REVOLVING CREDIT AGREEMENT
AGREEMENT made as of the 8th day of March, 2005, by and
between CITIZENS BANK OF MASSACHUSETTS, a state-chartered bank
having its principal place of business at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Lender"), and OPTOMETRICS
CORPORATION, a Delaware corporation, having its principal place
of business at ▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Borrower").
I. GENERAL TERMS
Section 1.01. Revolving Loans; Use of Proceeds
(a) Subject to the terms and conditions hereinafter set
forth, the Lender will make revolving line of credit loans
("Revolving Loans") to the Borrower in such amounts as Borrower
may request from time to time at the address of the Lender set
forth above in an aggregate principal amount not to exceed the
lesser of (a) Four Hundred Thousand and 00/100 Dollars
($400,000.00) (the "Maximum Credit") or (b) the Borrowing Base
(as hereinafter defined) then in effect on any Business Day (as
hereinafter defined) prior to the first to occur of (x) January
31, 2006 (the "Maturity Date") or (y) the earlier termination of
this Agreement pursuant to Article V of this Agreement.
(b) The proceeds of the Revolving Loans shall be used by
the Borrower (a) to pay off an existing line of credit from the
Lender to Optometrics LLC, a Massachusetts limited liability
company (the "Seller"), in connection with the Borrower's
acquisition of all or substantially all of the assets of the
Seller and (b) the remainder for working capital purposes.
Section 1.02. Secured Revolving Credit Note; Payments of
Principal and Interest
(a) The Revolving Loans shall be evidenced by that certain
Secured Revolving Credit Note of even date herewith (the "Note")
made by the Borrower in favor of the Lender.
(b) The Borrower shall repay in full all amounts due under
the Note upon the first to occur of (i) the Maturity Date (unless
the same is extended by Lender in its sole discretion) or (ii) an
acceleration under Article V of this Agreement following an Event
of Default. The Borrower shall repay the aggregate principal
amount of all Revolving Loans from the Lender to the Borrower
outstanding at any time (the "Aggregate Revolving Loans") in part
from time to time in such principal amounts as may be necessary
to ensure that the Aggregate Revolving Loans at no time exceed
the lesser of the Maximum Credit or the Borrowing Base then in
effect, as reflected in the Borrowing Base Certificate (as
hereinafter defined most recently provided to the Lender or any
information determined by the Lender in the interim.
Notwithstanding the definition of "Maximum Credit" set forth
above, nothing contained in this Agreement shall be construed to
obligate the Lender to make any Revolving Loan after the Maturity
Date or earlier termination of this Agreement pursuant to Article
V; further, nothing herein shall be construed to obligate the
Lender to make any Revolving Loan in excess of the Borrowing
Base; but in either such case the Lender may choose to do so and
all Revolving Loans shall in any event be secured by the
Collateral (as defined in the Security Agreement (as hereinafter
defined)).
(c) The Borrower will pay interest on the principal amount
of the Aggregate Revolving Loans outstanding from time to time,
from the date of the initial Revolving Loan until payment of all
Revolving Loans and the Note in full such interest to be payable
monthly in arrears on the first (1st) day of each calendar month,
commencing April 1, 2005, and on the date of payment of the
Revolving Loans in full. All Revolving Loans shall bear interest
at a fluctuating rate of interest equal to the Citizens Bank of
Massachusetts Prime Rate (as announced from time to time) plus
one-half of one percent (0.50%) per annum. Interest shall be
calculated on the basis of actual days elapsed and a 360-day
year.
Section 1.03. Requests for Revolving Loans; Notations
Reflecting Revolving Loans
(a) The Borrower will give the Lender telephonic or
written notice by no later than 3:00 p.m. on any Business Day
on which it requests a Revolving Loan, specifying the amount
and date of each Revolving Loan requested.
(b) The Borrower hereby irrevocably authorizes the Lender
to make or cause to be made on the books of the Lender, at or
following the time of making of any Revolving Loan and of
receiving any payment of principal, an appropriate and accurate
notation reflecting such transaction and the then aggregate
unpaid principal balance of the Revolving Loans. The amount so
noted, and other regular entries by the Lender on its books
with respect to interest and other charges, shall constitute
evidence as to the amount owed by the Borrower with respect to
principal of the Revolving Loan and with respect to interest
and other charges.
