CREDIT AGREEMENT by and between SOUTHWALL TECHNOLOGIES INC., a Delaware corporation and WELLS FARGO HSBC TRADE BANK, N.A Dated as of May 30, 2006
by
and
between
SOUTHWALL
TECHNOLOGIES INC., a Delaware corporation
and
XXXXX
FARGO HSBC TRADE BANK, N.A
Dated
as
of
May
30,
2006
Exhibit
A
- Addendum to Credit Agreement
Exhibit
B
- Revolving Credit Facility Supplement
Exhibit
C
- Collateral/Credit Support Document
|
XXXXX
FARGO HSBC TRADE BANK
|
SOUTHWALL
TECHNOLOGIES INC., a Delaware corporation ("Borrower"),
organized under the laws of the State of Delaware
whose chief executive office is located at the address specified after its
signature to this Agreement ("Borrower's
Address") and XXXXX
FARGO HSBC TRADE BANK, N.A. ("Trade
Bank"), whose address is specified after its
signature to this Agreement, have entered into this CREDIT
AGREEMENT as
of May
30, 2006,
2006
("Effective Date"). All references to this "Agreement" include those covenants
included in the Addendum to Agreement
("Addendum") attached as Exhibit A hereto.
I.
CREDIT
FACILITY
1.1 The
Facility. Subject
to the terms and conditions of this Agreement, Trade Bank will make available
to
Borrower
a Revolving Credit Facility ("Facility") for which a Facility Supplement
("Supplement") is attached as Exhibit B hereto.
Additional terms for the Facility are set forth in the Supplement. The Facility
will be available from the Closing Date up to and until May 31, 2007 ("Facility
Termination Date"). Collateral and credit support required for the Facility
is
set forth in Exhibit C hereto. Definitions for those capitalized terms not
otherwise defined are contained in Article 8 below.
1.2 Credit
Extension Limit. The
aggregate outstanding amount of all Credit Extensions may at no time exceed
Three
Million Dollars ($3,000,000) ("Overall Credit Limit"). The aggregate outstanding
amount of all Credit Extensions outstanding
at any time under Revolving Credit Facility may not exceed that amount specified
as the "Credit Limit" in the Supplement for the Facility. An amount equal
to
100% of each unfunded Credit Extension shall be used in calculating the
outstanding
amount of Credit Extensions under this Agreement.
1.3 Overadvance. All
Credit Extensions made hereunder shall be added to and deemed part of the
Obligations when
made. If, at anytime and for any reason, the aggregate outstanding amount
of all
Credit Extensions made pursuant to
this
Agreement exceeds the dollar limitation in Section 1.2, then Borrower shall
immediately pay to Trade Bank on demand,
in cash, the amount of such excess.
1.4 Repayment;
Interest and Fees. Each
funded Credit Extension shall be repaid by Borrower, and shall bear interest
from the date of disbursement at those per annum rates and such interest
shall
be paid, at the times specified in the
Supplement, Note or Facility Document. Borrower agrees to pay to Trade Bank
with
respect to the Revolving Credit Facility,
interest at a per annum rate equal to (i) the Prime Rate minus 1.75% as
specified in the Note, or (ii) Xxxxx Fargo's LIBOR
Rate plus 1% as specified in the Note, and the fees specified in the Supplement
as well as those fees specified in the
relevant Facility Document(s). Interest and fees will be calculated on the
basis
of a 360 day year, actual days elapsed. Any overdue payments of principal
(and
interest to the extent permitted by law) shall bear interest at a per annum
floating rate equal to the Prime Rate plus 5%.
1.5 Prepayments. Credit
Extensions under any Facility may only be prepaid in accordance with the
terms
of the Supplement.
At the time of any prepayment (including, but not limited to, any prepayment
which is a result of the occurrence
of an Event of Default and an acceleration of the Obligations) Borrower will
pay
to Trade Bank all interest accrued
on the amount so prepaid to the date of such prepayment and all costs, expenses
and fees specified in the Loan Documents.
II.
REPRESENTATIONS
AND WARRANTIES
Borrower
represents and warrants to Trade Bank that the following representations
and
warranties are true and correct:
2.1 Legal
Status. Borrower
is duly organized and existing and in good standing under the laws of the
jurisdiction indicated
in this Agreement, and is qualified or licensed to do business in all
jurisdictions in which such qualification or licensing is required and in
which
the failure to so qualify or to be so licensed could have a material adverse
affect on Borrower.
Page
1
2.2 Authorization
and Validity. The
execution, delivery and performance of this Agreement, and all other Loan
Documents
to which Borrower is a party, have been duly and validly authorized, executed
and delivered by Borrower and constitute legal, valid and binding agreements
of
Borrower, and are enforceable against Borrower in accordance with their
respective
terms.
2.3 Borrower's
Name. The
name
of Borrower set forth at the end of this Agreement is its correct name. If
Borrower
is conducting business under a fictitious business name, Borrower is in
compliance with all laws relating to the conduct
of such business under such name.
2.4 Financial
Condition and Statements. All
financial statements of Borrower delivered to Trade Bank have been
prepared in conformity with GAAP, and completely and accurately reflect the
financial condition of Borrower (and any
consolidated Subsidiaries) at the times and for the periods stated in such
financial statements. Neither Borrower nor any
Subsidiary has any material contingent liability not reflected in the aforesaid
financial statement. Since the date of the financial
statements delivered to Trade Bank for the last fiscal period of Borrower
to end
before the Effective Date, there has
been
no material adverse change in the financial condition, business or prospects
of
Borrower. Borrower is solvent.
