EXHIBIT 10.2
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TERM LOAN AND REVOLVING CREDIT AGREEMENT
between
VIKO TECHNOLOGY, INC.
and
THE DEVELOPMENT BANK OF SINGAPORE LTD.,
LOS ANGELES AGENCY
September 24, 2002
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TABLE OF CONTENTS
Page
TERM LOAN AND REVOLVING CREDIT AGREEMENT............................................... 1
ARTICLE 1 INTERPRETATION............................................................... 1
Section 1.1 Definitions.............................................. 1
Section 1.2 Accounting Terms......................................... 6
Section 1.3 Interpretation........................................... 6
ARTICLE 2 AMOUNTS AND TERMS OF LOANS................................................... 7
Section 2.1 Commitments.............................................. 7
Section 2.2 Making Loans............................................. 7
Section 2.3 Repayment................................................ 8
Section 2.4 Interest................................................. 8
Section 2.5 Prepayment............................................... 9
Section 2.6 Fees..................................................... 9
Section 2.7 Payments and Computations................................ 9
Section 2.8 Payment on Non-Business Days............................. 10
Section 2.9 Increased Costs, Etc..................................... 10
Section 2.10 Taxes.................................................... 11
Section 2.11 Voluntary Conversion of LIBOR Loan into Fixed Rate Loan.. 11
Section 2.12 Indemnity................................................ 11
ARTICLE 3 CONDITIONS OF LENDING........................................................ 12
Section 3.1 Conditions Precedent to Initial Loan..................... 12
Section 3.2 Conditions Precedent to Each Loan........................ 13
ARTICLE 4 REPRESENTATIONS AND WARRANTIES............................................... 14
Section 4.1 Organization and Good Standing........................... 14
Section 4.2 No Conflict.............................................. 14
Section 4.3 Governmental Action...................................... 14
Section 4.4 Enforceability........................................... 14
Section 4.5 Financial Statements..................................... 15
Section 4.6 Legal Proceedings........................................ 15
Section 4.7 Payment of Taxes......................................... 15
Section 4.8 Employee Benefit Plans................................... 15
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ARTICLE 5 COVENANTS OF BORROWER........................................................ 15
Section 5.1 Compliance with Governmental Rules, Etc.................. 15
Section 5.2 Financial and Other Information.......................... 16
Section 5.3 Insurance................................................ 16
Section 5.4 Preservation of Corporate Existence, Etc................. 16
Section 5.5 Visitation Rights........................................ 17
Section 5.6 Maintenance of Properties................................ 17
Section 5.7 Liens, Etc............................................... 17
Section 5.8 Mergers, Etc............................................. 17
Section 5.9 Use of Proceeds.......................................... 17
Section 5.10 Maintenance of Net Worth................................. 17
Section 5.11 Maintenance of Gearing Ratio............................. 17
Section 5.12 Maintenance of Ratio of Debt to EBITDA................... 18
Section 5.13 Maintenance of Interest Service Coverage Ratio........... 18
Section 5.14 Sales, Etc. of Assets.................................... 18
Section 5.15 Other Secured Indebtedness............................... 18
Section 5.16 Guaranteed Obligations................................... 19
ARTICLE 6 EVENTS OF DEFAULT............................................................ 19
Section 6.1 Events of Default........................................ 19
ARTICLE 7 MISCELLANEOUS................................................................ 20
Section 7.1 Amendments, Etc.......................................... 20
Section 7.2 Notices, Etc............................................. 20
Section 7.3 No Waiver; Remedies...................................... 21
Section 7.4 Costs and Expenses....................................... 21
Section 7.5 Right of Setoff.......................................... 21
Section 7.6 Binding Effect........................................... 22
Section 7.7 Governing Law............................................ 22
Section 7.8 Execution in Counterparts................................ 22
Section 7.9 Waiver of Jury Trial..................................... 23
Exhibit A Term Note
Exhibit B Borrowing Notice
Exhibit C Conversion/Continuation Notice
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TERM LOAN AND REVOLVING CREDIT AGREEMENT
This Agreement, dated as of September 24, 2002, is entered into by VIKO
TECHNOLOGY, INC., a California corporation (the "Borrower"), and THE DEVELOPMENT
BANK OF SINGAPORE LTD., LOS ANGELES AGENCY, a foreign banking corporation
incorporated in Singapore (the "Bank").
ARTICLE 1
INTERPRETATION
Section 1.1 Definitions. The following terms, as used herein, shall have
the respective meanings set forth below (such meanings to be equally applicable
to both the singular and plural forms of the terms defined).
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"Borrowing Notice" means a notice from the Borrower to the Bank
substantially in the form of Exhibit B.
"Business Day" means a day of the year on which banks are not authorized
or required by law to close in Los Angeles and, if the applicable day relates to
a LIBOR Loan, on which dealings are carried on in the London interbank market.
"Closing Date" means the date on which the conditions precedent set forth
in Section 3.1 have been satisfied and the initial Loan has been funded.
"Code" means the Internal Revenue Code of 1986.
"Control Agreement" means a control agreement, restricted account
agreement or similar agreement or document, in each case in form and substance
reasonably satisfactory to the Bank and entered into for the purpose of
perfecting a security interest in one or more deposit accounts or securities
accounts of the Borrower.
"Conversion," "Convert" and "Converted" each refer to a conversion of a
LIBOR Loan into a Fixed Rate Loan.
"Conversion/Continuation Notice" means a notice from the Borrower to the
Bank substantially in the form of Exhibit C.
"Credit Documents" means this Agreement, the Term Note, the Security
Agreement, the Guaranty, the Subordination Agreement, the Control Agreements and
any Interest Rate Agreements.
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"Debt" of any Person means (a) all obligations of such Person for
borrowed money; (b) all obligations of such Person for the deferred purchase
price of property or services (other than normal trade accounts payable arising
in the ordinary course of business that are not overdue); (c) all obligations of
such Person evidenced by notes, bonds, debentures or other similar instruments;
(d) all indebtedness of such Person created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person (even though the rights and remedies of the seller or lender under
any such agreement in the event of a default are limited to repossession or sale
of such property); (e) all obligations of such Person as lessee under leases
that have been or should be, in accordance with generally accepted accounting
principles, recorded as capital leases; (f) all obligations, contingent or
otherwise, of such Person under any acceptance, letter-of-credit or similar
facilities; (g) all obligations of such Person under any interest-rate swap,
"cap," "collar" or other hedging agreement; (h) all Guaranteed Indebtedness of
such Person; (i) all Debt, of another person or entity, of a type referred to in
any of clauses (a) through (g) above that is secured by (or for which the holder
of such Debt has the right, contingent or otherwise, to be secured by) a Lien on
property (including accounts and contracts rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Debt; (j) all liabilities of such Person in respect of unfunded vested benefits
under employee-benefit plans subject to ERISA; and (k) all Withdrawal Liability
of such Person incurred under employee-benefit plans subject to ERISA.
"Default" means any Event of Default and any event that, with the
giving of notice or the passage of time or both, would become an Event of
Default.
"EBITDA" of any Person means operating earnings of such Person before
interest expense (net of capitalized interest expense), taxes, depreciation
expense, amortization expense, noncash nonrecurring charges, and gains or losses
on sales of assets.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means any Person that for purposes of Title IV of ERISA
is a member of the Borrower's controlled group, or under common control with the
Borrower, within the meaning of Section 414 of the Code and the regulations
promulgated and rulings issued thereunder.
"ERISA Event" means (a) a reportable event, within the meaning of Section
4043 of ERISA, unless the 30 day notice requirement with respect thereto has
been waived by the PBGC; (b) the provision by the administrator of any Plan of a
notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA); (c) the cessation of operations at a facility in the
circumstances described in Section 4068(f) of ERISA; (d) the withdrawal by the
Borrower or an ERISA Affiliate from a Multiple Employer Plan during a plan year
for which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (e) the failure by the Borrower or any ERISA Affiliate to make a payment
to a plan required under Section 302(f)(1) of ERISA; (f) the adoption of an
amendment to a Plan requiring the provision of security to such Plan, pursuant
to Section 307 of ERISA; or (g) the institution by the PBGC of proceedings to
terminate a Plan, pursuant to Section 4042 of ERISA, or the occurrence of any
event or condition
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that would constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, a Plan.
"Event of Default" has the meaning set forth in Section 6.1.
"Fixed Rate" means the fixed rate of interest per annum established by the
Bank, taking into account such factors as the Bank may deem appropriate.
"Fixed Rate Loan" means a Loan that bears interest by reference to the
Fixed Rate.
"Governmental Action" means any authorization, approval, consent, waiver,
exception, license, filing, registration, permit, notarization or other
requirement of any Governmental Person.
"Governmental Person" means, whether domestic or foreign, any national,
federal, state or local government, any political subdivision thereof, any
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body or entity, including the Federal Deposit Insurance Corporation,
the Comptroller of the Currency, the Board of Governors of the Federal Reserve
System, any central bank and any comparable authority.
"Governmental Rule" means any treaty, law, rule, regulation, ordinance,
order, code, interpretation, judgment, writ, injunction, decree, determination,
directive, guideline, request, policy or similar form of decision of any
Governmental Person, arbitrator or referee.
"Guaranteed Indebtedness" of any Person means all Debt, of another person
or entity, of a type referred to in any of clauses (a) through (g) of the
definition of "Debt" in this Section 1.1 that is guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (a) to pay or purchase such Debt
or to advance or supply funds for the payment or purchase of such Debt, (b) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such Debt or to assure the holder of such Debt against loss, (c) to advance or
supply funds to or in any other manner invest in the debtor (including any
agreement to pay for property or services irrespective of whether or not such
property is received or such services are rendered) or (d) otherwise to assure a
creditor against loss.
"Guarantor" means Infiniti Solutions Pte Ltd, a company incorporated in
Singapore by which the Borrower is wholly owned.
"Guaranty" means the guaranty executed by the Guarantor in favor of the
Bank with respect to this Agreement.
"Interest Period" means, with respect to a LIBOR Loan, initially, the
period commencing on the date of such Loan or the date of Conversion of another
Loan into such a Loan and ending on the last day of the period selected by the
Borrower pursuant to the provisions below and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below. The duration of each Interest Period shall be any number
of days or months up to and including 3 months (provided that such number of
days or months is then available to
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the Bank for funding in the relevant interbank market), in each case as the
Borrower may select upon telephonic notice received by the Bank not later than
11:00 a.m., Los Angeles time, on the third Business Day before the first day of
such Interest Period (such notice to be confirmed by the Borrower's delivery of
a Borrowing Notice or a Conversion/Continuation Notice, as applicable, to the
Bank by telecopier by the end of the same Business Day); provided, however,
that:
(a) only one Interest Period may be in effect for a Term Loan at any time;
(b) whenever the last day of any Interest Period would otherwise occur on
a day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day; provided, however, that,
if such extension would cause the last day of such Interest Period to occur in
the next succeeding calendar month, then the last day of such Interest Period
shall occur on the next preceding Business Day; and
(c) if the Bank fails to receive notice of the Borrower's selection of the
duration of any Interest Period for any LIBOR Loan, then the duration of such
Interest Period shall be 3 months.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future, interest rate option, interest rate swap, interest rate
cap or other interest rate hedge or arrangement entered into pursuant to Section
2.2(c) with the Bank or any Affiliate of the Bank (or any other institution
reasonably acceptable to the Bank).
"LIBOR" means, for any Interest Period for any LIBOR Loan, the rate
appearing on page 3750 of the Telerate Service (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Bank from time to time for
purposes of providing quotations of interest rates applicable to dollar deposits
in the London interbank market) at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period, as the rate for
dollar deposits in an amount substantially equal to the amount of such Loan and
for a period coinciding with such Interest Period.
"LIBOR Loan" means a Loan that bears interest by reference to LIBOR.
"Lien" means, with respect to any asset, (a) any lien, security interest,
charge, claim, mortgage, pledge or other encumbrance of any kind in respect of
such asset or (b) the interest of a vendor or lessor under any conditional-sale
agreement, capital lease or other title-retention agreement relating to such
asset.
"Loan" means a Term Loan or a Revolving Loan.
"Loan Parties" means the Borrower and the Guarantor.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA and subject to Title IV thereof, to which the Borrower or
any ERISA Affiliate is making or accruing an obligation to make contributions,
or has within any of the preceding 5 plan years
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made or accrued an obligation to make contributions, such plan being maintained
pursuant to one or more collective-bargaining agreements.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA and subject to Title IV thereof, that (a) is
maintained by the Borrower or an ERISA Affiliate and at least one Person other
than the Borrower and its ERISA Affiliates or (b) was so maintained previously,
but is not currently maintained by the Borrower or its ERISA Affiliates, and in
respect of which the Borrower or an ERISA Affiliate would still have liability
under Section 4064 or 4069 of ERISA in the event such plan has been or were to
be terminated.
"Organic Documents" means, with respect to any entity, in each case to the
extent applicable thereto, its certificate and articles of incorporation or
organization, its by-laws or operating agreement, its partnership agreement, all
other formation and/or governing documents, and all voting agreements and
similar arrangements applicable to any of its authorized shares of capital
stock, its partnership interests or its member interests, and any other
arrangements relating to the control or management of any such entity (whether
existing as corporation, a partnership, a limited liability company or
otherwise).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a limited-liability company,
a corporation (including a business trust), a joint stock company, a trust, an
incorporated association, a joint venture or any other entity, including any
Governmental Person.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Prime Rate" means the variable rate of interest per annum established by
the Bank from time to time as its United States "prime rate." Such "prime rate"
is set by the Bank as a general reference rate of interest, taking into account
such factors as the Bank may deem appropriate, it being understood that many of
the Bank's commercial or other loans are priced in relation to such rate, that
it is not necessarily the lowest or best rate actually charged to any customer
and that the Bank may make various commercial or other loans at rates of
interest having no relationship to such rate. For purposes of this Agreement,
the Prime Rate shall change whenever the Bank's "prime rate" referred to above
changes, and each change in the Prime Rate shall be effective as of the opening
of business on the date established as the effective date of any change in such
"prime rate."
"Revolving Loan" has the meaning set forth in Section 2.1(b).
"Security Agreement" means the Security Agreement executed by the Borrower
in favor of the Bank, in form and substance satisfactory to the Bank.
"Single Employer Plan" means a single employer plan, as defined in Section
4001(a)(15) of ERISA and subject to Title IV thereof, that (a) is maintained by
the Borrower or an ERISA Affiliate and no Person other than the Borrower and its
ERISA Affiliates or (b) was so maintained previously, but is not currently
maintained by the Borrower or its ERISA Affiliates,
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and in respect of which the Borrower or an ERISA Affiliate would still have
liability under Section 4069 of ERISA in the event such plan has been or were to
be terminated.
"Subordination Agreement" means that certain Subordination Agreement, in
form and substance satisfactory to the Bank in its sole discretion, executed by
Kumar Xxxxx in his capacity as Sellers' Representative (as such term is defined
in the Share Purchase Agreement dated December 18, 2001 between the Guarantor
and the former shareholders of the Borrower) in favor of the Bank.
"Subsidiary" means, as to any Person, any corporation, limited-liability
company, partnership, joint venture or other entity of which (a) a majority of
the outstanding capital stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors or Persons performing
similar functions (irrespective of whether at the time other such capital stock
or interests have or might have voting power upon the occurrence of a
contingency) or (b) a majority of the interests in the capital or profits of
which is at the time directly or indirectly owned by such Person, by such Person
and one or more of its other Subsidiaries or by one or more of such Person's
other Subsidiaries. Unless otherwise specified herein, "Subsidiary" means a
Subsidiary of the Borrower.
