EXHIBIT 10.41
COMMERCIAL REVOLVING LOAN, TERM LOAN, LINE OF CREDIT
AND SECURITY AGREEMENT
This Commercial Revolving Loan, Term Loan, Line of Credit and Security
Agreement dated June 30, 1998 between MEMRY CORPORATION, a Delaware corporation
with its chief executive office and principal place of business at 00 Xxxxxxxx
Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000 ("Borrower") and XXXXXXX BANK, a banking
institution with an office at 000 Xxxxxx Xxxxxx, Xxxx Place II, 5th Floor, HFD
605, Hartford, Connecticut 06103-3494 ("Lender").
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PREAMBLE
WHEREAS, Borrower has requested Lender to extend to Borrower the following
financial accommodations (collectively, the "Loans"): (a) a revolving loan in
the maximum aggregate principal amount of up to $3,000,000, (b) a term loan in
the original principal amount of $500,000, and (c) a line of credit which
provides for, among other things, amounts outstanding thereunder to be converted
to term indebtedness; and
WHEREAS, Lender has agreed to extend the Loans to Borrower on the conditions
set forth below.
NOW, THEREFORE, for the mutual considerations contained in this Agreement,
Borrower and Lender agree as follows:
ARTICLE I. Definitions
Section 1.1. Accounting Terms; Etc. Unless otherwise defined, all accounting
terms shall be construed, and all computations or classifications of assets and
liabilities and of income and expenses shall be made or determined in accordance
with generally accepted accounting principles consistently applied. As used
herein, or in the Financing Agreements or in any certificate, document or report
delivered pursuant to this Agreement or any other Financing Agreement, the
following terms shall have the following meanings:
(a) "Account" and "Accounts" shall have the meanings assigned in Section
12.1(a) hereof.
(b) "Account Debtor" and "Account Debtors" shall mean the person or entity or
persons or entities obligated to Borrower upon the Accounts.
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(c) "Additional Costs" shall have the meaning assigned in Section 8.1 hereof.
(d) "Agreement" shall mean this Commercial Revolving Loan, Term Loan, Line of
Credit and Security Agreement as the same may from time to time be amended,
supplemented or otherwise modified.
(e) "Arrangement" shall have the meaning assigned in Section 9.1(n) hereof.
(f) "Business Day" shall mean any day other than a day on which commercial
banks in Hartford, Connecticut are required or permitted by law to close.
(g) "Capital Leases" shall mean capital leases, conditional sales contracts
and other title retention agreements relating to the purchase or acquisition of
Capital Assets.
(h) "Capitalized Leases" shall mean Capital Leases which are required by GAAP
to be capitalized on the Borrower's balance sheet.
(i) "CII Agreement" shall have the meaning assigned in Section 10.1(i)
hereof;
(j) "Collateral" shall mean the property of Borrower described in Section
12.1 hereof.
(k) "Company" and "Companies" shall mean Borrower and any entities affiliated
with Borrower in connection with any Plan.
(l) "Converted Equipment Loan" shall mean an Initial Converted Equipment
Loan, a Subsequent Converted Equipment Loan or a Final Converted Equipment Loan,
and "Converted Equipment Loans" shall mean the Initial Converted Equipment Loan,
the Subsequent Converted Equipment Loan and the Final Converted Equipment Loan.
(m) "Converted Equipment Loan Notes" shall mean the Initial Converted
Equipment Loan Note, the Subsequent Converted Equipment Loan Note and the Final
Converted Equipment Loan Note.
(n) "Current Maturity of Long-Term Debt" shall mean the current maturity of
long term Indebtedness paid or payable during the applicable period, including
but not limited to, amounts required to be paid or payable during such period
under Capital Leases.
(o) "Debt to Worth Ratio" shall mean, during the applicable period, that
quotient equal to Total Liabilities, divided by Tangible Net Worth.
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(p) "Debt Service Coverage Ratio" shall mean, during the applicable period,
that quotient equal to (i) EBITDA, divided by (ii) the sum of (A) Interest, PLUS
Current Maturity of Long-Term Debt.
(q) "Defaulting Event" shall mean the occurrence of an Event of Default or
the occurrence of any condition or event which but for the giving of notice or
passage of time or both would constitute an Event of Default.
(r) "Discount Rate" shall mean the rate which, when compounded monthly, is
equivalent to the Treasury Rate when compounded semi-annually.
(s) "Dollar" and the sign "$" shall mean lawful money of the United States of
America.
(t) "EBIT" shall mean, for the applicable period, Borrower's earnings before
Interest and taxes, as determined in accordance with GAAP.
(u) "EBITDA" shall mean, for the applicable period, Borrower's earnings
before Interest, taxes, depreciation and amortization for such period, all as
determined in accordance with GAAP.
(v) "EBIT to Interest Ratio" shall mean, during the applicable period, that
quotient equal to EBIT, divided by Interest.
"Election Notice" shall have the meanings assigned in Sections 3.2, 4.4, 5.4
and 6.4 hereof.
(w) "Eligible Accounts" shall mean those Accounts of Borrower which arise
from the sale of inventory or rendition of services in the ordinary course of
Borrower's business, are subject to Lender's perfected, first lien security
interest and no other lien or security interest, and are evidenced by an invoice
or other documentary evidence satisfactory to Lender. Further, no Account shall
be an Eligible Account if:
(i) it arises out of a sale made by Borrower to any affiliate, division,
subsidiary or parent of Borrower or to any person or entity controlled by or
under common control with an affiliate, division, subsidiary or parent of
Borrower;
(ii) it is due or unpaid more than seventy (70) days after its original
invoice date;
(iii) the account debtor is also Borrower's creditor or supplier, has
disputed liability or made any claim with respect to any other account due
from such account debtor to Borrower, or the account is otherwise subject to
any defense, counterclaim or offset of or by the
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account debtor (provided, however, that Accounts of Borrower arising out of
sales to Raychem Corporation shall not be ineligible pursuant to this
subsection (iii) if Lender has received a landlord's" agreement acceptable in
form, scope and substance to Lender in Lender's sole discretion);
(iv) the account debtor is located outside the United States (unless such
account is supported by a letter of credit or credit insurance acceptable in
form, scope and substance to Lender in Lender's sole discretion);
(v) the account debtor is located in New Jersey or Minnesota, unless
Borrower has (x) filed a Notice of Business Activities Report in the
appropriate office or agency for such state in the then current year, or (y)
received a Certificate of Authority to do business and is in good standing in
such state;
(vi) the sale giving rise to the account is on a xxxx-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or other repurchase or
return basis, or is evidenced by a Note or chattel paper;
(vii) Borrower has made an agreement with the account debtor for any
deduction from the invoice representing said account except for discounts or
allowances made in the ordinary course of Borrower's business for prompt
payment, which discounts or allowances are reflected in the calculation of
the face value of each respective invoice related thereto;
(viii) fifty percent (50%) or more of the aggregate invoices for an
account debtor are due or unpaid for more than seventy (70) days after their
original invoice date;
(ix) it arises out of a sale made by the Borrower to an account debtor
that is the United States Government or any agency or subdivision thereof
(collectively the "Government"), unless Borrower has complied in all respects
with the Federal Assignment of Claims Act of 1940, or has otherwise satisfied
Lender as to the assignability and collectability of said accounts, provided,
however, that up to $50,000 of Accounts outstanding at any one time and
arising out of sales by the Borrower to the Government shall not be rendered
ineligible solely because the Borrower has not complied as aforesaid; or
(x) the Lender in its sole but reasonable discretion deems the Account to
be unacceptable for any reason.
If there is any dispute as to whether any Account is an Eligible Account,
the determination of Lender shall at all times control.
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(x) "Eligible Equipment" shall mean new equipment to be purchased by the
Borrower for its business.
(y) "Eligible Inventory" shall mean Borrower's inventory of raw materials,
work-in-process and finished goods (excluding so called "Ultravalve"
inventory and until the new perpetual inventory control system known as "MFG
Pro" is installed by Borrower and is operational, excluding inventory
characterized as inventory of "Memry East" or "Connecticut Tools") located at
00 Xxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxx and 0000 Xxxxxxxx Xxxxxx, Xxx
Xxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxxxxx to the extent Lender, in its sole but
reasonable discretion, determines that such inventory is eligible for
advance. In addition and without limiting Lender's discretion, Eligible
Inventory shall be net of reserves and returns, valued at the lower of cost
or market (as determined in accordance with the FIFO method of accounting),
and subject to Lender's perfected first security interest and to no other
lien or security interest. Further and without limiting Lender's discretion,
no inventory shall be eligible if it is:
(i) deemed by Lender as slow moving or obsolete;
(ii) not otherwise in good condition and salable through normal trade
channels;
(iii) not salable in the ordinary course of Borrower's business; or
(iv) at a location for which Lender has not received a lessor's agreement
in form and content satisfactory to Lender in its sole discretion.
(z) "Environmental Laws" shall mean any and all applicable foreign,
federal, state and local statutes, laws, regulations, rules, ordinances,
orders, guidances, policies or common law (whether now existing or hereafter
enacted or promulgated) pertaining to the environment, of any and all
federal, state or local governments and governmental and quasi-governmental
agencies, bureaus, subdivisions, commissions or departments which may now or
hereafter have jurisdiction over Borrower and all applicable judicial and
administrative and regulatory decrees, judgments and orders, including common
law rulings and determinations, relating to injury to, or the protection of,
real or personal property or human health or the environment, including,
without limitation, all requirements pertaining to reporting, licensing,
permitting, investigation, remediation and removal of emissions, discharges,
releases or threatened releases of Hazardous Materials, chemical substances,
pollutants or contaminants whether solid, liquid or gaseous in nature, into
the environment or relating to the manufacture, processing, distribution use,
treatment, storage, disposal, transport or handling of such Hazardous
Materials, chemical substances, pollutants or contaminants.
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Without limiting the generality of the foregoing, the term "Environmental
Laws" shall encompass each of the following statutes, and regulations
promulgated thereunder, and amendments and successors to such statutes and
regulations, as may be enacted and promulgated from time to time: Federal
Occupational Safety and Health Act ("OSHA"); the Clean Air Act ("CAA"); the
Toxic Substances Control Act ("TSCA"); the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("XXXX"); the Clean Water Act
("CWA"); the Resource Conservation and Recovery Act, as amended by the Hazardous
and Solid Waste Amendments of 1984 ("RCRA"); the Hazardous Materials
Transportation Act; and all applicable Environmental Laws of each state and
municipality in which Borrower conducts business or locates assets and all rules
and regulations thereunder and amendments thereto, and all similar state and
local laws, rules and regulations.
(aa) "Equipment Loan" shall mean an Initial Equipment Loan, a Subsequent
Equipment Loan or a Final Equipment Loan and "Equipment Loans" shall mean the
Initial Equipment Loans, the Subsequent Equipment Loans and the Final Equipment
Loans.
(bb) "Equipment Loan Conversion Dates" shall mean the Initial Equipment Loan
Conversion Date, the Subsequent Equipment Loan Conversion Date and the Final
Equipment Loan Conversion Date.
(cc) "Equipment Loan Account" shall have the meaning assigned in Section 4.2
hereof.
(dd) "Equipment Loan Borrowing Base" shall mean an amount equal to the lesser
of: (i) Seven Hundred Fifty Thousand Dollars ($750,000); or (ii) seventy-five
percent (75%) of the face amount of net invoices for Eligible Equipment.
(ee) "Equipment Loan Note" shall have the meaning assigned in Section 4.2
hereof.
(ff) "ERISA" shall mean the Employee Retirement Income Security Act of 1974
and all rules and regulations promulgated pursuant thereto, as the same may from
time to time be supplemented or amended.
(gg) "Event of Default" and "Events of Default" shall have the meanings
assigned in Section 13.1 hereof.
(hh) "Final Converted Equipment Loan" shall have the meaning assigned in
Section 6.7 hereof.
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(ii) "Final Converted Equipment Loan Maturity Date" shall mean June 30, 2004.
(jj) "Final Converted Equipment Loan Note" shall have the meaning assigned in
Section 6.7 hereof.
(kk) "Final Equipment Loan" and "Final Equipment Loans" shall have the
meanings assigned in Section 6.1 hereof.
(ll) "Final Equipment Loan Conversion Date" shall mean July 1, 2001.
(mm) "Final Equipment Loan Maturity Date" shall mean June 30, 2001.
(nn) "Financing Agreement" or "Financing Agreements" shall mean this
Agreement, the Notes, the Patent Security Agreement, the Trademark Security
Agreement and any and all other instruments, agreements and documents executed
in connection herewith or therewith or related hereto or thereto, together with
any amendments, supplements or modifications hereto or thereto.
(oo) "Fixed Assets" shall mean equipment and other assets of Borrower which,
by generally accepted accounting principles, must be treated as fixed assets in
financial statements of Borrower.
(pp) "Fixed Rate" shall mean the rate of interest determined by the Lender to
be the sum of the imputed United States Treasury Notes annual yield as of the
first day of the applicable Interest Period based upon quotes reported in the
Federal Reserve Statistical Release H.15 - Selected Interest Rates under the
heading "U.S. Government Securities/Treasury constant maturities" for United
States Treasury Notes having a maturity approximately equal to such Interest
Period. In the event Release H.15 is no longer published, Lender shall select a
comparable publication to determine the Fixed Rate.
(qq) "Fixed Rate Loan" shall mean the Initial Converted Equipment Loan, the
Subsequent Converted Equipment Loan, the Final Converted Equipment Loan or the
Term Loan in the event the Borrower elects an interest rate applicable thereto
based upon the Fixed Rate.
(rr) "Fixed Rate Prepayment Premium" means the greater of:
(i) one percent (1%) of the amount of the principal balance of the
Fixed Rate Loan being prepaid; or
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(ii) the product of (x) a fraction whose numerator is an amount equal
to the principal amount of the Fixed Rate Loan being prepaid and whose
denominator is the outstanding principal balance of the Fixed Rate Loan on
the date of such prepayment (before giving effect to such prepayment),
multiplied by (y) an amount equal to the remainder obtained by subtracting
(a) an amount equal to the outstanding principal amount of the Fixed Rate
Loan as the date of such prepayment (before giving effect to such
prepayment) from (b) the present value as of the date of such prepayment
of the remaining scheduled payments of principal and interest on the Fixed
Rate Loan (before giving effect to such prepayment) determined by
discounting such payments at the Discount Rate.
(ss) "GAAP" shall mean United States generally accepted accounting principles
consistently applied.
(tt) "Government" shall have the meaning assigned in clause (ix) of the
definition of Eligible Accounts.
(uu) "Hazardous Material" shall mean any chemical, compound, material,
mixture or substance: (i) the presence of which requires or may hereafter
require notification, investigation, monitoring or remediation under any
Environmental Law; (ii) which is or becomes defined as a "hazardous waste",
"hazardous material" or "hazardous substance" or "toxic substance" or
"pollutant" or contaminant" under any present or future applicable federal,
state or local law or under the rules and regulations adopted or promulgated
pursuant thereto, including, without limitation, the Environmental Laws; (iii)
which is toxic, explosive, corrosive, reactive, ignitable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes
regulated by any governmental authority, agency, department, commission, board,
agency or instrumentality of any foreign country, the United States, any state
of the United States, or any political subdivision thereof to the extent any of
the foregoing has or had jurisdiction over Borrower; (iv) which contains without
limitation, gasoline, diesel fuel or other petroleum products, asbestos or
polychlorinated biphenyls ("PCBs"); or (v) any other chemical, material or
substance, exposure to, or disposal of, which is now or hereafter prohibited,
limited or regulated by any federal, state or local governmental body,
instrumentality or agency.
(vv) "Indebtedness" shall mean all obligations that in accordance with GAAP
should be classified as liabilities upon Borrower's balance sheet or to which
reference should be made by footnotes thereto.
(ww) "Indemnifiable Liability" shall have the same meaning assigned in
Section 18.1(a) hereof.
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(xx) "Indemnitees" shall have the meanings assigned in Section 18.1(a)
hereof.
(yy) "Initial Converted Equipment Loan" shall have the meaning assigned
in Section 4.7 hereof.
(zz) "Initial Converted Equipment Loan Maturity Date" shall mean June 30,
2002.
(aaa) "Initial Converted Equipment Loan Note" shall have the meaning assigned
in Section 4.7 hereof.
(bbb) "Initial Equipment Loan" and "Initial Equipment Loans" shall have the
meanings assigned in Section 4.1 hereof.
(ccc) "Initial Equipment Loan Conversion Date" shall mean July 1, 1999.
(ddd) "Intangible Assets" shall mean assets that in accordance with GAAP are
properly classifiable as intangible assets, including but not limited to,
goodwill, franchises, licenses, patents, trademarks, tradenames and copyrights.
(eee) "Interest" shall mean, for the applicable period, all interest paid or
payable, including but not limited to, interest paid or payable on Indebtedness
and on Capital Leases, determined in accordance with GAAP.
(fff) "Interest Period" shall mean:
(i) with respect to each LIBOR Rate Loan, the period commencing on the
date of such LIBOR Rate Loan and ending thirty (30), sixty (60) or ninety
(90) days thereafter, as the Borrower may elect in the applicable Election
Notice;
(ii) with respect to any Fixed Rate Loan, a period of not less than one
(1) year and not more than a term expiring on (a) the Initial Converted
Equipment Loan Maturity Date, in the case of any Initial Converted
Equipment Loan, (b) the Subsequent Converted Equipment Loan Maturity Date,
in the case of any Subsequent Converted Equipment Loan, (c) the Final
Converted Equipment Loan Maturity Date, in the case of any Final Converted
Equipment Loan, and (d) the Term Loan Maturity Date, in the case of the
Term Loan;
(iii) with respect to each Prime Rate Loan, on the date of such Prime
Rate Loan and ending if and when it becomes a LIBOR Rate Loan pursuant to
Section 7.2 hereof; provided, that:
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(A) any Interest Period that would otherwise end on a day that is
not a Business Day shall be extended to the next succeeding Business
Day unless, in the case of a LIBOR Rate Loan, such Business Day
falls in the next calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day;
(B) any Interest Period applicable to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject to clause
(iii) below, end on the last Business Day of a calendar month;
(C) the Borrower may not elect an Interest Period for a LIBOR
Rate Loan which would otherwise end: (a) after the conclusion of the
Revolving Loan Term, in the case of any Revolving Loan, (b) after
the Initial Equipment Loan Conversion Date, in the case of any
Initial Equipment Loan, (c) after the Subsequent Equipment Loan
Conversion Date, in the case of any Subsequent Equipment Loan, and
(d) after the Final Equipment Loan Conversion Date, in the case of
any Final Equipment Loan; and
(iv) There shall be no more than three (3) different Interest
Periods outstanding at any time, and the amount to be subject to any
LIBOR Rate or Fixed Rate shall be in an amount at least equal to
$250,000 and in increments of $250,000, provided, however, that the
Lender may, in its sole discretion, permit the Borrower to elect
amounts to be subject to such interest rates which are not in
increments of $250,000.
