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Exhibit 10.50
COAST
LOAN AND SECURITY AGREEMENT (CEFO FACILITY)
Borrower: Catalyst Semiconductor, Inc.,
a Delaware corporation
Address: 0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Date: June 19, 1997
THIS LOAN AND SECURITY AGREEMENT ("Loan Agreement"), dated the above date, is
entered into at Los Angeles, California, between COAST BUSINESS CREDIT, a
division of Southern Pacific Thrift & Loan Association ("Coast"), a California
corporation, with offices at 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, and the borrower named above ("Borrower"), whose chief
executive office is located at the above address ("Borrower's Address").
* COAST AND THE BORROWER ARE ALSO PARTIES TO THAT CERTAIN LOAN AND SECURITY
AGREEMENT DATED JUNE 19, 1997 (THE "NONCEFO AGREEMENT") AND THE COLLATERAL
AGREEMENTS REFERRED TO THEREIN. BOTH THIS AGREEMENT AND THE NON-CEFO AGREEMENT
AND SUCH OTHER COLLATERAL AGREEMENTS SHALL CONTINUE IN FULL FORCE AND EFFECT,
AND ALL RIGHTS AND REMEDIES OF COAST HEREUNDER AND THEREUNDER ARE CUMULATIVE.
1. LOANS.
1.1 LOANS, COLLATERAL AGREEMENTS. Borrower has requested and may
hereafter request that Coast advance funds or otherwise extend credit to or for
the benefit of Borrower ("Loan(s)") in accordance with the terms and provisions
of this Loan Agreement and other written agreements ("Collateral Agreement(s)"),
including, but not limited to, any one or more of the following described
security agreements now or hereafter entered into between Borrower and Coast:
(a) CEFO Collateral Agreement and (d) any promissory notes or guaranties. The
amount and terms of payment of any Loans by Coast to Borrower shall be
determined in accordance with the terms and provisions of this Loan Agreement
and of any executed Collateral Agreements. Notwithstanding anything herein or in
any Collateral Agreement to the contrary, in no event shall the Borrower permit
the total balance of all Loans and all other Obligations (including without
limitation the Obligations under and as defined in the Non-CEFO Agreement)
outstanding at any one time to exceed $13,500,000 ("Maximum Dollar Amount");
and, if for any reason they do, Borrower shall immediately pay the amount of
such excess to Coast in immediately available funds.
1.2 INTEREST. Unless specifically provided to the contrary in any
Collateral Agreement, all Loans shall bear interest at a rate equal to the
"Prime Rate" (as hereinafter defined), plus 2.25% per annum, calculated on the
basis of a 360-day year for the actual number
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of days elapsed; provided, however, all Loans shall bear interest at a rate
equal to the Prime Rate plus 1.75% per annum upon receipt of evidence acceptable
to Coast in its sole and absolute discretion that Borrower has achieved and
maintained a Tangible Net Worth (as that term is defined herein) of no less than
$17,000,000. The interest rate applicable to all Loans shall be adjusted monthly
as of the first day of each month, and the interest to be charged for that month
shall be based on the highest "Prime Rate" in effect during said month, but in
no event shall the rate of interest charged on any Loans in any month be less
than 8% per annum. "Prime Rate" is defined as the actual "Reference Rate" or the
substitute therefor of the Bank of America NT&SA ("B of A") whether or not that
rate is the lowest interest rate charged by B of A. If the Prime Rate, as
defined, is unavailable, "Prime Rate" shall mean the highest of the prime rates
published in the Wall Street Journal on the first business day of the month, as
the base rate on corporate loans at large U.S. money center commercial banks.
1.3 FEES. Borrower shall pay to Coast a loan origination fee in the
amount of n/a concurrently herewith, and an annual loan fee of n/a on each
anniversary of the date hereof during the term of this Loan Agreement. Said fees
are in addition to all other sums payable to Coast, are not refundable for any
reason, and shall bear interest from the date due to the date paid at the
highest interest rate applicable to any of the Obligations.
1.4 CONDITIONS PRECEDENT. The obligation of Coast to make the Loans is
subject to the satisfaction, in the sole discretion of Coast, at or prior to the
first advance of funds hereunder, of each, every and all of the following
conditions:
(a) STATUS OF ACCOUNTS AT CLOSING. No accounts payable shall
be due and unpaid ninety (90) days past its due date;
(b) REVIEW OF BORROWER'S FORECAST. Coast shall have received,
reviewed, and accepted Borrower's financial forecasts.
(c) LANDLORD WAIVER. Coast shall have received duly executed
landlord waivers in form an substance satisfactory Coast, in Coast's sole and
absolute discretion, and in form for recording in the appropriate recording
office, with respect to all allocations where Borrower maintains any inventory
or equipment;
(d) EXECUTED LOAN DOCUMENTS. Coast shall have received this
Agreement duly executed and in form and substance satisfactory to Coast in its
sole and absolute discretion;
(e) DAILY REMITTANCE. Coast shall have received evidence that
Borrower has established a procedure for (and borrower shall provide for) the
daily remittance to be collected either by payment in kind, blocked account, or
lockbox basis.
(f) SUBORDINATION. Borrower's debt, if any shall be
subordinated to Coast in a form and substance acceptable to Coast in its sole
and absolute discretion.
(g) PRIORITY OF COAST'S LIENS. Coast shall have received the
results "of record" searches satisfactory to Coast in its sole and absolute
discretion, reflecting its Uniform
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Commercial Code filings against Borrower indicating that Coast has a perfected,
first priority lien in and upon all of the Collateral, subject only to Permitted
Liens;
(h) CEFO GUARANTEE. Coast shall have received an assignment of
the California Export Finance Office guarantee on or before the earlier of: (a)
30 days after the date of this Agreement, and (b) the date 5 days before the
date on which the Borrower requests an advance under the CEFO Agreement.
2. DEFINITIONS OF OBLIGATIONS AND COLLATERAL; GRANT OF SECURITY INTEREST.
2.1 OBLIGATIONS. The term "Obligations" as used in this Loan Agreement,
and any and all Collateral Agreements, shall mean and include each and all of
the following: the obligation to pay all Loans and all interest thereon when due
and to pay and perform when due all other indebtedness, liabilities,
obligations, guarantees, covenants, agreements, warranties and representations
of Borrower to Coast, whether heretofore, now or hereafter existing, owing or
arising; whether primary, secondary, direct, acquired from a third party,
absolute, contingent, fixed, secured or unsecured; joint or several, written or
oral, monetary or non-monetary; and whether created pursuant to, or caused by
Borrower's breach of, this Loan Agreement, a Collateral Agreement or any other
present or future agreement or instrument, or created by operation of law or
otherwise (INCLUDING without limitation the Obligations under and as defined in
the Non-CEFO Agreement).
