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EXHIBIT 10.6(a)
CREDIT AND REIMBURSEMENT AGREEMENT
THIS CREDIT AND REIMBURSEMENT AGREEMENT is made and entered into effective as of
April 24, 2000, by and between ALLIANCE MEDICAL CORPORATION, a Delaware
corporation ("BORROWER") as borrower, and IMPERIAL BANK, a California banking
corporation ("LENDER") as lender.
FACTUAL BACKGROUND
A. On October 15, 1999, Lender made available to Borrower certain
financial accommodations in the form of a standby letter of credit in the face
amount of $500,000 issued for the account of Borrower.
B. Borrower has requested Lender to make available to Borrower the
following additional financial accommodations (i) a revolving line of credit in
an amount not to exceed $1,000,000, and (ii) a term loan in the original
principal amount not to exceed $750,000. Borrower intends to use the proceeds of
such line of credit and term loan for working capital. In addition, Borrower has
requested that Lender continue in effect the existing letter of credit subject,
however, to the terms and conditions hereof.
C. Lender has agreed to make available such line of credit and term
loans and letter of credit upon and subject to the terms and conditions of this
Credit and Reimbursement Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, Borrower and Lender as follows:
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SECTION 1
DEFINITIONS
As used in this Credit and Reimbursement Agreement, the following terms
have the following meanings:
1.1 "Accounts Receivable Turnover Period" shall mean 365 divided by the
Receivables Turnover Ratio, calculated on a quarterly basis beginning March 31,
2000.
1.2 "Additional Sums" shall have the meaning assigned to it in Section
12.10.
1.3 "Advance" shall mean a disbursement of funds under Facility A or
Facility B or otherwise pursuant to this Agreement.
1.4 "Affiliate" shall mean any Person directly or indirectly
controlling or controlled by, or under direct or indirect common control with,
another Person. A Person shall be deemed to control another Person for the
purposes of this definition if the first Person possesses, directly or
indirectly, the power to direct, or cause the direction of, the management and
policies of the second Person, whether through the ownership of voting
securities, common directors, trustees or officers, by contract or otherwise.
1.5 "Average Accounts Receivable" shall mean, for the specified
calendar quarter (a) the sum of (i) the outstanding balance on Borrower's
accounts owed to Borrower, as of the last day of the immediately preceding
twelve month period and (ii) the outstanding balance on Borrower's accounts owed
to Borrower, as of the last day of the testing quarter, (b) divided by two (2).
1.6 "Agreement" shall mean this Credit and Reimbursement Agreement, as
amended, supplemented or modified from time to time, together with all exhibits
and schedules attached to this Agreement from time to time.
1.7 "Borrower" shall have the meaning assigned to it in the Preamble to
this Agreement.
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1.8 "Borrowing Base Certificate" shall mean a certificate in the form
attached hereto as Exhibit B.
1.9 "Business Day" shall mean a day other than a Saturday, Sunday or
other day on which state banking corporations in Los Angeles, California are
authorized or required by law to close.
1.10 "Capital Lease" shall mean any lease of any Property by Borrower
that has been or will be classified and accounted for as a capital lease on the
balance sheet of Borrower in accordance with GAAP.
1.11 "CCP" shall have the meaning assigned to it in Section 12.5.
1.12 "CD" shall mean that certificate of deposit, dated as of October
15, 1999, in the face amount of $500,000, issued by Lender to Borrower, and any
certificate or certificates of deposit issued in substitution, replacement, or
renewal of such certificate of deposit.
1.13 "Claim" shall have the meaning assigned to it in Section 12.5.
1.14 "Claim Date" shall have the meaning assigned to it in Section
12.5.
1.15 "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
1.16 "Compliance Certificate" shall mean a certificate in the form of
Exhibit C attached hereto, signed by the Chief Executive Officer or the Chief
Financial Officer of Borrower, and certifying, among other things, that Borrower
is, as of the date of the Compliance Certificate, in compliance with all of the
covenants stated in Sections 9 and 10.
1.17 "Court" shall have the meaning assigned to it in Section 12.5.
1.18 "Debt Service Coverage Ratio" shall mean, for the specified
period, the ratio of Borrower's EBITDA to the sum of the following that are due
within the relevant period: all current maturities of long-term debt for the
upcoming twelve months plus interest expense and Capital Lease obligations.
Borrower's Debt Service Coverage Ratio shall be calculated quarterly
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on an annualized basis (a) for the calendar quarter ending September 30, 2000,
(b) for the six month period ending December 31, 2000, (c) for the nine month
period ending March 31, 2001, and (d) thereafter on a rolling four-quarter
basis.
1.19 "Default" shall mean an event that with the giving of notice or
the passage of time or both would constitute an Event of Default.
1.20 "Disbursement" shall have the meaning assigned to it in Section
4.7.
1.21 "EBITDA" shall mean, for any specified period, as determined in
accordance with GAAP: (a) the Net Income of Borrower; plus (b) the sum of the
following to the extent deducted in the determination of such Net Income: (i)
income taxes less taxes actually paid in cash, (ii) interest expense, less any
interest income, and (iii) amortization and depreciation, including amortization
of goodwill.
1.22 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as supplemented and amended from time to time.
1.23 "Eligible Account Receivable" shall mean an account owed to
Borrower that meets the following requirements when such account first comes
into existence, and continues to meet such requirements until such account is
collected in full:
(a) the account arose from a bona fide sale or lease of goods
delivered or shipped and/or the provision of services to a purchaser located in
the United States for which Borrower has genuine invoices, shipping documents or
receipts;
(b) the account is due and payable not more than 30 days after
the date of the related invoice;
(c) the account is owned by Borrower free and clear of all
Liens, other than Liens held by Lender;
(d) the account is enforceable for the amount showing as owing
in such invoice, shipping documents or receipt, and the transaction out of which
the account arose complies with all applicable laws and regulations;
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(e) the account is not subject to any setoff, credit allowance
or adjustment;
(f) the account debtor has not returned the goods or disputed
liability for the goods and/or services;
(g) the account has not been past due for more than 120 days;
(h) Borrower has no knowledge of any circumstance that might
impair the account debtor's credit standing;
(i) the account does not arise out of an international
transaction unless (i) payment is insured under a policy of insurance acceptable
to Lender; (ii) the account has been specifically approved by Lender (in its
sole discretion); or (iii) payment is assured under a letter of credit issued or
confirmed by a bank acceptable to Lender;
(j) the account debtor is not (i) a Subsidiary of Borrower;
(ii) a Person who is a shareholder, director, officer or employee of Borrower;
(iii) except with respect to an account for which Borrower has complied with the
United States Assignment of Claims Act of 1940, as amended, the United States of
America or any agency, department or instrumentality thereof; (iv) a
Governmental Authority other than the United States of America or any agency,
department or instrumentality thereof; (v) a "debtor" or similar party under or
in any proceeding under the United States Bankruptcy Code or any other law
providing for creditor relief; or (vi) an assignor for the benefit of creditors;
(k) the account is assignable to Lender and, if evidenced by
any instrument, has been endorsed and delivered to Lender in an manner
satisfactory to Lender in its sole discretion;
(l) the account is not conditioned on the approval of the
account debtor or subject to any repurchase obligation on the part of Borrower
or any return right or privilege of the account debtor;
(m) the account does not arise out of a bonded contract;
(n) the account does not arise out of a consignment or
guaranteed sale;
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(o) the account has not been referred to any third party for
collection;
(p) the account does not constitute a progress billing;
(q) any credit balance of greater than 90 days from the
earlier of (i) delivery or shipment of the goods, (ii) performance of the
service, or (iii) the date of the related invoice;
(r) the account is not owed by an account debtor that is
obligated on any account owed to Borrower more than 25% of which has been past
due for more than 120 days from the earlier of (i) delivery or shipment of the
goods, (ii) performance of the service, or (iii) the date of the related
invoice;
(s) the account debtor is not a party that has supplied or
provided any goods, inventory, materials or services to Borrower;
(t) the account is not a ▇▇▇▇ and hold account; and
(u) the account does not arise out of or constitute a contract
receivable.
Any Eligible Account Receivable that fails to meet any of the above requirements
shall immediately and without any action by Lender cease to be an Eligible
Account Receivable.
Notwithstanding any provision herein to the contrary, at any given time the
accounts of a given Person and its Affiliates and Subsidiaries shall not exceed
20% of the aggregate Eligible Accounts Receivable.
1.24 "Eligible Equipment" shall mean equipment that is:
(i) acquired by Borrower for use in the usual and ordinary
course of Borrower's business;
(ii) from time to time determined by Lender to be eligible for
inclusion in the Facility B Borrowing Base;
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(iii) owned by Borrower free and clear of all Liens other than
Liens held by Lender and the Liens described in clauses (a),
(b), (c) and (d) of the definition of Permitted Liens; and
(iv) reflected on the financial statements of Borrower as an
asset in accordance with GAAP.
Any Eligible Equipment that fails to meet any of the above requirements shall
immediately and without any action by Lender cease to be Eligible Equipment.
1.25 "Event of Default" shall have the meaning assigned to it in
Section 11.1.
1.26 "Existing Letter of Credit" shall mean the Letter of Credit in the
Stated Amount of $500,000, issued by Lender for the account of Borrower pursuant
to the Letter of Credit Agreement.
1.27 "Facility A" shall have the meaning assigned to it in Section 2.1,
as the same may be amended, supplemented or modified from time to time.
1.28 "Facility A Advance" shall mean an Advance under Facility A.
1.29 "Facility A Accrued Amount" shall have the meaning assigned to it
in Section 2.4(c).
1.30 "Facility A Advance Request" shall mean a written request for a
Facility A Advance in the form attached as Exhibit D, executed by an authorized
officer of Borrower.
1.31 "Facility A Billed Amount" shall have the meaning assigned to it
in Section 2.4(c).
1.32 "Facility A Borrowing Base" shall mean, as of any date, the lesser
of: (a) the Facility A Maximum Principal Amount; or (b) 75% of the aggregate
amount of Eligible Accounts Receivable.
1.33 "Facility A Borrowing Date" shall have the meaning assigned to it
in Section 2.5.
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1.34 "Facility A Commitment" shall mean the obligations of Lender to
make Facility A available to Borrower pursuant to Section 2.1 in the amount
referred to therein.
1.35 "Facility A Commitment Period" shall mean the period from and
including the date hereof to and including the Facility A Termination Date.
1.36 "Facility A Due Date" shall have the meaning assigned to it in
Section 2.4(c).
1.37 "Facility A Maturity Date" shall mean the first Business Day next
preceding the first anniversary of the date of this Agreement, or such earlier
date on which all amounts under Facility A first become due and payable as
provided herein.
1.38 "Facility A Maximum Available Commitment" shall mean, at any
specified time, the amount, if any, by which the Facility A Borrowing Base
exceeds the unpaid principal balance outstanding at such time under Facility A.
1.39 "Facility A Maximum Principal Amount" shall mean $1,000,000.00.
1.40 "Facility A Note" shall mean the Revolving Credit Promissory Note,
of even date herewith, in the Facility A Maximum Principal Amount, executed by
Borrower in favor of Lender to evidence Facility A, as the same may be amended,
supplemented or modified from time to time, together with all exhibits and
schedules attached thereto from time to time.
1.41 "Facility A Termination Date" shall mean the second Business Day
next preceding the first anniversary of the date of this Agreement, or such
earlier date on which Lender's obligation to make Facility A Advances first
terminates as provided herein.
1.42 "Facility B" shall have the meaning assigned to it in Section 3.1,
as the same may be amended, supplemented or modified from time to time.
1.43 "Facility B Accrued Amount" shall have the meaning assigned to it
in Section 3.4(c).
1.44 "Facility B Advance" shall mean the Advance under Facility B made
on the date that this Agreement is executed by Borrower and Lender.
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1.45 "Facility B Advance Request" shall mean a written request for the
Facility B Advance in the form attached hereto as Exhibit E executed by an
authorized officer of Borrower.
1.46 "Facility B Billed Amount" shall have the meaning assigned to it
in Section 3.4(c).
1.47 "Facility B Borrowing Base" shall mean, as of any date, the lesser
of: (a) the Facility B Maximum Principal Amount; or (b) the sum of (i) 80% of
the aggregate Invoice Price of New Eligible Equipment and (ii) 50% of the
aggregate Invoice Price of Used Eligible Equipment.
1.48 "Facility B Commitment" shall mean the obligation of Lender to
make Facility B available to Borrower pursuant to Section 3.1 in the amount
referred to herein.
