<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
--------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------ ------------------
Commission file number 1-9983
OEC MEDICAL SYSTEMS, INC.
(Registrant)
Incorporated in the State of Delaware
I.R.S. Employer Identification Number 94-2538512
384 Wright Brothers Drive, Salt Lake City, Utah 84116
(Address of Principal Executive Offices)
Telephone: (801) 328-9300
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
requirements for the past 90 days.
Yes X No
----- -----
As of April 15, 1994, there were 12,429,623 shares of Common Stock ($.01 par
value) outstanding.
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
<CAPTION>
OEC MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(In thousands, except per share amounts)
1994 1993
--------- ---------
<S> <C> <C>
Net sales
Product $ 20,393 $ 20,323
Service 2,867 2,435
--------- ---------
Total net sales 23,260 22,758
--------- ---------
Cost of sales
Product 11,677 10,947
Service 2,024 2,078
--------- ---------
Total cost of sales 13,701 13,025
--------- ---------
Gross margin 9,559 9,733
--------- ---------
Operating Expenses
Research and development 2,412 2,092
Marketing and sales 4,286 3,803
Administrative, general and other 1,352 1,666
--------- ---------
Total operating expenses 8,050 7,561
--------- ---------
Operating income 1,509 2,172
Interest income 87 138
Interest expense (145) --
--------- ---------
Income before income taxes 1,451 2,310
Income tax benefit 826 --
--------- ---------
Income from continuing operations 2,277 2,310
Loss from operation of discontinued operations
(net of income tax expense of $176 in 1993) -- (4,264)
--------- ---------
Net income (loss) $ 2,277 $ (1,954)
--------- ---------
--------- ---------
Net income (loss) per common and
common equivalent share:
Continuing operations $ 0.18 $ 0.19
Discontinued operations -- (0.35)
--------- ---------
Net income (loss) $ 0.18 $ (0.16)
--------- ---------
--------- ---------
Common and common equivalent shares 12,564 12,493
--------- ---------
--------- ---------
</TABLE>
See accompanying notes
Page 2 of 9
<PAGE>
<TABLE>
<CAPTION>
OEC MEDICAL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1994 AND DECEMBER 31, 1993
(In thousands)
ASSETS
1994 1993
---------- ----------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and temporary cash investments $ 7,512 $ 5,383
Accounts and notes receivable, net of
allowances of $723 and $2,024, respectively 20,051 25,184
Inventories 20,544 19,120
Prepaid expenses and other current assets 1,035 1,098
---------- ----------
Total current assets 49,142 50,785
Long-term receivables 1,250 1,361
Property and equipment, net 11,142 10,698
Cost in excess of net assets acquired, net of
accumulated amortization of $6,420 and $6,260, respectively 11,976 12,136
Deferred income taxes 3,803 2,000
Patents, licenses, purchased technologies and other assets,
net of accumulated amortization of $874 and $836, respectively 115 154
---------- ----------
$ 77,428 $ 77,134
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 3,682 $ 4,242
Note payable to related party 9,846 9,700
Accrued salaries and benefits 2,253 2,341
Accrued warranty and installation costs 835 1,363
Deferred income and customer deposits 4,920 4,816
Income taxes payable 4 816
Accrued legal fees and litigation settlements 4,193 4,075
Accrued restructuring costs 1,931 3,259
Accrued distributor commissions 1,596 2,422
Other accrued liabilities 1,578 802
---------- ----------
Total current liabilities 30,838 33,836
---------- ----------
---------- ----------
Stockholders' equity:
Preferred stock, $.01 par value
Authorized--2,000 shares, including 1,100 shares
of convertible preferred stock, none outstanding
Common stock, $.01 par value
Authorized--30,000 shares
Outstanding--12,430 and 12,411 shares, respectively 124 124
Capital in excess of par value 67,874 66,858
Accumulated deficit (21,390) (23,667)
Foreign currency translation adjustment (18) (17)
---------- ----------
Total stockholders' equity 46,590 43,298
---------- ----------
$ 77,428 $ 77,134
---------- ----------
---------- ----------
</TABLE>
See accompanying notes
Page 3 of 9
<PAGE>
<TABLE>
<CAPTION>
OEC MEDICAL SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(In thousands)
1994 1993
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Income from continuing operations $ 2,277 $2,310
Adjustments to reconcile income from continuing operations
to net cash provided (used) by continuing operations:
Depreciation and amortization 776 691
Bad debt expense 30 30
Deferred income tax benefit (884) --
Changes in current assets and liabilities:
Accounts and notes receivable 5,103 484
Inventories (1,424) (4,258)
Prepaid expenses and other current assets 63 (5)
Accounts payable (560) 654
Note payable to related party 146 --
Accrued salaries and benefits (88) (115)
Accrued warranty and installation costs (528) 31
Deferred income and customer deposits 104 708
Income taxes payable (812) (462)
Accrued legal fees and litigation settlements 118 (1,578)
Accrued restructuring costs (1,328) --
Accrued distributor commissions (826) (173)
Other accrued liabilities 776 714
Other -- (23)
--------- ---------
Net cash provided (used) by continuing operations 2,943 (992)
Net cash used by discontinued operations -- (1,587)
--------- ---------
Net cash provided (used) by operating activities 2,943 (2,579)
--------- ---------
INVESTING ACTIVITIES:
Reduction in long-term receivables 111 --
Additions to property and equipment, net (1,020) (355)
Change in net long-term assets of discontinued operations -- 3,099
Other (1) (186)
--------- ---------
Net cash provided (used) by investing activities (910) 2,558
--------- ---------
FINANCING ACTIVITIES --
Sales of common stock, net 96 340
--------- ---------
Net increase in cash and temporary cash investments 2,129 319
Cash and temporary cash investments at beginning of period 5,383 1,924
--------- ---------
Cash and temporary cash investments at end of period $ 7,512 $ 2,243
--------- ---------
--------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (for continuing operations only):
Cash paid during the period for interest -- --
Cash paid during the period for income taxes $146 --
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
During the three months ended March 31, 1994, the Company increased its net deferred income tax
asset by $1,803 as a result of reducing the valuation allowance on the deferred tax assets. Of the
total $1,803 of valuation allowance reallocation, $919 was credited directly to stockholders' equity
and $884 was recorded as a deferred tax benefit.
</TABLE>
See accompanying notes
Page 4 of 9
<PAGE>
OEC MEDICAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 1994
1. Interim information is unaudited but, in the opinion of Company management,
all adjustments necessary for a fair presentation of interim results have
been included. The results for the three months ended March 31, 1994 are
not necessarily indicative of the results to be expected for the entire
year. These financial statements and notes should be read in conjunction
with the Company's financial statements for the year ended December 31,
1993, filed on Form 10-K.
2. Inventories are stated at the lower of cost, utilizing the first-in/first-
out method, or market. Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
-------------- -------------
(In thousands)
<S> <C> <C>
Purchased parts and
completed subassemblies $ 8,702 $ 7,819
Work-in-process 5,014 4,145
Finished goods 5,723 6,800
Service and repair parts 4,220 3,389
------- -------
23,659 22,153
Less: reserves (3,115) (3,033)
------- -------
$ 20,544 $ 19,120
-------- --------
-------- --------
</TABLE>
3. The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," effective January 1, 1993.
This statement superseded SFAS No. 96, "Accounting for Income Taxes," which
was adopted by the Company in 1987. As a result of the
Restructuring/Distribution and subsequent earnings history, some of the
uncertainties regarding the Company's potential for utilization of its net
operating loss carryforwards and tax credits have been reduced, and certain
of the reserves against its deferred tax asset were determined to no longer
be required. As a result, reserves totaling $1,803,000 were reversed
in the first quarter of 1994. Of this amount, $919,000 related to tax
benefits arising out of the exercise of stock options in prior years and,
as a result, were recognized in paid in capital and did not impact the
consolidated statement of operations.
4. Revenues from the discontinued operations for the quarter ending
March 31, 1993 were $48.8 million.
