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EXHIBIT 10.48
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Greyrock
Business
Credit
A NationsBank Company
LOAN AND SECURITY AGREEMENT
BORROWER: MTI TECHNOLOGY CORPORATION
ADDRESS: 0000 X. XX XXXXX XXXXXX
XXXXXXX, XXXXXXXXXX 00000
Date: May 23, 1997
This Loan and Security Agreement is entered into on the above date between
GREYROCK BUSINESS CREDIT, a Division of NationsCredit Commercial Corporation
("GBC"), whose address is 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000 and the borrower named above ("Borrower"), whose chief
executive office is located at the above address ("Borrower's Address"). The
Schedule to this Agreement (the "Schedule") being signed concurrently is an
integral part of this Agreement. (Definitions of certain terms used in this
Agreement are set forth in Section 8 below.)
1. LOANS.
1.1 LOANS. GBC will make loans to Borrower (the "Loans"), (LANGUAGE
INTENTIONALLY OMITTED), up to the amounts (the "Credit Limit") shown on the
Schedule, provided no Default or Event of Default has occurred and is
continuing. If at any time or for any reason the total of all outstanding Loans
and all other Obligations exceeds the Credit Limit, Borrower shall immediately
pay the amount of the excess to GBC, [ * ]*.
*UPON ONE BUSINESS DAY'S NOTICE FROM GBC
1.2 INTEREST. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth to
the contrary in this Agreement or in another written agreement signed by GBC and
Borrower. Interest shall be payable monthly, on the last day of the month.
Interest may, in GBC's discretion, be charged to Borrower's loan account, and
the same shall thereafter bear interest at the same rate as the other Loans.
1.3 FEES. Borrower shall pay GBC the fee(s) shown on the Schedule, which are
in addition to all interest and other sums payable to GBC and are not
refundable.
2. SECURITY INTEREST.
2.1 SECURITY INTEREST. To secure the payment and performance of all of the
Obligations when due, Borrower hereby grants to GBC a security interest in all
of Borrower's interest in the following, whether now owned or hereafter
acquired, and wherever located (collectively, the "Collateral"): All
Inventory, Equipment, Receivables, Investment Property and General Intangibles*,
including, without limitation, all of Borrower's Deposit Accounts, all money,
all collateral in which GBC is granted a security interest pursuant to any other
present or future agreement, all property now or at any time in the future in
GBC's possession, and all proceeds (including proceeds of any insurance
policies, proceeds of letters of credit, proceeds of proceeds and claims against
third parties), all products of the foregoing, and all books and records related
to any of the foregoing.
* GBC'S SECURITY INTEREST IN ANY PRESENT OR FUTURE TECHNOLOGY (INCLUDING
PATENTS, TRADE SECRETS, AND OTHER TECHNOLOGY) SHALL BE SUBJECT TO ANY LICENSES
OR RIGHTS NOW OR IN THE FUTURE GRANTED BY THE BORROWER TO ANY THIRD PARTIES IN
THE ORDINARY COURSE OF BORROWER'S BUSINESS; PROVIDED THAT IF THE BORROWER
PROPOSES TO SELL, LICENSE OR GRANT ANY OTHER RIGHTS WITH RESPECT TO ANY MATERIAL
TECHNOLOGY OF BORROWER IN A TRANSACTION THAT, IN SUBSTANCE, CONVEYS A MAJOR PART
OF THE ECONOMIC VALUE OF THAT TECHNOLOGY, GBC SHALL FIRST BE REQUESTED TO
RELEASE ITS SECURITY INTEREST IN THE SAME, AND GBC MAY WITHHOLD SUCH RELEASE IN
ITS REASONABLE DISCRETION. TRANSFERS OF TECHNOLOGY PURSUANT TO THE
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Language indicated as being shown by strike out in the typeset document is
enclosed in brackets [ * ] in the electronic format.
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GREYROCK BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
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SETTLEMENT AGREEMENT BETWEEN BORROWER AND DIGITAL EQUIPMENT CORPORATION DATED
DECEMBER 4, 1992 SHALL NOT REQUIRE THE CONSENT OF GBC.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
In order to induce GBC to enter into this Agreement and to make Loans,
Borrower represents and warrants to GBC as follows, and Borrower covenants that
the following representations will continue to be true, and that Borrower will
at all times comply with all of the following covenants:
3.1 CORPORATE EXISTENCE AND AUTHORITY. Borrower, if a corporation, is and
will continue to be, duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation. Borrower is and will continue
to be qualified and licensed to do business in all jurisdictions in which any
failure to do so would have a material adverse effect on Borrower. The
execution, delivery and performance by Borrower of this Agreement, and all other
documents contemplated hereby (i) have been duly and validly authorized, (ii)
are enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors'
rights generally), (iii) do not violate Borrower's articles or certificate of
incorporation, or Borrower's by-laws, or any law or any material agreement or
instrument which is binding upon Borrower or its property, and (iv) do not
constitute grounds for acceleration of any material indebtedness or obligation
under any material agreement or instrument which is binding upon Borrower or its
property.
3.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule are all
prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give GBC 30* days prior written notice before changing its name
or doing business under any other name. Borrower has complied, and will in the
future comply, with all laws relating to the conduct of business under a
fictitious business name.
*10
3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in the
heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth on the Schedule. Borrower will give GBC at least 30* days' prior
written notice before opening any additional place of business, changing its
chief executive office, or moving any of the Collateral to a location other than
Borrower's Address or one of the locations set forth on the Schedule.
*10
3.4 TITLE TO COLLATERAL; PERMITTED LIENS. Borrower is now, and will at all
times in the future be, the sole owner of all the Collateral, except for items
of Equipment which are leased by Borrower*. The Collateral now is and will
remain free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for Permitted Liens. GBC now has, and
will continue to have, a first-priority perfected and enforceable security
interest in all of the Collateral**, subject only to the Permitted Liens, and
Borrower will at all times defend GBC and the Collateral against all claims of
others. So long as any Loan is outstanding which is a term loan, none of the
Collateral now is or will be affixed to any real property in such a manner, or
with such intent, as to become a fixture. Borrower is not and will not become a
lessee under any real property lease pursuant to which the lessor may obtain any
rights in any of the Collateral and no such lease now prohibits, restrains,
impairs or will prohibit, restrain or impair Borrower's right to remove any
Collateral from the leased premises. Whenever any Collateral is located upon
premises in which any third party has an interest (whether as owner, mortgagee,
beneficiary under a deed of trust, lien or otherwise), Borrower shall, whenever
requested by GBC, use its best efforts to cause such third party to execute and
deliver to GBC, in form acceptable to GBC, such waivers and subordinations as
GBC shall specify, so as to ensure that GBC's rights in the Collateral are, and
will continue to be, superior to the rights of any such third party. Borrower
will keep in full force and effect, and will comply*** with all the terms of,
any lease of real property where any of the Collateral now or in the future may
be located.
*, EXCEPT FOR THE DEC 4000AXP COMPUTER WHICH IS ON LOAN TO BORROWER
PURSUANT TO THE SETTLEMENT AGREEMENT BETWEEN BORROWER AND DIGITAL EQUIPMENT
CORPORATION DATED DECEMBER 4, 1992
** (IN WHICH A SECURITY INTEREST CAN BE PERFECTED BY THE FILING OF A
FINANCING STATEMENT OR, IN THE CASE OF ANY DEPOSIT ACCOUNT, BY NOTICE)
*** IN ALL MATERIAL RESPECTS
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3.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the *Collateral in
good working condition, ordinary wear and tear excepted, and Borrower will not
use the Collateral for any unlawful purpose. Borrower will immediately advise
GBC in writing of any material loss or damage to the Collateral. Borrower will
maintain the validity of, and otherwise maintain, preserve and protect, its
patents, trademarks, copyrights and other intellectual property in accordance
with prudent business practices.
* EQUIPMENT
3.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.
3.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial statements
now or in the future delivered to GBC have been, and will be, prepared in
conformity with generally accepted accounting principles and now and in the
future will [ * ]* the financial condition of Borrower, at the times and for
the periods therein stated. Between the last date covered by any such statement
provided to GBC and the date hereof, there has been no material adverse change
in the financial condition or business of Borrower. Borrower is now and will
continue to be solvent.
*PRESENT FAIRLY, SUBJECT TO YEAR-END AUDIT ADJUSTMENTS,
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely
filed, and will timely file*, all tax returns and** reports required by
applicable law, and Borrower has timely paid, and will [ * ] pay***, all
applicable taxes, assessments, deposits and contributions now or in the future
owed by Borrower. Borrower may, however, defer payment of any contested taxes,
provided that Borrower (i) in good faith contests Borrower's obligation to pay
the taxes by appropriate proceedings promptly and diligently instituted and
conducted, (ii) notifies GBC in writing of the commencement of, and any material
development in, the proceedings, and (iii) posts bonds or takes any other steps
required to keep the contested taxes from becoming a lien upon any of the
Collateral. **** Borrower is unaware of any claims or adjustments proposed for
any of Borrower's prior tax years which could result in additional taxes
becoming due and payable by Borrower. Borrower has paid, and shall continue to
pay all amounts necessary to fund all present and future pension, profit sharing
and deferred compensation plans in accordance with their terms, and Borrower has
not and will not withdraw from participation in, permit partial or complete
termination of, or permit the occurrence of any other event with respect to, any
such plan which could result in any***** liability of Borrower, including any
liability to the Pension Benefit Guaranty Corporation or any other governmental
agency. Borrower shall, at all times, utilize the services of an outside payroll
service providing for the automatic deposit of all payroll taxes payable by
Borrower.
