Exhibit 10.1
[LOGO OF SANWA BANK]
CREDIT AGREEMENT
(LINE OF CREDIT)
(TERM LOAN)
This Agreement (the "Agreement") is made and entered into as of February
27, 2001, by and between SANWA BANK CALIFORNIA (the "Bank") and OSI SYSTEMS,
INC. (the "Borrower"), on the terms and conditions that follow:
SECTION
1
DEFINITIONS
1.1 Certain Defined Terms: Unless elsewhere defined in this Agreement, the
following terms shall have the following meanings (such meanings to be
generally applicable to the singular and plural forms of the terms
defined):
1.1.1 "Acceptance Facility": shall mean the credit facility described
as such in Section 2.
1.1.2 "Advance": shall mean an advance to the Borrower under the
credit facility (ies) described in Section 2.
1.1.3 "Applicable Margin": shall mean the following interest rate
percentage based upon the Funded Debt Ratio provided for in
Section 6.2(iv) then in effect.
Funded Debt Ratio Applicable Margin for LIBOR Applicable Margin for
or Fixed Rate: Reference Rate:
Less than 2 to 1 1.50% 0%
Between 2.49 and 2 to 1 2.00% .125%
Between 2.99 and 2.50 to 1 2.50% .25%
3.00 to 1 or greater 3.00% .50%
-1-
1.1.4 "Business Day": shall mean a day, other than a Saturday or
Sunday, on which commercial banks are open for business in
California.
1.1.5 "Close-Out Date": shall mean the Business Day on which the Bank
closes out and liquidates an FX Transaction.
1.1.6 "Closing Value": has the meaning given to it in Section 8.6(i)
hereof.
1.1.7 "Closing Gain" and "Closing Loss": shall mean the amount
determined in accordance with Section 8.6(ii) hereof.
1.1.8 "Collateral": shall mean the property described in Section 3,
together with any other personal or real property in which the
Bank may be granted a lien or security interest to secure
payment of the Obligations.
1.1.9 "Credit Percentage": shall mean 15%.
1.1.10 "Current Liabilities": shall mean current liabilities as
determined in accordance with generally accepted accounting
principles, including any negative cash balance on the
Borrower's financial statement.
1.1.11 "Debt": shall mean all liabilities of the Borrower less
Subordinated Debt, if any.
1.1.12 "EBITDA": shall mean earnings exclusive of extraordinary gains
and before deductions for interest expense, taxes, depreciation
and amortization expense.
1.1.13 "Effective Tangible Net Worth": shall mean the Borrower's stated
net worth plus Subordinated Debt but less all intangible assets
of the Borrower (i.e., goodwill, trademarks, patents,
copyrights, organization expense, and similar intangible items
including, but not limited to, investments in and all amounts
due from affiliates, officers or employees).
1.1.14 "Environmental Claims": shall mean all claims, however asserted,
by any governmental authority or other person alleging potential
liability or responsibility for violation of any Environmental
Law or for Discharge or injury to the environment or threat to
public health, personal injury (including sickness, disease or
death), property damage, natural resources damage, or otherwise
alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs,
restitution, civil or criminal penalties, injunctive relief, or
other type of relief, resulting from or based upon (a) the
presence, placement, discharge, emission or release (including
intentional and unintentional, negligent and non-negligent,
sudden or non-sudden, accidental or non-accidental placement,
spills, leaks, Discharges, emissions or releases) of any
Hazardous Material at, in, or from property, whether or not
owned by the Borrower, or (b) any other circumstances forming
the basis of any violation, or alleged violation, of any
Environmental Law.
1.1.15 "Environmental Laws": shall mean all federal, state or local
laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative orders,
directed duties, requests, licenses, authorizations and permits
of, and agreements with, any governmental authorities, in each
case relating to environmental, health, safety and land use
matters; including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air
Act, the Federal Water Pollution Control Act of 1972, the Solid
Waste Disposal Act, the Federal Resource Conservation and
Recovery Act, the Toxic Substances Control Act, the Emergency
Planning and Community Right-to-Know Act, the California
Hazardous Waste Control Law, the California Solid Waste
Management, Resource, Recovery and Recycling Act, the California
Water Code and the California Health and Safety Code.
-2-
1.1.16 "Environmental Permits": shall have the meaning provided in
Section 5.11 hereof.
1.1.17 "ERISA": shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, including (unless the
context otherwise requires) any rules or regulations promulgated
thereunder.
1.1.18 "Event of Default": shall have the meaning set forth in Section
7.
1.1.19 "Expiration Date of Line of Credit": shall mean November 30,
2002, or the date of termination of the Bank's commitment to
lend under this Agreement pursuant to Section 8, whichever shall
occur first.
1.1.20 "Expiration Date of Term Loan": shall mean December 31, 2005 or
the date of termination of the Bank's commitment to lend under
this Agreement pursuant to Section 8, whichever shall occur
first.
1.1.21 "Fed Funds Balance": shall have the respective meaning as it is
defined for each facility under Section 2, hereof if applicable.
1.1.22 "Fed Funds Rate": shall have the respective meaning as it is
defined for each facility under Section 2, hereof if applicable.
1.1.23 "Fixed Rate Advance": shall have the respective meaning as it is
defined for each facility under Section 2, hereof if applicable.
1.1.24 "Fixed Rate Balance": shall have the respective meaning as it is
defined for each facility under Section 2, hereof if applicable.
1.1.25 "Fixed Rate": shall have the respective meaning as it is defined
for each facility under Section 2, hereof if applicable.
1.1.26 "Foreign Currency": shall mean any legally traded currency other
than US dollars and which may be transferred by paperless wire
transfer or cash and in which the Bank regularly trades.
1.1.27 "Foreign Subsidiary": shall mean a corporate entity that is not
organized or created in the United States, including only the
States and District of Columbia, or under the law of the United
States or of any state or territory.
1.1.28 "Foreign Exchange Sub-Facility": shall mean the credit facility
described as such in Section 2.
1.1.29 "Funded Debt": shall mean all Indebtedness for borrowed money.
1.1.30 "FX Risk Liability": shall mean the product of (a) the Credit
Percentage, times (b) the aggregate of the Notional Values of
all FX Transactions outstanding, net of any Offsetting
Transactions.
1.1.31 "FX Limit": shall mean $4,500,000.00.
1.1.32 "FX Transaction": shall mean any transaction between the Bank
and the Borrower pursuant to which the Bank has agreed to sell
to or to purchase from the Borrower a Foreign Currency of an
agreed amount at an agreed price in US dollars or such other
agreed upon Foreign Currency, deliverable and payable on an
agreed date.
-3-
1.1.33 "Hazardous Materials": shall mean all those substances which are
regulated by, or which may form the basis of liability under,
any Environmental Law, including all substances identified under
any Environmental Law as a pollutant, contaminant, hazardous
waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or petroleum
or petroleum derived substance or waste.
1.1.34 "Indebtedness": shall mean, with respect to the Borrower, (i)
all indebtedness for borrowed money or for the deferred purchase
price of property or services in respect of which the Borrower
is liable, contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which the Borrower otherwise assures
a creditor against loss and (ii) obligations under leases which
shall have been or should be, in accordance with generally
accepted accounting principles, reported as capital leases in
respect of which the Borrower is liable, contingently or
otherwise, or in respect of which the Borrower otherwise assures
a creditor against loss.
1.1.35 "Interest Period": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.36 "Letter of Credit Facility": shall mean the credit facility
described as such in Section 2.
1.1.37 "LIBOR Advance": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.38 "LIBOR Balance": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.39 "LIBOR Interest Period": shall have the respective meaning as it
is defined for each facility under Section 2, hereof.
1.1.40 "LIBOR Rate": shall have the respective meaning as it is defined
for each facility under Section 2, hereof.
1.1.41 "Line of Credit": shall mean the credit facility described as
such in Section 2.
1.1.42 "Notional Value": shall mean the US Dollar equivalent of the
price at which the Bank agreed to purchase or sell to the
Borrower a Foreign Currency.
1.1.43 "Obligations": shall mean all amounts owing by the Borrower to
the Bank pursuant to this Agreement including, but not limited
to, the unpaid principal amount of Advances.
1.1.44 "Offsetting Transaction": shall mean a FX Transaction to
purchase a Foreign Currency and a FX Transaction to sell the
same Foreign Currency , each with the same Settlement Date and
designated as an Offsetting Transaction at the time of entering
into the FX Transaction.
1.1.45 "Ordinary Course of Business": shall mean, with respect to any
transaction involving the Borrower or any of its subsidiaries or
affiliates, the ordinary course of the Borrower's business, as
conducted by the Borrower in accordance with past practice and
undertaken by the Borrower in good faith and not for the purpose
of evading any covenant or restriction in this Agreement or in
any other document, instrument or agreement executed in
connection herewith.
1.1.46 "Permitted Liens": shall mean: (i) liens and security interests
securing indebtedness owed by the Borrower to the Bank; (ii)
liens for taxes, assessments or similar charges not yet due;
(iii) liens of materialmen, mechanics, warehousemen, or carriers
or other like liens
-4-
arising in the Ordinary Course of Business and securing
obligations which are not yet delinquent; (iv) purchase money
liens or purchase money security interests upon or in any
property acquired or held by the Borrower in the Ordinary Course
of Business to secure Indebtedness outstanding on the date
hereof or permitted to be incurred herein; (v) liens and
security interests which, as of the date hereof, have been
disclosed to and approved by the Bank in writing; and (vi) those
liens and security interests which in the aggregate constitute
an immaterial and insignificant monetary amount with respect to
the net value of the Borrower's assets.
1.1.47 "Reference Rate": shall mean an index for a variable interest
rate which is quoted, published or announced by Bank as its
reference rate and as to which loans may be made by Bank at,
above or below such rate.
1.1.48 "Settlement Date": shall mean the Business Day on which the
Borrower has agreed to (a) deliver the required amount of
Foreign Currency, or (b) pay in US dollars the agreed upon
purchase price of the Foreign Currency.
1.1.49 "Subordinated Debt": shall mean such liabilities of the Borrower
which have been subordinated to those owed to the Bank in a
manner acceptable to the Bank.
1.1.50 "Term Applicable Margin": shall mean the following interest rate
percentages based upon the Funded Debt Ratio provided for in
Section 6.2 (iv) then in effect:
Funded Debt Ratio Applicable Margin for LIBOR, Applicable Margin for
Fixed Rate or Fed Funds: Reference Rate:
Less than 2 to 1 1.75% .25%
Between 2.49 and 2 to 1 2.25% .375%
Between 2.99 and 2.50 to 1 2.75% .50%
3.00 to 1 or greater 3.25% .75%
1.1.51 "Term Loan and Line Account": shall have the meaning provided in
Section 2.66 hereof.
