Exhibit 10.42
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement (this "Agreement"), dated as of May 10,
1999, is entered into by and among Litronic Industries, Inc., a California
corporation ("LII"), and Litronic Inc., a Delaware corporation ("Litronic") (LII
and Litronic are sometimes referred to individually as a "Company" and
collectively as the "Companies"), and Fidelity Funding, Inc., a Texas
corporation ("Fidelity"). In consideration of the mutual covenants and
agreements contained herein, the Companies and Fidelity hereby agree as follows:
Section 1. Definitions and Rules of Construction.
1.1 When used herein, the following terms shall have the following
meanings:
"Account" means the right of a Company to payment for goods sold or leased
or for services rendered by such Company which is not evidenced by an instrument
or chattel paper, whether or not earned by performance.
"Account Debtor" means the Person obligated to make payment on an Account.
"Advance" has the meaning given to it in Section 2.1.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, or is controlled by or under common control
with, such Person.
"Borrowing Base" means, with respect to any Company, an amount, determined
by Fidelity from time to time, equal to the sum of (a) 85% of the aggregate
outstanding face amount of the Eligible Accounts of such Company and (b) the
lesser of (i) 50% of the value of the Eligible Inventory of such Company, valued
at the lower of cost or market, or (ii) $1,000,000 less 50% of the value of the
Eligible Inventory of the other Company then included in such other Company's
Borrowing Base, valued at the lower of cost or market. Fidelity may change the
percentage of Eligible Accounts and/or Eligible Inventory constituting the
Borrowing Base of any Company from time to time based upon dilution, net
collectibility and other factors deemed appropriate by Fidelity.
"Borrowing Base Certificate" means a certificate in the form attached
hereto as Exhibit A, duly executed by the president or the chief financial
officer of the applicable Company.
"Cash Collateral" has the meaning given to it in Section 7.
"Collateral" has the meaning given to it in Section 6.
"Concentration Limit" means, as of any date and with respect to any
Account Debtor, an amount equal to 20% of the face amount of Eligible Accounts
of all Companies outstanding on such date; provided, however, that the
Concentration Limit, as of any date, with respect to Accounts owed by Lockheed
shall be an amount equal to 30% of the face amount of Eligible Accounts of all
Companies outstanding on such date; and provided, further, however, that the
Concentration Limit, as of any date, with respect to Accounts owed by the United
States or any department or instrumentality thereof (any such department or
instrument being treated as an individual Account Debtor for purposes hereof)
shall be an amount equal to 50% of the Eligible Accounts of all Companies
outstanding on such date.
"Contract Rate" means, prior to the occurrence of an Event of Default or
an event or circumstance that would, with the giving of notice, the passage of
time or both, constitute an Event of Default, a rate of interest equal to the
lesser of (a) the Prime Rate in effect from time to time plus 0.625% per annum
and (b) the maximum rate permitted by applicable law and means, after the
occurrence of an Event of Default or an event or circumstance that would, with
the giving of notice, the passage of time or both, constitute an Event of
Default, a rate of interest equal to the lesser of (x) the Prime Rate in effect
from time to time plus 4.625% per annum and (y) the maximum rate permitted by
applicable law. The Contract Rate shall be automatically increased or decreased,
as the case may be, without notice to the Companies from time to time as of the
effective date of each change in the Prime Rate.
"Current Assets" means, as of any date and with respect to any Company,
only those assets of such Company that may, in the ordinary course of business,
be convened into cash within a such Company, (b) prepaid expenses for services
or for supplies that are not purchased for resale, and (c) amounts due from
Affiliates of such Company.
"Current Liabilities" means, as of any date, the Advances outstanding on
such date to such Company and all other Obligations of such Company that are due
within one year from such date.
"Debt" means, with respect to any Person, all indebtedness, obligations
and liabilities of such Person, including without limitation: (a) all
liabilities which would be reflected on a balance sheet of such Person prepared
in accordance wit GAAP, (b) all obligations of such Person in respect of any
guaranty of any Debt of another Person, and (c) all obligations, indebtedness
and liabilities secured by any lien on or security interest in any property or
assets of such Person.
"EBIT" means, with respect to any Company and for any period, the sum
(determined without duplication, on a consolidated basis and in accordance with
GAAP) of (a) such Company's Net Profit (or net loss) for such period before
provision for income taxes, and (b) the Interest Expense of such Company for
such period.
"Eligible Accounts" means, at the time of determination thereof, all
Accounts other than (i) any Account which is payable more than 45 days from
invoice date, (ii) any Account which has been outstanding for more than 90 days
from invoice date, (iii) any Account as to which Fidelity does not have a valid
and perfected, first priority security interest, (iv) to the extent that the
aggregate outstanding Accounts owed by any single Account Debtor exceeds the
Concentration Limit, any Account owed by such Account Debtor, (v) any Account
that is owed by an Account Debtor that is an Affiliate of any Company or an
officer or employee of any Company, (vi) except as approved in writing by
Fidelity from time to time, any Account that arises out of a sale made or
services performed outside of the United States or Canada or that is owed by an
Account Debtor located outside the United States or Canada, (vii) any Account
that is owed by a creditor or supplier of any Company or with respect to which
any defense, counterclaim or right of set off has been asserted, (viii) any
Account owed by an Account Debtor if more than 50% (in dollar amount) of such
Account Debtor's Accounts, have been outstanding more than 90 days from invoice
date, (ix) except as approved in writing by Fidelity from time to time, any
Account that is owed by the United States or any department, agency or
instrumentality thereof, unless (a) the right to payment under such Account is
assigned to Fidelity as Collateral in full compliance with the Assignment of
Claims Act of 1940, as amended (31 U.S.C. 3727), (b) such Account arose pursuant
to a discreet purchase order, such purchase order or the related invoice
specifies the Remittance Address as the place of payment and the amount of such
Account does not exceed $100,000, or (c) the Account Debtor on such Account is a
client of LII on the date hereof, and (x) any Account that has not been approved
by Fidelity for inclusion in the applicable Borrowing Base.
"Eligible Inventory" means, at the time of determination, all raw
materials that are part of a Company's Inventory that (i) are owned by such
Company, are located in the United States of America and, if located on leased
or mortgaged premises, are subject to the terms of a lien waiver letter executed
by the landlord or mortgagee of such premises if deemed necessary by Fidelity in
its sole discretion, (ii) are ready for sale, and are not, in the opinion of
Fidelity, damaged, obsolete or otherwise not readily salable at full value,
(iii) have been held in Inventory for not more than 120 days, (iv) are not on
lease or consignment or furnished under any contract of service from or to any
Person, (v) are subject to an enforceable, first priority, perfected security
interest in favor of Fidelity, (vi) are not the subject of an invoice giving
rise to an Eligible Account, and (vii) have been approved by Fidelity for
inclusion in the Borrowing Base.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, regulations, rules, orders, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants or industrial, toxic or hazardous
substances into the environment, or otherwise relating to the manufacture,
processing, treatment, transport or handling of pollutants or industrial, toxic
or hazardous substances.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA Plan" means any pension benefit plan subject to Title IV of ERISA
maintained by any Company or any Affiliate thereof with respect to which any
Company has a fixed or contingent liability.
"Event of Default" has the meaning given it in Section 9.
"Facility Limit" means $20,000,000.
"GAAP" means generally accepted accounting principles and practices as
promulgated by the American Institute of Certified Public Accountants, applied
on basis consistent with past practices.
"Indemnified Claims" means any and all claims, demands, actions, causes of
action, judgments, liabilities, damages and consequential damages, penalties,
fines, costs, fees, expenses and disbursements (including, without limitation,
fees and expenses of attorneys and other professional consultants and experts in
connection with any investigation or defense) of every kind, known or unknown,
existing or hereafter arising, foreseeable or unforeseeable, which may be
imposed upon, threatened or asserted against or incurred or paid by any
Indemnified Person at any time and from time to time, because of, resulting
from, in connection with or arising out of any transaction, act, omission, event
or circumstance in any way connected with the Collateral or the Transaction
Documents (including but not limited to enforcement of Fidelity's rights
thereunder or the defense of Fidelity's actions thereunder), excluding with
respect to any Indemnified Persons, any of the foregoing resulting from such
Indemnified Person's gross negligence or willful misconduct.
"Indemnified Persons" means Fidelity and its officers, directors,
shareholders, employees, attorneys, representatives and Affiliates.
"Intangible Assets" means, with respect to any Company, such of such
Company's assets as are treated as intangible pursuant to GAAP, including,
without limitation: (a) obligations owing by officers, directors, shareholders,
employees, subsidiaries, Affiliates or any Person in which any such officer,
director, shareholder, employee, subsidiary, or Affiliate owns any interest and
(b) any asset which is intangible or lacks intrinsic or marketable value or
collectibility, including, without limitation, goodwill, noncompetition
agreements, patents, copyrights, trademarks, franchises, organization or
research and development costs.
"Inventory" means all goods, now owned or hereafter acquired by a Company,
wherever located, that are held for sale or lease or are to be furnished under
any contract of service (including, but not limited to raw materials, work in
process, finished goods and materials used or consumed in the manufacture or
production thereof, goods in which such Company has an interest in mass or a
joint or other interest or rights of any kind, and goods which have been
returned to or repossessed or stopped in transit by such Company).
"Net Profit" means, with respect to any Company and for any period, such
Company's net income before income tax for such period determined in accordance
with GAAP.
"Obligations" means all indebtedness, obligations and liabilities of the
Companies to Fidelity arising under the Transaction Documents, and all other
indebtedness, obligations and liabilities of the Companies to Fidelity, whether
presently existing or hereafter arising, direct or indirect, primary or
secondary, joint or several, fixed or contingent, and whether originally payable
to Fidelity or to a third party and subsequently acquired by Fidelity.
"Person" means any individual, corporation, joint venture, partnership,
trust, unincorporated organization or governmental entity or agency.
"Prime Rate" means the rate per annum published from time to time by The
Wall Street Journal as the base rate for corporate loans at large commercial
banks (or, if more than one such rate is published, the higher or highest of the
rates so published). If such rate is no longer published by The Wall Street
Journal, then Fidelity shall, in its sole
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discretion substitute the base or prime rate for corporate loans at a large
commercial bank for the base rate published in The Wall Street Journal. Such
rate may not necessarily be the lowest or best rate actually charged to any
customer of such commercial bank.
"Proportionate Share" means, with respect to any Company and as of any
date, the ratio obtained by dividing (a) the outstanding principal balance of
the Advances, if any, to such Company as of such date, by (b) the sum of the
outstanding principal balance of all Advances as of such date.
"Pulsar" means Pulsar Data Systems, Inc., a Delaware corporation.
"Remittance Address" means such address as Fidelity shall direct the
Companies from time to time in writing in accordance with the terms hereof.
"Shareholders Equity" means, with respect to any Company and as of any
date, the shareholders' equity of such Company as of such date determined in
accordance with GAAP plus the principal balance of any Debt of such Company
subordinated to the Obligations pursuant to a written subordination agreement
satisfactory to Fidelity between Fidelity and the Person to whom such Debt is
owed.
"Tangible Net Worth" means, with respect to any Company and as of any
date, the amount obtained by subtracting such Company's Intangible Assets as of
such date from such Company's Shareholders' Equity as of such date.
"Tangible Net Worth Requirement" means $2,000,000 until March 31, 2000 and
for each calendar quarter thereafter means the Tangible Net Worth Requirement as
of the last day of the preceding calendar quarter plus $500,000.
"Term" has the meaning given to it in Section 11.4.
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) of ERISA or (ii)
any other reportable event described in Section 4043(b) of ERISA other than a
reportable event not subject to the provision for 30-day notice to the Pension
Benefit Guaranty Corporation pursuant to a waiver by such corporation under
Section 4043(a) of ERISA or (b) the withdrawal of any Company or any Affiliate
of any Company from any ERISA Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001 (a)(2) of ERISA, or (c) any
event or condition which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any ERISA
Plan.
"Transaction Documents" means this Agreement and all other documents and
instruments executed and delivered in connection herewith or therewith.
"UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.
"Working Capital" means, as of any date and with respect to any Company,
the excess of Current Assets of such Company over Current Liabilities of such
Company as of such date.
"Working Capital Requirement" means $2,000,000 until March 31, 2000 and
for each calendar quarter thereafter means the Working Capital Requirement as of
the last day of the preceding calendar quarter plus $500,000.
1.2 Terms defined in the UCC and used but not defined herein shall have
the meanings ascribed to them in the UCC.
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1.3 References herein to a particular agreement, instrument or document
also shall be deemed to refer to and include all renewals, extensions and
modifications of such agreement, instrument or document. All addenda, exhibits
and schedules attached to this Agreement are a part hereof for all purposes.
Words in the singular form shall be construed to include the plural and vice
versa, unless the context otherwise requires.
1.4 All interest accruing hereunder shall be calculated on the basis of
actual days elapsed (including the first but excluding the last day) plus three
business days and a year of 360 days. Unless otherwise expressly provided herein
or unless Fidelity otherwise consents, all financial statements and reports
famished to Fidelity hereunder shall be prepared, and all financial computations
and determinations pursuant hereto shall be made, in accordance with GAAP. All
payments received by Fidelity after its internally established time for closing
business on any business day shall be applied as of the next succeeding business
day. Any payment which is due on a day which is not a business day shall instead
be deemed to be due on the next succeeding business day, and interest thereon
shall accrue and be payable at the then applicable rate during the time of such
extension. Fidelity's records in respect of loans advanced, accrued interest,
payments received and applied and other matters in respect of calculation of
the amount of the Obligations shall be deemed conclusive absent demonstration of
error. All statements of account rendered by Fidelity to any Companies relating
to principal, accrued interest or costs owing by any Company under this
Agreement shall be presumed to be correct and accurate unless, within 30 days
after receipt thereof, the Companies shall notify Fidelity in writing of any
claimed error therein.
Section 2. Advances.
2.1 Subject to the terms of this Agreement, including, without limitation,
Section 3, Fidelity shall make advances to each Company (each an "Advance" and
collectively the "Advances") from time to time during the Term; provided,
however, that the aggregate principal amount of Advances outstanding at any time
to any Company shall not exceed such Company's Borrowing Base determined by
Fidelity from time to time; and provided, further, however, that the aggregate
principal amount of Advances outstanding at any time to all Companies shall not
exceed the Facility Limit. Each Advance must be in a minimum amount of $20,000
or, if less, the unadvanced portion of the applicable Borrowing Base. The
Companies hereby agree to repay to Fidelity all Advances made to the Companies
hereunder, together with interest thereon, in the manner provided herein. The
principal owing hereunder in respect of the Advances at any given time shall
equal the aggregate amount of Advances made hereunder minus all principal
payments thereon received by Fidelity hereunder. Subject to the terms and
conditions hereof, the Companies may borrow, repay and reborrow under this
Agreement.