*, INCLUDING ANY APPLICABLE EXTENSIONS
** MATERIAL
*** PRIOR TO DELINQUENCY
**** EXCEPT AS OTHERWISE DISCLOSED TO GBC IN WRITING,
***** MATERIAL
3.9 COMPLIANCE WITH LAW. Borrower has complied, and will comply, in all
material respects, with all provisions of all applicable laws and regulations,
including, but not limited to, those relating to Borrower's ownership of real or
personal property, the conduct and licensing of Borrower's business, and all
environmental matters.
3.10 LITIGATION. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of Borrower's
knowledge) threatened by or against or affecting Borrower in any court or before
any governmental agency (or any basis therefor known to Borrower) which may
result, either separately or in the aggregate, in any material adverse change in
the financial condition or business of Borrower, or in any material impairment
in the ability of Borrower to carry on its business in substantially the same
manner as it is now being conducted. Borrower will promptly inform GBC in
writing of any claim, proceeding, litigation or investigation in the future
threatened or instituted by or against Borrower involving any single claim of
$50,000* or more, or involving $100,000** or more in the aggregate.
* $100,000
** $200,000
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enclosed in brackets [ * ] in the electronic format.
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3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes.
4. RECEIVABLES AND INVESTMENT PROPERTY.
4.1 REPRESENTATIONS RELATING TO RECEIVABLES. Borrower represents and
warrants to GBC that each Receivable with respect to which Loans are requested
by Borrower shall, on the date each Loan is requested and made, represent an
undisputed, bona fide, existing, unconditional obligation of the Account Debtor
created by the sale, delivery, and acceptance of goods or the rendition of
services, in the ordinary course of Borrower's business.
4.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE. Borrower
represents and warrants to GBC as follows: All statements made and all unpaid
balances appearing in all invoices, instruments and other documents evidencing
the Receivables are and shall be true and correct and all such invoices,
instruments and other documents and all of Borrower's books and records are and
shall be genuine and in all respects what they purport to be, and all
signatories and endorsers have the capacity to contract. All sales and other
transactions underlying or giving rise to each Receivable shall comply with all
applicable laws and governmental rules and regulations. All* signatures and
indorsements on all documents, instruments, and agreements relating to all
Receivables are and shall be genuine, and all such documents, instruments and
agreements are and shall be legally enforceable in accordance with their
terms**.
*TO THE BEST OF BORROWER'S KNOWLEDGE, ALL
**, EXCEPT AS ENFORCEMENT MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY,
REORGANIZATION, MORATORIUM, AND OTHER SIMILAR LAWS RELATING TO OR AFFECTING
CREDITORS' RIGHTS GENERALLY AND BY GENERAL EQUITY PRINCIPLES
4.3 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES AND INVESTMENT
PROPERTY. Borrower shall deliver to GBC transaction reports and loan requests,
schedules and assignments of all Receivables, and schedules of collections, all
on GBC's standard forms; provided, however, that Borrower's failure to execute
and deliver the same shall not affect or limit GBC's security interest and other
rights in all of Borrower's Receivables, nor shall GBC's failure to advance or
lend against a specific Receivable affect or limit GBC's security interest and
other rights therein. Together with each such schedule and assignment, or later
if requested by GBC, Borrower shall furnish GBC with copies (or, at GBC's
request, originals) of all contracts, orders, invoices, and other similar
documents, and all original shipping instructions, delivery receipts, bills of
lading, and other evidence of delivery, for any goods the sale or disposition of
which gave rise to such Receivables, and Borrower warrants the genuineness of
all of the foregoing. Borrower shall also furnish to GBC an aged accounts
receivable trial balance in such form and at such intervals as GBC shall*
request. In addition, Borrower shall deliver to GBC the originals of all
instruments, chattel paper, security agreements, guarantees and other documents
and property evidencing or securing any Receivables, immediately upon receipt
thereof and in the same form as received, with all necessary indorsements, and,
upon the request of GBC, Borrower shall deliver to GBC all letters of credit and
also all certificated securities with respect to any Investment Property, with
all necessary indorsements, and obtain such account control agreements with
securities intermediaries and take such other action with respect to any
Investment Property, as GBC shall request, in form and substance satisfactory to
GBC. Upon request of GBC Borrower additionally shall** obtain consents from any
letter of credit issuers with respect to the assignment to GBC of any letter of
credit proceeds.
* REASONABLY
** USE ITS BEST EFFORTS TO
4.4 COLLECTION OF RECEIVABLES AND INVESTMENT PROPERTY INCOME. Borrower
shall have the right to collect all Receivables and retain all Investment
Property payments and distributions, unless and until a Default or an Event of
Default has occurred. Borrower shall hold all payments on, and proceeds of, and
distributions with respect to, Receivables and Investment Property in trust for
GBC, and Borrower shall deliver all such payments, proceeds and distributions to
GBC, within one business day after receipt of the same, in their original form,
duly endorsed, to be applied to the Obligations in such order as GBC shall
determine. Upon the request of GBC, any such distributions and payments with
respect to any Investment Property held in any securities account shall be held
and retained in such securities account as part of the Collateral.
4.5 DISPUTES. Borrower shall notify GBC promptly of all disputes* or claims
relating to Receivables** on the regular reports to GBC. Borrower shall not
forgive, or settle any Receivable for less than payment in full, or agree to do
any of the foregoing, except that Borrower may do so, provided that: (i)
Borrower does so in good faith, in a commercially reasonable manner, in the
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ordinary course of business, and in arm's length transactions, which are
reported to GBC on the regular reports provided to GBC; (ii) no Default or Event
of Default has occurred and is continuing; and (iii) taking into account all
such settlements and forgiveness, the total outstanding Loans and other
Obligations will not exceed the Credit Limit.
* IN EXCESS OF $50,000
** (INCLUDING ALL DISPUTES OR CLAIMS REGARDING RECEIVABLES WITH RESPECT TO
WHICH ANY LOAN WAS MADE)
4.6 RETURNS. Provided no Event of Default has occurred and is continuing, if
any Account Debtor returns any Inventory to Borrower in the ordinary course of
its business, Borrower shall promptly determine the reason for such return and
promptly issue a credit memorandum to the Account Debtor in the appropriate
amount (*sending a copy to GBC). In the event any attempted return occurs after
the occurrence of any Event of Default, Borrower shall (i) not accept any
return** without GBC's prior written consent, (ii) hold the returned Inventory
in trust for GBC, (iii) segregate all returned Inventory from all of Borrower's
other property, (iv) conspicuously label the returned Inventory as GBC's
property, and (v) immediately notify GBC of the return of any*** Inventory,
specifying the reason for such return, the location and condition of the
returned Inventory, and on GBC's request deliver such returned Inventory to
GBC.****
* AND, UPON REQUEST OF GBC,
** OF MATERIAL INVENTORY
*** MATERIAL
**** MATERIAL INVENTORY MEANS INVENTORY WITH A VALUE IN EXCESS OF $50,000.
4.7 VERIFICATION. GBC may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to
the Receivables, by means of mail, telephone or otherwise, either in the name of
Borrower or GBC or such other name as GBC may choose, and GBC or its designee
may, at any time*, notify Account Debtors that it has a security interest in the
Receivables.
* AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT WHICH IS CONTINUING
4.8 NO LIABILITY. GBC shall not under any circumstances be responsible or
liable for any shortage or discrepancy in, damage to, or loss or destruction of,
any goods, the sale or other disposition of which gives rise to a Receivable, or
for any error, act, omission, or delay of any kind occurring in the settlement,
failure to settle, collection or failure to collect any Receivable, or for
settling any Receivable in good faith for less than the full amount thereof, nor
shall GBC be deemed to be responsible for any of Borrower's obligations under
any contract or agreement giving rise to a Receivable. Nothing herein shall,
however, relieve GBC from liability for its own gross negligence or willful
misconduct.
5. ADDITIONAL DUTIES OF THE BORROWER.
5.1 INSURANCE. Borrower shall, at all times, insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to GBC, in such form and amounts as GBC may
reasonably require, and Borrower shall provide evidence of such insurance to
GBC, so that GBC is satisfied that such insurance is, at all times, in full
force and effect. All such insurance policies shall name GBC as an additional
loss payee, and shall contain a lenders loss payee endorsement in form
reasonably acceptable to GBC. Upon receipt of the proceeds of any such
insurance, GBC shall apply such proceeds in reduction of the Obligations as GBC
shall determine in its sole discretion, except that, provided no Default or
Event of Default has occurred and is continuing, GBC shall release to Borrower
insurance proceeds with respect to Equipment totaling less than $[ * ]*, which
shall be utilized by Borrower for the replacement of the Equipment with respect
to which the insurance proceeds were paid. GBC may require reasonable assurance
that the insurance proceeds so released will be so used. If Borrower fails to
provide or pay for any insurance, GBC may, but is not obligated to, obtain the
same at Borrower's expense. Borrower shall promptly deliver to GBC copies of all
reports made to insurance companies.
*$750,000
5.2 REPORTS. Borrower, at its expense, shall provide GBC with the written
reports set forth in the Schedule, and such other written reports with respect
to Borrower (including budgets, sales projections, operating plans and other
financial documentation), as GBC shall from time to time reasonably specify.
