EXHIBIT 10.10
SILICON VALLEY BANK
LOAN AND SECURITY AGREEMENT
(EXIM PROGRAM)
BORROWER: GENUS, INC.
ADDRESS: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
DATE: NOVEMBER , 2001
----
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK, COMMERCIAL FINANCE DIVISION ("Silicon"), whose address is
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and the borrower(s) named
above (the "Borrower"), whose chief executive office is located at the above
address ("Borrower's Address"). The Schedule to this Agreement (the "Schedule")
shall for all purposes be deemed to be a part of this Agreement, and the same is
an integral part of this Agreement. (Definitions of certain terms used in this
Agreement are set forth in Section 8 below.)
1. LOANS.
1.1 LOANS. Silicon will make loans to Borrower (the "Loans"), in amounts
determined by Silicon in its * , up to the amounts (the "Credit Limit") shown on
the Schedule, provided no Default or Event of Default has occurred and is
continuing, and subject to deduction of any Reserves for accrued interest and
such other Reserves as Silicon deems proper from time to time.
*GOOD FAITH BUSINESS JUDGMENT
1.2 INTEREST. All Loans and all other monetary Obligations shall bear interest
at the rate shown on the Schedule, except where expressly set forth to the
contrary in this Agreement. Interest shall be payable monthly, on the last day
of the month. Interest may, in Silicon's discretion, be charged to Borrower's
loan account, and the same shall thereafter bear interest at the same rate as
the other Loans. Silicon may, in its discretion, charge interest to Borrower's
Deposit Accounts maintained with Silicon. Regardless of the amount of
Obligations that may be outstanding from time to time, Borrower shall pay
Silicon minimum monthly interest during the term of this Agreement in the amount
set forth on the Schedule (the "Minimum Monthly Interest").
1.3 OVERADVANCES. If at any time or for any reason the total of all
outstanding Loans and all other Obligations exceeds the Credit Limit (an
"Overadvance"), Borrower shall immediately pay the amount of the excess to
Silicon, without notice or demand. Without limiting Borrower's obligation to
repay to Silicon on demand the amount of any Overadvance, Borrower agrees to pay
Silicon interest on the outstanding amount of any Overadvance, on demand, at a
rate equal to the interest rate which would otherwise be applicable to the
Overadvance, plus an additional 2% per annum.
1.4 FEES. Borrower shall pay Silicon the fee(s) shown on the Schedule, which
are in addition to all interest and other sums payable to Silicon and are not
refundable.
1.5 LETTERS OF CREDIT. At the request of Borrower, Silicon may, in its sole
discretion, issue or arrange for the issuance of letters of credit for the
account of Borrower, in each case in form and substance satisfactory to Silicon
in its sole discretion (collectively, "Letters of Credit"). The aggregate face
amount of all outstanding Letters of Credit from time to time shall not exceed
the amount shown on the Schedule (the "Letter of Credit Sublimit"), and shall be
reserved against Loans which would otherwise be available hereunder, and in the
event at any time there are insufficient Loans available to Borrower for such
reserve, Borrower shall deposit and maintain with Silicon cash collateral in an
amount at all times equal to such deficiency, which shall be held as Collateral
for all purposes of this Agreement. Borrower shall pay all bank charges
(including * charges of Silicon) for the issuance of Letters of Credit, together
with such additional fee as Silicon's letter of credit department shall charge
in connection with the issuance of the Letters of Credit. Any payment by Silicon
under or in connection with a Letter of Credit shall constitute a Loan hereunder
on the date such payment is made. Each Letter of Credit shall have an expiry
date no later than thirty days prior to the Maturity
82
Date. Borrower hereby agrees to indemnify, save, and hold Silicon harmless from
any loss, cost, expense, or liability, including payments made by Silicon,
expenses, and reasonable attorneys' fees incurred by Silicon arising out of or
in connection with any Letters of Credit. Borrower agrees to be bound by the
regulations and interpretations of the issuer of any Letters of Credit
guarantied by Silicon and opened for Borrower's account or by Silicon's
interpretations of any Letter of Credit issued by Silicon for Borrower's
account, and Borrower understands and agrees that Silicon shall not be liable
for any error, negligence, or mistake, whether of omission or commission, in
following Borrower's instructions or those contained in the Letters of Credit or
any modifications, amendments, or supplements thereto. Borrower understands that
Letters of Credit may require Silicon to indemnify the issuing bank for certain
costs or liabilities arising out of claims by Borrower against such issuing
bank. Borrower hereby agrees to indemnify and hold Silicon harmless with respect
to any loss, cost, expense, or liability incurred by Silicon under any Letter of
Credit as a result of Silicon's indemnification of any such issuing bank. The
provisions of this Loan Agreement, as it pertains to Letters of Credit, and any
other present or future documents or agreements between Borrower and Silicon
relating to Letters of Credit are cumulative.
*CUSTOMARY
2. SECURITY INTEREST.
2.1 SECURITY INTEREST. To secure the payment and performance of all of
the Obligations when due, Borrower hereby grants to Silicon a security interest
in all of Borrower's interest in the following, whether now owned or hereafter
acquired, and wherever located: All Inventory, Equipment, Receivables, and
General Intangibles, including, without limitation, all of Borrower's Deposit
Accounts, and all money, and all property now or at any time in the future in
Silicon's possession (including claims and credit balances), and all proceeds
(including proceeds of any insurance policies, proceeds of proceeds and claims
against third parties), all products and all books and records related to any of
the foregoing (all of the foregoing, together with all other property in which
Silicon may now or in the future be granted a lien or security interest, is
referred to herein, collectively, as the "Collateral").
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.
In order to induce Silicon to enter into this Agreement and to make Loans,
Borrower represents and warrants to Silicon as follows, and Borrower covenants
that the following representations will continue to be true, and that Borrower
will at all times comply with all of the following covenants:
3.1 CORPORATE EXISTENCE AND AUTHORITY. Borrower, if a corporation, is and will
continue to be, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. Borrower is and will continue to
be qualified and licensed to do business in all jurisdictions in which any
failure to do so would have a material adverse effect on Borrower. The
execution, delivery and performance by Borrower of this Agreement, and all other
documents contemplated hereby (i) have been duly and validly authorized, (ii)
are enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors'
rights generally), and (iii) do not violate Borrower's articles or certificate
of incorporation, or Borrower's by-laws, or any law or any material agreement
or instrument which is binding upon Borrower or its property, and (iv) do not
constitute grounds for acceleration of any material indebtedness or obligation
under any material agreement or instrument which is binding upon Borrower or its
property.
3.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule are all
prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give Silicon 30 days' prior written notice before changing its
name or doing business under any other name. Borrower has complied, and will in
the future comply, with all laws relating to the conduct of business under a
fictitious business name.
3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in the
heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth on the Schedule. Borrower will give Silicon at least 30 days prior
written notice before opening any additional place of business, changing its
chief executive office, or moving any of the Collateral to a location other than
Borrower's Address or one of the locations set forth on the Schedule*.
*EXCEPT FOR DEMONSTRATIONS OF INVENTORY IN THE ORDINARY COURSE OF BUSINESS
3.4 TITLE TO COLLATERAL; PERMITTED LIENS. * Borrower is now, and will at all
times in the future be, the sole owner of all the Collateral, except for items
of Equipment which are leased by Borrower. The Collateral now is and will remain
free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for Permitted Liens. Silicon now has,
and will continue to have, a first-priority perfected and enforceable security
interest in all of the Collateral, subject only to the Permitted Liens, and
Borrower will at all times defend Silicon and the Collateral against all claims
of others. None of the Collateral now is or will be affixed to any real
property in such a manner, or with such intent, as to become a fixture**.
Borrower is not and will not become a lessee under any real property lease
pursuant to which the lessor
83
may obtain any rights in any of the Collateral and no such lease now prohibits,
restrains, impairs or will prohibit, restrain or impair Borrower's right to
remove any Collateral from the leased premises. Whenever any Collateral is
located upon premises in which any third party has an interest (whether as
owner, mortgagee, beneficiary under a deed of trust, lien or otherwise),
Borrower shall, whenever requested by Silicon, use its best efforts to cause
such third party to execute and deliver to Silicon, in form acceptable to
Silicon, such waivers and subordinations as Silicon shall specify, so as to
ensure that Silicon's rights in the Collateral are, and will continue to be,
superior to the rights of any such third party. Borrower will keep in full force
and effect, and will comply with all the terms of, any lease of real property
where any of the Collateral now or in the future may be located.
*EXCEPT AS OTHERWISE PERMITTED BY THIS AGREEMENT,
**EXCEPT FOR CUSTOMARY LEASEHOLD IMPROVEMENTS
3.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the Collateral in good
working condition, and Borrower will not use the Collateral for any unlawful
purpose. Borrower will immediately advise Silicon in writing of any material
loss or damage to the Collateral.
3.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at Borrower's
Address complete and accurate books and records, comprising an accounting system
in accordance with generally accepted accounting principles.
3.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial statements now
or in the future delivered to Silicon have been, and will be, prepared in
conformity with generally accepted accounting principles and now and in the
future will completely and accurately reflect the financial condition of
Borrower, at the times and for the periods therein stated. Between the last date
covered by any such statement provided to Silicon and the date hereof, there has
been no material adverse change in the financial condition or business of
Borrower. Borrower is now and will continue to be solvent.
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely
filed, and will timely file, all tax returns and reports required by foreign,
federal, state and local law, and Borrower has timely paid, and will timely pay,
all foreign, federal, state and local taxes, assessments, deposits and
contributions now or in the future owed by Borrower. Borrower may, however,
defer payment of any contested taxes, provided that Borrower (i) in good faith
contests Borrower's obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (ii) notifies Silicon in
writing of the commencement of, and any material development in, the
proceedings, and (iii) posts bonds or takes any other steps required to keep the
contested taxes from becoming a lien upon any of the Collateral. Borrower is
unaware of any claims or adjustments proposed for any of Borrower's prior tax
years which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid, and shall continue to pay all amounts necessary to
fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not and will not withdraw
from participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could result
in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.
Borrower shall, at all times, utilize the services of an outside payroll service
providing for the automatic deposit of all payroll taxes payable by Borrower.
3.9 COMPLIANCE WITH LAW. * Borrower has complied, and will comply, in all
material respects, with all provisions of all foreign, federal, state and local
laws and regulations relating to Borrower, including, but not limited to, those
relating to Borrower's ownership of real or personal property, the conduct and
licensing of Borrower's business, and all environmental matters.
*TO THE BEST OF ITS KNOWLEDGE,
3.10 LITIGATION. Except as disclosed in the Schedule, there is no claim, suit,
litigation, proceeding or investigation pending or (to best of Borrower's
knowledge) threatened by or against or affecting Borrower in any court or before
any governmental agency (or any basis therefor known to Borrower) which *
result, either separately or in the aggregate, in any material adverse change in
the financial condition or business of Borrower, or in any material impairment
in the ability of Borrower to carry on its business in substantially the same
manner as it is now being conducted. Borrower will promptly inform Silicon in
writing of any claim, proceeding, litigation or investigation in the future
threatened or instituted by or against Borrower involving any single claim of
$50,000 or more, or involving $100,000 or more in the aggregate.
*COULD BE REASONABLY EXPECTED TO
3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes. Borrower is not purchasing or carrying any "margin
stock" (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan will be used to purchase
or carry any "margin stock" or to extend credit to others for the purpose of
purchasing or carrying any "margin stock."
4. RECEIVABLES.
4.1 REPRESENTATIONS RELATING TO RECEIVABLES. Borrower represents and
warrants to Silicon as follows: Each Receivable with respect to which Loans are
requested by Borrower shall, on the date each Loan is requested and made, (i)
represent an undisputed bona fide existing unconditional obligation of the
84
Account Debtor created by the sale, delivery, and acceptance of goods or the
rendition of services in the ordinary course of Borrower's business, and (ii)
meet the Minimum Eligibility Requirements set forth in Section 8 below.
4.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE. Borrower
represents and warrants to Silicon as follows: All statements made and all
unpaid balances appearing in all invoices, instruments and other documents
evidencing the Receivables are and shall be true and correct and all such
invoices, instruments and other documents and all of Borrower's books and
records are and shall be genuine and in all respects what they purport to be,
and all signatories and endorsers have the capacity to contract. All sales and
other transactions underlying or giving rise to each Receivable shall fully
comply with all applicable laws and governmental rules and regulations. All
signatures and endorsements on all documents, instruments, and agreements
relating to all Receivables are and shall be genuine, and all such documents,
instruments and agreements are and shall be legally enforceable in accordance
with their terms.
4.3 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES. Borrower shall deliver to
Silicon transaction reports and loan requests, schedules and assignments of all
Receivables, and schedules of collections, all on Silicon's standard forms;
provided, however, that Borrower's failure to execute and deliver the same shall
not affect or limit Silicon's security interest and other rights in all of
Borrower's Receivables, nor shall Silicon's failure to advance or lend against a
specific Receivable affect or limit Silicon's security interest and other rights
therein. Loan requests received after 12:00 Noon will not be considered by
Silicon until the next Business Day. Together with each such schedule and
assignment, or later if requested by Silicon, Borrower shall furnish Silicon
with copies (or, at Silicon's request, originals) of all contracts, orders,
invoices, and other similar documents, and all original shipping instructions,
delivery receipts, bills of lading, and other evidence of delivery, for any
goods the sale or disposition of which gave rise to such Receivables, and
Borrower warrants the genuineness of all of the foregoing. Borrower shall also
furnish to Silicon an aged accounts receivable trial balance in such form and at
such intervals as Silicon shall request. In addition, Borrower shall deliver
to Silicon the originals of all instruments, chattel paper, security agreements,
guarantees and other documents and property evidencing or securing any
Receivables, immediately upon receipt thereof and in the same form as received,
with all necessary indorsements, all of which shall be with recourse. Borrower
shall also provide Silicon with copies of all credit memos within two days after
the date issued.
4.4 COLLECTION OF RECEIVABLES. Borrower shall have the right to collect all
Receivables, unless and until a Default or an Event of Default has occurred*.
Borrower shall hold all payments on, and proceeds of, Receivables in trust for
Silicon, and Borrower shall immediately deliver all such payments and proceeds
to Silicon in their original form, duly endorsed in blank, to be applied to the
Obligations in such order as Silicon shall determine. Silicon may, in its
discretion, require that all proceeds of Collateral be deposited by Borrower
into a lockbox account, or such other "blocked account" as Silicon may specify,
pursuant to a blocked account agreement in such form as Silicon may specify.
**Silicon or its designee may, at any time, notify Account Debtors that the
Receivables have been assigned to Silicon.
*AND IS CONTINUING
**AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF A DEFAULT OR AN EVENT OF
DEFAULT
4.5. REMITTANCE OF PROCEEDS. All proceeds arising from the disposition of any
Collateral shall be delivered, in kind, by Borrower to Silicon in the original
form in which received by Borrower not later than the following Business Day
after receipt by Borrower, to be applied to the Obligations in such order as
Silicon shall determine; provided that, if no Default or Event of Default has
occurred*, Borrower shall not be obligated to remit to Silicon the proceeds of
the sale of worn out or obsolete equipment disposed of by Borrower in good faith
in an arm's length transaction for an aggregate purchase price of $25,000 or
less (for all such transactions in any fiscal year). Borrower agrees that it
will not commingle proceeds of Collateral with any of Borrower's other funds or
property, but will hold such proceeds separate and apart from such other funds
and property and in an express trust for Silicon. Nothing in this Section limits
the restrictions on disposition of Collateral set forth elsewhere in this
Agreement.
*AND IS CONTINUING
4.6 DISPUTES. Borrower shall notify Silicon promptly of all disputes or claims
relating to Receivables. Borrower shall not forgive (completely or partially),
compromise or settle any Receivable for less than payment in full, or agree to
do any of the foregoing, except that Borrower may do so, provided that: (i)
Borrower does so in good faith, in a commercially reasonable manner, in the
ordinary course of business, and in arm's length transactions, which are
reported to Silicon on the regular reports provided to Silicon; (ii) no Default
or Event of Default has occurred and is continuing; and (iii) taking into
account all such discounts settlements and forgiveness, the total outstanding
Loans will not exceed the Credit Limit. Silicon may, at any time after the
occurrence * of an Event of Default, settle or adjust disputes or claims
directly with Account Debtors for amounts and upon terms which Silicon considers
advisable in its
85
reasonable credit judgment and, in all cases, Silicon shall credit Borrower's
Loan account with only the net amounts received by Silicon in payment of any
Receivables.