(ggg) "Inventory" shall have the meaning assigned in Section 12.1(d) hereof.
(hhh) "Lessor's Agreements" shall have the meaning assigned in Section
10.1(f) hereof.
(iii) "Leverage Ratio" shall mean, during the applicable period, that
quotient equal to Total Funded Debt, divided by EBITDA.
(jjj) "LIBOR" or "LIBOR Rate" shall mean for any LIBOR Rate Loan for the then
current Interest Period relating thereto, the rate per annum determined pursuant
to the following formula:
LIBOR = LIBOR Base Rate
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1-Reserve Percentage
with "LIBOR Base Rate" meaning the rate of interest determined by the Lender
to be the prevailing rate per annum at which deposits in U.S. dollars are
offered to the Lender by first class banks in the Interbank LIBOR market in
which it regularly participates on or about 10:00 a.m. (Hartford time) two (2)
Business Days before the first day of such Interest Period in an amount equal to
the principal amount of such LIBOR Loan to which such Interest Period is to
apply for a period of time approximately equal to such Interest Period, and with
"Reserve Percentage" meaning the rate (expressed as a decimal) applicable to the
Lender during such Interest Period under regulations issued from time to time by
the Board of Governors of the Federal Reserve System (or any successor) for
determining the actual reserve requirement (including without limitation, any
basic, supplemental, emergency or marginal reserve requirement) of the Lender
with respect to "Eurocurrency liabilities" as that term is defined under such
regulations.
The LIBOR Rate shall be adjusted automatically as of the effective date of
any change in the Reserve Percentage.
(kkk) "LIBOR Rate Loan" shall mean the Revolving Loan, the Initial
Equipment Loan, the Subsequent Equipment Loan or the Final Equipment Loan in
the event the Borrower elects an interest rate applicable thereto based upon
the LIBOR Rate.
(lll) "Life Insurance Assignment" shall have the meaning assigned in
Section 10.1(d) hereof.
(mmm) "Loan" means a Revolving Loan, the Term Loan, an Equipment Loan, or
a Converted Equipment Loan, and "Loans" means the Revolving Loans, the Term
Loan, the Equipment Loans, and the Converted Equipment Loans.
(nnn) "Lockbox Agreement" shall have the meaning assigned in Section
14.1(m) hereof.
(ooo) "Note" means the Revolving Loan Note, the Term Loan Note, the
Equipment Loan Note, the Initial Converted Equipment Loan Note, the
Subsequent Converted Equipment Loan Note or the Final Converted Equipment
Loan Note, and "Notes" means the Revolving Loan Note, the Term Loan Note, the
Equipment Loan Note, the Initial Converted Equipment Loan Note, the
Subsequent Converted Equipment Loan Note and the Final Converted Equipment
Loan Note.
(ppp) "Notice of Revolving Loan Borrowing" shall have the meaning assigned
in Section 2.2 hereof.
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(qqq) "Notice of Equipment Loan Borrowing" shall have the meaning assigned
in Section 4.2 hereof.
(rrr) "Obligation" and "Obligations" mean and include all loans advances,
interest, indebtedness, liabilities, obligations, fees, charges, expenses,
guaranties, covenants and duties at any time owing by Borrower to Lender of
every kind and description, whether or not evidenced by any note or other
instrument, whether or not for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including, but not limited to, the Loans, and all other
indebtedness, liabilities and obligations of Borrower arising under this
Agreement and the other Financing Agreements or otherwise, and all reasonable
costs, expenses, fees, charges incurred by Lender hereunder or otherwise with
respect to Borrower, including, without limitation, reasonable fees and
expenses of attorneys, paralegals and other professionals incurred in
connection with any of the foregoing, or in any way connected with, involving
or relating to the preservation, enforcement, protection or defense of, or
realization under this Agreement, any of the other Financing Agreements, any
related agreement, document or instrument, the Collateral and the rights and
remedies hereunder or thereunder, including without limitation, all
reasonable costs, expenses and fees incurred in inspecting or surveying
mortgaged real estate, if any, or conducting Environmental studies or tests,
and all reasonable costs, expenses and fees incurred in connection with any
"workout" or default resolution negotiations involving legal counsel or other
professionals and further in connection with any modification, renegotiation
or restructuring of the indebtedness evidenced by this Agreement and/or any
of the other Financing Agreements and/or Obligations.
(sss) "Patent Security Agreement" shall have the meaning assigned in
Section 10.1(j) hereof.
(ttt) "Plan" means any employee benefit plan or other plan maintained by
Borrower or any entity affiliated with Borrower for employees covered by
Title I of ERISA.
(uuu) "Premises" shall mean the real property located at 00 Xxxxxxxx
Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxx and 0000 Xxxxxxxx Xxxxxx, Xxx Xxxxx Xxxxxx,
Xxxxx Xxxx, Xxxxxxxxxx.
(vvv) "Prime Rate" shall mean the Prime Rate as published from time to
time in the "Money Rates" section of The Wall Street Journal or any successor
publication, or in the event that such rate is no longer published in The
Wall Street Journal, a comparable index or reference selected by Lender. The
Prime Rate need not and may not necessarily be the lowest or most favorable
rate.
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(www) "Prime Rate Loan" shall mean any Loan which the Borrower has
selected an interest rate based upon the Prime Rate.
(xxx) "Product Line" shall have the meaning assigned in Section 12.1
hereof.
(yyy) "Receivables" shall have the meaning assigned in Section 12.1(a)
hereof.
(zzz) "Release" shall mean any release, emission, disposal, leaching or
migration into the environment (including, without limitation, the
abandonment or disposal of any barrels, containers, or other closed
receptacles containing any Hazardous Materials) or into or out of any
property owned, occupied or used by Borrower.
(aaaa) "Revolving Loan" and "Revolving Loans" shall have the meanings
assigned in Section 2.1 hereof.
(bbbb) "Revolving Loan Account" shall have the meaning assigned in Section
2.2 hereof.
(cccc) "Revolving Loan Borrowing Base" shall mean an amount equal to the
lesser of: (i) Three Million Dollars ($3,000,000) or (ii) an amount equal to
the aggregate of (1) eighty percent (80%) of Eligible Accounts and (2) the
lesser of (A) thirty-five percent (35%) of Eligible Inventory, or (B) Seven
Hundred Fifty Thousand Dollars ($750,000).
(dddd) "Revolving Loan Note" shall have the meaning assigned in Section
2.2 hereof.
(eeee) "Revolving Loan Term" shall have the meaning assigned in Section
17.1(a) hereof.
(ffff) "Subsequent Converted Equipment Loan" shall have the meaning
assigned in Section 5.7 hereof.
(gggg) "Subsequent Converted Equipment Loan Maturity Date" shall mean June
30, 2003.
(hhhh) "Subsequent Converted Equipment Loan Note" shall have the meaning
assigned in Section 5.7 hereof.
(iiii) "Subsequent Equipment Loan" and "Subsequent Equipment Loans" shall
have the meanings assigned in Section 5.1 hereof.
(jjjj) "Subsequent Equipment Loan Conversion Date" shall mean July 1,
2000.
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(kkkk) "Subsidiary" and "Subsidiaries" shall mean any corporation or
corporations of which the outstanding shares of any stock having ordinary
voting power is at the time owned by Borrower and/or by one or more
Subsidiaries.
(llll) "Tangible Net Worth" shall mean Total Assets minus the sum of (i)
Total Liabilities, and (ii) Intangible Assets.
(mmmm) "Term Loan" shall have the meaning assigned in Section 3.1 hereof.
(nnnn) "Term Loan Maturity Date" shall mean June 30, 2003.
(oooo) "Termination Fee" shall have the meaning assigned in Section 7.7
hereof.
(pppp) "Term Loan Note" shall have the meaning assigned in Section 3.1
hereof.
(qqqq) "Total Assets" shall mean total assets determined in accordance
with GAAP.
(rrrr) "Total Funded Debt" shall mean all Indebtedness of Borrower
pursuant to any agreement or instrument to which the Borrower is a party
relating to the borrowing of money or the obtaining of credit or in respect
of Capitalized Leases.
(ssss) "Total Liabilities" shall mean total current Indebtedness
determined in accordance with GAAP.
(tttt) "Trademark Security Agreement" shall have the meaning assigned in
Section 10.1(k) hereof.
(uuuu) "Treasury Rate" means the yield calculated by the linear
interpolation of the yield, as reported in Federal Reserve Statistical
Release H.15-Selected Interest Rates under the heading "U.S. Government
Securities/Treasury Constant Maturities" for the week ending prior to the
date of the relevant prepayment, of United States Treasury constant
maturities with a maturity date (one longer and one shorter) most nearly
approximating the end of the Interest Period in which the prepayment is made.
ARTICLE II. Revolving Loans
Section 2.1. Amounts. Subject to the terms and conditions contained in
this Agreement, and so long as no Defaulting Event has occurred, Lender
agrees, in its sole but reasonable discretion, to make and remake loans
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(collectively, the "Revolving Loans" and, individually, a "Revolving Loan") to
Borrower from time to time until terminated as provided below in principal
amounts not exceeding in the aggregate at any one time outstanding the Revolving
Loan Borrowing Base, it being agreed and understood that at no time shall the
maximum aggregate principal amount of the Revolving Loans made by Lender exceed
the Revolving Loan Borrowing Base.
Section 2.2. Procedure For Advances, Notice of Revolving Loan Borrowing,
Revolving Loan Note, Etc. Within the limits of the Revolving Loan Borrowing Base
and the Revolving Loan Term, so long as Borrower is in compliance with all of
the terms and conditions of this Agreement and no Defaulting Event has occurred,
Borrower may request borrowings and may repay and request reborrowings of
Revolving Loans. Whenever Borrower desires an advance, Borrower shall notify
Lender (which notice shall be irrevocable) by telecopy or telephone of the
proposed borrowing. Such notice (each, a "Notice of Revolving Loan Borrowing")
shall be accompanied by a borrowing base certificate (in a form acceptable to
Lender), specify the date of the proposed borrowing, the type of borrowing, the
amount proposed to be borrowed and, if a LIBOR Rate Loan is being requested, the
duration of the Interest Period. Each Notice of Revolving Loan Borrowing must be
received by Lender no later than 11:00 a.m., Hartford, Connecticut time on the
day such borrowing is requested. In addition to this Agreement, the Revolving
Loans shall be evidenced by a Revolving Promissory Note payable to Lender in the
form of Exhibit A attached hereto (the "Revolving Loan Note"). Insofar as
Borrower may request and Lender shall make Revolving Loans hereunder, Lender
shall enter such advances as debits on a revolving loan account maintained by
Borrower with Lender (the "Revolving Loan Account"). Lender may also record to
the Revolving Loan Account, in accordance with customary accounting practices
and procedures, (i) all fees, accrued and unpaid interest, late fees, usual and
customary charges for the maintenance and administration of checking and any
other accounts maintained by Borrower with Lender, and other fees and charges
which are properly chargeable to Borrower under this Agreement, (ii) all
payments, subject to collection, made by or account of indebtedness evidenced by
the Revolving Loan Account, (iii) all proceeds of Collateral which are finally
paid to Lender in its own office in cash or collected items, and (iv)other
appropriate debits and credits, including without limitation, payments of
interest due hereunder.
Section 2.3. Monthly Statements. On a monthly basis, Lender shall render a
statement for the Revolving Loan Account, which statement shall be considered
correct and accepted by Borrower and conclusively binding upon Borrower unless
Borrower notifies Lender to the contrary within ten (10) days of the receipt of
said statement by Borrower. Lender shall have the right to debit the Revolving
Loan Account for all interest charges on the Revolving Loan as
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and when the same shall be due and payable, if not otherwise paid by Borrower,
subject to applicable law.
Section 2.4. Interest Periods. The Borrower shall elect the initial Interest
Period applicable to a Revolving Loan which is a LIBOR Rate Loan in its Notice
of Revolving Loan Borrowing. The Borrower shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Lender of
such duration not less than three (3) Business Days prior to the last day of the
then current Interest Period applicable to such LIBOR Rate Loan. If the Lender
does not receive timely notice of the Interest Period elected by the Borrower,
the Borrower shall be deemed to have elected to convert to a Prime Rate Loan
subject to Section 7.2 below.
Section 2.5. Lender Discretion. Nothing herein shall be construed to (a)
require Lender to make Revolving Loans, and/or (b) prohibit Lender from lending
in excess of the Revolving Loan Borrowing Base, it being agreed that all such
loans and advances shall be at Lender's sole (but in the case of (a) above,
reasonable) discretion and shall not establish a pattern or custom binding upon
Lender.
ARTICLE III. Term Loan
Section 3.1. Amount. Subject to the terms and conditions contained in this
Agreement, Lender agrees to make a loan to Borrower in the original principal
amount of $500,000 (the "Term Loan"). In addition to this Agreement, the Term
Loan shall be evidenced by a Term Loan Note payable to Lender in the form of
Exhibit B attached hereto (the "Term Loan Note").
Section 3.2. Notice and Manner of Establishing Interest Rate. Whenever the
Borrower desires to have the Term Loan accrue interest as a Fixed Rate Loan, the
Borrower shall give the Lender written notice at least three (3) Business Days
prior to the day on which the requested Fixed Rate Loan is to take effect. Such
notice (an "Election Notice") shall specify the effective date of the Fixed Rate
Loan and the duration of the initial Interest Period. The Borrower shall elect
the duration of each succeeding Interest Period by giving irrevocable written
notice to Lender of such duration not less than three (3) Business Days prior to
the last day of the then current Interest Period applicable to such Fixed Rate
Loan. If the Lender does not receive timely notice of the Interest Period
elected by the Borrower, the Borrower shall be deemed to have elected to convert
to a Prime Rate Loan subject to Section 7.2 below.
Section 3.3. Monthly Statements. On a monthly basis, Lender shall render a
statement for the Term Loan, which statement shall be considered correct and
accepted by Borrower and conclusively binding upon Borrower unless Borrower
notifies Lender to the contrary within ten (10) days of
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the receipt of said statement by Borrower. Lender shall have the right to debit
any account of Borrower for all principal, interest and other charges on the
Term Loan as and when the same shall be due and payable, if not otherwise paid
by Borrower.
ARTICLE IV. Initial Equipment Loan; Initial Converted Equipment Loan
Section 4.1. Amount. Subject to the terms and conditions contained in this
Agreement and so long as no Defaulting Event has occurred, Lender agrees to make
loans (collectively, the "Initial Equipment Loans" and, individually, an
"Initial Equipment Loan") to Borrower from time to time until terminated as
provided below in principal amounts not exceeding in the aggregate at any one
time outstanding the Equipment Loan Borrowing Base, it being agreed and
understood that at no time shall the maximum aggregate principal amount of the
Equipment Loans made by Lender exceed the Equipment Loan Borrowing Base.
Section 4.2. Procedure For Advances; Equipment Loan Notice of Borrowing;
Equipment Loan Note, Etc. Within the limits of the Equipment Loan Borrowing
Base, so long as Borrower is in compliance with all of the terms and conditions
of this Agreement and no Defaulting Event has occurred, Borrower may request
borrowings and repay BUT NOT REBORROW Initial Equipment Loans. To be eligible to
obtain any Initial Equipment Loan, Borrower must submit to Lender at least three
(3) Business Days prior to the date on which Borrower requests Lender to make
such Initial Equipment Loan, enforceable at the sole option of Lender: (a)
copies of invoices which reflect the actual cost of the Eligible Equipment being
purchased with the proceeds of such Initial Equipment Loan, including, if any,
installation and other services and costs associated therewith; (b) evidence
satisfactory to Lender that upon payment of the purchase price therefor, the
Eligible Equipment shall be in the Borrower's physical possession and that (1)
the Borrower has acquired good title to such Eligible Equipment, and (2) such
Eligible Equipment is not subject to any pledge, lien, lease, encumbrance or
charge of any kind whatsoever, other than in favor of Lender. Whenever Borrower
desires an advance, Borrower shall notify Lender (which notice shall be
irrevocable) by telecopy or telephone of the proposed borrowing. Such notice
(each, a "Notice of Equipment Loan Borrowing") shall specify the date of the
proposed borrowing, the type of borrowing, the amount proposed to be borrowed,
and if a LIBOR Rate Loan, the duration of the Interest Period. Each Notice of
Equipment Loan Borrowing must be received by Lender no later than 11:00 a.m.,
Hartford, Connecticut time on the day such borrowing is requested. In addition
to this Agreement, the Initial Equipment Loans shall be evidenced by an
Equipment Loan Note payable to Lender in the form of Exhibit C attached hereto
(the "Equipment Loan Note"). Insofar as Borrower may request and Lender shall
make Initial
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Equipment Loans hereunder, Lender shall enter such advances as debits on an
equipment loan account maintained by Borrower with Lender (the "Equipment Loan
Account"). Lender may also record to the Equipment Loan Account, in accordance
with customary accounting practices and procedures, (i) all fees, accrued and
unpaid interest, late fees, usual and customary charges for the maintenance and
administration of checking and any other accounts maintained by Borrower with
Lender, and other fees and charges which are properly chargeable to Borrower
under this Agreement, (ii) all payments, subject to collection, made by or
account of indebtedness evidenced by the Equipment Loan Account, (iii) all
proceeds of Collateral which are finally paid to Lender in its own office in
cash or collected items, and (iv) other appropriate debits and credits,
including without limitation, payments of interest due hereunder.
Section 4.3. Interest Periods for Initial Equipment Loans. The Borrower shall
elect the initial Interest Period applicable to an Initial Equipment Loan which
is a LIBOR Rate Loan in its Notice of Equipment Loan Borrowing. The Borrower
shall elect the duration of each succeeding Interest Period by giving
irrevocable written notice to Lender of such duration not less than three (3)
Business Days prior to the last day of the then current Interest Period
applicable to such LIBOR Rate Loan. If the Lender does not receive timely notice
of the Interest Period elected by the Borrower, the Borrower shall be deemed to
have elected to convert to a Prime Rate Loan subject to Section 7.2 below.
Section 4.4. Notice and Manner of Establishing Interest Rate for Initial
Converted Equipment Loans. Whenever the Borrower desires to have the Initial
Converted Equipment Loan accrue interest as a Fixed Rate Loan, the Borrower
shall give the Lender written notice at least three (3) Business Days prior to
the day in which the requested Fixed Rate Loan is to take effect. Such notice
(an "Election Notice") shall specify the effective date of the Fixed Rate Loan
and the duration of the initial Interest Period. The Borrower shall elect the
duration of each succeeding Interest Period by giving irrevocable written notice
to Lender of such duration not less than three (3) Business Days prior to the
last day of the then current Interest Period applicable to such Fixed Rate Loan.
If the Lender does not receive timely notice of the Interest Period elected by
the Borrower, the Borrower shall be deemed to have elected to convert to a Prime
Rate Loan subject to Section 7.2 below.
