REVOLVING LOAN AND SECURITY AGREEMENT
This is a REVOLVING LOAN AND SECURITY AGREEMENT made the
day of July, 1995 between MIDLANTIC BANK, N.A. ("Lender"), having
offices at 000 Xxxxxx Xxxxxx, Xxxxx, Xxx Xxxxxx 00000 and
MEASUREMENT SPECIALTIES, INC., a corporation organized under the
laws of the State of New Jersey ("Borrower"), having its
principal place of business at 00 Xxxxxx Xxxxx Xxxx, Xxxxxxxxx,
Xxx Xxxxxx 00000.
1. DEFINITIONS.
"Account" - as defined in Section 2A.1(c)(i).
"Banking Day" - any day other than a Saturday, Sunday or legal
holiday for banks under the laws of the State of New Jersey.
"Collateral" - as defined in Section 3.2(b).
"Default Rate" - a rate of interest two (2%) percent per annum in
excess of the rate otherwise applicable at the time to a
Revolving Loan.
"Equipment" - as defined in Section 3.2(c).
"ERISA" - as defined in Section 4.17.
"Event of Default" - as defined in Section 8.
"Inventory" - as defined in Section 2A.1(c)(iii).
"ISRA" - the New Jersey Industrial Site Recovery Act, as amended
(N.J.S.A. 13:1K-6 et seq.).
"Net Value of Qualified Inventory" - as defined in Section
2A.1(c)(v).
"Obligations" - as defined in Section 3.2(a).
"PBGC" - Pension Benefit Guaranty Corporation.
"Prime Rate" - the rate of interest announced from time to time
by Lender as its "prime rate" or "prime lending rate", whether or
not such rate is published or otherwise made known to the
Borrower, which rate is determined from time to time by Lender as
a means of pricing some loans to its customers and is neither
tied to any external rate of interest or index nor necessarily
reflects the lowest rate of interest actually charged by Lender
to any particular class or category of customers.
"Qualified Account" - as defined in Section 2A.1(c)(ii).
"Qualified Inventory" - as defined in Section 2A.1(c)(iv).
"Related Entity" - any domestic corporate subsidiary or affiliate
of Borrower, and any domestic unincorporated association or other
domestic entity through which Borrower conducts any part of its
business.
"Relevant Documents" - any and all documents and instruments
delivered to Lender pursuant or incident to this Agreement or the
Revolving Loan (a) by Borrower or any Related Entity, (b) by any
pledgor or grantor of a lien, security interest or other right,
or (c) by any guarantor of any of the Obligations.
"Revolving Loan" or "Revolving Loans" - as defined in Section
2A.1(a).
"Revolving Loan Limit" - as defined in Section 2A.1(b).
"Revolving Note" - as defined in Section 2A.1(a).
"Tangible Capital Funds" - as defined in Section 6.19.
"Tangible Net Worth" - as defined in Section 6.20.
"UCC" - the Uniform Commercial Code as in effect from time to
time in the State of New Jersey.
"Working Capital" - as defined in Section 6.18.
2A. REVOLVING LOANS; ACCOUNTS; INVENTORY.
2A.1 AMOUNT AND CERTAIN DEFINITIONS.
(a) Lender may at its discretion, upon the request of Borrower,
make loans or issue letters of credit hereunder to Borrower (a
"Revolving Loan" or the "Revolving Loans") from time to time on a
revolving loan basis in an aggregate principal amount not in
excess at any time outstanding of the Borrower's Revolving Loan
Limit; provided that, if the outstanding amount of the Revolving
Loans should exceed the Revolving Loan Limit at any time, such
excess (i) shall nevertheless be secured by the Collateral and be
subject to the terms of this Agreement, and (ii) shall be payable
immediately upon demand by Lender. The Revolving Loans shall be
payable (i) within one hundred twenty (120) days after demand by
Lender, or (ii) at such other time as is provided in Section 9,
Section 11 or elsewhere in this Agreement, whichever of (i) or
(ii) shall first occur. The Revolving Loans may, but need not,
be evidenced by one or more promissory notes (referred to
collectively as the "Revolving Note" in the form of Exhibit A
annexed to this Agreement); except as may be otherwise provided
in a Revolving Note, the Revolving Loans shall be payable in
accordance with the terms of this Agreement.
(b) Definition of Revolving Loan Limit.
i) Borrower's Revolving Loan Limit shall be the lesser of Two
Million ($2,000,000.00) Dollars or the sum of the following:
A) eighty (80%) percent of the face amount of Qualified
Accounts (less reserves determined by Lender for advertising
allowances, warranty claims and other contingencies), which
percentage Lender may increase or decrease from time to time as
Lender in its sole and absolute discretion may determine; plus
B) fifty (50%) percent of the face amount of accounts
receivable arising from the sale of goods or the performance of
services by the Borrower in Canada, provided those accounts
receivable would otherwise be deemed Qualified Accounts (less
reserves determined by Lender for advertising allowances,
warranty claims and other contingencies), which percentage Lender
may increase or decrease from time to time as Lender in its sole
and absolute discretion may determine; plus
C) the lesser of thirty (30%) percent of the Net Value of
Qualified Inventory or Four Hundred Thousand ($400,000.00)
Dollars, which percentage or amount Lender may increase or
decrease from time to time as Lender in its sole and absolute
discretion may determine, less
D) the full face amount of any and all outstanding letters
of credit issued by the Bank for the account of the Borrower.
ii) Lender shall have the right to increase or decrease the
Revolving Loan Limit from time to time. The Revolving Loan Limit
shall be subject to the limitation stated in Section 11.3 in the
event of notice of termination of this Agreement.
(c) Definitions of Account; Qualified Account; Inventory;
Qualified Inventory; Net Value of Qualified Inventory.
i) The term "Account" shall mean all items described in the UCC
definition thereof and all of the following, whether or not so
described (in all cases whether now existing or hereafter
created): all obligations of any kind at any time due or owing
to Borrower and all rights of Borrower to receive payment or any
other consideration (whether classified under the UCC or the law
of any other state as accounts, accounts receivable, contract
rights, chattel paper, general intangibles, or otherwise)
including without limitation invoices, contract rights, accounts
receivable, general intangibles, closes-in-action, notes, drafts,
acceptances, instruments and all other debts, obligations and
liabilities in whatever form owing to Borrower from any person,
firm, corporation, governmental authority or other entity,
together with all security for any thereof, and all of Borrower's
rights to goods sold (whether delivered, undelivered, in transit
or returns), represented by any thereof, together with all
proceeds and products of any of the foregoing.
ii) The term "Qualified Account" shall mean an Account which has
been identified and described to Lender's satisfaction, is
represented by Borrower (by its acceptance of Revolving Loans
thereon) as meeting all of the following criteria on its
origination date and thereafter until collected, and is in all
other respects acceptable to Lender:
A) Borrower is the sole owner of the Account and has not
sold, assigned or otherwise transferred it, and the Account is
not subject to any claim, lien or security interest;
B) The Account is bona fide and legally enforceable and
owing to Borrower for the sale of goods or performance of
services in the United States or, if outside of the United
States, where the Account is backed by a letter of credit in
favor of the Borrower, and in the ordinary course of business and
the Account does not require any further act on the part of
Borrower to make it owing by the Account debtor, and Borrower has
delivered to Lender (or, at the time of origination of the
Account, if required by Lender, will deliver to Lender) invoices,
xxxxxxxx, shipping documents and other documents evidencing the
obligation to pay the Account;
C) The Account does not represent a conditional sale,
consignment or other sale on a basis other than that of absolute
sale, is not evidenced by any note, instrument, chattel paper or
like document, and does not arise out of a contract with the
United States or any of its departments, agencies or
instrumentalities, unless the Bank determines, in its sole and
absolute discretion, that its security interest in Accounts due
from the United States or any of its departments, agencies or
instrumentalities, has been properly perfected under the Federal
Assignment of Claims Act;
D) The Account is invoiced on the date Inventory or other
goods represented thereby are shipped to the account debtor, and
the invoice is not outstanding more than ninety (90) days from
the invoice date, unless ninety (90) day repayment terms are
granted in which case the invoice is not outstanding more than
one hundred twenty (120) days from the invoice date;
E) The amount of the Account included in calculating the
Revolving Loan Limit does not exceed twenty-five (25%) percent of
Borrower's total Qualified Account at the time outstanding;
F) The Account is not subject to any defense, offset,
counterclaim, credit, allowance or adjustment except usual and
customary prompt payment discounts, nor has the Account debtor
returned the goods or indicated any dispute or complaint
concerning them;
G) Not more than fifty (50%) percent of the aggregate
amount of all amounts owed by an account debtor are overdue
more than ninety (90) days from the invoice date, unless
ninety (90) day repayment terms are granted in which case
not more than fifty (50%) percent of the aggregate amount of
all amounts owed by an account debtor are overdue more than
one hundred twenty (120) days from the invoice date, or
Borrower has not received any notice, nor has it any
knowledge, of any facts which adversely affect the credit of
the account debtor; and
H) The Account debtor is not a Related Entity or other
subsidiary or affiliate of Borrower nor a director or officer of
Borrower or a subsidiary or affiliate of any director or officer.
iii) The term "Inventory" shall mean all items described in the
UCC definition thereof and all of the following, whether or not
so described (in all cases whether now owned or hereafter
acquired by Borrower and wherever located): all goods,
merchandise or other personal property held by Borrower for sale
or lease or to be furnished under labels and other devices, names
or marks affixed thereto for purposes of selling or identifying
the same or the seller or manufacturer thereof, and all right,
title and interest of Borrower therein and thereto; all raw
materials, work or goods in process; and all materials and
supplies of any kind or description used or usable in connection
with the manufacture, packaging, shipping, advertisement, sale or
finishing of any of the foregoing, together with all proceeds and
products of any of the foregoing.
iv) The term "Qualified Inventory" shall mean the Inventory which
has been identified and described to Lender's satisfaction, is
represented by Borrower (by its acceptance of Revolving Loans
thereon) as meeting all of the following criteria on the date of
any Revolving Loan based thereon and thereafter while any of the
Obligations are outstanding, and is in all other respects
acceptable to Lender:
A) Borrower is the sole owner of the Inventory; none of the
Inventory is being held by Borrower on a consignment basis;
Borrower has not sold, assigned or otherwise transferred all or
any portion thereof; and none thereof is subject to any claim,
lien or security interest;
B) If any of the Inventory is represented or covered by any
document of title, instrument or chattel paper, Borrower is the
sole owner of all such documents, instruments and paper, all
thereof are in the possession of Lender, none thereof has been
sold, assigned or otherwise transferred, and none thereof is
subject to any claim, lien or security interest;
C) None of the Inventory has been sold under a xxxx-and-
hold, guaranteed sale, sale-and-return, sale on approval or
consignment basis, or any other basis subject to a repurchase
obligation or return right, as permitted under Section 6.9 of
this Agreement; and
D) The Inventory is located only at the Borrower's principal
place of business set forth in Section 4.14 of this Agreement, or
at public warehouses under the Borrower's direction and from whom
the Bank has received a warehouseman's letter, in form and
substance acceptable to the Bank, unless the Inventory is in
transit and is subject to a letter of credit issued by the Bank.
v) The term "Net Value of Qualified Inventory" shall mean the
value, as determined by Lender in its sole and absolute
discretion, of the Qualified Inventory in the actual or
constructive possession of Borrower at any time, exclusive of any
transportation, processing or handling charges affecting the
value thereof, and exclusive of work-in-process and such other
value as Lender in its sole and absolute discretion determines to
exclude.