*AND DURING THE CONTINUANCE
4.7 RETURNS. Provided no Event of Default has occurred and is continuing, if
any Account Debtor returns any Inventory to Borrower in the ordinary course of
its business, Borrower shall promptly determine the reason for such return and
promptly issue a credit memorandum to the Account Debtor in the appropriate
amount (sending a copy to Silicon). In the event any attempted return occurs
after the occurrence * of any Event of Default, Borrower shall (i) hold the
returned Inventory in trust for Silicon, (ii) segregate all returned Inventory
from all of Borrower's other property, (iii) conspicuously label the returned
Inventory as Silicon's property, and (iv) immediately notify Silicon of the
return of any Inventory, specifying the reason for such return, the location and
condition of the returned Inventory, and on Silicon's request deliver such
returned Inventory to Silicon.
*AND DURING THE CONTINUANCE
4.8 VERIFICATION. Silicon may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to
the Receivables, by means of mail, telephone or otherwise, either in the name of
Borrower or Silicon or such other name as Silicon may choose.
4.9 NO LIABILITY. Silicon shall not under any circumstances be responsible or
liable for any shortage or discrepancy in, damage to, or loss or destruction of,
any goods, the sale or other disposition of which gives rise to a Receivable, or
for any error, act, omission, or delay of any kind occurring in the settlement,
failure to settle, collection or failure to collect any Receivable, or for
settling any Receivable in good faith for less than the full amount thereof, nor
shall Silicon be deemed to be responsible for any of Borrower's obligations
under any contract or agreement giving rise to a Receivable. Nothing herein
shall, however, relieve Silicon from liability for its own gross negligence or
willful misconduct.
5. ADDITIONAL DUTIES OF BORROWER.
5.1 FINANCIAL AND OTHER COVENANTS. Borrower shall at all times comply with the
financial and other covenants set forth in the Schedule.
5.2 INSURANCE. Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Silicon, in such form and amounts as Silicon
may reasonably require, and Borrower shall provide evidence of such insurance to
Silicon, so that Silicon is satisfied that such insurance is, at all times, in
full force and effect. All such insurance policies shall name Silicon as an
additional insured and loss payee, and shall contain a lenders loss payee
endorsement in form reasonably acceptable to Silicon. Upon receipt of the
proceeds of any such insurance, Silicon shall apply such proceeds in reduction
of the Obligations as Silicon shall determine in its sole discretion, except
that, provided no Default or Event of Default has occurred and is continuing,
Silicon shall release to Borrower insurance proceeds with respect to Equipment
totaling less than $100,000, which shall be utilized by Borrower for the
replacement of the Equipment with respect to which the insurance proceeds were
paid. Silicon may require reasonable assurance that the insurance proceeds so
released will be so used. If Borrower fails to provide or pay for any
insurance, Silicon may, but is not obligated to, obtain the same at Borrower's
expense. Borrower shall promptly deliver to Silicon copies of all reports made
to insurance companies.
5.3 REPORTS. Borrower, at its expense, shall provide Silicon with the written
reports set forth in the Schedule, and such other written reports with respect
to Borrower (including budgets, sales projections, operating plans and other
financial documentation), as Silicon shall from time to time reasonably specify.
5.4 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and on one
Business Day's notice, Silicon, or its agents, shall have the right to inspect
the Collateral, and the right to audit and copy Borrower's books and records.
Silicon shall take reasonable steps to keep confidential all information
obtained in any such inspection or audit*, but Silicon shall have the right to
disclose any such information to its auditors, regulatory agencies, and
attorneys, and pursuant to any subpoena or other legal process. The foregoing
inspections and audits shall be at Borrower's expense and the charge therefor
shall be $700 per person per day (or such higher amount as shall represent
Silicon's then current standard charge for the same), plus reasonable out of
pocket expenses. Borrower will not enter into any agreement with any accounting
firm, service bureau or third party to store Borrower's books or records at any
location other than Borrower's Address, without first obtaining Silicon's
written consent, which may be conditioned upon such accounting firm, service
bureau or other third party agreeing to give Silicon the same rights with
respect to access to books and records and related rights as Silicon has under
this Loan Agreement. **Borrower waives the benefit of any accountant-client
privilege or other evidentiary privilege precluding or limiting the disclosure,
divulgence or delivery of any of its books and records (except that Borrower
does not waive any attorney-client privilege).
*EQUIVALENT TO THOSE STEPS IT TAKES TO SAFEGUARD ITS OWN CONFIDENTIAL
FINANCIAL INFORMATION
**WITH RESPECT TO SILICON,
86
5.5 NEGATIVE COVENANTS. Except as may be permitted in the Schedule, Borrower
shall not, without Silicon's prior written consent, do any of the following:
(i) merge or consolidate with another corporation or entity*; (ii) acquire any
assets, except in the ordinary course of business**; (iii) enter into any other
transaction outside the ordinary course of business***; (iv) sell or transfer
any Collateral, except for the sale of finished Inventory in the ordinary course
of Borrower's business, and except for the sale of obsolete or unneeded
Equipment in the ordinary course of business****; (v) store any Inventory or
other Collateral with any warehouseman or other third party; (vi) sell any
Inventory on a sale-or-return, guaranteed sale, consignment, or other contingent
basis; (vii) make any loans of any money or other assets ; (viii) incur any
debts, outside the ordinary course of business, which would have a material,
adverse effect on Borrower or on the prospect of repayment of the Obligations;
(ix) guarantee or otherwise become liable with respect to the obligations of
another party or entity ; (x) pay or declare any dividends on Borrower's stock
(except for dividends payable solely in stock of Borrower); (xi) redeem, retire,
purchase or otherwise acquire, directly or indirectly, any of Borrower's stock;
(xii) make any change in Borrower's capital structure which would have a
material adverse effect on Borrower or on the prospect of repayment of the
Obligations; or (xiii) or (xiv) dissolve or elect to dissolve. Transactions
permitted by the foregoing provisions of this Section are only permitted if no
Default or Event of Default would occur as a result of such transaction.
* PROVIDED, HOWEVER, THAT A SUBSIDIARY OF BORROWER MAY MERGE OR CONSOLIDATE
INTO ANOTHER SUBSIDIARY OF BORROWER OR INTO BORROWER
**PROVIDED, HOWEVER, THAT BORROWER MAY ACQUIRE INTELLECTUAL PROPERTY ASSETS
FROM BORROWER'S SUBSIDIARIES AND ENTER INTO NON-EXCLUSIVE SERVICES AGREEMENTS
WITH BORROWER'S SUBSIDIARIES RELATING THERETO
*** EXCEPT AS OTHERWISE PERMITTED BY OTHER PROVISIONS OF THIS AGREEMENT;
**** AND EXCEPT FOR THE ISSUANCE OF NON-EXCLUSIVE LICENSES AND SIMILAR
NON-EXCLUSIVE ARRANGEMENTS FOR THE USE OF PROPERTY OF BORROWER
+ EXCEPT: (A) LOANS EXISTING AS OF THE DATE HEREOF THAT ARE SHOWN ON THE
SCHEDULE; AND (B) LOANS CONSISTING OF (1) TRAVEL ADVANCES AND EMPLOYEE
RELOCATION LOANS AND OTHER EMPLOYEE LOANS AND ADVANCES IN THE ORDINARY COURSE OF
BUSINESS; AND (2) LOANS TO EMPLOYEES, OFFICERS OR DIRECTORS FOR THE PURCHASE OF
EQUITY SECURITIES OF BORROWER PURSUANT TO EMPLOYEE STOCK PURCHASE PLANS OR
AGREEMENTS APPROVED BY THE BORROWER'S BOARD OF DIRECTORS; AND (C) DEBT
OBLIGATIONS RECEIVED IN CONNECTION WITH THE BANKRUPTCY OR REORGANIZATION OF
CUSTOMERS OR SUPPLIERS AND IN SETTLEMENT OF DELINQUENT OBLIGATIONS OF, AND OTHER
DISPUTES WITH, CUSTOMERS OR SUPPLIERS IN THE ORDINARY COURSE OF BUSINESS AND (D)
DEBT OBLIGATIONS CONSISTING OF NOTES RECEIVABLE OF, OR PREPAID ROYALTIES AND
OTHER CREDIT EXTENSIONS TO, CUSTOMERS WHO ARE NOT AFFILIATES, IN THE ORDINARY
COURSE OF BUSINESS
++ EXCEPT FOR EXISTING GUARANTIES OF THE OBLIGATIONS OF THE BORROWER'S
WHOLLY-OWNED SUBSIDIARIES
5.6 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against Silicon with respect to any Collateral or in any manner
relating to Borrower, Borrower shall, without expense to Silicon, make available
Borrower and its officers, employees and agents and Borrower's books and
records, to the extent that Silicon may deem them reasonably necessary in order
to prosecute or defend any such suit or proceeding.
5.7 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by
Silicon, to execute all documents and take all actions, as Silicon, may deem
reasonably necessary or useful in order to perfect and maintain Silicon's
perfected security interest in the Collateral, and in order to fully consummate
the transactions contemplated by this Agreement.
6. TERM.
6.1 MATURITY DATE. This Agreement shall continue in effect until the maturity
date set forth on the Schedule (the "Maturity Date"), subject to Section 6.3
below.
6.2 EARLY TERMINATION. This Agreement may be terminated prior to the Maturity
Date as follows: (i) by Borrower, effective three Business Days after written
notice of termination is given to Silicon; or (ii) by Silicon at any time after
the occurrence of an Event of Default, without notice, effective immediately.
If this Agreement is terminated by Borrower or by Silicon under this Section
6.2, Borrower shall pay to Silicon a termination fee in an amount equal to *
provided that no termination fee shall be charged if the credit facility
hereunder is replaced with a new facility from another division of Silicon
Valley Bank. The termination fee shall be due and payable on the effective date
of termination and thereafter shall bear interest at a rate equal to the highest
rate applicable to any of the Obligations.
*ONE PERCENT (1%) OF THE OVERALL CREDIT LIMIT (AS DEFINED IN THE SCHEDULE),
PROVIDED THAT THE TOTAL TERMINATION FEE UNDER THIS LOAN AGREEMENT AND UNDER THE
NON-EXIM AGREEMENT (AS DEFINED IN THE SCHEDULE)
87
SHALL NOT EXCEED ONE PERCENT (1%) OF THE OVERALL CREDIT LIMIT, AND
6.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier effective
date of termination, Borrower shall pay and perform in full all Obligations,
whether evidenced by installment notes or otherwise, and whether or not all or
any part of such Obligations are otherwise then due and payable. Without
limiting the generality of the foregoing, if on the Maturity Date, or on any
earlier effective date of termination, there are any outstanding Letters of
Credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an amount
equal to the face amount of all such Letters of Credit plus all interest, fees
and cost due or to become due in connection therewith, to secure all of the
Obligations relating to said Letters of Credit, pursuant to Silicon's then
standard form cash pledge agreement. Notwithstanding any termination of this
Agreement, all of Silicon's security interests in all of the Collateral and all
of the terms and provisions of this Agreement shall continue in full force and
effect until all Obligations have been paid and performed in full; provided
that, without limiting the fact that Loans are subject to the discretion of
Silicon, Silicon may, in its sole discretion, refuse to make any further Loans
after termination. No termination shall in any way affect or impair any right
or remedy of Silicon, nor shall any such termination relieve Borrower of any
Obligation to Silicon, until all of the Obligations have been paid and performed
in full. Upon payment and performance in full of all the Obligations and
termination of this Agreement, Silicon shall promptly deliver to Borrower
termination statements, requests for reconveyances and such other documents as
may be required to fully terminate Silicon's security interests.
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and Borrower shall
give Silicon immediate written notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to Silicon by Borrower or any
of Borrower's officers, employees or agents, now or in the future, shall be
untrue or misleading in a material respect; or (b) Borrower shall fail to pay
when due any Loan or any interest thereon or any other monetary Obligation; or
(c) the total Loans and other Obligations outstanding at any time shall exceed
the Credit Limit *; or (d) Borrower shall fail to comply with any of the
financial covenants set forth in the Schedule or shall fail to perform any other
non-monetary Obligation which by its nature cannot be cured; or (e) Borrower
shall fail to perform any other non-monetary Obligation, which failure is not
cured within 5 Business Days after the date due; or (f) any levy, assessment,
attachment, seizure, lien or encumbrance (other than a Permitted Lien) is made
on all or any part of the Collateral which is not cured within 10 days after the
occurrence of the same; or (g) any default or event of default occurs under any
obligation secured by a Permitted Lien, which is not cured within any applicable
cure period or waived in writing by the holder of the Permitted Lien; or (h)
Borrower breaches any material contract or obligation, which has or may
reasonably be expected to have a material adverse effect on Borrower's business
or financial condition; or (i) Dissolution, termination of existence, insolvency
or business failure of Borrower; or appointment of a receiver, trustee or
custodian, for all or any part of the property of, assignment for the benefit of
creditors by, or the commencement of any proceeding by Borrower under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect; or (j) the commencement of any proceeding against Borrower or
any guarantor of any of the Obligations under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect, which is not cured
by the dismissal thereof within ** 30 days after the date commenced; or (k)
revocation or termination of, or limitation or denial of liability upon, any
guaranty of the Obligations or any attempt to do any of the foregoing, or
commencement of proceedings by any guarantor of any of the Obligations under any
bankruptcy or insolvency law; or (l) revocation or termination of, or limitation
or denial of liability upon, any pledge of any certificate of deposit,
securities or other property or asset of any kind pledged by any third party to
secure any or all of the Obligations, or any attempt to do any of the foregoing,
or commencement of proceedings by or against any such third party under any
bankruptcy or insolvency law; or (m) Borrower makes any payment on account of
any indebtedness or obligation which has been subordinated to the Obligations
other than as permitted in the applicable subordination agreement, or if any
Person who has subordinated such indebtedness or obligations terminates or in
any way limits his subordination agreement; or (n) *** or (o) Borrower shall
generally not pay its debts as they become due, or Borrower shall conceal,
remove or transfer any part of its property, with intent to hinder, delay or
defraud its creditors, or make or suffer any transfer of any of its property
which may be fraudulent under any bankruptcy, fraudulent conveyance or similar
law; or (p) there shall be a material adverse change in Borrower's business or
financial condition; or (q)
88
Silicon may cease making any Loans hereunder during any of the above cure
periods, and thereafter if an Event of Default has occurred****.
