<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________
Commission file No. 0-9613
NUCLEAR RESEARCH CORPORATION
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Pennsylvania 1343870
- ---------------------------- --------------------
(State or other jurisdiction (I.R.S. Employer
of organization) Identification No.)
125 Titus Avenue, Warrington, Pennsylvania 18976
- --------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(215) 343-5900
--------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __x__ No ____
As of May 15, 1997, the Registrant had 28,175 shares of its common
stock outstanding.
<PAGE>
INDEX
<TABLE>
<CAPTION>
Number Page
- ------ ----
<S> <C>
PART I - Financial Information
Item 1. Consolidated Financial Statements...............................................................4
Consolidated Balance Sheets - March 31, 1997
and June 30, 1996......................................................................4
Consolidated Statements of Operations - Three
Months Ended March 31, 1997 and 1996...................................................6
Consolidated Statements of Operations - Nine
Months Ended March 31, 1997 and 1996...................................................7
Consolidated Statements of Shareholders' Equity -
Nine Months Ended March 31, 1997 and The
Year Ended June 30, 1996...............................................................8
Consolidated Statements of Cash Flows - Nine
Months Ended March 31, 1997 and 1996...................................................9
Notes to Consolidated Financial Statements.....................................................10
Item 2. Management's Discussion and Analysis of Results of Operations and Financial
Condition......................................................................................13
PART II - Other Information
Item 1. Legal Proceedings..............................................................................16
Item 2. Changes in Securities..........................................................................16
Item 3. Defaults upon Senior Securities................................................................16
Item 4. Submission of Matters to a Vote of Security Holders............................................16
Item 5. Other Information..............................................................................16
Item 6. Exhibits and Reports on Form 8-k...............................................................16
</TABLE>
2
<PAGE>
The Private Securities Litigation Reform Act of 1995 provides
a "safe harbor" for forward-looking statements. Certain information included in
this Quarterly Report contains information that is forward looking, such as
information relating to future sales and earnings, ability to ship a new product
to the United States government, adequacy of cash available from the Company's
operations and credit facilities and the impact on the Company of the outcome of
certain litigation described herein. Such forward looking information involves
important risks and uncertainties that could significantly affect expected
results in the future from those expressed in any forward-looking statements
made by, or on behalf of, the Company. These risks and uncertainties include,
but are not limited to, uncertainties relating to economic conditions,
acquisitions and divestitures, government and regulatory policies, the pricing
and availability of equipment, materials and programming, technological
developments and changes in the competitive environment in which the Company
operates.
3
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
NUCLEAR RESEARCH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
----------------------------------------------
ASSETS
<TABLE>
<CAPTION>
March 31, 1997 June 30, 1996
-------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 81,519 $ 174,737
Accounts receivable 2,460,367 2,872,304
Inventory (Note 3) 4,811,623 4,613,074
Costs and estimated
earnings in excess
of billings
on uncompleted contracts
(Note 4) 173,795 3,170,206
Prepaid expenses
and other current assets 266,644 260,259
Prepaid taxes on income 536,648 --
Deferred Income Taxes 46,500 46,500
------------- -------------
Total Current Assets 8,377,096 11,137,080
PROPERTY, PLANT AND EQUIPMENT
(net of accumulated depreciation
and amortization of $3,101,331 at
March 31, 1997 and $2,801,885 at
June 30, 1996) 2,339,519 2,067,531
OTHER ASSETS
Intangible assets (net of accumulated
amortization of $36,508 at
March 31, 1997 and $20,283 at
June 30, 1996) 379,492 393,617
Patents (net of accumulated
amortization of $84,930 at
March 31, 1997 and $75,311 at
June 30, 1996) 172,703 146,300
Other 50,608 65,412
------------- -------------
Total Other Assets 602,803 605,329
------------- -------------
TOTAL ASSETS $ 11,319,418 $ 13,809,940
============= =============
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
NUCLEAR RESEARCH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
---------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, 1997 June 30, 1996
-------------- -------------
CURRENT LIABILITIES
Short-term borrowings $ 1,925,000 $ 3,325,000
Current portion of
long-term debt 281,510 484,474
Accounts payable 1,099,187 893,314
Accrued expenses 510,172 1,001,480
Accrued payroll and
payroll taxes 311,014 235,967
Taxes payable on income -- 114,145
------------ -----------
Total Current Liabilities 4,126,883 6,054,380
LONG TERM DEBT 317,739 141,666
DEFERRED INCOME TAXES 27,734 27,734
MINORITY INTEREST IN EQUITY OF
CONSOLIDATED SUBSIDIARY -- 84,956
COMMITMENTS AND CONTINGENCY
(Note 5)
SHAREHOLDERS' EQUITY
Common Stock
Stated value $5 per
share, with 60,000 shares
authorized, 31,873 shares
issued and 28,175 shares
outstanding 159,365 159,365
Additional paid in
capital 517,010 517,010
Retained Earnings 6,233,040 6,887,182
Less: treasury stock,
3,698 shares at cost (62,353) (62,353)
------------ -----------
Total Shareholders' Equity 6,847,062 7,501,204
------------ -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 11,319,418 $ 13,809,940
============ ============
See Notes to Consolidated Financial Statements
5
<PAGE>
NUCLEAR RESEARCH CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
-------------------------------------------
Three Months Ended
March 31,
1997 1996
---- ----
NET SALES $ 3,000,031 $ 8,100,045
COST OF SALES 2,281,704 5,781,763
----------- ------------
GROSS PROFIT 718,327 2,318,282
SELLING AND ADMINISTRATIVE
EXPENSES 842,064 759,113
RESEARCH AND DEVELOPMENT
EXPENSES 227,892 254,452
INTEREST EXPENSE 49,557 103,707
----------- ------------
INCOME (LOSS) FROM OPERATIONS (401,186) 1,201,010
OTHER INCOME (LOSS) (16,937) 15,680
----------- ------------
INCOME (LOSS) BEFORE MINORITY
INTEREST (418,123) 1,216,690
MINORITY INTEREST IN LOSS OF
CONSOLIDATED SUBSIDIARY -- 78,897
----------- ------------
INCOME (LOSS) BEFORE INCOME TAXES (418,123) 1,295,587
LESS: NET TAX EXPENSE (BENEFIT) (105,548) 524,290
----------- ------------
NET INCOME (LOSS) $ (312,575) $ 771,297
=========== ============
PRIMARY EARNINGS (LOSS) PER SHARE $ (8.98) $ 22.11
=========== ============
WEIGHTED AVERAGE COMMON SHARES $ 34,817 $ 34,879
=========== ============
See Notes to Consolidated Financial Statements
6
<PAGE>
NUCLEAR RESEARCH CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
-------------------------------------------
Nine Months Ended
March 31,
1997 1996
---- ----
NET SALES $ 10,163,277 $ 20,443,219
COST OF SALES 8,085,415 15,373,636
------------ ------------
GROSS PROFIT 2,077,862 5,069,583
SELLING AND ADMINISTRATIVE
EXPENSES 2,320,147 2,079,794
RESEARCH AND DEVELOPMENT
EXPENSES 701,317 743,153
INTEREST EXPENSE 144,003 254,121
------------ ------------
INCOME (LOSS) FROM OPERATIONS (1,087,605) 1,992,515
OTHER INCOME 11,526 22,806
------------ ------------
INCOME (LOSS) BEFORE MINORITY
INTEREST (1,076,079) 2,015,321
MINORITY INTEREST IN LOSS
OF CONSOLIDATED SUBSIDIARY 84,956 235,695
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (991,123) 2,251,016
LESS: NET TAX EXPENSE (BENEFIT) (336,981) 903,229
------------ ------------
NET INCOME (LOSS) $ (654,142) $ 1,347,787
============ ===========
PRIMARY EARNINGS (LOSS) PER SHARE $ (18.79) $ 38.64
============ ===========
WEIGHTED AVERAGE COMMON SHARES 34,817 34,879
============ ===========
See Notes to Consolidated Financial Statements
7
<PAGE>
NUCLEAR RESEARCH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED MARCH 31, 1997 AND YEAR ENDED JUNE 30, 1996
(UNAUDITED)
---------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock Additional Total
Paid In Retained Treasury Shareholders'
Shares Amount Capital Earnings Stock Equity
------ ------ ---------- --------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at
June 30, 1995 28,175 $ 159,365 $ 517,010 $ 5,180,215 $ (62,353) $ 5,794,237
Net Income for
the year ended
June 30, 1996 -- -- -- 1,706,967 -- 1,706,967
------ --------- --------- ----------- --------- -----------
Balance at
June 30, 1996 28,175 159,365 517,010 6,887,182 (62,353) 7,501,204
Net loss for
the nine months
ended March 31,
1997 -- -- -- (654,142) -- (654,142)
------ --------- --------- ----------- --------- -----------
Balance at
March 31, 1997 28,175 $ 159,365 $ 517,010 $ 6,233,040 $ (62,353) $ 6,847,062
====== ========= ========= =========== ========= ===========
</TABLE>
8
<PAGE>
NUCLEAR RESEARCH CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED
--------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (654,142) $ 1,347,787
Adjustments to reconcile net income (net loss) to
net cash provided by (used by) operating
activities:
Depreciation and amortization 325,290 283,664
Minority interest in loss of
consolidated subsidiary (84,956) (235,695)
(Increase) decrease in:
Accounts receivable 411,937 (735,721)
Inventory (198,549) (85,342)
Prepaid expenses and other assets (6,385) (286,352)
Prepaid taxes or income (536,648) --
Costs and estimated earnings in
excess of billings on
uncompleted contracts 2,996,411 (1,372,143)
Increase (decrease) in:
Accounts payable 205,873 188,002
Accrued expenses and payroll taxes (416,261) 367,478
Taxes payable - on income (114,145) (121,917)
----------- -----------
NET CASH PROVIDED BY (USED BY) OPERATING
ACTIVITIES 1,928,425 (650,239)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (609,556) (918,909)
(Increase) decrease in other assets 14,804 (37,343)
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (594,752) (956,252)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (payments) proceeds on line of credit (1,400,000) 2,175,000
Net (payments) proceeds of long-term debt (26,891) (23,468)
Other -- (19,946)
----------- -----------
NET CASH (USED BY) PROVIDED BY FINANCING ACTIVITIES (1,426,891) 2,131,586
----------- -----------
NET DECREASE (INCREASE) IN CASH (93,218) 525,095
----------- -----------
CASH - beginning 174,737 66,905
----------- -----------
CASH - ending $ 81,519 $ 592,000
----------- -----------
SUPPLEMENTARY INFORMATION REGARDING
NON-CASH INVESTING ACTIVITIES
Acquisition of intangible assets $ - $ 414,000
=========== ===========
</TABLE>
9
<PAGE>
NUCLEAR RESEARCH CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1997 and March 31, 1996
Note 1. The Consolidated Financial Statements of Nuclear Research Corporation
have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission ("SEC"). In the opinion of management, the
accompanying Consolidated Financial Statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to present fairly
the consolidated financial position as of March 31, 1997 and June 30, 1996 and
the consolidated results of operations and cash flows for the three months and
nine months ended March 31, 1997 and 1996. Certain information and footnote
disclosures prepared in accordance with generally accepted accounting principles
have either been condensed or omitted pursuant to SEC rules and regulations.
These financial statements should be read in conjunction with the financial
statements and the notes included in the Company's latest Annual Report on Form
10-K.
The consolidated results of operations for the nine months ended March 31, 1997
and 1996 are not necessarily indicative of the results for the full year.
Note 2. Principles of Consolidation.
The Consolidated Financial Statements include the accounts of Nuclear Research
Corporation, NRC Acquisition Corporation and Northeast Nuclear, Ltd.,
wholly-owned subsidiaries hereafter referred to collectively as the "Company."
Also included in the Consolidated Financial Statements are the accounts of
Measurement Dynamics LLC ("MDLLC").
In July, 1995 the Company entered into an operating agreement to form MDLLC, a
New Jersey limited liability company, the purpose of which is to develop,
manufacture, produce and sell temperature measurement devices and other related
products or services. Pursuant to the operating agreement, the Company
contributed property, in the form of cash, inventory and other business assets
having a fair market value of $300,000, in exchange for 42% of MDLLC. The
Company will produce temperature measurement devices to be sold by MDLLC under a
manufacturing agreement and will provide administrative services to MDLLC.
In connection with the formation of MDLLC, the Company recorded an intangible
asset of $414,000 which represents certain rights, proprietary information and
intellectual property contributed by the minority interest in MDLLC. The
intangible asset is being amortized over its estimated useful life of twenty
years.
MDLLC now has a deficit in its equity account. Therefore, according to generally
accepted accounting principles, the liability in Minority Interest in Equity of
Consolidated Subsidiary has been reduced to zero on the Consolidated Balance
Sheet at March 31, 1997.
All significant inter-company accounts and transactions have been eliminated in
consolidation.
10
<PAGE>
NUCLEAR RESEARCH CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 3. Inventory.
(Unaudited)
March 31, June 30,
1997 1996
--------- --------
Inventory consists of:
Work-In-Process
United States Government
contracts $3,063,895 $3,226,042
Commercial contracts 1,646,374 865,157
Purchased and manufactured
parts 592,382 521,875
---------- ----------
5,302,651 4,613,074
Less: Progress payments on United
States Government contracts 491,028 --
---------- ----------
Total $4,811,623 $4,613,074
========== ==========
The Company uses the last-in, first-out (LIFO) method to determine its material
inventory costs. The following information will facilitate comparison with
operating results of companies using the FIFO method. If the Company's inventory
had been determined using the FIFO method at March 31, 1997, reported
inventories would have been $1,050,819 higher and reported net loss would have
decreased by $16,230 ($.47 per share). The pro forma effect relating to the use
of the FIFO method would have resulted in the following balances for the
statement of operations presentation for the nine months ended March 31, 1997:
Gross Profit $ 2,002,310
============
Loss from Operations $ (1,063,014)
============
Net Loss $ (637,912)
============
11
<PAGE>
NUCLEAR RESEARCH CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 4. Costs and Estimated Earnings in Excess of Billings on
Uncompleted Contracts.
The Company recognizes revenues on several fixed-price contracts using the
percentage-of-completion method, measured by the percentage of cost incurred to
date compared to the estimated total cost for the contracts. That method is used
because management considers total cost to be the best available measure of
progress on the contracts. Because of inherent uncertainties in estimating
costs, it is at least reasonably possible that the estimates used will change
within the near term.
Contract costs include all direct material, direct labor and indirect costs
related to contract performance. Provisions for estimated losses on the
uncompleted contracts are made in the period in which such losses are
determined. Changes in estimated job profitability resulting from job
performance, job conditions, claims, change orders, and settlements, are
accounted for in the period in which the changes occur.
The asset, "Costs and estimated earnings in excess of billings on uncompleted
contracts," represents revenues recognized in excess of amounts billed.
Costs, estimated earnings, and billings on uncompleted contracts are summarized
as follows:
Costs incurred and estimated
earnings on uncompleted
contracts $9,053,170
Billings to date 8,879,375
----------
$ 173,795
==========
Included in accompanying balance sheet under
the following caption:
Costs and estimated earnings
in excess of billings on
uncompleted contracts $ 173,795
==========
12
<PAGE>
NUCLEAR RESEARCH CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 5. Commitments and Contingency.
In September 1995, the Company's management ("Management") was
notified that MDLLC, Mark A. Sitcoske and a company controlled by Mr. Sitcoske,
Measurement Dynamics, Inc., had been named as co-defendants in a suit filed on
September 7, 1995 in Superior Court of the State of Rhode Island by Hanna
Manufacturing, Inc. ("Hanna"), a Rhode Island Company that previously employed
Mr. Sitcoske. The suit alleges that the defendants acted in violation of an
existing employment and non-compete agreement between Hanna and Mr. Sitcoske and
seeks to enjoin Mr. Sitcoske from his continued employment with MDLLC and to
obtain damages; however, Hanna has not yet sought a hearing to obtain injunctive
relief. The matter is now in discovery. Management expects that the resolution
of this matter will have no material impact on the Company.
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
The Company experienced disappointing results during the nine
months ended March 31, 1997, in part due to (a) completion of several government
contracts and (b) decreased sales resulting from the Company's inability to ship
a new product to the United States government during the current fiscal year.
That product is currently in the first article stage of production and requires
government approval prior to shipment. The Company anticipates that shipments of
this product will commence in the first quarter of the fiscal year ended June
30, 1998.
The Company anticipates that it will continue to show a net
loss for the three months ended June 30, 1997 due to (a) its inability to ship
the new product to the government during the current fiscal year, as discussed
above, (b) a decrease in orders received during the nine months ended March 31,
1997, (c) delays in the Company's ability to reduce costs in accordance with
reduced sales and (d) the inclusion of the majority of MDLLC's losses in the
Company's financial statements (see Note 2 to the Consolidated Financial
Statements).
In January 1997, the Company entered into a term loan in the
amount of $1,800,000, of which amount $1,400,000 was committed for the Company's
acquisition of two companies with which it was then in negotiations. Both
acquisition attempts failed; however, the Company continues to seek acquisition
opportunities. In addition, the Company anticipated, but did not realize,
significant growth for MDLLC as well as for the Company's Geiger Muller tube and
nucleonic gauge product lines.
13
<PAGE>
Three Months Ended March 31, 1997 Compared to Three Months
Ended March 31, 1996.
Sales for the three months ended March 31, 1997 decreased to
$3,000,031 from $8,100,045 for the three months ended March 31, 1996 due to (a)
the completion of several government contracts and (b) the Company's inability
to ship a new product to the United States government during the period, as
discussed above.
Income (loss) from operations decreased to a loss of $401,186
for the three months ended March 31,1997 as compared to income of $1,201,010 for
the three months ended March 31, 1996 because of reduced sales. Due to reduced
sales, gross profit as a percentage of sales decreased to 23.94% as compared to
28.62% for the three months ended March 31, 1996.
Selling and administrative expenses increased to $842,064 for
the three months ended March 31, 1997 as compared to $759,113 for the three
months ended March 31, 1996, due primarily to increases in insurance expenses.
Due to reduced sales, as a percentage of sales, selling and administrative
expenses increased to 28.07% for the three months ended March 31, 1997 as
compared to 9.37% for the three months ended March 31, 1996.
Research and development expenses decreased to $227,892 for
the three months ended March 31, 1997 as compared to $254,452 for the three
months ended March 31, 1996. Due to reduced sales, as a percentage of sales,
research and development expenses increased to 7.60% as compared to 3.14% for
the three months ended March 31, 1996.
Interest expense decreased $54,150 to $49,557 for the three
months ended March 31, 1997. The decrease can be accounted for by decreased
borrowings and a reduction in related costs associated with a letter of credit
for a multi-year contract.
Nine Months Ended March 31, 1997 Compared to Nine Months Ended
March 31, 1996.
Sales for the nine months ended March 31, 1997 decreased to
$10,163,277 from $20,443,219 for the nine months ended March 31, 1996 due to (a)
the completion of several government contracts and (b) the Company's inability
to ship a new product to the United States government during the period, as
discussed above.
Income (loss) from operations decreased to a loss of
$1,087,605 for the nine months ended March 31, 1997 from income of $1,992,515
for the nine months ended March 31, 1996 because of reduced sales. Due to
reduced sales, gross profit as a percentage of sales decreased to 20.44% as
compared to 24.80% for the nine months ended March 31, 1996.
