SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated as of January 4, 1995
between
SILICON VALLEY BANK
and
RASTEROPS
and
TRUEVISION, INC.
TABLE OF CONTENTS
Page
1. DEFINITIONS AND CONSTRUCTION........................................ 1
1.1 Definitions.................................................. 1
1.2 Accounting Terms............................................. 13
2. LOAN AND TERMS OF PAYMENT......................................... 13
2.1 Revolving Advances........................................... 13
2.2 Letters of Credit............................................ 15
2.3 Overadvances................................................. 16
2.4 Interest Rates, Interest Payments, and
Calculations................................................. 16
2.5 Crediting Payments........................................... 17
2.6 Fees......................................................... 17
2.7 Additional Costs............................................. 18
2.8 Term; Payment of Obligations on Maturity Date................ 18
3. CONDITIONS OF LOANS............................................... 18
3.1 Conditions Precedent to Initial Loan......................... 18
3.2 Conditions Precedent to all Loans............................ 19
4. CREATION OF SECURITY INTEREST ................................... 20
4.1 Grant, Confirmation, Restatement and Continuation
of Security Interest......................................... 20
4.2 Limitation With Respect to Patents and Trademarks
and Copyrights............................................... 21
4.3 Delivery of Additional Documentation Required................ 21
4.4 Right to Inspect............................................. 22
4.5 Lockbox...................................................... 22
5. REPRESENTATIONS AND WARRANTIES.................................... 22
5.1 Due Organization and Qualification........................... 22
5.2 Due Authorization; No Conflict .............................. 22
5.3 No Prior Encumbrances; First Priority Security
Interest in Accounts......................................... 22
5.4 Bona Fide Accounts........................................... 23
5.5 Merchantable Inventory....................................... 23
5.6 Name; Location of Chief Executive Office..................... 24
5.7 Litigation................................................... 24
5.8 No Material Adverse Change in Financial
Statements................................................... 24
5.9 Solvency .................................................... 24
5.10 Regulatory Compliance........................................ 24
5.11 Environmental Condition...................................... 25
5.12 Taxes........................................................ 25
5.13 Subsidiaries................................................. 25
5.14 Government Consents.......................................... 25
5.15 Full Disclosure ............................................. 25
5.16 Locations of Collateral...................................... 25
5.17 Tax Identification Numbers................................... 26
5.18 No Instruments .............................................. 26
5.19 Inventory of Subsidiaries.................................... 26
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5.20 Indebtedness to ▇▇▇▇ Atlantic - Tricon Leasing
Corporation.................................................. 26
5.21 Copyrights, Trademarks and Patent............................ 26
6. AFFIRMATIVE COVENANTS............................................. 26
6.1 Good Standing................................................ 26
6.2 Government Compliance........................................ 27
6.3 Financial Statements, Reports, Certificates.................. 27
6.4 Returns...................................................... 28
6.5 Taxes........................................................ 28
6.6 Insurance.................................................... 28
6.7 Principal Depository......................................... 29
6.8 Quick Ratio.................................................. 29
6.9 Tangible Net Worth........................................... 29
6.10 Debt-Net Worth Ratio......................................... 29
6.11 Profitability................................................ 30
6.12 Further Assurances........................................... 30
7. NEGATIVE COVENANTS................................................ 30
7.1 Extraordinary Transactions and Disposal of Assets............ 30
7.2 Loans; Contingent Liabilities................................ 30
7.3 Restructure.................................................. 30
7.4 Mergers or Acquisitions...................................... 31
7.5 Indebtedness................................................. 31
7.6 Encumbrances................................................. 31
7.7 Distributions................................................ 31
7.8 Investments.................................................. 31
7.9 Transactions With Affiliates................................. 31
7.10 Subordinated Debt............................................ 32
7.11 Compliance................................................... 32
7.12 Instruments; Security Interest............................... 32
7.13 Chattel Paper................................................ 32
8. EVENTS OF DEFAULT................................................. 32
8.1 Payment Default.............................................. 32
8.2 Reporting, Insurance, Financial and Negative
Covenant Defaults............................................ 32
8.3 Other Covenant Defaults...................................... 32
8.4 Material Adverse Effect...................................... 33
8.5 Attachment................................................... 33
8.6 Insolvency................................................... 33
8.7 Other Agreements............................................. 33
8.8 Subordinated Debt............................................ 33
8.9 Judgments ................................................... 33
8.10 Misrepresentations........................................... 34
8.11 Default Under Agreements With ▇▇▇▇ Atlantic.................. 34
9. BANK'S RIGHTS AND REMEDIES....................................... 34
9.1 Rights and Remedies.......................................... 34
9.2 Power of Attorney............................................ 35
9.3 Bank Expenses; Attorneys' Fees and Costs..................... 36
9.4 Bank Expenses; Payments Made on Behalf of
Borrowers.................................................... 37
9.5 Remedies Cumulative.......................................... 38
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10. WAIVERS; INDEMNIFICATION; REVIVAL................................ 38
10.1 DEMAND; PROTEST AND OTHER WAIVERS........................... 38
10.2 Bank's Liability for Collateral............................. 39
10.3 Indemnification............................................. 39
10.4 Disgorgement; Revival of Obligations........................ 39
11. NOTICES.......................................................... 40
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER....................... 41
13. GENERAL PROVISIONS............................................... 41
13.1 Successors and Assigns...................................... 41
13.2 Time of Essence ............................................ 41
13.3 Severability of Provisions.................................. 41
13.4 Amendments in Writing, Integration.......................... 41
13.5 Counterparts................................................ 42
13.6 Survival.................................................... 42
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A -- Form of Amended and Restated Promissory Note
Schedule of Exceptions
Schedule 2.1 -- Borrowing Certificate
Schedule 5.4 -- Bona Fide Accounts
Schedule 5.7 -- Legal Proceedings
Schedule 5.13 -- Subsidiaries
Schedule 5.16 -- Schedule of Offices, Locations of Collateral and
Records Concerning Collateral for RasterOps and Truevision
Schedule 6.3(a) -- Daily Sales and Collections Report
Schedule 6.3(b) -- Borrowing Base Certificate
Schedule 6.3(c) -- Compliance Certificate
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This SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is entered
into as of January 4 , 1995, effective as of November 15, 1994, by and among
---
SILICON VALLEY BANK ("Bank"), RASTEROPS, a California corporation, and
TRUEVISION, INC., an Indiana corporation, and amends, restates and supersedes
the "Amended and Restated Loan Agreement", as defined below. RasterOps and
Truevision are hereafter collectively referred to as "Borrowers" and
individually as a "Borrower."
RECITALS
A. On or about May 26, 1994, Borrower and Lender entered into that
certain Amended and Restated Loan and Security Agreement, effective as of
November 15, 1993 (the "Amended and Restated Loan Agreement"), which amended,
restated and superseded that certain Business Loan Agreement dated as of May 12,
1993, and certain other "Related Documents" as defined in the Business Loan
Agreement;
B. The Amended and Restated Loan Agreement matured on November 15, 1994
and Borrowers have requested that Bank extend the maturity date, renew its loan
facility with Borrowers for another year, and amend the terms of the Amended and
Restated Loan Agreement;
C. Bank is willing to extend the maturity date, renew its loan facility
and amend the terms and conditions of the Amended and Restated Loan Agreement,
but only upon the terms, and subject to the conditions, contained herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, the parties hereto agree as follows:
AGREEMENT
1. DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:
"Accounts" means all presently existing and hereafter arising
accounts, rights to payment, contract rights, chattel paper, general
intangibles, and all other forms of obligations owing to any Borrower, each
arising out of or in connection with the sale or lease of goods by such
Borrower, the rendering of services by such Borrower or the licensing of any
property of such Borrower, whether or not earned by performance,
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any and all credit insurance, guaranties, and other security therefor, as well
as all merchandise returned to or reclaimed by such Borrower, such Borrower's
Books relating to any of the foregoing, and all accounts receivable of every
kind and nature. The term Accounts includes all "accounts" as such term is
defined in the Code.
"Advances" shall have the meaning set forth in Section 2.1
hereof.
"Affiliate" means any person or entity that owns or controls
directly or indirectly ten percent or more of the stock of another entity, any
person that controls or is controlled by or is under common control with such
persons or any Affiliate of such persons or each of such person's officers,
directors, joint venturers or partners.
"Agreement" shall mean this Amended and Restated Loan and
Security Agreement, including all amendments, modifications and supplements
hereto and any appendices, exhibits or schedules to any of the foregoing, and
shall refer to this Agreement as the same may be in effect at the time such
reference becomes operative.
"Amended and Restated Loan Agreement" shall have the meaning set
forth in the Recitals to this Agreement.
"Avid-Technology - Ireland" means Avid Technology - Ireland.
"Bank" means Silicon Valley Bank and its assignees.
"Bank Expenses" shall have the meaning assigned to it in Section
9.3 of this Agreement.
"Borrower(s)" means RasterOps, a California corporation, and
Truevision, Inc., an Indiana corporation.
"Borrower's Books" means all of each Borrower's books and records
including: ledgers; records concerning such Borrower's assets or liabilities,
the Collateral, business operations or financial condition; and all computer
programs, or tape files, and the equipment, containing such information.
"Borrowing Base" shall have the meaning set forth in Section 2.1
hereof.
"Borrowing Base Certificate" shall have the meaning set forth in
Section 6.3 hereof.
"Borrowing Certificate" shall have the meaning set
forth in Section 2.1 hereof.
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"Business Day" means any day that is not a Saturday, Sunday, or
other day on which banks in the State of California are authorized or required
to close.
"Cash Collateral Account" shall mean the deposit account
maintained by Borrowers with Bank in connection with the Lockbox Agreement.
"Chattel Paper" means "chattel paper" as defined in the Code.
"Closing Date" means the date on which all of the conditions
precedent in Section 3.1 and 3.2 are satisfied and the initial Advance is made.
"Code" means the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of California; PROVIDED, HOWEVER, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of Bank's security interest in any Collateral
is governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of California, the term "Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provision.
"Collateral" shall mean the property described in Section 4.1 of
this Agreement.
"Collateral Assignments" means those certain Collateral
Assignment, Patent Mortgage and Security Agreements dated as of May 12, 1993,
between RasterOps and Bank, and those certain Collateral Assignment, Mortgage
and Security Agreements (Copyrights, Trademarks and Patents) dated as of May 26,
1994 between Truevision and Bank, including all amendments, modifications and
supplements to each of the foregoing, and appendices, exhibits or schedules to
any of the foregoing, and shall refer to the Collateral Assignments as the same
may be in effect at the time such reference becomes operative.
"Committed Line" means $5,000,000.
"Compliance Certificate" shall have the meaning set forth in
Section 6.3 hereof.
"Computation Date" the last day of each fiscal quarter of
RasterOps, which fiscal quarters end on April 1, July 1, September 30 and
December 30 of each year.
"Contingent Obligation" means, as applied to any person, any
direct or indirect liability, contingent or otherwise, of that person with
respect to any indebtedness, lease, dividend, letter of credit or other
obligation of another,
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including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), co-made or discounted or sold with recourse by that person,
or in respect of which that person is otherwise directly or indirectly liable.
The amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported.
"Copyrights" means any and all copyrights, copyright rights,
copyright applications, copyright registrations, copyright licenses, and like
protections in each work or authorship and derivative work thereof, whether
published or unpublished, and whether or not the same also constitutes a trade
secret, now or hereafter existing, created, acquired or held, including the
copyrights described in each of the Collateral Assignments.
"Current Assets" means, as of any applicable date, all amounts
that should, in accordance with GAAP, be included as current assets on the
consolidated balance sheet of Borrowers as at such date.
"Current Liabilities" means as of any applicable date, all
amounts that should, in accordance with GAAP, be included as current liabilities
on the consolidated balance sheet of Borrowers as at such date, plus, to the
extent not already included therein, all Advances made under this Agreement, and
all Indebtedness that is payable upon demand or within one year from the date of
determination thereof unless such Indebtedness is renewable or extendable at the
option of any Borrower or any subsidiary to a date more than one year from the
date of determination.
"Dai Nippon" means Dai Nippon Screen Manufacturing Co., Ltd.
"Documents" means "documents" as defined in the Code.
"Domestic Distributor Accounts" means those Eligible Accounts
with respect to which either Ingram, Tech Data, Merisel, or Intelligence
Electronic is the account debtor.
"Eligible Accounts" means those Accounts that arise in the
ordinary course of Borrowers' business from each Borrower's sale or lease of
goods or rendering of services that have been validly assigned and comply with
all of Borrowers' representations and warranties to Bank and that are and at all
times shall continue to be acceptable to Bank in all respects, together with
Accounts of a like character acquired by Borrowers from other entities;
PROVIDED, that standards of eligibility may be fixed and revised from time to
time by Bank in Bank's reasonable judgment and upon notification thereof to
Borrowers in
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accordance with the provisions hereof. Unless otherwise agreed to by Bank,
Eligible Accounts shall not include the following:
(a) Accounts that the account debtor has failed to pay within
ninety (90) days of invoice date;
(b) Accounts with respect to an account debtor, fifty percent
(50%) of whose Accounts the account debtor has failed to pay within ninety (90)
days of invoice date;
(c) Accounts with respect to which the account debtor is an
officer, employee, or agent of any Borrower;
(d) Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, ▇▇▇▇ and hold,
or other terms by reason of which the payment by the account debtor may be
conditional;
(e) Accounts with respect to which the account debtor is an
Affiliate of any Borrower;
(f) Accounts with respect to which the account debtor is not a
resident of the United States or Canada except for Eligible Foreign Accounts;
(g) Accounts with respect to which the account debtor is the
United States or any department, agency, or instrumentality of the United
States;
(h) Accounts with respect to which any Borrower is liable to
the account debtor for goods sold or services rendered by the account debtor, or
otherwise, to such Borrower, but only to the extent of the amounts owing to the
account debtor against amounts owed to RasterOps;
(i) Accounts with respect to an account debtor whose total
obligations to any Borrower, together with the total obligations of such account
debtor's subsidiaries and affiliates to such Borrower, exceeds twenty-five
percent (25%) of all Accounts, to the extent such obligations exceed the
aforementioned percentage;
(j) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Bank believes, in
its sole discretion, that there may be a basis for dispute (but only to the
extent of the amount subject to such dispute or claim), or is subject to any
Insolvency Proceeding, or becomes insolvent, or goes out of business;
(k) Accounts the collection of which Bank reasonably determines
after reasonable inquiry to be doubtful by reason of the account debtor's
financial condition;
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(1) Accounts generated from the sale of any Sony Inventory or
any Panasonic Inventory;
(m) Accounts that are represented by an instrument or chattel
paper of any kind; and
(n) Accounts arising out of the delivery of samples, trial
merchandise, promotional or demonstration materials.
"Eligible Foreign Accounts" means Accounts that are otherwise
Eligible Accounts but with respect to which the account debtor is not a resident
of the United States or Canada, and either (1) such Accounts are supported by
one or more letters of credit in favor of Bank as beneficiary, in an amount and
of a tenor, and issued by a financial institution, acceptable to Bank, or (2)
the account debtor is Dai Nippon, Avid Technology Ireland, or Marubeni.
"Equipment" means all machinery, equipment, apparatus, fittings,
furniture, fixtures, vehicles, and tools. The term Equipment includes all
"equipment" as defined in the Code.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"Event of Default" shall have the meaning set forth in Section 8
hereof.
"Existing Obligations" means on the date of this Agreement, all
of the outstanding obligations and indebtedness, if any, of Borrowers to the
Bank under the Amended and Restated Loan Agreement and the "Loan Documents" (as
defined in the Amended and Restated Loan Agreement).
"Factoring Agreement" means that certain Factoring
Agreement dated as of December----,1994, executed by Borrowers
in favor of Bank.
"Fixtures" means all "fixtures" as defined in the Code.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"General Intangibles" means "general intangibles" as defined in
the Code, including, without limitation, all rights to payment, causes of
action, rights to receive tax refunds, customer lists, guaranties, deposit
accounts, cash, rights in and claims under insurance policies (including rights
to unearned premiums), Copyrights, Patents, Trademarks, tradenames, rights under
license agreements and all other intellectual property.
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"IBM Credit" means IBM Credit Corporation.
"IBM Inventory Collateral" means the inventory collateral
described in that certain IBM Credit Flooring Line.
"IBM Credit Flooring Line" means that certain Agreement for
Wholesale Financing dated September 30, 1994 and executed by RasterOps in favor
of IBM Credit as may be amended from time to time.
"Indebtedness" means (a) all indebtedness for borrowed money or
the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations, and
(d) all Contingent Obligations.
"▇▇▇▇▇▇" means ▇▇▇▇▇▇ Micro, Inc.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person or entity under any provision of the United States Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
"Instruments" means "instruments" as defined in the Code.
"Intelligent Electronics" means Intelligent Electronics, Inc.
"Inventory" means all present and future inventory in which any
Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process, and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description, now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of any Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing, and
any documents of title representing any of the above, and Borrower's Books
relating to any of the foregoing. The term Inventory includes all "inventory"
as such term is defined in the Code.
"IRC" means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.
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"Letters of Credit" shall mean commercial or standby letters of
credit issued at the request of RasterOps, as agent for each Borrower, for the
account of Borrowers, and bankers' acceptances accepted at the request of
RasterOps, as agent for each Borrower, and for the account of Borrowers, for
which Bank has incurred Letter of Credit Obligations pursuant thereto.
"Letter of Credit Obligations" shall mean all outstanding
obligations incurred by Bank at the request of RasterOps, as agent for each
Borrower, whether direct or indirect, contingent or otherwise, due or not due,
in connection with the issuance or guaranty, by Bank or another, of letters of
credit, bankers' acceptances in respect of letters of credit, or the like. The
aggregate amount of such Letter of Credit Obligations shall not exceed the
maximum amount set forth in Section 2.2(b).
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien (including judgment liens,
landlords' liens, liens of mechanics, suppliers and other Persons for the
provision of goods or services, and all other liens arising under statute,
common law or judicial interpretation), charge, claim, security interest,
easement or encumbrance, preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever intended or having the
effect of providing security for an obligation (including, any lease or title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the Code or comparable
law of any jurisdiction).
"Loan Documents" means, collectively, this Agreement, the
Revolving Note, Lockbox Agreement, Factoring Agreement, any other note or notes
executed by Borrowers, the Collateral Assignments, and any other agreement
entered into between any Borrower and Bank in connection with this Agreement,
all as amended, supplemented or extended from time to time, and shall refer to
the Loan Documents as the same may be in effect at the time such reference
becomes operative.
"Lockbox Agreement" means the check collection and deposit
arrangement created under that certain Lockbox Services Subscriber Agreement,
dated December 21, 1994, between Borrowers and Bank pursuant to which payments
made to each Borrower are paid into or deposited into the Cash Collateral
Account, or any modifications, additions or replacements thereof.
"Marubeni" means Marubeni International Electronics.
"Maturity Date" means December 31, 1995.
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"Material Adverse Effect" means a material adverse effect on:
(i) the business, assets, operations, prospects, projections or financial or
other condition of Borrowers and any Subsidiary of Borrowers, taken as a whole,
(ii) the ability of Borrowers taken as a whole to pay and perform the
Obligations in accordance with the terms hereof, (iii) the Collateral or Bank's
Liens on the Collateral or the priority of any such Lien, or (iv) Bank's rights
and remedies under this Agreement or under any of the other Loan Documents.
"Merisel" means, collectively, Merisel America, Inc. and Merisel
Canada.
"Negotiable Collateral" means all of Borrowers' present and
future letters of credit of which it is a beneficiary, notes, drafts,
instruments, documents of title, and chattel paper, and each Borrower's Books
relating to any of the foregoing.
"Notice of Borrowing" shall have the meaning set forth in Section
2.1 hereof.
"Obligations" means all debt, principal, interest and other
amounts (including all amounts charged to Borrowers' loan account pursuant to
any agreement authorizing Bank to charge Borrowers' loan account), obligations,
covenants, and duties owing by any Borrower to Bank of any kind and description
(whether pursuant to or evidenced by the Loan Documents, or by any other
agreement between Bank and any such 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, and including any debt, liability, or
obligation owing from any Borrower to others that Bank may have obtained by
assignment or otherwise, and further including all interest not paid when due
and all Bank Expenses that Borrowers are required to pay or reimburse by the
Loan Documents, by law, or otherwise.
"Panasonic Inventory" means any inventory which is manufactured,
sold and/or delivered to RasterOps by or on behalf of Panasonic Industrial
Company, or which bears Panasonic Industrial Company's name or identification,
together with all parts and accessories and all replacements and substitutions
thereof or thereto.
"Patents" means all patents, patent applications, and like
protections including, without limitation, improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the
same, now or hereafter existing, created, acquired or held, including the
patents and patent applications described in each of the Collateral Assignments.
"Periodic Payments" means all installments or similar recurring
payments that any Borrower may now or hereafter
9
become obligated to pay to Bank pursuant to the terms and provisions of any
instrument, or agreement now or hereafter in existence between such Borrower and
Bank.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrowers in favor of Bank arising under
this Agreement;
(b) Lease payment obligations under leases that Borrowers are
not prohibited from entering into under the Loan Documents;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors, other than
Sony, incurred in the ordinary course of business;
(e) Indebtedness to IBM Credit and ▇▇▇▇ Atlantic - Tricon
Leasing Corporation for the purchase or acquisition of Sony Inventory, and
Panasonic Inventory, respectively, not to exceed, at any time, the aggregate
outstanding amount of $2,000,000;
(g) Extensions of any of items of Permitted Indebtedness (a)
through (f) above, PROVIDED that the principal amount thereof is not increased
or the terms thereof are not modified to impose more burdensome terms upon
Borrowers; and
(h) Any other existing Indebtedness disclosed on the Schedule.
"Permitted Investment" means:
(a) Investments existing on the date of this Agreement disclosed
in the Schedule; and
(b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency or any State thereof
maturing within one (1) year from the date of acquisition thereof, (ii)
commercial paper maturing no more than one (1) year from the date of creation
thereof and currently having the highest rating obtainable from either Standard
& Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc., and (iii) certificates
of deposit maturing no more than one (1) year from the date of investment
therein issued by Bank.
