Exhibit 10.03
FIRST AMENDED AND RESTATED LINE OF CREDIT
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LOAN AND SECURITY AGREEMENT
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THIS FIRST AMENDED AND RESTATED LINE OF CREDIT LOAN AND SECURITY AGREEMENT,
dated April 4, 1996, by and between VIVID TECHNOLOGIES, INC., a Massachusetts
corporation with a principal place of business in Woburn, Massachusetts (the
"Borrower") and BAYBANK, N.A., a federally chartered bank with its head office
in Boston, Massachusetts (the "Lender").
W I T N E S S E T H:
BACKGROUND. The Borrower, pursuant to a Line of Credit Loan and Security
Agreement dated May 23, 1995 (the "1995 Agreement"), has entered into a
revolving loan facility with the Lender. The Borrower has requested the Lender
to increase its borrowing availability, lend it up to $3,000,000.00 on a
revolving loan basis (the "Loan") and to make certain other amendments to the
1995 Agreement. The Lender is willing to accommodate the Borrower's requests
upon the terms and conditions hereinafter set forth.
This Agreement amends and restates the 1995 Agreement.
NOW, THEREFORE, in consideration of the premises herein contained, and each
intending to be legally bound hereby, the parties agree as follows:
ARTICLE 1. DEFINITIONS
As used herein:
1.01 "Accounts," "Chattel Paper," "Contracts," "Documents," "Equipment,"
"Fixtures," "General Intangibles," "Goods," "Instruments," and "Inventory" shall
have the same respective meanings as are given to those terms in the Uniform
Commercial Code as presently adopted and in effect in the Commonwealth of
Massachusetts.
1.02 "Affiliate" means, as to any Person, each other Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
under common control with, such Person or is a related entity (including, but
not limited to,
partnerships, joint ventures, joint stock companies, corporations) to the
Borrower.
1.03 "Agreement" means this First Amended and Restated Line of Credit Loan
and Security Agreement, as the same may from time to time be amended or
supplemented.
1.04 "Availability Date" means February 28, 1997. The Availability Date
may be extended by the Lender at its sole discretion.
1.05 "Borrowing Availability" means the amount which is equal at any given
time to the total of (1) the Borrowing Base, less (2) the aggregate amount of
all Disbursements then outstanding together with interest at the Rate, as
defined in Section 2.05 hereof.
1.06 "Borrowing Base" means a maximum credit availability of $3,000,000.00,
pursuant to the Loan. At no time shall the Borrowing Base exceed $3,000,000.00.
1.07 "Business Day" means a day on which the Federal Reserve Bank of New
York is open for business.
1.08 "Closing" has the meaning given to such term in Section 3.01.
1.09 "Collateral" has the meaning given to such term in Section 4.01.
1.10 "Collateral Documents" means the UCC Financing Statements specified in
Section 3.01(C) and the documents, whether deliverable at or after the Closing,
required under Article 4.0.
1.11 "Current Assets" means, at any time, all assets that should in accordance
with GAAP, be classified as current assets on a consolidated balance sheet of
the Borrower and its Subsidiaries.
1.12 "Current Liabilities" means, at any time, all Indebtedness that should, in
accordance with GAAP, be classified as liabilities on a consolidated balance of
the Borrower and its Subsidiaries.
1.13 "Current Ratio" means, at any time, Current Assets divided by Current
Liabilities.
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1.14 "Disbursement" means the Lender's Loan advances to the Borrower under
the Agreement to reimburse the Borrower for amounts paid or to be paid by the
Borrower for Goods.
1.15 "Earnings" means, at any date as of which the amount thereof shall be
determined, the earnings of the Borrower and its Subsidiaries, as appropriate,
from continuing operations before income taxes with respect to such period,
excluding any non-recurring or extraordinary items.
1.16 "Event of Default" has the meaning provided in Section 7.01.
1.17 "Financial Statements" means (1) the consolidated balance sheet of the
Borrower and its Subsidiaries as of September 30, 1995, and consolidated
statements of income, stockholders' equity, and changes in financial position,
and notes thereto, of the Borrower for the year ended on such date, certified as
to the year ended September 30, 1995 by a CPA acceptable to Lender; and (2) as
to the first quarter of the 1996 fiscal year ended December 31, 1995, the
consolidated balance sheet of the Borrower and its Subsidiaries and consolidated
statements of income, stockholders' equity, and changes in financial position,
and notes thereto, of the Borrower prepared and certified by the treasurer to
present fairly the consolidated financial position and results of operations of
the Borrower at such dates and for such periods in accordance with GAAP.
1.18 "GAAP" means generally accepted accounting principles applied
consistently with such changes or modifications thereto as may be approved in
writing by the Lender.
1.19 "Indebtedness" means, as to the Borrower or any Subsidiary, all items
of indebtedness, obligation or liability whether matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or several, including,
but without limitation:
(A) All indebtedness guaranteed, directly or indirectly, in any manner, or
endorsed (other than for collection or deposit in the ordinary course of
business) or discounted with recourse;
(B) All indebtedness in effect guaranteed, directly or indirectly, through
agreements, contingent or otherwise: (1) to purchase such indebtedness; or (2)
to purchase, sell, or lease (as lessee or lessor) property, products, materials,
or supplies or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such indebtedness or to
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insure the owner of the indebtedness against loss; or (3) to supply funds to, or
in any other manner invest in, the debtor;
(C) All indebtedness secured by (or for which the holder of such
indebtedness has a right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, pledge, lien, security interest, or other charge or
encumbrance upon property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed; and
(D) All indebtedness incurred as the lessee of Goods or services under
leases that, in accordance with GAAP, should not be reflected on the lessee's
balance sheet.
1.20 "Intellectual Property" means trademarks, service marks, trade names,
trade styles, logos, goodwill, trade secrets, patents, copyrights and licenses
acquired under any statutory, common law or registration process in any state or
nation at any time, or under any agreement executed with any person or entity at
any time. The term "license" refers not only to rights granted by agreement
from the owner of patents, trademarks, service marks and the like, but also to
rights granted by a franchiser under a franchise or similar agreement. The
foregoing enumeration is not intended as a limitation of the meaning of the word
"license". A complete list of all of the Borrower's Intellectual Property
registrations, claims, filings, or pending applications for any of the
foregoing, wherever registered, claimed or filed showing the place of filing,
the registration, claim, filing or application number and date is attached
hereto as Exhibit 1.20.
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1.21 "Landlord's Consent and Waiver" means that certain Landlord's Consent
and Waiver, a copy of which is attached hereto as Exhibit 1.21, executed by the
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Borrower and to be duly recorded or filed for the benefit of the Lender, as from
time to time supplemented or amended.
1.22 "Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any government or political subdivision or
agency thereof, or of any court or similar entity established by any thereof.
1.23 "Letter of Credit" means any irrevocable letter of credit payable in the
United States or at the issuing bank, subject to Uniform Customs and Practice
for Documentary Credits (1993 Revisions) (UCP 500) issued for the benefit of
Borrower.
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1.24 "Net Sales" means for the applicable period, all proceeds from the sale of
goods and services by the Borrower in the ordinary course of the Borrower's
business, net of fees, commissions, freight charges and other allowances,
adjustments, credits, or similar charges.
1.25 "Note" means the promissory note referred to in Section 2.03.
1.26 "Obligations" is intended to be used in its most comprehensive sense
and means all the obligations of the Borrower to the Lender of every kind and
description, whether direct or indirect, absolute or contingent, primary or
secondary, joint or several, due or to become due, now existing or hereafter
arising or acquired and whether by way of loan, discount, letter of credit,
lease or otherwise, including without limitation, the following obligations:
(A) To pay the principal of, and interest on, the Note in accordance
with the terms thereof and to satisfy all other liabilities to the Lender,
whether hereunder or otherwise, whether now existing or hereafter incurred,
matured or unmatured, direct or contingent, joint or several, including any
extensions, modifications, renewals thereof and substitutions therefor;
(B) To repay to the Lender all amounts advanced by the Lender hereunder or
otherwise on behalf of the Borrower, including, but without limitation, advances
for principal or interest payments to prior secured parties, mortgagees, or
lienors, or for taxes, levies, insurance, rent, or repairs to, or maintenance or
storage of, any of the Collateral;
(C) To perform and observe all covenants, agreements and undertakings
of the Borrower pursuant to the terms and conditions of this Agreement, the
Collateral Documents or any other agreement or instrument now or hereafter
delivered to the Lender by the Borrower; and
(D) To reimburse the Lender, on demand, for all of the Lender's expenses
and costs, including without limitation the reasonable fees and expenses of its
counsel, in connection with the preparation, administration, amendment,
modification, or enforcement of this Agreement and the documents required
hereunder, including, without limitation, any proceeding brought, or threatened,
to enforce payment or performance of any of the obligations referred to in the
foregoing paragraphs (A), (B) and (C).
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1.27 "Operating Account" means the account opened by Borrower at the
offices of the Lender, Account #_____________, used for the purposes of
disbursement and repayment of the Loan as set out in Sections 2.01 and 2.06.
1.28 "Permitted Liens" means:
(A) Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business, that are not yet due and payable;
(B) Pledges or deposits made in the ordinary course of business to
secure payment of worker's compensation, or to participate in any fund in
connection with worker's compensation, unemployment insurance, old-age pensions,
or other social security programs;
(C) Liens of mechanics, materialmen, warehousemen, carriers, or other
like liens, securing obligations incurred in the ordinary course of business
that are not yet due and payable;
(D) Good faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, not in excess of ten percent (10%) of
the aggregate amount due thereunder, or to secure statutory obligations, or
surety, appeal, indemnity, performance, or other similar bonds required in the
ordinary course of business;
(E) Encumbrances consisting of zoning restrictions, easements, or other
restrictions on the use of real property, none of which materially impairs the
use of such property by the Borrower in the operation of its business, and none
of which is violated in any material respect by existing or proposed structures
or land use;
(F) Liens in favor of the Lender, including, but not limited to the
Lender's first priority security interest on a certain telephone system as more
particularly described on Exhibit 1.28, attached hereto and made a part hereof;
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(G) Existing liens set forth or described on Exhibit 1.28, attached
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hereto and made a part hereof;
(H) Purchase money security interests granted to secure not more than
seventy-five per cent (75%) of the purchase price of
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assets, the purchase of which does not violate this Agreement or any instrument
required hereunder; and
(I) The following, if the validity or amount thereof is being contested in
good faith by appropriate and lawful proceedings, so long as levy and execution
thereon have been stayed and continue to be stayed and they do not, in the
aggregate, materially detract from the value of the property of the Borrower or
any Subsidiary, or materially impair the use thereof in the operation of its
business:
(1) Claims or liens for taxes, assessments, or charges due and payable
and subject to interest or penalty;
(2) Claims, liens and encumbrances upon, and defects of title to, real
or personal property, including any attachment of personal or real property or
other legal process prior to adjudication of a dispute on the merits;
(3) Claims or liens of mechanics, materialmen, warehousemen, carriers,
or other like liens; and
(4) Adverse judgments on appeal.