Section 1.04. Late Fee; Default Interest
(a) If any billed amount of principal and/or interest is
not paid in full within five (5) days after the same is due,
Borrower shall pay to Lender a late fee on such unpaid amount
equal to five percent (5%) of such late payment.
(b) During any period in which an Event of Default is
existing, the interest rate under the Note shall be the Citizens
Bank of Massachusetts Prime Rate plus two and one-half percent
(2.5%) per annum, until full payment of all principal, interest,
expenses and costs of collection, if any, due hereunder are
received by the Lender.
Section 1.05. Security for the Note
The Note and the Borrower's obligations hereunder shall be
secured by (a) a first priority security interest in all of the
Borrower's personal property pursuant to the terms of a Security
Agreement of even date (the "Security Agreement"), and (b) an
unconditional and continuing guaranty by Dynasil Corporation of
America, a New Jersey corporation (the "Guarantor"), the one
hundred percent (100%) stockholder of the Borrower. All
agreements and instruments described in this Section 1.05,
together with any and all other agreements and instruments
heretofore or hereafter securing the Note, are sometimes
hereinafter referred to collectively as the "Security Documents"
and individually as a "Security Document".
Section 1.06. Definitions
"Borrowing Base" shall mean the sum of (i) eighty percent
(80%) of Borrower's Eligible Receivables from time to time, plus
(ii) thirty percent (30%) of Eligible Inventory up to
$200,000.00.
"Borrowing Base Certificate" shall mean the borrowing base
certificate, in the form of Exhibit A attached hereto and made a
part hereof, that the Borrower shall complete and deliver to the
Lender pursuant to which the Borrower shall substantiate that
the Aggregate Revolving Loans do not exceed the lesser of the
Maximum Credit or the Borrowing Base.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day when commercial banks are authorized or
required to be closed in Boston, Massachusetts.
"Eligible Inventory" shall mean the aggregate of the lower
of cost or Market Value of all of the Iinventory of the
Borrower, expressly excluding Inventory that constitutes work-in-
process, which (i) is owned solely by the Borrower and with
respect to which the Borrower has good, valid and marketable
title; (ii) is stored at the chief executive office or any other
place of business of the Borrower; (iii) is subject to a valid,
enforceable, first priority security interest in favor of the
Lender; and (iv) otherwise conforms to the warranties contained
herein and which at all times continues to be acceptable to the
Lender in its sole discretion, which discretion shall be
exercised in a commercially reasonable manner.
"Eligible Receivables" shall mean the aggregate face amount
(less the aggregate amount of all returns, discounts, claims,
credits, charges and allowances of any nature and all reserves
for slow paying accounts or foreign sales) of such of the
Borrower's trade accounts receivable for goods sold and/or
services rendered by the Borrower in the ordinary course of its
business, on terms usual to the business of the Borrower
("Receivables"), which shall be deemed by the Lender in its sole
discretion to be eligible.