*PROVIDED THAT IF AN OVERADVANCE RESULTS DIRECTLY FROM A CHANGE BY SILICON OF
EITHER THE AMOUNT OF RESERVES OR OF THE MINIMUM ELIGIBILITY REQUIREMENTS, THEN
BORROWER SHALL HAVE FIVE BUSINESS DAYS TO CURE SUCH OVERADVANCE
**45
***WITHOUT SILICON'S PRIOR WRITTEN CONSENT, (1) A "PERSON" OR "GROUP" (WITHIN
THE MEANING OF SECTIONS 13(D) AND 14(D)(2) OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED) BECOMES, AFTER THE DATE OF THIS AGREEMENT, THE "BENEFICIAL
OWNER" (AS DEFINED IN RULE 13D-3 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED) DIRECTLY OR INDIRECTLY, OF MORE THAN 30% OF THE TOTAL VOTING POWER OF
ALL CLASSES OF CAPITAL STOCK THEN OUTSTANDING OF BORROWER ENTITLED TO VOTE IN
THE ELECTION OF DIRECTORS, OR (2) A MAJORITY OF THE MEMBERS OF THE BOARD OF
DIRECTORS OF A BORROWER SHALL NOT CONSTITUTE CONTINUING DIRECTORS
****AND IS CONTINUING
7.2 REMEDIES. Upon the occurrence * of any Event of Default, and at any time
thereafter, Silicon, at its option, and without notice or demand of any kind
(all of which are hereby expressly waived by Borrower), may do any one or more
of the following: (a) Cease making Loans or otherwise extending credit to
Borrower under this Agreement or any other document or agreement; (b) Accelerate
and declare all or any part of the Obligations to be immediately due, payable,
and performable, notwithstanding any deferred or installment payments allowed by
any instrument evidencing or relating to any Obligation; (c) Take possession of
any or all of the Collateral wherever it may be found, and for that purpose
Borrower hereby authorizes Silicon without judicial process to enter onto any of
Borrower's premises without interference to search for, take possession of,
keep, store, or remove any of the Collateral, and remain on the premises or
cause a custodian to remain on the premises in exclusive control thereof,
without charge for so long as Silicon deems it reasonably necessary in order to
complete the enforcement of its rights under this Agreement or any other
agreement; provided, however, that should Silicon seek to take possession of any
of the Collateral by Court process, Borrower hereby irrevocably waives: (i) any
bond and any surety or security relating thereto required by any statute, court
rule or otherwise as an incident to such possession; (ii) any demand for
possession prior to the commencement of any suit or action to recover possession
thereof; and (iii) any requirement that Silicon retain possession of, and not
dispose of, any such Collateral until after trial or final judgment; (d) Require
Borrower to assemble any or all of the Collateral and make it available to
Silicon at places designated by Silicon which are reasonably convenient to
Silicon and Borrower, and to remove the Collateral to such locations as Silicon
may deem advisable; (e) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Silicon shall have the right to use Borrower's premises,
vehicles, hoists, lifts, cranes, equipment and all other property without
charge; (f) Sell, lease or otherwise dispose of any of the Collateral, in its
condition at the time Silicon obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private sales,
in lots or in bulk, for cash, exchange or other property, or on credit, and to
adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. Silicon shall have the right to
conduct such disposition on Borrower's premises without charge, for such time or
times as Silicon deems reasonable, or on Silicon's premises, or elsewhere and
the Collateral need not be located at the place of disposition. Silicon may
directly or through any affiliated company purchase or lease any Collateral at
any such public disposition, and if permissible under applicable law, at any
private disposition. Any sale or other disposition of Collateral shall not
relieve Borrower of any liability Borrower may have if any Collateral is
defective as to title or physical condition or otherwise at the time of sale;
(g) Demand payment of, and collect any Receivables and General Intangibles
comprising Collateral and, in connection therewith, Borrower irrevocably
authorizes Silicon to endorse or sign Borrower's name on all collections,
receipts, instruments and other documents, to take possession of and open mail
addressed to Borrower and remove therefrom payments made with respect to any
item of the Collateral or proceeds thereof, and, in Silicon's sole discretion,
to grant extensions of time to pay, compromise claims and settle Receivables and
the like for less than face value; (h) Offset against any sums in any of
Borrower's general, special or other Deposit Accounts with Silicon; and (i)
Demand and receive possession of any of Borrower's federal and state income tax
returns and the books and records utilized in the preparation thereof or
referring thereto. All reasonable attorneys' fees, expenses, costs, liabilities
and obligations incurred by Silicon with respect to the foregoing shall be added
to and become part of the Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of the
Obligations. Without limiting any of Silicon's rights and remedies, from and
after the occurrence of any Event of Default, ** the interest rate applicable to
the Obligations shall be increased by an additional four percent per annum.
89
* DURING THE CONTINUANCE THEREOF
** AND DURING THE CONTINUANCE THEREOF
7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and Silicon
agree that a sale or other disposition (collectively, "sale") of any Collateral
which complies with the following standards will conclusively be deemed to be
commercially reasonable: (i) Notice of the sale is given to Borrower at least
seven days prior to the sale, and, in the case of a public sale, notice of the
sale is published at least seven days before the sale in a newspaper of general
circulation in the county where the sale is to be conducted; (ii) Notice of the
sale describes the collateral in general, non-specific terms; (iii) The sale is
conducted at a place designated by Silicon, with or without the Collateral being
present; (iv) The sale commences at any time between 8:00 a.m. and 6:00 p.m;
(v) Payment of the purchase price in cash or by cashier's check or wire transfer
is required; (vi) With respect to any sale of any of the Collateral, Silicon may
(but is not obligated to) direct any prospective purchaser to ascertain directly
from Borrower any and all information concerning the same. Silicon shall be
free to employ other methods of noticing and selling the Collateral, in its
discretion, if they are commercially reasonable.
7.4 POWER OF ATTORNEY. Upon the occurrence * of any Event of Default, without
limiting Silicon's other rights and remedies, Borrower grants to Silicon an
irrevocable power of attorney coupled with an interest, authorizing and
permitting Silicon (acting through any of its employees, attorneys or agents) at
any time, at its option, but without obligation, with or without notice to
Borrower, and at Borrower's expense, to do any or all of the following, in
Borrower's name or otherwise, but Silicon agrees to exercise the following
powers in a commercially reasonable manner: (a) Execute on behalf of Borrower
any documents that Silicon may, in its sole discretion, deem advisable in order
to perfect and maintain Silicon's security interest in the Collateral, or in
order to exercise a right of Borrower or Silicon, or in order to fully
consummate all the transactions contemplated under this Agreement, and all other
present and future agreements; (b) Execute on behalf of Borrower any document
exercising, transferring or assigning any option to purchase, sell or otherwise
dispose of or to lease (as lessor or lessee) any real or personal property which
is part of Silicon's Collateral or in which Silicon has an interest; (c) Execute
on behalf of Borrower, any invoices relating to any Receivable, any draft
against any Account Debtor and any notice to any Account Debtor, any proof of
claim in bankruptcy, any Notice of Lien, claim of mechanic's, materialman's or
other lien, or assignment or satisfaction of mechanic's, materialman's or other
lien; (d) Take control in any manner of any cash or non-cash items of payment or
proceeds of Collateral; endorse the name of Borrower upon any instruments, or
documents, evidence of payment or Collateral that may come into Silicon's
possession; (e) Endorse all checks and other forms of remittances received by
Silicon; (f) Pay, contest or settle any lien, charge, encumbrance, security
interest and adverse claim in or to any of the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same; (g)
Grant extensions of time to pay, compromise claims and settle Receivables and
General Intangibles for less than face value and execute all releases and other
documents in connection therewith; (h) Pay any sums required on account of
Borrower's taxes or to secure the release of any liens therefor, or both; (i)
Settle and adjust, and give releases of, any insurance claim that relates to any
of the Collateral and obtain payment therefor; (j) Instruct any third party
having custody or control of any books or records belonging to, or relating to,
Borrower to give Silicon the same rights of access and other rights with respect
thereto as Silicon has under this Agreement; and (k) Take any action or pay any
sum required of Borrower pursuant to this Agreement and any other present or
future agreements. Any and all reasonable sums paid and any and all reasonable
costs, expenses, liabilities, obligations and attorneys' fees incurred by
Silicon with respect to the foregoing shall be added to and become part of the
Obligations, shall be payable on demand, and shall bear interest at a rate equal
to the highest interest rate applicable to any of the Obligations. In no event
shall Silicon's rights under the foregoing power of attorney or any of Silicon's
other rights under this Agreement be deemed to indicate that Silicon is in
control of the business, management or properties of Borrower.
*AND DURING THE CONTINUANCE
7.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any sale
of the Collateral shall be applied by Silicon first to the reasonable costs,
expenses, liabilities, obligations and attorneys' fees incurred by Silicon in
the exercise of its rights under this Agreement, second to the interest due upon
any of the Obligations, and third to the principal of the Obligations, in such
order as Silicon shall determine in its sole discretion. Any surplus shall be
paid to Borrower or other persons legally entitled thereto; Borrower shall
remain liable to Silicon for any deficiency. If, Silicon, in its sole
discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale of Collateral, Silicon shall
have the option, exercisable at any time, in its sole discretion, of either
reducing the Obligations by the principal amount of purchase price or deferring
the reduction of the Obligations until the actual receipt by Silicon of the cash
therefor.
7.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set forth in
this Agreement, Silicon shall have all the other rights and remedies accorded a
secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or
90
agreement now or in the future entered into between Silicon and Borrower, and
all of such rights and remedies are cumulative and none is exclusive. Exercise
or partial exercise by Silicon of one or more of its rights or remedies shall
not be deemed an election, nor bar Silicon from subsequent exercise or partial
exercise of any other rights or remedies. The failure or delay of Silicon to
exercise any rights or remedies shall not operate as a waiver thereof, but all
rights and remedies shall continue in full force and effect until all of the
Obligations have been fully paid and performed.
8. DEFINITIONS. AS USED IN THIS AGREEMENT, THE FOLLOWING TERMS HAVE THE
FOLLOWING MEANINGS:
"Account Debtor" means the obligor on a Receivable.
---------------
"Affiliate" means, with respect to any Person, a relative, partner,
---------
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.
"Business Day" means a day on which Silicon is open for business.
-------------
"Code" means the Uniform Commercial Code as adopted and in effect in the State
----
of California from time to time.
"Collateral" has the meaning set forth in Section 2.1 above. *
----------
*"CONTINUING DIRECTOR" MEANS (A) ANY MEMBER OF THE BOARD OF DIRECTORS WHO WAS
--------------------
A DIRECTOR (OR COMPARABLE MANAGER) OF BORROWER ON THE DATE OF THIS AGREEMENT,
AND (B) ANY INDIVIDUAL WHO BECOMES A MEMBER OF THE BOARD OF DIRECTORS AFTER THE
DATE OF THIS AGREEMENT IF SUCH INDIVIDUAL WAS APPOINTED OR NOMINATED FOR
ELECTION TO THE BOARD OF DIRECTORS BY A MAJORITY OF THE CONTINUING DIRECTORS.
"Default" means any event which with notice or passage of time or both, would
-------
constitute an Event of Default.
"Deposit Account" has the meaning set forth in Section 9102(a) of the Code.
----------------
"Eligible Inventory" means Inventory which Silicon, in its sole judgment, deems
-------------------
eligible for borrowing, based on such considerations as Silicon may from time to
time deem appropriate*. Without limiting the fact that the determination of
which Inventory is eligible for borrowing is a matter of Silicon's discretion,
Inventory which does not meet the following requirements will not be deemed to
be Eligible Inventory: Inventory which (i) consists of raw materials or
finished goods, in good, new and salable condition which is not perishable, not
obsolete or unmerchantable, and is not comprised of work in process, packaging
materials or supplies; (ii) meets all applicable governmental standards; (iii)
has been manufactured in compliance with the Fair Labor Standards Act; (iv)
conforms in all respects to the warranties and representations set forth in this
Agreement; (v) is at all times subject to Silicon's duly perfected, first
priority security interest; and (vi) is situated at a one of the locations set
forth on the Schedule.
*AND WHICH CONSTITUTES "ELIGIBLE EXPORT-RELATED INVENTORY" (AS DEFINED IN THE
EXIM BORROWER AGREEMENT REFERRED TO IN THE SCHEDULE).
"Eligible Receivables" means Receivables arising in the ordinary course of
--------------------
Borrower's business from the sale of goods or rendition of services, which
Silicon, in its sole judgment, shall deem eligible for borrowing, based on such
considerations as Silicon may from time to time deem appropriate*. Without
limiting the fact that the determination of which Receivables are eligible for
borrowing is a matter of Silicon's discretion, the following (the "Minimum
-------
Eligibility Requirements") are the minimum requirements for a Receivable to be
-------------------------
an Eligible Receivable: (i) the Receivable must not be outstanding for more
than 120 days from its invoice date, (ii) the Receivable must not represent
progress ▇▇▇▇▇▇▇▇, or be due under a fulfillment or requirements contract with
the Account Debtor, (iii) the Receivable must not be subject to any
contingencies (including Receivables arising from sales on consignment,
guaranteed sale or other terms pursuant to which payment by the Account Debtor
may be conditional)***, (iv) the Receivable must not be owing from an Account
Debtor with whom Borrower has any dispute (whether or not relating to the
particular Receivable), (v) the Receivable must not be owing from an Affiliate
of Borrower, (vi) the Receivable must not be owing from an Account Debtor which
is subject to any insolvency or bankruptcy proceeding, or whose financial
condition is not acceptable to Silicon, or which, fails or goes out of a
material portion of its business, (vii) the Receivable must not be owing from
the United States or any department, agency or instrumentality thereof (unless
there has been compliance, to Silicon's satisfaction, with the United States
Assignment of Claims Act), (viii) , (ix) the Receivable must not be owing from
an Account Debtor to whom Borrower is or may be liable for goods purchased from
such Account Debtor or otherwise. Receivables owing from one Account Debtor will
not be deemed Eligible Receivables to the extent they exceed 25% of the total
Receivables outstanding**. In addition, if more than 50% of the Receivables
owing from an Account Debtor are outstanding more than 120 days from their
invoice date (without regard to unapplied credits) or are otherwise not eligible
Receivables, then all Receivables owing from that
91
Account Debtor will be deemed ineligible for borrowing. Silicon may, from time
to time, in its discretion, revise the Minimum Eligibility Requirements, upon
written notice to Borrower.
*AND WHICH CONSTITUTE "ELIGIBLE EXPORT-RELATED ACCOUNTS RECEIVABLE" (AS DEFINED
IN THE EXIM BORROWER AGREEMENT REFERRED TO IN THE SCHEDULE).
**PROVIDED THAT SAID PERCENTAGE SHALL BE 60% FROM THE FOLLOWING CUSTOMERS:
SCS TAIWAN, SAMSUNG, ST MICRO, INFINEON, FOREIGN LOCATIONS OF IBM, AND FOREIGN
LOCATIONS OF INTEL; PROVIDED, FURTHER, THAT SUCH PERCENTAGE IS SUBJECT TO
ADJUSTMENT BY SILICON AFTER EACH INSPECTION OR AUDIT CONDUCTED BY SILICON OR ITS
AGENTS AS PROVIDED FOR HEREIN
*** OTHER THAN A SALE CONTINGENT ON THE SUBJECT GOODS CONFORMING WITH
BORROWER'S NORMAL PERFORMANCE CRITERIA (BUT A RECEIVABLE SHALL NOT BE AN
ELIGIBLE RECEIVABLE IF THE SALE OF GOODS GIVING RISE THERETO DOES NOT CONFORM
WITH BORROWER'S NORMAL PERFORMANCE CRITERIA)
"Equipment" means all of Borrower's present and hereafter acquired machinery,
---------
molds, machine tools, motors, furniture, equipment, furnishings, fixtures, trade
fixtures, motor vehicles, tools, parts, dyes, jigs, goods and other tangible
personal property (other than Inventory) of every kind and description used in
Borrower's operations or owned by Borrower and any interest in any of the
foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions or improvements to any of the foregoing, wherever
located.
"Event of Default" means any of the events set forth in Section 7.1 of this
------------------
Agreement.
---
"General Intangibles" means all general intangibles of Borrower, whether now
--------------------
owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, Deposit Accounts, inventions, designs, drawings, blueprints, patents,
patent applications, trademarks and the goodwill of the business symbolized
thereby, names, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, security and other deposits, rights in
all litigation presently or hereafter pending for any cause or claim (whether in
contract, tort or otherwise), and all judgments now or hereafter arising
therefrom, all claims of Borrower against Silicon, rights to purchase or sell
real or personal property, rights as a licensor or licensee of any kind,
royalties, telephone numbers, proprietary information, purchase orders, and all
insurance policies and claims (including without limitation life insurance, key
man insurance, credit insurance, liability insurance, property insurance and
other insurance), tax refunds and claims, computer programs, discs, tapes and
tape files, claims under guaranties, security interests or other security held
by or granted to Borrower, all rights to indemnification and all other
intangible property of every kind and nature (other than Receivables).
"Inventory" means all of Borrower's now owned and hereafter acquired goods,
---------
merchandise or other personal property, wherever located, to be furnished under
any contract of service or held for sale or lease (including without limitation
all raw materials, work in process, finished goods and goods in transit), and
all materials and supplies of every kind, nature and description which are or
might be used or consumed in Borrower's business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
merchandise or other personal property, and all warehouse receipts, documents of
title and other documents representing any of the foregoing.
"Obligations" means all present and future Loans, advances, debts,
-----------
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to Silicon, whether evidenced by this Agreement or any
note or other instrument or document, whether arising from an extension of
credit, opening of a letter of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by Silicon in
Borrower's debts owing to others), absolute or contingent, due or to become due,
including, without limitation, all interest, charges, expenses, fees, attorney's
fees, expert witness fees, audit fees, letter of credit fees, collateral
monitoring fees, closing fees, facility fees, termination fees, minimum interest
charges and any other sums chargeable to Borrower under this Agreement or under
any other present or future instrument or agreement between Borrower and
Silicon.
"Permitted Liens" means the following: (i) purchase money security interests
----------------
in specific items of Equipment; (ii) leases of specific items of Equipment;
(iii) liens for taxes not yet payable; (iv) additional security interests and
liens consented to in writing by Silicon, which consent shall not be
unreasonably withheld; (v) security interests being terminated substantially
concurrently with this Agreement; (vi) liens of materialmen, mechanics,
warehousemen, carriers, or other similar liens arising in the ordinary course of
business and securing obligations which are not delinquent; (vii) liens incurred
in connection with the extension, renewal or refinancing of the indebtedness
secured by liens of the type described above in clauses (i) or (ii) above,
provided that any extension, renewal or replacement lien is limited to the
property encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; (viii)
Liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods. Silicon will have
the right to
92
require, as a condition to its consent under subparagraph (iv) above, that the
holder of the additional security interest or lien sign an intercreditor
agreement on Silicon's then standard form, acknowledge that the security
interest is subordinate to the security interest in favor of Silicon, and agree
not to take any action to enforce its subordinate security interest so long as
any Obligations remain outstanding, and that Borrower agree that any uncured
default in any obligation secured by the subordinate security interest shall
also constitute an Event of Default under this Agreement.