2.2 Each request by a Company to Fidelity for an Advance hereunder must be
in writing or promptly confirmed in writing. Each such written request or
confirmation shall be accompanied by a "Borrowing Base Certificate" in the form
attached hereto as Exhibit "A," together with such supporting information as
Fidelity shall request, signed by an authorized representative of such Company.
2.3 Promptly after receiving each Borrowing Base Certificate, Fidelity
shall, based upon such Borrowing Base Certificate and such other information
available to Fidelity, redetermine the applicable Borrowing Base, which
redetermination shall take effect immediately and remain in effect until the
next such redetermination. If all conditions precedent to any Advance requested
have been met, Fidelity will on the date requested make such Advance available
to the applicable Company by wire transfer to the account designated in writing
by such Company. In the event Fidelity does not receive an appropriately
completed Borrowing Base Certificate, Fidelity shall have no obligation to
redetermine any Borrowing Base or make any additional Advances hereunder.
2.4 If the aggregate unpaid principal balance of the Advances to any
Company exceeds such Company's Borrowing Base at any time, the Companies shall,
upon receipt of notice thereof from Fidelity, immediately repay the principal of
the Advances in an amount at least equal to such excess. Any principal repaid
pursuant to this Section 2.4 shall be in addition to, and not in lieu of, all
payments otherwise required to be paid under the Transaction Documents.
2.5 The aggregate unpaid principal balance of the Advances plus all
accrued but unpaid interest thereon shall be payable by the Companies to
Fidelity on the last day of the Term.
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2.6 The aggregate unpaid principal balance of all Advances shall bear
interest at the Contract Rate in effect from time to time. Except as provided in
Section 2.5, all accrued but unpaid interest thereon shall be due and payable by
the Companies to Fidelity on the last day of each calendar month.
2.7 The Companies shall pay to Fidelity an annual facility fee in the
amount of $75,000, payable on the date hereof and on each anniversary of the
date hereof during the Term. All facility fees payable shall be deemed earned on
the date hereof, and shall be subject to acceleration upon any early termination
of this Agreement prior to the end of the Term. The Companies hereby authorize
Fidelity, at its sole discretion, to deduct any facility fee from any Advance or
Term Advance hereunder.
2.8 In the event that the income earned by Fidelity during any calendar
month pursuant to Section 2.6 is less than $14,000, the Companies shall pay to
Fidelity a minimum usage fee equal to the difference between the amount so
earned by Fidelity and $14,000, regardless of Fidelity's prior compensation. The
minimum usage fee for each calendar month shall be due and payable on the first
day of the next calendar month, and shall be prorated for any partial calendar
month during the Term.
2.9 In addition to, and not in lieu of, any termination fee required by
Section 11.4, the Companies shall pay to Fidelity a liquidation fee (in this
section called the "Liquidation Fee") in the amount of 2.00% of the face amount
of each Eligible Account included in any Company's Borrowing Base that is
outstanding at any time during the Liquidation Period (as defined below) and
that Fidelity collects following collection efforts by Fidelity and excluding
collections in the ordinary course of business (i.e., paid within 30 days). The
Liquidation Fee shall be payable on the date on which Fidelity collects the
applicable Eligible Account. For purposes of this section, the term "Liquidation
Period" means a period beginning on the earliest of (i) the date of commencement
against or by any Company of any voluntary or involuntary case under the federal
Bankruptcy Code, (ii) the date of any general assignment by any Company for the
benefit of its creditors; (iii) the date of any appointment or taking possession
by a receiver, liquidation, assignee, custodian or similar official of all or a
substantial part of any Company's assets, or (iv) the date of the cessation of
business of any Company (other than in connection with the sale of substantially
all of the assets of such Company or the merger of such Company with and into
the other Company, provided that Fidelity consented in writing to such sale or
merger prior thereto), and ending on the date on which Fidelity has actually
received all fees, costs, expenses and other amounts owing to it hereunder.
2.10 Contemporaneously with the execution and delivery hereof, the
Companies shall pay to Fidelity a fee of $15,000 plus out-of-pocket expenses to
cover the charges of Fidelity's in-house counsel for the negotiation,
preparation, execution and delivery of the Transaction Documents. In addition,
the Companies shall pay or reimburse Fidelity upon demand for (a) all other
costs and expenses incurred by Fidelity in connection with its due diligence
review of the Companies and the closing of the transactions contemplated hereby
and (b) all reasonable attorney's fees, court costs and other expenses incurred
by Fidelity (whether or not litigation is commenced or judgment issued, and if
litigation is commenced whether at trial or any appellate level) in connection
with the enforcement by Fidelity of this Agreement or any other Transaction
Document, the protection or enforcement of Fidelity's interest in the
Collateral, the collection by Fidelity of the Collateral, or the representation
of Fidelity in connection with any bankruptcy case or insolvency proceeding
involving any Company, the Collateral, or any Account Debtor, including, without
limitation, any representation involving relief from a stay motion, a cash
collateral dispute, an assumption or rejection motion or a dispute concerning
any proposed disclosure statement and plan proposed in any such proceeding.
2.11 Fidelity shall be entitled to collect upon demand its normal and
customary charges for the following routine services provided or obtained in the
course of performing its functions with respect to the Collateral: lock box
charges and wire transfers.
2.12 All interest, fees and other amounts due to Fidelity pursuant to this
Section 2 shall be payable on demand, and may, in Fidelity's sole discretion, be
deducted from any Advance or paid from the Cash Collateral.
2.13 The parties hereto intend to contract in strict compliance with
applicable usury law from time to time in effect. In furtherance thereof, the
parties hereto stipulate and agree that none of the terms and provisions
contained in this Agreement or any other Transaction Document shall ever be
construed to create a contract to pay, for the use,
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forbearance or detention of money, interest in excess of the maximum amount of
interest permitted to be charged by applicable law from time to time in effect.
None of any Company, any present or future guarantor or any other Person
hereafter becoming liable for the payment of the Obligations, shall ever be
liable for unearned interest thereon or shall ever be required to pay interest
thereon in excess of the maximum amount that may be lawfully charged under
applicable law from time to time in effect, and the provisions of this paragraph
shall control over all other provisions of the Transaction Documents which may
be in conflict therewith. If any indebtedness or obligation owed by any Company
under any Transaction Document is prepaid or accelerated and as a result any
amounts held to constitute interest are determined to be in excess of the legal
maximum, or Fidelity shall otherwise collect moneys which are determined to
constitute interest which would otherwise increase the interest on all or any
part of such obligations to an amounts in excess of that permitted to be charged
by applicable law then in effect, then all such sums determined to constitute
interest in excess of such legal limit shall, without penalty, be promptly
applied to reduce the then outstanding principal of the related indebtedness or
obligations or, at Fidelity's option returned to such Company or the other payor
thereof upon such determination. In determining whether or not any amount paid
or payable, under any circumstance, exceeds the maximum amount permitted under
applicable law, Fidelity and the Companies shall to the greatest extent
permitted under applicable law, characterize any non-principal payment as an
expense, fee or premium rather than as interest, and amortize, prorate, allocate
and spread the total amount of interest throughout the entire contemplated term
of this Agreement in accordance with the amounts outstanding from time to time
hereunder and the Maximum Rate from time to time in effect under applicable law
in order to lawfully charge the maximum amount of interest permitted under
applicable law. If at any time the rate at which interest is payable hereunder
exceeds the Maximum Rate, the amount outstanding hereunder shall bear interest
at the Maximum Rate only, but shall continue to bear interest at the Maximum
Rate until such time as the total amount of interest accrued hereunder equals
(but does not exceed) the total amount of interest which would have accrued
hereunder had there been no Maximum Rate applicable hereto. In the event
applicable law provides for an interest ceiling under Chapter 1D of the Texas
Credit Title, that ceiling shall be the indicated (weekly) ceiling and shall be
used when appropriate in determining the maximum rate permitted by applicable
law. As used in this paragraph, (i) the term "applicable law" means the laws of
the State of Texas or the laws of the United States of America, whichever laws
allow the greater interest, as such laws now exist or may be changed or amended
or come into effect in the future, and (ii) the term "Maximum Rate" means, at
the time of determination, the maximum rate of interest which, under applicable
law, may then be charged hereunder. The parties agree that this Agreement shall
not be subject to Chapter 346 of the Texas Finance Code.
Section 3. Conditions Precedent to Advances.
3.1 Fidelity shall not be obligated to make any Advance hereunder
(including the first) until it shall have received the following documents, duly
executed in form and substance satisfactory to Fidelity and its counsel:
(a) lockbox agreements relating to the lockboxes at any Remittance
Address and the related deposit accounts, duly executed by the
financial institutions establishing and maintaining such lockboxes
and deposit accounts;
(b) certificates executed by the President and the Secretary of each
Company certifying (i) the names and signatures of the officers of
such Company authorized to execute Transaction Documents, (ii) the
resolutions duly adopted by the Board of Directors of such Company
authorizing the execution of the Transaction Documents to it which
it is a party, and (iii) correctness and completeness of the copy of
the bylaws of such Company attached thereto;
(c) a certificate executed by the President and the Chief Financial
Officer/Treasurer of each Company certifying the satisfaction of the
conditions set forth in Section 3.2;
(d) certificates regarding the due formation, valid existence and good
standing of each Company in the state of its organization issued by
the appropriate governmental authorities in such jurisdiction;
(e) landlord agreements subordinating the security interests of any
landlord for premises where Eligible Inventory is located in the
Collateral to the security interest therein of Fidelity granted
herein;
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(f) a favorable opinion of counsel for the Companies covering such
matters as Fidelity may request in its sole discretion;
(g) endorsements naming Fidelity as an additional insured or loss payee,
as appropriate, on all liability insurance and all property
insurance policies of the Companies;
(h) validity guaranties of Xxxx Xxxx and Xxxxxxx X. Xxxxx, Xx.;
(i) release agreements executed by IBM, AT&T, Hewlett-Packard,
Wilmington Savings, Wilmington Trust, Banyan Systems and Xxxxxx
Micro of any liens or security interests, if any, that they may have
in the Collateral.
3.2 Fidelity shall not be obligated to make any Advance hereunder
(including the first), unless: (i) all representations and warranties made by
each Company in the Transaction Document are true on and as of the date of such
Advance as if such representations and warranties had been made as of the date
of such Advance, (ii) each Company have performed and complied with all
agreements and conditions required in the Transaction Documents to be performed
or complied with by them on or prior to the date of such Advance, (iii) no Event
of Default or any event or circumstance that, with the passage of time, the
giving of notice or both, would become an Event of Default shall have occurred,
(iv) such Advance shall not be prohibited by any law or any regulation or any
order of any court or governmental agency or authority, (v) neither Company
shall have repudiated or made any anticipatory breach of any of its obligations
under any Transaction Document, and (vi) Fidelity shall not have disapproved
such Advance in whole or in part.
3.3 Fidelity shall not be obligated to make any Advance hereunder
(including the first), unless (a) Litronic shall have completed an initial
public offering of its capital stock resulting in net proceeds of at least
$20,000,000 to Litronic and (b) the Companies shall have acquired all of the
assets, and assumed all of the liabilities, of Pulsar.
Section 4. The Companies' Representations and Warranties. Each Company
jointly and severally represents and warrants to Fidelity on the date hereof,
and shall be deemed to represent and warrant to Fidelity on each date on which
an Advance is made to any Company hereunder, that:
4.1 Each Company is a corporation or limited liability company duly
organized, validly existing and in good standing under the laws of the state of
its incorporation or formation, with all requisite power and authority to
execute, deliver and perform its obligations under this Agreement and the other
Transaction Documents to which it is a party and to conduct its business as
presently conducted. Each Company is duly qualified and authorized to do
business as a foreign corporation or limited liability company and is in good
standing in all states in which such qualification and good standing are
necessary or desirable for the conduct by such Company of its business or the
performance by such Company of its obligations hereunder. The execution,
delivery and performance by each Company of this Agreement and the other
Transaction Documents to which it is a party do not and will not constitute (a)
a violation of any applicable law or such Company's articles or certificate of
incorporation and bylaws or certificate of organization and regulations, as the
case may be, or (b) a material breach of any other document, agreement or
instrument to which such Company is a party or by which such Company is bound.
This Agreement and the other Transaction Documents to which any Company is a
party have been duly authorized, executed and delivered by such Company, and are
legal, valid and binding obligations of such Company enforceable against such
Company in accordance with their terms. No consent of, approval by, registration
or filing with or authorization from any governmental authority or agency is
required in connection with the execution, delivery or performance by any
Company of this Agreement or the other Transaction Documents to which it is a
party.
4.2 Except as described on Schedule 4.2 attached hereto, none of the
Collateral is subject to any lien, encumbrance, security interest or other claim
of any kind or nature, no Company has transferred, sold, pledged or given a
security interest in any of its Accounts, Inventory, machinery or equipment to
anyone other than Fidelity, and there are no financing statements on file in any
public office governing any property of any Company of any kind, real or
personal, in which such Company is named in or has signed as the debtor.
8
4.3 Except as described on Schedule 4.2 attached hereto, each Company is
the sole owner and holder of and has good and marketable title to, all
Collateral purported to be owned by it. This Agreement creates a valid security
interest in the Collateral in favor of Fidelity, and on such security interest
is a perfected, first-priority security interest in the Collateral superior to
the rights of any other Persons therein.
4.4 The amount of each Eligible Account of each Company is due and owing
to such Company and represents an accurate statement of a bona fide sale,
delivery and acceptance of Inventory or performance of service by such Company
to or for an Account Debtor. The terms for payment of the Eligible Accounts are
30 days from date of invoice and the payment of the Eligible Accounts is not
contingent upon the fulfillment by any Company of any further performance of any
nature whatsoever. There are no set-offs, allowances, discounts, deductions,
counterclaims against the Eligible Accounts or any claims by Account Debtors, of
any kind whatsoever, valid or invalid, that have been or may be asserted as a
basis for refusing to pay an Eligible Account, in whole or in part, either at
the time it is accepted by Fidelity for inclusion in any Borrowing Base or prior
to the date it is to be paid. To the best of each Company's knowledge, each
Account Debtor's business is solvent. The Companies have served or caused to be
served any and all preliminary notices required by law to perfect or enforce any
mechanic's lien or stop notice or bonded stop notice for the Eligible Accounts
and the information contained in those notices is true and correct to the best
of each Company's knowledge.
4.5 All Inventory covered by any Borrowing Base Certificate submitted to
Fidelity is in good condition, meets all standards imposed by any governmental
authority or agency having regulating authority over such Eligible Inventory or
its use or sale, currently is either useable or saleable in the ordinary course
of business without diminution in value and meets all of the criteria contained
in the definition of Eligible Inventory (except clause (vii) thereof).
