EXHIBIT 10.2
COMERICA
LOAN AND SECURITY AGREEMENT (ACCOUNTS AND INVENTORY)
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OBLIGOR # NOTE # : AGREEMENT DATE
: November 19, 2002
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CREDIT LIMIT : INTEREST RATE :OFFICER NO./INITIALS
$2,000,000 : Base Rate plus 0.500% :48225,▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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THIS AGREEMENT is entered into on November 19, 2002, between
Comerica Bank-California ("Bank")as secured party, whose
headquarters office is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
and the undersigned ("Borrower"), whose sole place of business
(if it has only one), chief executive office (if it has more than
one place of business) or residence (if an individual) is located
at the address set forth below its name on the signature page to
this Agreement. The parties agree as follows:
1. DEFINITIONS.
1.1 "Accounts" shall mean and includes all presently
existing and hereafter arising accounts, including without
limitation all accounts receivable, contract rights and other
forms of right to payment for monetary obligations or receivables
for property sold or to be sold, leased, licensed, assigned or
otherwise disposed of, or for services rendered or to be rendered
(including without limitation all health-care-insurance
receivables) owing to Borrower, and any supporting obligations,
credit insurance, guaranties or security therefor, irrespective
of whether earned by performance.
1.2 "Agreement" shall mean and includes this Loan and
Security Agreement (Accounts and Inventory), any concurrent or
subsequent rider to this Loan and Security Agreement (Accounts
and Inventory) and any extensions, supplements, amendments or
modifications to this Loan and Security Agreement (Accounts and
Inventory) and/or to any such rider.
1.3 "Bank Expenses" shall mean and includes: all costs or
expenses required to be paid by Borrower under this Agreement
which are paid or advanced by Bank; taxes and insurance premiums
of every nature and kind of Borrower paid by Bank; filing,
recording, publication and search fees, appraiser fees, auditor
fees and costs, and title insurance premiums paid or incurred by
Bank in connection with Bank's transactions with Borrower; costs
and expenses incurred by Bank in collecting the Accounts (with or
without suit) to correct any default or enforce any provision of
this Agreement, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, disposing of,
preparing for sale and/or advertising to sell the Collateral,
whether or not a sale is consummated; costs and expenses of suit
incurred by Bank in enforcing or defending this Agreement or any
portion hereof, including, but not limited to, expenses incurred
by Bank in attempting to obtain relief from any stay, restraining
order, injunction or similar process which prohibits Bank from
exercising any of its rights or remedies; and reasonable
attorneys' fees and expenses incurred by Bank in advising,
structuring, drafting, reviewing, amending, terminating,
enforcing, defending or concerning this Agreement, or any portion
hereof or any agreement related hereto, whether or not suit is
brought. Bank Expenses shall include Bank's in-house legal
charges at reasonable rates.
1.4 "Base Rate" shall mean that variable rate of interest
so announced by Bank at its headquarters office in San Jose,
California as its "Base Rate" from time to time and which serves
as the basis upon which effective rates of interest are
calculated for those loans making reference thereto.
1.5 "Borrower's Books" shall mean and includes all of
Borrower's books and records including but not limited to minute
books; ledgers; records indicating, summarizing or evidencing
Borrower's assets, (including, without limitation, the Accounts)
liabilities, business operations or financial condition, and all
information relating thereto, computer programs; computer disk or
tape files; computer printouts; computer runs; and other computer
prepared information and equipment of any kind.
1.6 "Borrowing Base" shall mean the sum of: (1) Seventy Five
percent (75.000%) of the net amount of Eligible Accounts after
deducting therefrom all payments, adjustments and credits
applicable thereto; and (2) the amount, if any, of the advances
against Inventory agreed to be made pursuant to any Inventory
Rider, or other rider, amendment or modification to this
Agreement, that may now or hereafter be entered into by Bank and
Borrower.
1.7 "Cash Flow" shall mean, for any applicable period of
determination, the Net Income (after deduction for income taxes
and other taxes of such Person, or its subsidiaries, determined
by reference to income or profits of such Person, or its
subsidiaries) for such period, plus, to the extent deducted in
computation of such Net Income, the amount of depreciation and
amortization expense and the amount of deferred tax liability
during such period, all as determined in accordance with GAAP.
1.8 "Cash Flow Coverage Ratio" shall mean the ratio, as of
any applicable period of determination, the numerator of which is
Net Income plus depreciation plus amortization plus (or minus)
the increase (or decrease) in the deferred tax ability minus
dividends and, to the extent that and so long as Borrower is an
entity that is not directly subject to Federal income taxation
with respect to which any earnings are attributable ratably to
each Person with an ownership interest in Borrower, minus any
distributions to each such Person in an amount necessary to pay
each such Person's income tax resulting from such ownership
interest, at the greater of actual draws or net income times the
highest prevailing personal tax rate, and the denominator of
which is the current portion of long term debt plus the current
portion of capital lease payments for the same period of
determination.
1.9 "Collateral" shall mean and includes all personal
property of Borrower, including without limitation each and all
of the following: the Accounts; the Inventory; the General
Intangibles; the Negotiable Collateral; Borrower's Books; all
Borrower's deposit accounts; all Borrower's investment property
(including without limitation securities and securities
entitlements); all goods, instruments, documents, policies and
certificates of insurance, deposits, money or other personal
property of Borrower in which Bank receives a security interest
and which now or later come into the possession, custody or
control of Bank; all Borrower's equipment and fixtures; all
additions, accessions, attachments, parts, replacements,
substitutions, renewals, interest, dividends, distributions or
rights of any kind for or with respect to any of the foregoing
(including without limitation any stock splits, stock rights,
voting rights and preferential rights); any supporting
obligations for any of the foregoing; and the products and
proceeds of any of the foregoing, including, but not limited to,
proceeds of insurance covering the Collateral, and any and all
Accounts, General Intangibles, Negotiable Collateral, Inventory,
equipment, money, deposit accounts, investment property,
equipment, fixtures or other tangible and intangible property of
Borrower resulting from the sale or other disposition of the
Collateral and the proceeds thereof and any supporting
obligations or security therefor and any right to payment
thereunder, and including, without limitation, cash or other
property which were proceeds and are recovered by a bankruptcy
trustee or otherwise as a preferential transfer by Borrower.
Notwithstanding anything to the contrary contained herein,
Collateral shall not include any waste or other materials which
have been or may be designated as toxic or hazardous by Bank.
1.10 "Credit" shall mean all Indebtedness, except that
Indebtedness arising pursuant to any other separate contract,
instrument, note or other separate agreement which, by its terms,
provides for a specified interest rate and term.
1.11 "Credit Limit" shall mean Two Million and no/l00
Dollars($2,000 000.00).
1.12 "Current Assets" shall mean, in respect of a Person and
as of any applicable date of determination; all (a) unrestricted
cash, marketable securities, or certificates of deposit; (b) non-
affiliated accounts receivable; (c) United States government
securities;(d) claims against the United States government; and
(e) inventories (held for sale in the ordinary course of
business) of such Person.
1.13 "Current Liabilities" shall mean, in respect of a
Person and as of any applicable date of determination, (a) all
liabilities of such Person that should be classified as current
in accordance with GAAP, including, without limitation, any
portion of the principal of the Indebtedness under this Agreement
classified as current, plus (b) to the extent not otherwise
included, all liabilities of Borrower to any of its affiliates
(including officers, directors, shareholders, subsidiaries and
commonly held companies) whether or not classified as current in
accordance with GAAP.
1.14 "Daily Balance" shall mean the amount determined by
taking the amount of the Credit owed at the beginning of a given
day, adding any new Credit advanced or incurred on such date, and
subtracting any payments or collections which are deemed to be
paid and are applied by Bank in reduction of the Credit on that
date under the provisions of this Agreement.
1.15 "Debt" shall mean, as of any applicable date of
determination, all items of indebtedness, obligation or liability
of a Person, whether matured or unmatured, liquidated or
unliquidated, direct or indirect, absolute or contingent, joint
or several, that should be classified as liabilities in
accordance with GAAP. In the case of Borrower, the term "Debt"
shall include, without limitation, the Indebtedness.
1.16 "Debt-to-Worth Ratio" shall mean, in respect of a
Person and as of any applicable date of determination, the ratio
of (a) the total Debt of such Person at such time, to (b) the
Tangible Effective Net Worth of such Person at such time.
1.17 "Eligible Accounts" shall mean and includes those
Accounts of Borrower which are due and payable within ninety (90)
days, or less, from the date of invoice, have been validly
assigned to Bank and strictly comply with all of Borrower's
warranties and representations to Bank; but Eligible Accounts
shall not include the following: (a) Accounts with respect to
which the account debtor is an officer, employee, partner, joint
venturer or agent of Borrower; (b) Accounts with respect to which
goods are placed on consignment, guaranteed sale or other terms
by reason of which the payment by the account debtor may be
conditional; (c) Accounts with respect to which the account
debtor is not a resident of the United States; (d) Accounts with
respect to which the account debtor is the United States or any
department, agency or instrumentality of the United States; (e)
Accounts with respect to which the account debtor is any State of
the United States or any city, county, town, municipality or
division thereof; (f) Accounts with respect to which the account
debtor is a subsidiary of, related to, affiliated or has common
shareholders, officers or directors with Borrower; (g) Accounts
with respect to which Borrower is or may become liable to the
account debtor for goods sold or services rendered by the account
debtor to Borrower; (h) Accounts not paid by an account debtor
within ninety (90) days from the date of the invoice; (i) Accounts
with respect to which account debtors dispute liability or make
any claim, or have any defense, cross claim, counter claim, or
offset;(j) Accounts with respect to which any Insolvency
Proceeding is filed by or against the account debtor, or if an
account debtor becomes insolvent, fails or goes out of business;
(k) Accounts owed by any single account debtor which exceed
twenty percent (20%) of all of the Eligible Accounts; and (l)
Accounts with a particular account debtor on which over twenty-
five percent (25%) of the aggregate amount owing is greater than
ninety (90) days from the date of the invoice.
1.18 "Event of Default" shall mean one or more of those
events described in Section 7 contained herein below.
1.19 "GAAP" shall mean, as of any applicable period,
generally accepted accounting principles in effect during such
period.
1.20 "General Intangibles" shall mean and includes all of
Borrower's present and future general intangibles and other
personal property (including without limitation all payment
intangibles, electronic chattel paper, contract rights, rights
arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trademarks,
servicemarks, copyrights, blueprints, drawings, plans, diagrams,
schematics, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment
(including without limitation, rights to payment evidenced by
chattel paper, documents or instruments) and other rights under
any royalty or licensing agreements, infringement claims,
software (including without limitation any computer program that
is embedded in goods that consist solely of the medium in which
the program is embedded), information contained on computer disks
or tapes, literature, reports, catalogs, insurance premium
rebates, tax refunds, and tax refund claims), other than goods,
Accounts, Inventory, Negotiable Collateral, and Borrower's Books.
1.21 "Indebtedness" shall mean and includes any and all
loans, advances, Letter of Credit Obligations, overdrafts, debts,
liabilities (including, without limitation, any and all amounts
charged to Borrower's loan account pursuant to any agreement
authorizing Bank to charge Borrower's loan account), obligations,
lease payments, guaranties, covenants and duties owing by
Borrower to Bank of any kind and description whether advanced
pursuant to or evidenced by this Agreement; by any note or other
Instrument; or by any other agreement between Bank and Borrower
and whether or not for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due now
existing or hereafter arising, including, without limitation, any
interest, fees, expenses, costs and other amounts owed to Bank
that but for the provisions of the United States Bankruptcy Code
would have accrued after the commencement of any Insolvency
Proceeding, and including, without limitation, any debt,
liability, or obligations owing from Borrower to others which
Bank may have obtained by assignment, participation, purchase or
otherwise, and further including, without limitation, all
interest not paid when due and all Bank Expenses which Borrower
is required to pay or reimburse by this Agreement, by law, or
otherwise.
1.22 "Insolvency Proceeding" shall mean and includes any
proceeding or case commenced by or against Borrower, or any
guarantor of Borrower's Indebtedness, or any of Borrower's
account debtors, under any provisions of the United States
Bankruptcy Code, as amended, or any other bankruptcy or
insolvency law, including, but not limited to assignments for the
benefit of creditors, formal or informal moratoriums, composition
or extensions with some or all creditors, any proceeding seeking
a reorganization, arrangement or any other relief under the
United States Bankruptcy Code, as amended, or any other
bankruptcy or insolvency law.
1.23 "Inventory" shall mean and includes all present and
future inventory in which Borrower has any interest, including,
but not limited to, goods held by Borrower for sale or lease or
to be furnished under a contract of service and all of Borrower's
present and future raw materials, work in process, finished goods
(including without limitation any computer program embedded in
any of the foregoing goods and any supporting information
provided in connection therewith that (i) is associated with the
goods in such a manner that the program customarily is considered
part of the goods or that (ii) by becoming the owner of the
goods, a person acquires a right to use the program in connection
with the goods), together with any advertising materials and
packing and shipping materials, wherever located and any
documents of title representing any of the above, and any
equipment, fixtures or other property used in the storing,
moving, preserving, identifying, accounting for and shipping or
preparing for the shipping of inventory, and any and all other
items hereafter acquired by Borrower by way of substitution,
replacement, return, repossession or otherwise, and all additions
and accessions thereto, and the resulting product or mass, and
any documents of title respecting any of the above.
1.24 "Letter of Credit Obligations" shall mean, as of any
applicable date of determination, the sum of the undrawn amount
of any letter(s) of credit issued by Bank upon the application of
and/or for the account of Borrower, plus any unpaid reimbursement
obligations owing by Borrower to Bank in respect of any such
letter(s) of credit.
1.25 "Net Income" shall mean the net income (or loss) of a
person for any period of determination, determined in accordance
with GAAP but excluding in any event:
a. any gains or losses on the sale or other disposition,
not in the ordinary course of business, of investments or
fixed or capital assets, and any taxes on the excluded gains
and any tax deductions or credits on account on any excluded
losses; and
b. in the case of Borrower, net earnings of any Person in
which Borrower has an ownership interest, unless such net
earnings shall have actually been received by Borrower in
the form of cash distributions.
1.26 "Negotiable Collateral" shall mean and include all of
Borrower's present and future letters of credit, advises of
credit, letter-of-credit rights, certificates of deposit, notes,
drafts, money, documents (including without limitation all
negotiable documents), instruments (including without limitation
all promissory notes), tangible chattel paper or any other
similar property.
1.27 "Judicial Officer or Assignee" shall mean and includes
any trustee, receiver, controller, custodian, assignee for the
benefit of creditors or any other person or entity having powers
or duties like or similar to the powers and duties of trustee,
receiver, controller, custodian or assignee for the benefit of
creditors.
1.28 "Person" or "person" shall mean and includes any
individual, corporation, partnership, joint venture, firm,
association, trust, unincorporated association, joint stock
company, government, municipality, political subdivision or
agency or other entity.
1.29 "Quick Assets" shall mean, as of any applicable date of
determination, unrestricted cash, certificates of deposit or
marketable securities and net accounts receivable arising from
the sale of goods and services, and United States government
securities and/or claims against the United States government of
Borrower and its subsidiaries.
1.30 "Subordinated Debt" shall mean indebtedness of the
Borrower to third parties which has been subordinated to the
Indebtedness pursuant to a subordination agreement in form and
content satisfactory to Bank.
1.31 "Subordination Agreement" shall mean a subordination
agreement in form satisfactory to Bank making all present and
future indebtedness of Borrower to N/A subordinate to the
Indebtedness.
1.32 "Tangible Effective Net Worth" shall mean, with respect
to any Person and as of any applicable date of determination,
Tangible Net Worth plus Subordinated Debt.
1.33 "Tangible Net Worth" shall mean, with respect to any
Person and as of any applicable date of determination, the excess
of:
a. the net book value of all assets of such Person
(excluding affiliate receivables, patents, patent rights,
trademarks, trade names, franchises, copyrights, licenses,
goodwill, and all other intangible assets of such Person)
after all appropriate deductions in accordance with GAAP
(including, without limitation, reserves for doubtful
receivables, obsolescence, depreciation and amortization),
over
b. all Debt of such Person at such time.
1.34 "Working Capital" shall mean, as of any applicable date
of determination, Current Assets less Current Liabilities.
Any and all terms used in the foregoing definitions and
elsewhere in this Agreement shall be construed and defined in
accordance with the meaning and definition of such terms under
and pursuant to the California Uniform Commercial Code
(hereinafter referred to as the "Uniform Commercial Code") as
amended, revised or replaced from time to time. Notwithstanding
the foregoing, the parties intend that the terms used herein
which are defined in the Uniform Commercial Code have, at all
times, the broadest and most inclusive meanings possible.
Accordingly, if the Uniform Commercial Code shall in the future
be amended or held by a court to define any term used herein more
broadly or inclusively than the Uniform Commercial Code in effect
on the date of this Agreement, then such term, as used herein,
shall be given such broadened meaning. If the Uniform Commercial
Code shall in the future be amended or held by a court to define
any term used herein more narrowly, or less inclusively, than the
Uniform Commercial Code in effect on the date of this Agreement,
such amendment or holding shall be disregarded in defining terms
used in this Agreement.
2. LOAN AND TERMS OF PAYMENT.
For value received, Borrower promises to pay to the order of
Bank such amount, as provided for below, together with interest,
as provided for below.