"Person" means any individual, sole proprietorship, partnership, joint
------
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"Receivables" means all of Borrower's now owned and hereafter acquired
-----------
accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, securities, securities accounts, investment
property, documents and all other forms of obligations at any time owing to
Borrower, all guaranties and other security therefor, all merchandise returned
to or repossessed by Borrower, and all rights of stoppage in transit and all
other rights or remedies of an unpaid vendor, lienor or secured party.
"Reserves" means, as of any date of determination, such amounts as Silicon may
--------
from time to time establish and revise in good faith reducing the amount of
Loans, Letters of Credit and other financial accommodations which would
otherwise be available to Borrower under the lending formula(s) provided in the
Schedule: (a) to reflect events, conditions, contingencies or risks which, as
determined by Silicon in good faith, do or may affect (i) the Collateral or any
other property which is security for the Obligations or its value (including
without limitation any increase in delinquencies of Receivables), (ii) the
assets, business or prospects of Borrower or any Guarantor, or (iii) the
security interests and other rights of Silicon in the Collateral (including the
enforceability, perfection and priority thereof); or (b) to reflect Silicon's
good faith belief that any collateral report or financial information furnished
by or on behalf of Borrower or any Guarantor to Silicon is or may have been
incomplete, inaccurate or misleading in any material respect; or (c) in respect
of any state of facts which Silicon determines in good faith constitutes an
Event of Default or may, with notice or passage of time or both, constitute an
Event of Default.
Other Terms. All accounting terms used in this Agreement, unless otherwise
------------
indicated, shall have the meanings given to such terms in accordance with
generally accepted accounting principles, consistently applied. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meanings
provided by the Code, to the extent such terms are defined therein.
9. GENERAL PROVISIONS.
9.1 INTEREST COMPUTATION. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by Silicon (including
proceeds of Receivables and payment of the Obligations in full) shall be deemed
applied by Silicon on account of the Obligations three Business Days after
receipt by Silicon of immediately available funds, and, for purposes of the
foregoing, any such funds received after 12:00 Noon on any day shall be deemed
received on the next Business Day. Silicon shall not, however, be required to
credit Borrower's account for the amount of any item of payment which is
unsatisfactory to Silicon in its sole discretion, and Silicon may charge
Borrower's loan account for the amount of any item of payment which is returned
to Silicon unpaid.
9.2 APPLICATION OF PAYMENTS. All payments with respect to the Obligations may
be applied, and in Silicon's sole discretion reversed and re-applied, to the
Obligations, in such order and manner as Silicon shall determine in its sole
discretion.
9.3 CHARGES TO ACCOUNTS. Silicon may, in its discretion, require that Borrower
pay monetary Obligations in cash to Silicon, or charge them to Borrower's Loan
account, in which event they will bear interest at the same rate applicable to
the Loans. Silicon may also, in its discretion, charge any monetary Obligations
to Borrower's Deposit Accounts maintained with Silicon.
9.4 MONTHLY ACCOUNTINGS. Silicon shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Silicon), unless Borrower
notifies Silicon in writing to the contrary within thirty days after each
account is rendered, describing the nature of any alleged errors or admissions.
9.5 NOTICES. All notices to be given under this Agreement shall be in writing
and shall be given either personally or by reputable private delivery service or
by regular first-class mail, or certified mail return receipt requested,
addressed to Silicon or Borrower at the addresses shown in the heading to this
Agreement, or at any other address designated in writing by one party to the
other party*. Notices to Silicon shall be directed to the Commercial Finance
Division, to the attention of the Division Manager or the Division Credit
Manager. All notices shall be deemed to have been given upon delivery in the
case of notices personally delivered, or at the expiration of one Business Day
following delivery to the private delivery service, or two Business Days
following the deposit thereof in the United States mail, with postage prepaid**.
93
* OR BY FACSIMILE (IF TO BORROWER AT (▇▇▇) ▇▇▇-▇▇▇▇ OR IF TO SILICON AT
▇▇▇-▇▇▇-▇▇▇▇)
** OR ON THE DATE SENT BY CONFIRMED FACSIMILE, IF SENT BEFORE 5:00 PM, OR, IF
SO SENT AFTER 5:00 PM, ON THE NEXT BUSINESS DAY
9.6 SEVERABILITY. Should any provision of this Agreement be held by any court
of competent jurisdiction to be void or unenforceable, such defect shall not
affect the remainder of this Agreement, which shall continue in full force and
effect.
9.7 INTEGRATION. This Agreement and such other written agreements, documents
and instruments as may be executed in connection herewith are the final, entire
and complete agreement between Borrower and Silicon and supersede all prior and
contemporaneous negotiations and oral representations and agreements, all of
which are merged and integrated in this Agreement. There are no oral
--------------------
understandings, representations or agreements between the parties which are not
--------------------------------------------------------------------------------
set forth in this Agreement or in other written agreements signed by the parties
--------------------------------------------------------------------------------
in connection herewith.
-------------------------
9.8 WAIVERS. The failure of Silicon at any time or times to require Borrower
to strictly comply with any of the provisions of this Agreement or any other
present or future agreement between Borrower and Silicon shall not waive or
diminish any right of Silicon later to demand and receive strict compliance
therewith. Any waiver of any default shall not waive or affect any other
default, whether prior or subsequent, and whether or not similar. None of the
provisions of this Agreement or any other agreement now or in the future
executed by Borrower and delivered to Silicon shall be deemed to have been
waived by any act or knowledge of Silicon or its agents or employees, but only
by a specific written waiver signed by an authorized officer of Silicon and
delivered to Borrower. Borrower waives demand, protest, notice of protest and
notice of default or dishonor, notice of payment and nonpayment, release,
compromise, settlement, extension or renewal of any commercial paper,
instrument, account, General Intangible, document or guaranty at any time held
by Silicon on which Borrower is or may in any way be liable, and notice of any
action taken by Silicon, unless expressly required by this Agreement.
9.9 NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Silicon, nor any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Silicon shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower
or any other party through the ordinary negligence of Silicon, or any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Silicon, but nothing herein shall relieve Silicon * from
liability for its own gross negligence or willful misconduct.
* NOR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY
OTHER PERSON AFFILIATED WITH REPRESENTING SILICON
9.10 AMENDMENT. The terms and provisions of this Agreement may not be waived
or amended, except in a writing executed by Borrower and a duly authorized
officer of Silicon.
9.11 TIME OF ESSENCE. Time is of the essence in the performance by Borrower of
each and every obligation under this Agreement.
9.12 ATTORNEYS FEES AND COSTS. Borrower shall reimburse Silicon for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by Silicon, pursuant to,
or in connection with, or relating to this Agreement (whether or not a lawsuit
is filed), including, but not limited to, any reasonable attorneys' fees and
costs Silicon incurs in order to do the following: prepare and negotiate this
Agreement and the documents relating to this Agreement; obtain legal advice in
connection with this Agreement or Borrower; enforce, or seek to enforce, any of
its rights; prosecute actions against, or defend actions by, Account Debtors;
commence, intervene in, or defend any action or proceeding; initiate any
complaint to be relieved of the automatic stay in bankruptcy; file or prosecute
any probate claim, bankruptcy claim, third-party claim, or other claim; examine,
audit, copy, and inspect any of the Collateral or any of Borrower's books and
records; protect, obtain possession of, lease, dispose of, or otherwise enforce
Silicon's security interest in, the Collateral; and otherwise represent Silicon
in any litigation relating to Borrower. In satisfying Borrower's obligation
-----------------------------------
hereunder to reimburse Silicon for attorneys fees, Borrower may, for
-----------------------------------------------------------------------------
convenience, issue checks directly to Silicon's attorneys, Levy, Small & ▇▇▇▇▇▇,
-------------------------------------------------------------------------------
but Borrower acknowledges and agrees that Levy, Small & ▇▇▇▇▇▇ is representing
--------------------------------------------------------------------------------
only Silicon and not Borrower in connection with this Agreement. If either
---------------------------------------------------------------------
Silicon or Borrower files any lawsuit against the other predicated on a breach
of this Agreement, the prevailing party in such action shall be entitled to
recover its reasonable costs and attorneys' fees, including (but not limited to)
reasonable attorneys' fees and costs incurred in the enforcement of, execution
upon or defense of any order, decree, award or judgment. All attorneys' fees
and costs to which Silicon may be entitled pursuant to this Paragraph shall
immediately become part of Borrower's Obligations, shall be due on demand, and
shall bear interest at a rate equal to the highest interest rate applicable to
any of the Obligations.
9.13 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective successors, assigns, heirs,
beneficiaries and
94
representatives of Borrower and Silicon; provided, however, that Borrower may
not assign or transfer any of its rights under this Agreement without the prior
written consent of Silicon, and any prohibited assignment shall be void. No
consent by Silicon to any assignment shall release Borrower from its liability
for the Obligations.
9.14 JOINT AND SEVERAL LIABILITY. If Borrower consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.
9.15 LIMITATION OF ACTIONS. Any claim or cause of action by Borrower against
Silicon, its directors, officers, employees, agents, accountants or attorneys,
based upon, arising from, or relating to this Loan Agreement, or any other
present or future document or agreement, or any other transaction contemplated
hereby or thereby or relating hereto or thereto, or any other matter, cause or
thing whatsoever, occurred, done, omitted or suffered to be done by Silicon, its
directors, officers, employees, agents, accountants or attorneys, shall be
barred unless asserted by Borrower by the commencement of an action or
proceeding in a court of competent jurisdiction by the filing of a complaint
within * after the first act, occurrence or omission upon which such claim or
cause of action, or any part thereof, is based, and the service of a summons and
complaint on an officer of Silicon, or on any other person authorized to accept
service on behalf of Silicon, within thirty (30) days thereafter. Borrower
agrees that such ** period is a reasonable and sufficient time for Borrower to
investigate and act upon any such claim or cause of action. The ** period
provided herein shall not be waived, tolled, or extended except by the written
consent of Silicon in its sole discretion. This provision shall survive any
termination of this Loan Agreement or any other present or future agreement.
*TWO YEARS
**TWO-YEAR
9.16 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used in
this Agreement for convenience. Borrower and Silicon acknowledge that the
headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement. The term
"including", whenever used in this Agreement, shall mean "including (but not
limited to)". * This Agreement has been fully reviewed and negotiated between
the parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against Silicon or Borrower under any rule
of construction or otherwise.
* FOR PURPOSES OF THIS AGREEMENT, DEFAULTS AND EVENTS OF DEFAULT ARE DEEMED
"CONTINUING" (OR VARIATIONS OF SUCH TERM) AFTER THEY OCCUR, UNLESS AND UNTIL
THEY ARE WAIVED IN WRITING BY SILICON OR CURED WITHIN ANY APPLICABLE CURE
PERIOD.
9.17 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and
transactions hereunder and all rights and obligations of Silicon and Borrower
shall be governed by the laws of the State of California. As a material part of
the consideration to Silicon to enter into this Agreement, Borrower (i) agrees
that all actions and proceedings relating directly or indirectly to this
Agreement shall, at Silicon's option, be litigated in courts located within
California, and that the exclusive venue therefor shall be Santa ▇▇▇▇▇ County;
(ii) consents to the jurisdiction and venue of any such court and consents to
service of process in any such action or proceeding by personal delivery or any
other method permitted by law; and (iii) waives any and all rights Borrower may
have to object to the jurisdiction of any such court, or to transfer or change
the venue of any such action or proceeding.
9.18 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND SILICON EACH HEREBY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN SILICON AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF SILICON OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR BORROWER, IN
ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
BORROWER:
GENUS, INC.
BY
--------------------------
PRESIDENT OR VICE PRESIDENT
SILICON:
SILICON VALLEY BANK
BY
--------------------------
TITLE
----------------------------
95
SILICON VALLEY BANK
SCHEDULE TO
LOAN AND SECURITY AGREEMENT (EXIM PROGRAM)
BORROWER: GENUS, INC.
ADDRESS: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
DATE: NOVEMBER , 2001
----
This Schedule forms an integral part of the Loan and Security Agreement between
Silicon Valley Bank and the above-borrower of even date.
================================================================================
1. CREDIT LIMIT
(Section 1.1): An amount not to exceed the lesser of a total of
$7,500,000 at any one time outstanding (the "Maximum
Credit Limit"), or the sum or (a) and (b) below:
(a) 85% of the amount of Borrower's Eligible
Receivables (as defined in Section 8 above), plus
(b) an amount not to exceed the lesser of:
(1) 70% of the value of Borrower's Eligible
Inventory (as defined in Section 8 above),
calculated at the lower of cost or market
value and determined on a first-in,
first-out basis, or
(2) $3,000,000.
Provided that (i) the total Loans under Section 1(b)
above shall not at any time exceed 60% of the total
Loans outstanding under Sections 1(a) and 1(b) above
combined, and (ii) the total outstanding Obligations
under this Loan Agreement and under the Non-Exim
Agreement (as defined below) shall not at any time
exceed $10,000,000 (the "Overall Credit Limit").
LETTER OF CREDIT SUBLIMIT
(Section 1.5): $3,000,000, provided that the total Letter of Credit
Sublimit and the Foreign Exchange Contract Sublimit
shall not, at any time, exceed $3,000,000.
FOREIGN EXCHANGE
CONTRACT SUBLIMIT $3,000,000, provided that the total Letter of Credit
Sublimit and the Foreign Exchange Contract Sublimit
shall not, at any time, exceed $3,000,000.
Borrower may enter into foreign exchange forward contracts with Silicon, on its
standard forms, under which Borrower commits to purchase from or sell to Silicon
a set amount of foreign currency more than one business day after the contract
date (the "FX Forward Contracts"); provided that (1) at the time the FX Forward
Contract is entered into Borrower has Loans available to it under this Agreement
in an amount at least equal to 10% of the amount of the FX Forward Contract; (2)
the total FX Forward Contracts at any one time outstanding may not exceed 10
times the amount of the Foreign Exchange Contract Sublimit set forth above.
Silicon shall have the right to withhold, from the Loans otherwise available to
96
Borrower under this Agreement, a reserve (which shall be in addition to all
other reserves) in an amount equal to 10% of the total FX Forward Contracts from
time to time outstanding, and in the event at any time there are insufficient
Loans available to Borrower for such reserve, Borrower shall deposit and
maintain with Silicon cash collateral in an amount at all times equal to such
deficiency, which shall be held as Collateral for all purposes of this
Agreement. Silicon may, in its discretion, terminate the FX Forward Contracts at
any time that an Event of Default occurs and is continuing. Borrower shall
execute all standard form applications and agreements of Silicon in connection
with the FX Forward Contracts, and without limiting any of the terms of such
applications and agreements, Borrower shall pay all standard fees and charges of
Silicon in connection with the FX Forward Contracts.
================================================================================
2. INTEREST.
INTEREST RATE (Section 1.2):
A rate equal to the "Prime Rate" in effect from time to
time, plus 1.75% per annum. Interest shall be
calculated on the basis of a 360-day year for the
actual number of days elapsed. "Prime Rate" means the
rate announced from time to time by Silicon as its
"prime rate;" it is a base rate upon which other rates
charged by Silicon are based, and it is not necessarily
the best rate available at Silicon. The interest rate
applicable to the Obligations shall change on each date
there is a change in the Prime Rate.
MINIMUM MONTHLY
INTEREST (Section 1.2): None.
================================================================================
3. FEES (Section 1.4):
LOAN FEE: $112,500, payable concurrently herewith.
COLLATERAL MONITORING
FEE: $750 per month, payable in arrears (prorated for any
partial month at the beginning and at termination of
this Agreement).
================================================================================
4. MATURITY DATE
(Section 6.1): One year from the date of this Agreement.
================================================================================
5. FINANCIAL COVENANTS
(Section 5.1): Borrower shall comply with each of the financial
covenants set forth in the Non-Exim Agreement (as
defined below).
================================================================================
6. REPORTING.
(Section 5.3):
Borrower shall provide Silicon with the following:
1. Monthly Receivable agings, aged by invoice date, within
fifteen days after the end of each month.
2. Monthly accounts payable agings, aged by invoice date,
and outstanding or held check registers, if any, within
fifteen days after the end of each month.