1.49 "Facility B Due Date" shall have the meaning assigned to it in
Section 3.4(c).
1.50 "Facility B Maturity Date" shall mean the first Business Day
preceding the fifth anniversary of the date of this Agreement, or such earlier
date on which all amounts due under Facility B first become due and payable
hereunder.
1.51 "Facility B Maximum Principal Amount" shall mean $750,000.
1.52 "Facility B Note" shall mean the Term Loan Promissory Note -
Facility B, of even date herewith, in the amount of $750,000, executed by
Borrower in favor of Lender (evidencing amounts advanced by Lender under
Facility B with respect to equipment (other than computer and computer
peripheral equipment) that constitutes Eligible Equipment, as the same may be
from time to time amended, supplemented, or modified, together with all exhibits
and schedules from time to time attached thereto.
1.53 "Facility B Term" shall mean the period from and including the
date hereof to and including the Facility B Maturity Date.
1.54 "Facility C" shall have the meaning assigned to it in Section 4.1,
as the same may be amended, supplemented or modified from time to time.
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1.55 "Facility C Commitment" shall mean the obligations of Lender to
make Facility C available to Borrower pursuant to Section 4.1 in the amount
referred to herein.
1.56 "Facility C Final Expiration Date" shall mean October 11, 2004.
1.57 "Facility C Maximum Stated Amount" shall mean $500,000.
1.58 "Facility C Outstanding Balance" in effect at any time means the
maximum aggregate amount available to be drawn at such time on all outstanding
Letters of Credit, the determination of such maximum amount to assume compliance
with all conditions for a Disbursement.
1.59 "GAAP" shall mean those generally accepted accounting principles
and practices which are recognized as such by the American Institute of
Certified Public Accountants acting through its Accounting Principles Board or
by the Financial Accounting Standards Board or through other appropriate boards
or committees thereof and which are consistently applied for all periods so as
to properly reflect the financial condition, and the results of operations and
changes in financial position of Borrower.
1.60 "Government Authority" shall mean any nation or government, any
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administration functions of or
pertaining to government, and any corporation or other entity owned or
controlled (through stock or capital ownership or otherwise) by any of the
foregoing.
1.61 "Indebtedness" shall mean, at any specified time: (a) the
aggregate indebtedness for borrowed money and for the deferred purchase price of
property or services in respect of which Borrower is liable, contingently or
otherwise, as obligor or otherwise and any commitment by which Borrower assures
a creditor against loss, including contingent reimbursement obligations (less
deferred portion of tenant inducement advanced by Borrower's landlord) with
respect to letters of credit; (b) the aggregate indebtedness guaranteed in any
manner by Borrower, including guaranties in the form of an agreement to
repurchase or reimburse; (c) all obligations under Capital Leases in respect of
which obligations Borrower is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations Borrower assures a
creditor against loss; (d) all unfunded obligations of Borrower to
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any "multiemployer plan" as such term is defined under ERISA; (e) all
liabilities secured by any Lien on any Property owned by Borrower even though
Borrower has not assumed or otherwise become liable for the payment thereof; and
(f) all other liabilities or obligations of Borrower which, in accordance with
GAAP, are properly shown as a liability of Borrower on the balance sheet of
Borrower.
1.62 "Indemnified Costs" mean all actual or threatened liabilities,
claims, actions, causes of action, judgments, orders, damages (including
foreseeable and unforeseeable consequential damages), costs, expenses, fines,
penalties and losses (including sums paid in settlement of claims and all
consultant, expert and legal fees and expenses of counsel to Lender).
1.63 "Indemnified Parties" means and includes Lender, its respective
Subsidiaries and Affiliates, assignees of any of interest of Lender in the Loan
Documents or the Related Documents, owners of participation or other interests
in the Loan Documents or the Related Documents, and the officers, directors,
employees, attorneys and agents of each of them.
1.64 "Intangible Assets" means those assets that are (i) deferred
assets, other than prepaid taxes; (ii) patents, copyrights, trademarks,
tradenames, franchises, goodwill, experimental expenses and other similar assets
which would be classified as intangible assets on a balance sheet prepared in
accordance with generally accepted accounting principles consistently applied;
and (iii) unamortized debt discount and expense.
1.65 "Invoice" shall mean, with respect to any Eligible Equipment, the
invoice issued by the seller thereof to Borrower showing the Invoice Price of
such Eligible Equipment and whether such equipment constitutes New Eligible
Equipment or Used Eligible Equipment, as approved by Lender in its sole and
absolute discretion.
1.66 "Invoice Price" shall mean, with respect to any Eligible
Equipment, the price actually paid by Borrower to acquire such Eligible
Equipment as shown on the related Invoice.
1.67 "Landlord(s)" shall mean the landlord(s) under the Leases.
1.68 "Landlord Lien Waivers" shall collectively mean the landlord
waivers (each in a form acceptable to Lender in its sole discretion) executed by
the Landlords in favor of Lender, as
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the same may from time to time be amended, supplemented or modified, together
with all exhibits and schedules from time to time attached thereto, pursuant to
which each Landlord, among other things, waives any landlord's lien, whether
statutory or otherwise, and other claims in and to any of the collateral for the
Obligations and agrees to such other covenants as are reasonably requested by
Lender.
1.69 "Leases" shall collectively mean the leases described on Exhibit F
attached hereto (as Exhibit F may be updated from time to time), as such leases
may from time to time be amended, supplemented or modified, and any other rental
agreements or leases hereafter executed by Borrower for the lease or rental of
real property or space, together with all exhibits and schedules from time to
time attached thereto.
1.70 "Lender" shall have the meaning assigned thereto in the Preamble
to this Agreement.
1.71 "Letter of Credit" shall mean the Existing Letter of Credit, any
other letter of credit issued hereunder by Lender for the account of Borrower,
and any other letter of credit issued in substitution, replacement, or renewal
thereof.
1.72 "Letter of Credit Agreement" shall mean that certain agreement by
and between Borrower and Lender pursuant to which Lender issued the Letter of
Credit dated as of October 15, 1999.
1.73 "Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, charge, lien
(statutory or other), security interest, preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement), any
financing lease having substantially the same economic effect as any of the
foregoing (including the interest of a vendor or lessor under any conditional
sale agreement, Capital Lease or other title retention agreement), or the filing
of any financing statement under the UCC or comparable law of any jurisdiction.
1.74 "Loans" shall collectively mean all amounts advanced or to be
advanced under Facility A and Facility B.
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1.75 "Loan Documents" shall mean this Agreement, all Borrowing Base
Certificates, the Notes, the Security Agreement, the Pledge Agreement, and all
notes, mortgages, deeds of trust, security agreements, assignments, financing
statements, certificates and other documents whether now or hereafter existing,
executed by Borrower in connection with the Obligations.
1.76 "Net Income" shall mean for any period the net income of Borrower
for such period in accordance with GAAP.
1.77 "New Eligible Equipment" shall mean Eligible Equipment that, when
acquired by Borrower, was new and had not previously been used.
1.78 "New-Renewal Notice" shall mean written notice by Lender to the
beneficiary of a Letter of Credit that such Letter of Credit shall not be
renewed and shall expire on the then current Stated Expiry Date.
1.79 "Notes" shall mean the Facility A Note, the Facility B Note, and
any note or notes required by Lender to be executed by Borrower in connection
with the Obligations, and any other note or notes issued in substitution,
replacement or renewal of any of the foregoing notes.
1.80 "Obligations" shall mean all amounts to be paid or satisfied and
all covenants and obligations to be performed or fulfilled by Borrower pursuant
to the Loan Documents and all other amounts, covenants and obligations that
Borrower hereafter agree to pay, perform or fulfill for Lender's benefit, as the
same may be amended, supplemented or modified from time to time.
1.81 "PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA, and any entity
succeeding to any or all of its functions.
1.82 "Permitted Liens" shall mean:
(a) Liens for taxes, assessments or other governmental
charges, and carriers', warehousemen's, repairmen's, mechanics', materialmen's
and other like Liens incident to construction, which are either not delinquent
or are being contested in good faith by appropriate proceedings which will
prevent foreclosure of such Liens, and against which Borrower have provided, and
are maintaining, adequate reserves in accordance with GAAP; provided, however,
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that if Borrower contests such a Lien, Borrower shall furnish to Lender a bond,
guarantee or other security with respect to such Lien satisfactory in form and
substance to Lender in its sole discretion;
(b) easements, restrictions, minor title irregularities and
similar matters which have no material adverse effect upon the ownership and use
of the affected property;
(c) Liens or deposits in connection with workers compensation,
unemployment, social security or other insurance or benefits, or to secure
customs duties, public or statutory obligations in lieu of surety, stay or
appeal bonds, or to secure performance of contracts or bids (other than
contracts for the payment of money borrowed), or deposits required by law as a
condition to the transaction of business, or other Liens or deposits of a like
nature made in the ordinary course of business;
(d) Liens or security interests held by Lender;
(e) Liens created by Capital Leases permitted by Section 10.3,
so long as (i) the Indebtedness secured by all such Liens, together with the
Indebtedness described in clause (1) below, does not exceed $100,000 in the
aggregate for Borrower at any given time; (ii) the Liens created by such Capital
Leases attach solely to the assets being leased or acquired by Borrower pursuant
to such Capital Leases and secure only the capitalized amount; and (iii) the
Indebtedness secured by any such Lien does not exceed 100% of the capitalized
amount; and
(f) purchase money liens or security interests permitted by
Section 10.3 and granted to suppliers in the ordinary course of business for
purposes of purchasing inventory, so long as (i) the Indebtedness secured by all
such liens and security interests, together with the indebtedness described in
clause (e) above, does not exceed $100,000 in the aggregate for Borrower at any
given time; (ii) such purchase money liens or security interests arise pursuant
to a bona fide sales at prices consistent with the prevailing market price for
such inventory; (iii) the Liens created by such transactions attach solely to
the inventory being acquired by Borrower and secure only the balance of the
purchase price of such inventory; and (iv) the Indebtedness secured by any such
Lien does not exceed 100% of the price of the inventory that is acquired.
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1.83 "Person" shall mean an individual, partnership, limited liability
company, corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Government Authority or other entity of whatever
nature.
1.84 "Plan" shall mean any savings, profit sharing, retirement,
deferred compensation contract or other plan maintained for employees of
Borrower and covered by Title IV of ERISA.
1.85 "Pledge Agreement" shall mean the Pledge Agreement, of even date
herewith, executed by Borrower and Lender, as the same may from time to time be
amended, supplemented, or modified, together with all exhibits and schedules
from time to time attached thereto, which secures, among other things, the
Obligations.
1.86 "Prime Rate" shall mean the annual rate of interest from time to
time announced by Lender as the fluctuating "prime" or equivalent rate of
interest of Lender. Any increase or decrease in the Prime Rate shall be
effective on the day the Prime Rate reflecting such increase or decrease is
announced or published, as the case may be. Borrower acknowledges that the Prime
Rate may not represent the most favorable interest rate from time to time
offered by Lender to Borrower of Lender, that the Prime Rate may increase or
decrease daily during the time this Agreement is in effect, and that the amount
by which the Prime Rate may increase or decrease is not limited as to increases
or decreases that may occur on any day while amounts owing on the Loans remain
outstanding.
1.87 "Property" shall mean any interest of Borrower in any kind of
property or asset, whether real, personal or mixed, or tangible or intangible,
including all Eligible Accounts Receivable, Eligible Equipment and
Trademarks/names and Patents.
1.88 "Receivables Turnover Ratio" shall mean for the specified period,
the ratio of Borrowers revenues (as determined in accordance with GAAP) computed
on a rolling four-quarter basis to Borrower's Average Accounts Receivable.
1.89 "Related Documents" shall collectively mean the Warrant Agreement
(including any Antidilution Agreement and Registration Rights Agreement executed
in connection therewith), the Landlord Lien Waivers, and all notes, mortgages,
deeds of trust, security
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agreements, assignments, financing statements and other documents, whether now
or hereafter existing, executed by a Person other than Borrower in connection
with the Obligations.
1.90 "Security Agreement" shall mean the Security Agreement, of even
date herewith, between Borrower and Lender, as the same may from time to time be
amended, supplemented or modified, together with all exhibits and schedules from
time to time attached thereto, which secures, among other things, the
Obligations.
1.91 "Stated Amount" of a Letter of Credit means the amount of the
Letter of Credit as stated in the Letter of Credit.
