Exhibit 10.21
CONTINUING LETTER OF CREDIT AGREEMENT
(PINE RIDGE)
In consideration of the Bank (as defined below) in its discretion issuing from
time to time letters of credit whether documentary or standby and all amendments
thereto (hereinafter each individually, and all collectively called the
"Credit") substantially in accordance with an Application (as defined below) for
a Credit tendered to the Bank, Millennium Cell Inc. (hereinafter, individually
and collectively, the "Applicant") agrees:
1. DEFINITIONS. As used herein: (A) "AGREEMENT" means each Application by the
Applicant for a Credit and this Continuing Letter of Credit Agreement, as each
may be modified; (B) "APPLICATION" means, if Applicant uses electronic
communication facilities to apply for or instruct the Bank as to the contents of
a Credit, information sufficient to enable the Bank to prepare and issue or
amend a Credit for Applicant's account transmitted by electronic message (which
may, but need not, be computer generated), including facsimile, directed to the
Bank by Applicant using such identification codes, passwords, and other security
procedures as the Bank and Applicant may agree are commercially reasonable from
time to time; or a written and signed application with sufficient information
delivered to the Bank to enable it to prepare and issue or amend a Credit for
Applicant's account; (C) "BANK" means Wachovia Bank, National Association and
all of its branches, whether in the United States or foreign and any of Bank's
affiliates that issue letters of credit; Applicant authorizes and directs the
Bank to select the branch or affiliate which will issue or process any Credit:
and for the purposes of Sections 4, 7 and 9, "Bank" includes correspondents of
Bank; (D) "BUSINESS DAY" means any day that is not a Saturday, Sunday or other
day on which commercial banks are authorized or required to close at the place
where Bank is obligated to honor a presentation or otherwise act under the
Credit or this Agreement; (E) "COLLATERAL" means (i) all Applicant's Property
(as hereinafter defined) now or hereafter in possession or control of Bank or
its agents, affiliates or representatives (for any purpose); and (ii) all
proceeds and products of the foregoing, now or later existing; (F) "DEBENTURES"
means the $8,500,000 Secured Convertible Debentures of Applicant issued on or
about the date hereof and purchased by Pine Ridge Financial, Inc. ("Pine
Ridge"); (G) "DRAFT" means any draft (sight or time), receipt, acceptance,
cable, SWIFT or other written demand for payment; (H) "EVENT OF DEFAULT" means
(i) failure to pay or perform any of the Obligations when due or Applicant shall
fail to abide by any of the terms and provisions of this Agreement or any
agreement executed by Applicant in favor of Bank in connection herewith or
connection with any Credit for the benefit of Pine Ridge; (ii) termination of
Applicants existence; (iii) institution of any proceeding under any law relating
to bankruptcy, insolvency or reorganization by or against Applicant, or the
appointment of a receiver or similar official for Applicant or any of
Applicant's property or the occurrence of any other Bankruptcy Event (as that
term is defined in the Debentures); (iv) seizure or forfeiture of Applicant or
any of its property; (v) attachment or restraint of or other legal process
against property in which Applicant has an interest in the control of Bank or
any third party on behalf of Bank; (vi) any statement to Bank made by Applicant
or on its behalf is incorrect or misleading in any material respect; (vii)
Applicant's failure to provide Bank on request any books and records; (viii)
Applicant's failure to withhold, collect or pay any tax when assessed or due;
(ix) any representation or warranty made by Applicant herein or otherwise to
Bank shall be incorrect or inaccurate in any material respect when made or
deemed made; or (x) any other act or circumstance leading Bank in good faith to
deem itself insecure; (I) "GOOD FAITH" means honesty in fact in the conduct or
transaction concerned; (J) "ISP 98" means the International Standby Practices,
International Chamber of Commerce ("ICC") Publication No. 590, or any subsequent
revisions or restatement thereof which may be adopted by the ICC and in use by
the Bank; (K) "JURISDICTION" means the state in the United States where the
Bank's branch which maintains Applicant's major deposits is located, or if
Applicant does not have deposits with the Bank, the Bank's office in a state of
the United States where Applicant's major banking relationship with it is
conducted; if neither of the foregoing apply, then jurisdiction shall mean New
York City, New York; (L) "OBLIGATIONS" means all obligations of any, some or all
of parties comprising the Applicant to Bank now or hereafter existing under this
Agreement and under any other document entered into by Applicant in connection
with any Agreement; (M) "PRIME RATE" means that changing rate of interest
announced publicly from time to time by Bank as its Prime Rate; (N) "PROPERTY"
means all present and future "Collateral" (as that term is defined in the
Security Agreement dated on or about the date hereof from Applicant to Bank),
together with all cash and non cash proceeds and products thereof, and all
Applicant's rights thereto and all documents relative thereto; and (O) "UCP"
means the Uniform Customs and Practice for Documentary Credits, ICC Publication
Number 500, or any subsequent revision or restatement thereof adopted by the ICC
and in use by the Bank. Terms not defined herein will, if defined therein, have
the same meaning as given in the Uniform Commercial Code as amended from time to
time.