4.6 The addresses set forth in the perfection certificates delivered by
the Companies to Fidelity in connection herewith are, and for at least the last
six months have been, the mailing addresses, the chief executive offices, the
principal places of business, the offices where all of the books and records
concerning the Eligible Accounts are maintained and the location of all
Collateral of each Company. No Company transacts business, or has transacted
business during the past five years, under any trade, fictitious or assumed name
other than those set forth under such Company's signature hereon, provided that
the name of the Company was "Dril-Tron, Inc." prior to January 4, 1995. During
the past five years, no Company has been a party to a merger or consolidation or
has acquired all or substantially all of the assets of any Person except the
purchase of assets from Pulsar Data Systems, Inc. contemplated by Section 3.3.
4.7 The Companies have filed all tax reports and returns required to be
filed by them and have paid all federal, state and local taxes and governmental
charges imposed upon the Companies.
4.8 Each Company is in compliance with ERISA, and is not required to
contribute to any "multiemployer plan" as defined in Section 4001 of ERISA. Each
Company has conducted its business in material compliance with all applicable
laws, including but not limited to, applicable Environmental Laws, and maintains
and is in compliance with all licenses and permits required under any such laws
to conduct its business and perform its obligations hereunder. No Company has
any known material contingent liability under any Environmental Law.
4.9 The application made by the Companies to Fidelity in connection with
this Agreement and the statements made therein and in any materials furnished in
connection therewith are true and correct as of the date hereof. All financial
statements furnished by the Companies to Fidelity in connection with such
application or hereunder have been prepared in accordance with GAAP and fairly
present the financial condition and results of operations of the Companies as of
the dates and for the periods indicated therein.
4.10 There is no fact which any Company has not disclosed to Fidelity in
writing which could materially adversely affect the properties, business or
financial condition of any Company or any of the Collateral, or which it is
necessary to disclose in order to keep the foregoing representations and
warranties from being misleading.
9
Section 5. Covenants of the Companies. From the date hereof and until the
payment and performance in full of all of the Obligations, each Company jointly
and severally covenants with Fidelity that, without Fidelity's prior written
consent in each case:
5.1 Each Company shall preserve and maintain its corporate existence, good
standing and authority to transact business in all jurisdictions where necessary
for the proper conduct of its business, and shall maintain all of its
properties, rights, privileges and franchises necessary or desirable in the
normal conduct of its business.
5.2 Each Company shall permit Fidelity and its representatives, including
any appraisers, auditors and accountants selected by Fidelity, to inspect any of
the Collateral at any time during normal business hours. In addition, Fidelity
shall have the right, from time to time, to audit each Company's books and
records during normal business hours. The Companies shall pay all costs
associated with any such audits at the rate of $750 per day per auditor plus
reasonable out-of-pocket expenses; provided, however, that as long as no Event
of Default or event or circumstance that would, with the giving of notice, the
passage of time or both, constitute an Event of Default, has occurred, the
liability of the Companies for any such audits shall be limited to the costs of
four audits per calendar year.
5.3 Each Company shall maintain its books and records in accordance with
GAAP. Each Company shall furnish Fidelity, upon request, such information and
statements as Fidelity shall request from time to time regarding such Company's
business affairs, financial condition and results of its operations. Without
limiting the generality of the foregoing, each Company shall provide Fidelity,
on or prior to the last day of each month, unaudited consolidated financial
statements with respect to the prior month and, within 90 days after the end of
each of such Company's fiscal years, audited annual consolidated financial
statements and such certificates relating to the foregoing as Fidelity may
request including, without limitation, a monthly certificate from the president
and chief financial officer of such Company certifying the accuracy of such
financial statements, stating whether any Events of Default have occurred and
stating in detail the nature of any such Events of Default. Each Company shall
provide Fidelity a Borrowing Base Certificate, appropriately completed and with
all attachments, at any time that Fidelity shall request and on or before the
last day of any calendar week in which such Company does not request an Advance.
In addition, each Company shall furnish to Fidelity upon request a current
listing of all open and unpaid accounts payable and accounts receivable, names,
addresses and contact persons for Account Debtors, and such other items of
information that Fidelity may deem necessary or appropriate from time to time.
The Companies immediately shall notify Fidelity in writing upon becoming aware
of the existence of any condition or circumstance that constitutes an Event of
Default or that would, with the giving of notice, the passage of time or both,
constitute an Event of Default. Any such written notice shall be signed by the
president and chief financial officer of each Company and shall specify the
nature of such condition or circumstance, the period of the existence thereof
and the action that the Companies propose to take with respect thereto.
5.4 Each Company promptly shall notify Fidelity of any attachment or any
other legal process levied against such Company and any action, suit, proceeding
or other similar claim initiated against such Company involving an amount in
controversy of more than $50,000.
5.5 The Companies shall keep and maintain adequate insurance by insurers
reasonably acceptable to Fidelity with respect to their business and all
Collateral. Such insurance shall cover loss, damages and liability of amounts
not less than reasonably requested by Fidelity and shall include, at a minimum,
business interruption insurance, insurance for workers compensation, general
premises liability, fire, casualty, theft and all risk. The Companies shall
cause Fidelity to be an additional insured and loss payee under all policies of
insurance covering any of the Collateral, to the extent of Fidelity's interest.
The Companies shall deliver copies of each insurance policy to Fidelity upon
request.
5.6 The Companies shall file all tax reports and returns required to be
filed by it in the manner and at the times required by applicable law, and shall
pay all federal, state and local taxes and charges imposed upon the Companies
when due.
5.7 Litronic shall maintain a Tangible Net Worth of not less than the
Tangible Net Worth Requirement at all times, and Litronic shall maintain Working
Capital of not less than the Working Capital Requirement at all times.
10
5.8 Each Company shall comply with ERISA and shall not become required to
contribute to any "multiemployee plan" as defined in Section 4001 of ERISA. Each
Company shall conduct its business in material compliance with all applicable
laws, and shall maintain and comply with all licenses and permits required under
any such laws to conduct its business and perform its obligations hereunder.
Without limiting the generality of the foregoing, each Company shall comply with
all Environmental Laws now or hereafter applicable to such Company and shall
obtain, at or prior to the time required by applicable Environmental Laws, all
environmental, health and safety permits, licenses and other authorizations
necessary for its operations. Each Company promptly shall furnish to Fidelity
all written notices of violation, complaints, penalty assessments, suits or
other proceedings received by such Company with respect to any alleged violation
of or non-compliance with any Environmental Laws.
5.9 The Net Profit of Litronic for each of the calendar quarters in 1999
and 2000 shall not exceed a negative $1,500,000, and the Net Profit of Litronic
for each calendar quarter thereafter shall equal or exceed $500,000.
5.10 No Company shall grant, create or allow to exist any security
interest, lien or other encumbrance on any of the Collateral other than (a) the
lien and security interest granted to Fidelity herein, (b) the security
interests, liens or other encumbrances described on Schedule 4.2 attached hereto
and any liens and security interests granted to holders of Debt refinancing any
Debt secured by such security interests, liens or other encumbrances to the
extent permitted by Section 5.12(c), (c) purchase money liens or security
interests, and (d) liens and security interests securing Debt permitted under
Section 5.12(c), and no Company shall execute any financing statement in favor
of any Person other than Fidelity, the Persons described on Schedule 4.2
attached hereto and any Person to whom a purchase money lien or security
interest or other lien or security interest permitted above has been granted. No
Company shall change its mailing address, chief executive office, principal
place of business or place where such records are maintained, open any new place
of business, close any existing place of business or change the location of any
of the Collateral or transact business under any trade, fictitious or assumed
name other than those set forth under such Company's signature hereon without
providing at least 30 days' prior written notice thereof to Fidelity.
5.11 No Company shall accept any returns or grant any allowance or credit
(other than those returns, allowances and credits accepted or granted in the
ordinary course of such Company's business) to any Account Debtor without notice
to and the prior written approval of Fidelity. The Companies shall provide to
Fidelity for each Account Debtor on Eligible Accounts a weekly report, in form
and substance satisfactory to Fidelity, itemizing all such returns and
allowances made during the previous week with respect to such Eligible Accounts.
5.12 No Company shall incur, directly, or indirectly, any Debt for
borrowed money or otherwise under any promissory note, bond, indenture or
similar instrument, or in connection with the obligations of any Person (whether
by guaranty, suretyship, purchase or repurchase agreement or agreement to make
investments or otherwise), other than (a) Debt incurred in favor of Fidelity,
(b) Debt secured by purchase money liens or security interests permitted by
Section 5.10, (c) Debt incurred to refinance any other Debt then existing and
permitted hereunder to the extent that such Debt does not exceed the amount of
Debt refinanced and such Debt is secured only by the properties and assets that
secured the Debt refinanced, (d) Debt subordinated to the Obligations pursuant
to a written subordination agreement satisfactory to Fidelity between Fidelity
and the Person to whom such Debt is owed, or (e) Debt incurred in the normal and
ordinary course of such Company's business.
5.13 The Companies shall not use any of the funds paid to the Companies
hereunder directly or indirectly for personal, family, household or agricultural
purposes.
5.14 No Company shall directly or indirectly become liable in connection
with the Debt of any Person, whether by guarantee, surety, endorsement (other
than endorsement of negotiable instruments for collection in the ordinary course
of business), agreement to purchase or repurchase, agreement to make
investments, agreement to provide funds or maintain working capital, or any
agreement to assure a creditor against loss, other than in favor of Fidelity.
11
5.15 No Company shall discontinue, or make any material change in, its
business as currently established, or enter any new or different line of
business not directly related to such Company's existing line of business.
5.16 No Company shall declare, pay or issue any dividends or other
distributions in respect of its capital stock or distribute, reserve, secure, or
otherwise make or commit distributions on account of its capital stock, or make
any payment on account of the purchase, redemption or other acquisition or
retirement of any shares of its capital stock (each, a "Distribution"), unless
(a) immediately prior thereto and after giving effect thereto, no Event of
Default or any event or circumstance that, with the giving of notice, the
passage of time or both, would constitute an Event of Default, has occurred, and
(b) the sum of (i) the amount of such Distribution, (ii) the amount of all other
previous Distributions by such Company in the same calendar year, and (iii) the
amount of all loans and advances previously made by such Company to any officer,
director, shareholder or Affiliate of such Company pursuant to the second
proviso in the first sentence of Section 5.17 in the same calendar year, do not
exceed 50% of such Company's EBIT for the period from January 1 in the year of
such Distribution is made through and including the date of such Distribution.
5.17 No Company shall make any loans or advances to or for the benefit of
any officer, director, shareholder or Affiliate of such Company; provided,
however, that each Company may make advances for routine expense allowances to
its officers and directors in the ordinary course of business; and, provided,
further, however, that so long as (a) immediately prior thereto and after giving
effect thereto, no Event of Default or any event or circumstance that, with the
giving of notice, the passage of time or both, would constitute an Event of
Default, has occurred, and (b) the sum of (i) the amount of such loan or
advance, (ii) the amount of all other previous loans or advances by such Company
to any officer, director, shareholder or Affiliate of such Company in the same
calendar year, and (iii) the amount of all Distributions previously made by such
Company in the same calendar year do not exceed 50% of such Company's EBIT for
the period from January 1 in the year of such loan or advance is made through
and including the date of such loan or advance, a Company may make loans or
advances to the other Company. No Company shall make any payment on any
obligation owing to any officer, director, shareholder or Affiliate of such
Company.
5.18 No Company shall purchase or otherwise acquire assets from any Person
outside the ordinary course of business of such Company.
5.19 No Company shall invest in or otherwise purchase or acquire the
securities of any Person.
5.20 No Company shall sell or dispose of any of its assets other than the
sale of Inventory in the ordinary course of business and other sales or
dispositions of not more than $25,000 in net book value of assets per calendar
month, and no Company shall dissolve or liquidate or become a party to any
merger or consolidation with any Person.
5.21 Each Company shall keep and maintain its furniture, fixtures
machinery and equipment in good operating condition and repair (normal wear and
tear excepted), and shall make all necessary repairs thereto so that the value
and operating efficiency thereof shall at all times be maintained and preserved.
Each Company shall notify Fidelity immediately in writing of any material loss
or damage to any item of its furniture, fixtures, machinery and equipment.
5.22 If any Company now owns or hereafter acquires any vehicles, aircraft,
watercraft or other machinery and equipment for which a certificate of title has
been issued or applied for, such Company immediately shall deliver to Fidelity,
properly endorsed, each certificate of title or application for title or other
evidence of ownership for each such item of machinery and equipment. The
Companies shall take all actions necessary to have Fidelity's security interest
properly recorded on each such certificate of title and shall take all other
actions necessary to perfect Fidelity's security interest in all such assets now
or hereafter acquired by such Company.
Section 6. Collateral. In order to secure the payment and performance of
all Obligations, each Company hereby grants to Fidelity a security interest in
and lien upon all of such Company's right, title and interest in and to (a) all
Accounts, contract rights and general intangibles, receivables and claims
whether now or hereafter arising,
12
all guaranties and security therefor and all of such Company's right title and
interest in the goods purchased and represented thereby, if any, including all
of such Company's rights in and to returned goods and rights of stoppage in
transit, replevin and reclamation as unpaid vendor; (b) all Inventory and all
accessions thereto and products thereof and documents therefor; (c) all
furniture, fixtures, equipment and machinery, wherever located and whether now
or hereafter existing, and all parts thereof, accessions thereto, and
replacements therefor and all documents and general intangibles covering or
relating thereto; (d) all books and records pertaining to the foregoing,
including but not limited to computer programs, data, certificates, records,
circulation lists, subscriber lists, advertiser lists, supplier lists, customer
lists, customer and supplier contracts, sales orders, and purchasing records;
and (e) all proceeds of the foregoing (collectively, the "Collateral"). The
Companies agree to comply with all appropriate laws in order and to take all
actions necessary or desirable in Fidelity's judgment to perfect Fidelity's
security interest in and to the Collateral, to execute any financing statement
or additional documents as Fidelity may request and to deliver to Fidelity a
list of all locations of its Inventory, equipment and machinery and landlord and
or mortgagee lien waivers with respect to each site where Inventory, equipment
or machinery is located and which is either leased by the Companies or has been
mortgaged by the Companies, upon request by Fidelity.
