Exhibit 10.16
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CREDIT AGREEMENT
By and Between
MIKRON INFRARED, INC.,
as Borrower
and
FLEET NATIONAL BANK,
as Bank
Dated: As of November 21, 2002
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▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Page
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SECTION 1.1 SPECIFIC TERMS DEFINED ...................................... 2
SECTION 1.2 RULES OF INTERPRETATION AND CONSTRUCTION .................... 22
ARTICLE II
AMOUNT AND TERMS OF THE FACILITY
SECTION 2.1 COMMITMENT TO LEND .......................................... 24
SECTION 2.2 PROCEDURES FOR MAKING THE ADVANCES UNDER THE FACILITY ....... 24
SECTION 2.3 THE REVOLVING NOTE .......................................... 25
SECTION 2.4 INTEREST RATE ............................................... 25
SECTION 2.5 PAYMENT OF PRINCIPAL ........................................ 25
SECTION 2.6 OPTIONAL PREPAYMENT OF FACILITY PRINCIPAL ................... 26
SECTION 2.7 MANDATORY PREPAYMENTS ....................................... 26
SECTION 2.8 CONVERSION AND CONTINUATION OPTIONS ......................... 27
SECTION 2.9 MAXIMUM NUMBER OF TRANCHES .................................. 27
SECTION 2.10 INCREASED COST .............................................. 27
SECTION 2.11 ILLEGALITY .................................................. 28
SECTION 2.12 DISASTER .................................................... 28
SECTION 2.13 USE OF PROCEEDS ............................................. 29
SECTION 2.14 DEFAULT RATE ................................................ 29
SECTION 2.15 LATE CHARGE ................................................. 29
SECTION 2.16 TENDER AND APPLICATION OF PAYMENT ........................... 29
SECTION 2.17 TIME OF PAYMENT ............................................. 29
SECTION 2.18 USURY ....................................................... 29
SECTION 2.19 SECURITY FOR THE FACILITY ................................... 30
ARTICLE III
CLOSING; CONDITIONS PRECEDENT
SECTION 3.1 CLOSING ..................................................... 32
SECTION 3.2 CONDITIONS TO CLOSING AND INITIAL ADVANCE ................... 32
SECTION 3.2 CONDITIONS TO ALL SUBSEQUENT ADVANCES ....................... 36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 CORPORATE EXISTENCE; GOOD STANDING .......................... 37
SECTION 4.2 CORPORATE AUTHORITY ......................................... 37
SECTION 4.3 BINDING EFFECT OF DOCUMENTS ................................. 38
SECTION 4.4 NO EVENTS OF DEFAULT ........................................ 38
SECTION 4.5 NO GOVERNMENTAL CONSENT NECESSARY ........................... 38
SECTION 4.6 LITIGATION .................................................. 38
SECTION 4.7 NO VIOLATIONS OF LAWS ....................................... 38
SECTION 4.8 USE OF PROCEEDS OF THE FACILITY ............................. 39
SECTION 4.9 OFFICIAL APPROVAL OF PERMITS ................................ 39
SECTION 4.10 GOVERNMENTAL AUTHORITY RECEIVED ............................. 39
SECTION 4.11 NO REPORTABLE EVENT ......................................... 39
SECTION 4.12 INFORMATION AND FINANCIAL DATA ACCURATE; FINANCIAL
STATEMENTS; NO MATERIALLY ADVERSE CHANGES ................... 39
SECTION 4.13 NO REGISTRATION REQUIRED OF THE REVOLVING NOTE .............. 40
SECTION 4.14 TAXES ....................................................... 40
SECTION 4.15 NO EXISTING DEFAULTS ........................................ 40
SECTION 4.16 TITLE TO PROPERTIES AND COLLATERAL .......................... 41
SECTION 4.17 NO UNTRUE STATEMENTS ........................................ 41
SECTION 4.18 BROKERAGE COMMISSIONS ....................................... 41
SECTION 4.19 OTHER LIENS ................................................. 41
SECTION 4.20 INSURANCE ................................................... 41
SECTION 4.21 LABOR MATTERS ............................................... 41
SECTION 4.22 ENVIRONMENTAL MATTERS ....................................... 42
SECTION 4.23 BOOKS AND RECORDS ........................................... 42
SECTION 4.24 NAMES, LOCATION OF OFFICES .................................. 42
SECTION 4.25 CAPITALIZATION; OWNERSHIP OF THE BORROWER ................... 42
SECTION 4.26 INVESTMENT COMPANY ACT OF 1940 ............................. 43
SECTION 4.27 MARGIN REGULATION ........................................... 43
SECTION 4.28 SURVIVAL OF REPRESENTATIONS AND WARRANTIES .................. 43
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.1 NOTIFY BANK ................................................. 44
SECTION 5.2 PAY TAXES AND LIABILITIES; COMPLY WITH AGREEMENT ............ 44
SECTION 5.3 OBSERVE COVENANTS ........................................... 44
SECTION 5.4 MAINTAIN CORPORATE EXISTENCE AND QUALIFICATIONS ............. 44
SECTION 5.5 INFORMATION AND DOCUMENTS TO BE FURNISHED TO THE BANK ....... 44
SECTION 5.6 ACCESS TO RECORDS AND PROPERTY .............................. 47
SECTION 5.7 COMPLY WITH LAWS ............................................ 47
SECTION 5.8 INSURANCE REQUIRED .......................................... 48
SECTION 5.9 CONDITION OF COLLATERAL; NO LIENS ........................... 49
SECTION 5.10 PAYMENT OF PROCEEDS ......................................... 49
SECTION 5.11 PAY FEES AND EXPENSES ....................................... 49
SECTION 5.12 RECORDS ..................................................... 49
SECTION 5.13 DELIVERY OF DOCUMENTS ....................................... 49
SECTION 5.14 NAME CHANGES; LOCATION CHANGES .............................. 49
SECTION 5.15 FURTHER ASSURANCES .......................................... 50
SECTION 5.16 INDEMNIFICATION ............................................. 50
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.1 NO CONSOLIDATION, MERGER, ACQUISITION ....................... 52
SECTION 6.2 DISPOSITION OF ASSETS OR COLLATERAL ......................... 52
SECTION 6.3 OTHER LIENS ................................................. 52
SECTION 6.4 OTHER LIABILITIES ........................................... 52
SECTION 6.5 PAYMENT OF DIVIDENDS; REDEMPTION OF STOCK ................... 52
SECTION 6.6 ACCOUNTS .................................................... 52
SECTION 6.7 PREPAYMENT OF OTHER INDEBTEDNESS ............................ 52
SECTION 6.8. SALE OR ISSUANCE OF STOCK ................................... 53
SECTION 6.9. INVESTMENTS ................................................. 53
SECTION 6.10 LOANS ....................................................... 53
SECTION 6.11 GUARANTIES .................................................. 53
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SECTION 6.12 REMOVE PROPERTY ............................................. 53
SECTION 6.13 MODIFICATION OF DOCUMENTS ................................... 53
SECTION 6.14 CHANGE BUSINESS ............................................. 53
SECTION 6.15 SETTLEMENTS ................................................. 54
SECTION 6.16 CHANGE LOCATION OR NAME ..................................... 54
SECTION 6.17 FIXED CHARGE COVERAGE RATIO ................................. 54
SECTION 6.18 MAXIMUM LEVERAGE RATIO ...................................... 54
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1. EVENTS OF DEFAULT ........................................... 55
SECTION 7.2. REMEDIES .................................................... 57
SECTION 7.3 SET-OFF ..................................................... 57
SECTION 7.4. NO NOTICES .................................................. 58
SECTION 7.5. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER .................. 58
SECTION 7.6. WAIVER OF JURY TRIAL ........................................ 58
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 REPRESENTATIONS AND WARRANTIES SURVIVE ...................... 59
SECTION 8.2 NOTICES ..................................................... 59
SECTION 8.3 REMEDIES CUMULATIVE ......................................... 60
SECTION 8.4 MODIFICATIONS IN WRITING .................................... 60
SECTION 8.5 SUCCESSORS AND ASSIGNS ...................................... 60
SECTION 8.6 SALE OF LOAN INTEREST ....................................... 60
SECTION 8.7 PLEDGE TO THE FEDERAL RESERVE ............................... 61
SECTION 8.8 INTEGRATION ................................................. 61
SECTION 8.9 GOVERNING LAW, SEVERABILIY .................................. 61
SECTION 8.10 SUBMISSON TO JURISDICTION ................................... 61
SECTION 8.11 WAIVER OF BANKRUPTCY STAY ................................... 62
SECTION 8.12 COUNTERPARTS ................................................ 62
SCHEDULES
SCHEDULE "A" FORM OF BORROWING BASE CERTIFICATE
SCHEDULE "B" LOCATION OF COLLATERAL
SCHEDULE "C" LOCATION OF OFFICES
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (hereinafter referred to as the "Agreement") is made
as of the 21st day of November, 2002, by and between
MIKRON INFRARED, INC., a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey, having its principal
office located at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter
referred to as the "Borrower"),
AND
FLEET NATIONAL BANK, a national banking association duly organized and
validly existing under the laws of the United States of America, having an
office located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter
referred to as the "Bank").
W I T N E S S E T H:
WHEREAS, the Borrower has requested, and the Bank has agreed, to extend a
certain credit facility to the Borrower (hereinafter referred to as the
"Facility"), subject to the terms and conditions set forth in this Agreement.
WHEREAS, the Borrower and the Bank now desire to enter into this Agreement
in order to provide for the terms and conditions upon which the Bank will make
the Facility to the Borrower.
NOW, THEREFORE, in consideration of these premises and the mutual
representations, covenants and agreements of the Borrower and the Bank, each
party binding itself and its successors and assigns, do hereby promise, covenant
and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Specific Terms Defined. The following terms (including both
the singular and plurals thereof) shall have the meanings respectively assigned
to them directly or by reference below in this Section 1.1;
"Account Debtor" shall mean any "account debtor", as such term is defined
in Section 9-102(a)(3) of the UCC.
"Account" and "Accounts Receivable" shall mean any "account", as such term
is defined in Section 9-102(a)(2) of the UCC, whether now owned or hereafter
acquired by the Borrower, and, in any event, includes, without limitation, any
now existing and future, (1) accounts receivable, and any and all instruments,
documents, book debts, notes, drafts, payment intangibles, acceptances, payments
under lease of Inventory or Equipment, or sale of Inventory or Equipment,
Contracts, General Intangibles and other forms of obligations now or hereafter
received by or belonging or owing to the Borrower (other than forms of
obligations evidenced by Chattel Paper or Instruments), including, without
limitation, all accounts created by or arising from all sales or leases of goods
or rendition of services by the Borrower to its customers, and all accounts
arising from sales or rendition of services by the Borrower made under any of
its trade names or styles, or through any of its divisions including, without
limitation, the right to receive the Proceeds of purchase orders and Contracts;
(2) reserves and credit balances arising under any Account; (3) guarantees or
collateral for any of the foregoing; (4) commercial tort claims, insurance
policies or rights relating to any of the foregoing; and (5) cash and non-cash
Proceeds of any and all of the foregoing.
"Acquisition" shall mean that certain purchase of shares by HOHENSTAUFEN
ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwaltungs GmbH pursuant to the Share
Purchase Agreement.
"Acquisition Documentation" shall any and all documents, agreements and/or
instruments executed in connection with the Acquisition.
"Additional Costs" shall have the meaning assigned and ascribed to such
term as set forth in Section 2.10 of this Agreement.
"Advance" shall mean any advance of monies or funds to the Borrower by the
Bank in connection with the Facility.
"Advance Date" shall means in relation to any Advance, the day on which
such Advance is made or to be made to the Borrower.
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"Advance Limit" shall mean, at any date of determination thereof, an
amount equal to the lesser of (i) Four Million and 00/100 ($4,000,000.00)
Dollars or (ii) the sum of (1) eighty (80%) percent of the face amount of the
Borrower's Eligible Accounts Receivable plus (2) fifty (50%) percent of the face
amount of the Borrower's Eligible Inventory plus twenty-five (25%) of the value
of the Borrower's Eligible PP & E.
"Affiliate" shall mean, in relation to any corporation, any person that
(directly or indirectly) controls or is controlled by or is under common control
with such corporation. For the purposes of this definition, the term "control",
as used with respect to any person, shall mean the possession (directly or
indirectly) of the power to direct or to cause the direction of the management
or the policies of such person, whether through the ownership of shares of any
class in the capital of such person or by contract or otherwise.
"Agreement" shall have the meaning assigned and ascribed to such term as
set forth in the Preamble of this Agreement.
"Bank" shall have the meaning assigned and ascribed to such term as set
forth in the Preamble of this Agreement.
"Borrower" shall have the meaning assigned and ascribed to such term as
set forth in the Preamble of this Agreement.
"Borrowing Base Certificate" shall mean an advance request and certificate
duly executed by the Borrower in form and substance satisfactory to the Bank and
substantially in the form as more fully set forth in Schedule "A", attached
hereto and made a part hereof.
"Business Day" shall mean any day other than a Saturday, Sunday or day
which shall be in the State of New Jersey a legal holiday or day on which
banking institutions are required or authorized to close.
"Capital Assets" shall mean fixed assets, both tangible and intangible, as
such term is defined in accordance with GAAP.
"Capital Expenditures" shall mean expenditures or obligations incurred for
the acquisition of Capital Assets.
"Chattel Paper" shall mean any "chattel paper", as such term is defined in
Section 9-102(a)(11) of the UCC, including, without, limitation, all electronic
chattel paper, whether now owned or hereafter acquired by the Borrower.
"Closing Date" shall mean the date on which the initial Advance is made by
the Bank to the Borrower.
"Collateral" shall mean, by way of inclusion and not by limitation, all
property and interests in property whether now or hereafter existing or created
or now or hereafter
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acquired by the Borrower, any Subsidiary and/or Affiliate of the Borrower, other
than HOHENSTAUFEN ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwaltungs GmbH and
the German Subsidiaries, in or upon which a security interest, lien or mortgage
is granted to or in favor of the Bank, for its benefit, under any of the Loan
Documents, as collateral security for the Obligations. In addition, the term
"Collateral" shall also be deemed to include the Guaranty Agreement.
"Contracts" shall mean all contracts, licenses, instruments, undertakings,
documents or other agreements in or under which the Borrower may now or
hereafter have any right, title or interest (other than rights evidenced by
Chattel Paper or Instruments), including, without limitation, (i) any claim of
the Borrower arising thereunder from misrepresentation or breach of warranty and
(ii) all such agreements which pertain to the lease, sale, construction, design,
manufacture or other disposition of any Equipment, fixtures, real property or
any interest in real property as any of the same may from time to time be
amended or supplemented (with the prior written consent of the Bank in the event
any such amendments are out of the Borrower's ordinary course of business),
other than such contracts, instruments, undertakings, documents or other
agreements which specifically prohibit their assignment as security, provided,
that notwithstanding any such prohibition, such contracts, instruments,
undertakings, documents or other agreements shall be deemed to be contracts to
the extent that such prohibition is inconsistent with the provisions of Section
9-406 of the UCC.
"Continue", "Continuation" and "Continued" shall refer to the continuation
of a LIBOR Loan from one Interest Period to the next Interest Period.
"Convert", Conversion" and "Converted" shall refer to a conversion of any
Prime Rate Loan into a LIBOR Loan or of any LIBOR Loan into a Prime Rate Loan.
"Copyright Security Agreement" shall mean that certain copyright security
agreement, executed by the Borrower in favor of the Bank, whereby the Borrower
granted to the Bank, a valid perfected first security lien interest, in and to
all Copyrights and other similar property owned by it, for the purpose of
providing the Bank with security for the Facility.
"Copyrights" shall mean all United States copyrights, registrations and
applications therefor of the Borrower, and any and all (i) renewals and
extensions thereof, (ii) income, royalties, damages and payments now and
hereafter due or payable or both with respect thereto, including, without
limitation, damages and payments for past or future infringements or
misappropriation thereof, (iii) rights to ▇▇▇ for past, present and future
infringements or misappropriation thereof, and (iv) all other rights
corresponding thereto, in each instance, whether now owned or hereafter acquired
by the Borrower.
"Debt" shall mean with respect to the Borrower at any date and without
duplication, the sum of the following calculated in accordance with GAAP: (a)
all liabilities, obligations and indebtedness for borrowed money including, but
not limited to, obligations evidenced by bonds, debentures, notes or other
similar instruments of any
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such Person, (b) all obligations to pay the deferred purchase price of property
or services of any such Person (including, without limitation, all obligations
under non-competition agreements), (c) all obligations of any such Person as
lessee under any leases to the extent such obligations are required to be
capitalized in accordance with GAAP, (d) all Debt of any other Person secured by
a Lien on any asset of any such Person, (e) all guaranty obligations of any such
Person, (f) all obligations, contingent or otherwise, of any such Person
relative to the face amount of letters of credit, whether or not drawn,
including, without limitation, any Reimbursement Obligation, and banker's
acceptances issued for the account of any such Person, (g) all obligations of
any such Person to redeem, repurchase, exchange, defease or otherwise make
payments in respect of capital stock or other securities or partnership
interests of such Person, and (h) all net payment obligations incurred by any
such Person pursuant to Hedging Agreements.
"Default" shall mean any of the events of default as defined and described
in Article VII of this Agreement, whether or not any requirement for the giving
of notice, passing of time, or both, or the happening of any other condition,
has been satisfied.
