Loan And Security Agreement

EXHIBIT 10.5


LOAN AND SECURITY AGREEMENT


between


ACCOM, INC.,
A Delaware Corporation


Borrower


and


THE PROVIDENT BANK,
An Ohio Banking Institution


Lender


$2,000,000.00 REVOLVING LINE OF CREDIT


Dated: February 10, 2000
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TABLE OF CONTENTS


ARTICLE 1 DEFINITIONS....................................................................1 Section 1.1. Account Debtor.............................................1 Section 1.2. Accounts, Chattel Paper, Documents, Equipment, Fixtures,
General Intangibles, Goods, Instruments and Investment
Property...................................................1 Section 1.3. Affiliate. ................................................2 Section 1.4. Agreement. ................................................2 Section 1.5. Borrowing Base.............................................2 Section 1.6. Business Day. .............................................2 Section 1.7. Capital Adequacy Requirement. .............................2 Section 1.8. Capital Expenditures.......................................2 Section 1.9. Capital Lease. ............................................3 Section 1.10. Capital Lease Obligations. ................................3 Section 1.11. Closing. ..................................................3 Section 1.12. Code. .....................................................3 Section 1.13. Collateral. ...............................................3 Section 1.14. Collection Account. .......................................3 Section 1.15. Commercial Account. .......................................3 Section 1.16. Default. ..................................................3 Section 1.17. Dollar Cap. ...............................................4 Section 1.18. EBITDA.....................................................4 Section 1.19. Eligible Accounts. ........................................4 Section 1.20. Employee Benefit Plan. ....................................5 Section 1.21. Environmental Laws. .......................................5 Section 1.22. EPA Permit. ...............................................6 Section 1.23. ERISA. ....................................................6 Section 1.24. ERISA Affiliate. ..........................................6 Section 1.25. ERISA Liabilities. ........................................6 Section 1.26. Event Of Default. .........................................6 Section 1.27. Facilities. ...............................................6 Section 1.28. Fiscal Year. ..............................................6 Section 1.29. G.A.A.P. ..................................................6 Section 1.30. Guaranteed Pension Plan. ..................................6 Section 1.31. Indebtedness. .............................................7 Section 1.32. Insolvency Proceedings. ...................................7 Section 1.33. Interest Rate Protection Agreement. .......................7 Section 1.34. Interest Coverage Ratio....................................7 Section 1.35. Interest Expense...........................................7 Section 1.36. Inventory. ................................................7
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Section 1.37. Laws. .....................................................8 Section 1.38. Lender Expenses. ..........................................8 Section 1.39. Letters Of Credit. ........................................8 Section 1.40. Loan. .....................................................8 Section 1.41. Loan Documents. ...........................................8 Section 1.42. Lock Box. .................................................9 Section 1.43. Material Adverse Event. ...................................9 Section 1.44. Maximum Revolving Loan Amount. ............................9 Section 1.45. Multiemployer Plan. .......................................9 Section 1.46. Note. .....................................................9 Section 1.47. Obligations. ..............................................9 Section 1.48. Permitted Liens. .........................................10 Section 1.49. Person. ..................................................10 Section 1.50. Receivables. .............................................10 Section 1.51. Records. .................................................10 Section 1.52. Regulated Substance. .....................................10 Section 1.53. Release. .................................................10 Section 1.54. Restricted Payment. ......................................11 Section 1.55. Revolving Loan. ..........................................11 Section 1.56. Revolving Loan Note. .....................................11 Section 1.57. Solvent. .................................................11 Section 1.58. Subordinated Debt.........................................11 Section 1.59. Subsidiary. ..............................................11 Section 1.60. Tangible Net Worth........................................12 Section 1.61. Termination Event. .......................................12


