1
REVOLVING CREDIT LOAN AGREEMENT
THIS REVOLVING CREDIT LOAN AGREEMENT made and delivered this _1st__
day of December, 1993, by and between SYMMETRICOM, INC. and COMERICA
BANK-CALIFORNIA.
WITNESSETH
WHEREAS, the Borrower desires to borrow up to Seven Million
Dollars ($7,000,000) from the Bank from time to time for the working
capital needs of the Borrower; and
WHEREAS, the Bank is willing to supply such financing subject to
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, the Borrower and the Bank agree as follows:
1. Definitions.
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following respective meanings:
"Accounts Receivable" shall mean and include all Accounts, Chattel
Paper and General Intangibles (including, but not limited to Tax
Refunds, trade names, trade styles and goodwill, trade marks, copyrights
and patents, and applications therefor, trade and proprietary secrets,
formulae, designs, blueprints and plans, customer lists, literary
rights, licenses and permits, receivables, insurance proceeds,
beneficial interests in trusts and minute books and other books and
records) now owned or hereafter acquired by Borrower.
"Affiliate" shall mean, when used with respect to any person, any
other person which, directly or indirectly, controls or is controlled by
or is under common control with such person. For purposes of this
definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), with respect to any
person, shall mean possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such
person, whether through the ownership of voting securities or by
contract or otherwise.
"Agreement" shall mean this Revolving Credit Loan Agreement.
"Bank" shall mean Comerica Bank- California, a California banking
corporation.
"Bankruptcy Code" shall mean Title 11 of the United States Code,
as amended, or any successor act or code.
"Borrower" shall mean SYMMETRICOM, INC., a California Corporation.
"Business Day" shall mean a day on which the Bank is open to carry
on its normal commercial lending business.
"Commitment Amount" shall mean, as of any applicable date of
determination, Seven Million Dollars ($7,000,000).
"Consolidated" or "consolidated" shall mean, when used with
reference to any financial term in this Agreement, the aggregate for two
or more persons of the amounts signified by such term for all such
persons determined on a consolidated basis in accordance with GAAP.
Unless otherwise specified herein, references to "consolidated"
financial statements or data of the Borrower includes consolidation with
its Subsidiaries in accordance with GAAP.
"Contract Rate" shall mean, as of any applicable date of
determination, the interest rate determined in accordance with Sections
2.4 and 2.5 of this Agreement.
"Current Assets" shall mean, as of any applicable date of
determination, all cash, non-affiliated customer receivables, United
States government securities, claims against the United States
government, and inventories.
"Current Liabilities" shall mean, as of any applicable date of
deter-mination, (i) all liabilities of a person that should be classified
as current in accordance with GAAP, including without limitation any
portion of the principal of the Note classified as current, plus (ii) to
the extent not otherwise included, all liabilities of the Borrower to
any of its Affiliates whether or not classified as current in accordance
with GAAP.
"Debt" shall mean, as of any applicable date of determination, all
items of indebtedness, obligation or liability of a person, whether
matured or unma-tured, liquidated or unliquidated, direct or indirect,
absolute or contingent, joint or several, that should be classified as
liabilities in accordance with GAAP.
"Default" shall mean a condition or event which, with the giving
of notice or the passage of time, or both, would become an Event of
Default.
"Disbursement Date" shall mean each date upon which the Bank makes
a loan to the Borrower under Section 2.1 of this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, or any successor act or code.
"Event of Default" shall mean any of those conditions or events
listed in Section 8.1 of this Agreement.
"Financial Statements" shall mean all those balance sheets,
earnings sta-tements and other financial data (whether of the Borrower,
any of its Subsidiaries, the Guarantor or otherwise) which have been
furnished to the Bank for the purposes of, or in connection with, this
Agreement and the transactions con-templated hereby.
"GAAP" shall mean, as of any applicable date of determination,
generally accepted accounting principles consistently applied.
"Guarantor" shall mean (jointly and severally if more than one)
TELECOM SOLUTIONS PUERTO RICO, INC. and LINFINITY MICROELECTRONICS INC.
"Guaranty" shall mean a guaranty (or separate guaranties) in the
form and content of Exhibit C to this Agreement pursuant to which the
Guarantor (jointly and severally if more than one) unconditionally
guarantees repayment to the Bank of all the Indebtedness.
"Indebtedness" shall mean all loans, advances, indebtedness,
obligations and liabilities of the Borrower to the Bank under this
Agreement, together with all other indebted-ness, obligations and
liabilities whatsoever of the Borrower to the Bank, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, due or to become due, now existing or
hereafter arising.
"Legal Rate" shall mean the maximum interest rate permitted to be
paid by the Borrower or received by the Bank with respect to the
Indebtedness represented by the Note under applicable law.
"Loan" shall mean the Revolving Loans.
"Net Income" shall mean the net income (or loss) of a person for
any period determined in accordance with GAAP but excluding in any
event:
(i) any gains or losses on the sale or other disposition,
not in the ordinary course of business, of investments or fixed or
capital assets, and any taxes on the excluded gains and any tax
deductions or credits on account on any excluded losses; and
(ii) in the case of the Borrower, net earnings of any
Person in which Borrower has an ownership interest, unless such net
earnings shall have actually been received by Borrower in the form of
cash distributions.
"Note" shall mean the Revolving Credit Note.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
person succeeding to the present powers and functions of the Pension
Benefit Guaranty Corporation.
"Permitted Liens" shall mean:
(a) Liens and encumbrances in favor of the Bank;
(b) Liens for taxes, assessments or other governmental
charges incurred in the ordinary course of business and for which no
interest, late charge or penalty is attaching or which is being
contested in good faith by appropriate proceedings and, if requested by
the Bank, bonded in an amount and manner satisfactory to the Bank;
(c) Liens, not delinquent, created by statute in connection
with worker's compensation, unemployment insurance, social security and
similar statutory obligations;
(d) Liens of mechanics, materialmen, carriers, warehousemen
or other like statutory or common law liens securing obligations
incurred in good faith in the ordinary course of business that are not
yet due and payable;
(e) Encumbrances consisting of existing or future zoning
restrictions, existing recorded rights-of-way, existing recorded
easements, existing recorded private restrictions or existing or future
public restrictions on the use of real property, none of which
materially impairs the use of such property in the operation of the
business for which it is used and none of which is violated in any
material respect by any existing or proposed structure or land use; and
(f) Existing liens as reported in the Financial Statements provided to the
Bank by Borrower; and
(g) Liens for the purchase or acquisition of fixed assets.
"Person" or "person" shall mean any individual, corporation,
partnership, joint ven-ture, association, trust, unincorporated
association, joint stock company, government, municipality, political
subdivision or agency, or other entity.
"Prime Rate" shall mean that annual rate of interest designated by
the Bank as its prime rate, which rate may not be the lowest rate of
interest charged by the Bank to any of its customers, and which rate is
changed by the Bank from time to time.
"Quarterly Operating Profits" shall mean operating profits (or
Loss) of a person for each quarter determined in accordance with GAAP.
"Quick Assets" shall mean, as of any applicable date of
determination, all cash, non-affiliated customer receivables, United
States government securities and claims against the United States
government.
"Revolving Credit Note" shall mean a promissory note conforming to
Section 2.3 of this Agreement and in the form and content of Exhibit E
to this Agreement.