3. Monthly reconciliations of Receivable agings (aged by
invoice date), transaction reports, and general ledger,
within fifteen days after the end of each month.
4. Monthly perpetual inventory reports for the Inventory
valued on a first-in, first-out basis at the lower of
cost or market (in accordance with generally accepted
accounting principles) or such other inventory reports
as are reasonably requested by Silicon, all within
fifteen days after the end of each month.
97
5. Monthly unaudited financial statements, as soon as
available, and in any event within thirty days after
the end of each month.
6. Monthly Compliance Certificates, within thirty days
after the end of each month, in such form as Silicon
shall reasonably specify, signed by the Chief Financial
Officer of Borrower, certifying that as of the end of
such month Borrower was in full compliance with all of
the terms and conditions of this Agreement, and setting
forth calculations showing compliance with the
financial covenants set forth in this Agreement and
such other information as Silicon shall reasonably
request, including, without limitation, a statement
that at the end of such month there were no held
checks.
7. Quarterly unaudited financial statements, as soon as
available, and in any event within forty-five days
after the end of each fiscal quarter of Borrower.
8. Annual operating budgets (including income statements,
balance sheets and cash flow statements, by month) for
the upcoming fiscal year of Borrower within thirty days
prior to the end of each fiscal year of Borrower.
9. Annual financial statements, as soon as available, and
in any event within 120 days following the end of
Borrower's fiscal year, certified by independent
certified public accountants acceptable to Silicon.
================================================================================
7. COMPENSATION
(Section 5.5): Without Silicon's prior written consent, Borrower shall
not pay total compensation, including salaries,
withdrawals, fees, bonuses, commissions, drawing
accounts and other payments, whether directly or
indirectly, in money or otherwise, during any fiscal
year to all of Borrower's executives, officers and
directors (or any relative thereof) as a group in
excess of 115% of the total amount thereof in the prior
fiscal year.
================================================================================
8. BORROWER INFORMATION:
PRIOR NAMES OF
BORROWER
(Section 3.2): As set forth in the Borrower's Representations and
Warranties dated November 5, 2001.
PRIOR TRADE
NAMES OF BORROWER
(Section 3.2): As set forth in the Borrower's Representations and
Warranties dated November 5, 2001.
EXISTING TRADE
NAMES OF BORROWER
(Section 3.2): As set forth in the Borrower's Representations and
Warranties dated November 5, 2001.
OTHER LOCATIONS AND
ADDRESSES (Section 3.3): As set forth in the Borrower's Representations and
Warranties dated November 5, 2001.
MATERIAL ADVERSE
LITIGATION (Section 3.10): None.
98
================================================================================
9. EXIM PROVISIONS:
(5) EXIM GUARANTY. Prior to the first disbursement of
any Loans hereunder, Borrower shall cause the Export
Import Bank of the United States (the "Exim Bank") to
guarantee the Loans made under this Agreement, pursuant
to a Master Guarantee Agreement, Loan Authorization
Agreement and (to the extent applicable) Delegated
Authority Letter Agreement (collectively, the "Exim
Guaranty"), and Borrower shall cause the Exim Guaranty
to be in full force and effect throughout the term of
this Agreement and so long as any Loans hereunder are
outstanding. If, for any reason, the Exim Guaranty
shall cease to be in full force and effect, of if the
Exim Bank declares the Exim Guaranty void or revokes
any obligations thereunder or denies liability
thereunder, any such event shall constitute an Event of
Default under this Agreement. Nothing in any
confidentiality agreement in this Agreement or in any
other agreement shall restrict Silicon's right to make
disclosures and provide information to the Exim Bank in
connection with the Exim Guaranty.
(6) EXIM BORROWER AGREEMENT; COSTS. Borrower shall,
concurrently execute and deliver a Borrower Agreement,
in the form specified by the Exim Bank, in favor of
Silicon and the Exim Bank (the "Exim Borrower
Agreement"). This Agreement is subject to all of the
terms and conditions of the Exim Borrower Agreement,
all of which are hereby incorporated herein by this
reference. Borrower expressly agrees to perform all of
the obligations and comply with all of the affirmative
and negative covenants and all other terms and
conditions set forth in the Exim Borrower Agreement as
though the same were expressly set forth herein. In the
event of any conflict between the terms of the Exim
Borrower Agreement and the other terms of this
Agreement, whichever terms are more restrictive shall
apply. Borrower shall reimburse Silicon for all fees
and all out of pocket costs and expenses incurred by
Silicon with respect to the Exim Guaranty and the Exim
Borrower Agreement, including without limitation all
facility fees and usage fees, and Silicon is authorized
to debit Borrower's account with Silicon for such fees,
costs and expenses when paid by Silicon.
(7) NON-EXIM AGREEMENT; CROSS-COLLATERALIZATION;
CROSS-DEFAULT. Silicon and the Borrower are parties to
that certain Loan and Security Agreement of even date
(the "Non-Exim Agreement"). Both this Agreement and the
Non-Exim Agreement shall continue in full force and
effect, and all rights and remedies under this
Agreement and the Non-Exim Agreement are cumulative.
The term "Obligations" as used in this Agreement and in
the Non-Exim Agreement shall include without limitation
the obligation to pay when due all Loans made pursuant
to this Agreement (the "Exim Loans") and all interest
thereon and the obligation to pay when due all Loans
made pursuant to the Non-Exim Agreement (the "Non-Exim
Loans") and all interest thereon. Without limiting the
generality of the foregoing, all "Collateral" as
defined in this Agreement and as defined in the
Non-Exim Agreement shall secure all Exim Loans and all
Non-Exim Loans and all interest thereon, and all other
Obligations. Any Event of Default under this Agreement
shall also constitute an Event of Default under the
Non-Exim Agreement, and any Event of
99
Default under the Non-Exim Agreement shall also
constitute an Event of Default under this Agreement. In
the event Silicon assigns its rights under this
Agreement and/or under any Note evidencing Exim Loans
and/or its rights under the Non-Exim Agreement and/or
under any Note evidencing Non-Exim Loans, to any third
party, including without limitation the Exim Bank,
whether before or after the occurrence of any Event of
Default, Silicon shall have the right (but not any
obligation), in its sole discretion, to allocate and
apportion Collateral to the Agreement and/or Note
assigned and to specify the priorities of the
respective security interests in such Collateral
between itself and the assignee, all without notice to
or consent of the Borrower.
================================================================================
10. OTHER COVENANTS
(Section 5.1): Borrower shall at all times comply with all of the
following additional covenants:
(1) BANKING AND INVESTMENT RELATIONSHIP. Borrower
shall at all times maintain its primary banking
and investment relationship with Silicon and shall
maintain all of its funds (including without
limitation all deposit accounts and all investment
funds) with Silicon.
(a) SUBORDINATION OF INSIDE DEBT. All present and future
indebtedness of Borrower to its officers, directors and
shareholders ("Inside Debt") shall, at all times, be
subordinated to the Obligations pursuant to a
subordination agreement on Silicon's standard form.
Borrower represents and warrants that there is no
Inside Debt presently outstanding. Prior to incurring
any Inside Debt in the future, Borrower shall cause the
person to whom such Inside Debt will be owed to execute
and deliver to Silicon a subordination agreement on
Silicon's standard form.
(b) COPYRIGHT FILINGS. Concurrently, Borrower is executing
and delivering to Silicon a Collateral Assignment,
Patent Mortgage and Security Agreement between Borrower
and Silicon (the "Intellectual Property Agreement").
Within 60 days after the date hereof, Borrower shall
(i) cause all of its computer software, the licensing
of which results in Receivables, to be registered with
the United States Copyright Office, (ii) complete the
Exhibits to the Intellectual Property Agreement with
all of the information called for with respect to such
software and all other copyrights, (iii) cause the
Intellectual Property Agreement to be recorded in the
United States Copyright Office, and (iv) provide
evidence of such recordation to Silicon.
(8) BARCLAYS FINANCING STATEMENT. Borrower represents
and warrants that (i) the UCC-1 Financing
Statement filed in the Office of the California
Secretary of State on January 18, 1999 with
respect to "Genus, Inc." in favor of Barclays
Bank, PLC (File No 933360012) does not relate to
Borrower, (ii) Borrower understands that said
financing statement relates to a Wisconsin
corporation, Genus, Inc., (iii) Borrower has no
ownership or other interest in, or relationship
with, said Wisconsin corporation, (iv) Borrower
has no indebtedness to Barclays Bank PLC, and (v)
Borrower has not and will not grant any security
interest in any of its assets to Barclays Bank,
PLC during the term of this Agreement and so long
as any of the Obligations remain outstanding.
100
Borrower: Silicon:
GENUS, INC. SILICON VALLEY BANK
By By
---------------------------------- -------------------------------
President or Vice President Title
----------------------------
ANNEX B
EXPORT-IMPORT BANK OF THE UNITED STATES
WORKING CAPITAL GUARANTEE PROGRAM
BORROWER AGREEMENT
THIS BORROWER AGREEMENT (this "Agreement") is made and entered into by the
entity identified as Borrower on the signature page hereof ("Borrower") in favor
of the Export-Import Bank of the United States ("Ex-Im Bank") and the
institution identified as Lender on the signature page hereof ("Lender").
RECITALS
Borrower has requested that Lender establish a Loan Facility in favor of
Borrower for the purposes of providing Borrower with pre-export working capital
to finance the manufacture, production or purchase and subsequent export sale of
Items.
It is a condition to the establishment of such Loan Facility that Ex-Im
Bank guarantee the payment of ninety percent (90%) of certain credit
accommodations subject to the terms and conditions of a Master Guarantee
Agreement, the Loan Authorization Agreement, and to the extent applicable, the
Delegated Authority Letter Agreement.
Borrower is executing this Agreement for the benefit of Lender and Ex-Im
Bank in consideration for and as a condition to Lender's establishing the Loan
Facility and Ex-Im Bank's agreement to guarantee such Loan Facility pursuant to
the Master Guarantee Agreement.
NOW, THEREFORE, Borrower hereby agrees as follows:
DEFINITIONS
DEFINITION OF TERMS. AS USED IN THIS AGREEMENT, INCLUDING THE RECITALS TO THIS
-------------------
AGREEMENT AND THE LOAN AUTHORIZATION AGREEMENT, THE FOLLOWING TERMS SHALL HAVE
THE FOLLOWING MEANINGS:
"Accounts Receivable" shall mean all of Borrower's now owned or hereafter
acquired (a) "accounts" (as such term is defined in the UCC), other receivables,
book debts and other forms of obligations, whether arising out of goods sold or
services rendered or from any other transaction; (b) rights in, to and under all
purchase orders or receipts for goods or services; (c) rights to any goods
represented or purported to be represented by any of the foregoing (including
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods); (d) moneys due
or to become due to such Borrower under all purchase orders and contracts for
the sale of goods or the performance of services or both by Borrower (whether or
not yet earned by performance on the part of Borrower), including the proceeds
of the foregoing; (e) any notes, drafts, letters of credit, insurance proceeds
or other instruments, documents and writings evidencing or supporting the
foregoing; and (f) all collateral security and guarantees of any kind given by
any other Person with respect to any of the foregoing.
101
"Advance Rate" shall mean the rate specified in Section 5(C) of the Loan
Authorization Agreement for each category of Collateral.
"Business Day" shall mean any day on which the Federal Reserve Bank of New
York is open for business.
"Buyer" shall mean a Person that has entered into one or more Export Orders
with Borrower.
"Collateral" shall mean all property and interest in property in or upon
which Lender has been granted a Lien as security for the payment of all the Loan
Facility Obligations including the Collateral identified in Section 6 of the
Loan Authorization Agreement and all products and proceeds (cash and non-cash)
thereof.
"Commercial Letters of Credit" shall mean those letters of credit subject
to the UCP payable in Dollars and issued or caused to be issued by Lender on
behalf of Borrower under a Loan Facility for the benefit of a supplier(s) of
Borrower in connection with Borrower's purchase of goods or services from the
supplier in support of the export of the Items.
"Country Limitation Schedule" shall mean the schedule published from time
to time by Ex-Im Bank and provided to Borrower by Lender which sets forth on a
country by country basis whether and under what conditions Ex-Im Bank will
provide coverage for the financing of export transactions to countries listed
therein.
"Credit Accommodation Amount" shall mean, the sum of (a) the aggregate
outstanding amount of Disbursements and (b) the aggregate outstanding face
amount of Letter of Credit Obligations.
"Credit Accommodations" shall mean, collectively, Disbursements and Letter
of Credit Obligations.
"Debarment Regulations" shall mean, collectively, (a) the Governmentwide
Debarment and Suspension (Nonprocurement) regulations (Common Rule), 53 Fed.
Reg. 19204 (May 26, 1988), (b) Subpart 9.4 (Debarment, Suspension, and
Ineligibility) of the Federal Acquisition Regulations, 48 C.F.R. 9.400-9.409 and
(c) the revised Governmentwide Debarment and Suspension (Nonprocurement)
regulations (Common Rule), 60 Fed. Reg. 33037 (June 26, 1995).
"Delegated Authority Letter Agreement" shall mean the Delegated Authority
Letter Agreement, if any, between Ex-Im Bank and Lender.
"Disbursement" shall mean, collectively, (a) an advance of a working
capital loan from Lender to Borrower under the Loan Facility, and (b) an advance
to fund a drawing under a Letter of Credit issued or caused to be issued by
Lender for the account of Borrower under the Loan Facility.
"Dollars" or "$" shall mean the lawful currency of the United States.
"Effective Date" shall mean the date on which (a) the Loan Documents are
executed by Lender and Borrower or the date, if later, on which agreements are
executed by Lender and Borrower adding the Loan Facility to an existing working
capital loan arrangement between Lender and Borrower and (b) all of the
conditions to the making of the initial Credit Accommodations under the Loan
Documents or any amendments thereto have been satisfied.
"Eligible Export-Related Accounts Receivable" shall mean an Export-Related
Account Receivable which is acceptable to Lender and which is deemed to be
eligible pursuant to the Loan Documents, but in no event shall Eligible
Export-Related Accounts Receivable include any Account Receivable:
(a) that does not arise from the sale of Items in the ordinary course of
Borrower's business;
(b) that is not subject to a valid, perfected first priority Lien in favor
of Lender;
(c) as to which any covenant, representation or warranty contained in the
Loan Documents with respect to such Account Receivable has been breached;
(d) that is not owned by Borrower or is subject to any right, claim or
interest of another Person other than the Lien in favor of Lender;
(e) with respect to which an invoice has not been sent;
(f) that arises from the sale of defense articles or defense services;
(g) that is due and payable from a Buyer located in a country with which
Ex-Im Bank is prohibited from doing business as designated in the Country
Limitation Schedule;
(h) that does not comply with the requirements of the Country Limitation
Schedule;
(i) that is due and payable more than one hundred eighty (180) days from
the date of the invoice;
(j) that is not paid within sixty (60) calendar days from its original due
date, unless it is insured through Ex-Im Bank export credit insurance for
comprehensive commercial and political risk, or through Ex-Im Bank approved
private insurers for comparable coverage, in which case it is not paid within
ninety (90) calendar days from its due date;
(k) that arises from a sale of goods to or performance of services for an
employee of Borrower, a stockholder of Borrower, a subsidiary of Borrower, a
Person with a controlling interest in Borrower or a Person which shares common
controlling ownership with Borrower;
(l) that is backed by a letter of credit unless the Items covered by
the subject letter of credit have been shipped;
102
(m) that Lender or Ex-Im Bank, in its reasonable judgment, deems
uncollectible for any reason;
(n) that is due and payable in a currency other than Dollars, except as
may be approved in writing by Ex-Im Bank;
(o) that is due and payable from a military Buyer, except as may be
approved in writing by Ex-Im Bank;
(p) that does not comply with the terms of sale set forth in Section 7
of the Loan Authorization Agreement;
(q) that is due and payable from a Buyer who (i) applies for, suffers,
or consents to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property or calls a meeting of its creditors, (ii) admits in writing its
inability, or is generally unable, to pay its debts as they become due or ceases
operations of its present business, (iii) makes a general assignment for the
benefit of creditors, (iv) commences a voluntary case under any state or
federal bankruptcy laws (as now or hereafter in effect), (v) is adjudicated as
bankrupt or insolvent, (vi) files a petition seeking to take advantage of any
other law providing for the relief of debtors, (vii) acquiesces to, or fails to
have dismissed, any petition which is filed against it in any involuntary case
under such bankruptcy laws, or (viii) takes any action for the purpose of
effecting any of the foregoing;
(r) that arises from a ▇▇▇▇-and-hold, guaranteed sale, sale-and-return,
sale on approval, consignment or any other repurchase or return basis or is
evidenced by chattel paper;
(s) for which the Items giving rise to such Account Receivable have not been
shipped and delivered to and accepted by the Buyer or the services giving rise
to such Account Receivable have not been performed by Borrower and accepted by
the Buyer or the Account Receivable otherwise does not represent a final sale;
(t) that is subject to any offset, deduction, defense, dispute, or
counterclaim or the Buyer is also a creditor or supplier of Borrower or the
Account Receivable is contingent in any respect or for any reason;
(u) for which Borrower has made any agreement with the Buyer for any
deduction therefrom, except for discounts or allowances made in the ordinary
course of business for prompt payment, all of which discounts or allowances are
reflected in the calculation of the face value of each respective invoice
related thereto; or
(v) for which any of the Items giving rise to such Account Receivable
have been returned, rejected or repossessed.
