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Exhibit 10.12
[LOGO]
LOAN AND SECURITY AGREEMENT
BORROWER: SUBMICRON SYSTEMS, INC.
ADDRESS: 0000 XXXXXXXXX XXXXX
XXXXXXXXX, XXXXXXXXXXXX 00000
BORROWER: SUBMICRON WET PROCESS STATIONS, INC.
ADDRESS: 0000 XXXXXXX XXXXXX
XXXXX XXXXX, XXXXXXXXXX 00000
DATE: NOVEMBER 25, 1997
This Loan and Security Agreement is entered into on the above date
between GREYROCK BUSINESS CREDIT, a Division of NationsCredit Commercial
Corporation ("GBC"), whose address is 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx
000, Xxx Xxxxxxx, XX 00000 and the borrower(s) named above (jointly and
severally "Borrower"), whose chief executive office is located at the
above address ("Borrower's Address"). The Schedule to this Agreement
(the "Schedule") being signed concurrently is an integral part of this
Agreement. (Definitions of certain terms used in this Agreement are set
forth in Section 8 below.)
1. LOANS.
1.1 LOANS. GBC will make loans to Borrower (the "Loans"), in
amounts determined by GBC in its good faith business judgment, up to the
amounts (the "Credit Limit") shown on the Schedule, provided no Default or
Event of Default has occurred and is continuing. If at any time or for any
reason the total of all outstanding Loans and all other Obligations
exceeds the Credit Limit, Borrower shall immediately pay the amount of the
excess to GBC, without notice or demand.
1.2 INTEREST. All Loans and all other monetary Obligations shall
bear interest at the rate shown on the Schedule, except where expressly
set forth to the contrary in this Agreement or in another written
agreement signed by GBC and Borrower. Interest shall be payable monthly,
on the last day of the month. Interest may, in GBC's discretion, be
charged to Borrower's loan account, and the same shall thereafter bear
interest at the same rate as the other Loans.
1.3 FEES. Borrower shall pay GBC the fee(s) shown on the Schedule,
which are in addition to all interest and other sums payable to GBC and
are not refundable.
2. SECURITY INTEREST.
2.1 SECURITY INTEREST. To secure the payment and performance of
all of the Obligations when due, Borrower hereby grants to GBC a security
interest in all of Borrower's interest in the following, whether now
owned or hereafter acquired, and wherever located (collectively, the
"Collateral"): All Inventory, Equipment, Receivables, and General
Intangibles, including, without limitation, all of Borrower's Deposit
Accounts, all money, all collateral in which GBC is granted a security
interest pursuant to any other present or future agreement, all property
now or at any time in the future in GBC's possession, and all proceeds
(including proceeds of any insurance policies, proceeds of proceeds and
claims against third parties), all products of the foregoing, and all
books and records related to any of the foregoing.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
In order to induce GBC to enter into this Agreement and to make
Loans, Borrower represents and warrants to GBC as follows, and Borrower
covenants that the following representations will continue to be true,
and that Borrower will at all times comply with all of the following
covenants:
3.1 CORPORATE EXISTENCE AND AUTHORITY. Borrower, if a corporation,
is and will continue to be, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation.
Borrower is and will continue to be qualified and licensed to do business
in all jurisdictions in which any failure to do so would have a material
adverse effect on Borrower. The execution, delivery and performance by
Borrower of this Agreement, and all other documents contemplated hereby
(i) have been duly and validly authorized, (ii) are enforceable against
Borrower in accordance with their terms (except as enforcement may be
limited by equitable principles and by bankruptcy, insolvency,
reorganization,
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moratorium or similar laws relating to creditors' rights generally),
(iii) do not violate Borrower's articles or certificate of incorporation,
or Borrower's by-laws, or any law or any material agreement or instrument
which is binding upon Borrower or its property, and (iv) do not
constitute grounds for acceleration of any material indebtedness or
obligation under any material agreement or instrument which is binding
upon Borrower or its property.
3.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth
in the heading to this Agreement is its correct name. Listed on the
Schedule are all prior names of Borrower and all of Borrower's present
and prior trade names. Borrower shall give GBC 30 days' prior written
notice before changing its name or doing business under any other name.
Borrower has complied, and will in the future comply, with all laws
relating to the conduct of business under a fictitious business name.
3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set
forth in the heading to this Agreement is Borrower's chief executive
office. In addition, Borrower has places of business and Collateral is
located only at the locations set forth on the Schedule. Borrower will
give GBC at least 30 days prior written notice before opening any
additional place of business, changing its chief executive office, or
moving any of the Collateral to a location other than Borrower's Address
or one of the locations set forth on the Schedule.
3.4 TITLE TO COLLATERAL; PERMITTED LIENS. Borrower is now, and will
at all times in the future be, the sole owner of all the Collateral,
except for items of Equipment which are leased by Borrower. The
Collateral now is and will remain free and clear of any and all liens,
charges, security interests, encumbrances and adverse claims, except for
Permitted Liens. GBC now has, and will continue to have, a first-priority
perfected and enforceable security interest in all of the Collateral,
subject only to the Permitted Liens, and Borrower will at all times defend
GBC and the Collateral against all claims of others. So long as any Loan
is outstanding which is a term loan, none of the Collateral now is or will
be affixed to any real property in such a manner, or with such intent, as
to become a fixture. Borrower is not and will not become a lessee under
any real property lease pursuant to which the lessor may obtain any rights
in any of the Collateral superior to those of GBC and no such lease now
prohibits, materially restrains, or impairs or will prohibit, restrain or
impair Borrower's right to remove any Collateral from the leased premises.
Whenever any Collateral is located upon premises in which any third party
has an interest (whether as owner, mortgagee, beneficiary under a deed of
trust, lien or otherwise), Borrower shall, whenever requested by GBC, use
its best efforts to cause such third party to execute and deliver to GBC,
in form acceptable to GBC, such waivers and subordinations as GBC shall
specify, so as to ensure that GBC's rights in the Collateral are, and will
continue to be, superior to the rights of any such third party. Borrower
will keep in full force and effect, and will comply with all the terms of,
any lease of real property where any of the Collateral now or in the
future may be located.
3.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the
Collateral in good working condition, ordinary wear and tear excepted,
and Borrower will not use the Collateral for any unlawful purpose.
Borrower will promptly advise GBC in writing of any material loss or
damage to the Collateral.
3.6 BOOKS AND RECORDS. Borrower has maintained and will maintain
at Borrower's Address complete and accurate books and records, comprising
an accounting system in accordance with generally accepted accounting
principles.
3.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial
statements now or in the future delivered to GBC have been, and will be,
prepared in conformity with generally accepted accounting principles and
now and in the future will completely and fairly reflect the financial
condition of Borrower, at the times and for the periods therein stated.
Between the last date covered by any such statement provided to GBC and
the date hereof, there has been no material adverse change in the
financial condition or business of Borrower. Borrower is now and will
continue to be solvent.
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has
timely filed, and will timely file, all tax returns and reports required
by applicable law, and Borrower has timely paid, and will timely pay, all
applicable taxes, assessments, deposits and contributions now or in the
future owed by Borrower. Borrower may, however, defer payment of any
contested taxes, provided that Borrower (i) in good faith contests
Borrower's obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (ii) notifies GBC in
writing of the commencement of, and any material development in, the
proceedings, and (iii) posts bonds or takes any other steps required to
keep the contested taxes from becoming a lien upon any of the Collateral.
Borrower is unaware of any claims or adjustments proposed for any of
Borrower's prior tax years which could result in additional taxes
becoming due and payable by Borrower. Borrower has paid, and shall
continue to pay all amounts necessary to fund all present and future
pension, profit sharing and deferred compensation plans in accordance
with their terms, and Borrower has not and will not withdraw from
participation in, permit partial or complete termination of, or permit
the occurrence of any other event with respect to, any such plan which
could result in any liability of Borrower, including any liability to the
Pension Benefit Guaranty Corporation or any other governmental agency.