"Revolving Loan" shall mean an advance made by the Bank to the
Borrower under Section 2.1 of this Agreement on a Disbursement Date.
"Subsidiary" shall mean any corporation (whether now existing or
hereafter organized or acquired) in which more than fifty percent (50%)
of the outstanding securities having ordinary voting power for the
election of directors, as of any applicable date of determination, shall
be owned directly, or indirectly through one or more Subsidiaries, by
the Borrower.
"Tangible Net Worth" shall mean, as of any applicable date of
deter-mination, the excess of (i) the net book value of all assets of a
person (other than patents, patent rights, trademarks, trade names,
franchises, copyrights, licenses, goodwill, and similar intangible
assets) after all appropriate deductions in accordance with GAAP
(including, without limitation, reserves for doubtful receivables,
obsolescence, depreciation and amortization), over (ii) all Debt of such
person.
"Tax Refunds" shall mean refunds or claims for refunds of any
taxes at any time paid by Borrower to the United States of America or
any state, city, county or other governmental entity.
"Termination Date" shall mean December 1, 1995 (or such earlier
date on which the Borrower shall permanently terminate the Bank's
commitment under Section 2.8.1 of this Agreement).
"UCC" shall mean Uniform Commercial Code of the State of
California (approved June 8, 1968) as amended.
"Working Capital" shall mean, as of any applicable date of
determination, Current Assets less Current Liabilities.
1.2 Accounting Terms. All accounting terms not specifically
defined in this Agreement shall be construed in accordance with GAAP.
1.3 Singular and Plural. Where the context herein requires, the
singular number shall be deemed to include the plural, the masculine
gender shall include the feminine and neuter genders, and vice versa.
2. Commitment, Interest and Fees.
2.1 Revolving Credit Commitment. Subject to the terms and
conditions of this Agreement, the Bank agrees to make loans to the
Borrower on a revolving basis in such amount as the Borrower shall
request pursuant to Section 2.2 of this Agreement at any time from the
date of this Agreement until the Termination Date, up to an aggregate
principal amount outstanding at any time not to exceed the lesser of the
Commitment Amount, provided that each Disbursement Date under this
Agreement must be a Business Day.
2.2 Borrowing Procedures.
2.2.1 Notice. The Borrower shall by telephone give the Bank
notice of the Borrower's desire for a Revolving Loan no later than 1:00
p.m. San Jose, California time in order to have the date of notice be
the Disbursement Date, otherwise the following Business Day shall be the
Disbursement Date. Such notice shall specify the principal amount of
the proposed advance for such Revolving Loan. Prior to such telephone
notice, Borrower shall have executed and delivered to the Bank a
Telephone Notice Authorization.
2.2.2 Bank Obligations. The Bank agrees to make the
Revolving Loan on the Disbursement Date established by notice to the
Bank from the Borrower conforming to the requirements of Section 2.2.1
by crediting the deposit account of the Borrower with the Bank specified
in the Advance & Payment Agreement in the amount of such Revolving Loan,
provided, however, that the Bank shall not be obligated if:
(a) Any of the conditions precedent set forth in
Section 4 of this Agreement shall not have been satisfied or waived by
the Bank in accordance with Section 9.3 of this Agreement, or
(b) Such proposed Revolving Loan would cause the
aggregate unpaid principal amount of the Revolving Loans outstanding
under this Agreement to exceed the Commitment Amount on the Disbursement
Date.
2.3 Revolving Credit Note. The Revolving Loans shall be
evidenced by the Revolving Credit Note, executed by the Borrower, dated
the date of this Agreement, payable to the Bank on the Termination Date
(unless sooner accelerated pursuant to the terms of this Agreement), and
in the principal amount of the original Commitment Amount. The date and
amount of each Revolving Loan made by the Bank and of each repayment of
principal thereon received by the Bank shall be recorded by the Bank in
its records. The aggregate unpaid principal amount so recorded by the
Bank shall constitute the best evidence of the principal amount owing
and unpaid on the Revolving Credit Note, provided, however, that the
failure by the Bank so to record any such amount or any error in so
recording any such amount shall not limit or otherwise affect the
obligations of the Borrower under this Agreement or the Note to repay
the principal amount of all the Revolving Loans together with all
interest accrued or accruing thereon.
2.4 Interest. The Revolving Credit Note shall bear interest on
the principal balance from time to time outstanding under the Revolving
Credit Note at a rate equal to the Prime Rate of the Bank until
maturity, whether by acceleration or otherwise, and thereafter at a rate
equal to three percent (3%) per annum plus the rate otherwise prevailing
hereunder, but in no event to exceed the Legal Rate. Interest shall be
payable to the extent then accrued on the first day of each consecutive
calendar month, beginning December 1, 1993, in the case of the Revolving
Credit Note until maturity (whether by acceleration or otherwise) and
from and after such maturity, on demand. The rate of interest
applicable to the Note shall change as and when the Bank's Prime Rate
changes.
2.5 Maximum Rate. At no time shall the Contract Rate payable on
the Revolving Credit Note be deemed to exceed the Legal Rate. In the
event any interest is charged or received by the Bank in excess of the
Legal Rate, the Borrower acknowledges that any such excess interest
shall be the result of an accidental and bona fide error, and such
excess shall first be applied to reduce the principal then unpaid
hereunder (in inverse order of their maturities if principal amounts are
due in installments); second, applied to reduce any obligation for other
indebtedness of the Borrower to the Bank; and third, any remaining
excess returned to the Borrower.
2.6 Fees.
2.6.1 Commitment Fee. The Borrower shall pay to the Bank a
commitment fee for the period from the date of this Agreement to and
including the Termination Date equal to Twenty Five Thousand Dollars
($25,000) per annum. Such commitment fee shall be payable in quarterly
installments on the first Business Day of each quarter, beginning
October 1, 1993, and on the Termination Date, for the periods ending on
such date.
2.7 Basis of Computation. The amount of all interest and fees
hereunder shall be computed for the actual number of days elapsed on the
basis of a year consisting of three hundred sixty (360) days.
2.8 Changes in Commitment and Prepayments.
2.8.1 Termination or Reduction in Commitment. The Borrower,
at any time and from time to time (except as may hereinafter be
provided), upon at least five (5) Business Days' prior written notice
received by the Bank, may permanently terminate the Bank's commitment to
make Revolving Loans under this Agreement or permanently reduce the
Commitment Amount by an integral multiple of One Hundred Thousand
Dollars ($100,000), provided, however, that the Borrower, on the
effective date of such termination or reduction, shall pay to the Bank,
in the case of a termination, the aggregate unpaid principal amount of
all Revolving Loans, or, in the case of a reduction, the amount, if any,
by which the aggregate unpaid principal amount of all Revolving Loans
exceeds the then reduced Commitment Amount, together in either case with
all interest accrued and unpaid on the principal amounts so prepaid, but
without other premium. The notice shall specify the Termination Date or
the reduced Commitment Amount and the effective date of the reduction,
as the case may be. The Borrower may not revoke any such notice of
termination or reduction without the prior written consent of the Bank.
