Exhibit 10(f)
[M&T Bank LOGO]
EQUIPMENT LINE
CREDIT AGREEMENT
New York
March 24,2005
BORROWER: SONO-TEK CORPORATION, a corporation organized under the laws of
New York
Address of residence/chief executive office: 0000 Xxxxx 0X, Xxxxxx, Xxx Xxxx
00000
BANK: MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
with its principal banking office at One M&T Plaza, Buffalo, New York
14240 Attention: Office of General Counsel
The Bank and the Borrower, intending to be legally bound, agree as follows:
I. DEFINITIONS.
a. Capital Expenditures. The term "Capital Expenditures" means, for any
fiscal year, the aggregate of all expenditures (whether paid in cash
or accrued as liabilities, and including expenditures for
obligations under any lease with respect to which Borrower's
obligations thereunder should, in accordance with G.A.A.P., be
capitalized and reflected as a liability on the balance sheet of
Borrower) by Borrower during such period that are required by
G.A.A.P. to be included in or reflected by the property, plant or
equipment or similar fixed asset accounts on the balance sheet of
Borrower.
b. Cash Flow. The term "Cash Flow" means the sum of (i) net income
after tax, dividends and distributions, plus (ii) depreciation
expense and amortization, plus (iii) Interest Expense, all
determined in accordance with G.A.A.P.
c. Cash Flow Coverage. The term "Cash Flow Coverage" means the ratio of
Cash Flow to the sum of (i) the current portion of all Long Term
Debt as specified in the financial statement dated twelve (12)
months prior, plus (ii) Interest Expense, all determined in
accordance with G.A.A.P.
d. Credit. The term "Credit" means any and all credit facilities and
any other financial accommodations made by the Bank in favor of the
Borrower whether now or hereafter in existence.
e. Current Assets. The term "Current Assets" means, at any time, the
aggregate amount of all current assets, including, but not limited
to, cash, cash equivalents, marketable securities, receivables
maturing within twelve (12) months from such time, and inventory
(net of LIFO Reserve), but excluding prepaid expenses and officer,
stockholder, employee and related entity advances and receivables,
all as determined in accordance with G.A.A.P.
f. Current Liabilities. The term "Current Liabilities" means, at any
time, the aggregate amount of all liabilities and obligations which
are due and payable on demand or within twelve (12) months from such
time, or should be properly reflected as attributable to such twelve
(12) month period in accordance with G.A.A.P.
g. Current Ratio. The term "Current Ratio" means the ratio of Current
Assets to Current Liabilities.
h. Equipment Line of Credit. The term "Equipment Line of Credit" means
the credit facility extended to the Borrower by the Bank pursuant to
Section 2 of this Agreement.
i. G.A.A.P. The term "G.A.A.P." means, with respect to any date of
determination, generally accepted accounting principles as used by
the Financial Accounting Standards Board and/or the American
Institute of Certified Public Accountants consistently applied and
maintained throughout the periods indicated.
j. Interest Expense. The term "Interest Expense" means all finance
charges reflected on the income statement as interest expense for
all obligations of Borrower to any person, including, but not
limited to, Bank, as shown on the balance sheet in accordance with
G.A.A.P.
k. Long Term Debt. The term "Long Term Debt" means all obligations of
Borrower to any person, including, but not limited to, the
Obligations, payable more than twelve (12) months from the date of
their creation, which in accordance with G.A.A.P. are shown on the
balance sheet as a liability (excluding reserves for deferred income
taxes) for the period then ended.
l. Maximum Line of Credit Amount. The term "Maximum Line of Credit
Amount" means $150,000.00.
m. Obligations. The term "Obligations" means any and all indebtedness
or other obligations of the Borrower to the Bank in any capacity,
now existing or hereafter incurred, however created or evidenced,
regardless of kind, class or form, whether direct, indirect,
absolute or contingent (including obligations pursuant to any
guaranty, endorsement, other assurance of payment or otherwise),
whether joint or several, whether from time to time reduced and
thereafter increased, or entirely extinguished and thereafter
reincurred, together with all extensions, renewals and replacements
thereof, and all interest, fees, charges, costs or expenses which
accrue on or in connection with the foregoing, including any
indebtedness or obligations (i) not yet outstanding but contracted
for, or with regard to which any other commitment by the Bank
exists; (ii) arising prior to, during or after any pendency of any
bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding; (iii)
owed by the Borrower to others and which the Bank obtained, or may
obtain, by assignment or otherwise; and (iv) payable under this
Agreement.
n. Quick Ratio. The term "Quick Ratio" means the ratio of Current
Assets less inventory (net of LIFO Reserve), to Current Liabilities.
o. Subordinated Debt. The term "Subordinated Debt" means all
indebtedness of the Borrower which has been formally subordinated to
payment and collection of the Obligations.
p. Subsidiary. The term "Subsidiary" means any corporation or other
business entity of which at least fifty percent (50%) of the voting
stock or other ownership interest is owned by the Borrower directly
or indirectly through one or more Subsidiaries. If the Borrower has
no Subsidiaries, the provisions of this Agreement relating to the
Subsidiaries shall be disregarded, without affecting the
applicability of such provisions to the Borrower alone.
