LOAN AND SECURITY AGREEMENT
(NON-EXIM FACILITY)
This Agreement is between the undersigned Borrower and the undersigned Lender
concerning loans and other credit accommodations to be made by Lender to
Borrower.
SECTION 1. PARTIES
1.1 "BORROWER" is identified in Section 10.5(B) and includes successors
and assigns. If more than one Borrower is specified in Section 10.5(B), all
references to Borrower shall mean each of them, jointly and severally,
individually and collectively, and the successors and assigns of each.
1.2 "LENDER" shall mean THE CIT GROUP/BUSINESS CREDIT, INC. and its
agents, designees, representatives, successors and assigns.
SECTION 2. LOANS AND OTHER CREDIT ACCOMMODATIONS
2.1 Revolving Loans. Lender shall, subject to the terms and conditions
contained herein, make revolving loans to Borrower ("REVOLVING LOANS") in
amounts requested by Borrower from time to time, but not in excess of the then
existing Net Availability and provided the requested loan would not cause the
outstanding Obligations to exceed the Maximum Credit. Subject to the terms and
conditions set forth in this Agreement, Revolving Loans may be Prime Rate Loans,
LIBOR Loans or any combination thereof.
(a) "MAXIMUM CREDIT" shall have the meaning set forth in
Section 10.1(a).
(b) "GROSS AVAILABILITY" is at any time (i) the product of the
outstanding amount of Eligible Accounts multiplied by the Eligible Accounts
Percentage set forth in Section 10.1(b) minus (ii) Reserves.
(c) "NET AVAILABILITY" shall mean an amount equal to the then
Gross Availability minus the aggregate amount of all Obligations other than the
then outstanding principal balance of EXIM Revolving Loans (as defined in
Section 10.7).
(d) "ELIGIBLE ACCOUNTS" shall mean the accounts created by
Borrower in the ordinary course of business which are and remain acceptable to
Lender and (1) which have not remained unpaid for more than the number of days
after the invoice date set forth in Section 10.1(d); (2) which are absolutely
owing to Borrower and payment is not conditional or contingent (such as
consignments, guaranteed sales or right of return or other similar terms); (3)
which are owed by an account debtor having a chief executive office or principal
place of business is located in the United States and such accounts are not
"Eligible Accounts" under and as defined in the EXIM Loan Agreement; (4) which
do not arise from progress xxxxxxxx, retainages or xxxx and hold sales; (5)
which are not subject to contras, setoffs, counterclaims or disputes and with
respect to which there are no other facts existing or threatened which would
impair or delay the collectibility of all or any portion thereof, or which might
result in any adverse change in the account debtor's financial condition; (6)
with respect to which the goods
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giving rise thereto were not at the time of the sale subject to any liens except
those permitted in this Agreement; (7) which are not due from any (x) entity
affiliated (directly or indirectly) with Borrower, or (y) any officer, employee,
shareholder or agent of Borrower or any affiliate thereof; (8) with respect to
which there has been compliance with the Assignment of Claims Act or similar
State or local law, if applicable, if the account debtor is the United States or
any domestic governmental unit; (9) with respect to which Borrower has delivered
to Lender such documents as Lender may have requested pursuant to Section 5.9
hereof and Lender shall have received satisfactory verifications of such
accounts; (10) the account debtor owing such accounts (together with such
account debtor's affiliates) does not owe more than twenty percent (20%) of all
Eligible Accounts (the amount exceeding twenty percent (20%) shall not be
eligible); (11) which are owed by an account debtor if more than fifty percent
(50%) of the accounts owed by such account debtor are unpaid after the invoice
date for more than the number of days set forth in Section 10.1 (D); and (12)
which are owed by an account debtor deemed creditworthy at all times by Lender
in its reasonable business judgment.
(e) Intentionally Deleted.
(f) Lender shall have a continuing right to reduce Gross
Availability by implementing reserves ("RESERVES"), and to increase and decrease
such Reserves, if and to the extent that, in Lender's sole judgment reasonably
exercised, such Reserves are necessary to protect Lender against any state of
facts which does, or would, with notice or passage of time or both, constitute
an Event of Default or have an adverse effect on any Collateral.
2.2 Intentionally Deleted.
2.3 Borrowing of LIBOR Loans. Upon not less than three (3) Eurodollar
Business Days' irrevocable written notice from Borrower to Lender (each, a
"NOTICE OF LIBOR BORROWING"), Borrower shall have the right, subject to the
terms and conditions of this Agreement, to request on that portion of any Loan
be made as LIBOR Loans, to request that any LIBOR Loans be continued as LIBOR
Loans or to request that all or any portion of the Prime Rate Loans be converted
into LIBOR Loans, which notice shall in each case specify:
(i) the date on which such LIBOR Loans are to be made or
continued as such or the date on which such Prime Rate Loans are to be
converted into LIBOR Loans, as applicable (which day shall in each case
be a Eurodollar Business Day);
(ii) the aggregate principal amount of such loans that are to
be made or continued as, or converted into, LIBOR Loans, as applicable
(which, in the case of each such LIBOR Loan, shall be at least equal to
$1,000,000 or any larger multiple of $1,000,000); and
(iii) the Interest Period applicable to such LIBOR Loan.
If Borrower shall not have delivered a Notice of LIBOR Borrowing with respect to
any outstanding LIBOR Loan as set forth above in this paragraph within three (3)
Eurodollar Business Days' prior to the end of the Interest Period for such LIBOR
Loan, such LIBOR Loan
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shall, without any further action required by Borrower or Lender, be converted
into a Prime Rate Loan effective from and after the last day of such Interest
Period. Notwithstanding the foregoing, (x) no more than three (3) separate
Interest Periods in respect of LIBOR Loans may be outstanding at any one time,
and (y) upon the occurrence and during the continuance of an Event of Default,
Borrower shall not have the right to submit a Notice of LIBOR Borrowing and all
then existing LIBOR Loans shall be converted to Prime Rate Loans.
Notwithstanding anything to the contrary contained herein, Lender (or any
participant, if applicable) shall not be required to purchase United States
Dollar deposits in the London interbank market or from any other applicable
LIBOR market or source or otherwise "match fund" to fund LIBOR Loans, but any
and all provisions hereof relating to LIBOR Loans shall be deemed to apply as if
Lender (and any participant, if applicable) had purchased such deposits to fund
any LIBOR Loans. Lender shall be entitled to charge the Borrower a $500 fee upon
the first effective day of any such election for a LIBOR Loan.
2.4 Additional Provisions Relating to LIBOR Loans.
(a) If, after the date of this Agreement, any change in any
law or the application of the requirements thereof (whether such change occurs
in accordance with the terms of such law as enacted, as a result of amendment or
otherwise), any change in the interpretation or administration of any law by any
governmental authority, or compliance by Lender with any request or directive
(whether or not having the force of law) of any governmental authority (each, a
"CHANGE OF LAW"):
(i) shall subject Lender to any tax, duty or other
charge with respect to any LIBOR Loan, or shall change the basis of
taxation of payments by Borrower to Lender on such LIBOR Loan under
this Agreement (except for changes in the rate of taxation on the
overall net income of Lender); or
(ii) shall impose, modify or hold applicable any
reserve, special deposit or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances or
loans by, or any other acquisition of funds by Lender for any LIBOR
Loan; or
(iii) shall impose on Lender any other condition
related to any LIBOR Loan;
and the effect of any of the foregoing is to increase the cost to Lender of
making, renewing, or maintaining any such LIBOR Loan or to reduce any amount
receivable by Lender hereunder; then Borrower shall from time to time, upon
demand by Lender, pay to Lender additional amounts sufficient to reimburse
Lender for such increased costs or to compensate Lender for such reduced
amounts. A certificate as to the amount of such increased costs or reduced
amounts, submitted by Lender to Borrower shall, in the absence of manifest
error, be conclusive and binding on Borrower for all purposes.