2.10 Basis of Payments. All sums payable by the Borrower to the
Bank under this Agreement or the other documents contemplated hereby
shall be paid directly to the Bank at its principal office set forth
Section 9.10 hereof in immediately available United States funds,
without set off, deduction or coun-terclaim. In its sole discretion, the
Bank may charge any and all deposit or other accounts (including without
limit an account evidenced by a certificate of deposit) of the Borrower
with the Bank for all or a part of any Indebtedness then due; provided,
however, that this authorization shall not affect the Borrower's
obligation to pay, when due, any Indebtedness whether or not account
balances are sufficient to pay amounts due.
2.11 Receipt of Payments. Any payment of the Indebtedness made
by mail will be deemed tendered and received only upon actual receipt by
the Bank at the address designated for such payment, whether or not the
Bank has authorized payment by mail or any other manner, and shall not
be deemed to have been made in a timely manner unless received on the
date due for such payment, time being of the essence. The Borrower
expressly assumes all risks of loss or liability resulting from non-
delivery or delay of delivery of any item of payment transmitted by mail
or in any other manner. Acceptance by the Bank of any payment in an
amount less than the amount then due shall be deemed an acceptance on
account only, and the failure to pay the entire amount then due shall be
and continue to be an Event of Default, and at any time thereafter and
until the entire amount then due has been paid, the Bank shall be
entitled to exercise any and all rights conferred upon it herein upon
the occurrence of an Event of Default. The Borrower waives the right to
direct the application of any and all payments at any time or times
hereafter received by the Bank from or on behalf of the Borrower. The
Borrower agrees that the Bank shall have the continuing exclusive right
to apply and to reapply any and all payments received at any time or
times hereafter against the Indebtedness in such manner as the Bank may
deem advisable, notwithstanding any entry by the Bank upon any of its
books and records. The Borrower expressly agrees that to the extent
that the Bank receives any payment or benefit and such payment or
benefit, or any part thereof, is subsequently invalidated, declared to
be fraudulent or preferential, set aside or is required to be repaid to
a trustee, receiver, or any other party under any bankruptcy act, state
or federal law, common law or equitable cause, then to the extent of
such payment or benefit, the Indebtedness or part thereof intended to be
satisfied shall be revived and continued in full force and effect as if
such payment or benefit had not been made and, further, any such
repayment by the Bank, to the extent that the Bank did not directly
receive a corresponding cash payment, shall be added to and be
additional Indebtedness payable upon demand by the Bank.
4. Conditions Precedent to Obligations of Bank.
4.1 Conditions to First Disbursement. The obligations of the
Bank under this Agreement are subject to the occurrence, prior to or
simultaneously with the Disbursement Date first occurring, of each of
the following conditions:
4.1.1 Documents Executed and Filed. The Borrower shall have
exe-cuted (or caused to be executed) and delivered to the Bank and, as
appropriate, there shall have been filed or recorded with such filing or
recording offices as the Bank shall deem appropriate, the following:
(a) The Revolving Credit Note;
(b) The Guaranty:
1. TELECOM SOLUTIONS PUERTO RICO, INC.;
2. LINFINITY MICROELECTRONICS Inc.;
(c) The Corporate Resolution Authorizing Execution
Of Guaranty:
1. TELECOM SOLUTIONS PUERTO RICO, INC.;
2. LINFINITY MICROELECTRONICS Inc.;
(d) The Loan Disbursement Order;
(e) The Advance & Payment Agreement;
4.1.2 Certified Resolutions. If the Borrower is a
corporation, the Borrower shall have furnished to the Bank a copy of
resolutions of the Board of Directors of the Borrower authorizing the
execution, delivery and performance of this Agreement, the borrowing
hereunder, the Revolving Credit Note and any other documents
contemplated by this Agreement, which shall have been certified by the
Secretary or Assistant Secretary of the Borrower as of the Disbursement
Date first occurring as being complete, accurate and in effect. If the
Borrower is a partnership, the Borrower shall have furnished to the Bank
a copy of resolutions of the partners of the Borrower authorizing the
execution, delivery and performance of this Agreement, the borrowing
hereunder, the Revolving Credit Note and any other documents
contemplated by this Agreement, which shall have been certified by the
general partners of the Borrower as of the Disbursement Date first
occurring as being complete, accurate and in effect.
4.1.3 Certified Articles/Partnership Certificate. If the
Borrower is a corporation, the Borrower shall have furnished to the Bank
a copy of the Articles of Incorporation including all amendments thereto
and restatements thereof, and all other charter documents of the
Borrower, all of which shall have been certified by the California
Secretary of State as of a date within thirty days of the Disbursement
Date first occurring. If the Borrower is a general partnership, the
Borrower shall have furnished to the Bank a copy of the Certificate of
Co-Partnership and all other documents required to be filed by the
Borrower to create a general partnership, including all amendments
thereto and restatements thereof, all of which shall have been certified
by the office of the county clerk or other appropriate filing office as
of a date within thirty days of the Disbursement Date first occurring.
If the Borrower is a limited partnership, the Borrower shall have
furnished to the Bank a copy of the Certificate of Limited Partnership
and all other documents required to be filed by the Borrower to create a
limited partnership, including all amendments thereto and restatements
thereof, all of which shall have been certified by the California
Secretary of State or other appropriate filing office as of a date
within thirty days of the Disbursement Date first occurring.
4.1.4 Certified Bylaws/Partnership Agreement. If the
Borrower is a corporation, the Borrower shall have furnished to the Bank
a copy of the Bylaws of the Borrower, including all amendments thereto
and restatements thereof, which shall have been certified by the
Secretary or Assistant Secretary of the Borrower as of the Disbursement
Date first occurring as being complete, accurate and in effect. If the
Borrower is a partnership, the Borrower shall have furnished to the Bank
a copy of the partnership agreement of the Borrower, including all
amendments thereto and restatements thereof, which shall have been
certified to by the general partners of the Borrower as of the
Disbursement Date first occurring as being complete, accurate and in
effect.
4.2 Conditions to All Disbursements. The obligations of the
Bank to make any Revolving Loan on any Disbursement Date, including, but
not limited to, the Disbursement Date first occurring, are subject to
the occurrence, prior to or on the Disbursement Date related to such
Revolving Loan, of each of the following conditions:
4.2.3 Bank Satisfaction. The Bank shall not know or have
any reason to believe that, as of such Disbursement Date:
(a) Any Default or Event of Default has occurred and
is continuing;
(b) Any warranty or representation set forth in
Section 5 of this Agreement shall not be true and correct; or
(c) Any provision of law, any order of any court or
other agency of government on any regulation, rule or interpretation
thereof shall have had any material adverse effect on the validity or
enforceability of this Agreement, the Revolving Credit Note, the
Guaranty, the Corporate Resolution To Borrow, the Corporate Resolution
Authorizing Execution Of Guaranty by (i) TELECOM SOLUTIONS PUERTO RICO, INC.
and
(ii) LINFINITY MICROELECTRONICS Inc. or the other documents
contemplated hereby.
