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EXHIBIT 10.12
SILICON VALLEY BANK
LOAN AND SECURITY AGREEMENT
Borrower: Pacific Communications, Inc.
Address: 0000 X. Xxxxx Xxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
DATE: FEBRUARY 26, 1993
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK ("Silicon"), whose address is 0000 Xxxxxxxx Xxxxx, Xxxxx
Xxxxx, Xxxxxxxxxx 00000-0000 and the borrower named above (the "Borrower"),
whose chief executive office is located at the above address ("Borrower's
Address").
1. LOANS.
1.1 Loans. Silicon, in its * discretion, will make loans to the Borrower
(the "Loans") in amounts determined by Silicon in its * discretion up to the
amount (the "Credit Limit") shown on the Schedule to this Agreement (the
"Schedule"), provided no Event of Default and no event which, with notice or
passage of time or both, would constitute an Event of Default has occurred. The
Borrower is responsible for monitoring the total amount of Loans and other
Obligations outstanding from time to time, and Borrower shall not permit the
same, at any time, to exceed the Credit Limit. If at any time the total of all
outstanding Loans and all other Obligations exceeds the Credit Limit, the
Borrower shall immediately pay the amount of the excess to Silicon, without
notice or demand.
* reasonable
12 Interest. All Loans and all other monetary Obligations shall bear interest
at the rate shown on the Schedule hereto. Interest shall be payable monthly, on
the due date shown on the monthly billing from Silicon to the Borrower.
13 Fees. The Borrower shall pay to Silicon a loan origination fee in the amount
shown on the Schedule hereto concurrently herewith. This fee is in addition to
all interest and other sums payable to Silicon and is not refundable.
2. GRANT OF SECURITY INiEREST.
2.1 Obligations. The term "Obligations" as used in this Agreement means
the following: the obligation to pay all Loans and all interest thereon when
due, and to pay and perform when due all other present and future indebtedness,
liabilities, obligations, guarantees, covenants, agreements, warranties and
representations of the Borrower to Silicon, whether joint or several, monetary
or non-monetary, and whether created pursuant to this Agreement or any other
present or future agreement or otherwise. Silicon may, in its discretion,
require
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that Borrower pay monetary Obligations in cash to Silicon, or charge them to
Borrower's Loan account, in which event they will bear interest at the same
rate applicable to the Loans.
2.2 CollateraL As security for all Obligations, the Borrower hereby grants
Silicon a continuing security interest in all of the Borrower's interest in the
types of property described below, whether now owned or hereafter acquired, and
wherever located (collectively, the "Collateral"): (a) All accounts, contract
rights, chattel paper, letters of credit, documents, securities, money, and
instruments, and all other obligations now or in the future owing to the
Borrower; (b) All inventory, goods, merchandise, materials, raw materials, work
in process, finished goods, farm products, advertising, packaging and shipping
materials, supplies, and all other tangible personal property which is held for
sale or lease or furnished under contracts of service or consumed in the
Borrower 5 business, and all warehouse receipts and other documents; and (c)
All equipment, including without limitation all machinery, fixtures, trade
fixtures, vehicles, furnishings, furniture, materials, tools, machine tools,
office equipment, computers and peripheral devices, appliances, apparatus,
parts, dies, and jigs; (d) All general intangibles including, but not limited
to, deposit accounts, goodwill, names, trade names, trademarks and the goodwill
of the business symbolized thereby, trade secrets, drawings, blueprints,
customer lists, patents, patent applications, copyrights, security deposits,
loan commitment fees, federal, state and local tax refunds and claims, all
rights in all litigation presently or hereafter pending for any cause or claim
(whether in contract, tort or otherwise), and all judgments now or hereafter
arising therefrom, all claims of Borrower against Silicon, all rights to
purchase or sell real or personal property, all rights as a licensor or
licensee of any kind, all royalties, licenses, processes, telephone numbers,
proprietary information, purchase orders, and all insurance policies and claims
* (including without limitation credit, liability, property and other
insurance), and all other rights, privileges and franchises of every kind; (e)
All books and
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records, whether stored on computers or otherwise maintained; and (f) All
substitutions, additions and accessions to any of the foregoing, and all
products, proceeds and insurance proceeds of the foregoing, and all guaranties
of and security for the foregoing; and all books and records relating to any of
the foregoing. Silicon's security interest in any present or future technology
(including patents, trade secrets, and other technology) shall be subject to
any licenses or rights now or in the future granted by the Borrower to any
third parties in the ordinary course of Borrower's business; provided that if
the Borrower proposes to sell, license or grant any other rights with respect
to any technology in a transaction that, in substance, conveys a major part of
the economic value of that technology, Silicon shall first be requested to
release its security interest in the same, and Silicon may withhold such
release in its discretion. * except that the Collateral shall not
include the proceeds of that certain $3,000,000 life insurance on the life of
Xxxxxx X. Xxxxxx subject to his death which proceeds shall be payable ot BT
Capital Corporation, a Delaware corporation
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
The Borrower represents and warrants to Silicon as follows, and the Borrower
covenants that the following representations will continue to be true, and that
the Borrower will comply with all of the following covenants:
3.1 Corporate Existence and Authority. The Borrower, if a corporation, is
and will continue to be, duly authorized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. The Borrower is and
will continue to be qualified and licensed to do business in all jurisdictions
in which any failure to do so would have a material adverse effect on the
Borrower. The execution, delivery and performance by the Borrower of this
Agreement, and all other documents contemplated hereby have been duly and
validly authorized, are enforceable against the Borrower in accordance with
their terms, and do not violate any law or any provision of and are not grounds
for acceleration under, any agreement or instrument which is binding upon the
Borrower.