1.92 "Stated Expiry Date" of a Letter of Credit means the stated expiry
date or expiration date as stated in the Letter of Credit.
1.93 "Subsidiary" shall mean, as to any Person, a corporation whose
shares of stock having ordinary voting power (other than stock having such power
only by reason of the happening of a contingency that has not occurred) to elect
a majority of the board of directors or other managers of such corporation are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries or both, by such Person.
1.94 "Tangible Debt to Net Worth Ratio" shall mean for the specified
quarter, the ratio of all of Borrower's liabilities to Borrower's Tangible Net
Worth less any balance sheet adjustments relating to current liabilities,
measured quarterly.
1.95 "Tangible Net Worth" shall mean, for the specified quarter, the
total shareholder's equity (including capital stock, additional paid in capital
and retained earnings after deducting treasury stock) which would appear on a
balance sheet of Borrower prepared as of such date in accordance with generally
accepted accounting principles consistently applied, less the aggregate book
value of Intangible Assets shown on such balance sheet.
1.96 "Tangible Net Worth Minimum" means as of a specified date the sum
of (i) $2,700,000, plus (ii) beginning June 30, 2000, the sum of (x) seventy
percent (70%) of Borrower's positive Net Income and (y) one hundred percent
(100%) of extraordinary gains and
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proceeds of sales of equity interests in Borrower, for each quarter thereafter,
less (iii) any balance sheet adjustments relating to existing liabilities in
each calendar quarter.
1.97 "Trademarks/names and Patents" shall mean all logos, insignia,
trademarks and trade names and patents or applications therefor now or hereafter
utilized for or in connection with the business of Borrower, all of which are
listed on Exhibit G.
1.98 "UCC" shall mean the Uniform Commercial Code as the same may from
time to time be in effect in the State of California.
1.99 "Used Eligible Equipment" shall mean all Eligible Equipment that
is not New Eligible Equipment.
1.100 "Warrant Agreement" shall mean that Warrant Agreement, of even
date herewith. executed by Borrower and Lender, as the same may from time to
time be amended, supplemented, or modified, together with all exhibits and
schedules from time to time attached thereto.
Except as otherwise herein specifically provided, each accounting term
used herein shall have the meaning given to the accounting term under GAAP, all
other terms contained in this Agreement (and which are not otherwise
specifically defined herein) shall have the meanings provided in the UCC to the
extent the same are used or defined therein. Unless the context otherwise
requires, the words "hereof," "herein," and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, the word "include(s)" means
"include(s), without limitation," and the word "including" means "including,
without limitation". All references to dollar amounts shall mean amounts in
lawful money of the United States of America.
SECTION 2
REVOLVING CREDIT FACILITY - FACILITY A
2.1 Revolving Line of Credit Commitment. Subject to the terms and
conditions of this Agreement, Lender agrees to make a revolving line of credit
facility ("FACILITY A") available to Borrower during the Facility A Commitment
Period in an aggregate principal amount at any
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one time outstanding not to exceed the Facility A Borrowing Base. During the
Facility A Commitment Period, so long as no Default or Event of Default has
occurred, Borrower may borrow and repay the amounts owing under Facility A in
whole or in part, and reborrow, all in accordance with the terms and conditions
hereof.
2.2 Interest Payable. Subject to the provisions of Section 5.1 (Default
Interest) Borrower shall pay interest on the unpaid principal amount from time
to time outstanding under Facility A, in arrears, at a rate equal to the Prime
Rate plus 2.00%.
2.3 Facility Fee. Upon the execution of this Agreement by Borrower and
Lender, Borrower shall become obligated to pay to Lender, with respect to
Facility A, a facility fee of $5,000. If, on the Facility A Maturity Date (and
each successive maturity date if Facility A is renewed or extended), Borrower
has not terminated Facility A by (i) giving Lender written notice of such
termination, and (ii) paying in full the unpaid principal balance of, all
interest accrued on and all other charges and amounts due and payable with
respect to Facility A, Borrower shall become obligated to pay Lender with
respect to Facility A, and Borrower shall pay Lender on the first Business Day
after such Facility A Maturity Date (and each successive maturity date if
Facility A is renewed or extended), an additional facility fee in the amount of
0.50% times the Facility A Maximum Principal Amount then in effect.
2.4 Repayment Terms.
(a) Borrower shall pay all accrued, but unpaid, interest on
the unpaid principal amount from time to time outstanding under Facility A,
commencing on May 10, 2000, and continuing monthly thereafter on the 10th day of
each month until the principal and all other amounts outstanding under Facility
A have been paid in full and the Facility A Commitment has been terminated.
Unless Lender otherwise agrees in writing, all payments shall be made by
automatic pre-authorized electronic debit of Borrower's account(s) pursuant to a
separate agreement by and between Borrower and Lender.
(b) Borrower shall repay in full all outstanding and unpaid
principal, interest and other charges outstanding under the Facility A no later
than the Facility A Maturity Date.
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(c) On or about the last day of each calendar month, Lender
shall mail to Borrower a statement of the estimated amount (the "FACILITY A
BILLED AMOUNT") that will be due under Facility A on the 10th day of the
immediately succeeding month (the "FACILITY A DUE DATE") for the interest
payable for such calendar month. The calculation of the Facility A Billed Amount
shall be made on the assumption that no new extensions of credit or payments
will be made between the date of the statement and the applicable Facility A Due
Date, and that there will be no changes in the applicable interest rate. The
Facility A Billed Amount shall be due, regardless of the actual amount of
interest accrued. If the Facility A Billed Amount differs from the amount
actually owing on the Facility A Due Date based on the interest rates actually
in effect and the actual principal balances outstanding (the "FACILITY A ACCRUED
AMOUNT"), the difference will be treated as follows:
(i) If the Facility A Billed Amount is less than the
Facility A Accrued Amount, the Facility A Billed Amount for the following
Facility A Due Date shall be increased by the amount of the difference. Borrower
shall not be in Default solely by reason of any such difference; or
(ii) If the Facility A Billed Amount is more than the
Facility A Accrued Amount, the Facility A Billed Amount for the following
Facility A Due Date shall be decreased by the amount of the difference.
Regardless of any such difference, interest shall continue to accrue on Facility
A based on the actual amount of principal outstanding, without compounding.
Lender shall not be obligated to pay Borrower interest on any overpayment.
(d) Unless otherwise provided in this Agreement or required by
applicable law, payments received by Lender with respect to Facility A shall be
applied first to the Additional Sums or other costs or charges provided for
herein, next to the accrued and unpaid interest with respect to Facility A, and
then the remainder to the principal amount outstanding under Facility A.
2.5 Procedure for Obtaining Facility A Advance. As a condition to each
Facility A Advance, Borrower shall submit to Lender a Facility A Advance
Request. A request for a
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Facility A Advance shall specify a Business Day during the Facility A Commitment
Period on which such Advance is to be made (a "FACILITY A BORROWING DATE") and
the amount of the Advance requested. A Facility A Advance may be requested in
any principal amount of $100,000 or more up to the Facility A Maximum Available
Commitment. A request for a Facility A Advance shall be made not later than one
Business Day prior to the corresponding Facility A Borrowing Date; provided,
however, that Lender waives such notice requirement with respect to the initial
Facility A Advance requested by Borrower and to be made on the date of execution
of this Agreement.
2.6 Prepayments.
(a) Optional Prepayments. Provided that all matured interest
and other charges accrued to the date of prepayment are also paid in full,
Borrower may, at the option of Borrower, at any time and from time to time,
prepay the principal amount of Facility A, in whole or in part, without any
prepayment premium or penalty. Notwithstanding any partial prepayment of
principal under Facility A, there shall be no change in the due date of or the
amount of any scheduled payment with respect to Facility A unless Lender, in its
sole discretion, agrees in writing to such change.
(b) Mandatory Prepayment. At any time that the aggregate
principal amount outstanding under Facility A exceeds the Facility A Borrowing
Base, Borrower shall immediately prepay the amount by which such aggregate
principal amount outstanding exceeds such borrowing base, together with interest
accrued on the amount of the prepayment.
SECTION 3
TERM LOAN - FACILITY B
3.1 Term Loan - Facility B. Subject to the terms and conditions of this
Agreement, Lender agrees to extend a term loan ("FACILITY B") to Borrower in an
aggregate principal amount at any one time not to exceed the Facility B
Borrowing Base. Amounts paid or repaid under Facility B may not be reborrowed.
Amounts under Facility B shall be drawn on the date that this Agreement is
executed by Borrower and Lender.
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3.2 Interest Payable. Subject to the provisions of Section 5.1,
Borrower shall pay interest on the unpaid principal amount from time to time
outstanding under Facility B, in arrears, at a rate equal to the Prime Rate plus
2.50%.
3.3 Facility Fee. Upon the execution of this Agreement by Borrower and
Lender, Borrower shall become obligated to pay to Lender, and shall pay to
Lender on such date, with respect to Facility B, a facility fee of $7,500.
3.4 Repayment Terms.
(a) Facility B Note. Borrower shall pay all accrued, but
unpaid, interest on the unpaid principal amount from time to time outstanding
under the Facility B Note, commencing on May 10, 2000, and continuing monthly
thereafter on the 10th day of each month until October 10, 2000. Commencing on
November 10, 2000 and continuing on the 10th day of each month thereafter to and
including May 10, 2005, Borrower shall pay on each such date principal in the
amount equal to 1/54th of the unpaid principal amount outstanding under the
Facility B Note as of each such payment date, plus accrued interest. Unless
Lender otherwise agrees in writing, all payments shall be made by automatic
pre-authorized electronic debit of Borrower's account(s) pursuant to a separate
agreement by and between Borrower and Lender.
(b) The entire principal balance outstanding under Facility B,
together with all accrued interest and other amounts payable pursuant to
Facility B, the Loan Documents and the Related Documents, if not sooner paid as
provided in the Loan Documents or any of the Related Documents, shall be due and
payable on the Facility B Maturity Date.
(c) On or about the last day of each calendar month, Lender
shall mail to Borrower a statement of the estimated amount (the "FACILITY B
BILLED AMOUNT") that will be due under Facility B on the 10th day of the
immediately succeeding month (the "FACILITY B DUE DATE") for the interest and
any principal payable for such month. The calculation of the Facility B Billed
Amount shall be made on the assumption that there will be no changes in the
applicable interest rate. The Facility B Billed Amount will be due, regardless
of the actual amount of interest accrued. If the Facility B Billed Amount
differs from the amount actually owing on the
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Facility B Due Date based on the interest rates actually in effect and the
actual principal balances outstanding (the "FACILITY B ACCRUED AMOUNT"), the
difference will be treated as follows:
(i) If the Facility B Billed Amount is less than the
Facility B Accrued Amount, the Facility B Billed Amount for the following
Facility B Due Date shall be increased by the amount of the difference. Borrower
shall not be in Default solely by reason of any such difference; or
(ii) If the Facility B Billed Amount is more than the
Facility B Accrued Amount, the Facility B Billed Amount for the following
Facility B Due Date shall be decreased by the amount of the difference.
Regardless of any such difference, interest shall continue to accrue on Facility
B based on the actual amount of principal outstanding, without compounding.
Lender shall not be obligated to pay Borrower interest on any overpayment.
(d) Unless otherwise provided in this Agreement or required by
applicable law, payments received by Lender with respect to Facility B shall be
applied, first to the Additional Sums or other costs or charges provided for
herein, next to accrued and unpaid interest with respect to Facility B, and then
the remainder to the principal amount outstanding under Facility B.
3.5 Procedure for Obtaining Facility B Advance. As a condition to the
Facility B Advance, Borrower shall submit to Lender on or prior to the date that
this Agreement is executed by Lender and Borrower, a Facility B Advance Request
therefor, accompanied by the Invoices approved by Lender for the Eligible
Equipment for which such request is submitted and that shall be attached as
Exhibit A hereto. The Facility B Advance shall be in the principal amount of the
sum of (i) 80% of the Invoice Price stated on the corresponding Invoice with
respect to New Eligible Equipment, and (ii) 50% of the Invoice Price stated on
the corresponding Invoice with respect to Used Eligible Equipment.
3.6 Extinguishment of Facility B. Borrower's right to draw any portion
of Facility B that is not advanced by Lender on the date that this Agreement is
executed by Borrower and
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Lender shall without further action or notice be extinguished, and any and all
obligations of Lender to make such unadvanced portion of Facility B available
hereunder shall thereupon cease.
