As filed with the Securities and Exchange Commission on March 30, 1998
Registration No. 333-33129
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
_______________
AMENDMENT NO. 3
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________
BARRINGER TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
Delaware 3829 84-0720473
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
_______________
219 South Street, Murray Hill, New Jersey 07974
(908) 665-8200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
_______________
Stanley S. Binder, President
Barringer Technologies Inc.
219 South Street, Murray Hill, New Jersey 07974
(908) 665-8200
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
_______________
Copies to:
John D. Hogoboom, Esq. Nils H. Okeson, Esq.
Lowenstein Sandler PC Alston & Bird LLP
65 Livingston Avenue 1201 West Peachtree Street
Roseland, New Jersey 07068 Atlanta, Georgia 30309
(973) 597-2500 (404) 881-7000
_______________
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the Registration Statement becomes effective.
_______________
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [ ] _______________
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
The Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), and the Company's by-laws, as amended ("By-laws"), provide that
the Company shall, to the fullest extent permitted by law, indemnify each person
(including the heirs, executors, administrators and other personal
representatives of such person) against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such person in connection with any threatened, pending or actual
suit, action or proceeding (whether civil, criminal, administrative or
investigative in nature or otherwise) in which such person may be involved by
reason of the fact that he or she is or was a director or officer of the Company
or is serving any other incorporated or unincorporated enterprise in any of such
capacities at the request of the Company.
Section 145 of the General Corporation Law of the State of Delaware (the
"GCL") permits a corporation, under specified circumstances, to indemnify its
directors, officers, employees or agents against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by them in connection with any action, suit or proceeding brought by
third parties by reason of the fact that they were or are directors, officers,
employees or agents of the corporation, if such directors, officers, employees
or agents acted in good faith and in a manner they reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, i.e., one by or in the right of the
corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been judged liable to the corporation unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers, employees or agents are
fairly and reasonably entitled to indemnity for such expenses despite such
adjudication of liability.
The Certificate of Incorporation also contains a provision limiting the
personal liability of directors to the fullest extent permitted or authorized by
the GCL or other applicable law. Under the GCL, such provision would not limit
liability of a director for (i) breach of the director's duty of loyalty, (ii)
acts or omissions not in good faith or involving intentional misconduct or
knowing violation of law, (iii) payment of dividends or repurchases or
redemptions of stock other than from lawfully available funds, or (iv) any
transactions from which the director derives an improper benefit.
<PAGE>
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth an itemized statement of all expenses to be
incurred in connection with the issuance and distribution of the securities that
are the subject of this Registration Statement, other than underwriting
discounts and commissions. All expenses incurred with respect to the
distribution will be paid by the Company, and such amounts, other than the
Securities and Exchange Commission registration fee and the NASD filing fee, are
estimates only.
Expense
---------------
Securities and Exchange Commission registration fee $ 10,586
National Association of Securities Dealers, Inc. filing fee 3,994
Nasdaq National Market listing fee 17,500
Accounting fees and expenses 65,000
Legal fees and expenses 180,000
Blue Sky fees and expenses 5,000
Printing and engraving expenses 200,000
Miscellaneous 17,920
Total $ 500,000
Item 26. Recent Sales of Unregistered Securities
The following information relates to securities of the Company issued or
sold within the past three years which were not registered under the Securities
Act (all share and per share amounts have been adjusted to reflect the
one-for-four reverse stock split of the Common Stock, $.01 par value ("Common
Stock"), effected on September 25, 1995):
(i) In July 1996, the Company issued an aggregate amount of $1,000,000
of its 6% subordinated convertible debentures, due 1997 (the "Debentures")
to institutional and private investors and members of management for an
aggregate purchase price of $1,000,000. This transaction was completed
without registration under the Securities Act of the Debentures or the
shares of Common Stock into which such Debentures are convertible in
reliance upon the exemption provided by Section 4(2) of the Securities Act.
There were no underwriters for this issuance.
(ii) In June 1995, the Company issued an aggregate of 28 units, each
unit consisting of 2,500 shares of Common Stock and a five-year warrant to
purchase 2,500 shares of Common Stock at $2.00 per share (a "Unit"), to
private investors and members of management, for an aggregate purchase
price of $168,000. This transaction was completed without registration
under the Securities Act of the shares of Common Stock or the warrants
comprising the Units or the shares of Common Stock underlying the warrants
in reliance upon the exemption provided by Section 4(2) of the Securities
Act. There were no underwriters for this issuance.
(iii) In May 1995, the Company issued an aggregate of 125 Units and
one three-year warrant to purchase 37,500 shares of Common Stock at $2.00
per share, to two institutional investors, for an aggregate purchase price
of $750,000. This transaction was completed without registration under the
Securities Act of the shares of Common Stock or the warrants comprising the
Units, the shares of Common Stock underlying the warrants included in the
Units, the additional three-year warrant or the shares of Common Stock
underlying the three-year warrant, in reliance upon the exemption provided
by Section 4(2) of the Securities Act. There were no underwriters for this
issuance.
(iv) In April 1995, the Company issued warrants to purchase 6,250
shares of Common Stock at $4.00 per share to Labco in connection with its
extension of an intercompany obligation. This transaction was completed
without registration under the Securities Act of the warrants or the
underlying shares of Common Stock in reliance upon the exemption provided
by Section 4(2) of the Securities Act. There were no underwriters for this
issuance.
(v) At various times between January 1, 1995 and February 1, 1998, the
Company granted stock options to retain employees of the Company covering
an aggregate of 610,150 shares of Common Stock. These grants were exempt
from registration pursuant to Securities Act Release No. 33-6188 (Feb. 1,
1980). No underwriter was involved in these grants.
Item 27. Exhibits
The following exhibits are filed as part of this Registration Statement:
1.1 Form of Underwriting Agreement.*
3.1 Certificate of Incorporation of the Company, as amended.*
3.2 By-laws of the Company (previously filed as Exhibit 3.2A to the
Company's Annual Report on Form 10-K/A-2 for the fiscal year ended
December 31, 1994 (File No. 0-3207) and incorporated herein by
reference).
5.1 Opinion of Lowenstein Sandler PC.
10.1 Amended and Restated Employment Agreement, dated as of December 31,
1997, between the Company and Stanley S. Binder.
10.2 Employment Agreement, dated November 1, 1996, between the Company and
Richard S. Rosenfeld (previously filed as Exhibit 10.2 to the
Company's Registration Statement on Form SB-2 (File No. 333-13703)
and incorporated herein by reference).
10.3 Employment Agreement, dated November 1, 1996, between the Company and
Kenneth S. Wood (previously filed as Exhibit 10.3 to the Company's
Registration Statement on Form SB-2 (File No. 333-13703) and
incorporated herein by reference).
10.4 Consulting Agreement, dated as of January 1, 1991, between the
Company and John J. Harte (previously filed as Exhibit 10.4 to the
Company's Registration Statement on Form SB-2 (File No. 333-13703)and
incorporated herein by reference).
10.5 Form of 1995 nonqualified stock option agreement (previously filed as
Exhibit 10.6 to the Company's Registration Statement on Form SB-2
(File No. 333-13703) and incorporated herein by reference).
10.6 Form of 1996 nonqualified stock option agreement (previously filed as
Exhibit 10.3 to the Company's Registration Statement on Form SB-2
(File No. 333-13703) and incorporated herein by reference).
10.7 Description of 1991 Warrant Plan (previously filed as Exhibit 10.8
to the Company's
<PAGE>
Registration Statement on Form SB-2 (File No. 333-13703) and
incorporated herein by reference).
10.8 Description of Exercise Plan (previously filed as Exhibit 10.9 to the
Company's Registration Statement on Form SB-2 (File No. 333-13703)
and incorporated herein by reference).
10.9 Barringer Technologies Inc. 1997 Stock Compensation Program.*
10.10 License Agreement, dated February 27, 1989, between Canadian Patents
and Development Limited - Societe Canadienne Des Brevets Et
D'Exploitation Limite and Barringer Instruments Limited (the "License
Agreement"), Supplement #1, dated March 4, 1991, Assignment of
License Agreement, dated January 2, 1992, to Her Majesty the Queen in
Right of Canada, as Represented By the Minister of National Revenue
and Supplemental Letter Agreement, dated October 7, 1996 (previously
filed as Exhibit 10.10 to the Company's Registration Statement on
Form B-2 (File No. 333-13703) and incorporated herein by reference).
10.11 Letter Agreement, dated July 25, 1997, by and between Barringer
Research Limited and Her Majesty the Queen in Right of Canada, as
Represented By the Minister of National Revenue.*
10.12 Termination Agreement, dated October 7, 1996, between the Company and
Barringer Laboratories Inc. (previously filed as Exhibit 10.11 to the
Company's Registration Statement on Form SB-2 (File No. 333-13703)
and incorporated herein by reference).
10.13 Warrant Agreement by and between the Company and American Stock
Transfer & Trust Company (previously filed as Exhibit 4.1 to the
Company's Registration Statement on Form SB-2 (File No. 333-13703)
and incorporated herein by reference).
10.14 Form of Warrant issued to Janney Montgomery Scott Inc. (previously
filed as Exhibit 4.2 to the Company's Registration Statement on Form
SB-2 (File No. 333-13703) and incorporated herein by reference).
10.15 Lease, dated as of February 17, 1993, between the Company and Murray
Hill Associates (previously filed as Exhibit 10.17 to the Company's
Registration Statement on Form SB-2 (File No. 333-13703) and
incorporated herein by reference).
10.16 Lease, dated as of July 27, 1995, between Barringer Research Limited
and Lehndorff Management Limited (previously filed as Exhibit 10.18
to the Company's Registration Statement on Form SB-2 (File No.
333-13703) and incorporated herein by reference).
10.17 Letter Agreement, dated February 20, 1998 by and between the Company
and The Boyle Company.*
10.18 Supplemental Executive Retirement Plan.
10.19 Revolving Credit Note dated March 13, 1998 between the Company and
Fleet Bank, N.A.
10.20 Unlimited Guaranty of Payment and Performance dated March 13, 1998
between the Company and Fleet Bank, N.A.
10.21 Revolving Credit Loan Agreement dated March 13, 1998 among the
Company, Barringer Instruments, Inc., Barringer Research Limited
and Fleet Bank, N.A.
21.1 List of the Company's Subsidiaries (previously filed as Exhibit 21 to
the Company's Registration Statement on Form SB-2 (File No.333-13703)
and incorporated herein by reference).
23.1 Consent of BDO Seidman, LLP, independent certified public
accountants.*
23.2 Consent of Lowenstein Sandler PC (included in Exhibit 5.1 to this
registration statement).
24.1 Power of Attorney.*
<PAGE>
27.1 Financial Data Schedule.*
__________
* Previously filed.
Item 28. Undertakings
The undersigned registrant hereby undertakes:
(1) For the purpose of determining any liability under the Securities
Act of 1933, as amended (the "Securities Act"), the information omitted
from the form of Prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of Prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act, shall be deemed a part of this Registration Statement as of the time
it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions on
indemnification, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and authorizes this amendment to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Borough of New Providence, State of New Jersey, on March
30, 1998.
BARRINGER TECHNOLOGIES INC.
By: /s/ Stanley S. Binder
Stanley S. Binder, President and
Chief Executive Officer
Signature Title
/s/ Stanley S. Binder President, Chief Executive Officer
(Principal Executive Officer) and
Director
Stanley S. Binder
* Director
John D. Abernathy
* Director
Richard D. Condon
* Director
John H. Davies
* Director
John J. Harte
* Director
James C. McGrath
/s/ Richard S. Rosenfeld Vice President-Finance, Chief Financial
Officer Richard S. Rosenfeld and
Treasurer (Principal Accounting
Financial Officer)
*By: /s/ Stanley S. Binder
Stanley S. Binder,
Attorney-in-Fact
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description Page
1.1 Form of Underwriting Agreement.*
3.1 Certificate of Incorporation of the Company, as amended.*
3.2 By-laws of the Company (previously filed as Exhibit 3.2A to the Company's
Annual Report on Form 10-K/A-2 for the fiscal year ended December 31, 1994
(File No. 0-3207) and incorporated herein by reference).
5.1 Opinion of Lowenstein Sandler PC.
10.1 Amended and Restated Employment Agreement, dated as of December 31, 1997,
between the Company and Stanley S. Binder.
10.2 Employment Agreement, dated November 1, 1996, between the Company and
Richard S. Rosenfeld (previously filed as Exhibit 10.2 to the Company's
Registration Statement on Form SB-2 (File No. 333-13703) and incorporated
herein by reference).
10.3 Employment Agreement, dated November 1, 1996, between the Company and
Kenneth S. Wood (previously filed as Exhibit 10.3 to the Company's
Registration Statement on Form SB-2 (File No. 333-13703) and incorporated
herein by reference).
10.4 Consulting Agreement, dated as of January 1, 1991, between the Company and
John J. Harte (previously filed as Exhibit 10.4 to the Company's
Registration Statement on Form SB-2 (File No. 333-13703) and incorporated
herein by reference).
10.5 Form of 1995 nonqualified stock option agreement (previously filed as
Exhibit 10.6 to the Company's Registration Statement on Form SB-2 (File No.
333-13703) and incorporated herein by reference).
10.6 Form of 1996 nonqualified stock option agreement (previously filed as
Exhibit 10.3 to the Company's Registration Statement on Form SB-2 (File No.
333-13703) and incorporated herein by reference).
10.7 Description of 1991 Warrant Plan (previously filed as Exhibit 10.8 to the
Company's Registration Statement on Form SB-2 (File No. 333- 13703) and
incorporated herein by reference).
10.8 Description of Exercise Plan (previously filed as Exhibit 10.9 to the
Company's Registration Statement on Form SB-2 (File No. 333-13703) and
incorporated herein by reference).
10.9 Barringer Technologies Inc. 1997 Stock Compensation Program.*
10.10 License Agreement, dated February 27, 1989, between Canadian Patents and
Development Limited - Societe Canadienne Des Brevets Et D'Exploitation
Limite and Barringer Instruments Limited (the "License Agreement"),
Supplement #1, dated March 4, 1991, Assignment of License Agreement,
dated January 2, 1992, to Her Majesty the Queen in Right of Canada, as
Represented By the Minister of National Revenue and Supplemental Letter
Agreement, dated October 7, 1996 (previously filed as Exhibit 10.10 to
the Company's Registration Statement on Form SB-2 (File No. 333-13703)
and incorporated herein by reference).
10.11 Letter Agreement, dated July 25, 1997, by and between Barringer Research
Limited and Her Majesty the Queen in Right of Canada, as Represented By
the Minister of National Revenue.*
10.12 Termination Agreement, dated October 7, 1996, between the Company and
Barringer Laboratories Inc. (previously filed as Exhibit 10.11 to the
Company's Registration Statement on Form SB-2 (File No. 333-13703) and
incorporated herein by reference).
10.13 Warrant Agreement by and between the Company and American Stock Transfer
& Trust Company (previously filed as Exhibit 4.1 to the Company's
Registration Statement on Form SB-2 (File No. 333-13703) and incorporated
herein by reference).
10.14 Form of Warrant issued to Janney Montgomery Scott Inc. (previously filed
as Exhibit 4.2 to the Company's Registration Statement on Form SB-2 (File
No. 333-13703) and incorporated herein by reference).
10.15 Lease, dated as of February 17, 1993, between the Company and Murray Hill
Associates (previously filed as Exhibit 10.17 to the Company's
Registration Statement on Form SB-2 (File No. 333-13703) and incorporated
herein by reference).
10.16 Lease, dated as of July 27, 1995, between Barringer Research Limited and
Lehndorff Management Limited (previously filed as Exhibit 10.18 to the
Company's Registration Statement on Form SB-2 (File No. 333-13703) and
incorporated herein by reference).
10.17 Letter Agreement, dated February 20, 1998 by and between the Company
and The Boyle Company.*
10.18 Supplemental Executive Retirement Plan.
10.19 Revolving Credit Note dated March 13, 1998 between the Company and Fleet
Bank, N.A.
10.20 Unlimited Guaranty of Payment and Performance dated March 13, 1998
between the Company and Fleet Bank, N.A.
10.21 Revolving Credit Loan Agreement dated March 13, 1998 among the Company,
Barringer Instruments, Inc., Barringer Research Limited and Fleet Bank,
N.A.
23.1 Consent of BDO Seidman, LLP, independent certified public accountants.*
23.2 Consent of Lowenstein Sandler PC (included in Exhibit 5.1 to this
registration statement).
24.1 Power of Attorney.*
27.1 Financial Data Schedule.*
______________________
* Previously filed.
EXHIBIT 5.1
John D. Hogoboom Tel 973.597.2382 Fax 973.597.2383
Member of the Firm [email protected]
March 27, 1998
Barringer Technologies Inc.
219 South Street
Murray Hill, New Jersey 07974
Dear Sirs:
In connection with the registration under the Securities Act of 1933, as amended
(the "Act"), of (i) 2,270,000 shares (the "New Shares") of the Common Stock, par
value $.01 per share (the "Common Stock"), of Barringer Technologies Inc., a
Delaware corporation (the "Company") (together with any additional New Shares
that may be registered pursuant to a registration statement filed pursuant to
Rule 462(b) of the Act), and (ii) 30,000 shares (the "Previously Issued Shares")
of Common Stock (together with any additional Previously Issued Shares that may
be registered pursuant to a registration statement filed pursuant to Rule 462(b)
of the Act), we have examined such corporate records, certificates and other
documents, and such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion.
Upon the basis of such examination, we advise you that, in our opinion:
1. When the Registration Statement has become effective under the Act, the terms
of the issue and sale of the New Shares have been duly established in conformity
with the Company's Certificate of Incorporation, as amended, so as not to
violate any applicable law or result in a breach of any agreement or instrument
binding on the Company and so as to comply with any requirement or restriction
imposed by any court or governmental body having jurisdiction over the Company,
and the New Shares have been duly issued and sold as contemplated in the
Registration Statement, the New Shares will be validly issued, fully paid and
non-assessable.
2. Assuming that, at the time of the issuance of the Previously Issued Shares,
the Company received payment of the full consideration therefor in a form
authorized pursuant to the provisions of the Delaware General Corporation Law as
in effect at the time of such issuance, the Previously Issued Shares have been
validly issued, fully paid and are non-assessable.
The foregoing opinion is limited to the Federal laws of the United States and
the General Corporation Law of the State of Delaware, and we are expressing no
opinion as to the effect of the laws of any other jurisdiction.
In rendering this opinion, we have relied as to certain matters on information
obtained from public officials, officers of the Company and other sources
believed by us to be responsible.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (and any registration statement relating to the
Registration Statement filed pursuant to Rule 462(b) of the Act) and to the
references to us under the heading "Legal Matters" in the Prospectus relating
thereto. In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ Lowenstein Sandler PC
EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement"), dated
December 31, 1997, by and between Barringer Technologies Inc. (the "Company")
and Stanley S. Binder (the "Executive"), residing at 32 Corey Lane, Mendham, New
Jersey 07945.
W I T N E S S E T H:
WHEREAS, on December 31, 1997, the Executive and the Company originally
entered into this Agreement, which set forth the terms and conditions upon which
the Executive shall continue to serve as the Chairman of the Board and Chief
Executive Officer of the Company; and
WHEREAS, the Executive and the Company wish to amend and restate certain of
the provisions of this Agreement to correctly reflect the current understanding
of the parties with respect to such terms and conditions, all as more fully set
forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
Section 1. Term of Employment. The Executive's employment under this
Agreement shall commence on January 1, 1998 (the "Commencement Date") and,
subject to earlier termination pursuant to Section 6 hereof, shall continue
until December 31, 2002 (the "Term"). The Executive hereby represents and
warrants that (i) he has the legal capacity to execute and perform this
Agreement, (ii) this Agreement is a valid and binding obligation of the
Executive enforceable against him in accordance with its terms, (iii) the
Executive's service hereunder will not conflict with, or result in a breach of,
any agreement, understanding, order, judgment or other obligation to which the
Executive is presently a party or by which he may be bound, and (iv) the
Executive is not subject to, or bound by, any covenant against competition,
confidentiality obligation or any other agreement, order, judgment or other
obligation which would conflict with, restrict or limit the performance of the
services to be provided by him hereunder.
Section 2. Position and Duties. During the Term, the Executive shall serve
as the Chairman and Chief Executive Officer of the Company and shall have such
powers and duties as are commensurate with such position and as may be conferred
upon him from time to time by the Board of Directors of the Company (the
"Board"). During the Term, and except for illness or incapacity and reasonable
vacation periods consistent with Section 3 below, the Executive shall reasonably
devote all of his business time, attention, skill and efforts exclusively to the
business and affairs of the Company and its subsidiaries and affiliates;
provided, however, that the Executive may engage in charitable, educational,
religious, civic and similar types of activities (all of which shall be deemed
to benefit the Company), speaking engagements, membership on the board of
directors of other organizations (to the extent approved in advance by the
Board), and similar activities to the extent that such activities do not inhibit
or prohibit the performance
<PAGE>
of his duties hereunder or inhibit or conflict with the business of the Company,
its subsidiaries and affiliates.
Section 3. Compensation. For all services rendered by the Executive in any
capacity required hereunder during the Term, including, without limitation,
services as an executive officer, director, or member of any committee of the
Company or any subsidiary, affiliate or division thereof, the Executive shall be
compensated as follows:
(a) The Company shall pay the Executive a fixed salary at the rate of
$250,000 per annum or such higher (but never lower) annual amount as is being
paid from time to time pursuant to the terms hereof ("Base Salary"). The Base
Salary shall be subject to such periodic review and such periodic increases as
the Board shall deem appropriate in accordance with the Company's customary
procedures and practices regarding the salaries of senior officers. Base Salary
shall be payable in accordance with the customary payroll practices of the
Company, but in no event less frequently than bi-weekly.