"Permitted Liens" means the following:
(a) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, PROVIDED the same have no priority over any of Bank's
security interests;
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(b) Liens (i) upon or in any equipment acquired or held by any
Borrower or any of its Subsidiaries to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the time of
its acquisition, PROVIDED that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment;
(c) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in clause
(b) above, PROVIDED that any extension, renewal or replacement Lien shall be
limited to the property encumbered by the existing Lien and the principal amount
of the indebtedness being extended, renewed or refinanced does not increase; and
(d) Any Lien of IBM Credit against RasterOps in the collateral,
and proceeds thereof, described in the financing statement bearing file No.
9429860480, filed with the California Secretary of State's office on October 3,
1994, and any Lien of ▇▇▇▇ Atlantic - Tricon Leasing Corporation against
RasterOps in the collateral described in the financing statement bearing file
No. 94083300, which was filed with the California Secretary of State's office on
April 28, 1994.
"Person" shall mean any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether Federal, state, county, city, municipal or otherwise,
including any instrumentality, division, agency, body or department thereof).
"Prime Rate" means the variable rate of interest, per annum, most
recently announced by Bank, as its "prime rate," whether or not such announced
rate is the lowest rate available from Bank.
"Quick Assets" means at any date as of which the amount thereof
shall be determined, on a consolidated basis, the cash, accounts receivable and
investments with maturities not to exceed 90 days, of Borrowers.
"Related Documents" shall have the meaning set forth in the
Recital.
"Revolving Facility" means the facility under which RasterOps, as
agent for each Borrower, may request Bank to issue cash advances or commercial
letters of credit for the benefit of Borrowers, as specified in Section 2.1
hereof.
"Revolving Note" means a promissory note in substantially the
form of EXHIBIT A attached hereto, as the same may be amended or supplemented
from time to time, and shall refer
11
to the Revolving Note as the same may be in effect at the time such reference
becomes operative.
"Schedule" means the Schedule of Exceptions attached to this
Agreement.
"Sony" shall mean Sony Corporation of America, Sony Corporation,
Sony Component(s) Product(s) Division, or any division, affiliate or subsidiary
of any of the foregoing.
"Sony Inventory" means any inventory now held or hereafter
acquired by RasterOps bearing the tradenames and/or trademarks "Sony" either
singly or in combination with other words.
"Subordinated Debt" means any debt subordinated to the debt owing
by each Borrower to Bank on terms acceptable to Bank.
"Subsidiary" shall mean, with respect to any Person, any
corporation of which an aggregate of more than 50% of the outstanding stock
(including all shares, options, warrants, interests, participations or other
equivalents (regardless of how designated) of or in a corporation or equivalent
entity) having ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether, at the time, stock of
any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person.
"Tangible Net Worth" means at any date as of which the amount
thereof shall be determined, on a consolidated basis, the total assets of
Borrowers MINUS (i) the sum of any amounts attributable to (a) goodwill, (b)
intangible items such as unamortized debt discount and expense, patents, trade
and service marks and names, copyrights and research and development expenses
except prepaid expenses, (c) all reserves not already deducted from assets, and
(d) current and non-current deferred taxes AND
(ii) Total Liabilities.
"Tech Data" means Tech Data Corporation.
"Total Liabilities" means at any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
GAAP be classified as liabilities on the consolidated balance sheet of
Borrowers, including in any event all Indebtedness, but specifically excluding
Subordinated Debt.
"Trademarks" means all trademarks, trademark applications,
trademark registrations, trademark licenses, and like protections including,
without limitation, improvements,
12
divisions, continuations, renewals, reissues, extensions, and continuations-in-
part of the same, now or hereafter existing, created, acquired or held,
including the trademarks and trademark applications described in each of the
Collateral Assignments.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter. The term "including" shall not be
limiting or exclusive, unless specifically indicated to the contrary.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the terms
"financial statements" shall include the notes and schedules thereto.
2. LOAN AND TERMS OF PAYMENT
2.1 REVOLVING ADVANCES.
(a) Subject to the terms and conditions of this Agreement, Bank
agrees to make revolving advances ("Advances") to Borrowers, as requested solely
by RasterOps, as agent for each Borrower, in an amount not to exceed the lesser
of (i) the Committed Line or (ii) the Borrowing Base, in either case less the
amount of outstanding Letter of Credit Obligations. For purposes of this
Agreement "Borrowing Base" shall mean an amount equal to the sum of (1) sixty-
five percent (65%) of Eligible Accounts other than Domestic Distributor
Accounts, and (2) forty percent (40%) of Domestic Distributor Accounts. On the
Closing Date, all of the Existing Obligations, if any, shall be rolled over into
this Agreement and shall constitute and be deemed to be Advances under this
Agreement, and shall bear interest and be repayable in accordance with, and
shall be subject to all of the terms and conditions set forth in, this
Agreement. Borrowers' availability under the Revolving Facility on the Closing
Date shall be an amount equal to the amount, if any, by which the lesser of (i)
the Committed Line or (ii) the Borrowing Base, exceeds the Existing Obligations,
if any.
(b) To evidence the Advances, Borrowers shall execute and
deliver to Bank on the date hereof the Revolving Note, which shall amend,
restate and supersede the "Revolving Note" delivered in connection with the
Amended and Restated Loan Agreement.
(c) Whenever Borrowers desire an Advance, RasterOps, as agent
for each Borrower, will notify Bank by facsimile transmission or telephone no
later than 3:00 p.m. California time, on the same Business Day that the Advance
is to be made ("Notice of Borrowing"). Each such notification shall be
13
promptly confirmed by a "Borrowing Certificate" in substantially the form of
SCHEDULE 2.1 hereto.
(d) Bank is authorized to make Advances under this Agreement,
based upon instructions received from an officer of RasterOps, or without
instructions if in Bank's discretion such Advances are necessary to meet
Obligations which have become due and remain unpaid. Bank will credit the
amount of Advances made under this Section 2.1 to Borrowers' loan account.
Amounts borrowed pursuant to this Section 2.1 may be repaid and reborrowed at
any time during the term of this Agreement so long as no Event of Default has
occurred and is continuing.
(e) The Revolving Facility shall terminate on the Maturity Date,
at which time all amounts advanced under this Section 2.1 together with all
other Obligations, shall be immediately due and payable.
(f) If at any time or times after the Closing Date and before
the Maturity Date, there are no Advances outstanding under the Revolving
Facility and Borrowers desire Bank to make an Advance hereunder, RasterOps, as
agent for each Borrower, will provide to Bank, at least ten (10) days before any
such Advance under this Agreement: (a) a company prepared consolidated balance
sheet, income statement and cash flow statement covering Borrowers' operations
during the previous month, certified by an officer of RasterOps acceptable to
Bank; (b) a Borrowing Base Certificate together with aged listings of accounts
receivable and accounts payable, (c) a Compliance Certificate, and (d) all other
financial statements, reports, and certificates required pursuant to Section 6.3
of this Agreement.
(g) Any Advance which may be made or deemed made by Bank to
RasterOps, as agent for each Borrower, are and shall be received by RasterOps in
trust for each Borrower. RasterOps shall distribute the proceeds of any such
Advances solely to or for the account of Borrowers. Each Borrower shall be
directly indebted to Bank for each Advance distributed to it by RasterOps, in
its capacity as agent for each Borrower, as if that Advance had been advanced
directly by Bank to the Borrower which received the proceeds thereof.
2.2 LETTERS OF CREDIT.
(a) On the date of this Agreement, all letter of credit
obligations of Borrowers to Bank under the Amended and Restated Loan Agreement,
if any, shall be rolled over into this Agreement and shall constitute and be
deemed to be Letter of Credit Obligations hereunder.
(b) Bank agrees, subject to the terms and conditions
hereinafter set forth, so long as no Event of Default has occurred and is
continuing, at any time prior to the Maturity Date, to incur Letter of Credit
Obligations, as RasterOps, as
14
agent for each Borrower, shall request by written notice to Bank which written
notice must be received by Bank not later than 12:00 noon on the same Business
Day of the requested date of issuance of the Letters of Credit supporting
obligations of Borrowers arising in the ordinary course of business; PROVIDED,
HOWEVER, that the proposed documentation for each Letter of Credit Obligation is
reasonably satisfactory to Bank and that the aggregate amount of all Letter of
Credit Obligations pursuant to this Section 2.2(b) at any one time outstanding
(whether or not then due and payable) shall not, when added to the aggregate
amount of the Advances outstanding, exceed the limit on Advances set forth in
Section 2.1; AND FURTHER PROVIDED, HOWEVER, that (A) no such Letter of Credit
shall have an expiry date which is later than the Maturity Date, and (B) one
hundred percent (100%) of the amount of such Letter of Credit Obligations shall
be deducted from availability under the Revolving Facility. The determination
of the bank or other legally authorized Person (including Bank) which shall
issue or accept, as the case may be, any letter of credit or bankers acceptance
contemplated by this Section 2.2, and a determination whether or not the
proposed documentation with respect to any Letter of Credit Obligation is
reasonably acceptable, shall be made by Bank in its sole discretion.
(c) In the event that Bank shall make any payment on account of
or with respect to any Letter of Credit Obligation, such payment shall then be
deemed to constitute an Advance under Section 2.1.
(d) In the event that Bank shall incur any Letter of Credit
Obligations hereunder, Borrowers agree to pay to Bank, all fees and charges paid
by Bank on account of such Letter of Credit Obligations to the issuer or like
party.
2.3 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations owed by Borrowers to Bank pursuant to Section 2.1 of this Agreement
is greater than the lesser of (i) the Committed Line or (ii) the Borrowing Base,
Borrowers shall immediately pay to Bank, in cash, the amount of such excess.
2.4 INTEREST RATES, INTEREST PAYMENTS, AND CALCULATIONS.
(a) INTEREST RATE. Interest shall accrue on the principal
amount of the Obligations evidenced by the Revolving Note outstanding at the end
of each day at a fluctuating rate per annum equal to the Prime Rate plus two
percent (2.OO%).
(b) DEFAULT RATE. All Obligations shall bear interest, from
and after the occurrence of an Event of Default, at a rate equal to five (5)
percentage points above the interest rate applicable immediately prior to the
occurrence of the Event of Default.
15
(c) PAYMENTS. Interest hereunder shall be due and payable on
the last Business Day of each calendar month during the term hereof. Bank
shall, at its option, charge such interest, all Bank Expenses, and all Periodic
Payments against Borrowers' deposit accounts or against the Committed Line, in
which case those amounts shall thereafter accrue interest at the rate then
applicable hereunder. Any interest not paid when due shall be compounded by
becoming a part of the Obligations, and such interest shall thereafter accrue
interest at the rate then applicable hereunder.
(d) COMPUTATION. The foregoing rate of interest shall be
increased or decreased, as the case may be, by an amount equal to any increase
or decrease in the Prime Rate, with such adjustments to be effective as of the
opening of business on the day that any such change in the Prime Rate becomes
effective. If this Agreement is executed on a day that is not a Business Day,
the Prime Rate in effect on the date hereof shall be the Prime Rate for the last
Business Day immediately preceding the date hereof. Interest shall be
calculated on a daily basis (computed on the actual number of days elapsed over
a year of 360 days), commencing on the date hereof, and shall be payable as
provided in Section 2.4(c).
(e) MAXIMUM INTEREST. In no contingency or event whatsoever
shall the aggregate of all amounts deemed interest hereunder and charged or
collected pursuant to the terms of this Agreement exceed the highest rate
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that such a court
determines that Bank has charged or received interest hereunder in excess of the
highest applicable rate, the rate in effect hereunder shall automatically be
reduced to the maximum rate permitted by applicable law and Bank shall promptly
refund to Borrowers any interest received by Bank in excess of the maximum
lawful rate or, if so requested by Borrowers, shall apply such excess to the
principal balance of the Obligations. It is the intent hereof that Borrowers
not pay or contract to pay, and that Bank not receive or contract to receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may be paid by Borrowers under applicable law.
2.5 CREDITING PAYMENTS. The receipt by Bank of any wire transfer of
funds, check, or other item of payment shall be immediately applied to
conditionally reduce the Obligations, but shall not be considered a payment on
account unless such wire transfer is of immediately available federal funds and
is made to the appropriate deposit account of Bank or unless and until such
check or other item of payment is honored when presented for payment and has
actually been collected and credited to Borrowers' account; PROVIDED, that any
wire transfer, check or other item of payment received by Bank after 11:00 a.m.
California time shall be deemed to have been received by Bank as of the opening
of business on the immediately following Business
16
Day. Notwithstanding anything to the contrary in the immediately preceding
sentence, if Bank receives payment by check, interest shall accrue on that
portion of the Obligations equal to the amount of such check through the date
such check is deemed to have been received by Bank as set forth in the proviso
of this Section 2.5, and interest shall accrue on that portion of the
Obligations equal to the amount of such check after the date upon which such
check is deemed to have been received as set forth in the proviso in this
Section 2.5 only if such check is dishonored when presented for payment.
2.6 FEES. Borrowers shall pay to Bank the following:
(a) FINANCIAL EXAMINATION AND APPRAISAL FEES. Bank's customary
fees and out-of-pocket expenses for Bank's audits of each Borrower's Accounts
and Inventory, and for each appraisal of Collateral and financial analysis and
examination of each Borrower performed from time to time by Bank or its agents;
and
(b) BANK EXPENSES. On the date hereof, all Bank Expenses
incurred through the date hereof, including, without limitation, reasonable
attorneys' fees and expenses in connection with the preparation of the Loan
Documents.
2.7 ADDITIONAL COSTS. In case any law, regulation, treaty or
official directive or the interpretation or application thereof by any court of
any governmental authority charged with the administration thereof or the
compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):
(a) subjects Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by Borrowers or
otherwise with respect to the transactions contemplated hereby (except for taxes
on the overall net income of Bank imposed by the United States of America or any
political subdivision thereof); or
(b) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans by, Bank; or
(c) imposes upon Bank any other condition with respect to their
performance under this Agreement, and the result of any of the foregoing is to
increase the cost to Bank, reduce the income receivable by Bank or impose any
expense upon Bank with respect to any loans, Bank shall notify Borrowers
thereof. Borrowers agree to pay to Bank the amount of such increase in cost,
reduction in income or additional expense as and when such cost, reduction or
expense is incurred or determined, upon presentation by Bank of a statement in
the amount and setting
17
forth Bank's calculation thereof, which statement shall be deemed true and
correct absent manifest error.
2.8 TERM; PAYMENT OF OBLIGATIONS ON MATURITY DATE. This Agreement
shall become effective upon acceptance by Bank and shall continue in full force
and effect for a term ending on the Maturity Date. Notwithstanding the
foregoing, Bank shall have the right to terminate this Agreement immediately and
without notice upon the occurrence of an Event of Default. Unless sooner paid
or due and payable as provided herein, all Obligations, including, without
limitation, principal, interest, fees and Bank Expenses, under this Agreement,
the Revolving Note or any of the other Loan Documents, shall be due and payable
in full on the Maturity Date. Each Borrower shall be jointly and severally
liable for the Obligations.
3. CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL LOAN. The obligation of Bank to
make the initial Advance is subject to the condition precedent that Bank shall
have received on or before the Closing Date, in form and substance satisfactory
to Bank, the following:
(a) this Agreement, together with all schedules and exhibits,
an amendment to the Collateral Assignments, the Lockbox Agreement, the Factoring
Agreement, and the Revolving Note, each duly executed by Borrowers or a
Borrower, as required therein, each in a form acceptable to Bank;
(b) a certificate of the secretary of each Borrower with
respect to incumbency and resolutions of the board of directors of such Borrower
authorizing the execution, delivery and performance of this Agreement, the
Revolving Note, the Lockbox Agreement, the Factoring Agreement, and Collateral
Assignments;
(c) guarantees from each of each Borrower's Subsidiaries, in
form acceptable to Bank;
(d) a non-refundable commitment fee in the amount of Sixty-Five
Thousand Dollars ($65,000);
(e) an accounts receivable audit;
(f) payment of the fees and Bank Expenses then
due and specified in section 2.6 hereof;
(g) those agreements, documents and other information set forth
in the Schedule of Documents delivered in connection with this Agreement; and
(h) such other documents, and completion of such other matters,
as Bank may deem necessary or appropriate.
18
3.2 CONDITIONS PRECEDENT TO ALL LOANS. The obligation of Bank to
make each Advance, including the initial Advance, is further subject to the
following conditions:
(a) timely receipt by Bank of the Notice of Borrowing as
provided in Section 2.1;
(b) the representations, warranties and disclosures contained
in this Agreement and in any other Loan Documents shall not be misleading and
shall be true and accurate in all material respects on and as of the date of
such Notice of Borrowing and on the effective date of each Advance as though
made at and as of each such date;
(c) no Event of Default shall have occurred and be continuing,
or would result from such Advance;
(d) there are no facts and circumstances which would, in the
Bank's reasonable determination, negatively affect the Bank's ability to collect
any outstanding Obligations;
(e) no event shall have occurred and be continuing, or would
result from any Advance, which constitutes or would constitute an Event of
Default; and
(f) the aggregate unpaid principal amount of the Obligations
after giving effect to such Advance shall not exceed the limitation set forth in
Section 2.1.
The acceptance by any Borrower of the proceeds of each Advance shall be
deemed to be as of the date of such acceptance (i) a representation and warranty
by each Borrower on the date of such Advance that the conditions of this Section
3.2 have been satisfied, and (ii) a confirmation by each Borrower of the
granting and continuance of Bank's Liens pursuant to this Agreement and the
other Loan Documents.
4. CREATION OF SECURITY INTEREST
4.1 GRANT, CONFIRMATION, RESTATEMENT AND CONTINUATION OF SECURITY
INTEREST. In order to secure prompt repayment of any and all Obligations and in
order to secure prompt performance by Borrowers of each of their covenants and
duties under this Agreement, the Revolving Note and the other Loan Documents,
each Borrower hereby grants to Bank a continuing Lien upon and security interest
in all of such Borrower's right, title, and interest in, to, and under the
following, whether now owned by or owing to such Borrower or hereafter acquired
by or arising in favor of such Borrower, and regardless of where located (all of
which being hereinafter collectively referred to as the "Collateral"):
(a) All Inventory;
19
(b) All Chattel Paper that (i) is proceeds of Inventory,
Accounts, Equipment, or Fixtures, or (ii) evidences a right to payment for goods
sold or leased, for services rendered or for property licensed, whether or not
earned by performance;
(c) All Accounts;
(d) All contract rights and causes of action
arising out of or in connection with the sale or lease of goods by such
Borrower, the rendering of services by such Borrower or the licensing of
property by such Borrower;
(e) All Equipment and Fixtures;
(f) All General Intangibles;
(g) All Documents;
(h) All Instruments;
(i) All accessions to, substitutions for and all
replacements, rents, profits, products, and cash and non-cash proceeds of (a),
(b), (c), (d), (e), (f), (g) and (h) above, including proceeds of and any
unearned premiums with respect to insurance policies insuring any of the
Collateral; and
(j) All books and records of such Borrower pertaining to any of
(a), (b), (c), (d), (e), (f), (g), (h) or (i) above.
The foregoing grant of a security interest is also a confirmation,
restatement, and continuation of the existing security interests granted to Bank
under the Amended and Restated Loan Agreement, and any other security interest
granted by any Borrower to Bank. The security interest herein provided for and
all previously granted security interests, as amended hereby, shall continue to
be perfected by all of the financing statements, fixture filings or other
filings or recordations that were filed or recorded on or before November 15,
1993, naming any Borrower as debtor and Bank as secured party (including the
financing statement filed with the Office of the Secretary of State on August
15, 1988, as file No. 88198336, as amended and continued), as well as being also
perfected by any such filings or recordations made on or after November 15,
1993.
4.2 LIMITATION WITH RESPECT TO PATENTS AND TRADEMARKS AND
COPYRIGHTS. Notwithstanding (i) anything to the contrary in this Agreement or
in any of the Collateral Assignments, (ii) Borrowers' granting to Bank of a
security interest in the Patents, Trademarks, and Copyrights, and (iii) that
the Patents, Trademarks, and Copyrights are included in the Collateral, Bank
shall not enforce its security interest in any Patents, Trademarks or
Copyrights; PROVIDED, that Bank shall have the right to enforce its security
interest in all Collateral other
20
than the Patents, Trademarks or Copyrights, including all Accounts, Inventory,
Equipment, and other Collateral (including proceeds), relating to or arising
from or in connection with the Patents, Trademarks or Copyrights. The security
interest granted to Bank in the Patents, Trademarks, and Copyrights is being
granted solely to the extent necessary for Bank to have a perfected security
interest in the Collateral other than the Patents, Trademarks, and Copyrights
and to protect and assist Bank in enforcing Bank's security interest in such
Collateral.
4.3 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Each Borrower
shall from time to time execute and deliver to Bank, at the request of Bank, all
financing statements and other documents that Bank may reasonably request, in
form satisfactory to Bank, to perfect and continue perfected Bank's security
interests in the Collateral and in order to fully consummate all of the
transactions contemplated under the Loan Documents.
4.4 RIGHT TO INSPECT. Bank (through any of its officers, employees,
or agents) shall have the right, upon reasonable prior notice, from time to time
during any Borrower's usual business hours, to inspect such Borrower's Books and
to make copies thereof and to check, test, and appraise the Collateral in order
to verify such Borrower's financial condition or the amount, condition of, or
any other matter relating to, the Collateral.
4.5 LOCKBOX. Until such time as all of Borrowers' Obligations to
Bank have been paid and satisfied in full, Borrowers shall instruct all obligors
under instruments held by Borrowers and all account debtors to remit all
payments to the Cash Collateral Account. Borrowers shall not modify or
terminate the Lockbox Agreement without Bank's prior written consent. Borrowers
shall promptly deposit any checks or other payments directly received by them on
account of any right to payment of Borrowers into the Cash Collateral Account.