"Taxes" has the meaning set forth in Section 2.10.
"Term Commitment" has the meaning set forth in Section 2.1(a).
"Term Loan" has the meaning set forth in Section 2.1(a).
"Term Loan Commitment Expiration Date" means March 31, 2003.
"Term Note" means the Term Note of the Borrower payable to the order of
the Bank, substantially in the form of Exhibit A, evidencing the indebtedness of
the Borrower to the Bank resulting from a Term Loan.
"Type" refers to the distinction between LIBOR Loans and Fixed Rate Loans.
"Withdrawal Liability" has the meaning given such term under Part 1 of
Subtitle E of Part IV of ERISA.
Section 1.2 Accounting Terms. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be delivered
hereunder with respect to the Borrower shall be prepared, in accordance with
generally accepted accounting principles consistent with those applied in the
preparation of the financial statements referred to in Section 4.5.
Section 1.3 Interpretation. In this Agreement the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to any statute are to be construed as including all
statutory provisions consolidating, amending or replacing the statute referred
to; references to "writing" include printing, typing, lithography and other
means of reproducing words in a tangible, visible form; references to sections
(or any subdivisions of a section), articles, schedules, annexes and exhibits
are to those of this
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Agreement unless otherwise indicated; the words "including," "includes" and
"include" are deemed to be followed by the words "without limitation";
references to agreements and other contractual instruments are deemed to include
all subsequent amendments and other modifications to such instruments, but only
to the extent such amendments and other modifications are not prohibited by the
terms of this Agreement; and references to any Persons include their respective
permitted successors and assigns.
ARTICLE 2
AMOUNTS AND TERMS OF LOANS
Section 2.1 Commitments.
(a) The Bank agrees, on the terms and conditions hereinafter set forth, to
make one or more term loans (each a "Term Loan") to the Borrower from and
including the Closing Date to but excluding the Term Loan Commitment Expiration
Date in an aggregate amount not to exceed $14,000,000 in principal amount at any
time outstanding (the "Term Commitment").
(b) The Bank hereby establishes an uncommitted revolving credit facility,
pursuant to which the Bank, acting in its sole and absolute discretion, may
agree from time to time, but shall have no obligation to agree, on the terms and
conditions hereinafter set forth, to make loans (each a "Revolving Loan") to the
Borrower on any Business Day, in an aggregate amount not to exceed $2,000,000 in
principal amount at any time outstanding. Each Revolving Loan shall be in the
amount of $100,000 or an integral multiple of $100,000 in excess thereof.
(c) NOTWITHSTANDING (i) THAT THIS AGREEMENT SETS FORTH CERTAIN PROCEDURES
FOR THE POSSIBLE EXTENSION OF REVOLVING LOANS BY THE BANK TO THE BORROWER AND
(ii) THAT THIS AGREEMENT CONTAINS CERTAIN AGREEMENTS OF THE BORROWER TO PROVIDE
INFORMATION TO THE BANK ON A REGULAR BASIS, TO MAKE CERTAIN PAYMENTS TO THE BANK
AND TO TAKE OTHER ACTIONS THAT MAY BENEFIT THE BANK OR CONSTRAIN THE BORROWER,
THE BORROWER ACKNOWLEDGES AND AGREES THAT (A) THE BANK HAS NO OBLIGATION
WHATSOEVER TO AGREE TO MAKE REVOLVING LOANS AS DESCRIBED HEREIN OR OTHERWISE AND
(B) THE BANK HAS THE RIGHT, SHOULD IT EXTEND CREDIT TO THE BORROWER AT ANY TIME
AS DESCRIBED HEREIN OR OTHERWISE, TO DISCONTINUE THE MAKING OF REVOLVING LOANS
TO THE BORROWER AT ANY TIME IN THE SOLE AND ABSOLUTE DISCRETION OF THE BANK.
Section 2.2 Making Loans.
(a) Each Loan shall be made on notice from the Borrower to the Bank, given
not later than 11:00 a.m., Los Angeles time, (i) in the case of a LIBOR Loan, on
the third Business Day before the date of the proposed Loan and (ii) in the case
of a Fixed Rate Loan, on the seventh Business Day before the date of the
proposed Loan. Each such notice of a Loan shall be by telephone confirmed, by
the end of the same Business Day, by the Borrower's delivery of a Borrowing
Notice to the Bank by telecopier and shall specify therein (i) the requested
date of such Loan (which shall be a Business Day), (ii) whether such Loan is to
be a Term Loan or a
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Revolving Loan, (iii) in the case of a Term Loan, whether such Loan is to be a
LIBOR Loan or a Fixed Rate Loan, (iv) the amount of such Loan and (v) in the
case of a LIBOR Loan, the initial Interest Period for such Loan. Not later than
11:00 a.m., Los Angeles time, on the date of such Loan and upon fulfillment of
the applicable conditions set forth in Article 3, the Bank will make the
proceeds of the requested Loan available to the Borrower by crediting the
account designated by the Borrower for such purpose.
(b) Notwithstanding anything in Section 2.2(a) to the contrary, the
Borrower may not request or continue any LIBOR Loan if the obligation of the
Bank to make or maintain LIBOR Loans is then suspended pursuant to Section 2.9.
(c) Notwithstanding anything in Section 2.2(a) to the contrary, the
Borrower may not request a Fixed Rate Loan unless (i) the Bank enters into and
maintains, for the duration of such Fixed Rate Loan, Interest Rate Agreements,
each in form and substance reasonably satisfactory to the Bank, covering an
amount equal to or greater than the amount of the Fixed Rate Loan being
requested by the Borrower and (ii) the amount of the Fixed Rate Loan being
requested by the Borrower is more than or equal to $5,000,000 or such lesser
amount as is operationally feasible by the Bank.
(d) Each Borrowing Notice shall be irrevocable and binding on the
Borrower. The Borrower will indemnify the Bank against any loss, cost or expense
incurred by the Bank as a result of any failure to fulfill, on or before the
date specified in any Borrowing Notice, the applicable conditions set forth in
Article 3, including any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by the Bank to
fund any Loan requested pursuant to such Borrowing Notice when such Loan, as a
result of such failure, is not made on such date.
Section 2.3 Repayment.
(a) The Borrower will repay the Term Loans in twelve equal quarterly
installments on the 1st day of each January, April, July and October, commencing
on April 1, 2004. Any amount repaid under the Term Loan may not be reborrowed by
the Borrower.
(b) Within thirty days of receipt by the Borrower of a notice from the
Bank requesting repayment of the Revolving Loans or such other time period as
may be agreed to in writing by the Bank, the Borrower will repay all Revolving
Loans then outstanding.
Section 2.4 Interest.
(a) The Borrower will pay interest on the unpaid principal amount of each
Term Loan, from the date of such Loan until such principal amount is paid in
full, (i) during such periods as such Loan is a LIBOR Loan, at a rate per annum
equal at all times during each Interest Period for such LIBOR Loan to the sum of
LIBOR for such Interest Period for such LIBOR Loan plus 2.5% per annum and (ii)
during such periods as such Loan is a Fixed Rate Loan, at a rate per annum equal
at all times to the Fixed Rate.
(b) The Borrower will pay interest on the unpaid principal amount of each
Revolving Loan, from the date of such Loan until such principal amount is paid
in full, at a rate per annum
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equal at all times during each Interest Period for such LIBOR Loan to the sum of
LIBOR for such Interest Period for such LIBOR Loan plus 2.0% per annum.
(c) In the event that any principal amount of any Loan or any other amount
payable hereunder is not paid to the Bank when due, the Borrower will pay
interest to the Bank on such amount from the date on which such amount is due
until the date on which such amount is paid in full, payable on demand, at an
interest rate per annum equal to (i) for Loans, the applicable interest rate for
such Loan plus 5% per annum or (ii) for any other amount, the Prime Rate plus 5%
per annum. In the event that the amount of such interest is less than $250, the
Borrower will pay an administrative charge of $250 rather than the amount of
such interest.
Section 2.5 Prepayment. The Borrower may, upon at least 5 Business Days'
notice to the Bank stating the proposed date and principal amount of the
prepayment, and if such notice is given the Borrower will, prepay the
outstanding principal amount of the Term Loans and/or the Revolving Loans in
whole or in part, together with (a) accrued and unpaid interest to the date of
such prepayment on the principal amount prepaid and (b)(i) in the event that a
prepayment is made for a Term Loan on or before the first anniversary of the
Closing Date, a prepayment penalty equal to 0.50% on the outstanding principal
amount of such Loan and (ii) in the event that a prepayment is made for a Term
Loan after the first anniversary of the Closing Date but on or before the second
anniversary of the Closing Date, a prepayment penalty equal to 0.375% on the
outstanding principal amount of such Loan. Any amount prepaid under the Term
Loan may not be reborrowed by the Borrower. The Borrower agrees to indemnify the
Bank and to hold the Bank harmless from and to pay the Bank within 5 Business
Days of the Bank's demand the amount of any liability, loss or expense arising
from the reemployment of funds obtained by it, from fees payable to terminate
any Interest Rate Agreements relating to such funds or from fees payable to
terminate the deposits from which such funds were obtained (including reasonable
fees and expenses of counsel) which the Bank may sustain or incur as a
consequence of the making by the Borrower of a prepayment of any Loan. The only
prepayment penalty Borrower will incur for prepaying the Revolving Loans will be
for any funding loss incurred by the Bank resulting from Borrower's voluntary
election to prepay the Revolving Loans on a day which is not the last day of an
Interest Period with respect thereto. The Bank's certificate as to such
liability, loss or expense shall be deemed conclusive, absent manifest error.
This covenant shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
Section 2.6 Fees. The Borrower will pay the Bank a commitment fee on the
average daily unused portion of the Term Commitment, from the date hereof until
the Term Loan Commitment Expiration Date, at the rate of 0.5% per annum, payable
quarterly in arrears on the 1st day of each January, April, July and October,
commencing on January 1, 2003, and on the Term Loan Commitment Expiration Date.
Section 2.7 Payments and Computations.
(a) The Borrower will make each payment due to the Bank hereunder and
under the Term Note and the Revolving Loans not later than 11:00 a.m., Los
Angeles time, on the day when due, in immediately available funds, to the Bank
at the account specified thereby for such purpose from time to time.
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(b) All computations of interest and fees payable by the Borrower
hereunder shall be calculated on the basis of a 360-day year and the actual
number of days elapsed (including the first day but excluding the last day of
the period in question). Each determination by the Bank of any interest rate or
fee hereunder shall be conclusive, except in the case of manifest error.
Section 2.8 Payment on Non-Business Days. Whenever any payment to be made
hereunder or under the Term Note is stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest; provided, however, that, if such extension would cause
payment of interest on or principal of any Loan to be made in the next following
calendar month, such payment shall be made on the next preceding Business Day.
Section 2.9 Increased Costs, Etc.
(a) If, due to either (i) the introduction of or any change (including any
change by way of imposition or increase of reserve requirements) in or in the
interpretation of any Governmental Rule or (ii) the compliance with any
Governmental Rule (whether or not having the force of law), there is any
increase in the cost to the Bank of agreeing to make, making, funding or
maintaining any Loan, then the Borrower will from time to time, upon demand by
the Bank, pay to the Bank additional amounts sufficient to compensate the Bank
for such increased cost. A certificate as to the amount of such increased cost
submitted to the Borrower by the Bank shall be conclusive and binding for all
purposes, absent manifest error in the calculations contained therein or in the
applicability of such increased cost to any Loan.
(b) If the Bank determines that compliance with any Governmental Rule or
any guideline or request from any Governmental Person (whether or not having the
force of law) affects or would affect the amount of capital required or expected
to be maintained by the Bank or any corporation controlling the Bank and that
the amount of such capital is increased by or based upon the existence of the
Bank's commitment to lend or any Loan hereunder and other commitments or loans
of such types (or similar commitments or loans), then, upon demand by the Bank,
the Borrower will pay to the Bank, from time to time as specified by the Bank,
additional amounts sufficient to compensate the Bank in the light of such
circumstances, to the extent that the Bank reasonably determines such increase
in capital to be reasonably allocable to the existence of the Bank's commitment
to lend or any Loan hereunder. A certificate as to such amounts submitted to the
Borrower by the Bank shall be conclusive and binding for all purposes, absent
manifest error in the calculations contained therein or in the applicability of
such increase in capital to any Loan.
(c) Notwithstanding any other provision of this Agreement, if the
introduction of, or any change in or in the interpretation of, any Governmental
Rule makes it unlawful, or any Governmental Person asserts that it is unlawful,
for the Bank to make a LIBOR Loan or to continue to fund or maintain any LIBOR
Loan hereunder, then, on notice thereof and demand therefor by the Bank to the
Borrower, (i) each affected Loan shall automatically convert into a Loan bearing
interest at the Prime Rate, and interest on such Loan shall be payable in
arrears on the 1st day of each January, April, July and October during the
period of such conversion, and (ii) the obligation of the Bank to make or
maintain LIBOR Loans shall be suspended; provided,
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however, that each affected Loan shall thereafter convert back into a LIBOR Loan
if the circumstances causing such suspension no longer exist.
(d) If the Bank notifies the Borrower that U.S.-dollar deposits are not
available to the Bank in the relevant interbank market for a certain Interest
Period or Interest Periods, then the obligation of the Bank to make available
the affected Interest Period or Interest Periods shall be suspended until the
Bank notifies the Borrower that the circumstances causing such suspension no
longer exist. If at any time no Interest Periods are available to the Bank in
the relevant interbank market in the amount of the relevant Loan or Loans, then,
on notice thereof and demand therefor by the Bank to the Borrower, (i) each
affected Loan shall automatically convert into a Loan bearing interest at the
Prime Rate, and interest on such Loan shall be payable in arrears on the 1st day
of each January, April, July and October during the period of such conversion,
and (ii) the obligation of the Bank to make or maintain LIBOR Loans shall be
suspended; provided, however, that each affected Loan shall thereafter convert
back into a LIBOR Loan if the circumstances causing such suspension no longer
exist.
Section 2.10 Taxes. The Borrower and the Bank will use their best efforts
to take whatever action may be necessary so that all payments by the Borrower
hereunder or under the Term Note shall be made, in accordance with Section 2.7,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto (all such taxes, levies, imposts, deductions, charges,
withholdings and liabilities hereinafter referred to as "Taxes"). In the event
of any application of or change in any Governmental Rule that has the effect of
requiring the Borrower to withhold Taxes from any amount payable to the Bank
under this Agreement, the amount so payable shall be increased to the extent
necessary to yield to the Bank (after payment of all Taxes) interest or any such
other amount payable hereunder at the rate or in the amount specified in this
Agreement and the Term Note.
Section 2.11 Voluntary Conversion of LIBOR Loan into Fixed Rate Loan. The
Borrower may on any Business Day, upon prior written notice given to the Bank,
not later than 11:00 a.m., Los Angeles time, on the seventh Business Day before
the date of the proposed Conversion, subject to the provisions of Section 2.9,
Convert a LIBOR Loan into a Fixed Rate Loan; provided, however, that any
Conversion of a LIBOR Loan shall be made on, and only on, the last day of the
Interest Period for such Loan. Each such notice of a Conversion shall be by
telephone confirmed, by the end of the same Business day, by the Borrower's
delivery of a Conversion/Continuation Notice to the Bank by telecopier and,
within the restrictions specified above, shall specify (i) the date of such
Conversion and (ii) the Loan to be Converted. Each such notice of a Conversion
shall be irrevocable and binding on the Borrower.