2.1 Upon the request of Borrower, made at any time and from
time to time during the term hereof, and so long as no Event of
Default has occurred, Bank shall lend to Borrower an amount equal
to the Borrowing Base; provided, however, that the Daily Balance
shall not exceed the lesser of either the Credit Limit or the
Borrowing Base, minus all Letter of Credit Obligations. If at
any time for any reason, the amount of Indebtedness owed by
Borrower to Bank pursuant to this Section 2.1 and Section 2.3 of
this Agreement is greater than the aggregate amount available to
be drawn under this Section 2.1, Borrower shall immediately pay
to Bank, in cash, the amount of such excess.
2.2 Except as hereinbelow provided, the Credit shall bear
interest, on the Daily Balance owing, at a fluctuating rate of
interest equal to the Base Rate plus 50/100 (0.500%)percentage
points per annum.
All interest chargeable under this Agreement that is based
upon a per annum calculation shall be computed on the basis of a
three hundred sixty (360) day year for actual days elapsed. The
Base Rate as of the date of this Agreement is Four and 25/100
(4.250%) per annum. In the event that the Base Rate announced
is, from time to time hereafter, changed, adjustment in the Base
Rate shall be made and based on the Base Rate in effect on the
date of such change. The Base Rate, as adjusted, shall apply to
the Credit until the Base Rate is adjusted again. The minimum
interest payable by Borrower under this Agreement shall in no
event be less than n/a per month.
All interest payable by Borrower under the Credit shall be
due and payable on the first day of each calendar month during
the term of this Agreement. A late payment charge equal to five
percent (5%) of each late payment may be charged on any payment
not received by Bank within ten (10) calendar days after the
payment due date, but acceptance of payment of this charge shall
not waive any Event of Default under this Agreement. Upon the
occurrence of an Event of Default hereunder, and without
constituting a waiver of any such Event of Default, then during
the continuation thereof, at Bank's option, the Credit shall bear
interest, on the Daily Balance owing, at a rate equal to three
percent (3%) per year in excess of the rate applicable
immediately prior to the occurrence of the Event of Default, and
such rate of interest shall fluctuate thereafter from time to
time at the same time and in the same amount as any fluctuation
in the rate of interest applicable immediately prior to any such
occurrence.
2.3 Subject to the terms and conditions of this Agreement,
Bank agrees to issue or cause to be issued letters of credit for
the account of Borrower during the term of this Agreement in the
aggregate outstanding face amount not to exceed (i) the lesser of
the Credit Limit or the Borrowing Base, minus (ii) the then
outstanding Daily Balance, provided that the Letter of Credit
Obligations shall not in any case exceed N/A Dollars ($ N/A)
All letters of credit shall be, in form and substance, acceptable
to Bank in its sole discretion and shall be subject to the terms
and conditions of Bank's form of standard Letter of Credit
Application and Agreement.
The obligation of Borrower to immediately reimburse Bank for
drawings made under letters of credit shall be absolute,
unconditional and irrevocable in accordance with the terms of
this Agreement and the Letter of Credit Application and Agreement
with respect to each such letter of credit. Borrower shall
indemnify, defend, protect and hold Bank harmless from any loss,
cost, expense, or liability, including, without limitation,
reasonable attorney's fees incurred by Bank, whether in-house or
outside counsel is used, arising out of or in connection with any
letters of credit.
3. TERM.
3.1 This Agreement shall remain in full force and effect
until:
___ Terminated by notice, by either party. Notice of such
termination shall be effectuated by mailing of a registered
or certified letter not less than thirty (30) days prior to
the effective date of such termination, addressed to the
other party at the address set forth herein and the
termination shall be effective as of the date so fixed in
such notice.
X June 30, 2004, unless earlier terminated by notice by
Borrower. Notice of such termination by Borrower shall be
effectuated by mailing of a registered or certified letter
not less than thirty (30) days prior to the effective date
of such termination, addressed to Bank at the address set
forth herein and the termination shall be effective as of
the date so fixed in such notice.
Notwithstanding the foregoing, should Borrower be in default
of one or more of the provisions of this Agreement, Bank may
terminate this Agreement at any time without notice.
Notwithstanding the foregoing, should either Bank or Borrower
become insolvent or unable to meet its debts as they mature, or
fail, suspend, or go out of business, the other party shall have
the right to terminate this Agreement at any time without notice.
On the date of termination all Indebtedness shall become
immediately due and payable without notice or demand; no notice
of termination by Borrower shall be effective until Borrower
shall have paid all Indebtedness to Bank in full.
Notwithstanding termination, until all Indebtedness has been
fully satisfied, Bank shall retain its security interest in all
existing Collateral and Collateral arising thereafter, and
Borrower shall continue to perform all of its obligations.
3.2 After termination and when Bank has received payment in
full of Borrower's Indebtedness to Bank, Bank shall reassign to
Borrower all Collateral held by Bank, and shall execute a
termination of all security agreements and security interests
given by Borrower to Bank.
4. CREATION OF SECURITY INTEREST.
4.1 Borrower hereby grants to Bank a continuing security
interest in all presently existing and hereafter arising
Collateral in order to secure prompt repayment of any and all
Indebtedness owed by Borrower to Bank and in order to secure
prompt performance by Borrower of each and all of its covenants
and obligations under this Agreement and otherwise created.
Bank's security interest in the Collateral shall attach to all
Collateral without further act on the part of Bank or Borrower.
In the event that any Collateral, including proceeds, is
evidenced by or consists of Negotiable Collateral, Borrower,
immediately upon the request of Bank, shall (a) endorse or assign
such Negotiable Collateral to Bank, (b) deliver actual physical
possession of such Negotiable Collateral to Bank, and (c) ▇▇▇▇
conspicuously all of its records pertaining to such Negotiable
Collateral with a legend, in form and substance satisfactory to
Bank (and in the case of Negotiable Collateral consisting of
tangible chattel paper, immediately ▇▇▇▇ all such tangible
chattel paper with a conspicuous legend in form and substance
satisfactory to Bank), indicating that the Negotiable Collateral
is subject to the security interest granted to Bank hereunder.
4.2 Bank's security interest in the Accounts shall attach
to all Accounts without further act on the part of Bank or
Borrower. Upon request from Bank, Borrower shall provide Bank
with schedules describing all Accounts created or acquired by
Borrower(including without limitation agings listing the names
and addresses of, and amounts owing by date by account debtors),
and shall execute and deliver written assignments of all Accounts
to Bank all in a form acceptable to Bank; provided, however,
Borrower's failure to execute and deliver such schedules and/or
assignments shall not affect or limit Bank's security interest
and other rights in and to the Accounts. Together with each
schedule, Borrower shall furnish Bank with copies of Borrower's
customers' invoices or the equivalent, and original shipping or
delivery receipts for all merchandise sold, and Borrower warrants
the genuineness thereof. Upon the occurrence of an Event of
Default, Bank or Bank's designee may notify customers or account
debtors of Bank's security interest in the Collateral and direct
such customers or account debtors to make payments directly to
Bank, but unless and until Bank does so or gives Borrower other
written instructions, Borrower shall collect all Accounts for
Bank, receive in trust all payments thereon as Bank's trustee,
and, if so requested to do so from Bank, Borrower shall
immediately deliver said payments to Bank in their original form
as received from the account debtor and all letters of credit,
advices of credit, instruments, documents, chattel paper or any
similar property evidencing or constituting Collateral.
Notwithstanding anything to the contrary contained herein, if
sales of Inventory are made for cash, Borrower shall immediately
deliver to Bank, in identical form, all such cash, checks, or
other forms of payment which Borrower receives. The receipt of
any check or other item of payment by Bank shall not be
considered a payment on account until such check or other item of
payment is honored when presented for payment, in which event,
said check or other item of payment shall be deemed to have been
paid to Bank two (2) calendar days after the date Bank actually
receives such check or other item of payment.
4.3 Bank's security interest in Inventory shall attach to
all Inventory without further act on the part of Bank or
Borrower. Borrower will at Borrower's expense pledge, assemble
and deliver such Inventory to Bank or to a third party as Bank's
bailee; or hold the same in trust for Bank's account or store the
same in a warehouse in Bank's name; or deliver to Bank documents
of title representing said Inventory; or evidence of Bank's
security interest in some other manner acceptable to Bank. Until
a default by Borrower under this Agreement or any other Agreement
between Borrower and Bank, Borrower may, subject to the
provisions hereof and consistent herewith, sell the Inventory,
but only in the ordinary course of Borrower's business. A sale
of Inventory in Borrower's ordinary course of business does not
include an exchange or a transfer in partial or total
satisfaction of a debt owing by Borrower.
4.4 Concurrently with Borrower's execution of this
Agreement, and at any time or times hereafter at the request of
Bank, Borrower shall (a) execute and deliver to Bank security
agreements, mortgages, assignments, certificates of title,
affidavits, reports, notices, schedules of accounts, letters of
authority and all other documents that Bank may reasonably
request, in form satisfactory to Bank, to perfect and maintain
perfected Bank's security interest in the Collateral and in order
to fully consummate all of the transactions contemplated under
this Agreement, (b) cooperate with Bank in obtaining a control
agreement in form and substance satisfactory to Bank with respect
to all deposit accounts, electronic chattel paper, investment
property, and letter-of-credit rights, and (c) in the event that
any Collateral is in the possession of a third party, Borrower
shall join with Bank in notifying such third party of Bank's
security interest and obtaining an acknowledgment from such third
party that it is holding such Collateral for the benefit of Bank.
By authenticating or becoming bound by this Agreement, Borrower
authorizes the filing of initial financing statement(s), and any
amendment(s) covering the Collateral to perfect and maintain
perfected Bank's security interest in the Collateral. Upon the
occurrence of an Event of Default, Borrower hereby irrevocably
makes, constitutes and appoints Bank (and any of Bank's officers,
employees or agents designated by Bank) as Borrower's true and
lawful attorney-in-fact with power to sign the name of Borrower
on any security agreement, mortgage, assignment, certificate of
title, affidavit, letter of authority, notice of other similar
documents which must be executed and/or filed in order to perfect
or continue perfected Bank's security interest in the Collateral,
and to take such actions in its own name or in Borrower's name as
Bank, in its sole discretion, deems necessary or appropriate to
establish exclusive possession or control (as defined in the
Uniform Commercial Code) over any Collateral of such nature that
perfection of Bank's security interest may be accomplished by
possession or control.
4.5 Borrower shall make appropriate entries in Borrower's
Books disclosing Bank's security interest in the Accounts. Bank
(through any of its officers, employees or agents) shall have the
right at any time or times hereafter, provided that reasonable
notice is provided, during Borrower's usual business hours, or
during the usual business hours of any third party having control
over the records of Borrower, to inspect and verify Borrower's
Books in order to verify the amount or condition of, or any other
matter, relating to, said Collateral and Borrower's financial
condition.
4.6 Effective only upon the occurrence of an Event of
Default, Borrower appoints Bank or any other person whom Bank may
designate as Borrower's attorney-in-fact, with power: to endorse
Borrower's name on any checks, notes, acceptances, money order,
drafts or other forms of payment or security that may come into
Bank's possession; to sign Borrower's name on any invoice or ▇▇▇▇
of lading relating to any Accounts, on drafts against account
debtors, on schedules and assignments of Accounts, on
verifications of Accounts and on notices to account debtors; to
establish a lock box arrangement and/or to notify the post office
authorities to change the address for delivery of Borrower's mail
addressed to Borrower to an address designated by Bank, to
receive and open all mail addressed to Borrower, and to retain
all mail relating to the Collateral and forward all other mail to
Borrower; to send, whether in writing or by telephone, requests
for verification of Accounts; and to do all things necessary to
carry out this Agreement. Borrower ratifies and approves all
acts of the attorney-in-fact. Neither Bank nor its attorney-in-
fact will be liable for any acts or omissions or for any error of
judgement or mistake of fact or law. This power being coupled
with an interest, is irrevocable so long as any Accounts in which
Bank has a security interest remain unpaid and until the
Indebtedness has been fully satisfied.
4.7 In order to protect or perfect any security interest
which Bank is granted hereunder, Bank may, in its sole
discretion, discharge any lien or encumbrance or bond the same,
pay any insurance, maintain guards, warehousemen, or any
personnel to protect the Collateral, pay any service bureau, or,
obtain any records, and all costs for the same shall be added to
the Indebtedness and shall be payable on demand.
4.8 Borrower agrees that Bank may provide information
relating to this Agreement or relating to Borrower to Bank's
parent, affiliates, subsidiaries and service providers.
5. CONDITIONS PRECEDENT.
5.1 As conditions precedent to the making of the loans and
the extension of the financial accommodations hereunder, Borrower
shall execute, or cause to be executed, and deliver to Bank, in
form and substance satisfactory to Bank and its counsel, the
following:
a. This Agreement and other documents, instruments and
agreements required by Bank;
b. If Borrower is a corporation, limited liability
company, limited partnership or other such entity, certified
copies of all actions taken by Borrower, any grantor of a
security interest to Bank to secure the Indebtedness, and
any guarantor of the Indebtedness, authorizing the
execution, delivery and performance of this Agreement and
any other documents, instruments or agreements entered into
in connection herewith, and authorizing specific officers to
execute and deliver any such documents, instruments and
agreements;
c. If Borrower is a corporation, limited liability
company, limited partnership or other such entity, then a
certificate of good standing showing that Borrower is in
good standing under the laws of the state of its
incorporation or formation and certificates indicating that
Borrower is qualified to transact business and is in good
standing in any other state in which it conducts business;
d. If Borrower is a partnership, then a copy of Borrower's
partnership agreement certified by each general partner of
Borrower;
e. UCC searches and financing statements, tax lien and
litigation searches, fictitious business statement filings,
insurance certificates, notices or other similar documents
which Bank may require and in such form as Bank may require,
in order to reflect, perfect or protect Bank's first
priority security interest in the Collateral and in order to
fully consummate all of the transactions contemplated under
this Agreement;
f. Evidence that Borrower has obtained insurance and
acceptable endorsements;
g. Such control agreements from each Person as Bank may
require;
h. Duly executed certificates of title with respect to
that portion of the Collateral that is subject to
certificates of title;
i. Such collateral access agreements from each lessor,
warehouseman, bailee, and other Person as Bank may require,
duly executed by each such Person; and
j. Warranties and representations of officers.
6. WARRANTIES, REPRESENTATIONS AND COVENANTS.
6.1 If so requested by Bank, Borrower shall, at such
intervals designated by Bank, during the term hereof execute and
deliver a Report of Accounts Receivable or similar report, in
form customarily used by Bank. The aggregate amount of the
Borrowing Base at all times during the effectiveness of this
Agreement shall not be less than the advances made hereunder.
Bank shall have the right to recompute the Borrowing Base in
conformity with this Agreement.
6.2 If any warranty is breached as to any Account, or any
Account is not paid in full by an account debtor within Ninety
(90) days from the date of invoice, or an account debtor disputes
liability or makes any claim with respect thereto, or a petition
in bankruptcy or other application for relief under the
Bankruptcy Code or any other insolvency law is filed by or
against an account debtor, or an account debtor makes an
assignment for the benefit of creditors, becomes insolvent, fails
or goes out of business, then Bank may deem ineligible any and
all Accounts owing by that account debtor, and reduce the
Borrowing Base by the amount thereof. Bank shall retain its
security interest in all Accounts, whether eligible or
ineligible, until all Indebtedness has been fully paid and
satisfied. Returns and allowances, if any, as between Borrower
and its customers, will be on the same basis and in accordance
with the usual customary practices of Borrower, as they exist at
this time. Any merchandise which is returned by an account
debtor or otherwise recovered shall be set aside, marked with
Bank's name, and Bank shall retain a security interest therein.
Borrower shall promptly notify Bank of all disputes and claims
and settle or adjust them on terms approved by Bank. After
default by Borrower hereunder, no discount, credit or allowance
shall be granted to any account debtor by Borrower and no return
of merchandise shall be accepted by Borrower without Bank's
consent. Bank may, after default by Borrower, settle or adjust
disputes and claims directly with account debtors for amounts and
upon terms which Bank considers advisable, and in such cases Bank
will credit Borrower's loan account with only the net amounts
received by Bank in payment of the Accounts, after deducting all
Bank Expenses in connection therewith.
6.3 Borrower warrants, represents, covenants and agrees
that:
a. Borrower has good and marketable title to the
Collateral. Bank has and shall continue to have a first
priority perfected security interest in and to the
Collateral. The Collateral shall at all times remain free
and clear of all liens, encumbrances and security interests
(except those in favor of Bank);
b. All Accounts are and will, at all times pertinent
hereto, be bona fide existing obligations created by the
sale and delivery of merchandise or the rendition of
services to account debtors in the ordinary course of
business, free of liens, claims, encumbrances and security
interests (except as held by Bank and except as may be
consented to, in writing, by Bank) and are unconditionally
owed to Borrower without defenses, disputes, offsets
counterclaims, rights of return or cancellation, and
Borrower shall have received no notice of actual or imminent
bankruptcy or insolvency of any account debtor at the time
an Account due from such account debtor is assigned to Bank;
and
c. At the time each Account is assigned to Bank, all
property giving rise to such Account shall have been
delivered to the account debtor or to the agent for the
account debtor for immediate shipment to, and unconditional
acceptance by, the account debtor. Borrower shall deliver
to Bank, as Bank may from time to time require, delivery
receipts, customer's purchase orders, shipping instructions,
bills of lading and any other evidence of shipping
arrangements. Absent such a request by Bank, copies of all
such documentation shall be held by Borrower as custodian
for Bank.