5. Warranties and Representations.
On a continuing basis from the date of this Agreement until the
later of the Termination Date or when the Indebtedness is paid in full
and the Borrower has performed all of its other obligations hereunder,
the Borrower represents and warrants to the Bank that:
5.1 Corporate Existence and Power. (a) The Borrower and
the Guarantor are a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and California,
(b) the Borrower, its Subsidiaries and the Guarantor each has the power
and authority to own its properties and assets and to carry out its
business as now being conducted and is qualified to do business and in
good standing in every jurisdiction wherein such qualification is
necessary and (c) the Borrower has the power and authority to execute,
deliver and perform this Agreement, to borrow money in accordance with
its terms, to execute, deliver and perform the Revolving Credit Note
and other documents contemplated hereby, to grant to the Bank liens and
security interests in the Collateral as hereby contemplated and to do
any and all other things required of it hereunder.
5.2 Authorization and Approvals. The execution, delivery and
performance of this Agreement, the borrowings hereunder and the
execution, delivery and performance of the Revolving Credit Note, the
Guaranty, and other documents contemplated hereby (a) have been duly
authorized by all requisite corporate action of the Borrower, (b) will
not violate any provision of law, any order of any court or other agency
of government, the Articles of Incorporation or Bylaws of the Borrower,
any provision of any indenture, note, agreement or other instrument to
which the Borrower is a party, or by which it or any of its properties
or assets are bound, (c) will not be in conflict with, result in a
breach of or constitute (with or without notice or passage of time) a
default under any such inden-ture, note, agreement or other instrument,
and (d) will not result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Borrower other than in favor of the Bank and
as contemplated hereby. References to the "Borrower" in this Section
5.2 shall instead be deemed to be references to the Guarantor as the
case may be, with respect to the Guaranty.
5.3 Valid and Binding Agreement. This Agreement is, and the
Revolving Credit Note, the Corporate Resolution To Borrow, the Corporate
Resolution Authorizing Execution Of Guaranty by (i) Telecom Solutions Puerto
Rico,
Inc. and (ii) Linfinity Microelectronics Inc. or the other documents
contemplated hereby will be, when delivered, valid and binding obli-
gations of the Borrower, and the Guaranty will be valid and binding
obligations of the Guarantor in accordance with their terms.
5.4 Actions, Suits or Proceedings. There are no actions, suits
or proceedings, at law or in equity, and no pro-ceedings before any
arbitrator or by or before any governmental commission, board, bureau,
or other administrative agency, pending, or, to the best knowledge of
the Borrower, threatened against or affecting the Borrower, any of its
Subsidiaries or the Guarantor or any properties or rights of the
Borrower, any of its Subsidiaries or the Guarantor, which, if adversely
determined, could materially impair the right of the Borrower, any of
its Subsidiaries or the Guarantor to carry on business substantially as
now conducted or could have a material adverse effect upon the financial
condition of the Borrower, any of its Subsidiaries or the Guarantor.
5.6 Accounting Principles. All consolidated and consolidating
balance sheets, earnings statements and other financial data furnished
to the Bank for the purposes of, or in connection with, this Agreement
and the transactions contemplated by this Agreement, have been prepared
in accordance with GAAP, and do or will fairly present the financial
condition of the Borrower, its Subsidiaries and the Guarantor, as of the
dates, and the results of their operations for the periods, for which
the same are furnished to the Bank. Without limiting the generality of
the foregoing, the Financial Statements have been prepared in accordance
with GAAP (except as disclosed therein) and fairly present the financial
condition of the Borrower, its Subsidiaries and, if relevant, the
Guarantor as of the dates, and the results of its operations for the
fiscal periods, for which the same are furnished to the Bank. The
Borrower has no material con-tingent obligations, liabilities for taxes,
long-term leases or unusual for-ward or long-term commitments not
disclosed by, or reserved against in, the Financial Statements.
5.7 Financial Condition. The Borrower and the Guarantor is each
solvent, able to pay its debts as they mature, has capital sufficient to
carry on its business and has assets the fair market value of which
exceed its liabilities, and neither the Borrower nor the Guarantor will
be rendered insolvent, under-capitalized or unable to pay maturing debts
by the execution or performance of this Agreement, the Guaranty or the
other documents contemplated hereby. There has been no material adverse
change in the business, properties or condition (financial or otherwise)
of the Borrower, any of its Subsidiaries or the Guarantor since the date
of the latest of the Financial Statements.
5.8 Conditions Precedent. As of each Disbursement Date, all
appropriate conditions precedent referred to in Section 4 hereof shall
have been satisfied or waived in writing by the Bank.
5.9 Taxes. The Borrower, its Subsidiaries and the Guarantor has
each filed by the due date therefor all federal, state and local tax
returns and other reports it is required by law to file, has paid or
caused to be paid all taxes, assessments and other governmental charges
that are shown to be due and payable under such returns, and has made
adequate provision for the payment of such taxes, assessments or other
governmental charges which have accrued but are not yet payable. The
Borrower has no knowledge of any deficiency or assessment in connection
with any taxes, assessments or other governmen-tal charges not adequately
disclosed in the Financial Statements.
5.10 Compliance with Laws. The Borrower, its Subsidiaries and
the Guarantor has each complied with all applicable laws, to the extent
that failure to comply would materially interfere with the conduct of
the business of the Borrower, any of its Subsidiaries or the Guarantor.
5.11 Indebtedness. Except as disclosed in the Financial Statements, neither
the Borrower, any of its Subsidiaries nor the Guaranto
has any indebtedness for money borrowed or any direct or indirect
obligations under any leases (whether or not required to be capita-lized
under GAAP) or any agreements of guarantee or surety except for the
endorsement of negotiable instruments by the Borrower, its Subsidiaries
or the Guarantor in the ordinary course of business for deposit or
collection.
5.12 Material Agreements. Except as disclosed in the Financial Statements,
neither the Borrower, any of its Subsidiaries nor the
Guarantor has any material leases, contracts or commit-ments of any kind
(including, without limitation, employment agreements, collective
bargaining agreements, powers of attorney, distribution contracts,
patent or trademark licenses, contracts for future purchase or delivery
of goods or rendering of services, bonus, pension and retirement plans,
or accrued vacation pay, insurance and welfare agreements); to the best
knowledge of Borrower, all parties to such agreements have complied with
the provisions of such leases, contracts or commitments; and to the best
knowledge of the Borrower, no party to such agreements is in default
thereunder, nor has there occurred any event which with notice or the
passage of time, or both, would constitute such a default.
5.13 Margin Stock. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System,
and no part of the proceeds of any loan hereunder will be used, directly
or indirectly, to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock or
for any other purpose which might violate the provisions of Regulation
G, T, U or X of the said Board of Governors. The Borrower does not own
any margin stock.
5.14 Pension Funding. Neither the Borrower, any of its
Subsidiaries nor the Guarantor has incurred any accumu-lated funding
deficiency within the meaning of ERISA or incurred any liability to the
PBGC in connection with any employee benefit plan established or
maintained by the Borrower, any of its Subsidiaries or the Guarantor and
no reportable event or prohibited transaction, as defined in ERISA, has
occurred with respect to such plans.
5.15 Misrepresentation. No warranty or representation by the
Borrower contained herein or in any certificate or other document
furnished by the Borrower pursuant hereto contains any untrue statement
of material fact or omits to state a material fact necessary to make
such warranty or represen-tation not misleading in light of the
circumstances under which it was made. There is no fact which the
Borrower has not disclosed to the Bank in writing which materially and
adversely affects nor, so far as the Borrower can now foresee, is likely
to prove to affect materially and adversely the business, operations,
properties, prospects, profits or condition (financial or otherwise) of
the Borrower, any of its Subsidiaries or the Guarantor or ability of the
Borrower to perform this Agreement or the ability of the Guarantor to
perform the Guaranty.