2.2 COLLATERAL. As security and collateral for all Obligations,
Borrower hereby grants to Coast a continuing security interest in, and assigns
to Coast, all of Borrower's interest in the types of property described below,
whether now owned or hereafter acquired and wherever located, together with all
proceeds (including insurance proceeds), substitutions, accessions and products
thereof (collectively referred to as "Collateral"):
2.2(a) ACCOUNTS. All accounts, contract rights, chattel paper,
and instruments, and all other obligations now or hereafter owing to Borrower
hereinafter sometimes collectively referred to as "Accounts"), and all right,
title and interest of Borrower in, and all of Borrower's rights and remedies
with respect to, all goods, the sale or other disposition of which gives rise to
any Account, including, without limitation, all returned, reclaimed and
repossessed goods and all rights of stoppage in transit, repletion, reclamation,
and all rights as an unpaid vendor; and
2.2(b) INVENTORY. All inventory, goods, merchandise,
materials, raw materials, work in process, finished goods, advertising,
packaging and shipping materials, supplies, and all other tangible personal
property which is held for sale or lease or furnished under contracts of service
or consumed in Borrower's business, including, without limitation, any and all
of the foregoing which are returned, repossessed, reclaimed or stopped in
transit, and including, but not limited to, those described in any Inventory
Collateral Security Agreement executed by Borrower, and all warehouse receipts
and other documents or instruments now or hereafter issued with respect to any
of the foregoing; and
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2.2(c) EQUIPMENT. All equipment, goods (other than inventory),
machinery, fixtures, trade fixtures, vehicles, furnishings, furniture, supplies,
materials, tools, machine tools, office equipment, appliances, apparatus, parts,
dies, jigs, and chattels, including, but not limited to, those described in any
Equipment Collateral Security Agreement executed by Borrower except for
equipment acquired by purchase money financing under agreements expressly
prohibiting junior liens on such equipment; and
2.2(d) INTANGIBLES. All deposit accounts and general
intangibles (including, but not limited to, tax refunds, goodwill, name,
drawings, trademarks, blueprints, trade names, trade secrets, customer lists,
patents, patent applications, copyrights, security deposits, loan commitment
fees, royalties, licenses, processes, and all other rights, privileges and
franchises); and
2.2(e) INVESTMENT PROPERTY. All investment property as defined
by Section 9115 of the California Commercial Code in effect on the date hereof.
All personal property of Borrower which comes into Coast's possession,
custody or control; and all tangible and intangible personal property in which
Coast now has or hereafter acquires a security interest to secure any or all of
the Obligations; and all substitutions, additions and access to any or all of
the foregoing items of Collateral; and all guaranties of and security for any
and all of the foregoing; and all books and records relating to any and all of
the foregoing and the equipment containing said books and records. Payment and
performance of the Obligations are collateralized by the Collateral and by any
security interest created in any other agreement now or hereafter existing
between Coast and Borrower unless such other agreement is a deed of trust or
other security instrument having real property or rents from real property as
its subject matter and express provides to the contrary.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.
To induce Coast to enter into this Loan Agreement and now and hereafter
to enter into Collateral Agreement, Borrower represents and warrant that each of
the following representations and warrant now is and hereafter will continue to
be true and correct in all respects and Borrower has and will timely perform
each of the following covenants:
3.1 CORPORATE EXISTENCE AND POWER. Borrower, if a corporation, is and
will continue to be, due authorized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation. Borrower and will continue to
be qualified and licensed to the business in all jurisdictions in which the
nature of its business transacted by it, or the ownership or leasing of its
property, makes such qualification or licensing necessary and where the failure
to be so qualified would have a material adverse effect on the Borrower, and
Borrower has and will continue to have all requisite power and authority to
carry on its business as it is not or may hereafter be, conducted.
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3.2 AUTHORITY. Borrower is, and will continue to be, authorized to
enter into, to grant security interests in its property pursuant to, and to
perform its obligations under, this Loan Agreement, any Collateral Agreement and
all other instruments and transactions contemplated herein. The execution,
delivery and performance by Borrower of this Loan Agreement, any Collateral
Agreement and all other instruments and transactions contemplated herein have
been validly authorized, are enforceable against the Borrower in accordance with
their terms, and do not violate any law or any provision of Borrower's Articles
of Incorporation, By-Laws and any Shareholder Agreements nor do they violate any
material provision of, nor will they result in acceleration under, any material
agreement, indenture, note or instrument which is binding upon Borrower, or any
of its property.
3.3 NAME; TRADE NAMES AND STYLES. Borrower has set forth above its
correct name. Listed on the Schedule hereto are all prior names of Borrower and
each fictitious name, trade name and trade style by which Borrower has been, or
is now, known. Borrower shall provide Coast with fifteen (15) days' advance
written notice prior to doing business under any other name, fictitious name,
trade name or trade style. Borrower has complied, and will hereafter comply,
with all laws relating to the conduct of business under, the ownership of
property in, and the renewal or continuation of the right to use, a corporate,
fictitious or trade name or trade style.
3.4 PLACE OF BUSINESS; LOCATION OF COLLATERAL. Borrower's sole place of
business; or, if Borrower has more than one place of business, Borrower's chief
executive office; or, if Borrower is an individual and does not have a separate
place of business, Borrower's residence is, and will continue to be, located at
Borrower's Address and all of Borrower's books and records, including, but not
limited to, the books and records relating to Borrower's Accounts, are and will
be maintained at Borrower's Address unless and until Coast shall otherwise
consent in writing. In addition to Borrower's Address, Borrower has places of
business and Collateral is located only at the locations shown on the Schedule
hereto. Borrower will provide Coast with at least fifteen (15) days' advance
written notice if Borrower moves any of the Collateral to any new location not
previously reported to Coast, or obtains any additional sites for the conduct of
Borrower's business or the location of any Collateral.
3.5 THE TO COLLATERAL; LIENS. Borrower is now, and will at all times
hereafter be, the lawful and sole owner of all the Collateral. With the
exception of the security interest granted Coast, the Collateral now is and will
remain free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims ("Liens"), other than Permitted Liens. As used
herein, "Permitted Liens" means (i) any Liens existing as of the date hereof and
disclosed in Schedule A hereto; (ii) Liens for taxes, fees, assessments or other
governmental charges or levies, either not delinquent or being contested in good
faith by appropriate proceedings, provided the same have no priority over any of
Coast's security interests; (iii) Liens of materialmen, mechanics, warehousemen,
carriers, or employees or other like Liens arising in the ordinary course of
business and securing obligations either not delinquent more than 45 days or
being contested in good faith by appropriate proceedings; (iv) any judgment,
attachment or similar lien, unless the judgment it secures is not fully covered
by insurance and has not been discharged or execution thereof effectively stayed
and bonded against pending appeal within 30 days of the entry thereof provided
that, if the judgment is not fully covered by insurance or
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execution thereof has not been so stayed and bonded, Coast shall not be required
to make any Loans or otherwise extend credit to or for the benefit of Borrower;
(v) Liens (i) upon or in any equipment acquired or to be acquired, held or
leased by the Borrower to secure the purchase price of such equipment or
indebtedness incurred solely for the purpose of financing the acquisition of
such equipment or (ii) existing on such equipment at the time of its acquisition
or lease, provided that the Lien is confined solely to the equipment so acquired
and improvements thereon; (vi) Leases or subleases and licenses or sublicenses
granted to others not interfering in any material respect with the business of
Borrower; (vii) Encumbrances securing reimbursement obligations of Borrower with
respect to commercial letters of credit, provided that such encumbrances shall
attach only to documents or other property relating to such letters of credit
and products and proceeds thereof that are not Collateral under this Agreement
or any of the Collateral Agreements subsequent to the delivery of such property
to Borrower; (viii) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in
clauses (i) and (v) above, provided that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing Lien and the
principal amount of the indebtedness being extended, renewed or refinanced does
not increase; (ix) Liens securing debt junior in perfection and priority to the
lien of Coast which are expressly subordinated to Coast on terms satisfactory to
Coast (including a provision stating that the secured party shall not take
action to enforce its lien so long as any of the Obligations remain
outstanding); (x) Liens in favor of customs and revenue authorities which secure
payment of customs duties in connection with the importation of goods; (xi)
Liens which constitute rights of set-off of a customary nature or bankers' liens
on amounts on deposit, whether arising by contract or by operation of law, in
connection with arrangements entered into with depository institutions in the
ordinary course of business; and (xii) other Liens in existence on the date
hereof and listed on Schedule A hereto. Without limiting any of Coast's other
rights and remedies, if Borrower grants any third xxxxx x xxxx or encumbrance on
or security interest (other than a Permitted Lien) in any of the Collateral,
Coast, in its sole discretion, shall have the right to treat such action as a
notice of termination by Borrower to Coast under Paragraph 8(d) hereof, as of
any date subsequent to such grant selected by Coast, in its sole discretion, and
to charge Borrower the termination fee therein provided. Coast now has, and will
have, a perfected and enforceable first priority security interest in all of the
Collateral (Other than Collateral subject to a Permitted Lien) to the extent
that such security interest can be perfected by the filing of financing
statements and Borrower will at all times defend Coast and the Collateral
against all claims of others. Borrower is not and will not become a lessee under
any real property lease pursuant to which the lessor may obtain any rights in
any of the Collateral and no such lease now prohibits, restrains, impairs or
will prohibit, restrain or impair Borrower's right to remove any Collateral from
the leased premises. Whenever any Collateral is located upon premises in which
any third party has an interest (whether as owner, mortgagee, beneficiary under
a deed of trust, lien or otherwise), Borrower shall, whenever requested by
Coast, use its best efforts to cause such third xxxxx to execute and deliver to
Coast, in form acceptable to Coast, whatever waivers and subordinations that
Coast specifies, so as to ensure that Coast'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 for leases of sales offices at which not
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more than $200,000 in Collateral is located.