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q. Tangible Net Worth. The term "Tangible Net Worth" means the
aggregate assets of Borrower excluding all intangible assets,
including, but not limited to, goodwill, licenses, trademarks,
patents, copyrights, organization costs, appraisal surplus, officer,
stockholder, related entity and employee advances or receivables,
mineral rights and the like, less liabilities, plus Subordinated
Debt, all determined in accordance with G.A.A.P. (except to the
extent that under G.A.A.P. "tangible net worth" excludes leasehold
improvements which are included in "Tangible Net Worth" as defined
herein).
r. Total Liabilities. The term "Total Liabilities" means the aggregate
amount of all assets of the Borrower less the sum of shareholder
equity and Subordinated Debt (if any), as shown on the balance sheet
in accordance with G.A.A.P.
s. Transaction Documents. The term Transaction Documents" means this
Agreement and all documents, instruments or other agreements by the
Borrower in favor of the Bank in connection (directly or indirectly)
with the Obligations, whether now or hereafter in existence,
including promissory notes, security agreements, guaranties and
letter of credit reimbursement agreements.
t. Working Capital. The term "Working Capital" means that amount which
is equal to the excess of Current Assets over Current Liabilities.
2. BASIC TERMS OF THE EQUIPMENT LINE OF CREDIT.
a. Advances. Subject to the continued compliance of Borrower with this
Agreement and all other accompanying Transaction Documents and the
continued absence of any default by Borrower or any indorser,
guarantor or any other party liable for, or whose assets or any
interest therein secures payment of any of the Obligations, Bank may
advance to Borrower, for use by Borrower as hereafter provided, such
sums as Borrower may request, but which shall not exceed in the
aggregate at any one time outstanding the Maximum Line of Credit
Amount. Borrower shall not request any advance of proceeds of the
Equipment Line of Credit which exceeds the Maximum Line of Credit
Amount. Even if the aggregate amount of advances made and
outstanding under the Equipment Line of Credit shall at any time and
for any reason exceed the Maximum Line of Credit Amount, Borrower
shall nevertheless be liable for the entire amount outstanding with
interest thereon in accordance with this Agreement and all
accompanying Transaction Documents, and Borrower shall be
responsible for observance of, performance of and compliance with
all of the terms, covenants and provisions hereof and thereof.
Advances under the Equipment Line of Credit shall be evidenced by
separate term notes, in form and substance acceptable to Bank. The
Equipment Line of Credit shall be utilized for purposes of making
equipment and/or vehicle acquisitions. Within such limitations and
subject to all of the terms and conditions set forth herein and in
the other accompanying Transaction Documents, Borrower may borrow,
repay and reborrow funds under the Equipment Line of Credit in
accordance with the terms and conditions of this Agreement. Nothing
contained in this Agreement shall be construed as obligating Bank to
make any particular loan or advance to Borrower, and Borrower is not
relying upon Bank to make or continue to make advances for any
purpose whatsoever. All such loans or advances remain within the
discretion of Bank.
b. Advance Procedure. With respect to each advance and all matters and
transactions in connection therewith, Borrower hereby irrevocably
authorizes Bank to accept, rely upon, act upon and comply with any
oral or written instructions, requests, confirmation and orders of
any employee or representative of Borrower who is so authorized or
designated as a signer of loan documents under the provisions of
Borrower's most recent resolutions or similar documents on file with
Bank. Borrower acknowledges that the transmission between Borrower
and Bank of any such instructions, requests, confirmations and
orders involves the possibility or errors, omissions, mistakes and
discrepancies and agrees to adopt such internal measures and
operational procedures as may be necessary to protect its interests.
By reason thereof, Borrower hereby assumes all risk of loss and
responsibility for, releases and discharges Bank from any and all
responsibility or liability for, and agrees to indemnify, reimburse
on demand and hold Bank harmless from, any and all claims, actions,
damages, losses, liability and expenses by reason of, arising out
of, or in any way connected with or related to: (i) Banks accepting,
relying and acting upon, complying with or observing any such
instruction, request, confirmation or order: or (ii) any such error,
omission, mistake, or discrepancy, provided such error, omission,
mistake or discrepancy is not the result of negligence on the part
of Bank.