1.1.52 "Variable Rate Advance": shall have the respective meaning as it
is defined for each facility under Section 2, hereof.
1.1.53 "Variable Rate": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.2 Accounting Terms: All references to financial statements, assets,
liabilities, and similar accounting items not specifically defined
herein shall mean such financial statements or such items prepared or
determined in accordance with generally accepted accounting principles
consistently applied and, except where otherwise specified, all
financial data submitted pursuant to this Agreement shall be prepared in
accordance with such principles.
1.3 Other Terms: Other terms not otherwise defined shall have the meanings
attributed to such terms in the California Uniform Commercial Code.
-5-
SECTION
2
CREDIT FACILITIES
2.1 THE LINE OF CREDIT
2.1.1 The Line of Credit: On terms and conditions as set forth herein,
the Bank agrees to make Advances to the Borrower from time to
time from the date hereof to the Expiration Date, provided the
aggregate amount of such Advances outstanding at any time does
not exceed $12,000,000.00 (the "Line of Credit"). Within the
foregoing limits, the Borrower may borrow, partially or wholly
prepay, and reborrow under this Section 2.1. Proceeds of the
Line of Credit shall be used for general working capital
purposes.
2.1.2 Making Line Advances: Each Advance shall be conclusively deemed
to have been made at the request of and for the benefit of the
Borrower (i) when credited to any deposit account of the
Borrower maintained with the Bank or (ii) when paid in
accordance with the Borrower's written instructions. Subject to
the requirements of Section 4 and provided such request is made
in a timely manner as provided in Section 2.1.5 below, Advances
shall be made by the Bank under the Line of Credit.
2.1.3 Repayment: On the Expiration Date of the Line of Credit, the
Borrower hereby promises and agrees to pay to the Bank in full
the aggregate unpaid principal amount of all Advances then
outstanding, together with all accrued and unpaid interest
thereon.
2.1.4 Interest on Advances: Interest shall accrue from the date of
each Advance under the Line of Credit at one of the following
rates, as quoted by the Bank and as elected by the Borrower
below:
(i) Variable Rate Advances: A variable rate per annum
----------------------
equivalent to the Reference Rate plus the Applicable
Margin (the "Variable Rate"). Interest shall be adjusted
concurrently with any change in the Reference Rate. An
Advance based upon the Variable Rate is hereinafter
referred to as a "Variable Rate Advance".
(ii) Fixed Rate Advances: A fixed rate per annum quoted by the
-------------------
Bank for 30, 60, 90 or 180 days or for such other period
of time that the Bank may quote and offer (provided that
any such period of time does not extend beyond the
Expiration Date) (the "Interest Period") for Advances in
the minimum amount of $100,000.00. Such interest rate
shall be a percentage equal to the Applicable Margin plus
the rate which the Bank determines in its sole and
absolute discretion to be equal to the Bank's cost of
acquiring funds (adjusted for any and all assessments,
surcharges and reserve requirements pertaining to the
borrowing or purchase by the Bank of such funds) in an
amount approximately equal to the amount of the relevant
Advance and for a period of time approximately equal to
the relevant Interest Period (the "Fixed Rate"). Advances
based upon the Fixed Rate are hereinafter referred to as
"Fixed Rate Advances".
(iii) LIBOR Advances: A fixed rate quoted by the Bank for one
--------------
week, 1, 2, 3, or 6 months or for such other period of
time that the Bank may quote and offer (provided that any
such period of time does not extend beyond the Expiration
Date) (the "LIBOR Interest Period") for Advances in the
minimum amount of $100,000.00. Such interest rate shall be
a percentage equal to the Applicable Margin plus the
Bank's LIBOR Rate which is that rate determined by the
Bank's Treasury Desk as being the arithmetic mean (rounded
upwards, if necessary, to
-6-
the nearest whole multiple of one-sixteenth of one percent
(1/16%)) of the U. S. dollar London Interbank Offered Rates for
such period appearing on page 3750 (or such other page as may
replace page 3750) of the Telerate screen at or about 11:00 a.m.
(London time) on the second Business Day prior to the first days
of such period (adjusted for any and all assessments, surcharges
and reserve requirements) (the "LIBOR Rate"). An Advance based
upon the LIBOR Rate is hereinafter referred to as a "LIBOR
Advance".
Interest on any Advance shall be computed on the basis of 360
days per year, but charged on the actual number of days elapsed.
The Borrower hereby promises and agrees to pay interest in
arrears on all Advances on the first calendar day of each month.
If interest is not paid as and when it is due, it shall be added
to the principal, become and be treated as a part thereof, and
shall thereafter bear like interest.
2.1.5 Notice of Borrowing: Upon written or telephonic notice which shall be
received by the Bank at or before 2:00 p.m. (California time) on a
Business Day, the Borrower may borrow under the Line of Credit by
requesting:
(i) A Variable Rate Advance or Fixed Rate Advance: A Variable Rate
---------------------------------------------
Advance or Fixed Rate Advance may be made on the day notice is
received by the Bank; provided, however, that if the Bank shall
not have received notice at or before 2:00 p.m. on the day such
Advance is requested to be made, such Variable Rate Advance or
Fixed Rate Advance may, at the Bank's option, be made on the
next Business Day.
(ii) A LIBOR Advance: Notice of any LIBOR Advance shall be received
---------------
by the Bank no later than two Business Days prior to the day
(which shall be a Business Day) on which the Borrower requests
such LIBOR Advance to be made.
2.1.6 Notice of Election to Adjust Interest Rate: Upon telephonic notice which
shall be received by the Bank at or before 2:00 p.m. (California time)
on a Business Day, the Borrower may elect:
(i) That interest on a Variable Rate Advance shall be adjusted to
accrue at the Fixed Rate; provided, however, that such notice
shall be received by the Bank no later than 2:00 p.m. on the
Business Day on which the Borrower requests that interest be
adjusted to accrue at the Fixed Rate.
(ii) That interest on a Variable Rate Advance shall be adjusted to
accrue at the LIBOR Rate; provided, however, that such notice
shall be received by the Bank no later than two Business Days
prior to the Business Day on which the Borrower requests that
interest be adjusted to accrue at the LIBOR Rate.
(iii) That interest on a Fixed Rate Advance shall continue to accrue
at a newly quoted Fixed Rate or shall be adjusted to commence to
accrue at the Variable Rate; provided, however, that such notice
shall be received by the Bank no later than 2:00 p.m. on the
last day of the Interest Period pertaining to such Fixed Rate
Advance. If the Bank shall not have received notice (as
prescribed herein) of the Borrower's election that interest on
any Fixed Rate Advance shall continue to accrue at the newly
quoted Fixed Rate as the case may be the Borrower shall be
deemed to have elected that interest thereon shall be adjusted
to accrue at the
-7-
Variable Rate upon the expiration of the relevant Interest
Period pertaining to such Advance.
(iv) That interest on a Fixed Rate Advance shall accrue at a newly
quoted LIBOR Rate or interest on a LIBOR Advance shall continue
to accrue at a newly quoted Fixed Rate or LIBOR Rate or shall be
adjusted to commence to accrue at the Variable Rate; provided,
however, that such notice shall be received by the Bank no later
than two Business Days prior to the last day of the relevant
Interest Period or LIBOR Interest Period, as applicable. If the
Bank shall not have received notice as prescribed herein of the
Borrower's election that interest on any Fixed Rate Advance
shall accrue interest at a newly quoted LIBOR Rate or at a newly
quoted Fixed Rate pursuant to subparagraph (iii) hereinabove; or
any LIBOR Advance shall continue to accrue at the newly quoted
Fixed Rate or LIBOR Rate as the case may be, the Borrower shall
be deemed to have elected that interest thereon shall be
adjusted to accrue at the Variable Rate upon the expiration of
the relevant Interest Period or LIBOR Interest Period pertaining
to such Advance.
2.1.7 Prepayment: The Borrower may prepay any Advance in whole or in part, at
any time and without penalty, provided, however, that: (i) any partial
prepayment shall first be applied at the Bank's option, to accrued and
unpaid interest and next to the outstanding principal balance; and (ii)
during any period of time in which interest is accruing on any Advance
on the basis of the LIBOR Rate or Fixed Rate, no prepayment shall be
made except on a day which is the last day of the LIBOR Interest Period
or Interest Period pertaining thereto. If the whole or any part of any
LIBOR Advance or Fixed Rate Advance is prepaid by reason of acceleration
or otherwise (except as described hereinabove), the Borrower shall, upon
the Bank's request, promptly pay to and indemnify the Bank for all
costs, expenses and any loss ( excluding loss of profit on any margin)
actually incurred by the Bank and any loss (including loss of profit
resulting from the re-employment of funds) deemed sustained by the Bank
as a consequence of such prepayment and provided further, that any
prepayment hereunder shall not be deemed to be an event of default.
The Bank shall be entitled to fund all or any portion of its Advances in
any manner it may determine in its sole discretion, but all calculations
and transactions hereunder shall be conducted as though the Bank
actually funded all Advances through the purchase of dollar deposits
bearing interest at the same rate as U.S. Treasury securities in the
amount of the relevant Advance and in maturities corresponding to the
date of such purchase to the Expiration Date hereunder.
2.1.8 Indemnification for LIBOR Rate or Fixed Rate Costs: During any period of
time in which interest on any Advance is accruing on the basis of the
LIBOR Rate or Fixed Rate, the Borrower shall, withing 15 days of the
Bank's written request, which request shall explain in reasonable detail
the reason for such costs or payments, promptly pay to and reimburse the
Bank for all costs incurred and payments made by the Bank by reason of
any future assessment, reserve, deposit or similar requirement or any
surcharge, tax or fee imposed upon the Bank or as a result of the Bank's
compliance with any directive or requirement of any regulatory authority
pertaining or relating to funds used by the Bank in quoting and
determining the LIBOR Rate or Fixed Rate. Bank shall use its best
efforts to provide Borrower in advance, with an estimate or any such
costs which may potentially be incurred hereunder.