2.5 Litigation. Except
as
disclosed in writing to Trade Bank prior to the Effective Date, there is
no
action, claim, suit,
litigation, proceeding or investigation pending or (to best of Borrower's
knowledge) threatened by or against or affecting
Borrower or any Subsidiary in any court or before any governmental authority,
administrator or agency which may
result in (a) any material adverse change in the financial condition or business
of Borrower's, or (b) any material impairment
of the ability of Borrower to carry on its business in substantially the
same
manner as it is now being conducted.
2.6 No
Violation. The
execution, delivery, and performance by Borrower of each of the Loan Documents
do not violate any provision of any law or regulation, or contravene any
provision of the Articles of Incorporation or By-Laws of Borrower, or result
in
a breach of or constitute a default under any contract, obligation, indenture,
or other instrument to which
Borrower is a party or by which Borrower may be bound.
2.7 Income
Tax Returns. Borrower
has no knowledge of any pending assessments or adjustments of its income
tax
payable with respect to any year.
2.8
No
Subordination. There
is
no agreement, indenture, contract, or instrument to which Borrower is a party
or
by which Borrower may be bound that requires the subordination in right of
payment of any of Borrower's obligations subject
to this Agreement to any other obligation of Borrower.
2.9
ERISA. Borrower
is in compliance in all material respects with all applicable provisions
of the
Employee Retirement
Income Security Act of 1974, as amended or recodified from time to time
("ERISA"); Borrower has not violated any
provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower
(each, a "Plan"); no Reportable Event, as defined in ERISA, has occurred
and is
continuing with respect to any Plan initiated by Borrower; Borrower has met
its
minimum funding requirements under ERISA with respect to each Plan; and
each
Plan will be able to fulfill its benefit obligations as they come due in
accordance with the Plan documents and under
GAAP.
2.10 Other
Obligations. Except
as
disclosed in writing to Trade Bank prior to the Effective Date, neither
Borrower
nor any Subsidiary are in default of any obligation for borrowed money, any
purchase money obligation or any material
lease, commitment, contract, instrument or obligation.
2.11 No
Defaults. No
Event
of Default, and event which with the giving of notice or the passage of time
or
both
would constitute an Event of Default, has occurred and is
continuing.
2.12 Information
Provided to Trade Bank. The
information provided to the Trade Bank concerning Borrower's
business is true and correct.
2.13 Environmental
Matters. Except
as
disclosed by Borrower to Trade Bank in writing prior to the Effective
Date,
Borrower (as well as any Subsidiary) is each in compliance in all material
respects with all applicable Federal or state
environmental, hazardous waste, health and safety statutes, and any rules
or
regulations adopted pursuant thereto, which
govern or affect any Borrower's or any Subsidiary's operations and/or
properties, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization
Act of 1986, the Federal Resource Conservation and Recovery Act of 1976,
the
Federal Toxic Substances
Control Act and the California Health and Safety Code, as any of the same
may be
amended, modified or supplemented from time to time. None of the operations
of
Borrower or of any Subsidiary is the subject of any Federal or state
investigation evaluating whether any remedial action involving a material
expenditure is needed to respond to a release
of any toxic or hazardous waste or substance into the environment.
Page
2
III.
CONDITIONS
TO EXTENDING FACILITIES
3.1
Conditions
to Initial Credit Extension. The
obligation of Trade Bank to make the first Credit Extension is subject
to the fulfillment to Trade Bank's satisfaction of the following
conditions:
| (a) |
Approval
of Trade Bank Counsel. All
legal matters relating to making the Facility available to Borrower
must be satisfactory to counsel for Trade
Bank.
|
| (b) |
Documentation. Trade
Bank must have received, in form and substance satisfactory to
Trade
Bank,
the following documents and instruments duly executed and in full
force
and effect:
|
| (1) |
a
corporate borrowing resolution and incumbency certificate if Borrower
is a
corporation, a
partnership or joint venture borrowing certificate if Borrower
is a
partnership or joint venture,
and a limited liability company borrowing certificate if Borrower
is a
limited liability
company;
|
| (2) |
the
Facility Documents for the Facility, including, but not limited
to,
note(s) ("Notes") for the
Revolving Credit Facility, Trade Bank's standard Commercial Letter
of
Credit Agreement
or Standby Letter of Credit Agreement for any letter of credit
Facility;
|
| (3) |
those
guarantees, security agreements, deeds of trust, subordination
agreements,
intercreditor
agreements, factoring agreements, tax service contracts, and other
Collateral
Documents required by Trade Bank to evidence the collateral/credit
support
specified
in the Supplement;
|
| (4) |
if
an audit or inspection of any books, records or property is specified
in
the Supplement for
the Facility, an audit or inspection report from Xxxxx Fargo or
another
auditor or inspector
acceptable to Trade Bank reflecting values and property conditions
satisfactory to Trade Bank; and
|
| (5) |
if
insurance is required in the Addendum, the insurance policies specified
in
the Addendum
(or other satisfactory proof thereof) from insurers acceptable
to Trade
Bank.
|
3.2
Conditions
to Making Each Credit Extension. The
obligation of Trade Bank to make each Credit Extension is subject to the
fulfillment to Trade Bank's satisfaction of the following
conditions:
| (a) |
Representations
and Warranties. The
representations and warranties contained in this Agreement,
the Facility Documents and the Collateral Documents will be true
and
correct on and as
of the date of the Credit Extension with the same effect as though
such
representations and warranties
had been made on and as of such
date;
|
| (b) |
Documentation. Trade
Bank must have received, in form and substance satisfactory to
Trade
Bank,
the following documents and instruments duly executed and in full
force
and effect:
|
| (1) |
if
the Credit Extension is the issuance of a Commercial Letter of
Credit,
Trade Bank's standard
Application For Commercial Letter of Credit or standard Application
and
Agreement
For Commercial Letter of Credit;
|
Page
3
| (2) |
if
the Credit Extension is the issuance of a Standby Letter of Credit,
Trade
Bank's standard
Application For Standby Letter of Credit or standard Application
and
Agreement For
Standby Letter of Credit;
|
| (3) |
if
a Borrowing Base Certificate is required for the Credit Extension,
a
Borrowing Base Certificate
demonstrating compliance with the requirements for such Credit
Extension.
|
| (c) |
Fees.
