EXHIBIT 10.22
[Logo of Sanwa AMENDED AND RESTATED CREDIT AGREEMENT
Bank California] ($10,000,000 Revolving Line of Credit)
($10,000,000 Letter of Credit Sub-Facility, $5,000,000 Acceptance
Sub-Facility and $4,500,000 Foreign Exchange Sub-Facility)
($3,000,000 Equipment Purchase Facility)
($15,000,000 Acquisition Non-revolving Line Converting to Term)
($3,000,000 Term Loan)
This Agreement (the "Agreement") is made and entered into as of September
2, 1999, by and between SANWA BANK CALIFORNIA (the "Bank") and OSI SYSTEMS,
INC., UDT SENSORS, INC., ▇▇▇▇▇▇ OPTICS, INC., RAPISCAN SECURITY PRODUCTS, INC.,
METOREX SECURITY PRODUCTS, INC., SILICON MICROSTRUCTURES, INC., and ARISTO
MEDICAL PRODUCTS, INC. (each a "Borrower" and together, the "Borrowers"), on the
terms and conditions that follow and completely amends, restates, and supersedes
all previous Credit Agreements between the Borrower and the Bank.
SECTION
1
DEFINITIONS
1.1 Certain Defined Terms: Unless elsewhere defined in this Agreement, the
following terms shall have the following meanings (such meanings to be generally
applicable to the singular and plural forms of the terms defined):
1.1.1 "Acceptance Facility": shall mean the credit facility described as
such in Section 2.
1.1.2 "Advance": shall mean an advance to any of the Borrowers under the
credit facility (ies) described in Section 2.
1.1.3 "Alternate Currency": shall mean any lawful currency other than
Dollars which is freely transferable and convertible into Dollars.
1.1.4 "Applicable Margin". shall mean the following interest rate
percentages based upon the Debt Coverage Ratio then in effect:
Debt Coverage Ratio Applicable Margin
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Less than 2 to 1 1.25%
Between 2.24 and 2 to 1 1.50%
Between 2.74 and 2.25 to 1 1.75%
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2.75 to 1 or greater 2.00%
1.1.5 "Business Day": shall mean a day other than a Saturday or Sunday on
which commercial banks are open for business in California, USA,
and, with respect to Eurocurrency Advances, on which dealings are
carried on in the London interbank market and banks are open for
business in London and in the country of issue of the currency of
such Advance.
1.1.6 "Close-Out Date": shall mean the Business Day on which the Bank
closes out and liquidates a FX Transaction.
1.1.7 "Closing Value": has the meaning given to it in Section 8.6(i)
hereof.
1.1.8 "Closing Gain" and "Closing Loss" :shall mean the amount determined
in accordance with Section 8.6(ii) hereof.
1.1.9 "Collateral": shall mean the property described in Section 3,
together with any other personal or real property in which the Bank
may be granted a lien or security interest to secure payment of the
Obligations.
1.1.10 "Companies": shall mean all the Borrowers, Foreign Subsidiaries,
and any subsidiary, either foreign or domestic, hereafter acquired.
1.1.11 "Credit Percentage" : shall mean 15%.
1.1.12 "Current Liabilities": shall mean current liabilities as determined
in accordance with generally accepted accounting principals,
including any negative cash balance on the Borrowers' financial
statements.
1.1.13 "Debt": shall mean all liabilities of the Borrowers, or any
Borrower, as applicable, less Subordinated Debt, if any.
1.1.14 "Dollars" and the sign "$": shall mean lawful money of the United
States.
1.1.15 "EBITDA": shall mean earnings exclusive of extraordinary gains and
before deductions for interest expense, taxes, depreciation and
amortization expense.
1.1.16 "Effective Tangible Net Worth": shall mean each Borrower's stated
net worth plus Subordinated Debt but less all intangible assets of
the Borrowers (i.e., goodwill, trademarks, patents, copyrights,
organization expense, and similar intangible items including, but
not limited to, investments in and all amounts due from affiliates,
officers or employees).
1.1.17 "Environmental Claims": shall mean all claims, however asserted, by
any governmental authority or other person alleging potential
liability or responsibility for violation of any Environmental Law
or for release or injury to the environment or threat to public
health, personal injury (including sickness, disease or death),
property damage, natural resources damage, or otherwise alleging
liability or responsibility for damages (punitive or otherwise),
cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type
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of relief, resulting from or based upon (a) the presence,
placement, discharge, emission or release (including intentional
and unintentional, negligent and non-negligent, sudden or non-
sudden, accidental or non-accidental placement, spills, leaks,
discharges, emissions or releases) of any Hazardous Material at,
in, or from property, whether or not owned by any of the Borrowers,
or (b) any other circumstances forming the basis of any violation,
or alleged violation, of any Environmental Law.
1.1.18 "Environmental Laws": shall mean all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties,
requests, licenses, authorizations and permits of, and agreements
with, any governmental authorities, in each case relating to
environmental, health, safety and land use matters; including the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), the Clean Air Act, the Federal Water
Pollution Control Act of 1972, the Solid Waste Disposal Act, the
Federal Resource Conservation and Recovery Act, the Toxic
Substances Control Act, the Emergency Planning and Community Right-
to-Know Act, the California Hazardous Waste Control Law, the
California Solid Waste Management, Resource, Recovery and Recycling
Act, the California Water Code and the California Health and Safety
Code.
1.1.19 "Environmental Permits": shall have the meaning provided in Section
5.11 hereof.
1.1.20 "Equipment": shall mean equipment as defined in the California
Uniform Commercial Code.
1.1.21 "Equipment Purchase Facility": shall mean the credit facility
described as such in Section 2.
1.1.22 "Equipment Value": shall mean the lesser of: the invoice cost of
the equipment (excluding taxes, license fees, transportation costs,
insurance premiums, and installation and connection expenses, fees
and costs); or the book value of the equipment; or the liquidation
value of the equipment as determined by the Bank.
1.1.23 "ERISA": shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, including (unless the context
otherwise requires) any rules or regulations promulgated
thereunder.
1.1.24 "Eurocurrency Advance", "Eurocurrency Interest Period" and
"Eurocurrency Rate": shall have the meanings provided in Section
2.1.4 hereof.
1.1.25 "Event of Default": shall have the meaning set forth in Section 7.
1.1.26 "Expiration Date": shall mean November 30, 2000, or the date of
termination of the Bank's commitment to lend under this Agreement
pursuant to Section 8, whichever shall occur first.
1.1.27 "Fixed Rate Advance": shall have the respective meaning as it is
defined for each facility under Section 2, hereof if applicable.
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1.1.28 "Fixed Rate": shall have the respective meaning as it is defined
for each facility under Section 2, hereof if applicable.
1.1.29 "Foreign Currency": shall mean any legally traded currency other
than US dollars and which may be transferred by paperless wire
transfer or cash and in which the Bank regularly trades.
1.1.30 "Foreign Exchange Facility": shall mean the credit facility
described as such in Section 2.
1.1.31 "Foreign Subsidiaries": shall mean a corporate entity that is not
organized or created in the United states, including only the
States and the District of Columbia, or under the law of the United
states or of any state or territory.
1.1.32 "Funded Debt": shall mean all Indebtedness for borrowed money.
1.1.33 "FX Risk Liability": shall mean the product of (a) the Credit
Percentage, times (b) the aggregate of the Notional Values of all
FX Transactions outstanding, net of any Offsetting Transactions.
1.1.34 "FX Limit": shall mean $4,500,000.00.
1.1.35 "FX Transaction": shall mean any transaction between the Bank and
any of the Borrowers pursuant to which the Bank has agreed to sell
to or to purchase from such Borrower a Foreign Currency of an
agreed amount at an agreed price in US dollars or such other agreed
upon Foreign Currency, deliverable and payable on an agreed date.
1.1.36 "Hazardous Materials": shall mean all those substances which are
regulated by, or which may form the basis of liability under, any
Environmental Law, including all substances identified under any
Environmental Law as a pollutant, contaminant, hazardous waste,
hazardous constituent, special waste, hazardous substance,
hazardous material, or toxic substance, or petroleum or petroleum
derived substance or waste.
1.1.37 "Indebtedness": shall mean, with respect to any of the Borrowers,
(i) all indebtedness for borrowed money or for the deferred
purchase price of property or services in respect of which such
Borrower is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which such Borrower
otherwise assures a creditor against loss and (ii) obligations
under leases which shall have been or should be, in accordance with
generally accepted accounting principles, reported as capital
leases in respect of which such Borrower is liable, contingently or
otherwise, or in respect of which such Borrower otherwise assures a
creditor against loss.
1.1.38 "Interest Period": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.39 "Letter of Credit Facility": shall mean the credit facility
described as such in Section 2.
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1.1.40 "LIBOR Advance": shall have the respective meaning as it is defined
for each facility under Section 2, hereof.
1.1.41 "LIBOR Interest Period": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.42 "LIBOR Rate": shall have the respective meaning as it is defined
for each facility under Section 2, hereof.
1.1.43 "Line Account": shall have the meaning provided in Section 2.9
hereof.
1.1.44 "Line of Credit": shall mean the credit facility described as such
in Section 2.
1.1.45 "Notional Value": shall mean the US Dollar equivalent of the price
at which the Bank agreed to purchase or sell to the Borrower a
Foreign Currency.
1.1.46 "Obligations": shall mean all amounts owing by the Borrowers to the
Bank pursuant to this Agreement including, but not limited to, the
unpaid principal amount of Advances.
1.1.47 "Offsetting Transaction": shall mean a FX Transaction to purchase a
Foreign Currency and a FX Transaction to sell the same Foreign
Currency, each with the same Settlement Date and designated as an
Offsetting Transaction at the time of entering into the FX
Transaction.
1.1.48 "Ordinary Course of Business": shall mean, with respect to any
transaction involving any of the Borrowers or any of its
subsidiaries or affiliates, the ordinary course of such Borrower's
business, as conducted by such Borrower in accordance with past
practice and undertaken by such Borrower in good faith and not for
the purpose of evading any covenant or restriction in this
Agreement or in any other document, instrument or agreement
executed in connection herewith.
1.1.49 "Permitted Liens": shall mean: (i) liens and security interests
securing indebtedness owed by the Borrowers to the Bank; (ii) liens
for taxes, assessments or similar charges not yet due; (iii) 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; (iv) purchase money liens
or purchase money security interests upon or in any property
acquired or held by any of the Borrowers in the Ordinary Course of
Business to secure Indebtedness outstanding on the date hereof or
permitted to be incurred under Section 5.7 hereof; (v) liens and
security interests which, as of the date hereof, have been
disclosed to and approved by the Bank in writing; and (vi) those
liens and security interests which in the aggregate constitute an
immaterial and insignificant monetary amount with respect to the
net value of the Borrowers' assets.
1.1.50 "Redenominate", "Redenomination" and "Redenominated": each refers
to redenomination of each Advance from Dollars into an Alternate
Currency or from an Alternate Currency into Dollars or another
Alternate Currency pursuant to Section 2.06.
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1.1.51 "Reference Rate": shall mean an index for a variable interest rate
which is quoted, published or announced by Bank as its reference
rate and as to which loans may be made by Bank at, above or below
such rate.
1.1.52 "Settlement Date": shall mean the Business Day on which the
applicable Borrower has agreed to (a) deliver the required amount
of Foreign Currency, or (b) pay in US dollars the agreed upon
purchase price of the Foreign Currency.
1.1.53 "Subordinated Debt": shall mean such liabilities of any of the
Borrowers which have been subordinated to those owed to the Bank in
a manner acceptable to the Bank.
1.1.54 "Variable Rate Advance": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.55 "Variable Rate": shall have the respective meaning as it is defined
for each facility under Section 2, hereof.
1.2 Accounting Terms: All references to financial statements, assets,
liabilities, and similar accounting items not specifically defined herein
shall mean such financial statements or such items prepared or determined
in accordance with generally accepted accounting principles consistently
applied and, except where otherwise specified, all financial data submitted
pursuant to this Agreement shall be prepared in accordance with such
principles.
1.3 Other Terms: Other terms not otherwise defined shall have the meanings
attributed to such terms in the California Uniform Commercial Code.
1.4 Currency Equivalents Generally: For all purposes of this Agreement other
than Section 2, the equivalent in any Alternate Currency of an amount in
Dollars shall be determined at the rate of exchange quoted by the Bank in
Los Angeles, at 9:00 A.M. on the date of determination, for the spot
purchase in the relevant foreign exchange market of such amount of Dollars
with such Alternate Currency.
SECTION
2
CREDIT FACILITIES
2.1 THE LINE OF CREDIT
2.1.1 The Line of Credit: On terms and conditions as set forth herein,
the Bank agrees to make Advances in Dollars or in Alternate
Currency to the Borrowers from time to time from the date hereof
to the Expiration Date, provided the aggregate amount of such
Advances outstanding at any time does not exceed $10,000,000.00 or
the equivalent in Alternate Currency (the "Line of Credit").
Within the foregoing limits, the Borrowers may borrow, partially
or wholly prepay, and reborrow under this Section 2.1. Proceeds of
the Line of Credit shall be used for general working capital
purposes.
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2.1.2 Making Line Advances: Each Advance under the Line of Credit shall
be conclusively deemed to have been made at the request of and for
the benefit of the Borrowers (i) when credited to any deposit
account of any of the Borrowers maintained with the Bank or (ii)
when paid in accordance with the Borrowers' written instructions.
Subject to the requirements of Section 4, Advances shall be made
by the Bank upon telephonic or facsimile request received from the
Borrower, which request shall be received not later than 12:00
p.m. (Pacific Standard Time) on the date specified for a Variable
Rate Advance, as hereinafter defined, and 11:00 a.m. (Pacific
Standard Time) two business days prior to the date specified for a
Eurocurrency Advance or a Cost of Funds Advance, as hereinafter
defined, each of which dates shall be a Business Day. The rates
for a Eurocurrency Advance or a Cost of Funds Advance shall be set
on the same Business Day as the request is received if received by
11:00 a.m. and on the next Business Day if received after 11:00
a.m.. Requests for Advances received after such time may, at the
Bank's option, be deemed to be a request for an Advance to be made
on the next succeeding Business Day for a Variable Rate Advance
and the third succeeding Business Day for a Eurocurrency Advance
or a Cost of Funds Advance.
2.1.3 Repayment: On the Expiration Date, each Borrower hereby jointly
and severally promises and agrees to pay to the Bank in full the
aggregate unpaid principal amount of all Advances then
outstanding, together with all accrued and unpaid interest
thereon. provided, however, that any Advance denominated in
Dollars must be repaid in Dollars and any Advance denominated in
an Alternate Currency must be repaid in the same Alternate
Currency.
2.1.4 Interest on Advances: Interest shall accrue from the date of each
Advance under the Line of Credit at one of the following rates, as
quoted by the Bank and as elected by the Borrowers hereinbelow:
(i) Variable Rate Advances: For Advances denominated in Dollars,
a variable rate per annum equivalent to an index for a
variable interest rate which is quoted, published or
announced from time to time by the Bank as its reference
rate (the "Reference Rate") and as to which loans may be
made by the Bank at, below or above such Reference Rate (the
"Variable Rate"). Interest shall be adjusted concurrently
with any change in the Reference Rate. An Advance which
bears interest at the Variable Rate is hereinafter referred
to as a "Variable Rate Advance".
(ii) Eurocurrency Advances: For Advances denominated in Dollars
or in Alternate Currency, a fixed rate quoted by the Bank
for one, three, six, nine or twelve months or for such other
period of time that the Bank may quote and offer (provided
that any such period of time does not extend beyond the
Expiration Date) [the "Eurocurrency Interest Period"] for
Advances in the minimum amount of $100,000 and in $100,000
increments thereafter. Such interest rate shall be a
percentage, rounded upward to the nearest one-hundredth of
one percent, equivalent to the Bank's Eurocurrency Rate for
Dollars or such Alternate Currency plus the Applicable
Margin which is that rate determined by the Bank's Treasury
Desk as being the approximate rate at which the Bank could
purchase offshore Dollar deposits or Alternate Currency
deposits in an amount approximately equal
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to the amount of the relevant Advance and for a period of
time approximately equal to the relevant Eurocurrency
Interest Period (adjusted for any and all assessments,
surcharges and reserve requirements pertaining to the
purchase by the Bank of such Alternate Currency deposits
[the "Eurocurrency Rate"]. An Advance which bears interest
at the Eurocurrency Rate is hereinafter referred to as the
"Eurocurrency Advance".
(iii) Cost of Funds Advances. For Advances denominated in Dollars,
the Bank hereby agrees to make Advances to the Borrower, at
Borrower's election, at a fixed rate quoted by Bank in its
sole discretion for each Advance (the "Cost of Funds Rate")
plus the Applicable Margin and for such period of time that
the Bank may quote and offer, provided that any such period
of time does not extend beyond the Expiration Date (the
"Cost of Funds Interest Period") for Advances in the minimum
amount $100,000 and in $100,000 increments thereafter.
Advances based upon the Cost of Funds Rate are hereinafter
referred to as "Cost of Funds Advances". The Bank shall
provide the Borrower with a statement of the Borrower's Cost
of Funds Rate, which statement shall be considered to be
correct and conclusively binding on the Borrower unless the
Borrower notifies the Bank to the contrary within 30 days
after the Borrower's receipt of any such statement which it
deems to be incorrect.
Eurocurrency Advances and Cost of Funds Advances are sometimes
hereinafter referred to as a "Fixed Rate Advance".
Interest on Variable Rate Advances and Cost of Funds Advances
shall be paid in Dollars in monthly installments commencing on the
first day of the month following the date of the first such
Advance and continuing on the first day of each month thereafter.
Interest on any Eurocurrency Advance shall be paid on the last day
of the Eurocurrency Interest Period pertaining to such
Eurocurrency Advance and shall be paid in Dollars or in the
relevant Alternate Currency as the case may be. Each Borrower
further jointly and severally promises and agrees to pay the Bank
interest on any Eurocurrency Advance with an Eurocurrency Interest
Period in excess of 90 days on a quarterly basis (i.e., on the
last day of each 90-day period occurring in such Eurocurrency
Interest Period) and on the last day of the relevant Eurocurrency
Interest Period.
If interest is not paid as and when it is due, it shall be added
to the principal, become and be treated as a part thereof, and
shall thereafter bear like interest.
2.1.5 Notice of Election to Adjust Interest Rate: The Borrowers may
elect that interest on a Fixed Rate Advance shall continue to
accrue at a newly quoted Eurocurrency Rate or Cost of Funds Rate;
provided, however, that such notice shall be received by the Bank
no later than 11:00 a.m. two business days prior to the last day
of the Eurocurrency Interest Period for a Eurocurrency Advance and
1:00 p.m. one business day prior to the last day of a Cost of
Funds Interest Period for a Cost of Funds Advance. Such notice may
be by telephone if confirmed in writing by telecopy with the
original of such writing deposited in the US mail or with
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an air courier on the same day. The Bank shall not incur any
liability to any Borrower in acting upon any telephonic notice
referred to above that the Bank believes in good faith to have
been given by a duly authorized officer or other person authorized
to act on behalf of any Borrower and upon any borrowing,
Redenomination or continuation by the Bank in accordance with this
Agreement pursuant to any telephonic notice, each Borrower shall
have effected the borrowing, redenomination or continuation of
Advances hereunder. The Borrowers may elect that interest on a
Fixed Rate Advance shall accrue at the Variable Rate; provided,
however, that such notice shall be received by the Bank no later
than one business day prior to the last day of the Interest Period
pertaining to such Fixed Rate Advance, and provided further,
however, that such Fixed Rate Advance shall be in Dollars or
Redenominated in Dollars pursuant to the terms hereinbelow. If the
Bank shall not have received notice (as prescribed herein) of
Borrowers' election that interest on any Fixed Rate Advance shall
continue to accrue at the newly quoted Eurocurrency Rate or Cost
of Funds Rate or Variable Rate as the case may be, the Borrowers
shall be deemed to have elected that interest thereon shall be
adjusted to accrue at the Variable Rate then in effect and any
Alternate Currency shall be Redenominated in Dollars.
