereof,
interest on the Obligations shall be payable monthly, in arrears, shall be
computed at the Interest Rate for the Revolving Credit Facility and on the
Term Loan Interest Rate for the Term Loan, and shall be due on the first day
of each month following the accrual thereof.
3.2.3 DEFAULT INTEREST. In lieu of Basic Interest,
immediately upon the occurrence of an Event of Default, unless waived by
Lender, Borrower shall pay Lender, monthly, until the first Anniversary Date
on which all Obligations have been fully paid, the greater of:
3.2.3.1 interest, before as well as after
judgment, at the Default Rate; or
3.2.3.2 the greater of:
3.2.3.2.1 the monthly average of all
interest and fees paid by Borrower to Lender hereunder for the preceding 180
days (or portion thereof if Obligations have not been outstanding for at
least 180 days): or
3.2.3.2.2 the Minimum Monthly Charge.
3.2.4 CALCULATION OF INTEREST. All interest charged
hereunder shall be computed on the basis of a three hundred sixty (360) day
year for the actual number of days elapsed. Notwithstanding anything to the
contrary contained herein, any interest rate calculated hereunder shall be
rounded to the closest 1/4 of 1%, with no adjustment made for rate changes of
less than 1/4 of 1%.
3.2.5 COLLATERAL MANAGEMENT FEE. Borrower shall pay
Lender the Collateral Management Fee monthly, in arrears, on the first day of
each month following the accrual thereof.
3.2.6 SPECIAL CREDIT ACCOMMODATION FEE. Simultaneously
with the making of a Special Credit Accommodation, Borrower shall pay to
Lender the Special Credit Accommodation Fee.
3.2.7 ADDITIONAL FEES. Borrower shall pay Lender fees
for such services as Lender customarily charges fees, as set forth in Lender
Standard Fee Schedule, a copy of which will be provided to Borrower on
demand. Lender shall have the right to change all or any of such fees upon
ten (10) days notice to Borrower.
3.2.8 MINIMUM MONTHLY CHARGE.
3.2.8.1 For any full month in which the sum of
(i) the aggregate interest paid by the Affiliates to Lender, and (ii) the
aggregate collateral management fees (including, without limitation, the
Collateral Management Fee) paid by the Affiliates to Lender is less than the
Minimum Monthly Charge, Lender shall debit the difference to the Obligations
as of the first day of the following month, until the date on which all
Obligations have been fully repaid (whether or not this Agreement has
heretofore been terminated).
3.2.8.2 In the event that this Agreement begins
on other than the first day of a month, or that the Obligations are fully
repaid on other than the last day of a month, the preceding section shall
apply pro-rata to such month.
3.2.8.3 If Borrower requests Lender to consent
to termination of this Agreement on a date earlier than Section 11 permits,
Borrower shall pay Lender the Termination Charges as computed pursuant to
Section 1.58.
3.2.9 MISDIRECTED PAYMENT FEE. Immediately upon
accrual, Borrower shall pay any misdirected Payment Fee to Lender.
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3.3 PAYMENTS UPON TERMINATION. Upon the Termination Date, the
unpaid balance of the Obligations (other than the Term Loan and the other
Obligations arising under Section 2.2 hereof) shall be due and payable
without demand or notice.
4. GRANT OF SECURITY INTEREST. To secure the payment and performance
in full of all of the Obligations, Borrower hereby grants to Lender a
continuing security interest in the Collateral.
5. COLLECTION AND ADMINISTRATION OF ACCOUNTS.
5.1 COLLECTION.
5.1.1 MONETARY COLLATERAL. Borrower is authorized to
collect Monetary Collateral on behalf of and in trust for Lender, at
Borrower's expense, but such authority shall automatically terminate upon an
Event of Default. Lender may modify or terminate such authority at any time
irrespective of whether an Event of Default has occurred and directly collect
any of the Monetary Collateral. Borrower shall, at Borrower's expense and in
the manner requested by Lender from time to time, direct that Monetary
Collateral be (or, if received by Borrower, shall cause same to be) (a) sent
to a post office box designated by and/or in the name of Lender, or in the
name of Borrower, but as to which access is limited solely to Lender and/or
(b) deposited into a bank account maintained in the name of Lender and/or a
blocked bank account under arrangements with the depository bank under which
all funds deposited to such blocked bank account are required to be
transferred to Lender. In connection therewith, Borrower shall execute such
post office box and/or blocked bank account agreements as Lender shall
specify.