2. APPLICANT'S REIMBURSEMENT OF BANK: (A) Applicant shall pay Bank on demand in
immediately available funds (in United States currency) (i) the amount of each
Draft drawn or purporting to be drawn under the Credit (whether drawn before, on
or after the expiry date stated in the Credit); provided that if the Credit
provides for acceptance of a time draft or incurrence of a deferred payment
obligation, reimbursement shall be due sufficiently in advance of its maturity
to enable the Bank to arrange for its cover in same day funds to reach the place
where it is payable no later than the date of its maturity; (ii) any amount by
which Bank's cost of payment under the Credit exceeds the amount paid by
Applicant; (iii) interest on all amounts not paid when due at a fluctuating rate
per annum equal to the Prime Rate plus 2%, but in no event at an interest rate
exceeding the highest rate permitted by applicable law. Applicant authorizes
Bank to immediately reimburse itself for all Drafts paid by Bank under any
Credit by debiting the amount so paid from the Collateral. Notwithstanding the
foregoing, Applicant's obligation to reimburse Bank for any amounts paid by Bank
under any Credit or any other Obligation shall be absolute and unconditional
whether or not sufficient amounts are available from the Collateral. (B) FOREIGN
CURRENCY. If the Draft is payable in other than U.S. currency, Applicant will
pay Bank the amount in U.S. currency from Bank at Bank's current selling rate of
exchange for delivery to the place of payment in the currency and amount in
which such Draft was drawn. If there is no current selling rate of exchange
generally offered by Bank for effecting such payment, Applicant will pay Bank on
demand an amount which Bank deems necessary to pay or provide for the payment of
the Obligations, and Applicant shall remain liable for any deficiency which may
result if such amount in U.S. currency proves to be insufficient to effect full
payment or reimbursement to Bank at the time when such rate of exchange shall
again be current. (C) FEES, COSTS AND EXPENSES. Applicant will pay Bank (i) fees
in respect of the Credit equal to thirty five (35) basis points per annum on the
face amount of the Credit for the period of time the Credit is outstanding, such
fee to be payable upon issuance of the Credit and on the yearly anniversary of
the issuance of the Credit; (ii) Bank's standard fees then in effect (including,
if applicable, application fees, issuance fees, maintenance fees, amendment
fees, drawing fees, discrepancy fees, acceptance or deferred payment obligation
fees, transfer fees and assignment of letter of credit proceeds fees); and (iii)
on demand, all costs and expenses that Bank incurs in connection with the Credit
or this Agreement, including (a) reasonable attorneys' fees and disbursements
and other dispute resolution expenses to protect or enforce Bank's rights or
remedies under or in connection with the Credit, this Agreement or any separate
security agreement, guaranty or other agreement or undertaking supporting this
Agreement or to respond to any notice of forgery, fraud, abuse or illegality in
connection with this Agreement, the Credit, any presentation under the Credit or
any transaction underlying the Credit (including an active defense by Bank in
any action in which an injunction is sought or obtained against presentation or
honor), (b) costs and expenses in connection with any requested amendment to or
waiver under the Credit or this Agreement, (c) reasonable costs and expenses in
complying with any governmental exchange, currency control or other laws, rules
or regulations of any country now or hereafter applicable to the purchase or
sale of, or dealings in, foreign currency, (d) any stamp taxes, recording taxes,
or similar taxes or fees payable in connection with the Credit or this
Agreement, and (e) any adviser, confirmer, or other nominated person fees and
expenses that are chargeable to Applicant or Bank. References in this Agreement
to attorneys' fees and disbursements shall include any reasonably allocated
costs of internal counsel. (D) INCREASED COSTS AND TAXES. Applicant shall pay
Bank on demand increased costs or Bank's reduction in yield from any new or
changed reserve, capital, special deposit, tax, insurance or other requirement
or guideline affecting the Banks or its parent's contingent or absolute rights
or obligations under or in connection with this Agreement or any Credit provided
the Bank acts reasonably to avoid or minimize the increased costs or reduction
in the yield and computes the same on a reasonable basis. Applicant agrees that
all payments hereunder shall be made without withholding, deduction or set-off
and shall be made free and clear of taxes other than federal and state income
and franchise taxes imposed on the Bank. (E) AUTOMATIC DEBIT FOR PAYMENT.
Applicant authorizes Bank to debit any of Applicant's accounts at Bank for any
payments due under this Agreement, Applicant further certifies that, subject to
the security agreement of even date, it holds legitimate ownership of each of
these accounts and preauthorizes this debit as part of its ownership rights.
3. INDEPENDENCE; APPLICANT RESPONSIBILITY. Applicant is responsible for
preparing or approving the text of the Credit as issued by Bank and as received
by any Beneficiary, including responsibility for any terms and conditions
thereof that are ineffective, ambiguous, inconsistent, unduly complicated, or
reasonably impossible to satisfy. Applicant's ultimate responsibility for the
final text shall not be affected by any assistance Bank may provide such as
drafting or recommending text or by Bank's use or refusal to use text submitted
by Applicant. Bank does not represent or warrant that the Credit will satisfy
Applicant's requirements or intentions. Applicant is responsible for the
suitability of the Credit for Applicant's purposes. Applicant will examine the
copy of the Credit, and any other documents sent by Bank in connection with the
Credit, and shall notify Bank of any non-compliance with Applicant's
instructions, and of any discrepancy in any document under any presentment or
other irregularity, within 3 Business Days after Applicant receives any of such
documents (the "Required Time"); provided, however, if the end of the Required
Time falls on a weekend or Bank holiday, the deadline shall be extended to the
end of the next Business Day. Applicant's failure to give timely and specific
notice during the Required Time of objection shall automatically waive
Applicants objection, authorize or ratify Bank's action or inaction, and
preclude Applicant from raising the objection as a defense or claim against Bank
4. CLAIMS AGAINST BANK; WAIVERS; EXCULPATIONS; LIMITATIONS OF LIABILITY,
RATIFICATION; ACCOUNTING. (A) Applicant's obligations shall be irrevocable and
unconditional and performed strictly in accordance with the terms of this
Agreement, irrespective of: (i) any change or waiver in the time, manner or
place of payment of or any other term of the Obligations (including any release)
of any other party who, if applicable, has guaranteed or is jointly and
severally liable for any of the Obligations or granted any security therefore;
(ii) any exchange, change or release of any Collateral or other collateral
(including any failure of Bank to perfect any security interest therein), for
any of the Obligations, (iii) any presentation under the Credit being forged,
fraudulent or any statement therein being untrue or inaccurate, (iv) any
agreement by Bank and any Beneficiary extending or shortening Bank's time after
presentation to examine documents or to honor or give notice of discrepancies.
