Exhibit 10.95

 

LOAN AGREEMENT

 

This Agreement dated as of April 18, 2019, is among Bank of America N.A. (the
"Bank"), CUI, Inc., an Oregon corporation, (“CUI”) and CUI-Canada, Inc., a Nova
Scotia corporation (“CUI Canada”, and collectively with CUI, the "Borrower").

 

1.

definitions

 

In addition to the terms which are defined elsewhere in this Agreement, the
following terms have the meanings indicated for the purposes of this Agreement:

 

1.1

"Acceptable Inventory" means inventory which satisfies the following
requirements:

 

(a)

The inventory is owned by the Borrower free of any title defects or any liens or
interests of others except the security interest in favor of the Bank.

 

(b)

The inventory is located at locations which the Borrower has disclosed to the
Bank and which are acceptable to the Bank. If the inventory is covered by a
negotiable document of title (such as a warehouse receipt) that document must be
delivered to the Bank. Inventory which is in transit is not acceptable.

 

(c)

The inventory is held for sale in the ordinary course of the Borrower's business
and is of good and merchantable quality. Display items, work-in-process, parts,
raw materials, samples, and packing and shipping materials are not acceptable.
Inventory which is obsolete, unsalable, damaged, defective, used, discontinued
or slow-moving, or which has been returned by the buyer, is not acceptable.

 

(d)

The inventory is covered by insurance as required in the "Covenants" section of
this Agreement.

 

(e)

The inventory has not been manufactured to the specifications of a particular
account debtor.

 

(f)

The inventory is not subject to any licensing agreements which would prohibit or
restrict in any way the ability of the Bank to sell the inventory to third
parties.

 

(g)

The inventory has been produced in compliance with the requirements of the U.S.
Fair Labor Standards Act (29 U.S.C. §§201 et seq.), the Employment Standards
Act, 2000 (Ontario) and other applicable law.

 

(h)

The inventory is not placed on consignment.

 

(i)

The inventory is otherwise acceptable to the Bank.

 

1.2

"Acceptable Receivable" means an account receivable which satisfies the
following requirements:

 

(a)

The account has resulted from the sale of goods by the Borrower in the ordinary
course of the Borrower's business and without any further obligation on the part
of the Borrower to service, repair, or maintain any such goods sold other than
pursuant to any applicable warranty.

 

(b)

There are no conditions which must be satisfied before the Borrower is entitled
to receive payment of the account. Accounts arising from COD sales, consignments
or guaranteed sales are not acceptable.

 

(c)

The debtor upon the account does not claim any defense to payment of the
account, whether well founded or otherwise.

 

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(d)

The account balance does not include the amount of any counterclaims or offsets
which have been or may be asserted against the Borrower by the account debtor
(including offsets for any "contra accounts" owed by the Borrower to the account
debtor for goods purchased by the Borrower or for services performed for the
Borrower). To the extent any counterclaims, offsets, or contra accounts exist in
favor of the debtor, such amounts shall be deducted from the account balance.

 

(e)

The account represents a genuine obligation of the debtor for goods sold to and
accepted by the debtor. To the extent any credit balances exist in favor of the
debtor, such credit balances shall be deducted from the account balance.

 

(f)

The account balance does not include the amount of any finance or service
charges payable by the account debtor. To the extent any finance charges or
service charges are included, such amounts shall be deducted from the account
balance.

 

(g)

The Borrower has sent an invoice to the debtor in the amount of the account.

 

(h)

The Borrower is not prohibited by the laws of the jurisdiction where the account
debtor is located from bringing an action in the courts of that state or
province to enforce the debtor's obligation to pay the account. The Borrower has
taken all appropriate actions to ensure access to the courts of the jurisdiction
where the account debtor is located, including, where necessary, the filing of a
Notice of Business Activities Report or other similar filing with the applicable
governmental agency or the qualification by the Borrower as a foreign
corporation authorized to transact business in such jurisdiction.

 

(i)

The account is owned by the Borrower free of any title defects or any liens or
interests of others except the security interest in favor of the Bank.

 

(j)

The debtor upon the account is not any of the following:

 

 

(i)

An employee, affiliate, parent or subsidiary of the Borrower, or an entity which
has common officers or directors with the Borrower.

 

 

(ii)

(A) The U.S. government or any agency or department of the U.S. government
unless the Bank agrees in writing to accept the obligation, the Borrower
complies with the procedures in the Federal Assignment of Claims Act of 1940 (41
U.S.C. §6305) with respect to the obligation, and the underlying contract
expressly provides that neither the U.S. government nor any agency or department
thereof shall have the right of set-off against the Borrower; or (B) the
Canadian government or any agency or department of the Canadian government
unless the Bank agrees in writing to accept the obligation, the Borrower
complies with the procedures in the Financial Administration Act (Canada) with
respect to the obligation, and the underlying contract expressly provides that
neither the Canadian government nor any agency or department thereof shall have
the right of set-off against the Borrower.

 

 

(iii)

Any state, province, territory, county, city, town or municipality.

 

 

(iv)

Any person or entity located in a foreign country other than the United States
or Canada unless (A) the account is supported by an irrevocable letter of credit
issued by a bank acceptable to the Bank, and, if requested by the Bank, the
original of such letter of credit and/or any usance drafts drawn under such
letter of credit and accepted by the issuing or confirming bank have been
delivered to the Bank, or (B) the account is covered by foreign credit insurance
acceptable to the Bank and the account is otherwise an Acceptable Receivable.

 

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(k)

The account is not in default. An account will be considered in default if any
of the following occur:

 

 

(i)

the account is not paid within 90 days from its invoice date or 60 days from its
due date, whichever occurs first;

 

 

(ii)

the debtor obligated upon the account suspends business, makes a general
assignment for the benefit of creditors, or fails to pay its debts generally as
they come due; or

 

 

(iii)

any petition is filed by or against the debtor obligated upon the account under
any bankruptcy or insolvency law or any other law or laws for the relief of
debtors.

 

(l)

The account is not the obligation of a debtor who is in default (as defined
above) on 10% or more of the accounts upon which such debtor is obligated.

 

(m)

The account does not arise from the sale of goods which remain in the Borrower's
possession or under the Borrower's control.

 

(n)

The account is not evidenced by a promissory note or chattel paper, nor is the
account debtor obligated to the Borrower under any other obligation which is
evidenced by a promissory note.

 

(o)

The account is otherwise acceptable to the Bank.

 

In addition to the foregoing limitations, the dollar amount of accounts included
as Acceptable Receivables which are the obligations of a single debtor shall not
exceed the concentration limit established for that debtor. To the extent the
total of such accounts exceeds a debtor's concentration limit, the amount of any
such excess shall be excluded. The concentration limit for each debtor shall be
equal to 10% of the total amount of the Borrower's Acceptable Receivables at
that time. The foregoing concentration limit shall not apply to the following
debtors: Future Electronic, Digi-Key Electronics and Arrow.

 

1.3

“Beneficial Ownership Certification” means a certification regarding beneficial
ownership required by the Beneficial Ownership Regulation.

 

1.4

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

 

1.5

"Borrowing Base" means the sum of:

 

(a)

80% of the balance due on Acceptable Receivables; plus

 

(b)

the lesser of (i) 50% of the Borrower’s cost of Acceptable Inventory, (ii) 80%
of the orderly liquidation value of Acceptable Inventory and (iii) the amount
included in the Borrowing Base pursuant to subclause (a) of this definition;
minus

 

(c)

the outstanding amount of loans, advances, other extensions of credit
investments, capital contributions and other transfers of assets made to
affiliates of the Borrower that are not Obligors pursuant to Section 7.12(d) or
7.13(d).

 

In determining the orderly liquidation value of Acceptable Inventory to be
included in the Borrowing Base, the Bank will use the its independent
determination of the orderly liquidation value of such inventory in such
quantities and on such terms as the Bank deems appropriate.

 

After calculating the Borrowing Base as provided above, the Bank may deduct such
reserves as the Bank may establish from time to time in its reasonable credit
judgment, including, without limitation, all Canadian Priority Payables Reserves
and reserves for rent at leased locations subject to statutory or contractual
landlord’s liens, inventory shrinkage, dilution, customs charges, warehousemen’s
or bailees’ charges and the amount of estimated maximum exposure, as determined
by the Bank from time to time, under any interest rate contracts which the
Borrower enters into with the Bank (including interest rate swaps, caps, floors,
options thereon, combinations thereof, or similar contracts).

 

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1.6     “Canadian Plan" means a "pension plan" or "plan" within the meaning of
the applicable pension benefits legislation in any jurisdiction of Canada that
is organized and administered to provide pensions, pension benefits or
retirement benefits for employees and former employees of the Borrower or any
Related Party.