Section 7. Collection. Each invoice representing an Account shall state on
its face that amounts payable thereunder are payable only at the Remittance
Address. Fidelity shall have the right at any time, either before or after the
occurrence of an Event of Default and without notice to any Company, to notify
any or all Account Debtors on the Collateral of the assignment of the Collateral
to Fidelity and to direct such Account Debtors to make payment of all amounts
due or to become due to any Company directly to Fidelity, and to the extent
permitted by law, to enforce collection of any Collateral and to adjust, settle
or compromise the amount or payment thereof. So long as no Event of Default or
event that, with the passage of time, the giving of notice or both, would become
an Event of Default has occurred and is continuing, all collections of
Collateral of any Company received by Fidelity shall be applied by Fidelity to
the payment of the outstanding Advances of such Company, whether or not then
due, then to any interest due on any Advances to such Company and any other fees
or charges due hereunder and allocable or attributable directly to such Company,
then to such Company's Proportionate Share of all other Obligations then due and
any remaining funds shall be delivered to such Company. Upon the occurrence of
an Event of Default or an event that, with the passage of time, the giving of
notice or both, would become an Event of Default, any such remaining funds may
be applied to any of the Obligations of the Companies, whether or not then due,
or held by Fidelity as cash collateral ("Cash Collateral") until all Obligations
have been paid in full and Fidelity has no further obligation to advance funds
to the Companies. All amounts and proceeds (including instruments and writings)
received by any Company in respect of the Collateral shall be received in trust
for the benefit of Fidelity hereunder, shall be segregated from other funds of
such Company and shall be immediately paid over to Fidelity in the same form as
received (with any necessary endorsement) to be applied in the same manner as
payments received directly by Fidelity. If the six-month monthly rolling average
of credit card sales for both Companies in the aggregate exceeds $100,000, all
credit card payments shall be directed to a blocked account set up at a bank
acceptable to Fidelity for Fidelity's benefit and shall be applied to the
Obligations in the manner provided herein.
Section 8. Power of Attorney. Each Company grants to Fidelity an
irrevocable power of attorney coupled with an interest authorizing and
permitting Fidelity, at its option, with or without notice to such Company, to
do any or all of the following: (a) endorse the name of such Company on any
checks or other evidences of payment whatsoever that may come into the
possession of Fidelity regarding Collateral, including checks received by
Fidelity pursuant to Section 7 hereof; (b) receive, open and forward any mail
addressed to such Company and received at the Remittance Address; (c) pay,
settle, compromise, prosecute or defend any action, claim, conditional waiver
and release, or proceeding relating to Collateral; (d) upon the occurrence of an
Event of Default, notify, in the name of such Company, the U.S. Post Office to
change the address for delivery of mail addressed to such Company to such
address as Fidelity may designate (provided that Fidelity shall turn over to
such Company all such mail not relating to Collateral); and (e) execute and file
on behalf of such Company any financing statement amendment thereto or
continuation thereof (i) deemed necessary or appropriate by Fidelity to protect
Fidelity's interest in and to the Collateral or (ii) required or permitted under
any provision of this Agreement. The authority granted to Fidelity herein is
irrevocable until this Agreement is terminated and all amounts due to Fidelity
hereunder have been paid in full. Each Company acknowledges that Fidelity may
verify or confirm the Eligible Accounts from time to time, by among other means,
contacting the related Account Debtors, and each Company consents to such
verification and confirmation.
13
Section 9. Default. An event of default ("Event of Default") shall be
deemed to have occurred hereunder, and Fidelity shall have no further obligation
to make any further Advances and may immediately exercise its rights and
remedies with respect to the Collateral under this Agreement, the UCC and
applicable law, upon the happening of one or more of the following:
(a) Any Company shall fail to pay on demand or otherwise as and when
required or due any amount required to be paid or owed by such Company to
Fidelity, whether hereunder or otherwise.
(b) Any Company shall breach any covenant or agreement made herein or in
any other Transaction Document (other than those covered by clause (a) above)
and the same shall not be cured to Fidelity's satisfaction within ten days
after the earlier of (i) the date on which Company first obtains knowledge that
such covenant or agreement has been breached or (ii) the date on which Fidelity
notifies the Companies that such covenant or agreement has been breached.
(c) Any warranty or representation made herein or in any other Transaction
Document shall be untrue in any material respect when made or any report,
certificate, schedule, financial statement, profit and loss statement or other
statement furnished by any Company, or by any other Person on behalf of any
Company, to Fidelity is not true and correct in all material respects when
furnished.
(d) There shall be commenced by or against any Company any voluntary under
the federal Bankruptcy Code, or there shall be commenced against the Company any
involuntary case under the federal Bankruptcy Code that is not dismissed within
60 days after commencement, or any Company shall make an assignment for the
benefit of its creditors, or of a receiver or custodian shall be appointed for
any Company for a substantial portion of its assets.
(e) Any Company shall become insolvent in that its debts are greater than
the fair value of its assets, or any Company is generally not paying its debts
as they become due.
(f) Any involuntary lien, garnishment, attachment or the like shall be
issued against or shall attach to the Collateral and the same is not released or
bonded or insured to the satisfaction of Fidelity within ten days.
(g) An event or circumstance shall have occurred which Fidelity believes
has or may result in a material adverse change in any Company's financial
condition, business or operations or the value of the Collateral.
(h) Any Company shall have a federal or state tax lien filed against any
of its properties, or shall fail to pay any federal or state tax when due, or
shall fail to file any federal or state tax form or report as and when due.
(i) Either (i) any "accumulated funding deficiency" (as defined in Section
412(a) of the Internal Revenue Code of 1986, as amended) in excess of $25,000
exists with respect to any ERISA Plan, or (ii) any Termination Event occurs with
respect to any ERISA Plan and the then current value of such ERISA Plan's
benefit liabilities exceeds the then current value of such ERISA Plan's assets
available for the payment of such benefit liabilities by more than $25,000.
(j) Any Company suffers the entry against it a final judgment for the
payment of money in excess of $100,000, and either (i) such judgment is not paid
in full within 30 days after the entry of such judgment or (ii) such judgement
is not bonded or insured to the satisfaction of Fidelity.
(k) Fidelity shall believe in good faith that the prospect for payment or
performance of the Obligations has become impaired.
(l) Any guarantor of the Obligations shall repudiate his, her or its
obligations in respect of such guaranty.
14
(m) An "event of default" shall have occurred and be continuing under any
agreement, document or instrument evidencing any Debt exceeding $500,000 of any
Company and such "event of default" is not waived by the holder of such Debt or
otherwise cured by such Company, or any Debt exceeding $500,000 of any Company
is accelerated or called for payment prior to the due date thereof.
(n) Xxxx Xxxx or, after the acquisition by Litronic of the stock of Pulsar
Data Systems, Inc., Xxxxxxx X. Xxxxx, Xx. shall cease to serve as a member of
the Board of Directors or executive management of Litronic.
Upon the occurrence of an Event of Default described in subsection (d) of this
section, all of the Obligations owing by the Companies to Fidelity under any of
the Transaction Documents shall thereupon be immediately due and payable,
without demand, presentment, notice of demand or of dishonor and nonpayment, or
any other notice or declaration of any kind, all of which are hereby expressly
waived by the Companies. During the continuation of any other Event of Default,
Fidelity, at any time and from time to time, may declare any or all of the
Obligations owing by the Companies to Fidelity under any of the Transaction
Documents immediately due and payable, all without notice, demand, presentment,
notice of demand or of dishonor and nonpayment, or any notice or declaration of
any kind, all of which are hereby expressly waived by the Companies. After any
such acceleration (whether automatic or due to declaration by Fidelity), any
obligation of Fidelity to make any further Advances or Term Advances or loans of
any kind under this Agreement or any other agreement with any Company shall
terminate. All Advances hereunder are subject to approval by Fidelity in its
sole discretion, and may be declined in whole or in part, without prior notice
to the Companies, whether or not an Event of Default may then be in existence.
Section 10. Remedies and application of Proceeds.
10.1 In addition to, and without limitation of, the foregoing provisions
of this Agreement, if an Event of Default shall have occurred and be continuing,
Fidelity may from time to time in its discretion, without limitation and without
notice except as expressly herein: (a) exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein, under the other
Transaction Documents or otherwise available to it, all the rights and remedies
of a secured party on default under the UCC (whether or not the UCC applies to
the affected Collateral); (b) require any Company to, and each Company hereby
agrees that it will at its expense, assemble all or part of the Collateral as
directed by Fidelity and make it available to Fidelity at a place to be
designated by Fidelity that is reasonably convenient to both parties; (c) reduce
its claim to judgment or foreclose or otherwise enforce, in whole or in part,
the security interest created hereby by any available judicial procedure; (d)
dispose of, at its office, on the premises or any Company or elsewhere, all or
any part of the Collateral, as a unit or in parcels, by public or private
proceedings; (e) buy the Collateral, or any part thereof, at any public sale, or
at any private sale if the Collateral is of a type customarily sold in a
recognized market or is of a type that is the subject to widely distributed
standard price quotations; (f) apply by appropriate judicial proceedings for
appointment of a receiver for the Collateral, or any part thereof, and each
Company hereby consents to any such appointment; and (g) at its discretion,
retain the Collateral in satisfaction of the Obligations whenever the
circumstances are such that Fidelity is entitled to do so under the UCC or
otherwise. Each Company agrees that, to the extent notice of sale shall be
required by law, at least five days' notice to such Company of the time and
place of any public sale of the Collateral or the time after which any private
sale of the Collateral is to be made shall constitute reasonable notification.
Fidelity shall not be obligated to make any sale of Collateral regardless of
whether any notice of sale has been given. Fidelity may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
10.2 If any Event of Default shall have occurred and be continuing,
Fidelity may in its discretion apply any Cash Collateral, and any cash proceeds
received by Fidelity in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral, to any or all of the
following in such order as Fidelity may elect: (a) the repayment of all or any
portion of the Obligations; (b) the repayment of reasonable costs and expenses,
including reasonable attorneys' fees and legal expenses, incurred by Fidelity in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any Collateral, (iii) the exercise or enforcement of any of
the rights of Fidelity hereunder, or (iv) the failure of any Company to perform
or observe any of the provisions hereof; (c) the payment or other satisfaction
of any liens and other encumbrances upon any of the Collateral; (d) the
reimbursement of Fidelity for the amount of any obligations of
15
any Company paid or discharged by Fidelity, and of any expenses of Fidelity
payable by any Company hereunder or under the other Transaction Documents; (e)
by holding the same as Collateral; (f) the payment of any other amounts required
by applicable law (including, without limitation, Part 5 of Article 9 of the UCC
or any successor or similar applicable statutory provision); and (g) by delivery
to such Company or to whomsoever shall be lawfully entitled to receive the same
or as a court of competent jurisdiction shall direct.
Section 11. Miscellaneous.
11.1 In the event that any Company commits any act or omission that
prevents or unreasonably interferes with (a) Fidelity's exercise of the rights
and privileges arising under the power of attorney granted in Section 8 of this
Agreement or (b) Fidelity's perfection of or levy upon the security interest
granted in the Collateral, including any seizure of any Collateral, such Company
acknowledges that such conduct will cause immediate, severe, incalculable and
irreparable harm and injury, and agrees that such conduct shall constitute
sufficient grounds to entitle Fidelity to an injunction, writ of possession, or
other applicable relief in equity, and to make such application for such relief
in any court of competent jurisdiction, without any prior notice to such Company
unless otherwise required by applicable law.
11.2 All rights, remedies and powers granted to Fidelity in this
Agreement, or in any other instrument or agreement given by any Company to
Fidelity or otherwise available to Fidelity in equity or at law, are cumulative
and may be exercised singularly or concurrently with such other rights as
Fidelity may have. These rights may be exercised from time to time as to all or
any part of the Collateral as Fidelity in its discretion may determine. No
waiver by Fidelity of its rights and remedies shall be effective unless the
waiver is in writing and signed by Fidelity. A waiver by Fidelity of a right or
remedy under this Agreement or any other Transaction Document on one occasion
shall not be deemed to be a waiver of such right or remedy on any subsequent
occasion. An Advance by Fidelity during the continuation of an Event of Default
shall not obligate Fidelity to make any further Advances during the continuation
of such Event of Default.
11.3 Any notice or communication with respect to this Agreement or any
other Transaction Document shall be given in writing, sent by (i) personal
delivery, (ii) expedited delivery service with proof of delivery, (iii) United
States mail, postage prepaid, registered or certified mail, or (iv) prepaid
telegram, telex or telecopy, addressed to each party hereto at its address set
forth below its signature hereon or to such other address or to the attention of
such other Person as hereafter shall be designated in writing by the applicable
party sent in accordance herewith. Any such notice or communication shall be
deemed to have been given either at the time of personal delivery or, in the
case of delivery service or mail, as of the date of first attempted delivery at
the address and in the manner provided herein, or in the case of telegram, telex
or telecopy, upon receipt. The Companies hereby agree that Fidelity may
publicize the transaction contemplated by this Agreement in newspapers, trade
and similar publications including, without limitation, the publication of a
"tombstone".
11.4 The term of this Agreement shall be for three years from the date
hereof (the original term and any extension thereof are herein called the
"Term") and from year to year thereafter unless either party hereto gives notice
to the other party hereto not more than 90 days or less than 60 days prior to
the end of the Term; provided, however, that Fidelity may terminate this
Agreement at any time effective immediately upon the occurrence of an Event of
Default. The Companies acknowledge that termination of this Agreement at any
time prior to the end of the Term would result in the loss by Fidelity of the
benefits of this Agreement and that the damages incurred by Fidelity as a result
of such termination would be difficult and impractical to ascertain. Therefore,
in the event this Agreement is terminated prior to the second anniversary of the
date hereof for any reason, the Companies shall pay to Fidelity an early
termination fee in an amount equal to (x) the average monthly accrued interest
and fees earned by Fidelity hereunder prior to the date of termination
multiplied by (y) the number of months remaining in the Term as of the date of
termination, but only the maximum extent permitted by applicable law. No early
termination fee shall be payable if such termination occurs after the second
anniversary of the date hereof. Any termination of this Agreement shall not
affect Fidelity's security interest in the Collateral, and this Agreement shall
continue to be effective, until all obligations have been completed and
satisfied in full. No Company shall be entitled to terminate this Agreement as
to itself only, unless all Companies terminate this Agreement or Fidelity
consents to such termination.
16
11.5 Each and every provision, condition, covenant and representation
contained in this Agreement is, and shall be construed, to be a separate and
independent covenant and agreement. If any term or provision of this Agreement
shall to any extent be invalid or unenforceable, the remainder of the Agreement
shall not be affected thereby.
11.6 The Companies jointly and severally agree to indemnify, hold harmless
and defend all Indemnified Persons from and against any and all Indemnified
Claims other than those arising out of the gross negligence or willful
misconduct of the applicable Indemnified Person. THE FOREGOING INDEMNIFICATION
SHALL APPLY WHETHER OR NOT SUCH INDEMNIFIED CLAIMS ARE IN ANY WAY OR TO ANY
EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY,
OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY
INDEMNIFIED PERSON. Upon notification and demand, the Companies agree to provide
defense of any Indemnified Claim and to pay all reasonable costs and expenses of
counsel selected by any Indemnified Person in respect thereof. Neither the
Company nor any Indemnified Person shall compromise or settle any Indemnified
Claim without the prior written consent of the other, which consent shall not be
unreasonably withheld. Except as specifically provided in this section, the
Companies waive all notices from any Indemnified Person. The provisions of this
Section 11.6 shall survive the termination of this Agreement.