(B) Without limiting the foregoing, it is expressly agreed that the Obligations
of Applicant to reimburse or to pay Bank pursuant to this Agreement will not be
excused by ordinary negligence, gross negligence, wrongful conduct or willful
misconduct of Bank. However, the foregoing shall not excuse Bank from liability
to Applicant in any independent action or proceeding brought by Applicant
against Bank following such reimbursement or payment by Applicant to the extent
of any unavoidable direct damages suffered by Applicant that are caused directly
by Bank's gross negligence or willful misconduct; provided that (i) Bank shall
be deemed to have acted with due diligence and reasonable care if it acts in
accordance with standard letter of credit practice of commercial banks located
in the place that the Credit is issued; and (ii) Applicant's aggregate remedies
against Bank for wrongfully honoring a presentation or wrongfully retaining
honored documents shall in no event exceed the aggregate amount paid by
Applicant to Bank with respect to the honored presentation, plus interest. (C)
Without limiting any other provision of the Agreement, Bank and, as applicable,
its correspondents: (i) may rely upon any oral, telephonic, telegraphic,
facsimile, electronic, written or other communication believed in good faith to
have been authorized by Applicant, whether or not given or signed by an
authorized person; (ii) shall not be responsible for any acts or omissions by,
or the solvency of, any Beneficiary, any nominated person or any other person;
(iii) May honor any presentation or drawing under the Credit that appears on its
face substantially to comply with the terms and conditions of the Credit; (iv)
may disregard any requirement of the Credit that presentation be made to it at a
particular place or by a particular time of day (but not any requirement for
presentation by a particular day) or that notice of dishonor be given in a
particular manner, and Bank may amend or specify any such requirement in the
Credits; (v) may accept as a draft any written or electronic demand or request
for payment under the Credit, even if nonnegotiable or not in the form of a
draft, and may disregard any requirement that such draft, demand or request bear
any or adequate reference to the Credit; (vi) may honor, before or after its
expiration, a previously dishonored presentation under the Credit, whether
pursuant to court order, to settle or compromises any claim that is wrongfully
dishonored or otherwise, and shall be entitled to reimbursement to the same
extent (if any) as if it had initially honored plus reimbursement of any
interest paid by it; (vii) may honor, upon receipt, any drawing that is payable
upon presentation of a statement advising negotiation or payment (even if such
statement indicates that a draft or other document is being separately
delivered) and shall not be liable for any failure of any Draft or document to
arrive or to conform with the Draft or document referred to in the statement or
any underlying transaction; (viii) may retain proceeds of the Credit based on a
valid exercise of Bank's set off rights or an apparently applicable attachment
order or blocking regulation; (ix) may select any branch or affiliate of Bank or
any other bank to act as advising, transferring, confirming and/or nominated
bank under the law and practice of the place where it is located; (x) shall not
be responsible for any other action or inaction taken or suffered by Bank or its
correspondents under or in connection with the Credit, with any presentation
thereunder or with any Collateral, if required or permitted under any applicable
domestic or foreign law or letter of credit practice. Examples of laws or
practice that may be applicable, depending upon the terms of the Credit and
where and when it is issued, include the UCC, the Uniform Rules for Demand
Guarantees ("URG") the UCP, the ISP, published rules of practice, applicable
standard practice of banks that regularly issue letters of credit, and published
statements or interpretations on matters of standard bank practice. (D) Neither
Bank nor any of its correspondents shall be liable in contract, tort, or
otherwise, for any punitive, exemplary, consequential, indirect or special
damages. Any claim by Applicant under or in connection with this Agreement or
the Credit shall be reduced by an amount equal to the sum of (i) the amount (if
any) saved by Applicant as a result of the breach or other wrongful conduct
complained of; and (ii) the amount (if any) of the loss that would have been
avoided had Applicant taken all reasonable steps to mitigate any loss, including
by enforcing its rights in the transaction(s) underlying the Credit, and in case
of a claim of wrongful dishonor, by specifically and timely authorizing Bank to
effect a cure.
