EXHIBIT 10(s)
FIRST AMENDMENT TO LINE OF CREDIT AGREEMENT
THIS AGREEMENT is entered into this 20th day of May, 1998, between
NUCLEAR RESEARCH, a Pennsylvania business corporation with its chief executive
office and principal place of business at 000 Xxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxx 00000 (the "Borrower"), and FIRST UNION NATIONAL BANK, successor
by merger to Corestates Bank, N.A. and Bucks County Bank and Trust Company, with
offices at 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 (the "Bank").
BACKGROUND
A. The Borrower and the Bank are parties to a Line of Credit Agreement
dated January 14, 1997 (the "Loan Agreement"), and certain Loan Documents
executed in connection therewith. Unless otherwise indicated in this Agreement,
all capitalized terms not otherwise defined shall have the meaning given to them
in the Loan Agreement.
B. The Borrower has requested that the Bank increase the borrowing
availability of the Line of Credit Loans from the current outstanding balance of
Five Million Four Hundred Ninety-Nine Thousand Seven Hundred Thirty-Four Dollars
($5,499,734.00) to the maximum amount of up to Six Million Dollars
($6,000,000.00). From the date of this Agreement through and including June 30,
1998, this additional credit availability will be made available on a committed
basis, provided that no Event of Default or Collateral Deterioration (as defined
below) greater than Eight Hundred Thousand Dollars ($800,000.00) occurs.
Effective July 1, 1998, and at all times thereafter, Line of Credit Loans shall
be provided in the sole and absolute discretion of the Bank,
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and shall be repayable at any time thereafter on a demand basis, irrespective of
whether or not an Event of Default or Collateral Deterioration greater than
$800,000.00 has occurred. Subject to the terms and conditions noted below, and
the continued full and complete compliance with the Loan Agreement, the Loan
Documents and all other agreements, documents and instruments executed by the
Borrower in favor of the Bank, the Bank has agreed to provide this additional
increased credit availability under the Line of Credit Loans.
AGREEMENT
In consideration of the foregoing, and the covenants set forth below,
and intending to be legally bound, the Borrower and the Bank agree:
1. Amendments to Loan Agreement. Effective as of the date of
this Agreement:
(a) Section 1.01 is amended by inserting, alphabetically
where they would otherwise appear, the following new defined terms:
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 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
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invoice on which the Account is based; (vi) any Account not
arising in the ordinary course of business; (vii) any Account
in which the Bank does not have a first priority perfected
security interest and lien; (viii) 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 or such Account is otherwise acceptable to the Bank in
its sole discretion) ; (ix) 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.
Eligible Inventory means Inventory (as defined in the
Pennsylvania Uniform Commercial Code) of the Borrower
consisting of the gross amount of its raw materials, only
work-in-process relating to the UDR contract 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.
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.
Liquid Collateral Shortfall means the difference between the
Line of Credit Principal Balance and the Liquid Collateral.
Collateral Deterioration means the increase (if any) in the
amount of the Liquid Collateral Shortfall from the Beginning
Measurement Date to the date on which an advance is requested
under the Line of Credit Loans. The amount of any such
Collateral Deterioration shall be determined initially from
the borrowing base certification and supporting documentation
attached as Exhibit "A" and 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 maintained in
accordance with generally accepted accounting principles,
consistently applied; provided, however, that the Bank shall
maintain the right to audit, inspect and verify the books and
records of the Borrower to determine whether, using the same
definitions, valuations and procedures used in preparing the
borrowing base certificate attached as Exhibit "A" to this
Agreement, the borrowing base certification accurately
reflects the amount of Liquid Collateral.
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Beginning Measurement Date means May 18, 1998, at which date
(i) the Borrower has certified to the Bank that its Liquid
Collateral is equal to $1,372,004.39, and (ii) the Line of
Credit Principal Balance was $5,499,734.00 thus making the
certified Liquid Collateral Shortfall equal to $4,127,729.58.