3.2 Name; Trade Names and Styles. The name of the Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule hereto
are all prior names of the Borrower and all of Borrower's present and prior
trade names. The Borrower shall give Silicon 15 days' prior written notice
before changing its name or doing business under any other name. The Borrower
has complied, and will in the future comply, with all laws relating to the
conduct of business under a fictitious business name.
00 Xxxxx xx Xxxxxxxx; Location of Collateral The address set forth in the
heading to this Agreement is the Borrower's chief executive office. In
addition, the Borrower has places of business and Collateral is located only at
the locations set forth on the Schedule to this Agreement. The Borrower will
give Silicon at least 15 days prior written notice before changing its chief
executive office or locating the Collateral at any other location *. *
, other than for certain office, computer and demonstration equipment
temporarily located outside of offices of the Borrower for use by employees or
customers of Borrower.
3.4 Title to Collateral; Permitted liens. The Borrower
is now, and will at all times in the future be, the sole owner of all the
Collateral, except for items of equipment which are leased by the Borrower. The
Collateral now is and will remain free and clear of any and all liens, charges,
security interests, encumbrances and adverse claims, except for the following
("Permitted Liens"): (i) purchase money security interests in specific items
of equipment; (ii) leases of specific items of equipment; (iii) liens for taxes
not yet payable; (iv) additional security interests and liens consented to in
writing by Silicon in its sole discretion, which consent shall not be
unreasonably withheld; and (v) security interests being terminated
substantially concurrently with this Agreement. Silicon will have the right to
require, as a condition to its consent under subparagraph (iv) above, that the
holder of the additional security interest or lien sign an inter-creditor
agreement * acknowledge that the security interest is subordinate to the
security interest in favor of Silicon, and agree not to take any action to
enforce its subordinate security interest so long as any Obligations remain
outstanding, and that the Borrower agree that any uncured default in any
obligation secured by the subordinate security interest shall also
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constitute an Event of Default under this Agreement. Silicon now has, and will
continue to have, a perfected and enforceable security interest in all of the
Collateral, subject only to the Permitted Liens, and the Borrower will at all
times defend Silicon and the Collateral against all claims of others. None of
the Collateral now is or will be affixed to any real property in such a manner,
or with such intent, as to ** become a fixture * that is acceptable to
Silicon in its discretion
** , except for any leasehold improvements that Borrower has made to its
leasehold premises
3.5 Maintenance of CollateraL The Borrower will maintain the Collateral in
good working condition, and the Borrower will not use the Collateral for any
unlawful purpose. The Borrower will immediately advise Silicon in writing of
any material loss or damage to the Collateral.
3.6 Books and Records. The Borrower has maintained and will maintain at
the Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.
3.7 Financial Condition and Statements All financial statements now or in
the future delivered to Silicon have been, and will be, prepared in conformity
with generally accepted accounting principles and now and in the future will
completely and accurately reflect the financial condition of the Borrower, at
the times and for the periods therein stated*. Since the last date covered by
any such statement, there has been no material adverse change in the financial
condition or business of the Borrower. The Borrower is now and will continue to
be solvent. The Borrower will provide Silicon: (i) within 30 days after the end
of each month, a monthly financial statement prepared by the Borrower, and a
Compliance Certificate in such form as Silicon shall reasonably specify, signed
by the Chief Financial Officer of the Borrower, certifying that as of the end
of such month the Borrower was in full compliance with all of the terms and
conditions of this
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Agreement, and setting forth calculations showing compliance with the financial
covenants set forth on the Schedule and such other information as Silicon shall
reasonably request; and (ii) within 120 days following the end of the
Borrower's fiscal year, complete annual financial statements, certified by * *
independent certified public accountants acceptable to Silicon. *
subject to normal year~nd adjustments
** Deloitte & Touche or other
3.8 Tax Returns and Payments; Pension
Contributions. The Borrower has timely filed, and will timely file, all tax
returns and reports required by foreign, federal, state and local law, and the
Borrower has timely paid, and will timely pay, * all foreign, federal, state
and local taxes, assessments, deposits and contributions now or in the future
owed by the Borrower *~. The Borrower may, however, defer payment of any
contested taxes, provided that the Borrower (i) in good faith contests the
Borrower's obligation to pay the taxes by appropriate proceedings promptly and
diligently instituted and conducted, (ii) notifies Silicon in writing of the
commencement of, and any material development in, the proceedings, and (iii)
posts bonds or takes any other steps required to keep the contested taxes from
becoming a lien upon any of the Collateral. The Borrower is unaware of any
claims or adjustments proposed for any of the Borrower's prior tax years which
could result in additional taxes becoming due and payable by the Borrower. The
Borrower has paid, and shall continue to pay all amounts necessary to fund all
present and future pension, profit sharing and deferred compensation plans in
accordance with their terms, and the Borrower has not and will not withdraw
from participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could result
in any * * * liability of the Borrower, including, without limitation, any
liability to the Pension Benefit Guaranty Corporation or its successors or any
other governmental agency. * in all material respects
** provided that the Borrower shall pay any and all of such taxes,
assessments, deposits and contributions the failure of which to pay results or
may result in a lien on any of the Collateral
*** material
3.9 Compliance with Law. The Borrower has complied, and will comply, in all
material respects, with all provisions of all foreign, federal, state and local
laws and regulations relating to the Borrower, including, but not limited to,
those relating to the Borrower's ownership of real or personal property,
conduct and licensing of the Borrower's business, and environmental matters.