2A.2 INTEREST RATE. The Revolving Loans shall bear interest at a
fluctuating interest rate per annum equal at all times to one and
one-eighth (1.125%) percent above Lender's Prime Rate in effect
from time to time, each change in such fluctuating rate to take
effect simultaneously with the corresponding change in the Prime
Rate, without notice to Borrower.
2A.3 PAYMENT OF INTEREST. Interest on the Revolving Loans shall
be payable on the first day of each month in arrears by
automatically debiting any loan or deposit account of Borrower
maintained with the Lender. Any failure or delay by Lender in
debiting such account or accounts for the payment of interest
shall not discharge or relieve Borrower of the obligation to make
such interest payments. At Lender's option, Lender may also
charge any loan or deposit account of Borrower for the interest
payments due and any other charges payable by Borrower to Lender
including, without limitation, interest fees and expenses.
Borrower hereby consents to such automatic charge by Lender.
2A.4 COLLECTION AND REMITTANCE. Borrower covenants and agrees
(a) to receive in trust for Lender all payments on Accounts for
the sale of goods or performance of services and all payments on
Inventory, in each case whether cash, checks, drafts, notes,
acceptances or other forms of payment, and (b) to deliver such
payments to Lender forthwith in the identical form in which
received.
2A.5 DETERMINATION OF BALANCE OF REVOLVING LOANS.
(a) In determining the outstanding balance of the Revolving
Loans, (i) domestic checks received by Lender's Commercial
Finance Department before noon of a Banking Day will be credited
on that Banking Day, and thereafter on the following Banking Day;
(ii) any other form of funds received by Lender's Commercial
Finance Department will be credited on the Banking Day when that
Department has received notification of collection if before
noon, and thereafter on the following Banking Day; and (iii) all
credits shall be conditional upon final payment to Lender in cash
or solvent credits of the items giving rise to them and, if any
item is not so paid, the amount of any credit given for it shall
be charged to the balance of the Revolving Loans whether or not
the item is returned.
(b) For the purpose of computing interest on the Revolving Loans
and other Obligations in the event the Obligations under this
Agreement become fully monitored, on a daily basis, at the sole
discretion of the Bank, interest shall continue to accrue on the
amount of any payment received by Lender's Commercial Finance
Department for a period of two (2) Banking Days after it is
credited.
2A.6 MONTHLY AND INTERIM STATEMENTS. Once each month Lender
shall render a statement of account to Borrower showing the
current status of principal, interest and service charges with
respect to the Revolving Loans. If these statements or any
interim statements indicate that the outstanding balance of the
Revolving Loans exceeds the Revolving Loan Limit, Borrower, at
Lender's option, forthwith shall either furnish additional
Collateral satisfactory to Lender or pay the difference in cash.
The statement of account rendered by Lender shall be considered
correct, accepted by Borrower and conclusively binding upon
Borrower, unless Borrower gives Lender written notice to the
contrary within ten (10) Banking Days after the sending of the
statement by Lender. If Borrower disputes the correctness of
Lender's statement, Borrower's notice shall specify in detail the
particulars of its basis for contending that Lender's statement
is incorrect.
2A.7 OVERDRAFTS. In the event Lender honors a check of Borrower
resulting in Borrower's checking account being overdrawn, then
Lender shall be deemed to have loaned the amount of such
overdraft to Borrower, pursuant to the terms of this Section 2A,
on the Lender's Banking Day immediately preceding the day on
which the Borrower's check is tendered to Lender for
collection. Lender shall not be obliged to honor any overdraft
of Borrower, whether or not it has done so in the past.
2B. ADDITIONAL PROVISIONS RE: INTEREST AND PAYMENTS ON ALL
REVOLVING LOANS.
2B.1 INTEREST CALCULATION; LAWFUL RATE. Interest on the
Revolving Loans shall be calculated on a daily basis upon the
unpaid principal balance, with each day representing 1/360th of a
year. If the interest rate calculated in accordance with any
provision of this Agreement for any of the Revolving Loans would
at any time exceed the maximum permitted by any law then
applicable to such Revolving Loans, then for such period as such
rate would exceed the maximum permitted by such law (and no
longer) the rate of interest payable on such Revolving Loans
shall be reduced to the maximum permitted by such law.
2B.2 CHARGE AGAINST BORROWER. Lender may, at its discretion,
charge the amount of any payment of principal or interest on any
of the Revolving Loans to any checking or loan account of
Borrower, deduct such amount from any future Revolving Loan to
Borrower, or apply any Collateral proceeds or other funds
received by Lender against payment of such amount.
2B.3 NON-BANKING DAYS. If any payment pursuant to this Agreement
or any of the Relevant Documents shall be stated to be due on a
day other than a Banking Day, such payment may be made on the
next succeeding Banking Day and such extension of time shall be
included in computation of the interest or other payment due.
2B.4 REIMBURSEMENT OF INCREASED COST TO LENDER. If any law,
regulation or guideline, or change in any law, regulation or
guideline or in the interpretation thereof, or any order or
ruling by any regulatory body, court or other governmental
authority, or compliance by the Lender with any request or
directive (whether or not having the force of law) of any such
regulatory body, court or authority, shall impose, modify, or
deem applicable to Lender any reserve, capital, special deposit
or other requirement or condition in respect of this Agreement or
any of the Revolving Loans, which results in an increased cost or
reduced benefit to Lender in maintaining any of the Revolving
Loans (as determined by reasonable allocation of the aggregate of
such increased costs or reduced benefits to Lender resulting from
such event), then Borrower shall pay to Lender from time to time
upon demand additional amounts sufficient to compensate Lender
for such increased costs or reduced benefits, together with
interest on each such amount from a date ten (10) days after the
date of demand until payment in full thereof at the highest rate
then applicable to any of the Revolving Loans. A certificate
setting forth in reasonable detail such increased cost incurred
or reduced benefit realized by Lender as a result of any such
event shall be conclusive as to the amount thereof, absent
manifest error.
2B.5 FACILITY FEE AND COSTS. The Borrower shall pay to the
Lender a facility fee in an amount equal to Ten Thousand
($10,000.00) Dollars per annum, in immediately available funds.
The facility fee shall be due simultaneously with the execution
of this Agreement for the first year, and on the anniversary date
of this Agreement for every year thereafter.
0.XXXXXXXX INTEREST; ADDITIONAL DEFINITIONS.
3.1 GRANT OF SECURITY INTERESTS. As security for the due and
punctual payment and performance of all of the Obligations,
whether pursuant to this Agreement or otherwise, Borrower hereby
pledges, transfers and assigns to Lender, and grants to Lender
security interests in, (a) all of the Collateral wherever located
and whether now existing or hereafter created and whether now
owned or hereafter acquired by Borrower, and (b) all accessions
and additions thereto, replacements and substitutions therefor,
and proceeds and products thereof. The security interests
granted hereby, and all remedies and other rights stated or
referred to in this Agreement or any of the Relevant Documents,
shall continue in full force and effect until full and final
payment and performance of the Revolving Loans and all other
Obligations under this Agreement and the Relevant Documents.
3.2 DEFINITIONS OF "Obligations," "Collateral" and "Equipment".
(a) The term "Obligations" shall mean:
i) all principal of and interest on the Revolving Loans and all
other sums payable by Borrower or any Related Entity under the
terms of this Agreement or any of the Relevant Documents,
ii) all other indebtedness, liabilities, obligations and
agreements of every kind and nature of Borrower or any Related
Entity to or with Lender or any affiliate of Lender,
iii) all guaranties of any of Borrower's Obligations, and
iv) any participation or interest of Lender or any affiliate of
Lender in any indebtedness, liabilities, obligations or
agreements of Borrower, any Related Entity or any such guarantor
to or with others, in each case whether now existing or hereafter
created, whether now or hereafter contemplated, whether pursuant
to this Agreement, any of the Relevant Documents or otherwise,
whether in the form of refinancing, letters of credit, bankers
acceptances, guaranties, loans, interest, charges, fees, expenses
or otherwise, whether direct or indirect, whether acquired
outright, conditionally or as collateral security from another,
whether absolute or contingent, joint or several, liquidated or
unliquidated, secured or unsecured, and whether arising by
operation of law or otherwise, and including without limitation
any future advances, renewals, extensions, modifications or
changes in form of, or substitutions for, any of the items
described in the preceding clauses (i) through (iv).
(b) The term "Collateral" shall mean the following, wherever
located and whether now existing or hereafter created and whether
now owned or hereafter acquired by Borrower: (i) the Accounts;
(ii) the Inventory; (iii) the Equipment; (iv) all guaranties,
security and liens for payment of any Accounts, and all documents
of title, policies or certificates of insurance, insurance
proceeds, proceeds of condemnation or other seizure, securities,
chattel paper and other documents and instruments evidencing or
pertaining to any thereof; (v) all claims of Borrower against
third parties for loss of or damage to, or otherwise relating to,
any of the Collateral; (vi) all files, correspondence, customer
lists, computer programs, tapes, discs and related data
processing software, owned by Borrower or in which Borrower has
an interest, which contains information identifying any of the
Collateral or identifying any Account debtor or the amount owed
by same, or which would otherwise be necessary or helpful in the
realization on any of the Collateral; (vii) all moneys,
securities, drafts, notes, items, contract rights, leases,
licenses and general intangibles, and all general or special
deposits, balances, sums, proceeds and credits of Borrower;
(viii) all trade names, trademarks, trademark registrations,
copyrights, patents and licenses, and other franchises and
licenses in which Borrower has an interest, and all other
intangible personal property similar to any of the foregoing;
(ix) sixty-five (65%) percent of the capital stock of Measurement
Limited, the Borrower's Hong Kong affiliate, pursuant to a
certain Stock Pledge Assignment of even date herewith; (x) all
other property of Borrower; (xi) all rights and remedies which
Borrower might exercise with respect to any of the foregoing but
for the execution of this Agreement; and (xii) all accessions and
additions to, replacements and substitutions for, and proceeds
and products of, the items described in the preceding clauses (i)
through (xi).
(c) The term "Equipment" shall mean all items described in the
UCC definition thereof and all of the following, whether or not
so described (in all cases whether now owned or hereafter
acquired by Borrower and wherever located): all of Borrower's
equipment, machinery, furniture, fixtures, motor vehicles, parts,
supplies and tools, and all other tangible personal property
similar to any of the foregoing, and all repairs, modifications,
alterations, replacements, additions, controls and operating
accessories therefor.
3.3 FURTHER ASSURANCES. Borrower shall execute and deliver such
financing statements and other documents (in form and substance
satisfactory to Lender) and take such other actions as Lender may
request from time to time in order to create, perfect or continue
the security interests and other liens provided for by this
Agreement under the UCC or other laws of the State of New Jersey
or under any other state or federal law.
4. REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Lender, knowing and intending that Lender will rely
thereon in making the Revolving Loans contemplated hereby, that
the following statements are true and accurate.