5. SECURITY AGREEMENT. The provisions of this Section shall only supplement, not
supersede, provisions of any other security agreement in favor of Bank which are
inconsistent herewith. (A) SECURITY INTEREST. As security for the payment and
performance of the Obligations, Applicant assigns, pledges and grants to Bank a
security interest in the Collateral. The security interest of Bank in Collateral
shall continue until all Obligations are repaid, and shall not be invalidated by
reason of the delivery or possession of the Property to Applicant or anyone
else. (B) SUBROGATION. As additional security for the Obligations, Bank shall be
subrogated to the Applicant's rights in respect of any transaction in any way
related to the Credit or any Drafts, including rights against Beneficiary or any
collateral. (C) ACTIONS REGARDING COLLATERAL. Applicant will execute and deliver
to Bank any documents, and take any action, which Bank deems necessary or
desirable to evidence or perfect any security interest in favor of Bank, to
acquire possession of any Property, or to protect Bank's interests with respect
to any Collateral, including, without limitation, transferring or registering
Property in the name of Bank; in order to accomplish any of the foregoing, Bank
may, at its option, at any time and without notice to Applicant, transfer to, or
register in the name of, Bank or its nominees any Collateral; and further, Bank
is irrevocably appointed as attorney-in-fact for Applicant and authorized,
without notice to Applicant, to execute and deliver all such documents and to
take all such actions on behalf of Applicant, including, without limitation, the
execution, delivery and/or filing of collateral control agreements, financing
statements and trust receipt statements. This appointment is coupled with an
interest. (D) CARE OF PROPERTY; MODIFICATION. Bank will exercise care in the
preservation of Collateral if such Property is in the custody of Bank; provided,
however, its standard of care for Property in its custody is the lesser of that
required by applicable law or that requested by Applicant in writing. Applicant
shall remain obligated under the terms of the Agreement notwithstanding the
release or substitution of any Collateral at any time(s), or any delay,
extension of time, renewal, compromise or other indulgence granted by Bank
related to any Obligations, or to any promissory note, Draft, ▇▇▇▇ of exchange
or other instrument related to any Obligations. Applicant waives notice of any
such delay, extension, release, substitution, renewal, compromise or other
indulgence, and consents to be bound thereby as fully as if Applicant had
expressly agreed thereto in advance. The proceeds of any Collateral may be
applied, in whole or in part, by Bank to pay any matured, or to anticipate the
payment of any unmatured, Obligations.
6. REPRESENTATIONS. Applicant represents that from the date of this Agreement
and until final payment in full of the Obligations: ACCURATE INFORMATION. All
information now and hereafter furnished to Bank is and will be true, correct and
complete. Any such information relating to Applicant's financial condition will
accurately reflect Applicant's financial condition as of the date(s) thereof,
(including all contingent liabilities of every type), and Applicant further
represents that its financial condition has not changed materially or adversely
since the date(s) of such documents. AUTHORIZATION; NON-CONTRAVENTION. The
execution, delivery and performance by Applicant and any guarantor, as
applicable, of this Agreement and other documents to which it is a party are
within its power, have been duly authorized as may be required and, if
necessary, by making appropriate filings with any governmental agency or unit
and are the legal, binding, valid and enforceable obligations of Applicant and
any guarantors; and do not (i) contravene, or constitute (with or without the
giving of notice or lapse of time or both) a violation of any provision of
applicable law, a violation of the organizational documents of Applicant or any
guarantor, or a default under any agreement, judgment, injunction, order, decree
or other instrument binding upon or affecting Applicant or any guarantor, (ii)
result in the creation or imposition of any lien (other than the lien(s) created
by the documents executed by Applicant in connection herewith) on any of
Applicant's or any guarantor's assets, or (iii) give cause for the acceleration
of any obligations of Applicant or any guarantor to any other creditor. ASSET
OWNERSHIP. Applicant has good and marketable title to all of the properties and
assets reflected on the balance sheets and financial statements supplied Bank by
Applicant, and all such properties and assets are free and clear of mortgages,
security deeds, pledges, liens, charges, and all other encumbrances, except as
otherwise disclosed to Bank by Applicant in the reports filed with the
Securities and Exchange Commission and in writing and approved by Bank
("Permitted Liens"). To Applicant's knowledge, no default has occurred under any
Permitted Liens and no claims or interests adverse to Applicant's present rights
in its properties and assets have arisen. DISCHARGE OF LIENS AND TAXES.
Applicant has duly filed, paid and/or discharged all taxes or other claims which
may become a lien on any of its property or assets, except to the extent that
such items are being appropriately contested in good faith and an adequate
reserve for the payment thereof is being maintained. SUFFICIENCY OF CAPITAL.
Applicant is not, and after consummation of this Agreement and after giving
effect to all indebtedness incurred and liens created by Applicant in connection
with this Agreement, will not be, insolvent within the meaning of 11 U.S.C.
Section 9 101(32). COMPLIANCE WITH LAWS. Applicant is in material compliance in
all respects with all federal, state and local laws, rules and regulations
applicable to its properties, operations, business, and finances, including,
without limitation, any federal or state laws relating to liquor (including 18
U.S.C. Section 3617, et seq.) or narcotics (including 21 U.S.C. Section 801, et
seq.) and/or any commercial crimes; all applicable federal, state and local laws
and regulations intended to protect the environment; and the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), if applicable. ORGANIZATION
AND AUTHORITY. Applicant is duly created, validly existing and in good standing
under the laws of the state of its organization, and has all powers,
governmental licenses, authorizations, consents and approvals required to
operate its business as now conducted. Applicant is duly qualified, licensed and
in good standing in each jurisdiction where qualification or licensing is
required by the nature of its business or the character and location of its
property, business or customers, and in which the failure to so qualify or be
licensed, as the case may be, in the aggregate, could have a material adverse
effect on the business, financial position, results of operations, properties or
prospects of Applicant. NO LITIGATION. There are no pending or, to the best of
its knowledge, threatened suits, claims or demands against Applicant or any
guarantor that have not been disclosed to Bank by Applicant in writing, and
approved by Bank. REGULATION U. None of the proceeds of the Credit extended
pursuant to this Agreement shall be used directly or indirectly for the purpose
of purchasing or carrying any margin stock in violation of any of the provisions
of Regulation U of the Board of Governors of the Federal Reserve System
("Regulation U"), or for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry margin stock or for any other
purchase which might render the Credit a "Purpose Credit" within the meaning of
Regulation U. ERISA. Each employee pension benefit plan, as defined in ERISA,
maintained by Applicant meets, as of the date hereof, the minimum funding
standards of ERISA and all applicable regulations thereto and requirements
thereof, and of the Internal Revenue Code of 1986, as amended. No "Prohibited
Transaction" or "Reportable Event" (as both terms are defined by ERISA) has
occurred with respect to any such plan.