 

1.7     “Canadian Priority Payables” means, at any time, (a) the amount payable
by the Borrower, or the accrued amount for which the Borrower has an obligation
to remit to a governmental authority or other person pursuant to any applicable
law, in respect of (i) pension fund obligations; (ii) employment insurance;
(iii) goods and services taxes, sales taxes, harmonized taxes, excise taxes,
value added taxes, employee income taxes and other taxes or governmental
royalties payable or to be remitted or withheld; (iv) workers’ compensation; (v)
wages, commissions, severance pay, employee deductions, vacation pay and amounts
payable under the Wage Earner Protection Program Act (Canada) or secured by
Section 81.3 or 81.4 of the Bankruptcy and Insolvency Act (Canada) and (vi)
other charges and demands; and (b) the aggregate amount of any raw materials or
inventory of the Borrower which the Bank in its reasonable discretion considers
is or may be subject to retention of title by a supplier or a right of a
supplier to recover possession thereof, including, without limitation, such
inventory subject to a right of a supplier to repossess goods pursuant to
Section 81.1 of the Bankruptcy and Insolvency Act (Canada) or any other laws of
Canada which grant repossession, revendication or similar rights to unpaid
suppliers; in each case, in respect of which any governmental authority or other
person may claim a security interest, hypothec, prior claim, lien, trust
(statutory or deemed) or other claim or lien ranking or capable of ranking in
priority to or pari passu with one or more of the liens in favor of the Bank.

 

1.8     “Canadian Priority Payables Reserves” means, on any date of
determination for the Borrowing Base, a reserve established by the Bank in its
reasonable discretion in such amount as the Bank may determine in respect of
Canadian Priority Payables.

 

1.9     "Credit Limit" means the amount of Ten Million Dollars ($10,000,000).

 

1.10     “CUI-Global” means CUI Global, Inc., a Colorado corporation.

 

1.11     “CUI-Japan” means CUI Japan Co., Ltd., a Japanese company.

 

1.12     “Guarantor” means any person or entity, if any, providing a guaranty
with respect to the obligations hereunder.

 

1.13     “Obligor” means any Borrower and/or Guarantor.

 

1.14     “Related Party” means each of CUI, CUI-Canada and CUI-Japan and their
respective subsidiaries.

 

2.

line of credit amount and terms

 

2.1

Line of Credit Amount.

 

(a)

During the availability period described below, the Bank will provide a line of
credit to the Borrower (the “Line of Credit”). The amount of the Line of Credit
(the "Commitment") is equal to the lesser of (i) the Credit Limit or (ii) the
Borrowing Base.

 

(b)

This is a revolving line of credit. During the availability period, the Borrower
may repay principal amounts and reborrow them.

 

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(c)

The Borrower agrees not to permit the principal balance outstanding to exceed
the Commitment. If the Borrower exceeds this limit, the Borrower will
immediately pay the excess to the Bank upon the Bank's demand.

 

2.2

Availability Period.

 

The Line of Credit is available between the date of this Agreement and March 31,
2021, or such earlier date as the availability may terminate as provided in this
Agreement (the "Expiration Date").

 

2.3

Conditions to Availability of Credit.

 

In addition to the items required to be delivered to the Bank under the
paragraph entitled "Financial Information" in the "Covenants" section of this
Agreement, the Borrower will promptly deliver the following to the Bank at such
times as may be requested by the Bank:

 

(a)

A borrowing base certificate, in form and detail satisfactory to the Bank,
setting forth the Acceptable Receivables and the Acceptable Inventory on which
the requested extension of credit is to be based.

 

2.4

Repayment Terms.

 

(a)

The Borrower will pay interest on April 30, 2019, and then on the last day of
each month thereafter until payment in full of all principal outstanding under
this facility. The amount of each interest payment shall be the amount of
accrued interest on the Line of Credit as of the interest payment date or such
earlier accrual date as indicated on the billing statement for such interest
payment.

 

(b)

The Borrower will repay in full all principal, interest or other charges
outstanding under this Agreement no later than the Expiration Date.

 

(c)

The Borrower may prepay the Line of Credit in full or in part at any time. The
prepayment will be applied to the most remote payment of principal due under
this Agreement.

 

2.5

Interest Rate.

 

(a)

The interest rate is a rate per year equal to the LIBOR Daily Floating Rate plus
2.00 percentage point(s).

 

(b)

The LIBOR Daily Floating Rate is a fluctuating rate of interest which can change
on each banking day. The rate will be adjusted on each banking day to equal the
London Interbank Offered Rate (or a comparable or successor rate which is
approved by the Bank) for U.S. Dollar deposits for delivery on the date in
question for a one month term beginning on that date. The Bank will use the
London Interbank Offered Rate as published by Bloomberg (or other commercially
available source providing quotations of such rate as selected by the Bank from
time to time) as determined at approximately 11:00 a.m. London time two (2)
London Banking Days prior to the date in question, as adjusted from time to time
in the Bank’s sole discretion for reserve requirements, deposit insurance
assessment rates and other regulatory costs. If such rate is not available at
such time for any reason, then the rate will be determined by such alternate
method as reasonably selected by the Bank. A "London Banking Day" is a day on
which banks in London are open for business and dealing in offshore dollars. If
at any time the LIBOR Daily Floating Rate is less than zero, such rate shall be
deemed to be zero for the purposes of this Agreement.

 

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(c)

For the purposes of the Interest Act (Canada), (i) whenever a rate of interest
or fee rate hereunder is calculated on the basis of a year (the “deemed year”)
that contains fewer days than the actual number of days in the calendar year of
calculation, such rate of interest or fee rate shall be expressed as a yearly
rate by multiplying such rate of interest or fee rate by the actual number of
days in the calendar year of calculation and dividing it by the number of days
in the deemed year, (ii) the principle of deemed reinvestment of interest shall
not apply to any interest calculation hereunder and (iii) the rates of interest
stipulated herein are intended to be nominal rates and not effective rates or
yields. The Borrower irrevocably agrees not to plead or assert, whether by way
of defense or otherwise, in any proceeding relating to this Agreement, that the
interest payable under this Agreement and its calculation have not been
adequately disclosed to the Borrower, whether pursuant to section 4 of the
Interest Act (Canada) or any other applicable law.

 

2.6

Letters of Credit.

 

(a)

As a subfacility under the Line of Credit, during the availability period, the
Bank agrees from time to time to issue or cause an affiliate to issue standby
letters of credit for the account of the Borrower (each a "Letter of Credit,"
and collectively "Letters of Credit"); provided however, that the aggregate
drawn and undrawn amount of all outstanding Letters of Credit shall not at any
time exceed One Million Dollars ($1,000,000). The form and substance of each
Letter of Credit shall be subject to approval by the Bank, in its sole
discretion. Each Letter of Credit shall be issued for a term, as designated by
the Borrower, not to exceed three hundred sixty-five (365) days; provided
however, that no Letter of Credit shall have an expiration date more than one
hundred eighty (180) days beyond the Expiration Date. The undrawn amount of all
Letters of Credit shall be reserved under the Line of Credit and such amount
shall not be available for borrowings. Each Letter of Credit shall be subject to
the additional terms and conditions of the Letter of Credit agreements,
applications and any related documents required by the Bank in connection with
the issuance of Letters of Credit. At the option of the Bank, any drawing paid
under a Letter of Credit may be deemed an advance under the Line of Credit and
shall be repaid by the Borrower in accordance with the terms and conditions of
this Agreement applicable to such advances; provided however, that if advances
under the Line of Credit are not available, for any reason, at the time any
drawing is paid, then the Borrower shall immediately pay to the Bank the full
amount drawn, together with interest from the date such drawing is paid to the
date such amount is fully repaid by the Borrower, at the rate of interest
applicable to advances under the Line of Credit. In such event the Borrower
agrees that the Bank, in its sole discretion, may debit any account maintained
by the Borrower with the Bank for the amount of any such drawing. The Borrower
agrees to deposit in a cash collateral account with the Bank an amount equal to
the aggregate outstanding undrawn face amount of all letters of credit which
remain outstanding on the Expiration Date. The Borrower grants a security
interest in such cash collateral account to the Bank. Amounts held in such cash
collateral account shall be applied by the Bank to the payment of drafts drawn
under such letters of credit and to the obligations and liabilities of the
Borrower to the Bank, in such order of application as the Bank may in its sole
discretion elect.

 

(b)

The Borrower shall pay the Bank a non-refundable fee equal to 2.00% per annum of
the outstanding undrawn amount of each standby letter of credit, payable
quarterly in advance, calculated on the basis of the face amount outstanding on
the day the fee is calculated. If there is a default under this Agreement, at
the Bank's option, the amount of the fee shall be increased to 6.00% per annum,
effective starting on the day the Bank provides notice of the increase to the
Borrower.

 

3.

collateral

 

3.1

Personal Property.

 

The personal property listed below now owned or owned in the future by the
parties listed below will secure the Borrower’s obligations to the Bank under
this Agreement or, if the collateral is owned by a Guarantor, will secure the
guaranty, if so indicated in the security agreement. The collateral is further
defined in security agreement(s) executed by the owners of the collateral.

 

(a)

Equipment and fixtures.

 

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(b)

Inventory.

 

(c)

Receivables.

 

(d)

Securities and other investment property.

 

Regulation U of the Board of Governors of the Federal Reserve System places
certain restrictions on loans secured by margin stock (as defined in the
Regulation). The Bank and the Borrower shall comply with Regulation U. If any of
the collateral is margin stock, the Borrower shall provide to the Bank a Form
U-1 Purpose Statement.