5.19 No Conflicting Agreements. Neither the Borrower, any of its
Subsidiaries nor the Guarantor is in default under any shareholder
agreement, preferred stock agreement or any other agreement to which it
is a party or by which it or any of its property is bound, the effect of
which might have a material adverse effect on the business or operations
of the Borrower, any of its Subsidiaries or the Guarantor. No provision
of the Certificate of Incorporation, By-Laws or preferred stock, if any,
of the Borrower, and no provision of any existing mortgage, indenture,
note, contract, agreement, statute (including, without limitation, any
applicable usury or similar law), rule, regulation, judgment, decree or
order binding on the Borrower or affecting the property of the Borrower
conflicts with, or requires any consent under, or would in any way
prevent the execution, delivery or carrying out of the terms of, this
Agreement and the documents contemplated hereby, and the taking of any
such action will not constitute a default under, or result in the
creation or imposition of, or obligation to create any lien upon the
property of the Borrower pursuant to the terms of any such mortgage,
indenture, note, contract or agreement.
6. Affirmative Covenants.
On a continuing basis from the date of this Agreement until the
later of the Termination Date or when the Indebtedness is paid in full
and the Borrower has performed all of its other obligations hereunder,
the Borrower covenants and agrees that it will:
6.1 Financial and Other Information.
6.1.1 Annual Financial Reports. Furnish to the Bank, in
form and reporting basis satisfactory to the Bank, not later than ninety
(90) days after the close of each fiscal year of the Borrower, beginning
with the fiscal year ending June 30, 1994, financial statements of the
Borrower on a consolidated basis containing the
balance sheet of the Borrower as of the close of each such fiscal year,
statements of income and retained earnings and a statement of cash flows
for each such fiscal year, and such other comments and financial details
as are usually included in similar reports. Such reports shall be
prepared in accordance with GAAP by independent certified public
accountants of recognized standing selected by the Borrower and
acceptable to the Bank and shall contain unqualified opinions as to the
fairness of the statements therein contained.
6.1.2 Quarterly Financial Statements. Furnish to the Bank
not later than forty-five (45) days after the close of each quarter of
each fiscal year of the Borrower, beginning with the fiscal quarter
ending December 31, 1993, financial statements on a consolidated basis
containing the balance sheet of the Borrower as of
the end of each such period, statements of income and retained earnings
of the Borrower and a statement of cash flows of the Borrower for the
portion of the fiscal year up to the end of such period, and such other
comments and financial details as are usually included in similar
reports. These statements shall be prepared on the same accounting
basis as the statements required in Section 6.1.1 of this Agreement and
shall be in such detail as the Bank may reasonably require, and the
accuracy of the statements shall be certified by the chief executive or
financial officer of the Borrower.
6.1.4 Aging of Accounts Certificate. In the event that
Indebtedness exceeds $3,500,000.00 Borrower shall furnish to the Bank by
the 15th of each month an aging of Borrower's Accounts Receivable as of
the end of the preceding month in a form satisfactory to the Bank.
6.1.8 Adverse Events. Promptly inform the Bank of the
occurrence of any Default or Event of Default, or of any other
occurrence which has or could reasonably be expected to have a
materially adverse effect upon the Borrower's or any of its
Subsidiaries' business, properties, or financial condition or upon the
Borrower's ability to comply with its obligations hereunder.
6.1.9 Shareholder Reports. Promptly furnish to the Bank
upon becoming available a copy of all financial statements, reports,
notices, proxy statements and other communications sent by the Borrower
or any of its Subsidiaries to their stockholders, and all regular and
periodic reports filed by the Borrower or any of its Subsidiaries with
any securities exchange, the Securities and Exchange Commission or any
governmental authorities succeeding to any or all of the functions of
said Commission or Bureau.
6.1.10 Management Letters. Furnish to the Bank,
promptly upon receipt thereof, copies of all management letters and
other reports of substance submitted to the Borrower or any of its
Subsidiaries by independent certified public accountants in connection
with any annual or interim audit of the books of the Borrower or any of
its Subsidiaries.
6.1.11 Other Information As Requested. Promptly
furnish to the Bank such other information regarding the operations,
business affairs and financial condition of the Borrower and its
Subsidiaries as the Bank may reasonably request from time to time and
permit the Bank, its employees, attorneys and agents, to inspect all of
the books, records and properties of the Borrower and its Subsidiaries
at any reasonable time. References in Section 6 to "the chief executive
or financial officer" shall mean "the general partners" where the
Borrower is a partnership.
6.3 Taxes. Pay promptly and within the time that they can be
paid without late charge, penalty or interest all taxes, assessments and
similar imposts and charges of every kind and nature lawfully levied,
assessed or imposed upon the Borrower or its Subsidiaries, and their
property, except to the extent being contested in good faith and, if
requested by the Bank, bonded in an amount and manner satisfactory to
the Bank. If the Borrower shall fail to pay such taxes and assessments
within the time they can be paid without penalty, late charge or
interest the Bank shall have the option to do so, and the Borrower
agrees to repay the Bank upon demand, with interest at the Contract
Rate, all amounts so expended by the Bank.
6.4 Maintain Corporation and Business. Do or cause to be done
all things necessary to preserve and keep in full force and effect the
Borrower's and each of its Subsidiaries' corporate existence, rights and
franchises and comply with all applicable laws; continue to conduct and
operate its and each of its Subsidiaries' business substantially as
conducted and operated during the present and preceding calendar year;
at all times maintain, preserve and protect all franchises and trade
names and preserve all the remainder of its and its Subsidiaries'
property and keep the same in good repair, working order and condition;
and from time to time make, or cause to be made, all needed and proper
repairs, renewals, replacements, betterments and improvements thereto so
that the business carried on in connection therewith may be properly and
advantageously con-ducted at all times.
6.5 Maintain Tangible Net Worth. On a consolidated and non-
consolidated basis, maintain a Tangible Net Worth for it of not less
than the amounts specified during the periods specified below:
(a) $35,000,000.00 from the date of this Agreement until
December 1, 1995.
6.6 Maintain Debt Ratio. On a consolidated
basis, maintain the ratio of its Debt to Tangible Net Worth at not more
than 1.00 to 1.00.
6.7 Maintain Quick Ratio. On a consolidated basis, maintain the ratio of its
Quick Assets to Current
Liabilities at not less than 1.25 to 1.00.
6.8 Maintain Profitability. On a consolidated basis, Quarterly Operating
Profits shall be greater than
zero if the prior quarter's Quarterly Operating Profits were less than
zero.