Section 2.12 Indemnity. The Borrower agrees to indemnify the Bank and to
hold the Bank harmless from and to pay the Bank within 5 Business Days of the
Bank's demand the amount of any liability, loss or expense arising from the
reemployment of funds obtained by it or from fees payable to terminate the
deposits from which such funds were obtained (including reasonable fees and
expenses of counsel) which the Bank may sustain or incur as a consequence of (a)
default by the Borrower in payment when due of the principal amount of or
interest on any LIBOR Loan, (b) default by the Borrower in making a borrowing
of, conversion or continuation of LIBOR Loans after the Borrower has given a
notice requesting the same in accordance with
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the provisions of this Agreement, (c) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (d) the making by the Borrower of a prepayment
or conversion of LIBOR Loans on a day which is not the last day of an Interest
Period with respect thereto. The Bank's certificate as to such liability, loss
or expense shall be deemed conclusive, absent manifest error. This covenant
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
ARTICLE 3
CONDITIONS OF LENDING
Section 3.1 Conditions Precedent to Initial Loan. The obligation of the
Bank to make any Loan to be made on the Closing Date is subject to the
satisfaction, immediately prior to or concurrently with the making of such Loan,
of the following conditions and in the case of documentation, dated the Closing
Date (unless otherwise provided below) and in form and substance satisfactory to
the Bank; provided, however, the Closing Date shall be no later than 45 days
from the date of execution of this Agreement:
(a) this Agreement, duly executed and delivered by the Borrower and the
Bank;
(b) (i) the Term Note duly executed by the Borrower, (ii) the Security
Agreement duly executed by the Borrower, (iii) the Guaranty duly executed by the
Guarantor, (iv) the Subordination Agreement, (v) Control Agreements executed by
the relevant depositary and the Borrower with respect to the deposit accounts
and securities accounts of the Borrower selected by the Bank and (vi) all other
agreements or instruments required to create or perfect a security interest in
the Borrower's personal property;
(c) incumbency certificates for each of the Borrower and the Guarantor, in
each case dated as of the Closing Date and executed by the Chairman of the Board
of the Borrower and the Chief Executive Officer of the Guarantor, as applicable;
(d) a copy of the resolutions of the Board of Directors of the Borrower
and the Guarantor authorizing (i) the execution, delivery and performance of the
Credit Documents to which it is or will be a party and (ii) in the case of the
Borrower, the borrowings contemplated hereunder, certified by the Secretary of
the Borrower and the Chief Executive Officer of the Guarantor, as applicable, as
of the Closing Date, which certificate states that such resolutions thereby
certified have not been amended, modified, revoked or rescinded and are in full
force and effect;
(e) one or more certificates of the appropriate Governmental Persons of
the State of California, dated reasonably near the Closing Date, attaching the
charter documents of the Borrower and all amendments thereto and certifying that
such amendments are the only amendments to the Borrower's charter documents on
file;
(f) certificates, dated a recent date, of the Secretaries of State of
California and Texas and each other jurisdiction where the Borrower is required
to be qualified to do business under such jurisdiction's law, certifying as to
the existence and good standing of, and the payment of taxes by, the Borrower in
such state;
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(g) copies of the Organic Documents of each of the Borrower and the
Guarantor certified as of the Closing Date as complete and correct copies
thereof by the Secretary of the Borrower and Chief Executive Officer of the
Guarantor, as applicable;
(h) payment of a front-end fee in the amount of $80,000 (receipt of which
is hereby acknowledged by the Bank);
(i) payment of all other fees, costs and expenses, accrued and unpaid and
otherwise due and payable on or before the Closing Date by the Borrower in
connection with this Agreement;
(j) the executed legal opinion of counsel to the Borrower and the
Guarantor, in form and substance satisfactory to the Bank;
(k) such UCC and other Lien searches as the Bank shall deem necessary;
(l) evidence satisfactory to the Bank that the credit facility between the
Borrower and Comerica Bank-California and all other Debt of the Borrower not
permitted by the Credit Documents have been repaid, and all Liens in connection
therewith released;
(m) no Default shall have occurred and be continuing on the Closing Date
or would occur after giving effect to the Loans requested to be made on the
Closing Date, and the representations and warranties contained in this Agreement
and each other Credit Document and certificate or other writing delivered to the
Bank in satisfaction of the conditions set forth in this Section 3.1 prior to or
on the Closing Date shall be correct in all material respects on and as of the
Closing Date, and the Bank shall have received a certificate of the Borrower to
such effect, dated as of the Closing Date and executed by an officer of the
Borrower;
(n) evidence that the insurance policies provided for in Section 5.3 and
in the other Credit Documents are in full force and effect, certified by the
insurance broker therefor, together with appropriate evidence showing the Bank
as additional insured or loss payee, as appropriate; and
(o) such other approvals, opinions and documents as the Bank may
reasonably request, and all legal matters incident to the making of such Loans
shall be satisfactory to the Bank.
Section 3.2 Conditions Precedent to Each Loan. The obligation of the Bank
to make each Loan (including the initial Loan) shall be subject to the further
conditions precedent set forth below.
(a) The following statements shall be true (and each of the giving of the
applicable Borrowing Notice and the acceptance by the Borrower of the proceeds
of such Loan shall constitute a representation and warranty by the Borrower that
on the date of such Loan such statements are true):
(i) the representations and warranties contained in each Credit
Document are correct in all material respects on and as of the date of
such Loan, before and after giving
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effect to such Loan and to the application of the proceeds thereof, as
though made on and as of such date; and
(ii) no event has occurred and is continuing, or would result from
such Loan or the application of the proceeds thereof, that constitutes a
Default; and
(b) The obligation of the Bank to make a Term Loan shall also be subject
to (i) confirmation by the Bank in a manner reasonably acceptable to the Bank of
the amount owed by the Borrower to Comerica Bank-California or (ii) receipt by
the Bank from the Borrower of a purchase order for new equipment, together with
a quotation for the price of such equipment from the supplier, all in a manner
reasonably acceptable to the Bank.
(c) The Bank shall have received such other approvals, opinions, evidence
and documents as it may reasonably request.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank as set forth below.
Section 4.1 Organization and Good Standing. The Borrower is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California. The Borrower is duly qualified to do business as a foreign
entity and is in good standing in each jurisdiction in which it conducts
business (except for jurisdictions in which the failure to so qualify could not
reasonably be expected to have a material and adverse effect on the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Borrower).
Section 4.2 No Conflict. The execution, delivery and performance by the
Borrower of each Credit Document to which it is or is to be a party are within
the Borrower's corporate powers, have been duly authorized by all necessary
corporate action and do not contravene (a) the Borrower's charter documents or
bylaws or (b) any applicable Governmental Rule or contractual restriction
binding on or affecting the Borrower (other than the credit facility in favor of
Comerica Bank-California which will be repaid by the Borrower pursuant to
Section 3.1(l)).
Section 4.3 Governmental Action. No Governmental Action, and no
authorization, approval or other action by, or notice to, any Governmental
Person, is required for the due execution, delivery or performance by the
Borrower of any Credit Document to which it is or is to be a party.
Section 4.4 Enforceability. This Agreement has been, and each other Credit
Document to which the Borrower is or is to be a party when delivered hereunder
will be, duly executed and delivered by the Borrower. This Agreement is, and
each other Credit Document to which the Borrower is or is to be a party when
delivered hereunder will be, a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting creditors' rights
generally or by equitable principles relating to enforceability.
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Section 4.5 Financial Statements. (a) The audited consolidated balance
sheet of the Borrower and its Subsidiaries as of April 30, 2001 and the audited
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the fiscal period then ended, (b) the
unaudited consolidated balance sheet of the Borrower and its Subsidiaries as of
December 31, 2001 and the unaudited consolidated statements of income, retained
earnings and cash flows of the Borrower and its Subsidiaries for the fiscal
period then ended and (c) the interim consolidated financial statements of the
Borrower and its Subsidiaries as of June 30, 2002, the copies of all of which
have been furnished to the Bank, fairly present the financial condition of the
Borrower and its Subsidiaries as of such date and the results of the operations
of the Borrower and its Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles consistently applied.
Since June 30, 2002, there has been no material adverse change in such condition
or operations.
Section 4.6 Legal Proceedings. There is no pending or, to the best
knowledge of the Borrower, threatened action or proceeding affecting the
Borrower or any of its Subsidiaries before any Governmental Person, arbitrator
or referee that could reasonably be expected to materially and adversely affect
the financial condition or operations of the Borrower or any such Subsidiary or
that purports to affect the legality, validity or enforceability of any Credit
Document.
Section 4.7 Payment of Taxes. The Borrower has filed all federal, state
and local income tax returns required to have been filed thereby and has paid
all taxes, assessments, charges and other amounts due thereunder, except to the
extent disputed by appropriate proceedings diligently pursued and to the extent
that appropriate reserves are being maintained with respect to any amounts so
disputed.
Section 4.8 Employee Benefit Plans. No ERISA Event has occurred and is
continuing with respect to any Plan. Neither the Borrower nor any ERISA
Affiliate has incurred or is reasonably expected to incur any unpaid Withdrawal
Liability to any Multiemployer Plan. Neither the Borrower nor any ERISA
Affiliate has been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated, within the
meaning of Title IV of ERISA, and to the best knowledge of the Borrower, no
Multiemployer Plan is reasonably expected to be in reorganization or to be
terminated, within the meaning of Title IV of ERISA.
ARTICLE 5
COVENANTS OF BORROWER
So long as any Loan remains unpaid or the Term Commitment remains
outstanding, the Borrower will observe the covenants set forth below, unless the
Bank otherwise consents in writing.
Section 5.1 Compliance with Governmental Rules, Etc. The Borrower will
comply, and will cause each of its Subsidiaries to comply, in all material
respects with all applicable Governmental Rules (including ERISA, the
regulations thereunder, and all applicable environmental laws and regulations),
such compliance to include paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon it or upon its property,
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except to the extent that the same is being contested in good faith by proper
proceedings and that appropriate reserves are being maintained with respect to
the same.
Section 5.2 Financial and Other Information. The Borrower will furnish the
following to the Bank:
(a) as soon as available and in any event within 120 days after the end of
each fiscal year of the Borrower, an audited consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such year and audited
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for such fiscal year, certified by independent
public accountants acceptable to the Bank;
(b) as soon as available and in any event within 90 days after the end of
each fiscal quarter of the Borrower, an unaudited consolidated balance sheet of
the Borrower and its Subsidiaries as of the end of such quarter and unaudited
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for such quarter;
(c) as soon as possible and in any event within 5 days after the
occurrence of any Default or ERISA Event of which the Borrower knows or should
know, a statement of the chief financial officer of the Borrower setting forth
details of such Default or ERISA Event and the action that the Borrower has
taken and proposes to take with respect thereto;
(d) promptly after the filing or receipt thereof, copies of all reports
and notices that the Borrower or any Subsidiary thereof files under ERISA with
the U.S. Internal Revenue Service, the PBGC or the U.S. Department of Labor or
that the Borrower or any such Subsidiary receives from the PBGC; and
(e) promptly upon request by the Bank, such other information respecting
the condition or operations, financial or otherwise, of the Borrower or any of
its Subsidiaries as the Bank may from time to time reasonably request.
Section 5.3 Insurance. The Borrower will maintain, and will cause each of
its Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Borrower or such Subsidiary operates
(including but not limited to casualty, liability, fire, flood, business
interruption, earthquake and workers' compensation). Notwithstanding anything to
the contrary set forth herein, the amount of the insurance shall be sufficient
to cover 100% of the replacement cost of the insured property. The obligation of
the Bank to make any Loan shall be conditioned on all such policies of insurance
containing an endorsement, in form and substance reasonably satisfactory to the
Bank, showing the Bank as additional insured or loss payee, as appropriate.
Section 5.4 Preservation of Corporate Existence, Etc. The Borrower will
preserve and maintain, and will cause each of its Subsidiaries to preserve and
maintain, its corporate existence, rights (charter and statutory) and
franchises; provided, however, that neither the Borrower nor any such Subsidiary
shall be required to preserve any such right or franchise if the Board of
Directors of the Borrower or such Subsidiary reasonably determines that the
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preservation thereof is no longer desirable in the conduct of the business of
the Borrower or such Subsidiary, as the case may be, and the loss thereof is not
disadvantageous in any material respect to the Borrower, such Subsidiary or the
Bank. The Borrower shall not, and shall not permit its Subsidiaries to, amend
its articles of incorporation and by-laws or equivalent Organic Documents
relating to its borrowing powers and its principal business activities without
the prior written consent of the Bank, such consent not to be unreasonably
withheld.
Section 5.5 Visitation Rights. At any reasonable time and from time to
time upon receipt of reasonable prior notice, the Borrower will permit the Bank
or any agents or representatives thereof, to examine and make copies of and
abstracts from the records and books of account of, visit the properties of and
inspect the personal property of (including but not limited to goods financed
with the Loans), the Borrower and any of its Subsidiaries and to discuss the
affairs, finances and accounts of the Borrower and any of its Subsidiaries with
any of their officers or directors and with their independent certified public
accountants, all of the foregoing at the Borrower's sole cost and expense.
Section 5.6 Maintenance of Properties. The Borrower will maintain and
preserve, and will cause each of its Subsidiaries to maintain and preserve, all
of its properties that are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
Section 5.7 Liens, Etc. Without the prior written consent of the Bank
which shall not be unreasonably withheld, the Borrower will not create or suffer
to exist any Lien or other type of preferential arrangement upon or with respect
to any of its properties, whether now owned or hereafter acquired, or assign any
right to receive income, in each case to secure or provide for the payment of
any Debt of any Person, other than purchase-money Liens upon any property
acquired or held by the Borrower in the ordinary course of business to secure
the purchase price of such property or to secure indebtedness incurred solely
for the purpose of financing the acquisition of such property.
Section 5.8 Mergers, Etc. Without the prior written consent of the Bank
which shall not be unreasonably withheld, the Borrower will not merge or
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its assets (whether now owned or hereafter acquired) to, any Person.
Section 5.9 Use of Proceeds. The Borrower will use the proceeds of the
Term Loans only to repay its outstanding loans to Comerica Bank-California and
to finance future capital expenditures. The Borrower will use the proceeds of
the Revolving Loans only for its working capital purposes.
Section 5.10 Maintenance of Net Worth. The Borrower will not permit the
consolidated net worth of it and its Subsidiaries to be equal to or less than $0
at any time.
Section 5.11 Maintenance of Gearing Ratio. The Borrower will not permit
the ratio of (a) the consolidated total liabilities of the Borrower and its
Subsidiaries to (b) the consolidated net worth of the Borrower and its
Subsidiaries to exceed (i) 1.75 to 1.0 as of December 31, 2002
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and June 30, 2003, (ii) 1.50 to 1.0 as of December 31, 2003 and June 30, 2004
and (iii) 1.0 to 1.0 as of December 31, 2004 and as of the end of each June and
December thereafter.
Section 5.12 Maintenance of Ratio of Debt to EBITDA. The Borrower will not
permit the ratio of (a) the consolidated Debt of the Borrower and its
Subsidiaries to (b) the consolidated EBITDA of the Borrower and its Subsidiaries
to exceed (i) 2.75 to 1.0 as of December 31, 2002 and June 30, 2003, (ii) 2.25
to 1.0 as of December 31, 2003 and June 30, 2004 and (iii) 2.0 to 1.0 as of
December 31, 2004 and as of the end of each June and December thereafter;
provided, however, that, if the Borrower fails to comply with the foregoing
covenant or the covenant set forth in Section 5.13 as of December 31, 2002, then
such failure shall not constitute a default of such covenant if the Borrower
does not permit the ratio of (x) the consolidated EBITDA of the Borrower and its
Subsidiaries less taxes paid, payable and/or accrued by the Borrower and its
Subsidiaries for such fiscal year to (y) the consolidated amount of all interest
on Debt which was paid, payable and/or accrued for such fiscal year (without
duplication of previous amounts) and the consolidated amount of the current
portion of long term Debt of the Borrower and its Subsidiaries to be less than
1.25 to 1.0 as of December 31, 2002. The Borrower shall be permitted to use
either a rolling twelve month basis figure or an annualized six months basis
figure in determining compliance with this covenant as of the end of June of any
fiscal year.