4.1 ORGANIZATION AND QUALIFICATION.
(a) Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction stated at
the beginning of this Agreement.
(b) Borrower has the power and authority, and all necessary
licenses or other authorizations, to own its properties and to
carry on its business as now conducted, and is duly qualified and
in good standing in each jurisdiction wherein the nature of the
property owned or used or of the business conducted requires such
qualification.
4.2 DUE AUTHORIZATION; NO DEFAULT.
(a) The execution, delivery and performance by Borrower of this
Agreement, the Revolving Note and the Relevant Documents are
within Borrower's powers, have been duly authorized by all
necessary action on the part of Borrower, and do not and will not
(i) violate Borrower's Certificate or Articles of Incorporation
or Bylaws, or any applicable law or regulation, or any judgment,
order or decree of any judicial or other governmental body, (ii)
constitute a breach of, or default under, any agreement,
undertaking or instrument to which Borrower is a party or by
which it may be affected, or (iii) result in the imposition of
any lien, encumbrance or restriction on any assets of Borrower.
(b) Borrower has delivered to Lender true and complete copies of
Borrower's resolutions necessary to authorize the transactions
contemplated by this Agreement, and of Borrower's Certificate or
Articles of Incorporation and Bylaws, all as in effect on the
date hereof and certified by a duly authorized officer of the
Borrower.
(c) This Agreement and the Relevant Documents upon their
execution and delivery, and the Revolving Note upon their
issuance, will be legal, valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their
respective terms.
4.3 NO GOVERNMENTAL CONSENT NECESSARY. No authorization,
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for the due
execution, delivery and performance by Borrower of this
Agreement, the Revolving Note or any of the Relevant Documents.
4.4 NO PROCEEDINGS. There are no pending or, to the best of the
Borrower's knowledge, threatened claims, actions, proceedings or
investigations before any court, arbitrator, or governmental body
or agency that may, singly or in the aggregate, have a material
adverse effect on (a) the validity or enforceability of this
Agreement, the Revolving Note or any of the Relevant Documents,
or the ability of Borrower to perform any of its Obligations, or
(b) the financial condition or the properties or operations of
Borrower.
4.5 FINANCIAL STATEMENTS.
(a) Subject to any limitation stated therein, all balance sheets,
income statements and other financial data which have been or
shall hereafter be furnished to Lender do and will truly and
fairly present the financial condition of Borrower as of the
respective dates thereof and the results of its operations for
the periods ended on such dates, in accordance with generally
accepted accounting principles consistently applied during all
periods. All other information, reports and other papers and
data furnished to Lender are, or will be at the time the same are
so furnished, true, accurate and complete in all material
respects.
(b) Except as shown on the most recent financial statements set
forth on Schedule 1 to this Agreement, Borrower has no
liabilities as of the date hereof which would have an adverse
effect on the Collateral or on the financial condition,
operations or other properties of Borrower.
4.6 NO CHANGE IN FINANCIAL CONDITION; SOLVENCY.
(a) There has been no material change in Borrower's financial
condition since the date of its last financial statements set
forth on Schedule 1 to this Agreement.
(b) Borrower's assets, at a fair valuation, exceed Borrower's
liabilities (including, without limitation, contingent
liabilities), Borrower is paying its debts as they become due,
and Borrower has capital and assets sufficient to carry on its
business.
4.7 COMPLIANCE WITH LAWS. Borrower is in compliance with all
federal, state and local statutes, rules, regulations, orders and
other provisions of law applicable to its ownership or use of
properties or the conduct of its business; Borrower has not
received any notice of violation of any of the foregoing; and
Borrower is not in violation of any judgment, order or decree of
any judicial or other governmental body.
4.8 NO OTHER VIOLATIONS. Borrower is not in violation of any
term of its Certificate or Articles of Incorporation or Bylaws,
and no event or condition has occurred and is continuing which
constitutes or results in (or would constitute or result in, with
the giving of notice, lapse of time or other condition) (a)
breach of, or a default under, any material agreement,
undertaking or instrument to which Borrower is a party or by
which it may be affected, or (b) the imposition of any lien,
encumbrance or restriction on any property of Borrower.
4.9 TAXES AND ASSESSMENTS. Borrower has filed all federal, state
and local tax returns and other reports it is required to file to
the date hereof (or has obtained valid, written extensions as to
any not so filed), has paid all taxes, assessments and other
governmental charges due and payable to the date hereof, and has
made adequate provision for the payment of such taxes,
assessments and charges accrued but not yet payable. Borrower
has no knowledge of any deficiency or additional assessment in a
materially important amount in connection with any taxes,
assessments or other governmental charges not provided for or
disclosed in the financial statements set forth on Schedule 1 to
this Agreement. Borrower's federal income tax returns for the
period through the year ended March 31, 1991 have been audited by
the Internal Revenue Service, and the tax liability of Borrower
for such periods has been finally determined by the Internal
Revenue Service and satisfied.
4.10 ACCOUNTS. The list of Accounts dated June 30, 1995
delivered to Lender is complete and contains an accurate aging
thereof and, except as otherwise specified by Borrower to Lender
in writing, each of said Accounts meets the criteria for a
Qualified Account stated in Subsection 2A.1(c)(ii) of this
Agreement.
4.11 INVENTORY. Borrower's Inventory, as reflected by its most
recent balance sheet included on Schedule 1 to this Agreement,
consists of items of a quality and quantity usable or salable in
the ordinary course of its business; the values of obsolete
items, items below standard quality and items in the process of
repair have been written down to realizable market value, or
adequate reserves have been provided therefor; and the values
carried on said balance sheet are set at the lower of cost or
market, in accordance with generally accepted accounting
principles consistently applied.
4.12 BOOKS AND RECORDS. Borrower maintains its books and records
relative to its Accounts and its Inventory at 00 Xxxxxx Xxxxx
Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000.
4.13 LOCATION OF COLLATERAL. Except for Inventory in transit or
held by suppliers, none of the Inventory, Equipment or other
tangible property constituting part of the Collateral is or will
be, or has been during the six months preceding execution of this
Agreement, located in or on any premises other than those
identified in Schedule 2 to this Agreement. Schedule 2 contains
an accurate record of all landlords of premises leased by
Borrower and of all mortgagees of premises owned by Borrower.
4.14 PLACES OF BUSINESS. The principal place of business and
chief executive office of Borrower is located at 00 Xxxxxx Xxxxx
Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000. Schedule 3 to this Agreement
lists all of the other offices or locations in or from which
Borrower conducts any of its business or operations.
4.15 OTHER NAME OR ENTITIES. Except as disclosed on Schedule 4
to this Agreement, none of Borrower's business is conducted
through any corporate subsidiary or affiliate, unincorporated
association or other entity and Borrower has not, within the
seven years preceding the date of this Agreement (a) changed its
name, (b) used any name other than the name stated at the
beginning of this Agreement, or (c) merged or consolidated with,
or acquired the assets of, any corporation or other business.
4.16 TITLE AND LIENS. Borrower has good and marketable title to
all of the Collateral as sole owner thereof, free and clear of
any mortgage, security interest, assignment, pledge,
hypothecation, or other lien or encumbrance, except the liens
created by this Agreement and any identified on Schedule 5 to
this Agreement. None of the Collateral is subject to any
prohibition against encumbering, pledging, hypothecating or
assigning the same or requires notice or consent in connection
therewith.
4.17 ERISA. Borrower is in compliance in all material respects
with the provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and the related provisions of
the Internal Revenue Code, and with all regulations and published
interpretations issued thereunder by the United States Treasury
Department, the United States Department of Labor and the
PBGC. Neither a reportable event as defined in Section 4043 of
ERISA, nor a prohibited transaction as defined in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code, has occurred
and is continuing with respect to any employee benefit plan
subject to ERISA established or maintained, or to which
contributions have been or may be made, by Borrower or by any
trade or business (whether or not incorporated) which together
with Borrower would be treated as a single employer under Section
4001 of ERISA (any such trade or business being referred to
hereinafter as an "ERISA Affiliate," and any such employee
benefit plan being referred to hereinafter as a "Plan"). No
notice of intention to terminate a Plan has been filed nor has
any Plan been terminated; the PBGC has not instituted proceedings
to terminate, or to appoint a trustee to administer, any Plan,
nor do circumstances exist that constitute grounds for any such
proceedings; and neither Borrower nor any ERISA Affiliate has
completely or partially withdrawn from any multiemployer Plan
described in Section 4001(a)(3) of ERISA. Borrower and each
ERISA Affiliate has met the minimum funding standards under ERISA
with respect to each of its Plans; no Plan of Borrower or of any
ERISA Affiliate has an accumulated funding deficiency or waived
funding deficiency within the meaning of ERISA; and no material
liability to the PBGC under ERISA has been incurred by Borrower
or any ERISA Affiliate.
4.18 O.S.H.A. Borrower has duly complied with, and its
facilities, business, leaseholds, equipment and other property
are in compliance in all material respects with, the provisions
of the federal Occupational Safety and Health Act and all rules
and regulations thereunder and all similar state and local laws,
rules and regulations; and there are no outstanding citations,
notices or orders of non-compliance issued to Borrower or
relating to its facilities, business, leaseholds, equipment or
other property under any such law, rule or regulation.
4.19 ENVIRONMENTAL MATTERS.
(a) Except as disclosed in Schedule 6 to this Agreement, no
property owned or used by Borrower and located in the State of
New Jersey is an "industrial establishment" within the meaning of
the ISRA or is or has been used for the generation, manufacture,
refining, transportation, treatment, storage, handling or
disposal of any "hazardous substances" or "hazardous wastes"
within the meaning of ISRA. The following are all of the
Standard Industrial Classification Codes applicable to the
properties and operations of Borrower:
(b) Borrower is in compliance in all material respects with all
applicable federal, state and local statues, rules, regulations,
orders and other provisions of law relating to air emissions,
water discharge, noise emissions, solid and liquid disposal,
hazardous waste and substances, and other environmental, health
and safety matters.
4.20 MARGIN STOCK. No part of the proceeds of any Revolving Loan
will be used, directly or indirectly, to purchase or carry any
"margin stock" (as defined in Regulation U issued by the Board of
Governors of the Federal Reserve System), to extend credit to
others for the purpose of purchasing or carrying any such margin
stock, or for any purpose that violates any provision of
Regulations G, T, U or X issued by the Board of Governors of the
Federal Reserve System.
4.21 REPRESENTATIONS AND WARRANTIES TRUE, ACCURATE AND
COMPLETE;
CONFIRMATION WITH EACH LOAN.
(a) None of the representations, warranties or statements to
Lender contained in this Agreement, in any of the Relevant
Documents or in any other writing delivered to Lender in
connection with the Collateral, this Agreement or any of the
transactions contemplated thereby, contains or will contain any
untrue statement of a material fact or omits or will omit to
state a material fact necessary to make such representation,
warranty or statement not misleading in light of the
circumstances under which it is made. All of such
representations, warranties and statements shall survive until
full and final payment and performance of the Revolving Loans and
all other Obligations under this Agreement and the Relevant
Documents.
