EXHIBIT 10.6
LOAN AND SECURITY AGREEMENT
THIS AGREEMENT, dated as of December 24, 1997, is entered into between IXYS
CORPORATION, a corporation (hereinafter called "Borrower"), whose sole place of
business (if Borrower has only one), chief executive office (if Borrower has
more than one place of business), or residence (if a sole proprietorship) is at
the address set forth in Section 1.5 hereinbelow, and BANK OF THE WEST, a
California banking corporation whose address is set forth in Section 1.3.
The parties agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
definitions:
1.1 ACCOUNTS. The term "Account(s)" means all presently existing and
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hereafter arising accounts, contract rights, instruments, documents, chattel
paper, and all other forms of obligations owing to Borrower arising out of the
sale or lease of goods or the rendition of services by Borrower whether or not
earned by performance, and any and all credit insurance, guaranties and other
security therefor, as well as all merchandise returned to or reclaimed by
Borrower.
1.2 AGREEMENT. The term "this Agreement" means this Loan and Security
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Agreement, any concurrent or subsequent rider to this Loan and Security
Agreement and any extensions, supplements, amendments or modifications to this
Loan and Security Agreement and or to any such rider.
1.3 BANK. The term "Bank" shall mean and refer to BANK OF THE WEST, a
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California banking corporation, with a place of business located at 00 Xxxx Xxx
Xxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxx Xxx Business Banking Group, Xxx Xxxx,
Xxxxxxxxxx 00000.
1.4 BANK EXPENSES. The term "Bank Expenses" means all costs and expenses
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incurred by Bank in connection with this Agreement or the transactions
contemplated hereby, including, without limitation, all costs or expenses
required to be paid by Borrower under this Agreement which are paid or advanced
by Bank; taxes and insurance premiums of every nature and kind of Borrower paid
by Bank; filing, recording, publication, search fees, appraiser fees, auditor
fees, title insurance premiums paid or incurred by Bank in connection with
Bank's transactions with Borrower; costs and expenses incurred by Bank in
collecting or realizing upon the Collateral (with or without suit), to correct
any default or enforce any provision of this Agreement, or in gaining possession
of, maintaining, handling, preserving, storing, shipping, selling, preparing for
sale and/or advertising to sell the Collateral, whether or not a sale is
consummated; costs and expenses of suit incurred by Bank in enforcing or
defending this Agreement or any portion hereof; and reasonable attorneys' fees
and expenses incurred by Bank in advising, structuring, drafting, reviewing,
amending, terminating, enforcing, defending or concerning this Agreement, any
portion hereof, any agreement related hereto, or any of the transactions
contemplated hereby, whether or not suit is brought, and including, but not
limited to, any expenses incurred in relation to opposing or seeking to obtain
relief from any stay or restraining order prohibiting Bank from exercising its
rights as a secured creditor, foreclosing upon or disposing of Collateral, or
such related matters.
1.5 BORROWER. The term "Borrower" shall mean and refer to the party first
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named above, whose address is 0000 Xxxxxxx Xxxxxx, Xxxxx Xxxxx, XX 00000.
1.6 BORROWER'S BOOKS. The term "Borrower's Books" means all of Borrower's
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books and records including, but not limited to: minute books; ledgers, records
indicating, summarizing or evidencing Borrower's assets, liabilities, the
Collateral, the Obligations, and all information relating thereto; records
indicating, summarizing or evidencing Borrower's business operations or
financial condition; and all computer programs, disc or tape files, printouts,
runs, and other computer prepared information and the equipment containing such
information.
1.7 BORROWING BASE. The term "Borrowing Base" means the sum of: (a) eighty
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percent (80%) of the net amount of Eligible Accounts, after deducting therefrom
all payments, adjustments and credits applicable thereto, and (b) the amount of
the advances agreed to be made pursuant to any rider, amendment or modification
to this Agreement that may now or hereafter be entered into by Bank and
Borrower.
1.8 CODE. The term "the Code" means the California Uniform Commercial Code,
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and any and all terms used in this Agreement which are defined in the Code and
not specifically defined herein shall be construed and defined in accordance
with the meaning and definition ascribed to such terms under the Code.
1.9 COLLATERAL. The term "Collateral" means each and all of the following:
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the Accounts, the General Intangibles; the Negotiable Collateral; the Inventory;
the Equipment; any money or deposit accounts; any other assets of Borrower in
which Bank receives a security interest, or which hereafter come into the
possession, custody or control of Bank; and the Proceeds of any of the
foregoing, and Borrower's Books. Notwithstanding anything to the contrary
contained herein, Collateral shall not include any materials designated by Bank
as toxic or hazardous waste materials.
1.10 CREDIT. The term "Credit" means all Obligations in respect of amounts
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actually paid or advanced by Bank under this Agreement.
1.11 DAILY BALANCE. The term "Daily Balance" shall mean the amount
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determined by taking the amount of the Credit owed at the beginning of a given
day, adding any new Credit advanced to or incurred by Borrower on such date, and
subtracting any payments or collections which are deemed to be paid and are
applied by Bank in reduction of the Credit on that date under the provisions of
this Agreement.
1.12 ELIGIBLE ACCOUNTS. The term "Eligible Accounts" means and includes
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Eligible Domestic Accounts and Eligible Foreign Accounts; provided, however,
that in no event shall the amount of Eligible Foreign Accounts exceed the lesser
of One Million Dollars ($1,000,000.00) or twenty-five percent of the Borrowing
Base.
1.12.1 ELIGIBLE DOMESTIC ACCOUNTS. The term "Eligible Domestic
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Accounts" means and includes those accounts of Borrower which are due and
payable within thirty (30) days (or less) from the date of invoice, have been
validly assigned to Bank and strictly comply with all of Borrower's warranties
and representations to Bank; but Eligible Domestic Accounts shall not include
the following: (a) accounts with respect to which the account debtor is an
officer, employee, partner, joint venturer or agent of Borrower; (b) accounts
with respect to which goods are placed on consignment, guarantied sale or other
terms by reason of which the payment by the account debtor may be conditional;
(c) accounts with respect to which the account debtor is not a resident of the
United States of America; (d) accounts with respect to which the account debtor
is the United States of America or any department, agency or instrumentality
thereof; (e) accounts with respect to which the account debtor is a subsidiary
of, related to, affiliated or has common shareholders, officers or directors
with Borrower; (f) accounts with respect to which Borrower is or may become
liable to the account debtor for goods sold or services rendered by the account
debtor to Borrower; (g) accounts not paid by an account debtor within ninety
(90) days from the date of the invoice; (h) accounts with respect to which
account debtors dispute liability or make any claim, or have any defense,
crossclaim, counterclaim or offset; (i) accounts with respect to which any
Insolvency Proceeding is filed by or against the account debtor, or if an
account debtor becomes insolvent, fails or goes out of business; (j) all
accounts owed by an account debtor when fifty percent (50%) or more of all
outstanding accounts owed by the account debtor to Borrower have not been paid
within ninety (90) days after the date of invoice; and (k) accounts owed by any
single account debtor which exceed twenty percent (20%) of all of the Eligible
Domestic Accounts.
1.12.2 ELIGIBLE FOREIGN ACCOUNTS. The term "Eligible Foreign Accounts"
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means and includes those accounts of Borrower which have been pre-approved by
Bank in writing, are due and payable within thirty (30) days, or less, from the
date of invoice, have been validly assigned to Bank, are due from account
debtors that are not residents of the United States of America, are insured or
guaranteed by insurers or guarantors satisfactory to Bank, and strictly comply
with all of Borrower's warranties and representations to Bank; but Eligible
Foreign Accounts shall not include the following: (a) accounts with respect to
which the account debtor is an officer, employee, partner, joint venturer or
agent of Borrower; (b) accounts with respect to which goods are placed on
consignment, guarantied sale or other terms by reason of which the payment by
the account debtor may be conditional; (c) accounts with respect to which the
account debtor is a subsidiary of, related to, affiliated or has common
shareholders, officers or directors with Borrower; (d) accounts with respect to
which Borrower is or may become liable to the account debtor for goods sold or
services rendered by the account debtor to Borrower; (e) accounts not paid by an
account debtor within ninety (90) days from the date of the invoice; (f)
accounts with respect to which account debtors dispute liability, or make any
claim, or have any defense, crossclaim, counterclaim or offset; (g) accounts
with respect to which any Insolvency Proceeding is filed by or against the
account debtor, or if an account debtor becomes insolvent, fails or goes out of
business; (h) all accounts owed by an account debtor when fifty percent (50%) or
more of all outstanding accounts owed by the account debtor to Borrower have not
been paid within ninety (90) days after the date of invoice; and (i) accounts
owed by any single account debtor which exceed twenty percent (20%)of all of the
Eligible Foreign Accounts.
1.13 EQUIPMENT. The term "Equipment" means all of Borrower's present and
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hereafter acquired equipment, wherever located, including without limitation,
machinery, machine tools, motors, controls, attachments, parts, tools, and
accessories incidental thereto, computer and office equipment, furniture,
furnishings, fixtures, motor vehicles, trailers and rolling stock; and all
substitutions, replacements, accessories, additions, attachments, improvements,
accessions, Proceeds and products of the foregoing.
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1.14 EVENT OF DEFAULT. The term "Event of Default" shall have the meaning
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set forth in Article 11 of this Agreement.
1.15 GENERAL INTANGIBLES. The term "General Intangibles" means and includes
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all of Borrower's present and future general intangibles and other personal
property (including, without limitation, any and all choses or things in action,
goodwill, patents, copyrights, trade names, trademarks, trade secrets,
blueprints, drawings, purchase orders, computer programs, software, computer
discs, computer tapes, literature, reports, catalogs, deposit accounts and tax
refunds) other than goods and accounts.
1.16 INSOLVENCY PROCEEDING. The term "Insolvency Proceeding" means any
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proceeding commenced by or against any person or entity, including Borrower,
under any provision of the federal Bankruptcy Code, as amended, or under any
other bankruptcy or insolvency law, including, but not limited to, assignments
for the benefit of creditors, formal or informal moratoriums, compositions or
extensions with some or all creditors.
1.17 INVENTORY. The term "Inventory" means all present and hereafter
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acquired inventory in which Borrower has any interest, wherever located,
including, but not limited to, goods held by Borrower for sale or lease or to be
furnished under a contract of service, new or raw product and materials,
components, work-in-process, finished goods, labels and other package dress,
advertising material and packing and shipping materials, any documents of title
representing any of the above, and any equipment, fixtures, or other property
used in the storing, moving, preserving, identifying, accounting for and
shipping or preparing for the shipping of Inventory.
1.18 JUDICIAL OFFICER OR ASSIGNEE. The term "Judicial Officer or Assignee"
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means any trustee, receiver, controller, custodian, assignee for the benefit of
creditors or any other person or entity having powers or duties like or similar
to the powers and duties of a trustee, receiver, controller, custodian or
assignee for the benefit of creditors.
1.19 NEGOTIABLE COLLATERAL. The term "Negotiable Collateral" shall have the
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meaning set forth in Section 5.1 of this Agreement.
1.20 OBLIGATIONS. The term "Obligations" means any and all obligations,
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loans, advances, overdrafts, debts, liabilities (including, without limitation,
any and all amounts charged to Borrower's account pursuant to any agreement
authorizing Bank to charge Borrower's account), lease and other contractual
obligations, guaranties, covenants, promises and duties owing by Borrower to
Bank of any kind and description (whether advanced pursuant to or evidenced by
this Agreement; by any note or other instrument; or by any other agreement
between Bank and Borrower and whether or not for the payment of money), whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including, without limitation, any debt, liability or
obligation owing from Borrower to others which Bank may have obtained by
assignment, participation, operation of law, or otherwise, and further
including, without limitation, all interest not paid when due and all Bank
Expenses.
1.21 OVER ADVANCE. The term "Over Advance" shall have the meaning set forth
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in Section 2.1 of this Agreement.
1.22 OVERLINE. The term "Overline" shall have the meaning set forth in
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section 3.1 of this Agreement.
1.23 PRIME RATE. The term "Prime Rate" means the variable rate of interest,
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per annum, most recently announced by Bank at its headquarters office in San
Francisco, California as its "prime rate", with the understanding the Bank's
"prime rate" is only one of Bank's base rates and serves as a basis upon which
effective rates of interest are calculated for loans making reference thereto
and may not be the lowest of Bank's base rates.
1.24 PROCEEDS. The term "Proceeds" means whatever is received upon the
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sale, lease, exchange, collection or other disposition of Collateral or
proceeds, including, without limitation, proceeds of insurance covering
Collateral, tax refunds, and any and all Accounts, General Intangibles,
Negotiable Collateral, Inventory, Equipment, money, deposit accounts, goods, or
other tangible and intangible property of Borrower resulting from the sale or
other disposition of the Collateral, and the proceeds thereof.
1.25 RATE. The term "Rate" shall have the meaning set forth in Section 2.3
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of this Agreement.