 

(e)

Time deposits with the Bank.

 

(f)

Patents, trademarks and other general intangibles.

 

4.

loan administration and fees

 

4.1

Fees.

 

The Borrower will pay to the Bank the fees set forth on Schedule A.

 

4.2

Collection of Payments; Payments Generally.

 

(a)

Payments will be made by debit to a deposit account, if direct debit is provided
for in this Agreement or is otherwise authorized by the Borrower. For payments
not made by direct debit, payments will be made by mail to the address shown on
the Borrower’s statement, or by such other method as may be permitted by the
Bank.

 

(b)

Each disbursement by the Bank and each payment by the Borrower will be evidenced
by records kept by the Bank which will, absent manifest error, be conclusively
presumed to be correct and accurate and constitute an account stated between the
Borrower and the Bank.

 

(c)

All payments to be made by the Borrower shall be made free and clear of and
without condition or deduction for any counterclaim, defense, recoupment or
setoff.

 

4.3

Requests for Credit; Equal Access by all Borrowers.

 

Any Borrower (or a person or persons authorized by any one of the Borrowers),
acting alone, can borrow up to the full amount of credit provided under this
Agreement. Each Borrower will be liable for all extensions of credit made under
this Agreement to any other Borrower.

 

4.4

Borrower’s Instructions.

 

Subject to the terms, conditions and procedures stated elsewhere in this
Agreement, the Bank may honor instructions for advances or repayments and any
other instructions under this Agreement given by any one of the individuals the
Bank reasonably believes is authorized to sign loan agreements on behalf of the
Borrower, or any other individual(s) designated by any one of such authorized
signers (each an “Authorized Individual”). The Bank may honor any such
instructions made by any one of the Authorized Individuals, whether such
instructions are given in writing or by telephone, telefax or Internet and
intranet websites designated by the Bank with respect to separate products or
services offered by the Bank.

 

4.5

Direct Debit.

 

The Borrower agrees that on the due date of any amount due under this Agreement,
the Bank will debit the amount due from deposit account number owned by CUI, or
such other of the Borrower’s accounts with the Bank as designated in writing by
the Borrower (the "Designated Account"). Should there be insufficient funds in
the Designated Account to pay all such sums when due, the full amount of such
deficiency shall be immediately due and payable by the Borrower.

 

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4.6

Banking Days.

 

Unless otherwise provided in this Agreement, a banking day is a day other than a
Saturday, Sunday or other day on which commercial banks are authorized to close,
or are in fact closed, in the state where the Bank's lending office is located,
and, if such day relates to amounts bearing interest at an offshore rate (if
any), means any such day on which dealings in dollar deposits are conducted
among banks in the offshore dollar interbank market. All payments and
disbursements which would be due or which are received on a day which is not a
banking day will be due or applied, as applicable, on the next banking day.

 

4.7

Additional Costs.

 

The Borrower will pay the Bank, on demand, for the Bank's costs or losses
arising from any Change in Law which are allocated to this Agreement or any
credit outstanding under this Agreement.  The allocation will be made as
determined by the Bank, using any reasonable method.  The costs include, without
limitation, the following:

 

(a)

any reserve or deposit requirements (excluding any reserve requirement already
reflected in the calculation of the interest rate in this Agreement); and

 

(b)

any capital requirements relating to the Bank's assets and commitments for
credit.

 

“Change in Law” means the occurrence, after the date of this Agreement, of the
adoption or taking effect of any new or changed law, rule, regulation or treaty,
or the issuance of any request, rule, guideline or directive (whether or not
having the force of law) by any governmental authority; provided that (x) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines or directives issued in connection with that Act, and (y) all
requests, rules, guidelines or directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking Supervision (or any
successor authority) or the United States regulatory authorities, in each case
pursuant to Basel III, shall in each case be deemed to be a “Change in Law,”
regardless of the date enacted, adopted or issued.

 

4.8

Interest Calculation.

 

Except as otherwise stated in this Agreement, all interest and fees, if any,
will be computed on the basis of a 360-day year and the actual number of days
elapsed. This results in more interest or a higher fee than if a 365-day year is
used. Installments of principal which are not paid when due under this Agreement
shall continue to bear interest until paid. To the extent that any calculation
of interest or any fee required to be paid under this Agreement shall be less
than zero, such rate shall be deemed zero for purposes of this Agreement.

 

4.9

Default Rate.

 

Upon the occurrence of any default or after maturity or after judgment has been
rendered on any obligation under this Agreement, all amounts outstanding under
this Agreement, including any unpaid interest, fees, or costs, will at the
option of the Bank bear interest at a rate which is 4.0 percentage point(s)
higher than the rate of interest otherwise provided under this Agreement. This
may result in compounding of interest. This will not constitute a waiver of any
default.

 

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4.10

Taxes.

 

If any payments to the Bank under this Agreement are made from outside the
United States, the Borrower will not deduct any foreign taxes from any payments
it makes to the Bank. If any such taxes are imposed on any payments made by the
Borrower (including payments under this paragraph), the Borrower will pay the
taxes and will also pay to the Bank, at the time interest is paid, any
additional amount which the Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such taxes had not been imposed.
The Borrower will confirm that it has paid the taxes by giving the Bank official
tax receipts (or notarized copies) within thirty (30) days after the due date.

 

4.11

Payments in Kind.

 

If the Bank requires delivery in kind of the proceeds of collection of the
Borrower's accounts receivable, such proceeds shall be credited to interest,
principal, and other sums owed to the Bank under this Agreement in the order and
proportion determined by the Bank in its sole discretion. All such credits will
be conditioned upon collection and any returned items may, at the Bank's option,
be charged to the Borrower.

 

5.

conditions

 

Before the Bank is required to extend any credit to the Borrower under this
Agreement, it must receive any documents and other items it may reasonably
require, in form and content acceptable to the Bank, including any items
specifically listed below.

 

 

5.1

Authorizations.

 

Evidence that the execution, delivery and performance by the Borrower and/or
such Obligor of this Agreement and any instrument or agreement required under
this Agreement have been duly authorized.

 

 

5.2

Governing Documents.

 

A copy of each Obligor’s organizational documents.

 

5.3

KYC Information.

 

(a)

Upon the request of the Bank, the Borrower shall have provided to the Bank, and
the Bank shall be reasonably satisfied with, the documentation and other
information so requested in connection with applicable “know your customer” and
anti-money-laundering rules and regulations, including, without limitation, the
PATRIOT Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing
Act (Canada).

 

(b)

If an Obligor qualifies as a “legal entity customer” under the Beneficial
Ownership Regulation, it shall have provided a Beneficial Ownership
Certification to the Bank if so requested.

 

 

5.4

Guaranties.

 

Guaranty signed by CUI-Global.

 

 

5.5

Security Agreement(s).

 

Signed original security agreement(s) executed by CUI and CUI-Canada covering
the personal property collateral which the Bank requires.

 

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5.6

Perfection and Evidence of Priority.

 

Evidence that the security interests and liens in favor of the Bank are valid,
enforceable, properly perfected in a manner acceptable to the Bank and prior to
all others' rights and interests, except those the Bank consents to in writing.

 

 

5.7

Payment of Fees.

 

Payment of all fees, expenses and other amounts due and owing to the Bank. If
any fee is not paid in cash, the Bank may, in its discretion, treat the fee as a
principal advance under this Agreement or deduct the fee from the loan proceeds.

 

 

5.8

Repayment of Other Credit Agreement.

 

Evidence that the existing loan agreement with Wells Fargo Capital Finance has
been or will be repaid and cancelled, and all security interests related thereto
shall be released, on or before the first disbursement under this Agreement.

 

 

5.9

Good Standing.

 

Certificates of good standing (or equivalent, if available) for each Obligor
from its jurisdiction of formation.

 

 

5.10

Insurance.

 

Evidence of insurance coverage, as required in the "Covenants" section of this
Agreement.

 

 

6.

representations and warranties

 

When the Borrower signs this Agreement, and until the Bank is repaid in full,
the Borrower makes the following representations and warranties. Each request
for an extension of credit constitutes a renewal of these representations and
warranties as of the date of the request:

 

 

6.1

Formation.

 

Each Obligor is duly formed and existing under the laws of the state, province
or other jurisdiction where organized.

 

 

6.2

Authorization.

 

This Agreement, and any instrument or agreement required under this Agreement,
are within the applicable Obligor’s powers, have been duly authorized, and do
not conflict with any of its organizational papers.

 

6.3

Beneficial Ownership Certification.

 

The information included in the Beneficial Ownership Certification most recently
provided to the Bank, if applicable, is true and correct in all respects.

 

 

6.4

Good Standing.

 

In each state, province or other jurisdiction in which an Obligor does business,
it is properly licensed, in good standing, and, where required, in compliance
with fictitious name (e.g. trade name or d/b/a) statutes.

 

10

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6.5

Government Sanctions.