In determining whether a Receivable shall be eligible, (i)
the subject goods have been shipped or delivered to (and accepted
by) an account debtor on an absolute final sale basis and not on
consignment, on approval or on a sale-or-return basis or subject
to any other repurchase or return agreement, or on an open
account basis, or on a "▇▇▇▇ and hold" or a delayed billing basis
and no part of the subject goods has been returned, rejected,
lost or damaged or, in the case of services, the services have
been performed by the Borrower and accepted by the account
debtor; the account is not evidenced by chattel paper or an
instrument of any kind unless such chattel paper or instrument
has been delivered to the Lender and endorsed or assigned to the
Lender's order; and said account debtor is not insolvent or the
subject of any bankruptcy or insolvency proceeding of any kind
and (ii) the Receivable shall be a valid, legally enforceable
obligation of the account debtor thereunder
Without limiting the discretion of the Lender to determine
which Receivables are eligible, the following shall be deemed
ineligible:
(a) those Receivables due from any affiliates of the
Borrower, including, without limitation, any of its officers,
directors, stockholders, employees or agents;
(b) those Receivables that are due from suppliers or
other vendors of the Borrower;
(c) those Receivables that are being disputed by the
account debtor;
(d) those Receivables that are due from a person or entity
that is the subject of a voluntary or involuntary bankruptcy,
insolvency, reorganization, liquidation or other debt relief or
adjustment proceeding, including an assignment for the benefit of
its creditors;
(e) those Receivables that are more than ninety (90) days
past due from date of invoice;
(f) those Receivables that are due from any
governmental entity subject to specific legal assignment laws
or rules;
(g) those Receivables that are due from any person, entity
or debtor located outside of the United States unless such
Receivables are fully insured and evidence of such insurance is
presented to and found acceptable to the Lender;
(h) those Receivables that represent progress ▇▇▇▇▇▇▇▇;
and
(i) those Receivables that have been designated, by notice
to the Borrower, by the Lender in its sole discretion as
unacceptable for any reason (including, without limitation,
breach of any warranty of the Borrower with respect thereto;
claims or disputes relating thereto; bankruptcy, insolvency,
suspension of business, making of an assignment for the benefit
of creditors by or appointment of a receiver for, the account
debtor; or any other circumstances as a result of which the
Lender believes that collection thereof may be doubtful or that
the same are not suitable as a basis for borrowing under this
Agreement);
PROVIDED THAT if at any time twenty-five percent (25%) or more of
the aggregate amount of the Receivables due from any account
debtor are unpaid in whole or in part more than ninety (90) days
from the respective dates of invoices, from and after such time
none of the Receivables (then existing or thereafter arising) due
from such account debtor shall be deemed to be Eligible
Receivables until such time as all Receivables due from such
account debtor are (as a result of actual payments received
thereon) no more than ninety (90) days from the date of invoice.
"Inventory" shall mean all goods now owned or hereafter
acquired by a person and intended for sale, including, without
limitation, raw materials, work-in-process, and finished goods,
which would, in accordance with generally accepted accounting
principles, be classified as inventory of a person conducting a
business the same as or similar to that of such person.
"Market Value" shall mean the aggregate price at which
Eligible Inventory is offered for sale to customers of the
Borrower, as reflected on an ongoing inventory thereof, as
determined by the Lender and as such ongoing inventory is
reduced by sales, markdowns, obsolescence and shrinkage.
II. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender (which
representations and warranties shall survive the delivery of the
Note and the making of the Loan) that:
Section 2.01. Since February 18, 2005, there has been no
material adverse change in the financial condition of the
Borrower or the Guarantor and since that date no dividends or
other distributions have been declared or paid or made to the
stockholders of the Borrower of the Guarantor except as may be
otherwise stated in a letter of the Borrower to the Lender dated
the date of this Agreement and acknowledged in writing by the
Lender.
Section 2.02. The Borrower (a) is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware, (b) has the corporate power and authority to own its
properties and to carry on business as now being conducted and is
qualified to do business in every jurisdiction where such
qualification is necessary, including, without limitation, the
Commonwealth of Massachusetts, and (c) has the corporate power to
execute and deliver, and perform its obligations under this
Agreement, the Note and the Security Documents.
Section 2.03. The execution and delivery and performance by the
Borrower of its obligations under this Agreement, the Note and
each of the Security Documents have been duly authorized by all
requisite corporate action and will not violate any provision of
law, any order of any court or other agency of government, the
corporate charter or by-laws of the Borrower or any indenture,
agreement or other instrument to which it is a party, or by which
it is bound, or be in conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default
under, or except as may be provided by this Agreement, result in
the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of the property or assets of the
Borrower pursuant to, any such indenture, agreement or
instrument. The Borrower is not required to obtain any consent,
approval or authorization from, or to file any declaration or
statement with, any governmental instrumentality or other agency
in connection with or as a condition to the execution, delivery
or performance of this Agreement, the Note or the Security
Documents.
Section 2.04. There is no action, suit or proceeding at law or
in equity or by or before any governmental instrumentality or
other agency now pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower which, if adversely
determined, would have a material adverse effect on the business,
operations, properties, assets or condition, financial or
otherwise, of the Borrower.
Section 2.05. The Borrower is not a party to any agreement or
instrument or subject to any charter or other corporate
restriction adversely affecting its business, properties or
assets, operations or conditions, financial or otherwise. The
Borrower is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which it is a party.