Borrower shall, at all times, utilize the services of an outside payroll
service providing for the automatic deposit of all payroll taxes payable
by Borrower.
3.9 COMPLIANCE WITH LAW. Borrower has complied, and will comply,
in all material respects, with all provisions of all applicable laws and
regulations, including, but not limited to, those relating to Borrower's
ownership of real or personal property, the conduct and licensing of
Borrower's business, and all environmental matters.
3.10 LITIGATION. Except as disclosed in the Schedule, there is no
claim, suit, litigation, proceeding or investigation pending or (to best
of Borrower's knowledge) threatened by or against or affecting Borrower
in any court or
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before any governmental agency (or any basis therefor known to
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of
Borrower, or in any material impairment in the ability of Borrower to
carry on its business in substantially the same manner as it is now being
conducted. Borrower will promptly inform GBC in writing of any claim,
proceeding, litigation or investigation in the future threatened or
instituted by or against Borrower involving any single claim of $50,000
or more, or involving $100,000 or more in the aggregate.
3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used
solely for lawful business purposes.
4. RECEIVABLES.
4.1 REPRESENTATIONS RELATING TO RECEIVABLES. Borrower represents
and warrants to GBC as follows: Each Receivable with respect to which
Loans are requested by Borrower shall, on the date each Loan is requested
and made, represent an undisputed, bona fide, existing, unconditional
obligation of the Account Debtor created by the sale, delivery, and
acceptance of goods or the rendition of services, in the ordinary course
of Borrower's business.
4.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE.
Borrower represents and warrants to GBC as follows: All statements made
and all unpaid balances appearing in all invoices, instruments and other
documents evidencing the Receivables are and shall be true and correct and
all such invoices, instruments and other documents and all of Borrower's
books and records are and shall be genuine and in all respects what they
purport to be, and all signatories and endorsers have the capacity to
contract. All sales and other transactions underlying or giving rise to
each Receivable shall comply with all applicable laws and governmental
rules and regulations. All signatures and indorsements on all documents,
instruments, and agreements relating to all Receivables are and shall be
genuine, and all such documents, instruments and agreements are and shall
be legally enforceable in accordance with their terms. Subject to
limitations on enforcement imposed by equitable principles and by
bankruptcy, insolvency and other similar laws affecting creditors rights
generally
4.3 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES. Borrower
shall deliver to GBC transaction reports and loan requests, schedules and
assignments of all Receivables, and schedules of collections, all on
GBC's standard forms; provided, however, that Borrower's failure to
execute and deliver the same shall not affect or limit GBC's security
interest and other rights in all of Borrower's Receivables, nor shall
GBC's failure to advance or lend against a specific Receivable affect or
limit GBC's security interest and other rights therein. Together with
each such schedule and assignment, or later if requested by GBC, Borrower
shall furnish GBC with copies (or, at GBC's request, originals) of all
contracts, orders, invoices, and other similar documents, and all
original shipping instructions, delivery receipts, bills of lading, and
other evidence of delivery, for any goods the sale or disposition of
which gave rise to such Receivables, and Borrower warrants the
genuineness of all of the foregoing. Borrower shall also furnish to GBC
an aged accounts receivable trial balance in such form and at such
intervals as GBC shall request. In addition, Borrower shall deliver to
GBC the originals of all instruments, chattel paper, security agreements,
guarantees and other documents and property evidencing or securing any
Receivables, immediately upon receipt thereof and in the same form as
received, with all necessary indorsements.
4.4 COLLECTION OF RECEIVABLES. Borrower shall have the right to
collect all Receivables, unless and until a Default or an Event of
Default has occurred. Borrower shall hold all payments on, and proceeds
of, Receivables in trust for GBC, and Borrower shall deliver all such
payments and proceeds to GBC, within one business day after receipt of
the same, in their original form, duly endorsed, to be applied to the
Obligations in such order as GBC shall determine.
4.5 DISPUTES. Borrower shall notify GBC promptly of all disputes
or claims relating to Receivables on the regular reports to GBC.
Borrower shall not forgive, or settle any Receivable for less than
payment in full, or agree to do any of the foregoing, except that
Borrower may do so, provided that: (i) Borrower does so in good faith, in
a commercially reasonable manner, in the ordinary course of business, and
in arm's length transactions, which are reported to GBC on the regular
reports provided to GBC; (ii) no Default or Event of Default has
occurred and is continuing; and (iii) taking into account all such
settlements and forgiveness, the total outstanding Loans and other
Obligations will not exceed the Credit Limit.
4.6 RETURNS. Provided no Event of Default has occurred and is
continuing, if any Account Debtor returns any Inventory to Borrower in the
ordinary course of its business, Borrower shall promptly determine the
reason for such return and if accepted for return in the discretion of
borrower consistent with past practice, borrower shall promptly issue a
credit memorandum to the Account Debtor in the appropriate amount (sending
a copy to GBC). In the event any attempted return occurs after the
occurrence of any Event of Default, Borrower shall (i) not accept any
return without GBC's prior written consent, (ii) hold the returned
Inventory in trust for GBC, (iii) segregate all returned Inventory from
all of Borrower's other property, (iv) conspicuously label the returned
Inventory as GBC's property, and (v) immediately notify GBC of the return
of any Inventory, specifying the reason for such return, the location and
condition of the returned Inventory, and on GBC's request deliver such
returned Inventory to GBC.
4.7 VERIFICATION. GBC may, from time to time, verify directly with
the respective Account Debtors the validity, amount and other matters
relating to the Receivables, by means of mail, telephone or otherwise,
either in the name of Borrower or GBC or such other name as GBC may
choose, and GBC or its designee may, at any time, notify Account Debtors
that it has a security interest in the Receivables.
4.8 NO LIABILITY. GBC shall not under any circumstances be
responsible or liable for any shortage or discrepancy in, damage to, or
loss or destruction of, any goods, the sale or other disposition of which
gives rise to a Receivable, or for any error, act, omission, or delay of
any kind occurring in the settlement, failure to settle, collection or
failure to collect any Receivable, or for settling any Receivable in good
faith for less than the full
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amount thereof, nor shall GBC be deemed to be responsible for any of
Borrower's obligations under any contract or agreement giving rise to a
Receivable. Nothing herein shall, however, relieve GBC from liability
for its own gross negligence or willful misconduct.
5. ADDITIONAL DUTIES OF THE BORROWER.
5.1 INSURANCE. Borrower shall, at all times, insure all of the
tangible personal property Collateral and carry such other business
insurance, with insurers reasonably acceptable to GBC, in such form and
amounts as GBC may reasonably require, and Borrower shall provide
evidence of such insurance to GBC, so that GBC is satisfied that such
insurance is, at all times, in full force and effect. All such insurance
policies shall name GBC as an additional loss payee, and shall contain a
lenders loss payee endorsement in form reasonably acceptable to GBC.
Upon receipt of the proceeds of any such insurance, GBC shall apply such
proceeds in reduction of the Obligations as GBC shall determine in its
sole discretion, except that, provided no Default or Event of Default has
occurred and is continuing, GBC shall release to Borrower insurance
proceeds with respect to Equipment totaling less than * $200,000, which
shall be utilized by Borrower for the replacement of the Equipment with
respect to which the insurance proceeds were paid. GBC may require
reasonable assurance that the insurance proceeds so released will be so
used. If Borrower fails to provide or pay for any insurance, GBC may,
but is not obligated to, obtain the same at Borrower's expense. Borrower
shall promptly deliver to GBC copies of all reports made to insurance
companies.
5.2 REPORTS. Borrower, at its expense, shall provide GBC with the
written reports set forth in the Schedule, and such other written reports
with respect to Borrower (including budgets, sales projections, operating
plans and other financial documentation), as GBC shall from time to time
reasonably specify.
