Exhibit 10.18
LINE OF CREDIT AGREEMENT WITH LETTER OF CREDIT AND/OR ACCEPTANCE
FINANCING AGREEMENT
MIKRON INSTRUMENT CO., INC. of ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (jointly and
severally if more than one, the "Borrower") and Fleet National Bank, a national
banking association created and existing under the laws of the United States of
America with a principal office located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (the "Bank"), for valuable consideration, the receipt of which is
hereby acknowledged, agree as follows:
I. DEFINITIONS.
1. Each reference herein to:
a. "Acceptance" shall mean a draft drawn by the Borrower on and
accepted by the Bank payable to the order of the Borrower and
endorsed by the Borrower either in blank or to the order of
the Bank and having a tenor not in excess of 180 days, and
created pursuant to the Acceptance Financing provisions of
this Agreement;
b. "Acceptance Credit Limit" shall mean the maximum amount of the
Credit Limit which may be used for the creation of Acceptances
as set forth in the Acceptance Financing provisions of this
Agreement;
c. "Accounts", "Chattel Paper", "Consumer Goods", "Documents",
"Equipment", "Farm Products", "Fixtures", "General
intangibles", "Goods", "Instruments", "Inventory", "Money",
and "Securities" shall have the meaning assigned to each in
the Uniform Commercial Code from time to time in effect in the
State (the "UCC");
d. "Affiliates of Borrower" means any person or entity that,
directly or indirectly, controls, is controlled by or is under
common control with the Borrower or is an inside director or
officer of the Borrower. For purposes of this definition, the
term "control" (including the terms "controlling", "controlled
by" and "under common control with") means the possession,
direct or indirect, of the power to vote five percent (5%) or
more of (i) the voting stock of a corporation, (ii) the
partnership interests of a partnership, or (iii) the
membership interests of a limited liability company, or to
direct or cause the direction of the management and policies
of any such entity, whether through the ownership of voting
stock, partnership interests, membership interests, by
contract or otherwise;
e. "Books and Records" shall mean all books, correspondence,
credit files, records and other documents relating directly or
indirectly to the Obligations and the Collateral, including,
without limitation, all tapes, cards, runs, data bases,
software programs, diskettes, and other papers and documents
in the possession or control of the Borrower, any computer
service bureau, or other agent or independent contractor;
f. "Clean Advance" shall mean a cash advance expressly excluding
the issuance of Letters of Credit and the creation of
Acceptances) by the Bank to the Borrower under the Clean
Advances provisions of this Agreement;
MIKRON INSTRUMENT CO., INC. Page 1 of 19
g. "Commercial Letters of Credit" shall mean Letters of Credit,
the beneficiary of which is under a contractual obligation to
sell Goods to the Borrower, which Goods will constitute
Inventory in the hands of the Borrower;
h. "L/C Credit Limit" shall mean the maximum amount of the Credit
Limit which may be used for issuance of Letters of Credit as
set forth in the Letters of Credit provisions of this
Agreement;
i. "Letter of Credit Application" shall mean the agreement or
agreements between the Bank and the Borrower with respect to
the issuance of Letters of Credit;
j. "Letters of Credit" shall mean irrevocable credits as defined
in the UCP issued by the Bank to one or more beneficiaries for
the account of the Borrower and consisting of either or both
of Commercial Letters of Credit and Standby Letters of Credit
as provided in the Letters of Credit provisions of this
Agreement;
k. "Loan Documents" shall mean this Agreement, the Note, any Bank
issued Commitment Letter and any amendments thereto, and any
and all mortgages, pledge agreements, security agreements,
financing statements, guaranties and other documents related
to this Agreement and/or the Loan;
l. "Material Adverse Change" shall mean with respect to the
Borrower and any guarantors and any of their respective
properties or revenues, an event, action or condition that
would or is reasonably likely to (i) adversely affect the
validity or enforceability of, or the authority of the
Borrower and/or any guarantor to perform their respective
obligations under, the Loan Documents, or (ii) materially
adversely affect the business, operations, assets or condition
(financial or otherwise) of the Borrower and/or any guarantor
or the ability of the Borrower and/or any guarantor to perform
their respective obligations under any of the Loan Documents,
or (iii) materially adversely affect the value of any
Collateral;
m. "Prime Rate" shall mean the rate of interest designated by the
Bank from time to time as being its prime rate of interest,
which rate of interest may not necessarily be the lowest rate
of interest charged by the Bank to anyone of its customers or
any particular class of customers.
n. "Standby Letters of Credit" shall mean Letters of Credit which
represent the Bank's obligation to the beneficiary (i) to
repay money borrowed by or advanced to or for the account of
the Borrower, or (ii) to make payment on account of any
indebtedness undertaken by the Borrower, or (iii) to make
payment on account of any default by the Borrower in the
performance of an obligation;
o. "State" shall mean the State of New Jersey.
p. "TSOC" shall mean the Bank's Trade Services Operation Center
operated by Fleet Services Corporation;
q. "UCP" shall mean the Uniform Customs and Practice for
Documentary Credits, International Chamber of Commerce
Publication No. 500 (1993 Revision or the most recent revision
or successor thereto).
MIKRON INSTRUMENT CO., INC. Page 2 of 19
II. LOAN.
1. Credit Limit. This Agreement evidences a line of credit for the
Borrower's short-term borrowing needs (the "Loan") with a credit
limit (the "Credit Limit") of the maximum principal sum of One
Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00).