(b) Borrower's acceptance of each Revolving Loan under this
Agreement shall constitute a confirmation of the matters set
forth in the preceding Sections 4.1 through 4.21(a) as of the
date of such Loan. If requested by Lender, Borrower shall
further confirm such matters by delivery of a certificate dated
the day of the Revolving Loan and signed by a duly authorized
officer of Borrower satisfactory to Lender.
5. AFFIRMATIVE COVENANTS. Borrower covenants and agrees that,
until full and final payment and performance of the Revolving
Loans and all other Obligations under this Agreement and the
Relevant Documents, Borrower shall, unless Lender shall otherwise
consent in writing:
5.1 MAINTENANCE OF EXISTENCE AND QUALIFICATIONS. Maintain and
preserve in full force and effect its existence and good standing
and all other rights, powers, franchises, licenses and
qualifications necessary or desirable for its ownership or use of
properties or the conduct of its business.
5.2 PAYMENT OF TAXES AND OTHER OBLIGATIONS. Pay (a) before they
become delinquent, all taxes, assessments and governmental
charges imposed upon it or any of its property or required to be
collected by it, and (b) when due, all other indebtedness and
liabilities of any kind now or hereafter owing by it.
5.3 MAINTENANCE OF PROPERTIES. Maintain its properties in good
working order and condition.
5.4 NOTICE OF ADVERSE EVENTS. Promptly notify Lender in writing
of the occurrence or existence of any of the following:
(a) any Event of Default as defined in this Agreement or any
event which, with the giving of notice, lapse of time or other
condition, would become such an Event of Default;
(b) any matter or event which has resulted in, or may result in,
a material adverse change in the financial condition or any
property or operations of Borrower;
(c) any material claim, action, proceeding or investigation filed
or instituted against Borrower, or any adverse determination in
any material pending action, proceeding or investigation
affecting it [for purposes of this Section 5.4(c), "material"
shall mean any claim, action, proceeding or investigation in
excess of Fifty Thousand ($50,000.00) Dollars];
(d) any loss from casualty or theft in excess of Fifty Thousand
($50,000.00) Dollars, whether or not insured, affecting property
of Borrower;
(e) whether or not otherwise reportable under this Section 5.4,
any complaint, citation, order or other notice of a violation or
a claim involving any of the following, if the liability or
penalty therefor may exceed One Hundred Thousand ($100,000.00)
Dollars singly or in the aggregate: any applicable federal, state
or local statute, rule, regulation, order or other provision of
law relating to air emissions, water discharge, noise emissions,
solid or liquid disposal, hazardous waste or substances, or other
environmental, health or safety matters (the notice to Lender to
include, along with other relevant information, the name of the
complainant or claimant and the nature and potential amount of
the claim);
(f) any event or condition described in Section 8.15 of this
Agreement relating to ERISA;
(g) if any of the representations and warranties contained in
this Agreement, or in any of the Relevant Documents or any other
writing delivered to Lender by Borrower in connection with this
Agreement or any of the transactions contemplated thereby, ceases
to be true, correct and complete;
(h) any default or event of default under any lease agreement for
real property to which the Borrower is a party, or upon the
commencement by the landlord for possession of premises leased by
the Borrower or payment of back rent.
5.5 INFORMATION AND DOCUMENTS TO BE FURNISHED TO LENDER.
Furnish
to Lender in form and substance satisfactory to it:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available but in no
event later than ninety (90) days after the end of each fiscal
year of Borrower, a balance sheet of Borrower as of the end of
such year and statements of income, cash flows and changes in
stockholders' equity for such year (all in reasonable detail and
with all notes and supporting schedules), audited by an
independent certified public accountant satisfactory to Lender,
as presenting fairly the financial condition of Borrower as of
the dates and for the periods indicated and as having been
prepared in accordance with generally accepted accounting
principles consistently applied, except as may be otherwise
disclosed in such financial statements or the notes thereto,
together with (i) the related Form 10-K or 10-KSB filed by the
Borrower with the Securities and Exchange Commission, (ii) the
report from the Borrower's independent certified public
accountant as discussed more fully in Section 5.5(l) of this
Agreement and (iii) a consolidating balance sheet of Borrower as
of the end of such year and consolidating statement of income for
such year (all in reasonable detail and with all notes and
supporting schedules), prepared by management of the Borrower and
certified by the chief financial officer of Borrower as
presenting fairly the financial condition of Borrower as of the
dates and for the periods indicated and as having been prepared
in accordance with generally accepted accounting principles
consistently applied.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available but in
no event later than fifty (50) days after the end of each of the
first three (3) quarters of each fiscal year of Borrower, a
balance sheet of Borrower as of the end of such quarter and
statements of income, cash flows and changes in stockholders'
equity for such quarter and for the period commencing at the end
of the previous fiscal year and ending with the end of such
quarter (all in reasonable detail and with all notes and
supporting schedules) certified by the chief financial officer of
Borrower as presenting fairly the financial condition of Borrower
as of the dates and for the periods indicated and as having been
prepared in accordance with generally accepted accounting
principles consistently applied, except as may be otherwise
disclosed in such financial statements or the notes thereto,
together with (i) the related Form 10-Q or 10-QSB filed by the
Borrower with the Securities and Exchange Commission, and (ii) a
consolidating balance sheet of Borrower as of the end of such
quarter and consolidating statement of income for such quarter
and for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter (all in reasonable
detail and with all notes and supporting schedules), prepared by
management of the Borrower and certified by the chief financial
officer of Borrower as presenting fairly the financial condition
of Borrower as of the dates and for the periods indicated and as
having been prepared in accordance with generally accepted
accounting principles consistently applied.
(c) INFORMATION PROVIDED BY BORROWER TO THE PUBLIC.
Simultaneously with the release of any information by the
Borrower to its shareholders or the public at large, the Borrower
shall deliver that same information to the Bank.
(d) ACCOUNTS, INVENTORY AND ACCOUNTS PAYABLE REPORTS. On or
before the fifteenth (15th) day of each month as of the close of
the preceding month, and from time to time as Lender may require:
certificates and assignment schedules describing the Qualified
Account and Inventory in detail and total, aging reports of
Accounts, Accounts Payable aging reports, and Collateral and Loan
Reconciliation reports, all in such form as Lender may require.
(e) DAILY SALES REPORTS. On a daily basis, reports summarizing
the Borrower's daily sales, collections, and debit and/or credit
adjustments, and remittances, all in such form and with such
supporting documentation as Lender may require.
(f) PROJECTIONS. Within ninety (90) days following the close of
each fiscal year of the Borrower, consolidated and consolidating
financial projections of the Borrower's operations on a monthly
basis for the upcoming fiscal year and on an annual basis for
each fiscal year remaining under the term of this Agreement, all
in reasonable detail and in such form as the Lender may require
and prepared by the principal financial officer of the Borrower.
(g) CHANGE IN STATUS. Immediately, notice identifying any
Inventory or Account that has ceased to be Qualified Inventory or
a Qualified Account.
(h) REJECTION, DELAY, CLAIMS. Immediately, notice of the
rejection of goods, delay in performance, or claims made in
regard to Accounts.
(i) ERISA DOCUMENTS. As soon as filed or distributed, all ERISA
reports, notices, returns and other documents filed as required
by or in compliance with ERISA, whether to the Internal Revenue
Service, the Department of Labor, the Pension Benefit Guaranty
Corporation or any other appropriate agency.
(j) VIOLATIONS. Immediately, a copy of any complaint, citation,
order or other notice of a violation or claim required to be
reported pursuant to Subsection 5.4(e) of this Agreement.
(k) OTHER DOCUMENTS. Immediately upon demand:
i) A certificate executed by an officer of Borrower satisfactory
to Lender stating that there then exists no Event of Default
hereunder and no event which, with the giving of notice or lapse
of time or other condition, would constitute an Event of Default;
ii) All original and other documents evidencing right to payment,
including but not limited to invoices, original orders, and
shipping and delivery receipts; and
iii) Such other documents or information as Lender may reasonable
request, including financial projections and cash flow analysis.
(l) REPORTS FROM ACCOUNTANTS. Any statement, report, compilation,
tax return or other document or writing which is the result of
professional accounting services provided by the Borrower's
accountant shall be accompanied by a written communication, in
form and substance satisfactory to the Bank, signed by the
Borrower and its accountant, stating, among other things, that
(i) the accountant acknowledges that the Bank intends to rely on
all such statements, reports, compilations, tax returns and other
documents or writings, and (ii) the Borrower has knowledge of the
Bank's reliance or intended reliance on such statements, reports,
compilations, tax returns and other documents or writings.
5.6 ACCESS TO RECORDS AND PROPERTY. At any time and from time to
time, upon request by Lender, give any representative of Lender
access during normal business hours to inspect any of Borrower's
properties and to examine, copy and make extracts from any and
all books, records and documents in the possession of Borrower or
any independent contractor relating to Borrower's affairs or the
Collateral (including without limitation returns for federal
income tax and other taxes).
5.7 INSURANCE AT BORROWER'S EXPENSE.
(a) LIABILITY AND PROPERTY INSURANCE. Maintain at Borrower's
expense (with such insurers, in such amounts and with such
deductibles as is satisfactory to Lender) public liability and
third party property damage insurance and insurance on the
Collateral (including without limitation insurance against fire,
explosion, boiler damage, theft, burglary, spoilage, pilferage,
loss in transit and all other hazards and risks ordinarily
insured against by other owners or users of such properties in
similar businesses), which insurance shall be evidenced by
policies (i) in form and substance satisfactory to Lender, (ii)
designating Lender and its assigns as additional co-insureds and
loss payees as their interests may appear from time to time,
(iii) containing a "breach of warranty clause" whereby the
insurer agrees that a breach of the insuring conditions or any
negligence of Borrower or any other person shall not invalidate
the insurance as to Lender and its assigns, and (iv) requiring at
least thirty (30) days' prior written notice to Lender and its
assigns before cancellation or any material change shall be
effective.
(b) COPIES OF POLICIES. Upon demand, deliver to Lender the
original of each policy evidencing insurance required by this
Section 5.7, together with evidence of payment of all premiums
therefor.
(c) NOTICE AND PROOF OF LOSS. In the event of loss or damage,
forthwith notify Lender and file proofs of loss satisfactory to
Lender with the appropriate insurer, but without limiting the
rights of Lender pursuant to Subsection 7.1(k).
(d) PROCEEDS. Forthwith upon receipt, endorse and deliver
insurance proceeds to Lender, but without limiting the rights of
Lender pursuant to Subsection 7.1(k).
(e) OTHER. In no event shall Lender be required either to (i)
ascertain the existence of or examine any insurance policy, or
(ii) advise Borrower in the event such insurance coverage shall
not comply with the requirements of this Agreement.
5.8 CONDITION OF COLLATERAL; NO LIENS. Maintain the Collateral
in good condition and repair at all times, preserve the
Collateral from loss, damage, or destruction of any nature
whatsoever, and, except as permitted by this Agreement, keep the
Collateral free and clear of any mortgage, security interest,
assignment, pledge, hypothecation, or other lien or encumbrance,
except the liens created by this Agreement and any identified on
Schedule 5 to this Agreement.