5.3 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times,
and on one business day's notice, GBC, or its agents, shall have the right
to inspect the Collateral, and the right to audit and copy Borrower's
books and records. GBC shall take reasonable steps to keep confidential
all information obtained in any such inspection or audit, but GBC shall
have the right to disclose any such information to its auditors,
regulatory agencies, and attorneys, and pursuant to any subpoena or other
legal process. GBC shall use its good faith efforts to notify borrower of
any such intended disclosure pursuant to subpoena or other legal process,
but GBC shall have no liability for any failure to do so. The foregoing
inspections and audits shall be at Borrower's expense and the charge
therefor shall be $600 per person per day (or such higher amount as shall
represent GBC's then current standard charge for the same), plus
reasonable out-of-pockets expenses. Borrower shall not be charged more
than $3,000 per audit (plus reasonable out-of-pockets expenses), nor shall
audits be done more frequently than four times per calendar year, provided
that the foregoing limits shall not apply after the occurrence of a
Default or Event of Default, nor shall they restrict GBC's right to
conduct audits at its own expense (whether or not a Default or Event of
Default has occurred). Borrower will not enter into any agreement with any
accounting firm, service bureau or third party to store Borrower's books
or records at any location other than Borrower's Address, without first
obtaining GBC's written consent, which may be conditioned upon such
accounting firm, service bureau or other third party agreeing to give GBC
the same rights with respect to access to books and records and related
rights as GBC has under this Agreement.
5.4 REMITTANCE OF PROCEEDS. All proceeds arising from the sale or
other disposition of any Collateral shall be delivered, in kind, by
Borrower to GBC in the original form in which received by Borrower not
later than the following business day after receipt by Borrower, to be
applied to the Obligations in such order as GBC shall determine; provided
that, (a) proceeds from the sale of collateral pursuant to transactions
permitted by Section 5.5(iii) need not be remitted by borrower to GBC
unless an event of default shall have occurred and be continuing, and (b)
if no Default or Event of Default has occurred and is continuing, then
Borrower shall not be obligated to remit to GBC the proceeds of the sale
of Equipment which is sold in the ordinary course of business, in a
good-faith arm's length transaction. Except for the proceeds of the sale
of collateral as set forth above, Borrower shall not commingle proceeds of
Collateral with any of Borrower's other funds or property, and shall hold
such proceeds separate and apart from such other funds and property and in
an express trust for GBC. Nothing in this Section limits the restrictions
on disposition of Collateral set forth elsewhere in this Agreement.
5.5 NEGATIVE COVENANTS. Except as may be permitted in the Schedule,
Borrower shall not, without GBC's prior written consent, do any of the
following: (i) merge or consolidate with another corporation or entity,
unless borrower is the surviving corporation in such merger and no event
of default results from such merger under the other provisions of this
agreement; (ii) acquire any assets, except in the ordinary course of
business or, if other than in the ordinary course, with a fair market
value in the aggregate in excess of $100,000 in any fiscal quarter; (iii)
enter into any other transaction outside the ordinary course of business
other than (a) contribution of borrower's assets listed on Exhibit A
hereto to Primaxx Corporation ("Primaxx") in connection with the
contemplated sale of the capital stock of Primaxx to an unaffiliated third
party; and (b) the contemplated sale of the capital stock of Primaxx to an
unaffiliated third part in an arms length transaction; provided that the
consummation of the transactions described in clauses (a) through (b) is
subject to the following condition: No loans will be outstanding with
respect to any receivables or inventory included in the assets contributed
or sold; (iv) sell or transfer any Collateral, except that, provided no
Default or Event of Default has occurred and is continuing, Borrower may
(a) sell finished Inventory in the ordinary course of Borrower's business,
and (b) sell Equipment in the ordinary course of business, in good-faith
arm's length transactions; (v) store any Inventory or other Collateral
with any warehouseman or other third party other than inventory stored on
customer sites or at bonded warehouses (none of which inventory shall
constitute "eligible inventory"); (vi) sell any Inventory on a
sale-or-return, guaranteed sale, consignment, or other contingent basis
(but the foregoing is not intended to prohibit borrower from storing
inventory on customer sites in the ordinary course of business; provided
that no inventory so stored shall be "eligible inventory"); (vii) make any
loans of any money or other assets other than loans to other borrowers or
to Submicron Systems Corporation (the "Parent") or secured loans which in
a total amount for all such loans not to exceed $59,000 at any time
outstanding; (viii) incur any debts, outside the ordinary course of
business, which would have a material, adverse effect on Borrower or on
the prospect of repayment of the Obligations; (ix) guarantee or otherwise
become liable with respect to the obligations of another party or entity;
(x) pay or declare any dividends on Borrower's stock (except for dividends
payable solely in stock of Borrower and except for cash dividends paid to
the Parent in accordance with applicable law); (xi) redeem, retire,
purchase or otherwise acquire, directly or indirectly, any of Borrower's
stock; (xii) make any change in Borrower's capital structure which would
have a material adverse effect on Borrower or on the prospect of repayment
of the Obligations; or (xiii) dissolve or elect to dissolve; or (xiv)
agree to do any of the foregoing.
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5.6 LITIGATION COOPERATION. Should any third-party suit or
proceeding be instituted by or against GBC with respect to any Collateral
or in any manner relating to Borrower, Borrower shall, without expense to
GBC, make available Borrower and its officers, employees and agents, and
Borrower's books and records, without charge, to the extent that GBC may
deem them reasonably necessary in order to prosecute or defend any such
suit or proceeding. Any such books and records made available to GBC
hereunder shall be subject to the confidentiality provisions of Section
5.3 above.
5.7 NOTIFICATION OF CHANGES. Borrower will promptly notify GBC in
writing of any change in its officers or directors, the opening of any
new bank account or other deposit account, and any material adverse
change in the business or financial affairs of Borrower.
5.8 FURTHER ASSURANCES. Borrower agrees, at its expense, on
request by GBC, to execute all documents and take all actions, as GBC may
deem reasonably necessary or useful in order to perfect and maintain
GBC's perfected security interest in the Collateral, and in order to
fully consummate the transactions contemplated by this Agreement.
5.9 INDEMNITY. Borrower hereby agrees to indemnify GBC and hold
GBC harmless from and against any and all claims, debts, liabilities,
demands, obligations, actions, causes of action, penalties, costs and
expenses (including attorneys' fees), of every nature, character and
description, which GBC may sustain or incur based upon or arising out of
any of the Obligations, any actual or alleged failure to collect and pay
over any withholding or other tax relating to Borrower or its employees,
any relationship or agreement between GBC and Borrower, any actual or
alleged failure of GBC to comply with any writ of attachment or other
legal process relating to Borrower or any of its property, or any other
matter, cause or thing whatsoever occurred, done, omitted or suffered to
be done by GBC relating to Borrower or the Obligations (except any such
amounts sustained or incurred as the result of the gross negligence or
willful misconduct of GBC or any of its directors, officers, employees,
agents, attorneys, or any other person affiliated with or representing
GBC). Notwithstanding any provision in this Agreement to the contrary,
the indemnity agreement set forth in this Section shall survive any
termination of this Agreement and shall for all purposes continue in full
force and effect.
6. TERM.
6.1 MATURITY DATE. This Agreement shall continue in effect until
the maturity date set forth on the Schedule (the "Maturity Date");
provided that the Maturity Date shall automatically be extended, and this
Agreement shall automatically and continuously renew, for successive
additional terms of one year each, unless one party gives written notice
to the other, not less than sixty days prior to the next Maturity Date,
that such party elects to terminate this Agreement effective on the next
Maturity Date.
6.2 EARLY TERMINATION. This Agreement may be terminated prior to
the Maturity Date as follows: (i) by Borrower, effective three business
days after written notice of termination is given to GBC; or (ii) by GBC
at any time after the occurrence of an Event of Default, without notice,
effective immediately. If this Agreement is terminated by Borrower or by
GBC under this Section 6.2, Borrower shall pay to GBC a termination fee
(the "Termination Fee") in the amount shown on the Schedule. The
Termination Fee shall be due and payable on the effective date of
termination and thereafter shall bear interest at a rate equal to the
highest rate applicable to any of the Obligations.