2.1.9 Conversion from LIBOR Rate or Fixed Rate to Variable Rate: In the event
that the Bank shall at any time determine that the accrual of interest
on the basis of the LIBOR Rate or Fixed Rate (i) has become infeasible
because the Bank is unable to determine the LIBOR Rate or Fixed Rate due
to the unavailability of U.S. Dollar deposits, contracts or certificates
of deposit in an amount approximately equal to the amount of the
relevant
-8-
Advance and for a period of time approximately equal to the
relevant LIBOR Interest Period or Interest Period as the case
may be or (ii) is or has become unlawful by reason of the Bank's
compliance with any new law, rule, regulation, guideline or
order, or any new interpretation of any present law, rule,
regulation guideline or order, then the Bank shall promptly give
telephonic notice thereof (confirmed in writing) to the
Borrower, in which event any Advance bearing interest at either
the LIBOR Rate or Fixed Rate as the case may be shall be deemed
to be a Variable Rate Advance and interest shall thereupon
immediately accrue at the Variable Rate and shall continue at
such rate until the Bank determines that the LIBOR Rate or Fixed
Rate is no longer infeasible or unlawful.
2.2 THE TERM LOAN
2.2.1 The Term Loan: On terms and conditions as set forth herein, the
Bank agrees to lend to the Borrower in one drawing, upon the
Borrower's request therefore made prior to February 1, 2001, up
to the maximum amount of $10,500,000.00 (the "Term Loan").
Proceeds of the Term Loan shall be used to refinance existing
Indebtedness.
2.2.2 Making the Term Loan: The Term Loan shall be conclusively deemed
to have been made at the request of and for the benefit of the
Borrower (i) when credited to any deposit account of the
Borrower maintained with the Bank or (ii) when paid in
accordance with the Borrower's written instructions.
2.2.3 Repayment: The Borrower hereby promises and agrees to pay
principal monthly on the first day of each month in 47
installments of $218,750.00, commencing on February 1, 2001. On
the Expiration Date of the Term Loan, the Borrower hereby
promises and agrees to pay to the Bank the entire unpaid
principal balance, together with accrued and unpaid interest.
Each payment received by the Bank shall, at the Bank's option,
be applied to pay interest then due and unpaid under the Term
Loan and the remainder thereof (if any) shall be applied to pay
principal on the Term Loan.
2.2.4 Interest: Interest shall accrue on the Term Loan at one of the
following rates, as quoted by the Bank and as elected by the
Borrower below:
(i) Variable Rate Balances: A variable rate per annum
----------------------
equivalent to the Reference Rate plus the Term Applicable
Margin (the "Variable Rate"). Interest shall be adjusted
concurrently with any change in the Reference Rate. The
Term Loan based upon the Variable Rate is hereinafter
referred to as a "Variable Rate Balance".
(ii) Fixed Rate Balances: A fixed rate per annum quoted by the
-------------------
Bank for 30, 60, 90 or 180 days or for such other period
of time that the Bank may quote and offer (provided that
any such period of time does not extend beyond the
Expiration Date) for the entire amount of the Term Loan.
Such interest rate shall be a percentage equal to the Term
Applicable Margin plus the rate which the Bank determines
in its sole and absolute discretion to be equal to the
Bank's cost of acquiring funds (adjusted for any and all
assessments, surcharges and reserve requirements
pertaining to the borrowing or purchase by the Bank of
such funds) in an amount approximately equal to the amount
of the Term Loan and for a period of time approximately
equal to the relevant Interest Period (the "Fixed Rate").
The Term Loan bearing interest at the Fixed Rate is
hereinafter referred to as "Fixed Rate Balances".
-9-
(iii) LIBOR Balance: A fixed rate quoted by the Bank for one week, 1,
-------------
2, 3, or 6 months or for such other period of time that the
Bank may quote and offer (provided that any such period of time
does not extend beyond the Expiration Date) (the "LIBOR
Interest Period") for the entire amount of the Term Loan. Such
interest rate shall be a percentage equal to the Term
Applicable Margin plus the Bank's LIBOR Rate which is that rate
determined by the Bank's Treasury Desk as being the arithmetic
mean (rounded upwards, if necessary, to the nearest whole
multiple of one-sixteenth of one percent (1/16%)) of the U. S.
dollar London Interbank Offered Rates for such period appearing
on page 3750 (or such other page as may replace page 3750 of
the Telerate screen at or about 11:00 a.m. (London time) on the
second Business Day prior to the first days of such period
(adjusted for any and all assessments, surcharges and reserve
requirements) (the "LIBOR Rate"). The Term Loan based upon the
LIBOR Rate is hereinafter referred to as a "LIBOR Balance".
(iv) Fed Funds Balances: The rate per annum set forth in the daily
------------------
statistical release designated as the Composite 3:30 p.m.
Quotations for U.S. Government Securities, or any successor
publication, published by the Federal Reserve Bank of New York
(including as such successor, the "Composite 3:30 p.m.
Quotations") for such previous day under the caption "Federal
Funds Effective Rate" plus the Term Applicable Margin
(hereinafter referred to as the "Fed Funds Rate". If on any
relevant day the appropriate rate for such previous day is not
yet published in the Composite 3:30 p.m. Quotations, the rate
for such previous day will be the arithmetic mean of the rates
for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each of
three (3) leading brokers of Federal funds transactions in New
York City, selected by the Bank. The Term Loan or a portion
thereof based upon the Fed Funds Rate is hereinafter referred
to as a "Fed Funds Balance".
Interest shall be computed on the basis of 360 days per year, but
charged on the actual number of days elapsed.
The Borrower hereby promises and agrees to pay interest in arrears on
the Term Loan on the first calendar day of each month.
If interest is not paid as and when it is due, it shall be added to
the principal, become and be treated as a part thereof, and shall
thereafter bear like interest.
2.2.5 Notice of Borrowing. Upon telephonic notice which shall be received by
the Bank at or before 2:00 p.m. (California time) on a Business Day,
the Borrower may draw under the Term Loan by requesting:
(i) A Variable Rate Balance, Fed Funds Balance or Fixed Rate
Balance: A Variable Rate Balanc, Fed Funds Balance or Fixed
Rate Balance may be made on the day notice is received by the
Bank; provided, however, that if the Bank shall not have
received notice at or before 2:00 p.m. on the day such drawing
is requested to be made, such Variable Rate Balance, Fed Funds
Balance or Fixed Rate Balance may, at the Bank's option, be
made on the next Business Day.
(ii) A LIBOR Balance: Notice of any LIBOR Balance shall be received
by the Bank no later than two business days prior to the day
(which shall be a business day) on which the Borrower requests
such LIBOR Balance to be made.
2.2.6 Notice of Election to Adjust Interest Rate: Upon telephonic notice
which shall be received by the Bank at or before 2:00 p.m. (California
time) on a Business Day, the
-10-
Borrower may elect:
(i) That interest on a Variable Rate Balance shall be adjusted to
accrue at the Fixed Rate; provided, however, that such notice
shall be received by the Bank no later than 2:00 p.m. on the
Business Day on which the Borrower requests that interest be
adjusted to accrue at the Fixed Rate.
(ii) That interest on a Variable Rate Balance shall be adjusted to
accrue at the LIBOR Rate; provided, however, that such notice
shall be received by the Bank no later than two Business Days
prior to the Business Day on which the Borrower requests that
interest be adjusted to accrue at the LIBOR Rate.
(iii) That interest on a Fed Funds Balance shall be adjusted to accrue
at the Fixed Rate; provided, however, that such notice shall be
received by the Bank no later than 2:00 p.m. on the Business Day
on which the Borrower requests that interest be adjusted to
accrue at the Fixed Rate.
(iv) That interest on a Fed Funds Balance shall be adjusted to accrue
at the LIBOR Rate; provided, however, that such notice shall be
received by the Bank no later than two Business Days prior to
the Business Day on which the Borrower requests that interest be
adjusted to accrue at the LIBOR Rate.
(v) That interest on a Fixed Rate Advance shall continue to accrue
at a newly quoted Fixed Rate or shall be adjusted to commence to
accrue at the Variable Rate or the Fed Funds Rate; provided,
however, that such notice shall be received by the Bank no later
than 2:00 p.m. on the last day of the Interest Period pertaining
to such Fixed Rate Balance. If the Bank shall not have received
notice (as prescribed herein) of the Borrower's election that
interest on any Fixed Rate Balance shall continue to accrue at
the newly quoted Fixed Rate as the case may be the Borrower
shall be deemed to have elected that interest thereon shall be
adjusted to accrue at the Variable Rate upon the expiration of
the relevant Interest Period.
(vi) That interest on a Fixed Rate Advance shall accrue at a newly
quoted LIBOR Rate or interest on a LIBOR Balance shall continue
to accrue at a newly quoted Fixed Rate or LIBOR Rate or shall be
adjusted to commence to accrue at the Variable Rate or Fed Funds
Rate; provided, however, that such notice shall be received by
the Bank no later than two Business Days prior to the last day
of the relevant Interest Period or LIBOR Interest Period, as
applicable. If the Bank shall not have received notice as
prescribed herein of the Borrower's election that interest on
any Fixed Rate Balance shall accrue interest at a newly quoted
LIBOR Rate or at a newly quoted Fixed Rate pursuant to
subparagraph (iii) hereinabove; or any LIBOR Balance shall
continue to accrue at the newly quoted Fixed Rate or LIBOR Rate
as the case may be, the Borrower shall be deemed to have elected
that interest thereon shall be adjusted to accrue at the
Variable Rate upon the expiration of the relevant Interest
Period or LIBOR Interest Period.
2.2.7 Prepayment. The Borrower may prepay the Term Loan in whole or in part,
at any time and without penalty, provided, however, that: (i) any
partial prepayment shall first be applied at the Bank's option, to
accrued and unpaid interest and next to the outstanding principal
balance; and (ii) during any period of time in which interest is
accruing on any Balance on the basis of the LIBOR Rate or Fixed Rate, no
prepayment shall be made except on a day which is the last day of the
LIBOR Interest Period or Interest Period pertaining thereto. If the
whole or any part of the Term Loan is prepaid by reason of acceleration
or otherwise, (except as described hereinabove) the Borrower shall, upon
the Bank's request, promptly pay to and indemnify the Bank for all
costs, expenses and any loss (excluding loss of profit
-11-
on any margin actually incurred by the Bank and any loss
(including loss of profit resulting from the re-employment of
funds) deemed sustained by the Bank as a consequence of such
prepayment, and provided further, that any prepayment hereunder
shall not be deemed to be an event of default.
The Bank shall be entitled to fund all or any portion of the
Term Loan in any manner it may determine in its sole discretion,
but all calculations and transactions hereunder shall be
conducted as though the Bank actually funded the Term Loan
through the purchase of dollar deposits bearing interest at the
same rate as U.S. Treasury securities in the amount of the Term
Loan and in maturities corresponding to the date of such
purchase to the Expiration Date hereunder.