5.9 PROCEEDS OF COLLATERAL. Forthwith upon receipt, pay to
Lender all proceeds of Collateral, other than proceeds from the
sale or disposition of fixed assets in accordance with Section
6.2 of this Agreement, which shall not exceed Ten Thousand
($10,000.00) Dollars per transaction or Thirty Thousand
($30,000.00) Dollars in any fiscal year, whereupon such proceeds
shall become Lender's sole property.
5.10 RECORDS. Maintain complete and accurate books and records
of all its operations and properties, including records of the
Collateral and the status of each of the Accounts.
5.11 DELIVERY OF DOCUMENTS. If any proceeds of Accounts shall
include, or any of the Accounts shall be evidenced by, notes,
trade acceptances or instruments or documents, or if any
Inventory is covered by documents of title or chattel paper,
whether or not negotiable, immediately deliver them to Lender
appropriately endorsed. Borrower waives protest regardless of
the form of the endorsement. If Borrower fails to endorse any
instrument or document, Lender is authorized to endorse it on
Borrower's behalf.
5.12 UNITED STATES CONTRACTS. If any of the Accounts arises out
of a contract with the United States or any of its departments,
agencies or instrumentalities, immediately notify Lender and
execute any necessary instruments in order that all money due or
to become due under such contract shall be assigned to Lender and
proper notice of the assignment given under the Federal
Assignment of Claims Act.
5.13 FURTHER ASSURANCES. From time to time, execute and deliver
such further documents and take such further actions as Lender
may reasonably request in order to carry out the purposes of this
Agreement, the Relevant Documents and any other instruments,
documents and agreements which shall be executed concurrently
herewith or thereafter with regard to the transactions
contemplated by this Agreement.
5.14 ACCOUNT RELATIONSHIP. Maintain its principal banking
relationship and all operating accounts with the Lender. Without
limiting the generality of the foregoing, the Borrower shall
maintain a demand deposit account with the Lender from which the
Lender is authorized and directed, without demand or notice, to
charge and withdraw all amounts that shall become due and payable
to the Lender pursuant to this Agreement.
5.15 RELATED ENTITIES. Cause each Related Entity to comply with
the covenants stated in this Section 5, to the extent relevant to
such Entity, as if stated with reference to such Entity.
6. NEGATIVE COVENANTS. Borrower covenants and agrees that, until
full and final payment and performance of the Revolving Loans and
all other Obligations under this Agreement and the Relevant
Documents, Borrower shall not, unless Lender shall otherwise
consent in writing:
6.1 NO CONSOLIDATION, MERGER, ACQUISITION, LIQUIDATION. Enter
into any merger, consolidation, reorganization or
recapitalization; take any steps in contemplation of dissolution
or liquidation; conduct any part of Borrower's business through
any corporate subsidiary or affiliate, unincorporated association
or other entity not disclosed on Schedule 4 to this Agreement; or
acquire the stock or assets of any person, firm, joint venture,
partnership, corporation or other entity, whether by merger,
consolidation, purchase of stock or otherwise.
6.2 DISPOSITION OF ASSETS OR COLLATERAL. Sell, lease, or
otherwise transfer or dispose of any or all of the Collateral or
other assets of Borrower, other than the sale of Inventory in the
ordinary course of business and the retirement of other assets in
the normal course of operations.
6.3 OTHER LIENS. Incur, create or permit to exist, in an
aggregate amount at any time exceeding One Hundred Thousand
($100,000.00) Dollars, any mortgage, security interest,
assignment, pledge, hypothecation, lien, encumbrance, conditional
sale or other title retention agreement, financing lease having
substantially the same effect as any of the foregoing, or other
preferential arrangement of any type, in each case upon or with
respect to any assets of Borrower, whether now owned or hereafter
acquired, except (a) liens for taxes not delinquent, (b) the
liens created by this Agreement and the Relevant Documents, and
(c) any liens identified on Schedule 5 to this Agreement.
6.4 OTHER LIABILITIES. Incur, create, assume or permit to exist
any indebtedness or liability on account of either borrowed money
or the deferred purchase price of property or services, except
(a) Obligations to Lender, (b) indebtedness subordinated to
payment of the Obligations on terms approved by Lender in
writing, (c) those liabilities existing on the date of this
Agreement and shown by the financial statements attached as
Schedule 1 to this Agreement, (d) purchase money and/or lease
financing of an outstanding amount not to exceed One Hundred
Thousand ($100,000.00) Dollars at any one time, or (e) normal
trade indebtedness incurred by the Borrower in the ordinary
course of business.
6.5 LOANS. Make loans to any person or entity, other than loans
to employees not to exceed (a) Twenty-Five Thousand ($25,000.00)
Dollars, in the aggregate, outstanding at any one time, (b)
advances of services and/or materials to the Borrower's Hong Kong
subsidiary, Measurement Limited, not to exceed Seven Hundred
Fifty Thousand ($750,000.00) Dollars, in the aggregate,
outstanding at any one time, and (c) actual cash advances to the
Borrower's Hong Kong subsidiary, Measurement Limited, not to
exceed Three Hundred Thousand ($300,000.00) Dollars, in the
aggregate, outstanding at any one time. The amounts advanced to
Measurement Limited as of March 31, 1995, which was in an amount
equal to Four Hundred Thirty Thousand ($430,000.00) Dollars,
shall not be used in calculating future advances permitted under
this covenant.
6.6 GUARANTIES; CONTINGENT LIABILITIES. (a) Assume, guarantee,
endorse, contingently agree to purchase or otherwise become
liable upon the obligation of any person or entity, except by the
endorsement of negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business, or
(b) agree to maintain the working capital or net worth of any
person or entity or to make investments in any person or entity
(except for short-term investment of excess cash).
6.7 DIVIDENDS AND OTHER DISTRIBUTIONS. Declare or pay any cash
dividend or make any distribution on, or redeem, retire or
otherwise acquire directly or indirectly, any share of its stock,
or make any distribution of assets to its stockholders. Nothing
in this paragraph shall preclude any cashless exercise of stock
options.
6.8 TRANSACTIONS WITH AFFILIATES. Enter into any transaction
with a person or entity directly or indirectly controlling,
controlled by or under the direct or indirect common control of
Borrower, on a basis less favorable in a material respect to
Borrower than if such transactions were not with such a person or
entity. Nothing in this paragraph, however, shall preclude any
sale of goods by the Borrower, at the Borrower's cost, to its
affiliates.
6.9 SALE OF INVENTORY. Sell any of the Inventory on a
xxxx-and-hold, guaranteed sale, sale-and-return, sale on approval
or consignment basis, or any other basis subject to a repurchase
obligation or return right, without prior written notice to the
Lender.
6.10 REMOVAL OF COLLATERAL. Remove, or cause or permit to be
removed, any of the Collateral or other assets from the premises
identified on Schedule 2 to this Agreement, except for sales of
Inventory in the ordinary course of business.
6.11 TRANSFER OF NOTES OR ACCOUNTS. Sell, assign, transfer,
discount or otherwise dispose of any Accounts or any promissory
note or other instrument payable to it with or without recourse,
except for collection without recourse in the ordinary course of
business.
6.12 SETTLEMENTS. Compromise, settle or adjust any claim in a
material amount relating to any of the Collateral.
6.13 MODIFICATION OF GOVERNING DOCUMENTS. Change, alter or
modify, or permit any change, alteration or modification of, its
Certificate of Incorporation or Bylaws or other governing
documents, other than non-material changes to its Certificate of
Incorporation or Bylaws provided the Borrower immediately notify
the Bank of such change and provides the Bank with the amendment
or modification documents.
6.14 CHANGE BUSINESS. Cause or permit a material change in the
nature of its business as conducted on the date of this
Agreement.
6.15 CHANGE OF LOCATION OR NAME. Change any of the following:
(a) the location stated in Section 4.12 of this Agreement for the
maintenance of the books and records relative to the Accounts and
Inventory;
(b) the location of the principal place of business or chief
executive office of Borrower as stated in Section 4.14 of this
Agreement; or
(c) the name under which Borrower conducts any of its business or
operations.
6.16 CHANGE OF ACCOUNTING PRACTICES. Change its present
accounting principles or practices in any material respect,
except as may be permitted by generally accepted accounting
principles.
6.17 INCONSISTENT AGREEMENT. Enter into any agreement containing
any provision that would be violated by the performance of
Borrower's obligations under this Agreement or any of the
Relevant Documents or under any document delivered or to be
delivered by it in connection therewith.
6.18 WORKING CAPITAL. Cause or permit its consolidated Working
Capital to be less than (a) One Million Four Hundred Thousand
($1,400,000.00) Dollars at any time during any fiscal year,
measured quarterly at fiscal quarter end dates, and (b) one
hundred five (105%) percent of its consolidated Working Capital
reported for the immediately preceding fiscal year end,
commencing with the fiscal year ending March 31, 1996 (to reflect
one hundred five (105%) percent of the fiscal year end March 31,
1995 consolidated Working Capital) and continuing for each fiscal
year end thereafter, measured annually at fiscal year end. The
term Working Capital means, as of the time of any determination
thereof, the amount determined in accordance with generally
accepted accounting principles, applied on a consistent basis, by
which the current assets of Borrower exceed its current
liabilities.
6.19 TANGIBLE CAPITAL FUNDS.
(a) Cause or permit its consolidated Tangible Capital Funds to be
less than:
i) eighty-five (85%) percent of its consolidated Tangible Capital
Funds reported for the immediately preceding fiscal year end, at
any time during any fiscal year, measured quarterly at fiscal
quarter end dates, and
ii) one hundred twelve (112%) percent of its consolidated
Tangible Capital Funds reported for the immediately preceding
fiscal year end, commencing with the fiscal year ending March 31,
1996 (to reflect one hundred twelve (112%) percent of the fiscal
year end March 31, 1995 consolidated Tangible Capital Funds) and
continuing for each fiscal year end thereafter, measured annually
at fiscal year end.
(b) Cause or permit its unconsolidated Tangible Capital Funds
(that is, the Borrower's Tangible Capital Funds without giving
effect to its non-United States operations), to be less than:
i) One Million Two Hundred Thousand ($1,200,000.00) Dollars at
any time during any fiscal year, measured quarterly at fiscal
quarter end dates, and
ii) one hundred two (102%) percent of its unconsolidated Tangible
Capital Funds reported for the immediately preceding fiscal year
end, commencing with the fiscal year ending March 31, 1996 (to
reflect an increase of one hundred two (102%) percent over the
fiscal year end March 31, 1995 unconsolidated Tangible Capital
Funds) and continuing for each fiscal year end thereafter,
measured annually at fiscal year end.
(c) The term Tangible Capital Funds meaning, as of the time of
any determination thereof, the difference between (i) the sum of
(A) the par value (or value stated on the books of Borrower) of
the capital stock of all classes of Borrower, plus (or minus in
the case of a deficit) (B) the amount of Borrower's surplus,
whether capital or earned, plus (C) the total amount of any and
all subordinated debt of the Borrower, less (ii) the sum of
treasury stock, unamortized debt discount and expense, good will,
trademarks, trade names, patents, deferred charges, and other
intangible assets, and any write-up of the value of any assets,
all determined in accordance with generally accepted accounting
principles, applied on a consistent basis.