6.4 At the time each eligible Account is assigned to Bank,
all such Eligible Accounts will be due and payable on terms set
forth in Section 1.17, or on such other terms approved in writing
by Bank in advance of the creation of such Accounts and which are
expressly set forth on the face of all invoices, copies of which
shall be held by Borrower as custodian for Bank, and no such
Eligible Account will then be past due.
6.5 Borrower shall keep the Inventory only at the following
locations: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and the
owner or mortgagees of the respective locations are:
___________________________________________.
a. Borrower, immediately upon demand by Bank therefor,
shall now and from time to time hereafter, at such intervals
as are reasonably requested by Bank, deliver to Bank,
designations of Inventory specifying Borrower's cost of
Inventory, the wholesale market value thereof and such other
matters and information relating to the Inventory as Bank
may request;
b. Borrower's Inventory, valued at the lower of Borrower's
cost or the wholesale market value thereof, at all times
pertinent hereto shall not be less than N/A Dollars ($N/A)
of which no less than N/A Dollars ($ N/A) shall be in raw
materials and finished goods;
c. All of the Inventory is and shall remain free from all
purchase money or other security interests, liens or
encumbrances, except as held by Bank;
d. Borrower does now keep and hereafter at all times shall
keep correct and accurate records itemizing and describing
the kind, type, quality and quantity of the Inventory, its
cost therefor and selling price thereof, and the daily
withdrawals therefrom and additions thereto, all of which
records shall be available upon demand to any of Bank's
officers, agents and employees for inspection and copying;
e. All Inventory, now and hereafter at all times, shall be
new Inventory of good and merchantable quality free from
material defects;
f. Inventory is not now and shall not at any time or times
hereafter be located or stored with a bailee, warehouseman
or other third party without Bank's prior written consent,
and, in such event, Borrower will concurrently therewith
cause any such bailee, warehouseman or other third party to
issue and deliver to Bank, warehouse receipts in Bank's name
evidencing the storage of Inventory and/or an acknowledgment
by such bailee of Bank's prior rights in the Inventory, in
each case in form and substance acceptable to Bank. In any
event, Borrower shall instruct any third party to hold all
such Inventory for Bank's account subject to Bank's security
interests and its instructions; and
g. Bank shall have the right upon demand now and/or at all
times hereafter, during Borrower's usual business hours,
after reasonable notice, to inspect and examine the
Inventory and to check and test the same as to quality,
quantity, value and condition and Borrower agrees to
reimburse Bank for Bank's reasonable costs and expenses in
so doing.
6.6 Borrower represents, warrants and covenants with Bank
that Borrower will not, without Bank's prior written consent:
▇. ▇▇▇▇▇ a security interest in or permit a lien, claim or
encumbrance upon any of the Collateral to any person,
association, firm, corporation, entity or governmental
agency or instrumentality;
b. Permit any levy, attachment or restraint to be made
affecting any of Borrower's assets;
c. Permit any Judicial Officer or Assignee to be appointed
or to take possession of any or all of Borrower's assets;
d. Other than sales of Inventory in the ordinary course of
Borrower's business, to sell, lease, or otherwise dispose
of, move, or transfer, whether by sale or otherwise, any of
Borrower's assets;
e. Change its name, the location of its sole place of
business, chief executive office or residence, business
structure, corporate identity or structure, form of
organization or the state in which it has been formed or
organized; add any new fictitious names, liquidate, merge or
consolidate with or into any other business organization;
f. Move or relocate any Collateral;
g. Acquire any other business organization;
h. Enter into any transaction not in the usual course of
Borrower's business;
i. Make any change in Borrower's financial structure or in
any of its business objectives, purposes or operations which
would materially adversely affect the ability of Borrower to
repay Borrower's indebtedness;
j. Incur any debts outside the ordinary course of
Borrower's business except renewals or extensions of
existing debts and interest thereon;
k. Make loans, advances or extensions of credit to any
Person, except in the ordinary course of business;
l. Guarantee or otherwise, directly or indirectly, in any
way be or become responsible for obligations of any other
Person, whether by agreement to purchase the indebtedness of
any other Person, agreement for the furnishing of funds to
any other Person through the furnishing of goods, supplies
or services, by way of stock purchase, capital contribution,
advance or loan, for the purpose of paying or discharging
(or causing the payment or discharge of) the indebtedness of
any other Person, or otherwise, except for the endorsement
of negotiable instruments by Borrower in the ordinary course
of business for deposit or collection;
m. Make any payment on account of any Subordinated Debt
except for regularly scheduled payments of interest and
principal in accordance with the provisions of any
Subordination Agreement executed by Bank and the
subordinated debt holder, or amend any provision contained
in any documentation relating to any such Subordinated Debt
without Bank's prior written consent;
n. (a) Sell, lease, transfer or otherwise dispose of
properties and assets having an aggregate book value of more
than N/A Dollars ($N/A) (whether in one transaction or in a
series of transactions) except as to the sale of Inventory
in the ordinary course of business; (b) change its name,
consolidate with or merge into any other corporation, permit
another corporation to merge into it, acquire all or
substantially all the properties or assets of any other
Person, enter into any reorganization or recapitalization or
reclassify its capital stock, or (c) enter into any sale-
leaseback transaction;
o. Purchase or hold beneficially any stock or other
securities of, or make any investment or acquire any
securities or other interest whatsoever in, any other
Person, except for the common stock of the Subsidiaries
owned by Borrower on the date of this Agreement and except
for certificates of deposit with maturities of one year or
less of United States commercial banks with capital, surplus
and undivided profits in excess of One Hundred Million
Dollars ($100,000,000.00) and the securities or other direct
obligations of the United States Government maturing within
one year from the date of acquisition thereof; and
p. Allow any fact, condition or event to occur or exist
with respect to any employee pension or profit sharing plans
established or maintained by it which might constitute
grounds for termination of any such plan or for the court
appointment of a trustee to administer any such plan.
q. Borrower shall not without Bank's prior written consent
acquire or expend for or commit itself to acquire or expend for
fixed assets by lease, purchase or otherwise in an aggregate
amount that exceeds N/A Dollars($______) in any fiscal
year; and
6.7 Borrower is not a merchant whose sales for resale of
goods for personal, family or household purposes exceeded seventy-
five percent (75%) in dollar volume of its total sales of all
goods during the twelve (12) months preceding the filing by Bank
of a financing statement describing the Collateral. At no time
hereafter shall Borrower's sales for resale goods for personal,
family or household purposes exceed seventy-five percent (75%) in
dollar volume of its total sales.
6.8 Borrower represents, warrants, covenants and agrees
that:
a. Borrower's true and correct legal name is that set
forth on the signature page to this Agreement. Except as
disclosed in writing to Bank on or before the date of this
Agreement, Borrower has not done business under any name
other than that set forth on the signature page to this
Agreement;
b. If Borrower is an individual, the location (as
determined pursuant to the Uniform Commercial Code) of
Borrower's principal residence is that set forth following
Borrower's name on the signature page to this Agreement;
c. If Borrower is a registered organization that is
organized under the laws of any one of the states comprising
the United States (e.g. corporation, limited partnership,
registered limited liability partnership or limited
liability company), and is located (as determined pursuant
to the Uniform Commercial Code) in the state under the laws
of which it was organized, Borrower's form of organization
and the state in which it has been organized are those set
forth immediately following Borrower's name on the signature
page to this Agreement;
d. If Borrower is a registered organization organized
under the laws of the United States, and Borrower is located
in the state that United States law designates as its
location or, if United States law authorizes Borrower to
designate the state for its location, the state designated
by Borrower, or if neither of the foregoing are applicable,
at the District of Columbia (in each case as determined in
accordance with the Uniform Commercial Code), Borrower's
form of organization and the state or district in which it
is located are those set forth immediately following
Borrower's name on the signature page to this Agreement;
e. If Borrower is a domestic organization that is not a
registered organization under the laws of the United States
or any state thereof (e.g. general partnership, joint
venture, trust, estate or association), and Borrower is
located (as determined pursuant to the Uniform Commercial
Code) at its sole place of business or, if it has more than
one place of business, at its chief executive office,
Borrower's form of organization and the address of that
location are those set forth on the signature page to this
Agreement; and
f. If Borrower is a foreign individual or foreign
organization or a branch or agency of a bank that is not
organized under the laws of the United States or a state
thereof, Borrower is located (as determined pursuant to the
Uniform Commercial Code) at the address set forth following
Borrower's name on the signature page to this Agreement.
6.9 If Borrower is a corporation, Borrower represents,
warrants and covenants as follows:
a. Borrower will not make any distribution or declare or
pay any dividend (in stock or in cash) to any shareholder or
on any of its capital stock, of any class, whether now or
hereafter outstanding, or purchase, acquire, repurchase, or
redeem or retire any such capital stock; provided, however,
so long as no Event of Default has or is continuing
hereunder, to the extent that and so long as Borrower is an
entity that is not directly subject to Federal income
taxation and with respect to which any earnings are
attributable ratably to each Person with an ownership
interest in Borrower, Borrower may make distributions to
each such Person in an amount necessary to pay each such
Person's income tax resulting from such ownership interest
in Borrower, provided, further, that, promptly upon request
of Bank, Borrower shall cause each such Person to provide
Bank with copies of its tax return to substantiate any such
distribution;
b. Borrower is and shall at all times hereafter be a
corporation duly organized and existing in good standing
under the laws of the state of its incorporation and
qualified and licensed to do business in California or any
other state in which it conducts its business;
c. Borrower has the right and power and is duly authorized
to enter into this Agreement; and
d. The execution by Borrower of this Agreement shall not
constitute a breach of any provision contained in Borrower's
articles of incorporation or by-laws.
6.10 The execution of and performance by Borrower of all of
the terms and provisions contained in this Agreement shall not
result in a breach of or constitute an event of default under any
agreement to which Borrower is now or hereafter becomes a party.
6.11 Borrower shall promptly notify Bank in writing of its
acquisition by purchase, lease or otherwise of any after acquired
property of the type included in the Collateral, with the
exception of purchases of inventory in the ordinary course of
business.
6.12 All assessments and taxes, whether real, personal or
otherwise, due or payable by, or imposed, levied or assessed
against, Borrower or any of its property have been paid, and
shall hereafter be paid in full, before delinquency. Borrower
shall make due and timely payment or deposit of all federal,
state and local taxes, assessments or contributions required of
it by law, and will execute and deliver to Bank, on demand,
appropriate certificates attesting to the payment or deposit
thereof. Borrower will make timely payment or deposit of all
F.I.C.A. payments and withholding taxes required of it by
applicable laws, and will upon request furnish Bank with proof
satisfactory to it that Borrower has made such payments or
deposit. If Borrower fails to pay any such assessment, tax,
contribution, or make such deposit, or furnish the required
proof, Bank may, in its sole and absolute discretion and without
notice to Borrower,(i) make payment of the same or any part
thereof, or (ii) set up such reserves in Borrower's loan account
as Bank deems necessary to satisfy the liability therefor, or
both. Bank may conclusively rely on the usual statements of the
amount owing or other official statements issued by the
appropriate governmental agency. Each amount so paid or
deposited by Bank shall constitute a Bank Expense and an
additional advance to Borrower.
6.13 There are no actions or proceedings pending by or
against Borrower or any guarantor of Borrower before any court or
administrative agency and Borrower has no knowledge of any
pending, threatened or imminent litigation, governmental
investigations or claims, complaints, actions or prosecutions
involving Borrower or any guarantor of Borrower, except as
heretofore specifically disclosed in writing to Bank. If any of
the foregoing arise during the term of the Agreement, Borrower
shall immediately notify Bank in writing.
6.14 Insurance.
a. Borrower, at its expense, shall keep and maintain its
assets insured against loss or damage by fire, theft,
explosion, sprinklers and all other hazards and risks
ordinarily insured against by other owners who use such
properties in similar businesses for the full insurable
value thereof. Borrower shall also keep and maintain
business interruption insurance and public liability and
property damage insurance relating to Borrower's ownership
and use of the Collateral and its other assets. All such
policies of insurance shall be in such form, with such
companies, and in such amounts as may be satisfactory to
Bank. Borrower shall deliver to Bank certified copies of
such policies of insurance and evidence of the payments of
all premiums therefor. All such policies of insurance
(except those of public liability and property damage) shall
contain an endorsement in a form satisfactory to Bank
showing Bank as a loss payee thereof, with a waiver of
warranties satisfactory to Bank, and all proceeds payable
thereunder shall be payable to Bank and, upon receipt by
Bank, shall be applied on account of the Indebtedness owing
to Bank. To secure the payment of the Indebtedness,
Borrower grants Bank a security interest in and to all such
policies of insurance (except those of public liability and
property damage) and the proceeds thereof, and Borrower
shall direct all insurers under such policies of insurance
to pay all proceeds thereof directly to Bank.
b. Borrower hereby irrevocably appoints Bank (and any of
Bank's officers, employees or agents designated by Bank) as
Borrower's attorney for the purpose of making, selling and
adjusting claims under such policies of insurance, endorsing
the name of Borrower on any check, draft, instrument or
other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions
with respect to such policies of insurance. Borrower will
not cancel any of such policies without Bank's prior written
consent. Each such insurer shall agree by endorsement upon
the policy or policies of insurance issued by it to Borrower
as required above, or by independent instruments furnished
to Bank, that it will give Bank at least ten (10) days
written notice before any such policy or policies of
insurance shall be altered or canceled, and that no act or
default of Borrower, or any other person, shall affect the
right of Bank to recover under such policy or policies of
insurance required above or to pay any premium in whole or
in part relating thereto. Bank, without waiving or
releasing any Indebtedness or any Event of Default, may, but
shall have no obligation to do so, obtain and maintain such
policies of insurance and pay such premiums and take any
other action with respect to such policies which Bank deems
advisable. All sums so disbursed by Bank, as well as
reasonable attorneys' fees incurred by Bank, whether in-
house or outside counsel is used, court costs, expenses and
other charges relating thereto, shall constitute Bank
Expenses and are payable on demand.
6.15 All financial statements and information relating to
Borrower which have been or may hereafter be delivered by
Borrower to Bank are true and correct and have been prepared in
accordance with GAAP consistently applied and there has been no
material adverse change in the financial condition of Borrower
since the submission of such financial information to Bank.
6.16 Financial Reporting.
a. Borrower at all times hereafter shall maintain a
standard and modern system of accounting in accordance with
GAAP consistently applied with ledger and account cards
and/or computer tapes and computer disks, computer printouts
and computer records pertaining to the Collateral which
contain information as may from time to time be requested by
Bank, not modify or change its method of accounting or enter
into, modify or terminate any agreement presently existing,
or at any time hereafter entered into with any third party
accounting firm and/or service bureau for the preparation
and/or storage of Borrower's accounting records without the
written consent of Bank first obtained and without said
accounting firm and/or service bureau agreeing to provide
information regarding the Accounts and Inventory and
Borrower's financial condition to Bank; permit Bank and any
of its employees, officers or agents, upon demand, during
Borrower's usual business hours, or the usual business hours
of third persons having control thereof, to have access to
and examine all of Borrower's Books relating to the
Collateral, Borrower's Indebtedness to Bank, Borrower's
financial condition and the results of Borrower's operations
and in connection therewith, permit Bank or any of its
agents, employees or officers to copy and make extracts
therefrom.
b. Borrower shall deliver to Bank within thirty (30) days
after the end of each Month, a COMPANY PREPARED balance
sheet and profit and loss statement covering Borrower's
operations and deliver to Bank within ninety (90) days after
the end of each of Borrower's fiscal years a(n) COMPANY
PREPARED statement of the financial condition of Borrower
for each such fiscal year, including but not limited to, a
balance sheet and profit and loss statement and any other
report requested by Bank relating to the Collateral and the
financial condition of Borrower, and a certificate signed by
an authorized employee of Borrower to the effect that all
reports, statements, computer disk or tape files, computer
printouts, computer runs, or other computer prepared
information of any kind or nature relating to the foregoing
or documents delivered or caused to be delivered to Bank
under this subparagraph are complete, correct and thoroughly
present the financial condition of Borrower and that there
exists on the date of delivery to Bank no condition or event
which constitutes a breach or Event of Default under this
Agreement.
c. In addition to the financial statements requested
above, Borrower agrees to provide Bank with the following
schedules:
XX Accounting Receivable Agings __ on a Monthly* basis;
XX Accounts Payable Agings __ on a Monthly* basis;
__ Job Progress Reports __ on a _____ basis;
XX Borrowing Base Certificate __ on a Monthly* basis;
__ Compliance Certification __ on a _____ basis; and
__ _________________________ __ on a _____ basis.
* due within 20 days of month end
6.17 Borrower shall maintain the following financial ratios
and covenants on a consolidated and non-consolidated basis, which
shall be monitored on a Quarterly basis, except as noted below:
a. Working Capital in an amount not less than N/A
b. Tangible Effective Net Worth in an amount not less than
N/A.
c. a ratio of Current Assets to Current Liabilities of not
less than N/A.
d. a ratio of Quick Assets to Current Liabilities of not
less than 1.2:1.0
e. A Debt-to-Worth Ratio of less than 1.00:1.00
f. Cash Flow Coverage Ratio of not less than N/A.
g. Net Income after taxes of See Addendum "A" attached
hereto and made a part of this Agreement
h. All financial covenants shall be computed in accordance
with GAAP consistently applied except as otherwise
specifically set forth in this Agreement. All monies due
from affiliates (including officers, directors and
shareholders) shall be excluded from Borrower's assets for
all purposes hereunder.