 

(a)

No Obligor, nor any affiliated entities of any Obligor, including in the case of
any Obligor that is not a natural person, subsidiaries nor, to the knowledge of
the Borrower, any owner, trustee, director, officer, employee, agent, affiliate
or representative of the Borrower or any other Obligor is an individual or
entity (“Person”) currently the subject of any sanctions administered or
enforced by the United States Government, including, without limitation, the
U.S. Department of Treasury’s Office of Foreign Assets Control, the Canadian
Government, the United Nations Security Council, the European Union, Her
Majesty’s Treasury, or other relevant sanctions authority (collectively,
“Sanctions”), nor is the Borrower or any other Obligor located, organized or
resident in a country or territory that is the subject of Sanctions.

 

(b)

The Borrower will not, directly or indirectly, use the proceeds of the credit
provided under this Agreement, or lend, contribute or otherwise make available
such proceeds to any subsidiary, joint venture partner or other Person, to fund
any activities of or business with any Person, or in any country or territory,
that, at the time of such funding, is the subject of Sanctions, or in any other
manner that will result in a violation by any Person (including any Person
participating in the transaction, whether as underwriter, advisor, investor or
otherwise) of Sanctions.

 

6.6

Financial Information.

 

All financial and other information that has been or will be supplied to the
Bank is sufficiently complete to give the Bank accurate knowledge of the
Borrower's (and any other Obligor's) financial condition, including all material
contingent liabilities. Since the date of the most recent financial statement
provided to the Bank, there has been no material adverse change in the business
condition (financial or otherwise), operations, properties or prospects of the
Borrower (or any other Obligor).

 

6.7

Lawsuits.

 

There is no lawsuit, tax claim or other dispute pending or threatened against
the Borrower or any other Obligor which, if lost, would impair the Borrower's or
such Obligor’s financial condition or ability to repay its obligations as
contemplated by this Agreement or any other agreement contemplated hereby.

 

6.8

Other Obligations.

 

No Related Party is not in default on any obligation for borrowed money, any
purchase money obligation or any other material lease, commitment, contract,
instrument or obligation.

 

6.9

Tax Matters.

 

The Borrower has no knowledge of any pending assessments or adjustments of
income tax for itself or for any Related Party for any year and all taxes due
have been paid.

 

6.10

Collateral.

 

All collateral required in this Agreement is owned by the grantor of the
security interest free of any title defects or any liens or interests of others,
except those which have been approved by the Bank in writing.

 

6.11

No Event of Default.

 

There is no event which is, or with notice or lapse of time or both would be, a
default under this Agreement.

 

6.12

Location of Obligors.

 

(a)

The place of business of CUI (or, if CUI has more than one place of business,
its chief executive office) is located at the address listed on the signature
page of this Agreement.

 

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(b)

The place of business of CUI-Canada (or, if CUI-Canada has more than one place
of business, its chief executive office) is located at the address listed on the
signature page of this Agreement.

 

 

6.13

ERISA Plans, etc.

 

(a)

Each Plan (other than a multiemployer plan) is in compliance in all material
respects with ERISA, the Code and other federal or state law, including all
applicable minimum funding standards and there have been no prohibited
transactions with respect to any Plan (other than a multiemployer plan), which
has resulted or could reasonably be expected to result in a material adverse
effect.

 

(b)

With respect to any Plan subject to Title IV of ERISA:

 

 

(i)

No reportable event has occurred under Section 4043(c) of ERISA which requires
notice.

 

 

(ii)

No action by the Borrower or any ERISA Affiliate to terminate or withdraw from
any Plan has been taken and no notice of intent to terminate a Plan has been
filed under Section 4041 or 4042 of ERISA.

 

(c)

The following terms have the meanings indicated for purposes of this Agreement:

 

 

(i)

"Code" means the Internal Revenue Code of 1986, as amended.

 

 

(ii)

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

 

 

(iii)

"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code.

 

 

(iv)

"Plan" means a plan within the meaning of Section 3(2) of ERISA maintained or
contributed to by the Borrower or any ERISA Affiliate, including any
multiemployer plan within the meaning of Section 4001(a)(3) of ERISA.

 

(d)

No Related Party sponsors, administers or has any obligation with respect to any
Canadian Plan.

 

 

6.14

No Plan Assets.

 

As of the date hereof and throughout the term of this Agreement, no Obligor (1)
is an employee benefit plan subject to ERISA, (2) is a plan or account subject
to Section 4975 of the Code; (3) is an entity deemed to hold “plan assets” of
any such plans or accounts for purposes of ERISA or the Code; (4) is a
“governmental plan” within the meaning of ERISA; or (5) sponsors, administers or
has any obligation with respect to any Canadian Plan.

 

 

6.15

Enforceable Agreement.

 

This Agreement is a legal, valid and binding agreement of the Borrower,
enforceable against the Borrower in accordance with its terms, and any
instrument or agreement required under this Agreement, when executed and
delivered by any Obligor, will be similarly legal, valid, binding and
enforceable against such Obligor.

 

 

6.16

No Conflicts.

 

This Agreement does not conflict with any law, agreement, or obligation by which
any Obligor is bound.

 

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6.17

Permits, Franchises.

 

Each Related Party possesses all permits, memberships, franchises, contracts and
licenses required and all trademark rights, trade name rights, patent rights,
copyrights, and fictitious name rights necessary to enable it to conduct the
business in which it is now engaged.

 

6.18

Insurance.

 

Each Related Party has obtained, and maintained in effect, the insurance
coverage required in the "Covenants" section of this Agreement.

 

6.19

Merchantable Inventory; Compliance with FSLA.

 

All inventory which is included in the Borrowing Base is of good and
merchantable quality and free from defects, and has been produced in compliance
with the requirements of the U.S. Fair Labor Standards Act (29 U.S.C. §§201 et
seq.), the Employment Standards Act, 2000 (Ontario) and other applicable law.

 

7.

covenants

 

The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full, the Borrower shall, and shall cause each
Related Party:

 

7.1

Use of Proceeds.

 

To use the proceeds of the credit extended under this Agreement only for
business purposes.

 

7.2

Financial Information.

 

To provide the following financial information and statements in form and
content acceptable to the Bank, and such additional information as requested by
the Bank from time to time. The Bank reserves the right, upon written notice to
the Borrower, to require the Borrower to deliver financial information and
statements to the Bank more frequently than otherwise provided below, and to use
such additional information and statements to measure any applicable financial
covenants in this Agreement.

 

(a)

Within 90 days of the fiscal year end, the annual financial statements of
CUI-Global, certified and dated by an authorized financial officer. These
financial statements must be audited (with an opinion satisfactory to the Bank)
by a Certified Public Accountant (“CPA”) acceptable to the Bank. The statements
shall be prepared on a consolidated basis.

 

(b)

Within 45 days after each period's end (including the last period in each fiscal
year), quarterly financial statements of CUI-Global, certified and dated by an
authorized financial officer. These financial statements may be
company-prepared. The statements shall be prepared on a consolidated basis.

 

(c)

Within 120 days of the fiscal year end, the annual financial statements of the
Related Parties, certified and dated by an authorized financial officer of the
Borrower. These financial statements must be audited (with an opinion
satisfactory to the Bank) by a CPA acceptable to the Bank. The statements shall
be prepared on a consolidated and consolidating basis.

 

(d)

Within 45 days after each period's end (including the last period in each fiscal
year), quarterly financial statements of the Related Parties, certified and
dated by an authorized financial officer of the Borrower. These financial
statements may be company-prepared. The statements shall be prepared on a
consolidated and consolidating basis.

 

(e)

Promptly, upon sending or receipt, copies of any management letters and
correspondence relating to management letters, sent or received by any Obligor
to or from its auditor. If no management letter is prepared, the Bank may, in
its discretion, request a letter from such auditor stating that no deficiencies
were noted that would otherwise be addressed in a management letter.

 

13

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(f)

Financial projections covering a time period acceptable to the Bank and
specifying the assumptions used in creating the projections. The projections
shall be provided to the Bank no less often than 60 days after the end of each
fiscal year.

 

(g)

Concurrently with the financial statements delivered pursuant to clauses (a),
(b), (c) and (d) above, a compliance certificate, signed by an authorized
financial officer of the Borrower and setting forth (i) the information and
computations (in sufficient detail) to establish compliance with all financial
covenants at the end of the period covered by the financial statements then
being furnished and (ii) whether there existed as of the date of such financial
statements and whether there exists as of the date of the certificate, any
default under this Agreement applicable to the party submitting the information
and, if any such default exists, specifying the nature thereof and the action
the party is taking and proposes to take with respect thereto.

 

(h)

A borrowing base certificate setting forth the amount of Acceptable Receivables
and Acceptable Inventory as of the last day of each month within 25 days after
the period end and, upon the Bank's request, copies of the invoices or the
record of invoices from the Borrower's sales journal for such Acceptable
Receivables, copies of the delivery receipts, purchase orders, shipping
instructions, bills of lading and other documentation pertaining to such
Acceptable Receivables, and copies of the cash receipts journal pertaining to
the borrowing base certificate.

 

(i)

A detailed aging of the Borrower’s receivables by invoice or a summary aging by
account debtor, as specified by the Bank, within 25 days after the end of each
month.

 

(j)

A summary aging by vendor of accounts payable within 25 days after the end of
each month.

 

(k)

If the Bank requires the Borrower to deliver the proceeds of accounts receivable
to the Bank upon collection by the Borrower, a schedule of the amounts so
collected and delivered to the Bank.