Trade Bank must have received any fees required by the Loan Documents
to
be paid at the
time such Credit Extension is made.
|
IV.
AFFIRMATIVE
COVENANTS
Borrower
covenants that so long as Trade Bank remains committed to make Credit Extensions
to Borrower, and until payment of all Obligations and Credit Extensions,
Borrower will comply with each of the following covenants: (For purposes
of this
Article IV, and Article V below, reference to "Borrower" may also extend
to
Borrower's subsidiaries, if so specified
in the Addendum.)
4.1 Punctual
Payments. Punctually
pay all principal, interest, fees and other Obligations due under this
Agreement
or under any Loan Document at the time and place and in the manner specified
herein or therein.
4.2 Notification
to Trade Bank. Promptly,
but in no event more than 5 calendar days after the occurrence of each
such
event, provide written notice in reasonable detail of each of the
following:
| (a) |
Occurrence
of a Default. The
occurrence of any Event of Default or any event which with the
giving
of notice or the passage of time or both would constitute an Event
of
Default;
|
| (b) |
Borrower's
Trade Names; Place of Business. Any
change of Borrower's (or any Subsidiary's) name,
trade name or place of business, or chief executive
officer;
|
| (c) |
Litigation. Any
action, claim, proceeding, litigation or investigation threatened
or
instituted by or against
or affecting Borrower (or any Subsidiary) in any court or before
any
government authority, administrator
or agency which may materially and adversely affect Borrower's
(or any
Subsidiary's)
financial condition or business or Borrower's ability to carry
on its
business in substantially
the same manner as it is now being
conducted;
|
| (d) |
Uninsured
or Partially Uninsured Loss. Any
uninsured or partially uninsured loss through liability
or property damage or through fire, theft or any other cause affecting
Borrower's (or any Subsidiary's)
property in excess of the aggregate amount required
hereunder;
|
| (e) |
Reports
Made to Insurance Companies. Copies
of all material reports made to insurance companies;
and
|
| (f) |
ERISA. The
occurrence and nature of any Reportable Event or Prohibited Transaction,
each as defined
in ERISA, or any funding deficiency with respect to any
Plan.
|
4.3 Books
and Records. Maintain
at Borrower's address books and records in accordance with GAAP, and
permit
any representative of Trade Bank, at any reasonable time, to inspect, audit
and
examine such books and records, to make copies of them, and to inspect the
properties of Borrower.
4.4 Tax
Returns and Payments. Timely
file all tax returns and reports required by foreign, federal state and local
law, and timely pay all foreign, federal, state and local taxes, assessments,
deposits and contributions 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 instituted and diligently conducted, (ii)
notifies Trade
Bank in writing of the commencement of, and any material development in,
the
proceedings, (iii) posts bonds or takes
any
other steps required to keep the contested taxes from becoming a lien upon
any
of the Collateral, and (iv)
makes provision, to Trade Bank's satisfaction, for eventual payment of such
taxes in the event Borrower is obligated to make
such
payment.
Page
4
4.5 Compliance
with Laws. Comply
in
all material respects with the 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 health and environmental
matters.
4.6 Taxes
and Other Liabilities. Pay
and
discharge when due any and all indebtedness, obligations, assessments
and taxes, both real and personal, including without limitation federal and
state income taxes and state and local
property taxes and assessments, except (a) such as Borrower may in good faith
contest or as to which a bona fide dispute
may arise, and (b) for which Borrower has made provision, to Trade Bank's
satisfaction, for eventual payment thereof
in the event that Borrower is obligated to make such payment.
4.7 Insurance. Maintain
and keep in force insurance of the types and in amounts customarily carried
in
lines of business similar to that of Borrower, including, but not limited
to,
fire, extended coverage, public liability, flood, property damage
and workers' compensation, with all such insurance to be in amounts satisfactory
to Trade Bank and to be carried with
companies approved by Trade Bank before such companies are retained, and
deliver
to Trade Bank from time to time
at
Trade Bank's request schedules setting forth all insurance then in effect.
All
insurance policies shall name Trade Bank as an additional loss payee, and
shall
contain a lenders loss payee endorsement in form reasonably acceptable to
Trade
Bank. (Upon receipt of the proceeds of any such insurance, Trade Bank shall
apply such proceeds in reduction of the
outstanding funded Credit Extensions and shall hold any remaining proceeds
as
collateral for the outstanding unfunded
Credit Extensions, as Trade Bank shall determine in its sole discretion,
except
that, provided no Event of Default
has occurred, Trade Bank 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, if Trade Bank receives reasonable assurance that the
insurance proceeds so released will be
so
used.) If Borrower fails to provide or pay for any insurance, Trade Bank
may,
but is not obligated to, obtain the insurance
at Borrower's expense.