6.18 Borrower shall promptly supply Bank (and cause any
guarantor to supply Bank) with such other information (including
tax returns) concerning its financial affairs (or that of any
guarantor) as Bank may request from time to time hereafter, and
shall promptly notify Bank of any material adverse change in
Borrower's financial condition and of any condition or event
which constitutes a breach of or an event which constitutes an
Event of Default under this Agreement.
6.19 Borrower is now and shall be at all times hereafter
solvent and able to pay its debts (including trade debts) as they
mature.
6.20 Borrower shall immediately and without demand reimburse
Bank for all sums expended by Bank in connection with any action
brought by Bank to correct any default or enforce any provision
of this Agreement, including all Bank Expenses; Borrower
authorizes and approves all advances and payments by Bank for
items described in this Agreement as Bank Expenses.
6.21 Each warranty, representation and agreement contained
in this Agreement shall automatically be deemed repeated with
each advance and shall conclusively be presumed to have been
relied on by Bank regardless of any investigation made or
information possessed by Bank. The warranties, representations
and agreements set forth herein shall be cumulative and in
addition to any and all other warranties, representations and
agreements which Borrower shall give, or cause to be given, to
Bank, either now or hereafter.
6.22 Borrower shall keep all of its principal bank accounts
with Bank and shall notify Bank immediately in writing of the
existence of any other bank account, deposit account, or any
other account into which money can be deposited.
6.23 Borrower shall furnish to Bank: (a) as soon as
possible, but in no event later than thirty (30) days after
Borrower knows or has reason to know that any reportable event
with respect to any deferred compensation plan has occurred, a
statement of the chief financial officer of Borrower setting
forth the details concerning such reportable event and the action
which Borrower proposes to take with respect thereto, together
with a copy of the notice of such reportable event given to the
Pension Benefit Guaranty Corporation, if a copy of such notice is
available to Borrower;(b) promptly after the filing thereof with
the United States Secretary of Labor or the Pension Benefit
Guaranty Corporation, copies of each annual report with respect
to each deferred compensation plan; (c) promptly after receipt
thereof, a copy of any notice Borrower may receive from the
Pension Benefit Guaranty Corporation or the Internal Revenue
Service with respect to any deferred compensation plan; provided,
however, this subparagraph shall not apply to notice of general
application issued by the Pension Benefit Guaranty Corporation or
the Internal Revenue Service; and (d) when the same is made
available to participants in the deferred compensation plan, all
notices and other forms of information from time to time
disseminated to the participants by the administrator of the
deferred compensation plan.
6.24 Borrower is now and shall at all times hereafter remain
in compliance with all federal, state and municipal laws,
regulations and ordinances relating to the handling, treatment
and disposal of toxic substances, wastes and hazardous material
and shall maintain all necessary authorizations and permits.
6.25 Borrower shall maintain insurance on the life of N/A in
an amount not to be less than ________________ Dollars ($_______)
under one or more policies issued by insurance companies
satisfactory to Bank, which policies shall be assigned to Bank as
security for the Indebtedness and on which Bank shall be named as
sole beneficiary.
6.26 Borrower shall limit direct and indirect compensation
paid to the following employees: ▇/▇, ▇/▇, ▇/▇ to an aggregate of
N/A Dollars ($N/A) per N/A.
7. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
Event of Default by Borrower under this Agreement:
a. If Borrower fails or neglects to perform, keep or
observe any term, provision, condition, covenant, agreement,
warranty or representation contained in this Agreement, or
any other present or future document, instrument or
agreement between Borrower and Bank:
b. If any representation, statement, report or certificate
made or delivered by Borrower, or any of its officers,
employees or agents to Bank is not true and correct;
c. If Borrower fails to pay when due and payable or
declared due and payable, all or any portion of Borrower's
Indebtedness (whether of principal, interest, taxes,
reimbursement of Bank Expenses, or otherwise);
d. If there is a material impairment of the prospect of
repayment of all or any portion of Borrower's indebtedness
or a material impairment of the value or priority of Bank's
security interest in the Collateral;
e. If all or any of Borrower's assets are attached,
seized, subject to a writ or distress warrant, or are levied
upon, or come into the possession of any Judicial Officer or
Assignee and the same are not released, discharged or bonded
against within ten (10) days thereafter;
f. If any Insolvency Proceeding is filed or commenced by
or against Borrower without being dismissed within ten (10)
days thereafter;
g. If any proceeding is filed or commenced by or against
Borrower for its dissolution or liquidation;
h. If Borrower is enjoined, restrained or in any way
prevented by court order from continuing to conduct all or
any material part of its business affairs;
i. If a notice of lien, levy or assessment is filed of
record with respect to any or all of Borrower's assets by
the United States Government, or any department, agency or
instrumentality thereof, or by any state, county, municipal
or other government agency, or if any taxes or debts owing
at any time hereafter to any one or more of such entities
becomes a lien, whether inchoate or otherwise, upon any or
all of Borrower's assets and the same is not paid on the
payment date thereof;
j. If a judgment or other claim becomes a lien or
encumbrance upon any or all of Borrower's assets and the
same is not satisfied, dismissed or bonded against within
ten (10) days thereafter;
k. If Borrower's records are prepared and kept by an
outside computer service bureau at the time this Agreement
is entered into or during the term of this Agreement such an
agreement with an outside service bureau is entered into,
and at any time thereafter, without first obtaining the
written consent of Bank, Borrower terminates, modifies,
amends or changes its contractual relationship with said
computer service bureau or said computer service bureau
fails to provide Bank with any requested information or
financial data pertaining to Bank's Collateral, Borrower's
financial condition or the results of Borrower's operations;
l. If Borrower permits a default in any material agreement
to which Borrower is a party with third parties so as to
result in an acceleration of the maturity of Borrower's
indebtedness to others, whether under any indenture,
agreement or otherwise;
m. If Borrower makes any payment on account of
indebtedness which has been subordinated to Borrower's
Indebtedness to Bank except as otherwise permitted under the
terms of this Agreement;
n. If any misrepresentation exists now or thereafter in
any warranty or representation made to Bank by any officer
or director of Borrower, or if any such warranty or
representation is withdrawn by any officer or director;
o. If any party subordinating its claims to that of Bank's
or any guarantor of Borrower's Indebtedness dies, terminates
its subordination or guaranty, violates the terms of the
subordination or guaranty, becomes insolvent, or an
Insolvency Proceeding is commenced by or against any such
subordinating party or guarantor;
p. If Borrower is an individual and Borrower dies;
q. If there is a change of ownership or control of Twenty
Five percent (25.000%) or more of the issued and outstanding
stock of Borrower; or
r. If any reportable event, which Bank determines
constitutes grounds for the termination of any deferred
compensation plan by the Pension Benefit Guaranty
Corporation or for the appointment by the appropriate United
States District Court of a trustee to administer any such
plan, shall have occurred and be continuing thirty (30) days
after written notice of such determination shall have been
given to Borrower by Bank, or any such Plan shall be
terminated within the meaning of Title IV of the Employment
Retirement Income Security Act ("ERISA"),or a trustee shall
be appointed by the appropriate United States District Court
to administer any such plan, or the Pension Benefit Guaranty
Corporation shall institute proceedings to terminate any
plan and in case of any event described in this Section 7,
the aggregate amount of Borrower's liability to the Pension
Benefit Guaranty Corporation under Sections 4062, 4063 or
4064 of ERISA shall exceed five percent (5%) of Borrower's
Tangible Effective Net Worth.
Notwithstanding anything contained in Section 7 to the
contrary, Bank shall refrain from exercising its rights and
remedies and Event of Default shall thereafter not be deemed
to have occurred by reason of the occurrence of any of the
events set forth in Sections 7.e, 7.f or 7.j of this
Agreement if, within ten (10) days from the date thereof,
the same is released, discharged, dismissed, bonded against
or satisfied; provided, however, if the event is the
institution of Insolvency Proceedings against Borrower, Bank
shall not be obligated to make advances to Borrower during
such cure period.
8. BANK'S RIGHTS AND REMEDIES.
8.1 Upon the occurrence of an Event of Default by Borrower
under this Agreement, Bank may, at its election, without notice
of its election and without demand, do any one or more of the
following, all of which are authorized by Borrower:
a. Declare Borrower's Indebtedness, whether evidenced by
this Agreement, installment notes, demand notes or
otherwise, immediately due and payable to Bank;
b. Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement, or any other
agreement between Borrower and Bank;
c. Terminate this Agreement as to any future liability or
obligation of Bank, but without affecting Bank's rights and
security interests in the Collateral, and the Indebtedness
of Borrower to Bank;
d. Without notice to or demand upon Borrower or any
guarantor, make such payments and do such acts as Bank
considers necessary or reasonable to protect its security
interest in the Collateral. Borrower agrees to assemble the
Collateral if Bank so requires and to make the Collateral
available to Bank as Bank may designate. Borrower
authorizes Bank to enter the premises where the Collateral
is located, take and maintain possession of the Collateral
and the premises (at no charge to Bank), or any part
thereof, and to pay, purchase, contest or compromise any
encumbrance, charge or lien which in the opinion of Bank
appears to be prior or superior to its security interest and
to pay all expenses incurred in connection therewith;
e. Without limiting Bank's rights under any security
interest, Bank is hereby granted a license or other right to
use, without charge, Borrower's labels, patents, copyrights,
rights of use of any name, trade secrets, trade names,
trademarks and advertising matter, or any property or a
similar nature as it pertains to the Collateral, in
completing production of, advertising for sale and selling
any Collateral and Borrower's rights under all licenses and
all franchise agreements shall inure to Bank's benefit, and
Bank shall have the right and power to enter into sublicense
agreements with respect to all such rights with third
parties on terms acceptable to Bank;
f. Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sales and sell (in
the manner provided for herein) the Inventory;
g. Sell or dispose the Collateral at either a public or
private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at
such places (including Borrower's premises) as is
commercially reasonable in the opinion of Bank. It is not
necessary that the Collateral be present at any such sale.
At any sale or other disposition of the Collateral pursuant
to this Section, Bank disclaims all warranties which would
otherwise be given under the Uniform Commercial Code,
including without limitation a disclaimer of any warranty
relating to title, possession, quiet enjoyment or the like,
and Bank may communicate these disclaimers to a purchaser at
such disposition. This disclaimer of warranties will not
render the sale commercially unreasonable;
h. Bank shall give notice of the disposition of the
Collateral as follows:
(1) Bank shall give Borrower and each holder of a
security interest in the Collateral who has filed with
Bank a written request for notice, a notice in writing
of the time and place of public sale, or, if the sale
is a private sale or some disposition other than a
public sale is to be made of the Collateral, the time
on or after which the private sale or other disposition
is to be made;
(2) The notice shall be personally delivered or
mailed, postage prepaid, to Borrower's address
appearing in this Agreement, at least ten (10) calendar
days before the date fixed for the sale, or at least
ten (10) calendar days before the date on or after
which the private sale or other disposition is to be
made, unless the Collateral is perishable or threatens
to decline speedily in value. Notice to persons other
than Borrower claiming an interest in the Collateral
shall be sent to such addresses as have been furnished
to Bank or as otherwise determined in accordance with
Section 9611 of the Uniform Commercial Code; and
(3) If the sale is to be a public sale, Bank shall
also give notice of the time and place by publishing a
notice one time at least ten (10) calendar days before
the date of the sale in a newspaper of general
circulation in the county in which the sale is to be
held; and
(4) Bank may credit bid and purchase at any public
sale.
i. Borrower shall pay all Bank Expenses incurred in
connection with Bank's enforcement and exercise of any of
its rights and remedies as herein provided, whether or not
suit is commenced by Bank;
j. Any deficiency which exists after disposition of the
Collateral as provided above will be paid immediately by
Borrower. Any excess will be returned, without interest and
subject to the rights of third parties, to Borrower by Bank,
or, in Bank's discretion, to any party who Bank believes, in
good faith, is entitled to the excess;
k. Without constituting a retention of Collateral in
satisfaction of an obligation within the meaning of 9620 of
the Uniform Commercial Code or an action under California
Code of Civil Procedure 726, apply any and all amounts
maintained by Borrower as deposit accounts (as that term is
defined under 9102 of the Uniform Commercial Code) or other
accounts that Borrower maintains with Bank against the
Indebtedness;
l. The proceeds of any sale or other disposition of
Collateral authorized by this Agreement shall be applied by
Bank first upon all expenses authorized by the Uniform
Commercial Code and all reasonable attorney fees and legal
expenses incurred by Bank, whether in-house or outside
counsel is used, the balance of the proceeds of the sale or
other disposition shall be applied in the payment of the
Indebtedness, first to interest, then to principal, then to
remaining Indebtedness and the surplus, if any, shall be
paid over to Borrower or to such other person(s) as may be
entitled to it under applicable law. Borrower shall remain
liable for any deficiency, which it shall pay to Bank
immediately upon demand. Borrower agrees that Bank shall be
under no obligation to accept any non cash proceeds in
connection with any sale or disposition of Collateral unless
failure to do so would be commercially unreasonable. If
Bank agrees in its sole discretion to accept noncash
proceeds (unless the failure to do so would be commercially
unreasonable), Bank may ascribe any commercially reasonable
value to such proceeds. Without limiting the foregoing,
Bank may apply any discount factor in determining the
present value of proceeds to be received in the future or
may elect to apply proceeds to be received in the future
only as and when such proceeds are actually received in cash
by Bank; and
m. The following shall be the basis for any finder of
fact's determination of the value of any Collateral which is
the subject matter of a disposition giving rise to a
calculation of any surplus or deficiency under Section
9615(f) of the Uniform Commercial Code: (i) The Collateral
which is the subject matter of the disposition shall be
valued in an "as ias condition as of the date of the
disposition, without any assumption or expectation that such
Collateral will be repaired or improved in any manner; (ii)
the valuation shall be based upon an assumption that the
transferee of such Collateral desires a resale of the
Collateral for cash promptly (but no later than 30 days)
following the disposition; (iii) all reasonable closing
costs customarily borne by the seller in commercial sales
transactions relating to property similar to such Collateral
shall be deducted including, without limitation, brokerage
commissions, tax prorations, attorney's fees, whether in-
house or outside counsel is used, and marketing costs; (iv)
the value of the Collateral which is the subject matter of
the disposition shall be further discounted to account for
any estimated holding costs associated with maintaining such
Collateral pending sale (to the extent not accounted for in
(iii) above), and other maintenance, operational and
ownership expenses; and (v) any expert opinion testimony
given or considered in connection with a determination of
the value of such Collateral must be given by persons having
at least 5 years experience in appraising property similar
to the Collateral and who have conducted and prepared a
complete written appraisal of such Collateral taking into
consideration the factors set forth above. The "value" of
any such Collateral shall be a factor in determining the
amount of proceeds which would have been realized in a
disposition to a transferee other than a secured party, a
person related to a secured party or a secondary obligor
under Section 9615(f) of the Uniform Commercial Code.
8.2 In addition to any and all other rights and remedies
available to Bank under or pursuant to this Agreement or any
other documents, instrument or agreement contemplated hereby,
Borrower acknowledges and agrees that (i) at any time following
the occurrence and during the continuance of any Event of
Default, and/or (ii) termination of Bank's commitment or
obligation to make loans or advances or otherwise extent credit
to or in favor of Borrower hereunder, in the event that and to
the extent that there are any Letter of Credit Obligations
outstanding at such time, upon demand of Bank, Borrower shall
deliver to Bank, or cause to be delivered to Bank, cash
collateral in an amount not less than such Letter of Credit
Obligations, which cash collateral shall be held and retained by
Bank as cash collateral for the repayment of such Letter of
Credit Obligations, together with any and all other Indebtedness
of Borrower to Bank remaining unpaid, and Borrower pledges to
Bank and grants to Bank a continuing first priority security
interest in such cash collateral so delivered to Bank.
Alternatively, Borrower shall cause to be delivered to Bank an
irrevocable standby letter of credit issued in favor of Bank by a
bank acceptable to Bank, in its sole discretion, in an amount not
less than such Letter of Credit Obligations, and upon terms
acceptable to Bank, in its sole discretion.
8.3 Bank's rights and remedies under this Agreement and all
other agreements shall be cumulative. Bank shall have all other
rights and remedies not inconsistent herewith as provided by law
or in equity. No exercise by Bank of one right or remedy shall
be deemed an election, and no waiver by Bank of any default on
Borrower's part shall be deemed a continuing waiver. No delay by
Bank shall constitute a waiver, election or acquiescence by Bank.
9. TAXES AND EXPENSES REGARDING BORROWER'S PROPERTY. If
Borrower fails to pay promptly when due to another person or
entity, monies which Borrower is required to pay by reason of any
provision in this Agreement, Bank may, but need not, pay the same
and charge Borrower's loan account therefor, and Borrower shall
promptly reimburse Bank. All such sums shall become additional
Indebtedness owing to Bank, shall bear interest at the rate
hereinabove provided, and shall be secured by all Collateral.