Section 4.5. Monthly Statements. On a monthly basis, Lender shall render a
statement for the Equipment Loan Account, which statement shall be considered
correct and accepted by Borrower and conclusively binding upon Borrower unless
Borrower notifies Lender to the contrary within ten (10) days of the receipt of
said statement by Borrower. Lender shall have the right to debit the Equipment
Loan Account for all interest charges on the Initial
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Equipment Loans as and when the same shall be due and payable, if not otherwise
paid by Borrower, subject to applicable law.
Section 4.6. Lender Discretion. Nothing herein shall be construed to prohibit
Lender from lending in excess of the Equipment Loan Borrowing Base, it being
agreed that all such loans and advances shall be at Lender's sole discretion and
shall not establish a pattern or custom binding upon Lender.
Section 4.7. Conversion to Initial Converted Equipment Loan. Notwithstanding
anything to the contrary contained herein, so long as Borrower is in compliance
with all of the terms and conditions of this Agreement and no Defaulting Event
has occurred, on the Initial Equipment Loan Conversion Date, the then
outstanding principal balance of the Initial Equipment Loans shall convert into
term indebtedness having a final maturity on the Initial Converted Equipment
Loan Maturity Date (the "Initial Converted Equipment Loan"). The Initial
Converted Equipment Loan shall bear interest at a rate determined in accordance
with Section 7.1(a)(iv) hereof, and be payable in thirty-six (36) substantially
equal, consecutive monthly payments of principal in accordance with the terms
and conditions of an Initial Converted Equipment Loan Note payable to Lender in
the form of Exhibit D attached hereto (the "Initial Converted Equipment Loan
Note"). On the Initial Equipment Loan Conversion Date, Borrower shall execute
and/or deliver, or cause to be delivered to Lender an Initial Converted
Equipment Loan Note and such other instruments, documents and agreements as
Lender reasonably requires, all in form, scope and substance satisfactory to
Lender. On and after the Initial Equipment Loan Conversion Date, Borrower shall
have no ability to request, and Lender shall have no obligation to make, any
further Initial Equipment Loans.
ARTICLE V. Subsequent Equipment Loan; Subsequent Converted Equipment Loan
Section 5.1. Amount. Subject to the terms and conditions contained in this
Agreement and so long as no Defaulting Event has occurred, Lender agrees to make
loans (collectively, the "Subsequent Equipment Loans" and, individually, a
"Subsequent Equipment Loan") to Borrower from time to time until terminated as
provided below in principal amounts not exceeding in the aggregate at any one
time outstanding the Equipment Loan Borrowing Base, it being agreed and
understood that at no time shall the maximum aggregate principal amount of the
Equipment Loans made by Lender exceed the Equipment Loan Borrowing Base.
Section 5.2. Procedure For Advances; Equipment Loan Notice of Borrowing;
Subsequent Equipment Loan Note, Etc. Within the
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limits of the Equipment Loan Borrowing Base, so long as Borrower is in
compliance with all of the terms and conditions of this Agreement and no
Defaulting Event has occurred, and so long as the entire outstanding principal
balance of the Initial Equipment Loans has converted into an Initial Converted
Equipment Loan in accordance with Section 4.7 hereof, Borrower may request
borrowings and repay BUT NOT REBORROW Subsequent Equipment Loans. To be eligible
to obtain any Subsequent Equipment Loan, Borrower must submit to Lender at least
three (3) Business Days prior to the date on which Borrower requests Lender to
make such Subsequent Equipment Loan, enforceable at the sole option of Lender:
(a) copies of invoices which reflect the actual cost of the Eligible Equipment
being purchased with the proceeds of such Subsequent Equipment Loan, including,
if any, installation and other services and costs associated therewith; (b)
evidence satisfactory to Lender that upon payment of the purchase price
therefor, the Eligible Equipment shall be in the Borrower's physical possession
and that (1) the Borrower has acquired good title to such Eligible Equipment,
and (2) such Eligible Equipment is not subject to any pledge, lien, lease,
encumbrance or charge of any kind whatsoever, other than in favor of Lender.
Whenever Borrower desires an advance, Borrower shall notify Lender (which notice
shall be irrevocable) pursuant to a Notice of Equipment Loan Borrowing. Each
Notice of Equipment Loan Borrowing shall specify the date of the proposed
borrowing, the type of borrowing, the amount proposed to be borrowed, and if a
LIBOR Rate Loan, the duration of the Interest Period. Each Notice of Equipment
Loan Borrowing must be received by Lender no later than 11:00 a.m., Hartford,
Connecticut time on the day such borrowing is requested. In addition to this
Agreement, the Subsequent Equipment Loans shall be evidenced by the Equipment
Loan Note. Insofar as Borrower may request and Lender shall make Subsequent
Equipment Loans hereunder, Lender shall enter such advances as debits on the
Equipment Loan Account. Lender may also record to the Equipment Loan Account, in
accordance with customary accounting practices and procedures, (i) all fees,
accrued and unpaid interest, late fees, usual and customary charges for the
maintenance and administration of checking and any other accounts maintained by
Borrower with Lender, and other fees and charges which are properly chargeable
to Borrower under this Agreement, (ii) all payments, subject to collection, made
by or account of indebtedness evidenced by the Equipment Loan Account, (iii) all
proceeds of Collateral which are finally paid to Lender in its own office in
cash or collected items, and (iv) other appropriate debits and credits,
including without limitation, payments of interest due hereunder.
Section 5.3. Interest Periods for Subsequent Equipment Loans. The Borrower
shall elect the initial Interest Period applicable to a Subsequent Equipment
Loan which is a LIBOR Rate Loan in its Notice of Equipment Loan Borrowing. The
Borrower shall elect the duration of each succeeding Interest Period by giving
irrevocable written notice to Lender of such duration not less than three (3)
Business Days prior to the last day of the then
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current Interest Period applicable to such LIBOR Rate Loan. If the Lender does
not receive timely notice of the Interest Period elected by the Borrower, the
Borrower shall be deemed to have elected to convert to a Prime Rate Loan subject
to Section 7.2 below.
Section 5.4. Notice and Manner of Establishing Interest Rate for Subsequent
Converted Equipment Loans. Whenever the Borrower desires to have the Subsequent
Converted Equipment Loan accrue interest as a Fixed Rate Loan, the Borrower
shall give the Lender written notice at least three (3) Business Days prior to
the day in which the requested Fixed Rate Loan is to take effect. Such notice
(an "Election Notice") shall specify the effective date of the Fixed Rate Loan
and the duration of the initial Interest Period. The Borrower shall elect the
duration of each succeeding Interest Period by giving irrevocable written notice
to Lender of such duration not less than three (3) Business Days prior to the
last day of the then current Interest Period applicable to such Fixed Rate Loan.
If the Lender does not receive timely notice of the Interest Period elected by
the Borrower, the Borrower shall be deemed to have elected to convert to a Prime
Rate Loan subject to Section 7.2 below.
Section 5.5. Monthly Statements. On a monthly basis, Lender shall render a
statement for the Equipment Loan Account, which statement shall be considered
correct and accepted by Borrower and conclusively binding upon Borrower unless
Borrower notifies Lender to the contrary within ten (10) days of the receipt of
said statement by Borrower. Lender shall have the right to debit the Equipment
Loan Account for all interest charges on the Subsequent Equipment Loans as and
when the same shall be due and payable, if not otherwise paid by Borrower,
subject to applicable law.
Section 5.6. Lender Discretion. Nothing herein shall be construed to prohibit
Lender from lending in excess of the Equipment Loan Borrowing Base, it being
agreed that all such loans and advances shall be at Lender's sole discretion and
shall not establish a pattern or custom binding upon Lender.
Section 5.7. Conversion to Subsequent Converted Equipment Loan.
Notwithstanding anything to the contrary contained herein, so long as Borrower
is in compliance with all of the terms and conditions of this Agreement and no
Defaulting Event has occurred, on the Subsequent Equipment Loan Conversion Date,
the then outstanding principal balance of the Subsequent Equipment Loans shall
convert into term indebtedness having a final maturity on the Subsequent
Converted Equipment Loan Maturity Date (the "Subsequent Converted Equipment
Loan"). The Subsequent Converted Equipment Loan shall bear interest at a rate
determined in accordance with Section 7.1(a)(vi) hereof, and be payable in
thirty-six (36) substantially equal, consecutive monthly payments of principal
in accordance with the terms and
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conditions of a Subsequent Converted Equipment Loan Note payable to Lender in
the form of Exhibit E attached hereto (the "Subsequent Converted Equipment Loan
Note"). On the Subsequent Equipment Loan Conversion Date, Borrower shall execute
and/or deliver, or cause to be delivered to Lender a Subsequent Converted
Equipment Loan Note and such other instruments, documents and agreements as
Lender reasonably requires, all in form, scope and substance satisfactory to
Lender. On and after the Subsequent Equipment Loan Conversion Date, Borrower
shall have no ability to request, and Lender shall have no obligation to make,
any further Subsequent Equipment Loans.
ARTICLE VI. Final Equipment Loan; Final Converted Equipment Loan
Section 6.1. Amount. Subject to the terms and conditions contained in this
Agreement and so long as no Defaulting Event has occurred, Lender agrees to make
loans (collectively, the "Final Equipment Loans" and, individually, an "Final
Equipment Loan") to Borrower from time to time until terminated as provided
below in principal amounts not exceeding in the aggregate at any one time
outstanding the Equipment Loan Borrowing Base, it being agreed and understood
that at no time shall the maximum aggregate principal amount of the Equipment
Loans made by Lender exceed the Equipment Loan Borrowing Base.
Section 6.2. Procedure For Advances; Equipment Loan Notice of Borrowing;
Final Equipment Loan Note, Etc. Within the limits of the Equipment Loan
Borrowing Base, so long as Borrower is in compliance with all of the terms and
conditions of this Agreement and no Defaulting Event has occurred, and so long
as the entire outstanding principal balance of the Initial Equipment Loans and
the Subsequent Equipment Loans has converted into an Initial Converted Equipment
Loan and a Subsequent Equipment Loan in accordance with Sections 4.7 and 5.7
hereof, respectively, Borrower may request borrowings and repay BUT NOT REBORROW
Final Equipment Loans. To be eligible to obtain any Final Equipment Loan,
Borrower must submit to Lender at least three (3) Business Days prior to the
date on which Borrower requests Lender to make such Final Equipment Loan,
enforceable at the sole option of Lender: (a) copies of invoices which reflect
the actual cost of the Eligible Equipment being purchased with the proceeds of
such Final Equipment Loan, including, if any, installation and other services
and costs associated therewith; (b) evidence satisfactory to Lender that upon
payment of the purchase price therefor, the Eligible Equipment shall be in the
Borrower's physical possession and that (1) the Borrower has acquired good title
to such Eligible Equipment, and (2) such Eligible Equipment is not subject to
any pledge, lien, lease, encumbrance or charge of any kind whatsoever, other
than in favor of Lender. Whenever Borrower desires an advance, Borrower shall
notify Lender (which notice shall be irrevocable) pursuant to a Notice of
Equipment Loan Borrowing.
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Each Notice of Equipment Loan Borrowing shall specify the date of the proposed
borrowing, the type of borrowing, the amount proposed to be borrowed, and if a
LIBOR Rate Loan, the duration of the Interest Period. Each Notice of Equipment
Loan Borrowing must be received by Lender no later than 11:00 a.m., Hartford,
Connecticut time on the day such borrowing is requested. In addition to this
Agreement, the Final Equipment Loans shall be evidenced by the Equipment Loan
Note. Insofar as Borrower may request and Lender shall make Final Equipment
Loans hereunder, Lender shall enter such advances as debits on the Equipment
Loan Account. Lender may also record to the Equipment Loan Account, in
accordance with customary accounting practices and procedures, (i) all fees,
accrued and unpaid interest, late fees, usual and customary charges for the
maintenance and administration of checking and any other accounts maintained by
Borrower with Lender, and other fees and charges which are properly chargeable
to Borrower under this Agreement, (ii) all payments, subject to collection, made
by or account of indebtedness evidenced by the Equipment Loan Account, (iii) all
proceeds of Collateral which are finally paid to Lender in its own office in
cash or collected items, and (iv) other appropriate debits and credits,
including without limitation, payments of interest due hereunder.
Section 6.3. Interest Periods for Final Equipment Loans. The Borrower shall
elect the initial Interest Period applicable to a Final Equipment Loan which is
a LIBOR Rate Loan in its Notice of Equipment Loan Borrowing. The Borrower shall
elect the duration of each succeeding Interest Period by giving irrevocable
written notice to Lender of such duration not less than three (3) Business Days
prior to the last day of the then current Interest Period applicable to such
LIBOR Rate Loan. If the Lender does not receive timely notice of the Interest
Period elected by the Borrower, the Borrower shall be deemed to have elected to
convert to a Prime Rate Loan subject to Section 7.2 below.
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Section 6.4. Notice and Manner of Establishing Interest Rate for Final
Converted Equipment Loans. Whenever the Borrower desires to have the Final
Converted Equipment Loan accrue interest as a Fixed Rate Loan, the Borrower
shall give the Lender written notice at least three (3) Business Days prior to
the day in which the requested Fixed Rate Loan is to take effect. Such notice
(an "Election Notice") shall specify the effective date of the Fixed Rate Loan
and the duration of the initial Interest Period. The Borrower shall elect the
duration of each succeeding Interest Period by giving irrevocable written notice
to Lender of such duration not less than three (3) Business Days prior to the
last day of the then current Interest Period applicable to such Fixed Rate Loan.
If the Lender does not receive timely notice of the Interest Period elected by
the Borrower, the Borrower shall be deemed to have elected to convert to a Prime
Rate Loan subject to Section 7.2 below.
Section 6.5. Monthly Statements. On a monthly basis, Lender shall render a
statement for the Equipment Loan Account, which statement shall be considered
correct and accepted by Borrower and conclusively binding upon Borrower unless
Borrower notifies Lender to the contrary within ten (10) days of the receipt of
said statement by Borrower. Lender shall have the right to debit the Equipment
Loan Account for all interest charges on the Final Equipment Loans as and when
the same shall be due and payable, if not otherwise paid by Borrower, subject to
applicable law.
Section 6.6. Lender Discretion. Nothing herein shall be construed to prohibit
Lender from lending in excess of the Equipment Loan Borrowing Base, it being
agreed that all such loans and advances shall be at Lender's sole discretion and
shall not establish a pattern or custom binding upon Lender.
Section 6.7. Conversion to Final Converted Equipment Loan. Notwithstanding
anything to the contrary contained herein, so long as Borrower is in compliance
with all of the terms and conditions of this Agreement and no Defaulting Event
has occurred, on the Final Equipment Loan Conversion Date, the then outstanding
principal balance of the Final Equipment Loans shall convert into term
indebtedness having a final maturity on the Final Converted Equipment Loan
Maturity Date (the "Final Converted Equipment Loan"). The Final Converted
Equipment Loan shall bear interest at a rate determined in accordance with
Section 7.1(a)(viii) hereof, and be payable in thirty-six (36) substantially
equal, consecutive monthly payments of principal in accordance with the terms
and conditions of a Final Converted Equipment Loan Note payable to Lender in the
form of Exhibit F attached hereto (the "Final Converted Equipment Loan Note").
On the Final Equipment Loan Conversion Date, Borrower shall execute and/or
deliver, or cause to be delivered to Lender a Final Converted Equipment Loan
Note and such other instruments, documents and agreements as Lender reasonably
requires, all in form, scope and substance satisfactory to Lender. On and after
the Final Equipment Loan Conversion Date, Borrower shall have no ability to
request, and Lender shall have no obligation to make, any further Final
Equipment Loans.
ARTICLE VII. Interest, Prepayment, Etc.
Section 7.1. Interest.
(a) Pre-default Interest. So long as no Defaulting Event has occurred:
(i) Revolving Loans. Each Revolving Loan shall bear such type of interest
as the Borrower may elect subject to the provisions of this Agreement. During
the period from the date made through and
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including the date of payment in full, each Revolving Loan shall bear interest
on the outstanding principal amount thereof, for the Interest Period applicable
thereto, at the election of the Borrower, (A) in the case of a Prime Rate Loan,
at a floating rate per annum equal to the Prime Rate plus three-quarters of one
percentage point (.75%), or (B) in the case of a LIBOR Rate Loan, at a per annum
rate equal to the LIBOR Rate plus three hundred (300) basis points.
(ii) Term Loan. The Term Loan shall bear such type of interest as the
Borrower may elect subject to the provisions of this Agreement. The Term Loan
shall bear interest on the outstanding principal amount thereof, for the
Interest Period applicable thereto, at a per annum rate equal to, at the
election of the Borrower: (A) if a Prime Rate Loan, at a floating rate per
annum equal to the Prime Rate plus three-quarters of one percentage point
(.75%), or (B) in the case of a Fixed Rate Loan, at a per annum rate equal to
the Fixed Rate plus three hundred twenty-five (325) basis points.
(iii) Initial Equipment Loans. Each Initial Equipment Loan shall bear such
type of interest as the Borrower may elect subject to the provisions of this
Agreement. During the period from the date made until the Initial Equipment
Loan Conversion Date, each Initial Equipment Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at the election of the Borrower, (A) in the case of a Prime Rate
Loan, at a floating rate per annum equal to the Prime Rate plus
three-quarters of one percentage point (.75%), or (B) in the case of a LIBOR
Rate Loan, at a per annum rate equal to the LIBOR Rate plus three hundred
(300) basis points.
(iv) Initial Converted Equipment Loan. The Initial Converted Equipment
Loan shall bear such type of interest as the Borrower may elect subject to
the provisions of this Agreement. During the period from the Initial
Equipment Loan Conversion Date through and including the date of payment in
full, the Initial Converted Equipment Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at the election of the Borrower, (A) in the case of a Prime Rate
Loan, at a floating rate per annum equal to the Prime Rate plus
three-quarters of one percentage point (.75%), or (B) in the case of a Fixed
Rate Loan, at a per annum rate equal to the Fixed Rate plus three hundred
twenty-five (325) basis points.
(v) Subsequent Equipment Loans. Each Subsequent Equipment Loan shall bear
such type of interest as the Borrower may elect subject to the provisions of
this Agreement. During the period from the date made until the Subsequent
Equipment Loan Conversion Date,
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each Subsequent Equipment Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at the election of
the Borrower, (A) in the case of a Prime Rate Loan, at a floating rate per annum
equal to the Prime Rate plus three-quarters of one percentage point (.75%), or
(B) in the case of a LIBOR Rate Loan, at a per annum rate equal to the LIBOR
Rate plus three hundred (300) basis points.
(vi) Subsequent Converted Equipment Loan. The Subsequent Converted
Equipment Loan shall bear such type of interest as the Borrower may elect
subject to the provisions of this Agreement. During the period from the
Subsequent Equipment Loan Conversion Date through and including the date of
payment in full, the Subsequent Converted Equipment Loan shall bear interest
on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at the election of the Borrower, (A) in the case of a
Prime Rate Loan, at a floating rate per annum equal to the Prime Rate plus
three-quarters of one percentage point (.75%), or (B) in the case of a Fixed
Rate Loan, at a per annum rate equal to the Fixed Rate plus three hundred
twenty-five (325) basis points.
