EXHIBIT 10.17
AMENDED PARTICIPATION AGREEMENT
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This Amended Participation Agreement (the "Agreement") is made and executed
this 31st day of October, 2001 by and between PNC BANK, NATIONAL ASSOCIATION
("Lender") with an office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Assistant Vice President, and FARO TECHNOLOGIES,
INC., with an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Attn: ▇▇. ▇▇▇▇▇
▇▇▇▇ ("Participant").
BACKGROUND
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A. Pursuant to the terms and conditions of a certain Loan Agreement ("Loan
Agreement") dated January 28, 1998 and related agreements, instruments and
documents, all as amended from time to time (collectively called the "Credit
Documents"), Lender has made loans, advances, and extensions of credit ("Line of
Credit") to Spatialmetrix Corporation ("Borrower") up to a current maximum
principal outstanding amount of $2,300,000 at any one time.
B. Participant acknowledges receipt of copies of the Credit Documents.
All capitalized terms used herein without definition shall have the respective
meanings ascribed thereto in the Credit Documents.
C. On April 13, 2001, Lender increased the maximum principal among of the
Line of Credit to Three Million Eight Hundred Thousand Dollars ($3,800,000.00)
and Lender and Participant entered into a Participation Agreement whereby Lender
sold and transferred to Participant a participating interest in the Line of
Credit subject to the terms and conditions set forth in the Participation
Agreement.
D. Contemporaneously herewith, Lender is further increasing the maximum
principal amount of the Line of Credit to Five Million Three Hundred Thousand
($5,300,000) Dollars. Participant has agreed to purchase and accept and Lender
is willing to sell and transfer to Participant an increased participating
interest in the Line of Credit subject to the terms and conditions hereinafter
set forth.
NOW, THEREFORE, with the foregoing Background deemed incorporated herein and
made a part hereof, for good and valuable consideration the receipt of which is
hereby acknowledged, and intending to be legally bound, the parties hereby
covenant and agree as follows:
1. Pursuant and subject to the terms hereof, Lender hereby sells, extends
and transfers to Participant and Participant hereby purchases and accepts from
Lender an undivided participating interest in the Line of Credit ("Participation
Share") in an amount equal to the lesser of: (i) fifty six and sixty one
hundredths percent (56.60%) ("Participation Percentage") of the principal amount
of the Line of Credit outstanding on the books of Lender, or (ii) $3,000,000.
Participant's Participation Share shall be sold on a "last out" basis, meaning
the Participant's Participation Share shall only be paid after Lender's share of
the Line of Credit is paid and satisfied in full.
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2. INTENTIONALLY DELETED.
3. Lender shall pay over to Participant from and promptly after payment to
Lender of, the interest actually received by Lender from Borrower, a sum equal
to interest calculated on Participant's actual outstanding daily Participation
Share of the Line of Credit for the period covered by the interest payment at
the per-annum rate equal to PNC Bank's Prime Rate plus two and one-quarters of
one (2.25 %) percent. Participant shall not share in any prepayment premiums or
fees set forth in the Loan Agreement. If Lender should, for any reason, receive
less than the full amount of interest or other compensation due under the Credit
Documents, Participant's share of such interest or compensation set forth herein
shall ▇▇▇▇▇ ratably.
4. Except as set forth in Section 3 hereof, all amounts paid to and credited
by Lender to the outstanding balance of the Line of Credit including, without
limitation, principal, interest and expenses and including the proceeds or
collections resulting from the realization from or disposition of any Collateral
Security for the Line of Credit shall be applied first (to be applied to
principal, interest and expenses in such order as Lender may elect) for the
benefit of Lender and then second, to Participant. The term "Collateral
Security" as used herein includes Lender's lien on or security interest in all
of Borrower's Collateral (as defined in the Credit Documents) and the amounts
payable under and the proceeds of all other agreements under which any party
other than Borrower becomes liable in any capacity in connection with the Line
of Credit; balances in any bank account (including proceeds of any setoff), or
loss reserve account or other reserve account of Borrower which Lender or
Participant appropriates and applies to or toward the satisfaction of any
liability of Borrower to Lender; and all other property, real or personal,
tangible or intangible, of Borrower or any third party which secures payment of
the Line of Credit. Lender shall hold title to and possession of all Collateral
Security and Credit Documents in its name. Upon payment in full of Lender's
share of the Line of Credit, Participant shall be the full and sole owner of the
Line of Credit, the Credit Documents and all rights and obligations thereunder
in its sole name.