11.7 All grants, covenants and agreements contained in this Agreement
shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that the Companies may not delegate
or assign any of their duties or obligations under this Agreement without the
prior written consent of Fidelity. FIDELITY RESERVES THE RIGHT TO ASSIGN ITS
RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT IN WHOLE OR IN PART TO ANY PERSON OR
ENTITY. Without limiting the generality of the foregoing, Fidelity may from time
to time grant participations in all or any part of the Obligations to any Person
on such terms and conditions as may be determined by Fidelity in its sole and
absolute discretion, provided that the grant of such participation shall not
relieve Fidelity of its obligations hereunder nor create any additional
obligation of the Companies.
11.8 Any action permitted or provided to be taken or omitted by Fidelity
hereunder may be taken or omitted, as the case may be, by Fidelity in its sole
and absolute discretion, and any consent or waiver required of Fidelity or
determination to be made by Fidelity hereunder may be given, withheld or made,
as the case may be, by Fidelity in its sole and absolute discretion.
11.9 ALL OBLIGATIONS HEREUNDER ARE THE JOINT AND SEVERAL OBLIGATION OF ALL
COMPANIES. ALL OBLIGATIONS AND INDEBTEDNESS NOW OR HEREAFTER OWING TO FIDELITY
BY THE COMPANIES JOINTLY AND SEVERALLY OR BY ANY COMPANY INDIVIDUALLY SHALL BE
SECURED BY ALL OF THE COLLATERAL, AND FIDELITY MAY HOLD AND APPLY AND REAPPLY
ALL MONIES, PROPERTY AND OTHER COLLATERAL OF ANY COMPANY IN PAYMENT OF ANY
INDEBTEDNESS, LIABILITIES OR OBLIGATIONS OF ANY OF THE COMPANIES UNDER THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. NO COMPANY SHALL HAVE, AND EACH
COMPANY EXPRESSLY WAIVES, ANY, RIGHTS OF SUBROGATION, REIMBURSEMENT, INDEMNIFY,
EXONERATION, CONTRIBUTION OR ANY SIMILAR CLAIM OR AGAINST ANY OTHER COMPANY OR
ANY OTHER PERSON DIRECTLY OR CONTINGENTLY LIABLE FOR THE OBLIGATIONS OR AGAINST
OR WITH RESPECT TO ANY OTHER COMPANY'S PROPERTY (INCLUDING, WITHOUT LIMITATION,
ALL OF SUCH COMPANY'S PROPERTY WHICH SERVES AS COLLATERAL FOR ITS OBLIGATIONS TO
FIDELITY). IN ADDITION, EACH COMPANY WAIVES ANY RIGHT TO ENFORCE ANY REMEDY
WHICH FIDELITY NOW HAS OR MAY HEREAFTER HAVE AGAINST ANY OTHER COMPANY.
NOTWITHSTANDING THE FOREGOING OR ANY OTHER PROVISION OF THIS AGREEMENT, IT IS
UNDERSTOOD AND AGREED THAT NO COMPANY SHALL BE LIABLE HEREUNDER FOR ANY PORTION
OF THE OBLIGATIONS IN EXCESS OF SUCH COMPANY'S "MAXIMUM LIABILITY AMOUNT." AS
USED HEREIN, THE TERM "MAXIMUM LIABILITY AMOUNT" SHALL MEAN, WITH RESPECT TO ANY
COMPANY, THE LESSER OF (a) THE AMOUNT OF THE OBLIGATIONS OR (b) THE SUM OF (i)
THE OUTSTANDING PRINCIPAL BALANCE OF THE ADVANCES TO SUCH COMPANY HEREUNDER,
ACCRUED AND UNPAID INTEREST
17
THEREON, ANY OTHER FEES AND CHARGES HEREUNDER ALLOCABLE OR ATTRIBUTABLE DIRECTLY
TO SUCH COMPANY AND SUCH COMPANY'S PROPORTIONATE SHARE OF ANY OTHER FEES AND
CHARGES HEREUNDER AND (ii) THE MAXIMUM ADDITIONAL AMOUNT THAT WOULD NOT RESULT
IN SUCH COMPANY'S LIABILITY HEREUNDER CONSTITUTING A FRAUDULENT TRANSFER OR
CONVEYANCE UNDER APPLICABLE STATE OR FEDERAL LAW AS DETERMINED BY A COURT OF
COMPETENT JURISDICTION.
11.10 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO THE RULES
THEREOF RELATING TO CONFLICTS OF LAW. EACH COMPANY HEREBY IRREVOCABLY SUBMITS
ITSELF TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN ORANGE
COUNTY, CALIFORNIA AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE
UPON IT IN ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT, ANY BORROWING
HEREUNDER OR ANY OTHER RELATIONSHIP BETWEEN FIDELITY AND EACH COMPANY BY ANY
MEANS ALLOWED UNDER STATE OR FEDERAL LAW. ANY LEGAL PROCEEDING ARISING OUT OF OR
IN ANY WAY RELATED TO THIS AGREEMENT, ANY BORROWING HEREUNDER OR ANY OTHER
RELATIONSHIP BETWEEN FIDELITY AND EACH COMPANY SHALL BE BROUGHT AND LITIGATED IN
ANY ONE OF THE STATE OR FEDERAL COURTS LOCATED IN ORANGE COUNTY, CALIFORNIA
HAVING JURISDICTION UNLESS FIDELITY SHALL ELECT OTHERWISE. THE PARTIES HERETO
HEREBY WAIVE AND AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE, THAT ANY SUCH PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT
THE VENUE THEREOF IS IMPROPER.
11.11 EACH OF EACH COMPANY AND FIDELITY HEREBY (A) IRREVOCABLY WAIVES, TO
THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY OR ASSOCIATED HEREWITH; (B) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (C) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (D)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS PARAGRAPH.
11.12 This Agreement shall not become effective unless and until Litronic
completes a public offering of its capital stock resulting in net proceeds to
Litronic of at least $20,000,000. Effective upon the completion of such a public
offering, this Agreement shall restate and amend the Loan and Security Agreement
dated June 27, 1996 between Litronic Industries, Inc. and Fidelity Funding of
California, Inc. (as the same may have heretofore been amended or modified, the
"Original Agreement,") in its entirety, and all of the terms and provisions
hereof shall supersede the terms and provisions thereof; provided that all
indebtedness and obligations of the Company to Fidelity under the Original
Agreement are renewed and extended hereby and all liens, security interests,
assignments, superior titles, rights, remedies, powers, equities and priorities
(the "Liens") created by the Original Agreement are renewed and extended hereby
and shall continue in full force and effect to secure the Obligations. By this
Agreement, the Liens are hereby ratified and confirmed as valid, subsisting and
continuing to secure the Obligations.
11.13 THIS AGREEMENT AND THE DOCUMENTS DESCRIBED HEREIN AND DELIVERED IN
CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT OF THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
18
THE PARTIES. NO MODIFICATION OR AMENDMENT OF OR SUPPLEMENT TO THIS AGREEMENT OR
TO ANY SUCH DOCUMENTS SHALL BE VALID OR EFFECTIVE UNLESS THE SAME IS IN WRITING
AND SIGNED BY THE PARTY AGAINST WHOM IT IS SOUGHT TO BE ENFORCED.
The undersigned have entered into this Agreement as of the date first
written above.
FIDELITY FUNDING, INC., LITRONIC INDUSTRIES, INC.,
a Texas corporation a California corporation
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxx Xxxx
----------------------------- ----------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxx Xxxx
----------------------- ----------------------
Title: President Title: President & CEO
---------------------- ---------------------
Mailing Address: 00000 Xxxxx Xxxxx, Mailing Address: 0000 Xxxx Xxxxxx,
Xxxxx 000 Xxxxx 0000
Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxxxxxxx 00000
Street Address: 00000 Xxxxx Xxxxx, Xxxxxx Address: 0000 Xxxx Xxxxxx,
Xxxx 000 Xxxxx 0000
Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxxxxxxx 00000
Other Place of Business:
0000 Xxxxxxxxxx Xxxxx
Xxxxx X
Xxxxxx, Xxxxxxxx 00000
Trade, Fictitious and Assumed Names used:
None.
LITRONIC INC.
a Delaware corporation
By: /s/ Xxxx Xxxx
----------------------------
Name: Xxxx Xxxx
----------------------
Title: President & CEO
---------------------
Mailing Address: 0000 Xxxx Xxxxxx,
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Street Address: 0000 Xxxx Xxxxxx,
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Other Place of Business:
0000 Xxxxxxxxxx Xxxxx
Xxxxx X
Xxxxxx, Xxxxxxxx 00000
Trade, Fictitious and Assumed Names used:
None.
19
SCHEDULE 4.2
Liens and Security Interests
Secured Party Filing Office File No.
------------- ------------- --------
Greyhound Orange County, California 92-347600
General Electric Orange County, California 96-634031
Sun Microsystem California Secretary of State 9829960106
Phoenixcor California Secretary of State 9607360274
Imaging Financial California Secretary of State 94156674
ITT Capital California Secretary of State 94097409
California Thrift California Secretary of State 0000000000
20
EXHIBIT A
BORROWING BASE CERTIFICATE
LITRONIC INC.
(Date)
REPORT #
FINISHED RAW
COLLATERAL ACCOUNTS GOODS MATERIALS
RECEIVABLE INVENTORY INVENTORY
----------------------------------------------------------------- ---------- --------- ---------
1 GROSS COLLATERAL LAST REPORT (REPORT #)
REPORT DATE: (DATE) LINE 6 PRIOR REPORT
2 ADD SALES ASSIGNED AND INVENTORY ADDITIONS
3 ADD DEBIT MEMOS AND OTHER ADJUSTMENTS
4 LESS CASH COLLECTIONS AND INVENTORY REDUCTIONS
5 LESS DISCOUNTS, CREDIT MEMOS AND ADJUSTMENTS
6 GROSS COLLATERAL PER THIS REPORT
7 INELIGIBLE COLLATERAL
ACCOUNTS RECEIVABLE INVENTORY
-----------------------------------------------------------------
A PAST DUE OVER 90 DAYS OBSOLETE
B CREDITS OVER 90 DAYS SLOW MOVING
C CROSS AGING - 25%>90, 0 ELIGIBLE CONSIGNED
D COD SALES >120 DAYS
E FOREIGN RECEIVABLES PACKAGING
F CONTRA ACCOUNTS OTHER LIMIT
UNRECONCILED AIR OVERAGE AMOUNT
H CONCENTRATION - >20% COMMERCIAL ----------
H CONCENTRATION - >30% LOCKHEED XXXXXX
H CONCENTRATION - >50% GOVERNMENT
I OFFSITE INVENTORY NOT> 120 DAYS
8 TOTAL INELIGIBLE PER THIS
REPORT (SUM 7A THROUGH 7H) ________________________________________________
9 NET ELIGIBLE COLLATERAL (6-8) ________________________________________________
# ADVANCE RATE ________________________________________________
85% 50% 50%
# TOTAL
----------
COLLATERAL AVAILABILITY
# BORROWING BASE
LESSER 0F 11 OR COMMITMENT TOTAL:
# LESS SPECIAL RESERVE
# NET AVAILABILITY BEFORE LOAN _____________________________________________________________
BALANCE (12-13) _____________________________________________________________
LOAN
-----------------------------------------------------------------
# LOAN BALANCE - LAST REPORT LINE 22
# LESS PAYMENTS FROM COLLECTIONS
# BALANCE PER FIDELITY FUNDING OF CALIFORNIA
REPORT PRIOR TO NEW ACTIVITY
# LESS NON-COLLECTION PAYMENTS
# ADD LOAN ADJUSTMENTS:
INTEREST
AUDIT FEES
MINIMUM FEE ADJUSTMENT _____________________________________________________________
WIRE TRANSFER, LOCK BOX, MISC, FEES
# ADD LINE MAINTENANCE FEE
# ADD ADVANCE REQUEST THIS REPORT _____________________________________________________________
# NEW LOAN BALANCE _____________________________________________________________
# EXCESS AVAILABILITY _____________________________________________________________
Page 1
5/10/99
Bbc
EXHIBIT A
BORROWING BASE CERTIFICATE
LITRONIC INC.
(Date)
REPORT #
THE UNDERSIGNED HEREBY CERTIFIES TO FIDELITY FUNDING, INC. ("FIDELITY") THAT:
1 HE IS THE DULY ELECTED AND QUALIFIED CHIEF FINANCIAL OFFICER OF
____________________ (THE "COMPANY"), IS FAMILIAR WITH THE FACTS HEREIN
CERTIFIED AND IS DULY AUTHORIZED TO CERTIFY SUCH FACTS AND MAKE AND
DELIVER THIS BORROWING BASE CERTIFICATE FOR AND ON BEHALF OF THE COMPANY,
PURSUANT TO THAT CERTAIN LOAN AND SECURITY AGREEMENT, (THE "AGREEMENT"),
DATED AS OF MAY__, 1999 AMONG LITRONIC INC., LITRONIC INDUSTRIES, INC. AND
FIDELITY.
2 ALL REPRESENTATIONS AND WARRANTIES MADE BY THE COMPANY IN THE AGREEMENT OR
ANY OTHER INSTRUMENT, DOCUMENT, CERTIFICATE OR OTHER AGREEMENT EXECUTED IN
CONNECTION THEREWITH (COLLECTIVELY, THE "TRANSACTION DOCUMENTS") DELIVERED
ON OR BEFORE THE DATE HEREOF ARE TRUE ON AND AS OF THE DATE HEREOF AS IF
SUCH REPRESENTATIONS AND WARRANTIES HAD BEEN MADE AS OF THE DATE HEREOF.
3 NO EVENTS OF DEFAULT OR ANY EVENT, THAT WITH THE GIVING OF NOTICE, THE
PASSAGE OF TIME OR BOTH, WOULD CONSTITUTE AN EVENT OF DEFAULT HAS OCCURRED
AND IS EXISTING.
4 THE COMPANY HAS PERFORMED AND COMPLIED WITH ALL AGREEMENTS AND CONDITIONS
REQUIRED IN THE TRANSACTION DOCUMENTS TO BE PERFORMED OR COMPLIED WITH BY
IT ON OR PRIOR TO THE FUNDING OF THE ADVANCE REQUESTED HEREBY.
5 AFTER FIDELITY MAKES THE ADVANCE REQUESTED HEREBY, THE AGGREGATE AMOUNT OF
ALL OUTSTANDING ADVANCES WILL NOT EXCEED THE LESSER OF (I) THE COMMITMENT
AND (II) THE BORROWING BASE.
6 ALL INFORMATION CONTAINED IN THIS BORROWING BASE CERTIFICATE IS TRUE,
CORRECT AND COMPLETE.
TERMS USED AND NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANING ASSIGNED TO
THEM IN THE AGREEMENT, IF SO DEFINED UNDER SECTION 1. "DEFINITIONS AND
CONSTRUCTION" OF THE AGREEMENT.