Section 2.06. Except for equipment that is leased, the Borrower
has good title to all of its properties and assets, free and
clear of all mortgages, security interests, restrictions, liens
and encumbrances of any kind, except liens permitted hereunder
and restrictions, easements and minor irregularities in title
which do not and will not interfere with the occupation, use and
enjoyment by the Borrower of such properties and assets in the
normal course of its business as presently conducted or
materially impair the value of such properties and assets for the
purpose of such business.
Section 2.07. The Borrower has no subsidiaries.
Section 2.08. Any borrowings made by the Borrower under this
Agreement do not and will not render the Borrower insolvent; the
Borrower is not contemplating either the filing of a petition by
it under any state or federal bankruptcy or insolvency laws or
the liquidating of all or a major portion of its property, and
the Borrower has no knowledge of any person contemplating the
filing of any such petition against it, including the properties
and assets reflected in the financial statements referred to in
Section 2.01 hereof.
Section 2.09. No statement of fact made by or on behalf of the
Borrower in this Agreement or in any certificate or schedule
furnished to the Lender pursuant hereto, contains any untrue
statement of a material fact or omits to state any material fact
necessary to make statements contained therein or herein not
misleading. There is no fact presently known to the Borrower
which has not been disclosed to the Lender which materially
affects adversely, nor as far as the Borrower can foresee, will
materially affect adversely the property, business, operations or
condition (financial or otherwise) of the Borrower.
Section 2.10. The Borrower has filed all federal, state and
local tax returns required to be filed and has paid or made
adequate provision for the payment of all federal, state and
local taxes, charges and assessments.
Section 2.11. Except as otherwise disclosed to the Lender, the
Borrower does not have a profit sharing, pension or other similar
plan providing for a program of deferred compensation to any
employee except as disclosed to the Lender. With respect to such
plan, Borrower covenants and agrees to cause to be paid when due
all amounts necessary to fund in accordance with its terms such
plan and will take no action which could result in liability to
the Pension Benefit Guaranty Corporation, or any of its
successors or assigns, or to the entity which provides funds for
such plan.
II. CONDITIONS OF MAKING REVOLVING LOANS
The obligation of the Lender to make the Revolving Loans
hereunder is subject to the following conditions precedent:
Secion 3.01. The representations and warranties set forth in
Article II hereof shall be true and correct on and as of the date
hereof and the dates the Revolving Loans are requested and made.
Secion 3.02. The Borrower will open and maintain with the
Lender an account that will be the principal depository of the
Borrower's funds. Advances of Revolving Loans will be made by
the Lender to the Borrower upon telephonic request to credit such
advance to the Borrower's account made by an officer of the
Borrower who has been duly authorized by its board of directors
and whose name, along with a certified copy of such resolutions,
has been transmitted to the Bank. Such request shall be
confirmed in writing by the Lender's receipt, within two (2)
business days thereafter, of a request for advance in the form of
Exhibit B attached hereto, signed by a duly authorized officer of
the Borrower indicating the date and amount of the advance
requested and acknowledging the principal balance outstanding on
the Revolving Loan as of the said date after taking into
consideration the amount of the advance as so requested.
Secion 3.03. No Event of Default as specified in Article VI
hereof, nor any event which upon notice or lapse of time or both
would constitute such an Event of Default, shall have occurred.
III. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, from the date hereof
and until payment in full of the principal of, and interest on,
the Note and any other indebtedness of the Borrower to the
Lender, whether now existing or arising hereafter, the Borrower
will:
Section 4.01.
(a) Do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its corporate existence,
rights, licenses, permits and franchises and comply with all laws
and regulations applicable to it; at all times maintain, preserve
and protect all franchises and trade names and preserve all the
remainder of its property used or useful in the conduct of its
business and keep the same in good repair, working order and
condition, and from time to time, make, or cause to be made, all
needful and proper repairs, renewals, replacements, betterments
and improvements thereto, so that the business carried on in
connection therewith may be properly and advantageously conducted
at all times; and keep its insurable properties adequately
insured at all times, by financially sound and reputable
insurers, to such extent and against such risks, including fire
and other risks insured against by extended coverage, and
maintain liability and such other insurance as is customarily
maintained by companies engaged in similar businesses, all as may
be approved by the Lender.