3.10 Litigation. Except as disclosed in the Schedule, there is no claim, suit,
litigation, proceeding or investigation pending or (to best of the Borrower's
knowledge) threatened by or against or affecting the Borrower in any court or
before any governmental agency (or any basis therefor known to the Borrower)
which may result, either separately or in the aggregate, in any material
adverse change in the financial condition or business of the Borrower, or in
any material impairment in the ability of the Borrower to carry on its business
in substantially the same manner as it is now being conducted. The Borrower
will promptly inform Silicon in writing of any claim, proceeding, litigation or
investigation in the future threatened or instituted by or against the Borrower
involving amounts in excess of $100,000.
3.11 Use of Proceeds. All proceeds of all Loans shall be used solely for
lawful business purposes.
4. ADDITIONAL DUTIES OF THE BORROWER.
4.1 Financial and Other Covenants. The Borrower shall at all times comply
with the financial and other covenants set forth in the Schedule to this
Agreement.
4.2 Overadvance; Proceeds of Accounts. If for any reason the total of all
outstanding Loans and all other Obligations exceeds the Credit Limit *, without
limiting Silicon's other remedies, and whether or not Silicon declares an Event
of Default, Borrower shall remit to Silicon all checks and other proceeds of
Borrower's accounts and general intangibles * * , in the same form as received
by Borrower, within one day after Borrower's receipt
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of the same, to be applied to the Obligations in such order as Silicon shall
determine in its discretion.
* the amount of any such excess is referred to herein as an
"Overadvance"
** up to the amount of the Overadvance, subject to Silicon's rights and
remedies under any Event of Default hereunder, including, without limitation,
that an Event of Default arising from or relating to the Overadvance.
4.3 Insurance. The Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Silicon, in such form and amounts as Silicon
may reasonably require. All such insurance policies shall name Silicon as an
additional loss payee, and shall contain a lenders loss payee endorsement in
form reasonably acceptable to Silicon. Upon receipt of the proceeds of any such
insurance, Silicon shall apply such proceeds in reduction of the Obligations as
Silicon shall determine in its sole and absolute discretion, except that,
provided no Event of Default has occurred, Silicon shall release to the
Borrower insurance proceeds with respect to equipment totalling less than
$100,000, which shall be utilized by the Borrower for the replacement of the
equipment with respect to which the insurance proceeds were paid **. Silicon
may require reasonable assurance that the insurance proceeds so released will
be so used. If the Borrower fails to provide or pay for any insurance, Silicon
may, but is not obligated to, obtain the same at the Borrower's expense. The
Borrower shall promptly deliver to Silicon copies of all reports made to
insurance companies. * $500,000
* * provided that Silicon may release other amounts in excess of such
$500,000 amount to the Borrower, if Silicon so consents, which consent will not
be unreasonably withheld.
4.4 Reports. The Borrower shall provide Silicon with such written reports
with respect to the Borrower (including without limitation budgets, sales
projections, operating plans and other financial documentation), as Silicon
shall from time to time reasonably specify.