1.29 "Person" means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, joint venture, court,
or government or political subdivision or agency thereof.
1.30 "Records" means correspondence, memoranda, tapes, disks, diskettes,
papers, books and other documents, or transcribed information of any type,
whether expressed in ordinary or machine-readable language.
1.31 "Stockholders' Equity" means, at any time the aggregate of Subordinated
Indebtedness, plus the sum of the following accounts set forth on a consolidated
balance sheet of the Borrower and its Subsidiaries prepared in accordance with
GAAP: (A) the par or stated value of all outstanding capital stock; (B) capital
surplus; and (C) retained earnings.
1.32 "Subordinated Indebtedness" means all Indebtedness incurred at any time by
the Borrower or any Subsidiary, the repayment of which is subordinated to the
Loan in form and manner satisfactory to the Lender and includes, without
limitation, any notes, bonds, debentures, or other debts of Borrower to its
officers, directors
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or stockholders. All existing Subordinated Indebtedness is so specified in
Exhibit 1.32.
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1.33 "Subsidiary" means any Affiliate that is directly, or indirectly through
one or more intermediaries, controlled by the Borrower or not less than 50% of
the voting capital stock of which is owned, directly or through one or more
intermediaries, by the Borrower.
1.34 "Tangible Net Worth" means, at any time, Stockholders' Equity, less the sum
of:
(A) Any surplus resulting from any write-up of assets subsequent to
December 31, 1995;
(B) The value of goodwill, including any amounts, however designated
on a consolidated balance sheet of the Borrower and its Subsidiaries,
representing the excess of the purchase price paid for assets or stock acquired
over the value assigned thereto on the books of the Borrower;
(C) The value of Patents, trademarks, trade names, copyrights and
licenses;
(D) Any amount at which shares of capital stock of the Borrower appear as
an asset on the Borrower's balance sheet;
(E) Loans and advances to stockholders, directors, officers, or employees;
(F) Deferred expenses; and
(G) Any other amount in respect of an intangible that should be classified
as an asset on a consolidated balance sheet of the Borrower and its Subsidiaries
in accordance with GAAP.
1.35 "UCC Financing Statements" means those certain UCC-1 Financing Statements
and UCC-3 Amendments, copies of which are attached hereto as Exhibit 1.35,
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executed by the Borrower and duly recorded or filed for the benefit of the
Lender at the filing offices set forth on Exhibit 1.35, as from time to time
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supplemented or amended.
1.36 Accounting. Accounting terms used and not otherwise defined in this
Agreement have the meanings determined by, and all calculations with respect to
accounting or financial matters
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unless otherwise provided herein shall be computed in accordance with, GAAP.
ARTICLE 2. THE LOAN
2.01 Disbursement of the Loan.
Disbursements shall only be made upon the written request of the Borrower.
The Borrower may make requests for Disbursements by facsimile transmissions to
the Lender. The Lender will credit the proceeds of the Loan to the Operating
Account.
2.02 General Terms.
Subject to the terms hereof, the Lender will lend the Borrower, from
time to time until the Availability Date or until such time as the Lender makes
demand on the Note, whichever occurs first, such sums in integral multiples of
$10,000.00 as the Borrower may request by reasonable same day notice to the
Lender, received by the Lender not later than 10:00 a.m. of such day, but which
shall not exceed, in the aggregate principal amount at any one time outstanding,
the Borrowing Base. The Borrower may borrow, repay without penalty or premium
and reborrow hereunder, from the date of this Agreement until the Availability
Date or such time as the Lender makes demand on the Note, whichever occurs
first, either the full amount of the Borrowing Availability or any lesser sum
which is $10,000.00 or an integral multiple thereof, provided that the
outstanding principal amount of the Loan shall at no time exceed the amount of
the then existing Borrowing Base, and if, at any time, an excess shall for any
reason exist, the full amount of such excess, together with accrued and unpaid
interest thereon as herein provided, shall be immediately due and payable in
full and shall be paid in accordance with the provisions of Section 2.06. In
the alternative, at Lender's sole option and without imposing on Lender any
requirement to so choose, the Borrower shall furnish additional security to the
Lender with respect to any outstanding principal in excess of the Borrowing
Base, in form and amount satisfactory to the Lender.
2.03 The Note.
The Loan shall be evidenced by a note in the form attached hereto as
Exhibit 2.03, payable on demand, but in any event due and payable on the first
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business day after the Availability Date.
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2.04 The Facility Fee.
In consideration of the Loan, from and after the date of this Agreement up
to and including the Availability Date, the Borrower shall pay the Lender a
facility fee of one-half of one percent (0.5%) on the average daily Borrowing
Availability during each fiscal quarter or portion thereof. This facility fee
shall be payable, without demand, on the last day of each March, June, September
and December, commencing June 30, 1996. The Borrower shall make payment of the
facility fee by wire transfer, certified check or by authorizing the Lender to
withdraw readily available funds from the Operating Account.
2.05 Interest Rate and Payments of Interest.
(A) Interest shall be paid as follows:
(1) Except as otherwise provided in Section 2.05(B), interest on the
principal balance of the Loan from time to time outstanding shall be payable at
a rate (the "Rate") equal to the Prime Rate in effect from time to time until
the Availability Date or demand, whichever first occurs, and four percent (4%)
above the Prime Rate in effect from time to time after the first to occur of an
Event of Default, the Availability Date, or demand. For the purposes hereof,
"Prime Rate" shall mean the rate announced by the Lender from time to time as
its prime rate.
(2) Each time the Prime Rate shall change, the Rate shall change
contemporaneously with such change in the Prime Rate. Interest shall be
calculated on the basis of a 360-day year, counting the actual number of days
elapsed, and shall be payable monthly in arrears on the first day of each month
and at maturity, whether by acceleration or otherwise.
(B) It is the intention of the parties hereto to conform strictly to
applicable usury laws as in effect, from time to time, during the term of the
Loan. Accordingly, if any transaction or transactions contemplated hereby would
be usurious under applicable law (including the laws of the United States of
America, or of any other jurisdiction whose laws may be applicable), then, in
that event, notwithstanding anything to the contrary in this Agreement or any
other agreement entered into in connection with this Agreement, it is agreed as
follows: (1) the provisions of this Section 2.05(B) shall govern and control;
(2) the aggregate of all interest under applicable law that is contracted for,
charged, or received under this Agreement or
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under any of the other aforesaid agreements or otherwise in connection with this
Agreement shall under no circumstances exceed the maximum amount of interest
allowed by applicable law, and any excess shall be promptly credited to the
Borrower by the Lender (or, if such consideration shall have been paid in full,
such excess shall be promptly refunded to the Borrower by the Lender); (3)
neither the Borrower nor any person or entity now or hereafter liable in
connection with this Agreement shall be obligated to pay the amount of such
interest to the extent that it is in excess of the maximum interest permitted by
the applicable usury laws; and (4) the effective rate of interest shall be ipso
facto reduced to the Highest Lawful Rate hereinafter defined. All sums paid, or
agreed to be paid, to the Lender for the use, forbearance, and detention of the
indebtedness of the Borrower to the Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full term of the Note until payment is made in full so that the actual rate of
interest does not exceed the Highest Lawful Rate in effect at any particular
time during the full term thereof. The maximum lawful interest rate, if any,
referred to in this Section 2.05(B) that may accrue pursuant to this Agreement
is referred to herein as the "Highest Lawful Rate". If at any time the Rate
exceeds the Highest Lawful Rate, the rate of interest to accrue pursuant to this
Agreement shall be limited, notwithstanding anything to the contrary in this
Agreement, to the Highest Lawful Rate, but any subsequent reductions in the
Prime Rate shall not reduce the interest to accrue pursuant to this Agreement
below the Highest Lawful Rate until the total amount of interest accrued
pursuant to this Agreement equals the amount of interest that would have accrued
if a varying rate per annum equal to the Rate had at all times been in effect.
If the total amount of interest paid or accrued pursuant to this Agreement under
the foregoing provisions is less than the total amount of interest that would
have accrued if a varying rate per annum equal to the Rate had at all times been
in effect, then the Borrower agrees to pay to the Lender an amount equal to the
difference between (a) the lesser of (i) the amount of interest that would have
accrued if the Highest Lawful Rate had at all times been in effect, or (ii) the
amount of interest that would have accrued if a varying rate per annum equal to
the Rate had at all times been in effect, and (b) the amount of interest accrued
in accordance with the other provisions of this Agreement.
2.06 Payment to the Lender.
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The Borrower shall pay monthly to the Lender interest at the Rate as
provided in the Note.
The Lender shall send the Borrower statements of all amounts paid or due
hereunder, which statements shall be considered correct and conclusively binding
on the Borrower unless the Borrower notifies the Lender to the contrary within
thirty (30) days of its receipt of any statement that it deems to be incorrect.
Alternatively, at its sole discretion, the Lender may charge any other deposit
account of the Borrower or demand payment against the statements.
Nothing in this Section 2.06 shall operate to alter the demand nature
of the Loan or otherwise to reduce, diminish or impair the Lender's cumulative
rights and remedies.