2. Advances. The Bank agrees to make advances to the Borrower until
demand by the Bank and/or termination of the Bank's commitment upon
the occurrence of an Event of Default, provided that the aggregate
principal amount of the Loan does not exceed the Credit Limit. The
outstanding principal balance of all advances shall bear interest at
the sum of the Prime Rate plus ZERO percent (00%) per annum.
3. Excess Advances. If for any reason the aggregate outstanding
principal balance of the Loan should at any time exceed the Credit
Limit, the Borrower shall, without demand, immediately pay to the
Bank a sum sufficient to reduce the outstanding principal balance of
the Loan to the Credit Limit.
4. Commitment Fee. A non-refundable commitment fee of $0.00 will be due
and payable at closing, and a commitment fee will be charged to the
Borrower on the annual renewal date ( if any) of the loan.
III. CLEAN ADVANCES.
1. Maximum Amount. The Borrower may utilize the Loan for Clean Advances
in the following maximum amount (which assumes the maximum amount of
the Credit Limit is available to the Borrower): The maximum amount
of One Million Five Hundred Thousand and No/100 Dollars
($1,500,000.00). This maximum amount is further modified by the
provisions of Paragraph 8 of Part III.
2. Minimum Amount of Advance. Each advance under this Agreement shall
be in the minimum amount of One Thousand Dollars ($ 1,000.00) or the
unadvanced balance of the Credit Limit, whichever is less.
3. Telephone Access. The Borrower shall access the Loan by a telephonic
request. The Borrower accepts all risks inherent in such request.
The Borrower absolves the Bank from all damages, loss and
liabilities of whatsoever nature which may result from an
unauthorized telephonic request, a defective transmission, or a
telephonic request which is misunderstood by the Bank employee.
Neither the Bank nor any of its directors, officers or employees
shall be under any duty to pass upon the validity, accuracy,
authorization, effectiveness, or genuineness of any telephonic
request, and the Bank and its directors, officers and employees
shall be entitled to assume that any such telephonic instructions
are valid, effective, accurate, genuine and authorized. The Borrower
consents to the Bank's taping and recording of all telephonic
conversations relating to this Agreement and the Loan. All advances
shall be disbursed by the Bank by deposit of the Loan proceeds to
the Borrower's deposit account with the Bank
4. Demand Loan. On demand by the Bank, the entire outstanding principal
balance of the Loan and all accrued interest shall immediately
become due and payable.
5. Note; Interest Calculation. The Loan shall be evidenced by the
Borrower's note of even date with this Agreement (which note and all
amendments thereto and any additional or supplementary notes
executed pursuant to this Agreement are
MIKRON INSTRUMENT CO., INC. Page 3 of 19
herein referred to collectively as the "Note"). After demand, all
principal and other amounts outstanding and payable under the Note
shall bear interest at the rate of twenty percent (20%) per annum
until paid in full. Interest shall be calculated on the basis of a
360-day year using the actual number of days elapsed.
6. Late Fee. If the entire amount of any required principal and/or
interest is not paid in full within (10) days after the same is due,
the Borrower shall pay to the Bank a late fee equal to five percent
(5%) of the required payment.
7. Prepayment. The Borrower shall have the right at any time and from
time to time to prepay the Loan in whole or in part without premium,
penalty, or other charge (except as set forth in the next sentence),
but with accrued interest to the day of such prepayment on the
amount prepaid. To the extent that any full prepayment during the
first twelve (12) months from the date of this Agreement results,
directly or indirectly, from the application of funds borrowed by
the Borrower from any lending or financial services institution
other than the Bank, the Borrower shall pay to the Bank at the time
of such prepayment a non-refundable early termination fee of $35 (if
unsecured) or $75 (if secured). This provision shall not constitute
a waiver of Part V, 9 of this Agreement.
8. Annual Clean Up. As long as this Agreement remains in effect, the
Borrower shall at least once each twelve (12) month period pay such
amount of outstanding Clean Advances and accrued interest thereon as
may be necessary to maintain for a period of at least thirty (30)
consecutive days thereafter a Clean Advance balance less than or
equal to zero percent (0%) of the maximum amount of Clean Advances.
The Borrower's compliance with this clean-up provision of this
paragraph shall not cause a termination of any security agreements,
mortgages or other agreements which may secure the Loan.
IV. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants that:
1. Organization and Powers. (a) If a corporate, partnership, limited
liability company or trust Borrower, it is duly organized, validly
existing and in good standing, (b) it has the power and authority to
own its properties and to carry on its business as now being
conducted and, if a corporate, partnership, limited liability
company or trust Borrower, is qualified to do business in every
jurisdiction where such qualification is necessary, (c) it has the
power to execute, deliver and perform the Loan Documents, (d) the
execution, delivery and performance of the Loan Documents have been
duly authorized by all requisite action, (e) the execution, delivery
and performance of the Loan Documents will not violate any provision
of law, any order of any court or other agency of government, the
Articles of Incorporation or By-laws of a corporate Borrower, the
partnership agreement of a partnership Borrower, the Articles of
Incorporation or Operating Agreement of a limited liability company
Borrower, or the trust agreement of a trust Borrower, or any
indenture, agreement or other instrument to which it is a party, or
by which it is bound, or be in conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument, or result
in the creation or imposition of any lien, charge or encumbrance of
any nature
MIKRON INSTRUMENT CO., INC. Page 4 of 19
whatsoever upon any of the property or assets of the Borrower (other
than in favor of the Bank) or the acceleration of any of its
outstanding indebtedness.
