EXHIBIT 11.1(a)
BUSINESS LOAN AGREEMENT (ASSET BASED)
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PRINCIPAL LOAN DATE MATURITY LOAN NO CALL/COLL ACCOUNT OFFICER INITIALS
$6,500,000.00 02-07-2002 06-30-2004 932900001-1 932900001-1 22163 [INITIALS ILLEGIBLE]
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References in the shaded area are for Lender's use only and do not limit the applicability of this document
to any particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
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BORROWER: INTERNATIONAL REMOTE LENDER: CALIFORNIA BANK & TRUST
IMAGING SYSTEMS, INC. COMMERCIAL LOAN CENTER
0000 XXXX XXXXXX 000 XXXXX XXXX XXXXXX, XXXXX 000
XXXXXXXXXX, XX 00000 XXX XXXXXXX, XX 00000
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THIS BUSINESS LOAN AGREEMENT (ASSET BASED) DATED FEBRUARY 7, 2002, IS MADE AND
EXECUTED BETWEEN INTERNATIONAL REMOTE IMAGING SYSTEMS, INC. ("BORROWER") AND
CALIFORNIA BANK & TRUST ("LENDER") ON THE FOLLOWING TERMS AND CONDITIONS.
BORROWER HAS RECEIVED PRIOR COMMERCIAL LOANS FROM LENDER OR HAS APPLIED TO
LENDER FOR A COMMERCIAL LOAN OR LOANS OR OTHER FINANCIAL ACCOMMODATIONS,
INCLUDING THOSE WHICH MAY BE DESCRIBED ON ANY EXHIBIT OR SCHEDULE ATTACHED TO
THIS AGREEMENT ("LOAN"). BORROWER UNDERSTANDS AND AGREES THAT: (A) IN GRANTING,
RENEWING, OR EXTENDING ANY LOAN, LENDER IS RELYING UPON BORROWER'S
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS AS SET FORTH IN THIS AGREEMENT; (B)
THE GRANTING, RENEWING, OR EXTENDING OF ANY LOAN BY LENDER AT ALL TIMES SHALL BE
SUBJECT TO LENDER'S SOLE JUDGMENT AND DISCRETION; AND (C) ALL SUCH LOANS SHALL
BE AND REMAIN SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT.
TERM. This Agreement shall be effective as of February 7, 2002, and shall
continue in full force and effect until such time as all of Borrower's Loans in
favor of Lender have been paid in full, including principal, interest, costs,
expenses, attorneys' fees, and other fees and charges, or until such time as the
parties may agree in writing to terminate this Agreement.
ADVANCE AUTHORITY. The following persons currently are authorized to request
advances and authorize payments under the line of credit until Lender receives
from Borrower, at Lender's address shown above, written notice of revocation of
their authority: XX. XXXX X. X'XXXXXX, CEO/CHAIRMAN OF INTERNATIONAL REMOTE
IMAGING SYSTEMS, INC.; XXXX XXXXX, CFO/SECRETARY OF INTERNATIONAL REMOTE IMAGING
SYSTEMS, INC.; AND XXXXXX XXXXXXX, CONTROLLER.
LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not exceed the Borrowing
Base. Within the foregoing limits, Borrower may borrow, partially or wholly
prepay, and reborrow under this Agreement as follows:
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make any
Advance to or for the account of Borrower under this Agreement is subject
to the following conditions precedent, with all documents, instruments,
opinions, reports, and other items required under this Agreement to be in
form and substance satisfactory to Lender:
(1) Lender shall have received evidence that this Agreement and all
Related Documents have been duly authorized, executed, and delivered
by Borrower to Lender.
(2) Lender shall have received such opinions of counsel,
supplemental opinions, and documents as Lender may request.
(3) The security interests in the Collateral shall have been duly
authorized, created, and perfected with first lien priority and
shall be in full force and effect.
(4) All guaranties required by Lender for the credit facility(ies)
shall have been executed by each Guarantor, delivered to Lender, and
be in full force and effect.
(5) Lender, at its option and for its sole benefit, shall have
conducted an audit of Borrower's Accounts, Inventory, books,
records, and operations, and Lender shall be satisfied as to their
condition.
(6) Borrower shall have paid to Lender all fees, costs, and expenses
specified in this Agreement and the Related Documents as are then
due and payable.
(7) There shall not exist at the time of any Advance a condition
which would constitute an Event of Default under this Agreement, and
Borrower shall have delivered to Lender the compliance certificate
called for in the paragraph below titled "Compliance Certificate."
MAKING LOAN ADVANCES. Advances under this credit facility, as well as
directions for payment from Borrower's accounts, may be requested orally
or in writing by authorized persons. Lender may, but need not, require
that all oral requests be confirmed in writing. Each Advance shall be
conclusively deemed to have been made at the request of and for the
benefit of Borrower (1) when credited to any deposit account of Borrower
maintained with Lender or (2) when advanced in accordance with the
instructions of an authorized person. Lender, at its option, may set a
cutoff time, after which all requests for Advances will be treated as
having been requested on the next succeeding Business Day.
MANDATORY LOAN REPAYMENTS. If at any time the aggregate principal amount
of the outstanding Advances shall exceed the applicable Borrowing Base,
Borrower, immediately upon written or oral notice from Lender, shall pay
to Lender an amount equal to the difference between the outstanding
principal balance of the Advances and the Borrowing Base. On the
Expiration Date, Borrower shall pay to Lender in full the aggregate unpaid
principal amount of all Advances then outstanding and all accrued unpaid
interest, together with all other applicable fees, costs and charges, if
any, not yet paid.
LOAN ACCOUNT. Lender shall maintain on its books a record of account in
which Lender shall make entries for each Advance and such other debits and
credits as shall be appropriate in connection with the credit facility.
Lender shall provide Borrower with periodic statements of Borrower's
account, which statements shall be considered to be correct and
conclusively binding on Borrower unless Borrower notifies Lender to the
contrary within thirty (30) days after Borrower's receipt of any such
statement which Borrower deems to be incorrect.
COLLATERAL. To secure payment of the Primary Credit Facility and performance of
all other Loan, obligations and duties owed by. Borrower to Lender, Borrower
(and others, if required) shall grant to Lender Security Interests in such
property and assets as Lender may require. Lender's Security Interests in the
Collateral shall be continuing liens and shall include the proceeds and products
of the Collateral, including without limitation the proceeds of any insurance.
With respect to the Collateral, Borrower agrees and represents and warrants to
Lender:
PERFECTION OF SECURITY INTERESTS. Borrower agrees to execute financing
statements and all documents perfecting Lender's Security Interest and to
take whatever other actions are requested by Lender to perfect and
continue Lender's Security Interests in the Collateral. Upon request of
Lender, Borrower will deliver to Lender any and all of the documents
evidencing or constituting the Collateral, and Borrower will note Lender's
interest upon any and all chattel paper and instruments if not delivered
to Lender for possession by Lender. Contemporaneous with the execution of
this Agreement, Borrower will execute one or more UCC financing statements
and any similar statements as may be required by applicable law, and
Lender will file such financing statements and all such similar statements
in the appropriate location or locations. Borrower hereby appoints Lender
as its irrevocable attorney-in-fact for the purpose of executing any
documents necessary to perfect or to continue any Security Interest.
Lender may at any time, and without further authorization from Borrower,
file a carbon, photograph, facsimile, or other reproduction of any
BUSINESS LOAN AGREEMENT (ASSET BASED)
LOAN NO: 932900001-1 (CONTINUED) PAGE 2
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financing statement for use as a financing statement. Borrower will
reimburse Lender for all expenses for the perfection, termination, and the
continuation of the perfection of Lender's security interest in the
Collateral. Borrower promptly will notify Lender before any change in
Borrower's name including any change to the assumed business names of
Borrower. Borrower also promptly will notify Lender before any change in
Borrower's Social Security Number or Employer Identification Number.
Borrower further agrees to notify Lender in writing prior to any change in
address or location of Borrower's principal governance office or should
Borrower merge or consolidate with any other entity.
COLLATERAL RECORDS. Borrower does now, and at all times hereafter shall,
keep correct and accurate records of the Collateral, all of which records
shall be available to Lender or Lender's representative upon demand for
inspection and copying at any reasonable time. With respect to the
Accounts, Borrower agrees to keep and maintain such records as Lender may
require, including without limitation information concerning Eligible
Accounts and Account balances and agings. Records related to Accounts
(Receivables) are or will be located at *. With respect to the Inventory,
Borrower agrees to keep and maintain such records as Lender may require,
including without limitation information concerning Eligible Inventory and
records itemizing and describing the kind, type, quality, and quantity of
Inventory, Borrower's Inventory costs and selling prices, and the daily
withdrawals and additions to Inventory. Records related to Inventory are
or will be located at *. The above is an accurate and complete list of all
locations at which Borrower keeps or maintains business records concerning
Borrower's collateral. *Borrower and its subsidiaries.
COLLATERAL SCHEDULES. Concurrently with the execution and delivery of this
Agreement, Borrower shall execute and deliver to Lender schedules of
Accounts and Inventory and schedules of Eligible Accounts and Eligible
Inventory in form and substance satisfactory to the Lender. Thereafter
supplemental schedules shall be delivered according to the following
schedule:
REPRESENTATIONS AND WARRANTIES CONCERNING ACCOUNTS. With respect to the
Accounts, Borrower represents and warrants to Lender: (1) Each Account
represented by Borrower to be an Eligible Account for purposes of this
Agreement conforms to the requirements of the definition of an Eligible
Account; (2) All Account information listed on schedules delivered to
Lender will be true and correct, subject to immaterial variance; and (3)
Lender, its assigns, or agents shall have the right at any time and at
Borrower's expense to inspect, examine, and audit Borrower's records and
to confirm with Account Debtors the accuracy of such Accounts.