(b) Provided that the Executive remains actively employed by the Company on
a full-time basis, the Company shall pay the Executive a special bonus (each, a
"Special Bonus") in the respective amounts set forth below if, in any fiscal
year during the Term, "EBITDA" for such fiscal year at least equals "Targeted
EBITDA" for such fiscal year; provided, however, that the Executive shall not be
entitled to receive more than three Special Bonuses during the Term.
Special Bonus Number Special Bonus Amount
One $65,000
Two $65,000
Three $70,000
Any Special Bonus payable to the Executive hereunder shall accrue as of the end
of the applicable fiscal year but shall be paid no later than March 31 of the
year immediately succeeding the end of the fiscal year in respect of which such
Special Bonus has been earned.
For purposes of this Section 3(b), "EBITDA" means, for any period, the sum
(without duplication) of (i) Consolidated Net Income, (ii) to the extent
Consolidated Net Income has been reduced thereby, all income taxes of the
Company and its subsidiaries paid or accrued for such period (other than income
taxes attributable to extraordinary, unusual or non-recurring gains or losses),
all interest expenses, amortization expenses and depreciation expenses of the
Company and its subsidiaries paid or accrued for such period, and (iii) other
non-cash items reducing Consolidated Net Income, less other non-cash items
increasing Consolidated Net Income, all as determined on a consolidated basis
for the Company and its subsidiaries in conformity with generally accepted
accounting principles, consistently applied for all relevant periods.
"Consolidated Net Income" means, for any period, the aggregate net income (or
loss) of the Company and its subsidiaries for such period on a consolidated
basis, determined in accordance with generally accepted accounting principles,
consistently applied for all relevant
<PAGE>
periods, less (i) gains and losses from any sale, lease, conveyance, transfer or
other disposition of any assets or property of the Company and its subsidiaries,
other than in the ordinary course of business, including the tax effects
thereof, (ii) items classified under generally accepted accounting principles,
consistently applied for all relevant periods, as extraordinary or non-recurring
gains and losses, and the related tax effects thereof, and (iii) the net income
or loss of any entity acquired in a transaction accounted for as a pooling of
interests accrued prior to the date such entity is acquired by the Company.
"Targeted EBITDA" for any fiscal year shall be as set forth in the annual budget
for such fiscal year prepared by management of the Company (including the
Executive) and approved by the Board.
All determinations of EBITDA hereunder shall be made by the Company's
independent public accountants, which determinations shall be final, binding and
conclusive on the Executive and the Company, absent clear mistake or other
manifest error.
(c) The Executive shall be entitled to participate in the Company's Annual
Incentive Plan or any successor plan (the "Annual Incentive Plan"), which plan
provides for the payment of incentive cash compensation to key officers based
upon the performance of the Company and the officer's individual performance.
The Company shall pay the Executive such amounts, if any, as shall become due to
the Executive from time to time under the Annual Incentive Plan. A summary
description of the terms of the Annual Incentive Plan is attached hereto as
Exhibit A.
(d) The Executive also shall be entitled to participate in the Company's
Supplemental Executive Retirement Plan or any successor plan (the "SERP Plan"),
which plan provides for contributions by the Company to accounts maintained for
the benefit of certain senior executive officers of the Company based upon the
performance of the Company. The Company shall pay to the Executive's account
such amounts, if any, as shall become due from time to time under the SERP Plan.
A summary description of the terms of the SERP Plan is attached hereto as
Exhibit B.
(e) Within 30 days of the date hereof, the Executive Compensation Committee
of the Board (the "Committee") shall, pursuant to the terms of the Company's
1997 Stock Compensation Program (the "Program"), grant to the Executive options
(the "Options") covering 50,000 shares of the Company's common stock, par value
$.01 per share (the "Common Stock"). The Options may be incentive stock options
or non-qualified options, as determined by the Committee. The Options shall have
an exercise price (subject to adjustment as specified in the Program) equal to
the Fair Market Value (as such term is defined in the Program) of the Common
Stock underlying the Options on the date of grant, and shall be governed by and
subject to the terms and conditions of the Program (except as otherwise provided
for in Section 6 hereof).
(f) Subject to compliance with the terms of Section 4 hereof, the Company
shall reimburse the Executive for the Executive's actual out-of-pocket expenses
of leasing a car of the Executive's choice and all related maintenance, repairs,
insurance and other expenses, subject to a monthly cap of $750.
<PAGE>
(g) The Base Salary in effect from time to time shall be increased by any
premiums paid by the Executive to obtain and maintain a disability insurance
policy (together with any replacement disability insurance policy, the
"Disability Policy") providing the Executive with payments equal to not more
than 65% of his Base Salary as in effect from time to time in the event that the
Executive becomes permanently disabled and containing such terms and conditions
as the Board or the Executive Compensation Committee of the Board may approve.
The Executive shall be the owner of the Disability Policy and the Company shall
have no obligation to maintain the Disability Policy or incur any out-of-pocket
expense in connection therewith. The Executive shall provide the Company with a
true and complete copy of any Disability Policy maintained by the Executive and
shall provide the Company with such other information (including access to such
medical and other records relating to the Executive) as the Company may
reasonably request from time to time.
(h) The Company shall maintain a term insurance policy (the "Term Policy")
insuring the life of the Executive with a mutually acceptable insurance company
in an amount of not less than $1,000,000 at no cost to the Executive (except any
associated tax liability) with the beneficiary to be designated by the
Executive. In the event that the Executive's employment is terminated pursuant
to the terms hereof, the Company shall assign its rights under the Term Policy
to the Executive for no additional consideration and, subject to the terms of
the Term Policy, the Executive shall have the right to assume the Company's
obligations thereunder. Upon such assignment, the Company shall have no further
obligation with respect to the Term Policy.
(i) Subject to compliance with the terms of Section 4 hereof, the Company
shall reimburse the Executive for the actual out-of-pocket expenses incurred by
the Executive in obtaining personal financial planning, tax or legal services,
subject to a cap of $15,000 for expenses incurred prior to the first anniversary
of the Commencement Date and $5,000 for expenses incurred in each remaining
calendar year during the Term.
(j) The Executive shall be entitled to five weeks of vacation in each
calendar year during the Term; provided, however, that the Executive shall not
be entitled to carryover vacation from one year to any other year or to any
payment in respect of any unused or accrued vacation.
(k) The Company also will furnish the Executive, without cost to him except
any associated tax liability, with perquisites consistent with those afforded
other senior executives holding positions with the Company comparable to the
position held by the Executive.
(l) Except as expressly modified by the terms hereof, the Executive shall
be entitled to participate in all compensation and employee benefit plans or
programs, and to receive all benefits, perquisites and emoluments, for which any
salaried employees of the Company are eligible under any plan or program now or
hereafter established and maintained by the Company, to the fullest extent
permissible under the general terms and provisions of such plans or programs
<PAGE>
and in accordance with the provisions thereof. Notwithstanding the foregoing,
nothing in this Agreement shall preclude the amendment or termination of any
such plan or program, including, without limitation, the Annual Incentive Plan
and the SERP Plan; provided, that, such amendment or termination is applicable
generally to the senior officers of the Company or any subsidiary or affiliate.
Section 4. Business Expenses. Subject to any applicable limitations set
forth in Section 3, the Company shall pay or reimburse the Executive for all
reasonable travel or other expenses incurred by the Executive in connection with
the performance of his duties and obligations under this Agreement, subject to
the Executive's presentation of appropriate vouchers in accordance with such
procedures as the Company may from time to time establish for senior officers
and to preserve any deductions for Federal income taxation purposes to which the
Company may be entitled.
Section 5. Reserved.
Section 6. Termination of Employment; Effects Thereof.
(a) The Company shall have the right, upon delivery of written notice to
the Executive, to terminate the Executive's employment hereunder prior to the
expiration of the Term (i) pursuant to a Termination for Cause, (ii) upon the
Executive's becoming Permanent Disabled, or (iii) pursuant to a Without Cause
Termination; provided, however, that, without the Executive's written consent,
no Without Cause Termination shall be effective until 60 days after receipt by
the Executive of written notice of termination from the Company. The Executive
shall have the right, upon delivery of written notice to the Company, to
terminate the Executive's employment hereunder prior to the expiration of the
Term (i) pursuant to a termination for Good Reason, (ii) following the
occurrence of Change in Control Event upon compliance with the procedures set
forth in Section 6(f), or (iii) in the Executive's sole discretion; provided,
however, that, without the Company's written consent, no termination of the
Executive's employment pursuant to this sentence shall be effective without the
Company's consent until 90 days after receipt by the Company of written notice
of termination from the Executive. The Executive's employment hereunder shall
terminate automatically without action by any party hereto upon the Executive's
death.
(b) In the event that the Company terminates the Executive's employment
pursuant to a Without Cause Termination, or the Executive terminates his
employment for Good Reason, the Company shall pay the Executive a lump sum equal
to 2.99 times the Executive's annual Base Salary as in effect at the time of
such termination, together with any earned but unpaid Base Salary as of the date
of termination of employment. In addition, subject to the provisions of Section
3(l), the Company shall pay the Executive an amount determined under the Annual
Incentive Plan in respect of the year in which the termination of employment is
effective assuming (i) the Executive has met all of his personal objectives pro
rated for such year, and (ii) the total bonus pool under the Annual Incentive
Plan for such year is based upon the level of the Company's performance through
the end of the month immediately preceding the effective date of such
termination with such performance being annualized for the year in which the
<PAGE>
termination of employment is effective. The Company also shall pay to the
Executive (or as the Executive may otherwise direct) all amounts which the
Executive is entitled to pursuant to the SERP Plan (whether vested or unvested).
Further, notwithstanding the terms of the Company's stock compensation programs
or the terms of any agreement between the Company and the Executive evidencing
an award to the Executive, (i) all stock options and other awards previously
granted to the Executive shall become immediately payable (in the case of any
awards which do not require further payment or exercise by the Executive) or
exercisable for a period of six months following the effective date of the
termination of the Executive's employment, and (ii) any stock options or other
awards previously granted to the Executive which have not been exercised on or
before the end of such six-month period shall expire and shall be null and void.
The Company shall continue to provide the Executive and his spouse with
continued group hospitalization, health and medical insurance coverage
consistent with and pursuant to the terms of the medical plan, if any, then
maintained by the Company for its employees until the Executive reaches age 65
or, in the event the Executive dies prior to attaining age 65, until his spouse
becomes eligible for medical benefits provided pursuant to Medicare or any
successor program. Neither the Executive nor his spouse shall be required to
contribute to the cost of such coverage (except for any deductibles and
co-payments generally applicable to participants in such medical plan). The
Executive acknowledges that the medical benefits coverage provided to him and
his spouse hereunder shall run concurrently with any period of coverage to which
the Executive or his spouse may be entitled under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA"). Any period of
continuation coverage under COBRA shall be measured from the effective date of
the termination of the Executive's employment hereunder. The Executive and his
spouse will have the statutory period after the termination of his employment to
elect continued COBRA coverage. No other payments shall be made, or benefits
provided, by the Company under this Agreement except as otherwise required by
law.
(c) In the event that the Company terminates the Executive's employment
pursuant to a Permanent Disability, the Company shall pay the Executive any
earned but unpaid Base Salary as of the date of termination of employment and,
subject to the provisions of Section 3(l), shall pay the Executive an amount
determined under the Annual Incentive Plan in respect of the year in which the
termination of employment is effective assuming (i) the Executive has met all of
his personal objectives pro rated for such year, and (ii) the total bonus pool
under the Annual Incentive Plan for such year is based upon the level of the
Company's performance through the end of the month immediately preceding the
effective date of such termination with such performance being annualized for
the year in which the termination of employment is effective. The Company also
shall pay to the Executive (or as the Executive may otherwise direct) all
amounts which the Executive is entitled to pursuant to the SERP Plan (whether
vested or unvested). All stock options or other awards previously granted to the
Executive that have not vested on or before the effective date of the
termination of the Executive's employment will immediately expire and shall be
null and void as of the date of termination and all options or awards previously
granted to the Executive that have vested on or before the effective date of the
termination of the Executive's employment shall be payable or exercisable as
specified in the stock compensation program or other arrangement pursuant to
which such options or awards were granted to the Executive. No other payments
shall be made, or benefits provided, by the Company under this Agreement except
as otherwise required by law.
<PAGE>
(d) In the event that the Company terminates the Executive's employment
hereunder due to a Termination for Cause or the Executive terminates his
employment with the Company other than for Good Reason (including, without
limitation, pursuant to any retirement plan or policy then maintained by the
Company), the Company shall pay the Executive any earned but unpaid Base Salary
as of the date of termination of employment. The Company also shall pay to the
Executive (or as the Executive may otherwise direct) all amounts then credited
to the Executive's account pursuant to the SERP Plan that have vested on or
before the effective date of the termination of the Executive's employment and
all amounts then so credited that have not vested on or before the effective
date of the termination of the Executive's employment shall be forfeited. The
Executive shall not be entitled to participate in the Annual Incentive Plan in
respect of the year in which termination of his employment occurs or any
subsequent year. Notwithstanding the terms of the Company's stock compensation
programs or the terms of any agreement between the Company and the Executive
evidencing an award to the Executive, (i) all stock options and other awards
previously granted to the Executive that have not vested on or before the
effective date of the termination of the Executive's employment shall expire and
shall be null and void, (ii) all stock options and other awards previously
granted to the Executive that have vested on or prior to the effective date of
the termination of the Executive's employment shall be payable (in the case of
any awards which do not require further payment or exercise by the Executive) or
exercisable for a period of three months following the effective date of the
termination of the Executive's employment, and (iii) any such stock options or
other awards which have not been exercised on or before the end of such
three-month period shall expire and shall be null and void. No other payments
shall be made, or benefits provided, by the Company whether under this Agreement
or otherwise except to the extent required by law.
(e) In the event that the Executive's employment hereunder is terminated
due to the Executive's death, the Company shall pay the Executive's executor or
other legal representative (the "Representative") any earned but unpaid Base
Salary as of the date of termination of employment and, subject to the
provisions of Section 3(l), shall pay the Representative an amount determined
under the Annual Incentive Plan in respect of the year in which the Executive's
death occurs assuming (i) the Executive has met all of his personal objectives
pro rated for such year, and (ii) the total bonus pool under the Annual
Incentive Plan for such year is based upon the level of the Company's
performance through the end of the month immediately preceding the Executive's
death with such performance being annualized for the year in which the
Executive's death occurs; provided, that, the amount paid to the Representative
shall be pro rated for the number of complete months preceding the Executive's
death. In addition, the Company shall pay to the Representative (or as the
Representative may otherwise direct) all amounts which the Executive is entitled
to pursuant to the SERP Plan (whether vested or unvested). All stock options or
other awards previously granted to the Executive that have not vested on or
before the Executive's death will immediately expire and shall be null and void
as of the date of death and all options or awards previously granted to the
Executive that have vested on or before the Executive's death shall be payable
or exercisable by the Representative as specified in the stock compensation
program or other arrangement pursuant to which such options or awards were
granted to the Executive. No other payments shall be
<PAGE>
made, or benefits provided, by the Company under this Agreement except as
otherwise required by law.
(f) If a Change in Control Event occurs, the Executive shall have the
right, in his sole discretion, to elect to terminate his employment by providing
written notice of his election to the Company within 180 days after the
occurrence of such Change in Control Event. Any termination of employment by the
Executive pursuant to this Section 6(f) shall be deemed to be a termination for
Good Reason and shall have the effects set forth in Section 6(b) hereof.
(g) For purposes of this Agreement, the following terms have the following
meanings:
(i) The term "Termination for Cause" means, to the maximum extent
permitted by applicable law, a termination of the Executive's
employment by the Company because the Executive has (a) materially
breached or materially failed to perform his duties under applicable
law and such breach or failure to perform causes material damage to
the Company or constitutes self-dealing or willful misconduct, (b)
intentionally committed an act of dishonesty in the performance of his
duties hereunder that either constitutes self-dealing, willful
misconduct, a breach of duty to the Company or a violation of
applicable law, (c) engaged in conduct detrimental to the business of
the Company which causes material damage to the Company, (d) been
convicted of a felony, (e) been convicted of a misdemeanor involving
moral turpitude, (f) materially breached or materially failed to
perform his obligations and duties hereunder, which breach or failure
the Executive shall fail to remedy within 30 days after written demand
from the Company, or (g) violated in any material respect the
representations made in Section 1 above or the provisions of Section 7
below.
(ii) The term "Good Reason" means a termination of the
Executive's employment by the Executive due to a failure of the
Company or its successors without the prior consent of the Executive
to fulfill its obligations under this Agreement in any material
respect, including (a) any failure to elect or re-elect or to appoint
or reappoint the Executive to the office of Chairman of the Board and
Chief Executive Officer (or any equivalent title with substantially
similar duties), (b) any other material change by the Company in the
functions, duties or responsibilities of the Executive's position with
the Company which would materially reduce the ranking or level,
dignity, responsibility, importance or scope of such position, or (c)
the termination or amendment of either the Annual Incentive Plan or
the SERP Plan so as to materially diminish the benefits expected to be
enjoyed by the Executive thereunder; provided, however, that for
purposes of this clause (c), "Good Reason" shall not exist if the
termination or amendment (i) occurs in connection with the adoption or
modification of another plan having a purpose similar to the Annual
Incentive Plan or the SERP Plan, as the case may be, in which the
Executive is eligible to participate and, after giving effect to the
adoption or modification of such other plan, the aggregate net benefit
expected to
<PAGE>
be enjoyed by the Executive under such plans is not diminished
materially, or (ii) was reasonably required in order to comply with
applicable law, rule or regulation.
(iii) The term "Without Cause Termination" means a termination of
the Executive's employment by the Company other than due to (i) a
Termination for Cause, (ii) Permanent Disability, (iii) the
Executive's death, or (iv) the expiration of this Agreement.
(iv) The term "Permanent Disability" means permanently disabled
so as to qualify for full benefits under the Disability Policy;
provided, however, that if no Disability Policy is in effect on the
date of determination, "Permanent Disability" shall mean the inability
of the Executive to perform his duties hereunder on a full-time basis
for a period of six full calendar months during any eight consecutive
calendar months due to illness or injury of a physical or mental
nature, supported by the completion by the Executive's attending
physician (or a physician selected by the Company and reasonably
satisfactory to the Executive or his legal representative if the
Executive's physician is unable or unwilling to provide the necessary
certification) of a medical certification form outlining the
disability and treatment.
(v) The term "Change in Control Event" means any of the following
events:
(A) Any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended), is or becomes the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934,
as amended, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has the
right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of
50% or more of the total voting power of the Company's
outstanding capital stock;
(B) The individuals who (i) as of the date of this Agreement
constitute the Board of Directors (the "Original Directors"),
(ii) thereafter are elected to the Board of Directors and whose
election or nomination for election to the Board of Directors was
approved by a vote of at least 2/3 of the Original Directors then
still in office (such Directors being called "Additional Original
Directors"), or (iii) are elected to the Board of Directors and
whose election or nomination for election to the Board of
Directors was approved by a vote of at least 2/3 of the Original
Directors and Additional Original Directors then still in office,
cease for any reason to constitute a majority of the members of
the Board of Directors;
<PAGE>
(C) The Company shall consummate a merger, consolidation,
recapitalization, or reorganization of the Company, other than
any such transaction which results in holders of outstanding
voting securities of the Company immediately prior to the
transaction having beneficial ownership of at least 50% of the
total voting power represented by the voting securities of the
surviving entity outstanding immediately after such transaction,
with the voting power of each such continuing holder relative to
such other continuing holders being not altered substantially in
the transaction; or
(D) The Company shall consummate a plan of complete
liquidation of the Company or an agreement for the sale,
assignment, conveyance, transfer, lease or other disposition by
the Company of all or substantially all of its assets to any
person, or group of related persons, in one or a series of
related transactions.
(h) Any payments to be made or benefits to be provided by the Company
pursuant to Section 6(b) or (f) hereof are subject to the receipt by the Company
of an effective general release and agreement not to sue in a form reasonably
satisfactory to the Company (the "Release") pursuant to which the Executive
agrees (i) to release all claims against the Company and certain related parties
(excluding claims for any severance benefits payable hereunder), (ii) not to
maintain any action, suit, claim or proceeding against the Company and certain
related parties, and (iii) to be bound by certain confidentiality and mutual
non-disparagement covenants specified therein. Notwithstanding the due date of
any post-employment payment, the Company shall not be obligated to make any
payments under Section 6(b) or (f) until after the expiration of any revocation
period applicable to the Release.
Section 7. Other Duties of Executive During and After Term. (a) The
Executive recognizes and acknowledges that all information pertaining to the
affairs, business, clients, or customers of the Company or any of its
subsidiaries or affiliates (any or all of such entities being hereinafter
referred to as the "Business"), as such information may exist from time to time,
other than information that the Company has previously made publicly available,
is confidential information and is a unique and valuable asset of the Business,
access to and knowledge of which are essential to the performance of the
Executive's duties under this Agreement. In consideration of the payments made
to him hereunder, the Executive shall not, except to the extent reasonably
necessary in the performance of his duties under this Agreement, divulge to any
person, firm, association, corporation, or governmental agency, any information
concerning the affairs, businesses, clients, or customers of the Business
(except such information as is required by law to be divulged to a government
agency or pursuant to lawful process), or make use of any such information for
his own purposes or for the benefit of any person, firm, association or
corporation (except the Business) and shall use his reasonable best efforts to
prevent the disclosure of any such information by others. All records,
memoranda, letters, books, papers, reports, accountings, experience or other
data, and other records and documents relating to the Business, whether made by
the Executive or otherwise coming into his possession, are confidential
information and are, shall be, and shall remain the property of the Business. No
copies thereof shall be made which are not retained by the Business, and the
Executive agrees, on
<PAGE>
termination of his employment or on demand of the Company, to deliver the same
to the Company.