6.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and
whether or not all or any part of such Obligations are otherwise then due
and payable. Without limiting the generality of the foregoing, if on the
Maturity Date, or on any earlier effective date of termination, there are
any outstanding letters of credit issued based upon an application,
guarantee, indemnity or similar agreement on the part of GBC, then on
such date Borrower shall provide to GBC cash collateral in an amount
equal to 110% of the face amount of all such letters of credit plus all
interest, fees and costs due or (in GBC's estimation) likely to become
due in connection therewith, to secure all of the Obligations relating to
said letters of credit, pursuant to GBC's then standard form cash pledge
agreement. Notwithstanding any termination of this Agreement, all of
GBC's security interests in all of the Collateral and all of the terms
and provisions of this Agreement shall continue in full force and effect
until all Obligations have been paid and performed in full; provided
that, without limiting the fact that Loans are subject to the discretion
of GBC, GBC may, in its sole discretion, refuse to make any
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further Loans after termination. No termination shall in any way affect
or impair any right or remedy of GBC, nor shall any such termination
relieve Borrower of any Obligation to GBC, until all of the Obligations
have been paid and performed in full. Upon payment and performance in
full of all the Obligations and termination of this Agreement, GBC shall
promptly deliver to Borrower termination statements, requests for
reconveyances and such other documents as may be reasonably required to
terminate GBC's security interests.
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "Event of Default" under this Agreement, and
Borrower shall give GBC immediate written notice thereof: (a) Any
warranty, representation, statement, report or certificate made or
delivered to GBC by Borrower or any of Borrower's officers, employees or
agents, now or in the future, shall be untrue or misleading in a material
respect; or (b) Borrower shall fail to pay when due any Loan or any
interest thereon or any other monetary Obligation; or (c) the total Loans
and other Obligations outstanding at any time shall exceed the Credit
Limit; or (d) Borrower shall fail to perform any non-monetary Obligation
which by its nature cannot be cured; or (e) Borrower shall fail to perform
any other non-monetary Obligation, which failure is not cured within 5
business days after the date performance is due; or (f) any levy,
assessment, attachment, seizure, lien or encumbrance (other than a
Permitted Lien) is made on all or any part of the Collateral which is not
cured within 10 days after the occurrence of the same; or (g) any default
or event of default occurs under any obligation secured by a Permitted
Lien, which is not cured within any applicable cure period or waived in
writing by the holder of the Permitted Lien; or (h) Borrower breaches any
material contract or obligation, which has or may reasonably be expected
to have a material adverse effect on Borrower's business or financial
condition; or (i) dissolution, termination of existence, insolvency or
cessation of failure of Borrower or any Guarantor; or appointment of a
receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceeding by Borrower or any Guarantor under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in
effect; or (j) the commencement of any proceeding against Borrower or any
Guarantor under any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect, which is not cured by the
dismissal thereof within 45 days after the date commenced; or (k)
revocation or termination of, or limitation or denial of liability upon,
any guaranty of the Obligations or any attempt to do any of the foregoing;
or (l) revocation or termination of, or limitation or denial of liability
upon, any pledge of any certificate of deposit, securities or other
property or asset pledged by any third party to secure any or all of the
Obligations, or any attempt to do any of the foregoing, or commencement of
proceedings by or against any such third party under any bankruptcy or
insolvency law; or (m) Borrower makes any payment on account of any
indebtedness or obligation which has been subordinated to the Obligations
other than as permitted in the applicable subordination agreement, or if
any Person who has subordinated such indebtedness or obligations
terminates or in any way limits or terminates its subordination agreement;
or (n) there shall be a change in the record or beneficial ownership of an
aggregate of more than 20% of the outstanding shares of stock of Borrower,
in one or more transactions, compared to the ownership of outstanding
shares of stock of Borrower in effect on the date hereof, without the
prior written consent of GBC; or (o) Borrower shall generally not pay its
debts as they become due, or Borrower shall conceal, remove or transfer
any part of its property, with intent to hinder, delay or defraud its
creditors, or make or suffer any transfer of any of its property which may
be fraudulent under any bankruptcy, fraudulent conveyance or similar law;
or (p) there shall be a material adverse change in Borrower's business or
financial condition in GBC's good faith judgment. GBC may cease making any
Loans hereunder during any of the above cure periods, and thereafter if an
Event of Default has occurred.
7.2 REMEDIES. Upon the occurrence and during the continuance of any
Event of Default, and at any time thereafter, GBC, at its option, and
without notice or demand of any kind (all of which are hereby expressly
waived by Borrower), may do any one or more of the following: (a) Cease
making Loans or otherwise extending credit to Borrower under this
Agreement or any other document or agreement; (b) Accelerate and declare
all or any part of the Obligations to be immediately due, payable, and
performable, notwithstanding any deferred or installment payments allowed
by any instrument evidencing or relating to any Obligation; (c) Take
possession of any or all of the Collateral wherever it may be found, and
for that purpose Borrower hereby authorizes GBC without judicial process
to enter in a peaceful manner onto any of Borrower's premises without
interference to search for, take possession of, keep, store, or remove any
of the Collateral, and remain on the premises or cause a custodian to
remain on the premises in exclusive control thereof, without charge for so
long as GBC deems it reasonably necessary in order to complete the
enforcement of its rights under this Agreement or any other agreement;
provided, however, that should GBC seek to take possession of any of the
Collateral by Court process, Borrower hereby irrevocably waives: (i) any
bond and any surety or security relating thereto required by any statute,
court rule or otherwise as an incident to such possession; (ii) any demand
for possession prior to the commencement of any suit or action to recover
possession thereof; and (iii) any requirement that GBC retain possession
of, and not dispose of, any such Collateral until after trial or final
judgment; (d) Require Borrower to assemble any or all of the Collateral
and make it available to GBC at places designated by GBC which are
reasonably convenient to GBC and Borrower, and to remove the Collateral to
such locations as GBC may deem advisable; (e) Complete the processing,
manufacturing or repair of any Collateral prior to a disposition thereof
and, for such purpose and for the purpose of removal, GBC shall have the
right to use Borrower's premises, vehicles, hoists, lifts, cranes,
equipment and all other property without charge; (f) Sell, lease or
otherwise dispose of any of the Collateral, in its condition at the time
GBC obtains possession of it or after
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further manufacturing, processing or repair, at one or more public and/or
private sales, in lots or in bulk, for cash, exchange or other property,
or on credit, and to adjourn any such sale from time to time without
notice other than oral announcement at the time scheduled for sale. GBC
shall have the right to conduct such disposition on Borrower's premises
without charge, for such time or times as GBC deems reasonable, or on
GBC's premises, or elsewhere and the Collateral need not be located at
the place of disposition. GBC may directly or through any affiliated
company purchase or lease any Collateral at any such public disposition,
and if permissible under applicable law, at any private disposition. Any
sale or other disposition of Collateral shall not relieve Borrower of any
liability Borrower may have if any Collateral is defective as to title or
physical condition or otherwise at the time of sale; (g) Demand payment
of, and collect any Receivables and General Intangibles comprising
Collateral and, in connection therewith, Borrower irrevocably authorizes
GBC to endorse or sign Borrower's name on all collections, receipts,
instruments and other documents, to take possession of and open mail
addressed to Borrower and remove therefrom payments made with respect to
any item of the Collateral or proceeds thereof, and, in GBC's sole
discretion, to grant extensions of time to pay, compromise claims and
settle Receivables, General Intangibles and the like for less than face
value; and (h) Demand and receive possession of any of Borrower's federal
and state income tax returns and the books and records utilized in the
preparation thereof or referring thereto. All reasonable attorneys'
fees, expenses, costs, liabilities and obligations incurred by GBC with
respect to the foregoing shall be added to and become part of the
Obligations, shall be due on demand, and shall bear interest at a rate
equal to the highest interest rate applicable to any of the Obligations.