REPRESENTATIONS AND WARRANTIES CONCERNING INVENTORY. With respect to the
Inventory, Borrower represents and warrants to Lender: (1) All Inventory
represented by Borrower to be Eligible Inventory for purposes of this
Agreement conforms to the requirements of the definition of Eligible
Inventory; (2) All Inventory values listed on schedules delivered to
Lender will be true and correct, subject to immaterial variance; (3) The
value of the Inventory will be determined on a consistent accounting
basis; (4) Except as agreed to the contrary by Lender in writing, all
Eligible Inventory is now and at all times hereafter will be in Borrower's
physical possession and shall not be held by others on consignment, sale
on approval, or sale or return; (5) Except as reflected in the Inventory
schedules delivered to Lender, all Eligible Inventory is now and at all
times hereafter will be of good and merchantable quality, free from
defects; (6) Eligible Inventory is not now and will not at any time
hereafter be stored with a bailee, warehouseman, or similar party without
Lender's prior written consent, and, in such event, Borrower will
concurrently at the time of bailment cause any such bailee, warehouseman,
or similar party to issue and deliver to Lender, in form acceptable to
Lender, warehouse receipts in Lender name evidencing the storage of
Inventory; and (7) Lender, its assigns, or agents shall have the right at
any time and at Borrower's expense to inspect and examine the Inventory
and to check and test the same as to quality, quantity, value, and
condition.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.
LOAN DOCUMENTS. Borrower shall provide to Lender the following documents
for the Loan: (1) the Note; (2) Security Agreements granting to Lender
security interests in the Collateral; (3) financing statements and all
other documents perfecting Lender's Security Interests; (4) evidence of
insurance as required below; (5) guaranties; (6) subordinations; (7)
together with all such Related Documents as Lender may require for the
Loan; all in form and substance satisfactory to Lender and Lender's
counsel.
BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents. In addition, Borrower shall have provided such other
resolutions, authorizations, documents and instruments as Lender or its
counsel, may require.
FEES AND EXPENSES UNDER THIS AGREEMENT. Borrower shall have paid to Lender
all fees, costs, and expenses specified in this Agreement and the Related
Documents as are then due and payable.
REPRESENTATIONS AND WARRANTIES. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
NO EVENT OF DEFAULT. There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under this Agreement
or under any Related Document.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
ORGANIZATION. Borrower is a corporation for profit which is, and at all
times shall be, duly organized, validly existing, and in good standing
under and by virtue of the laws of the State of Delaware. Borrower is duly
authorized to transact business in the State of California and all other
states in which Borrower is doing business, having obtained all necessary
filings, governmental licenses and approvals for each state in which
Borrower is doing business. Specifically, Borrower is, and at all times
shall be, duly qualified as a foreign corporation in all states in which
the failure to so qualify would have a material adverse effect on its
business or financial condition. Borrower has the full power and authority
to own its properties and to transact the business in which it is
presently engaged or presently proposes to engage. Borrower maintains an
office at 0000 Xxxx Xxxxxx, Xxxxxxxxxx, XX 00000. Unless Borrower has
designated otherwise in writing, the principal office is the office at
which Borrower keeps its books and records including its records
concerning the Collateral. Borrower will notify Lender prior to any change
in the location of Borrower's state of organization or any change in
Borrower's name. Borrower shall do all things necessary to preserve and to
keep in full force and effect its existence, rights and privileges, and
shall comply with all regulations, rules, ordinances, statutes, orders and
decrees of any governmental or quasi-governmental authority or court
applicable to Borrower and Borrower's business activities.
ASSUMED BUSINESS NAMES. Borrower has filed or recorded all documents or
filings required by law relating to all assumed business names used by
Borrower. Excluding the name of Borrower, the following is a complete list
of all assumed business names under which Borrower does business: IRIS and
IRIS Diagnostics.
AUTHORIZATION. Borrower's execution, delivery, and performance of the
agreement and all the Related Documents have been duly authorized by all
necessary action by Borrower and do not conflict with, result in a
violation of, or constitute a default under (1) any provision of
Borrower's articles of incorporation or organization, or bylaws, or any
agreement other instrument binding upon Borrower or (2) any law,
governmental regulation, court decree, or order applicable to Borrower or
to Borrower's properties.
FINANCIAL INFORMATION. Each of Borrower's financial statements supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change
in Borrower's financial condition subsequent to the date of the most
recent financial statement supplied to Lender. Borrower has no material
contingent obligations except as disclosed in such financial statements.
BUSINESS LOAN AGREEMENT (ASSET BASED)
LOAN NO: 932900001-1 (CONTINUED) PAGE 3
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LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement
Borrower is required to give under this Agreement when delivered will
constitute legal, valid, and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.
PROPERTIES. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and
as accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interests, and has
not executed any security documents or financing statements relating to
such properties. All of Borrower's properties are titled in Borrower's
legal name, and Borrower has not used or filed a financing statement under
any other name for at least the last five (5) years.
HAZARDOUS SUBSTANCES. Except as disclosed to and acknowledged by Lender in
writing, Borrower represents and warrants that: (1) During the period of
Borrower's ownership of Borrower's Collateral, there has been no use,
generation, manufacture, storage, treatment, disposal, release or
threatened release of any Hazardous Substance by any person on, under,
about or from any of the Collateral. (2) Borrower has no knowledge of, or
reason to believe that there has been (a) any breach or violation of any
Environmental Laws; (b) any use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any Hazardous
Substance on, under, about or from the Collateral by any prior owners or
occupants of any of the Collateral; or (c) any actual or threatened
litigation or claims of any kind by any person relating to such matters.
(3) Neither Borrower nor any tenant, contractor, agent or other authorized
user of any of the Collateral shall use, generate, manufacture, store,
treat, dispose of or release any Hazardous Substance on, under, about or
from any of the Collateral; and any such activity shall be conducted in
compliance with all applicable federal, state, and local laws,
regulations, and ordinances, including without limitation all
Environmental Laws. Borrower authorizes Lender and its agents to enter
upon the Collateral to make such inspections and tests as Lender may deem
appropriate to determine compliance of the Collateral with this section of
the Agreement. Any inspections or tests made by Lender shall be at
Borrower's expense and for Lender's purposes only and shall not be
construed to create any responsibility or liability on the part of Lender
to Borrower or to any other person. The representations and warranties
contained herein are based on Borrower's due diligence in investigating
the Collateral for hazardous waste and Hazardous Substances. Borrower
hereby (1) releases and waives any future claims against Lender for
indemnity or contribution in the event Borrower becomes liable for cleanup
or other costs under any such laws, and (2) agrees to indemnify and hold
harmless Lender against any and all claims, losses, liabilities, damages,
penalties, and expenses which Lender may directly or indirectly sustain or
suffer resulting from a breach of this section of the Agreement or as a
consequence of any use, generation, manufacture, storage, disposal,
release or threatened release of a hazardous waste or substance on the
Collateral. The provisions of this section of the Agreement, including the
obligation to indemnify, shall survive the payment of the Indebtedness and
the termination, expiration or satisfaction of this Agreement and shall
not be affected by Lender's acquisition of any interest in any of the
Collateral, whether by foreclosure or otherwise.
LITIGATION AND CLAIMS. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by Lender in writing.
TAXES. To the best of Borrower's knowledge, all of Borrower's tax returns
and reports that are or were required to be filed, have been filed, and
all taxes, assessments and other governmental charges have been paid in
full, except those presently being or to be contested by Borrower in good
faith in the ordinary course of business and for which adequate reserves
have been provided.
LIEN PRIORITY. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may in any way be
superior to Lender's Security Interests and rights in and to such
Collateral.
BINDING EFFECT. This Agreement, the Note, all Security Agreements (if
any), and all Related Documents are binding upon the signers thereof, as
well as upon their successors, representatives and assigns, and are
legally enforceable in accordance with their respective terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:
NOTICES OF CLAIMS AND LITIGATION. Promptly inform Lender in writing of (1)
all material adverse changes in Borrower's financial condition, and (2)
all existing and all threatened litigation, claims, investigations,
administrative proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial condition of
Borrower or the financial condition of any Guarantor.
FINANCIAL RECORDS. Maintain its books and records in accordance with GAAP,
applied on a consistent basis, and permit Lender to examine and audit
Borrower's books and records at all reasonable times.
FINANCIAL STATEMENTS. Furnish Lender with the following:
ANNUAL STATEMENTS. As soon as available, but in no event later than
one-hundred-twenty (120) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended,
audited by a certified public accountant satisfactory to Lender.
INTERIM STATEMENTS. As soon as available, but in no event later than
sixty (60) days after the end of each fiscal quarter, Borrower's
balance sheet and profit and loss statement for the period ended,
prepared by Borrower.
TAX RETURNS. As soon as available, but in no event later than thirty
(30) days after the applicable filing date for the tax reporting
period ended, Federal and other governmental tax returns, prepared
by Borrower.
All financial reports required to be provided under this Agreement shall
be prepared in accordance with GAAP, applied on a consistent basis, and
certified by Borrower as being true and correct.
ADDITIONAL INFORMATION. Furnish such additional information and
statements, as Lender may request from time to time.
INSURANCE. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
Borrower's properties and operations, in form, amounts, coverages and with
insurance companies acceptable to Lender. Borrower, upon request of
Lender, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without at
least ten (10) days prior written notice to Lender. Each insurance policy
also shall include an endorsement providing that coverage in favor of
Lender will not be impaired in any way by any act, omission or default of
Borrower or any other person. In connection with all policies covering
assets in which Lender holds or is offered a security interest for the
Loans, Borrower will provide Lender with such lender's loss payable or
other endorsements as Lender may require.
INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (1) the
name of the insurer; (2) the risks insured; (3) the amount of the policy;
(4) the properties insured; (5) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (6) the expiration date of the policy. In addition, upon
request of Lender (however not more often than annually), Borrower will
have an independent appraiser satisfactory to Lender determine, as
applicable, the actual cash value or replacement cost of any Collateral.
The cost of such appraisal shall be paid by Borrower.