 

(l)

An inventory listing within 25 days after the end of each month. The listing
must include a description of the inventory, its location and cost, and such
other information as the Bank may require.

 

(m)

Copies of all letters of credit issued in support of the Borrower’s accounts
receivable.

 

(n)

Promptly upon the Bank's request, such other books, records, statements, lists
of property and accounts, budgets, forecasts or reports as to any Related Party
and as to any other Obligor as the Bank may request.

 

7.3

Tangible Net Worth.

 

To maintain on a consolidated basis with the Related Parties Tangible Net Worth
equal to at least Four Million Dollars ($4,000,000).

 

"Tangible Net Worth" means the value of total assets (including leaseholds and
leasehold improvements and reserves against assets but excluding goodwill,
patents, trademarks, trade names, organization expense, unamortized debt
discount and expense, capitalized or deferred research and development costs,
deferred marketing expenses, and other like intangibles, and monies due from
affiliates, officers, directors, employees, shareholders, members or managers)
less total liabilities, including but not limited to accrued and deferred income
taxes, but excluding the non-current portion of Subordinated Liabilities.

 

“Subordinated Liabilities” means liabilities subordinated to the Borrower’s
obligations to the Bank in a manner acceptable to the Bank in its sole
discretion.

 

14

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7.4

Basic Fixed Charge Coverage Ratio.

 

To maintain on a consolidated basis with the Related Parties a Basic Fixed
Charge Coverage Ratio of at least 1.20:1.0.

 

"Basic Fixed Charge Coverage Ratio" means the ratio of (a) the sum of EBITDA
minus maintenance capital expenditures (which shall be deemed to be $1,250,000),
minus cash income tax, minus dividends, withdrawals, and other distributions, to
(b) the sum of interest expense, lease expense, rent expense, the current
portion of long term debt and the current portion of capitalized lease
obligations.

 

"EBITDA" means net income, less income or plus loss from discontinued operations
and extraordinary items, plus income taxes, plus interest expense, plus
depreciation, depletion, and amortization.

 

This ratio will be calculated at the end of each reporting period for which the
Bank requires financial statements, using the results of the twelve-month period
ending with that reporting period. The current portion of long-term liabilities
will be measured as of the date twelve (12) months prior to the current
financial statement.

 

7.5

Dividends and Distributions.

 

Not to declare or pay any dividends, redemptions of stock or membership
interests, distributions and withdrawals (as applicable) to its owners, except:

 

(a)

dividends payable in capital stock; and

 

(b)

from earnings available for such purposes and earned during the immediately
preceding fiscal year, and in any event, not in excess of Five Million Dollars
($5,000,000) per fiscal year in the aggregate.

 

7.6

Bank as Principal Depository.

 

To maintain the Bank or one of its affiliates as its principal depository bank,
including for the maintenance of business, cash management, operating and
administrative deposit accounts.

 

7.7

Other Debts.

 

Not to have outstanding or incur any direct or contingent liabilities or lease
obligations (other than those to the Bank or to any affiliate of the Bank), or
become liable for the liabilities of others, without the Bank's written consent.
This does not prohibit:

 

(a)

Acquiring goods, supplies, or merchandise on normal trade credit.

 

(b)

Liabilities, lines of credit and leases in existence on the date of this
Agreement disclosed in writing to the Bank in the Borrower's most recent
financial statement.

 

(c)

Additional debts and lease obligations for the acquisition of fixed assets, to
the extent permitted elsewhere in this Agreement.

 

(d)

Additional debts and lease obligations for business purposes which do not exceed
a total principal amount of One Million Dollars ($1,000,000) outstanding at any
one time.

 

7.8

Other Liens.

 

Not to create, assume, or allow any security interest, hypothec or lien
(including judicial liens) on property any Related Party now or later owns
without the Bank's written consent. This does not prohibit:

 

(a)

Liens and security interests in favor of the Bank or any affiliate of the Bank.

 

15

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(b)

Liens for taxes not yet due.

 

(c)

Liens outstanding on the date of this Agreement disclosed in writing to the
Bank.

 

(d)

Additional purchase money security interests in assets acquired after the date
of this Agreement, if the total principal amount of debts secured by such liens
does not exceed One Million Dollars ($1,000,000) at any one time.

 

7.9

Maintenance of Assets.

 

(a)

Not to sell, assign, lease, transfer or otherwise dispose of any part of any
Related Party’s business or any Related Party’s assets except inventory sold in
the ordinary course of such Related Party’s business.

 

(b)

Not to sell, assign, lease, transfer or otherwise dispose of any assets for less
than fair market value, or enter into any agreement to do so.

 

(c)

Not to enter into any sale and leaseback agreement covering any of its fixed
assets.

 

(d)

To maintain and preserve all rights, privileges, and franchises any Related
Party now has.

 

(e)

To make any repairs, renewals, or replacements to keep each Related Party’s
properties in good working condition.

 

(f)

To execute and deliver such documents as the Bank deems necessary to create,
perfect and continue the security interests contemplated by this Agreement.

 

7.10

Investments.

 

Not to have any existing, or make any new, investments in any individual or
entity, or make any capital contributions or other transfers of assets to any
individual or entity, except for:

 

(a)

Existing investments disclosed to the Bank in writing prior to the date of this
Agreement.

 

(b)

Investments in any of the following:

 

 

(i)

certificates of deposit;

 

 

(ii)

U.S. treasury bills and other obligations of the federal government;

 

 

(iii)

readily marketable securities (including commercial paper, but excluding
restricted stock and stock subject to the provisions of Rule 144 of the
Securities and Exchange Commission).

 

(c)

Investments in the Borrower.

 

(d)

Investments that, together with loans, advances and other extensions of credit
made pursuant to Section 7.13(d), do not exceed an aggregate amount of Three
Million Dollars ($3,000,000) outstanding at any one time.

 

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7.11

Loans.

 

Not to make any loans, advances or other extensions of credit to any individual
or entity, except for:

 

(a)

Existing extensions of credit disclosed to the Bank in writing prior to the date
of this Agreement.

 

(b)

Extensions of credit to the Borrower.

 

(c)

Extensions of credit in the nature of accounts receivable or notes receivable
arising from the sale or lease of goods or services in the ordinary course of
business to non-affiliated entities.

 

(d)

Extensions of credit that, together with investments, capital contributions and
other transfers of assets made pursuant to Section 7.12(d), do not exceed an
aggregate amount of Three Million Dollars ($3,000,000) outstanding at any one
time.

 

7.12

Change of Management.

 

Not to make any substantial change in the present executive or management
personnel of the Borrower.

 

7.13

Change of Ownership.

 

Not to cause, permit, or suffer any change in capital ownership such that any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of such
person or its subsidiaries, and any person or entity acting in its capacity as
trustee, agent or other fiduciary or administrator of any such plan) becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, except that a person or group shall be deemed to have
“beneficial ownership” of all capital stock that such person or group has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time (such right, an “option right”)), directly or indirectly, of
35% or more of the capital stock of CUI-Global entitled to vote for members of
the board of directors of CUI-Global on a fully diluted basis (and taking into
account all such securities that such person or group has the right to acquire
pursuant to any option right).

 

Not to cause, permit, or suffer any change in capital ownership such that
CUI-Global ceases to own and control one hundred percent (100%) in the direct or
indirect capital ownership of CUI, CUI-Canada or CUI-Japan.

 

7.14

Additional Negative Covenants.

 

Not to, without the Bank's written consent:

 

(a)

Enter into any consolidation, merger, amalgamation, or other combination, or
become a partner in a partnership, a member of a joint venture, or a member of a
limited liability company.

 

(b)

Acquire or purchase a business or its assets.

 

(c)

Engage in any business activities substantially different from the Related
Parties’ present business.

 

(d)

Liquidate or dissolve any Related Party’s business.

 

(e)

Voluntarily suspend its business.

 

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7.15

Notices to Bank.

 

To promptly notify the Bank in writing of:

 

(a)

Any event of default under this Agreement, or any event which, with notice or
lapse of time or both, would constitute an event of default.

 

(b)

Any change in any Obligor’s name, legal structure, place of business, or chief
executive office if the Obligor has more than one place of business.

 

 

7.16

Insurance.

 

(a)

General Business Insurance. To maintain insurance satisfactory to the Bank as to
amount, nature and carrier covering property damage (including loss of use and
occupancy) to any of the Borrower’s properties, business interruption insurance,
public liability insurance including coverage for contractual liability, product
liability and workers' compensation, and any other insurance which is usual for
such Borrower’s business. Each policy shall include a cancellation clause in
favor of the Bank.

 

(b)

Insurance Covering Collateral. To maintain all risk property damage insurance
policies (including without limitation windstorm coverage, flood coverage, and
hurricane coverage as applicable) covering the tangible property comprising the
collateral. Each insurance policy must be in an amount acceptable to the Bank.
The insurance must be issued by an insurance company acceptable to the Bank and
must include a lender's loss payable endorsement in favor of the Bank in a form
acceptable to the Bank.