Any payments made by Bank shall not constitute(i) an agreement by
it to make similar payments in the future, or (ii) a waiver by
Bank of any default under this Agreement. Bank need not inquire
as to, or contest the validity of, any such expense, tax,
security interest, encumbrance or lien and the receipt of the
usual official notice of the payment thereof shall be conclusive
evidence that the same was validly due and owing. Such payments
shall constitute Bank Expenses and additional advances to
Borrower.
10. WAIVERS.
10.1 Borrower agrees that checks and other instruments
received by Bank in payment or on account of Borrower's
Indebtedness constitute only conditional payment until such items
are actually paid to Bank and Borrower waives the right to direct
the application of any and all payments at any time or times
hereafter received by Bank on account of Borrower's Indebtedness
and Borrower agrees that Bank shall have the continuing exclusive
right to apply and reapply such payments in any manner as Bank
may deem advisable, notwithstanding any entry by Bank upon its
books.
10.2 Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release,
compromise, settlement, extension or renewal of any or all
commercial paper, accounts, documents, instruments, chattel
paper, and guarantees at any time held by Bank on which Borrower
may in any way be liable.
10.3 Bank shall not in any way or manner be liable or
responsible for (a) the safekeeping of the Inventory; (b) any
loss or damage thereto occurring or arising in any manner or
fashion from any cause; (c) any diminution in the value thereof;
or (d) any act or default of any carrier, warehouseman, bailee,
forwarding agency or other person whomsoever. All risk of loss,
damage or destruction of Inventory shall be borne by Borrower.
10.4 Borrower waives the right and the right to assert a
confidential relationship, if any, it may have with any
accountant, accounting firm and/or service bureau or consultant
in connection with any information requested by Bank pursuant to
or in accordance with this Agreement, and agrees that a Bank may
contact directly any such accountants, accounting firm and/or
service bureau or consultant in order to obtain such information.
10.5 THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT
TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE
WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE
OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT
TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE
PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS
AGREEMENT OR THE INDEBTEDNESS.
10.6 In the event that Bank elects to waive any rights or
remedies hereunder, or compliance with any of the terms hereof,
or delays or fails to pursue or enforce any term, such waiver,
delay or failure to pursue or enforce shall only be effective
with respect to that single act and shall not be construed to
affect any subsequent transactions or Bank's right to later
pursue such rights and remedies.
11. ONE CONTINUING LOAN TRANSACTION. All loans and advances
heretofore, now or at any time or times hereafter made by Bank to
Borrower under this Agreement or any other agreement between Bank
and Borrower, shall constitute one loan secured by Bank's
security interests in the Collateral and by all other security
interests, liens, encumbrances heretofore, now or from time to
time hereafter granted by Borrower to Bank.
Notwithstanding the above, (i) to the extent that any
portion of the Indebtedness is a consumer loan, that portion
shall not be secured by any deed of trust or mortgage on or other
security interest in Borrower's principal dwelling which is not a
purchase money security interest as to that portion, unless
expressly provided to the contrary in another place, or (ii) if
Borrower(or any of them) has (have) given or give(s) Bank a deed
of trust or mortgage covering real property, that deed of trust
or mortgage shall not secure the loan and any other Indebtedness
of Borrower (or any of them), unless expressly provided to the
contrary in another place.
12. NOTICES. Unless otherwise provided in this Agreement, all
notices or demands by either party on the other relating to this
Agreement shall be in writing and sent by regular United States
mail, postage prepaid, properly addressed to Borrower or to Bank
at the addresses stated in this Agreement, or to such other
addresses as Borrower or Bank may from time to time specify to
the other in writing. Requests for information made to Borrower
by Bank from time to time hereunder may be made orally or in
writing, at Bank's discretion.
13. AUTHORIZATION TO DISBURSE. Bank is hereby authorized to
make loans and advances hereunder upon telephonic or other
instructions received from anyone purporting to be an officer,
employee, or representative of Borrower, or at the discretion of
Bank if said loans and advances are necessary to meet any
Indebtedness of Borrower to Bank. Bank shall have no duty to
make inquiry or verify the authority of any such party, and
Borrower shall hold Bank harmless from any damage, claims or
liability by reason of Bank's honor of, or failure to honor, any
such instructions.
14. PAYMENTS. Borrower hereby authorizes Bank to deduct the
full amount of any interest, fees, costs, or Bank Expenses due
under this Agreement and not paid or collected when due in
accordance with the terms and conditions hereof from any account
maintained by Borrower with Bank. Should there be insufficient
funds in any such account to pay all such sums when due, the full
amount of such deficiency shall be immediately due and payable by
Borrower; provided, however, that Bank shall not be obligated to
advance funds to cover any such payment.
15. DESTRUCTION OF BORROWER'S DOCUMENTS. Any documents,
schedules, invoices or other papers delivered to Bank, may be
destroyed or otherwise disposed of by Bank six (6) months after
they are delivered to or received by Bank, unless Borrower
requests, in writing, the return of the said documents,
schedules, invoices or other papers and makes arrangements, at
Borrower's expense, for their return.
16. CHOICE OF LAW. The validity of this Agreement, its
construction, interpretation and enforcement, and the rights of
the parties hereunder and concerning the Collateral, shall be
determined according to the laws of the State of California. The
parties agree that all actions or proceedings arising in
connection with this Agreement shall be tried and litigated only
in the state and federal courts in the Northern District of
California or the County of Santa ▇▇▇▇▇.
17. GENERAL PROVISIONS.
17.1 This Agreement shall be binding and deemed effective
when executed by Borrower and accepted and executed by Bank
at its headquarters office.
17.2 This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the
parties; provided, however, that Borrower may not assign
this Agreement or any rights hereunder without Bank's prior
written consent and any prohibited assignment shall be
absolutely void. No consent to an assignment by Bank shall
release Borrower or any guarantor from their obligations to
Bank. Bank may assign this Agreement and its rights and
duties hereunder. Bank reserves the right to sell, assign,
transfer, negotiate or grant participations in all or any
part of, or any interest in Bank's rights and benefits
hereunder. In connection therewith, Bank may disclose all
documents and information which Bank now or hereafter may
have relating to Borrower or Borrower's business.
17.3 Paragraph headings and paragraph numbers have been set
forth herein for convenience only; unless the contrary is
compelled by the context, everything contained in each
paragraph applies equally to this entire Agreement. Unless
the context of this Agreement clearly requires otherwise,
references to the plural include the singular, references to
the singular include the plural, and the term "including" is
not limiting. The words "hereof", "herein", "hereby",
"hereunder" and similar terms in this Agreement refer to
this Agreement as a whole and not to any particular
provision of this Agreement.
17.4 Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed or resolved against Bank or
Borrower, whether under any rule of construction or
otherwise; on the contrary, this Agreement has been reviewed
by all parties and shall be construed and interpreted
according to the ordinary meaning of the words used so as to
fairly accomplish the purposes and intentions of all parties
hereto.
17.5 Each provision of this Agreement shall be severable
from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific
provision.
17.6 This Agreement cannot be changed or terminated orally.
This Agreement contains the entire agreement of the parties
hereto and supersedes all prior agreements, understandings,
representations, warranties and negotiations, if any,
related to the subject matter hereof, and none of the
parties shall be bound by anything not expressed in writing.
17.7 The parties intend and agree that their respective
rights, duties, powers, liabilities, obligations and discretions
shall be performed, carried out, discharged and exercised
reasonably and in good faith.
17.8 In addition, if this Agreement is secured by a deed of
trust or mortgage covering real property, then the trustor or
mortgagor shall not mortgage or pledge the mortgaged premises as
security for any other indebtedness or obligations. This
Agreement, together with all other indebtedness secured by said
deed of trust or mortgage, shall become due and payable
immediately, without notice, at the option of Bank, (a) if said
trustor or mortgagor shall mortgage or pledge the mortgaged
premises for any other indebtedness or obligations or shall
convey, assign or transfer the mortgaged premises by deed,
installment sale contract or other instrument;(b) if the title to
the mortgaged premises shall become vested in any other person or
party in any manner whatsoever, or (c) if there is any
disposition (through one or more transactions) of legal or
beneficial title to a controlling interest of said trustor or
mortgagor.
17.9 Each undersigned Borrower hereby agrees that it is
jointly and severally, directly, and primarily liable to Bank for
payment and performance in full of all duties, obligations and
liabilities under this Agreement and each other document,
instrument and agreement entered into by Borrower with or in
favor of Bank in connection herewith, and that such liability is
independent of the duties, obligations and liabilities of any
other Borrower or any other guarantor of the Indebtedness, as
applicable. Each reference herein to Borrower shall mean each
and every Borrower party hereto, individually and collectively,
jointly and severally.
IN WITNESS WHEREOF, the parties hereto have caused this Loan
and Security Agreement (Accounts and Inventory)to be executed as
of the date first hereinabove written.
Accepted and effective as of November 19, 2002
at Bank Headquarters Office
Comerica Bank-California Borrower:
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ Hemacare Corporation,
------------------------- a Corporation
Signature of ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Corporate Banking
Officer By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Address for Notices Title: CEO
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By:___________________
Address for Notices Signature of
Title: _______________
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By:___________________
Signature of
Title: _______________
By:___________________
Signature of
Title:________________
BORROWER:
Coral Blood Services, Inc.,
a Corporation
By: /s/▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Signature of ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: CEO
By:____________________
Signature of
Title:_________________
By:____________________
Signature of
Title:_________________
By:_____________________
Signature of
Title:__________________
ADDENDUM "A" TO LOAN AND SECURITY AGREEMENT
(ACCOUNTS AND INVENTORY)
This Addendum "A" to Loan and Security Agreement (this
"Addendum") is attached to, and by this reference shall be a part
of and is hereby incorporated by this reference into that certain
Loan and Security Agreement (Accounts and Inventory) dated
November 19, 2002 (the "Agreement") executed by Hemacare
Corporation and Coral Blood Services, Inc. ("Borrower") in favor
of Comerica Bank - California ("Bank"). Except as otherwise
noted, the terms not defined herein shall have the meaning set
forth in the Agreement.
Notwithstanding anything to the contrary contained in the
Agreement, Borrower and Bank agree that the provisions set forth
therein shall be amended as follows:
1. Subsection 2.1 of the Agreement is hereby deleted in
its entirety and replaced with the following:
2.1 Upon the request of Borrower, made at any
time and from time to time during the term hereof, and
so long as no Event of Default has occurred, Bank shall
lend to Borrower an amount equal to the Borrowing Base;
provided, however, that the Daily Balance shall not
exceed the lesser of either the Credit Limit or the
Borrowing Base, minus all Letter of Credit Obligations
and minus all term debt outstanding and owing from
Borrower to Bank. If at any time for any reason, the
amount of Indebtedness owed by Borrower to Bank
pursuant to this Section 2.1 and Section 2.3 of this
Agreement is greater than the aggregate amount
available to be drawn under this Section 2.1, Borrower
shall immediately pay to Bank, in cash, the amount of
such excess.
2. Subsection 6.5(g) of the Agreement is hereby deleted in
its entirety and replaced with the following:
(g) Permit representatives of Bank to conduct audits
of Borrower's books and records relating to the
Accounts, and other Collateral and make extracts
therefrom, with results satisfactory to Bank, provided
that Bank shall use its best efforts to not interfere
with the conduct of Borrower's business, and to the
extent possible to arrange for verification of the
Accounts directly with the account debtors obligated
thereon or otherwise, all under reasonable procedures
acceptable to Bank and at Borrower's sole expense;
provided, further, that, prior to an Event of Default,
Borrower shall not be responsible for the expense of
more than two (2) such audits, in any fiscal year.
Notwithstanding any of the provisions contained in
Section 1.6 hereof, Borrower hereby acknowledges and
agrees that upon completion of any such audit Bank
shall have the right to adjust any Borrowing Base
percentage, in its sole and reasonable discretion,
based on its review of the results of such collateral
audit.
3. Subsection 6.16(b) of the Agreement is hereby deleted
in its entirety and replaced with the following:
(b) Borrower shall delivery to Bank(i) within forty-
five (45) days after the end of each month, a company
prepared balance sheet and profit and loss statement
covering Borrower's operations, (ii) within ninety (90)
days after the end of each of Borrower's fiscal years
an audited statement of the financial condition of
Borrower for each such fiscal year, including but not
limited to, a balance sheet and profit and loss
statement and any other report requested by Bank
relating to the Collateral and the financial condition
of Borrower, and (iii) a certificate signed by an
authorized employee of Borrower to the effect that all
reports, statements, computer disk or tape files,
computer printouts, computer runs, or other computer
prepared information of any kind or nature relating to
the foregoing or documents delivered or caused to be
delivered to Bank under this subparagraph are complete,
correct and thoroughly present the financial condition
of Borrower and that there exists on the date of
delivery to Bank no condition or event which
constitutes a breach of Event of Default under this
Loan and Security Agreement.
4. Subsection 6.17(a) through (h). of the Agreement are
hereby deleted in their entirety and replaced with the following:
a. a ratio of Quick Assets to Current Liabilities of
not less than 1.20:1.00;
b. a Debt-to-Worth Ratio of not more than 1.00:1.00;
c. a Net Profit after taxes of not less than the
following: (i) for quarters ending December 31, 2002
and March 31, 2003 breakeven, (ii) for quarter ending
June 30, 2003 $50,000, and each quarter there after
$75,000;
d. a Net Profit after taxes on annual basis of not
less than $500,000 commences fiscal year 2003.
IN WITNESS WHEREOF, the parties have agreed as of the 21 day
of November 2002,
Borrower: Bank:
HEMACARE CORPORATION COMERICA BANK-CALIFORNIA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------- ------------------------
Title: CEO ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Corporate Banking Officer
COMERICA
Corporate Resolutions and Incumbency Certification Authority to
Procure Loans
I certify that I am the duly elected and qualified Secretary of
Hemacare Corporation a California corporation (the "Corporation")
and the keeper of the records of the Corporation; that the
following is a true and correct copy of resolutions duly adopted
by the Board of Directors of the Corporation in accordance with
its bylaws and applicable statutes.
Copy of Resolutions:
Be it Resolved, That:
1. Any (insert number required to sign) (1) (one) of the
following (insert titles only) __________________ of the
Corporation are/is authorized, for, on behalf of, and in the name
of the Corporation to:
(a) Negotiate and procure loans, letters of credit and
other credit or financial accommodations from Comerica Bank-
California (the "Bank"), a California banking corporation,
up to an amount not exceeding $ UNLIMITED
(b) Discount with the Bank, commercial or other business
paper belonging to the Corporation made or drawn by or upon
third parties, without limit as to amount;
(c) Purchase, sell, exchange, assign, endorse for transfer
and/or deliver certificates and/or instruments representing
stocks, bonds, evidences of Indebtedness or other securities
owned by the Corporation, whether or not registered in the
name of the Corporation;
(d) Give security for any liabilities of the Corporation to
the Bank by grant, security interest, assignment, lien, deed
of trust or mortgage upon any real or personal property,
tangible or intangible of the Corporation;
(e) Issue and/or execute one or more warrants for the
purchase of the Corporation's capital stock to Bank; and
(f) Execute and deliver in form and content as may be
required by the Bank any and all notes, evidences of
Indebtedness, applications for letters of credit,
guaranties, subordination agreements, loan and security
agreements, financing statements, assignments, liens, deeds
of trust, mortgages, trust receipts and other agreements,
instruments or documents to carry out the purposes of these
Resolutions, any or all of which may relate to all or to
substantially all of the Corporation's property and assets.
2. Said Bank be and it is authorized and directed to pay the
proceeds of any such loans or discounts as directed by the
persons so authorized to sign, whether so payable to the order of
any of said persons in their individual capacities or not, and
whether such proceeds are deposited to the individual credit of
any of said persons or not;
3. Any and all agreements, instruments and documents previously
executed and acts and things previously done to carry out the
purposes of these Resolutions are ratified, confirmed and
approved as the act or acts of the Corporation.
4. These Resolutions shall continue in force, and the Bank may
consider the holders of said offices and their signatures to be
and continue to be as set forth in a certified copy of these
Resolutions delivered to the Bank, until notice to the contrary
in writing is duly served on the Bank (such notice to have no
effect on any action previously taken by the Bank in reliance on
these Resolutions).
5. Any person, corporation or other legal entity dealing with
the Bank may rely upon a certificate signed by an officer of the
Bank to effect that these Resolutions and any agreement,
instrument or document executed pursuant to them are still in
full force and effect and binding upon the Corporation.
6. The Bank may consider the holders of the offices of the
Corporation and their signatures, respectively, to be and
continue to be as set forth in the Certificate of the Secretary
of the Corporation until notice to the contrary in writing is
duly served on the Bank.
I further certify that the above Resolutions are in full
force and effect as of the date of this Certificate; that
these Resolutions and any borrowings or financial
accommodations under these Resolutions have been properly
noted in the corporate books and records, and have not been
rescinded, annulled, revoked or modified; that neither the
foregoing Resolutions nor any actions to be taken pursuant
to them are or will be in contravention of any provision of
the articles of incorporation or bylaws of the Corporation
or of any agreement, indenture or other instrument to which
the Corporation is a party or by which it is bound; and that
neither the articles of incorporation nor bylaws of the
Corporation nor any agreement, indenture or other instrument
to which the Corporation is a party or by which it is bound
require the vote or consent of shareholders of the
Corporation to authorize any act, matter or thing described
in the foregoing Resolutions.