"Default Rate" shall mean, to the extent permitted by law, whenever there
is any Event of Default under the Loan Documents, or non-payment upon demand,
the rate of interest on the unpaid principal balance of the Facility shall, at
the option of the Bank, be five (5%) percent per annum in excess of the rate of
interest provided for in the Revolving Note. The Borrower acknowledge that: (i)
such additional rate is a material inducement to the Bank to make the Facility;
(ii) the Bank would not have made the Facility in the absence of the agreement
of the Borrower to pay such default rate; (iii) such additional rate represents
compensation for increased risk to the Bank that the Facility will not be
repaid; and (iv) such rate is not a penalty and represents a reasonable estimate
of (a) the cost to the Bank in allocating its resources (both personnel and
financial) to the ongoing review, monitoring, administration and collection of
the Facility and (b) compensation to the Bank for losses that are difficult to
ascertain.
"Distribution" shall mean the declaration or payment of any dividend on or
in respect of any shares of any class of capital stock of the Borrower, other
than dividends payable solely in the shares of common stock of the Borrower,
directly or indirectly through a Subsidiary or otherwise; the return of capital
by the Borrower of their shareholders as such; or any other distribution on or
in respect of any shares of any class of capital stock of the Borrower.
"Documents" shall mean any "document," as such term is defined in Section
9-102(a)(30) of the UCC, now owned or hereafter acquired by the Borrower and, in
any event, shall include, without limitation, all bills of lading, warehouse
receipts and other documents of title, in each instance whether now owned or
hereafter acquired by the Borrower.
"EBITDA" shall mean the Borrower's earnings before interest, taxes,
depreciation and amortization, as such term is computed and construed in
accordance with GAAP.
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"E(2)T" shall mean a reference to E Square Technology Corporation.
"Eligible Accounts Receivable" shall mean the Accounts Receivable as to
which the Borrower has furnished to the Bank information adequate to identify
the same, at such times and in such form as has been or, from time to time may
be, requested by the Bank, which meet all of the following criteria on the
origination date of the said accounts and continuing thereafter until collected,
and which is in all other respects acceptable to the Bank:
(i) The Borrower is the sole owner of the Accounts Receivable and has not
sold, assigned, mortgaged, or hypothecated, or released from the Bank's security
interest, all or any portion thereof, nor are they subject to any claim, lien or
security interest of any persons or entities, including without limitation the
United States, or any agency or instrumentality thereof;
(ii) They shall be valid and legally enforceable, owing to the Borrower
for the performance of services or the sale of goods arising in the ordinary
course of business for which the Borrower has delivered or, at the time of
origination of the said accounts, if required by the Bank, will deliver to the
Bank, invoices, ▇▇▇▇▇▇▇▇ and shipping documents and other documents evidencing
the obligation of the Borrower's customer to pay the Accounts Receivable;
(iii) No financing statement, other than as may be executed in favor of or
consented to by the Bank, covering any Account Receivable or its proceeds is on
file in any public office, and neither the Borrower nor the Bank has received
any notice of any proposed acquisition, of any account receivable security
interest therein;
(iv) The original date of the invoice for the Account Receivable is less
than ninety (90) days from the invoice date;
(v) They are not subject to any offsets, credits, allowances or
adjustments due the account debtor except usual and customary prompt payment
discount, nor has the account debtor returned the goods or indicated any dispute
or complaint concerning them;
(vi) The Borrower has not received any notice, nor has it any knowledge of
any facts, which adversely affects the credit of the account debtor; and
(vii) The Bank has not notified the Borrower that either the Account
Receivable or the account debtor is not qualified.
Notwithstanding the above, the following will be considered ineligible
receivables:
(a) Accounts Receivable which remain unpaid ninety (90) days after the
date of the original invoice;
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(b) Accounts Receivable with respect to which the Account Debtor is a
director, officer, employee, Subsidiary or Affiliate of the Borrower;
(c) Accounts Receivable with respect to which the Account Debtor is a
federal Governmental Authority, the United States of America, or, in each case,
any department, agency or instrumentality thereof;
(d) Accounts Receivable with respect to which the Account Debtor is any
state or municipal Governmental Authority or any agency or instrumentality
thereof;
(e) Accounts Receivable not denominated in U.S. dollars;
(f) Accounts Receivable with respect to which the Account Debtor is not a
resident of the United States of America; unless such Accounts Receivable are
either bonded, insured or backed by a letter of credit naming the Bank as the
sole beneficiary and issued by a financial institution acceptable to the Bank;
(g) Accounts Receivable that are subject to any dispute, contra-account,
defense, offset or counterclaim, volume rebate or advertising or other
allowance;
(h) Accounts Receivable with respect to which the Bank does not have a
first and valid fully perfected and enforceable security interest;
(i) Accounts Receivable with respect to which the Account Debtor is the
subject of a bankruptcy or similar solvency proceeding or has made an assignment
for the benefit of creditors or whose assets have been conveyed to a receiver,
trustee or assignee for the benefit of creditors;
(j) Accounts Receivable with respect to which the Account Debtor is
located in any jurisdiction which adopts a statute or other requirement with
respect to which any Person that obtains a business from within such
jurisdiction or is otherwise subject to such jurisdiction's tax law requiring
such Person to file a business activity report or make any other required
filings in a timely manner in order to enforce its claims in such jurisdiction's
courts or arising under such jurisdiction's laws;
(k) Accounts Receivable due from an Account Debtor which exceed twenty
(20%) percent of the net amount of all Eligible Accounts Receivable;
(l) Accounts Receivable due from any Account Debtor where more than fifty
(50%) percent of such Accounts Receivable have been deemed ineligible;
(m) Accounts Receivable with respect to which the Account Debtor's
obligation does not constitute its legal, valid and binding obligation,
enforceable against it in accordance with its terms;
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(n) Accounts Receivable with respect to which the Borrower has not yet
performed the applicable service;
(o) Accounts Receivable subject to any Lien (except those in favor of the
Bank), or the Inventory, goods, property, services or other consideration of
which such Accounts Receivable constitutes proceeds is subject to any such Lien;
(p) Accounts Receivable due from any Subsidiary or Affiliate of the
Borrower;
(q) Accounts Receivable that have been classified by the Borrower as
doubtful or that have otherwise failed to meet established or customary credit
standards of the Borrower, to the extent of such write-down;
(r) Accounts Receivable evidenced by a promissory note, chattel paper or
other similar instrument;
(s) Accounts Receivable that are subordinate or junior in right or
priority of payment pursuant to a written agreement between the applicable
Account Debtor and the Borrower to any other obligation or claim; and
(t) Accounts Receivable that are consigned or otherwise assigned to any
Person (other than the Borrower) for collection or otherwise.
"Eligible Inventory" shall mean the Inventory as to which the Borrower has
furnished to the Bank information, adequate to identify the same, at such times
and in such form as has been or, from time to time may be, requested by the
Bank, which meet all of the following criteria and which is in all other
respects acceptable to the Bank:
(i) the Inventory is either (a) finished goods or (b) raw materials
other than supplies; but excluding in all cases work-in-process, any goods which
have been shipped, delivered, sold by or provided to the Borrower on a ▇▇▇▇ and
hold, consignment sale, guaranteed sale, or sale or return basis; or any other
similar basis or understanding other than an absolute sale;
(ii) the Inventory is new, of good and merchantable quality;
(iii) the Inventory is located on premises listed on Schedule "B" to
this Agreement;
(iv) the Inventory is not stored with a bailee, warehouseman,
consignee or similar party unless the Bank has given its prior written consent
and the Borrower has caused such bailee, warehouseman, consignee or similar
party to issue and deliver to the Bank, in form and substance acceptable to the
Bank, warehouse receipts or similar type documentation therefor in the Bank's
name;
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(v) the Inventory is subject to the Bank's first prior perfected
security interest and is not subject to any other Lien;
(vi) the Inventory has not been manufactured in violation of any
federal minimum wage or overtime laws, including, without limitation, the Fair
Labor Standards Act, 29 U.S.C. ss. 215(a)(1); and
(vii) the Inventory is not, and should not be, disqualified for any
other reason generally accepted in the commercial finance business.
Notwithstanding the qualification standards specified above, upon prior
notice to the Borrower, the Bank may at any time or from time to time revise
such qualification standards or, in its sole discretion, determine that certain
Inventory is not eligible to be Eligible Inventory.
"Eligible PP & E" shall mean the net book value of all PP & E to which the
Borrower has furnished to the Bank information, adequate to identify the same,
at such times and in such form as has been or, from time to time may be,
requested by the Bank and which is in all other respects acceptable to the Bank.
"Environmental Law" or "Environmental Laws" shall mean all federal, state
and local laws, statutes, ordinances and regulations now or hereafter in effect,
and in each case as amended or supplemented from time to time, and any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include but are not limited to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. ss.9601 et seq.)
("CERCLA"); the Hazardous Material Transportation Act, as amended (49 U.S.C.
ss.180 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as
amended (7 U.S.C. ss.136 et seq.); the Resource Conservation and Recovery Act,
as amended (42 U.S.C. ss.6901 et seq.) ("RCRA"); the Toxic Substance Control
Act, as amended (42 U.S.C. ss.7401 et seq.); the Clean Air Act, as amended (42
U.S.C. ss.740 et seq.); the Federal Pollution Control Act, as amended (33 U.S.C.
ss.1251 et seq.); the Occupational Safety and Health Act, as amended (29 U.S.C.
ss.651 et seq.); the Safe Drinking Water Act, as amended (42 U.S.C. ss.300f et
seq.); the Food, Drug and Cosmetic Act, as amended (21 U.S.C. ss.301 et seq.);
the Medical Waste Tracking Act of 1988, Pub. L. No. 100-582, 102 Stat. 2950
(1988), and their state and local counterparts or equivalents and any transfer
of ownership, notification or approval statutes such as the New Jersey
Industrial Site Recovery Act (N.J.S.A. ss.13:1K-6 et seq.) ("ISRA"); the New
Jersey Leaking Underground Storage Tank Act (N.J.S.A. ss.58:10a-21 et seq.)
("LUST"); and the Spill Compensation and Control Act (N.J.S.A. ss.58:10-23.11 et
seq.).
"Environmental Liabilities and Costs" shall mean, as to any Person, all
liabilities obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages,
- 10 -
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts and consultants
and costs of investigation and feasibility studies), fines, penalties, sanctions
and interest incurred as a result of any claim or demand by any other Person,
whether based in contract, tort, implied or express warranty, strict liability,
criminal or civil statute, including any Environmental Law, permit, order or
agreement with any Governmental Authority or other Person, and which arise from
any environmental, health or safety conditions, or a Release or conditions that
are reasonably likely to result in a Release, and result from the past, present
or future operations of such Person or any of its Subsidiaries.
"Environmental Lien" shall mean any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b), (c), (m), or (o) of the Tax Code.
"ERISA Event" shall mean, as to the Borrower, (i) a Reportable Event with
respect to a Title IV Plan, (ii) the withdrawal of the Borrower, any of its
Subsidiaries or any ERISA Affiliate from a Title IV Plan subject to Section 4063
of ERISA during a plan year in which it was a "substantial employer" as defined
in Section 4001(a) (2) of ERISA, (iii) the complete or partial withdrawal of the
Borrower, any of its Subsidiaries or any ERISA Affiliate from any Multi-employer
Plan, (iv) the filing of a notice of intent to terminate a Title IV Plan or the
treatment of a plan amendment as a termination under Sections 4041 of ERISA, (v)
the institution of proceedings to terminate a Title IV Plan or Multi-employer
Plan by the PBGC, or (vi) any other event or condition grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or the imposition of any liability under Title IV
or ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA.
"Equipment" shall mean all "equipment", as such term is defined in Section
9-102(a)(33) of the UCC, whether now owned or hereafter acquired by the Borrower
and wheresoever located, and shall also mean and include all personal property,
including that constituting machinery, equipment, plant, furnishings, fixtures
and other fixed assets of any kind, nature and description, whether affixed to
real property or not, including automobiles, trucks and vehicles of every
description, trailers, handling and delivery equipment, fixtures and office
furniture, as well as all additions to, substitutions for, replacements of or
accessions to any of the items recited as aforesaid and all attachments,
components, parts, (including spare parts) and accessories whether installed
thereon or affixed thereto and all fuel for any thereof.
- 11 -
"Existing Facility" shall mean that certain credit facility by and between
the Borrower and the Bank in the aggregate principal amount of $1,500,000.00
which, upon the closing the Facility, shall be of no further force and effect.
"Event of Default" or "Events of Default" shall mean any of the events of
default as defined and described in Section 7.1 of this Agreement; provided that
any requirement for the giving of notice, the passing of time, or both, or the
happening of any other condition, has been satisfied.
"Facility" shall have the meaning assigned and ascribed to such term as
set forth in the first Recital of this Agreement.
"Financing Statements" means the UCC-1 Financing Statements to be filed
with applicable Governmental Authorities pursuant to which the Bank shall
perfect its security interest in the Collateral.
"Fiscal Quarter" shall mean the three (3) month period of each Fiscal Year
(or such other three months as agreed upon by the Borrower and the Bank):
November 1 - January 31
February 1 - April 30
May 1 - July 31
August 1 - October 31
"Fiscal Year" shall mean that twelve (12) month period commencing on
November 1 and ending on October 31 of each year (or such other twelve month as
agreed upon by the Borrower and the Bank).
"Fixed Charge Coverage Ratio" shall mean the ratio which is equivalent to
the sum of the Borrower's EBITDA less any cash taxes, Distributions, Capital
Expenditures and treasury stock purchases divided by the sum of the Borrower's
Current Portion of Long Term Debt plus Interest Expense.
"GAAP" shall mean Generally Accepted Accounting Principles, consistently
applied.
"General Intangibles" shall mean any "general intangibles," as such term
is defined in Section 9-102(a)(42) of the UCC, now owned or hereafter acquired
by the Borrower and, in any event, shall include, without limitation, all
rights, interest, choses in action, causes of actions, claims and all other
intangible property of the Borrower of every kind and nature, in each instance
whether now owned or hereafter acquired by the Borrower, including, without
limitation, all corporate and other business records, all loans, royalties, and
all other forms of obligations receivable whatsoever (other than Accounts
Receivable); all trademarks, patents, trade secrets, licenses, copyrights,
goodwill, inventions (whether patented or patentable or not), designs,
registrations, permits, franchises, proprietary or confidential information,
technical information,
- 12 -
procedures and designs; all knowledge, know-how, skill, expertise and experience
relating to the business conducted by the Borrower; all computer programs,
software, data bases, data, processes, models, drawings, printouts and other
computer materials, customer lists, credit files, and supplier contracts, firm
sale orders, rights under license and franchise agreements; all interests in
partnerships and joint ventures; all tax refunds and tax refund claims; all
right, title and interest under leases, subleases, licenses and concessions and
other agreements relating to personal property; all payment due or made to the
Borrower in connection with any requisition, confiscation, condemnation, seizure
or forfeiture of any property by any Person or Governmental Authority; all
deposit accounts (general or special) with any bank or other financial
institution; all credits with and other claims against third parties (including
carriers and shippers) (other than Accounts Receivable); all rights to
indemnification; all reversionary interests in pension and profit sharing plans
and reversionary, beneficial and residual interests in trusts; all proceeds of
insurance of which the Borrower is the beneficiary; all right, title and
interest which the Borrower may now or hereafter have or under any other
Contracts or contract right, now owned or hereafter acquired by the Borrower;
and all letters of credit, guaranties, liens, security interests and other
security held by or granted to the Borrower; and all other intangible property,
whether or not similar to the foregoing, in each instance, however and wherever
arising.
"Generally Accepted Accounting Principles" shall mean generally accepted
principles and practices for financial statements as developed and modified by
the American Institute of Certified Public Accountants, the Financial Accounting
Standards Board, the Securities and Exchange Commission, the stock exchanges and
industry practices and custom, applied on a consistent basis.
"German Subsidiaries" shall mean reference to IMPAC Electronic GmbH, IMPAC
Systems GmbH, infra sensor Spezialpyrometer GmbH, INFRAPOINT Messtechnik GmbH,
IMPAC France, Sarl and IMPAC Infrared Ltd..
"Governmental Authority" or "Governmental Authorities" shall mean any
federal, state, county or municipal governmental agency, board, commission,
officer, official or entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government whose
consent or approval is required as a prerequisite to (i) the continued
uninterrupted operation and occupancy of the Borrower's business operations, or
(ii) the performance of any act or obligation or the observance of any agreement
or condition of the Borrower under this Agreement or the other Loan Documents.
"Guarantor" shall mean a reference to E(2)T.
"Guaranty Agreement" shall mean that certain agreement of guaranty,
executed and delivered by the Guarantor, for the benefit of the Bank, with
respect to the Obligations.
- 13 -
"Hedging Obligations" shall mean any and all obligations of the Borrower,
whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (i) any and all agreements, devices
or arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, commodity prices, exchange rates or forward
rates applicable to such party's assets, liabilities or exchange transactions,
including, but not limited to, dollar-denominated or cross-currency interest
rate exchange agreements, forward currency exchange agreements, interest rate
cap or collar protection agreements, forward rate currency or interest rate
options, puts and warrants or any similar derivative transactions, and (ii) any
and all cancellations, buy backs, reversals, terminations of any of the
foregoing.