3.7 Optional Prepayments. Provided that all matured interest and other
charges accrued to the date of prepayment are also paid in full, Borrower may,
at the option of Borrower, at any time and from time to time, prepay the
principal amount of Facility B, in whole or in part, without any prepayment
premium or penalty; provided, however, that the amount of any such prepayment
shall be at least $50,000 or any greater amount in increments of $50,000.
Notwithstanding any partial prepayment of principal hereof, there shall be no
change in the due date or the amount of any scheduled payment with respect to
Facility B unless Lender, in its sole discretion, agrees in writing to such
change. All prepayments under Facility B shall be applied, at the option of
Lender, in the inverse order of maturity.
SECTION 4
LETTER OF CREDIT - FACILITY C
4.1 Letter of Credit - Facility C. Subject to the terms and conditions
of this Credit Agreement, Lender agrees from time to time before the Facility C
Final Expiration Date to issue Letters of Credit for the account of Borrower
("FACILITY C"). Each reference in this Agreement to "issue" or "issuance" or
other forms of such words in relation to Letters of Credit shall be deemed to
include an extension or renewal of a Letter of Credit.
4.2 Existing Letter of Credit. Borrower and Lender acknowledge and
agree that the Existing Letter of Credit shall continue in full force and effect
upon and subject to the terms and conditions of this Agreement and that for
purposes hereof the Existing Letter of Credit shall be deemed to have been
issued hereunder on the date hereof. Borrower and Lender further acknowledge and
agree that the Letter of Credit Agreement is amended and restated in its
entirety by this Agreement.
4.3 Stated Amount of Letters of Credit. Each Letter of Credit shall (i)
by its terms be issued in a Stated Amount; (ii) have a Stated Expiry Date no
later than the Facility C Final Expiration Date; (iii) expire or be terminated
by the beneficiary thereunder on or before its Stated Expiry Date (unless
renewed in accordance with the terms hereof); and (v) not cause the
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Facility C Outstanding Balance after the issuance of said Letter of Credit to
exceed the Facility C Maximum Stated Amount.
4.4 Automatic Renewal. A Letter of Credit will be automatically renewed
for a one-year period upon its Stated Expiry Date in accordance with its terms
unless at least 60 days prior to such Stated Expiry Date (after giving effect to
all prior renewals) Lender issues a Notice of Non-Renewal. Lender agrees that it
shall not issue a Notice of Non-Renewal with respect to a Letter of Credit so
long as:
(i) No Default or Event of Default shall have occurred
and is continuing;
(ii) After giving effect to such renewal, the Facility C
Outstanding Balance shall not exceed the Facility C Maximum Stated Amount;
(iii) The representations and warranties of Borrower
made in Section 8 shall be true and correct as of the date that is 75 days prior
to the then Current Stated Expiry Date (and Borrower is deemed to restate such
representations and warranties as of such date);
(iv) The Stated Expiration Date of the Letter of Credit,
after giving effect to such renewal, shall not be later than 60 days prior to
the Facility C Final Expiration Date; and
(v) None of the conditions described in Section 4.10
exist.
4.5 Issuance Procedure for Letter of Credit. If Borrower desires Lender
to issue a Letter of Credit, Borrower shall submit to Lender a written request
to issue a Letter of Credit on or before 9:00 a.m. (Inglewood, California time)
three (3) Business Days prior to the requested date of issuance, and shall
execute such applications and agreements as Lender may reasonably request.
Borrower may request the issuance of a Letter of Credit in such form as Borrower
may reasonably request. Subject to the terms of this Agreement, Lender will
issue such Letter of Credit on the date specified in the request submitted in
connection therewith, Lender and Borrower agree that all Letters of Credit
issued pursuant to the terms of this Section shall be
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subject to the terms and conditions, and entitled to the benefits, of this
Agreement and the other Loan Documents.
4.6 Letter of Credit Fees. Borrower agrees to pay to Lender a charge
for all reasonable administrative expenses of Lender in connection with the
issuance, amendment, renewal, or modification (if any) and administration of the
Letters of Credit upon demand from time to time, which charge shall not exceed
$150.00 per draw, transfer or transaction. In addition, Borrower agrees to pay
and on each anniversary thereof prior to the Facility C Final Expiration Date, a
letter of credit fee in the amount of 1.5% of the Stated Amount of the Letter of
Credit as of such anniversary date.
4.7 Disbursements; Interest. Lender will notify Borrower of the
presentment for payment of a Letter of Credit by any beneficiary thereto,
together with notice of the date (the "DISBURSEMENT DATE") such payment shall be
made. Subject to the terms and provisions of the Letter of Credit, Lender shall
make such payment (a "DISBURSEMENT") to the beneficiary of the Letter of Credit.
Borrower agrees to pay interest on the aggregate amount of all unreimbursed
Disbursements from the date of Disbursement to the date such amount is
reimbursed, at a rate equal to the Prime Rate plus 2%.
4.8 Reimbursement Obligations of Borrower. Borrower's obligation to
reimburse the Lender with respect to each Disbursement (including interest
thereon) in respect of any Letter of Credit shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff counterclaim, or
defense to payment which Borrower may have or have had against the Lender, or
the beneficiary thereof, including any defense based upon the occurrence of any
Event of Default, any draft, demand or certificate or other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient, the failure of any Disbursement to conform to the terms of the
Letter of Credit (if, in Lender's good faith opinion, such Disbursement is
determined to be appropriate) or any non-application or misapplication by the
beneficiary of the proceeds of such Disbursement, or the legality, validity,
form, regularity or enforceability of the Letter of Credit; provided, however,
that nothing herein shall adversely affect the right of Borrower to commence any
proceeding against Lender for any wrongful
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Disbursement made by Lender under the Letter of Credit as a result of acts or
omissions constituting gross negligence or willful misconduct on the part of
Lender.
4.9 Nature of Reimbursement Obligations. Borrower shall assume all
risks of the acts, omissions or misuse of any Letter of Credit by the
beneficiary thereof. Lender (except to the extent of its own gross negligence or
willful misconduct) shall not be responsible for:
(a) The form, validity, sufficiency, accuracy, genuineness or
legal effect of any Letter of Credit or any document submitted by any party in
connection with the issuance of any Letter of Credit, even if such document
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged;
(b) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit;
(c) failure of any beneficiary of any Letter of Credit to
comply fully with conditions required in order to demand payment under a Letter
of Credit;
(d) errors, omissions, interruption or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or otherwise; or
(e) any loss or delay in the transmission or otherwise of any
document or draft required by or from a beneficiary of a Letter of Credit in
order to make a Disbursement under a Letter of Credit or of the proceeds
thereof.
None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted the Lender hereunder. In furtherance and extension, and
not in limitation or derogation of any of the foregoing, any action taken or
omitted to be taken by Lender in good faith shall be binding upon Borrower and
shall not put Lender under any resulting liability to Borrower.
4.10 Certain Requirements. Lender is under no obligation to issue or
renew any Letter of Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain Lender
from issuing or renewing such
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Letter of Credit, or any requirement of law applicable to Lender or any request
or directive (with which it is customary for banks in the relevant jurisdiction
to comply whether or not having the force of law) from any Governmental
Authority with jurisdiction over the Lender shall prohibit, or request that
Lender refrain from, the issuance or renewal of letters of credit generally or
such Letter of Credit in particular or shall impose upon Lender with respect to
such Letter of Credit any restriction, reserve, or capital requirement (for
which Lender is not otherwise compensated hereunder) not in effect on the date
hereof, or shall impose upon Lender any unreimbursed loss, cost, or expense
which was not applicable on the date hereof and which Lender in good ▇▇▇▇▇ ▇▇▇▇▇
material to it;
(ii) Lender has received written notice from Borrower,
on or prior to the Business Day prior to the requested date of issuance or
renewal of such Letter of Credit, that one or more of the applicable conditions
for issuance or renewal is not then satisfied;
(iii) any requested Letter of Credit does not provide
for drafts, or is not otherwise in form and substance acceptable to Lender, or
the issuance or renewal of the Letter of Credit shall violate any applicable
policies of Lender; or
(iv) such Letter of Credit is to be denominated in a
currency other than dollars.
SECTION 5
COMMON PROVISIONS
5.1 Default Interest. Notwithstanding any provision to the contrary
herein, after the occurrence of an Event of Default, the aggregate principal
amount outstanding under each of the Loans shall bear interest, payable on
demand, at a per annum rate equal to the applicable of the rates stated in
Section 2.2, Section 3.2, or Section 4.7, plus 4.00%. Neither the requirement
nor any payment of such additional interest shall constitute a waiver of any
Event of Default.
5.2 Interest and Fee Computations. Except as otherwise expressly stated
in this Agreement, all interest and fees with respect to each of the Facilities
shall be computed on the basis of a 360-day year and the actual number of days
elapsed.
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5.3 Method of Payment. Payments by Borrower under this Agreement shall
be made to Imperial Bank, at such location designated by Lender from time to
time, and shall be made in immediately available funds, or such other type of
funds as may be acceptable to Lender in its sole discretion.
5.4 Payment Due Dates. All payments under this Agreement that become
due on a day other than a Business Day shall be due on the next Business Day.
All payments under this Agreement received by Lender on a day other than a
Business Day shall be applied on the next Business Day.
5.5 Late Charge. If Borrower fails to make any payment under this
Agreement within 10 days after the date the same first becomes due and payable,
Borrower shall pay to Lender, in addition to all other charges, a late charge
equal to 5.00% of the amount of such overdue payment.
5.6 Late Advance Requests. Any request for an Advance received by
Lender after 12:00 p.m. (California time) on any Business Day shall be treated
as having been received by Lender on the next succeeding Business Day.
5.7 Loan Accounts. Lender shall maintain on the books of Lender a
separate record of account for each of Facility A, Facility B and Facility C in
which Lender shall make entries for each Advance or Disbursement and such other
debits and credits as shall be appropriate for each such facility. Lender shall
provide Borrower with periodic statements of the account of Borrower under each
such facility, which statements shall be deemed to be correct and conclusively
binding on Borrower, unless Borrower notifies Lender to the contrary within 30
days after Lender sends such statements to Borrower.
SECTION 6
COLLATERAL
6.1 Collateral. The Obligations shall be secured by: (a) a perfected
first-priority security interest in all of the equipment, inventory, accounts,
trademarks, trade names and other general intangibles and other assets of
Borrower, whether now owned or hereafter acquired, as
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further described in the Security Agreement; and (b) a perfected first-priority
security interest in, and pledge by Borrower of the CD, as further described in
the Pledge Agreement.
SECTION 7
CONDITIONS PRECEDENT
7.1 Initial Advance. In addition to the terms and conditions otherwise
contained herein, the obligations of Lender to make the initial Advance are
conditioned on each of the following having been satisfied in a manner
acceptable to Lender, in Lender's sole discretion:
(a) The Loan Documents and the Related Documents in the forms
and substance approved by Lender shall have been duly authorized and executed by
each of Borrower and any other parties thereto and delivered by Borrower to
Lender.
(b) Lender shall have received evidence satisfactory to Lender
that the representations and warranties of Borrower in the Loan Documents are
true and accurate and not misleading.
(c) All financing statements required by Lender shall have
been duly authorized and executed by Borrower and delivered to Lender and filed
in the appropriate governmental offices, including (i) financing statements
relating to the property described in the Security Agreement executed by each
Borrower and filed in the Offices of the Secretary of State of the State of
Arizona, and the Secretary of State of the State of Delaware, and (ii) financing
statements relating to the property described in the Pledge Agreement executed
by Borrower and filed in the Offices of the Secretary of State of the State of
Arizona, and the Secretary of State of the State of Delaware.
(d) Lender shall have received the CD.
(e) The Landlord Lien Waivers with respect to the Leases
existing as of the date of such Advance shall have been duly authorized,
executed and delivered by Landlords to Lender in form and substance acceptable
to Lender in its reasonable discretion.
(f) Lender shall have received all fees, costs and expenses
specified in the Loan Documents and the Related Documents as are then due and
payable by Borrower to
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Lender, including the fees described in Section 2.3, Section 3.3 and Section
4.6, the attorneys' fees and costs incurred by Lender in connection with the
preparation of the Loan Documents and the Related Documents, and all other costs
incurred by Lender, including any appraisal fees, audit fees, environmental
fees, premiums for title insurance policies and endorsements and filing,
recording and search fees.
(g) Lender shall have received all terminations of financing
statements, partial releases of financing statements, mortgage releases, deed of
trust releases, pay-off letters and/or agreements and other documents required
by Lender to ensure that there are no Liens affecting the collateral for the
Obligations, other than the Permitted Liens.