(vii) Final Equipment Loans. Each Final Equipment Loan shall bear such
type of interest as the Borrower may elect subject to the provisions of this
Agreement. During the period from the date made until the Final Equipment
Loan Maturity Date, each Final Equipment Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at the election of the Borrower, (A) in the case of a Prime Rate
Loan, at a floating rate per annum equal to the Prime Rate plus
three-quarters of one percentage point (.75%), or (B) in the case of a LIBOR
Rate Loan, at a per annum rate equal to the LIBOR Rate plus three hundred
(300) basis points.
(viii) Final Converted Equipment Loans. The Final Converted Equipment Loan
shall bear such type of interest as the Borrower may elect subject to the
provisions of this Agreement. During the period from the Final Equipment Loan
Conversion Date through and including the date of payment in full, the Final
Converted Equipment Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at the election
of the Borrower, (A) in the case of a Prime Rate Loan, at a floating rate per
annum equal to the Prime Rate plus three-quarters of one percentage point
(.75%), or (B) in the case of a Fixed Rate Loan, at a per annum rate equal to
the Fixed Rate plus three hundred twenty-five (325) basis points.
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(b) Payment of Interest. So long as any of the Obligations remain
outstanding, interest on the Loans shall be due and payable without notice or
demand monthly in arrears beginning on August 1, 1998 and continuing on the
first business day of each and every month thereafter.
(c) Default Interest Rate. Notwithstanding the foregoing, interest on the
Loans, at all times after the occurrence of an Event of Default and during the
continuance of an Event of Default, and interest on all payments of interest
that are not paid when due, shall accrue at a rate per annum equal to, in the
case of any Event Default which occurs as a result of Borrower's failure to make
any payment required hereunder or under the Notes, four percentage points
(4.0%), and in the case of any other Event of Default, two percentage points
(2.0%), in each case above the applicable interest rates otherwise in effect
under this Agreement.
(d) Calculation Of Interest. Interest on the Loans shall be calculated on the
basis of a 360-day year and the actual number of days elapsed.
(e) Late Payment. If any amount due hereunder or under the Notes is not paid
within ten (10) days after the date it is due and payable, without in any way
affecting Lender's right to make demand hereunder or to declare an Event of
Default to have occurred, Lender may in its sole discretion assess a late charge
against Borrower equal to five percent (5.0%) of such late payment (provided,
however, that the minimum late charge assessed by Lender hereunder shall be
$15.00), which late charge shall be immediately due and payable and may be paid
by a charge to, at Lender's option, either Borrower's Revolving Loan Account or
Equipment Loan Account.
(f) Lawful Interest. It being the intent of the parties that the rate of
interest and all other charges to Borrower be lawful, if for any reason the
payment of a portion of interest, fees or charges as required by this Agreement
would exceed the limit established by applicable law which a commercial bank
such as Lender may charge to a commercial borrower such as Borrower, then the
obligation to pay interest or charges shall automatically be reduced to such
limit and, if any amounts in excess of such limits shall have been paid, then
such amounts shall be applied to the unpaid principal amount of the Obligations
or refunded to Borrower so that under no circumstances shall interest or charges
required hereunder exceed the maximum rate allowed by law, as aforesaid.
Section 7.2. Conversion of Interests Rates of Revolving Loans, Equipment
Loans and Term Loan.
(a) Revolving Loans. Provided that no Event of Default shall have occurred,
the Borrower may, on any Business Day, convert any outstanding Prime Rate Loan
or a LIBOR Rate Loan into a LIBOR Rate Loan or a Prime Rate Loan, respectively,
in the same aggregate principal amount, provided,
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however, that any conversion of a LIBOR Rate Loan shall be made only on the last
Business Day of the then current Interest Period applicable to such LIBOR Rate
Loan.
(b) Initial Equipment Loans Prior to Initial Equipment Loan Conversion Date.
Provided that no Event of Default shall have occurred, the Borrower may, on any
Business Day prior to the Initial Equipment Loan Conversion Date, convert any
outstanding Initial Equipment Loan bearing interest as a Prime Rate Loan or a
LIBOR Rate Loan into a LIBOR Rate Loan or a Prime Rate Loan, respectively, in
the same aggregate principal amount, provided, however, that any conversion of a
LIBOR Rate Loan shall be made only on the last Business Day of the then current
Interest Period applicable to such LIBOR Rate Loan.
(c) Initial Equipment Loans After Initial Equipment Loan Conversion Date.
Provided no Event of Default shall have occurred, the Borrower may, on any
Business Day after the Initial Equipment Loan Conversion Date, convert the
outstanding Initial Converted Equipment Loan bearing interest as a Prime Rate
Loan or a Fixed Rate Loan into a Fixed Rate Loan or a Prime Rate Loan,
respectively, in the same aggregate principal amount, provided, however, that
any conversion of a Fixed Rate Loan shall be made only on the last Business Day
of the then current Interest Period applicable to such Fixed Rate Loan.
(d) Subsequent Equipment Loans Prior to Subsequent Equipment Loan Conversion
Date. Provided that no Event of Default shall have occurred, the Borrower may,
on any Business Day prior to the Subsequent Equipment Loan Conversion Date,
convert any outstanding Subsequent Equipment Loan bearing interest as a Prime
Rate Loan or a LIBOR Rate Loan into a LIBOR Rate Loan or a Prime Rate Loan,
respectively, in the same aggregate principal amount, provided, however, that
any conversion of a LIBOR Rate Loan shall be made only on the last Business Day
of the then current Interest Period applicable to such LIBOR Rate Loan.
(e) Subsequent Equipment Loans After Subsequent Equipment Loan Conversion
Date. Provided no Event of Default shall have occurred, the Borrower may, on any
Business Day after the Subsequent Equipment Loan Conversion Date, convert the
outstanding Subsequent Converted Equipment Loan bearing interest as a Prime Rate
Loan or a Fixed Rate Loan into a Fixed Rate Loan or a Prime Rate Loan,
respectively, in the same aggregate principal amount, provided, however, that
any conversion of a Fixed Rate Loan shall be made only on the last Business Day
of the then current Interest Period applicable to such Fixed Rate Loan.
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(f) Final Equipment Loans Prior to Final Equipment Loan Conversion Date.
Provided that no Event of Default shall have occurred, the Borrower may, on any
Business Day prior to the Final Equipment Loan Conversion Date, convert any
outstanding Final Equipment Loan bearing interest as a Prime Rate Loan or a
LIBOR Rate Loan into a LIBOR Rate Loan or a Prime Rate Loan, respectively, in
the same aggregate principal amount, provided, however, that any conversion of a
LIBOR Rate Loan shall be made only on the last Business Day of the then current
Interest Period applicable to such LIBOR Rate Loan.
(g) Final Equipment Loans After Final Equipment Loan Conversion Date.
Provided no Event of Default shall have occurred, the Borrower may, on any
Business Day after the Final Equipment Loan Conversion Date, convert the
outstanding Final Converted Equipment Loan bearing interest as a Prime Rate Loan
or a Fixed Rate Loan into a Fixed Rate Loan or a Prime Rate Loan, respectively,
in the same aggregate principal amount, provided, however, that any conversion
of a Fixed Rate Loan shall be made only on the last Business Day of the then
current Interest Period applicable to such Fixed Rate Loan.
(h) Term Loan. Provided that no Event of Default shall have occurred, the
Borrower may, on any Business Day, convert the outstanding Term Loan bearing
interest as a Prime Rate Loan or a Fixed Rate Loan into a Fixed Rate Loan or a
Prime Rate Loan, respectively, in the same aggregate principal amount, provided,
however, that any conversion of a Fixed Rate Loan shall be made only on the last
Business Day of the then current Interest Period applicable to such Fixed Rate
Loan.
(i) Conversion of Loans. If the Borrower desires to convert a Loan, it shall
give Lender not less than three (3) Business Days' prior written notice
specifying the date of such conversion, the Loan to be converted, and if the
conversion is from a Prime Rate Loan to a LIBOR Rate Loan, or from a Prime Rate
Loan to a Fixed Rate Loan, the duration of the first Interest Period therefor.
Section 7.3. Prepayments.
(a) Optional Prepayments. Borrower may, at its option and upon thirty (30)
Business Days prior written notice (except with respect to the Revolving Loan in
which case no prior written notice shall be required), prepay any Loan, in whole
or in part, on the following conditions: (a) Borrower shall pay all accrued
interest on the principal being paid to the date of the prepayment and, in the
case of prepayments in full, all fees, charges, costs, expenses and other
amounts then due under any of the Loans, (b) in the case of a LIBOR Rate Loan or
Fixed Rate Loan, such LIBOR Rate Loan or Fixed Rate
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Loan shall only be prepaid on the last Business Day of the then current Interest
Period with respect thereto; (c) any partial prepayment of the Term Loan or a
Converted Equipment Loan shall be applied to principal installments due
thereunder in the inverse order of maturity and shall not relieve Borrower's
obligation to make regularly scheduled principal payments thereunder; (d) if
Borrower wishes to prepay and terminate the Revolving Loans prior to the
expiration of the Revolving Loan Term, Borrower must, at the option of Lender,
also prepay in full the other Loans and all other Obligations, including without
limitation, any amount or amounts due under Article VIII hereof; and (e) in its
notice, the Borrower shall specify the date of prepayment, the type of loan to
be prepaid and the specific amount to be prepaid on such loan. In the event that
any prepayment of a LIBOR Rate Loan or Fixed Rate Loan is required or permitted
on a date other than the last Business Day of the then current Interest Period
with respect thereto, the Borrower shall indemnify the Lender therefor in
accordance with Section 8.4 hereof.
(b) Mandatory Prepayments.
(i) Revolving Loans. If, at any time, the aggregate principal amount
of all outstanding Revolving Loans shall exceed the Revolving Loan
Borrowing Base, then any such excess amount shall, without limiting any
other rights or remedies of Lender hereunder, be immediately paid by
Borrower to the Lender.
(ii) Equipment Loan. If, at any time, the aggregate principal amount
of all outstanding Equipment Loans shall exceed the Equipment Loan
Borrowing Base, then any such excess amount shall, without limiting any
other rights or remedies of Lender hereunder, be immediately paid by
Borrower to the Lender.
Section 7.4. Closing Fees. On or before the date hereof, Borrower shall pay
or have paid to Lender all fees, expenses and other costs incurred by Lender in
connection with the closing of the extension of the Loans (including, without
limitation, all attorney's and other professionals' fees and expenses).
Section 7.5. Commitment Fee. On or before the date hereof, Borrower shall pay
or have paid to Lender a non-refundable commitment fee of $25,000 in connection
with the closing of the Loans.
Section 7.6. Unused Revolving Loan Fee. The Borrower shall pay to Lender a
fee computed at the per annum rate of one-quarter of one percentage point (.25%)
on the average daily unused portion of the Revolving Loan during the period for
which payment is made, payable monthly in arrears commencing on August 1, 1998
and continuing on the first Business Day of
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each and every month thereafter and on the last day of the Revolving Loan Term
or such earlier date as the Revolving Loan shall terminate.
Section 7.7. Early Termination Fee. In the event that during the first year
of the Revolving Loan Term (a) the Revolving Loan is terminated by the Borrower,
or (b) the Revolving Loan is terminated as a result of the occurrence of an
Event of Default, Borrower shall pay to Lender on the effective date of
termination, in addition to any other payments Borrower is required to make
hereunder, a termination fee equal to one percent (1%) of the maximum principal
amount of the Loans (the "Termination Fee"). It is understood that the
determination of the maximum principal amount of the Loans shall be made without
regard to the components of the Revolving Loan Borrowing Base based upon
Eligible Accounts and Eligible Inventory and the component of the Equipment Loan
Borrowing Base based upon Eligible Equipment. For example, for purposes of this
provision, on the date hereof the maximum principal amount of the Revolving Loan
is $3,000,000, the maximum principal amount of the Equipment Loan is $750,000
and the maximum principal amount of the Term Loan is $500,000 and the
Termination Fee would be $42,500.
ARTICLE VIII. Yield Protection
Section 8.1. Increased Costs. In the event that applicable law, treaty or
regulation or directive from any government, governmental agency or regulatory
authority, or any change therein or in the interpretation or application
thereof, or compliance by Lender with any request or directive (whether or not
having the force of law) from any central bank or government, governmental
agency or regulatory authority, shall:
(a) subject Lender to any tax of any kind whatsoever with respect to this
Agreement or any of the Loans (except taxes on the overall net income of Lender)
or change the basis of taxation of payments to Lender of principal, interest or
any other amount payable hereunder (except for changes in the rate of tax on the
overall net income of Lender);
(b) impose, modify or hold applicable any reserve, special deposit or similar
requirements against assets held by, or deposits or other liabilities in or for
the account of, advances or loans by, or other credit extending by, any office
of Lender, including without limitation, pursuant to Regulations of the Board of
Governors of the Federal Reserve System; or
(c) in the reasonable opinion of Lender, cause any Note, any Loan or this
Agreement to be included in any calculations used in the computation of
regulatory capital standards; or
(d) impose on Lender any other condition with respect to this Agreement, any
of the Notes or any of the Loans;
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and the result of any of the foregoing is to increase the cost to Lender of
making, renewing or maintaining any of the Loans (or any part thereof) by an
amount the Lender deems to be material or to reduce the amount of any payment
(whether of principal, interest or otherwise) with respect to any of the Loans
by an amount that Lender deems to be material, then, in any such case, Borrower
shall promptly pay Lender, upon its demand, such additional amounts as will
compensate Lender for such additional costs or such reduction as the case may be
(collectively, the "Additional Costs"). Lender shall certify the amount of such
Additional Costs to Borrower, and such certification, absent manifest error,
shall be deemed conclusive.
Section 8.2. Capital Adequacy Protection. If, after the date hereof, Lender
shall have determined that the adoption of any applicable law, governmental
rule, regulation or order regarding capital adequacy of banks or bank holding
companies, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Lender with any request or directive regarding capital adequacy (whether or
not having the force of law and whether or not failure to comply therewith would
be unlawful, so long as Lender believes in good faith that such has the force of
law or that the failure to so comply would be unlawful) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on Lender's capital as a consequence of Lender's obligations
hereunder to a level below that which Lender could have achieved but for such
adoption, change or compliance (taking into consideration Lender's policies with
respect to capital adequacy immediately before such adoption, change or
compliance and assuming that Lender's capital was fully utilized prior to such
adoption, change or compliance) by an amount deemed by Lender in its reasonable
judgment to be material, then, upon demand, Borrower shall immediately pay to
Lender, from time to time as specified by Lender, such additional amounts as
shall be sufficient to compensate Lender of such reduced return, together with
interest on each such amount from the date of such specification by Lender until
payment in full thereof at the highest rate of interest (other than the default
rate of interest) due on the Loans. A certificate of Lender setting forth the
amount to be paid to Lender shall, in the absence of manifest error, be deemed
conclusive. In determining such amount, Lender shall use any reasonable
averaging and attribution methods. Borrower may, however, avoid paying such
amounts for future rate of return reductions if, within the maximum borrowings
permitted herein, Borrower borrows such amounts as will cause Lender to avoid
any such future rate of return reductions which would otherwise be caused by
such changed capital adequacy requirements or Borrower agrees to a reduction in
the Loans to achieve the same result.
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Section 8.3. Basis for Determining Interest Rate Inadequate or Unfair. In the
event that the Lender shall have determined that (a) by reason of circumstances
affecting the Interbank LIBOR market, adequate and reasonable means do not exist
for determining LIBOR, or (b) Dollar deposits in the relevant amount and for the
relevant maturity are not available to the Lender in the Interbank LIBOR market
with respect to a proposed LIBOR Rate Loan, a proposed conversion of any Prime
Rate Loan to a LIBOR Rate Loan, or an outstanding LIBOR Rate Loan, Lender shall
give the Borrower prompt notice of such determination. If such notice is given
(i) any requested LIBOR Rate Loan shall be made as a Prime Rate Loan, unless the
Borrower gives the Lender three (3) Business Days' prior written notice that its
request for such borrowing is cancelled; (ii) any loan which was to have been
converted to a LIBOR Rate Loan shall be continued as a Prime Rate Loan; and
(iii) any outstanding LIBOR Rate Loan shall be converted to a Prime Rate Loan on
the last Business Day of the then current Interest Period for such LIBOR Rate
Loan. Until such notice has been withdrawn, the Lender shall have no obligation
to make LIBOR Rate Loans or maintain outstanding LIBOR Rate Loans, and the
Borrower shall not have the right to convert Prime Rate Loans to LIBOR Rate
Loans.
Section 8.4. Indemnity. The Borrower agrees to indemnify the Lender and to
hold the Lender harmless from any loss (including the additional costs referred
to in Section 8.1 above and any lost profits) or expense that it may sustain or
incur as a consequence of any prepayment or any Event of Default by the Borrower
in the payment of the principal of or interest on any LIBOR Rate Loan or Fixed
Rate Loan or as a consequence of a failure by the Borrower to complete a
borrowing of, a prepayment of or conversion of a LIBOR Rate Loan or Fixed Rate
Loan after notice thereof has been given, including (but not limited to) any
loss of profit or any interest payable by the Lender to lenders of funds
obtained by it in order to make or maintain its LIBOR Rate Loans or Fixed Rate
Loans hereunder (including, in the case of any Fixed Rate Loan, the Fixed Rate
Prepayment Premium).
Section 8.5. Survival. Unless and only if Lender shall have made prompt
demand upon Borrower for payment of amounts due under this Article VIII prior to
the date upon which full and final payment of the Revolving Loans and other
Obligations is made, the obligations and covenants of Borrower under this
Article VIII shall survive the termination of this Agreement and payment of the
Loans and other Obligations.
ARTICLE IX. Representations and Warranties
Section 9.1. Representations and Warranties. Borrower represents and warrants
to Lender that:
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(a) Good Standing and Qualification. It is duly organized, validly existing
and in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to own and operate its properties and to
carry on its business as presently conducted and is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
wherein the character of the properties owned or leased by it therein or in
which the transaction of its business therein makes such qualification
necessary, except where such failure to be so qualified would not have a
material adverse effect on the financial condition, assets or operations of the
Borrower.
(b) Corporate Authority. It has full power and authority to enter into this
Agreement and the other Financing Agreements to which it is a party, to make the
borrowings contemplated herein, to execute and deliver the Notes and the other
Financing Agreements to which it is a party, and to incur the obligations
provided for herein and therein, all of which have been duly authorized by all
necessary and proper corporate action. No other consent or approval or the
taking of any other action in respect of shareholders or of any public authority
is required as a condition to the validity or enforceability of this Agreement,
the Notes, the other Financing Agreements or any other instrument, document or
agreement delivered in connection herewith or therewith.