"Instrument" shall mean any "instrument," as such term is defined in
Section 9-102(a)(47) of the UCC, including, without limitation, rights to
proceeds of letters of credit, letter-of-credit rights, supporting obligations
of every kind and description and investment property, whether now owned or
hereafter acquired by the Borrower, other than instruments that constitute, or
are a part of a group of writings that constitute, Chattel Paper.
"Insurance Policies" shall mean all of the Borrower' right, title and
interest under any policy of insurance affecting the collateral, including,
without limitation, unearned premiums thereon.
"Interest Period" shall mean, with respect to any LIBOR Loan,
(i) initially, the period commencing on the date such LIBOR Loan is made
or the Conversion Date and ending one (1), two (2), three (3) or six (6) months
thereafter, as selected by the Borrower in the Notice of Borrowing; and
(ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such LIBOR Loan and ending one (1), two
(2), three (3) or six (6) months thereafter, as selected by the Borrower in the
Notice of Borrowing, provided, however, that:
(1) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest Period shall end
on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the Maturity
Date shall end on the Maturity Date;
(3) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar
- 14 -
month at the end of such Interest Period) shall end on the last Business Day of
a calendar month; and
(4) the Borrower shall select Interest Periods so as not to require a
payment or prepayment of any LIBOR Loan during an Interest Period for such Loan.
"Inventory" shall mean any "inventory," as such term is defined in Section
9-102(a)(48) of the UCC, now owned or hereafter acquired by the Borrower and, in
any event, shall include, without limitation, all inventory, merchandise, goods
and other tangible personal property now owned or hereafter acquired by the
Borrower (wherever located, whether in the possession of the Borrower or of a
bailee or other person for sale, storage, transit, processing, packaging,
delivery, shipping, use or otherwise and whether consisting of whole goods,
spare parts, components, supplies, materials, or consigned, returned or
repossessed goods) which are held for sale or lease or to be furnished (or have
been furnished) under any contract of service or which constitute raw materials,
work in process or materials used or consumed in the Borrower' businesses or in
the processing, packaging or shipping of same and all finished goods in the
possession of the Borrower.
"IRS' shall mean the United States Internal Revenue Service.
"LIBOR" shall mean, as applicable to any LIBOR Loan, the rate per annum as
determined on the basis of the offered rates for deposits in U.S. Dollars, for
an applicable Interest Period, comparable to such LIBOR Loan which appears on
the Telerate page 3750 as of 11:00 a.m. London time on the day that is two
London Banking Days preceding the first day of such LIBOR Loan; provided,
however, if the rate described above does not appear on the Telerate System on
any applicable interest determination date, the LIBOR rate shall be the rate
(rounded upward, if necessary, to the nearest one hundred-thousandth of a
percentage point), determined on the basis of the offered rates for deposits in
U.S. dollars for a period of time comparable to such LIBOR Loan which are
offered by four major banks in the London interbank market at approximately
11:00 a.m. London time, on the day that is two (2) London Banking Days preceding
the first day of such LIBOR Loan as selected by Bank. The principal London
office of each of the four major London banks will be requested to provide a
quotation of its U.S. Dollar deposit offered rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the rate
for that date will be determined on the basis of the rates quoted for loans in
U.S. dollars to leading European banks for a period of time comparable to such
LIBOR Loan offered by major banks in New York City at approximately 11:00 a.m.
New York City time, on the day that is two London Banking Days preceding the
first day of such LIBOR Loan. In the event that Bank is unable to obtain any
such quotation as provided above, it will be deemed that LIBOR pursuant to a
LIBOR Loan cannot be determined. In the event that the Board of Governors of the
Federal Reserve System shall impose a Reserve Percentage with respect to LIBOR
deposits of Bank, then for any period during which such Reserve Percentage shall
apply, LIBOR shall be equal to the amount determined above divided by an amount
equal to 1 minus the Reserve Percentage.
- 15 -
"LIBOR Loan" shall mean any Advance or portion of an Advance that bears
interest at a rate determined with reference to LIBOR.
"LIBOR Interest Rate" shall mean the interest rate charged for each
borrowing under a LIBOR Loan.
"Licenses" shall mean all license agreements in which the Borrower grants
or receives a grant of any interest in Copyrights, Trademarks, Patents and Trade
Secrets and other intellectual property and any and all (i) renewals,
extensions, supplements, amendments and continuations thereof, (ii) income,
royalties, damages and payments now and hereafter due and/or payable to the
Borrower with respect thereto, including, without limitation, damages and
payments for past or future violations or infringements or misappropriation
thereof, and (iii) rights to ▇▇▇ for past, present and future violations or
infringements thereof, in each instance, whether now owned or hereafter acquired
by the Borrower.
"Lien" shall mean any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the UCC or comparable
law of any jurisdiction to evidence any of the foregoing).
"Loan Documents" shall mean any and all agreements, documents,
certificates and instruments executed by the Borrower or any other Person or
delivered by the Borrower to the Bank pursuant to and in connection with the
Facility and this Agreement, including, without limitation, the Revolving Note
and the Financing Statements.
"Margin Stock" shall mean a reference to "margin stock", as such term is
defined in Regulation G, Regulation T, Regulation U and Regulation X.
"Master Agreement" shall mean that certain ISDA Master Agreement, executed
by and between the Borrower and the Bank pursuant to which the Borrower and the
Bank may enter into any derivative, interest or currency swap, fixture, option
or other interest rate protection or similar agreement.
"Maturity Date" shall mean November 20, 2005.
"Maximum Leverage Ratio" shall mean the ratio which is equivalent to the
Borrower's Total Liabilities less Subordinated Debt divided by the Borrower's
Tangible Net Worth minus the sum of (i) all amounts due and owing from
Affiliates and Subsidiaries plus (ii) Subordinated Debt.
- 16 -
"Notice of Borrowing" shall have the meaning assigned and ascribed to such
term as set forth in Section 2.2 of this Agreement.
"Notice of Conversion" shall have the meaning assigned and ascribed to
such term as set forth in Section 2.8 of this Agreement.
"Obligation" shall mean any one of the Obligations.
"Obligations" shall mean, collectively, all of the indebtedness,
obligations, liabilities, and agreements of every kind and nature of the
Borrower to or with the Bank, or to or with any affiliate of the Bank, or of any
guarantor of the Borrower's indebtedness, obligations, liabilities and
agreements to or with the Bank, or to or with any affiliate of the Bank, now
existing or hereafter arising, and now or hereafter contemplated, pursuant to
this Agreement, the Loan Documents or otherwise, whether in the form of
refinancing, letters of credit, bankers acceptances, guaranties, loans,
interest, charges, expenses or otherwise, direct or indirect, (including without
limitation, any participants or interest of the Bank, or of an affiliate of the
Bank in any obligation of the Borrower to others), acquired outright,
conditionally or as collateral security from another, absolute or contingent,
joint or several, liquidated or unliquidated, secured or unsecured, arising by
operation of law or otherwise, including without limitation any future advances,
renewals, extensions or changes in form of, or substitutions for, any of said
indebtedness, obligations or liabilities, the other sums and charges to be paid
to the Bank pursuant to this Agreement or any of the Loan Documents to which the
Borrower is a party, including any indebtedness or liabilities arising from any
derivative, interest or currency swap, fixture, option or other interest rate
protection or similar agreement (including, without limitation, the Hedging
Obligations) and all interest and late charges on any of the foregoing.
"Patent Security Agreement" shall mean that certain patent security
agreement, executed by the Borrower in favor of the Bank, whereby the Borrower
granted to the Bank, a valid perfected first security lien interest, in and to
all Patents and other similar property owned by it, for the purpose of providing
the Bank with security for the Facility.
"Patents" shall mean all United States patents and patent applications,
along with any and all (i) inventions and improvements described and claimed
therein and all other technical developments, whether or not patentable, now or
hereafter made, (ii) reissues, divisions, continuations, renewals, extensions,
reexaminations, continuations-in-part and extensions thereof, (iii) income,
royalties, damages and payments now and hereafter due and/or payable to the
Borrower with respect thereto and all proceeds thereof, including, without
limitation, damages and payments for past or future infringements or
misappropriation thereof, (iv) rights to ▇▇▇ for past, present and future
infringements or misappropriation thereof, and (v) all other rights
corresponding thereto, in each instance, whether now owned or hereafter acquired
by the Borrower.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
- 17 -
"Permit" shall mean any permit, approval, authorization, license,
variance, or permissions required from a Governmental Authority under applicable
Requirements of Law.
"Permitted Encumbrances" shall mean, with respect to the Collateral, the
following: (i) liens for taxes, assessments or governmental charges not then due
and payable or not then delinquent; (ii) liens for taxes, assessments or
governmental charges the validity of which are being contested in good faith by
the Borrower by appropriate proceedings, provided that the Borrower shall have
maintained reasonably adequate reserves and accrued the estimated liability on
the Borrower' balance sheet for the payment of same; (iii) liens created or
contemplated by the Loan Documents; (iv) liens in favor of or consented to by
the Bank, and (v) liens for purchase money equipment financing which, in the
aggregate, does not exceed $100,000.00.
"Person" or "Persons" shall mean any one or more individuals,
partnerships, corporations (including a business trust), joint stock companies,
trusts, unincorporated associations, joint ventures or other entities, or a
foreign state or political subdivision thereof or any agency of such state or
subdivision.
"Pledge Agreement" shall mean that certain Pledge Agreement, dated as of
November 21, 2002 executed by the Borrower with respect to the stock interests
owned by it in HOHENSTAUFEN ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwaltungs
GmbH.
"Pledged Debt" shall mean all instruments, including but not limited to,
promissory notes evidencing any indebtedness due and owing to the Borrower by
any Person, including any Subsidiaries of the Borrower.
"PP & E" shall mean all property, plant and Equipment, whether now owned
or hereafter acquired by the Borrower and wheresoever located; to which the
Borrower can demonstrate clear title and possession within the United States of
America.
"Prime Rate" shall mean the rate of interest utilized, from time to time,
by the Bank as its prime lending rate. This rate of interest is a reference rate
and is neither tied to any external rate of interest or index, nor does it
necessarily reflect the lowest rate of interest actually charged by the Bank to
any particular class or category of customers of the Bank. The Prime Rate shall
be set on the Closing Date and is to be adjusted automatically and immediately
thereafter from time to time on the same day as the Prime Rate changes, without
notice to the Borrower, and any other guarantors or endorsers, if any, and any
notice of which they may be entitled is hereby waived. Any such a change in the
Prime Rate shall not affect or alter the terms and condition of this Agreement
or the Revolving Note, all of which shall remain in full force and effect.
"Prime Rate Loan" shall mean any Advance or portion of an Advance that
bears interest at a rate determined with reference to the Prime Rate.
- 18 -
"Proceeds" shall have the meaning assigned to it under the UCC and, in any
event, shall include, but not be limited to, (i) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to the Borrower from time to
time with respect to any of the Collateral, (ii) any and all payments (in any
form whatsoever) made or due and payable to the Borrower from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau or agency or any other Person (whether or not acting under
color of Governmental Authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, or any successor statute or regulation thereto.
"Regulation G" shall mean Regulation G of the Board of Governors of the
Federal Reserve System, or any successor statute or regulation thereto.
"Regulation T" shall mean Regulation T of the Board of Governors of the
Federal Reserve System, or any successor statute or regulation thereto.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System, or any successor statute or regulation thereto.
"Regulation X" shall mean Regulation X of the Board of Governors of the
Federal Reserve System, or any successor statute or regulation thereto.
"Release" shall mean, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration by such Person of a contaminant into the indoor or outdoor
environment or into or out of any property owned by such Person or any of it
Subsidiaries, including the movement of contaminants through or in the air,
soil, surface water, groundwater or property.
"Remedial Action" shall mean all actions required to (i) clean up, remove,
treat or in any other way address contaminants in the indoor or outdoor
environment; (ii) prevent a Release or condition that is reasonably likely to
result in a Release or minimize further release of contaminants so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; or (iii) perform pre-remedial studies and
investigations and post-remedial monitoring and care.
"Reportable Event" means any of the events set forth in Section 4043 (b)
(1), (2), (3), (5), (6), (8) or (9) of ERISA.
"Requirement of Law" shall mean, as to any Person, the charter and by-laws
or other organizational or governing documents of such Person, and all federal,
state and local laws, rules, regulations, orders, decrees or other
determinations of an arbitrator, court or other Governmental Authority,
including all disclosure requirements of ERISA
- 19 -
and the requirements of Environmental Laws, in each case applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
"Reserve Percentage" shall mean the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves), which is
imposed on member banks of the Federal Reserve System against "Euro-currency
Liabilities", as such term is defined in Regulation D.
"Responsible Officer" shall mean the chief executive officer, chief
financial officer, corporate controller or any other officer of the Borrower
acceptable to the Bank.
"Revolving Note" shall mean that certain revolving credit note, dated the
date of this Agreement, in the aggregate principal amount of up to Four Million
and 00/100 ($4,000,000.00) Dollars, executed by the Borrower in favor of the
Bank, evidencing the Facility.
"Security Agreement" shall mean that certain security agreement executed
by the Borrower in favor of the Bank, whereby the Borrower granted to the Bank a
valid perfected first security lien interest in the Collateral for the purpose
of providing the Bank with security for the Facility.
"Share Purchase Agreement" shall mean that certain Share Sale and Purchase
Agreement and Assignment of Shares, dated November 21, 2002, executed by and
between HOHENSTAUFEN ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwaltungs GmbH, as
purchaser, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, as sellers, with respect to the shares of Impac Electronic GmbH and
Infrapoint Messtechnik GmbH.
"Solvent" means, with respect to any Person on a particular date, that on
such date (i) the fair value of the assets of such Person (both at fair
valuation and at present fair saleable value) is, on the date of determination,
greater then the total amount of liabilities, including contingent and
unliquidated liabilities, of such Person, (ii) such Person is able to pay all
liabilities of such Person as they mature, and (ii) such Person does not have
unreasonably small capital with which to carry on its business. In computing the
amount of contingent or unliquidated liabilities at anytime, such liability will
be computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Subordinated Debt" shall mean, at any particular time, all Debt of the
Borrower that shall be expressly subordinated upon written terms and conditions,
satisfactory to the Bank, in right of payment to the prior payment in full of
all of the Obligations.
"Subsidiary" or "Subsidiaries" shall mean with respect to any Person (i) a
corporation a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such
- 20 -
Person, by such Person and one or more Subsidiaries of such Person or by one or
more Subsidiaries of such Person, or (ii) any other Person (other than a
corporation) in which such Persons and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has at least a
majority ownership interest.
"Subsidiary Security Agreement" shall mean that certain security agreement
executed by any Guarantor in favor of the Bank, whereby any Guarantor granted in
favor of the Bank a valid perfected first security lien interest in the
Collateral for the purpose of providing the Bank with security for the Facility.
"Tax Code" shall mean the Internal Revenue Code of 1986 (or any successor
legislation thereto), as amended from time to time (26 U.S.C. ss.31 et seq.).
"Trademark Security Agreement" shall mean that certain trademark security
agreement, executed by the Borrower in favor of the Bank, whereby the Borrower
granted to the Bank, a valid perfected first security lien interest, in and to
all Trademarks and other similar property owned by it, for the purpose of
providing the Bank with security for the Facility.
"Trademarks" shall mean all United States trademarks, service marks, trade
names, fictitious names, corporate names and company names, whether registered
or at common law, and all registrations and applications therefor of the
Borrower, and the entire goodwill of the Borrower's businesses connected
therewith and symbolized thereby, together with any and all (i) renewals
thereof, (ii) income, royalties, damages and payments now and hereafter due
and/or payable or both with respect thereto, including, without limitation,
damages and payments for past or future infringements or misappropriation
thereof, and (iii) rights to ▇▇▇ for past, present and future infringements or
misappropriation thereof, and (iv) all other rights corresponding thereto, in
each instance, whether now owned or hereafter acquired by the Borrower, and
including, without limitation, the Trademarks.
"Trade Secrets" shall mean all trade secrets of the Borrower, along with
any and all (i) income, royalties, damages and payments now and hereafter due
and/or payable to the Borrower with respect thereto, including, without
limitation, damages and payments for past or future infringements or
misappropriations thereof, and (ii) all other rights corresponding thereof, in
each instance, whether now owned or hereafter acquired by the Borrower.
"Tranche" shall mean a collective reference to all LIBOR Loans and the
then current Interest Periods with respect to such LIBOR Loans which begin on
the same date and end on the same later date (whether or not such LIBOR Loans
shall originally have been made on the same day).
"UCC" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New Jersey; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority
- 21 -
of the Bank's security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New
Jersey, the term "UCC" shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions thereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions..
Section 1.2 Rules of Interpretation and Construction. In this Agreement,
unless the context otherwise requires:
(i) Articles and Sections mentioned by number only are the
respective Articles and Sections of this Agreement as so numbered;
(ii) Words importing a particular gender shall mean and include the
other gender and words importing the singular number mean and include the plural
number and vice versa;
(iii) Words importing persons shall mean and include firms,
associations, partnerships (including limited partnerships), societies, trusts,
corporations or other legal entities, including public or governmental bodies,
as well as natural persons;
(iv) Each reference in this Agreement to a particular person shall
be deemed to include a reference to such person's successors and permitted
assigns.