4.5 Access to Collateral, Books and Records. At all reasonable times, and
upon ~ * business day notice,
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Silicon, or its agents, shall have the right to inspect the Collateral, and the
right to audit and copy the Borrower's accounting books and records and
Borrower's books and records relating to the Collateral. Silicon shall take
reasonable steps to keep confidential all information obtained in any such
inspection or audit, but Silicon shall have the right to disclose any such
information to its auditors, regulatory agencies, and attorneys, and pursuant
to any subpoena or other legal process. The foregoing audits shall be at
Silicon's expense, except that the Borrower shall reimburse Silicon for its
reasonable out of pocket costs for semi-annual accounts receivable audits by
third parties retained by Silicon, and Silicon may debit Borrower's deposit
accounts with Silicon for the cost of such semi-annual accounts receivable
audits (in which event Silicon shall send notification thereof to the Borrower)
* *. Notwithstanding the foregoing, after the occurrence of an Event of Default
all audits shall be at the Borrower's *******. * three
** provided, that if there have never been any Loans outstanding
hereunder, then such accounts receivable audits shall only be conducted on an
annual basis and not on a semi-annual basis, until such time that any Loans
have been made hereunder, and, at all times thereafter, such audits shall be
conducted on a semi-annual basis in accordance with the other provisions of
this section. and may be performed on one business day's notice
4.6 Negative Covenants. Except as may be permitted in the Schedule hereto,
the Borrower shall not, without Silicon's prior written consent, do any of the
following: (i) merge or consolidate with another corporation, except that the
Borrower may merge or consolidate with another corporation if the Borrower is
the surviving corporation in the merger and the aggregate value of the assets
acquired in the merger do not exceed 25% of Borrower's Tangible Net Worth (as
defined in the Schedule) as of the end of the month prior to the effective date
of the merger, and the assets of the corporation acquired in the merger are not
subject to any liens or encumbrances, except Permitted Liens; (ii) acquire any
assets outside the ordinary course of business for an aggregate purchase price
exceeding 25% of Borrower's Tangible Net Worth (as defined in the Schedule) as
of the end of the month prior to the effective date of the acquisition; (iii)
enter into any other transaction outside the ordinary course of business
(except as permitted by the other provisions of this Section); (iv) sell or
transfer any Collateral, except for the sale of finished inventory in the
ordinary course of the Borrower's business, and except for the sale of obsolete
or unneeded equipment in the ordinary course of business * ; (v) make any loans
of any money or any other assets; (vi) incur any debts, outside the ordinary
course of business, which would have a material, adverse effect on the Borrower
or on the prospect of repayment of the Obligations; (vii) guarantee or
otherwise become liable with respect to the obligations of another party or
entity; (viii) pay or declare any dividends on the Borrower's stock (except for
dividends payable solely in stock of the Borrower); (ix) redeem, retire,
purchase or otherwise acquire, directly or indirectly, any of the Borrower's
stock; (x) make any change in the Borrower's capital structure which has a
material adverse effect on the Borrower or on the prospect of repayment of the
Obligations; or (xi) dissolve or elect to dissolve. Transactions permitted by
the foregoing 4- provisions of this Section are only permitted if no Event of
Default and no event which (with notice or passage of time or both) would
constitute an Event of Default would occur as a result of such transaction. *
or license technology or products in the ordinary course of Borrower's business
4.7 Litigation Cooperation. Should any third-party suit or proceeding be
instituted by or against Silicon with respect to any Collateral or in any
manner relating to the Borrower, the Borrower shall, without expense to
Silicon, make available the Borrower and its officers, employees and agents and
the Borrower's books and records to the extent that Silicon may deem them
reasonably necessary in order to prosecute or defend any such suit or
proceeding.
4.8 Verification. Silicon may, from time to time, following prior notification
to Borrower, verify directly with the respective account debtors the validity,
amount and other matters relating to the Borrower's accounts, by means of mail,
telephone or otherwise, either in the name of the Borrower or Silicon or
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such other name as Silicon may reasonably choose, provided that no prior
notification to Borrower shall be required following an Event of Default.
4.9 Execute Additional Documentation. The Borrower agrees, at its expense,
on request by Silicon, to execute all documents in form satisfactory to
Silicon, as Silicon, may deem reasonably necessary or useful in order to
perfect and maintain Silicon's perfected security interest in the Collateral,
and in order to fully consummate all of the transactions contemplated by this
Agreement.
5. TERM.
5.1 Maturity Date. This Agreement shall continue in effect until the maturity
date set forth on the Schedule hereto (the "Maturity Date').
5.2 Early Termination. This Agreement may be terminated, without penalty,
prior to the Maturity Date as follows: (i) by the Borrower, effective three
business days after written notice of termination is given to Silicon; or (ii)
by Silicon at any time after the occurrence of an Event of Default, without
notice, effective immediately.
5.3 Payment of Obligations. On the Maturity Date or on any earlier
effective date of termination, the Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether
or not all or any part of such Obligations are otherwise then due and payable.
