FORBEARANCE AND LOAN RESTRUCTURE AGREEMENT
between
NUCLEAR RESEARCH CORPORATION, as Borrower
and
XXXX X. XXXXXXX and XXXXXXX X. XXXXXXX, as Sureties
and
FIRST UNION NATIONAL BANK, successor by merger to CoreStates
Bank, N.A. and Bucks County Bank & Trust Company, as Lender
April 29, 1999
TABLE OF CONTENTS
-----------------
PAGE
----
1. Definitions ........................................................... 2
2. Accuracy of Background/Forbearance by Bank ............................ 4
3. Validity of Loan Documents ............................................ 4
4. Outstanding Indebtedness/Termination of Credit Facilities ............. 4
5. Minimum Required Payments ............................................. 5
6. Repayment and Restructure of Loans .................................... 5
7. Confirmation of Collateral and Security Interests ..................... 6
8. Representations and Warranties ........................................ 7
9. Covenants ............................................................. 8
10. Closing Date .......................................................... 8
11. Conditions Precedent to this Agreement ................................ 8
12. Events of Default ..................................................... 9
13. No Waiver; Cumulative Remedies ........................................ 10
14. Expedited Hearing Regarding Relief from Automatic Stay ................ 10
15. Indemnity ............................................................. 10
16. Additional Documents and Cooperation .................................. 10
17. Amendments and Waivers ................................................ 11
18. Notices ............................................................... 11
19. Joint and Several Obligations ......................................... 11
20. Ratification of Loan Documents ........................................ 11
21. Advice of Counsel and Others .......................................... 11
22. Integration ........................................................... 12
23. No Marshalling ........................................................ 12
24. Brokerage ............................................................. 12
25. Negation of Partnership ............................................... 12
26. Confidentiality ....................................................... 12
27. Recision of Payments .................................................. 12
28. Miscellaneous ......................................................... 12
29. Consent to Jurisdiction ............................................... 13
30. Waiver of Jury Trial .................................................. 13
31. Confession of Judgment ................................................ 13
(i)
FORBEARANCE AND LOAN RESTRUCTURE AGREEMENT
------------------------------------------
THIS AGREEMENT is made this 29th day of April, 1999, between NUCLEAR
RESEARCH CORPORATION, a Pennsylvania business corporation with its chief
executive office and principal place of business at 000 Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000 (the "Borrower"), XXXX X. XXXXXXX and XXXXXXX X.
XXXXXXX, husband and wife with a residence address at 0 Xxxxxx Xxxxx, Xxxxxxxx,
Xxxxxxxxxxxx 00000 (individually a "Surety" and, collectively, the "Sureties")
and FIRST UNION NATIONAL BANK, successor by merger to CoreStates Bank, N.A. and
Bucks County Bank and Trust Company, a national banking association with offices
located at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 (the
"Bank").
BACKGROUND
----------
A. The Borrower and the Bank are currently parties to various loan and
other credit agreements pursuant to which the Bank has provided various loans
and other extensions of credit to the Borrower, including (without limitation):
(i) a line of credit in the original principal amount of Five Million Five
Hundred Thousand Dollars ($5,500,000), which was subsequently increased to Six
Million Dollars ($6,000,000) pursuant to an Amendment Agreement dated May 20,
1998 (the "Line of Credit"); (ii) a term loan in the original principal amount
of One Million Eight Hundred Thousand Dollars ($ 1,800,000), originally extended
on or about January 14, 1997 (the "Term Loan"); (iii) a second term loan in the
original principal amount of Three Hundred Thousand Dollars ($300,000),
originally extended on or about August 21, 1995 (the "Second Term Loan"); and
(iv) a facility for the issuance of letters of credit, the repayment of which is
evidenced in part by a demand note in the original principal amount of Seven
Hundred Seventy-Four Thousand Three Hundred and Three Dollars ($774,303)
executed and delivered by the Borrower to the Bank on or about March 13, 1997
(the "Letter of Credit Facility"). The Line of Credit, the Term Loan, the Second
Term Loan, the Letter of Credit Facility, and any other loans or other
extensions of credit made by the Bank to the Borrower are referred to,
collectively, as the Loans.
B. Repayment of the Line of Credit is evidenced in part by that certain
Master Demand Note dated January 14, 1997, in the original principal amount of
$5,500,000, as amended by an Allonge dated May 20, 1998 increasing the maximum
principal amount of Line of Credit to $6,000,000 (the "Line of Credit Note"),
the repayment of the Term Loan is evidenced in part by that certain promissory
note dated January 14, 1997, in the original principal amount of $1,800,000 (the
"Term Note"), the repayment of the Letter of Credit Facility is evidenced in
part by that certain master demand note dated March 13, 1997, in the original
principal amount of $774,303.03 (the "Demand Note") and the repayment of the
Second Term Loan is evidenced in part by that certain promissory note dated
August 21, 1995 in the original principal amount of $300,000 (the "Second Term
Note"). The Loans, each of the foregoing promissory notes and all other
indebtedness and obligations of the Borrower to the Bank is secured by, among
other things, a first priority security interest in all of the Borrower's
present and future accounts, inventory, equipment, contract rights, instruments,
investment property, documents, chattel paper and general intangibles, and all
proceeds and products of, and
replacements to, all of the foregoing, as evidenced by various security
agreements, mortgages and other lien instruments previously executed and
delivered by the Borrower to the Bank. The foregoing indebtedness and
obligations are also secured by various mortgage liens on the Borrower's real
property and appurtenances thereto located at and known as 000 Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx (the "Real Property").