ARTICLE 2 TERMS OF LOAN.................................................................12 Section 2.1. Agreement To Extend Revolving Loan........................12
Section 2.1.1. Conditions Precedent To Each Advance....................13
Section 2.1.2. Interest And Lender's Records...........................13
Section 2.1.3. Commitment Fee..........................................14
Section 2.1.4. Facility Fee............................................14
Section 2.1.5. Monitoring Fee. ........................................14
Section 2.1.6. Term....................................................14
Section 2.1.7. Purpose.................................................14 Section 2.2. Letters Of Credit.........................................14
Section 2.2.1. Issuance Of Letters Of Credit. .........................14
Section 2.2.2. Rights And Remedies Of The Lender. .....................15
Section 2.2.3. Indemnification. .......................................15
Section 2.2.4. Reimbursement Obligations. .............................15
Section 2.2.5. Fees, Charges And Other Terms. .........................16
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Section 2.3. Capital Adequacy. ........................................16 Section 2.4. Payments. ................................................16 Section 2.5. Advancements. ............................................16 Section 2.6. Termination. .............................................17


ARTICLE 3 SECURITY FOR THE OBLIGATIONS..................................................17 Section 3.1. Grant Of Security Interest. ..............................17 Section 3.2. Proceeds And Products. ...................................18 Section 3.3. Priority Of Security Interests. ..........................18 Section 3.4. Future Advances. .........................................18 Section 3.5. Receivable Collections. ..................................18 Section 3.6. Collection Of Receivables By Lender. .....................18 Section 3.7. Maintenance Of Principal Accounts.........................19 Section 3.8. Further Assurances. ......................................19 Section 3.9. Fair Labor Standards Act. ................................20


ARTICLE 4 REPRESENTATIONS AND WARRANTIES................................................20 Section 4.1. Accuracy Of Information. .................................20 Section 4.2. No Litigation. ...........................................20 Section 4.3. No Liability Or Adverse Change. ..........................20 Section 4.4. Title To Collateral. .....................................21 Section 4.5. Authority; Approvals And Consents.........................21
Section 4.5.1. Authority. .............................................21
Section 4.5.2. Approvals. .............................................21
Section 4.5.3. Consents. ..............................................21 Section 4.6. Binding Effect Of Documents, Etc. ........................21 Section 4.7. Other Names. .............................................22 Section 4.8. No Events Of Default. ....................................22 Section 4.9. Taxes. ...................................................22 Section 4.10. Compliance With Laws. ....................................22 Section 4.11. Chief Place Of Business. .................................22 Section 4.12. Location Of Inventory. ...................................22 Section 4.13. No Subsidiaries. .........................................22 Section 4.14. No Labor Agreements. .....................................22 Section 4.15. Eligible Accounts. .......................................23 Section 4.16. Approvals. ...............................................23 Section 4.17. Financial Statements. ....................................23 Section 4.18. Solvency. ................................................23 Section 4.19. Fair Labor Standards Act. ................................23
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Section 4.20. Employee Benefit Plans....................................23
Section 4.20.1. Compliance. ............................................23
Section 4.20.2. Absence Of Termination Event. ..........................23
Section 4.20.3. Actuarial Value. .......................................24
Section 4.20.4. No Withdrawal Liability. ...............................24 Section 4.21. Environmental Conditions..................................24
Section 4.21.1. Existence Of Permits. ..................................24
Section 4.21.2. Compliance With Permits. ...............................24
Section 4.21.3. No Litigation. .........................................24
Section 4.21.4. No Releases. ...........................................24
Section 4.21.5. Transportation. ........................................24
Section 4.21.6. No Violation Notices. ..................................25
Section 4.21.7. No Notice Of Violations. ...............................25