(h) Lender shall have received evidence that the insurance
required under the Loan Documents and the Related Documents is in full force and
effect, that Lender is named as a loss payee thereunder, and that such insurance
includes a provision requiring the insurer to provide Lender at least 30 days'
prior written notice of the cancellation, expiration, termination or any change
in the coverage afforded thereby.
(i) Lender shall have received a certificate of the Secretary
of Borrower in the form and substance approved by Lender, of even date herewith,
as to: (i) the incumbency and signature of the officer of Borrower executing the
Loan Documents and the Related Documents; (ii) the adoption and continued effect
of resolutions of the Board of Directors of Borrower attached thereto,
authorizing the execution, delivery and performance of the Loan Documents and
the Related Documents to which Borrower is a party; and (iii) the accuracy of
the copies of the Articles of Incorporation or Certificate of Incorporation and
Bylaws of Borrower attached thereto.
(j) Lender, at its option and for its sole benefit, shall have
conducted an audit of the equipment, books, records and operations of Borrower,
and Lender shall be satisfied as to their condition.
(k) Lender shall have received a Compliance Certificate signed
by Borrower, dated not more than 5 days prior to the initial Advance, and such
reports and other certificates as Lender may require in order to satisfy itself
as to the financial condition of Borrower.
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(l) Lender shall have received a certificate of good standing
for Borrower from the appropriate government authorities of the state of
incorporation of such Borrower, and from any other state in which Borrower is
required to qualify to transact its business.
(m) Lender shall have received the favorable written opinion
of counsel to Borrower, in form and substance satisfactory to Lender and its
counsel.
(n) Lender shall have received true and correct copies of all
Trademarks/names and Patents filed with the United States Patent and Trademark
Office, if any.
(o) No Default or Event of Default shall then exist, nor shall
any Default or Event of Default arise as a result of the initial Advance.
(p) Lender shall have received all other items that Lender
reasonably requires.
7.2 Subsequent Advances. In addition to the terms and conditions
otherwise contained herein, the obligation of Lender to make each Advance after
the initial Advance made pursuant to Section 7.1 is conditioned on each of the
following conditions having been satisfied in a manner acceptable to Lender, in
Lender's sole discretion, on and as of the date of such Advance:
(a) Lender shall have received evidence satisfactory to Lender
that the representations and warranties of Borrower in the Loan Documents are
true, accurate and not misleading.
(b) The Loan Documents and the Related Documents shall be in
full force and effect, and the liens and security interests granted to Lender
thereby shall be perfected and in full force and effect with the priorities
described therein.
(c) The Landlord Lien Waivers with respect to the Leases
existing as of the date of such Advance shall have been duly authorized,
executed and delivered by Landlords to Lender in form and substance acceptable
to Lender in its sole discretion.
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(d) Lender shall have received all fees, costs and expenses
specified in the Loan Documents and the Related Documents as are then due and
payable by Borrower to Lender.
(e) Lender shall have received evidence that the insurance
required under the Loan Documents and the Related Documents is in full force and
effect, that Lender is named as a loss payee thereunder, and that such insurance
includes a provision requiring the insurer to provide Lender at least 30 days'
prior written notice of the cancellation, expiration, termination or any change
in the coverage afforded thereby.
(f) No Default or Event of Default shall exist.
(g) All proceedings to be taken in connection with such
Advance and all documents incident thereto shall be satisfactory in form and
substance to Lender.
(h) Lender shall have received a Compliance Certificate dated
not more than 5 days prior to the Advance.
7.3 Facility A Advances. In addition to the applicable conditions
stated in Section 7.1 and Section 7.2, the obligation of Lender to make each
Facility A Advance is conditioned on each of the following having been satisfied
in a manner acceptable to Lender, in Lender's sole discretion, on and as of the
date of such Advance:
(a) Lender shall have received from Borrower a Facility A
Advance Request, together with the related Borrowing Base Certificate.
(b) The principal amount outstanding under Facility A,
together with the amount of such Advance, shall not exceed the Facility A
Borrowing Base.
SECTION 8
REPRESENTATIONS AND WARRANTIES
To induce Lender to make the Loans as herein provided, and until all of
the Obligations are repaid and performed in full, Borrower represents and
warrants to Lender, and by each
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request for an Advance or issuance or renewal of a Letter of Credit shall be
deemed to represent and warrant that:
8.1 Organization; Qualification; Affiliates of Borrower. Borrower is a
corporation that is duly organized, validly existing and in good standing under
the laws of the State in which such Borrower is incorporated, and has the full
power and authority to execute the Loan Documents and any Related Documents to
which Borrower is a party. Borrower has all necessary licenses, permits and
franchises to borrow hereunder and to grant the Liens provided for in the Loan
Documents and the Related Documents and to own its assets and conduct its
business as presently conducted. Borrower is duly licensed or qualified and in
good standing to do business in all jurisdictions where failure to qualify would
have an adverse effect upon Borrower, and Borrower has no liabilities as a
result of any failure to qualify to do business as a foreign corporation in any
jurisdiction. Borrower has no Subsidiaries or Affiliates, other than as
described on Exhibit H attached hereto. Where required, Borrower is in
compliance with all fictitious name statutes.
8.2 Authorization and Enforceability. The making, execution, delivery
and performance of the Loan Documents and any Related Documents to be executed
by Borrower, have each been duly authorized by all necessary corporate action.
The Loan Documents and any Related Documents to which Borrower is a party, when
executed, delivered and issued by Borrower, will be the legal, valid and binding
obligations of Borrower, enforceable against such Borrower in accordance with
their respective terms.
8.3 Absence of Conflicts. The making, execution and performance of the
Loan Documents and any Related Documents to which Borrower is a party, and
compliance with their respective terms, do not violate or constitute a default
under any presently existing provision of law or the Articles of Incorporation
or Certificate of Incorporation or Bylaws of Borrower or any agreement,
instrument or obligation to which Borrower or any of its Affiliates is a party
or by which Borrower or any of its Affiliates is bound, or any law, statute,
governmental regulation, court decree, or order applicable to Borrower or any of
its Affiliates.
8.4 Solvency. After giving effect to the transactions contemplated by
this Agreement, (a) the assets of Borrower, at fair valuation, will exceed the
liabilities, including contingent
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liabilities, of Borrower; (b) Borrower is not engaged in a business or
transaction for which its assets are unreasonably small; and (c) Borrower is
able to pay its debts as they mature or otherwise become due and payable.
8.5 Taxes. Borrower has filed all federal, state, foreign and local tax
returns that were required to be filed, except those returns for which the due
date has been validly extended. Borrower has paid or made provisions for the
payment of all taxes, assessments and other governmental charges owed (including
state and federal payroll taxes), and no tax deficiencies have been proposed or
assessed against Borrower. There are no pending or, to the knowledge of
Borrower, threatened tax controversies or disputes relating to Borrower.
8.6 Absence of Litigation. Borrower is not a party to nor is there any
threat of any litigation or administrative proceeding against Borrower except
for litigation described on Exhibit I.
8.7 Accuracy of Information. All information, certificates and
statements given by Borrower in, or pursuant to, the Loan Documents or any
Related Documents were accurate, true and complete in all respects when given,
continue to be accurate, true and complete as of the date hereof, and do not
contain any untrue statement or omission of a fact necessary to make the
statements therein not misleading. There is no fact or circumstance known to
Borrower which adversely affects, or which in the future may adversely affect,
the business, Property, operations or condition, financial or otherwise, of
Borrower which has not been set forth in the Loan Documents or any Related
Documents to which Borrower is a party.
8.8 Ownership of Property. Borrower owns and has good and marketable
title in the legal name of Borrower to the Property owned by it free and clear
of any Liens, other than Permitted Liens. All buildings and equipment, whether
leased to or owned by Borrower, are in good condition, repair (ordinary wear and
tear excepted) and working order and conform to all applicable laws, ordinances
and regulations. Borrower has taken and will take all necessary action to
maintain the interest of Borrower in and to any Property that is leased by
Borrower to third parties, including the filing of financing statements in the
appropriate offices when required. Borrower has not used, or filed a financing
statement under, any name other than that of Borrower for at least the last six
years.
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8.9 Lien Priority. Borrower has entered into any security agreement or
otherwise granted a Lien to, or permitted a Lien to be held by, any Person that
would be prior or in any way superior to the Liens of Lender created by the Loan
Documents, except for Liens described in clause (e) and clause (1) of the
definition of Permitted Liens.
8.10 Governmental Approvals. No consent, approval, authorization or
other action by, or filing with, any federal, state or local Government
Authority is required in connection with or as a condition to the execution,
delivery and performance by Borrower of the Loan Documents and any Related
Documents to which Borrower is a party.
8.11 Compliance with Law. Borrower is in compliance with all laws,
rules, regulations, orders, judgments, writs and decrees applicable to Borrower.
8.12 Permits; Franchises. Borrower possesses all permits, franchises,
memberships, contracts and licenses required and all trademark rights, trade
name rights, patent rights, fictitious name rights and all other intellectual
property rights necessary to enable Borrower to conduct the business in which
Borrower is now engaged without conflict with the rights .of others. Other than
the Trademarks/names and Patents listed on Exhibit G, Borrower currently does
not own any trademark, trade name, patent rights or other intellectual property,
and no such ownership is required in order to enable Borrower to conduct the
business in which Borrower is now engaged. At such time as Borrower acquires any
additional Trademarks/names and Patents or other intellectual property, Borrower
will immediately notify Lender of such acquisition, and Borrower shall cooperate
with Lender to perfect the security interest of Lender in such rights.
8.13 Federal Reserve Regulations. Borrower will not, directly or
indirectly, use the proceeds of any of the Loans to purchase or carry any
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System (12 C.F.R. 221, as amended), or otherwise take or
permit any action which would involve a violation of any regulation of the Board
of Governors of the Federal Reserve System.
8.14 Other Obligations. Borrower has not received any notice claiming
any, or after reasonable investigation has any knowledge that it is in, default
under any obligation for
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borrowed money, any purchase money obligation or any other lease, commitment,
contract, instrument or obligation.
8.15 ERISA. Borrower is in compliance in all respects with the
applicable provisions of ERISA and the regulations and published interpretations
thereunder and: (a) no "prohibited transaction" as defined in Section 406 of
ERISA or Section 4975 of the Code has occurred with respect to any Plan; (b) no
action has been taken by any Person that would cause the Internal Revenue
Service to assert a disqualification of any Plan under Section 401(a) of the
Code; (c) there has not been any "reportable event" as defined in Section 4043
of ERISA with respect to any Plan: (d) no "accumulated funding deficiency," as
defined in Section 302 of ERISA (whether or not waived) has occurred with
respect to any Plan; (e) no action by Borrower to withdraw from any Plan has
been taken and no notice of intent to terminate a Plan has been filed under
Section 4041 of ERISA; and (f) no proceeding has been commenced with respect to
a Plan under Section 4042 of ERISA, and no event has occurred or condition
exists which might constitute grounds for the commencement of such a proceeding.
8.16 Financial Information. The financial statements and information
that have been or will be supplied to Lender by or on behalf of Borrower are,
and as to future statements, will be, accurate and complete, and present fairly
the financial position of the subjects thereof as of the end of such periods and
the results of the operation and cash flows of Borrower for such periods then
ended in conformity with GAAP. There has been no adverse change in the financial
condition or assets of Borrower subsequent to the date of the most recent
financial statements supplied to Lender. All financial and other information to
be supplied to Lender by or on behalf of Borrower will be in form and content as
required by Lender and in compliance with all governmental regulations that
apply.
8.17 Leases. Exhibit F accurately identifies all of the real property
leases (including any amendments or modifications thereof and any side
agreements, letter agreements or supplemental agreements with respect thereto)
to which Borrower is a party, or to which its leased properties are subject,
including the title of the lease (and any amendment, modification, side
agreement, letter agreement or supplemental agreement), the name of the
landlord, the date of the lease (and any amendment, modification, side
agreement, letter agreement or supplemental
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agreement), the expiration date of the lease, the address and location of the
real property. Borrower has not delivered to Lender true, accurate and complete
copies of all such leases (and any such amendments, modifications, side
agreements, letter agreements and supplemental agreements).
8.18 Capital Stock of Borrower. All outstanding shares of capital stock
of Borrower have been duly authorized and issued as required by law and are
fully paid and non-assessable, and the issuance and sale thereof have been made
in compliance with, in all respects, applicable federal and state securities
laws. There are no outstanding proxies, warrants, options or other rights issued
or granted by Borrower with respect to shares of capital stock or other
securities of such Borrower except as described on Exhibit L.