6.20 CAPITAL EXPENDITURES. Enter into any agreement to purchase
or pay for, or become obligated to pay for, capital expenditures,
long term leases, capital leases or sale lease-backs (all
determined in accordance with generally accepted accounting
principles consistently applied):
(a) during the fiscal year ending March 31, 1996, in an amount
aggregating in excess of Six Hundred Fifty Thousand ($650,000.00)
Dollars plus seventy (70%) percent of the Borrower's consolidated
net income over One Million ($1,000,000.00) Dollars for the
fiscal year ending March 31, 1996; and
(b) during each fiscal year ending after March 31, 1996, in an
amount aggregating in excess of Five Hundred Thousand
($500,000.00) Dollars plus seventy (70%) percent of the
Borrower's consolidated net income over One Million
($1,000,000.00) Dollars for the applicable fiscal year.
6.21 RELATED ENTITIES. Cause, suffer or permit any Related
Entity to fail to observe any covenant stated in this Section 6,
as if stated with reference to such Entity.
7.ADDITIONAL POWERS OF LENDER.
7.1 POWERS OF ATTORNEY. Borrower hereby constitutes and appoints
Lender (and any employee or agent of Lender, with full power of
substitution) its true and lawful attorney and agent in fact to
take any or all of the actions described below in Lender's or
Borrower's name and at Borrower's expense:
(a) CHARGES AGAINST CREDIT BALANCES. Lender, without demand, may
charge and withdraw from any credit balance that Borrower may
then have with Lender, or with any affiliate of Lender, any
amount that shall become due from Borrower to Lender under this
Agreement or any of the Relevant Documents.
(b) EVIDENCE OF LIENS. Lender may execute such financing
statements and other documents and take such other actions as
Lender deems necessary or proper in order to create, perfect or
continue the security interests and other liens provided for by
this Agreement or any of the Relevant Documents, and Lender may
file the same (or a photocopy of this Agreement or of any
financing statement signed by Borrower) in any appropriate
governmental office.
(c) PRESERVATION OF COLLATERAL. Lender may take any and all
action that it deems necessary or proper to preserve its interest
in the Collateral, including without limitation the payment of
debts of Borrower that might impair the Collateral or Lender's
security interest therein, the purchase of insurance on
Collateral, the repair or safeguarding of Collateral, or the
payment of taxes, assessments or other liens thereon. All sums
so expended by Lender shall be added to the Obligations, shall be
secured by the Collateral, and shall be payable on demand with
interest at the Default Rate from the respective dates such sums
are expended.
(d) LENDER'S RIGHT TO CURE. In the event Borrower fails to
perform any of its Obligations, then Lender may perform the same
but shall not be obligated to do so. All sums so expended by
Lender shall be added to the Obligations, shall be secured by the
Collateral, and shall be payable on demand with interest at the
Default Rate from the respective dates such sums are expended.
(e) VERIFICATION OF ACCOUNTS. Lender may make test verifications
of any and all Accounts in any manner and through any medium
Lender considers advisable, and Borrower shall render any
necessary assistance.
(f) COLLECTIONS; MODIFICATION OF TERMS. Upon the occurrence and
continuance of any Event of Default, Lender may demand, xxx for,
collect and give receipts for any money, instruments or property
payable or receivable on account of or in exchange for any of the
Collateral, or make any compromises it deems necessary or proper,
including without limitation extending the time of payment,
permitting payment in installments, or otherwise modifying the
terms or rights relating to any of the Collateral, all of which
may be effected without notice to or consent by Borrower and
without otherwise discharging or affecting the Obligations, the
Collateral or the security interest granted under this Agreement
or any of the Relevant Documents.
(g) NOTIFICATION OF ACCOUNT DEBTORS. Upon the occurrence and
continuance of any Event of Default Borrower, at the request of
Lender, shall notify the Account debtors of Lender's security
interest in its Accounts. Upon the occurrence and continuance of
any Event of Default, Lender may notify the Account debtors on
any of the Accounts to make payment directly to Lender, and
Lender may endorse all items of payment received by it that are
payable to Borrower; until such time as Lender elects to exercise
such right of notification, Borrower is authorized to collect and
enforce the Accounts in accordance with Section 2A.4.
(h) NOTIFICATION AS TO INVENTORY. Lender may notify the bailee
of any Inventory of Lender's security interest therein.
(i) ENDORSEMENTS. Lender may endorse Borrower's name on checks,
notes, acceptances, drafts, invoices, bills of lading and any
other documents or instruments requiring Borrower's endorsement.
(j) MAILS. Upon the occurrence and continuance of any Event of
Default, Lender may notify the postal authorities to deliver all
mail, parcels, and other material addressed to Borrower to Lender
at such address as Lender may direct, and Lender may open and
deal with same as it deems necessary or proper, provided that the
Lender shall make available to the Borrower all mail not related
to the Collateral or to any of the Obligations.
(k) INSURANCE. Lender may file proofs of loss and claim with
respect to any of the Collateral with the appropriate insurer,
and may endorse in its own and Borrower's name any checks or
drafts constituting insurance proceeds.
(l) BANK ACCOUNTS. Upon the occurrence of an Event of Default
specified in Section 8.16 of this Agreement, Lender may at its
discretion, execute against accounts maintained at any
institution or withdraw funds from any institution in the name of
the Borrower or in its own name.
7.2 IRREVOCABILITY; LENDER'S DISCRETION. Borrower covenants and
agrees that any action described in Section 7.1 may be taken at
Lender's sole, absolute and reasonable discretion, at any time
and from time to time, and (unless stated specifically to the
contrary in Section 7.1 with respect to any power) whether prior
or subsequent to an Event of Default, and Borrower hereby
ratifies and confirms all actions so taken. Borrower further
covenants and agrees that the powers of attorney granted by
Section 7.1 are coupled with an interest and shall be irrevocable
until full and final payment and performance of the Revolving
Loans and all other Obligations under this Agreement and the
Relevant Documents; that said powers are granted solely for the
protection of Lender's interest and Lender shall have no duty to
exercise any thereof; that the decision whether to exercise any
of such powers, and the manner of exercise, shall be solely
within Lender's discretion; and that neither Lender nor any of
its directors, officers, employees or agents shall be liable for
any act of omission or commission, or for any mistake or error of
judgment, in connection with any such powers.
8. EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute an Event of Default:
8.1 FAILURE TO PAY. Borrower fails to pay when due any principal
of or interest on any Revolving Loan or any other sum owing to
Lender, including without limitation any of the Obligations
arising under this Agreement or any of the Relevant Documents or
under any other agreement with Lender;
8.2 FAILURE TO PERFORM. Borrower fails to perform or observe (a)
any covenant, term or condition of this Agreement or any of the
Relevant Documents, or (b) any of the other Obligations;
8.3 CROSS DEFAULT; DEFAULT ON OTHER DEBT. (a) Any other default
on any of the Obligations or under any of the Relevant Documents
occurs, or (b) default occurs under any indebtedness or other
obligation of Borrower, or of any guarantor of any of the
Obligations, to any third party that entitles such third party to
declare such indebtedness or other obligation due prior to its
date of maturity;
8.4 FALSE REPRESENTATION OR WARRANTY. Any representation,
warranty or statement contained in this Agreement, in any of the
Relevant Documents or in any other writing delivered to Lender,
by or on behalf of the Borrower, in connection with the
Collateral, this Agreement or any of the transactions
contemplated thereby, proves to have been incorrect in any
material respect when made;
8.5 CESSATION OF BUSINESS. Borrower ceases to do business as a
going concern;
8.6 CHANGE IN CONDITION. There occurs any change in the
condition or affairs, financial or otherwise, of Borrower or of
any endorser, guarantor or surety for any of the Obligations,
which in the reasonable opinion of Lender impairs Lender's
security or increases its risks;
8.7 INSECURITY. At any time Lender reasonably believes that the
prospect of payment or performance of any of the Obligations is
impaired;
8.8 LIQUIDATION OR DISSOLUTION. Borrower takes any action to
authorize its liquidation or dissolution;
8.9 INABILITY TO PAY DEBTS. Borrower (a) becomes unable or fails
to pay its debts generally as they become due, (b) admits in
writing its inability to pay its debts, or (c) proposes or makes
a composition agreement with creditors, a general assignment for
the benefit of creditors, or a bulk sale;
8.10 BANKRUPTCY; INSOLVENCY. Any proceeding is instituted by or
against Borrower (a) seeking to adjudicate it bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment or
composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or
(b) seeking appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property, or
Borrower takes any action to authorize or consent to any action
described in this Section 8.11;
8.11 JUDGMENTS. One or more judgments or orders for the payment
of money exceeding Fifty Thousand ($50,000.00) Dollars in the
aggregate are rendered against Borrower, and such judgment or
order continues unsatisfied and not effectively stayed for a
period of thirty (30) consecutive days;
8.12 ATTACHMENT. Any substantial part of the assets of Borrower
becomes subject to attachment, execution, levy or like process
which shall not have been effectively stayed;
8.13 CONDEMNATION. Any governmental agency, or other entity with
power to do so, commences proceedings to condemn, seizes or
expropriates assets of Borrower necessary for the conduct of
Borrower's business as conducted on the date of this Agreement,
without material change, or Borrower abandons such assets or
suspends operation thereof for a period of thirty (30)
consecutive days;
8.14 ERISA. With respect to any Plan (as defined in Section 4.17
of this Agreement), there occurs or exists any of the events or
conditions described in the following clauses (a) through (h) and
such event or condition, together with all like events or
conditions, could in the opinion of Lender subject Borrower to
any tax, penalty or other liability that might, singly or in the
aggregate, have a material adverse effect on the financial
condition or the properties or operations of Borrower:
(a) a reportable event as defined in Section 4043 of ERISA;
(b) a prohibited transaction as defined in Section 406 of ERISA
or Section 4975 of the Internal Revenue Code;
(c) termination of the Plan or filing of notice of intention to
terminate;
(d) institution by the Pension Benefit Guaranty Corporation of
proceedings to terminate, or to appoint a trustee to administer,
the Plan, or circumstances that constitute grounds for any such
proceedings;
(e) complete or partial withdrawal from a multiemployer Plan, or
the reorganization, insolvency or termination of a multiemployer
Plan;
(f) an accumulated funding deficiency within the meaning of
ERISA;
(g) violation of the reporting, disclosure or fiduciary
responsibility requirements of ERISA or the Internal Revenue
Code; or
(h) any act or condition which could result in direct, indirect
or contingent liability to any Plan or the Pension Benefit
Guaranty Corporation; or
8.15 GUARANTY. Any guaranty of any of the Obligations ceases to
be effective or any guarantor denies liability thereunder.
8.16 LITIGATION UNDER LEASE AGREEMENT. Upon the commencement
of
any litigation by the landlord of any real property leased by the
Borrower, whether for possession of the leased premises or for
money judgment, and such litigation continues unsatisfied and not
effectively stayed for a period of thirty (30) days.
