Exhibit 10.50
BUSINESS LOAN AGREEMENT (ASSET BASED)
BORROWER: VIVITAR CORPORATION LENDER: DBS BANK LTD., LOS ANGELES AGENCY
520 GRAVES AVE 445 SOUTH FIGUEROA STREET
OXNARD, CA 93030 SUITE 3550
LOS ANGELES, CA 90071
THIS BUSINESS LOAN AGREEMENT (ASSET BASED) DATED DECEMBER 26, 2006, IS MADE AND
EXECUTED BETWEEN VIVITAR CORPORATION ("BORROWER") AND DBS BANK LTD., LOS ANGELES
AGENCY ("LENDER") ON THE FOLLOWING TERMS AND CONDITIONS. BORROWER HAS RECEIVED
PRIOR COMMERCIAL LOANS FROM LENDER OR HAS APPLIED TO LENDER FOR A COMMERCIAL
LOAN OR LOANS OR OTHER FINANCIAL ACCOMMODATIONS, INCLUDING THOSE WHICH MAY BE
DESCRIBED ON ANY EXHIBIT OR SCHEDULE ATTACHED TO THIS AGREEMENT ("LOAN").
BORROWER UNDERSTANDS AND AGREES THAT: (A) IN GRANTING, RENEWING, OR EXTENDING
ANY LOAN, LENDER IS RELYING UPON BORROWER'S REPRESENTATIONS, WARRANTIES, AND
AGREEMENTS AS SET FORTH IN THIS AGREEMENT; (B) THE GRANTING, RENEWING, OR
EXTENDING OF ANY LOAN BY LENDER AT ALL TIMES SHALL BE SUBJECT TO LENDER'S SOLE
JUDGMENT AND DISCRETION; AND (C) ALL SUCH LOANS SHALL BE AND REMAIN SUBJECT TO
THE TERMS AND CONDITIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL APPLY TO ANY
AND ALL PRESENT AND FUTURE LOANS, LOAN ADVANCES, EXTENSION OF CREDIT, FINANCIAL
ACCOMMODATIONS AND OTHER AGREEMENTS AND UNDERTAKINGS OF EVERY NATURE AND KIND
THAT MAY BE ENTERED INTO BY AND BETWEEN BORROWER AND LENDER NOW AND IN THE
FUTURE.
TERM. This Agreement shall be effective as of December 26, 2006, and shall
continue in full force and effect until such time as all of Borrower's Loans in
favor of Lender have been paid in full, including principal, interest, costs,
expenses, attorneys' fees, and other fees and charges, or until June 30, 2007.
LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, subject to the
limitation set forth under the paragraph entitled "Other Credit Facilities and
Amount". Within the foregoing limits, Borrower may borrow, partially or wholly
prepay, and reborrow under this Agreement as follows:
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make any
Advance to or for the account of Borrower under this Agreement is subject
to the following conditions precedent, with all documents, instruments,
opinions, reports, and other items required under this Agreement to be in
form and substance satisfactory to Lender:
(1) Lender shall have received evidence that this Agreement and all
Related Documents have been duly authorized, executed, and delivered
by Borrower to Lender.
(2) Lender shall have received such opinions of counsel, supplemental
opinions, and documents as Lender may request.
(3) The security interests in the Collateral shall have been duly
authorized, created, and perfected with first lien priority and shall
be in full force and effect.
(4) All guaranties required by Lender for the credit facility(ies)
shall have been executed by each Guarantor, delivered to Lender, and
be in full force and effect.
(5) Lender, at its option and for its sole benefit, shall have
conducted an audit of Borrower's Accounts, Inventory, books, records,
and operations, and Lender shall be satisfied as to their condition.
(6) Borrower shall have paid to Lender all fees, costs, and expenses
specified in this Agreement and the Related Documents as are then due
and payable, including without limitation the following loan fees:
NONREFUNDABLE OF LOAN FEE OF $35,000.00 AND NONREFUNDABLE OF
DOCUMENTATION FEE OF $750.00.
(7) There shall not exist at the time of any Advance a condition which
would constitute an Event of Default under this Agreement, and
Borrower shall have delivered to Lender the compliance certificate
called for in the paragraph below titled "Compliance Certificate."
MAKING LOAN ADVANCES. Advances under this credit facility, as well as
directions for payment from Borrower's accounts, may be requested orally or
in writing by authorized persons. Lender may, but need not, require that
all oral requests be confirmed in writing. Each Advance shall be
conclusively deemed to have been made at the request of and for the benefit
of Borrower (1) when credited to any deposit account of Borrower maintained
with Lender or (2) when advanced in accordance with the instructions of an
authorized person. Lender, at its option, may set a cutoff time, after
which all requests for Advances will be treated as having been requested on
the next succeeding Business Day.
CONDITION OF EACH ADVANCE. For each drawdown request or each advance
request, Borrower must submit the current Borrowing Base certificate,
Accounts Receivable (including aging) and accounts payable (including
aging) to Lender at least 1 business day prior to the date of each
drawdown.
MANDATORY LOAN REPAYMENTS. If at any time the aggregate principal amount of
the credit extended hereunder exceeds the limit set forth under the
paragraph entitled "Other Credit Facilities and Amount", Borrower,
immediately upon written or oral notice from Lender, shall pay to Lender an
amount equal to the difference between the aggregate outstanding principal
balance and the Borrowing Base. On the Expiration Date, Borrower shall pay
to Lender in full the aggregate unpaid principal amount of all Advances and
the other credit extent hereunder and then outstanding and all accrued
unpaid interest, together with all other applicable fees, costs and
charges, if any, not yet paid.
LOAN ACCOUNT. Lender shall maintain on its books a record of account in
which Lender shall make entries for each Advance and such other debits and
credits as shall be appropriate in connection with the credit facility.
Lender shall provide Borrower with periodic statements of Borrower's
account, which statements shall be considered to be correct and
conclusively binding on Borrower unless Borrower notifies Lender to the
contrary within thirty (30) days after Borrower's receipt of any such
statement which Borrower deems to be incorrect.
COLLATERAL. To secure payment of the Primary Credit Facility and performance of
all other Loans, obligations and duties owed by Borrower to Lender, Borrower
(and others, if required) shall grant to Lender Security Interests in such
property and assets as Lender may require. Lender's Security Interests in the
Collateral shall be continuing liens and shall include the proceeds and products
of the Collateral, including without limitation the proceeds of any insurance.
With respect to the Collateral, Borrower agrees and represents and warrants to
Lender:
PERFECTION OF SECURITY INTERESTS. Borrower agrees to execute all documents
perfecting Lender's Security Interest and to take whatever actions are
requested by Lender to perfect and continue Lender's Security Interests in
the Collateral. Upon request of Lender, Borrower will deliver to Lender any
and all of the documents evidencing or constituting the Collateral, and
Borrower will note Lender's interest upon any and all chattel paper and
instruments if not delivered to Lender for possession by Lender.
Contemporaneous with the execution of this Agreement, Borrower will execute
one or more UCC financing statements and any similar statements as may be
required by applicable law, and Lender will file such financing statements
and all such similar statements in the appropriate location or locations.
Borrower hereby appoints Lender as its irrevocable attorney-in-fact for the
purpose of executing any documents necessary to perfect or to continue any
Security Interest. Lender may at any time, and without further
authorization from Borrower, file a carbon, photograph, facsimile, or other
reproduction of any financing statement for use as a financing statement.
Borrower will reimburse Lender for all expenses for the perfection,
termination, and the continuation of the perfection of Lender's security
interest in the Collateral. Borrower promptly will notify Lender before any
change in Borrower's name including any change to the assumed business
names of Borrower. Borrower also promptly will notify Lender before any
change in Borrower's Social Security Number or Employer Identification
Number. Borrower further agrees to notify Lender in writing prior to any
change in address or location of Borrower's principal governance office or
should Borrower merge or consolidate with any other entity.