2.1.6 Redenomination of Advances: The Borrowers may, upon notice given
to the Bank at least four Business Days prior to the date of the
proposed Redenomination, request that a Eurocurrency Advance be
Redenominated from Dollars into an Alternate Currency or from an
Alternate Currency into Dollars or another Alternate Currency;
provided, however, that any Redenomination shall be made on, and
only on, the last day of an Interest Period for such Advances.
Each such notice of request of a Redenomination ( "Notice of
Redenomination") shall be by telecopier, telex or cable, confirmed
immediately in writing, or may be by telephone if confirmed in
writing by telecopy with the original of such writing deposited in
the US mail or with an air courier on the same day, and the Bank
shall not incur any liability to any Borrower in acting upon any
telephonic notice referred to above that the Bank believes in good
faith to have been given by a duly authorized officer or other
person authorized to act on behalf of any Borrower and upon any
borrowing, Redenomination or continuation by the Bank in
accordance with this Agreement pursuant to any telephonic notice,
the Borrowers shall have effected the borrowing, redenomination or
continuation of Advances hereunder, specifying (i) the
Eurocurrency Advance(s) to be Redenominated, (ii) the date of the
proposed Redenomination, (iii) the Alternate Currency into which
such Advances are to be Redenominated, and (iv) the duration of
the Interest Period for such Advances upon being so Redenominated.
In the case of a Notice of Redenomination which requests a
Redenomination of Advances into an Alternate Currency, such
Redenomination is subject to confirmation by Bank not later than
the third Business Day before the requested date of such
Redenomination that such Bank agrees to such Redenomination. which
confirmation shall be notified to the Borrowers. If no
confirmation is provided the Redenomination will not occur. Each
Advance so requested to be Redenominated will be Redenominated, on
the date specified therefor in such Notice of Redenomination, into
an equivalent amount thereof in the currency requested in such
Notice of Redenomination, such equivalent amount to be determined
on such date in accordance with Section 2.7, and, upon being so
Redenominated, will have an initial Interest Period as requested
in such Notice of Redenomination.
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2.1.7 Prepayment:
(i) The Borrowers may prepay any Advance in whole or in part, at
any time and without penalty, provided, however, that: (i)
any partial prepayment shall first be applied, at the Bank's
option, to accrued and unpaid interest and next to the
outstanding principal balance; and (ii) during any period of
time in which interest is accruing on any Advance on the
basis of the Eurocurrency Rate or the Cost of Funds Rate, no
prepayment shall be made except on a day which is the last
day of the Interest Period pertaining thereto provided,
however, if the whole or any part of any Fixed Rate Advance
is prepaid by reason of acceleration or otherwise, the
Borrower shall jointly and severally upon the Bank's
request, promptly pay to and indemnify the Bank for all
costs and any loss actually incurred by the Bank, excluding
loss of profit on any margin, but including any loss
resulting from the re-employment of funds, sustained by the
Bank as a consequence of such prepayment, and provided
further, that any prepayment hereunder shall not be deemed
to be an event of default.
(ii) If, on the last day of any Interest Period, the equivalent
in Dollars of the aggregate principal amount of all
Eurocurrency Advances then outstanding when combined with
the aggregate principal amount of all Variable Rate Advances
and Cost of Funds Advances then outstanding exceeds the Line
of Credit, the Borrowers shall jointly and severally on such
last day prepay an aggregate principal amount of such
Advances to the Bank in an amount at least equal to such
excess, with accrued interest to the date of such prepayment
on the principal amount prepaid.
(iii) The Bank shall be entitled to fund all or any portion of its
Advances in any manner it may determine in its sole
discretion, but all calculations and transactions hereunder
shall be conducted as though the Bank actually funded all
Advances through the purchase of dollar deposits bearing
interest at the same rate as U.S. Treasury securities in the
amount of the relevant Advance and in maturities
corresponding to the date of such purchase to the Expiration
Date hereunder.
2.1.8 Indemnification for Eurocurrency Rate and Cost of Funds Rate
Costs: During any period of time in which interest on any Advance
is accruing on the basis of the Eurocurrency Rate or the Cost of
Funds Rate, the Borrowers shall jointly and severally, within 15
days of the Bank's written request, which request shall explain in
reasonable detail the reason for such costs or payments, promptly
pay to and reimburse the Bank for all costs incurred and payments
made by the Bank by reason of any future assessment, reserve,
deposit or similar requirement or any surcharge, tax or fee
imposed upon the Bank or as a result of the Bank's compliance with
any directive or requirement of any regulatory authority
pertaining or relating to the Alternate Currency or Dollars or
cost of funds used by the Bank in quoting and determining the
Eurocurrency Rate or the Cost of Funds Rate under this Agreement.
Bank shall use its best efforts to provide Borrowers, in advance,
with an estimate of any such costs which may potentially be
incurred hereunder.
2.1.9 Eurocurrency Rate or Cost of Funds Rate Infeasible: In the event
that the Bank shall at any time determine that the accrual of
interest on the basis of the
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Eurocurrency Rate or the Cost of Funds Rate (i) is infeasible at
the time of any borrowing, continuation or Redenomination because
the Bank is unable to determine the Eurocurrency Rate or Cost of
Funds Rate due to the unavailability of Dollars or Alternate
Currency deposits, contracts or time deposits in an amount
approximately equal to the amount of the relevant Advance and for
a period of time approximately equal to relevant Interest Period
or (ii) is or has become unlawful or infeasible by reason of the
Bank's compliance with any new law, rule, regulation, guideline or
order, or any new interpretation of any present law, rule,
regulation, guideline or order, then the Bank shall give
telephonic notice thereof (confirmed in writing) to the Borrowers,
in which event such Fixed Rate Advance shall be immediately
prepaid but then may be converted or Redenominated into a Variable
Rate Advance at the election of the Borrowers.
2.1.10 Failure to Borrow: In the case of any Fixed Rate Advance, the
Borrowers shall jointly and severally indemnify Bank against any
loss, cost or expense incurred by Bank as a result of any failure
to borrow on the date specified for such Fixed Rate Advance (other
than as a result of Bank's failure to make funds available for
such Advance), including, without limitation, any loss (excluding
loss of anticipated profits), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds
acquired by Bank to fund such Fixed Rate Advance to be made by
Bank when such Fixed Rate Advance is not made on such date.
2.1.11 Computations and Payments: Interest on any Advance shall be
computed on the basis of 360 days per year, but charged on the
actual number of days elapsed. Whenever any payment hereunder
shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the
computation of payment of interest; provided, however, if such
extension would cause payment of interest on or principal of
Eurocurrency Advances to be made in the next following calendar
month, such payment shall be made on the immediately preceding
Business Day.
2.1.12 Loan Fee. The Borrowers promise and agree, concurrently with the
execution and delivery of this Agreement, to pay to the Bank a
non-refundable loan fee equal to .125% of the unused portion of
the Line of Credit, payable quarterly in arrears on the last day
of each March, June, September and December of each year.
2.2 LETTER OF CREDIT SUB-FACILITY
2.2.1 Letter of Credit Sub-Facility: The Bank agrees to issue commercial
and/or standby letters of credit (each a "Letter of Credit") on
behalf of the Borrowers of up to $10,000,000.00. At no time,
however, shall the total principal amount of all Advances
outstanding under the Line of Credit, together with the total face
amount of all Letters of Credit outstanding, less any partial
draws paid by the Bank, exceed the Line of Credit.
(i) Upon the Bank's request, the Borrowers shall promptly pay to
the Bank issuance fees and such other fees, commissions, costs
and any out-of-
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pocket expenses charged or incurred by the Bank with respect to
any Letter of Credit.
(ii) The commitment by the Bank to issue Letters of Credit shall,
unless earlier terminated in accordance with the terms of the
Agreement, automatically terminate on the Expiration Date of the
Letter of Credit and no Letter of Credit shall expire on a date
which is 90 days after the Expiration Date.
(iii) Each Letter of Credit shall be in form and substance satisfactory
to the Bank and in favor of beneficiaries satisfactory to the
Bank, provided that the Bank 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 the Bank, 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.
(iv) Prior to the issuance of each Letter of Credit, but in no event
later than 10:00 a.m. (California time) on the day such Letter of
Credit is to be issued (which shall be a Business Day), the
Borrowers shall deliver to the Bank a duly executed form of the
Bank's standard form of application for issuance of a letter of
credit with proper insertions.
(v) The Borrowers shall, upon the Bank's request, promptly pay to and
reimburse the Bank for all costs incurred and payments made by the
Bank by reason of any future assessment, reserve, deposit or
similar requirement or any surcharge, tax or fee imposed upon the
Bank or as a result of the Bank's compliance with any directive or
requirement of any regulatory authority pertaining or relating to
any Letter of Credit. In the event that the Borrowers fail to pay
any drawing under any Letter of Credit or the balances in the
depository account or accounts maintained by the Borrowers with
Bank are insufficient to pay such drawing, without limiting the
rights of Bank hereunder or waiving any Event of Default caused
thereby, Bank may, and Borrowers hereby authorize the Bank to
create an Advance bearing interest at the rate or rates provided
in Section 9.2 hereof to pay such drawing.
2.3 ACCEPTANCE SUB-FACILITY
2.3.1 Acceptance Sub-Facility: The Borrowers may from time to time request the
Bank to accept one or more drafts drawn on the Bank for the account of
the Borrowers (each an "Acceptance") of up to $5,000,000. At no time,
however, shall the total principal balance of all Acceptances
outstanding, together with the total face amount of all outstanding
Letters of Credit less any partial draws paid by the Bank, exceed the
sum of $10,000,000.00 and, together with the total principal balance of
all Advances outstanding under the Line of Credit, exceed the Line of
Credit.
(i) Requests for Acceptances. Each request for an Acceptance shall be
made in writing or by telephone confirmed in writing (each a
"Request"), shall be irrevocable, and shall involve one or more
drafts as described below. Each Request shall be delivered or
communicated to the Bank no
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later than 10:00 a.m. (California time) on the day (which shall be a
business day) on which the creation of an Acceptance is requested. By
making any such Request, the Borrowers agree that all matters relating to
each such Acceptance shall be governed hereby and the Borrowers restate
all warranties and representations made by the Borrower herein as if made
on the date of the Request and on the date that the Acceptance is
created.
(ii) Acceptances. Each Acceptance shall be created upon a Request by the
Bank's acceptance of a draft in form and substance satisfactory to the
Bank (each a "Draft"). Each Draft shall: (i) be drawn on the Bank by or
on behalf or for the account of the Borrowers in accordance with the
provisions hereof ; (ii) have a minimum face amount of $100,000.00; (iii)
be for the purpose of financing only those transactions permitted by
Subsection 7 of Section 13 of the Federal Reserve Act, as amended from
time to time; and (iv) mature not more than 180 days after the date
thereof (provided that, if such date is not a Business Day, the maturity
shall be extended to the next succeeding Business Day). However, no Draft
shall mature after the Expiration Date. The Borrowers hereby warrant that
any Acceptances relating to the importation or exportation of goods or
relating to the domestic shipment of goods shall: (i) not have a term in
excess of the period of time which is usual and reasonably necessary to
finance transactions of the character of the underlying import or export
transaction or the underlying domestic shipment; (ii) not, together with
all other Acceptances relating to any such shipment, have an aggregate
face amount exceeding the CIF value of such shipment; and (iii) not be
created more than 30 days after the date of shipment of goods to which
such Acceptance relates. Acceptances relating to the storage of goods
shall be subject to the further conditions that: (i) at the time such
Acceptance is created, the goods being stored are covered by a warehouse
receipt issued by a bonded warehouse independent of the Borrowers and
acceptable to the Bank; (ii) the goods covered by the warehouse receipt
are readily marketable staples (as such term is defined in Section 13 of
the Federal Reserve Act by the Board of Governors of the Federal Reserve
System or by Federal Reserve Bulletins) held pending a reasonably
immediate sale, distribution or shipment; and (iii) the face amount of
the Acceptance relating to such goods does not exceed the fair market
value of the goods.
(iii) Acceptance Liability. The Borrowers are obligated, and hereby
unconditionally promise and agree, to pay the Bank, on the maturity date
of each Acceptance or on such earlier date as may be required pursuant
hereto, the face amount of each such Acceptance.
(iv) Acceptance Commissions. The Borrowers agree, upon acceptance by the Bank
of each Draft and as a condition precedent to such Acceptance, to pay to
the Bank a fee (the "Commission") in an amount equal to 1.5% per annum of
the face amount of each Acceptance calculated on the basis of 360 days
per year for the actual number of days (including the first day but
excluding the last day) during the period which is for the term of the
Draft.
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(v) Discount of Acceptances. The Bank agrees to discount any
Acceptance that is created and presented to it for discount at
a rate quoted by the Bank at the time the Acceptance is
presented to the Bank for discount and for a similar dollar
amount and a similar maturity as the Draft being presented to
the Bank by the Borrowers for acceptance (the "Acceptance
Discount Rate"). On the date any such Acceptance is presented
for discount, the Bank shall: (i) cause the aggregate
discounted amount (less any Commission then payable by the
Borrowers to the Bank hereunder) to be made available to the
Borrowers by crediting such amount to the Borrowers' demand
deposit account maintained with the Bank, and (ii) advise the
Borrowers of the Acceptance Discount Rate at which the Bank
discounted such Acceptance. The Bank shall have the right, in
its sole discretion, to sell, rediscount, hold or otherwise
deal with or dispose of any such Acceptance discounted by it.
(vi) Acceptance Collateral. Each Draft accepted by the Bank shall be
secured by a security interest in the goods (as defined in the
California Uniform Commercial Code) involved in the transaction
out of which the Acceptance arose to the extent that such a
security interest is either required by the Bank or in order
that the relevant Acceptance conform to the requirements of
Section 13 of the Federal Reserve Act.
(vii) Future Assessments. The Borrowers shall, within 15 days of the
Bank's written request, promptly pay to and reimburse the Bank
for all costs incurred and payments made by the Bank by reason
of any future assessment, reserve, deposit or similar
requirement or any surcharge, tax or fee imposed upon the Bank
or as a result of the Bank's compliance with any directive or
requirement of any regulatory authority pertaining or relating
to any Acceptance. Bank shall use its best efforts to provide
Borrowers, in advance, with an estimate of any such costs which
may potentially be incurred hereunder.
2.4 FOREIGN EXCHANGE SUB-FACILITY
2.4.1 Foreign Exchange Sub-Facility: The Bank agrees to enter into FX
Transactions with the Borrowers, at the Borrowers' request therefor
made prior to the Expiration Date, provided however, that at no time
shall the aggregate FX Risk Liability of the Borrowers exceed the FX
Limit, and provided further, at no time shall the aggregate FX Risk
Liability combined with the total face amount of all Letters of Credit
outstanding, less any partial draws paid by the Bank, together with
the total principal balance of all Acceptances outstanding, together
with the total principal amount of all outstanding Advances, exceed
the Line of Credit. Each FX Transaction shall be used to hedge the
Borrowers' foreign exchange exposure.
(i) Requests. Each request for a FX Transaction shall be made by
telephone to the Bank's Treasury Department ("Request"), shall
specify the Foreign Currency to be purchased or sold, the
amount of such Foreign Currency and the Settlement Date. Each
Request shall be communicated to the Bank no later than 3:00
p.m. California time on the Business Day on which the FX
Transaction is requested.
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(ii) Tenor. No FX Transaction shall have a Settlement Date which is
more than 365 days after the date of entry into such FX
Transaction.
(iii) Availability. Bank may refuse to enter into a FX Transaction
with the Borrowers where the Bank, at its sole discretion,
determines that (1) the requested Foreign Currency is
unavailable, or (2) the Bank is not then dealing in the
requested Foreign Currency, or (3) the Bank would be
prohibited by any applicable law, rule, regulation or order
from purchasing such Foreign Currency.
(iv) Payment. Payment is due on the Settlement Date of the relevant
FX Transaction. The Bank is hereby authorized by the Borrowers
to charge the full settlement price of any FX Transaction
against the depository account or accounts maintained by the
Borrowers with the Bank on the Settlement Date. In the event
that the Borrowers fail to pay the settlement price of any FX
Transaction on the Settlement Date or the balances in the
depository account or accounts maintained with Bank are
insufficient to pay the settlement price, without limiting the
rights of Bank hereunder or waiving any Event of Default
caused thereby, Bank may , and Borrowers hereby authorize Bank
to, create an Advance bearing interest at the Variable Rate to
pay the settlement price on the Settlement Date.
(v) Increased Costs. Borrowers shall, within 15 days of the Bank's
written request promptly pay to and reimburse the Bank for all
costs incurred and payments made by the Bank by reason of any
assessment, reserve, deposit, capital maintenance or similar
requirement or any surcharge, tax or fee imposed upon the Bank
or as a result of the Bank's compliance with any directive or
requirement of any regulatory authority pertaining or relating
to any FX Transaction. Bank shall use its best efforts to
provide Borrowers, in advance, with an estimate of any such
costs which may potentially be incurred hereunder.
(vi) Impossibility of Performance. In the event that the Borrowers
or the Bank cannot perform under a FX Transaction due to force
majeure or an act of State or it becomes unlawful or
impossible to perform, all in the good faith judgement of the
Borrowers or the Bank, then upon notice to the other party,
the Borrowers or the Bank may require the close-out and
liquidation of the affected FX Transaction in accordance with
the provisions of this Agreement
2.5 EQUIPMENT PURCHASE FACILITY
2.5.1 Equipment Purchase Facility: The Bank hereby agrees to make loans
and advances ("Advances") to assist the Borrowers in purchasing
items of equipment, upon a request therefor made by the Borrowers to
the Bank prior to November 30, 2000 (the "Equipment Purchase
Facility"). Each Advance made hereunder shall be in an amount not to
exceed 80% of the Value of the item(s) of Equipment being purchased;
provided, however, that at no time shall the total aggregate
outstanding principal amount of Advances made hereunder exceed the
sum of $3,000,000.00; and provided further that the amount of any
Advance which is repaid, in whole or in part, may not be reborrowed.
-15-
2.5.2 Equipment Account: The Bank shall maintain on its books a record of
account in which the Bank shall make entries for each Advance and such
other debits and credits as shall be appropriate in connection with the
Equipment Purchase Facility (the "Equipment Account").
2.5.3 Security Interest in Equipment. The Borrowers, shall execute and deliver
to the Bank, security agreements, financing statements, disbursement
instructions and such other documents and instruments which the Bank may
require with respect to such Advance and the perfection of the Bank's
security interest in the Equipment pertaining to such Advance.
2.5.4 Repayment: Unless sooner due in accordance with the terms of the
Agreement, on the Expiration Date, each Borrower hereby jointly and
severally promises and agrees to pay to the Bank in full the aggregate
unpaid principal amount of all Advances then outstanding hereunder,
together with all accrued and unpaid interest thereon.
2.5.5 Interest on Advances: Interest shall accrue from the date of each Advance
under the Equipment Purchase Facility at one of the following rates, as
quoted by the Bank and as elected by the Borrowers pursuant to Subsection
(i) or Subsection (ii) or Subsection (iii) below:
(i) Variable Rate Advances: A variable rate per annum equivalent to the
----------------------
Reference Rate (the "Variable Rate"). Interest shall be adjusted
concurrently with any change in the Reference Rate. An Advance
based upon the Variable Rate is hereinafter referred to as a
"Variable Rate Advance".
(ii) Fixed Rate Advances: A fixed rate per annum quoted by the Bank for
-------------------
30, 60, 90 or 180 days or for such other period of time that the
Bank may quote and offer (provided that any such period of time
does not extend beyond the Expiration Date) (the "Interest Period")
for Advances in the minimum amount of $100,000.00. Such interest
rate shall be a percentage approximately equivalent to the
Applicable Margins plus the rate which the Bank determines in its
sole and absolute discretion to be equal to the Bank's cost of
acquiring funds (adjusted for any and all assessments, surcharges
and reserve requirements pertaining to the borrowing or purchase by
the Bank of such funds) in an amount approximately equal to the
amount of the relevant Advance and for a period of time
approximately equal to the relevant Interest Period (the "Fixed
Rate"). Advances based upon the Fixed Rate are hereinafter referred
to as "Fixed Rate Advances".