2.2.8 Indemnification for LIBOR Rate or Fixed Rate Costs. During any
period of time in which interest on the Term Loan is accruing on
the basis of the LIBOR Rate or Fixed Rate, the Borrower shall,
within 15 days of the Bank's written request, which request
shall explain in reasonable detail the reason for such costs or
payments, promptly pay to and reimburse the Bank for all costs
incurred and payments made by the Bank by reason of any future
assessment, reserve, deposit or similar requirement or any
surcharge, tax or fee imposed upon the Bank or as a result of
the Bank's compliance with any directive or requirement of any
regulatory authority pertaining or relating to funds used by the
Bank in quoting and determining the LIBOR Rate or Fixed Rate.
Bank shall use its best efforts to provide Borrower, in advance,
with an estimate of any such costs which may potentially be
incurred hereunder.
2.2.9 Conversion from LIBOR Rate or Fixed Rate to Variable Rate. In
the event that the Bank shall at any time determine that the
accrual of interest on the basis of the LIBOR Rate or Fixed Rate
(i) has become infeasible because the Bank is unable to
determine the LIBOR Rate or Fixed Rate due to the unavailability
of U.S. Dollar deposits, contracts or certificates of deposit in
an amount approximately equal to the amount the Term Loan and
for a period of time approximately equal to the relevant LIBOR
Interest Period or Interest Period as the case may be or (ii) is
or has become unlawful by reason of the Bank's compliance with
any new law, rule, regulation, guideline or order, or any new
interpretation of any present law, rule, regulation guideline or
order, then the Bank shall promptly give telephonic notice
thereof (confirmed in writing) to the Borrower, in which event
the LIBOR Balance or Fixed Rate Balance as the case may be shall
be deemed to be a Variable Rate Balance and interest shall
thereupon immediately accrue at the Variable Rate and shall
continue at such rate until the Bank determines that the LIBOR
Rate or Fixed Rate is no longer infeasible or unlawful.
2.3 LETTER OF CREDIT SUB-FACILITY
2.3.1 Letter of Credit Sub-Facility: The Bank agrees to issue
commercial and/or standby letters of credit (each a "Letter of
Credit") on behalf of the Borrower of up to $10,000,000.00. At
no time, however, shall the total principal amount of all
Advances outstanding under the Line of Credit, together with the
total face amount of all Letters of Credit outstanding, less any
partial draws paid by the Bank, exceed the Line of Credit.
(i) Upon the Bank's request, the Borrower shall promptly pay
to the Bank issuance fees and such other fees,
commissions, costs and any out-of-pocket expenses charged
or incurred by the Bank with respect to any Letter of
Credit.
(ii) The commitment by the Bank to issue Letters of Credit
shall, unless earlier terminated in accordance with the
terms of the Agreement, automatically terminate on the
Expiration Date of the Line of Credit and no Letter of
Credit shall expire on a
-12-
date which is 180 days after the Expiration Date or as
negotiated by the Borrower and the Bank.
(iii) Each Letter of Credit shall be in form and substance
satisfactory to the Bank and in favor of beneficiaries
satisfactory to the Bank, provided that the Bank may
refuse to issue a Letter of Credit due to the nature of
the transaction or its terms or in connection with any
transaction where the Bank, due to the beneficiary or the
nationality or residence of the beneficiary, would be
prohibited by any applicable law, regulation or order
from issuing such Letter of Credit.
(iv) Prior to the issuance of each Letter of Credit, but in no
event later than 10:00 a.m. (California time) on the day
such Letter of Credit is to be issued (which shall be a
Business Day), the Borrower shall deliver to the Bank a
duly executed form of the Bank's standard form of
application for issuance of a Letter of Credit with
proper insertions.
(v) The Borrower shall, upon the Bank's request, promptly pay
to and reimburse the Bank for all costs incurred and
payments made by the Bank by reason of any future
assessment, reserve, deposit or similar requirement or
any surcharge, tax or fee imposed upon the Bank or as a
result of the Bank's compliance with any directive or
requirement of any regulatory authority pertaining or
relating to any Letter of Credit.
In the event that the Borrower fails to pay any drawing under any Letter of
Credit or the balances in the depository account or accounts maintained by
the Borrower with Bank are insufficient to pay such drawing, without
limiting the rights of Bank hereunder or waiving any Event of Default
caused thereby, Bank may, and Borrower hereby authorizes Bank to create an
Advance bearing interest at the rate or rates provided in Section 9.2
hereof to pay such drawing.
2.4 ACCEPTANCE SUB-FACILITY
2.4.1 Acceptance Sub- Facility: The Borrower may from time to time
request the Bank to accept one or more drafts drawn on the Bank
for the account of the Borrower (each an "Acceptance") of up to
$5,000,000.00. At no time, however, shall the total principal
balance of all Acceptances outstanding, together with the total
face amount of all outstanding Letters of Credit less any
partial draws paid by the Bank, exceed the sum of $10,000,000.00
and, together with the total principal balance of all Advances
outstanding under the Line of Credit, exceed the Line of Credit.
(i) Requests for Acceptances. Each request for an Acceptance
shall be made in writing or by telephone confirmed in
writing (each a "Request"), shall be irrevocable, and
shall involve one or more drafts as described below. Each
Request shall be delivered or communicated to the Bank no
later than 10:00 a.m. (California time) on the day (which
shall be a business day) on which the creation of an
Acceptance is requested. By making any such Request, the
Borrower agrees that all matters relating to each such
Acceptance shall be governed hereby and the Borrower
restates all warranties and representations made by the
Borrower herein as if made on the date of the Request and
on the date that the Acceptance is created.
(ii) Acceptances. Each Acceptance shall be created upon a
Request by the Bank's acceptance of a draft in form and
substance satisfactory to the Bank (each a "Draft"). Each
Draft shall: (i) be drawn on the Bank by or on behalf or
for the account of the Borrower in accordance with the
provisions hereof ; (ii) have a minimum face amount of
$100,000.00; (iii) be for the purpose of financing only
-13-
those transactions permitted by Subsection 7 of Section 13
of the Federal Reserve Act, as amended from time to time;
and (iv) mature not more than 180 days after the date
thereof (provided that, if such date is not a Business
Day, the maturity shall be extended to the next succeeding
Business Day). However, no Draft shall mature more than 90
days after the Expiration Date of Acceptances. The
Borrower hereby warrants that any Acceptances relating to
the importation or exportation of goods or relating to the
domestic shipment of goods shall: (i) not have a term in
excess of the period of time which is usual and reasonably
necessary to finance transactions of the character of the
underlying import or export transaction or the underlying
domestic shipment; (ii) not, together with all other
Acceptances relating to any such shipment, have an
aggregate face amount exceeding the CIF value of such
shipment; and (iii) not be created more than 30 days after
the date of shipment of goods to which such Acceptance
relates. Acceptances relating to the storage of goods
shall be subject to the further conditions that: (i) at
the time such Acceptance is created, the goods being
stored are covered by a warehouse receipt issued by a
bonded warehouse independent of the Borrower and
acceptable to the Bank; (ii) the goods covered by the
warehouse receipt are readily marketable staples (as such
term is defined in Section 13 of the Federal Reserve Act
by the Board of Governors of the Federal Reserve System or
by Federal Reserve Bulletins) held pending a reasonably
immediate sale, distribution or shipment; and (iii) the
face amount of the Acceptance relating to such goods does
not exceed the fair market value of the goods.
(iii) Acceptance Liability. The Borrower is obligated, and
hereby unconditionally promises and agrees, to pay the
Bank, on the maturity date of each Acceptance or on such
earlier date as may be required pursuant hereto, the face
amount of each such Acceptance.
(iv) Acceptance Commissions. The Borrower agrees, upon
acceptance by the Bank of each Draft and as a condition
precedent to such Acceptance, to pay to the Bank a fee
(the "Commission") in an amount equal to 1.5% per annum of
the face amount of each Acceptance calculated on the basis
of 360 days per year for the actual number of days
(including the first day but excluding the last day)
during the period which is for the term of the Draft.
(v) Discount of Acceptances. The Bank agrees to discount any
Acceptance that is created and presented to it for
discount at a rate quoted by the Bank at the time the
Acceptance is presented to the Bank for discount and for a
similar dollar amount and a similar maturity as the Draft
being presented to the Bank by the Borrower for acceptance
(the "Acceptance Discount Rate"). On the date any such
Acceptance is presented for discount, the Bank shall: (i)
cause the aggregate discounted amount (less any Commission
then payable by the Borrower to the Bank hereunder) to be
made available to the Borrower by crediting such amount to
the Borrower's demand deposit account maintained with the
Bank, and (ii) advise the Borrower of the Acceptance
Discount Rate at which the Bank discounted such
Acceptance. The Bank shall have the right, in its sole
discretion, to sell, rediscount, hold or otherwise deal
with or dispose of any such Acceptance discounted by it.
(vi) Acceptance Collateral. Each Draft accepted by the Bank
shall be secured by a security interest in the goods (as
defined in the California Uniform Commercial Code)
involved in the transaction out of which the Acceptance
arose to the extent that such a security interest is
either required by the Bank or in order that the relevant
Acceptance conform to the requirements of Section 13 of
the Federal Reserve Act.
-14-
(vii) Future Assessments. The Borrower shall, within 15 days of
the Bank's written request, promptly pay to and reimburse
the Bank for all costs incurred and payments made by the
Bank by reason of any future assessment, reserve, deposit
or similar requirement or any surcharge, tax or fee
imposed upon the Bank or as a result of the Bank's
compliance with any directive or requirement of any
regulatory authority pertaining or relating to any
Acceptance. Bank shall use its best efforts to provide
Borrower in advance with an estimate of any such costs
which may potentially be incurred hereunder.
2.5 FOREIGN EXCHANGE SUB-FACILITY
2.5.1 Foreign Exchange Sub-Facility: The Bank agrees to enter into FX
Transactions with the Borrower, at the Borrower's request
therefor made prior to the Expiration Date, provided however,
that at no time shall the aggregate FX Risk Liability of the
Borrower exceed the FX Limit, and provided further, at no time
shall the aggregate FX Risk Liability combined with the total
face amount of all Letters of Credit outstanding, less any
partial draws paid by the Bank, together with the total
principal balance of all Acceptances outstanding, together with
the total principal amount of all outstanding Advances, exceed
the Line of Credit. Each FX Transaction shall be used to hedge
the Borrower's foreign exchange exposure.