COLLATERAL RECORDS. Borrower does now, and at all times hereafter shall,
keep correct and accurate records of the Collateral, all of which records
shall be available to Lender or Lender's representative upon demand for
inspection and copying at any reasonable time. With respect to the
Accounts, Borrower agrees to keep and maintain such records as Lender may
require, including without limitation information concerning Eligible
Accounts and Account balances and agings. Records related to Accounts
(Receivables) are or will be located at 520 Graves Avenue, Oxnard, CA
93030. With respect to the Inventory, Borrower agrees to keep and maintain
such records as Lender may require, including without limitation
information concerning Eligible Inventory and records itemizing and
describing the kind, type, quality, and quantity of Inventory, Borrower's
Inventory costs and selling prices, and the daily withdrawals and additions
to Inventory. Records related to Inventory are or will be located at 520
Graves Avenue, Oxnard, CA 93030. The above is an accurate and complete list
of all locations at which Borrower keeps or maintains business records
concerning Borrower's collateral.
COLLATERAL SCHEDULES. Concurrently with the execution and delivery of this
Agreement, Borrower shall execute and deliver to Lender schedules of
Accounts and Inventory and schedules of Eligible Accounts and Eligible
Inventory in form and substance satisfactory to the Lender. Thereafter
supplemental schedules shall be delivered according to the following
schedule: With respect to Eligible Accounts, schedules shall be delivered
monthly within 30 days after the end of each calendar month. With respect
to Eligible Inventory, schedules shall be delivered monthly within 30 days
after the end of each calendar month.
REPRESENTATIONS AND WARRANTIES CONCERNING ACCOUNTS. With respect to the
Accounts, Borrower represents and warrants to Lender: (1) Each Account
represented by Borrower to be an Eligible Account for purposes of this
Agreement conforms to the requirements of the definition of an Eligible
Account; (2) All Account information listed on schedules delivered to
Lender will be true and correct, subject to immaterial variance; and (3)
Lender, its assigns, or agents shall have the right at any time and at
Borrower's expense to inspect, examine, and audit Borrower's records and to
confirm with Account Debtors the accuracy of such Accounts.
REPRESENTATIONS AND WARRANTIES CONCERNING INVENTORY. With respect to the
Inventory, Borrower represents and warrants to Lender: (1) All Inventory
represented by Borrower to be Eligible Inventory for purposes of this
Agreement conforms to the requirements of the definition of Eligible
Inventory; (2) All Inventory values listed on schedules delivered to Lender
will be true and correct, subject to immaterial variance; (3) The value of
the Inventory will be determined on a consistent accounting basis; (4)
Except as agreed to the contrary by Lender in writing, all Eligible
Inventory is now and at all times hereafter will be in Borrower's physical
possession and shall not be held by others on consignment, sale on
approval, or sale or return; (5) Except as reflected in the Inventory
schedules delivered to Lender, all Eligible Inventory is now and at all
times hereafter will be of good and merchantable quality, free from
defects; (6) Eligible Inventory is not now and will not at any time
hereafter be stored with a bailee, warehouseman, or similar party without
Lender's prior written consent, and, in such event, Borrower will
concurrently at the time of bailment cause any such bailee, warehouseman,
or similar party to issue and deliver to Lender, in form acceptable to
Lender, warehouse receipts in Lender name evidencing the storage of
Inventory; and (7) Lender, its assigns, or agents shall have the right at
any time and at Borrower's expense to inspect and examine the Inventory and
to check and test the same as to quality, quantity, value, and condition.
REMITTANCE ACCOUNT. Borrower agrees that Lender may at any time require
Borrower to institute procedures whereby the payments and other proceeds of
the Accounts shall be paid by the Account Debtors under a remittance
account or lock box arrangement with Lender, or Lender's agent, or with one
or more financial institutions designated by Lender. Borrower further
agrees that, if no Event of Default exists under this Agreement, any and
all of such funds received under such a remittance account or lock box
arrangement shall, at Lender's sole election and discretion, either be (1)
paid or turned over to Borrower not to exceed 30% of net collected
proceeds; (2) deposited into one or more accounts for the benefit of
Borrower (which deposit accounts shall be subject to a security assignment
in favor of Lender); (3) deposited into one or more accounts for the joint
benefit of Borrower and Lender (which deposit accounts shall likewise be
subject to a security assignment in favor of Lender); (4) paid or turned
over to Lender to be applied to the Indebtedness in such order and priority
as Lender may determine within its sole discretion; or (5) any combination
of the foregoing as Lender shall determine from time to time. Borrower
further agrees that, should one or more Events of Default exist, any and
all funds received under such a remittance account or lock box arrangement
shall be paid or turned over to Lender to be applied to the Indebtedness,
again in such order and priority as Lender may determine within its sole
discretion.
OTHER CREDIT FACILITIES AND AMOUNT. Revolving credit facilities comprising
issuance of sight Letters of Credit and Working Capital Advances. At no time
shall the aggregate sum of Advances plus Working Capital Advances, plus Letters
of Credit, plus unreimbursed drawing under Letters of Credit exceed the
Borrowing Base. The following credit accommodations are either in place or will
be made available to Borrower:
LETTER OF CREDIT FACILITY. Subject to the terms of this Agreement, Lender
will issue sight letters of credit (each a "Letter of Credit") on behalf of
Borrower.
(1) Upon Lender's request, Borrower promptly shall pay to Lender
issuance fees and such other fees, commissions, costs, and any
out-of-pocket expenses charged or incurred by Lender with respect to
any Letter of Credit.
(2) The commitment by Lender to issue Letters of Credit shall, unless
earlier terminated in accordance with the terms of this Agreement,
automatically terminate on the Expiration Date and no Letter of Credit
shall expire on a date which is more than zero days after the
Expiration Date.
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(3) Each Letter of Credit shall be in form and substance satisfactory
to Lender and in favor of beneficiaries satisfactory to Lender,
provided that Lender may refuse to issue a Letter of Credit due to the
nature of the transaction or its terms or in connection with any
transaction where Lender, due to the beneficiary or the nationality or
residence of the beneficiary, would be prohibited by any applicable
law, regulation, or order from issuing such Letter of Credit. Under no
circumstances, however, will a Letter of Credit exceed 180 days from
the issue date.
(4) Prior to the issuance of each Letter of Credit, and in all events
prior to any daily cutoff time Lender may have established for
purposes thereof, Borrower shall deliver to Lender a duly executed
form of Lender's standard form of application for issuance of letter
of credit with proper insertions.
LENDER'S RIGHTS UPON DEFAULT. Upon the occurrence of any Event of Default,
Lender may, at its sole and absolute discretion and in addition to any other
remedies available to it under this Agreement or otherwise, require Borrower to
pay immediately to Lender, for application against drawings under any
outstanding Letters of Credit, the outstanding principal amount of any such
Letters of Credit which have not expired. Any portion of the amount so paid to
Lender which is not applied to satisfy draws under any such Letters of Credit or
any other obligations of Borrower to the Lender shall be repaid to Borrower
without interest.
LENDER'S COSTS AND EXPENSES. Borrower shall, upon Lender's request, promptly pay
to and reimburse Lender for all costs incurred and payments made by Lender by
reason of any future assessment, reserve, deposit, or similar requirement or any
surcharge, tax, or fee imposed upon Lender or as a result of Lender's compliance
with any directive or requirement of any regulatory authority pertaining or
relating to any Letter of Credit.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.
LOAN DOCUMENTS. Borrower shall provide to Lender the following documents
for the Loan: (1) the Note; (2) Security Agreements granting to Lender
security interests in the Collateral; (3) financing statements and all
other documents perfecting Lender's Security Interests; (4) evidence of
insurance as required below; (5) guaranties; (6) together with all such
Related Documents as Lender may require for the Loan; all in form and
substance satisfactory to Lender and Lender's counsel.
BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents. In addition, Borrower shall have provided such other
resolutions, authorizations, documents and instruments as Lender or its
counsel, may require.