6.10 ERISA. (a) At all times meet and cause each of the
Subsidiaries to meet the minimum funding requirements of ERISA with
respect to the Borrower's and Subsidiaries' employee benefit plans
subject to ERISA; (b) promptly after the Borrower knows or has reason to
know (i) of the occurrence of any event, which would constitute a
reportable event or prohibited transaction under ERISA, or (ii) that the
PBGC or the Borrower has instituted or will institute proceedings to
terminate an employee pension plan, deliver to the Bank a certificate of
the chief financial officer of the Borrower setting forth details as to
such event or proceedings and the action which the Borrower proposes to
take with respect thereto, together with a copy of any notice of such
event which may be required to be filed with the PBGC; and (c) furnish
to the Bank (or cause the plan administrator to furnish the Bank) a copy
of the annual return (including all schedules and attachments) for each
plan covered by ERISA, and filed with the Internal Revenue Service by
the Borrower not later than ten (10) days after such report has been so
filed.
6.11 Use of Loan Proceeds. Use the proceeds of the loan
hereunder only for the purposes set forth in the recitals to this
Agreement.
7. Negative Covenants.
On a continuing basis from the date of this Agreement until the
later of the Termination Date or when the Indebtedness is paid in full
and the Borrower has performed all of its other obligations hereunder,
the Borrower covenants and agrees that it will not, and will not permit
any Subsidiary to:
7.3 Stock Acquisition. Purchase, redeem, retire or otherwise
acquire any of the shares of its capital stock, or make any commitment
to do so in excess of $1,000,000 in any given fiscal year.
7.4 Liens and Encumbrances. Create, incur, assume or suffer to
exist any mortgage, pledge, encumbrance, security interest, lien or
charge of any kind upon any of its property or assets (including without
limit any charge upon property purchased or acquired under a conditional
sales or other title retaining agreement or lease required to be
capitalized under GAAP) whether now owned or hereafter acquired other
than Permitted Liens.
7.5 Indebtedness. Incur, create, assume or permit to exist any
indebtedness or liability on account of deposits or advances or any
indebtedness or liability for borrowed money, or any other indebtedness
or liability evidenced by notes, bonds, debentures or similar
obligations, or any other indebtedness whatsoever, except for (a) the
Indebtedness, (b) indebtedness subordinated to the prior payment in full
of the Indebtedness upon terms and conditions approved in writing by the
Bank, (c) existing indebtedness to the extent set forth on attached
Schedule 5.11, (d) trade indebtedness incurred and paid in the ordinary
course of business, (e) contingent indebtedness to the extent permitted
by Section 7.7 of this Agreement, and (f) indebtedness secured by
Permitted Liens.
7.6 Extension of Credit. Make loans, advances or extensions of
credit to any Person, except for sales on open account and otherwise in
the ordinary course of business.
7.7 Guarantee Obligations. Guarantee or otherwise, directly or
indirectly, in any way be or become responsible for obligations of any
other Person, whether by agreement to purchase the indebtedness of any
other Person, agreement for the furnishing of funds to any other Person
through the fur-nishing of goods, supplies or services, by way of stock
purchase, capital contribution, advance or loan, for the purpose of
paying or discharging (or causing the payment or discharge of) the
indebtedness of any other Person, or otherwise, except for the
endorsement of negotiable instruments by the Borrower in the ordinary
course of business for deposit or collection; and except for aggregate
guarantees not to exceed $500,000 at any one point in time.
7.8 Subordinate Indebtedness. Subordinate any indebtedness due
to it from a Person to indebtedness of other creditors of such Person.
7.9 Acquire Securities. Purchase or hold beneficially any stock
or other securities of, or make any investment or acquire any interest
whatsoever in, any other Person, except for the common stock of the
Subsidiaries owned by the Borrower on the date of this Agreement and
except for certificates of deposit with maturities of one year or less
of United States commercial banks with capital, surplus and undivided
profits in excess of $100,000,000 and except for money market funds mutually
agreed to by Bank and Borrower, and direct obligations
States Government maturing within one year from the date of acquisition
thereof.
7.12 Pension Plan. (a) Allow any fact, condition or event to
occur or exist with respect to any employee pension or profit sharing
plans established or maintained by it which might constitute grounds for
termination of any such plan or for the court appointment of a trustee
to administer any such plan, or (b) permit any such plan to be the
subject of termination proceedings (whether voluntary or involuntary)
from which termination proceedings there may result a liability of the
Borrower or any of its Subsidiaries to the PBGC which, in the opinion of
the Bank, will have a materially adverse effect upon the operations,
business, property, assets, financial condition or credit of the
Borrower or any of its Subsidiaries.
7.13 Misrepresentation. Furnish the Bank with any certificate or
other document that contains any untrue statement of a material fact or
omits to state a material fact necessary to make such certificate or
document not misleading in light of the circumstances under which it was
furnished.
7.14 Margin Stock. Apply any of the proceeds of the Note to the
purchase or carrying of any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, or
any regulations, interpretations or rulings thereunder.
8. Events of Default, Enforcement, Application of Proceeds.
8.1 Events of Default. The occurrence of any of the following
events shall constitute an Event of Default hereunder:
8.1.1 Failure to Pay Monies Due. If the Borrower shall fail
to pay, when due, any principal or interest under the Revolving Credit
Note or any taxes, insurance or other amount payable by the Borrower
under this Agreement or if the Borrower, any of its Subsidiaries or the
Guarantor shall fail to pay, when due, any indebtedness, obligation or
liability whatsoever of the Borrower, any of its Subsidiaries or the
Guarantor to the Bank.
8.1.2 Misrepresentation. If any warranty or representation
of the Borrower in connection with or contained in this Agreement, or if
any financial data or other information now or hereafter furnished to
the Bank by or on behalf of the Borrower, shall prove to be false or
misleading in any material respect.
8.1.3 Noncompliance with Bank Agreement. If the Borrower,
any of its Subsidiaries or the Guarantor shall fail to perform in the
time and manner required any of its obligations or cove-nants under, or
shall fail to comply with any of the provisions of, this Agreement or
any other agreement with the Bank to which it may be a party, which does
not involve the failure to make a payment when due (be it principal,
interest, taxes, insurance or otherwise) and which is not cured by the
Borrower within thirty (30) days after the earlier of the date of notice
to the Borrower by the Bank of such Default or the date the Bank is
notified, or should have been notified pursuant to the Borrower's
obligation under Section 6.1.8 hereof, of such Default.
8.1.4 Other Defaults. If the Borrower, any of its
Subsidiaries or the Guarantor shall default in the payment when due of
any of its indebted-ness (other than to the Bank) or in the observance or
performance of any term, covenant or condition in any agreement or
instrument evidencing, securing or relating to such indebtedness, and
such default be continued for a period sufficient to permit acceleration
of the indebtedness, irrespective of whether any such default shall be
forgiven or waived or there has been acceleration by the holder thereof.
8.1.5 Judgments. If there shall be rendered against the
Borrower, any of its Subsidiaries or the Guarantor one or more judgments
or decrees involving an aggregate liability of One Million Dollars
($1,000,000.00) or more, which has or have become non-appealable and
shall remain undischarged, unsatisfied by insurance and unstayed for
more than thirty (30) days, whether or not consecutive; or if a writ of
attachment or garnishment against the pro-perty of the Borrower, any of
its Subsidiaries or the Guarantor shall be issued and levied in an
action claiming One Million Dollars ($1,000,000.00) or more and not
released or appealed and bonded in an amount and manner satisfactory to
the Bank within thirty (30) days after such issuance and levy.