(b) If, after the date of this Agreement, Lender determines
that (i) any Change of Law affects the amount of capital required or expected to
be maintained by Lender or any entity controlling Lender (a "CAPITAL ADEQUACY
REQUIREMENT") and (ii) the amount of capital
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maintained by Lender or such entity which is attributable to or based upon the
extensions of credit under this Agreement must be increased as a result of such
Capital Adequacy Requirement (taking into account Lender's or such entity's
policies with respect to capital adequacy), Borrower shall pay to Lender or such
entity, upon demand of Lender, such amounts as Lender or such entity shall
determine are necessary to compensate Lender or such entity for the increased
costs to Lender or such entity of such increased capital. A certificate of
Lender setting forth in reasonable detail the computation of any such increased
costs, delivered by Lender to Borrower shall, in the absence of manifest error,
be conclusive and binding on Borrower for all purposes.
(c) If on or prior to the first day of any Interest Period for
any LIBOR Loan:
(i) Lender determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits
referred to in the definition of "LIBOR" in Section 3.1 are not being
provided in the relevant amounts for the relevant maturities for
purposes of determining rates of interest for LIBOR Loans as provided
in this Agreement, or
(ii) Lender determines, which determination shall be
conclusive, that LIBOR will not adequately and fairly reflect the cost
to Lender of making or maintaining any LIBOR Loan for such Interest
Period,
then Lender shall give prompt notice of such determination to Borrower and, so
long as such condition remains in effect, the Lender shall be under no
obligation to make additional LIBOR Loans, to continue LIBOR Loans or to convert
Prime Rate Loans into LIBOR Loans, and Borrower shall, on the last day or days
of the then current Interest Period or Periods for the outstanding LIBOR Loans,
either prepay such LIBOR Loans or convert such LIBOR Loans into Prime Rate Loans
in accordance with Section 2.3.
(d) Notwithstanding any other provision of this Agreement, in
the event that it becomes unlawful or, by reason of a Change of Law, impossible
for Lender to honor its obligation to make or maintain LIBOR Loans, then Lender
shall promptly notify Borrower of such event and Lender's obligation to make or
to continue LIBOR Loans, or to convert Prime Rate Loans into LIBOR Loans shall
be suspended until such time as Lender may again make and maintain LIBOR Loans.
(e) If all or a portion of the outstanding principal amount of
the Obligations shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such outstanding amount, to the extent it is a LIBOR
Loan, shall be automatically converted to a Prime Rate Loan on the next
succeeding Business Day.
(f) The Borrower agrees to indemnify and to hold Lender
(including any participant ) harmless from any loss or expense which Lender or
such participant may sustain or incur as a consequence of: (i) an Event of
Default due to Borrower's failure to make payment of the principal amount of or
interest on any LIBOR Loans, as and when the same shall be due and payable in
accordance with the terms of this Agreement, including, but not limited to, any
such loss or expense arising from interest or fees payable by Lender or such
participant to lenders of
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funds obtained by either of them in order to maintain the LIBOR Loans hereunder;
(ii) default by the Borrower in making a borrowing or conversion after the
Borrower has given a Notice of LIBOR Borrowing; (iii) any prepayment of LIBOR
Loans on a day which is not the last day of the Interest Period applicable
thereto, including, without limitation, prepayments arising as a result of the
application of the proceeds of Collateral to the Revolving Loans; and (iv)
default by the Borrower in making any prepayment after the Borrower had given
notice to Lender thereof. The determination by Lender of the amount of any such
loss or expense, when set forth in a written notice to the Borrower, containing
Lender's calculations thereof in reasonable detail, shall be conclusive on the
Borrower in the absence of manifest error. Calculation of all amounts payable
under this paragraph with regard to LIBOR Loans shall be made as though Lender
had actually funded the LIBOR Loans through the purchase of deposits in the
relevant market and currency, as the case may be, bearing interest at the rate
applicable to such LIBOR Loans in an amount equal to the amount of the LIBOR
Loans and having a maturity comparable to the relevant interest period;
provided, however, that Lender may fund each of the LIBOR Loans in any manner
Lender sees fit and the foregoing assumption shall be used only for calculation
of amounts payable under this paragraph. In addition, notwithstanding anything
to the contrary contained herein, Lender shall apply all proceeds of Collateral
and all other amounts received by it from or on behalf of the Borrower (A)
initially to the Prime Rate Loans and (B) subsequently to LIBOR Loans; provided,
however, (1) upon the occurrence of an Event of Default or (2) in the event the
aggregate amount of outstanding Loans exceeds Net Availability or the applicable
maximum levels set forth therefor, Lender may apply all such amounts received by
it to the payment of Obligations in such manner and in such order as Lender may
elect in its reasonable business judgment. In the event that any such amounts
are applied to Revolving Loans which are LIBOR Loans, such application shall be
treated as a prepayment of such loans and Lender shall be entitled to
indemnification hereunder. This covenant shall survive termination of this
Agreement and payment of the outstanding Obligations.
2.5 Accommodations. Lender may, in its sole discretion reasonably
exercised, issue or cause to be issued, from time to time at Borrower's request
and on terms and conditions and for purposes satisfactory to Lender, credit
accommodations consisting of letters of credit, bankers' acceptances,
merchandise purchase guaranties or other guaranties or indemnities for
Borrower's account ("ACCOMMODATIONS"). Any payments made by Lender in connection
with the Accommodations shall constitute additional Revolving Loans to Borrower.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Interest shall accrue on the principal amount of the
Revolving Loans at the following rates: (i) during such periods as any such
Obligation is a Prime Rate Loan, at a fluctuating rate per annum equal to the
per annum rate set forth as the Interest Rate in Section 10.3(A); and (ii)
during such periods as any such Obligation is a LIBOR Loan, for each Interest
Period, at the per annum rate set forth as the Interest Rate in Section 10.3(B).
The Interest Rate on all Prime Rate Loans shall increase or decrease by an
amount equal to each increase or decrease, respectively, in the Prime Rate (as
defined below) effective as of the date of each such change. Interest on all
Obligations shall be calculated upon the closing daily outstanding principal
balances in the loan account(s) of Borrower for each day during the immediately
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preceding month and shall be payable by Borrower on the first day of each month
and, in the case of LIBOR Loans, additionally on the last day of each Interest
Period. On and after any Event of Default or termination hereof, interest on all
Obligations shall accrue at a rate equal to two percent (2%) per annum in excess
of the Interest Rate otherwise payable until such time as all Obligations are
paid in full. In no event shall charges constituting interest exceed the rate
permitted under any applicable law or regulation, and if any provision of this
Agreement is in contravention of any such law or regulation, such provision
shall be deemed amended to conform thereto.
(b) For purposes of this Section 3.1 and each other place
where such terms appear, the following terms shall have the respective meanings
set forth below:
"EURODOLLAR BUSINESS DAY" shall mean any Business Day on which
commercial lending institutions are open for international business
(including dealings in United States Dollar deposits) in London.