7. AFFIRMATIVE COVENANTS. Applicant agrees that from the date hereof and until
final payment in full of the Obligations, unless Bank shall otherwise consent in
writing, Applicant will: ACCESS TO BOOKS AND RECORDS. Allow Bank, or its agents,
during normal business hours and upon reasonable notice, access to the books,
records and such other documents of Applicant as Bank shall reasonably require,
and allow Bank, at Applicants expense, to inspect, audit and examine the same
and to make extracts therefrom and to make copies thereof. BUSINESS CONTINUITY.
Conduct its business in substantially the same manner as such business is now
and has previously been conducted. ESTOPPEL CERTIFICATE. Furnish, within 15 days
after request by Bank, a written statement duly acknowledged identifying each
outstanding Credit and whether offsets or defenses exist against the
Obligations. INSURANCE. Maintain adequate insurance coverage with respect to its
properties and business against loss or damage of the kinds and in the amounts
customarily insured against by companies of established reputation engaged in
the same or similar businesses including, without limitation, commercial general
liability insurance, workers compensation insurance, and business interruption
insurance; all acquired in such amounts and from such companies as Bank may
reasonably require. MANAGEMENT LETTER. Applicant shall deliver to Bank within 90
days after the close of each fiscal year, its management letter, in form and
substance acceptable to Bank, prepared by Applicants independent certified
public accountant. MAINTAIN PROPERTIES. Maintain, preserve and keep its property
in good repair, working order and condition, making all needed replacements,
additions and improvements thereto, to the extent allowed by this Agreement.
NOTICE OF DEFAULT AND OTHER NOTICES. (a) NOTICE OF DEFAULT. Furnish to Bank
immediately upon becoming aware of the existence of any condition or event which
constitutes an Event of Default (or similarly denominated term) or any event
which, upon the giving of notice or lapse of time or both, is reasonably likely
to become an Event of Default, written notice specifying the nature and period
of existence thereof and the action which Applicant is taking or proposes to
take with respect thereto. (b) OTHER NOTICES. Promptly notify Bank in writing of
(i) any material adverse change in its financial condition or its business; (ii)
any default under any material agreement, contract or other instrument to which
it is a party or by which any of its properties are bound, or any acceleration
of the maturity of any indebtedness owing by Applicant; (iii) any material
adverse claim against or affecting Applicant or any part of its properties; (iv)
the commencement of, and any material determination in, any litigation with any
third party or any proceeding before any governmental agency or unit affecting
Applicant; and (v) at least 30 days prior thereto, any change in Applicant's
name or address as shown above, and/or any change in Applicants structure. OTHER
FINANCIAL INFORMATION. Deliver promptly such other information regarding the
operation, business affairs, and financial condition of Applicant which Bank may
reasonably request. PAYMENT OF DEBTS. Pay and discharge when due, and before
subject to penalty or further charge, and otherwise satisfy before maturity or
delinquency, all obligations, debts, taxes, and liabilities of whatever nature
or amount, except those which Applicant in good faith disputes. REPORTS AND
PROXIES. Deliver to Bank, promptly, a copy of all financial statements, reports,
notices, and proxy statements, sent by Applicant to stockholders, and all
regular or periodic reports required to be filed by Applicant with any
governmental agency or authority.
8. NEGATIVE COVENANTS. Applicant agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Applicant will not: CHANGE IN FISCAL YEAR. Change its fiscal
year. CHANGE OF CONTROL. Make or suffer a Change in Control (as that term is
defined in the Debentures). GUARANTEES. Guarantee or otherwise become
responsible for obligations of any other person or persons, other than the
endorsement of checks and drafts for collection in the ordinary course of
business. DEFAULT ON OTHER CONTRACTS OR OBLIGATIONS. Default on any material
contract with or obligation when due to Bank or any other third party or default
in the performance of any obligation to Bank or any other third party incurred
for money borrowed in an amount in excess of $100,000.00. GOVERNMENT
INTERVENTION. Permit the assertion or making of any seizure, vesting or
intervention by or under authority of any government by which the management of
Applicant or any guarantor is displaced of its authority in the conduct of its
respective business or its such business is curtailed or materially impaired.
JUDGMENT ENTERED. Permit the entry of any monetary judgment or the assessment
against, the filing of any tax lien against, or the issuance of any writ of
garnishment or attachment against any property of or debts due Applicant in an
amount in excess of $100,000.00 which is not discharged or execution is not
stayed within 45 days of entry.
9. ANNUAL FINANCIAL STATEMENTS. Applicant shall deliver to Bank, within 90 days
after the close of each fiscal year, audited financial statements reflecting its
operations during such fiscal year, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules; all on a consolidated and consolidating basis with respect to
Applicant and its subsidiaries, affiliates and parent or holding company, as
applicable, and in reasonable detail, prepared in conformity with generally
accepted accounting principles, applied on a basis consistent with that of the
preceding year. All such statements shall be examined by an independent
certified public accountant acceptable to Bank. The opinion of such independent
certified public accountant shall not be acceptable to Bank if qualified due to
any limitations in scope imposed by Applicant or any other person or entity. Any
other qualification of the opinion by the accountant shall render the
acceptability of the financial statements subject to Banks approval.