5. Lender shall, at all times, have the sole and exclusive right to service,
administer and monitor the Line of Credit, the Collateral Security and Credit
Documents, including without limitation the rights to: (i) exercise all rights,
privileges and options under the Credit Documents, including the credit judgment
with respect to the making of advances and the determinations to the basis on
which and the extent to which advances may be made, (ii) amend the Credit
Documents, (iii) modify or terminate the Line of Credit or accelerate the Line
of Credit, (iv) release, substitute or exchange any of the Collateral Security,
(v) waive nonperformance by Borrower or other Events of Default, or enforce or
refrain from enforcing its rights or remedies under the Credit Documents, and
(vi) compromise claims by or against Borrower or with respect to any Collateral
Security. Participant shall have no right or vote in connection with Lender's
rights set forth above. Notwithstanding the foregoing, Lender and Participant
agree as follows:
(a) Participant shall not make any payments directly to Borrower but shall
forward all additional funds to be advanced under this Agreement to Lender by
wire transfer to PNC Bank, ABA ▇▇▇▇▇▇▇▇▇, SL #▇▇▇▇▇-▇▇▇▇▇▇▇ for further advance
to Spatialmetrix Corporation, Note Number ▇▇▇▇▇▇▇▇▇, contact ▇▇▇▇▇ ▇▇▇▇▇▇ at
▇▇▇-▇▇▇-▇▇▇▇ when wire is sent;
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(b) Lender shall permit Borrower to draw upon the Line of Credit after the
date for up to a maximum of $1,500,000;
(c) Lender shall not make any further increases in the maximum principal
amount of the Line of Credit beyond $5,300,000 without the Participant's prior
written consent;
(d) Participant acknowledges that it has received and approved Borrower's
first draw request of Seven Hundred Fifty Thousand Dollars ($750,000) and that
Participant shall, at the time of execution of this Agreement, wire to the
Lender Seven Hundred and Fifty Thousand Dollars ($750,000) for further credit to
the Borrower. No portion of the funds advanced by the Participant shall be used
to pay down the Lender's portion of the Line of Credit;
(e) Lender agrees that draw requests by the Borrower in excess of the first
draw request of Seven Hundred Fifty Thousand Dollars ($750,000) shall not be
made without the prior approval of Participant. No portion of the funds advanced
by the Participant shall be used to pay down the Lender's portion of the Line of
Credit;
(f) Lender shall not release, substitute or exchange any of the Collateral
Security without the Participant's prior written consent;
(g) Lender shall not extend the time for repayment of the principal balance of
the Line of Credit beyond December 28, 2001 without the Participant's prior
written consent,
(h) The parties hereto acknowledge that until such time as the Lender's
portion of the Line of Credit is paid in full, Borrower shall remit forty
percent (40%) of all gross receipts received by Borrower from the collection of
accounts receivable or the sale of inventory immediately to Lender, to be
applied as a direct repayment of the Lender's portion of the Line of Credit.
(i) Participant previously purchased from Borrower a LaserTracker system,
serial no. ___________ (the "Equipment") for which Participant has paid to
Borrower the sum of $250,000. Lender consents to the re-purchase of the
Equipment by the Borrower and agrees that Borrower may pay to the Participant
the re-purchase price of $250,000 from the proceeds of the initial Advance
hereunder.
6. Lender shall have the right to deduct from payments on the Line of Credit,
or collections from or proceeds of Collateral Security, such funds as may be
necessary to pay or reimburse Lender for costs and expenses incurred by it and
not reimbursed by Borrower. All out-of-pocket costs and out-of-pocket expenses
incurred by Lender and not reimbursed by Borrower after the date hereof in
connection with the amendment, administration and enforcement of the Line of
Credit and Lender's rights in the Collateral Security (including, without
limitation, reasonable counsel fees and expenditures to preserve and protect the
Collateral Security under, and preserve and defend Lender's rights and interest
under, the Credit Documents shall be shared by Participant pro rata with Lender
based on Participant's Participation Percentage, however, Participant shall only
be required to reimburse Lender for such out-of-pocket costs and expenses
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to the extent Participant has received monies from Lender for application
against its Participation Share. Lender shall not be responsible to Participant
for any of Participant's costs and expenses arising from the interpretation of,
amendment to or enforcement of this Agreement, and neither Participant nor
Lender shall be entitled to share, on a pro rata basis with the other, any costs
and expenses arising from any actions or proceedings brought by Lender or
Participant against the other party.