ARTICLE 3. CONDITIONS PRECEDENT
The obligation of the Lender to make the Loan is subject to the
following conditions precedent:
3.01 Documents Required for the Closing.
The Borrower shall have delivered to the Lender, prior to the initial
Disbursement (the "Closing"), the following:
(A) The Note duly executed by the Borrower, in the form attached hereto as
Exhibit 2.03;
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(B) The Financial Statements;
(C) The UCC Financing Statements and other instruments required by
Article 4.0;
(D) The fully executed Landlord's Consent and Waiver, in the form attached
hereto as Exhibit 1.21;
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(E) A copy, certified as of the date of the Closing, of resolutions of the
board of directors of the Borrower, authorizing the execution, delivery, and
performance of this Agreement, the Note, the Collateral Documents, and each
other document to be delivered pursuant hereto or in connection herewith;
(F) A copy, certified as of the date of the Closing, of the Borrower's
bylaws;
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(G) A certificate of the corporate clerk or assistant clerk of the
Borrower, dated the date of the Closing, as to the incumbency and signatures of
the officers of the Borrower signing this Agreement, the Note, the Collateral
Documents, and each other document to be delivered pursuant hereto;
(H) A copy, certified as of the most recent date practicable by the
Secretary of the Commonwealth of Massachusetts, of the Articles of Organization
of the Borrower, and all amendments thereto, together with a certificate (dated
the date of the Closing) of the corporate clerk or assistant clerk of the
Borrower to the effect that such Articles of Organization have not been further
amended since the date of the aforesaid certification of the Secretary of the
Commonwealth of Massachusetts;
(I) Certificates of legal existence (long form) and good standing dated as
of the most recent date practicable, issued by the Secretary of the Commonwealth
of Massachusetts as to the legal existence, good standing, Articles of
Organization and all amendments thereto of the Borrower, together with a
certificate (dated the date of the Closing) of the corporate clerk or assistant
clerk of the Borrower to the effect that nothing has occurred since issuance of
the Certificates of Legal Existence and Good Standing that would prevent the
Secretary of the Commonwealth of Massachusetts from issuing updated
Certificates;
(J) Certificates, as of the most recent dates practicable, of the
Secretary of the Commonwealth of Massachusetts and of the secretary of state of
each state in which the Borrower is qualified as a foreign corporation and, if
applicable, of the department of revenue or taxation of each of the foregoing
states, as to the good standing of the Borrower, together with a certificate
(dated the date of the Closing) of the corporate clerk or assistant clerk of the
Borrower to the effect that nothing has occurred since issuance of the
Certificate of Good Standing that would prevent the Department of Revenue from
issuing an updated Certificate;
(K) A written opinion of the law firm of Brown, Rudnick, Freed & Gesmer,
P.C., legal counsel for the Borrower, dated the date of the Closing and
addressed to the Lender, in the form attached hereto as Exhibit 3.01(J).
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(L) A certificate, dated the date of the Closing, signed by the
president or a vice president of the Borrower and to the effect that:
(1) The representations and warranties set forth in Section 5.01 are
true as of the date of the Closing; and
(2) No Event of Default hereunder, and no event which, with the giving
of notice or passage of time or both, would become such an Event of Default, has
occurred as of such date;
(M) Copies of all documents evidencing the terms and conditions of any
debt specified as Subordinated Indebtedness on Exhibit 1.32 and fully executed
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Subordination Agreements with respect to such Subordinated Indebtedness in form
and substance satisfactory to Lender; and
(N) A certificate of insurance as required by Section 6.01(D).
3.02 Documents Required for Disbursements.
At the time of, and as a condition to, any Disbursement subsequent to the
Closing, the Lender may require the Borrower to deliver to the Lender a
certificate, dated the date on which any such Disbursement is to be made, signed
by the president or a vice president of the Borrower, and to the effect that
(1) As of the date thereof, no Event of Default has occurred and is
continuing, and no event has occurred and is continuing that, but for the giving
of notice or passage of time or both, would be an Event of Default;
(2) No material adverse change has occurred in the business prospects,
financial condition, or results of operations of the Borrower or any Subsidiary
since the date of the Financial Statements; and
(3) Each of the representations and warranties contained in Section 5.01
is true and correct in all respects as if made on and as of the date of such
disbursement.
3.03 Certain Events.
At the time of, and as a condition to, the Closing and each Disbursement to
be made by the Lender at or subsequent to the Closing:
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(A) No Event of Default shall have occurred and be continuing, and no
event shall have occurred and be continuing that, with the giving of notice or
passage of time or both, would be an Event of Default;
(B) No material adverse change shall have occurred in the business
prospects, financial condition, or results of operations of the Borrower or any
Subsidiary since the dates of the Financial Statements; and
(C) All of the Collateral Documents shall have remained in full force
and effect.
3.04 Legal Matters.
At the time of the Closing and each subsequent Disbursement, all legal
matters incidental thereto shall be satisfactory to Bowditch & ▇▇▇▇▇, legal
counsel to the Lender.
ARTICLE 4. COLLATERAL SECURITY
4.01 Composition of the Collateral.
The property in which a security interest is granted pursuant to the
provisions of Sections 4.02 and 4.03 is herein collectively called the
"Collateral". The Collateral, together with all other property of the Borrower
of any kind held by the Lender, shall stand as one general, continuing
collateral security for all Obligations and may be retained by the Lender until
all Obligations have been satisfied in full.
4.02 Rights in Property Held by the Lender.
As security for the prompt satisfaction of all Obligations, the Borrower
hereby assigns, transfers, and sets over to the Lender all of its right, title,
and interest in and to, and grants the Lender a lien on and a security interest
in, all amounts that may be owing, from time to time, by the Lender to the
Borrower in any capacity, including, but without limitation, any balance or
share belonging to the Borrower, or any deposit or other account with the
Lender, which lien and security interest shall be independent of, and in
addition to, any right of set-off that the Lender has under Section 8.07 or
otherwise.
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4.03 Rights in Property Held Either by the Borrower or by the Lender.
As further security for the prompt satisfaction of all of the
Obligations, the Borrower hereby assigns to the Lender all of its right, title
and interest in and to, and grants the Lender a lien upon and a continuing
security interest in, all of the following, wherever located, whether now owned
or hereafter acquired, together with all replacements therefor, accessions
thereto, and proceeds (including, but without limitation, insurance proceeds)
and products thereof:
(A) All Inventory with the sole exception of the two fully working
prototype systems located at the Borrower's facility at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, and further described as follows:
Horizontal System Prototype Vertical System Prototype
--------------------------- -------------------------
Part # 10004-10001 Part # 10004-10001 VR
Model: H1 Model: VDS-1
Serial #: P002 Serial #: V001
(B) All Accounts, including but not limited to, Contracts, accounts
receivable, contract rights, and Chattel Paper, regardless of whether or not
they constitute proceeds or products of other Collateral;
(C) All General Intangibles, regardless of whether or not they
constitute proceeds or products of other Collateral, including, without
limitation, all the Borrower's rights (which the Lender may exercise or not as
it in its sole discretion may determine) to acquire or obtain Goods and/or
services with respect to the manufacture, processing, storage, sale, shipment,
delivery or installation of any of the Borrower's Inventory or other Collateral;
(D) All products of and accessions to any of the Collateral;
(E) All liens, guaranties, securities, rights, remedies and privileges
pertaining to any of the Collateral, including the right of stoppage in transit;
(F) All obligations owing to the Borrower of every kind and nature,
and all choses in action;
-16-
(G) All tax refunds of every kind and nature to which the Borrower is
now or hereafter may become entitled no matter however arising, including,
without limitation, loss carryback refunds;
(H) All Intellectual Property, goodwill, trade secrets, computer programs,
customer lists, trade names, trademarks, copyrights and patents;
(I) All Chattel Paper, Documents and Instruments (whether negotiable or
non-negotiable, and regardless of their being attached to Chattel Paper);
(J) All Equipment, including without limitation machinery, furniture,
motor vehicles, Fixtures and all other Goods used in the conduct of the business
of the Borrower;
(K) All proceeds of Collateral of every kind and nature and in whatever
form, including, without limitation, both cash and non-cash proceeds resulting
or arising from the rendering of services by the Borrower or the sale or other
disposition by the Borrower of the Inventory or other Collateral;
(L) All books, Records, computer disks, diskettes, electronic data and
other information relating to the conduct of the Borrower's business including,
without in any way limiting the generality of the foregoing, those relating to
its Accounts; and
(M) All deposit accounts maintained by the Borrower with any bank, trust
company, investment firm or fund, or any similar institution or organization.
4.04 Priority of Liens.
The foregoing liens shall be first and prior liens except for Permitted
Liens.
4.05 UCC Financing Statements.
(A) The Borrower will:
(1) Execute such UCC financing statements (including amendments
thereto and continuation statements thereof) in form satisfactory to the Lender
as the Lender, from time to time, may specify;
-17-
(2) Pay, or reimburse the Lender for paying, all costs and taxes of
filing or recording the same in such public offices as the Lender may designate;
and
(3) Take such other steps as the Lender, from time to time, may
direct, including the noting of the Lender's lien on the Collateral and on any
certificates of title therefor, all to perfect to the satisfaction of the Lender
the Lender's interest in the Collateral.
(B) In addition to the foregoing, and not in limitation thereof:
(1) A carbon, photographic, or other reproduction of this Agreement
shall be sufficient as a UCC financing statement and may be filed in any
appropriate office in lieu thereof; and
(2) To the extent lawful, the Borrower hereby appoints the Lender as
its attorney-in-fact (without requiring the Lender to act as such) to execute
any UCC financing statement in the name of the Borrower, and to perform all
other acts that the Lender deems appropriate to perfect and continue its
security interest in, and to protect and preserve, the Collateral.