Section 5.13 Maintenance of Interest Service Coverage Ratio. The Borrower
will not permit the ratio of (a) the consolidated EBITDA of the Borrower and its
Subsidiaries less taxes paid, payable and/or accrued by the Borrower and its
Subsidiaries to (b) the consolidated amount of all interest on Debt which was
paid, payable and/or accrued to be less than 6.0 to 1.0 as of the end of June
and December of any fiscal year. The Borrower shall be permitted to use either a
rolling twelve month basis figure or an annualized six months basis figure in
determining compliance with this covenant as of the end of June of any fiscal
year.
Section 5.14 Sales, Etc. of Assets...Without the prior written consent of
the Bank which shall not be unreasonably withheld, the Borrower will not,
without the prior written consent of the Bank which shall not be unreasonably
withheld, sell, lease, transfer or otherwise dispose of, or permit any
Subsidiary to sell, lease, transfer or otherwise dispose of, any of its assets,
except in the ordinary course of the Borrower's or such Subsidiary's business.
Section 5.15 Other Secured Indebtedness. Without the prior written consent
of the Bank which shall not be unreasonably withheld, the Borrower shall not,
and shall not permit any Subsidiary to, create, incur, assume or permit to exist
any indebtedness or liabilities resulting from borrowings, loans, advances,
capitalized leases or purchase-money indebtedness secured by the Borrower's or
such Subsidiary's assets, whether matured or unmatured, liquidated or
unliquidated, joint or several, except for (a) liabilities of the Borrower to
the Bank, (b) liabilities of the Borrower to the Junior Creditor (as defined in
the Subordination Agreement) not exceeding $15,000,000 and (c) purchase-money
indebtedness and capitalized leases of the Borrower or any Subsidiary incurred
in connection with the purchase or lease of equipment, so long as the
outstanding principal amount of indebtedness incurred in connection with such
purchase or lease of equipment, whether before or after the date hereof, at no
time exceeds $5,000,000 in the aggregate.
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Section 5.16 Guaranteed Obligations. Other than the guarantee by the
Borrower guaranteeing the Guarantor's obligations to the Junior Creditor (as
defined in the Subordination Agreement), the Borrower shall not, and shall not
permit any Subsidiary to, create, incur, assume or permit to exist any
Guaranteed Indebtedness without the prior written consent of the Bank which
shall not be unreasonably withheld. The Borrower shall not make any payment or
distribute any assets of any kind or character, whether in cash or property, to
Junior Creditor on account of the Borrower's obligations to guarantee the
Guarantor's obligations to the Junior Creditor.
ARTICLE 6
EVENTS OF DEFAULT
Section 6.1 Events of Default. If any of the following events (each an
"Event of Default") occurs and is continuing:
(a) the Borrower fails to make any payment of principal of, or interest
on, any Loan when due;
(b) any representation or warranty made by any Loan Party (or any of its
officers) in or in connection with any Credit Document proves to have been
incorrect in any material respect when made;
(c) any Loan Party fails to perform or observe any term, covenant or
agreement contained in any Credit Document on its part to be performed or
observed (other than any referred to in Section 6.1(a)), and any such failure
remains unremedied for 10 days after written notice thereof has been given to
such Loan Party by the Bank;
(d) any Loan Party or any of its Subsidiaries fails to pay any principal
of, or premium or interest on, any Debt (other than the Loans) of such Loan
Party or such Subsidiary (as the case may be), when the same becomes due and
payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure continues after the applicable grace
period, if any, specified in the agreement or instrument relating to such Debt;
any other event occurs or condition exists under any agreement or instrument
relating to any such Debt and continues after the applicable grace period, if
any, specified in such agreement or instrument, if the effect of such condition
or event is to accelerate, or to permit the acceleration of, the maturity of
such Debt; or any such Debt is declared to be due and payable, or is required to
be prepaid (other than by a regularly scheduled required prepayment), prior to
the stated maturity thereof;
(e) any Loan Party or any of its Subsidiaries generally does not pay its
debts as such debts become due, admits in writing its inability to pay its debts
generally or makes a general assignment for the benefit of creditors; any
proceeding is instituted by or against any Loan Party or any of its Subsidiaries
seeking to adjudicate it as bankrupt or insolvent, seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of any order for
relief or the appointment of a receiver, trustee or other similar official for
it or for any substantial part of its property; or any Loan Party or any of its
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Subsidiaries takes any corporate or other legal action to authorize any of the
actions set forth above in this Section 6.1(e);
(f) any judgment or order for the payment of money in excess of $750,000
is rendered against any Loan Party or any of its Subsidiaries, and either (i)
enforcement proceedings are commenced by any creditor upon such judgment or
order or (ii) there is any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, is not in effect;
(g) any material provision of the Guaranty for any reason ceases to be
valid and binding on the Guarantor, or the Guarantor so states in writing; or
(h) the Guarantor is no longer the legal and beneficial owner, direct or
indirect, of all of the outstanding capital stock of the Borrower, or any of
such stock becomes subject to any Lien (other than a Lien in favor of the Bank);
then, and in any such event, the Bank may, by notice to the Borrower, (i)
declare the Term Commitment (if then outstanding) to be terminated, whereupon
the same shall forthwith terminate, and (ii) declare the Loans, all interest
thereon and all other amounts payable under this Agreement and the other Credit
Documents to be forthwith due and payable, whereupon the Loans, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that in the
event of an actual or deemed entry of an order for relief with respect to any
Loan Party or any Subsidiary thereof under the Federal Bankruptcy Code (or the
equivalent under the Governmental Rules of any other jurisdiction), (A) the Term
Commitment (if then outstanding) shall automatically terminate, and (B) the
Loans, all such interest and all such amounts shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrower.
ARTICLE 7
MISCELLANEOUS
Section 7.1 Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Term Note, or consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same is in writing and
signed by the Bank, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
Section 7.2 Notices, Etc. All notices and other communications provided
for hereunder shall be in writing and shall be mailed (certified mail, return
receipt requested), telecopied or delivered personally to the Borrower or the
Bank, as applicable, at the address or telecopier number of such party set forth
under its name on the signature pages hereof, or at such other address or
telecopier number as designated by such party in a written notice to the other
parties. All such notices and communications shall be deemed received (a) if
personally delivered, upon delivery, (b) if sent by first-class mail, on the
third Business Day following deposit into the mails, and (c) if sent by
telecopier, on that Business Day if sent before 5 p.m.,
-20-
Pacific time, otherwise, on the Business Day following the sending of such
notice or communication.
Section 7.3 No Waiver; Remedies. No failure on the part of the Bank to
exercise, and no delay in exercising, any right under any Credit Document shall
operate as a waiver thereof, and no single or partial exercise of any right
under any Credit Document shall preclude any other or further exercise thereof
or the exercise of any other right. The remedies provided in the Credit
Documents are cumulative and not exclusive of any remedies provided by law.
Section 7.4 Costs and Expenses.
(a) The Borrower agrees to pay on demand all costs and expenses in
connection with the preparation, execution, delivery, administration,
modification and amendment of the Credit Documents and the other documents
delivered hereunder, including the reasonable fees and out-of-pocket expenses of
counsel for the Bank with respect thereto and with respect to advising the Bank
as to its rights and responsibilities under the Credit Documents. The Borrower
further agrees to pay on demand all costs and expenses, if any (including
reasonable counsel fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of the Credit
Documents and the other documents delivered hereunder. Notwithstanding the
foregoing, the Bank will use its best efforts to minimize its legal fees
incurred in connection with documenting the transaction contemplated herein. The
Bank will notify the Borrower in the event that the legal fees incurred in
connection with this transaction exceeds $28,000, and both parties shall work in
good faith in minimizing any cost exceeding this amount.
(b) If, due to acceleration of the maturity of the Loans pursuant to
Section 6.1 or due to any other reason, the Bank receives any payment of
principal of any Loan other than on the last day of an Interest Period for such
Loan, or if the basis for determining the interest rate for any Loan is changed
in accordance with the terms of this Agreement for any reason, then the Borrower
will pay to the Bank on demand any amounts required to compensate the Bank for
any losses, costs or expenses that it may incur as a result of such payment or
change, including any loss (including loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Bank to fund or maintain any Loan.
(c) In the event that the Borrower or its Subsidiaries is in default of
the payment of insurance premiums, legal fees, property taxes or any other
out-of-pocket expenses, the Bank may in its sole and absolute discretion pay
such amounts and the Borrower agrees to reimburse the Bank for such amounts,
together with interest on such amounts from the date that the Bank paid such
amounts until the date on which such amounts are paid in full, payable on
demand, at an interest per annum equal to the Prime Rate plus 5% per annum. In
the event that the amount of such interest is less than $250, the Borrower will
pay the Bank an administrative charge of $250 rather than the amount of such
interest.
Section 7.5 Right of Setoff. Upon the occurrence and during the
continuation of any Event of Default, the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the
-21-
Bank to or for the credit or the account of the Borrower against any and all of
the obligations of the Borrower now or hereafter existing under this Agreement
or the Term Note, irrespective of whether or not the Bank has made any demand
under this Agreement or the Term Note and although such obligations may be
unmatured; provided, however, that, before setting off pursuant to this section
against any account that the Borrower may maintain with the Bank, the Bank shall
give the Borrower at least 3 days' prior written notice of the same, and the
Bank may prohibit withdrawals from such account unless and until such Event of
Default is no longer continuing. The Bank agrees to notify the Borrower after
any such setoff and application by the Bank; further provided, however, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of the Bank under this section are in addition to other
rights and remedies (including other rights of setoff) that the Bank may have.
Section 7.6 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Borrower and the Bank and their respective successors and
assigns, except that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the Bank.
The Bank may assign to any financial institution all or any part of, or any
interest in, the Bank's rights and benefits under the Credit Documents, and to
the extent of such assignment such assignee shall have the same rights and
benefits against the Borrower as it would have had if it were the Bank
hereunder.
Section 7.7 Governing Law. THIS AGREEMENT AND THE TERM NOTE SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF CALIFORNIA WITHOUT REFERENCE TO THE CHOICE-OF-LAW PRINCIPLES THEREOF.
Section 7.8 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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Section 7.9 Waiver of Jury Trial. THE BORROWER AND THE BANK HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY.
VIKO TECHNOLOGY, INC.
By: /s/ Xxxxxxxx Xxxxx
-------------------------------
Name: Xxxxxxxx Xxxxx
Title: Chairman of the Board
0000X Xxxxxx Xxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxxx Xxxxx
THE DEVELOPMENT BANK OF SINGAPORE
LTD., LOS ANGELES AGENCY
By: /s/ Chee Xxxx Xxx
-------------------------------
Name: Chee Xxxx Xxx
Title: General Manager
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxx Xxxx Tan
S-1
TERM NOTE
U.S.$14,000,000 Dated as of September 24, 2002
FOR VALUE RECEIVED, the undersigned, VIKO TECHNOLOGY, INC., a California
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of THE DEVELOPMENT BANK OF SINGAPORE LTD., LOS ANGELES AGENCY, a foreign
banking corporation incorporated in Singapore (the "Bank"), in lawful money of
the United States and in immediately available funds, the aggregate unpaid
principal amount of all Term Loans made by the Bank to the undersigned pursuant
to Section 2.1 of the Credit Agreement (as hereinafter defined), in amounts in
accordance with, and subject to, the provisions of Section 2.3 of the Credit
Agreement. Such payment shall be made for the account of the Bank at the office
of the Bank, located at 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000 or at such other office as the holder of this Term Note may
notify the undersigned and as agreed to by the Bank. The undersigned further
agrees to pay interest in like money at such office or such other office on the
unpaid principal amount hereof from time to time at the rates per annum and on
the dates specified in Section 2.4 of the Credit Agreement until paid in full
(both before and after judgment to the extent permitted by law).
This Term Note is the Term Note referred to in the Term Loan and Revolving
Credit Agreement dated as of September 24, 2002 (as amended, supplemented,
restated or otherwise modified from time to time, the "Credit Agreement"),
between the undersigned and the Bank, is entitled to the benefits thereof and of
the other Credit Documents and is subject to optional and mandatory prepayment
in whole or in part as provided therein. Reference is hereby made to the Credit
Agreement for a more complete statement of the terms and conditions under which
the Term Loan evidenced hereby is made and is to be repaid. Capitalized terms
used herein which are defined in the Credit Agreement shall have such meanings
unless otherwise defined herein or unless the context otherwise requires.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement, all amounts then remaining unpaid on this Term Note
shall become, or may be declared to be, immediately due and payable, all as
provided therein.
THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO THE
CHOICE-OF-LAW PRINCIPLES THEREOF.
IN WITNESS WHEREOF, the undersigned has caused this Term Note to be duly
executed and delivered by its proper and duly authorized officer as of the day
and year first above written.
VIKO TECHNOLOGY, INC.
By: ________________________
Name: ______________________
Title: _____________________
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SECURITY AGREEMENT
This Security Agreement, dated as of September 24, 2002, is made by VIKO
TECHNOLOGY, INC., a California corporation (the "Borrower"), in favor of THE
DEVELOPMENT BANK OF SINGAPORE LTD., LOS ANGELES AGENCY, a foreign banking
corporation incorporated in Singapore (the "Bank").
Recitals
A. The Borrower and the Bank have entered into a Term Loan and
Revolving Credit Agreement dated as of September 24, 2002 (said Agreement, as it
may hereafter be amended, restated or otherwise modified from time to time,
herein called the "Credit Agreement"). Terms defined in the Credit Agreement and
not otherwise defined herein are used herein as defined therein, and the rules
of interpretation set forth in Sections 1.2 and 1.3 of the Credit Agreement are
incorporated herein by reference. Terms defined in the California Uniform
Commercial Code (the "Code") and not otherwise defined herein or in the Credit
Agreement are used herein as defined in the Code.
B. It is a condition precedent to the extension of credit by the Bank
under the Credit Agreement that the Borrower grant the security interest
contemplated by this Agreement. Accordingly, the Borrower hereby agrees as set
forth below.