3. REPRESENTATIONS AND WARRANTIES. The Borrower makes the following
representations and warranties and any "Additional Representations and
Warranties" on the schedule attached hereto and made part hereof (the
"Schedule"), all of which shall be deemed to be continuing representations and
warranties as long as this Agreement is in effect:
a. Good Standing; Authority. The Borrower and each Subsidiary (if
either is not an individual) is duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it was
formed. The Borrower and each Subsidiary is duly authorized to do
business in each jurisdiction in which failure to be so qualified
might have a material adverse effect on its business or assets and
has the power and authority to own each of its assets and to use
them in the ordinary course of business now and in the future.
b. Compliance. The Borrower and each Subsidiary conducts its business
and operations and the ownership of its assets in compliance with
each applicable statute, regulation and other law, including
environmental laws. All approvals, including authorizations,
permits, consents, franchises, licenses, registrations, filings,
declarations, reports and notices (the "Approvals") necessary for
the conduct of the Borrower's and each Subsidiary's business and for
the Credit have been duly obtained and are in full force and effect.
The Borrower and each Subsidiary is in compliance with the
Approvals. The Borrower and each Subsidiary (if either is not an
individual) is in compliance with its certificate of incorporation,
by-laws, partnership agreement, articles of organization, operating
agreement or other applicable organizational or governing document
as may be applicable to the Borrower or a Subsidiary depending on
its organizational structure ("Governing Documents"). The Borrower
and each Subsidiary is in compliance with each agreement to which it
is a party or by which it or any of its assets is bound.
c. Legality. The execution, delivery and performance by the Borrower of
this Agreement and all related documents, including the Transaction
Documents, (i) are in furtherance of the Borrower's purposes and
within its power and authority; (ii) do not (A) violate any statute,
regulation or other law or any judgment, order or award of any
court, agency or other governmental authority or of any arbitrator
with respect to the Borrower or any Subsidiary or (B) violate the
Borrower's or any Subsidiary's Governing Documents (if either is not
an individual), constitute a default under any agreement binding on
the Borrower or any Subsidiary or result in a lien or encumbrance on
any assets of the Borrower or any Subsidiary; and (iii) if the
Borrower or any Subsidiary is not an individual, have been duly
authorized by all necessary organizational actions.
d. Fiscal Year. The fiscal year of the Borrower is the calendar year
unless the following blank states otherwise: year ending
____________.
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e. Title to Assets. The Borrower and each Subsidiary has good and
marketable title to each of its assets free of security interests,
mortgages or other liens or encumbrances, except as set forth on the
Schedule titled "Permitted Liens" or pursuant to the Bank's prior
written consent.
f. Judgments and Litigation. There is no pending or threatened claim,
audit, investigation, action or other legal proceeding or judgment,
order or award of any court, agency or other governmental authority
or arbitrator (any, an "Action") which involves the Borrower, its
Subsidiaries or their respective assets and might have a material
adverse effect upon the Borrower or any Subsidiary or threaten the
validity of the Credit, any Transaction Document or any related
document or action.
g. Full Disclosure. Neither this Agreement nor any certificate,
financial statement or other writing provided to the Bank by or on
behalf of the Borrower or any Subsidiary contains any statement of
fact that is incorrect or misleading in any material respect or
omits to state any fact necessary to make any such statement not
incorrect or misleading. The Borrower has not failed to disclose to
the Bank any fact that might have a material adverse effect on the
Borrower or any Subsidiary.