1.26 TANGIBLE NET WORTH. The term "Tangible Net Worth" means net worth as
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determined in accordance with generally accepted accounting principles
consistently applied, increased by debt subordinated to Bank and decreased by
the following: patents, licenses, goodwill, capitalized research and development
costs, subscription lists, organization expenses and monies due from affiliates
(including officers, directors, shareholders, parents, partners, joint
venturers, subsidiaries and commonly held companies). For the purpose of this
Agreement, the term "debt subordinated to Bank" shall mean any loans, debts, or
other obligations ("Third Party Debts") owing by Borrower to any third parties
(including, without limitation, any shareholders or affiliates of Borrower)
and/or security interests ("Third Party Security Interests") in the assets of
Borrower (including, without limitation, the Collateral) in favor of any third
parties (including, without limitation, any shareholders or affiliates of
Borrower), which has been subordinated to Borrower's Obligations to Bank under
this Agreement and to Bank's security interest in the Collateral. Such
subordination shall be on terms and conditions acceptable to Bank in its sole
and absolute discretion. With respect to Third Party Debt, such subordination
shall include (at a minimum) an agreement by the holder of the Third Party Debt
to suspend payments by Borrower of any principal, interest or other amount under
the Third Party Debt until this Agreement has been terminated and all of
Borrower's Obligations to Bank have been paid off and satisfied. With respect to
Third Party Security Interests, such subordination shall include (at a minimum)
an agreement by the beneficiary of the Third Party Security Interest to (i)
subordinate the priority of its lien to the lien in favor of Bank and (ii)
refrain from exercising any rights or remedies with respect to the property
encumbered and hypothecated by such Third Party Security Interest until all
Obligations owing by Borrower to Bank have been paid, performed and satisfied.
1.27 ACCOUNTING TERMS. All accounting terms and computations shall be based
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upon generally accepted accounting principles consistently applied.
2. LOANS AND TERMS OF PAYMENT
2.1 REVOLVING LOANS. UPON the request of Borrower, made at any time and
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from time to time during the term hereof, and so long as no Event of Default has
occurred, Bank shall lend to Borrower an amount equal to the Borrowing Base;
provided, however, that in no event shall Bank be obligated to make advances to
Borrower under this Section 2.1 whenever the Daily Balance, when added to the
total of Borrower's Obligations in respect of all letters of credit outstanding
under Section 3.1 of this Agreement, exceeds, at any time, either the Borrowing
Base or the sum of Five Million Dollars ($5,000,000.00).
All loans made pursuant to this Section 2.1 shall be added to and
deemed part of the Credit when made. If, at any time and for any reason, the
Daily Balance exceeds the amount of the loans and advances for which Borrower is
eligible based upon the above limitations, or if the advances made pursuant to
any rider to this Agreement exceed the percentage or dollar limitations
contained in such rider (an "Over Advance"), then Borrower shall immediately pay
to Bank, in cash, the amount of such Over Advance.
2.2 NOTICE AND METHOD OF BORROWING. Bank is hereby authorized to make the
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loans and the extensions of credit provided for in this Agreement based upon
telephonic or other instructions received from anyone purporting to be an
authorized representative of Borrower or, at the discretion of Bank, if said
loans are necessary to satisfy any Obligation of Borrower to Bank. Bank shall
have no duty to make inquiry or verify the authority of any such party and
Borrower shall hold Bank harmless from any damages, claims, or liability by
reason of Bank's honor of, or failure to honor, any such instructions. Bank
reserves the right to withhold advancing any loan and/or issuing any letter of
credit under this Agreement pending: (a) presentation by Borrower to Bank of a
certificate of borrowing base, in form and content satisfactory to Bank, and the
verification of the contents thereof by Bank; and (b) receipt of such additional
information as Bank may, from time to time, request. Bank reserves the right to
recompute the Eligible Accounts, and any other elements of the base upon which
Borrower computes the loans and letters of credit to which Borrower is eligible,
based upon such information and verification as Bank, in its discretion, deems
relevant.
2.3 REVOLVING LOANS INTEREST RATE. Except as hereinbelow provided, all
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Credit shall bear interest, on the Daily Balance owing, at a per annum rate
equal to the Prime Rate (the "Rate"). The Rate as of the date of this Agreement
is eight and one-half percent (8.50%) per annum. In the event that the Prime
Rate announced is, from time to time hereafter, changed, adjustment in the rate
of interest payable by Borrower shall be made on the effective date of the
change in the Prime Rate. The rate of interest, as adjusted, shall apply to all
Credit until the Prime Rate is adjusted again. All interest chargeable under
this Agreement on a per annum basis shall be computed on a basis on a 360-day
year for actual days elapsed.
Interest payable by Borrower under this Section 2.3 shall be due and
payable on the fifth (5th) day of each calendar month during the term of this
Agreement, and Bank may, at its option, elect to treat any due but unpaid
interest and Bank Expenses as advances under the Credit, and all such advances
shall bear interest on the daily balance thereof, at a per annum rate applicable
to the Credit under the terms of this Agreement. The receipt of any check or
other item of payment by Bank shall not be considered a payment until such check
or other item of payment is honored when presented for payment, in which event,
said check or other item of payment shall be deemed to have been paid to Bank in
accordance with Bank's rules and regulations relating to credits to deposit
accounts or, in Bank's discretion, two (2) calendar days after the date Bank
actually receives possession of such check or other item of payment.
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2.4 OVER ADVANCE INTEREST RATE. Without affecting Borrower's obligations
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to repay immediately any Over Advance in accordance with Section 2. I hereof,
all Over Advances shall bear additional interest on the amount thereof at the
rate of two percent (2%) per month payable from the date incurred and for each
month thereafter, until repaid in full.
2.5 DEFAULT INTEREST RATE. Notwithstanding anything to the contrary
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contained in Article 2 of this Agreement, the Credit shall bear interest, from
and after any Event of Default and without constituting a waiver of any such
Event of Default, on the Daily Balance owing, at a per annum rate five (5)
percentage points above the Rate.
2.6 ACCOUNT STATED. Bank shall render monthly statements of the Credit
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owing by Borrower to Bank, including statements of all principal, interest and
Bank Expenses owing, and such statement shall be conclusively presumed to be
correct and accurate and constitute an account stated between Borrower and Bank
unless, within thirty (30) days after receipt thereof by Borrower, Borrower
shall deliver to Bank, by registered or certified mail, at Bank's place of
business indicated above, written objection thereto specifying the error or
errors, if any, contained in any such statement.
2.7 FEES. Once every twelve (12) months during the term of this Agreement,
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Borrower shall pay to Bank, on demand, an annual fee in an amount equal to
twenty-five one-hundredths of one percent (0.25 %) of the maximum dollar
limitation on the credit available to Borrower specified in the first paragraph
of Section 2.1 above, which fee shall represent an unconditional and non-
refundable payment to Bank in consideration of Bank's agreement to enter into
this Agreement.
3. COMMERCIAL LETTER OF CREDIT FACILITY
3.1 REVOLVING LETTERS OF CREDIT. Upon the request of Borrower, made at any
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time and from time to time during the term hereof, and so long as no Event of
Default has occurred, Bank, on a revolving basis, will, subject to the
limitations set forth below, issue commercial letters of credit for Borrower's
account to facilitate the importation of merchandise by Borrower for resale by
Borrower and issue standby letters of credit for Borrower's account for purposes
acceptable to Bank; provided, however, that in no event shall Bank be obligated
to issue any letters of credit under this Section 3.1, whenever the total of
Borrower's Obligations in respect of all letters of credit outstanding under
this Section 3.1, when added to the Daily Balance, exceeds, at any time, either
the Borrowing Base or the sum of Five Million Dollars ($5,000,000.00); provided
further, however, that the total of Borrower's Obligations in respect to all
letters of credit outstanding may not exceed at any one time Three Million Five
Hundred Thousand Dollars ($3,500,000.00).
If, at any time and for any reason, the total of Borrower's
Obligations in respect to all letters of credit outstanding under this Section
3.1, when added to the Daily Balance, exceeds either the Borrowing Base or the
sum of Five Million Dollars ($5,000,000.00) (an "Overline") or if, at any time
and for any reason, the total of Borrower's Obligations in respect to all
commercial and standby letters of credit outstanding hereunder exceeds Three
Million Five Hundred Thousand Dollars ($3,500,000.00)(an "L/C Overline"), then
Borrower shall immediately pay to Bank, in cash, the amount of such Overline
and/or L/C Overline. Bank may, in its sole discretion, elect to treat an L/C
Overline as an advance under the Credit. Notwithstanding the foregoing, Borrower
shall be able to obtain standby and commercial letters of credit in excess of
the Three Million Five Hundred Thousand Dollar ($3,500,000.00) sublimit set
forth above if and only if Borrower delivers to Bank cash or some other
collateral approved by Bank in its sole and absolute discretion in the amount of
the requested letter of credit (the "L/C Overline Collateral"). Such L/C
Overline Collateral shall constitute a part of the Collateral, shall be
encumbered by the security interest granted in Section 5.1 of this Agreement,
and shall secure all of Borrower's Obligations (and not just those under the L/C
Overline). Borrower shall execute and deliver, or cause to be executed and
delivered, to Bank, concurrent with Borrower's request for an L/C Overline, and
at any time or times hereafter at the request of Bank, all financing statements,
continuation financing statements, fixture filings, letters of authority and all
other documents that Bank may reasonably request, in form satisfactory to Bank,
to perfect and maintain perfected Bank's security interests in the L/C Overline
Collateral and Bank shall have all rights in connection therewith as are
specified elsewhere in this Agreement (including, without limitation, those
under Section 5.2 of this Agreement).
3.2 ADVANCES RE: LETTERS OF CREDIT. All amounts actually paid or advanced
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by Bank to or for the benefit of Borrower under or in respect to letters of
credit issued under Section 3.1 above shall, when made, constitute advances
under the Credit and shall be payable and bear interest as provided in this
Agreement, and shall otherwise be subject to all terms and conditions hereof,
3.3 APPLICATION AND AGREEMENT RE: COMMERCIAL LETTERS OF CREDIT. Each
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commercial letter of credit issued under Section 3.1 above shall be issued
pursuant to the terms and conditions hereof and of a Bank standard form
Application For Commercial Letter of Credit and Agreement (Commercial Letter of
Credit) executed by Borrower and shall:
(a) Expire on or before one hundred eighty (180) days after the date
such letter of credit is issued;
(b) Require drafts payable at sight [or up to thirty (30) days after
sight]; and
(c) Be otherwise in form and substance and in favor of beneficiaries
satisfactory to Bank.
Borrower shall pay Bank issuance fees, negotiation fees and such other
fees at the times and in the amounts Bank advises Borrower from time to time as
being applicable to commercial letters of credit. In the event of any
inconsistency between the terms of this Agreement and the terms of such
Application For Commercial Letter of Credit and Agreement (Commercial Letter of
Credit), the terms of such Application for Commercial Letter of Credit and
Agreement (Commercial Letter of Credit) shall control.
3.4 APPLICATION AND AGREEMENT RE: STANDBY LETTERS OF CREDIT. Each standby
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letter of credit issued under Section 3.1 above shall be issued pursuant to the
terms and conditions hereof and of a Bank standard form Application For Standby
Letter of Credit and Agreement (Standby Letter of Credit) executed by Borrower
and shall:
(a) Expire on or before one hundred eighty (180) days after the date
such standby letter of credit is issued; and
(b) Be otherwise in form and substance and in favor of beneficiaries
satisfactory to Bank.
Borrower shall pay to Bank issuance fees and other fees at the times
and in the amounts Bank advises Borrower from time to time as being applicable
to standby letters of credit. In the event of any inconsistency between the
terms of this Agreement and the terms of such Application For Standby Letter of
Credit and Agreement (Standby Letter of Credit), the terms of such Application
For Standby Letter of Credit and Agreement (Standby Letter of Credit) shall
control.
3.5 OBLIGATIONS RE: LETTERS OF CREDIT. All advances made, letters of
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credit issued and other financial accommodations extended by Bank to or for the
account or benefit of Borrower under Article 3 of this Agreement shall be added
to and deemed part of the Obligations when made, issued, created and/or
extended.
4. TERM
4.1 TERM AND TERMINATION. This Agreement shall commence on the date
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hereof, shall (with respect to the revolving credit facility under Article 2 of
this Agreement, the letter of credit Facility under Article 3 of this Agreement,
and the F/X Subfacility under Article 14 of this Agreement) remain in full force
and effect until August 5, 1990 and shall continue on a month-to-month basis
thereafter until terminated by either party by thirty (30) days written notice.
With respect to Equipment Purchase Line A. the term of this Agreement shall be
set forth in Article 15. Notice of such termination shall be effectuated by the
mailing of a registered or certified letter of notice. Notwithstanding the
foregoing, upon the occurrence of an Event of Default, Bank may terminate its
obligations under this Agreement without notice.