1O. PERIODIC FINANCIAL STATEMENTS. Applicant shall deliver to Bank unaudited
management-prepared quarterly financial statements including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules, as soon as available and in any event within
45 days after the close of each calendar quarter; all on a consolidated and
consolidating basis with respect to Applicant and its subsidiaries, affiliates
and parent or holding company, as applicable, all in reasonable detail and
prepared in conformity with generally accepted accounting principles, applied on
a basis consistent with that of the preceding year. Such statements shall be
certified as to their correctness by a principal financial officer of Applicant
and in each case subject to audit and year-end adjustments.
11. CONDITIONS TO ISSUANCE OF CREDIT. The obligation of Bank to issue any Credit
is subject to the following conditions precedent:
(a) On the date of issuance the following statements shall be true and
Bank shall have received a certificate signed by an authorized officer of
Applicant, dated the date of issuance, stating that:
(i) The representations and warranties contained in this Agreement
and in any document or agreement entered into in connection
herewith are true and correct on and as of the date of
issuance of the Credit as though made on and as of such date;
and
(ii) No event has occurred and is then continuing or would result
from the issuance of the Credit, which constitutes an Event of
Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both.
(b) There shall have been no introduction of or change in, or in the
interpretation of, any law or regulation that would make it unlawful or unduly
burdensome for the Bank to issue or maintain the Credit, no outbreak or
escalation of hostilities or other calamity or crisis affecting Bank, no
suspension of or material limitation on trading on the New York Stock Exchange
or any other national securities exchange, no declaration of a general banking
moratorium by United States or New Jersey banking authorities, and no
establishment of any new restrictions on transactions in securities or on banks
materially affecting the free market for securities or the extension of credit
by banks.
(c) Simultaneous with the issuance of each Credit, the amount of funds on
deposit in the account of Applicant at Bank (account number 2000010228427) is
not less than the outstanding amount available for drawing under the Credits
(including any Credit to be issued).
(d) Bank shall have received such other documents, opinions and other
matters as Bank reasonably requests.
12. COMMUNICATIONS. (A) INTERNET. Applicant may electronically initiate the
issuance and amendment of any Credit and retrieve or send information about any
outstanding Credit by accessing an internet site maintained by the Bank (the
"Web Site") through Applicant's computer equipment and web browser software.
Applicant is responsible to provide its own computer equipment and web browser
software and shall be responsible for all acquisition, installation, repair and
maintenance costs associated therewith. Applicant shall select its own internet
service provider. Applicant shall comply promptly with all instructions on the
Web Site governing its use and the security measures to be maintained in
connection with its use. Applicant authorizes the Bank to receive data and act
upon Applicant's requests which Bank receives over the Web Site. Applicant
agrees that Bank may rely on the authenticity and accuracy of messages and
information received by Bank on the Web Site purporting to be from the
Applicant. Applicant agrees: (i) to protect all assigned operator identification
passwords and accepts full responsibility for any compromise of security; (ii)
to limit access to the Web Site to those persons authorized by Applicant through
the use of security procedures implemented and enforced by the Applicant; (iii)
accurately to input any data fields necessary to initiate, release or cancel any
transaction; (iv) to access the Web Site as often as necessary consistent with
Applicants business activities it conducts on the Web Site, which may be daily,
and retrieve and review outstanding Credit detail reports; and (v) to notify the
Bank promptly of any error or defect in the report. Applicant acknowledges and
understands that the instructions sent by it through the internet to the Bank
and the information retrieved by the Applicant from the Web Site through the
internet will be encrypted, but that such encryption is not completely secure
and is not free from errors, poor transmissions, interception, forgery, viruses,
tampering, destruction, deciphering or other delay or casualty. The Bank shall
not be liable for any loss, claim or liability, cost or expense arising from:
(a) any of the foregoing; (b) failure of any internet service provider to
provide its services; (c) failure of communications media, legal restrictions;
(d) act of God, fire or other catastrophe, computer failure or any other cause
or circumstance beyond the Bank's control; (e) any unauthorized person's use of
or access to the Web Site; or (f) failure of Applicant to report errors or
defects promptly. (B) ELECTRONIC SYSTEMS. Applicant may desire to transmit and
receive by means of facsimile, open internet communication, or other unguarded
electronic communications (hereinafter collectively the "electronic systems")
Applications and other paper-writings to or from the Bank. To induce the Bank to
accept communication via electronic systems, Applicant shall: i) ensure that its
officers, agents and employees, will at all times follow and maintain the
integrity of any security established by the Applicant and the Bank; ii)
immediately notify the Bank in the event that Applicant should have reason to
believe that the security established for electronic systems transmission has
been breached or compromised in any manner; iii) ensure that only authorized
personnel selected and controlled by the Applicant request action(s) by
transmittal of document(s) by electronic systems; iv) ensure that any documents
transmitted to the Bank by means of electronic systems shall be a complete and
accurate copy and if signed be executed by personnel authorized by the
Applicant; and v) maintain its software and equipment and any privacy control
device within such software or equipment without any reliance on or
responsibility by the Bank. The Applicant acknowledges and agrees that the Bank
shall: i) not be responsible to the Applicant for any loss or damage arising
from the use of unguarded electronic systems, including access or misuse of
Applicant's confidential information, transmission of a virus, or failed,
incomplete or inaccurate transmission; ii) not be responsible to assure that,
its software and equipment for receiving messages or documents from electronic
systems will be compatible with that of Applicant or available at all times for
Applicant's use; iii) have absolute discretion but without liability, for any
reason whatsoever, not to act upon documentation received by electronic systems;
provided, however, that the Bank shall notify the undersigned promptly should it
elect to defer action until the original documentation is physically presented
to the Bank; iv) without any liability on its part to do so, have the right at
its discretion to make further inquiries and demand further verification to
determine the validity of any document prior to taking any action; and v) have
the right to assume that any reproduction of documentation received by
electronic systems constitutes a full, complete and accurate reproduction of the
original documentation and that all signatures are authorized and genuine. (C)
INDEMNITY. Separate and independent from any other indemnity set forth in this
Agreement, the Applicant hereby indemnifies and holds the Bank harmless against
any and all loss, liability, damage or expenses of whatever kind and nature
arising from Bank's acceptance and/or delivery of information and Applications
over its Web Site or by electronic systems.