GUARANTIES. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, executed by the guarantors
BUSINESS LOAN AGREEMENT (ASSET BASED)
LOAN NO: 932900001-1 (CONTINUED) PAGE 4
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named below, on Lender's forms, and in the amounts and under the
conditions set forth in those guaranties.
NAMES OF GUARANTORS AMOUNTS
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ADVANCED DIGITAL IMAGING RESEARCH, LLC $8,000,000.00
STATSPIN, INC. $8,000,000.00
SUBORDINATION. Prior to disbursement of any Loan proceeds, deliver to
Lender a subordination agreement on Lender's forms, executed by Borrower's
creditor named below, subordinating all of Borrower's indebtedness to such
creditor, or such lesser amount as may be agreed to by Lender in writing,
and any security interests in collateral securing that indebtedness to the
Loans and security interests of Lender.
NAME OF CREDITOR TOTAL AMOUNT OF DEBT
---------------- --------------------
DIGITAL IMAGING TECHNOLOGIES, INC. $7,000,000.00
OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or a hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's and
subsidiaries' business operations, unless specifically consented to the
contrary by Lender in writing.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every kind
and nature, imposed upon Borrower or it properties, income, or profits,
prior to the date on which penalties would attach, and all lawful claims
that, if unpaid, might become a lien or charge upon any of Borrower's
properties, income, or profits.
PERFORMANCE. Perform and comply, in a timely manner, with all terms,
conditions, and provisions set forth in this Agreement, in the Related
Documents, and in all other instruments and agreements between Borrower
and Lender. Borrower shall notify Lender immediately in writing of any
default in connection with any agreement.
OPERATIONS. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner.
ENVIRONMENTAL STUDIES. Promptly conduct and complete, at Borrower's
expense, all such investigations, studies, samplings and testings as may
be requested by Lender or any governmental authority relative to any
substance, or any waste or by-product of any substance defined as toxic or
a hazardous substance under applicable federal, state, or local law, rule,
regulation, order or directive, at or affecting any property or any
facility owned, leased or used by Borrower.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the conduct of Borrower's
properties, businesses and operations, and to the use or occupancy of the
Collateral, including without limitation, the Americans With Disabilities
Act. Borrower may contest in good faith any such law, ordinance, or
regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Borrower has notified Lender in writing
prior to doing so and so long as, in Lender's sole opinion, Lender's
interests in the Collateral are not jeopardized. Lender may require
Borrower to post adequate security or a surety bond, reasonably
satisfactory to Lender, to protect Lender's interest.
INSPECTION. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) in the possession of
a third party, Borrower, upon request of Lender, shall notify such party
to permit Lender free access to such records at all reasonable times and
to provide Lender with copies of any records it may request, all at
Borrower's expense.
COMPLIANCE CERTIFICATES. Unless waived in writing by Lender, provide
Lender at least annually, with a certificate executed by Borrower's chief
financial officer, or other officer or person acceptable to Lender,
certifying that the representations and warranties set forth in this
Agreement are true and correct as of the date of the certificate and
further certifying that, as of the date of the certificate, no Event of
Default exists under this Agreement.
ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all
respects with any and all Environmental Laws; not cause or permit to
exist, as a result of an intentional or unintentional action or omission
on Borrower's part or on the part of any third party, on property owned
and/or occupied by Borrower, any environmental activity where damage may
result to the environment, unless such environmental activity is pursuant
to and in compliance with the conditions of a permit issued by the
appropriate federal, state or local governmental authorities; shall
furnish to Lender promptly and in any event within thirty (30) days after
receipt thereof a copy of any notice, summons, lien, citation, directive,
letter or other communication from any governmental agency or
instrumentality concerning any intentional or unintentional action or
omission on Borrower's part in connection with any environmental activity
whether or not there is damage to the environment and/or other natural
resources.
ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, assignments,
financing statements, instruments, documents and other agreements as
Lender or its attorneys may reasonably request to evidence and secure the
Loans and to perfect all Security Interests.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrower's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Borrower. All such expenses will become a
part of the Indebtedness and, at Lender's option, will (A) be payable on demand;
(B) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
INDEBTEDNESS AND LIENS. (1) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (2) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower's assets
(except as allowed as Permitted Liens), or (3) sell with recourse any of
Borrower's accounts, except to Lender.
BUSINESS LOAN AGREEMENT (ASSET BASED)
LOAN NO:932900001-1 (CONTINUED) Page 5
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CONTINUITY OF OPERATIONS. (1) Engage in any business activities
substantially different than those in which Borrow is presently engaged,
(2) cease operations, liquidate, merge, transfer or consolidate with any
other entity, change its name, dissolve or transfer or sell Collateral out
of the ordinary course of business, or (3) pay any dividends on Borrower's
stock (other than dividends payable in its stock), provided, however that
notwithstanding the foregoing, but only so long as no Event of Default has
occurred and is continuing or would result from the payment of dividends,
if Borrower is a "Subchapter S Corporation" (as defined in the Internal
Revenue Code of 1986, as amended), Borrower may pay cash dividends on its
stock to its shareholders from time to time in amounts necessary to enable
the shareholders to pay income taxes and make estimated income tax payments
to satisfy their liabilities under federal and state law which arise solely
from their status as Shareholders of a Subchapter S Corporation because of
their ownership of shares of Borrower's stock, or purchase or retire any of
Borrower's outstanding shares or alter or amend Borrower's capital
structure.
LOANS, ACQUISITIONS AND GUARANTIES.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan
to Borrower, whether under this Agreement or under any other agreement,
Lender shall have no obligation to make Loan Advances or to disburse Loan
proceeds if: (A) Borrower or any Guarantor is in default under the terms of
this Agreement or any of the Related Documents or any other agreement that
Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor
dies, becomes incompetent or becomes insolvent, files a petition in
bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there
occurs a material adverse change in Borrower's financial condition, in the
financial condition of any Guarantor, or in the value of any Collateral
securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts
to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender; or (E) Lender in good xxxxx xxxxx itself insecure,
even though no Event of Default shall have occurred.
DEFAULT. Each of the following shall constitute an Event of Default under
this Agreement:
PAYMENT DEFAULT. Borrower fails to make any payment when due under the
Loan.
OTHER DEFAULTS. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in any of
the Related Documents or to comply with or to perform any term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
DEFAULT IN FAVOR OF THIRD PARTIES. Borrower or any Grantor defaults under
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's or any Grantor's property or
Borrower's or any Grantor's ability to repay the Loans or perform their
respective obligations under this Agreement or any of the Related
Documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this
Agreement or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished or becomes false or
misleading at any time thereafter.
INSOLVENCY. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
document to create a valid and perfected security interest or lien) at any
time and for any reason.
CREDITOR OF FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the Loan. This
includes a garnishment of any of Borrower's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply if
there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Borrower gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion, as being an adequate reserve
or bond for the dispute.
EVENTS AFFECTING GUARANTOR. any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or any Guarantor dies or
becomes incompetent, or revokes or disputes the validity of, or liability
under, any Guaranty of the Indebtedness. In the event of a death, Lender,
at its option, may, but shall not be required to, permit the Guarantor's
estate to assume unconditionally the obligations arising under the guaranty
in a manner satisfactory to Lender, and, in doing so, cure any Event of
Default.
CHANGE IN OWNERSHIP. **
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Loan is impaired.
INSECURITY. Lender in good faith believes itself insecure.
RIGHT TO CURE. If any default, other than a default on Indebtedness,
is curable and if Borrower or Grantor, as the case may be, has not been
given a notice of a similar default within the preceding twelve (12)
months, it may be cured (and no Event of Default will have occurred) if
Borrower or grantor, as the case may be, after receiving written notice
from Lender demanding cure of such default: (1) cure the default within
fifteen (15) days; or (2) if the cure requires more than fifteen (15) days,
immediately initiate steps which Lender deems in Lender's sole discretion
to be sufficient to cure the default and thereafter continue and complete
all reasonable and necessary steps sufficient to produce compliance as soon
as reasonably practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except
where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make further Loan Advances or disbursements), and, at Lender's
option, all Indebtedness immediately will become due and payable, all without
notice of any kind to Borrower, except that in the case of an Event of Default
of the type described in the "Insolvency" subsection above, such acceleration
shall be automatic and not optional. In addition, Lender shall have all the
rights and remedies provided in the Related Documents or available at law, in
equity, or otherwise. Except as may be prohibited by applicable law, all of
Lender's rights and remedies shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy shall not
exclude pursuit of any other remedy, and an election to make expenditures or
to take action to perform an obligation of Borrower or of any Grantor shall not
affect Lender's right to declare a default and to exercise its rights and
remedies.
DEPOSIT AGREEMENT SECURITY. Borrower hereby grants a security interest to
Lender in any and all deposit accounts (checking, savings, money market or time)
of Borrower at Lender, now existing or hereinafter opened, to secure the
Indebtedness. This includes all deposit accounts Borrower holds jointly with
someone else.
BORROWING BASE CERTIFICATE. Unless waived in writing by Lender, provide
Lender within 20 days of each month end and at the time of each disbursement of
Loan proceeds with a certificate executed by Borrower's chief financial officer,
or other officer or person acceptable to Lender.
BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No: 932900001-1 (Continued) PAGE 6
================================================================================
certifying that the representations and warranties set forth in this Agreement
are true and correct as of the date of the certificate and further certifying
that, as of the date of the certificate, no Event of Default or Potential Event
of Default exists under this Agreement.
ADDITIONAL INFORMATION. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will furnish such additional information
and statements, list of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower's financial condition and business operations
as Lender may reasonably request from time to time, including without
limitation: (a) detailed Accounts Receivable and Payable agings, as soon as
available, but in no event later than twenty (20) days of each month end; (b)
detailed Inventory Report, as soon as available, but in no event later than
twenty (20) days of each month end.
COLLATERAL EXAM. Borrower covenants and agrees with Lender that, while this
Agreement is in effect, Borrower will permit employees or agents of Lender at
any reasonable time, but at least annually, prior to renewal, to inspect any and
all Collateral for the Loan or Loans, as well as Borrower's other properties and
to examine or audit Borrower's books, accounts, and records and to make copies
and memoranda of Borrower's books, accounts, and records as may be deemed
necessary. Any such inspection or examination shall be at Borrower's expense.