8.19 Offices. The address of each office, production facility and other
facility of Borrower is listed on Exhibit J attached hereto. The books and
records of Borrower and all records pertaining to Eligible Accounts Receivable,
and Eligible Equipment are located at the office location for Borrower listed on
Exhibit J, and copies of consolidated records for Borrower are maintained at
Borrower's general business office listed on Exhibit J.
8.20 Investment Company Act. Borrower is not an "investment company" or
a company "controlled by an investment company" within the meaning of the
Investment Company Act of 1940, as amended.
8.21 Foreign Entity. Borrower is not a "foreign corporation," "foreign
trust," "foreign estate," or other "foreign person," as those terms are defined
in the Code and related income tax regulations.
8.22 Covenants In Other Documents. None of the documents executed in
connection with any other Indebtedness of Borrower other than the Obligations
contains covenants governing financial performance or financial ratios or
contains restrictions on the right of Borrower to incur additional Indebtedness
or ▇▇▇▇▇ ▇ ▇▇▇▇.
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SECTION 9
AFFIRMATIVE COVENANTS
From and after the date of this Agreement and until all of the
liabilities and obligations of Borrower to Lender pursuant to the Loan Documents
and the Related Documents are repaid and performed in full, Borrower shall:
9.1 Corporate Existence; Properties; Other Requirements. (a) Maintain
the corporate existence of Borrower; (b) comply in all respects with all
applicable laws, regulations, ordinances and orders of any Government Authority
with authority over the business of Borrower; (c) conduct the business of
Borrower substantially as now conducted and proposed to be conducted; and (d)
maintain and preserve substantially all rights, licenses, privileges, and
franchises Borrower now has so as not to adversely affect the ability of
Borrower to perform the obligations of Borrower under the Loan Documents and the
Related Documents.
9.2 Maintenance. Maintain, preserve and keep the Property in good
repair, working order and condition and from time to time make all necessary
repairs, renewals, replacements and additions thereto so that at all times the
overall efficiency thereof shall be preserved and maintained.
9.3 Property Insurance. Maintain all risk property damage insurance,
business interruption insurance, comprehensive liability insurance (including
coverage for contractual liability, product liability (including coverage for
medical products) and workers compensation), any other insurance that is usual
for the business of Borrower and such other insurance as Lender may from time to
time require. The insurance obtained in connection with this Section 9.3 shall:
(a) be in an amount acceptable to Lender; (b) be in a form acceptable to Lender;
(c) be issued by an insurance company acceptable to Lender; and (d) include a
lender loss payable endorsement acceptable to Lender. In the case of any all
risk property damage insurance maintained by Borrower, the amount of the
insurance will be the full replacement cost of the insured Property. Borrower
will, upon request of Lender, deliver to Lender a copy of each insurance policy,
or if permitted by Lender, a certificate setting forth in summary form the
nature and extent of the insurance maintained pursuant to this Section 9.3. In
addition, Borrower shall, upon request by Lender, have an independent appraiser
satisfactory to Lender determine, as applicable, the cash
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value or replacement cost of the insured Property. The cost of such appraisals
shall be paid by Borrower.
9.4 Collateral Audits; Financial Reports. Maintain a system of
accounting in accordance with GAAP, and permit Lender and the representatives of
Lender to visit and audit, inspect or examine the Property, books, accounts and
records of Borrower at all reasonable times and to make copies and memoranda of
the books, accounts and records of Borrower and furnish to Lender and the duly
authorized representatives of Lender such information respecting the business,
financial condition, assets and liabilities (whether absolute or contingent) of
Borrower, as Lender may reasonably request. If any of the foregoing are in the
possession of a third party, Borrower hereby authorizes each such third party to
grant Lender and the agents or consultants of Lender access thereto to perform
such inspections and to respond to the requests of Lender for information
concerning the foregoing. Without limiting the foregoing, Borrower acknowledges
that Lender (1) may conduct an audit of the collateral for the Obligations
within 180 days after the date hereof, and (ii) shall be permitted to conduct,
at Lender's sole discretion, during each 180 day period thereafter, an updated
audit of the collateral for the Obligations. Borrower will pay to Lender on the
date hereof, costs and expenses incurred by Lender in conducting such audit for
each collateral audit conducted by Lender within one hundred eighty (180) days
after the date hereof, and Borrower shall thereafter pay costs and expenses
incurred by Lender in conducting such audit for each subsequent collateral
audit.
Borrower, without any request from Lender, will furnish each of the following to
Lender:
(a) As soon as available and in any event within 45 days after
the end of each calendar quarter (including the quarter during which Borrower
fiscal year ends, subject only to normal year-end accounting adjustments), a
copy of the internally-prepared financial statements of Borrower for such
calendar quarter (and for the same calendar quarter of the immediately preceding
year), including the balance sheet and statement of profit and loss of Borrower
for such calendar month, with supporting schedules, all in form and content
reasonably acceptable to Lender, and prepared and certified on behalf of
Borrower by the chief financial officer of Borrower or other authorized officer
thereof acceptable to Lender.
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(b) As soon as available, and in any event within 10 Business
Days after the end of each calendar month, (i) a Borrowing Base Certificate
effective as of the last day of such calendar month, and (ii) a certificate
setting forth a detailed accounts receivable aging reconciled to such general
ledger, a detailed accounts payable aging reconciled to such general ledger, the
amount of any book overdraft, the amount of checks issued but not sent and an
inventory outlining both inventory composition and activity, all for such
calendar month and certified as true and accurate on behalf of Borrower by the
chief financial officer of Borrower or other authorized officer thereof
acceptable to Lender.
(c) As soon as available, and in any event within 45 days
after the end of each calendar quarter, a certificate of the chief financial
officer of Borrower or an authorized officer thereof acceptable to Lender, which
sets forth; (i) that no Default or Event of Default exists hereunder as of the
date of such certificate, or if such a Default or Event of Default exists, a
specification of the nature thereof (ii) a computation in reasonable detail of
the calculation of the financial covenants and ratios set forth in Section
10.12.
(d) As soon as available, and in any event within 30 days
after the end of each calendar quarter, a certificate of the chief financial
officer of Borrower or other authorized officer thereof acceptable to Lender,
that sets forth operating statistics appropriate for Borrower's business and as
otherwise may be requested from time to time by Lender.
(e) As soon as available, and in any event within 90 days
after the close of each fiscal year of Borrower, a copy of the audited financial
statements of Borrower for such fiscal year and, beginning with the fiscal year
ending December 31, 2000, for the immediately preceding fiscal year, including
balance sheet, statement of profit and loss and statement of cash flow for such
fiscal year and, beginning with the fiscal year ending December 31, 2000, for
the previous fiscal year, all as prepared by national independent certified
public accountants of recognized standing selected by Borrower (the "CPA"),
together with any letters or reports to the management of Borrower by the CPA,
which report shall be accompanied by the unqualified opinion of the CPA to the
effect that the statements present fairly, in all respects, the financial
position of Borrower as of the end of such fiscal year and the results of the
operations of
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Borrower and the cash flows of Borrower for the fiscal year then ended in
conformity with GAAP.
(f) As soon as available, and in any event within 90 days
after the end of each fiscal year of Borrower, pro forma financial projections
for Borrower for the next fiscal year, including income statements and balance
sheets, certified by Borrower to be based on information then available and
believed by Borrower to be a reasonable projection of Borrower financial
performance for the period covered. Such pro forma projections shall be updated
within thirty (30) days after Borrower consummates the acquisition of the stock
or substantially all of the assets of another Person.
(g) Executed copies of the federal and state tax returns of
Borrower and each request or application for an extension of time to file such a
return, within 15 days after filing with the Internal Revenue Service or the
state tax agency, as applicable.
(h) Such other financial information that Lender may
reasonably request regarding the financial condition of Borrower.
All of the information referred to in this Section 9.4 shall be in a form
satisfactory to Lender, complete and correct in all respects and shall be
prepared in reasonable detail and in accordance with GAAP.
9.5 Use of Proceeds. Use all proceeds of the Loans in the manner
required by the Loan Documents.
9.6 Perfection of Liens. Perfect and protect the priority of the Liens
of Lender and reimburse Lender for related costs that Lender incurs to perfect
and protect the priority of the Liens of Lender.
9.7 Notices to Lender. Promptly notify Lender in writing of any of the
following: (a) any failure to comply with the Loan Documents or any of the
Related Documents; (b) the existence of any Lien against the Property of
Borrower, other than a Permitted Lien; (c) any adverse change in the financial
condition or operations, as applicable, of Borrower; (d) any change in the name,
legal structure, place of business, residence or chief executive office, as
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applicable, of Borrower; (e) any acquisition or purchase of a business or its
assets by Borrower; (f) any acquisition or purchase of any interest in real
property (whether fee or leasehold) by Borrower; (g) any threatened or pending
litigation, governmental proceeding or labor dispute against Borrower which
could have an adverse affect on Borrower; (h) any notice received by Borrower
with respect to any unpaid taxes, assessments or charges; and (i) the occurrence
of any Default or Event of Default.
9.8 Notices or Filing. Promptly provide Lender with a copy of any
notices or filings made by Borrower with, or received by Borrower from, any
Government Authority (including the Securities and Exchange Commission or any
other regulatory agency).
9.9 Other Agreements. Perform all obligations and comply with all terms
and conditions of all other agreements, whether now or hereafter existing,
between Borrower and any other Person, and notify Lender immediately in writing
of any default or event of default in connection with any other such agreement.
9.10 Taxes, Charges and Liens. Pay and discharge when due all
Indebtedness and obligations of Borrower, including all assessments, taxes,
governmental charges, levies and Liens, of every kind and nature, imposed upon
Borrower or the Property or income or profits of Borrower, prior to the date on
which penalties would attach, and all lawful claims that, if unpaid, might
become a Lien or charge upon any of the Property or income or profits of
Borrower; provided, however, Borrower will not be required to pay and discharge
any such assessment, tax, charge, ▇▇▇▇, ▇▇▇▇ or claim so long as: (a) the
legality of the same shall be contested in good faith by appropriate
proceedings; (b) Borrower shall have established on the books of Borrower
adequate reserves with respect to such contested assessment, tax, charge, levy,
Lien, or claim in accordance with GAAP; and (c) Lender has not made a
determination that the Property is in danger of foreclosure or loss. Borrower,
upon demand of Lender, will furnish to Lender evidence of payment of the
assessments, taxes, charges, levies, Liens and claims and will authorize the
appropriate governmental official to deliver to Lender at any time a written
statement of any assessments, taxes, charges, levies, Liens and claims against
the Property or income or profits of Borrower.
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9.11 Operations. Conduct the business affairs of Borrower in a
reasonable and prudent manner and in compliance with all applicable federal,
state and municipal laws, ordinances, rules and regulations respecting the
Property or the businesses and operations of Borrower, including the Americans
with Disabilities Act and all minimum funding standards and other requirements
of ERISA and other laws applicable to any Plan.
9.12 ERISA Plans. Give prompt written notice to Lender of any of the
following: (a) the occurrence of any reportable event under Section 4043(b) of
ERISA for which the PBGC requires a 30 day notice; (b) any action by Borrower to
terminate or withdraw from a Plan or the filing of any notice of intent to
terminate under Section 4041 of ERISA; (c) any notice of noncompliance made or
received under Section 4041(b) of ERISA with respect to a Plan; or (d) the
commencement of any proceeding under Section 4042 of ERISA with respect to a
Plan.
9.13 Banking Relationships. Maintain the primary banking relationships
of Borrower (including all operating, deposit and other cash accounts other than
payroll and ▇▇▇▇▇ cash accounts) with Lender and use Lender's cash management
services.
9.14 Real Property. Prior to the acquisition of any leasehold interest
in real property (or any substitute leasehold interest), Borrower shall provide
Lender written notice thereof. Prior to the acquisition of such leasehold
interest, Borrower shall provide Lender with a Landlord Consent executed by the
landlord of the subject real property. Borrower will promptly update the
information on the attached Exhibit F if the information changes (including the
entering into any renewal, extension or replacement of existing leases and any
additional Leases by Borrower).
9.15 Intellectual Property. Within 30 days after the date of this
Agreement, take all action necessary to: (a) preserve and perfect the rights of
Borrower in the Trademarks/Names and Patents and any other intellectual property
of Borrower; and (b) perfect the Lien of Lender in such intellectual property.