"EUROCURRENCY RESERVE REQUIREMENTS" for any day, as applied to
a LIBOR Loan, shall mean the aggregate (without duplication) of the
maximum rates of reserve requirements (expressed as a decimal fraction)
in effect with respect to Lender and/or any present or future lender or
participant on such day (including, without limitation, basic,
supplemental, marginal and emergency reserves under Regulation D or any
other applicable regulations of the Board of Governors of the Federal
Reserve System or other governmental authority having jurisdiction with
respect thereto, as now and from time to time in effect, dealing with
reserve requirements prescribed for Eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of such
Board) maintained by Lender and/or participants (such rate to be
adjusted to the nearest one sixteenth of one percent (1/16 of 1%) or,
if there is not a nearest one sixteenth of one percent (1/16 of 1%), to
the next higher one sixteenth of one percent (1/16 of 1%)).
"INTEREST PERIOD" shall mean, with respect to any LIBOR Loan,
a one month, two month or three month period commencing on the date
such LIBOR Loan is made or the date on which any Obligation begins to
bear interest based upon LIBOR and ending one month, two months or
three months thereafter, as applicable, as the Borrower may elect in
the applicable Notice of LIBOR Borrowing. Notwithstanding the foregoing
(i) no Interest Period may end after the initial Term or, if
applicable, any renewal Term; (ii) each Interest Period that would
otherwise end on a day which is not a Eurodollar Business Day shall end
on the next succeeding Eurodollar Business Day or, if such next
succeeding Eurodollar Business Day falls in the next succeeding
calendar month, on the next preceding Eurodollar Business Day, (iii)
any Interest Period that begins on the last Eurodollar Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month, at the end of such Interest
Period) shall end on the last Eurodollar Business Day of a calendar
month, and (iv) no Interest Period for any LIBOR Loan shall have a
duration of less than one month and, if the Interest Period for any
such LIBOR Loan would otherwise be a shorter period, such LIBOR Loan
shall not be available under this Agreement for such period.
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"LIBOR" shall mean, at any time of determination, and subject
to availability, for each applicable Interest Period, a variable rate
of interest equal to: (a) at Lender's election (i) the applicable LIBOR
quoted to Lender by The Chase Manhattan Bank (or any successor
thereof), or (ii) the rate of interest determined by Lender at which
deposits in U.S. dollars are offered for the relevant Interest Period
based on information presented on Telerate Systems at Page 3750 as of
11:00 A.M. (London time) on the day which is two (2) Business Days
prior to the first day of such Interest Period, provided that, if at
least two such offered rates appear on the Telerate System at Page 3750
in respect of such Interest Period, the arithmetic mean of all such
rates (as determined by Lender) will be the rate used; divided by (b) a
number equal to 1.0 minus the aggregate (but without duplication) of
the rates (expressed as a decimal fraction) of Eurocurrency Reserve
Requirements in effect on the day which is two (2) Business Days prior
to the beginning of such Interest Period.
"LIBOR LOANS" shall mean Revolving Loans that bear interest at
rates based on LIBOR.
"NOTICE OF LIBOR BORROWING" shall have the meaning given to
that term in Section 2.3 of this Agreement.
"PRIME RATE" is the rate of interest publicly announced by
Chase Manhattan Bank in New York, New York, or its successors and
assigns, from time to time as its prime rate or similar such
designation (such rate is not intended to be the lowest rate of
interest charged by such bank to its borrowers).
"PRIME RATE LOANS" shall mean loans that bear interest at
rates based upon the Prime Rate.
3.2 Fees. Borrower shall pay to Lender:
(a) Closing Fee. A closing fee fully earned and payable at
closing in the amount set forth in Section 10.3(D).
(b) Intentionally Deleted.
(c) Collateral Management Fee. A collateral management fee
fully earned and payable at closing and on each anniversary thereof in the
amount set forth in Section 10.3(f).
(d) Unused Line Fee. An unused line fee payable monthly, on
the first day of each month, in arrears, for each month at the rate per annum
set forth in Section 10.3(G), calculated upon the amount, if any, by which the
Unused Line Fee Basis exceeds the average outstanding daily principal balance
during the preceding month of all Revolving Loans, EXIM Revolving Loans and
Accommodations. The "Unused Line Fee Basis" means an amount equal to (i) for the
period beginning on the Closing Date through and including March 31, 2002,
$20,000,000, (ii) for the period beginning on April 1, 2002 through and
including March 31, 2003, $22,500,000, and (iii) beginning on April 1, 2003 and
at all times thereafter, the Maximum Credit.
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SECTION 4. GRANT OF SECURITY INTEREST
4.1 Grant of Security Interest. To secure the payment and performance
in full of all Obligations, Borrower hereby grants to Lender a continuing
security interest in, and lien upon, the Collateral.
4.2 "OBLIGATIONS" shall mean any and all Revolving Loans, EXIM
Revolving Loans and all other indebtedness, liabilities and obligations of every
kind, nature and description owing by Borrower to Lender and/or its affiliates,
including principal, interest, charges, fees and expenses, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, whether arising
under this Agreement or otherwise, whether now existing or hereafter arising,
whether arising before, during or after the initial or any renewal Term or after
the commencement of any case with respect to Borrower under the United States
Bankruptcy Code or any similar statute, whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, secured or unsecured, original, renewed or extended and whether
arising directly or howsoever acquired by Lender including from any other entity
outright, conditionally or as collateral security, by assignment, merger with
any other entity, participations or interests of Lender in the obligations of
Borrower to others, assumption, operation of law, subrogation or otherwise and
shall also include all amounts chargeable to Borrower under this Agreement or in
connection with any of the foregoing.
4.3 "COLLATERAL" shall mean all of the following property of Borrower:
(a) All of the Borrower's now owned and hereafter acquired:
(i) accounts (as defined in the UCC), and any and all other receivables (whether
or not specifically listed on schedules furnished to Lender), including, without
limitation, all accounts created by, or arising from, all of the Borrower's
sales, leases, rentals of goods or renditions of services to its customers,
including but not limited to, those accounts arising under any of the Borrower's
trade names or styles, or through any of the Borrower's divisions; (ii) any and
all instruments, documents, chattel paper (including electronic chattel paper);
(iii) unpaid seller's or lessor's rights (including rescission, replevin,
reclamation, repossession and stoppage in transit) relating to the foregoing or
arising therefrom; (iv) rights to any goods represented by any of the foregoing,
including rights to returned, reclaimed or repossessed goods; (v) reserves and
credit balances arising in connection with or pursuant hereto; (vi) guarantees,
supporting obligations, payment intangibles and letter of credit rights; (vii)
insurance policies or rights relating to any of the foregoing; (viii) all rights
to payment, including those arising in connection with bank and non-bank credit
cards and including any electronic media and software, pertaining to any and all
of the foregoing; (ix) notes, deposits or property of account debtors securing
the obligations of any such account debtors to the Borrower; and (x) cash and
non-cash proceeds (as defined in the UCC) of any and all of the foregoing
(herein "ACCOUNTS");
(b) All of the Borrower's now owned and hereafter acquired
inventory (as defined in the UCC) and including, without limitation, all
additions, substitutions and replacements thereof, wherever located, together
with all goods and materials used or usable in manufacturing, processing,
packaging or shipping same in all stages of production - from raw materials
through work-in-process to finished goods - and all proceeds thereof of whatever
sort (herein "INVENTORY");
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(c) to the extent related to the license granted to Lender
under Section 7.2 or as necessary, appropriate or desirable as determined by
Lender for the disposition of the Accounts and Inventory, all present and
hereafter acquired general intangibles (as defined in the UCC);
(d) Intentionally Deleted.