13. TWO PARTIES SIGNING AGREEMENT. (A) CO-APPLICANTS. If the Agreement is signed
by two or more Applicants, it shall be the joint and several obligation of each.
Bank shall designate in the Credit as account party and as Applicant,
who without joinder of the account party shall have the exclusive right to issue
all instructions on any matters relating to the Credit. If the foregoing
information is left blank or incomplete, the Bank at its discretion may accept
an Application, or seek instruction, from any Applicant regarding a Credit,
including, without limitation, any amendment thereto or waiver of any
discrepancy thereunder, and until Bank at the office at which the relevant
Credit is issued actually receives written notice of revocation, each Applicant
shall be bound by and hereby affirms the instructions of the other. (B)
FINANCIAL INSTITUTION AS CUSTOMER. If the Agreement is signed as Applicant or
co-Applicant by a bank, trust company or other financial institution for its
customer, such Applicant appoints Bank as its agent to issue the Credit. Such
Applicant and its customer agree to act in accordance with and be subject to the
Agreement. If such Applicant is required (i) to reimburse Bank; (ii) to pay Bank
in the Event of Default; (iii) to indemnify Bank; or (iv) to provide collateral,
then its customer agrees to reimburse, pay or indemnify Applicant for the full
amount of those payments and to provide the requisite collateral. In addition,
the customer agrees to obtain such Applicant's consent before agreeing to waive
any discrepancy in the documents related to the Credit or to waive or amend any
terms of the Agreement or the Credit.
14. EVENT OF DEFAULT. On and after any Event of Default: (A) the amount of the
Credit, as well as any other Obligations, shall, at Bank's option, become due
and payable immediately without demand or notice to Applicant or if contingent,
may be treated by Bank as due and payable for its maximum face amount; (B) Bank
may set off and apply any deposits or any other indebtedness at any time owing
by Bank to or for Applicant's credit or account against any matured or unmatured
Obligations, irrespective of whether or not Bank shall have made any demand
under the Agreement and although such deposits, indebtedness or Obligations may
be unmatured or contingent; (C) Bank may exercise all rights and remedies
available to it in law or equity; and (D) in respect of any Collateral, Bank may
exercise all the rights and remedies of a secured party under the Uniform
Commercial Code or any other applicable law and also may, without notice except
as required by law, sell such Property or any part thereof in one or more
parcels at public or private sale, for cash, on credit or for future delivery,
and on such other terms as Bank may deem commercially reasonable. Written notice
mailed or delivered to Applicant at the address specified in the Agreement at
least five business days prior to the date of public sale or prior to the date
after which private sale is to be made shall be reasonable, adequate notice.
Applicant will pay on demand all costs and expenses (including reasonable
attorneys fees and legal expenses, incurred prior to or after a bankruptcy
filing) related to the custody, preservation or sale of, or collection from, or
realization upon, any of the Collateral and related to the collections of the
Obligations and the enforcement of Bank's rights against Collateral. In the
event of sale of or collection from the Collateral, Bank may in its discretion
hold the proceeds as Collateral or apply the proceeds as Bank deems appropriate
to the payment of costs and expenses or to one or more of the Obligations,
whether or not then due.
15. INDEMNIFICATION. Applicant will indemnify and hold harmless Bank and its
officers, directors, affiliates, employees, attorneys and agents (each, an
"Indemnified Party") from and against any and all claims, liabilities, losses,
damages, costs and expenses (including reasonable attorneys' fees and
disbursements and other dispute resolution expenses (including fees and expenses
in preparation for a defense of any investigation, litigation or proceeding) and
costs of collection) that arise out of or in connection with: (A) the Credit or
any pre-advice of its issuance; (B) any payment or action taken or omitted to be
taken in connection with the Credit or this Agreement (including any action or
proceeding to (i) restrain any presentation, (ii) compel or restrain any payment
or the taking of any other action under the Credit, (iii) obtain damages for
wrongful dishonor or honor of the Credit or for breach of any other duty arising
out of or related to the Credit, (iv) compel or restrain the taking of any
action under this Agreement or (v) obtain similar relief (including by way of
interpleader, declaratory judgment, attachment or otherwise), regardless of who
the prevailing party is in any such action or proceeding; (C) any beneficiary
requested to issue its own undertaking seeking to be reimbursed, indemnified or
compensated or (D) any third party seeking to enforce the rights of an
applicant, beneficiary, nominated person, transferee, assignee of letter of
credit proceeds, or holder of an instrument or document; (E) the enforcement of
this Agreement or any rights or remedies under or in connection with this
Agreement, the Collateral or the Credit; (F) the release by Applicant of any
Credit to any third party prior to its issuance by the Bank; or (G) any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto government or governmental authority (including with respect to any
document or property received under this Agreement or the Credit ) or any other
cause beyond the Banks control, except to the extent such liability, loss,
damage, cost or expense is found in a final, non-appealable judgment by a court
of competent jurisdiction to have resulted directly from such Indemnified
party's gross negligence or willful misconduct. Applicant will pay on demand
from time to time all amounts owing under this section. If and to the extent
that the obligations of Applicant under this section are unenforceable for any
reason, Applicant agrees to make the maximum contribution to the payment of such
obligation that is permissible under applicable law.