FEES AND EXPENSES UNDER THIS AGREEMENT. Borrower shall have paid to Lender
all fees, costs, and expenses specified in this Agreement and the Related
Documents as are then due and payable, including without limitation the
following loan fees: NONREFUNDABLE OF LOAN FEE OF $35,000.00 AND
NONREFUNDABLE OF DOCUMENTATION FEE OF $750.00.
REPRESENTATIONS AND WARRANTIES. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
NO EVENT OF DEFAULT. There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under this Agreement
or under any Related Document.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
ORGANIZATION. Borrower is a corporation for profit which is, and at all
times shall be, duly organized, validly existing, and in good standing
under and by virtue of the laws of the State of California. Borrower is
duly authorized to transact business in all other states in which Borrower
is doing business, having obtained all necessary filings, governmental
licenses and approvals for each state in which Borrower is doing business.
Specifically, Borrower is, and at all times shall be, duly qualified as a
foreign corporation in all states in which the failure to so qualify would
have a material adverse effect on its business or financial condition.
Borrower has the full power and authority to own its properties and to
transact the business in which it is presently engaged or presently
proposes to engage. Borrower maintains its principal office at 520 GRAVES
AVE, OXNARD, CA 93030. Unless Borrower has designated otherwise in writing,
this is the principal office at which Borrower keeps its books and records
including its records concerning the Collateral. Borrower will notify
Lender prior to any change in the location of Borrower's state of
organization or any change in Borrower's name. Borrower shall do all things
necessary to preserve and to keep in full force and effect its existence,
rights and privileges, and shall comply with all regulations, rules,
ordinances, statutes, orders and decrees of any governmental or
quasi-governmental authority or court applicable to Borrower and Borrower's
business activities.
ASSUMED BUSINESS NAMES. Borrower has filed or recorded all documents or
filings required by law relating to all assumed business names used by
Borrower. Excluding the name of Borrower, the following is a complete list
of all assumed business names under which Borrower does business: NONE.
AUTHORIZATION. Borrower's execution, delivery, and performance of this
Agreement and all the Related Documents have been duly authorized by all
necessary action by Borrower, do not require the consent or approval of any
other person, regulatory authority, or governmental body, and do not
conflict with, result in a violation of, or constitute a default under (1)
any provision of (a) Borrower's articles of incorporation or organization,
or bylaws, or (b) any agreement or other instrument binding upon Borrower
or (2) any law, governmental regulation, court decree, or order applicable
to Borrower or to Borrower's properties. Borrower has the power and
authority to enter into the Note and the Related Documents and to grant
collateral as security for the Loan. Borrower has the further power and
authority to own and to hold all of Borrower's assets and properties, and
to carry on Borrower's business as presently conducted.
FINANCIAL INFORMATION. Each of Borrower's financial statements supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement
Borrower is required to give under this Agreement when delivered will
constitute legal, valid, and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.
PROPERTIES. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such
properties. All
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of Borrower's properties are titled in Borrower's legal name, and Borrower
has not used or filed a financing statement under any other name for at
least the last five (5) years.
HAZARDOUS SUBSTANCES. Except as disclosed to and acknowledged by Lender in
writing, Borrower represents and warrants that: (1) During the period of
Borrower's ownership of the Collateral, there has been no use, generation,
manufacture, storage, treatment, disposal, release or threatened release of
any Hazardous Substance by any person on, under, about or from any of the
Collateral. (2) Borrower has no knowledge of, or reason to believe that
there has been (a) any breach or violation of any Environmental Laws; (b)
any use, generation, manufacture, storage, treatment, disposal, release or
threatened release of any Hazardous Substance on, under, about or from the
Collateral by any prior owners or occupants of any of the Collateral; or
(c) any actual or threatened litigation or claims of any kind by any person
relating to such matters. (3) Neither Borrower nor any tenant, contractor,
agent or other authorized user of any of the Collateral shall use,
generate, manufacture, store, treat, dispose of or release any Hazardous
Substance on, under, about or from any of the Collateral; and any such
activity shall be conducted in compliance with all applicable federal,
state, and local laws, regulations, and ordinances, including without
limitation all Environmental Laws. Borrower authorizes Lender and its
agents to enter upon the Collateral to make such inspections and tests as
Lender may deem appropriate to determine compliance of the Collateral with
this section of the Agreement. Any inspections or tests made by Lender
shall be at Borrower's expense and for Lender's purposes only and shall not
be construed to create any responsibility or liability on the part of
Lender to Borrower or to any other person. The representations and
warranties contained herein are based on Borrower's due diligence in
investigating the Collateral for hazardous waste and Hazardous Substances.
Borrower hereby (1) releases and waives any future claims against Lender
for indemnity or contribution in the event Borrower becomes liable for
cleanup or other costs under any such laws, and (2) agrees to indemnify,
defend, and hold harmless Lender against any and all claims, losses,
liabilities, damages, penalties, and expenses which Lender may directly or
indirectly sustain or suffer resulting from a breach of this section of the
Agreement or as a consequence of any use, generation, manufacture, storage,
disposal, release or threatened release of a hazardous waste or substance
on the Collateral. The provisions of this section of the Agreement,
including the obligation to indemnify and defend, shall survive the payment
of the Indebtedness and the termination, expiration or satisfaction of this
Agreement and shall not be affected by Lender's acquisition of any interest
in any of the Collateral, whether by foreclosure or otherwise.
LITIGATION AND CLAIMS. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by Lender in writing.
TAXES. To the best of Borrower's knowledge, all of Borrower's tax returns
and reports that are or were required to be filed, have been filed, and all
taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good faith
in the ordinary course of business and for which adequate reserves have
been provided.
LIEN PRIORITY. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may in any way be
superior to Lender's Security Interests and rights in and to such
Collateral.
BINDING EFFECT. This Agreement, the Note, all Security Agreements (if any),
and all Related Documents are binding upon the signers thereof, as well as
upon their successors, representatives and assigns, and are legally
enforceable in accordance with their respective terms.
COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely for
business or commercially related purposes.
EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower may
have any liability complies in all material respects with all applicable
requirements of law and regulations, and (1) no Reportable Event nor
Prohibited Transaction (as defined in ERISA) has occurred with respect to
any such plan, (2) Borrower has not withdrawn from any such plan or
initiated steps to do so, (3) no steps have been taken to terminate any
such plan or to appoint a trustee to administer such a plan, and (4) there
are no unfunded liabilities other than those previously disclosed to Lender
in writing.
INVESTMENT COMPANY ACT. Borrower is not an "investment company" or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
PUBLIC UTILITY HOLDING COMPANY ACT. Borrower is not a "holding company", or
a "subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
REGULATIONS T AND U. Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulations T
and U of the Board of Governors of the Federal Reserve System).
INFORMATION. All information previously furnished or which is now being
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated by this Agreement is, and
all information furnished by or on behalf of Borrower to Lender in the
future will be, true and accurate in every material respect on the date as
of which such information is dated or certified; and no such information is
or will be incomplete by omitting to state any material fact the omission
of which would cause the information to be misleading.
CLAIMS AND DEFENSES. There are no defenses or counterclaims, offsets or
other adverse claims, demands or actions of any kind, personal or
otherwise, that Borrower, any Grantor, or any Guarantor could assert with
respect to the Note, Loan, this Agreement, or the Related Documents.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:
REPAYMENT. Repay the Loan in accordance with its terms and the terms of
this Agreement.
NOTICES OF CLAIMS AND LITIGATION. Promptly inform Lender in writing of (1)
all material adverse changes in Borrower's financial condition, and (2) all
existing and all threatened litigation, claims, investigations,
administrative proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial condition of Borrower
or the financial condition of any Guarantor. In addition, Borrower shall
provide Lender with written notice of the occurrence of any Event of
Default, the occurrence of any Reportable Event under, or the institution
of steps by Borrower to withdraw from, or the institution of any steps to
terminate, any employee benefit plan as to which Borrower may have any
liability.