(iii) LIBOR Advances: A fixed rate quoted by the Bank for one week, 1, 2,
--------------
3, or 6 months or for such other period of time that the Bank may
quote and offer (provided that any such period of time does not
extend beyond the Expiration Date) (the "LIBOR Interest Period")
for Advances in the minimum amount of $100,000.00. Such interest
rate shall be a percentage approximately equivalent to the
Applicable Margin plus the Bank's LIBOR Rate which is that rate
determined by the Bank's Treasury Desk as being the arithmetic mean
(rounded upwards, if necessary, to the nearest whole multiple of
one-sixteenth of one percent (1/16%)) of the U. S. dollar ▇▇▇▇▇▇
-▇▇-
▇▇▇▇▇▇▇▇▇ Offered Rates for such period appearing on page 3750 (or
such other page as may replace page 3750) of the Telerate screen at
or about 11:00 a.m. (London time) on the second Business Day prior
to the first days of such period (adjusted for any and all
assessments, surcharges and reserve requirements) (the "LIBOR
Rate"). An Advance based upon the LIBOR Rate is hereinafter
referred to as a "LIBOR Advance".
Interest on any Advance shall be computed on the basis of 360 days per
year, but charged on the actual number of days elapsed.
Each Borrower hereby jointly and severally promises and agrees to pay
interest in arrears on Variable Rate Advances on the last calendar day of
each month.
Interest on any LIBOR Advance or Fixed Rate Advance with a LIBOR Interest
Period or Interest Period of 3 months or less shall be paid on the last
day of the LIBOR Interest Period or Interest Period as the case may be.
The Borrowers further promise and agree to pay the Bank interest on any
LIBOR Advance or Fixed Rate Advance with a LIBOR Interest Period or
Interest Period in excess of 3 months on a quarterly basis (i.e., on the
last day of each 3 month period occurring in such LIBOR Interest Period
or Interest Period) and on the last day of the LIBOR Interest Period or
Interest Period.
If interest is not paid as and when it is due, it shall be added to the
principal, become and be treated as a part thereof, and shall thereafter
bear like interest.
2.5.6 Notice of Borrowing: Upon written notice which shall be received by the
Bank at or before 2:00 p.m. (California time) on a Business Day, the
Borrowers may borrow under the Equipment Purchase Facility by requesting:
(i) A Variable Rate Advance or Fixed Rate Advance: A Variable Rate
---------------------------------------------
Advance or Fixed Rate Advance may be made on the day notice is
received by the Bank; provided, however, that if the Bank shall not
have received notice at or before 2:00 a.m. on the day such Advance
is requested to be made, such Variable Rate Advance or Fixed Rate
Advance may, at the Bank's option, be made on the next Business Day.
(ii) A LIBOR Advance: Notice of any LIBOR Advance shall be received by
---------------
the Bank no later than two Business Days prior to the day (which
shall be a Business Day) on which the Borrowers request such LIBOR
Advance to be made.
2.5.7 Notice of Election to Adjust Interest Rate: Upon telephonic notice which
shall be received by the Bank at or before 2:00 p.m. (California time) on
a Business Day, the Borrowers may elect:
(i) That interest on a Variable Rate Advance shall be adjusted to accrue
at the Fixed Rate; provided, however, that such notice shall be
received by the Bank no later than 2:00 p.m. on the Business Day on
which the Borrowers request that interest be adjusted to accrue at
the Fixed Rate.
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(ii) That interest on a Variable Rate Advance shall be adjusted to
accrue at the LIBOR Rate; provided, however, that such notice shall
be received by the Bank no later than two Business Days prior to
the Business Day on which the Borrowers request that interest be
adjusted to accrue at the LIBOR Rate.
(iii) That interest on a Fixed Rate Advance shall continue to accrue at a
newly quoted Fixed Rate or shall be adjusted to commence to accrue
at the Variable Rate; provided, however, that such notice shall be
received by the Bank no later than 2:00 p.m. on the last day of the
Interest Period pertaining to such Fixed Rate Advance. If the Bank
shall not have received notice (as prescribed herein) of the
Borrowers' election that interest on any Fixed Rate Advance shall
continue to accrue at the newly quoted Fixed Rate as the case may
be the Borrowers shall be deemed to have elected that interest
thereon shall be adjusted to accrue at the Variable Rate upon the
expiration of the relevant Interest Period pertaining to such
Advance.
(iv) That (i) interest on a Fixed Rate Advance shall accrue at a newly
quoted LIBOR Rate or (ii) interest on a LIBOR Advance shall
continue to accrue at a newly quoted Fixed Rate or LIBOR Rate or
shall be adjusted to commence to accrue at the Variable Rate;
provided, however, that such notice shall be received by the Bank
no later than two Business Days prior to the last day of the
relevant Interest Period or LIBOR Interest Period, as applicable.
If the Bank shall not have received notice as prescribed herein of
the Borrowers' election that interest on (x) any Fixed Rate Advance
shall accrue interest at a newly quoted LIBOR Rate or at a newly
quoted Fixed Rate pursuant to subparagraph (c) hereinabove; or (y)
any LIBOR Advance shall continue to accrue at the newly quoted
Fixed Rate or LIBOR Rate as the case may be, the Borrowers shall be
deemed to have elected that interest thereon shall be adjusted to
accrue at the Variable Rate upon the expiration of the relevant
Interest Period or LIBOR Interest Period pertaining to such
Advance.
2.5.8 Prepayment: The Borrowers may prepay any Advance in whole or in part, at
any time and without penalty, provided, however, that: (i) any partial
prepayment shall first be applied at the Bank's option, to accrued and
unpaid interest and next to the outstanding principal balance; and (ii)
during any period of time in which interest is accruing on any Advance on
the basis of the LIBOR Rate or Fixed Rate, no prepayment shall be made
except on a day which is the last day of the LIBOR Interest Period or
Interest Period pertaining thereto. if the whole or any part of any LIBOR
Advance or Fixed Rate Advance is prepaid by reason of acceleration or
otherwise, the Borrower shall jointly and severally upon the Bank's
request, promptly pay to and indemnify the Bank for all costs and any
loss actually incurred by the Bank, excluding loss of profit on any
margin, but including any loss resulting from the re-employment of funds,
sustained by the Bank as a consequence of such prepayment, and provided
further, that any prepayment hereunder shall not be deemed to be an event
of default.
The Bank shall be entitled to fund all or any portion of its Advances in
any manner it may determine in its sole discretion, but all calculations
and transactions hereunder shall be conducted as though the Bank actually
funded all Advances
-18-
through the purchase of dollar deposits bearing interest at the same
rate as U.S. Treasury securities in the amount of the relevant Advance
and in maturities corresponding to the date of such purchase to the
Expiration Date hereunder.
2.5.9 Indemnification for LIBOR Rate or Fixed Rate Costs: During any period of
time in which interest on any Advance is accruing on the basis of the
LIBOR Rate or Fixed Rate, the Borrowers shall, within 15 days of the
Bank's written request, promptly pay to and reimburse the Bank for all
costs incurred and payments made by the Bank by reason of any future
assessment, reserve, deposit or similar requirement or any surcharge,
tax or fee imposed upon the Bank or as a result of the Bank's compliance
with any directive or requirement of any regulatory authority pertaining
or relating to funds used by the Bank in quoting and determining the
LIBOR Rate or Fixed Rate. Bank shall use its best efforts to provide
Borrowers, in advance, with an estimate of any such costs which may
potentially be incurred hereunder.
2.5.10 Conversion from LIBOR Rate or Fixed Rate to Variable Rate: In the event
that the Bank shall at any time determine that the accrual of interest
on the basis of the LIBOR Rate or Fixed Rate (i) has become infeasible
because the Bank is unable to determine the LIBOR Rate or Fixed Rate due
to the unavailability of U.S. Dollar deposits, contracts or certificates
of deposit in an amount approximately equal to the amount of the
relevant Advance and for a period of time approximately equal to the
relevant LIBOR Interest Period or Interest Period as the case may be or
(ii) is or has become unlawful by reason of the Bank's compliance with
any new law, rule, regulation, guideline or order, or any new
interpretation of any present law, rule, regulation guideline or order,
then the Bank shall promptly give telephonic notice thereof (confirmed
in writing) to the Borrowers, in which event any Advance bearing
interest at either the LIBOR Rate or Fixed Rate as the case may be shall
be deemed to be a Variable Rate Advance and interest shall thereupon
immediately accrue at the Variable Rate and shall continue at such rate
until the Bank determines that the LIBOR Rate or Fixed Rate is no longer
infeasible or unlawful.
2.5.11 Term Loan Conversion: The Borrowers may, by giving written notice to the
Bank at any time and from time to time, convert the principal balance
outstanding under the Equipment Purchase Facility as of the Expiration
Date of Equipment Purchase Facility to be payable on a term loan basis.
The term loan (the "Term Loan") shall be in the amount of such
outstanding principal balance and be for a term of 60 months and shall
be evidenced by a promissory note in form and substance satisfactory to
the Bank (the "Equipment Term Note", attached hereto as Exhibit 1).
Accrued and unpaid interest under the Equipment Purchase Facility shall
be paid to the Bank concurrently with the Borrowers' execution of the
Term Note. In addition to the short term fixed rates not to exceed 12
months, the Borrower may fix the rate for the entire 60 month term loan
at a Cost of Funds plus 1.50% or a Federal Funds plus 1.50%. For the
Federal Funds Rate to apply a SWAP Agreement, which includes an ISDA
Master Agreement with schedule to the Separate Master Agreement and a
certified corporate resolution for such transaction, secured with a
blanket lien will be required. Interest shall accrue and principal and
interest shall be paid in accordance with the terms and provisions of
the Term Note.
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2.6 THE ACQUISITION LINE OF CREDIT
2.6.1 The Acquisition Line of Credit: On terms and conditions as set forth
herein, the Bank agrees to make Advances under the Acquisition Line of
Credit, on a non-revolving basis, in Dollars or in Alternate Currency
to the Borrowers from time to time from the date hereof to November
30, 1999, at which time the Acquisition Line must be paid in full or
termed out pursuant to Section 2.6.11, and again the draw down period
will be extended one more year to November 30, 2000, which is the
Expiration Date at which time the Acquisition Line must be paid in
full or termed out pursuant to Section 2.6.11, provided the aggregate
amount of such Advances outstanding at any time does not exceed
$15,000,000.00 or the equivalent in Alternate Currency (the
"Acquisition Line of Credit"). Within the foregoing limits, the
Borrowers may borrow, partially or wholly prepay, but may not
reborrow, under this Section 2.1. Proceeds of the Acquisition Line of
Credit shall be used to acquire companies in related lines of business
as the Borrowers or that are involved in a manufacturing process or
technology similar to those used by the Borrowers, provided that each
such Advance shall be limited to $5,000,000 per transaction hereunder
and subject to the following conditions.
(i) Acquired companies must have a positive EBITDA on an after
acquisition one year proforma basis, adjusted for nonrecurring
expenses including income tax items and reduced payroll, etc.,
due to economies of scale. Borrower is to provide calculations.
(ii) OSI must remain in full compliance with financial covenants on
a proforma basis.
(iii) Aggregate acquisitions in excess of $40 million in fiscal 1999
and $30 million in any fiscal year thereafter must be approved
by the Bank.
(iv) The purchase price of each acquisition may not exceed $25
million without Bank approval.
(v) The cash component of each acquisition may not exceed $15
million without Bank's prior written approval.
(vi) The business acquired must be in a related line of business as
the Borrowers or involve manufacturing processes or technology
similar to those used by the Borrowers.
(vii) The Bank will have a first priority lien on assets acquired in
domestic acquisitions and stock acquired in a domestic stock
purchase will be assigned to Bank in a separate security
agreement. The Bank will not have any lien on assets acquired
in the acquisition of a Foreign Subsidiary and stock acquired
in a foreign stock purchase will not be assigned to Bank.
(viii) Borrower shall provide Bank with a written certification that
all the above conditions are in compliance and provide a
proforma cash flow schedule of acquired company with detail of
expense reduction which results in a
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positive EBITDA.
(ix) A funding fee equal to 0.25% at funding.
Prior acquisitions that had terms exceeding the terms of this Section or terms
that were violations of the prior loan agreements are hereby waived on a one
time basis and such waiver shall not be deemed a waiver of any future violations
or terms of this Agreement.
2.6.2 Making Acquisition Line Advances: Each Advance shall be conclusively
deemed to have been made at the request of and for the benefit of
the Borrowers (i) when credited to any deposit account of any of the
Borrowers maintained with the Bank or (ii) when paid in accordance
with the Borrowers' written instructions. Subject to the
requirements of Section 4, Advances shall be made by the Bank upon
telephonic or facsimile request received from the Borrower, which
request shall be received not later than 12:00 p.m. (Pacific
Standard Time) on the date specified for a Variable Rate Advance, as
hereinafter defined, and 11:00 a.m. (Pacific Standard Time) two
business days prior to the date specified for a Eurocurrency Advance
or a Cost of Funds Advance, as hereinafter defined, each of which
dates shall be a Business Day. The rates for a Eurocurrency Advance
or a Cost of Funds Advance shall be set on the same Business Day as
the request is received if received by 11:00 a.m. and on the next
Business Day if received after 11:00 a.m.. Requests for Advances
received after such time may, at the Bank's option, be deemed to be
a request for an Advance to be made on the next succeeding Business
Day for a Variable Rate Advance and the third succeeding Business
Day for a Eurocurrency Advance or a Cost of Funds Advance.
2.6.3 Repayment: On November 30, 1999, and on the Expiration Date, each
Borrower hereby jointly and severally promises and agrees to pay to
the Bank in full the aggregate unpaid principal amount of all
Advances then outstanding, together with all accrued and unpaid
interest thereon, provided, however, that any Advance denominated in
Dollars must be repaid in Dollars and any Advance denominated in an
Alternate Currency must be repaid in the same Alternate Currency.
2.6.4 Interest on Advances: Interest shall accrue from the date of each
Advance under the Acquisition Line of Credit at Variable Rate or at
the Eurocurrency Rate or Cost of Funds Rate plus the Applicable
Margin, each as quoted by the Bank and as elected by the Borrowers
hereinbelow:
Eurocurrency Advances and Cost of Funds Advances are sometimes
hereinafter referred to as a "Fixed Rate Advance".
Interest on Variable Rate Advances and Cost of Funds Advances shall
be paid in Dollars in monthly installments commencing on the first
day of the month following the date of the first such Advance and
continuing on the first day of each month thereafter.
Interest on any Eurocurrency Advance shall be paid on the last day
of the Eurocurrency Interest Period pertaining to such Eurocurrency
Advance and shall be paid in Dollars or in the relevant Alternate
Currency as the case may be. Each Borrower further jointly and
severally promises and agrees to pay the Bank interest on any
Eurocurrency Advance with an Eurocurrency Interest Period in excess
of
-21-
90 days on a quarterly basis (i.e., on the last day of each 90-day period
occurring in such Eurocurrency Interest Period) and on the last day of
the relevant Eurocurrency Interest Period.
If interest is not paid as and when it is due, it shall be added to the
principal, become and be treated as a part thereof, and shall thereafter
bear like interest.
2.6.5 Notice of Election to Adjust Interest Rate: The Borrowers may elect that
interest on a Fixed Rate Advance shall continue to accrue at a newly
quoted Eurocurrency Rate or Cost of Funds Rate; provided, however, that
such notice shall be received by the Bank no later than 11:00 a.m. two
business days prior to the last day of the Eurocurrency Interest Period
for a Eurocurrency Advance and 1:00 p.m. one business day prior to the
last day of a Cost of Funds Interest Period for a Cost of Funds Advance.
Such notice may be by telephone if confirmed in writing by telecopy with
the original of such writing deposited in the US mail or with an air
courier on the same day. The Bank shall not incur any liability to any
Borrower in acting upon any telephonic notice referred to above that the
Bank believes in good faith to have been given by a duly authorized
officer or other person authorized to act on behalf of any Borrower and
upon any borrowing, Redenomination or continuation by the Bank in
accordance with this Agreement pursuant to any telephonic notice, each
Borrower shall have effected the borrowing, redenomination or
continuation of Advances hereunder. The Borrowers may elect that interest
on a Fixed Rate Advance shall accrue at the Variable Rate; provided,
however, that such notice shall be received by the Bank no later than one
business day prior to the last day of the Interest Period pertaining to
such Fixed Rate Advance, and provided further, however, that such Fixed
Rate Advance shall be in Dollars or Redenominated in Dollars pursuant to
the terms hereinbelow. If the Bank shall not have received notice (as
prescribed herein) of Borrowers' election that interest on any Fixed Rate
Advance shall continue to accrue at the newly quoted Eurocurrency Rate or
Cost of Funds Rate or Variable Rate as the case may be, the Borrowers
shall be deemed to have elected that interest thereon shall be adjusted
to accrue at the Variable Rate then in effect and any Alternate Currency
shall be Redenominated in Dollars.
2.6.6 Redenomination of Advances: The Borrowers may, upon notice given to the
Bank at least four Business Days prior to the date of the proposed
Redenomination, request that a Eurocurrency Advance be Redenominated from
Dollars into an Alternate Currency or from an Alternate Currency into
Dollars or another Alternate Currency; provided, however, that any
Redenomination shall be made on, and only on, the last day of an Interest
Period for such Advances. Each such notice of request of a Redenomination
("Notice of Redenomination") shall be by telecopier, telex or cable,
confirmed immediately in writing, or may be by telephone if confirmed in
writing by telecopy with the original of such writing deposited in the US
mail or with an air courier on the same day, and the Bank shall not incur
any liability to any Borrower in acting upon any telephonic notice
referred to above that the Bank believes in good faith to have been given
by a duly authorized officer or other person authorized to act on behalf
of any Borrower and upon any borrowing, Redenomination or continuation by
the Bank in accordance with this Agreement pursuant to any telephonic
notice, the Borrowers shall have effected the borrowing, redenomination
or continuation of Advances hereunder, specifying (i) the Eurocurrency
Advance(s) to be Redenominated, (ii) the date of
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the proposed Redenomination, (iii) the Alternate currency into which such
Advances are to be Redenominated, and (iv) the duration of the Interest
Period for such Advances upon being so Redenominated. In the case of a
Notice of Redenomination which requests a Redenomination of Advances into
an Alternate Currency, such Redenomination is subject to confirmation by
Bank not later than the third Business Day before the requested date of
such Redenomination that such Bank agrees to such Redenomination. which
confirmation shall be notified to the Borrowers. If no confirmation is
provided the Redenomination will not occur. Each Advance so requested to
be Redenominated will be Redenominated, on the date specified therefor in
such Notice of Redenomination, into an equivalent amount thereof in the
currency requested in such Notice of Redenomination, such equivalent
amount to be determined on such date in accordance with Section 2.7, and,
upon being so Redenominated, will have an initial Interest Period as
requested in such Notice of Redenomination.
2.6.7 Prepayment:
(i) The Borrowers may prepay any Advance in whole or in part, at any
time and without penalty, provided, however, that: (i) any partial
prepayment shall first be applied, at the Bank's option, to accrued
and unpaid interest and next to the outstanding principal balance;
and (ii) during any period of time in which interest is accruing on
any Advance on the basis of the Eurocurrency Rate or the Cost of
Funds Rate, no prepayment shall be made except on a day which is
the last day of the Interest Period pertaining thereto provided,
however, if the whole or any part of any Fixed Rate Advance is
prepaid by reason of acceleration or otherwise, the Borrower shall
jointly and severally upon the Bank's request, promptly pay to and
indemnify the Bank for all costs and any loss actually incurred by
the Bank, excluding loss of profit on any margin, but including any
loss resulting from the re-employment of funds, sustained by the
Bank as a consequence of such prepayment, and provided further,
that any prepayment hereunder shall not be deemed to be an event of
default.
(ii) If, on the last day of any Interest Period, the equivalent in
Dollars of the aggregate principal amount of all Eurocurrency
Advances then outstanding when combined with the aggregate
principal amount of all Variable Rate Advances and Cost of Funds
Advances then outstanding exceeds the Acquisition Line of Credit,
the Borrowers shall jointly and severally on such last day prepay
an aggregate principal amount of such Advances to the Bank in an
amount at least equal to such excess, with accrued interest to the
date of such prepayment on the principal amount prepaid.