Section 1. Grant of Security Interest. The Borrower hereby assigns and
pledges to the Bank, and hereby grants to the Bank a security interest in, all
of the Borrower's right, title and interest in and to the following, whether now
owned or hereafter acquired, whether now or hereafter existing and wherever
located (the "Collateral"):
(a) all equipment in all of its forms (including all machinery,
furniture, furnishings, trade fixtures, tools, appliances, boilers, turbines,
generators, pipes, wires, cooling towers, pollution-control equipment, switches
and other goods of any kind), and all accessions and additions thereto, parts
and appurtenances thereof, substitutions therefor and replacements thereof (all
such equipment, accessions, additions, parts, appurtenances, substitutions and
replacements herein called the "Equipment");
(b) all inventory in all of its forms (including (i) all goods in
which the Borrower has an interest in mass or a joint or other interest or right
of any kind (including goods in which the Borrower has an interest or right as
consignee) and (ii) all goods that are returned to or repossessed by the
Borrower), and all accessions to, products of and documents for any or all of
the foregoing (any and all such inventory, accessions, products and documents
herein called the "Inventory");
(c) all accounts, chattel paper, instruments, letter-of-credit
rights, payment intangibles and other obligations for the payment of money to
the Borrower of any kind, whether or not arising out of or in connection with
the sale or lease of goods or the rendering of services, and all rights in and
to all security agreements, leases and other contracts securing or otherwise
relating to any such accounts, chattel paper, instruments, letter-of-credit
rights, payment intangibles or other obligations (any and all such accounts,
chattel paper, instruments, letter-of-credit rights, payment intangibles and
other obligations herein called the "Receivables");
(d) all investment property of any kind, all certificates and
instruments representing or evidencing such investment property, and all
interest, dividends, distributions, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any investment property;
(e) all of the following (the "Account Collateral"):
(i) all deposit accounts, securities accounts and other
accounts maintained at banks or other financial institutions (all such deposit
accounts, securities accounts and other accounts herein called the "Bank
Accounts"), all funds held in the Bank Accounts and all certificates and
instruments, if any, from time to time representing or evidencing the Bank
Accounts;
(ii) all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter delivered to or
otherwise possessed by the Bank for or on behalf of the Borrower in substitution
for or in addition to any or all of the then existing Account Collateral; and
(iii) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the then existing Account
Collateral;
(f) to the extent not referred to above in this Section 1, all
general intangibles, including the following: (i) inventions, designs, patents,
patent applications, copyrights, copyright registrations, applications to
register copyrights, licenses, trademarks (including service marks), trademark
or service xxxx applications, trade names, trade secrets, confidential or
proprietary technical and business information, know-how, show-how or other data
or information, software and databases and all embodiments or fixations thereof
and related documentation, registrations and franchises, and all additions,
improvements and accessions to, and books and records describing or used in
connection with, any of the foregoing, (ii) all contract rights and (iii) all
tax refunds; and
(g) all proceeds of any and all of the foregoing Collateral
(including proceeds that constitute property of any type described above in this
Section 1) and, to the extent not otherwise included, all (i) insurance proceeds
and other payments under insurance (whether or not the Bank is the loss payee
thereof) payable by reason of loss or damage to, or otherwise with respect to,
the Collateral or any part thereof, (ii) payments under any indemnity, warranty
or guaranty payable by reason of loss or damage to, or otherwise with respect
to, the Collateral or
2
any part thereof, (iii) eminent domain proceeds, (iv) books and records with
respect to the Collateral or any part thereof and (v) cash.
NOTWITHSTANDING (i) THAT THE BORROWER IS GRANTING A SECURITY INTEREST TO
THE BANK PURSUANT TO THIS AGREEMENT AND (ii) THAT THIS AGREEMENT CONTAINS
CERTAIN AGREEMENTS OF THE BORROWER TO PROVIDE INFORMATION TO THE BANK ON A
REGULAR BASIS, TO MAKE CERTAIN PAYMENTS TO THE BANK AND TO TAKE OTHER ACTIONS
THAT MAY BENEFIT THE BANK OR CONSTRAIN THE BORROWER, THE BORROWER ACKNOWLEDGES
AND AGREES THAT (A) THE BANK HAS NO OBLIGATION WHATSOEVER TO AGREE TO MAKE
REVOLVING LOANS AS DESCRIBED IN THE CREDIT AGREEMENT OR OTHERWISE AND (B) THE
BANK HAS THE RIGHT, SHOULD IT EXTEND CREDIT TO THE BORROWER AT ANY TIME AS
DESCRIBED IN THE CREDIT AGREEMENT OR OTHERWISE, TO DISCONTINUE THE MAKING OF
REVOLVING LOANS TO THE BORROWER AT ANY TIME IN THE SOLE AND ABSOLUTE DISCRETION
OF THE BANK.
Section 2. Security for Obligations. The security interest granted by the
Borrower pursuant to this Agreement secures the payment of all obligations of
the Borrower now or hereafter existing under, in respect of or in connection
with the following documents (the "Secured Documents"): (a) the Credit
Agreement; (b) each other Credit Document to which the Borrower is or becomes a
party; and (c) this Agreement (all such obligations herein called the "Secured
Obligations").
Section 3. Borrower Remains Liable. Notwithstanding anything herein to the
contrary, (a) the Borrower shall remain liable under the contracts and
agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Bank of any of its
rights hereunder shall not release the Borrower from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) the Bank shall not (i) have any obligation or liability under the contracts
and agreements included in the Collateral by reason of this Agreement or (ii) be
obligated to perform any of the obligations or duties of the Borrower thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
Section 4. Representations and Warranties. The Borrower represents and
warrants to the Bank as set forth below.
(a) All of the Equipment and Inventory is located at the address
specified for the Borrower pursuant to Schedule 1. The Borrower keeps its
originals of its records concerning the Collateral at the address specified for
the Borrower pursuant to Schedule 1. The Borrower does not own any chattel paper
or instruments.
(b) The Borrower is the legal and beneficial owner of the
Collateral, free and clear of any Lien other than Liens permitted by Section 5.7
of the Credit Agreement. No effective financing statement or other instrument
similar in effect covering any or all of the Collateral is on file in any filing
or recording office, except such as may have been filed or recorded: (i) in
favor of the Bank relating to this Agreement, (ii) pursuant to any
purchase-money
3
liens entered into in the ordinary course of business and in accordance with the
terms of the Credit Agreement, (iii) in favor of the Junior Creditor (as defined
in the Subordination Agreement) and (iv) in favor of Comerica Bank-California.
The financing statements in favor of Comerica Bank-California shall be
terminated prior to or concurrently with the making of any Loan by the Bank. The
Borrower has no trade name other than those listed in Schedule 1.
(c) The Borrower has exclusive possession and control of the
Equipment and the Inventory. None of the Inventory is evidenced by a document of
title, warehouse receipt or similar document.
(d) The Borrower does not own any investment property.
(e) The Borrower does not have any deposit accounts or securities
accounts other than the accounts set forth in Schedule 2.
(f) This Agreement, the filing of a UCC-1 financing statement with
the California Secretary of State against the Borrower and in favor of the Bank,
and the execution of Control Agreements with respect to the Bank Accounts create
a valid and perfected first-priority security interest in the Collateral,
subject only to Liens permitted by Section 5.7 of the Credit Agreement. All
filings and other actions necessary or desirable to perfect and protect such
security interest have been duly taken.
(g) Except for the filing of a UCC-1 financing statement against
the Borrower and in favor of the Bank, no Governmental Action is required either
(i) for the grant by the Borrower of the security interest granted hereby or
(ii) for the perfection of or exercise by the Bank of its rights provided for in
this Agreement or the remedies in respect of the Collateral provided pursuant to
this Agreement.
Section 5. Further Assurances.
(a) The Borrower agrees that from time to time, at its expense, it
will promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary, or that the Bank may reasonably
request, in order to perfect and protect the security interest granted or
purported to be granted hereby or to enable the Bank to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, the Borrower will, if requested by the Bank,
(i) execute and file such financing statements or amendments thereto, and such
other instruments or notices, as may be necessary, or as the Bank may reasonably
request, in order to perfect and preserve the security interest granted or
purported to be granted hereby and (iii) cause one or more Control Agreements,
in form and substance satisfactory to the Bank, to be executed by all parties
necessary to establish "control" under the Code with respect to any or all
deposit accounts or securities accounts of the Borrower, for the purpose of
perfecting a security interest in such accounts.
(b) The Borrower hereby authorizes the Bank to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral
4
without the signature of the Borrower where permitted by law. A copy of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
(c) The Borrower will furnish to the Bank from time to time such
statements and schedules further identifying and describing the Collateral, and
such other reports in connection with such Collateral, as the Bank may
reasonably request, all in reasonable detail.
Section 6. As to Equipment and Inventory.
(a) The Borrower will keep the Equipment and Inventory at the
places therefor specified in Section 4(a) hereof.
(b) The Borrower will cause the Equipment to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and in accordance with any applicable manufacturers'
manuals, and will forthwith, or in the case of any loss or damage to any of the
Equipment as quickly as practicable after the occurrence thereof, make or cause
to be made all repairs, replacements and other improvements in connection
therewith as are necessary or desirable to such end. The Borrower will promptly
furnish to the Bank a statement concerning any material loss or damage to the
Equipment.
(c) The Borrower will pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory; provided, however, that the Borrower shall not be
required to pay or discharge any such tax, assessment, charge, levy or claim
that is being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained.
Section 7. Place of Perfection; Collection of Receivables.
(a) The Borrower will give the Bank at least 30 days' prior
written notice of any change in the jurisdiction of its organization or in the
location of the office where it keeps its records concerning the Collateral.
(b) Except as otherwise provided in this Section 7(b), the
Borrower will continue to collect, at its own expense, all amounts due or to
become due to the Borrower under the Receivables. In connection with such
collections, the Borrower may take (and, at the Bank's direction, will take)
such action as the Borrower or the Bank may deem necessary or advisable to
enforce collection of the Receivables; provided, however, that the Bank shall
have the right at any time, upon the occurrence and during the continuation of a
Default and upon written notice to the Borrower of its intention to do so, to
notify the account debtors or obligors under any Receivables of the assignment
of such Receivables to the Bank, to direct such account debtors or obligors to
make payment of all amounts due or to become due to the Borrower thereunder
directly to the Bank, to enforce collection of any such Receivables at the
expense of the Borrower and to adjust, settle or compromise the amount or
payment of any such Receivables, in the same manner and to the same extent as
the Borrower might have done. After receipt by the
5
Borrower of the notice from the Bank referred to in the proviso to the preceding
sentence, (i) all amounts and proceeds (including instruments) received by the
Borrower in respect of the Receivables shall be received in trust for the
benefit of the Bank hereunder, shall be segregated from other funds of the
Borrower and shall be forthwith paid over to the Bank in the same form as so
received (with any necessary endorsement) to be held as cash collateral and, if
an Event of Default has occurred and is continuing, applied as provided in
Section 10(b), and (ii) the Borrower will not adjust, settle or compromise the
amount or payment of any Receivable, release wholly or partly any account debtor
or obligor thereunder, or allow any credit or discount thereon.
Section 8. Bank Appointed Attorney-in-Fact. The Borrower hereby
irrevocably appoints the Bank as the Borrower's attorney-in-fact, with full
authority in the place and stead of the Borrower and in the name of the Borrower
or otherwise, from time to time in the Bank's discretion at any time after the
occurrence and during the continuation of a Default, to take any action and to
execute any instrument that the Bank may deem necessary or advisable to
accomplish the purposes of this Agreement, including the following:
(a) to obtain and adjust insurance required to be paid to the Bank
pursuant to Section 5.3 of the Credit Agreement;
(b) to ask for, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due or to become due under
or in respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other
instruments, documents or chattel paper in connection with clause (a) or (b)
above; and
(d) to file any claims, take any action and institute any
proceedings that the Bank may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce compliance with the rights of the
Bank with respect to any of the Collateral.
The foregoing power of attorney is a power coupled with an interest and is
therefore irrevocable without the written consent of the Bank.
Section 9. Bank May Perform; Bank's Duties.
(a) If the Borrower fails to perform any agreement thereof
contained herein, the Bank may itself perform or cause performance of such
agreement, and the expenses of the Bank incurred in connection therewith shall
be payable by the Borrower under Section 11(b).
(b) The powers conferred on the Bank under this Agreement are
solely to protect its interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Bank shall not have any duty as to any Collateral, as to
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Bank has or is deemed to
6
have knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral. The Bank shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that the Bank accords its own
similar property.
Section 10. Remedies. If any Event of Default occurs and is continuing,
the provisions set forth below shall apply.
(a) The Bank may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all of the rights and remedies of a secured party on default under the
Code (whether or not the Code applies to the affected Collateral) and may also
(i) require the Borrower to, and the Borrower hereby agrees that it will at its
expense and upon request by the Bank forthwith, assemble all or part of the
Collateral as directed by the Bank and make it available to the Bank at a place
to be designated by the Bank that is reasonably convenient to both parties and
(ii) without notice except as provided below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the Bank's
offices or elsewhere, for cash, on credit or for future delivery and upon such
other terms as are commercially reasonable. The Borrower agrees that, to the
extent notice of sale is required by law, at least 10 days' notice to the
Borrower of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The Bank
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Bank may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned.
(b) All payments received by the Bank under or in respect of the
Collateral, and all cash proceeds received by the Bank in respect of any sale
of, collection from or other realization upon all or any part of the Collateral
may, in the discretion of the Bank, be held by the Bank as collateral for,
and/or then or at any time thereafter applied (after payment of any amounts
payable to the Bank pursuant to Section 11) in whole or in part by the Bank for
the ratable benefit of the Bank against, all or any part of the Secured
Obligations in such order as the Bank may elect. Any surplus of such payments or
cash proceeds held by the Bank and remaining after payment in full of the
Secured Obligations shall be paid over to the Borrower or to whoever may be
lawfully entitled to receive such surplus.
(c) The Bank may exercise any and all rights and remedies of the
Borrower under or in respect of the Collateral.
(d) All payments received by the Borrower under or in respect of
the Collateral shall be received in trust for the benefit of the Bank, shall be
segregated from other funds of the Borrower and shall be forthwith paid over to
the Bank in the same form as so received (with any necessary endorsement).
(e) The Bank may, without notice to the Borrower except as
required by law and at any time and from time to time, charge, set off and
otherwise apply any or all of the Account Collateral against the Secured
Obligations.
7
(f) Notwithstanding any agreement to the contrary, the Bank agrees
to provide at least 24 hours notice to the Guarantor prior to the Bank
exercising its rights under any Control Agreement after an Event of Default has
occurred.
Section 11. Indemnity and Expenses.
(a) The Borrower agrees to indemnify the Bank from and against any
and all claims, losses and liabilities growing out of or resulting from this
Agreement (including enforcement of this Agreement), except claims, losses or
liabilities resulting from the Bank's gross negligence or willful misconduct.
(b) The Borrower will upon demand pay to the Bank the amount of
any and all reasonable expenses, including the reasonable fees and disbursements
of its counsel and of any experts and agents, that the Bank may incur in
connection with (i) the custody, preservation, use or operation of, or the sale
of, collection from or other realization upon, any of the Collateral, (ii) the
exercise or enforcement of any of the rights of the Bank hereunder or (iii) the
failure by the Borrower to perform or observe any of the provisions hereof.
Section 12. Amendments, Waivers, Etc.
(a) No amendment or waiver of any provision of this Agreement, and
no consent to any departure by the Borrower herefrom, shall in any event be
effective unless the same is in writing and signed by the Bank and, in the case
of any amendment, the Borrower, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) The waiver (whether express or implied) by the Bank of any
breach of the terms or conditions of this Agreement shall not prejudice any
remedy of the Bank in respect of any continuing or other breach of the terms and
conditions hereof and shall not be construed as a bar to any right or remedy
that the Bank would otherwise have on any future occasion under this Agreement.
(c) No failure to exercise or delay in exercising any right, power
or privilege under this Agreement by the Bank shall operate as a waiver thereof
or the exercise of any other right, power or privilege.
Section 13. Addresses for Notices. All notices and other communications
provided for hereunder shall be given in accordance with the provisions of, and
with the effect provided in, Section 7.2 of the Credit Agreement.