ADDITIONAL NEGATIVE COVENANT. For transactions in excess of $1,000,000.00,
Borrower shall not, without prior written consent from Bank, loan, advance,
invest, purchase or otherwise acquire the assets or business of any person or
other entity; or merge, consolidate, or commence any proceedings thereof; or
sell any assets except in the ordinary and normal course of its business as now
conducted.
FINANCIAL COVENANTS AND RATIOS. Borrower covenants and agrees with Lender that,
while this Agreement is in effect, Borrower will comply with the following
financial covenants and ratios:
WORKING CAPITAL. Maintain Working Capital in excess of $6,250,000.00, effective
for the quarter prior to California Bank & Trust funding and then changing to
$4,500,000.00, effective for the immediate quarter subsequent to California Bank
& Trust funding, to be monitored on a quarterly basis.
TANGIBLE NET WORTH. Maintain a minimum Tangible Net Worth of not less than
$10,750,000.00, to be monitored on a quarterly basis.
DEBT/TANGIBLE NET WORTH RATIO. Maintain a ratio of Debt/Tangible Net Worth of
not less than 1.25 to 1.00, to be monitored on a quarterly basis.
EARNINGS BEFORE INTEREST, TAXES DEPRECIATION AND AMORTIZATION/(CURRENT PORTION
OF LONG-TERM DEBT + INTEREST EXPENSE) RATIO. Maintain a ratio of Earnings before
Interest, Taxes Depreciation and Amortization/(Current Portion of Long-Term Debt
+ Interest Expense) Ratio of not less than 1.25 to 1.00 effective for the fiscal
year end December 31, 2001 and for every quarter through September 30, 2002 and
then changing to 1.50 to 1.00 effective for the fiscal year end December 31,
2002 and for every quarter thereafter. Covenant to be reviewed quarterly with
the Earnings before Interest, Taxes Depreciation and Amortization and interest
expense based upon a cumulative rolling 12-month basis.
ADDENDUM TO ELIGIBLE ACCOUNTS SECTION. Item number (12) in the "Eligible
Accounts" section is hereby amended to include the following additional
information: The concentration levels of Xxxxxx Scientific International (CMS)
and IDAXX Laba, Inc. shall be calculated on a combined basis of all the A/R
(i.e. IDAXX/IRIS + Statspin).
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment
to this Agreement shall be effective unless given in writing and signed
by the party or parties sought to be charged or bound by the alteration
or amendment.
ATTORNEYS' FEES; EXPENSES. Borrower agrees to pay upon demand all of
Lender's costs and expenses, including Lender's attorneys' fees and
Lender's legal expenses, incurred in connection with the enforcement of
this Agreement. Lender may hire or pay someone else to help enforce this
Agreement, and Borrower shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender's attorneys' fees and
legal expenses whether or not there is a lawsuit, including attorneys'
fees and legal expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Borrower also shall pay
all court costs and such additional fees as may be directed by the
court.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the
provisions of this Agreement.
CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loan to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any
other matter relating to the Loan, and Borrower hereby waives any rights
to privacy Borrower may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such
participation interests. Borrower also agrees that the purchasers of any
such participation interests will be considered as the absolute owners
of such interests in the Loan and will have all the rights granted under
the participation agreement or agreements governing the sale of such
participation interests. Borrower further waives all rights of offset or
counterclaim that it may have now or later against Lender or against any
purchaser of such a participation interest and unconditionally agrees
that either Lender or such purchaser may enforce Borrower's obligation
under the Loan irrespective of the failure or insolvency of any holder
of any interest in the Loan. Borrower further agrees that the purchaser
of any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may have
against Lender.
GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF
CALIFORNIA. THIS AGREEMENT HAS BEEN ACCEPTED BY LENDER IN THE STATE OF
CALIFORNIA.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's
request to submit to the jurisdiction of the courts of Los Angeles
County, State of California.
NO WAIVER BY LENDER. Lender shall not be deemed to have waived any
rights under this Agreement unless such waiver is given in writing and
signed by Lender. No delay or omission on the part of Lender in
exercising any right shall operate as a waiver of such right or any
other right. A waiver by Lender of a provision of this Agreement shall
not prejudice or constitute a waiver of Lender's right otherwise to
demand strict compliance with that provision or any other provision of
this Agreement. No prior waiver by Lender, nor any course of dealing
between Lender and Borrower, or between Lender and any Grantor, shall
constitute a waiver of any of Lender's rights or of any of Borrower's or
any Grantor's obligations as to any future transactions. Whenever the
consent of Lender is required under this Agreement, the granting of such
consent by Lender in any instance shall not constitute continuing
consent to subsequent instances where such consent is required and in
all cases such consent may be granted or withheld in the sole discretion
of Lender.
NOTICES. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law),
when deposited with a nationally recognized overnight courier, or, if
mailed, when deposited in the United States mail, as first class,
certified or registered mail postage prepaid, directed to the addresses
shown near the beginning of this Agreement. Any party may change its
address for notices under this Agreement by giving formal written notice
to the other parties, specifying that the purpose of the notice is to
change the party's address. For notice purposes, Borrower agrees to keep
Lender informed at all times of Borrower's current address. Unless
otherwise provided or required by law, if there is more than one
Borrower, any notice given by
BUSINESS LOAN AGREEMENT (ASSET BASED)
LOAN NO: 932900001-1 (CONTINUED) PAGE 7
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Lender to any Borrower is deemed to be notice given to all Borrowers.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other circumstance. If feasible, the
offending provision shall be considered modified so that it becomes legal,
valid and enforceable. If the offending provision cannot be so modified, it
shall be considered deleted from this Agreement. Unless otherwise required
by law, the illegality, invalidity, or unenforceability of any provision of
this Agreement shall not affect the legality, validity or enforceability of
any other provision of this Agreement.
SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower" as
used in this Agreement shall include all of Borrower's subsidiaries and
affiliates. Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any Loan or
other financial accommodation to any of Borrower's subsidiaries or
affiliates.
SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
behalf of Borrower shall bind Borrower's successors and assigns and shall
inure to the benefit of Lender and its successors and assigns. Borrower
shall not, however, have the right to assign Borrower's rights under this
Agreement or any interest therein, without the prior written consent of
Lender.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and agrees
that in extending Loan Advances, Lender is relying on all representations,
warranties, and covenants made by Borrower in this Agreement or in any
certificate or other instrument delivered by Borrower to Lender under this
Agreement or the Related Documents. Borrower further agrees that regardless
of any investigation made by Lender, all such representations, warranties
and covenants will survive the extension of Loan Advances and delivery to
Lender of the Related Documents, shall be continuing in nature, shall be
deemed made and redated by Borrower at the time each Loan Advance is made,
and shall remain in full force and effect until such time as Borrower's
Indebtedness shall be paid in full, or until this Agreement shall be
terminated in the manner provided above, whichever is the last to occur.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.
WAIVE JURY. ALL PARTIES TO THIS AGREEMENT HEREBY WAIVE THE RIGHT TO ANY
JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY ANY PARTY
AGAINST ANY OTHER PARTY.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money
of the United States of America. Words and terms used in the singular shall
include the plural, and the plural shall include the singular, as the context
may require. Words and terms not otherwise defined in this Agreement shall have
the meanings attributed to such terms in the Uniform Commercial Code.
Accounting words and terms not otherwise defined in this Agreement shall have
the meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date of this Agreement:
ACCOUNT. The word "Account" means a trade account, account receivable,
other receivable, or other right to payment for goods sold or services
rendered owing to Borrower (or to a third party grantor acceptable to
Lender).
ADVANCE. The word "Advance" means a disbursement of Loan funds made, or to
be made, to Borrower or on Borrower's behalf under the terms and conditions
of this Agreement.
AGREEMENT. The word "Agreement" means this Business Loan Agreement (Asset
Based), as this Business Loan Agreement (Asset Based) may be amended or
modified from time to time, together with all exhibits and schedules
attached to this Business Loan Agreement (Asset Based) from time to time.
BORROWER. The word "Borrower" means international Remote Imaging Systems,
Inc., and all other persons and entities signing the Note in whatever
capacity.
BORROWING BASE. The words "Borrowing Base" mean as determined by Lender
from time to time, the lesser of (1) $6,500,000.00 or (2) the sum of (a)
80.000% of the aggregate amount of Eligible Accounts, 60 DAYS or less from
the due date for domestic Accounts Receivable, and 90 DAYS or less from the
due date for Foreign Accounts Receivable with sufficient Accounts
Receivable insurance coverage or L/C support (not to exceed in
corresponding Loan amount based on Eligible Accounts $6,500,000.00), plus
(b) 30.000% of the aggregate amount of Eligible Raw Material Inventory and
30.000% of Eligible Finished Goods Inventory (not to exceed $1,500,000.00).
***
BUSINESS DAY. The words "Business Day" mean a day on which commercial banks
are open in the State of California.
COLLATERAL. The word "Collateral" means all property and assets granted as
collateral security for a loan, whether real or personal property, whether
granted directly or indirectly, whether granted now or in the future, and
whether granted in the form of a security interest, mortgage, collateral
mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien, charge, lien or title retention
contract, lease or consignment intended as a security device, or any other
security or lien interest whatsoever, whether created by law, contract, or
otherwise. The word Collateral also includes without limitation all
collateral described in the Collateral section of this Agreement.
ELIGIBLE ACCOUNTS. The words "Eligible Accounts" mean at any time, all of
Borrower's Accounts which contain selling terms and conditions acceptable
to Lender. The net amount of any Eligible Account against which Borrower
may borrow shall exclude all returns, discounts, credits, and offsets of
any nature. Unless otherwise agreed to by Lender in writing, Eligible
Accounts do not include:
(1) Accounts with respect to which the Account Debtor is employee or
agent of Borrower.