On the date of termination, all Obligations owed by Borrower to Bank
under that portion of the total facility hereunder with respect to which
Borrower's rights have expired or terminated shall become immediately due and
payable without notice or demand and shall be repaid to Bank in cash or by a
wire transfer of immediately available funds. Notwithstanding termination, until
all Obligations have been fully repaid and permitted, Bank shall retain its
security interest in all existing Collateral and Collateral arising thereafter,
and Borrower shall continue to perform all Obligations.
4.2 TERMINATION OF SECURITY INTEREST. After termination and when Bank has
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received payment and performance in full of all Obligations, and upon the
execution by Borrower and delivery to Bank of a general release in favor of
Bank, Bank shall execute a termination of all security agreements and security
interests given by Borrower to Bank.
5. CREATION OF SECURITY INTEREST
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5.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to Bank a
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continuing security interest in the Collateral in order to secure prompt
repayment and performance of all Obligations. Bank's security interest in the
Collateral shall attach to the Collateral without further act on the part of
Bank or Borrower. In the event that any Collateral is evidenced by or consists
of a letter of credit, advice of credit, instrument, money, document, negotiable
document, chattel paper or any similar property (collectively the "Negotiable
Collateral"), Borrower shall, immediately upon receipt thereof, endorse and
assign such Negotiable Collateral over to Bank, and deliver actual physical
possession of the Negotiable Collateral to Bank.
5.2 SECURITY DOCUMENTS; ATTORNEY-IN-FACT. Borrower shall execute and
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deliver, or cause to be executed and delivered, to Bank, concurrent with
Borrower's execution of this Agreement, and at any time or times hereafter at
the request of Bank, all financing statements, continuation financing
statements, fixture filings, landlord waivers, security agreements, chattel
mortgages, assignments, deeds of trust, assignments of leases, endorsements of
certificates of title, affidavits, reports, notices, schedules of Accounts,
schedules of Inventory, and letters of authority and all other documents that
Bank may reasonably request, in form satisfactory to Bank, to perfect and
maintain perfected Bank's security interests in the Collateral and in order to
fully consummate all of the transactions contemplated trader this Agreement.
Borrower hereby irrevocably makes, constitutes and appoints Bank (and any of
Bank's officers, employees or agents designated by Bank to act on Bank's behalf)
as Borrower's true and lawful attorney with power to sign the name of Borrower
on any of the above-described documents or on any other similar documents which
need to be executed, recorded, and/or filed in order to perfect or continue
perfected Bank's security interest in the Collateral. In addition, following the
occurrence of an Event of Default, Borrower hereby appoints Bank (and any of
Bank's officers, employees, or agents designated by Bank) as Borrower's
attorney, with power: to endorse Borrower's name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security that may
come into Bank's possession; to sign Borrower's name on any invoice or xxxx of
lading relating to any Accounts, on drafts against account debtors, on schedules
and assignments of Accounts, on verifications of accounts, and on notices to
account debtors; to establish a lock box arrangement and/or to notify the post
office authorities to change the address for delivery of Borrower's mail to an
address designated by Bank, to receive and open all mail addressed to Borrower,
and to retain all mail relating to the Collateral and forward all other mail to
Borrower; to send, whether in writing or by telephone, requests for verification
of Accounts; and to do all things necessary to carry out this Agreement.
Borrower ratifies and approves all acts of the attorney, and neither Bank nor
its attorney will be liable for any acts or omissions or for any error of
judgment or mistake of fact or law made in good faith. The appointment of Bank
as Borrower's attorney, and each and every one of Bank's rights and powers,
being coupled with an interest, are irrevocable so long as any Obligations
remain unpaid or unperformed.
To protect or perfect any security interest granted to Bank hereunder,
Bank may, in its sole discretion, discharge any lien or encumbrance or bond the
same, pay any insurance, fees or charges, maintain guards, warehousemen or any
personnel to protect the Collateral, pay any service bureau or obtain any
records, and all costs for the same shall be Bank Expenses.
6. CONDITIONS PRECEDENT
As conditions precedent to the making of the loans and the extension
of the financial accommodations hereunder, Borrower shall execute and deliver or
cause to be executed and delivered, to Bank, in form and substance satisfactory
to Bank and its counsel, each of the following:
6.1 AGREEMENT. This Agreement, together with supplemental security
---------
agreements, chattel mortgages, riders and other documents required by Bank;
6.2 FINANCING STATEMENT. Financing statements (Form UCC-1) in form
-------------------
acceptable for filing and recording with the appropriate governmental
authorities;
6.3 RESOLUTIONS. If Borrower is a corporation, certified extracts from the
-----------
minutes of the meetings of Borrower's board of directors, authorizing the
borrowings and the granting of the security interests provided for herein and
authorizing specific officers to execute and deliver the agreements provided for
herein;
6.4 CERTIFICATES. If Borrower is a corporation, a certificate of good
------------
standing showing that Borrower is in good standing under the laws of the state
of its incorporation, and certificates indicating that Borrower has qualified to
transact business and is in good standing in any other state in which Borrower
conducts business;
6.5 PARTNERSHIP AGREEMENT. if Borrower is a partnership, then a copy of
---------------------
Borrower's partnership agreement certified by each general partner of Borrower;
6.6 SEARCH RESULTS. UCC, tax lien, litigation, judgment and other
--------------
searches, title reports, fictitious business name statement filings, insurance
certificates, notices or other similar documents which Bank may require and in
such form as Bank may require, in order to reflect Bank's first priority
security interest in the Collateral and in order to fully consummate all of the
transactions contemplated under this Agreement;
6.7 WAIVERS. Waivers executed by landlords and mortgagees of any real
-------
property on which the Collateral is located;
6.8 OFFICERS' WARRANTIES AND REPRESENTATIONS. An executed form warranties
----------------------------------------
and representations of officers; and
6.9 INSURANCE. Evidence satisfactory to Bank that Borrower has obtained
---------
insurance policies or binders, in such amounts as may be acceptable to Bank,
respecting the tangible assets of Borrower which are to serve as Collateral and
naming Bank as a loss payee on a 438-BFU endorsement and/or additional insured
(at Bank's discretion). At Bank's option Borrower shall also provide evidence of
sufficient insurance coverage respecting worker's compensation liability,
products liability claims and other liability claims and naming Bank as an
additional insured in connection therewith
6.10 AUDITOR'S CERTIFICATION. A letter, certification or other written
-----------------------
approval from any independent certified public accountant or other independent
third party auditor authorizing Bank to rely on (and acknowledging Bank's actual
reliance upon) all audits, income statements, balance sheets, profit and loss
statements and other financial statements and reports prepared by such
accountant or auditor and in Bank's possession.
6.11 SECURED LENDING AUDIT. If requested by Bank, an audit, inspection or
---------------------
other report prepared by auditors or consultants acceptable to Bank confirming
(i) the location, quantity, quality, and value of all equipment and inventory,
(ii) the accuracy, authenticity, amount, aging, payment history, obligors, and
status of all Accounts, and (iii) such other attributes, locations, quantities,
qualities, and values of the Collateral as Bank deems necessary or appropriate.
7. MANAGEMENT AND STATUS OF COLLATERAL
7.1 MANAGEMENT OF ACCOUNTS.
----------------------
(a) ASSIGNMENTS OF ACCOUNTS. From time to time, and at Bank's request,
-----------------------
Borrower shall provide Bank with schedules describing all Accounts created or
acquired by Borrower and shall execute and deliver written assignments of such
Accounts to Bank, whether or not Bank makes advances against such Accounts;
provided, however, that Borrower's failure to execute and deliver such schedules
and/or assignments shall not impair or limit Bank's security interest and other
rights in and to the Accounts. At Bank's request, Borrower shall furnish Bank
with copies of Borrower's sales journals or invoices, and, if requested by Bank,
copies of customers' purchase orders, or the equivalent, delivery receipts,
shipping instructions, bills of lading and other evidence of shipping
arrangements, and Borrower warrants the genuineness thereof. Absent a request,
Borrower shall maintain all such documents as custodian for Bank.
(b) COLLECTION OF ACCOUNTS. At any time (with or without the
----------------------
occurrence or an Event of Default), Bank or Bank's designee may notify customers
or account debtors of Borrower that the Accounts have been assigned to Bank and
that Bank has a security interest therein. Following the occurrence of an Event
of Default, Bank (or its designee) may also notify all account debtors to pay
their Accounts directly to Bank, may take whatever other steps Bank deems
necessary to collect the Accounts directly, may exercise any other remedies
provided or authorized by this Agreement, and may charge the collection costs
and expenses to Borrower as part of the Obligations. Unless and until an Event
of Default occurs hereunder, Borrower may collect all Accounts directly. Any
Accounts directly collected by Borrower shall be received in trust by Borrower
as Bank's trustee and, immediately upon the occurrence of any Event of Default,
Borrower shall deliver said payments to Bank in their original form as received
from the account debtor and, if any sale of Collateral is made for cash,
Borrower shall concurrently deliver such cash to Bank. Bank shall be entitled,
in its discretion, to apply all payments and collections to the Obligations.
(c) WARRANTIES AND DISPUTES RE: ACCOUNTS. If any warranty, promise or
------------------------------------
covenant is breached as to any account, or if any part of the amount of the
accounts owing by an account debtor shall be other than Eligible Accounts, then
Bank may deem ineligible any or all accounts owing by that account debtor, and
reduce the amount of Eligible Accounts by the amount thereof. Bank shall retain
its security interest in all Accounts, whether they are Eligible Accounts or
not. until all Obligations have been fully repaid and performed.
(d) RETURNS AND ALLOWANCES. Returns and allowances, if any, as between
----------------------
Borrower and Borrower's customers, will be on the same basis and in accordance
with the usual customary practices of Borrower, as they exist at this time.
Immediately upon written request by Bank, and continuing thereafter until such
time as Bank may indicate,
4
(a) any goods which are returned by an account debtor, or any account debtor
which Bank may indicate, or which is otherwise recovered by Borrower from such
account debtor shall be set aside and marked with Bank's name, and Bank shall
retain a security interest therein, (b) Borrower shall promptly notify Bank of
all prior returns and recoveries by such account debtor to the extent indicated
by Bank, and all such returns and recoveries thereafter, (c) Borrower shall
promptly deliver any such returned or recovered goods to Bank to the extent Bank
shall indicate, and (d) Borrower shall promptly notify Bank of any dispute or
claim which is then pending and shall not settle or adjust any such dispute or
claim without Bank's prior written approval. After an Event of Default, no
discount, credit or allowance shall be granted by Borrower to any account debtor
and no return of merchandise shall be accepted by Borrower without Bank's
written consent. Bank may, after an Event of Default, settle or adjust disputes
and claims directly with account debtors for amounts and upon terms which Bank
considers advisable and, in such cases, Bank will credit Borrower's account with
only the net amounts received by Bank in payment of such disputed Accounts after
deducting all Bank Expenses incurred or expended in connection therewith.
7.2 MANAGEMENT OF EQUIPMENT.
-----------------------
(a) EQUIPMENT RECORDS. Borrower shall maintain a comprehensive and up-
-----------------
to-date list of all Equipment, showing the date of purchase, any identifying
descriptions and numbers, and records of maintenance. Borrower shall deliver a
copy of such list to Bank upon execution of this Agreement, and at such time or
times thereafter as Bank may request.
(b) CONDITION OF EQUIPMENT. Borrower shall keep and maintain the
----------------------
Equipment in good operating condition and repair and make all necessary
replacements thereto so that the value and operating efficiency thereof shall at
all times be maintained and preserved. Borrower shall not permit any items of
Equipment to become a fixture to real estate or an accession to other property,
and the Equipment is now and shall at all times remain and be personal property.
(c) CERTIFICATE OF TITLE. Upon Bank's request, Borrower shall
--------------------
immediately deliver to Bank, properly endorsed, any and all evidences of
ownership, certificates of title or applications for titles to any or all items
of Equipment.
(d) INSPECTION OF EQUIPMENT. Bank shall have the right, now and at all
-----------------------
times hereafter, during Borrower's usual business hours, or at the regular
business hours of any third party in possession of Equipment, to inspect and
examine the Equipment and to check and test the same as to quality, quantity,
value and condition, and Borrower agrees to reimburse Bank for its reasonable
costs and expenses in so doing; provided, however, that prior to the occurrence
of an Event of Default Borrower shall be obligated to reimburse for more than
one (1) such inspection and examination during any twelve (12) month period.
7.3 MANAGEMENT OF INVENTORY.
-----------------------
(a) INVENTORY RECORDS. Borrower does now keep and hereafter at all
-----------------
times shall keep correct and accurate records itemizing and describing the
kind, type, quality and quantity of the Inventory, Borrower's cost therefor
and selling price thereof, and the daily withdrawals therefrom and additions
thereto, all of which records shall be available upon demand to any of Bank's
officers, agents and employees for inspection and copying.