5.1.2 ELECTRONIC PROCEEDS OF COLLATERAL. In the event
Borrower receives proceeds of Collateral in the form of wire transfer or
other intangible funds transfer mechanism, Borrower shall immediately pay
such proceeds to Lender.
5.2 NOTIFICATIONS, ETC. Lender may, at any time, irrespective
of whether an Event of Default has occurred, without notice to or the assent
of Borrower, (a) notify any entity obligated with respect to any Monetary
Collateral (an "Obligated Party"), by means of the letter attached as EXHIBIT
A, to the form and substance of which Borrower hereby consents, that the
underlying Monetary Collateral has been assigned to Lender by Borrower and
that payment thereof is to be made to the order of and directly and solely to
Lender, (b) send, or cause to be sent by its designee, requests (which may
identify the sender by a pseudonym) for verification of any Monetary
Collateral directly to the appropriate Obligated Party or any bailee with
respect thereto, and (c) demand, collect or enforce payment of any
Collateral, but without any duty to do so, and Lender shall not be liable for
any failure to collect or enforce payment thereof. At Lender's request, all
invoices and statements sent to any Obligated Party or any bailee, shall
state that the relevant Monetary Collateral has been assigned to Lender and
that any payments in respect thereof are payable directly and solely to
Lender.
5.3 LENDER'S POWERS. Borrower hereby authorizes Lender and
any designee of Lender, at Borrower's sole expense, to exercise at any time
in Lender's or such designee's discretion all or any of the following powers,
which powers are irrevocable until all of the Obligations have been paid in
full: (a) receive, take, endorse, assign, deliver, accept and deposit, in the
name of Lender or Borrower, any and all cash, checks, commercial paper,
drafts, remittances and other instruments and documents relating to the
Collateral or the proceeds thereof, (b) transmit to any Obligated Party or
any bailee notice of the interest of Lender in the Collateral or request from
any such entity, at any time, in the name of Borrower or Lender or any
designee of Lender, information concerning the Monetary Collateral and any
amounts owing with respect thereto, (c) notify any Obligated Party to make
payment directly and solely to Lender, or notify bailees as to the
disposition of Collateral, (d) take or bring, in the name of Lender or
Borrower, all steps, actions, suits or proceedings deemed by Lender necessary
or desirable to effect collection of or other realization upon any
Collateral, (e) after an Event of Default, change the address for delivery of
mail to Borrower and to receive and open mail addressed to Borrower, (f)
after an Event of Default, upon any terms and conditions, extend the time of
payment of, compromise, or settle for cash, credit, return of merchandise,
any and all Monetary Collateral and discharge or release any Obligated Party
without affecting any of the Obligations, (g) execute in the name of Borrower
and file against Borrower in favor of Lender financing statements or
amendments with respect to any or all of the Collateral, and (h) execute in
the name of Borrower and file on behalf of Borrower with such governmental
authorities as are appropriate such documents (including, without limitation,
applications and certificates) as may be required for purposes of having
Borrower qualified to transact business in a particular state or georaphic
location.
5.4 RELEASE. Borrower hereby releases and exculpates Lender,
its officers, employees, agents, designees, attorneys, and accountants from
any liability arising from any acts under this Agreement or in furtherance
thereof, whether of omission or commission, and whether based upon any error
of judgment or mistake of law or fact, except for gross negligence or willful
misconduct. In no event shall Lender have any liability to Borrower for lost
profits or other special or consequential damages.
5.5 NO AMENDMENTS. After written notice by Lender to
Borrower, and automatically, without notice, after an Event of Default,
Borrower shall not, without the prior written consent of Lender in each
instance, (a) grant any extension of time for payment of any Monetary
Collateral, (b) compromise or settle any
8
Monetary Collateral for less than the full amount thereof, (c) release in
whole or in part any Obligated Party, or (d) grant any credits, discounts,
allowances, deductions, return authorizations or the like with respect to any
Monetary Collateral.