Section 14. Continuing Security Interest; Assignments under Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the Term
Commitment has terminated and the Secured Obligations have been paid in full,
(b) be binding upon the Borrower and its successors and assigns and (c) inure,
together with the rights and remedies of the Bank hereunder, to the benefit of
the Bank and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c),
8
the Bank may assign or otherwise transfer any or all of its rights and
obligations under the Credit Agreement to any other Person, and such other
Person shall thereupon become vested with all of the benefits in respect thereof
granted to the Bank herein or otherwise. Upon the termination of the Term
Commitment and the payment in full of the Secured Obligations, the security
interest granted hereby shall terminate, and all rights to the Collateral shall
revert to the Borrower. Upon any such termination, the Bank will execute and
deliver to the Borrower, at its expense, such documents as the Borrower may
reasonably request to evidence such termination.
Section 15. Headings. The section and subsection headings used in this
Agreement have been inserted for convenience of reference only and do not
constitute matters to be considered in interpreting this Agreement.
Section 16. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery by telecopier of an executed counterpart of a signature page to this
Agreement shall be effective as delivery of an originally executed counterpart
of this Agreement.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY.]
9
Section 17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA
WITHOUT REFERENCE TO THE CHOICE-OF-LAW PRINCIPLES THEREOF.
The Borrower has caused this Agreement to be executed by its duly
authorized representative as of the date first set forth above.
VIKO TECHNOLOGY, INC.
By: /s/ Xxxxxxxx Xxxxx
------------------------
Name: Xxxxxxxx Xxxxx
Title: Chairman of the Board
SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT is made as of September 24, 2002 (this
"Agreement") between THE DEVELOPMENT BANK OF SINGAPORE LTD., LOS ANGELES AGENCY
("Senior Creditor"), having an address at 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000 and KUMAR XXXXX IN HIS CAPACITY AS SELLERS'
REPRESENTATIVE (as such term is defined in the Share Purchase Agreement dated
December 18, 2001 (the "Share Purchase Agreement") by and between Infiniti
Solutions Pte Limited, a Singapore limited liability company ("Infiniti") and
the then shareholders of Viko Technology, Inc., a California corporation) (the
"Junior Creditor").
WHEREAS, Infiniti has executed the following: (a) Promissory Note
dated December 18, 2001 made by Infiniti payable to the order of Junior Creditor
in the original principal amount of Twelve Million and 00/100 Dollars
($12,000,000.00); and (b) Promissory Note dated December 18, 2001 made by
Infiniti payable to the order of Junior Creditor in the original principal
amount of Three Million and 00/100 Dollars ($3,000,000.00), as such amount may
be adjusted pursuant to the terms of the note (the foregoing notes are
collectively referred to as the "Notes");
WHEREAS, the Notes are guaranteed by Viko Technology, Inc., a
California corporation ("Borrower"), pursuant to the terms of that certain
Guaranty dated December 18, 2001 (the "Guaranty") by Borrower in favor of Junior
Creditor as set forth more fully in the Guaranty, and Borrower's obligations
under the Guaranty are secured by the collateral set forth in that certain
Security Agreement dated December 18, 2001 (the "Security Agreement") by
Borrower in favor of Junior Creditor as set forth more fully in the Security
Agreement (the Guaranty, the Security Agreement and the documents and
instruments executed pursuant thereto are collectively referred to as the
"Junior Creditor Documents"); all loans, advances, liabilities and obligations
at any time owed by Borrower to Junior Creditor, now existing or hereafter
arising, secured or unsecured, absolute or contingent, due or to become due, and
whether direct or indirect or acquired by Junior Creditor by transfer, pledge,
purchase, assignment or otherwise, including without limitation, the obligations
evidenced by the Junior Creditor Documents, together with all principal,
interest, fees, attorneys' fees and costs, charges, expenses, costs and interest
accruing during a bankruptcy proceeding with respect to Borrower,
notwithstanding any law to the contrary, are referred to as the "Junior Debt";
WHEREAS, Senior Creditor has made and will make certain loans and
credit accommodations to Borrower pursuant to the terms and conditions of that
certain Term Loan and Revolving Credit Agreement dated as of September __, 2002
by and between Senior Creditor and Borrower (as amended from time to time such
document, together with all instruments and documents executed in connection
therewith, the "Senior Creditor Documents"); all loans, advances, liabilities
and obligations at any time owed by Borrower to Senior Creditor, now existing or
hereafter arising, secured or unsecured, absolute or contingent, due or to
become due, and whether direct or indirect or acquired by Senior Creditor by
transfer, pledge, purchase, assignment or otherwise, including without
limitation, the obligations evidenced by the Senior Creditor Documents, together
with all principal, interest, fees, attorneys' fees and costs, charges,
expenses, costs and interest accruing during a bankruptcy proceeding with
respect to Borrower, notwithstanding any law to the contrary, are referred to as
the "Senior Debt";
WHEREAS, Senior Creditor requires that Junior Creditor subordinate,
and Junior Creditor has agreed to subordinate, the repayment of the Junior Debt
and Junior Creditor's rights and remedies relating thereto under the Junior
Creditor Documents to the payment and performance of the Senior Debt and Senior
Creditor's rights and remedies relating thereto under the Senior Creditor
Documents; and
WHEREAS, Senior Creditor requires that Junior Creditor subordinate,
and Junior Creditor has agreed to subordinate, Junior Creditor's security
interest and lien on Borrower's property and assets to the security interest and
lien of Senior Creditor in Borrower's property and assets, and to Senior
Creditor's rights and remedies as a secured party related thereto.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Senior Creditor and Junior Creditor agree as follows:
1. No Third Party Beneficiaries. All understandings, agreements,
representations and warranties contained hereby are solely for the benefit of
the parties hereto and there are no other parties (including, without
limitation, Borrower) who are intended to be benefited in any way by this
Agreement.
2. Outstanding Balance of Junior Debt. Junior Creditor represents
and warrants that as of the date hereof, the aggregate principal amount of
indebtedness due and owing from Infiniti and guaranteed by Borrower to Junior
Creditor is Fifteen Million and 00/100 Dollars ($15,000,000.00) and such amount
is evidenced by the Junior Creditor Documents. Other than the Junior Creditor
Documents, there are no agreements or instruments between Junior Creditor and
Borrower relating to the payment of the Junior Debt.
3. Subordination of Junior Debt. Junior Creditor agrees that the
payment of the principal of, interest on, and other amounts due and owing on the
Junior Debt is and shall be expressly subordinate and junior in right of payment
to the indefeasible payment and performance in full of the Senior Debt.
3.1 Payments in Trust for Senior Creditor. Any payments or
distribution of assets of Borrower of any kind or character, whether in cash or
property, received by Junior Creditor on account of the Junior Debt in violation
of this Agreement, shall be held by Junior Creditor, in trust, for the benefit
of Senior Creditor, and shall be delivered to Senior Creditor in kind,
immediately upon receipt by Junior Creditor, for application to the Senior Debt
until the Senior Debt is indefeasibly paid in full. Any proceeds of collateral,
or proceeds thereof (whether or not identifiable), or payments from any
guarantors received by Junior Creditor, on account of the Junior Debt, shall be
paid to the Senior Creditor immediately upon receipt by Junior Creditor until
the Senior Debt is paid in full.
3.2 Dissolution, Liquidation or Reorganization of Borrower.
Upon the distribution of any of Borrower's assets, whether by reason of sale,
reorganization, liquidation, dissolution, arrangement, bankruptcy, receivership,
assignment for the benefit of creditors,
foreclosure or otherwise, Senior Creditor shall be entitled to receive payment
in full of the Senior Debt prior to the payment of all or any part of the Junior
Debt.
4. Priority of Liens. Notwithstanding the terms or provisions of
any agreement or arrangement which either Senior Creditor or Junior Creditor may
now or hereafter have with Borrower, or any rule of law, and irrespective of (a)
the time, order or method of attachment or perfection of any security interest
or the recordation or other filing in any public record of any financing
statement or security agreement; or (b) the giving or failure to give notice of
the acquisition or expected acquisition of purchase money security interests,
the security interest granted to Senior Creditor by Borrower, whether or not
perfected, or any other lien now or hereafter held by Senior Creditor are and
shall remain senior to and have priority over any security interest now or
hereafter granted by Borrower to Junior Creditor.
5. Standstill Period. If (a) there is a Default or an Event of
Default under the Senior Debt; or (b) if there is a Default (as defined in the
Junior Creditor Documents) under the Junior Debt such that Junior Creditor then
has the right to enforce rights against Borrower and Junior Creditor's
collateral, then Junior Creditor shall not be entitled to declare the Junior
Debt to be due and payable or take any action with respect to collateral in
which its security interest is subordinate to that of Senior Creditor, whether
by judicial or non-judicial foreclosure, notification to Borrower's account
debtors, setoff or otherwise exercise any other remedy until the indefeasible
payment in full of the Senior Debt.
5.1 Intervention. If Junior Creditor, in contravention of
the terms of this Section 5, shall commence, prosecute or participate in any
suit, action or proceeding against Borrower or initiate any foreclosure sale or
proceeding or any other action to enforce its lien on any of Senior Creditor's
collateral, then Borrower may interpose as a defense or plea the making of this
Agreement, and the Senior Creditor may intervene and interpose such defense or
plea in its name or in the name of Borrower. If the Junior Creditor, in
contravention of the terms of this Agreement, shall attempt to enforce any
remedies prohibited by this Agreement, then Senior Creditor or Borrower may, by
virtue of this Agreement, restrain the enforcement thereof in the name of Senior
Creditor or in the name of Borrower.
6. No Lien on Real Property. Junior Creditor represents and
warrants that it does not now have and it will not obtain, without Senior
Creditor's prior written consent, a lien or security interest on, or in, the
real property of Borrower.
7. Covenants of Junior Creditor. Junior Creditor covenants and
agrees that it shall not, except as provided in this Agreement, directly or
indirectly:
7.1 exercise or enforce any right of acceleration, demand or
set off against Borrower or the assets or property of Borrower, in each case in
connection with the Junior Debt;
7.2 make any claim or commence or initiate any action,
lawsuit, case or proceedings against Borrower in connection with the Junior Debt
or join together with any creditor in any action, lawsuit, case or proceeding
against Borrower in connection with the Junior Debt;
7.3 ask for, demand, take, accept, receive or take any
action to obtain, any security interest or lien on the assets or property of
Borrower or exercise any right of foreclosure or any right or remedy with
respect to Borrower or the assets or property of Borrower;
7.4 contact any account debtors of Borrower in connection
with the Junior Debt or otherwise seek payment from any obligor on any
Collateral (as defined in the Senior Creditor Documents) in connection with the
Junior Debt; or
7.5 take any other action that interferes with, is
prejudicial to or inconsistent with Senior Creditor's rights and first priority
secured lien with respect to the assets or property of Borrower including,
without limitation, the taking of any action that will impede, interfere with,
restrict, or restrain the exercise by Senior Creditor of its rights and remedies
under the Senior Creditor Documents.
8. Assignment of Senior Debt. Any person or entity whose loans or
advances to Borrower hereafter are used to refinance and pay in full the Senior
Debt shall be deemed for all purposes hereof to be the successor to Senior
Creditor, and from and after the date of any such refinancing in satisfaction in
full of the Senior Debt such person or entity shall be deemed a party hereto in
the place and stead of Senior Creditor as if such person or entity had been the
original signatory hereto, and all loans, advances, liabilities, covenants and
duties at any time or times owed by Borrower to such person or entity, whether
direct or indirect, absolute or contingent, secured or unsecured, due or to
become due, then existing or thereafter arising, including any renewals,
extensions, modifications, or replacements of any of the foregoing, shall be
deemed for all purposes hereunder to constitute and be Senior Debt. Junior
Creditor shall execute and deliver such further documents and instruments and
take such further action as may reasonably be requested by such successor to
Senior Creditor to effect the purposes of this Agreement.
9. Representations and Warranties of Junior Creditor. Junior
Creditor represents, covenants and agrees that:
9.1 as of the date hereof, it is the sole owner and holder
of the Junior Debt and that it has not sold or assigned any interest therein;
9.2 it has not granted any prior subordination with respect
to the Junior Debt, except for a subordination agreement with Comerica Bank -
California, in substantially the same form as this Agreement, which is expected
to be terminated upon the retirement of the loans made to Borrower by Comerica
Bank - California by the loans made under the Senior Credit Documents;
9.3 it does not have a security interest or lien on the
property or assets of Borrower other than as set forth in the Junior Creditor
Documents;
9.4 it will not, at any time while this Agreement is in
effect, sell, transfer, pledge, assign, hypothecate or otherwise dispose of any
or all of the Junior Debt to any entity other than one which agrees in a
writing, reasonably satisfactory in form and substance to Senior Creditor, to
become a party hereto and to succeed to the rights and to be bound by all of
the obligations of Junior Creditor hereunder. In the case of any such
disposition by Junior Creditor, it will notify Senior Creditor at least (15)
fifteen days prior to the date of any of such intended disposition;
9.5 it will not grant, create, or incur any security
interest, lien, charge, or other encumbrance whatsoever upon the Junior Debt;
9.6 it will not modify, amend, alter, change, substitute or
extend any of the terms or provisions of the Junior Debt or any of the Junior
Creditor Documents in any manner which would make Borrower's obligations
thereunder more burdensome than as of the date hereof;
9.7 it will, at the request of Senior Creditor, release any
lien and security interest it has on any Senior Creditor collateral to
facilitate its transfer or sale so long as the proceeds thereof are applied
against the Senior Debt and any excess is paid to Junior Creditor to be applied
against the Junior Debt;
9.8 it waives any rights it may have to claim that the
enforceability of this Agreement may be affected by any subsequent modification,
release, extension, or other change, material or otherwise, in the Senior Debt;
and
9.9 (a) it is the duly authorized agent of the Sellers (as
defined in the Share Purchase Agreement) and has the full right, power and
authority to enter into this Agreement on behalf of the Sellers and to legally
bind the Sellers to the terms and conditions hereof and (b) when executed and
delivered by the Junior Creditor on behalf of itself and as the agent for the
Sellers, this Agreement shall constitute a valid and legally binding obligation
of Junior Creditor and the Sellers, respectively, enforceable against such
parties in accordance with its terms.
10. Modification of Senior Debt. Senior Creditor may at any time,
in Senior Creditor's discretion, renew or extend the time of payment of any
portion of the Senior Debt, increase the amount of the Senior Debt, or waive or
release any collateral which may be held therefor, and Senior Creditor may enter
into such agreements with Borrower as Senior Creditor may deem desirable without
notice to or further assent from the Junior Creditor and without in any way
affecting Senior Creditor's rights hereunder to amend or modify the Senior Debt.
11. Junior Creditor Claims. If Junior Creditor fails to diligently
enforce any of its rights in any claims it may have against Borrower or its
properties arising out of or relating to the Junior Debt ("Junior Creditor
Claim"), in any bankruptcy, receivership or any other insolvency proceeding
relative to Borrower or its properties, then Junior Creditor hereby: (a) assigns
to Senior Creditor all of its rights in any Junior Creditor Claim, in any
bankruptcy, receivership or any other insolvency proceeding relative to Borrower
or its properties; and (b) irrevocably appoints Senior Creditor as Junior
Creditor's true and lawful attorney, with full power of substitution, (which
power is coupled with an interest and is irrevocable), for the use and benefit
of Senior Creditor, without notice to Junior Creditor at Senior Creditor's
option, to: (i) enforce Junior Creditor Claims whether in Senior Creditor's own
name or in the name of Junior Creditor, by proof of debt, proof of claim, suit
or otherwise; (ii) collect any assets of
Borrower distributed, divided or applied by way of dividend or payment, or any
securities or the proceeds of any realization upon the same in respect of Junior
Creditor Claims, and apply the same to the Senior Debt until the Senior Debt is
paid in full in cash; and (iii) vote and exercise any and all rights in respect
of Junior Creditor Claims including, without limitation, to accept or reject any
plan of partial or complete liquidation, reorganization or arrangement.