5. REPRESENTATIONS AND WARRANTIES
Each Borrower represents, warrants and covenants as
follows:
5.1 DUE ORGANIZATION AND QUALIFICATION. Such Borrower is a
corporation duly existing and in good standing under the laws of its state of
incorporation and qualified and licensed to do business in, and is in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be so qualified, except for such states as to which
any failure so to qualify would not have a Material Adverse Effect on such
Borrower.
5.2 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance of the Loan Documents are within such Borrower's powers, have been
duly authorized, and are not in
21
conflict with nor constitute a breach of any provision contained in such
Borrower's Articles of Incorporation or Bylaws, nor will they constitute an
event of default under any material agreement to which such Borrower is a party
or by which such Borrower is bound. Such Borrower is not in default under any
agreement to which it is a party or by which it is bound, which default could
have a Material Adverse Effect on the financial condition or business operations
of such Borrower.
5.3 NO PRIOR ENCUMBRANCES; FIRST PRIORITY SECURITY INTEREST IN
ACCOUNTS. Such Borrower has good and indefeasible title to the Collateral, free
and clear of liens, claims, security interests, or encumbrances, except as held
by Bank and except for Permitted Liens. The liens and security interests of
Bank in the Accounts are prior to any liens and security interests of any other
Person in Accounts. Except as disclosed in the Schedule, such Borrower has not
acquired any part of the Collateral from an assignor outside the ordinary course
of such assignor's business. The security interests granted to Bank in the
Collateral constitute (i) valid security interests in such Collateral, and (ii)
first priority security interests in all Collateral, other than (a) Panasonic
Inventory to the extent ▇▇▇▇ Atlantic-Tricon Leasing Corporation has a valid and
perfected security interest in such Panasonic Inventory and has complied with
the requirements set forth in the Code for obtaining purchase money priority,
and (b) IBM Inventory Collateral if and to the extent IBM Credit has a valid and
perfected security interest in such IBM Inventory Collateral and to the extent
Bank has subordinated its security interest therein.
5.4 BONA FIDE ACCOUNTS. The Eligible Accounts are and shall remain
bona fide existing obligations created by the sale and delivery of Inventory or
the rendition of services to account debtors in the ordinary course of
Borrowers' business, unconditionally owed to Borrowers without defenses,
disputes, offsets, counterclaims, or, except to the extent otherwise provided on
SCHEDULE 5.4, rights of return or cancellation. The property giving rise to
such Eligible Accounts has been delivered to the account debtor or to the
account debtor's agent for immediate shipment to and, except to the extent
otherwise provided on SCHEDULE 5.4, unconditional acceptance by the account
debtor. Neither Borrower has, and at all times hereafter, shall not have,
received notice of actual or imminent bankruptcy or insolvency of any account
debtor at the time an account due from such account debtor is included in the
Borrowing Base or any Borrowing Base Certificate as an Eligible Account or
Domestic Distributor Account.
5.5 MERCHANTABLE INVENTORY. All Inventory reported on the
consolidated financial statements of Borrowers delivered to Bank before the
Closing Date, and on any consolidated financial statements delivered after the
Closing Date, is now and at all times hereafter shall be in all material
respects of good and marketable quality, and free from all material defects.
Without
22
the Bank's prior consent, the Inventory is not now and shall not at any time
hereafter be stored with a bailee, warehouseman, or similar party unless Bank
has received a pledge of the warehouse receipt covering such Inventory. Except
for Inventory sold in the ordinary course of business and except for such other
locations as Bank may approve in writing, each Borrower shall keep the Inventory
only at the location set forth in Section 11 hereof, the locations described on
SCHEDULE 5.16, and such other locations of which such Borrower gives Bank prior
written notice and as to which such Borrower signs and files a financing
statement where needed to perfect Bank's security interest.
5.6 NAME; LOCATION OF CHIEF EXECUTIVE OFFICE. Except as disclosed in
the Schedule, such Borrower has not done business under any name other than that
specified on the signature page hereof. The chief executive office of such
Borrower is located at the address indicated in Section 11 hereof. Such
Borrower will not, without (i) thirty (30) days prior written notification to
Bank, and (ii) taking such action as is necessary to cause the Lien of Bank in
the Collateral to continue to be perfected, relocate such chief executive
office.
5.7 LITIGATION. There are no actions or proceedings pending by or
against such Borrower before any court or administrative agency in which an
adverse decision could have a Material Adverse Effect on such Borrower or the
Collateral, except as disclosed on the SCHEDULE 5.7. Such Borrower does not have
knowledge of any such pending or threatened actions or proceedings. Such
Borrower will promptly notify Bank in writing if any action, proceeding or
governmental investigation, involving such Borrower is commenced that may result
in damages or costs to such Borrower of Fifty Thousand Dollars ($50,000) or
more.
5.8 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All
financial statements relating to Borrowers or any Affiliate or Subsidiary of
Borrowers that have been or may hereafter be delivered by any Borrower to Bank
fairly present in all material respects Borrowers' financial condition as of the
date thereof and Borrowers' results of operations for the period then ended.
There has not been a material adverse change in the financial condition of any
Borrower since the date of the most recent of such financial statements
submitted to Bank.
5.9 SOLVENCY. Such Borrower is solvent and able to pay its debts
(including trade debts) as they mature.
5.10 REGULATORY COMPLIANCE. Such Borrower has met and at all times
will meet the minimum funding requirements of ERISA with respect to any employee
benefit plans subject to ERISA. No event has occurred resulting from such
Borrower's failure to comply with ERISA that is reasonably likely to result in
such Borrower's incurring any liability that could have a Material Adverse
Effect on the financial condition or business operations
23
of any Borrower. Such Borrower is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940. Such Borrower is not engaged principally, or as one of the
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations G, T and
U of the Board of Governors of the Federal Reserve System), and the proceeds of
the Advances will not be used for such purpose. Such Borrower has complied with
all the provisions of the Federal Fair Labor Standards Act.
5.11 ENVIRONMENTAL CONDITION. None of such Borrower's properties or
assets has ever been used by any Borrower or, to the best of such Borrower's
knowledge, by previous owners or operators in the disposal of, or to produce,
store, handle, treat, release, or transport, any hazardous waste or hazardous
substance other than in accordance with applicable law; none of such Borrower's
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a hazardous waste or
hazardous substance disposal site, or a candidate for closure pursuant to any
environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by such Borrower; and such Borrower has not received a summons,
citation, notice, or directive from the Environmental Protection Agency or any
other federal or state governmental agency concerning any action or omission by
any Borrower resulting in the releasing, or otherwise disposing of hazardous
waste or hazardous substances into the environment.
5.12 TAXES. Such Borrower has filed or caused to be filed all tax
returns required to be filed, and has paid, or has made adequate provision for
the payment of, all taxes that are due and payable.
5.13 SUBSIDIARIES. Except as disclosed on SCHEDULE 5.13 such Borrower
does not own any stock, partnership interest or other equity securities of any
entity, except for Permitted Investments.
5.14 GOVERNMENT CONSENTS. Such Borrower has obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all governmental authorities that are necessary for the
continued operation of Borrowers' business as currently conducted.
5.15 FULL DISCLOSURE. No representation, warranty or other statement
made by such Borrower in any certificate or written statement furnished to Bank
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained in such certificates or
statements not misleading.
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5.16 LOCATIONS OF COLLATERAL. Such Borrower's chief executive
office (which is also described in Section 11), corporate offices and all other
locations of Collateral and its records concerning the Collateral, including the
location of all warehouses and storage facilities, are as set forth on SCHEDULE
5.16 attached hereto; PROVIDED, that all of the warehouses and storage
facilities described on SCHEDULE 5.16 are operated by a Borrower and not by any
other Persons. Such Borrower shall not change its chief executive office,
principal place of business, corporate offices, warehouses or storage facilities
or remove such records unless it has taken such action as is necessary to cause
the Lien of Bank to continue to be perfected. Such Borrower shall not change
its chief executive office, principal place of business, corporate offices,
warehouses or storage facilities or the location of its records concerning the
Collateral without giving thirty (30) days,' prior written notice thereof to
Bank.
5.17 TAX IDENTIFICATION NUMBERS. The federal employer identification
number for RasterOps is 77 0161747. The federal employer identification number
for Truevision is 35 1719168.
5.18 NO INSTRUMENTS. None of the amounts owed by any customer of
either Borrower to such Borrower for any Inventory sold or services performed by
such Borrower is evidenced by a promissory note or other instrument in favor of
such Borrower.
5.19 INVENTORY OF SUBSIDIARIES. None of the Subsidiaries of
RasterOps, other than Truevision, has any inventory located in the United
States.
. 5.20 INDEBTEDNESS TO ▇▇▇▇ ATLANTIC - TRICON LEASING CORPORATION AND IBM
CREDIT. The aggregate outstanding indebtedness of Borrowers to ▇▇▇▇ Atlantic -
Tricon Leasing Corporation and IBM Credit does not as of the date of this
Agreement and shall not any time hereafter exceed $2,000,000 in the aggregate.
5.21 COPYRIGHTS, TRADEMARKS AND PATENT. Borrowers reaffirm that the
Patents, Trademarks and Copyrights listed in the schedules of the Collateral
Assignments are the only Patents, Trademarks and Copyrights of Borrowers and
that Borrowers have not acquired any additional Patents, Trademarks and/or
Copyrights.
6. AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that, until payment
in full of the Obligations, such Borrower shall do all of the following:
6.1 GOOD STANDING. Such Borrower shall maintain its corporate
existence and its good standing in its jurisdiction of incorporation and
maintain qualification in each jurisdiction in
25
which the failure to so qualify could have a Material Adverse
Effect on the financial condition, operations or business of such
Borrower. Such Borrower shall maintain in force all licenses,
approvals and agreements, the loss of which could have a Material
Adverse Effect on its financial condition, operations or
business.
6.2 GOVERNMENT COMPLIANCE. Such Borrower shall comply
with all statutes, laws, ordinances and government rules and
regulations to which it is subject, noncompliance with which
could materially adversely affect the financial condition,
operations or business of any Borrower.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
RasterOps shall deliver, or cause to be delivered, to Bank:
(a) as soon as available, but in no event later
than 3:00 p.m. on each day after the date of this Agreement that
is not a Saturday or Sunday, a report in the form of SCHEDULE
6.3(a) of the Borrowers' sales and collections for the prior day
that is not a Saturday or Sunday;
(b) as soon as available but in no event later
than fifteen (15) days after the last day of each month, a
"Borrowing Base Certificate" signed by an officer of RasterOps in
substantially the form of SCHEDULE 6.3(b) hereto, together with
(i) aged listings of accounts receivable and accounts payable,
(ii) a schedule showing purchases of Sony Inventory and Panasonic
Inventory for the month then ended and the total aggregate
indebtedness outstanding to ▇▇▇▇ Atlantic - Tricon Leasing
Corporation, and IBM Credit as of the end of such month,
(iii) the distributor sell through reports that report the five
highest aggregate sell throughs of the previous month, and
(iv) all sales return information reports;
(c) as soon as available, but in no event later
than thirty (30) days after the end of each month, (i) a company
prepared consolidated and consolidating balance sheet, income
statement and cash flow statement covering the Borrowers' and
their Subsidiaries' operations during such period, certified by
an officer of RasterOps reasonably acceptable to Bank, and
(ii) as agent for each Borrower, a "Compliance Certificate"
signed by an authorized officer of RasterOps in substantially the
form of SCHEDULE 6.3(c) hereto;
(d) as soon as available, but in no event later
than ninety (90) days after the end of RasterOps's fiscal year,
audited consolidated and consolidating financial statements of
RasterOps covering RasterOps and its Subsidiaries' operations
during the previous fiscal year which are prepared in accordance
with GAAP, consistently applied, by an independent certified
public accounting firm reasonably acceptable to Bank, together
with an unqualified opinion on such financial statements of such
independent certified public accounting firm, and (at the time of
26
filing with the appropriate tax authorities) the tax returns of
Borrowers;
(e) as soon as available, but in no event later
than five (5) days after RasterOps files the same with the
Security and Exchange Commission, a copy of RasterOps's quarterly
10-Q report and annual 10-K report;
(f) promptly upon becoming available, copies of
all statements, reports and notices sent or made available
generally by any Borrower to its security holders or to any
holders of Subordinated Debt;
(g) immediately upon receipt of written notice
thereof, a report of any material legal actions pending or
threatened against any Borrower; and
(h) such budgets, sales projections, operating
plans or other financial information as Bank may reasonably
request from time to time.
Bank shall have a right from time to time to audit
Borrowers' Accounts at borrowers' expense, provided that such
audits will be conducted no more often than every three (3)
months unless an Event of Default has occurred.
6.4 RETURNS. Returns and allowances, if any, as
between such Borrower and its account debtors shall be on the
same basis and in accordance with the usual customary practices
of such Borrower, as they exist at the time of the execution and
delivery of this Agreement. Such Borrower shall promptly notify
Bank of all returns and recoveries and of all disputes and
claims, where the return, recovery, dispute or claim involves
more than Fifty Thousand Dollars ($50,000).
6.5 TAXES. Such 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; and such Borrower
will make timely payment or deposit of all tax payments and
withholding taxes required of it by applicable laws, including,
but not limited to, those laws concerning F.I.C.A., F.U.T.A.,
state disability, and local, state, and federal income taxes, and
will, upon request, furnish Bank with proof satisfactory to Bank
indicating that such Borrower has made such payments or deposits;
provided that such Borrower need not make any payment if the
amount or validity of such payment is contested in good faith by
appropriate proceedings and is adequately reserved against by
such Borrower.
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6.6 INSURANCE.
(a) Such Borrower, at its expense, shall keep the
Collateral insured against loss or damage by fire, theft,
explosion, sprinklers, and all other hazards and risks, and in
such amounts, as ordinarily insured against by other owners in
similar businesses conducted in the locations where such
Borrower's business is conducted on the date hereof. Such
Borrower shall also maintain insurance relating to such
Borrower's ownership and use of the Collateral in amounts and of
a type that are customary to businesses similar to Borrower's
business.
(b) All such policies of insurance shall be in
such form, with such companies, and in such amounts as reasonably
satisfactory to Bank. All such policies of insurance shall
contain a lender's loss payable endorsement, in a form
satisfactory to Bank, showing Bank as a loss payee thereof, and
shall specify that the insurer must give at least ten (10) days
notice to Bank before canceling its policy for any reason. Such
Borrower shall deliver to Bank certified copies of such policies
of insurance and evidence of the payments of all premiums
therefor. All proceeds payable under any such policy shall, at
the option of Bank, be payable to Bank to be applied on account
of the Obligations.
6.7 PRINCIPAL DEPOSITORY. Borrowers shall maintain
their principal depository and operating accounts with Bank;
PROVIDED, that prior to opening any accounts with any other banks
or financial institutions RasterOps shall provide Bank with at
least five (5) days, prior written notice of the bank or
financial institution at which such account will be opened, the
account number, and the purpose for which such account will be
used. Truevision shall provide Bank with the same information
with respect to each bank account as is required to be provided
by RasterOps. Each bank account maintained by any Borrower on
the Closing Date is listed on the Schedule.
6.8 QUICK RATIO. As of each Computation Date,
RasterOps shall have a ratio of Quick Assets to Current
Liabilities of at least 0.75 to 1.0. For purposes of calculating
the Quick Ratio only, all Letter of Credit Obligations shall be
considered as part of the Indebtedness constituting the Current
Liabilities of RasterOps.
6.9 TANGIBLE NET WORTH. As of the date of this
Agreement, RasterOps shall have a Tangible Net Worth of not less
than Eleven Million Two Hundred Fifty Thousand Dollars
($11,250,000.00), which amount shall thereafter increase, on each
Computation Date after the date of this Agreement, by eighty
percent (80%) of the net profits after taxes, and with no
deduction for losses, that RasterOps earned during the previous
fiscal quarter.
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6.10 DEBT-NET WORTH RATIO. As of each Computation
Date, RasterOps shall have a ratio of Total Liabilities less
Subordinated Debt to Tangible Net Worth plus Subordinated Debt of
not more than 1.70 to 1.0.
6.11 PROFITABILITY. The losses incurred by RasterOps
on a consolidated basis for the fiscal quarters ending
December 30, 1994, and April 1, 1995 shall not exceed $700,000.00
and $200,000.00, respectively. RasterOps shall not have any loss
for the fiscal quarter ending July 1, 1995. RasterOps shall be
profitable, on a consolidated basis, before taxes and after taxes
on each Computation Date beginning September 30, 1995 and
continuing thereafter.
6.12 FURTHER ASSURANCES. At any time and from time to
time such Borrower shall execute and deliver such further
instruments and take such further action as may reasonably be
requested by Bank to effect the purposes of this Agreement.
7. NEGATIVE COVENANTS
Each Borrower covenants and agrees that, so long as any
credit hereunder shall be available and until payment in full of
the Obligations, such Borrower will not do any of the following:
7.1 EXTRAORDINARY TRANSACTIONS AND DISPOSAL OF ASSETS.
Enter into any transaction not in the ordinary and usual course
of such Borrower's business, including, but not limited to, the
sale, lease, or other disposition of, moving, relocation, or
transfer, whether by sale or otherwise, of such Borrower's
assets, other than (i) sales of Inventory in the ordinary and
usual course of such Borrower's business as presently conducted,
(ii) sales or other dispositions in the ordinary course of
business of assets that have become worn out or obsolete or that
are promptly being replaced, (iii) sales of Equipment having an
aggregate book value not to exceed One Hundred Thousand Dollars
($100,000) in any calendar year, for not less than fair market
value.
7.2 LOANS; CONTINGENT LIABILITIES. Except for
Permitted Investments, make or accrue any loans or advances of
money to any third party, or, except for Permitted Indebtedness,
guarantee or otherwise become in any way liable with respect to
the obligations of any third party except by endorsement of
instruments or items of payment for deposit to the account of
such Borrower or which are transmitted or turned over to Bank.
7.3 RESTRUCTURE. Change such Borrower's name; make
any material change in such Borrower's financial structure or
business operations; cause, permit or suffer any material change
in such Borrower's ownership; or suspend operation of such
Borrower's business; PROVIDED, that the (i) exercise by Scitex of
any warrants existing as of the Closing Date, or (ii) the
issuance of any stock to any officers, directors or any other
29
employees of such Borrower pursuant to such Borrower's employee
benefit plan as it exists as of the Closing Date, shall not
constitute a change in such Borrower's financial structure or
ownership for the purpose of this Section 7.3.
7.4 MERGERS OR ACQUISITIONS. Merge or consolidate
with or into any other business organization, or acquire directly
or indirectly all or substantially all of the capital stock or
property of another Person.
7.5 INDEBTEDNESS. Create, incur, assume or be or
remain liable with respect to any Indebtedness other than
Permitted Indebtedness.
7.6 ENCUMBRANCES. Create, incur, assume or suffer to
exist any mortgage, lien, security interest or other encumbrance
with respect to any of its property, or assign or otherwise
convey any right to receive income, including the sale of any
Accounts, except for Permitted Liens.
7.7 DISTRIBUTIONS. Pay any dividends or make any
other distribution or payment on account of or in redemption,
retirement or purchase of any capital stock; PROVIDED, that such
Borrower can redeem capital stock issued to any employee,
consultant, and director of such Borrower out of legally
available funds upon (i) termination of such employee's
employment agreement with such Borrower, (ii) termination of such
consultant's consulting agreement with such Borrower, or
(iii) resignation or termination of such directors from the board
of directors of such Borrower, but only to the extent provided
under any written employment agreement between any such employee
and Borrower, any written consulting agreement between any such
consultant and such Borrower or any written agreement between any
such director and such Borrower.
7.8 INVESTMENTS. Directly or indirectly make or own
any beneficial interest in (including stock, partnership
interest, or other securities of), or make any loan, advance, or
capital contribution to, any Person other than Permitted
Investments, and other than advances by any Borrower in or to
(i) any Borrower, or (ii) any Subsidiary of RasterOps that is not
a Borrower.
7.9 TRANSACTIONS WITH AFFILIATES. Directly or
indirectly enter into or permit to exist any material transaction
with any Person controlling, controlled by, or under common
control (whether by contract, ownership of voting securities, or
otherwise) with any Borrower except for transactions that are in
the ordinary course of such Borrower's business, upon fair and
reasonable terms that are no less favorable to such Borrower than
would be obtained in an arm's length transaction with a non-
affiliated Person.
30
7.10 SUBORDINATED DEBT. Make any payment in respect of
any Subordinated Debt except in compliance with the terms of such
Subordinated Debt, or amend any provision contained in any
documentation relating to the Subordinated Debt if such amendment
would adversely affect the interests of Bank.
7.11 COMPLIANCE. Fail to meet the minimum funding
requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur, or violate any law or
regulation, which violation could have a material adverse effect
on the condition or prospects of any Borrower.
7.12 INSTRUMENTS: SECURITY INTEREST. Accept any
promissory note or other instrument from any customer of such
Borrower as payment for any Inventory of such Borrower or
services performed by such Borrower without first notifying Bank
that it intends to accept a promissory note or other instrument;
PROVIDED, that such Borrower shall, immediately upon receipt,
deliver such promissory note or other instrument to Bank to hold
as Collateral under this Agreement.
7.13 CHATTEL PAPER. Accept or generate any Chattel
Paper in connection with the sale any Inventory of Borrower or
otherwise.
8. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an "Event of
Default" under this Agreement:
8.1 PAYMENT DEFAULT. If any Borrower fails to pay
when due and payable or when declared due and payable in
accordance with the Loan Documents, any portion of the
Obligations;
8.2 REPORTING, INSURANCE, FINANCIAL AND NEGATIVE
COVENANT DEFAULTS. If any Borrower fails to perform, keep or
observe any obligation, covenant or agreement under Sections 6.2,
6.6, 6.7, 6.8, 6.9, 6.10 or 6.11, or violates any of the
covenants contained in Article 7 of this Agreement;
8.3 OTHER COVENANT DEFAULTS. If any Borrower fails or
neglects to perform, keep, or observe any material term,
provision, condition, covenant, or agreement contained in this
Agreement, in any of the Loan Documents, or in any other present
or future agreement between any Borrower and Bank (other than the
monetary Obligations, insurance, and financial covenants and
negative covenants described in Sections 8.1 and 8.2 above or any
other covenant specifically dealt with in Section 8 of this
Agreement) and the same has not been cured to Bank's satisfaction
within thirty (30) days after any Borrower shall have received
written notice of any such failure from Bank;
31
8.4 MATERIAL ADVERSE EFFECT. If there occurs any
event that would have a Material Adverse Effect, which event
continues for thirty (30) days after any Borrower shall have
received written notice thereof;
8.5 ATTACHMENT. If any material portion of any
Borrower's assets is attached, seized, subjected to a writ or
distress warrant, or is levied upon, or comes into the possession
of any trustee, receiver or Person acting in a similar capacity
and such attachment, seizure, writ or distress warrant or levy
has not been removed, discharged or rescinded within ten (10)
days, or if any 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, or if a judgment or other
claim becomes a lien or encumbrance upon any material portion of
any Borrower's assets, or if a notice of lien, levy, or
assessment is filed of record with respect to any of any
Borrower's assets by the United States Government, or any
department, agency, or instrumentality thereof, or by any state,
county, municipal, or governmental agency, and the same is not
paid within twenty (20) days after any Borrower receives notice
thereof, PROVIDED that none of the foregoing shall constitute an
Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contesting by
any Borrower (PROVIDED that no Advances will be made during such
cure period);
8.6 INSOLVENCY. If an Insolvency Proceeding is
commenced by any Borrower, or if an Insolvency Proceeding is
commenced against any Borrower and is not dismissed within thirty
(30) days (PROVIDED that no Advances will be made prior to the
dismissal of such case);
8.7 OTHER AGREEMENTS. If there is a default in any
agreement to which any Borrower is a party with a third party or
parties resulting in a right by such third party or parties,
whether or not exercised, to accelerate the maturity of any
material Indebtedness.
8.8 SUBORDINATED DEBT. If any Borrower makes any
payment on account of Subordinated Debt, except to the extent
such payment is allowed under any subordination agreement entered
into with Bank;
8.9 JUDGMENTS. If a judgment or judgments for the
payment of money in an amount, individually or in the aggregate,
of Fifty Thousand Dollars ($50,000) shall be rendered against any
Borrower and shall remain unsatisfied and unstayed for a period
of ten (10) days (PROVIDED that no Advances will be made prior to
the satisfaction or stay of such judgment); or
8.10 MISREPRESENTATIONS. If any material
misrepresentation or material misstatement exists now or
hereafter in any warranty, representation, statement, or report
32
made to Bank by any Borrower or any officer, employee, agent, or
director of any Borrower.
8.11 DEFAULT UNDER AGREEMENTS WITH ▇▇▇▇ ATLANTIC AND
IBM CREDIT. If any Borrower fails or neglects to pay or perform
any obligation under any of its agreements with ▇▇▇▇ Atlantic -
Tricon Leasing Corporation and/or IBM Credit and any such failure
or neglect is not remedied within any applicable cure period
PROVIDED in any such agreements, or a default or event of default
occurs under any such agreements which default or event of
default is not waived by ▇▇▇▇ Atlantic-Tricon Leasing Corporation
and/or IBM Credit.
9. BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES. Upon the occurrence of an
Event of Default, 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 each Borrower:
(a) Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable (PROVIDED that upon the occurrence of
an Event of Default described in Section 8.6 all Obligations
shall become immediately due and payable without any action by
Bank);
(b) Cease advancing money or extending credit to
or for the benefit of Borrowers under this Agreement or under any
other agreement between any Borrower and Bank;
(c) in Bank's reasonable discretion, activate the
Factoring Agreement;
(d) Settle or adjust disputes and claims directly
with account debtors for amounts, upon terms and in whatever
order that Bank reasonably considers advisable;
(e) Without notice to or demand upon borrowers'
make such payments and do such acts as Bank considers necessary
or reasonable to protect its security interest in the Collateral.
Each Borrower agrees to assemble the Collateral if Bank so
requires, and to make the Collateral available to Bank as Bank
may designate. Each Borrower authorizes Bank to enter the
premises where the Collateral is located, to take and maintain
possession of the Collateral, or any part of it, and to pay,
purchase, contest, or compromise any encumbrance, charge, or lien
which in Bank's determination appears to be prior or superior to
its security interest and to pay all expenses incurred in
connection therewith. Each Borrower hereby grants Bank a license
and the right to enter into possession of such premises and to
occupy the same in order to exercise any of Bank's rights or
remedies PROVIDED herein, at law, in equity, or otherwise, and if
33
such premises are owned by such Borrower, such Borrower agrees
not to charge Bank for Bank's use of such premises;
(f) Without notice to Borrowers set off and apply
to the Obligations any and all (i) balances and deposits of
Borrowers held by Bank, or (ii) indebtedness at any time owing to
or for the credit or the account of Borrowers held by Bank;
(g) Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell
(in the manner PROVIDED for herein) the Collateral. Bank is
hereby granted a license or other right, solely pursuant to the
provisions of this section 9.1, to use, without charge, each
Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it
pertains to the Collateral, solely in completing production of,
advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this
section 9.1, each Borrower's rights under all licenses and all
franchise agreements shall inure to Bank's benefit;
(h) Sell the Collateral at either one or more
public or private sales, or both, by way of one or more contracts
or transactions, in lots or in bulk, for cash or on terms or any
combination thereof, in such manner and at such times and places
(including Borrowers' premises) as Bank determines is
commercially reasonable. Each Borrower hereby agrees that seven
(7) days' written notice to Borrowers of any public or private
sale or other disposition of the Collateral shall be reasonable
notice thereof;
(i) Bank may credit bid and purchase at any
public sale; and
(j) Any deficiency that exists after disposition
of the Collateral as PROVIDED above will be paid immediately by
Borrowers.
9.2 POWER OF ATTORNEY. Each Borrower hereby
irrevocably appoints Bank (and any of Bank's designated officers,
or employees) as such Borrower's true and lawful attorney to:
(a) At such time or times hereafter as Bank, in its
sole discretion, may determine:
(i) endorse such Borrower's name on any checks or
other forms of payment or security that may come
into Bank's possession;
(ii) sign the name of such Borrowers on any of the
documents described in Section 4.3; and
34
(iii) do all other acts and things necessary, in
Bank's determination, to fulfill such Borrower's
Obligations under this Agreement.
(b) At such time or times upon the occurrence and
continuation of an Event of Default:
(i) send requests to account debtors for
verification of Accounts;
(ii) sign such Borrower's name on any invoice or
▇▇▇▇ of lading relating to any Account, drafts
against account debtors, schedules and assignments
of Accounts, verifications of Accounts, and
notices to account debtors;
(iii) make, settle, and adjust all claims under
and decisions with respect to such Borrower's
policies of insurance; and
(iv) settle and adjust disputes and claims
respecting the Accounts directly with account
debtors, for amounts upon terms which Bank
determines to be reasonable.
The appointment of Bank as such Borrower's attorney in fact, and
each and every one of Bank's rights and powers, being coupled
with an interest, is irrevocable until all of the Obligations
have been fully repaid and performed.
9.3 BANK EXPENSES; ATTORNEYS' FEES AND COSTS.
Borrowers shall pay all reasonable out-of-pocket expenses of Bank
in connection with the preparation of, or any payment under or
termination of, the Loan Documents (including the reasonable fees
and expenses of all of its counsel retained in connection with
the Loan Documents, the transactions contemplated thereby, or any
repayment or termination thereunder). If, at any time or times,
regardless of the existence of an Event of Default, Bank shall
employ counsel or other professional advisors for advice or other
representation or shall incur reasonable legal, appraisal,
accounting, consulting or other costs and expenses in connection
with:
(a) any amendment, modification or waiver of, or
consent with respect to, any of the Loan Documents;
(b) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Bank, any Borrower,
or any other Person) in any way relating to the Collateral, any
of the Loan Documents, including any litigation, contest,
dispute, suit, case, proceeding or action, and any appeal or
review thereof, in connection with a case commenced by or against
any Borrower, or any other Person that may be obligated to Bank
by virtue of the Loan Documents, under the United States
35
Bankruptcy Code or any other applicable Federal, state, or
foreign bankruptcy or other similar law;
(c) any attempt to enforce any rights of Bank
against any Borrower, or any other Person that may be obligated
to Bank by virtue of any of the Loan Documents; and/or
(d) any attempt to inspect, verify, protect,
collect, sell, liquidate or otherwise dispose of the Collateral;
then, and in any such event, the reasonable fees of such
attorneys and other professional advisors arising from such
services, including those of any appellate proceedings, and all
reasonable expenses, costs, charges and other fees incurred by
such counsel or other professionals in any way or respect arising
in connection with or relating to any of the events or actions
described in this Section 9.3 shall be payable, on demand, by
Borrowers to Bank, in the manner described in Section 2.4(c) of
this Agreement, and shall be additional Obligations secured by
the Collateral. All fees and expenses described in this
Section 9.3, together with those expenses described in
Section 9.4 of this Agreement, shall be referred to hereinafter
collectively, as the "Bank Expenses".
9.4 BANK EXPENSES; PAYMENT MADE ON BEHALF OF BORROWERS.
If any Borrower fails to pay any amounts or furnish
any required proof of payment due to third Persons as required
under the terms of this Agreement, then Bank may do any or all of
the following: (a) make payment of the same or any part thereof;
(b) set up such reserves in Borrowers' loan account as Bank deems
necessary to protect Bank from the exposure created by such
failure; or (c) obtain and maintain insurance policies of the
type discussed in Section 6.6 of this Agreement, and take any
action with respect to such policies as Bank deems prudent. Any
amounts paid or deposited by Bank shall constitute Bank Expenses,
shall be immediately due and payable, and shall bear interest at
the then applicable rate hereinabove PROVIDED, and shall be
secured by the Collateral. Any payments made by Bank shall not
constitute an agreement by Bank to make similar payments in the
future or a waiver by Bank of any Event of Default under this
Agreement.
9.5 REMEDIES CUMULATIVE. Bank's rights and remedies
under this Agreement, the Loan Documents, and all other
agreements are cumulative and may be exercised singly or
concurrently and are not exclusive of any rights and remedies
PROVIDED by law. Bank shall have all other rights and remedies
as PROVIDED under the Code, 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 Event of Default on any Borrower's part
shall be deemed a continuing waiver. No delay by Bank shall
constitute a waiver, election, or acquiescence by it.
36
10. WAIVERS: INDEMNIFICATION: REVIVAL.
10.1 DEMAND: PROTEST AND OTHER WAIVERS. EACH BORROWER
WAIVES (I) 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 ACCOUNTS, DOCUMENTS, INSTRUMENTS,
CHATTEL PAPER, AND GUARANTEES AT ANY TIME HELD BY BANK ON WHICH
SUCH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND
CONFIRMS WHATEVER BANK MAY DO IN THIS REGARD; (II) NOTICE PRIOR
TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR
SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING
BANK TO EXERCISE ANY OF BANK'S REMEDIES, INCLUDING THE ISSUANCE
OF AN IMMEDIATE WRIT OF POSSESSION; (III) THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTION LAWS; (IV) ANY RIGHT SUCH
BORROWER MAY HAVE UPON PAYMENT IN FULL OF THE OBLIGATIONS TO
REQUIRE BANK TO TERMINATE ITS SECURITY INTEREST IN THE COLLATERAL
OR IN ANY OTHER PROPERTY OF SUCH BORROWER UNTIL TERMINATION OF
THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS AND THE EXECUTION BY
SUCH BORROWER, AND BY ANY PERSON WHOSE LOANS TO SUCH BORROWER IS
USED IN WHOLE OR IN PART TO SATISFY THE OBLIGATIONS, OF AN
AGREEMENT INDEMNIFYING BANK FROM ANY LOSS OR DAMAGE BANK MAY
INCUR AS THE RESULT OF DISHONORED CHECKS OR OTHER ITEMS OF
PAYMENT RECEIVED BY BANK FROM SUCH BORROWER OR ANY ACCOUNT DEBTOR
AND APPLIED TO THE OBLIGATIONS; AND (V) NOTICE OF ACCEPTANCE
HEREOF.
IF AND TO THE EXTENT THAT ANY OBLIGATION OF ANY
BORROWER TO BANK SHALL BE CONSIDERED AN OBLIGATION OF GUARANTY OR
SURETYSHIP, THEN THE FOLLOWING WAIVER SHALL APPLY WITH RESPECT TO
EACH SUCH PERSON: SUCH BORROWER AGREES THAT BANK SHALL BE UNDER
NO OBLIGATION TO: (i) MARSHAL ANY ASSETS IN FAVOR OF SUCH
PERSON, (ii) TO PROCEED FIRST AGAINST ANY OTHER PERSON OR ANY
PROPERTY OF ANY OTHER PERSON OR AGAINST ANY COLLATERAL, (iii)
ENFORCE FIRST ANY OTHER GUARANTY OBLIGATIONS WITH RESPECT TO, OR
SECURITY FOR, THE OBLIGATIONS, (iv) PURSUE ANY OTHER REMEDY IN
BANK'S POWER THAT SUCH BORROWER MAY NOT BE ABLE TO PURSUE ITSELF
AND THAT MAY LIGHTEN SUCH BORROWER'S BURDEN, ANY RIGHT TO WHICH
SUCH BORROWER HEREBY EXPRESSLY WAIVES.
TO THE EXTENT THAT ANY BORROWER SHALL BE REQUIRED TO
REPAY A PORTION OF ANY OBLIGATIONS WHICH SHALL EXCEED THE GREATER
OF (X) THE AMOUNT OF SUCH BORROWING ACTUALLY RECEIVED BY SUCH
BORROWER AND (Y) THE AMOUNT WHICH SUCH BORROWER WOULD OTHERWISE
HAVE PAID IF EACH BORROWER HAD REPAID THE AGGREGATE AMOUNT OF
SUCH BORROWING IN THE SAME PROPORTION AS SUCH BORROWER'S NET
WORTH IMMEDIATELY AFTER THE CLOSING DATE BEARS TO THE AGGREGATE
NET WORTH OF ALL OF BORROWERS IMMEDIATELY AFTER THE CLOSING DATE,
THEN SUCH BORROWER SHALL BE REIMBURSED BY THE OTHER BORROWER FOR
THE AMOUNT OF SUCH EXCESS, PRO RATA, BASED UPON THEIR RESPECTIVE
NET WORTHS IMMEDIATELY AFTER THE CLOSING DATE. THIS PARAGRAPH IS
INTENDED ONLY TO DEFINE THE RELATIVE RIGHTS OF THE borrowers' AND
NOTHING SET FORTH IN THIS PARAGRAPH IS INTENDED TO OR SHALL
IMPAIR THE OBLIGATIONS OF borrowers' JOINTLY AND SEVERALLY, TO
37
PAY TO BANK THE OBLIGATIONS AS AND WHEN THE SAME SHALL BECOME DUE
AND PAYABLE IN ACCORDANCE WITH THE TERMS HEREOF.
EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS
AND THE WAIVERS SET FORTH IN SECTION 12 OF THIS AGREEMENT, ARE A
MATERIAL INDUCEMENT TO BANK'S ENTERING INTO THIS AGREEMENT AND
THAT BANK IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH SUCH BORROWER.
10.2 BANK'S LIABILITY FOR COLLATERAL. So long as Bank
complies with its Obligations, if any, under Section 9207 of the
Code, Bank shall not in any way or manner be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any
lose 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 the Collateral shall be borne by
Borrowers.
10.3 INDEMNIFICATION. Each Borrower shall defend,
indemnify and hold harmless Bank and its officers, employees, and
agents against: (a) all Obligations, demands, claims, and
liabilities claimed or asserted by any other party in connection
with the transactions contemplated by this Agreement, and (b) all
losses or Bank Expenses in any way suffered, incurred, or paid by
Bank as a result of or in any way arising out of, following, or
consequential to transactions between Bank and Borrowers whether
under this Agreement, or otherwise (including without limitation
attorneys fees and expenses), except for losses caused by Bank's
gross negligence or willful misconduct or Bank's breach of any
specific Obligations to Borrowers as set forth in this Agreement.
10.4 DISGORGEMENT: REVIVAL OF OBLIGATIONS. In the
event that any proceeds of Collateral paid or distributed to or
realized by the Bank, or any other payment made to Bank pursuant
to the terms hereof, is required to be disgorged, returned,
repaid, turned over, or refunded to the Borrowers or to any other
Person, the Obligations shall be reinstated, revived, or restored
by the amount that is required to be disgorged, returned, repaid,
turned over, or refunded, the same as if such payment,
distribution, or realization had never been made. The
Obligations, as reinstated, revived, or restored, shall continue
to be secured by the Collateral.
11. NOTICES
Unless otherwise PROVIDED in this Agreement, all
notices or demands by any party relating to this Agreement or any
other agreement entered into in connection herewith shall be in
writing and (except for financial statements and other
informational documents which may be sent by first-class mail,
postage prepaid) shall be personally delivered or sent by
certified mail, postage prepaid, return receipt requested, or by
38
prepaid telefacsimile to Borrowers or to Bank, as the case may
be, at its addresses set forth below:
If to Borrowers: RasterOps
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: R. ▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Bank: Silicon Valley Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Silicon Valley Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
The parties hereto may change the address at which they are
to receive notices hereunder, by notice in writing in the
foregoing manner given to the other.
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF
BORROWERS AND BANK HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION
OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF SANTA
▇▇▇▇▇, STATE OF CALIFORNIA. EACH BORROWER AND BANK HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
39
ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR
ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON
LAW OR STATUTORY CLAIMS.
13. GENERAL PROVISIONS
13.1 SUCCESSORSAND ASSIGNS. This Agreement shall bind
and inure to the benefit of the respective successors and
permitted assigns of each of the parties; PROVIDED, HOWEVER, that
neither this Agreement nor any rights hereunder may be assigned
by any Borrower without Bank's prior written consent, which
consent may be granted or withheld in Bank's sole discretion.
Bank shall have the right without the consent of or notice to
Borrowers to sell, transfer, negotiate, or grant participations
in all or any part of, or any interest in Bank's rights and
benefits hereunder.
13.2 TIME OF ESSENCE. Time is the essence for the
performance of all Obligations set forth in this Agreement.
13.3 SEVERABILITY OF PROVISIONS. Each provision of
this Agreement shall be severable from other provision of
this Agreement for the purpose of determining the legal
enforceability of any specific provision.
13.4 AMENDMENTS IN WRITING, INTEGRATION. This
Agreement cannot be changed or terminated orally. All prior
agreements, understandings, representations, warranties, and
negotiations between the parties hereto with respect to the
subject matter of this Agreement, if any, are merged into this
Agreement.
13.5 COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall
be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement.
13.6 SURVIVAL. All covenants, representations and
warranties made in this Agreement shall continue in full force
and effect so long as any Obligations remain outstanding. The
Obligations of each Borrower to indemnify Bank with respect to
the expenses, damages, losses, costs and liabilities described in
40
Section 10.3 shall survive until all applicable statute of
limitations periods with respect to actions that may be brought
against Bank have run.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
"Borrowers"
RASTEROPS
By:/S/(illegible)
---------------------
Title: CFO
------------------
TRUEVISION, INC.
By:/s/(illegible)
---------------------
Title: CFO
------------------
"Bank"
SILICON VALLEY BANK
By:/s/▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
Title:Vice President
------------------
41
EXHIBIT A
SECOND AMENDED AND RESTATED REVOLVING PROMISSORY NOTE
$5,000,000 Santa Clara, California
December ____, 1994
FOR VALUE RECEIVED, the undersigned, RASTEROPS, a California
corporation and TRUEVISION, INC., an Indiana corporation (which corporations are
referred to individually as "Borrower" and collectively as "Borrowers"), promise
to pay to the order of Silicon Valley Bank ("Bank"), or its registered assigns,
at such place as the holder hereof may designate, in lawful money of the United
States of America, the aggregate unpaid principal amount of all advances
("Advances") made by Bank to Borrowers under this Second Amended and Restated
Revolving Promissory Note ("Revolving Note"), up to a maximum principal amount
of Five Million and 00/100 Dollars ($5,000,000). Borrowers shall also pay
interest on the aggregate unpaid principal amount of such Advances at the rates
and in accordance with the terms of the Second Amended and Restated Loan and
Security Agreement between Borrowers and Bank of even date herewith, as amended
from time to time (the "Loan Agreement") on the last Business Day (as defined
below) of each month. The entire principal amount and all accrued interest
shall be due and payable in full on December 31, 1995.
As used herein, the term "Business Day" means any day that is not a
Saturday, Sunday, or other day on which banks in the State of California are
authorized or required to be closed.
This Revolving Note is issued pursuant to the Loan Agreement, which
shall govern the rights and obligations of each Borrower with respect to all
Obligations hereunder. All of the terms, covenants and conditions of the Loan
Agreement and all other instruments evidencing or securing the indebtedness
hereunder (including, without limitation, the "Loan Documents" as defined in the
Loan Agreement) are hereby made a part of this Revolving Note and are deemed
incorporated herein in full. All capitalized terms used herein, unless
otherwise specifically defined in this Revolving Note, shall have the meanings
ascribed to them in the Loan Agreement.
Each Borrower irrevocably waives the right to direct the application
of any and all payments at any time hereafter received by Bank from or on behalf
of any Borrower, and each Borrower irrevocably agrees that Bank shall have the
continuing exclusive right to apply any and all such payments against the then
due and owing obligations of any Borrower as Bank may deem advisable. In the
absence of a specific determination by Bank with respect thereto, all payments
shall be applied in the following order: (a) then due and payable fees and
expenses; (b) then due and payable interest payments and mandatory prepayments;
and (c) then due and payable principal payments and optional prepayments.