(b) Section 2.01 of the Loan Agreement is deleted in its entirety, and
inserted in its place is the following new section:
SECTION 2.01. The Line of Credit. The Bank agrees, on the
terms and conditions hereinafter set forth, to make loans (the
"Line of Credit Loans") to the Borrower from time to time, in
accordance with the terms of the Master Demand Note in an
aggregate amount not to exceed, at any one time outstanding, a
sum equal to Six Million Dollars ($6,000,000.00); provided,
however, that in no event shall the Bank be obligated to
consider making Line of Credit Loans if there has been a
Collateral Deterioration of more than Eight Hundred Thousand
Dollars ($800,000.00) from the Beginning Measurement Date to
the time a request is being made for a Line of Credit Loan
(the "Borrowing Availability") . The Borrowing Availability
shall be reduced from time to time by the face amount of all
Letters of Credit then outstanding, other than letter of
credit no 522976, (together with the amount of any
unreimbursed drawings under Letters of Credit) and may, at
Borrower's option, be permanently reduced from time to time in
amounts designated by Borrower to Bank. In the event of such
reduction by Borrower, the Note and other Loan Documents shall
be modified as required by Bank to reflect such reduction.
Within the limits of the amount set forth in this Section
2.01, and subject to the provisions of this Agreement,
including, without limitation, the Bank's right to demand
repayment of the Line of Credit Loans at any time, the
Borrower may borrow, repay and reborrow under this Section
2.01. Notwithstanding the above provisions, or anything to the
contrary set forth in Section 2.02, 2.09, 2.10 or 8.01 of this
Agreement, Line of Credit Loans shall be made available by the
Bank to the Borrower from the date of this Agreement through
and including June 30, 1998, so long as (a) no Event of
Default has occurred or is continuing, and (b) the Collateral
Deterioration from the Beginning Measurement Date has not
exceeded the sum of Eight Hundred Thousand Dollars
($800,000.00).
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(c) Section 2.08(1) (i) is supplemented by inserting the phrase
"investment property" immediately after the phrase "accounts receivable" in that
Section. Section 2.08 is further amended by deleting the phrase "where the total
contract amount exceeds Five Hundred Thousand Dollars ($500,000)" where that
phrase currently appears in Section 2.08(5).
(d) Section 5.08 of the Loan Agreement is supplemented by amending
subsection (1) to require that those reports be delivered to the Bank on or
before June 30 of each year, and Section 5.08 is further amended by adding the
following new subsections, immediately after current subsection (5):
(6) On or before Tuesday of each week, and prior to each
request for an advance under the Line of Credit Loans, a fully
completed and signed borrowing base certification in the form
attached as Exhibit "A" to this Agreement, certifying to the
Bank as of the end of the immediately preceding Business Day,
among other things, the amount of the Borrower's Eligible
Receivables, Eligible Inventory, the Line of Credit Principal
Balance and such other matters as are set forth on the
attached certification; and
(7) On or before Tuesday of each week, an update and report,
in such format and detail as the Bank may reasonably request,
providing to the Bank additional information (if any) with
respect to the Borrower's efforts in connection with any sale
of all or a portion of its business, or attempts to obtain
alternative financing and/or investors.
(e) Sections 5.06(l) and 6.02(2) are modified to recognize Borrower is
not paying certain of its accounts payable in accordance with required
contractual terms.
(f) Section 5.09 of the Loan Agreement is deleted in its entirety.
(g) Section 4.07 of the Loan Agreement is amended to recognize the
possibility of a claim being filed against the Borrower by Measurement Dynamics,
LLC.
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(h) Section 6.04 is amended by deleting the phrase appearing at the end
of such section providing "if such dividend, stock purchase, or other action
described in this paragraph would cause or result in the occurrence of an Event
of Default as defined herein".
(i) All provisions of the Loan Agreement, the Loan Documents and any
other agreement, document or instrument executed by the Borrower in favor of the
Bank (including, without limitation, the provisions of Section 7.01(1) through
(8) of the Loan Agreement) which provide for cure periods and/or notification
prior to an Event of Default having been deemed to occur are eliminated and
stricken.
(j) Section 10.02 is amended by providing that notice to the Bank shall
be given to:
Xx. Xxxxxxxx X. Xxxxxx
CoreStates Bank, N.A.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx Building
FC 1-8-13-2
Philadelphia, PA 19101-7618
2. Conditions. As conditions precedent of the execution, delivery and
effectiveness of this Agreement, and the increased amount of the Line of Credit
Loans, the Borrower shall have delivered or caused to be delivered to the Bank,
in form and content satisfactory to the Bank and its counsel, the following
agreements, documents and instruments:
(a) An Allonge to the Master Demand Note, increasing the face
amount of such Master Demand Note to $6,000,000.00;
(b) An Agreement of Suretyship executed by Xxxx X. Xxxxxxx and
Xxxxxxx X. Xxxxxxx with respect to their liability as sureties for in connection
with any "Collateral Deterioration" (as defined in their Surety Agreement to the
Bank);
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(c) An Affidavit executed by Xxxx X. Xxxxxxx and Xxxxxxx X.