12. Waiver of Marshaling. Junior Creditor irrevocably waives any
right to compel Senior Creditor to marshal assets of the Borrower, whether such
rights arise under California Civil Code Sections 2899 and 3433 or otherwise.
13. Term. The subordination and agreements set forth herein shall
remain in full force and effect until Senior Creditor advises Junior Creditor
that Borrower has indefeasibly paid in full in cash the Senior Debt and Senior
Creditor has terminated its security interests in and to the collateral. The
rights and obligations of Junior Creditor and Senior Creditor hereunder shall
not be affected by any act or failure to act by Borrower (regardless of any
knowledge Senior Creditor may have thereof) or the bankruptcy or insolvency of
Borrower and shall be effective regardless of whether either Senior Creditor or
Junior Creditor in the future seeks to rescind, amend, terminate or reform by
litigation or otherwise their respective agreements with Borrower.
14. Further Assurances. Each party hereto agrees to execute and
deliver such additional instruments and documents and make such additional
actions as the other party may reasonably request in order to carry out and
evidence the terms of this Agreement.
15. Attorneys' Fees. If either party seeks to enforce its rights
hereunder, then the prevailing party shall have its reasonable attorneys' fees
and expenses incurred in the enforcement of this Agreement (whether or not the
result of litigation) paid by the other party. It shall be presumed (subject to
rebuttal only by the introduction of competent evidence to the contrary) that
the amount recoverable is the amount billed to the prevailing party by its
counsel and that such amount will be reasonable if based on customary billing
rates charged to such party by its counsel in similar matters.
16. Venue and Jury Trial Waiver. Senior Creditor and Junior
Creditor hereby submit to the exclusive jurisdiction of the state and Federal
courts located in the County of Los Angeles, State of California. SENIOR
CREDITOR AND JUNIOR CREDITOR EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH
PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
17. Miscellaneous.
17.1 Choice of Law. This Agreement shall be governed by and
construed under the laws of the State of California.
17.2 Successors and Assigns. This Agreement shall bind and
inure to the benefit of the respective successors and permitted assigns of each
of the parties.
17.3 Severability of Provisions. In the event any one or more
of the provisions contained in this Agreement is held to be invalid, illegal or
unenforceable in any respect, then such provision shall be ineffective only to
the extent of such prohibition or invalidity, and the validity, legality, and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
17.4 Amendments. Neither this Agreement nor any provisions
hereof may be changed, waived, discharged or terminated, nor may any consent to
the departure from the terms hereof be given, orally (even if supported by new
consideration), but only by an instrument in writing signed by all parties to
this Agreement. Any waiver or consent so given shall be effective only in the
specific instance and for the specific purpose for which given.
17.5 Entire Agreement. This Agreement embodies the entire
agreement and understanding among and between the parties hereto, and supersedes
all prior or contemporaneous agreements and understandings between said parties,
verbal or written, express or implied, relating to the subject matter hereof. No
course of dealing, course of performance or trade usage, and no parol evidence
of any nature, shall be used to supplement or modify any terms of this
Agreement.
17.6 Waiver. No failure to exercise and no delay in
exercising any right, power, or remedy hereunder shall impair any right, power,
or remedy which Bank may have, nor shall any such delay be construed to be a
waiver of any of such rights, powers, or remedies, or any acquiescence in any
breach or default hereunder; nor shall any waiver by Bank of any breach or
default by Junior Creditor hereunder be deemed a waiver of any default or breach
subsequently occurring. All rights and remedies granted to Bank hereunder shall
remain in full force and effect notwithstanding any single or partial exercise
of, or any discontinuance of action begun to enforce, any such right or remedy.
The rights and remedies specified herein are cumulative and not exclusive of
each other or of any rights or remedies which Bank would otherwise have. Any
waiver, permit, consent or approval by Bank of any breach or default hereunder
must be in writing and shall be effective only to the extent set forth in such
writing and only as to that specific instance.
17.7 Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
all signatures were upon the same instrument. Delivery of an executed
counterpart of the signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement, and
any party delivering such an executed counterpart of the signature page to this
Agreement by facsimile to any other party shall thereafter also promptly deliver
a manually executed counterpart of this Agreement to such other party; provided;
however, that the failure to deliver such manually executed counterpart shall
not affect the validity, enforceability, or binding effect of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Subordination Agreement to be duly executed and delivered by their respective
officers hereunto duly authorized as of the date first above written
/s/ Kumar Xxxxx
----------------------------------
Kumar Xxxxx in his capacity as
Sellers' Representative
THE DEVELOPMENT BANK OF SINGAPORE LTD.,
LOS ANGELES AGENCY
/s/ Xxxx Xxxx, Xxx
----------------------------------
By: Xxxx Xxxx, Ong
Its: General Manager
ACKNOWLEDGMENT AND AGREEMENT
The undersigned duly authorized officer of Viko Technology, Inc., a
California corporation, does hereby accept and acknowledge receipt of a copy of
the foregoing Subordination Agreement, and agrees that (a) it will not pay any
of the Junior Debt except as the foregoing Subordination Agreement provides; (b)
it will be bound by all provisions of the foregoing Subordination Agreement (c)
it shall immediately notify Junior Creditor of an event of default on the Senior
Debt; and (d) that it will have no rights, remedies or priorities either
directly or as a third party beneficiary by virtue of the Subordination
Agreement.
All capitalized terms used in this Acknowledgment and Agreement
without definition shall have the same meanings as set forth in the foregoing
Subordination Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Acknowledgment
and Agreement to be duly executed as of the day and year first above written.
VIKO TECHNOLOGY, INC.
/s/ Kumar Xxxxx
----------------------------------
By: ------------------------------
Its: President
DBS/G06/02
GUARANTEE
1. In consideration of The Development Bank of Singapore Ltd., Los Angeles
Agency, a foreign banking corporation incorporated in Singapore, with an
office at 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx,
00000, Xxxxxx Xxxxxx of America, ("the Bank") agreeing to make available
the loan facilities (the "Facilities") to Viko Technology, Inc., a company
incorporated in California, United States of America and having its
registered office at 0000X Xxxxxx Xxxx, Xxx Xxxx, XX 00000 ("the
Borrower") pursuant to the terms and conditions set out in a Term Loan and
Revolving Credit Agreement dated as of 24 September, 2002 between the
Borrower and the Bank (as such agreement may hereafter be amended,
restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"), we, Infiniti Solutions Pte Ltd, a company
incorporated in Singapore and having a registered office at 0000 Xxxxx
Xxxx, #00-00 Xxxxxx Xxxx Xxxxxxx Xxxxxxxxx (199588) ("the Guarantor")
HEREBY IRREVOCABLY AND UNCONDITIONALLY guarantees to pay and satisfy the
Bank on demand as principal debtor and not merely as surety all sums of
money which are now or shall from time to time and at any time hereafter
be due or owing to the Bank by the Borrower under the Credit Agreement
(the "Guaranteed Money", which expression shall include any part thereof).
Terms used and not otherwise defined herein shall have the meanings
ascribed to such terms in the Credit Agreement).
2. The Guarantor shall:
(a) maintain a consolidated gearing ratio not exceeding (i) 1.85 to 1.0
as of 31 December 2002 and 30 June 2003, (ii) 1.75 to 1.0 as of 31
December 2003 and 30 June 2004 and (iii) 1.50 to 1.0 as of 31
December 2004 and as of the end of any covenant testing period
thereafter. The consolidated gearing ratio is defined as the ratio
of (i) Consolidated Total Liability of the Guarantor and its
Subsidiaries net of payables to (i.i) the former shareholders of the
Borrower under the Share Purchase Agreement dated December 18, 2001
between the Guarantor and such shareholders and (i.ii) the existing
shareholders of Automated Technology (Phil) Inc under the purchase
consideration for the acquisition of the shares in Automated
Technology (Phil) Inc when such acquisition takes place. to (ii)
Consolidated Networth of the Guarantor and its Subsidiaries.
Consolidated Networth shall include redeemable preference shares for
periods up to 31 December 2005 only. The consolidated gearing
covenant shall be tested on a semi-annual basis on every 30 June and
31 December until the Guaranteed Money has been fully paid or
satisfied;
(b) ensure that there is no significant change in the key management of
the Guarantor until the Guaranteed Money has been fully paid or
satisfied;
(c) ensure that sufficient funds in new equity are raised by the
Guarantor for the payment of the cash components under the purchase
consideration of the Borrower and Automated Technology (Phil) Inc.;
(d) ensure that any redemption of preference shares by the Guarantor
shall not cause an event of default under the Borrower's credit
facilities;
(e) give the Bank or an Affiliate thereof at least ten Business Days to
match offers of other financial institutions in connection with the
future debt financing needs of the Guarantor and any Affiliate
thereof;
(f) give the Bank or an Affiliate thereof at least ten Business Days to
match offers of other financial institutions in connection with the
future fund raising needs of the Guarantor and any Affiliate thereof
in equity markets where the Bank or an Affiliate has a strong
presence;
(g) ensure that it is the legal and beneficial owner, direct or
indirect, of all of the outstanding capital stock of the Borrower;
(h) notify the Bank immediately in the event that there is a threatened
action or proceeding (other than those of a frivolous or vexatious
nature or those disputed promptly in good faith and by appropriate
proceedings) affecting the Guarantor or its Subsidiaries before any
Governmental Person, arbitrator or referee that could reasonably be
expected to materially and adversely affect the financial condition
or operations of the Guarantor or any of its Subsidiaries;
(i) file all income tax returns required to have been filed and pay all
taxes, assessments, charges and other amounts due thereunder, except
to the extent disputed by appropriate proceedings diligently pursued
and to the extent that appropriate reserves are being maintained
with respect to any amounts so disputed; and
(j) not amend or alter its memorandum and articles of association
relating to its borrowing powers and its principal business
activities without the prior written consent of the Bank, such
consent not to be unreasonably withheld.
3. This Guarantee shall not be considered as satisfied by any intermediate
payment or satisfaction of the Guaranteed Money but shall be a continuing
security and shall extend to cover all or any part of the Guaranteed Money
which shall for the time being constitute the balance due or owing from
the Borrower to the Bank upon any account or otherwise as aforesaid.
4. The Bank may at any time and without affecting its rights against the
Guarantor determine enlarge or vary any credit to the Borrower, vary
exchange abstain from perfecting or release any other securities held or
to be held by the Bank for or on account of the Guaranteed Money, open a
fresh account or accounts and/or continue with any account or accounts
current or otherwise with or for the Borrower renew bills and promissory
notes in any manner and compound with give time for payment, accept
compositions from and make any other arrangements with the Borrower or any
obligors on bills notes or other securities held or to be held by the Bank
for and on behalf of the Borrower.
5. This Guarantee shall be in addition to and shall not be in any way
prejudiced or affected by any collateral or other security now or
hereafter held by the Bank for the Guaranteed Money nor shall such
collateral or other security or any lien to which the Bank may be
otherwise entitled or the liability of any person or persons not parties
hereto for all or any part of the Guaranteed Money be in any way
prejudiced or affected by this Guarantee. The Bank shall have full power
at its discretion to give time for payment or to make any other
arrangement with any such other person or persons without prejudice to
this Guarantee or the Guarantor's liability hereunder. All monies received
by the Bank from the Guarantor or the Borrower or any person or persons
liable to pay the same may be applied by the Bank to any account or item
of account or to any transaction which the same may be applicable.
6. No disposition assurance security or payment which may be avoided under
any law relating to bankruptcy or under any provisions of the Singapore
Companies Act (Cap 50) or any statutory modification thereof or under any
other applicable laws or is otherwise avoided in any manner and no release
settlement or discharge which may have been given or made on the faith of
any such disposition assurance security or payment shall prejudice or
affect the Bank's right to recover from the Guarantor monies to the full
extent of this Guarantee as if such disposition assurance security payment
release settlement or discharge had never been granted given or made.
7. All dividends compositions and monies received by the Bank from the
Borrower or from any other company person or estate capable of being
applied by the Bank in reduction of the indebtedness of the Borrower shall
be regarded for all purposes as payments in gross and in the event of
bankruptcy or winding up or any receiving order or other analogous order
being made or any other analogous events occurring under any applicable
laws in relation to the Borrower the Bank shall be entitled to prove in
the bankruptcy winding up dissolution or liquidation of the Borrower in
respect of the
2
whole of the Borrower's indebtedness to the Bank and without any right of
the Guarantor to be subrogated to the Bank in respect of any such proof
until the Bank shall have received in the bankruptcy winding up or
liquidation of the Borrower or from other sources one hundred (100) cents
on the dollar.
8. Any payments by the Guarantor hereunder shall be made without any set-off
or counterclaim and shall be free and clear of any taxes including
withholding taxes, import or levies. If the Guarantor is required to make
any payment hereunder subject to the deduction or withholding of tax, the
Guarantor shall increase the sum payable by it to the extent necessary to
ensure that, after making the required deduction or withholding, the Bank
receives and retains (free from any liability in respect of any such
deduction or withholding) a net sum equal to the sum which it would have
received and so retained had no such deduction or withholding been made or
required to be made. The Guarantor shall thereafter submit all tax
receipts or such evidence of payment of tax to the Bank as soon as
reasonably practicable. In the event that the Bank actually receives the
benefit of a tax credit, allowance or refund resulting solely and directly
from a deduction or withholding in respect of which the Guarantor has paid
an additional amount under this Clause, the Bank shall reimburse to the
Guarantor such part of that benefit as, will leave it (after such
reimbursement) in a position which is no more and no less favourable than
the position in which it would have been if such deduction, withholding,
payment or liability had not been made or incurred.
9. If any goods and services tax ("GST" which expression includes any tax of
a similar nature which may be substituted or levied in addition to it)
whatsoever is now or hereafter chargeable by law on any payment hereunder,
the Guarantor shall pay such GST in addition to all other sums payable
hereunder or relating hereto and agrees to indemnify the Bank against the
payment if the Bank is required by law to collect and make payment in
respect of such GST. The Bank may debit the Guarantor's account(s) for
such GST including default interest payable in the same manner as may be
provided herein or in any agreement relating hereto for the Facilities
and/or other charges or as the Bank may prescribe from time to time,
notwithstanding such debiting may result in the Guarantor's account
becoming overdrawn Provided that the Bank shall forthwith upon making such
debit give notice thereof to the Guarantor.
10. The Bank may but is not bound to resort for the Bank's own benefit to any
other means of payment at any time and in any order the Bank deems fit
without thereby diminishing the Guarantor's liability hereunder and the
Bank may exercise its rights under this Guarantee in force either for
payment of the ultimate balance after resorting to other means of payment
or for the balance due notwithstanding that other means of payment have
not been resorted to and in the latter case without entitling the
Guarantor to any benefit from such other means of payment so long as the
Guaranteed Money remains owing and unpaid by the Borrower to the Bank and
in addition the Bank may require payment by the Guarantor of its liability
without taking any proceedings first to enforce such payment by the
Borrower.
11. If any monies shall be paid by the Guarantor to the Bank under this
Guarantee, the Guarantor shall not in respect of the amount so paid seek
to enforce repayment or to exercise any other rights or legal remedies of
whatsoever kind which may accrue howsoever to the Guarantor in respect of
the amount so paid until the Guaranteed Money owing from the Borrower to
the Bank has been fully paid to the Bank. The Guarantor will not prove in
competition with the Bank for any monies owing by the Borrower to the
Guarantor on any account whatsoever and/or in respect of any monies due or
owing from the Borrower to the Bank but will give to the Bank the full
benefit of any proof which the Guarantor may be able to make in the
bankruptcy or winding up or liquidation of the Borrower or in any
arrangement or composition with creditors until the Bank shall have
received all monies guaranteed hereunder outstanding and remaining unpaid
by the Borrower to the Bank.