(i) Requests. Each request for a FX Transaction shall be made
by telephone to the Bank's Treasury Department
("Request"), shall specify the Foreign Currency to be
purchased or sold, the amount of such Foreign Currency
and the Settlement Date. Each Request shall be
communicated to the Bank no later than 3:00 p.m.
California time on the Business Day on which the FX
Transaction is requested.
(ii) Tenor. No FX Transaction shall have a Settlement Date
which is more than 365 days after the date of entry into
such FX Transaction, and provided further, no FX
Transaction shall expire on a date which is after the
Expiration Date.
(iii) Availability. Bank may refuse to enter into a FX
Transaction with the Borrower where the Bank, at its sole
discretion, determines that (1) the requested Foreign
Currency is unavailable, or (2) the Bank is not then
dealing in the requested Foreign Currency, or (3) the
Bank would be prohibited by any applicable law, rule,
regulation or order from purchasing such Foreign
Currency.
(iv) Payment. Payment is due on the Settlement Date of the
relevant FX Transaction. The Bank is hereby authorized by
the Borrower to charge the full settlement price of any
FX Transaction against the depository account or accounts
maintained by the Borrower with the Bank on the
Settlement Date. In the event that the Borrower fails to
pay the settlement price of any FX Transaction on the
Settlement Date or the balances in the depository account
or accounts maintained with Bank are insufficient to pay
the settlement price, without limiting the rights of Bank
hereunder or waiving any Event of Default caused thereby,
Bank may, and Borrower hereby authorizes Bank to, create
an Advance bearing interest at the Variable Rate to pay
the settlement price on the Settlement Date.
(v) Increased Costs. Borrower shall within 15 days of the
Bnak's written request, promptly pay to and reimburse the
Bank for all costs incurred and payments made by the Bank
by reason of any assessment, reserve, deposit, capital
maintenance or similar requirement or any surcharge, tax
or fee imposed upon the Bank or as a result of the Bank's
compliance with any directive or requirement of any
regulatory authority pertaining or relating to any FX
Transaction. Bank shall use its best effort to provide
Borrower, in advance, with an estimate of any such costs
which may potentially be incurred hereunder
-15-
(vi) Impossibility of Performance. In the event that the
Borrower or the Bank cannot perform under a FX
Transaction due to force majeure or an act of State or it
becomes unlawful or impossible to perform, all in the
good faith judgement of the Borrower or the Bank, then
upon notice to the other party, the Borrower or the Bank
may require the close-out and liquidation of the affected
FX Transaction in accordance with the provisions of this
Agreement.
2.6 Term Loan and Line Account: The Bank shall maintain on its books a
record of account in which the Bank shall make entries for each Advance,
the Term Loan and such other debits and credits as shall be appropriate
in connection with the Line of Credit and the Term Loan (the "Term Loan
and Line Account"). The Bank shall provide the Borrower with a statement
of the Borrower's Term Loan and Line Account, which statement shall be
considered to be correct and conclusively binding on the Borrower unless
the Borrower notifies the Bank to the contrary within 30 days after the
Borrower's receipt of any such statement which it deems to be incorrect.
2.7 Authorization to Charge Account(s): The Borrower hereby authorizes the
Bank to charge, from time to time, against any or all of the Borrower's
deposit accounts with the Bank any amount so due under this Agreement,
including, but not limited to, account # 261535176maintained with the
Bank's Rosemead Branch.
2.8 Payments: If any payment required to be made by the Borrower hereunder
becomes due and payable on a day other than a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and
interest thereon shall be payable at the then applicable rate during
such extension. All payments required to be made hereunder shall be made
to the office of the Bank designated for the receipt of notices herein
or such other office as Bank shall from time to time designate.
2.9 Late Payment: In addition to any other rights the Bank may have
hereunder, if any payment of principal or interest or any portion
thereof, under this Agreement is not paid within 5 days of when due, a
late payment charge equal to five percent (5%) of such past due payment
may be assessed and shall be immediately payable.
SECTION
3
COLLATERAL
3.1 The Collateral: To secure payment and performance of all the Borrower's
Obligations under this Agreement and all other liabilities, loans,
guarantees, covenants and duties owed by the Borrower to the Bank,
whether or not evidenced by this or by any other agreement, absolute or
contingent, due or to become due, now existing or hereafter and
howsoever created, the Borrower hereby grants the Bank a security
interest in and to all of the following property ("Collateral"):
(i) Equipment. All goods now owned or hereafter acquired by
the Borrower or in which the Borrower now has or may
hereafter acquire any interest including, but not limited
to, all machinery, equipment, furniture, furnishings,
fixtures, tools, supplies and motor vehicles of every
kind and description, and all additions, accessions,
improvements, replacements and substitutions thereto and
thereof (the "Equipment") , but excluding the goods of
any Foreign Subsidiary,.
(ii) Inventory. All inventory now owned or hereafter acquired
by the Borrower, including, but not limited to, all raw
materials, work in process, finished goods, merchandise,
parts and supplies of every kind and description,
including inventory temporarily out of the Borrower's
custody or possession, together with all returns
-16-
on accounts (the "Inventory") but excluding the inventory
of any Foreign Subsidiary,.
(iii) Accounts. All accounts, contract rights and general
intangibles now owned or hereafter created or acquired by
the Borrowerincluding, but not limited to, all
receivables, goodwill, trademarks, trademark
applications, trade styles, trade names, patents, patent
applications, copyrights and copyright applications,
customer lists, business records and computer programs,
tapes, disks and related data processing software that at
any time evidence or contain information relating to any
of the Collateral ,but excluding the accounts, contract
rights and general intangibles of any Foreign
Subsidiary,.
(iv) Documents. All documents, instruments and chattel paper
now owned or hereafter acquired by the Borrower,
including, but not limited to, warehouse and other
receipts, bills of sale and bills of lading, but
excluding the documents, instruments and chattel paper of
any Foreign Subsidiary or any document or instrument that
derives its value by reference to either the stock of or
the assets of, a Foreign Subsidiary.
(v) Monies. All monies, deposit accounts, certificates of
deposit and securities of the Borrower now or hereafter
in the Bank's or its agents' possession, excluding any
interest in accounts and securities of any Foreign
Subsidiary.
The Bank's security interest in the Collateral shall be a continuing lien and
shall include the proceeds and products of the Collateral including, but not
limited to, the proceeds of any insurance thereon.
The security interest granted to Bank in the Collateral shall not secure or be
deemed to secure any Indebtedness of the Borrower to the Bank which is, at the
time of its creation, subject to the provisions of any state or federal consumer
credit or truth-in-lending disclosure statutes.
SECTION
4
CONDITIONS PRECEDENT
4.1 Conditions Precedent to the Initial Advance: The obligation of the Bank
to make the initial Advance and the first extension of credit to or on
account of the Borrower hereunder is subject to the conditions precedent
that the Bank shall have received before the date of such initial
Advance and such first extension of credit all of the following, in form
and substance satisfactory to the Bank:
(i) Authority to Borrow. Evidence that the execution,
delivery and performance by the Borrower of this
Agreement and any document, instrument or agreement
required hereunder have been duly authorized.
(ii) Guarantors. Continuing guaranties in favor of the Bank
executed by the following, together with evidence that
the execution, delivery and performance by any guarantor
has been duly authorized: UDT Sensors, Inc., Rapiscan
Security Products, Inc., Metorex Security Products, Inc.,
Silicon Microstructures, Inc., Aristo Medical Products,
Inc., OSI Fibercom, Inc., Osteometer, USA Inc. and Xxxxxx
Optics, Inc..
-17-
(iii) Fees. A fee of $75,000.00, which includes payment of all
of the Bank's out-of-pocket expenses in connection with
the preparation and negotiation of this Agreement.
(iv) Financing Statements. Executed UCC-1 financing
statement(s) describing the Collateral, which have been
filed with the Secretary of State or the county recorder
as a lien of first priority.
(v) Miscellaneous. Such other evidence as the Bank may
request to establish the consummation of the transaction
contemplated hereunder and compliance with the conditions
of this Agreement.
4.2 Conditions Precedent to All Advances: The obligation of the Bank to make
each Advance and each other extension of credit to or on account of the
Borrower (including the initial Advance and the first extension of
credit) shall be subject to the further conditions precedent that, on
the date of each Advance or each extension of credit and after the
making of such Advance or extension of credit:
(i) Subsequent Approvals. The Bank shall have received such
supplemental approvals, opinions or documents as the Bank
may reasonably request.
(ii) Representations and Warranties. The representations
contained in Section 5 and in any other document,
instrument or certificate delivered to the Bank hereunder
are true, correct and complete.
(iii) Event of Default. No event has occurred and is continuing
which constitutes, or with the lapse of time or giving of
notice or both, would constitute an Event of Default.
(iv) Collateral. The security interest in the Collateral has
been duly authorized, created and perfected with first
priority and is in full force and effect.
The Borrower's acceptance of the proceeds of any loan, advance or extension of
credit or the Borrower's execution of any document or instrument evidencing or
creating any Obligation hereunder shall be deemed to constitute the Borrower's
representation and warranty that all of the above statements are true and
correct.
SECTION
5
REPRESENTATIONS AND WARRANTIES
The Borrower hereby makes the following representations and warranties
to the Bank, which representations and warranties are continuing:
5.1 Status: The Borrower is a corporation duly organized and validly
existing under the laws of the state of California and is properly
licensed and is qualified to do business and in good standing in, and,
where necessary to maintain the Borrower's rights and privileges, has
complied with the fictitious name statute of every jurisdiction in which
the Borrower is doing business.
5.2 Authority: The execution, delivery and performance by the Borrower of
this Agreement and any instrument, document or agreement required
hereunder have been duly authorized and do not and will not: (i) violate
any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
application to the Borrower; (ii) result in a breach
-18-
of or constitute a default under any material indenture or loan or
credit agreement or other material agreement, lease or instrument to
which the Borrower is a party or by which it or its properties may be
bound or affected; or (iii) require any consent or approval of its
stockholders or violate any provision of its articles of incorporation
or by-laws.
5.3 Legal Effect: This Agreement constitutes, and any instrument, document
or agreement required hereunder when delivered hereunder will
constitute, legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective
terms.
5.4 Fictitious Trade Styles: There are no fictitious trade styles used by
the Borrower in connection with its business operations. The Borrower
shall notify the Bank not less than 30 days prior to effecting any
change in the matters described herein or prior to using any other
fictitious trade style at any future date, indicating the trade style
and state(s) of its use.