(v) Any headings preceding the texts of the several Articles and
Sections of this Agreement, and any table of contents or marginal notes appended
to copies hereof, shall be solely for convenience of reference and shall not
constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
(vi) If any clause, provision or section of this Agreement shall be
ruled invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any of the remaining
provisions thereof, unless not invalidating or rendering unenforceable the
remaining provisions shall be inequitable;
(vii) The terms "herein", "hereunder", "hereby", "hereto", and any
similar terms as used in this Agreement refer to this Agreement; the term
"heretofore: means before the date of execution of this Agreement; and the term
"hereafter" means after the date of execution of this Agreement;
(viii) If any clause, provision or section of this Agreement shall
be determined to be apparently contrary to or conflicting with any other clause,
provision or section of this Agreement, then the clause, provision or section
containing the more specific provisions shall control and govern with respect to
such apparent conflict;
(ix) Unless otherwise specified, (a) all accounting terms used
herein or in any Loan Document shall be interpreted, (b) all accounting
determinations and
- 22 -
computations hereunder or thereunder shall be made, and (c) all financial
statements required to be delivered hereunder or thereunder shall be prepared,
in accordance with GAAP; and
(x) The word "and" when used from time to time herein shall mean
"or" or "and/or" if such meaning is expansive of the rights or interests of the
Bank in the given context.
[SPACE INTENTIONALLY LEFT BLANK]
- 23 -
ARTICLE II
AMOUNT AND TERMS OF THE FACILITY
Section 2.1 Commitment to Lend.
(i) Subject to the terms and conditions set forth in this Agreement, the
Bank will make advances, from time to time, to the Borrower, in such amounts as
the Borrower may request and the Borrower may borrow, repay, and reborrow from
time to time between the date of this Agreement and the Maturity Date, upon
notice by the Borrower to the Bank given in accordance with Section 2.2 of this
Agreement, such sums as requested by the Borrower up to a maximum aggregate
principal amount outstanding (after giving effect to all amounts requested) at
one time equal to the Advance Limit. Each request for an Advance hereunder shall
constitute a representation by the Borrower that the conditions set forth in
this Agreement have been satisfied on the date of such request.
(ii) The Bank may, from time to time, in its sole and absolute discretion,
permit the outstanding amount of the Facility, or the aggregate outstanding
amount of all loans, advances and/or other financial accommodations to exceed
the limitations set forth in this Agreement. In any such event, and without
limiting the rights of the Bank to demand payment of the Facility, in whole or
in part, at any time and from time to time, the Borrower shall immediately repay
to the Bank, and/or furnish cash collateral to the Bank, for such portion of the
outstanding loans, advances or other financial accommodations which equals the
amount(s) by which the formulas or the limitations set forth herein have been
exceeded. If the outstanding amount of the loans, advances or other financial
accommodations shall exceed the Advance Limit at any time, such excess shall be
deemed secured by the Collateral and shall be subject to the terms of this
Agreement.
Section 2.2 Procedures for Making the Advances Under the Facility. Subject
to all of the applicable terms and conditions of this Agreement, Advances shall
be made by the Bank to the Borrower, at such times and in such amounts, as shall
be requested by the Borrower in compliance with this Section 2.2:
(i) Advances shall be in integral multiples of $100,000.00;
(ii) In no event shall the sum of (a) the amount of any and all
Advances requested by the Borrower, and (b) the outstanding principal
balance of the Facility, on the requested Advance Date, exceed the Advance
Limit.
(iii) Each Advance shall be made on notice given by the Borrower to
the Bank not later than 11:00 a.m. (hereinafter referred to as a "Notice
of Borrowing"), on the date which is three (3) Business Days prior to the
proposed Advance Date. Each such Notice of Borrowing shall be by telephone
or
- 24 -
facsimile, in each case confirmed immediately in a signed writing by the
Borrower specifying therein (a) the requested Advance Date, (b) the amount
of such Advance and (c) any exceptions to the covenants, representations
and warranties set forth in this Agreement.
(iv) Notwithstanding any provision of this Section 2.2 to the
contrary, in no event shall the Bank be obligated, nor shall the Borrower
request the Bank, to make any Advances upon the occurrence of a Default or an
Event of Default.
Section 2.3 The Revolving Note. The obligation of the Borrower to repay
all monies advanced by the Bank to the Borrower in connection with the Facility
shall be evidenced by the Revolving Note. The Revolving Note, inter alia, shall
(i) be dated the Closing Date, (ii) be payable in the amounts and on the dates
as provided for in Section 2.5 hereof, and (iii) bear interest at the rates and
be payable on the dates and in the manner provided for in Section 2.4 hereof.
Section 2.4 Interest Rate. (i) Subject to terms and conditions of this
Agreement, interest shall be computed daily on the advanced and unpaid principal
amount of all Advances from the date on which each such Advance is made until
the principal thereof shall be paid in full, hereunder at a rate per annum equal
to:
(1) for any Prime Rate Loan, the Prime Rate minus one hundred (100)
basis points, as in effect from time to time; and
(2) for any LIBOR Loan, at all times during the applicable Interest
Period, one hundred fifty (150) basis points over and above LIBOR
for such Interest Period for such LIBOR Loan.
(ii) Interest on all Advances outstanding shall be paid monthly, in
arrears, (a) with respect to any Prime Rate Loan on the first day of each and
every month until the Maturity Date, (b) with respect to any LIBOR Loan, on the
last day of each applicable Interest Period, (c) with respect to any Prime Rate
Loan or LIBOR Loan whose principal balance is to be paid prior to the last day
of any such month, on the date any such loan is paid in full or (d) or such
earlier date as a result of the occurrence of an Event of Default under the Loan
Documents; at which time all unpaid principal and accrued interest, together
with any fees, charges, expenses and other sums, if any, shall be due and
payable to the Bank; which fees shall be deemed to have been earned.
(iii) All computations of interest called for under the Facility
shall be made on the basis of a 360 day year for the actual number of days
elapsed.
Section 2.5 Payment of Principal. The aggregate outstanding
principal balance of the Facility shall be due and payable by the Borrower to
the Bank on the Maturity Date or such earlier date as a result of the occurrence
of an Event of Default under the Loan Documents; at which time all unpaid
principal and accrued interest, together with any,
- 25 -
fees, charges, expenses and other sums, if any, due and owing to the Bank; which
fees shall be deemed to have been earned.
Section 2.6 Optional Prepayment of Principal. (i) With respect to any
LIBOR Loan under the Facility, the Borrower may prepay a LIBOR Loan only upon at
least three (3) Business Days prior written notice to the Bank (which notice
shall be irrevocable), and any such prepayment shall occur only on the last day
of the Interest Period for such LIBOR Loan. The Borrower shall pay to the Bank,
upon request of the Bank and in addition to the payment of all accrued and
unpaid interest due on the Facility, together with all sums, expenses and fees
due and owing to the Bank, which fees shall be deemed to have been earned, such
amount or amounts as shall be sufficient (in the reasonable opinion of the Bank)
to compensate it for any loss, cost, or expense incurred as a result of: (i) any
payment of a LIBOR Loan on a date other than the last day of the Interest Period
for such Loan; (ii) any failure by the Borrower to borrow a LIBOR Loan on the
date specified by Borrower's written notice; (iii) any failure by the Borrower
to pay a LIBOR Loan on the date for payment specified in the Borrower's written
notice. Without limiting the foregoing, the Borrower shall pay to the Bank a
"yield maintenance fee" in an amount computed as follows: The current rate for
United States Treasury securities (bills on a discounted basis shall be
converted to a bond equivalent) with a maturity date closest to the term chosen
pursuant to the LIBOR Rate Election as to which the prepayment is made, shall be
subtracted from the LIBOR RATE in effect at the time of prepayment. If the
result is zero or a negative number, there shall be no yield maintenance fee. If
the result is a positive number, then the resulting percentage shall be
multiplied by the amount of the principal balance being prepaid. The resulting
amount shall be divided by 360 and multiplied by the number of days remaining in
the term chosen pursuant to the LIBOR Rate Election as to which the prepayment
is made. Said amount shall be reduced to present value calculated by using the
above referenced United States Treasury securities rate and the number of days
remaining in the term chosen pursuant to the LIBOR Rate Election as to which
prepayment is made. The resulting amount shall be the yield maintenance fee due
to the Bank upon the prepayment of a LIBOR Loan. Each reference in this
paragraph to "LIBOR Rate Election" shall mean the election by the Borrower of
the LIBOR Rate. If by reason of an Event of Default, the Bank elects to declare
the Revolving Note to be immediately due and payable, then any yield maintenance
fee with respect to a LIBOR Loan shall become due and payable in the same manner
as though Borrower had exercised such right of prepayment.
(ii) With respect to any Prime Rate Loan under the Facility, the Borrower
may prepay, in whole or in part, without premium or penalty therefor, the
outstanding principal amount of the Facility, at any time during the term of the
Facility, provided, any prepayment of principal of the Facility shall be
accompanied by payment of all accrued and unpaid interest due on the Facility,
together with all sums, expenses and fees due and owing to the Bank, which fees
shall be deemed to have been earned.
Section 2.7 Mandatory Prepayments. In the event that at any time during
the term of the Facility, the outstanding principal balance of the Facility
exceeds the Advance Limit, the Borrower, immediately and without delay, shall
make any and all such
- 26 -
payments necessary to reduce the outstanding principal balance of the Facility
to be less than or equal to the Advance Limit.
Section 2.8 Conversion and Continuation Options. (i) The Borrower may
elect from time to time to (a) Convert any LIBOR Loan to a Prime Rate Loan or
(b) Convert a Prime Rate Loan to a LIBOR Loan, by giving the Bank at least three
(3) Business Days' prior irrevocable notice of such election (hereinafter
referred to as a "Notice Conversion"), provided that any such Notice of
Conversion provided with respect to a LIBOR Loan may only be made on the last
day of an Interest Period with respect thereto. Any such Notice of Conversion
provided with respect to a LIBOR Loan shall specify the length of the initial
Interest Period or Interest Periods therefor. All or any part of any outstanding
LIBOR Loans and Prime Rate Loans may be Converted as provided herein, provided,
that (i) no Event of Default has occurred, (ii) any such Conversion may only be
made if, after giving effect thereto, Section 2.9 shall not have been
contravened, and (iii) no Prime Rate Loan may be Converted into a LIBOR Loan
after the date that is one month prior to the Maturity Date.
(ii) Any LIBOR Loan may be Continued as such upon the expiration of the
then current Interest Period with respect thereto by the Borrower giving notice
to the Bank, in accordance with the terms and conditions of this Agreement, of
the length of the next Interest Period to be applicable to such Loan, provided,
that no LIBOR Loan may be Continued (i) upon the occurrence of an Event of
Default, (ii) any such Continuation may only be made if, after giving effect
thereto, Section 2.9 shall not have been contravened or (iii) after the date
that is one month prior to the Maturity Date and provided, further, that if the
Borrower shall fail to give such notice or if such Continuation is not permitted
pursuant to this Section 2.8, such LIBOR Loan shall be automatically converted
to a Prime Rate Loan on the last day of such then expiring Interest Period.
Section 2.9 Maximum Number of Tranches. All Advances, Conversions and
Continuations under the Facility and all selections of Interest Periods under
the Facility shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, in no event shall there be more than five (5)
Tranches outstanding at any time.
Section 2.10 Increased Cost The Borrower shall pay to the Bank, from time
to time, such amounts as the Bank may determine to be necessary to compensate
the Bank for any costs incurred by the Bank, which the Bank determines are
attributable to its making or maintaining any LIBOR Loan hereunder or its
obligation hereunder, or any reduction in any amount receivable by the Bank
under this Agreement or the Revolving Note in respect of any such LIBOR Loan or
such obligation (such increases in costs and reductions in amounts receivable
shall hereinafter be referred to as "Additional Costs"), resulting from any
change, after the date of this Agreement, in United States Federal, state,
municipal, or foreign laws or regulations, including, but nor limited to
Regulation D of the Board of Governors of the Federal Reserve System or the
adoption or making after such date of any interpretations, directives or
requirements applying to a class of banks including the Bank of or under any
United States Federal, state, municipal or any
- 27 -
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof (hereinafter referred to as a "Regulatory Change"),
which: (1) changes the basis of taxation of any amounts payable to the Bank
under this Agreement or the Revolving Note in respect of any of such LIBOR Loan
(other than taxes imposed on the overall net income of the Bank); or (2) imposes
or modifies any reserve, special deposit, or similar requirements relating to
any extensions of credit or other assets of, or any deposits with or other
liabilities of the Bank, including, but not limited to, any of LIBOR Loan or
deposits referred to in the definition of the LIBOR Interest Rate; or (3)
imposes any other condition affecting this Agreement or the Revolving Note (or
any of such extensions of credit or liabilities).
Section 2.11 Illegality. Notwithstanding any other provision in this
Agreement to the contrary, if the adoption of any applicable law, rule, or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
compliance by the Bank with any request or directive (whether or not having the
force of law) of any such authority, central bank, or comparable agency shall
make it unlawful or impossible for the Bank to (1) maintain its commitment, as
set forth in this Revolving Note, then upon notice to the Borrower by the Bank,
the commitment of the Bank shall terminate; or (2) maintain or fund a LIBOR
Loan, then upon notice to the Borrower by the Bank the outstanding principal
amount of the borrowings based upon the LIBOR Interest Rate, together with
interest accrued thereon, and any and all other fees, charges and other sums, if
any, due and payable to the Bank shall be converted and charged at an interest
rate, determined by the Bank in its sole and absolute discretion (hereinafter
referred to as an "Alternate Base Rate Loan"); which determination shall be
deemed to be conclusive.
Section 2.12 Disaster Notwithstanding any term or provision of this
Agreement to the contrary, if the Bank determines, in its sole and absolute
discretion, that:
(a) Quotations of interest rates for the relevant deposits referred to in
the definition of LIBOR Interest Rate are not being provided in the relevant
amounts or for the relative maturities for purposes of determining the rate of
interest on a LIBOR Loan as provided in this Agreement or the Revolving Note; or
(b) The relevant rates of interest referred to in the definition of LIBOR
Interest Rate, as the case may be, upon the basis of which the rate of interest
for any such type of loan is to be determined do not accurately cover the cost
to the Bank of making or maintaining such type of a LIBOR Loan; then the Bank
shall forthwith give notice thereof to the Borrower, whereupon until the Bank
notifies the Borrower that the circumstances giving rise to such suspension no
longer exist, (a) the obligation of the Bank to make a LIBOR Loan shall be
suspended; and (b) all previous advances based upon the LIBOR Interest Rate
shall then be converted to a Prime Rate Loan.
- 28 -
Section 2.13 Use of Proceeds The proceeds of each of the Advances will be
to provide working capital to the Borrower. No part of the proceeds of any of
the Advances shall be assignable without the prior written consent of the Bank
and any attempt to make such assignment without such consent shall be void.
Section 2.14 Default Rate If any amount of principal or other amount due
hereunder or under the Facility and/or the Revolving Note is not paid when due,
whether at stated maturity, by acceleration or otherwise, the Borrower shall pay
to the Bank, to the extent permitted by applicable law, interest on the unpaid
amount at the Default Rate and said unpaid amount shall be payable upon demand.
Section 2.15 Late Charge In the event that any payment, including, without
limitation, interest or principal, required to be made by Borrower under any of
the Revolving Note shall not be received by the Bank within ten (10) days after
the same shall be due and payable, the Bank may charge, and if so charged, the
Borrower shall pay upon demand, a late charge of five cents ($0.05) for each
dollar ($1.00) of such delinquent payment, for the purpose of defraying the
expenses incident to the handling of such delinquent payments.
Section 2.16 Tender and Application of Payment. All payments of principal
and interest due under the Revolving Note and all fees shall be made to the Bank
at its principal office or such other place as the Bank shall designate in
writing, in immediately available funds in any coin or currency of the United
States of America which, at the time of payment, is legal tender for the payment
of public and private debts, without counterclaim or set-off and free and clear
of, and without any deduction or withholding for, any taxes or other payments.
All payments so received shall constitute payment to the Bank and shall be
applied first to the payment of all fees, expenses and other amounts due to the
Bank (excluding principal and interest), then to accrued interest, and the
balance on account of outstanding principal; provided, however, that after
demand, payments will be applied to the Obligations of the Borrower to the Bank
as the Bank determines in its sole discretion.
Section 2.17 Time of Payment If this Agreement, the Revolving Note or any
payment hereunder or thereunder becomes due on a day which is not a Business
Day, the due date or payment shall be extended to the next succeeding Business
Day, and such extension of time shall be included in computing interest and fees
in connection with such payment.
Section 2.18 Usury. All agreements between the Borrower and any Guarantor
and the Bank are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the indebtedness
evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the
Bank for the use or the forbearance of the indebtedness evidenced hereby exceed
the maximum permissible under applicable law. As used herein, the term
"applicable law" shall mean the law in effect as of the date hereof; provided,
however, that in the event there is a change in the law which results in a
higher permissible rate of interest, then the Revolving Note shall
- 29 -
be governed by such new law as of its effective date. In this regard, it is
expressly agreed that it is the intent of the Borrower and the Bank in the
execution, delivery and acceptance of the Revolving Note to contract in strict
compliance with the laws of the New Jersey from time to time in effect. If,
under or from any circumstances whatsoever, fulfillment of any provision hereof
or of any of the Loan Documents at the time of performance of such provision
shall be due, shall involve transcending the limit of such validity prescribed
by applicable law, then the obligation to be fulfilled shall automatically be
reduced to the limits of such validity, and if under or from circumstances
whatsoever the Bank should ever receive as interest an amount which would exceed
the highest lawful rate, such amount which would be excessive interest shall be
applied to the reduction of the principal balance evidenced hereby and not to
the payment of interest. This provision shall control every other provision of
all agreements between the Borrower, any Guarantor and the Bank.