(c) Binding Agreements. This Agreement constitutes, and the Notes and the
other Financing Agreements executed and/or delivered in connection herewith or
therewith, when issued and delivered pursuant hereto for value received shall
constitute, valid and legally binding obligations of Borrower, enforceable in
accordance with their respective terms, except as enforcement may be limited by
principles of equity, bankruptcy, insolvency, or other laws affecting the
enforcement of creditors' rights generally.
(d) Litigation. Except as set forth on Schedule 9.1(d) attached hereto, (i)
there are no actions, suits or proceedings pending against Borrower before any
court or administrative agency, nor are there any (ii) actions, suits or
proceedings threatened, which, with respect to both (i) and (ii) individually or
in the aggregate, would materially and adversely affect the financial condition,
assets or operations of Borrower, nor are there any such actions, suits or
proceedings which question the validity of this Agreement, the Notes, any of the
other Financing Agreements or any action to be taken in connection with the
transactions contemplated hereby or thereby.
(e) No Conflicting Law or Agreements. The execution, delivery and performance
by Borrower of this Agreement, the Notes and each other Financing Agreement, as
the case may be, does not (i) violate any provision of its Certificate of
Incorporation or By-laws or any order, decree or judgment, or any material
provision of any statute, rule or regulation to which
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the Borrower may be subject; (ii) violate or conflict with, result in a breach
of or constitute (with notice or lapse of time, or both) a material default
under any shareholder agreement, stock preference agreement, mortgage, indenture
or other contract or undertaking to which it is a party, or by which any of its
properties may be bound; and (iii) result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any property or assets
of Borrower, except for the liens granted hereunder to Lender.
(f) Taxes. With respect to all of its taxable periods it has filed all tax
returns which are required to be filed and all federal, state, municipal,
franchise and other taxes shown on such filed returns have been paid or are
being diligently contested by appropriate proceedings and have been reserved
against, as required by generally accepted accounting principles, consistently
applied.
(g) Financial Statements. It has heretofore delivered to Lender its audited
annual balance sheet as of June 30, 1997, and the related statements of income,
retained earnings and cash flows for the fiscal year or period then ended. Each
of such statements is complete and correct in all material respects and fairly
presents its consolidated financial condition as of the dates and for the
periods referred to therein and has been prepared in accordance with generally
accepted accounting principles. There are no liabilities, direct or indirect,
fixed or contingent, of Borrower as of the dates of said balance sheets which
are not reflected in such statements or in the notes thereto, except as are not
required to be so reflected in accordance with GAAP.
(h) Adverse Developments. Except as set forth on Schedule 9.1(h) attached
hereto, since its unaudited balance sheet as of March 31, 1998, there has been
no material adverse change in its financial condition, business, operations,
affairs or prospects or in any of its properties or assets.
(i) Existence of Assets and Title Thereto. Except as set forth on Schedule
9.1(i) attached hereto, it has good and marketable title to all of its
properties and assets, including the properties and assets reflected in the
financial statements delivered in connection herewith. None of such properties
or assets are subject to any mortgage, pledge, lien, lease, encumbrance or
charge, except those permitted under the terms of this Agreement, pledges or
deposits in connection with or to secure workers' compensation, unemployment or
liability insurance, liens for property taxes not yet due and payable, and other
similar liens arising by operation of law and not in the aggregate material.
(j) Regulations G, T, U and X. The proceeds of the borrowings hereunder are
not being used and will not be used, directly or indirectly, for the purposes of
purchasing or carrying any margin stock in contravention, or which
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would cause any Lender to be in violation, of Regulations G, T, U or X
promulgated by the Board of Governors of the Federal Reserve System.
(k) Compliance. Except as set forth on Schedule 9.1(k) attached hereto, it is
not in default with respect to any order, writ, injunction or decree of any
court or of any federal, state, municipal or other governmental department,
commission, board, bureau, agency, authority or official, nor is it in violation
of any material law, statute, rule or regulation to which it is or any of its
properties are subject and it has not received notice of any such default from
any party and is not in default in the payment or performance of any of its
material obligations to any third parties or in the performance of any material
mortgage, indenture, lease, contract or other agreement to which it is a party
or by which any of its assets or properties may be bound.
(l) Leases and Subleases. It enjoys quiet and undisturbed possession under
all leases and subleases under which it is operating, and all of such leases and
subleases are valid and subsisting and not in default.
(m) Pension Plans.
(i) No fact, including but not limited to any "reportable event", as that
term is defined in Section 4043 of ERISA, exists in connection with any Plan
of any of the Companies under Sections 414(b), (c), (m), (n) and (o) of the
Internal Revenue Code of 1986, as amended (the "Code") which might constitute
grounds for termination of any such Plan by the Pension Benefit Guaranty
Corporation (the "PBGC") or for the appointment by the appropriate United
States District Court of a trustee to administer any such Plan. A list of all
of the Companies' respective Plans are attached hereto on Schedule 9.1(m)
attached hereto;
(ii) No "prohibited transaction" within the meaning of Section 406 of
ERISA or Section 4975 of the Code exists or will exist upon the execution and
delivery of this Agreement and the other Financing Agreements, or the
performance by the parties hereto or thereto of their respective duties and
obligations hereunder and thereunder;
(iii) Each of the Companies agrees to do all acts, including, but not
limited to, making all contributions necessary to maintain compliance with
ERISA or the Code, and agrees not to terminate any such Plan in a manner (or
do or fail to do any act) which could result in the imposition of a lien on
any of its properties pursuant to Section 4068 of ERISA;
(iv) None of the Companies sponsors or maintains, and has never
contributed to, and has not incurred any withdrawal liability under a
"multi-employer plan" as defined in Section 3 of ERISA and none of
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the Companies has any written or verbal commitment of any kind to establish,
maintain or contribute to any "multi-employer plan" under the Multi-employer
Pension Plan Amendment Act of 1980;
(v) None of the Companies has any unfunded liability in contravention of
ERISA and the Code;
(vi) Each and every Plan complies currently, and has complied in the past,
both as to form and operation, with its terms and with provisions of the Code
and ERISA, and all applicable regulations thereunder and all rules issued by
the Internal Revenue Service U.S. Department of Labor and the PBGC and as
such, is and remains a "qualified" plan under the Code;
(vii) No actions, suits or claims are pending (other than routine claims
for benefits) against any Plan, or the assets of any such Plan;
(viii) The Companies have performed all obligations required to be
performed by it under any Plan and the Companies are not in default, or in
violation of any Plan, and have no knowledge of any such default or violation
by any other party to any and all Plans;
(ix) No liability has been incurred by any of the Companies to the PBGC or
to participants or beneficiaries on account of any termination of a Plan
subject to Title IV of ERISA, no notice of intent to terminate a Plan has
been filed by (or on behalf of) any of the Companies pursuant to Section 4041
of ERISA and no proceeding has been commenced by the PBGC pursuant to Section
4042 of ERISA;
(x) The reporting and disclosure provisions of the Securities Act of 1933
and Securities Exchange Act of 1934 have been complied with for all such
Plans.
(n) Deferred Compensation Arrangements. Except as set forth in Schedule
9.1(n) attached hereto, none of the Companies have entered into deferred
compensation plans, arrangements or commitments (each, individually an
"Arrangement"). With respect to each such Arrangement:
(i) Such Arrangement complies currently, and has complied in the past,
both as to form and operation, with its terms and the provisions of the Code
and ERISA and all applicable laws, rules and regulations;
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(ii) The disclosure and reporting provisions of the Securities Act of 1933
and the Securities Exchange Act of 1934 have been satisfied;
(iii) Such Arrangement is legally valid and binding and is in full force
and effect;
(iv) The Companies have made all contributions required to be made under
such Arrangement and no contributions are currently due and owing thereunder;
(v) There are no actions, suits or claims pending (other than routine
claims for benefits) or, to the best of the Companies' knowledge, which could
be reasonably expected to be asserted against such Arrangement; and
(vi) The Companies have performed all obligations required to be performed
by it under such Arrangement and the Companies are not in default or in
violation of, and the Companies have no knowledge of a such default or
violation by any other party to such Arrangement.
Notwithstanding anything to the contrary contained herein, the
representations and warranties contained in this Section 9.1(n) are qualified in
their entirety by the disclosure set forth in Schedule 9.1(n) attached hereto.
(o) Chief Executive Office. Its chief executive office and principal place of
business, and the office where its books and records concerning Collateral are
kept, is as set forth in the first paragraph of this Agreement and in Schedule
9.1(o) attached hereto.
(p) Places of Business. It has no other places of business and locates no
Collateral, specifically including books and records, at any location other than
as set forth in Schedule 9.1(o) attached hereto. It shall maintain a full and
complete set of its books and records in its offices at the chief executive
office described in the immediately preceding paragraph.
(q) Contingent Liabilities. It is not a party to any suretyship, guaranty or
other similar type agreement, nor has it offered its endorsement to any
individual, concern, corporation or other entity or acted or failed to act in
any manner which would in any way create a contingent liability that does not
appear in the financial statements referred to hereinbefore.
(r) Contracts. After giving effect to the transactions contemplated upon the
closing of this Agreement, no material contract, governmental or otherwise, to
which it will be a party is subject to
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renegotiation, nor will it be in default of any material contract to which it is
a party.
(s) Unions and Pensions. It is not a party to any collective bargaining or
union agreement.
(t) Licenses. It has or, with respect to the conduct of its business in
California, has applied and reasonably expects to be granted, all material
licenses, permits and other permissions required by any government, agency or
subdivision thereof, or from any licensing entity to which Borrower may be
subject, necessary for the conduct of its business, all of which it represents
to be in good standing and in full force and effect.
(u) Collateral. After giving effect to the transactions contemplated upon the
closing of this Agreement, it will be the sole owner of the Collateral free and
clear of all liens, encumbrances, security interests and claims except the liens
granted to Lender hereunder and the security interests and liens listed on
Schedule 9.1(u) attached hereto. Borrower is fully authorized to grant a
security interest in each and every item of the Collateral to Lender. All
documents and agreements related to the Collateral shall be true and correct and
in all respects what they purport to be. All signatures and endorsements that
appear thereon shall be genuine and all signatories and endorsers shall have
full capacity to contract. None of the transactions underlying or giving rise to
the Collateral shall violate any applicable state or federal laws or
regulations. All documents relating to the Collateral shall be legally
sufficient under such laws or regulations and shall be legally enforceable in
accordance with their terms. Borrower agrees to defend the Collateral against
the claims of all persons other than Lender. Notwithstanding anything to the
contrary contained herein, the representations and warranties contained in this
Section 9.1(u) are qualified in their entirety by the disclosure set forth in
Schedule 9.1(u) attached hereto.
(v) Tradenames. It does not have any material tradenames other than as set
forth in Schedule 9.1(v) attached hereto.
(w) Financial Information. All financial information, including, but not
limited to information relating to the Receivables and Inventory, submitted by
it to Lender, whether previously or in the future, is and will be true and
correct in all material respects, and is and will be complete insofar as may be
necessary to render it a true and accurate depiction of the subject matter to
which it relates.
(x) Parent or Subsidiary Corporations. Borrower has no parent corporation and
has no Subsidiaries other than as set forth in Schedule 9.1(x) attached hereto.
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(y) Environmental Matters.
(i) It has obtained all permits, licenses and other authorizations which
are required under all Environmental Laws. It is in compliance with the terms
and conditions of all such permits, licenses and authorizations, and is also
in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code,
plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder.
(ii) No notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending or threatened by any
governmental or other entity with respect to any alleged failure by Borrower
to have any permit, license or authorization required in connection with the
conduct of its business or with respect to any Environmental Laws, including
without limitation, Environmental Laws relating to the generation, treatment,
storage, recycling, transportation, disposal or release of any Hazardous
Materials.
(iii) No oral or written notification of a release of any Hazardous
Material has been filed by or against Borrower and no property now or
previously owned, leased or used by it, including without limitation, the
Premises, is listed or proposed for listing on the Comprehensive
Environmental Response, Compensation and Inventory of Sites or National
Priorities List under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or on any similar state or federal
list of sites requiring investigation or cleanup.
(iv) There are no liens or encumbrances arising under or pursuant to any
Environmental Laws on any of the property or properties owned, leased or used
by it, including without limitation, any of the properties owned or leased by
it, and no governmental actions have been taken or are in process which could
subject any of such properties to such liens or encumbrances or, as a result
of which Borrower would be required to place any notice or restriction
relating to the presence of Hazardous Materials at any property owned by it
in any deed to such property.
(v) Neither it nor, to the best knowledge of Borrower, any previous owner,
tenant, occupant or user of any property owned, leased or used by Borrower,
has (i) engaged in or permitted any operations or activities upon or any use
or occupancy of such property, or any portion thereof, for the purpose of or
in any way involving the release, discharge,
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refining, dumping or disposal (whether legal or illegal, accidental or
intentional) of any Hazardous Materials on, under, or in or about such
property, or (ii) transported or had transported any Hazardous Materials to
such property except to the extent such Hazardous Materials are raw products
commonly used in day-to-day manufacturing operations of such property and, in
such case, in compliance with, all Environmental Laws; (iii) engaged in or
permitted any operations or activities which would allow the facility to be
considered a treatment, storage or disposal facility as that term is defined
in 40 CFR 264 and 265, (iv) engaged in or permitted any operations or
activities which would cause any of Borrower's properties to become subject
to The Connecticut Transfer Act. Section 22a-134 et sea. C.G.S., or (v)
constructed, stored or otherwise located Hazardous Materials on under, in or
about any such property except to the extent commonly used in day-to-day
operations of any such property and, in such case, in compliance with all
Environmental Laws. Further, to the best knowledge of Borrower, no Hazardous
Materials have migrated from other properties upon, about or beneath any such
property.
(z) Use of Proceeds. It will use the proceeds of the Loans solely (i) to
satisfy in full debt outstanding to First Union National Bank on the date
hereof, (ii) to satisfy in full debt outstanding to Emitzel Holdings, S.A. on
the date hereof and, to the extent not satisfied in full prior to the date
hereof, debt outstanding to Xxxxx X. Xxxxx and Harbour Investment Corporation on
the date hereof, and (iii) for working capital purposes.
ARTICLE X. Conditions of Lending
Section 10.1. Conditions of the Initial Loan. Subject to the terms hereof,
the obligation of Lender to make the first Initial Revolving Loan, the first
Initial Equipment Loan and the Term Loan under this Agreement is subject to the
fulfillment of the following conditions precedent at the time of the execution
of this Agreement:
(a) Notes. Lender shall have received a duly executed Revolving Loan Note,
Term Loan Note and Equipment Loan Note drawn to its order.
(b) Evidence of Corporate Action. Lender shall have received certified copies
of all corporate action (in form and substance satisfactory to Lender) taken by
Borrower to authorize the execution, delivery and performance of this Agreement,
the Notes, and the other Financing Agreements to which it is a party, and the
borrowings to be made hereunder and thereunder, together with true copies of
Borrower's Certificate of Incorporation and By-laws and such other papers as
Lender or its counsel may require.
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(c) Opinion of Counsel. Lender shall have received a favorable written
opinion of counsel for Borrower, accompanied by such supporting documents as
Lender or its counsel may require.
(d) Life Insurance Assignment. Lender shall have received a duly executed
life insurance assignment as collateral (the "Life Insurance Assignment") on the
life of Xxxxx X. Xxxxx, which shall be in an amount equal to $500,000. The Life
Insurance Assignment shall be in form, scope and substance satisfactory to
Lender.
(e) Lessor's Agreements. Borrower shall cause to be delivered to Lender
lessor's agreements with respect to the Premises leased or subleased by Borrower
(the "Lessor's Agreements") in form, scope and substance satisfactory to Lender.
(f) UCC-1 Financing Statements. Lender shall have received from Borrower duly
executed UCC-1 financing statements and such other documents as Lender deems
necessary or proper to perfect, upon filing of such UCC-1 financing statements
or such other documents, the security interest in the Collateral, all of which
shall be in form, scope and substance satisfactory to Lender and its counsel.
(g) Notices of Assignment and Post Office Box Change of Address Cards. Lender
shall have received notices of assignment and a post office change of address
cards from Borrower, which shall be in form, scope and substance satisfactory to
Lender and its counsel.
(h) CII Agreement. Lender shall have received an agreement from Connecticut
Innovations, Inc., in form, scope and substance satisfactory to Lender (the "CII
Agreement").
(i) Patent Security Agreement. Lender shall have received a Patent Security
Agreement, in form, scope and substance satisfactory to Lender (the "Patent
Security Agreement").
(j) Trademark Security Agreement. Lender shall have received a Trademark
Security Agreement, in form, scope and substance satisfactory to Lender (the
"Trademark Security Agreement").
(k) Lockbox Agreement. Lender shall have received a Lockbox Agreement, in
form, scope and substance satisfactory to Lender (the "Lockbox Agreement").
(l) Further Documents. Lender shall have received such further documents,
instruments and agreements as Lender may request, including without limitation,
title insurance or an attorneys' certificate of title,
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landlord's agreements, warehouse agreements, and evidence that the insurance
policies and certificates evidencing adequate insurance and coverage on
Borrower's assets are currently in full force and effect, continue to name
Lender as loss payee or additional insured, as the case may be, and that the
premiums are current.
Section 10.2. Conditions of Further Loans. In addition to the conditions in
Section 10.1 above, Lender shall make no further Revolving Loans or Equipment
Loans (collectively, the "Further Loans") unless the following conditions shall
exist or have been satisfied by Borrower at the time any Further Loan is
requested:
(a) Absence of Termination or Default. Lender shall not have terminated the
Revolving Loan facility or the Equipment Loan facility hereunder, nor shall a
Defaulting Event exist or have occurred.
(b) Compliance Certificates. On the date of each Revolving Loan or Equipment
Loan hereunder and after giving effect thereto, Borrower shall have delivered to
Lender, upon Lender's request, a certificate executed by its chief financial
officer which states, among other things, that: (i) Borrower has complied, and
is then in compliance, with all the terms, covenants and conditions of this
Agreement and the other Financing Agreements to which it is a party; (ii) there
exists no Event of Default or Defaulting Event; and (iii) the representations
and warranties contained herein and in the other Financing Agreements are true
and correct with the same effect as though such representations and warranties
had been made at the time of each Further Loan.
(c) Revolving Loan Borrowing Base and Equipment Loan Borrowing Base. The
indebtedness of Borrower by virtue of the making of any Revolving Loan or
Equipment Loan shall not exceed the Revolving Loan Borrowing Base or the
Equipment Loan Borrowing Base, respectively. Borrower shall not request any
Revolving Loan or Equipment Loan if the effect of such Revolving Loan or
Equipment Loan shall be to cause the aggregate balance of all Revolving Loans or
Equipment Loans to exceed the Revolving Loan Borrowing Base or the Equipment
Loan Borrowing Base, respectively.
(d) Further Documents. Lender shall have received such further documents,
instruments and agreements as Lender may reasonably request.