5.5 Financial Statements: All financial statements, information and other
data which may have been or which may hereafter be submitted by the
Borrower to the Bank are true, accurate and correct and have been or
will be prepared in accordance with generally accepted accounting
principles consistently applied and accurately represent the financial
condition or, as applicable, the other information disclosed therein.
Since the most recent submission of such financial information or data
to the Bank, the Borrower represents and warrants that no material
adverse change in the Borrower's financial condition or operations has
occurred which has not been fully disclosed to the Bank in writing.
5.6 Litigation: Except as have been disclosed to the Bank in writing, there
are no actions, suits or proceedings pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or the Borrower's
properties before any court or administrative agency which, if
determined adversely to the Borrower, would have a material adverse
effect on the Borrower's financial condition or operations or on the
Collateral.
5.7 Title to Assets: The Borrower has good and marketable title to all of
its assets (including, but not limited to, the Collateral) and the same
are not subject to any security interest, encumbrance, lien or claim of
any third person except for Permitted Liens.
5.8 ERISA: If the Borrower has a pension, profit sharing or retirement plan
subject to ERISA, such plan has been and will continue to be funded in
accordance with its terms and otherwise complies with and continues to
comply with the requirements of ERISA.
5.9 Taxes: The Borrower has filed all tax returns required to be filed and
paid all taxes shown thereon to be due, including interest and
penalties, other than such taxes which are currently payable without
penalty or interest or those which are being duly contested in good
faith.
5.10 Margin Stock. The proceeds of any loan or advance hereunder will not be
used to purchase or carry margin stock as such term is defined under
Regulation U of the Board of Governors of the Federal Reserve System.
5.11 Environmental Compliance. The operations of the Borrower comply, and
during the term of this Agreement will at all times comply, in all
respects with all Environmental Laws; the Borrower has obtained all
licenses, permits, authorizations and registrations required under any
Environmental Law ("Environmental Permits") and necessary for its
---------------------
ordinary course operations, all such Environmental Permits are in good
standing, and the Borrower is in compliance with all material terms and
conditions of such Environmental Permits; neither the Borrower nor any
of its present property or operations is subject to any outstanding
written order from or agreement with any governmental authority nor
subject to any judicial or docketed administrative proceeding,
respecting any Environmental Law, Environmental Claim or Hazardous
Material; there are no Hazardous Materials or other conditions or
circumstances existing, or arising from operations prior to the date
-19-
of this Agreement, with respect to any property of the Borrower that
would reasonably be expected to give rise to Environmental Claims;
provided, however, that with respect to property leased from an
--------
unrelated third party, the foregoing representation is made to the best
knowledge of the Borrower. In addition, (i) the Borrower does not have
any underground storage tanks that are not properly registered or
permitted under applicable Environmental Laws, or that are leaking or
disposing of Hazardous Materials off-site, and (ii) the Borrower has
notified all of their employees of the existence, if any, of any health
hazard arising from the conditions of their employment and have met all
notification requirements under Title III of CERCLA and all other
Environmental Laws.
SECTION
6
COVENANTS
The Borrower covenants and agrees that, during the term of this Agreement, and
so long thereafter as the Borrower is indebted to the Bank under this Agreement,
the Borrower will, unless the Bank shall otherwise consent in writing:
6.1 Reporting and Certification Requirements: Deliver or cause to be
delivered to the Bank in form and detail satisfactory to the Bank:
(i) Not later than 105 days after the end of each of the
Borrower's fiscal years, a copy of the annual audited
financial report of the Borrower for such year, prepared
by a firm of certified public accountants acceptable to
Bank and accompanied by an unqualified opinion of such
firm, a copy of the Borrower's Securities and Exchange
Commission Form 10-K, and a copy of the Borrower's
financial projections for the upcoming 3 years.
(ii) Not later than 50 days after the end of each fiscal
quarter, the Borrower's financial statement as of the end
of such period and a copy of the Borrower's Securities
and Exchange Commission Form 10-Q.
(iii) Concurrently with the delivery of the financial reports
required hereunder and following any acquistion permitted
under Section 6.4 or stock repurchase under Section 6.10,
a compliance certificate stating that the Borrower is in
compliance with all covenants contained herein and that
no Event of Default or potential Event of Default has
occurred or is continuing, and certified to by the chief
financial officer of the Borrower.
(iv) Promptly upon the Bank's request, such other information
pertaining to the Borrower, the Collateral or any
guarantor hereunder as the Bank may reasonably request.
6.2 Financial Condition: The Borrower promises and agrees, during the term
of this Agreement and until payment in full of all of the Borrower's
Obligations, the Borrower will maintain at all times:
(i) Net Worth: A minimum Effective Tangible Net Worth of at
least $50,000,000.00.
(ii) Quick Ratio: A ratio of the sum of cash, cash equivalents
and accounts receivable to Current Liabilities of not
less than 1.00 to 1.
(iii) Quarterly Losses: Profitability by not allowing any
quarterly losses.
-20-
(iv) Funded Debt Ratio: A ratio of Funded Debt to EBITDA of
not more than 3.25 to 1 through March 31, 2001, 3.00 to 1
at the end of each fiscal quarter through March 31, 2002
and 2.50 to 1 at the end of each fiscal quarter
thereafter, with EBITDA based upon the immediately
preceding three fiscal quarters and the current quarter
just ended.
(v) Debt Coverage Ratio. A ratio of EBITDA to the sum of
interest expense and the current portion of long term
Debt of not less than 1.5 to 1, measured at the end of
each fiscal quarter based upon the immediately preceding
three fiscal quarters and the current quarter just ended.
6.3 Preservation of Existence; Compliance with Applicable Laws: Maintain and
preserve its existence and all rights and privileges now enjoyed; and
conduct its business and operations in accordance with all applicable
laws, rules and regulations.
6.4 Merge or Consolidate: Not liquidate or dissolve, merge or consolidate
with or into, or acquire any other business organization, other than
cash acquisitions of up to $500,000.00 in any one fiscal year and stock
acquisitions of up to $1,000,000.00 in any one fiscal year.
6.5 Maintenance of Insurance: Keep and maintain the Collateral insured for
not less than its full replacement value against all risks of loss and
damage and maintain insurance in such amounts and covering such risks as
is usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which the Borrower
operates and maintain such other insurance and coverages as may be
required by the Bank. All such insurance shall be in form and amount and
with companies satisfactory to the Bank.
With respect to insurance covering properties in which the Bank
maintains a security interest or lien, such insurance shall name the
Bank as loss payee pursuant to a loss payable endorsement satisfactory
to the Bank and shall not be altered or canceled except upon 10 days'
prior written notice to the Bank. Upon the Bank's request, the Borrower
shall furnish the Bank with the original policy or binder of all such
insurance.
6.6 Maintenance of Collateral and Other Properties: Except for Permitted
Liens, keep and maintain the Collateral free and clear of all levies,
liens, encumbrances and security interests (including, but not limited
to, any lien of attachment, judgment or execution) and defend the
Collateral against any such levy, lien, encumbrance or security
interest; comply with all laws, statutes and regulations pertaining to
the Collateral and its use and operation; execute, file and record such
statements, notices and agreements, take such actions and obtain such
certificates and other documents as necessary to perfect, evidence and
continue the Bank's security interest in the Collateral and the priority
thereof; maintain accurate and complete records of the Collateral which
show all sales, claims and allowances; and properly care for, house,
store and maintain the Collateral in good condition, free of misuse,
abuse and deterioration, other than normal wear and tear. The Borrower
shall also maintain and preserve all its properties in good working
order and condition in accordance with the general practice of other
businesses of similar character and size, ordinary wear and tear
excepted.
6.7 Payment of Obligations and Taxes: Make timely payment of all assessments
and taxes and all of its liabilities and obligations including, but not
limited to, trade payables, unless the same are being contested in good
faith by appropriate proceedings with the appropriate court or
regulatory agency. For purposes hereof, the Borrower's issuance of a
check, draft or similar instrument without delivery to the intended
payee shall not constitute payment.
6.8 Inspection Rights and Accounting Records: The Borrower will maintain
adequate books and records in accordance with generally accepted
accounting principles consistently applied and in a manner otherwise
acceptable to Bank, and, at any reasonable time and from time to time,
permit
-21-
the Bank or any representative thereof to examine and make copies of the
records and visit the properties of the Borrower and discuss the
business and operations of the Borrower with any employee or
representative thereof. If the Borrower shall maintain any records
(including, but not limited to, computer generated records or computer
programs for the generation of such records) in the possession of a
third party, the Borrower hereby agrees to notify such third party to
permit the Bank free access to such records at all reasonable times and
to provide the Bank with copies of any records which it may request, all
at the Borrower's expense, the amount of which shall be payable
immediately upon demand.
6.9 Payment of Dividends: Not declare or pay any dividends on any class of
stock now or hereafter outstanding except dividends payable solely in
the Borrower's capital stock.
6.10 Redemption or Repurchase of Stock: Not redeem or repurchase any class of
the Borrower's stock now or hereafter outstanding, except stock in an
amount of up to $2,000,000.00 in the aggregate.
6.11 Additional Indebtedness: Not, after the date hereof, create, incur or
assume, directly or indirectly, any additional Indebtedness other than
(i) Indebtedness owed or to be owed to the Bank or (ii) Indebtedness to
trade creditors incurred in the Ordinary Course of Business or (iii)
Indebtedness owed or to be owed to Xxxxx Fargo HSBC Trade Bank of up to
$500,000.00 or (iv) Indebtedness owed to Foreign Subsidiaries or (v)
Indebtedness for equipment financing of up to $1,500,000.00 through June
30, 2001 and $2,500,000 in any one fiscal year thereafter.
6.12 Loans: Not make any loans or advances or extend credit to any third
person, including, but not limited to, directors, officers,
shareholders, partners, employees, affiliated entities and subsidiaries
of the Borrower, except for credit extended in the Ordinary Course of
Business as presently conducted and except up to $350,000.00 in the
aggregate.
6.13 Liens and Encumbrances: Not create, assume or permit to exist any
security interest, encumbrance, mortgage, deed of trust, or other lien
(including, but not limited to, a lien of attachment, judgment or
execution) affecting any of the Borrower's properties, or execute or
allow to be filed any financing statement or continuation thereof
affecting any of such properties, except for Permitted Liens or as
otherwise provided in this Agreement, and except liens and security
interests associated with Indebtedness of up to $1,500,000.00 through
June 30, 2001 and $2,500,000 in any one fiscal year thereafter.