(b) Comply with all applicable laws and regulations, whether now
in effect or hereafter enacted or promulgated by any governmental
authority having jurisdiction over the Borrower.
Section 4.02. Pay and discharge or cause to be paid and
discharged all taxes, assessments and governmental charges or
levies imposed upon it or upon its respective income and profits
or upon any of its property, real, personal or mixed, or upon any
part thereof, before the same shall become in default, as well as
all lawful claims for labor, materials and supplies or otherwise,
which, if unpaid, might become a lien or charge upon such
properties or any part thereof; provided, however, that the
Borrower shall not be required to pay and discharge or cause to
be paid and discharged any such tax, assessment, charge, levy or
claim so long as the validity thereof shall be contested in good
faith by appropriate proceedings and it shall have set aside on
its books adequate reserves with respect to any such tax,
assessment, charge, levy or claim, so contested; and provided,
further, that payment with respect to any such tax, assessment,
charge, levy or claim shall be made before any of its property
shall be seized or sold in satisfaction thereof.
Section 4.03. Give prompt written notice to the Lender of any
proceedings instituted against it by or in any Federal or state
court or before any commission or other regulatory body, whether
Federal, state or local, which, if adversely determined, would
have an adverse effect upon its business, operations, properties,
assets, or condition, financial or otherwise.
Section 4.04. Furnish to the Lender the following which shall be
satisfactory to the Lender:
(a) Within one hundred twenty (120) days of the end of each
fiscal year, consolidated audited financial statements
of the Guarantor with consolidating schedules showing
the Borrower, certified by ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co.,
p.c., or other independent certified public accountants
selected by the Guarantor and acceptable to the Lender,
the form of such certification to be also satisfactory
to the Lender, showing the financial condition of the
Guarantor at the close of such fiscal year, the results
of operations during such year and containing a
statement to the effect that such accountants have
examined the provisions of the Agreement and that none
of the Events of Default, as specified in Article VI
hereof, nor any event which upon notice or lapse of
time or both would constitute such an Event of Default,
has occurred.
(b) Within thirty (30) days after the end of each quarter
in each such fiscal year, (1) a borrowing base
certificate as of the end of such quarterly period and
(2) an accounts receivable aging; in each case as of
the end of such quarterly period, in form and substance
satisfactory to the Lender and certified by the
Borrower's chief financial officer.
(c) Within forty-five (45) days after the end of each
quarter in each such fiscal year, balance sheets and
statements of income and surplus, together with
supporting schedules, prepared by the Borrower and
certified by its chief financial officer, such balance
sheets to be as of the close of such quarter and such
statements of income and surplus to be for the period
from the beginning of the then current fiscal year to
the end of such quarter, in each case subject to audit
and year-end adjustments.
(d) Concurrently with the delivery of the annual audited
financial statements required by this Section 4.04, a
certificate in the form attached hereto as Exhibit C by
the President or chief financial officer of the
Borrower (i) calculating, setting forth and certifying
as to the accuracy of the amounts required to be
calculated under Sections 4.09 and 4.10 hereof, and
(ii) certifying as to the fact that he has examined the
provisions of this Agreement and that none of the
Events of Default, as specified in Article VI hereof,
nor any event which upon notice or lapse of time, or
both, would constitute such an Event of Default, has
occurred and is continuing.
(e) Promptly, from time to time such other information
regarding its operations, assets, business, affairs and
financial condition, as the Lender may reasonably
request. To the extent any of the information of the
Borrower or the Guarantor delivered to the Lender
pursuant to this subsection (e) constitutes material
non-public information, the Lender shall treat the same
as such.
Section 4.05. Permit agents or representatives of the Lender to
inspect, at reasonable hours and upon reasonable notice, its
books and records and to make abstracts or reproductions thereof.
Section 4.06. Promptly advise the Lender of any material adverse
change in its condition, financial or otherwise, or of the
occurrence of any Event of Default by the Borrower of the type
described in Article VI hereof, or of the occurrence of any event
which upon notice or lapse of time or both would constitute such
an Event of Default.
Section 4.07. Maintain a standard system of accounting in
accordance with generally accepted accounting principles.