ARTICLE XI. Covenants
A. Affirmative Covenants.
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Borrower covenants and agrees that from the date hereof until payment and
performance in full of all Obligations, and until the termination of this
Agreement, unless Lender otherwise consents in writing, Borrower shall:
Section 11.1. Financial Statements. Deliver or caused to be delivered to
Lender: (a) within thirty (30) days after the close of each fiscal month of
Borrower, internally prepared financial statements of Borrower including balance
sheets as of the close of such month, and statements of income and retained
earnings for such month and for that portion of the fiscal year-to-date then
ended, all of which financial statements shall be prepared on a basis consistent
with that of the preceding period or containing disclosure of the effect on
financial condition or results of operations, and which shall be certified by
the chief financial officer of Borrower as being accurate and fairly presenting
the financial condition of Borrower; (b) within one hundred five (105) days
after the close of each fiscal year of Borrower, audited financial statements
including a balance sheet as of the close of such fiscal year and statements of
income, stockholders' capital and cash flow for the year then ended, both
prepared in conformity with generally accepted accounting principles, applied on
a basis consistent with that of the preceding year or containing disclosure of
the effect on financial condition or results of operations of any change in the
application of accounting principles during the year, and accompanied by a
report thereon containing an unqualified opinion of a recognized certified
public accounting firm selected by Borrower and reasonably satisfactory to
Lender (it being hereby agreed and understood that McGladrey & Xxxxxx is an
accounting firm satisfactory to Lender), which opinion shall state that such
financial statements fairly present the financial condition and results of
operations of Borrower in accordance with generally accepted accounting
principles; (c) at least thirty (30) days prior to the close of each fiscal year
of Borrower, internally prepared drafts of annual projections of Borrower, in
form, scope and substance satisfactory to Lender; (d) within fifteen (15) days
of the close of each month, monthly aging of accounts receivable and accounts
payable, inventory status reports, ineligible calculations and reconciliations,
all in form, scope and substance satisfactory to Lender; (e) contemporaneously
with the delivery to shareholders or governmental agencies, copies of all
reports and information delivered to shareholders or filed with governmental
agencies, including without limitation, Forms 10-K and 10-Q; (f) promptly upon
Lender's written request, such other information about the financial condition
and operations of Borrower as Lender may, from time to time, reasonably request;
and (g) promptly upon becoming aware of any Event of Default, or the occurrence
or existence of a Defaulting Event, notice thereof in writing. Notwithstanding
anything to the contrary contained herein, the requirements herein with respect
to interim financial statements shall be subject to normal and customary
year-end audit adjustments and the fact that footnotes sufficient to satisfy the
requirements of the Securities and Exchange Act of 1934, as amended, need not be
as extensive as what may be required by generally accepted accounting
principles.
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Section 11.2. Insurance and Endorsements. (a) Keep its properties and cause
the Premises to be insured against fire and other hazards (pursuant to so-called
"All Risk" coverage) in amounts and with companies satisfactory to Lender to the
same extent and covering such risks as is customary in the same or a similar
business; maintain public liability coverage, including without limitation,
products liability coverage, against claims for personal injuries or death; and
maintain all worker's compensation, employment or similar insurance as may be
required by applicable law; and (b) all insurance shall contain such terms, be
in such form, and be for such periods reasonably satisfactory to Lender, and be
written by carriers duly licensed by the appropriate governmental authorities of
each state where any Collateral is located. Without limiting the generality of
the foregoing, such insurance must provide that it may not be canceled without
thirty (30) days' prior written notice to Lender. Borrower shall cause Lender to
be endorsed as a loss payee with a long form Lender's Loss Payable Clause, in
form and substance acceptable to Lender on all such insurance. In the event of
failure to provide and maintain insurance as herein provided, Lender may, at its
option, provide such insurance and charge the amount thereof to the Revolving
Loan Account. Borrower shall furnish to Lender certificates or other
satisfactory evidence of compliance with the foregoing insurance provisions.
Borrower hereby irrevocably appoints Lender as its attorney-in-fact, coupled
with an interest to make proofs of loss and claims for insurance, and to receive
payments of the insurance proceeds and execute and endorse all documents, checks
and drafts in connection with payment of such insurance. Any insurance proceeds
received by Lender shall be applied to the Obligations in such order and manner
as Lender shall determine in its sole discretion.
Section 11.3. Tax and Other Liens. Comply in all material respects with all
statutes and government regulations and pay all taxes, assessments, governmental
charges or levies, or claims for labor, supplies, rent and other obligations
made against it or their property which, if unpaid, might become a lien or
charge against Borrower or its properties, except for any of the foregoing being
contested in good faith and against which adequate reserves have been
established in accordance with generally accepted accounting principles.
Section 11.4. Place of Business; Locations of Collateral. Maintain its chief
place of business and chief executive offices at the address set forth in the
introductory sentence hereof and its other places of business as set forth in
Schedule 11.4 hereto unless Borrower shall have given Lender thirty (30) days'
prior written notice of each change in such place of business. Locate no
Collateral at any location other than the Premises; provided, however, that (a)
Borrower may locate inventory (other than work-in-process at customers'
premises) at locations other than the Premises which in the aggregate at any
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one time does not have a value of more than $100,000, and (b) Borrower may
locate work-in-process at customers' premises.
Section 11.5. Inspections. Allow Lender by or through any of its officers,
attorneys, and/or accountants designated by it, for the purpose of ascertaining
whether or not each and every provision hereof and of any related agreement,
instrument and document is being performed, to enter the offices and plants of
Borrower to examine or inspect any of the properties, books and records or
extracts therefrom, to make copies of such books and records or extracts
therefrom and to make complete environmental studies and/or investigations, and
to discuss the affairs, finances and accounts thereof with Borrower all at such
reasonable times, upon reasonable notice and as often as Lender or any
representative of Lender may reasonably request.
Section 11.6. Litigation. Promptly advise Lender of the commencement or
threat of litigation, including arbitration proceedings and any proceedings
before any governmental agency (but excluding product liability claims which are
either fully covered by insurance or adequately covered by insurance and which
are not likely to have a material adverse effect on the business, assets or
condition (financial or otherwise) of Borrower), which is instituted against
Borrower and is reasonably likely to have a materially adverse effect upon the
condition financial, operating or otherwise, of Borrower.
Section 11.7. Maintenance of Existence. Maintain its corporate existence and
comply with all valid and applicable statutes, rules and regulations, and
maintain its properties in good repair, working order and operating condition.
Borrower shall immediately notify Lender of any event causing material loss in
the value of their assets.
Section 11.8. Inventory. Allow Lender to examine and inspect the Inventory at
reasonable times and intervals and upon reasonable notice. Borrower shall
immediately notify Lender of any event causing material loss or depreciation in
value of Inventory and the amount of such loss or depreciation.
Section 11.9. ERISA. Immediately notify Lender of any event which causes it
not to be in compliance with ERISA in all material respects.
Section 11.10. Notice of Certain Events. Give prompt written notice to Lender
of:
(a) any material dispute that may arise between Borrower and any governmental
regulatory body or law enforcement agency;
(b) any labor controversy resulting or likely to result in a strike or work
stoppage against Borrower;
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(c) any proposal by any public authority to acquire the assets or business of
Borrower;
(d) the location of any Collateral other than at Borrower's places of
business disclosed in this Agreement (other than Collateral in transit in the
ordinary course of Borrower's business);
(e) any proposed or actual change of the name, identity or legal form of
organization of Borrower;
(f) any circumstance or event by virtue of which or in connection with which
Borrower may have incurred or may incur any liability, expense or responsibility
under any Environmental Law, including, without limitation: (i) any Release of
any Hazardous Material required to be reported to any federal, state or local
governmental authority instrumentality or agency under any applicable
Environmental Law; (ii) any and all written communications with respect to
claims or suits under any applicable Environmental Law or any Release of
Hazardous Material required to be reported to any federal, state or local
governmental authority, instrumentality or agency; (iii) any remedial action
taken by Borrower or any other person in response to (A) any Hazardous Material
on, under or about the properties or assets of Borrower, the existence of which
may give rise to a claim or suit resulting in a material change of Borrower's
business operations or financial condition, or (B) any claim or suit resulting
in a material change of Borrower's business operations or financial condition;
(iv) Borrower's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of Borrower's business premises which may cause
such premises to be in violation of any Environmental Law or to be subject to
any restrictions on the ownership, occupation, transferability or use thereof
under any Environmental Law and (v) any request for information from any
federal, state or local governmental authority, instrumentality or agency that
indicates such entity is investigating Borrower's potential responsibility for a
Release of Hazardous Material;
(g) any other matter which has resulted or is reasonably likely to result in
a material adverse change in the financial condition or operations of Borrower;
(h) any information received by Borrower with respect to any Receivable that
may materially affect the value thereof or the rights and remedies of Lender
with respect thereto; and
(i) any action, suit or claim pending or which is threatened or asserted
against Borrower.
Section 11.11. Defaults. Upon the occurrence of an Event of Default or of a
Defaulting Event, give prompt written notice of such occurrence
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to Lender signed by the president or chief financial officer of Borrower
describing such occurrence and the action, if any, being taken to cure the Event
of Default or Defaulting Event.
Section 11.12. Duties. Borrower has complied and will continue to comply with
any and all material federal, state and local laws affecting its business,
including, but not limited to, payment of all federal and state taxes with
respect to sales to Account Debtors by Borrower and disclosures in connection
therewith. Borrower agrees to indemnify Lender against and hold Lender harmless
from, all claims, actions and losses, including reasonable attorney's fees and
costs incurred by Lender arising from any contention, whether well founded or
otherwise, that there has been a failure to comply with such laws.
Section 11.13. Collateral Duties. Do whatever Lender may reasonably request
from time to time by way of obtaining, executing, delivering and filing
financing statements, assignments, landlord's or mortgagee's waivers, warehouse
agreements and other notices and amendments and renewals of any of the
foregoing, and Borrower will take any and all reasonable steps and observe such
formalities as Lender may reasonably request, in order to create and maintain a
valid and enforceable first lien upon, pledge of, and first priority security
interest in, any and all of the Collateral. Lender hereby is authorized to file
financing statements without the signature of Borrower and to execute and file
such financing statements on behalf of Borrower as specified by the Uniform
Commercial Code to perfect or maintain its security interest in all of the
Collateral. All reasonable charges, expenses and fees Lender may incur in filing
any of the foregoing, together with reasonable costs and expenses of any lien
search required by Lender, and any taxes relating thereto, shall be charged to
the Revolving Loan Account and added to the Obligations.
Section 11.14. Audit and Appraisals by Lender; Fees. Permit Lender by or
through any of its officers, employees or other representatives to audit the
books and records of Borrower and to conduct or cause to be conducted appraisals
of Borrower's assets at such times, upon reasonable notice, and in such manner
and detail as Lender deems reasonable. Without limiting the generality of the
foregoing, Lender shall be allowed to verify the Receivables and Inventory of
Borrower and to confirm with Account Debtors the validity and amount of
Receivables. Lender is hereby authorized to charge any such audit and appraisal
fees and expenses to the Revolving Loan Account. Notwithstanding the foregoing,
so long as no Event of Default has occurred, Lender shall not conduct more than
two (2) audits or appraisals per calendar year and Borrower shall not be
obligated to reimburse or pay to Lender in excess of $15,000 per calendar year
in the aggregate for fees and expenses incurred in connection with any such
audit or appraisal.
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Section 11.15. Bank Accounts. Maintain all of its bank accounts, including
without limitation, its operating and depository accounts, at Lender; provided
however, the Borrower shall be permitted to have operating and depository
accounts not maintained by Lender so long as either (i) the aggregate amount on
deposit therein (not including for payroll) does not exceed $100,000 at any one
time and so long as it is necessary for Borrower to have such accounts because
Lender does not maintain a branch convenient to Borrower for the purposes of
such account or (ii) the Borrower has on deposit with Lender an aggregate amount
at least equal to the aggregate outstanding principal amount of the Loans.
Section 11.16. Year 2000 Compatibility. Borrower shall take all action
necessary to assure that Borrower's computer based systems are able to operate
and effectively process data including dates on and after January 1, 2000. At
the request of Lender, Borrower shall provide Lender with assurance acceptable
to Lender of Borrower's Year 2000 compatibility.
B. Negative Covenants.
The Borrower covenants and agrees that from the date hereof until payment and
performance in full of all Obligations and until the termination of this
Agreement, unless Lender otherwise consents in writing, the Borrower shall not:
Section 11.17. Encumbrances. Incur or permit to exist any lien, mortgage,
charge or other encumbrance against any of its properties or assets, whether now
owned or hereafter acquired, except: (a) liens required or expressly permitted
by this Agreement; (b) pledges or deposits in connection with or to secure
worker's compensation, unemployment or liability insurance; (c) those listed on
Schedule 9.1(u) attached hereto; and (d) purchase money liens securing financing
for machinery and equipment purchased in the ordinary course of business as
permitted pursuant to Section 11.18(b) below.
Section 11.18. Limitation on Indebtedness. Create, incur or guarantee any
indebtedness or obligation for borrowed money (including without limitation, any
reimbursement obligations for any letter of credit issued by any financial
institution) or issue or sell any of its obligations to any lender, except: (a)
as set forth on Schedule 11.18 attached hereto; and (b) purchase money financing
and/or capitalized lease obligations for machinery and equipment purchased or
leased in the ordinary course of business in the aggregate principal amount of
not greater than $350,000 in any fiscal year.
Section 11.19. Contingent Liabilities. Assume, guarantee, endorse or
otherwise become liable upon the obligations of any person, firm or corporation,
or enter into any purchase or option agreement or other arrangement having
substantially the same effect as such a guarantee, except
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by the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business.
Section 11.20. Consolidation or Merger. Merge into or consolidate with or
into any entity.
Section 11.21. Loans, Advances, Investments. Except as set forth on Schedule
11.21 attached hereto, make or permit to exist any loans or advances to, or
purchase any stock, other securities or evidences of indebtedness of, or make or
permit to exist any investment (including without limitation the acquisition of
stock of a corporation), or acquire any assets or any other interest whatsoever,
in any other person; provided, however, that Borrower shall be permitted to make
investments in short-term direct obligations of the United States Government so
long as such obligations mature not more than one (1) year after the date of
acquisition thereof and that Lender continues to have a duly perfected first
lien security interest in such obligations in form, scope and substance
satisfactory to Lender; and provided further that the Borrower shall be
permitted to make loans to its officers, directors and shareholders in the
ordinary course of business in the aggregate principal amount of not greater
than $25,000 at any time, and advances for travel expenses incurred in the
ordinary course of Borrower's business. Lender acknowledges that Borrower has
advised it that Borrower may, in the future, desire to acquire interests in
other persons and, in connection with any such acquisition, Borrower may request
financing from Lender to fund any such acquisition. Lender agrees that it shall
not unreasonably withhold its consent to, and the use of Revolving Loan proceeds
for, any such investment or acquisition with respect to another person so long
as (a) at the time of any such investment or acquisition no Event of Default or
Defaulting Event shall have occurred or would occur after giving effect thereto
(including, without limitation, of any financial covenant set forth in Article
XIC below), and (b) the interests proposed to be acquired are with respect to an
industry which is similar, related or complementary to Borrower's industry.
Lender further agrees that it will consider any request from Borrower for
consent to, and financing for, any such investment or acquisition that does not
satisfy (a) or (b) above, it being agreed and understood that the granting of
any such consent or commitment to finance shall be in the sole discretion of
Lender.
Section 11.22. Acquisition of Stock of Borrower; Dividends. Except as may be
permitted pursuant to the terms of the CII Agreement, purchase, acquire, redeem
or retire, or make any commitment to purchase, acquire, redeem or retire, any of
the capital stock of Borrower, whether now or hereafter outstanding, or declare
or pay any dividend, or make any distribution to any of its stockholders.
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Section 11.23. Sale and Lease of Assets. Except as set forth on Schedule
11.23 attached hereto, sell or lease any of the assets of the Borrower, except
for sales of inventory in the ordinary course of business consistent with past
practices and on an arms-length basis and except for assets having a book value
of not more than $750,000 and used solely in a business operation of the
Borrower that the Borrower has elected to discontinue, provided that, Borrower
receives at least $500,000 for such assets, at least forty percent (40%) of
which is received in cash and no more than sixty percent (60%) of which is
received in the form of a promissory note which will be assigned to Lender
pursuant to documents in form, scope and substance satisfactory to Lender in its
sole discretion.
Section 11.24. Name Changes. Change its name from that set forth in this
Agreement.
Section 11.25. Prohibited Transfers. Transfer, in any manner, either directly
or indirectly, any cash, property, or other asset to any parent or any of its
affiliates or Subsidiaries, other than sales made in the ordinary course of
business and for fair consideration on terms no less favorable than if such sale
had been an arms-length transaction between Borrower or such Subsidiary and an
unaffiliated entity.
Section 11.26. No Management/Ownership Change. Suffer Xxxxx X. Xxxxx to: (a)
cease to be the President of Borrower and performing such duties normally
associated with such position, or (b) cease to be the beneficial owner of
280,000 shares of stock of, and warrants in, Borrower currently beneficially
owned by Xxxxx X. Xxxxx.
Section 11.27. Leasebacks. Lease any real estate or other capital asset from
any lessor who shall have acquired such property from Borrower.
Section 11.28. CII Agreement. Amend the CII Agreement or
make payment of any sums to CII in violation of the CII Agreement.
C. Financial Covenants.
Borrower agrees and covenants that from the date hereof until the payment and
performance in full of all Obligations, and until the termination of this
Agreement, Borrower shall not:
Section 11.29. Tangible Net Worth. Permit its Tangible Net Worth to be less
than (a) $4,500,000 on June 30, 1998 and at the end of each and every fiscal
quarter thereafter through and including Xxxxx 00, 0000, (x) $5,500,000 on June
30, 1999 and at the end of each and every fiscal quarter thereafter through and
including March 31, 2000, and (c) $6,500,000 at the end of each and every fiscal
quarter thereafter.
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Section 11.30. Debt to Worth Ratio. Permit its Debt to Worth Ratio to be less
than (a) 1.5 to 1.0 on June 30, 1998 and at the end of each and every fiscal
quarter thereafter through and including Xxxxx 00, 0000, (x) 1.25 to 1.0 on June
30, 1999 and at the end of each and every fiscal quarter thereafter through and
including March 31, 2000, and (c) 1.0 to 1.0 at the end of each and every fiscal
quarter thereafter.
Section 11.31. Debt Service Coverage Ratio. Permit its Debt Service Coverage
Ratio for each period of four (4) consecutive fiscal quarters to be less than
(a) 1.5 to 1.0 on June 30, 1998 and at the end of each and every fiscal quarter
thereafter through and including Xxxxx 00, 0000, (x) 1.75 to 1.0 on June 30,
1999 and at the end of each and every fiscal quarter thereafter through and
including March 31, 2000, and (c) 2.0 to 1.0 at the end of each and every fiscal
quarter thereafter.