(2) Accounts with respect to which the Account Debtor is a subsidiary
of, or affiliated with Borrower or its shareholders, officers, or
directors.
(3) Accounts with respect to which goods are placed on consignment,
guaranteed sale, or other terms by reason of which the payment by the
Account Debtor may be conditional.
(4) Accounts with respect to which the Account Debtor is not a
resident of the United States, except to the extent such Accounts are
supported by insurance, bonds or other assurances satisfactory to
Lender.
(5) Accounts with respect to which Borrower is or may become liable to
the Account Debtor for goods sold or services rendered by the Account
Debtor to Borrower.
(6) Accounts which are subject to dispute, counterclaim, or setoff.
(7) Accounts with respect to which the goods have not been shipped or
delivered, or the services have not been rendered, to the Account
Debtor.
(8) Accounts with respect to which Lender, in its sole discretion,
deems the creditworthiness or financial condition of the Account
Debtor to be unsatisfactory.
BUSINESS LOAN AGREEMENT (ASSET BASED)
LOAN NO: 932900001-1 (CONTINUED) PAGE 8
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(9) Accounts of any Account Debtor who has filed or has had filed against
it a petition in bankruptcy or an application for relief under any
provision of any state or federal bankruptcy, insolvency, or debtor-in-
relief acts; or who has had appointed trustee, custodian, or receiver for
the assets of such Account Debtor; or who has made an assignment for the
benefit of creditors or has become insolvent of fails generally to pay
its debt (including its payrolls) as such debts become due.
(10) Account with respect to which the Account Debtor is the United States
government or any department or agency of the United States.
(11) Accounts which have not been paid in full within 60 DAYS from the due
date. The entire balance of any Account of any single Account Debtor will
be in eligible whenever the portion of the Account which has not been paid
within 60 DAYS from the due date is in excess of 25.000% of the total
amount outstanding on the Account.
(12) That portion of the Accounts of any single Account Debtor which
exceeds 25.000% of all of Borrower's Accounts.
ELIGIBLE INVENTORY. The words "Eligible Inventory" mean at any time, all of
Borrower's Inventory as defined below except:
(1) Inventory which is not owned by Borrower free and clear of all
security interests, liens, encumbrances, and claims of third parties.
(2) Inventory which Lender, in its sole discretion, deems to be obsolete,
unsalable, damaged, defective, or unfit for further processing.
(3) Work in progress
(4) Items held in showroom and inventory located in a 3rd party warehouse.
ENVIRONMENTAL LAWS. The word "Environmental Laws" mean any and all state,
federal and local statutes, regulations and ordinances relating to the
protection of human health of the environment, including without limitation the
Comprehensive Environment Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("XXXX"), the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.,
Chapters 6.5 through 7.7 of Division 20 of the California Health and Safety
Code, Section 25100, et seq., or other applicable state or federal laws, rules,
or regulations adopted pursuant thereto.
EVENT OF DEFAULT. The words "Event of Default" mean any of the events of
default set forth in this Agreement if the default section of this Agreement.
EXPIRATION DATE. The words "Expiration Date mean the date of termination of
Lender's commitment to lend under this Agreement.
GAAP. The word "GAAP" means generally accepted accounting principles.
GRANTOR. The word "Grantor" means each and all to the persons or entities
granting a Security Interest in an Collateral for the Loan, including without
limitation all Borrowers granting such a Security Interest.
GUARANTOR. The word "Guarantor" means any guarantor, surely, or accommodation
party of any or all of the loan.
GUARANTY. The work "Guaranty" means the guaranty from Guarantor to Lender,
including without limitation a guaranty of all or part of the Note.
HAZARDOUS SUBSTANCES. The word "Hazardous Substances' mean materials that,
because of their quantity, concentration or physical, chemical or infectious
characteristics, may cause or pose a present or potential hazard to human
health of the environment when improperly used, treated, stored, disposed of,
generated, manufactured, transported or otherwise handled. The words "Hazardous
Substances" are used in their very broadest sense and include without
limitation any and all hazardous or toxic substances, materials or waste as
defined by or listed under the Environmental Laws. The term "Hazardous
Substances" also includes, without limitation, petroleum and petroleum
by-products or any fraction thereof and asbestos.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
the Note or Related Documents, including all principal and interest together
with all other indebtedness and costs and expenses for which Borrowers is
responsible under this Agreement or under any of the Related Documents.
INVENTORY. The word "Inventory means all of Borrower's raw materials, work in
process, finished goods, merchandise, parts and supplies, of every kind and
description, and goods held for sale or lease or furnished under contracts of
service in which Borrower now has or hereafter acquires any right, whether held
by Borrower or others, and all documents of title, warehouse receipts, bills of
lading, and all other documents of every type covering all or any part of the
foregoing. Inventory includes inventory temporarily out of Borrower's custody
or possession and all returns on Accounts.
LENDER. The word "Lender" means California Bank & Trust, its successors and
assigns.
LOAN. The word "Loan" means any and all loans and financial accommodations from
Lender to Borrower whether now or hereafter existing, and however evidenced,
including without limitation those loans and financial accommodations described
herein or described on any exhibit or schedule attached to this Agreement from
time to time.
NOTE. The word "Note" means the Note executed by International Remote Imaging
Systems, Inc. in the principal amount of $6,500,000.00 dated February 7, 2002,
together with all renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for the note or credit agreement.
PERMITTED LIENS. The words "Permitted Liens" mean (1) liens and security
interests securing indebtedness owed by Borrower to Lender; (2) liens for taxes,
assessments, or similar charges either not yet due or being contested in good
faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other
like liens arising in the ordinary course of business and securing obligations
which are not yet delinquent; (4) purchase money liens or purchase money
security interests upon or in any property acquired or held by Borrower in the
ordinary course of business to secure indebtedness outstanding on the date of
this Agreement or permitted to be incurred under the paragraph of this Agreement
titled "Indebtedness and Liens"; (5) liens and security interests which, as of
the date of this Agreement, have been disclosed to and approved by the Lender in
writing; and (6) those liens and security interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to the
net value of Borrower's assets.
PRIMARY CREDIT FACILITY. The words "Primary Credit Facility" mean the credit
facility described in the Line of Credit section of this Agreement.
RELATED DOCUMENTS. The words "Related Documents" mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Loan.
SECURITY AGREEMENT. The word "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements, understandings or
other agreements, whether created by law, contract, or otherwise, evidencing,
governing, representing, or creating a Security Interest.
SECURITY INTEREST. The words "Security Interest" mean, without limitation, any
and all types of collateral security, present and future, whether in the
BUSINESS LOAN AGREEMENT (ASSET BASED)
LOAN NO: 932900001-1 (CONTINUED) PAGE 9
================================================================================
form of a lien, charge, encumbrance, mortgage, deed of trust, security
deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel
mortgage, chattel trust, factor's lien, equipment trust, conditional sale,
trust receipt, lien or title retention contract, lease or consignment
intended as a security device, or any other security or lien interest
whatsoever whether created by law, contract, or otherwise.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) IS DATED FEBRUARY 7, 2002.
BORROWER:
BY: /s/ Xxxx X. X'Xxxxxx BY: /s/ Xxxx Xxxxx
----------------------------- ----------------------------
LENDER: XX. XXXX X. X'XXXXXX XXXX XXXXX
CEO OF INTERNATIONAL REMOTE CFO/SECRETARY OF INTERNATIONAL
IMAGING SYSTEMS, INC. REMOTE IMAGING, INC.
CALIFORNIA BANK & TRUST
By: [SIGNATURE ILLEGIBLE]
------------------------------
AUTHORIZED SIGNER
--------------------------------------------------------------------------------
** Any acquisition of Borrower's common stock by merger, new issuance, or
otherwise, that results in one holder owning twenty-five (25%) percent or
more of such common stock.
*** For Purposes of calculating the Borrowing Base, the numbers and percentages
described above shall use the combined figures of Borrower and its
subsidiary Statspin, Inc.
BUSINESS LOAN AGREEMENT
---------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL/COLL ACCOUNT OFFICER INITIALS
$500,000.00 02-07-2002 01-31-2007 932900001-3 932900001-3 22163 [INITIALS ILLEGIBLE]
---------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
---------------------------------------------------------------------------------------------------------------------
BORROWER: INTERNATIONAL REMOTE LENDER: CALIFORNIA BANK & TRUST
IMAGING SYSTEMS, INC. COMMERCIAL LOAN CENTER
0000 XXXX XXXXXX 000 XXXXX XXXX XXXXXX, XXXXX 000
XXXXXXXXXX, XX 00000 XXX XXXXXXX, XX 00000
================================================================================
THIS BUSINESS LOAN AGREEMENT DATED FEBRUARY 7, 2002, IS MADE AND EXECUTED
BETWEEN INTERNATIONAL REMOTE IMAGING SYSTEMS, INC. ("BORROWER") AND CALIFORNIA
BANK & TRUST ("LENDER") ON THE FOLLOWING TERMS AND CONDITIONS. BORROWER HAS
RECEIVED PRIOR COMMERCIAL LOANS FROM LENDER OR HAS APPLIED TO LENDER FOR A
COMMERCIAL LOAN OR LOANS OR OTHER FINANCIAL ACCOMMODATIONS, INCLUDING THOSE
WHICH MAY BE DESCRIBED ON ANY EXHIBIT OR SCHEDULE ATTACHED TO THIS AGREEMENT
("LOAN"). BORROWER UNDERSTANDS AND AGREES THAT: (A) IN GRANTING, RENEWING, OR
EXTENDING ANY LOAN, LENDER IS RELYING UPON BORROWER'S REPRESENTATIONS,
WARRANTIES, AND AGREEMENTS AS SET FORTH IN THIS AGREEMENT; (B) THE GRANTING,
RENEWING, OR EXTENDING OF ANY LOAN BY LENDER AT ALL TIMES SHALL BE SUBJECT TO
LENDER'S SOLE JUDGMENT AND DISCRETION; AND (C) ALL SUCH LOANS SHALL BE AND
REMAIN SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT.