(b) The Executive recognizes and acknowledges that the Company shall own
all Work Product created by the Executive during the Term. As used herein, "Work
Product" includes, but is not limited to, all intellectual property rights, U.S.
and international copyrights, patentable inventions, creations, discoveries and
improvements, works of authorship and ideas, whether or not patentable or
copyrightable and regardless of their form or state of development. All Work
Product shall be considered work made for hire by the Executive and shall be
owned by the Company.
If any of the Work Product may not, by operation of law, be considered a
work made for hire by the Executive for the Company, or if ownership of all
right, title and interest of the intellectual property rights therein shall not
otherwise vest exclusively in the Company, the Executive shall assign, and upon
creation thereof shall be deemed to have automatically assigned, without further
consideration, the ownership of all such Work Product to the Company and its
successors and assigns. The Company, its successors and assigns shall have the
right to obtain and hold in its or their own name copyrights, patents,
registrations and other protections available to the Work Product. The Executive
shall, at the Company's expense, assist the Company in obtaining and maintaining
patent, copyright, trademark and other appropriate protection for all Work
Product in all countries. The Executive hereby irrevocably relinquishes for the
benefit of the Company, its successors and assigns any moral rights in the Work
Product recognized under applicable law.
The Executive shall disclose all Work Product promptly to the Company and
shall not disclose the Work Product to anyone other than authorized Company
personnel without the Company's prior written consent. The Executive shall not
disclose to the Company or induce the Company to use any secret or confidential
information or material belonging to others.
The provisions of this Section 7(b) cover Work Product of any kind that is
conceived or made by the Executive that (i) results from tasks assigned to the
Executive by the Company, its subsidiaries and affiliates, or (ii) are conceived
or made with the use of facilities or materials provided by the Company, its
subsidiaries and affiliates.
(c) In consideration of the payments made to him hereunder, during the
two-year period commencing on the effective date of the termination of his
employment for any reason, the Executive shall not, without express prior
written approval of the Board, directly or indirectly, own or hold any
proprietary interest in, or be employed by or receive remuneration from, any
corporation, limited liability company, business trust, partnership, sole
proprietorship or other entity engaged in competition with the Company or any of
its affiliates (a "Competitor"), other than severance-type or retirement-type
benefits from entities constituting prior employers of the Executive. The
Executive also shall not, during such two-year period, solicit for the account
of any Competitor, any customer or client of the Company or its affiliates, or
any entity or individual that was such a customer or client during the
twelve-month period immediately preceding the termination of the Executive's
employment. The Executive also shall not, during
<PAGE>
such two-year period, act on behalf of any Competitor to interfere with the
relationship between the Company or its subsidiaries and affiliates and their
respective employees.
For purposes of the preceding paragraph, (i) the term "proprietary
interest" means legal or equitable ownership, whether through stockholding or
otherwise, of an equity interest in a business, firm or entity other than
ownership of less than two percent of any class of equity interest in a publicly
held business, firm or entity and (ii) an entity shall be considered to be
"engaged in competition" if such entity is, or is a holding company for, a
company engaged in the business of designing, manufacturing, assembling, selling
or servicing trace chemical detection equipment or related software or supplies
anywhere in the world.
(d) The Executive acknowledges that the restrictions contained in this
Section 7 are reasonable and necessary to protect the legitimate interests of
the Company and that any breach by the Executive of any provision contained in
this Section 7 will result in irreparable injury to the Company for which a
remedy at law would be inadequate. Accordingly, the Executive acknowledges that
the Company shall be entitled to temporary, preliminary and permanent injunctive
relief against the Executive in the event of any breach or threatened breach by
the Executive of the provisions of this Section 7, in addition to any other
remedy that may be available to the Company whether at law or in equity.
(e) The Company's obligation to make payments, or provide for any benefits
under this Agreement (except to the extent vested or exercisable) shall cease
upon a violation by the Executive of the provisions of this Section 7. The
provisions of this Section 7 shall survive any termination of the Executive's
employment with the Company.
Section 8. Excise Taxes. Notwithstanding anything herein to the contrary,
if it is determined that any payment, coverage or benefit provided to the
Executive would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any interest or
penalties with respect to such excise tax (such excise tax, together with any
interest or penalties thereon, is herein referred to as an "Excise Tax"), then
the Executive shall be entitled to one or more additional payments (each, a
"Gross-up Payment") in an amount that will place the Executive in the same
after-tax economic position that he would have enjoyed if the Excise Tax had not
been imposed. The amount of each Gross-up Payment shall be determined in good
faith by the Company in accordance with the formula {(E x (1 - M) / (1 - T)) -
E} (or such other formula as the Company reasonably determines is appropriate to
achieve the same result), where
E equals the payment, coverage or benefit which is determined to be "excess
parachute payments" within the meaning of Section 280G(b)(i) of the Code;
M equals the sum of the highest marginal federal and state income tax rates
then applicable to the Executive, net of the effect, if any, of the deduction of
state income taxes on the Executive's federal income tax return; and
<PAGE>
T equals M plus the rate of Excise Tax applicable to the payment, coverage
or benefit.
Any Gross-Up Payment shall be paid to the Executive in sufficient time to
enable the Executive to pay any Excise Tax imposed on the Executive.
Section 9. Withholdings. The Company may directly or indirectly withhold
from any payments made under this Agreement all Federal, state, city or other
taxes and all other deductions as shall be required pursuant to any law or
governmental regulation or ruling or pursuant to any contributory benefit plan
maintained by or on behalf of the Company.
Section 10. Consolidation, Merger, or Sale of Assets. Nothing in this
Agreement shall preclude the Company from consolidating or merging into or with,
or transferring all or substantially all of its assets to, or engaging in any
other business combination with, any other person or entity which assumes this
Agreement and all obligations and undertakings of the Company hereunder. Upon
such a consolidation, merger, transfer of assets or other business combination
and assumption, the term "Company" as used herein shall mean such other person
or entity and this Agreement shall continue in full force and effect.
Section 11. Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be given in writing and
shall be deemed to have been duly given if delivered or mailed, postage prepaid,
by same day or overnight mail (i) if to the Executive, at the address set forth
above with a copy to Hertzog, Calamari & Gleason, 100 Park Avenue, New York, New
York 10017, attention: Anthony L. Paccione, or (ii) if to the Company, as
follows:
Barringer Technologies Inc.
219 South Street
Murray Hill, New Jersey 07974
or to such other address as either party shall have previously specified in
writing to the other.
Section 12. No Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to execution, attachment, levy, or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect; provided, however, that nothing in this Section
12 shall preclude the assumption of such rights by executors, administrators or
other legal representatives of the Executive or his estate and their assigning
any rights hereunder to the person or persons entitled thereto.
Section 13. Expenses. Except as set forth herein, each party hereto shall
pay its own expenses incident to the preparation, negotiation, administration
and enforcement of this Agreement and the transactions contemplated herein.
Notwithstanding the foregoing, the Company shall reimburse the Executive for the
reasonable out-of-pocket expenses incurred by
<PAGE>
the Executive in connection with the preparation, negotiation and execution of
this Agreement, subject to receipt of appropriate invoices and such other
documentation as the Company may reasonably request.
Section 14. Source of Payment. Subject to the terms of the SERP Plan, all
payments provided for under this Agreement shall be paid in cash from the
general funds of the Company. Except as may be required pursuant to the SERP
Plan, the Company shall not be required to establish a special or separate fund
or other segregation of assets to assure such payments, and, if the Company
shall make any investments to aid it in meeting its obligations hereunder, the
Executive shall have no right, title or interest whatever in or to any such
investments except as may otherwise be expressly provided in a separate written
instrument relating to such investments. Nothing contained in this Agreement,
and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship, between the Company and
the Executive or any other person. To the extent that any person acquires a
right to receive payments from the Company hereunder, such right, without
prejudice to rights which employees may have, shall be no greater than the right
of an unsecured creditor of the Company.
Section 15. Binding Agreement; No Assignment. This Agreement shall be
binding upon, and shall inure to the benefit of, the Executive and the Company
and their respective permitted successors, assigns, heirs, beneficiaries and
representatives. This Agreement is personal to the Executive and may not be
assigned by him without the prior written consent of the Company. Any attempted
assignment in violation of this Section 15 shall be null and void.
Section 16. Dispute Resolution. At the option of either the Company or the
Executive, any dispute, controversy or question arising under, out of or
relating to this Agreement or the breach thereof, other than pursuant to Section
7 hereof, shall be referred for decision by arbitration in the State of New
Jersey by a neutral arbitrator mutually selected by the parties hereto. Any
arbitration proceeding shall be governed by the Rules of the American
Arbitration Association then in effect or such rules last in effect (in the
event such Association is in existence). If the parties are unable to agree upon
such a neutral arbitrator within 21 days after either party has given the other
written notice of the desire to submit the dispute, controversy or question for
decision as aforesaid, then either party may apply to the American Arbitration
Association for a final and binding appointment of a neutral arbitrator,
however, if such Association is not then in existence or does not act in the
matter within 45 days of any such application, either party may apply to the
Presiding Judge of the Superior Court of any county in New Jersey for an
appointment of a neutral arbitrator to hear the parties and such Judge is hereby
authorized to make such appointment. In the event that either party exercises
the right to submit a dispute, controversy or question arising hereunder to
arbitration, the decision of the neutral arbitrator shall be final, conclusive
and binding on all interested persons and no action at law or in equity shall be
instituted or, if instituted, further prosecuted by either party other than to
enforce the award of the neutral arbitrator. The award of the neutral arbitrator
may be entered in any court that has jurisdiction. The Executive and the Company
shall each bear all their own
<PAGE>
costs (including the fees and disbursements of counsel) incurred in connection
with any such arbitration and shall each pay one-half of the costs of any
arbitrator appointed hereunder.
Section 17. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New Jersey,
without reference to the choice of law principles thereof.
Section 18. Entire Agreement. This Agreement shall constitute the entire
agreement among the parties with respect to the matters covered hereby and shall
supersede all previous written, oral or implied understandings among them with
respect to such matters, including, but not limited to, the Employment
Agreement, dated as of July 10, 1989, between the Company and the Executive.
Section 19. Amendments. This Agreement may only be amended or otherwise
modified, and compliance with any provision hereof may only be waived, by a
writing executed by all of the parties hereto. The provisions of this Section 19
may only be amended or otherwise modified by such a writing.
Section 20. Severability. The invalidity of any provision hereof shall not
affect the validity, force or effect of the remaining provisions hereof. In the
event that an arbitrator designated pursuant to the provisions of Section 16 or
a court of competent jurisdiction determines that any provision contained herein
is not enforceable as written because of the breadth or duration of such
provision, such arbitrator or court shall have the authority to modify the terms
of such provision so that, as so modified, such provision shall be enforceable
to the maximum extent permitted by applicable law.
Section 21. No Strict Construction. Each of the parties hereto acknowledges
that this Agreement has been prepared jointly by the parties hereto, each of
whom has been represented by counsel, and shall not be strictly construed
against either party.
Section 22. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, and all of which shall together
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by the undersigned, thereunto duly authorized, and the Executive has
signed this Agreement, all as of the date first written above.
BARRINGER TECHNOLOGIES INC.
By:/s/James C. McGrath
_________________________________
James C. McGrath, Chairman of the
Executive Compensation Committee
of the Board of Directors
/s/Stanley S. Binder
_________________________________
Stanley S. Binder
EXHIBIT A
BARRINGER TECHNOLOGIES, INC.
ANNUAL INCENTIVE PLAN for
EXECUTIVE MANAGEMENT POSITIONS
Purpose
The purpose of this plan is to relate compensation for Executive to the
performance of the company and their own performance. In addition, this plan
should assist in attracting and retaining outstanding Executive by rewarding
outstanding performance. This plan is also intended to foster the spirit of
teamwork by the officer group.
General Description
The basic format of this plan is to base incentives on the establishment and
accomplishment of team and individual goals for each of the Executives covered
under the plan. In addition, the plan protects the interest of shareholders by
limiting the total amount paid in incentives to 10% of net income.
Eligibility for the Plan
The current eligibility for the plan includes the four officers of the company;
the Chief Executive Officer, the Executive Vice President, the Vice President &
Secretary, and the Vice President, Finance-Chief Financial Officer. Additional
eligibility may be determined by the Compensation Committee of the Board of
Directors upon the recommendation of the Chief Executive Officer.
Amounts
Because each of the Executives has a different impact on the overall results of
the organization, the target incentive award varies for each position and is
expressed as a percentage of actual base salary effective for that year. In
addition to the target percentage, there will be the ability to increase the
annual incentive by up to 50% for accomplishment of goals beyond expectations,
provided the overall results warrant this acceleration. Should target
performance not be fully met by individuals, partial bonuses up to 50% of the
targeted amount should be paid if some but not all of the goals are met.
The following table summarizes the amounts:
Partial
Accomplishment
Position Target Incentive of Target Maximum Incentive
CEO 50% 25% 100%
EVP 40% 20% 100%
VP 35% 17-1/2% 100%
CFO 30% 15% 100%
If group targets are not met, then no incentive (0%) should be paid. If targets
are exceeded, then an interpolation between the target amount and the maximum
can be made.
Net Income Limitation
In no case should the amount of incentive paid out under this plan exceed 10% of
net income. The following table illustrates this point:
Target Annual Target Annual
Position Base Salary Incentive Incentive in Dollars
CEO $250,000 50% $125,000
EVP 167,000 40% 66,800
VP 136,000 35% 47,600
CFO 125,000 35% 43,750
TOTAL $678,000 42% $283,150
This payout of $283,150 would only be applicable if net income for the year
exceeded $2,831,500 using the formula of 10% of net income as the limit. To the
extent that net income is less than this amount, each individual award would be
scaled back by the ratio of actual net income compared to the income necessary
for a full payout. For example, if the total annual incentive $'s computed are
$350,000 and net income was $1,500,000, then, each award would be multiplied by:
$1,500,000 - actual net income =42.8%
$3,500,000 - net income necessary for a full payout
<PAGE>
In this way, each award will be scaled back to 42.8% of the computed amount and
the total awards will be limited to 10% of net income:
$350,000 x 42.8% = $150,000
Goals
Goals should be established at the beginning of the year. The CEO and the
Executives as a group will establish team goals which will be approved by the
Executive Compensation Committee. An example of team goals would be the
following:
1) Achievement of plan/budget
2) Accuracy of sales forecasts
3) Accuracy of production completion schedule
4) Achievement of growth strategy (internal growth and/or acquisition)
5) Successful completion of financing plans
6) New product development (optional)
In addition, each of the officers should have individual goals. The individual
goals should be made up of two components. The first component should be that
officer's portion of the team goals for which they have primary responsibility.
For example, the Executive Vice President would have sales and production goals
and the Vice President would have marketing and sales goals. The second
component of individual goals will be personal goals. Examples of personal goals
would be; increase involvement in industry associations, develop staff
abilities, hire or designate a replacement, etc. Personal goals will be agreed
to by each of the officers with the Chief Executive Officer and for the Chief
Executive Officer, with the Chairman of the Executive Compensation Committee.
Equal weight should be given to the team and the individual goals. Within the
individual goals, superior weight should be given to the individual's portion of
the team goals and less to the personal goals, although there is no formula for
weighing the importance of the goals. The formula is 50% for team goals and 50%
for individual goals.
The illustration attached is offered to further clarify this plan.
<PAGE>
Administration of the Plan
The plan is administered by the Executive Compensation Committee of the Board
which has the right to interpret, amend, or cancel the plan at any time. The CEO
will recommend to the Committee the results of the plan for the year, with the
exception of his own award. Amounts should be accrued during the year and
payment, if any, should be at the end of the year.
<PAGE>
ILLUSTRATION
Givens
The base salary of the V.P. for Marketing and Sales is $167,000. The target
incentive is 35%. The computed payout to all executives is $275,000.
Goals
The team goals were:
1. Achievement of plan/budget - net income of $2,900,000.
2. Accuracy of sales forecast - 100 units
3. Produce 100 units
The V.P. for Marketing and Sales individual goals were:
1. Accuracy of sales forecast - 100 units (one of the team goals)
2. Personal goals of
hire and develop a technical sales person
increase industry involvement with speaking engagements
improve communications with major customers
Results
The sales goals of 100 units were achieved. Unforeseen supply problems limited
production to 85 units. All else went well and the net income was $3,000,000.
All personal goals were accomplished.
Computation
The annual incentive for the V.P. would be:
1/2 of incentive based on team goal
(team goals was partially on target = 1/2 x 35% x 50% = 8.75%
since production goal was only partially achieved
1/2 of incentive based on individual goal (including personal goals)
(individual was on target = 1/2 x 35% = 17.5%
Total = 26.25%
26.25% x $167,000 = $43,837.50
The limitation on annual incentive would be:
Company earned $3,000,000. For target payout to all executives, the company must
earn $2,750,000. Therefore the payout of $43,837.50 is not modified.
If earnings were only $2,000,000, then the award would be adjusted by:
$2,000,000 actual net income = 72.7%
2,750,000 the amount needed for a full payout
The individual award for the V.P. for Marketing and Sales would be:
$43,837.50 x 72.7% = $31,870.
And the total incentives for all executives would be $200,000. (10% of net
income)
EXHIBIT B
BARRINGER TECHNOLOGIES
Supplemental Executive Retirement Plan
Purpose: The purpose of this plan is to provide a reasonable replacement of
income for Executives of the company upon retirement. The amounts are contingent
on the performance of the company as well as the individual Executive.
General Description: This is a defined contribution plan in which a defined
percentage of each executive's annual pay is contributed annually to an account
in the executive's name. The percentage is contingent on company performance.
Since the annual incentive is included in the definition of pay, the
contribution is also contingent on the executive's performance. The plan
supplements the existing retirement plan for all employees which is qualified
under section 401(k) of the IRS code as well as Social Security. This
Supplemental Executive Retirement Plan is not qualified for special tax
treatment, and contributions to the plan are not deductible for tax purposes
until actual amounts are paid out as compensation expenses. Contributions are
not taxed to the executives until received. Contributions are charged to
earnings for the year the contributions are made.
Eligibility: Eligibility is determined by the Executive Compensation Committee
of the Board of Directors. The initial eligibility includes:
Stanley S. Binder Chief Executive Officer
John H. Davies Executive Vice President
Kenneth S. Woods Vice President and Secretary
Richard S. Rosenfeld Vice President, Finance -
Chief Financial Officer
Contributions: Contributions will be made annually to an account in the name of
each individual in the plan as soon after the final accounting of the company's
annual results as is practical.
The amount of the annual contribution will be a percentage of the base salary
and annual incentive of each individual for the year just ended. The percentage
will be determined by the Executive Compensation Committee of the Board of
Directors with the following guidelines:
<TABLE>
<CAPTION>
If no net If Target net income Maximum Contribution if
income is achieved net income exceeds Target
<S> <C> <C> <C>
Stan Binder 0% 20% 22%
John Davies 0% 20% 22%
Ken Woods 0% 8% 10%
Rich Rosenfeld 0% 8% 10%
</TABLE>
Contributions will be on a sliding scale. The Compensation Committee will
interpolate between the percentages between the guidelines where necessary using
as guidance the amount of net income, the relationship of net income to past
years, the overall economic environment, and other factors they consider
relevant.
Investment of Account Balances. Account balances will be invested by the Company
in the same investment options available in the Company's 401(k) plan. The
Executives may indicate the investment options of their choice, although the
Executive Compensation Committee will make the designation of how the funds will
be invested. The earnings accrue to the account of the named Executive. Earnings
of the account are taxable to the Company when they are earned. Earnings are
deductible by the Company and taxable to the Executives when they are paid out
as retirement income to the individual.
The fund balance is made up of Company contributions which are made annually and
earnings or losses which are accrued periodically according to the investment
choice. Mutual funds are valued daily, etc.
Vesting: Full vesting is 100% after 5 years of plan participation.
Distribution:
Retirement
The minimum age for retirement distribution is age 60 with 5 years of
plan participation.
Amount
The individual will be distributed a lump sum equal to the account
balance, which includes both Company contributions and earnings or
losses, or a life annuity purchased with the account balance.
Death or Permanent
Disability Benefit
In the case of death or permanent disability, the individual or
designated beneficiary will receive the account balance on that date,
whether or not the individual is vested.
<PAGE>
Discharge without Cause or
Resignation for Good Reason
The individual receives the balance of the account on the designated
date whether or not the individual is vested.
Voluntary Resignation
The individual, if vested, receives distribution at the later of date
of termination or age 60. If individual is not vested, account balance
is forfeited.
Termination for Cause
The individual, if vested, receives distribution at the later of the
date of termination or age 60. If individual is not vested, account
balance is forfeited.
Change of Control
If the individual leaves under the conditions of a change of control,
the age and service requirements are waived and the individual
received the current balance whether or not the individual is vested.
EXHIBIT 10.18
Barringer Technologies Inc.
Supplemental Retirement Plan
Preamble
Establishment and Intent. Barringer Technologies Inc., together with its
subisidiaries (the "Employer") establishes, effective as of January 1, 1998, a
nonqualified, unfunded, deferred contribution supplemental executive retirement
plan on behalf of certain designated management or highly compensated employees.
The Plan is intended to be an unfunded deferred compensation plan for a select
group of management or highly compensated employees, as described in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). This
document defines the provisions of such nonqualified plan and shall be known as
the "Barringer Technologies Inc. Supplemental Retirement Plan."
Purpose. The Plan has three purposes: (1) to provide the Participants with
additional retirement benefits to supplement retirement benefits available to
them from other sources, including the qualified retirement plan maintained by
the Employer; (2) to provide an incentive to Participants to perform at high
levels; and (3) to encourage Participants to remain in the employ of the
Employer.