Section 11.32. Leverage Ratio. Permit its Leverage Ratio for each period of
four (4) consecutive fiscal quarters to be more than 3.0 to 1.0 on June 30, 1998
and at the end of each and every fiscal quarter thereafter.
Section 11.33. EBIT to Interest Ratio. Permit its EBIT to Interest Ratio for
each period of four (4) consecutive fiscal quarters to be less than 3.0 to 1.0
on June 30, 1998 at the end of each and every fiscal quarter thereafter.
ARTICLE XII. Collateral
Section 12.1. Grant. To secure the prompt payment and performance of each and
all of the Obligations, the Borrower pledges, assigns, transfers and grants to
Lender a continuing first priority security interest in the following property
of Borrower, whether now owned or hereafter acquired or arising (the
"Collateral"):
(a) All accounts and accounts receivable related to or arising from the sale
or lease of inventory or rendition of services by Borrower (the "Accounts") and
all other accounts, bank accounts, contracts, contract rights, Notes, documents,
chattel paper, instruments, acceptances, drafts or other forms of obligations
and receivables (collectively with the Accounts, the "Receivables"), whether or
not the same are listed on any schedules assignments or reports furnished to
Lender from time to time, and whether such Receivables are now existing or are
created or arise at any time hereafter, together with all goods, inventory and
merchandise returned by or reclaimed by or repossessed from customers wherever
such goods, inventory and merchandise are located, and all proceeds thereto
including without limitation, proceeds of insurance thereon and all guaranties,
securities, and liens which Borrower may hold for the payment of any such
Receivables, including without limitation, all
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rights of stoppage in transit, replevin and reclamation and all other rights and
remedies of an unpaid vendor or lienor, and any liens held by Borrower as a
mechanic, contractor, subcontractor, processor, materialman, machinist
manufacturer, artisan, or otherwise;
(b) All documents, instruments, documents of title, general intangibles,
policies and certificates of insurance, guaranties, securities chattel paper,
deposits, tax returns, proceeds of insurance, proceeds of an eminent domain or
condemnation award, cash, liens or other property, which are now or may
hereinafter be in the possession of Borrower or as to which Borrower may now or
hereafter control possession by documents of title or otherwise, including, but
not limited to, all property allocable to unshipped orders relating to
Receivables and Inventory;
(c) All books, records, customer lists, supplier lists, ledgers, evidences of
shipping, invoices, purchase orders, sales orders and all other evidences of
Borrower's business records, including all cabinets, drawers, etc. that may hold
the same; computer records, lists, software, programs, wherever located, all
whether now existing or hereafter arising or acquired;
(d) All of Borrower's inventory, whether now owned or hereafter acquired
(collectively, the "Inventory"), including without limitation : (i) all goods
manufactured or acquired for sale or lease, and any piece goods, raw materials,
work in process and finished merchandise, findings or component materials, and
all supplies, goods, incidentals, office supplies, packaging materials, and any
and all items including machinery and equipment used or consumed in the
operation of the business of Borrower or which contribute to the finished
product or to the, sale, promotion and shipment thereof, in which Borrower may
now or at any time hereafter have an interest, whether or not such inventory is
listed in this Agreement on any reports furnished to Lender from time to time;
(ii) all inventory whether or not the same is in transit or in the constructive,
actual or exclusive occupancy or possession of Borrower or is held by Borrower
or by others for the Accounts, including without limitation, all goods covered
by purchase orders and contracts with suppliers and all goods billed and held by
suppliers; (iii) all inventory which may be located on the premises of Borrower
or of any carrier, forwarding agents, truckers, warehousemen, vendors, selling
agents or third parties; (iv) all general intangibles relating to or arising out
of inventory; (v) all proceeds and products of the foregoing resulting from the
sale, lease or other disposition of inventory, including cash, accounts
receivable, other non-cash proceeds and trade-ins; and (vi) with respect to
after-acquired inventory, the security interest shall be deemed to be a purchase
money security interest;
(e) All general intangibles, including without limitation, tax refunds,
investment property, proceeds of insurance eminent domain awards,
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condemnation proceeds, and patents, copyrights, tradenames, trademarks,
applications therefor, and licenses to any patent, copyright, trademark, or
tradename that Borrower now owns, has the right to use or may hereafter own or
acquire the right to use;
(f) All equipment, machinery, appliances, and furniture and fixtures, now
existing or hereafter arising, wherever located, and all contracts, contract
rights and chattel paper arising out of any lease of any of the foregoing;
(g) All other collateral in which Borrower may hereafter grant to Lender a
security interest; and
(h) All renewals, substitutions, replacements, additions, accessions,
proceeds, and products of any and all of the foregoing, including without
limitation, all proceeds of credit, fire and other insurance and also including,
without limitation, rents and profits resulting from the temporary use of the
Collateral.
Provided, however, that notwithstanding anything in this Section 12.1 to the
contrary: (A) the priority of Lender's lien in chattel paper shall be subject to
the proper perfection thereof; (B) the Lender's lien in Borrower's intellectual
property is subject to existing licenses of certain thereof to Raychem
corporation, and to existing licenses of certain thereof to Automation
Electronics, Inc.; and (C) the Collateral shall not include any of Borrower's
right, title and interest in, to and under any of the following: (i) Borrower's
inventory of finished goods and work-in-process of its Ultravalve microprocessor
controlled bath and shower valves product line (the "Product Line"), including
the version of the Memrysafe valve used in the Product Line (which is not
currently used by Borrower for any other purpose), as well as the raw materials
owned by Borrower that are used exclusively for the Product Line; (ii) the
Borrower's registered trademark Ultravalve, with U.S. Registration No. 2,122,691
and a registration date of December 23, 1997; (iii) the Borrower's U.S. patent
no. Des. 313,761, dated January 15, 1991, actuator plate for temperature control
valve; (iv) the following intellectual property of the Borrower, to the extent
(and only to the extent) that they relate exclusively to the Product Line or
Borrower's business of manufacturing and selling the Product Line: (a) all trade
dress and logos, including any goodwill associated therewith; (b) all
copyrightable works, all copyrights, and any applications, registrations and
renewals in connection therewith; (c) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, schematics, diagrams, test procedures,
specifications, customer and supplier lists, catalogs, pricing and cost
information, and business and marketing plans and proposals); (d) all other
similar proprietary rights; and (e) all copies and tangible embodiments thereof
(in whatever form or medium);
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(v) the specified tangible assets of Borrower set forth on Schedule 12.1 hereto;
and (vi) Borrower's right, title and interest in, to and under (x) the
Agreement, dated February 22, 1995, between the Borrower and American Standard,
Inc., (y) the IAPMO Research and Testing, Inc. Certificate of Listing relating
to the Product Line, and (z) the Underwriters Laboratories Inc. listings
relating to the Product Line.
ARTICLE XIII. Events of Default
Section 13.1. Events of Default. Any and all Obligations, including without
limitation, the Obligations arising pursuant to or in connection with the Loans,
shall, at the option of Lender and notwithstanding any time or credit allowed by
any Notes or agreement, become immediately due and payable if any one or more of
the following events (collectively, "Events of Default" and individually, an
"Event of Default") shall occur:
(a) Borrower's failure to pay principal, interest or, within three (3) days
of when due, any other sum due hereunder or under the Notes;
(b) Borrower's failure to pay or perform when due any other covenant, duty,
indebtedness, liability or obligation arising under this Agreement, the Notes or
any of the other Financing Agreements, or any other Obligation (provided,
however, that the Borrower's failure to perform any of the obligations set forth
in Sections 11.3, 11.6, 11.7, 11.9, 11.12, 11.13 and 11.16 shall not constitute
an Event of Default unless and until such failure continues for thirty (30) days
or more);
(c) the making by Borrower of any misrepresentation of a material fact to
Lender;
(d) the filing, making or issuance of any lien, levy, seizure, attachment,
garnishment, injunction, execution, tax lien or judgment upon or against
Borrower or any of the Collateral, or any other property or assets of Borrower
which is not discharged or removed within a period of thirty (30) days from the
date of such filing, making or issuance;
(e) any of the following of, by, or involving Borrower: insolvency (failure
to pay debts as they mature or where the fair value of assets is not in excess
of liabilities); business failure; appointment of a receiver or custodian;
assignment for the benefit of creditors; calling of a meeting of creditors;
appointment of a committee of creditors, or liquidating banks, or offering of a
composition extension to creditors; or the commencement of any proceedings under
any bankruptcy or insolvency law;
(f) Borrower's failure to keep the Collateral insured against loss by fire or
otherwise for the full insurable value thereof with companies and for
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coverages (including Lender's Long Form Loss Payable Endorsement) acceptable to
Lender and making the loss, if any, payable to Lender;
(g) the loss, revocation or failure to renew any license and/or permit now
held or hereafter acquired by Borrower which materially adversely affects the
ability of Borrower to continue their operations as presently conducted;
(h) the declaration of a default under any obligation of Borrower for
borrowed money to any other creditor;
(i) the receipt by Lender of a Default Notice from Raychem Corporation (as
defined in the Lessor's Agreement from Raychem Corporation);
(j) the occurrence of any event or circumstance with respect to the Borrower
such that Lender shall reasonably and in good faith believe that the prospect of
payment of all or any part of Obligations or the performance by the Borrower
under this Agreement, or any other agreement between the Lender and the
Borrower, is impaired; or
(k) the receipt by Lender of a Put Notice from Connecticut Innovations, Inc.
(as defined in the CII Agreement).
Upon the occurrence of any Event of Default, at the option of Lender: (x) any
and all Obligations, including without limitation, the Obligations arising from
or in connection with the Loans, shall become immediately due and payable, and
(y) Borrower's eligibility to request any further Loans shall automatically and
immediately terminate, without presentment, demand, protest, notice of protest
or other notice or requirements of any kind, all of which Borrower expressly
waives. Notwithstanding the foregoing sentence, if any Event of Default under
clause (e) occurs, the acceleration of the Obligations and termination of
Borrower's eligibility to request further Loans shall be automatic.
At any time after an Event of Default, Lender may proceed to enforce the
rights of Lender whether by suit in equity or by action at law, whether for
specific performance of any covenant or agreement contained in this Agreement,
the Notes or the other Financing Agreements, or in aid of the exercise of any
power granted in either this Agreement or the Notes or any other Financing
Agreement, or it may proceed to obtain judgment or any other relief whatsoever
appropriate to the enforcement of such rights, or proceed to enforce any legal
or equitable right which Lender may have by reason of the occurrence of any
Event of Default hereunder.
ARTICLE XIV. Collection of Receivables
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Section 14.1. Lockbox Agreement. All Receivables shall be directed to and
deposited in a lockbox established by Lender pursuant to the Lockbox Agreement.
Section 14.2. Computation. Collections of Receivables shall be credited to
the Obligations of Borrower; provided, however, that all credits shall be
conditional credits subject to collection and that returned items at Lender's
option, may be charged to Borrower; and further provided that for purposes of
the computation of interest, items shall not be deemed to be collected until
three (3) days after their actual receipt by Lender.
ARTICLE XV. Returned Merchandise
Section 15.1. Procedures. The Borrower shall promptly notify Lender of any
credits, adjustments or disputes arising concerning the goods or services
represented by Receivables. Borrower will immediately pay Lender from its own
funds (and not from the proceeds of Receivables), for application to the
Revolving Loans, an amount equal to any credit or adjustment made to any
Eligible Accounts; provided, however, that so long as Borrower is not in default
hereunder, such payment need not be made if Borrower shall have, after making
such credit or adjustment, sufficient Receivables to maintain the aggregate
outstanding balance of the Revolving Loans under the Revolving Loan Borrowing
Base.
ARTICLE XVI. Rights and Remedies of Lender
Section 16.1. Remedies of Lender. Upon the occurrence of any Event of
Default, Lender shall have in any jurisdiction where enforcement of this
Agreement, the Notes or any other Financing Agreement is sought, in addition to
all other rights and remedies which Lender may have under law and equity, the
following rights and remedies, all of which may be exercised with or without
further notice to Borrower and without a prior judicial or administrative
hearing, which notice and hearing are expressly waived: to occupy any of
Borrower's premises for up to six (6) months rent free for the purposes of
liquidating Collateral, including, without limitation, conducting an auction
thereon; to enforce or foreclose the liens and security interests created under
this Agreement or under any other agreement relating to Collateral by any
available judicial procedure or without judicial process; to enter any premises
where any Collateral may be located for the purpose of taking possession or
removing the same; to sell, assign, lease, or otherwise dispose of Collateral or
any part thereof, either at public or private sale, in lots or in bulk, for
cash, on credit or otherwise, with or without representations or warranties, and
upon such terms as shall be acceptable to Lender, all at Lender's sole option
and as Lender in its sole discretion may deem advisable; to bid or become
purchaser at any such sale if public; and, at the option of Lender to apply or
be
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credited with the amount of all or any part of the Obligations owing to Lender
against the purchase price bid by Lender at any such sale.
Section 16.2. Specific Powers. Lender may at any time, before (only with
respect to clauses (v), (vii) and (x) of this Section 16.2) or after the
occurrence of an Event of Default and during the continuance of an Event of
Default, at Lender's sole discretion: (i) give notice of assignment to any
Account Debtor (it being agreed and understood that Lender may at any time,
before or after demand for payment of the Revolving Loan or the occurrence of an
Event of Default, verify receivables directly with Account Debtors); (ii)
collect Receivables directly and charge, or cause to be charged, the collection
costs and expenses to the Revolving Loan Account; (iii) collect receivables
submitted by Borrower to Lender for collection and charge, or cause to be
charged, the collection costs and expenses to the Revolving Loan Account; (iv)
settle or adjust disputes and claims directly with Account Debtors for amounts
and upon terms which Lender considers advisable, and credit, or cause to be
credited, the Revolving Loan Account with the net amounts received in payment of
Receivables; (v) exercise all other rights granted in this Agreement and the
other Financing Agreements; (vi) receive, open and dispose of all mail addressed
to Borrower and notify the Post Office authorities to change the address for
delivery of Borrower's mail to an address designated by Lender; (vii) endorse
the name of Borrower on any checks or other evidence of payment that may come
into possession of Lender and on any invoice, freight or express xxxx, xxxx of
lading or other document; (viii) in the name of Borrower or otherwise, demand,
xxx for, collect and give acquittance for any and all monies due or to become
due on Receivables; (ix) compromise, prosecute or defend any action, claim or
proceeding concerning Receivables; and (x) do any and all things necessary and
proper to carry out the purposes contemplated in this Agreement, the other
Financing Agreements and any other agreement between the parties. Neither Lender
nor any person acting as its representative hereunder shall be liable for any
acts or omissions or for any error of judgment or mistake of fact or law, except
for gross negligence or willful misconduct. Borrower agrees that the powers
granted hereunder, being coupled with an interest, shall be irrevocable so long
as any Obligation remains unsatisfied. Notwithstanding the foregoing, it is
understood that Lender is under no duty to take any of the foregoing actions and
that after having made demand upon the Account Debtors for payment, Lender shall
have no further duty as to the collection or protection of Receivables or any
income therefrom and no further duty to preserve any rights pertaining thereto,
other than the safe custody thereof in the event Lender takes possession
thereof.
Section 16.3. Duties After Default. After the occurrence and during the
continuance of an Event of Default, Borrower will, at Lender's request, assemble
all Collateral and make it available to Lender at places which Lender may
reasonably select, whether at the premises of Borrower or elsewhere, and will
make available to Lender all premises and facilities of
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Borrower for the purpose of Lender taking possession of Collateral or of
removing or putting the Collateral in salable form. In the event that Lender
elects to exercise its right to take possession and control of any Collateral,
and any goods called for in any sales order, contract, invoice or other
instrument or agreement evidencing or purporting to give rise to any Receivable
shall not have been delivered or shall be claimed to be defective by any
customer, Lender shall have the right in its sole discretion to use and deliver
to such customer any goods of Borrower to fulfill such order, contract or the
like so as to make good any such Receivable. If any Collateral shall require
repairing, maintenance, preparation, or the like, or is in process or other
unfinished state, Lender shall have the right, but shall not be obligated, to
effectuate such repair, maintenance, preparation, processing or completion of
manufacturing for the purpose of putting the same in such salable form as Lender
shall deem appropriate, provided that Lender shall nonetheless have the right to
sell or dispose of such Collateral without such processing. The net cash
proceeds resulting from the collection, liquidation, sale, lease or other
disposition of Collateral shall be applied first to the expenses (including all
attorneys' and professionals' fees) of retaking, holding, storing, processing
and preparing for sale, selling, collecting, liquidating and the like such
collateral, and then to the satisfaction of all Obligations, (application as to
any particular Obligations or against principal or interest to be at Lender's
sole discretion), and then, upon full and final payment of the Obligations, and
unless otherwise prohibited by court order or law, to Borrower, it being agreed
that if any such payment made to Lender is recovered from or repaid by Lender in
whole or in part in any bankruptcy, insolvency or similar proceeding instituted
by or against Borrower, this Agreement automatically shall be reinstated without
any further action by Borrower and Lender. Borrower shall be liable to Lender
and shall pay to Lender on demand any deficiency which may remain after such
sale, disposition, collection or liquidation of Collateral.
Section 16.4. Cumulative Remedies. The enumeration of Lender's rights and
remedies set forth in this Article XVI is not intended to be exhaustive and the
exercise by Lender of any right or remedy hereunder shall not preclude the
exercise of any other rights or remedies, all of which shall be cumulative and
shall be in addition to any other right or remedy given hereunder or under any
other agreement between the parties or which may now or hereafter exist in law
or at equity or by suit or otherwise. No delay or failure to take action on the
part of Lender in exercising any right, power or privilege shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude other or further exercise thereof or the exercise of
any other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between Borrower and Lender or its
employees shall be effective to change, modify or discharge any provision of
this Agreement or to constitute a waiver of any Event of Default.
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ARTICLE XVII. Term
Section 17.1. Term and Termination.
(a) Revolving Loan. Unless sooner terminated by Lender as a result of the
occurrence of an Event of Default, Borrower's eligibility to request Revolving
Loans shall commence on the date hereof and shall continue for a period through
and including June 30, 2001 (the "Revolving Loan Term"). Borrower's eligibility
to request Revolving Loans may be extended after the Revolving Loan Term only
with the express written consent of both Borrower and Lender. At the end of the
Revolving Loan Term, Borrower shall pay the entire balance of the Revolving
Loans, the Equipment Loans, the Converted Equipment Loans, the Term Loan and all
other outstanding Obligations. Further, upon termination of the Revolving Loan
facility all of the rights, interests and remedies of Lender and Obligations of
Borrower shall survive and Borrower shall have no right to receive, and Lender
shall have no obligation to make, any further Loans.