FINANCIAL RECORDS. Maintain its books and records in accordance with GAAP,
applied on a consistent basis, and permit Lender to examine and audit
Borrower's books and records at all reasonable times.
FINANCIAL STATEMENTS. Furnish Lender with the following:
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ANNUAL STATEMENTS. As soon as available, but in no event later than
150 days after the end of each fiscal year, Borrower's balance sheet
and income statement for the year ended, audited by a certified public
accountant satisfactory to Lender.
INTERIM STATEMENTS. As soon as available, but in no event later than
thirty (30) days after the end of each month, Borrower's balance sheet
and profit and loss statement for the period ended, prepared by
Borrower.
TAX RETURNS. As soon as available, but in no event later than thirty
(30) days after the applicable filing date for the tax reporting
period ended, Federal and other governmental tax returns, prepared by
a certified public accountant satisfactory to Lender.
ADDITIONAL REQUIREMENTS. (1) Listing Schedule: A listing of Eligible
Inventory, Eligible Accounts (including aging), dilution reserve
certificate, account payable (including aging) plus a Certification of
Borrower's authorized officer (s) to the truthfulness and completeness
of such listing shall be furnished monthly to Lender within 30 days
after the end of each calendar month;
(2) Personal Financial Statement of Mr. Cheng - Chich Huang in form
and acceptable to Lender.
(3) Semi-Annual collateral audit.
(4) Lockbox requirement to be completed within 3 weeks of loan
closing. 70% of the collection shall be applied to pay down the loan
outstanding and 30% to be released to Borrower upon their request.
(5) Borrower shall maintain minimum accounts payable of $5,000,000.00.
All financial reports required to be provided under this Agreement
shall be prepared in accordance with GAAP, applied on a consistent
basis, and certified by Borrower as being true and correct.
ADDITIONAL INFORMATION. Furnish such additional information and statements,
as Lender may request from time to time.
INSURANCE. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
Borrower's properties and operations, in form, amounts, coverage and with
insurance companies acceptable to Lender. Borrower, upon request of Lender,
will deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that
coverage will not be cancelled or diminished without at least thirty (30)
days prior written notice to Lender. Each insurance policy also shall
include an endorsement providing that coverage in favor of Lender will not
be impaired in any way by any act, omission or default of Borrower or any
other person. In connection with all policies covering assets in which
Lender holds or is offered a security interest for the Loans, Borrower will
provide Lender with such lender's loss payable or other endorsements as
Lender may require.
INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (1) the
name of the insurer; (2) the risks insured; (3) the amount of the policy;
(4) the properties insured; (5) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (6) the expiration date of the policy. In addition, upon
request of Lender (however not more often than annually), Borrower will
have an independent appraiser satisfactory to Lender determine, as
applicable, the actual cash value or replacement cost of any Collateral.
The cost of such appraisal shall be paid by Borrower.
GUARANTIES. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, executed by the guarantor named
below, on Lender's forms, and in the amount and under the conditions set
forth in those guaranties.
NAME OF GUARANTOR AMOUNT
- ----------------- --------------
CHENG - CHICH HUANG $20,000,000.00
OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to the
date on which penalties would attach, and all lawful claims that, if
unpaid, might become a lien or charge upon any of Borrower's properties,
income, or profits.
PERFORMANCE. Perform and comply, in a timely manner, with all terms,
conditions, and provisions set forth in this Agreement, in the Related
Documents, and in all other instruments and agreements between Borrower and
Lender, and in all other loan agreements now or in the future existing
between Borrower and any other party. Borrower shall notify Lender
immediately in writing of any default in connection with any agreement.
OPERATIONS. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner.
ENVIRONMENTAL STUDIES. Promptly conduct and complete, at Borrower's
expense, all such investigations, studies, samplings and testing as may be
requested by Lender or any governmental authority relative to any
substance, or any waste or by-product of any substance defined as toxic or
a hazardous substance under applicable federal, state, or local law, rule,
regulation, order or directive, at or affecting any property or any
facility owned, leased or used by Borrower.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the conduct of Borrower's
properties, businesses and operations, and to the use or occupancy of the
Collateral, including without limitation, the Americans With Disabilities
Act. Borrower may contest in good faith any such law, ordinance, or
regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Borrower has notified Lender in writing
prior to doing so and so long as, in Lender's sole opinion, Lender's
interests in the Collateral are not jeopardized. Lender may require
Borrower to post adequate security or a surety bond, reasonably
satisfactory to Lender, to protect Lender's interest.
5
INSPECTION. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) in the possession of
a third party, Borrower, upon request of Lender, shall notify such party to
permit Lender free access to such records at all reasonable times and to
provide Lender with copies of any records it may request, all at Borrower's
expense.
CHANGE OF LOCATION. Immediately notify Lender in writing of any additions
to or changes in the location of Borrower's businesses.
TITLE TO ASSETS AND PROPERTY. Maintain good and marketable title to all of
Borrower's assets and properties.
NOTICE OF DEFAULT, LITIGATION AND ERISA MATTERS. Forthwith upon learning of
the occurrence of any of the following, Borrower shall provide Lender with
written notice thereof, describing the same and the steps being taken by
Borrower with respect thereto: (1) the occurrence of any Event of Default,
or (2) the institution of, or any adverse determination in, any litigation,
arbitration proceeding or governmental proceeding, or (3) the occurrence of
a Reportable Event under, or the institution of steps by Borrower to
withdraw from, or the institution of any steps to terminate, any employee
benefit plan as to which Borrower may have any liability.
OTHER INFORMATION. From time to time Borrower will provide Lender with such
other information as Lender may reasonably request.
EMPLOYEE BENEFIT PLANS. So long as this Agreement remains in effect,
Borrower will maintain each employee benefit plan as to which Borrower may
have any liability, in compliance with all applicable requirements of law
and regulations.
COMPLIANCE CERTIFICATES. Unless waived in writing by Lender, provide Lender
within thirty (30) days after the end of each fiscal quarter, with a
certificate executed by Borrower's chief financial officer, or other
officer or person acceptable to Lender, certifying that the representations
and warranties set forth in this Agreement are true and correct as of the
date of the certificate and further certifying that, as of the date of the
certificate, no Event of Default exists under this Agreement.
ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all respects
with any and all Environmental Laws; not cause or permit to exist, as a
result of an intentional or unintentional action or omission on Borrower's
part or on the part of any third party, on property owned and/or occupied
by Borrower, any environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to and in
compliance with the conditions of a permit issued by the appropriate
federal, state or local governmental authorities; shall furnish to Lender
promptly and in any event within thirty (30) days after receipt thereof a
copy of any notice, summons, lien, citation, directive, letter or other
communication from any governmental agency or instrumentality concerning
any intentional or unintentional action or omission on Borrower's part in
connection with any environmental activity whether or not there is damage
to the environment and/or other natural resources.
ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, assignments,
financing statements, instruments, documents and other agreements as Lender
or its attorneys may reasonably request to evidence and secure the Loans
and to perfect all Security Interests.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrower's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Borrower. All such expenses will become a
part of the Indebtedness and, at Lender's option, will (A) be payable on demand;
(B) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
INDEBTEDNESS AND LIENS. (1) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (2) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower's assets
(except as allowed as Permitted Liens), or (3) sell with recourse any of
Borrower's accounts, except to Lender.
NO ADDITIONAL BORROWING. There shall be no additional borrowing, without
prior written consent from the Lender.
CONTINUITY OF OPERATIONS. (1) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(2) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, or (3) pay any dividends
on Borrower's stock (other than dividends payable in its stock), provided,
however that notwithstanding the foregoing, but only so long as no Event of
Default has occurred and is continuing or would result from the payment of
dividends, if Borrower is a "Subchapter S Corporation" (as defined in the
Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends
on its stock to its shareholders from time to time in amounts necessary to
enable the shareholders to pay income taxes and make estimated income tax
payments to satisfy their liabilities under federal and state law which
arise solely from their status as Shareholders of a Subchapter S
Corporation because of their ownership of shares of Borrower's stock, or
purchase or retire any of Borrower's outstanding shares or alter or amend
Borrower's capital structure.