4.8 Further
Assurances. At
Trade
Bank's request and in form and substance satisfactory to Trade Bank,
execute
all documents and take all such actions at Borrower's expense as Trade Bank
may
deem reasonably necessary or
useful
to perfect and maintain Trade Bank's perfected security interest in the
Collateral and in order to fully consummate
all of the transactions contemplated by the Loan Documents.
V.
NEGATIVE
COVENANTS
Borrower
covenants that so long as Trade Bank remains committed to make any Credit
Extensions to Borrower and
until
all Obligations and Credit Extensions have been paid, Borrower will
not:
5.1 Merge
or Consolidation, Transfer of Assets. Merge
into or consolidate with any other entity; make any substantial
change in the nature of Borrower's business as conducted as of the date hereof;
acquire all or substantially all of
the
assets of any other entity with the exception that Borrower may acquire all
or
substantially all of the assets of any other
entity up to an amount of $3,000,000; nor sell, lease, transfer or otherwise
dispose of all or a substantial or material portion of Borrower's assets
except
in the ordinary course of its business.
5.2 Use
of Proceeds. Borrower
will not use the proceeds of any Credit Extension except for the purposes,
if
any, specified for such Credit Extension in the Supplement covering the Facility
under which such Credit Extension is made.
VI.
EVENTS
OF DEFAULT AND REMEDIES
6.1
Events
of Default. The
occurrence of any of the following shall constitute an "Event of
Default":
| (a) |
Failure
to Make Payments When Due. Borrower's
failure to pay principal, interest, fees or other amounts when
due under
any Loan Document.
|
Page
5
|
(b)
|
Failure
to Perform Obligations. Any
failure by Borrower to comply with any covenant or obligation
in this Agreement or in any Loan Document (other than those referred
to in
subsection (a)above),
and such default shall continue for a period of twenty calendar
days from
the earlier of (i)
Borrower's failure to notify Trade Bank of such Event of Default
pursuant
to Section 4.2(a) above,
or (ii) Trade Bank's notice to Borrower of such Event of
Default.
|
|
(c)
|
Untrue
or Misleading Warranty or Statement. Any
warranty, representation, financial statement,
report or certificate made or delivered by Borrower under any
Loan
Document is untrue
or misleading in any material respect when made or
delivered.
|
|
(d)
|
Defaults
Under Other Loan Documents. Any
"Event of Default" occurs under any other Loan Document;
any Guaranty is no longer in full force and effect (or any claim
thereof
made by Guarantor)
or any failure of a Guarantor to comply with the provisions thereof;
or
any breach of the
provisions of any Subordination Agreement or Intercreditor Agreement
by
any party other than
the Trade Bank.
|
|
(e)
|
Defaults
Under Other Agreements or Instruments. Any
default in the payment or performance of
any obligation, or the occurrence of any event of default, under
the terms
of any other agreement
or instrument pursuant to which Borrower, any Subsidiary or any
Guarantor
or general partner of Borrower has incurred any debt or other
material
liability to any person or entity.
|
|
(f)
|
Concealing
or Transferring Property. Borrower
conceals, removes or transfers any part of its property
with intent to hinder, delay or defraud its creditors, or makes
or suffers
any transfer of any
of its property which may be fraudulent under any bankruptcy,
fraudulent
conveyance or similar
law.
|
|
(g)
|
Judgments
and Levies Against Borrower. The
filing of a notice of judgment lien against Borrower,
or the recording of any abstract of judgment against Borrower,
in any
county in which Borrower
has an interest in real property, or the service of a notice
of levy
and/or of a writ of attachment
or execution, or other like process, against the assets of Borrower,
or
the entry of a judgment
against Borrower.
|
|
(h)
|
Event
or Condition Impairing Payment or Performance. Any
event occurs or condition arises which
Trade Bank in good faith believes impairs or is substantially
likely to
impair the prospect of payment or performance by Borrower of
the
Obligations, including, but not limited to any material adverse
change in
Borrower's financial condition, business or
prospects.
|
|
(i)
|
Voluntary
Insolvency. Borrower,
any Subsidiary or any Guarantor (i) becomes insolvent, (ii)
suffers or consents to or applies for the appointment of a receiver,
trustee, custodian or liquidator
of itself or any of its property, (iii) generally fails to pay
its debts
as they become due, (iv)
makes a general assignment for the benefit of creditors, or (v)
files a
voluntary petition in bankruptcy, or seeks reorganization, in
order to
effect a plan or other arrangement with creditors or
any other relief under the Bankruptcy Reform Act, Title 11 of
the United
States Code, as amended
or recodified from time to time ("Bankruptcy Code"), or under
any state or
Federal law granting relief to debtors, whether now or hereafter
in
effect.
|
|
(j)
|
Involuntary
Insolvency. Any
involuntary petition or proceeding pursuant to the Bankruptcy
Code
or
any other applicable state or federal law relating to bankruptcy,
reorganization or other relief for debtors
is filed or commenced against Borrower, any Subsidiary or Guarantor,
or an
order for relief is entered against it by any court of competent
jurisdiction under the Bankruptcy Code or any
other applicable state or federal law relating to bankruptcy,
reorganization or other relief for debtors.
|
Page
6
VII.