Without limiting any of GBC's rights and remedies, from and after the
occurrence of any Event of Default, the interest rate applicable to the
Obligations shall be increased by an additional four percent per annum.
7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower
and GBC agree that a sale or other disposition (collectively, "sale") of
any Collateral which complies with the following standards will
conclusively be deemed to be commercially reasonable: (i) Notice of the
sale is given to Borrower at least seven days prior to the sale, and, in
the case of a public sale, notice of the sale is published at least seven
days before the sale in a newspaper of general circulation in the county
where the sale is to be conducted; (ii) Notice of the sale describes the
collateral in general, non-specific terms; (iii) The sale is conducted at
a place designated by GBC, with or without the Collateral being present;
(iv) The sale commences at any time between 8:00 a.m. and 6:00 p.m; (v)
Payment of the purchase price in cash or by cashier's check or wire
transfer is required; (vi) With respect to any sale of any of the
Collateral, GBC may (but is not obligated to) direct any prospective
purchaser to ascertain directly from Borrower any and all information
concerning the same. GBC shall be free to employ other methods of
noticing and selling the Collateral, in its discretion, if they are
commercially reasonable.
7.4 POWER OF ATTORNEY. Upon the occurrence and during the
continuance of any Event of Default, without limiting GBC's other rights
and remedies, Borrower grants to GBC an irrevocable power of attorney
coupled with an interest, authorizing and permitting GBC (acting through
any of its employees, attorneys or agents) at any time, at its option,
but without obligation, with or without notice to Borrower, and at
Borrower's expense, to do any or all of the following, in Borrower's name
or otherwise, but GBC agrees to exercise the following powers in a
commercially reasonable manner: (a) Execute on behalf of Borrower any
documents that GBC may, in its sole discretion, deem advisable in order
to perfect and maintain GBC's security interest in the Collateral, or in
order to exercise a right of Borrower or GBC, or in order to fully
consummate all the transactions contemplated under this Agreement, and
all other present and future agreements; (b) Execute on behalf of
Borrower any document exercising, transferring or assigning any option to
purchase, sell or otherwise dispose of or to lease (as lessor or lessee)
any real or personal property which is part of GBC's Collateral or in
which GBC has an interest; (c) Execute on behalf of Borrower, any
invoices relating to any Receivable, any draft against any Account Debtor
and any notice to any Account Debtor, any proof of claim in bankruptcy,
any Notice of Lien, claim of mechanic's, materialman's or other lien, or
assignment or satisfaction of mechanic's, materialman's or other lien;
(d) Take control in any manner of any cash or non-cash items of payment
or proceeds of Collateral; endorse the name of Borrower upon any
instruments, or documents, evidence of payment or Collateral that may
come into GBC's possession; (e) Endorse all checks and other forms of
remittances received by GBC; (f) Pay, contest or settle
any lien, charge, encumbrance, security interest and adverse claim in or
to any of the Collateral, or any judgment based thereon, or otherwise
take any action to terminate or discharge the same; (g) Grant extensions
of time to pay, compromise claims and settle Receivables and General
Intangibles for less than face value and execute all releases and other
documents in connection therewith; (h) Pay any sums required on account
of Borrower's taxes or to secure the release of any liens therefor, or
both; (i) Settle and adjust, and give releases of, any insurance claim
that relates to any of the Collateral and obtain payment therefor; (j)
Instruct any third party having custody or control of any books or
records belonging to, or relating to, Borrower to give GBC the same
rights of access and other rights with respect thereto as GBC has under
this Agreement; and (k) Take any action or pay any sum required of
Borrower pursuant to this Agreement and any other present or future
agreements. Any and all reasonable sums paid and any and all reasonable
costs, expenses, liabilities, obligations and reasonable attorneys' fees
incurred by GBC with respect to the foregoing shall be added to and
become part of the Obligations, shall be payable on demand, and shall
bear interest at a rate equal to the highest interest rate applicable to
any of the Obligations. In no event shall GBC's rights under the
foregoing power of attorney or any of GBC's other rights under this
Agreement be deemed to indicate that GBC is in control of the business,
management or properties of Borrower.
7.5 APPLICATION OF PROCEEDS. All proceeds realized as the result
of any sale or other disposition of the Collateral shall be applied by
GBC first to the reasonable costs, expenses, liabilities, obligations and
attorneys' fees incurred by GBC in the exercise of its rights under this
Agreement, second to the interest due upon any of the Obligations, and
third to the principal of the Obligations,
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in such order as GBC shall determine in its sole discretion. Any surplus
shall be paid to Borrower or other persons legally entitled thereto;
Borrower shall remain liable to GBC for any deficiency. If GBC, in its
sole discretion, directly or indirectly enters into a deferred payment or
other credit transaction with any purchaser at any sale of Collateral,
GBC shall have the option, exercisable at any time, in its sole
discretion, of either reducing the Obligations by the principal amount of
purchase price or deferring the reduction of the Obligations until the
actual receipt by GBC of the cash therefor.
7.6 REMEDIES CUMULATIVE. In addition to the rights and remedies
set forth in this Agreement, GBC shall have all the other rights and
remedies accorded a secured party under the California Uniform Commercial
Code and under all other applicable laws, and under any other instrument
or agreement now or in the future entered into between GBC and Borrower,
and all of such rights and remedies are cumulative and none is exclusive.
Exercise or partial exercise by GBC of one or more of its rights or
remedies shall not be deemed an election, nor bar GBC from subsequent
exercise or partial exercise of any other rights or remedies. The
failure or delay of GBC to exercise any rights or remedies shall not
operate as a waiver thereof, but all rights and remedies shall continue
in full force and effect until all of the Obligations have been fully
paid and performed.
8. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"Account Debtor" means the obligor on a Receivable.
"Affiliate" means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent
or subsidiary of such Person, or any Person controlling, controlled by or
under common control with such Person.
"Agreement" and "this Agreement" means this Loan and Security
Agreement and all modifications and amendments thereto, extensions
thereof, and replacements therefor.
"Business Day" means a day on which GBC is open for business.
"Code" means the Uniform Commercial Code as adopted and in effect in
the State of California from time to time.
"Collateral" has the meaning set forth in Section 2.1 above.
"Default" means any event which with notice or passage of time or
both, would constitute an Event of Default.
"Deposit Account" has the meaning set forth in Section 9105 of the
Code.
"Eligible Inventory" means Inventory which GBC, in its good faith
business judgement , deems eligible for borrowing, based on such
considerations as GBC may from time to time deem appropriate. Without
limiting the fact that the determination of which Inventory is eligible
for borrowing is a matter of GBC's good faith business judgment Inventory
which does not meet the following requirements will not be deemed to be
Eligible Inventory: Inventory which (i) is in good, new and salable
condition which is not perishable, not obsolete or unmerchantable, and is
not comprised of, packaging materials or supplies; (ii) meets all
applicable governmental standards; (iii) has been manufactured in
compliance with the Fair Labor Standards Act; (iv) conforms in all
respects to the warranties and representations set forth in this
Agreement; (v) is at all times subject to GBC's duly perfected, first
priority security interest; and (vii) is situated at Borrower's Address or
at one of Borrower's other locations set forth on the Schedule.
"Eligible Receivables" means unconditional Receivables arising in the
ordinary course of Borrower's business from the completed sale of goods or
rendition of services, which GBC, in its good faith business judgment
shall deem eligible for borrowing, based on such considerations as GBC may
from time to time deem appropriate.
"Equipment" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment,
furnishings, fixtures, trade fixtures, motor vehicles, tools, parts, dyes,
jigs, goods and other tangible personal property (other than Inventory) of
every kind and description used in Borrower's operations or owned by
Borrower and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions or
improvements to any of the foregoing, wherever located.