(e) All present and future documents (as defined in the UCC)
and any and all warehouse receipts, bills of lading, shipping documents, chattel
paper, instruments and similar documents, all whether negotiable or not and all
goods and Inventory relating thereto and all cash and non-cash proceeds of the
foregoing (herein "DOCUMENTS OF TITLE"); and
(f) All books and records of Borrower pertaining to any of the
foregoing.
SECTION 5. COLLECTION AND ADMINISTRATION
5.1 Collections. Borrower will, at its expense as Lender requests,
direct that all remittances and all other proceeds of Collateral be sent to a
lock box designated by Lender, and deposited into a bank account selected by
Lender with arrangements with the bank providing that all funds deposited in the
bank account are to be transferred solely to Lender. Borrower shall bear all
risk of loss of any funds deposited into such account. In connection therewith,
Borrower shall execute such lock box agreements as Lender shall specify. All
collections and all other proceeds of Collateral received by Borrower shall be
held in trust for Lender and immediately remitted to Lender in kind.
5.2 Charges to Loan Account. At Lender's option, all payments of
principal, interest, fees, costs, expenses and other charges provided for in
this Agreement, or in any other agreement now or hereafter existing between
Lender and Borrower, may be charged on the date when due to any loan account of
Borrower maintained by Lender. Interest, fees for Accommodations, the Unused
Line Fee and any other amounts payable by Borrower to Lender based on a per
annum rate shall be calculated on the basis of actual days elapsed over a
360-day year.
5.3 Payments. All Obligations shall be payable at Lender's Office set
forth in Section 10.5(A) or at such other place as Lender may expressly
designate in writing. Lender shall apply all proceeds of Collateral received by
Lender and all other payments in respect of the Obligations to the Revolving
Loans or to any other Obligations then due, in whatever order or manner Lender
shall determine, upon the date of Lender's receipt of advice from Lender's bank
that such remittances or other payments have been credited to Lender's account
or in the case of remittances or other payments received directly in kind by
Lender, upon the date of Lender's deposit thereof at Lender's bank, subject to
final payment and collection. In consideration thereof, Lender will charge the
Borrower's account with Collection Days which shall mean the number of days set
forth in Section 10.3(C) to provide for the deposit, clearance and collection of
checks or other instruments representing the proceeds of Collateral, the amount
of which has been credited to the Borrower's loan account, and for which
interest may be charged on the aggregate amount of such deposits, at the rate
provided for in Section 10.3(a). For purposes of this Agreement, "BUSINESS DAY"
shall mean any day on which Lender and Lender's banks are open.
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5.4 Loan Account Statements. Lender shall, monthly, render to Borrower
a loan account statement which shall be considered correct and binding upon
Borrower as an account stated, except to the extent that Lender receives, within
ninety (90) days after the mailing of such statement, written notice from
Borrower of any specific exceptions to that statement.
5.5 Direct Collections. Lender may, at any time, (a) after the
occurrence of an Event of Default (unless such Event of Default has been cured
to the extent permitted hereunder), notify any account debtor that the Accounts
and other Collateral have been assigned to Lender and that payment thereof is to
be made to the order of and directly to Lender, (b) send, or cause to be sent by
its designee, requests (which may identify the sender by a pseudonym) for
verification by telephone, in writing or otherwise of Accounts and other
Collateral directly to any account debtor or any other obligor or any bailee
with respect thereto, (c) after the occurrence of an Event of Default (unless
such Event of Default has been cured to the extent permitted hereunder), demand,
collect or enforce payment of any Accounts or such other Collateral, but without
any duty to do so, and Lender shall not be liable for any failure to collect or
enforce payment thereof, (d) after the occurrence of an Event of Default (unless
such Event of Default has been cured to the extent permitted hereunder), take or
bring, in the name of Lender or Borrower, all actions, suits or proceedings
deemed by Lender necessary or desirable to effect collection of, or other
realization upon, the Collateral, and (e) after an Event of Default, (i) change
the address for delivery of Borrower's mail and to receive and open mail
addressed to Borrower and (ii) extend the time of payment of, compromise or
settle (for cash, credit, return of merchandise), and upon any terms or
conditions, any and all Accounts or other Collateral and discharge or release
the account debtor or other obligor. At Lender's request, all invoices and
statements sent to any account debtor, other obligor or bailee, shall state that
the Accounts and such other Collateral have been assigned to Lender and are
payable directly and only to Lender.
5.6 Attorney-in-Fact. Borrower hereby appoints Lender as Borrower's
attorney-in-fact and authorizes Lender at Borrower's sole expense to exercise at
any time in Lender's discretion reasonably exercised all or any powers necessary
for Lender to obtain information about the Collateral or to enforce Lender's
rights which appointment and authorization shall be irrevocable until the
Obligations have been paid in full and Lender has no further obligation to
provide financial accommodations to Borrower.
5.7 Liability. Borrower hereby releases and exculpates Lender, its
officers, agents and employees from any liability arising from any acts under
this Agreement or in furtherance thereof except for gross negligence or willful
misconduct. Lender will not have any liability to Borrower for lost profits or
other special or consequential damages.
5.8 Administration of Accounts. After written notice by Lender to
Borrower or without notice after an Event of Default, Borrower shall not (a)
amend, modify, settle or compromise any of the Accounts, (b) release, in whole
or in part, any account debtor or other person liable for the payment of any
other Collateral or (c) grant any credits, discounts, allowances, deductions,
return authorizations or the like with respect to any Account or any other
Collateral.
5.9 Documents. Borrower shall deliver to Lender, as Lender may request,
all documents, schedules, invoices, proofs of delivery, purchase orders,
statements, contracts and all
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other information evidencing or relating to the Collateral, in form and
substance satisfactory to Lender and duly executed by Borrower. Borrower will
promptly report to Lender all credits, discounts, allowances, deductions, return
authorizations or the like. In no event shall any schedule or confirmatory
assignment (or the absence thereof or omission of any of the Accounts or other
Collateral therefrom) limit or in any way be construed as a waiver, limitation
or modification of the security interests or rights of Lender or the warranties,
representations and covenants of Borrower under this Agreement.
5.10 Access. Lender shall have access (a) upon 2 Business Days written
notice from Lender to Borrower and during reasonable business hours (absent an
Event of Default) and (b) after an Event of Default (unless cured to the extent
permitted hereunder) at any time during normal business hours to all of the
premises where Collateral is located for the purposes of inspecting or copying
the Collateral, and Borrower's books and records. Lender, at no charge, may use
such of Borrower's personnel, equipment, including computer equipment, programs,
printed output and computer readable media, supplies and premises for the
collection of Accounts and realization on other Collateral. Borrower hereby
authorizes all accountants and third parties to disclose and deliver to Lender,
at Borrower's expense, all financial information, books and records, work
papers, management reports and other information in their possession regarding
Borrower which authorization shall be irrevocable until the Obligations have
been paid in full and Lender has no further obligation to provide financial
accommodations to Borrower.