 

(c)

Evidence of Insurance. Upon the request of the Bank, to deliver to the Bank a
copy of each insurance policy, or, if permitted by the Bank, a certificate of
insurance listing all insurance in force.

 

 

7.17

Compliance with Laws.

 

To comply with the requirements of all laws and all orders, writs, injunctions
and decrees applicable to it or to its business or property, except in such
instances in which (a) such requirement of law or order, writ, injunction or
decree is being contested in good faith by appropriate proceedings diligently
conducted; or (b) the failure to comply therewith could not reasonably be
expected to cause a material adverse change in any Related Party’s business
condition (financial or otherwise), operations or properties, or ability to
repay the credit, or, in the case of the Controlled Substances Act, result in
the forfeiture of any material property of any Related Party.

 

 

7.18

Books and Records.

 

To maintain adequate books and records, including complete and accurate records
regarding all Collateral.

 

 

7.19

Audits; Field Exam.

 

To allow the Bank and its agents to inspect the Obligors’ properties and
examine, audit, and make copies of books and records at any time. If any of the
Obligors’ properties, books or records are in the possession of a third party,
the Borrower authorizes that third party to permit the Bank or its agents to
have access to perform inspections or audits and to respond to the Bank's
requests for information concerning such properties, books and records. Without
limiting the foregoing, at the expense of the Borrower, the Bank shall be
permitted to conduct an annual field exam in respect of the Borrower’s inventory
and accounts receivable.

 

 

7.20

Perfection of Liens.

 

To help the Bank perfect and protect its security interests and liens, and
reimburse it for related costs it incurs to protect its security interests and
liens.

 

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7.21

Cooperation.

 

To take any action reasonably requested by the Bank to carry out the intent of
this Agreement.

 

7.22

Patriot Act; Beneficial Ownership Regulation.

 

Promptly following any request therefor, to provide information and
documentation reasonably requested by the Bank for purposes of compliance with
applicable “know your customer” and anti-money-laundering rules and regulations,
including, without limitation, the PATRIOT Act, the Proceeds of Crime (Money
Laundering) and Terrorist Financing Act (Canada), and the Beneficial Ownership
Regulation.

 

 

7.23

Subsidiary Guaranties and Collateral.

 

(a)

Guarantors. The Borrower will cause each of its domestic subsidiaries whether
newly formed, after acquired or otherwise existing to promptly (and in any event
within thirty (30) days after such subsidiary is formed or acquired (or such
longer period of time as agreed to by the Bank in its reasonable discretion))
become a Guarantor hereunder by way of execution of a guaranty, in form and
substance satisfactory to the Bank. In connection therewith, the Borrower shall
give notice to the Bank not less than ten (10) days prior to the creation of a
subsidiary (or such shorter period of time as agreed to by the Bank in its
reasonable discretion), or acquiring the equity interests of any other person.
In connection with the foregoing, the Borrower shall deliver to the Bank, with
respect to each new Guarantor, such other documents and agreements as reasonably
required by the Bank, including, without limitation, resolutions, organizational
documents and incumbency certificates with respect to such new Guarantor.

 

(b)

Collateral. The Borrower will cause each Guarantor’s tangible and intangible
personal property now owned or hereafter acquired by it to be subject at all
times to a first priority, perfected lien (subject to liens permitted hereunder)
in favor of the Bank to secure the obligations incurred under this Agreement or
otherwise in connection with this Agreement or any guaranty hereof. The Borrower
shall provide opinions of counsel and any filings and deliveries reasonably
necessary in connection therewith to perfect the security interests therein, all
in form and substance reasonably satisfactory to the Bank.

 

(c)

Further Assurances. At any time upon request of the Bank, promptly execute and
deliver any and all further instruments and documents and take all such other
action as the Bank may deem necessary or desirable to maintain in favor of the
Bank, liens and insurance rights on the collateral required to be delivered
hereby that are duly perfected in accordance with the requirements hereof, all
other documents executed in connection herewith and all applicable laws.

 

 

8.

default and remedies

 

If any of the following events of default occurs, the Bank may do one or more of
the following without prior notice except as required by law or expressly agreed
in writing by Bank: declare the Borrower in default, stop making any additional
credit available to the Borrower, and require the Borrower to repay its entire
debt immediately. If an event which, with notice or the passage of time, will
constitute an event of default has occurred and is continuing, the Bank has no
obligation to make advances or extend additional credit under this Agreement. In
addition, if any event of default occurs, the Bank shall have all rights, powers
and remedies available under any instruments and agreements required by or
executed in connection with this Agreement, as well as all rights and remedies
available at law or in equity. If an event of default occurs under the paragraph
entitled “Bankruptcy/Receivers,” below with respect to any Obligor, then the
entire debt outstanding under this Agreement will automatically be due
immediately.

 

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8.1

Failure to Pay.

 

The Borrower fails to make a payment under this Agreement when due.

 

 

8.2

Other Bank Agreements.

 

(i) Any default occurs under any other document executed or delivered in
connection with this Agreement, including without limitation, any note,
guaranty, subordination agreement, mortgage or other collateral agreement, (ii)
any Obligor purports to revoke or disavow any guaranty or collateral agreement
provided in connection with this Agreement; (iii) any representation or warranty
made by any Obligor is false when made or deemed to be made; or (iv) any default
occurs under any other agreement the Borrower (or any Obligor) or any of the
Borrower's related entities or affiliates has with the Bank or any affiliate of
the Bank.

 

 

8.3

Cross-default.

 

Any default occurs under any agreement in connection with any credit any Obligor
or any of the Borrower's related entities or affiliates has obtained from anyone
else or which any Obligor or any of the Borrower's related entities or
affiliates has guaranteed.

 

 

8.4

False Information.

 

The Borrower or any other Obligor has given the Bank false or misleading
information or representations.

 

 

8.5

Bankruptcy/Receivers.

 

Any Obligor or any general partner of any Obligor files a bankruptcy petition, a
bankruptcy petition is filed against any of the foregoing parties or any other
proceeding under applicable law is commenced seeking to adjudicate it a bankrupt
or an insolvent, or any Obligor, or any general partner of any Obligor makes a
general assignment for the benefit of creditors; makes a proposal to its
creditors or files notice of its intention to do so, institutes any other
proceeding under applicable law seeking to adjudicate it a bankrupt or an
insolvent, or seeking liquidation, dissolution, winding-up, reorganization,
compromise, arrangement, adjustment, protection, moratorium, relief, stay of
proceedings of creditors, composition of it or its debts or any other similar
relief; or a receiver or similar official is appointed for a substantial portion
of any Obligor's business; or the business is terminated, or such Obligor is
liquidated or dissolved.

 

 

8.6

Lien Priority.

 

The Bank fails to have an enforceable first lien (except for any prior liens to
which the Bank has consented in writing) on or security interest in any property
given as security for this Agreement (or any guaranty).

 

 

8.7

Judgments.

 

Any judgments or arbitration awards are entered against any Related Party or
other Obligor in an aggregate amount of Two Hundred Fifty Thousand Dollars
($250,000) or more.

 

 

8.8

Material Adverse Change.

 

A material adverse change occurs, or is reasonably likely to occur, in any
Obligor's business condition (financial or otherwise), operations or properties,
or ability to repay its obligations as contemplated hereunder or under any
document executed in connection with this Agreement.

 

 

8.9

Government Action.

 

Any government authority takes action that the Bank believes materially
adversely affects any Obligor's financial condition or ability to repay.

 

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8.10

ERISA Plans.

 

A reportable event occurs under Section 4043(c) of ERISA, or any Plan
termination (or commencement of proceedings to terminate a Plan) or the full or
partial withdrawal from a Plan under Section 4041 or 4042 of ERISA occurs;
provided such event or events could reasonably be expected, in the judgment of
the Bank, to have a material adverse effect.

 

 

8.11

Covenants.

 

Any default in the performance of or compliance with any obligation, agreement
or other provision contained in this Agreement (other than those specifically
described as an event of default in this Article).

 

8.12

Forfeiture.

 

A judicial or nonjudicial forfeiture or seizure proceeding is commenced by a
government authority and remains pending with respect to any property of any
Obligor or any part thereof, on the grounds that the property or any part
thereof had been used to commit or facilitate the commission of a criminal
offense by any person, including any tenant, pursuant to any law, including
under the Controlled Substances Act or the Civil Asset Forfeiture Reform Act,
regardless of whether or not the property shall become subject to forfeiture or
seizure in connection therewith.

 

 

9.

enforcing this agreement; miscellaneous

 

 

9.1

GAAP.

 

Except as otherwise stated in this Agreement, all financial information provided
to the Bank and all financial covenants will be made under generally accepted
accounting principles, consistently applied; provided, however, leases shall
continue to be classified and accounted for on a basis consistent with that
reflected in the financial statements of the Borrower for the most recently
ended fiscal year prior to the date of this Agreement for all purposes of this
Agreement, notwithstanding any change in GAAP relating thereto, unless the
parties hereto shall enter into a mutually acceptable amendment addressing such
changes.

 

 

9.2

Governing Law.