(b) INVENTORY DESIGNATIONS. Borrower, immediately upon demand by Bank
----------------------
therefor, shall now and from time to time hereafter, at such intervals as are
requested by Bank, deliver to Bank designations of Inventory specifying
Borrower's cost of Inventory, the wholesale market value thereof and such other
matters and information relating to the Inventory as Bank may request.
(c) STORAGE OF INVENTORY. Inventory is not now and shall not at any
----------------
time or times hereafter be located or stored with a bailee, warehouseman or
other third party without Bank's prior written consent, and, in such event,
Borrower will concurrently therewith cause any such bailee, warehouseman or
other third party to issue and deliver to Bank, in a form acceptable to Bank,
warehouse receipts in Bank's name evidencing the storage of Inventory or other
evidence of Bank's prior rights in the Inventory. In any event, Borrower shall
instruct any third party to hold all such Inventory for Bank's account subject
to Bank's security interest and its instructions.
(d) DELIVERY OF INVENTORY TO BANK. Upon the occurrence of an event of
-----------------------------
default, Borrower will, at Bank's request and at Borrower's expense, pledge,
assemble and deliver such Inventory to Bank or to a third party as Bank's
bailee; or hold the same in trust for Bank's account; or store the same in a
warehouse in Bank's name; or deliver to Bank documents of title representing
said Inventory or evidencing Bank's security interest in some other manner
acceptable to Bank.
(e) INVENTORY INSPECTION. Bank shall have the right, at all times,
--------------------
during Borrower's normal business hours, or at the regular business hours of any
third party having custody of or control over Inventory, to inspect and examine
the Inventory and to check and test the same as to quality, quantity, value and
condition, and Borrower agrees to reimburse Bank for its reasonable costs and
expenses in so doing; provided, however, that prior to the occurrence of an
Event of Default Borrower shall be obligated to reimburse for more than one (1)
such inspection and examination during any twelve (12) month period.
(f) SALES IN ORDINARY COURSE. Until the occurrence of an Event of
------------------------
Default, Borrower may, subject to the provisions hereof and consistent herewith,
sell the Inventory, but only in the ordinary course of Borrower's business and
for full and fair consideration. A sale of Inventory in Borrower's ordinary
course of business does not include an exchange or a transfer in partial or
total satisfaction of a debt owing by Borrower. After an Event of Default,
Borrower shall not sell any Inventory without Bank's written consent.
7.4 BORROWER'S BOOKS. Bank shall have the right, at all times and at least
----------------
annually, during Borrower's normal business hours, or at the regular business
hours of any third party having custody of or control over Borrower's Books, to
inspect, review, examine, and audit Borrower's Books and to make summaries and
photocopies thereof. Borrower agrees to reimburse Bank for its reasonable costs
and expenses in performing such inspection, review, examination, audit and
photocopying.
8. WARRANTIES AND REPRESENTATIONS
In order to induce Bank to enter into this Agreement and to make the
loans and/or issue the letters of credit contemplated hereby, Borrower warrants,
represents and agrees that, until all Obligations are fully paid and performed:
8.1 TITLE TO PROPERTIES. Borrower has and at all times will have good,
-------------------
marketable and indefeasible title to the Collateral; the Collateral is and at
all times shall remain free and clear of all liens, claims, encumbrances, and
purchase money or other security interests (except as held by Bank or as may be
consented to, in writing, by Bank), and the Collateral is and shall, at all
times, remain of good and of merchantable quality, free from defects.
8.2 VALIDITY OF ACCOUNTS. The accounts are and will, at all times
--------------------
pertinent hereto, be bona fide existing obligations created by the sale or lease
of goods or the rendition of services to account debtors in the ordinary course
of Borrower's business, and are and will be unconditionally owed to Borrower
without rights of return or cancellation. At the time each account is generated
and/or assigned to Bank: (a) all accounts will be due and payable in accordance
with the terms set forth in Section 1.12 of this Agreement, or on such other
terms approved in writing by Bank in advance of the creation of accounts, and
such terms shall be expressly set forth on the face of all invoices; (b) all
property giving rise to accounts shall have been delivered to the account debtor
or to the agent of the account debtor for immediate shipment to and
unconditional acceptance by the account debtor; (c) no account will be past due;
(d) all accounts shall be unconditionally owed to Borrower without defense,
offset or counterclaim dispute; and (e) Borrower shall have received no notice
of actual or imminent Insolvency Proceeding of any account debtor.
8.3 PLACE OF BUSINESS. Borrower's sole place of business or chief
-----------------
executive office or residence is located at the address set forth in Section 1.5
hereinabove, and Borrower covenants and agrees that Borrower will not, during
the term of this Agreement, without prior written notification to Bank, relocate
said sole place of business or chief executive office or residence.
8.4 LEGAL STATUS. Borrower, if incorporated, is and shall at all times
------------
hereafter be duly organized and existing and in good standing under the laws
of the state of its incorporation, and qualified or licensed to do business,
and in good standing as a foreign corporation, if applicable, in all
jurisdictions in which such qualification or licensing is required.
8.5 AUTHORIZATION AND VALIDITY. This Agreement and each other document,
--------------------------
contract and instrument required by or at any time delivered to Bank in
connection with this Agreement have been duly authorized, and upon their
execution and delivery in accordance with the provisions hereof will constitute
legal, valid and binding agreements and obligations of Borrower or the party
which executes the same, enforceable in accordance with their respective terms.
8.6 NO VIOLATION. The execution, delivery and performance by Borrower of
-----------
this Agreement shall not: (a) violate any laws or regulation, (b) constitute a
breach of any provision contained in the Articles of Incorporation, Bylaws or
other organization papers of Borrower, or (c) constitute an event of default
under any agreement to which Borrower is now or hereafter becomes a party or by
which Borrower may be bound.
5
8.7 PAYMENT OF TAXES. All assessments and taxes, whether real, personal or
----------------
otherwise, due or payable by, or imposed, levied or assessed against Borrower,
or any of Borrower's property, have been paid in full before delinquency.
8.8 NO LITIGATION. There are not presently, nor will there be at any time
-------------
during the term of this Agreement, any actions or proceedings pending by or
against Borrower, any guarantor of the Obligations (or any portion thereof) or
any general partner of Borrower before any court or administrative agency, and
Borrower has no knowledge of any pending, threatened or imminent litigation,
governmental investigations or claims, complaints, actions or prosecutions
involving Borrower, any such guarantor or general partner, except for ongoing
collection matters and except as heretofore disclosed in writing to Bank. If any
of the foregoing do arise during the term of this Agreement, Borrower shall
immediately notify Bank in writing.
8.9 FINANCIAL STATEMENTS AND CONDITION. All financial statements and
----------------------------------
information relating to Borrower which have been or may hereafter be delivered
by Borrower to Bank are true and correct and have been prepared in accordance
with generally accepted accounting principles consistently applied, and there
has been no material adverse change in the financial condition of Borrower since
the submission of such financial information to Bank.
8.10 PERMITS, FRANCHISES. Borrower possesses, and will hereafter possess,
-------------------
all permits, memberships, franchises, contracts and licenses required and all
trademark rights, trade names, trade name rights, patents, patent rights and
fictitious name rights necessary to enable Borrower to conduct the business in
which Borrower is now engaged without conflict with the rights of others.
8.11 ERISA WARRANTY. Borrower has not withdrawn from (and no termination,
--------------
partial termination or other event has occurred with respect to) any deferred
compensation plan maintained for the benefit of Borrower's employees, and has
not withdrawn from any multi-employer plan described in Section 4001(a)(3) of
ERISA (as defined in Section 8.9 of this Agreement).
8.12 ENVIRONMENTAL MATTERS. Borrower is now and at all times hereafter
---------------------
shall remain in compliance with all federal, state and municipal laws,
regulations and ordinances relating to the handling, treatment and disposal of
toxic substances, wastes and hazardous material and shall maintain all necessary
authorizations and permits. None of the operations of Borrower is now nor shall
hereafter be the subject of any federal, state or municipal investigation
evaluating whether any remedial action is needed to respond to a release of any
toxic or hazardous waste or substance into the environment.
8.13 SOLVENCY. Borrower is now and shall be at all times hereafter solvent
--------
and able to pay Borrower's debts (including trade debts) as they mature.
8.14 LIEN PRIORITY. The liens and security interests of Bank in the
-------------
Collateral are and shall remain first priority, except as expressly agreed to,
in writing, by Bank.
8.15 WARRANTIES AND REPRESENTATIONS CUMULATIVE. Each warranty,
-----------------------------------------
representation and agreement contained in this Agreement shall be automatically
deemed repeated with each loan and/or advance and shall be true, accurate and
correct at each such time and shall be conclusively presumed to have been relied
on by Bank regardless of any investigation made or information possessed by
Bank. The warranties, representations and agreements set forth herein shall be
cumulative and in addition to any and all other warranties, representations and
agreements which Borrower shall give, or cause to be given, to Bank, either now
or hereafter.
9. NEGATIVE COVENANTS
Borrower will not, without Bank's prior written consent, during the
term hereof and so long as any Obligation remains unpaid or unperformed:
9.1 CHANCE IN IDENTITY. Change Borrower's name, business structure, or
------------------
identity, or add any new fictitious name, or relocate Borrower's sole place of
business or chief executive office or residence.
9.2 ACQUISITION AND MERGER. Acquire, merge or consolidate with or into any
----------------------
other business organization or enter into any partnership, joint venture or
other combination.
9.3 ORDINARY COURSE OF BUSINESS. Enter into any transaction not in the
---------------------------
usual course of Borrower's business.
9.4 CHANGE IN FINANCIAL STRUCTURE. Make any change in Borrower's financial
-----------------------------
structure or in any of Borrower's business objectives, purposes, or operations.
9.5 SUSPENSION OF BUSINESS. Suspend or go out of business.
----------------------
9.6 DIVIDENDS AND DISTRIBUTIONS. If Borrower is a corporation, make any
---------------------------
distribution or declare or pay any dividends (in cash or stock) on, or purchase,
acquire, redeem or retire any of its capital stock, of any class, whether now or
hereafter outstanding; provided, however, that notwithstanding the prohibition
in this section 9.6, Borrower may repurchase, reacquire and/or redeem
outstanding capital stock of its former employees in an amount not exceeding Two
Hundred Fifty Thousand Dollars ($250,000.00) per fiscal year.
9.7 LIENS AND ENCUMBRANCES. Grant a security interest in or permit a lien,
----------------------
claim or encumbrance upon all or any portion of Borrower's assets or the
Collateral, except in favor of Bank and except for purchase money liens.
9.8 INVESTMENT IN SECURITIES. Make any investment in securities, other
------------------------
than the securities of the United States of America.
9.9 ERISA/COVENANT. Withdraw from participation in, or permit the
--------------
termination or partial termination of, or permit the occurrence of any other
event with respect to any deferred compensation plan maintained for the benefit
of Borrower's employees under circumstance that could result in liability to the
Pension Benefit Guaranty Corporation, or any of its successors or assigns, or to
any entity which provides funds for such delivered compensation plan, or
withdraw from any multi-employer plan described in Section 4001(a)(3) of the
Employee Retirement Income Security Act ("ERISA") of 1974, as amended, which may
cover Borrower's employees.
9.10 RELOCATION AND SALE OF ASSETS. Other than in the ordinary course of
-----------------------------
Borrower's business, sell, lease, or otherwise dispose of, move, relocate, or
transfer, whether by sale or otherwise, any of Borrower's assets or the
Collateral.
9.11 GUARANTEES. Guaranty or otherwise become in any way liable with
----------
respect to the obligations of any third party, except by endorsement of
instruments or items of payment for deposit to the general account of Borrower
or which are transmitted or turned over to Bank.
9.12 INDEBTEDNESS. Incur any debts outside the ordinary course of
------------
Borrower's business, except for renewals or extensions of existing debts and
except for debts secured solely by purchase-money liens on the asset so acquired
by such indebtedness.
9.13 LOANS. Make any advance or loan to any person or entity.
-----
10. AFFIRMATIVE COVENANTS
Borrower hereby covenants and agrees that during the term hereof and
until all Obligations are fully paid and performed:
10.1 LOCATION OF EQUIPMENT/INVENTORY. Borrower shall keep the Equipment and
-------------------------------
Inventory only at the address recited in Section 1.5 of this Agreement or at
such other locations as may be approved by Bank in writing. If requested by
Bank, Borrower shall provide Bank with the name and mailing address of the
landlord for each location described above or where any of the Equipment or
Inventory may (from time to time) be kept and/or the mortgagee, beneficiary, or
lender of any mortgage, deed of trust or other lien encumbering each such
location.
10.2 VALUE OF COLLATERAL. Bank shall not in any way or manner be liable or
----------------
responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
to the Collateral or occurring or arising in any manner or fashion from any
cause; (c) any diminution in the value of the Collateral or (d) any act or
default by any carrier, warehouseman, bailee, forwarding agency or any other
person or entity whomsoever. All risk of loss, damage, destruction or loss of
value of the Collateral shall be borne by Borrower, whether or not Borrower
shall be in possession or control of the Collateral.