4.06 Mortgagees', Landlords', and Warehousemen's Waivers.
The Borrower will, within twenty (20) days after any request of the
Lender, cause any mortgagee of real estate owned by the Borrower, any landlord
of premises leased by the Borrower, and any warehouseman or other bailee on
whose premises any of the Collateral may be located to execute and deliver to
the Lender instruments, in form and substance satisfactory to the Lender, by
which such mortgagee, landlord or warehouseman or other bailee waives its
rights, if any, in and to all Goods composing a part of the Collateral.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
5.01 Original.
To induce the Lender to enter into this Agreement, the Borrower
represents and warrants to the Lender as follows:
(A) The Borrower is a corporation duly organized, validly existing, and in
good standing under the Laws of the Commonwealth of Massachusetts; the Borrower
has no Subsidiaries other than the
-18-
Subsidiaries named in Exhibit 5.01(A); each Subsidiary is a corporation duly
---------------
organized, validly existing, and in good standing under the Laws of its
jurisdiction of incorporation, all as set forth in Exhibit 5.01(A); the Borrower
---------------
and Subsidiaries have the lawful power to own their properties and to engage in
the businesses they conduct, and each is duly qualified and in good standing as
a foreign corporation in the jurisdictions wherein the nature of the business
transacted by it or property owned by it makes such qualification necessary; the
states in which the Borrower and each Subsidiary are qualified to do business
are set forth in Exhibit 5.01(A) or otherwise disclosed to the Lender in
---------------
writing; the percentage of the Borrower's ownership of the outstanding stock of
each Subsidiary is as listed in Exhibit 5.01(A); the addresses of all places of
---------------
business of the Borrower and its Subsidiaries are as set forth in Exhibit
-------
5.01(A) or otherwise disclosed to the Lender in writing; neither the Borrower
-------
nor any Subsidiary has changed its name, been the surviving corporation in a
merger, acquired any business, or changed its principal executive office within
five (5) years and one (1) month prior to the date hereof except as set forth in
Exhibit 5.01(A); and all of the authorized, issued, and outstanding shares of
---------------
capital stock of each Subsidiary are owned by the Borrower;
(B) Neither the Borrower nor any Subsidiary is directly or indirectly
controlled by, or acting on behalf of, any Person which is an "Investment
Company", within the meaning of the Investment Company Act of 1940, as amended;
(C) Neither the Borrower nor any Subsidiary is in default with respect
to any of its existing Indebtedness, and the making and performance of this
Agreement, the Note, and the Collateral Documents will not (immediately or with
the passage of time, the giving of notice, or both):
(1) violate the Articles of Organization or by-laws of the Borrower or
any Subsidiary, or violate any Laws or result in a default under any contract,
agreement, or instrument to which the Borrower or any Subsidiary is a party or
by which the Borrower or any Subsidiary or its property is bound; or
(2) result in the creation or imposition of any security interest in,
or lien or encumbrance upon, any of the assets of the Borrower or any Subsidiary
except in favor of the Lender;
-19-
(D) The Borrower has the power and authority to enter into and perform
this Agreement, the Note, and the Collateral Documents, and to incur the
obligations herein and therein provided for, and has taken all actions necessary
to authorize the execution, delivery, and performance of this Agreement, the
Note, and the Collateral Documents;
(E) This Agreement, the Note, and the Collateral Documents are, or when
delivered will be, valid, binding, and enforceable in accordance with their
respective terms;
(F) Except as disclosed in Exhibit 5.01(F) hereto, there is no pending
---------------
order, notice, claim, litigation, proceeding, or investigation against or
affecting the Borrower or any Subsidiary, whether or not covered by insurance,
that would in the aggregate involve the payment of $10,000.00 or more or would
otherwise materially or adversely affect the financial condition or business
prospects of the Borrower or any Subsidiary if adversely determined;
(G) The Borrower and its Subsidiaries have good and marketable title
to all of their assets, none of which is subject to any security interest,
encumbrance or lien, or claim of any third Person except for Permitted Liens;
(H) The Financial Statements, including any schedules and notes
pertaining thereto, have been prepared in accordance with GAAP, and fully and
fairly present the financial condition of the Borrower and its Subsidiaries at
the dates thereof and the results of operations for the periods covered thereby,
and there have been no material adverse changes in the consolidated financial
condition or business of the Borrower and its Subsidiaries from September 30,
1995, to the date hereof;
(I) As of the date hereof, the Borrower and its Subsidiaries have no
material Indebtedness of any nature, including, but without limitation,
liabilities for taxes and any interest or penalties relating thereto except to
the extent reflected (in a footnote or otherwise) and reserved against in the
consolidated balance sheet dated September 30, 1995 included in the Financial
Statements or as disclosed in, or permitted by, this Agreement; and the Borrower
does not know or have reasonable ground to know of any basis for the assertion
against it or any Subsidiary of any claim or litigation related to such
Indebtedness as of the date of the Closing except as disclosed on Exhibit
-------
5.01(F) or otherwise disclosed to the Lender in writing;
-------
-20-
(J) Except as otherwise permitted herein, the Borrower has filed all
federal, state, and local tax returns and other reports required by any
applicable Laws to have been filed prior to the date hereof, has paid or caused
to be paid all taxes, assessments, and other governmental charges that are due
and payable prior to the date hereof, and has made adequate provision for the
payment of such taxes, assessments, or other charges accruing but not yet
payable; the Borrower has no knowledge of any deficiency or additional
assessment in a materially important amount in connection with any taxes,
assessments, or charges not provided for on its books;
(K) Except to the extent that the failure to comply would not
materially interfere with the conduct of the business of the Borrower or any
Subsidiary, the Borrower and its Subsidiaries have each complied with all
applicable Laws with respect to (1) any restrictions, specifications, or other
requirements pertaining to products that it manufactures or sells or to the
services it performs; (2) the conduct of its business; and (3) the use,
maintenance, and operation of the real and personal properties owned or leased
by it in the conduct of its business;
(L) No representation or warranty by or with respect to the Borrower
or any Subsidiary contained herein or in any certificate or other document
furnished by the Borrower or any Subsidiary pursuant hereto contains any untrue
statement of a material fact or omits to state a material fact necessary to make
such representation or warranty not misleading in light of the circumstances
under which it was made;
(M) Each consent, approval or authorization of, or filing, registration or
qualification with, any Person required to be obtained or effected by the
Borrower, any Subsidiary, or any guarantor in connection with the execution and
delivery of this Agreement, the Note, and the Collateral Documents or the
undertaking or performance of any obligation hereunder or thereunder has been
duly obtained or effected;
(N) There is no Indebtedness of the Borrower or any Subsidiary: (1)
for money borrowed, or (2) under any security agreement, mortgage or agreement
covering the lease by the Borrower or any Subsidiary as lessee of real or
personal property except as reflected in the Financial Statements or as
described in Exhibit 5.01(N);
---------------
(O) Except as described in Exhibit 5.01(O), attached hereto, or
---------------
otherwise disclosed to the Lender in writing, (a)
-21-
neither the Borrower nor any Subsidiary has any material leases, contracts, or
commitments of any kind (including, without limitation, employment agreements;
collective bargaining agreements; powers of attorney; distribution arrangements;
licenses, patents, copyrights, trademarks, service marks or license agreements;
contracts for future purchase or delivery of Goods or rendering of services;
bonuses, pension, and retirement plans; or accrued vacation pay, insurance, and
welfare agreements); (b) to the best of Borrower's knowledge, all parties to all
such material leases, contracts, and other commitments to which the Borrower or
any Subsidiary is a party have complied with the provisions of such leases,
contracts, and other commitments; and (c) to the best of Borrower's knowledge,
no party is in default under any term thereof and no event has occurred which,
but for the giving of notice or the passage of time, or both, would constitute a
default;
(P) The Borrower has not made any agreement or taken any action which
may cause anyone to become entitled to a commission or finder's fee as a result
of or in connection with the making of the Loan;
(Q) The Borrower's consolidated federal tax returns for all years of
operation, including the year ended September 30, 1994, have been filed with the
Internal Revenue Service and have not been challenged. The Borrower's
consolidated federal tax return for the year ended September 30, 1995 shall be
filed with the Internal Revenue Service by June 15, 1996;
(R) Any Employee Pension Benefit Plans, as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), of the Borrower
and each Subsidiary meet, as of the date hereof, the minimum funding standards
of 29 U.S.C.A. 1082 (Section 302 of ERISA), and no Reportable Event or
Prohibited Transaction, as defined in ERISA, has occurred with respect to any
Employee Benefit Plans, as defined in ERISA, of the Borrower or any Subsidiary;
(S) The liens and security interests created pursuant to Sections 4.02
and 4.03 are and will be at the Closing in all cases first and prior liens
except for Permitted Liens;
(T) Except as shown on Exhibit 1.20, Borrower has no patent claims,
------------
trademark or copyright registrations or other filings or applications protecting
its Intellectual Property in any jurisdiction; and
-22-
(U) The Borrower is in full compliance with all of its tenant
obligations under that certain Commercial Lease dated December 19, 1995 between
the Borrower and ▇▇▇▇▇▇▇▇ Properties Management, Inc.; the Landlord's Consent
and Waiver dated as of April 4, 1996 among the Borrower, ▇▇▇▇▇▇▇▇ Properties
Management, Inc. and the Lender is in full force and effect; and the Borrower
knows of no default under the Commercial Lease.
5.02 Survival.
All of the representations and warranties set forth in Section 5.01
shall survive until all Obligations are satisfied in full and there remain no
outstanding commitments hereunder.