(iii) The Bank shall be entitled to fund all or any portion of its
Advances in any manner it may determine in its sole discretion, but
all calculations and transactions hereunder shall be conducted as
though the Bank actually funded all Advances through the purchase
of dollar deposits bearing interest at the same rate as U.S.
Treasury securities in the amount of the relevant Advance and in
maturities corresponding to the date of such purchase to the
Expiration Date hereunder.
2.6.8 Indemnification for Eurocurrency Rate and Cost of Funds Rate Costs:
During
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any period of time in which interest on any Advance is accruing on the
basis of the Eurocurrency Rate or the Cost of Funds Rate, the Borrowers
shall jointly and severally, within 15 days of the Bank's written
request, which request shall explain in reasonable detail the reason for
such costs or payments, promptly pay to and reimburse the Bank for all
costs incurred and payments made by the Bank by reason of any future
assessment, reserve, deposit or similar requirement or any surcharge,
tax or fee imposed upon the Bank or as a result of the Bank's compliance
with any directive or requirement of any regulatory authority pertaining
or relating to the Alternate Currency or Dollars or cost of funds used
by the Bank in quoting and determining the Eurocurrency Rate or the Cost
of Funds Rate under this Agreement. Bank shall use its best efforts to
provide Borrowers, in advance, with an estimate of any such costs which
may potentially be incurred hereunder.
2.6.9 Eurocurrency Rate or Cost of Funds Rate Infeasible: In the event that
the Bank shall at any time determine that the accrual of interest on the
basis of the Eurocurrency Rate or the Cost of Funds Rate (i) is
infeasible at the time of any borrowing, continuation or Redenomination
because the Bank is unable to determine the Eurocurrency Rate or Cost of
Funds Rate due to the unavailability of Dollars or Alternate Currency
deposits, contracts or time deposits in an amount approximately equal to
the amount of the relevant Advance and for a period of time
approximately equal to relevant Interest Period or (ii) is or has become
unlawful or infeasible by reason of the Bank's compliance with any new
law, rule, regulation, guideline or order, or any new interpretation of
any present law, rule, regulation, guideline or order, then the Bank
shall give telephonic notice thereof (confirmed in writing) to the
Borrowers, in which event such Fixed Rate Advance shall be immediately
prepaid but then may be converted or Redenominated into a Variable Rate
Advance at the election of the Borrowers.
2.6.10 Failure to Borrow: In the case of any Fixed Rate Advance, the Borrowers
shall jointly and severally indemnify Bank against any loss, cost or
expense incurred by Bank as a result of any failure to borrow on the
date specified for such Fixed Rate Advance (other than as a result of
Bank's failure to make funds available for such Advance), including,
without limitation, any loss (excluding loss of anticipated profits),
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by Bank to fund such Fixed Rate Advance
to be made by Bank when such Fixed Rate Advance is not made on such
date.
2.6.11 Computations and Payments: Interest on any Advance shall be computed on
the basis of 360 days per year, but charged on the actual number of days
elapsed. Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case
be included in the computation of payment of interest; provided,
however, if such extension would cause payment of interest on or
principal of Eurocurrency Advances to be made in the next following
calendar month, such payment shall be made on the immediately preceding
Business Day.
2.6.12 Term Loan Conversion: The Borrowers may, by giving written notice to the
Bank at any time and from time to time, convert the principal balance
outstanding under the Acquisition Line of Credit to be payable on a term
loan basis. The term loan (the "Acquisition Term Loan") shall be in the
amount of such outstanding principal
-24-
balance and shall be for a period of 48 months and shall be
evidenced by a promissory note in form and substance satisfactory to
the Bank (the "Acquisition Term Note" attached as Exhibit 2).
Accrued and unpaid interest under the Acquisition Line of Credit
shall be paid to the Bank concurrently with the Borrowers' execution
of the Acquisition Term Note. In addition to the short term fixed
rates not to exceed 12 months, the Borrower may fix the rate for the
entire 48 month term loan at a Cost of Funds plus 1.50% or a Federal
Funds plus 1.50%. For the Federal Funds Rate to apply a SWAP
Agreement, which includes an ISDA Master Agreement with schedule to
the Separate Master Agreement and a certified corporate resolution
for such transaction, secured with a blanket lien will be required.
Interest shall accrue and principal and interest shall be paid in
accordance with the terms and provisions of the Term Note.
2.6.13 Loan Fee. The Borrowers promise and agree to pay to the Bank a non-
refundable funding fee of .25% on the acquisition facility on
funding.
2.7 Currency Equivalents: For purposes of the provisions of this Section 2, (i)
the equivalent in Dollars of any Alternate Currency shall be determined by
using the quoted spot rate at which Bank's principal office in Los Angeles
offers to exchange Dollars for such Alternate Currency at 9:00 A.M. (Los
Angeles time) two Business Days prior to the date on which such equivalent
is to be determined, (ii) the equivalent in any Alternate Currency of any
other Alternate Currency shall be determined by using the quoted spot rate
at which Bank's principal office in Los Angeles offers to exchange such
Alternate Currency for the equivalent in Dollars of such other Alternate
Currency at 9:00 A.M. (Los Angeles time) two Business Days prior to the
date on which such equivalent is to be determined, and (iii) the equivalent
in any Alternate Currency of Dollars shall be determined by using the
quoted spot rate at which Bank's principal office in Los Angeles offers to
exchange such Alternate Currency for Dollars at 9:00 A.M. (Los Angeles
time) two Business Days prior to the date on which such equivalent is to be
determined. Except as specified hereinabove, the equivalent in Dollars of
each Eurocurrency Rate Advance made in an Alternative Currency shall be
recalculated hereunder on each date that it shall be necessary to determine
the unused portion of Bank's Line of Credit or any or all Advance or
Advances outstanding on such date.
2.8 Term Loan:
2.8.1 Term Loan: On the terms and conditions as set forth herein, the Bank
agrees to lend to the Borrowers, in one drawing, upon the Borrowers'
request therefore made prior to October 15, 1999, up to the maximum
amount of $3,000,000 (the "Term Loan").
2.8.2 Making the Term Loan. The Term Loan shall be conclusively deemed to
have been made at the request of and for the benefit of the
Borrowers (i) when credited to any deposit account of the Borrowers
maintained with the Bank or (ii) when paid in accordance with
Borrowers' written instructions.
2.8.3 Interest. Interest on the Term Loan Balance shall accrue from the
date of funding under the Term Loan at one of the following rates,
as quoted by the Bank and as elected by the Borrowers pursuant to
Subsection (i) or Subsection (ii) or Subsection (iii) below:
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(i) Variable Rate Balances: A variable rate per annum equivalent to the
----------------------
Reference Rate (the "Variable Rate"). Interest shall be adjusted
concurrently with any change in the Reference Rate. A Balance based
upon the Variable Rate is hereinafter referred to as a "Variable
Rate Balance".
(ii) Fixed Rate Balances: A fixed rate per annum quoted by the Bank for
-------------------
30, 60, 90 or 180 days or for such other period of time that the
Bank may quote and offer (provided that any such period of time does
not extend beyond the Expiration Date) (the "Interest Period") for
Balances in the minimum amount of $100,000.00. Such interest rate
shall be a percentage approximately equivalent to the Applicable
Margins plus the rate which the Bank determines in its sole and
absolute discretion to be equal to the Bank's cost of acquiring
funds (adjusted for any and all assessments, surcharges and reserve
requirements pertaining to the borrowing or purchase by the Bank of
such funds) in an amount approximately equal to the amount of the
relevant Balance and for a period of time approximately equal to the
relevant Interest Period (the "Fixed Rate"). A Balance based upon
the Fixed Rate are hereinafter referred to as a "Fixed Rate
Balance".
(iii) LIBOR Balances: A fixed rate quoted by the Bank for one week, 1, 2,
--------------
3, or 6 months or for such other period of time that the Bank may
quote and offer (provided that any such period of time does not
extend beyond the Expiration Date) (the "LIBOR Interest Period") for
Balances in the minimum amount of $100,000.00. Such interest rate
shall be a percentage approximately equivalent to the Applicable
Margin plus the Bank's LIBOR Rate which is that rate determined by
the Bank's Treasury Desk as being the arithmetic mean (rounded
upwards, if necessary, to the nearest whole multiple of one-
sixteenth of one percent (1/16%)) of the U. S. dollar London
Interbank Offered Rates for such period appearing on page 3750 (or
such other page as may replace page 3750) of the Telerate screen at
or about 11:00 a.m. (London time) on the second Business Day prior
to the first days of such period (adjusted for any and all
assessments, surcharges and reserve requirements) (the "LIBOR
Rate"). A Balance based upon the LIBOR Rate is hereinafter referred
to as a "LIBOR Balance".
In addition to the interest rates already stated, Borrower may fix the rate
for the entire 60 month term loan at a Cost of Funds plus 1.50% or a
Federal Funds plus 1.50%. For the Federal Funds Rate to apply, a SWAP
Agreement, including an ISDA Master Agreement with schedule to the Separate
Master Agreement and a certified corporate resolution for such transaction,
secured with a blanket lien, will be required. Interest shall accrue and
principal and interest shall be paid in accordance with the terms and
provisions of Paragraph 2.8.8 hereunder.
Interest on any Balance shall be computed on the basis of 360 days per
year, but charged on the actual number of days elapsed.
Each Borrower hereby jointly and severally promises and agrees to pay
interest on the Term Loan, in arrears, on the last calendar day of each
month.
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Interest on any LIBOR Advance or Fixed Rate Advance with a LIBOR Interest
Period or Interest Period of 3 months or less shall be paid on the last
day of the LIBOR Interest Period or Interest Period as the case may be.
The Borrowers further promise and agree to pay the Bank interest on any
LIBOR Advance or Fixed Rate Advance with a LIBOR Interest Period or
Interest Period in excess of 3 months on a quarterly basis (i.e., on the
last day of each 3 month period occurring in such LIBOR Interest Period
or Interest Period) and on the last day of the LIBOR Interest Period or
Interest Period.
If interest is not paid as and when it is due, it shall be added to the
principal, become and be treated as a part thereof, and shall thereafter
bear like interest.
2.8.4 Notice of Election to Adjust Interest Rate: Upon telephonic notice which
shall be received by the Bank at or before 2:00 p.m. (California time) on
a Business Day, the Borrowers may elect:
(i) That interest on a Variable Rate Balance shall be adjusted to
accrue at the Fixed Rate; provided, however, that such notice
shall be received by the Bank no later than 2:00 p.m. on the
Business Day on which the Borrowers request that interest be
adjusted to accrue at the Fixed Rate.
(ii) That interest on a Variable Rate Balance shall be adjusted to
accrue at the LIBOR Rate; provided, however, that such notice
shall be received by the Bank no later than two Business Days
prior to the Business Day on which the Borrowers request that
interest be adjusted to accrue at the LIBOR Rate.
(iii) That interest on a Fixed Rate Balance shall continue to accrue at
a newly quoted Fixed Rate or shall be adjusted to commence to
accrue at the Variable Rate; provided, however, that such notice
shall be received by the Bank no later than 2:00 p.m. on the last
day of the Interest Period pertaining to such Fixed Rate Balance.
If the Bank shall not have received notice (as prescribed herein)
of the Borrowers' election that interest on any Fixed Rate Balance
shall continue to accrue at the newly quoted Fixed Rate as the
case may be the Borrowers shall be deemed to have elected that
interest thereon shall be adjusted to accrue at the Variable Rate
upon the expiration of the relevant Interest Period pertaining to
such Balance.
(iv) That (i) interest on a Fixed Rate Balance shall accrue at a newly
quoted LIBOR Rate or (ii) interest on a LIBOR Balance shall
continue to accrue at a newly quoted Fixed Rate or LIBOR Rate or
shall be adjusted to commence to accrue at the Variable Rate;
provided, however, that such notice shall be received by the Bank
no later than two Business Days prior to the last day of the
relevant Interest Period or LIBOR Interest Period, as applicable.
If the Bank shall not have received notice as prescribed herein of
the Borrowers' election that interest on any Fixed Rate Balance
shall accrue interest at a newly quoted LIBOR Rate or at a newly
quoted Fixed Rate pursuant to subparagraph (c) hereinabove; or any
LIBOR Balance shall continue to accrue at the newly quoted Fixed
Rate or LIBOR Rate as the case may be, the Borrowers shall be
deemed to have elected that interest thereon shall be adjusted to
accrue at the Variable Rate upon the
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expiration of the relevant Interest Period or LIBOR Interest Period
pertaining to such Balance.
2.8.5 Prepayment: The Borrowers may prepay any Balance in whole or in part, at
any time and without penalty, provided, however, that: (i) any partial
prepayment shall first be applied at the Bank's option, to accrued and
unpaid interest and next to the outstanding principal balance; and (ii)
during any period of time in which interest is accruing on any Balance on
the basis of the LIBOR Rate or Fixed Rate, no prepayment shall be made
except on a day which is the last day of the LIBOR Interest Period or
Interest Period pertaining thereto. if the whole or any part of any LIBOR
Balance or Fixed Rate Balance is prepaid by reason of acceleration or
otherwise, the Borrower shall jointly and severally upon the Bank's
request, promptly pay to and indemnify the Bank for all costs and any
loss actually incurred by the Bank, excluding loss of profit on any
margin, but including any loss resulting from the re-employment of funds,
sustained by the Bank as a consequence of such prepayment, and provided
further, that any prepayment hereunder shall not be deemed to be an event
of default.
The Bank shall be entitled to fund all or any portion of its Balances in
any manner it may determine in its sole discretion, but all calculations
and transactions hereunder shall be conducted as though the Bank actually
funded all Advances through the purchase of dollar deposits bearing
interest at the same rate as U.S. Treasury securities in the amount of
the relevant Advance and in maturities corresponding to the date of such
purchase to the Expiration Date hereunder.
2.8.6 Indemnification for LIBOR Rate or Fixed Rate Costs: During any period of
time in which interest on any Advance is accruing on the basis of the
LIBOR Rate or Fixed Rate, the Borrowers shall, within 15 days of the
Bank's written request, promptly pay to and reimburse the Bank for all
costs incurred and payments made by the Bank by reason of any future
assessment, reserve, deposit or similar requirement or any surcharge, tax
or fee imposed upon the Bank or as a result of the Bank's compliance with
any directive or requirement of any regulatory authority pertaining or
relating to funds used by the Bank in quoting and determining the LIBOR
Rate or Fixed Rate. Bank shall use its best efforts to provide Borrowers,
in advance, with an estimate of any such costs which may potentially be
incurred hereunder.
2.8.7 Conversion from LIBOR Rate or Fixed Rate to Variable Rate: In the event
that the Bank shall at any time determine that the accrual of interest on
the basis of the LIBOR Rate or Fixed Rate (i) has become infeasible
because the Bank is unable to determine the LIBOR Rate or Fixed Rate due
to the unavailability of U.S. Dollar deposits, contracts or certificates
of deposit in an amount approximately equal to the amount of the relevant
Advance and for a period of time approximately equal to the relevant
LIBOR Interest Period or Interest Period as the case may be or (ii) is or
has become unlawful by reason of the Bank's compliance with any new law,
rule, regulation, guideline or order, or any new interpretation of any
present law, rule, regulation guideline or order, then the Bank shall
promptly give telephonic notice thereof (confirmed in writing) to the
Borrowers, in which event any Advance bearing interest at either the
LIBOR Rate or Fixed Rate as the case may be shall be deemed to be a
Variable Rate Advance and interest shall thereupon immediately accrue at
the Variable Rate and shall continue at such rate until the
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Bank determines that the LIBOR Rate or Fixed Rate is no longer
infeasible or unlawful.
2.8.8 Repayment. The Term Loan will amortize over 7 years but will be due
in 5 years. The Borrowers hereby promise and agree to pay principal
as follows: Commencing on December 1, 1999, and continuing monthly
thereafter up to and including October 1, 2004, principal shall be
paid monthly on the 1st of each month in 59 installments of
$35,714.29. On November 1, 2004 of the Term Loan, the Borrowers
hereby promise and agree to pay a balloon payment to the Bank of the
entire unpaid principal balance, together with accrued and unpaid
interest.
2.9 Facility and Sub-Facility Accounts:
2.9.1 The Bank shall maintain on its books a record of each separate
facility by an account in which the Bank shall make entries for each
Advance on each facility and such other debits and credits as shall
be appropriate in connection with the credit facilities granted
hereunder (the "Line Account, Equipment Account, Foreign Exchange
Account, Acceptances Account, Letter of Credit Account, Acquisition
Account" and "Term Loan Account"). The Bank shall provide the
Borrowers with a statement of the Borrowers' Accounts, which
statements shall be considered to be correct and conclusively
binding on the Borrowers unless the Borrowers notify the Bank to the
contrary within 18 months after the Borrowers' receipt of any such
statement which it deems to be incorrect.
2.9.2 The Borrowers hereby authorize the Bank to charge, from time to
time, against any or all of the Borrowers' deposit accounts with the
Bank any amount so due under this Agreement, including, but not
limited to, account #261535176 maintained with the Bank's Rosemead
Office (CBC).
2.9.3 If any payment required to be made by the Borrowers hereunder become
due and payable on a day other than a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and
interest thereon shall be payable at the then applicable rate during
such extension. All payments required to be made hereunder shall be
made to the office of the Bank designated for the receipt of notices
herein or such other office as Bank shall from time to time
designate.
2.10 Late Payment: In addition to any other rights the Bank may have hereunder,
if any payment of principal or interest or any portion thereof, under this
Agreement for any of the facilities is not paid within 10 days of when due,
a late payment charge equal to five percent (5%) of such past due payment
may be assessed and shall be immediately payable.
SECTION
3
COLLATERAL
3.1 The Collateral: To secure payment and performance of all the Borrowers'
Obligations under this Agreement and all other liabilities, loans,
guarantees, covenants and duties
-29-
owed by the Borrowers to the Bank, whether or not evidenced by this or by
any other agreement, absolute or contingent, due or to become due, now
existing or hereafter and howsoever created, the Borrowers hereby grant the
Bank a security interest in and to all of the following property
("Collateral"):
(i) Equipment. All goods now owned or hereafter acquired by any of
the Borrowers or in which any of the Borrowers now have or may
hereafter acquire any interest, excluding goods of any Foreign
Subsidiary, including, but not limited to, all machinery,
equipment, furniture, furnishings, fixtures, tools, supplies and
motor vehicles of every kind and description, and all additions,
accessions, improvements, replacements and substitutions thereto
and thereof (the "Equipment").
(ii) Inventory. All inventory now owned or hereafter acquired by any
of the Borrowers, excluding any Foreign Subsidiary, including,
but not limited to, all raw materials, work in process, finished
goods, merchandise, parts and supplies of every kind and
description, including inventory temporarily out of such
Borrower's custody or possession, together with all returns on
accounts (the "Inventory").
(iii) Accounts. All accounts, contract rights and general intangibles
now owned or hereafter created or acquired by any of the
Borrowers, including, but not limited to, all receivables,
goodwill, trademarks, trademark applications, trade styles,
trade names, patents, patent applications, copyrights and
copyright applications, customer lists, business records and
computer programs, tapes, disks and related data processing
software that at any time evidence or contain information
relating to any of the Collateral, provided however that the
accounts, contract rights and general intangibles of the
Borrowers' foreign affiliates and subsidiaries shall not be
included hereunder.
(iv) Documents. All documents, instruments and chattel paper now
owned or hereafter acquired by any of the Borrowers, including,
but not limited to, warehouse and other receipts, bills of sale
and bills of lading, provided, however, that any document or
instrument that derives its value by reference to either the
stock of, or the assets of, a Foreign Subsidiary, are excluded.
(v) Monies. All monies, deposit accounts, certificates of deposit
and securities of any of the Borrowers now or hereafter in the
Bank's or its agents' possession, excluding any interest in
accounts of any Foreign Subsidiary.