LOANS, ACQUISITIONS AND GUARANTIES. (1) Loan, invest in or advance money or
assets to any other person, enterprise or entity, (2) purchase, create or
acquire any interest in any other enterprise or entity, or (3) incur any
obligation as surety or guarantor other than in the ordinary course of
business.
AGREEMENTS. Borrower will not enter into any agreement containing any
provisions which would be violated or breached by the performance of
Borrower's obligations under this Agreement or in connection herewith.
6
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(A) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes
incompetent or becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse
change in Borrower's financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; or (D) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the Loan or any other loan with Lender.
DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:
PAYMENT DEFAULT. Borrower fails to make any payment when due under the
Loan.
OTHER DEFAULTS. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in any of
the Related Documents or to comply with or to perform any term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
DEFAULT IN FAVOR OF THIRD PARTIES. Borrower or any Grantor defaults under
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's or any Grantor's property or
Borrower's or any Grantor's ability to repay the Loans or perform their
respective obligations under this Agreement or any of the Related
Documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf, or made by
Guarantor, under this Agreement or the Related Documents in connection with
the obtaining of the Loan evidenced by the Note or any security document
directly or indirectly securing repayment of the Note is false or
misleading in any material respect, either now or at the time made or
furnished or becomes false or misleading at any time thereafter.
INSOLVENCY. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
document to create a valid and perfected security interest or lien) at any
time and for any reason.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the Loan. This includes
a garnishment of any of Borrower's accounts, including deposit accounts,
with Lender. However, this Event of Default shall not apply if there is a
good faith dispute by Borrower as to the validity or reasonableness of the
claim which is the basis of the creditor or forfeiture proceeding and if
Borrower gives Lender written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Lender, in
its sole discretion, as being an adequate reserve or bond for the dispute.
EXECUTION; ATTACHMENT. Any execution or attachment is levied against the
Collateral, and such execution or attachment is not set aside, discharged
or stayed within thirty (30) days after the same is levied.
CHANGE IN ZONING OR PUBLIC RESTRICTION. Any change in any zoning ordinance
or regulation or any other public restriction is enacted, adopted or
implemented, that limits or defines the uses which may be made of the
Collateral such that the present or intended use of the Collateral, as
specified in the Related Documents, would be in violation of such zoning
ordinance or regulation or public restriction, as changed.
DEFAULT UNDER OTHER LIEN DOCUMENTS. A default occurs under any other
mortgage, deed of trust or security agreement covering all or any portion
of the Collateral.
JUDGMENT. Unless adequately covered by insurance in the opinion of Lender,
the entry of a final judgment for the payment of money involving more than
ten thousand dollars ($10,000.00) against Borrower and the failure by
Borrower to discharge the same, or cause it to be discharged, or bonded off
to Lender's satisfaction, within thirty (30) days from the date of the
order, decree or process under which or pursuant to which such judgment was
entered.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or any Guarantor dies or
becomes incompetent, or revokes or disputes the validity of, or liability
under, any Guaranty of the Indebtedness. In the event of a death, Lender,
at its option, may, but shall not be required to, permit the Guarantor's
estate to assume unconditionally the obligations arising under the guaranty
in a manner satisfactory to Lender, and, in doing so, cure any Event of
Default.
CHANGE IN OWNERSHIP. Any change in ownership of the common stock of
Borrower without prior written consent from the Lender.
INTER-COMPANY LOAN. There shall not be any inter-company loans to
subsidiaries or related companies without prior written consent from the
Lender.
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Loan is impaired.
RIGHT TO CURE. If any default, other than a default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been given
a notice of a similar default within the preceding twelve (12) months, it
may be cured if Borrower or Grantor, as the case may be, after receiving
written notice from Lender demanding cure of such default: (1) cure the
default within ten (10) days; or (2) if the cure requires more than ten
(10) days, immediately initiate steps which Lender deems in Lender's sole
discretion to be sufficient to cure the default and thereafter continue and
complete all reasonable and necessary steps sufficient to produce
compliance as soon as reasonably practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
further Loan Advances or disbursements), and, at Lender's option, all
Indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "Insolvency"
7
subsection above, such acceleration shall be automatic and not optional. In
addition, Lender shall have all the rights and remedies provided in the Related
Documents or available at law, in equity, or otherwise. Except as may be
prohibited by applicable law, all of Lender's rights and remedies shall be
cumulative and may be exercised singularly or concurrently. Election by Lender
to pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation of
Borrower or of any Grantor shall not affect Lender's right to declare a default
and to exercise its rights and remedies.
ADDITIONAL DOCUMENTS. Borrower shall provide Lender with the following
additional documents:
CORPORATE RESOLUTION. Borrower has provided or will provide Lender with a
certified copy of resolutions properly adopted by Borrower's Board of
Directors, and certified by Borrower's corporate secretary, assistant
secretary, or other authorized officer, under which Borrower's Board of
Directors authorized one or more designated officers or employees to
execute this Agreement, the Note and any and all Security Agreements
directly or indirectly securing repayment of the same, and to consummate
the borrowings and other transactions as contemplated under this Agreement,
and to consent to the remedies following any default by Borrower as
provided in this Agreement and in any Security Agreements.
OPINION OF COUNSEL. When required by Lender, Borrower has provided or will
provide Lender with an opinion of Borrower's counsel certifying to and
that: (1) Borrower's Note, any Security Agreements and this Agreement
constitute valid and binding obligations on Borrower's part that are
enforceable in accordance with their respective terms; (2) Borrower is
validly existing and in good standing; (3) Borrower has authority to enter
into this Agreement and to consummate the transactions contemplated under
this Agreement; and (4) such other matters as may have been requested by
Lender or by Lender's counsel.
USA PATRIOT ACT NOTICE. Lender hereby notifies the Borrower that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the "Act"), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow Lender to
identify the Borrower in accordance with the Act.
RIGHT TO INSPECT. Lender shall have the right, from time to time hereafter to
inspect te books and to check, test and appraise the Collateral in order to
verify Borrower's financial conditions of the amount, quality, value, condition
of, or any other matter relating to the Collateral, provided that there shall be
2 collateral appraisals per year at the Borrower's cost.
JUDICIAL REFERENCE. Judicial Reference; Consent to Jurisdiction. ALL CLAIMS,
CAUSES OF ACTION OR OTHER DISPUTES CONCERNING THIS AGREEMENT OR THE RELATED
DOCUMENTS (EACH A "CLAIM"), INCLUDING ANY AND ALL QUESTIONS OF LAW OR FACT
RELATING THERETO, SHALL, AT THE WRITTEN REQUEST OF ANY PARTY TO THIS AGREEMENT,
BE DETERMINED BY JUDICIAL REFERENCE PURSUANT TO THE CALIFORNIA CODE OF CIVIL
PROCEDURE ("REFERENCE"). THE PARTIES SHALL SELECT A SINGLE NEUTRAL REFEREE, WHO
SHALL BE A RETIRED STATE OR FEDERAL JUDGE. IN THE EVENT THAT THE PARTIES CANNOT
AGREE UPON A REFEREE, THE REFEREE SHALL BE APPOINTED BY THE COURT. THE REFEREE
SHALL REPORT A STATEMENT OF DECISION TO THE COURT. NOTHING IN THIS PARAGRAPH
SHALL LIMIT THE RIGHT OF ANY PARTY AT ANY TIME TO EXERCISE SELF-HELP REMEDIES,
FORECLOSE AGAINST COLLATERAL OR OBTAIN PROVISIONAL REMEDIES. THE PARTIES SHALL
BEAR THE FEES AND EXPENSES OF THE REFEREE EQUALLY UNLESS THE REFEREE ORDERS
OTHERWISE. THE REFEREE SHALL ALSO DETERMINE ALL ISSUES RELATING TO THE
APPLICABILITY, INTERPRETATION, AND ENFORCEABILITY OF THIS PARAGRAPH. THE PARTIES
ACKNOWLEDGE THAT THE CLAIMS WILL NOT BE ADJUDICATED BY A JURY. Subject to the
immediately preceding paragraph, each party hereto hereby irrevocably and
unconditionally (1) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the Related Documents to which it is a
party, or for recognition and enforcement of any judgment in respect thereof, to
the non-exclusive general jurisdiction of the courts of the State of California,
the courts of the United States of America for the Central District of
California, and appellate courts from any thereof; (2) consents that any such
action or proceeding may be brought in such courts and waives any objection that
it may now or hereafter have to the venue of any such action or proceeding in
any such court or that such action or proceeding was brought in an inconvenient
forum and agrees not to plead or claim the same; (3) agrees that service of
process in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to any party at its address set forth herein; (4) agrees
that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other
jurisdiction; and (5) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this subsection any punitive damages.