ARTICLE 6. COVENANTS OF THE BORROWER
6.01 Affirmative Covenants.
The Borrower does hereby covenant and agree with the Lender that, so
long as any of the Obligations remain unsatisfied or any commitments hereunder
remain outstanding, it will comply, or if appropriate cause its Subsidiaries to
comply, at all times with the following affirmative covenants:
(A) The Borrower will use the proceeds of the Loan for working capital
purposes and will furnish the Lender such evidence as it may reasonably require
with respect to such use;
(B) The Borrower will furnish the Lender:
(1) As soon as available, (i) but in any event within thirty (30) days
after the close of each month in each fiscal year: (a) a statement of
stockholders' equity and a statement of changes in financial position of the
Borrower for such month; (b) an income statement of the Borrower for such month;
and (c) a balance sheet of the Borrower as of the end of such month, and (ii)
but in any event within thirty (30) days after the close of each fiscal quarter
in each fiscal year: (a) a consolidated statement of stockholders' equity and a
consolidated statement of changes in financial position of the Borrower and its
Subsidiaries for such quarter; (b) consolidated and consolidating income
statements of the Borrower and its Subsidiaries for such quarter; and (c)
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of such quarter--all in reasonable detail, subject to
normal year-end audit
-23-
adjustments and certified by the Borrower's president or controller to have been
prepared in accordance with GAAP;
(2) As soon as available, but in any event within one hundred twenty
(120) days after the close of each fiscal year: (a) a consolidated statement of
stockholders' equity and a consolidated statement of changes in financial
position of the Borrower and its Subsidiaries for such fiscal year; (b)
consolidated and consolidating income statements of the Borrower and its
Subsidiaries for such fiscal year; and (c) consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as of the end of such fiscal
year--all such statements to be in reasonable detail, including all supporting
schedules and comments; the consolidated statements and balance sheets to be
audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or another independent certified public accountant
selected by Borrower and acceptable to the Lender, and certified by such
accountants to have been prepared in accordance with GAAP and to present fairly
the consolidated financial position and results of operations of the Borrower
and its Subsidiaries; in addition, the Borrower will obtain from such
independent certified public accountants and deliver to the Lender, within one
hundred twenty (120) days after the close of each fiscal year, their written
statement that in making the examination necessary to their certification they
have obtained no knowledge of any Event of Default by the Borrower, or
disclosing all Events of Default of which they have obtained knowledge (it being
understood and agreed by the Lender that in making their examination, such
accountants shall not be required to go beyond the bounds of generally accepted
auditing procedures for the purpose of certifying financial statements); the
Lender shall have the right, from time to time to discuss the affairs of the
Borrower directly with such independent certified public accountants after
notice to the Borrower and opportunity of the Borrower to be represented at any
such discussions;
(3) Contemporaneously with each monthly and year-end financial report
required by the foregoing paragraphs (1) and (2), a certificate of the president
or controller of the Borrower stating that he has individually reviewed the
provisions of this Agreement and that a review of the activities of the Borrower
during such year or monthly period, as the case may be, has been made by him or
under his supervision, with a view to determining whether the Borrower has
fulfilled all its obligations under this Agreement, and that, to the best of his
knowledge, the Borrower has observed and performed each undertaking contained in
this Agreement and is not in default in the observance or performance of any of
the provisions hereof or, if the Borrower shall be so
-24-
in default, specifying all such defaults and events of which he may have
knowledge;
(4) Promptly after the sending or making available or filing of the
same, copies of all reports, proxy statements, and financial statements that the
Borrower or any successor Person sends or makes available to its stockholders
and all registration statements and reports that the Borrower or any successor
Person files with the Securities and Exchange Commission;
(5) Within thirty (30) days after the end of each calendar month, in
such form and detail as shall be satisfactory to the Lender, an aging, as of the
end of such month, of Accounts of the Borrower certified by the president or
controller of the Borrower to be complete and correct;
(6) Within thirty (30) days after the end of each calendar month, in
such form and detail as shall be satisfactory to the Lender, a listing of
Borrower's Inventory, showing the amount, size, grade, manufacturer, and cost of
each item or group thereof;
(7) As soon as available, but in any event within one hundred twenty
(120) days after the close of each fiscal year: financial and operating
projections for the next fiscal year--all such projections to contain such
detail and to be in such form as the Lender may request, and to include all
supporting schedules and comments, and to be certified by the president or
controller of the Borrower to be complete;
(8) Upon the Lender's request, from time to time, copies of any or all
agreements, contracts, or commitments referred to in Section 5.01(O) hereof;
(C) The Borrower will maintain its Inventory, Equipment, real estate,
and other properties in good condition and repair (normal wear and tear
excepted), and will pay and discharge or cause to be paid and discharged, when
due, the cost of repairs to, or maintenance of, the same, and will pay or cause
to be paid in a timely manner all rental or mortgage payments due on such real
estate. The Borrower hereby agrees that, in the event it fails to pay or cause
to be paid any such payment, it will promptly notify the Lender thereof, and the
Lender may, in its discretion, do so and on demand be reimbursed therefor by the
Borrower;
-25-
(D) The Borrower and its Subsidiaries will maintain, or cause to be
maintained, public liability insurance (subject to a maximum of $10,000.00 in
deductibles for each entity) and fire and extended coverage insurance on all
assets that are of a character usually insured by corporations engaged in the
same or similar businesses, all in form and amount sufficient to indemnify the
Borrower or Subsidiary for 100% of the appraised value of any such asset lost or
damaged (subject to any deductible customary in the Borrower's or Subsidiary's
industry) or in an amount consistent with the amount of insurance generally
carried on comparable assets within the industry and with such insurers as may
be satisfactory to the Lender. The Borrower and its Subsidiaries will cause all
such insurance policies to contain a standard mortgage clause and to be payable
to the Lender as its interest may appear, to deliver the policies of insurance
to the Lender, and, in the case of all policies of insurance carried for the
benefit of the Borrower or any Subsidiary by any lessee, sublessee, subtenant,
or other party having rights to occupy or use the mortgage property or any part
thereof or interest therein under any lease, sublease, or other agreement
(whether oral, written, or otherwise evidenced), to cause all such policies to
be payable to the Lender as its interest may appear. Such policies shall
contain a provision whereby they cannot be cancelled except after ten (10) days'
written notice to the Lender. The Borrower will furnish to the Lender such
evidence of insurance as the Lender may require. The Borrower hereby agrees
that, in the event it or any Subsidiary fails to pay or cause to be paid the
premium on any such insurance when due, the Lender, in its discretion, may do so
and be reimbursed by the Borrower therefor. The Borrower and each Subsidiary
hereby assign to the Lender any returned or unearned premiums that may be due
the Borrower or any Subsidiary upon cancellation by the insurer of any such
policy for any reason whatsoever and direct any such insurer to pay the Lender
any amounts so due. Provided, however, that the Lender will pay to the Borrower
or the appropriate Subsidiary any such returned or unearned premiums within five
(5) days after the receipt thereof if there has not occurred and be continuing
an Event of Default hereunder. The Lender is hereby appointed the attorney-in-
fact of the Borrower and each Subsidiary (without requiring the Lender to act as
such) to endorse any check which may be payable to the Borrower or any
Subsidiary to collect any premiums or the proceeds of such insurance (other than
proceeds of public liability insurance), and any amount so collected may be
applied by the Lender toward satisfaction of any of the Obligations if an Event
of Default has occurred and is continuing. If the Lender receives any proceeds
from insurance in the absence of an Event
-26-
of Default, it shall remit such proceeds to the Borrower or such Subsidiary
within three (3) Business Days after the Lender's receipt of such proceeds;
(E) The Borrower and its Subsidiaries will each pay or cause to be
paid when due, all taxes, assessments, and charges or levies imposed upon it or
on any of its property or which it is required to withhold and pay except where
contested in good faith by appropriate proceedings with adequate reserves
therefor having been set aside on its books; provided, however, that the
Borrower and each Subsidiary shall pay or cause to be paid all such taxes,
assessments, charges or levies forthwith whenever foreclosure on any lien that
may have attached (or security therefor) appears imminent;
(F) The Borrower shall permit the representatives of the Lender to
make reasonable physical inspections at any time during normal business hours of
the Collateral and of the Borrower's facilities, activities, books and Records,
and cause its officers and employees to give full cooperation and assistance in
connection therewith, so that Lender can determine whether the Borrower has
maintained the Borrowing Base at no less than the principal amount of the Loan
outstanding; the cost of such inspections shall be paid for by Borrower as an
additional amount due under the Loan;
(G) The Borrower and its Subsidiaries will each take all necessary
steps to preserve its corporate existence and franchises and comply with all
present and future Laws applicable to it in the operation of its business, and
all material agreements to which it is subject;
(H) The Borrower and its Subsidiaries will each collect its Accounts
and sell its Inventory only in the ordinary course of business;
(I) The Borrower and its Subsidiaries will each keep accurate and
complete Records of its Accounts, Inventory, and Equipment consistent with sound
business practices;
(J) The Borrower and its Subsidiaries will each give prompt notice to
the Lender of (1) any litigation or proceeding in which it is a party if an
adverse decision therein would require it to pay more than $10,000.00 or deliver
assets the value of which exceeds such sum (whether or not the claim is
considered to be covered by insurance); and (2) the institution of any other
suit or proceeding involving it that might materially and adversely
-27-
affect its operations, financial condition, property, or business prospects;
(K) Within ten (10) days after the filing thereof, the Borrower will
furnish the Lender with copies of federal income tax returns filed by the
Borrower. The Borrower will cause the full amount of each federal and other
income tax refund (including any interest component thereof) received by the
Borrower to be applied as an immediate repayment or partial repayment of the
Loan;
(L) The Borrower and its Subsidiaries will each pay when due (or
within applicable grace periods) all of its other Indebtedness due third Persons
except when the amount thereof is being contested in good faith by appropriate
proceedings and with adequate reserves therefor being set aside on its books;
provided, however, that no payment shall be made in respect to Subordinated
Indebtedness except in strict compliance with all of the terms of subordination
thereof theretofore approved in writing by the Lender. If default be made by
the Borrower or any Subsidiary in the payment of any principal (or installment
thereof) of, or interest on, any such Indebtedness, the Lender shall have the
right, in its discretion, to pay such interest or principal for the account of
the Borrower or such Subsidiary and be reimbursed by the Borrower or such
Subsidiary therefor;
(M) The Borrower and its Subsidiaries will each notify the Lender
immediately if it becomes aware of the occurrence of any Event of Default or of
any fact, condition, or event that only with the giving of notice or passage of
time or both, could become an Event of Default or if it becomes aware of any
material adverse change in the business prospects, financial condition
(including, without limitation, proceedings in bankruptcy, insolvency,
reorganization, or the appointment of a receiver or trustee), or results of
operations of the Borrower, a Subsidiary, or any guarantor or of the failure of
the Borrower or any Subsidiary to observe any of their respective undertakings
hereunder or under the Collateral Documents;
(N) The Borrower and its Subsidiaries will each notify the Lender
thirty (30) days in advance of any change in the location of any of its places
of business or of the establishment of any new, or the discontinuance of any
existing, place of business;
(O) The Borrower and its Subsidiaries will each (1) fund any of its
Employee Pension Benefit Plans in accordance with no less than the minimum
funding standards of 29 U.S.C.A. 1082
-28-
(Section 302 of ERISA); (2) furnish the Lender, promptly after the filing of the
same, with copies of any reports or other statements filed with the United
States Department of Labor or the Internal Revenue Service with respect to any
such Plan; and (3) promptly advise the Lender of the occurrence of any
Reportable Event or Prohibited Transaction with respect to any Employee Benefit
Plan;
(P) With respect to Letters of Credit:
(1) The Borrower shall require that each Letter of Credit issued for
its benefit shall provide that one of the required documents for the first
payment under the Letter of Credit shall be a copy of an assignment of proceeds
executed by the Borrower (the beneficiary of the Letter of Credit) in favor of
the Lender; said assignment shall be for the full amount of the Letter of Credit
and shall provide that all payments under the Letter of Credit shall be made to
the Operating Account;
(2) The Borrower will take all necessary and advisable steps to ensure
that the Letter of Credit will be delivered to the paying or confirming bank and
that said paying or confirming bank shall be authorized to retain the Letter of
Credit on behalf of the Lender, which is the assignee of the proceeds thereof;
(3) In the event that the Borrower is unable to obtain the assignment
of the Letter of Credit in accordance with subparagraphs (1) and (2) above, the
Borrower shall arrange in writing (with a copy to the Lender) with the account
party under the Letter of Credit that the issuer of said Letter of Credit
include therein a provision to the effect that payment under said Letter of
Credit shall be negotiated only at the Lender's counters or, alternatively, that
payment shall be made only to the Operating Account;
(Q) The Borrower shall require payment of all Accounts in U.S. Dollars
or in such other form or currency as is acceptable to the Lender;
(R) So long as any Obligations are outstanding, the Borrower shall
maintain its primary depository accounts with the Lender; and
(U) The Borrower shall maintain:
(1) A Current Ratio, tested at the end of each fiscal quarter, of not
less than 1.5:1.0; and
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(2) A ratio of Current Liabilities to Tangible Net Worth, tested at
the end of each fiscal quarter, of not more than 1.0:1.0.