(vi) Securities. All securities, stocks, and other instruments or
certificates of shares, in domestic subsidiaries acquired in the
future to be delivered to Bank and to be evidenced by a separate
Security Agreement in favor of the Bank. Securities owner by any
Foreign Subsidiaries are excluded.
The Bank's security interest in the Collateral shall be a continuing lien and
shall include the proceeds and products of the Collateral including, but not
limited to, the proceeds of any insurance thereon.
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The security interest granted to Bank in the Collateral shall not secure or be
deemed to secure any Indebtedness of the Borrowers to the bank which is, at the
time of its creation, subject to the provisions of any state or federal consumer
credit or truth-in-lending disclosure statutes.
SECTION
4
CONDITIONS PRECEDENT
4.1 Conditions Precedent to the Initial Advance: The obligation of the Bank to
make the initial Advance and the first extension of credit to or on account
of the Borrowers hereunder is subject to the conditions precedent that the
Bank shall have received before the date of such initial Advance and such
first extension of credit all of the following, in form and substance
satisfactory to the Bank:
(i) Authority to Borrow. Evidence that the execution, delivery and
performance by the Borrowers of this Agreement and any document,
instrument or agreement required hereunder have been duly
authorized.
(ii) Audit. The Bank shall have conducted an audit of each of the
Borrowers' books, records and operations and the Bank shall be
satisfied as to the condition thereof.
(iii) Miscellaneous. Such other evidence as the Bank may request to
establish the consummation of the transaction contemplated
hereunder and compliance with the conditions of this Agreement.
4.2 Conditions Precedent to All Advances: The obligation of the Bank to make
each Advance and each other extension of credit to or on account of the
Borrowers (including the initial Advance and the first extension of credit)
shall be subject to the further conditions precedent that, on the date of
each Advance or each extension of credit and after the making of such
Advance or extension of credit:
(i) Subsequent Approvals. The Bank shall have received such
supplemental approvals, opinions or documents as the Bank may
reasonably request.
(ii) Representations and Warranties. The representations contained in
Section 5 and in any other document, instrument or certificate
delivered to the Bank hereunder are true, correct and complete.
(iii) Event of Default. No event has occurred and is continuing which
constitutes, or with the lapse of time or giving of notice or
both, would constitute an Event of Default.
(iv) Collateral. The security interest in the Collateral has been
duly authorized, created and perfected with first priority and
is in full force and effect.
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The Borrowers' acceptance of the proceeds of any loan, advance or extension of
credit or the Borrowers' execution of any document or instrument evidencing or
creating any Obligation hereunder shall be deemed to constitute the Borrowers'
representation and warranty that all of the above statements are true and
correct.
SECTION
5
REPRESENTATIONS AND WARRANTIES
Each of the Borrowers, jointly and severally, hereby makes the following
representations and warranties to the Bank, which representations and warranties
are continuing:
5.1 Status: All Borrowers are corporations duly organized and validly existing
under the laws of the state of California and are properly licensed and are
qualified to do business and in good standing in, and, where necessary to
maintain each Borrower's rights and privileges, such Borrower has complied
with the fictitious name statute of every jurisdiction in which such
Borrower is doing business.
5.2 Authority: The execution, delivery and performance by each of the Borrowers
of this Agreement and any instrument, document or agreement required
hereunder have been duly authorized and do not and will not: (i) violate
any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
application to such Borrower; (ii) result in a breach of or constitute a
default under any material indenture or loan or credit agreement or other
material agreement, lease or instrument to which such Borrower is a party
or by which it or its properties may be bound or affected; or (iii) require
any consent or approval of its stockholders or violate any provision of its
articles of incorporation or by-laws; or violate any provision of its
partnership agreement, or require any consent or approval of its members or
violate any provision of its articles of organization or operating
agreement, each as the case may be applicable herein.
5.3 Legal Effect: This Agreement constitutes, and any instrument, document or
agreement required hereunder when delivered hereunder will constitute,
legal, valid and binding obligations of each of the Borrowers enforceable
against such Borrower in accordance with their respective terms.
5.4 Fictitious Trade Styles: There are no fictitious trade styles used by the
Borrowers in connection with their business operations. The Borrowers shall
notify the Bank not less than 30 days prior to effecting any change in the
matters described herein or prior to using any other fictitious trade style
at any future date, indicating the trade style and state(s) of its use.
5.5 Financial Statements: The Companies' consolidated financial statements,
information and other data which may have been or which may hereafter be
submitted by the Borrowers to the Bank are true, accurate and correct and
have been or will be prepared in accordance with generally accepted
accounting principles consistently applied and accurately represent the
financial condition or, as applicable, the other information disclosed
therein. Since the most recent submission of such financial information or
data to the Bank, each of the Borrowers, jointly and severally, represents
and warrants that no
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material adverse change in any of the Borrowers' financial condition or
operations has occurred which has not been fully disclosed to the Bank in
writing.
5.6 Litigation: Except as have been disclosed to the Bank in writing, there
are no actions, suits or proceedings pending or, to the knowledge of any
of the Borrowers, threatened against or affecting any of the Borrowers or
such Borrower's properties before any court or administrative agency
which, if determined adversely to such Borrower, would have a material
adverse effect on the Borrower's financial condition or operations or on
the Collateral.
5.7 Title to Assets: Each of the Borrowers has good and marketable title to
all of its assets (including, but not limited to, the Collateral) and the
same are not subject to any security interest, encumbrance, lien or claim
of any third person except for Permitted Liens.
5.8 ERISA: If any of the Borrowers has a pension, profit sharing or
retirement plan subject to ERISA, such plan has been and will continue to
be funded in accordance with its terms and otherwise complies with and
continues to comply with the requirements of ERISA.
5.9 Taxes: Each of the Borrowers has filed all tax returns required to be
filed and paid all taxes shown thereon to be due, including interest and
penalties, other than such taxes which are currently payable without
penalty or interest or those which are being duly contested in good
faith.
5.10 Margin Stock. The proceeds of any loan or advance hereunder will not be
used to purchase or carry margin stock as such term is defined under
Regulation U of the Board of Governors of the Federal Reserve System.
5.11 Environmental Compliance. The operations of each of the Borrowers comply,
and during the term of this Agreement will at all times comply, in all
material respects with all Environmental Laws; each of the Borrowers has
obtained all material licenses, permits, authorizations and registrations
required under any Environmental Law ("Environmental Permits") and
---------------------
necessary for its ordinary course operations, all such Environmental
Permits are in good standing, and such Borrower is in compliance with all
material terms and conditions of such Environmental Permits; neither the
Borrower nor any of its present property or operations is subject to any
outstanding written order from or agreement with any governmental
authority nor subject to any judicial or docketed administrative
proceeding, respecting any Environmental Law, Environmental Claim or
Hazardous Material; there are no Hazardous Materials or other conditions
or circumstances existing, or arising from operations prior to the date
of this Agreement, with respect to any property of such Borrower that
would reasonably be expected to give rise to Environmental Claims;
provided, however, that with respect to property leased from an unrelated
--------
third party, the foregoing representation is made to the best knowledge
of such Borrower. In addition, (i) none of the Borrowers have any
underground storage tanks (x) that are not properly registered or
permitted under applicable Environmental Laws, or (y) that are leaking or
disposing of Hazardous Materials off-site, and (ii) each of the Borrowers
has notified all of their employees of the existence, if any, of any
health hazard arising from the conditions of their employment and have
met all notification requirements under Title III of CERCLA and all other
Environmental Laws.
-33-
SECTION
6
COVENANTS
Each Borrower covenants and agrees that, during the term of this Agreement, and
so long thereafter as each Borrower is indebted to the Bank under this
Agreement, each Borrower will, unless the Bank shall otherwise consent in
writing:
6.1 Reporting and Certification Requirements: Deliver or cause to be delivered
to the Bank in form and detail satisfactory to the Bank:
(i) Not later than 125 days after the end of each Companies' fiscal
year, a copy of the annual audited consolidated financial report
of the Companies for such year, prepared by a firm of certified
public accountants acceptable to Bank and accompanied by an
unqualified opinion of such firm plus a copy of the Companies
consolidating financial projections for the upcoming 3 years and
10K report.
(ii) Not later than 50 days after the end of each fiscal quarter, the
Companies' consolidating financial statement and not later than
50 days after the end of each of the first three fiscal quarters
Borrower's 10Q report as of the end of such period.
(iii) Concurrently with the delivery of the financial reports required
hereunder, a compliance certificate stating that each Borrower
is in compliance with all covenants contained herein and that no
Event of Default or potential Event of Default has occurred or
is continuing, and certified to by the chief financial officer
of each Borrower.
(iv) Promptly upon the Bank's request, such other information
pertaining to any Borrower or the Company, the Collateral or any
guarantor hereunder as the Bank may reasonably request.
6.2 Financial Condition: Each Borrower promises and agrees, during the term of
this Agreement and until payment in full of all of the Borrowers'
Obligations, the Companies will maintain at all times on a consolidated
basis:
(i) Net Worth. A minimum Effective Tangible Net Worth of at least
$50,000,000.00.
(ii) Quick Ratio. A ratio of the sum of cash, cash equivalents and
accounts receivable to Current Liabilities plus debt under
working capital line maturing in more than one year of not less
than .80 to 1.
(iii) Debt Coverage Ratio. A ratio of EBITDA to the sum of interest
expense and the current portion of long term Debt of not less
than 2 to 1, measured at the end of each fiscal quarter based
upon the immediately preceding three fiscal quarters and the
current quarter just ended.
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(iv) Losses. Not allow any quarterly losses, excluding any
extraordinary items associated with an acquisition.
(v) Funded Debt Ratio. A ratio of Funded Debt to EBITDA of not more
than 3 to 1 on a rolling 4 quarters basis.
6.3 Preservation of Existence; Compliance with Applicable Laws: Maintain and
preserve its existence and all rights and privileges now enjoyed; and
conduct its business and operations in accordance with all applicable laws,
rules and regulations.
6.4 Merge or Consolidate: Not liquidate or dissolve, merge or consolidate with
or into, or acquire any other business organization, provided however, that
the Borrowers may make business acquisitions of up to $40,000,000 in fiscal
year 1999 and $30,000,000 in any one fiscal year thereafter, provided
however, that any acquired company must have a positive EBITDA and the
total purchase price may not exceed $25,000,000 of which not more than
$15,000,000 may be in cash.
6.5 Maintenance of Insurance: Keep and maintain the Collateral insured for not
less than its full replacement value against all risks of loss and damage,
other than earthquake insurance, and maintain insurance in such amounts and
covering such risks as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which
each Borrower operates and maintain such other insurance and coverages as
may be required by the Bank. All such insurance shall be in form and amount
and with companies satisfactory to the Bank.
With respect to insurance covering properties in which the Bank maintains a
security interest or lien, such insurance shall name the Bank as loss payee
pursuant to a loss payable endorsement satisfactory to the Bank and shall
not be altered or canceled except upon 10 days' prior written notice to the
Bank. Upon the Bank's request, the Borrowers shall furnish the Bank with
the original policy or binder of all such insurance.
6.6 Maintenance of Collateral and Other Properties: Except for Permitted Liens,
keep and maintain the Collateral free and clear of all levies, liens,
encumbrances and security interests (including, but not limited to, any
lien of attachment, judgment or execution) and defend the Collateral
against any such levy, lien, encumbrance or security interest; comply with
all laws, statutes and regulations pertaining to the Collateral and its use
and operation; execute, file and record such statements, notices and
agreements, take such actions and obtain such certificates and other
documents as necessary to perfect, evidence and continue the Bank's
security interest in the Collateral and the priority thereof; maintain
accurate and complete records of the Collateral which show all sales,
claims and allowances; and properly care for, house, store and maintain the
Collateral in good condition, free of misuse, abuse and deterioration,
other than normal wear and tear. Each Borrower shall also maintain and
preserve all its properties in good working order and condition in
accordance with the general practice of other businesses of similar
character and size, ordinary wear and tear excepted.
6.7 Payment of Obligations and Taxes: Make timely payment of all assessments
and taxes and all of its liabilities and obligations including, but not
limited to, trade payables, unless the same are being contested in good
faith by appropriate proceedings with the appropriate court or regulatory
agency. For purposes hereof, any Borrower's issuance of
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a check, draft or similar instrument without delivery to the intended
payee shall not constitute payment.
6.8 Inspection Rights and Accounting Records: Each Borrower will maintain
adequate books and records in accordance with generally accepted
accounting principals consistently applied and in a manner otherwise
acceptable to Bank, and, at any reasonable time and from time to time,
permit the Bank or any representative thereof to examine and make copies
of the records and visit the properties of each Borrower and discuss the
business and operations of each Borrower with any employee or
representative thereof. If any Borrower shall maintain any records
(including, but not limited to, computer generated records or computer
programs for the generation of such records) in the possession of a third
party, such Borrower hereby agrees to notify such third party to permit
the Bank free access to such records at all reasonable times and to
provide the Bank with copies of any records which it may request, all at
such Borrower's expense, the amount of which shall be payable immediately
upon demand.
6.9 Payment of Dividends: Not declare or pay any dividends on any class of
stock now or hereafter outstanding except dividends payable solely in
each Borrower's capital stock.
6.10 Redemption or Repurchase of Stock: Not redeem or repurchase any class of
each Borrower's stock now or hereafter outstanding, except stock in an
amount of up to $12,000,000.00 in any one fiscal year.
6.11 Loans: Not make any loans or advances or extend credit to any third
person, including, but not limited to, directors, officers, shareholders,
partners, employees of any Borrower, except for credit extended in the
Ordinary Course of Business as presently conducted and except up to
$350,000.00 in any one fiscal year.
6.12 Additional Indebtedness: Not, after the date hereof, create, incur or
assume, directly or indirectly, any additional Indebtedness other than
(i) Indebtedness owed or to be owed to the Bank or (ii) Indebtedness to
trade creditors incurred in the ordinary course of the Borrower's
business or (iii) Indebtedness presently owed to ▇▇▇▇▇ Fargo HSBC Trade
Bank or (iv) Indebtedness owed by foreign subsidiaries.
6.13 Liens and Encumbrances: Not create, assume or permit to exist any
security interest, encumbrance, mortgage, deed of trust, or other lien
(including, but not limited to, a lien of attachment, judgment or
execution) affecting any of the Borrower's properties, or execute or
allow to be filed any financing statement or continuation thereof
affecting any of such properties, except for Permitted Liens or as
otherwise provided in this Agreement and except liens in favor of the
Borrower's foreign subsidiaries and ▇▇▇▇▇ Fargo HSBC Trade Bank.
6.14 Capital Expense: Not make any fixed capital expenditure or any commitment
therefor, including, but not limited to, incurring liability for leases
which would be, in accordance with generally accepted accounting
principles, reported as capital leases, or purchase any real or personal
property in an aggregate amount exceeding $5,000,000 in any one fiscal
year, excluding assets acquired as the result of any acquisition.
6.15 Transfer Assets: Not, after the date hereof, sell, contract for sale,
convey, transfer, assign, lease or sublet, any of its assets (including,
but not limited to, the Collateral) except
-36-
in the Ordinary Course of Business and, then, only for full, fair and
reasonable consideration or except as such might occur between or among
the Borrowers.
6.16 Change in Nature of Business: Not make any material change in each of
their financial structure or the nature of each of their business as
existing or conducted as of the date hereof.
6.17 Compensation of Employees: Compensate its employees for services rendered
at an hourly rate at least equal to the minimum hourly rate prescribed by
any applicable federal or state law or regulation.
6.18 Notice: Give the Bank prompt written notice of any and all (i) Events of
Default; (ii) litigation, arbitration or administrative proceedings to
which any Borrower is a party and in which the claim or liability exceeds
$500,000.00 or which affects the Collateral; (iii) other matters which
have resulted in, or might result in a material adverse change in the
Collateral or the financial condition or business operations of any
Borrower, and (iv) any enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened
against any Borrower or any of its properties.
6.19 Environmental Compliance: Each Borrower shall conduct its operations and
keep and maintain all of its property in material compliance with all
Environmental Laws and, upon the written request of the Bank, the
Borrowers shall submit to the Bank, at the Borrowers' sole cost and
expense, at reasonable intervals, a report providing the status of any
environmental, health or safety compliance, hazard or liability.
6.20 Inventory:
(i) Except as provided herein below, the Borrowers' inventory shall,
at all times, be in each Borrower's physical possession, shall
not be held by others on consignment, sale on approval, or sale
or return and shall be kept only at: 12515,12525,12533,and ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇; and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(ii) Each Borrower shall keep correct and accurate records.
(iii) The inventory shall not at any time or times hereafter be stored
with a bailee, warehouseman or similar party without the Bank's
prior written consent and, in such event, the Borrowers will
concurrently therewith cause any such bailee, warehouseman or
similar party to issue and deliver to the Bank, in form
acceptable to the Bank, warehouse receipts in the Bank's name
evidencing the storage of inventory.
(iv) At any reasonable time and from time to time, allow Bank to have
the right, upon demand, to inspect and examine inventory and to
check and test the same as to quality, quantity, value and
condition and each Borrower agrees to reimburse the Bank for the
Bank's reasonable costs and expenses in so doing.
-37-
6.21 Year 2000 Compliant. Borrower shall perform all acts reasonably necessary
to ensure that Borrower becomes Year 2000 Compliant in a timely manner.
Such acts shall include performing a review and assessment of all of
Borrower's systems and adopting a plan with a budget for the remediation
and testing of such systems. For the purposes hereof, "Year 2000
Compliant" shall mean that all software, hardware, firmware, equipment,
goods or systems, utilized by and material to the business operations or
financial condition of the Borrower, will properly perform date sensitive
functions before, during and after the Year 2000. Borrower shall use its
best efforts to remain informed as to whether its major customers,
suppliers and vendors are Year 2000 Compliant. Borrower shall, upon the
Bank's request, provide Bank with such certifications or other evidence of
Borrower's compliance with the terms hereof as Bank may from time to time
require
6.22 Location and Maintenance of Equipment.:
(i) The Equipment shall at all times, be in each Borrower's physical
possession, shall not be held by others on consignment, sale on
approval, or sale or return and shall be kept only at:
12515,12525,12533,and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇; and ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(ii) Each Borrower shall not secrete, abandon or remove, or permit
the removal of, the Equipment, or any part thereof, from the
location(s) shown above or remove or permit to be removed any
accessories now or hereafter placed upon the Equipment.
(iii) Upon the Bank's demand, each Borrower shall provide the Bank
with a complete and accurate description of the Equipment
including, as applicable, the make, model, identification number
and serial number of each item of Equipment. In addition, each
Borrower shall notify the Bank of the acquisition of any new or
additional Equipment or the replacement of any existing
Equipment and shall supply the Bank with a complete description
of any such additional or replacement Equipment.
(iv) The Borrowers shall, at the Borrowers' sole cost and expense,
keep and maintain the Equipment in a good state of repair and
shall not destroy, misuse, abuse, illegally use or be negligent
in the care of the Equipment or any part thereof. The Borrowers
shall not remove, destroy, obliterate, change, cover, paint,
deface or alter the name plates, serial numbers, labels or other
distinguishing numbers or identification marks placed upon the
Equipment or any part thereof by or on behalf of the
manufacturer, any dealer or rebuilder thereof, or the Bank. Each
Borrower shall not be released from any liability to the Bank
hereunder because of any injury to or loss or destruction of the
Equipment. The Borrowers shall allow the Bank and its
representatives free access to and the right to inspect the
Equipment at all times and shall comply with the terms and
conditions of any leases covering the real property on which the
Equipment is located and any orders, ordinances, laws,
regulations or rules of any federal, state or municipal agency
or authority having jurisdiction of such real property or
-38-
the conduct of the business of the persons having control or
possession of the Equipment.
(v) The Equipment is not now and shall not at any time hereafter be
so affixed to the real property on which it is located as to
become a fixture or a part thereof. The Equipment is now and
shall at all times hereafter be and remain personal property of
the Borrowers.
SECTION
7
EVENTS OF DEFAULT
Any one or more of the following described events shall constitute an event
of default (an "Event of Default") under this Agreement:
7.1 Non-Payment: Any Borrower shall fail to pay the principal amount of any
Obligations when due or interest on the Obligations within 5 days of when
due.