Selling and administrative expenses increased $240,353 to
$2,320,147 for the nine months ended March 31, 1997 compared to the nine months
ended March 31, 1996 due to (a) increases in salaries and (b) commission
expenses related to foreign sales. Due to reduced sales, as a percentage of
sales, selling and administrative expenses increased to 22.83% for the nine
months ended March 31, 1997 as compared to 10.17% for the nine months ended
March 31, 1996.
14
<PAGE>
Research and development expenses decreased $41,836 to
$701,317 for the nine months ended March 31, 1997 compared to the nine months
ended March 31, 1996. Due to reduced sales, research and development expenses
increased to 6.90% for the nine months ended March 31, 1997 as compared to 3.64%
for the nine months ended March 31, 1996.
Interest expense decreased to $144,003 for the nine months
ended March 31, 1997 as compared to $254,121 for the nine months ended March 31,
1996. The decrease can be accounted for by decreased borrowings and a reduction
in related costs associated with a letter of credit for a multi-year contract.
Liquidity and Capital Resources
During the nine months ended March 31, 1997, reductions in
accounts receivable of $411,937, costs and estimated earnings in excess of
billing on uncompleted contracts of $2,996,411 and an increase in accounts
payable of $205,873 were the factors that affected cash provided by operating
activities. The reduction in accounts receivable occurred due to the Company's
ability to collect year end receivables (typically the highest during the year)
during the nine months ended March 31, 1997. Decreases in accrued expenses and
payroll taxes of $416,261 combined with an increase in prepaid taxes on income
of $536,648 partially offset cash provided by operating activities. The decrease
in accrued expenses is primarily a result of the reduction of accrued commission
expenses and the repayment of an outstanding liability. The increase in prepaid
taxes on income results from the payment of estimated income taxes combined with
the tax benefits associated with the net loss for the nine months ended March
31, 1997. The costs and estimated earnings in excess of billings on uncompleted
contracts resulted from the Company's use of the percentage of completion method
for income recognition of several multi-year contracts.
During the nine months ended March 31, 1997, the Company made
capital expenditures in the aggregate amount of $201,778 to purchase
manufacturing and computer equipment and to make certain expenditures associated
with patents. Additionally, $407,778 was expended on the 20,000 square foot
addition to the Company's Warrington facility. Cash used by financing activities
was a result of payments on the line of credit $1,400,000 and on long term debt
of $426,891 which were partially offset by a new term loan in the amount of
$1,800,000, of which $400,000 was drawn in the quarter ended March 31, 1997.
The Company's backlog of orders as of April 30, 1997 was
$14,863,000 as compared to $10,078,000 as of April 30, 1996. The recent
completion of several government contracts may continue to reduce sales and
earnings over one or more succeeding quarters and until existing backlog and new
orders and deliveries are sufficient to reverse the trend.
On January 14, 1997, the Company increased its working capital
line of credit to $5,500,000. The interest rate of this facility is payable at
the bank's prime rate. Additionally, on January 14, 1997, the Company entered
into a $1,800,000 term loan with repayment based on a five year term. During the
three months ended March 31, 1997, the Company drew $400,000 of the $1,800,000
available on the term loan, at an interest rate of 7.85%. Both the working
capital line of credit and the term loan are secured by accounts receivable,
inventory, certain real property, assignments of government contracts and a
letter of credit confirmed and negotiated by
15
<PAGE>
the bank. The Company believes that funds from operations and amounts available
under its credit facilities continue to be sufficient to satisfy the Company's
cash requirements.
The Company believes that inflation has had no material impact
on its operations.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
In September 1995, the Company's management was notified that
MDLLC, Mark A. Sitcoske and a company controlled by Mr. Sitcoske, Measurement
Dynamics, Inc., had been named as co-defendants in a suit filed on September 7,
1995 in the Superior Court of the State of Rhode Island by Hanna Manufacturing,
Inc. ("Hanna"), a Rhode Island company that previously employed Mr. Sitcoske.
The suit alleges that the defendants acted in violation of an existing
employment and non-compete agreement between Hanna and Mr. Sitcoske and seeks to
enjoin Mr. Sitcoske from his continued employment with MDLLC and to obtain
damages; however, Hanna has not yet sought a hearing to obtain injunctive
relief. The matter is now in discovery. Management expects that the resolution
of this matter will have no material impact on the Company.
Item 2. Changes in Securities.
Not Applicable.
Item 3. Defaults upon Senior Securities.
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 5. Other Information.
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10(a) Term Loan Agreement, dated as of January 14, 1997,
between the Company and CoreStates Bank, N.A.
("CoreStates").
10(b) Commercial Promissory Note, dated January 14, 1997,
from the Company to CoreStates.
16
<PAGE>
10(c) Open-End Mortgage, made on January 14, 1997, by the
Company in favor of CoreStates.
10(d) Line of Credit Agreement, dated as of January 14,
1997, between the Company and CoreStates.
10(e) Master Demand Note, dated January 14, 1997, from the
Company to CoreStates.
10(f) Open-End Mortgage, made on January 14, 1997, by the
Company in favor of CoreStates.
10(g) Security Agreement, made on January 14, 1997, between
CoreStates and the Company.
10(h) General Assignment of Government Contracts and the
Proceeds Thereof, dated as of January 14, 1997, from
the Company to CoreStates.
10(i) Assignment of Proceeds of Letter of Credit, dated
January 14, 1997, from the Company to CoreStates.
11 Computation of earnings per share.
27 Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter
ended March 31, 1997.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
NUCLEAR RESEARCH CORPORATION
(Registrant)
Date: May 15, 1997 /s/ Earl M. Pollock
------------------------------------
Earl M. Pollock
Chairman of the Board and President
(Principal Executive Officer)
Date: May 15, 1997 /s/ Mark S. Pollock
------------------------------------
Mark S. Pollock
Treasurer and Chief Financial Officer
(Principal Financial and Accounting
Officer)
18
<PAGE>
EXHIBIT INDEX
Exhibit Method of Filing
- ------- ----------------
10(a) Term Loan Agreement, dated as of January 14, *
1997, between the Company and CoreStates
Bank, N.A. ("CoreStates").
10(b) Commercial Promissory Note, dated January *
14, 1997, from the Company to CoreStates.
10(c) Open-End Mortgage, made on January 14, *
1997, by the Company in favor of CoreStates.
10(d) Line of Credit Agreement, dated as of January *
14, 1997, between the Company and
CoreStates.
10(e) Master Demand Note, dated January 14, 1997, *
from the Company to CoreStates.
10(f) Open-End Mortgage, made on January 14, *
1997, by the Company in favor of CoreStates.
10(g) Security Agreement, made on January 14, *
1997, between CoreStates and the Company.
10(h) General Assignment of Government Contracts *
and the Proceeds Thereof, dated as of January
14, 1997, from the Company to CoreStates.
10(i) Assignment of Proceeds of Letter of Credit, *
dated January 14, 1997, from the Company to
CoreStates.
11 Computation of earnings per share. *
27 Financial Data Schedule *
* Filed electronically herewith.
19
<PAGE>
EXHIBIT 10(a)
TERM LOAN AGREEMENT
TERM LOAN AGREEMENT, dated as of January 14, 1997, between
NUCLEAR RESEARCH CORPORATION, a Pennsylvania corporation, with its principal
place of business at 125 Titus Avenue, Warrington, Pennsylvania, 18976, (the
"Borrower") and CORESTATES BANK, N.A. ("Bank"), with offices at 4259 West Swamp
Road, Suite 410, Fourth Floor, Doylestown, Pennsylvania, 18901. The parties
hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Defined Terms. As used in this Agreement, the
following terms have the following meanings (terms defined in the singular to
have the same meaning when used in the plural and vice versa):
"Affiliate" means any person (1) which directly or indirectly
controls, or is controlled by, or is under common control with the Borrower or a
Subsidiary; (2) which directly or indirectly beneficially owns or holds
twenty-five percent (25%) or more of any class of voting stock of the Borrower
or any Subsidiary; or (3) twenty-five percent (25%) or more of the voting stock
of which is directly or indirectly beneficially owned or/held by the Borrower or
a Subsidiary. The term control means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract, or
otherwise.
"Agreement" means this Term Loan Agreement, as amended,
supplemented, or modified from time to time.
"Bank" means CoreStates Bank, N.A. ("CoreStates"), unless the
context indicates otherwise.
"Borrower" means Nuclear Research Corporation, unless the
context indicates otherwise.
"Business Day" means any day other than a Saturday, Sunday, or
other day on which commercial banks in Philadelphia are authorized or required
to close under the laws of the Commonwealth of Pennsylvania.
"Capitalized Lease Obligations" means any amount payable with
respect to any lease of any tangible or intangible property (whether real,
personal or mixed), however denoted, which either (1) is required by GAAP to be
reflected as a liability on the face of the balance
-1-
<PAGE>
sheet of the lessee, or (2) based on actual circumstances existing and
ascertainable either at the commencement of the term of such lease or at any
subsequent time at which any property becomes subject thereto, can reasonably by
anticipated to impose on such lessee substantially the same economic risks and
burdens, having regard to such lessee's obligations and the lessor's rights
under the lease both during and at the termination of the lease, as would be
imposed on the lessee by any lease which is required to be so reflected on the
balance sheet of the lessee or by the ownership of the leased property.
"Collateral" means all property which is subject or is to be
subject to the Lien granted by the Security Agreements.
"Debt" means (1) indebtedness or liability for borrowed money
or for the deferred purchase price of property or service (including trade
obligations); (2) obligations as lessee under Capital Lease Obligations; (3)
current liabilities in respect of unfunded vested benefits under any Plan; (4)
obligations under letters of credit issued for the account of any Person; (5)
all obligations arising under acceptance facilities; (6) all guaranties,
endorsements (other than for collection or deposit in the ordinary course of
business), and other contingent obligations to purchase, to provide funds for
payment, to supply funds to invest in any Person, or otherwise to assure a
creditor against loss; and (7) obligations secured by any Lien on property owned
by any Person, whether or not the obligations have been assumed.
"Default" means any of the events specified in Section 7.01,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Environmental Law" means any presently existing or hereafter
enacted or decided federal, state or local statutory or common laws relating to
pollution or protection of the environment, including, without limitation, any
common law of nuisance or trespass, and any law or regulation relating to
emissions, discharges, releases or threatened release of pollutants,
contaminants or chemicals or industrial, toxic or hazardous substances or wastes
into the environment (including without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or chemicals or industrial,
toxic or hazardous substances or waste.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and published
interpretations thereof.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which together with the Borrower would be treated as a single
employer under Section 4001 of ERISA.
-2-
<PAGE>
"Event of Default" means any of the events specified in
Section 7.0l, provided that any requirement for the giving of notice, the lapse
of time, or both, or any other condition, has been satisfied.
"GAAP" means generally accepted accounting principles in the
United States.
"Guarantors" mean N.R.C. Acquisition Corp., a Pennsylvania
corporation and Measurement Dynamics LLC, a New Jersey limited liability
company.
"Guaranty Agreements" mean the Guaranty Agreements dated as of
the date of this Agreement, as amended, modified or supplemented from time to
time, executed and delivered by the Guarantors to the Bank.
"Hazardous Materials" means any contaminants, hazardous
substances, regulated substances or hazardous wastes which may be the subject of
liability pursuant to any Environmental Law.
"Head Office" means the principal office of CoreStates Bank,
N.A. at 4259 Swamp Road, Doylestown, Pennsylvania 18901.
"Lending Office" means for each type of Loan, the Lending
Office of the Bank (or of an affiliate of the Bank) designated for such type of
Loan on the signature pages hereof or such other office of the Bank (or of an
affiliate of the Bank) as the Bank may from time to time specify to the Borrower
as the office at which its Loans of such type are to be made and maintained.
"Lien" means any mortgage, deed of trust, pledge, security
interest, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority, or other security agreement or
preferential arrangement, charge, or encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction to evidence
any of the foregoing).
"Loan" means the Term Loan.
"Loan Document(s)" means this Agreement, the Note, the
Mortgage, the Guaranty Agreements, the General Assignment of Government
Contracts and the Proceeds thereof, the Assignment of Proceeds of Letter of
Credit and the Security Agreements.
"Note" means the Commercial Promissory Note.
-3-
<PAGE>
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority, or other entity of whatever nature.
"Security Agreement(s)" means, collectively, the Security
Agreements to be delivered by the Borrower and the Guarantors under the terms of
this Agreement, unless the context indicates otherwise.
"Subsidiary" means a corporation the shares of stock of which
having ordinary voting power (other than stock having such power only by reason
of the happening of a contingency) to elect a majority of the board of directors
or other managers of such corporation are at the time owned, or the management
of which is otherwise controlled, directly or indirectly through one or more
intermediaries or both, by the Borrower or Guarantors.
Section 1.02. 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 be prepared in
accordance with such principles.
ARTICLE II
AMOUNT AND TERMS OF THE LOAN; SECURITY FOR THE LOAN
Section 2.01. Term Loan. The Bank agrees, on the terms and
conditions hereinafter set forth, to make a loan (the "Term Loan") to the
Borrower, in accordance with the terms of the Commercial Promissory Note as
defined below, in an aggregate principal amount of One Million Eight Hundred
Thousand Dollars ($1,800,000.00).
Section 2.02. Note. The Term Loan made by the Bank under this
Agreement shall be evidenced by, and repaid with interest in accordance with, a
single promissory note of the Borrower duly completed, in the principal amount
of One Million Eight Hundred Thousand Dollars ($1,800,000.00), dated the date of
this Agreement, payable to the Bank (said promissory note, as it may be
hereafter amended, renewed or extended, the "Commercial Promissory Note").
Section 2.03. Method of Payment. The Borrower shall make each
payment of principal of and interest on the Loan and all fees owing to the Bank
on the date when due in lawful money of the United States to Bank at its Head
Office or other designated location in immediately available funds. The Borrower
hereby authorizes the Bank to charge from time to time against any account of
the Borrower with Bank any amount so due. Borrower shall pay to Bank promptly
such amounts as may be due if Borrower's deposit account balances are
insufficient. Whenever any payment to be made under this Agreement or under the
Note shall be stated to be due on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of the payment of
interest.
-4-
<PAGE>
Section 2.04. Use of Proceeds. The proceeds of the Loan
hereunder shall be used by the Borrower for the acquisition of the business
assets of TSA Systems, Ltd., the acquisition of the assets of Teledyne
Corporation and the restructuring of advances by Borrower to Measurement
Dynamics LLC.
Section 2.05. Security for the Loan. As security for the Loan
and for all amounts payable hereunder and under the Note as well as for all
other existing and future liabilities, whether absolute or contingent, due or to
become due of the Borrower to the Bank under any other loans or extensions of
credit by the Bank to the Borrower, the Bank shall receive the following:
(l) Valid, perfected first liens on and security interests in
the following Collateral:
(i All of the property, real or personal,
tangible or intangible of the Borrower, now owned or hereafter acquired,
referred to in the Security Agreements, including, without limiting the
generality of the foregoing, all of the Borrower's accounts, accounts
receivable, inventory and return goods, machinery, equipment, furniture,
fixtures, leasehold improvements, chattel paper, documents of title, contract
rights and general intangibles, including registered trademarks, trade names and
patents. The security agreements, UCC-1 Financing Statements, and all other
instruments necessary to create a perfected first lien in the aforesaid assets
shall be referred to herein collectively as the "Borrower's Security
Agreements."
(ii All of the property, real or personal,
tangible or intangible of the Guarantors, now owned or hereafter acquired,
referred to in the Security Agreements, including without limiting the
generality of the foregoing, all of the Guarantors' accounts, accounts
receivable, inventory and return goods, machinery, equipment, furniture,
fixtures, leasehold improvements, chattel paper, documents of title, contract
rights and general intangibles, including registered trademarks, trade names and
patents. The Security Agreements, UCC-1 Financing Statements, and all other
instruments necessary to create a perfected first lien in the aforesaid assets
shall be referred to herein collectively as the "Guarantors' Security
Agreements."
(2) A valid fourth lien mortgage ("Mortgage")
executed by the Borrower, covering the real estate located at 125 Titus Avenue,
Warrington, Pennsylvania (the "Real Estate"), and all fixtures, machinery and
equipment necessary or incidental to the general operation and maintenance
thereof and all renewals and replacements thereof or additions thereto, and such
other property as the Bank may reasonably require, all as is more specifically
described in the Mortgage. The Mortgage shall be a fourth lien on a good and
marketable fee simple title to the mortgaged property, free and clear of all
prior liens, restrictions, easements and other encumbrances and title objections
except such as may have been approved in writing by the Bank, and except a first
lien mortgage to Bank in the principal amount of $1,600,000.00 dated May 21,
1993, and two existing mortgages in favor of Bank dated February 21, 1992 and
-5-
<PAGE>
August 21, 1995, respectively, each in the amount of Three Hundred Thousand
Dollars ($300,000.00).
(3) Unconditional Guaranty Agreements, in favor of
Bank, executed by the Guarantors, which Guaranty Agreements shall guarantee
payment and not merely collection of the entire indebtedness evidenced by the
Note, and also the prompt performance of all obligations under the Note and this
Agreement, and, as to the Guaranty of N.R.C. Acquisition Corp., the prompt
performance of all obligations under all other documents evidencing the Loans
and all other payments and obligations from Borrower to Bank now existing or
hereafter arising, provided, however, that the Guaranty Agreement of Measurement
Dynamics LLC, as such Agreement relates to the Term Loan Agreement, shall be
limited only to the maximum of Four Hundred Thousand Dollars ($400,000.00) owed
under the Term Loan Agreement plus interest and costs relating to such amount.
(4) Assignment of a confirmed letter of credit and
the proceeds thereof in the original face amount of Six Million Four Hundred
Seventy-One Thousand Ninety Dollars and Ninety-Five Cents ($6,471,090.95) issued
by the Korea Exchange Bank, said assignment being referred to herein as the
"Assignment of the Korea Exchange Bank Letter of Credit."
(5) Assignment of all existing and future government
contracts, and the proceeds thereof, between Borrower and the United States
Government, or any agency, department or unit thereof, where the total contract
amount exceeds Five Hundred Thousand Dollars ($500,000.00). The Borrower shall
execute a General Assignment of Government Contracts on the date hereof and,
subject to the provisions set forth below, provide specific assignments of and
consents to the assignment of those contracts promptly after each such contract
is executed.
(6) At Bank's request, confirmation by CoreStates
Trade Finance Department and assignment of any and all future letters of credit,
and the proceeds thereof, to or in favor of Borrower as beneficiary where the
amount orsuch letter of credit exceeds One Million Dollars ($1,000,000.00).