C. In order to induce the Bank to continue the availability of the
Loans to the Borrower, as well as to increase the borrowing availability of, and
maximum amount available under, the Line of Credit, the Sureties have executed
and delivered to the Bank that certain guaranty agreement and attached rider
dated May 20, 1998 (the "Surety Agreement"). The Borrower and the Sureties are
sometimes referred to, jointly and severally in this Agreement, as the Obligors.
D. The borrowing availability under the Line of Credit expired by its
terms on June 30, 1998 and, in addition to this expiration, the Borrower's
indebtedness and obligations owing under the Line of Credit Note and Demand Note
have been and continue to be payable on demand. Pursuant to the terms and
conditions of a letter of intent originally dated on or about October 15, 1998,
as amended, modified and supplemented (the "Letter of Intent") the Borrower is
negotiating with Aptec Instruments, Ltd. ("Aptec"), a Canadian corporation, and
Eurisys Mesures, S.A., a French corporation, for the sale of a controlling
interest in the Borrower to Aptec, initially and, thereafter, to Eurisys
Mesures, S.A. In order to allow the Obligors additional time to consummate the
transactions contemplated by the Letter of Intent, they have requested that the
Bank refrain from demanding payment under the Line of Credit Note and the Demand
Note (which would also accelerate the maturity of all the other Loans), which
the Bank is willing to do subject to the terms and conditions set forth below.
TERMS
-----
In consideration of the foregoing and of the covenants and mutual
agreements set forth below, and for other good and valuable consideration, the
receipt of which is acknowledged, the parties, intending to be legally bound,
agree:
1. Definitions. In addition to terms defined elsewhere in this Agreement
and the Background of this Agreement (which terms are incorporated by
reference), the following terms as used in this Agreement shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Agreement" means this Forbearance and Loan Restructure Agreement, as
the same may be amended, modified, restated or supplemented from time to time.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended,
and codified at 11 U.S.C. Section 101 et seq.
"Cash Collateral Account" means that certain account maintained in the
name of the Bank, for the account of the Borrower, but over which the Borrower
shall have sole and exclusive control.
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"Closing Date" has the meaning given to that term in paragraph 10 of
this Agreement.
"Collateral" means all property and assets of the Borrower in which
the Bank now has a lien, security interest, right of set-off or other
encumbrance as security for the Loans or any other Indebtedness, and also
includes the Real Property, other property and assets described in the
Background of this Agreement and the property pledged pursuant to the Stock
Pledge Agreement.
"Eligible Inventory" means Inventory (as defined in the Pennsylvania
Uniform Commercial Code) of the Borrower consisting of raw materials,
work-in-process and finished goods products, and with respect to which (i) the
Bank maintains a perfected, first priority security interest and lien, and (ii)
the Bank has obtained a landlord's waiver acceptable to it if such Inventory is
stored, located or warehoused at a location not owned by the Borrower.
"Eligible Receivables" means Accounts (as defined in the Pennsylvania
Uniform Commercial Code) due and owing to the Borrower for the sale of goods or
the rendition of services (exclusive of sales, excise or any other taxes) where:
(a) delivery of the merchandise or rendition of the services has been completed;
(b) no return, rejection or repossession has occurred; (c) the merchandise or
the services have been finally accepted by the account debtor without dispute,
offset, defense, counterclaim or other claim of avoidance; (d) no more than
ninety (90) days have elapsed from the date of the invoice on which the account
is based; (e) the Account is, and continues to be, in full conformity with the
representations and warranties made by the Borrower to the Bank; and (f) the
Borrower is, and continues to be, satisfied with the credit standing of the
account debtor in relation to the amount of credit extended. Without limiting
the general nature of the foregoing, the following types of Accounts shall not
be deemed Eligible Receivables: (i) any Account known to be not readily
collectible for any reason (including, without limitation, bankruptcy of the
account debtor); (ii) any Account represented by an invoice without a definite
due date; (iii) any Account represented by a pre-billed invoice; (iv) any
Account in litigation or arbitration; (v) any Account of an account debtor where
fifty percent (50%) or more of the amounts of all Accounts owing by such account
debtor are outstanding more than ninety (90) days past the end of the month in
which the invoice on which the Account is based; (vi) any Account not arising in
the ordinary course of business; (vii) any Account owing by the United States
government or any of its departments, instrumentalities, or agencies which has
not been assigned to the Bank in accordance with the Federal Assignment of
Claims Act; (viii) any Account in which the Bank does not have a first priority
perfected security interest and lien; (ix) any Account owing by an account
debtor located outside of the United States (unless, as determined by the Bank
in its sole discretion, such Account is payable in United States dollars and is
guaranteed as to payment by a letter of credit or other means acceptable to the
Bank); (x) any Account owing by a subsidiary or affiliate of the Borrower, or by
an entity controlling or under common control with the Borrower, and (xi) any
Account arising out of a consignment or commission contract or agreement.
"Event of Default" has the meaning given to that term in paragraph 12
of this Agreement.
3
"Fraudulent Transfer" means any transfer, sale, exchange, payment or
other conveyance of any nature, direct or indirect, which may be deemed a
fraudulent transfer pursuant to either the Pennsylvania Uniform Fraudulent
Transfer Act, 12 Pa.C.S.A. ss. 5-101 to ss. 5-110, or ss. 548 of the Bankruptcy
Code.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis.