 

Except to the extent that any law of the United States may apply, this Agreement
shall be governed and interpreted according to the laws of New York (the
“Governing Law State”), without regard to any choice of law, rules or principles
to the contrary. Nothing in this paragraph shall be construed to limit or
otherwise affect any rights or remedies of the Bank under federal law.

 

9.3

Venue and Jurisdiction.

 

The Borrower agrees that any action or suit against the Bank arising out of or
relating to this Agreement shall be filed in federal court or state court
located in the Governing Law State. The Borrower agrees that the Bank shall not
be deemed to have waived its rights to enforce this section by filing an action
or suit against the Borrower or any Obligor in a venue outside of the Governing
Law State. If the Bank does commence an action or suit arising out of or
relating to this Agreement, the Borrower agrees that the case may be filed in
federal court or state court in the Governing Law State. The Bank reserves the
right to commence an action or suit in any other jurisdiction where any
Borrower, any other Obligor, or any Collateral has any presence or is located.
The Borrower consents to personal jurisdiction and venue in such forum selected
by the Bank and waives any right to contest jurisdiction and venue and the
convenience of any such forum. The provisions of this section are material
inducements to the Bank’s acceptance of this Agreement.

 

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9.4

Successors and Assigns.

 

This Agreement is binding on the Borrower's and the Bank's successors and
assignees. The Borrower agrees that it may not assign this Agreement without the
Bank's prior consent. The Bank may sell participations in or assign this loan
and the related loan documents, and may exchange information about the Borrower
and any other Obligor (including, without limitation, any information regarding
any hazardous substances) with actual or potential participants or assignees. If
a participation is sold or the loan is assigned, the purchaser will have the
right of set-off against the Borrower.

 

 

9.5

Waiver of Jury Trial.

 

EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (b)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER DOCUMENTS CONTEMPLATED HEREBY BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION AND (c) CERTIFIES
THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE.

 

 

9.6

Waiver of Class Actions.

 

The terms “Claim” or “Claims” refer to any disputes, controversies, claims,
counterclaims, allegations of liability, theories of damage, or defenses between
Bank of America, N.A., its subsidiaries and affiliates, on the one hand, and the
other parties to this Agreement, on the other hand (all of the foregoing each
being referred to as a “Party” and collectively as the “Parties”). Whether in
state court, federal court, or any other venue, jurisdiction, or before any
tribunal, the Parties agree that all aspects of litigation and trial of any
Claim will take place without resort to any form of class or representative
action. Thus the Parties may only bring Claims against each other in an
individual capacity and waive any right they may have to do so as a class
representative or a class member in a class or representative action. THIS CLASS
ACTION WAIVER PRECLUDES ANY PARTY FROM PARTICIPATING IN OR BEING REPRESENTED IN
ANY CLASS OR REPRESENTATIVE ACTION REGARDING A CLAIM.

 

 

9.7

Severability; Waivers.

 

If any part of this Agreement is not enforceable, the rest of the Agreement may
be enforced. The Bank retains all rights, even if it makes a loan after default.
If the Bank waives a default, it may enforce a later default. Any consent or
waiver under this Agreement must be in writing.

 

 

9.8

Expenses.

 

(a)

The Borrower shall pay to the Bank immediately upon demand the full amount of
all payments, advances, charges, costs and expenses, including reasonable
attorneys' fees, expended or incurred by the Bank in connection with (i) the
negotiation and preparation of this Agreement and any related agreements, the
Bank's continued administration of this Agreement and such related agreements,
and the preparation of any amendments and waivers related to this Agreement or
such related agreements, (ii) filing, recording and search fees, appraisal fees,
field examination fees, title report fees, and documentation fees with respect
to any collateral and books and records of the Borrower or any other Obligor,
(iii) the Bank's costs or losses arising from any changes in law which are
allocated to this Agreement or any credit outstanding under this Agreement, and
(iv) costs or expenses required to be paid by the Borrower or any other Obligor
that are paid, incurred or advanced by the Bank.

 

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(b)

The Borrower will indemnify and hold the Bank harmless from any loss, liability,
damages, judgments, and costs of any kind relating to or arising directly or
indirectly out of (i) this Agreement or any document required hereunder, (ii)
any credit extended or committed by the Bank to the Borrower hereunder, (iii)
any claim, whether well-founded or otherwise, that there has been a failure to
comply with any law regulating the Borrower's sales or leases to or performance
of services for debtors obligated upon the Borrower's accounts receivable and
disclosures in connection therewith, and (iv) any litigation or proceeding
related to or arising out of this Agreement, any such document, any such credit,
or any such claim, including, without limitation, any act resulting from the
Bank complying with instructions the Bank reasonably believes are made by any
Authorized Individual. This paragraph will survive this Agreement's termination,
and will benefit the Bank and its officers, employees, and agents.

 

(c)

The Borrower shall reimburse the Bank for any reasonable costs and attorneys'
fees incurred by the Bank in connection with (a) the enforcement or preservation
of the Bank's rights and remedies and/or the collection of any obligations of
the Borrower which become due to the Bank and in connection with any "workout"
or restructuring, and (b) the prosecution or defense of any action in any way
related to this Agreement, the credit provided hereunder or any related
agreements, including without limitation, any action for declaratory relief,
whether incurred at the trial or appellate level, in an arbitration proceeding
or otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by the Bank or any other person) relating to
the Borrower or any other person or entity.

 

 

9.9

Joint and Several Liability.

 

(a)

Each Borrower agrees that it is jointly and severally liable to the Bank for the
payment of all obligations arising under this Agreement, and that such liability
is independent of the obligations of the other Borrower(s). Each obligation,
promise, covenant, representation and warranty in this Agreement shall be deemed
to have been made by, and be binding upon, each Borrower, unless this Agreement
expressly provides otherwise. The Bank may bring an action against any Borrower,
whether an action is brought against the other Borrower(s).

 

(b)

Each Borrower agrees that any release which may be given by the Bank to the
other Borrower(s) or any other Obligor will not release such Borrower from its
obligations under this Agreement.

 

(c)

Each Borrower waives any right to assert against the Bank any defense, setoff,
counterclaim, or claims which such Borrower may have against the other
Borrower(s) or any other party liable to the Bank for the obligations of the
Borrowers under this Agreement.

 

(d)

Each Borrower waives any defense by reason of any other Borrower’s or any other
person's defense, disability, or release from liability. The Bank can exercise
its rights against each Borrower even if any other Borrower or any other person
no longer is liable because of a statute of limitations or for other reasons.

 

(e)

Each Borrower agrees that it is solely responsible for keeping itself informed
as to the financial condition of the other Borrower(s) and of all circumstances
which bear upon the risk of nonpayment. Each Borrower waives any right it may
have to require the Bank to disclose to such Borrower any information which the
Bank may now or hereafter acquire concerning the financial condition of the
other Borrower(s).

 

(f)

Each Borrower waives all rights to notices of default or nonperformance by any
other Borrower under this Agreement. Each Borrower further waives all rights to
notices of the existence or the creation of new indebtedness by any other
Borrower and all rights to any other notices to any party liable on any of the
credit extended under this Agreement.

 

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(g)

The Borrowers represent and warrant to the Bank that each will derive benefit,
directly and indirectly, from the collective administration and availability of
credit under this Agreement. The Borrowers agree that the Bank will not be
required to inquire as to the disposition by any Borrower of funds disbursed in
accordance with the terms of this Agreement.

 

(h)

Until all obligations of the Borrowers to the Bank under this Agreement have
been paid in full and any commitments of the Bank or facilities provided by the
Bank under this Agreement have been terminated, each Borrower waives any right
of subrogation, reimbursement, indemnification and contribution (contractual,
statutory or otherwise), which such Borrower may now or hereafter have against
any other Borrower with respect to the indebtedness incurred under this
Agreement.

 

(i)

Each Borrower waives any right to require the Bank to proceed against any other
Borrower or any other person; proceed against or exhaust any security; or pursue
any other remedy. Further, each Borrower consents to the taking of, or failure
to take, any action which might in any manner or to any extent vary the risks of
the Borrowers under this Agreement or which, but for this provision, might
operate as a discharge of the Borrowers.

 

9.10

Set-Off.

 

Upon and after the occurrence of an event of default under this Agreement, (a)
the Borrower hereby authorizes the Bank at any time without notice and whether
or not the Bank shall have declared any amount owing by the Borrower to be due
and payable, to set off against, and to apply to the payment of, the Borrower’s
indebtedness and obligations to the Bank under this Agreement and all related
agreements, whether matured or unmatured, fixed or contingent, liquidated or
unliquidated, any and all amounts owing by the Bank to the Borrower, and in the
case of deposits, whether general or special (except trust and escrow accounts),
time or demand and however evidenced, and (b) pending any such action, to hold
such amounts as collateral to secure such indebtedness and obligations of the
Borrower to the Bank and to return as unpaid for insufficient funds any and all
checks and other items drawn against any deposits so held as the Bank, in its
sole discretion, may elect. The Borrower hereby grants to the Bank a security
interest in all deposits and accounts maintained with the Bank to secure the
payment of all such indebtedness and obligations of the Borrower to the Bank.

 

 

9.11

One Agreement.