4. AFFIRMATIVE COVENANTS. So long as this Agreement is in effect, the Borrower
will comply with any "Additional Affirmative Covenant" contained in the Schedule
and shall:
a. Financial Statements and Other Information. Promptly deliver to the
Bank (i) within sixty (60) days after the end of each of its first
three fiscal quarters, an unaudited consolidating and consolidated
financial statement of the Borrower and each Subsidiary as of the
end of such quarter, which financial statement shall consist of
income and cash flows for the quarter, for the corresponding quarter
in the previous fiscal year and for the period from the end of the
previous fiscal year, with a consolidating and consolidated balance
sheet as of the quarter end all in such detail as the Bank may
request; (ii) within ninety (90) days after the end of each fiscal
year, consolidating and consolidated statements of the Borrower's
and each Subsidiary's income and cash flows and its consolidating
and consolidated balance sheet as of the end of such fiscal year,
setting forth comparative figures for the preceding fiscal year and
to be (check applicable box, if no box is checked the financial
statements shall be audited):
|X| audited |_| reviewed |_| compiled
by an independent certified public accountant acceptable to the
Bank; all such statements shall be certified by the Borrower's chief
financial officer to be correct and in accordance with the
Borrower's and each Subsidiary's records and to present fairly the
results of the Borrower's and each Subsidiary's operations and cash
flows and its financial position at year end; and (iii) with each
statement of income, a certificate executed by the Borrower's chief
executive and chief financial officers or other such person
responsible for the financial management of the Borrower (A) setting
forth the computations required to establish the Borrower's
compliance with each financial covenant, if any, during the
statement period, (B) stating that the signers of the certificate
have reviewed this Agreement and the operations and condition
(financial or other) of the Borrower and each of its Subsidiaries
during the relevant period and (C) stating that no Event of Default
occurred during the period, or if an Event of Default did occur,
describing its nature, the date(s) of its occurrence or period of
existence and what action the Borrower has taken with respect
thereto. The Borrower shall also promptly provide the Bank with
copies of all annual reports, proxy statements and similar
information distributed to shareholders, partners or members, and
copies of all filings with the Securities and Exchange Commission
and the Pension Benefit Guaranty Corporation, and shall provide, in
form satisfactory to the Bank, such additional information, reports
or other information as the Bank may from time to time reasonably
request regarding the financial and business affairs of the Borrower
or any Subsidiary. If the Borrower is an individual, the Borrower
shall provide annually a personal financial statement in form and
detail acceptable to the Bank and such other financial information
as the Bank may from time to time reasonably request.
b. Accounting; Tax Returns and Payment of Claims. The Borrower and each
Subsidiary will maintain a system of accounting and reserves in
accordance with generally accepted accounting principles, has filed
and will file each tax return required of it and, except as
disclosed in the Schedule, has paid and will pay when due each tax,
assessment, fee, charge, fine and penalty imposed by any taxing
authority upon it or any of its assets, income or franchises, as
well as all amounts owed to mechanics, materialmen, landlords,
suppliers and the like in the normal course of business.
c. Inspections. Promptly upon the Bank's request, the Borrower will
permit, and cause its Subsidiaries to permit, the Banks officers,
attorneys or other agents to inspect its and its Subsidiary's
premises, examine and copy its records and discuss its and its
Subsidiary's business, operations and financial or other condition
with its and its Subsidiary's responsible officers and independent
accountants.
d. Operating Accounts. Maintain, and cause its Subsidiaries to
maintain, all bank accounts with the Bank.
e. Changes in Management and Control. If the Borrower is not an
individual, immediately upon any change in the identity of the
Borrower's chief executive officers or in its beneficial ownership,
the Borrower will provide to the Bank a certificate executed by its
senior individual authorized to transact business on behalf of the
Borrower, specifying such change.
f. Notice of Defaults and Material Adverse Changes. Immediately upon
acquiring reason to know of (i) any Event of Default, (ii) any event
or condition that might have a material adverse effect upon the
Borrower or any Subsidiary or (iii) any Action, the Borrower will
provide to the Bank a certificate executed by the Borrower's senior
individual authorized to transact business on behalf of the
Borrower, specifying the date(s) and nature of the event or the
Action and what action the Borrower or its Subsidiary has taken or
proposes to take with respect to it.
g. Insurance. Maintain its, and cause its Subsidiaries to maintain,
property in good repair and will on request provide the Bank with
evidence of insurance coverage satisfactory to the Bank, including
fire and hazard, liability, workers' compensation and business
interruption insurance and flood hazard insurance as required.
h. Further Assurances. Promptly upon the request of the Bank, the
Borrower will execute, and cause its Subsidiaries to execute, and
deliver each writing and take each other action that the Bank deems
necessary or desirable in connection with any transaction
contemplated by this Agreement.
5. NEGATIVE COVENANTS. As long as this Agreement is in effect, the Borrower
shall not violate, and shall not suffer or permit any of its Subsidiaries to
violate, any of the following covenants and any "Additional Negative Covenant"
on the Schedule. The Borrower shall not:
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a. Indebtedness. Permit any indebtedness (including direct and
contingent liabilities) not described on the Schedule titled
"Permitted Indebtedness" except for trade indebtedness or current
liabilities for salary and wages incurred in the ordinary course of
business and not substantially overdue.
b. Guaranties. Become a guarantor, a surety, or otherwise liable for
the debts or other obligations of another, whether by guaranty or
suretyship agreement, agreement to purchase indebtedness, agreement
for furnishing funds through the purchase of goods, supplies or
services (or by way of stock purchase, capital contribution, advance
or loan) for the purpose of paying or discharging indebtedness, or
otherwise, except as an endorser of instruments for the payment of
money deposited to its bank account for collection in the ordinary
course of business and except as may be specified in the Schedule
titled "Permitted Guaranties".