To the foregoing ends, contemporaneously with the
execution and delivery of this Agreement, (i) the Borrower will execute and
deliver to the Bank the Mortgage and Borrower's Security Agreements, (ii) the
Borrower will execute and deliver to the Bank the Assignment of the Korea
Exchange Bank Letter of Credit and the General Assignment of Government
Contracts, (iii) the Guarantors will execute and deliver to the Bank the
Guaranty Agreements, and (iv) the Guarantors will execute and deliver to the
Bank the Guarantors' Security Agreements. If, as and when letters of credit are
issued to or in favor of Borrower as beneficiary as provided in subsection (6)
above, Borrower shall, promptly upon request of Bank, provide confirmation to
the CoreStates Trade Finance Department and execute all reasonably required
documentation to effect the assignment of the letter of credit to Bank. Borrower
shall make all reasonable efforts and take all required steps to attempt to
obtain the specific assignment of and consent to the assignment of all existing
and future contracts as specified in
-6-
<PAGE>
Section 2.05(5) above, such efforts to include, without limitation, the
preparation and filing of all initial documents and requests, the preparation
and filing of all appropriate responses to requests for follow-up documentation
and follow-up efforts on all such requests by telephone and written
correspondence. Copies of any and all correspondence to and from any
governmental agency or unit thereof, in connection with all such Assignments
shall be supplied to Bank contemporaneously as such correspondence is generated
or received.
Section 2.06. Late Fees. In the event any of the aforesaid
payments of principal and/or interest, in whole or in part, are fifteen (15)
days beyond their due date, Borrower shall pay Bank a "late charge" of five
cents ($.05) for each dollar ($1.00) so overdue to cover the extra expenses of
handling delinquent payments.
Section 2.07. Commitment Fee. The Borrower shall pay to the
Bank a commitment fee equal to one percent (1%) of the principal amount of the
Loan funds utilized to fund the acquisition of TSA Systems, Ltd. and Teledyne
Corporation and one-half percent (1/2%) of the principal amount of the Loan
funds utilized to fund the restructuring of advances to Measurement Dynamics
LLC.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Condition Precedent to Term Loan. The obligation
of the Bank to make the Term Loan to the Borrower is subject to the condition
precedent that the Bank shall have received on or before the day of the Term
Loan each of the following, in form and substance satisfactory to the Bank and
its counsel:
(1) The Commercial Promissory Note duly executed by
the Borrower.
(2) The Mortgage duly executed by the Borrower for
recording as a fourth lien mortgage lien on the Real Estate located at 125 Titus
Avenue, Warrington, Pennsylvania.
(3) The Borrower's Security Agreements duly executed
by the Borrower, together with such number of financing statements (UCC-l) duly
executed by the Borrower, as debtor, for filing under the Uniform Commercial
Code of all jurisdictions necessary or in the opinion of the Bank, desirable to
perfect the security interest created by the Borrower's Security Agreements.
(4) The Assignment of the Korea Exchange Bank Letter
of Credit and the General Assignment of Government Contracts duly executed by
the Borrower.
-7-
<PAGE>
(5) A certificate (dated the date of this Agreement)
of the Secretary of the Borrower setting forth and certifying as true and
correct all corporate action taken by the Borrower, including resolutions of its
Board of Directors, authorizing the execution, delivery, and performance of the
Loan Documents to which it is a party and each other document to be delivered
pursuant to this Agreement.
(6) The Guaranty Agreements executed by the
Guarantors.
(7) The Guarantors' Security Agreements duly
executed by the Guarantors, together with such number of financing statements
(UCC-1) duly executed by the Guarantors, as debtor, for filing under the Uniform
Commercial Code of all jurisdictions necessary or, in the opinion of the Bank,
desirable to perfect the security interest created by the Guarantors' Security
Agreements.
(8) A certificate (dated the date of this Agreement)
of the Secretary of the Guarantors (a) setting forth and certifying as true and
correct all corporate action taken by the Guarantors, including resolutions of
its Board of Directors, authorizing the execution, delivery, and performance of
the Loan Documents to which it is a party and each other document to be
delivered pursuant to this Agreement and (b) certifying the names and true
signatures of the officers of the Guarantors authorized to sign the Loan
Documents to which it is a party and the other documents to be delivered by the
Guarantors under this Agreement.
(9) Evidence of all polices of fire insurance with
extended coverage and flood coverage (if necessary), covering any loss or damage
to the Real Estate and insurable equipment, howsoever such loss or damage may
arise, such insurance to be placed with such companies and in such amounts as
Bank shall require. All premiums required to maintain all such insurance in
force and effect shall be paid by Borrower, and evidence of payment shall be
furnished to Bank. All such insurance shall be maintained in such form as to be
available to and for the protection of Borrower and Borrower's agents and Bank.
The fire and casualty insurance policy or policies shall contain the standard
mortgagee and loss payee clause making losses payable thereunder to Bank.
Receipt of evidence of insurance policies acceptable to Bank pursuant to any
provisions hereunder shall not thereafter bar Bank from requiring additional
insurance, as Bank may deem necessary or desirable from time to time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank that:
Section 4.01. Incorporation, Good Standing and Due
Qualification. The Borrower is a corporation duly incorporated, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation; has the corporate power and authority to own its
-8-
<PAGE>
assets and to transact the business in which it is now engaged or proposed to be
engaged; and, to the best of Borrower's knowledge, is duly qualified as a
foreign corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required.
Section 4.02. Corporate Power and Authority. The execution,
delivery, and performance by the Borrower of the Loan Documents have been duly
authorized by all necessary corporate action and do not and will not (l) require
any consent or approval of the shareholders of such corporation; (2) contravene
such corporation's charter or bylaws; (3) cause Borrower to violate any
provision of or cause or result in a breach of or constitute a default under any
law, rule, regulation (including, without limitation, all regulations of the
Board of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination, or award presently in effect having
applicability to such corporation; (4) cause or result in a breach of or
constitute a default by Borrower under any indenture or loan or credit agreement
or any other agreement, lease, or instrument to which such corporation is a
party or by which it or its properties may be bound or affected; or (5) cause or
result in or require the creation or imposition of any Lien, upon or with
respect to any of the properties now owned or hereafter acquired by such
corporation except as contemplated by this Agreement.
Section 4.03. Legally Enforceable Agreement. This Agreement
is, and each of the other Loan Documents when delivered under this Agreement
will be, legal, valid and binding obligations of the Borrower, or, Guarantors,
where applicable, enforceable against the Borrower, or, the Guarantors, where
applicable, in accordance with their respective terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency, and other
similar laws affecting creditor's rights generally.
Section 4.04. Financial Statements; Accuracy of Information.
All information, financial statements, exhibits and reports furnished by the
Borrower and the Guarantors, to the Bank in connection with this Agreement and
the borrowings contemplated hereby are, and all such information, financial
statements, exhibits and reports hereafter furnished by the Borrower and the
Guarantors, to the Bank will be true and correct in every material respect on
the date furnished to the Bank, and no such information, financial statements,
exhibit or report contains or will contain any material misstatement of fact or
omits or will omit to state a material fact or any fact necessary to make the
statement contained therein not materially misleading.
Section 4.05. Labor Disputes and Acts of God. Neither the
business nor the properties of the Borrower or the Guarantors are affected by
any fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) materially and adversely
affecting such business or properties or the operation of the Borrower or the
Guarantors.
Section 4.06. Other Agreements. The Borrower is not a party to
any indenture, loan or credit agreement, or to any lease or other agreement or
instrument, or subject to any charter or corporation restriction which is
reasonably likely to have a material adverse effect on the business, properties,
assets, operations, or conditions, financial or otherwise, of the Borrower or
the ability of the Borrower to carry out its obligations under the Loan
Documents to which it
-9-
<PAGE>
is a party. The Borrower is not in default in any respect in the performance,
observance or fulfillment of any of the obligations, covenants, or conditions
contained in any agreement or instrument material to its business to which it is
a party.
Section 4.07. Litigation. There is no pending or, to
Borrower's knowledge, threatened action or proceeding against or affecting the
Borrower before any court, governmental agency, or arbitrator which is
reasonably likely to, in any one case or in the aggregate, materially adversely
affect the financial condition, operations, properties, or business of the
Borrower or the ability of the Borrower to perform its obligation under the Loan
Documents to which it is a party.
Section 4.08. No Defaults on Outstanding Judgments or Orders.
The Borrower has satisfied all judgments and is not in material default with
respect to any judgment, writ, injunction, decree, rule or regulation of any
court, arbitrator, or federal, state, municipal, or other governmental
authority, commission, board, bureau, agency, or instrumentality, domestic or
foreign.
Section 4.09. Ownership and Liens. The Borrower and the
Guarantors have title to, or valid leasehold interests in, all of their
respective properties and assets, real and personal, (other than any properties
or assets disposed of in the ordinary course of business), and none of the
properties and assets owned by the Borrower or Guarantors is subject to any
Lien, except for existing purchase money liens and liens in favor of Bank.
Section 4.10. ERISA. The Borrower is in compliance in all
material respects with all applicable provisions of ERISA. Neither a Reportable
Event nor a Prohibited Transaction has occurred and is continuing with respect
to any Plan; no notice of intent to terminate a Plan has been filed nor has any
Plan been terminated; no circumstances exist which constitute grounds under
Section 4042 of ERISA entitling the PBGC to institute proceedings to terminate,
or appoint a trustee to administer a Plan, nor has the PBGC instituted any such
proceedings; neither the Borrower nor any ERISA Affiliate has completely or
partially withdrawn under Sections 4201 or 4204 of ERISA from a Multiemployer
Plan; Borrower and each ERISA Affiliate have met their minimum funding
requirements under ERISA with respect to all of their Plans and the present fair
market value of all Plan assets exceeds the present value of all vested benefits
under each Plan, as determined on the most recent valuation date of the Plan and
in accordance with the provisions of ERISA and the regulations thereunder for
calculating the potential liability of the Borrower or any ERISA Affiliate to
PBGC or the Plan under Title IV of ERISA; and neither the Borrower nor any ERISA
Affiliate has incurred any liability to the PBGC under ERISA.
Section 4.11. Operation of Business. The Borrower possesses
all licenses, permits, franchises, patents, copyrights, trademarks, and trade
names, or rights thereto, to conduct its business substantially as now conducted
and as presently proposed to be conducted, and the Borrower is not in material
violation of any valid rights of others with respect to any of the foregoing.
-10-
<PAGE>
Section 4.12. Taxes. The Borrower and the Guarantors have
filed all tax returns (federal, state and local) required to be filed and have
paid all taxes, assessments, and governmental charges and levies thereon to be
due, including interest and penalties, except the filing of tax returns or the
payment of taxes, if any, being contested by the Borrower or the Guarantors, and
disclosed to the Bank in writing or those where the failure to file or pay is
not reasonably likely to have a material adverse effect on Borrower.
Section 4.13. Debt. The Borrower is not indebted under any
credit agreement, indenture, purchase agreement, guaranty, Capital Lease
Obligations, or other investment, agreement or arrangement except as disclosed
in the Borrower's financial statements or as otherwise disclosed to the Bank in
writing or those where the failure to file or pay is not reasonably likely to
have a material adverse affect on Borrower.
Section 4.14. Environmental Matters. To the best of the
Borrower's knowledge, no real property owned or leased by the Borrower, or owned
by the Guarantors is in material violation of any Environmental Laws, no
Hazardous Materials are present on said real property except for materials used
in Borrower's business which are stored, maintained and utilized in accordance
with all applicable laws, rules and regulations, and neither the Borrower nor
the Guarantors have been identified in any litigation, administrative
proceedings or investigation as a responsible party for any liability under any
Environmental Laws.
Section 4.15. Mortgage Liens. The mortgage lien granted to the
Bank pursuant to the Mortgage will be superior and prior to any liens of all
third persons existing on the date of its execution and delivery or thereafter
arising by way of lien or otherwise to the full extent provided by law upon the
recording of such mortgage in the Office of the Recorder of Deeds of Bucks
County except for existing first, second and third mortgages to Bank. All such
action as is necessary to establish the mortgage lien of the Bank and their
priority as described in the preceding sentence will have been taken, and there
will be as of the date of recording of such mortgage no necessity for any
further action in order to protect, preserve and continue the mortgage lien and
such priority, except that if the failure to record the Mortgage or the
recording of the Mortgage in a different order of priority is the result of the
actions or inactions of Bank, Borrower shall have no obligation or liability in
connection therewith. All recording fees and other expenses in connection with
each such action have been or will be paid by the Borrower.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as the Note shall remain unpaid or this Agreement
shall remain in effect, the Borrower will:
Section 5.01. Maintenance of Existence. Preserve and maintain
its corporate existence and good standing in the jurisdiction of its
incorporation, and qualify and remain
-11-
<PAGE>
qualified as a foreign corporation in each jurisdiction in which such
qualification is required and where the failure to qualify would have a material
adverse effect upon Borrower.
Section 5.02. Maintenance of Records. Keep accurate records
and books of account, in which complete entries will be made in accordance with
the GAAP consistently applied, reflecting all financial transactions of the
Borrower.
Section 5.03. Maintenance of Properties. Maintain, keep and
preserve all of its properties (tangible and intangible) necessary or useful in
the proper conduct of its material business in reasonably good working order and
condition, ordinary wear and tear excepted.
Section 5.04. Conduct of Business; Permits and Approvals;
Compliance with Laws. Continue to engage in an efficient and economical manner
in a business of the same general type as conducted by it on the date of this
Agreement; maintain in full force and effect, its franchises, and all licenses,
patents, trademarks, trade names, contracts, permits, approvals and other rights
necessary to the profitable conduct of its business; and comply in all material
respects with all applicable laws, rules, regulations and orders, except for
noncompliance which is not reasonably expected to have any adverse effect on
Borrower.
Section 5.05. Maintenance of Insurance. Maintain insurance,
including the fire insurance and flood insurance policies described in Section
3.01(9) above, naming Bank as Lender Loss Payee, with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies engaged in the same or a similar
business and similarly situated, which insurance may provide for reasonable
deductibility from coverage thereof.
Section 5.06. Payment of Debt; Payment of Taxes, etc. Promptly
pay and discharge:
(1) All of its Debt in accordance with the terms
thereof;
(2) All taxes, assessments, and governmental charges
or levies imposed upon it or upon its income and profits, upon any of its
property, real, personal or mixed, or upon any part thereof, before the same
shall become in default;
(3) All lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, might become a lien or charge upon such
property or any part thereof;
provided, however, that so long as the Borrower first notifies the Bank of its
intention to do so, the Borrower shall not be required to pay and discharge any
such Debt, tax, assessment, charge, levy or claim so long as the failure to so
pay or discharge does not constitute or result in a Default or an Event of
Default under Section 7.01(7) and so long as no foreclosure or other similar
proceeding shall have been commenced against such property or any part thereof
and so
-12-
<PAGE>
long as the validity thereof shall be contested in good faith by appropriate
proceedings diligently pursued and it shall have set aside on its books adequate
reserves with respect thereto.
Section 5.07. Right of Inspection. At any reasonable time and
from time to time, during normal business hours and with reasonable prior
notice, permit the Bank or any agent or representative thereof (a) to examine
and make copies of and abstracts from the records and books of account of, and
visit the properties of, the Borrower and the Guarantors, and to inspect and
verify all inventory of Borrower, and (b) to discuss the affairs, finances, and
accounts of the Borrower and the Guarantors, with any of its officers and
directors and the Borrower's independent accountants. Borrower shall pay all
costs assessed by Bank for such inspections, or field examinations.
Section 5.08. Reporting Requirements. Furnish to the Bank:
(1) Within sixty (60) days after the end of each
fiscal quarter of the Borrower and the Guarantors, internally prepared financial
statements of the Borrower and the Guarantors, including a balance sheet and
related statements of income and shareholders' equity together with Borrower's
Form 10-Q, as filed;
(2) Within one hundred twenty (120) days after the
close of each fiscal year of the Borrower and the Guarantors, financial
statements of the Borrower and the Guarantors, including a balance sheet and
related statements of income, shareholders' equity, and changes in financial
position together with Borrower's Form 10-K, as filed, all in reasonable detail,
together with all supporting schedules and notes, and prepared on an audited
basis by independent certified public accountants satisfactory to the Bank in
its reasonable discretion. Bank will, on an annual basis, review with Borrower
the quality of the work produced by Borrower's accountants;
(3) within thirty (30) days after the end of each
fiscal quarter of the Borrower, updated cash flow projections for the current
quarter;
(4) Within fifteen (15) days after the end of each
month, accounts receivables and accounts payable agings; and
(5) Such other information respecting the condition
or operations, financial or otherwise, of the Borrower as the Bank may from time
to time reasonably request, including but not limited to financial projections,
tax returns, and listings of assets.
Section 5.09. Financial Covenants. Maintain a debt to worth
ratio not to exceed 1.25 to 1 and a minimum current ratio of 1.5 to 1. For
purposes of calculation of the minimum current ratio, the entire outstanding
balance under this Agreement shall be shown as a current liability. These ratios
will be measured and reviewed annually after receipt of the audited annual
financial statements.
-13-
<PAGE>
Section 5.10. Further Assurances. Do such further acts and
things and execute and deliver to the Bank such additional assignments,
agreements, powers and instruments, as the Bank may reasonably require or
reasonably deem advisable to carry into effect the purposes of this Agreement or
to better assure and confirm unto the Bank its rights, powers and remedies
hereunder.
Section 5.11. Cross-Default and Cross-Collateralization. Agree
that all existing and future loan obligations of Borrower shall be
cross-collateralized and cross-defaulted.
ARTICLE VI
NEGATIVE COVENANTS
So long as the Note shall remain unpaid or this Agreement
shall remain in effect, the Borrower will not:
Section 6.01. Liens. Create, incur, assume, or suffer to
exist, any Lien upon or with respect to any of its properties, now owned or
hereafter acquired, except:
(l) Liens in favor of the Bank;
(2) Liens for taxes or assessments or other
government charges or levies if not yet due and payable or, if due and payable,
if they are being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted and for which appropriate reserves are
maintained and so long as no foreclosure, distraint, sale or other similar
proceedings shall have been commenced with respect thereto;
(3) Deposits, or pledges to secure the performance
of bids, tenders, contracts (other than contracts for the payment of money),
leases (permitted under the terms of this Agreement), or public or statutory
obligations; surety, indemnity, performance, or other similar bonds; or other
similar obligations, all arising in the ordinary course of business;
(4) Existing purchase money Liens on equipment and
vehicles so long as each such Lien (i) exists upon the same terms as those
existing on the date hereof and (ii) does not secure indebtedness in a principal
amount greater than that outstanding on the date hereof and no additional assets
are furnished as Collateral to secure such Liens; and
(5) Liens securing Debt permitted under Section 6.02
of this Agreement.
Section 6.02. Debt. Create, incur, assume, or suffer to exist
any Debt, except:
-14-
<PAGE>
(1) Bank Debt under this Agreement, the Note, the
other Loan Documents or under any other document, instrument or agreement
between the Borrower and the Bank, including a Line of Credit to Borrower dated
even date herewith in the amount of Five Million Five Hundred Thousand Dollars
($5,500,000.00);
(2) Current accounts payable, accrued expenses and
other current items arising out of transactions (other than borrowings) in the
ordinary course of business;
(3) Indebtedness secured by purchase money security
interests and capitalized leases of equipment and vehicles, provided that the
total aggregate principal amount (including Capitalized Lease Obligations) of
all such indebtedness incurred during each calendar year shall not exceed Two
Hundred Fifty Thousand Dollars ($250,000.00) and provided that the liens and
security interests securing such indebtedness, i) are limited to the specific
identified asset purchased with such indebtedness, and ii) except for the
priority obtained as a result of its classification as a purchase money security
interest, shall in no way affect or impair the existing liens and security
interests in favor of Bank; and
(4) Indebtedness hereafter incurred in connection
with a Lien permitted in Section 6.01 above, including debt for existing
purchase money obligations.