Without limiting the generality of the foregoing, if on the Maturity Date, or
on any earlier effective date of termination, there are any outstanding letters
of credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an
amount equal to the face amount of all such letters of credit plus all
interest, fees and cost due or to become due in connection therewith, to secure
all of the Obligations relating to said letters of credit, pursuant to
Silicon's then standard form cash pledge agreement. Notwithstanding any
termination of this Agreement, all of Silicon's security interests in all of
the Collateral and all of the terms and provisions of this Agreement shall
continue in full force and effect until all Obligations have been paid and
performed in full; provided that, without limiting the fact that Loans are
discretionary on the part of Silicon, Silicon
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may, in its sole discretion, refuse to make any further Loans after
termination. No termination shall in any way affect or impair any right or
remedy of Silicon, nor shall any such termination relieve the Borrower of any
Obligation to Silicon, until all of the Obligations have been paid and
performed in full. Upon payment and performance in full of all the
Obligations, Silicon shall promptly deliver to the Borrower" termination
statements, requests for reconveyances and such other documents as may be
required to fully terminate any of Silicon's security interests. * ,in
a commercially reasonable manner,
6. EVENTS OFDEFAULTAND REMEDIES.
6.1 Events of Default. The occurrence of any of the following events shall
constitute an "Event of Default" under this Agreement, and the Borrower shall
give Silicon immediate written notice thereof: (a) Any warranty,
representation, statement, report or certificate made or delivered to Silicon
by the Borrower or any of the Borrower's officers, employees or agents, now or
in the future, shall be untrue or misleading in any material respect; or (0)
the Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation; or (c) the total Loans and other Obligations
outstanding at any time exceed the Credit Limit; or (d) the Borrower shall fail
to comply with any of the financial covenants set forth in the Schedule or
shall fail to perform any other non-monetary Obligation which by its nature
cannot be cured; or (e) the Borrower shall fail to pay or perform any other
non-monetary Obligation, which failure is not cured within 5 business days
after the date due; or (I) Any levy, assessment, attachment, seizure, lien or
encumbrance is made on all or any part of the Collateral which is not cured
within 10 days after the occurrence of the same * ; or (g) Dissolution,
termination of existence, insolvency or business failure of the Borrower; or
appointment of a receiver, trustee or custodian, for all or any part of the
property of' assignment for the benefit of creditors by, or the commencement of
any proceeding by the Borrower under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law
or statute of any jurisdiction, now or in the future in effect; or (h) the
commencement of any proceeding against the Borrower or any guarantor of any of
the Obligations under any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect, which is not cured by the
dismissal thereof within 30 ** days after the date commenced; (i) revocation or
termination of' or limitation of liability upon any guaranty of the
Obligations; or commencement of' proceedings by any guarantor of any of the
Obligations under any bankruptcy or insolvency law; or (1) the Borrower makes
any payment on account of any indebtedness or obligation which has been
subordinated to the Obligations other than as permitted in the applicable
subordination agreement or if any person who has subordinated such indebtedness
or obligations terminates or in any way limits his subordination agreement; or
(k) there shall be a change in the record or beneficial ownership of an
aggregate of more than 20% of the outstanding shares of stock of the Borrower,
in one or more transactions, compared to the ownership of outstanding shares of
stock of the Borrower in effect on the date hereof' without the prior written
consent of Silicon; or (I) the Borrower shall generally not pay its debts as
they become due; or the Borrower shall conceal, remove or transfer any part of
its property, with intent to hinder, delay or defraud its creditors, or make or
suffer any transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law. Silicon may cease making any
Loans hereunder during any of the above cure periods, and thereafter if an
Event of Default has occurred. * except for Permitted Liens as
described in Section 3.4
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6.2 Remedies. Upon the occurrence of any Event of Default, and at any time
thereafter, Silicon, at its option, and without notice or demand of any kind
(all of which are hereby expressly waived by the Borrower), may do any one or
more of the following: (a) Cease making Loans or otherwise extending credit to
the Borrower under this Agreement or any other document or agreement; (b)
Accelerate and declare all or any part of the Obligations to be immediately
due, payable, and performable, notwithstanding any deferred or installment
payments allowed by any instrument evidencing or relating to any Obligation;
(c) Take possession of any or all of the Collateral wherever it may be found,
and for that purpose the
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Borrower hereby authorizes Silicon without judicial process to enter onto any
of the Borrower's premises without interference to search for, take possession
of' keep, store, or remove any of the Collateral, and remain on the premises or
cause a custodian to remain on the premises in exclusive control thereof
without charge for so long as Silicon deems it reasonably necessary in order to
complete the enforcement of its rights under this Agreement or any other
agreement; provided, however, that should Silicon seek to take possession of
any or all of the Collateral by Court process, the Borrower hereby irrevocably
waives: (i) any bond and any surety or security relating thereto required by
any statute, court rule or otherwise as an incident to such possession; (ii)
any demand for possession prior to the commencement of any suit or action to
recover possession thereof; and (iii) any requirement that Silicon retain
possession of and not dispose of any such Collateral until after trial or final
judgment; (d) Require the Borrower to assemble any or all of the Collateral and
make it available to Silicon at places designated by Silicon which are
reasonably convenient to Silicon and the Borrower, and to remove the Collateral
to such locations as Silicon may deem advisable; (e) Require Borrower to
deliver to Silicon, in kind, all checks and other payments received with
respect to all accounts and general intangibles, together with any necessary