 

This Agreement and any related security or other agreements required by this
Agreement constitute the entire agreement between the Borrower and the Bank with
respect to each credit subject hereto and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. In the event of any conflict between this Agreement and any other
agreements required by this Agreement, this Agreement will prevail.

 

 

9.12

Notices.

 

Unless otherwise provided in this Agreement or in another agreement between the
Bank and the Borrower, all notices required under this Agreement shall be
personally delivered or sent by first class mail, postage prepaid, or by
overnight courier, to the addresses on the signature page of this Agreement, or
sent by facsimile to the fax number(s) listed on the signature page, or to such
other addresses as the Bank and the Borrower may specify from time to time in
writing. Notices and other communications shall be effective (i) if mailed, upon
the earlier of receipt or five (5) days after deposit in the U.S. mail, first
class, postage prepaid, (ii) if telecopied, when transmitted, or (iii) if
hand-delivered, by courier or otherwise (including telegram, lettergram or
mailgram), when delivered.

 

 

9.13

Headings.

 

Article and paragraph headings are for reference only and shall not affect the
interpretation or meaning of any provisions of this Agreement.

 

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9.14

Counterparts.

 

This Agreement may be executed in any number of counterparts, each of which,
when so executed, shall be deemed to be an original, and all of which when taken
together shall constitute one and the same Agreement. Delivery of an executed
counterpart of this Agreement (or of any agreement or document required by this
Agreement and any amendment to this Agreement) by telecopy or other electronic
imaging means shall be as effective as delivery of a manually executed
counterpart of this Agreement; provided, however, that the telecopy or other
electronic image shall be promptly followed by an original if required by the
Bank.

 

 

9.15

Borrower/Obligor Information; Reporting to Credit Bureaus.

 

The Borrower authorizes the Bank at any time to verify or check any information
given by the Borrower to the Bank, check the Borrower’s credit references,
verify employment, and obtain credit reports and other credit bureau information
from time to time in connection with the administration, servicing and
collection of the loans under this Agreement. The Borrower agrees that the Bank
shall have the right at all times to disclose and report to credit reporting
agencies and credit rating agencies such information pertaining to the Borrower
and all other Obligors as is consistent with the Bank's policies and practices
from time to time in effect.

 

9.16

Customary Advertising Material.

 

The Borrower consents to the publication by the Bank of customary advertising
material relating to the transactions contemplated hereby using the name,
product photographs, logo or trademark of the Borrower.

 

9.17

Amendments.

 

This Agreement may be amended or modified only in writing signed by each party
hereto.

 

9.18

Disposition of Schedules and Reports.

 

The Bank will not be obligated to return any schedules, invoices, statements,
budgets, forecasts, reports or other papers delivered by the Borrower. The Bank
will destroy or otherwise dispose of such materials at such time as the Bank, in
its discretion, deems appropriate.

 

9.19

Returned Merchandise.

 

Until the Bank exercises its rights to collect the accounts receivable as
provided under any security agreement required under this Agreement, the
Borrower may continue its present policies for returned merchandise and
adjustments. Credit adjustments with respect to returned merchandise shall be
made immediately upon receipt of the merchandise by the Borrower or upon such
other disposition of the merchandise by the debtor in accordance with the
Borrower's instructions. If a credit adjustment is made with respect to any
Acceptable Receivable, the amount of such adjustment shall no longer be included
in the amount of such Acceptable Receivable in computing the Borrowing Base.

 

9.20

Verification of Receivables.

 

The Bank may at any time, either orally or in writing, request confirmation from
any debtor of the current amount and status of the accounts receivable upon
which such debtor is obligated.

 

9.21

Waiver of Confidentiality.

 

The Borrower authorizes the Bank to discuss the Borrower's financial affairs and
business operations with any accountants, auditors, business consultants, or
other professional advisors employed by the Borrower, and authorizes such
parties to disclose to the Bank such financial and business information or
reports (including management letters) concerning the Borrower as the Bank may
request.

 

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9.22

Statutory Notice Oregon.

 

Under Oregon law, most agreements, promises and commitments made by the Bank
concerning loans and other credit extensions which are not for personal, family
or household purposes or secured solely by any Borrower's residence must be in
writing, express consideration and be signed by us to be enforceable.

 

9.23

Limitation of Interest and Other Charges.

 

If, at any time, the rate of interest, together with all amounts which
constitute interest and which are reserved, charged or taken by the Bank as
compensation for fees, services or expenses incidental to the making,
negotiating or collection of the loan evidenced hereby, shall be deemed by any
competent court of law, governmental agency or tribunal to exceed the maximum
rate of interest permitted to be charged by the Bank to the Borrower under
applicable law (including without limitation, the Criminal Code (Canada)), then,
during such time as such rate of interest would be deemed excessive, that
portion of each sum paid attributable to that portion of such interest rate that
exceeds the maximum rate of interest so permitted shall be deemed a voluntary
prepayment of principal. As used herein, the term “applicable law” shall mean
the law in effect as of the date hereof; provided, however, that in the event
there is a change in the law which results in a higher permissible rate of
interest, then this Agreement shall be governed by such new law as of its
effective date.

 

9.24

Currency Indemnity.

 

If a judgment or order is rendered by any court or tribunal for the payment of
any amount owing to the Bank under this Agreement or for the payment of damages
in respect of any breach of this Agreement, or under or in respect of a judgment
or order of another court or tribunal for the payment of those amounts or
damages, and the judgment or order is expressed in a currency (the "Judgment
Currency") except the currency payable under this Agreement (the "Agreed
Currency"), the party against whom the judgment or order is made shall indemnify
and hold the Bank harmless against any deficiency in terms of the Agreed
Currency in the amounts received by the Bank arising or resulting from any
variation as between (a) the actual rate of exchange at which the Agreed
Currency is converted into the Judgment Currency for the purposes of the
judgment or order, and (b) the actual rate of exchange at which the Bank is able
to purchase the Agreed Currency with the amount of the Judgment Currency
actually received by the Bank on the date of receipt. The indemnity in this
Section shall constitute a separate and independent obligation from the other
obligations of the Borrower under this Agreement.

 

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Signature Page 

 

The Borrower executed this Agreement as of the date stated at the top of the
first page, intending to create an instrument executed under seal.

 

Borrowers:

 

CUI, Inc.

 

 

By: __/s/ Daniel N. Ford______________________________ (Seal)

Name: Daniel N. Ford

Title: CFO

 

CUI-Canada, Inc.

 

 

By: __/s/ Daniel N. Ford______________________________ (Seal)

Name: Daniel N. Ford

Title: CFO

 

Address where notices to

the Borrower are to be sent:

 

20050 SW 112th Ave.

Tualatin, OR 97062

 

Telephone: (503) 612-2300

 

 

Bank:

 

Bank of America, N.A.

 

 

By: _/s/ Michael W. Snook____________________________

Michael W. Snook, Senior Vice President

 

Address where notices to

the Bank are to be sent:

 

Bank of America

NC1-001-05-13

One Independence Center

101 North Tryon Street

Charlotte, NC 28255-0001

 

 

Prepared by: Moore & Van Allen PLLC

 

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USA Patriot Act Notice.

 

Federal law requires Bank of America, N.A. (the “Bank”) to provide the following
notice. The notice is not part of the foregoing agreement or instrument and may
not be altered. Please read the notice carefully.

 

(1)     USA PATRIOT ACT NOTICE

 

Federal law requires all financial institutions to obtain, verify and record
information that identifies each person who opens an account or obtains a loan.
The Bank will ask for the Borrower’s legal name, address, tax ID number or
social security number and other identifying information. The Bank may also ask
for additional information or documentation or take other actions reasonably
necessary to verify the identity of the Borrower, guarantors or other related
persons.

 

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 SCHEDULE A

 

FEES

 

(a)

Loan Fee.

 

The Borrower agrees to pay a loan fee in the amount of Xxxxxx ($Xxxxxx). This
fee is due on the date of this Agreement.

 

(b)

Waiver Fee.

 

If the Bank, at its discretion, agrees to waive or amend any terms of this
Agreement, the Borrower will, at the Bank's option, pay the Bank a fee for each
waiver or amendment in an amount advised by the Bank at the time the Borrower
requests the waiver or amendment. Nothing in this paragraph shall imply that the
Bank is obligated to agree to any waiver or amendment requested by the Borrower.
The Bank may impose additional requirements as a condition to any waiver or
amendment.

 

(c)

Late Fee.

 

To the extent permitted by law, the Borrower agrees to pay a late fee in an
amount not to exceed four percent (4%) of any payment that is more than fifteen
(15) days late. The imposition and payment of a late fee shall not constitute a
waiver of the Bank’s rights with respect to the default.

 

(d)

Returned Payment Fee.

 

The Bank, in its discretion, may collect from the Borrower a returned payment
fee each time a payment is returned or if there are insufficient funds in the
designated account when a payment is attempted through automatic payment.

 

(e)

Unused Commitment Fee.

 

The Borrower agrees to pay a fee on any difference between the Credit Limit and
the amount of credit it actually uses, determined by the daily amount of credit
outstanding during the specified period. The fee will be calculated at 0.25% per
year. This fee is due on April 30, 2019, and on the last day of each following
month until the expiration of the availability period.

 

29