7. Participant has entered into this Agreement solely upon its own
independent investigation and credit analysis and is not relying upon any
information supplied by or any representations made by Lender. Participant shall
continue to make its own analysis and evaluation of Borrower. Lender makes no
representation or warranty and assumes no responsibility with respect to (a) the
financial condition of Borrower, any guarantor or other obligor, or any account
debtor of Borrower; (b) the accuracy, sufficiency or currency of any information
concerning the financial condition, prospects or results of operations of
Borrower; (c) the sufficiency, authenticity, legal effect, validity or
enforceability of the Credit Documents; or (d) the value, condition, location or
quality to the Collateral Security. Lender assumes no responsibility or
liability with respect to the collectibility of the Line of Credit or the
performance by Borrower of any obligation under the Credit Documents.
8. During the term of this Agreement, Lender will furnish Participant with
copies of all financial statements and field examination reports of Borrower and
such other financial statements and reports as Participant may reasonably
request. Lender shall promptly provide Participant with a copy of all
correspondence from Lender to Borrower, including without limitation, demands
for payment, notices of default, notices of acceleration, summons and
complaints, and all notices relating to the sale of the Collateral Security.
Lender will promptly notify Participant when it receives notice of or has actual
knowledge of any Event of Default under the Credit Documents.
9. (a) Lender shall exercise the same care in accordance with commercially
reasonable practices in administering, servicing and monitoring the Loan as it
exercises with respect to similar transactions involving no participation.
Lender shall exercise its right and options hereunder in a manner deemed by
Lender to be in the best interests of Lender and Participant. Without limiting
the foregoing, Lender may rely on the advice of counsel concerning legal matters
and upon any written statements which it believes to be genuine or to have been
presented by a proper person or entity and shall not be required to make any
inquiry concerning the performance by Borrower of any of its obligations and
liabilities under the Credit Documents or under any other document or agreement.
Lender shall be entitled to rely on any notice, consent, certificate, affidavit,
letter, telegram, teletype message, statement, order or other document believed
by it to be genuine and correct and to have been signed and sent by the proper
person or persons and, in respect of legal matters, upon an opinion of counsel
selected by Lender.
(b) Notwithstanding Paragraph 9(a) above, Lender shall not in any event
have any liability whatsoever to Participant except for Lender's negligence,
willful misconduct or bad faith.
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10. (a) In the event that: (a) Lender is required to refund or repay to
Borrower or any other party all or any portion of any principal, interest or
other payment which was paid to Lender after the date of this Agreement, and (b)
Lender remitted all or a portion of such principal, interest or other payment to
Participant pursuant to this Agreement, then Participant shall remit to Lender,
on demand of Lender, such refunded or repaid amounts actually received by
Participant.
(b) Participant hereby indemnifies, ratably according to its
Participation Percentage, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever arising after the date hereof,
which may be imposed on, incurred by or asserted against the Bank in any way
relating to or arising out of Lender's execution of, or compliance with this
Agreement or actions taken or omitted by Lender at the direction of or with the
consent of Participant in connection with the terms hereof, provided that
Participant shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the willful misconduct or gross
negligence of Lender. Participant's obligations under this Section shall survive
the termination of the Credit Documents and this Agreement.
11. (a) Participant acknowledges and agrees that this Agreement merely sets
forth the terms and conditions under which it is acquiring an interest in
certain loans and extensions of credit made and to be made by Lender in a
commercial loan transaction entered into between Lender and Borrower, and that
this Agreement is therefore not intended to represent and shall not be deemed to
constitute a security. This Agreement and the participation of Participant in
the Line of Credit are not intended to and shall not be deemed to create or
constitute any joint venture or partnership between Participant and Lender.