12. Any indebtedness of the Borrower now or hereafter held by the Guarantor
shall be fully subordinated to the indebtedness of the Borrower to the
Bank under the Credit Agreement and such indebtedness of the Borrower to
the Guarantor if the Bank so requires shall be collected enforced
3
and received by the Guarantor and shall be paid over to the Bank on
account of the indebtedness of the Borrower to the Bank but without
reducing or affecting in any manner the liability of the Guarantor under
this Guarantee until all the Guaranteed Money has been fully paid to the
Bank.
13. The Guarantor agrees and acknowledges that the obligations and liabilities
of the Guarantor hereunder shall be absolute and unconditional and in
addition to the other provisions of this Guarantee, shall not be
abrogated, prejudiced, affected or discharged:
(a) by the Bank granting explicitly or by conduct or otherwise, whether
directly or indirectly, to the Borrower, the Guarantor or any other
person of any time, forbearance, concession, credit compounding,
compromise, waiver, variation, renewal, release, discharge or other
advantage or indulgence;
(b) by the Bank failing neglecting or deciding not to recover the moneys
hereby guaranteed or any part thereof by the realisation of any
collateral or other security or in any manner otherwise or in the
event of enforcement by the Bank of any collateral or other security
or any remedy or otherwise, by any act, omission, negligence or
other conduct or failure on the part of the Bank or any other person
in connection therewith;
(c) by any laches, acquiescence, delay, acts, omissions, mistakes on the
part of the Bank or any other person;
(d) by reason of any agreement, deed, mortgage, charge, debenture,
guarantee indemnity or security held or taken at any time by the
Bank or by reason of the same being void, voidable or unenforceable;
(e) by any moratorium or other period staying or suspending by statute
or order of any court or other authority all or any of the Bank's
rights, remedies or recourse against the Borrower or the Guarantor;
(f) by reason of any other dealing, matter or thing which, but for the
provisions of this Clause, could or might operate to affect or
discharge all or any part of the obligations and liabilities of the
Guarantor hereunder; or
(g) by the Bank asserting or failing to assert any right or remedy
against the Borrower or doing or omitting to do any act in pursuance
of any authority or permission contained in this Guarantee.
14. The Guarantor declares it has not taken and undertakes not to take
directly or indirectly from the Borrower in respect of its liability and
obligation hereunder any security of any nature whatsoever whereby the
Guarantor or any person claiming under it might in the Borrower's
bankruptcy or winding-up or liquidation increase the proofs in such
bankruptcy or liquidation or diminish the property available for
distribution to the Bank's detriment.
15. For the consideration aforesaid and as a separate and independent
stipulation:
(a) the Guarantor agrees that all sums of money which may not be
recoverable from the Guarantor on the footing of a guarantee whether
by reason of any legal limitation disability or incapacity including
without limitation the bankruptcy or winding-up or liquidation or
any other analogous events in relation to the Borrower under any
other applicable laws or any other fact or circumstance whether
known to the Bank or not shall nevertheless be recoverable from the
Guarantor on demand as though the Guarantor was the sole and
principal debtor;
(b) the Guarantor irrevocably and unconditionally undertakes to
indemnify the Bank on a full indemnity basis against all reasonable
legal costs between solicitors and clients and other costs and
disbursements incurred for or in connection with demanding and
enforcing
4
payment of all monies guaranteed hereunder or otherwise howsoever in
enforcing this Guarantee and/or the covenants agreements
undertakings stipulations terms and conditions of this Guarantee.
(c) the Guarantor agrees to furnish and provide the Bank with and
permits the Bank to obtain all such statements information
explanation and data as the Bank may reasonably require from time to
time regarding the operations and financial affairs of the
Guarantor. The Guarantor hereby agrees and undertakes to furnish to
the Bank (i) every fiscal quarter immediately after their issue, but
in any case not later than 90 days after the end of each fiscal
quarter, unaudited consolidated financial statements of the
Guarantor for such quarter, including a balance sheet, income
statement and cash flow statement and (ii) every year immediately
after their issue, but in any case not later than 120 days after the
close of its financial year, (A) the audited annual consolidated
financial statements of the Guarantor, including a balance sheet,
income statement and cash flow statement, audited by a firm of
auditors approved by the Bank together with auditors' and directors'
reports and (B) a copy of the annual return which the Guarantor is
required by law to file with the Registrar of Companies.
16. A statement or certificate signed by the Manager Accountant or other
officer of the Bank as to the monies and liabilities for the time being
due to or incurred by the Bank (and setting out the computation and basis
thereof) shall subject only to computational and/or clerical mistakes be
final and conclusive and be binding on the Guarantor.
17. This Guarantee shall continue to bind the Guarantor notwithstanding :
(a) any change by amalgamation reconstruction or otherwise which may be
made in the constitution of the company by which the business of the
Bank may for the time being be carried on and shall be available to
the company carrying on the business of the Bank for the time being;
or
(b) any winding-up (whether voluntary or compulsory) amalgamation or
reconstruction of or affecting the Borrower or any defect
informality or insufficiency of the Borrower's borrowing powers; or
(c) any winding-up (whether voluntary or compulsory) amalgamation or
reconstruction of or affecting the Guarantor.
18. The Guarantor shall, immediately upon any occurrence of the following:
(i) the giving of notice by the Guarantor to convene its general meeting
for passing any resolution to wind up the Guarantor; or
(ii) the filing of any application for placing the Guarantor under
judicial management; or
(iii) the filing of any petition for winding up the Guarantor.
notify the Bank of the same.
Where any such notification as aforesaid is given verbally by the
Guarantor to the Bank, the Guarantor shall confirm it in writing within
twenty-four (24) hours thereof.
19. The Guarantor shall not be discharged or released from this Guarantee by
any alteration in the obligations covenants undertakings stipulations
terms and conditions governing the Facilities ("the Terms"). The Bank may
from time to time vary, or add to the Terms and this Guarantee shall
extend and apply to the Terms varied or added to (notwithstanding such
variations or additions may impose further liabilities or more onerous
covenants undertakings or burdens on the Borrower) notwithstanding the
Guarantor shall not have received notice or been made aware of or
consented to
5
such variations of or additions to the Terms Provided that the Bank shall
forthwith upon effecting such variation or addition (as the case may be)
give notice thereof to the Guarantor..
20. Any demand for payment of monies or any other demand or notice under this
Guarantee may be made by any officer of the rank of Assistant Treasurer
and above or any Secretary Manager Accountant Legal Officer or by any
person or firm acting as solicitors for the Bank by a letter addressed to
the Guarantor and sent by registered post or delivered to the address
abovestated and a notice or demand so served shall be deemed to be served
and received on the day it was so left or the 3rd day from the date it is
posted (where the Guarantor's address is in Singapore) or 7 days after
posting (where the Guarantor's address is outside Singapore), as the case
may be.
21. The Guarantor may not determine or revoke this Guarantee unless the Bank
receives notice of its intention to revoke this Guarantee and agrees in
writing, and the Guarantor makes full provision for any other outstanding
liabilities or obligations to the Bank of the Borrower's account
guaranteed hereunder and not unless the Guaranteed Money is paid to the
Bank in full.
22. In addition to any lien right of set-off or other right which the Bank may
have the Bank shall be entitled at any time upon the Guarantor's failure
to pay the Guaranteed Money or any part thereof pursuant to a declaration
of an Event of Default pursuant to Clause 6.1 of the Credit Agreement and
without prior notice to the Borrower or the Guarantor to combine or
consolidate all or any of the accounts and liabilities of the Borrower or
the Guarantor with or to the Bank anywhere whether in or outside Singapore
or set-off or transfer any sums standing to the credit of one or more of
such accounts in or towards satisfaction of any of the liabilities of the
Borrower or the Guarantor to the Bank on any other accounts whether in or
outside Singapore or in any other respect whether such liabilities be
actual or contingent primary or collateral several or joint
notwithstanding that the credit balances on such accounts and the
liabilities on any other accounts may not be expressed in the same
currency and the Bank is hereby authorised to effect any necessary
conversions at the Bank's prevailing rate of exchange Provided that the
Bank shall forthwith upon effecting such application or conversion (as the
case may be) give notice thereof to the Guarantor.
23. In addition and without prejudice to any right or remedies of the Bank
under this Guarantee or by law conferred upon the Bank, the Bank may from
time to time and at any time upon the Guarantor's failure to pay the
Guaranteed Money or any part thereof pursuant to a declaration of an Event
of Default pursuant to Clause 6.1 of the Credit Agreement, debit to any
account of the Guarantor with the Bank, whether the account be current or
otherwise, all or any part of the Guaranteed Money and the sums so debited
shall be deemed to be monies advanced by the Bank to the Guarantor on the
Guarantor's account and payable on demand Provided that the Bank shall
forthwith upon making such debit give notice thereof to the Guarantor.
24. In addition and without prejudice to any other rights of the Bank under
the loan and security documents relating to the Facilities, if this
Guarantee or any other security for the Facilities is terminated, or for
any other reason which the Bank deems justifiable, the Bank may forthwith
open a new or separate interest-bearing account ("the new account") for
the Borrower in the Bank's books with a view to preserving the rights of
the Bank to prove the whole of the moneys owing by the Borrower and if the
Bank does not in fact open such new account it shall nevertheless be
deemed to have done so at the time of such termination and as from and
after the time that the new account was opened or so deemed to have been
opened, all payments made by or on behalf of the Borrower shall
(notwithstanding any legal or equitable rule of presumption to the
contrary) be credited or deemed to have been credited to the new account
and shall not go to reduce the amount owing by the Borrower to the Bank at
the time the new account was opened or deemed to have been opened, unless
the Bank expressly directs otherwise after all sums (actual or contingent)
owing to the Bank under the new account have been paid and satisfied to
the Bank in full or at any other time. For the avoidance of doubt, if a
payment which would (but for this Clause) have been applied in the
reduction of the Guaranteed Money is instead credited to a new account of
the
6
Borrower under this Clause, then for the purpose of calculating interest
on the Guaranteed Money, the Guaranteed Money shall be deemed to have been
reduced by the amount of that payment
25. In addition to the rights conferred by any applicable laws, the Guarantor
consents to the Bank disclosing any information relating to this Guarantee
where such disclosure may be required under any applicable law or
regulation or by any governmental authority or body with whose requests
the Bank is accustomed to or required to comply.
26. (a) Without prejudice to the other provisions of this Guarantee any
amount received or recovered by the Bank in a currency other than
the contractual currency whether as a result of or of the
enforcement of a judgment or order of court or tribunal of any
jurisdiction in the dissolution of the Borrower and/or the Guarantor
or otherwise, shall only constitute a discharge to the extent of the
amount in the contractual currency which the Bank is able in
accordance with its usual practice to purchase with the amount so
received or recovered in such other currency on the date of that
receipt or recovery (or if it is not practicable to make that
purchase on that date on the first date on which it is practicable
to do so).
(b) If that amount in the contractual currency is less than the amount
in the contractual currency due to the Bank by the Borrower, the
Guarantor shall indemnify the Bank against any loss sustained by the
Bank as a result. In any event, the Guarantor shall indemnify the
Bank against the cost of making any such purchase.
(c) These indemnities constitute a separate and independent obligation
from the other obligations in this Guarantee and shall give rise to
a separate and independent cause of action.
27. (a) This Guarantee shall be governed by and construed in all respects in
accordance with the laws of Singapore and shall be subject to the
non-exclusive jurisdiction of the courts of Singapore. The Guarantor
hereby agrees that where any actions or proceedings are initiated
and taken in Singapore the Guarantor shall submit to the
jurisdiction of the courts of Singapore. The service of any writ of
summons or any legal process in respect of any action or proceeding
hereunder may be effected on the Guarantor by forwarding a copy of
the writ of summons and statement of claim or other legal process by
registered post to the address of the Guarantor hereinbefore stated.
(b) To the extent that the Guarantor may in any jurisdiction claim for
itself or its assets immunity from suit, execution, attachment
(whether in aid of execution, before judgment or otherwise) or other
legal process and to the extent in any such jurisdiction there may
be attributed to itself or its assets such immunity whether on
grounds of sovereignty or otherwise (whether or not claimed), the
Guarantor irrevocably agrees not to claim and irrevocably waives
such immunity to the full extent permitted by the laws of such
jurisdiction. The Guarantor irrevocably agrees and undertakes that
it and its assets are, and shall be subject to any proceedings
attachment or execution in respect of its obligations under this
Guarantee.
(c) The Guarantor irrevocably consents in respect of any proceedings
anywhere to the giving of any relief or the issue of any process in
connection with those proceedings including, without limitation, the
making, enforcement or execution against any assets whatsoever
(irrespective of the use or intended use) of any order or judgment
which may be made or given in those proceedings.
28. The Guarantor may not assign its rights nor transfer its obligations or
any part thereof under this Guarantee without the prior written consent of
the Bank (such consent not to be unreasonably withheld). The Bank shall at
its own cost be entitled to assign or transfer any part or all of its
rights and or obligations under this Guarantee to any person in favour of
whom it has assigned any part or
7
all of its rights or transferred any part or all of its obligations under
the Term Loan and Revolving Credit Agreement.
29. In the event that the Guarantor or its Subsidiaries is in default of the
payment of insurance premiums, legal fees, property taxes or any other
out-of-pocket expenses, the Bank may in its sole and absolute discretion
pay such amounts and the Guarantor agrees to reimburse the Bank for such
amounts, together with interest on such amounts from the date that the
Bank paid such amounts until the date on which such amounts are paid in
full, payable on demand, at an interest per annum equal to the Prime Rate
plus 5% per annum. In the event that the amount of such interest is less
than $250, the Guarantor will pay the Bank an administrative charge of
$250 rather than the amount of such interest Provided that the Bank shall
notify the Guarantor of the amount payable by the Guarantor under this
Clause and shall in such notification set out the computation and basis of
such amount.
30. In this Guarantee where the context so admits :
(a) words importing the singular number include the plural number and
vice versa;
(b) words importing the masculine gender include the feminine or neuter
gender;
(c) the expression "the Guarantor" includes the personal representatives
and successors-in-title of the Guarantor;
(d) the expression "the Bank" and "the Borrower" include their
respective successors and assigns; and
(e) the word "person" includes any company or association or body of
persons, corporate or unincorporated.
31. Third Party Rights. The Contracts (Rights of Third Parties) Act (Chap 53B)
shall not apply to this Guarantee and no person not party to this
Guarantee shall have or acquire any right to enforce any term of it
pursuant to that Act. This Clause shall not affect any right or remedy of
any third party which exists or is available otherwise than by reason of
that Act and shall prevail over any other provision of this Guarantee
which is inconsistent with it.
IN WITNESS WHEREOF the Guarantor has hereunto affixed its Common Seal on the 27
day of September 2002.
The Common Seal of )
Infiniti Solutions Pte Ltd ) /s/ Xxxxxxxx Xxxxx
was hereunto affixed )
in the presence of )
- Director
/s/ Kong Kah Chin
- Secretary
I, Tan Xxx Xxxx , a Notary Public of the Supreme Court of the Republic of
Singapore practising in the Republic of Singapore hereby certify that on the 27
day of September 2002 the Common Seal of Infiniti Solutions Pte Ltd was duly
affixed to the within written instrument at Singapore in my presence in
accordance with the regulations of the said company (which regulations have been
produced and shown to me).
Witness my hand this 27 day of September 2002. /s/ Tan Xxx Xxxx, Advocate
and Solicitor, Singapore
8