I further certify that the following named persons have been duly
elected to the offices set opposite their respective names, that
they continue to hold these offices at the present time, and that
the signatures which appear below are the genuine, original
signatures of each respectively:
(PLEASE SUPPLY GENUINE SIGNATURES OF AUTHORIZED SIGNERS BELOW)
NAME (type or print) TITLE SIGNATURE
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Corp. Secretary /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ CFO /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------
In Witness Whereof, I have affixed my name as Secretary and have
caused the corporate seal of said Corporation to be affixed on 11-
21-2002.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Secretary
--------------------------------------------------------------------
The Above Statements are Correct.: _________________________
SIGNATURE OF OFFICER OR DIRECTOR OR, IF NONE, A
SHAREHOLDER OTHER THAN SECRETARY WHEN SECRETARY IS
AUTHORIZED TO SIGN ALONE
Failure to complete the above when the Secretary is authorized to
sign alone shall constitute a certification by the Secretary that
the Secretary is the sole Shareholder, Director and Officer of
the Corporation.
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COMERICA
Corporate Resolutions and Incumbency Certification Authority to
Procure Loans
I certify that I am the duly elected and qualified Secretary of
Coral Blood Services, Inc., a California corporation (the
"Corporation") and the keeper of the records of the Corporation;
that the following is a true and correct copy of resolutions duly
adopted by the Board of Directors of the Corporation in
accordance with its bylaws and applicable statutes.
Copy of Resolutions:
Be it Resolved, That:
1. Any (insert number required to sign) (1) (one) of the
following (insert titles only) _________________ of the
Corporation are/is authorized, for, on behalf of, and in the name
of the Corporation to:
(a) Negotiate and procure loans, letters of credit and
other credit or financial accommodations from Comerica Bank-
California (the "Bank"), a California banking corporation ,
up to an amount not exceeding $ UNLIMITED
(b) Discount with the Bank, commercial or other business
paper belonging to the Corporation made or drawn by or upon
third parties, without limit as to amount;
(c) Purchase, sell, exchange, assign, endorse for transfer
and/or deliver certificates and/or instruments representing
stocks, bonds, evidences of Indebtedness or other securities
owned by the Corporation, whether or not registered in the
name of the Corporation;
(d) Give security for any liabilities of the Corporation to
the Bank by grant, security interest, assignment, lien, deed
of trust or mortgage upon any real or personal property,
tangible or intangible of the Corporation;
(e) Issue and/or execute one or more warrants for the
purchase of the Corporation's capital stock to Bank; and
(f) Execute and deliver in form and content as may be
required by the Bank any and all notes, evidences of
Indebtedness, applications for letters of credit,
guaranties, subordination agreements, loan and security
agreements, financing statements, assignments, liens, deeds
of trust, mortgages, trust receipts and other agreements,
instruments or documents to carry out the purposes of these
Resolutions, any or all of which may relate to all or to
substantially all of the Corporation's property and assets.
2. Said Bank be and it is authorized and directed to pay the
proceeds of any such loans or discounts as directed by the
persons so authorized to sign, whether so payable to the order of
any of said persons in their individual capacities or not, and
whether such proceeds are deposited to the individual credit of
any of said persons or not;
3. Any and all agreements, instruments and documents previously
executed and acts and things previously done to carry out the
purposes of these Resolutions are ratified, confirmed and
approved as the act or acts of the Corporation.
4. These Resolutions shall continue in force, and the Bank may
consider the holders of said offices and their signatures to be
and continue to be as set forth in a certified copy of these
Resolutions delivered to the Bank, until notice to the contrary
in writing is duly served on the Bank (such notice to have no
effect on any action previously taken by the Bank in reliance on
these Resolutions).
5. Any person, corporation or other legal entity dealing with
the Bank may rely upon a certificate signed by an officer of the
Bank to effect that these Resolutions and any agreement,
instrument or document executed pursuant to them are still in
full force and effect and binding upon the Corporation.
6. The Bank may consider the holders of the offices of the
Corporation and their signatures, respectively, to be and
continue to be as set forth in the Certificate of the Secretary
of the Corporation until notice to the contrary in writing is
duly served on the Bank.
I further certify that the above Resolutions are in full
force and effect as of the date of this Certificate; that
these Resolutions and any borrowings or financial
accommodations under these Resolutions have been properly
noted in the corporate books and records, and have not been
rescinded, annulled, revoked or modified; that neither the
foregoing Resolutions nor any actions to be taken pursuant
to them are or will be in contravention of any provision of
the articles of incorporation or bylaws of the Corporation
or of any agreement, indenture or other instrument to which
the Corporation is a party or by which it is bound; and that
neither the articles of incorporation nor bylaws of the
Corporation nor any agreement, indenture or other instrument
to which the Corporation is a party or by which it is bound
require the vote or consent of shareholders of the
Corporation to authorize any act, matter or thing described
in the foregoing Resolutions.
I further certify that the following named persons have been duly
elected to the offices set opposite their respective names, that
they continue to hold these offices at the present time, and that
the signatures which appear below are the genuine, original
signatures of each respectively:
(PLEASE SUPPLY GENUINE SIGNATURES OF AUTHORIZED SIGNERS BELOW)
NAME (type or print) TITLE SIGNATURE
▇▇▇▇▇ ▇▇▇▇▇▇▇ CFO /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Corp. Secretary /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
In Witness Whereof, I have affixed my name as Secretary and have
caused the corporate seal of said Corporation to be affixed on
_____________________.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
Secretary
----------------------------------------------------------------------
The Above Statements are
Correct :____________________________________________________
SIGNATURE OF OFFICER OR DIRECTOR OR, IF NONE, A
SHAREHOLDER OTHER THAN SECRETARY WHEN SECRETARY IS
AUTHORIZED TO SIGN ALONE
Failure to complete the above when the Secretary is authorized to
sign alone shall constitute a certification by the Secretary that
the Secretary is the sole Shareholder, Director and Officer of
the Corporation.
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DISBURSEMENT AUTHORIZATION
To: Comerica Bank - California ("Bank")
You are hereby authorized and instructed to make the
following initial disbursement(s) of proceeds of the, Revolving
Loan evidenced by Loan Documents dated as of November 19, 2002 in
the face amount of Two Million Dollars ($2,000,000) executed by
Hemacare Corporation and Coral Blood Services, Inc. ("Borrower")
to Bank, as follows:
1. Wire Transfer to the sum of $ .
2. Deposit to Account No. in the name of at
Bank the sum of $ .
3. Credit to Loan No. at the Bank the sum of $
effective as of .
4. Pay to Bank the sum of $ for payment of the
Loan Fee.
5. Pay to Bank the sum of $ for reimbursement
of its costs and expenses for (e.g., legal fees,
appraisal fees, title fees, flood certification, tax
service contract, etc.).
6. Other Pay-off obliqor no. XXXXXXXXXXXX/XX as of
11/19/2002 $450,000.00
BORROWER:
Hemacare Corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ Its: CFO
--------------------------
By: Its:
--------------------------
Coral Blood Services, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ Its: CFO
--------------------------
By: Its:
--------------------------
COMERICA
SURETYSHIP RIDER
Borrowers : Hemacare Corporation and Coral Blood Services, Inc.
Each of the undersigned Borrowers has entered into that certain
Loan and Security Agreement (hereinafter referred to as the
"Agreement"), dated November 19, 2002, with Comerica Bank -
California, a California banking corporation ("Bank") as secured
party. This SURETYSHIP RIDER (hereinafter this "Rider"), dated
November 19, 2002, is hereby made a part of and incorporated into
that Agreement. Unless otherwise defined, all initially
capitalized terms in this Rider shall be as defined in the
Agreement.
The parties to the Agreement hereby agree as follows:
1. Each Borrower agrees that it is jointly and severally,
directly, and primarily liable to Bank for payment in full of the
Indebtedness and that such liability is independent of the
duties, obligations and liabilities of the other Borrower. The
Agreement and each other document, instrument and agreement
entered into by any one or more of the Borrowers in connection
therewith (collectively, hereinafter, the "Loan Documents") are a
primary and original obligation of each Borrower, are not the
creation of a surety relationship, and are an absolute,
unconditional, and continuing promise of payment and performance
which shall remain in full force and effect without respect to
future changes in conditions, including any change of law or any
invalidity or irregularity with respect to the Loan Documents.
Each Borrower acknowledges that the obligations of such Borrower
undertaken herein might be construed to consist, at least in
part, of the guaranty of obligations of persons or entities other
than such Borrower (including any other Borrower party hereto)
and, in full recognition of that fact, each Borrower consents and
agrees that Bank may, at any time and from time to time, without
notice or demand, whether before or after any actual or purported
termination, repudiation, or revocation of the Agreement and the
other Loan Documents by any one or more Borrowers, and without
affecting the enforceability or continuing effectiveness hereof
as to each Borrower: (a) supplement, restate, modify, amend,
increase, decrease, extend, renew, accelerate, or otherwise
change the time for payment or the terms of the Indebtedness or
any part thereof, including any increase or decrease of the
rate(s) of interest thereon; (b) supplement restate, modify,
amend, increase, decrease or waive, or enter into or give any
agreement, approval, or consent with respect to, the Indebtedness
or any part thereof, or any of the Loan Documents or any
additional security or guaranties, or any condition covenant,
default, remedy, right, representation or term thereof or
thereunder; (c) accept new or additional instruments, documents
or agreements in exchange for or relative to any of the Loan
Documents or the Indebtedness or any part thereof; (d) accept
partial payments on the Indebtedness; (e) receive and hold
additional security or guaranties for the Indebtedness or any
part thereof; (f) release, reconvey, terminate, waive, abandon,
fail to perfect, subordinate, exchange, substitute, transfer, or
enforce any security or guaranties, and apply any security and
direct the order or manner of sale thereof as Bank in its sole
and absolute discretion may determine; (g) release any Person
from any personal liability with respect to the Indebtedness or
any part thereof; (h) settle, release on terms satisfactory to
Bank or by operation of applicable laws, or otherwise liquidate
or enforce any Indebtedness and any security therefor or guaranty
thereof in any manner, consent to the transfer of any security
and bid and purchase at any sale; or (i) consent to the merger,
change, or any other restructuring or termination of the
corporate or partnership existence of any Borrower or any other
Person, and correspondingly restructure the Indebtedness, and any
such merger, change, restructuring, or termination shall not
affect the liability of any Borrower or the continuing
effectiveness hereof, or the enforceability hereof with respect
to all or any part of the Indebtedness.
2. Upon the occurrence and during the continuance of any
Event of Default, Bank may enforce the Agreement and the other
Loan Documents independently as to each Borrower and
independently of any other remedy or security Bank at any time
may have or hold in connection with the Indebtedness, and it
shall not be necessary for Bank to marshal assets in favor of any
Borrower or any other Person or to proceed upon or against or
exhaust any security or remedy before proceeding to enforce the
Agreement and the other Loan Documents. Each Borrower expressly
waives any right to require Bank to marshal assets in favor of
any Borrower or any other Person or to proceed against any other
Borrower or any Collateral provided by any Person, and agrees
that Bank may proceed against Borrowers or any Collateral in such
order as it shall determine in its sole and absolute discretion.
3. Bank may file a separate action or actions against any
Borrower, whether action is brought or prosecuted with respect to
any security or against any other person, or whether any other
person is joined in any such action or actions. Each Borrower
agrees that Bank and any Borrower and any affiliate of any
Borrower may deal with each other in connection with the
Indebtedness or otherwise, or alter any contracts or agreements
now or hereafter existing between any of them, in any manner
whatsoever, all without in any way altering or affecting the
continuing efficacy of the Agreement or the other Loan Documents.
4. Bank's rights under the Loan Documents shall be
reinstated and revived, and the enforceability of the Agreement
and the other Loan Documents shall continue, with respect to any
amount at any time paid on account of the Indebtedness which
thereafter shall be required to be restored or returned by Bank,
all as though such amount had not been paid. The rights of Bank
created or granted herein and the enforceability of the Agreement
and the other Loan Documents at all times shall remain effective
to cover the full amount of all the Indebtedness even though the
Indebtedness, including any part thereof or any other security or
guaranty therefor, may be or hereafter may become invalid or
otherwise unenforceable as against any Borrower and whether or
not any other Borrower shall have any personal liability with
respect thereto.
5. To the maximum extent permitted by applicable law and
to the extent that a Borrower is deemed a guarantor, each
Borrower expressly waives any and all defenses now or hereafter
arising or asserted by reason of (a) any disability or other
defense of any other Borrower with respect to the Indebtedness,
(b) the unenforceability or invalidity of any security or
guaranty for the Indebtedness or lack of perfection or continuing
perfection or failure of priority of any security for the
Indebtedness, (c) the cessation for any cause whatsoever of the
liability of any other Borrower (other than by reason of the full
payment and performance of all Indebtedness), (d) any failure of
the to marshal assets in favor Bank of any Borrower or any other
person, (e) any failure of Bank to give notice of sale or other
disposition of collateral to any Borrower or any other Person or
any defect in any notice that may be given in connection with any
sale or disposition of collateral, (f) any failure of Bank to
comply with applicable law in connection with the sale or other
disposition of any collateral or other security for any
Obligation, including any failure of Bank to conduct a
commercially reasonable sale or other disposition of any
collateral or other security for any Obligation, (g) any act or
omission of Bank or others that directly or indirectly results in
or aids the discharge or release of any Borrower or the
Indebtedness or any security or guaranty therefor by operation of
law or otherwise, (h) any law which provides that the obligation
of a surety or guarantor must neither be larger in amount nor in
other respects more burdensome than that of the principal or
which reduces a surety's or guarantor's obligation in proportion
to the principal obligation, (i) any failure of Bank to file or
enforce a claim in any bankruptcy or other proceeding with
respect to any Person, (j) the election by Bank of the
application or non-application of Section 1111 (b)(2) of the
United States Bankruptcy Code, (k) any extension of credit or the
grant of any lien under ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Bankruptcy Code, (1) any use of cash collateral under Section 363
of the United States Bankruptcy Code, (m) any agreement or
stipulation with respect to the provision of adequate protection
in any bankruptcy proceeding of any Person, (n) the avoidance of
any lien in favor of Bank for any reason, or (o) any action taken
by Bank that is authorized by the Agreement or any other
provision of any Loan Document. Until such time as all of the
Indebtedness have been fully, finally, and indefeasibly paid in
full in cash: (i) each Borrower hereby waives and postpones any
right of subrogation it has or may have as against any other
Borrower respect to the Indebtedness; and (ii) in addition, each
borrower also hereby waives and postpones any right to proceed or
to seek recourse against or with respect to any property or asset
of any other Borrower. Each Borrower expressly waives all
setoffs and counterclaims and all presentments, demands for
payment or performance, notices of nonpayment or nonperformance,
protests, notices of protest, notices of dishonor and all other
notices or demands of any kind or nature whatsoever with respect
to the Indebtedness, and all notices of acceptance of the
Agreement or the other Loan Documents or of the existence,
creation or incurring of new or additional Indebtedness.
6. In the event that all or any part of the Indebtedness
at any time are secured by any one or more deeds of trust or
mortgages or other instruments creating or granting liens on any
interests in real property, each Borrower authorizes Bank, upon
the occurrence of and during the continuance of any Event of
Default, at its sole option, without notice or demand and without
affecting the obligations of any Borrower, the enforceability of
the Agreement and the other Loan Documents, or the validity or
enforceability of any liens of Bank, to foreclose any or all of
such deeds of trust or mortgages or other instruments by judicial
or nonjudicial sale.
7. Without limiting the generality of any other waiver or
other provision set forth in this Rider, each Borrower waives all
rights and defenses that such Borrower may have because the
Indebtedness are secured by real property. This means, among
other things:
(a) Bank may collect from any Borrower without first
foreclosing on any real or personal property pledged as
Collateral by any other Borrower to secure the
Indebtedness.
(b) If Bank forecloses on any real property pledged as
Collateral by any Borrower:
(1) 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.
(2) Bank may collect from any Borrower even if Bank,
by foreclosing on the real property pledged as
Collateral, has destroyed any right that Borrower
may have to collect from any other Borrower.
This is an unconditional and irrevocable waiver of any rights and
defenses each Borrower may have because the Indebtedness are
secured by Real Property. These rights and defenses include, but
are not limited to, any rights or defenses based upon Section
580a, 580b, 580d, or 726 of the Code of Civil Procedure.
8. To the fullest extent permitted by applicable law, to
the extent that a Borrower is deemed a guarantor, each Borrower
expressly waives any defenses to the enforcement of the Agreement
and the other Loan Documents or any rights of Bank created or
granted hereby or to the recovery by Bank against any Borrower or
any other Person liable therefor of any deficiency after a
judicial or nonjudicial foreclosure or sale, even though such a
foreclosure or sale may impair the subrogation rights of
Borrowers and may preclude Borrowers from obtaining reimbursement
or contribution from other Borrowers. To the fullest extent
permitted by applicable law, each Borrower expressly waives any
suretyship defenses or benefits that it otherwise might or would
have under applicable law. WITHOUT LIMITING THE GENERALITY OF
ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS RIDER, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER
WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN ELECTION OF
REMEDIES BY LENDER, EVEN THOUGH THAT ELECTION OF REMEDIES, SUCH
AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY FOR THE
INDEBTEDNESS, HAS DESTROYED SUCH BORROWER'S RIGHTS OF SUBROGATION
AND REIMBURSEMENT AGAINST THE OTHER BORROWERS BY THE OPERATION
LAW, INCLUDING BUT NOT LIMITED TO SECTION 580d OF THE CODE OF
CIVIL PROCEDURE, OR OTHERWISE.