6.02 Negative Covenants.
The Borrower does hereby covenant and agree with the Lender that, so
long as any of the Obligations remain unsatisfied or any commitments hereunder
remain outstanding, it will comply, or if appropriate cause its Subsidiaries to
comply, at all times with the following negative covenants, unless the Lender
shall otherwise have agreed in writing:
(A) Neither the Borrower nor any Subsidiary will change its name,
enter into any merger, consolidation, reorganization or recapitalization, or
reclassify its capital stock;
(B) Neither the Borrower nor any Subsidiary will sell, transfer,
lease, or otherwise dispose of all or (except in the ordinary course of
business) any material part of its assets;
(C) Neither the Borrower nor any Subsidiary will sell, lease,
transfer, assign, or otherwise dispose of any of the Collateral except in the
ordinary course of business;
(D) Neither the Borrower nor any Subsidiary will sell or otherwise
dispose of, or for any reason cease operating, any of its divisions, franchises,
or lines of business;
(E) Neither the Borrower nor any Subsidiary will mortgage, pledge,
grant, or permit to exist a security interest in, or a lien upon, any of its
assets of any kind, now owned or hereafter acquired, except for Permitted Liens,
liens of the Collateral Documents, and existing liens listed on Exhibit 5.01(N)
---------------
to the extent shown on such Exhibit 1.28 to be permitted to exist after the
------------
Closing;
(F) Neither the Borrower nor any Subsidiary will become liable,
directly or indirectly, as guarantor or otherwise for any obligation of any
other Person, except for the endorsement of commercial paper for deposit or
collection in the ordinary course of business;
(G) Neither the Borrower nor any Subsidiary will incur, create,
assume, or permit to exist any Indebtedness except: (1) the Loan; (2) existing
Indebtedness listed on Exhibit 5.01(N)
---------------
-30-
to the extent shown on such Exhibit 1.28 to be permitted to exist after the
------------
Closing; (3) trade indebtedness incurred in the ordinary course of business
(provided, however, that neither the Borrower nor any Subsidiary may acquire
inventory other than for cash or on open account except as expressly approved in
writing and in advance by the Lender); (4) contingent Indebtedness permitted by
Section 6.02(F); (5) operating lease obligations incurred in the normal course
of business under the current lease arrangement; (6) Indebtedness secured by
Permitted Liens; and (7) Subordinated Indebtedness;
(H) The Borrower shall not declare, pay or set apart any funds for the
payment of any dividends (other than dividends payable in shares of the
Borrower's stock) on any class of shares of the Borrower's stock, or apply any
of its funds, property or assets to, or set apart any funds, property or assets
for, the purchase, redemption or other retirement of, or make any other
distribution, by reduction of capital or otherwise, in respect of any class of
shares of the Borrower's stock, or with respect to any other funds or assets
without the prior written consent of the Lender;
(I) Neither the Borrower nor any Subsidiary will form any subsidiary,
make any investment in (including any assignment of Inventory or other
property), or make any loan in the nature of an investment to, any Person, other
than investments of the Borrower in the Subsidiaries listed on Exhibit 5.01(A);
---------------
(J) Neither the Borrower nor any Subsidiary will make payments on
account of the purchase or lease of consolidated fixed assets that, in the
aggregate, in any fiscal year (commencing with the current fiscal year) will
exceed the depreciation taken or to be taken with respect to consolidated fixed
assets during such year; as used in this paragraph, the term "lease" means a
lease reflected on a consolidated balance sheet of the Borrower and its
Subsidiaries or a lease that should be so reflected under GAAP;
(K) Neither the Borrower nor any Subsidiary will purchase or otherwise
invest in or hold securities, nonoperating real estate, or other nonoperating
assets except: (1) direct obligations of the United States of America, or of a
bank with assets of not less than $50,000,000.00 or other investments approved
in advance in writing by the Lender; (2) the present investment in any such
assets held as of September 30, 1995 and reflected in the Financial Statements;
and (3) operating assets that hereafter become nonoperating assets;
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(L) Neither the Borrower nor any Subsidiary will transfer, purchase or
redeem, or permit any subsidiary to transfer or purchase, any shares of the
Borrower's capital stock unless such transfer, purchase or redemption is
effected solely from the proceeds of and within a reasonable time after the
issuance to third parties by the Borrower or its subsidiary of capital stock
which is in addition to the capital stock of the Borrower or its subsidiary, as
the case may be, outstanding on the date of the Agreement;
(M) Neither the Borrower nor any Subsidiary will prepay any
Subordinated Indebtedness, Indebtedness for borrowed money except the
Obligations, or Indebtedness secured by any of its assets (except the
Obligations), or enter into or modify any agreement as a result of which the
terms of payment of any of the foregoing Indebtedness are waived or modified;
(N) Neither the Borrower nor any Subsidiary will enter into any sale-
leaseback transaction;
(O) Neither the Borrower nor any Subsidiary will acquire or agree to
acquire any stock in, or all or substantially all of the assets of, any Person;
(P) Neither the Borrower nor any Subsidiary will furnish the Lender
any certificate or other document that will contain any untrue statement of
material fact or that will omit to state a material fact necessary to make it
not misleading in light of the circumstances under which it was furnished;
(Q) Neither the Borrower nor any Subsidiary will directly or
indirectly apply any part of the proceeds of the Loan to the purchasing or
carrying of any "margin stock" within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System, or any regulations, interpretations,
or rulings thereunder;
(R) The Borrower shall make no payments of principal, interest, or of
any other amounts under any Subordinated Indebtedness until all amounts
outstanding under the Loan ("Senior Debt") have been paid in full; in the event
of the dissolution or winding up of the Borrower's business affairs, the
Subordinated Indebtedness shall at all times be subordinated to the Senior Debt.
At such time as there shall exist any Subordinated Indebtedness, the Borrower
shall obtain from the
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subordinated creditor a written undertaking affirming this covenant;
(S) During the term of the Loan, the Borrower shall not make any
advances to any stockholder, Affiliate or related entity (including but not
limited to, partnerships, joint ventures, joint stock companies, corporations,
parent companies or subsidiaries) except that the Borrower may use Loan proceeds
to fund its wholly owned British subsidiary, Vivid Technologies UK Ltd.;
(T) Neither the Borrower nor any Subsidiary shall utilize the Loan for
the purpose of servicing any of the Borrower's pre-existing or future
indebtedness unrelated to the Loan; and
(U) The Borrower shall not incur (i) for any two (2) consecutive
fiscal quarters net operating losses aggregating more than $300,000.00 or (ii)
in any fiscal year, a net operating loss.