Section 6.03. Mergers, etc. Merge or consolidate with, or
sell, assign, lease, or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person, or acquire all or substantially all
of the assets or the business of any Person, except that Bank shall permit the
acquisition of the assets of TSA Systems, Ltd. and a division of Teledyne
Corporation and the Measurement Dynamics LLC transactions.
Section 6.04. Dividends. Declare or pay any dividends; or
purchase, redeem, retire, or otherwise acquire for value any of its capital
stock now or hereafter outstanding; or make any distribution of assets to its
shareholders as such whether in cash, assets or obligations of the Borrower; or
allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption, or retirement of, any shares
of its capital stock; or make any other distribution by reduction of capital or
otherwise in respect of any shares of its capital stock, if such dividend, stock
purchase, or other action described in this paragraph would cause or result in
the occurrence of an Event of Default as defined herein.
Section 6.05. Sale of Assets. Sell, lease, assign, transfer,
or otherwise dispose of any of its now owned or hereafter acquired assets
except: (a) for inventory disposed of in the ordinary course of business; (b)
the sale or other disposition of assets no longer used or useful in the conduct
of its business; and (c) the sale or other disposition of assets provided the
proceeds of sale are used either to pay down existing term loans owed by
Borrower to Bank or to purchase substantially similar replacement assets.
-15-
<PAGE>
Section 6.06. Guaranties, etc. Assume, guarantee, endorse, or
otherwise be or become directly or contingently responsible or liable,
(including, but not limited to, an agreement to purchase any obligation, stock,
assets, goods, or services, or to supply or advance any funds, assets, goods, or
services, or to maintain or cause such Person to maintain a minimum working
capital or net worth, or otherwise to assure the creditors of any Person against
loss) for obligations of any Person, except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business.
Section 6.07. Hazardous Materials; Indemnification. Use,
generate, treat, store, dispose of or otherwise introduce any Hazardous
Materials into or on any real property owned or leased by it, except in an
environmentally safe manner through methods meet in all material respects all of
the standards of the federal Environmental Protection Agency and any other
federal, state or local agency with authority to enforce Environmental Laws. The
Borrower hereby agrees to indemnify, reimburse, defend and hold harmless the
Bank and its directors, officers, agents and employees ("Indemnified Parties")
for, from and against all demands, liabilities, damages, costs, claims, suits,
actions, legal or administrative proceedings, interest, losses, expenses and
reasonable attorney's fees (including any such fees and expenses incurred in
enforcing this indemnity) asserted against, imposed on or incurred by any of the
Indemnified Parties, directly or indirectly pursuant to or in connection with
the application of any Environmental Law to acts or omissions occurring at any
time on or in connection with any real estate owned or leased by the Borrower or
any business conducted thereon, except for acts or omissions of Bank, its
employees or authorized agents. None of the aforesaid shall in any way limit or
restrict the right of Borrower to defend claims asserted against it or any of
the Indemnified Parties.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. Events of Default. If any of the following
events ("Events of Default") shall occur:
(1) The Borrower shall fail to pay the principal of,
or interest on, the Note or any amount of a commitment fee or any other amount
due hereunder, if such failure is not cured within fifteen (15) days after
written notice thereof has been given to Borrower by Bank;
(2) Any representation or warranty made or deemed
made by the Borrower in this Agreement or the Security Agreements which are
contained in any certificate, document, opinion, or financial or other statement
furnished at any time under or in connection with any Loan Documents shall prove
to have been incorrect in any material respect on or as of the date made or
deemed made and the Borrower shall not have cured the effect of such false or
misleading statements within fifteen (15) days after it occurs;
-16-
<PAGE>
(3) The Borrower shall fail to perform or observe
any term, covenant, or agreement contained in any Loan Document to which it is a
party on its part to be performed or observed, including, without limitation,
the Security Agreements, where such failure to perform or observe is not cured
within thirty (30) days after the written notice thereof has been given to the
Borrower by the Bank;
(4) A default in the payment or performance of any
obligation of the Borrower to the Bank other than under this Agreement or the
Note and such default shall have continued uncured after the giving of any
required notice or past the expiration of any applicable grace or cure period;
(5) The Borrower shall (a) fail to pay any
indebtedness for borrowed money of the Borrower, the principal face amount of
which exceeds Two Hundred Fifty Thousand Dollars ($250,000.00), (other than
indebtedness to Bank), or any interest or premium thereon, within fifteen (15)
days of its due date (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise), or (b) fail to perform or observe any term,
covenant, or condition on its part to be performed or observed under any
agreement or instrument relating to any such indebtedness, when required to be
performed or observed, if the effect of such failure to pay or perform or
observe is to accelerate, or to permit the acceleration after the giving of
notice or passage of time, or both, of the maturity of such indebtedness, unless
such failure to perform or observe shall be waived by the holder of such
indebtedness; or any such indebtedness shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
(6) The Borrower (a) shall generally not, or shall
be unable to, or shall admit in writing its inability to pay its debts as such
debts become due; or (b) shall make an assignment for the benefit of creditors,
petition or apply to any tribunal for the appointment of a custodian, receiver,
or trustee for it or a substantial part of its assets; or (c) shall commence any
proceeding under any bankruptcy, reorganization, arrangements, readjustment of
debt, dissolution, or liquidation law or statute of any jurisdiction, whether
now or hereafter in effect; or (d) shall have any such petition or application
filed or any such proceeding commenced against it, in which an order for relief
is entered or adjudication or appointment is made and which remains undismissed
for a period of thirty (30) days or more; or (e) by any act or omission shall
indicate its consent to, approval of, or acquiescence in any such petition,
application, or proceeding, or order for relief, or the appointment of a
custodian, receiver, or trustee for all or any substantial part of its
properties; or (f) shall suffer any such custodianship, receivership, or
trusteeship to continue undischarged for a period of thirty (30) days or more;
(7) One or more judgments, decrees, or orders for
the payment of money in excess of Twenty-Five Thousand Dollars ($25,000.00)
shall be rendered against the Borrower, and such judgments, decrees, or orders
shall continue unsatisfied and in effect for a period of fifteen (15)
consecutive days without being vacated, discharged, satisfied or stayed or
bonded pending appeal;
-17-
<PAGE>
(8) Any of the following events occur or exist with
respect to the Borrower or any ERISA Affiliate: (a) any Prohibited Transaction
involving any Plan; (b) any Reportable Event with respect to any Plan; (c) the
filing under Section 4041 of ERISA of a notice of intent to terminate any Plan
or the termination of any Plan; (d) any event or circumstance that might
constitute grounds entitling the PBGC to institute proceedings under Section
4042 of ERISA for the termination of, or for the appointment of a trustee to
administer, any Plan, or the institution by the PBGC of any such proceedings;
(e) complete or partial withdrawal under Section 4201 or 4204 of ERISA from a
Multiemployer Plan or the reorganization, insolvency, or termination of any
Multiemployer Plan; and in each case above, such event or condition, together
with all other events or conditions, if any, could in the opinion of the Bank
subject the Borrower to any tax, penalty, or other liability to a Plan, a
Multiemployer Plan, the PBGC, or otherwise (or any combination thereof) which in
the reasonable determination of the Bank is reasonably likely to have a material
adverse effect on the financial condition, properties or operations of the
Borrower;
then, and in any such event, the Agreement shall terminate and the entire
amounts outstanding under the Loan and all interest thereon and all other
amounts payable under this Agreement shall become and be immediately due and
payable; provided that upon the happening of a Default specified in Section
7.01(6), this Agreement shall terminate and the outstanding Note and all
interest thereon and all other amounts payable thereunder shall be immediately
due and payable without declaration or other prior notice to the Borrower.
Thereupon Bank shall have all of the rights and remedies available to it under
the Loan Documents or otherwise at law or in equity. The Borrower expressly
waives any presentment, demand, protest or further notice of any kind. With
respect to all Loans payable on demand, the Bank's rights to demand payable
shall not be restricted or impaired by the absence, non-occurrence or waiver of
a default, and it is understood that the Bank may demand payment at any time.
ARTICLE VIII
CONFESSION OF JUDGMENT
Section 8.01. Upon the occurrence of any default not cured
within the applicable grace period, Borrower irrevocably authorizes and empowers
any attorney or any clerk of any court of record to appear for and confess
judgment against Borrower for such sums as are due and owing on this Term Loan
Agreement and the Commercial Promissory Note, with or without declaration, with
costs of suit, without stay of execution and with reasonable attorneys' fees
added for collection fees. If a copy of this Agreement and the Commercial
Promissory Note, verified by affidavit by or on behalf of the Bank, shall have
been filed in such action, it shall not be necessary to file the original of
this Agreement and the Master Demand Note. The authority granted hereby shall
not be exhausted by the initial exercise thereof and may be exercised by the
Bank from time to time until all sums payable by Borrower have been paid in
full.
-18-
<PAGE>
ARTICLE IX
MISCELLANEOUS
Section 9.01. Amendments, etc. No amendment, modification,
termination, or waiver of any provision of any Loan Document to which the
Borrower is a party, nor consent to any departure by the Borrower from any Loan
Document to which it is a party, shall in any event be effective unless the same
shall be in writing and signed by the Bank, (and, if an amendment, modification
or termination, also by Borrower), and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section 9.02. Notices, etc. All notices and other
communications provided for under this Agreement and under the other Loan
Documents to which the Borrower is a party shall be in writing (including
telegraphic and telex transmissions and facsimile transmissions, if subject to
pre-established verification procedures) and mailed or transmitted and
delivered,
if to the Borrower, at:
Nuclear Research Corporation
125 Titus Avenue
Warrington, PA 18976
Attention: Mark Pollock
if to CoreStates Bank, N.A., at:
CoreStates Bank, N.A.
4259 Swamp Road, Suite 410
Fourth Floor
Doylestown, PA 18901
Attention: Edward F. Mulligan,
Vice President
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section 9.02.
Section 9.03. No Waiver; Remedies. No failure on the part of
the Bank to exercise, and no delay in exercising, any right, power, or remedy
under any Loan Documents shall operate as a waiver thereof; nor shall any single
or partial exercise of any right under any Loan Documents preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in the Loan Documents are cumulative and not exclusive of any remedies
provided by law.
Section 9.04. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Borrower and the Bank and their
respective successors and
-19-
<PAGE>
assigns, except that the Borrower may not assign or transfer any of its rights
under any Loan Document to which the Borrower is a party without the prior
written consent of the Bank.
Section 9.05. Costs, Expenses, and Taxes. The Borrower agrees
to pay (a) all costs and expenses in connection with the preparation, execution,
delivery, filing, recording of any of the Loan Documents including, but not
limited, to the reasonable fees and out-of-pocket expenses of counsel for the
Bank, and local counsel who may be retained by said counsel, with respect
thereto and with respect to advising the Bank as to its rights and
responsibilities under any of the Loan Documents; (b) all costs and expenses, if
any, in connection with the enforcement of any of the Loan Documents including,
but not limited, to the reasonable fees and out-of-pocket expenses of counsel
for the Bank and local counsel who may be retained by said counsel incurred by
the Bank in connection with the enforcement and collection of the Loan and the
Loan Documents and with respect to advising the Bank as to its rights and
responsibilities under any of the Loan Documents. In addition, the Borrower
shall pay any and all stamp and similar taxes and fees payable or determined to
be payable in connection with the execution, delivery, filing, and recording of
any of the Loan Documents and the other documents to be delivered under any such
Loan Documents, and agrees to save the Bank harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees, so long as such delay or omission is not
caused by Bank.
Section 9.06. Right of Setoff. The Bank is hereby authorized
at any time and from time to time, without notice to the Borrower (any such
notice being expressly waived by the Borrower), to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Bank to or for the credit
or the account of the Borrower against any and all of the obligations of the
Borrower now or hereafter existing under this Agreement or the Note or any other
Loan Document, irrespective of whether or not the Bank shall have made any
demand under this Agreement or the Note or such other Loan Document and although
such obligations may be unmatured. The Bank agrees promptly to notify the
Borrower after any such setoff and application, provided that the failure to
give such notice shall not affect the validity of such setoff and application.
The rights of the Bank under this Section 9.06 are in addition to other rights
and remedies (including, without limitation, other rights of setoff) which the
Bank may have.
Section 9.07. Governing Law. This Agreement and the Note shall
be governed by, and construed in accordance with, the laws of the Commonwealth
of Pennsylvania.
Section 9.08. Severability of Provisions. Any provision of any
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.
-20-
<PAGE>
Section 9.9. Survival of Agreement. All covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by the Bank of the Loan and the
execution and delivery to the Bank of the Note and shall continue in full force
and effect so long as the Note or any amounts due hereunder are outstanding and
unpaid.
Section 9.10. Headings. Article and Section headings in the
Loan Documents are included in such Loan Documents for the convenience of
reference only and shall not constitute a part of the applicable Loan Documents
for any other Purpose.
Section 9.11. JURISDICTION AND VENUE. IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER, THE
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED IN ANY COUNTY IN THE COMMONWEALTH OF PENNSYLVANIA
WHERE BANK OR BORROWER MAINTAIN AN OFFICE AND AGREES NOT TO RAISE ANY OBJECTION
TO SUCH JURISDICTION OR TO THE LAYING OR MAINTAINING OF THE VENUE OF ANY SUCH
PROCEEDING IN SUCH COUNTY.
Section 9.12. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK TO ENTER INTO
THIS AGREEMENT.
IN WITNESS WHEREOF, INTENDING TO BE LEGALLY BOUND HEREBY,
the parties have caused this Agreement to be executed by their respective
officers thereunto duly authorized, as of the date first above written.
"Borrower" NUCLEAR RESEARCH CORPORATION
By: /s/ Earl M. Pollock
--------------------------- (SEAL)
Title: President
"Bank" CORESTATES BANK, N.A.
By: /s/ Edward F. Mulligan
--------------------------- (SEAL)
Name: Edward F. Mulligan
Title: Vice President
-21-
<PAGE>
EXHIBIT 10(b)
COMMERCIAL PROMISSORY NOTE
$1,800,000.00 January 14, 1997
FOR VALUE RECEIVED, each of the undersigned, jointly and severally if
more than one (hereinafter collectively referred to as "Borrower"), promises to
pay to the order of CORESTATES BANK, N.A., a national banking association (the
"Bank"), at any of its banking offices in Pennsylvania, the principal amount of
ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS ($1,800,000.00) ("Loan"), in lawful
money of the United States, plus interest, to be paid as follows:
(a) Beginning one month from the date of this Note
and thereafter on the same day of each succeeding month Borrower shall repay the
principal of the Loan, in sixty (60) equal successive monthly installments of
principal each in the amount of THIRTY THOUSAND DOLLARS ($30,000.00), together
with interest monthly on the outstanding principal balance at the fixed rate of
7.85% per annum.
(b) All payments shall be applied first to the
payment in full of any cost incurred in the collection of any sum due under this
Note, including but not limited to reasonable attorneys' fees, then to the
payment in full of any late charges, then to the payment in full of accrued,
unpaid interest, then to the payment of any other monies due under this Note or
the Loan Documents, and finally to the reduction of the unpaid principal balance
of this Note.
ADDITIONAL TERMS OF THIS NOTE - Each of the following provisions
shall apply to this Note, to any extension or modification hereof and to the
indebtedness evidenced hereby, except as otherwise expressly stated above or in
a separate writing signed by Bank and Borrower.
INTEREST - Interest shall be calculated on the basis of a 365-day
year and shall be charged for the actual number of days elapsed. Accrued
interest shall be payable monthly. Accrued interest shall also be payable when
the entire principal balance of this Note becomes due and payable (whether by
demand, stated maturity or acceleration) or, if earlier, when such principal
balance is actually paid to Bank. If the rate at which interest accrues is based
on the "Prime Rate", that term is defined as the rate of interest for loans
established by Bank from time to time as its prime rate. Said per annum rate of
interest shall change each time Bank's prime rate shall change, effective on and
as of the date of the change. Interest shall accrue on each disbursement
hereunder from the date such disbursement is made by Bank, provided, however,
that to the extent this Note represents a replacement, substitution, renewal or
refinancing of existing indebtedness, interest shall accrue from the date
hereof. Interest shall accrue on the unpaid balance hereof at the rate provided
for in this Note until the entire unpaid balance has been paid in full,
notwithstanding the entry of any judgment against Borrower.
-1-
<PAGE>
PREPAYMENT - Any prepayment of principal (including any principal
repayment as a result of acceleration by Bank of this Note) shall require
immediate payment to Bank of a prepayment fee equal to the amount, if any, by
which the aggregate present value of scheduled principal and interest payment
eliminated by the prepayment exceeds the principal amount being prepaid. Said
present value shall be calculated by application of a discount rate determined
by Bank in its reasonable judgment to be the yield-to-maturity at the time of
prepayment on U.S. Treasury securities having a maturity which most closely
approximates the final maturity date of the principal balance then outstanding.
Whether or not a prepayment fee is required hereunder, prepayments shall be
applied to scheduled installments of principal in the inverse order of their
maturity, shall be accompanied by payment of accrued interest on the principal
amount being prepaid and, unless this Note has been accelerated by Bank, shall
not be permitted in an amount less than the scheduled principal installment
immediately prior to final maturity of the outstanding principal balance.
LATE CHARGE - If any payment which is to be made hereunder is not
paid within fifteen (15) days after the date when due, the Borrower shall pay to
the Lender a late charge of five cents ($0.05) for each dollar which is so
overdue for the purpose of defraying the expense incident to handling such
delinquency. This provision shall not be deemed to affect or lengthen the time
to cure any default hereunder.
COLLATERAL - As security for all indebtedness to Bank now or
hereafter incurred by Borrower, under this Note or otherwise, Borrower grants
Bank a lien upon and security interest in any securities, instruments or other
personal property of Borrower now or hereafter in Bank's possession and in any
deposit balances now or hereafter held by Bank for Borrower's account and in all
proceeds of any such personal property or deposit balances. Such liens and
security interests shall be independent of Bank's right of setoff. This Note and
the indebtedness evidenced hereby shall be additionally secured by any lien or
security interest evidenced by a writing (whether now existing or hereafter
executed) which contains a provision to the effect that such lien or security
interest is intended to secure (a) this Note or indebtedness evidenced hereby or
(b) any category of liabilities, obligations or the indebtedness of Borrower to
Bank which includes this Note or the indebtedness evidenced hereby, and all
property subject to any such lien or security interest shall be collateral for
this Note.
EVENTS OF DEFAULT - Each of the following shall be an Event of
Default hereunder: (a) the nonpayment when due, after the expiration of the
applicable grace period, of any amount payable under this Note or under any
obligation or indebtedness to Bank of Borrower or any person liable, either
absolutely or contingently, for payment of any indebtedness evidenced hereby,
including endorsers, guarantors and sureties (each such person is referred to as
an "Obligor"); or (b) the occurrence of an Event of Default under the Term Loan
Agreement between Borrower and Bank dated even date herewith.