9. Each of the undersigned Borrowers warrants and agrees
that each of the waivers and consents set forth herein are made
after consultation with legal counsel and with full knowledge of
their significance and consequences, with the understanding that
events giving rise to any defense or right waived may diminish,
destroy or otherwise adversely affect rights which Borrower
otherwise may have against any other Borrower, Bank or others, or
against Collateral. If any of the waivers or consents herein are
determined to be contrary to any applicable law or public policy,
such waivers and consents shall be effective to the maximum
extent permitted by law.
Accepted and effective as of:
a Bank's Headquarters Office
COMERICA BANK-CALIFORNIA BORROWERS:
a California banking HEMACARE CORPORATION,
corporation a corporation
By: By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------ ---------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Its: CFO
Corporate Banking Officer
By: _____________________
Its:_____________________
CORAL BLOOD SERVICES, INC.
a corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Its: CFO
By:_______________________
Its:______________________
COMERICA
ENVIRONMENTAL RIDER
Comerica Bank - California
Name of Office
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Address
This ENVIRONMENTAL RIDER (this "Rider")dated this 19th day
of November , 2002 is hereby made a part of and incorporated
into that certain Loan and Security Agreement (the
"Agreement")dated November 19, 2002 between Comerica Bank-
California a California corporation ("Lender")and Hemacare
Corporation and Coral Blood Services, Inc. ("Borrower").
1. Borrower hereby represents, warrants and covenants that
none of the collateral or real property occupied and/or owned by
Borrower has ever been used by Borrower or any other previous
owner and/or operator in connection with the disposal of or to
refine, generate, manufacture, produce, store, handle, treat,
transfer, release, process or transport any hazardous waste, as
defined in 42 U.S.C. 9601 (14) ("Hazardous Substance"), and
Borrower will not at any time use the collateral or such real
property for the disposal of, refining of, generating,
manufacturing, producing, storing, handling, treating,
transferring, releasing, processing, or transporting any such
Hazardous Waste and/or Hazardous Substances.
2. None of the collateral or real property used and/or
occupied by Borrower has been designated, listed or identified in
any manner by the United States Environmental Protection Agency
(the "EPA")or under and pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended, set forth at 42 U.S.C. 9601 et seq. ("CERCLA")or the
Resource Conservation and Recovery Act of 1986, as amended, set
forth at 42 U.S.C. 9601 et seq. ("RCRA")or any other
environmental protection statute as a Hazardous Waste or
Hazardous Substance disposal or removal site, superfund or
cleanup site or candidate for removal of closure pursuant to
RCRA, CERCLA or any other environmental protection statute.
3. Borrower has not received a summons, citation, notice,
directive, letter or other communication, written or oral, from
the EPA or any other federal or state governmental agency or
instrumentality, authorized pursuant to an environmental
protection statute, concerning any intentional or unintentional
action or omission by Borrower resulting in the releasing,
spilling, leaking, pumping, pouring, emitting, emptying, dumping
or otherwise disposing of Hazardous Waste or Hazardous Substance
into the environment resulting in damage thereto or to the fish,
shellfish, wildlife, biota or other natural resources.
4. Borrower shall not cause or permit to exist, as a
result of an intentional or unintentional action or omission on
its part, or on the part of any third party, on property owned
and/or occupied by Borrower, any disposal, releasing, spilling,
leaking, pumping, omitting, pouring, emptying or dumping of a
Hazardous Waste or Hazardous Substance into the environment where
damage may result to the environment, fish, shellfish, wildlife,
biota or other natural resources unless such disposal, release,
spill, leak, pumping, emission, pouring, emptying or dumping is
pursuant to and in compliance with the conditions of a permit
issued by the appropriate federal or state governmental
authority.
5. Borrower shall furnish to Lender:
(a) Promptly and in any event within thirty(30) days
after receipt thereof, a copy of any notice, summons, citation,
directive, letter or other communications from the EPA or any
other governmental agency or instrumentality concerning any
intentional or unintentional action or omission on Borrower's
part in connection with the handling, transporting, transferring,
disposal or in the releasing, spilling, leaking, pumping,
pouring, emitting, emptying or dumping of Hazardous Waste or
Hazardous Substances into the environment resulting in damage to
the environment, fish, shellfish, wildlife, biota and any other
natural resource;
(b) Promptly and in any event within thirty (30) days
after the receipt thereof, a copy of any notice of or other
communication concerning the filing of a lien upon, against or in
connection with Borrower, the collateral or Borrower's real
property by the EPA or any other governmental agency or
instrumentality authorized to file such a lien pursuant to an
environmental protection statute in connection with a fund to pay
for damages and/or cleanup and/or removal costs arising from the
intentional or unintentional action or omission of Borrower
resulting from the disposal or in the releasing, spilling,
leaking, pumping, pouring, emitting, emptying or dumping of
Hazardous Waste or Hazardous Substances into the environment;
(c) Promptly and in any event within thirty (30) days
after the receipt thereof, a copy of any notice, directive,
letter or other communication from the EPA or any other
governmental agency or instrumentality acting under the authority
of an environmental protection statute indicating that all or any
portion of the Borrower's property or assets have been listed
and/or borrowers deemed by such agency to be the owner and
operator of the facility that has failed to furnish to the EPA or
other authorized governmental agency or instrumentality, all the
information required by the RCRA, CERCLA or other applicable
environmental protection statutes;
(d) Promptly and in no event more than thirty (30)
days after the filing thereof with the EPA or other governmental
agency or instrumentality authorized as such pursuant to an
environmental protection statute, copies of any and all
information reports filed with such agency or instrumentality in
connection with Borrower's compliance with RCRA, CERCLA or other
applicable environmental protection statutes.
6. Any one or more of the following events which occur
with respect to Borrower shall constitute an event of default:
(a) The breach by Borrower of any covenant or
condition, representation or warranty contained in this Rider;
(b) The failure by Borrower to comply with each, every
and all of the requirements of RCRA, CERCLA or any other
applicable environmental protection statutes on the real property
and/or on owned by borrower;
(c) The receipt by Borrower of a notice from the EPA
or any other governmental agency or instrumentality acting under
the authority of any environmental protection statute, indicating
that a lien has been filed against any of the collateral, or any
of Borrower's other property by the EPA or any other governmental
agency or instrumentality in connection with a fund as a result
of damage arising from an intentional or unintentional action or
omission by Borrower resulting from the disposal, releasing,
spilling, leaking, pumping, pouring, emitting, emptying or
dumping of Hazardous Substances or Hazardous Waste into the
environment; and
(d) Any other event or condition exists which might,
in the opinion of Lender, under applicable environmental
protection statutes, have a material adverse effect on the
financial or operational condition of Borrower or the value of
all or any material part of the collateral or other property of
Borrower.
In witness whereof, the Borrower has agreed as of the date
first set forth above.
HemaCare Corporation
(BORROWER/PLEDGOR)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By:
---------------------- ____________________
Its: CFO Its:___________________
By:_______________________ By:____________________
Its:______________________ Its:___________________
CA 336 (12-94)
COMERICA
ENVIRONMENTAL RIDER
Comerica Bank - California
Name of Office
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Address
This ENVIRONMENTAL RIDER (this "Rider")dated this 19th day
of November , 2002 is hereby made a part of and incorporated
into that certain Loan and Security Agreement (the
"Agreement")dated November 19, 2002 between Comerica Bank-
California a California corporation ("Lender")and Hemacare
Corporation and Coral Blood Services, Inc. ("Borrower").
1. Borrower hereby represents, warrants and covenants that
none of the collateral or real property occupied and/or owned by
Borrower has ever been used by Borrower or any other previous
owner and/or operator in connection with the disposal of or to
refine, generate, manufacture, produce, store, handle, treat,
transfer, release, process or transport any hazardous waste, as
defined in 42 U.S.C. 9601 (14) ("Hazardous Substance"), and
Borrower will not at any time use the collateral or such real
property for the disposal of, refining of, generating,
manufacturing, producing, storing, handling, treating,
transferring, releasing, processing, or transporting any such
Hazardous Waste and/or Hazardous Substances.
2. None of the collateral or real property used and/or
occupied by Borrower has been designated, listed or identified in
any manner by the United States Environmental Protection Agency
(the "EPA")or under and pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended, set forth at 42 U.S.C. 9601 et seq. ("CERCLA")or the
Resource Conservation and Recovery Act of 1986, as amended, set
forth at 42 U.S.C. 9601 et seq. ("RCRA")or any other
environmental protection statute as a Hazardous Waste or
Hazardous Substance disposal or removal site, superfund or
cleanup site or candidate for removal of closure pursuant to
RCRA, CERCLA or any other environmental protection statute.
3. Borrower has not received a summons, citation, notice,
directive, letter or other communication, written or oral, from
the EPA or any other federal or state governmental agency or
instrumentality, authorized pursuant to an environmental
protection statute, concerning any intentional or unintentional
action or omission by Borrower resulting in the releasing,
spilling, leaking, pumping, pouring, emitting, emptying, dumping
or otherwise disposing of Hazardous Waste or Hazardous Substance
into the environment resulting in damage thereto or to the fish,
shellfish, wildlife, biota or other natural resources.
4. Borrower shall not cause or permit to exist, as a
result of an intentional or unintentional action or omission on
its part, or on the part of any third party, on property owned
and/or occupied by Borrower, any disposal, releasing, spilling,
leaking, pumping, omitting, pouring, emptying or dumping of a
Hazardous Waste or Hazardous Substance into the environment where
damage may result to the environment, fish, shellfish, wildlife,
biota or other natural resources unless such disposal, release,
spill, leak, pumping, emission, pouring, emptying or dumping is
pursuant to and in compliance with the conditions of a permit
issued by the appropriate federal or state governmental
authority.
5. Borrower shall furnish to Lender:
(a) Promptly and in any event within thirty(30) days
after receipt thereof, a copy of any notice, summons, citation,
directive, letter or other communications from the EPA or any
other governmental agency or instrumentality concerning any
intentional or unintentional action or omission on Borrower's
part in connection with the handling, transporting, transferring,
disposal or in the releasing, spilling, leaking, pumping,
pouring, emitting, emptying or- dumping of Hazardous Waste or
Hazardous Substances into the environment resulting in damage to
the environment, fish, shellfish, wildlife, biota and any other
natural resource;
(b) Promptly and in any event within thirty (30) days
after the receipt thereof, a copy of any notice of or other
communication concerning the filing of a lien upon, against or in
connection with Borrower, the collateral or Borrower's real
property by the EPA or any other governmental agency or
instrumentality authorized to file such a lien pursuant to an
environmental protection statute in connection with a fund to pay
for damages and/or cleanup and/or removal costs arising from the
intentional or unintentional action or omission of Borrower
resulting from the disposal or in the releasing, spilling,
leaking, pumping, pouring, emitting, emptying or dumping of
Hazardous Waste or Hazardous Substances into the environment;
(c) Promptly and in any event within thirty (30) days
after the receipt thereof, a copy of any notice, directive,
letter or other communication from the EPA or any other
governmental agency or instrumentality acting under the authority
of an environmental protection statute indicating that all or any
portion of the Borrower's property or assets have been listed
and/or borrowers deemed by such agency to be the owner and
operator of the facility that has failed to furnish to the EPA or
other authorized governmental agency or instrumentality, all the
information required by the RCRA, CERCLA or other applicable
environmental protection statutes;
(d) Promptly and in no event more than thirty (30)
days after the filing thereof with the EPA or other governmental
agency or instrumentality authorized as such pursuant to an
environmental protection statute, copies of any and all
information reports filed with such agency or instrumentality in
connection with Borrower's compliance with RCRA, CERCLA or other
applicable environmental protection statutes.
6. Any one or more of the following events which occur
with respect to Borrower shall constitute an event of default:
(a) The breach by Borrower of any covenant or
condition, representation or warranty contained in this Rider;
(b) The failure by Borrower to comply with each, every
and all of the requirements of RCRA, CERCLA or any other
applicable environmental protection statutes on the real property
and/or on owned by borrower;
(c) The receipt by Borrower of a notice from the EPA
or any other governmental agency or instrumentality acting under
the authority of any environmental protection statute, indicating
that a lien has been filed against any of the collateral, or any
of Borrower's other property by the EPA or any other governmental
agency or instrumentality in connection with a fund as a result
of damage arising from an intentional or unintentional action or
omission by Borrower resulting from the disposal, releasing,
spilling, leaking, pumping, pouring, emitting, emptying or
dumping of Hazardous Substances or Hazardous Waste into the
environment; and
(d) Any other event or condition exists which might,
in the opinion of Lender, under applicable environmental
protection statutes, have a material adverse effect on the
financial or operational condition of Borrower or the value of
all or any material part of the collateral or other property of
Borrower.
In witness whereof, the Borrower has agreed as of the date
first set forth above.
Coral Blood Services, Inc.
(BORROWER/PLEDGOR)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By:______________________
----------------------
Its: CFO Its:_____________________
By:______________________ By:______________________
Its:_____________________ Its:_____________________
CA 336 (12-94)
COMERICA
EQUIPMENT RIDER
Borrower(s): Hemacare Corporation
Coral Blood Services, Inc.
Borrower has entered into a certain Loan and Security
Agreement (Accounts and Inventory) (hereinafter referred to as
"Agreement") dated November 19, 2002 with Bank (Secured Party).
This EQUIPMENT RIDER(hereinafter referred to as this "Rider")
dated November 19, 2002 is hereby made a part of and incorporated
into that Agreement.
1. Borrower grants to Bank a security interest in the following
wherever located (hereinafter referred to as "Equipment"):
(a) all of Borrower's present machinery, equipment,
fixtures, vehicles, office equipment, furniture,
furnishings, tools, dies, jigs and attachments, wherever
located, (including but not limited to, the items listed and
described on the Schedule of Equipment attached hereto and
marked Exhibit "A" and by this reference made a part hereof
as though fully set forth herein);
(b) all of Borrower's additional equipment, wherever
located, of like or unlike nature, to be acquired hereafter,
and all replacements, substitutes, accessions, additions and
improvements to any of the foregoing; and
(c) all of Borrower's general intangibles, including
without limitation, computer programs, computer disks,
computer tapes, literature, reports, catalogs, drawings,
blueprints and other proprietary items.
2. Bank's security interest in the Equipment as set forth above
shall secure each, any and all of Borrower's indebtedness to
Bank, as the term "Indebtedness" is defined in the Agreement.
3. Bank may, in its sole discretion, from time to time
hereafter, make loans to Borrower. Loans made by Bank to
Borrower pursuant to this Rider shall be included as part of the
Indebtedness of Borrower to Bank and at Bank's option, may be
evidenced by promissory note(s), in form satisfactory to Bank.
Such loans shall bear interest at the rate and be payable in the
manner specified in said promissory note(s) in the event Bank
exercises the aforementioned option, and in the event Bank does
not, such loans shall bear interest at the rate and be payable in
the manner specified in the Agreement.
4. Borrower represents and warrants to Bank that:
(a) it has good and indefeasible title to the Equipment;
(b) the Equipment is and will be free and clear of all
liens, security interests, encumbrances and claims, except
as held by Bank,
(C) the Equipment shall be kept only at the following
locations: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(d) the owners or mortgagees of the respective locations
are: __________________________________________________
(e) Bank shall have the right upon demand now and/or at all
times hereafter, during Borrower's usual business hours to
inspect and examine the Equipment and Borrower agrees to
reimburse Bank for its reasonable costs and expenses in so
doing.
5. Borrower shall keep and maintain the Equipment in good
operating condition and repair, make all necessary replacements
thereto so that the value and operating efficiency thereof shall
at all times be maintained and preserved. Borrower shall not
permit any items of Equipment to become a fixture to real estate
or accession to other property, and the Equipment is now and
shall at all times remain and be personal property.
6. Borrower, at its expense, shall keep and maintain: the
Equipment insured against loss or damage by fire, theft,
explosion, sprinklers and all other hazards and risks ordinarily
insured against by other owners who use such properties and
interest in properties in similar businesses for the full
insurable value thereof; and business interruption insurance and
public liability and property damage insurance relating to
Borrower's ownership and use of its assets. All such policies of
insurance shall be in such form, with such companies and in such
amounts as may be satisfactory to Bank. Borrower shall deliver
to Bank certified copies of such policies of insurance and
evidence of the payment of all premiums thereof. All such
policies of insurance (except those of public liability and
property damage) shall contain an endorsement in a form
satisfactory to Bank showing loss payable to Bank and all
proceeds payable thereunder shall be payable to Bank and upon
receipt by Bank shall be applied on the account of Borrower's
indebtedness. To secure the payment of Borrower's indebtedness,
Borrower grants Bank a security interest in and to all such
policies of insurance (except those of public liability and
property damage) and the proceeds thereof and directs all
insurers under such policies of insurance to pay all proceeds
thereof directly to Bank. Borrower hereby irrevocably appoints
Bank (and any of Bank's officers, employees or agents designated
by Bank) as Borrower's attorney-in-fact for the purpose of
making, settling and adjusting claims under such policies of
insurance and for making all determinations and decisions with
respect to such policies of insurance. Each such insurer shall
agree by endorsement upon the policy or policies of insurance
issued by it to Borrower as required above, or by independent
instruments furnished to Bank that it will give Bank at least ten
(10) days written notice before any such policy or policies of
insurance shall be altered or canceled, and that no act or
default of Borrower, or any other person, shall affect the right
of Bank to recover under such policy or policies of insurance
required above or to pay any premium in whole or in part relating
thereto. Bank, without waiving or releasing any obligations or
defaults by Borrower hereunder, may at any time or times
hereafter, but shall have no obligation to do so, obtain and
maintain such policies of insurance and pay such premiums and
take any other action with respect to such policies which Bank
deems advisable. All sums so disbursed by Bank, including
reasonable attorneys' fees, court costs, expenses and other
charges relating thereto, shall be a part of Borrower's
Indebtedness and payable on demand.