SECTION 6. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Borrower hereby represents, warrants and covenants to Lender the
following, the truth and accuracy of which, and compliance with which, shall be
continuing conditions of the making of loans or other credit accommodations by
Lender to Borrower:
6.1 Financial and Other Reports. Borrower shall: (a) keep and maintain
its books and records in accordance with generally accepted accounting
principles, consistently applied; (b) at its expense on or before the fifteenth
(15th) day of each month, deliver to Lender (i) true and complete monthly agings
of its Accounts and accounts payable; (ii) monthly Inventory reports; and (iii)
internally prepared interim financial statements consisting of a statement of
profit and loss, a balance sheet and statement of cash flow; (c) within 45 days
of the end of each fiscal quarter but concurrent with Borrower's quarterly
filings with the Securities and Exchange Commission, Borrower's internally
prepared financial statements consisting of a statement of profit and loss, a
balance sheet and statement of cash flow; (d) annually, as soon as available,
but in no event later than ninety (90) days after the end of Borrower's fiscal
year, deliver audited financial statements consisting of a statement of profit
and loss, a balance sheet and statement of cash flow accompanied by the report
and opinion thereon of independent certified public accountants reasonably
acceptable to Lender; (e) promptly upon request, provide financial statement
projections consisting of a statement of profit and loss, a balance sheet and
statement of cash flow in a format reasonably acceptable to Lender; and (f)
promptly notify Lender in writing of any loss, damage, investigation, action,
suit, proceeding or claim relating to a material portion of the Collateral or
which may result in any material adverse change in Borrower's business, assets,
liabilities or condition, financial or otherwise. All of the foregoing shall be
in such form, and together with such information, as Lender may reasonably
request.
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6.2 Books and Records. Borrower's (a) books and records concerning
Accounts and its chief executive office are and shall be maintained only at the
address set forth in Section 10.5(c), and (b) other places of business and the
only other locations of Collateral (including, without limitation, Borrower's
Inventory), are and shall be at the addresses set forth in Section 10.5(e)
hereof, except Borrower may change such locations or open a new place of
business after thirty (30) days prior written notice to Lender. Borrower shall
execute and deliver, or cause to be executed and delivered, to Lender such
financing statements, amendments and other agreements as Lender may reasonably
require.
6.3 Title; Liens. Borrower has, and at all times will continue to have,
good and marketable title to all of the Collateral, free and clear of all liens,
security interests, claims or encumbrances of any kind except in favor of Lender
or as set forth on Schedule A hereto.
6.4 Disposition of Assets. Borrower shall not directly or indirectly:
(a) sell, lease, transfer, assign or otherwise dispose of any Collateral or any
material portion of its other assets (other than sales of Inventory in the
ordinary course of business); (b) consolidate with, or merge with or into, any
other entity or permit any other entity to consolidate with or merge with or
into Borrower; or (c) form or acquire any interest in any firm, corporation or
other entity; provided that if no Event of Default has occurred unless such
Event of Default has been cured to the extent permitted herein Borrower may
undertake acquisitions of other business entities within the same industry as
Borrower without Lender's prior written approval, so long as (i) immediately
after giving effect to such acquisition, Borrower's Aggregate Excess
Availability plus unrestricted and unencumbered (other than liens in favor of
Lender) cash equivalents and cash (in U.S. Dollars in domestic bank accounts) of
the Borrower and its subsidiaries is no less than $7,500,000, (ii) the proforma
financial projections (which shall be in form and substance reasonably
acceptable to the Lender) of the Borrower and its subsidiaries on a consolidated
basis after giving effect to any such acquisition reflects that the proforma
consolidated unrestricted and unencumbered (other than liens in favor of Lender)
cash equivalents and cash (in U.S. Dollars in domestic bank accounts) of the
Borrower and its subsidiaries plus the Borrower's Aggregate Excess Availability
will be positive over the 12 months immediately following the completion of any
such acquisition, and (iii) Borrower executes any and all documents or
agreements or performs such acts as Lender may reasonably require to preserve
Lender's perfected first priority security interest in the assets of Borrower
and its rights and remedies under this Agreement and applicable law.
6.5 Insurance. Borrower shall at all times maintain, with insurers
reasonably acceptable to Lender, adequate insurance (including, without
limitation, at the option of Lender, flood insurance) with respect to the
Collateral and other assets. All insurance shall be in such form, substance,
amounts and coverage as may be satisfactory to Lender and shall provide for
thirty (30) days' prior written notice to Lender of cancellation or reduction of
coverage. Lender may adjust or settle any claim or other matter under or arising
pursuant to such insurance on the Collateral. Borrower shall provide evidence of
such insurance and a lender's loss payable endorsement satisfactory to Lender.
Lender may obtain, at Borrower's expense, such insurance should Borrower fail to
do so. Borrower shall deliver to Lender all proceeds of insurance received by
Borrower on the Collateral. Lender may apply any insurance proceeds received to
the cost of repairs to, or replacement of, any Collateral and/or, at Lender's
option, to payment of or as security for any of the Obligations in any order or
manner as Lender determines.
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6.6 Compliance With Laws. Borrower is, and at all times will, continue
to be in material compliance with the requirements of all laws, rules,
regulations and orders of any governmental authority relating to its business.
All of Borrower's Inventory shall be produced in accordance with the
requirements of the Federal Fair Labor Standards Act of 1938, as amended and all
rules, regulations and orders related thereto. Borrower shall pay and discharge
all taxes, assessments and governmental charges against Borrower or any
Collateral when due, unless the same are being contested in good faith. Lender
may establish Reserves for the amount contested and penalties which may accrue
thereon. Borrower shall not be deemed to have breached any provision of this
Section 6.6 if (i) the failure to comply with the requirements of this Section
6.6 resulted from good faith error or innocent omission, (ii) Borrower promptly
commences and diligently pursues a cure of such breach, and (iii) such failure
is cured within (30) days following Borrower's receipt of notice of such
failure, or if such breach cannot in good faith be cured within thirty (30)
days, then such breach is cured within a reasonable time frame based upon the
extent and nature of the breach and the necessary remediation, and in conformity
with any applicable consent order, consensual agreement and applicable law.
6.7 Accounts. All statements made and all unpaid balances and other
information appearing in the invoices, agreements, proofs of rendition of
services and delivery of goods and other documentation relating to the Accounts,
and all confirmatory assignments, schedules, statements of account and books and
records with respect thereto, are true and correct and in all respects what they
purport to be.
6.8 Equipment. Borrower shall keep its equipment in good order and
repair, ordinary wear and tear excepted.
6.9 Financial Covenants. Borrower shall maintain positive EBITDA
measured quarterly and calculated on a trailing four quarter basis; provided
that the above EBITDA requirement shall only be tested as of the end of a fiscal
quarter if, at any time in the following fiscal quarter, the sum of Borrower's
unrestricted and unencumbered (other than liens in favor of Lender) cash
equivalents and cash (in U.S. Dollars in domestic bank accounts) plus Borrower's
Aggregate Excess Availability was less than $7,500,000. "EBITDA" for any fiscal
period of Borrower means the net income of Borrower for such fiscal period, plus
interest expense, depreciation and amortization and provision for income taxes
for such fiscal period, and minus non-recurring miscellaneous income and plus
non-recurring and non-cash miscellaneous expenses, all calculated in accordance
with generally accepted accounting principles.
6.10 Affiliated Transactions. Borrower will not, directly or
indirectly: (a) lend or advance money or property to, guarantee or assume
indebtedness of, or invest (by capital contribution or otherwise) in any person,
firm, corporation or other entity; (b) declare, pay or make any cash dividend,
redemption or other cash distribution on account of any shares of any class of
stock of Borrower now or hereafter outstanding; (c) make any payment on the
principal amount of, or interest on, any indebtedness owing to any officer,
director, shareholder, or affiliate of Borrower; (d) make any loans or advances
to any officer, director, employee, shareholder or affiliate of Borrower; or (e)
enter into any sale, lease or other transaction with any officer, director,
employee, shareholder or affiliate of Borrower on terms that are less favorable
to Borrower than those which might be obtained at the time from persons who are
not an officer, director, employee, shareholder or affiliate of Borrower.