3.6 MAINTENANCE OF COLLATERAL. Borrower has maintained and will
maintain the Collateral and all of its assets in good working condition, at
Borrower's expense. Borrower will not use the Collateral or any of its other
properties for any unlawful purpose and will not secrete or abandon the
Collateral except for the abandonment of worn-out or obsolete equipment or
inventory in the ordinary course of business. Borrower will immediately advise
Coast in writing of any material loss or depreciation of the Collateral.
3.7 BOOKS AND RECORDS. Borrower has maintained and will maintain at
Borrower's Address books and records which are complete and accurate in all
material respects and which comprise an accounting system in accordance with
generally accepted principles. Borrower has not and will not in the future enter
into any agreement with any accounting firm, service bureau or third parry to
prepare or store Borrower's books and records at any location other than
Borrower's Address, without first obtaining Coast's written consent, which may
be conditioned upon such accounting firm, service bureau or other third party
agreeing to give Coast the same rights with respect to access to books and
records and related rights as Coast has under Paragraph 4.3 of this Loan
Agreement.
3.8 FINANCIAL CONDITION AND STATEMENTS. All financial statements now or
hereafter delivered to Coast have been, and will be, prepared in conformity with
generally accepted accounting principles and now and hereafter will fairly
reflect the financial condition of Borrower, at the times and for the periods
therein stated. Since the last date covered by any such statement, there has
been no material adverse change in the financial condition, operations or any
other status of the Borrower. Borrower is now and will continue to be solvent in
both the "equity" and "bankruptcy" sense. Borrower will deliver to Coast a copy
of all reports and financial statements pursuant to Schedule 42.
3.9 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has
timely filed, and will timely file, all tax returns and reports required by
foreign, federal, state or local law. Borrower has timely paid, and will timely
pay, all foreign, federal, state and local taxes, assessments, deposits and
contributions now or hereafter owed by Borrower. Borrower may defer payment of
any contested taxes provided that Borrower (i) in good faith contests Borrower's
obligation to pay such taxes by appropriate proceedings promptly and diligently
instituted and conducted, (ii) notifies Coast in writing of the commencement of
and any material development in such proceedings, and (iii) posts bonds or takes
any other steps required to keep such contested taxes from becoming a lien
(other than Permitted Liens) against or charge upon any of the Collateral or
other properties of Borrower. 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. 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
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plan which could result in any liability of Borrower, including, without
limitation, any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency. When requested, Borrower will
furnish Coast with proof satisfactory to Coast of Borrower's making the payment
or deposit of all such taxes and contributions, such proof to be delivered
within five (5) days after the due date established by law for each such payment
or deposit. If Borrower fails or is unable to pay or deposit such taxes or
contributions, Coast may, but is not obligated to, pay the same and treat all
such advances as additional Obligations of Borrower. Such advances shall bear
interest at the highest interest rate applicable to any of the Obligations.
3.10 COMPLIANCE WITH LAW. Unless noncompliance would not materially
adversely affect (i) Borrower's financial condition as reflected in its
financial statements previously delivered to Coast; (ii) Borrower's operations;
or (iii) Borrower's business, Borrower has complied, and will comply, 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, conduct and licensing of
Borrower's business and employment of Borrower's personnel.
3.11 LITIGATION. There is no claim, suit, litigation, proceeding or
investigation pending or threatened by or against or affecting Borrower in any
court or before any regulatory commission, board or other governmental agency
(or any basis therefor known to borrower) which is reasonably likely to result,
either separately or in the aggregate, in any material adverse change in the
business or condition of Borrower, or in any impairment in the ability of
Borrower to carry on its business in substantially the same manner as it is now
being conducted involving any single claim of $50,000 or more, or involving
$100,000 or more in the aggregate. Borrower will immediately inform Coast in
writing of any claim, proceeding, litigation or investigation hereafter
threatened or instituted by or against Borrower involving any single claim of
$50,000 or more, or involving $100,000 or more in the aggregate.
3.12 USE OF PROCEEDS. Borrower is not purchasing or carrying any
"margin stock" (as defined in Regulation G 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." All proceeds of all Loans
shall be used solely for lawful business purposes.
3.13 CONTINUING EFFECT. All representations, warranties and covenants
of Borrower contained in this Loan Agreement and any Collateral Agreement and
any other agreement with Coast shall be true and correct at the time of the
effective date of each such agreement and shall be deemed continuing and shall
remain true, correct and in full force and effect until payment and satisfaction
in full of all of the Obligations, and Borrower acknowledges that Coast is and
will be expressly relying on such representations, warranties and covenants in
making Loans to Borrower.
4. ADDITIONAL DUTIES OF BORROWER.
4.1 INSURANCE. Borrower shall, at all times, at Borrower's expense,
insure all of the Collateral and carry such other business insurance with
insurers reasonably acceptable to Coast,
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in such form and amounts as Coast may reasonably require. All such insurance
policies shall name Coast as an additional loss payee, shall provide that
proceeds payable thereunder be payable directly to Coast unless written
authority to the contrary is obtained, and shall also provide that no act or
default of Borrower or any other person shall affect the right of Coast to
recover thereunder and shall contain a lenders loss payee endorsement in form
acceptable to Coast. Upon receipt of the proceeds of any such insurance, Coast
shall apply such proceeds in reduction of the Obligations as Coast shall
determine in its sole and absolute discretion provided that if (I) no Event of
Default has occurred and is continuing, and (ii) the proceeds are less than
$50,000 and (iii) the proceeds relate to Collateral which Is not inventory to be
untitled to fulfill "Eligible Purchase Orders" (as defined in the CEFO
Collateral Agreement of even date), then Coast shall release the same to the
Borrower for the repair or replacement of the property affected. If Borrower
fails to provide or pay for any such insurance, Coast may, but is not obligated
to, procure the same at Borrower's expense. Borrower agrees to deliver to Coast,
promptly as rendered, copies of all material reports made to all insurance
companies.