STANDARD TERMS AND CONDITIONS. An exhibit, titled "STANDARD TERMS AND
CONDITIONS," is attached to this Agreement and by this reference is made a part
of this Agreement just as if all the provisions, terms and conditions of the
Exhibit had been fully set forth in this Agreement.
TRADE SERVICE FEE. An exhibit, titled "TRADE SERVICE FEE SCHEDULE," is attached
to this Agreement and by this reference is made a part of this Agreement just as
if all the provisions, terms and conditions of the Exhibit had been fully set
forth in this Agreement.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
ATTORNEYS' FEES; EXPENSES. Borrower agrees to pay upon demand all of
Lender's costs and expenses, including Lender's attorneys' fees and
Lender's legal expenses, incurred in connection with the enforcement of
this Agreement. Lender may hire or pay someone else to help enforce this
Agreement, and Borrower shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender's attorneys' fees and legal
expenses whether or not there is a lawsuit, including attorneys' fees and
legal expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Borrower also shall pay all court costs
and such additional fees as may be directed by the court.
BORROWER INFORMATION. Borrower consents to the release of information on or
about Borrower by Lender in accordance with any court order, law or
regulation and in response to credit inquiries concerning Borrower.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loan to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation whatsoever,
to any one or more purchasers, or potential purchasers, any information or
knowledge Lender may have about Borrower or about any other matter
8
relating to the Loan, and Borrower hereby waives any rights to privacy
Borrower may have with respect to such matters. Borrower additionally
waives any and all notices of sale of participation interests, as well as
all notices of any repurchase of such participation interests. Borrower
also agrees that the purchasers of any such participation interests will be
considered as the absolute owners of such interests in the Loan and will
have all the rights granted under the participation agreement or agreements
governing the sale of such participation interests. Borrower further waives
all rights of offset or counterclaim that it may have now or later against
Lender or against any purchaser of such a participation interest and
unconditionally agrees that either Lender or such purchaser may enforce
Borrower's obligation under the Loan irrespective of the failure or
insolvency of any holder of any interest in the Loan. Borrower further
agrees that the purchaser of any such participation interests may enforce
its interests irrespective of any personal claims or defenses that Borrower
may have against Lender.
GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY FEDERAL LAW APPLICABLE TO
LENDER AND, TO THE EXTENT NOT PREEMPTED BY FEDERAL LAW, THE LAWS OF THE
STATE OF CALIFORNIA WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS. THIS
AGREEMENT HAS BEEN ACCEPTED BY LENDER IN THE STATE OF CALIFORNIA.
NON-LIABILITY OF LENDER. The relationship between Borrower and Lender
created by this Agreement is strictly a debtor and creditor relationship
and not fiduciary in nature, nor is the relationship to be construed as
creating any partnership or joint venture between Lender and Borrower.
Borrower is exercising Borrower's own judgment with respect to Borrower's
business. All information supplied to Lender is for Lender's protection
only and no other party is entitled to rely on such information. There is
no duty for Lender to review, inspect, supervise or inform Borrower of any
matter with respect to Borrower's business. Lender and Borrower intend that
Lender may reasonably rely on all information supplied by Borrower to
Lender, together with all representations and warranties given by Borrower
to Lender, without investigation or confirmation by Lender and that any
investigation or failure to investigate will not diminish Lender's right to
so rely.
NOTICE OF LENDER'S BREACH. Borrower must notify Lender in writing of any
breach of this Agreement or the Related Documents by Lender and any other
claim, cause of action or offset against Lender within thirty (30) days
after the occurrence of such breach or after the accrual of such claim,
cause of action or offset. Borrower waives any claim, cause of action or
offset for which notice is not given in accordance with this paragraph.'
Lender is entitled to rely on any failure to give such notice.
INDEMNIFICATION OF LENDER. Borrower agrees to indemnify, to defend and to
save and hold Lender harmless from any and all claims, suits, obligations,
damages, losses, costs and expenses (including, without limitation,
Lender's attorneys' fees), demands, liabilities, penalties, fines and
forfeitures of any nature whatsoever that may be asserted against or
incurred by Lender, its officers, directors, employees, and agents arising
out of, relating to, or in any manner occasioned by this Agreement and the
exercise of the rights and remedies granted Lender under this, as well as
by: (1) the ownership, use, operation, construction, renovation,
demolition, preservation, management, repair, condition, or maintenance of
any part of the Collateral; (2) the exercise of any of Borrower's rights
collaterally assigned and pledged to Lender hereunder; (3) any failure of
Borrower to perform any of its obligations hereunder; and/or (4) any
failure of Borrower to comply with the environmental and ERISA obligations,
representations and warranties set forth herein. The foregoing indemnity
provisions shall survive the cancellation of this Agreement as to all
matters arising or accruing prior to such cancellation and the foregoing
indemnity shall survive in the event that Lender elects to exercise any of
the remedies as provided under this Agreement following default hereunder.
Borrower's indemnity obligations under this section shall not in any way be
affected by the presence or absence of covering insurance, or by the amount
of such insurance or by the failure or refusal of any insurance carrier to
perform any obligation on its part under any insurance policy or policies
affecting the Collateral and/or Borrower's business activities. Should any
claim, action or proceeding be made or brought against Lender by reason of
any event as to which Borrower's indemnification obligations apply, then,
upon Lender's demand, Borrower, at its sole cost and expense, shall defend
such claim, action or proceeding in Borrower's name, if necessary, by the
attorneys for Borrower's insurance carrier (if such claim, action or
proceeding is covered by insurance), or otherwise by such attorneys as
Lender shall approve. Lender may also engage its own attorneys at its
reasonable discretion to defend Borrower and to assist in its defense and
Borrower agrees to pay the fees and disbursements of such attorneys.
COUNTERPARTS. This Agreement may be executed in multiple counterparts, each
of which, when so executed, shall be deemed an original, but all such
counterparts, taken together, shall constitute one and the same Agreement.
NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Borrower, or between
Lender and any Grantor, shall constitute a waiver of any of Lender's rights
or of any of Borrower's or any Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the
sole discretion of Lender.
NOTICES. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law), when
deposited with a nationally recognized overnight courier, or, if mailed,
when deposited in the United States mail, as first class, certified or
registered mail postage prepaid, directed to the addresses shown near the
beginning of this Agreement. Any party may change its address for notices
under this Agreement by giving formal written notice to the other parties,
specifying that the purpose of the notice is to change the party's address.
For notice purposes, Borrower agrees to keep Lender informed at all times
of Borrower's current address. Unless otherwise provided or required by
law, if there is more than one Borrower, any notice given by Lender to any
Borrower is deemed to be notice given to all Borrowers.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other circumstance. If feasible, the
offending provision shall be considered modified so that it becomes legal,
valid and enforceable. If the offending provision cannot be so modified, it
shall be considered deleted from this Agreement. Unless otherwise required
by law, the illegality, invalidity, or unenforceability of any provision of
this Agreement shall not affect the legality, validity or enforceability of
any other provision of this Agreement.