Section 4.08. Maintain a Debt Coverage Ratio of not less
than 1.25 to 1.00, which Debt Coverage Ratio, on a stand-alone
basis, on an annual basis as at the end of each fiscal year of
the Borrower. "Debt Coverage Ratio" shall mean earnings before
interest, taxes, depreciation and amortization Less cash taxes,
unfinanced capital expenditures and distributions Divided by
actual interest expense and current maturities of long-term debt.
Section 4.09. Maintain a ratio of its total liabilities to
its Net Worth of less than or equal to 2.50 to 1.00, on a stand-
alone basis, which shall be tested on an annual basis as at the
end of each fiscal year determined in accordance with generally
accepted accounting principles consistently applied. "Net Worth"
shall be defined as the excess of the Borrower's total assets
over its total liabilities computed in accordance with generally
accepted accounting principles consistently applied, plus the
amount of any indebtedness of the Borrower which shall be
subordinated to the Loan on terms satisfactory to the Lender.
Section 4.10. Use the Lender as the principal depository of
its corporate funds.
IV. NEGATIVE COVENANTS
The Borrower covenants and agrees that, until payment in
full of the principal of, and interest on, the Note and any other
indebtedness of the Borrower to the Lender, whether now existing
or arising hereafter, unless the Lender shall otherwise consent
in writing, it will not, directly or indirectly:
Section 5.01. Incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any indebtedness or
liability, except:
(a) indebtedness to the Lender;
(b) indebtedness to equipment lessors for equipment leases
in existence on the date hereof;
(c) indebtedness incurred after the date hereof to a lender
, other than the Lender, in excess of the aggregate amount
of Fifty Thousand and 00/100 Dollars ($50,000.00)
outstanding at any one time, without the prior written
consent of the Lender; and
(d) indebtedness with respect to trade obligations and
other normal accruals in the ordinary course of business not
yet due and payable, or with respect to which it is
contesting in good faith the amount or validity thereof by
appropriate proceedings, and then only to the extent it has
set aside on its books adequate reserves therefor.
Section 5.02. Create, incur, assume or suffer to exist any
mortgage, security interest, pledge, lien, charge or other
encumbrance of any nature whatsoever on or in any of its assets,
now or hereafter owned, other than:
(a) liens securing the payment of taxes, either not yet due or
the validity of which is being contested in good faith by
appropriate proceedings, and as to which it shall have set aside
on its books adequate reserves;
(b) deposits under worker's compensation, unemployment insurance
and social security laws, or to secure the performance of bids,
tenders, contracts (other than for the repayment of borrowed
money) or leases, or to secure statutory obligations or surety or
appeal bonds, or to secure indemnity, performance or other
similar bonds in the ordinary course of business;
(c) liens imposed by law, such as carriers', warehousemen's or
mechanics' liens, incurred by it in good faith in the ordinary
course of business, and liens arising out of a judgment or award
against it with respect to which it shall currently be
prosecuting an appeal, a stay of execution pending such appeal
having been secured;
(d) liens to secure the indebtedness, but only the indebtedness,
permitted pursuant to Sections 5.01 (b) and (c) above; and
(e) liens in favor of the Lender.
Section 5.03. Guarantee, endorse or otherwise in anyway become
or be responsible for obligations of any other person, except
endorsements of negotiable instruments for collection in the
ordinary course of business.
Section 5.04. Sell, lease, transfer or otherwise dispose of its
properties, assets, rights, licenses and franchises to any
person, except in the ordinary course of its business and except
for obsolete assets, or turn over the management of, or enter a
management contract with respect to, such properties, assets,
rights, licenses and franchises.
Section 5.05. Enter into any arrangement, directly or
indirectly, with any person whereby it shall sell or transfer any
property, real, personal or mixed, used or useful in its
business, whether now owned or hereafter acquired, and thereafter
rent or lease such property, without the prior written consent of
the Lender, which consent shall not be unreasonably withheld,
delayed or conditioned.
Section 5.06. Purchase, invest in or otherwise acquire or hold
securities, including, without limitation, capital stock and
evidences of indebtedness of, or make Loan or advances to, or
enter into any arrangement for the purpose of providing funds or
credit to, any other person, except (i) ordinary and necessary
travel and business expense advances to employees of the Borrower
and (ii) investments in short-term obligations of the United
States or certificates of deposit of the Lender.