ARTICLE 7. DEFAULT
7.01 Events of Default.
The occurrence of any one or more of the following events shall
constitute an Event of Default hereunder:
(A) The Borrower or any guarantor shall fail to pay when due any of
its Obligations to pay money to the Lender;
(B) The Borrower or any guarantor or Subsidiary shall fail to observe
or perform any of its Obligations other than payment of money to be observed or
performed by it hereunder, under any of the Collateral Documents or otherwise,
and such failure shall continue for five (5) days after (1) notice of such
failure from the Lender; or (2) the Lender is notified of such failure or should
have been so notified pursuant to the provisions of Section 6.01(N), whichever
is earlier;
(C) The Borrower or any Subsidiary shall fail to pay any Indebtedness
due any third Persons, and such failure shall continue beyond any applicable
grace period, or the Borrower or any Subsidiary shall suffer to exist any other
event of default under any agreement binding the Borrower or any Subsidiary;
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(D) Any financial statement, representation, warranty, or certificate
made or furnished by or with respect to the Borrower or any guarantor or
Subsidiary to the Lender in connection with this Agreement, or as inducement to
the Lender to enter into this Agreement, or in any separate statement or
document to be delivered to the Lender hereunder, shall be materially false,
incorrect, or incomplete when made;
(E) The Borrower or any guarantor or Subsidiary shall admit its
inability to pay its debts as they mature or shall make an assignment for the
benefit of itself or any of its creditors;
(F) Proceedings in bankruptcy, or for reorganization of the Borrower
or any Subsidiary, or for the readjustment of any of their respective debts
under the Bankruptcy Code, as amended, or any part thereof, or under any other
Laws, whether state or federal, for the relief of debtors, now or hereafter
existing, shall be commenced against or by the Borrower or any guarantor or
Subsidiary and, except with respect to any such proceedings instituted by the
Borrower, guarantor or a Subsidiary, shall not be discharged within ninety (90)
days of their commencement;
(G) A receiver or trustee shall be appointed for the Borrower or any
guarantor or Subsidiary or for any substantial part of their respective assets,
or any proceedings shall be instituted for the dissolution or the full or
partial liquidation of the Borrower or any guarantor or Subsidiary, and except
with respect to any such appointments requested or instituted by the Borrower,
any guarantor or a Subsidiary, such receiver or trustee shall not be discharged
within ninety (90) days of his appointment, and except with respect to any such
proceedings instituted by the Borrower, a guarantor or a Subsidiary, such
proceedings shall not be discharged within ninety (90) days of their
commencement, or the Borrower or any guarantor or Subsidiary shall discontinue
business or materially change the nature of its business, or the Collateral
becomes, in the reasonable judgment of the Lender, insufficient in value to
satisfy the Obligations, or the Lender otherwise reasonably finds itself
insecure as to the prompt and punctual payment and discharge of the Obligations;
(H) The Borrower or any guarantor or Subsidiary shall suffer final
judgments for payment of money aggregating in excess of $10,000.00 and shall not
discharge the same within a period of ninety (90) days unless, pending further
proceedings, execution has not been commenced or, if commenced, has been
effectively stayed;
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(I) A judgment creditor of the Borrower or any guarantor or Subsidiary
shall obtain possession of any of the Collateral by any means, including
(without implied limitation) levy, distraint, replevin, or self-help; or
(J) Any obligee of Subordinated Indebtedness shall fail to comply with
the subordination provisions of the instruments evidencing such Subordinated
Indebtedness.
7.02 Acceleration.
At its option, and at any time, whether immediately or otherwise, the
Lender may, upon the occurrence of any Event of Default, declare all Obligations
of the Borrower or guarantor to the Lender immediately due and payable without
further action of any kind and without notice, demand or presentment.
7.03 Demand Nature of Obligations.
The enumeration of the non-exclusive list of Events of Default in no
way modifies the demand nature of the Obligations. The occurrence of any one or
more Events of Default may cause the Lender (i) to make demand for payment and
performance of all Obligations, (ii) to cease making advances under the Loan,
and (iii) to exercise its cumulative rights and remedies. The Borrower
acknowledges that in so acting the Lender shall be deemed to be acting in a
commercially reasonable manner and in good faith. The Borrower acknowledges
that the occurrence of an Event of Default is not a condition or prerequisite to
the Lender making demand for payment or performance of any of the Obligations.
ARTICLE 8. THE LENDER'S RIGHTS AND REMEDIES
8.01 The Lender's Rights Upon Default.
Upon demand on the Note or the occurrence of an Event of Default and
at any time thereafter, the Lender, without presentment, demand, notice, protest
or advertisement of any kind, will have the rights set forth in this Article.
8.02 Account Debtors.
Upon demand on the Note or the occurrence of an Event of Default and
at any time thereafter, the Lender may notify account
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debtors, at the Borrower's expense, that the Collateral has been assigned to the
Lender and that payments shall be made directly to the Lender. Upon request of
the Lender, the Borrower will notify such account debtors that their accounts
must be paid to the Lender. Upon demand on the Note or the occurrence of an
Event of Default and at all times thereafter, the Borrower will hold all checks,
drafts, cash and other remittances in trust for the Lender and deliver them in
kind to the Lender. The Lender shall have full power to collect, compromise,
endorse, sell or otherwise deal with the Collateral or proceeds thereof in its
own name or in the name of the Borrower.
8.03 Possession and Foreclosure of Collateral.
Upon demand or the occurrence of an Event of Default and at any time
thereafter, the Lender shall have the following rights and remedies, which
rights and remedies are cumulative and not exclusive: (i) to the extent that
the Borrower could legally do so, the Lender may enter onto, occupy and use any
premises owned by the Borrower or in which the Borrower has any interest; (ii)
the Lender may take possession of all or any Collateral; (iii) in the Lender's
sole discretion, the Lender may operate and use the Borrower's equipment,
complete work in process and sell inventory without being liable to the Borrower
on account of any losses, damage or depreciation that may occur as a result
thereof (so long as the Lender acts in good faith); and (iv) the Lender may
lease or license the Collateral to any Person for such purposes.
In any event, the Lender may sell, lease, assign and deliver the whole
or any part of the Collateral, at public or private sale, for cash, upon credit
or for future delivery, at such prices and upon such terms as the Lender deems
advisable. The Lender may sell or lease Collateral alone or in conjunction with
other property, real or personal, and allocate the sale proceeds or leases among
the items of Collateral sold without the necessity of the Collateral being
present at any such sale, or in view of prospective purchasers thereof. If
notice of sale is legally required, the Borrower agrees that five (5) days oral
notice shall be deemed reasonable. Upon such sale, the Lender may become the
purchaser of the whole or any part of the Collateral sold, discharged from all
claims and free from any right of redemption. In case of any such sale by the
Lender of all or any of the Collateral on credit, or for future delivery, such
Collateral so sold may be retained by the Lender until the selling price is paid
by the purchaser. The Lender shall incur no liability in case of the failure of
the purchaser to take possession and pay for the Collateral so sold. In case of
any
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such failure, the said Collateral may be resold. Any Collateral remaining unsold
after being offered at public auction may be abandoned or disposed of for no
consideration in such manner as the Lender deems appropriate.
In any event, at any time and from time to time the Lender may abandon
the Collateral or any part thereof. The Borrower agrees immediately upon demand
to take possession of any and all abandoned Collateral and to remove it from any
location in the possession of or under the control of the Lender.
8.04 Use of Intellectual Property.
Upon demand on the Note or the occurrence of an Event of Default and
at any time thereafter, the Lender may use all or any part of the Borrower's
Intellectual Property which the Borrower now has or may hereafter acquire. The
Lender may license such Intellectual Property to third parties, seek
registration of such Intellectual Property in any state or nation or prosecute
pending applications for patents, copyrights, trademarks, or service marks in
the Borrower's name in any state or nation.
8.05 Notification of Default to Third Parties.
Upon demand on the Note or the occurrence of an Event of Default and
at any time thereafter, the Lender may notify the Borrower's suppliers, account
debtors and other third parties of the default and of any and all decisions made
and actions taken by the Lender with respect to this Agreement, the Obligations
or the Collateral, without liability of any kind.
8.06 Assembly of Collateral.
Upon demand on the Note or the occurrence of an Event of Default and
at any time thereafter, the Lender may require the Borrower to assemble the
Collateral in a single location at a place to be designated by the Lender and
make the Collateral at all times secure and available to the Lender.
8.07 Right of Set-Off.
Upon demand on the Note or the occurrence of any Event of Default and
at any time thereafter, the Lender may, and is hereby authorized by the
Borrower, at any time and from time to time, to the fullest extent permitted by
applicable Laws, without advance notice to the Borrower (any such notice being
expressly waived by the Borrower), set-off and apply any and all deposits
(general or
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special, time or demand, provisional or final) at any time held and any other
indebtedness at any time owing by the Lender to, or for the credit or the
account of, the Borrower against any or all of the Obligations of the Borrower
or any guarantor, now or hereafter existing, whether or not such Obligations
have matured and irrespective of whether the Lender has exercised any other
rights that it has or may have with respect to such Obligations, including
without limitation any acceleration rights. The Lender agrees promptly to notify
the Borrower after any such set-off and application, provided that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of the Lender under this Section 8.07 are in addition to
the other rights and remedies (including, without limitation, other rights of
set-off) which the Lender may have.
8.08 Exercise of Other Remedies.
Upon demand on the Note or the occurrence of any Event of Default and
at any time thereafter, the Lender may exercise the remedies of a Lender
afforded by the Uniform Commercial Code and other applicable law or by the terms
of any agreement between the Borrower and the Lender.
8.09 Cumulative Rights and Remedies.
All rights and remedies of the Lender, whether provided for herein or
in other agreements, instruments or documents or conferred by law, are
cumulative and may be exercised alone or simultaneously.
ARTICLE 9. ATTORNEY-IN-FACT
9.01 Attorney-In-Fact.
Upon demand on the Note or the occurrence of an Event of Default and
at all times thereafter, the Borrower hereby irrevocably appoints the Lender, or
its designee, as the Borrower's true and lawful attorney-in-fact, with full
power as follows: (1) to endorse the name of the Borrower on any assignments,
notes, checks, drafts, money orders, or other instruments of payment for
Collateral; (2) to sign or endorse the name of the Borrower on any negotiable
instrument, invoice, freight or express ▇▇▇▇, ▇▇▇▇ of lading, storage or
warehouse receipts, drafts, assignments, verifications and notices in connection
with Accounts; (3) to obtain, adjust, settle and cancel, in the Borrower's name,
insurance policies as required by
-38-
Section 6.01(D) and to sign the Borrower's name on settlement checks or drafts;
(4) in the Borrower's name, to do any act which this Agreement requires Borrower
to do, and, (5) to give notice to the United States Post Office to effect
changes of address so that mail addressed to the Borrower may be delivered
directly to the Lender. In exercising this power-of-attorney, the Lender shall
not be liable to the extent that it acts in good faith.