1
Upon and after the occurrence of an Event of Default, this Revolving
Note may, as provided in the Loan Agreement, and without demand, notice or legal
process of any kind, be declared, and upon such declaration immediately shall
become, or upon certain circumstances set forth in the Loan Agreement may become
without declaration, due and payable in full.
Bank is hereby authorized by Borrowers to endorse on Bank's books and
records each Advance made by Bank under this Note and the amount of each payment
or prepayment of principal of each such Advance received by Bank; it being
understood, however, that failure to make any such endorsement (or any errors in
notation) shall not affect the obligations of any Borrower with respect to
Advances made hereunder, and payments of principal by each Borrower shall be
credited to Borrowers notwithstanding the failure to make a notation (or any
errors in notation) thereof on such books and records.
Borrowers promise to pay Bank all costs and expenses of collection of
this Revolving Note and to pay all reasonable attorneys' fees incurred in such
collection or in any suit or action to collect this Revolving Note or in any
appeal thereof. Each Borrower waives presentment, demand, protest, notice of
protest, notice of dishonor, notice of nonpayment, and any and all other notices
and demands in connection with the delivery, acceptance, performance, default or
enforcement of this Revolving Note, as well as any applicable statute of
limitations. No delay by Bank in exercising any power or right hereunder shall
operate as a waiver of any power or right. Time is of the essence as to all
obligations hereunder.
This Revolving Note shall be deemed to be made under, and shall be
construed in accordance with and governed by, the laws of the State of
California, excluding conflicts of laws principles.
2
This Revolving Note amends, restates and supersedes the Amended and
Restated Revolving Promissory Note dated as of May 26, 1994, by Borrowers in
favor of Bank (the "Amended Note").
Each Borrower shall be jointly and severally liable for all
indebtedness and obligations under this Revolving Note.
IN WITNESS WHEREOF, Borrowers have caused this Revolving Note to be
duly executed and delivered to Bank on the date first above written.
("Borrowers")
RASTEROPS
By:______________________________
Title:___________________________
TRUEVISION, INC.
By:______________________________
Title:___________________________
3
SCHEDULE 2.1
BORROWING CERTIFICATE
The undersigned hereby certifies as follows:
I, ____________________________, am the duly elected and acting __________
_______________ of RASTEROPS (a "Borrower").
This certificate is delivered pursuant to Section 2.1 of that certain
Second Amended and Restated Loan and Security Agreement by and between Silicon
Valley Bank ("Bank") and RasterOps and Truevision, Inc. (the "Loan Agreement").
RasterOps and Truevision, Inc. are referred to collectively as "Borrowers" and
individually as a "Borrower." The terms used in this Borrowing Certificate which
are defined in the Loan Agreement have the same meaning herein as ascribed to
them therein.
RasterOps, as agent for each Borrower, is confirming its telephone request
made on ____________________, 19__ for an Advance as follows:
(a) The date on which the Advance is to be made is,
_______________,19__
(b) The amount of the Advance is to be $___________________.
All representations and warranties of each Borrower stated in the Loan
Agreement are true, accurate and complete in all material respects as of the
date of the telephone request for an Advance confirmed by this Borrowing
Certificate; provided, however, that those representations and warranties
expressly referring to another date shall be true, accurate and complete in all
material respects as of such date.
IN WITNESS WHEREOF, this Borrowing Certificate is executed by the
undersigned as of this _______ day of _______________________ 19__.
RASTEROPS
By: __________________________________
Title: _______________________________
SCHEDULE 5
DISCLOSURE STATEMENT
DECEMBER, 1994
The following disclosures constitute the RasterOps Disclosure Schedule as
referenced in the Amended and Restated Loan and Security Agreement, dated as of
__________, 1994 (the "Agreement") by and among RasterOps ("RasterOps"),
Truevision, Inc. ("Truevision") and Silicon Valley Bank.
Each of these disclosures applies to each Section of the Agreement to which it
pertains, whether or not the specific Section numbers are indicated below. All
capitalized terms used herein shall, unless the context indicates otherwise,
have the definition ascribed to them in the Agreement. The disclosures herein
should be read together and are qualified by the other pertinent information
contained herein.
Schedule 5.1 Organization and Qualification.
See attached Articles of Incorporation and By-laws of RasterOps and Truevision,
Inc.
Schedule 5.4 Bona Fide Accounts.
RasterOps and Truevision provide customers with industry standard rights of
return on their respective products.
Schedule 5.7 Legal Proceedings.
1) In re RasterOps Corporation Securities Litigation, United States District
Court, Northern District of California No. C-92-20349-RMW (EAI).
In June, 1992, two virtually identical class action lawsuits were filed against
the Company and certain of its current and former officers and directors
alleging violations of the federal securities laws. The original complaints
alleged, among other things, that the Company and the individual defendants
artificially inflated the price of RasterOps Common Stock by making
misrepresentations and omissions of material facts in various public statements
issued during the alleged class period, beginning October 18, 1990 and ending
October 2, 1991 and that certain officers and directors sold shares of RasterOps
Common Stock during the alleged class period while in possession of material
non-public information. The complaints sought unspecified compensatory damages
and costs and attorneys' fees on behalf of purchasers of the Company's Common
Stock during the alleged class period. On August 26, 1992, the plaintiffs filed
an amended consolidated complaint consolidating the two above-referenced actions
and adding direct and derivative causes of action for violation by the
individual defendants of federal and state prohibitions against trading in
securities while in possession of material non-public information. The court
granted defendants' motions to dismiss the consolidated complaint on January 6,
1993. In February 1993, plaintiffs filed a second amended class action
complaint asserting claims for violation of the federal securities laws and a
derivative complaint purporting to assert claims on behalf of the Company
against the individual defendants for breach of fiduciary duty and violation of
state law prohibiting trading on the basis of material non-public information.
2) Radius, Inc. v. RasterOps Corporation, United States District Court, Northern
District of California, Case No. C-94 20119.
Radius, Inc. ("Radius") has filed suit against RasterOps, alleging False
Advertising, Unfair Trade Practice and Trade Libel in connection with a certain
advertisement that has been circulated by RasterOps. Radius is seeking an
injunction against RasterOps' use of the advertisement in question as well as
unspecified compensatory and punitive damages.
Schedule 5.13 Subsidiaries.
RasterOps has the following subsidiaries:
- RasterOps Foreign Sales Corporation
Jurisdiction of Incorporation: Barbados
Shares Outstanding: 1,000
Shares Owned Directly: 1,000
- RasterOps S.A.R.L.
Jurisdiction of Incorporation: France
Shares Outstanding: 500
Shares Owned Directly: 499
- RasterOps France S.A.R.L.
Jurisdiction of Incorporation: France
Shares Outstanding: 500
Shares Owned Directly: 500
- RasterOps U.K. Limited
Jurisdiction of Incorporation: United Kingdom
Shares Outstanding: 1,000
Shares Owned Directly: 999
- Raster Image Processing Systems
Jurisdiction of Incorporation: Delaware
Shares Outstanding: 1,000
Shares Owned Directly 1,000
- Truevision, Inc.
Jurisdiction of Incorporation: Indiana
Shares Outstanding 1,000
Shares Owned Directly 1,000
- RasterOps GmbH
Jurisdiction of Incorporation: Germany
Shares Outstanding: 1
Shares Owned Directly 1
- RasterOps B.V.
Jurisdiction of Incorporation: The Netherlands
Shares Outstanding: 1
Shares Owned Directly: 1
- RasterOps Japan, Inc.
Jurisdiction of Incorporation: California
Shares Outstanding: 1,000
Shares Owned Directly: 1,000
Schedule 5.16 Borrowers' Collateral Locations.
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇ Schipol South
The Netherlands
Australia
(▇▇▇▇▇▇▇ Optical)
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Canada
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
CTS
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
RasterOps - Main Bldg.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇
RasterOps - ▇▇▇▇. ▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇
SCI - San ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
SCI - South Dakota
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Startech
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Truevision, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SCHEDULE 6.3(a)
DAILY SALES AND COLLECTIONS REPORT
SILICON VALLEY BANK
COLLATERAL RECONCILIATION
------------------------------------------------------------------------------
------------------------------------------------------------------------------
RECONCILIATION OF A/R AGING TO GENERAL LEDGER
For the period from: / / to / /
------------------------------------------------------------------------------
------------------------------------------------------------------------------
PREVIOUS A/R AGING - DATED: _____/_____/_____ $
------------------------------------------------------------------------------
-------------
a) Add: Invoices $
b) Debit Memos $
c) Deduct: Credit Memos $( )
NET SALES (per invoice/credit memo register)-
(total of a thru c) $
------------------------------------------------------------------------------
d) Deduct: A/R Cash Receipts $( )
e) Cash Discounts $( )
f) Adjustments + or
(-)(explain): $
----------------------------------------------
----------------------------------------------
TOTAL DEDUCTIONS TO A/R (per cash receipts journal)-
(total of d thru f) $( )
------------------------------------------------------------------------------
OTHER ADJUSTMENTS and/or JOURNAL ENTRIES (explain):
Write-offs $( )
----------------------------------------------
$
----------------------------------------------
$
----------------------------------------------
TOTAL ADJUSTMENTS + or (-) $
------------------------------------------------------------------------------
-------------
TOTAL MUST EQUAL TOTAL OF ATTACHED A/R
AGING DATED: _____/_____/_____ $
------------------------------------------------------------------------------
GENERAL LEDGER A/R BALANCE as of: _____/_____/_____ $
------------------------------------------------------------------------------
DIFFERENCE BETWEEN AGING and G/L (explain): $
------------------------------------------------------------------------------
-------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
RECONCILIATION OF A/R AGING TO DAILY TRANSACTION REPORTS
For the month of: _____________, 199_
------------------------------------------------------------------------------
------------------------------------------------------------------------------
BALANCE FROM TRANS. REPORT
#__________ DATED: _____/_____/_____ $
------------------------------------------------------------------------------
-------------
Add: A/R ▇▇▇▇▇▇▇▇ in Transit (list total by date & TR#):
TOTAL ▇▇▇▇▇▇▇▇ In Transit $
------------------------------------------------------------------------------
Deduct: Credit Memos In Transit (list total by date & TR#):
TOTAL Credit Memos In Transit $( )
------------------------------------------------------------------------------
Deduct: A/R Cash Receipts In Transit (list by date & TR#):
TOTAL A/R Cash Receipts In Transit $( )
------------------------------------------------------------------------------
Other Adjustments (explain & list by date & TR#)
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
TOTAL Other Adjustments + or (-) $
------------------------------------------------------------------------------
TOTAL PER ATTACHED A/R AGING DATED: _____/_____/_____ $
------------------------------------------------------------------------------
------------------------------------------------------------------------------
COMPANY NAME: RASTEROPS SILICON VALLEY BANK:
------------------------------------------------------------------------------
__________________
AUTHORIZED SIGNATURE: __________________ RECEIVED BY: _____________
DATE: __________________ DATE: _____________
SILICON VALLEY BANK
DAILY TRANSACTION REPORT #: ________
------------------------------------------------------------------------------
------------------------------------------------------------------------------
ACCOUNTS RECEIVABLE COLLATERAL ACTIVITY**:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
**EXCLUDES DISTRIBUTOR ACCOUNTS RECEIVABLES
BEGINNING ACCOUNTS RECEIVABLE BALANCE AS OF: _____/_____/____ $
-----------
-----------
FROM SCHEDULE A:
a) Add: Invoices $
b) Debit Memos $
c) Deduct: Credit Memos $( )
NET SALES (per invoice/credit memo register)-
(total of a thru c) $
------------------------------------------------------------------------------
FROM SCHEDULE B:
d) Deduct: A/R Cash Receipts $( )
e) Cash Discounts $( )
f) Adjustments + or
(-) (explain): $
----------------------------------------------
----------------------------------------------
TOTAL DEDUCTIONS TO A/R (per cash receipts journal)-
(total of d thru f) $( )
------------------------------------------------------------------------------
g) OTHER ADJUSTMENTS and/or JOURNAL ENTRIES (explain):
h) Write-offs $( )
----------------------------------------------
i) $
----------------------------------------------
$
----------------------------------------------
TOTAL ADJUSTMENTS + or (-)
(total of g thru i) $
------------------------------------------------------------------------------
NEW ACCOUNTS RECEIVABLE BALANCE PER THIS REPORT: $
-----------
-----------
Less: Total Ineligible Accounts Receivables: $( )
-----------
TOTAL ELIGIBLE ACCOUNTS RECEIVABLE: $
-----------
A) A/R FUNDS AVAILABLE** @: 65% (OR LINE LIMITS $5,000,000) $
------------------------------------------------------------------------------
------------------------------------------------------------------------------
DISTRIBUTOR COLLATERAL ACTIVITY*:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
*▇▇▇▇▇▇, TECH DATA, MERISEL & INTELLIGENT ELECTRONICS ONLY
BEGINNING DISTRIBUTOR ACCOUNTS RECEIVABLE BALANCE AS OF:
____/____/____/ $
-----------
-----------
a) Add: Ivoices $
b) Deduct: A/R Cash Receipts $( )
c) Adjustments + or (-) (explain): $
S
-----------
ENDING DISTRIBUTOR ACCOUNTS RECEIVABLE
BALANCE PER THIS REPORT: $
-----------
-----------
Less: Total Ineligible Distributor Receivables: $
-----------
TOTAL ELIGIBLE DISTRIBUTOR ACCOUNTS RECEIVABLE: $
-----------
B) DISTRIBUTOR A/R FUNDS AVAILABLE @:
40% (OR LINE LIMIT $5,000,000) $
------------------------------------------------------------------------------
------------------------------------------------------------------------------
C) TOTAL FUNDS AVAILABLE @:
(A) + (B) OR LINE LIMIT $5,000,000
-----------
D) LESS: OUTSTANDING UNDER LETTER OF CREDIT SUB-LIMIT $( )
-----------
E) LESS: OUTSTANDING UNDER FOREIGN EXCHANGE SUB-LIMIT $( )
-----------
F) ADJUSTED FUNDS AVAILABLE @:
LINE (C) - LINE (B) - LINE (C) OR $5,000,000 $
------------------------------------------------------------------------------
------------------------------------------------------------------------------
LOAN ACTIVITY
------------------------------------------------------------------------------
------------------------------------------------------------------------------
CURRENT LOAN BALANCE: $
-----------
-----------
Less: Collections included w/ this report
(From Schedule B)
-----------
(from Cash Collateral Account #▇▇▇▇▇▇▇▇-70)
Add: Advance requested this report $
-----------
(to General Account #▇▇▇▇▇▇▇▇-70)
G) NEW LOAN BALANCE PER THIS REPORT: $
-----------
-----------
NET FUNDS AVAILABLE / (OVERADVANCE):
LINE (F) - LINE (G) PER THIS REPORT $
-----------
-----------
COMPANY NAME: RASTEROPS SILICON VALLEY BANK:_____________
------------------------------------------------------------------------------
__________________
AUTHORIZED SIGNATURE: __________________ RECEIVED BY: _____________
DATE: __________________ DATE: _____________
SILICON VALLEY BANK
SCHEDULE A - ACCOUNTS RECEIVABLES ASSIGNMENTS
REPORT #: _____________
We hereby assign the following invoices, credit memos and debit memos to Silicon
Valley Bank:
INVOICE DATE INVOICE# INVOICE AMT. CUSTOMER NAME
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
------------ ------------ ------------ -------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Invoices:
-------------------------------------------------------------------------------
Total Debit Memos:
-------------------------------------------------------------------------------
Total Credit Memos:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
NET ASSIGNMENTS
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
COMPANY NAME: RASTEROPS SILICON VALLEY BANK:
-------------------------------------------------------------------------------
__________________
AUTHORIZED SIGNATURE: __________________ RECEIVED BY: ______________
DATE: __________________ DATE: ______________
SILICON VALLEY BANK
SCHEDULE B-A/R COLLECTIONS
REPORT #: _____________
----------------------------------------------------------------------------------------------------
INVOICE AMOUNT NET OVER /
DATE CUSTOMER NAME: NUMBER CREDITED TO A/R CASH SHORT / DISC. MISC. CASH
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
TOTALS
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
COMPANY NAME: RASTEROPS SILICON VALLEY BANK:_____________
__________________
AUTHORIZED SIGNATURE: __________________ RECEIVED BY: _____________
DATE: __________________ DATE: _____________
SILICON VALLEY BANK
SCHEDULE C - INELIGIBLE ADJUSTMENTS*
(A) INELIGIBLE** AMOUNT AS OF:___________ $
------------
1. Amounts over 90 days past invoice date ------------
2. Balance of 50% over 90 day accounts ------------
3. 25% Concentration Limitation ------------
4. Credit Balances > 90 days ------------
5. Foreign Accounts*** ------------
6. Governmental Accounts ------------
7. Contra Accounts ------------
8. Promotion or Demo Accounts ------------
9. Intercompany/Employee Accounts ------------
10. Other (please explain on reverse) ------------
(B) TOTAL INELIGIBLE ADJUSTMENTS: $
------------
REVISED INELIGIBLE (LINE (A) +/- LINE (B)) $ -----------
-----------
*Excludes Distributor Accounts Receivable.
**Receivables generated by the sale of Sony inventory are ineligible so long as
SVB is in a subordinate position to IBM.
***Dai Nippon, Avid Tech-Ireland and Marebini are eligible foreign accounts.
COMPANY NAME: RASTEROPS SILICON VALLEY BANK:_____________
__________________
AUTHORIZED SIGNATURE: __________________ RECEIVED BY: _____________
DATE: __________________ DATE: ______________
SILICON VALLEY BANK
SCHEDULE C - INELIGIBLE ADJUSTMENTS*
DISTRIBUTOR ACCOUNTS RECEIVABLE ONLY*
(A) INELIGIBLE AMOUNT AS OF:___________ $
------------
1. Amounts Over 90 Days Past Invoice Date ------------
2. Balance of 50% Over 90 Day Accounts ------------
3. Credit Balances Past 90 Days ------------
4. 25% Concentration Limitation ------------
5. Contra Accounts ------------
6. Promotion or Demo Accounts ------------
7. Other (please explain on reverse) ------------
(B) TOTAL INELIGIBLE ADJUSTMENTS: $ ------------
REVISED INELIGIBLE (LINE (A) +/- LINE (B)) $ -----------
-----------
*▇▇▇▇▇▇, Tech Data, Merisel & Intelligent Electronics
COMPANY NAME: RASTEROPS SILICON VALLEY BANK:_____________
__________________
AUTHORIZED SIGNATURE: __________________ RECEIVED BY: _____________
DATE: __________________ DATE: _____________
SCHEDULE 6.3 (b)
BORROWING BASE CERTIFICATE
Borrowers: RasterOps Lender: Silicon Valley Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Truevision, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------------------------------------------------
Committed Line: $5,000,000
ACCOUNTS RECEIVABLE
1. Accounts Receivable $ ------------
2. Additions (please explain on reverse) $ ------------
3. TOTAL ACCOUNTS RECEIVABLE $ ------------
ACCOUNTS RECEIVABLE DEDUCTIONS
4. Accounts over 90 days due $ ------------
5. Balance of 50% over 90 day accounts $ ------------
6. Concentration Limits $ ------------
7. Foreign Accounts $ ------------
8. Governmental Accounts $ ------------
9. Contra Accounts $ ------------
10. Accounts generated from the sale of
Sony Inventory $ ------------
11 Accounts generated from the sale of
Panasonic Inventory $ ------------
12. Promotion or Demo Accounts $ ------------
13. All Intercompany/Affiliate/
Employee Accounts $ ------------
14. Stock Balancing Returns in Excess
of New Purchases $ ------------
15. Other (please explain on reverse) $ ------------
16. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $ ------------
17. Domestic Distributor Accounts ("DDA's") $ ------------
18 Eligible Accounts, Excluding DDA's
(No. 3 minus No. 16 minus No. 17) $ ------------
19 LOAN VALUE OF NON-DDA's (65% of No. 18) $ ------------
20. LOAN VALUE OF DDA's (40% of No. 17) $ ------------
BALANCES
21. Maximum Loan Amount $ ------------
22. Total Funds Available (Lesser of No. 21 or
(No. 19 plus No. 20)) $ ------------
23. Present balance owing on Line of Credit $ ------------
25. RESERVE POSITIVE (No. 22 - No. 23) $ ------------
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE FOREGOING IS TRUE, COMPLETE
AND CORRECT, AND THAT THE INFORMATION REFLECTED IN THIS BORROWING BASE
CERTIFICATE COMPLIES WITH THE REPRESENTATIONS AND WARRENTIES SET FORTH IN THE
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT BETWEEN SILICON
VALLEY BANK AND RASTEROPS AND TRUEVISION. COMMENTS:
RASTEROPS
BY:____________________________
Authorized Signer
-----------------------
BANK USE ONLY
---- --- ----
Rec'd By:
--------------
Auth. Signer
Date:
------------------
Verified:
--------------
Auth. Signer
Date:
-----------------
------------------------
SCHEDULE
6.3(c)
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
-------------
FROM: RASTEROPS
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
The undersigned authorized officer of RASTEROPS hereby certifies, for
itself and as agent for TRUEVISION, INC. (Truevision, Inc. and RasterOps being
referred to hereafter collectively as "Borrowers") that in accordance with the
terms and conditions of the Second Amended and Restated Loan and Security
Agreement between Borrowers and Bank (the "Agreement"), (i) each Borrower is in
complete compliance for the period ending __________ of and with all required
conditions and terms except as noted below and (ii) all representations and
warranties of each Borrower stated in the Agreement are true, accurate and
complete in all material respects as of the date hereof. Attached herewith are
the required documents supporting the above certification. The Officer further
certifies that these are prepared in accordance with Generally Accepted
Accounting Principals (GAAP) and are consistent from one period to the next
except as explained in an accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANTS REQUIRED COMPLIES
------------------- -------- --------
Daily Sales and collections Daily Yes No
A/R & A/P Agings Within 15 days of month end Yes No
Borrowing Base Certificate Within 15 days of month end Yes No
Distributor Sell Throughs Within 15 days of month end Yes No
Return Sales Within 15 days of month end Yes No
Monthly financial statements Within 30 days of month end Yes No
Compliance Certificate Within 30 days of month end Yes No
Annual (CPA Audited) Within 90 days of FYE Yes No
A/R Audit Initial and Quarterly Yes No
Quarterly 10-Q Within 5 days of SEC filing Yes No
Annual 10-K Within 5 days of SEC filing Yes No
FINANCIAL COVENANTS REQUIRED ACTUAL COMPLIES
------------------- --------- ------- --------
Maintain on a quarterly basis:
Minimum Quick Ratio 0.75 to 1.0 ______:1.0 Yes No
Minimum TNW $11,250,000 + $ ________ Yes No
80% of net
quarterly profits
Maximum Debt/TNW 1.70 to 1.0 ______:1.0 Yes No
Profitability Maximum __________ Yes No
Losses
Q2 12/30/94
($7,000,000)
Q3 4/1/95
($200,000)
Q4 7/1/95
("O")
Profitable
Thereafter
COMMENTS REGARDING EXCEPTIONS:
Sincerely,
RASTEROPS
----------------------------------------
SIGNATURE
----------------------------------------
TITLE
----------------------------------------
DATE
[LOGO] SILICON VALLEY BANK
AMENDMENT TO LOAN DOCUMENTS
BORROWER: RASTEROPS, INC.