9. REMEDIES.
9.1 RIGHTS IN GENERAL. Automatically upon the occurrence of an
Event of Default described in Section 8.11, and at the option of
Lender upon the occurrence of any other Event of Default, (a) all
provisions for additional Revolving Loans under this Agreement
shall terminate, (b) the principal and interest of the Revolving
Loans all other amounts payable under this Agreement and all
other Obligations shall become and be immediately due and
payable, without presentment, demand, protest, or further notice
of any kind, all of which are hereby expressly waived by
Borrower, and (c) Lender shall be entitled to exercise forthwith
(to the extent and in such order as Lender may elect, in its sole
and absolute discretion) any or all rights and remedies provided
for in this Agreement, any Revolving Note or any Relevant
Documents, all rights and remedies of a secured party under the
UCC, and all other rights and remedies that may otherwise be
available to Lender by agreement or at law or in equity.
9.2 SPECIFIC RIGHTS REGARDING COLLATERAL. In addition to the
rights as stated generally in Section 9.1, Borrower agrees that,
upon the occurrence of an Event of Default, Lender shall be
entitled to the rights and remedies, and Borrower shall have the
obligations, set forth below:
(a) Lender may enter upon the premises where any of the
Collateral is located and take possession thereof and, at
Lender's option, remove or sell in place any or all thereof;
(b) Upon notice from Lender, Borrower shall promptly at its
expense assemble any or all of the Collateral and make it
available at a reasonably convenient place designated by Lender;
(c) Lender may, with or without judicial process, sell, lease or
otherwise dispose of any or all of the Collateral at public or
private sale or proceedings, in a commercially reasonable manner,
by one or more contracts, in one or more parcels, at the same or
different times and places, with or without having the Collateral
at the place of sale or other disposition, to such persons or
entities, for cash or credit or for future delivery and upon such
other terms, as Lender may in its discretion deem best in each
such matter. The purchaser of any of the Collateral at any such
sale shall hold the same free of any equity or redemption or
other right or claim of Borrower, all of which - together with
all rights of stay, exemption or appraisal under any statute or
other law now or hereafter in effect - Borrower hereby
unconditionally waives to the fullest extent permitted by law.
If any of the Collateral is sold on credit or for future
delivery, Lender shall not be liable for the failure of the
purchaser to pay for same and, in the event of such failure,
Lender may resell such Collateral provided any such sale is
conducted in a commercially reasonable manner;
(d) Borrower hereby further agrees that notice of the time and
place of any public sale, or of the time after which any private
sale or other intended disposition or action relating to any of
the Collateral is to be made or taken, shall be deemed
commercially reasonable notice thereof, and shall satisfy the
requirements of any applicable statute or other law, if such
notice (i) is delivered not less than three (3) business days
prior to the date of the sale, disposition or other action to
which the notice relates, or (ii) is mailed (by ordinary first
class mail, postage prepaid) not less than five (5) business days
prior thereto. Lender shall not be obligated to make any sale or
other disposition or take other action pursuant to such notice
and may, without other notice or publication, adjourn or postpone
any public or private sale or other disposition or action by
announcement at the time and place previously fixed therefor, and
such sale, disposition or action may be held or accomplished at
any times or places to which the same may be so adjourned or
postponed;
(e) Lender may purchase any or all of the Collateral at any
public sale and may purchase at private sale any of the
Collateral that is of a type customarily sold in a recognized
market or the subject of widely distributed price quotations or
as may be further permitted by law. Lender may make payment of
the purchase price for any Collateral by credit against the then
outstanding amount of the Obligations;
(f) Lender may at its discretion retain any or all of the
Collateral and apply the same in satisfaction of part or all of
the Obligations;
(g) Any cash proceeds of sale, lease or other disposition of
Collateral shall be applied as follows:
First: To the reasonable fees and expenses of collecting,
enforcing, safeguarding, holding and disposing of Collateral, and
to other expenses of Lender in connection with the enforcement of
this Agreement, the Revolving Note, any of the Relevant
Documents, or any other agreement relating to any of the
Obligations (including without limitation court costs and the
fees and expenses of attorneys, accountants and appraisers),
together with interest at the Default Rate from the respective
dates such sums are expended;
Second: Any surplus then remaining to the payment of interest and
principal of the Revolving Loans and other sums payable as part
of the Obligations, in such order as the Lender elects; and
Third: Any surplus then remaining to Borrower or whoever may be
lawfully entitled thereto.
9.3 SET-OFF. Borrower further agrees that:
(a) Upon the occurrence of an Event of Default, Lender is hereby
authorized at any time from time to time, without notice to
Borrower (any such notice being expressly waived by Borrower), to
set off and apply (or cause any affiliate of Lender to set off
and apply) any and all deposits (general or special, time or
demand, provisional or final) at any time held and other
indebtedness at any time owing by Lender or such affiliate to or
for the credit or the account of Borrower, against any or all of
the Obligations of Borrower now or hereafter existing under this
Agreement, the Revolving Note or otherwise, irrespective of
whether or not Lender shall have made any demand and although
such Obligations may be unmatured;
(b) If any other lender has participated with Lender with respect
to any of the Revolving Loans, Borrower hereby authorizes such
participating lender, upon the occurrence of any Event of
Default, immediately and without notice or other action, at
request of Lender, to set off against any of Borrower's
Obligations to Lender any deposits held or money owed by such
participating lender in any capacity to Borrower, whether or not
due, and to remit the money set off to Lender; and
(c) The rights stated in this Section 9.3 are in addition to
other rights and remedies (including, without limitation, other
rights of set-off or lien) that Lender or any participating
lender may have.
9.4 CUMULATIVE REMEDIES; NO WAIVER BY LENDER. No remedy
referred
to in this Agreement is intended to be exclusive, but each shall
be cumulative and in addition to any other remedy referred to in
this Agreement or otherwise available to Lender by agreement or
at law or in equity. No express or implied waiver by Lender of
any default or Event of Default shall in any way be, or be
construed to be, a waiver of any future or subsequent default or
Event of Default. The failure or delay of Lender in exercising
any rights granted it hereunder upon any occurrence of any of the
contingencies set forth herein shall not constitute a waiver of
any such right upon the continuation or recurrence of any such
contingency or similar contingencies, and any single or partial
exercise of any particular right by Lender shall not exhaust the
same or constitute a waiver of any other right.
9.5 WAIVERS AND CONSENTS RELATING TO REMEDIES. In connection
with any action or proceeding arising out of or relating in any
way to this Agreement, the Revolving Note, any of the Revolving
Loans, any of the Relevant Documents, any other agreement
relating to any of the Obligations, any of the Collateral, or any
act or mission relating to any of the foregoing:
(a) BORROWER AND LENDER WAIVE THE RIGHT TO TRIAL BY JURY;
(b) Borrower and Lender consent to the jurisdiction of any court
of the State of New Jersey and of any federal court located in
New Jersey, and waive any right to object to such court as an
inconvenient forum;
(c) Borrower waives personal service of any summons, complaint or
other process in connection with any such action or proceeding
and agrees that service thereof may be made, as Lender may elect,
by certified mail directed to Borrower at the location provided
for notices to Borrower under this Agreement or, in the
alternative, in any other form or manner permitted by law;
(d) Borrower agrees that all of the Collateral constitutes equal
security for all of the Obligations, and agrees that Lender shall
be entitled to sell, retain or otherwise deal with any or all of
the Collateral, in any order or simultaneously as Lender shall
determine in its sole and absolute discretion, free of any
requirement for the marshaling of assets or other restriction
upon Lender in dealing with the Collateral; and
(e) Borrower agrees that Lender may proceed directly against
Borrower for collection of any or all of the Obligations without
first selling, retaining or otherwise dealing with any of the
Collateral.
10. ADDITIONAL WAIVERS AND CONSENTS OF BORROWER.
10.1 WAIVERS. Borrower waives demand, presentment, notice of
dishonor or protest of any instruments either of Borrower or
others which may be included in the Collateral.
10.2 CONSENTS. Borrower consents to (a) any extension,
postponement of time of payment or other indulgence, (b) any
substitution, exchange or release of Collateral, (c) any addition
to, or release of, any party or person primarily or secondarily
liable, and (d) any acceptance of partial payments on any
Accounts or instruments and the settlement, compromising or
adjustment thereof.
10.3 WAIVER OF AUTOMATIC STAY. The Borrower agrees that, in the
event the Borrower, the Guarantor, any other guarantor of the
Loan or any of the persons or parties constituting the Borrower,
shall:
(a) file with any bankruptcy court of competent jurisdiction or
be the subject of a petition under Title 11 of the United States
Code, as amended (the "Bankruptcy Code");
(b) be the subject of any order for relief under the Bankruptcy
Code;
(c) 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;
(d) have sought or consented to or acquiesced in the appointment
of any trustee, receiver, conservator or liquidator; or
(e) be the subject of any order, judgment, or decree entered by
any court of competent jurisdiction approving a petition filed
against such party 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 other relief for debtors;
the Lender shall thereupon be entitled and the Borrower
irrevocably consents to immediate and unconditional relief from
any automatic stay imposed by Section 362 of the Bankruptcy Code,
or otherwise, on or against the exercise of the rights and
remedies otherwise available to the Lender herein or in any other
documents, instruments, writings or agreements executed and
delivered in connection therewith and as otherwise provided by
law, and the Borrower irrevocably waives any right to object to
such relief and will not contest any motion by the Lender seeking
relief from the automatic stay.
11. TERMINATION OF AGREEMENT.
11.1 TERMINATION BY LENDER. Lender shall have the right, at any
time and in its sole and absolute discretion and without the
necessity for an Event of Default hereunder, to terminate this
Agreement, insofar as it relates to Revolving Loans, upon one
hundred twenty (120) days written notice to Borrower. Upon the
termination date stated in such notice: (a) all provisions for
additional Revolving Loans under this Agreement shall terminate,
(b) the principal and interest of the Revolving Loans, and all
other Obligations under this Agreement and the Relevant Documents
related to the Revolving Loans, shall become and be immediately
due and payable, without presentment, demand, protest, or further
notice of any kind, all of which are hereby expressly waived by
Borrower, and (c) Lender shall be entitled to exercise forthwith
(to the extent and in such order as Lender may elect, in its sole
and absolute discretion) any or all of the rights and remedies
referred to in Section 9 of this Agreement for the collection of
such amounts.
11.2 TERMINATION BY BORROWER.
(a) Borrower may terminate this Agreement, without termination
charge, as of the second or any subsequent anniversary of the
date stated at the beginning of this Agreement, by giving Lender
at least ninety (90) days written notice prior to the anniversary
date on which the Borrower intends to terminate, provided that on
such anniversary date the principal and interest of the Revolving
Loans, and all other Obligations under this Agreement and the
Relevant Documents have been paid in full.
(b) Except as stated in Subsection 11.2(a), Borrower may
terminate this Agreement only upon:
i) giving ninety (90) days' prior written notice to Lender of the
intended termination date;
ii) paying to Lender in full the principal and interest of the
Revolving Loans, and all other Obligations under this Agreement
and the Relevant Documents; and
iii) paying to Lender, as liquidated damages, the applicable
amount stated below:
A) If the termination date is prior to the first anniversary
of the date stated at the beginning of this Agreement, a sum
equal to two (2%) percent of the average monthly principal
balance of the Revolving Loans outstanding during the period in
which this Agreement has been in effect; or
B) If the termination date is after such first anniversary
but prior to the second such anniversary, a sum equal to one (1%)
percent of the average monthly principal balance of the Revolving
Loans outstanding during the twelve (12) month period immediately
preceding the date on which Borrower gives notice of termination.