See accompanying notes
Page 5 of 9
<PAGE>
OEC MEDICAL SYSTEMS, INC
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For the first quarter ended March 31, 1994, OEC Medical Systems, Inc. had net
income of $2.3 million compared with income from continuing operations of $2.3
million reported in the same period of 1993. The results for the first quarter
of 1994 include a tax benefit of $.8 million, or $.06 per share, from the
reversal of certain reserves against deferred tax assets which were established
upon the adoption of Statement of Financial Accounting Standard No. 109 in the
first quarter of 1993.
The following table sets forth OEC's operating results as a percent of net
sales:
<TABLE>
<CAPTION>
Three Months
1994 1993
------ ------
<S> <C> <C>
Net sales
Product 87.7% 89.3%
Service 12.3% 10.7%
------ ------
Total net sales 100.0% 100.0%
Cost of sales
Product 50.2% 48.1%
Service 8.7% 9.1%
------ ------
Total cost of sales 58.9% 57.2%
Gross margin 41.1% 42.8%
------ ------
Operating expenses:
Research and development 10.4% 9.2%
Marketing and sales 18.4% 16.7%
Administrative, general and other 5.8% 7.3%
------ ------
Total operating expenses 34.6% 33.2%
Operating income 6.5% 9.6%
Income from continuing operations 9.8% 10.2%
Net income (loss) 9.8% (8.6%)
</TABLE>
SALES AND MARKETS
Net product sales for the quarter ended March 31, 1994, were $20.4 million
compared to net product sales of $20.3 million for the comparable period of
1993. Product sales were basically flat in light of selling off of the prior
model C-Arm inventory which included a higher proportion of demonstration
equipment in preparation for the new Series 9600, also impacting results was the
continued softness in markets due to uncertainty surrounding the
administration's healthcare program, as well as competitive pressures. The
uncertainty surrounding the
See accompanying notes
Page 6 of 9
<PAGE>
adminstration's healthcare program was a major factor in the urology market
where system prices tend to be higher and therefore subject to greater
limitations on capital expenditures.
Service revenue increased from $2.4 million to $2.9 million for the first
quarter of 1994, primarily due to a higher capture rate of service contracts.
MARGIN ANALYSIS
OEC's gross margin expressed as a percentage of net sales declined in the first
quarter compared with the same period in 1993. This was primarily a result of
a higher proportion of demonstration equipment sales of the previous model C-Arm
in anticipation of the introduction of the new Series 9600 Mobile Digital
Imaging System in March of 1994.
Service expenses as a percentage of net sales were down compared to the first
quarter of 1993. This was accomplished through better efficiency in manpower
and lower expenses in relationship to systems under service contracts.
OPERATING EXPENSES
Operating expenses were higher in the first quarter ended March 31, 1994 at
34.6% of net sales as compared to 33.2% of net sales for the same period of
1993. This was a result of higher expenses associated with the introduction of
the new Series 9600 Mobile Digital Imaging System. Research and development
expense increases were directly related to increased efforts on the introduction
of the Series 9600. Increases in sales and marketing expenses were due to
higher incentives given to the sales force in order to sell the prior model C-
Arm and expense associated with the introduction of the Series 9600 in March of
1994.
Administrative expense was lower for the three months ended March 31, 1994
versus the same period in 1993 due to the reduction of legal expenses and
regulatory expenses.
INCOME TAXES
Due to the net loss carryforwards, OEC has booked no provision for domestic
income taxes in the first quarter of 1994. OEC has a tax benefit of $.8 million
or $.06 per share for the reversal of certain reserves against deferred tax
assets.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1994, OEC had cash and temporary cash investments of $7.5 million.
There are no current material commitments for capital expenditures.
Cash provided by operations for the first quarter of 1994 was $2.9 million,
compared with $1.0 million used by continuing operations in the comparable
period of 1993. This increase was due primarily to improved collections of
accounts receivables. Capital expenditures for the first quarter of 1994
totalled $1.0 million, which was higher than the same period in 1993. The
increase was due to additional tooling and fixtures associated with the new
Series 9600 Mobile Digital Imaging System.
On February 10, 1994, OEC arranged a $10 million unsecured line of credit with
Zions First National Bank in Salt Lake City as a funding source for working
capital requirements. The Company does not anticipate any significant borrowing
at this time.
See accompanying notes
Pages 7 of 9
<PAGE>
OEC is required to make an installment payment of approximately $5 million to
Diasonics Ultrasound, Inc. in June 1994 in connection with the restructuring of
the Company in October 1993. Despite such payment, OEC believes that is has
adequate liquidity to sustain anticipated growth through the coming twelve
months.
PART II. Other information.
ITEM 1. Legal proceedings
There are no significant changes in legal proceedings from the previous stated
position in the Company's annual report for 1993 or Form 10K filed with the
Securities & Exchange Commission on March 30, 1994.
ITEM 6. Exhibits
(a) The following exhibit (numbered in accordance with Item 601 of SEC
Regulations S-K) is filed as part of this report:
Exhibit
Number Description
- ------ -----------
10.17 Loan agreement, dated February 10, 1994, by and between OEC
Medical Systems, Inc., and Zions First National Bank.
(b) Reports on Form 8-K
Not applicable.
See accompanying notes
Page 8 of 9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OEC MEDICAL SYSTEMS, INC.
(Registrant)
By /s/ Randy W. Zundel
--------------------------------
Randy W. Zundel
Chief Financial Officer
(Principal Accounting Officer)
Date: May 8, 1994
See accompanying notes
Page 9 of 9
<PAGE>
EXHIBIT 10.17
LOAN AGREEMENT
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
$10,000,000.00 02-10-1994 05-31-1995 NZ 0001 11718
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
</TABLE>
BORROWER: OEC MEDICAL SYSTEMS, INC. LENDER: ZIONS FIRST NATIONAL BANK
384 WRIGHT BROTHERS DRIVE HEAD OFFICE/COMMERCIAL LOANS
SALT LAKE CITY, UT 84116 P.O. BOX 25822
SALT LAKE CITY, UT 84125
- --------------------------------------------------------------------------------
THIS LOAN AGREEMENT between OEC MEDICAL SYSTEMS, INC. ("Borrower") and ZIONS
FIRST NATIONAL BANK ("Lender") is made and executed on the following terms and
conditions. Borrower has received prior commercial loans from Lender or has
applied to Lender for a commercial loan or loans and other financial
accommodations, including those which may be described on any exhibit or
schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations from
Lender to Borrower, are referred to in this Agreement individually as the "Loan"
and collectively as the "Loans." Borrower understands and agrees that: (a) in
granting, renewing, or extending any Loan, Lender is relying upon Borrower's
representations, warranties, and agreements, as set forth in this Agreement;
(b) the granting, renewing, or extending of any Loan by Lender at all times
shall be subject to lender's sole judgment and discretion; and (c) all such
Loans shall be and shall remain subject to the following terms and conditions
of this Agreement.
TERM. This Agreement shall be effective as of February 10,,1994, and shall
continue thereafter until all Indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
AGREEMENT. The word "Agreement" means this Loan Agreement, as this Loan
Agreement may be amended or modified form time to time, together with all
exhibits and schedules attached to this Loan Agreement from time to time.
ACCOUNT. The word "Account" means a trade account, account receivable, or
other right to payment for goods sold or services rendered owing to
Borrower (or to a third party grantor acceptable to Lender).
ACCOUNT DEBTOR. The words "Account Debtor" mean the person or entity
obligated upon an Account.
ADVANCE. The word "Advance" means a disbursement of Loan funds under this
Agreement.
BORROWER. The word "Borrower" means OEC MEDICAL SYSTEMS, INC. The word
"Borrower" also includes, as applicable, all subsidiaries and affiliates of
Borrower as provided below in the paragraph titled "Subsidiaries and
Affiliates."