5.3 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and on one
business day's notice,
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GBC, or its agents, shall have the right to inspect the Collateral, and the
right to audit and copy Borrower's books and records. GBC shall take reasonable
steps to keep confidential all information obtained in any such inspection or
audit, but GBC shall have the right to disclose any such information to its
auditors, regulatory agencies, and attorneys, and pursuant to any subpoena or
other legal process. [ * ]* Borrower will not enter into any agreement with
any accounting firm, service bureau or third party to store Borrower's books or
records at any location other than Borrower's Address, without first obtaining
GBC's written consent, which may be conditioned upon such accounting firm,
service bureau or other third party agreeing to give GBC the same rights with
respect to access to books and records and related rights as GBC has under this
Agreement.
*THE FOREGOING AUDITS AND INSPECTIONS SHALL BE AT GBC'S EXPENSE EXCEPT THAT,
AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF ANY DEFAULT OR EVENT OF
DEFAULT, SUCH AUDITS AND INSPECTIONS SHALL BE AT BORROWER'S EXPENSE.
5.4 REMITTANCE OF PROCEEDS. All proceeds arising from the sale or other
disposition of any Collateral shall be delivered, in kind, by Borrower to GBC in
the original form in which received by Borrower not later than the following
business day after receipt by Borrower, to be applied to the Obligations in such
order as GBC shall determine; provided that, if no Default or Event of Default
has occurred and is continuing, and if no term loan is outstanding hereunder,
then Borrower shall not be obligated to remit to GBC the proceeds of the sale of
Equipment which is sold in the ordinary course of business, in a good-faith
arm's length transaction. Except for the proceeds of the sale of Equipment as
set forth above, Borrower shall not commingle proceeds of Collateral with any of
Borrower's other funds or property, and shall hold such proceeds separate and
apart from such other funds and property and in an express trust for GBC.
Nothing in this Section limits the restrictions on disposition of Collateral set
forth elsewhere in this Agreement.
5.5 NEGATIVE COVENANTS. Except as may be permitted in the Schedule,
Borrower shall not, without GBC's prior written consent, do any of the
following: (i) merge or consolidate with another corporation or entity*; (ii)
acquire any assets, except in the ordinary course of business**; (iii) enter
into any other transaction outside the ordinary course of business; (iv) sell or
transfer any Collateral, except that, provided no Default or Event of Default
has occurred and is continuing, Borrower may (a) sell finished Inventory in the
ordinary course of Borrower's business, and (b) if no term loan is outstanding
hereunder, sell Equipment in the ordinary course of business, in good-faith
arm's length transactions; (v) store any Inventory or other Collateral with any
warehouseman or other third party; (vi) sell any Inventory on a sale-or-return,
guaranteed sale, consignment, or other contingent basis; (vii) make any loans of
any money or other assets***; (viii) incur any debts, outside the ordinary
course of business, which would have a material, adverse effect on Borrower or
on the prospect of repayment of the Obligations; (ix) guarantee or otherwise
become liable with respect to the obligations of another party or entity****;
(x) pay or declare any dividends on Borrower's stock (except for dividends
payable solely in stock of Borrower); (xi) redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of Borrower's stock*****; (xii) make any
change in Borrower's capital structure which would have a material adverse
effect on Borrower or on the prospect of repayment of the Obligations; or (xiii)
dissolve or elect to dissolve; or (xiv) agree to do any of the foregoing.O
*, EXCEPT THAT BORROWER MAY MERGE OR CONSOLIDATE WITH ANOTHER CORPORATION
IF BORROWER IS THE SURVIVING CORPORATION IN THE MERGER, AND THE AGGREGATE VALUE
OF THE ASSETS ACQUIRED IN THE MERGER DOES NOT EXCEED 25% OF BORROWER'S TANGIBLE
NET WORTH AS OF THE END OF THE MONTH PRIOR TO THE EFFECTIVE DATE OF THE MERGER,
AND THE ASSETS OF THE CORPORATION ACQUIRED IN THE MERGER ARE NOT SUBJECT TO ANY
LIENS OR ENCUMBRANCES, EXCEPT LIENS THAT WOULD CONSTITUTE PERMITTED LIENS AFTER
GIVING EFFECT TO SUCH MERGER
**, EXCEPT THAT BORROWER MAY ACQUIRE ASSETS OUTSIDE THE ORDINARY COURSE OF
BUSINESS IF THE AGGREGATE PURCHASE PRICE OF SUCH ASSETS DOES NOT EXCEED 25% OF
BORROWER'S TANGIBLE NET WORTH AS OF THE END OF THE MONTH PRIOR TO THE EFFECTIVE
DATE OF THE ACQUISITION
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***, EXCEPT FOR (A) LOANS TO EMPLOYEES IN AN AGGREGATE AMOUNT AT ANY ONE
TIME OUTSTANDING NOT TO EXCEED $250,000, (B) MISCELLANEOUS AMOUNTS IN AN
AGGREGATE AMOUNT AT ANY ONE TIME OUTSTANDING NOT TO EXCEED $500,000, (C) CREDIT
SALES TO ACCOUNT DEBTORS IN THE ORDINARY COURSE OF BUSINESS, AND (D) LOANS OF
DEMONSTRATION EQUIPMENT IN THE ORDINARY COURSE OF BUSINESS
****, AND EXCEPT FOR GUARANTEES OF LOANS TO EMPLOYEES IN AN AGGREGATE AMOUNT
AT ANY ONE TIME OUTSTANDING NOT TO EXCEED $250,000, AND EXCEPT FOR GUARANTEES OF
MISCELLANEOUS AMOUNTS IN AN AGGREGATE AMOUNT AT ANY ONE TIME OUTSTANDING NOT TO
EXCEED $500,000, AND EXCEPT FOR GUARANTEES OF OBLIGATIONS OF BORROWER'S WHOLLY
OWNED SUBSIDIARIES IN THE ORDINARY COURSE OF BUSINESS
***** (EXCEPT THAT BORROWER MAY REPURCHASE OR REDEEM SHARES OF ITS CAPITAL
STOCK PURSUANT TO EMPLOYEE STOCK OPTION PLANS FOR AN AGGREGATE PRUCHASE PRICE
NOT TO EXCEED $50,000 PER FISCAL YEAR)
+ TRANSACTIONS EXCEPTED FROM THE FOREGOING NEGATIVE COVENANTS ARE ONLY
PERMITTED IF NO EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING AND IF NO
DEFAULT OR EVENT OF DEFAULT WOULD OCCUR AS A RESULT OF SUCH TRANSACTION. FOR
PURPOSES OF THE FOREGOING, "TANGIBLE NET WORTHO MEANS THE EXCESS OF TOTAL
ASSETS OVER TOTAL LIABILITIES, DETERMINED IN ACCORDANCE WITH GAAP, EXCLUDING
HOWEVER ALL ASSETS WHICH WOULD BE CLASSIFIED AS INTANGIBLE ASSETS UNDER GAAP,
INCLUDING, WITHOUT LIMITATION GOODWILL, LICENSES, PATENTS, TRADEMARKS, TRADE
NAMES, COPYRIGHTS, AND FRANCHISES. "LIABILITIESO FOR PURPOSES OF THE
FOREGOING DO NOT INCLUDE INDEBTEDNESS WHICH IS SUBORDINATED TO THE INDEBTEDNESS
TO GBC UNDER A SUBORDINATION AGREEMENT IN FORM SPECIFIED BY GBC OR BY LANGUAGE
IN THE INSTRUMENT EVIDENCING THE INDEBTEDNESS WHICH IS ACCEPTABLE TO GBC.
5.6 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against GBC with respect to any Collateral or in any manner
relating to Borrower, Borrower shall, without expense to GBC, make available
Borrower and its officers, employees and agents, and Borrower's books and
records, without charge, to the extent that GBC may deem them reasonably
necessary in order to prosecute or defend any such suit or proceeding.
5.7 NOTIFICATION OF CHANGES. Borrower will promptly notify GBC in writing
of any change in its officers or directors, the opening of any new bank account
or other deposit account, the opening of any new securities account, and any
material adverse change in the business or financial affairs of Borrower.
5.8 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by GBC,
to execute all documents and take all actions, as GBC may deem reasonably
necessary or useful in order to perfect and maintain GBC's perfected security
interest in the Collateral*, and in order to fully consummate the transactions
contemplated by this Agreement.
*WHICH IS OF A TYPE WITH RESPECT TO WHICH A SECURITY INTEREST MAY BE
PERFECTED BY THE FILING OF A FINANCING STATEMENT
5.9 INDEMNITY. Borrower hereby agrees to indemnify GBC and hold GBC
harmless from and against any and all claims, debts, liabilities, demands,
obligations, actions, causes of action, penalties, costs and expenses (including
attorneys' fees), of every nature, character and description, which GBC may
sustain or incur based upon or arising out of any of the Obligations, any actual
or alleged failure to collect and pay over any withholding or other tax relating
to Borrower or its employees, any relationship or agreement between GBC and
Borrower, any actual or alleged failure of GBC to comply with any writ of
attachment or other legal process relating to Borrower or any of its property,
or any other matter, cause or thing whatsoever occurred, done, omitted or
suffered to be done by GBC relating to Borrower or the Obligations (except any
such amounts sustained or incurred as the result of the gross negligence or
willful misconduct of GBC or any of its directors, officers, employees, agents,
attorneys, or any other person affiliated with or representing GBC).