2. Financial Statements. The Borrower has heretofore furnished to the
Bank accurate and complete financial data and other information
based on its operations in previous years, and said financial data
fairly presents the financial position and the results of operations
for the periods indicated therein. There has been no Material
Adverse Change since the date of the most recent financial
statement.
3. Litigation. There is no action, suit or proceeding at law or in
equity or by or before any governmental instrumentality or other
agency now pending or threatened against or affecting the Borrower.
4. No Conflict. The Borrower is not a party to any agreement or
instrument or subject to any restriction materially or adversely
affecting its business, properties or assets, operations or
condition, financial or otherwise. The Borrower has no knowledge
that it is in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party.
5. Use of Proceeds. No part of the proceeds of the Loan will be used
for consumer purposes or will be used to purchase or carry, directly
or indirectly, any margin stock or margin security (within the
meaning of Regulation U of the Board of Governors of the Federal
Reserve System) or to extend credit to others for the purpose of
purchasing or carrying any such margin stock or margin security. If
requested by the Bank the Borrower will furnish in connection with
this Agreement a statement in conformity with the requirements of
Federal Reserve Form U-1 referred to in said Regulation U.
V. CONDITIONS OF LENDING.
The Bank shall be obligated to make advances under this Agreement only if
on the date such advance is requested:
a. The representations and warranties in Part III hereof are true and
correct;
b. No Event of Default exists; and
c. The Bank shall have received: (a) certificate of authority, (b) the
original Loan Documents, and (c) such additional supporting
documents as the Bank may reasonably request.
VI. COVENANTS.
The Borrower covenants and agrees that it will:
1. (a) Legal Existence; Insurance; Etc. Keep in full force and effect
its legal existence (if a corporation, partnership, limited
liability company or trust), rights, licenses, permits and
franchises and operate its business as conducted prior to the date
hereof; maintain all property used in the conduct of its business
and keep the same in good repair, working order and condition; and
maintain adequate insurance on its properties against fire, theft,
and extended coverage risks and against public liability and
property damage and products liability and such other risks as may
be required by law or as may be reasonably required by the Bank, in
such form, for such periods, and written by such companies as may be
satisfactory to the Bank, such insurance in the case of a secured
loan to name
MIKRON INSTRUMENT CO., INC. Page 5 of 19
the Bank as additional insured and/or mortgagee/loss payee. All
policies of insurance shall provide for at least twenty (20) days'
written notice to the Bank prior to cancellation or change in the
coverage, scope or amount of any such policies or policies. Borrower
shall furnish the Bank with certificates of compliance with the
foregoing insurance provision.
(b) Compliance with Laws. Comply with all present and future
applicable laws, ordinances, rules, regulations, directives and
other requirements of all governmental instrumentalities, including
without limitation those relating to Hazardous Substances, within
such time periods as required thereby, with time being of the
essence.
2. Operation of Business. Maintain and operate its business in a proper
and efficient manner.
3. Payment of Taxes. Pay and discharge all taxes, assessments, and
governmental charges imposed upon Borrower, its income or its
property before the same shall be in default as well as all lawful
claims for labor, materials and supplies or otherwise which, if
unpaid, might become a lien upon any such properties.
4. Financial Statements. Furnish to the Bank
a. promptly, from time to time as requested by the Bank, and in
all events within one hundred twenty (120) days after the
close of each applicable party's tax year, (i) with respect to
the Borrower and all corporate, partnership or trust
guarantors, financial statements (audited if requested),
balance sheets, profit and loss statements, together with
supporting schedules, signed and in such form as may be
acceptable to the Bank; (ii) with respect to all individual
guarantors, signed personal financial statements; and (iii)
with respect to all entities and individuals referred to in
(i) and (ii), current Federal income tax returns (with all
schedules and exhibits), or in the case of a partnership, Form
1065 (with all schedules and exhibits). In any event, all the
documents referred to in this subparagraph (a), regardless of
when last submitted, must be submitted to the Bank, as often
as the Bank shall deem necessary, if there occurs a Material
Adverse Change.
b. promptly, from time to time, such other information regarding
the operations, assets, business, affairs and financial
condition of the Borrower and all guarantors, as the Bank may
reasonably request; and
c. with respect to all personal financial statements submitted by
individual guarantors, such statements shall be on forms
prescribed by the Bank.
5. Inspection. Permit agents or representatives of the Bank, at
reasonable hours and upon reasonable notice, to inspect the Books
and Records of the Borrower and to make abstracts or reproductions
thereof, all at the Borrower's expense.
6. Adverse Changes. Promptly advise the Bank of any Material Adverse
Change.
7. Accounting System. Maintain a standard system of accounting in
accordance with generally accepted accounting principles.
8. Depository. Maintain the Bank as the Borrower's principal
depository.
9. Indebtedness. Not incur or permit to exist any indebtedness or
liability except indebtedness to the Bank or any Bank affiliate,
indebtedness with respect to
MIKRON INSTRUMENT CO., INC. Page 6 of 19
warranty, trade obligations and other liabilities incurred in the
ordinary course of business, and any indebtedness or liability
permitted in writing by the Bank.