TERM. This Agreement shall be effective as of February 7, 2002, and shall
continue in full force and effect until such time as all of Borrower's Loans in
favor of Lender have been paid in full, including principal, interest, costs,
expenses, attorneys' fees, and other fees and charges, or until such time as
the parties may agree in writing to terminate this Agreement.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to
the fulfillment to Lender's satisfaction of all of the conditions set forth in
this Agreement and in the Related Documents.
LOAN DOCUMENTS. Borrower shall provide to Lender the following documents
for the Loan: (1) the Note; (2) Security Agreements granting to Lender
security interests in the Collateral; (3) financing statements and all
other documents perfecting Lender's Security Interests; (4) evidence of
insurance as required below; (5) guaranties; (6) together with all such
Related Documents as Lender may require for the Loan; all in form and
substance satisfactory to Lender and Lender's counsel.
BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents. In addition, Borrower shall have provided such other
resolutions, authorizations, documents and instruments as Lender or its
counsel, may require.
PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in
this Agreement or any Related Document.
REPRESENTATIONS AND WARRANTIES. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
NO EVENT OF DEFAULT. There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under this Agreement
or under any Related Document.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any indebtedness exists:
ORGANIZATION. Borrower is a corporation for profit which is, and at all
times shall be, duly organized, validly existing, and in good standing
under and by virtue of the laws of the State of Delaware. Borrower is duly
authorized to transact business in the State of California and all other
states in which Borrower is doing business, having obtained all necessary
filings, governmental licenses and approvals for each state in which the
failure to so qualify would have a material adverse effect on its business
or financial condition. Borrower has the full power and authority to own
its properties and to transact the business in which it is presently
engaged or presently proposes to engage. Borrower maintains an office at
0000 Xxxx Xxxxxx, Xxxxxxxxxx, XX 00000. Unless Borrower has designated
otherwise in writing, the principal office is the office at which Borrower
keeps its books and records including its records concerning the
Collateral. Borrower will notify Lender prior to any change in the location
of Borrower's state of organization or any change in Borrower's name.
Borrower shall do all things necessary to preserve and to keep in full
force and effect its existence, rights and privileges, and shall comply
with all regulations, rules, ordinances, statutes, orders and decrees of
any governmental or quasi-governmental authority or court applicable to
Borrower and Borrower's business activities.
ASSUMED BUSINESS NAMES. Borrower has filed or recorded all documents or
filings required by law relating to all assumed business names used by
Borrower. Excluding the name of Borrower, the following is a complete list
of all assumed business names under which Borrower does business: IRIS and
IRIS Diagnostics.
AUTHORIZATION. Borrower's execution, delivery, and performance of this
Agreement and all the Related Documents have been duly authorized by all
necessary action by Borrower and do not conflict with, result in a
violation of, or constitute a default under (1) any provision of Borrower's
articles of incorporation or organization, or bylaws, or any agreement or
other instrument binding upon Borrower or (2) any law, governmental
regulation, court decree or order applicable to Borrower or to Borrower's
properties.
FINANCIAL INFORMATION. Each of Borrower's financial statements supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement
Borrower is required to give under this Agreement when delivered will
constitute legal, valid, and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.
PROPERTIES. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such
properties. All of Borrower's properties are titled in Borrower's legal
name, and Borrower has not used or filed a financing statement under any
other name for at least the last five (5) years.
HAZARDOUS SUBSTANCES. Except as disclosed to and acknowledged by Lender in
writing, Borrower represents and warrants that: (1) During the period of
Borrower's ownership of Borrower's Collateral, there has been no use,
generation, manufacture, storage, treatment, disposal, release or
threatened release of any Hazardous Substance by any person on, under,
about or from any of the Collateral. (2) Borrower has no knowledge of, or
reason to believe that there has been (a) any breach or violation of any
Environmental Laws; (b) any use, generation, manufacture, storage,
BUSINESS LOAN AGREEMENT
Loan No: 932900001-3 (CONTINUED) PAGE 2
================================================================================
treatment, disposal, release or threatened release of any Hazardous
Substance on, under, about or from the Collateral by any prior owners or
occupants of any of the Collateral; or (c) any actual or threatened
litigation or claims of any kind by any person relating to such matters.
(3) Neither Borrower nor any tenant, contractor, agent or other
authorized user of any of the Collateral shall use, generate,
manufacture, store, treat, dispose of or release any Hazardous Substance
on, under, about or from any of the Collateral; and any such activity
shall be conducted in compliance with all applicable federal, state, and
local laws, regulations, and ordinances, including without limitation
all Environmental Laws. Borrower authorizes Lender and its agents to
enter upon the Collateral to make such inspections and tests as Lender
may deem appropriate to determine compliance of the Collateral with this
section of the Agreement. Any inspections or tests made by Lender shall
be at Borrower's expense and for Lender's purposes only and shall not be
construed to create any responsibility or liability on the part of
Lender to Borrower or to any other person. The representations and
warranties contained herein are based on Borrower's due diligence in
investigating the Collateral for hazardous waste and Hazardous
Substances. Borrower hereby (1) releases and waives any future claims
against Lender for indemnity or contribution in the event Borrower
becomes liable for cleanup or other costs under any such laws, and (2)
agrees to indemnify and hold harmless Lender against any and all claims,
losses, liabilities, damages, penalties, and expenses which Lender may
directly or indirectly sustain or suffer resulting from a breach of this
section of the Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release of a
hazardous waste or substance on the Collateral. The provisions of this
section of the Agreement, including the obligation to indemnify, shall
survive the payment of the Indebtedness and the termination, expiration
or satisfaction of this Agreement and shall not be affected by Lender's
acquisition of any interest in any of the Collateral, whether by
foreclosure or otherwise.
LITIGATION AND CLAIMS. No litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid
taxes) against Borrower is pending or threatened, and no other event has
occurred which may materially adversely affect Borrower's financial
condition or properties, other than litigation, claims, or other events,
if any, that have been disclosed to and acknowledged by Lender in
writing.
TAXES. To the best of Borrower's knowledge, all of Borrower's tax
returns and reports that are or were required to be filed, have been
filed, and all taxes, assessments and other governmental charges have
been paid in full, except those presently being or to be contested by
Borrower in good faith in the ordinary course of business and for which
adequate reserves have been provided.
LIEN PRIORITY. Unless otherwise previously disclosed to Lender in
writing, Borrower has not entered into or granted any Security
Agreements, or permitted the filing or attachment of any Security
Interests on or affecting any of the Collateral directly or indirectly
securing repayment of Borrower's Loan and Note, that would be prior or
that may in any way be superior to Lender's Security Interests and
rights in and to such Collateral.
BINDING EFFECT. This Agreement, the Note, all Security Agreements (if
any), and all Related Documents are binding upon the signers thereof, as
well as upon their successors, representatives and assigns, and are
legally enforceable in accordance with their respective terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:
NOTICES OF CLAIMS AND LITIGATION. Promptly inform Lender in writing of
(1) all material adverse changes in Borrower's financial condition, and
(2) all existing and all threatened litigation, claims, investigations,
administrative proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial condition of
Borrower or the financial condition of any Guarantor.
FINANCIAL RECORDS. Maintain its books and records in accordance with
GAAP, applied on a consistent basis, and permit Lender to examine and
audit Borrower's books and records at all reasonable times.
FINANCIAL STATEMENTS. Furnish Lender with the following:
ANNUAL STATEMENTS. As soon as available, but in no event later
than one-hundred-twenty (120) days after the end of each fiscal
year, Borrower's balance sheet and income statement for the year
ended, audited by a certified public accountant satisfactory to
Lender.
INTERIM STATEMENTS. As soon as available, but in no event later
than sixty (60) days after the end of each fiscal quarter,
Borrower's balance sheet and profit and loss statement for the
period ended, prepared by Borrower.
TAX RETURNS. As soon as available, but in no event later than
thirty (30) days after the applicable filing date for the tax
reporting period ended, Federal and other governmental tax
returns, prepared by Borrower.
All financial reports required to be provided under this Agreement shall
be prepared in accordance with GAAP, applied on a consistent basis, and
certified by Borrower as being true and correct.
ADDITIONAL INFORMATION. Furnish such additional information and
statements, as Lender may request from time to time.
INSURANCE. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect
to Borrower's properties and operations, in form, amounts, coverages and
with insurance companies acceptable to Lender. Borrower, upon request of
Lender, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without
at least ten (10) days prior written notice to Lender. Each insurance
policy also shall include an endorsement providing that coverage in
favor of Lender will not be impaired in any way by any act, omission or
default of Borrower or any other person. In connection with all policies
covering assets in which Lender holds or is offered a security interest
for the Loans, Borrower will provide Lender with such lender's loss
payable or other endorsements as Lender may require.
INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (1) the
name of the insurer; (2) the risks insured; (3) the amount of the
policy; (4) the properties insured; (5) the then current property values
on the basis of which insurance has been obtained, and the manner of
determining those values; and (6) the expiration date of the policy. In
addition, upon request of Lender (however not more often than annually),
Borrower will have an independent appraiser satisfactory to Lender
determine, as applicable, the actual cash value or replacement cost of
any Collateral. The cost of such appraisal shall be paid by Borrower.
GUARANTIES. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, executed by the guarantors
named below, on Lender's forms, and in the amounts and under the
conditions set forth in those guaranties.
NAMES OF GUARANTORS AMOUNTS
------------------- -----------
ADVANCED DIGITAL IMAGING RESEARCH, LLC 8,000,000.00
STATSPIN, INC. $8,000,000.00
OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's and
subsidiaries' business operations specifically consented to the contrary
by Lender in writing.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every
kind and nature, imposed upon Borrower or its properties, income, or
profits, prior to the
BUSINESS LOAN AGREEMENT
LOAN NO: 932900001-3 (CONTINUED) PAGE 3
================================================================================
date on which penalties would attach, and all lawful claims that, if
unpaid, might become a lien or charge upon any of Borrower's properties,
income, or profits.