Xxxxxxx with respect to their knowing, voluntary and intelligent waiver of
rights with regard to the warrant of attorney to confess judgment contained in
the Surety Agreement;
(d) Implementation by the Borrower of the procedures required
by Section 3 of the Security Agreement with respect to the opening, depositing
and processing of payments through the "Cash Collateral Account", as defined in
such Security Agreement;
(e) UCC-3 Amendment Financing Statements to reflect, among
other things, the change in name and address of the Bank, as well as the
inclusion of "investment property" in the description of Collateral;
(f) This Agreement, duly executed; and
(g) Such additional agreements, documents or instruments as
the Bank or its counsel may have requested under the terms of this Agreement,
or otherwise.
3. Representations and Warranties. In order to induce the Bank to enter
into this Agreement, the Borrower represents and warrants to the Bank that:
(a) The execution, delivery and performance of this Agreement,
and all agreements, documents and instruments executed and delivered in
connection with this Agreement (the "Related Documents") have been duly
authorized by all necessary corporate or other required action, and do not and
will not violate any provision of law or of the charter, by-laws, or the like,
or any agreement, trust or other indenture or instrument to which it is a party
or by which its properties may be bound, or any order or decree affecting it or
its properties, so that this Agreement and the Related Documents will be a
legal, valid and binding obligations of the Borrower, enforceable in accordance
with their terms.
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(b) All representations and warranties made to the Bank in the
Loan Agreement and the Loan Documents are true, complete and correct, with the
same effect as though made on and as of the date of this Agreement.
(c) The Borrower acknowledges and confirms that: (i) the Loan
Agreement, Loan Documents and all other agreements, documents, instruments
executed by the Borrower in favor of the Bank are legal, valid and binding
obligations of the Borrower, enforceable in accordance with their terms and
conditions, and all security interests, mortgage liens and other encumbrances
provided for or referred to in the Loan Agreement and Loan Documents have been
duly granted, and properly attached and recorded or perfected. The Borrower
represents and warrants that it does not have or maintain, and shall not assert,
any defense, set-off, counterclaim or claim of avoidance of any nature to the
Indebtedness, the Loan Agreement and Loan Documents. As of May 19, 1998, the
Borrower further confirms the outstanding principal and accrued but unpaid
interest balances under the promissory notes referred to below:
Principal Interest
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1. Master Demand Note $5,499,734.00 $20,038.75
2. $1,800,000 Commercial
Promissory Note dated 1/14/97 $175,000.00 $190.80
3. Demand Note dated 9/30/94,
as amended $774,303.00 -0-
4. $300,000 Term Note dated 8/21/95 $49,999.80 $68.75
4. Miscellaneous.
(a) This Agreement shall be deemed a modification of the Loan
Agreement and the Loan Documents, to the extent it is directly inconsistent with
any of those agreements. Subject
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to the foregoing, the Loan Agreement, the Loan Documents and all other
agreements, documents and instruments executed by the Borrower in favor of the
Bank, and all of their terms, conditions, representations, warranties, covenants
and other undertakings are ratified and confirmed, and shall continue in full
force and effect.
(b) This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the Borrower and the Bank,
and shall be construed and enforced in accordance with the laws in effect in the
Commonwealth of Pennsylvania.
(c) The Borrower represents and warrants that Exhibit "B" to
this Agreement sets forth and describes all patents, copyrights, trademarks (and
all pending applications with respect to the foregoing) in which the Borrower
has an interest either as owner, licensee or otherwise. The Borrower does
further covenant and agree to deliver to the Bank, on or before June 5, 1998,
such additional agreements, documents or instruments as the Bank or its counsel
may request with respect to the liens granted to the Bank in the Loan Agreement
and other Loan Documents (including, without limitation, patent mortgages and
assignments, copyright and trademark security agreements and other similar or
related documents).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
NUCLEAR RESEARCH
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, President
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxxx X. Xxxxxx
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Xxxxxxxx X. Xxxxxx, Vice President
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