6
10.3 NOTICE OF LITIGATION, ENVIRONMENTAL INVESTIGATIONS. Promptly after the
--------------------------------------------------
commencement thereof, Borrower shall notify Bank in writing of: (a) any
litigation pending or threatened against Borrower, any guarantor of the
Obligations (or any portion thereof) or any general partner of Borrower, and (b)
any federal, state or municipal investigation evaluating whether any remedial
action is needed by Borrower to respond to a release of any toxic or hazardous
waste or substance into the environment.
10.4 TAXES. Borrower shall make due and timely payment or deposit of all
-----
federal, state and local taxes, assessments or contributions required of
Borrower by law, and will execute and deliver to Bank, on demand, appropriate
certificates attesting to the payment or deposit thereof. Borrower will make
timely payment or deposit of all F.I.C.A. payments and withholding taxes
required of Borrower by applicable laws, and will, upon request, furnish Bank
with proof satisfactory to Bank that Borrower has made such payments or
deposits. If Borrower fails to pay any such assessment, tax, contribution, or
make such deposit, or furnish the required proof, Bank may, in Bank's sole and
absolute discretion and without notice to Borrower: (a) make payment of the same
or any part thereof, or (b) set up such reserves against the Credit, or
otherwise reduce the loans and advances for which Borrower is eligible under
this Agreement, as Bank deems necessary to satisfy the liability therefor, or
both. Bank may conclusively rely on the usual statements of the amount owing or
other official statements issued by the appropriate governmental agency. Each
amount paid or deposited by Bank shall constitute Bank Expenses and an advance
to Borrower. Nothing herein contained shall preclude Borrower from contesting,
diligently, in good faith, and by appropriate proceedings, the imposition or any
assessments and taxes and to withhold payment of such contested amounts pending
the resolution of such proceedings.
10.5 COMPLIANCE. Borrower shall maintain all licenses, permits,
----------
governmental approvals, rights, privileges and franchises necessary for the
conduct of Borrower's business; conduct Borrower's business in an orderly and
regular manner; and comply with the provisions of all documents pursuant to
which Borrower is organized and/or which govern Borrower's continued existence
and with the requirements of all laws, rules, regulations and orders of any
governmental authority applicable to Borrower or Borrower's business.
10.6 INSURANCE.
---------
(a) ACQUISITION AND MAINTENANCE. Borrower, at Borrower's expense,
---------------------------
shall keep and maintain the Collateral insured against loss or damage by fire,
theft, explosion, sprinklers and all other hazards and risks ordinarily insured
against by other owners who use such properties in similar businesses for the
full insurable value thereof. Borrower shall also keep and maintain business
interruption insurance and public liability and property damage insurance
relating to Borrower's ownership and use of the Collateral. All such policies of
insurance shall be in such form, with such companies, and in such amounts and
with such deductibles as may be satisfactory to Bank. Borrower shall deliver to
Bank certified copies of such policies of insurance and evidence of the payments
of all premiums therefor.
(b) LOSS PAYEE ENDORSEMENT AND ADDITIONAL INSURED. All such policies
---------------------------------------------
of insurance (except those of public liability) shall contain an endorsement in
a form satisfactory to Bank showing Bank as a loss payee thereof, with a waiver
of warranties (Form 438-BFU), and all proceeds payable thereunder shall be
payable to Bank and, upon receipt by Bank, shall be applied on account of the
Obligations, in Bank's discretion. To further secure the payment and full
performance of the Obligations, Borrower grants Bank a security interest in and
to all such policies of insurance (except those of public liability) and the
proceeds thereof, and Borrower shall direct all insurers under such policies of
insurance to pay all proceeds thereof directly to Bank. All public liability and
property damage policies of insurance shall name Bank as an additional insured
thereunder.
(c) SETTLEMENT OF CLAIMS. Prior to the occurrence of an Event of
--------------------
Default, Borrower shall have the right to make, settle and adjust any and all
claims under such policies of insurance; provided, however, that Borrower shall
not legally conclude the settlement or adjustment of any claim which in amount
exceeds five percent (5%) of Borrower's total assets without Bank's prior
written consent. Following the occurrence of an Event of Default, Bank (and any
of its employees, officers or designated agents) is and shall be irrevocably
appointed as Borrower's lawful attorney-in-fact with full power to make, settle
and adjust all claims under such policies of insurance, to endorse the name of
Borrower on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance, and to make all determinations and
decisions with respect to such policies of insurance.
(d) NOTICE AND CANCELLATION. Borrower will not cancel any of such
-----------------------
policies without Bank's prior written consent. Each such insurer shall agree by
endorsement upon the policy or Policies of insurance issued by it to Borrower as
required above, or by independent instruments furnished to Bank, that it will
give Bank at least ten (10) days written notice before any such Policy or
policies of insurance shall be altered or canceled, and that no act or default
of Borrower, or any other person, shall affect the right of Bank to recover
under such policy or policies of insurance required above or to pay any premium
in whole or in part relating thereto. Bank, without waiving or releasing any
Obligations or Event of Default, may, but shall have no obligation to do so,
obtain and maintain such policies and pay such premiums and take any other
action with respect to such policies which Bank deems advisable. All sums so
disbursed by Bank, as well as reasonable attorney's fees, court costs, expenses
and other charges relating thereto, shall constitute Bank Expenses, when
disbursed, and shall be payable on demand.
10.7 BANK ACCOUNTS. Except for permitted investments, Borrower shall keep
-------------
all of Borrower's principal bank accounts with Bank and shall open no bank
account, deposit account or other account into which money can be deposited
without the written consent of Bank.
10.8 ERISA/COVENANT. Borrower shall furnish to Bank: (a) as soon as
--------------
possible, but in no event later than thirty (30) days after Borrower knows or
has reason to know that any reportable event with respect to any deferred
compensation plan has occurred, a statement of the chief financial officer of
Borrower setting forth the details concerning such reportable event and the
action which Borrower proposes to take with respect thereto, together with a
copy of the notice of such reportable event given to the Pension Benefit
Guaranty Corporation, if a copy of such notice is available to Borrower; (b)
promptly after the filing thereof with the United States Secretary of Labor or
the Pension Benefit Guaranty Corporation, copies of each annual report with
respect to each deferred compensation plan; (c) promptly after receipt thereof,
a copy of any notice Borrower may receive from the Pension Benefit Guaranty
Corporation or the Internal Revenue Service with respect to any deferred
compensation plan; provided, however, this subsection shall not apply to notice
of general application issued by the Pension Benefit Guaranty Corporation or the
Internal Revenue Service; and (d) when the same is made available to
participants in the deferred compensation plan, all notices and other forms of
information from time to time disseminated to the participants by the
administrator of the deferred compensation plan.
10.9 REIMBURSEMENTS. Borrower shall immediately and without demand
--------------
reimburse Bank for all sums expended by Bank which constitute Bank Expenses and
Borrower hereby authorizes and approves all advances and payments by Bank for
items constituting Bank Expenses.
10.10 ACCOUNTING METHODS. Borrower shall maintain a standard and modern
------------------
system of accounting in accordance with generally accepted accounting principles
consistently applied with ledger and account cards and/or computer tapes, discs,
printouts, and records pertaining to the collateral which contain information as
may from time to time be requested by Bank. Borrower shall permit Bank and any
of Bank's employees, officers or agents, upon demand, during Borrower's usual
business hours, or the usual business hours of third persons having control
thereof, to have access to and examine all of Borrower's Books relating to the
Collateral, the Obligations, Borrower's financial condition, and the results of
Borrower's operations, and, in connection therewith, permit Bank or any of
Bank's agents, employees or officers to copy and make extracts therefrom, and to
inspect the properties of Borrower.
10.11 FINANCIAL STATEMENTS. Borrower agrees to deliver to Bank the following
--------------------
reports, statements, certificates, or other materials, which materials will be
in a form acceptable to Bank and will be delivered within the time periods
specified in this section 10.11:
(a) within thirty (30) days after the end of each calendar month, a
consolidating and consolidated balance sheet, a profit and loss statement, an
aging of all Accounts, and a certificate setting forth the amount of the
Borrowing Base, each of which shall be in a form and content acceptable to Bank,
prepared by Borrower, certified by an officer or other authorized employee of
Borrower, or to be full, true, complete and accurate and further certified by
such officer or other authorized employee that there exists on the date of
delivery to Bank no condition or event which constitutes a breach of or Event of
Default under this Agreement, and covering Borrower's operations during such
period;
(b) within twenty (20) days after the end of each of Borrower's fiscal
quarters, an aging of all accounts payable, which shall be in a form and content
acceptable to Bank, prepared by Borrower, certified by an officer or other
authorized employee of Borrower to be full, true, complete and accurate and
further certified by such officer or other authorized employee that there exists
on the date of delivery to Bank no condition or event which constitutes a breach
of or Event of Default under this Agreement, and covering Borrower's operations
during such period;
(c) within ninety (90) days after the end of each of Borrower's fiscal
years, a consolidating and consolidated statement of the financial condition of
Borrower for each such fiscal year, including (but not limited to) a long-form
balance sheet and profit and loss statement, prepared or audited by certified
public accountants acceptable to Bank, together with an unqualified opinion
thereon by said accountants, accompanied by a certificate signed by an officer
or other authorized employee of Borrower to be full, true, complete and accurate
and further certified by such officer or other authorized employee that there
exists on the date of delivery to Bank no condition or event which constitutes a
breach of or Event of Default under this Agreement, and covering Borrower's
operations during such period; and
7
(d) from time to time and on request from Bank, and any other report
requested by Bank relating to the Collateral and the financial condition of
Borrower, accompanied by a certificate signed by an officer or other authorized
employee of Borrower to the effect that all reports, statements, computer disc
or tape files, printouts, runs, or other computer prepared information of any
kind or nature relating to the foregoing, or documents delivered or caused to be
delivered to Bank under this Section 10.11 are full, true, complete, correct,
and thoroughly present the financial condition of Borrower and that there exists
on the date of delivery to Bank no condition or event which constitutes a breach
of or Event of Default under this Agreement.
Each of the foregoing shall be Borrower shall comply with any request
and shall treat any written request as a continuing obligation until expressly
modified or terminated in writing.
10.12 NOTIFICATIONS. Borrower shall promptly supply and cause any guarantor
-------------
of the Obligations (or any portion thereof) and/or any general partner of
Borrower to supply Bank with such other information, including tax returns,
concerning Borrower's, any such guarantor's and/or general partner's affairs as
Bank may request from time to time hereafter. Borrower shall promptly notify
Bank of any material adverse change in Borrower's financial condition and of any
condition or event which constitutes a breach of or Event of Default under this
Agreement.
10.13 FINANCIAL COVENANTS. At all times during the term of this Agreement,
-------------------
Borrower shall:
(a) Maintain working capital in an amount not less than Twelve Million
Dollars ($12,000,000.00);
(b) Maintain a ratio of (i) the sum of cash, cash equivalents, and
accounts receivable to (ii) current liabilities of one (1.0) to
one (1.0) or greater;
(c) Maintain a ratio of total debt (less debt subordinated to Bank) to
Tangible Net Worth of not greater than one and one-quarter (1.25)
to one (1.00);
(d) Maintain a Tangible Net Worth in an amount not less than Twenty
Million Dollars ($20,000,000.00);
(e) Maintain profitable operations on a quarterly basis;
(f) Maintain a ratio of net after-tax profit plus depreciation and
amortization, quarterly and on a rolling four quarter basis, to
current maturities of long term liabilities and capitalized leases
of not less than two (2.0) to one (1.0);
All monies due from affiliates (including officers, directors, shareholders,
parents, partners, joint venturers, subsidiaries and commonly held companies)
shall be excluded from Borrower's assets for all purposes hereunder.
11. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an Event of Default under this Agreement:
11.1 FAILURE TO MAKE PAYMENT. If Borrower fails to pay when due and
-----------------------
payable, or when declared due and payable, all or any portion of the
Obligations.
11.2 BREACH. If Borrower fails or neglects to perform, keep or observe any
------
term, provision, condition, covenant, agreement, warranty or representation
contained in this Agreement or any other present or future agreement between
Borrower and Bank.
11.3 MATERIAL IMPAIRMENT. If there is a material impairment of the prospect
-------------------
of repayment of all or any portion of the Obligations, or a material impairment
of the value of the Collateral or the priority of Bank's security interests
therein.
11.4 SEIZURE OF ASSETS. If all or any of the assets of Borrower, any
-----------------
guarantor of the Obligations (or any portion thereof) or any general partner of
Borrower are attached, seized, subjected to a writ or distress warrant, or are
levied upon, or come into the possession of any Judicial Officer or Assignee.