TRUEVISION, INC.
DATE: JUNE 13, 1995
THIS AMENDMENT TO LOAN DOCUMENTS is entered into between SILICON VALLEY
BANK ("Silicon") and the borrower named above (jointly and severally, the
"Borrower"), with reference to the various loan and security agreements and
other documents, instruments and agreements between them (as amended,
collectively, the "Existing Loan Documents").
The Parties agree to amend the Existing Loan Documents, as follows:
1. PRESENT LOAN BALANCE. Borrower acknowledges that the present
unpaid principal balance of the Borrower's indebtedness, liabilities and
obligations to Silicon under the Existing Loan Documents, including interest
accrued through June 14, 1995 is $2,821,049.09 (the "Present Loan Balance"), and
that said sum is due and owing without any defense, offset, or counterclaim of
any kind.
2. AMENDMENT TO EXISTING LOAN DOCUMENTS. The Existing Loan Documents
are hereby amended in their entirety to read as set forth in the Loan and
Security Agreement being executed concurrently (collectively, the "New Loan
Documents"). The Borrower acknowledges that the Present Loan Balance shall be
the opening balance of the Loans pursuant to the New Loan Documents as of the
date hereof, and shall, for all purposes, be deemed to be Loans made by Silicon
to the Borrower pursuant to the New Loan Documents. In addition the letter of
credit currently outstanding, in the amount of $500,000 shall for all purposes
be deemed to be a Letter of Credit outstanding under the New Loan Documents.
Notwithstanding the execution of the New Loan Documents, the following Existing
Loan Documents shall continue in full force and effect and shall continue to
secure all present and future indebtedness, liabilities, guarantees and other
Obligations (as defined in the New Loan Documents): All standard documents of
Silicon entered into by the Borrower in connection with Foreign Exchange
Contracts or Letters of Credit; and all agreements relating to the establishment
of lockboxes and other blocked account agreements; and all UCC-1 financing
statements and other documents filed with governmental offices which perfect
liens or security interests in favor of Silicon; and all collateral assignments,
mortgages and other security agreements relating to copyrights, patents,
trademarks and other intellectual property.
3. INTELLECTUAL PROPERTY AGREEMENTS. Borrower agrees that any
provision in any collateral assignment, mortgage or other security agreement
relating to copyrights, patents, trademarks and other intellectual property
(collectively, the "Intellectual Property Agreements"), which provides that
Silicon may not enforce its security interest in any patents, trademarks,
copyrights or other intellectual property, or limits Silicon's security interest
therein, is hereby
-1-
deleted. Borrower shall execute and deliver to Silicon, on its request, such
further amendments to the Intellectual Property Agreements as Silicon shall,
from time to time, specify, in order to carry into effect the foregoing
provision, but this Section 3 and the other provisions of this Agreement shall
be fully effective even if no such further amendments are executed.
4. GENERAL PROVISIONS. This Amendment and the New Loan Documents set
forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with respect
to the subject hereof. Borrower represents and warrants to Silicon that all of
their subsidiaries and affiliates are concurrently executing the Consent set
forth below.
BORROWER: SILICON:
RASTEROPS, INC. SILICON VALLEY BANK
BY /s/(illegible) BY/s/(illegible)
------------------------------- ----------------------------
PRESIDENT OR VICE PRESIDENT TITLE SR. VICE PRESIDENT
BY /s/(illegible)
------------------------------
SECRETARY OR ASS'T SECRETARY
TRUEVISION, INC.
BY /s/(illegible)
------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/(illegible)
------------------------------
SECRETARY OR ASS'T SECRETARY
-2-
GUARANTORS' CONSENT
The undersigned, guarantors, acknowledge that their consent to the
foregoing Agreement is not required, but the undersigned nevertheless do hereby
consent to the foregoing Agreement and to the documents and agreements referred
to therein and to all future modifications and amendments thereto, and any
termination thereof, and to any and all other present and future documents and
agreements between or among the foregoing parties. Nothing herein shall in any
way limit any of the terms or provisions of the Guaranties of the undersigned,
all of which are hereby ratified and affirmed. This Consent may be executed in
counterparts. The signature of the undersigned shall be fully effective even if
other persons named below fail to sign this Consent. Nothing herein shall imply
any obligation on the part of any party to obtain the consent of the undersigned
to any future transaction, whether or not similar to the foregoing.
Rasterops Japan, Inc. Raster Image Processing Systems
By /s/(inellible) By /s/(inellible)
---------------------------- -----------------------------
Title CFO Title CFO
------------------------- ------------------------
Rasterops B.V. Rasterops France, Sarl
By /s/(inellible) By /s/(inellible)
---------------------------- -----------------------------
Title CFO Title CFO
------------------------- ------------------------
Rasterops U.K., Ltd. Rasterops Sarl
By /s/(inellible) By /s/(inellible)
---------------------------- -----------------------------
Title CFO Title CFO
------------------------- ------------------------
Rasterops GMBH Rasterops Foreign Sales Corporation
By /s/(inellible) By /s/(inellible)
---------------------------- -----------------------------
Title CFO Title CFO
------------------------- ------------------------
-3-
SILICON VALLEY BANK
LOAN AND SECURITY AGREEMENT
BORROWER: RASTEROPS
TRUEVISION, INC.
ADDRESS: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
DATE: JUNE 13, 1995
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK COMMERCIAL FINANCE DIVISION ("Silicon"), whose address is
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ and the
borrower(s) named above (jointly and severally, the "Borrower"), whose chief
executive office is located at the above address ("Borrower's Address"). The
Schedule to this Agreement (the "Schedule") shall for all purposes be deemed
to be a part of this Agreement, and the same is an integral part of this
Agreement. (Definitions of certain terms used in this Agreement are set forth
in Section 8 below.)
1. LOANS.
1.1 LOANS. Silicon will make loans to Borrower (the "Loans"), in amounts
determined by Silicon in its sole discretion, up to the amounts (the "Credit
Limit") shown on the Schedule, provided no Default or Event of Default has
occurred and is continuing.
1.2 INTEREST. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth to
the contrary in this Agreement. Interest shall be payable monthly, on the last
day of the month. Interest may, in Silicon's discretion, be charged to
Borrower's loan account, and the same shall thereafter bear interest at the same
rate as the other Loans. Silicon may, in its discretion, charge interest to
Borrower's Deposit Accounts maintained with Silicon. Regardless of the amount
of Obligations that may be outstanding from time to time, Borrower shall pay
Silicon minimum monthly interest during the term of this Agreement in the amount
set forth on the Schedule (the "Minimum Monthly Interest").
1.3 OVERADVANCES. If at any time or for any reason the total of all
outstanding Loans and all other Obligations exceeds the Credit Limit (an
"Overadvance"), Borrower shall immediately pay the amount of the excess to
Silicon, without notice or demand. Without limiting Borrower's obligation to
repay to Silicon on demand the amount of any Overadvance, Borrower agrees to
pay Silicon interest on the outstanding amount of any Overadvance, on demand,
at a rate equal to the interest rate which would otherwise be applicable to
the Overadvance, plus an additional 2% per annum.
1.4 FEES. Borrower shall pay Silicon the fee(s) shown on the Schedule,
which are in addition to all interest and other sums payable to Silicon and are
not refundable.
1.5 LETTERS OF CREDIT. At the request of Borrower, Silicon may, in its
sole discretion, issue or arrange for the issuance of letters of credit for the
account of Borrower, in each case in form and substance satisfactory to Silicon
in its sole discretion (collectively, "Letters of Credit"). The aggregate face
amount of all outstanding Letters of Credit from time to time shall not exceed
the amount shown on the Schedule (the "Letter of Credit Sublimit"), and shall be
reserved against Loans which would otherwise be available hereunder. Borrower
shall pay all bank charges (including charges of Silicon) for the issuance of
Letters of Credit, together with such additional fee as Silicon's letter of
credit department shall charge in connection with the issuance of the Letters of
Credit. Any payment by Silicon under or in connection with a Letter of Credit
shall constitute a Loan hereunder on the date such payment is made. Each Letter
of Credit shall have an expiry date no later than thirty days prior to the
Maturity Date. Borrower hereby agrees to indemnify, save, and hold Silicon
harmless from any loss, cost, expense, or liability, including payments made by
Silicon, expenses, and reasonable attorneys' fees incurred by Silicon arising
out of or in connection with any Letters of Credit. Borrower agrees to be bound
by the regulations and interpretations of the issuer of any Letters of Credit
-1-
guarantied by Silicon and opened for Borrower's account or by Silicon's
interpretations of any Letter of Credit issued by Silicon for Borrower's
account, and Borrower understands and agrees that Silicon shall not be liable
for any error, negligence, or mistake, whether of omission or commission, in
following Borrower's instructions or those contained in the Letters of Credit or
any modifications, amendments, or supplements thereto. Borrower understands
that Letters of Credit may require Silicon to indemnify the issuing bank for
certain costs or liabilities arising out of claims by Borrower against such
issuing bank. Borrower hereby agrees to indemnify and hold Silicon
harmless with respect to any loss, cost, expense, or liability incurred by
Silicon under any Letter of Credit as a result of Silicon's indemnification of
any such issuing bank. The provisions of this Loan Agreement, as it pertains to
Letters of Credit, and any other present or future documents or agreements
between Borrower and Silicon relating to Letters of Credit are cumulative.
2. SECURITY INTEREST.
2.1 SECURITY INTEREST. To secure the payment and performance of all of
the Obligations when due, Borrower hereby grants to Silicon a security interest
in all of Borrower's interest in the following, whether now owned or hereafter
acquired, and wherever located (collectively, the "Collateral"): All Inventory,
Equipment, Receivables, and General Intangibles, including, without limitation,
all of Borrower's Deposit Accounts, and all money, and all property now or at
any time in the future in Silicon's possession (including claims and credit
balances), and all proceeds (including proceeds of any insurance policies,
proceeds of proceeds and claims against third parties), all products and all
books and records related to any of the foregoing (all of the foregoing,
together with all other property in which Silicon may now or in the future be
granted a lien or security interest, is referred to herein, collectively, as the
"Collateral").
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
In order to induce Silicon to enter into this Agreement and to make Loans,
Borrower represents and warrants to Silicon as follows, and Borrower covenants
that the following representations will continue to be true, and that Borrower
will at all times comply with all of the following covenants:
3.1 CORPORATE EXISTENCE AND AUTHORITY. Borrower, if a corporation, is
and will continue to be, duly organized validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Borrower is and will
continue to be qualified and licensed to do business in all jurisdictions in
which any failure to do so would have a material adverse effect on Borrower.
The execution, delivery and performance by Borrower of this Agreement, and all
other documents contemplated hereby (i) have been duly and validly authorized,
(ii) are enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors'
rights generally), and (iii) do not violate Borrower's articles or certificate
of incorporation, or Borrower's by-laws, or any law or any any material
agreement or instrument which is binding upon Borrower or its property, and (iv)
do not constitute grounds for acceleration of any material indebtedness or
obligation under any material agreement or instrument which is binding upon
Borrower or its property.
3.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule are all
prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give Silicon 30 days' prior written notice before changing its
name or doing business under any other name. Borrower has complied, and will in
the future comply, with all laws relating to the conduct of business under a
fictitious business name.
3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in
the heading to this Agreement is Borrower's chief executive office. In
addition, Borrower has places of business and Collateral is located only at the
locations set forth on the Schedule. Borrower will give Silicon at least 30
days prior written notice before opening any additional place of business,
changing its chief executive office, or moving any of the Collateral to a
location other than Borrower's Address or one of the locations set forth on the
Schedule.
3.4 TITLE TO COLLATERAL; PERMITTED LIENS. Borrower is now, and will at
all times in the future be, the sole owner of all the Collateral, except for
items of Equipment which are leased by Borrower. The Collateral now is and will
remain free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for Permitted Liens. Silicon now has,
and will continue to have, a first-priority perfected and enforceable security
interest in all of the Collateral, subject only to the Permitted Liens, and
Borrower will at all times defend Silicon and the Collateral against all claims
of others. None of the Collateral now is or will be affixed to any real
property in such a manner, or with such intent, as to become a fixture.
Borrower is not and will not become a lessee under any real property lease
pursuant to which the lessor may obtain any rights in any of the Collateral and
no such lease now prohibits, restrains, impairs or will prohibit, restrain or
impair Borrower's right to remove any Collateral from the leased premises.
Whenever any Collateral is located upon premises in which any third party has an
interest (whether as owner, mortgagee, beneficiary under a deed of trust, lien
or otherwise), Borrower shall, whenever requested by Silicon, use its best
efforts to cause such third party to execute and deliver to Silicon, in form
acceptable to Silicon, such waivers and subordinations as Silicon shall specify,
so as to ensure that Silicon's rights in the Collateral are, and will continue
to be, superior to the rights of any such third party. Borrower will keep in
full force and effect, and will comply with all the terms of, any lease of real
property where any of the Collateral now or in the future may be located.
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3.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the Collateral in
good working condition, and Borrower will not use the Collateral for any
unlawful purpose. Borrower will immediately advise Silicon in writing of any
material loss or damage to the Collateral.
3.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.
3.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial statements
now or in the future delivered to Silicon have been, and will be, prepared in
conformity with generally accepted accounting principles and now and in the
future will completely and accurately reflect the financial condition of
Borrower, at the times and for the periods therein stated. Between the last
date covered by any such statement provided to Silicon and the date hereof,
there has been no material adverse change in the financial condition or business
of Borrower. Borrower is now and will continue to be solvent.
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has
timely filed, and will timely file, all tax returns and reports required by
foreign, federal, state and local law, and Borrower has timely paid, and will
timely pay, all foreign, federal, state and local taxes, assessments, deposits
and contributions now or in the future owed by Borrower. Borrower may, however,
defer payment of any contested taxes, provided that Borrower (i) in good faith
contests Borrower's obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (ii) notifies Silicon in
writing of the commencement of, and any material development in, the
proceedings, and (iii) posts bonds or takes any other steps required to keep the
contested taxes from becoming a lien upon any of the Collateral. Borrower is
unaware of any claims or adjustments proposed for any of Borrower's prior tax
years which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid, and shall continue to pay all amounts necessary to
fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not and will not withdraw
from participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could result
in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.
Borrower shall, at all times, utilize the services of an outside payroll service
providing for the automatic deposit of all payroll taxes payable by Borrower.
3.9 COMPLIANCE WITH LAW. Borrower has complied, and will comply, in all
material respects, with all provisions of all foreign, federal, state and local
laws and regulations relating to Borrower, including, but not limited to, those
relating to Borrower's ownership of real or personal property, the conduct and
licensing of Borrower's business, and all environmental matters.
3.10 LITIGATION. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of Borrower's
knowledge) threatened by or against or affecting Borrower in any court or before
any governmental agency (or any basis therefor known to Borrower) which may
result, either separately or in the aggregate, in any material adverse change in
the financial condition or business of Borrower, or in any material impairment
in the ability of Borrower to carry on its business in substantially the same
manner as it is now being conducted. Borrower will promptly inform Silicon in
writing of any claim, proceeding, litigation or investigation in the future
threatened or instituted by or against Borrower involving any single claim of
$50,000 or more, or involving $100,000 or more in the aggregate.
3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes. Borrower is not purchasing or carrying any "margin
stock" (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan will be used to purchase
or carry any "margin stock" or to extend credit to others for the purpose of
purchasing or carrying any "margin stock."
4. RECEIVABLES.
4.1 REPRESENTATIONS RELATING TO RECEIVABLES. Borrower represents and
warrants to Silicon as follows: Each Receivable with respect to
which Loans are requested by Borrower shall, on the date each Loan is requested
and made, (i) represent an undisputed bona fide existing unconditional
obligation of the Account Debtor created by the sale, delivery, and acceptance
of goods or the rendition of services in the ordinary course of Borrower's
business, and (ii) meet the Minimum Eligibility Requirements set forth in
Section 8 below.
4.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE. Borrower
represents and warrants to Silicon as follows: All statements made and all
unpaid balances appearing in all invoices, instruments and other documents
evidencing the Receivables are and shall be true and correct and all such
invoices, instruments and other documents and all of Borrower's books and
records are and shall be genuine and in all respects what they purport to be,
and all signatories and endorsers have the capacity to contract. All sales and
other transactions underlying or giving rise to each Receivable shall fully
comply with all applicable laws and governmental rules and regulations. All
signatures and indorsements on all documents, instruments, and agreements
relating to all Receivables are and shall be genuine, and all such documents,
instruments and agreements are and shall be legally enforceable in accordance
with their terms.
4.3 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES. Borrower shall
deliver to Silicon transaction reports and loan requests, schedules and
assignments of all Receivables, and schedules of collections, all on Silicon's
standard forms; provided, however, that Borrower's failure to execute and
deliver the same shall not affect or limit Silicon's security interest and other
rights in all of Borrower's Receivables,
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nor shall Silicon's failure to advance or lend against a specific Receivable
affect or limit Silicon's security interest and other rights therein. Loan
requests received after 2:30 PM will not be considered by Silicon until the next
Business Day. Together with each such schedule and assignment, or later if
requested by Silicon, Borrower shall furnish Silicon with copies (or, at
Silicon's request, originals) of all contracts, orders, invoices, and other
similar documents, and all original shipping instructions, delivery receipts,
bills of lading, and other evidence of delivery, for any goods the sale or
disposition of which gave rise to such Receivables, and Borrower warrants the
genuineness of all of the foregoing. Borrower shall also furnish to Silicon an
aged accounts receivable trial balance in such form and at such intervals as
Silicon shall request. In addition, Borrower shall deliver to Silicon the
originals of all instruments, chattel paper, security agreements, guarantees and
other documents and property evidencing or securing any Receivables, immediately
upon receipt thereof and in the same form as received, with all necessary
indorsements, all of which shall be with recourse. Borrower shall also provide
Silicon with copies of all credit memos within two days after the date issued.
4.4 COLLECTION OF RECEIVABLES. Borrower shall have the right to collect
all Receivables, unless and until a Default or an Event of Default has occurred.
Borrower shall hold all payments on, and proceeds of, Receivables in trust for
Silicon, and Borrower shall immediately deliver all such payments and proceeds
to Silicon in their original form, duly endorsed in blank, to be applied to the
Obligations in such order as Silicon shall determine. Silicon may, in its
discretion, require that all proceeds of Collateral be deposited by Borrower
into a lockbox account, or such other "blocked account" as Silicon may specify,
pursuant to a blocked account agreement in such form as Silicon may specify.
Silicon or its designee may, at any time, notify Account Debtors that the
Receivables have been assigned to Silicon.
4.5. REMITTANCE OF PROCEEDS. All proceeds arising from the disposition of
any Collateral shall be delivered, in kind, by Borrower to Silicon in the
original form in which received by Borrower not later than the following
Business Day after receipt by Borrower, to be applied to the Obligations in such
order as Silicon shall determine; provided that, if no Default or Event of
Default has occurred, Borrower shall not be obligated to remit to Silicon the
proceeds of the sale of worn out or obsolete equipment disposed of by Borrower
in good faith in an arm's length transaction for an aggregate purchase price of
$25,000 or less (for all such transactions in any fiscal year). Borrower agrees
that it will not commingle proceeds of Collateral with any of Borrower's other
funds or property, but will hold such proceeds separate and apart from such
other funds and property and in an express trust for Silicon. Nothing in this
Section limits the restrictions on disposition of Collateral set forth elsewhere
in this Agreement.
4.6 DISPUTES. Borrower shall notify Silicon promptly of all disputes or
claims relating to Receivables. Borrower shall not forgive (completely or
partially), compromise or settle any Receivable for less than payment in full,
or agree to do any of the foregoing, except that Borrower may do so, provided
that: (i) Borrower does so in good faith, in a commercially reasonable manner,
in the ordinary course of business, and in arm's length transactions, which are
reported to Silicon on the regular reports provided to Silicon; (ii) no Default
or Event of Default has occurred and is continuing; and (iii) taking into
account all such discounts settlements and forgiveness, the total outstanding
Loans will not exceed the Credit Limit. Silicon may, at any time after the
occurrence of an Event of Default, settle or adjust disputes or claims directly
with Account Debtors for amounts and upon terms which Silicon considers
advisable in its reasonable credit judgment and, in all cases, Silicon shall
credit Borrower's Loan account with only the net amounts received by Silicon in
payment of any Receivables.
4.7 RETURNS. Provided no Event of Default has occurred and is continuing,
if any Account Debtor returns any Inventory to Borrower in the ordinary course
of its business, Borrower shall promptly determine the reason for such return
and promptly issue a credit memorandum to the Account Debtor in the appropriate
amount (sending a copy to Silicon). In the event any attempted return occurs
after the occurrence of any Event of Default, Borrower shall (i) hold the
returned Inventory in trust for Silicon, (ii) segregate all returned Inventory
from all of Borrower's other property, (iii) conspicuously label the returned
Inventory as Silicon's property, and (iv) immediately notify Silicon of the
return of any Inventory, specifying the reason for such return, the location and
condition of the returned Inventory, and on Silicon's request deliver such
returned Inventory to Silicon.