PERFORMANCE. Perform and comply, in a timely manner, with all terms,
conditions, and provisions set forth in this Agreement, in the Related
Documents, and in all other instruments and agreements between Borrower and
Lender. Borrower shall notify Lender immediately in writing of any default
in connection with any agreement.
OPERATIONS. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner.
ENVIRONMENTAL STUDIES. Promptly conduct and complete, at Borrower's
expense, all such investigations, studies, samplings and testings as may be
requested by Lender or any governmental authority relative to any
substance, or any waste or by-product of any substance defined as toxic or
a hazardous substance under applicable federal, state, or local law, rule,
regulation, order or directive, at or affecting any property or any
facility owned, leased or used by Borrower.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the conduct of Borrower's
properties, business and operations, and to the use or occupancy of the
Collateral, including without limitation, the Americans With Disabilities
Act. Borrower may contest in good faith any such law, ordinance, or
regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Borrower has notified Lender in writing
prior to doing so and so long as, in Lender's sole opinion, Lender's
interests in the Collateral are not jeopardized. Lender may require
Borrower to post adequate security or a surety bond, reasonably
satisfactory to Lender, to protect Lender's interest.
INSPECTION. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) in the possession of
a third party, Borrower, upon request of Lender, shall notify such party to
permit Lender free access to such records at all reasonable times and to
provide Lender with copies of any records it may request, all at Borrower's
expense.
COMPLIANCE CERTIFICATES. Unless waived in writing by Lender, provide
Lender at least annually, with a certificate executed by Borrower's chief
financial officer, or other officer or person acceptable to Lender,
certifying that the representations and warranties set forth in this
Agreement are true and correct as of the date of the certificate and
further certifying that, as of the date of the certificate, no Event of
Default exists under this Agreement.
ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all respects
with any and all Environmental Laws; not cause or permit to exist, as a
result of an intentional or unintentional action or omission on Borrower's
part or on the part of any third party, on property owned and/or occupied
by Borrower, any environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to and in
compliance with the conditions of a permit issued by the appropriate
federal, state or local governmental authorities; shall furnish to Lender
promptly and in any event within thirty (30) days after receipt thereof a
copy of any notice, summons, lien, citation, directive, letter or other
communication from any governmental agency or instrumentality concerning
any intentional or unintentional action or omission on Borrower's part in
connection from any environmental activity whether or not there is damage
to the environment and/or other natural resources.
ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, assignments,
financing statements, instruments, documents and other agreements as Lender
or its attorneys may reasonably request to evidence and secure the Loans
and to perfect all Security Interests.
Lender'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrower's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Borrower. All such expenses will become a
part of the Indebtedness and, at Lender's option, will (A) be payable on
demand; (B) be added to the balance of the Note and be apportioned among and be
payable with any installment payments to become due during either (1) the term
of any applicable insurance policy; or (2) the remaining term of the Note; or
(C) be treated as a balloon payment which will be due and payable at the Note's
maturity.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while
this Agreement is in effect, Borrower shall not, without the prior written
consent of Lender:
INDEBTEDNESS AND LIENS. (1) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (2) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower's assets
(except as allowed as Permitted Liens), or (3) sell with recourse any of
Borrower's accounts, except to Lender.
CONTINUITY OF OPERATIONS. (1) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(2) cease operations, liquidate, merge, transfer or consolidate with any
other entity, change its name, dissolve or transfer or sell Collateral out
of the ordinary course of business, or (3) pay any dividends on Borrower's
stock (other than dividends payable in its stock), provided, however that
notwithstanding the foregoing, but only so long as no Event of Default has
occurred and is continuing or would result from the payment of dividends,
if Borrower is a "Subchapter S Corporation" (as defined in the Internal
Revenue Code of 1986, as amended), Borrower may pay cash dividends on its
stock to its shareholders from time to time in amounts necessary to enable
the shareholders to pay income taxes and make estimated income tax payments
to satisfy their liabilities under federal and state law which arise solely
from their status as Shareholders of a Subchapter S Corporation because of
their ownership of shares of Borrower's stock, or purchase or retire any of
Borrower's outstanding shares or alter or amend Borrower's capital
structure.
LOANS, ACQUISITIONS AND GUARANTIES.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(A) Borrower or any Guarantor is in default under the terms of this Agreement
or any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes
incompetent or becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse
change in Borrower's financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; or (D) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the
BUSINESS LOAN AGREEMENT
LOAN NO:932900001-3 (CONTINUED) PAGE 4
==============================================================================
Loan or any other loan with Lender; or (E) Lender in good xxxxx xxxxx itself
insecure, even though no Event of Default shall have occurred.
DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:
PAYMENT DEFAULT. Borrower fails to make any payment when due under the
Loan.
OTHER DEFAULTS. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in any of
the Related Documents or to comply with or to perform any term, obligation,
covenant or condition in any other Agreement between lender and Borrower.
DEFAULT IN FAVOR OF THIRD PARTIES. Borrower or any Grantor defaults under
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's or any Grantor's property of
Borrower's or any Grantor's ability to repay the Loans or perform their
respective obligations under this Agreement or any of the Related
Documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this
Agreement of the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished or becomes false or
misleading at any time thereafter.
INSOLVENCY. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
document to create a valid and perfected security interest or lien) at any
time and for any reason.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by and creditor of Borrower or by any
governmental agency against any collateral securing the Loan. This includes
a garnishment of any of Borrower's accounts, including deposit accounts,
with Lender. However, this Event of Default shall not apply if there is a
good faith dispute by Borrower as to the validity or reasonableness of the
claim which is the basis of the creditor or forfeiture proceeding and if
Borrower gives Lender written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Lender, in
its sole discretion, as being an adequate reserve or bond for the dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or any Guarantor dies or
becomes incompetent, or revokes or disputes the validity of, or liability
under, any Guaranty of the Indebtedness. In the event of a death, Lender,
at its option, may, but shall not be required to, permit the Guarantor's
estate to assume unconditionally the obligations arising under the guaranty
in a manner satisfactory to Lender, and, in doing so, cure any Event of
Default.
CHANGE IN OWNERSHIP.**
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Loan is impaired.
INSECURITY. Lender in good faith believes itself insecure.
RIGHT TO CURE. If any default, other than a default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been given
a notice of a similar default within the preceding twelve (12) months, it
may be cured (and no Event of Default will have occurred) if Borrower or
Grantor, as the case may be, after receiving written notice from Lender
demanding cure of such default: (1) cure the default within fifteen (15)
days; or (2) if the cure requires more than fifteen (15) days, immediately
initiate steps which Lender deems in Lender's sole discretion to be
sufficient to cure the default and thereafter continue and complete all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except
where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make further Loan Advances or disbursements), and, at Lender's
option, all Indebtedness immediately will become due and payable, all without
notice of any kind to Borrower, except that in the case of an Event of Default
of the type described in the "Insolvency" subsection above, such acceleration
shall be automatic and not optional. In addition, Lender shall have all the
rights and remedies provided in the Related Documents or available at law, in
equity, or otherwise. Except as may be prohibited by applicable law, all of
Lender's rights and remedies shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy shall not
exclude pursuit of any other remedy, and an election to make expenditures or to
take action to perform an obligation of Borrower or of any Grantor shall not
affect Lender's right to declare a default and to exercise its rights and
remedies.
DEPOSIT AGREEMENT SECURITY. Borrower hereby grants a security interest to
Lender in any and all deposit accounts (checking, savings, money market or
time) of Borrower at Lender, now existing or hereinafter opened, to secure the
Indebtedness. this includes all deposit accounts Borrower holds jointly with
someone else.
FINANCIAL COVENANTS AND RATIOS. Borrower covenants and agrees with Lender that,
while this Agreement is in effect, Borrower will comply with the following
financial covenants and ratios:
WORKING CAPITAL. Maintain Working Capital in excess of $6,250,000.00 effective
for the quarter prior to California Bank & Trust funding and then changing to
$4,500,000.00, effective for the immediate quarter subsequent to California Bank
& Trust funding, to be monitored on a quarterly basis.
TANGIBLE NET WORTH. Maintain a minimum Tangible Net Worth of not less than
$10,750,000.00, to be monitored on a quarterly basis.
DEBT/TANGIBLE NET WORTH RATIO. Maintain a ratio of Debt/Tangible Net Worth of
not less than 1.25 to 1.00, to be monitored on a quarterly basis.
EARNINGS BEFORE INTEREST, TAXES DEPRECIATION AND AMORTIZATION (CURRENT PORTION
OF LONG-TERM DEBT + INTEREST EXPENSE) RATIO. Maintain a ration of Earnings
before Interest, Taxes Depreciation and Amortization/(Current Portion of
Long-Term Debt Interest Expense) Ratio of not less than 1.25 to 1.00
effective for the fiscal year end December 31, 2001 and for every quarter
through September 30, 2002 and then changing to 1.50 to 1.00 effective for the
fiscal year end December 31, 2002 and for every quarter thereafter. Covenant to
be reviewed quarterly with the Earnings before Interest, Taxes Depreciation and
Amortization and interest expense based upon a cumulative rolling 12-month
basis.
ADDITIONAL NEGATIVE COVENANT. For transactions in excess of $1,000,000.00,
Borrower shall not, without prior written consent from Bank, loan, advance,
invest, purchase or otherwise acquire the assets or business of any person or
other entity; or merge, consolidate, or commence any proceedings thereof; or
sell any assets except in the ordinary and normal course of its business as now
conducted.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are part of
this Agreement.
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
BUSINESS LOAN AGREEMENT
Loan No: 932900001-3 (CONTINUED) Page 5
================================================================================
matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
ATTORNEYS' FEES; EXPENSES. Borrower agrees to pay upon demand all of
Lender's costs and expenses, including Lender's attorneys' fees and
Lender's legal expenses, incurred in connection with the enforcement of
this Agreement. Lender may hire or pay someone else to help enforce this
Agreement, and Borrower shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender's attorneys' fees and
legal expenses whether or not there is a lawsuit, including attorneys'
fees and legal expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Borrower also shall pay
all court costs and such additional fees as may be directed by the
court.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the
provisions of this Agreement.
CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loan to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any
other matter relating to the Loan, and Borrower hereby waives any rights
to privacy Borrower may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such
participation interests. Borrower also agrees that the purchasers of any
such participation interests will be considered as the absolute owners
of such interests in the Loan and will have all the rights granted under
the participation agreement or agreements governing the sale of such
participation interests. Borrower further waives all rights of offset or
counterclaim that it may have now or later against Lender or against any
purchaser of such a participation interest and unconditionally agrees
that either Lender or such purchaser may enforce Borrower's obligation
under the Loan irrespective of the failure or insolvency of any holder
of any interest in the Loan. Borrower further agrees that the purchaser
of any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may have
against Lender.
GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF
CALIFORNIA. THIS AGREEMENT HAS BEEN ACCEPTED BY LENDER IN THE STATE OF
CALIFORNIA.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's
request to submit to the jurisdiction of the courts of Los Angeles
County, State of California.
NO WAIVER BY LENDER. Lender shall not be deemed to have waived any
rights under this Agreement unless such waiver is given in writing and
signed by Lender. No delay or omission on the part of Lender in
exercising any right shall operate as a waiver of such right or any
other right. A waiver by Lender of a provision of this Agreement shall
not prejudice or constitute a waiver of Lender's right otherwise to
demand strict compliance with that provision or any other provision of
this Agreement. No prior waiver by Lender, nor any course of dealing
between Lender and Borrower, or between Lender and any Grantor, shall
constitute a waiver of any of Lender's rights or of any of Borrower's or
any Grantor's obligations as to any future transactions. Whenever the
consent of Lender is required under this Agreement, the granting of such
consent by Lender in any instance shall not constitute continuing
consent to subsequent instances where such consent is required and in
all cases such consent may be granted or withheld in the sole discretion
of Lender.
NOTICES. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law),
when deposited with a nationally recognized overnight courier, or, if
mailed, when deposited in the United States mail, as first class,
certified or registered mail postage prepaid, directed to the addresses
shown near the beginning of this Agreement. Any party may change its
address for notices under this Agreement by giving formal written notice
to the other parties, specifying that the purpose of the notice is to
change the party's address. For notice purposes, Borrower agrees to keep
Lender informed at all times of Borrower's current address. Unless
otherwise provided or required by law, if there is more than one
Borrower, any notice given by Lender to any Borrower is deemed to be
notice given to all Borrowers.
SEVERABILITY. If a court of competent jurisdiction finds any provision
of this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision
illegal, invalid, or unenforceable as to any other circumstance. If
feasible, the offending provision shall be considered modified so that
it becomes legal, valid and enforceable. If the offending provision
cannot be so modified, it shall be considered deleted from this
Agreement. Unless otherwise required by law, the illegality, invalidity,
or unenforceability of any provision of this Agreement shall not affect
the legality, validity or enforceability of any other provision of this
Agreement.
SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of
any provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower"
as used in this Agreement shall include all of Borrower's subsidiaries
and affiliates. Notwithstanding the foregoing however, under no
circumstances shall this Agreement be construed to require Lender to
make any Loan or other financial accommodation to any of Borrower's
subsidiaries or affiliates.
SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
behalf of Borrower shall bind Borrower's successors and assigns and
shall inure to the benefit of Lender and its successors and assigns.
Borrower shall not, however, have the right to assign Borrower's rights
under this Agreement or any interest therein, without the prior written
consent of Lender.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and
agrees that in making the Loan, Lender is relying on all
representations, warranties, and covenants made by Borrower in this
Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement or the Related Documents.
Borrower further agrees that regardless of any investigation made by
Lender, all such representations, warranties and covenants will survive
the making of the Loan and delivery to Lender of the Related Documents,
shall be continuing in nature, and shall remain in full force and effect
until such time as Borrower's Indebtedness shall be paid in full, or
until this Agreement shall be terminated in the manner provided above,
whichever is the last to occur.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of
this Agreement.
WAIVE JURY. ALL PARTIES TO THIS AGREEMENT HEREBY WAIVE THE RIGHT TO ANY
JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY ANY
PARTY AGAINST ANY OTHER PARTY.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:
ADVANCE. The word "Advance" means a disbursement of Loan funds made, or
to be made, to Borrower or on Borrower's behalf on a line of credit or
multiple advance basis under the terms and conditions of this Agreement.
AGREEMENT. The word "Agreement" means this Business Loan Agreement, as
this Business Loan Agreement may be amended or modified from
BUSINESS LOAN AGREEMENT
Loan No: 932900001-3 (Continued) Page 6
================================================================================
time to time, together with all exhibits and schedules attached to this
Business Loan Agreement from time to time.
BORROWER. The word "Borrower" means International Remote Imaging
Systems, Inc., and all other persons and entities signing the Note in
whatever capacity.
COLLATERAL. The word "Collateral" means all property and assets granted
as collateral security for a Loan, whether real or personal property,
whether granted directly or indirectly, whether granted now or in the
future, and whether granted in the form of a security interest,
mortgage, collateral mortgage, deed of trust, assignment, pledge, crop
pledge, chattel mortgage, collateral chattel mortgage, chattel trust,
factor's lien, equipment trust, conditional sale, trust receipt, lien,
charge, lien or title retention contract, lease or consignment intended
as a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.
ENVIRONMENTAL LAWS. The words "Environmental Laws" mean any and all
state, federal and local statutes, regulations and ordinances relating
to the protection of human health or the environment, including without
limitation the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986,
Pub. L. No. 99-499 ("XXXX"), the Hazardous Materials Transportation Act,
49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5 through 7.7 of
Division 20 of the California Health and Safety Code, Section 25100, et
seq., or other applicable state or federal laws, rules, or regulations
adopted pursuant thereto.
EVENT OF DEFAULT, The words "Event of Default" mean any of the events of
default set forth in this Agreement in the default section of this
Agreement.
GAAP. The word "GAAP" means generally accepted accounting principles.
GRANTOR. The word "Grantor" means each and all of the persons or
entities granting a Security Interest in any Collateral for the Loan,
including without limitation all Borrowers granting such a Security
Interest.
GUARANTOR. The word "Guarantor" means any guarantor, surety, or
accommodation party of any or all of the Loan.
GUARANTY. The word "Guaranty" means the guaranty from Guarantor to
Lender, including without limitation a guaranty of all or part of the
Note.
HAZARDOUS SUBSTANCES. The words "Hazardous Substances" mean materials
that, because of their quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential
hazard to human health or the environment when improperly used, treated,
stored, disposed of, generated, manufactured, transported or otherwise
handled. The words "Hazardous Substances" are used in their very
broadest sense and include without limitation any and all hazardous or
toxic substances, materials or waste as defined by or listed under the
Environmental Laws. The term "Hazardous Substances" also includes,
without limitation, petroleum and petroleum by-products or any fraction
thereof and asbestos.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced
by the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which
Borrower is responsible under this Agreement or under any of the Related
Documents.
LENDER. The word "Lender" means California Bank & Trust, its successors
and assigns.
LOAN. The word "Loan" means any and all loans and financial
accommodations from Lender to Borrower whether now or hereafter
existing, and however evidenced, including without limitation those
loans and financial accommodations described herein or described on any
exhibit or schedule attached to this Agreement from time to time.
NOTE. The word "Note" means the Note executed by International Remote
Imaging Systems, Inc. in the principal amount of $500,000.00 dated
February 7, 2002, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions
for the note or credit agreement.
PERMITTED LIENS. The words "Permitted Liens" mean (1) liens and security
interests securing Indebtedness owed by Borrower to Lender; (2) liens
for taxes, assessments, or similar charges either not yet due or being
contested in good faith; (3) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in the ordinary
course of business and securing obligations which are not yet
delinquent; (4) purchase money liens or purchase money security
interests upon or in any property acquired or held by Borrower in the
ordinary course of business to secure indebtedness outstanding on the
date of this Agreement or permitted to be incurred under the paragraph
of this Agreement titled "Indebtedness and Liens"; (5) liens and
security interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing; and (6) those liens
and security interests which in the aggregate constitute an immaterial
and insignificant monetary amount with respect to the net value of
Borrower's assets.
RELATED DOCUMENTS. The words "Related Documents" mean all promissory
notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security
deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection
with the Loan.
SECURITY AGREEMENT. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
SECURITY INTEREST. The words "Security Interest" mean, without
limitation, any and all types of collateral security, present and
future, whether in the form of a lien, charge, encumbrance, mortgage,
deed of trust, security deed, assignment, pledge, crop pledge, chattel
mortgage, collateral chattel mortgage, chattel trust, factor's lien,
equipment trust, conditional sale, trust receipt, lien or title
retention contract, lease or consignment intended as a security device,
or any other security or lien interest whatsoever whether created by
law, contract, or otherwise.
BUSINESS LOAN AGREEMENT
LOAN NO: 932900001-3 (CONTINUED) PAGE 7
================================================================================
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS
DATED FEBRUARY 7, 2002.
BORROWER:
INTERNATIONAL REMOTE
IMAGING SYSTEMS INC.
By: /s/ Xxxx X. X'Xxxxxx By: /s/ Xxxx Xxxxx
-------------------------------- -------------------------------
Xx. Xxxx X. X'Xxxxxx Xxxx Xxxxx
CEO of International Remote CFO/Secretary of International
Imaging Systems, Inc. Remote Imaging Systems, Inc.
LENDER:
CALIFORNIA BANK & TRUST
By: /s/ [SIGNATURE ILLEGIBLE]
---------------------------------
AUTHORIZED SIGNER
--------------------------------------------------------------------------------
** Any acquisition of Borrower's common stock by merger, new issuance, or
otherwise, that results in one holder owning twenty-five percent (25%) or
more of such common stock.