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6.11 Fees and Expenses. Borrower shall pay, on Lender's demand, all
reasonable costs, expenses, filing fees and taxes payable in connection with the
preparation, execution, delivery, recording, administration, collection,
liquidation, enforcement and defense of the Obligations, Lender's rights in the
Collateral, this Agreement and all other existing and future agreements or
documents contemplated herein or related hereto, including any amendments,
waivers, supplements or consents which may hereafter be made or entered into in
respect hereof, or in any way involving claims or defenses asserted by, or
against, Lender, including, but not limited to, the following: (a) all filing or
recording taxes and fees, documentary taxes, intangibles taxes and mortgage
recording taxes and fees; (b) all title insurance and other insurance premiums,
appraisal fees, fees incurred in connection with any environmental report, audit
or survey and search fees; (c) all fees as then in effect relating to the wire
transfer of loan proceeds and other funds and fees then in effect for returned
checks and credit reports; (d) all reasonable expenses and costs heretofore and
from time to time hereafter incurred by Lender during the course of periodic
field examinations of the Collateral and Borrower's operations including field
examiner travel, food and lodging, plus a per diem charge at the rate set forth
in Section 10.3(h) for Lender's examiners in the field and office; and (e) the
reasonable costs, disbursements and fees of in-house and outside counsel to
Lender, including but not limited to such reasonable fees and disbursements
incurred as a result of a workout, restructuring, reorganization, liquidation,
insolvency proceeding or litigation between the parties hereto, any third party
and in any appeals arising therefrom.
6.12 Further Assurances. At the request of Lender, at Borrower's sole
expense, Borrower shall execute and deliver, or cause to be executed and
delivered, to Lender such agreements, documents and instruments, including
waivers, consents and subordination agreements from mortgagees or other holders
of security interests or liens, landlords or bailees, and do, or cause to be
done, such further acts as Lender, in its discretion reasonably exercised, deems
necessary to effectuate the provisions and purposes of this Agreement. Borrower
hereby authorizes Lender to file financing statements or amendments against
Borrower in favor of Lender with respect to the Collateral without Borrower's
signature and to file as financing statements any carbon, photographic or other
reproduction of this Agreement. Without limiting the foregoing, the obligation
of Lender to make the initial advance hereunder is subject to, among other
things, the delivery or satisfaction in Lender's discretion reasonably exercised
of each of the following conditions, agreements and documents as applicable: (a)
a blocked or Lender bank account established for the proceeds of Collateral; (b)
the EXIM Loan Agreement has been executed by all the parties thereto and all the
conditions precedent therein have been satisfied; (c) Lender shall have received
the written waiver of the Export-Import Bank with respect to such matters as
Lender deems necessary or appropriate; (d) all Export-Import Bank approvals,
guaranties, waivers and other documentation shall have been executed and
delivered by all parties thereto and Lender shall be satisfied that the
Export-Import Bank Working Capital Guarantee Program is in effect with respect
to the Exim Revolving Loans; (e) on a best efforts basis, landlord waivers on
all of Borrower's domestic leased locations; (f) first priority lien on all of
the Collateral; (g) perfection in consigned Inventory to the extent requested by
Lender; (h) the Lender's satisfaction with the financial condition of the
Borrower and an updated examination of the books and records of the Borrower;
(i) the absence of any material adverse change in the financial condition,
business, prospects, profitability, assets (including, without limitation, the
Collateral) or operations of the Borrower as determined by Lender in its sole
discretion
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reasonably exercised; and (j) receipt by the Borrower of the proceeds from the
secondary common stock offering, which became effective on February 16, 2001.
6.13 Environmental Condition. None of Borrower's properties or assets
has ever been designated or identified pursuant to any environmental protection
statute as a hazardous waste or hazardous substance disposal site or a candidate
for closure pursuant to any environmental protection statute. No lien arising
under any environmental protection statute has attached to any revenues or to
any real or personal property owned by Borrower. Borrower has not received a
summons, citation, notice or directive from the Environmental Protection Agency
or any other federal or state governmental agency concerning any action or
omission by Borrower resulting in the releasing, or otherwise exposing of,
hazardous waste or hazardous substances into the environment. Borrower is, and
will continue to be, in material compliance with all statutes, regulations,
ordinances and other legal requirements pertaining to the production, storage,
handling, treatment, release, transportation or disposal of any hazardous waste
or hazardous substance.
6.14 State of Incorporation. If Borrower is a corporation, it is duly
organized, existing and in good standing under the laws of the state set forth
in Section 10.5(F).
SECTION 7. EVENTS OF DEFAULT AND REMEDIES
7.1 Events of Default. All Obligations shall be immediately due and
payable, without notice or demand, and any provisions of this Agreement as to
future loans and credit accommodations by Lender shall terminate automatically,
upon the termination of this Agreement or, at Lender's option, upon or at any
time after the occurrence or existence of any one or more of the following
"EVENTS OF DEFAULT":
(a) Borrower fails to pay when due any of the Obligations
within five (5) Business Days of the due date thereof; provided that nothing
contained herein shall prohibit Lender from charging such amounts to the
Borrower's loan account on the due date thereof;
(b) Breach by Borrower of any warranty, representation or
covenant contained herein or in any other written agreement between Borrower and
Lender (other than the Exim Loan Agreement), provided that, in the absence of
fraud, conversion and gross misrepresentation, such breach by Borrower of any of
the warranties, representations or covenants referred in this clause (b) shall
not be deemed to be an Event of Default unless and until such breach shall
remain unremedied to Lender's satisfaction for a period of seven (7) Business
Days from the date of such breach;
(c) Intentionally Deleted.
(d) Any judgment or judgments aggregating in excess of the
amount set forth in Section 10.5 (G) except to the extent such judgments are
fully covered by insurance without a reservation of rights or any injunction or
attachment is obtained against Borrower, which remains unstayed for a period of
ten (10) days (provided that such period shall be extended during such time as
any such judgment is being contested in good faith and by appropriate
proceedings so long as there has been no execution on any of Borrower's assets
by the judgment creditor);
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(e) Borrower ceases to exist or the usual business of Borrower
ceases or is suspended;
(f) Any acquisition by any group of persons (within the
meaning of the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
or by any person, of beneficial ownership (within the meaning of Rule 13d-3 of
the Exchange Act), directly or indirectly, of more than 50% of the issued and
outstanding capital stock of Borrower having the right to vote for the election
of directors of Borrower; or more than one-third of the persons who were
directors of Borrower on the first day of any period consisting of twelve (12)
consecutive calendar months (the first of which twelve (12) month periods
commencing on the first day of the month during which this Agreement was
executed), cease, for any reason other that death or disability, to be directors
of Borrower, and the board of directors as thereafter constituted is not
reasonably acceptable to Lender;
(g) Borrower becomes insolvent, makes an assignment for the
benefit of creditors, makes or sends notice of a bulk transfer or calls a
general meeting of its creditors or principal creditors;
(h) Any petition or application for any relief under the
bankruptcy laws of the United States now or hereafter in effect or under any
insolvency, reorganization, receivership, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction now or hereafter in effect
(whether at law or in equity) is filed by or against Borrower, provided that any
such petition or application filed against Borrower shall not be deemed an Event
of Default if such proceeding is controverted within ten (10) days and dismissed
and vacated within thirty (30) days of commencement, except in the event that
any of the actions sought in any such proceeding shall occur or Borrower shall
take action to authorize or effect any of the actions in any such proceeding;
(i) The indictment of Borrower under any criminal statute or
the commencement of (A) any criminal proceedings against Borrower or (B) civil
proceedings (under the Racketeer Influenced and Corrupt Organizations statutes,
18 U.S.C. ss.1961 et seq.) against Borrower pursuant to which statute or
proceedings the penalties or remedies sought or available include forfeiture of
any of the property of Borrower which forfeiture Lender believes could
reasonably be expected to have a material adverse effect on either of the
following: (x) Borrower's business or (y) Collateral with a market value in
excess of $250,000;
(j) Any default or event of default occurs on the part of
Borrower under any material agreement, document or instrument to which Borrower
is a party or by which Borrower or any of its property is bound which default or
event of default Lender believes may have a material adverse effect on the
Collateral or Borrower's business; or
(k) Any Event of Default under, and as defined in, the EXIM
Loan Agreement shall occur.