"Event of Default" means any of the events set forth in Section 7.1
of this Agreement.
"General Intangibles" means all general intangibles of Borrower,
whether now owned or hereafter created or acquired by Borrower,
including, without limitation, all choses in action, causes of action,
corporate or other business records, Deposit Accounts, inventions,
designs, drawings, blueprints, patents, patent applications, trademarks
and the goodwill of the business symbolized thereby, names, trade names,
trade secrets, goodwill, copyrights, registrations, licenses, franchises,
customer lists, security and other deposits, rights in all litigation
presently or hereafter pending for any cause or claim (whether in
contract, tort or otherwise), and all judgments now or hereafter arising
therefrom, all claims of Borrower against GBC, rights to purchase or sell
real or personal property, rights as a licensor or licensee of any kind,
royalties, telephone numbers, proprietary information, purchase orders,
and all insurance policies and claims (including life insurance, key man
insurance, credit insurance, liability insurance, property insurance and
other insurance), tax refunds and claims, computer programs, discs, tapes
and tape files, claims under guaranties, security interests or other
security held by or granted to Borrower, all rights to indemnification
and all other intangible property of every kind and nature (other than
Receivables).
"Guarantor" means any Person who has guaranteed any of the
Obligations.
"Inventory" means all of Borrower's now owned and hereafter acquired
goods, merchandise or other personal property, wherever located, to be
furnished under any
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contract of service or held for sale or lease (including all raw
materials, work in process, finished goods and goods in transit), and all
materials and supplies of every kind, nature and description which are or
might be used or consumed in Borrower's business or used in connection
with the manufacture, packing, shipping, advertising, selling or
finishing of such goods, merchandise or other personal property, and all
warehouse receipts, documents of title and other documents representing
any of the foregoing.
"LIBOR Rate" means (i) the one-month London Interbank Offered Rate
for deposits in U.S. dollars, as shown each day in The Wall Street
Journal (Eastern Edition) under the caption "Money Rates - London
Interbank Offered Rates (LIBOR)"; or (ii) if the Wall Street Journal does
not publish such rate, the offered one-month rate for deposits in U.S.
dollars which appears on the Reuters Screen LIBO Page as of 10:00 a.m.,
New York time, each day, provided that if at least two rates appear on
the Reuters Screen LIBO Page on any day, the "LIBOR Rate" for such day
shall be the arithmetic mean of such rates; or (iii) if the Wall Street
Journal does not publish such rate on a particular day and no such rate
appears on the Reuters Screen LIBO Page on such day, the rate per annum
at which deposits in U.S. dollars are offered to the principal London
office of The Chase Manhattan Bank, in the London interbank market at
approximately 11:00 A.M., London time, on such day in an amount
approximately equal to the outstanding principal amount of the Loans, for
a period of one month, in each of the foregoing cases as determined in
good faith by GBC, which determination shall be conclusive absent
manifest error.
"Obligations" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness
at any time owing by Borrower to GBC, whether evidenced by this Agreement
or any note or other instrument or document, whether arising from an
extension of credit, opening of a letter of credit, banker's acceptance,
loan, guaranty, indemnification or otherwise, whether direct or indirect
(including, without limitation, those acquired by assignment and any
participation by GBC in Borrower's debts owing to others), absolute or
contingent, due or to become due, including, without limitation, all
interest, charges, expenses, fees, attorney's fees, expert witness fees,
audit fees, letter of credit fees, loan fees, termination fees, minimum
interest charges and any other sums chargeable to Borrower under this
Agreement or under any other present or future instrument or agreement
between Borrower and GBC.
"Permitted Liens" means the following: (i) purchase money security
interests in specific items of Equipment; (ii) leases of specific items
of Equipment; (iii) liens for taxes not yet payable; (iv) additional
security interests and liens which are subordinate to the security
interest in favor of GBC and are consented to in writing by GBC (which
consent shall not be unreasonably withheld); (v) security interests being
terminated substantially concurrently with this Agreement; (vi) liens of
materialmen, mechanics, warehousemen, carriers, or other similar liens
arising in the ordinary course of business and securing obligations which
are not delinquent; (vii) liens incurred in connection with the
extension, renewal or refinancing of the indebtedness secured by liens of
the type described above in clauses (i) or (ii) above, provided that any
extension, renewal or replacement lien is limited to the property
encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase;
(viii) Liens in favor of customs and revenue authorities which secure
payment of customs duties in connection with the importation of goods.
GBC will have the right to require, as a condition to its consent under
subparagraph (iv) above, that the holder of the additional security
interest or lien sign an intercreditor agreement on GBC's then standard
form, acknowledge that the security interest is subordinate to the
security interest in favor of GBC, and agree not to take any action to
enforce its subordinate security interest so long as any Obligations
remain outstanding, and that Borrower agree that any uncured default in
any obligation secured by the subordinate security interest shall also
constitute an Event of Default under this Agreement.
"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association,
corporation, government, or any agency or political division thereof, or
any other entity.
"Receivables" means all of Borrower's now owned and hereafter
acquired accounts (whether or not earned by performance), letters of
credit, contract rights, chattel paper, instruments, securities,
documents and all other forms of obligations at any time owing to
Borrower, all guaranties and other security therefor, all merchandise
returned to or repossessed by Borrower, and all rights
of stoppage in transit and all other rights or remedies of an unpaid
vendor, lienor or secured party.
Other Terms. All accounting terms used in this Agreement, unless
otherwise indicated, shall have the meanings given to such terms in
accordance with generally accepted accounting principles, consistently
applied. All other terms contained in this Agreement, unless otherwise
indicated, shall have the meanings provided by the Code, to the extent
such terms are defined therein.
9. GENERAL PROVISIONS.
9.1 INTEREST COMPUTATION. In computing interest on the
Obligations, all checks, wire transfers and other items of payment
received by GBC (including proceeds of Receivables and payment of the
Obligations in full) shall be deemed applied by GBC on account of the
Obligations three Business Days after receipt by GBC of immediately
available funds. GBC shall not, however, be required to credit
Borrower's account for the amount of any item of payment which is
unsatisfactory to GBC in its discretion, and GBC may charge Borrower's
Loan account for the amount of any item of payment which is returned to
GBC unpaid.
9.2 APPLICATION OF PAYMENTS. All payments with respect to the
Obligations may be applied, and in GBC's sole discretion reversed and
re-applied, to the Obligations, in such order and manner as GBC shall
determine in its sole discretion.
9.3 CHARGES TO ACCOUNT. GBC may, in its discretion, require that
Borrower pay monetary Obligations in cash to GBC, or charge them to
Borrower's Loan account, in which event they will bear interest at the
same rate applicable to the Loans.
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9.4 MONTHLY ACCOUNTINGS. GBC shall provide Borrower monthly with
an account of advances, charges, expenses and payments made pursuant to
this Agreement. Such account shall be deemed correct, accurate and
binding on Borrower and an account stated (except for reverses and
reapplications of payments made and corrections of errors discovered by
GBC), unless Borrower notifies GBC in writing to the contrary within
sixty days after each account is rendered, describing the nature of any
alleged errors or admissions.
9.5 NOTICES. All notices to be given under this Agreement shall be
in writing and shall be given either personally or by reputable private
delivery service or by regular first-class mail, or certified mail return
receipt requested, addressed to GBC or Borrower at the addresses shown in
the heading to this Agreement, or at any other address designated in
writing by one party to the other party. All notices shall be deemed to
have been given upon delivery in the case of notices personally
delivered, or at the expiration of one business day following delivery to
the private delivery service, or two business days following the deposit
thereof in the United States mail, with postage prepaid.
9.6 SEVERABILITY. Should any provision of this Agreement be held
by any court of competent jurisdiction to be void or unenforceable, such
defect shall not affect the remainder of this Agreement, which shall
continue in full force and effect.