5.6 DELIVERY OF COLLATERAL. At such times as Lender may
request and in the manner specified by Lender, Borrower shall deliver to
Lender or Lender's representative original invoices, agreements, proof of
rendition of services and delivery of goods and other documents evidencing or
relating to the transactions which gave rise to any of the Collateral,
together with customer statements, schedules describing the Monetary
Collateral and/or statements of account and confirmatory assignments to
Lender of the Monetary Collateral, in form and substance satisfactory to
Lender and duly executed by Borrower. Without limiting the provisions of any
other section of this Agreement, Borrower will promptly notify Lender, in
writing, of Borrower's granting of credits, discounts, allowances,
deductions, return authorizations or the like with respect to any Monetary
Collateral other than in the ordinary course of Borrower's business. In no
event shall any such schedule or confirmatory assignment (or the absence
thereof or omission of any Monetary Collateral therefrom) limit or in any way
be construed as a waiver, limitation, or modification of the Liens or rights
of Lender or the warranties, representations, and covenants of Borrower under
this Agreement.
5.6.1 In addition, in the event that any Collateral,
including proceeds, is evidenced by or consists of a contract, letter of
credit, advice of credit, instrument, money, negotiable documents, chattel
paper, or similar property (collectively, the "Negotiable Collateral"),
Borrower shall, immediately upon written request therefor from Lender,
endorse and assign such Negotiable Collateral over to Lender and deliver
actual physical possession of the Negotiable Collateral to Lender.
5.7 INSPECTION. From time to time as requested by Lender, at
the sole expense of Borrower, Lender or its designee shall have access,
during reasonable business hours if prior to an Event of Default and at any
time if on or after an Event of Default, to all premises where Collateral is
located for the purposes of inspecting (and removing, if after the occurrence
of an Event of Default) any of the Collateral, including Borrower's books and
records, and Borrower shall permit Lender or its designee to make copies of
such books and records or extracts therefrom as Lender may request. Without
expense to Lender, Lender may use any of Borrower's personnel, equipment,
including computer equipment, programs, printed output and computer readable
media, supplies and premises for the collection of accounts and realization
on other Collateral as Lender, in its sole discretion, deems appropriate.
Borrower hereby irrevocably authorizes all accountants and third parties, in
the form attached hereto as EXHIBIT B, to disclose and deliver to Lender at
Borrower's expense all financial information, books and records, work papers,
management reports and other information in their possession relating to
Borrower. In addition to the foregoing, Borrower hereby authorizes Lender at
any time to access electronically information concerning any accounts
maintained by Borrower with any bank or other financial institution so long
as such access is in furtherance of, or to monitor compliance with, the terms
of this Agreement.
6. CONDITIONS PRECEDENT TO ALL CREDIT ACCOMMODATIONS. Subject to the
other terms and conditions contained herein, Lender's obligation to make any
Credit Accommodation or Term Loan available to Borrower is subject to the
satisfaction of, or waiver of, immediately prior to or concurrently with the
making of such Credit Accommodation, the following conditions precedent:
6.1 EXECUTIONS. This Agreement and all other Documents
required by Lender shall be executed by Borrower and all other Obligors.
6.2 REPRESENTATIONS AND WARRANTIES. All representations and
warranties of Borrower to Lender set forth herein or in any of the Documents
shall be true and accurate and complete in all respects;
6.3 NO EVENT OF DEFAULT. There shall not exist an Event of
Default or an event which with the giving of notice or the passage of time,
or both, would be or become an Event of Default; and
6.4 PAYMENT OF ALL FEES. Borrower shall have paid to Lender
all accrued and unpaid fees and other amounts due and payable hereunder and
pursuant to the terms hereof including, without limitation, all of Lender's
attorneys' fees.
7. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower represents
and warrants to Lender as follows, the truth and accuracy of which, and
compliance with which, shall be continuing conditions of the making of any
Credit Accommodations:
7.1 PRIORITY INTEREST. No entity other than Lender has (or,
in the case of after-acquired Collateral, will have, at the time Borrower
acquires rights therein) any interest in the Collateral, including but not
limited to any security interest or other lien or charge.
7.2 ACCOUNTS. As to each Account, except as disclosed in
writing to Lender at the time such Account Receivable arises: (a) each is
valid and legally enforceable and represents an undisputed bona fide
indebtedness incurred by the account debtor for the sum reported to Lender;
(b) each arises from an absolute and unconditional sale of goods, without any
right of return or consignment, or from a completed rendition of
9
services; (c) each is not, at the time such Account Receivable arises,
subject to any defense, offset, dispute, contra relationship, counterclaim,
or any given or claimed credit, allowance or discount; and (d) all statements
made and all unpaid balances and other information appearing in the invoices,
agreements, proofs of rendition of services and delivery of goods and other
documentation relating to the Accounts Receivable, and all confirmatory
assignments, schedules, statements of account and books and records with
respect thereto, are true and correct and in all respects what they purport
to be.
7.3 CONDITION OF EQUIPMENT. With respect to Borrower's
equipment, Borrower shall keep the Equipment in good order and repair, and in
running and marketable condition, ordinary wear and tear excepted.
8. BORROWER'S AFFIRMATIVE COVENANTS. Until payment in full of the
Obligations, Borrower agrees to:
8.1 FINANCIAL STATEMENTS, REPORTS AND CERTIFICATIONS. Furnish
to Lender, in form and substance satisfactory to Lender:
8.1.1 ANNUAL FINANCIAL STATEMENTS. As soon as possible
after the end of each fiscal year of Borrower, and in any event within ninety
(90) days thereafter: (a) a complete copy of Borrower's financial
statements, including but not limited to (i) the management letter, if any,
(ii) the balance sheet as of the close of the fiscal year, and (iii) the
income statement for such year, together with a statement of cash flows,
reviewed by certified public accountants selected by Borrower and
satisfactory to Lender; and (b) a statement certified by the chief financial
officer or president of Borrower that Borrower is in compliance with all the
terms, conditions, covenants and warranties of this Agreement; and
8.1.2 OTHER FINANCIAL STATEMENTS. No later than sixty
(60) days after the close of each fiscal quarter (an "Accounting Period"),
Borrower's balance sheet as of the close of such Accounting Period and its
income statement for that portion of the then current fiscal year through the
end of such Accounting Period certified by Borrower's chief financial officer
or president as being complete, correct, and fairly representing its
financial condition and results of operations.
8.1.3 INVENTORY REPORTS. On or before (I) the
fifteenth day of each month and (ii) the last day of each month, a statement
describing all Inventory of Borrower as of such date, including the
composition thereof, which statement shall be in form and substance
satisfactory to Lender. Said reports are required only when Lender is making
Inventory Advances.
8.2 EXPENSES.
8.2.1 GENERALLY. Pay all out-of-pocket expenses of
Lender (including, but not limited to, fees and disbursements of Lender's
counsel) incident to (whether by judicial proceedings or otherwise, and
whether any resulting dispute resolution procedure involving tort, contract
or other claims):
8.2.1.1 the preparation, negotiation, execution,
administration and enforcement of the Documents, any amendments, extensions
and renewals thereof, and any other documents prepared in connection with any
transactions between Borrower and Lender, whether or not executed;
8.2.1.2 any expenses incurred by Lender (whether
or not for the benefit of Borrower) under this Agreement, including, without
limitation, all expenses for postage relating to the mailing of statements,
invoices, and verifications, and all expenses relating to any audits of all
or any portion of the Collateral;
8.2.1.3 the protection of Lender's rights under
the Documents;
8.2.1.4 defending against any and all claims
against Lender relating to any of its acts of commission or omission directly
or indirectly relating to the Documents;
8.2.1.5 or in any way arising out of a
bankruptcy proceeding commenced by or against Borrower, including but not
limited to expenses incurred in enforcing or defending Lender's claims
against Borrower or the Collateral, defending any avoidance actions, and
expenses related to the administration of said proceeding;
8.2.2 INDEMNIFICATION. Indemnify and save Lender
harmless from any and all liability with respect to any stamp or other taxes
(other than transfer or income taxes) which may be determined to be payable
in connection with the execution of the Documents or any action of Lender
with respect to the Collateral, including, without limitation, the transfer
of the Collateral to Lender's name or that of Lender's nominee or any
purchaser at a foreclosure sale.