6.14 Transfer Assets: Not, after the date hereof, sell, contract for sale,
convey, transfer, assign, lease or sublet, any of its assets (including,
but not limited to, the Collateral) except in the Ordinary Course of
Business and, then, only for full, fair and reasonable consideration.
6.15 Change in Nature of Business: Not make any material change in its
financial structure or the nature of its business as existing or
conducted as of the date hereof.
6.16 Compensation of Employees: Compensate its employees for services
rendered at an hourly rate at least equal to the minimum hourly rate
prescribed by any applicable federal or state law or regulation.
6.17 Capital Expense: Not make any fixed capital expenditure or any
commitment therefor, including, but not limited to, incurring liability
for leases which would be, in accordance with generally accepted
accounting principles, reported as capital leases, or purchase any real
or personal property in an aggregate amount exceeding $5,000,000.00 in
any one fiscal year.
6.18 Notice: Give the Bank prompt written notice of any and all (i) Events of
Default; (ii) litigation, arbitration or administrative proceedings to
which the Borrower is a party and in which the claim or liability
exceeds $500,000.00 or which affects the Collateral; (iii) other matters
which have resulted
-22-
in, or might result in a material adverse change in the Collateral or
the financial condition or business operations of the Borrower, and (iv)
any enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened against the Borrower or any
of its properties.
6.19 Environmental Compliance: The Borrower shall conduct its operations and
keep and maintain all of its property in compliance with all
Environmental Laws and, upon the written request of the Bank, the
Borrower shall submit to the Bank, at the Borrower's sole cost and
expense, at reasonable intervals, a report providing the status of any
environmental, health or safety compliance, hazard or liability.
6.20 Inventory:
(i) Except as provided herein below, the Borrower's inventory
shall, at all times, be in the Borrower's physical
possession, shall not be held by others on consignment,
sale on approval, or sale or return and shall be kept
only at: : 12515,12525,12533,and 00000 Xxxxxxx Xxx,
Xxxxxxxxx, Xxxxxxxxxx 00000; 0000 Xxxx Xx Xxxxxxx Xxxx.,
Xxxxxxxxx, Xxxxxxxxxx 00000; 0000 Xxxxxxxxxx Xxxxxx,
Xxxxx Xxxxxxx, Xxxxxxxxxxx 00000; 0000 X. Xxxxxxxx, Xxxx
Xxxxx, Xxxxxxxxx 00000; 000 Xxxxxxxx Xxxxxxxxx, Xxxxx,
Xxx Xxxxxx, 00000; 000 Xxxx Xxxxxx Xx., Xxxxxx, XX 00000
and 00000 Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000,
except in the ordinary course of business.
(ii) The inventory shall not at any time or times hereafter be
stored with a bailee, warehouseman or similar party
without the Bank's prior written consent and, in such
event, the Borrower will concurrently therewith cause any
such bailee, warehouseman or similar party to issue and
deliver to the Bank, in form acceptable to the Bank,
warehouse receipts in the Bank's name evidencing the
storage of inventory.
(iii) At any reasonable time and from time to time, allow Bank
to have the right, upon demand, to inspect and examine
inventory and to check and test the same as to quality,
quantity, value and condition and the Borrower agrees to
reimburse the Bank for the Bank's reasonable costs and
expenses in so doing.
6.21 Location and Maintenance of Equipment.:
(i) The Equipment shall at all times be in the Borrower's
physical possession, shall not be held for sale or lease,
and shall be kept only at the following location(s):
12515,12525,12533,and 00000 Xxxxxxx Xxx, Xxxxxxxxx,
Xxxxxxxxxx 00000; 0000 Xxxx Xx Xxxxxxx Xxxx., Xxxxxxxxx,
Xxxxxxxxxx 00000; 0000 Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxxxx,
Xxxxxxxxxxx 00000; 0000 X. Xxxxxxxx, Xxxx Xxxxx,
Xxxxxxxxx 00000; 000 Xxxxxxxx Xxxxxxxxx, Xxxxx, Xxx
Xxxxxx, 00000; 000 Xxxx Xxxxxx Xx., Xxxxxx, XX 00000 and
00000 Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000.
except in the ordinary course of subiness.
The Borrower shall not secrete, abandon or remove, or
permit the removal of, the Equipment, or any part
thereof, from the location(s) shown above or remove or
-23-
permit to be removed any accessories now or hereafter
placed upon the Equipment.
(ii) Upon the Bank's demand, the Borrower shall immediately
provide the Bank with a complete and accurate description
of the Equipment including, as applicable, the make,
model, identification number and serial number of each
item of Equipment. In addition, the Borrower shall
immediately notify the Bank of the acquisition of any new
or additional Equipment or the replacement of any
existing Equipment and shall supply the Bank with a
complete description of any such additional or
replacement Equipment.
(iii) The Borrower shall, at the Borrower's sole cost and
expense, keep and maintain the Equipment in a good state
of repair and shall not destroy, misuse, abuse, illegally
use or be negligent in the care of the Equipment or any
part thereof. The Borrower shall not remove, destroy,
obliterate, change, cover, paint, deface or alter the
name plates, serial numbers, labels or other
distinguishing numbers or identification marks placed
upon the Equipment or any part thereof by or on behalf of
the manufacturer, any dealer or rebuilder thereof, or the
Bank. The Borrower shall not be released from any
liability to the Bank hereunder because of any injury to
or loss or destruction of the Equipment. The Borrower
shall allow the Bank and its representatives free access
to and the right to inspect the Equipment at all times
during normal business hours and upon reasonable notice
and shall comply with the terms and conditions of any
leases covering the real property on which the Equipment
is located and any orders, ordinances, laws, regulations
or rules of any federal, state or municipal agency or
authority having jurisdiction of such real property or
the conduct of the business of the persons having control
or possession of the Equipment.
(iv) The Equipment is not now and shall not at any time
hereafter be so affixed to the real property on which it
is located as to become a fixture or a part thereof. The
Equipment is now and shall at all times hereafter be and
remain personal property of the Borrower.
SECTION
7
EVENTS OF DEFAULT
Any one or more of the following described events shall constitute an
event of default (an "Event of Default") under this Agreement:
7.1 Non-Payment: Any Borrower shall fail to pay the principal amount of any
Obligations when due or interest on the Obligations within 5 days of
when due.
7.2 Performance Under This Agreement: The Borrowers or any Guarantor shall
fail in any material respect to perform or observe any term, covenant or
agreement contained in this Agreement or in any document, instrument or
agreement relating to this Agreement or any other document or agreement
executed by the Borrowers or any Guarantor with or in favor of Bank and
any such failure shall continue unremedied for more than 30 days after
the occurrence thereof.
7.3 Representations and Warranties; Financial Statements: Any representation
or warranty made by the Borrower under or in connection with this
Agreement or any financial statement given by the Borrower or any
guarantor shall prove to have been incorrect in any material respect
when made or given or when deemed to have been made or given.
-24-
7.4 Other Agreements: If there is a default under any agreement to which
Borrower is a party with Bank or with a third party or parties resulting
in a right by the Bank or by such third party or parties, whether or not
exercised, to accelerate the maturity of any Indebtedness in an amount
in excess of $250,000.00.
7.5 Insolvency: The Borrower or any guarantor shall: (i) become insolvent or
be unable to pay its debts as they mature; (ii) make an assignment for
the benefit of creditors or to an agent authorized to liquidate any
substantial amount of its properties and assets; (iii) file a voluntary
petition in bankruptcy or seeking reorganization or to effect a plan or
other arrangement with creditors; (iv) file an answer admitting the
material allegations of an involuntary petition relating to bankruptcy
or reorganization or join in any such petition; (v) become or be
adjudicated a bankrupt; (vi) apply for or consent to the appointment of,
or consent that an order be made, appointing any receiver, custodian or
trustee, for itself or any of its properties, assets or businesses; or
(vii) in an involuntary proceeding, any receiver, custodian or trustee
shall have been appointed for all or substantial part of the Borrower's
or guarantor's properties, assets or businesses and shall not be
discharged within 30 days after the date of such appointment.
7.6 Execution: Any writ of execution or attachment or any judgment lien
shall be issued against any property of the Borrower in an amount in
excess of $250,000.00 and shall not be discharged or bonded against or
released within 30 days after the issuance or attachment of such writ or
lien.
7.7 Revocation or Limitation of Guaranty: Any guaranty shall be revoked or
limited or its enforceability or validity shall be contested by any
guarantor, by operation of law, legal proceeding or otherwise or any
guarantor who is a natural person shall die.
7.8 Suspension: The Borrower shall voluntarily suspend the transaction of
business or allow to be suspended, terminated, revoked or expired any
permit, license or approval of any governmental body necessary to
conduct the Borrower's business as now conducted.
7.10 Impairment of Collateral. There shall occur any injury or damage to all
or substantially all of the Collateral or all or substantially all of
the Collateral shall be lost, stolen or destroyed.
SECTION
8
REMEDIES ON DEFAULT
Upon the occurrence of any Event of Default, the Bank may, at its sole and
absolute election, without demand and only upon such notice as may be required
by law:
8.1 Acceleration: Declare any or all of the Borrower's indebtedness owing to
the Bank, whether under this Agreement or any other document, instrument
or agreement, immediately due and payable, whether or not otherwise due
and payable.
8.2 Cease Extending Credit: Cease making Advances or otherwise extending
credit to or for the account of the Borrower under this Agreement or
under any other agreement now existing or hereafter entered into between
the Borrower and the Bank.
-25-
8.3 Termination: Terminate this Agreement as to any future obligation of the
Bank without affecting the Borrower's obligations to the Bank or the
Bank's rights and remedies under this Agreement or under any other
document, instrument or agreement.
8.4 Letters of Credit: Require the Borrower to pay immediately to the Bank,
for application against drawings under any outstanding Letters of
Credit, the outstanding principal amount of any such Letters of Credit
which have not expired. Any portion of the amount so paid to the Bank
which is not applied to satisfy draws under any such Letters of Credit
or any other obligations of the Borrower to the Bank shall be repaid to
the Borrower without interest.
8.5 Acceptances: Require the Borrower to pay immediately to the Bank, for
application against outstanding Acceptances, the outstanding principal
amount of any such Acceptances which have not matured. Any portion of
the amount so paid to the Bank which is not applied to repayments on any
such matured Acceptances or any other obligations of the Borrower to the
Bank shall be repaid to the Borrower.