GENERAL
PROVISIONS
7.1 Notices. All
notices to be given under this Agreement shall be in writing and shall be
given
personally or by regular
first-class mail, by certified mail return receipt requested, by a private
delivery service which obtains a signed receipt,
or by facsimile transmission addressed to Trade Bank or Borrower at the address
indicated after their signature to this
Agreement, or at any other address designated in writing by one party to
the
other party. Trade Bank is hereby authorized
by Borrower to act on such instructions or notices sent by facsimile
transmission or telecommunications device which
Trade Bank believes come from Borrower. All notices shall be deemed to have
been
given upon delivery, in the case
of
notices personally delivered or delivered by private delivery service, upon
the
expiration of 3 calendar days following
the deposit of the notices in the United States mail, in the case of notices
deposited in the United States mail with
postage prepaid, or upon receipt, in the case of notices sent by facsimile
transmission.
7.2 Waivers. No
delay
or failure of Trade Bank in exercising any right, power or remedy under any
of
the Loan Documents
shall affect or operate as a waiver of such right, power or remedy; nor shall
any single or partial exercise of any such right, power or remedy preclude,
waive or otherwise affect any other or further exercise thereof or the exercise
of any other right, power or remedy. Any waiver, consent or approval by Trade
Bank under any of the Loan Documents must
be
in writing and shall be effective only to the extent set out in such
writing.
7.3 Benefit
of Agreement. The
provisions of the Loan Documents shall be binding upon and inure to the benefit
of
the
respective successors, assigns, heirs, executors, administrators, beneficiaries
and legal representatives of Borrower
and Trade Bank; provided, however, that Borrower may not assign or transfer
any
of its rights under any Loan Document without the prior written consent of
Trade
Bank, and any prohibited assignment shall be void. No consent by Trade
Bank to any assignment shall release Borrower from its liability for the
Obligations unless such release is specifically
given by Trade Bank to Borrower in writing. Trade Bank reserves the right
to
sell, assign, transfer, negotiate or grant
participations in all or any part of, or any interest in, Trade Bank's rights
and benefits under each of the Loan Documents.
In connection therewith, Trade Bank may disclose any information relating
to the
Facility, Borrower or its business,
or any Guarantor or its business.
7.4 Joint
and Several Liability. If
Borrower consists of more than one person or entity, the liability of each
of
them
shall be joint and several, and the compromise of any claim with, or the
release
of, any one such Borrower shall not constitute a compromise with, or a release
of, any other such Borrower.
7.5 No
Third Party Beneficiaries. This
Agreement is made and entered into for the sole protection and benefit of
Borrower
and Trade Bank and their respective permitted successors and assigns, and
no
other person or entity shall be a third
party beneficiary of, or have any direct or indirect cause of action or claim
in
connection with, any of the Loan Documents
to which it is not a party.
7.6 Governing
Law and Jurisdiction. This
Agreement shall, unless provided differently in any Loan Document, be
governed by, and be construed in accordance with, the internal laws of the
State
of California, except to the extent Trade
Bank has greater rights or remedies under federal law whether as a national
bank
or otherwise. Borrower and Trade
Bank (a) agree that all actions and proceedings relating directly or indirectly
to this Agreement shall be litigated in courts located within California;
(b)
consent to the jurisdiction of any such court and consent to service of process
in any such
action or proceeding by personal delivery or any other method permitted by
law;
and (c) waive 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.
Page
7
7.7 Mutual
Waiver of Jury Trial. Borrower
and Trade Bank 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, (a) any
Loan
Document, (b) any other present or future
agreement, instrument or document between Trade Bank and Borrower, or (c)
any
conduct, act or omission of Trade
Bank or Borrower or any of their directors, officers, employees, agents,
attorneys or any other persons or entities affiliated
with Trade Bank or Borrower, which waiver will apply in all of the mentioned
cases whether the case is a contract or
tori
case or any other case. Borrower represents and warrants that no officer,
representative or agent of Trade Bank has
represented, expressly or otherwise, that Trade Bank would not seek to enforce
this waiver of jury trial.
7.8 Severability. Should
any provision of any Loan Document be prohibited by, or invalid under applicable
law, or held
by
any court of competent jurisdiction to be void or unenforceable, such defect
shall not affect, the validity of the other
provisions of the Loan Documents.
7.9 Entire
Agreement: Amendments. This
Agreement and the other Loan Documents are the final, entire and complete
agreement between Borrower and Trade Bank concerning the Credit Extensions
and
the Facility; supersede all prior
and
contemporaneous negotiations and oral representations and agreements. There
are
no oral understandings, representations
or agreements between the parties concerning the Credit Extensions or the
Facility which are not set forth in
the
Loan Documents. This Agreement and the Supplement may not be waived, amended
or
superseded except in a writing
executed by Borrower and Trade Bank.
7.10
Collection
of Payments. Unless
otherwise specified in any Loan Document, other than this Agreement or
any
Note, all principal, interest and any fees due to Trade Bank by Borrower
under
this Agreement, the Addendum, any Supplement, any Facility Document, any
Collateral Document or any Note, will be paid by Trade Bank having Xxxxx
Fargo
debit
any
of Borrower's accounts with Xxxxx Fargo and forwarding such amount debited
to
Trade Bank, without presentment,
protest, demand for reimbursement or payment, notice of dishonor or any other
notice whatsoever, all of which
are
hereby expressly waived by Borrower. Such debit will be made at the time
principal, interest or any fee is due to Trade
Bank pursuant to this Agreement, the Addendum, any Supplement, any Facility
Document, any Collateral Document
or any Note.
7.11
Costs.