7.2 Performance Under This Agreement: The Borrowers shall fail in any material
respect to perform or observe any term, covenant or agreement contained in
this Agreement or in any document, instrument or agreement relating to this
Agreement or any other document or agreement executed by the Borrowers with
or in favor of Bank and any such failure shall continue unremedied for more
than 30 days after written notice from the Bank to the Borrowers of the
existence and character of such Event of Default.
7.3 Representations and Warranties; Financial Statements: Any representation or
warranty made by any of the Borrowers under or in connection with this
Agreement or any financial statement given by any of the Borrowers or any
guarantor shall prove to have been incorrect in any material respect when
made or given or when deemed to have been made or given.
7.4 Other Agreements: If there is a default under any other agreement with Bank
or under an agreement to which any of the Borrowers is a party with the
Bank or with a third party or parties resulting in a right by the Bank or
by such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of $250,000.00.
7.5 Insolvency: Any of the Borrowers or any guarantor shall: (i) become
insolvent or be unable to pay its debts as they mature; (ii) make an
assignment for the benefit of creditors or to an agent authorized to
liquidate any substantial amount of its properties and assets; (iii) file a
voluntary petition in bankruptcy or seeking reorganization or to effect a
plan or other arrangement with creditors; (iv) file an answer admitting the
material allegations of an involuntary petition relating to bankruptcy or
reorganization or join in any such petition; (v) become or be adjudicated a
bankrupt; (vi) apply for or consent to the appointment of, or consent that
an order be made, appointing any receiver, custodian or trustee, for itself
or any of its properties, assets or businesses; or (vii) in an involuntary
proceeding, any receiver, custodian or trustee shall have been appointed
for all or substantial part of such
-39-
Borrower's or guarantor's properties, assets or businesses and shall not be
discharged within 30 days after the date of such appointment.
7.6 Execution: Any writ of execution or attachment or any judgment lien shall
be issued against any property of any of the Borrowers in an amount in
excess of $250,000.00 and shall not be discharged or bonded against or
released within 30 days after the issuance or attachment of such writ or
lien.
7.7 Suspension: Any of the Borrowers shall voluntarily suspend the transaction
of business or allow to be suspended, terminated, revoked or expired any
permit, license or approval of any governmental body necessary to conduct
such Borrower's business as now conducted.
7.8 Change in Ownership: There shall occur a sale, transfer, disposition or
encumbrance (whether voluntary or involuntary), or an agreement shall be
entered into to do so, with respect to more than 25% of the issued and
outstanding capital stock of any Borrower owned by ▇▇▇▇▇▇ ▇▇▇▇▇▇ without
the prior written consent of the Bank.
SECTION
8
REMEDIES ON DEFAULT
Upon the occurrence of any Event of Default, the Bank may, at its sole and
absolute election, without demand and only upon such notice as may be required
by law:
8.1 Acceleration: Declare any or all of the Borrowers' indebtedness owing to
the Bank, whether under this Agreement or any other document, instrument or
agreement, immediately due and payable, whether or not otherwise due and
payable.
8.2 Cease Extending Credit: Cease making Advances or otherwise extending credit
to or for the account of the Borrowers under this Agreement or under any
other agreement now existing or hereafter entered into between any of the
Borrowers and the Bank.
8.3 Termination: Terminate this Agreement as to any future obligation of the
Bank without affecting the Borrowers' obligations to the Bank or the Bank's
rights and remedies under this Agreement or under any other document,
instrument or agreement.
8.4 Letters of Credit: Require the Borrowers to pay immediately to the Bank,
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 the Bank which is not
applied to satisfy draws under any such Letters of Credit or any other
obligations of the Borrower to the Bank shall be repaid to the Borrowers.
8.5 Acceptances: Require the Borrower to pay immediately to the Bank, for
application against outstanding Acceptances, the outstanding principal
amount of any such Acceptances which have not matured. Any portion of the
amount so paid to the Bank which is not applied to repayments on any such
matured Acceptances or any other obligations of the Borrower to the Bank
shall be repaid to the Borrower.
-40-
8.6 Close-Out and Liquidation: Close-out and liquidate each outstanding FX
Transaction so that each FX Transaction is canceled in accordance with the
following:
(i) Closing Value. The Bank shall calculate value of such canceled
FX Transaction by converting (1) in the case of a FX Transaction
whose Settlement Date is the same as or later than the Close-Out
Date, the amount of Foreign Currency into US dollars at a rate
of exchange at which the Bank can buy or sell US dollars with or
against the Foreign Currency for delivery on the Settlement Date
of the relevant FX Transaction; or (2) in the case of a FX
Transaction whose Settlement Date precedes the Close-Out Date,
the amount of the Foreign Currency adjusted by adding interest
with respect thereto at the Variable Rate from the Settlement
Date to the Close-Out Date, into US Dollars at a rate of
exchange at which the Bank can buy or sell US dollars with or
against the Foreign Currency for delivery on the Close-Out Date.
(ii) Closing Gain or Loss. (1) For a FX Transaction for which the
Bank agreed to purchase a Foreign Currency, the amount by which
the Closing Value exceeds the Notional Value shall be a Closing
Loss and the amount by which the Closing Value is less than the
Notional Value shall be a Closing Gain; and (2) For a FX
Transaction for which the Bank agreed to sell a Foreign
Currency, the amount by which the Closing Value exceeds the
Notional Value shall be a Closing Gain and the amount by which
the Closing Value is less than the Notional Value shall be a
Closing Loss.
(iii) Net Present Value. The Closing Gain or Closing Loss for each
Settlement Date falling after the Close-out Date will be
discounted by the Bank to it net present value.
(iv) Payment. To the extent that the net amount of the aggregate
Closing Gains exceeds the Closing Losses, such amount shall be
payable by the Bank to the applicable Borrower. To the extent
that the aggregate net amount of the Closing Losses exceeds the
Closing Gains, such amount shall be payable by such Borrower to
the Bank.
8.7 Protection of Security Interest: Make such payments and do such acts as the
Bank, in its sole judgment, considers necessary and reasonable to protect
its security interest or lien in the Collateral. Each of the Borrowers
hereby irrevocably authorizes the Bank to pay, purchase, contest or
compromise any encumbrance, lien or claim which the Bank, in its sole
judgment, deems to be prior or superior to its security interest. Further,
the Borrowers hereby agree to pay to the Bank, upon demand therefor, all
expenses and expenditures (including attorneys' fees) incurred in
connection with the foregoing.
8.8 Foreclosure: Enforce any security interest or lien given or provided for
under this Agreement or under any security agreement, mortgage, deed of
trust or other document, in such manner and such order, as to all or any
part of the properties subject to such security interest or lien, as the
Bank, in its sole judgment, deems to be necessary or appropriate and the
Borrowers hereby waive any and all rights, obligations or defenses now or
hereafter established by law relating to the foregoing. In the enforcement
of its security interest or lien, the Bank is authorized to enter upon the
premises where any Collateral is located and take possession of the
Collateral or any part thereof, together
-41-
with the Borrower's records pertaining thereto, or the Bank may require
any Borrower to assemble the Collateral and records pertaining thereto and
make such Collateral and records available to the Bank at a place
designated by the Bank. The Bank may sell the Collateral or any portions
thereof, together with all additions, accessions and accessories thereto,
giving only such notices and following only such procedures as are
required by law, at either a public or private sale, or both, with or
without having the Collateral present at the time of the sale, which sale
shall be on such terms and conditions and conducted in such manner as the
Bank determines in its sole judgment to be commercially reasonable. Any
deficiency which exists after the disposition or liquidation of the
Collateral shall be a continuing liability of the Borrowers to the Bank
and shall be immediately paid by the Borrowers to the Bank.
8.9 Non-Exclusivity of Remedies: Exercise one or more of the Bank's rights set
forth herein or seek such other rights or pursue such other remedies as
may be provided by law, in equity or in any other agreement now existing
or hereafter entered into between any of the Borrowers and the Bank, or
otherwise.
8.10 Application of Proceeds: All amounts received by the Bank as proceeds from
the disposition or liquidation of the Collateral shall be applied to the
Borrowers' indebtedness to the Bank as follows: first, to the costs and
expenses of collection, enforcement, protection and preservation of the
Bank's lien in the Collateral, including court costs and reasonable
attorneys' fees, whether or not suit is commenced by the Bank; next, to
those costs and expenses incurred by the Bank in protecting, preserving,
enforcing, collecting, liquidating, selling or disposing of the
Collateral; next, to the payment of accrued and unpaid interest on all of
the Obligations; next, to the payment of the outstanding principal balance
of the Obligations; and last, to the payment of any other indebtedness
owed by the Borrowers to the Bank. Any excess Collateral and excess
proceeds existing after the disposition or liquidation of the Collateral
will be returned or paid by the Bank to the Borrowers.
SECTION
9
MISCELLANEOUS
9.1 Amounts Payable on Demand: If the Borrowers shall fail to pay on demand
any amount so payable under this Agreement, the Bank may, at its option
and without any obligation to do so and without waiving any default
occasioned by the Borrowers having so failed to pay such amount, create an
Advance under this Agreement in an amount equal to the amount so payable,
which Advance shall thereafter bear interest as provided hereunder.
9.2 Default Interest Rate: If an Event of Default, or an event which, with
notice or passage of time could become an Event of Default, has occurred
or is continuing, the Borrowers shall pay to the Bank interest on any
Indebtedness or amount payable under this Agreement at a rate which is 3%
in excess of the rate or rates then in effect under this Agreement.
9.3 Reliance and Further Assurances: Each warranty, representation, covenant,
obligation and agreement contained in this Agreement shall be conclusively
presumed to have been relied upon by the Bank regardless of any
investigation made or information possessed by the Bank and shall be
cumulative and in addition to any other warranties, representations,
-42-
covenants and agreements which any of the Borrowers now or hereafter shall
give, or cause to be given, to the Bank. The Borrowers agree to execute
all documents and instruments and to perform such acts as the Bank may
reasonably deem necessary to confirm and secure to the Bank all rights and
remedies conferred upon the Bank by this agreement and all other documents
related thereto.
9.4 No Guaranty or Surety: If any Borrower hereunder is deemed to be a surety
or guarantor due to its joint and several liability hereunder such
Borrower hereby unconditionally and irrevocably acknowledges and agrees to
the matters set forth below:
(i) Each Borrower waives its rights of subrogation, reimbursement,
indemnification and contribution and any other rights and
defenses that are or may become available to such Borrower by
reason of Sections 2787 to 2855, inclusive, of the California
Civil Code and as they may be amended or superseded in the
future. Without limiting the generality of the foregoing, each
Borrower(s) arising from the Bank's election of a remedy on any
indebtedness under bankruptcy or other debtor relief laws or
under any other laws, including, but not limited to those
purporting to reduce the Bank rights against any Borrower in
proportion to the principal obligation of any indebtedness (as
presently contained in Section 2809 of the California Civil Code
and as it may be amended or superseded in the future).
(ii) Each Borrower waives all rights and defenses that such Borrower
may have because the Borrower's debt is secured by real
property. This means, among other things:
(1) The Bank may collect from such Borrower without first
foreclosing on any real property or personal property
collateral pledged by the Borrower(s);
(2) If the Bank forecloses on any real property collateral
pledged by the Borrowers:
(i) The amount of the debt may be reduced only by the price
for which that collateral is sold at the foreclosure sale,
even if the collateral is worth more than the sale price.
(ii) The Bank may collect from the Borrower(s) even if the
Bank, by foreclosing on such real property collateral, has
destroyed any right such Borrower(s) may have to collect
from any other Borrower(s).
This is an unconditional and irrevocable waiver of any rights and defenses the
Borrower(s) may have because the Borrowers' debt is secured by real property.
These rights and defenses include, but are not limited to, any rights or
defenses based upon Sections 580 a, 580b, 580d and 726 of the California Code of
Civil Procedure.
(iii) Each Borrower waives all rights and defenses arising out of an
election of remedies by the Bank, even though that election of
remedies, such as a nonjudicial foreclosure with respect to
security for the Borrowers' indebtedness, has destroyed such
Borrowers' rights of subrogation and
-43-
reimbursement against any other Borrower(s) by the operation of Section
580d of the California Code of Civil Procedure or otherwise.
(iv) Each Borrower waives any defense arising by reason of:
(1) The cessation from any cause whatsoever, other than payment in
full, of the Borrowers' indebtedness;
(2) The application by the Borrowers of the proceeds of any Advance
for purposes other than purposes represented by the Borrowers to the
Bank intended or understood by the Bank or such Borrower;
(3) Any act or omission by the Bank which directly or indirectly
results in or aids the discharge of the Borrowers or any Borrowers'
indebtedness by operation of law or otherwise; or
(4) Any modification of the Borrowers' indebtedness, in any form
whatsoever, including, but not limited to, any renewal, extension,
acceleration or other change in the time for payment of such
indebtedness or other change in the terms of such indebtedness or any
part thereof including, but not limited to, increase or decrease of
the rate of interest thereon.
(v) Each Borrower waives the benefit of the statute of limitations affecting
such Borrower's liability hereunder or the enforcement hereof.
(vi) Each Borrower waives all right to require the Bank to: (i) proceed
against any other Borrower(s), any endorser, cosigner, other guarantor or
other person liable on any indebtedness; (ii) join any endorser,
cosigner, other guarantor on any indebtedness in any action or actions
that may be brought and prosecuted by the Bank solely and separately
against any Borrower(s) on any indebtedness; (iii) proceed against any
item or items of collateral securing any indebtedness or any guaranty
thereof; (iv) give notice of the terms, time and place of any public or
private sale of personal property held from Borrowers or any person or
comply with Section 9504 of the California Uniform Commercial Code; or
(v) pursue or refrain from pursuing any other remedy whatsoever in the
Bank's power.
(vii) Each Borrower waives any defense arising by reason of any disability or
other defense of any other Borrower(s), successors or any endorser,
cosigner, other guarantor or other person liable on any indebtedness.
Until all indebtedness has been paid in full, each Borrower shall not
have any right of subrogation and each Borrower waives any benefit of and
right to participate in any collateral now or hereafter held by the Bank.
Each Borrower waives all presentments, demands for performance, notices
or nonperformance, protests, notices of protest, notices of dishonor,
notices of sale of any collateral securing any indebtedness or any
guaranty thereof, and notice of the existence, creation or incurring of
new or additional indebtedness.
-44-
9.5 Communications from Borrowers; Joint and Several Liability; Extent of
Obligations. The obligations of the Borrowers to repay the Obligations
shall not be affected in any way or to any extent by any failure by the
Bank to obtain direction from all the Borrowers in any given case (it being
expressly agreed and understood that each of the Borrowers is empowered to
act on behalf of all the Borrowers with respect to all matters relating to
this Agreement and the credit facility evidenced hereby). The liability of
the Borrowers hereunder is joint and several. The Borrowers hereby: (1)
acknowledge and agree that the Bank shall have no obligation to proceed
against any Borrower before proceeding against any other Borrower or
Borrowers or any of the guarantors under their respective guaranties, (2)
waive any defense to their obligations under this Agreement based upon or
arising out of the disability or other defense or cessation of liability of
any Borrower versus any other or of any other Person, and (3) waive any
right of subrogation or ability to proceed against any Person or to
participate in any security for the Obligations until the Obligations have
been paid and reformed in full.
9.6 Attorneys' Fees: The Borrowers shall pay to the Bank all costs and
expenses, including but not limited to reasonable attorneys fees, incurred
by Bank in connection with the administration, enforcement, including any
bankruptcy, appeal or the enforcement of any judgment or any refinancing or
restructuring of this Agreement or any document, instrument or agreement
executed with respect to, evidencing or securing the indebtedness
hereunder.
9.7 Notices: All notices, payments, requests, information and demands which
either party hereto may desire, or may be required to give or make to the
other party hereto, shall be given or made to such party by hand delivery
or through deposit in the United States mail, postage prepaid, or by
facsimile delivery, or to such other address as may be specified from time
to time in writing by either party to the other.
To the Borrowers: To the Bank:
▇▇▇▇▇▇ OPTICS, INC
UDT SENSORS, INC. SANWA BANK CALIFORNIA
RAPISCAN SECURITY PRODUCTS, INC. Rosemead Office (CBC)
OSI SYSTEMS, INC. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ SECURITY PRODUCTS, INC. ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SILICON MICROSTRUCTURES, INC. Attn: C. ▇▇▇▇ ▇▇▇▇▇▇▇
ARISTO MEDICAL PRODUCTS, INC. FAX: (▇▇▇)▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
9.8 Waiver: Neither the failure nor delay by the Bank in exercising any right
hereunder or under any document, instrument or agreement mentioned herein
shall operate as a waiver thereof, nor shall any single or partial exercise
of any right hereunder or under any other document, instrument or agreement
mentioned herein preclude other or further exercise thereof or the exercise
of any other right; nor shall any waiver of any right or default
-45-
hereunder, or under any other document, instrument or agreement mentioned
herein, constitute a waiver of any other right or default or constitute a
waiver of any other default of the same or any other term or provision.
9.9 Conflicting Provisions: To the extent the provisions contained in this
Agreement are inconsistent with those contained in any other document,
instrument or agreement executed pursuant hereto, the terms and provisions
contained herein shall control. Otherwise, such provisions shall be
considered cumulative.
9.10 Binding Effect; Assignment: This Agreement shall be binding upon and inure
to the benefit of the Borrowers and the Bank and their respective
successors and assigns, except that the Borrowers shall not have the right
to assign their rights hereunder or any interest herein without the prior
written consent of the Bank. The Bank may sell, assign or grant
participation in all or any portion of its rights and benefits hereunder.
The Borrowers agree that, in connection with any such sale, grant or
assignment, the Bank may deliver to the prospective buyer, participant or
assignee financial statements and other relevant information relating to
the Borrower and any guarantor.
9.11 Jurisdiction: This Agreement, any notes issued hereunder, the rights of
the parties hereunder to and concerning the Collateral, and any documents,
instruments or agreements mentioned or referred to herein shall be
governed by and construed according to the laws of the State of California
without regard to conflict of law principles, to the jurisdiction of whose
courts the parties hereby submit.
9.12 Judgment Currency: If for the purposes of obtaining judgment in any court
it is necessary to convert a sum due hereunder in any currency (the
"Original Currency") into another currency (the "Other Currency") the
parties hereto agree, to the fullest extent that they may effectively do
so, that the rate of exchange used shall be that at which in accordance
with normal banking procedures the Bank could purchase the Original
Currency with the Other Currency at Los Angeles on the second Business Day
preceding that on which final judgment is given.
The obligation of the Borrower in respect of any sum due in the Original
Currency from it to Bank shall, notwithstanding any judgment in any Other
Currency, be discharged only to the extent that on the Business Day
following receipt by Bank of any sum adjudged to be so due in such Other
Currency Bank may in accordance with normal banking procedures purchase
Dollars with such Other Currency; if the amount of the Original Currency
so purchased is less than the sum originally due to the Bank, the Borrower
agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify Bank against such loss, and if the amount of the Original
Currency so purchased exceeds the sum originally due to Bank in the
Original Currency, Bank agrees to remit to Borrower such excess.
9.13 Waiver of Jury Trial: EACH OF THE BORROWERS AND THE BANK WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH OF THE BORROWERS AND THE
BANK AGREE THAT ANY
-46-
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION
AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE
OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
9.14 Telephone Recording: The Borrowers agree that the Bank may electronically
record all telephone conversations between the Borrowers and the Bank
solely with respect to any FX Transaction and that any such recording may
be submitted in evidence in any arbitration or other legal proceeding.
Such recording shall be deemed to be conclusive evidence as to the terms
of any FX Transaction in the event of a dispute.
9.15 Counterparts: This Agreement may be executed in any number of counterparts
and all such counterparts taken together shall be deemed to constitute one
and the same instrument.
9.16 Headings: The headings herein set forth are solely for the purpose of
identification and have no legal significance.