(b) Term Loan. Unless sooner terminated by Lender as a result of the
occurrence of an Event of Default (including without limitation the failure to
pay the Revolving Note upon demand or on its due date), the Term Loan shall be
due and payable in fifty-nine (59) consecutive monthly installments of principal
in the amount of $8,333.33 (plus interest in arrears) commencing on August 1,
1998 and continuing on the first day of each and every month thereafter through
and including June 1, 2003, and (b) one final installment of $8,332.53, plus all
accrued and unpaid interest, principal and any other sums due hereunder or under
the Term Loan Note on June 30, 2003.
(c) Initial Equipment Loans. Unless sooner terminated by Lender as a result
of the occurrence of an Event of Default (including without limitation the
failure to pay the Revolving Note on its due date), Borrower's eligibility to
request Initial Equipment Loans shall commence on the date hereof and shall
continue for a period until the Initial Equipment Loan Conversion Date and
Borrower shall thereafter have no right to receive, and Lender shall have no
obligation to make, any further Initial Equipment Loans.
(d) Subsequent Equipment Loans. Unless sooner terminated by Lender as a
result of the occurrence of an Event of Default (including without limitation
the failure to pay the Revolving Note on its due date), Borrower's eligibility
to request Subsequent Equipment Loans shall commence on the Initial Equipment
Loan Conversion Date and shall continue for a period until the Subsequent
Equipment Loan Conversion Date and Borrower shall thereafter have no right to
receive, and Lender shall have no obligation to make, any further Subsequent
Equipment Loans.
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(e) Final Equipment Loans. Unless sooner terminated by Lender as a result of
the occurrence of an Event of Default (including without limitation the failure
to pay the Revolving Note on its due date), Borrower's eligibility to request
Final Equipment Loans shall commence on the Subsequent Equipment Loan Conversion
Date and shall continue for a period through and including the Final Equipment
Loan Maturity Date and Borrower shall thereafter have no right to receive, and
Lender shall have no obligation to make, any further Final Equipment Loans.
(f) Initial Converted Equipment Loans. Unless sooner terminated by Lender as
a result of the occurrence of an Event of Default (including without limitation
the failure to pay the Revolving Note on its due date), the Initial Converted
Equipment Loans shall be due and payable in thirty-six (36) consecutive equal
monthly installments of principal, each equal to 1/36th of the outstanding
principal balance of the Equipment Loan Note as of the Initial Equipment Loan
Conversion Date (plus interest in arrears), commencing on July 1, 1999 and
continuing on the first day of each and every month thereafter through and
including June 30, 2002. Notwithstanding the foregoing, principal, accrued and
unpaid interest and any other amounts due hereunder or under the Initial
Converted Equipment Loan Note shall be due and payable in full on June 30, 2002.
(g) Subsequent Converted Equipment Loans. Unless sooner terminated by Lender
as a result of the occurrence of an Event of Default (including without
limitation the failure to pay the Revolving Note on its due date), the
Subsequent Converted Equipment Loans shall be due and payable in thirty-six (36)
consecutive equal monthly installments of principal, each equal to 1/36th of the
outstanding principal balance of the Equipment Loan Note as of the Subsequent
Equipment Loan Conversion Date (plus interest in arrears), commencing on July 1,
2000 and continuing on the first day of each and every month thereafter through
and including June 1, 2003. Notwithstanding the foregoing, principal, accrued
and unpaid interest and any other amounts due hereunder or under the Subsequent
Converted Equipment Loan Note shall be due and payable in full on June 30, 2003.
(h) Final Converted Equipment Loans. Unless the Revolving Loan is not renewed
or unless the Final Converted Equipment Loan is sooner terminated by Lender as a
result of the occurrence of an Event of Default (including without limitation
the failure to pay the Revolving Note on its due date), the Final Converted
Equipment Loans shall be due and payable in thirty-six (36) consecutive equal
monthly installments of principal, each equal to 1/36th of the outstanding
principal balance of the Equipment Loan Note as of the Final Equipment Loan
Conversion Date (plus interest in arrears), commencing on July 1, 2001 and
continuing on the first day of each and every month thereafter through and
including June 1, 2004. Notwithstanding the
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foregoing, principal, accrued and unpaid interest and any other amounts due
hereunder or under the Final Converted Equipment Loan Note shall be due and
payable in full on June 30, 2004.
(i) Termination of Obligations. Upon full, final and indefeasible payment of
the Obligations to Lender, all rights and remedies of Borrower and Lender
hereunder shall cease, so long as any payment so made to Lender and applied to
the Obligations is not thereafter recovered from or repaid by Lender in whole or
in part in any bankruptcy, insolvency or similar proceeding instituted by or
against Borrower, whereupon this Agreement shall be automatically reinstated
without any further action by Borrower and Lender and shall continue to be fully
applicable to such Obligations to the same extent as though the payment so
recovered or repaid had never been originally made on such Obligations.
ARTICLE XVIII. Miscellaneous
Section 18.1. Indemnification.
(a) In consideration of Lender's execution and delivery of this Agreement and
Lender's making of the Loans hereunder and in addition to all other obligations
of Borrower under this Agreement, Borrower hereby agrees to defend, protect,
indemnify and hold harmless Lender, its successors, assigns, officers,
directors, employees and agents (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement)
(individually, each an "Indemnitee" and collectively, the "Indemnitees") from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages and expenses in connection therewith
(irrespective of whether any such Indemnitees is a party to any action for which
indemnification hereunder is sought), and including reasonable attorneys' fees
and disbursements as and when incurred (collectively, the "Indemnifiable
Liabilities") incurred by the Indemnitees or any of them as a result of, or
arising out of, or relating to (i) the execution, delivery, performance or
enforcement of this Agreement and the other Financing Agreements and any
instrument, document or agreement executed pursuant hereto to any of the
Indemnitees; (ii) Lender's status as lender to, or creditor of, Borrower; or
(iii) the operation of Borrower's business from and after the date hereof,
including, without limitation, those arising under any Environmental Law. To the
extent that the foregoing undertaking by Borrower may be unenforceable for any
reason, Borrower shall make the maximum contribution to the payment and
satisfaction of each of the Indemnifiable Liabilities which is permissible under
applicable law.
(b) The Borrower hereby covenants and agrees at all times to indemnify, hold
harmless and defend the Indemnitees, whether as secured party
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in possession or as successor in interest to Borrower as owner of any personal
property assets located on the real property of Borrower by virtue of any action
taken by Lender pursuant to the Financing Agreements, the Uniform Commercial
Code (as in effect in any applicable jurisdiction) or otherwise, from and
against any and all liabilities, losses, damages, costs, expenses, penalties,
fines, causes of actions, suits, claims, demands or judgments, including,
without limitation, attorneys' fees and expenses, suffered or incurred in
connection with: (i) the Environmental Laws, including, without limitation,
liens or claims of any federal, state or municipal government or
quasi-governmental agency or any third person, whether arising under any
Environmental Law or any other federal, state or municipal law or regulation;
(ii) any spill or contamination affecting the Premises or any other property
owned, leased, controlled or used by Borrower, including, without imitation, any
Hazardous Substance or other waste-like or toxic substances located on, under,
emanating from or relating to the Premises or such property from and on and
after the date hereof or any portion of any thereof or any property contiguous
to the Premises or such property from and after the date hereof, and including,
without limitation, any loss of value of the Premises or such property as a
result of any such spill or contamination; and (iii) the direct or indirect
installation, use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal or presence of any Hazardous Substance
on under or about the Premises or any other property owned, leased, controlled
or used by Borrower or any portion of any thereof, from and including all
consequential damages, the costs of any required or necessary repair, cleanup or
detoxification, and the costs of the preparation and implementation of any
closure, remedial or other required plans; provided, however, that Borrower
shall have no obligation to indemnify the Indemnitees under this Section 18.1(b)
for claims or losses resulting solely from the Indemnitees' Parties own
negligent action while on the Premises or property of Borrower. Further, is
expressly agreed and understood that the mere fact that an Indemnitee has been
declared an "owner" or "operator" (as such term is defined in any Environmental
Law) resulting from such Indemnitee having taking possession of any of the
Collateral (without any negligence on the part of such Indemnitee) shall not
exonerate Borrower from any claim by such Indemnitee or any other Indemnitee
seeking indemnification.
Section 18.2. Payment Set-Aside. To the extent that Borrower makes a payment
or payments to Lender (whether hereunder, under the Notes, or under the other
Financing Agreements) or Lender enforces its security interests or rights or
exercises its right of setoff; and such payment or payments or the proceeds of
such enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to Borrower, a
trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action) in connection with any bankruptcy or
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similar proceeding involving Borrower, then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.
Section 18.3. Set-off. The Borrower hereby grants to Lender a lien and right
of setoff for all its liabilities to Lender upon and against all its deposits,
credits, collateral and property now or hereafter in the possession or control
of Lender or in transit to Lender. Lender may, upon the occurrence of any Event
of Default or Defaulting Event or both, apply or exercise the right of set off
against any or all of the foregoing or any part of any thereof against any
liability of Borrower to Lender, regardless whether such liability is matured or
unmatured.
Section 18.4. Covenants to Survive; Binding Agreement. All covenants,
agreements, warranties and representations made herein, in the Notes, in the
other Financing Agreements, and in all certificates or other documents of
Borrower shall survive the advances of money made by Lender to Borrower
hereunder and the delivery of the Notes and the other Financing Agreements, and
all such covenants, agreements, warranties and representations shall be binding
upon and inure to the benefit of Lender and its successors and assigns, whether
or not so expressed.
Section 18.5. Cross-Collateralization. All Collateral which Lender may at any
time acquire from Borrower or from any other source in connection with
Obligations arising under this Agreement and the other Financing Agreements
shall constitute collateral for each and every Obligation, without apportionment
or designation as to particular Obligations and all Obligations, however and
whenever incurred, shall be secured by all Collateral however and whenever
acquired, and Lender shall have the right, in its sole discretion, to determine
the order in which Lender's rights in or remedies against any Collateral are to
be exercised and which type of Collateral or which portions of Collateral are to
be proceeded against and the order of application of proceeds of Collateral as
against particular Obligations.
Section 18.6. Cross-Default. Borrower acknowledges and agrees that an Event
of Default and/or Defaulting Event under any one of the Financing Agreements
shall constitute an Event of Default or Defaulting Event under each of the other
Financing Agreements.
Section 18.7. Amendments and Waivers. Neither this Agreement, the Notes, the
other Financing Agreements, nor any term, covenant or condition hereof or
thereof may be changed, waived, discharged, modified or terminated except by a
writing executed by the parties hereto or thereto. No failure on the part of
Lender to exercise, and no delay in exercising, any right,
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remedy or power hereunder or under the Notes or the other Financing Agreements
shall preclude any other or future exercise thereof, or the exercise of any
other right remedy or power.
Section 18.8. Notices. All notices, requests, consents, demands and other
communications hereunder shall be in writing and shall be mailed by first class
mail to the respective parties to this Agreement to the address set forth in the
introductory sentence hereof.
Section 18.9. Transfer of Lender's Interest. Borrower hereby agrees that
Lender, in its sole discretion, may freely sell, assign or otherwise transfer
participations, portions, co-lender interests or other interests in all or any
portion of the indebtedness, liabilities or obligations arising in connection
with or in any way related to the financing transactions of which this Agreement
is a part provided that such transferee is a recognized financial institution.
In the event of any such transfer, the transferee may, in Lender's sole
discretion, have and enforce all the rights, remedies and privileges of Lender.
Borrower consents to the release by Lender to any potential transferee of any
and all information (including, without limitation, financial information)
pertaining to Borrower as Lender, in its sole discretion, may deem appropriate.
If such transferee so participates with Lender in making loans or advances
hereunder or under any other agreement between such Lender and Borrower,
Borrower hereby grants to such transferee and such transferee shall have and is
hereby given a continuing lien and security interest in any money, securities or
other property of Borrower in the custody or possession of such transferee,
including the right of setoff under circumstances consistent with this
Agreement, to the extent of such transferee's participation in the Obligations
of Borrower to Lender.
Section 18.10. Waivers.
(a) THE BORROWER ACKNOWLEDGES THAT THE LOANS EVIDENCED HEREBY ARE COMMERCIAL
TRANSACTIONS AND WAIVES ITS RIGHT TO NOTICE AND HEARING UNDER CHAPTER 903a OF
THE CONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE OR
FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH LENDER MAY DESIRE TO
USE, AND FURTHER WAIVES ITS RIGHTS TO REQUEST THAT LENDER POST A BOND, WITH OR
WITHOUT SURETY, TO PROTECT BORROWER AGAINST DAMAGES THAT MAY BE CAUSED BY ANY
PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY LENDER. THE BORROWER FURTHER WAIVES
DILIGENCE, DEMAND, PRESENTMENT FOR PAYMENT, NOTICE OF NONPAYMENT, PROTEST AND
NOTICE OF ANY RENEWALS OR EXTENSIONS.
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(b) THE BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION
OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO
THE FINANCING TRANSACTIONS OF WHICH THIS AGREEMENT IS A PART AND/OR THE
ENFORCEMENT OF ANY OF LENDER'S RIGHTS, INCLUDING, WITHOUT LIMITATION, TORT
CLAIMS. THE BORROWER FURTHER ACKNOWLEDGES THAT LENDER HAS NOT REPRESENTED TO
BORROWER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
(c) THE BORROWER ACKNOWLEDGES THAT IT MAKES THE FOREGOING WAIVERS IN CLAUSE
(a) AND CLAUSE (b) ABOVE, KNOWINGLY, VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER
CONSIDERATION OF THE RAMIFICATIONS OF SUCH WAIVERS WITH ITS ATTORNEYS.
Section 18.11. Section Headings; Severability; Entire Agreement. Section and
subsection headings have been inserted herein for convenience only and shall not
be construed as part of this Agreement. Every provision of this Agreement, the
Notes and the other Financing Agreements is intended to be severable; if any
term or provision of this Agreement, the Notes, the other Financing Agreements,
or any other document delivered in connection herewith shall be invalid, illegal
or unenforceable for any reason whatsoever, the validity, legality and
enforceability of the remaining provisions hereof or thereof shall not in any
way be affected or impaired thereby. All Exhibits and Schedules to this
Agreement shall be annexed hereto and shall be deemed to be part of this
Agreement. This Agreement, the other Financing Agreements, and the Exhibits and
Schedules attached hereto and thereto embody the entire agreement and
understanding between Borrower and Lender and supersede all prior agreements and
understandings relating to the subject matter hereof unless otherwise
specifically reaffirmed or restated herein.
Section 18.12. Governing Law, Notice and Service of Process, Pleadings and
Other Papers. This Agreement and the other Financing Agreements, and all
transactions, assignments and transfers hereunder and thereunder, and all the
rights of the parties, shall be governed as to validity, construction,
enforcement and in all other respects by the laws of the State of Connecticut
(but not its conflicts of law provisions). Borrower hereby designates and
appoints, without power of revocation, the Secretary of the State of the State
of Connecticut as Borrower's agent upon whom may be served all process,
pleadings, notices or other papers which may be served upon it as a result of
any of its Obligations under this Agreement or other Financing Agreements.
Borrower agrees that the Superior Court for the Judicial District of
Hartford/New Britain or the United States District Court for the District of
Connecticut shall have jurisdiction to hear and determine any claims or disputes
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pertaining to the financing transactions of which this Agreement is a part
and/or to any matter arising or in any way related to this Agreement or any
other agreement between Lender and Borrower, and Borrower expressly submits and
consents in advance to such jurisdiction in any action or proceeding.
Section 18.13. Miscellaneous Provisions Regarding Borrower's Documents.
(a) Lender acknowledges that, pursuant to Section 7(b) of the Amended and
Restated Asset Purchase Agreement, dated as of May 10, 1996, between Borrower
and Raychem Corporation, a Delaware corporation ("Raychem"), as amended (the
"Raychem Agreement"), Borrower is required (i) to keep books and records
relating to products which Borrower manufactures and which Raychem manufactured
prior to the Closing (as defined in the Raychem Agreement) for a period of seven
(7) years, and (ii) to maintain all documents purchased from Raychem under the
Raychem Agreement relating in any way to the matters subject to the lawsuit
entitled Intrinsic v. Raychem Corporation during the pendency of such litigation
(including all appeals thereof). In the event that Lender forecloses upon any
such books, records and/or documents at a time when the aforesaid requirements
are still in force, Lender agrees to take possession of such books, records
and/or documents, and/or to sell or otherwise convey such books, records and/or
documents, or cause such books, records and/or documents to be sold or otherwise
conveyed, subject to the aforesaid restrictions.
(b) Lender acknowledges that, pursuant to the definition of the term
"Documents" contained in Section 1 of the Raychem Agreement, Borrower may not
have title to certain documents in Borrower's possession due to the inability of
Raychem to transfer such documents to Borrower without the prior written consent
of various third parties. Lender agrees and acknowledges that its lien upon
Borrower's assets hereunder only covers documents to the extent that Borrower in
fact has any right, title and/or interest in and to the same, and that Lender
will have no more interest in any such documents upon an exercise of any of its
foreclosure or similar rights hereunder than Borrower currently has to such
documents. Borrower represents and warrants to Lender that the aforesaid
documents (i) do not relate to the Borrower's accounts receivable, inventory
and/or machinery and equipment, and (ii) are not material to the Borrower's
respective assets, businesses and/or prospects.
Section 18.14. Waiver. Without limiting the generality of the waivers
contained in this Agreement or in any other Financing Agreement, Borrower
irrevocably waives any right to claim that Lender is not dealing fairly with
Borrower, or for any other reason has any liability to Borrower, regardless of
the status of the business, financial condition, or prospects of Borrower, on
account of Lender taking action to repossess or collect upon the Collateral or
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otherwise to collect the Obligations as a result of receiving a Put Notice from
Connecticut Innovations, Inc.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as of the date first above written.
Witnesses: MEMRY CORPORATION
_____________________________________ By:_______________________________
_____________________________________ Its
Witnessed: XXXXXXX BANK
_____________________________________ By________________________________
_____________________________________ Its
STATE OF CONNECTICUT )
) ss. Hartford
COUNTY OF HARTFORD )
Before me, the undersigned, this ____ day of June, 1998, personally appeared
___________________, known to me to be the ____________ of MEMRY CORPORATION and
that he as such officer, signer and sealer of the foregoing instrument,
acknowledged the execution of the same to be his free act and deed individually
and as such officer, and the free act and deed of said corporation.
In Witness Whereof; I hereunto set my hand.
_______________________________________________
Notary Public
My Commission Expires:
Commissioner of the Superior Court
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STATE OF CONNECTICUT )
) ss. Hartford
COUNTY OF HARTFORD )
Before me, the undersigned, this ____ day of June, 1998 personally appeared
____________, known to me to be the ___________________ of XXXXXXX BANK, and
that he as such officer, signer and sealer of the foregoing instrument,
acknowledged the execution of the same to be his free act and deed individually
and as such officer, and the free act and deed of said corporation.
In Witness Whereof; I hereunto set my hand.
_______________________________________________
Notary Public
My Commission Expires:
Commissioner of the Superior Court