BANK'S REMEDIES - Upon the occurrence of one or more Events of
Default unless Bank elects otherwise, the entire unpaid balance of this Note and
all accrued interest shall be immediately due and payable without notice to
Borrower or any Obligor, and Bank may,
-2-
<PAGE>
immediately or at any time thereafter, exercise any or all of its rights and
remedies hereunder or under any agreement or otherwise under applicable law
against Borrower, any Obligor and any collateral. Bank may exercise its rights
and remedies in any order and may, at its option, delay in or refrain from
exercising some or all of its rights and remedies without prejudice thereto.
Upon the occurrence of any such Event of Default or at any time thereafter, Bank
may, at its option, and upon five days' written notice to Borrower, begin
accruing interest on this Note, at a rate not to exceed two percent (2%) per
annum in excess of the greater of (a) the rate of interest provided for above,
or (b) the Prime Rate in effect from time to time on the unpaid principal
balance hereof; provided, however, that no interest shall accrue hereunder in
excess of the maximum rate permitted by law. All such additional interest shall
be payable on demand.
CONFESSION OF JUDGMENT - Upon the occurrence of any default not cured
within the applicable grace period, Borrower irrevocably authorizes and empowers
any attorney or any clerk of any court of record to appear for and confess
judgment against Borrower for such sums as are due and owing on this Note, with
or without declaration, with costs of suit, without stay of execution and with
reasonable attorneys' fees added for collection fees. If a copy of this Note,
verified by affidavit by or on behalf of Bank, shall have been filed in such
action, it shall not be necessary to file the original of this Note. The
authority granted hereby shall not be exhausted by the initial exercise thereof
and may be exercised by Bank from time to time. There shall be excluded from the
lien of any judgment obtained solely pursuant to this paragraph all improved
real estate in any area identified under regulations promulgated under the Flood
Disaster Protection Act of 1973, as having special flood hazards if the
community in which such area is located is participating in the National Flood
Insurance Program. Any such exclusion shall not affect any lien upon property
not so excluded.
NOTICE TO BORROWER - Any notice required to be given by Bank under
the provisions of this Note shall be effective as to each Borrower and each
Obligor when given as set forth in the Term Loan Agreement dated even date
herewith between Borrower and Bank.
DISBURSEMENT AND PAYMENTS - The proceeds of this Note, or any portion
thereof, may be credited by Bank to the deposit account of Borrower, or
disbursed in any other manner requested by Borrower and approved by Bank. If
Borrower so requests, Bank may, at its option, disburse the proceeds of this
Note in more than one disbursement on the same or different dates, but except as
otherwise agreed by Bank in writing, no action taken by Bank in response to any
such request shall be deemed to create or shall imply the existence of any
commitment or obligation to pay or credit the undisbursed portion of this Note.
All payments due under this Note are to be made in immediately available funds.
If Bank accepts payment in any other form, such payment shall not be deemed to
have been made until the funds compromising such payment have actually been
received by or made available to Bank. If Borrower is not an individual,
Borrower authorizes Bank (but Bank shall have no obligation) to charge any
deposit account in Borrower's name for any and all payments of principal,
interest, or any other amounts due under this Note.
-3-
<PAGE>
PAYMENT OF COSTS - In addition to the principal and interest payable
hereunder, Borrower agrees to pay Bank, on demand, all costs and expenses
(including reasonable attorneys' fees and disbursements) which may be incurred
by Bank in the collection of this Note or the enforcement of Bank's rights and
remedies hereunder.
WAIVERS, ETC. - Borrower and each Obligor waive presentment,
dishonor, notice of dishonor, protest and notice of protest. Neither the failure
nor any delay on the part of Bank to exercise any right, remedy, power or
privilege hereunder shall operate as a waiver or modification thereof. No
consent, waiver or modification of the terms of this Note shall be effective
unless set forth in a writing signed by Bank. All rights and remedies of Bank
are cumulative and concurrent and no single or partial exercise of any power or
privilege shall preclude any other or further exercise of any right, power or
privilege.
MISCELLANEOUS - This Note is the unconditional obligation of
Borrower, and Borrower agrees that Bank shall not be required to exercise any of
its rights or remedies against any collateral in which it holds a lien or
security interest, or against which it has right of setoff, or against any
particular obligor. All representations, warranties and agreements herein are
made jointly and severally by each Borrower. If any provision of this Note shall
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision hereof. To the extent that this Note represents a
replacement, substitution, renewal or refinancing of a pre-existing note or
other evidence of indebtedness, the indebtedness represented by such
pre-existing note or other instrument shall not be deemed to have been
extinguished hereby. This Note has been delivered in and shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to the law of conflicts. In the event any due date specified or
otherwise provided for in this Note shall fall on a day which Bank is not open
for business, such due date shall be postponed until the next banking day, and
interest and any fees or similar charges shall continue to accrue during such
period of postponement. This Note shall be binding upon each Borrower and each
additional Obligor and upon their personal representatives, heirs, successors
and assigns, and shall benefit Bank and its successors and assigns.
CONSENT TO JURISDICTION AND VENUE - IN ANY LEGAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS
NOTE OR THE RELATIONSHIP EVIDENCED HEREBY, EACH UNDERSIGNED PARTY HEREBY
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED IN ANY COUNTY IN THE COMMONWEALTH OF PENNSYLVANIA WHERE BANK
MAINTAINS AN OFFICE AND AGREES NOT TO RAISE ANY OBJECTION TO SUCH JURISDICTION
OR TO THE LAYING OR MAINTAINING OF THE VENUE OF ANY SUCH PROCEEDING IN SUCH
COURT.
WAIVER OF JURY TRIAL - EACH UNDERSIGNED PARTY HEREBY
WAIVES, AND BANK BY ITS ACCEPTANCE HEREOF THEREBY WAIVES TRIAL
BY JURY IN ANY LEGAL PROCEEDING INVOLVING DIRECTLY OR
-4-
<PAGE>
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF OR RELATED TO THIS NOTE OR THE RELATIONSHIP EVIDENCED HEREBY.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK TO ENTER INTO, ACCEPT OR RELY
UPON THIS NOTE.
IN WITNESS WHEREOF, Borrower intending this to be a sealed instrument
and intending to be legally bound hereby, has executed and delivered this Note
as of the day and year first above written.
NUCLEAR RESEARCH CORPORATION
/s/ Earl M. Pollock
----------------------- (SEAL)
Name: Earl M. Pollock
Title: President
-5-
<PAGE>
EXHIBIT 10(c)
OPEN-END
MORTGAGE
THIS MORTGAGE SECURES FUTURE ADVANCES
THIS MORTGAGE is made on January 14, 1997 by NUCLEAR RESEARCH
CORPORATION, a Pennsylvania corporation, 125 Titus Avenue, Warrington,
Pennsylvania, 18976 ("Borrower") in favor of CORESTATES BANK, N.A., a national
banking association, 4259 West Swamp Road, Doylestown, Pennsylvania, 18901
("Lender"). INTENDING TO BE LEGALLY BOUND, Borrower agrees as follows:
1. LOAN TERMS -
(a) This is an open-end Mortgage that secures future
advances under a term loan from Lender to Borrower. The maximum amount of the
loan secured by this Mortgage is ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS
($1,800,000.00) (the "Principal Sum"). This Mortgage shall have the full force,
effect and benefit of a Mortgage to secure advances of money, the lien for which
shall relate back to the date of the Mortgage.
(b) Borrower has executed and delivered to Lender this
Mortgage and a Promissory Note ("Note") of even date herewith, which is hereby
incorporated herein by reference, to secure repayment of the Principal Sum,
interest and all unpaid balances of advances made with respect to the Mortgaged
Premises for the payment of taxes, assessments, maintenance charges, insurance
premiums and costs incurred for the protection of the Mortgaged Premises, as
defined herein, or the lien of the Mortgage, expenses incurred by the Lender by
reason of default by the Borrower under the Mortgage and advances made under a
construction loan to enable completion of the improvements for which the
construction loan was originally made, if applicable, all of which are included
in and called "Entire Indebtedness". This Mortgage secures the Note and any
extension, modification or renewal thereof.
2. LENDER'S INSPECTION - Any right or privilege given Lender to
inspect the Mortgaged Premises, whether under this Mortgage, the Note, any
construction loan agreement, mortgage application, or otherwise, and any actual
inspection made by the Lender, its agents, servants, employees, appraisers,
engineers, or architects, shall be deemed to be made for the sole and exclusive
benefit of the Lender. The Borrower, the Borrower's heirs, successors and
assigns, and the Borrower's tenants, agents, servants, employees, visitors and
all other parties shall not be deemed to be beneficiaries for any purpose of any
such inspection. Any approval of the Mortgaged Premises or of any construction
of improvements thereon as the result of any such inspection by Lender or others
acting on behalf of Lender shall not be deemed any kind of
-1-
<PAGE>
warranty of fitness for any purpose. Lender shall have no liability of any kind
to any party as a result of any inspection or investigation of the Mortgaged
Premises or otherwise.
3. MORTGAGED PREMISES - To secure the payment of the Entire
Indebtedness and in consideration of the loan from Lender to Borrower, Borrower
does hereby grant and convey unto Lender the premises herein called "Mortgaged
Premises", consisting of:
ALL THAT CERTAIN lot or Piece of ground,. with buildings
and improvements now thereon erected, if any, and to be erected, situate and
bounded and described as is more particularly set forth in the legal description
attached hereto, made a part hereof, and marked Exhibit "A".
TOGETHER WITH:
(a) All the right, title and interest of Borrower in and
to all the rights, covenants, privileges and appurtenances thereunto belonging
or in any wise appertaining, and together with all buildings and improvements
presently thereon and hereafter constructed thereon; and
(b) Borrower's fixtures, machinery, improvements,
including but not limited to all furnaces, boilers, elevators, heaters,
switchboards, electrical equipment1 heating, plumbing, refrigerating,
ventilating, air-cooling and air-conditioning apparatus and systems, electrical
and all other mechanical systems, gas and electrical fixtures, fittings,
machinery, fire protection equipment, and all other building service equipment
used in connection with the operation and maintenance of the buildings and
improvements; and
(c) Any and all tenements, hereditaments and
appurtenances belonging to the real estate or any part thereof hereby mortgaged
or intended so to be, or in any way appertaining thereto, and all streets,
alleys, passages, ways, water courses and all easements and covenants now
existing or hereafter created for the benefit of the Borrower or any subsequent
owner or tenant of the Mortgaged Premises over ground adjoining the Mortgaged
Premises and all rights to enforce the maintenance thereof, and all other
rights, liberties and privileges of whatsoever kind or character, and the
reversions and remainders, income, rents, issues and profits arising therefrom,
and all the estate, right, title, interest, property, possession, claim and
demand whatsoever, at law or in equity, of the Borrower in and to the Mortgaged
Premises or any part thereof. (All of the above-mentioned Mortgaged Premises,
buildings, improvements, fixtures, machinery, equipment, tenements,
hereditaments and appurtenances, and other property interest are sometimes
collectively referred to herein as the "Mortgaged Property".)
TO HAVE AND TO HOLD the Mortgaged Property hereby
conveyed or mentioned and intended so to be, unto Lender, to its own use
forever.
PROVIDED ALWAYS, and this instrument is upon the express
condition that, if Borrower pays to Lender the Principal Sum mentioned in the
Note, the interest thereon
-2-
<PAGE>
and all other sums payable by Borrower to Lender as are secured hereby, in
accordance with the provisions of the Note and this Mortgage, at the times and
in the manner specified, without deduction, fraud or delay, and Borrower
performs and complies with all the agreements, conditions, covenants, provisions
and stipulations contained herein and in the Note, then this Mortgage, and the
estate hereby granted shall cease and become void.
4. BORROWER WARRANTS. COVENANTS AND AGREES -
---------------------------------------
(a) That Borrower has good and valid title to the
Mortgaged Premises and that it has the right, full power and lawful authority to
grant, bargain, sell, convey, assign, transfer, mortgage, pledge, set over and
confirm the same to the Lender in the manner and form herein accomplished. The
Mortgaged Premises are free and clear of all encumbrances except as set forth
herein and in the title search obtained by Lender in connection with this
Mortgage. The Lender, its successors and assigns will quietly enjoy and possess
the Mortgaged Premises to the extent provided in this Mortgage, and Borrower
will warrant and defend the rights or title of the Lender to the Mortgaged
Premises against all lawful claims not herein specifically excepted;
(b) That all financial statements presented to Lender
are true and correct, and no adverse change in the financial circumstances of
Borrower has occurred since the foregoing were presented to Lender. Borrower
shall give written notice to Lender of any adverse change in the financial
circumstances of Borrower;
(c) To pay all installments of interest and principal to
Lender and the Entire Indebtedness as set forth herein;
(d) To pay when due and payable and before interest or
penalties are due thereon all taxes, local, state and federal, water and sewer
rents, assessments and all other charges or claims which may be assessed or
levied or a lien on the Mortgaged Premises, and to produce to Lender at or
before the last day upon which they may be paid without penalty or interest,
receipts of the current year proving payment of all such taxes, water and sewer
rents, assessments, charges and claims; provided that, if Borrower shall have
deposited with Lender before the due date thereof sums sufficient to pay such
taxes, water and sewer rents, assessments, charges or claims, the same shall be
paid by Lender;
(e) To maintain insurance on the Mortgaged Premises of
such kinds, in such amounts, and in such companies as are satisfactory to
Lender, and if this insurance or any part thereof shall expire, or be withdrawn,
or become void by breach of any condition thereof by Borrower, or become void or
unsafe by reason of the failure, or impairment of the capital of any company in
which said insurance may then be, or if for any other reason whatsoever this
insurance shall become unsatisfactory to Lender, to effect new insurance on said
Mortgaged Premises satisfactory to Lender; and to pay as they shall become due
all premiums for such insurance; and to lodge with Lender, as further security
for said indebtedness, all policies therefor, with loss payable clauses attached
in favor of and acceptable to Lender. In the event of loss, Borrower will give
immediate notice by mail to Lender, and Lender may make proof of loss
-3-
<PAGE>
if not made promptly by Borrower. Borrower hereby directs any insurance company
concerned to pay directly to Lender any moneys not in excess of the unpaid
balance of the Entire Indebtedness which may become payable under such
insurance, including return of unearned premiums, such moneys, or any part
thereof, to be applied at the option of Lender to said unpaid balance or to the
repair of the property damaged; and Borrower appoints Lender as attorney-in-fact
to endorse any draft therefor. In the event of foreclosure of the Mortgage or
other transfer of title to the Mortgaged Premises, all right, title and interest
of Borrower to any insurance policies then in force covering the Mortgaged
Premises shall pass to the transferee of the Mortgaged Premises. All policies
shall be maintained in full force and effect, shall be assigned and delivered to
Lender with premiums prepaid as collateral security for the payment of the
indebtedness secured hereby, shall be endorsed with a standard mortgagee and
loss payee clause in favor of Lender, not subject to contribution, and shall
provide for at least twenty (20) days notice of cancellation to Lender. If the
insurance, or any part thereof, shall expire, or be withdrawn, or become void by
Borrower's breach of any condition thereof, or become void or unsafe by reason
of the failure or impairment of the capital of any company in which the
insurance may then be carried, or if for any reason whatsoever the insurance
shall be unsatisfactory to Lender, Borrower shall place new insurance on the
Mortgaged Property, satisfactory to Lender. All renewal policies, with premiums
paid, shall be delivered to Lender at least twenty (20) days before expiration
of the old policies.
(f) To maintain the Mortgaged Premises in good repair,
order and condition; not to remove, demolish or materially alter the Mortgaged
Premises; not to remove from the Mortgaged Premises fixtures, appliances and
equipment of any nature covered by the lien of the Mortgage without having
obtained the prior written consent of Lender; and Borrower will not make,
install, or permit to be made or installed, any alterations, additions,
improvements, fixtures, appliances or equipment of any nature to or in the
Mortgaged Premises without obtaining the prior written consent of Lender, which
consent Lender hereby reserves the right to refuse to grant;
(g) To comply with all laws, ordinances, regulations and
orders relating to the Mortgaged Premises by all federal, state, municipal and
other authorities, including by way of example but not in limitation, zoning and
subdivision ordinances, building codes and Board of Health regulations;
(h) To notify Lender promptly of commencement of any
proceedings for condemnation of Mortgaged Premises and to permit Lender to
participate in such proceedings and to receive the proceeds of the condemnation
up to the amount of the Entire Indebtedness;
(i) If requested, to furnish Lender within one hundred
twenty (120) days of the close of each fiscal year financial statements in form
and detail satisfactory to Lender;
(j) To pay, when due and payable and before interest and
penalties are due thereon, all taxes owing by Borrower to the United States of
America, the Commonwealth of Pennsylvania, and any political or municipal
subdivisions thereof, including income taxes, individual, partnership,
corporation or other entity income or other taxes, estate, inheritance and
-4-
<PAGE>
real estate taxes and any other taxes, and to produce to Lender, on or before
September l of each year, copies of all tax returns filed and tax bills issued
or received during she previous twelve (12) months and receipts evidencing the
full payment of all amounts known to be due on such returns, and, within twenty
(20) days of receipts thereof, all settlements, notices of deficiency or
overassessment and any other notices pertaining to Borrower's tax liability
(except, in the event any tax is being disputed in good faith, payment need not
be made until the contest is finally determined, provided there is deposited
with Lender security if and as required by Lender to protect Lender against
delay and nonpayment of the tax);
(k) To perform every obligation of the lessor and to
enforce every obligation of the lessee in every lease that is assigned to Lender
or any tenancy in which the rents are assigned to Lender, and not to modify,
alter, waive or cancel any such lease or any part thereof, nor anticipate for
more than one month any rents that may be collectible under such lease or that
may have been assigned to Lender; nor assign any such lease or any such rents;
(l) If Lender shall become a party, by intervention or
otherwise, to any action or proceeding, including insolvency or bankruptcy
proceedings, affecting the Mortgaged Premises or the title thereto or Lender's
interest under this Mortgage, or if Lender employs an attorney to collect any of
the indebtedness or to enforce performance of the obligations, covenants and
agreements secured hereby, Borrower shall reimburse Lender, forthwith upon
written notice and without further demand, for all reasonable costs, charges and
counsel fees incurred by Lender, in any such case, whether or not suit be
commenced, and the same shall be secured hereby as a further charge and lien
upon the Mortgaged Premises.