16. GOVERNING LAW; UCP, ISP 98. The UCP or ISP 98 as applicable to each Credit
governs this Agreement and is incorporated herein. Subject to the other
provisions of the Agreement, the Agreement shall be governed by and construed in
accordance with the substantive laws of the Jurisdiction, without regard to
conflicts of law principles, except to the extent that such law is inconsistent
with the UCP or ISP 98, as applicable. In the event any provision of the UCP or
ISP 98, as applicable, is or is construed to vary from or be in conflict with
any provision of any applicable law of the Jurisdiction or the federal law of
the United States, to the extent permitted by law, the UCP or the ISP 98, as
applicable, shall govern or be read to explain the applicable law. Unless
Applicant specifies otherwise in its application for the Credit, Applicant
agrees that Bank may issue the Credit subject to the UCP or ISP 98 or, at Banks
option, such later revision of either thereof as is in effect at the time of
issuance of the Credit. Bank's privileges, rights and remedies under the UCP,
ISP 98 or such later revision shall be in addition to, and not in limitation of,
its privileges, rights, and remedies expressly provided for herein. The UCP and
ISP 98 shall serve, in the absence of proof to the contrary, as evidence of
standard practice with respect to the subject matter thereof.
17. SAVINGS CLAUSE. Whenever possible, each provision of the Agreement shall be
interpreted in a manner as to be effective and valid under applicable law, but
if any provision of the Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of the Agreement.
18. BANKRUPTCY AND FORFEITURE REINSTATEMENT. If any consideration transferred to
Bank in payment of, or as collateral for, or in satisfaction of the Obligations,
shall be voided in whole or in part as a result of (A) a subsequent bankruptcy
or insolvency proceeding; (B) any forfeiture or in rem seizure action or remedy;
(C) any fraudulent transfer or preference action or remedy; or (D) any other
criminal or equitable proceeding or remedy, then Bank may at its option recover
the Obligations or the consideration so voided from Applicant. In such event,
Banks claim to recover the voided consideration shall be a new and independent
claim arising under the Agreement, and shall be jointly and severally due and
payable immediately by Applicant.
19. MISCELLANEOUS. The rights and remedies granted to Bank in the Agreement are
in addition to all other rights or remedies afforded to Bank under applicable
law, equity or other agreements. The terms of the Agreement may not be waived or
amended, unless the parties consent in writing. The Agreement shall be binding
on Applicant's heirs, executors, administrators, successors and permitted
assigns, and shall inure to the benefit of Bank's successors and assigns. Bank
can assign this Agreement and its rights to reimbursement regarding any Credit
without Applicant's consent. Applicant shall not assign any rights or remedies
related to the Agreement or the Credit without written consent of the Bank. Any
notice to Applicant, if mailed, shall be deemed given when mailed, postage paid,
addressed to Applicant at the address on the Application or such other address
furnished by Applicant to Bank. This Section shall not be deemed to be an
exclusive list of each means of notice from one party to the other. The
Agreement will continue in full force and effect until the expiration or
cancellation of each Credit and all outstanding Obligations have been satisfied
in a manner satisfactory to Bank, and Applicant requests termination in writing.
Applicant will comply with all laws, regulations and customs now or hereafter
applicable to the Agreement or to the transaction related to the Credit, and
will furnish evidence of compliance as Bank may require. This Agreement contains
the final, complete and exclusive understanding of, and supersedes all prior or
contemporaneous, oral or written, agreements, understandings, representations
and negotiations between, the parties relating to the subject matter of this
Agreement.
20. CONSENT TO JURISDICTION AND VENUE. IN ANY PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THE AGREEMENT OR THE
RELATIONSHIP ESTABLISHED HEREUNDER, APPLICANT IRREVOCABLY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN ANY COUNTY IN
THE JURISDICTION AND AGREES NOT TO RAISE ANY OBJECTION TO THE JURISDICTION OR TO
THE LAYING OR MAINTAINING OF THE VENUE OF ANY SUCH PROCEEDING IN THE
JURISDICTION. APPLICANT AGREES THAT SERVICE OF PROCESS IN ANY SUCH PROCEEDING
MAY BE DULY EFFECTED UPON IT BY MAILING A COPY THEREOF, BY REGISTERED MAIL,
POSTAGE PREPAID, TO IT.
21. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, APPLICANT
AND WHEN IT ISSUES A CREDIT, BANK KNOWINGLY AND VOLUNTARILY WAIVE ALL RIGHTS TO
TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED ON, ARISING OUT OF, OR
RELATING TO THE AGREEMENT OR THE CREDIT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT
THERETO. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BANK TO ISSUE THE CREDIT.
22. EFFECTIVENESS OF AGREEMENT. Applicant agrees that the terms and conditions
of this Continuing Letter of Credit Agreement shall be continuing and shall
apply to any Credit currently, or in the future, issued by the Bank on
Applicant's behalf.
Very truly yours,
Millennium Cell Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. Date: January 30, 2003
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: VP, Internationa Business Management
CFO, Corporate Secretary
(Authorized Signature and Title)