9.17 Entire Agreement and Amendments: This Agreement and all documents,
instruments and agreements mentioned herein constitute the entire and
complete understanding of the parties with respect to the transactions
contemplated hereunder. All previous conversations, memoranda and writings
between the parties pertaining to the transactions contemplated hereunder
not incorporated or referenced in this Agreement or in such documents,
instruments and agreements are superseded hereby. This Agreement may be
amended only by an instrument in writing signed by the Borrower and the
Bank.
-47-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first hereinabove written.
BANK: BORROWERS:
SANWA BANK CALIFORNIA OSI SYSTEMS, INC.
BY: /s/ C. ▇▇▇▇ ▇▇▇▇▇▇▇ BY: /s/ ▇▇▇▇ ▇▇▇▇▇
------------------------------------- -----------------------------
C. ▇▇▇▇ ▇▇▇▇▇▇▇, Vice President ▇▇▇▇ ▇▇▇▇▇, CFO
UDT SENSORS, INC.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇▇▇▇▇, CFO
▇▇▇▇▇▇ OPTICS, INC.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇▇▇▇▇, CFO
RAPISCAN SECURITY PRODUCTS, INC.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇▇▇▇▇, CFO
METOREX SECURITY PRODUCTS, INC.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇▇▇▇▇, CFO
SILICON MICROSTRUCTURES, INC.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇▇▇▇▇, CFO
ARISTO MEDICAL PRODUCTS, INC.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇▇▇▇▇, CFO
-48-
CERTIFIED CORPORATE RESOLUTION TO BORROW
WHEREAS, OSI SYSTEMS, INC. (the "Corporation") has made application to
SANWA BANK CALIFORNIA (the "Bank") for credit accommodations which may consist
of but shall in no way be limited to the following: the renewal, continuation or
extension of an existing obligation; the extension of a new loan, line of credit
or commitment; the issuance of letters of credit or banker's acceptances; or the
purchase or sale through Bank of foreign currencies.
RESOLVED, that: ▇▇▇▇▇▇ ▇▇▇▇▇▇, as the Chief Executive Officer of the
Corporation, or ▇▇▇▇ ▇▇▇▇▇ as the Chief Financial Officer is authorized, in the
name of and on behalf of the Corporation to:
(a) Borrow money from the Bank in such amounts and upon such terms and
conditions as are agreed upon by the officers of the Corporation and the Bank;
and execute and deliver or endorse such evidences of indebtedness or renewals
thereof or agreements therefor as may be required by the Bank, all in such form
and content as the officers of the Corporation executing such documents shall
approve (which approval shall be evidenced by the execution and delivery of such
documents); provided, however, that the maximum amount of such indebtedness
shall not exceed the principal sum of $33 million exclusive of any interest,
fees, attorneys' fees and other costs and expenses related to the indebtedness.
(b) Execute such evidences of indebtedness, agreements, security instruments
and other documents and to take such other actions as are herein authorized.
(c) Sell to or discount or re-discount with the Bank any and all negotiable
instruments, contracts or instruments or evidences of indebtedness at any time
held by the Corporation; and endorse, transfer and deliver the same, together
with guaranties of payment or repurchase thereof, to the Bank (for which the
Bank is hereby authorized and directed to pay the proceeds of such sale,
discount or re-discount as directed by such endorsement without inquiring into
the circumstances of its issue or endorsement or the disposition of such
proceeds).
(d) Withdraw, receive and execute receipts for deposits and withdrawals on
accounts of the Corporation maintained with the Bank.
(e) Grant security interests and liens in any real, personal or other property
belonging to or under the control of the Corporation as security for any
indebtedness of the Corporation to the Bank; and execute and deliver to the Bank
any and all security agreements, pledges, mortgages, deeds of trust and other
security instruments and any other documents to effectuate the grant of such
security interests and liens, which security instruments and other documents
shall be in such form and content as the officers of the Corporation executing
such security instruments and other documents shall approve and which approval
shall be evidenced by the execution and delivery of such security instruments
and other documents.
(f) Apply for letters of credit or seek the issuance of banker's acceptances
under which the Corporation shall be liable to the Bank for repayment.
(g) Purchase and sell foreign currencies, on behalf of the Corporation, whether
for immediate or future delivery, in such amounts and upon such terms and
conditions as the officer(s) authorized herein may deem appropriate, and give
any instructions for transfers or deposits of monies by check, drafts, cable,
letter or otherwise for any purpose incidental to the foregoing, and
-1-
authorize or direct charges to the depository account or accounts of the
Corporation for the cost of any foreign currencies so purchased through the
Bank.
(h) To designate in writing to the Bank in accordance with the terms of any
agreement or other document executed by the above-named individuals one or more
individuals who shall have the authority to as provided herein, to:
(1) request advances under lines of credit extended by the Bank to the
Corporation;
(2) apply for letters of credit or seek the issuance of banker's acceptances
under which the Corporation shall be liable to the Bank for repayment;
(3) make deposits and receive and execute receipts for deposits on accounts of
the Corporation maintained with the Bank;
(4) make withdrawals and receive and execute receipts for withdrawals on
account of the Corporation maintained with the Bank;
(5) purchase and sell foreign currencies.
(i) Transact any other business with the Bank incidental to the powers
hereinabove stated.
RESOLVED FURTHER, that all such evidences of indebtedness, agreements,
security instruments and other documents executed in the name of and on behalf
of the Corporation and all such actions taken on behalf of the Corporation in
connection with the matters described herein are hereby ratified and approved.
RESOLVED FURTHER, that the Bank is authorized to act upon these resolutions
until written notice of their revocation is delivered to the Bank.
RESOLVED FURTHER, that any resolution set forth herein is in addition to
and does not supersede any resolutions previously given by the Corporation to
the Bank.
RESOLVED FURTHER, that the Secretary of the Corporation be, and hereby is,
authorized and directed to prepare, execute and deliver to the Bank a certified
copy of the foregoing resolutions.
I do hereby certify that I am ▇▇▇▇ ▇▇▇▇▇, the Secretary of OSI SYSTEMS,
INC., a California corporation, and I do hereby further certify that the
foregoing is a true copy of the resolutions of the Board of Directors of the
Corporation adopted and approved at a meeting which was duly called and held in
accordance with all applicable provisions of law and the Articles and By-Laws of
the Corporation, on the 3rd day of August, 1999, at which meeting a majority of
the Board of Directors of the Corporation was present and voted in favor of the
resolutions.
I hereby further certify that such resolutions are presently in full force
and effect and have not been amended or revoked. I do further certify that the
following persons have been duly elected and qualified as and, this day are,
officers of the Corporation, holding their respective offices appearing below
their names, and that the signatures appearing opposite their names are the
genuine signatures of such persons.
-2-
▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Chief Executive Officer (SIGNATURE)
▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------
Chief Financial Officer (SIGNATURE)
IN WITNESS WHEREOF, this document is executed as of the 2 day of
September, 1999.
NAME OF CORPORATION: OSI SYSTEMS, INC.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------
NAME: ▇▇▇▇ ▇▇▇▇▇, SECRETARY
-3-
CERTIFIED CORPORATE RESOLUTION TO BORROW
WHEREAS, UDT SENSORS, INC. (the "Corporation") has made application to
SANWA BANK CALIFORNIA (the "Bank") for credit accommodations which may consist
of but shall in no way be limited to the following: the renewal, continuation or
extension of an existing obligation; the extension of a new loan, line of credit
or commitment; the issuance of letters of credit or banker's acceptances; or the
purchase or sale through Bank of foreign currencies.
RESOLVED, that: ▇▇▇▇▇▇ ▇▇▇▇▇▇, as the Chief Executive Officer of the
Corporation, or ▇▇▇▇ ▇▇▇▇▇ as the Chief Financial Officer of the Corporation, is
authorized, in the name of and on behalf of the Corporation to:
(a) Borrow money from the Bank in such amounts and upon such terms and
conditions as are agreed upon by the officers of the Corporation and the Bank;
and execute and deliver or endorse such evidences of indebtedness or renewals
thereof or agreements therefor as may be required by the Bank, all in such form
and content as the officers of the Corporation executing such documents shall
approve (which approval shall be evidenced by the execution and delivery of such
documents); provided, however, that the maximum amount of such indebtedness
shall not exceed the principal sum of $33million exclusive of any interest,
fees, attorneys' fees and other costs and expenses related to the indebtedness.
(b) Execute such evidences of indebtedness, agreements, security instruments
and other documents and to take such other actions as are herein authorized.
(c) Sell to or discount or re-discount with the Bank any and all negotiable
instruments, contracts or instruments or evidences of indebtedness at any time
held by the Corporation; and endorse, transfer and deliver the same, together
with guaranties of payment or repurchase thereof, to the Bank (for which the
Bank is hereby authorized and directed to pay the proceeds of such sale,
discount or re-discount as directed by such endorsement without inquiring into
the circumstances of its issue or endorsement or the disposition of such
proceeds).
(d) Withdraw, receive and execute receipts for deposits and withdrawals on
accounts of the Corporation maintained with the Bank.
(e) Grant security interests and liens in any real, personal or other property
belonging to or under the control of the Corporation as security for any
indebtedness of the Corporation to the Bank; and execute and deliver to the Bank
any and all security agreements, pledges, mortgages, deeds of trust and other
security instruments and any other documents to effectuate the grant of such
security interests and liens, which security instruments and other documents
shall be in such form and content as the officers of the Corporation executing
such security instruments and other documents shall approve and which approval
shall be evidenced by the execution and delivery of such security instruments
and other documents.
(f) Apply for letters of credit or seek the issuance of banker's acceptances
under which the Corporation shall be liable to the Bank for repayment.
(g) Purchase and sell foreign currencies, on behalf of the Corporation, whether
for immediate or future delivery, in such amounts and upon such terms and
conditions as the officer(s) authorized herein may deem appropriate, and give
any instructions for transfers or deposits of monies by check, drafts, cable,
letter or otherwise for any purpose incidental to the foregoing, and
-1-
authorize or direct charges to the depository account or accounts of the
Corporation for the cost of any foreign currencies so purchased through the
Bank.
(h) To designate in writing to the Bank in accordance with the terms of any
agreement or other document executed by the above-named individuals one or more
individuals who shall have the authority to as provided herein, to:
(1) request advances under lines of credit extended by the Bank to the
Corporation;
(2) apply for letters of credit or seek the issuance of banker's acceptances
under which the Corporation shall be liable to the Bank for repayment;
(3) make deposits and receive and execute receipts for deposits on accounts of
the Corporation maintained with the Bank;
(4) make withdrawals and receive and execute receipts for withdrawals on
account of the Corporation maintained with the Bank;
(5) purchase and sell foreign currencies.
(i) Transact any other business with the Bank incidental to the powers
hereinabove stated.
RESOLVED FURTHER, that all such evidences of indebtedness, agreements,
security instruments and other documents executed in the name of and on behalf
of the Corporation and all such actions taken on behalf of the Corporation in
connection with the matters described herein are hereby ratified and approved.
RESOLVED FURTHER, that the Bank is authorized to act upon these resolutions
until written notice of their revocation is delivered to the Bank.
RESOLVED FURTHER, that any resolution set forth herein is in addition to
and does not supersede any resolutions previously given by the Corporation to
the Bank.
RESOLVED FURTHER, that the Secretary of the Corporation be, and hereby is,
authorized and directed to prepare, execute and deliver to the Bank a certified
copy of the foregoing resolutions.
I do hereby certify that I am ▇▇▇▇ ▇▇▇▇▇, the Secretary of UDT SENSORS,
INC., a California corporation, and I do hereby further certify that the
foregoing is a true copy of the resolutions of the Board of Directors of the
Corporation adopted and approved at a meeting which was duly called and held in
accordance with all applicable provisions of law and the Articles and By-Laws of
the Corporation, on the 3rd day of August, 1999, at which meeting a majority of
the Board of Directors of the Corporation was present and voted in favor of the
resolutions.
I hereby further certify that such resolutions are presently in full force
and effect and have not been amended or revoked. I do further certify that the
following persons have been duly elected and qualified as and, this day are,
officers of the Corporation, holding their respective offices appearing below
their names, and that the signatures appearing opposite their names are the
genuine signatures of such persons.
-2-
▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Chief Executive Officer (SIGNATURE)
▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------
Chief Financial Officer (SIGNATURE)
IN WITNESS WHEREOF, this document is executed as of the 2 day of September,
1999.
NAME OF CORPORATION: UDT SENSORS, INC.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------
NAME: ▇▇▇▇ ▇▇▇▇▇ , SECRETARY
-3-
CERTIFIED CORPORATE RESOLUTION TO BORROW
WHEREAS, ▇▇▇▇▇▇ OPTICS, INC. (the "Corporation") has made application to
SANWA BANK CALIFORNIA (the "Bank") for credit accommodations which may consist
of but shall in no way be limited to the following: the renewal, continuation or
extension of an existing obligation; the extension of a new loan, line of credit
or commitment; the issuance of letters of credit or banker's acceptances; or the
purchase or sale through Bank of foreign currencies.
RESOLVED, that: ▇▇▇▇▇▇ ▇▇▇▇▇▇, as the Chief Executive Officer of the
Corporation, or ▇▇▇▇ ▇▇▇▇▇ as the Chief Financial Officer of the Corporation, is
authorized, in the name of and on behalf of the Corporation to:
(a) Borrow money from the Bank in such amounts and upon such terms and
conditions as are agreed upon by the officers of the Corporation and the Bank;
and execute and deliver or endorse such evidences of indebtedness or renewals
thereof or agreements therefor as may be required by the Bank, all in such form
and content as the officers of the Corporation executing such documents shall
approve (which approval shall be evidenced by the execution and delivery of such
documents); provided, however, that the maximum amount of such indebtedness
shall not exceed the principal sum of $33 million exclusive of any interest,
fees, attorneys' fees and other costs and expenses related to the indebtedness.
(b) Execute such evidences of indebtedness, agreements, security instruments
and other documents and to take such other actions as are herein authorized.
(c) Sell to or discount or re-discount with the Bank any and all negotiable
instruments, contracts or instruments or evidences of indebtedness at any time
held by the Corporation; and endorse, transfer and deliver the same, together
with guaranties of payment or repurchase thereof, to the Bank (for which the
Bank is hereby authorized and directed to pay the proceeds of such sale,
discount or re-discount as directed by such endorsement without inquiring into
the circumstances of its issue or endorsement or the disposition of such
proceeds).
(d) Withdraw, receive and execute receipts for deposits and withdrawals on
accounts of the Corporation maintained with the Bank.
(e) Grant security interests and liens in any real, personal or other property
belonging to or under the control of the Corporation as security for any
indebtedness of the Corporation to the Bank; and execute and deliver to the Bank
any and all security agreements, pledges, mortgages, deeds of trust and other
security instruments and any other documents to effectuate the grant of such
security interests and liens, which security instruments and other documents
shall be in such form and content as the officers of the Corporation executing
such security instruments and other documents shall approve and which approval
shall be evidenced by the execution and delivery of such security instruments
and other documents.
(f) Apply for letters of credit or seek the issuance of banker's acceptances
under which the Corporation shall be liable to the Bank for repayment.
(g) Purchase and sell foreign currencies, on behalf of the Corporation, whether
for immediate or future delivery, in such amounts and upon such terms and
conditions as the officer(s)
-1-
authorized herein may deem appropriate, and give any instructions for transfers
or deposits of monies by check, drafts, cable, letter or otherwise for any
purpose incidental to the foregoing, and authorize or direct charges to the
depository account or accounts of the Corporation for the cost of any foreign
currencies so purchased through the Bank.
(h) To designate in writing to the Bank in accordance with the terms of any
agreement or other document executed by the above-named individuals one or more
individuals who shall have the authority to as provided herein, to:
(1) request advances under lines of credit extended by the Bank to the
Corporation;
(2) apply for letters of credit or seek the issuance of banker's acceptances
under which the Corporation shall be liable to the Bank for repayment;
(3) make deposits and receive and execute receipts for deposits on accounts of
the Corporation maintained with the Bank;
(4) make withdrawals and receive and execute receipts for withdrawals on
account of the Corporation maintained with the Bank;
(5) purchase and sell foreign currencies.
(i) Transact any other business with the Bank incidental to the powers
hereinabove stated.
RESOLVED FURTHER, that all such evidences of indebtedness, agreements,
security instruments and other documents executed in the name of and on behalf
of the Corporation and all such actions taken on behalf of the Corporation in
connection with the matters described herein are hereby ratified and approved.
RESOLVED FURTHER, that the Bank is authorized to act upon these resolutions
until written notice of their revocation is delivered to the Bank.
RESOLVED FURTHER, that any resolution set forth herein is in addition to
and does not supersede any resolutions previously given by the Corporation to
the Bank.
RESOLVED FURTHER, that the Secretary of the Corporation be, and hereby is,
authorized and directed to prepare, execute and deliver to the Bank a certified
copy of the foregoing resolutions.
I do hereby certify that I am ▇▇▇▇ ▇▇▇▇▇, the Secretary of ▇▇▇▇▇▇ OPTICS,
INC., a California corporation, and I do hereby further certify that the
foregoing is a true copy of the resolutions of the Board of Directors of the
Corporation adopted and approved at a meeting which was duly called and held in
accordance with all applicable provisions of law and the Articles and By-Laws of
the Corporation, on the 3rd day of August, 1999, at which meeting a majority of
the Board of Directors of the Corporation was present and voted in favor of the
resolutions.
I hereby further certify that such resolutions are presently in full force
and effect and have not been amended or revoked. I do further certify that the
following persons have been duly elected and qualified as and, this day are,
officers of the Corporation, holding their respective
-2-
offices appearing below their names, and that the signatures appearing opposite
their names are the genuine signatures of such persons.
▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Chief Executive Officer (SIGNATURE)
▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------
Chief Financial Officer (SIGNATURE)
IN WITNESS WHEREOF, this document is executed as of the 2 day of September,
1999.
NAME OF CORPORATION: ▇▇▇▇▇▇ OPTICS, INC.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------
NAME: ▇▇▇▇ ▇▇▇▇▇, SECRETARY
-3-
CERTIFIED CORPORATE RESOLUTION TO BORROW
WHEREAS, RAPISCAN SECURITY PRODUCTS, INC. (the "Corporation") has made
application to SANWA BANK CALIFORNIA (the "Bank") for credit accommodations
which may consist of but shall in no way be limited to the following: the
renewal, continuation or extension of an existing obligation; the extension of a
new loan, line of credit or commitment; the issuance of letters of credit or
banker's acceptances; or the purchase or sale through Bank of foreign
currencies.
RESOLVED, that: ▇▇▇▇▇▇ ▇▇▇▇▇▇, as the Chief Executive Officer of the
Corporation, or ▇▇▇▇ ▇▇▇▇▇ as the Chief Financial Officer of the Corporation, is
authorized, in the name of and on behalf of the Corporation to:
(a) Borrow money from the Bank in such amounts and upon such terms and
conditions as are agreed upon by the officers of the Corporation and the Bank;
and execute and deliver or endorse such evidences of indebtedness or renewals
thereof or agreements therefor as may be required by the Bank, all in such form
and content as the officers of the Corporation executing such documents shall
approve (which approval shall be evidenced by the execution and delivery of such
documents); provided, however, that the maximum amount of such indebtedness
shall not exceed the principal sum of $33 million exclusive of any interest,
fees, attorneys' fees and other costs and expenses related to the indebtedness.
(b) Execute such evidences of indebtedness, agreements, security instruments
and other documents and to take such other actions as are herein
authorized.
(c) Sell to or discount or re-discount with the Bank any and all negotiable
instruments, contracts or instruments or evidences of indebtedness at any time
held by the Corporation; and endorse, transfer and deliver the same, together
with guaranties of payment or repurchase thereof, to the Bank (for which the
Bank is hereby authorized and directed to pay the proceeds of such sale,
discount or re-discount as directed by such endorsement without inquiring into
the circumstances of its issue or endorsement or the disposition of such
proceeds).
(d) Withdraw, receive and execute receipts for deposits and withdrawals on
accounts of the Corporation maintained with the Bank.
(e) Grant security interests and liens in any real, personal or other property
belonging to or under the control of the Corporation as security for any
indebtedness of the Corporation to the Bank; and execute and deliver to the Bank
any and all security agreements, pledges, mortgages, deeds of trust and other
security instruments and any other documents to effectuate the grant of such
security interests and liens, which security instruments and other documents
shall be in such form and content as the officers of the Corporation executing
such security instruments and other documents shall approve and which approval
shall be evidenced by the execution and delivery of such security instruments
and other documents.