c. Liens. Permit any of its assets to be subject to any security
interest, mortgage or other lien or encumbrance, except as set forth
on the Schedule titled "Permitted Liens" and except for liens for
property taxes not yet due; pledges and deposits to secure
obligations or performance for workers' compensation, bids, tenders,
contracts other than notes, appeal bonds or public or statutory
obligations; and materialmen's, mechanics', carriers' and similar
liens arising in the normal course of business.
d. Investments. Make any investment other than in FDIC insured deposits
or United States Treasury obligations of less than one year, or in
money market or mutual funds administering such investments, except
as set forth on the Schedule titled "Permitted Investments".
e. Loans. Make any loan, advance or other extension of credit except as
disclosed on the Schedule titled "Permitted Loans", except for
endorsements of negotiable instruments deposited to the Borrower's
deposit account for collection, trade credit in the normal course of
business and intercompany loans approved in writing by the Bank.
f. Distributions. If the Borrower is not an individual, declare or pay
any distribution, except for (i) dividends payable solely in stock
and (ii) cash dividends paid to the Borrower by its Subsidiary.
g. Changes In Form. (i) Transfer or dispose of substantially all of its
assets, (ii) acquire substantially all of the assets of any other
entity, (iii) do business under or otherwise use any name other than
its true name or (iv) make any material change in its business,
structure, purposes or operations that might have a material adverse
effect on the Borrower or any of its Subsidiaries. If the Borrower
or any Subsidiary is not an individual, (i) participate in any
merger, consolidation or other absorption or (ii) make, terminate or
permit to be revoked any election pursuant to Subchapter S of the
Internal Revenue Code.
6. FINANCIAL COVENANTS. During the term of this Agreement, the Borrower shall
not violate, and shall not suffer or permit any of its Subsidiaries to violate,
any of the following covenants (complete applicable financial covenant) or any
"Additional Financial Covenants" on the Schedule. For purposes of this Section,
if the Borrower has any Subsidiaries all references to the Borrower shall
include the Borrower and all of its subsidiaries on a consolidated basis. Unless
a different measurement period is specified, compliance for the financial
covenants shall be required at all times.
|_| a. Borrower shall maintain Tangible Net Worth of not less than $_____,
measured (select one: quarterly or annually) _____ as of each
(select one: quarter or fiscal year) _____ end.
|_| b. Borrower shall maintain a ratio of Total Liabilities to Tangible Net
Worth of not greater than _____:_____, measured (select one: quarterly
or annually) _____ as of each (select one: quarter or fiscal year)
_____ end.
|_| c. Borrower shall maintain a Current Ratio of not less than _____:_____,
measured (select one: quarterly or annually) _____ as of each (select
one: quarter or fiscal year) _____ end.
|_| d. Borrower shall maintain Working Capital of not less than $_____,
measured (select one: quarterly or annually) _____ as of each (select
one: quarter or fiscal year) _____ end.
|_| e. Borrower shall maintain Cash Flow Coverage of not less than
_____:_____, measured for the previous four quarters as of each
(select one: quarter or fiscal year) _____ end.
|_| f. Without the prior written consent of Bank, Borrower shall not make
any Capital Expenditures in excess of $_____ in the aggregate during
any fiscal year of Borrower.
|_| g. Borrower shall not pay or accrue during any fiscal year compensation
(including but not limited to all salary, bonuses, consulting,
management or other fees, rentals and other payments to any person
owning or managing 5% or more of the Borrower or any relative or
cohabitant of such a person, and to any entity under common control
with or controlling the Borrower) exceeding $_____ in the aggregate.
|_| h. Borrower shall not become obligated as lessee pursuant to operating
leases exceeding $_____ in the aggregate during any fiscal year.