(m) In the event of default, to pay to Lender, on
demand, all costs and expenses incurred by Lender in connection with the curing
of any such default or the collection of sums secured hereby, including but not
limited to cost of any title search and reasonable attorneys' fees;
(n) To permit Lender, or any persons authorized by
Lender, to enter and inspect the Mortgaged Premises at all reasonable times,
and, in the event of any default by Borrower under the terms of this Mortgage or
accompanying Note, to employ for duration of default as managing agent of the
Mortgaged Premises the person or persons designated by Lender;
(o) To restore, repair or rebuild promptly any part of
Mortgaged Premises damaged by fire or any other casualty;
(p) Not to initiate, join in or consent to any change in
any private restrictive covenant, easement, right of way, zoning ordinance, or
other public or private restrictions relating to use of Mortgaged Premises or
any part thereof;
(q) Not to permit any writ of any execution process to
be levied against the Mortgaged Premises and not to permit any judicial sale
thereof; not to make any assignment for the benefit of creditors;
-5-
<PAGE>
(r) Not to permit the appointment of a receiver,
liquidator or trustee of the Borrower or of any of the property of Borrower,
insolvency of the Borrower or the adjudication of Borrower as a bankrupt, or the
filing of any petition for the bankruptcy, reorganization or arrangement of
Borrower pursuant to the Federal Bankruptcy Act or any similar statute, or the
institution of any proceeding for the dissolution or liquidation of Borrower;
(s) That Borrower will warrant and defend the lien of
this instrument to be at all times a fourth lien on the Mortgaged Premises,
subject only to easements and agreements of record prior to the recording of
this Mortgage and under and subject to the following existing mortgages in favor
of Lender: (i) $1,160,000.00 dated May 21, 1993; (ii) $300,000.00 dated August
21, 1995 and (iii) $300,000.00 dated February 21, 1992.
5. HAZARDOUS SUBSTANCES; WASTES -
(a) To Borrower's knowledge, after due inquiry, no
Hazardous Substances have been disposed of on or in the Mortgaged Premises
through any means at any time prior to Borrower's ownership thereof and Borrower
is aware of no condition on or affecting the Mortgaged Premises which
constitutes or might constitute an environmental health hazard.
(b) "Hazardous Substances" shall mean hazardous wastes,
hazardous substances, hazardous materials, toxic substances, hazardous air
pollutants or toxic pollutants, as those terms are used in any law, guideline,
regulation or ruling of any governmental body and petroleum products, including
gasoline, diesel fuel, motor oil, waste or used oil and heating oil which are
not permitted to be located on the premises by any requirement of any
governmental body or in excess of that which is normally used in the operation
of the Borrower's business.
(c) Borrower hereby represents and warrants that
Borrower has substantially complied with, is currently in substantial compliance
with, has not been charged with, has not received any notice of, and is not
under investigation for the failure to substantially comply with any and all
laws of any governmental body relating to environmental protection matters, and,
specifically, those relating to Hazardous Substances.
(d) Borrower covenants to the Lender that Borrower shall
use all reasonable efforts to prevent the deposit, storage, emission, discharge
or release by Borrower of any Hazardous Substances on its properties unless such
deposit, storage, emission, discharge or release is authorized by and in full
compliance with a duly issued permit, license, authorization or other approval
of a governmental body. Borrower shall notify Lender promptly of any significant
or material environmental event, circumstance or condition relating to its
properties. Borrower hereby indemnifies, defends and holds harmless Lender from
and against any claim, demand, loss or liability, including, but not limited to,
costs of remedial action, response costs, personal injury and property damage,
directly or indirectly arising out of or attributable to the use1 generation,
deposit, storage, release, threatened release, discharge, disposal, burial,
-6-
<PAGE>
dumping, spilling, leaking or other presence of Hazardous Substances on, under
or about the Mortgaged Premises.
(e) If an event of default under this Mortgage shall
occur, then Borrower shall, upon reasonable notice and at all reasonable times,
permit such visitation of such persons as the Lender may select in connection
with the Lender's consideration of enforcement or preservation of tights under
this Mortgage, any Note or any related documents, to visit its properties and
perform such reasonable environmental site investigations and assessments on its
properties for the purposes of determining whether there exists on its
properties any environmental condition which could result in any liability, cost
or expense to the owner or occupier thereof relating to Hazardous Substances.
Borrower will supply to the Lender's representatives such historical and
operational information, including the results of all samples sent for analysis,
correspondence with governmental bodies and previous environmental audits or
environmental reviews regarding its properties as are within its possession,
custody or control or which are reasonably available to it and which may be
reasonably requested by the Lender to facilitate Lender's assessment of any
environmental violations, on the properties of Borrower.
(f) Borrower shall defend, indemnify, and hold harmless
Lender and its directors, officers, agents and employees, from any and all
liabilities (including strict liability), actions, demands, penalties, losses,
costs, or expenses (including without limitation attorneys' fees and expenses,
and remedial costs), suits, costs of any settlement or judgment, and claims of
any and every kind whatsoever which may now or in the future (whether before or
after the satisfaction of this Mortgage) be paid, incurred, or suffered by or
asserted against Lender by any person or entity or governmental agency for, with
respect to, or as a direct or indirect result of, the presence on or under, or
the escape, seepage, leakage, spillage, discharge, emission, or release from the
Premises of any Hazardous Substances or arise out of or result from the
environmental condition of the Premises or the violation of any Environmental
Laws regardless of whether or not caused by or within the control of Borrower or
Lender except for acts or omissions of Bank, its employees or authorized agents.
The representations, covenants, warranties, and indemnifications contained in
this paragraph shall survive the satisfaction and payment in full of this
Mortgage.
6. EVENTS OF DEFAULT - Upon the happening of any of the following
events, each of which shall constitute a default hereunder, all liabilities of
Borrower to Lender, at the option of Lender, shall become immediately due and
payable:
(a) Failure of Borrower to pay the principal or interest
on the Note when due or on any renewal, extension or other modification of the
Note or failure to pay when due any interest or installment on any other
obligation of any nature whatsoever owing to Lender within fifteen (15) days
after the same shall become due and owing;
(b) Failure of Borrower to perform any obligation owing
to Lender under the Note, this Mortgage or any agreement with Lender not cured
within thirty (30) days after notice thereof is given by Lender to Borrower or
material breach of any representation, warranty,
-7-
<PAGE>
covenant or agreement herein contained or contained in the Note or in any other
agreement now or hereafter entered into between Borrower and Lender;
(c) The filing of bankruptcy, receivership or insolvency
proceedings of any kind by or against Borrower or the making by Borrower of an
assignment for the benefit of creditors;
(d) Any execution shall have been levied against tie
Mortgaged Premises or against any other property of the Borrower, on account of
a judgment in excess of Twenty- Five Thousand Dollars ($25,000.00) and shall
continue unstayed and in effect for a period of ten (10) days;
(e) The furnishing of materially false information
heretofore or hereafter by Borrower to Lender or the refusal by Borrower to
provide material information hereafter;
(f) Any change in the financial condition of Borrower
which causes Lender in good faith to believe that performance of the obligations
herein is impaired or doubtful;
(g) The occurrence of any event of default as defined in
the Note or the Loan Agreement;
(h) The dissolution, merger, consolidation or
reorganization of Borrower corporation;
(i) Any change occurs in the control of Borrower unless
the new control person(s) are reasonably satisfactory to Lender.
7. REMEDIES UPON DEFAULT - In the event of any default of Borrower or
in the event of condemnation of all or part of the Mortgaged Premises, unless
the Lender agrees otherwise, in addition to all other rights and remedies of the
Lender given by the Note, Loan Agreement and by law, Lender shall have the
following rights, privileges and remedies:
(a) The Entire Indebtedness shall, at the option of
Lender and without notice or demand to Borrower, become due and payable
immediately. Payment of the same may be enforced and recovered in whole or in
part at any time and from time to time by one or more of the remedies in this
Mortgage or the Note, or both.
(b) Lender may recover as part of the Entire
Indebtedness all costs of suit, including the cost of title searches, attorneys'
fees, appraisal fees, inspections and all "out-of-pocket" expenses, and, in
addition thereto, reasonable attorneys' fees.
(c) Lender may institute an action of mortgage
foreclosure, or take such other action, as the law may allow, at law or in
equity, for the enforcement thereof and
-8-
<PAGE>
realization on the mortgage security or any other security which is herein or
elsewhere provided for, and proceed thereon to final judgment and execution
thereon for the Entire Indebtedness, with interest at the rate stipulated in the
Note to the date of default and thereafter at a rate not less than two percent
(2%) per annum above the rate extant on the date of such default, together with
all other sums secured by this Mortgage, all costs of suit, interest at not less
than two percent (2%) per annum above the rate extant on the date of such
default, on any judgment obtained by Lender from and after the date of any
Sheriff's sale of the Mortgaged Premises until actual payment is made by the
Sheriff of the full amount due Lender. Borrower hereby authorizes and empowers
any attorney or attorneys or the Prothonotary or Clerk of any Court of the
Commonwealth of Pennsylvania to appear for Borrower in any such Court in any
appropriate action there or elsewhere brought at the suit of Lender with or
without declaration filed, as of any term, and to confess or enter judgment, or
both, against Borrower for the Entire Indebtedness due under this Mortgage and
the Note, with the cost of suit, and for so doing this Mortgage or a copy hereof
verified by affidavit shall be sufficient warrant. Any attorney authorized to
act for Borrower to confess judgment against Borrower may also act for and on
behalf of Lender. Borrower executes this authorization for confession of
judgment KNOWINGLY, UNDERSTANDINGLY AND VOLUNTARILY. Borrower waives the
requirement for any further explanation of Borrower's rights.
(d) Lender may enter into possession of the Mortgaged
Premises, and, in addition to its other rights and remedies, exercise the
general rights of a Lender in possession, with or without legal action, and by
force if necessary, collect all rentals therefrom and, after deducting all costs
of collection and administration expense, apply the net rentals to the payment
of taxes, water and sewer rents, charges and claims, insurance premiums and all
other carrying charges, and to the maintenance, repair or restoration of the
Mortgaged Premises, or on account and in reduction of the principal or interest
hereby secured, in such order and amounts as Lender, in Lender's sole
discretion, may elect; and for said purpose, Borrower hereby assigns to Lender
all rentals due and to become due under any lease or leases of the Mortgaged
Premises, whether now existing or hereafter created, as well as all rights and
remedies provided in such lease or leases for the collection of said rents; and
Borrower hereby authorizes and empowers any attorney or attorneys of any Court
of the Commonwealth of Pennsylvania or elsewhere to appear for Borrower and as
attorney for Borrower to sign an agreement for entering an amicable action of
ejectment for possession of the Mortgaged Premises, and to confess judgment
therein against Borrower and all others claiming under or through Borrower, in
favor of Lender, whereupon a writ of possession may immediately issue for the
possession of the Mortgaged Premises, without any prior writ or proceeding
whatsoever; and for so doing, this Mortgage or a copy hereof verified by
affidavit shall be a sufficient warrant. Lender may bring such amicable action
in ejectment before or after the institution of foreclosure proceedings upon
this Mortgage, or after judgment thereon or on the Note, or after a Sheriff's or
any Judicial Sale of the Mortgaged Premises. If for any reason after such action
has been commenced it shall be discontinued, or possession of the Mortgaged
Property shall remain in or be restored to Borrower, Lender shall have the right
for the same default or any subsequent default to bring one or more further
amicable actions as above provided to recover possession of the Mortgaged
Premises. Lender may bring an amicable action in ejectment and confess judgment
therein before or after the institution of proceedings to foreclose this
Mortgage or to enforce the Note, or after entry of
-9-
<PAGE>
judgment therein or on the Note, or after a Sheriff's Sale of the Mortgaged
Property in which Lender is the successful bidder, it being the understanding of
the parties that the authorization to pursue such proceedings for obtaining
possession and confessing judgment therein is an essential part of the remedies
for enforcement of the Mortgage and the Note, and shall survive any execution
sale to Lender.
(e) The remedies of Lender as provided herein, or in
said Note, and all warrants herein and in said Note contained, and all remedies
provided in the Loan Agreement and any and all other remedies otherwise provided
by law shall be cumulative and concurrent, and may be pursued singly,
successively or together at the sole discretion of Lender, and such warrants
shall not be exhausted by any exercise thereof but may be exercised as often as
occasion therefor shall occur; and the failure to exercise any such right or
remedy shall in no event be construed as a waiver or release of the same.
(f) In the event Borrower should fail to pay any tax,
claim, lien or encumbrance which shall be or become prior in lien to this
Mortgage, or to pay any insurance premium for insurance required under this
Mortgage, or to keep the Mortgaged Premises in repair, or commits or permits
waste, then Lender, at its option, may pay said claim, lien, encumbrance, tax
assessment or premium with right of subrogation thereunder, may make such
repairs and take such steps as it deems advisable to prevent or cure such waste,
and may appear in any action or proceeding with respect to any of the foregoing
and retain counsel therein1 and take such action therein as Lender deems
advisable, and for any of said purposes Lender may advance such sums of money as
it deems necessary. All such sums advanced shall be added to and become a part
of the Entire Indebtedness secured hereby, and repayment thereof, with interest
thereon at the interest rates set forth in the Note from the dates of the
respective expenditures, may be enforced by Lender against Borrower at any time.
(g) Lender shall have the right, from time to time, to
bring an appropriate action to recover any sums required to be paid by Borrower
under the terms of this Mortgage, as they become due, without regard to whether
or not the Principal Sum or any other sums secured by the Note and this Mortgage
shall be due, and without prejudice to the right of Lender thereafter to bring
an action of Mortgage foreclosure, or any other action, for any default by
Borrower existing at the time the earlier action was commenced.
(h) Any real estate sold pursuant to any writ of
execution issued on a judgment obtained by virtue of the Note or this Mortgage,
or pursuant to any other judicial proceedings under the Mortgage, may be sold in
one parcel, as an entirety, or in such parcels and in such manner or order as
Lender, in its sole discretion, may elect.
8. WAIVERS -
(a) Borrower hereby waives and releases (1) all errors,
defects and imperfections in any proceeding instituted by Lender under this
Mortgage; (2) all benefit that might accrue to Borrower by virtue of any present
or future laws exempting the Mortgaged
-10-
<PAGE>
Premises, or any part of the proceeds arising from any sale thereof, from
attachment; levy or sale under execution, or providing for any stay of
execution, exemption from civil process, or extension of time for payment; and
(3) all notices not otherwise herein specifically required Borrower's default or
of Lender's exercise, or election to exercise, any option under this Mortgage.
(b) Lender shall not by any act of omission or
commission be deemed to waive any of its rights or remedies hereunder unless
such waiver be in writing and signed by Lender and then only to the extent
specifically set forth therein; a waiver on one event shall not be construed as
continuing or as a bar to or waiver of such right or remedy on a subsequent
event.
9. SECURITY AGREEMENT - This Mortgage constitutes a security agreement
under the Uniform Commercial Code and creates a security interest in the
machinery and equipment essential to the operation of the building owned by
Borrower included in the Mortgaged Property. Borrower shall execute, deliver,
file and refile any financing statements or other security agreements Lender may
require from time to time to confirm the lien of this Mortgage with respect to
such property. Without limiting the foregoing, Borrower hereby irrevocably
appoints Lender attorney-in-fact for Borrower to execute, deliver and file such
instruments for and on behalf of Borrower.
10. DECLARATION OF NO SET-OFF - Within one week after requested to do
so by Lender, Borrower shall certify to Lender or to any proposed assignee of
this Mortgage, in a writing duly acknowledged, the amount of principal, interest
and other charges then owing on the obligation secured by this Mortgage and
whether there are any set-offs or defenses against it.
11. REQUIRED NOTICES - Borrower shall notify Lender promptly of the
occurrence of any of the following:
(a) A fire or other casualty causing damage to the
Mortgaged Premises;
(b) Receipt of notice of condemnation of Mortgaged
Premises;
(c) Receipt of notice from any governmental authority
relating to the structure, use or occupancy of the Mortgaged Premises;
(d) Substantial change in the occupancy of the Mortgaged
Premises;
(e) Threat or commencement of any litigation affecting
the Mortgaged Premises.
-11-
<PAGE>
12. CONDEMNATION - In the event of any condemnation or taking of any
part of the Mortgaged Premises by eminent domain, alteration of the grade of any
street, or other injury to or decrease in the value of the Mortgaged Premises by
any public or quasi-public authority or corporation, all proceeds (that is, the
award or agreed compensation for the damages sustained) shall be applicable
first to payment of the indebtedness secured hereby. No settlement for the
damages sustained shall be made by Borrower without Lender's prior written
approval. Borrower shall continue to pay the installments of principal, interest
and other charges until payment of the proceeds shall have been received by the
Lender. All the proceeds shall be applied in the order and in the amounts that
Lender, in Lender's sole discretion, may elect, to the payment of principal
(whether or not then due and payable), interest or any sums secured by this
Mortgage, or toward payment to the Borrower, on such terms as the Lender may
specify, to be used for the sole purpose of altering, restoring or rebuilding
any part of the Mortgaged Property which may have been altered, damaged or
destroyed as a result of the taking, alteration of grade or other injury to the
Mortgaged Premises. Nothing in this Mortgage shall limit rights otherwise
available at law to Lender, including, but not limited to, rights to intervene
as a party to any condemnation proceeding.
13. RESTRICTIONS ON TRANSFER - Without the prior written consent of
Lender, Borrower will not sell or transfer, or permit or suffer to be sold or
transferred, voluntarily or by operation of law (other than by death or by
execution on the Note) all or any of its interest in the Mortgaged Premises, nor
permit issuance or transfer of stock in Borrower if Borrower is a corporation,
nor permit any creation or transfer of partnership interests if Borrower is a
partnership. Any consent of Lender to a sale or transfer of all or part of the
interests of Borrower in the Mortgaged Premises or an issuance or transfer of
stock or of any other interests in Borrower shall pertain to the referenced
sale, transfer or issuance only and shall not constitute, or obligate Lender to
approve, any further sale, transfer or issuance or relieve any person of any
liability hereunder or under the Note. Any violation of or failure to comply
with the provisions of this section shall constitute an immediate Event of
Default hereunder and under the Note.
14. RIGHTS AND REMEDIES CUMULATIVE -
(a) The rights and remedies of Lender as provided in the
Note, in this Mortgage and in the warrants contained in both, shall be
cumulative and concurrent, may be pursued separately, successively or together
against Borrower or against the Mortgaged Property, or both, at the sole
discretion of Lender, and may be exercised as often as occasion therefor shall
arise. The failure to exercise any such right or remedy shall in no event be
construed as a waiver or release thereof.
(b) Any failure by Lender to insist upon strict
performance by Borrower of any of the terms and provisions of this Mortgage or
of the Note shall not be deemed to be a waiver of any of the terms or provisions
of the Mortgage and Note, and Lender shall have the right thereafter to insist
upon strict performance by the Borrower of any and all of them.
-12-
<PAGE>
(c) Lender may release, regardless of consideration, any
part of the security held for the indebtedness secured by this Mortgage without,
as to the remainder of the security, in any way impairing or affecting the lien
of this Mortgage or its priority over any subordinate lien.
(d) For payment of the indebtedness secured hereby,
Lender may resort to any other security therefor held by Lender in such order
and manner as Lender may elect.
15. AMENDMENT - This Mortgage cannot be changed or amended except by
agreement in writing signed by the party against whom enforcement of the change
is sought.
16. APPLICABLE LAW - This Mortgage shall be governed by and construed
according to the law of the Commonwealth of Pennsylvania.
17. CONSTRUCTION - Whenever used in this Mortgage, unless the context
clearly indicated a contrary intent:
(a) The word, "Borrower" shall mean the person who
executes this Mortgage and any subsequent owner of the Mortgaged Property and
his respective heirs, executors, administrators, successors and assigns;
(b) The word "Lender" shall mean the person specifically
named herein as "Lender" or any subsequent holder of this Mortgage;
(c) The word "person" shall mean individual,
corporation, partnership or unincorporated association;
(d) The use of any gender shall include all genders;
(e) The singular number shall include the plural and the
plural the singular as the context may require.
