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Hypercom - REVOLVING LINE OF CREDIT LOAN AGREEMENT
REVOLVING LINE OF CREDIT
LOAN AGREEMENT
(ACCOUNTS RECEIVABLE AND INVENTORY)
This Agreement is entered into by and between HYPERCOM, INC., an Arizona corporation & HYPERCOM LATINO AMERICA, INC., an Arizona corporation & HYPERCOM MANUFACTURING RESOURCES, INC., an Arizona corporation ("Borrower") and Bank One, Arizona, NA ("Bank"). RECITALS: Borrower desires to obtain from Bank a revolving line of credit ("Loan") and Bank is willing to make the Loan, but only on the terms and conditions hereinafter set forth. NOW, THEREFORE in consideration of the premises and the mutual promises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. LOAN. 1.1 REVOLVING LINE OF CREDIT. Subject to the terms and conditions contained herein and in the other documents, instruments and agreements executed in connection with the Loan and the security therefor ("Loan Documents"), Bank will establish for Borrower the Loan as a revolving line of credit against which Bank will make advances ("Advances") from time to time for the purpose of providing working capital to Borrower. Subject to the terms hereof, Borrower shall have the right to obtain Advances, repay Advances and obtain additional Advances; however, all of the Advances hereunder shall be viewed as a single loan. At no time shall the unpaid principal balance of the Loan exceed the amount set forth in Section 13 hereof ("Maximum Amount") and all Advances of the Loan shall be made on or before the date set forth in Section 13 hereof. 1.2 ADVANCES. Subject to the terms and conditions hereof, Advances of the Loan will be made in amounts not to exceed the amount ("Borrowing Base") calculated in accordance with the formula set forth in the Borrowing Base Certificate, attached hereto as Exhibit A and by this reference incorporated herein. In calculating the Borrowing Base, the percentage set forth in Section 13 hereof of the amount of Total Eligible Accounts Receivable and the percentage set forth in Section 13 hereof of the amount (determined on the basis of the lower of cost or market value) of Total Eligible Inventory shall be used. "Eligible Account Receivable" is an amount owing to Borrower, as determined by Bank in its sole and absolute discretion, which has arisen from the delivery and/or shipment of products previously made and from services rendered for which an invoice has been issued by Borrower to its customer ("Customer") (a) which amount is not subject to any offset, counterclaim or defense asserted by the Customer, (b) which amount is subject to a perfected security interest in favor of Bank and is not subject to any other security interest, lien, claim or encumbrances, (c) which amount has not remained unpaid for more than the number of days set forth in Section 13 after the date due under the terms of the related invoice, (d) where not more than fifteen percent (15%) of the total amount owing from the Customer has remained unpaid for more than the number of days set forth in Section 13 after the date due under the terms of the related invoice, (e) which amount is not an uninsured amount owing from a Customer located in a foreign country and (f) which amount is not owing from the United States of America or any agency, department or subdivision thereof, unless a properly executed assignment of claims has been received by Bank. "Eligible Inventory" is the inventory of Borrower (consisting of those items within the categories set forth in Section 13), as determined by Bank in its sole and absolute discretion, to be (a) in good condition and salable in the ordinary course of Borrower's business, (b) owned by Borrower free and clear of any mortgages, liens, security interests, claims, encumbrances or rights of others, excepting only the security interests in favor of Bank, (c) located at a location identified in a Security Agreement (hereinafter defined), (d) subject to a perfected security interest in favor of Bank, (e) not subject to any consignment to any Customer and (e) not acquired by Borrower in or as part of a bulk transfer of sale or assets unless Borrower has complied with all applicable bulk sales or bulk transfer laws. 1.3 NOTE. The Loan shall be evidenced by a promissory note ("Note") of even date herewith in a form prepared and approved by Bank in the Maximum Amount, payable in accordance with the terms thereof. Interest on the principal amount outstanding from time to time shall be charged as provided in the Note and should such rate of interest as calculated thereunder exceed that allowed by law, the applicable rate of interest will be the maximum rate of interest allowed by applicable law. 1.4 PREPAYMENTS. If for any reason the aggregate principal amount of the Loan outstanding at any time shall exceed the maximum amount permitted to be borrowed in accordance with Section 1.2 hereof, Borrower, without notice or demand, shall immediately make a principal payment to Bank in an amount equal to such excess plus accrued and unpaid interest hereon. Borrower may from time to time, prepay all or part of the outstanding principal balance of the Loan. 1.5 REMITTANCE ACCOUNT. If so indicated in Section 13 hereof, the proceeds received by Borrower from its inventory and collection of accounts receivable, which, pursuant to the Security Agreements (hereinafter defined), are required to be transmitted to Bank, shall be handled and administered by Bank in and through a remittance account in accordance with the provisions of the Security Agreements. 