(b) No amounts paid by Participant hereunder shall be considered as a
loan by Participant to Lender. It is expressly agreed that the participation
herein described is a full-risk, non-recourse participation and that Participant
shall look only to payments received and collected by Lender from Borrower or
from Collateral Security or from any guarantor or other obligor for repayment of
the participation.
12. (a) Participant shall not sell, subparticipate, assign, transfer or
pledge all or any portion of its Participation Share in the Line of Credit, or
its rights or obligations hereunder, without the prior written consent of
Lender.
(b) Subject to the provisions of Section 13 hereof, nothing herein
contained shall prohibit or restrict Lender from granting other participations
in the Line of Credit to any other party as Lender may, in its sole discretion,
elect. Lender shall provide Participant with prior written notice of the grant
of other participations in the Line of Credit.
13. (a) At any time after the date of this Agreement, Participant may, but
is not obligated to, on ten (10) days' prior written notice to Lender, terminate
this Agreement and tender to Lender, on the effective date of such termination,
an amount of cash or Federal Funds or other funds immediately available in
Philadelphia, Pennsylvania equal to 100% of Lender's Share in the outstanding
balance of the Line of Credit, plus accrued interest as of the date of such
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tender. If such tender is duly made, Participant shall thereupon be deemed to
have acquired Lender's entire Share for which such tender was made and this
Agreement shall be terminated, except for obligations existing under paragraph
10(b) hereof on the date of tender.
(b) If Lender has granted a participation in this Line of Credit to any
person other than the Participant (an "Other Participant"), at any time after
the date of this Agreement, Participant may, but is not obligated to, on ten
(10) days' prior written notice to the Other Participant, terminate this
Agreement and tender to the Other Participant, on the effective date of
termination, an amount of cash or Federal Funds or other funds immediately
available in Philadelphia, Pennsylvania, equal to 100% of such Other
Participant's Share in the outstanding balance of the Line of Credit, plus
accrued interest as of the date of such tender. If such tender is duly made,
Participant shall thereupon be deemed to have acquired such Other Participant's
entire Share for which such tender was made and the Participation Agreement
entered into between the Other Participant and Lender shall be terminated. Each
participation agreement entered into by the Lender in which a participation in
the Line of Credit is granted to any Other Participant shall incorporate the
provisions of this Section 13.
(c) From and after receipt of written notice from the Participant of its
intention to exercise its option under Section 13(a) hereof, the Lender shall
not take any of the actions described in Section 5(i) through (vi) without the
prior written consent of Participant.
14. During the term of this Agreement, Participant shall not with respect to
Borrower, without the prior written consent of Lender, offer, solicit,
negotiate, or otherwise contact Borrower in any manner regarding the Line of
Credit, the Credit Documents, this Agreement or any of the terms of any of the
above; provided however, that nothing in this Paragraph is intended to restrict
Participant's discussions, negotiations or contacts with Borrower solely
regarding Borrower's product development or matters arising from or relating to
the proposed acquisition of the Borrower by the Participant.
15. This Agreement may be executed in counterpart copies, each of which shall
be deemed a duplicate original hereof.
16. No modification or waiver of any provision of this Agreement shall be
binding or enforceable unless in writing and signed by the party against whom
enforcement is sought. No rights are intended to be created hereunder for the
benefit of Borrower or any other third party beneficiary. Notices required or
given hereunder shall be sent to the addresses set forth above either by
telecopy, hand delivery against receipt or by a nationally-recognized overnight
courier service on an overnight or next business day basis and sent to the
addresses described on the first page of this Agreement. Notices shall be
effective either immediately upon hand delivery or one business day after pick-
up by express courier.
17. This Agreement shall inure to the benefit of Lender and Participant and
their respective successors and assigns. This Agreement shall be governed by the
laws of the Commonwealth of Pennsylvania.
THE PARTICIPANT HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY ACTION,
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PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY
DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE PARTICIPANT ACKNOWLEDGES THAT
THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed the
day and year first above written.
PNC BANK, NATIONAL ASSOCIATION
By:
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Title:
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FARO TECHNOLOGIES, INC.
By:
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Title:
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