10. Liens. Not create, assume or suffer to exist any mortgage, security
interest or lien on any of its assets, now or hereafter owned, other
than liens securing indebtedness to the Bank or any Bank affiliate,
liens securing the payment of taxes not yet due, liens imposed by
law (other than for borrowed money), liens incurred by the Borrower
in good faith in the ordinary course of business, and other liens
permitted in writing by the Bank.
11. Guaranties; Etc. Not guarantee, endorse or otherwise become or be
responsible for obligations of any other person or entity, whether
by agreement to purchase the indebtedness of any other person or
entity or agreement for the furnishing of funds to any other person
or entity through purchase of Goods, supplies or services, or by way
of stock purchase, capital contribution, advance or loan, for the
purpose of paying or discharging any indebtedness or obligation of
such other person or entity, or otherwise, except endorsements of
negotiable instruments for collection in the ordinary course of
business.
12. Investments. Not purchase, invest in or otherwise acquire or hold
Securities including, without limitation, capital stock (including
closely held stock) and evidences of indebtedness of, or make loans
or advances to, or enter into any arrangement for the purpose of
providing funds or credit to, any other person or entity (including,
without limitation, all Affiliates of the Borrower), except
investments in short-term obligations of the United States and
certificates of deposit issued by the Bank or any Bank Affiliate.
13. Sales of Accounts and Instruments. Not sell, assign, discount or
dispose of any Accounts or Instruments held by the Borrower, with or
without recourse, except for collection (including endorsements) in
the ordinary course of business.
14. Sales and Transfers. Not sell, assign, lease, transfer, sell and
leaseback or otherwise dispose of all or any material amount of its
assets not in the ordinary course of business to any person or
entity or turn over the management of, or enter into a management
contract with respect to, such assets.
15. Valuation. Not write up (by creating an appraisal surplus or
otherwise) the value of any capital assets above their cost less the
depreciation regularly allowable thereon.
16. Fundamental Changes. Not dissolve, liquidate, consolidate with or
merge with any corporation, limited liability company or other
entity or agree to do any of the foregoing.
17. Distributions. If a corporate Borrower, not declare or pay any
dividends, or make any distribution to holders of shares of its
capital stock (and on account of such capital stock) of cash,
capital stock or other property, or directly or indirectly, redeem,
purchase or otherwise acquire any shares of its capital stock of any
class; and if a partnership or limited liability company Borrower,
not permit the return or withdrawal of any capital contributions;
provided, however, that if the Borrower is an "S" Corporation under
the Internal Revenue Code, the Borrower may make annually such cash
distributions to its shareholders as shall equal the sum of federal
income taxes which are allocable to such shareholders'
MIKRON INSTRUMENT CO., INC. Page 7 of 19
income received or deemed to have been received on account of such
shareholders' capital stock in the Borrower.
18. Additional Covenants. Comply with the additional covenants, if any,
set forth on affixed Exhibit A-1.
VII. SECURITY AGREEMENT AND OTHER SECURITY DOCUMENTS.
1. Security Interest; Collateral; Obligations. The Borrower hereby
grants to the Bank, as security for any and all obligations
whatsoever of the Borrower to the Bank, whether direct, indirect,
absolute or contingent, due or to become due and whether now
existing or hereafter arising and howsoever evidenced or acquired,
including without limitation all indebtedness and liabilities
evidenced by the Loan, this Agreement, the other Loan Documents,
checking account overdrafts, and letter of credit reimbursement
agreements, excluding, however, indebtedness incurred primarily for
personal, family or household purposes (collectively, the
"Obligations"), a security interest in and agrees and acknowledges
that the Bank has and will continue to have a security interest in
all of the Collateral described below, both presently owned and
after acquired, together with all proceeds and products thereof,
additions and accessions thereto, and all replacements and
substitutions therefor (collectively, the "Collateral"), excluding,
however, all such Collateral which constitutes Consumer Goods in the
hands of the Borrower: Accounts, Books/Records, Chattel, Documents,
Equipment Fixtures, Instruments, General Intangibles, Inventory,
Securities, Machinery, Furniture, Contract Rights.
2. Borrower hereby warrants, covenants and agrees that:
a. Title; Adverse Liens. Except for prior security interests
disclosed on Exhibit A-2 (if any) and except for the security
interest granted hereby, the Borrower is the owner of
presently owned Collateral and will be the owner of Collateral
hereafter acquired free from any adverse lien, and Borrower
will defend the Collateral against the claims and demands of
all persons at any time claiming the same or any interest
therein.
b. Financing Statements. Except for financing statements
evidencing the security interests which may be listed on
Exhibit A-2 (if any), no financing statements covering any
Collateral are on file in any public office. At the request of
the Bank, the Borrower will execute one or more (i) financing
statements pursuant to the UCC; (ii) title certificate lien
application forms; and (iii) other documents necessary or
advisable to perfect the security interests evidenced hereby,
all in form satisfactory to the Bank. Where allowed by law,
the Borrower hereby irrevocably authorizes the Bank to file
financing statements and amendments without the signature of
the Borrower. The Borrower will pay the cost of filing the
aforesaid documents or filing or recording this Agreement in
all public offices wherever filing or recording is deemed by
the Bank to be necessary or desirable.
c. Adverse Liens. The Borrower will keep the Collateral free from
any future adverse liens.
d. Equipment. If the Borrower has granted a security interest in
Equipment:
i The Equipment is used primarily for business purposes.