Section 5.07. Dissolve, liquidate, consolidate with or merge
with, or otherwise acquire all or substantially all of the assets
or properties of, any person or entity without the prior written
consent of the Lender, which consent shall not be unreasonably
withheld, delayed or conditioned, or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇
▇▇▇▇▇▇▇ cease to be employed by either the Borrower or the
Guarantor.
Section 5.08. Declare or pay any dividends, or make any
distribution of cash or property, or both, to holders of shares
of its capital stock, if after giving effect thereto any of the
foregoing would result in a breach, default or Event of Default
under this Agreement, or directly or indirectly, redeem, purchase
or otherwise acquire for a consideration, any shares of its
capital stock, of any class.
Section 5.09. Engage, directly or indirectly, in a business
substantially different from the business now being conducted.
Section 5.10. Sell, assign, discount or dispose in anyway of any
accounts receivable, promissory notes or trade acceptances held
by the Borrower, with or without recourse, except for collection
(including endorsements) in the ordinary course of business.
V. DEFAULTS
In each case of happening of any of the following events
(each of which is herein and in the Term Note sometimes called an
"Event of Default"):
(a) any representation or warranty made herein, or in any
report, certificate, financial statement or other instrument
furnished in connection with this Agreement, or the borrowing
hereunder, shall prove to be false or misleading in any material
respect;
(b) default in the payment when due of any principal or interest
on the Note within ten (10) days of when the same is due;
(c) default in the payment of any installment of the principal
of, or interest on, (i) that certain Note (SBA Form 147) in the
original principal amount of Three Hundred Thousand and 00/100
Dollars ($300,000.00) executed by the Borrower in favor of the
Lender or (ii) any other indebtedness of the Borrower to the
Lender (other than the Note) for more than five (5) days after
the date when the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment or by
acceleration or otherwise;
(d) default in the due observance or performance of any
covenant, condition or agreement (other than those contained in
(a), (b) or (c) above) contained herein and the same shall
continue unremedied for five (5) days after notice thereof shall
have been given to the Borrower or the occurrence of an event of
default as defined or described in the Note or in any of the
Security Documents;
(e) default with respect to any evidence of indebtedness of the
Borrower (other than to the Lender) in a material amount, if the
effect of such default is to accelerate the maturity of such
indebtedness or to permit the holder thereof to cause such
indebtedness to become due prior to the stated maturity thereof,
or if any indebtedness of the Borrower (other than to the Lender)
is not paid, when due and payable, whether at the due date
thereof or a date fixed for prepayment or otherwise, provided
that the foregoing shall not be a default so long as the validity
thereof shall be contested in good faith by appropriate
proceedings and the Borrower shall have set aside on its books
adequate reserves, in the sole judgment of the Lender, with
respect to any such material indebtedness and provided, further,
that payment with respect to such indebtedness shall be made
before any of the Borrower's assets or properties shall have been
seized or sold in satisfaction thereof;
(f) the Borrower or the Guarantor shall (i) apply for or consent
to the appointment of a receiver, trustee, custodian or
liquidator of it or any of its property, (ii) admit in writing
its inability to pay its debts as they mature, (iii) make a
general assignment for the benefit of creditors, (iv) have an
order of relief entered against it or insolvent or be the subject
of an order for relief under Title 11 of the United States Code
or (v) file a voluntary petition in bankruptcy, or a petition or
an answer seeking reorganization or an arrangement with creditors
or to take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or liquidation law
or statute, or an answer admitting the material allegations of a
petition filed against it in any proceeding under any such law or
if corporate action shall be taken for the purpose of effecting
any of the foregoing;
(g) an order, judgment or decree shall be entered, without the
application, approval or consent of the Borrower or the Guarantor
by any court of competent jurisdiction, approving a petition
seeking reorganization of either the Borrower or the Guarantor or
appointing a receiver, trustee, custodian or liquidator of the
Borrower or the Guarantor or of all or a substantial part of the
assets of the Borrower or the Guarantor, and such order, judgment
or decree shall continue unstayed and in effect for any period of
thirty (30) days;
(h) final judgment for the payment of money in excess of an
aggregate of One Hundred Thousand Dollars ($100,000) shall be
rendered against the Borrower or the Guarantor, and the same
shall remain undischarged for a period of ten (10) consecutive
days, during which execution shall not be effectively stayed;
(i) the occurrence of any attachment of any deposits or other
property of the Borrower or the Guarantor in the hands or
possession of the Lender, or the occurrence of any attachment of
any other property of the Borrower or the Guarantor in an amount
exceeding Ten Thousand Dollars ($10,000) which shall not be
discharged within thirty (30) days of the date of such
attachment;
then and in every such Event of Default and at any time
thereafter during the continuance of such event, the Note and any
and all other indebtedness of the Borrower to the Lender, shall,
at the option of the Lender, immediately become due and payable,
both as to principal and interest, without presentment, demand,
protest or notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the Note or other
evidence of such indebtedness to the contrary notwithstanding.