11.5 VOLUNTARY INSOLVENCY. If an Insolvency Proceeding is commenced by
--------------------
Borrower or any general partner of Borrower.
11.6 INVOLUNTARY INSOLVENCY. If an Insolvency Proceeding is commenced
----------------------
against Borrower or any general partner of Borrower.
11.7 INJUNCTION. If Borrower is enjoined, restrained or in any way
----------
prevented by court order from continuing to conduct all or any material part of
Borrower's business affairs.
11.8 LIEN, LEVY. If a notice of lien, levy or assessment is filed of record
----------
with respect to any or all of the assets of Borrower, any guarantor of the
Obligations (or any portion thereof) or any general partner of Borrower by the
United States Government, or any department, agency or instrumentality thereof,
or by any state, county, municipal or other governmental agency, or if any taxes
or debts owing at any time hereafter to any one or more of such entities becomes
a lien, whether xxxxxx or otherwise, upon any or all of the assets of Borrower
or any such guarantor or general partner and the same is not paid on the payment
date thereof.
11.9 JUDGMENT LIEN. If one or more judgments and/or one or more other
-------------
claims becomes liens or encumbrances upon any or all of the assets of Borrower,
any guarantor of the Obligations, or any general partner of Borrower in an
aggregate amount in excess of Twenty-Five Thousand Dollars ($25,000.00).
11.10 THIRD PARTY AGREEMENTS. If there is a default in any material
----------------------
agreement to which Borrower, any guarantor of the Obligations (or any portion
thereof) or any general partner of Borrower is a party with third parties
resulting in a right by such third parties to accelerate the maturity of
Borrower's, any such guarantor's or general partner's indebtedness.
11.11 PAYMENT OF SUBORDINATED DEBT. If Borrower makes any payment on account
----------------------------
of indebtedness which has been subordinated to the Obligations, or any portion
thereof.
11.12 MISREPRESENTATIONS. If any misrepresentation exists in any warranty or
------------------
representation made to Bank by Borrower or any officer, director or partner of
Borrower, or if any warranty or representation is withdrawn by Borrower or any
officer, director or partner of Borrower.
11.13 DEATH, INCAPACITY. If Borrower or any general partner of Borrower is
-----------------
an individual and Borrower or any such general partner dies or becomes
incapacitated.
11.14 WITHDRAWAL, DISSOLUTION OF GENERAL PARTNER. If any general partner of
------------------------------------------
Borrower withdraws from Borrower, dissolves or liquidates, or if the directors,
shareholders or members of any such general partner take action to effect such
general partner's dissolution or liquidation.
11.15 IMPAIRMENT OF GUARANTIES, PLEDGES, SUBORDINATIONS. If any party
-------------------------------------------------
subordinating its claims to those of Bank or pledging collateral to secure any
of the Obligations, or if any guarantor of or indemnitor regarding Borrower's
Obligations (or any portion thereof) dies, terminates that subordination,
pledge, guaranty or indemnity agreement or becomes the subject of an Insolvency
Proceeding, or if any such agreement becomes ineffective or unenforceable for
any reason, or if any such party defaults under any agreement between said party
and Bank.
11.16 CHANGE OF OWNERSHIP. If there is a change of ownership or control
-------------------
of ten percent (10%) or more of the issued and outstanding stock of Borrower (if
Borrower is a corporation), or if any one or more of the general partners of
Borrower with an aggregate ownership interest in Borrower of ten percent (10%)
or more resigns or is expelled.
11.17 ADDITIONAL DEFAULTS. If an event occurs which with the passage of time
-------------------
would constitute an Event of Default.
Notwithstanding anything contained in this Article 11 to the contrary, upon the
occurrence of an Event of Default, Bank, at Bank's discretion, may cease
advancing monies or extending loans or other credit accommodations under this
Agreement or any other agreement between Bank and Borrower provided, however,
that Bank shall refrain from further exercising its rights and remedies and an
Event of Default shall thereafter be deemed not to have occurred by reason of
the occurrence of any of the events set forth in Sections 11.6, 11.8 and 11.9 of
this Agreement if, within ten (10) days from the date of such occurrence, the
subject event or action is released, discharged, dismissed, bonded against or
satisfied.
8
12. BANK'S RIGHTS AND REMEDIES
12.1 RIGHTS AND POWERS. If an Event of Default shall have occurred and not
-----------------
been cured or waived in accordance with the terms hereof, Bank shall have the
following rights and powers and may, at its election, without notice of its
election and without demand, do any one or more of the following, all of which
are authorized by Borrower:
(a) Declare all Obligations immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement, or any other agreement between Borrower and Bank;
(c) Terminate this Agreement as to any future liability or obligation
of Bank, but without effecting Bank's rights and security interest in the
Collateral and without effecting the Obligations;
(d) Without notice to or demand upon Borrower or any guarantor, make
such payments and do such acts as Bank considers necessary or reasonable to
protect its security interest in the Collateral. Borrower agrees to assemble the
Collateral if Bank so requires, and to make the Collateral available to Bank as
Bank may designate. Borrower authorizes Bank to enter the premises where the
Collateral is located, take and maintain possession of the Collateral and the
premises, or any part thereof, for so long as is required by Bank, and at no
cost to Bank, and to pay, purchase, contest or compromise any encumbrance,
charge or lien which in the opinion of Bank appears to be prior or superior to
Bank's security interest and to pay all expenses incurred in connection
therewith;
(e) Without constituting a retention of Collateral in satisfaction or
an Obligation within the meaning of Section 9505 of the Code or an action under
California Code of Civil Procedure Section 726, Bank may apply any and all
amounts maintained by Borrower with Bank as deposit accounts (as that term is
defined under Section 9105 of the Code)or other accounts against the
Obligations;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale and sell or dispose of (in the manner provided for
herein) the Collateral;
(g) Sell or dispose of the Collateral at either public or private
sales, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as is
commercially reasonable in the opinion of Bank. It is not necessary that the
Collateral be present at any such sale;
(h) Bank shall give the Borrower and each holder of a security
interest in the Collateral who has filed with Bank a written request for notice,
a notice in writing of the time and place of public sale, or, if the sale is a
private sale or some other disposition other than a public sale is to be made of
the Collateral, the time on or after which the private sale or other disposition
is to be made. The notice shall be personally delivered or mailed, postage
prepaid, to Borrower as provided in Section 13.3 of this Agreement, at least
five (5) calendar days before the date fixed for the sale, or at least live (5)
calendar days before the date on or after which the private sale or other
disposition is to be made, unless the Collateral is perishable or threatens to
decline speedily in value. Notice to parties other than Borrower claiming an
interest in the Collateral shall be sent to such addresses as they have
furnished to Bank. If the sale is to be a public sale, Bank shall also give
notice of the time and place by publishing a notice one time at least live (5)
calendar days before the date of the sale in a newspaper of general circulation
in the county in which the sale is to be held;
(i) Bank may credit bid and purchase at any public sale;
(j) Borrower shall pay all Bank Expenses incurred in connection with
Bank's enforcement and exercise of any of Bank's rights and remedies as herein
provided, whether or not suit is commenced by Bank;
(k) Any deficiency which exists after disposition of the Collateral as
provided above will be paid immediately by Borrower. Any excess will be
returned, without interest and subject to the rights of third parties, to
Borrower by Bank, or, in Bank's discretion, to any party who Bank believes, in
good faith, is entitled to such excess;
(l) Bank is hereby granted a license or other right to use, without
charge, Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks and advertising matter, or any property of a
similar nature, as it pertains to the Collateral or any disposition thereof, and
Borrower's rights under all general intangibles, licenses and franchise
agreements shall inure to Bank's benefit, and Bank shall have the right and
power to enter into sublicense agreements with respect to all such rights with
third parties on terms acceptable to Bank.
12.2 REMEDIES CUMULATIVE. Bank's rights and remedies under this Agreement
-------------------
and all other agreements shall be cumulative. Bank shall have all other rights
and remedies not inconsistent herewith as provided under the Code, by law, or in
equity. No exercise by Bank of one right or remedy shall be deemed an election,
and no waiver by Bank of any default on Borrower's part shall be deemed a
continuing waiver. No delay by Bank shall constitute a waiver, election or
acquiescence by Bank.
13. MISCELLANEOUS
13.1 TAXES AND OTHER EXPENSES REGARDING THE COLLATERAL. If Borrower fails
-------------------------------------------------
to pay promptly when due to any person or entity, monies which Borrower is
required to pay by reason of any provision in this Agreement, Bank may, but need
not, pay the same and any such payment shall immediately constitute an advance
under and pursuant to the Credit, and Borrower shall promptly reimburse Bank
therefore. All such sums shall be Bank Expenses hereunder. Any payments made by
Bank shall not constitute: (a) an agreement by Bank to make similar payments in
the future, or (b) a waiver by Bank of any default under this Agreement. Bank
need not inquire as to, or contest the validity of, any such expense, tax,
security interest, encumbrance or lien and the receipt of the usual official
notice for the payment thereof shall be conclusive evidence that the same was
validly due and owing.
13.2 WAIVERS.
-------
(a) APPLICATION OF PAYMENTS. Borrower waives the right to direct the
-----------------------
application of any and all payments or collections at any time or times
hereafter received by Bank on account of any Obligations, and Borrower agrees
that Bank shall have the continuing exclusive right to apply and reapply such
payments or collections to the Obligations in any manner as Bank may deem
advisable.
(b) NOTICES OF DEMAND, ETC. Borrower waives demand, protest, notice of
----------------------
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, documents,
instruments, chattel paper, and guaranties at any time held by Bank on which
Borrower may in any way be liable.
(c) CONFIDENTIALITY OF ACCOUNTING. Borrower waives the right to assert
a confidential relationship, if any, Borrower may have with any accounting firm
and/or service bureau in connection with any information requested by Bank
pursuant to or in accordance with this Agreement, and agrees that Bank may
contact directly any such accounting firm and/or service bureau in order to
obtain such information.
13.3 NOTICES. Unless otherwise provided in this Agreement, all notices or
-------
demands by any party relating to this Agreement shall be in writing and sent by
regular United States mail, postage prepaid, properly addressed to Borrower at
Borrower's address set forth in Section 1.5 of this Agreement or to Bank at
Bank's address set forth in Section 1.3 hereinabove, or to such other addresses
as Borrower or Bank may from time to time specify to the other in writing.
13.4 DESTRUCTION OF BORROWER'S DOCUMENTS. Any documents, schedules,
-----------------------------------
invoices or other papers delivered to Bank may be destroyed or otherwise
disposed of by Bank six (6) months after they are delivered to or received by
Bank unless Borrower does request, in writing, the return of the said documents,
schedules, invoices or other papers and makes arrangements, at Borrower's
expense, for their return.
13.5 CHOICE OF LAW. The validity of this Agreement, its construction,
-------------
interpretation and enforcement, and the rights of the parties hereunder and
concerning the Collateral, shall be determined under, governed by and construed
in accordance with the laws of the State of California. The parties agree that
all actions or proceedings arising in connection with this Agreement shall be
tried and litigated only in the state courts located in the County of San
Francisco, State of California, or the County of Santa Xxxxx, State of
California, or the federal courts located in the Northern District of
California. Borrower waives any right Borrower may have to assert the doctrine
of forum non conveniens or to object to such venue and hereby consents to any
court-ordered relief.
13.6 ONE LOAN TRANSACTION. The Obligations shall be secured by all other
--------------------
security interests, liens or encumbrances heretofore, now, or at any time
hereafter granted by Borrower to Bank. If more than one person or entity is
signing this Agreement on behalf of Borrower, the Obligations of each party
signing this Agreement on behalf of Borrower shall be joint and several.
9
13.7 AGREEMENT BINDING; ASSIGNMENT. This Agreement shall be binding and
-----------------------------
deemed effective when executed by Borrower and accepted and executed by Bank.
This Agreement shall bind and inure to the benefit of the respective successors
and assigns of each of the parties; provided, however, that Borrower may not
assign this Agreement or any rights hereunder without Bank's prior written
consent and any prohibited assignment shall be absolutely void. No consent to an
assignment by Bank shall release Borrower or any guarantor from their
obligations to Bank. Bank may assign this Agreement and its rights and duties
hereunder. Bank reserves the right to sell, assign, transfer, negotiate or grant
participations in all or any part of, or any interest in, Bank's rights and
benefits hereunder. In connection therewith, Bank may disclose all documents and
information which Bank now has or hereafter may have relating to Borrower or
Borrower's business.
13.8 HEADINGS, GENDER AND JOINT AND SEVERAL LIABILITY. Article and section
------------------------------------------------
headings and article and section numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each article and section applies equally to this entire Agreement.
As used in this Lease and when required by the context, each number (singular or
plural) shall include all numbers, and each gender shall include all genders. If
more than one person or entity is signing this Agreement on behalf of Borrower,
the Obligations of each party signing this Agreement on behalf of Borrower shall
be joint and several.