8.6 Close-Out and Liquidation: Close-out and liquidate each outstanding FX
Transaction so that each FX Transaction is canceled in accordance with
the following:
(i) Closing Value. The Bank shall calculate value of such
canceled FX Transaction by converting (1) in the case of
a FX Transaction whose Settlement Date is the same as or
later than the Close-Out Date, the amount of Foreign
Currency into US dollars at a rate of exchange at which
the Bank can buy or sell US dollars with or against the
Foreign Currency for delivery on the Settlement Date of
the relevant FX Transaction; or (2) in the case of a FX
Transaction whose Settlement Date precedes the Close-Out
Date, the amount of the Foreign Currency adjusted by
adding interest with respect thereto at the Variable Rate
from the Settlement Date to the Close-Out Date, into US
Dollars at a rate of exchange at which the Bank can buy
or sell US dollars with or against the Foreign Currency
for delivery on the Close-Out Date.
(ii) Closing Gain or Loss. (1) For a FX Transaction for which
the Bank agreed to purchase a Foreign Currency, the
amount by which the Closing Value exceeds the Notional
Value shall be a Closing Loss and the amount by which the
Closing Value is less than the Notional Value shall be a
Closing Gain; and (2) For a FX Transaction for which the
Bank agreed to sell a Foreign Currency, the amount by
which the Closing Value exceeds the Notional Value shall
be a Closing Gain and the amount by which the Closing
Value is less than the Notional Value shall be a Closing
Loss.
(iii) Net Present Value. The Closing Gain or Closing Loss for
each Settlement Date falling after the Close-out Date
will be discounted by the Bank to it net present value.
(iv) Payment. To the extent that the net amount of the
aggregate Closing Gains exceeds the Closing Losses, such
amount shall be payable by the Bank to the Borrower. To
the extent that the aggregate net amount of the Closing
Losses exceeds the Closing Gains, such amount shall be
payable by the Borrower to the Bank.
8.7 Protection of Security Interest: Make such payments and do such acts as
the Bank, in its sole judgment, considers necessary and reasonable to
protect its security interest or lien in the Collateral. The Borrower
hereby irrevocably authorizes the Bank to pay, purchase, contest or
compromise any encumbrance, lien or claim which the Bank, in its sole
judgment, deems to be prior or superior to its security interest.
Further, the Borrower hereby agrees to pay to the Bank, upon
-26-
demand therefor, all expenses and expenditures (including attorneys'
fees) incurred in connection with the foregoing.
8.8 Foreclosure: Enforce any security interest or lien given or provided for
under this Agreement or under any security agreement, mortgage, deed of
trust or other document, in such manner and such order, as to all or any
part of the properties subject to such security interest or lien, as the
Bank, in its sole judgment, deems to be necessary or appropriate and the
Borrower hereby waives any and all rights, obligations or defenses now
or hereafter established by law relating to the foregoing. In the
enforcement of its security interest or lien, the Bank is authorized to
enter upon the premises where any Collateral is located and take
possession of the Collateral or any part thereof, together with the
Borrower's records pertaining thereto, or the Bank may require the
Borrower to assemble the Collateral and records pertaining thereto and
make such Collateral and records available to the Bank at a place
designated by the Bank. The Bank may sell the Collateral or any portions
thereof, together with all additions, accessions and accessories
thereto, giving only such notices and following only such procedures as
are required by law, at either a public or private sale, or both, with
or without having the Collateral present at the time of the sale, which
sale shall be on such terms and conditions and conducted in such manner
as the Bank determines in its sole judgment to be commercially
reasonable. Any deficiency which exists after the disposition or
liquidation of the Collateral shall be a continuing liability of the
Borrower to the Bank and shall be immediately paid by the Borrower to
the Bank.
8.9 Non-Exclusivity of Remedies: Exercise one or more of the Bank's rights
set forth herein or seek such other rights or pursue such other remedies
as may be provided by law, in equity or in any other agreement now
existing or hereafter entered into between the Borrower and the Bank, or
otherwise.
8.10 Application of Proceeds: All amounts received by the Bank as proceeds
from the disposition or liquidation of the Collateral shall be applied
to the Borrower's indebtedness to the Bank as follows: first, to the
costs and expenses of collection, enforcement, protection and
preservation of the Bank's lien in the Collateral, including court costs
and reasonable attorneys' fees, whether or not suit is commenced by the
Bank; next, to those costs and expenses incurred by the Bank in
protecting, preserving, enforcing, collecting, liquidating, selling or
disposing of the Collateral; next, to the payment of accrued and unpaid
interest on all of the Obligations; next, to the payment of the
outstanding principal balance of the Obligations; and last, to the
payment of any other indebtedness owed by the Borrower to the Bank. Any
excess Collateral and excess proceeds existing after the disposition or
liquidation of the collateral will be returned or paid by the Bank to
the Borrower.
SECTION
9
MISCELLANEOUS
9.1 Amounts Payable on Demand: If the Borrower shall fail to pay on demand
any amount so payable under this Agreement, the Bank may, at its option
and without any obligation to do so and without waiving any default
occasioned by the Borrower having so failed to pay such amount, create
an Advance under this Agreement in an amount equal to the amount so
payable, which Advance shall thereafter bear interest as provided
hereunder.
9.2 Default Interest Rate: If an Event of Default, or an event which, with
notice or passage of time could become an Event of Default, has occurred
or is continuing, the Borrower shall pay to the Bank interest on any
Indebtedness or amount payable under this Agreement at a rate which is
3% in excess of the rate or rates then in effect under this Agreement.
-27-
9.3 Reliance and Further Assurances: Each warranty, representation,
covenant, obligation and agreement contained in this Agreement shall be
conclusively presumed to have been relied upon by the Bank regardless of
any investigation made or information possessed by the Bank and shall be
cumulative and in addition to any other warranties, representations,
covenants and agreements which the Borrower now or hereafter shall give,
or cause to be given, to the Bank. Borrower agrees to execute all
documents and instruments and to perform such acts as the Bank may
reasonably deem necessary to confirm and secure to the Bank all rights
and remedies conferred upon the Bank by this agreement and all other
documents related thereto.
9.4 Attorneys' Fees: Borrower shall pay to the Bank all costs and expenses,
including but not limited to reasonable attorneys fees, incurred by Bank
in connection with the enforcement, including any bankruptcy, appeal or
the enforcement of any judgment or any refinancing or restructuring of
this Agreement or any document, instrument or agreement executed with
respect to, evidencing or securing the indebtedness hereunder.
9.5 Notices: All notices, payments, requests, information and demands which
either party hereto may desire, or may be required to give or make to
the other party hereto, shall be given or made to such party by hand
delivery or through deposit in the United States mail, postage prepaid,
or by facsimile delivery, or to such other address as may be specified
from time to time in writing by either party to the other.
To the Borrower: To the Bank:
OSI SYSTEMS, INC. SANWA BANK CALIFORNIA
00000 Xxxxxxx Xxx. Rosemead Office (CBC)
Xxxxxxxxx, XX 00000 0000 Xxxx Xxxxxx Xxxxxxxxx
Xxxx: Xxxx Xxxxx Xxxxxxxx, XX 00000
FAX: ( ) - Attn: Xxxxx X. Xxxxxxx
FAX: (000) 000-0000
With a copy to:
Xxxxxxx, Xxxx Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.C.
Attn: Xxxxx X. Xxxxxx, Esq.
0000 Xxxxxxxx Xxxx., Xxxxxxxxx
Xxxxxxx Xxxxx, XX 00000
FAX (000) 000-0000
9.6 Waiver: Neither the failure nor delay by the Bank in exercising any
right hereunder or under any document, instrument or agreement mentioned
herein shall operate as a waiver thereof, nor shall any single or
partial exercise of any right hereunder or under any other document,
instrument or agreement mentioned herein preclude other or further
exercise thereof or the exercise of any other right; nor shall any
waiver of any right or default hereunder, or under any other document,
instrument or agreement mentioned herein, constitute a waiver of any
other right or default or constitute a waiver of any other default of
the same or any other term or provision.
9.7 Conflicting Provisions: To the extent the provisions contained in this
Agreement are inconsistent with those contained in any other document,
instrument or agreement executed pursuant hereto, the terms and
provisions contained herein shall control. Otherwise, such provisions
shall be considered cumulative.
9.8 Binding Effect; Assignment: This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Bank and their respective
successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the
prior written consent of the Bank. The Bank may sell, assign or grant
participation in all or any portion of its
-28-
rights and benefits hereunder. The Borrower agrees that, in connection
with any such sale, grant or assignment, the Bank may deliver to the
prospective buyer, participant or assignee financial statements and
other relevant information relating to the Borrower and any guarantor.
9.9 Jurisdiction: This Agreement, any notes issued hereunder, the rights of
the parties hereunder to and concerning the Collateral, and any
documents, instruments or agreements mentioned or referred to herein
shall be governed by and construed according to the laws of the State of
California without regard to conflict of law principles, to the
jurisdiction of whose courts the parties hereby submit.
9.10 Waiver of Jury Trial: THE BORROWER AND THE BANK EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF
THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER AND THE BANK
EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY
OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY
PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
9.11 Telephone Recording: The Borrower agrees that the Bank may
electronically record all telephone conversations between the Borrower
and the Bank with respect to any FX Transaction and that any such
recording may be submitted in evidence in any arbitration or other legal
proceeding. Such recording shall be deemed to be conclusive evidence as
to the terms of any FX Transaction in the event of a dispute.
9.12 Counterparts: This Agreement may be executed in any number of
counterparts and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
9.13 Headings: The headings herein set forth are solely for the purpose of
identification and have no legal significance.
9.14 Entire Agreement and Amendments: This Agreement and all documents,
instruments and agreements mentioned herein constitute the entire and
complete understanding of the parties with respect to the transactions
contemplated hereunder. All previous conversations, memoranda and
writings between the parties pertaining to the transactions contemplated
hereunder not incorporated or referenced in this Agreement or in such
documents, instruments and agreements are superseded hereby. This
Agreement may be amended only by an instrument in writing signed by the
Borrower and the Bank.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first hereinabove written.
-29-
BANK: BORROWER:
SANWA BANK CALIFORNIA OSI SYSTEMS, INC.
BY: /s/ Xxxxx X. Xxxxxxx BY: /s/ Xxxx Xxxxx
------------------------------------ -------------------------------
NAME: Xxxxx X. Xxxxxxx, NAME: Xxxx Xxxxx,
Vice President Chief Financial Officer
-30-