"Indebtedness" means (i) the outstanding principal of the Loans, and
all interest accrued thereon and all costs, fees and expenses relating thereto,
(ii) all other indebtedness and other obligations and undertakings now or
hereafter owing by the Borrower to the Bank under this Agreement or the Loan
Documents, and (iii) all other liabilities and obligations of the Borrower to
the Bank, whether primary or secondary, absolute or contingent, direct or
indirect, joint, several, joint and several, or independent, voluntary or
involuntary, now or hereafter existing, due or to become due, or held or to be
held by the Bank for its own account or as agent for others, whether created
directly or acquired by negotiation, assignment, or otherwise.
"Insolvency or Liquidation Proceeding" means (a) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding relative to any Obligor or their assets, or
to the creditors of any Obligor, irrespective of whether a case or proceeding is
commenced under the Bankruptcy Code or other applicable law, (b) any
liquidation, dissolution, reorganization or winding-up of the affairs of any
Obligor, whether voluntary or involuntary, and whether or not involving
insolvency or bankruptcy, and (c) any assignment for the benefit of creditors
or any other marshalling of assets and liabilities of any of the Obligors.
"Intellectual Property" means all existing and future patents,
trademarks, service marks, copyrights (or applications relating to any of the
foregoing) tradenames, technology, know-how, processes, names and the likenesses
used in or necessary to the conduct of the Borrower's business, or works or
items that are protectable as patents, trademarks, copyrights, tradenames,
know-how, and all other assets of rights consisting of or commonly known as
intellectual property, and all goodwill associated with all of the foregoing.
"Line of Credit Principal Balance" means the principal amount
outstanding and remaining unpaid under the Line of Credit Loans extended by the
Bank to the Borrower.
"Liquid Collateral" means the total of eighty percent (80%) of Eligible
Receivables, plus twenty percent (20%) of Eligible Inventory, plus one hundred
percent (100%) of the total of collected funds constituting cash held by the
Bank in the Cash Collateral Account.
"Liquid Collateral Shortfall" means the difference between the Line of
Credit Principal Balance and the Liquid Collateral. The amount of any such
Liquid Collateral Shortfall shall be determined initially from the borrowing
base certification (in the form attached as Exhibit "A" to this Agreement)
prepared from the books and records of the Borrower as regularly kept by it in
the ordinary course of business and as reflected on the borrowing base
certifications from time to time submitted by the Borrower to the Bank, all of
which shall be
4
maintained in accordance with GAAP; provided, however, that the Bank shall
maintain the right to audit, inspect and verify the books and records of the
Borrower to determine whether the borrowing base certification accurately
reflects the amount of Liquid Collateral. For purposes of this Agreement and the
limited liability of the Sureties under the Surety Agreement, the Liquid
Collateral Shortfall shall be $3,800,000 as of and effective January 1, 1999,
and shall not increase above this amount for purposes of determining whether an
Event of Default has occurred under this Agreement. (TAPE)
"Loan Documents" means and includes the Notes, the Stock Pledge
Agreement and all credit agreements, security agreements, mortgages, lien
instruments and all other agreements, documents and instruments now or in the
future executed and delivered to the Bank in connection with the Indebtedness,
as the foregoing may be amended, modified, supplemented or restated from time to
time.
"Net Proceeds" means, upon the sale or refinance of any of the
Collateral and/or in connection with or pursuant to the transactions
contemplated by the Letter of Intent, all sums remaining after payment of
customary and reasonable closing costs, satisfactory in nature and amount to the
Bank (at its sole discretion), and the payment prior perfected liens (if any) in
favor of lienholders not affiliated with, or controlled by, any of the Obligors.
"Notes" means, collectively, the Term Note, the Second Term Note, the
Line of Credit Note and the Demand Note.
"Prime Rate" means a floating annual rate of interest that is
designated from time to time by the Bank as its Prime Rate, and used by the Bank
as a reference base with respect to different rates of interest rates charged to
Borrowers, it being understood that the Bank's determination and designation
from time to time of its Prime Rate shall not in any way preclude it from making
loans to other Borrowers at rate that is higher or lower than, or different
from, its Prime Rate as announced from time to time.
"Stock Pledge Agreement" means collectively, those agreements of even
date pursuant to which Xxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx pledge and grant
to the Bank, on a non-recourse basis, a first priority security interest in and
lien on all of the issued and outstanding shares of stock in the Borrower in
which they have any legal, equitable or other interest.
2. Accuracy of Background/Forbearance by Bank. The Borrower acknowledges
and agrees that the Background of this Agreement (as set forth above) is true
and correct and that, but for the execution and delivery of this Agreement, the
Bank has and maintains the right, without further demand or notice of any kind,
or opportunity to cure, to: (i) receive full and immediate payment and
performance of the Loans, and all other Indebtedness; (ii) exercise all rights
and remedies available to the Bank under the Loan Documents, at law, in equity,
by virtue of statute or otherwise; and (iii) foreclose upon or otherwise
exercise foreclosure related remedies relative to the Collateral.
Notwithstanding the foregoing, but subject to the full and complete compliance
with the terms and conditions of this Agreement and each of the Loan Documents
(and except as otherwise provided in this Agreement or the Loan Documents), the
Bank agrees to forbear from
5
the exercise of the rights and remedies available to it as a result of the
defaults noted in the Default Letters until the occurrence of an additional or
further Event of Default. Immediately upon the occurrence of such additional or
further Event of Default, all of the existing Events of Default referred to in
the Default Letters shall be deemed fully reinstated for the benefit of the Bank
exercising at that time such rights and remedies as may be available to it.