ARTICLE 10. MISCELLANEOUS
10.01 Construction.
The provisions of this Agreement shall be in addition to those of any
security agreement, note, or other evidence of liability now or hereafter held
by the Lender, all of which shall be construed as complementary to each other.
To the extent that there appears any conflicts between and among the documents,
the order of precedence in their construction shall be (1) the Note, (2) this
Agreement and (3) other ancillary agreements and documents presented at Closing.
Nothing herein contained shall prevent the Lender from enforcing any or all
other security agreements, notes, or other evidences of liability in accordance
with their respective terms.
10.02 Further Assurance.
From time to time, the Borrower will execute and deliver to the Lender
such additional documents and will provide such additional information as the
Lender may reasonably require to carry out the terms of this Agreement and be
informed of the status and affairs of the Borrower.
10.03 Enforcement and Waiver by the Lender.
The Lender shall have the right at all times to enforce the provisions
of this Agreement and the Collateral Documents in strict accordance with the
terms hereof and thereof, notwithstanding any conduct or custom on the part of
the Lender in refraining from so doing at any time or times. The failure of the
Lender at any time or times to enforce its rights under such provisions,
strictly in accordance with the same, shall not be construed as having created a
custom in any way or manner contrary to specific provisions of this Agreement or
as having in any way or manner modified or waived the same. All rights and
remedies of the Lender are cumulative and concurrent and the
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exercise of one right or remedy shall not be deemed a waiver or release of any
other right or remedy.
10.04 Expenses of the Lender.
The Borrower will, on demand, reimburse the Lender for all expenses,
including the reasonable fees and expenses of legal counsel for the Lender,
incurred by the Lender in connection with the preparation, administration,
amendment, modification, or enforcement of this Agreement and the Collateral
Documents and the collection or attempted collection of any of the Obligations.
10.05 Notices.
Any notices or consents required or permitted by this Agreement shall
be in writing and shall be deemed delivered if delivered in person or if sent by
certified mail, postage prepaid, return receipt requested, facsimile or
telegraph, as follows, unless such address is changed by written notice
hereunder:
(A) If to the Borrower:
Vivid Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: S. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Brown, Rudnick, Freed & Gesmer
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(B) If to the Lender:
BayBank, N.A.
7 New England Executive Park
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
and to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esquire
Bowditch & ▇▇▇▇▇
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▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
10.06 Waiver and Indemnification by the Borrower.
To the maximum extent permitted by applicable Laws, the Borrower:
(A) Waives (1) protest of all commercial paper at any time held by the
Lender on which the Borrower is in any way liable; (2) except as the same may
herein be specifically granted, notice of acceleration and of intention to
accelerate; and (3) notice and opportunity to be heard, after acceleration in
the manner provided in Section 7.02, before exercise by the Lender of the
remedies of self-help, set-off, or of other summary procedures permitted by any
applicable Laws or by any agreement with the Borrower, and, except where
required hereby or by any applicable Laws, notice of any other action taken by
the Lender; and
(B) Indemnifies the Lender and its officers, attorneys, agents, and
employees from all claims for loss or damage caused by any act or omission on
the part of any of them except willful misconduct.
10.07 Participation.
Notwithstanding any other provision of this Agreement, the Borrower
understands that the Lender may at any time enter into participation agreements
with one or more participating banks whereby the Lender will allocate certain
percentages of its commitment to them. The Borrower acknowledges that, for the
convenience of all parties, this Agreement is being entered into with the Lender
only and that its obligations under this Agreement are undertaken for the
benefit of, and as an inducement to, any such participating bank as well as the
Lender, and the Borrower hereby grants to each such participating bank, to the
extent of its participation in the Loan, the right to set off deposit accounts
maintained by the Borrower with such bank.
10.08 Applicable Law.
This Agreement is entered into and performable in the Commonwealth of
Massachusetts and shall be subject to and construed and enforced in accordance
with the laws of the Commonwealth of Massachusetts.
10.09 Binding Effect, Assignment, and Entire Agreement.
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This Agreement shall inure to the benefit of, and shall be binding upon,
the respective successors and permitted assigns of the parties hereto. The
Borrower has no right to assign any of its rights or obligations hereunder
without the prior written consent of the Lender. This Agreement, including the
Exhibits hereto, all of which are hereby incorporated herein by reference, and
the documents executed and delivered pursuant hereto, constitute the entire
agreement between the parties and may be amended only by a writing signed on
behalf of each party.
10.10 Severability.
If any provision of this Agreement shall be held invalid under any
applicable Laws, such invalidity shall not affect any other provision of this
Agreement that can be given effect without the invalid provision, and, to this
end, the provisions hereof are severable.
10.11 Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as a
sealed instrument as of the day and year first above written.
VIVID TECHNOLOGIES, INC.
By:
--------------------- -------------------------------
Witness S. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
President
BAYBANK, N.A.
By:
--------------------- -------------------------------
Witness ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
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NOTE
----
$3,000,000.00 Framingham, Massachusetts
April 4, 1996
FOR VALUE RECEIVED, VIVID TECHNOLOGIES, INC., a Massachusetts corporation
with its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
(the "Borrower"), promises to pay to BAYBANK, N.A. (the "Lender"), or order, ON
DEMAND, at the Lender's branch office at 7 New England Executive Park,
Burlington, Massachusetts, the principal sum of THREE MILLION AND 00/100 DOLLARS
($3,000,000.00) or such lesser amounts as shall from time to time be
outstanding, in lawful money of the United States of America, with interest from
the date of advancement on the unpaid balance at the rate and in the manner
hereinafter provided.
The unpaid principal of this Note from time to time outstanding shall bear
interest, computed on the basis of the actual number of days elapsed over a year
assumed to have 360 days, at a rate per annum equal to the Lender's Prime Rate
of interest, established from time to time by the Lender (the "Prime Rate"),
such interest rate to be adjusted from time to time on the effective date of any
change in the Prime Rate announced by the Lender. The Prime Rate shall be that
rate of interest announced from time to time by the Lender as its Prime Rate.
Interest shall be payable monthly in arrears beginning one month from the date
hereof and thereafter continuing on the same day of each succeeding month;
provided, however, that all indebtedness evidenced by this Note, if not sooner
paid, shall in any event be due and payable on February 28, 1997 (the "Maturity
Date").
The Borrower may borrow, repay (without penalty), and reborrow the
principal hereunder prior to the Maturity Date in accordance with the terms of
the Agreement as hereafter defined and incorporated herein, provided (i) there
has been no occurrence of an Event of Default or (ii) the Lender has not made
demand on the Borrower.
Each payment made hereunder shall be applied first to interest then due on
the unpaid balance of principal and then to principal. Upon expiration of any
applicable grace period,
1
overdue payments of principal (whether at stated maturity, by acceleration or
otherwise) and, to the extent permitted by law, overdue interest, shall bear
interest, compounded monthly and payable on demand in immediately available
funds, at a rate per annum equal to four percent (4.00%) above the Prime Rate,
fully floating; provided that if such interest exceeds the maximum amount
permitted to be paid under applicable law, then such interest shall be reduced
to such maximum permitted amount.
If a payment of principal or interest due hereunder is not made within ten
(10) days of its due date, the Borrower will also pay on demand in addition
thereto a late charge equal to five percent (5.00%) of the amount of such
payment.
This Note is issued pursuant to the provisions of a certain Line of Credit
Loan and Security Agreement dated May 23, 1995, as amended by a First Amended
and Restated Line of Credit Loan and Security Agreement dated of even date
herewith, both by and between the Borrower and the Lender, all of the terms and
conditions of which are incorporated herein by reference, as the same may from
time to time be amended (together the "Agreement"). No reference to the
Agreement nor any provision thereof shall affect or impair the absolute and
unconditional obligation of the Borrower to pay the principal of and interest on
this Note as herein provided. An Event of Default under the Agreement shall
also constitute an Event of Default hereunder.
The indebtedness evidenced by this Note is secured as set forth in the
Agreement.
This Note may be prepaid before maturity in whole or in part without
penalty or premium.
Any deposits or other sums at any time credited by or due from the holder
to the Borrower or any endorser or guarantor hereof and any securities or other
property of the Borrower or any endorser or guarantor hereof at any time in the
possession or custody of the holder may at all times be held and treated as
collateral security for the payment of this Note and any and all other
liabilities (direct or indirect, absolute or contingent, sole, joint or several,
secured or unsecured, due or to become due, now existing or hereafter arising)
of any such maker to the holder. Upon the occurrence of an Event of Default,
the holder may apply or set-off such deposits or other sums against such
liabilities at any time.
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The Borrower and each guarantor, endorser or other person now or hereafter
liable for the payment of any of the indebtedness evidenced by this Note,
severally agree, by making, guaranteeing or endorsing this Note or by making any
agreement to pay any of the indebtedness evidenced by this Note, to waive
presentment for payment, protest and demand, notice of protest, demand and or
dishonor and nonpayment of this Note, and consents, on one or more occasions,
without notice or further assent (a) to the substitution, exchange or release of
the collateral securing this Note or any part thereof at any time, (b) to the
acceptance or release by the holder or holders hereof at any time of any
additional collateral or security for or other guarantors of this Note, (c) to
the modification or amendment, at any time, and from time to time, of this Note,
the Agreement, or any instrument securing this Note at the request of any person
liable hereon, (d) to the granting by the holder hereof of any extension of the
time for payment of this Note or for the performance of the agreements,
covenants and conditions contained in this Note, the Agreement, or any other
instrument securing this Note, at the request of any person liable hereon, and
(e) to any and all forbearances and indulgences whatsoever. Such consent shall
not alter or diminish the liability of any person.
The Borrower agrees to pay all expenses and costs, including reasonable
attorneys' fees and costs of collection, which may be incurred by the holder
hereof in connection with the enforcement of any obligations hereunder,
including without limitation representation of the holder in any bankruptcy or
insolvency proceedings in which the Borrower is a party in interest.
IN WITNESS WHEREOF, the Borrower has executed this Note by its duly
authorized officer as an instrument under seal as of the day and year first
written above.
Witness: VIVID TECHNOLOGIES, INC.
By:
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S. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
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