7. Until default by Borrower under the Agreement or this Rider,
Borrower may, subject to the provisions of the Agreement and this
Rider and consistent therewith, remain in possession thereof and
use the Equipment referred to herein in the ordinary course of
business at the location or locations hereinabove designated.
8. All of the terms, conditions, warranties, covenants,
agreements and representations of the Agreement are incorporated
herein and reaffirmed.
9. Upon a default by Borrower under the Agreement or this
Rider, Borrower upon request of Bank to do so, agrees to assemble
and make the Equipment or any part thereof available to Bank at a
place designated by Bank.
10. Borrower shall upon demand by Bank immediately deliver to
Bank and properly endorse, any and all evidences of ownership,
certificates of title or applications for title to any of the
aforesaid items of Equipment.
11. Bank shall not in any way or manner be liable or responsible
for (a) the safekeeping of the Equipment; (b) any loss or damage
thereto occurring or arising in any manner or fashion from any
cause; (c) any diminution in the value thereof or (d) any act or
default by any person whomsoever. All risk of loss, damage or
destruction of the Equipment shall be borne by Borrower.
Borrower(s): Hemacare Corporation Coral Blood Services,
Inc.
By: /s/ ▇▇▇▇▇ Factor, CFO By /s/ ▇▇▇▇▇ Factor, CFO
----------------------- -----------------------
By:_________________________ By:________________________
Its:________________________ Its:_______________________
By:_________________________ By:________________________
Its:________________________ Its:_______________________
By:_________________________ By:________________________
Its:________________________ Its:_______________________
Accepted this 19th day of November 2002 at Bank's place of
business in ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
By:__________________________
CA132(612002) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
Corporate Banking Officer
Comerica
Borrower's Telephone and Facsimile Authorization
Obligor Number: Date: November 19, 2002
Assignment Unit: 96550 Obligation Number:
The undersigned confirms certain borrowing arrangements pursuant
to and subject to the terms of the $2,000,000.00 Note, and all
renewals, extensions, modifications, and/or substitutions thereof
(the "Note") dated November 19, 2002 , executed and delivered by
the undersigned to Comerica Bank-California ("Bank").
Until notice to the contrary to the undersigned, Bank has agreed
that advances under the Note may be requested from time to time
at the discretion of the undersigned by telephone or facsimile
transmission. Upon timely receipt of such telephone request or
facsimile transmission from the undersigned, Bank is authorized
to lend and credit(the next banking day if credit to another
financial institution) such sums of money as requested to any of
the following accounts or any other account with Bank designated
by the undersigned (together with the Security Code) (such
account(s) referred to as
"Designated Account(s)"):
Financial Institution Name Account Number Transit Number
If there is a Security Code assigned below or under the Comerica
Flexline System, Bank may rely on receipt of the Security Code as
proof that the caller or sender is authorized to make the request
for advance, repayment, or change of Security Code.
The undersigned acknowledges that borrowings under the Note may
be repaid from time to time at the election of the undersigned,
but subject to the terms of the Note and any related agreement
with Bank, upon receipt of instructions to do so sent from the
undersigned to Bank by telephone or facsimile transmission
(together with the Security Code and the Designated Account(s)).
Repayment may be effected (in whole or in part) by debiting any
account designated above (or designated in compliance with the
above paragraph) in accordance with the undersigned's
instructions (together with the Security Code). The undersigned
shall remain fully responsible for any amounts outstanding under
the Note if the undersigned's accounts with Bank are insufficient
for the repayment of the Note. All requests for payments are to
be against collected funds.
The undersigned acknowledges that if Bank makes an advance or
effects a repayment based on a request made by telephone or
facsimile transmission, it shall be for the convenience of the
undersigned and all risks involved in the use of this procedure
shall be borne by the undersigned, and the undersigned expressly
agrees to indemnify and hold Bank harmless therefor. Without
limitation of the foregoing, the undersigned acknowledges that
Bank shall have no duty to confirm the authority of anyone
requesting an advance or repayment by telephone or facsimile
transmission, and further that Bank has advised the undersigned
to protect and safeguard the Security Code to prevent its
unauthorized use. The undersigned assumes any losses or damages
whatsoever which may occur or arise out of its failure to protect
and safeguard the Security Code or out of its unauthorized use.
Borrower(s): Hemacare Corporation and Coral Blood Services.
Inc.
Address: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
STREET ADDRESS CITY STATE COUNTRY ZIP CODE
Hemacare Corporation
Hemacare Corporation
By: /s/ ▇▇▇▇▇ Factor Its: CFO
--------------------- -----------------
SIGNATURE OF ▇▇▇▇▇ TITLE
Fractor
By:______________________ Its:__________________
SIGNATURE OF TITLE
Coral Blood Services, Inc.
By: /s/ ▇▇▇▇▇ Factor Its: CFO
------------------- --------------------
SIGNATURE OF ▇▇▇▇▇ TITLE
Fractor
By:______________________ Its:____________________
SIGNATURE OF TITLE
----------------------------------------------------------------
Comerica Flexline customers will enter their Security Code
directly into Comerica's Flexline system. For customers desiring
to utilize a Security Code outside of the Flexline system, please
enter your Security Code below.
Security Code ________________________________
-----------------------------------------------------------------
ComericA
Automatic Loan Payment Authorization
Date: November 19, 2002
Obligor Name (Typed or Printed): Hemacare Corporation and Coral
Blood Services, Inc.
Obligor Number: Lender's Cost Center #: 96550
Address: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇▇
STREET ADDRESS CITY STATE COUNTRY ZIP CODE
The undersigned hereby authorizes Comerica Bank-California
("Bank") to charge the account designated below for the payments
due on the loan(s) as designated below and all renewals,
extensions, modifications and/or substitutions thereof. This
authorization will remain in effect unless the undersigned
requests a modification that is agreed to by the Bank in writing.
The undersigned remains fully responsible for all amounts
outstanding to Bank if the designated account is insufficient for
repayment.
Automatic Payment Authorization for all payments on all
current and future borrowings, as and when such
payments come due (which payments include, without
limitation, principal, interest, fees, costs, and
expenses).
Automatic Payment Authorization for all payments on
only the specific borrowing identified below, as and
when such payments come due (which payments include,
without limitation, principal, interest, fees, costs,
and expenses).
Specific Obligation Number:
Automatic Payment Authorization for less than all
payments on only the specific borrowing indentified
below, as and when such payments come due.
Specific Obligation Number:
Principal and Interest payments only
Principal payments only
Interest payments only
SPECIAL INSTRUCTIONS/IRREGULAR PAYMENT INSTRUCTIONS
Payment Due Date: Your loan payments will be charged to your
account as indicated above on the dates such payments become due
(or on a date thereafter when there are available funds) unless
that day is a Saturday, Sunday, or Bank holiday in which case
such payments will be charged on the following business day, with
interest to accrue during this extension as provided under the
loan documents.
Account to be Charged:.
/X/ Checking Comerica Bank-California Comerica Account No.
XXXXXXXXXXX
/ / Savings Comerica Account No.
Number of lead days to issue billing _____________________
(Charges to account are withdrawals pursuant to account
resolution)
Hemacare Corporation
By: /s/ ▇▇▇▇▇ Factor Its: CFO
--------------------- --------------------
SIGNATURE OF ▇▇▇▇▇ TITLE
Fractor
Coral Blood Services,Inc.
By: /s/ ▇▇▇▇▇ Factor Its: CFO
-------------------- ---------------------
SIGNATURE OF ▇▇▇▇▇ TITLE
Fractor
CP00193 (3-01) Bank Copy
STATEMENT
DATE: November 19, 2000
Hemacare Corporation and Coral Comerica Bank-California
Blood Services, Inc. ▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: Fee on $200,000,000 Note, dated November 19, 2002 and
maturing June 30, 2004 Officer48225
Loan Fee $2,150.00
Documentation Fee $350.00
TOTAL DUE: $2,500.00
Customer Check Attached
Charge DDA No. XXXXXXXXX
Acknowledged by: \s\ ▇▇▇▇▇ Factor
---------------------------
COMERICA
Agreement to Furnish Insurance
(Herein called "Bank")
Borrower(s):
Hemacare Corporation and Coral Blood Services, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
I understand that the Security Agreement or Deed of Trust which I
executed in connection with this transaction requires me to
provide a physical damage insurance policy including a Lenders
Loss Payable Endorsement in favor of the Bank as shown below,
within ten (10) days from the date of this agreement.
The following minimum insurance must be provided according to the
terms of the security documents.
/ / AUTOMOBILES, TRUCKS, /x/ MACHINERY & EQUIPMENT:
RECREATIONAL VEHICLES MISCELLANEOUS PERSONAL
Comprehensive & PROPERTY
Collision Fire & Extended Coverage
Lender's Loss Payable Lender's Loss Payable
Endorsement Endorsement
/ / Breach of Warranty
Endorsement
/ / BOATS / / AIRCRAFT
All Risk Hull All Risk Ground & Flight
Insurance Insurance
Lender's Loss Payable Lender's Loss Payable
Endorsement Endorsement
/ / Breach of Warranty / / Breach of Warranty
Endorsement Endorsement
/ / MOBILE HOMES / / REAL PROPERTY
Fire, Theft & Combined Fire & Extended Coverage
Additional Coverage Lender's Loss Payable
Lender's Loss Payable Endorsement
Endorsement / / All Risk Coverage
// Earthquake / / Special Form Risk
Coverage
/ /
/ / Earthquake
/ / Other
/x/ INVENTORY
/ / Other______________________________________________________
_______________________________________________________________
_______________________________________________________________
I may obtain the required insurance from any company that is
acceptable to the Bank, and will deliver proof of such coverage
with an effective date of November 19, 2002 or earlier.
I understand and agree that if I fail to deliver proof of
insurance to the Bank at the address below, or upon the lapse or
cancellation of such insurance, the Bank may procure Lender's
Single Interest Insurance or other similar coverage on the
property. If the Bank procures insurance to protect its interest
in the property described in the security documents, the cost for
the insurance will be added to my indebtedness as provided in the
security documents. Lender's Single Interest Insurance shall
cover only the Bank's interest as a secured party, and shall
become effective at the earlier of the funding date of this
transaction or the date my insurance was cancelled or expired. I
UNDERSTAND THAT LENDER'S SINGLE INTEREST INSURANCE WILL PROVIDE
ME WITH ONLY LIMITED PROTECTION AGAINST PHYSICAL DAMAGE TO THE
COLLATERAL, UP TO THE BALANCE OF THE LOAN, HOWEVER, MY EQUITY IN
THE PROPERTY WILL NOT BE INSURED. FURTHER, THE INSURANCE WILL
NOT PROVIDE MINIMUM PUBLIC LIABILITY OR PROPERTY DAMAGE
INDEMNIFICATION AND DOES NOT MEET THE REQUIREMENTS OF THE
FINANCIAL RESPONSIBILITY LAW.
CALIFORNIA CIVIL CODE SECTION 2955.5. HAZARD INSURANCE
DISCLOSURE: No lender shall require a borrower, as a condition of
receiving or maintaining a loan secured by real property, to
provide hazard insurance coverage against risks to the
improvements on that real property in an amount exceeding the
replacement value of the improvements on the property.
Bank Address for Insurance Documents:
Comerica Bank-California
▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇ Mail Code 4604
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇ ▇▇▇▇▇ -4423
I acknowledge having read the provisions of this agreement, and
agree to its terms. I authorize the Bank to provide to any
person (including any insurance agent or company) any information
necessary to obtain the insurance coverage required.
OWNER(S) OF COLLATERAL: DATED: November 19,2002
Hemacare Corporation
/s/ ▇▇▇▇▇ Factor
----------------------
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INSURANCE VERIFICATION
Date 11/21/02 Phone (▇▇▇)▇▇▇-▇▇▇▇
Agents Name ▇▇▇▇▇▇ Dancer Person Talked To ▇▇▇▇▇▇ ▇▇▇▇▇▇
Agents Address ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Insurance Company ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, broker for Hartford Insurance
Company
Policy Number(s) 72UUNGL7828
Effective Dates: From 03/31/2002 To: 04/30/2003
Deductible $ 1,000.00 Comments:
COMERICA
------------------------------------------------------------------
Agreement to Furnish Insurance
Borrower(s):
Hemacare Corporation and Coral Blood Services, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
I understand that the Security Agreement or Deed of Trust which I
executed in connection with this transaction requires me to
provide a physical damage insurance policy including a Lenders
Loss Payable Endorsement in favor of the Bank as shown below,
within ten (10) days from the date of this agreement.
The following minimum insurance must be provided according to the
terms of the security documents.
/ / AUTOMOBILES, TRUCKS, /x/ MACHINERY & EQUIPMENT:
RECREATIONAL VEHICLES MISCELLANEOUS PERSONAL
Comprehensive & PROPERTY
Collision Fire & Extended Coverage
Lender's Loss Payable Lender's Loss Payable
Endorsement Endorsement
/ / Breach of Warranty
Endorsement
/ / BOATS / / AIRCRAFT
All Risk Hull All Risk Ground & Flight
Insurance Insurance
Lender's Loss Payable Lender's Loss Payable
Endorsement Endorsement
/ / Breach of Warranty / / Breach of Warranty
Endorsement Endorsement
/ / MOBILE HOMES / / REAL PROPERTY
Fire, Theft & Combined Fire & Extended Coverage
Additional Coverage Lender's Loss Payable
Lender's Loss Payable Endorsement
Endorsement / / All Risk Coverage
// Earthquake / / Special Form Risk
Coverage
/ /
/ / Earthquake
/ / Other
/x/ INVENTORY
/ / Other______________________________________________________
_______________________________________________________________
_______________________________________________________________
I may obtain the required insurance from any company that is
acceptable to the Bank, and will deliver proof of such coverage
with an effective date of November 19, 2002 or earlier.
I understand and agree that if I fail to deliver proof of
insurance to the Bank at the address below, or upon the lapse or
cancellation of such insurance, the Bank may procure Lender's
Single Interest Insurance or other similar coverage on the
property. If the Bank procures insurance to protect its interest
in the property described in the security documents, the cost for
the insurance will be added to my indebtedness as provided in the
security documents. Lender's Single Interest Insurance shall
cover only the Bank's interest as a secured party, and shall
become effective at the earlier of the funding date of this
transaction or the date my insurance was cancelled or expired. I
UNDERSTAND THAT LENDER'S SINGLE INTEREST INSURANCE WILL PROVIDE
ME WITH ONLY LIMITED PROTECTION AGAINST PHYSICAL DAMAGE TO THE
COLLATERAL, UP TO THE BALANCE OF THE LOAN, HOWEVER, MY EQUITY IN
THE PROPERTY WILL NOT BE INSURED. FURTHER, THE INSURANCE WILL
NOT PROVIDE MINIMUM PUBLIC LIABILITY OR PROPERTY DAMAGE
INDEMNIFICATION AND DOES NOT MEET THE REQUIREMENTS OF THE
FINANCIAL RESPONSIBILITY LAW.
CALIFORNIA CIVIL CODE SECTION 2955.5. HAZARD INSURANCE
DISCLOSURE: No lender shall require a borrower, as a condition of
receiving or maintaining a loan secured by real property, to
provide hazard insurance coverage against risks to the
improvements on that real property in an amount exceeding the
replacement value of the improvements on the property.
Bank Address for Insurance Documents:
Comerica Bank-California
▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇ Mail Code 4604
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇ ▇▇▇▇▇ -4423
I acknowledge having read the provisions of this agreement, and
agree to its terms. I authorize the Bank to provide to any
person (including any insurance agent or company) any information
necessary to obtain the insurance coverage required.
OWNER(S) OF COLLATERAL: DATED: November 19, 2002
Coral Blood Services, Inc.
/s/ ▇▇▇▇▇ Factor
------------------------
-----------------------------------------------------------------
INSURANCE VERIFICATION
Date 11/21/02 Phone (▇▇▇)▇▇▇-▇▇▇▇
Agents Name ▇▇▇▇▇▇ Dancer Person Talked To ▇▇▇▇▇▇ ▇▇▇▇▇▇
Agents Address ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Insurance Company ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, broker for Hartford Insurance
Company
Policy Number(s) 72UUNGL7828
Effective Dates: From 03/31/2002 To: 04/30/2003
Deductible $ 1,000.00 Comments:
------------------------------------------------------------------