endorsements, within one day after the date received by the Borrower; (f)
Complete the processing, manufacturing or repair of any Collateral prior to a
disposition thereof and, for such purpose and for the purpose of removal,
Silicon shall have the right to use the Borrower's premises, vehicles, hoists,
lifts, cranes, equipment and all other property without charge; (g) Sell, lease
or otherwise dispose of any of the Collateral in its condition at the time
Silicon obtains possession of it or after further manufacturing, processing or
repair, at any one or more public and/or private sales, in lots or in bulk, for
cash, exchange or other property, or on credit, and to adjourn any such sale
from time to time without notice other than oral announcement at the time
scheduled for sale. Silicon shall have the right to conduct such disposition
on the Borrower's premises without charge, for such time or times as Silicon
deems reasonable, or on
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Silicon's premises, or elsewhere and the Collateral need not be located at the
place of disposition. Silicon may directly or through any affiliated company
purchase or lease any Collateral at any such public disposition, and if
permissible under applicable law, at any private disposition. Any sale or other
disposition of Collateral shall not relieve the Borrower of any liability the
Borrower may have if any Collateral is defective as to title or physical
condition or otherwise at the time of sale; (h) Demand payment of' and collect
any accounts and general intangibles comprising Collateral and, in connection
therewith, the Borrower irrevocably authorizes Silicon to endorse or sign the
Borrower's name on all collections, receipts, instruments and other documents,
to take possession of and open mail addressed to the Borrower and remove
therefrom payments made with respect to any item of the Collateral or proceeds
thereof' and, in Silicon's sole discretion, to grant extensions of time to pay,
compromise claims and settle accounts and the like for less than face value;
(i) Offset against any sums in any of Borrower's general, special or other
deposit accounts with Silicon; and (1) Demand and receive possession of any of
the Borrower's federal and state income tax returns and the books and records
utilized in the preparation thereof or referring thereto. All reasonable
attorneys' fees, expenses, costs, liabilities and obligations incurred by
Silicon with respect to the foregoing shall be added to and become part of the
Obligations, shall be due on demand, and shall bear interest at a rate equal to
the highest interest rate applicable to any of the Obligations. Without
limiting any of Silicon's rights and remedies, from and after the occurrence of
any Event of Default, the interest rate applicable to the Obligations ahatl *
be increased by an additional four percent per annum. * may in Bank's
discretion
6.3 Standards for Determining Commercial Reasonableness. The Borrower and
Silicon agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to the
Borrower at least seven days prior to the sale, and, in the case of a public
sale, notice of the sale is published at least seven days before the sale in a
newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price
in cash or by cashier's check or wire transfer is required; (vi) With respect
to any sale of any of the Collateral, Silicon may (1)ut is not obligated to)
direct any prospective purchaser to ascertain directly from the Borrower any
and all information concerning the same. Silicon may employ other methods of
noticing and selling the Collateral, in its discretion, if they are
commercially reasonable.
6.4 Power of Attorney. Upon the occurrence of any Event of Default * without
limiting Silicon's other rights and remedies, the Borrower grants to Silicon an
irrevocable power of attorney coupled with an interest, authorizing and
permitting Silicon (acting through any of its employees, attorneys or agents)
at any time, at its option, but without obligation, with or without notice to
the Borrower, and at the Borrower's expense, to do any or all of the following,
in the Borrower's name or otherwise: a) Execute on behalf of the Borrower
any documents that Silicon may, in its sole and absolute discretion, deem
advisable in order to perfect and maintain Silicon's security interest in the
Collateral, or in order to
11
exercise a right of the Borrower or Silicon, or in order to fully consummate
all the transactions contemplated under this Agreement, and all other present
and future agreements; (1)) Execute on behalf of the Borrower any document
exercising, transferring or assigning any option to purchase, sell or otherwise
dispose of or to lease (as lessor or lessee) any real or personal property
which is part of Silicon's Collateral or in which Silicon has an interest; (c)
Execute on behalf of the Borrower, any invoices relating to any account, any
draft against any account debtor and any notice to any account debtor, any
proof of claim in bankruptcy, any Notice of Lien, claim of mechanic's,
materialman's or other lien, or assignment or satisfaction of mechanic's,
materialman's or other lien; (d) Take control in any manner of any cash or
non-cash items of payment or proceeds of Collateral; endorse the name of the
Borrower upon any instruments, or documents, evidence of payment or Collateral
that may come into Silicon's possession; (e) Endorse all checks and other forms
of remittances received by Silicon; (f) Pay, contest or settle any lien,
charge, encumbrance, security interest and adverse claim in or to any of the
Collateral, or any judgment based thereon, or otherwise take any action to
12
terminate or discharge the same; (g) Grant extensions of time to pay,
compromise claims and settle accounts and general intangibles for less than
face value and execute all releases and other documents in connection
therewith; (h) Pay any sums required on account of the Borrower's taxes or to
secure the release of any liens therefor, or both; (i) Settle and adjust, and
give releases of' any insurance claim that relates to any of the Collateral and
obtain payment therefor; 0) Instruct any third party having custody or control
of any books or records belonging to, or relating to, the Borrower to give
Silicon the same rights of access and other rights with respect thereto as
Silicon has under this Agreement; and (k) Take any action or pay any sum
required of the Borrower pursuant to this Agreement and any other present or
future agreements. Silicon shall exercise the foregoing powers in a
commercially reasonable manner. Any and all reasonable sums paid and any and
all reasonable costs, expenses, liabilities, obligations and attorneys' fees
incurred by Silicon with respect to the foregoing shall be added to and become
part of the Obligations, shall be payable on demand, and shall bear interest at
a rate equal to the highest interest rate applicable to any of the Obligations.