3. Validity of Loan Documents. The Obligors acknowledge and agree, and
represent and warrant that: (i) the Loan Documents executed by them are legal,
valid and binding obligations, enforceable in accordance with their terms, and
all security interests, liens and other encumbrances granted in or created by
the Loan Documents have been duly granted or created, properly filed or
recorded, and duly perfected; and (ii) the Obligors do not have or maintain, and
shall not assert any defense, set-off, counterclaim or claim of avoidance of any
nature to the Loans, any other Indebtedness or to any of the Loan Documents
executed by them.
4. Outstanding Indebtedness/Termination of Credit Facilities. The Borrower
acknowledges and agrees that, as of February 2, 1999, the Borrower is indebted
to the Bank (on account of the Loans) for outstanding principal, and accrued but
unpaid interest (at the non-Default Rate) of:
Loan Principal Interest
---- --------- --------
The Term Loan $105,000 $616.01
The Second Term Loan Paid in Full Paid in Full
The Line of Credit $4,917,116.18 $2,116.18
Letter of Credit Facility $ 774,303 $ N/A
The Obligors further acknowledge and agree, and represent and warrant that: (i)
interest has continued to accrue on the outstanding principal balances of the
Loans at the applicable rates of interest set forth in the Loan Documents; and
(ii) the Borrower is liable to the Bank for all costs, fees and expenses
(including fees and expenses of legal counsel of $22,150.07 from January, 1998,
through March 31, 1999, a portion of which has been previously reimbursed by the
Borrower) that the Bank may have incurred, or may in the future incur, in
connection with the preparation, execution and administration of this Agreement
and the Loan Documents, the collection and enforcement of the Indebtedness of
the Obligors to the Bank, and the preservation and realization upon the
Collateral. The Obligors also acknowledge and agree that the availability of
additional borrowing under the Line of Credit and Letter of Credit Facility has
been properly terminated, and that the Bank has no obligation to make any
additional loans or other extensions of credit to any Obligor under the Line of
Credit, the Letter of Credit Facility or otherwise.
5. Minimum Required Payments. The Borrower shall pay or cause to be paid
to the Bank, by not later than the 15th day of each month commencing effective
January 15, 1999, principal payments in the amount of not less than Twenty Five
Thousand Dollars ($25,000.00)
6
which shall be applied against the principal portion of the Loans then
outstanding in such manner as the Bank may determine in its sole discretion. The
Borrower shall also continue to pay, on the first day of each month continuing
on March 1, 1999, until all of the Indebtedness is paid finally and in full,
interest and fees at the rates provided for in the Notes and with respect to the
Loans.
6. Repayment and Restructure of Loans. Notwithstanding anything to the
contrary set forth in any of the Loan Documents, all of the Indebtedness shall
be due and payable in full, without the need for further notice or demand by the
Bank, on the earlier of (i) the occurrence of an Event of Default, (ii) closing
with respect to the transactions contemplated by the Letter of Intent, (iii)
transfer of any Obligor's interest in all or any portion of the Collateral,
including any of the shares of stock in the Borrower owned in any capacity by
either Surety, or (iv) June 30, 1999.
7. Confirmation of Collateral and Security Interests. As security for the
repayment of the Loans and Indebtedness referred to in this Agreement, and the
performance of the obligations of the Obligors under this Agreement and the Loan
Documents, the Borrower confirms to the Bank the grant of the security interests
and liens as provided for in the Loan Documents executed by it and in existence
prior to the execution of this Agreement, as well as those agreements, documents
and instruments executed in connection with this Agreement, all of which shall
constitute Loan Documents.
8. Representations and Warranties. In order to induce the Bank to enter
into this Agreement, the Obligors represent and warrant to the Bank that:
(a) The Obligors have full power and authority to execute, deliver and
perform this Agreement, and all other documents and instruments executed or
delivered by them in connection with this Agreement. This Agreement, and all
other documents and instruments executed or delivered in connection with this
Agreement by the applicable Obligor have been duly authorized, executed and
delivered, and constitute legal, valid and binding obligations of the Obligors,
enforceable in accordance with their respective terms.
(b) None of the Obligors has made, cause to be made or acquiesced in
any Fraudulent Transfer.
(c) Except as otherwise set forth on Exhibit "B" to this Agreement, the
representations and warranties made by the Borrower to the Bank in the Loan
Documents are true and correct, as though made on and as of the date of this
Agreement.
(d) None of the Obligors have applied for or consented, and shall not
apply for or consent, to the appointment of any receiver, trustee or liquidator
for themselves or any of their properties or assets, made a general assignment
for the benefit of creditors, been adjudicated a bankrupt or insolvent, or filed
(or at any time will file) a voluntary petition in bankruptcy or petition or
answer seeking an arrangement with creditors or seeking to take advantage of any
law or statute relating to Insolvency or Liquidation Proceeding, adjustment of
debt or otherwise. No petition of the type requesting the relief mentioned in
this paragraph 8(d) has been filed against any of the
7
Obligors, and no action has been or will be taken by any of them for the purpose
of effectuating any of the foregoing.