SOLE DISCRETION OF LENDER. Whenever Lender's consent or approval is
required under this Agreement, the decision as to whether or not to consent
or approve shall be in the sole and exclusive discretion of Lender and
Lender's decision shall be final and conclusive.
SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower" as
used in this Agreement shall include all of Borrower's subsidiaries and
9
affiliates. Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any Loan or
other financial accommodation to any of Borrower's subsidiaries or
affiliates.
SUCCESSORS AND ASSIGNS. All covenants and agreements by or on behalf of
Borrower contained in this Agreement or any Related Documents shall bind
Borrower's successors and assigns and shall inure to the benefit of Lender
and its successors and assigns. Borrower shall not, however, have the right
to assign Borrower's rights under this Agreement or any interest therein,
without the prior written consent of Lender.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and agrees
that in extending Loan Advances, Lender is relying on all representations,
warranties, and covenants made by Borrower in this Agreement or in any
certificate or other instrument delivered by Borrower to Lender under this
Agreement or the Related Documents. Borrower further agrees that regardless
of any investigation made by Lender, all such representations, warranties
and covenants will survive the extension of Loan Advances and delivery to
Lender of the Related Documents, shall be continuing in nature, shall be
deemed made and redated by Borrower at the time each Loan Advance is made,
and shall remain in full force and effect until such time as Borrower's
Indebtedness shall be paid in full, or until this Agreement shall be
terminated in the manner provided above, whichever is the last to occur.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.
WAIVE JURY. TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL PARTIES TO THIS
AGREEMENT HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:
ACCOUNT. The word "Account" means a trade account, account receivable,
other receivable, or other right to payment for goods sold or services
rendered owing to Borrower (or to a third party grantor acceptable to
Lender).
ACCOUNT DEBTOR. The words "Account Debtor" mean the person or entity
obligated upon an Account.
ADVANCE. The word "Advance" means a disbursement of Loan funds made, or to
be made, to Borrower or on Borrower's behalf under the terms and conditions
of this Agreement.
AGREEMENT. The word "Agreement" means this Business Loan Agreement (Asset
Based), as this Business Loan Agreement (Asset Based) may be amended or
modified from time to time, together with all exhibits and schedules
attached to this Business Loan Agreement (Asset Based) from time to time.
BORROWER. The word "Borrower" means VIVITAR CORPORATION and includes all
co-signers and co-makers signing the Note and all their successors and
assigns.
BORROWING BASE. The words "Borrowing Base" mean (1) The lesser of (a)
$20,000,000.00 or (b) 80% of the aggregate amount of Eligible Accounts if
the Dilution Rate is equal or less than 10% or; (2) The lesser of (a)
$20,000,000.00 or (b) 70% of the aggregate amount of Eligible Accounts if
the Dilution Rate is greater than 10% but less than 15%, minus the
aggregate amount of reserves, if any, established by Lender.
BUSINESS DAY. The words "Business Day" mean a day on which commercial banks
are open in the State of California.
C.I.F.. The initials "C.I.F." mean costs, insurance and freight, which
includes in a lump sum the cost of the goods, insurance and freight to the
named destination, as provided in the Uniform Commercial Code.
COLLATERAL. The word "Collateral" means all property and assets granted as
collateral security for a Loan, whether real or personal property, whether
granted directly or indirectly, whether granted now or in the future, and
whether granted in the form of a security interest, mortgage, collateral
mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien, charge, lien or title retention
contract, lease or consignment intended as a security device, or any other
security or lien interest whatsoever, whether created by law, contract, or
otherwise. The word Collateral also includes without limitation all
collateral described in the Collateral section of this Agreement.
DILUTION RATE. means, as of any date of determination, a percentage, based
upon the experience of the previously monthly record, that is the result of
dividing the Dollar (or Dollar equivalent) amount of (a) total credit memos
and charge back or other dilutive items with respect to the Accounts of
Borrower during such period, by (b) Borrower's total sales with respect to
Accounts during such period.
ELIGIBLE ACCOUNTS. The words "Eligible Accounts" mean at any time, all of
Borrower's Accounts which contain selling terms and conditions acceptable
to Lender. The net amount of any Eligible Account against which Borrower
may borrow shall exclude all returns, discounts, credits, and offsets of
any nature. Unless otherwise agreed to by Lender in writing, Eligible
Accounts do not include:
(1) Accounts with respect to which the Account Debtor is employee or
agent of Borrower.
(2) Accounts with respect to which the Account Debtor is a subsidiary
of, or affiliated with Borrower or its shareholders, officers, or
directors.
(3) Accounts with respect to which goods are placed on consignment,
guaranteed sale, or other terms by reason of which the payment by the
Account Debtor may be conditional.
(4) Accounts with respect to which the Account Debtor is not a
resident of the United States, except to the extent such Accounts are
supported by insurance, bonds or other assurances satisfactory to
Lender.
(5) Accounts with respect to which Borrower is or may become liable to
the Account Debtor for goods sold or services rendered by the Account
Debtor to Borrower.
(6) Accounts which are subject to dispute, counterclaim, or setoff.
(7) Accounts with respect to which the goods have not been shipped or
delivered, or the services have not been rendered, to the Account
10
Debtor.
(8) Accounts with respect to which Lender, in its sole discretion,
deems the creditworthiness or financial condition of the Account
Debtor to be unsatisfactory.
(9) Accounts of any Account Debtor who has filed or has had filed
against it a petition in bankruptcy or an application for relief under
any provision of any state or federal bankruptcy, insolvency, or
debtor-in-relief acts; or who has had appointed a trustee, custodian,
or receiver for the assets of such Account Debtor; or who has made an
assignment for the benefit of creditors or has become insolvent or
fails generally to pay its debts (including its payrolls) as such
debts become due.
(10) Accounts with respect to which the Account Debtor is the United
States government or any department or agency of the United States,
however, provided, that up to $750,000.00 under the name of AAFES
shall be permitted as Eligible Accounts.
(11) Accounts which have not been paid in full within 60 DAYS FROM DUE
DATE. The entire balance of any Account of any single Account Debtor
will be ineligible whenever the portion of the Account which has not
been paid within 60 DAYS FROM DUE DATE is in excess of 25.000% of the
total amount outstanding on the Account.
(12) Accounts that fail to satisfy eligible criteria established from
time to time by Lender.
ELIGIBLE INVENTORY. The words "Eligible Inventory" mean, at any time, all
of Borrower's Inventory as defined below, except:
(1) Inventory which is not owned by Borrower free and clear of all
security interests, liens, encumbrances, and claims of third parties.
(2) Inventory which Lender, in its sole discretion, deems to be
obsolete, unsalable, damaged, defective, or unfit for further
processing.
(3) Work in progress.
ENVIRONMENTAL LAWS. The words "Environmental Laws" mean any and all state,
federal and local statutes, regulations and ordinances relating to the
protection of human health or the environment, including without limitation
the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499
("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the
California Health and Safety Code, Section 25100, et seq., or other
applicable state or federal laws, rules, or regulations adopted pursuant
thereto.
ERISA. The word "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time, and including all regulations and
published interpretations of the act.
EVENT OF DEFAULT. The words "Event of Default" mean individually,
collectively, and interchangeably any of the events of default set forth in
this Agreement in the default section of this Agreement.
EXPIRATION DATE. The words "Expiration Date" mean the date of termination
of Lender's commitment to lend under this Agreement.
GAAP. The word "GAAP" means generally accepted accounting principles.
GRANTOR. The word "Grantor" means each and all of the persons or entities
granting a Security Interest in any Collateral for the Loan, including
without limitation all Borrowers granting such a Security Interest.
GUARANTOR. The word "Guarantor" means any guarantor, surety, or
accommodation party of any or all of the Loan, and, in each case,
Borrower's successors, assigns, heirs, personal representatives, executors
and administrators of any guarantor, surety, or accommodation party.