18. CAPTIONS - The captions preceding the text of the paragraphs or
subparagraphs of this Mortgage are inserted only for convenience of reference
and shall not constitute a part of this Mortgage, nor shall they in any way
affect its meaning, constitution or effect.
19. NOTICES - All communications or notices to be given by either party
to the other hereunder shall be sent certified mail addressed to the Lender,
CORESTATES BANK, N.A., 4259 West Swamp Road, Doylestown, Pennsylvania 18901, or
to such other address as the
-13-
<PAGE>
Lender may specify in a written notice to the Borrower, and to the Borrower, 125
Titus Avenue, Warrington, Pennsylvania, l8976, or to such other address as the
Borrower may specify in a written notice approved and accepted by Lender.
20. CONSENT TO JURISDICTION AND VENUE - IN ANY LEGAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS
MORTGAGE OR THE RELATIONSHIP EVIDENCED HEREBY, EACH UNDERSIGNED PARTY HEREBY
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED IN ANY COUNTY IN THE COMMONWEALTH OF PENNSYLVANIA WHERE LENDER
MAINTAINS AN OFFICE AND AGREES NOT TO RAISE ANY OBJECTION TO SUCH JURISDICTION
OR TO THE LAYING OR MAINTAINING OF THE VENUE OF ANY SUCH PROCEEDING IN SUCH
COUNTY.
21. WAIVER OF JURY TRIAL - THE UNDERSIGNED PARTY HEREBY WAIVES, AND
LENDER BY ITS ACCEPTANCE HEREOF THEREBY WAIVES, TRIAL BY JURY IN ANY LEGAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS
MORTGAGE OR THE RELATIONSHIP EVIDENCED HEREBY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR LENDER TO ENTER INTO, ACCEPT OR RELY UPON THIS MORTGAGE.
EXECUTED by Borrower under seal the day and year first above written.
NUCLEAR RESEARCH CORPORATION
By: /s/ Earl M. Pollock
----------------------- (SEAL)
Name: Earl M. Pollock
Title: President
COMMONWEALTH OF PENNSYLVANIA :
: ss.
COUNTY OF BUCKS :
On January 14, 1997, before me, the undersigned officer, personally
appeared Earl M. Pollock, who acknowledged himself to be the President of
Nuclear Research Corporation, and
-14-
<PAGE>
that he, as such officer, being authorized so to do, executed the foregoing
instrument for the purposes therein contained by signing the name of said
corporation by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Jeanette M. Hannay-Janowski
-------------------------------- (SEAL)
Notary Public
[Notarial Seal]
* * * * * * * * * *
I hereby certify that the principal office and complete post office address of
the within-named Lender and person entitled to interest on this Mortgage is 4259
West Swamp Road, Doylestown, Pennsylvania 18901.
/s/ Edward F. Mulligan
--------------------------------
Edward F. Mulligan
-15-
<PAGE>
EXHIBIT "A"
ALL THAT CERTAIN tract of land as shown on a plan of survey
for Nuclear Research Corporation as made by Surveying Services, Inc., 71 Ashland
Street, Doylestown, Pennsylvania, situate in Warrington Township, Bucks County,
Pennsylvania, bounded and described, as follows:
BEGINNING at a point, a hub set, on the Southeasterly side of
Titus Road, said point being located eight hundred seventy-four and thirty-five
hundredths feet (874.35 ft.) Northeasterly from the centerline of County Line
Road and a corner of lands now or formerly of the Telford Industrial Development
Authority; (l) thence along the Southeasterly side of Titus Road North
thirty-seven degrees twenty-five minutes East two hundred forty-three and
seventeen hundredths feet (N. 37 deg. 25 min. E. 243.17 ft.) to a hub set, a
corner of lands now or formerly of the Crane Company; (2) thence along lands of
the Crane Company South fifty-two degrees eighteen minutes East five hundred
thirty-five and seventeen hundredths feet (S. 52 deg. 18 min. E. 535.17 ft.) to
a concrete monument found, a corner of lands of the Crane Company, land now or
formerly of Joseph H. and Mary Penrose and lands now or formerly of Joseph
LaRocca; (3) thence along lands of LaRocca South thirty-seven degrees
twenty-five minutes West two hundred forty three and seventeen hundredths feet
(S. 37 deg. 25 min. W. 243.17 ft.) to an iron pin found, a corner of lands of
LaRocca, and other lands now or formerly of the Crane Company; (4) thence along
lands of the Crane Company and lands now or formerly of the Telford Industrial
Development Authority North fifty-two degrees eighteen minutes West five hundred
thirty-five and seventeen hundredths feet (N. 52 deg. 18 min. W. 535.17 ft.) to
the first mentioned point and place of BEGINNING.
CONTAINING two and nine hundred eighty-eight thousandths acres
(2.988 ac.).
BEING THE SAME PREMISES which the Bucks County Industrial
Development Authority, a body corporate and politic organized and existing under
the laws of the Commonwealth of Pennsylvania, by Deed dated August 7, 1990 and
recorded December 16, 1992 in the Office for the Recorder of Deeds of Bucks
County at Land Record Book 585 Page 1993, granted and conveyed unto Nuclear
Research Corporation, a corporation organized and existing under the laws of the
Commonwealth of Pennsylvania.
BEING TAX PARCEL NO. 50-31-28-13.
-16-
<PAGE>
EXHIBIT 10(d)
LINE OF CREDIT AGREEMENT
LINE OF CREDIT AGREEMENT, dated as of January 14, 1997,
between NUCLEAR RESEARCH CORPORATION, a Pennsylvania corporation, with its
principal place of business at 125 Titus Avenue, Warrington, Pennsylvania,
18976, (the "Borrower") and CORESTATES BANK, N.A. ("Bank"), with offices at 4259
West Swamp Road, Suite 410, Fourth Floor, Doylestown, Pennsylvania, 18901. The
parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Defined Terms. As used in this Agreement, the
following terms have the following meanings (terms defined in the singular to
have the same meaning when used in the plural and vice versa):
"Affiliate" means any person (1) which directly or indirectly
controls, or is controlled by, or is under common control with the Borrower or a
Subsidiary; (2) which directly or indirectly beneficially owns or holds
twenty-five percent (25%) or more of any class of voting stock of the Borrower
or any Subsidiary; or (3) twenty-five percent (25%) or more of the voting stock
of which is directly or indirectly beneficially owned or held by the Borrower or
a Subsidiary. The term control means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract, or
otherwise.
"Agreement" means this Line of Credit Agreement, as amended,
supplemented, or modified from time to time.
"Bank" means CoreStates Bank, N.A. ("CoreStates"), unless the
context indicates otherwise.
"Borrower" means Nuclear Research Corporation, unless the
context indicates otherwise.
"Business Day" means any day other than a Saturday, Sunday, or
other day on which commercial banks in Philadelphia are authorized or required
to close under the laws of the Commonwealth of Pennsylvania.
"Capitalized Lease Obligations" means any amount payable with
respect to any lease of any tangible or intangible property (whether real,
personal or mixed), however denoted, which either (l) is required by GAAP to be
reflected as a liability on the face of the balance sheet
-1-
<PAGE>
of the lessee, or (2) based on actual circumstances existing and ascertainable
either at the commencement of the term of such lease or at any subsequent time
at which any property becomes subject thereto, can reasonably by anticipated to
impose on such lessee substantially the same economic risks and burdens, having
regard to such lessee's obligations and the lessor's rights under the lease both
during and at the termination of the lease, as would be imposed on the lessee by
any lease which is required to be so reflected on the balance sheet of the
lessee or by the ownership of the leased property.
"Collateral" means all property which is subject or is to be
subject to the Lien granted by the Security Agreements.
"Debt" means (l) indebtedness or liability for borrowed money
or for the deferred purchase price of property or service (including trade
obligations); (2) obligations as lessee under Capital Lease Obligations; (3)
current liabilities in respect of unfunded vested benefits under any Plan; (4)
obligations under letters of credit issued for the account of any Person; (5)
all obligations arising under acceptance facilities; (6) all guaranties,
endorsements (other than for collection or deposit in the ordinary course of
business), and other contingent obligations to purchase, to provide funds for
payment, to supply funds to invest in any Person, or otherwise to assure a
creditor against loss; and (7) obligations secured by any Lien on property owned
by any Person, whether or not the obligations have been assumed.
"Default" means any of the events specified in Section 7.01,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Environmental Law" means any presently existing or hereafter
enacted or decided federal, state or local statutory or common laws relating to
pollution or protection of the environment, including without limitation, any
common law of nuisance or trespass, and any law or regulation relating to
emissions, discharges, releases or threatened release of pollutants,
contaminants or chemicals or industrial, toxic or hazardous substances or wastes
into the environment (including without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or chemicals or industrial,
toxic or hazardous substances or waste.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and published
interpretations thereof.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which together with the Borrower would be treated as a single
employer under Section 4001 of ERISA.
-2-
<PAGE>
"Event of Default" means any of the events specified in
Section 7.01, provided that any requirement for the giving of notice, the lapse
of time, or both, or any other condition, has been satisfied.
"GAAP" means generally accepted accounting principles in the
United States.
"Guarantors" mean N.R.C. Acquisition Corp., a Pennsylvania
corporation and Measurement Dynamics LLC, a New Jersey limited liability
company.
"Guaranty Agreements" mean the Guaranty Agreements dated as of
the date of this Agreement, as amended, modified or supplemented from time to
time, executed and delivered by the Guarantors to the Bank.
"Hazardous Materials" means any contaminants, hazardous
substances, regulated substances or hazardous wastes which may be the subject of
liability pursuant to any Environmental Law.
"Head Office" means the principal office of CoreStates Bank,
N.A. at 4259 Swamp Road, Doylestown, Pennsylvania 18901.
"Lending Office" means for each type of Loan, the Lending
Office of the Bank (or of an affiliate of the Bank) designated for such type of
Loan on the signature pages hereof or such other office of the Bank (or of an
affiliate of the Bank) as the Bank may from time to time specify to the Borrower
as the office at which its Loans of such type are to be made and maintained.
"Letters of Credit" has the meaning assigned to that term in
Section 2.14 of this Agreement, but in no event shall such term include the
existing performance Letter of Credit issued by Bank to Kepco in the approximate
amount of $647,109.00 and any other Letters of Credit issued by Bank in
connection with Borrower's sales of large radiation monitoring systems where
Bank, in its sole discretion, upon request of Borrower and after applying Bank's
normal credit extension policies and procedures, approves such performance
Letters of Credit and agrees that same shall not be backed by this Line of
Credit Agreement.
"Lien" means any mortgage, deed of trust, pledge, security
interest, hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority, or other security agreement or
preferential arrangement, charge, or encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction to evidence
any of the foregoing).
"Loan(s)" means the Line of Credit Loans.
-3-
<PAGE>
"Loan Document(s)" means this Agreement, the Note, the
Mortgage, the Guaranty Agreements, the Assignment of Proceeds of Letter of
Credit, the General Assignment of Government Contracts and Proceeds Thereof, and
the Security Agreements.
"Note" means the Master Demand Note.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority, or other entity of whatever nature.
"Prime Rate" means the rate of interest for loans established
by Bank at its Head Office from time to time as its prime rate.
"Security Agreement(s)" means, collectively, the Security
Agreements to be delivered by the Borrower and the Guarantors under the terms of
this Agreement, unless the context indicates otherwise.
"Subsidiary" means a corporation the shares of stock of which
having ordinary voting power (other than stock having such power only by reason
of the happening of a contingency) to elect a majority of the board of directors
or other managers of such corporation are at the time owned, or the management
of which is otherwise controlled, directly or indirectly through one or more
intermediaries or both, by the Borrower or Guarantors.
Section 1.02. 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 be prepared in
accordance with such principles.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS; SECURITY FOR THE LOANS
Section 2.01. Line of Credit. The Bank agrees, on the terms
and conditions hereinafter set forth, to make loans (the "Line of Credit Loans")
to the Borrower from time to time, in accordance with the terms of the Master
Demand Note as defined below, in an aggregate amount not to exceed, at any one
time outstanding, a sum equal to Five Million Five Hundred Thousand Dollars
($5,500,000.00) (the "Borrowing Availability"). The Borrowing Availability shall
be reduced from time to time by the face amount of all Letters of Credit then
outstanding and may, at Borrower's option, be permanently reduced from time to
time in amounts designated by Borrower to Bank. In the event of such reduction
by Borrower, the Note and other Loan Documents shall be modified as required by
Bank to reflect such reduction. Within the limits of the amount set forth in
this Section 2.01, and subject to the provisions of this Agreement, including,
without limitation, the Bank's right to demand repayment of the Line of Credit
Loans at any time, the Borrower may borrow, repay and reborrow under this
Section 2.01.
-4-
<PAGE>
Section 2.02. Notice and Manner of Borrowing.
(1) A person duly authorized under Subsection 2.02(b)
below may request Loans by telephonic (confirmed in writing) or written notice
to Bank not in excess of the maximum amount of the Line of Credit in the
aggregate at any time outstanding. If Bank elects to make a Loan, then Bank will
credit Borrower's designated account with Bank or wire such sum upon Borrower's
written instructions. Notwithstanding the foregoing, unless Bank notifies
Borrower to the contrary, Bank agrees, at Borrower's request, to provide to
Borrower a daily automatic sweep service (the "Sweep") by way of a debit against
or credit to Borrower's designated account with Bank by automatically making a
Loan when and in the amount necessary to be applied to cover items charged
against that account not otherwise covered by funds in the account or by
automatically transferring excess funds on deposit in that account to be applied
to pay down Loans, as applicable, as of the close of each banking day. Upon
Borrower's request Bank will forward to Borrower a written advice or statement
of each Loan which will specify the manner of disbursement and such other terms
as may have been agreed to.
(2) Any and all documents required to be executed in
conjunction with Loans may be signed by any of the officers or other persons
duly authorized by Borrower's borrowing resolutions as in effect from time to
time ("Authorized Person"), provided that a copy of all such resolutions is
certified by the Secretary of Borrower's corporation and delivered to Bank. The
Bank shall incur no liability to Borrower or any other person in acting upon any
request for a Loan which Bank believes in good faith to have been made by a
person duly authorized to borrower on Borrower's behalf as set forth in
Borrower's borrowing resolutions.
Section 2.04. Interest. The Borrower shall pay interest to the
Bank on the outstanding and unpaid principal amount of the Line of Credit Loans
made under this Agreement at a rate per annum equal to the Prime Rate.
Any change in the interest rate based on the Prime
Rate resulting from a change in the Prime Rate shall be effective as of the
opening of business on the day on which such change in the Prime Rate becomes
effective.
Interest on each Note shall be calculated on the
basis of a year of three hundred sixty-five (365) days for the actual number of
days elapsed.
Each overdue payment of principal on any Loan and,
to the extent permitted by law, each overdue payment of interest shall bear
interest, payable on demand, for each day until paid at a rate per annum equal
to 2% in excess of the rate of interest borne by the overdue Loan; provided that
no interest shall accrue hereunder in excess of the maximum rate permitted by
law.
Interest on the Loans shall be paid monthly in
immediately available funds at the Head Office of Bank or such other location as
Bank may direct in accordance with the terms of the Note.
-5-
<PAGE>
Section 2.05. Note. The Line of Credit Loans made by the Bank
under this Agreement shall be evidenced by, and repaid with interest in
accordance with, a single promissory note of the Borrower duly completed, in the
principal amount of Five Million Five Hundred Thousand Dollars ($5,500,000.00),
dated the date of this Agreement, payable to the Bank (said promissory note, as
it may be hereafter amended, renewed or extended, the "Master Demand Note"). The
amount of each Line of Credit Loan and payment of principal and interest
received by the Bank on account of the Line of Credit Loans, shall be evidenced
by the Bank's records, which shall, in the absence of error, be conclusive as to
the outstanding balance of the Line of Credit Loans made by the Bank and
interest thereon.
Section 2.06. Method of Payment. The Borrower shall make each
payment of principal of and interest on the respective shares of all Loans made
under this Agreement and under the Note and all fees owing to the Bank on the
date when due in lawful money of the United States to Bank at its Head Office or
other designated location in immediately available funds. The Borrower hereby
authorizes the Bank to charge from time to time against any account of the
Borrower with Bank any amount so due. Borrower hereby further authorizes Bank to
make the Sweep. Borrower shall pay to Bank promptly such amounts as may be due
if Borrower's deposit account balances are insufficient. Whenever any payment to
be made under this Agreement or under the Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest.
Section 2.07. Use of Proceeds. The proceeds of the Loans
hereunder shall be used by the Borrower for working capital requirements, and to
back Letters of Credit issued by Bank for the benefit of Borrower, and for
Borrower's other business purposes.
Section 2.08. Security for the Loans. As security for the
Loans and for all amounts payable hereunder and under the Note as well as for
all other existing and future liabilities, whether absolute or contingent, due
or to become due of the Borrower to the Bank under any other loans or extensions
of credit by the Bank to the Borrower, the Bank shall receive the following:
(l) Valid, perfected first liens on and security
interests in the following Collateral:
(i All of the property, real or personal,
tangible or intangible of the Borrower, now owned or hereafter acquired,
referred to in the Security Agreements, including without limiting the
generality of the foregoing, all of the Borrower's accounts, accounts
receivable, inventory and return goods, machinery, equipment, furniture,
fixtures, leasehold improvements, chattel paper, documents of title, contract
rights and general intangibles, including registered trademarks, trade names and
patents. The security agreements, UCC-l Financing Statements, and all other
instruments necessary to create a perfected first lien in the aforesaid assets
shall be referred to herein collectively as the "Borrower's Security
Agreements".
-6-
<PAGE>
(ii All of the property, real or personal,
tangible or intangible of the Guarantors, now owned or hereafter acquired,
referred to in the Security Agreements, including without limiting the
generality of the foregoing, all of the Guarantors' accounts, accounts
receivable, inventory and return goods, machinery, equipment, furniture,
fixtures, leasehold improvements, chattel paper, documents of title, contract
rights and general intangibles, including registered trademarks, trade names and
patents. The security agreements, UCC-l Financing Statements, and all other
instruments necessary to create a perfected first lien in the aforesaid assets
shall be referred to herein collectively as the "Guarantors' Security
Agreements."
(2) A valid fifth lien mortgage ("Mortgage")
executed by the Borrower, covering the real estate located at 125 Titus Avenue,
Warrington, Pennsylvania (the "Real Estate"), and all fixtures, machinery and
equipment necessary or incidental to the general operation and maintenance
thereof and all renewals and replacements thereof or additions thereto, and such
other property as the Bank may reasonably require, all as is more specifically
described in the Mortgage. The Mortgage shall be a fifth lien on a good and
marketable fee simple title to the mortgaged property, free and clear of all
prior liens, restrictions, easements and other encumbrances and title objections
except such as may have been approved in writing by the Bank, and except a
mortgage to Bank in the amount of One Million One Hundred Sixty Thousand Dollars
($1,160, 000.00) dated May 21, 1993, two existing mortgages in favor of Bank
each in the amount of Three Hundred Thousand Dollars ($300,000.00) dated
February 21, 1992 and August 21, 1995, respectively, and a mortgage to Bank in
the amount of One Million Eight Hundred Thousand Dollars ($1,800,000.00), dated
even date herewith.