(e) Neither this Agreement, nor any certificate, statement, report or
other document furnished or to be furnished in connection with this Agreement
contains any untrue statement of material fact, or omits to state any fact
necessary in order to make the statements contained in this Agreement not
misleading. The Borrower has disclosed to the Bank all facts that materially and
adversely affects its business or financial conditions, or its ability to
perform their obligations under this Agreement or the Loan Documents.
(f) Exhibit "C" to this Agreement sets forth a full, complete and
accurate description of all Intellectual Property owned by the Borrower, or
Intellectual Property with respect to which the Borrower has rights of any
nature.
9. Covenants. So long as the Loans or any other Indebtedness remain unpaid
and outstanding, the Obligors covenant and agree that, unless the Bank otherwise
consents in writing:
(a) The Obligors shall comply in all respects with all the terms,
conditions, covenants and undertakings in the Loan Documents executed by them
(as amended and modified by this Agreement) to be observed and performed by the
Obligors, including the financial reporting requirements set forth in the Loan
Agreement.
(b) The Obligors shall provide to the Bank, promptly after receipt,
copies of any complaints, demands, summons or other documents evidencing an
intent by any person or entity to assert any claim or commence any action or
legal proceeding against any of them, or their assets or properties.
(c) The Obligors shall use their best efforts and due diligence with
respect to consummation of the transactions contemplated by the Letter of
Intent, and shall keep the Bank apprised of all actions taken, and all
developments with respect to, their efforts relative to the consummation of the
transactions contemplated by the Letter of Intent, and shall provide all
information as the Bank may from time to time request concerning such efforts.
(d) The Borrower shall maintain all of its deposit and other banking
accounts with the Bank until the Loans are repaid in full.
(e) The Borrower shall at all times maintain a Liquid Collateral
Shortfall of not more than $3,800,000, compliance with this requirement to be
tested effective January 1, 1999, and on a daily basis thereafter. To the extend
required to comply with this covenant, the Borrower shall pay to the Bank, and
maintain on deposit in the Cash Collateral Account, such sums as are necessary
to cause this covenant to be complied with at all times.
(f) The Obligors shall take all steps to insure that, upon consummation
of the transactions contemplated by the Letter of Intent, or any other sale of
all or any portion of the Borrower's assets or stock, that the Net Proceeds of
any such transaction are paid first to the Bank, to repayment in full of the
Indebtedness.
8
(g) The Borrower shall reimburse the Bank for audit fees incurred by
the Bank in connection with the execution and delivery of this Agreement, and
all related agreements, documents and instruments.
10. Closing Date. The transactions contemplated by this Agreement shall be
consummated on or before 2:00 p.m. on Friday, April __, 1999 (the "Closing
Date"). If for any reason the conditions precedent to closing required to be
performed by the Obligors under this Agreement have not been performed and the
transactions contemplated by this Agreement have not been consummated on or
before the Closing Date, the Bank, at its sole discretion, may by written notice
to the Obligors: (a) extend the Closing Date to a date provided in such written
notice, or (b) terminate all of the obligations of the Bank under this
Agreement, and proceed to exercise or renew the exercise of all of the rights
and remedies held by the Bank under the Loan Documents, applicable law or
otherwise.
11. Conditions Precedent to this Agreement. As conditions precedent to the
Bank's obligations under this Agreement, the Obligors shall deliver or cause to
be delivered to the Bank, in a form and substance satisfactory to the Bank and
its counsel;
(a) Evidence that the Bank has been named as loss payee, mortgagee and
other insured on policies of insurance maintained with respect to the
Collateral.
(b) Evidence that the Borrower is current in the payment of all of its
applicable obligations owing to taxing authorities, and that it has no
liabilities (contingent or otherwise) other than as set forth in the financial
statement referred to in paragraph 11 (g) below.
(c) Updated UCC, judgment and tax lien searches as to all of the
Borrower and the Collateral.
(d) Subsistence certificates, authorization documents and any such
other matters as may be necessary or advisable to evidence the continued
existence and good standing of the Borrower, and all agreements, documents and
instruments executed in connection with this Agreement on behalf of the
Borrower.
(e) (intentionally omitted).
(f) Copies of all agreements, documents and instruments relative to the
consummation of the transactions consummated by the Letter of Intent, including
(even if they are in draft form only) agreements for the sale of all or any
portion of the assets or stock of the Borrower.
(g) The most recently available balance sheet, and statement of profit
and loss, for the Borrower.
(h) Reimbursement to the Bank of $10,555.08 on account of accrued but
unpaid legal fees and disbursements owing for the period from October 5, 1998
through and including
9
the Closing Date, which reimbursement is to be made directly to Stradley, Ronon,
Xxxxxxx Xxxxx, LLP, as counsel for the Bank.
(i) Such reaffirmations or modifications to the Surety Agreement as
shall be necessary to confirm the obligation of the Sureties with respect to the
Borrower's obligation to maintain the Liquid Collateral Shortfall, as referred
to in paragraph 9(e) of this Agreement.
(j) The Stock Pledge Agreement.
(k) Such agreements, documents or instruments as may be necessary to
record with the United States Patent and Trademark Office and/or United States
Copyright Office, as applicable, further evidence of the Bank's security
interest in the Intellectual Property.
(l) Such additional agreements, documents or instruments and such
additional approvals and opinions as the Bank or its counsel may have requested
under the terms of this Agreement.
12. Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default" under this Agreement and the Loan
Documents:
(a) The Borrower fails to pay or cause to be paid any principal of, or
interest on the Loans, or any other portions of the Indebtedness, when and as
due under this Agreement or the Loan Documents as amended by this Agreement; or
(b) Any Obligor fails to comply with any other term, condition,
undertaking or covenant contained in this Agreement, or in any documents or
instruments executed or delivered by any Obligor in connection with this
Agreement; or
(c) Any representation or warranty made by any Obligor in this
Agreement, or in any documents or instruments executed or delivered by any
Obligor in connection with this Agreement proves to be false or misleading in
any material respect; or
(d) Any Obligor institutes, commences, joins in or acquiesces in any
action or any legal or equitable proceeding seeking to rescind, amend, alter,
revoke, terminate or otherwise modify the provisions of this Agreement or any
Loan Document, or any documents or instruments executed or delivered by any
Obligor in connection with this Agreement or any Loan Document; or
(e) Any default or event of default, or any event which with notice or
passage of time or both would constitute a default or event of default,
otherwise occurs under any of the Loan Documents (as amended by this Agreement).
Upon the occurrence of an Event of Default, the Bank shall be free to
exercise any and all rights and remedies available to it under this Agreement,
the Loan Documents, at law, in equity or otherwise. Without limiting the general
nature of the foregoing, the Bank shall, upon the occurrence of these events, be
entitled to receive, and shall be free to pursue the collection of
10
interest at the default rate of the Prime Rate plus five percent (5%) per annum
(which rate of interest shall accrue effective as of the occurrence of an Event
of Default, and continue to accrue before and after judgment), the collection of
late charges on the basis provided for in the Notes, and such other costs, fees
and expenses as may be recoverable under the Loan Documents.
13. No Waiver; Cumulative Remedies. No failure or delay on the part of the
Bank in exercising any right, power or remedy under this Agreement or the Loan
Documents shall operate as a waiver, nor shall any single or partial exercise of
such right, power or remedy preclude any other or further exercise thereof, or
the exercise of any other right, power or remedy. No waiver of any right, power
or remedy under this Agreement or the Loan Documents shall be effective unless
in writing and signed by the Bank. The remedies in this Agreement and the Loan
Documents are cumulative, and not exclusive of any remedies provided by law.
14. Relief from Automatic Stay. The Obligors agree that, if they (or any of
them) should (i) file with any bankruptcy court of competent jurisdiction or be
the subject of any petition under the Bankruptcy Code, (ii) be the subject of
any order for relief issued under the Bankruptcy Code, (iii) file or be the
subject of any petition seeking any reorganization, arrangement; composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy, insolvency, or other
relief for debtors, (iv) have sought or consented to or acquiesced in the
appointment of any trustee, receiver, conservator, or liquidator, (v) be the
subject of any order, judgment or decree entered by a court of competent
jurisdiction approving a petition filed against them for any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any present or future federal or state act or law relating to
bankruptcy, insolvency, or relief for debtors, then the Bank shall be entitled
to an expedited hearing with respect to the Bank's entitlement to relief from
any automatic stay imposed by Section 362 of the Bankruptcy Code, or from any
other stay or suspension of remedies imposed in any other manner with respect to
the exercise of the rights and remedies otherwise available to the Bank under
the Loan Documents, at law, in equity, by virtue of the statute, or otherwise.
15. Indemnity. The Borrower shall indemnify and hold harmless the Bank from
and against any and all losses, claims, damages, liabilities, costs and
expenses, including fees and expenses of counsel, arising out of or in
connection with any default by the Obligors (or any of them) in the performance
or observance of any term, condition, covenant or undertaking in this Agreement
or the Loan Documents.
16. Additional Documents and Cooperation. Upon request from time to time by
the Bank, the Obligors shall execute and deliver, or cause to be executed and
delivered to the Bank, any additional agreements, documents or instruments as
the Bank may request to effectuate this Agreement or to preserve, protect,
maintain or enforce the mortgage liens, security interests and other
encumbrances of the Bank. The Obligors do further agree to cooperate in all
respects with the Bank, to do or cause to be done such other acts or things as
may be necessary or desirable to effectuate the purposes and intentions of this
Agreement, and to assist the Bank in maximizing the value of any Collateral
sold, transferred or otherwise disposed of by the Bank.
11
17. Amendments and Waivers. The provisions of this Agreement may be
modified or amended only by a written agreement entered into by the Obligors and
the Bank, and may be waived only by a written waiver signed by the Bank. No
waiver, modification or amendment shall extend to or affect any obligation not
expressly waived, modified or amended, or impair any right of the Bank related
to such obligation,
18. Notices. All notices, requests, demands and other communications which
this Agreement requires or permits any party to give any other party shall be in
writing (including telecopier), and shall be given by certified mail, return
receipt not required, by hand delivery or by overnight mail, to such party at
its or their address set forth in the preamble to this Agreement, or at such
other address or telecopier number as shall be designated by such party in a
notice to each other. All notices, requests, demands and other communications
provided for under this Agreement shall be effective (i) if given by certified
mail, when deposited in the United States mails, with postage prepaid, properly
addressed, or (ii) if given by hand delivery or by overnight mail, when
delivered at the proper address; or (iii) if given by telecopier, when sent to
the appropriate telecopy number and upon receipt of confirmation that the
telecopy has been sent.
19. Joint and Several Obligation. With respect to those portions of this
Agreement that refer to the "Obligors", this Agreement shall be construed so
that all terms, conditions, covenants, undertakings, representations and
warranties of the Borrower and the Sureties shall be the joint and several
obligations of all of them, and shall bind each of them as fully as though each
of them were named individually and collectively in this Agreement.