In no event shall Silicon's rights under the foregoing power of attorney or any
of Silicon's other rights under this Agreement be deemed to indicate that
Silicon is in control of the business, management or properties of the
Borrower.
* on 2 business days notice and at any time thereafter
6.5 Application of Proceeds. All proceeds realized as
the result of any sale of the Collateral shall be applied by Silicon first to
the costs, expenses, liabilities, obligations and attorneys' fees incurred by
Silicon in the exercise of its rights under this Agreement, second to the
interest due upon any of the Obligations, and third to the principal of the
Obligations, in such order as Silicon shall determine in its sole discretion.
Any surplus shall be paid to the Borrower or other persons legally entitled
thereto; the Borrower shall remain liable to Silicon for any deficiency.
13
If' Silicon, in its sole discretion, directly or indirectly enters into a
deferred payment or other credit transaction with any purchaser at any sale or
other disposition of Collateral, Silicon shall have the option, exercisable at
any time, in its sole discretion, of either reducing the Obligations by the
principal amount of purchase price or deferring the reduction of the
Obligations until the actual receipt by Silicon of the cash therefor.
6.6 Remedes Cumulative. In addition to the rights and remedies set forth
in this Agreement, Silicon shall have all the other rights and remedies
accorded a secured party under the California Uniform Commercial Code and under
all other applicable laws, and under any other instrument or agreement now or
in the future entered into between Silicon and the Borrower, and all of such
rights and remedies are cumulative and none is exclusive. Exercise or partial
exercise by Silicon of one or more of its rights or remedies shall not be
deemed an election, nor bar Silicon from subsequent exercise or partial
exercise of any other rights or remedies. The failure or delay of Silicon to
exercise any rights or remedies shall not operate as a waiver thereof' but all
rights and remedies shall continue in full force and effect until all of the
Obligations have been fully paid and performed.
7. GENERAL PROVISIONS.
7.1 Notices. All notices to be given under this Agreement shall be in writing
and shall be given either personally or by regular first-class mail, or
certified mail return receipt requested, addressed to Silicon or the Borrower
at the addresses shown in the heading to this Agreement, or at any other
address designated in writing by one party to the other party. All notices
shall be deemed to have been given upon delivery in the case of notices
personally delivered to the Borrower or to Silicon, or at the expiration of ~ *
business days following the deposit thereof in the United States mail, with
postage prepaid. * four
72 Severability. Should any provision of this Agreement be held by any court
of competent jurisdiction to be void or unenforceable, such defect shall not
affect the remainder of this Agreement, which shall continue in full force and
effect.
7.3 Integration. This Agreement and such other written agreements, documents
and instruments as may be
executed in connection herewith are the final, entire and complete agreement
between the Borrower and Silicon and supersede all prior and contemporaneous
negotiations and oral representations and agreements, all of which are merged
and integrated in this Agreement. There are no oral understandings.
representations or agreements between the Darties which are not set forth in
this Agreement or in other written agreements signed bv the parties in
connection herewith.
7.4 Waivers. The failure of Silicon at any time or times
to require the Borrower to strictly comply with any of the provisions of this
Agreement or any other present or future agreement between the Borrower and
Silicon shall not waive or diminish any right of Silicon later to demand and
receive strict compliance therewith. Any waiver of any default shall not waive
or affect any other default, whether prior or subsequent thereto. None of the
provisions of this Agreement or any other agreement now or in the future
executed by the Borrower and delivered to Silicon shall be deemed to have been
waived by any act or knowledge of Silicon or its agents or employees, but only
by a specific written waiver signed by an officer of Silicon and delivered to
the Borrower. The Borrower waives demand, protest, notice of protest and notice
of default or dishonor, notice of payment and nonpayment, release, compromise,
settlement, extension or renewal of any commercial paper, instrument, account,
general intangible, document or guaranty at any time held by Silicon on which
the Borrower is or may in any way be liable, and notice of any action taken by
Silicon, unless expressly required by this Agreement.