BORROWING BASE. The words "Borrowing Base" mean, as determined by Lender
from time to time, the lesser of (a) $10,000,000.00; or (b) 70.000% of the
aggregate amount of Eligible Accounts.
BUSINESS DAY. The words "Business Day" mean a day on which commercial
banks are open for business in the State of Utah.
CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
COLLATERAL. The word "Collateral" means and includes without limitation
all property and assets granted as collateral security for a Loan, whether
real or personal property, whether granted directly or indirectly, whether
granted now or in the future, and whether granted in the form of a security
interest, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien, charge, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise. The
word "Collateral" includes without limitation all collateral described
below in the section titled "COLLATERAL."
ELIGIBLE ACCOUNTS. The words "Eligible Accounts" mean, at any time, all of
Borrower's Accounts which contain Borrower's standard selling terms and
conditions. The net amount of any Eligible Account against which Borrower
may borrow shall exclude all returns, discounts, credits, and offsets of
any nature. Unless otherwise agreed to be Lender in writing, Eligible
Accounts do not include:
(a) Accounts with respect to which the Account Debtor is an officer, an
employee or agent of Borrower.
(b) Accounts with respect to which the Account Debtor is a subsidiary
of, or affiliated with or related to Borrower or its shareholders,
officers, or directors.
(c) Accounts with respect to which goods are placed on consignment,
guaranteed sale, or other terms by reason of which the payment by the
Account Debtor may be conditional.
(d) Accounts with respect to which the Account Debtor is not a resident
of the United States, except to the extent such Accounts are supported
by insurance, bonds or other assurances satisfactory to Lender.
(e) Accounts with respect to which Borrower is or may become liable to
the Account Debtor for goods sold or services rendered by the Account
Debtor to Borrower.
(f) Accounts which are subject to dispute, counterclaim, or setoff.
(g) Accounts with respect to which the goods have not been shipped or
delivered, or the services have not been rendered, to the Account
Debtor.
(h) Accounts of any Account Debtor who has filed or has had filed
against it a petition in bankruptcy or an application for relief under
any provision of any state or federal bankruptcy, insolvency, or debtor-
in-relief acts; or who has had appointed a trustee, custodian, or
receiver for the assets of such Account Debtor; or who has made an
assignment for the benefit of creditors or has become insolvent or fails
generally to pay its debts (including its payrolls) as such debts become
due.
(i) Accounts with respect to which the Account Debtor is the United
States government or any department or agency of the United States.
<PAGE>
02-10-1994 LOAN AGREEMENT Page 2
(Continued)
(j) Accounts which have not been paid in full within 150 DAYS FROM DATE
OF INVOICE.
(k) That portion of the Accounts of any single Account Debtor which
exceeds 10.000% of all of Borrower's Accounts.
ERISA. The word "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
EVENT OF DEFAULT. The words "Event of Default" mean and include any of the
Events of Default set forth below in the section titled "EVENTS OF
DEFAULT."
EXPIRATION DATE. The words "Expiration Date" mean the date of termination
of Lender's commitment to lend under this Agreement.
GRANTOR. The word "Grantor" means and includes each and all of the persons
or entities granting a Security Interest in any Collateral for the
Indebtedness, including without limitation all Borrowers granting such a
Security Interest.
GUARANTOR. The word "Guarantor" means and includes without limitation,
each and all of the guarantors, sureties, and accommodation parties in
connection with any Indebtedness.
INDEBTEDNESS. The word "Indebtedness" means and includes without
limitation all Loans, together with all other obligations, debts and
liabilities of Borrower to Lender, or any one or more of them, as well as
all claims by Lender against Borrower, or any one or more of them; whether
now or hereafter existing, voluntary or involuntary, due or not due,
absolute or contingent, liquidated or unliquidated; whether Borrower may be
liable individually or jointly with others; whether Borrower may be
obligated as a guarantor, surety, or otherwise; whether recovery upon such
Indebtedness may be or hereafter may become barred by any statute of
limitations; and whether such Indebtedness may be or hereafter may become
otherwise unenforceable.
LENDER. The word "Lender" means ZIONS FIRST NATIONAL BANK, its successors
and assigns.
LETTER OF CREDIT. The words "Letter of Credit" mean a letter of credit
issued by Lender on behalf of Borrower as described below in the section
titled "Letter of Credit Facility."
LINE OF CREDIT. The words "Line of Credit" mean the credit facility
described in the Section titled "LINE OF CREDIT" below.
LOAN. The word "Loan" or "Loans" means and includes any and all commercial
loans and financial accommodations from Lender to Borrower, whether now or
hereafter existing, and however evidenced, including without limitation
those loans and financial accommodations described herein or described on
any exhibit or schedule attached to this Agreement from time to time.
NOTE. The word "Note" means Borrower's promissory note or notes, if any,
evidencing Borrower's Loan obligations in favor of Lender, as well as any
substitute, replacement or refinancing note or notes therefor.
PERMITTED LIENS. The words "Permitted Liens" mean: (a) liens and security
interests securing Indebtedness owed by Borrower to Lender; (b) liens for
taxes, assessments, or similar charges either not yet due or being
contested in good faith; (c) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in the ordinary
course of business and securing obligations which are not yet delinquent;
(d) purchase money liens or purchase money security interests upon or in
any property acquired or held by Borrower in the ordinary course of
business to secure indebtedness outstanding on the date of this Agreement
or permitted to be incurred under the paragraph of this Agreement titled
"Indebtedness and Liens", (e) liens and security interests which, as of
the date of this Agreement, have been disclosed to and approved by the
Lender in writing; and (f) those liens and security interests which in the
aggregate constitute an immaterial and insignificant monetary amount with
respect to the net value of Borrower's assets.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
guaranties, security agreements, mortgages, deeds of trust, and all other
instruments, agreements and documents, whether now or hereafter existing,
executed in connection with the Indebtedness.
SECURITY AGREEMENT. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
SECURITY INTEREST: The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended as
security device, or any other security or lien interest whatsoever, whether
created by law, contract, or otherwise.
SARA. The word "SARA" means the Superfund Amendments and Reauthorization
Act of 1986 as now or hereafter amended.
LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not exceed the Borrowing
Base. Within the foregoing limits, Borrower may borrow, partially or wholly
prepay, and reborrow under this Agreement as follows.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make any
Advance to or for the account of Borrower under this Agreement is subject
to the following conditions precedent, with all documents, instruments,
opinions, reports, and other items required under this Agreement to be in
form and substance satisfactory to Lender:
(a) Lender shall have received evidence that this Agreement and all
Related Documents have been duly authorized, executed, and delivered by
Borrower to Lender.
(b) Lender shall have received such opinions of counsel, supplemental
opinions, and documents as Lender may request.
(c) In case of default under pledging of collateral section. The
security interests in the Collateral shall have been duly authorized,
created, and perfected with first lien priority and shall be in full
force and effect.
(d) In case of default under pledging of collateral section, Lender,
at its option and for its sole benefit, shall have conducted an audit of
Borrower's Accounts, books, records, and operations, and Lender shall be
satisfied as to their condition.
(e) Borrower shall have paid to Lender all fees, costs, and expenses
specified in this Agreement and the Related Documents as are then due
and payable, including without limitation the following loan fees: 1/16
OF ONE PERCENT QUARTERLY ON UNUSED PORTION OF THE REVOLVING LINE OF
CREDIT.
<PAGE>
02-10-1994 LOAN AGREEMENT Page 3
(Continued)
(F) THERE SHALL NOT EXIST AT THE TIME OF ANY ADVANCE A CONDITION WHICH
WOULD CONSTITUTE AN EVENT OF DEFAULT UNDER THIS AGREEMENT, AND BORROWER
SHALL HAVE DELIVERED TO LENDER THE COMPLIANCE CERTIFICATE CALLED FOR IN
THE PARAGRAPH BELOW TITLED "COMPLIANCE CERTIFICATE."