20. Ratification of Loan Documents. This Agreement shall be deemed to amend
and modify the Loan Documents, to the extent inconsistent therewith. Subject to
the foregoing, the Loan Documents are ratified and confirmed and remain in full
force and effect. Without limiting the generality of the foregoing, nothing in
this Agreement shall be construed to: (i) impair the validity, perfection or
priority of any lien, security interest, right of set-off or other encumbrance
securing the Loans or any other Indebtedness; (ii) except as otherwise expressly
provided in this Agreement, waive or impair any rights, remedies or powers of
the Bank under the Loan Documents, or (iii) require the Bank to grant any
additional period of time within which to repay the Loans. For purposes of
determining the liability of the Sureties under the Surety Agreement, the
defined terms Eligible Inventory, Eligible Receivables, Line of Credit Principal
Balance, Liquid Collateral and Liquid Collateral Shortfall shall have the
meaning given to them in this Agreement, and the absence of any Collateral
Deterioration with respect to which the Sureties are obligated to the Bank shall
be determined in accordance with the Liquid Collateral Shortfall definition set
forth in this Agreement, and with respect to which the initial amount of the
Liquid Collateral Shortfall shall be in an amount not greater than $3,800,000,
as more fully set forth in the definition of Liquid Collateral Shortfall.
Therefore, if the Liquid Collateral Shortfall increaser, above the $3,800,000
figure on the "Collateral Deterioration Measurement Date" (as defined in the
Surety Agreement), the Sureties shall be liable to the Bank for this amount,
subject to the $800,000 limitation set forth in the Surety Agreement.
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21. Advice of Counsel and Others. The Obligors acknowledge that they have
consulted with, and have had the opportunity to consult with, legal counsel and
such financial other experts and advisors as they have deemed necessary in
connection with the execution, delivery and performance of this Agreement. The
Obligors all specifically acknowledge and agree that they have consulted with
legal counsel of their choice during the course of discussions and negotiations
leading up to the execution and delivery of this Agreement and the documents
required by this Agreement, The Obligors also represent and warrant that they
understand and accept the terms and conditions of this Agreement, and that they
have entered into this Agreement because it is in their best interests under the
circumstances.
22. Integration. This Agreement and the Loan Documents constitute the
entire agreement and understanding among the parties related to the subject
matter of this Agreement, and supersedes all prior proposals, negotiations,
agreements and understandings relating to such subject matter. The Obligors
acknowledge that, in entering into this Agreement, they are not relying on any
statement, representation, warranty, covenant or agreement of any kind made by
the Bank or any employee or agent of the Bank, other than the agreements of the
Bank set forth in this Agreement.
23. No Marshalling. The Obligors waive against the Bank any right which any
of them may have, whether individually or in their capacity as the
representative of any of the Obligors, to compel a marshalling of assets against
the Bank, and acknowledge that, upon the occurrence of an Event of Default, the
Bank is free to pursue, in such order and manner as it may elect, any rights or
remedies available to it under this Agreement, the Loan Documents or otherwise
available under applicable law, in equity or otherwise.
24. Brokerage, The Obligors represent and warrant to the Bank that the
transactions contemplated by this Agreement are made without liability for any
finder's, realtor's, broker's, agent's or other similar commission.
25. Negation of Partnership. The relationship between the Obligors and the
Bank is that of debtors and creditor. Nothing contained in this Agreement will
be deemed to create a partnership or joint venture between the Bank and the
Borrower, between the Bank and the Sureties or between the Bank and any other
party, or to cause the Bank to be liable or responsible in any way for the
actions, liabilities, debts or obligations of the Obligors or any other party.
26. Confidentiality. The Obligors agree to maintain the terms of this
Agreement and all negotiations relating to the subject matter of this Agreement
as confidential among the Obligors and the Bank. Neither the Borrower nor the
Sureties will issue or cause to be issued any announcement or other statement
concerning the subject matter of this Agreement, without the prior written
approval of the Bank.
27. Recision of Payments. If at any time and for any reason any payment
made under or in connection with this Agreement or any of the Loan Documents is
rescinded or must otherwise be returned by the Bank for any reason, including
any Insolvency or Liquidation Proceeding of any of the Obligors, the security
interests and liens of the Bank, and related rights and remedies of the Bank,
shall be reinstated as though payment had not been made.
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28. Miscellaneous,
(a) This Agreement shall be governed in all respects by the laws in
effect in the Commonwealth of Pennsylvania (without regard to principles of
conflicts of law), and for all purposes shall be construed in accordance with
such laws.
(b) The headings used in this Agreement are for convenience of
reference only, and shall not control or affect the provisions of this
Agreement. Unless otherwise indicated, all references in this Agreement to
paragraphs and subparagraphs shall be construed as references to paragraphs and
subparagraphs of this Agreement. Use of the words "including", "includes" and
the like are intended to be words of illustration only, and not words of
limitation.
(c) This Agreement shall be binding upon and operate for the benefit of
the Obligors and the Bank, and their respective heirs, executors,
administrators, successors and assigns; provided, however, that none of the
Obligors may assign or delegate any of its or their rights or obligations under
this Agreement, or any documents or instruments executed in connection with this
Agreement, without the prior written consent of the Bank.
(d) This Agreement may be executed and delivered in any number of
counterparts, each of which shall constitute an original but all of which shall
constitute one and the same instrument.