<PAGE>
Table of Contents
Page
Article I. Definitions 1
Article II. Participation 5
Article III. Performance Account 6
Article IV. Vesting 8
Article V. Payment of Benefits 9
Article VI. Administration 10
Article VII. Miscellaneous 12
Appendix - List of Plan Participants 14
<PAGE>
Article I. Definitions
When used herein, the following shall have the meanings below unless the
context clearly indicates otherwise:
1.1 "Administrator" means the Executive Compensation Committee of Barringer
Technologies Inc. appointed by the Board of Directors to administer this Plan.
1.2 "Appendix" means a written supplement attached to the Plan and made a
part hereof which has been added in accordance with the provisions of the Plan.
1.3 "Beneficiary" means the Participant's spouse or other person designated
by the Participant. If the Participant has no spouse and makes no effective
Beneficiary designation, then the Participant's Beneficiary shall be the
Participant's estate.
1.4 "Board of Directors" means the Board of Directors of Barringer
Technologies Inc.
1.5 "Change in Control" means any of the following events:
(A) Any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended), is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, as amended, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of 50% or more of the total voting power of
the Company's outstanding capital stock;
(B) The individuals who (i) as of the date of this Agreement
constitute the Board of Directors (the "Original Directors"), (ii) thereafter
are elected to the Board of Directors and whose election or nomination for
election to the Board of Directors was approved by a vote of at least 2/3 of the
Original Directors then still in office (such Directors being called "Additional
Original Directors"), or (iii) are elected to the Board of Directors and whose
election or nomination for election to the Board of Directors was approved by a
vote of at least 2/3 of the Original Directors and Additional Original Directors
then still in office, cease for any reason to constitute a majority of the
members of the Board of Directors;
(C) The stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company or the Company
shall consummate any such transaction if stockholder approval is not sought or
obtained, other than any such transaction which would result in holders of
outstanding voting securities of the Company immediately prior to the
transaction having beneficial ownership of at least 50% of the total voting
power represented by the voting securities of the surviving entity outstanding
<PAGE>
immediately after such transaction, with the voting power of each such
continuing holder relative to such other continuing holders being not altered
substantially in the transaction; or
(D) The stockholders of the Company shall approve a plan of complete
liquidation of the Company or an agreement for the sale, assignment, conveyance,
transfer, lease or other disposition by the Company of all or substantially all
of its assets to any person, or group of related persons, in one or a series of
related transactions.
1.6 "Code" means the Internal Revenue Code of 1986, as amended.
1.7 "Company" means Barringer Technologies Inc.
1.8 "Compensation" means a Participant's base salary and the amount payable
to such Participant under the Annual Incentive Plan or any successor cash bonus
plan for services rendered to the Employer for the applicable period.
Compensation shall include amounts that would be paid to the Participant with
respect to the Plan Year but for the Participant's election under a cash or
deferred arrangement described in Section 401(k) of the Code or a cafeteria plan
described in Section 125 of the Code. Except as expressly provided in the
preceding sentence, Compensation shall not include Employer Allocations or
contributions to this or any other plan for the benefit of its employees.
1.9 "EBITDA" means, for any period, the sum (without duplication) of (i)
Consolidated Net Income, (ii) to the extent Consolidated Net Income has been
reduced thereby, all income taxes of the Company and its subsidiaries paid or
accrued for such period (other than income taxes attributable to extraordinary,
unusual or non-recurring gains or losses), all interest expenses, amortization
expenses and depreciation expenses of the Company and its subsidiaries paid or
accrued for such period, and (iii) other non-cash items reducing Consolidated
Net Income, less other non-cash items increasing Consolidated Net Income, all as
determined on a consolidated basis for the Company and its subsidiaries in
conformity with generally accepted accounting principles, consistently applied
for all relevant periods. "Consolidated Net Income" means, for any period, the
aggregate net income (or loss) of the Company and its subsidiaries for such
period on a consolidated basis, determined in accordance with generally accepted
accounting principles, consistently applied for all relevant periods, less (i)
gains and losses from any sale, lease, conveyance, transfer or other disposition
of any assets or property of the Company and its subsidiaries, other than in the
ordinary course of business, including the tax effects thereof, (ii) items
classified under generally accepted accounting principles, consistently applied
for all relevant periods, as extraordinary or non-recurring gains and losses,
and the related tax effects thereof, and (iii) the net income or loss of any
entity acquired in a transaction accounting for as a pooling of interests
accrued prior to the date such entity is acquired by the Company.
<PAGE>
All determinations of EBITDA hereunder shall be made by the Company's
independent public accountants, which determinations shall be final, binding and
conclusive for all purposes under this Plan, absent clear mistake or other
manifest error.
1.10 "Effective Date" means January 1, 1998.
1.11 "Employer" means the Company and any of its direct or indirect
wholly-owned subsidiaries which adopt, with the approval of the Company, the
Plan.
1.12 "Employer Allocation" means the amount allocated to each Participant's
Performance Account each Plan Year pursuant to Section 3.1.
1.13 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.14 "Good Reason" with respect to an individual Participant, shall have
the meaning ascribed to such term in such Participant's employment agreement
with the Employer. In all other cases, references to "Good Reason" shall be
given no effect.
1.15 "Investment Fund or Funds" means one or more of the investment
alternatives which are used by the Plan as a measurement of investment return on
Performance Accounts.
1.16 "Normal Retirement Date" means the first day of the month coincident
with or next following the later of the date a Participant reaches age 60 and
the date he or she completes five Years of Plan Participation.
1.17 "Participant" means an individual employed by the Employer who
satisfies the requirements described in Article II. The names of the initial
Tier I and Tier II Participants are listed in the Appendix.
1.18 "Performance Account" means the bookkeeping account established and
maintained for each Participant to which Employer Allocations and any investment
earnings or losses thereon are credited.
1.19 "Permanent Disability" (i) with respect to an individual Participant,
shall have the meaning ascribed thereto in such Participant's employment
agreement with the Employer or (ii) in the event that no such agreement exists,
such term shall mean the total and permanent incapacity of a Participant as a
result of which the Participant is entitled to receive and is receiving
disability benefits under the Federal Social Security Act.
1.20 "Plan" means the Barringer Technologies Inc. Supplemental Retirement
Plan set forth herein, as the same may be amended or supplemented from time to
time.
1.21 "Plan Year" means the calendar year.
<PAGE>
1.22 "Supplemental Retirement Benefit" means the benefits payable to the
Participant in accordance with Article V.
1.23 "Targeted EBITDA" means the amount of EBITDA determined by the
Administrator with respect to a particular Plan Year and used in the
determination of Employer Allocations described in Section 3.1.2.
1.24 "Termination for Cause" (i) with respect to an individual Participant,
shall have the meaning ascribed thereto in such Participant's employment
agreement with the Employer or (ii) in the event that no such agreement exists,
such term shall mean, to the maximum extent permitted by applicable law, a
termination of the Participant's employment by the Employer because the
Participant has (a) materially breached or materially failed to perform his or
her duties under applicable law and such breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness, (b) committed an
act of dishonesty in the performance of his or her duties to the Employer or
engaged in conduct materially detrimental to the business of the Employer, (c)
been convicted of a felony, (d) been convicted of a misdemeanor involving moral
turpitude, (e) materially breached or materially failed to perform his or her
obligations and duties hereunder, which breach or failure the Participant shall
fail to remedy within 30 days after written demand from the Employer, or (f)
violated in any material respect the representations made in any Participant's
employment agreement between the Employer and the Participant or any covenant
contained therein.
1.25 "Tier I Participant" means an individual employed by the Employer who
satisfies the requirements described in Article II for Tier I Participants. The
names of Tier I Participants as of the date hereof are listed in the Appendix.
1.26 "Tier II Participant" means an individual employed by the Employer who
satisfies the requirements described in Article II for Tier II Participants. The
names of Tier II Participants as of the date hereof are listed in the Appendix.
1.27 "Year of Plan Participation" means each calendar year period beginning
on an Employee's Effective Date of Participation, as set forth in Section 2.3,
and each anniversary thereof on which the Participant is still employed on the
last day of said calendar year.
1.28 "Without Cause Termination" (i) with respect to an individual
Participant, shall have the meaning ascribed thereto in such Participant's
employment agreement with the Employer or (ii) in the event that no such
agreement exists, such term shall mean a termination of the Participant's
employment by the Employer other than due to (a) a Termination for Cause (as
defined in Section 1.24 above), (b) Permanent Disability (as defined in Section
1.19 above) or (c) the Participant's death.
<PAGE>
Article II. Participation
2.1 Board of Directors Approval. The Administrator, in its sole discretion,
shall designate the Employees who shall participate under the Plan as
Participants solely from a select group of management or highly compensated
employees.
2.2 Tier. Employees shall be designated as either Tier I or Tier II
Participants. The names of the initial Tier I and Tier II Participants as of the
date hereof are listed in the Appendix.
2.3 Effective Date of Participation. A selected Employee shall become a
Participant on the later of the Effective Date of the Plan, or the January 1
designated by the Administrator.
<PAGE>
Article III. Performance Account
3.1 Employer Allocations.
3.1.1 Entitlement. For each Plan Year beginning on or after the
Effective Date that a Participant receives credit for a Year of Plan
Participation, the Employer shall allocate to the Performance Account
established for such Participant the amount determined under Section 3.1.2,
provided that the Participant is employed by the Employer on the last day of the
Plan Year or terminated employment during such Plan Year on account of death,
Permanent Disability or attainment of his Normal Retirement Date. Employer
Allocations shall be credited, as soon as administratively possible, after the
last day of the Plan Year to which they relate.
3.1.2 Determination of Amount. The amount allocated to an eligible
Participant's Performance Account under Section 3.1.1 for each Plan Year, if
any, shall be a percentage of the Participant's Compensation for such Plan Year.
Such percentage shall be determined by the Administrator, in its sole
discretion, subject to the following guidelines:
<TABLE>
- --------------------- ------------- ---------------------- -----------------------------------
<S> <C> <C> <C>
PARTICIPANT IF NO EBITDA IF TARGETED EBITDA IS MAXIMUM IF EBITDA EXCEEDS TARGETED
ACHIEVED EBITDA
- --------------------- ------------- ---------------------- -----------------------------------
- --------------------- ------------- ---------------------- -----------------------------------
TIER I 0% 20% 22%
TIER II 0% 8% 10%
- --------------------- ------------- ---------------------- -----------------------------------
</TABLE>
In addition, in determining each Participant's percentage (within the ranges set
forth above), the Administrator may consider the amount of current net income of
the Employer, the relationship of current net income of the Employer to that of
prior years, the overall economic environment and any other factors it considers
relevant.
3.2 Investment Elections. The Administrator shall select Investment Funds
to be used as a measurement of investment returns on Performance Accounts, or
may appoint one or more investment managers to select such Funds. Each
Participant may specify the percentage of Employer Allocations to his
Performance Account for each Plan Year to be credited with the investment
returns earned by each such Investment Fund, by filing an investment election
form with the Administrator in accordance with procedures established by the
Administrator. A Participant may change his Investment Fund selections for
future Employer Allocations, or for amounts already credited to his Performance
Account, in accordance with procedures established by the Administrator. No such
selection shall obligate the Administrator or the Plan to invest any amounts in
any Investment Fund.
<PAGE>
3.3 Crediting of Investment Returns to Performance Accounts. As of the end
of each Plan Year, the Administrator shall credit or debit each Participant's
Performance Account with the investment returns attributable to the balance of
such Performance Account.
<PAGE>
Article IV. Vesting
4.1 Vesting Based on Years of Participation. A Participant shall have a 0%
vested interest in his or her Performance Account until the Participant
completes five Years of Plan Participation, at which time his or her interest
shall become 100% vested.
4.2 Vesting Based on Permanent Disability or Death. A Participant's
interest in his or her Performance Account shall in any case become 100% vested
if, while employed by the Employer, he or she sustains a Permanent Disability or
dies.
4.3 Vesting Based on Without Cause Termination or Resignation for Good
Reason. A Participant's interest in his or her Performance Account shall in any
case become 100% vested if his or her service with the Employer is terminated as
a result of a Without Cause Termination. In the event that the employment
agreement between an individual Participant and the Employer provides for
resignation for Good Cause, then such Participant's interest in his or her
Performance Account shall in any case become 100% vested if he or she terminates
employment with the Employer by resignation for Good Reason.
4.4 Vesting Based on Change in Control. A Participant's interest in his
Performance Account shall in any case become 100% vested if his or her service
with the Employer terminates as a result of a Change in Control.
4.4 Forfeiture. If a Participant's employment terminates for any reason
other than those described in this Article, before the Participant completes
five Years of Plan Participation, the Participant shall forfeit his or her
entire interest in his or her Performance Account.
<PAGE>
Article V. Payment of Benefits
5.1 Payment at Normal Retirement Date. A Participant whose employment with
the Employer terminates on or after his Normal Retirement Date, shall be
entitled to receive the value of his Performance Account as soon as
administratively practicable thereafter.
5.2 Form of Benefit. Any benefit to which a Participant is entitled in this
Article V shall be paid in cash in a single lump sum. As an alternative, a
Participant may instruct the Administrator to purchase an annuity with the
single lump sum.
5.3 Death Benefits. As soon as administratively practicable following a
Participant's death, the Participant's Beneficiary shall be paid in a single
cash lump sum equal to the Participant's vested interest in his or her
Performance Account not otherwise distributed to such Participant hereunder.
5.4 Disability Benefit. As soon as administratively practicable following
the Administrator's determination that a Participant has suffered a Permanent
Disability, the Participant shall be entitled to receive the Participant's
vested interest in his or her Performance Account.
5.5 Vested Terminated Participants. A Participant, on the date determined
under Sections 5.5.1 or 5.5.2, who terminates employment with the Employer
before his or her Normal Retirement Date shall be entitled to receive the
Participant's vested interest in his or her Performance Account.
5.5.1 Without Cause Termination or Resignation for Good Reason. In the
event that a Participant leaves the service of the Employer as a result of a
Without Cause Termination, he or she shall be entitled to receive the vested
value of his or her Performance Account as soon as administratively practicable
following his or her date of termination. In the event that the employment
agreement between an individual Participant and the Employer provides for
resignation for Good Reason and such Participant leaves the service of the
Employer as a result thereof, than such Participant shall be entitled to receive
the vested value of his or her Performance Account as soon as administratively
practicable following his or her date of termination.
5.5.2 Termination for Cause and Other Termination or Resignation. In
the event that a Participant leaves the service of the Employer as a result of a
Termination for Cause, retirement or any reason (other than Without Cause
Termination, Permanent Disability, resignation for Good Reason (where
applicable), resignation or termination in connection with a Change in Control
or death), he or she shall be entitled to receive the vested value of his or her
Performance Account as soon as administratively practicable following the later
of the date of termination or attainment of age 60.
<PAGE>
Article VI. Administration
6.1 Administration. The Administrator shall have the authority to interpret
the Plan and to determine the amount and time of payment of benefits and other
issues arising in the administration of the Plan. Any construction or
interpretation of the Plan and any determination of fact in administering the
Plan made in good faith by the Administrator shall be final and conclusive for
all Plan purposes.
6.2 Claims Procedure.
6.2.1 Initial Determination. Upon presentation to the Administrator of
a claim for benefits under the Plan, the Administrator shall make a
determination of the validity thereof. If the determination is adverse to the
claimant, the Administrator shall furnish to the claimant within 90 days after
the receipt of the claim a written notice setting forth the following:
a) the specific reason or reasons for the denial;
b) specific references to pertinent provisions of the Plan on
which the denial is based;
c) if applicable, a description of any additional material or
information necessary for the claimant to perfect the claim and
an explanation of why such material or information is necessary;
and
d) appropriate information as to the steps to be taken if the
claimant wishes to submit his or her claim for review.
6.2.2 Appeal Procedure. In the event of a denial of a claim, the
claimant or his or her authorized representative may appeal such denial to the
Administrator for a full and fair review of the adverse determination. The
claimant's request for review must be in writing and made to the Administrator
within 60 days after receipt by claimant of the written notification described
in Section 6.2.1; provided, however, that such 60-day period may be extended by
the Administrator in its sole discretion if circumstances so warrant. During
this period, the claimant or his or her duly authorized representative may
review pertinent documents, and may submit issues and comments in writing which
shall be given full consideration by the Administrator in its review.
6.2.3 Decision on Appeal. A decision on a request for review shall (i)
state in writing the specific reasons and references to the Plan provisions on
which it is based; (ii) shall be promptly provided to the claimant and (iii) be
made by the Administrator not later than 60 days after receipt of the request;
provided, however, that the Administrator, in its sole discretion, may postpone
such decision for a period of time
<PAGE>
not to exceed 60 days if circumstances so warrant. If it is necessary to extend
the period of time for making a decision beyond 60 days after the receipt of the
request, the claimant shall be notified in writing of the extension of time
prior to the beginning of such extension.
Article VII. Miscellaneous
7.1 No Effect on Employment Rights. Nothing contained herein will confer
upon any Participant the right to be retained in the service of the Employer nor
limit the right of the Employer to discharge or otherwise deal with any
Participant without regard to the existence of the Plan.
7.2 Funding. The Employer may establish a grantor trust for the purpose of
funding Supplemental Retirement Benefits. Any trust so created shall conform to
the terms of the model trust provided by the Internal Revenue Service as
described in Revenue Procedure 92-64. Notwithstanding the establishment of such
trust, it is the intention of the Employer and the Participants that the Plan
shall be unfunded for tax purposes and for purposes of Title I of ERISA. All
amounts credited under the Plan shall constitute general assets of the Employer.
The Plan constitutes a mere promise by the Employer to pay benefits in the
future. To the extent that any Participant or any other person acquires a right
to receive benefits under this Plan, such right shall be no greater than the
right of any unsecured general creditor of the Employer.
7.3 Spendthrift Provisions. No benefit payable under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge prior to actual receipt thereof by the payee; and
any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber
or charge prior to such receipt shall be void; and the Employer shall not be
liable in any manner for or subject to the debts, contracts, liabilities,
engagements or torts of any person entitled to any benefit under the Plan. The
Plan shall honor a qualified domestic relations order (within the meaning of
Section 206(d)(3)(B)(i) of ERISA).
7.4 Governing Law. The Plan is established under and will be construed
according to the laws of the State of New Jersey, to the extent that such laws
are not preempted by ERISA and valid regulations promulgated thereunder.
7.5 Incapacity of Recipient. In the event a Participant is declared
incompetent and a conservator or other person legally charged with the care of
the person or the estate of such Participant is appointed, any benefits under
the Plan to which such Participant is entitled shall be paid to the conservator
or other person legally charged with the care of such Participant. Except as
provided in the preceding sentence, should the Administrator, in its discretion,
determine that a Participant is unable to manage his or her personal affairs,
the Administrator may take distributions to any person for the benefit of such
Participant, provided the Administrator makes a reasonable good faith judgment
that such person shall expend the funds so distributed for the benefit of such
Participant.
7.6 Amendment or Termination. The Company reserves the right to amend or
terminate the Plan when, in the sole opinion of the Company, an amendment or
termination is advisable. Any such amendment or termination shall be made
pursuant to a
<PAGE>
resolution of the Board of Directors and shall be effective as of the date
specified in the resolution. No amendment or termination of the Plan shall
directly or indirectly deprive any Participant of all or any portion of the
Participant's Performance Account considered to be accrued under the Plan before
the date of amendment or termination.
7.7 Withholding. The Employer reserves the right, notwithstanding any other
provision of the Plan, to withhold applicable federal, state or local taxes from
payments under the Plan.
7.8 Construction. The singular includes the plural, unless the context
clearly indicates otherwise.
<PAGE>
Appendix - List of Plan Participants
As of January 1, 1998 the following employees have been designated by the
Administrator as Tier I participants:
Stanley S. Binder
John H. Davies
As of January 1, 1998, the following employees have been designated by the
Administrator as Tier II participants:
Kenneth S. Wood
Richard S. Rosenfeld
REVOLVING CREDIT NOTE
$5,000,000.00 Princeton, New Jersey
March 13, 1998
The undersigned, BARRINGER TECHNOLOGIES INCORPORATED (the "Maker")
hereby promises to pay to the order of FLEET BANK, N.A. (the "Payee") as and
when due as set forth in the Loan Agreement (as hereinafter defined) the
principal sum of Five Million Dollars ($5,000,000.00) or, if less, the aggregate
principal amount (as shown by Payee's records, which shall constitute prima
facie evidence thereof) of all advances (collectively, the "Advances") made by
Payee under the Revolving Credit provided for in and made pursuant to Section
2.1 of the Revolving Credit Loan Agreement, dated the date hereof, between Maker
and Payee (the "Loan Agreement"), which Advances shall be due and payable in
full on or before the Revolving Credit Expiration Date, as defined in the Loan
Agreement. Capitalized terms used herein and not otherwise defined shall have
the meanings given such terms in the Loan Agreement.
The undersigned further promises to pay to the order of Payee interest
on the unpaid principal amounts of the Advances from the respective dates on
which the Advances are made until such principal amounts have been repaid in
full, payable at the times and rates provided in the Loan Agreement.
Maker hereby waives presentment, demand for payment, notice of dishonor
or acceleration, protest and notice of protest, and any and all other notices or
demands in connection with the delivery, acceptance, performance, default or
enforcement of this Note except any notice expressly required in the Loan
Agreement. This is the Revolving Credit Note mentioned in, and is entitled to
the benefits of, the Loan Agreement.
IN WITNESS WHEREOF, Maker hereby executes this Note on the day and year
first above written.
BARRINGER TECHNOLOGIES INCORPORATED
By: \S\ STANLEY BINDER
---------------------
Name: Stanley Binder
Title: President
Attest: \S\ RICHARD S. ROSENFELD
------------------------
Richard S. Rosenfeld
Vice President Finance
UNLIMITED GUARANTY OF PAYMENT AND PERFORMANCE
THIS AGREEMENT OF GUARANTY, dated as of this 13th day of March, 1998,
between Barringer Instruments, Inc., a Delaware corporation, with offices at 219
South Street, Murray Hill, New Jersey 07974 (, the "Guarantor") and FLEET BANK,
N.A. with offices at 1125 Route 22 West, Bridgewater, New Jersey 08807
(hereinafter, together with any successor and assigns, "Lender").