Expenses and Attorneys' Fees. Borrower
will reimburse Trade Bank for all costs and expenses, including, but not
limited
to, reasonable attorneys' fees and expenses (which counsel may be Trade Bank
or
Xxxxx Fargo employees),
expended or incurred by Trade Bank in the preparation and negotiation of
this
Agreement, the Notes, the Collateral
Documents, the Addendum, and the Facility Documents, in amending this Agreement,
the Collateral Documents,
the Notes, the Addendum, or the Facility Documents, in collecting any sum
which
becomes due Trade Bank on
the
Notes, under this Agreement, the Collateral Documents, the Addendum, the
Supplement, or any of the Facility Documents,
in the protection, perfection, preservation and enforcement of any and all
rights of Trade Bank in connection with
this
Agreement, the Notes, any of the Collateral Documents, the Supplement, any
of
the Addendum, or any of the Facility
Documents, including, without limitation, the fees and costs incurred in
any
out-of-court work out or a bankruptcy or reorganization proceeding.
VIII.
DEFINITIONS
8.1 "Agreement"means
this Agreement and the Addendum attached hereto, as corrected or modified
from
time to time by Trade Bank and Borrower.
8.2 "Banking
Day"means
each day except Saturday, Sunday and a day specified as a holiday by federal
or
California
statute.
8.3 "Closing
Date"means
the
date on which the first Credit Extension is made.
8.4 "Collateral"means
all
property securing the Obligations.
8.5 "Collateral
Documents" means
those security agreement(s), deed(s) of trust, guarantee(s), subordination
agreement(s),
intercreditor agreement(s), and other credit support documents and instruments
required by the Trade Bank
to
effect the collateral and credit support requirements set forth in the
Supplement with respect to the Facility.
Page
8
8.6 "Credit
Extension" means
each extension of credit under the Facility (whether funded or unfunded),
including,
but not limited to, (a) the issuance of sight or usance commercial letters
of
credit or commercial letters of credit supported
by back-up letters of credit, (b) the issuance of standby letters of credit,
(c)
the issuance of shipping guarantees,
(d) the making of revolving credit working capital loans, (e) the making
of
loans against imports for letters of credit,
(f) the making of clean import loans outside letters of credit, (g) the making
of advances against export orders, (h)
the
making of advances against export letters of credit, (i) the making of advances
against outgoing collections, (j) the making of term loans, and (k) the entry
into foreign exchange contracts.
8.7 "Credit
Limit"
means,
with respect to the any Facility, the amount specified under the column labeled
"Credit Limit" in the Supplement for that related Facility.
8.8 "Dollars"
and
"$"
means
United States dollars.
8.9 "Facility
Documents" means,
with respect to the Facility, those documents specified in the Supplement
for
the Facility, and any other documents customarily required by Trade Bank
for
said Facility.
8.10 "GAAP"
means
generally accepted accounting principles, which are applicable to the
circumstances, as of
the
date of determination, set out in the opinions and pronouncements of the
Accounting Principles Board and the American
Institute of Certified Public Accountants and in the statements and
pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as may be approved
by a
significant segment of the accounting
profession.
8.11 "Loan
Documents" means
this Agreement, the Addendum, the Supplement, the Facility Documents and
the
Collateral Documents.
8.12 "Note"
has
the
meaning specified in Section 3.1(b)(2) above.
8.13 "Obligations"
means
(a)
the obligation of Borrower to pay principal, interest and fees on all funded
Credit
Extensions and fees on all unfunded Credit Extensions, and (b) the obligation
of
Borrower to pay and perform when due
all
other indebtedness, liabilities, obligations and covenants required under
the
Loan Documents.
8.14 "Person"
means
and
includes natural persons, corporations, limited partnerships, general
partnerships, joint
stock companies, joint ventures, associations, companies, trusts, banks,
trust
companies, land trusts, business trusts or other organizations, whether or
not
legal entities, and governments and agencies and political subdivisions
thereof.
8.15 "Prime
Rate"
means
the
rate most recently announced by Xxxxx Fargo at its principal office in San
Francisco,
California as its "Prime Rate", with the understanding that the Prime Rate
is
one of Xxxxx Fargo's base rates and
serves as the basis upon which effective rates of interest are calculated
for
those loans making reference thereto, and is
evidenced by the recording thereof after its announcement in such internal
publication or publications as Xxxxx Fargo may
designate. Any change in an interest rate resulting from a change in the
Prime
Rate shall become effective as of 12:01
a.m. of the Banking Day on which each change in the Prime Rate is announced
by
Xxxxx Fargo.
8.16 "Subsidiary"
means
(i)
any corporation at least the majority of whose securities having ordinary
voting
power
for
the election of directors (other than securities having such power only by
reason of the happening of a contingency)
are at the time owned by Borrower and/or one or more Subsidiaries, and (ii)
any
joint venture or partnership in which Borrower and/or one or more Subsidiaries
has a majority interest.
8.17 "Xxxxx
Fargo"
means
Xxxxx Fargo Bank, N.A.
IX.
ARBITRATION
9.1
Arbitration. The
parties hereto agree, upon demand by any party, to submit to binding arbitration
all claims,
disputes and controversies between or among them (and their respective
employees, officers, directors, attorneys, and other agents), whether in
tort,
contract or otherwise arising out of or relating to in any way (i) the loan
and
related loan and
security documents which are the subject of this Agreement and its negotiation,
execution, collateralization, administration,
repayment, modification, extension, substitution, formation, inducement,
enforcement, default or termination;
or (ii) requests for additional credit.