Section 2.19 Security for the Facility. (i) As security for the due and
punctual payment and performance of all of the terms and conditions of the Loan
Documents, the Borrower and such other Person shall execute and deliver, or
cause to be executed and delivered, to the Bank on the Closing Date, the
following Loan Documents:
(a) This Agreement;
(b) The Security Agreement;
(c) The Subsidiary Security Agreement;
(d) The Pledge Agreement;
(e) The Patent Security Agreement;
(f) The Trademark Security Agreement;
(g) The Copyright Security Agreement;
(h) The Guaranty Agreement;
(i) The Financing Statements; and
(j) All such other documents as the Bank may have reasonably
required.
(ii) THE BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT AND
THE COLLATERAL DESCRIBED AND SET FORTH IN THIS AGREEMENT AND THE LOAN DOCUMENTS
COVERS, AND IS INTENDED TO COVER, ALL ASSETS OF THE BORROWER AND THE GUARANTOR
AS MORE PARTICULARLY DESCRIBED THEREIN. FOR AVOIDANCE OF DOUBT, IT IS EXPRESSLY
UNDERSTOOD AND AGREED
- 30 -
THAT, TO THE EXTENT THE UCC IS REVISED SUBSEQUENT TO THE DATE OF THIS AGREEMENT
SUCH THAT THE DEFINITION OF ANY OF THE FOREGOING TERMS INCLUDED IN THE
DESCRIPTION OF COLLATERAL IS CHANGED, ALTERED OR MODIFIED, THE BORROWER AND THE
GUARANTOR, AS APPLICABLE, AND THE BANK HEREBY AGREE THAT ANY PROPERTY WHICH IS
INCLUDED IN SUCH CHANGED DEFINITIONS WHICH WOULD NOT OTHERWISE BE INCLUDED IN
THE FOREGOING GRANT ON THE DATE HEREOF BE INCLUDED IN SUCH GRANT IMMEDIATELY
UPON THE EFFECTIVE DATE OF SUCH REVISION; IT BEING THE INTENTION OF THE
BORROWER, THE GUARANTOR AND THE BANK THAT THE DESCRIPTION OF COLLATERAL SET
FORTH THIS AGREEMENT AND THE LOAN DOCUMENTS BE CONSTRUED TO INCLUDE THE BROADEST
POSSIBLE RANGE OF PROPERTY AND ASSETS AND ALL TANGIBLE AND INTANGIBLE PERSONAL
PROPERTY AND FIXTURES OF THE BORROWER OF EVERY KIND AND DESCRIPTION.
[SPACE INTENTIONALLY LEFT BLANK]
- 31 -
ARTICLE III
CLOSING; CONDITIONS PRECEDENT
Section 3.1 Closing. The closing shall take place at the offices of
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, ▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
at 10:00 a.m. on November 21, 2002, or on such other place, date and time as the
parties hereto shall mutually agree.
Section 3.2 Conditions to Closing and Initial Advance. The obligations of
the Bank to close the Facility and to make the initial Advance are subject to
the satisfaction of each of the following conditions:
(i) Executed Loan Documents. This Agreement, the Revolving Note, together
with any other applicable Loan Documents, shall have been duly authorized,
executed and delivered to the Bank by the parties thereto, shall be in
full force and effect and no Default or Event of Default shall exist
thereunder.
(ii) Closing Certificates; etc.
(a) Certificate of Secretary of the Borrower and Guarantor. The Bank
shall have received a certificate of the secretary of each of the Borrower
and any Guarantor certifying as to the incumbency and genuineness of the
signature of each officer of the Borrower or such Guarantor executing the
Loan Documents to which it is a party and certifying that attached thereto
is a true, correct and complete copy of (1) the certificate of
incorporation or other organizational document of the Borrower or such
Guarantor and all amendments thereto, certified as of a recent date by the
appropriate Governmental Authority in its jurisdiction of incorporation,
(2) the bylaws or other operative document of the Borrower or such
Guarantor as in effect on the date of such certifications, (3) resolutions
duly adopted by the Board of Directors of the Borrower or such Guarantor
authorizing the borrowings contemplated hereunder and the execution,
delivery and performance of this Agreement and the other Loan Documents to
which it is a party, and (4) each certificate required to be delivered
pursuant to Section 3.1(ii)(b).
(b) Certificates of Good Standing. The Bank shall have received
certificates as of a recent date of the good standing of the Borrower and
any Guarantor under the laws of its jurisdiction of organization and, to
the extent requested by the Bank in its reasonable judgment, each other
jurisdiction where the Borrower and any Guarantor is qualified to do
business and a certificate of the relevant taxing authorities of such
jurisdiction certifying that such Person has required tax returns and owes
no delinquent taxes.
- 32 -
(c) Opinion of Counsel. The Bank shall have received favorable
opinions of counsel to the Borrower and any Guarantor addressed to the
Bank with respect to the Borrower and any Guarantor, the Loan Documents
and such other matters as the Bank shall reasonably request.
(d) Borrowing Base Certificate. The Bank shall have received from
the Borrower, a Borrowing Base Certificate, dated as of the Closing Date
executed by a Responsible Officer of the Borrower which shall be accurate
and complete in all material respects.
(iii) Collateral.
(a) Filings and Recordings. All filings and recordations that are
necessary to perfect the security interests of the Bank in the Collateral
shall have been received by the Bank and the Bank shall have received
evidence satisfactory to the Bank that upon such filings and recordations
such security interests constitute valid and perfected first priority
liens therein.
(b) Pledged Collateral. The Bank shall have received (A) original
stock certificates or other certificates evidencing the capital stock or
other ownership interests pledged pursuant to the Pledge Agreement
together with an undated stock power for each such certificate duly
executed in blank by the registered owner thereof and (B) each original
promissory note pledged pursuant to the Pledge Agreement.
(c) Lien Search. The Bank shall have received the results of a lien
search (including a search as to judgments and tax matters) made against
the Borrower and the Guarantor under the Uniform Commercial Code as in
effect in any state in which any of its assets are located, indicating
among other things that it assets are free and clear of any lien except
for the Permitted Encumbrances.
(d) Hazard and Liability Insurance. The Bank shall have received
certificates of insurance, evidence of payment of all insurance premiums
for the current policy year of each, and, if requested by the Bank, copies
(certified by a Responsible Officer) of insurance policies in the form
required under the Loan Documents and otherwise in form and substance
reasonably satisfactory to the Bank.
(e) Environmental Assessments. The Bank shall have received the
environmental assessments and the other environmental reports, if any, set
forth in this Agreement.
(iv) Excess Availability. The Bank shall have received, a Borrowing Base
Certificate, in form and substance acceptable to the Bank, manifesting a
minimum of $500,000.00 in availability under the Facility (after
accounting for the
- 33 -
financing and closing of the Acquisition) to be utilized by the Borrower
for unforeseen working capital needs.
(v) Consent; Defaults.
(a) Governmental and Third Party Approvals. The Borrower shall have
obtained all necessary approvals, authorizations and consents of any
Person and of all Governmental Authorities and courts having jurisdiction
with respect to the transactions contemplated by this Agreement and the
Loan Documents.
(b) No Injunction, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or
proposed before any Governmental Authority to enjoin, restrain, or
prohibit, or to obtain substantial damages in respect of, or which is
related to or arises out of this Agreement or the Loan Documents or the
consummation of the transactions contemplated hereby or thereby, or which,
in the Bank's sole discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement and the Loan Documents.
(c) No Event of Default. No Default or Event of Default shall have
occurred.
(vi) Financial Matters.
(a) Financial Condition Certificate. The Borrower shall have
delivered to the Bank a certificate, in form and substance satisfactory to
the Bank, and certified as accurate by a Responsible Officer, that (A) the
Borrower and its Subsidiaries taken as a whole are Solvent, (B) the
Borrower's and its Subsidiaries' payables are not past due beyond
customary trade terms, (C) attached thereto are calculations evidencing
compliance basis with the covenants contained in Articles V and VI hereof
determined on a pro forma basis, as of the Closing Date and after giving
effect to the proposed Advances to be made on such date, (D) the financial
projections previously delivered to the Bank represent the good faith
estimates (utilizing assumptions believed by the Borrower's management to
be reasonable) of the financial condition and operations of the Borrower
and its Subsidiaries.
(b) Payment at Closing. The Borrower shall have paid to the Bank the
fees and any other accrued an unpaid fees or commissions due hereunder
(including, without limitation, legal fees and expenses) and to any other
Person such amount as may be due thereto in connection with the
transactions contemplated hereby, including all taxes, fees and other
charges in connection with the execution, delivery, recording, filing and
registration of any of the Loan Documents.
(vii) Acquisition Documents.
- 34 -
(a) The Bank shall have received the Acquisition Documentation
(including amendments, modifications, and waivers thereof) relating to the
Acquisition to be executed by the parties thereto prior to the closing
thereof (and the Acquisition shall be consummated in accordance with the
terms of such provided documentation on or before the first Advance Date).
The Acquisition Documentation shall not permit, inter alia, the
distribution, payment or advance of any earn out, notes payable or other
required or contingent payments to be made by the Borrower or any of its
Subsidiaries and/or Affiliates to any past, present or future shareholder
of the Borrower or any of its Subsidiaries and/or Affiliates, except (i)
any deferred payments to be made by the Borrower or any of its
Subsidiaries and/or Affiliates under the Share Purchase Agreement or (ii)
payments to be made under any employment agreements entered into by the
Borrower or any of its Subsidiaries and/or Affiliates pursuant to and in
connection with the Share Purchase Agreement.
(b) The Bank shall be satisfied that the maximum amount paid for the
Acquisition (including the fees and expenses paid in connection with such
Acquisition) does not exceed $__________________.
(c) The Bank shall have received copies (i) of each employment
agreement between the Borrower and its respective key employees and (ii)
each non-competition agreement entered into by any seller or any member of
management of the Borrower in favor of the Borrower, each of the foregoing
in form and substance satisfactory to the Bank.
(d) The Bank shall have received copies of all loan documentation to
be executed by and between HOHENSTAUFEN ZWEIHUNDERTSECHSUNDZWANZIGSTE
Vermogensverwaltungs GmbH and ING-BHF Bank with respect to the
Acquisition.
(viii) Miscellaneous
(a) Notice of Borrowing. The Bank shall have received a Notice of
Borrowing, as applicable, from the Borrower in accordance with the terms
and conditions of this Agreement.
(b) Existing Facility. The Existing Facility shall be repaid in full
and terminated and all collateral security therefore shall be released,
and the Bank shall have received a pay-off letter in form and substance
satisfactory to it evidencing such repayment, termination, reconveyance
and release.
(c) Other Documents. All opinions, certificates and other
instruments and all proceedings in connection with the transactions
contemplated by this Agreement shall be satisfactory in form and substance
to the Bank. The Bank shall have received copies of all other documents,
certificates and instruments
- 35 -
reasonably requested thereby, with respect to the transactions
contemplated by this Agreement.
Section 3.3 Conditions to All Subsequent Advances. The obligations of the
Bank to make any Advances, and to convert or continue any Loan are subject to
the satisfaction of the following conditions precedent on the relevant borrowing
continuation, conversion, issuance or extension date:
(i) Continuation of Representations and Warranties. The representations
and warranties contained in Article IV shall be true and correct on and as
of such borrowing or issuance date of continuation or conversion with the
same effect as if made on and as of such date; except for any
representation and warranty made as of an earlier date, which
representation and warranty shall remain true and correct as of such
earlier date.
(ii) No Existing Default. No Default or Event of Default shall have
occurred and be continuing (i) on the borrowing date with respect to such
Advance or after giving effect to the Advance to be made on such date or
on such continuation or conversion date after giving effect to such
continuation or conversion.
(iii) Notices. The Bank shall have received a Notice of Borrowing or
Notice of Conversion/Continuation, as applicable, from the Borrower in
accordance with this terms and conditions of this Agreement.
[SPACE INTENTIONALLY LEFT BLANK]
- 36 -
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Bank, knowing and
intending that the Bank shall rely thereon in making the Facility contemplated
hereby, that:
Section 4.1 Corporate Existence; Good Standing.
(i) The Borrower is (a) a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or a
period longer than the term of the Facility, and is duly qualified or has made
application for due qualification, to do business in all states in which its
ownership of property or conduct of business legally requires such
authorization, and (b) has all requisite corporate power and authority and full
legal right to own or to hold under lease its properties and to carry on the
business in which it is presently engaged.
(ii) The Borrower has adequate corporate power and authority and has full
legal rights to enter into each of the Loan Documents to which it is a party, to
perform, observe and comply with all of its respective agreements and
obligations under each of such documents.
(iii) As of the Closing Date, E(2)T is the only domestic Subsidiary and/or
Affiliate of the Borrower.
Section 4.2 Corporate Authority. The execution and delivery by the
Borrower of the Loan Documents to which it is a party, the performance by the
Borrower of all of its respective agreements and obligations under each of such
documents, and the incurring by the Borrower of all of the Obligations
contemplated by this Agreement, have been duly authorized by all necessary
corporate actions on the part of the Borrower and its shareholders and do not
and will not (i) contravene any provision of the Borrower's certificate of
incorporation or by-laws or this Agreement (each from time to time in effect),
(ii) conflict with, or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, or result in the creation of any
mortgage, lien, pledge, charge, security interest or other encumbrance upon any
of the property of the Borrower under any material agreement, mortgage or other
instrument to which the Borrower is or may become a party, (iii) violate or
contravene any provision of any law, regulation, order, ruling or interpretation
thereunder or any decree, order or judgment or any court or governmental or
regulatory authority, bureau, agency or official (all as from time to time in
effect and applicable to such entity), (iv) require any waivers, consents or
approvals by any of the creditors or trustees for creditors of the Borrower, or
(v) require any approval, consent, order, authorization, or license by, or
giving notice to, or taking any other action with respect to, any governmental
or regulatory authority or agency except those actions that have been taken or
will be taken prior to the Closing Date, under any provision of any applicable
law.
- 37 -
Section 4.3 Binding Effect of Documents. The Borrower has duly executed
and delivered each of the Loan Documents to which it is a party, and each of
such documents is in full force and effect. The agreements and obligations of
the Borrower as contained in each of the Loan Documents constitutes or upon
execution and delivery thereof will constitute legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance with
their respective terms subject as to the enforcement of remedies only, to any
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application at the time in effect..
Section 4.4 No Events of Default.
(i) No Event of Default has occurred and is continuing and no event has
occurred and is continuing and no condition exists that would, with notice or
the lapse of time, or both, constitute an Event of Default.
(ii) The Borrower is not in default in any respect under any contract,
agreement or instrument to which the Borrower is a party or by which the
Borrower is bound, the consequence of which default could materially or
adversely affect the financial condition, assets, operations or property of the
Borrower.
Section 4.5 No Governmental Consent Necessary. No consent or approval of,
giving of notice to, registration with or taking of any other action in respect
of, any governmental authority or agency is required with respect to the
execution, delivery and performance by the Borrower of this Agreement and the
Loan Documents to which it is a party.
Section 4.6 Litigation. There is no action, suit, proceeding, inquiry,
hearing or investigation pending or threatened, in any court of law or in
equity, or before or by any federal, state or local Governmental Authority,
wherein there is a reasonable probability that an unfavorable determination,
decision, decree, ruling or finding might (i) result in any material adverse
change in the business, assets, liabilities, financial condition properties or
operations of the Borrower, (ii) adversely affect the transactions contemplated
by this Agreement and the other Loan Documents to which the Borrower is a party
or by which the Borrower is bound in connection with the Facility, and the
ability of the Borrower to perform its respective obligations hereunder and
thereunder, or (iii) adversely affect the validity or enforceability of this
Agreement and other Loan Documents to which the Borrower is a party or by which
the Borrower is bound in connection with the Facility. The Borrower is not in
violation of or in default with respect to any order, writ, injunction, decree
or demand of any such court or Governmental Authority.
Section 4.7 No Violations of Laws. The Borrower has conducted, and is
conducting, its business, so as to comply in all material respects with all
applicable federal, state, county and municipal statutes and regulations. The
Borrower is not charged with, nor under investigation with respect to, any
violation of any such statutes,
- 38 -
regulations or orders, which could have a material or adverse effect on the
financial condition, business or operations of the Borrower.
Section 4.8 Use of Proceeds of the Facility. Proceeds of the Facility
shall be used only for those purposes set forth in this Agreement. No part of
the proceeds of the Facility shall be used, directly or indirectly, for the
purpose of purchasing or carrying any margin stock within the meaning of
Regulation U, or for the purpose of purchasing or carrying or trading in any
stock under such circumstances as to involve the Borrower in a violation of
Regulation X or the Bank in a violation of Regulation U. In particular, without
limitation of the foregoing, no part of the proceeds from the Facility are
intended to be used to acquire any publicly-held stock of any kind.