GUARANTY. The word "Guaranty" means the guaranty from Guarantor to Lender,
including without limitation a guaranty of all or part of the Note.
HAZARDOUS SUBSTANCES. The words "Hazardous Substances" mean materials that,
because of their quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential hazard
to human health or the environment when improperly used, treated, stored,
disposed of, generated, manufactured, transported or otherwise handled. The
words "Hazardous Substances" are used in their very broadest sense and
include without limitation any and all hazardous or toxic substances,
materials or waste as defined by or listed under the Environmental Laws.
The term "Hazardous Substances" also includes, without limitation,
petroleum and petroleum by-products or any fraction thereof and asbestos.
INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which
Borrower is responsible under this Agreement or under any of the Related
Documents.
INVENTORY. The word "Inventory" means all of Borrower's raw materials, work
in process, finished goods, merchandise, parts and supplies, of every kind
and description, and goods held for sale or lease or furnished under
contracts of service in which Borrower now has or hereafter acquires any
right, whether held by Borrower or others, and all documents of title,
warehouse receipts, bills of lading, and all other documents of every type
covering all or any part of the foregoing. Inventory includes inventory
temporarily out of Borrower's custody or possession and all returns on
Accounts.
LENDER. The word "Lender" means DBS BANK LTD., LOS ANGELES AGENCY, its
successors and assigns.
LETTER OF CREDIT. The words "Letter of Credit" mean a letter of credit
issued by Lender on behalf of Borrower as described in the Letter of Credit
Facility section of this Agreement.
LOAN. The word "Loan" means any and all loans and financial accommodations
from Lender to Borrower whether now or hereafter existing, and however
evidenced, including without limitation those loans and financial
accommodations described herein or described on any exhibit or schedule
attached to this Agreement from time to time, and further including any and
all subsequent amendments, additions, substitutions, renewals and
refinancings of any of Borrower's Loans.
NOTE. The word "Note" means the Note executed by VIVITAR CORPORATION in the
principal amount of $20,000,000.00 dated December 26, 2006, together with
all renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for the note or credit agreement.
11
PERMITTED LIENS. The words "Permitted Liens" mean (1) liens and security
interests securing Indebtedness owed by Borrower to Lender; (2) liens for
taxes, assessments, or similar charges either not yet due or being
contested in good faith; (3) liens of materialmen, mechanics, warehousemen,
or carriers, or other like liens arising in the ordinary course of business
and securing obligations which are not yet delinquent; (4) purchase money
liens or purchase money security interests upon or in any property acquired
or held by Borrower in the ordinary course of business to secure
indebtedness outstanding on the date of this Agreement or permitted to be
incurred under the paragraph of this Agreement titled "Indebtedness and
Liens"; (5) liens and security interests which, as of the date of this
Agreement, have been disclosed to and approved by the Lender in writing;
and (6) those liens and security interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to
the net value of Borrower's assets.
PRIMARY CREDIT FACILITY. The words "Primary Credit Facility" mean the
credit facility described in the Line of Credit section of this Agreement.
RELATED DOCUMENTS. The words "Related Documents" mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Loan.
SECURITY AGREEMENT. The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
SECURITY INTEREST. The words "Security Interest" mean, individually,
collectively, and interchangeably, without limitation, any and all types of
collateral security, present and future, whether in the form of a lien,
charge, encumbrance, mortgage, deed of trust, security deed, assignment,
pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel
trust, factor's lien, equipment trust, conditional sale, trust receipt,
lien or title retention contract, lease or consignment intended as a
security device, or any other security or lien interest whatsoever whether
created by law, contract, or otherwise.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) IS DATED DECEMBER 26, 2006.
BORROWER:
VIVITAR CORPORATION
By: /s/ BO-SEN LIU
---------------------------------
BO-SEN LIU, PRESIDENT/SECRETARY
OF VIVITAR CORPORATION
LENDER:
DBS BANK LTD., LOS ANGELES AGENCY
By: /s/ ANDREW KO
---------------------------------
AUTHORIZED SIGNER
12
STANDARD TERMS AND CONDITIONS
BORROWER: VIVITAR CORPORATION LENDER: DBS BANK LTD., LOS ANGELES AGENCY
520 GRAVES AVE 445 SOUTH FIGUEROA STREET
OXNARD, CA 93030 SUITE 3550
LOS ANGELES, CA 90071
THIS STANDARD TERMS AND CONDITIONS IS ATTACHED TO AND BY THIS REFERENCE IS MADE
A PART OF THE BUSINESS LOAN AGREEMENT (ASSET BASED), DATED DECEMBER 26, 2006,
AND EXECUTED IN CONNECTION WITH A LOAN OR OTHER FINANCIAL ACCOMMODATIONS BETWEEN
DBS BANK LTD., LOS ANGELES AGENCY AND VIVITAR CORPORATION.
The following standard terms and conditions are an integral part of the terms of
the facilities.
1. DBS BANK LTD., LOS ANGELES AGENCY ("THE LENDER") RESERVES THE RIGHT AT ANY
TIME TO DEMAND IMMEDIATE PAYMENT OF THE WHOLE OR ANY PART OF THE FACILITY
OUTSTANDING TOGETHER WITH INTEREST AND ALL OTHER MONIES OWING TO DATE
AND/OR TO DEBIT THE BORROWERS' ACCOUNT WITH INTEREST, COMMISSION, CHARGES,
FEES, NORMAL BANK CHARGES AND ALL MONIES INCURRED IN CONNECTION WITH THE
FACILITY AND/OR THE ENFORCEMENT THEREOF.
2 THE BORROWER SHALL GIVE TO LENDER A NOTICE OF A REQUEST FOR BORROWING BY
TELEPHONE OR FACSIMILE TRANSMISSION NOT LATER THAN 10:00 A.M. ON THE
FUNDING DATE. ANY NOTICE IN CONNECTION WITH A REQUESTED BORROWING THAT IS
RECEIVED BY LENDER AFTER 10:00 A.M. ON ANY BUSINESS DAY, OR AT ANY TIME ON
A DAY THAT IS NOT A BUSINESS DAY, SHALL BE DEEMED RECEIVED BY LENDER ON THE
NEXT BUSINESS DAY.
3. IF THE BORROWER GIVES THE LENDER A NOTICE OF REPAYMENT BEFORE 10:00 A.M. ON
A BUSINESS DAY, AND WIRES THE PAYMENT TO THE LENDER BY 12:00 P.M. ON THE
SAME BUSINESS DAY, THE PAYMENT SHALL BE APPLIED TO THE CREDIT FACILITY ON
THE SAME BUSINESS DAY. ANY PAYMENT THAT IS WIRED AND RECEIVED BY THE LENDER
AFTER 12:00 P.M SHALL BE APPLIED TO THE CREDIT FACILITY ON THE NEXT
SUCCEEDING BUSINESS DAY.
ANY PAYMENT BY CHECK THAT IS RECEIVED BY THE LENDER BEFORE 12:00 P.M. ON A
BUSINESS DAY SHALL BE APPLIED TO THE CREDIT FACILITY WHEN THE FUND OF THE CHECK
IS AVAILABLE.
ANY PAYMENT BY CHECK THAT IS RECEIVED BY THE LENDER AFTER 12:00 P.M. ON A
BUSINESS DAY SHALL BE CONSIDERED AS RECEIPT ON THE FOLLOWING BUSINESS DAY.
PAYMENT SHALL BE APPLIED TO THE CREDIT FACILITY WHEN THE FUND OF THE CHECK IS
AVAILABLE.
THIS STANDARD TERMS AND CONDITIONS IS EXECUTED ON DECEMBER 26, 2006.
BORROWER:
VIVITAR CORPORATION
BY: /s/ BO-SEN LIU
---------------------------------
BO-SEN LIU, PRESIDENT/SECRETARY
OF VIVITAR CORPORATION
LENDER:
DBS BANK LTD., LOS ANGELES AGENCY
BY: /s/ ANDREW KO
---------------------------------
AUTHORIZED SIGNER