(f) Apply for letters of credit or seek the issuance of banker's acceptances
under which the Corporation shall be liable to the Bank for repayment.
(g) Purchase and sell foreign currencies, on behalf of the Corporation, whether
for immediate or future delivery, in such amounts and upon such terms and
conditions as the officer(s) authorized herein may deem appropriate, and give
any instructions for transfers or deposits of
-1-
monies by check, drafts, cable, letter or otherwise for any purpose incidental
to the foregoing, and authorize or direct charges to the depository account or
accounts of the Corporation for the cost of any foreign currencies so purchased
through the Bank.
(h) To designate in writing to the Bank in accordance with the terms of any
agreement or other document executed by the above-named individuals one or more
individuals who shall have the authority to as provided herein, to:
(1) request advances under lines of credit extended by the Bank to the
Corporation;
(2) apply for letters of credit or seek the issuance of banker's acceptances
under which the Corporation shall be liable to the Bank for repayment;
(3) make deposits and receive and execute receipts for deposits on accounts of
the Corporation maintained with the Bank;
(4) make withdrawals and receive and execute receipts for withdrawals on
account of the Corporation maintained with the Bank;
(5) purchase and sell foreign currencies.
(i) Transact any other business with the Bank incidental to the powers
hereinabove stated.
RESOLVED FURTHER, that all such evidences of indebtedness, agreements,
security instruments and other documents executed in the name of and on behalf
of the Corporation and all such actions taken on behalf of the Corporation in
connection with the matters described herein are hereby ratified and approved.
RESOLVED FURTHER, that the Bank is authorized to act upon these resolutions
until written notice of their revocation is delivered to the Bank.
RESOLVED FURTHER, that any resolution set forth herein is in addition to
and does not supersede any resolutions previously given by the Corporation to
the Bank.
RESOLVED FURTHER, that the Secretary of the Corporation be, and hereby is,
authorized and directed to prepare, execute and deliver to the Bank a certified
copy of the foregoing resolutions.
I do hereby certify that I am ▇▇▇▇ ▇▇▇▇▇ the Secretary of RAPISCAN SECURITY
PRODUCTS, INC., a California corporation, and I do hereby further certify that
the foregoing is a true copy of the resolutions of the Board of Directors of the
Corporation adopted and approved at a meeting which was duly called and held in
accordance with all applicable provisions of law and the Articles and By-Laws of
the Corporation, on the 3rd day of September, 1999, at which meeting a majority
of the Board of Directors of the Corporation was present and voted in favor of
the resolutions.
I hereby further certify that such resolutions are presently in full force
and effect and have not been amended or revoked. I do further certify that the
following persons have been duly elected and qualified as and, this day are,
officers of the Corporation, holding their respective offices appearing below
their names, and that the signatures appearing opposite their names are the
genuine signatures of such persons.
-2-
▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Chief Executive Officer (SIGNATURE)
▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------
Chief Financial Officer (SIGNATURE)
IN WITNESS WHEREOF, this document is executed as of the 2 day of September,
1999.
NAME OF CORPORATION: RAPISCAN SECURITY PRODUCTS, INC.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------
NAME: ▇▇▇▇ ▇▇▇▇▇, SECRETARY
-3-
CERTIFIED CORPORATE RESOLUTION TO BORROW
WHEREAS, METOREX SECURITY PRODUCTS, INC. (the "Corporation") has made
application to SANWA BANK CALIFORNIA (the "Bank") for credit accommodations
which may consist of but shall in no way be limited to the following: the
renewal, continuation or extension of an existing obligation; the extension of a
new loan, line of credit or commitment; the issuance of letters of credit or
banker's acceptances; or the purchase or sale through Bank of foreign
currencies.
RESOLVED, that: ▇▇▇▇▇▇ ▇▇▇▇▇▇, as the Chief Executive Officer of the
Corporation, or ▇▇▇▇ ▇▇▇▇▇ as the Chief Financial Officer is authorized, in the
name of and on behalf of the Corporation to:
(j) Borrow money from the Bank in such amounts and upon such terms and
conditions as are agreed upon by the officers of the Corporation and the Bank;
and execute and deliver or endorse such evidences of indebtedness or renewals
thereof or agreements therefor as may be required by the Bank, all in such form
and content as the officers of the Corporation executing such documents shall
approve (which approval shall be evidenced by the execution and delivery of such
documents); provided, however, that the maximum amount of such indebtedness
shall not exceed the principal sum of $33 million exclusive of any interest,
fees, attorneys' fees and other costs and expenses related to the indebtedness.
(k) Execute such evidences of indebtedness, agreements, security instruments
and other documents and to take such other actions as are herein
authorized.
(l) Sell to or discount or re-discount with the Bank any and all negotiable
instruments, contracts or instruments or evidences of indebtedness at any time
held by the Corporation; and endorse, transfer and deliver the same, together
with guaranties of payment or repurchase thereof, to the Bank (for which the
Bank is hereby authorized and directed to pay the proceeds of such sale,
discount or re-discount as directed by such endorsement without inquiring into
the circumstances of its issue or endorsement or the disposition of such
proceeds).
(m) Withdraw, receive and execute receipts for deposits and withdrawals on
accounts of the Corporation maintained with the Bank.
(n) Grant security interests and liens in any real, personal or other property
belonging to or under the control of the Corporation as security for any
indebtedness of the Corporation to the Bank; and execute and deliver to the Bank
any and all security agreements, pledges, mortgages, deeds of trust and other
security instruments and any other documents to effectuate the grant of such
security interests and liens, which security instruments and other documents
shall be in such form and content as the officers of the Corporation executing
such security instruments and other documents shall approve and which approval
shall be evidenced by the execution and delivery of such security instruments
and other documents.
(o) Apply for letters of credit or seek the issuance of banker's acceptances
under which the Corporation shall be liable to the Bank for repayment.
(p) Purchase and sell foreign currencies, on behalf of the Corporation, whether
for immediate or future delivery, in such amounts and upon such terms and
conditions as the officer(s) authorized herein may deem appropriate, and give
any instructions for transfers or deposits of
-4-
monies by check, drafts, cable, letter or otherwise for any purpose incidental
to the foregoing, and authorize or direct charges to the depository account or
accounts of the Corporation for the cost of any foreign currencies so purchased
through the Bank.
(q) To designate in writing to the Bank in accordance with the terms of any
agreement or other document executed by the above-named individuals one or
more individuals who shall have the authority to as provided herein, to:
(1) request advances under lines of credit extended by the Bank to the
Corporation;
(2) apply for letters of credit or seek the issuance of banker's acceptances
under which the Corporation shall be liable to the Bank for repayment;
(3) make deposits and receive and execute receipts for deposits on accounts of
the Corporation maintained with the Bank;
(4) make withdrawals and receive and execute receipts for withdrawals on
account of the Corporation maintained with the Bank;
(5) purchase and sell foreign currencies.
(r) Transact any other business with the Bank incidental to the powers
hereinabove stated.
RESOLVED FURTHER, that all such evidences of indebtedness, agreements,
security instruments and other documents executed in the name of and on behalf
of the Corporation and all such actions taken on behalf of the Corporation in
connection with the matters described herein are hereby ratified and approved.
RESOLVED FURTHER, that the Bank is authorized to act upon these resolutions
until written notice of their revocation is delivered to the Bank.
RESOLVED FURTHER, that any resolution set forth herein is in addition to
and does not supersede any resolutions previously given by the Corporation to
the Bank.
RESOLVED FURTHER, that the Secretary of the Corporation be, and hereby is,
authorized and directed to prepare, execute and deliver to the Bank a certified
copy of the foregoing resolutions.
I do hereby certify that I am ▇▇▇▇ ▇▇▇▇▇, the Secretary of METOREX SECURITY
PRODUCTS, INC., a California corporation, and I do hereby further certify that
the foregoing is a true copy of the resolutions of the Board of Directors of the
Corporation adopted and approved at a meeting which was duly called and held in
accordance with all applicable provisions of law and the Articles and By-Laws of
the Corporation, on the 3rd day of September, 1999, at which meeting a majority
of the Board of Directors of the Corporation was present and voted in favor of
the resolutions.
I hereby further certify that such resolutions are presently in full force
and effect and have not been amended or revoked. I do further certify that the
following persons have been duly elected and qualified as and, this day are,
officers of the Corporation, holding their respective offices appearing below
their names, and that the signatures appearing opposite their names are the
genuine signatures of such persons.
-5-
▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Chief Executive Officer (SIGNATURE)
▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------
Chief Financial Officer (SIGNATURE)
IN WITNESS WHEREOF, this document is executed as of the 2 day of September,
1999.
NAME OF CORPORATION: METOREX SECURITY PRODUCTS, INC.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------
NAME: ▇▇▇▇ ▇▇▇▇▇, SECRETARY
-6-
CERTIFIED CORPORATE RESOLUTION TO BORROW
WHEREAS, SILICON MICROSTRUCTURES, INC. (the "Corporation") has made
application to SANWA BANK CALIFORNIA (the "Bank") for credit accommodations
which may consist of but shall in no way be limited to the following: the
renewal, continuation or extension of an existing obligation; the extension of a
new loan, line of credit or commitment; the issuance of letters of credit or
banker's acceptances; or the purchase or sale through Bank of foreign
currencies.
RESOLVED, that: ▇▇▇▇▇▇ ▇▇▇▇▇▇, as the Chief Executive Officer of the
Corporation, or ▇▇▇▇ ▇▇▇▇▇ as the Chief Financial Officer is authorized, in the
name of and on behalf of the Corporation to:
(s) Borrow money from the Bank in such amounts and upon such terms and
conditions as are agreed upon by the officers of the Corporation and the Bank;
and execute and deliver or endorse such evidences of indebtedness or renewals
thereof or agreements therefor as may be required by the Bank, all in such form
and content as the officers of the Corporation executing such documents shall
approve (which approval shall be evidenced by the execution and delivery of such
documents); provided, however, that the maximum amount of such indebtedness
shall not exceed the principal sum of $33 million exclusive of any interest,
fees, attorneys' fees and other costs and expenses related to the indebtedness.
(t) Execute such evidences of indebtedness, agreements, security instruments
and other documents and to take such other actions as are herein
authorized.
(u) Sell to or discount or re-discount with the Bank any and all negotiable
instruments, contracts or instruments or evidences of indebtedness at any time
held by the Corporation; and endorse, transfer and deliver the same, together
with guaranties of payment or repurchase thereof, to the Bank (for which the
Bank is hereby authorized and directed to pay the proceeds of such sale,
discount or re-discount as directed by such endorsement without inquiring into
the circumstances of its issue or endorsement or the disposition of such
proceeds).
(v) Withdraw, receive and execute receipts for deposits and withdrawals on
accounts of the Corporation maintained with the Bank.
(w) Grant security interests and liens in any real, personal or other property
belonging to or under the control of the Corporation as security for any
indebtedness of the Corporation to the Bank; and execute and deliver to the Bank
any and all security agreements, pledges, mortgages, deeds of trust and other
security instruments and any other documents to effectuate the grant of such
security interests and liens, which security instruments and other documents
shall be in such form and content as the officers of the Corporation executing
such security instruments and other documents shall approve and which approval
shall be evidenced by the execution and delivery of such security instruments
and other documents.
(x) Apply for letters of credit or seek the issuance of banker's acceptances
under which the Corporation shall be liable to the Bank for repayment.
(y) Purchase and sell foreign currencies, on behalf of the Corporation, whether
for immediate or future delivery, in such amounts and upon such terms and
conditions as the officer(s) authorized herein may deem appropriate, and give
any instructions for transfers or deposits of
-1-
monies by check, drafts, cable, letter or otherwise for any purpose incidental
to the foregoing, and authorize or direct charges to the depository account or
accounts of the Corporation for the cost of any foreign currencies so purchased
through the Bank.
(z) To designate in writing to the Bank in accordance with the terms of any
agreement or other document executed by the above-named individuals one or more
individuals who shall have the authority to as provided herein, to:
(1) request advances under lines of credit extended by the Bank to the
Corporation;
(2) apply for letters of credit or seek the issuance of banker's acceptances
under which the Corporation shall be liable to the Bank for repayment;
(3) make deposits and receive and execute receipts for deposits on accounts of
the Corporation maintained with the Bank;
(4) make withdrawals and receive and execute receipts for withdrawals on
account of the Corporation maintained with the Bank;
(5) purchase and sell foreign currencies.
(aa) Transact any other business with the Bank incidental to the powers
hereinabove stated.
RESOLVED FURTHER, that all such evidences of indebtedness, agreements,
security instruments and other documents executed in the name of and on behalf
of the Corporation and all such actions taken on behalf of the Corporation in
connection with the matters described herein are hereby ratified and approved.
RESOLVED FURTHER, that the Bank is authorized to act upon these resolutions
until written notice of their revocation is delivered to the Bank.
RESOLVED FURTHER, that any resolution set forth herein is in addition to
and does not supersede any resolutions previously given by the Corporation to
the Bank.
RESOLVED FURTHER, that the Secretary of the Corporation be, and hereby is,
authorized and directed to prepare, execute and deliver to the Bank a certified
copy of the foregoing resolutions.
I do hereby certify that I am ▇▇▇▇ ▇▇▇▇▇, the Secretary of SILICON
MICROSTRUCTURES, INC., a California corporation, and I do hereby further certify
that the foregoing is a true copy of the resolutions of the Board of Directors
of the Corporation adopted and approved at a meeting which was duly called and
held in accordance with all applicable provisions of law and the Articles and
By-Laws of the Corporation, on the 3rd day of August, 1999, at which meeting a
majority of the Board of Directors of the Corporation was present and voted in
favor of the resolutions.
I hereby further certify that such resolutions are presently in full force
and effect and have not been amended or revoked. I do further certify that the
following persons have been duly elected and qualified as and, this day are,
officers of the Corporation, holding their respective offices appearing below
their names, and that the signatures appearing opposite their names are the
genuine signatures of such persons.
-2-
▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Chief Executive Officer (SIGNATURE)
▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------
Chief Financial Officer (SIGNATURE)
IN WITNESS WHEREOF, this document is executed as of the 2 day of September,
1999.
NAME OF CORPORATION: SILICON MICROSTRUCTURES, INC.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------
NAME: ▇▇▇▇ ▇▇▇▇▇, SECRETARY
-3-
CERTIFIED CORPORATE RESOLUTION TO BORROW
WHEREAS, ARISTO MEDICAL PRODUCTS, INC. (the "Corporation") has made
application to SANWA BANK CALIFORNIA (the "Bank") for credit accommodations
which may consist of but shall in no way be limited to the following: the
renewal, continuation or extension of an existing obligation; the extension of a
new loan, line of credit or commitment; the issuance of letters of credit or
banker's acceptances; or the purchase or sale through Bank of foreign
currencies.
RESOLVED, that: ▇▇▇▇▇▇ ▇▇▇▇▇▇, as the Chief Executive Officer of the
Corporation, or ▇▇▇▇ ▇▇▇▇▇ as the Chief Financial Officer is authorized, in the
name of and on behalf of the Corporation to:
(bb) Borrow money from the Bank in such amounts and upon such terms and
conditions as are agreed upon by the officers of the Corporation and the Bank;
and execute and deliver or endorse such evidences of indebtedness or renewals
thereof or agreements therefor as may be required by the Bank, all in such form
and content as the officers of the Corporation executing such documents shall
approve (which approval shall be evidenced by the execution and delivery of such
documents); provided, however, that the maximum amount of such indebtedness
shall not exceed the principal sum of $33 million exclusive of any interest,
fees, attorneys' fees and other costs and expenses related to the indebtedness.
(cc) Execute such evidences of indebtedness, agreements, security instruments
and other documents and to take such other actions as are herein authorized.
(dd) Sell to or discount or re-discount with the Bank any and all negotiable
instruments, contracts or instruments or evidences of indebtedness at any time
held by the Corporation; and endorse, transfer and deliver the same, together
with guaranties of payment or repurchase thereof, to the Bank (for which the
Bank is hereby authorized and directed to pay the proceeds of such sale,
discount or re-discount as directed by such endorsement without inquiring into
the circumstances of its issue or endorsement or the disposition of such
proceeds).
(ee) Withdraw, receive and execute receipts for deposits and withdrawals on
accounts of the Corporation maintained with the Bank.
(ff) Grant security interests and liens in any real, personal or other property
belonging to or under the control of the Corporation as security for any
indebtedness of the Corporation to the Bank; and execute and deliver to the Bank
any and all security agreements, pledges, mortgages, deeds of trust and other
security instruments and any other documents to effectuate the grant of such
security interests and liens, which security instruments and other documents
shall be in such form and content as the officers of the Corporation executing
such security instruments and other documents shall approve and which approval
shall be evidenced by the execution and delivery of such security instruments
and other documents.
(gg) Apply for letters of credit or seek the issuance of banker's acceptances
under which the Corporation shall be liable to the Bank for repayment.
(hh) Purchase and sell foreign currencies, on behalf of the Corporation, whether
for immediate or future delivery, in such amounts and upon such terms and
conditions as the officer(s) authorized herein may deem appropriate, and give
any instructions for transfers or deposits of
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monies by check, drafts, cable, letter or otherwise for any purpose incidental
to the foregoing, and authorize or direct charges to the depository account or
accounts of the Corporation for the cost of any foreign currencies so purchased
through the Bank.
(ii) To designate in writing to the Bank in accordance with the terms of any
agreement or other document executed by the above-named individuals one or more
individuals who shall have the authority to as provided herein, to:
(1) request advances under lines of credit extended by the Bank to the
Corporation;
(2) apply for letters of credit or seek the issuance of banker's acceptances
under which the Corporation shall be liable to the Bank for repayment;
(3) make deposits and receive and execute receipts for deposits on accounts of
the Corporation maintained with the Bank;
(4) make withdrawals and receive and execute receipts for withdrawals on
account of the Corporation maintained with the Bank;
(5) purchase and sell foreign currencies.
(jj) Transact any other business with the Bank incidental to the powers
hereinabove stated.
RESOLVED FURTHER, that all such evidences of indebtedness, agreements,
security instruments and other documents executed in the name of and on behalf
of the Corporation and all such actions taken on behalf of the Corporation in
connection with the matters described herein are hereby ratified and approved.
RESOLVED FURTHER, that the Bank is authorized to act upon these resolutions
until written notice of their revocation is delivered to the Bank.
RESOLVED FURTHER, that any resolution set forth herein is in addition to
and does not supersede any resolutions previously given by the Corporation to
the Bank.
RESOLVED FURTHER, that the Secretary of the Corporation be, and hereby is,
authorized and directed to prepare, execute and deliver to the Bank a certified
copy of the foregoing resolutions.
I do hereby certify that I am ▇▇▇▇ ▇▇▇▇▇, the Secretary of ARISTO MEDICAL
PRODUCTS, INC. a California corporation, and I do hereby further certify that
the foregoing is a true copy of the resolutions of the Board of Directors of the
Corporation adopted and approved at a meeting which was duly called and held in
accordance with all applicable provisions of law and the Articles and By-Laws of
the Corporation, on the 3rd day of August, 1999, at which meeting a majority
of the Board of Directors of the Corporation was present and voted in favor of
the resolutions.
I hereby further certify that such resolutions are presently in full force
and effect and have not been amended or revoked. I do further certify that the
following persons have been duly elected and qualified as and, this day are,
officers of the Corporation, holding their respective offices appearing below
their names, and that the signatures appearing opposite their names are the
genuine signatures of such persons.
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▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Chief Executive Officer (SIGNATURE)
▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------
Chief Financial Officer (SIGNATURE)
IN WITNESS WHEREOF, this document is executed as of the 2 day of September,
1999.
NAME OF CORPORATION: ARISTO MEDICAL PRODUCTS, INC.
BY: /s/ ▇▇▇▇ ▇▇▇▇▇
-------------------------------
NAME: ▇▇▇▇ ▇▇▇▇▇, SECRETARY
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