7.2 Remedies. Upon the occurrence of an Event of Default and at any
time thereafter, Lender shall have all default rights and remedies provided in
this Agreement, any other agreements between Borrower and Lender, the Uniform
Commercial Code (the "UCC") and
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other applicable law, all of which rights and remedies may be exercised without
notice to Borrower (except as otherwise required by applicable law), all such
notices being hereby waived, except such notice as is expressly provided for
hereunder or is not waivable under applicable law. All rights and remedies of
Lender are cumulative and not exclusive and are enforceable, in Lender's
discretion, alternatively, successively, or concurrently on any one or more
occasions and in any order Lender may determine. Without limiting the foregoing,
Lender may (a) accelerate the payment of all Obligations and demand immediate
payment thereof, (b) with or without judicial process or the aid or assistance
of others, enter upon any premises on or in which any of the Collateral may be
located and take possession of the Collateral or complete processing,
manufacturing and repair of all or any portion of the Collateral, (c) require
Borrower, at Borrower's expense, to assemble and make available to Lender the
Collateral at any place and time designated by Lender, (d) collect, foreclose,
receive, appropriate, setoff and realize upon any or all Collateral, or (e)
sell, lease, transfer, assign, or otherwise dispose of any or all Collateral
(including, without limitation, entering into contracts with respect thereto),
by public or private sales at any exchange, broker's board, any office of Lender
or elsewhere) at such prices and/or terms as Lender may deem reasonable, for
cash, upon credit or for future delivery, with the Lender having the right to
purchase the whole or any part of the Collateral at any such public sale, all of
the foregoing being free from any right or equity of redemption of Borrower,
which right or equity of redemption is hereby expressly waived and released by
Borrower. If any of the Collateral is sold or leased by Lender upon credit terms
or for future delivery, the Obligations shall not be reduced as a result thereof
until payment therefor is finally collected by Lender. If notice of disposition
of Collateral is required by law, ten (10) days prior notice by Lender to
Borrower designating the time and place of any public sale or the time after
which any private sale or other intended disposition of Collateral is to be
made, shall be deemed to be reasonable notice thereof and Borrower waives any
other notice. In the event Lender institutes an action to recover any Collateral
or seeks recovery of any Collateral by way of prejudgment remedy, Borrower
waives the posting of any bond which might otherwise be required. Lender is
hereby granted a license or other right to use, without charge, Borrower's
labels, patents, copyrights, rights of use of any name, trade secrets,
tradenames, trademarks and advertising matter, or any intellectual property of a
similar nature as it pertains to the Collateral, in advertising for sale and
selling, collecting on or otherwise disposing of any Collateral and Borrower's
rights under all licenses and all franchise agreements shall inure to Lender's
benefit.
7.3 Application of Proceeds. Lender may apply the cash proceeds of
Collateral received by Lender from any sale, lease, foreclosure or other
disposition of the Collateral to payment of any of the Obligations, in whole or
in part, and in such order as Lender may elect, whether or not then due.
Borrower shall remain liable to Lender for the payment of any deficiency
together with interest at the highest rate provided for herein and all costs and
expenses of collection or enforcement, including reasonable attorneys' fees and
legal expenses.
7.4 Lender's Cure of Third Party Agreement Default. Lender may, at its
option, cure any default by Borrower under any agreement with a third party or
pay or bond on appeal any judgment entered against Borrower, discharge taxes,
liens, security interests or other encumbrances at any time levied on, or
existing with respect to, the Collateral and pay any amount, incur any expense
or perform any act which, in Lender's sole judgment, is necessary or appropriate
to preserve, protect, insure, maintain, or realize upon the Collateral. Lender
may charge Borrower's loan account for any amounts so expended, such amounts to
be repayable by
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Borrower on demand. Lender shall be under no obligation to effect such cure,
payment, bonding or discharge, and shall not, by doing so, be deemed to have
assumed any obligation or liability of Borrower.
SECTION 8. JURY TRIAL WAIVER; CERTAIN OTHER WAIVERS AND CONSENTS
8.1 JURY TRIAL WAIVER. BORROWER AND LENDER EACH WAIVE ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING INSTITUTED BY EITHER OF THEM AGAINST
THE OTHER WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT. IN NO EVENT
WILL LENDER BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL
DAMAGES.
8.2 Counterclaims. Borrower waives all rights to interpose any claims,
deductions, setoffs or counterclaims of any kind, nature or description in any
action or proceeding instituted by Lender with respect to this Agreement, the
Obligations, the Collateral or any matter arising therefrom or relating thereto,
except compulsory counterclaims.
8.3 Jurisdiction. Borrower hereby irrevocably submits and consents to
the nonexclusive jurisdiction of the State and Federal Courts located in the
State in which the office of Lender designated in Section 10.5(a) is located and
any other State where any Collateral is located with respect to any action or
proceeding arising out of this Agreement, the Obligations, the Collateral or any
matter arising therefrom or relating thereto. In any such action or proceeding,
Borrower waives personal service of the summons and complaint or other process
and papers therein and agrees that the service thereof may be made by mail
directed to Borrower at its chief executive office set forth herein or other
address thereof of which Lender has received notice as provided herein, service
to be deemed complete five (5) days after mailing, or as permitted under the
rules of either of said Courts. Any such action or proceeding commenced by
Borrower against Lender will be litigated only in a Federal Court located in the
district, or a State Court in the State and County, in which the office of
Lender designated in Section 10.5(A) is located and Borrower waives any
objection based on FORUM NON CONVENIENS and any objection to venue in connection
therewith.
8.4 No Waiver by Lender. Lender shall not, by any act, delay, omission
or otherwise, be deemed to have expressly or impliedly waived any of its rights
or remedies unless such waiver shall be in writing and signed by an authorized
officer of Lender. A waiver by Lender of any right or remedy on any one occasion
shall not be construed as a bar to, or waiver of, any such right or remedy which
Lender would otherwise have on any future occasion, whether similar in kind or
otherwise.
SECTION 9. TERM OF AGREEMENT; MISCELLANEOUS
9.1 Term. This Agreement shall only become effective upon execution and
delivery by Borrower and Lender and shall continue in full force and effect for
a term set forth in Section 10.6 from the date hereof and shall be deemed
automatically renewed, as of the end of the initial or any renewal term (each a
"TERM"), based on the same terms and provisions for successive terms of equal
duration thereafter unless terminated by either party giving the other written
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notice at least sixty (60) days' prior to the end of the then current Term.