Section 4.9 Official Approval of Permits. The Borrower has obtained all
material federal, state, county and municipal licenses, certificates,
authorizations, and permits required to be obtained by it with respect to the
conducting of those, relating to water rights, water permits, air emissions,
water discharge, noise emissions, solid or liquid disposal, hazardous waste or
materials or other environmental health or safety matters. All such federal,
state, county and municipal licenses, certificates, authorizations and permits
are valid and sufficient to authorize it to conduct its business and impose no
materially burdensome restrictions on the Borrower.
Section 4.10 Governmental Authority Received. All timely authorizations,
permits, approvals and consents of Governmental Authorities which may be
required in connection with the carrying out or performance of any of the
Borrower's business activities or transactions required or contemplated
hereunder have been obtained (and remain in full force and effect).
Section 4.11 No Reportable Event. Each plan maintained by the Borrower is
in compliance with the applicable provisions of ERISA, except for instances of
noncompliance, which, singly or in the aggregate, do not and will not have a
material adverse effect upon the business, properties, assets, liabilities,
profits, financial condition, operations or results of operations, or business
prospects of the Borrower to perform its obligations under this Agreement and
the Loan Documents. The Borrower has met all of the funding standards applicable
to its plans, and there exists no event or condition which would permit the
institution of proceedings to terminate any such plan under Section 4042 of
ERISA.
Section 4.12 Information and Financial Data Accurate; Financial
Statements; No Materially Adverse Changes. All financial statements, information
and other financial data furnished by the Borrower to the Bank in connection
with this Agreement, which were relied upon by the Bank in connection with
making the Facility, (i) fairly present the financial condition of the Borrower
at the respective dates thereof, (ii) were prepared in accordance with Generally
Accepted Accounting Principles, consistently applied and (iii) manifest the
Borrower as Solvent. No material adverse changes have occurred with respect to
the Borrower's operations or its financial condition since the date
- 39 -
of the latest financial statements which are not disclosed therein or in the
notes to the financial statements.
Section 4.13 No Registration Required of the Revolving Note. The Borrower
has taken no action, directly or indirectly, whether by offer to sell or
solicitation of any offer to buy or otherwise negotiated with any person other
than the Bank so as to require registration of the issuance or sale of either
the Revolving Note under Section 5 of the Securities Act of 1993, as amended,
nor under the Trust Indenture Act of 1939, as amended.
Section 4.14 Taxes. All federal, state, local and foreign tax returns,
reports and statements required to be filed by the Borrower have been filed with
the appropriate Governmental Authorities in all jurisdictions in which such
returns, reports and statements are required to be filed and (ii) all taxes and
other impositions due and payable have been timely paid prior to the date on
which any fine, penalty, interest or late charge may be added thereto for
non-payment thereof, except where contested in good faith, by appropriate
proceedings, if adequate reserves therefor have been established on the books of
the Borrower in accordance with Generally Accepted Accounting Principals. The
Borrower has complied in all material respects with all applicable laws, rules
and regulations relating to the withholding and payment of taxes and has timely
withheld from employee wages and paid over to the proper Governmental
Authorities all amounts required to be so withheld and paid over for all periods
under all applicable law. No issue has been raised in any examination of the
federal income tax returns of the Borrower by the IRS that, by application of
similar principles, reasonably may be expected to result in assertion of a
material deficiency for any taxable year; not so examined that has not been
accrued on the Borrower's audited financial statements. Except for that certain
pending sales tax audit being completed by the State of California, no tax
return of the Borrower is being audited by any Governmental Authority. The
Borrower has not executed or filed with any Governmental Authority any agreement
or other document extending, or having the effect of extending, the period for
assessment of collection of any federal, state or local taxes or other
impositions or has any obligation under any written tax sharing agreement. No
property owned by the Borrower is property which such Person is or will be
required to treat as being owned by another Person pursuant to the provisions of
Section 168 (f) (8) of the Tax Code or is "tax-exempt use property" within the
meaning of Section 168 (h) (1) of the Tax Code. The Borrower has not filed a
consent pursuant to Section 341(f) of the Tax Code or agreed to have Section 341
(f) (2) of the Tax Code apply to any disposition of subsection (f) assets (as
such term is defined in Section 341 (f) (4) of the Tax Code) owned by the
Borrower. The Borrower has not agreed to, nor is required to, make any
adjustment pursuant to Section 481(a) of the Tax Code by reason of a change in
accounting method initiated by the Borrower.
Section 4.15 No Existing Defaults. The Borrower is not in violation of or
default (nor is there any waiver in effect which, if not in effect, would result
in a violation or default) in any material or adverse respect under any
provision of any agreement, indenture, evidence or indebtedness, loan or
financing agreement, certificate, lease or other instrument to which it is a
party, or by which it is bound, or of any law,
- 40 -
governmental order, rule or regulation, so as to affect adversely in any
material manner its business, assets or financial condition.
Section 4.16 Title to Properties and Collateral. The Borrower has good and
marketable title to all of its properties and assets listed in the most recent
financial statements delivered to the Bank on or prior to the Closing Date,
subject to the Permitted Encumbrances (except as otherwise expressly described
in said financial statements).
Section 4.17 No Untrue Statements. All statements, representations and
warranties made by the Borrower in this Agreement, any other Loan Document and
any other agreement, document, certificate or instrument previously furnished or
to be furnished by the Borrower to the Bank under this Agreement, (i) are and
shall be true, correct and complete in all material respects at the time they
were made, (ii) do not and shall not contain any untrue statement of a material
fact, and (iii) do not and shall not intentionally omit to state a material fact
necessary in order to make the information contained herein or therein not
misleading or incomplete. The Borrower understands that all such statements,
representations and warranties shall be deemed to have been relied upon by the
Bank as a material inducement to make the Facility.
Section 4.18 Brokerage Commissions. No Person is entitled to receive from
the Borrower any brokerage commission, finder's fee or similar fee or payment in
connection with the consummation of the transactions contemplated by this
Agreement.
Section 4.19 Other Liens. The Borrower owns or shall own all of the
Collateral free and clear of any and all liens, encumbrances, pledges or
security interests whatsoever, except the Permitted Encumbrances. Except as
provided otherwise in this Agreement, none of the Collateral is subject to any
prohibition against encumbering, pledging, hypothecating or assigning same.
Section 4.20 Insurance. All policies of insurance in effect of any kind or
nature owned by or issued to the Borrower, including policies of life, fire,
theft, product liability, public liability, property damage, other casualty,
employee fidelity, workers' compensation, employee health and welfare, title ,
property and liability insurance, are in full force and effect and are of a
nature and provide such coverage as is customarily carried by companies engaged
in similar businesses and owning similar properties in the same general areas in
which the Borrower operates.
Section 4.21 Labor Matters. There are no strikes or other labor disputes
or grievances pending or threatened against the Borrower. There are no unfair
labor practice charges, charges alleging unlawful employment discrimination or
grievances pending or in process or, to the knowledge of the Borrower,
threatened by or on behalf of any employee or group of employees of the
Borrower. The Borrower is not a party to any collective bargaining agreement.
- 41 -
Section 4.22 Environmental Matters.
(a) The Borrower is in material compliance with all applicable
Environmental Laws;
(b) The Borrower has obtained all material Permits required by
Environmental Laws necessary for its operations, and all such Permits are in
good standing and the Borrower is in compliance with all terms and conditions of
such Permits;
(c) Neither the Borrower nor any of its currently or previously owned or
leased property or operations is subject to any outstanding written order from
or agreement with any Governmental Authority or other Person or subject to any
judicial or docketed administrative proceeding respecting (i) Environmental
Laws, (ii) Remedial Action or (iii) any Environmental Liabilities and Costs
arising from a Release;
(d) There are no conditions or circumstances associated with the currently
or previously owned or leased properties or operations of the Borrower, which
may reasonably be expected to give rise to Environmental Liabilities and Costs,
which are material in amount;
(e) The Borrower does not operate a treatment, storage or disposal
facility requiring a permit under the Resource Conservation and Recovery Act, as
amended (42 U.S.C. ss.6901 et seq.), regulations thereunder or any state analog;
(f) The Borrower has not received any notice or claim to the effect that
it is or is reasonably expected to be liable to any Person as a result of the
Release or threatened Release; and
(g) No Environmental Lien and no unrecorded Environmental Lien, has
attached to any property of the Borrower.
Section 4.23 Books and Records. The Borrower maintains its books and
records related to its Accounts Receivable and its Inventory at ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇.
Section 4.24 Names, Location of Offices. Schedule "C" hereto sets forth a
complete and accurate list of all offices and locations at or out of which the
Borrower conducts any of its business or operations, said Schedule "C" to
indicate the Borrower's chief executive office.
Section 4.25 Capitalization; Ownership of the Borrower. On and as of the
Closing Date, the authorized Capital Stock of the Borrower will consist of
Fifteen Million (15,000,000) authorized shares of common stock, one-third cent
par value. Four Million Two Hundred Eighty Eight Thousand Two Hundred
(4,288,200) shares of common stock are duly issued, are outstanding and are
fully paid and non- assessable.
- 42 -
Section 4.26 Investment Company Act of 1940. The Borrower is not an
"investment company": or an "affiliated person" of or "promoter" or "principal
underwriter" for, within the meaning of the Investment Company Act of 1940, as
amended, modified or supplemented. The making of the Facility by the Bank, the
application of the proceeds and repayment thereof by the Borrower and the
consummation of the transactions contemplated by the Loan Documents will not
violate any provisions of such Act or any rule, regulation or order issued by
the Securities and Exchange Commission thereunder.
Section 4.27 Margin Regulation. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying Margin
Stock.
Section 4.28 Survival of Representations and Warranties. The foregoing
representations and warranties shall survive the execution of this Agreement.
[SPACE INTENTIONALLY LEFT BLANK]
- 43 -
ARTICLE V
AFFIRMATIVE COVENANTS
Until payment and performance in full of all Obligations and the
termination of this Agreement, the Borrower hereby covenants and agrees that it
will:
Section 5.1 Notify Bank. Promptly inform the Bank if any one or more of
the representations and warranties made by the Borrower in this Agreement or in
any document related hereto shall no longer be entirely true, accurate and
complete in any material respect.
Section 5.2 Pay Taxes and Liabilities; Comply with Agreement. Promptly
pay, when due, all indebtedness, sums and liabilities of any kind now or
hereafter owing by the Borrower to any party however created, incurred,
evidenced, acquired, arising or payable, including without limitation the
Obligations, income and excise taxes and taxes with respect to any of the
Collateral, or any wages or salaries paid by the Borrower or otherwise.
Section 5.3 Observe Covenants. Observe, perform and comply with the
covenants, terms and conditions of this Agreement, the Loan Documents and any
other agreement or document entered into between the Borrower and the Bank.
Section 5.4 Maintain Corporate Existence and Qualifications. Maintain and
preserve in full force and effect, its corporate existence and rights,
franchises, licenses and qualifications necessary to continue its business for a
period longer than the term of the Facility, and comply with all applicable
statutes, rules and regulations pertaining to the operation, conduct and
maintenance of its regulations of its existence and business including, without
limitation, all federal, state and local laws relating to benefit plans,
environmental safety, or health matters, and hazardous or liquid waste or
chemicals or other liquids (including use, sale, transport and disposal
thereof).
Section 5.5 Information and Documents to be Furnished to the Bank.
Furnish, or caused to be furnished, to the Bank:
(i) Annual Financial Statements. "Audited" financial statements at its own
cost, as soon as available, but in any event within one hundred twenty (120)
days after the close of each Fiscal Year during the term of the Facility. Such
financial statements are to include (a) a detailed consolidated and
consolidating balance sheet for it and its Subsidiaries, as at the end of its
Fiscal Year, (b) a detailed consolidated and consolidating statement of
operations for it and its Subsidiaries, for the twelve (12) months then ended,
and (c) a detailed consolidated and consolidating statement of cash flows for it
and its Subsidiaries, as at the close of the Fiscal Year then ended, all with
respect to the operation of the Borrower and its Subsidiaries. Such financial
statements shall be prepared by management of the Borrower and audited by an
independent certified public
- 44 -
accountant acceptable to the Bank and in accordance with the Generally Accepted
Accounting Principles and shall be accompanied by a copy of all Accounts
Receivable confirmations completed by the independent certified public
accountant in connection therewith.
(ii) Quarterly Financial Statements. Financial statements at its own cost
and expense, as soon as available and in any event within sixty (60) days after
the close of the end of each Fiscal Quarter during the term of the Facility.
Such financial statements are to include (a) a detailed consolidated and
consolidating balance sheet for it and its Subsidiaries, as at the end of the
most recent Fiscal Quarter, (b) a detailed consolidated and consolidating
statement of operations for it and its Subsidiaries, for the three (3) months
then ended, and (c) a detailed consolidated and consolidating statement of cash
flows for it and its Subsidiaries, as at the close of the Fiscal Quarter then
ended, all with respect to the operation of the Borrower and its Subsidiaries.
Such financial statements shall be prepared by management and in accordance with
the Generally Accepted Accounting Principles.
(iii) Tax Returns. Copies of its filed Federal and state Income Tax
Returns, at its own cost and expense, within ten (10) days of filing of same
with such appropriate taxing authorities, provided, however, in no event later
than March 31 of each calendar year during the term of the Facility, except for
an extension filed with such appropriate taxing authority; in which event the
Borrower shall provide the Bank with a copy of such extension filing, evidence
of payment of the estimated tax liability, if any, and, thereafter, pursuant to
and in accordance with such extension filing, the applicable Income Tax Return
within ten (10) days of filing of same with such appropriate taxing authority.
(iv) Annual Budget. In such form as may be required by the Bank, as soon
as available, but in no event later than November 1 of each calendar year during
the term of the Facility, the proposed annual budget for the Borrower and its
operations for the next succeeding Fiscal Year.
(v) Accounts Receivable Aging Reports. As soon as available but in any
event within ten (10) days after the close of each month during the term of the
Facility, a detailed aging report setting forth amounts due and owing on
Accounts Receivable on the Borrower books as of the close of the preceding
month, together with a reconciliation report satisfactory to the Bank showing
all sales, collections, payments and adjustments to Accounts Receivable on the
Borrower's books as of the close of the preceding month.
(vi) Accounts Payable Aging Reports. As soon as available but in any event
within ten (10) days after the close of each month during the term of the
Facility, a detailed aging report setting forth amounts due and owing on
accounts payable on the Borrower's books as of the close of the preceding month,
together with a reconciliation report satisfactory to the Bank showing all
adjustments to accounts payable on the Borrower's books as of the close of the
preceding month. (vii) Borrowing Base Certificate. On or before the tenth (10th)
day of each month during the term of the Facility, a Borrowing Base Certificate,
certified by the Chief Financial Officer of the Borrower.
- 45 -
(viii) Inventory Reports. As soon as available but in any event within ten
(10) days after the close of the end of each month during the term of the
Facility, a report of Inventory, in form and substance acceptable to the Bank,
setting forth (i) the total value of finished goods, work-in-progress and raw
materials and (ii) the location of the Inventory.
(ix) Field Exam. On or before the Closing Date and on or before the yearly
anniversary of the Closing Date, the results of a field audit examination
(hereinafter referred to as "Audit") conducted on behalf of the Bank with
respect to the Borrower's Accounts Receivable and Inventory; such examination to
be conducted by an independent certified public accountant acceptable to the
Bank.
(x) ERISA Documents. A certificate , upon request of the Bank, stating
that all ERISA reports, notices, returns and all other documents have been filed
as required by or in compliance with ERISA, whether to the Internal Revenue
Service, the Department of Labor, the Pension Benefit Guaranty Corporation or
any other appropriate agency, and all documents and information have been
distributed to participants in any Benefit Plan.
(xi) Public Securities Filings. As soon as available, but in any event
within fifteen (15) Business Days after the filing of same, all documents,
filings, submissions and other data required to be filed by it, including
without limitation, its Form 10-KSB and Form 10-QSB, in accordance with laws,
regulations, statutes and rules of the United States Securities and Exchange
Commission, NASDAQ and any other such stock exchanges to which it is subject.
(xii) Compliance Certificate. Concurrently with the delivery of the annual
financial statements required by Section 6.5(i) of this Agreement and the
quarterly financial statements required by Section 6.5(ii) of this Agreement, a
certified report, in form and substance acceptable to the Bank, prepared and
executed by management of the Borrower, with appropriate calculations, if any,
setting forth that the Borrower is in compliance with all representations,
warranties and covenants of this Agreement and certifying as to the fact that
the Borrower has examined the provisions of this Agreement and that no Default
or Event of Default has occurred (or if an Event of Default does exist, a
statement explaining its nature and extent).
(xiii) Notice of Judgments, Environmental, Health or Safety Complaints.
(a) Within five (5) days after the occurrence of same, written
notice to the Bank of the entry of any judgment or the institution of any
lawsuit or of other legal or equitable proceedings or the assertion of any
crossclaim or counterclaim seeking monetary damages from the Borrower in an
amount exceeding $50,000.00;
- 46 -
(b) Within ten (10) days after the occurrence of same, notice or
copies if written of all claims, complaints, orders, citations or notices,
whether formal or informal, written or oral, from a governmental body or private
person or entity, relating to air emissions, water discharge, noise emission,
solid or liquid waste disposal, hazardous waste or materials, or any other
environmental, health or safety matter. Such notices shall include, among other
information, the name of the party who filed the claim, the potential amount of
the claim, and the nature of the claim.