"Eligible Export-Related Inventory" shall mean Export-Related Inventory
which is acceptable to Lender and which is deemed to be eligible pursuant to the
Loan Documents, but in no event shall Eligible Export-Related Inventory include
any Inventory:
(a) that is not subject to a valid, perfected first priority Lien in
favor of Lender;
(b) that is located at an address that has not been disclosed to Lender
in writing;
(c) that is placed by Borrower on consignment or held by Borrower on
consignment from another Person;
(d) that is in the possession of a processor or bailee, or located on
premises leased or subleased to Borrower, or on premises subject to a mortgage
in favor of a Person other than Lender, unless such processor or bailee or
mortgagee or the lessor or sublessor of such premises, as the case may be, has
executed and delivered all documentation which Lender shall require to evidence
the subordination or other limitation or extinguishment of such Person's rights
with respect to such Inventory and Lender's right to gain access thereto;
(e) that is produced in violation of the Fair Labor Standards Act or
subject to the "hot goods" provisions contained in 29 US.C.Sec.215 or any
successor statute or section;
(f) as to which any covenant, representation or warranty with respect
to such Inventory contained in the Loan Documents has been breached;
(g) that is not located in the United States;
(h) that is demonstration Inventory;
(i) that consists of proprietary software (i.e. software designed
solely for Borrower's internal use and not intended for resale);
(j) that is damaged, obsolete, returned, defective, recalled or unfit
for further processing;
(k) that has been previously exported from the United States;
(l) that constitutes defense articles or defense services;
(m) that is to be incorporated into Items destined for shipment to a
country as to which Ex-Im Bank is prohibited from doing business as designated
in the Country Limitation Schedule;
(n) that is to be incorporated into Items destined for shipment to a
Buyer located in a country in which Ex-Im Bank coverage is not available for
commercial reasons as designated in the Country Limitation Schedule, unless and
only to the extent that such Items are to be sold to such country on terms of a
letter of credit confirmed by a bank acceptable to Ex-Im Bank; or
(o) that is to be incorporated into Items whose sale would result in an
Account Receivable which would not be an Eligible Export-Related Account
Receivable.
103
"Eligible Person" shall mean a sole proprietorship, partnership, limited
liability partnership, corporation or limited liability company which (a) is
domiciled, organized, or formed, as the case may be, in the United States; (b)
is in good standing in the state of its formation or otherwise authorized to
conduct business in the United States; (c) is not currently suspended or
debarred from doing business with the United States government or any
instrumentality, division, agency or department thereof; (d) exports or plans to
export Items; (e) operates and has operated as a going concern for at least one
(1) year; (f) has a positive tangible net worth determined in accordance with
GAAP; and (g) has revenue generating operations relating to its core business
activities for at least one year.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 and
the rules and regulations promulgated thereunder.
"Export Order" shall mean a written export order or contract for the
purchase by the Buyer from Borrower of any of the Items.
"Export-Related Accounts Receivable" shall mean those Accounts Receivable
arising from the sale of Items which are due and payable to Borrower in the
United States.
"Export-Related Accounts Receivable Value" shall mean, at the date of
determination thereof, the aggregate face amount of Eligible Export-Related
Accounts Receivable less taxes, discounts, credits, allowances and Retainages,
except to the extent otherwise permitted by Ex-Im Bank in writing.
"Export-Related Borrowing Base" shall mean, at the date of determination
thereof, the sum of (a) the Export-Related Inventory Value multiplied by the
Advance Rate applicable to Export-Related Inventory set forth in Section 5(C)(1)
of the Loan Authorization Agreement, (b) the Export-Related Accounts Receivable
Value multiplied by the Advance Rate applicable to Export-Related Accounts
Receivable set forth in Section 5(C)(2) of the Loan Authorization Agreement, (c)
if permitted by Ex-Im Bank in writing, the Retainage Value multiplied by the
Retainage Advance Rate set forth in Section 5(C)(3) of the Loan Authorization
Agreement and (d) the Other Assets Value multiplied by the Advance Rate
applicable to Other Assets set forth in Section 5(C)(4) of the Loan
Authorization Agreement.
"Export-Related Borrowing Base Certificate" shall mean a certificate in the
form provided or approved by Lender, executed by Borrower and delivered to
Lender pursuant to the Loan Documents detailing the Export-Related Borrowing
Base supporting the Credit Accommodations which reflects, to the extent included
in the Export-Related Borrowing Base, Export-Related Accounts Receivable,
Eligible Export-Related Accounts Receivable, Export-Related Inventory and
Eligible Export-Related Inventory balances that have been reconciled with
Borrower's general ledger, Accounts Receivable aging report and Inventory
schedule.
"Export-Related General Intangibles" shall mean those General Intangibles
necessary or desirable to or for the disposition of Export-Related Inventory.
"Export-Related Inventory" shall mean the Inventory of Borrower located in
the United States that has been purchased, manufactured or otherwise acquired by
Borrower for resale pursuant to Export Orders.
"Export-Related Inventory Value" shall mean, at the date of determination
thereof, the lower of cost or market value of Eligible Export-Related Inventory
of Borrower as determined in accordance with GAAP.
"Final Disbursement Date" shall mean, unless subject to an extension of
such date agreed to by Ex-Im Bank, the last date on which Lender may make a
Disbursement set forth in Section 10 of the Loan Authorization Agreement or, if
such date is not a Business Day, the next succeeding Business Day; provided,
--------
however, to the extent that Lender has not received cash collateral or an
-------
indemnity with respect to Letter of Credit Obligations outstanding on the Final
Disbursement Date, the Final Disbursement Date with respect to an advance to
fund a drawing under a Letter of Credit shall be no later than thirty (30)
Business Days after the expiry date of the Letter of Credit related thereto.
"GAAP" shall mean the generally accepted accounting principles issued by
the American Institute of Certified Public Accountants as in effect from time to
time.
"General Intangibles" shall mean all intellectual property and other
"general intangibles" (as such term is defined in the UCC) necessary or
desirable to or for the disposition of Inventory.
"Guarantor" shall mean each Person, if any, identified in Section 3 of the
Loan Authorization Agreement who shall guarantee (jointly and severally if more
than one) the payment and performance of all or a portion of the Loan Facility
Obligations.
"Guaranty Agreement" shall mean a valid and enforceable agreement of
guaranty executed by each Guarantor in favor of Lender.
"Inventory" shall mean all "inventory" (as such term is defined in the
UCC), now or hereafter owned or acquired by Borrower, wherever located,
including all inventory, merchandise, goods and other personal property which
are held by or on behalf of Borrower for sale or lease or are furnished or are
to be furnished under a contract of service or which constitute raw materials,
work in process or materials used or consumed or to be used or
104
consumed in Borrower's business or in the processing, production, packaging,
promotion, delivery or shipping of the same, including other supplies.
"ISP" shall mean the International Standby Practices-ISP98, International
Chamber of Commerce Publication No. 590 and any amendments and revisions
thereof.
"Issuing Bank" shall mean the bank that issues a Letter of Credit, which
bank is Lender itself or a bank that Lender has caused to issue a Letter of
Credit by way of guarantee.
"Items" shall mean the finished goods or services which are intended for
export from the United States, as specified in Section 4(A) of the Loan
Authorization Agreement.
"Letter of Credit" shall mean a Commercial Letter of Credit or a Standby
Letter of Credit.
"Letter of Credit Obligations" shall mean all outstanding obligations
incurred by Lender, whether direct or indirect, contingent or otherwise, due or
not due, in connection with the issuance or guarantee by Lender or the Issuing
Bank of Letters of Credit.
"Lien" shall mean any mortgage, security deed or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, security title, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the UCC or comparable law of any jurisdiction) by which
property is encumbered or otherwise charged.
"Loan Agreement" shall mean a valid and enforceable agreement between
Lender and Borrower setting forth the terms and conditions of the Loan Facility.
"Loan Authorization Agreement" shall mean the Loan Authorization Agreement
entered into between Lender and Ex-Im Bank or the Loan Authorization Notice
setting forth certain terms and conditions of the Loan Facility, a copy of which
is attached hereto as Annex A.
"Loan Authorization Notice" shall mean the Loan Authorization Notice
executed by Lender and delivered to Ex-Im Bank in accordance with the Delegated
Authority Letter Agreement setting forth the terms and conditions of each Loan
Facility.
"Loan Documents" shall mean the Loan Authorization Agreement, the Loan
Agreement, this Agreement, each promissory note (if applicable), each Guaranty
Agreement, and all other instruments, agreements and documents now or hereafter
executed by Borrower or any Guarantor evidencing, securing, guaranteeing or
otherwise relating to the Loan Facility or any Credit Accommodations made
thereunder.
"Loan Facility" shall mean the Revolving Loan Facility, the Transaction
Specific Loan Facility or the Transaction Specific Revolving Loan Facility
established by Lender in favor of Borrower under the Loan Documents.
"Loan Facility Obligations" shall mean all loans, advances, debts,
expenses, fees, liabilities, and obligations for the performance of covenants,
tasks or duties or for payment of monetary amounts (whether or not such
performance is then required or contingent, or amounts are liquidated or
determinable) owing by Borrower to Lender, of any kind or nature, present or
future, arising in connection with the Loan Facility.
"Loan Facility Term" shall mean the number of months from the Effective
Date to the Final Disbursement Date as originally set forth in the Loan
Authorization Agreement.
"Master Guarantee Agreement" shall mean the Master Guarantee Agreement
between Ex-Im Bank and Lender, as amended, modified, supplemented and restated
from time to time.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of
Borrower or any Guarantor, (b) Borrower's ability to pay or perform the Loan
Facility Obligations in accordance with the terms thereof, (c) the Collateral or
Lender's Liens on the Collateral or the priority of such Lien or (d) Lender's
rights and remedies under the Loan Documents.
"Maximum Amount" shall mean the maximum principal balance of Credit
Accommodations that may be outstanding at any time under the Loan Facility
specified in Section 5(A) of the Loan Authorization Agreement.
"Other Assets" shall mean the Collateral, if any, described in Section
5(C)(4) of the Loan Authorization Agreement.
"Other Assets Value" shall mean, at the date of determination thereof, the
value of the Other Assets as determined in accordance with GAAP.
"Permitted Liens" shall mean (a) Liens for taxes, assessments or other
governmental charges or levies not delinquent, or, being contested in good faith
and by appropriate proceedings and with respect to which proper reserves have
been taken by Borrower; provided, that, the Lien shall have no effect on the
-------- ----
priority of the Liens in favor of Lender or the value of the assets in which
Lender has such a Lien and a stay of enforcement of any such Lien shall be in
effect; (b) deposits or pledges securing obligations under worker's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (c) deposits or pledges securing bids, tenders,
105
contracts (other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the ordinary course of Borrower's business; (d) judgment Liens that
have been stayed or bonded; (e) mechanics', workers', materialmen's or other
like Liens arising in the ordinary course of Borrower's business with respect to
obligations which are not due; (f) Liens placed upon fixed assets hereafter
acquired to secure a portion of the purchase price thereof, provided, that, any
such Lien shall not encumber any other property of Borrower; (g) security
interests being terminated concurrently with the execution of the Loan
Documents; (h) Liens in favor of Lender securing the Loan Facility Obligations;
and (i) Liens disclosed in Section 6(D) of the Loan Authorization Agreement.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution,
public benefit corporation, entity or government (whether national, federal,
provincial, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof), and shall
include such Person's successors and assigns.
"Principals" shall mean any officer, director, owner, partner, key
employee, or other Person with primary management or supervisory
responsibilities with respect to Borrower or any other Person (whether or not an
employee) who has critical influence on or substantive control over the
transactions covered by this Agreement.
"Retainage" shall mean that portion of the purchase price of an Export
Order that a Buyer is not obligated to pay until the end of a specified period
of time following the satisfactory performance under such Export Order.
"Retainage Accounts Receivable" shall mean those portions of Eligible
Export-Related Accounts Receivable arising out of a Retainage.
"Retainage Advance Rate" shall mean the percentage rate specified in
Section 5(C)(3) of the Loan Authorization Agreement as the Advance Rate for the
Retainage Accounts Receivable of Borrower.
"Retainage Value" shall mean, at the date of determination thereof, the
aggregate face amount of Retainage Accounts Receivable, less taxes, discounts,
credits and allowances, except to the extent otherwise permitted by Ex-Im Bank
in writing.
"Revolving Loan Facility" shall mean the credit facility or portion thereof
established by Lender in favor of Borrower for the purpose of providing
pre-export working capital in the form of loans and/or Letters of Credit to
finance the manufacture, production or purchase and subsequent export sale of
Items pursuant to Loan Documents under which Credit Accommodations may be made
and repaid on a continuous basis based solely on the Export-Related Borrowing
Base during the term of such credit facility.
"Special Conditions" shall mean those conditions, if any, set forth in
Section 13 of the Loan Authorization Agreement.
"Specific Export Orders" shall mean those Export Orders specified in
Section 5(D) of the Loan Authorization Agreement.
"Standby Letter of Credit" shall mean those letters of credit subject to
the ISP or UCP issued or caused to be issued by Lender for Borrower's account
that can be drawn upon by a Buyer only if Borrower fails to perform all of its
obligations with respect to an Export Order.
"Transaction Specific Loan Facility" shall mean a credit facility or a
portion thereof established by Lender in favor of Borrower for the purpose of
providing pre-export working capital in the form of loans and/or Letters of
Credit to finance the manufacture, production or purchase and subsequent export
sale of Items pursuant to Loan Documents under which Credit Accommodations are
made based solely on the Export-Related Borrowing Base relating to Specific
Export Orders and once such Credit Accommodations are repaid they may not be
reborrowed.
"Transaction Specific Revolving Loan Facility" shall mean a Revolving
Credit Facility established to provide financing of Specific Export Orders.
"UCC" shall mean the Uniform Commercial Code as the same may be in effect
from time to time in the jurisdiction in which Borrower or Collateral is
located.
"UCP" shall mean the Uniform Customs and Practice for Documentary Credits
(1993 Revision), International Chamber of Commerce Publication No. 500 and any
amendments and revisions thereof.
"U.S." or "United States" shall mean the United States of America and its
territorial possessions.
"U.S. Content" shall mean with respect to any Item all the labor, materials
and services which are of U.S. origin or manufacture, and which are incorporated
into an Item in the United States.
"Warranty" shall mean Borrower's guarantee to Buyer that the Items will
function as intended during the warranty period set forth in the applicable
Export Order.
"Warranty Letter of Credit" shall mean a Standby Letter of Credit which is
issued or caused to be issued by Lender to support the obligations of Borrower
with respect to a Warranty or a Standby Letter of Credit which by its terms
becomes a Warranty Letter of Credit.