MAKING LOAN ADVANCES. Advances under the Line of Credit may be requested
orally by authorized persons. Lender may, but need not, require that all
oral requests be confirmed in writing. Each Advance shall be conclusively
deemed to have been made at the request of and for the benefit of Borrower
(a) when credited to any deposit account of Borrower maintained with
Lender or (b) when advanced in accordance with the instructions of an
authorized person. Lender, at its option, may set a cutoff time, after
which all requests for Advances will be treated as having been requested on
the next succeeding Business Day.
MANDATORY LOAN REPAYMENTS. If at any time the aggregate principal amount
of the outstanding Advances shall exceed the applicable Borrowing Base,
Borrower, immediately upon written or oral notice from Lender, shall pay to
Lender an amount equal to the difference between the outstanding principal
balance of the Advances and the Borrowing Base. On the Expiration Date,
Borrower shall pay to Lender in full the aggregate unpaid principal amount
of all Advances then outstanding and all accrued unpaid interest. together
with all other applicable fees, costs and charges, if any, not yet paid.
LOAN ACCOUNT. Lender shall maintain on its books a record of account in
which Lender shall make entries for each Advance and such other debits and
credits as shall be appropriate in connection with the credit facility.
Lender shall provide Borrower with periodic statements of Borrower's
account, which statements shall be considered to be correct and
conclusively binding on Borrower unless Borrower notifies Lender to the
contrary within thirty (30) days after Borrower's receipt of any such
statement which Borrower deems to be incorrect.
COLLATERAL To secure payment of the Line of Credit and performance of all other
Loans, obligations and duties owed by Borrower to Lender, Borrower (and others,
if required) shall grant to Lender any agreed to Security Interests in such
property and assets as Lender may request (the "Collateral"), including without
limitation Borrower's present and future Accounts and proceeds thereof.
Lender's Security Interests in the Collateral shall be continuing liens and
shall include the proceeds and products of the Collateral, including without
limitation the proceeds of any insurance. With respect to the Collateral,
Borrower agrees and represents and warrants to Lender:
PERFECTION OF SECURITY INTERESTS. Borrower agrees to execute such
financing statements and to take whatever other actions are requested by
Lender to perfect and continue Lender's Security Interests in the
Collateral. Upon request of Lender, Borrower will deliver to Lender any
and all of the documents evidencing or constituting the Collateral, and
Borrower will note Lender's interest upon any and all chattel paper if not
delivered to Lender for possession by Lender. Contemporaneous with the
execution of this Agreement, Borrower will execute one or more UCC
financing statements and any similar statements as may be required by
applicable law, and will file such financing statements and all such
similar statements in the appropriate location or locations. Borrower
hereby appoints Lender as its irrevocable attorney-in-fact for the purpose
of executing any documents necessary to perfect or to continue any Security
Interest. Lender may at any time, and without further authorization from
Borrower, file a carbon, photograph, facsimile, or other reproduction of
any financing statement for use as a financing statement. Borrower will
reimburse Lender for all expenses for the perfection, termination, and the
continuation of the perfection of Lender's security interest in the
Collateral. Borrower promptly will notify Lender of any change in
Borrower's name including any change to the assumed business names of
Borrower. Borrower also promptly will notify Lender of any change in
Borrower's Social Security Number or Employer Identification Number.
Borrower further agrees to notify Lender in writing prior to any change in
address or location of Borrower's principal governance office or should
Borrower merge or consolidate with any other entity.
COLLATERAL RECORDS. Borrower does now, and at all times hereafter shall,
keep correct and accurate records of the Collateral, all of which records
shall be available to Lender or Lender's representative upon demand for
inspection and copying at any reasonable time. With respect to the
Accounts, Borrower agrees to keep and maintain such records as Lender may
require, including without limitation information concerning Eligible
Accounts and Account balances and agings. The following is an accurate and
complete list of all locations at which Borrower keeps or maintains
business records concerning Borrower's Accounts: 384 WRIGHT BROTHERS
DRIVE, SALT LAKE CITY, UTAH 84116.
COLLATERAL SCHEDULES. In case of default causing collateralization of the
line of credit, Borrower shall execute and deliver to Lender a schedule of
Accounts and Eligible Accounts, in form and substance satisfactory to the
Lender. Thereafter Borrower shall execute and deliver to Lender such
supplemental schedules of Eligible Accounts and such other matters and
information relating to Borrower's Accounts as Lender may request
supplemental schedules shall be delivered according to the following
schedule: EVERY 30 DAYS THEREAFTER.
REPRESENTATIONS AND WARRANTIES CONCERNING ACCOUNTS. With respect to the
Accounts, Borrower represents and warrants to Lender: (a) Each Account
represented by Borrower to be an Eligible Account for purposes of this
Agreement conforms to the requirements of the definition of an Eligible
Account; (b) All Account information listed on schedules delivered to
Lender will be true and correct, subject to immaterial variance; and (c)
Lender, its assigns, or agents shall have the right at any time and at
Borrower's expense to inspect, examine, and audit Borrower's records and to
confirm with Account Debtors the accuracy of such Accounts.
NOTIFICATION BASIS. In case of default causing collateralization of the
line of credit, Borrower agrees and understands that this Loan shall be on
a notification basis pursuant to which Lender shall directly collect and
receive all proceeds and payments from the Accounts in which Lender has a
security interest. In order to facilitate the foregoing, Borrower agrees
to deliver to lender, upon demand, any and all of Borrower's records,
ledger sheets, payment cards, and other documentation, in the form
requested by Lender, with regard to the Accounts. Borrower further agrees
that Lender shall have the right to notify each Account Debtor, pay such
proceeds and payments directly to Lender, and to do any and all other
things as Lender may deem to be necessary and appropriate, within its sold
discretion, to carry out the terms and intent of this Agreement. Lender
shall have the further right, where appropriate and within Lender's sole
discretion, to file suit, either in its own name or in the name of
Borrower, to collect any and all such Accounts. Borrower further agrees
that Lender may take such other actions, either in Borrower's name or
Lender's name, as Lender may deem appropriate within its sole judgment,
with regard to collection and payment of the Accounts, without affecting
the liability of Borrower under this Agreement or on the Indebtedness.
ADDITIONAL CREDIT FACILITIES. In addition to the Line of Credit facility, the
following credit accommodations are either in place or will be made available to
Borrower:
LETTER OF CREDIT FACILITY. Subject to the terms of this Agreement, Lender
will issue standby letters of credit and commercial letters of credit (each
a "Letter of Credit") on behalf of Borrower. At no time, however, shall
the total face amount of all Letters of Credit outstanding, less any
partial draws paid under the Letters of Credit exceed the sum of
$500,000.00. In addition, at no time, shall the total face amount of all
Letters of Credit outstanding, less any partial draws paid under the
Letters of Credit, plus the total principal balance of all Acceptances
outstanding exceed the sum of $500,000.00.
(a) Upon Lender's request, Borrower promptly shall pay to Lender
issuance fees and such other fees, commissions, costs, and any out-of-
pocket expenses charged or incurred by Lender with respect to any Letter
of Credit.
(b) The commitment by Lender to issue Letters of Credit shall, unless
earlier terminated in accordance with the terms of this Agreement,
automatically terminate on the Expiration Date and no Letter of Credit
shall expire on a date which is THREE HUNDRED SIXTY FIVE (365) DAYS
after the Expiration Date.
(c) Each Letter of Credit shall be in form and substance satisfactory
to Lender and in favor of beneficiaries satisfactory to Lender, provided
that Lender may refuse to issue a Letter of Credit due to the nature of
the transaction or its terms or in connection with any transaction where
Lender, due to the beneficiary or the nationality or residence of the
beneficiary, would be prohibited by any applicable law, regulation, or
order from issuing such Letter of Credit. Under no circumstances,
however, will a Letter of Credit exceed THREE HUNDRED SIXTY FIVE (365)
DAYS from the issue date.