(xiii) Other Information. Within five (5) days after the request of same
by the Bank:
(a) Certificates of insurance for all policies of insurance to be
maintained by the Borrower pursuant hereto;
(b) An estoppel certificate executed by an authorized officer of the
Borrower indicating that there then exists no Event of Default and no event
which, with the giving of notice or lapse of time, or both, would constitute an
Event of Default under any agreement to which any of the Borrower is a party;
(c) All original and other documents evidencing right to payment,
including but not limited to invoices, original orders, shipping and delivery
receipts;
(d) All information received by the Borrower affecting the financial
status or condition of any account debtor; and
(e) Assignments, in form acceptable to the Bank, of all Eligible
Accounts Receivable, and of the monies due or to become due on specific
contracts relating to the same.
(xiii) From time to time, such other information as the Bank may
reasonably request, including financial projections and cash flow analysis.
Section 5.6 Access to Records and Property. At any time and from time to
time, upon request by the Bank, the Borrower shall give any representatives of
the Bank access during normal business hours to, and permit any of them to
examine, audit, copy or make extracts from, any and all books, records and
documents in the possession of the Borrower or any independent contractor
relating to the Borrower's affairs and the Collateral, and to inspect any of its
properties wherever located. Fees and expenses for said examinations and audits
are to be paid by the Borrower to the Bank.
Section 5.7 Comply with Laws. The Borrower shall comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, compliance with which is necessary to maintain its
corporate existence or the conduct of its business or non compliance with which
would materially or adversely effect its ability to perform its obligations or
any security given to secure its obligations. The Borrower shall comply with all
accounting rules, regulations, promulgations and
- 47 -
dictates as may be pronounced, adopted, articulated and/or published by the
American Institute of Certified Public Accountants, the Financial Accounting
Standards Board, the Securities and Exchange Commission, the stock exchanges and
such other regulatory body, federal and/or state having jurisdiction over such
matters
Section 5.8 Insurance Required.
(i) The Borrower shall cause to be maintained, in full force and effect on
all property of the Borrower including, without limitation, all inventory and
equipment for all Obligations, insurance in such amounts against such risks as
is satisfactory to the Bank, including, but without limitation, fire, boiler,
theft, burglary, pilferage, vandalism, malicious mischief, loss in transit, and
hazard insurance and, if, on the Closing Date, any real property upon which the
Borrower conducts its business is in an area that has been identified by the
Secretary of Housing and Urban Development as having special flood or mudslide
hazards, and on which the sale of flood insurance has been made available under
the National Flood Insurance Act of 1968, then flood insurance. Said policy or
policies shall:
(a) Be in a form and with insurers which are satisfactory to the
Bank;
(b) Be for such risks and for such insured values as the Bank or its
assigns may require in order to replace the property in the event of actual or
constructive total loss;
(c) Designate the Bank and its assignees, as additional insureds and
loss payees as their interests may from time to time appear;
(d) Contain a "breach of warranty clause" whereby the insurer agrees
that a breach of the insuring conditions or any negligence by the Borrower or
any other person shall not invalidate the insurance as to the Bank and its
assignee;
(e) Provide that they may not be canceled or materially altered
without ten (10) days prior notice to the Bank and its assigns; and
(f) Upon demand, be delivered to the Bank;
(ii) The Borrower shall obtain such additional insurance as the Bank may
reasonably require;
(iii) The Borrower shall in the event of loss or damage, forthwith notify
the Bank and file proofs of loss with the appropriate insurer. The Borrower
hereby authorize the Bank to endorse any checks or drafts constituting insurance
proceeds;
(iv) The Borrower shall forthwith upon receipt of insurance proceeds
endorse and deliver the same to the Bank; and
- 48 -
(v) In no event shall the Bank be required either to (a) ascertain the
existence of or examine any insurance policy or (b) advise the Borrower in the
event such insurance coverage shall not comply with the requirements of this
Agreement.
Section 5.9 Condition of Collateral; No Liens. The Borrower shall maintain
all Collateral conveyed to the Bank as collateral security for any Obligations
in good condition and repair at all times, undertake all reasonable efforts to
preserve it against any loss, damage, or destruction of any nature whatsoever
relating to said Collateral or its use, and keep said Collateral free and clear
of any liens, except Permitted Encumbrances created pursuant hereto or disclosed
herein.
Section 5.10 Payment of Proceeds. Upon the occurrence of an Event of
Default, the Borrower shall forthwith upon receipt of all proceeds of
Collateral, other than any such proceeds received by the Borrower in the
ordinary course of its business as a result of the sale of Inventory or
collection of Accounts Receivable, pay such proceeds over to Bank, and such
proceeds shall thereupon become the Bank's sole property.
Section 5.11 Pay Fees and Expenses. The Borrower shall pay on demand all
expenses of the Bank in connection with the preparation, administration,
default, collection, waiver or amendment of loan terms, or in connection with
Bank's exercise, preservation or enforcement of any of its rights, remedies or
options under this Agreement and the Loan Documents, including, without
limitation, fees of outside legal counsel or the allocated costs of in-house
legal counsel, accounting, consulting, brokerage or other similar professional
fees or expenses, and any fees or expenses associated with travel or other costs
relating to any appraisals or examinations conducted in connection with the loan
or any collateral therefor, and the amount of all such expenses shall, until
paid, bear interest at the Default Rate and be a part of the Obligations.
Section 5.12 Records. The Borrower shall at all times keep accurate and
complete records of the Collateral and the status of each Account Receivable.
Section 5.13 Delivery of Documents. If any proceeds of Accounts Receivable
shall include or any of the Accounts Receivable shall be evidenced by notes,
trade acceptances or instruments or documents, or if any Inventory is covered by
documents of title or chattel paper, whether or not negotiable, the Borrower
waive protest regardless of the form of the endorsement. If the Borrower fail to
endorse any instrument or document, the Bank is authorized to endorse it on the
Borrower behalf.
Section 5.14 Name Changes; Location Changes.
(i) The Borrower shall immediately notify the Bank if the Borrower is
known by or conducting business under any names other than in the name of the
Borrower or in the name of any of its Subsidiaries and/or Affiliates;
- 49 -
(ii) Immediately notify the Bank if the Borrower is conducting any of its
business or operations at or out of offices or locations other than those set
forth in this Agreement, or any change to the location of their chief executive
office; and
(iii) Immediately notify the Bank (a) in the event E(2)T is not the only
domestic Subsidiary and/or Affiliate of the Borrower and (b) any addition or
deletion to and/or change in the name of any of the German Subsidiaries. In the
event that there exists, at any time during the term of the Facility, a
Subsidiary other than E(2)T, the Borrower shall cause or suffer to cause any
such Subsidiary to execute and deliver, in favor of the Bank, an agreement of
guaranty, whereby the Subsidiary shall guaranty the complete payment and
performance of all Obligations.
Section 5.15 Further Assurances. The Borrower shall at any time or from
time to time upon request of the Bank take such steps and execute and deliver
such financing statements and other documents all in the form of substance
satisfactory to the Bank relating to the creation, validity or perfection of the
security interests provided for herein, under the UCC or other laws of the State
of New Jersey or of another state or states.
Section 5.16 Indemnification. The Borrower shall indemnify, protect,
defend and save harmless the Bank, as well as the Bank's directors, officers,
trustees, employees, agents, attorneys and shareholders (hereinafter referred to
collectively as the "Indemnified Parties" and individually as an "Indemnified
Party") from and against (i) any and all losses, damages, expenses or
liabilities of any kind or nature and from any suits, claims or demands, by
third parties including reasonable counsel fees incurred in investigating or
defending such claim, suffered by any of them and caused by, relating to,
arising out of, resulting from, or in any way connected with the Facility and
the transactions contemplated herein, and (ii) any and all losses, damages,
expenses or liabilities sustained by the Bank in connection with any
environmental sampling or cleanup of any property which constitutes part of the
Collateral required or mandated by any federal, state or local law, ordinance,
rule or regulation, including, without limitation, the Environmental Laws or
from an action or claim by the Borrower against the Indemnified Party. In case
any action shall be brought against an Indemnified Party based upon any of the
above and in respect to which indemnity may be sought against the Borrower, the
Indemnified Party against whom such action was brought, shall promptly notify
the Borrower in writing, and the Borrower shall assume the defense thereof,
including the employment of counsel selected by the Borrower and reasonably
satisfactory to the Indemnified Party, the payment of all costs and expenses and
the right to negotiate and consent to settlement. Upon reasonable determination
made by the Indemnified Party, the Indemnified Party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof; provided, however that the Indemnified Party shall pay the costs and
expenses incurred in connection with the employment of separate counsel. The
Borrower shall not be liable for any settlement of any such action effected
without its consent, but if settled with the Borrower consent, or if there be a
final judgment for the claimant in any such action, the Borrower agrees to
indemnify and save harmless said Indemnified Party against whom such action was
brought from and against any loss or liability by reason of such settlement or
judgment,
- 50 -
except as otherwise provided above. The provisions of this Section 5.16 shall
survive the termination of this Agreement and the final repayment of the
Facility.
[SPACE INTENTIONALLY LEFT BLANK]
- 51 -
ARTICLE VI
NEGATIVE COVENANTS
Until payment and performance in full of all Obligations, the Borrower
covenants and agrees that:
Section 6.1 No Consolidation, Merger, Acquisition. The Borrower will not
consolidate with, merge with, or acquire the stock or assets of any person,
firm, joint venture, partnership, corporation, or other entity, whether by
merger, consolidation, purchase of stock or otherwise except (i) with prior
express written consent of the Bank, which consent shall not be unreasonably
withheld, delayed or conditioned, (ii) in the event of a consolidation and/or
merger, if the surviving entity shall be the Borrower and (iii) in the event of
any domestic acquisition, the newly acquired entity, shall provide to the Bank,
a guaranty, in form and substance and on such terms as are acceptable to the
Bank, of all Obligations of the Borrower to the Bank.
Section 6.2 Disposition of Assets or Collateral. The Borrower will not
sell, lease, transfer, convey, or otherwise dispose of substantially all or all
of its assets or the Collateral except in the ordinary course of its business.
Section 6.3 Other Liens. The Borrower will not incur, create or permit to
exist any mortgage, assignment, pledge, hypothecation, security interest, lien
or other encumbrance on any of their property or assets, whether now owned or
hereafter acquired, except for the Permitted Encumbrances.
Section 6.4 Other Liabilities. The Borrower will not incur, create, assume
or permit to exist any Indebtedness or liability on account of either borrowed
money or the deferred purchase price of property, except (a) Obligations to the
Bank; or (b) Indebtedness subordinated to payment of the Obligations on terms
approved by the Bank in writing; or (c) the Permitted Encumbrances.
Section 6.5 Payment of Dividends; Redemption of Stock. Upon the occurrence
of a Default or an Event of Default, the Borrower will not pay any dividends,
make any withdrawal from its capital, make any other distributions and/or
repurchase, redeem, or otherwise acquire or set aside reserves to acquire, any
of their outstanding stock, partnership or other equity interests.
Section 6.6 Accounts. The Borrower will not sell, assign, transfer or
dispose of any of its Account or notes receivable, with or without recourse,
except to the Bank.
Section 6.7. Prepayment of Other Indebtedness. The Borrower will not
prepay any amounts not required to be prepaid, except to the Bank or any
Affiliate or in the ordinary course of business of the Borrower, or cause or
permit to be accelerated any amounts on any outstanding indebtedness now
existing or hereafter arising.
- 52 -
Section 6.8. Sale or Issuance of Stock. The Borrower will not sell, issue,
or agree to sell or issue, any shares and/or securities (voting, non-voting,
preferred, convertible. warrant or common) of the Borrower, or purchase such
shares and/or securities if the sale, issuance or purchase of such shares and/or
securities would result in a liability to the Borrower.
Section 6.9. Investments. Except as may be permitted by the terms and
conditions of this Agreement, the Borrower will not purchase or make any
investment in the stock, securities or evidences of indebtedness of or loan to
any other person or entity (including, without limitation, entities owned or
controlled by any officers, directors, shareholders, principals, partners or
affiliates of the Borrower) except (i) the United States Government or its
agencies, or (ii) certificates of deposit of United States domestic banks having
a ratio of qualifying total capital to weighted risk assets of not less than
eight (8%) percent, at least four (4%) percent of which is Tier I capital, and
total capital and surplus in excess of $50,000,000. "Qualifying total capital"
and Tier I capital" shall be defined from time to time pursuant to regulations
published by the Office of the Comptroller of the Currency and the Federal
Deposit Insurance Corporation.
Section 6.10 Loans. The Borrower will not make loans to any Person, firm
or entity.
Section 6.11 Guaranties. Except for its guaranty of that certain loan by
and between HOHENSTAUFEN ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwal-tungs
GmbH and ING-BHF Bank, the Borrower will not assume, guaranty, endorse,
contingently agree to purchase or otherwise become liable upon the obligation of
any Person, firm or entity except (a) by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; (b) contingent obligations under letters of credit entered
into in the ordinary course of business for the purchase of merchandise for
resale.
Section 6.12 Remove Property. The Borrower will not remove, or cause or
permit to be removed, without the Bank's prior written consent, any of its
Collateral or assets from those locations as more fully set forth in Schedule
"B", attached hereto and made a part hereof, except (i) for sales of Inventory
in the ordinary course of the Borrower business or (ii) removal (and return) of
any Collateral for use in the normal course of business of the Borrower.
Section 6.13 Modification of Documents. The Borrower will not change,
alter or modify, or permit any change, alteration or modification of its
Certificate of Incorporation, By-Laws or other governing documents, without the
Bank's prior written consent.
Section 6.14 Change Business. The Borrower will not change or alter the
nature of its business.
- 53 -
Section 6.15 Settlements. The Borrower will not compromise, settle or
adjust any claims in a material amount relating to any of the Collateral,
without the prior written consent of the Bank.
Section 6.16 Change Location or Name. The Borrower, without the prior
express written consent of the Bank, which consent shall not be unreasonably
withheld, delayed or conditioned, will not change the place where their books
and records are maintained or change its name or transact business under any
other name, from that location set forth in Schedule "C" of this Agreement.
Section 6.17 Fixed Charge Coverage Ratio. The Borrower shall not permit,
cause nor suffer to permit, at any time during the term of the Facility, its
Fixed Charge Coverage Ratio to be less than than the amount set forth below
opposite such period:
Period Ratio
------ -----
Closing Date through
July 31, 2003 1.25 to 1.0
August 1, 2003 and thereafter 1.50 to 1.0
In each case, the ratio shall be determined as of the last day of each
Fiscal Quarter for the four-quarter period ending on such day.
Section 6.18 Maximum Leverage Ratio. The Borrower shall not permit, cause
nor suffer to permit, at any time during the term of the Facility, its Maximum
Leverage Ratio, to be greater than 1.50 to 1.0. The ratio shall be determined as
of the last day of each Fiscal Quarter for the four-quarter period ending on
such day.