7. DEFAULT.
a. Events of Default. Any of the following events or conditions shall
constitute an "Event of Default": (i) failure by the Borrower to pay
when due (whether at the stated maturity, by acceleration, upon
demand or otherwise) the Obligations, or any part thereof, or there
occurs any event or condition which after notice, lapse of time or
after both notice and lapse of time will permit acceleration of any
Obligation; (ii) default by the Borrower in the performance of any
obligation, term or condition of this Agreement, the other
Transaction Documents or any other agreement with the Bank or any of
its affiliates or subsidiaries (collectively, "Affiliates"); (iii)
failure by the Borrower to pay when due (whether at the stated
maturity, by acceleration, upon demand or otherwise) any
indebtedness or obligation owing to any third party or any
Affiliate, the occurrence of any event which could result in
acceleration of payment of any such indebtedness or obligation or
the failure to perform any agreement with any third party or any
Affiliate; (iv) the Borrower is dissolved, becomes insolvent,
generally fails to pay or admits in writing its inability generally
to pay its debts as they become due; (v) the Borrower makes a
general assignment, arrangement or composition agreement with or for
the benefit of its creditors or makes, or sends notice of any
intended, bulk sale; the sale, assignment, transfer or delivery of
all or substantially all of the assets of the Borrower to a third
party; or the cessation by the Borrower as a going business concern;
(vi) the Borrower files a petition in bankruptcy or institutes any
action under federal or state law for the relief of debtors or seeks
or consents to the appointment of an administrator, receiver,
custodian or similar official for the wind up of its business (or
has such a petition or action filed against it and such petition
action or appointment is not dismissed or stayed within forty-five
(45) days); (vii) the reorganization, merger, consolidation or
dissolution of the Borrower (or
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the making of any agreement therefor); (viii) the death or judicial
declaration of incompetency of the Borrower, if an individual; (ix)
the entry of any judgment or order of any court, other governmental
authority or arbitrator against the Borrower; (x) falsity, omission
or inaccuracy of facts submitted to the Bank or any Affiliate
(whether in a financial statement or otherwise); (xi) an adverse
change in the Borrower, its business, assets, operations, affairs or
condition (financial or otherwise) from the status shown on any
financial statement or other document submitted to the Bank or any
Affiliate, and which change the Bank determines will have a material
adverse affect on (a) the Borrower, its business, assets, operations
or condition (financial or otherwise), or (b) the ability of the
Borrower to pay or perform the Obligations; (xii) any pension plan
of the Borrower fails to comply with applicable law or has vested
unfunded liabilities that, in the opinion of the Bank, might have a
material adverse effect on the Borrower's ability to repay its
debts; (xiii) any indication or evidence received by the Bank that
the Borrower may have directly or indirectly been engaged in any
type of activity which, in the Bank's discretion, might result in
the forfeiture or any property of the Borrower to any governmental
authority; (xiv) the occurrence of any event described in Section
7(a)(i) through and including 7(a)(xiii) with respect to any
Subsidiary or to any endorser, guarantor or any other party liable
for, or whose assets or any interest therein secures, payment of any
of the Obligations; or (xv) the Bank in good xxxxx xxxxx itself
insecure with respect to payment or performance of the Obligations.
b. Rights and Remedies Upon Default. Upon the occurrence of any Event
of Default, the Bank without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except
any notice required by law) to or upon the Borrower, any Subsidiary
or any other person (all and each of which demands, presentments,
protests, advertisements and notices are hereby waived), may
exercise all rights and remedies under the Borrower's or its
Subsidiaries' agreements with the Bank or its Affiliates, applicable
law, in equity or otherwise and may declare all or any part of any
Obligations not payable on demand to be immediately due and payable
without demand or notice of any kind and terminate any obligation it
may have to grant any additional loan, credit or other financial
accommodation to the Borrower or any Subsidiary. All or any part of
any Obligations whether or not payable on demand, shall be
immediately due and payable automatically upon the occurrence of an
Event of Default in Section 7(a)(vi) above. The provisions hereof
are not intended in any way to affect any rights of the Bank with
respect to any Obligations which may now or hereafter be payable on
demand.
8. EXPENSES. The Borrower shall pay to the Bank on demand all costs and expenses
(including all fees and disbursements of counsel retained for advice, suit,
appeal or other proceedings or purpose and of any experts or agents it may
retain), which the Bank may incur in connection with (i) the administration of
the Obligations, including any administrative fees the Bank may impose for the
preparation of discharges, releases or assignments to third-parties; (ii) the
enforcement and collection of any Obligations or any guaranty thereof; (iv) the
exercise, performance, enforcement or protection of any of the rights of the
Bank hereunder; or (v) the failure of the Borrower or any Subsidiary to perform
or observe any provisions hereof. After such demand for payment of any cost,
expense or fee under this Section or elsewhere under this Agreement, the
Borrower shall pay interest at the highest default rate specified in any
instrument evidencing any of the Obligations from the date payment is demanded
by the Bank to the date reimbursed by the Borrower. All such costs, expenses or
fees under this Agreement shall be added to the Obligations.
9. TERMINATION. This Agreement shall remain in full force and effect until (i)
all Obligations outstanding, or contracted or committed for (whether or not
outstanding), shall be finally and irrevocably paid in full and (ii) all
Transaction Documents have been terminated by the Bank.
10. RIGHT OF SETOFF. If an Event of Default occurs, the Bank shall have the
right to set off against the amounts owing under this Agreement and the other
Transaction Documents any property held in a deposit or other account or
otherwise with the Bank or its Affiliates or otherwise owing by the Bank or its
Affiliates in any capacity to the Borrower, its subsidiary or any guarantor of,
or endorser of any of the Transaction Documents evidencing, the Obligations.