MIKRON INSTRUMENT CO., INC. Page 8 of 19
ii The Equipment will be kept at the location listed on
affixed Exhibit A-3. Borrower shall promptly notify Bank
of any change in the location of the Equipment and
Borrower will not remove the Equipment from such
location without the prior written consent of the Bank.
e. Inventory. If the Borrower has granted a security interest in
Inventory:
i The Inventory is acquired for business purposes. In the
absence of an Event of Default hereunder, the Borrower
may sell the Inventory in the ordinary course of its
business upon terms not exceeding thirty (30) days, or
upon such further terms as the Bank may from time to
time approve. The Borrower shall not without the consent
of the Bank sell the Inventory to any supplier or
employee of the Borrower or to any person to whom the
`Borrower is indebted or under circumstances which would
otherwise create an adverse lien, including a right of
set-off, against the Account resulting from such sale.
ii Inventory will be kept at the location listed on affixed
Exhibit A-3. The Borrower will promptly notify the Bank
of any change in the location of the Inventory, and the
Borrower will not remove the Inventory from such
location without the prior written consent of the Bank.
f. Accounts. If the Borrower has granted a security interest in
Accounts:
i The Borrower will upon demand render to the Bank a
statement indicating the total dollar value of the
Accounts.
ii The only offices where the Borrower keeps Books and
Records concerning any Accounts is at the location
listed on affixed Exhibit A-3. The Borrower will not
remove any of such Books and Records from said offices
without the prior written consent of the Bank.
iii During the five years immediately preceding the grant of
the security interest hereby to the Secured Party,
Borrower has maintained its chief executive office at
the address(es), and during the time periods, set forth
on Exhibit A-3. Without the prior written consent of the
Secured Party, Borrower will not change its chief
executive office.
iv The Borrower will at all times keep accurate and
complete Books and Records of its Accounts, and the Bank
or any of its agents shall have the right to inspect the
Borrower's Books and Records relating to said Accounts
or to any other transactions to which the Borrower is a
party and from which an Account might arise and to make
extracts from said Books and Records, all at the
Borrower's expense. The Bank may in its own name or in
the names of others, communicate with account debtors in
order to verify with them, to the Bank's satisfaction,
the existence, amount and terms of any Accounts. The
Borrower shall immediately notify the Bank of any event
causing loss or depreciation in value
MIKRON INSTRUMENT CO., INC. Page 9 of 19
of any of its Accounts and the amount of such loss or
depreciation.
v If any of the Borrower's Accounts arise out of contracts
with the United States or any department agency or
instrumentality thereof, the Borrower will immediately
notify the Bank thereof in writing and execute any
instruments and take any steps required by the Bank in
order that all monies due and to become due under such
contracts shall be assigned to the Bank and notice
thereof given to the government under the Federal
Assignment of Claims Act.
vi If any of the Borrower's Accounts should be evidenced by
Instruments, the Borrower will immediately deliver such
Instruments to the Bank, appropriately endorsed to the
Bank's order and, regardless of the form of such
endorsement, the Borrower hereby waives presentment,
demand or notice of any kind with respect thereto.
vii This Agreement may, but need not be supplemented by
separate assignments of Accounts to the Bank, and if
such assignments are given, the rights given thereby
shall be in addition to and not in limitation of the
rights and security interests given by this Agreement.
g. Fixtures; Farm Products. If the Borrower has granted a
security interest in Fixtures and/or Farm Products, there is
affixed hereto as Exhibit A-4 a description of the applicable
real estate and the name(s) of the record owner.
h. Investment Securities. If the Borrower has granted a security
interest in Investment Securities the Bank may transfer
Collateral into its name or that of its nominee and may
receive the income and any distributions thereon and hold the
same as Collateral for the Obligations, or apply the same to
any Obligation, whether or not an Event of Default has
occurred.
VIII. EVENTS OF DEFAULT.
THE ITEMIZATION OF THE FOLLOWING EVENTS OF DEFAULT DOES NOT CHANGE THE
DEMAND NATURE OF THE OBLIGATIONS EVIDENCED BY THIS AGREEMENT AND THE NOTE.