Notwithstanding any provision in this Agreement to the contrary, the indemnity
agreement set forth in this Section shall survive any termination of this
Agreement and shall for all purposes continue in full force and effect.
6. TERM.
6.1 MATURITY DATE. This Agreement shall continue in effect until the
maturity date set forth on the Schedule (the "Maturity Date"); provided that
the Maturity Date shall automatically be extended, and this Agreement shall
automatically and continuously renew, for successive additional terms of one
year each, unless one party gives written notice to the other, not less than
sixty days prior to the next Maturity Date, that such party elects to terminate
this Agreement effective on the next Maturity Date.
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6.2 EARLY TERMINATION. This Agreement may be terminated prior to the
Maturity Date as follows: (i) by Borrower, effective three business days after
written notice of termination is given to GBC; or (ii) by GBC at any time after
the occurrence* of an Event of Default, without notice, effective immediately.
[ * ]
* AND DURING THE CONTINUANCE
6.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier effective
date of termination, Borrower shall pay and perform in full all Obligations,
whether evidenced by installment notes or otherwise, and whether or not all or
any part of such Obligations are otherwise then due and payable. Without
limiting the generality of the foregoing, if on the Maturity Date, or on any
earlier effective date of termination, there are any outstanding letters of
credit issued based upon an application, guarantee, indemnity or similar
agreement on the part of GBC, then on such date Borrower shall provide to GBC
cash collateral in an amount equal to 110% of the face amount of all such
letters of credit plus all interest, fees and costs due or (in GBC's estimation)
likely to become due in connection therewith, to secure all of the Obligations
relating to said letters of credit, pursuant to GBC's then standard form cash
pledge agreement. Notwithstanding any termination of this Agreement, all of
GBC's security interests in all of the Collateral and all of the terms and
provisions of this Agreement shall continue in full force and effect until all
Obligations have been paid and performed in full; provided that (LANGUAGE
INTENTIONALLY OMITTED) GBC may, in its sole discretion, refuse to make any
further Loans after termination. No termination shall in any way affect or
impair any right or remedy of GBC, nor shall any such termination relieve
Borrower of any Obligation to GBC, until all of the Obligations have been paid
and performed in full. Upon payment and performance in full of all the
Obligations and termination of this Agreement, GBC shall promptly deliver to
Borrower termination statements, requests for reconveyances and such other
documents as may be reasonably required to terminate GBC's security interests.
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "Event of Defaulto under this Agreement, and Borrower shall
give GBC immediate written notice thereof: (a) Any warranty, representation,
statement, report or certificate* made or delivered to GBC by Borrower or any of
Borrower's officers, employees or agents, now or in the future, shall be untrue
or misleading in a material respect; or (b) Borrower shall fail to pay when due
any Loan or any interest thereon or any other monetary Obligation; or (c) the
total Loans and other Obligations outstanding at any time shall exceed the
Credit Limit; or (d) Borrower shall fail to perform any non-monetary Obligation
which by its nature cannot be cured; or (e) Borrower shall fail to perform any
other non-monetary Obligation, which failure is not cured within** [ * ]; or
(f) Any levy, assessment, attachment, seizure, lien or encumbrance (other than a
Permitted Lien) is made on all or any*** part of the Collateral which is not
cured within ****10 days after the occurrence of the same; or (g) any default or
event of default occurs under any obligation secured by a Permitted Lien, which
is not cured within any applicable cure period or waived in writing by the
holder of the Permitted Lien; or (h) Borrower or any Guarantor breaches any
material contract or obligation, which has or may reasonably be expected to have
a material adverse effect on Borrower's or such Guarantor's business or
financial condition; or (i) dissolution, termination of existence, insolvency or
business failure of Borrower or any Guarantor; or appointment of a receiver,
trustee or custodian, for all or any part of the property of, assignment for the
benefit of creditors by, or the commencement of any proceeding by Borrower or
any Guarantor under any reorganization, bankruptcy, insolvency, arrangement,
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readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect; or (j) the commencement of any
proceeding against Borrower or any Guarantor under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect,
which is not cured by the dismissal thereof within 45 days after the date
commenced; or (k) revocation or termination of, or limitation or denial of
liability upon, any guaranty of the Obligations or any attempt to do any of the
foregoing; or (l) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset pledged by any other Person to secure any or all of the
Obligations, or any attempt to do any of the foregoing, or commencement of
proceedings by or against any such Person under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect; or (m) Borrower or
any Guarantor makes any payment on account of any indebtedness or obligation
which has been subordinated to the Obligations other than as permitted in the
applicable subordination agreement, or if any Person who has subordinated such
indebtedness or obligations terminates or in any way limits or terminates its
subordination agreement; or (n) [ * ] *****without the prior written consent
of GBC; or (") Borrower or any Guarantor shall generally not pay its debts as
they become due, or Borrower or any Guarantor shall conceal, remove or transfer
any part of its property, with intent to hinder, delay or defraud its creditors,
or make or suffer any transfer of any of its property which may be fraudulent
under any bankruptcy, fraudulent conveyance or similar law; or (p) there shall
be a material adverse change in Borrower's or any Guarantor's business or
financial condition. GBC may cease making any Loans hereunder during any of the
above cure periods, and thereafter if an Event of Default has occurred.
* IN WRITING (OTHER THAN PROJECTIONS)
** THIRTY (30) DAYS AFTER NOTICE FROM GBC, PROVIDED THAT IF SUCH FAILURE
MATERIALLY ADVERSELY AFFECTS THE COLLATERAL OR GBC'S SECURITY INTERESTS THEREIN,
THEN AN EVENT OF DEFAULT SHALL BE DEEMED TO OCCUR IMMEDIATELY UPON NOTICE FROM
GBC
*** MATERIAL
**** 30
***** ANY PERSON, OR TWO OR MORE PERSONS ACTING IN CONCERT, SHALL ACQUIRE
BENEFICIAL OWNERSHIP, DIRECTLY OR INDIRECTLY, OR SHALL ENTER INTO A CONTRACT OR
ARRANGEMENT (1) FOR THE ACQUISITION OF THE SECURITIES OF THE BORROWER (OR OTHER
SECURITIES CONVERTIBLE INTO SUCH SECURITIES) REPRESENTING 20% OR MORE OF THE
COMBINED VOTING POWER OF ALL SECURITIES OF THE BORROWER ENTITLED TO VOTE IN THE
ELECTION OF DIRECTORS, OR (2) WHICH UPON CONSUMMATION WILL RESULT IN ITS OR
THEIR ACQUISITION OF, OR CONTROL OVER, SECURITIES OF THE BORROWER (OR OTHER
SECURITIES CONVERTIBLE INTO SUCH SECURITIES) REPRESENTING 20% OR MORE OF THE
COMBINED VOTING POWER OF ALL SECURITIES OF THE BORROWER ENTITLED TO VOTE IN THE
ELECTION OF DIRECTORS,
7.2 REMEDIES. Upon the occurrence and during the continuance of any Event of
Default, GBC, at its option, and without notice or demand of any kind (all of
which are hereby expressly waived by Borrower), may do any one or more of the
following: (a) Cease making Loans or otherwise extending credit to Borrower
under this Agreement or any other document or agreement; (b) Accelerate and
declare all or any part of the Obligations to be immediately due, payable, and
performable, notwithstanding any deferred or installment payments allowed by any
instrument evidencing or relating to any Obligation; (c) Take possession of any
or all of the Collateral wherever it may be found, and for that purpose Borrower
hereby authorizes GBC without judicial process to enter onto any of Borrower's
premises without interference to search for, take possession of, keep, store, or
remove any of the Collateral, and remain on the premises or cause a custodian to
remain on the premises in exclusive control thereof, without charge for so long
as GBC deems it reasonably necessary in order to complete the enforcement of its
rights under this Agreement or any other agreement; provided, however, that
should GBC seek to take possession of any of the Collateral by Court process,
Borrower hereby irrevocably waives: (i) any bond and any surety or security
relating thereto required by any statute, court rule or otherwise as an incident
to such possession; (ii) any demand for possession prior to the commencement of
any suit or action to recover possession thereof; and (iii) any requirement that
GBC retain possession of, and not dispose of, any such Collateral until after
trial or final judgment; (d) Require Borrower to assemble any or all of the
Collateral and make it available to GBC at places designated by GBC which are
reasonably convenient to GBC and Borrower, and to remove the Collateral to such
locations as GBC may deem advisable; (e) Complete the processing, manufacturing
or repair of any Collateral prior to a disposition thereof and, for such purpose
and for the purpose of removal, GBC shall have the right to use* Borrower's
premises, vehicles, hoists, lifts, cranes, equipment and all other property
without charge; (f) Sell, lease or otherwise dispose of any of the Collateral,
in its condition at the time GBC obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private sales,
in lots or in bulk, for cash, exchange or other property, or on credit, and to
adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. GBC shall have the right to conduct
such disposition on Borrower's premises without charge, for such time or times
as GBC deems reasonable, or on GBC's premises, or elsewhere and the Collateral
need not be located at the place of disposition. GBC may
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directly or through any affiliated company purchase or lease any Collateral at
any such public disposition, and if permissible under applicable law, at any
private disposition. Any sale or other disposition of Collateral shall not
relieve Borrower of any liability Borrower may have if any Collateral is
defective as to title or physical condition or otherwise at the time of sale;
(g) Demand payment of, and collect any Receivables and General Intangibles
comprising Collateral and, in connection therewith, Borrower irrevocably
authorizes GBC to endorse or sign Borrower's name on all collections, receipts,
instruments and other documents, to take possession of and open mail addressed
to Borrower and remove therefrom payments made with respect to any item of the
Collateral or proceeds thereof, and, in GBC's [ * ]** discretion, to grant
extensions of time to pay, compromise claims and settle Receivables, General
Intangibles and the like for less than face value; (h) Collect, receive, dispose
of and realize upon any Investment Property, including withdrawal of any and all
funds from any securities accounts; and (i) Demand and receive possession of any
of Borrower's federal and state income tax returns and the books and records
utilized in the preparation thereof or referring thereto. All reasonable
attorneys' fees, expenses, costs, liabilities and obligations incurred by GBC
with respect to the foregoing shall be added to and become part of the
Obligations, shall be due on demand, and shall bear interest at a rate equal to
the highest interest rate applicable to any of the Obligations.