9.7 INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are
the final, entire and complete agreement between Borrower and GBC and
supersede all prior and contemporaneous negotiations and oral
representations and agreements, all of which are merged and integrated in
this Agreement. There are no oral understandings, representations or
agreements between the parties which are not set forth in this Agreement
or in other written agreements signed by the parties in connection
herewith.
9.8 WAIVERS. The failure of GBC at any time or times to require
Borrower to strictly comply with any of the provisions of this Agreement
or any other present or future agreement between Borrower and GBC shall
not waive or diminish any right of GBC later to demand and receive strict
compliance therewith. Any waiver of any default shall not waive or
affect any other default, whether prior or subsequent, and whether or not
similar. None of the provisions of this Agreement or any other agreement
now or in the future executed by Borrower and delivered to GBC shall be
deemed to have been waived by any act or knowledge of GBC or its agents
or employees, but only by a specific written waiver signed by an
authorized officer of GBC and delivered to Borrower. Borrower waives
demand, protest, notice of protest and notice of default or dishonor,
notice of payment and nonpayment, release, compromise, settlement,
extension or renewal of any commercial paper, instrument, account,
General Intangible, document or guaranty at any time held by GBC on which
Borrower is or may in any way be liable, and notice of any action taken
by GBC, unless expressly required by this Agreement.
9.9 AMENDMENT. The terms and provisions of this Agreement may not
be waived or amended, except in a writing executed by Borrower and a duly
authorized officer of GBC.
9.10 TIME OF ESSENCE. Time is of the essence in the performance by
Borrower of each and every obligation under this Agreement.
9.11 ATTORNEYS FEES AND COSTS. Borrower shall reimburse GBC for
all reasonable attorneys' fees and all filing, recording, search, title
insurance, appraisal, audit, and other reasonable costs incurred by GBC,
pursuant to, or in connection with, or relating to this Agreement
(whether or not a lawsuit is filed), including, but not limited to, any
reasonable attorneys' fees and costs GBC incurs in order to do the
following: prepare and negotiate this Agreement and the documents
relating to this Agreement; obtain legal advice in connection with this
Agreement or Borrower; enforce, or seek to enforce, any of its rights;
prosecute actions against, or defend actions by, Account Debtors;
commence, intervene in, or defend any action or proceeding; initiate any
complaint to be relieved of the automatic stay in bankruptcy; file or
prosecute any probate claim, bankruptcy claim, third-party claim, or
other claim; examine, audit, copy, and inspect any of the Collateral or
any of Borrower's books and records; protect, obtain possession of,
lease, dispose of, or otherwise enforce GBC's security interest in, the
Collateral; and otherwise represent GBC in any litigation relating to
Borrower. If either GBC or Borrower files any lawsuit against the other
predicated on a breach of this Agreement, the prevailing party in such
action shall be entitled to recover its reasonable costs and attorneys'
fees, including (but not limited to) reasonable attorneys' fees and costs
incurred in the enforcement of, execution upon or defense of any order,
decree, award or judgment. All attorneys' fees and costs to which GBC
may be entitled pursuant to this Paragraph shall immediately become part
of Borrower's Obligations, shall be due on demand, and shall bear interest
at a rate equal to the highest interest rate applicable to any of the
Obligations.
9.12 BENEFIT OF AGREEMENT. The provisions of this Agreement shall
be binding upon and inure to the benefit of the respective successors,
assigns, heirs, beneficiaries and representatives of Borrower and GBC;
provided, however, that Borrower may not assign or transfer any of its
rights under this Agreement without the prior written consent of GBC, and
any prohibited assignment shall be void. No consent by GBC to any
assignment shall release Borrower from its liability for the Obligations.
9.13 JOINT AND SEVERAL LIABILITY. If Borrower consists of more
than one Person, their liability shall be joint and several, and the
compromise of any claim with, or the release of, any Borrower shall not
constitute a compromise with, or a release of, any other Borrower.
9.14 LIMITATION OF ACTIONS. Any claim or cause of action by
Borrower against GBC, its directors, officers, employees, agents,
accountants or attorneys, based upon, arising from, or relating to this
Loan Agreement, or any other present or future document or agreement, or
any other transaction contemplated hereby or thereby or relating hereto
or thereto, or any other matter, cause or thing whatsoever, occurred,
done, omitted or suffered to be done by GBC, its directors, officers,
employees, agents, accountants or attorneys, shall be barred unless
asserted by Borrower by the commencement of an action or proceeding in a
court of competent jurisdiction by the
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filing of a complaint within one year after the first act, occurrence or
omission upon which such claim or cause of action, or any part thereof,
is based, and the service of a summons and complaint on an officer of
GBC, or on any other person authorized to accept service on behalf of
GBC, within thirty (30) days thereafter. Borrower agrees that such
one-year period is a reasonable and sufficient time for Borrower to
investigate and act upon any such claim or cause of action. The one-year
period provided herein shall not be waived, tolled, or extended except by
the written consent of GBC in its sole discretion. This provision shall
survive any termination of this Loan Agreement or any other present or
future agreement.
9.15 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only
used in this Agreement for convenience. Borrower and GBC acknowledge
that the headings may not describe completely the subject matter of the
applicable paragraph, and the headings shall not be used in any manner to
construe, limit, define or interpret any term or provision of this
Agreement. The term "including", whenever used in this Agreement, shall
mean "including (but not limited to)". This Agreement has been fully
reviewed and negotiated between the parties and no uncertainty or
ambiguity in any term or provision of this Agreement shall be construed
strictly against GBC or Borrower under any rule of construction or
otherwise.
9.16 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all
acts and transactions hereunder and all rights and obligations of GBC and
Borrower shall be governed by the laws of the State of California. As a
material part of the consideration to GBC to enter into this Agreement,
Borrower (i) agrees that all actions and proceedings relating directly or
indirectly to this Agreement shall, at GBC's option, be litigated in
courts located within California, and that the exclusive venue therefor
shall be Los Angeles County; (ii) consents to the jurisdiction and venue
of any such court and consents to service of process in any such action
or proceeding by personal delivery or any other method permitted by law;
and (iii) waives any and all rights Borrower may have to object to the
jurisdiction of any such court, or to transfer or change the venue of any
such action or proceeding.
9.17 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND GBC EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER
PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN GBC AND BORROWER, OR
ANY CONDUCT, ACTS OR OMISSIONS OF GBC OR BORROWER OR ANY OF THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS
AFFILIATED WITH GBC OR BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
BORROWER:
SUBMICRON SYSTEMS, INC.
BY_______________________________
PRESIDENT OR VICE PRESIDENT
BORROWER:
SUBMICRON WET PROCESS STATIONS, INC.
BY_______________________________
PRESIDENT OR VICE PRESIDENT
GBC:
GREYROCK BUSINESS CREDIT,
A DIVISION OF NATIONSCREDIT COMMERCIAL
CORPORATION
BY_______________________________
TITLE______________________________
Version -3
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[LOGO]
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: SUBMICRON SYSTEMS, INC.
ADDRESS: 0000 XXXXXXXXX XXXXX
XXXXXXXXX, XXXXXXXXXXXX 00000
BORROWER: SUBMICRON WET PROCESS STATIONS, INC.
ADDRESS: 0000 XXXXXXX XXXXXX
XXXXX XXXXX, XXXXXXXXXX 00000
DATE: NOVEMBER 25, 1997
This Schedule is an integral part of the Loan and Security Agreement between
GREYROCK BUSINESS CREDIT, A DIVISION OF NATIONSCREDIT COMMERCIAL CORPORATION
("GBC") and the above borrowers (jointly and severally "Borrower") of even
date.
1. CREDIT LIMIT
(Section 1.1): An amount not to exceed the lesser of (1) or (2) below:
(1) $15,000,000 at any one time outstanding; or
(2) an amount equal to
(i) 80% of the amount of Borrower's Eligible
Receivables (as defined in Section 8 above), plus
(ii) the lesser of 10% of the Value of
Borrower's Eligible Inventory (as defined in
Section 8 above) or $2,000,000. "Value", as
used herein, means the lower of cost or
wholesale market value.