4.2 REPORTS. At its expense, Borrower shall report, in form
satisfactory to Coast, such information as Coast may from time to time
reasonably specify regarding Borrower or the Collateral including, without
limitation, the written reports set forth in the Schedule hereto; such reports
shall be rendered with such frequency as Coast may reasonably specify. All
reports furnished Coast shall be complete and accurate in all material respects.
4.3 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At any time Coast, or its
agents, shall have immediate access to the Collateral and any other property of
Borrower, wherever located provided that if no Event of Default has occurred and
is continuing, such access shall be on one business days notice and during
normal business hours. Coast shall have the right to audit and copy Borrower's
books and records and accounts including accountants' reports wherever located
(hereinafter collectively the "Records"). Such audits shall be at Borrower's
expense and the charge for the audits shall be $750 per person per day (or such
higher amount as shall represent Coast'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 notifying Coast of the same and obtaining the written agreement
from such accounting firm service bureau or other third party to give Coast the
same rights with respect to access to books and records and related rights as
Coast has under this Loan Agreement. Borrower hereby irrevocably authorizes and
directs any of the officers, agents, accountants and attorneys having possession
or control of any of the Records (including computer records) to physically
deliver or make same available to Coast upon Coast's request. Coast shall have
the right to possession of, or to move to the premises of Coast or any agent of
Coast, for so long as Coast may desire, all or any part of the Records. All of
the rights of Coast under this Section 4 shall be subject to the provisions of
Section 14.11 of this Agreement.
4.4 PROHIBITED TRANSACTIONS. Borrower shall not without Coast's prior
written consent, merge, consolidate, dissolve, acquire any other corporation;
enter into any transaction not in its usual course of business; guarantee or
otherwise become in any way liable with respect to the obligations of another
parry or entity (except by endorsements of instruments or items of
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payment for deposit to the general account of Borrower or which are transmitted
or turned over to Coast on account of the Obligations); pay or declare any
dividends upon Borrower's stock; except that Borrower may repurchase or redeem
shares of its capital stock pursuant to employee option plans for an aggregate
purchase price not to exceed S100,000 per fiscal year, on a non-cumulative basis
redeem, retire, purchase or otherwise acquire, directly or indirectly, any of
Borrower's stock; make any change in Borrower's name, identity, corporate or
capital structure (except that Borrower may issue common stock upon exercise of
stock options, sell shares of its capital stock for cash, and issue convertible
debentures subordinate in all respects to the Obligations pursuant to
subordination provisions acceptable to Coast in its discretion); sell or
transfer any Collateral, except for the sale of furnished inventory in the
ordinary course of Borrower's business and except that, provided no Event of
Default has occurred and is continuing, Borrower may sell excess equipment in
the ordinary course of business in good faith arm's length transactions, and
retain the proceeds thereof for use in its business; lend or distribute any of
Borrower's property or assets, or incur any debts, outside of the ordinary
course of Borrower's business.
4.5 NOTIFICATION OF CHANGES. Borrower will promptly notify Coast in
writing of any change of its officers, directors, the death of any partner or
joint venturer, any purchase in excess of $50,000 out of the regularly course of
Borrower's business without Coast's consent and any adverse or material change
in the business or financial affairs of Borrower.
4.6 CHARGES. Borrower shall pay all charges assessed by Coast, in
accordance with Coast's schedule of charges in effect from time to time, and
such charges shall be part of the Obligations and shall be payable on demand.
4.7 LITIGATION COOPERATION. Should any suit or proceeding be instituted
by or against Coast with respect to any Collateral or for the collection or
enforcement of any Account, or in any manner relating to Borrower, Borrower
shall, without expense to Coast, and wherever and whenever designated by Coast,
make available Borrower and its officers, employees and agents and Borrower's
Records to the extent that Coast may deem necessary in order to prosecute or
defend any such suit or proceeding.
4.8 REMITTANCE OF PROCEEDS. All proceeds arising from the disposition
of the Collateral shall be delivered, in kind, by Borrower to Coast in the
original form in which received by Borrower not later than the following
business day after receipt by Borrower except (i) wire transfer remittances
received by Borrower shall be transmitted to Coast in total the day following
posting to Borrower's bank account. Borrower agrees that it will not commingle
proceeds of Collateral with any of Borrower's other fluids or property, but will
hold such proceeds separate and apart from such other funds and property and in
an express trust for Coast. Coast may from time to time verify directly with the
respective account debtors the validity, amount and any other matters relating
to the Accounts by means of mail, telephone or otherwise, either in the name of
Borrower or Coast or such other name as Coast may choose.
4.9 EXECUTE ADDITIONAL DOCUMENTATION. Borrower agrees, at its expense,
on demand by Coast, to execute all documents in form satisfactory to Coast, as
Coast, in its sole discretion,
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may deem reasonably necessary or useful in order to perfect and maintain Coast's
perfected first-priority or any other security interest in the Collateral, and
in order to fully consummate all of the transactions contemplated under this
Loan Agreement and under any Collateral Agreement.
4.10 TANGIBLE NET WORTH. Borrower shall maintain, at all times at which
any Obligations remain outstanding, a minimum Tangible Net Worth of Eleven
Million Dollars where "Tangible Net Worth" means consolidated stockholders'
equity, less, goodwill, patents, trademarks, copyrights, franchises, formulas,
leasehold interests, leasehold improvements, non-compete agreements, engineering
plans, deferred tax benefits, and organization costs.
5. APPLICATION OF PAYMENTS.
All forms of payments delivered to Coast on account of the Obligations
constitute conditional payment only until such items are actually paid in cash
to Coast; solely for the purpose of computing interest earned by coast, credit
therefor and for bank wire transfers shall be given as of the first business day
after receipt by Coast as to uncollected fluids and zero days after receipt of
collected (goods) fluids in order to allow for clearance, bookkeeping and
computer entries. All payments made by Borrower may be applied, and in Coast's
sole discretion reversed and re-applied, in whole or in part to any of the
Obligations, in such order and manner as Coast shall determine in its sole
discretion.