* (TO THE EXTENT THAT BORROWER HAS THE RIGHT TO ALLOW SUCH USE)
** REASONABLE
7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and GBC
agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to
Borrower at least seven days prior to the sale, and, in the case of a public
sale, notice of the sale is published at least seven days before the sale in a
newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by GBC,
with or without the Collateral being present; (iv) The sale commences at any
time between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price in cash
or by cashier's check or wire transfer is required; (vi) With respect to any
sale of any of the Collateral, GBC may (but is not obligated t") direct any
prospective purchaser to ascertain directly from Borrower any and all
information concerning the same. GBC shall be free to employ other methods of
noticing and selling the Collateral, in its discretion, if they are commercially
reasonable. Without limiting the generality of the foregoing, Borrower
recognizes that GBC may be unable to make a public sale of any or all of the
Investment Property, by reason of prohibitions contained in applicable
securities laws or otherwise, and expressly agrees that a private sale to a
restricted group of purchasers for investment and not with a view to any
distribution thereof shall be considered a commercially reasonable sale.
7.4 POWER OF ATTORNEY. Upon the occurrence and during the continuance of any
Event of Default, without limiting GBC's other rights and remedies, Borrower
grants to GBC an irrevocable power of attorney coupled with an interest,
authorizing and permitting GBC (acting through any of its employees, attorneys
or agents) at any time, at its option, but without obligation, with or without
notice to Borrower, and at Borrower's expense, to do any or all of the
following, in Borrower's name or otherwise, but GBC agrees to exercise the
following powers in a commercially reasonable manner: (a) Execute on behalf of
Borrower any documents that GBC may, in its sole discretion, deem advisable in
order to perfect and maintain GBC's security interest in the Collateral, or in
order to exercise a right of Borrower or GBC, or in order to fully consummate
all the transactions contemplated under this Agreement, and all other present
and future agreements*; (b) Execute on behalf of Borrower any document
exercising, transferring or assigning any option to purchase, sell or otherwise
dispose of or to lease (as lessor or lessee) any real or personal property which
is part of GBC's Collateral or in which GBC has an interest; (c) Execute on
behalf of Borrower, any invoices relating to any Receivable, any draft against
any Account Debtor and any notice to any Account Debtor, any proof of claim in
bankruptcy, any Notice of Lien, claim of mechanic's, materialman's or other
lien, or assignment or satisfaction of mechanic's, materialman's or other lien;
(d) Take control in any manner of any cash or non-cash items of payment or
proceeds of Collateral; endorse the name of Borrower upon any instruments, or
documents, evidence of payment or Collateral that may come into GBC's
possession; (e) Endorse all checks and other forms of remittances received by
GBC; (f) Pay, contest or settle any lien, charge, encumbrance, security interest
and adverse claim in or to any of the Collateral, or any judgment based thereon,
or otherwise take any action to terminate or discharge the same; (g) Grant
extensions of time to pay, compromise claims and settle Receivables
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and General Intangibles for less than face value and execute all releases and
other documents in connection therewith; (h) Pay any sums required on account of
Borrower's taxes or to secure the release of any liens therefor, or both; (i)
Settle and adjust, and give releases of, any insurance claim that relates to any
of the Collateral and obtain payment therefor; (j) Instruct any third party
having custody or control of any books or records belonging to, or relating to,
Borrower to give GBC the same rights of access and other rights with respect
thereto as GBC has under this Agreement; (k) Execute and deliver to any
securities intermediary or other Person any entitlement order, account control
agreement or other notice, document or instrument with respect to any Investment
Property; and (l) Take any action or pay any sum required of Borrower pursuant
to this Agreement and any other present or future agreements**. Any and all
reasonable sums paid and any and all reasonable costs, expenses, liabilities,
obligations and reasonable attorneys' fees incurred by GBC with respect to the
foregoing shall be added to and become part of the Obligations, shall be payable
on demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations. In no event shall GBC's rights under the
foregoing power of attorney or any of GBC's other rights under this Agreement be
deemed to indicate that GBC is in control of the business, management or
properties of Borrower.
* BETWEEN GBC AND BORROWER
** BETWEEN GBC AND BORROWER
7.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any sale
or other disposition of the Collateral shall be applied by GBC first to the
reasonable costs, expenses, liabilities, obligations and attorneys' fees
incurred by GBC in the exercise of its rights under this Agreement, second to
the interest due upon any of the Obligations, and third to the principal of the
Obligations, in such order as GBC shall determine in its sole discretion. Any
surplus shall be paid to Borrower or other persons legally entitled thereto;
Borrower shall remain liable to GBC for any deficiency. If, GBC, in its sole
discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale of Collateral, GBC shall have
the option, exercisable at any time, in its sole discretion, of either reducing
the Obligations by the principal amount of the purchase price or deferring the
reduction of the Obligations until the actual receipt by GBC of the cash
therefor.
7.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set forth
in this Agreement, GBC shall have all the other rights and remedies accorded a
secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between GBC and Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise by
GBC of one or more of its rights or remedies shall not be deemed an election,
nor bar GBC from subsequent exercise or partial exercise of any other rights or
remedies. The failure or delay of GBC to exercise any rights or remedies shall
not operate as a waiver thereof, but all rights and remedies shall continue in
full force and effect until all of the Obligations have been fully paid and
performed.
8. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"Account Debtor" means the obligor on a Receivable.
"Affiliate" means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.
"Agreement" and "this Agreemento means this Loan and Security
Agreement and all modifications and amendments thereto, extensions thereof, and
replacements therefor.
"Business Day" means a day on which GBC is open for business.
"Code" means the Uniform Commercial Code as adopted and in effect in
the State of California from time to time.
"Collateral" has the meaning set forth in Section 2.1 above.
"Default" means any event which with notice or passage of time or both,
would constitute an Event of Default.
"Deposit Account" has the meaning set forth in Section 9105 of the Code.
"Eligible Inventory" means Inventory which GBC, in its sole judgment, deems
eligible for borrowing, based on such considerations as GBC may from time to
time
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deem appropriate. Without limiting the fact that the determination of which
Inventory is eligible for borrowing is a matter of GBC's discretion, Inventory
which does not meet the following requirements will not be deemed to be Eligible
Inventory: Inventory which (i) [ * ],* not obsolete or unmerchantable, and
is not comprised of raw materials, work in process, packaging materials or
supplies; (iii) meets all applicable governmental standards; (iv) has been
manufactured in compliance with the Fair Labor Standards Act; (v) conforms in
all respects to the warranties and representations set forth in this Agreement;
(vi) is at all times subject to GBC's duly perfected, first priority security
interest; and (vii) is situated at a one of the locations set forth on the
Schedule.
* IS
"Eligible Receivables" means Receivables arising in the ordinary course of
Borrower's business from the sale of goods or rendition of services, which GBC,
in its sole judgment, shall deem eligible for borrowing, based on the following
considerations (the "Eligibility Requirements"): (i) the Receivable must not be
outstanding for more than 120 days from its invoice date, (ii) the Receivable
must not represent progress xxxxxxxx, or be due under a fulfillment or
requirements contract with the Account Debtor, (iii) the Receivable must not be
subject to any contingencies (including Receivables arising from sales on
consignment, guaranteed sale or other terms pursuant to which payment by the
Account Debtor may be conditional), (iv) the Receivable must not be owing from
an Account Debtor with whom the Borrower has any dispute (whether or not
relating to the particular Receivable), (v) the Receivable must not be owing
from an Affiliate of Borrower, (vi) the Receivable must not be owing from an
Account Debtor which is subject to any insolvency or bankruptcy proceeding, or
whose financial condition is not acceptable to GBC, or which, fails or goes out
of a material portion of its business, (vii) the Receivable must not be owing
from the United States or any department, agency or instrumentality thereof
(unless there has been compliance, to GBC's satisfaction, with the United States
Assignment of Claims Act), (viii) the Receivable must not be owing from an
Account Debtor located outside the United States or Canada (unless pre-approved
by GBC in its discretion in writing, or backed by a letter of credit
satisfactory to GBC, or FCIA insured satisfactory to GBC), (ix) the Receivable
must not be owing from an Account Debtor to whom Borrower is or may be liable
for goods purchased from such Account Debtor or otherwise, (x) the Receivable
must not violate any representation or warranty set forth in this Agreement,
(xi) the Receivable, when aggregated with all other Receivables owing from the
Account Debtor, must not exceed 40% of the total Eligible Receivables
outstanding, (xii) the Receivable must not be one in which GBC does not have a
first-priority, valid, perfected security interest, (xiii) the Receivable must
not arise from a maintenance contract or from xxxxxxxx made on a percentage
completion basis, and (xiv) the Receivable must not be one which GBC, in its
sole judgment exercised in good faith discretion, believes the collection of
which is insecure or may not be paid by reason of the Account Debtor's financial
inability to pay, or deems ineligible on such other credit and/or collateral
considerations as GBC in its good faith discretion deems appropriate. If more
than 50% of the Receivables owing from an Account Debtor are outstanding more
than 120 days from their invoice date (without regard to unapplied credits) or
are otherwise not Eligible Receivables, then all Receivables owing from that
Account Debtor will be deemed ineligible for borrowing.