<PAGE>
02-10-1994 LOAN AGREEMENT Page 4
(Continued)
(d) Prior to the issuance of each Letter of Credit, and in all events
prior to any daily cutoff time Lender may have established for purposes
thereof, Borrower shall deliver to Lender a duly executed form of
Lender's standard form of application for issuance of letter of credit
with proper insertions.
LENDER'S RIGHTS UPON DEFAULT. Upon the occurrence of any Event of Default,
Lender may, at its sole and absolute discretion
and in addition to any other remedies available to it under this Agreement
or otherwise, require Borrower to pay immediately to Lender, for
application against drawings under any outstanding Letters of Credit, the
outstanding principal amount of any such Letters of Credit which have not
expired. Any portion of the amount so paid to Lender which is not applied
to satisfy draws under any such Letters of Credit or any other obligations
of Borrower to the Lender shall be repaid to Borrower without interest.
LENDER'S COSTS AND EXPENSES. Borrower shall, upon Lender's request,
promptly pay to and reimburse Lender for all costs incurred and payments
made by Lender by reason of any future assessment, reserve, deposit, or
similar requirement or any surcharge, tax, or fee imposed upon Lender or as
a result of Lender's compliance with any directive or requirement of any
regulatory authority pertaining or relating to any Letter of Credit.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender as
of the date of this Agreement and as of the date of each disbursement of Loan
proceeds:
ORGANIZATION. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
Borrower has the full power and authority to own its properties and to
transact the businesses in which it is presently engaged or presently
proposes to engage. Borrower also is duly qualified as a foreign
corporation and is in good standing in all states in which the failure to
so qualify would have a material adverse effect on its businesses or
financial condition.
AUTHORIZATION. The execution, delivery, and performance of this Agreement
and all Related Documents by Borrower, to the extent to be executed,
delivered or performed by Borrower, have been duly authorized by all
necessary action by Borrower; do not require the consent or approval of
any other person, regulatory authority or governmental body; and do not
conflict with, result in a violation of, or constitute a default under (a)
any provision of its articles or incorporation or organization, or bylaws,
or any agreement or other instrument binding upon Borrower or (b) any law,
governmental regulation, court decree, or order applicable to Borrower.
FINANCIAL INFORMATION. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse charge in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material
contingent obligations except as disclosed in such financial statements.
LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms.
HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Agreement,
shall have the same meanings as set forth in the "CERCLA," "SARA," the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,
the Resource Conservation and Recovery Act, 49 U.S.C. Section 6901, et
seq., or other applicable state or Federal laws, rules, or warrants that:
(a) During the period of Borrower's ownership of the properties, there has
been no use, generation, manufacture, storage, treatment, disposal release
or threatened release of any hazardous waste or substance by any person on,
under, or about any of the properties. (b) Borrower has no knowledge of,
or reason to believe that there has been (i) any use, generation,
manufacture, storage, treatment, disposal, release, or threatened release
of any hazardous waste or substance by any prior owners or occupants of any
of the properties, or (ii) any actual or threatened litigation or claims of
any kind by any person relating to such matters. (c) Neither Borrower nor
any tenant, contractor, agent or other authorized user of any of the
properties shall use, generate, manufacture, store, treat, dispose of, or
release any hazardous waste or substance on, under, or about any of the
properties; and any such activity shall be conducted in compliance with all
applicable federal, state, and local laws, regulations, or ordinances,
including without limitation those laws, regulations and ordinances
described above. Borrower authorizes Lender and its agents to enter upon
the properties to make such inspections and tests as Lender may deem
appropriate to determine compliance of the properties with this section of
the Agreement. Any inspections or tests made by Lender shall be at
Borrower's expense and for Lender's purposes only and shall not be
construed to crate any responsibility or liability on the part of Lender to
Borrower or to any other person. The representations and warranties
contained herein are based on Borrower's due diligence in investigating the
properties for hazardous waste. Borrower hereby (a) releases and waives
any future claims against Lender for indemnity or contribution in the event
Borrower becomes liable for cleanup or other costs under any such laws, an
d (b) agrees to indemnify and hold harmless Lender against any and all
claims, losses, liabilities, damages, penalties, and expenses which Lender
may directly or indirectly sustain or suffer resulting from a breach of
this section of the Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release occurring
prior to Borrower's ownership or interest in the properties, whether or not
the same was or should have been known to Borrower. The provisions of this
section of ownership or interest in the properties, whether or not the same
wa or should have been known to Borrower. The provisions of this section
of ownership or interest in the properties, whether or not the same was or
should have been known to Borrower. The provisions of this section of the
Agreement, including the obligation to indemnify, shall survive the payment
of the Indebtedness and the termination or expiration of this Agreement and
shall not be affected by Lender's acquisition of any interest in any of the
properties, whether by foreclosure or otherwise.
LITIGATION AND CLAIMS. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by Lender in writing.
TAXES. To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all
taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good Faith
in the ordinary course of business and for which adequate reserves have
been provided.
LIEN PRIORITY. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing payment of
Borrower's Loan and Note, that would be prior or that may in any way be
superior to Lender's Security Interests and rights in and to such
Collateral.
BINDING EFFECT. This Agreement, the Note and all Security Agreements
directly or indirectly securing repayment of Borrower's Loan and Note are
binding upon Borrower as well as upon Borrower's successors,
representatives and assigns, and are legally enforceable in accordance with
their respective terms.
COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.
EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower
may have any liability complies in all material respects with all
applicable requirements of law and regulations, and (i) no Reportable
Event nor Prohibited Transaction (as defined in ERISA) has occurred with
respect to any such plan, (ii) Borrower has not withdrawn from any such
plan or initiated steps to do so, and (iii) no steps have been taken to
terminate any such plan.
LOCATION OF BORROWER'S OFFICES AND RECORDS. The chief place of business of
Borrower and the office or offices where Borrower keeps its records
concerning the Collateral is located at 384 WRIGHT BROTHERS DRIVE, SALT
LAKE CITY, UT 84116.
<PAGE>
02-10-1994 LOAN AGREEMENT Page 5
(Continued)
INFORMATION. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of
or in connection with this Agreement or any transaction contemplated hereby
is, and all information hereafter furnished by or on behalf of Borrower to
Lender will be, true and accurate in every material respect on the date as
of which such information is dated or certified; and none of such
information is or will be incomplete by omitting to state any material fact
necessary to make such information not misleading.
SURVIVAL OF REPRESENTATION AND WARRANTIES. Borrower understands and agrees
that Lender is relying upon the above representations and warranties in
extending Loan Advances to Borrower. Borrower further agrees that the
foregoing representations and warranties shall be continuing in nature and
shall remain in full force and effect until such time as Borrower's Loan
and Note shall be paid in full, or until this Agreement shall be terminated
in the manner provided above, whichever is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
LITIGATION. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all litigation and
claims and all threatened litigation and claims affecting Borrower of any
Guarantor which could materially affect the financial condition of Borrower
or the financial condition of any Guarantor.
FINANCIAL RECORDS. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis,
and permit Lender to examine and audit Borrower's books and records at all
reasonable times and at Lender's expense.
FINANCIAL STATEMENTS. Furnish Lender with, as soon as available, but in no
event later than ninety (90) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended, audited
by a certified public accountant satisfactory to Lender, and, as soon as
available, but in no event later than forty five (45) days after the end of
each fiscal quarter, Borrower's balance sheet and profit and loss statement
for the period ended, prepared and certified as correct to the best
knowledge and belief by Borrower's chief financial officer or other officer
or person acceptable to lender. All financial reports required to be
provided under this Agreement shall be prepared in accordance with
generally accepted accounting principles, applied on a consistent basis,
and certified by Borrower as being true and correct.
ADDITIONAL INFORMATION. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower's financial condition and business
operations as Lender may reasonably request from time to time.
INSURANCE. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
Borrower's properties and operations, in form, amounts, coverages and with
insurance companies reasonably acceptable to Lender in accordance with
industry standards applicable to Borrower.