1. Listing of Events of Default. The occurrence of any of the following
events or conditions with respect to the Borrower shall,
individually and collectively, be an "Event of Default" hereunder:
a. any representation or warranty made herein or in any report,
certificate, financial statement or other instrument furnished
in connection with this Agreement or the Loan shall prove to
be false or misleading in any material respect;
b. failure to pay the principal of, or interest on, the Note or
any other indebtedness of the Borrower to the Bank, within ten
(10) days from the date the same or any installment thereof
shall become due and payable,
MIKRON INSTRUMENT CO., INC. Page 10 of 19
whether at the due date thereof or at a date fixed for
prepayment or by acceleration or otherwise;
c. default in the due observance or performance of any other
covenant, condition or agreement contained in this Agreement,
any of the other Loan Documents, or in any other agreement or
document evidencing or pertaining to Obligations, and such
other default shall remain unremedied for ten (10) days;
d. the acceleration of the maturity of any of the Borrower's
indebtedness other than to the Bank;
e. involvement in financial difficulties as evidenced by:
i an attachment made on the Borrower's property or assets
which remains unreleased for a period in excess of
forty-five (45) days; or
ii the inability to pay its debts (including without
limitation taxes) generally as they become due; or
iii the appointment or authorization of a custodian as
defined in the Bankruptcy Code; provided, however, that
in the case of the appointment of a receiver in an
involuntary proceeding such appointment continues in
effect and undischarged for a period of thirty (30)
days; or
iv the entry of an order for relief in a voluntary case
under any chapter of the Bankruptcy Code; or
v the filing of an involuntary petition under any chapter
of the Bankruptcy Code, which petition remains
undismissed for a period of thirty (30) days; or
vi any other judicial modification or adjustment of the
rights of Borrower's creditors;
f. final judgment for the payment in excess of an aggregate of
Ten Thousand Dollars ($10,000.00) shall be rendered against
the Borrower and the same shall remain undischarged for a
period of thirty (30) consecutive days during which execution
shall not be effectively stayed;
g. any transfer (which shall include, without limitation, by
sale, exchange, gift, pledge, hypothecation, or by other means
except transfers by operation of law) to any person who is not
presently a shareholder of a corporate Borrower or the spouse
or child of a shareholder of a corporate Borrower of any
voting capital stock of the Borrower, except any transfers of
such shares upon the death of a shareholder either by will or
by intestacy;
h. any transfer (as defined in (g)) to any person who is not
presently a partner of a partnership Borrower or the spouse or
child of a partner of a partnership Borrower of any
partnership interest in the Borrower, except any transfer of
such interest upon the death of a partner either by will or
intestacy;
i. any transfer (as defined in (g)) to any person who is not
presently a member of a limited liability company Borrower or
the spouse or child of
MIKRON INSTRUMENT CO., INC. Page 11 of 19
a member of a limited liability company Borrower of any
membership interest in the Borrower, except any transfer of
such interest upon the death of a member either by will or
intestacy;
j. in the case of a trust Borrower, (i) any change in the
beneficiaries of the trust; (ii) any dilution of the
beneficial interest of one or more of the beneficiaries; or
(iii) any change in the trustee or trustees;
k. the suspension of business for cause, other than strike,
casualty or other cause beyond the Borrower's control and in
the event of such suspension for cause beyond the Borrower's
control, failure to resume operations as soon as possible;
l. dissolution or termination of the legal existence of the
Borrower;
m. participation in any illegal activity or in any activity,
whether or not related to the business of the Borrower, that
may subject the assets of the Borrower to (i) a restraining
order or any form of injunction issued by any federal or state
court or (ii) seizure, forfeiture or confiscation by any
federal or state governmental. instrumentality;
n. if the Bank believes in good faith, at any time, that either
(a) the prospect of the Borrower's (i) repayment of the Loan
or payment of any of its other obligations under the Loan
Documents or (ii) performance of its duties thereunder is
impaired or (b) there is any Material Adverse Change; or
o. with respect to any guaranty and/or subordination agreement
included in the Loan Documents, the failure of the same to
remain in full force and effect until the Loan is paid in full
and this Agreement is terminated.
2. Certain Cross-Defaults. The happening off any event or condition set
forth in subsection 1(e), (f), (l), or (m) above, with respect to a
general partner of a partnership Borrower or any guarantor of the
Loan shall likewise constitute an Event of Default.
3. Termination of Commitment. If an Event of Default occurs, the Bank,
at its option, may (i) make demand for payment of the entire
outstanding principal balance and all accrued interest on account of
the advances (the Bank having the right at all times, whether or not
an Event of Default has occurred, to make such demand); and (ii)
terminate the commitment to make advances under this Agreement
(provided, however, that if the Bank shall exercise its
discretionary right to make demand, such demand shall also terminate
the Bank's commitment to make advances, whether or not an Event of
Default has occurred).
IX. MISCELLANEOUS.
1. Waiver of Event of Default. No delay in terminating the Bank's
commitment under this Agreement and/or in making demand shall affect
the rights of the Bank later to take such action with respect
thereto, and no waiver as to one Event of Default shall affect
rights as to any other default.
2. Notices. Except as otherwise specifically provided for herein, any
notice, demand or communication hereunder shall be given in writing
(including facsimile transmission or telex) and mailed or delivered
to each party at its address set forth below, or, as to each party,
at such other address as shall be designated by such party by a
prior notice to the other party in accordance with
MIKRON INSTRUMENT CO., INC. Page 12 of 19
the terms of this provision. Any notice to the Borrower shall be
sent as follows: MIKRON INSTRUMENT CO., INC., ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. All notices hereunder shall be effective upon the
earliest to occur of (i) five (5) business days after such notice is
mailed, by registered or certified mail, postage prepaid (return
receipt requested), (ii) upon delivery by hand (iii) upon delivery
if delivered by overnight courier (such delivery to be evidenced by
the courier's records), and (iv) in the case of any notice or
communication by telex or telecopy, on the date when sent.
3. Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates
delivered pursuant hereto shall survive any making by the Bank of
the Loan and the execution and delivery of any Loan Documents and
shall continue in full force and effect until this Agreement is
terminated and all the Obligations are paid in full.