2. SECURITY 2.1 SECURITY AGREEMENTS. As security for the payment of the Note, the Loan, and all other liabilities and obligations of Borrower to Bank, now existing or hereafter created, Borrower shall grant to Bank a security interest in all of Borrower's inventory, accounts receivable, rights to payment and such other property ("Property"), as more particularly described in one or more security agreements ("Security Agreements") executed by Borrower and delivered to Bank in form and substance satisfactory to Bank, in its sole and absolute discretion. The Security Agreements shall grant to Bank a first and prior security interest in and to the Property, except as otherwise expressly provided therein. 2.2 ADDITIONAL DOCUMENTS. Borrower shall execute from time to time upon the request of Bank, such financing statements or the documents reasonably required by Bank to perfect or continue Bank's security interests described herein. 3. ADVANCES. 3.1 CONDITIONS PRECEDENT TO ADVANCES. Bank shall have no obligation to make any Advance until the conditions set forth in the following subparagraphs and elsewhere herein have been satisfied at the expense of Borrower, as determined by Bank in its sole and absolute discretion:
(a) Borrower shall have delivered to Bank, in form and substance
satisfactory to Bank, this Agreement, the Note, the Security Agreements
and such other documents, instruments, financing statements, certificates
and agreements as Bank may reasonably request;
(b) If Borrower is a corporation or a partnership, Borrower shall have
delivered to Bank, in form and substance satisfactory to Bank in its sole
and absolute discretion certified copies of resolutions of Borrower's
board of directors or partners, as the case may be, authorizing Borrower
to execute, deliver, honor and perform the Loan Documents and to grant the
security interest in the Property as provided in the Security Agreements
and certifying the names and signatures of the officers or partners, as
the case may be, of Borrower authorized to sign the Loan Documents;
(c) All of Bank's liens and security interests securing the Loan, shall
have been validly perfected;
(d) No material adverse change shall have occurred in the business or
financial condition of Borrower or any guarantor since the date of the
latest financial statements given to Bank by on behalf of Borrower or
such guarantor;
(e) Each of the warranties and representations made by Borrower in the
Loan Documents shall be true and correct as of the date of each Advance
and;
(f) Borrower shall have kept and performed the various covenants,
obligations and agreements on its part to be kept and performed under the
Loan Documents and no Event of Default, or act or event which with the
giving of notice or the passage of time, or both, would constitute an
Event of Default hereunder or under any of the other Loan Documents, shall
have occurred and be continuing. 3.2 REQUESTS FOR ADVANCES. Advances may be made by Bank at the oral or written request of the persons named in Section 13 hereof, either one acting alone, who are authorized to request Advances and direct disposition of any such Advances until written notice of the revocation of such authority is received from Borrower by Bank. Each request by Borrower for an Advance shall constitute a reaffirmation, as of the date of such request, of all of the representations and warranties of Borrower contained in this Agreement and in the other Loan Documents. 3.3 NO WAIVER. No Advance shall constitute a waiver of any of the conditions to any further Advances nor, in the event Borrower is unable to satisfy any such condition, shall any such Advance have the effect of precluding Bank from thereafter declaring such inability to be an Event of Default (as hereinafter define).
4. FEES.
4.1 FEES. As additional consideration for Bank's commitment to make Advances, Borrower agrees to pay the Bank the following fees, which shall be non-refundable to Borrower, shall be held and retained by Bank as its sole property and shall not be applied to any payments due under the Loan Documents other than this Section 4:
(a) a commitment fee in the amount set forth in Section 13 hereof, payable
on or before the date hereof;
(b) a non-utilization fee computed at the rate per annum set forth in
Section 13 hereof on the unused portion of the Maximum Amount and payable
quarterly in arrears to be calculated from the date hereof, where the
phrase "unused portion of the Maximum Amount" means the average difference
between (i) the Maximum Amount and (ii) the outstanding principal balance
of the Loan on each day during such period; and
(c) an inspection fee in the amount per inspection set forth in Section 13
hereof, payable within ten (10) days of Borrower being billed therefor by
5. REPRESENTATIONS AND WARRANTIES.
5.1 REPRESENTATIONS AND WARRANTIES. Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the execution of this Agreement:
(a) Legal Status. Borrower, if a corporation, partnership, trust, or other
legal entity, has been duly organized and is validly existing under the
laws of its State of Incorporation or formation, as the case may be, and is
qualified to transact business, and has made all filings and is in good
standing, in the State of Arizona and in every other jurisdiction in which
the nature of its business requires such qualifies;
(b) No Violation. The making and performance of Borrower of the Loan
Documents does not violate any provision of law, nor any provision of
Borrower's formation documents, including, without limitation, Articles of
Incorporation or any partnership or trust agreement, or result in a breach
of, or constitute a default under, any agreement, indenture or other
instrument to which Borrower is a party or by which Borrower may be bound;
(c) Authorization. This Agreement and the other Loan Documents have been
duly authorized, executed and delivered, and are legal, valid and binding
agreements of Borrower enforceable against Borrower in accordance with
their terms, except as enforceability may be limited by bankruptcy,
solven