OTHER AGREEMENTS. Comply with all terms and conditions of all other
material agreements, whether now or hereafter existing, between Borrower
and any other party and notify Lender immediately in writing of any default
in connection with any other such agreements.
LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to the
date on which penalties would attach, and all lawful claims that, if
unpaid, might become a lien or charge upon any of Borrower's properties,
income, or profits. Provided however, Borrower will not be required to pay
and discharge any such assessment, tax, charge, levy, lien or claim so long
as (a) the legality of the same shall be contested in good faith by
appropriate proceedings, and (b) Borrower shall have established on its
books adequate reserves with respect to such contested assessment, tax,
charge, levy, lien, or claim in accordance with generally accepted
accounting practices, Borrower, upon demand of Lender, will furnish to
Lender evidence of payment of the assessments, taxes, charges levies, liens
and claims and will authorize the appropriate governmental official to
deliver to lender at any time a written statement of any assessments,
taxes, charges, levies, liens and claims against Borrower's properties,
income, or profits.
PERFORMANCE. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in all other instruments and agreements
between Borrower and Lender in a timely manner, and promptly notify Lender
if Borrower learns of the occurrence of any event which constitutes an
Event of Default under this Agreement.
OPERATIONS. Substantially maintain its present executive and management
personnel; conduct its business affairs in a reasonable and prudent manner
and in compliance with all applicable federal, state and municipal laws,
ordinances, rules and regulations respecting its properties, charters,
businesses and operations, including without limitation, compliance with
the Americans With Disabilities Act and with all minimum funding standards
and other requirements of ERISA and other laws applicable to Borrower's
employee benefit plans.
INSPECTION. Permit employees or agents of Lender at any reasonable time to
inspect any and all collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records, in the possession of
a third party, Borrower, upon request of Lender, shall notify such party to
permit Lender free access to such records at all reasonable times and to
provide Lender with copies of any records it may request, all at Lender's
expense.
COMPLIANCE CERTIFICATE. Unless waived in writing by Lender, provide Lender
QUARTERLY W/IN 45 DAYS OF THE END OF EACH QUARTER with a certificate
executed by Borrower's chief financial officer, or other officer or person
acceptable to Lender, certifying that the representations and warranties
set forth in this Agreement are true and correct as of the date of the
certificate and further certifying that, as of the date of the certificate,
no Event of Default exists under this Agreement.
ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
notes, security agreements, financing statements, instruments, documents
and other agreements as Lender or its attorneys may reasonably request to
evidence and secure the Loans and to perfect all Security Interests.
<PAGE>
02-10-1994 LOAN AGREEMENT Page 6
(Continued)
RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law,
rule, regulation or guideline, or the interpretation or application of any
thereof by any court or administrative or governmental authority (including any
request or policy not having the force of law) shall impose, modify or make
applicable any taxes (except U.S. federal, state or local income or franchise
taxes imposed on Lender), reserve requirements, capital adequacy requirements or
other obligations which would (a) increase the cost to Lender for extending or
maintaining the credit facilities to which this Agreement relates, (b) reduce
the amounts payable to Lender under this Agreement or the Related Documents, or
(c) reduce the rate of return on lender's capital as a consequence of Lender's
obligations with respect to the credit facilities to which this Agreement
relates, then Borrower agrees to pay Lender such additional amounts as will
compensate Lender therefor, within five (5) days after Lender's written demand
for such payment, which demand shall be accompanied by an explanation of such
imposition or charge and a calculation in reasonable detail of the additional
amounts payable by Borrower, which explanation and calculations shall be
conclusive in the absence of manifest error.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender (not to be reasonably withheld):
INDEBTEDNESS AND LIENS. (a) Except for trade debt incurred in the normal
course of business and indebtedness to lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases in excess of $2,000,000.00 in total, (b) except
as allowed as a Permitted Lien, sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower's assets
in excess of $1,000,000.00, or (c) sell with recourse any of Borrower's
accounts, except to Lender.
CONTINUITY OF OPERATIONS. (a) Cease operations, liquidate, merge,
transfer, consolidate with any other entity, dissolve or transfer or sell
Collateral out of the ordinary course of business, or (b) pay any
dividends on Borrower's stock (other than dividends payable in its stock
and except as may be statutorily required for Subchapter S corporations) or
purchase or retire any of Borrower's outstanding shares or alter or amend
Borrower's capital structure.
LOANS, ACQUISITIONS AND GUARANTIES (a) Loan, or advance money or assets,
(b) incur any obligation as surety or guarantor other than in the ordinary
course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower whether under this Agreement or under any other agreement, Lender shall
have no obligation to make Loan Advances or to disburse Loan proceeds if: (a)
Borrower is in default under the terms of this Agreement or any of the Related
Documents or any other agreement that Borrower has with Lender; (b) Borrower
becomes insolvent, files a petition in bankruptcy or similar proceedings, or is
adjudged a bankrupt.
ADDITIONAL REQUIREMENTS FOR ELIGIBLE ACCOUNTS. 1) IF MORE THAN 20% OF ACCOUNTS
DUE FROM ANY ACCOUNT DEBTOR ARE MORE THAN 150 DAYS FROM INVOICE DATE ALL
ACCOUNTS OWING BY SUCH ACCOUNT DEBTOR SHALL NOT BE ELIGIBLE ACCOUNTS 2)
ACCOUNTS DUE AND PAYABLE MORE THAN 150 DAYS FROM THE DATE OF THE INVOICE SHALL
NOT BE ELIGIBLE ACCOUNTS 3) ACCOUNTS WHICH LENDER IN ITS SOLE DISCRETION
REASONABLY DEEMS INELIGIBLE.
ADDITIONAL REQUIREMENTS FOR ELIGIBLE INVENTORY. THE FOLLOWING INVENTORY IN
ADDITION TO THAT DESCRIBED ABOVE SHALL NOT BE ELIGIBLE INVENTORY: 1) INVENTORY
WHICH IS NOT FOR DIRECT RESALE INCLUDING BUT NOT LIMITED TO PACKAGING, LABELING
AND MANUFACTURING SUPPLIES 2) INVENTORY WHICH IS PROHIBITED FROM BEING SOLD BY
ANY FEDERAL, STATE OR LOCAL GOVERNMENTAL AGENCY.
ACCOUNTS RECEIVABLE AGING. BORROWER SHALL FURNISH TO LENDER A MONTHLY ACCOUNTS
RECEIVABLE AGING REPORT, TO INCLUDE ADDRESES OF ACCOUNTS RECEIVABLE CUSTOMERS,
WITHIN 30 DAYS OF THE END OF EACH MONTH IN A FORM ACCEPTABLE TO LENDER.
ACCOUNTS PAYABLE AGING. BORROWER SHALL FURNISH TO LENDER A QUARTERLY ACCOUNTS
PAYABLE AGING REPORT WITHIN 30 DAYS OF THE END OF EACH QUARTER IN A FORM
ACCEPTABLE TO LENDER BEGINNING DECEMBER 30, 1993.
AUTHORIZATION TO VERIFY ACCOUNTS RECEIVABLE. BORROWER HEREBY AUTHORIZES LENDER
WITH ITS SPECIFIC APPROVAL, TO VERIFY ITS ACCOUNTS RECEIVABLE THROUGH WRITTEN
AND/OR VERBAL VERIFICATION METHODS AT THE DISCRETION OF THE LENDER.
REPORTING REQUIREMENTS DEFERMENT. BORROWER SHALL NOT BE REQUIRED TO COMPLY WITH
ANY ACCOUNTS RECEIVABLE AND INVENTORY REPORTING REQUIREMENTS UNLESS BORROWER IS
IN DEFAULT OF ANY COVENANTS AND LENDER AT ITS OPTION HAS NOTIFIED BORROWER OF
SUCH DEFAULTS AND REQUIRED LATERALIZATION OF THE REVOLVING LINE OF CREDIT, IN
THE EVENT THAT BORROWER IS REQUIRED TO PROVIDE SUCH REPORTS ONLY LIMITED
REPORTING WILL BE REQUIRED BY LENDER AS LONG AS ADVANCES DO NOT EXCEED THE SUM
OF 50% OF THE AGGREGATE AMOUNT OF ELIGIBLE ACCOUNTS FOR 30 CONSECUTIVE DAYS.