Page
9
9.2
Governing
Rules. Any
arbitration proceeding will (i) proceed in a location in California selected
by
the American
Arbitration Association ("AAA"); (ii) be governed by the Federal Arbitration
Act
(Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the documents
between the parties; and (iii) be conducted
by the AAA, or such other administrator as the parties shall mutually agree
upon, in accordance with the AAA's commercial dispute resolution procedures,
unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed
interest,
arbitration fees and costs in which case the arbitration shall be conducted
in
accordance with the AAA's optional procedures
for large, complex commercial disputes (the commercial dispute resolution
procedures or the optional procedures
for large, complex commercial disputes to be referred to, as applicable,
as the
"Rules"). If there is any inconsistency
between the terms hereof and the Rules, the terms and procedures set forth
herein shall control. Any party who
fails
or refuses to submit to arbitration following a demand by any other party
shall
bear all costs and expenses incurred
by such other party in compelling arbitration of any dispute. Nothing contained
herein shall be deemed to be a waiver
by
any party that is a bank of the protections afforded to it under 12 U.S.C.
§91
or any similar applicable state law.
9.3
No
Waiver of Provisional Remedies, Self-Help and
Foreclosure. The
arbitration requirement does not limit
the
right of any party to (i) foreclose against real or personal property
collateral; (ii) exercise self-help remedies relating
to collateral or proceeds of collateral such as setoff or repossession; or
(iii)
obtain provisional or ancillary remedies
such as replevin, injunctive relief, attachment or the appointment of a
receiver, before during or after the pendency
of any arbitration proceeding. This exclusion does not constitute a waiver
of
the right or obligation of any party to
submit
any dispute to arbitration or reference hereunder, including those arising
from
the exercise of the actions detailed
in sections (i), (ii) and (iii) of this paragraph.
9.4
Arbitrator
Qualifications and Powers. Any
arbitration proceeding in which the amount in controversy is $5,000,000.00
or less will be decided by a single arbitrator selected according to the
Rules,
and who shall not render an award of greater than $5,000,000.00. Any dispute
in
which the amount in controversy exceeds $5,000,000.00 shall be decided
by majority vote of a panel of three arbitrators; provided however, that
all
three arbitrators must actively participate
in all hearings and deliberations. The arbitrator will be a neutral attorney
licensed in the State of California or a neutral retired judge of the state
or
federal judiciary of California, in either case with a minimum of ten years
experience in the
substantive law applicable to the subject matter of the dispute to be
arbitrated. The arbitrator will determine whether or not an issue is
arbitratable and will give effect to the statutes of limitation in determining
any claim. In any arbitration proceeding the arbitrator will decide (by
documents only or with a hearing at the arbitrator's discretion) any pre-hearing
motions
which are similar to motions to dismiss for failure to state a claim or motions
for summary adjudication. The arbitrator
shall resolve all disputes in accordance with the substantive law of California
and may grant any remedy or relief that
a
court of such state could order or grant within the scope hereof and such
ancillary relief as is necessary to make effective
any award. The arbitrator shall also have the power to award recovery of
all
costs and fees, to impose sanctions and
to
take such other action as the arbitrator deems necessary to the same extent
a
judge could pursuant to the Federal Rules
of
Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction. The
institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including
the plaintiff, to submit the controversy or claim to arbitration if any other
party contests such action for judicial relief.
9.5
Discovery. In
any
arbitration proceeding discovery will be permitted in accordance with the
Rules
All discovery shall be expressly limited to matters directly relevant to
the
dispute being arbitrated and must be completed no later than 20 days before
the
hearing date and within 180 days of the filing of the dispute with the AAA.
Any
requests for an
extension of the discovery periods, or any discovery disputes, will be subject
to final determination by the arbitrator upon
a
showing that the request for discovery is essential for the party's presentation
and that no alternative means for obtaining
information is available.
9.6
Class
Proceedings and Consolidations. The
resolution of any dispute arising pursuant to the terms of this Agreement
shall
be determined by a separate arbitration proceeding and such dispute shall
not be
consolidated with other
disputes or included in any class proceeding.
9.7
Payment
Of Arbitration Costs And Fees. The
arbitrator shall award all costs and expenses of the arbitration
proceeding.
Page
10
9.8 Real
Property Collateral; Judicial Reference. Notwithstanding
anything herein to the contrary, no dispute
shall be submitted to arbitration if the dispute concerns indebtedness secured
directly or indirectly, in whole or in part,
by
any real property unless (i) the holder of the mortgage, lien or security
interest specifically elects in writing to proceed
with the arbitration, or (ii) all parties to the arbitration waive any rights
or
benefits that might accrue to them by virtue
of
the single action rule statute of California, thereby agreeing that all
indebtedness and obligations of the parties, and
all
mortgages, liens and security interests securing such indebtedness and
obligations, shall remain fully valid and enforceable.
If any such dispute is not submitted to arbitration, the dispute shall be
referred to a referee in accordance with
California Code of Civil Procedure Section 638 et seq., and this general
reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators
shall be selected pursuant to the AAA's selection procedures. Judgment upon
the
decision rendered by a referee shall be entered in the court in which such
proceeding was commenced in accordance with California Code of Civil
Procedure Sections 644 and 645.
9.9
Miscellaneous. To
the
maximum extent practicable, the AAA, the arbitrators and the parties shall
take
all action required to conclude any arbitration proceeding within 180 days
of
the filing of the dispute with the AAA. No arbitrator
or other party to an arbitration proceeding may disclose the existence, content
or results thereof, except for disclosures
of information by a party required in the ordinary course of its business
or by
applicable law or regulation. If more
than
one agreement for arbitration by or between the parties potentially applies
to a
dispute, the arbitration provision most
directly related to the documents between the parties or the subject matter
of
the dispute shall control. This Agreement
may be amended or modified only in writing signed by each party hereto. If
any
provision of this Agreement shall
be
held to be prohibited by or invalid under applicable law such provision shall
be
ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or any remaining provisions of this Agreement.