106
1.01 RULES OF CONSTRUCTION. FOR PURPOSES OF THIS AGREEMENT, THE
-----------------------
FOLLOWING ADDITIONAL RULES OF CONSTRUCTION SHALL APPLY, UNLESS SPECIFICALLY
INDICATED TO THE CONTRARY: (a) WHEREVER FROM THE CONTEXT IT APPEARS APPROPRIATE,
EACH TERM STATED IN EITHER THE SINGULAR OR PLURAL SHALL INCLUDE THE SINGULAR AND
THE PLURAL, AND PRONOUNS STATED IN THE MASCULINE, FEMININE OR NEUTER GENDER
SHALL INCLUDE THE MASCULINE, THE FEMININE AND THE NEUTER; (b) THE TERM "OR" IS
NOT EXCLUSIVE; (c) THE TERM "INCLUDING" (OR ANY FORM THEREOF) SHALL NOT BE
LIMITING OR EXCLUSIVE; (d) ALL REFERENCES TO STATUTES AND RELATED REGULATIONS
SHALL INCLUDE ANY AMENDMENTS OF SAME AND ANY SUCCESSOR STATUTES AND REGULATIONS;
(e) THE WORDS "THIS AGREEMENT", "HEREIN", "HEREOF", "HEREUNDER" OR OTHER WORDS
OF SIMILAR IMPORT REFER TO THIS AGREEMENT AS A WHOLE INCLUDING THE SCHEDULES,
EXHIBITS, AND ANNEXES HERETO AS THE SAME MAY BE AMENDED, MODIFIED OR
SUPPLEMENTED; (f) ALL REFERENCES IN THIS AGREEMENT TO SECTIONS, SCHEDULES,
EXHIBITS, AND ANNEXES SHALL REFER TO THE CORRESPONDING SECTIONS, SCHEDULES,
EXHIBITS, AND ANNEXES OF OR TO THIS AGREEMENT; AND (g) ALL REFERENCES TO ANY
INSTRUMENTS OR AGREEMENTS, INCLUDING REFERENCES TO ANY OF THE LOAN DOCUMENTS, OR
THE DELEGATED AUTHORITY LETTER AGREEMENT SHALL INCLUDE ANY AND ALL
MODIFICATIONS, AMENDMENTS AND SUPPLEMENTS THERETO AND ANY AND ALL EXTENSIONS OR
RENEWALS THEREOF TO THE EXTENT PERMITTED UNDER THIS AGREEMENT.
INCORPORATION OF RECITALS. THE RECITALS TO THIS AGREEMENT ARE INCORPORATED INTO
-------------------------
AND SHALL CONSTITUTE A PART OF THIS AGREEMENT.
OBLIGATIONS OF BORROWER
Until payment in full of all Loan Facility Obligations and termination of
the Loan Documents, Borrower agrees as follows:
USE OF CREDIT ACCOMMODATIONS. (a) BORROWER SHALL USE CREDIT ACCOMMODATIONS ONLY
----------------------------
FOR THE PURPOSE OF ENABLING BORROWER TO FINANCE THE COST OF MANUFACTURING,
PRODUCING, PURCHASING OR SELLING THE ITEMS. BORROWER MAY NOT USE ANY OF THE
CREDIT ACCOMMODATIONS FOR THE PURPOSE OF: (i) SERVICING OR REPAYING ANY OF
BORROWER'S PRE-EXISTING OR FUTURE INDEBTEDNESS UNRELATED TO THE LOAN FACILITY
(UNLESS APPROVED BY EX-IM BANK IN WRITING); (ii) ACQUIRING FIXED ASSETS OR
CAPITAL GOODS FOR USE IN BORROWER'S BUSINESS; (iii) ACQUIRING, EQUIPPING OR
RENTING COMMERCIAL SPACE OUTSIDE OF THE UNITED STATES; (iv) PAYING THE SALARIES
OF NON U.S. CITIZENS OR NON-U.S. PERMANENT RESIDENTS WHO ARE LOCATED IN OFFICES
OUTSIDE OF THE UNITED STATES; OR (V) IN CONNECTION WITH A RETAINAGE OR WARRANTY
(UNLESS APPROVED BY EX-IM BANK IN WRITING).
IN ADDITION, NO CREDIT ACCOMMODATION MAY BE USED TO FINANCE THE
MANUFACTURE, PURCHASE OR SALE OF ANY OF THE FOLLOWING:
(i) Items to be sold or resold to a Buyer located in a country as to which
Ex-Im Bank is prohibited from doing business as designated in the Country
Limitation Schedule;
(ii) that part of the cost of the Items which is not U.S. Content unless
such part is not greater than fifty percent (50%) of the cost of the Items and
is incorporated into the Items in the United States;
(iii) defense articles or defense services; or
(iv) without Ex-Im Bank's prior written consent, any Items to be used in
the construction, alteration, operation or maintenance of nuclear power,
enrichment, reprocessing, research or heavy water production facilities.
LOAN DOCUMENTS AND LOAN AUTHORIZATION AGREEMENT. (a) EACH LOAN DOCUMENT AND
-----------------------------------------------
THIS AGREEMENT HAVE BEEN DULY EXECUTED AND DELIVERED ON BEHALF OF BORROWER, AND
EACH SUCH LOAN DOCUMENT AND THIS AGREEMENT ARE AND WILL CONTINUE TO BE A LEGAL
AND VALID OBLIGATION OF BORROWER, ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS
TERMS.
(c) BORROWER SHALL COMPLY WITH ALL OF THE TERMS AND CONDITIONS OF THE LOAN
DOCUMENTS, THIS AGREEMENT AND THE LOAN AUTHORIZATION AGREEMENT.
EXPORT-RELATED BORROWING BASE CERTIFICATES AND EXPORT ORDERS. IN ORDER TO
------------------------------------------------------------
RECEIVE CREDIT ACCOMMODATIONS UNDER THE LOAN FACILITY, BORROWER SHALL HAVE
DELIVERED TO LENDER AN EXPORT-RELATED BORROWING BASE CERTIFICATE AS FREQUENTLY
AS REQUIRED BY LENDER BUT AT LEAST WITHIN THE PAST THIRTY (30) CALENDAR DAYS AND
A COPY OF THE EXPORT ORDER(S) (OR, FOR REVOLVING LOAN FACILITIES, IF PERMITTED
BY LENDER, A WRITTEN SUMMARY OF THE EXPORT ORDERS) AGAINST WHICH BORROWER IS
REQUESTING CREDIT ACCOMMODATIONS. IF LENDER PERMITS SUMMARIES OF EXPORT ORDERS,
BORROWER SHALL ALSO DELIVER PROMPTLY TO LENDER COPIES OF ANY EXPORT ORDERS
REQUESTED BY LENDER. IN ADDITION, SO LONG AS THERE ARE ANY CREDIT
ACCOMMODATIONS OUTSTANDING UNDER THE LOAN FACILITY, BORROWER SHALL DELIVER TO
LENDER AT LEAST ONCE EACH MONTH NO LATER THAN THE TWENTIETH (20TH) DAY OF SUCH
MONTH OR MORE FREQUENTLY AS REQUIRED BY THE LOAN DOCUMENTS, AN EXPORT-RELATED
BORROWING BASE CERTIFICATE.
1.02 EXCLUSIONS FROM THE EXPORT-RELATED BORROWING BASE. IN DETERMINING
-------------------------------------------------------
THE EXPORT-RELATED BORROWING BASE, BORROWER SHALL EXCLUDE THEREFROM INVENTORY
WHICH IS NOT ELIGIBLE EXPORT-RELATED INVENTORY AND ACCOUNTS RECEIVABLE WHICH ARE
NOT ELIGIBLE EXPORT-RELATED ACCOUNTS RECEIVABLE. BORROWER SHALL PROMPTLY, BUT
IN ANY EVENT WITHIN FIVE (5) BUSINESS DAYS, NOTIFY LENDER (a) IF ANY THEN
EXISTING EXPORT-RELATED INVENTORY NO LONGER CONSTITUTES ELIGIBLE EXPORT-RELATED
INVENTORY OR (b) OF ANY EVENT OR CIRCUMSTANCE WHICH TO
107
BORROWER'S KNOWLEDGE WOULD CAUSE LENDER TO CONSIDER ANY THEN EXISTING
EXPORT-RELATED ACCOUNTS RECEIVABLE AS NO LONGER CONSTITUTING AN ELIGIBLE
EXPORT-RELATED ACCOUNTS RECEIVABLE.
FINANCIAL STATEMENTS. BORROWER SHALL DELIVER TO LENDER THE FINANCIAL STATEMENTS
--------------------
REQUIRED TO BE DELIVERED BY BORROWER IN ACCORDANCE WITH SECTION 11 OF THE LOAN
AUTHORIZATION AGREEMENT.
SCHEDULES, REPORTS AND OTHER STATEMENTS. BORROWER SHALL SUBMIT TO LENDER IN
---------------------------------------
WRITING EACH MONTH (a) AN INVENTORY SCHEDULE FOR THE PRECEDING MONTH AND (b) AN
ACCOUNTS RECEIVABLE AGING REPORT FOR THE PRECEDING MONTH DETAILING THE TERMS OF
THE AMOUNTS DUE FROM EACH BUYER. BORROWER SHALL ALSO FURNISH TO LENDER PROMPTLY
UPON REQUEST SUCH INFORMATION, REPORTS, CONTRACTS, INVOICES AND OTHER DATA
CONCERNING THE COLLATERAL AS LENDER MAY FROM TIME TO TIME SPECIFY.
ADDITIONAL SECURITY OR PAYMENT. (a) BORROWER SHALL AT ALL TIMES ENSURE THAT
------------------------------
THE EXPORT-RELATED BORROWING BASE EQUALS OR EXCEEDS THE CREDIT ACCOMMODATION
AMOUNT. IF INFORMED BY LENDER OR IF BORROWER OTHERWISE HAS ACTUAL KNOWLEDGE
THAT THE EXPORT-RELATED BORROWING BASE IS AT ANY TIME LESS THAN THE CREDIT
ACCOMMODATION AMOUNT, BORROWER SHALL, WITHIN FIVE (5) BUSINESS DAYS, EITHER (i)
FURNISH ADDITIONAL COLLATERAL TO LENDER, IN FORM AND AMOUNT SATISFACTORY TO
LENDER AND EX-IM BANK OR (ii) PAY TO LENDER AN AMOUNT EQUAL TO THE DIFFERENCE
BETWEEN THE CREDIT ACCOMMODATION AMOUNT AND THE EXPORT-RELATED BORROWING BASE.
(b) FOR PURPOSES OF THIS AGREEMENT, IN DETERMINING THE EXPORT-RELATED
BORROWING BASE THERE SHALL BE DEDUCTED FROM THE EXPORT-RELATED BORROWING BASE
(i) AN AMOUNT EQUAL TO TWENTY-FIVE PERCENT (25%) OF THE OUTSTANDING FACE AMOUNT
OF COMMERCIAL LETTERS OF CREDIT AND STANDBY LETTERS OF CREDIT AND (ii) ONE
HUNDRED PERCENT (100%) OF THE FACE AMOUNT OF WARRANTY LETTERS OF CREDIT LESS THE
AMOUNT OF CASH COLLATERAL HELD BY LENDER TO SECURE WARRANTY LETTERS OF CREDIT.
(c) UNLESS OTHERWISE APPROVED IN WRITING BY EX-IM BANK, FOR REVOLVING LOAN
FACILITIES (OTHER THAN TRANSACTION SPECIFIC REVOLVING LOAN FACILITIES), BORROWER
SHALL AT ALL TIMES ENSURE THAT THE OUTSTANDING PRINCIPAL BALANCE OF THE CREDIT
ACCOMMODATIONS THAT IS SUPPORTED BY EXPORT-RELATED INVENTORY DOES NOT EXCEED
SIXTY PERCENT (60%) OF THE SUM OF THE TOTAL OUTSTANDING PRINCIPAL BALANCE OF THE
DISBURSEMENTS AND THE UNDRAWN FACE AMOUNT OF ALL OUTSTANDING COMMERCIAL LETTERS
OF CREDIT. IF INFORMED BY LENDER OR IF BORROWER OTHERWISE HAS ACTUAL KNOWLEDGE
THAT THE OUTSTANDING PRINCIPAL BALANCE OF THE CREDIT ACCOMMODATIONS THAT IS
SUPPORTED BY INVENTORY EXCEEDS SIXTY PERCENT (60%) OF THE SUM OF THE TOTAL
OUTSTANDING PRINCIPAL BALANCE OF THE DISBURSEMENTS AND THE UNDRAWN FACE AMOUNT
OF ALL OUTSTANDING COMMERCIAL LETTERS OF CREDIT, BORROWER SHALL, WITHIN FIVE (5)
BUSINESS DAYS, EITHER (i) FURNISH ADDITIONAL NON-INVENTORY COLLATERAL TO LENDER,
IN FORM AND AMOUNT SATISFACTORY TO LENDER AND EX-IM BANK, OR (ii) PAY DOWN THE
APPLICABLE PORTION OF THE CREDIT ACCOMMODATIONS SO THAT THE ABOVE DESCRIBED
RATIO IS NOT EXCEEDED.
CONTINUED SECURITY INTEREST. BORROWER SHALL NOT CHANGE (a) ITS NAME OR IDENTITY
---------------------------
IN ANY MANNER, (b) THE LOCATION OF ITS PRINCIPAL PLACE OF BUSINESS, (c) THE
LOCATION OF ANY OF THE COLLATERAL OR (d) THE LOCATION OF ANY OF THE BOOKS OR
RECORDS RELATED TO THE COLLATERAL, IN EACH INSTANCE WITHOUT GIVING THIRTY (30)
DAYS PRIOR WRITTEN NOTICE THEREOF TO LENDER AND TAKING ALL ACTIONS DEEMED
NECESSARY OR APPROPRIATE BY LENDER TO CONTINUOUSLY PROTECT AND PERFECT LENDER'S
LIENS UPON THE COLLATERAL.
INSPECTION OF COLLATERAL. BORROWER SHALL PERMIT THE REPRESENTATIVES OF LENDER
------------------------
AND EX-IM BANK TO MAKE AT ANY TIME DURING NORMAL BUSINESS HOURS INSPECTIONS OF
THE COLLATERAL AND OF BORROWER'S FACILITIES, ACTIVITIES, AND BOOKS AND RECORDS,
AND SHALL CAUSE ITS OFFICERS AND EMPLOYEES TO GIVE FULL COOPERATION AND
ASSISTANCE IN CONNECTION THEREWITH.
GENERAL INTANGIBLES. BORROWER REPRESENTS AND WARRANTS THAT IT OWNS, OR IS
-------------------
LICENSED TO USE, ALL GENERAL INTANGIBLES NECESSARY TO CONDUCT ITS BUSINESS AS
CURRENTLY CONDUCTED EXCEPT WHERE THE FAILURE OF BORROWER TO OWN OR LICENSE SUCH
GENERAL INTANGIBLES COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT.
NOTICE OF CERTAIN EVENTS. BORROWER SHALL PROMPTLY, BUT IN ANY EVENT WITHIN FIVE
------------------------
(5) BUSINESS DAYS, NOTIFY LENDER IN WRITING OF THE OCCURRENCE OF ANY OF THE
FOLLOWING:
BORROWER OR ANY GUARANTOR (i) APPLIES FOR, CONSENTS TO OR SUFFERS THE
APPOINTMENT OF, OR THE TAKING OF POSSESSION BY, A RECEIVER, CUSTODIAN, TRUSTEE,
LIQUIDATOR OR SIMILAR FIDUCIARY OF ITSELF OR OF ALL OR A SUBSTANTIAL PART OF ITS
PROPERTY OR CALLS A MEETING OF ITS CREDITORS, (ii) ADMITS IN WRITING ITS
INABILITY, OR IS GENERALLY UNABLE, TO PAY ITS DEBTS AS THEY BECOME DUE OR CEASES
OPERATIONS OF ITS PRESENT BUSINESS, (iii) MAKES A GENERAL ASSIGNMENT FOR THE
BENEFIT OF CREDITORS, (iv) COMMENCES A VOLUNTARY CASE UNDER ANY STATE OR FEDERAL
BANKRUPTCY LAWS (AS NOW OR HEREAFTER IN EFFECT), (V) IS ADJUDICATED AS BANKRUPT
OR INSOLVENT, (VI) FILES A PETITION SEEKING TO TAKE ADVANTAGE OF ANY OTHER LAW
PROVIDING FOR THE RELIEF OF DEBTORS, (VII) ACQUIESCES TO, OR FAILS TO HAVE
DISMISSED WITHIN THIRTY (30) DAYS, ANY PETITION FILED AGAINST IT IN ANY
INVOLUNTARY CASE UNDER SUCH BANKRUPTCY LAWS, OR (VII) TAKES ANY ACTION FOR THE
PURPOSE OF EFFECTING ANY OF THE FOREGOING;
(a) ANY LIEN IN ANY OF THE COLLATERAL, GRANTED OR INTENDED BY THE LOAN
DOCUMENTS TO BE GRANTED TO LENDER, CEASES TO BE A VALID, ENFORCEABLE, PERFECTED,
FIRST PRIORITY LIEN (OR A LESSER PRIORITY IF EXPRESSLY PERMITTED PURSUANT TO
SECTION 6 OF THE LOAN AUTHORIZATION AGREEMENT) SUBJECT ONLY TO PERMITTED LIENS;
(b) THE ISSUANCE OF ANY LEVY, ASSESSMENT, ATTACHMENT, SEIZURE OR LIEN,
OTHER THAN A PERMITTED LIEN, AGAINST ANY
108
OF THE COLLATERAL WHICH IS NOT STAYED OR LIFTED WITHIN THIRTY (30) CALENDAR
DAYS;
(c) ANY PROCEEDING IS COMMENCED BY OR AGAINST BORROWER OR ANY GUARANTOR FOR
THE LIQUIDATION OF ITS ASSETS OR DISSOLUTION;
(d) ANY LITIGATION IS FILED AGAINST BORROWER OR ANY GUARANTOR WHICH HAS HAD
OR COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT AND SUCH
LITIGATION IS NOT WITHDRAWN OR DISMISSED WITHIN THIRTY (30) CALENDAR DAYS OF THE
FILING THEREOF;
(e) ANY DEFAULT OR EVENT OF DEFAULT UNDER THE LOAN DOCUMENTS;
(f) ANY FAILURE TO COMPLY WITH ANY TERMS OF THE LOAN AUTHORIZATION
AGREEMENT;
(g) ANY MATERIAL PROVISION OF ANY LOAN DOCUMENT OR THIS AGREEMENT FOR ANY
REASON CEASES TO BE VALID, BINDING AND ENFORCEABLE IN ACCORDANCE WITH ITS TERMS;
(h) ANY EVENT WHICH HAS HAD OR COULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT; OR
(i) THE CREDIT ACCOMMODATION AMOUNT EXCEEDS THE APPLICABLE EXPORT-RELATED
BORROWING BASE.