"Equipment" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.
"Event of Default" means any of the events set forth in Section 7.1 of this
Agreement.
"General Intangibles" means all general intangibles of Borrower,
whether now owned or hereafter created or acquired by Borrower, including,
without limitation, all choses in action, causes of action, corporate or other
business records, Deposit Accounts, inventions, designs, drawings, blueprints,
patents, patent applications, trademarks and the goodwill of the business
symbolized thereby, names, trade names, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, customer lists, security and other
deposits, rights in all litigation presently or hereafter pending for any cause
or claim (whether in contract, tort or otherwise), and all judgments now or
hereafter arising therefrom, all claims of Borrower against GBC, rights to
purchase or sell real or personal property, rights as a licensor or licensee of
any kind, royalties, telephone numbers, proprietary
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information, purchase orders, and all insurance policies and claims (including
life insurance, key man insurance, credit insurance, liability insurance,
property insurance and other insurance), tax refunds and claims, computer
programs, discs, tapes and tape files, claims under guaranties, security
interests or other security held by or granted to Borrower, all rights to
indemnification and all other intangible property of every kind and nature
(other than Receivables).
"Guarantor" means any Person who has guaranteed any of the Obligations.
"Inventory" means all of Borrower's now owned and hereafter acquired
goods, merchandise or other personal property, wherever located, to be furnished
under any contract of service or held for sale or lease (including all raw
materials, work in process, finished goods and goods in transit), and all
materials and supplies of every kind, nature and description which are or might
be used or consumed in Borrower's business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
merchandise or other personal property, and all warehouse receipts, documents of
title and other documents representing any of the foregoing.
"Investment Property" means any and all investment property of
Borrower, including all securities, whether certificated or uncertificated,
security entitlements, securities accounts, commodity contracts and commodity
accounts, and all financial assets held in any securities account or otherwise,
wherever located, and whether now existing or hereafter acquired or arising.
"Obligations" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to GBC, whether evidenced by this Agreement or any note
or other instrument or document, whether arising from an extension of credit,
opening of a letter of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by GBC in
Borrower's debts owing to others), absolute or contingent, due or to become due,
including, without limitation, all interest, charges, expenses, fees, attorney's
fees, expert witness fees, audit fees, letter of credit fees, loan fees,
termination fees, minimum interest charges and any other sums chargeable to
Borrower under this Agreement or under any other present or future instrument or
agreement between Borrower and GBC.
"Permitted Liens" means the following: (i) purchase money security
interests in specific items of Equipment; (ii) leases of specific items of
Equipment; (iii) liens for taxes not yet payable*; (iv) additional security
interests and liens which are subordinate to the security interest in favor of
GBC and are consented to in writing by GBC (which consent shall not be
unreasonably withheld); (v) security interests being terminated substantially
concurrently with this Agreement; (vi) liens of materialmen, mechanics,
warehousemen, carriers, or other similar liens arising in the ordinary course of
business and securing obligations which are not delinquent; (vii) liens incurred
in connection with the extension, renewal or refinancing of the indebtedness
secured by liens of the type described above in clauses (i) or (ii) above,
provided that any extension, renewal or replacement lien is limited to the
property encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; and (viii)
Liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods. GBC will have the
right to require, as a condition to its consent under subparagraph (iv) above,
that the holder of the additional security interest or lien sign an
intercreditor agreement on GBC's then standard form, acknowledge that the
security interest is subordinate to the security interest in favor of GBC, and
agree not to take any action to enforce its subordinate security interest so
long as any Obligations remain outstanding, and that Borrower agree that any
uncured default in any obligation secured by the subordinate security interest
shall also constitute an Event of Default under this Agreement.
* DELINQUENT
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"Prime Rate" means the actual "Reference Rateo or the substitute
therefor of Bank of America NT & SA ("B of A") whether or not that rate is
the lowest interest rate charged by B of A. If the Prime Rate, as so defined, is
unavailable on any date of determination, "Prime Rateo shall mean the
highest of the prime rates published in the Wall Street Journal, on such date of
determination, as the base rate on corporate loans at large United States money
center commercial banks, as determined in good faith by GBC, which determination
shall be conclusive absent manifest error.
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GREYROCK BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
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"Receivables" means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, documents and all other forms of obligations
at any time owing to Borrower, all guaranties and other security therefor, all
merchandise returned to or repossessed by Borrower, and all rights of stoppage
in transit and all other rights or remedies of an unpaid vendor, lienor or
secured party.
Other Terms. All accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings given to such terms in accordance with
generally accepted accounting principles, consistently applied. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meanings
provided by the Code, to the extent such terms are defined therein.
9. GENERAL PROVISIONS.
9.1 INTEREST COMPUTATION. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by GBC (including
proceeds of Receivables and payment of the Obligations in full) shall be deemed
applied by GBC on account of the Obligations THREE Business Days after receipt
by GBC of immediately available funds. GBC shall not, however, be required to
credit Borrower's account for the amount of any item of payment which is
unsatisfactory to GBC in its discretion, and GBC may charge Borrower's Loan
account for the amount of any item of payment which is returned to GBC unpaid.
9.2 APPLICATION OF PAYMENTS. All payments with respect to the Obligations
may be applied, and in GBC's sole discretion reversed and reapplied, to the
Obligations, in such order and manner as GBC shall determine in its sole
discretion.
9.3 CHARGES TO ACCOUNT. GBC may, in its discretion, require that Borrower
pay monetary Obligations in cash to GBC, or charge them to Borrower's Loan
account, in which event they will bear interest at the same rate applicable to
the Loans.
9.4 MONTHLY ACCOUNTINGS. GBC shall provide Borrower monthly with an account
of advances, charges, expenses and payments made pursuant to this Agreement.
Such account shall be deemed correct, accurate and binding on Borrower and an
account stated (except for reverses and reapplications of payments made and
corrections of errors discovered by GBC), unless Borrower notifies GBC in
writing to the contrary within sixty days after each account is rendered,
describing the nature of any alleged errors or admissions.
9.5 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service, or by facsimile, or by regular first-class mail, or certified mail
return receipt requested, addressed to GBC or Borrower at the addresses shown in
the heading to this Agreement, or at any other address designated in writing by
one party to the other party. All notices shall be deemed to have been given
upon delivery in the case of notices personally delivered, or at the expiration
of one business day following delivery to the private delivery service, or one
day after the date sent by facsimile, or two business days following the deposit
thereof in the United States mail, with postage prepaid.
9.6 SEVERABILITY. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
9.7 INTEGRATION. This Agreement and such other written agreements, documents
and instruments as may be executed in connection herewith are the final, entire
and complete agreement between Borrower and GBC and supersede all prior and
contemporaneous negotiations and oral representations and agreements, all of
which are merged and integrated in this Agreement. There are no oral
understandings, representations or agreements between the parties which are not
set forth in this Agreement or in other written agreements signed by the parties
in connection herewith.
9.8 WAIVERS. The failure of GBC at any time or times to require Borrower to
strictly comply with any of the provisions of this Agreement or any other
present or future agreement between Borrower and GBC shall not waive or diminish
any right of GBC later to demand and receive strict compliance therewith. Any
waiver of any default shall not waive or affect any other default, whether prior
or subsequent, and whether or not similar. None of the provisions of this
Agreement or any other agreement now or in the future executed by Borrower and
delivered to GBC shall be deemed to have been waived by any act or knowledge of
GBC or its agents or employees, but only by a specific written waiver signed by
an authorized officer of GBC and delivered to Borrower. Borrower waives demand,
protest, notice of protest and notice of default or dishonor, notice of payment
and nonpayment, release, compromise, settlement, extension or renewal of any
commercial
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GREYROCK BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
paper, instrument, account, General Intangible, document or guaranty at any time
held by GBC on which Borrower is or may in any way be liable, and notice of any
action taken by GBC, unless expressly required by this Agreement.
9.9 AMENDMENT. The terms and provisions of this Agreement may not be waived
or amended, except in a writing executed by Borrower and a duly authorized
officer of GBC.
9.10 TIME OF ESSENCE. Time is of the essence in the performance by Borrower
of each and every obligation under this Agreement.
9.11 ATTORNEYS' FEES AND COSTS. Borrower shall reimburse GBC for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by GBC, pursuant to, or in
connection with, or relating to this Agreement (whether or not a lawsuit is
filed), including, but not limited to, any reasonable attorneys' fees and costs
GBC incurs in order to do the following: prepare and negotiate this Agreement
and the documents relating to this Agreement; obtain legal advice in connection
with this Agreement or Borrower; enforce, or seek to enforce, any of its rights;
prosecute actions against, or defend actions by, Account Debtors; commence,
intervene in, or defend any action or proceeding; initiate any complaint to be
relieved of the automatic stay in bankruptcy; file or prosecute any probate
claim, bankruptcy claim, third-party claim, or other claim; examine, audit,
copy, and inspect any of the Collateral or any of Borrower's books and records;
protect, obtain possession of, lease, dispose of, or otherwise enforce GBC's
security interest in, the Collateral; and otherwise represent GBC in any
litigation relating to Borrower. If either GBC or Borrower files any lawsuit
against the other predicated on a breach of this Agreement, the prevailing party
in such action shall be entitled to recover its reasonable costs and attorneys'
fees, including (but not limited t") reasonable attorneys' fees and costs
incurred in the enforcement of, execution upon or defense of any order, decree,
award or judgment. All attorneys' fees and costs to which GBC may be entitled
pursuant to this Paragraph shall immediately become part of Borrower's
Obligations, shall be* due on demand, and shall bear interest at a rate equal to
the highest interest rate applicable to any of the Obligations.