Neither this Agreement nor the EXIM Loan Agreement may be terminated singly.
9.2 Termination. Borrower may also terminate this Agreement by giving
Lender at least sixty (60) days prior written notice and payment in full of all
of the Obligations as provided herein, including any unpaid fees. If termination
is other than at the end of a Term, than Borrower shall also pay Lender the
Early Termination Fee set forth in Section 10.3(I) hereof. Sixty days after
receipt of such early termination notice, Lender need not make any further loans
or accommodations. Lender shall also have the right to terminate this Agreement
at any time upon or after the occurrence of an Event of Default. If Lender
terminates this Agreement upon or after the occurrence of an Event of Default,
Borrower shall pay Lender forthwith, in full, all Obligations, including the
Early Termination Fee, and any unpaid fees. Notwithstanding anything to the
contrary herein, the Borrower shall not be required to pay the Early Termination
Fee if (a) no Event of Default has occurred and is continuing at the time the
Obligations are paid in full and (b) the funds utilized to pay the Obligations
in full are (i) the proceeds of a public offering of the stock of Borrower
and/or (ii) from cash not obtained through a refinancing.
9.3 Termination Indemnity Deposit. Upon termination of this Agreement
by Borrower, as permitted herein, in addition to payment of all Obligations
which are not contingent, Borrower shall deposit such amount of cash collateral
as Lender determines is necessary to secure Lender from loss, cost, damage or
expense, including reasonable attorneys' fees, in connection with any open
Accommodations or remittance items or other payments provisionally credited to
the Obligations and/or to which Lender has not yet received final and
indefeasible payment.
9.4 Notices. Except as otherwise provided, all notices, requests and
demands hereunder shall be (a) made to Lender at its address set forth in
Section 10.5(A) and to Borrower at its chief executive office set forth in
Section 10.5(C), or to such other address as either party may designate by
written notice to the other in accordance with this provision, and (b) deemed to
have been given or made: if by hand, immediately upon delivery; if by facsimile,
immediately upon receipt; if by overnight delivery service, one day after
dispatch; and if by first class or certified mail, three (3) days after mailing.
9.5 Severability. If any provision of this Agreement is held to be
invalid or unenforceable, such provision shall not affect this Agreement as a
whole but this Agreement shall be construed as though it did not contain the
particular provision held to be invalid or unenforceable.
9.6 Entire Agreement; Amendments; Assignments. This Agreement contains
the entire agreement of the parties as to the subject matter hereof, all prior
commitments, proposals and negotiations concerning the subject matter hereof
being merged herein. Neither this Agreement nor any provision hereof shall be
amended, modified or discharged, orally or by course of conduct, but only by a
written agreement signed by an authorized officer of Lender. This Agreement
shall be binding upon, and inure to the benefit of, each of the parties hereto
and their respective successors and assigns, except that any obligation of
Lender under this Agreement shall not be assignable nor inure to the successors
and assigns of Borrower.
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9.7 Discharge of Borrower. No termination of this Agreement shall
relieve or discharge Borrower of its Obligations, grants of Collateral, duties
and covenants hereunder or otherwise until such time as all Obligations to
Lender have been indefeasibly paid and satisfied in full.
9.8 Usage. All terms used herein which are defined in the UCC shall
have the meanings given therein unless otherwise defined in this Agreement and
all references to the singular or plural herein shall also mean the plural or
singular, respectively.
9.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State in which the office of Lender set forth in
Section 10.5(a) below is located.
SECTION 10. ADDITIONAL DEFINITIONS AND TERMS
10.1
(a) Maximum Credit (including
any sums advanced under the
EXIM Loan Agreement): $25,000,000
(b) Gross Availability Formulas:
Eligible Accounts Percentage: 85% provided that the
Dilution Percentage does not exceed 5%. The Dilution
Percentage is the sum of Borrower's credits, allowances,
discounts, write-offs, contra-accounts and offsets and
deductions which reduce the value of Accounts divided by
gross invoices. The Dilution Percentage shall be
calculated on a rolling 90 day average. If the Dilution
Percentage exceeds 5%, then the Eligible Accounts
Percentage shall be reduced at Lender's discretion by such
excess Dilution Percentage and Lender may create a Reserve
for such excess.
(c) Intentionally Deleted.
(d) Maximum days after Invoice
Date for Eligible Accounts: 90 days
(e) Intentionally Deleted.
10.2 Intentionally Deleted.
10.3 Interest, Fees & Charges:
(a) Prime Rate Loan Interest Rate: Prime Rate plus .50% per annum
(b) LIBOR Loan Interest Rate: LIBOR plus 3.25% per annum
(c) Collection Days: One (1) Business Day
(d) Closing Fee: $200,000
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(e) Intentionally Deleted.
(f) Collateral Management Fee: $50,000
(g) Unused Line Fee: 0.50% per annum
(h) Field Examination per diem charge
per examiner: Not Applicable
(i) Early Termination Fee:
First year of closing: 2.0% of the Maximum Credit
Second year of closing: 1.0% of the Maximum Credit
Third year of closing: 1.0% of the Maximum Credit
10.4 Intentionally Deleted.
10.5 Offices and Locations
(a) Lender's Office: 000 X. Xxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxx, XX 00000
(b) Borrower: Adept Technology, Inc.
(c) Borrower's Chief Executive Office: 000 Xxxx Xxxxxxx Xxx
Xxx Xxxx, XX 00000
(d) Intentionally Deleted.
(e) Borrower's Other Offices and Locations
of Collateral: 0000 X. Xxxxxxx Xx.
Xxxxxx, Xxxxxxx 00000
(f) Borrower's State of Incorporation: California
(g) Judgment Amount $400,000
10.6 Term: Three (3) Years
10.7 As used in this Agreement, the following terms have the meanings
set forth below:
(a) "EXIM LOAN AGREEMENT" means that certain Loan and Security
Agreement (EXIM Facility) dated the date hereof between Borrower and The CIT
Group/Commercial Services, Inc. (on behalf of its affiliate, Lender).
(b) "EXIM REVOLVING LOANS" means the "Revolving Loans" under
and as defined in the EXIM Loan Agreement.
(c) "AGGREGATE EXCESS AVAILABILITY" means, at any time, the
sum of (i) Borrower's excess Net Availability under this Agreement and (ii)
Borrower's excess Net Availability under the EXIM Loan Agreement.
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IN WITNESS WHEREOF, Borrower and Lender have duly executed this
Agreement this 5th day of April, 2001.
LENDER: BORROWER:
THE CIT GROUP/ ADEPT TECHNOLOGY, INC.
BUSINESS CREDIT, INC.
By: /s/ Xxxxx Xx By: /s/ Xxxxxxx X. Xxxxxx
--------------- -----------------------
Title: VP Title: VP and CFO
---- ------------
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SCHEDULE A
PERMITTED LIENS
Secured Party UCC Filing No. Types of Collateral
------------- -------------- -------------------
Zions Credit Corporation Arizona Filing: 0974310-0 Leased Equipment
filed 6/30/97
Zions Credit Corporation Arizona Filing: 01008530-0 Leased Equipment
filed 3/17/98
Telogy, Inc. California Filing: 0016760535 Leased Equipment
filed 6/8/00
Zions Credit Corporation California Filing: 0017160255 Leased Equipment
filed 6/12/00
Zions Credit Corporation California Filing: 0017160245 Leased Equipment
filed 6/12/00
A-1