8.3 COSTS AND EXPENSES - ENFORCEMENT OF JUDGMENTS. Reimburse
Lender for all costs and expenses, including attorneys' fees, which Lender
incurs in enforcing any judgment rendered in connection with
10
this Agreement. This provision is severable from all other provisions hereof
and shall survive, and not be deemed merged into, any such judgment.
8.4 TAXES AND EXPENSES REGARDING BORROWER'S ASSETS. Make
timely payment or deposit of all taxes, assessments or contributions required
of Borrower. If Borrower fails to make any such payment or deposit or
furnish the required proof, Lender may, in its sole discretion and without
notice to Borrower, (a) make payment of the same or any part thereof, or (b)
set up such reserves against the Obligations as Lender deems necessary to
satisfy the liability therefore, or both. Lender may conclusively rely on
statements of the amount owing or other official statements issued by the
appropriate governmental agency. Any payment made by Lender shall constitute
neither (i) an agreement by Lender to make similar payments in the future,
nor (ii) a waiver by Lender of any default under the Documents. Lender need
not inquire into, nor contest the validity of, any expense, tax, security
interest, encumbrance or lien, and the receipt of the usual official notice
requiring the payment thereof shall be conclusive evidence that the same was
validly due and owing.
8.5 LOCATION OF COLLATERAL. Give Lender written notice
immediately upon forming an intention to change the location of its chief
place of business or any of the Collateral.
8.6 CHANGE IN NAME. Give Lender written notice immediately
upon forming an intention to change its name or form of business organization.
8.7 INSURANCE. At all times maintain, with financially sound
and reputable insurers, casualty insurance with respect to the Collateral and
other assets. All such insurance policies shall be in such form, substance,
amounts and coverage as may be satisfactory to Lender and shall provide for
thirty (30) days prior written notice to Lender of cancellation or reduction
of coverage. Borrower hereby irrevocably authorizes Lender and any designee
of Lender to obtain at Borrower's expense, and, after an Event of Default, to
adjust or settle any claim or other matter under or arising pursuant to such
insurance or to amend or cancel such insurance. Borrower shall deliver to
Lender evidence of such insurance and a Lender's loss payable endorsement
naming Lender as loss payee as to all existing and future insurance policies
relating to the Collateral. Borrower shall deliver to Lender, in kind, all
instruments representing proceeds of insurance received by Borrower. Lender
may apply any and all insurance proceeds received at any time to the cost of
repairs to or replacement of any portion of the Collateral and/or, at
Lender's option, to the payment of or as security for any of the Obligations,
whether or not due, in any order or manner as Lender determines.
9. BORROWER'S NEGATIVE COVENANTS.
9.1 Until payment in full of the Obligations, Borrower shall
not suffer to exist any Lien upon any of its assets, except that Borrower may
acquire new equipment encumbered with purchase money security interests;
9.2 Borrower agrees that so long as it is indebted to Lender,
or so long as Lender has any obligation to extend credit to Borrower, it will
not, without Lender's written consent make any change in the character of its
business; or make any change in its executive management (Chairman of the
Board, Chief Executive Officer, President, and Chief Financial Officer).