4.8 VERIFICATION. Silicon may, from time to time, verify directly with
the respective Account Debtors the validity, amount and other matters relating
to the Receivables, by means of mail, telephone or otherwise, either in the name
of Borrower or Silicon or such other name as Silicon may choose.
4.9 NO LIABILITY. Silicon shall not under any circumstances be
responsible or liable for any shortage or discrepancy in, damage to, or loss or
destruction of, any goods, the sale or other disposition of which gives rise to
a Receivable, or for any error, act, omission, or delay of any kind occurring in
the settlement, failure to settle, collection or failure to collect any
Receivable, or for settling any Receivable in good faith for less than the full
amount thereof, nor shall Silicon be deemed to be responsible for any of
Borrower's obligations under any contract or agreement giving rise to a
Receivable. Nothing herein shall, however, relieve Silicon from liability for
its own gross negligence or willful misconduct.
5. ADDITIONAL DUTIES OF THE BORROWER.
5.1 FINANCIAL AND OTHER COVENANTS. Borrower shall at all times comply
with the financial and other covenants set forth in the Schedule.
5.2 INSURANCE. Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably accept-
-4-
able to Silicon, in such form and amounts as Silicon may reasonably require, and
Borrower shall provide evidence of such insurance to Silicon, so that Silicon is
satisfied that such insurance is, at all times, in full force and effect. All
such insurance policies shall name Silicon as an additional loss payee, and
shall contain a lenders loss payee endorsement in form reasonably acceptable to
Silicon. Upon receipt of the proceeds of any such insurance, Silicon shall
apply such proceeds in reduction of the Obligations as Silicon shall determine
in its sole discretion, except that, provided no Default or Event of Default has
occurred and is continuing, Silicon shall release to Borrower insurance proceeds
with respect to Equipment totaling less than $100,000, which shall be utilized
by Borrower for the replacement of the Equipment with respect to which the
insurance proceeds were paid. Silicon may require reasonable assurance that the
insurance proceeds so released will be so used. If Borrower fails to provide or
pay for any insurance, Silicon may, but is not obligated to, obtain the same at
Borrower's expense. Borrower shall promptly deliver to Silicon copies of all
reports made to insurance companies.
5.3 REPORTS. Borrower, at its expense, shall provide Silicon with the
written reports set forth in the Schedule, and such other written reports with
respect to Borrower (including budgets, sales projections, operating plans and
other financial documentation), as Silicon shall from time to time reasonably
specify.
5.4 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and on
one Business Day's notice, Silicon, or its agents, shall have the right to
inspect the Collateral, and the right to audit and copy Borrower's books and
records. Silicon shall take reasonable steps to keep confidential all
information obtained in any such inspection or audit, but Silicon shall have the
right to disclose any such information to its auditors, regulatory agencies, and
attorneys, and pursuant to any subpoena or other legal process. The foregoing
inspections and audits shall be at Borrower's expense and the charge therefor
shall be $500 per person per day (or such higher amount as shall represent
Silicon's then current standard charge for the same), plus reasonable out of
pocket expenses. Borrower will not enter into any agreement with any accounting
firm, service bureau or third party to store Borrower's books or records at any
location other than Borrower's Address, without first obtaining Silicon's
written consent, which may be conditioned upon such accounting firm, service
bureau or other third party agreeing to give Silicon the same rights with
respect to access to books and records and related rights as Silicon has under
this Loan Agreement. Borrower waives the benefit of any accountant-client
privilege or other evidentiary privilege precluding or limiting the disclosure,
divulgence or delivery of any of its books and records (except that Borrower
does not waive any attorney-client privilege).
5.5 NEGATIVE COVENANTS. Except as may be permitted in the Schedule,
Borrower shall not, without Silicon's prior written consent, do any of the
following: (i) merge or consolidate with another corporation or entity; (ii)
acquire any assets, except in the ordinary course of business; (iii) enter into
any other transaction outside the ordinary course of business; (iv) sell or
transfer any Collateral, except for the sale of finished Inventory in the
ordinary course of Borrower's business, and except for the sale of obsolete or
unneeded Equipment in the ordinary course of business; (v) store any Inventory
or other Collateral with any warehouseman or other third party; (vi) sell any
Inventory on a sale-or-return, guaranteed sale, consignment, or other contingent
basis; (vii) make any loans of any money or other assets; (viii) incur any
debts, outside the ordinary course of business, which would have a material,
adverse effect on Borrower or on the prospect of repayment of the Obligations;
(ix) guarantee or otherwise become liable with respect to the obligations of
another party or entity; (x) pay or declare any dividends on Borrower's stock
(except for dividends payable solely in stock of Borrower); (xi) redeem, retire,
purchase or otherwise acquire, directly or indirectly, any of Borrower's stock;
(xii) make any change in Borrower's capital structure which would have a
material adverse effect on Borrower or on the prospect of repayment of the
Obligations; or (xiii) pay total compensation, including salaries, fees,
bonuses, commissions, and all other payments, whether directly or indirectly, in
money or otherwise, to Borrower's executives, officers and directors (or any
relative thereof) in an amount in excess of the amount set forth on the
Schedule; or (xiv) dissolve or elect to dissolve. Transactions permitted by the
foregoing provisions of this Section are only permitted if no Default or Event
of Default would occur as a result of such transaction.
5.6 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against Silicon with respect to any Collateral or in any manner
relating to Borrower, Borrower shall, without expense to Silicon, make available
Borrower and its officers, employees and agents and Borrower's books and
records, to the extent that Silicon may deem them reasonably necessary in order
to prosecute or defend any such suit or proceeding.
5.7 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by
Silicon, to execute all documents and take all actions, as Silicon, may deem
reasonably necessary or useful in order to perfect and maintain Silicon's
perfected security interest in the Collateral, and in order to fully consummate
the transactions contemplated by this Agreement.
6. TERM.
6.1 MATURITY DATE. This Agreement shall continue in effect until the
maturity date set forth on the Schedule (the "Maturity Date"); provided that the
Maturity date shall automatically be extended, and this Agreement shall
automatically and continuously renew, for successive additional terms of one
year each, unless one party gives written notice to the other, not less than
sixty days prior to the next Maturity Date, that such party elects to terminate
this Agreement effective on the next Maturity Date.
6.2 EARLY TERMINATION. This Agreement may be terminated prior to the
Maturity Date as follows: (i) by Borrower, effective three Business Days after
written notice
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of termination is given to Silicon; or (ii) by Silicon at any time after the
occurrence of an Event of Default, without notice, effective immediately.
6.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether or
not all or any part of such Obligations are otherwise then due and payable.
Without limiting the generality of the foregoing, if on the Maturity Date, or on
any earlier effective date of termination, there are any outstanding Letters of
Credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an amount
equal to the face amount of all such Letters of Credit plus all interest, fees
and cost due or to become due in connection therewith, to secure all of the
Obligations relating to said Letters of Credit, pursuant to Silicon's then
standard form cash pledge agreement. Notwithstanding any termination of this
Agreement, all of Silicon's security interests in all of the Collateral and all
of the terms and provisions of this Agreement shall continue in full force and
effect until all Obligations have been paid and performed in full; provided
that, without limiting the fact that Loans are subject to the discretion of
Silicon, Silicon may, in its sole discretion, refuse to make any further Loans
after termination. No termination shall in any way affect or impair any right
or remedy of Silicon, nor shall any such termination relieve Borrower of any
Obligation to Silicon, until all of the Obligations have been paid and performed
in full. Upon payment and performance in full of all the Obligations and
termination of this Agreement, Silicon shall promptly deliver to Borrower
termination statements, requests for reconveyances and such other documents as
may be required to fully terminate Silicon's security interests.
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and Borrower
shall give Silicon immediate written notice thereof: (a) Any warranty,
representation, statement, report or certificate made or delivered to Silicon
by Borrower or any of Borrower's officers, employees or agents, now or in the
future, shall be untrue or misleading in a material respect; or (b) Borrower
shall fail to pay when due any Loan or any interest thereon or any other
monetary Obligation; or (c) the total Loans and other Obligations outstanding
at any time shall exceed the Credit Limit; or (d) Borrower shall fail to
comply with any of the financial covenants set forth in the Schedule or shall
fail to perform any other non-monetary Obligation which by its nature cannot
be cured; or (e) Borrower shall fail to perform any other non-monetary
Obligation, which failure is not cured within 5 Business Days after the date
due; or (f) Any levy, assessment, attachment, seizure, lien or encumbrance
(other than a Permitted Lien) is made on all or any part of the Collateral
which is not cured within 10 days after the occurrence of the same; or (g)
any default or event of default occurs under any obligation secured by a
Permitted Lien, which is not cured within any applicable cure period or
waived in writing by the holder of the Permitted Lien; or (h) Borrower
breaches any material contract or obligation, which has or may reasonably be
expected to have a material adverse effect on Borrower's business or
financial condition; or (i) Dissolution, termination of existence, insolvency
or business failure of Borrower; or appointment of a receiver, trustee or
custodian, for all or any part of the property of, assignment for the benefit
of creditors by, or the commencement of any proceeding by Borrower under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect; or (j) the commencement of any proceeding against Borrower
or any guarantor of any of the Obligations under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in
effect, which is not cured by the dismissal thereof within 30 days after the
date commenced; or (k) revocation or termination of, or limitation or denial
of liability upon, any guaranty of the Obligations or any attempt to do any
of the foregoing, or commencement of proceedings by any guarantor of any of
the Obligations under any bankruptcy or insolvency law; or (l) revocation or
termination of, or limitation or denial of liability upon, any pledge of any
certificate of deposit, securities or other property or asset of any kind
pledged by any third party to secure any or all of the Obligations, or any
attempt to do any of the foregoing, or commencement of proceedings by or
against any such third party under any bankruptcy or insolvency law; or (m)
Borrower makes any payment on account of any indebtedness or obligation which
has been subordinated to the Obligations other than as permitted in the
applicable subordination agreement, or if any Person who has subordinated
such indebtedness or obligations terminates or in any way limits his
subordination agreement; or (n) there shall be a change in the record or
beneficial ownership of an aggregate of more than 20% of the outstanding
shares of stock of Borrower, in one or more transactions, compared to the
ownership of outstanding shares of stock of Borrower in effect on the date
hereof, without the prior written consent of Silicon; or (o) Borrower shall
generally not pay its debts as they become due, or Borrower shall conceal,
remove or transfer any part of its property, with intent to hinder, delay or
defraud its
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creditors, or make or suffer any transfer of any of its property which may be
fraudulent under any bankruptcy, fraudulent conveyance or similar law; or (p)
there shall be a material adverse change in Borrower's business or financial
condition; or (q) Silicon, acting in good faith and in a commercially
reasonable manner, deems itself insecure because of the occurrence of an
event prior to the effective date hereof of which Silicon had no knowledge on
the effective date or because of the occurrence of an event on or subsequent
to the effective date. Silicon may cease making any Loans hereunder during
any of the above cure periods, and thereafter if an Event of Default has
occurred.
7.2 REMEDIES. Upon the occurrence of any Event of Default, and at any
time thereafter, Silicon, at its option, and without notice or demand of any
kind (all of which are hereby expressly waived by Borrower), may do any one
or more of the following: (a) Cease making Loans or otherwise extending
credit to Borrower under this Agreement or any other document or agreement;
(b) Accelerate and declare all or any part of the Obligations to be
immediately due, payable, and performable, notwithstanding any deferred or
installment payments allowed by any instrument evidencing or relating to any
Obligation; (c) Take possession of any or all of the Collateral wherever it
may be found, and for that purpose Borrower hereby authorizes Silicon without
judicial process to enter onto any of Borrower's premises without
interference to search for, take possession of, keep, store, or remove any of
the Collateral, and remain on the premises or cause a custodian to remain on
the premises in exclusive control thereof, without charge for so long as
Silicon deems it reasonably necessary in order to complete the enforcement of
its rights under this Agreement or any other agreement; provided, however,
that should Silicon seek to take possession of any of the Collateral by Court
process, Borrower hereby irrevocably waives: (i) any bond and any surety or
security relating thereto required by any statute, court rule or otherwise as
an incident to such possession; (ii) any demand for possession prior to the
commencement of any suit or action to recover possession thereof; and (iii)
any requirement that Silicon retain possession of, and not dispose of, any
such Collateral until after trial or final judgment; (d) Require Borrower to
assemble any or all of the Collateral and make it available to Silicon at
places designated by Silicon which are reasonably convenient to Silicon and
Borrower, and to remove the Collateral to such locations as Silicon may deem
advisable; (e) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Silicon shall have the right to use Borrower's premises,
vehicles, hoists, lifts, cranes, equipment and all other property without
charge; (f) Sell, lease or otherwise dispose of any of the Collateral, in its
condition at the time Silicon obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private
sales, in lots or in bulk, for cash, exchange or other property, or on
credit, and to adjourn any such sale from time to time without notice other
than oral announcement at the time scheduled for sale. Silicon shall have
the right to conduct such disposition on Borrower's premises without charge,
for such time or times as Silicon deems reasonable, or on Silicon's premises,
or elsewhere and the Collateral need not be located at the place of
disposition. Silicon may directly or through any affiliated company purchase
or lease any Collateral at any such public disposition, and if permissible
under applicable law, at any private disposition. Any sale or other
disposition of Collateral shall not relieve Borrower of any liability
Borrower may have if any Collateral is defective as to title or physical
condition or otherwise at the time of sale; (g) Demand payment of, and
collect any Receivables and General Intangibles comprising Collateral and, in
connection therewith, Borrower irrevocably authorizes Silicon to endorse or
sign Borrower's name on all collections, receipts, instruments and other
documents, to take possession of and open mail addressed to Borrower and
remove therefrom payments made with respect to any item of the Collateral or
proceeds thereof, and, in Silicon's sole discretion, to grant extensions of
time to pay, compromise claims and settle Receivables and the like for less
than face value; (h) Offset against any sums in any of Borrower's general,
special or other Deposit Accounts with Silicon; and (i) Demand and receive
possession of any of Borrower's federal and state income tax returns and the
books and records utilized in the preparation thereof or referring thereto.
All reasonable attorneys' fees, expenses, costs, liabilities and obligations
incurred by Silicon with respect to the foregoing shall be added to and
become part of the Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of
the Obligations. Without limiting any of Silicon's rights and remedies, from
and after the occurrence of any Event of Default, the interest rate
applicable to the Obligations shall be increased by an additional four
percent per annum.
7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and
Silicon agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to
Borrower at least seven days prior to the sale, and, in the case of a public
sale, notice of the sale is published at least seven days before the sale in a
newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general, non-
specific terms; (iii) The sale is conducted at a place designated by Silicon,
with or without the Collateral being present; (iv) The sale commences at any
time between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price in cash
or by cashier's check or wire transfer is required; (vi) With respect to any
sale of any of the Collateral, Silicon may (but is not obligated to) direct any
prospective purchaser to ascertain directly from Borrower any and all
information concerning the same. Silicon shall be free to employ other methods
of noticing and selling the Collateral, in its discretion, if they are
commercially reasonable.
7.4 POWER OF ATTORNEY. Upon the occurrence of any Event of Default,
without limiting Silicon's other rights and remedies, Borrower grants to Silicon
an irrevocable power of attorney coupled with an interest, authorizing and
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permitting Silicon (acting through any of its employees, attorneys or agents) at
any time, at its option, but without obligation, with or without notice to
Borrower, and at Borrower's expense, to do any or all of the following, in
Borrower's name or otherwise, but Silicon agrees to exercise the following
powers in a commercially reasonable manner: (a) Execute on behalf of Borrower
any documents that Silicon may, in its sole discretion, deem advisable in order
to perfect and maintain Silicon's security interest in the Collateral, or in
order to exercise a right of Borrower or Silicon, or in order to fully
consummate all the transactions contemplated under this Agreement, and all other
present and future agreements; (b) Execute on behalf of Borrower any document
exercising, transferring or assigning any option to purchase, sell or otherwise
dispose of or to lease (as lessor or lessee) any real or personal property which
is part of Silicon's Collateral or in which Silicon has an interest; (c) Execute
on behalf of Borrower, any invoices relating to any Receivable, any draft
against any Account Debtor and any notice to any Account Debtor, any proof of
claim in bankruptcy, any Notice of Lien, claim of mechanic's, materialman's or
other lien, or assignment or satisfaction of mechanic's, materialman's or other
lien; (d) Take control in any manner of any cash or non-cash items of payment or
proceeds of Collateral; endorse the name of Borrower upon any instruments, or
documents, evidence of payment or Collateral that may come into Silicon's
possession; (e) Endorse all checks and other forms of remittances received by
Silicon; (f) Pay, contest or settle any lien, charge, encumbrance, security
interest and adverse claim in or to any of the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same; (g)
Grant extensions of time to pay, compromise claims and settle Receivables and
General Intangibles for less than face value and execute all releases and other
documents in connection therewith; (h) Pay any sums required on account of
Borrower's taxes or to secure the release of any liens therefor, or both; (i)
Settle and adjust, and give releases of, any insurance claim that relates to any
of the Collateral and obtain payment therefor; (j) Instruct any third party
having custody or control of any books or records belonging to, or relating to,
Borrower to give Silicon the same rights of access and other rights with respect
thereto as Silicon has under this Agreement; and (k) Take any action or pay any
sum required of Borrower pursuant to this Agreement and any other present or
future agreements. Any and all reasonable sums paid and any and all reasonable
costs, expenses, liabilities, obligations and attorneys' fees incurred by
Silicon with respect to the foregoing shall be added to and become part of the
Obligations, shall be payable on demand, and shall bear interest at a rate equal
to the highest interest rate applicable to any of the Obligations. In no event
shall Silicon's rights under the foregoing power of attorney or any of Silicon's
other rights under this Agreement be deemed to indicate that Silicon is in
control of the business, management or properties of Borrower.
7.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any
sale of the Collateral shall be applied by Silicon first to the reasonable
costs, expenses, liabilities, obligations and attorneys' fees incurred by
Silicon in the exercise of its rights under this Agreement, second to the
interest due upon any of the Obligations, and third to the principal of the
Obligations, in such order as Silicon shall determine in its sole discretion.
Any surplus shall be paid to Borrower or other persons legally entitled thereto;
Borrower shall remain liable to Silicon for any deficiency. If, Silicon, in its
sole discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale of Collateral, Silicon shall
have the option, exercisable at any time, in its sole discretion, of either
reducing the Obligations by the principal amount of purchase price or deferring
the reduction of the Obligations until the actual receipt by Silicon of the cash
therefor.
7.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set forth
in this Agreement, Silicon shall have all the other rights and remedies accorded
a secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between Silicon and Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise by
Silicon of one or more of its rights or remedies shall not be deemed an
election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Silicon to exercise any
rights or remedies shall not operate as a waiver thereof, but all rights and
remedies shall continue in full force and effect until all of the Obligations
have been fully paid and performed.
8. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"ACCOUNT DEBTOR" means the obligor on a Receivable.
"AFFILIATE" means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.
"BUSINESS DAY" means a day on which Silicon is open for business.
"CODE" means the Uniform Commercial Code as adopted and in effect in the
State of California from time to time.
"COLLATERAL" has the meaning set forth in Section 2.1 above.
"DEFAULT" means any event which with notice or passage of time or both,
would constitute an Event of Default.
"DEPOSIT ACCOUNT" has the meaning set forth in Section 9105 of the Code.
"ELIGIBLE INVENTORY" means Inventory which Silicon, in its sole judgment,
deems eligible for borrowing, based on such considerations as Silicon may from
time to time deem appropriate. Without limiting the fact that the determination
of which Inventory is eligible for borrowing is a matter of Silicon's
discretion, Inventory which does not meet the following requirements will not be
deemed to be
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Eligible Inventory: Inventory which (i) consists of * finished goods, in good,
new and salable condition which is not perishable, not obsolete or
unmerchantable, and is not comprised of work in process, packaging materials or
supplies; (iii) meets all applicable governmental standards; (iv) has been
manufactured in compliance with the Fair Labor Standards Act; (v) conforms in
all respects to the warranties and representations set forth in this Agreement;
(vi) is at all times subject to Silicon's duly perfected, first priority
security interest; and (vii) is situated at a one of the locations set forth on
the Schedule.
*RAW MATERIALS OR
"ELIGIBLE RECEIVABLES" means Receivables arising in the ordinary course
of Borrower's business from the sale of goods or rendition of services, which
Silicon, in its sole judgment, shall deem eligible for borrowing, based on
such considerations as Silicon may from time to time deem appropriate.
Without limiting the fact that the determination of which Receivables are
eligible for borrowing is a matter of Silicon's discretion, the following
(the "MINIMUM ELIGIBILITY REQUIREMENTS") are the minimum requirements for a
Receivable to be an Eligible Receivable: (i) the Receivable must not be
outstanding for more than 90 days from its invoice date, (ii) the Receivable
must not represent progress ▇▇▇▇▇▇▇▇, or be due under a fulfillment or
requirements contract with the Account Debtor, (iii) the Receivable must not
be subject to any contingencies (including Receivables arising from sales on
consignment, guaranteed sale or other terms pursuant to which payment by the
Account Debtor may be conditional), (iv) the Receivable must not be owing
from an Account Debtor with whom the Borrower has any dispute (whether or not
relating to the particular Receivable), (v) the Receivable must not be owing
from an Affiliate of Borrower, (vi) the Receivable must not be owing from an
Account Debtor which is subject to any insolvency or bankruptcy proceeding,
or whose financial condition is not acceptable to Silicon, or which, fails or
goes out of a material portion of its business, (vii) the Receivable must not
be owing from the United States or any department, agency or instrumentality
thereof (unless there has been compliance, to Silicon's satisfaction, with
the United States Assignment of Claims Act), (viii) the Receivable must not
be owing from an Account Debtor located outside the United States or Canada
(unless * pre-approved by Silicon in its discretion in writing, or backed by
a letter of credit satisfactory to Silicon, or FCIA insured satisfactory to
Silicon), (ix) the Receivable must not be owing from an Account Debtor to
whom Borrower is or may be liable for goods purchased from such Account
Debtor or otherwise. Receivables owing from one Account Debtor will not be
deemed Eligible Receivables to the extent they exceed 25% of the total
eligible Receivables outstanding. In addition, if more than 50% of the
Receivables owing from an Account Debtor ** are outstanding more than 90 days
from their invoice date (without regard to unapplied credits) or are
otherwise not eligible Receivables, then all Receivables owing from that
Account Debtor will be deemed ineligible for borrowing. Silicon may, from
time to time, in its discretion, revise the Minimum Eligibility Requirements,
upon written notice to the Borrower.