W I T N E S S E T H :
WHEREAS, Barringer Technologies Incorporated, a Delaware corporation
(the "Borrower") is indebted to Bank pursuant to a certain Revolving Credit
Note, of even date herewith (the "Note"), which evidences an obligation in the
original maximum principal balance of $5,000,000.00 (the "Loan"); and
WHEREAS, Lender is unwilling to enter into the assumption
transaction without further collateral security in the form of an unconditional
guaranty by the Guarantor; and
WHEREAS, to induce Lender to grant the Loan to the Borrower, the
Guarantor herein executes the within instrument; and
NOW, THEREFORE, in consideration of the premises contained herein and
the sum of ONE ($1.00) DOLLAR, the receipt of which is hereby acknowledged, the
undersigned agree as follows:
1. Guaranty. The Guarantor absolutely and unconditionally guarantees to
Lender the due and prompt payment, whether at maturity or by acceleration or
otherwise, of the Loan including all principal, interest and other monies due or
that may become due under the documents evidencing the loan and the due and
punctual performance and observance by Borrower of any other terms, covenants
and conditions of the Loan Documents on the part of Borrower to be kept,
observed or performed together with all reasonable legal and other expenses of
collection and enforcement, including payment of the Loan. The Guarantor hereby
expressly and unconditionally waives demand, notice of presentment and
non-payment, protest and notice of protest, of said Note and consents that the
time for payment thereof may be extended by Lender without notice to or further
consent from any Guarantor.
2. Actions of Lender Do Not Affect Liability. In addition to (but not
in limitation of) all of the foregoing provisions, Lender may take any of the
following actions (with or without notice to any Guarantor) without affecting
the liability of any Guarantor in any way:
(a) Release, exchange, increase, decrease or surrender all or
any part of the security held by Lender for the said obligation, or substitute
new security for all or any portion thereof, whether or not the new security
shall be equal in value with the security substituted.
(b) Recast, extend or modify all or any portion of the said
obligation.
(c) Grant waivers, extensions, renewals or other indulgences
under any of the Loan Documents.
(d) Modify or amend any of the terms, provisions or agreements
contained in any of the Loan Documents.
(e) Vary, exchange, release or discharge, wholly or partially,
or delay in or abstain from perfecting or enforcing any security or guaranty of
the Loan Documents by any other person.
(f) Accept partial payment or performance of any of the
obligations due under the Loan Documents from the Borrower or any Guarantor.
(g) Compromise or make any settlement or other arrangement
with the Borrower or any Guarantor.
3. Liability Unconditional. Liability on this Guaranty shall not be
conditional or contingent upon the pursuance by Lender of whatever remedies that
Lender may have against Borrower, nor shall Lender be required to foreclose,
exhaust, or in any other way look for any security that Lender now has or that
Lender may obtain or acquire in the future. Lender shall not be obligated or
required to pursue any remedies it may have against Borrower, upon default of
Borrower, prior to pursuing any remedy against any Guarantor. Not in limitation
of the generality of the foregoing, the liability of any Guarantor hereunder
shall remain effective and enforceable even though Borrower's liability under
the Loan Documents may be unenforceable or even though recovery against the
Borrower may be barred by a statute of limitations or otherwise. Guarantor
waives any defense arising by reason of any disability or other defense of
Borrower or by reason of the cessation, from any cause whatsoever, of the
liability of Borrower.
4. Continuing Liability. Liability of the Guarantor hereunder shall be
a continuing one and shall extend to any and all notes or other evidences of
indebtedness that may be given in extension or renewal of the Note.
5. Representations and Warrants. The Guarantor hereby represents and
warrants that:
(a) Barringer Instruments, Inc., is a New Jersey corporation
in good standing and qualified to do business in New Jersey and all other
jurisdictions in which it conducts business or owns assets.
(b) The execution of this guaranty by the Guarantor has been
duly authorized by proper action of its board of directors and the persons
executing this guaranty on behalf of the Guarantor have been authorized to act
on the Guarantor's behalf and to bind the Guarantor to the terms hereof.
(c) The Guarantor has the legal capacity to enter into this
Guaranty and to perform its obligations hereunder.
(d) This Guaranty constitutes the legal, valid and binding
obligation of the Guarantor and is enforceable against the Guarantor in
accordance with its terms, subject to creditors, rights in general and
bankruptcy and insolvency laws.
(e) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, or before or by any court, public board or
body, pending or within the knowledge of Guarantor threatened, wherein an
unfavorable decision, ruling or finding would (i) to the extent not covered by
insurance, result in any material, adverse change in the business, financial
condition, properties or operations of Guarantor; (ii) materially adversely
affect the transactions contemplated in the Loan Documents or this Guaranty; or
(iii) adversely affect the validity or enforceability of the Loan Documents or
this Guaranty. All authorizations, consents and approvals of governmental bodies
or agencies required in connection with the execution and delivery of this
Guaranty or in connection with the performance of the Guarantor's obligations
hereunder have been obtained and will be obtained whenever required hereunder by
law.
(f) Neither the execution and delivery of this Guaranty, the
consummation of the transactions contemplated hereunder, nor the fulfillment of
or compliance with the terms and conditions contained herein is prevented,
limited by, conflicts with or results in a breach of the terms, conditions or
provisions of any law, rule, regulation, order of any court or governmental
agency, or any evidence of indebtedness, agreement or instrument of whatever
nature to which Guarantor (or any company, corporation or other business entity
controlled by Guarantor or affiliated with it) is now a party, or to which
Guarantor or any such entity is bound, or constitutes a default under any of the
foregoing. Such execution, delivery, consummation and performance will not
result in the creation or imposition of any lien, charge or encumbrance upon any
of the property or assets of the Guarantor or any such entity.
(g) The granting of the credit facility to the Borrower will
result in material benefits to the Guarantor.
(h) Neither this Guaranty nor any other document, certificate
or statement furnished to the Lender by or on behalf of the Borrower or
Guarantor contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein not misleading or incomplete.
(i) The representations and warranties of the Borrower to the
Lender were wholly true and accurate when made and are wholly true and accurate
as of the execution hereof.
6. Covenants of Guarantor. The Guarantor hereby covenants and agrees
that:
(a) Guarantor guarantees, unconditionally, that the Loan and
other obligations of Borrower under the Loan Documents will be paid and
performed in accordance with their terms, promptly upon demand of the Lender.
(b) Guarantor shall cause the Borrower to fully perform and
observe all of the covenants, agreements and obligations of the Borrower under
each of the Loan Documents.
(c) If Guarantor shall receive any monies, by reason of the
exercise of any rights of subrogation or contribution, prior to the payment in
full and performance of the Obligations contained herein and under the Loan
Documents, such amounts shall be paid by such Guarantor directly to the Lender.
(d) If Borrower is now or shall hereafter become indebted to
Guarantor, the amount of each sum and such indebtedness shall at all times be
subordinate, as to lien, time of payment and in all other respects to the
amounts owing to the Lender under the Loan Documents, and Guarantor shall not be
entitled to enforce or receive payment thereof until all sums owing to the
Lender have been paid. Nothing herein contained is intended or shall be
construed to give Guarantor any right of subrogation in or under the Note, or
any right to participate in any way therein, notwithstanding any payments made
by Guarantor under the Guaranty. The obligations of the Guarantor hereunder
shall continue in full force and effect until the obligations and all
obligations of the Borrower shall have been fully paid and performed.
(e) At all times during the term of this Guaranty, Guarantor
shall operate and maintain its assets and properties in a reasonable manner and
keep their property in good repair, and shall not despoil their assets.
(f) Guarantor shall promptly notify Lender of any material and
adverse changes in Guarantor's financial condition during the period of time
that the Loan remains outstanding.
(g) Guarantor shall promptly notify Lender of any litigations,
actions, proceedings, claims or investigations, pending or threatened against
Guarantor, that may materially and adversely affect the financial condition of
Guarantor.
7. Events of Default. Any one or more of the following shall constitute
an "Event of Default" hereunder:
(a) Failure of the Guarantor to perform its obligations herein
or to under the terms of the Revolving Credit Loan Agreement, of even date
herewith.
8. Remedies Upon Default. If any one or more Events of Default shall
occur under this Guaranty, then in each case, the Lender shall have all rights
and remedies, including but not limited to the right to:
(a) cause all amounts payable hereunder and pursuant to the
Loan Documents to be immediately due and payable, whereupon the same shall
become immediately due and payable;
(b) take any other action available, either in law or in
equity to enforce performance or collect any amounts due or thereafter to become
due under this Guaranty, or any of the Loan Documents and exercise all rights
and remedies of the Lender thereunder;
(c) enforce the observance of any of the covenants or
obligations of Guarantor under this Guaranty or any of the obligations of the
Borrower under the Loan Documents.
9. Costs of Collection. This Guaranty also includes all reasonable
attorneys' fees and expenses and disbursements incurred by Lender in the
collection, enforcement of payment or performance by Borrower of any obligation
of Borrower to Lender, and in the collection, enforcement of payment or
performance by Guarantor hereunder, including all reasonable expenses incurred
in enforcing all rights under this Guaranty.
10. No Waiver. Any waiver by Lender on default of Borrower, and any
failure on the part of Lender to enforce its rights against Borrower, shall be
limited to that particular instance, shall not operate or be deemed to waive any
future default or defaults, and shall not affect the absolute and unconditional
liability of the Guarantor. Any extensions of time granted by Lender to Borrower
shall not release the Guarantor from its obligations hereunder.
11. Indemnification. The Guarantor shall indemnify and save the Lender
harmless from any loss, claim, demand or charge whatsoever incurred by Lender
arising out of or resulting from default of the Borrower under any of the Loan
Documents.
12. Continuing Effect. This Guaranty shall continue in full effect,
notwithstanding any insolvency or bankruptcy of the Borrower.
13. Consent and Waiver By Guarantor. The Guarantor hereby consents to
all the terms and provisions of each of the Loan Documents, as the same may be
from time to time amended or modified. The Guarantor hereby irrevocably waives:
(a) Notice of acceptance of this Guaranty and notice that
credit has been extended by the Lender in reliance thereon;
(b) Notice of any amendment or any change in the terms of any
of the Loan Documents, or any other present or future agreement relating
directly or indirectly thereto;
(c) Notice of any default or Event of Default under any of the
Loan Documents, or any other present or future agreement relating directly or
indirectly thereto;
(d) Demand for performance, observance of and enforcement of
any provisions, or any pursuit or exhaustion of any rights or remedies against
the Borrower, or any other Guarantor or obligor who becomes liable in any manner
for any of the obligations, and any requirements of diligence or promptness on
the part of the Lender or any assignee of Lender in connection therewith;
(e) Diligence, presentment, protest, notice of dishonor and
notice of default in the payment of any amount at any time payable by the
Borrower under or in connection with any of the Loan Documents;
(f) The benefit of any statute of limitations affecting
Guarantor's liability hereunder or the enforcement thereof, and agrees that any
payment of any indebtedness or other act that shall toll any statute of
limitations applicable thereto shall similarly operate to toll such statute of
limitations applicable to Guarantor's liability hereunder; or
(g) The benefit of laws exempting property from levy or
execution.
14. Binding Effect. The Guarantor hereto agrees that this Guaranty
shall bind and inure to the benefit of its successors and assigns.
15. Governing Law. This Guaranty shall be governed by the substantive
law of New Jersey. The Guarantor hereby consents to the jurisdiction of the
courts of the State of New Jersey or the federal courts located in the federal
district of New Jersey.
16. Assignment By Lender. Lender may, without notice, assign this
Guaranty in whole or in part to a party to whom the Loan is assigned.
17. Setoff. In addition to all liens upon, and rights of setoff
against, the monies, securities or other property of Guarantor given to Lender
by law, Lender shall have a lien upon and a right of setoff against, all monies,
securities and other property of Guarantor now or hereafter in the possession of
Lender. Every such lien and right of setoff may be exercised without demand upon
or notice to Guarantor. No lien or right of setoff shall be deemed to have been
waived by any act or conduct on the part of Lender, or by any neglect to
exercise such right of setoff or to enforce such lien, or by any delay in so
doing. Every right of setoff and lien shall continue in full force and effect
until such right of setoff or lien is assigned to Lender as security for this
Guaranty and the Loan, without reducing or affecting in any manner the liability
of Guarantor under the other provisions of this Guaranty. Any notes now or
hereafter evidencing indebtedness of Borrower to Guarantor shall be marked with
a legend that the same are subject to this Agreement and, if Lender so requests,
shall be delivered to Lender.
18. Notices. All notices, requests and other communication pursuant to
this Guaranty shall be in writing, addressed to the Lender at its place of
business first indicated above or to the Guarantor at its address first
indicated above or at such other address as either party may give notice to the
other as herein provided. Any notice shall be by certified mail, return receipt
requested, and shall be effective upon mailing.
If hand delivered, the notice shall be effective upon receipt.
19. Obligations Absolute. The obligations of the Guarantor hereunder
shall be absolute.
20. Severability. If any term, provision, covenant or condition hereof
should be held by a court of competent jurisdiction to be invalid, void or
unenforceable, all other provisions, covenants and conditions hereof not held
invalid, void or unenforceable shall continue in full force and effect and shall
in no way be affected, impaired or invalidated thereby.
21. Payment Without Deduction. The Guarantor shall make all payments
required hereunder, free of any deductions, and without abatements, deduction or
setoff.
22. Waiver of Jury Trial. The Guarantor waives any right to a jury
trial in any litigation in any court with respect to, in connection with or
arising out of the Loan or any instrument or document delivered pursuant to the
Loan, or with respect to the validity, protection, interpretation, collection or
enforcement of the Loan.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the
date first written above.
ATTEST: GUARANTOR:
Barringer Instruments, Inc.
a New Jersey corporation
\S\ RICHARD S. ROSENFELD By: \S\ STANLEY BINDER
- ------------------------ ----------------------------
Richard S. Rosenfeld Name: Stanley Binder
Vice President Finance Title: Chairman & CEO
REVOLVING CREDIT LOAN AGREEMENT
Dated as of March 13, 1998
Among
BARRINGER TECHNOLOGIES INCORPORATED
BARRINGER INSTRUMENTS. INC.
BARRINGER RESEARCH LIMITED
and
FLEET BANK, N.A.
<PAGE>
THIS REVOLVING CREDIT AGREEMENT dated as of March [13], 1998 (the
"Agreement"), among BARRINGER TECHNOLOGIES INCORPORATED, a Delaware corporation
("BORROWER" or "BTI"), BARRINGER INSTRUMENTS, INC., a Delaware corporation
("BII"), and BARRINGER RESEARCH LIMITED, a Canadian corporation ("BRL") and
FLEET BANK, N.A. (together with any successors and assigns, the "Lender").
BACKGROUND
WHEREAS, Borrower has requested Lender to extend a credit facility to
the Borrower to enable Borrower to borrow up to FIVE MILLION AND 00/100 DOLLARS
($5,000,000.00) (the "Revolving Credit") on a revolving basis; and
WHEREAS, all the documents described hereunder that evidence and secure
the Revolving Credit, including, but not limited to, all notes, guarantees, and
other collateral documents, are referred to herein collectively as the "Loan
Documents"; and
WHEREAS, Lender has agreed to extend such credit to the Borrower upon
the terms and conditions set forth in this Agreement.
In consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Definitions. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Account" is as defined under the UCC.
"Advance" is as defined in Section 2.1 hereof.
"Advance Request" means a request for an Advance submitted in
accordance with subsection 2.1.1 hereof.
"Affiliate" means any other Person who controls, is controlled by or is
under common control with another Person.
"Agreement" means this agreement, as amended, restated, extended,
supplemented or modified from time to time.
"Applicable Interest Rate" shall mean the interest rate, as it may be
changed from time to time, in accordance with the terms hereof, due on an
Advance during an Interest Period. The Applicable Interest Rate shall equal, at
Borrower's option, Base Interest Rate (the "Base Rate Option") or the LIBOR
Interest Rate (the "LIBOR Option").
"Base Interest Period" shall mean a period of time from and including
the date of any Advance to and including the last day that any Advance bears
interest at the Base Interest Rate.
"Base Interest Rate" shall be a variable interest rate equal to the
Prime Rate, less 0.75%.
"BTI" shall mean Barringer Technologies Incorporated, a Delaware
corporation, with offices at 219 South Street, Murray Hill, New Jersey 07974.
"BII" shall mean Barringer Instruments, Inc., a New Jersey corporation,
with offices at 219 South Street, Murray Hill, New Jersey 07974.
"BRL" shall mean Barringer Research Limited, a Canadian corporation
with offices at 1730 Aimes Boulevard, Mississauga, Ontario, Canada L4W IVI.
"Books and Records" means all books, records, tapes, information, data,
stored material, computer media, passwords, access codes arising or related to
Borrower's business, now existing or hereafter acquired.
"Borrower" means BTI.
"Business Day" means a day other than a Saturday, Sunday, or other day
on which banks are authorized or required to close under the laws of New Jersey
or under Federal law.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act, as amended from time to time.
"Chattel Paper" is as defined in the UCC.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means all property that may secure any of the Liabilities
(including, without limitation, all amounts payable or deliverable under the
Loan Documents, and all proceeds of the foregoing in whatever form received, in
each case whether now owned or hereafter acquired.)
"Company" means BTI, BII and BRL.
"Consolidated" refers to the consolidation of the accounts of Borrower
in accordance with GAAP, including principles of consolidation.
"Consolidating" refers to the separate entity reporting and
consolidation of the accounts of Borrower and its subsidiaries in accordance
with GAAP, to the best efforts of Borrower.
"Contingent Liabilities" means all liabilities that must be classified
as contingent liabilities of Borrower under GAAP.
"Controlled Group" means all trades or businesses which are under
common control (as defined in ss.4001(b)(1) of ERISA) with Borrower.
"Credit Obligation" means any obligation in excess of $100,000.00 for
the payment of borrowed money, the installment purchase price of property or on
account of a lease of property that is capitalized under GAAP, and shall also
mean any obligation under a guaranty or suretyship agreement covering
obligations of such type.
"Current Assets" means all assets of the applicable person that are
classified as current assets under GAAP.
"Current Liabilities" means all liabilities of Borrower that are
classified as current liabilities under GAAP.
"Current Ratio" means the ratio of Current Assets to Current
Liabilities.
"Default" means the occurrence or non-occurrence of an event that, but
for the giving of notice, the passage of time or both, constitutes an Event of
Default.
"Default Rate" means the Prime Rate plus 3%.
"Defined Benefit Pension Plan" means an employee benefit pension plan
(other than a Multiemployer Plan) covered by Title IV of ERISA as provided in
Section 4021 of ERISA.
"Defined Contribution Plan" means an individual account plan as defined
in ss.3(34) of ERISA.
"Document" is as defined in the UCC as in effect on the date hereof.
"Employee Benefit Plan" has the meaning given to such term in ss.3(3)
of ERISA.
"Environmental Law" means any federal, state or local statute, law,
ordinance, regulation, rule, standard, permit or requirement, including but not
limited to those statutes, ordinances, laws, regulations, rules, standards,
permits and requirements promulgated under the laws of the United States of
America or any other nation, concerning or relating to the generation,
treatment, storage, transportation, disposal and release into the environment,
cleanup and remediation of any "hazardous substance", as that term is defined in
CERCLA.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
the regulations issued thereunder, as amended from time to time.
"Equipment" is as defined in the UCC.
"Event of Default" is as defined in Section 7.1.
"Funded Debt" means the sum of (A) the outstanding principal balance of
the Advances, plus (B) the outstanding principal amount of any other
indebtedness of Borrower (including without limitation, current maturities
thereof, but excluding trade payables, accrued expenses, current installments of
obligations not to compete, and taxes payable), plus (C) any obligation of the
Borrower for the payment of borrowed money or the installment purchase price of
property or on account of a lease of property capitalized under GAAP, and shall
also mean any obligation of Borrower under a guaranty or suretyship agreement
covering obligations of such type.
"GAAP" means generally accepted accounting principles, as in effect in
the United States as of the date of the Agreement, applied in a consistent
manner.
"General Intangible" is as defined in the UCC.
"Guarantor" means BII, and any other entity that may become a party to
this Agreement.
"Instrument" is as defined in the UCC.
"Interest Period" shall mean a LIBOR Interest Period or a Base Interest
Period.
"Inventory" is as defined in the UCC.
"Landlord's Waiver" means an instrument (in form satisfactory to
Lender) by which an owner of real property in which any Borrower is a tenant or
occupant waives its right to distrain on any of the Collateral, and by which
such owner grants to Lender the right (but not the obligation) to cure any
default by Borrower under the applicable lease.
"Lender" shall mean Fleet Bank, N.A., its successors or assigns.
"Leverage Ratio" means Total Liabilities divided by Tangible Net Worth.
"Liabilities" shall mean all principal, interest and fees due under the
Loan and all other liabilities of Borrower to Lender, whether absolute or
contingent, matured or unmatured, direct or indirect, sole, joint, several, or
joint and several, similar or dissimilar, arising under the Loan Documents, due
or to become due or heretofore or hereafter contracted or acquired under the
Loan Documents.
"LIBOR Interest Period" shall mean a period of time beginning on and
including the date of any Advance and ending on and including the last day of
the 30th, 60th or 90th day period (as selected by the Borrower in its Advance
Request with respect thereto) following the date of any Advance, and,
thereafter, a 30, 60 or 90 day period, as selected by the Borrower by
irrevocable notice to Lender given not less than three (3) Business Days prior
to the date of any new Advance or the last day of the then current Interest
Period with respect thereto, through and including the Maturity Date.