Such setoff shall be deemed to have been exercised immediately at the time the
Bank or such Affiliate elect to do so.
11. MISCELLANEOUS.
a. Notices. Any demand or notice hereunder or under any applicable law
pertaining hereto shall be in writing and duly given if delivered to
Borrower (at its address on the Bank's records) or to the Bank (at
the address on page one and separately to the Bank officer
responsible for Borrower's relationship with the Bank). Such notice
or demand shall be deemed sufficiently given for all purposes when
delivered (i) by personal delivery and shall be deemed effective
when delivered, or (ii) by mail or courier and shall be deemed
effective three (3) business days after deposit in an official
depository maintained by the United States Post Office for the
collection of mail or one (1) business day after delivery to a
nationally recognized overnight courier service (e.g., Federal
Express). Notice by e-mail is not valid notice under this or any
other agreement between Borrower and the Bank.
b. Generally Accepted Accounting Principles. Any financial calculation
to be made, all financial statements and other financial information
to be provided, and all books and records, system of accounting and
reserves to be kept in connection with the provisions of this
Agreement, shall be in accordance with generally accepted accounting
principles consistently applied during each interval and from
interval to interval; provided, however, that in the event changes
in generally accepted accounting principles shall be mandated by the
Financial Accounting Standards Board or any similar accounting body
of comparable standing, or should be recommended by Borrower's
certified public accountants, to the extent such changes would
affect any financial calculations to be made in connection herewith,
such changes shall be implemented in making such calculations only
from and after such date as Borrower and the Bank shall have amended
this Agreement to the extent necessary to reflect such changes in
the financial and other covenants to which such calculations relate.
c. Indemnification. If after receipt of any payment of all, or any part
of, the Obligations, the Bank is, for any reason, compelled to
surrender such payment to any person or entity because such payment
is determined to be void or voidable as a preference, an
impermissible setoff, or a diversion of trust funds, or for any
other reason, the Transaction Documents shall continue in full force
and the Borrower shall be liable, and shall indemnify and hold the
Bank harmless for, the amount of such payment surrendered. The
provisions of this Section shall be and remain effective
notwithstanding any contrary action which may have been taken by the
Bank in reliance upon such payment, and any such contrary action so
taken shall be without prejudice to the Banks rights under the
Transaction Documents and shall be deemed to have been conditioned
upon such payment having become final and irrevocable. The
provisions of this Section shall survive the termination of this
Agreement and the Transaction Documents.
d. Further Assurances, From time to time, the Borrower shall take, and
cause its Subsidiaries to take, such action and execute and deliver
to the Bank such additional documents, instruments, certificates,
and agreements as the Bank may reasonably request to effectuate the
purposes of the Transaction Documents.
5
e. Cumulative Nature and Non-Exclusive Exercise of Rights and Remedies.
All rights and remedies of the Bank pursuant to this Agreement and
the Transaction Documents shall be cumulative, and no such right or
remedy shall be exclusive of any other such right or remedy. In the
event of any unreconcilable inconsistencies, this Agreement shall
control. No single or partial exercise by the Bank of any right or
remedy pursuant to this Agreement or otherwise shall preclude any
other or further exercise thereof, or any exercise of any other such
right or remedy, by the Bank.
f. Governing Law; Jurisdiction. This Agreement has been delivered to
and accepted by the Bank and will be deemed to be made in the State
of New York. This Agreement will be interpreted in accordance with
the laws of the State of New York excluding its conflict of laws
rules. BORROWER HEREBY IRREVOCABLY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT IN THE STATE OF NEW YORK
IN A COUNTY OR JUDICIAL DISTRICT WHERE THE BANK MAINTAINS A BRANCH
AND CONSENTS THAT THE BANK MAY EFFECT ANY SERVICE OF PROCESS IN THE
MANNER AND AT BORROWER'S ADDRESS SET FORTH ABOVE FOR PROVIDING
NOTICE OR DEMAND; PROVIDED THAT NOTHING CONTAINED IN THIS AGREEMENT
WILL PREVENT THE BANK FROM BRINGING ANY ACTION, ENFORCING ANY AWARD
OR JUDGMENT OR EXERCISING ANY RIGHTS AGAINST BORROWER INDIVIDUALLY,
AGAINST ANY SECURITY OR AGAINST ANY PROPERTY OF BORROWER WITHIN ANY
OTHER COUNTY, STATE OR OTHER FOREIGN OR DOMESTIC JURISDICTION.