* ADDED TO BORROWER'S RECEIVABLES LOAN ACCOUNT
9.12 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective successors, assigns, heirs,
beneficiaries and representatives of Borrower and GBC and, as to Section 9.19
below, any participant of GBC; provided, however, that Borrower may not assign
or transfer any of its rights under this Agreement without the prior written
consent of GBC, and any prohibited assignment shall be void. No consent by GBC
to any assignment shall release Borrower from its liability for the Obligations.
9.13 JOINT AND SEVERAL LIABILITY. If Borrower consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.
9.14 LIMITATION OF ACTIONS. Any claim or cause of action by Borrower against
GBC, its directors, officers, employees, agents, accountants or attorneys, based
upon, arising from, or relating to this Agreement, or any other present or
future document or agreement, or any other transaction contemplated hereby or
thereby or relating hereto or thereto, or any other matter, cause or thing
whatsoever, occurred, done, omitted or suffered to be done by GBC, its
directors, officers, employees, agents, accountants or attorneys, shall be
barred unless asserted by Borrower by the commencement of an action or
proceeding in a court of competent jurisdiction by the filing of a complaint
within one year after* the first act, occurrence or omission upon which such
claim or cause of action, or any part thereof, is based, and the service of a
summons and complaint on an officer of GBC, or on any other person authorized to
accept service on behalf of GBC, within thirty (30) days thereafter. Borrower
agrees that such one-year period is a reasonable and sufficient time for
Borrower to investigate and act upon any such claim or cause of action. The
one-year period provided herein shall not be waived, tolled, or extended except
by the written consent of GBC in its sole discretion. This provision shall
survive any termination of this Agreement or any other present or future
agreement.
* BORROWER LEARNS OF, OR IN THE EXERCISE OF REASONABLE DILIGENCE SHOULD
HAVE LEARNED OF
9.15 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used in
this Agreement for convenience. Borrower and GBC acknowledge that the headings
may not describe completely the subject matter of the applicable paragraph, and
the headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. The term "including,o
whenever used in this Agreement, shall
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GREYROCK BUSINESS CREDIT LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
mean "including (but not limited to)." This Agreement has been fully reviewed
and negotiated between the parties and no uncertainty or ambiguity in any term
or provision of this Agreement shall be construed strictly against GBC or
Borrower under any rule of construction or otherwise.
9.16 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and
transactions hereunder and all rights and obligations of GBC and Borrower shall
be governed by the laws of the State of California. As a material part of the
consideration to GBC to enter into this Agreement, Borrower (i) agrees that all
actions and proceedings relating directly or indirectly to this Agreement shall,
at GBC's option, be litigated in courts located within California, and that the
exclusive venue therefor shall be Los Angeles County; (ii) consents to the
jurisdiction and venue of any such court and consents to service of process in
any such action or proceeding by personal delivery or any other method permitted
by law; and (iii) waives any and all rights Borrower may have to object to the
jurisdiction of any such court, or to transfer or change the venue of any such
action or proceeding.
9.17 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND GBC EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN GBC AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF GBC OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH GBC OR BORROWER, IN ALL
OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
9.18 CONFIDENTIALITY; SECURITIES LAWS. In handling any information
designated by Borrower as confidential, GBC shall exercise reasonable efforts to
keep such information confidential, provided that GBC may disclose such
information (a) to its auditors and attorneys, (b) to affiliates of GBC in
connection with their present or prospective business relations with Borrower,
(c) to prospective transferees or purchasers of an interest in the Obligations,
provided that they have entered into a comparable confidentiality agreement in
favor of Borrower and have delivered a copy to Borrower, (d) as required by law,
regulation (including, without limitation, as may be issued by any regulatory
authority), rule or order, subpoena, judicial order or similar order, (e) as may
be required in connection with any examination, audit or similar investigation
of GBC, (f) in connection with the enforcement of GBC's rights, (g) to Silicon
Valley Bank, and (h) where reasonably necessary in order to protect GBC's
interest. GBC acknowledges that it is aware that the United States securities
laws prohibit any persons who has material non-public information about a
company which has been obtained from such company from purchasing or selling
securities of such company.
9.19 ATTORNEYS' FEES AND COSTS OF PARTICIPANT. Without limitation upon the
generality of Borrower's obligations pursuant to paragraph 9.11 of this
Agreement, Borrower agrees, upon demand, to pay any participant of GBC in the
Loans, the amount of all reasonable attorneys' fees and [ * ] costs incurred
by such participant* in connection with its participation in the Loans. If GBC
shall advance or reimburse such participant for any such fees or costs, then the
amounts advanced or reimbursed shall become part of Borrower's Obligations under
this Agreement and shall bear interest at the same rate as Borrower's Loans.
* PURSUING PAYMENT DEFAULT OR BANKRUPTCY RELIEF
BORROWER:
MTI TECHNOLOGY CORPORATION
BY [SIG]
-------------------------------------
PRESIDENT OR VICE PRESIDENT
GBC:
GREYROCK BUSINESS CREDIT,
A DIVISION OF NATIONSCREDIT COMMERCIAL CORPORATION
BY [SIG]
--------------------------------------
TITLE
-----------------------------------
PRESIDENT
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--------------------------------------------------------------------------------
Greyrock
Business
Credit
A NationsBank Company
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: MTI TECHNOLOGY CORPORATION
ADDRESS: 0000 X. XX XXXXX XXXXXX
XXXXXXX, XXXXXXXXXX 00000
DATE: MAY 23, 1997
This Schedule is an integral part of the Loan and Security Agreement between
GREYROCK BUSINESS CREDIT, A DIVISION OF NATIONSCREDIT COMMERCIAL CORPORATION
("GBC") and the borrower named above ("Borrower") of even date.
--------------------------------------------------------------------------------
1. CREDIT LIMIT
(Section 1.1): (a) An amount not to exceed the lesser of (1) or (2) below:
(1) $30,000,000 at any one time outstanding; or
(2) an amount equal to
(i) either 80% of the amount of Borroweros Eligible
Receivables (as defined in Section 8 above) if the
"Non-Streamlined Facilityo (as defined below) is in
effect, or 50% of the amount of Borrower's Eligible
Receivables if the "Streamlined Facilityo (as defined
below) is in effect, as applicable, plus
(ii) either the amount described in (a) below or the
amount described in (b) below, as applicable (the
"Inventory Loan"):
(A) the lesser of 20% of the value of Borrower's
Eligible Inventory (as defined in Section 8 above)
or $3,500,000, to be available during the period
beginning on the first day and ending on the 15th
day of the first calendar month of any calendar
quarter (the "Initial Quarterly Periods"); or
(B) the lesser of 40% of the value of Borrower's
Eligible Inventory or $7,500,000, to be available
other than during Initial Quarterly Periods. (For
purposes of the foregoing, the "value of
Borrower's Eligible Inventoryo shall mean the
lesser of cost or wholesale market value as
determined in GBC's discretion.)
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For example, if on December 31 of any calendar
quarter the value of Borrower's Eligible Inventory
were $18,000,000, then the maximum Inventory Loan
(without regard to the limit contained in (1)
above) which Borrower may have outstanding on that
date would be $7,200,000, and if on January 1 of
any calendar quarter the value of Borrower's
Eligible Inventory were $18,000,000, then the
maximum Inventory Loan (without regard to the
limit contained in (1) above) which Borrower may
have outstanding on that date would be $3,500,000.
Without limitation upon the requirement of
timeliness with respect to any other Obligations
under the Loan and Security Agreement, there shall
be no cure period from the end of one quarter to
the beginning of the next Initial Quarterly Period
for purposes of bringing the balance of the
Inventory Loan into formula, and, without
limitation upon any of GBC's rights and remedies,
if the Inventory Loan shall at any time ever
exceed the limits set forth herein, then GBC may,
in its sole discretion, reduce the amount of
Inventory Loans which it shall make available.
(b) GBC agrees to approve as Eligible Receivables
certain amounts not exceeding $10,000,000 in the
aggregate owing to Borrower from XXX Xxxxxxxxxxx
("EMC") under that certain Asset Purchase Agreement
dated as of February 9, 1996 (as amended from time to
time, the "EMC Agreement"), between the Borrower and
EMC, provided that (i) GBC does not believe the
collection thereof is insecure or may not be paid by
reason of EMC's financial inability to pay, (ii) GBC
has a first priority, valid, perfected security
interest therein, and (iii) such amounts are not
otherwise deemed ineligible on such credit and/or
collateral considerations as GBC in its good faith
discretion deems appropriate. Borrower hereby covenants
and agrees that it shall not agree to any amendment or
modification to the EMC Agreement without GBC's prior
written consent, which consent GBC shall not
unreasonably withhold.