IN WITNESS WHEREOF, THIS INSTRUMENT IS EXECUTED BY THE UNDERSIGNED AS OF: (Date)
COMPANY NAME:_______________________
/s/ XX XXXXXXX
XXXXXX X. XXXXXXX
CHIEF FINANCIAL OFFICER
PAYMENT AND ADJUSTMENT DATA
ACCOUNTS AMOUNT
PAYMENTS RECEIVED BY: RECEIVABLE ACCOUNTS AMOUNT
DATE DEPOSIT TO RECEIVABLE OTHER TOTAL
------------------------------------------------------------------------------------------------------------------------------------
FIDELITY - DALLAS LOCKBOX
FIDELITY - DALLAS LOCKBOX
FIDELITY - DALLAS LOCKBOX
FIDELITY - DALLAS LOCKBOX
FIDELITY - DALLAS LOCKBOX ________________________________________
TOTAL RECEIPTS TO FIDELITY FUNDING TO LINE 16 ________________________________________
CREDIT CARD SALES/WIRE TRANSFER BYL
CREDIT CARD SALES/WIRE TRANSFER BYL
CREDIT CARD SALES/WIRE TRANSFER BYL
CREDIT CARD SALES/WIRE TRANSFER BYL
CREDIT CARD SALES/WIRE TRANSFER BYL
CREDIT CARD SALES/WIRE TRANSFER BYL
CREDIT CARD SALES/WIRE TRANSFER BYL ________________________________________
TOTAL RECEIPTS TO BANK OF XXXXX XXXXX ________________________________________
DISCOUNTS ALLOWED
________________________________________
TOTAL DISCOUNTS, CREDIT MEMOS AND ADJUSTMENTS ________________________________________
LESS DISCOUNTS, CREDIT MEMOS AND ADJUSTMENTS TO LINE 5 ________________________________________
Page 2
5/10/99
Bbc
________________________________________
TOTAL DEBIT MEMOS AND OTHER ADJUSTMENTS TO LINE 3 ________________________________________
VALIDITY GUARANTY
This Validity Guaranty is executed and delivered by Xxxx Xxxx, an
individual residing in California ("Validity Guarantor"), for the benefit of
Fidelity Funding, Inc., a Texas corporation ("Fidelity"), as follows:
WITNESSETH:
WHEREAS, Litronic Industries, Inc., a California corporation, and Litronic
Inc., a Delaware corporation (the "Companies"), and Fidelity have entered into a
Loan and Security Agreement (as amended, modified or otherwise supplemented from
time to time, the "Loan and Security Agreement") of even date herewith.
WHEREAS, as a condition (among others provided therein) to making advances
to the Companies under the Loan and Security Agreement, Fidelity requires that
Validity Guarantor make certain covenants, warranties and guaranties for the
benefit of Fidelity as provided herein, and as an inducement to Fidelity to
enter into the Loan and Security Agreement with the Companies and to make
advances to the Companies as provided therein, Validity Guarantor has agreed to
make such covenants, warranties and guaranties to Fidelity as provided herein.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, Validity Guarantor hereby expressly warrants, covenants and
guarantees to Fidelity as follows:
1. Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Loan and Security Agreement.
2. All Accounts or Inventory from time to time reported to Fidelity as
Eligible Accounts, Eligible Inventory or otherwise listed or included on any
Borrowing Base Certificate shall be genuine and in all respects what they
purport to be, shall, in the case of Accounts, represent bona fide and existing
obligations of Account Debtors, and shall, in the case of Inventory, constitute
goods useable and saleable in the ordinary course of business without diminution
in value.
3. All reports, schedules, certificates and other information from time to
time delivered or otherwise reported to Fidelity by either Company, including,
without limitation, all financial statements, tax returns and Borrowing Base
Certificates and all supporting information or documentation delivered in
connection therewith, shall be bona fide, complete, correct and accurate in all
respects and shall accurately and completely report all matters purported to be
covered or reported thereby.
4. Each Account from time to time identified to Fidelity in any Borrowing
Base Certificate as an Eligible Account shall at all times constitute an
Eligible Account. Each item of Inventory from time to time identified to
Fidelity in any Borrowing Base Certificate shall at all times constitute
Eligible Inventory.
5. Any and all officers, employees and other agents or representatives
from time to time signing any reports (including without limitation those
specifically mentioned above) or otherwise delivery any such information to
Fidelity shall be duly authorized to deliver same to Fidelity on behalf of the
applicable Company.
6. All collections and proceeds of Accounts from time to time received by
either Company, or any of its officers, employees, agents or other
representatives, shall forthwith be delivered to Fidelity as required under the
Loan and Security Agreement.
7. The Validity Guarantor agrees to indemnify, defend and save Fidelity
free and harmless of and from any damage or loss which Fidelity may sustain,
directly or indirectly, as a result of (i) any act or omission in breach or
contravention of any of the representations, warranties, covenants and
guaranties contained herein, (ii) any fraud, deceit, deception or criminal act
on the part of any officer, employee, agent or other representative of either
Company in any of its dealings with Fidelity on behalf of such Company, and
(iii) Accounts that are or become disputed, in whole or in part, by reason of
any dispute or disagreement pertaining to actions or inactions by either
Company, whether or not any such dispute, return or non-acceptance is justified.
8. Fidelity's rights and remedies hereunder are cumulative of all other
rights and remedies which Fidelity may now or hereafter have with respect to the
Companies. Validity Guarantor's liability hereunder is direct and unconditional,
and may be enforced by Fidelity without first pursuing any other right, remedy
or security.
9. This agreement shall be binding upon the Validity Guarantor and his or
her heirs, personal representatives, successors and assigns, and shall inure to
the benefit of Fidelity and its successors or assigns.
10. Validity Guarantor agrees that he or she will cooperate with Fidelity
at all times in connection with any actions taken by Fidelity pursuant to the
Loan and Security Agreement to monitor, administer, enforce or collect the
Collateral. In the event either Company should cease or discontinue operating as
a going concern in the ordinary course of business, then for so long as any
Obligations remain outstanding, Validity Guarantor agrees that he or she shall
assist Fidelity in connection with any such action, as Fidelity may request. At
Fidelity's request in such event, Validity Guarantor shall enter into a
collection servicing agreement with Fidelity pursuant to which Validity
Guarantor shall undertake to monitor, administer, enforce and collect the
Collateral, for the benefit of Fidelity, on such terms and conditions as
Fidelity and Validity Guarantor shall determine by mutual agreement.
2
11. This Agreement shall be a continuing agreement for the benefit of
Fidelity and its successors and assigns. Validity Guarantor expressly consents
to any or all of the following action by Fidelity, at any time, without notice
to Validity Guarantor: (i) renewal, extension or modification of the Loan and
Security Agreement or any of the Transaction Documents, (ii) renewal, extension,
modification, compromise, forbearance or forgiveness of the Obligations, or any
part thereof, (iii) increase or decrease of the rate of interest from time to
time to accrue on the Obligations, (iv) exercise of any rights or remedies under
the Transaction Documents, or forbearance of any rights or remedies under the
Transaction Documents, (v) release of any Person from time to time liable for
the Obligations or any part thereof, (vi) substitution, release or modification
of any Collateral. Validity Guarantor agrees that Fidelity may take all or any
of such action in such manner, and at such time, and upon such terms, as
Fidelity may determine in its sole discretion, without notice to Validity
Guarantor, without in any way impairing Validity Guarantor's obligations under
this Agreement. Validity Guarantor acknowledges that he has reviewed and is
familiar with the Transaction Documents and is familiar with the operations and
financial condition of the Companies, and agrees that Fidelity shall have no
duty or obligation to communicate to Validity Guarantor any information
regarding the Company's financial condition or affairs.
12. ALL ACTS AND TRANSACTIONS HEREUNDER AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED, CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO THE RULES THEREOF
RELATING TO CONFLICTS OF LAW. VALIDITY GUARANTOR HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN ORANGE COUNTY,
CALIFORNIA, AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON
VALIDITY GUARANTOR IN ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT OR ANY
OTHER RELATIONSHIP BETWEEN FIDELITY AND VALIDITY GUARANTOR BY ANY MEANS ALLOWED
UNDER STATE OR FEDERAL LAW. ANY LEGAL PROCEEDING ARISING OUT OF OR IN ANY WAY
RELATED TO THIS AGREEMENT OR ANY OTHER RELATIONSHIP BETWEEN FIDELITY AND
VALIDITY GUARANTOR SHALL BE BROUGHT AND LITIGATED EXCLUSIVELY IN ANY ONE OF THE
STATE OR FEDERAL COURTS LOCATED IN ORANGE COUNTY, CALIFORNIA HAVING JURISDICTION
UNLESS FIDELITY SHALL ELECT OTHERWISE. VALIDITY GUARANTOR HEREBY WAIVES AND
AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY SUCH
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS
IMPROPER.
THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
3
Signed effective as of May 10, 1999.
/s/ Xxxx Xxxx
--------------------------------------
Name: Xxxx Xxxx
Social Security No.: ###-##-####
Address: 00 Xxxxxxx Xxx Xxxxx
Xxxxxx Xxx Xxx, XX 00000
Telephone No.: (000) 000-0000
ACCEPTED:
FIDELITY FUNDING, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
----------------------
Title: President
----------------------
4
ACKNOWLEDGMENT AND STIPULATION
The undersigned hereby acknowledges and stipulates that (i) the
undersigned is the spouse of Validity Guarantor and (ii) all community property
interests of Validity Guarantor and the undersigned in all their assets whether
now owned or hereafter acquired (whether subject to the sole management of
Validity Guarantor or the undersigned) are subject to, and may be used for, the
payment and performance of Validity Guarantor's obligations under the above
Validity Guaranty. Notwithstanding the foregoing, Fidelity shall have no
recourse against the separate property of the undersigned for satisfaction of
any such obligations.
This Acknowledgment and Stipulation is entered into as of May 10, 1999 for
the benefit of Fidelity.
/s/ Xxxxxxxxx Xxxx
---------------------------
Spouse Name: Xxxxxxxxx Xxxx
5
VALIDITY GUARANTY
This Validity Guaranty is executed and delivered by Xxxxxxx X. Xxxxx, Xx.,
an individual residing in Maryland ("Validity Guarantor"), for the benefit of
Fidelity Funding, Inc., a Texas corporation ("Fidelity"), as follows:
WITNESSETH:
WHEREAS, Litronic Industries, Inc., a California corporation, and Litronic
Inc., a Delaware corporation (the "Companies"), and Fidelity have entered into a
Loan and Security Agreement (as amended, modified or otherwise supplemented from
time to time, the "Loan and Security Agreement") of even date herewith.
WHEREAS, as a condition (among others provided therein) to making advances
to the Companies under the Loan and Security Agreement, Fidelity requires that
Validity Guarantor make certain covenants, warranties and guaranties for the
benefit of Fidelity as provided herein, and as an inducement to Fidelity to
enter into the Loan and Security Agreement with the Companies and to make
advances to the Companies as provided therein, Validity Guarantor has agreed to
make such covenants, warranties and guaranties to Fidelity as provided herein.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, Validity Guarantor hereby expressly warrants, covenants and
guarantees to Fidelity as follows:
1. Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Loan and Security Agreement.
2. All Accounts or Inventory from time to time reported to Fidelity as
Eligible Accounts, Eligible Inventory or otherwise listed or included on any
Borrowing Base Certificate shall be genuine and in all respects what they
purport to be, shall, in the case of Accounts, represent bona fide and existing
obligations of Account Debtors, and shall, in the case of Inventory, constitute
goods useable and saleable in the ordinary course of business without diminution
in value.
3. All reports, schedules, certificates and other information from time to
time delivered or otherwise reported to Fidelity by either Company, including,
without limitation, all financial statements, tax returns and Borrowing Base
Certificates and all supporting information or documentation delivered in
connection therewith, shall be bona fide, complete, correct and accurate in all
respects and shall accurately and completely report all matters purported to be
covered or reported thereby.
4. Each Account from time to time identified to Fidelity in any Borrowing
Base Certificate as an Eligible Account shall at all times constitute an
Eligible Account. Each item of Inventory from time to time identified to
Fidelity in any Borrowing Base Certificate shall at all times constitute
Eligible Inventory.
5. Any and all officers, employees and other agents or representatives
from time to time signing any reports (including without limitation those
specifically mentioned above) or otherwise delivery any such information to
Fidelity shall be duly authorized to deliver same to Fidelity on behalf of the
applicable Company.
6. All collections and proceeds of Accounts from time to time received by
either Company, or any of its officers, employees, agents or other
representatives, shall forthwith be delivered to Fidelity as required under the
Loan and Security Agreement.
7. The Validity Guarantor agrees to indemnify, defend and save Fidelity
free and harmless of and from any damage or loss which Fidelity may sustain,
directly or indirectly, as a result of (i) any act or omission in breach or
contravention of any of the representations, warranties, covenants and
guaranties contained herein, (ii) any fraud, deceit, deception or criminal act
on the part of any officer, employee, agent or other representative of either
Company in any of its dealings with Fidelity on behalf of such Company, and
(iii) Accounts that are or become disputed, in whole or in part, by reason of
any dispute or disagreement pertaining to actions or inactions by either
Company, whether or not any such dispute, return or non-acceptance is justified.
8. Fidelity's rights and remedies hereunder are cumulative of all other
rights and remedies which Fidelity may now or hereafter have with respect to the
Companies. Validity Guarantor's liability hereunder is direct and unconditional,
and may be enforced by Fidelity without first pursuing any other right, remedy
or security.
9. This agreement shall be binding upon the Validity Guarantor and his or
her heirs, personal representatives, successors and assigns, and shall inure to
the benefit of Fidelity and its successors or assigns.
10. Validity Guarantor agrees that he or she will cooperate with Fidelity
at all times in connection with any actions taken by Fidelity pursuant to the
Loan and Security Agreement to monitor, administer, enforce or collect the
Collateral. In the event either Company should cease or discontinue operating as
a going concern in the ordinary course of business, then for so long as any
Obligations remain outstanding, Validity Guarantor agrees that he or she shall
assist Fidelity in connection with any such action, as Fidelity may request. At
Fidelity's request in such event, Validity Guarantor shall enter into a
collection servicing agreement with Fidelity pursuant to which Validity
Guarantor shall undertake to monitor, administer, enforce and collect the
Collateral, for the benefit of Fidelity, on such terms and conditions as
Fidelity and Validity Guarantor shall determine by mutual agreement.
2
11. This Agreement shall be a continuing agreement for the benefit of
Fidelity and its successors and assigns. Validity Guarantor expressly consents
to any or all of the following action by Fidelity, at any time, without notice
to Validity Guarantor: (i) renewal, extension or modification of the Loan and
Security Agreement or any of the Transaction Documents, (ii) renewal, extension,
modification, compromise, forbearance or forgiveness of the Obligations, or any
part thereof, (iii) increase or decrease of the rate of interest from time to
time to accrue on the Obligations, (iv) exercise of any rights or remedies under
the Transaction Documents, or forbearance of any rights or remedies under the
Transaction Documents, (v) release of any Person from time to time liable for
the Obligations or any part thereof, (vi) substitution, release or modification
of any Collateral. Validity Guarantor agrees that Fidelity may take all or any
of such action in such manner, and at such time, and upon such terms, as
Fidelity may determine in its sole discretion, without notice to Validity
Guarantor, without in any way impairing Validity Guarantor's obligations under
this Agreement. Validity Guarantor acknowledges that he has reviewed and is
familiar with the Transaction Documents and is familiar with the operations and
financial condition of the Companies, and agrees that Fidelity shall have no
duty or obligation to communicate to Validity Guarantor any information
regarding the Company's financial condition or affairs.