"LIBOR Interest Rate" shall mean an interest rate based upon the LIBOR
Rate, plus 2.0%.
"LIBOR Rate" shall mean the London Interbank Offered Rate for thirty
(30), sixty (60) or ninety (90) day U.S. Dollar deposits determined by Lender as
of the date of each Advance or the date which is the beginning of the LIBOR
Interest Period by reference to the offered rates that appear in The Wall Street
Journal (Eastern Edition) under the heading "London Interbank Offered Rates
(LIBOR)" of the "Money Rates" column on the Advance date (or if The Wall Street
Journal is not published on such date with such information, the next preceding
date on which The Wall Street Journal is published with such information). If
The Wall Street Journal ceases publication or ceases to publish the applicable
LIBOR Rate, Lender shall select a comparable publication or alternative means to
determine the applicable LIBOR Rate (such as the Telerate or Reuters systems)
and provide notice thereof to Borrower. The establishment of the LIBOR Rate by
Lender as of each Advance date and Lender's calculation of the Applicable
Interest Rate for an Interest Period shall (in the absence of manifest error) be
final and binding. The LIBOR Rate may not be the lowest LIBOR Rate available for
U.S. Dollar deposits in the London interbank Eurodollar market as of the date
for which the LIBOR Rate is determined by Lender.
"Loan" means the Revolving Credit.
"Loan Documents" means this Agreement, the Note and all other documents
executed and delivered in connection with the Loan.
"Multiemployer Plan" has the meaning given to such term in ss.3 (37) of
ERISA.
"Net Income" means total revenues from operations, less expenses
(including interest expenses and taxes), determined in accordance with GAAP,
except charges resulting solely from the accounting for costs resulting from
certain future acquisitions.
"Note" means the Revolving Credit Note.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" means (A) liens for taxes not yet delinquent;
(B) statutory inchoate liens in connection with workmen's compensation,
unemployment insurance, or other social security obligations; (C) mechanic's,
workman's, materialman's, landlord's, carrier's, or other similar liens arising
in the ordinary course of business with respect to obligations that are not due;
and (D) liens in favor of Lender.
"Person" mean an individual, corporation, partnership, limited
liability company, trust or any other entity.
"Plan" means an Employee Benefit Plan or other plan maintained for
employees of Borrower or any member of its Controlled Group and covered by
ERISA.
"Prime Rate" means the per annum index rate established and announced
from time to time by Lender as its "Prime Rate," and used by Lender in
establishing interest rates on some of its commercial Loan, and such term is not
intended to imply that such Prime Rate is, nor is such Prime Rate necessarily,
the lowest rate of interest charged by Lender on any type of commercial Loan.
"Prohibited Transaction" has the meaning given to such term in ss.406
of ERISA or regulations issued thereunder.
"Purchaser" means a buyer of goods from Borrower or a customer for whom
services have been rendered or materials furnished by Borrower.
"Reorganization" has the meaning given such term in ss.4241 of ERISA.
"Reportable Event" has the meaning given to such term in ss.4043 (b) of
ERISA or regulations issued thereunder.
"Revolving Credit" means the $5,000,000 revolving credit facility given
by Lender to Borrower, as more particularly described in Section 2.1.
"Revolving Credit Limit" means $5,000,000, less the aggregate of the
outstanding principal balance of all Advances made under the Revolving Credit
Note.
"Revolving Credit Expiration Date" means June 30, 1999, as extended
from time to time, except that Lender may, in Lender's sole discretion, extend
the Revolving Credit Expiration Date for an additional year from each Revolving
Credit Expiration Date.
"Revolving Credit Note" means Borrower's note in the form of Exhibit
2.3 evidencing the Revolving Credit.
"Subsidiary" means any person of which more than 50% of the voting
capital stock or other ownership interests is owned, directly or indirectly, by
another Person.
"Tangible Net Worth" means, at any time, the sum of (A) the par value
(or value stated on the books of such person) of the capital stock of all
classes of stock, plus (or minus in the case of a deficit) (B) the paid-in
capital in excess of par plus retained earnings, including undistributed
corporation earnings of all of Borrower, and shall not include minority
interests or intangible assets, as determined in accordance with GAAP.
"Total Liabilities" means all liabilities of a person under GAAP
definitions and shall not include minority interests, as defined under GAAP.
"UCC" shall mean the New Jersey Uniform Commercial Code, N.J.S.A.
12A:1-101 et seq., as from time to time amended.
"Withdrawal Liability" has the meaning given such term in 4201 of
ERISA.
SECTION 1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all financial data
submitted pursuant to this Agreement shall, if applicable, be prepared in
accordance with GAAP.
ARTICLE II
THE LOAN
SECTION 2.1 The Revolving Credit. Subject to the terms and conditions
hereinafter provided, Lender shall advance to Borrower, from time to time during
the period from the date hereof to and including the Revolving Credit Expiration
Date, such sums as Borrower may request (each such advance, an "Advance") in an
outstanding aggregate principal amount not to exceed the Revolving Credit Limit.
Borrower agrees that Advances shall only be used for working capital purposes,
for capital expenditures in the ordinary course of business and for general
corporate purposes. Advances may also be used for the issuance of standby
letters of credit and, provided the Borrower has received Lender's prior written
approval, for corporate acquisitions. The stated amount of a standby letter of
credit while outstanding shall reduce the Revolving Credit Limit. Any use of
Advances to support acquisitions or to repurchase Borrower's stock requires
Lender's prior written consent. If the aggregate amount of the Advances
outstanding at any time exceeds the Revolving Credit Limit, then Borrower shall
repay immediately the amount of such excess. Borrower may borrow, repay and
reborrow amounts available under the Revolving Credit until but not including
the Revolving Credit Expiration Date, subject to the terms and conditions of
this Agreement and provided that the outstanding Advances shall at no time
exceed the Revolving Credit Limit.
SECTION 2.1.1 Making the Advances. (A) Borrower may request an Advance
(each an "Advance Request") by telephone or in writing (including by facsimile
copy) by 11:00 a.m. of the Business Day on which the requested Advance is to be
made. All Advance Requests shall be signed by an officer of Borrower and shall
state the date and amount of the proposed Advance, the applicable Interest Rate
and Interest Period, if applicable, and directions for making the proposed
Advance. Any telephonic Advance Requests shall be confirmed by Borrower in
writing on the same day by facsimile copy, and the original executed Advance
Request shall subsequently be submitted to Lender.
(B) Each Advance Request shall constitute a representation that, at the
time thereof and giving effect to the Advance requested thereby, (1) no Event of
Default or Default has occurred and is continuing hereunder; (2) the
representations and warranties contained herein are expressly reaffirmed and are
correct as of the date of such Advance Request and will be correct as of the
date on which the Advance is to be made (except to the extent that such
representation or warranty applies to an earlier date, in which event it shall
be reaffirmed and correct as of such earlier date); and (3) the sum of the
outstanding Advances plus the requested Advance will not exceed the Revolving
Credit Limit. Lender shall make any such Advance available to Borrower in such
manner as Borrower may reasonably request in the Advance Request. Borrower shall
hold Lender harmless from any liability for any loss resulting from Lender's
reliance on any writing or facsimile copy purportedly made by any officer of any
Borrower. Lender's books and records shall be deemed conclusive evidence of
whether or not an Advance Request was made and the terms thereof. Each Advance
Request shall be irrevocable once submitted to Lender, whether submitted by
telephone or by facsimile copy.
SECTION 2.1.2 Interest Rates; Interest Payments on the Advances.
(A) Interest Rate. Each Advance shall bear interest at the then current
Applicable Interest Rate until a new Applicable Interest Rate is determined for
each Interest Period in accordance with the provisions hereof. If Lender at any
time determines, in its reasonable discretion, that Lender has miscalculated the
amount of a payment due to Lender (whether because of a miscalculation of the
Applicable Interest Rate or otherwise), Lender shall give notice to Borrower of
the corrected amount of such payment and
(i) if the corrected amount of such payment represents an
increase over the payment actually made, Borrower
shall, within ten (10) calendar days thereafter, pay to
Lender any additional sums that Lender determines that
Borrower should have made but for such miscalculation,
or;
(ii) if the corrected amount of such payment represents a
decrease below the payment actually made and Borrower
is not otherwise in default under any of the terms and
provisions of the Loan Documents, Lender shall, within
(10) calendar days thereafter, pay to Borrower the sums
that Borrower otherwise would not have been obligated
to pay to Lender but for such miscalculation.
The Borrower shall select an Applicable Interest Rate for each Advance,
and absent an affirmative selection by the Borrower, each Advance shall be
presumed to be at the Base Interest Rate. If any Advance bears interest at the
Base Interest Rate and at the end of any LIBOR Interest Period for an Advance,
the Borrower may select the LIBOR Option, and if the LIBOR Option is not
selected at the expiration of any LIBOR Interest Period, the interest rate on
such Advance shall convert to the Base Rate Option until the Borrower again
selects the LIBOR Option.
(B) Interest Payments on Advances. Borrower shall pay interest on the
unpaid principal amounts of all Advances made under the Revolving Credit from
the respective dates on which such Advances are disbursed until such Advances
have been repaid in full. Borrower shall pay interest on the Advances in arrears
on the last day of each month, commencing on the end of the month following the
date of such Advance and continuing until the Revolving Credit Expiration Date,
on which date Borrower shall pay the outstanding principal of all Advances, plus
all accrued and unpaid interest thereon and any other fees and costs due in
connection with the Revolving Credit. Notwithstanding the foregoing, interest on
an Advance bearing interest at the LIBOR interest Rate shall be payable at the
end of the applicable LIBOR Interest Period.
SECTION 2.1.3 Repayment of the Revolving Credit; Reduction of the
Revolving Credit Limit. (A) Lender shall have no obligation to fund Advance
Requests under the Revolving Credit received after 11:00 a.m. on the Revolving
Credit Expiration Date. Borrower shall pay the outstanding balance of all
Advances, plus all accrued and unpaid interest thereon and any other fees and
costs due in connection with the Revolving Credit, on the Revolving Credit
Expiration Date.
(B) Reduction or Cancellation of Revolving Credit Limit. At any time
and from time to time, Borrower may, upon at least five (5) Business Days
written notice to Lender, reduce the unutilized portion of the Revolving Credit
Limit by $100,000.00 or integral multiples thereof or terminate the Revolving
Credit. Each such notice shall specify the date upon which such reduction or
termination is to become effective, and shall be irrevocable. Any such
termination or reduction of the Revolving Credit Limit shall be permanent.
SECTION 2.2 Prepayments. (A) Except as provided in Subsection (B),
Borrower may prepay any or ail unpaid principal of the Loan without penalty or
premium provided that if such prepayment is less than the entire principal
amount of the Advances, then such prepayment shall be in the amount of
$10,000.00 or multiples thereof.
(B) LIBOR Interest Rate Prepayment Penalties. If the Borrower repays an
Advance that is bearing interest at the LIBOR Interest Rate on a date other than
the last day of the LIBOR Interest Period for that particular Advance, Borrower
shall pay a prepayment premium in lieu of the payment of interest equal to the
amount of the interest that would have been payable at the end of the LIBOR
Interest Period on the prepayment amount when discounted to a present value at a
rate per annum equal to the yield to maturity of the "Applicable Treasury Bond
Obligation(s)". The "Applicable Treasury Bond Obligation(s)" shall mean a debt
obligation of the United States Treasury having a maturity date nearest in time
to the expiration of the LIBOR Interest Period of the principal being prepaid.
The maturity date and yield to maturity of such Applicable Treasury Bond
Obligation(s) shall be determined by Lender in its reasonable discretion on the
basis of quotations published in The Wall Street Journal (or comparable source
on the date of prepayment).
SECTION 2.3 Note. (A) The obligations of Borrower to repay Advances
under the Revolving Credit are evidenced by a promissory note, dated the date of
this Agreement, payable to the order of Lender, in the principal amount of the
Revolving Credit and otherwise substantially in the form of Exhibit 2.3 attached
hereto.
SECTION 2.4 Fees. Borrower shall pay an annual commitment fee to Lender
on the Revolving Credit, which fee shall equal one-half of one percent (0.50%)
of the Revolving Credit measured on a per annum basis and payable as of the end
of each of Borrower's fiscal quarters.
SECTION 2.5 Place and Manner of Payments. Borrower agrees to make all
payments on account of principal, interest, the fees or any other sums due under
any of the Loan Documents without setoff or counterclaim to Lender at Lender's
office located at its address specified in Section 8.2 below, at or before 3:00
p.m. New Jersey time on the date due, in lawful money of the United States of
America. All payments received by Lender from Borrower shall be applied in the
following order: (A) to the payment of fees and other costs and expenses then
due and owing from Borrower, (B) to the payment of accrued and unpaid interest
then due, (C) to the payment of any other amounts outstanding under the
Revolving Credit.
SECTION 2.6 Computation of Interest. The interest on the amounts
outstanding under the Loan shall be computed on the basis of a year of 365 days
for the actual number of days elapsed.
SECTION 2.7 Late Charges; Default Rate. (A) If Borrower fails to make
any payment required hereunder or under any of the other Loan Documents within
ten (10) days of the date when due, Borrower shall pay to Lender a late charge
equal to three percent (3%) of the amount of such late payment as a late charge,
not to exceed $2,500.00. Late charges assessed by Lender are immediately due and
payable. Payments are deemed made on the Business Day that payment is received
by Lender, except that payments received after 3:00 p.m. New Jersey time will be
deemed received on the next Business Day.
(B) After an Event of Default, the interest rate then in effect on the
Loan immediately shall be increased to the Default Rate, and each time that the
Prime Rate changes, the Default Rate applicable to the Loan shall change
simultaneously therewith, without notice to Borrower.
SECTION 2.8. Clean Up Period. Borrower shall, for thirty (30)
consecutive between the date of this Agreement and December 31, 1998, and during
each subsequent twelve (12) month period, reduce the outstanding principal
balance of all Advances to zero.
ARTICLE III
COLLATERAL
SECTION 3.1 Collateral. The Revolving Credit is unsecured. However
Borrower, BII and BRL each covenants and agrees that neither Borrower, BII or
BRL will grant, pledge or assign to any Person a security interest in any of
their respective assets, whether now owned or hereafter acquired, including,
without limitation, (A) Accounts, Chattel Paper, Equipment (whether or not
constituting fixtures), Documents, Instruments, General Intangibles (including,
but not limited to, any and all interests in trademarks, service marks, patents,
licenses, permits, and copyrights), (B) Inventory of Borrower, if any, held by
any Borrower for sale or lease or to be furnished under contracts of service,
(C) Books and Records, or (D) all proceeds and products of the foregoing,
including casualty insurance thereon, now owned or hereafter acquired by
Borrower, BII or BRL (herein defined as "Collateral").
SECTION 3.2 Records and Reports. Borrower, BII and BRL shall keep
accurate and complete records of their respective Accounts (and the collection
thereof), General Intangibles, Chattel Paper, Instruments, Documents and
Inventory and furnish Lender such information about Borrower's Accounts, General
Intangibles, Chattel Paper, Instruments, Documents, and Inventory as Lender may
reasonably request. Lender shall have the right, upon reasonable notice during
regular business hours, to conduct periodic examinations and verifications of
their Books and Records, which examination may include, without limitation,
verifications of Accounts by contacting Purchasers. Borrower, BII and BRL agree,
upon reasonable notice during regular business hours, to make their Books and
Records available to Lender at Borrowers' principal place of business for
purposes of such examination. Provided that there does not exist an Event of
Default, Lender agrees to give at least one week written notice of such
examination and to conduct such examination during normal business hours.
Borrower, BII and BRL shall reimburse Lender for the costs and expenses (whether
internal or external) of any such examination, but only if Borrower, BII or BRL
is in default at the time of examination.
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.1 General Conditions Precedent to Lender's Obligations.
Lender's obligations hereunder are subject to the conditions precedent that
Lender shall have received all of the following, in form and substance
satisfactory to Lender:
(A) a copy, certified in writing by the Secretary or an Assistant
Secretary of BTI, BII and BRL, of (1) resolutions of the Board of Directors of
such entity evidencing approval of the Loan Documents by such entity and the
matters contemplated thereby, (2) each document evidencing other necessary
corporate action and governmental approvals, if any, with respect to the Loan
Documents, and (3) such entity's charter documents and by-laws;
(B) a favorable opinion of independent counsel(s) for BTI, BII and BRL
on such matters and in form and substance acceptable to Lender;
(C) a written certificate by the Secretary or an Assistant Secretary of
BIT, BII and BRL as to the names and signatures of the officers of such entity
authorized to sign the Loan Documents to which such entity is a party and the
other documents or certificates of such entity to be executed and delivered
pursuant thereto;
(D) recent certificates, issued by the Secretary of State of the states
or applicable governmental official for any foreign entity in which BTI, BII or
BRL is incorporated, stating that such entity is a corporation duly incorporated
and in good standing under the laws of that state;
(E) recent certificates, issued by the Secretaries of State of each
state in which BTI, BII or BRL is required to qualify to do business, stating
that such entity is in good standing as a foreign corporation under the laws of
such state;
(F) the executed Revolving Credit Note;
(G) the financial information required by Section 5.4 hereof relating
to BTI, BII and BRL;
(H) evidence of insurance policies in form and substance satisfactory
to Lender in such amounts and with such insurance companies as are acceptable to
Lender, insuring BTI, BII and BRL against such risks and with such coverage
(including, without limitation, property damage, workmen's compensation, public
liability, products liability, fire with extended coverage, vandalism, malicious
mischief, and flood) as may be customary for the business being conducted by
BTI, BII and BRL; with each policy of insurance providing that it will not be
terminated or otherwise modified adversely to Lender's interest without at least
30 days' prior written notice to Lender;
(I) a lien search prepared by a search company acceptable to Lender
showing that no perfected liens exist of record against any of the assets of
BTI, BII and BRL;
(J) such evidence as Lender may reasonably require that BTI, BII and
BRL have all licenses and permits necessary and material to the conduct of their
business as now being conducted, together with copies of all such licenses and
permits;
(K) evidence that BTI, BII and BRL have paid or have made arrangements
satisfactory to Lender to pay all fees, costs and expenses incurred in
connection with the transactions contemplated hereby including, without
limitation, the fees and expenses of Lender's counsel; and
(L) such other documents as Lender may reasonably require.
SECTION 4.2 Additional Conditions Precedent. The obligations of Lender
hereunder are subject to the further conditions precedent that:
(A) the representations and warranties contained in this Agreement, and
in the other Loan Documents shall be correct and accurate in all material
respects on and as of the date of each Advance as though made on and as of such
date (excluding representations and warranties which only speak as of a certain
date);
(B) no Default or Event of Default shall have occurred and be
continuing or will result from the making of any Advance;
(C) there shall have occurred no material adverse change in the
financial condition, or results of operations or prospects of BTI or BII since
the effective date of the most recent financial statements provided to Lender.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In addition to all other representations and warranties set forth in
this Agreement, BTI, BII and BRL represent and warrant as follows:
SECTION 5.1 Existence. Each entity is a corporation duly incorporated,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each entity has all requisite power and authority, corporate and
otherwise, to conduct its business and to own its properties and is duly
qualified as a foreign corporation in good standing in all other jurisdictions
in which its failure so to qualify would have a material adverse effect on the
financial condition or business of BTI, BII and BRL on a Consolidated Basis (a
"Material Adverse Effect").
SECTION 5.2 Authorization. The execution, delivery, and performance by
each entity of each Loan Document to which it is a party has been duly
authorized by all necessary corporate action, and does not violate any provision
of the charter or by-laws of such entity and will not result in a breach of or
constitute a default under any agreement, indenture, or instrument to which such
entity is a party or by which such entity, or any of its properties, may be
bound or affected which would have a Material Adverse Effect.
SECTION 5.3 Validity of Documents. Each Loan Document when duly
executed and delivered will constitute the valid and legally binding obligation
of the party executing it, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, or other similar
laws affecting the enforcement of creditors' rights generally.
SECTION 5.4 Financial Information. The financial information and
statements of each entity (or their predecessors in interest as the case may be)
(either separately or on a Consolidated Basis) previously delivered to Lender
are true and correct, and accurately reflect the financial position of such
entity as of such dates, subject to year-end adjustments, in accordance with
GAAP. Since such dates, there has been no material adverse change in such
financial position.
SECTION 5.5 Litigation. There are no actions, suits, or proceedings
pending or, to the knowledge of the officers of BTI, BII or BRL, threatened,
against any such entity, or any of their properties before any court or
governmental department, commission, board, bureau, agency, or instrumentality
(domestic or foreign) that, if determined adversely to such entity, would have a
Material Adverse Effect or which relate to their entering into the Loan
Documents, or the consummation of the transactions contemplated thereby.
SECTION 5.6 Places of Business; Location of Collateral. Each entity
represents that the properties listed on Exhibit 5.6 attached hereto serve as
each entity's respective chief place of business, chief executive office, and
the place where each entity keeps its Books and Records.
SECTION 5.7 Contingent Liabilities. There are no suretyship agreements,
guarantees, or other Contingent Liabilities of BTI, BII or BRL that are required
to be included on a financial statement prepared in accordance with GAAP that
are not included on the financial statements described in Section 5.4 hereof or
otherwise disclosed in this Agreement.
SECTION 5.8 Taxes. Each BTI, BII and BRL has filed all tax returns and
reports required to be filed before the date hereof and have paid all taxes,
assessments, and charges imposed upon each entity or their property, or that
either is required to withhold and pay over, to the extent that they were
required to be paid before the date hereof, except for any of the foregoing
which BTI, BII or BRL may be contesting in good faith and for which reasonable
reserves have been established.
SECTION 5.9 Encumbrances. Each such entity's property and assets are
not subject to any mortgage, pledge, security, interest, lien or other
encumbrance except for Permitted Encumbrances.