*THE ACCOUNT DEBTOR IS DAI NIPPON SCREEN MANUFACTURING CO. LTD., OR AVID
TACHNOLOGY-IRELAND, OR MARUBENI INT'L ELECTRONICS, OR IS OTHERWISE
**WHICH IS NOT A DISTRIBUTOR, OR MORE THAN 10% OF THE RECEIVABLES OWING
FROM AN ACCOUNT DEBTOR WHICH IS A DISTRIBUTOR,
"EQUIPMENT" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.
"EVENT OF DEFAULT" means any of the events set forth in Section 7.1 of this
Agreement.
"GENERAL INTANGIBLES" means all general intangibles of Borrower, whether
now owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other
business records, Deposit Accounts, inventions, designs, drawings,
blueprints, patents, patent applications, trademarks and the goodwill of the
business symbolized thereby, names, trade names, trade secrets, goodwill,
copyrights, registrations, licenses, franchises, customer lists, security and
other deposits, rights in all litigation presently or hereafter pending for
any cause or claim (whether in contract, tort or otherwise), and all
judgments now or hereafter arising therefrom, all claims of Borrower against
Silicon, rights to purchase or sell real or personal property, rights as a
licensor or licensee of any kind, royalties, telephone numbers, proprietary
information, purchase orders, and all insurance policies and claims
(including without limitation life insurance, key man insurance, credit
insurance, liability insurance, property insurance and other insurance), tax
refunds and claims, computer programs, discs, tapes and tape files, claims
under guaranties, security interests or other security held by or granted to
Borrower, all rights to indemnification and all other intangible property of
every kind and nature (other than Receivables).
"INVENTORY" means all of Borrower's now owned and hereafter acquired goods,
merchandise or other personal property, wherever located, to be furnished under
any contract of service or held for sale or lease (including without limitation
all raw materials, work in process, finished goods and goods in transit), and
all materials and supplies of every kind, nature and description which are or
might be used or consumed in Borrower's business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
merchandise or other personal property, and all warehouse receipts, documents of
title and other documents representing any of the foregoing.
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"OBLIGATIONS" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to Silicon, whether evidenced by this Agreement or any
note or other instrument or document, whether arising from an extension of
credit, opening of a letter of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by Silicon in
Borrower's debts owing to others), absolute or contingent, due or to become due,
including, without limitation, all interest, charges, expenses, fees, attorney's
fees, expert witness fees, audit fees, letter of credit fees, collateral
monitoring fees, closing fees, facility fees, termination fees, minimum interest
charges and any other sums chargeable to Borrower under this Agreement or under
any other present or future instrument or agreement between Borrower and
Silicon.
"PERMITTED LIENS" means the following: (i) purchase money security
interests in specific items of Equipment; (ii) leases of specific items of
Equipment; (iii) liens for taxes not yet payable; (iv) additional security
interests and liens consented to in writing by Silicon, which consent shall not
be unreasonably withheld; (v) security interests being terminated substantially
concurrently with this Agreement; (vi) liens of materialmen, mechanics,
warehousemen, carriers, or other similar liens arising in the ordinary course of
business and securing obligations which are not delinquent; (vii) liens incurred
in connection with the extension, renewal or refinancing of the indebtedness
secured by liens of the type described above in clauses (i) or (ii) above,
provided that any extension, renewal or replacement lien is limited to the
property encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; (viii)
Liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods. Silicon will have
the right to require, as a condition to its consent under subparagraph (iv)
above, that the holder of the additional security interest or lien sign an
intercreditor agreement on Silicon's then standard form, acknowledge that the
security interest is subordinate to the security interest in favor of Silicon,
and agree not to take any action to enforce its subordinate security interest so
long as any Obligations remain outstanding, and that Borrower agree that any
uncured default in any obligation secured by the subordinate security interest
shall also constitute an Event of Default under this Agreement.
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"RECEIVABLES" means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, securities, documents and all other forms of
obligations at any time owing to Borrower, all guaranties and other security
therefor, all merchandise returned to or repossessed by Borrower, and all rights
of stoppage in transit and all other rights or remedies of an unpaid vendor,
lienor or secured party.
OTHER TERMS. All accounting terms used in this Agreement, unless
otherwise indicated, shall have the meanings given to such terms in accordance
with generally accepted accounting principles, consistently applied. All other
terms contained in this Agreement, unless otherwise indicated, shall have the
meanings provided by the Code, to the extent such terms are defined therein.
9. GENERAL PROVISIONS.
9.1 INTEREST COMPUTATION. In computing interest on the Obligations,
all checks, wire transfers and other items of payment received by Silicon
(including proceeds of Receivables and payment of the Obligations in full)
shall be deemed applied by Silicon on account of the Obligations three
Business Days after receipt by Silicon of immediately available funds.
Silicon shall not, however, be required to credit Borrower's account for the
amount of any item of payment which is unsatisfactory to Silicon in its sole
discretion, and Silicon may charge Borrower's loan account for the amount of
any item of payment which is returned to Silicon unpaid.
9.2 APPLICATION OF PAYMENTS. All payments with respect to the
Obligations may be applied, and in Silicon's sole discretion reversed and re-
applied, to the Obligations, in such order and manner as Silicon shall determine
in its sole discretion.
9.3 CHARGES TO ACCOUNTS. Silicon may, in its discretion, require that
Borrower pay monetary Obligations in cash to Silicon, or charge them to
Borrower's Loan account, in which event they will bear interest at the same rate
applicable to the Loans. Silicon may also, in its discretion, charge any
monetary Obligations to Borrower's Deposit Accounts maintained with Silicon.
9.4 MONTHLY ACCOUNTINGS. Silicon shall provide Borrower monthly with
an account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Silicon), unless
Borrower notifies Silicon in writing to the contrary within thirty days after
each account is rendered, describing the nature of any alleged errors or
admissions.
9.5 NOTICES. All notices to be given under this Agreement shall be
in writing and shall be given either personally or by reputable private
delivery service or by regular first-class mail, or certified mail return
receipt requested, addressed to Silicon or Borrower at the addresses shown in
the heading to this Agreement, or at any other address designated in writing
by one party to the other party. Notices to Silicon shall be directed to the
Commercial Finance Division, to the attention of the Division Manager or the
Division Credit Manager. All notices shall be deemed to have been given upon
delivery in the case of notices personally delivered, or at the expiration
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of one Business Day following delivery to the private delivery service, or two
Business Days following the deposit thereof in the United States mail, with
postage prepaid.
9.6 SEVERABILITY. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
9.7 INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between Borrower and Silicon and supersede
al prior and contemporaneous negotiations and oral representations and
agreements, all of which are merged and integrated in this Agreement. THERE
ARE NO ORAL UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES
WHICH ARE NOT SET FORTH IN THIS AGREEMENT OR IN OTHER WRITTEN AGREEMENTS
SIGNED BY THE PARTIES IN CONNECTION HEREWITH.
9.8 WAIVERS. The failure of Silicon at any time or times to require
Borrower to strictly comply with any of the provisions of this Agreement or any
other present or future agreement between Borrower and Silicon shall not waive
or diminish any right of Silicon later to demand and receive strict compliance
therewith. Any waiver of any default shall not waive or affect any other
default, whether prior or subsequent, and whether or not similar. None of the
provisions of this Agreement or any other agreement now or in the future
executed by Borrower and delivered to Silicon shall be deemed to have been
waived by any act or knowledge of Silicon or its agents or employees, but only
by a specific written waiver signed by an authorized officer of Silicon and
delivered to Borrower. Borrower waives demand, protest, notice of protest and
notice of default or dishonor, notice of payment and nonpayment, release,
compromise, settlement, extension or renewal of any commercial paper,
instrument, account, General Intangible, document or guaranty at any time held
by Silicon on which Borrower is or may in any way be liable, and notice of any
action taken by Silicon, unless expressly required by this Agreement.
9.9 NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Silicon, nor any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Silicon shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower
or any other party through the ordinary negligence of Silicon, or any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Silicon, but nothing herein shall relieve Silicon from
liability for its own gross negligence or willful misconduct.
9.10 AMENDMENT. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by Borrower and a duly
authorized officer of Silicon.
9.11 TIME OF ESSENCE. Time is of the essence in the performance by
Borrower of each and every obligation under this Agreement.
9.12 ATTORNEYS FEES AND COSTS. Borrower shall reimburse Silicon for
all reasonable attorneys' fees and all filing, recording, search, title
insurance, appraisal, audit, and other reasonable costs incurred by Silicon,
pursuant to, or in connection with, or relating to this Agreement (whether or
not a lawsuit is filed), including, but not limited to, any reasonable
attorneys' fees and costs Silicon incurs in order to do the following:
prepare and negotiate this Agreement and the documents relating to this
Agreement; obtain legal advice in connection with this Agreement or Borrower;
enforce, or seek to enforce, any of its rights; prosecute actions against, or
defend actions by, Account Debtors; commence, intervene in, or defend any
action or proceeding; initiate any complaint to be relieved of the automatic
stay in bankruptcy; file or prosecute any probate claim, bankruptcy claim,
third-party claim, or other claim; examine, audit, copy, and inspect any of
the Collateral or any of Borrower's books and records; protect, obtain
possession of, lease, dispose of, or otherwise enforce Silicon's security
interest in, the Collateral; and otherwise represent Silicon in any
litigation relating to Borrower. IN SATISFYING BORROWER'S OBLIGATION
HEREUNDER TO REIMBURSE SILICON FOR ATTORNEYS FEES, BORROWER MAY, FOR
CONVENIENCE, ISSUE CHECKS DIRECTLY TO SILICON'S ATTORNEYS, LEVY, SMALL &
▇▇▇▇▇▇, BUT BORROWER ACKNOWLEDGES AND AGREES THAT LEVY, SMALL & ▇▇▇▇▇▇ IS
REPRESENTING ONLY SILICON AND NOT BORROWER IN CONNECTION WITH THIS AGREEMENT.
If either Silicon or Borrower files any lawsuit against the other predicated
on a breach of this Agreement, the prevailing party in such action shall be
entitled to recover its reasonable costs and attorneys' fees, including (but
not limited to) reasonable attorneys' fees and costs incurred in the
enforcement of, execution upon or defense of any order, decree, award or
judgment. All attorneys' fees and costs to which Silicon may be entitled
pursuant to this Paragraph shall immediately become part of Borrower's
Obligations, shall be due on demand, and shall bear interest at a rate equal
to the highest interest rate applicable to any of the Obligations.
9.13 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and Silicon; provided,
however, that Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Silicon, and any prohibited
assignment shall be void. No consent by Silicon to any assignment shall release
Borrower from its liability for the Obligations.
9.14 JOINT AND SEVERAL LIABILITY. If Borrower consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.
9.15 LIMITATION OF ACTIONS. Any claim or cause of action by Borrower
against Silicon, its directors, officers, employees, agents, accountants or
attorneys, based upon,
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arising from, or relating to this Loan Agreement, or any other present or future
document or agreement, or any other transaction contemplated hereby or thereby
or relating hereto or thereto, or any other matter, cause or thing whatsoever,
occurred, done, omitted or suffered to be done by Silicon, its directors,
officers, employees, agents, accountants or attorneys, shall be barred unless
asserted by Borrower by the commencement of an action or proceeding in a court
of competent jurisdiction by the filing of a complaint within one year after the
first act, occurrence or omission upon which such claim or cause of action, or
any part thereof, is based, and the service of a summons and complaint on an
officer of Silicon, or on any other person authorized to accept service on
behalf of Silicon, within thirty (30) days thereafter. Borrower agrees that
such one-year period is a reasonable and sufficient time for Borrower to
investigate and act upon any such claim or cause of action. The one-year period
provided herein shall not be waived, tolled, or extended except by the written
consent of Silicon in its sole discretion. This provision shall survive any
termination of this Loan Agreement or any other present or future agreement.
9.16 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used in
this Agreement for convenience. Borrower and Silicon acknowledge that the
headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement. The term
"including", whenever used in this Agreement, shall mean "including (but not
limited to)". This Agreement has been fully reviewed and negotiated between the
parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against Silicon or Borrower under any rule
of construction or otherwise.
9.17 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts
and transactions hereunder and all rights and obligations of Silicon and
Borrower shall be governed by the laws of the State of California. As a
material part of the consideration to Silicon to enter into this Agreement,
Borrower (i) agrees that all actions and proceedings relating directly or
indirectly to this Agreement shall, at Silicon's option, be litigated in
courts located within California, and that the exclusive venue therefor shall
be Santa ▇▇▇▇▇ County; (ii) consents to the jurisdiction and venue of any
such court and consents to service of process in any such action or
proceeding by personal delivery or any other method permitted by law; and
(iii) waives any and all rights Borrower may have to object to the
jurisdiction of any such court, or to transfer or change the venue of any
such action or proceeding.
9.18 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND SILICON EACH HEREBY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN SILICON AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF SILICON OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR BORROWER, IN
ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
BORROWER:
RASTEROPS, INC.
BY /s/ illegible
--------------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ illegible
--------------------------------------
SECRETARY OR ASS'T SECRETARY
TRUEVISION, INC.
BY /s/ illegible
--------------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ illegible
--------------------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY /s/ ▇▇▇▇▇▇▇ ▇. ?
--------------------------------------
TITLE /s/ SR. VICE PRESIDENT
-----------------------------------
42,914
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SILICON VALLEY BANK
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: RASTEROPS
TRUEVISION, INC.
ADDRESS: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
DATE: JUNE 13, 1995
This Schedule forms an integral part of the Loan and Security Agreement between
Silicon Valley Bank and the above-borrower of even date.
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1. CREDIT LIMIT
(Section 1.1): An amount not to exceed the lesser of a total of
$7,000,000 at any one time outstanding, or the sum or (a)
and (b) below:
(a) 75% of the amount of Borrower's Eligible
Receivables (as defined in Section 8 above), plus
(b) an amount not to exceed the lesser of:
(1) 20% of the value of Borrower's Eligible
Inventory (as defined in Section 8 above),
calculated at the lower of cost or market value
and determined on a first-in, first-out basis, or
(2) $1,250,000.
Loans to each Borrower will be made separately, based on
the Eligible Receivables and Eligible Inventory of each
Borrower. Prior to the making of any Loans with respect
to Inventory, Borrower shall provide to Silicon an
appriasal of its inventory by ▇▇▇▇-Dovetech, which shall
be satisfactory to Silicon in its discretion.
LETTER OF CREDIT SUBLIMIT
(Section 1.5): $5,000,000; provided that the total amount of Letters of
Credit at any time outstanding and the total amount of
any Exchange Contracts outstanding may not exceed
$5,000,000 in the aggregate.
FOREIGN EXCHANGE
CONTRACT SUBLIMIT Up to $5,000,000 of the Credit Limit may be utilized for
spot and future foreign exchange contracts (the "Exchange
Contracts"); provided that the total amount of Letters of
Credit at any time outstanding and the total amount of
any Exchange Contracts outstanding may not exceed
$5,000,000 in the aggregate. The Credit
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Limit available at any time shall be reduced by the following amounts (the
"Foreign Exchange Reserve") on each day (the "Determination Date"): (i) on
all outstanding Exchange Contracts on which delivery is to be effected or
settlement allowed more than two business days from the Determination Date,
10% of the gross amount of the Exchange Contracts; plus (ii) on all
outstanding Exchange Contracts on which delivery is to be effected or
settlement allowed within two business days after the Determination Date,
100% of the gross amount of the Exchange Contracts. In lieu of the Foreign
Exchange Reserve for 100% of the gross amount of any Exchange Contract, the
Borrower may request that Silicon debit the Borrower's bank account with
Silicon for such amount, provided Borrower has immediately available funds in
such amount in its bank account.
Silicon may, in its discretion, terminate the Exchange Contracts at any time
(a) that an Event of Default occurs or (b) that there is not sufficient
availability under the Credit Limit and Borrower does not have available
funds in its bank account to satisfy the Foreign Exchange Reserve. If either
Silicon or Borrower terminates the Exchange Contracts, and without limitation
of the FX Indemnity Provisions (as referred to below), Borrower agrees to
reimburse Silicon for any and all fees, costs and expenses relating thereto
or arising in connection therewith.
Borrower shall not permit the total gross amount of all Exchange Contracts on
which delivery is to be effected and settlement allowed in any two business
day period to be more than $2,000,000, nor shall Borrower permit the total
gross amount of all Exchange Contracts to which Borrower is a party,
outstanding at any one time, to exceed $5,000,000.
The Borrower shall execute all standard form applications and agreements of
Silicon in connection with the Exchange Contracts, and without limiting any
of the terms of such applications and agreements, the Borrower will pay all
standard fees and charges of Silicon in connection with the Exchange
Contracts.
Without limiting any of the other terms of this Loan Agreement or any such
standard form applications and agreements of Silicon, Borrower agrees to
indemnify Silicon and hold it harmless, from and against any and all claims,
debts, liabilities, demands, obligations, actions, costs and expenses
(including, without limitation, attorneys' fees of counsel of Silicon's
choice), of every nature and description, which it may sustain or incur,
based upon, arising out of, or in any way relating to any of the Exchange
Contracts or any transactions relating thereto or contemplated thereby
(collectively referred to as the "FX Indemnity Provisions").
The Exchange Contracts shall have maturity dates no later than the Maturity
Date.
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2. INTEREST.
INTEREST RATE (Section 1.2):
A rate equal to the "Prime Rate" in effect from
time to time, plus 2.75% per annum. Interest shall
be calculated on the basis of a 360-day year for
the actual number of days elapsed. "Prime Rate"
means the rate announced from time to time by
Silicon as its "prime rate;" it is a base rate
upon which other rates charged by Silicon are
based, and it is not necessarily the best rate
available at Silicon. The interest rate applicable
to the Obligations shall change on each date there
is a change in the Prime Rate.
MINIMUM MONTHLY
INTEREST (Section 1.2): Not applicable.
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3. FEES (Section 1.4):
Loan Fee: $20,000, payable concurrently herewith.
Collateral Monitoring
Fee: Not applicable
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4. MATURITY DATE
(Section 6. 1): One year from the date of this Agreement, subject
to automatic renewal as provided in Section 6.1
above, and early termination as provided in Section
6.2 above.
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5. FINANCIAL COVENANTS
(Section 5.1): Borrower shall comply with all of the following
covenants. Compliance shall be determined as of
the end of each month, except as otherwise
specifically provided below. Compliance shall be
determined with respect to RasterOps, on a
consolidated basis.
DEBT TO TANGIBLE
NET WORTH RATIO: Borrower shall maintain a ratio of total
liabilities to Tangible Net Worth of not more than
3.0 to 1.
MINIMUM TANGIBLE
NET WORTH: Borrower shall maintain a Tangible Net Worth of not
less than the "Minimum Tangible Debt Worth", which
shall mean: $8,000,000, PLUS (i) an amount equal to
50% of the value of any consideration received
after the date hereof for any stock or other
securities issued by the Borrower, plus (ii) 50% of
the amount of any increase in Borrower's Tangible
Net Worth which occurs as a result of a settlement
of the lawsuit entitled " SEE BELOW * " or any
related litigation (including without limitation
increases which occur as a result of the release of
reserves maintained by Borrower in connection with
the same).
* lawsuit "MARKLEEBETH CORP. ET AL.
-3- vs. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ RASTEROPS ET AL."
DEFINITIONS. For purposes of the foregoing financial covenants,
the following terms shall have the following
meanings:
"Liabilities" shall have the meaning ascribed to
that term by generally accepted accounting
principles.
"Tangible Net Worth" shall mean the excess of total
assets over total liabilities, determined in
accordance with generally accepted accounting
principles, with the following adjustments:
(A) there shall be excluded from assets: (i)
notes, accounts receivable and other
obligations owing to the Borrower from its
officers or other Affiliates, and (ii) all
assets which would be classified as intangible
assets under generally accepted accounting
principles, including without limitation
goodwill, licenses, patents, trademarks, trade
names, copyrights, capitalized software and
organizational costs, licenses and franchises
(B) there shall be excluded from liabilities:
all indebtedness which is subordinated to the
Obligations under a subordination agreement in
form specified by Silicon or by language in the
instrument evidencing the indebtedness which is
acceptable to Silicon in its discretion.
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6. REPORTING. (Section 5.3):
Borrower shall provide Silicon with the
following:
1. Monthly Receivable agings, aged by invoice
date, within ten days after the end of each
month.
2. Monthly accounts payable agings, aged by
invoice date, and outstanding or held check
registers within ten days after the end of
each month.
3. Monthly perpetual inventory reports for the
Inventory, on a category by category basis,
valued on a first-in, first-out basis at the
lower of cost or market (in accordance with
generally accepted accounting principles) or
such other inventory reports as are
reasonably requested by Silicon, all within
ten days after the end of each month.
4. Monthly unaudited financial statements, as
soon as available, and in any event within
thirty days after the end of each month.
5. Monthly Compliance Certificates, within
thirty days after the end of each month,
in such form as Silicon shall reasonably
specify, signed by the Chief Financial
Officer of Borrower, certifying that as of
the end of such month Borrower was in full
compliance with all of the terms and
conditions of this Agreement, and setting
forth calculations showing compliance with
the financial covenants set forth in this
Agreement and such other information as
Silicon shall reasonably request.
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