10. EVENTS OF DEFAULT AND REMEDIES.
10.1 EVENTS OF DEFAULT. Each of the following events or
conditions shall constitute an "Event of Default":
10.1.1 Borrower defaults in the payment of any
Obligations when due, whether at maturity, upon acceleration, or otherwise;
10.1.2 Borrower and/or any Guarantor is in default with
respect to the Documents and/or any other document, instrument, agreement or
indebtedness entered into by and between Lender and any Obligor;
10.1.3 The Obligations at any time exceed the Allowable
Amount;
10.1.4 Borrower or any Guarantor fails to pay any loan
when due;
10.1.5 Borrower or any Guarantor fails to pay any
payroll tax obligation when due;
10.1.6 An order for relief is entered against any
Obligor by any United States Bankruptcy Court; or Borrower or any Guarantor
does not generally pay its debts as they become due (within the meaning of 11
U.S.C. 303(h) as at any time amended, or any successor statute thereto); or
makes an assignment for the benefit of creditors; or any Obligor applies for
or consents to the appointment of a custodian, receiver, trustee, or similar
officer for it or for all or any substantial part of its assets, or such
custodian, receiver, trustee, or similar officer is appointed without the
application or consent of any Obligor; or any Obligor institutes (by
petition, application, answer, consent, or otherwise) any bankruptcy,
insolvency, reorganization,
11
moratorium, arrangement, readjustment of debt, dissolution, liquidation or
similar proceeding relating to it under the laws of any jurisdiction; or any
such proceeding shall be instituted (by petition, application, or otherwise)
against any Obligor; or any judgment, writ, warrant of attachment, execution,
or similar process shall be issued or levied against a substantial portion of
the assets of any Obligor; or
10.1.7 An adverse change occurs with respect to the
financial condition or operations of Borrower which results in a material
impairment of the prospect of repayment of the Obligations;
10.1.8 A sale, hypothecation or other disposition is
made of the beneficial interest in any class of voting stock of Borrower
which results in a change in control of Borrower's business;
10.1.9 Any Guarantor fails to perform or observe any of
such Guarantor's obligations under any Guaranty, or shall notify Lender of
its intention to rescind, modify, terminate or revoke the Guaranty with
respect to future transactions, or the Guaranty shall cease to be in full
force and effect for any reason whatever;
10.1.10 Any Subordinating Creditor fails to perform or
observe any of such Subordinating Creditor's obligations under any
Subordination Agreement, or notifies Lender of the Subordinating Creditor's
intention to rescind, modify, terminate or revoke the Subordination Agreement
with respect to future transactions, or the Subordination Agreement ceases to
be in full force and effect for any reason whatsoever;
10.1.11 Any of the Key Employees fails to devote 100%
of their efforts in furtherance of the business affairs of Borrower for any
one month, or ceases to be employed by Borrower.
10.2 REMEDIES.
10.2.1 Upon the occurrence of any Event of Default
(other than an Event of Default arising under Section 10.1.6 hereof), at
Lender's option:
10.2.1.1 Lender may declare this Agreement and
all of Lender's obligations hereunder terminated;
10.2.1.2 Lender may declare all Obligations to
be immediately due and payable, without presentment, demand, protest, or
notice of any kind, all of which are hereby expressly waived by Borrower;
10.2.1.3 all Obligations shall accrue interest
at the Default Rate; and
10.2.1.4 Lender may, immediately and without
expiration of any period of grace, enforce payment of all Obligations and
exercise any and all other remedies granted to it under the Documents, at
law, in equity, or otherwise.
10.2.2 Upon the occurrence of any Event of Default
arising under Section 10.1.6 hereof:
10.2.2.1 this Agreement and all of Lender's obligations
hereunder shall automatically terminate;
10.2.2.2 all Obligations shall be immediately
due and payable, without presentment, demand, protest, or notice of any kind,
all of which are hereby expressly waived by Borrower;
10.2.2.3 all Obligations shall accrue interest
at the Default Rate; and
10.2.2.4 Lender may, immediately and without
expiration of any period of grace, enforce payment of all Obligations and
exercise any and all other remedies granted to it under the Documents, at
law, in equity, or otherwise.
10.3. LIQUIDATION SUCCESS PREMIUM. To induce Lender to
collect, sell or otherwise dispose of the Collateral (the ALiquidation@) in
accordance with standards higher than that which may be commercially
reasonable (but without obligating Lender to exercise such higher standards),
Borrower agrees that if it shall essentially cease operating as a going
concern, and the proceeds from the Liquidation after the occurrence of an
Event of Default (the ADefault@) are in excess of the Obligations at the time
of Default, Borrower shall pay to Lender a liquidation success premium of ten
(10%) percent of the amount of such excess.