SECTION 5.10 Consents. To the best of Borrower' knowledge, no
authorization, consent, approval, license, exemption by or filing or
registration with any court or governmental department, commission, board
(including the Board of Governors of the Federal Reserve System), bureau,
agency, or instrumentality, domestic or foreign, or other Person is or will be
necessary for the valid execution, delivery, or performance by Borrower of the
Loan Documents.
SECTION 5.11 ERISA. No such entity is obligated to contribute to any
Multiemployer Plans and no such entity has any Withdrawal Liability with respect
to any Multiemployer Plan of which any such entity or any member of their
Controlled Group had previously been a member. All such Defined Benefit Pension
Plans and Defined Contribution Plans, as of the date hereof, meet the minimum
funding standards of Section 302 of ERISA and Section 412 of the Code without
regard to any funding waiver and no Prohibited Transaction has occurred with
respect to any such plan.
(A) No Reportable Event has occurred with respect to any Defined
Benefit Pension Plan. No Defined Benefit Pension Plan sponsored by Borrower or
any member of their Controlled Group has any amount of "unfunded benefit
liabilities" (as defined in 4001(a)(18) of ERISA). No trust was established in
connection with any such Defined Benefit Pension Plan pursuant to ss.4049 of
ERISA (as in effect on December 17, 1987) and no liability (whether or not such
liability is being litigated) has been asserted against any entity or any
Controlled Group member in connection with any such Defined Benefit Pension Plan
by the PBGC or by a trustee appointed pursuant to ss.4042 (b) or (c) of ERISA.
No lien has attached and no person has threatened to attach a lien on any
property of any such entity or any Controlled Group member as a result of any
failure to comply with the Code or ERISA.
(B) Each such Defined Benefit Pension Plan and Defined Contribution
Plan, as most recently amended, including, without limitation, amendments to any
trust agreement, group annuity, or insurance contracts, or other governing
instrument, is the subject of a favorable determination letter by the Internal
Revenue Service with respect to its qualification under ss.401 (a) of the Code
or an application for such determination within the applicable remedial
amendment period has been filed and such plans comply, both in form and in
operation, with the requirements of the Code and ERISA.
(C) All Plans maintained by any such entity or any member of their
Controlled Group comply in all respects (i) with the requirements of the Code
and the regulations thereunder and ERISA, and (ii) in form with those
requirements of the Code and the regulations thereunder and ERISA which must be
met on the date hereof. There is not now, and has not been, any violation of the
Code or the regulations thereunder or ERISA with respect to the filing of
applicable reports, documents, or notices regarding the Plans of Borrower or any
member of their Controlled Group with the Secretary of Labor, the Secretary of
the Treasury, the PBGC or any other governmental entity or the furnishing of
such documents to the participants or beneficiaries of the Plans.
(D) Neither entity nor any member of their Controlled Group has any
unfunded liabilities of unfunded and uninsured "employee welfare benefit planet"
(as defined in ss.3(1) of ERISA). There is not now, and has not been, any
violation of the "continuation coverage requirements" of "group health plans" of
former ss.162 (k) of the Code and the regulations thereunder (as in effect for
tax years beginning on or before December 31, 1988) and of ss.4980B of the Code
and the regulations thereunder (as in effect for tax years beginning on or after
January 1, 1989) and Part 6 of Subtitle B of Title i of ERISA with respect to
any Employee Benefit Plan of any entity or of any member of their Controlled
Group to which such continuation coverage requirements apply.
SECTION 5.12 Subsidiaries and Affiliates; Fictitious Name. No Company
has any Subsidiaries or Affiliates other than as listed on Exhibit 5.12 attached
hereto and do not trade under any fictitious names, other than as listed on
Exhibit 5.12 attached hereto.
SECTION 5.13 Licenses, Permits, Etc. Each Company is in possession of
and operating in compliance with all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates and orders required for the
conduct of their respective business as now conducted, and all of them are valid
and in full force and effect, except for those which if not obtained would not
have a Material Adverse Effect.
SECTION 5.14 Compliance with Laws. To the best of their knowledge,
Borrower are in material compliance with all laws, rules, regulations and orders
of all federal, state, and governmental agencies and courts that are applicable
to them, to the conduct of their business, or to the ownership and use of their
properties which if violated would have a Material Adverse Effect.
SECTION 5.15 Environmental Matters. To the extent necessary for the
conduct of its business, each entity is in possession of and in compliance with
all required permits relating to the discharge or release of liquids, gases or
solids into the air, water, and soil, except when the failure to have such
permits would not have a material adverse effect on such entity's business. Each
entity does not refine, process, generate, store, recycle, transport, dispose
of, or release into the environment any "hazardous substance" as that term is
defined in CERCLA, or any hazardous or toxic substances as those terms are used
in any state or local environmental statute or regulation, except in compliance
with all Environmental Laws. No entity has received notice from any governmental
agency that it is a potentially responsible party in any proceeding under an
environmental law. No entity has received any notice of violation, citation,
complaint, request for information, order, directive, compliance schedule,
notice of any claim, proceeding, or litigation from any person concerning any
entity's compliance with any Environmental Law, except as disclosed in
Borrower's financial statements.
SECTION 5.16 Intellectual Property. Each entity possesses all patents,
trademarks, copyrights, tradenames, trade secrets and other intellectual
property rights or licenses therefor, that are required to conduct its business
without conflict with the rights or claimed rights of others, except where the
failure to so own or possess such intellectual property rights would not have a
Material Adverse Effect.
SECTION 5.17 Regulation U, Etc. The Loan will not constitute a
violation of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System. No part of the proceeds of the Loan will be used for any
purposes which violate or are inconsistent with the provisions of any of such
regulations.
SECTION 5.18 Labor Matters. There are no existing or, to each Company's
actual knowledge, threatened or contemplated, strikes, slowdowns, picketing or
work stoppages by any employees against any Company, any lockouts by any Company
of any of its employees or any labor trouble or other occurrence, event or
condition of a similar character which would have a Material Adverse Effect.
SECTION 5.19 Outstanding Judgments or Orders. To the best knowledge of
each Company, each Company has satisfied all judgments against each of them, to
the extent outstanding and not stayed pending appeal for more than thirty (30)
days, and, to the best of actual knowledge, no entity is in default with respect
to any judgment, writ, injunction, decree, rule or regulation of any court,
arbitrator or commission, board, bureau, agency or instrumentality, domestic or
foreign, pertaining to such entity, except for any judgment which will not have
a Material Adverse Effect.
SECTION 5.20 No Defaults on Other Agreements. To the best of each
Company's knowledge, no entity is in default in the performance, observance or
fulfillment of any of the material obligations, covenants or conditions
contained in any agreement or instrument to which such entity is a party, which
obligation, covenant or condition has not been waived in writing or cured or
which would not have a Material Adverse Effect.
SECTION 5.21 Full Disclosure. No representation or warranty by each
entity in this Agreement and no information in any statement, certificate,
schedule or other document furnished or to be furnished to Lender pursuant
hereto, or in connection with the transactions contemplated hereby, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading.
SECTION 5.22 Debt and Credit Arrangements. Except for Debt owed by BTI
to Lender, as of the date hereof, neither BTI, BII nor BRL has any material debt
and no such entity is a party to any material credit agreement, indenture,
purchase agreement, guaranty, capital lease or other investments, agreements and
arrangements presently in effect providing for or relating to extensions of
credit in respect of which any such entity is in any manner directly or
contingently obligated, except for those disclosed on the financial statements
described in Section 5.4 above..
SECTION 5.23 No Defaults on Other Agreements. No Company is subject to
any charter or corporate restriction that has a Materially Adverse Affect. No
Company is a party to any indenture, loan or credit agreement, lease or other
agreement or instrument, nor is subject to any charter or corporate restriction
that has a Material Adverse Affect on any each Company's ability to carry out
its obligations under the Loan Documents. To the best of each Company's
knowledge, no Company is in default in any material respect in the performance,
observance or fulfillment of any of the material obligations, covenants or
conditions contained in any agreement or instrument material to its business to
which it is a party.
ARTICLE VI
COVENANTS
In addition to all other covenants set forth in this Agreement,
Borrower covenants that, so long as any of the Liabilities shall remain unpaid
and unless Lender shall otherwise consent in writing:
SECTION 6.1 Use of Proceeds. The Loan proceeds will be used for the
purposes set forth in Article II hereof.
SECTION 6.2 Financial Information. (A) Borrower will furnish to Lender,
as soon as delivered to any other creditor, and in any event within 90 days
after the close of each fiscal year of Borrower, audited consolidated financial
statements (income statements and balance sheet), and unaudited consolidating
financial statements. Such audited financial information will contain the report
of a certified by independent certified public accountants of recognized
standing selected by Borrower and reasonably acceptable to Lender. All such
financial information will be prepared according to GAAP.
(B) Borrower will furnish to Lender, as soon as delivered to any other
creditor and in any event within forty-five (45) days after the end of each
fiscal quarter, unaudited, unconsolidated and consolidating financial statements
for the period then ended. All of the foregoing financial information shall be
in such detail as Lender may reasonably require, and shall be prepared by and
accompanied by the certification referred to in (D) below.
(C) Borrower will furnish to Lender, within thirty (30) days of the end
of each fiscal quarter, an accounts receivable agings summary report of BII and
BRL in form and substance satisfactory to Lender.
(D) Each financial statement required hereunder will be accompanied by
(a) a certification in the form of Exhibit 6.2 attached hereto and made a part
hereof, and (b) a certificate of the chief executive or chief financial officer
of Borrower stating that such officer has reviewed the Borrower's operations for
that period and that no Event of Default or Default has occurred and is
continuing, or if any such Event of Default or Default has occurred and is
continuing, a written statement setting forth the details of such Event of
Default or Default, stating whether or not the same is continuing and, if so,
the action that Borrower propose to take with respect thereto. Such certificate
or statement will also include a reasonably detailed calculation of the
financial ratios set forth in Section 6.5 and Section 6.6 below, for the purpose
of establishing whether Borrower was in compliance with the requirements of such
Sections as of the end of the period covered by the financial statements. In
addition, the financial statements shall be accompanied by a letter from the
accountant acknowledging that the Lender will rely upon the financial statements
and consenting to the Lender's reliance thereon.
SECTION 6.3 Insurance. Borrower will at all times carry insurance, in
form and amount customary for Borrower's business, and underwritten by
financially sound and reputable insurers reasonably satisfactory to Lender.
SECTION 6.4 Encumbrances. Borrower, BII and BRL will not create, incur,
assume, or suffer to exist any mortgage, pledge, lien, or other encumbrance of
any kind upon, or any security interest in, any of their respective property or
assets, whether now owned or hereafter acquired, except for the Permitted
Encumbrances. Borrower, BII and BRL will not agree with any Person to restrict
their respective abilities to grant mortgages, pledges, liens or other
encumbrances upon, or security interests in, any of their property or assets.
SECTION 6.5 Borrower and BII Financial Covenants. Borrower and BII
shall, on a consolidated basis, maintain the following financial covenants,
which shall be tested as of each March 31, June 30, September 30 and December
31.
SECTION 6.5.1 Tangible Net Worth. The consolidated Tangible Net Worth
shall exceed $10,000,000, plus 50.0% of the Net Income for the current year,
plus the net proceeds of any stock offering.
SECTION 6.5.2 Total Liabilities to Tangible Net Worth. The ratio of
Total Liabilities to Tangible Net Worth shall not equal or exceed 0.30.
SECTION 6.6 Borrower and Subsidiary Financial Covenants. Borrower,
together with all of Borrower's subsidiaries, shall, on a consolidated basis,
maintain the following financial covenants, which shall be tested as of each
March 31, June 30, September 30 and December 31.
SECTION 6.6.1 Current Ratio. The Current Ratio shall not be less than
2.5:1.0.
SECTION 6.6.2 Tangible Net Worth. The consolidated Tangible Net Worth
shall equal or exceed the Tangible Net Worth as of the end of the prior calendar
year, plus 50.0% of the Net Income for the current year, plus the net proceeds
of any stock offering.
SECTION 6.6.3 Net Income. The consolidated Net Income shall exceed
$2,000,000 on a rolling four quarter basis, without a loss in any two (2)
consecutive calendar year quarters.
SECTION 6.6.4 Total Liabilities to Tangible Net Worth. The ratio of
Total Liabilities to Tangible Net Worth shall not equal or exceed 0.50.
SECTION 6.6.5 Capital Expenditures/Acquisitions. The aggregate of
capital expenditures, loans, investments or advances to entities which are not
or do not become a Guarantor (specifically to include BRL), or funds used for
acquisitions shall not exceed $5,000,000 in any aggregate four (4) consecutive
calendar year quarters, without Lender's prior written consent, except that the
limit shall increase to $10,000,000 upon the successful completion of an equity
offering where the net proceeds to the Borrower would exceed $20,000,000.
SECTION 6.7 Taxes. Borrower shall pay when due all taxes, assessments,
and charges imposed upon Borrower or Borrower' properties or that Borrower' are
required to withhold or pay over. Notwithstanding the foregoing, Borrower shall
be entitled to withhold such payment for any such tax, assessment or charge
while Borrower diligently contest such tax, assessment, or charge in good faith
and by appropriate proceedings provided that Borrower maintain adequate reserves
therefor and provided that the effect of such proceedings stays the right of the
taxing authority to execute upon the Borrower' assets for such non-payment.
SECTION 6.8 Guarantees, Etc. Borrower shall not, without Lender's prior
written consent, become liable on the obligation of another Person, except for a
Subsidiary or otherwise incur any consensual Contingent Liability, except with
respect to a Subsidiary, except by endorsement of negotiable instruments for
deposit or collection in the usual course of business.
SECTION 6.9 Loan and Investments. Borrower shall not make any Loan or
investments (including without limitation Loan to officers or Loan to or
investments in Affiliates or Subsidiaries) except for:
(A) investments in:
(1) assets to be used in the ordinary course of business,
(2) obligations of Lender,
(3) obligations of the U.S. government and its agencies,
(4) money market instruments, repurchase agreements,
commercial paper, certificates of deposit, bankers'
acceptances, Eurodollar certificates of deposit and
approved money market funds,
(5) corporate bonds, including Eurodollar issues of
U.S. corporations and U.S. dollar denominated issues
of foreign corporations,
(6) floating rate securities without interest rate caps,
(7) asset-backed securities,
(8) foreign government and provincial issues, and issues
of international agencies that are U. S. dollar
denominated,
(9) Joint ventures where the entity becomes a Guarantor,
and
(10) any now existing or hereafter created Guarantor.
Individual holdings of commercial paper must be rated A-1, P-1, or better by
either Standard and Poor's Corporation ("S&P") or Moody's Investor Services
("Moody's"), at the time of purchase. Securities of Issuers with a long-term
credit rating must be rated at least [AAA/Asa] [AA-/Aa3] [A-/A3] [BBB-/Baa3] by
S & P's or Moody's, respectively.
(B) Loan to:
(1) any Person, not a Borrower or Affiliate of a
Borrower, not to exceed $100,000.00 in the aggregate,
(2) any Affiliate of a Borrower not to exceed $500,000.00
in the aggregate.
SECTION 6.10 Compliance with Laws. Borrower shall comply with all laws,
rules, and regulations applicable to it in the operation of its business if the
failure to so comply could have a Material Adverse Effect.
SECTION 6.11 Environmental Matters. (A) To the extent necessary for the
conduct of their business, Borrower and BII will obtain and comply with all
required permits, licenses, registrations and approvals relating to the
discharge or release of liquids, gases or solids into the environment. To the
extent that such are applicable to the conduct of their business, Borrower and
BII will comply with all environmental laws relating to the generation,
treatment, storage, transportation, disposal, release or cleanup of any
"hazardous substance".
(B) Borrower or BII will immediately notify Lender if Borrower or BII
receives (i) any notice from any governmental agency that Borrower or BII is a
potentially responsible party in any proceeding under environmental law, (ii)
any notice of any claim, proceeding, litigation, order, directive, citation, or
request for information concerning environmental conditions, or notice of any
alleged violation of any environmental law, or (iii) any information concerning
any potentially adverse environmental condition, including, but not limited to,
any spilling, leaking, discharge, release, or threat of release of any hazardous
substance.
(C) Borrower and BII shall comply with any notice or directive from any
governmental authority, whether state, federal, or local, regarding the removal
or discharge of any hazardous substance on any of its properties within such
period as may be required therein unless the same is being contested by Borrower
or BII in good faith. Borrower or BII shall, upon request, provide a bond or
title insurance endorsement reasonably satisfactory to Lender insuring Lender's
continued lien on the Collateral affected by such notice or directive.
(D) Borrower, BII and BRL hereby indemnify and agree to defend and hold
harmless Lender, its parent corporation, subsidiaries, successors, assigns,
officers, directors, shareholders, employees, agents and counsel from and
against any and all claims, actions, causes of action, liabilities, penalties,
fines, damages, judgments, losses, suits, expenses, legal or administrative
proceedings, interest, costs and expenses (including court costs and reasonable
attorneys', consultants' and experts' fees) arising out of or in any way
relating to (i) the presence of any substance which is or becomes regulated
under any Environmental Law whether now or hereafter enacted, on, beneath or
arising from any property used or occupied by Borrower, BII or BRL; (ii) the
failure of Borrower, BII or BRL to comply with any Environmental Law; (iii)
Borrower's, BII's or BRL's breach of any of the representations and warranties
or covenants contained herein; (iv) any notice of violation, citation,
complaint, request for information, order, directive, compliance schedule,
notice of claim, consent decree, action, litigation or proceeding brought or
instituted by any governmental authority or any third party under or in
connection with any Environmental Law or based on the presence of any hazardous
substances; and (iv) the imposition or recording of a lien against any property
of or occupied by Borrower, BII or BRL pursuant to any Environmental Law, unless
due solely to the gross negligence or willful misconduct of Lender. IT IS
INTENDED THAT THE INDEMNITY PROVIDED IN THIS SECTION SHALL SURVIVE THE REPAYMENT
OF THE LIABILITIES.
SECTION 6.12 Maintenance of Property. Borrower, BII and BRL will
maintain all of its property (subject to ordinary wear and tear) materially
useful to it business in good condition and repair.
SECTION 6.13 Limitations on Borrowing. Except for borrowings from
Lender hereunder, Borrower will not incur any indebtedness for borrowed money,
or purchase any assets or property on an installment or other deferred payment
basis. BRL will not incur indebtedness in excess of $500,000 without Lender's
prior written consent.
SECTION 6.14 Reports; Change in Locations. (A) Borrower will furnish
the following to Lender:
(1) as soon as possible, and in any event within five (5) days after
Borrower becomes aware of the occurrence of any Default or Event of Default, a
written statement by the chief executive or chief financial officer of Borrower
setting forth the details of such Default or Event of Default, stating whether
or not the same is continuing and, if so, the action proposed to be taken with
respect thereto;
(2) immediately after receiving knowledge thereof, notice in writing of
all actions, suits, or proceedings before any court or governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign,
affecting Borrower where the potential liability is reasonably determined to be
in excess of $150,000, individually, or $150,000 in the aggregate and such
potential liability is uninsured;
(3) as soon as possible and in any event within five (5) business days
after Borrower becomes aware of the occurrence of a material adverse change in
the business, properties, operations, or condition (financial or otherwise) of
Borrower, a written statement by the chief executive or chief financial officer
of Borrower setting forth details of such material adverse change and the action
proposed to be taken with respect thereto;
(4) immediately after receiving knowledge thereof, notice in writing of
any strike, walkout, boycott or other labor dispute involving the Borrower,
where such labor dispute would have a Material Adverse Effect; and
(5) such other information respecting the Borrower's properties,
operations, and condition (financial or otherwise) as Lender may at any time and
from time to time reasonably request.
SECTION 6.15 ERISA. For purposes of this Section, the term Borrower
includes any member of Borrower's Controlled Group (A) Borrower will comply in
all material respects with the provisions of ERISA and the Code with respect to
any Defined Benefit Pension Plan and Defined Contribution Plan including the
timely filing of required annual reports and the payment of PBGC premiums.
(B) Borrower will furnish to Lender, upon Lender's request, promptly
after the filing thereof with the United States Secretary of Labor and the PBGC,
copies of each annual or other report with respect to each Defined Benefit
Pension Plan and Defined Contribution Plan maintained by Borrower.
(C) Borrower will cause to be made all contributions required to avoid
any accumulated funding deficiency (as defined in ss.412(a) of the Code and the
regulations thereunder and ss.302 (a) of ERISA), unless waived, with respect to
any pension plan (as defined in ss.3(2) of ERISA), other than a Multiemployer
Plan, which is subject to Part 3 of the Subtitle B of Title I of ERISA or
Section 412 of the Code and the regulations thereunder and that is maintained by
Borrower or any member of their Controlled Group.
(D) As soon as possible (and in any event within five (5) days) after
Borrower has reason to know (i) that any Reportable Event has occurred with
respect to any Defined Benefit Pension Plan maintained by Borrower, (ii) that
any Defined Benefit Pension Plan maintained by Borrower is to be terminated in a
distress termination (within the meaning of 4041(c) of ERISA), (iii) that the
PBGC has instituted or will institute proceedings under Title IV of ERISA to
terminate any Defined Benefit Pension Plan maintained by Borrower, (iv) that
Borrower has incurred Withdrawal Liability from a Multiemployer Plan maintained
by Borrower, or (v) that any Multiemployer Plan to which Borrower has made
contributions is in Reorganization, Borrower will furnish a statement to Lender
setting forth the details as to such Reportable Event, distress termination,
termination proceedings, Withdrawal Liability, or Reorganization, and the action
that Borrower proposes to take with respect thereto, together with a copy of any
notice of such Reportable Event or distress termination given to the PBGC, or a
copy of any notice of termination proceedings, Withdrawal Liability or
Reorganization received by Borrower.