SHOULD THE ADVANCES EXCEED THE 50% LIMIT FOR MORE THAN 30 CONSECUTIVE DAYS
DURING THE YEAR, THEN THE BORROWER SHALL BE REQUIRED TO PROVIDE SUCH REPORTS FOR
MONTHLY REPORTING.
BORROWING BASE CERTIFICATE. BORROWER SHALL FURNISH TO LENDER A MONTHLY
BORROWING BASE CERTIFICATE WITHIN 30 DAYS OF THE END OF EACH MONTH IN A FORM AND
CONTENT ACCEPTABLE TO LENDER.
SEC REPORTS. BORROWER SHALL FURNISH TO LENDER COPIES OF ANY REPORTS WHICH ARE
REQUIRED TO BE FILED WITH THE SECURITY EXCHANGE COMMISSION.
MINIMUM WORKING CAPITAL. BORROWER SHALL MAINTAIN MINIMUM WORKING CAPITAL
CALCULATED BY SUBTRACTING FINANCIAL STATEMENT CURRENT LIABILITIES FROM FINANCIAL
STATEMENT CURRENT ASSETS GREATER THAN OR EQUAL TO $16,500,000.00 CALCULATED ON A
QUARTERLY BASIS.
TANGIBLE NET WORTH. BORROWER SHALL MAINTAIN A MINIMUM TANGIBLE NET WORTH OF NOT
LESS THAN $25,000,000.00 AS OF QUARTER END DECEMBER 31, 1993 AND $26,000,000.00
AS OF QUARTER END MARCH 31, 1994 AND EACH QUARTER END THEREAFTER.
NET WORTH RATIO. BORROWER SHALL MAINTAIN A RATIO OF BORROWED DEBT TO TANGIBLE
NET WORTH OF LESS THAN 0.75 TO 1.00 CALCULATED ON A QUARTERLY BASIS.
COLLATERAL. THE PROVISIONS IN THIS LOAN AGREEMENT RELATING TO COLLATERAL ARE
NOT APPLICABLE UNTIL SUCH TIME AS BORROWER IS REQUIRED TO PROVIDE COLLATERAL.
PLEDGING OF COLLATERAL. BORROWER SHALL PLEDGE COLLATERAL ACCEPTABLE TO LENDER
IN THE EVENT BORROWER IS IN DEFAULT UNDER THE MINIMUM WORKING CAPITAL, TANGIBLE
NET WORTH AND/OR NET WORTH RATIO SECTIONS UNDER THIS LOAN AGREEMENT.
<PAGE>
02-10-1994 LOAN AGREEMENT Page 7
(Continued)
OTHER DEFAULTS. FAILURE OF BORROWER TO COMPLY WITH OR TO PERFORM WHEN DUE ANY
OTHER TERM, OBLIGATION, COVENANT OR CONDITION CONTAINED IN THIS AGREEMENT OR IN
ANY OF THE RELATED DOCUMENTS. IF ANY FAILURE, OTHER THAN A FAILURE TO PAY
MONEY, IS CURABLE AND IF BORROWER HAS NOT BEEN GIVEN A NOTICE OF A SIMILAR
BREACH WITH THE PRECEDING 12 MONTHS, IT MAY BE CURED (AND NO EVENT OF DEFAULT
WILL HAVE OCCURRED) IF BORROWER, AFTER RECEIVING WRITTEN NOTICE FROM LENDER
DEMANDING CURE OF SUCH FAILURE: (A) CURES THE FAILURE WITHIN 30 DAYS; OR (B)
IF THE CURE REQUIRES MORE THAN 30 DAYS, IMMEDIATELY INITIATES STEPS WHICH LENDER
DEEMS IN LENDER'S SOLE DISCRETION TO BE SUFFICIENT TO CURE THE FAILURE AND
THEREAFTER CONTINUES AND COMPLETES ALL REASONABLE AND NECESSARY STEPS SUFFICIENT
TO PRODUCE COMPLIANCE AS SOON AS REASONABLY PRACTICAL.
EXHIBIT "A". An exhibit, titled "EXHIBIT "A"," is attached to this Agreement
and by this reference is made a part of this Agreement just as if all the
provisions, terms and conditions of the Exhibit had been fully set forth in this
Agreement.
EVENTS OF DEFAULT: Each of the following shall constitute an Event of Default
under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due
on the Loans.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower default under any loan,
extension of credit, security agreement, purchase or sales agreement, or
any other agreement, in favor of any other creditor or person that may
materially affect any of Borrower's property or Borrower's ability to repay
the Loans or perform their respective obligations under this Agreement or
any of the Related Documents.
FALSE STATEMENTS. Any warranty, representation, or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under this
Agreement or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
Security Agreement to create a valid and perfected Security Interest) at
any time and for any reason.
INSOLVENCY. The dissolution or termination of Borrower's existence as a
going business, insolvency, appointment of a receiver for any part of
Borrower's property, any assignment for the benefit of creditors, any type
of creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, against any
collateral securing the Indebtedness, or by any governmental agency. This
includes a garnishment, attachment, or levy of a material nature on or of
any of Borrower's deposit accounts with Lender. However, this Event of
Default shall not apply if there is a good faith dispute by Borrower, as
the case may be, as to the validity or reasonableness of the claim which is
the basis of the creditor or forfeiture proceeding, and if Borrower gives
Lender written notice of the creditor or forfeiture proceeding and
furnishes reserves or a surety bond for the creditor or forfeiture
proceeding satisfactory to Lender.
CHANGE IN OWNERSHIP Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower by one purchase.
INSECURITY. Lender, in good faith, deems itself insecure.
RIGHT TO CURE. If any default, other than a Default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been given
a notice of a similar default within the preceding twelve (12) months, it
may be cured (and no Event of Default will have occurred) if Borrower or
Grantor, as the case may be, after receiving written notice from lender
demanding cure of such default: (a) cures the default within fifteen (15)
days; or (b) if the cure requires more than fifteen (15) days, immediately
initiates steps which Lender deems in Lenders sole discretion to be
sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
EFFECT OF ANY EVENT OF DEFAULT. If any Event of Default shall occur, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make Loan Advances or disbursements, and, at Lender's option, all
Loans immediately will become due and payable, all without notice of any kind to
Borrower, except that in the case of an Event of Default of the type described i
the "Insolvency" subsection above, such acceleration shall be automatic and not
optional. In addition, Lender shall have all the rights and remedies provided
in the Related Documents or available at law, in equity, or otherwise. Except
as may be prohibited by applicable law, all of Lender's rights and remedies
shall be cumulative and may be exercised singularly or concurrently. Election
by Lender to pursue any remedy shall not exclude pursuit of any other remedy,
and an election to make expenditures or to take action to perform an obligation
of Borrower or of any Grantor shall not affect Lender's right to declare a
default and to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions ar a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be changed or bound by the alteration or
amendment.
APPLICABLE LAW. THIS AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED
BY LENDER IN THE STATE OF UTAH. IF THERE IS A LAWSUIT, BORROWER AGREES
UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF SALT
LAKE COUNTY, THE STATE OF UTAH. SUBJECT TO THE PROVISIONS ON ARBITRATION,
THIS AGREEMENT SHALL BE GOVERNED BY THE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF UTAH.
ARBITRATION DISCLOSURES:
1. AS USED IN THIS ARBITRATION SECTION, THE TERM "PARTIES" MEANS THE
LENDER, ANY OTHER SIGNERS HERETO AND PERMITTED SUCCESSORS AND
ASSIGNS.
2. ARBITRATION IS USUALLY FINAL AND BINDING ON THE PARTIES AND
SUBJECT TO ONLY VERY LIMITED REVIEW BY A COURT.
3. THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT,
INCLUDING THEIR RIGHT TO A JURY TRIAL.
4. PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED AND DIFFERENT
FROM COURT PROCEEDINGS.
5. ARBITRATORS' AWARDS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS
OR LEGAL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK
MODIFICATION OF RULINGS BY ARBITRATORS IS STRICTLY LIMITED.
6. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS
AFFILIATED WITH THE BANKING INDUSTRY.
7. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR
THE AMERICAN ARBITRATION ASSOCIATION.
<PAGE>
02-10-1994 LOAN AGREEMENT Page 8
(Continued)
ARBITRATION PROVISIONS:
(a) Any controversy or claim between or among the parties, including
but not limited to those arising out of or relating to this Agreement or
any agreements or instruments relating hereto or delivered in connection
herewith, and including but not limited to a claim based on or arising
from an alleged tort, shall at the request of any party be determined by
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitration proceedings shall be
conducted in Salt Lake City, Utah. The arbitrator(s) shall have the
qualifications set forth in subparagraph (c) hereto. All statutes of
limitations which would otherwise be applicable in a judicial action
brought by a party shall apply to any arbitration or reference
proceedings hereunder.
(b) In any judicial action or proceeding arising out of or relating to
this Agreement or any agreements or instruments relating hereto or
delivered in connection herewith, including but not limited to a claim
based on or arising from an alleged tort, if the controversy or claim is
not submitted to arbitration as provided and limited in subparagraph (a)
hereto, all decisions of fact and law shall be determined by a reference
in accordance with Rule 53 of the Federal Rules of Civil Procedure or
Rule 53 of the Utah Rules of Civil Procedure or other comparable,
applicable reference procedure. The parties shall designate to the
court the referee(s) selected under the auspices of the American
Arbitration Association in the same manner as arbitrators are selected
in Association-sponsored arbitration proceedings. The referee(s) shall
have the qualifications set forth in subparagraph (c) hereto.
(c) The arbitrator(s) or referee(s) shall be selected in accordance
with the rules of the American Arbitration Association from panels
maintained by the Association. A single arbitrator or referee shall be
knowledgeable in the subject matter of the dispute. Where three
arbitrators or referees conduct an arbitration or reference proceeding,
the claim shall be decided by a majority vote of the three arbitrators
or referees, at least one of whom must be knowledgeable in the subject
matter of the dispute and at least one of whom must be a practicing
attorney. The arbitrator(s) or referee(s) shall award recovery of all
costs and fees (including reasonable attorneys' fees, administrative
fees, arbitrators' fees, and court costs). The arbitrator(s) or
referee(s) also may grant provisional or ancillary remedies such as,
for example, injunctive relief, attachment, or the appointment of a
receiver, either during the pendency of the arbitration or reference
proceeding or as part of the arbitration or reference award.
(d) Judgment upon an arbitration or reference award may be entered in
any court having jurisdiction, subject to the following limitation: the
arbitration or reference award is binding upon the parties only if the
amount does not exceed Four Million Dollars ($4,000,000.00); if the
award exceeds that limit, either party may commence legal action for a
court trial de novo. Such legal action must be filed within thirty (30)
days following the date of the arbitration or reference award; if such
legal action is not filed within that time period, the amount of the
arbitration or reference award shall be binding. The computation of the
total amount of an arbitration or reference award shall include amounts
awarded for arbitration fees, attorneys' fees, interest, and all other
related costs.
(e) At the Lender's option, foreclosure under a deed of trust or
mortgage may be accomplished either by exercise of a power of sale under
the deed of trust or by judicial foreclosure. The institution and
maintenance of an action for judicial relief or pursuit of a provisional
or ancillary remedy shall not constitute a waiver of the right of any
party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.
(f) Notwithstanding the applicability of other law to any other
provision of this Agreement. the Federal Arbitration Act, 9 U.S.C. 1
ET SEQ., shall apply to the construction and interpretation of this
arbitration paragraph.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Borrower under
this Agreement shall be joint and several, and all references to Borrower
shall mean each and every Borrower. This means that each of the persons
signing below is responsible for all obligations in this Agreement.
CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any other
matter relating to the Loan, and Borrower hereby waives any rights to
privacy it may have with respect to such matters Borrower additionally
waives any and all notices of sale of participation interests, as well as
all notices of any repurchase of such participation interests. Borrower
also agrees that the purchasers of any such participation interests will be
considered as the absolute owners of such interests in the Loans and will
have all the rights granted under the participation agreement or agreements
governing the sale of such participation interests. Borrower further
waives all rights of offset of counterclaim that it may have now or later
against Lender or against any purchaser of such a participation interest
and unconditionally agrees that either Lender or such purchaser may enforce
Borrower's obligation under the Loans irrespective of the failure or
insolvency of any holder of any interest in the Loans. Borrower further
agrees that the purchaser of any such participation interest s may enforce
its interests irrespective of any personal claims or defenses that Borrower
may have against Lender.
COSTS AND EXPENSES. Borrower agrees to pay upon demand all of Lender's
out-of-pocket expenses, including reasonable attorneys' fees, incurred in
connection with enforcement and collection of this Agreement or in
connection with the Loans made pursuant to this Agreement. Lender may pay
someone else to help collect the Loans and to enforce this Agreement, and
Borrower will pay that amount. This includes, subject to any limits under
applicable law, Lender's reasonable attorneys' fees and Lender's legal
expenses, whether or not there is a lawsuit, including reasonable
attorneys' fees for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services actually incurred. Borrower also will
pay any court costs, in addition to all other sums provided by law.
NOTICES. All notices required to be given under this Agreement shall be
given in writing and shall be effective when actually delivered or when
deposited with a nationally recognized overnight courier or deposited in
the United States mail, first class, postage prepaid, addressed to the
party to whom the notice is to be given at the address shown above., Any
party may change its address for notices under this Agreement by giving
formal written notice to the other parties, specifying that the purpose of
the notice is to change the party's address. To the extent permitted by
applicable law, if there is more than one Borrower, notice to any Borrower
will constitute notice to all Borrowers. For notice purposes, Borrower
agrees to keep Lender informed at all times of Borrower's current
address(es).
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
<PAGE>
02-10-1994 LOAN AGREEMENT Page 9
(Continued)
SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower" as
used herein shall include all subsidiaries and affiliates of Borrower.
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Lender to make any Loan or other
financial accommodation to any subsidiary or affiliate of Borrower.
SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure to
the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
SURVIVAL. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery
to Lender of the Related Documents, regardless of any investigation made by
Lender or on Lender's behalf.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by lender
of a provision of this Agreement shall not prejudice or constitute a waiver
of Lender's right otherwise to demand strict compliance with that provision
or any other provision of this Agreement. No prior waiver by Lender, not
any course of dealing between lender and Borrower, or between Lender and
any Grantor, shall constitute a waiver of any of Lender's right or of any
obligations of Borrower or of any Grantor as to any future transactions.
Whenever the consent of Lender is required under this Agreement, the
granting of such consent by Lender in any instance shall not constitute
continuing consent in subsequent instances where such consent is required
and in all cases such consent may be granted or withheld in the sole
discretion of Lender.
FINAL AGREEMENT. Borrower understands that this Agreement and the related loan
documents are the final expression of the agreement between Lender and Borrower
and may not be contradicted by evidence of any alleged oral agreement.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT, AND
BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF FEBRUARY 10, 1994.
BORROWER:
OEC MEDICAL SYSTEMS, INC.
BY: /S/ RANDY W. ZUNDEL BY: /S/ CLARENCE VERHOEF
---------------------------------------- ------------------------------
RANDY W. ZUNDEL, CHIEF FINANCIAL OFFICER CLARENCE VERHOEF, CONTROLLER
LENDER:
ZIONS FIRST NATIONAL BANK
BY: /S/ RICHARD P. JACKSON
----------------------------------------
AUTHORIZED OFFICER