11.3 EFFECT ON REVOLVING LOAN LIMIT. Upon the giving of notice
of termination pursuant to Section 11.1 or 11.2, the Revolving
Loan Limit thereafter shall not exceed the average principal
balance of the Revolving Loans outstanding during the thirty-day
period preceding the notice. All other requirements for
Revolving Loans shall remain unchanged.
11.4 MUTUAL RELEASE. Upon full and final payment and performance
of the Revolving Loans and all other Obligations under this
Agreement and the Relevant Documents, Borrower and Lender shall
thereupon automatically each be fully, finally and forever
released and discharged from any and all claims, liabilities and
obligations, whether in contract or tort, arising out of or
relating in any way to this Agreement, the Revolving Note or
Revolving Loans, or any act or omission relating to any of the
foregoing or to any of the Collateral or Relevant Documents.
12. COSTS, EXPENSES AND TAXES.
12.1 BORROWER AGREES TO PAY ON DEMAND:
(a) all costs and expenses in connection with the preparation,
execution, delivery, closing and administration of this
Agreement, the Revolving Note, the Relevant Documents, and the
other documents to be delivered in connection with this
Agreement, or any amendments to any of the foregoing (including,
without limitation, the fees and out-of-pocket expenses of
counsel for Lender and the cost of appraisals and reappraisals of
Collateral), whether or not a closing actually takes place;
(b) all losses, costs and expenses incurred by Lender in
connection with the enforcement of this Agreement, the Revolving
Note, any of the Relevant Documents, or any other agreement
relating to any of the Obligations, or in the preservation of any
rights of Lender under any thereof, or in connection with legal
advice relating to the rights or responsibilities of Lender under
any thereof (including without limitation court costs and the
fees and expenses of attorneys, accountants and appraisers), and
any expenditure made by Lender in accordance with Subsection
7.1(b) or (c) of this Agreement; and
(c) any and all search and recording costs, filing fees, stamp
and other taxes payable or determined to be payable in connection
with the execution and delivery of this Agreement, the Revolving
Note, or any of the Relevant Documents, and all liabilities to
which Lender may become subject as the result of delay in paying
or omission to pay such taxes.
12.2 With respect to any amount advanced by Lender and required
to be reimbursed by Borrower pursuant to the foregoing provisions
of this Section 12, Borrower shall also pay Lender interest on
such amount at the Default Rate. Borrower's obligations under
this Section 12 shall survive termination of the other provisions
of this Agreement.
13. INDEMNIFICATION BY BORROWER. Borrower hereby covenants and
agrees to indemnify, defend and hold harmless Lender and its
officers, directors, employees and agents from and against any
and all claims, damages, liabilities, costs and expenses
(including without limitation, the fees and out-of-pocket
expenses of counsel) which may be incurred by or asserted against
Lender or any such other individual or entity in connection with:
(a) any investigation, action or proceeding arising out of or in
any way relating to this Agreement, the Revolving Note, any of
the Revolving Loans, any of the Relevant Documents, any other
agreement relating to any of the Obligations, any of the
Collateral, or any act or omission relating to any of the
foregoing;
(b) any taxes, liabilities, claims or damages relating to the
Collateral or Lender's liens thereon; or
(c) the correctness, validity or genuineness of any instruments
or documents that may be released or endorsed to Borrower by
Lender (which shall automatically be deemed to be without
recourse to Lender in any event), or the existence, character,
quantity, quality, condition, value or delivery of any goods
purporting to be represented by any such documents.
14. MISCELLANEOUS.
14.1 ENTIRE AGREEMENT; AMENDMENTS; LENDER'S CONSENT. This
Agreement (including the Exhibits and Schedules thereto), the
Revolving Note and the Relevant Documents supersede, with respect
to their subject matter, all prior and contemporaneous
agreements, understandings, inducements or conditions between the
respective parties, whether express or implied, oral or written.
No amendment or waiver of any provision of this Agreement, the
Revolving Note or any of the Relevant Documents, nor consent to
any departure by Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by
Lender, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which
given.
14.2 NOTICES. All notices and other communications relating to
this Agreement or the Revolving Note (or to any of the Relevant
Documents, unless otherwise specified therein) shall be in
writing and addressed as follows:
If to Lender: Midlantic Bank, N.A.
Xxxxxx Xxxxxx
Xxxxx, XX 00000
Attention: Commercial Finance Department
If to Borrower: Measurement Specialties, Inc.
Xxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx. - President
or to such other address as the respective party or its
successors or assigns may subsequently designate by proper
notice.
14.3 GENDER. Throughout this Agreement, the masculine shall
include the feminine and vice versa and the singular shall
include the plural and vice versa, unless the context of this
Agreement indicates otherwise.
14.4 JOINT BORROWERS. If more than one party executes this
Agreement as Borrower, then for the purpose of this Agreement the
term Borrower shall mean each such party and each party shall be
jointly and severally liable as Borrower for the Obligations as
defined herein without regard to which party receives the
proceeds of any of the Revolving Loans. Each such party hereby
acknowledges that it expects to derive economic advantage from
each of the Revolving Loans.
14.5 CROSS DEFAULT; CROSS COLLATERAL. Borrower hereby agrees
that (a) all other agreements between Borrower and Lender or any
of its affiliates is hereby amended so that a default under this
Agreement is a default under all other agreements and a default
under any one of the other agreements is a default under this
Agreement, and (b) the Collateral under this Agreement secures
the Obligations now or hereafter outstanding under all other
agreements between Borrower and Lender or any of its affiliates
and the collateral pledged under any other agreement with Lender
or any of its affiliates secures the Obligations under this
Agreement.
14.6 BINDING EFFECT; GOVERNING LAW. This Agreement shall be
binding upon and inure to the benefit of Borrower and Lender and
their respective successors and assigns, except that Borrower
shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of
Lender. This Agreement, the Revolving Note, the Relevant
Documents and the other documents delivered in connection with
this Agreement shall be governed by, and construed in accordance
with, the laws of the State of New Jersey.
14.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together
shall constitute but one and the same agreement.
14.8 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement, the Revolving Note or any of the Relevant Documents
that is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, such Note or such
Relevant Documents or affecting the validity or enforceability of
such provision in any other jurisdiction.
14.9 TABLE OF CONTENTS; HEADINGS. The table of contents and
headings preceding the text of this Agreement are inserted solely
for convenience of reference and shall not constitute a part of
this Agreement nor affect its meaning, construction or effect.
14.10 EXHIBITS AND SCHEDULES. All of the Exhibits and Schedules
to this Agreement are hereby incorporated by reference herein and
made a part hereof.
14.11 FURTHER ACKNOWLEDGMENTS AND AGREEMENTS OF BORROWER
AND THE
LENDER.
(a) GENERAL ACKNOWLEDGMENTS.
i) Borrower and the Lender acknowledge and agree that they (A)
have independently reviewed and approved each and every provision
of this Agreement, including the Exhibits attached hereto and any
and all other documents and items as they or their counsel have
deemed appropriate, and (B) have entered into this Agreement and
have executed the closing documents voluntarily, without duress
or coercion, and have done all of the above with the advice of
their legal counsel.
ii) Borrower and the Lender acknowledge and agree that, to the
extent deemed necessary by them or their counsel, they and their
counsel have independently reviewed, investigated and/or have
full knowledge of all aspects of the transaction and the basis
for the transaction contemplated by this Agreement and/or have
chosen not to so review and investigate (in which case, Borrower
acknowledges and agrees that it has knowingly and upon the advice
of counsel waived any claim or defense based on any fact or any
aspect of the transaction that any investigation would have
disclosed), including without limitation:
A) the risks and benefits of the various waivers of rights
contained in this Agreement, including but not limited to, the
waiver of the right to a jury trial;
B) the adequacy of the consideration being transferred under
this Agreement, including the adequacy of the consideration for
the Mutual Release as set forth in Section 11.4 hereof.
(b) Borrower has made its own investigation or elected not to
make such investigation as to all matters it deems material to
this transaction and has not relied on any statement of fact or
opinion, disclosure or non-disclosure of the Lender, and has not
been induced by the Lender in any way, except for the
consideration recited herein, in entering into this Agreement and
executing the closing documents contemplated hereby, and further
acknowledges that the Lender has not made any warranties or
representations of any kind in connection with this transaction
except as specifically set forth herein or in the documents
executed in conjunction with this Agreement, and Borrower is not
relying on any such representations or warranties.
(c) Borrower acknowledges and agrees that, after careful
consideration, it does not deem any matter not reviewed or
investigated by it to be material to this Agreement and the
transaction contemplated hereby.
IN WITNESS WHEREOF, the undersigned have set their hands and
seals or caused these presents to be executed by their proper
corporate officers the day and year first above written.
Witness: MEASUREMENT SPECIALTIES, INC.
Xxxx X. Xxxxxxxx, By: Xxxxxx X. Xxxxxx, Xx.
Assistant Secretary President
MIDLANTIC BANK, N.A.
Xxxxxx X. Xxxxxxx By: Xxxx X. Xxxxxxx,
Vice President
CORPORATE ACKNOWLEDGMENT
STATE OF NEW JERSEY )
:ss.
COUNTY OF XXXXXX)
I certify that on the day of July, 1995, Xxxxxx X. Xxxxxx, Xx.
personally came before me and this person acknowledged under
oath, to my satisfaction, that:
A. this person signed and delivered this document as the
President of Measurement Specialties, Inc., the corporation named
in this document; and
B. this document was signed and delivered by the corporation as
its voluntary act duly authorized by a proper resolution of its
Board of Directors.
Xxxxxxx X. Xxxxxxx,
Attorney-at-Law of the State of New Jersey
LENDER ACKNOWLEDGMENT
STATE OF NEW JERSEY )
:ss.
COUNTY OF XXXXXX)
I certify that on the day of July, 1995, Xxxx X. Xxxxxxx
personally came before me and this person acknowledged under
oath, to my satisfaction, that:
A. this person signed and delivered this document as a Vice
President of Midlantic Bank, N.A., the bank named in this
document; and
B. this document was signed and delivered by the bank as its
voluntary act duly authorized by a proper resolution of its Board
of Directors.
Xxxxxx X. Xxxxxxx,
Attorney-at-Law of the State
of New Jersey
EXHIBIT LIST
A. Secured Revolving Loan Note
SCHEDULE LIST
1. Financial Statements
2. Landlords and Mortgages
3. Offices and Locations
4. Other Names and Entities
5. Liens and Encumbrances
6. ISRA Locations
SCHEDULE 1 - FINANCIAL STATEMENTS
SCHEDULE 2 - LANDLORDS AND MORTGAGEES
Transcube Associates, a New Jersey general partnership, pursuant
to a certain Lease Agreement dated May 4, 1994.
SCHEDULE 3 - OFFICES XXX XXXXXXXXX
Xxxxxx Xxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000.
SCHEDULE 4 - OTHER NAMES OR ENTITIES
SCHEDULE 5 - LIENS OR ENCUMBRANCES
None
SCHEDULE 6 - ISRA LOCATIONS
None