Borrower acknowledges and agrees that the venue provided above is
the most convenient forum for both the Bank and Borrower. Borrower
waives any objection to venue and any objection based on a more
convenient forum in any action instituted under this Agreement.
g. Joint and Several; Successors and Assigns. If there is more than one
Borrower, each of them shall be jointly and severally liable for all
amounts, which become due, and the performance of all obligations
under this Agreement, and the term "the Borrower" shall include each
as well as all of them. This Agreement shall be binding upon the
Borrower and upon its heirs and legal representatives, its
successors and assignees, and shall inure to the benefit of, and be
enforceable by, the Bank, its successors and assignees and each
direct or indirect assignee or other transferee of any of the
Obligations; provided, however, that this Agreement may not be
assigned by the Borrower without the prior written consent of the
Bank.
h. Waivers; Changes In Writing. No failure or delay of the Bank in
exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The Borrower
expressly disclaims any reliance on any course of dealing or usage
of trade or oral representation of the Bank (including
representations to make loans to the Borrower) and agrees that none
of the foregoing shall operate as a waiver of any right or remedy of
the Bank. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in
similar or other circumstances. No waiver of any provision of this
Agreement or consent to any departure by the Borrower therefrom
shall in any event be effective unless made specifically in writing
by the Bank and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. No
modification to any provision of this Agreement shall be effective
unless made in writing in an agreement signed by the Borrower and
the Bank.
i. Interpretation. Unless the context otherwise clearly requires,
references to plural includes the singular and references to the
singular include the plural; references to "individual" shall mean a
natural person and shall include a natural person doing business
under an assumed name (e.g., a "DBA"); the word "or" has the
inclusive meaning represented by the phrase "and/or"; the word
"including", "includes" and "include" shall be deemed to be followed
by the words "without limitation"; and captions or section headings
are solely for convenience and not part of the substance of this
Agreement. Any representation, warranty, covenant or agreement
herein shall survive execution and delivery of this Agreement and
shall be deemed continuous. Each provision of this Agreement shall
be interpreted as consistent with existing law and shall be deemed
amended to the extent necessary to comply with any conflicting law.
If any provision nevertheless is held invalid, the other provisions
shall remain in effect. The Borrower agrees that in any legal
proceeding, a photocopy of this Agreement kept in the Bank's course
of business may be admitted into evidence as an original.
j. Waiver of Jury Trial. THE BORROWER AND THE BANK HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY THE
BORROWER AND THE BANK MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW
OR IN EQUITY, IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTIONS
RELATED HERETO. THE BORROWER REPRESENTS AND WARRANTS THAT NO
REPRESENTATIVE OR AGENT OF THE BANK HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE BANK WILL NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THIS JURY TRIAL WAIVER. THE BORROWER ACKNOWLEDGES THAT
THE BANK HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE PROVISIONS OF THIS SECTION.
Acknowledgment. Borrower acknowledges that it has read and understands all the
provisions of this Agreement, including the Governing Law, Jurisdiction and
Waiver of Jury Trial, and has been advised by counsel as necessary or
appropriate.
Date: March 24, 2005
TIN # 00-0000000
SONO-TEK CORPORATION
By: /s/ Xxxxxxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxxxxxx X. Xxxxxx, President
Witness: /s/ Xxxxx X. X'Xxxxx
---------------------------------
(Signature)
Xxxxx X. X'Xxxxx
---------------------------------
(Typed Name)
6
ACCEPTED:
Date: March 24, 2005
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /s/ Xxxxx X. X'Xxxxx
--------------------------------------
Xxxxx X'Xxxxx, Vice President
ACKNOWLEDGMENT
STATE OF NEW YORK )
: SS.
COUNTY OF ULSTER )
On the 24th day of March, in the year 2005, before me, the undersigned, a
Notary Public in and for said State, personally appeared XXXXXXXXXXX X. XXXXXX,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within said instrument and
acknowledged to me that he/she executed the same in his/her capacity, and that
by his/her signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.
/s/ Xxxxxxxx X. Xxxxx
---------------------------------------------
Notary Public
[NOTARY STAMP]
FOR BANK USE ONLY
Authorization Confirmed:
-------------------------------------------------------
(if required per Credit Policy Manual Section 4.15.10, paragraph 1)
7
SCHEDULE
Additional Representations and Warranties (ss. 3)
Additional Affirmative Covenants (ss. 4)
Permitted Indebtedness (ss. 5(a))
Permitted Guaranties (ss. 5(b))
Permitted Liens (ss. 5(c))
Permitted Investments (ss. 5(d))
Permitted Loans (ss. 5(e))
Additional Financial Covenants (ss. 6)
8