13.9 CONSTRUCTION. Neither this Agreement nor any uncertainty or ambiguity
------------
herein shall be construed or resolved against Bank or Borrower, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly accomplish the purposes and
intentions of all parties hereto.
13.10 SEVERABILITY. Each provision of this Agreement shall be severable
-------------
from every other provision of this Agreement for the purpose of determining the
legal enforceability of any specific provision.
13.11 INTEGRATION. This Agreement cannot be changed or terminated orally. No
-----------
modification or amendment to this Agreement shall be effective unless in
writing, executed by Bank. Except as to currently existing obligations of
Borrower to Bank, all prior agreements, understandings, representations,
warranties, and negotiations between the parties, if any, are merged into this
Agreement.
13.12 PRIOR LOAN AND SECURITY AGREEMENT. The total Credit and the total of
---------------------------------
Borrower's Obligations in respect to all letters of credit previously issued by
Bank and outstanding on the date of this Agreement shall, from and after the
date of this Agreement, be deemed to have been incurred pursuant to this
Agreement. Borrower agrees and acknowledges that, as of the date of this
Agreement, there was due and owing under the prior letters of credit issued and
outstanding by Bank Obligations in respect of commercial letters of credit
outstanding in the aggregate amount of __________________ Dollars
($______________________).
13.13 WAIVER OF JURY TRIAL. BANK AND BORROWER HEREBY WAIVE, TO THE EXTENT
--------------------
PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH
RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR THE
OBLIGATIONS, OR ANY INSTRUMENT OR DOCUMENT DELIVERED IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, OR ANY OTHER CLAIM OR DISPUTE
HOWSOEVER ARISING (INCLUDING TORT AND CLAIMS FOR BREACH OF DUTY), BETWEEN BANK
AND BORROWER.
14. FX SUBFACILITY
14.1 REVOLVING FX SUBFACILITY. At the request of Borrower, made during
------------------------
Bank's normal business hours from time to time during the term of this
Agreement, and so long as no Event of Default has occurred, Bank will create
foreign exchange contracts for Borrower's account (the "FX Subfacility");
provided, however, that in no event shall Bank be obligated to enter into any
Foreign Exchange Contracts whenever either (i) the total of Borrower's
Obligations in respect of all Foreign Exchange Contracts outstanding under this
Section 14.1, when added to the Daily Balance, exceeds at any time the lesser of
the Borrowing Base or Five Million Dollars or (ii) the total of Borrower's
Obligations in to all Foreign Exchange Contracts outstanding at any time exceed
Seven Hundred Fifty Thousand Dollars ($750,000.00) (the "Maximum Exposure").
14.2 TERMS AND CONDITIONS. Except to the extent described by any separate
--------------------
agreement between Borrower and Bank (a "Foreign Exchange Contract"), the terms
and conditions governing any Foreign Exchange Contract entered into under this
FX Subfacility shall be governed by this Agreement and the Bank's standard terms
of business in effect on the Contract Date (as hereinafter defined). Borrower
shall pay Bank such issuance fees, negotiation fees, and other fees at the times
and in the amounts that Bank may from time to time impose in connection with the
provision of foreign exchange services. Borrower agrees to execute and deliver
to Bank such documents as Bank deems necessary in connection with the FX
Subfacility. Subject to the limitations prescribed by this Agreement, any
Foreign Exchange Contract shall obligate the Bank to exchange domestic currency
for foreign currency (or vice versa) and shall obligate Borrower to purchase
such exchanged currency at a price, in the currency and on a date agreed upon by
Borrower and Bank. Bank shall have the right, but not the obligation, to charge
any amounts owing by Borrower to Bank under any Foreign Exchange Contract
against any accounts maintained by Borrower with Bank.
Bank is hereby authorized to enter into any Foreign Exchange Contract
provided in this Agreement based upon telephonic or other instructions received
from anyone purporting to be an authorized representative of Borrower or, at the
discretion of Bank, if said contracts are necessary to satisfy, any Obligation
of Borrower to Bank. Bank shall have no duty to make inquiry or verify the
authority of any such party and Borrower shall hold Bank harmless from any
damages, claims, or liability by reason of Bank's honor of, or failure to honor,
any such instructions.
The date upon which Borrower and Bank shall exchange their currency
shall be referred to as the "Settlement Date." The date upon which Borrower
agrees on (i) the price to be paid, (ii) the currency to be exchanged by the
respective parties, and (iii) the date which shall constitute the Settlement
Date shall be referred to as the "Contract Date." In no event shall the
Settlement Date under any foreign exchange contract exceed twelve (12) months
from the Contract Date. Following the Contract Date, Bank shall have the right,
but not the obligation, to forward a confirmation statement to Borrower
confirming the terms of such Foreign Exchange Contract. If Borrower fails to
object to the information contained in the confirmation within the shorter of
(i) the period sated therein or (ii) ten (10) days after the date of such
notification, then the information contained in such confirmation shall be
binding on Borrower.
On the Contract Date, ten percent (10%) or the amount of such Foreign
Exchange Contract (in United States Dollars) (each, a "FX Advance") shall be
deemed part of the Credit and shall reduce Borrower's availability under Section
2.1 of this Agreement in a like amount. If at any time and for any reason, the
aggregate amount on all F/X Advances outstanding at any time exceeds ten percent
(10%) or the Maximum Exposure (an F/X Overadvance"), Borrower shall immediately
---
pay to Bank, in cash, the amount of such FX Overadvance. If Borrower fails to
satisfy and discharge its obligations under such Foreign Exchange Contract on
the Settlement Date, Bank shall have the right (but not the obligation) to treat
the amount of such unpaid and unsatisfied obligation as part of the Credit.
Notwithstanding the reduction in the Credit authorized by this Section 14.2,
Borrower's duty to satisfy and discharge its obligations under any Foreign
Exchange Contract on the Settlement Date, such failure shall constitute an Event
of Default under this Agreement.
15. EQUIPMENT PURCHASE FACILITY A.
------------------------------
15.1 (a) Upon the request of Borrower made at any time, and from time to
time, during Draw Period A (as hereinafter defined), subject to and upon the
terms and conditions of this Agreement, and so long as no Event of Default has
occurred, Bank agrees to make advances to Borrower for the purpose of purchasing
new equipment for use in connection with Borrower's business (the "Equipment
Purchase Line A"). For the purpose of this Agreement, "Draw Period A" shall mean
the period between the date of this Agreement and the earlier of: (i) March 31,
1998 or (ii) the date on which the aggregate of all advances made pursuant to
this Section 15.1 equals Six Hundred Thousand Dollars ($600,000.00).
(b) Each advance under Equipment Purchase Line A shall be in amount
not exceeding one hundred percent (100%) of the cost, excluding installation
charges, sales tax, freight, and software charges (as determined by Bank), of
items of new equipment approved by Bank and not made specifically for Borrower
on a custom basis. The aggregate of all advances made by Bank under Equipment
Purchase Line A shall not exceed Six Hundred Thousand Dollars ($600,000.00).
(c) Each advance made by Bank under Equipment Purchase Line A, if
approved by Bank, shall be made either to Borrower or to the vendor of any new
equipment financed with the proceeds of such advance (at Bank's option). In no
event shall said proceeds be used by Borrower for any purpose other than the
purchase of new equipment approved by Bank. In the event that Bank opts to
disburse the proceeds of any such advance directly to the vendor(s) of any new
equipment, Borrower shall deliver to Bank an amount equal to the difference
between the cost (including all installation charges, sales tax, freight, and
software charges) and the amount of such advance, which difference shall be
remitted to said vendor(s) with the advance by Bank. Bank shall not be obligated
to make any advance under this Section 15.1 unless and until Bank has received
and approved the following: (1) a copy of Borrower's purchase order, (2) an
original delivery and acceptance certificate executed by Borrower with respect
to any new equipment to be purchased, and (3) such other documentation as Bank
may require (including, without limitation, schedules attached hereto describing
said new equipment and financing statements relative thereto). Amounts once
borrowed and repaid under Equipment Purchase Line A shall not be available for
reborrowing.
10
15.2 All advances made under Equipment Purchase Line A shall be evidenced
by and subject to the terms of a promissory note executed by Borrower in
substantially the form of Exhibit "A" attached to this Agreement, with
appropriate insertions (the "Equipment Purchase Line Note A"). All loans and
advances made under Equipment Purchase Line A shall be added to and deemed a
part of the Obligations. Except as hereinbelow provided, all advances under
Equipment Purchase Line A shall bear interest, on the Daily Balance owing, at a
per annum rate equal to one-quarter of one percent in excess of the Prime Rate
(the "Equipment Purchase Line A Rate"). In the event that the Prime Rate
announced is, from time to time hereafter, changed, adjustment in the Equipment
Purchase Line A Rate or interest payable by Borrower shall be made on the
effective date of the change in the Prime Rate. The rate of interest, as
adjusted, shall apply to all advances outstanding under this Equipment Purchase
Line A until the Prime Rate is adjusted again. All interest chargeable under
this Equipment Purchase Line A on a per annum basis shall be computed on a basis
of a 360-day year for actual days elapsed.
15.3 (a) Commencing on the fifth day of the month after any advance is
made under this Equipment Purchase Line A, and continuing on the fifth day of
each calendar month during Draw Period A, Borrower shall make monthly payments
of all interest accrued on advances under Equipment Purchase Line A at Equipment
Purchase Line A Rate and all Bank Expenses incurred in connection with Equipment
Purchase Line A.
(b) Commencing on the fifth day of be the month after the end of Draw
Period A, and continuing on the fifth day of each of the next forty-seven (47)
months thereafter, Borrower shall make (i) equal and consecutive monthly
principal payments with each payment being in an amount sufficient to repay the
aggregate amount of advances under the Equipment Purchase Line A outstanding at
the end of Draw Period A over forth-eight (48) months on a straight-line basis,
(ii) monthly interest payments on the outstanding amount of the advances under
the Equipment Purchase Line A, and (iii) all Bank Expenses incurred by Bank in
connection with Equipment Purchase Line A.
(c) Bank may, at its option, elect to treat any due but unpaid
interest and Bank Expenses as advances under the Credit, and all such advances
shall bear interest on the daily balance thereof, at a per annum rate applicable
to the Credit under the terms of this Agreement. The receipt of any check or
other item of payment by Bank shall not be considered a payment until such check
or other item of payment is honored when presented for payment, in which event,
said check or other item of payment shall be deemed to have been paid to Bank in
accordance with Bank's rules and regulations relating to credits to deposit
accounts or, in Bank's discretion, two (2) calendar days after the date Bank
actually receives possession of such check or other item of payment.
Notwithstanding anything to the contrary contained in Article 15 of
this Agreement, all advances under Equipment Purchase Line A shall bear
interest, from and after any Event of Default and without constituting a waiver
of any such Event of Default, on the Daily Balance owing, at a per annum rate
five (5) percentage points above the Equipment Purchase Line A Rate.
15.4 Bank shall render monthly statements of all amounts owing by Borrower
to Bank under Equipment Purchase Line A, including statements of all principal,
interest, and Bank Expenses owing, and such statements shall be conclusively
presumed to be correct and accurate and constitute an account between Borrower
and Bank unless, within thirty (30) days after receipt thereof by Borrower,
Borrower delivers to Bank, by registered or certified mail, at Bank's place of
business, a written objection specifying the error or errors, if any, contained
in any such statement.
IN WITNESS WHEREOF, Borrower has executed and delivered this Agreement
on the date first hereinabove written.
"Borrower"
IXYS CORPORATION,
A corporation
/s/ Xxxxxx Xxxxxx
By:________________________________
Title: PRESIDENT & CEO
/s/ Xxxxxx Xxxxxxxx
By: _______________________________
Title: VP OF FINANCE & CFO
____________________________
ATTEST:
By: ___________________________
Title: ________________________
Accepted and effective this 29th day of December, 1997, at Bank's place
of business in the City of San Xxxx, State of California.
"Bank:
BANK OF THE WEST,
A California banking corporation
By: Xxxxx Xxxxxx
--------------------------
Title: Vice President
-----------------------
11
Exhibit A
EQUIPMENT PURCHASE LINE A NOTE
$600,000.00 DECEMBER 24, 0000
Xxx Xxxx, Xxxxxxxxxx
1. BORROWING AND INTEREST RATE: In consideration of all loans and advances
---------------------------
("Advances") from time to time made by BANK OF THE WEST (the "Lender") to or for
the benefit of the undersigned (alternatively, collectively, jointly and
severally the "Borrower") pursuant to the Loan Agreement of even date herewith
(collectively the "Loan Agreement"), Borrower promises to pay Lender, or order,
at 00 Xxxx Xxx Xxxxxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxx Xxx Business Banking Group,
San Jose, California on the dates and in the manner hereinafter set forth, all
outstanding Advances, plus any interest thereon then unpaid, at the rate (the
"Equipment Purchase Line A Rate") of one quarter of one percentage point (0.25%)
per year in excess of the Prime Rate (as hereinafter defined), which Equipment
Purchase Line A Rate shall vary concurrently with any change in the Prime Rate.