This arbitration provision shall survive termination, amendment or expiration
of
any of the documents or any relationship between the parties.
Borrower
and Trade Bank have caused this Agreement to be executed by their duly
authorized officers or representatives
on the date first written above.
"BORROWER"
SOUTHWALL
TECHNOLOGIES INC.
By:
/s/ S Xxxxxxxx
Title:
Vice President of Finance
Borrower's
Address:
0000
Xxxx
Xxxxxxxx Xxxx
Xxxx
Xxxx, XX 00000
"LENDER"
XXXXX
FARGO HSBC TRADE BANK,
NATIONAL
ASSOCIATION
By:
/s/ Felynn Haberecht
Felynn
Haberecht
Title
Vice President
Lender's
Address:
0
Xxxxx
Xxxxxx, 00xx Xxxxx
Xxx
Xxxxxxxxx, XX 00000
Page
11
EXHIBIT
A
|
XXXXX
FARGO HSBC TRADE BANK
|
ADDENDUM
TO CREDIT AGREEMENT
|
THIS
ADDENDUM IS ATTACHED TO THE CREDIT AGREEMENT ("CREDIT AGREEMENT") BETWEEN
XXXXX
FARGO HSBC TRADE BANK AND THE FOLLOWING BORROWER:
NAME
OF BORROWER: SOUTHWALL
TECHNOLOGIES INC.
ADDITIONAL
AFFIRMATIVE COVENANTS
The
following covenants are part of Article IV of the Credit Agreement:
REPORTS.
Borrower will furnish the following information or deliver the following
reports
to Trade Bank at the times indicated
below:
| • |
Annual
Financial Statements: Not
later than one hundred five (105) calendar days after and as of
the end of
each of Borrower's fiscal years, copies of the 10-K report filed
with the
Securities Exchange Commission, to include an annual unqualified
audited financial statement of Borrower, prepared by a certified
public
accountant acceptable to Trade Bank
and prepared in accordance with GAAP, to include balance sheet,
income
statement, statement of cash flow, auditor's
report, and footnotes.
|
| • |
Quarterly
Financial Statements: Not
later than sixty (60) calendar days after and as of the end of
each of
Borrower's fiscal
quarters, copies of the 10-Q report filed with the Securities Exchange
Commission, prepared by a certified public
accountant acceptable to Trade Bank and prepared in accordance
with GAAP,
to include balance sheet, income
statement and statement of cash
flow.
|
BY
SIGNING HERE BORROWER AGREES TO THE DESIGNATED PROVISIONS IN THIS
ADDENDUM:
SOUTHWALL
TECHNOLOGIES INC.
By:
/s/ S Xxxxxxxx
Title:
Vice President of Finance
Page
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EXHIBIT
B
|
XXXXX
FARGO HSBC TRADE BANK
|
REVOLVING
CREDIT FACILITY SUPPLEMENT
|
THIS
SUPPLEMENT IS AN INTEGRAL PART OF THE CREDIT AGREEMENT BETWEEN XXXXX FARGO
HSBC
TRADE
BANK AND THE FOLLOWING BORROWER:
NAME
OF BORROWER: SOUTHWALL
TECHNOLOGIES INC.
CREDIT
LIMIT FOR THIS REVOLVING CREDIT LOAN FACILITY: Credit
Limit: $3,000,000 (subject to dollar limitations in
Section 1.2 of Agreement)
FACILITY
DESCRIPTION: Trade
Bank will make the Revolving Credit Facility available to finance Borrower's
working capital.
The Revolving Credit Facility may be supported by (i) a standby letter of
credit
in favor of Trade Bank, (ii) a guarantee
or (iii) accounts receivable, inventory or other collateral. Revolving Credit
Loans cannot be used to repay outstanding
Revolving Credit Loans or Term Loans that have matured or to repay amounts
due
under any other Facilities provided
to Borrower.
FACILITY
DOCUMENTS:
| • |
Revolving
Credit Loans Note: The
term and prepayment conditions of the Loans under Revolving Credit
Facility are set forth in Revolving Credit Loans
Note.
|
INTEREST
RATES:
| • |
Loans
under Revolving Credit Facility: All
outstanding Loans under Revolving Credit Facility will bear interest
at
the
following rate at the Borrower's
option:
|
Prime
Rate: The
Prime
Rate minus 1.75% per annum.
Other
Rate: LIBOR
plus 1% per annum.
Interest
Payment Dates: Interest
on all outstanding Loans under Revolving Credit Facility will be paid at
least
once
each
month on the first day of the month.
FEES:
| • |
Facilities
Fee: Borrower
will pay the following Facilities Fee to Trade Bank before any
Facility,
including this Facility, is
made available to Borrower: $10,000
FQH
|
COLLATERAL: See
Exhibit C - Collateral/Credit Support Document.
BY
INITIALING HERE BORROWER AGREES TO ALL THE TERMS OF THIS
SUPPLEMENT:/s/ SK
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EXHIBIT
C
|
XXXXX
FARGO HSBC TRADE BANK
|
COLLATERAL/CREDIT
SUPPORT DOCUMENT
|
Standby
Letter of Credit in Favor of Trade Bank: Deutsche
Bank Trust Co. Americas will issue its standby letter of credit in favor
of
Trade Bank in the amount of $3,000,000, in form and substance reasonably
satisfactory to Trade Bank.
BY
INITIALING HERE BORROWER AGREES TO ALL THE TERMS OF THIS
EXHIBIT: /s/
SK
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