11. TERMINATION. The Revolving Credit Facility shall continue in
effect until the next Anniversary Date, and shall thereafter be automatically
renewed from year to year thereafter, subject to the terms of this Agreement,
unless:
12
11.1 Lender gives Borrower notice of non-renewal, in which
event the Revolving Credit Facility shall terminate sixty (60) days from the
date of such notice; or
11.2 Borrower gives Lender notice of non-renewal, in which
event the Revolving Credit Facility shall terminate on the Anniversary Date
which is at least sixty (60) days from the date on which such notice of
termination is actually received by Lender.
11.3 The Term Loan may not be renewed without a signed
writing by Lender.
12. REVOCATION OF BORROWER'S RIGHT TO SELL INVENTORY FREE AND CLEAR OF
LENDER'S SECURITY INTEREST. Lender may, upon the occurrence of an Event of
Default, (a) revoke Borrower's right to sell inventory free and clear of
Lender's security interest therein and (b) notify Borrower's account debtors,
or any other party(ies), of such revocation by means of language
substantially equivalent to that contained in EXHIBIT A attached hereto.
13. NO LIEN TERMINATION WITHOUT RELEASE. In recognition of Lender's
right to have all its attorneys' fees and other expenses incurred in
connection with this Agreement secured by the Collateral, notwithstanding
payment in full of all Obligations by Borrower, Lender shall not be required
to record any terminations or satisfactions of any of its liens on the
Collateral unless and until Borrower and all Guarantors have executed and
delivered to Lender general releases which conform to California Civil Code
Sections 1541-2.
14. DISCLAIMER FOR NEGLIGENCE. Lender shall not be liable for any
claims, demands, losses or damages made, claimed or suffered by Borrower,
except such as may arise through or could be caused by Lender's gross
negligence or willful misconduct.
15. LIMITATION OF CONSEQUENTIAL DAMAGE. Lender shall not be
responsible for any lost profits of Borrower arising from any breach of
contract, tort (excluding the Lender's gross negligence or willful
misconduct), or any other wrong arising from the establishment,
administration or collection of the Obligations.
16. ACCOUNT STATED. Lender shall render to Borrower a statement
setting forth the transactions arising hereunder. Each statement shall be
considered correct and binding upon Borrower as an account stated, except to
the extent that Lender receives, within thirty (30) days after the mailing of
such statement, written notice from Borrower of any specific exceptions by
Borrower to that statement.
17. RETENTION OF RECORDS. Lender shall retain any documents,
schedules, invoices or other papers delivered by Borrower only for such
period as Lender, at its sole discretion, may determine necessary, after
which time Lender may destroy such records without notice to or consent from
Borrower.
18. NOTICES TO THIRD PARTIES. Upon the occurrence of an Event of
Default as described in Section 10.1 hereof, Lender shall have the right to
give any Guarantor or Subordinating Creditor notice of any fact or event
relating to this Agreement, as Lender may deem necessary or desirable in
Lender's sole discretion, including, without limitation, Borrower's financial
condition. Borrower shall provide to each Guarantor and Subordinating
Creditor a copy of each notice, statement or report required to be given to
Lender under any of the paragraphs of this section.
19. INFORMATION TO PARTICIPANTS. Lender may furnish any financial or
other information concerning Borrower, or any of its subsidiaries, heretofore
or hereafter provided by Borrower to Lender, pursuant to this Agreement or
otherwise, to any prospective or actual purchaser of any participation or
other interest in any loans made by Lender to Borrower (whether under this
Agreement or otherwise), or to any prospective purchaser of any securities
issued or to be issued by Lender.
20. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements
and understandings relating to the subject matter hereof. No course of prior
dealings between the parties, no usage of the trade, and no parol or
extrinsic evidence of any nature, shall be used or be relevant to supplement,
explain or modify any term used herein. In the event of any conflict between
a term or condition of this Agreement and a term or condition of any
document(s) executed in connection herewith, the term or condition of this
Agreement shall govern. This Agreement has been fully reviewed and negotiated
between the parties and no uncertainty or ambiguity in any term or provision
of this Agreement shall be construed strictly against Lender or Borrower
under any rule of construction or otherwise.
19. MISCELLANEOUS.
19.1 NOTICES. All notices required to be given to any entity
other than Lender shall be deemed given upon the first to occur of (a)
deposit thereof in a receptacle under the control of the United States Postal
Service, (b) transmittal by electronic means to a receiver under the control
of such entity, or (c) actual receipt by such party or an employee or agent
of such entity. All notices required to be given to Lender hereunder shall
be deemed given upon actual receipt by a responsible officer of Lender. For
the purposes hereof, notices hereunder shall be sent to the following
addresses, or to such other addresses as each such entity may in writing
hereafter indicate:
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BORROWER
ADDRESS: PHOTOMATRIX, INC.
0000 Xxxxxxx Xxx.
Xxxxxxxx, XX 00000
Telephone Number: (000) 000-0000
Telefacsimile Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, President
LENDER
(Lending Office)
ADDRESS: CELTIC CAPITAL CORPORATION
0000 00xx Xxxxxx
Xxxxx 0000
Xxxxx Xxxxxx, XX 00000
Telephone Number: (000) 000-0000
Telefacsimile Number: (000) 000-0000
Attention: Xxxx Xxxxxx, President
19.2 SURVIVAL. All representations, warranties and
agreements herein contained on the part of Borrower shall survive the making
of Advances hereunder, and all such representations, warranties and
agreements shall be effective so long as any obligations owed to Lender by
Borrower remain unsatisfied or for such longer periods as may be expressly
stated.
19.3 AMENDMENT AND WAIVER. Neither this Agreement nor any
provisions hereof may be changed, waived, discharged or terminated orally,
but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought.
19.4 NO WAIVER. No failure to exercise and no delay in
exercising any right, power, or remedy hereunder shall impair any right,
power, or remedy which Lender may have, nor shall any such delay be construed
to be a waiver of any of such rights, powers, or remedies, or any
acquiescence in any breach or default hereunder; nor shall any waiver of any
breach or default of Borrower hereunder be deemed a waiver of any default or
breach subsequently occurring. All rights and remedies granted to Lender
hereunder shall remain in full force and effect notwithstanding any single or
partial exercise of, or any discontinuance of action begun to enforce, any
such right or remedy. The rights and remedies specified herein are
cumulative and not exclusive of each other or of any rights or remedies which
Lender would otherwise have. Any waiver, permit, consent or approval by
Lender of any breach or default hereunder must be in writing and shall be
effective only to the extent set forth in such writing and only as to that
specific instance.
191.5 CHOICE OF LAW. All issues arising in connection
herewith shall be governed by and construed in accordance with the internal
laws of the State of California.
19.6 WAIVER OF STATUTE OF LIMITATIONS. Borrower waives the
pleading of any statute of limitations with respect to any and all actions in
connection herewith.
19.7 VENUE. Borrower irrevocably agrees that, subject to
Lender's sole discretion, all actions and proceedings in any way, manner or
respect, arising in connection herewith (collectively, the "Actions") shall
be litigated in courts having situs within the County of Los Angeles, State
of California, and Borrower hereby consents and submits to the jurisdiction
of any local, state or federal court located within said County and State.
Borrower hereby waives any right it may have to transfer or change the venue
of any litigation brought against Borrower by Lender in accordance with this
paragraph.
19.8 WAIVER OF TRIAL BY JURY. IN RECOGNITION OF THE HIGHER
COSTS AND DELAY WHICH MAY RESULT FROM A JURY TRIAL, THE PARTIES HERETO WAIVE
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(a) ARISING HEREUNDER, OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT
HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first written above.
PHOTOMATRIX, INC.
14
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Xxxxxxx X. Xxxxx
Title: CEO
CELTIC CAPITAL CORPORATION
-------------------------------------
Xxxx Xxxxxx
Title: President
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