For the purpose of this Note, the "Prime Rate" shall mean the variable rate of
interest, per annum, most recently announced by Lender at its headquarters
office in San Francisco, California, as its "prime rate." The undersigned
understands that Lender's "prime rate" is one of its base rates with respect to
loans making reference thereto and may not be the lowest of Lender's base rates.
Interest shall be computed on the outstanding principal balance on the basis of
three hundred sixty (360) days per year and actual days elapsed.
2. REPAYMENT OF PRINCIPAL, INTEREST AND EXPENSES. Interest for the partial
---------------------------------------------
calendar month following the Funding Date (as hereinafter defined) shall be due
and payable in advance on the Funding Date. Such interest shall be deemed earned
on the date of funding and shall not constitute a payment of principal. For
purposes of this Note, the "Funding Date" shall be the date that amounts are
first advanced by Lender under this Note, whether such advances are made
directly to Borrower or are made to any escrow holder or other third party
pending the recordation or exchange of any documents or the occurrence or waiver
of any conditions precedent by Lender under this Note, the Loan Agreement, or
otherwise. For the purpose of this Agreement, "Draw Period A" shall mean the
period between the date of this Note and the earlier of: (i) March 31, 1998 or
(ii) the date on which the aggregate of all advances made pursuant to this
Section 15.1 of the Loan Agreement and under this Note equals Six Hundred
Thousand Dollars ($600,000.00).
(a) Commencing on the fifth day of the month after the Funding Date,
and continuing on the fifth day of each calendar month during Draw Period A,
Borrower shall make monthly payments of all interest accrued on advances under
Equipment Purchase Line A at Equipment Purchase Line A Rate and all Lender
Expenses incurred in connection with Equipment Purchase Line A.
(b) Commencing on the fifth day of be the month after the end of Draw
Period A, and continuing on the fifth day of each of the next forty-seven (47)
months thereafter, Borrower shall make (i) equal and consecutive monthly
principal payments with each payment being in an amount sufficient to repay the
aggregate amount of advances under the Equipment Purchase Line A outstanding at
the end of Draw Period A over forty-eight (48) months on a straight-line basis,
(ii) monthly interest payments on the outstanding amount of the advances under
the Equipment Purchase Line A, and (iii) all Lender Expenses incurred by Lender
in connection with Equipment Purchase Line A.
(c) Lender may, at its option, elect to treat any due but unpaid
interest and Lender Expenses as advances of Credit under the Loan Agreement, and
all such advances shall bear interest on the daily balance thereof, at a per
annum rate applicable to the Credit under the terms of the Loan Agreement. The
receipt of any check or other item of payment by Lender shall not be considered
a payment until such check or other item of payment is honored when presented
for payment, in which event, said check or other item of payment shall be deemed
to have been paid to Lender in accordance with Lender's rules and regulations
relating to credits to deposit accounts or, in Lender's discretion, two (2)
calendar days after the date Lender actually receives possession of such check
or other item of payment.
3. LATE FEES. If any payment due hereunder is not received by Lender
---------
within fifteen (15) days after the due date thereof, Borrower shall pay to
Lender without claim, notice or demand a late payment charge equal to six
percent (6%) of the amount of the installment of principal and interest due and
delinquent to defray the administrative costs and expenses suffered by Lender by
reason of such delinquency. Borrower acknowledges and agrees that the actual
amount of damages that would be incurred by Lender as a result of such
delinquency are extremely difficult or impracticable to ascertain and that the
late charge set forth herein represents a reasonable attempt to fix such
damages. Collection of such late charge shall not excuse the performance of the
terms of this Note nor prejudice Lender's right to enforce any right or remedy
which it may have for the collection of principal and interest or otherwise
under the terms of this Note, the Loan Agreements, or applicable law.
4. AUTHORITY FOR ADVANCES. All Advances shall be conclusively presumed to
----------------------
have been made to, for the benefit of, and at the request of Borrower when
deposited or credited to the account of Borrower with Lender or made in
accordance with the terms of the Loan Agreement or the oral or written
instructions of Borrower, or any one signing below for or on behalf of the
undersigned.
5. EVENTS OF DEFAULT AND REMEDIES.
------------------------------
(a) EVENTS OF DEFAULT. Any one of the Following occurrences shall
-----------------
constitute an "event of default" under this Note:
(1) The failure by Borrower to make any payment of principal or
interest upon this Note as and when the same becomes due and payable in
accordance with the terms hereof and the continuation of such failure
for five (5) days after written notice thereof is given Borrower by
Lender;
(2) The occurrence of any default under this Note other than as
described in the preceding clause (1) and the continuation of such
default for ten (10) days after written notice thereof is given
Borrower by Lender; or
(3) The occurrence of any event of default as defined under the
Loan Agreement, or any other document securing the obligations under
this Note. For purposes of Subparagraph 5(a)(3) with respect to any
event or occurrence which constitutes an event of default hereunder
solely by reason of its constituting a default under a document or
instrument other than this Note, to the extent (if any) that such other
document or instrument provides a grace or cure period with respect to
such default, the same grace or cure period, and only such period,
shall apply with respect thereof under this Note.
(b) Remedies. Upon the occurrence of any event of default hereunder:
--------
(i) the entire unpaid principal amount, any and all unpaid interest then accrued
on, and any other amounts owing under or evidenced by this Note, shall (at the
option of the Lender and without notice or demand of any kind to Borrower or any
other person) be and become immediately become due and payable and (ii) Lender
hereof shall have and may exercise any and all rights and remedies available at
law or in equity and also any and all rights and remedies provided in the Loan
Agreement.
Upon the occurrence of an event of default hereunder (which has not
been cured as therein provided or waived by Lender in writing), at the option of
Lender, and in addition to any other remedies available to Lender, interest may
be charged on the Advances outstanding on the date of such event of default at
the rate of five (5) percentage points greater than the Equipment Purchase Line
A Rate (the "Default Rate"). The Default Rate shall commence on the day
following any event of default and shall continue until such event of default
has been cured to the satisfaction of Lender.
6. WAIVERS, MAKER(S) AND ENDORSER(S). Borrower, for itself and for its
---------------------------------
successors, transferees and assigns and all guarantors, endorsers and signers,
hereby waives all valuation and appraisement privileges, presentment and demand
for payment, protest, notice of protest and nonpayment, dishonor and notice of
dishonor, bringing of suit, lack of diligence or delays in collection or
enforcement of this Note and notice of the intention to accelerate, the release
of any party liable, the release of any security for debt, the taking of any
additional security and any other indulgence or forbearance.
7. WAIVER OF STATUTE OF LIMITATIONS. The right to plead any and all
--------------------------------
statutes of limitations as a defense to any demand on this Note, any Loan
Agreement, or on any guaranty hereof, or to any agreement to pay the same, or to
any demand secured by any Loan Agreement, or other instrument securing this
Note, against Borrower, the holder of any property encumbered by any Loan
Agreement or other instrument securing this Note, and any guarantors or
sureties, is expressly waived by each and all said parties.
8. FEES, COSTS AND LENDER EXPENSES.
-------------------------------
1
(a) ATTORNEYS' FEES AND COSTS. If the holder of this Note refers it to
-------------------------
an attorney for collection or seeks legal advice following a default under this
Note, the Loan Agreement, or other security agreements securing this Note, or if
an action is instituted on this Note or the Loan Agreement, or if any other
judicial or non-judicial action is instituted by the holder hereof or by any
other person, and an attorney is employed by the holder hereof to appear in any
such action or proceeding or to reclaim, sequester, protect, preserve or enforce
the holder's interest in the real property security or any other security for
this Note, including, but not limited to proceedings to foreclose the loan
evidenced hereby, proceedings under the federal bankruptcy laws, or in eminent
domain, or under the probate code, or in connection with any state or federal
tax lien, or to enforce an assignments of rents, or for the appointment of a
receiver, or involving mechanics' liens or stop notices, or in connection with
disputes regarding the proper disbursement of loan funds, Borrower and every
endorser and guarantor hereof and every person who assumes the obligations
evidenced by this Note and the loan documents securing the same, jointly and
severally promise to pay reasonable attorneys' fees and for services performed
by the holder's attorney, and all costs and expenses incurred incident to such
employment.
(b) LENDER EXPENSES. Borrower shall immediately and without demand
---------------
reimburse Lender for all sums expended by Lender which constitute Lender
Expenses and Borrower hereby authorizes and approves all advances and payments
by Lender for items constituting Lender Expenses. The term "Lender Expenses"
means: all costs and expenses incurred by Lender in connection with this Note,
the Loan Agreement, or the transactions contemplated hereby, including, without
limitation, all costs or expenses required to be paid by Borrower under this
Note, the Loan Agreement, or the transactions contemplated hereby which are paid
or advanced by Lender; taxes and insurance premiums of every nature and kind of
Borrower paid by Lender; filing, recording, publication, search fees, appraiser
fees, auditor fees, title insurance premiums paid or incurred by Lender in
connection with Lender's transactions with Borrower; costs and expenses incurred
by Lender (with or without suit) in collecting or realizing upon any collateral
including, without limitation the Property (the "Collateral"), to correct any
default or enforce any provision of this Note, the Loan Agreement, or the
transactions contemplated hereby, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale and/or
advertising to sell the Collateral, whether or not a sale is consummated; costs
and expenses of suit incurred by Lender in enforcing or defending this Note, the
Loan Agreement, or the transactions contemplated hereby or any portion hereof;
and reasonable attorneys' fees and expenses incurred by Lender in advising,
structuring, drafting, reviewing, amending, terminating, enforcing, defending or
concerning this Note, the Loan Agreement, or the transactions contemplated
hereby, any portion hereof, any Agreement related hereto, or any of the
transactions contemplated hereby, whether or not suit is brought, and including,
but not limited to, any expenses incurred in relation to opposing or seeking to
obtain relief from any stay or restraining order prohibiting Lender from
exercising its rights as a secured creditor, foreclosing upon or disposing of
Collateral, or such related matters.
9. DEFINITIONS. The term "Lender," as used herein, shall mean and include
-----------
Lender and any successor or assign of Lender, and any holder of this Note shall,
upon becoming such holder, be included in the term "Lender" wherever the same
appears in this Note.
10. OBLIGATIONS UNDER LOAN AGREEMENT. The obligations arising under this
--------------------------------
Note constitute Obligations under and pursuant to the terms of the Loan
Agreement and are secured under and pursuant to the terms of such Loan
Agreement.
11. MISCELLANEOUS.
-------------
(a) GOVERNING LAW AND TIME OF PERFORMANCE. This Note shall be governed
-------------------------------------
by and construed under the laws of the State of California. Time is of the
essence of this Note and each provision hereof.
(b) SUCCESSORS AND ASSIGNS. This Note shall be binding upon Borrower
----------------------
and its successors and assigns, and shall inure to the benefit of Lender and its
successors and assigns.
(c) HEADINGS; GENDER. The headings of the Paragraphs and Subparagraphs
----------------
of this Note are inserted for convenience only and shall not be deemed to
constitute a part hereof. All words and phrases shall be taken to include the
singular or plural number, and the masculine, feminine or neuter gender, as may
fit the case.
(d) SEVERABILITY. If any provision of this Note or any payments
-------------
pursuant to the terms hereof shall be invalid or unenforceable to any extent,
the remainder of this Note and any other payments hereunder shall not be
affected thereby and shall be enforceable to the greatest extent permitted by
law.
(e) Modification. No waiver of any breach, default or event of default
------------
under this Note or under the Loan Agreement, or any obligations secured thereby,
shall be implied from any failure of Lender to take, or any delay by Lender in
taking, any action with respect to any concurrent or subsequent breach of or
event of default, default or failure of condition or from any previous wavier of
any similar or unrelated breach of or event of default, default, or failure of
condition. A waiver of any term of this Note, the Loan Agreement, or any of the
obligations secured thereby must be made in writing, shall be limited to the
express written terms of such waiver, and shall not be construed as a waiver or
release of any subsequent event or default, default or failure of condition.
(f) Joint Obligations. If this Note is executed by more than one
-----------------
person or entity as Borrower, the obligations of each such person or entity
shall be joint and several, and all said parties are and shall be jointly and
severally, directly and primarily, liable for the amount of all sums owing and
to be owed hereon, and agree that this Note and any or all payments coming due
hereunder may be extended or renewed from time to time without in any way
affecting or diminishing their liability hereunder. No such person shall be a
mere accommodation maker, since each such person shall be primarily and directly
liable hereunder.
IN WITNESS WHEREOF, the undersigned has executed and delivered this Note as
of the date and year first above written.
IXYS CORPORATION
a corporation
By: /s/ Xxxxxx Xxxxxx
__________________________________
Its: PRESIDENT & CEO
________________________________
2