6. EVENTS OF DEFAULT AND REMEDIES.
6.1 EVENTS OF DEFAULT. If any of the following events shall occur, such
an occurrence shall constitute an "Event of Default" and Borrower shall provide
Coast with immediate written notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to Coast by Borrower or any
of Borrower's officers, employees or agents now or hereafter shall be incorrect,
false, untrue or misleading in any material respect; or (b) Borrower shall fail
to repay when due part or all of any Loan or to pay any interest thereon when
due; or (c) Borrower shall fail to perform when due any term or condition
contained in this Loan Agreement or in any Collateral Agreement, or any other
agreement between Coast and Borrower; or (d) Borrower shall fail to pay or
perform any other Obligation when due; or (e) Any loss, theft, or substantial
damage to, or destruction of any or all of the Collateral (unless within five
(5) days after the occurrence of any such event, Borrower furnishes Coast with
evidence satisfactory to Coast that the amount of any such loss, theft, damage
to or destruction of the Collateral is fully insured under policies designating
Coast as the exclusive additional named insured other than lessors of real
property to Borrower); or Other than lessors of real property to Borrower(f) A
material impairment of the prospect of payment or performance of the Obligations
or a material impairment of the value of the Collateral or any impairment in the
priority of Coast's security interest; or (g) Any event shall arise which may
result or actually results in the acceleration of the maturity of the
indebtedness of Borrower to others under any loan or other agreement or
undertaking; or (h) Any levy, assessment, attachment, seizure, lien or
encumbrance (Other than Permitted Liens) for any cause or reason whatsoever,
upon all or any part of the Collateral or any other asset of Borrower (unless
discharged by payment, release or fully bonded against not more than ten (10)
days after such event has occurred); or (i) Dissolution, termination of
existence,
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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 or against,
Borrower under any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or hereafter in effect; or entry of a court or governmental
order which enjoins, restrains or in any way prevents Borrower from conducting
all or any part of its business; or failure to pay any foreign, federal, state
or local tax or other debt of Borrower unless, with respect to any such tax,
Borrower complies with the provisions of Paragraphs 3.9 (i), (ii), and (iii); or
(1) A notice of lien (Other than Permitted Liens), levy or assessment is filed
of record with respect to any of Borrower's assets by the United States or any
department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, or if any taxes or debts now or
hereafter owing to any one or more of them becomes a lien (Other than Permitted
Liens) upon all or any of the Collateral or any other assets of Borrower (other
than a lien for real Property taxes which are not yet due and payable); or (k)
Death, insolvency or incompetency of any guarantor of the Obligations;
appointment of a conservator or guardian of the person of any such guarantor;
appointment of a conservator, guardian, trustee, custodian or receiver of all or
any part of the assets, property or estate of any such guarantor; revocation or
termination of or limitation of liability upon, any guaranty of the Obligations;
or commencement of proceedings by or against any guarantor or surety for
Borrower under any bankruptcy or insolvency law; or (l) Borrower makes any
payment on account of any indebtedness or obligation which has been subordinated
to the Obligations in violation of 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 (m) Borrower shall generally
not pay its debts as they become due or shall enter into any agreement (whether
written or oral), or offer to enter into any such agreement, with all or a
significant number of its creditors regarding any moratorium or other indulgence
with respect to its debts or the participation of such creditors or their
representatives in the supervision, management or control of the business of
Borrower; 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 shall make any transfer of
its property to or for the benefit of any creditor at a time when other
creditors similarly situated have not been paid (except for individually
negotiated extensions of trade debt, leases or other obligations); or (n) Coast
at any time, acting in good faith and in a commercially reasonable manner, deems
itself insecure because of (i) the occurrence of an event prior to the effective
date hereof of which Coast had no knowledge on the effective date or (ii) the
occurrence of an event on or subsequent to the effective date.
6.2 REMEDIES. Upon the occurrence of any Event of Default, and at any
time thereafter, Coast, at its option, and without notice or demand of any kind
(all of which are hereby expressly waived by Borrower) (except that, prior to or
concurrently with the taking any of the following actions, Coast shall give
Borrower one general written notice stating that Coast is "proceeding to
exercise its rights and remedies" or words to that effect), may do any one or
more of the following: (a) Cease advancing money or extending credit to or for
the benefit of Borrower under this Loan Agreement, any Collateral Agreement, and
any other document or agreement; (b) Accelerate and declare all or any part of
the Obligations to be immediately due,
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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 Coast without judicial process to enter
onto any of the Borrower's premises without hindrance to search for, take
possession of, keep, store, or remove any of the Collateral and remain on such
premises or cause a custodian to remain thereon in exclusive control thereof
without charge for so long as Coast deems necessary in order to complete the
enforcement of its rights under this Loan Agreement or any Collateral Agreement,
or any other agreement; provided, however, that should Coast seek to take
possession of any or all 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 Coast
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 Coast at a place or places to be designated by Coast
which are reasonably convenient to Coast and Borrower, and to remove the
Collateral to such locations as Coast may deem advisable; (e) Complete
processing, manufacturing or repair of all or any portion of the Collateral
prior to a disposition thereof and, for such purpose and for the purpose of
removal, Coast shall have the right to use Borrower's premises, vehicles,
hoists, lifts, cranes, equipment and all other property without charge. Without
limiting any security interest granted Coast in other provisions of this Loan
Agreement or in any Collateral Agreement or other agreement, for the purpose of
completing manufacturing, processing or repair of Collateral and the disposition
thereof, Coast is hereby granted a security interest in, and Coast and any
purchaser from Coast may use without charge, all of the Borrower's plant,
machinery, equipment, labels, licenses, processes, patents, patent applications,
copyrights, names, trade names, trademarks, trade secrets, logos, advertising
material and all other assets, and may also utilize all of Borrower's rights
under any license or franchise agreement; (f) Sell, ship, reclaim, lease or
otherwise dispose of all or any portion of the Collateral in its condition at
the time Coast obtains possession or after further manufacturing, processing or
repair, at any one or more public and(or private sales (including execution
sales), in lots or in bulk, for cash, exchange or other property or on credit
arid to adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. Coast shall have the right to
conduct such disposition on Borrower's premises without charge for such time or
times as Coast deems fit, or on Coast's premises, or elsewhere and the
Collateral need not be located at the place of disposition. Coast 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 Accounts and general intangibles comprising part or all of
the Collateral and, in connection therewith, Borrower irrevocably authorizes
Coast 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 Coast's sole discretion, to grant
extensions of time to pay, compromise claims and settle Accounts and the like
for less than face value; (1) Demand and receive possession of any of Borrower's
federal and state income tax returns and the Records
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utilized in the preparation thereof or referring thereto. All attorneys' fees,
expenses, costs, liabilities and obligations incurred by Coast 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 Coast'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 three
percent per annum.
6.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and
Coast agree that the following conduct by Coast with respect to any disposition
of Collateral shall conclusively be deemed commercially reasonable (but other
conduct by Coast, including, but not limited to, Coast's use in its sole
discretion of other or different times, places and manners of noticing and
conducting any disposition of Collateral shall not be deemed unreasonable): Any
public or private disposition as to which on no later than the tenth calendar
day prior thereto written notice thereof is mailed or personally delivered to
Borrower and, with respect to any public disposition, on no later than the tenth
calendar day prior thereto notice thereof describing in general non-specific
terms, the Collateral to be disposed of is published once in a newspaper of
general circulation in the county where the sale is to be conducted, at any
place designated by Coast, with or without the Collateral being present, and
which commences at any time between 8:00 p.m. and 5:00 p.m. Without limiting the
generally of the foregoing, Borrower expressly agrees that, with respect to any
disposition of Accounts, instruments and general intangibles (collectively
"Receivables"), it shall be commercially reasonable for Coast to direct any
prospective acquirer thereof to ascertain directly from Borrower any and all
information (and Coast shall not be required to maintain records of, or answer
any inquiries) concerning the Receivables offered for disposition, including,
but not limited to, the terms of payment, aging and delinquency, if any, of the
Receivables, the financial condition of any obligor or account debtor thereon or
guarantor thereof, any collateral therefor and the condition and location of the
goods, if any, that are the subject of any of the Receivables.