4. Legal Fees and Expenses; Additional Fees and Charges. The Borrower
will pay all expenses incurred by the Bank in connection with the
preparation of the Loan Documents, the making of the Loan, and the
enforcement of the rights of the Bank in connection with this
Agreement any of the other Loan Documents and the Loan, including,
but not limited to, the reasonable fees of its counsel (which may
include costs allocated by the Bank's internal legal department),
plus the disbursements of said counsel. Borrower further agrees to
pay to the Bank on demand all reasonable fees, costs and expenses
incurred by the Bank in connection with the administration of the
Loan, including, without limitation, overnight courier fees, lien
search fees, and filing and recording fees. The Borrower agrees to
pay on demand the Bank's service fees and charges for administrative
costs as in effect from time to time (including, without limitation,
such fees and charges as may be expressly provided for in this
Agreement). Any such fee or charge may be implemented by the Bank
from time to time or, in the case of any such existing fee or
charge, the amount thereof may be increased by the Bank from time to
time, in each instance, in or to such amount as the Bank in its sole
discretion deems reasonable.
5. Choice of Law. This Agreement and all the other Loan Documents shall
be construed in accordance with and governed by the local laws
(excluding the conflict of laws rules, so-called) of the State.
6. Written Modification and Waiver. No modification or waiver of any
provision of this Agreement or of any of the other Loan Documents
nor consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be in writing, and then
such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand
on the Borrower in any case shall entitle the Borrower to any other
or further notice or demand in the same, similar or other
circumstances.
7. Accounting Practice. All matters involving accounting practice are
to be determined both as to classification of items and amounts in
accordance with generally accepted principles of accounting practice
consistently applied by the Borrower's accountants in the
preparation of its previous annual financial statements.
8. Documentation. All documents required hereunder shall be in form and
substance satisfactory to the Bank
MIKRON INSTRUMENT CO., INC. Page 13 of 19
9. Joint and Several Obligations. If this Agreement is signed by more
than one Borrower, all obligations of the Borrowers are their joint
and several obligations, and all references to the Borrower herein
shall be deemed to refer to each of them, either of diem, and all of
them.
10. Unenforceability. In the event any term or provision of this
Agreement or the application thereof to any person or circumstance
shall, to any extent be held invalid or unenforceable, the remainder
of this Agreement or the application of such term or provision to
persons or circumstances other than those to which it is held
invalid or unenforceable, shall be valid and enforceable to the
fullest extent permitted by law.
11. Cumulative Remedies; Setoff. The rights and remedies provided the
Bank in this Agreement and in the other Loan Documents shall be
cumulative and shall be in addition to and not in derogation of any
rights or remedies provided the Bank in any other document
instrument or agreement or under applicable law or otherwise, and
may be exercised concurrently or successively. Borrower and any
Guarantor hereby grant to Bank, a lien, security interest and right
of setoff as security for all liabilities and obligations to Bank,
whether now existing or hereafter arising, upon and against all
deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity
under the control of FleetBoston Financial Corporation., or in
transit to any of them. At any time, without demand or notice, Bank
may set off the same or any part thereof and apply the same to any
liability or obligation of Borrower and any Guarantor even though
unmatured and regardless of the adequacy of any collateral securing
the Loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS
OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE
LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER OR ANY
GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
12. Assignments and Participations. The Borrower agrees that the Bank
shall have the right at all times to sell all or any portion of the
Loan and all Loan Documents, and to grant one or more participations
in the Loan and in all Loan Documents. In connection therewith, the
Borrower hereby irrevocably authorizes the Bank to deliver to each
such purchaser, participant and prospective purchaser and
prospective participant originals and copies of all Loan Documents
and all financial statements and other credit and factual data from
time to time in the Bank's possession which relate to the Borrower
and/or all guarantors, if any, of the Loan. The Borrower further
agrees that the Bank shall have the right at all times to disclose
and report to credit reporting agencies such information pertaining
to the Borrower and/or all guarantors, if any, as is consistent with
the Bank's policies and practices from time to time in effect.
13. Maximum Rate of Interest. All provisions of this Agreement are
expressly subject to the condition that in no event shall the amount
paid or agreed to be paid to the Bank hereunder and deemed interest
under applicable law exceed the maximum rate of interest on the
unpaid principal balance of the Loan allowed by applicable law (the
"Maximum Allowable Rate"), which shall mean the law in effect on the
date of this Agreement, except that if there is a change in such law
MIKRON INSTRUMENT CO., INC. Page 14 of 19
which results in a higher Maximum Allowable Rate being applicable to
this Agreement then this Agreement shall be governed by such amended
law from and after its effective date. In the event that fulfillment
of any provision of this Agreement results in the interest rate
hereunder being in excess of the Maximum Allowable Rate, the
obligation to be fulfilled shall automatically be reduced to
eliminate such excess. If, notwithstanding the foregoing, the Bank
receives an amount which under applicable law would cause the
interest rate set forth in this Agreement to exceed the Maximum
Allowable Rate, the portion thereof which would be excessive shall
automatically be applied to and deemed a prepayment of the unpaid
principal balance of the Loan and not a payment of interest.