7.5 No Liability for Ordinary Negligence. Neither Silicon, nor any of its
directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Silicon shall be liable for any claims,
demands, losses or damages, of any kind whatsoever, made, claimed, incurred or
suffered by the Borrower or any other party through the ordinary negligence of
Silicon, or any of its directors, officers, employees, agents, attorneys or any
other person affiliated with or representing Silicon.
7.6 Amendment. The terms and provisions of this Agreement
14
may not be waived or amended, except in a writing executed by the Borrower and
a duly authorized officer of Silicon.
7.7 Time of Essence. Time is of the essence in the performance by the Borrower
of each and every obligation under this Agreement.
7.8 Attorneys Fees and Costs. The Borrower shall reimburse Silicon for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by Silicon, pursuant to,
or in connection with, or relating to this Agreement (whether or not a lawsuit
is filed), including, but not limited to, any reasonable attorneys' fees and
costs Silicon incurs in order to do the following: prepare and negotiate this
Agreement and the documents relating to this Agreement; obtain legal advice in
connection with this Agreement; enforce, or seek to enforce, any of its rights;
prosecute actions against, or defend actions by, account debtors; commence,
intervene in, or defend any action or proceeding; initiate any complaint to be
relieved of the automatic stay in bankruptcy; file or prosecute any probate
claim, bankruptcy claim, third-party claim, or other claim; examine, audit,
copy, and inspect any of the Collateral or any of the Borrower's books and
records; protect, obtain possession of, lease, dispose of, or otherwise enforce
Silicon's security interest in, the Collateral; and otherwise represent Silicon
in any litigation relating to the Borrower. In satisfving Borrower's obligation
hereunder to reimburse Silicon for attornevs fees. Borrower mav. for
convenience. issue checks directly to Silicon's attornevs. Levv. Small &
Xxxxxx. but Borrower acknowledges and agrees that Levv. Small & Xxxxxx is
representing onlv Silicon and not Borrower in connection with this Agreement.
If either Silicon or the Borrower files any lawsuit against the other
predicated on a breach of this Agreement, the prevailing party in such action
shall be entitled to recover its reasonable costs and attorneys' fees,
including (but not limited to) reasonable attorneys' fees and costs incurred in
the enforcement of' execution upon or defense of any order, decree, award or
judgment. All attorneys' fees and -7-
15
costs to which Silicon may be entitled pursuant to this Paragraph shall
immediately become part of the BorrowerAEs Obligations, shall be due on demand,
and shall bear interest at a rate equal to the highest interest rate applicable
to any of the Obligations.
7.9 Benefit of Agreement. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective successors, assigns, heirs,
beneficiaries and representatives of the parties hereto; provided, however,
that the Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Silicon, and any prohibited
assignment shall be void. No consent by Silicon to any assignment shall release
the Borrower from its liability for the Obligations.
7.10 Joint and Several Liability. If the Borrower consists of more than one
person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of' any other Borrower.
7.11 Paragraph Headings; Construction. Paragraph headings are only used in this
Agreement for convenience. The Borrower acknowledges that the headings may not
describe completely the subject matter of the applicable paragraph, and the
headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. 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 Silicon or the Borrower under any rule of construction or
otherwise.
7.12 Mutual Waiver of Jury TriaL The Borrower and Silicon each hereby waive the
right to trial by jury in any action or proceeding based upon, arising out of,
or in any way relating to, this Agreement or any other present or future
instrument or agreement between Silicon and the Borrower, or any conduct, acts
or omissions of Silicon or the Borrower or any of their directors, orncers,
employees, agents, attorneys or any other persons affiliated with Silicon or
the Borrower, in all of the foregoing cases, whether sounding in contract or
tort or otherwise.
7.13 Governing Law; Jurisdiction; Venue. This Agreement and
all acts and transactions hereunder and all rights and obligations of Silicon
and the Borrower shall be governed by, and in accordance with, the laws of the
State of California. Any undefined term used in this Agreement that is defined
in the California Uniform Commercial Code shall have the meaning assigned to
that term in the California Uniform Commercial Code. As a material part of the
consideration to Silicon to enter into this Agreement, the Borrower (i) agrees
that all actions and proceedings relating directly or indirectly hereto shall,
at Silicon's option, be litigated in courts located within California, and that
the exclusive venue therefor shall be Orange County; (ii) consents to the
jurisdiction and venue of any such court and consents to service of process in
any such action or proceeding by personal delivery or any other method
permitted by law; and Qii) waives any and all rights the Borrower may have to
object to the jurisdiction of any such court, or to transfer or change the
venue of any such action or proceeding.
Borrower:
PACIFIC COMMUNICATIONS, INC.
By ~
Xxxxxxx X. Xxxx, President or Vice President
By Xxxxxxx XxXxxxx, Secretary or Assistant Secretary
Silicon:
SILICON VALLEY BANK
By
Title