ARTICLE 5 AFFIRMATIVE COVENANTS.........................................................25 Section 5.1. Payment. .................................................25 Section 5.2. Insurance. ...............................................25 Section 5.3. Books And Records. .......................................25 Section 5.4. Collection Of Accounts; Sale Of Inventory. ...............26 Section 5.5. Notice Of Litigation And Proceedings. ....................26 Section 5.6. Payment Of Liabilities To Third Persons. .................26 Section 5.7. Notice Of Change Of Business Location.....................26 Section 5.8. Payment Of Taxes. ........................................26 Section 5.9. Inspections Of Records. ..................................27 Section 5.10. Notice Of Events Affecting Collateral; Compromise Of
Receivables; Returned Or Repossessed Goods. ..............27 Section 5.11. Documentation Of Collateral. .............................27 Section 5.12. Reporting Requirements. ..................................28
Section 5.12.1. Receivables And Accounts Payable Reports. ..............28
Section 5.12.2. Borrowing Base Report. .................................28
Section 5.12.3. Quarterly Financial Statements. ........................28
Section 5.12.4. Monthly Financial Statements. ..........................28
Section 5.12.5. Annual Financial Statements. ...........................28
Section 5.12.6. SEC And Other Filings...................................29
Section 5.12.7. Management Letters. ....................................29
Section 5.12.8. Certificates Of No Default. ............................29
Section 5.12.9. Reports To Other Creditors. ............................29
Section 5.12.10. Management Changes. ....................................30
Section 5.12.11. General Information.....................................30 Section 5.13. Employee Benefit Plans And Guaranteed Pension Plans. .....30 Section 5.14. Maintenance Of Fixed Assets. .............................30 Section 5.15. Consignments. ............................................30
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Section 5.16. Federal Assignment Of Claims Act. ........................31 Section 5.17. Compliance With Laws. ....................................31 Section 5.18. Tangible Net Worth........................................32 Section 5.19. EBITDA....................................................32 Section 5.20. Interest Coverage Ratio...................................32


ARTICLE 6 NEGATIVE COVENANTS............................................................32 Section 6.1. No Change Of Name, Merger, Etc. ..........................32 Section 6.2. No Sale Or Transfer Of Assets. ...........................33 Section 6.3. No Encumbrance Of Assets. ................................33 Section 6.4. No Indebtedness. .........................................33 Section 6.5. Restricted Payments. .....................................33 Section 6.6. Transactions With Affiliates. ............................33 Section 6.7. Loans, Investments And Sale-Leasebacks. ..................33 Section 6.8. No Acquisition Of Equity In Or Assets Of Third Persons. ..33 Section 6.9. No Assignment. ...........................................33 Section 6.10. No Alteration Of Structure Or Operations..................33 Section 6.11. Unpermitted Uses Of Loan Proceeds. .......................33 Section 6.12. Long Term Contracts. .....................................34 Section 6.13. Changes In Fiscal Year. ..................................34 Section 6.14. Limitation On Issuance Of Equity Interests. ..............34 Section 6.15. Capital Expenditures......................................34


ARTICLE 7 EVENTS OF DEFAULT.............................................................34 Section 7.1. Failure To Pay. ..........................................34 Section 7.2. Violation Of Covenants. ..................................34 Section 7.3. Representation Or Warranty. ..............................35 Section 7.4. Default Under Loan Documents. ............................35 Section 7.5. Cross-Default. ...........................................35 Section 7.6. Judgments.................................................35 Section 7.7. Levy By Judgment Creditor. ...............................35 Section 7.8. Failure To Pay Liabilities................................35 Section 7.9. Involuntary Insolvency Proceedings. ......................35 Section 7.10. Voluntary Insolvency Proceedings. ........................35 Section 7.11. Material Adverse Event. ..................................35 Section 7.12. ERISA. ...................................................35 Section 7.13. Transfer Of Equity Interests. ............................36 Section 7.14. Indictment Of Borrower. ..................................36 Section 7.15. Injunction. ..............................................36 Section 7.16. Notice And Cure Rights. ..................................36
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Section 8.1. Lender's Specific Rights And Remedies. ...................36
Section 8.2. Automatic Acceleration. ..................................37
Section 8.3. Sale Of Collateral. ......................................37
Section 8.4. Letters Of Credit. .......................................38
Section 8.5. Remedies Cumulative. .....................................38


ARTICLE 9 GENERAL CONDITIONS AND TERMS..................................................38 Section 9.1. Obligations Are Unconditional. ...........................38 Section 9.2. Indemnity. ...............................................38 Section 9.3. Lender Expenses. .........................................39 Section 9.4. Authorization To Obtain Financial Information. ...........39 Section 9.5. Incorporation; Construction Of Inconsistent Provisions. ..39 Section 9.6. Waivers. .................................................39 Section 9.7. Continuing Obligation Of Borrower. .......................39 Section 9.8. Choice Of Law. ...........................................39 Section 9.9. Submission To Jurisdiction; Venue; Actions Against Lender.39
Section 9.9.1. Jurisdiction. ..........................................40
Section 9.9.2. Venue. 40
Section 9.9.3. Waiver Of Objections To Venue. .........................40 Section 9.10. Notices. .................................................40 Section 9.11. Participations. ..........................................41 Section 9.12. Miscellaneous Provisions. ................................41 Section 9.13. Waiver Of Trial By Jury. .................................42