Loans will be made separately to each Borrower
based on the Collateral of each Borrower.
2. INTEREST.
INTEREST RATE (Section 1.2):
The interest rate in effect throughout each calendar
month during the term of this Agreement shall be the
highest "LIBOR Rate" in effect during such month, plus
5.375% per annum, provided that the interest rate in
effect in each month shall not be less than 8% per
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annum, and provided that the interest charged for each month
shall be a minimum of $10,000, regardless of the amount of
the Obligations outstanding. Interest shall be calculated
on the basis of a 360-day year for the actual number of days
elapsed. "LIBOR Rate" has the meaning set forth in Section
8 above.
3. FEES (Section 1.3/Section 6.2):
Loan Fee: $150,000, payable concurrently herewith.
Termination Fee: $10,000 per month for each month (or
portion thereof) from the effective date
of termination to the Maturity Date
NSF Check Charge: $15.00 per item.
Wire Transfers: $15.00 per transfer.
4. MATURITY DATE
(Section 6.1):
NOVEMBER 30, 1998, subject to automatic renewal as provided
in Section 6.1 above, and early termination as provided in
Section 6.2 above.
5. REPORTING.
(Section 5.2):
Borrower shall provide GBC with the following:
1. Annual financial
statements, as soon as available, and in any
event within 90 days following the end of
Borrower's fiscal year, certified by independent
certified public accountants acceptable to GBC.
2. Quarterly unaudited
financial statements, as soon as available, and
in any event within 45 days after the end of each
fiscal quarter of Borrower.
3. Monthly unaudited
financial statements, as soon as available, and
in any event within 45 days after the end of each
month.
4. Monthly Receivable
agings, aged by invoice date, within 10 days
after the end of each month.
5. Monthly accounts payable
agings, aged by invoice date, and outstanding or
held check registers within 10 days after the end
of each month.
6. Monthly perpetual
inventory reports for the Inventory valued on a
first-in, first-out basis at the lower of cost
or market (in accordance with generally accepted
accounting principles) or such other inventory
reports as are reasonably requested by GBC, all
within 30 days after the end of each month.
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6. BORROWER INFORMATION:
PRIOR NAMES OF
BORROWER
(Section 3.2): None
PRIOR TRADE
NAMES OF BORROWER
(Section 3.2): None
EXISTING TRADE
NAMES OF BORROWER
(Section 3.2): None
OTHER LOCATIONS AND
ADDRESSES (Section 3.3): See Exhibit B hereto
MATERIAL ADVERSE
LITIGATION (Section 3.10): None
7. OTHER COVENANTS:
Borrower shall at all times comply with all of the
following additional covenants:
(1) GUARANTY.
Borrower shall concurrently cause SUBMICRON
SYSTEMS CORPORATION to execute and deliver to
GBC a Continuing Guaranty, on GBC's standard
form, with respect to all of the Obligations,
and to execute and deliver a Security
Agreement with respect to all of its assets,
on GBC's standard form, and Borrower shall
cause such Guaranty and Security Agreement to
continue in full force and effect throughout
the term of this Loan Agreement and so long as
any portion of the Obligations remains
outstanding.
8. CONDITIONS PRECEDENT: In addition to the other conditions set forth in
this Loan Agreement, the making of the first Loan is condition on the
satisfaction of the following conditions precedent, which Borrower agrees
to satisfy on or before December 5, 1997:
(1) SUBORDINATED DEBT.
Borrower shall have consummated the issuance of
$20,000,000 of 12% Senior Subordinated Notes
and received $20,000,000 in cash consideration
therefor, all documentation in connection
therewith shall be acceptable to GBC in its
discretion, and the holders of said notes shall
have entered into an Intercreditor Agreement
with GBC on terms acceptable to GBC in its
discretion.
(2) INTELLECTUAL
PROPERTY. Without limiting the requirement
that GBC have a first-priority perfected and
enforceable security interest in all of the
Collateral, subject only to the Permitted
Liens, all filings in the
United States Patent and Trademark Office and
the United States Copyright Office shall have
been effected to give GBC a first-priority
perfected security interest in all of the
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Borrower's and Parent's patents,patent
applications, trademarks and the goodwill
of the business symbolized thereby,
copyrights, and registrations, and the
same shall be acceptable to GBC and its
counsel in their discretion.
(3) NO CONSENTS. No
consent or authorization of, filing with or
other act by or in respect of any Governmental
Authority or any other Person is required in
connection, with the execution, delivery,
performance, validity or enforceability of this
Agreement, or the other Loan Documents or the
consummation of the transactions contemplated
hereby or thereby or the continuing operations
of the Borrower following the consummation of
such transactions.
(4) PRE-FUNDING AUDIT.
GBC shall have performed a pre-funding audit and
collateral review, with results satisfactory to
GBC.
(5) DOCUMENTS. GBC shall
have received the following, each dated the date
of the initial Loan or as of an earlier date
acceptable to GBC, in form and substance
satisfactory to GBC and its counsel:
(A) acknowledgment copies of Uniform Commercial
Code financing statements (naming GBC as
secured party and the Borrower as debtor),
duly filed in all jurisdictions that GBC
deems necessary or desirable to perfect and
protect the security interests created
hereunder, and Official Uniform Commercial
Code searches in such jurisdictions, showing
such financing statements of record;
(B) the opinion of counsel for the Borrower
covering such matters incident to the
transactions contemplated by this Agreement
as GBC may specify in its discretion;
(C) certified copies of all policies of
insurance required by this Agreement and the
other documents relating hereto
(collectively, the "Loan Documents"),
together with loss payee endorsements for
all such policies naming GBC as lender loss
payee and an additional insured;
(D) copies of the Borrower's and Parent's
articles or certificate of incorporation,
certified as true, correct and complete by
the secretary of state of the state of
incorporation of Borrower and Parent within
45 days of the date hereof;
(E) copies of the bylaws of the Borrower and
Parent and a copy of the resolutions of the
Board of Directors of the Borrower and
Parent authorizing the execution, delivery
and performance of this Agreement and the
other Loan Documents (as applicable), and
the transactions contemplated hereby and
thereby, attached to which is a certificate
of the Secretary or an Assistant Secretary
of the Borrower certifying (A) that such
copies of the bylaws and resolutions are
true, complete and accurate copies thereof,
have not been amended or modified since the
date of such certificate and are in full
force and effect and (B) the incumbency,
names and true signatures of the officers of
the Borrower and Parent;
(F) a good standing certificate from the
Secretary of State of Borrower's and
Parent's state of incorporation and each
state in which the Borrower and Parent are
qualified as a foreign
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corporation, each dated within ten days of the
date of the first Loan;
(G) such other agreements and instruments as
GBC deems necessary in its sole and absolute
discretion in connection with the transactions
contemplated hereby.
Borrower: GBC:
SUBMICRON SYSTEMS, INC. GREYROCK BUSINESS CREDIT,
a Division of NationsCredit
Commercial Corporation
By_______________________________ By_______________________________
President or Vice President Title_____________________________
Borrower:
SUBMICRON WET PROCESS STATIONS, INC.
By_______________________________
President or Vice President
Version -23
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EXHIBIT A
ASSETS TO BE TRANSFERRED TO PRIMAXX CORPORATION
18
EXHIBIT "B"
OTHER LOCATIONS AND ADDRESSES
1. SubMicron Systems, Inc.
0000 Xxxxxxxxx Xxxxx
0000 Xxxxxxxxx Xxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
2. Universal Plastics
0000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
19
LEVY, SMALL & XXXXXX
000 Xxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone (000) 000-0000
Telecopier (000) 000-0000
TRANSMITTAL NOTE
20
SCHEDULE TO LOAN AND SECURITY AGREEMENT -.S.
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