8.1.6 Business Suspension, Bankruptcy, Etc. If the
Borrower, any of its Subsidiaries or the Guarantor shall voluntarily
suspend transaction of its business; or if the Borrower, any of its
Subsidiaries or the Guarantor shall not pay its debts as they mature or
shall make a general assignment for the benefit of creditors; or
proceedings in bankruptcy, or for reorganization or liquidation of the
Borrower, any of its Subsidiaries or the Guarantor under the Bankruptcy
Code or under any other state or federal law for the relief of debtors
shall be commenced or shall be commenced against the Borrower, any of
its Subsidiaries or the Guarantor and shall not be discharged within
thirty (30) days of commencement; or a receiver, trustee or custodian
shall be appointed for the Borrower, any of its Subsidiaries or the
Guarantor or for any substantial portion of their respective properties
or assets.
8.1.8 Inadequate Funding or Termination of Employee Benefit
Plan(s). If the Borrower, any of its Subsidiaries or the Guarantor shall
fail to meet its minimum funding requirements under ERISA with respect
to any employee benefit plan established or maintained by it, or if any
such plan shall be subject of termination proceedings (whether voluntary
or involuntary) and there shall result from such termination proceedings
a liability of Borrower, any of its Subsidiaries or the Guarantor to the
PBGC which in the opinion of the Bank will have a materially adverse
effect upon the operations, business, property, assets, financial
condition or credit of the Borrower, any of its Subsidiaries or the
Guarantor, as the case may be.
8.1.9 Occurrence of Certain Reportable Events. If there
shall occur, with respect to any pension plan maintained by the
Borrower, any of its Subsidiaries or the Guarantor any reportable event
(within the meaning of Section 4043(b) of ERISA) which the Bank shall
determine constitutes a ground for the termination of any such plan, and
if such event continues for thirty (30) days after the Bank gives
written notice to the Borrower, provided that termination of such plan
or appointment of such trustee would, in the opi-nion of the Bank, have a
materially adverse effect upon the operations, business, property,
assets, financial condition or credit of the Borrower, any of its
Subsidiaries or the Guarantor, as the case may be.
8.2 Acceleration of Indebtedness; Remedies. Upon the
occurrence of an Event of Default, all Indebtedness shall be due and
payable in full immediately at the option of the Bank without
presentation, demand, pro-test, notice of dishonor or other notice of any
kind, all of which are hereby expressly waived. Unless all of the
Indebtedness is then immediately fully paid, the Bank shall have and may
exercise any one or more of the rights and remedies for which provision
is made for a secured party under the UCC, under the Security
Agreements, the Continuing Collateral Mortgage or under any other
document contemplated hereby or for which provision is provided by law
or in equity, including, without limitation, the right to take
possession and sell, lease or otherwise dispose of any or all of the
Collateral and to set off against the Indebtedness any amount owing by
the Bank to the Borrower and/or any property of the Borrower in
possession of the Bank. The Borrower agrees, upon request of the Bank,
to assemble the Collateral and make it available to the Bank at any
place designated by the Bank which is reasonably convenient to the Bank
and the Borrower.
8.3 Application of Proceeds. All of the Indebtedness shall
constitute one loan secured by the Bank's security interest in the
Collateral and by all other security interests, mortgages, liens,
claims, and encumbrances now and from time to time hereafter granted
from the Borrower to the Bank. Upon the occurrence of an Event of
Default which is not cured within the cure period, if any, provided
under Section 8.2, the Bank may in its sole discretion apply the
Collateral to any portion of the Indebtedness. The proceeds of any sale
or other disposition of the Collateral authorized by this Agreement
shall be applied by the Bank, first upon all expenses authorized by the
UCC or otherwise in connection with the sale and all reasonable
attorneys' fees and legal expenses incurred by the Bank; the balance of
the proceeds of such sale or other disposition shall be applied in the
payment of the Indebtedness, first to interest, then to principal, then
to other Indebtedness and the surplus, if any, shall be paid over to the
Borrower or to such other Person or Persons as may be entitled thereto
under applicable law. The Borrower shall remain liable for any
deficiency, which the Borrower shall pay to the Bank immediately upon
demand.
8.4 Cumulative Remedies. The remedies provided for herein are
cumulative to the remedies for collection of the Indebtedness as
provided by law, in equity or by any mortgage, security agreement or
other document contemplated hereby. Nothing herein contained is
intended, nor shall it be construed, to preclude the Bank from pursuing
any other remedy for the recovery of any other sum to which the Bank may
be or become entitled for the breach of this Agreement by the Borrower.
9. Miscellaneous.
9.1 Independent Rights. No single or partial exercise of any
right, power or privilege hereunder, or any delay in the exercise
thereof, shall preclude other or further exercise of the rights of the
parties to this Agreement.
9.2 Covenant Independence. Each covenant in this Agreement
shall be deemed to be independent of any other covenant, and an
exception or illegality in one cove-nant shall not create an exception or
illegality in another covenant.
9.3 Waivers and Amendments. No forbearance on the part of the
Bank in enforcing any of its rights under this Agreement, nor any
renewal, extension or rearrangement of any payment or covenant to be
made or performed by the Borrower hereunder, shall constitute a waiver
of any of the terms of this Agreement or of any such right. No Default
or Event of Default shall be waived by the Bank except in a writing
signed and delivered by an officer of the Bank, and no waiver of any
other Default or Event of Default shall operate as a waiver of any
Default or Event of Default or of the same Default or Event of Default
on a future occasion. No other amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement or the Note or
other documents contemplated hereby shall be effective unless the same
shall be in writing and signed and delivered by an officer of the Bank.
9.4 Governing Law. This Agreement, and each and every term and
provi-sion hereof, shall be governed by and construed in accordance with
the internal law of the State of California. If any provisions of this
Agreement shall for any reason be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision
hereof, but this Agreement shall be construed as if such invalid or
unenforceable provisions had never been contained herein.
9.5 Survival of Warranties, Etc. All of the Borrower's
covenants, agreements, representations and warranties made in connection
with this Agreement and any document contemplated hereby shall survive
the borrowing and the delivery of the Note hereunder and shall be deemed
to have been relied upon by the Bank, notwithstanding any investigation
heretofore or hereafter made by the Bank. All statements contained in
any certificate or other docu-ment delivered to the Bank at any time by
or on behalf of the Borrower pur-suant hereto or in connection with the
transactions contemplated hereby shall constitute representations and
warranties by the Borrower in connection with this Agreement.
9.6 Costs and Expenses. The Borrower agrees that it will
reimburse the Bank, upon demand, for all costs and expenses incurred by
the Bank in connection with (i) collecting or attempting to collect the
Indebtedness or any part thereof, (ii) maintaining or defending the
Bank's security interests or liens (or the priority thereof), (iii) the
enforcement of the Bank's rights or remedies under this Agreement or the
other documents contemplated hereby, (iv) the preparation or making of
any amendments, modifications, waivers or consents with respect to this
Agreement or the other documents contemplated hereby, and/or (v) any
other matters or proceedings arising out of or in connection with any
lending arrangement between the Bank and the Borrower, which costs and
expenses include without limit payments made by the Bank for taxes,
insurance, assessments, or other costs or expenses which the Borrower is
required to pay under this Agreement or the other documents contemplated
hereby; expenses related to the examination of the Collateral; audit
expenses; court costs and reasonable attorneys' fees (whether in-house
or outside counsel is used, whether legal assistants are used, and
whether such costs are incurred in formal or informal collection
actions, federal bankruptcy proceedings, probate proceedings, on appeal
or otherwise); and all other costs and expenses of the Bank incurred in
connection with any of the foregoing.