12. ALL ACTS AND TRANSACTIONS HEREUNDER AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED, CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO THE RULES THEREOF
RELATING TO CONFLICTS OF LAW. VALIDITY GUARANTOR HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN ORANGE COUNTY,
CALIFORNIA, AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON
VALIDITY GUARANTOR IN ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT OR ANY
OTHER RELATIONSHIP BETWEEN FIDELITY AND VALIDITY GUARANTOR BY ANY MEANS ALLOWED
UNDER STATE OR FEDERAL LAW. ANY LEGAL PROCEEDING ARISING OUT OF OR IN ANY WAY
RELATED TO THIS AGREEMENT OR ANY OTHER RELATIONSHIP BETWEEN FIDELITY AND
VALIDITY GUARANTOR SHALL BE BROUGHT AND LITIGATED EXCLUSIVELY IN ANY ONE OF THE
STATE OR FEDERAL COURTS LOCATED IN ORANGE COUNTY, CALIFORNIA HAVING JURISDICTION
UNLESS FIDELITY SHALL ELECT OTHERWISE. VALIDITY GUARANTOR HEREBY WAIVES AND
AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY SUCH
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS
IMPROPER.
THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
3
Signed effective as of May 10,1999.
/s/ Xxxxxxx X. Xxxxx, Xx.
--------------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Social Security No.: ###-##-####
-----------------
Address: 0000 Xxxxxxxx Xx.
-----------------------------
M. Tedeville, MD 2014
-----------------------------
Telephone No.: 000-000-0000
-----------------------
ACCEPTED:
FIDELITY FUNDING, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
----------------------
Title: President
----------------------
4
CERTIFICATE OF CORPORATE RESOLUTION
OF
LITRONIC INDUSTRIES, INC.
The undersigned, the President and the Secretary of Litronic Industries,
Inc. (the "Company"), a California corporation, do hereby certify to Fidelity
Funding, Inc., that:
1. They are the duly elected, qualified and acting President and Secretary
of the Company, are familiar with the facts herein certified and are duly
authorized to certify such facts and make this certificate.
2. The Company is duly organized, validly existing and in good standing
under the laws of the State of California, and is duly authorized to transact
business as a foreign corporation in and is in good standing under the laws of
each jurisdiction where the ownership or lease of its properties and assets or
the conduct of its business would required such qualification; no changes have
been made to the Company's articles or certificate of incorporation since April
1, 1999; all franchise and other taxes required to maintain the Company's
corporate existence have been paid when due and no such taxes are delinquent;
and no proceedings are pending for the forfeiture of the Company's articles or
certificate of incorporation or for the Company's dissolution, voluntarily or
involuntarily.
3. The following resolutions were duly adopted by the Board of Directors
of the Company at a meeting duly called and held on May 10, 1999, in accordance
with all applicable laws and the Company's articles or certificate of
incorporation and by-laws:
RESOLVED, that each of the president, the treasurer/chief financial
officer, the secretary and each vice president of the Company, acting
jointly or alone, hereby are authorized to execute, deliver and perform
the Company's obligations under one or more agreements from time to time
(collectively, the "Loan and Security Agreement") with Fidelity Funding,
Inc. ("Fidelity") and Litronic Inc. (the "Co-Borrower") providing for the
establishment of a $20,000,000 revolving line of credit for the Company
and the Co-Borrower with Fidelity (with the obligations of the Company and
the Co-Borrower thereunder being joint and several) and the pledge of any
or all of the assets of the Company to secure the obligations of the
Company and the Co-Borrower to Fidelity thereunder, such Loan and Security
Agreement to be in form and substance satisfactory to the officer or
officers of the Company executing and delivering the same.
FURTHER RESOLVED, that each of the president, the treasurer/chief
financial officer, the secretary and each vice president of the Company,
acting jointly or alone, hereby are authorized and directed to execute and
deliver such documents and to take such other actions as they (or any of
them) shall deem necessary, desirable or convenient to consummate the
transactions contemplated by the Loan and Security Agreement and otherwise
to effectuate the intent of the foregoing resolution.
4. The foregoing resolutions have not been amended, modified or rescinded,
and remain in full force and effect on and as of the date hereof.
5. The following persons are the officers, and are the persons authorized
to act on behalf, of the Company pursuant to the foregoing resolutions:
Title Name Signature
----- ---- ---------
President Xxxx Xxxx /s/ Xxxx Xxxx
--------------------- -----------------------
Secretary Xxxxxxxxx Xxxx /s/ Xxxxxxxxx Xxxx
--------------------- -----------------------
Chief Financial Officer Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxx
--------------------- -----------------------
6. Attached hereto as Exhibit A is a true, complete and correct copy of
the by-laws of the Company as in effect on the date hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set the hands for and on
behalf of the Company on May 10, 1999.
LITRONIC INDUSTRIES, INC.
By: /s/ Xxxx Xxxx
------------------------------------
President
By: /s/ Xxxxxxxxx Xxxx
------------------------------------
Secretary
2
EXHIBIT A
Bylaws
3
CERTIFICATE OF CORPORATE RESOLUTION
OF
LITRONIC INC.
The undersigned, the President and the Secretary of Litronic Inc. (the
"Company"), a Delaware corporation, do hereby certify to Fidelity Funding, Inc.,
that:
1. They are the duly elected, qualified and acting President and Secretary
of the Company, are familiar with the facts herein certified and are duly
authorized to certify such facts and make this certificate.
2. The Company is duly organized, validly existing and in good standing
under the laws of the State of Delaware, and is duly authorized to transact
business as a foreign corporation in and is in good standing under the laws of
each jurisdiction where the ownership or lease of its properties and assets or
the conduct of its business would required such qualification; no changes have
been made to the Company's articles or certificate of incorporation since April
1, 1999; all franchise and other taxes required to maintain the Company's
corporate existence have been paid when due and no such taxes are delinquent;
and no proceedings are pending for the forfeiture of the Company's articles or
certificate of incorporation or for the Company's dissolution, voluntarily or
involuntarily.
3. The following resolutions were duly adopted by the Board of Directors
of the Company at a meeting duly called and held on May 10, 1999, in accordance
with all applicable laws and the Company's articles or certificate of
incorporation and by-laws:
RESOLVED, that each of the president, the treasurer/chief financial
officer, the secretary and each vice president of the Company, acting
jointly or alone, hereby are authorized to execute, deliver and perform
the Company's obligations under one or more agreements from time to time
(collectively, the "Loan and Security Agreement") with Fidelity Funding,
Inc. ("Fidelity") and Litronic Industries, Inc. (the "Co-Borrower")
providing for the establishment of a $20,000,000 revolving line of credit
for the Company and the Co-Borrower with Fidelity (with the obligations of
the Company and the Co-Borrower thereunder being joint and several) and
the pledge of any or all of the assets of the Company to secure the
obligations of the Company and the Co-Borrower to Fidelity thereunder,
such Loan and Security Agreement to be in form and substance satisfactory
to the officer or officers of the Company executing and delivering the
same.
FURTHER RESOLVED, that each of the president, the treasurer/chief
financial officer, the secretary and each vice president of the Company,
acting jointly or alone, hereby are authorized and directed to execute and
deliver such documents and to take such other actions as they (or any of
them) shall deem necessary, desirable or convenient to consummate the
transactions contemplated by the Loan and Security Agreement and otherwise
to effectuate the intent of the foregoing resolution.
4. The foregoing resolutions have not been amended, modified or rescinded,
and remain in full force and effect on and as of the date hereof.
5. The following persons are the officers, and are the persons authorized
to act on behalf, of the Company pursuant to the foregoing resolutions:
Title Name Signature
----- ---- ---------
President Xxxx Xxxx /s/ Xxxx Xxxx
--------------------- -----------------------
Secretary Xxxxxxxxx Xxxx /s/ Xxxxxxxxx Xxxx
--------------------- -----------------------
Chief Financial Officer Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxx
--------------------- -----------------------
6. Attached hereto as Exhibit A is a true, complete and correct copy of
the by-laws of the Company as in effect on the date hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set the hands for and on
behalf of the Company on May 10, 1999.
LITRONIC INC.
By: /s/ Xxxx Xxxx
------------------------------------
President
By: /s/ Xxxxxxxxx Xxxx
------------------------------------
Secretary
2
EXHIBIT A
Bylaws
3
COMPLIANCE CERTIFICATE
Reference is made to the Loan and Security Agreement (the "Fidelity
Agreement"), dated as of May 10, 1999, among Litronic Industries, Inc., a
California corporation, and Litronic Inc., a Delaware corporation (collectively,
the "Companies"), and Fidelity Funding, Inc., a Texas corporation ("Fidelity").
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Agreement. The undersigned, the President and the Chief Financial
Officer of each Company, certify to Fidelity that:
1. They are the duly elected, qualified, and acting President and Chief
Financial Officer of each Company.
2. They are familiar with the facts herein certified and are duly
authorized to certify such facts and make this certificate.
3. All representations and warranties made by the Companies in the
Fidelity Agreement or any other instrument, document, certificate or other
agreement executed in connection therewith (collectively, the "Transaction
Documents") delivered on or before the date hereof are true on and as of the
date hereof as if such representations and warranties had been made as of the
date hereof.
4. No Event of Default and no event or circumstance that, with the giving
of notice, the passage of time or both, would constitute an Event of Default
exist on the date hereof.
5. Each Company has performed and complied with all agreements and
conditions required in the Transaction Documents to be performed or complied
with by it on or prior to the date hereof.
IN WITNESS WHEREOF, this instrument is executed by the undersigned as of
May 10, 1999.
LITRONIC INDUSTRIES, INC.
By: /s/ Xxxx Xxxx
---------------------------------
President
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Chief Financial Officer
LITRONIC INC.
By: /s/ Xxxx Xxxx
---------------------------------
President
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Chief Financial Officer
2
PERFECTION CERTIFICATE
Reference is made to the Loan and Security Agreement (the "Agreement"),
dated as of May 10, 1999. among Litronic Industries, Inc., a California
corporation ("LII"), Litronic Inc., a Delaware corporation ("Litronic"), and
Fidelity Funding, Inc., a Texas corporation ("Fidelity"). Capitalized terms used
but not defined herein shall have the meanings ascribed to them in the
Agreement. The undersigned hereby certify to Fidelity as follows:
A. With respect to LII:
(i) The chief executive office of LII is located at the following
address:
Street Address County
-------------- ------
0000 Xxxx Xxxxxx, Xxxxx 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Mailing Address County
--------------- ------
0000 Xxxx Xxxxxx, Xxxxx 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
(ii) The following are all the locations where LII maintains any books or
records relating to any of its Accounts.
Street Address County
-------------- ------
0000 Xxxx Xxxxxx, Xxxxx 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
(iii) The following are all the places of business of LII not identified
above:
0000 Xxxxxxxxxx Xxxxx, Xxxxx X
Xxxxxx, Xxxxxxxx 00000
(iv) The following are all the locations not identified above where LII
maintains any inventory or equipment: None.
(v) The following are the names and addresses of all Persons other than
LII that have possession of any of LII's inventory or equipment:
None.
B. With respect to Litronic:
(i) The chief executive office of Litronic is located at the following
address:
Street Address County
-------------- ------
0000 Xxxx Xxxxxx, Xxxxx 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Mailing Address County
--------------- ------
0000 Xxxx Xxxxxx, Xxxxx 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
(ii) The following are all the locations where Litronic maintains any
books or records relating to any of its Accounts.
Street Address County
-------------- ------
0000 Xxxx Xxxxxx, Xxxxx 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
(iii) The following are all the places of business of Litronic not
identified above:
0000 Xxxxxxxxxx Xxxxx, Xxxxx X
Xxxxxx, Xxxxxxxx 00000
(iv) The following are all the locations not identified above where
Litronic maintains any inventory or equipment: None.
(v) The following are the names and addresses of all Persons other than
Litronic that have possession of any of Litronic's inventory or
equipment: None.
IN WITNESS WHEREOF, we have hereunto set our hands on May 10, 1999.
LITRONIC INDUSTRIES, INC.
By: /s/ Xxxx Xxxx
------------------------------------
President
By: /s/ Xxxxxxxxx Xxxx
------------------------------------
Secretary
2
LITRONIC INC.
By: /s/ Xxxx Xxxx
------------------------------------
President
By: /s/ Xxxxxxxxx Xxxx
------------------------------------
Secretary
3
FINANCING STATEMENT
This instrument is prepared and is intended to be a financing statement
complying with the formal requisites therefor as set forth in the Uniform
Commercial Code.
1. The name and address of debtor ("Debtor") is:
LITRONIC INDUSTRIES, INC.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
FED ID#00-0000000
2. The name and address of secured party ("Secured Party") is:
FIDELITY FUNDING, INC.
00000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
FED ID # 00-0000000
3. This financing statement covers the following types or items of
property (collectively, the "Collateral"):
All of the following which are now or hereafter owned by Debtor or
in which Debtor otherwise has any right, whether now existing or hereafter
arising: (a) all accounts, contract rights and general intangibles,
receivables and claims whether now or hereafter arising, all guaranties
and security therefor and all of Debtor's right, title and interest in the
goods purchased and represented thereby, if any, including all of Debtor's
rights in and to returned goods and rights of stoppage in transit,
replevin and reclamation as unpaid vendor; (b) all inventory, wherever
located and whether now or hereafter existing, (including, but not limited
to raw materials, work in process, finished goods and materials used or
consumed in the manufacture or production thereof, goods in which Debtor
has an interest in mass or a joint or other interest or rights of any
kind, and goods which are returned to or repossessed by Debtor) and all
accessions thereto and products thereof and documents therefor; (c) all
furniture, fixtures, machinery and equipment, wherever located and whether
now or hereafter existing, and all parts thereof, accessions thereto, and
replacements therefor and all documents and general intangibles covering
or relating thereto; (d) all books and records pertaining to the
foregoing, including but not limited to computer programs, data,
certificates, records, circulation lists, subscriber lists, advertiser
lists, supplier lists, customer and supplier contracts, sales orders, and
purchasing records; and (e) all proceeds of the foregoing.
4. This Financing Statement is presented for filing to the California
Secretary of State.
DEBTOR: SECURED PARTY:
LITRONIC INDUSTRIES, INC. FIDELITY FUNDING, INC.