6.4 APPLICATION OF PROCEEDS. All proceeds realized as the result of any
disposition of the Collateral shall be applied by Coast first to the costs,
expenses, liabilities, obligations and attorneys' fees incurred by Coast in the
exercise of its rights under this Loan Agreement and any Collateral Agreement,
second to the interest due upon any of the Obligations and third to the
principal of the Obligations in any order determined by Coast in its sole
discretion. The surplus, if any, shall be paid to Borrower; if any deficiency
shall arise, Borrower shall remain liable to Coast therefor. If, as a result of
the disposition of any of the Collateral, Coast directly or indirectly enters
into a credit transaction with any third xxxxx, Coast shall have the option,
exercisable at any time, in its sole discretion, of either reducing the
Obligations by the principal amount of such credit transaction or deferring the
reduction thereof until the actual receipt by Coast of cash therefor from such
third party.
6.5 REMEDIES CUMULATIVE. In addition to the rights and remedies set
forth in this Loan Agreement and any Collateral Agreement, Coast shall have all
the other rights and remedies accorded a secured party under the California
Uniform Commercial Code and under any and all other applicable laws and in any
other instrument or agreement now or hereafter entered into between Coast and
Borrower and all of such rights and remedies are cumulative and
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none is exclusive. Exercise or partial exercise by Coast of one or more of its
rights or remedies shall not be deemed an election, nor bar Coast from
subsequent exercise or partial exercise of any other rights or remedies. The
failure or delay of Coast to exercise copy 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.
7. POWER OF ATTORNEY.
Borrower grants to Coast an irrevocable power of attorney coupled with
an interest, authorizing and permitting Coast 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: (a) Execute on
behalf of Borrower any documents that Coast may, in its sole and absolute
discretion, deem advisable in order to perfect, maintain or improve Coast's
security interest in the Collateral or other real or personal property intended
to constitute Collateral, or in order to exercise a right of Borrower or Coast,
or in order to fully consummate all the transactions contemplated under this
Loan Agreement, any Collateral Agreement and all other present and future
agreements; (b) At any time after the occurrence of an Event of Default, to
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 Coast's Collateral or in
which Coast has an interest; (c) Execute on behalf of Borrower, any invoices
relating to any Account, 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) subject to the terms of this
Agreement and Collateral Agreements 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 Coast's possession; (e) Upon the occurrence of any Event of
Default, to receive and open all mail addressed to Borrower; (f) Endorse all
checks and other forms of remittances received by Coast "Pay to the Order of
Coast Business Credit Corporation," or in such other manner as Coast may
designate; (g) after an Event of Default Pay, contest or settle any lien,
charge, encumbrance, security interest and adverse claim to any of the
Collateral, or any judgment based on, or otherwise take any action to terminate
or discharge the same; (h) after an Event of Default Grant extensions of time to
pay, compromise claims and settle Accounts and the like for less than face value
and execute all releases and other documents in connection therewith; (i) Pay
any sums required on account of Borrower's taxes or to secure the release of any
liens therefor, or both; (j) Settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain payment
therefor; (k) Instruct any third party having custody or control of any books or
records belonging to, or relating to, Borrower to give Coast the same rights of
access and other rights with respect thereto as Coast has under Paragraph 4.3 of
this Loan Agreement; and (l) Take any action or pay any sum required of Borrower
pursuant to this Loan Agreement, any Collateral Agreement and any other present
or future agreements. Any and all sums paid and any and all costs, expenses,
liabilities, obligations and attorneys' fees incurred by Coast 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.
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In no event shall Coast's rights under the foregoing power of attorney or any of
Coast's other rights under this Loan Agreement or any Collateral Agreement be
deemed to indicate that Coast is in control of the business, management or
properties of Borrower.
8. TERMINATION.
This Loan Agreement and all Collateral Agreement(s) shall continue in
effect until June 19, 1998 (the "initial renewal date") and shall thereafter
automatically and continuously renew for successive additional terms of one
year(s) each unless terminated as to future transactions as hereinafter provided
so long as Borrower pays a renewal fee of 0.5% of the Maximum Dollar Amount to
Coast prior to the initial renewal date and thereafter each subsequent
anniversary thereof. (The initial renewal date and each subsequent date on which
the terms of this Loan Agreement and the Collateral Agreement(s) automatically
renew are hereinafter referred to as "renewal dates.") This Loan Agreement and
any Collateral Agreement may be terminated, as to future transactions only, as
follows: (a) By written notice from either Coast or Borrower to the other, not
less than one hundred twenty (120) days prior to the next renewal date, in which
event termination shall be effective on the next renewal date; or (b) By Coast
at any time after the occurrence of an Event of Default, without notice, in
which event termination shall be effective immediately; or (c) By one hundred
twenty (120) days' prior written notice from Borrower to Coast, in which event,
termination shall be effective on the sixtieth day after such notice is given;
or (d) By the grant by Borrower to any third party of a lien or encumbrance on,
or security interest in, any of the Collateral, as provided in Paragraph 3.5, in
which event termination shall be effective on the date selected by Coast
pursuant to Paragraph 3.5. On the effective date of termination, Borrower shall
pay and perform in fill 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. If Borrower attempts to terminate this Loan
Agreement under subparagraph (a) or (c) above, but does not pay and perform all
Obligations in full on the effective date of termination, then this Loan
Agreement and all Collateral Agreement(s) shall not be terminated and shall
continue in full force and effect until the next renewal date and shall
automatically renew thereafter as provided above. If termination occurs under
subparagraph (b), (c) or (d) above, Borrower shall pay to Coast a termination
fee in an amount equal to ** two percent of the Maximum Dollar Amount as defined
in Section 1.1 hereof. Said termination fee shall be included in the
Obligations, shall be payable on the effective date of termination, and shall
bear interest at a rate equal to the highest interest rate applicable to any of
the Obligations. Notwithstanding any termination of this Loan Agreement or any
Collateral Agreement, all of Coast's security interest in all of the Collateral
and all of the terms and provisions of this Loan Agreement and all Collateral
Agreement(s) shall continue in full force and effect until all Obligations have
been paid and performed in full, and no termination shall in any way affect or
impair any right or remedy of Coast, nor shall any such termination relieve
Borrower of any Obligation to Coast until all of the Obligations have been paid
and performed in full. Without limiting the fact that all Loans are
discretionary on the part of Coast, Coast may, in its sole discretion, refuse to
make any further Loans after termination. Upon payment and performance in full
of all the Obligations, Coast shall promptly deliver to Borrower termination
statements, request for reconveyances and such other documents as may be
required to fully terminate any of Coast's security interests. Notwithstanding
the foregoing,
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Borrower may not terminate this Agreement under subparagraph (a), (c) or (d)
above, unless Borrower also concurrently terminates the Non-CEFO Agreement.
9. NOTICES.
All notices to be given hereunder shall be in writing and shall be
served either personally or by Federal Express or other recognized private
delivery service ("Private Delivery") or by depositing the same in the United
States mail, postage prepaid, by regular first-class mail, or by certified mail,
return receipt requested, addressed to Coast or Borrower at the addresses shown
above, or at any other address as shall be designated by one party in a written
notice to the other party. Any such notice shall be deemed to have been given
upon delivery in the case of notices personally delivered to Borrower or to an
officer of Coast, or at the expiration of one (1) business day after the date
sent by Private Delivery, or at the expiration of three (3) business days
following the deposit thereof in the United States mail, with postage prepaid
(except that any notice of disposition referred to in Paragraph 6.3 hereof that
is mailed shall be deemed given at the time of deposit thereof in the United
States mail, with postage prepaid). If there is more than one Borrower, notice
to any Borrower shall constitute notice to all; if Borrower is a corporation,
the service upon any member of the Board of Directors, officer, employee or
agent shall constitute service upon the corporation.