VI. MISCELLANEOUS
Section 7.01. This Agreement and all covenants, agreements,
representations and warranties made herein and in the
certificates delivered pursuant hereto, shall survive the making
by the Lender of the Loan, the execution and delivery to the
Lender of the Note, and shall continue in full force and effect
so long as the Note and any other indebtedness of the Borrower to
the Lender is outstanding and unpaid. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and
all covenants, promises and agreements in this Agreement
contained, by or on behalf of the Borrower, shall inure to the
benefit of the respective successors and assigns of the Lender.
Section 7.02. The Borrower will reimburse the Lender upon demand
for all out-of-pocket costs, charges and expenses of the Lender
(including reasonable fees and disbursements of counsel to the
Lender) in connection with (i) the preparation, execution and
delivery of this Agreement, the Note and any security instrument
securing the Note, (ii) the making of the Loan, (iii) any
amendments, modifications, consents or waivers in respect thereof
and (iv) any enforcement thereof.
Section 7.03. This Agreement and the Note shall be construed in
accordance with and governed by the laws of the Commonwealth of
Massachusetts. It is intended by the parties that this Agreement
take effect as a seal instrument.
Section 7.04. No modification or waiver of any provision of this
Agreement, or of the Note, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the
same shall be in writing, and then such waiver or consent shall
be effective only in the specific instance, and for the purpose,
for which given. No notice to, or demand, on the Borrower, in
any case, shall entitle the Borrower to any other or future
notice or demand in the same, similar or other circumstances.
Section 7.05. Neither any failure nor any delay on the part of
the Lender in exercising any right, power or privilege hereunder,
or under the Note, or any other instrument given as security
therefor, shall operate as a waiver thereof, nor shall a single
or partial exercise thereof preclude any other or future
exercise, or the exercise of any other right, power or privilege.
Section 7.06. All notices, requests, demands and other
communications provided for hereunder shall be in writing
(including telegraphic communication) and mailed or telegraphed
or delivered to the applicable party at the addresses indicated
above or, as to each party, at such other address as shall be
designated by such parties in a written notice to the other party
complying as to delivery with the terms of this Section. All such
notices, requests, demands and other communication shall, when
mailed or telegraphed, respectively, be effective when deposited
in the mails or delivered to the telegraph company, respectively,
addressed as aforesaid.
Section 7.07. This Agreement shall be binding upon and inure to
the benefit of the Borrower and the Lender and their respective
successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein
without the prior written consent of the Lender.
Section 7.08. The Borrower, to the extent that it may lawfully
do so, waives trial by jury in any action brought on or with
respect to this Agreement, the Note, the Security Documents meets
or any other agreements executed in connection herewith.
[SPACE INTENTIONALLY LEFT BLANK; SIGATURE PAGE FOLLOWS]
Section 7.09.
Any Article and Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose. As
used in this Agreement, the term "person" shall include any
individual, corporation, partnership, joint venture, trust, or
unincorporated organization, or a government or any agency or
political subdivision thereof.
IN WITNESS WHEREOF, the Lender and the Borrower have caused
this Agreement to be duly executed by their duly authorized
officers, all as of the day and year first above written.
Lender:
CITIZENS BANK OF MASSACHUSTTS
By:________________________________
▇▇▇▇ ▇▇▇ Askin, Vice President
Borrower:
OPTOMETRICS CORPORATION
By:________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President