29. CONSENT TO JURISDICTION. EACH OBLIGOR CONSENTS TO THE JURISDICTION
OF THE COURTS OF THE COMMONWEALTH OF PENNSYLVANIA AND THE UNITED STATES DISTRICT
COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA IN CONNECTION WITH ANY CLAIM OR
DISPUTE ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE LOAN
DOCUMENTS. IF ANY ACTION IN CONNECTION WITH ANY SUCH CLAIM OR DISPUTE IS
COMMENCED BY OR AGAINST THE BANK IN ANY SUCH COURT, EACH OBLIGOR AGREES THAT
SERVICE OF PROCESS MAY BE MADE ON THEM BY CERTIFIED OR REGISTERED MAIL (RETURN
RECEIPT NOT REQUIRED) ADDRESSED TO THEM AT THEIR ADDRESSES SPECIFIED IN THE
PREAMBLE TO THIS AGREEMENT, OR AT SUCH OTHER ADDRESSES AS MAY BE DESIGNATED IN A
NOTICE COMPLYING WITH THE TERMS OF THIS AGREEMENT.
30. WAIVER OF JURY TRIAL. EACH OBLIGOR WAIVES TRIAL BY JURY, AND THE
RIGHT TO INTERPOSE ANY DEFENSE BASED ON ANY STATUTE OF LIMITATIONS OR CLAIM OF
LACHES, IN ANY ACTION BY OR AGAINST THEM IN CONNECTION WITH ANY CLAIM OR DISPUTE
ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE LOAN DOCUMENTS.
31. CONFESSION OF JUDGMENT. EACH OBLIGOR AUTHORIZES AND EMPOWERS THE
PROTHONOTARY, CLERK OF COURT, OR ANY ATTORNEY OF ANY COURT OF RECORD WITHIN THE
UNITED STATES OR ELSEWHERE TO APPEAR FOR AND CONFESS JUDGMENT AGAINST THEM, OR
ANY OF THEM, IN FAVOR OF THE BANK, UPON THE OCCURRENCE OF AN EVENT OF DEFAULT,
OR AT ANY TIME THEREAFTER, FOR ALL OR ANY PART OF THE INDEBTEDNESS THEN OWING
TO THE BANK, TOGETHER WITH EXPENSES OCCURRED IN CONNECTION
14
THEREWITH AND ATTORNEY FEES OF FIFTEEN PERCENT (15%) OF THE TOTAL OF THE
FOREGOING SUMS, BUT IN NO EVENT LESS THAN $10,000,000, WITH RELEASE OF ALL
ERRORS AND WITHOUT STAY OF EXECUTION. THE RIGHT OF INQUISITION UPON ANY LEVY ON
REAL ESTATE IS WAIVED, AND CONDEMNATION AGREED TO, AND NO BENEFIT OF EXEMPTION
SHALL BE CLAIMED UNDER OR BY VIRTUE OF ANY EXEMPTION ALL NOW IN FORCE OR WHICH
MAY BE HEREINAFTER ENACTED. THE AUTHORITY GRANTED TO CONFESS JUDGMENT SHALL NOT
BE EXHAUSTED BY ANY SINGLE OR MULTIPLE EXERCISE THEREOF, BUT SHALL CONTINUE FROM
TIME TO TIME AT ALL TIMES UNTIL FULL AND FINAL PAYMENT OF ALL OF THE
INDEBTEDNESS. IF A COPY OF THIS AGREEMENT SHALL BE FILED IN ANY SUCH ACTION, IT
SHALL NOT BE NECESSARY TO FILE THE ORIGINAL AS A WARRANT OF ATTORNEY, AND ANY
STATUTE OR RULE OF THE COURT TO THE CONTRARY IS EXPRESSLY WAIVED. EACH OBLIGOR
ACKNOWLEDGES AND AGREES THAT THIS WARRANT OF ATTORNEY TO CONFESS JUDGMENT MAY BE
EXERCISED ON ONE OR MORE OCCASIONS, AND AGAINST ANY ONE OR MORE OF THE OBLIGORS.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the day and year first above written.
ATTEST: NUCLEAR RESEARCH CORPORATION
/s/ Xxxxxxx X. Xxxxxxx By:/s/ Xxxx X. Xxxxxxx
---------------------------- --------------------------
Secretary Xxxx X. Xxxxxxx, President
[Corporate Seal]
/s/ Xxxxxxx X. Xxxxxxx By:/s/ Xxxx X. Xxxxxxx
---------------------------- --------------------------
WITNESS Xxxx X. Xxxxxxx, President
/s/ Xxxx X. Xxxxxxx By:/s/ Xxxxxxx X. Xxxxxxx
---------------------------- --------------------------
WITNESS Xxxxxxx X. Xxxxxxx, as Surety
[Corporate Seal]
FIRST UNION NATIONAL BANK, successor by merger to
CoreStates Bank, N.A. and Bucks County Bank &
Trust Company
By:/s/ Xxxxxx X. Xxxxxx, V.P.
--------------------------------
Xxxxxx X. Xxxxxx, Vice President
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EXHIBIT "A"
-----------
FORM OF BORROWING BASE CERTIFICATION
------------------------------------
16
EXHIBIT "B"
-----------
REPRESENTATIONS AND WARRANTIES THAT ARE NOT REAFFIRMED
BY THIS AGREEMENT
------------------------------------------------------
NONE.
17
EXHIBIT "C"
-----------
SCHEDULE OF INTELLECTUAL PROPERTY
---------------------------------
18