By: /s/ Xxxxxx X. Xxxxxxx By:
------------------------------ ------------------------------
Name: Xxxxxx X. Xxxxxxx Name:
------------------------- -------------------------
Title: CFO Title:
------------------------ ------------------------
2
FINANCING STATEMENT
This instrument is prepared and is intended to be a financing statement
complying with the formal requisites therefor as set forth in the Uniform
Commercial Code.
1. The name and address of debtor ("Debtor") is:
LITRONIC INC.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
FED ID#33-075190
2. The name and address of secured party ("Secured Party") is:
FIDELITY FUNDING, INC.
00000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
FED ID # 00-0000000
3. This financing statement covers the following types or items of
property (collectively, the "Collateral"):
All of the following which are now or hereafter owned by Debtor or
in which Debtor otherwise has any right, whether now existing or hereafter
arising: (a) all accounts, contract rights and general intangibles,
receivables and claims whether now or hereafter arising, all guaranties
and security therefor and all of Debtor's right, title and interest in
the goods purchased and represented thereby, if any, including all of
Debtor's rights in and to returned goods and rights of stoppage in
transit, replevin and reclamation as unpaid vendor; (b) all inventory,
wherever located and whether now or hereafter existing, (including, but
not limited to raw materials, work in process, finished goods and
materials used or consumed in the manufacture or production thereof, goods
in which Debtor has an interest in mass or a joint or other interest or
rights of any kind, and goods which are returned to or repossessed by
Debtor) and all accessions thereto and products thereof and documents
therefor; (c) all furniture, fixtures, machinery and equipment, wherever
located and whether now or hereafter existing, and all parts thereof,
accessions thereto, and replacements therefor and all documents and
general intangibles covering or relating thereto; (d) all books and
records pertaining to the foregoing, including but not limited to computer
programs, data, certificates, records, circulation lists, subscriber
lists, advertiser lists, supplier lists, customer and supplier contracts,
sales orders, and purchasing records; and (e) all proceeds of the
foregoing.
4. This Financing Statement is presented for filing to the California
Secretary of State.
DEBTOR: SECURED PARTY:
LITRONIC INC. FIDELITY FUNDING, INC.
By: /s/ Xxxxxx X. Xxxxxxx By:
------------------------------ ------------------------------
Name: Xxxxxx X. Xxxxxxx Name:
------------------------- -------------------------
Title: CFO Title:
------------------------ ------------------------
2
[GRAPHIC] FIDELITY FUNDING
----------------
FINANCIAL GROUP VIA FEDERAL EXPRESS
May 10, 1999
Xxx Xxxxxxx
Chief Financial Officer
Litronic, Inc.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Dear Xxx:
Enclosed find the document checklist for the Fidelity loan and two execution
copies of each document checkmarked thereon. Please have these documents signed
and send one full set to us for our files. You may keep the second set for your
records.
Respectfully yours,
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Corporate Counsel
Enclosures
00000 XXXXX XXXXX XXXXX XXXXX XXXXXX, XXXXX 00000
(000) 000-0000 FAX (000) 000-0000
--------------------------------------------------------------------------------
DOCUMENT LIST
FOR
LITRONIC INC.
SECTION I. PRINCIPAL DOCUMENTS
1. Loan and Security Agreement.
2. Validity Guaranty of Xxxx Xxxx.
3. Validity Guaranty of Xxxxxxx X. Xxxxx, Xx.
SECTION II. INTERCREDITOR AND SUBORDINATION AGREEMENTS
4. Release Agreements.
SECTION III. CORPORATE DOCUMENTS AND CERTIFICATES
5. Certificate of Corporate Resolution of Litronic Industries, Inc.
6. Certificate of Corporate Resolution of Litronic Inc.
7. Compliance Certificate.
8. Perfection Certificate.
9. Certified copy of articles or certificate of incorporation of Litronic
Industries, Inc.
10. Certified copy of articles or certificate of incorporation of Litronic
Inc.
11. Certificate of good standing of Litronic Industries, Inc.
12. Certificate of good standing of Litronic Inc.
SECTION IV. FINANCING STATEMENTS AND LIEN DOCUMENTS
13. Financing Statements covering collateral filed with:
a. Secretary of State of California.
b. State Department of Assessment and Taxes of the State of Maryland.
c. Clerk of Stanly County, Maryland.
14. Termination statements relating to Release Agreement.
15. Pre-closing lien search and copies from:
a. Secretary of State of California.
b. State Department of Assessment and Taxes of the State of Maryland.
c. Clerk of Stanly County, Maryland.
16. Post-closing lien search and copies from:
a. Secretary of State of California.
b. State Department of Assessment and Taxes of the State of Maryland.
c. Clerk of Stanly County, Maryland.
SECTION V. MISCELLANEOUS DOCUMENTS
17. Opinion of Counsel.
18. Additional Named Insured/Loss Payee Endorsement.
2
[ILLEGIBLE]
--------------------------------------------------------------------------------
A. NAME & TEL. # OF CONTACT AT FILER (optional)
--------------------------------------------------------------------------------
B. FILING OFFICE ACCT. # (optional)
--------------------------------------------------------------------------------
C. RETURN COPY TO: (Name and Mailing Address)
--------------------------------------------------------------------------------
D. OPTIONAL DESIGNATION (if applicable): |_| LESSOR/LESSEE
|_| CONSIGNOR/CONSIGNEE
|_| NON-UCC FILING
--------------------------------------------------------------------------------
1. DEBTOR'S EXACT FULL LEGAL NAME - Insert only one debtor name (1a or 1b)
--------------------------------------------------------------------------------
1a. ENTITY'S NAME
Litronic Industries, Inc.
--------------------------------------------------------------------------------
OR 1b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
--------------------------------------------------------------------------------
1c. MAILING ADDRESS CITY STATE COUNTRY POSTAL CODE
0000 Xxxx Xxxxxx, Xxxxxx XX XXX 00000
Suite 1250
--------------------------------------------------------------------------------
1d. S.S. OR TAX I.D.# OPTIONAL 1e. TYPE OF ENTITY
ADD'NL INFO RE
00-0000000 ENTITY DEBTOR
--------------------------------------------------------------------------------
1f. ENTITY'S STATE 1g. ENTITY'S ORGANIZATIONAL I.D.#, if any
OR COUNTRY OF
ORGANIZATION |_| NONE
--------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - Insert only one debtor name
(2a or 2b)
--------------------------------------------------------------------------------
2a. ENTITY'S NAME
--------------------------------------------------------------------------------
OR 2b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
--------------------------------------------------------------------------------
2c. MAILING ADDRESS CITY STATE COUNTRY POSTAL CODE
--------------------------------------------------------------------------------
2d. S.S. OR TAX I.D.# OPTIONAL 2e. TYPE OF ENTITY
ADD'NL INFO RE
ENTITY DEBTOR
--------------------------------------------------------------------------------
2f. ENTITY'S STATE 2g. ENTITY'S ORGANIZATIONAL I.D.#, if any
OR COUNTRY OF
ORGANIZATION |_| NONE
--------------------------------------------------------------------------------
3. SECURED PARTY'S (ORIGINAL S/P or ITS TOTAL ASSIGNEE) EXACT FULL LEGAL NAME -
Insert only one secured party name (3a or 3b)
--------------------------------------------------------------------------------
3a. ENTITY'S NAME
Fidelity Funding, Inc.
--------------------------------------------------------------------------------
OR 3b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
--------------------------------------------------------------------------------
3c. MAILING ADDRESS CITY STATE COUNTRY POSTAL CODE
00000 Xxxxx Xxxxx, Xxxxx 000 Xxxxxx XX XXX 00000
--------------------------------------------------------------------------------
4. This FINANCING STATEMENT covers the following types or items of property:
(a) all accounts, contract rights and general intangibles, receivables and
claims, whether now existing or hereafter arising, all guaranties and security
therefor and all of Debtor's right, title and interest i the goods purchased and
represented thereby, if any, including all of Debtor's rights in and to returned
goods and rights of stoppage in transit, replevin and reclamation as unpaid
vendor; (b) all inventory, wherever located or hereafter existing, including raw
materials, work i process, finished goods and materials used or consumed in the
manufacture or production thereof, goods in which Debtor has an interest in mass
or a joint or other interest or rights of any kind, goods which are returned to
or repossed by Debtor and all accessions thereto, (c) all furniture, fixtures,
machinery and equipment, (d) all books and records pertaining to the foregoing,
computer programs, data, certificates, records, lists and (e) all proceeds of
the foregoing.
--------------------------------------------------------------------------------
5. CHECK BOX (if applicable) |_|
This FINANCING STATEMENT is signed by the Secured Party instead of the
Debtor to perfect a security interest (a) in collateral already subject to
a security interest in another jurisdiction when it was brought into this
state, or when the debtor's location was changed to this state, or (b) in
accordance with other statutory provisions (additional data may be
required)
--------------------------------------------------------------------------------
6. REQUIRED SIGNATURE(S)
Litronic Industries, Inc. /s/ [ILLEGIBLE]
--------------------------------------------------------------------------------
Fidelity Funding, Inc.
--------------------------------------------------------------------------------
7. If filed in Florida (check one)
|_| Documentary stamp tax paid
|_| Documentary stamp tax not applicable
--------------------------------------------------------------------------------
8. |_| This FINANCING STATEMENT is to be filed (for record) (or recorded) in the
REAL ESTATE RECORDS Attach Addendum (if applicable)
--------------------------------------------------------------------------------
9. Check to REQUEST SEARCH CERTIFICATE(S) on Debtor(s)
(Additional Fee) (optional)
|_| All Debtors |_| Debtor 1 |_| Debtor 2
--------------------------------------------------------------------------------
(1) FILING OFFICER COPY -- NATIONAL FINANCING STATEMENT (FORM UCC1) (TRANS)
(REV. 12/18/95)
REORDER FROM
Registre, Inc.
000 XXXXXX XX.
X.X. XXX 000
XXXXX, XX 00000
(000) 000-0000
[ILLEGIBLE]
--------------------------------------------------------------------------------
A. NAME & TEL. # OF CONTACT AT FILER (optional)
--------------------------------------------------------------------------------
B. FILING OFFICE ACCT. # (optional)
--------------------------------------------------------------------------------
C. RETURN COPY TO: (Name and Mailing Address)
--------------------------------------------------------------------------------
D. OPTIONAL DESIGNATION (if applicable): |_| LESSOR/LESSEE
|_| CONSIGNOR/CONSIGNEE
|_| NON-UCC FILING
--------------------------------------------------------------------------------
1. DEBTOR'S EXACT FULL LEGAL NAME - Insert only one debtor name (1a or 1b)
--------------------------------------------------------------------------------
1a. ENTITY'S NAME
Litronic Inc.
--------------------------------------------------------------------------------
OR 1b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
--------------------------------------------------------------------------------
1c. MAILING ADDRESS CITY STATE COUNTRY POSTAL CODE
0000 Xxxx Xxxxxx, Xxxxxx XX XXX 00000
Suite 1250
--------------------------------------------------------------------------------
1d. S.S. OR TAX I.D.# OPTIONAL 1e. TYPE OF ENTITY
ADD'NL INFO RE
33-075190 ENTITY DEBTOR
--------------------------------------------------------------------------------
1f. ENTITY'S STATE 1g. ENTITY'S ORGANIZATIONAL I.D.#, if any
OR COUNTRY OF
ORGANIZATION |_| NONE
--------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - Insert only one debtor name
(2a or 2b)
--------------------------------------------------------------------------------
2a. ENTITY'S NAME
--------------------------------------------------------------------------------
OR 2b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
--------------------------------------------------------------------------------
2c. MAILING ADDRESS CITY STATE COUNTRY POSTAL CODE
--------------------------------------------------------------------------------
2d. S.S. OR TAX I.D.# OPTIONAL 2e. TYPE OF ENTITY
ADD'NL INFO RE
ENTITY DEBTOR
--------------------------------------------------------------------------------
2f. ENTITY'S STATE 2g. ENTITY'S ORGANIZATIONAL I.D.#, if any
OR COUNTRY OF
ORGANIZATION |_| NONE
--------------------------------------------------------------------------------
3. SECURED PARTY'S (ORIGINAL S/P or ITS TOTAL ASSIGNEE) EXACT FULL LEGAL NAME -
Insert only one secured party name (3a or 3b)
--------------------------------------------------------------------------------
3a. ENTITY'S NAME
Fidelity Funding, Inc.
--------------------------------------------------------------------------------
OR 3b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
--------------------------------------------------------------------------------
3c. MAILING ADDRESS CITY STATE COUNTRY POSTAL CODE
00000 Xxxxx Xxxxx, Xxxxx 000 Xxxxxx XX XXX 00000
--------------------------------------------------------------------------------
4. This FINANCING STATEMENT covers the following types or items of property:
(a) all accounts, contract rights and general intangibles, receivables and
claims, whether now existing or hereafter arising, all guaranties and security
therefor and all of Debtor's right, title and interest i the goods purchased and
represented thereby, if any, including all of Debtor's rights in and to returned
goods and rights of stoppage in transit, replevin and reclamation as unpaid
vendor; (b) all inventory, wherever located or hereafter existing, including raw
materials, work i process, finished goods and materials used or consumed in the
manufacture or production thereof, goods in which Debtor has an interest in mass
or a joint or other interest or rights of any kind, goods which are returned to
or repossed by Debtor and all accessions thereto, (c) all furniture, fixtures,
machinery and equipment, (d) all books and records pertaining to the foregoing,
computer programs, data, certificates, records, lists and (e) all proceeds of
the foregoing.
--------------------------------------------------------------------------------
5. CHECK BOX (if applicable) |_|
This FINANCING STATEMENT is signed by the Secured Party instead of the
Debtor to perfect a security interest (a) In collateral already subject to
a security interest in another jurisdiction when it was brought into the
state, or when the debtor's location was changed to this state, or (b) in
accordance with other statutory provisions (additional data may be
required)
--------------------------------------------------------------------------------
6. REQUIRED SIGNATURE(S)
Litronic Inc. /s/ [ILLEGIBLE]
--------------------------------------------------------------------------------
Fidelity Funding, Inc.
--------------------------------------------------------------------------------
7. If filed in Florida (check one)
|_| Documentary stamp tax paid
|_| Documentary stamp tax not applicable
--------------------------------------------------------------------------------
8. |_| This FINANCING STATEMENT is to be filed (for record) (or recorded) in the
REAL ESTATE RECORDS Attach Addendum (if applicable)
--------------------------------------------------------------------------------
9. Check to REQUEST SEARCH CERTIFICATE(S) on Debtor(s)
(Additional Fee) (optional)
|_| All Debtors |_| Debtor 1 |_| Debtor 2
--------------------------------------------------------------------------------
(1) FILING OFFICER COPY -- NATIONAL FINANCING STATEMENT (FORM UCC1) (TRANS)
(REV. 12/18/95)
REORDER FROM
Registre, Inc.
000 XXXXXX XX.
X.X. XXX 000
XXXXX, XX 00000
(000) 000-0000