9.7 Payments on Saturdays, Etc. Whenever any payment to be made
hereunder shall be stated to be due on a Saturday, Sunday or any other
day which is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension, if any, shall be included
in computing interest in connection with such payment.
9.8 Binding Effect. This Agreement shall inure to the benefit
of and shall be binding upon the parties hereto and their respective
successors and assigns; provided, however, that the Borrower may not
assign or transfer its rights or obligations hereunder without the prior
written consent of the Bank.
9.9 Maintenance of Records. The Borrower will keep all of its
records concerning its business operations and accounting at its
principal place of business. The Borrower will give the Bank prompt
written notice of any change in its principal place of business, or in
the location of its records.
9.10 Notices. All notices and communications provided for herein
or in any document contemplated hereby or required by law to be given
shall be in writing (unless expressly provided to the contrary) and, if
personally delivered, effective when delivered at the address below or,
in the case of mailing, effective two (2) days after sending by first
class mail, postage prepaid, addressed as follows: (a) If to the
Borrower, to: 85 West Tasman Drive, San Jose, CA 95134; and (b) if to
the Bank, to: Pier 33 South Bulkhead, San Francisco, CA 94111; or to
such other address as a party shall have designated to the other in
writing in accordance with this section. The giving of at least five
(5) days notice before the Bank shall take any action described in any
notice shall conclusively be deemed reasonable for all purposes;
provided, that this shall not be deemed to require the Bank to give five
day notice or any notice if not specifically required in this Agreement.
9.11 Counterparts. This Agreement may be signed in any number of
coun-terparts with the same effect as if the signatures were upon the
same instrument.
9.12 Headings. Article and section headings in this Agreement
are included for the convenience of reference only and shall not
constitute a part of this Agreement for any purpose.
9.13 Release and Discharge. Upon full payment of the
Indebtedness and performance by the Borrower of all its other
obligations hereunder, the parties shall thereupon automatically each be
fully, finally and forever released and discharged from any claim,
liability or obligation in connection with this Agreement and the other
documents contemplated hereby.
9.14 Waiver of Jury Trial. The Borrower and the Bank hereby
irrevocably waive the right to trial by jury with respect to any and all
actions or proceedings at any time in which the Borrower and the Bank
are parties arising out of this Agreement or the other documents
contemplated hereby.
9.15 Integration. This Agreement, Master Revolving Note,
Security Agreements, Financing Statements, and such other agreements,
documents and instruments as may be executed in connection herewith
shall supersede all prior negotiations, agreements and commitments with
respect to the subject matter hereof. In the event of a conflict
between this Agreement and any other agreement between the parties, this
Agreement shall govern.
9.16 Further Assurances. Borrower shall execute such instruments
and documents as Bank may request from time to time, and take such other
actions to perfect and continue the security interest granted hereunder
and otherwise to effect the purposes of this Agreement.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this
Agreement to be executed by their duly authorized officers as of the day
and year first written above.
By: /s/ William D. Rasdal By: /s/ J. Scott Kamsler
_____________________ ____________________
William D. Rasdal J. Scott Kamsler
Its: Chief Executive Officer Its: Chief Financial Officer
COMERICA BANK-California
By: /s/ Greg Atkinson
_________________
Greg Atkinson
Its: Corporate Banking Officer
LIST OF EXHIBITS
EXHIBIT E - Revolving Credit Note
EXHIBIT E
REVOLVING CREDIT MASTER NOTE
$7,000,000.00San Francisco, California
December __1__, 1993
FOR VALUE RECEIVED, the undersigned promises to pay to the order
of COMERICA BANK-CALIFORNIA (the "Bank") at Pier 33 South Bulkhead, San
Francisco, California, on December __1_, 1993, the principal sum or so
much of the principal sum of Seven Million Dollars ($7,000,000.00) as
may from time to time have been advanced and be outstanding under that
certain Revolving Credit Loan Agreement dated December _1__, 1993,
between the undersigned and the Bank (the "Agreement") plus all accrued
but unpaid interest thereon.
The unpaid principal amount of this Note shall bear interest at
the rate provided in Section 2.4 of the Agreement, which Agreement, as
it may be amended from time to time, is by this reference incorporated
herein and made a part hereof. Interest shall be payable to the extent
accrued on the first day of each consecutive calendar month, beginning
December 1, 1993, until maturity (whether by acceleration or otherwise)
and, thereafter, on demand at a rate equal to three percent (3%) per
annum plus the rate otherwise prevailing hereunder, but in no event to
exceed the Legal Rate (as defined in the Agreement).
This Note is a Master Note under which sums may or must be repaid
from time to time and under which new advances are to be made by the
Bank pursuant to the terms and conditions of the Agreement, and the
books and records of the Bank shall constitute the best evidence of the
amount of the indebtedness at any time owing hereunder.
The Bank is hereby granted a security interest in all property of
the undersigned at any time in the possession of the Bank or any
Affiliate (as defined in the Agreement) of the Bank (or as to which the
Bank or any Affiliate of the Bank at any time controls possession by
documents or otherwise) and in all balances of deposit or other accounts
(including without limit an account evidenced by a certificate of
deposit) of the undersigned from time to time with the Bank or any
Affiliate of the Bank.
If an Event of Default (as defined in the Agreement) occurs and is
not cured within the time, if any, provided for by the Agreement, the
Bank may exercise any one or more of the rights and remedies granted by
the Agreement or any document contemplated thereby or given to a secured
party under applicable law, including without limit the right to
accelerate this Note and any other Indebtedness (as defined in the
Agreement), and may set off against the principal of and interest on
this Note or against any other Indebtedness (i) any amount owing by the
Bank to the undersigned, (ii) any property of the undersigned at any
time in the possession of the Bank or any Affiliate of the Bank and
(iii) any amount in any deposit or other account (including without
limit an account evidenced by a certificate of deposit) of the
undersigned with the Bank or any Affiliate of the Bank.
The undersigned and all accommodation parties, guarantors and
indorsers (i) waive presentment, demand, protest and notice of dishonor,
(ii) agree that no extension or indulgence to the undersigned or release
or non-enforcement of any security, whether with or without notice,
shall affect the obligations of any accommodation party, guarantor or
indorser, and (iii) agree to reimburse the holder of this note for any
and all costs and expenses incurred in collecting or attempting to
collect any and all principal and interest under this Note (including,
but not limited to, court costs and reasonable attorney fees, whether
in-house or outside counsel is used and whether such costs and expenses
are incurred in formal or informal collection actions, federal
bankruptcy proceedings, appellate proceedings, probate proceedings, or
otherwise). This Note shall be governed by and construed in accordance
with the laws of the State of California.
IN WITNESS WHEREOF, the undersigned has executed this Note as of
the ___1__ day of December, 1993.
By: /s/ William D. Rasdal
_____________________
William D. Rasdal
Its: Chief Executive Officer
By: /s/ J. Scott Kamsler
____________________
J. Scott Kamsler
Its: Chief Financial Officer