10. GENERAL WAIVERS.
The failure of Coast at any time or times hereafter to require Borrower
to strictly comply with any of the provisions of this Loan Agreement or any
Collateral Agreement or any other present or future agreement between Borrower
and Coast shall not waive or diminish any right of Coast there were to demand
and receive strict compliance therewith. Any waiver of any default shall not
waive or affect any other default, whether prior or subsequent thereto. None of
the provisions of this Loan Agreement or any Collateral Agreement or other
agreement now or hereafter executed by Borrower and delivered to Coast shall be
deemed to have been waived by any act or knowledge of Coast or its agents or
employees, but only by a specific written waiver signed by an officer of Coast
and delivered to Borrower. Borrower waives the benefit of all statute(s) of
limitations in any action or proceeding based upon or arising out of this Loan
Agreement or any Collateral Agreement or any other present or future instrument
or agreement between Coast and Borrower. Borrower waives any and all notices or
demands which Borrower might be entitled to receive with respect to this Loan
Agreement, any Collateral Agreement, or any other agreement by virtue of any
applicable law. Borrower hereby 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 Coast on which Borrower is or may in any way be liable, and notice of any
action taken by Coast unless expressly required by this Loan Agreement or any
Collateral Agreement. Borrower hereby ratifies and confirms whatever Coast may
do in a commercially reasonable manner pursuant to this Loan Agreement and any
Collateral Agreement and agrees that Coast shall not be liable for (a) the
safekeeping of the Collateral or any loss or damage thereto, or diminution in
value thereof, from any cause whatsoever unless any damage thereto is caused by
Coast's gross negligence or willful
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misconduct, or (b) any act or omission of any carrier, warehouseman, bailee,
forwarding agent or other person, or (c) any act of commission or any omission
by Coast or its officers, employees, agents, or attorneys, or any of its or
their errors of judgment or mistakes of fact or law except for Coast's gross
negligence or willful misconduct.
11. ATTACHMENT WAIVERS.
To the extent that Coast, in its sole and absolute discretion,
determines, prior to the disposition of all of the Collateral, that the amount
to be realized by Coast for the disposition of all of the Collateral may be less
than amount of the Obligations, and to the full extent of any such anticipated
deficiency, Borrower waives the of Section 483.010(b) of the California Code of
Civil Procedure and of any and all other statutes requiring Coast to first
resort to and exhaust all of the Collateral before seeking or obtaining any
attachment remedy against Borrower, and Borrower expressly agrees that, to the
extent of such anticipated deficiency, Coast shall have of the rights of an
unsecured creditor, including, but are limited to, the right of Coast, prior to
the disposition of the Collateral, to obtain a temporary protective for and writ
of attachment or other available remedy. Company shall have no liability to
Borrower if the actual deficiency realized by Coast is less than the anticipated
deficiency of the basis of which Coast obtained a temporary protective order or
writ of attachment In the event Coast should seek a temporary protective order,
or writ of attachment or both, Borrower hereby irrevocably waives any bond at
any surety or security relating thereto required by at statute, court rule or
otherwise as an incident or condition precedent to the issuance of any temporary
protection order or writ of attachment.
12. ATTORNEYS' FEES AND COSTS.
Borrower shall forthwith pay to Coast the amount of all reasonable
attorneys' fees and all filing, recording publication, search and other costs
incurred by Coast pursuant to this Loan Agreement, any Collateral Agreement or
any other present or future agreement or connection with any transaction
contemplated hereby, Coast with respect to the Collateral or the defense o
enforcement of its interests (whether or not Coast files lawsuit against
Borrower). Without limiting the generality of the foregoing, Borrower shall,
with respect to each and all of the foregoing, pay all attorneys' fees and costs
Coast incurs in order to: obtain legal advice; enforce, or seek to enforce, any
of its rights; prosecute actions against, or defend actions by, Account debtors;
commence, intervene in, respond to, or defend any action or proceeding; initiate
any complaint to be relieved of the effect of the automatic stay in bankruptcy
in order to commence or continue a foreclosure or other disposition of the
Collateral or to commence, defend or continue any action or other proceeding in
or out of bankruptcy against Borrower or relating to the Collateral; file or
prosecute a claim or right in any action or proceeding, including, but not
limited to, any probate claim, bankruptcy claim, third-party claim, secured
creditor claim or reclamation complaint; examine, audit, count, test, copy, or
otherwise inspect any of the Collateral or any of Borrower's books and records;
or protect, obtain possession of, lease, dispose of, or otherwise enforce any
security interest in or lien on, the Collateral or represent Coast in any
litigation with respect to Borrower's affairs. If either Coast or Borrower files
any lawsuit against the other predicated on a breach of this Loan Agreement or
any Collateral Agreement, the prevailing party in such action shall be entitled
to recover its costs and attorneys'
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fees, including, but not limited to, 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 Coast 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.
13. DESTRUCTION OF BORROWER'S DOCUMENTS; LIMITATION OF ACTIONS.
Any documents, schedules, invoices or other papers delivered to Coast
may be destroyed or otherwise disposed of by Coast six (6) months after they are
delivered to Coast unless Borrower makes written request therefor and pays all
expenses attendant to their return, in which event, Coast shall return same when
Coast's actual or anticipated need therefor has terminated. Borrower agrees that
any claim or cause of action by Borrower against Coast, its directors, officers,
employees, agents, accountants or attorneys, based upon, arising from, or
relating to this Loan Agreement, or any Collateral Agreement, or any other
present or future 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 Coast, its
directors, officers, employees, agents, accountants or attorneys, relating in
any way to Borrower, shall be banned unless asserted by Borrower by the delivery
of a specific written claim setting forth in reasonably specific detail the
Borrower's claim or cause of action within one year after the first act,
occurrence or omission upon which such claim or cause of action, or any part
thereof, is based. Borrower agrees that such one-year period of time is a
reasonable and sufficient time for Borrower to investigate and act upon any such
claim or cause of action. The six-month period provided herein shall not be
waived, tolled, or extended except by the written concept of Coast in its sole
and absolute discretion. This provision shall survive any termination, however
arising, of this Loan Agreement, any Collateral Agreement, and any other present
or future agreement.
14. GENERAL PROVISIONS.
14.1 SEVERABILITY. Should any provision, clause or condition of this
Loan Agreement or any Collateral Agreement be held by any court of competent
jurisdiction to be void or unenforceable, such defect shall not affect the
remainder of this Loan Agreement or any Collateral Agreement.
14.2 INTERVENTION. This Loan Agreement and any Collateral Agreements
and such other agreements, documents and instruments as may be executed in
connection herewith shall be construed as the entire and complete agreement
between Borrower and Coast and shall supersede all prior negotiations, all of
which are merged and integrated herein.
14.3 AMENDMENT. The terms and provisions of this Loan Agreement and any
Collateral Agreement may not be waived or amended except in a writing executed
by Borrower and a duly authorized officer of Coast.
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14.4 TUNE OF ESSENCE. Time is of the essence in the performance by
Borrower of each and every obligation under this Loan Agreement and any
Collateral Agreement.
14.5 BENEFICIAL OF AGREEMENT. The provisions of this Loan Agreement and
any Collateral Agreement shall be binding upon and inure to the benefit of the
respective successors, assigns, heirs, beneficiaries and representatives of the
patties hereto; provided, however, that Borrower may not assign or transfer any
of its rights under this Loan Agreement or any Collateral Agreement without the
prior written consent of Coast, and any prohibited assignment shall be void. No
consent by Coast to any assignment shall relieve Borrower or any guarantor from
its liability for the Obligations.