--------------------------------------------------------------------------------
2. INTEREST
INTEREST RATE
(Section 1.2): The interest rate in effect throughout each calendar month
during the term of this Agreement shall be the highest
"Prime Rateo in effect during such month, plus 1.67% per
annum, provided that the interest rate in effect in each
month shall not be less than 9% per annum, and provided
further that the interest charged for each month shall be a
minimum of $10,000 regardless of the amount of the
Obligations outstanding. Interest shall be calculated on
the basis of a 360-day year for the actual number of days
elapsed. "Prime Rateo has the meaning set forth in Section
8 above.
--------------------------------------------------------------------------------
3. FEES (Section 1.3/Section 6.2):
LOAN FEE: $50,000, payable on or before the Effective Date
(as defined below).
NSF CHECK CHARGE: $15.00 per item.
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GREYROCK BUSINESS CREDIT SCHEDULE TO LOAN AND SECURITY AGREEMENT
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WIRE TRANSFERS: $15.00 per transfer.
4. MATURITY DATE May 31, 1998, subject to automatic renewal as provided
in Section 6.1 above, (Section 6.1): and early termination
as provided in Section 6.2 above.
--------------------------------------------------------------------------------
5. REPORTING Borrower shall provide GBC with the following:
(Section 5.2):
1. Annual financial statements, certified by independent
certified public accountants acceptable to GBC, within 5
days after the earlier of the date the Form 10-K is
filed or is required to be filed with the Securities and
Exchange Commission (the "SEC"), but, in any event, no
later than 90 days after the end of Borrower's fiscal
year.
2. Quarterly unaudited financial statements as soon as
available, and, in any event, no later than the earlier
of (i) 5 days after the earlier of the date the Forms
10-Q and 10-K are filed or are required to be filed with
the SEC, or (ii) 30 days after the end of each fiscal
quarter of Borrower.
3. Copies of the regular, periodical or special reports
(including Forms 10K, 10Q and 8K) that the Borrower or
any subsidiary may make to, or file with, the SEC,
within 5 days after the earlier the date they are filed
or required to be filed with the Securities Exchange
Commission.
4. Monthly Receivable agings, aged by invoice date, within
15 days after the end of each month.
5. Monthly accounts payable agings, aged by invoice date,
and outstanding or held check registers within 15 days
after the end of each month.
6. Monthly perpetual inventory reports for the Inventory
valued on a first-in, first-out basis at the lower of
cost or market (in accordance with generally accepted
accounting principles) or such other inventory reports
as are reasonably requested by GBC, all within 15 days
after the end of each month.
--------------------------------------------------------------------------------
6. BORROWER INFORMATION:
PRIOR NAMES OF
BORROWER
(Section 3.2): None
-------------------------------
PRIOR TRADE
NAMES OF BORROWER
(Section 3.2): Micro Technology, Inc.
-------------------------------
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EXISTING TRADE
NAMES OF BORROWER
(Section 3.2): None
-------------------------------
OTHER LOCATIONS AND
ADDRESSES (Section 3.3): See Exhibit A
-------------------------------
MATERIAL ADVERSE
LITIGATION (Section 3.10): None
------------------------------
--------------------------------------------------------------------------------
7. STREAMLINED AND NON-STREAMLINED FACILITIES
(Section 4):
7.1 SELECTING A FACILITY. Throughout each calendar quarter,
either the "Streamlined Facilityo or the
"Non-Streamlined Facilityo shall be in effect, and
Borrower shall give GBC written notice, at least three
business days before the beginning of each calendar
quarter as to which Facility shall be in effect during
such calendar quarter. If Borrower fails to give
written notice to GBC at least three business days
before the beginning of a calendar quarter, as to which
Facility shall be in effect, then the Facility in
effect during the prior calendar quarter shall continue
in effect during the next calendar quarter. The
Facility in effect as of the Effective Date shall be
the Non-Streamlined Facility. If Borrower desires to
change from a Streamlined Facility to a Non-Streamlined
Facility, then along with the written notice of such
change, Borrower shall provide GBC with any schedules,
reports, assignments, agings and the like which would
be required under the new Facility but were not
required under the old Facility, current as of the date
of the change, and shall allow GBC access to its books
and records for purposes of GBC conducting its standard
pre-funding audit.
7.2 STREAMLINED FACILITY PROVISIONS. At all times while
the Streamlined Facility is in effect, the following
provisions shall apply:
(A) Daily reporting of transactions and daily schedules
and assignments of Receivables and schedules of
collections, called for by Section 4.3 of the Loan
Agreement, will not be required. Instead, Borrower will
provide GBC with a weekly monthly Borrowing Base
Certificate, in such form as GBC shall from time to
time specify, within 3 days after the end of each week.
In the event, as of the end of any week, the total of
all Loans and all other Obligations exceeds the Credit
Limit, Borrower shall immediately pay the amount of the
excess to GBC.
(B) Delivery of the proceeds of Receivables and other
Collateral within one business day after receipt, as
called for by Sections 4.4 and 5.4 of the Loan
Agreement, will not be required.
7.3 TERMINATION OF STREAMLINED FACILITY Borrower shall have
the right to terminate the Streamlined Facility, as
provided above. In addition, the Streamlined Facility
shall immediately terminate if any Default or Event
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GREYROCK BUSINESS CREDIT SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
of Default occurs and is continuing. Upon any
termination of the Streamlined Facility, Borrower
shall, then and thereafter, provide GBC with the daily
reporting of transactions and daily schedules and
assignments of Receivables and schedules of
collections, as called for by Section 4.3 of the Loan
Agreement, and Borrower shall deliver all proceeds of
Receivables and other Collateral to GBC, within one
business day after receipt, as called for by Sections
4.4 and 5.4 of the Loan Agreement.
--------------------------------------------------------------------------------
8. AMENDMENT AND RESTATEMENT
The Loan and Security Agreement dated March 31, 1995,
together with the Schedule thereto, each as amended,
between GBC and Borrower (as so amended, the "Prior Loan
Agreement") shall be amended and restated in its entirety
by the Loan and Security Agreement, and this Schedule
thereto, subject to the conditions precedent that no
Default or Event of Default has occurred or is continuing
under the Prior Loan Agreement, and GBC shall have received
each of the following, in form and substance satisfactory
to GBC and its counsel:
(i) a certificate of the Secretary of Borrower certifying
(A) the resolutions and other actions taken or
adopted by Borrower authorizing the execution,
delivery and performance of the Loan and Security
Agreement, this Schedule and any other documents and
instruments in connection therewith (the "Amendment
Documents"), and (B) the incumbency, authority and
signatures of each officer of Borrower authorized to
execute and deliver the Amendment Documents and act
with respect thereto;
(ii) a favorable legal opinion of legal counsel to the
Borrower as to such matters as GBC may reasonably
request;
(iii) a Participation Agreement between GBC and Silicon
Valley Bank ("SVB"), in form and substance
satisfactory to GBC, pursuant to which SVB will
acquire a $10,000,000 participation interest in the
Loans; and
(iv) evidence that all searches have been received and all
filings, registrations and recordings have been made
in the appropriate governmental offices, and all
other action has been taken, which shall be necessary
to confirm and continue GBC's first-priority
perfected and enforceable security interest in all of
the Collateral (other than the Collateral to be
released as provided below), subject only to the
Permitted Liens.
GBC shall notify Borrower and SVB of the date of
satisfaction of the foregoing conditions to effectiveness
(the "Effective Date"). Until the occurrence of the
Effective Date, the Prior Loan Agreement shall remain in
full force and effect and shall be unaffected hereby.
On the Effective Date GBC shall release the Pledged
Securities, and the Pledge Agreement, the Guaranty and the
Subordination Agreement shall terminate (except for any
obligations which by their terms survive such termination,
such as indemnification obligations). In connection
therewith GBC will return all
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GREYROCK BUSINESS CREDIT SCHEDULE TO LOAN AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
original Pledged Securities and stock powers to Guarantor
and sign such other documents and take such other actions
as are reasonably necessary to accomplish the foregoing
termination, including termination of any UCC Financing
Statements in GBC's favor. (The foregoing capitalized
terms shall have the meanings set forth in the Amendment
to Loan Documents dated May 3, 1996, between Borrower and
GBC.)
Other than the foregoing release of the Pledged Securities
GBC's security interests in the Collateral created
pursuant to the Prior Loan Agreement shall be preserved
and continue in full force and effect notwithstanding the
amendment and restatement of the Prior Loan Agreement and
the occurrence of the Effective Date. GBC's execution and
delivery of, or acceptance of, the Amendment Documents
shall not be deemed to create a course of dealing or
otherwise create any express or implied duty by it to
provide any other or further amendments, consents or
waivers in the future. The Amendment Documents set forth
in full all of the representations and agreements of the
parties with respect to the subject matter thereof and
supersede all prior discussions, representations,
agreements and understandings between the parties with
respect to the subject thereof. All documents, instruments
and agreements between GBC and Borrower other than the
Prior Loan Agreement shall continue in full force and
effect and the same are hereby ratified and confirmed.
--------------------------------------------------------------------------------
BORROWER: GBC:
MTI TECHNOLOGY CORPORATION GREYROCK BUSINESS CREDIT,
A DIVISION OF NATIONSCREDIT COMMERCIAL
CORPORATION
BY [SIG] BY [SIG]
------------------------------ ------------------------------------
PRESIDENT OR VICE PRESIDENT
TITLE PRESIDENT
---------------------------------