The actions of Borrower shall include appropriate filings with the United States
Patent and Trademark Office.
9.16 Additional Assurances. Take any action reasonably requested by
Lender to carry out the intent of the Loan Documents and the Related Documents,
including the execution and
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delivery to Lender of all notes, mortgages, deeds of trust, security agreements,
financing statements, amendments to financing statements, instruments, documents
and other agreements as Lender may reasonably request to evidence and secure the
Loans and to perfect and protect all security interests and Liens of Lender.
9.17 Recovery of Additional Costs. If the imposition of or any change
in any law, rule, regulation or guideline, or the interpretation or application
of any thereof by any court or administrative or Government Authority (including
any request or policy not having the force of law) shall impose, modify or make
applicable any taxes (except U.S. federal, state or local income or franchise
taxes imposed on Lender), reserve requirements, capital adequacy requirements or
other obligations which would: (a) increase the cost to Lender for extending or
maintaining the credit facilities to which the Loan Documents relate; (b) reduce
the amounts payable to Lender under the Loan Documents or the Related Documents;
or (c) reduce the rate of return on the capital of Lender as a consequence of
the obligations of Lender with respect to the credit facilities to which the
Loan Documents relate; then, pay Lender such additional amounts as will
compensate Lender therefor, within 5 days after written demand by Lender for
such payment, which demand shall be accompanied by an explanation of such
imposition or charge and a calculation in reasonable detail of the additional
amounts payable by Borrower, which explanation and calculations shall be
conclusive in the absence of manifest error.
9.18 Books and Records. Borrower shall cause its books and records to
be maintained at its office address listed on Exhibit J attached hereto.
Borrower shall maintain its offices at the address stated in Exhibit J attached
hereto.
9.19 Additional Borrowers. Borrower upon Lender's request, shall
promptly and diligently (and in any event within the reasonable time specified
by Lender) take all actions necessary to cause any existing or future Subsidiary
of Borrower to become obligated as a borrower hereunder.
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SECTION 10
NEGATIVE COVENANTS
From and after the date of this Agreement and until all of the
liabilities and obligations of Borrower to Lender pursuant to the Loan Documents
and the Related Documents are repaid and performed in full, Borrower shall not
directly or indirectly:
10.1 Sale of Assets; Consolidation; Equity; Merger. (a) Sell, transfer,
lease, otherwise dispose of, mortgage, assign, pledge, grant a security interest
in, or otherwise encumber any of the Property, other than by Permitted Liens;
provided, however, that as long as Borrower receives reasonably equivalent value
in return Borrower is permitted to (i) sell, transfer, lease or otherwise
dispose of assets that are obsolete and worn out or which are no longer
necessary for the operation of the business of Borrower, or (ii) sell
manufactured or assembled goods in the ordinary course of business; (b) enter
into any agreement, directly or indirectly, to sell or transfer any property,
real or personal, used in the business of Borrower, and thereafter lease such
property or other property which Borrower intends to use for substantially the
same purposes; (c) cease operations, liquidate or dissolve or consolidate,
merge, joint venture or combine with or into any other Person; acquire or enter
into any agreement to acquire any business or its assets other than as
specifically permitted by this Agreement; or (d) acquire or enter into any
agreement to acquire the title to or lease any real property other than as
specifically permitted by this Agreement.
10.2 Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance
money or assets to any other Person or purchase or acquire any interest in, or
assets of, any other Person without the prior written consent of Lender which
will not be unreasonably withheld or delayed; or (b) incur any obligation as
surety or guarantor.
10.3 Other Indebtedness. Incur, create, assume, guarantee or otherwise
become primarily or secondarily liable for, or absolutely or contingently liable
for, or permit to exist, any Indebtedness without the prior written consent of
Lender, other than (a) Indebtedness to Lender; (b) any Capital Leases incurred
by Borrower in the ordinary course of business in connection with the lease of
inventory or equipment which, together with the Indebtedness described in clause
(c) and clause (d) of this Section 10.3, does not exceed $100,000 in the
aggregate for all
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Borrower at any given time; (c) any purchase money indebtedness of Borrower
incurred by one or more Borrower in the ordinary course of business in
connection with the purchase of inventory or equipment which, together with the
Indebtedness described in clause (b) and clause (c) of this Section 10.3, does
not exceed $100,000 in the aggregate for all Borrower at any given time; (d) any
leases for equipment to be used by Borrower that are classified under GAAP as
operating leases and the unpaid payments under which, together with the
indebtedness described in clause (b) and clause (c) of this Section 10.3, does
not exceed $100,000 in the aggregate for Borrower at any given time; (e) normal
trade payables incurred by Borrower in the ordinary course of business as long
as such trade payables are unsecured.
10.4 Issuance of Stock; Change in Ownership or Control. Issue any
additional stock or other securities not outstanding on the date hereof or make
or enter into or permit any transaction, including any redemption or issuance of
shares or stock or other corporate reorganization, that could effectively
transfer the power to (i) elect a majority of the Board of Directors of
Borrower, or (ii) otherwise control or direct the policies and procedures of
Borrower.
10.5 Other Liens. Create or permit to be created or allow to exist any
Lien on any Property now owned or hereafter acquired by Borrower, except
Permitted Liens.
10.6 Distributions. Pay any cash dividends, make any capital
contributions to any Person, allow any withdrawals from Borrower, pay any
consulting, management or guaranty fee or permit any distribution of any kind.
10.7 Compliance with ERISA. (a) Terminate any Plan so as to result in
any liability to PBGC; (b) engage in any "prohibited transaction" (as defined in
Section 4975 of the Code) involving any Plan which would result in a liability
for an excise tax or civil penalty in connection therewith; or (c) incur or
suffer to exist any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, involving any condition, which presents a risk
of incurring a liability to PBGC by reason of termination of any such Plan.
10.8 Change of Fiscal Year. Change the fiscal year of Borrower.
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10.9 Change Name, Office or Place of Business. Change the name, chief
executive office or the place of business of Borrower.
10.10 Change or Suspension of Business. Change the nature of the
business conducted by Borrower as of the date of this Agreement, or voluntarily
suspend the business of Borrower for more than 3 days in any fiscal year, unless
a longer suspension is reasonable as the result of any fire, flood or other act
of God, act of public enemy, riot, insurrection or governmental regulation of
the sale or transportation of materials, supplies or labor.
10.11 Financial Covenants. Permit:
(a) Borrower's Tangible Net Worth to be less than the Tangible
Net Worth Minimum.
(b) Borrower's Debt Service Coverage Ratio to be less than
1.25 to 1.
(c) Borrower's Account Receivable Turnover Period to exceed 70
days at the end of any fiscal quarter, commencing June 30, 2000.
(d) Borrower's Tangible Debt to Net Worth Ratio to exceed 1.30
to 1.00.
(e) Borrower's Net Income for any two consecutive fiscal
quarters commencing September 30, 2000, to be less than zero (i.e., net loss).
10.12 Permitted Investments. Invest in investments other than those
that can be readily liquidated, are investment grade, and are otherwise
acceptable to Lender.
SECTION 11
DEFAULT AND REMEDIES
11.1 Events of Default. Each of the following shall constitute an
"Event of Default":
(a) Payment Default. The failure of Borrower to make any
payment of principal, interest or other amount due under the Loan Documents or
any of the Related Documents on the date due.
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(b) Other Defaults. The failure of Borrower to comply with any
term, obligation, covenant or condition contained in the Loan Documents or in
any of the Related Documents and such failure continues unremedied for at least
10 days, or Borrower to comply with any other term, obligation, covenant or
condition contained in any other agreement between Lender and Borrower, if such
failure is not cured within the applicable cure period (if any) set forth in
such other agreement.
(c) False Statement. Any warranty, representation or statement
made or furnished to Lender by or on behalf of Borrower under the Loan Documents
or the Related Documents or in any financial statement delivered to Lender
pursuant to the Loan Documents or the Related Documents is false or misleading
in any material respect, either now or at the time made or furnished.
(d) Defective Collateralization. The Loan Documents or any of
the Related Documents ceases to be in full force and effect at any time and for
any reason, including the failure of any Related Document to create a valid and
perfected first-priority security interest or Lien as contemplated therein,
except for Liens described in clause (e) or clause (f) of the definition of
Permitted Liens.
(e) Insolvency; Bankruptcy. The dissolution or termination of
the existence of Borrower as a going business, the appointment of a receiver for
any part of the property of Borrower, or any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Borrower.
(f) Creditor Proceedings. Commencement of foreclosure, whether
by judicial proceeding, self-help, repossession or any other method, by any
creditor of Borrower against any collateral securing the Loans. This includes a
garnishment, attachment or levy on or of any of any deposit accounts of Borrower
that are maintained with Lender.
(g) Government Action. Any Government Authority takes action
that Lender reasonably believes will adversely affect the financial condition or
ability of Borrower to repay the Loans.
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(h) Judgments. A final judgment or arbitration award shall be
entered against Borrower, or Borrower enters into any settlement agreement with
respect to any litigation or arbitration, which, when added to other final
judgments or arbitration awards against Borrower, or settlement agreements with
respect to any litigation or arbitration, exceed the aggregate amount of
$50,000.
(i) Adverse Change. A material adverse change occurs in the
financial condition of Borrower or the prospects or ability of Borrower to repay
the Loans or otherwise perform the obligations of Borrower under the Loan
Documents or any of the Related Documents.
(j) Related Documents. The occurrence of an "Event of Default"
under and as defined in any of the Related Documents.
(k) Cross-Default. Any default or event of default that
creates or involves any obligation of Borrower in excess of $25,000 that occurs
under any agreement, lease, commitment, contract or instrument executed by
Borrower.
(l) Stock Transfers. There shall have occurred any sale,
conveyance, transfer or other disposition of any of the capital stock of
Borrower, directly or indirectly.
11.2 Remedies Upon Event of Default.
(a) Upon the occurrence of an Event of Default, then, at the
option of Lender, without presentment, notice, notice of dishonor, demand,
protest or action of any kind by Lender, all of which are hereby waived: (i) the
Facility A Commitment and the obligation of Lender to make Advances, the
Facility B Commitment and the obligation of Lender to fund Facility B Advances,
and the Facility C Commitment and the obligation of Lender to issue or renew
Letters of Credit shall all immediately terminate; and (ii) the entire amount of
the Obligations shall become immediately due and payable. In the case of an
Event of Default of the type described in Section 11.1(e), such acceleration
shall be automatic and not optional.
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(b) Upon the occurrence of an Event of Default, Lender may
apply any or all payments received hereunder towards any or all of the
Obligations in such order as Lender in its sole discretion deems appropriate.
(c) No remedy herein conferred upon Lender is intended to be
exclusive of any other remedy and each and every such remedy shall be cumulative
and may be exercised singularly or concurrently and shall be in addition to
every other remedy given hereunder, under the Loan Documents or the Related
Documents or now or hereafter existing at law or in equity or by statute or
otherwise.
SECTION 12
MISCELLANEOUS
12.1 Renewals and Extensions. Borrower understands and agrees that
Lender has made no commitment to extend or renew Facility A subsequent to the
Facility A Termination Date, to extend or renew Facility B beyond the Facility B
Maturity Date or to extend or renew Facility C beyond the Facility C Final
Expiration Date. Any extension or renewal of the Loans shall at all times be
subject to the sole discretion of Lender.
12.2 Right of Setoff. In addition to all Liens upon, and rights of
setoff against, the monies, securities or other property of Borrower given to
Lender by law, Lender shall have a Lien and a right of setoff against, and
Borrower hereby grants to Lender a security interest in, all monies, securities
and other property of Borrower now or hereafter in the possession of or on
deposit with Lender, whether held in a general or special account or deposit
including any account or deposit held jointly by Borrower with any other Person,
or for safekeeping or otherwise, except to the extent specifically prohibited by
law, Every such Lien, right of setoff and security interest may be exercised
only after the occurrence of a Default or an Event of Default, but without any
additional demand upon or notice to Borrower. No Lien, right of setoff or
security interest shall be deemed to have been waived by any act or conduct on
the part of Lender, by any neglect to exercise such right of setoff or to
enforce such Lien or security interest, or by any delay in so doing.
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12.3 GAAP. Except as otherwise stated in this Agreement, all financial
statements and information provided to Lender and all financial covenants shall
be made under GAAP.