14.6 JOINT AND SEVERAL LIABILITY. The liability of each Borrower 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.
14.7 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are used
herein for convenience only. Borrower acknowledges that the same may not
describe completely the subject matter of the applicable paragraph, and the same
shall not be used in any manner to construe, limit, define or interpret any term
or provision hereof. This Loan Agreement and the Collateral Agreements have been
fully reviewed and negotiated between the parties and no uncertainty or
ambiguity in any term or provision of this Loan Agreement or any Collateral
Agreement shall be construed strictly against Coast or Borrower under any rule
of construction or otherwise.
14.8 GOVERNING LAW; JURISDICTION; VENUE. This Loan Agreement and any
Collateral Agreement and all acts and transactions hereunder and all rights and
obligations of Coast and Borrower shall be governed by and in accordance with
the laws of the State of California. Any undefined term used in this Loan
Agreement or in any Collateral Agreement that is defined in the California
Uniform Commercial Code shall have the meaning therein assigned to that term. As
a material part of the consideration to Coast to enter into this Agreement,
Borrower (i) agrees that all actions and proceedings relating directly or
indirectly hereto shall, at Coast's option, be litigated in courts located
within California, and that the exclusive venue therefor shall be Los Angeles
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.
14.9 EXECUTION BY COAST. This Loan Agreement and any Collateral
Agreement which has been executed and delivered by Borrower to Coast shall not
become effective unless and until executed by a duly authorized officer of
Coast.
14.10 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND COAST EACH HEREBY WHILE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO, LOAN AGREEMENT OR ANY COLLATERAL AGREEMENT OR ANY
OTHER PRESENT OR FUTURE
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INSTRUMENT OR AGREEMENT BETWEEN COAST AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF COAST OR BORROWER ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH COAST OR BORROWER.
14.11 CONFIDENTIALITY. Coast covenants and agrees, on a continuing
basis, to use reasonable efforts in no event less than the same degree of care
that it exercises with respect to its own proprietary information of the same
types) to maintain the confidentiality of and not to disclose to any person
other than its officers, directors, attorneys and accountants and affiliates,
and such other persons to whom Coast shall at any time be required to make such
disclosure in accordance with applicable law, any Coast Business Credit Loan and
Security Agreement and all proprietary, trade secret or confidential information
provided to or received by Coast from or on account of Borrower or any affiliate
of Borrower, including business plans and forecasts, non-public financial
information, confidential or secret processes, formulae, devices or contractual
information, customer lists, employee relation matters, and any other
information the disclosure of which could reasonably be expected to have a
material adverse impact on the business, finances or operations of Borrower or
its affiliates, provided however the foregoing provisions shall not be effective
regarding the disposition of Collateral after an Event of Default.
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BORROWER:
CATALYST SEMICONDUCTOR, INC.,
A DELAWARE CORPORATION
By /s/ C. Xxxxxxx Xxxxxx
-------------------------------------------
President
By /s/ Xxxxx X. Xxxxxxxx
-------------------------------------------
Assistant Secretary
COAST:
COAST BUSINESS CREDIT, a division of
Southern Pacific Thrift and Loan
Association, a California corporation
By /s/ Xxxx X. Xxxxxxx
-------------------------------------------
Title Vice President
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SCHEDULE TO LOAN AND SECURITY AGREEMENT
PRIOR NAMES (SECTION 3.3):
None
FICTITIOUS NAMES, TRADE NAMES, TRADE STYLES (SECTION 3.3):
CAT FLASH
OTHER ADDRESSES (SECTION 3.4):
SEE LIST ATTACHED TO NON-CEFO AGREEMENT
REPORTS (SECTION 4.2):
Borrower shall provide Coast with the following:
(1) Monthly Receivable agings, aged by invoice date, within ten (10)
days after the end of each month.
(2) Monthly accounts payable agings, aged by invoice date, and
outstanding or held check registers within ten (10) days after the end of each
month.
(3) Monthly perpetual inventory reports for the Inventory valued on a
first-in, first 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 Coast, all within ten (10) days after the end of each
month.
(4) Monthly internally prepared financial statements, as soon as
available, and in any event within thirty (30) days after the end of each month.
(5) Quarterly internally prepared financial statements (10Qs), as soon
as available, and in any event within forty-five (45) days after the end of each
fiscal quarter of Borrower.
(6) Quarterly customer lists, including customer name, address, and
phone number.
(7) Annual financial statements (l0Ks) as soon as available, and in any
event within ninety (90) days following the end of Borrower's fiscal year,
certified by independent certified public accountants acceptable to Coast.
24
CATALYST SEMICONDUCTOR, INC.
HEADQUARTERS
0000 Xxxxxxxx Xxxxxx XX 000-000-0000
Xxxxxxxxx, XX 00000 FX 000-000-0000
SUBSIDIARY AND BRANCH OFFICE LISTING:
EASTERN US SALES XXXXXX
000/Xxxx X Xxxxx Xxxxx XX
Xxxxxx, XX 00000 FX
EASTERN US SALES XXXXXX
0000 Xxxxxxx Xxxxxxxx Xxxx, Xxxxx 000 XX
Xxxxxxxxxx, XX 00000 FX
XXXXXX XXXXX XXXXXX
0X, Xx 000, Xxx 0 XX 011-886-2-345-6192
Kee-Lung Road FX 011-886-2-729-9388
Taipei, Taiwan
SINGAPORE SALES OFFICE
Xxx 000, #B1-1635 PH 011-65-385-8568
Hougang Ave 8 FX 000-00-000-0000
Xxxxxxxxx 000000
EUROPEAN SALES OFFICE
The Quorem, Xxxx 0000 XX 000-00-0000-000-000
Xxxxxx Xxxxxxxx Xxxx FX 011-44-1865-481-511
Xxxxxx 0X0 0XX
Xxxxxxx
NIPPON CATALYST K.K. - JAPANESE SALES XXXXXX
0xx Xx, Xxxx Xxxxxx XX Xxxx XX 000-00-0-0000-0000
6-16-12, Honcho FX 000-00-0-0000-0000
Xxxxxx-xx, Xxxxx 000
Xxxxx
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In addition, the Company ships its inventory to subcontractor facilities
throughout the world, primarily as indicated below:
VOSHIKAWA SEMICONDUCTOR
0000-0, Xxxxxxxxx
Xxxxxxxx-Xxx, Xxxx-xxx
Xxxxxxxx, Xxxxx
HANA SEMICONDUCTOR (BKK) CO., LTD.
00/0 Xxx 0, Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxx-Xxxxxxx Xxxx, Xxxxx
Xxxxxxx 00000 Xxxxxxxx
NS ELECTRONICS BANGKOK (1993) LTD.
00/00 Xxxxxxxxx Xxxx, Soi Lasalle 000
Xxxxxx, Xxxxxxxxx
Xxxxxxx 00000 Xxxxxxxx
TRIO-TECH (BANGKOK) CO., LTD.
000 Xxxxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxx
Xxxxxxx 00000 Thailand
GATEWAY ELECTRONICS CORPORATION
Philippines-To be provided.
ANAM INDUSTRIAL CO., LTD.
280-8, 2-ga, Xxxxxx-xxxx
Xxxxxxxx-xx, Xxxxx, 000-000
Xxxxx
EXPEDITORS INTERNATIONAL
San Francisco, CA-To be provided.
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