(E) Borrower will furnish to Lender as soon as possible (and in any
event within five (5) days) after receipt thereof a copy of any notice that
Borrower receives from the PBGC or the Internal Revenue Service or from the
sponsor of any Multiemployer Plan that sets forth or proposes any action to be
taken or determination made by the PBGC or the Internal Revenue Service with
respect to any Defined Benefit Pension Plan, Defined Contribution Plan or
Multiemployer Plan.
(F) Borrower will promptly notify Lender of any taxes, penalties,
interest charges and other financial obligation that have been assessed or
imposed or that Borrower has reason to believe may be assessed or imposed
against Borrower by the Internal Revenue Service, the PBGC or any other
governmental entity with respect to any Plan or Multiemployer Plan.
(G) Borrower will promptly notify Lender of the adoption of any Defined
Benefit Pension Plan or Defined Contribution Plan or any obligation to
contribute to any Multiemployer Plan by Borrower.
(H) Borrower will not contribute to any Multiemployer Plan. Borrower
will not permit (i) with respect to any Employee Benefit Plan, any Prohibited
Transaction or Prohibited Transactions under ERISA or the Code resulting in
liability of Borrower in excess of $25,000 in the aggregate or (ii) with respect
to any Defined Benefit Pension Plan, any Reportable Event under ERISA, if upon
termination of the Plan or Plans with respect to which one or more such
Reportable Events has occurred there is or would be any liability of Borrower to
the PBGC in excess of $25,000 in the aggregate. Borrower will not voluntarily
take or fail to take any action that would result in any Withdrawal Liability
becoming due.
(I) Borrower will not fail to make required minimum contributions with
respect to a Defined Benefit Pension Plan, resulting in a lien (as provided in
ss.302 (f) of ERISA) against Borrower.
(J) Borrower will not permit the adoption of a plan amendment that
results in significant underfunding (as defined in ss.307 of ERISA) of a Defined
Benefit Pension Plan that requires Borrower to provide collateral or security.
(K) Borrower will not permit the unfunded liabilities of unfunded and
uninsured employee welfare benefit plans" (as defined in ss.3 (1) of ERISA) of
Borrower to exceed, in the aggregate, $10,000.
(L) Borrower will not acquire or permit the acquisition by any of their
Controlled Group members, of any trade or business that has directly or
indirectly incurred an unfunded benefit liability (as defined in ss.4001 of
ERISA) under any Defined Benefit Pension Plan prior to such acquisition.
Borrower will not acquire or permit the acquisition, by Borrower of any trade or
business that has directly or indirectly incurred an unfunded benefit liability
under any Defined Benefit Pension Plan.
SECTION 6.16 Mergers, Etc. Borrower, BII or BRL will not, directly or
indirectly and without the prior written consent of Lender: (A) merge or
consolidate with any other Person, (B) sell or lease or otherwise transfer all
or any substantial part of any of their respective assets to any Person, (C)
other than as specifically provided for in Section 6.6.5 hereof, acquire whether
through purchase or exchange of capital stock or assets or otherwise, all or any
substantial part of the assets of any other Person, or any capital stock of or
other equity interest in any other Person, unless otherwise approved by Lender
in writing, (D) consummate any recapitalization or reorganization, or (E) create
or acquire any Subsidiary. Any acquisition by exchange of Borrower's capital
stock as specified herein may not result in the violation of the financial
covenants or any other representation or covenant of this Agreement. Upon the
acquisition or creation of a Subsidiary, such Subsidiary shall guarantee the
Borrower's obligations hereunder and the Borrower shall cause the Subsidiary to
execute this Agreement, and such other documents as the Lender may reasonably
require, within thirty (30) days of the acquisition or creation of the
Subsidiary.
SECTION 6.17 Change of Business. Borrower, BII and BRL will not make
any material change in the nature of their respective business as conducted on
the date hereof.
SECTION 6.18 Disposal of Assets. Borrower, BII, and BRL will not
dispose of any assets except in the ordinary course of business.
SECTION 6.19 Intellectual Property. Borrower, BII and BRL will maintain
all of their respective patents, trademarks, copyrights, trade secrets and other
intellectual property rights and licenses therefor, which are material to their
business, if any, in full force and effect until their respective expiration
dates, if any.
SECTION 6.20 Dividends and Distributions. Borrower, BII and BRL will
not declare or pay any dividend, or declare or make any other payment or
distribution on, or to acquire, any of its capital stock, or make any other
payment to shareholders if there then exists a Default or Event of Default or
such distribution or dividend would cause a Default or Event of Default
hereunder.
SECTION 6.21 Indemnification. Borrower, BII and BRL hereby indemnify
and agree to protect, defend, and hold harmless Lender and its directors,
officers, employees, agents, attorneys and shareholders from and against any and
all losses, damages, expenses or liabilities of any kind or nature and from any
suits, claims, or demands, including all reasonable counsel fees incurred in
investigating, evaluating, or defending such claims, suffered by any of them and
caused by, relating to, arising out of, resulting from, or in any way connected
with this Agreement, the Note, any other Loan Document and any transaction
contemplated herein or therein including, but not limited to, claims based upon
any act or omission by Lender in connection with this Agreement, the Note or any
Loan Document and any transaction contemplated herein or therein to the extent
not caused by the gross negligence, bad faith or willful misconduct of Lender or
its directors, officers, employees, agents or attorneys. If Borrower, BII or BRL
shall have knowledge of any claim or liability hereby indemnified against,
Borrower, BII and BRL shall promptly give written notice to Lender. THIS
COVENANT SHALL SURVIVE THE PAYMENT OF THE INDEBTEDNESS CREATED BY THIS
AGREEMENT, THE NOTES OR THE LOAN DOCUMENTS.
SECTION 6.22 Licenses; Permits. Borrower, BII and BRL will maintain the
validity, force and effect of, and operate in compliance with, all franchises,
grants, authorizations, licenses, permits, easements, consents, certificates and
orders material to the conduct of their respective business.
SECTION 6.23 RICO. Borrower, BII and BRL shall not engage in any
conduct or fail to take any action which will, or would, under the facts and
circumstances relative thereto, violate the Racketeer Influenced and Corrupt
Organization Act as amended from time to time, 18 U.S.C. ss.ss.1961-68.
ARTICLE VII
DEFAULT
SECTION 7.1 Events of Default. Each of the following shall, at the
option of the Lender, be an event of default (an "Event of Default"):
(A) if Borrower shall fail to pay when due any interest, principal,
fees or any other Liabilities;
(B) if a non-monetary payment based default shall occur under any Loan
Document and such default continues after thirty (30) days written notice to
Borrower, or if Borrower, BII or BRL fail to perform their covenants under any
Loan Document (including without limitation this Agreement) when and as due and
such failure continues for more than thirty (30) days after written notice
thereof to Borrower, provided, however, if such default cannot reasonably be
cured within the thirty (30) day period, it shall not be a default hereunder so
long as the Borrower commences the cure within the thirty (30) day period and so
long as Borrower diligently pursues the cure to completion;
(C) if any representation or warranty made by Borrower, BII or BRL in
any Loan Document or in any certificate, agreement, instrument, statement, or
report contemplated by or made or delivered pursuant to or in connection with
any thereof, or if any information furnished to Lender pertaining to the Loan
shall prove to have been incorrect in any materially adverse respect as and when
made;
(D) if Borrower, BII or BRL shall fail to pay any Funded Debt or
Liabilities in excess of $250,000 owing by any of them, or any interest or
premium thereon, when due, whether owed to Lender or any other Person and
whether such Funded Debt or Liabilities shall become due by scheduled maturity,
by required prepayment, by acceleration, by demand, or otherwise, or shall fail
to perform any term, covenant, or agreement on its part to be performed under
any agreement or instrument evidencing or securing or relating to any such
Funded Debt or Liabilities in excess of $250,000 when required to be performed,
if the effect of such failure is to accelerate, or to permit the holder or
holders of such Funded Debt or Liabilities to accelerate, the maturity of such
Funded Debt or Liabilities, whether or not such failure to perform shall be
waived by the holder or holders of such Funded Debt or Liabilities, unless such
waiver has the effect of terminating the right of such holder or holders to
accelerate the maturity of such Funded Debt as a result of such failure;
(E) if Borrower, BII or BRL shall be adjudicated bankrupt or insolvent,
or admit in writing its inability to pay its debts as they mature; or if any
such entity shall make an assignment for the benefit of its creditors; or if any
such entity shall apply for or consent to the appointment of any receiver,
trustee, or similar officer for it or for all or any substantial part of its
property; or any such receiver, trustee, or similar officer shall be appointed
without the application or consent of any such entity and shall continue
undischarged for a period of 60 days; or if any such entity shall institute (by
petition, application, answer, consent, or otherwise) any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, dissolution,
liquidation, or similar proceeding relating to them under the laws of any
jurisdiction; or if such proceeding shall be instituted (by petition,
application, or otherwise) against any such entity and an order for relief shall
be entered in such proceeding or such proceeding shall remain undismissed for a
period of 60 days; or if any judgment, writ, warrant of attachment or execution
or similar process shall be issued or levied against property of any such entity
that represents a substantial portion of the property of such entity and such
judgment, writ, or similar process shall not be released, vacated, or fully
bonded within 60 days after its issue or levy;
(F) if (1) any Reportable Event, or any failure of compliance required
by Section 6.15 hereof, that Lender reasonably determines in good faith creates
a reasonable likelihood of the termination of any Defined Benefit Pension Plan
of Borrower or of the appointment by the appropriate United States District
Court of a trustee to administer any such Plan of Borrower, shall have occurred
and be continuing 60 days, or (2) any such plan shall be terminated, or (3) the
plan administrator of any such Plan shall file with the PBGC a notice of
intention to terminate such Defined Benefit Pension Plan, or (4) the PBGC shall
institute proceedings to terminate any such Defined Benefit Pension Plan or to
appoint a trustee to administer any such Defined Benefit Pension Plan and such
proceedings shall remain undismissed or unstayed for 30 days and if, in any of
the cases described in the foregoing clauses (1) to (4), Lender further
determines that the amount of the unfunded guaranteed benefits (within the
meaning of Title IV of ERISA) resulting upon termination of such Defined Benefit
Pension Plan would have a material adverse effect on the business, properties,
operation, or condition (financial or otherwise) of Borrower, BII or BRL if a
lien against the assets of Borrower, BII or BRL were to result under ERISA; or
SECTION 7.2 Remedies. If any Event of Default other than those
described in Section 7.1(E) shall occur and be continuing, then upon notice from
Lender to Borrower, or if any Event of Default described in Section 7.1(E) shall
occur then automatically, (A) the Revolving Credit and the right of Borrower to
request Advances thereunder shall terminate; (B) the Liabilities shall be due
and payable immediately without presentment, demand, protest or further action
of any kind; (C) Lender may exercise its rights under any Loan Document
(including this Agreement); (D) Lender may set off any Borrower's, BII's or
BRL's funds or property in Lender's possession against the Liabilities in such
order as Lender shall elect; and (E) Lender may exercise any other rights and
remedies available to Lender whether available at law, in equity, or otherwise.
ARTICLE VIII
ADDITIONAL PROVISIONS
SECTION 8.1 No Waiver; Cumulative Remedies. Lender's failure or delay
in exercising any right, power, or remedy hereunder shall not operate as a
waiver thereof; nor shall any single or partial exercise of any such right,
power, or remedy preclude any other or further exercise thereof or the exercise
of any other right, power, or remedy hereunder. No waiver of any provision
hereof shall be effective unless the same shall be in writing and signed by
Lender. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 8.2 Notices. All notices, requests, demands, and other
communications required or permitted hereunder shall be in writing, and shall be
given to such party at its address below or at such other address as shall be
designated by such party in a notice to each other party complying with the
terms of this Section. All notices, requests, demands, and other communications
provided for hereunder shall be effective (A) if given by mail, three (3)
business days after deposit in the mails, with first class postage prepaid,
addressed as aforesaid, or (B) if given by any other means, (including
telecopy), when delivered or received at the aforesaid addresses:
If to Lender:
Fleet Bank, N.A.
1125 Route 22 West
Bridgewater, NJ 08807
Attention: Craig W. Heal, Vice President
If to Borrower, BII or BRL:
Barringer Technologies Incorporated
219 South Street
Murray Hill, NJ 07974
Attention: Chief Financial Officer
SECTION 8.3 Set-off. Upon an Event of Default, Lender shall have a
right of set-off against, a lien upon, and a security interest in all property
of Borrower, BII or BRL now or at any time in the possession of Lender in any
capacity whatever, including, but not limited to such entities' interest in any
deposit account, as security for the Liabilities, including without limitation,
the obligations of Borrower under the Loan Documents and to reimburse Lender for
any returned checks.
SECTION 8.4 Costs and Expenses. Borrower, BII and BRL agree to pay on
demand (A) all reasonable out-of-pocket costs and expenses of Lender in
connection with the preparation, execution and delivery of the Loan Documents
and in connection with any request for an amendment, modification, or waiver of
any of the provisions of any thereof (including the reasonable fees and
out-of-pocket expenses of counsel with respect thereto); (B) all filing,
recording, and similar fees and charges; and (C) all reasonable costs and
expenses, if any, of Lender in connection with the enforcement of any Loan
Document (including the reasonable fees and out-of-pocket expenses of legal
counsel with respect thereto) after the occurrence of a Default or an Event of
Default.
SECTION 8.5 Governing Law. This Agreement and the other Loan Documents
shall be governed in all respects by the law of the State of New Jersey, the
jurisdiction in which the Loan Documents have been executed and delivered, and
for all purposes shall be construed in accordance with such law.
SECTION 8.6 Survival of Agreements and Representations; JURY WAIVER;
Consent to Jurisdiction. All agreements, representations and warranties made
herein shall survive the delivery of this Agreement and the Notes. Any and all
judicial proceedings brought by Lender against Borrower, BII or BRL or any of
them with respect to this Agreement may be brought in: (A) any court of
competent jurisdiction in the State of New Jersey; and (B) any Federal district
court having subject matter jurisdiction and being located in the State of New
Jersey. Borrower, BII and BRL hereby accept, for themselves and their
properties, the non-exclusive jurisdiction of the aforesaid courts and agree to
be bound by any judgments rendered by such courts in connection with this
Agreement. Neither Borrower, BII or BRL will move to transfer any such
proceeding to any different court. Any such process shall be served in
accordance with New Jersey law. Nothing herein limits the right of Lender to
bring proceedings against Borrower in the courts of any other jurisdiction.
AFTER CONSULTATION WITH COUNSEL, AND WITH KNOWLEDGE OF THE
CONSEQUENCES, BORROWER AND LENDER HEREBY WAIVE ALL RIGHTS TO DEMAND A JURY TRIAL
AND AGREE THAT ALL SUITS WILL BE HEARD BY JUDGE ONLY.
SECTION 8.7 Binding Effect; Assignment. The Loan Documents shall be
binding upon and inure to the benefit of Borrower, BII, BRL, Lender and their
respective successors and assigns, except that Borrower, BII nor BRL shall have
the right to assign or delegate any respective rights or obligations under any
of the Loan Documents.
SECTION 8.8 Captions. Article, Section and subsection headings used in
this Agreement are for convenience only and shall not affect the construction of
this Agreement.
SECTION 8.9 Amendments. This Agreement's provisions may be waived,
modified or amended only by written agreement or agreements entered into by
Borrower and Lender. No such waiver, modification or amendment shall extend to
or affect any obligation not expressly waived, modified or amended, or impair
any right of Lender related to such obligation.
SECTION 8.10 Usury. Nothing herein contained or in the Notes, or any
other Loan Document, nor any transaction related thereto shall be construed or
shall operate either presently or prospectively to require Borrower (i) to pay
interest at an unlawful rate and shall require payment of interest only to the
extent of such lawful rate, or (ii) to make any payment or do any act contrary
to law, but if any provision herein or therein contained shall otherwise so
operate to invalidate this Agreement, the Notes, or any other Loan Document, in
whole or in part, then such provision only shall stricken and the remainder of
this Agreement, the Note, and the other Loan Documents shall remain operative
and in full force and effect. Any interest paid in excess of the lawful rate
shall be refunded to Borrower. Such refund shall be made by application of the
excessive amount of interest paid against any sums outstanding under this
Agreement and shall be applied in such order as Lender may determine. If the
excessive amount of interest paid exceeds the sums outstanding hereunder, the
excess portion shall be refunded in cash by Lender. Any such crediting or refund
shall not cure or waive any default by Borrower hereunder or under the Note or
any other Loan Document. Borrower agrees, however, that in determining whether
or not any interest payable exceeds the highest rate permitted by law, any
non-principal payment (except payments specifically stated in this Agreement to
be "interest"), including without limitation prepayment premiums, shall be
deemed, to the extent permitted by law, to be an expense, fee, premium or
penalty rather than interest.
SECTION 8.11 Entire Agreement. This Agreement, the Exhibits attached
hereto and the Loan Documents constitute the entire understanding among the
parties with respect to the subject matter hereof, and supersedes any and all
contemporaneous and prior agreements between the parties hereto with respect to
the subject matter hereof.
SECTION 8.12 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed this Agreement, as of the date first written above.
BARRINGER TECHNOLOGIES INCORPORATED BARRINGER INSTRUMENTS, INC.
By: /s/Stanley Binder /s/Stanley Binder
------------------- By: ----------------------
Name: Stanley Binder Name: Stanley Binder
Title: President Title: President
/s/Richard S. Rosenfeld /s/Richard S. Rosenfeld
Attest: ------------------------ Attest:-----------------------
Richard S. Rosenfeld Richard S. Rosenfeld
Vice President Finance Vice President Finance
BARRINGER RESEARCH LIMITED
By: /s/Stanley Binder
---------------------
Name: Stanley Binder
Title: Director/Authorized Signatory
FLEET BANK, N.A.
By: /s/Craig W. Heal
---------------------
Name: Craig W. Heal
Title: Vice President
<PAGE>
EXHIBIT 2. 3
REVOLVING CREDIT NOTE
$5,000,000.00 Princeton, New Jersey
March 13, 1998
The undersigned, BARRINGER TECHNOLOGIES INCORPORATED (the "Maker")
hereby promises to pay to the order of FLEET BANK, N.A. (the "Payee"} as and
when due as set forth in the Loan Agreement (as hereinafter defined) the
principal sum of Five Million Dollars ($5,000,000.00} or, if less, the aggregate
principal amount (as shown by Payee's records, which shall constitute prima
facie evidence thereof) of all advances (collectively, the "Advances") made by
Payee under the Revolving Credit provided for in and made pursuant to Section
2.1 of the Revolving Credit Loan Agreement, dated the date hereof, between Maker
and Payee (the "Loan Agreement", which Advances shall be due and payable in full
on or before the Revolving Credit Expiration Date, as defined in the Loan
Agreement. Capitalized terms used herein and not otherwise defined shall have
the meanings given such terms in the Loan Agreement.
The undersigned further promises to pay to the order of Payee interest
on the unpaid principal amounts of the Advances from the respective dates on
which the Advances are made until such principal amounts have been repaid in
full, payable at the times and rates provided in the Loan Agreement.
Maker hereby waives presentment, demand for payment, notice of dishonor
or acceleration, protest and notice of protest, and any and all other notices or
demands in connection with the delivery, acceptance, performance, default or
enforcement of this Note except any notice expressly required in the Loan
Agreement. This is the Revolving Credit Note mentioned in, and is entitled to
the benefits of, the Loan Agreement.
IN WITNESS WHEREOF, Maker hereby executes this Note on the day and year
first above written.
BARRINGER TECHNOLOGIES INCORPORATED
By:--------------------
Name: Stanley Binder
Title: President
Attest:----------------
Richard S. Rosenfeld
Vice President Finance
<PAGE>
EXHIBIT 5.6
BUSINESS LOCATIONS
Barringer Technologies Incorporated
219 South Street
Murray Hill, New Jersey 07974
Barringer Instruments, Inc.
219 South Street
Murray Hill, New Jersey 07974
Barringer Research Limited
1730 Aimes Boulevard
Mississauga, Ontario, Canada L4W lV1
<PAGE>
EXHIBIT 5.12
LIST OF SUBSIDIARIES AND AFFILIATES
Barringer Technologies Incorporated
219 South Street
Murray Hill, New Jersey 07974
Barringer Instruments. Inc.
219 South Street
Murray Hill, New Jersey 07974
Barringer Research Limited
1730 Aimes Boulevard
Mississauga, Ontario, Canada L4W lV1
<PAGE>
EXHIBIT 6.2
FORM OF FINANCIAL STATEMENT ATTESTATION
To: FLEET BANK, N.A.
I (we) hereby submit to Fleet Bank, N.A. ("Lender,') my (our) Audited/House
Prepared Financial Statement dated ------- covering the period ------------of
for the purpose of either applying for credit or for supporting continuing
credit accommodations.
I (we) am (are) submitting this statement to Lender as being true, accurate and
complete as of the date it has been submitted. I understand that knowingly
providing Lender with false information for the purpose of inducing Lender to
extend or continue accommodations is a federal crime.
I (we), intending to be legally bound, hereby affirm and attest that this
financial statement, consisting of ------- pages (front and reverse counted as 1
) is true and correct to the best of my (our) knowledge.
I certify that no Event of Default has occurred under the Revolving Credit
Agreement as of the date hereof.
As of the date of this Certification:
1. Borrower and BII Financial Covenants.
(a) The Tangible Net Worth Ratio is -----------; and
(b) The Total Liabilities to Tangible Net Worth Ratio is -------------
1. Borrower and Subsidiary Financial Covenants.
(a) The Current Ratio is ------------;
(b) The Tangible Net Worth Ratio is --------;
(c) The Net income is --------; and
(d) The Total Liabilities to Tangible Net Worth Ratio is -----------.
---------------------------
Borrower's Names
---------------------------
Officer's Signature
(Title, if appropriate)
---------------------------
Date Signed
Note: This form is to be affixed to the financial statements, as submitted.