[SPACE INTENTIONALLY LEFT BLANK]
- 54 -
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 Events of Default. The occurrence of any of the following
events with the passing of any applicable notice and cure periods shall
constitute an "Event of Default" under this Agreement (hereinafter referred to
as an "Event of Default")
(i) Any representation or warranty made by the Borrower or any
Guarantor in the Revolving Note or in any other Loan Document furnished in
connection herewith shall prove to have been false, incorrect or misleading in
any substantial and material respect on the date as of which made;
(ii) The Borrower shall have failed to make any payment of any
installment of interest on the Revolving Note on its due date;
(iii) The Borrower shall have failed to make any payment of
principal on the Revolving Note on its due date;
(iv) The Borrower or any Guarantor shall have failed to duly observe
or perform any covenant, condition or agreement with respect to the payment of
moneys on the part of the Borrower or any Guarantor to be observed or performed
pursuant to the terms of the Loan Documents, other than the payment of principal
and interest which shall be governed by (ii) and (iii) above;
(v) The Borrower or any Guarantor shall have failed to duly observe
or perform any covenant, condition or agreement on the part of the Borrower or
any Guarantor to be observed or performed pursuant to the terms of the Loan
Documents other than the payment of moneys which shall be governed by (ii),
(iii) and (iv) above;
(vi) The Borrower shall have transferred, or caused to have been
transferred, title to or possession of any interest in the Collateral, or any
part thereof, to any party, whether voluntarily, involuntarily or by operation
of law, other than (i) the sale of its Inventory in the ordinary course of its
business and (ii) the sale of its PP & E, provided the Borrower has replaced
such sold item with one of similar value;
(vii) The Borrower shall have entered into any additional financing
or shall have consented to the placing of any lien on the Collateral;
(viii) The Borrower or any Guarantor shall have applied for or
consented to the appointment of a custodian, receiver, trustee or liquidator of
all or a substantial part of their assets; a custodian shall have been appointed
with or without consent of the Borrower or any Guarantor, as may be applicable;
the Borrower or any Guarantor shall have made a general assignment for the
benefit of their respective creditors; the Borrower or any Guarantor shall have
filed a voluntary petition in bankruptcy, or a petition or an
- 55 -
answer seeking an arrangement with their creditors, or shall have taken
advantage of any insolvency law, or shall have filed an answer admitting the
material allegations of a petition in bankruptcy, or insolvency proceeding; or a
petition in bankruptcy shall have been filed against the Borrower or any
Guarantor and shall not have been dismissed for a period of thirty (30)
consecutive days, or if an Order for Relief has been entered under the
Bankruptcy Code; or an order, judgment or decree shall have been entered without
the application, approval or consent of the Borrower or any Guarantor by any
court of competent jurisdiction appointing a receiver, trustee, custodian or
liquidator of the Borrower or any Guarantor of a substantial part of their
assets and such order, judgment or decree shall have continued unstayed and in
effect for any period of thirty (30) consecutive days;
(ix) A writ of execution or attachment or any similar process shall
be issued or levied against all or any part of or interest in any of the
properties or assets of the Borrower pledged to the Bank or any partnerships,
corporations or other entities in which the Borrower or any Guarantor are the
principal controlling partner or shareholder, or any judgment in excess of
$50,000.00, involving monetary damages shall be entered against the Borrower or
any Guarantor or any partnerships, corporations or other entities in which the
Borrower or any Guarantor are the principal controlling partner or shareholder,
which shall become a lien on the Borrower or any Guarantor's properties or
assets or any portion thereof or interest therein and such execution, attachment
or similar process is not released, bonded, satisfied, vacated or stayed;
(x) Seizure or foreclosure of any of the properties or assets which
secure the Facility of the Borrower or any partnerships, corporations or other
entities in which the Borrower or any Guarantor are the principal controlling
partner or shareholder, pursuant to process of law or by respect of legal
self-help and/or debt;
(xi) A default by the Borrower or any Guarantor or any partnerships,
corporations or other entities in which the Borrower or any Guarantor are the
principal or controlling partner or shareholder, in any of the terms or
conditions of any agreement covering the payment of borrowed money and/or debt,
in excess of $50,000.00;
(xii) A material deterioration in the financial condition of the
Borrower or any Guarantor or the occurrence of any event, which in the sole and
absolute opinion of the Bank, impairs the financial responsibility of the
Borrower or any Guarantor;
(xiii) Any material change in the nature or character of the
business or the voluntary permanent closing of the business or ceasing of
operations of the Borrower or any Guarantor;
(xiv) In the event that ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ is no longer (a) an officer
and/or shareholder of the Borrower, (b) a managing director of HOHENSTAUFEN
ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwaltungs GmbH or any of the German
Subsidiaries or (c) an officer and/or director of any Guarantor;
- 56 -
(xv) The occurrence of a default under any documents, agreements
and/or instruments executed by and between HOHENSTAUFEN
ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwaltungs GmbH and ING-BHF Bank;
(xvi) The dissolution, merger, consolidation or reorganization of
the Borrower, HOHENSTAUFEN ZWEIHUNDERTSECHSUNDZWANZIGSTE Vermogensverwaltungs
GmbH or any Guarantor; and/or
(xvii) The failure to notify the Bank of the occurrence of an event
of default by the Borrower or any Guarantor under any terms and/or conditions of
any agreement covering the payment of borrowed money.
Section 7.2 Remedies. Upon the occurrence of an Event of Default and at
any time thereafter during the continuance of such Event of Default, the Bank
may take one or more of the following remedial steps in any order of priority:
(i) Declare immediately due and payable the outstanding principal
balance of the Revolving Note, together with all accrued and unpaid interest,
fees and other sums or expenses payable hereunder, if any, and accordingly
accelerate payment thereof notwithstanding contrary terms of payment stated
therein, without presentment, demand or notice of any kind, all of which are
expressly waived, notwithstanding anything to the contrary contained herein or
elsewhere;
(ii) Take any action at law or in equity against the Borrower (a) to
collect the payments then due and thereafter to become due under the Loan
Documents, or (b) to enforce performance and observance of any obligation,
agreement or covenant of the Borrower under the Loan Documents;
(iii) Exercise any and all rights and remedies of a secured party
under the UCC with respect to the Collateral owned by the Borrower; and
(iv) Exercise any and all rights and remedies provided for in the
Loan Documents as they relate to the Collateral or the Borrower.
Section 7.3 Set-Off. The Borrower and any Guarantor hereby grant to the
Bank, a continuing lien, security interest and right of setoff as security for
all liabilities and obligations to the 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 the Bank or any
entity under the control of Fleet Boston Financial Corporation and its
successors and assigns or in transit to any of them. At any time, without demand
or notice (any such notice being expressly waived by the Borrower), the Bank may
setoff the same or any part thereof and apply the same to any liability or
obligation of the Borrower and any Guarantor even though unmatured and
regardless of the adequacy of any other collateral securing the Facility. ANY
AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
- 57 -
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.
Section 7.4 No Notices. In order to entitle the Bank to exercise any
remedy available to it under Article VII of this Agreement, it shall not be
necessary for the Bank to give any notice, other than such notice as may be
required expressly in this Agreement or by applicable law.
Section 7.5 No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Agreement should be breached by any party and
thereafter waived by the other parties, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
Section 7.6 WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK (BY ACCEPTANCE
OF THIS AGREEMENT) MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS OR ACTIONS OF THE BANK RELATING TO THE ADMINISTRATION OF THE FACILITY
OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, THE BORROWER HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. THE BORROWER CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
BANK WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR BANK TO ACCEPT THIS
AGREEMENT AND MAKE THE FACILITY.
[SPACE INTENTIONALLY LEFT BLANK]
- 58 -
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Representations and Warranties Survive. All representations
and warranties contained herein or made in writing by or on behalf of the
Borrower in connection with the transactions contemplated hereby shall survive
the execution and delivery of this Agreement, any investigation at any time made
by or on behalf of the Bank, the making of the Facility contemplated hereby and
the acquisition and any disposition of the Revolving Note. All statements
contained in financial statements referred to in this Agreement and any
certificate or other instrument delivered by or on behalf of the Borrower
pursuant hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrower hereunder.
Section 8.2 Notices. Unless otherwise indicated differently, all notices,
payments, requests, reports, information or demands which any party hereto may
desire or may be required to give to any other party hereunder, shall be in
writing and shall be personally delivered or sent by telecopier, a nationally
recognized overnight courier service or first-class certified or registered
United States mail, postage prepaid, return receipt requested, and sent to the
party at its address appearing below or such other address as any party shall
hereafter inform the other party hereto by written notice given as aforesaid:
If to the Borrower: Mikron Infrared, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Arent Fox ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇, PLLC
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Bank: Fleet National Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
All notices, payments, requests, reports, information or demands so given shall
be deemed effective upon receipt or, if mailed, upon receipt or the expiration
of the third day following the date of mailing, whichever occurs first, except
that any notice of change in address shall be effective only upon receipt by the
party to whom said notice is addressed. A failure to send the requisite copies
does not invalidate an otherwise properly sent notice to the Borrower and/or the
Bank.
Section 8.3 Remedies Cumulative. No remedy herein conferred upon or
reserved to the Bank is intended to be exclusive of any other remedy or
remedies; but each and every such remedy shall be cumulative, and shall be in
addition to every other remedy given hereunder, or now or hereafter existing at
law or in equity or by statute. No delay or omission to exercise any right or
power accruing upon any Event of Default continuing as aforesaid, shall impair
any such right or power or shall be construed to be a waiver of any such Event
of Default, or acquiescence therein; and every such right and power may be
exercised from time to time and as often as may be deemed expedient.
Section 8.4 Modifications In Writing. Neither this Agreement nor any term
or provision hereof may be changed, waived, discharged or terminated except by
an instrument in writing signed by the Bank and the Borrower.
Section 8.5 Successors and Assigns. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of, and be enforceable
by, the respective successors and assigns of the parties hereto, whether so
expressed or not, and, in particular, shall inure to the benefit of, and be
enforceable by, any holder of the Revolving Note issued hereunder or any part
thereof.
Section 8.6 Sale of Loan Interest. The Bank shall have the unrestricted
right at any time and from time to time, and without the consent of or notice to
the Borrower or any Guarantor, to grant to one or more banks or other financial
institutions (each, a "Participant") participating interests in the Bank's
obligations to lend hereunder and/or any or all of the loans held by the Bank
hereunder. In the event of any such grant by the Bank of a participating
interest to a Participant, whether or not upon notice to the Borrower, the Bank
shall remain responsible for the performance of its obligations hereunder and
the Borrower shall continue to deal solely and directly with the Bank in
connection with the Bank's rights and obligations hereunder. The Bank may
furnish any information concerning the Borrower in its possession from time to
time to prospective Participants, provided that the Bank shall require any such
prospective Participant to agree in writing to maintain the confidentiality of
such information.
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Section 8.7 Pledge to the Federal Reserve. The Bank may at any time pledge
or assign all or any portion of its rights under the Loan Documents, including
any portion of the Revolving Note to any of the twelve (12) Federal Reserve
Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section
341. No such pledge or assignment or enforcement thereof shall release the Bank
from its obligations under any of the loan documents.
Section 8.8 Integration. This Agreement is intended by the parties as the
final, complete and exclusive statement of the transactions evidenced by this
Agreement. All prior or contemporaneous promises, agreements and understandings,
whether oral or written, are deemed to be superceded by this Agreement, and no
party is relying on any promise, agreement or understanding not set forth in
this Agreement. This Agreement may not be amended or modified except by a
written instrument describing such amendment or modification executed by the
Borrowers and the Bank.
Section 8.9 GOVERNING LAW, SEVERABILITY. THIS AGREEMENT AND THE REVOLVING
NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
JERSEY WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREUNDER. WHEREVER
POSSIBLE, EACH PROVISION OF THIS AGREEMENT SHALL BE INTERPRETED IN SUCH MANNER
AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS
AGREEMENT SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION
SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
AGREEMENT.
Section 8.10 SUBMISSION TO JURISDICTION
(A) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
THE REVOLVING NOTE OR ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE COURTS
OF THE STATE OF NEW JERSEY OR OF THE UNITED STATES OF AMERICA FOR THE DISTRICT
OF NEW JERSEY, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER
HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
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(B) THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF
ANY OF THE AFORESAID COURTS 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 PROVIDED HEREIN.
(C) NOTHING CONTAINED IN THIS SECTION 9.7 SHALL AFFECT THE RIGHT OF
THE BANK OR ANY HOLDER OF THE REVOLVING NOTE TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE BORROWER IN ANY OTHER JURISDICTION.
Section 8.11 WAIVER OF BANKRUPTCY STAY. IN CONSIDERATION OF THE TERMS,
CONDITIONS AND AGREEMENTS SET FORTH IN THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, THE BORROWER HEREBY KNOWINGLY, WILLINGLY AND INTENTIONALLY WAIVES ANY
PROVISIONS APPLICABLE IN CONNECTION WITH ANY VOLUNTARY OR INVOLUNTARY
INSOLVENCY, BANKRUPTCY, REORGANIZATION, FRAUDULENT CONVEYANCE OR SIMILAR
PROCEEDING INVOLVING THE BORROWER (OR OTHERWISE AFFECTING THE PREMISES) UNDER
ANY STATE OR FEDERAL LAW REGARDING CREDITORS' RIGHTS OR DEBTORS' OBLIGATIONS
IMPOSING AGAINST THE BANK, OR OTHERWISE PROVIDING FOR, AN AUTOMATIC STAY UNDER
SECTION 362(A) OF THE BANKRUPTCY CODE OR ANY OTHER PROHIBITION AGAINST THE
BANK'S COMMENCING, MAINTAINING OR COMPLETING ANY PROCEEDINGS IN CONNECTION WITH
OR THE EXERCISE OR ENFORCEMENT OF ANY OF THE BANK'S RIGHTS HEREUNDER OR UNDER
ANY OF THE OTHER LOAN DOCUMENTS OR ANY APPLICABLE LAW. IN FURTHERANCE THEREOF,
THE BORROWER FURTHER COVENANTS AND AGREES (I) THAT, IN THE EVENT OF THE
IMPOSITION OF ANY SUCH STAY OR OTHER PROHIBITION, THE BANK MAY SEEK TO LIFT ANY
SUCH STAY OR OTHER PROHIBITION OR SEEK EXEMPTION THEREFROM, (II) NOT TO CONTEST
ANY MOTION MADE BY THE BANK FOR THE LIFTING THEREOF OR FOR EXEMPTION THEREFROM
AND (III) TO COOPERATE WITH THE BANK, IN ANY MANNER REQUESTED BY THE BANK, IN
ITS EFFORTS TO OBTAIN RELIEF FROM ANY SUCH STAY OR OTHER PROHIBITION.
Section 8.12 Counterparts. This Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument. When counterparts have been executed by
all of the parties hereto, this Agreement shall be effective as of its date.
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IN WITNESS WHEREOF, the Borrower has duly executed and delivered this
Agreement, all as of the day and year first above written.
MIKRON INFRARED, INC.
By:___________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
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SCHEDULE "A"
ATTACHED TO AND MADE A PART OF THAT CERTAIN CREDIT AGREEMENT, BY AND BETWEEN
MIKRON INFRARED, INC., AS THE BORROWER, AND FLEET NATIONAL BANK, AS THE BANK,
DATED AS OF NOVEMBER 21, 2002
FORM OF BORROWING REQUEST CERTIFICATE
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[LOGO](SM) Fleet
Mikron Infrared, Inc.
Borrowing Base Certificate
(Due Monthly by the 10th)
Date: _____________
To Fleet National Bank (the "Bank") under a certain line of credit letter
agreement dated November 20, 2002 which, when taken together with other loan
documents between the Bank and Mikron Infrared, Inc. (the "Borrower") constitute
the "Loan Agreement".
Defined terms used in this certificate shall have the same meaning as ascribed
thereto in the Loan Agreement.
I. Computation of Borrowing Base
▇. ▇▇▇▇▇ Accounts Receivable ___________
B. Less: Ineligible Accounts Receivable (see attached schedule) ___________
C. Total Eligible Accounts Receivable ___________
D. 80% of Line C ___________
E. Total Inventory ___________
F. Less: Ineligible Inventory (see attached schedule) ___________
G. Total Eligible Inventory ___________
H. Less: Reserve of $-0- ___________
I. 50% of Line H ___________
J. Net Property Plant and Equipment ___________
K. 25% of Line J. ___________
L. Borrowing Base (Line D + Line I + Line K) ___________
II. Aggregate Principal Balance of Loans ___________
III. Excess Availability or Amount Due (Line L - Line II) ___________
If amount on line III is positive, result indicates remaining availability.
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If amount on line III is negative, result indicates amount due to Bank.
The undersigned officer of the Borrower certify that the information furnished
herein as of _________________________ is true and correct. In addition, the
signer certifies that; (i) as of the date hereof no Event of Default, or event
which after notice or lapse of time or both would be an Event of Default, exists
under the Loan Agreement; (ii) there exists no violation of any covenant, term,
condition or agreement contained in the Loan Agreement; (iii) no condition or
event has occurred which would constitute a Default or Event of Default under
the Loan Agreement; (iv) each of the representations and warranties contained in
the Loan Agreement is true and correct, except to the extent such
representations and warranties specifically relate to an earlier date and were
true and correct at such earlier date and; (v) the Borrower is in compliance
with all of the covenants, terms, conditions, and agreements of each loan
agreement and obligation to which it is party.
Mikron Infrared, Inc.
By: ____________________________
Name:
Title:
Ineligible Accounts Receivable
1. Amounts Aged Over 90 Days Past Invoice Date
2. Due From Affiliates
3. Conditional Accounts
4. Progress ▇▇▇▇▇▇▇▇, Deposits, Rebillings
5. Foreign Accounts - Uninsured
6. Installment Accounts
7. Government Accounts
8. Amounts Excluded Under 50% Rule
9. Accounts Not Liened
10. Disputed Accounts
11. Amounts Uninsured
12. Bankrupt Accounts
13. Contra Accounts
14. Accounts Excluded At Bank Discretion
15. Total Lines 1 Through 184
16. Less:
17. Amounts Due From Shonac Less Than 31 Days Past Invoice**
18. Plus:
19. Foreign Accounts Supported By Approved Irrevocable Letter Of
Credit
20. Equals:
21. Ineligible Accounts Receivable ___________
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22. Ineligible Inventory
23. Work In Process
24. Catalogs And Promotional Items
25. Rented and / or Demo Items
26. Returned Items Not Saleable
27. Damaged, Defective, Recalled Items
28. Samples And Demonstration Items
29. Consignment Items
30. Items Liened By Others
31. Packing And Shipping Materials
32. Excluded - Lack Of Landlord Lease Waiver
33. Accounts Not Liened
34. Total Lines 27 Through 36:
35. Equals:
36. Ineligible Inventory ___________
37.
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SCHEDULE "B"
ATTACHED TO AND MADE A PART OF THAT CERTAIN CREDIT AGREEMENT, BY AND BETWEEN
MIKRON INFRARED, INC., AS THE BORROWER, AND FLEET NATIONAL BANK, AS THE BANK,
DATED AS OF NOVEMBER 21, 2002
LOCATION OF COLLATERAL
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ Elevation Street
Hancock, Michigan
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
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SCHEDULE "C"
ATTACHED TO AND MADE A PART OF THAT CERTAIN CREDIT AGREEMENT, BY AND BETWEEN
MIKRON INFRARED, INC., AS THE BORROWER, AND FLEET NATIONAL BANK, AS THE BANK,
DATED AS OF NOVEMBER 21, 2002
LOCATION OF OFFICES
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ Elevation Street
Hancock, Michigan
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
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