Schedules - ---------


Schedule 1.48 Permitted Liens Schedule 4.2 Pending Litigation Schedule 4.7 Other Names Schedule 4.11 Chief Place Of Business Schedule 4.12 Location Of Inventory Schedule 4.13 No Subsidiaries Schedule 4.17 Liabilities And Obligations Not Disclosed In Financial
Statements
LOAN AND SECURITY AGREEMENT


THIS LOAN AND SECURITY AGREEMENT is dated as of February 10, 2000 by and between ACCOM, INC., a Delaware corporation ("BORROWER") and THE PROVIDENT BANK, an Ohio chartered banking institution ("LENDER").


RECITALS


The BORROWER has requested that the LENDER extend various credit accommodations to the BORROWER. The LENDER is willing to provide the requested credit accommodations upon the terms and conditions of this Loan And Security Agreement, and upon the granting by the BORROWER to the LENDER of the security interests, liens, and other assurances of payment provided for in this Loan And Security Agreement.


NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


ARTICLE 1
DEFINITIONS


As used in this Loan And Security Agreement, the terms set forth in this Article 1 have the meanings set forth below, unless the specific context of this Loan And Security Agreement clearly requires a different meaning. Terms defined in this Article 1 or elsewhere in this Loan And Security Agreement are in all capital letters throughout this Loan And Security Agreement. The singular use of any defined term includes the plural and the plural use includes the singular.


Section 1.1. Account Debtor. The term "ACCOUNT DEBTOR" means collectively each PERSON: (a) to or for whom the BORROWER has provided or has agreed to provide any goods or services; or (b) which owes the BORROWER any sum of money as a result of goods sold or services provided by the BORROWER; or (c) which is the maker or endorser on any INSTRUMENT payable to the BORROWER or otherwise owes the BORROWER any sum of money on account of any loan or other payment obligation. With respect to each RECEIVABLE which is payable by any governmental authority, "ACCOUNT DEBTOR" includes, without limitation, the agency, instrumentality or official which has the duty of remitting or causing the remittance of the amounts owing on such ACCOUNT or other RECEIVABLE.


Section 1.2. Accounts, Chattel Paper, Documents, Equipment, Fixtures, General Intangibles, Goods, Instruments and Investment Property. The terms "ACCOUNTS," "CHATTEL PAPER," "DOCUMENTS," "EQUIPMENT," "GENERAL INTANGIBLES," "GOODS," "INSTRUMENTS," and "INVESTMENT PROPERTY" shall have the same respective meanings as are given to those terms in the Uniform Commercial Code-Secured Transactions, Title 9, Commercial Law Article, Annotated Code of Maryland, as amended. The term "FIXTURES" shall have the meaning provided by the common law of the state in which the fixtures are located.


Section 1.3. Affiliate. The term "AFFILIATE" means collectively any PERSON: (a) that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with the BORROWER, including, without limitation, the officers, managers and directors of the BORROWER; (b) that directly or beneficially owns or holds ten percent (10%) or more of any equity interests in the BORROWER; or (c) ten percent (10%) or more of whose equity interests are owned directly or controlled by the BORROWER. As used herein, the term "control" (including, with correlative meanings, the terms "controlled by" and "under common control with") shall mean possession, directly or indirectly, of the power to direct the management or policies of a PERSON, whether through ownership of equity interests, by contract or otherwise.


Section 1.4. Agreement. The term "AGREEMENT" means this Loan And Security Agreement, as amended, extended, or modified from time to time by the parties hereto, as well as all schedules, exhibits and attachments hereto.


Section 1.5. Borrowing Base. The term "BORROWING BASE" means an amount equal to: (a) eighty percent (80%) of the face amount (less maximum discounts, credits and allowances which may be taken by or are granted to ACCOUNT DEBTORS in connection therewith) of billed ELIGIBLE ACCOUNTS; minus (b) the aggregate stated amount of all outstanding LETTERS OF CREDIT and unsatisfied reimbursement obligations of the BORROWER arising out of LETTERS OF CREDIT and such reserves as the LENDER deems appropriate from time to time, including without limitation, reserves determined by the LENDER to be appropriate with respect to bankers' acceptances, GUARANTY INDEBTEDNESS, INTEREST RATE PROTECTION AGREEMENTS, and other obligations of the BORROWER.