12.4 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial. This
Agreement shall be governed by and construed and enforced in accordance with the
substantive laws (other than conflict laws) of the State of Arizona, except to
the extent Lender has greater rights or remedies under Federal law, in which
case such choice of Arizona law shall not be deemed to deprive Lender of any
such rights and remedies as may be available under Federal law. Each party
consents to the personal jurisdiction and venue of the state courts located in
Maricopa County, Arizona in connection with any controversy related to this
Agreement, waives any argument that venue in any such forum is not convenient
and agrees that, at the option of Lender, any litigation initiated by any of
them in connection with this Agreement may be venued in the Superior Court of
Maricopa County, Arizona. EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO REQUIRE A TRIAL BY JURY IN ANY
COURT ACTION PERTAINING TO THE OBLIGATIONS OR THE LOAN DOCUMENTS, AND AGREES
THAT ANY SUCH ACTIONS OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
12.5 Indemnification. Except to the extent arising as the result of the
gross negligence or willful or intentional misconduct of the Indemnified Parties
(as determined by a final, non-appealable judgment of a court of competent
jurisdiction), Borrower agrees to indemnify, protect, defend, reimburse and hold
harmless the Indemnified Parties for, from and against any and all actual or
threatened liabilities, claims, actions, causes of actions, judgments, orders,
damages (including foreseeable and unforeseeable consequential damages), costs,
expenses, fines, penalties and losses (including sums paid in settlement of
claims and all consultant, expert and legal fees and expenses of counsel to the
Indemnified Parties) arising out of or resulting from any: (a) breach of any
representation or warranty made or given by Borrower to any of the Indemnified
Parties or to any prospective or actual buyer of all or any portion of the
collateral for the Loans or any breach of any covenant of Borrower under any of
the Loan Documents; or (b) any claim or cause of action of any kind by any party
that any of the Indemnified Parties are
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liable for any act or omission of Borrower or any other Person in connection
with the collateral securing the Loans.
12.6 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same agreement.
12.7 Entire Agreement. The Loan Documents, the exhibits attached
thereto and the Related Documents contain the entire agreement and understanding
of the parties with respect to the subject matter hereof, supersede all other
prior understandings, oral or written, with respect to the subject matter
hereof, and are intended by Lender and Borrower as the final, complete and
exclusive statement of the terms agreed to by them.
12.8 Amendments. No amendment, modification, change, waiver, release or
discharge hereof and hereunder shall be effective unless evidenced by an
instrument in writing and signed by the party against whom enforcement is
sought.
12.9 Conflicts; Inconsistency. In the event of any conflict or
inconsistency between the terms and provisions of this Agreement and the terms
and provisions of any of the other Loan Documents or any of the Related
Documents, the terms and provisions of this Agreement shall control to the
extent necessary to resolve such conflict or inconsistency.
12.10 Additional Sums. All fees, charges, goods, things in action or
any other sums or things of value, other than the interest resulting from the
interest rate charged with respect to the Loans paid or payable by Borrower
(collectively, the "ADDITIONAL SUMS"), whether pursuant to the Loan Documents or
the Related Documents or any other document or instrument in any way pertaining
to this lending transaction, or otherwise with respect to this lending
transaction, that, under the laws of the State of Arizona or California, maybe
deemed to be interest with respect to this lending transaction, for the purpose
of any laws of the State of Arizona or California that may limit the maximum
amount of interest to be charged with respect to this lending transaction, shall
be payable by Borrower as, and shall be deemed to be, additional interest, and
for such purposes only. the agreed upon and "contracted for rate of interest" of
this lending transaction shall be deemed to be increased by the rate of interest
resulting from the Additional Sums.
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12.11 Savings Clause. Borrower understand and believe that this lending
transaction complies with the usury laws of the States of Arizona and
California; however, if any interest or other charges in connection with this
lending transaction are ever determined to exceed the maximum amount permitted
by law, then Borrower agrees that: (a) the amount of interest or charges payable
pursuant to this lending transaction shall be reduced to the maximum amount
permitted by law; and (b) any excess amount previously collected from Borrower
in connection with this lending transaction that exceeded the maximum amount
permitted by law, will be credited against the principal balance then
outstanding hereunder. If the outstanding principal balance hereunder has been
paid in full, the excess amount paid will be refunded to Borrower,
12.12 Section Headings. The section headings set forth in this
Agreement are for convenience only and shall not have substantive meaning
hereunder or be deemed part of this Agreement.
12.13 Exchange of Information. Borrower agrees that Lender may exchange
financial information about Borrower with (a) any other lender participating in
the Loans; (b) the accountants and attorneys of Lender or any other lender
participating in the Loans; (c) regulatory agencies; and (d) any other Person,
as required by applicable law.
12.14 Consent to Sale or Transfer of Loan or Loan Participations.
(a) Sale or transfer of loans. Borrower agrees and consents to
the sale or transfer by Lender (whether now or later) of all of Lender's rights,
title and interest in the Loans to any other Person(s) (such Person(s),
hereinafter referred to as the "Loan Transferee(s)"). Lender may provide,
without any limitation whatsoever, to the Loan Transferee(s) any information or
knowledge Lender may have about Borrower or any other matter relating to the
Loans, and Borrower hereby waives any rights to privacy Borrower may have with
respect to such matters. Borrower agrees that, from and after any such sale or
transfer, the Loan Transferee(s) shall be. considered as the absolute owner(s)
of the Loans and the lender under this Agreement, and shall have all the rights
granted to Lender under this Agreement and may enforce the obligations of
Borrower under the Loans irrespective of any failure or insolvency of Lender.
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(b) Sale or transfer of Loan Participations. Borrower consents
and agrees to the sale or transfer by Lender (whether now or later) of one or
more participation interests in the Loans to any other Person(s) (such Person(s)
being hereinafter referred to as the "Loan Participant(s)"). Lender may provide,
without any limitation whatsoever, to the Loan Participant(s) any information or
knowledge Lender may have about Borrower or any other matter relating to the
Loans, and Borrower hereby waives any rights to privacy Borrower may have with
respect to such matters, Borrower hereby additionally waives any and all notices
of sale of participation interests in the Loan to the Loan Participant(s), as
well as all notices of any repurchase of such participation interests. Lender
agrees that any sale or transfer of a participation interest in the Loans shall
be such that Lender remains the lender under this Agreement with the exclusive
power and authority to enforce the provisions hereof and otherwise deal with
Borrower.
12.15 Payment of Expenses. Borrower agrees to pay all fees, costs and
expenses incurred by Lender in connection with the Loan Documents and the
Related Documents, including the attorneys' fees and costs incurred by Lender in
connection with the preparation of the Loan Documents or the Related Documents,
and all other fees of Lender, including the costs of conducting audits,
inspections or examinations of the collateral for the Loans, appraisal fees,
environmental fees, premiums for title insurance policies and endorsements, and
filing, recording and search fees. Whenever Borrower is obligated to pay or
reimburse Lender for any attorneys' fees, those fees shall include the allocated
costs for services of in-house counsel.
12.16 Costs of Collection. Borrower agrees to pay all costs of
collection, including attorneys' fees, whether or not suit is filed, and all
costs of suit and preparation for suit (whether at trial or appellate level), in
the event any payment of principal, interest or other amount with respect to the
Loans is not paid when due, or in case it becomes necessary to protect the
collateral which is security for the Loans, or to exercise any other right or
remedy hereunder or in the Related Documents, or in the event Lender is made
party to any litigation because of the existence of the Loans. or if at any time
Lender should incur any attorneys' fees in any proceeding under any federal
bankruptcy law (or any similar state or federal law) in connection with the
Loans. In the event of any court proceeding, attorneys' fees shall be set by the
court and not by the jury and shall be included in any judgment obtained by
Lender.
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12.17 Bankruptcy. In the event of the commencement of a bankruptcy case
by or against Borrower or involving any of the collateral for the Loans, Lender,
to the extent not already provided for herein, shall be entitled to recover, and
Borrower shall be obligated to pay, the attorneys' fees and costs of Lender
incurred in connection with: (a) any determination of the applicability of the
bankruptcy laws to the terms of the Loan Documents or the Related Documents or
the rights of Lender thereunder; (b) any attempt by Lender to enforce or
preserve its rights under the bankruptcy laws, or to prevent Borrower or any
other person from seeking to deny Lender its rights thereunder; (c) any effort
by Lender to protect, preserve, or enforce its rights against the collateral for
the Loans, or seeking authority to modify the automatic stay of 11 U.S.C.
Section 362 or otherwise seeking to engage in such protection, preservation or
enforcement; or (d) any civil proceeding(s) arising under the bankruptcy laws,
or arising in or related to a case under the bankruptcy laws.
12.18 Notices. Any notice or other communication with respect to this
Agreement shall: (a) be in writing; (b) be effective on the day of hand-delivery
thereof to the party to whom directed, one day following the day of deposit
thereof with delivery charges prepaid, with a national overnight delivery
service, or 2 days following the day of deposit thereof with postage prepaid,
with the United States Postal Service, by regular first class, certified or
registered mail; (c) if directed to Lender, be addressed to Lender at the office
of Lender set forth below the signature of Lender, or to such other address as
Lender shall have specified to Borrower Representative by like notice, with a
copy to Imperial Bank at One Arizona Center, ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and to Squire, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ L.L.P., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇
▇. ▇▇▇▇▇▇▇, Esq.; and (d) if directed to Borrower, be addressed to Borrower at
the address set forth below Borrower's signature, or to such other address as
Borrower shall have specified to Lender by like notice, with a copy to ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, Esq., ▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
12.19 Severability. If any provision of the Loan Documents or the
Related Documents is invalid or unenforceable, the other provisions of the Loan
Documents or the Related Documents shall remain in full force and effect and
shall be liberally construed in favor of
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Lender in order to effectuate the other provisions of the Loan Documents or the
Related Documents.
12.20 No Transfer by Borrower. Borrower shall not transfer or assign
any of the rights or obligations of Borrower under the Loan Documents or the
Related Documents without the prior written consent of Lender, which may be
given or withheld by Lender in its sole and absolute discretion.
12.21 Binding Nature. Subject to the restrictions in Section 14.21, the
provisions of the Loan Documents and the Related Documents shall be binding upon
Borrower and the successors and assigns of Borrower, and shall inure to the
benefit of Lender and the successors and assigns of Lender. Lender may from time
to time transfer all or any part of the interest of Lender in the Loan Documents
and the Related Documents without notice to Borrower.
12.22 Survival. All indemnities, warranties, representations and
covenants made by Borrower in the Loan Documents or the Related Documents shall
be considered to have been relied upon by Lender and will survive the making and
repayment of the Loans, delivery to Lender of the Loan Documents and the Related
Documents and the termination of each of Facility A Commitment, the Facility B
Commitment and the Facility C Commitment, regardless of any investigation made
by Lender or on behalf of Lender.
12.23 Time of Essence. Time is of the essence of the Loan Documents and
each and every provision of the Loan Documents and the Related Documents.
12.24 Waiver. Lender shall not be deemed to have waived any rights
under the Loan Documents or the Related Documents unless such waiver is given in
writing and signed by Lender. No delay or omission on the part of Lender in
exercising any right shall operate as a waiver of such right or any other right.
A waiver by Lender of a provision of the Loan Documents or the Related Documents
shall not prejudice or constitute a waiver of the right of Lender otherwise to
demand strict compliance with that provision or any other provision of the Loan
Documents or the Related Documents. Lender retains all rights even if Lender
makes any Advance after a Default. No prior waiver by Lender, nor any course of
dealing between Lender and Borrower, shall constitute a waiver of any of the
rights of Lender or of any obligations of
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Borrower as to any future incident or circumstance. Whenever the consent of
Lender is required under the Loan Documents or the Related Documents, the
granting of such consent by Lender in any instance shall not constitute
continuing consent in subsequent instances where such consent is required and in
all cases such consent may be granted or withheld in the sole discretion of
Lender. Lender may renew, extend or modify the Loans or release any party or
guarantor or collateral for the Loans; impair, fail to realize upon or perfect
the security interest of Lender in the collateral for the Loans; or take any
other action deemed necessary by Lender without the consent of or notice to
anyone and without releasing any such party from liability.
12.25 Construction. The Loan Documents and the Related Documents shall
be construed as a whole, in accordance with their fair meaning, and without
regard to or taking into account any presumption or other rule of law requiring
construction against the party preparing the Loan Documents or the Related
Documents.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ALLIANCE MEDICAL CORPORATION.
a Delaware corporation
By:
----------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
Borrower's Address for Notice
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
IMPERIAL BANK, a California banking
corporation
By:
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice-President
Address of Lender:
Imperial Bank
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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