14. WAIVER OF JURY TRIAL THE BORROWER WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
AGREEMENT AND ANY OF THE OTHER LOAN DOCUMENTS, AND AGREES THAT ANY
SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
15. Jurisdiction and Venue. The Borrower irrevocably consents that any
legal action or proceeding against it or any of its property with
respect to any matter arising under or relating to this Agreement
and the other Loan Documents may be brought in any court of the
State, or any Federal Court of the United States of America located
in the State, as the Bank may elect, and by execution and delivery
of this Agreement the Borrower hereby submits to and accepts with
regard to any such action or proceeding, for itself and in respect
of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts. The Borrower further irrevocably consents to
the service of process in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage
prepaid, to the Borrower at its address set forth herein. The
foregoing, however, shall not limit the Bank's rights to serve
process in any other manner permitted by law or to bring any legal
action or proceeding or to obtain execution of judgment in any other
jurisdiction. The Borrower irrevocably waives any objection which it
may now or hereafter have to the laying of the venue of any suit,
action or proceeding arising out of or relating to this Agreement
and the other Loan Documents, and further irrevocably waives any
claim that the State is not a convenient forum for any such suit,
action or proceeding.
16. Presentment; Etc. The Borrower expressly waives presentment notice
of dishonor, protest and notice of non-payment.
17. Debit. The Borrower hereby irrevocably authorizes the Bank and any
subsequent holder of the Note, both before and after demand, to
debit any of the Borrower's business accounts maintained with the
Bank (or subsequent holder for all sums (including without
limitation principal, interest, late fees, and other fees) payable
from time to time under this Agreement and the other Loan Documents.
In addition, if the Borrower has signed a separate authorization,
the Bank is authorized to initiate ACH debit transfers for the Loan
payments and on the business account(s) specified in the
authorization. These provisions shall not obligate the Bank to
create or allow any overdraft, and such authority shall not relieve
the Borrower of the obligation to assure that payments are made when
due.
MIKRON INSTRUMENT CO., INC. Page 15 of 19
18. Integration. The Loan Documents supersede all prior agreements
between the parties with respect to the Loan, whether oral or
written, including, without limitation, all correspondence between
counsel for the respective parties. The Loan Documents constitute
the entire agreements between the parties with respect to the Loan,
and the rights, duties, and obligations of the parties with respect
thereto.
19. Lender Liability. The Bank shall not be liable for any loss
sustained by any party resulting from any action, omission, or
failure to act by the Bank, whether with respect to the exercise or
enforcement of the Bank's rights or remedies under the Loan
Documents, the Loan, or otherwise, unless such loss is caused by the
actual willful misconduct of the Bank conducted in bad faith. IN NO
EVENT SHALL THE BANK EVER BE LIABLE FOR CONSEQUENTIAL OR PUNITIVE
DAMAGES, ANY RIGHT OR CLAIM THERETO BEING EXPRESSLY AND
UNCONDITIONALLY WAIVED.
20. Bank's Decisional Standards. To the extent that applicable laws
require the Bank's actions or decisions under the Loan Documents to
be conducted in good faith, the term "good faith" shall be defined
(using a subjective standard) as honesty in fact with regard to the
conduct or transaction concerned based upon the facts and
circumstances actually known to the individual(s) acting for the
Bank, and such requirement may be satisfied by reliance upon the
advice of attorneys, accountants, appraisers, architects, engineers,
or other qualified professionals.
21. Descriptive Headings; Context. The captions in this Agreement are
for convenience of reference only and shall not define or limit any
provision. Whenever the context requires, reference in this
Agreement to the neuter gender shall include the masculine and/or
feminine gender, and the singular number shall include the plural,
and, in each case, vice versa.
22. Acknowledgment of Copy. The Borrower acknowledges that it has
received a fully executed copy of this Agreement.
IN WITNESS WHEREOF, the Borrower and the Bank by persons duly authorized, have
executed this Agreement as of ___________________, 2001.
WITNESS
MIKRON INSTRUMENT CO., INC.
____________________________________ By:_____________________________________
Name:
Title:
____________________________________ By:_____________________________________
Name:
Title:
MIKRON INSTRUMENT CO., INC. Page 16 of 19
Fleet National Bank
By:_____________________________________
Name:
Title:
MIKRON INSTRUMENT CO., INC. Page 17 of 19
EXHIBIT A-1
Reference to V.18: Additional Covenants
The Borrower shall comply with the following additional requirements:
---------------------------------------------------------------------------------------------
PROPOSED COVENANT LIMITS TESTING FREQUENCY
---------------------------------------------------------------------------------------------
NI + Dep. + Amort. + Int. - Unfunded CAPEX 1.00 to 1 Annually
------------------------------------------
CMLTD + Int. Exp.
---------------------------------------------------------------------------------------------
Minimum Tangible Net Worth - GAAP $3,844,000 - 10/31/00 Quarterly
$4,100,000 - 10/31/01
---------------------------------------------------------------------------------------------
Total Liabilities 1.0 to 1 Quarterly
-----------------
Tangible Net Worth
---------------------------------------------------------------------------------------------
MIKRON INSTRUMENT CO., INC. Page 18 of 19
EXHIBIT A-2
Prior Security Interests in Collateral
EXHIBIT A-3
Location of Equipment
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Location of Inventory
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Offices Containing Records of Accounts
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EXHIBIT A-4
Description of Real Estate
Name(s) of Record Owner
MIKRON INSTRUMENT CO., INC. Page 19 of 19