INSURANCE. BORROWER WILL AT ALL TIMES CARRY PROPERTY, LIABILITY AND OTHER
---------
INSURANCE, WITH INSURERS ACCEPTABLE TO LENDER, IN SUCH FORM AND AMOUNTS, AND
WITH SUCH DEDUCTIBLES AND OTHER PROVISIONS, AS LENDER SHALL REQUIRE, AND
BORROWER WILL PROVIDE EVIDENCE OF SUCH INSURANCE TO LENDER, SO THAT LENDER IS
SATISFIED THAT SUCH INSURANCE IS, AT ALL TIMES, IN FULL FORCE AND EFFECT. EACH
PROPERTY INSURANCE POLICY SHALL NAME LENDER AS LOSS PAYEE AND SHALL CONTAIN A
LENDER'S LOSS PAYABLE ENDORSEMENT IN FORM ACCEPTABLE TO LENDER AND EACH
LIABILITY INSURANCE POLICY SHALL NAME LENDER AS AN ADDITIONAL INSURED. ALL
POLICIES OF INSURANCE SHALL PROVIDE THAT THEY MAY NOT BE CANCELLED OR CHANGED
WITHOUT AT LEAST TEN (10) DAYS' PRIOR WRITTEN NOTICE TO LENDER AND SHALL
OTHERWISE BE IN FORM AND SUBSTANCE SATISFACTORY TO LENDER. BORROWER WILL
PROMPTLY DELIVER TO LENDER COPIES OF ALL REPORTS MADE TO INSURANCE COMPANIES.
TAXES. BORROWER HAS TIMELY FILED ALL TAX RETURNS AND REPORTS REQUIRED BY
-----
APPLICABLE LAW, HAS TIMELY PAID ALL APPLICABLE TAXES, ASSESSMENTS, DEPOSITS AND
CONTRIBUTIONS OWING BY BORROWER AND WILL TIMELY PAY ALL SUCH ITEMS IN THE FUTURE
AS THEY BECAME DUE AND PAYABLE. BORROWER MAY, HOWEVER, DEFER PAYMENT OF ANY
CONTESTED TAXES; PROVIDED, THAT BORROWER (a) IN GOOD FAITH CONTESTS BORROWER'S
OBLIGATION TO PAY SUCH TAXES BY APPROPRIATE PROCEEDINGS PROMPTLY AND DILIGENTLY
INSTITUTED AND CONDUCTED; (b) NOTIFIES LENDER IN WRITING OF THE COMMENCEMENT OF,
AND ANY MATERIAL DEVELOPMENT IN, THE PROCEEDINGS; (c) POSTS BONDS OR TAKES ANY
OTHER STEPS REQUIRED TO KEEP THE CONTESTED TAXES FROM BECOMING A LIEN UPON ANY
OF THE COLLATERAL; AND (d) MAINTAINS ADEQUATE RESERVES THEREFOR IN CONFORMITY
WITH GAAP.
COMPLIANCE WITH LAWS. BORROWER REPRESENTS AND WARRANTS THAT IT HAS COMPLIED IN
--------------------
ALL MATERIAL RESPECTS WITH ALL PROVISIONS OF ALL APPLICABLE LAWS AND
REGULATIONS, INCLUDING THOSE RELATING TO BORROWER'S OWNERSHIP OF REAL OR
PERSONAL PROPERTY, THE CONDUCT AND LICENSING OF BORROWER'S BUSINESS, THE PAYMENT
AND WITHHOLDING OF TAXES, ERISA AND OTHER EMPLOYEE MATTERS, SAFETY AND
ENVIRONMENTAL MATTERS.
NEGATIVE COVENANTS. WITHOUT THE PRIOR WRITTEN CONSENT OF EX-IM BANK AND LENDER,
------------------
BORROWER SHALL NOT (a) MERGE, CONSOLIDATE OR OTHERWISE COMBINE WITH ANY OTHER
PERSON; (b) ACQUIRE ALL OR SUBSTANTIALLY ALL OF THE ASSETS OR CAPITAL STOCK OF
ANY OTHER PERSON; (c) SELL, LEASE, TRANSFER, CONVEY, ASSIGN OR OTHERWISE DISPOSE
OF ANY OF ITS ASSETS, EXCEPT FOR THE SALE OF INVENTORY IN THE ORDINARY COURSE OF
BUSINESS AND THE DISPOSITION OF OBSOLETE EQUIPMENT IN THE ORDINARY COURSE OF
BUSINESS; (d) CREATE ANY LIEN ON THE COLLATERAL EXCEPT FOR PERMITTED LIENS; (e)
MAKE ANY MATERIAL CHANGES IN ITS ORGANIZATIONAL STRUCTURE OR IDENTITY; OR (f)
ENTER INTO ANY AGREEMENT TO DO ANY OF THE FOREGOING.
REBORROWINGS AND REPAYMENT TERMS. (a) IF THE LOAN FACILITY IS A REVOLVING LOAN
--------------------------------
FACILITY, PROVIDED THAT BORROWER IS NOT IN DEFAULT UNDER ANY OF THE LOAN
DOCUMENTS, BORROWER MAY BORROW, REPAY AND REBORROW AMOUNTS UNDER THE LOAN
FACILITY UNTIL THE CLOSE OF BUSINESS ON THE FINAL DISBURSEMENT DATE. UNLESS THE
REVOLVING LOAN FACILITY IS RENEWED OR EXTENDED BY LENDER WITH THE CONSENT OF
EX-IM BANK, BORROWER SHALL PAY IN FULL THE OUTSTANDING LOAN FACILITY OBLIGATIONS
AND ALL ACCRUED AND UNPAID INTEREST THEREON NO LATER THAN THE FIRST BUSINESS DAY
AFTER THE FINAL DISBURSEMENT DATE.
IF THE LOAN FACILITY IS A TRANSACTION SPECIFIC LOAN FACILITY, BORROWER
SHALL, WITHIN TWO (2) BUSINESS DAYS OF THE RECEIPT THEREOF, PAY TO LENDER (FOR
APPLICATION AGAINST THE OUTSTANDING LOAN FACILITY OBLIGATIONS AND ACCRUED AND
UNPAID INTEREST THEREON) ALL CHECKS, DRAFTS, CASH AND OTHER REMITTANCES IT MAY
RECEIVE IN PAYMENT OR ON ACCOUNT OF THE EXPORT-RELATED ACCOUNTS RECEIVABLE OR
ANY OTHER COLLATERAL, IN PRECISELY THE FORM RECEIVED (EXCEPT FOR THE ENDORSEMENT
OF BORROWER WHERE NECESSARY). PENDING SUCH DEPOSIT, BORROWER SHALL HOLD SUCH
AMOUNTS IN TRUST FOR LENDER SEPARATE AND APART AND SHALL NOT COMMINGLE ANY SUCH
ITEMS OF PAYMENT WITH ANY OF ITS OTHER FUNDS OR PROPERTY.
CROSS DEFAULT. BORROWER SHALL BE DEEMED IN DEFAULT UNDER THE LOAN FACILITY IF
-------------
BORROWER FAILS TO PAY WHEN DUE ANY AMOUNT PAYABLE TO LENDER UNDER ANY LOAN OR
OTHER CREDIT ACCOMMODATIONS TO BORROWER WHETHER OR NOT GUARANTEED BY EX-IM BANK.
MUNITIONS LIST. IF ANY OF THE ITEMS ARE ARTICLES, SERVICES, OR RELATED
--------------
TECHNICAL DATA THAT ARE LISTED ON THE UNITED STATES MUNITIONS LIST (PART 121 OF
TITLE 22 OF THE CODE OF FEDERAL REGULATIONS), BORROWER SHALL SEND A WRITTEN
109
NOTICE PROMPTLY, BUT IN ANY EVENT WITHIN FIVE (5) BUSINESS DAYS, OF BORROWER
LEARNING THEREOF TO LENDER DESCRIBING THE ITEMS(S) AND THE CORRESPONDING INVOICE
AMOUNT.
SUSPENSION AND DEBARMENT, ETC. ON THE DATE OF THIS AGREEMENT NEITHER BORROWER
-----------------------------
NOR ITS PRINCIPALS ARE (a) DEBARRED, SUSPENDED, PROPOSED FOR DEBARMENT WITH A
FINAL DETERMINATION STILL PENDING, DECLARED INELIGIBLE OR VOLUNTARILY EXCLUDED
(AS SUCH TERMS ARE DEFINED UNDER ANY OF THE DEBARMENT REGULATIONS REFERRED TO
BELOW) FROM PARTICIPATING IN PROCUREMENT OR NONPROCUREMENT TRANSACTIONS WITH ANY
UNITED STATES FEDERAL GOVERNMENT DEPARTMENT OR AGENCY PURSUANT TO ANY OF THE
DEBARMENT REGULATIONS OR (b) INDICTED, CONVICTED OR HAD A CIVIL JUDGMENT
RENDERED AGAINST BORROWER OR ANY OF ITS PRINCIPALS FOR ANY OF THE OFFENSES
LISTED IN ANY OF THE DEBARMENT REGULATIONS. UNLESS AUTHORIZED BY EX-IM BANK,
BORROWER WILL NOT KNOWINGLY ENTER INTO ANY TRANSACTIONS IN CONNECTION WITH THE
ITEMS WITH ANY PERSON WHO IS DEBARRED, SUSPENDED, DECLARED INELIGIBLE OR
VOLUNTARILY EXCLUDED FROM PARTICIPATION IN PROCUREMENT OR NONPROCUREMENT
TRANSACTIONS WITH ANY UNITED STATES FEDERAL GOVERNMENT DEPARTMENT OR AGENCY
PURSUANT TO ANY OF THE DEBARMENT REGULATIONS. BORROWER WILL PROVIDE IMMEDIATE
WRITTEN NOTICE TO LENDER IF AT ANY TIME IT LEARNS THAT THE CERTIFICATION SET
FORTH IN THIS SECTION 2.19 WAS ERRONEOUS WHEN MADE OR HAS BECOME ERRONEOUS BY
REASON OF CHANGED CIRCUMSTANCES.
RIGHTS AND REMEDIES
INDEMNIFICATION. UPON EX-IM BANK'S PAYMENT OF A CLAIM TO LENDER IN CONNECTION
---------------
WITH THE LOAN FACILITY PURSUANT TO THE MASTER GUARANTEE AGREEMENT, EX-IM BANK
MAY ASSUME ALL RIGHTS AND REMEDIES OF LENDER UNDER THE LOAN DOCUMENTS AND MAY
ENFORCE ANY SUCH RIGHTS OR REMEDIES AGAINST BORROWER, THE COLLATERAL AND ANY
GUARANTORS. BORROWER SHALL HOLD EX-IM BANK AND LENDER HARMLESS FROM AND
INDEMNIFY THEM AGAINST ANY AND ALL LIABILITIES, DAMAGES, CLAIMS, COSTS AND
LOSSES INCURRED OR SUFFERED BY EITHER OF THEM RESULTING FROM (a) ANY MATERIALLY
INCORRECT CERTIFICATION OR STATEMENT KNOWINGLY MADE BY BORROWER OR ITS AGENT TO
EX-IM BANK OR LENDER IN CONNECTION WITH THE LOAN FACILITY, THIS AGREEMENT, THE
LOAN AUTHORIZATION AGREEMENT OR ANY OTHER LOAN DOCUMENTS OR (b) ANY MATERIAL
BREACH BY BORROWER OF THE TERMS AND CONDITIONS OF THIS AGREEMENT, THE LOAN
AUTHORIZATION AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. BORROWER ALSO
ACKNOWLEDGES THAT ANY STATEMENT, CERTIFICATION OR REPRESENTATION MADE BY
BORROWER IN CONNECTION WITH THE LOAN FACILITY IS SUBJECT TO THE PENALTIES
PROVIDED IN ARTICLE 18 U.S.C. SECTION 1001.
LIENS. BORROWER AGREES THAT ANY AND ALL LIENS GRANTED BY IT TO LENDER ARE ALSO
-----
HEREBY GRANTED TO EX-IM BANK TO SECURE BORROWER'S OBLIGATION, HOWEVER ARISING,
TO REIMBURSE EX-IM BANK FOR ANY PAYMENTS MADE BY EX-IM BANK PURSUANT TO THE
MASTER GUARANTEE AGREEMENT. LENDER IS AUTHORIZED TO APPLY THE PROCEEDS OF, AND
RECOVERIES FROM, ANY PROPERTY SUBJECT TO SUCH LIENS TO THE SATISFACTION OF LOAN
FACILITY OBLIGATIONS IN ACCORDANCE WITH THE TERMS OF ANY AGREEMENT BETWEEN
LENDER AND EX-IM BANK.
MISCELLANEOUS
GOVERNING LAW. THIS AGREEMENT AND THE LOAN AUTHORIZATION AGREEMENT AND THE
-------------
OBLIGATIONS ARISING UNDER THIS AGREEMENT AND THE LOAN AUTHORIZATION AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
GOVERNING THE LOAN DOCUMENTS.
NOTIFICATION. ALL NOTICES REQUIRED BY THIS AGREEMENT SHALL BE GIVEN IN THE
------------
MANNER AND TO THE PARTIES PROVIDED FOR IN THE LOAN AGREEMENT.
PARTIAL INVALIDITY. IF AT ANY TIME ANY OF THE PROVISIONS OF THIS AGREEMENT
------------------
BECOMES ILLEGAL, INVALID OR UNENFORCEABLE IN ANY RESPECT UNDER THE LAW OF ANY
JURISDICTION, NEITHER THE LEGALITY, THE VALIDITY NOR THE ENFORCEABILITY OF THE
REMAINING PROVISIONS HEREOF SHALL IN ANY WAY BE AFFECTED OR IMPAIRED.
WAIVER OF JURY TRIAL. BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
--------------------
WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
ACTION, SUIT, PROCEEDING OR OTHER LITIGATION BROUGHT TO RESOLVE ANY DISPUTE
ARISING UNDER, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, THE LOAN
AUTHORIZATION AGREEMENT, ANY LOAN DOCUMENT, OR ANY OTHER AGREEMENT, DOCUMENT OR
INSTRUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR
ACTIONS OR OMMISSIONS OF LENDER, EX-IM BANK, OR ANY OTHER PERSON, RELATING TO
THIS AGREEMENT, THE LOAN AUTHORIZATION AGREEMENT OR ANY OTHER LOAN DOCUMENT.
110
IN WITNESS WHEREOF, Borrower has caused this Agreement to be duly executed
as of the th day of , 2001.
--- ----------
GENUS, INC.
By:
--------------------------------
(Signature)
Name:
------------------------------
(Print or Type)
Title:
-----------------------------
(Print or Type)
ACKNOWLEDGED:
SILICON VALLEY BANK
By:
--------------------------------
(Signature)
Name:
------------------------------
(Print or Type)
Title:
-----------------------------
(Print or Type)
111
CONSENT OF GUARANTORS
Each of the undersigned as a Guarantor of the obligations of Borrower to
the Lender executing the foregoing Agreement hereby agrees that the foregoing
Agreement, each of their respective Guaranty Agreements and each other Loan
Documents may be assigned to the Export-Import Bank of the United States.
-----------------------------
[INDIVIDUAL GUARANTOR]
[CORPORATE GUARANTOR]
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
112