Section 1.6. Business Day. The term "BUSINESS DAY" means any day other than a Saturday, Sunday, or other day on which commercial banking institutions in the State of Maryland are required to be closed.


Section 1.7. Capital Adequacy Requirement. The term "CAPITAL ADEQUACY REQUIREMENT" means any LAW imposing any capital adequacy requirement or any other similar requirement (including but not limited to the capital adequacy regulations contained in Parts 3, 208 and 225 of Title 12 of the Code of Federal Regulations, as amended), any change in such LAWS or in the interpretation or application thereof, and any request or directive regarding capital adequacy (whether or not having the force of law) from any central bank or government authority.


Section 1.8. Capital Expenditures. The term "CAPITAL EXPENDITURES" means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities and including expenditures for CAPITAL LEASE OBLIGATIONS) by the BORROWER during such period that are required by G.A.A.P. to be included in or reflected by the property, plant, equipment or similar capital asset accounts in the consolidated balance sheet of the BORROWER.


2
Section 1.9. Capital Lease. The term "CAPITAL LEASE" means a lease with respect to which the lessee's obligations thereunder should, in accordance with G.A.A.P., be capitalized and reflected as a liability on the balance sheet of the lessee.


Section 1.10. Capital Lease Obligations. The term "CAPITAL LEASE OBLIGATIONS" means any indebtedness incurred as a lessee pursuant to a CAPITAL LEASE.


Section 1.11. Closing. The term "CLOSING" means the execution and delivery of this AGREEMENT, the NOTES, and various other LOAN DOCUMENTS. The date of CLOSING is the date written above as the date of this AGREEMENT.


Section 1.12. Code. The term "CODE" means the Internal Revenue Code of 1986, as amended, and all Treasury regulations, revenue rulings, revenue procedures or announcements issued thereunder.


Section 1.13. Collateral. The term "COLLATERAL" means all of the tangible and intangible assets of the BORROWER, wherever located, whether now owned or hereafter acquired by the BORROWER, together with all substitutions therefor, and all replacements and renewals thereof, and all accessions, additions, replacement parts, manuals, warranties and packaging relating thereto, including but not limited to the following tangible and intangible assets and property rights of the BORROWER: (a) ACCOUNTS; (b) CHATTEL PAPER; (c) DOCUMENTS; (d) EQUIPMENT; (e) FIXTURES; (f) GENERAL INTANGIBLES; (g) GOODS; (h) INSTRUMENTS; (i) INVENTORY, including returned, rejected, or repossessed INVENTORY and rights of reclamation and stoppage in transit with respect to INVENTORY; (j) INVESTMENT PROPERTY; (k) RECEIVABLES; (l) deposit accounts; (m) letter of credit rights; (n) copyrights, trademarks, patents, and all pending applications thereof; and (o) all RECORDS relating to or pertaining to any of the above listed COLLATERAL.


Section 1.14. Collection Account. The term "COLLECTION ACCOUNT" means a bank account designated by the LENDER from which the LENDER alone has power of access and withdrawal.


Section 1.15. Commercial Account. The term "COMMERCIAL ACCOUNT" means the commercial checking account to be established and maintained by the BORROWER with the LENDER and which may be utilized as the means of advancing funds under the LOAN.


Section 1.16. Default. The term "DEFAULT" means any event, occurrence or omission which, with the giving of notice, the passage of time, or both, would constitute an EVENT OF DEFAULT.


Section 1.17. Dollar Cap. The term "DOLLAR CAP" shall mean the sum of One Million Five Hundred Thousand Dollars ($1,500,000.00); provided that the DOLLAR CAP shall increase from One Million Five Hundred Thousand Dollars


3 ($1,500,000.00) to Two Million Dollars ($2,000,000.00) after March 31, 2000, if the BORROWER'S financial statements for the quarter ending March 31, 2000 submitted pursuant to Section 5.12 demon ...