(3) Unconditional Guaranty Agreements, in favor of
Bank, executed by the Guarantors, which Guaranty Agreements shall guarantee
payment and not merely collection of the entire indebtedness evidenced by the
Note, and also the prompt performance of all obligations under the Note and this
Agreement, and, as to the Guaranty of N.R.C. Acquisition Corp., the prompt
performance of all obligations under all other documents evidencing the Loans
and all other payments and obligations from Borrower to Bank now existing or
hereafter arising, provided, however, that the Guaranty Agreement of Measurement
Dynamics LLC, as such Agreement relates to the Line of Credit Agreement, shall
be limited only to the maximum of Four Hundred Thousand Dollars ($400,000.00)
owed under the Line of Credit Agreement plus interest and costs relating to such
amount.
(4) Assignment of a confirmed letter of credit and
the proceeds thereof in the original face amount of Six Million Four Hundred
Seventy-One Thousand Ninety Dollars and Ninety-Five Cents ($6,471,090.95) issued
by the Korea Exchange Bank, said assignment being referred to herein as the
"Assignment of the Korea Exchange Bank Letter of Credit".
(5) Assignment of all existing and future government
contracts, and the proceeds thereof, between Borrower and the United States
Government, or any agency, department or unit thereof, where the total contract
amount exceeds Five Hundred Thousand Dollars ($500,000.00). Borrower shall
execute a General Assignment of Government Contracts
-7-
<PAGE>
on the date hereof and, subject to the provisions set forth below, provide
specific assignments of and consents to the assignment of those contracts
promptly after each such contract is executed.
(6) At Bank's request, confirmation by CoreStates
Trade Finance Department and assignment of any and all future letters of credit,
and the proceeds thereof, to or in favor of Borrower as beneficiary where the
amount of such letter of credit exceeds One Million Dollars ($1,000,000.00).
To the foregoing ends, contemporaneously with the execution
and delivery of this Agreement, (i) the Borrower will execute and deliver to the
Bank the Mortgage and Borrower's Security Agreements, (ii) the Borrower will
execute and deliver to the Bank the Assignment of the Korea Exchange Bank Letter
of Credit and the General Assignment of Government Contracts, (iii) the
Guarantors will execute and deliver to the Bank the Guaranty Agreements, and
(iv) the Guarantors will execute and deliver to the Bank the Guarantors'
Security Agreements. If, as and when letters of credit are issued to or in favor
of Borrower as beneficiary as provided in subsection (6) above, Borrower shall,
promptly upon request of Bank, provide confirmation to the CoreStates Trade
Finance Department and execute all reasonably required documentation to effect
the assignment of the letter of credit to Bank. Borrower shall make all
reasonable efforts and take all required steps to attempt to obtain the specific
assignment of and consent to the assignment of all existing and future contracts
as specified in Section 2.08(5) above, such efforts to include, without
limitation, the preparation and filing of all initial documents and requests,
the preparation and filing of appropriate responses to requests for follow-up
documentation and follow-up efforts on all such requests by telephone and
written correspondence. Copies of any and all correspondence to and from any
government, governmental agency or unit thereof, in connection with all such
Assignments shall be supplied to Bank contemporaneously as such correspondence
is generated or received.
Section 2.09. Line of Credit Agreement Not a Commitment to
Lend. Borrower acknowledges and agrees that no provision hereof, and no course
of dealing by Bank in connection herewith, shall be deemed to create or shall
imply the existence of any commitment or obligation on the part of Bank to make
the Line of Credit Loans or any advances thereunder. The Line of Credit Loans
and all advances thereunder shall be made solely at Bank's discretion.
Section 2.10. Right of Bank to Demand Repayment.
Notwithstanding anything to the contrary in this Agreement or any of the other
agreements or documents executed and delivered in connection herewith, the Bank
may at any time in their sole discretion with or without cause and
notwithstanding that there shall not have occurred a default hereunder demand
payment of the Loans. The defaults described in Article VII hereof shall not
prescribe the conditions under which the Bank may demand payment or limit in any
manner the demand nature of the Master Demand Note issued pursuant to Section
2.05 of this Agreement. Upon the occurrence of any default which is continuing
and which is not otherwise waived by the Bank, the Bank shall have immediately
available to it the rights and remedies set forth under Article VII of this
Agreement.
-8-
<PAGE>
Section 2.11. Late Fees. In the event any of the aforesaid
payments of interest, in whole or in part, are fifteen (15) days beyond their
due date, Borrower shall pay Bank a "late charge" of five cents ($.05) for each
dollar ($1.00) so overdue to cover the extra expenses of handling delinquent
payments.
Section 2.12. Unutilized Line Fee. The Borrower shall pay to
the Bank annually, on January l of each year, a fee with respect to the unused
portion of the Borrowing Availability equal to one-quarter percent (1/4%) per
year (based on a three hundred sixty-five [365] day year) of the average unused
portion of the Borrowing Availability for the preceding calendar year (or
portion thereof). The unused portion of the Borrowing Availability shall, for
the purpose of calculating the unutilized line fee pursuant to this Section
2.12, be deemed to be, for any day this Agreement is in effect, the difference
between Five Million Five Hundred Thousand Dollars ($5,500,000.00) and the
principal amount of the Line of Credit Loans outstanding plus the face amount of
the Letters of Credit outstanding on that day (less any draws under the Letters
of Credit which have been reimbursed by the Borrower).
Section 2.13. Letter of Credit Fees. The Borrower shall pay to
the Bank upon the issuance of any Letter of Credit, and thereafter, annually, a
fee equal to one-half percent (1/2%) per annum (based on a three hundred
sixty-five [365] day year) based on the face amount of the Letter of Credit
issued. The Letter of Credit fee shall be paid in full at the time of issuance
of any such Letter of Credit, and thereafter annually, together with issuance
and amendment fees as determined by the Bank from time to time.
Section 2.14. Letters of Credit. Relying on the
representations and warranties set forth in this Agreement, and subject to such
terms and conditions as the Bank may from time to time require (including
without limitation, the execution and delivery by the Borrower of the Bank's
standard form of the letter of credit application in such form as shall be
acceptable to the Bank), the Bank agrees to issue letters of credit (in such
form as shall be acceptable to the Bank) for the account of Borrower and for the
benefit of customers or suppliers of Borrower in an aggregate face or stated
amount at any time outstanding not exceeding the Borrowing Availability;
provided, however, that the aggregate face or stated amount of Letters of Credit
at any time outstanding (less any draws under the Letters of Credit which have
been reimbursed by the Borrower), plus the aggregate principal amount of all
Loans made or extended pursuant to this Agreement at any time outstanding shall
not exceed the Borrowing Availability. On the date when the Loans shall be due
and payable (by demand or otherwise), the Borrowing Availability shall be
automatically reduced to zero, provided, however, that Bank shall have the
right, in its sole discretion, to require collateral and related documentation
from Borrower to secure the aggregate face or stated amount of the then
outstanding Letters of Credit, which collateral and related documentation may
take the form of either i) cash collateral equal the aggregate face or stated
amount of the then outstanding Letters of Credit; or, ii) upon mutual agreement
of Bank and Borrower, either y) a new loan, adequately secured as determined by
Bank, in Bank's sole discretion, or z) the Line of Credit Loan may be permitted
to continue, with the same collateral, with the Borrowing Availability limited
to an amount equal to the aggregate face or stated amount of Letters of Credit
at that time outstanding (less any draws under the Letters of Credit
-9-
<PAGE>
which have been reimbursed by the Borrower) to be utilized by the Bank for any
draws under such Letters of Credit for so long as and to the extent such Letters
of Credit remaining outstanding. In the event the Bank elects to continue the
Line of Credit Loan to secure the outstanding Letters of Credit, the Borrower
shall not be permitted to obtain or receive any additional advances under this
Agreement except only to the extent advances are made by the Bank for any draws
under such Letters of Credit.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Condition Precedent to first Line of Credit
Loan. The obligation of the Bank to make the first Line of Credit Loan to the
Borrower is subject to the condition precedent that the Bank shall have received
on or before the day of such Line of Credit Loan each of the following, in form
and substance satisfactory to the Bank and its counsel:
(1) The Master Demand Note duly executed by the
Borrower.
(2) The Mortgage duly executed by the Borrower for
recording as a fifth lien mortgage lien on the Real Estate located at 125 Titus
Avenue, Warrington, Pennsylvania.
(3) The Borrower's Security Agreements duly executed
by the Borrower, together with such number of financing statements (UCC-1) duly
executed by the Borrower, as debtor, for filing under the Uniform Commercial
Code of all jurisdictions necessary or, in the opinion of the Bank, desirable to
perfect the security interest created by the Borrower's Security Agreements.
(4) The Assignment of the Korean Exchange Bank
Letter of Credit and the General Assignment of Government Contracts duly
executed by the Borrower.
(5) A certificate (dated the date of this Agreement)
of the Secretary of the Borrower setting forth and certifying as true and
correct all corporate action taken by the Borrower, including resolutions of its
Board of Directors, authorizing the execution, delivery, and performance of the
Loan Documents to which it is a party and each other document to be delivered
pursuant to this Agreement.
(6) The Guaranty Agreements executed by the
Guarantors.
(7) The Guarantors' Security Agreements duly
executed by the Guarantors, together with such number of financing statements
(UCC-1) duly executed by the Guarantors, as debtor, for filing under the Uniform
Commercial Code of all jurisdictions necessary or, in the opinion of the Bank,
desirable to perfect the security interest created by the Guarantors' Security
Agreements.
-10-
<PAGE>
(8) A certificate (dated the date of this Agreement)
of the Secretary of the Guarantors (a) setting forth and certifying as true and
correct all corporate action taken by the Guarantors, including resolutions of
its Board of Directors, authorizing the execution, delivery, and performance of
the Loan Documents to which it is a party and each other document to be
delivered pursuant to this Agreement and (b) certifying the names and true
signatures of the officers of the Guarantors authorized to sign the Loan
Documents to which it is a party and the other documents to be delivered by the
Guarantors under this Agreement.
(9) Evidence of all policies of fire insurance with
extended coverage and flood coverage (if necessary), covering any loss or damage
to the Real Estate and insurable equipment, howsoever such loss or damage may
arise, such insurance to be placed with such companies and in such amounts as
Bank shall require. All premiums required to maintain all such insurance in
force and effect shall be paid by Borrower, and evidence of payment shall be
furnished to Bank. All such insurance shall be maintained in such form as to be
available to and for the protection of Borrower and Borrower's agents and Bank.
The fire and casualty insurance policy or policies shall contain the standard
mortgagee and loss payee clause making losses payable thereunder to Bank.
Receipt of evidence of insurance policies acceptable to Bank pursuant to any
provisions hereunder shall not thereafter bar Bank from requiring additional
insurance, as Bank may deem necessary or desirable from time to time.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank that:
Section 4.01. Incorporation, Good Standing and Due
Qualification. The Borrower is a corporation duly incorporated, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation; has the corporate power and authority to own its assets and to
transact the business in which it is now engaged or proposed to be engaged; and,
to the best of Borrower's knowledge, is duly qualified as a foreign corporation
and in good standing under the laws of each other jurisdiction in which such
qualification is required.
Section 4.02. Corporate Power and Authority. The execution,
delivery, and performance by the Borrower of the Loan Documents have been duly
authorized by all necessary corporate action and do not and will not (1) require
any consent or approval of the shareholders of such corporation; (2) contravene
such corporation's charter or bylaws; (3) cause Borrower to violate any
provision of or cause or result in a breach of or constitute a default under any
law, rule, regulation (including, without limitation, all regulations of the
Board of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination, or award presently in effect having
applicability to such corporation; (4) cause or result in a breach of or
constitute a default by Borrower under any indenture or loan or credit agreement
or any other agreement, lease, or instrument to which such corporation is a
party or by which it or its properties may be bound or affected; or (5) cause or
result in or require the creation or
-11-
<PAGE>
imposition of any Lien, upon or with respect to any of the properties now owned
or hereafter acquired by such corporation except as contemplated by this
Agreement.
Section 4.03. Legally Enforceable Agreement. This Agreement
is, and each of the other Loan Documents when delivered under this Agreement
will be, legal, valid and binding obligations of the Borrower, or, Guarantors,
where applicable, enforceable against the Borrower, or, the Guarantors, where
applicable, in accordance with their respective terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency, and other
similar laws affecting creditor's rights generally.
Section 4.04. Financial Statements; Accuracy of Information.
All information, financial statements, exhibits and reports furnished by the
Borrower and the Guarantors, to the Bank in connection with this Agreement and
the borrowings contemplated hereby are, and all such information, financial
statements, exhibits and reports hereafter furnished by the Borrower and the
Guarantors, to the Bank will be true and correct in every material respect on
the date furnished to the Bank, and no such information, financial statements,
exhibit or report contains or will contain any material misstatement of fact or
omits or will omit to state a material fact or any fact necessary to make the
statement contained therein not materially misleading.
Section 4.05. Labor Disputes and Acts of God. Neither the
business nor the properties of the Borrower or the Guarantors are affected by
any fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) materially and adversely
affecting such business or properties or the operation of the Borrower or the
Guarantors.
Section 4.06. Other Agreements. The Borrower is not a party to
any indenture, loan or credit agreement, or to any lease or other agreement or
instrument, or subject to any charter or corporation restriction which is
reasonably likely to have a material adverse effect on the business, properties,
assets, operations, or conditions, financial or otherwise, of the Borrower or
the ability of the Borrower to carry out its obligations under the Loan
Documents to which it is a party. The Borrower is not in default in any respect
in the performance, observance or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument material to
its business to which it is a party.
Section 4.07. Litigation. There is no pending or, to
Borrower's knowledge, threatened action or proceeding against or affecting the
Borrower before any court, governmental agency, or arbitrator which is
reasonably likely to, in any one case or in the aggregate, materially adversely
affect the financial condition, operations, properties, or business of the
Borrower or the ability of the Borrower to perform its obligation under the Loan
Documents to which it is a party.
Section 4.08. No Defaults on Outstanding Judgments or Orders.
The Borrower has satisfied all judgments and is not in material default with
respect to any judgment, writ, injunction, decree, rule or regulation of any
court, arbitrator, or federal, state, municipal, or other
-12-
<PAGE>
governmental authority, commission, board, bureau, agency, or instrumentality,
domestic or foreign.
Section 4.09. Ownership and Liens. The Borrower and the
Guarantors have title to, or valid leasehold interests in, all of their
respective properties and assets, real and personal, (other than any properties
or assets disposed of in the ordinary course of business), and none of the
properties and assets owned by the Borrower or Guarantors is subject to any
Lien, except for existing purchase money liens and liens in favor of Bank.
Section 4.10. ERISA. The Borrower is in compliance in all
material respects with all applicable provisions of ERISA. Neither a Reportable
Event nor a Prohibited Transaction has occurred and is continuing with respect
to any Plan; no notice of intent to terminate a Plan has been filed nor has any
Plan been terminated; no circumstances exist which constitute grounds under
Section 4042 of ERISA entitling the PBGC to institute proceedings to terminate,
or appoint a trustee to administer a Plan, nor has the PBGC instituted any such
proceedings; neither the Borrower nor any ERISA Affiliate has completely or
partially withdrawn under Sections 4201 or 4204 of ERISA from a Multiemployer
Plan; Borrower and each ERISA Affiliate have met their minimum funding
requirements under ERISA with respect to all of their Plans and the present fair
market value of all Plan assets exceeds the present value of all vested benefits
under each Plan, as determined on the most recent valuation date of the Plan and
in accordance with the provisions of ERISA and the regulations thereunder for
calculating the potential liability of the Borrower or any ERISA Affiliate to
PBGC or the Plan under Title IV of ERISA; and neither the Borrower nor any ERISA
Affiliate has incurred any liability to the PBGC under ERISA.
Section 4.11. Operation of Business. The Borrower possesses
all licenses, permits, franchises, patents, copyrights, trademarks, and trade
names, or rights thereto, to conduct its business substantially as now conducted
and as presently proposed to be conducted, and the Borrower is not in material
violation of any valid rights of others with respect to any of the foregoing.
Section 4.12. Taxes. The Borrower and the Guarantors have
filed all tax returns (federal, state and local) required to be filed and have
paid all taxes, assessments, and governmental charges and levies thereon to be
due, including interest and penalties, except the filing of tax returns or the
payment of taxes, if any, being contested by the Borrower or the Guarantors, and
disclosed to the Bank in writing or those where the failure to file or pay is
not reasonably likely to have a material adverse effect on Borrower.
Section 4.13. Debt. The Borrower is not indebted under any
credit agreement, indenture, purchase agreement, guaranty, Capital Lease
Obligations, or other investment, agreement or arrangement except as disclosed
in the Borrower's financial statements or as otherwise disclosed to the Bank in
writing.
-13-
<PAGE>
Section 4.14. Environmental Matters. To the best of the
Borrower's knowledge, no real property owned or leased by the Borrower, or owned
by the Guarantors is in material violation of any Environmental Laws, no
Hazardous Materials are present on said real property except for materials used
in Borrower's business which are stored, maintained and utilized in accordance
with all applicable laws, rules and regulations, and neither the Borrower nor
the Guarantors have been identified in any litigation, administrative
proceedings or investigation as a responsible party for any liability under any
Environmental Laws.
Section 4.15. Mortgage Liens. The mortgage lien granted to the
Bank pursuant to the Mortgage will be superior and prior to any liens of all
third persons existing on the date of its execution and delivery or thereafter
arising by way of lien or otherwise to the full extent provided by law upon the
recording of such mortgage in the Office of the Recorder of Deeds of Bucks
County except for existing first, second and third mortgages to Bank and a
mortgage to Bank in the amount of One Million Eight Hundred Thousand Dollars
($1,800,000.00), dated even date herewith. All such action as is necessary to
establish the mortgage lien of the Bank and their priority as described in the
preceding sentence will have been taken, and there will be as of the date of
recording of such mortgage no necessity for any further action in order to
protect, preserve and continue the mortgage lien and such priority, except that
if the failure to record the Mortgage or the recording of the Mortgage in a
different order of priority is the result of the actions or inactions of Bank,
Borrower shall have no obligation or liability in connection therewith. All
recording fees and other expenses in connection with each such action have been
or will be paid by the Borrower.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as the Note shall remain unpaid or this Agreement
shall remain in effect, the Borrower will:
Section 5.01. Maintenance of Existence. Preserve and maintain
its corporate existence and good standing in the jurisdiction of its
incorporation, and qualify and remain qualified as a foreign corporation in each
jurisdiction in which such qualification is required and where the failure to
qualify would have a material adverse effect upon Borrower.
Section 5.02. Maintenance of Records. Keep accurate records
and books of account, in which complete entries will be made in accordance with
the GAAP consistently applied, reflecting all financial transactions of the
Borrower.
Section 5.03. Maintenance of Properties. Maintain, keep and
preserve all of its properties (tangible and intangible) necessary or useful in
the proper conduct of its material business in reasonably good working order and
condition, ordinary wear and tear excepted.
-14-
<PAGE>
Section 5.04. Conduct of Business; Permits and Approvals;
Compliance with Laws. Continue to engage in an efficient and economical manner
in a business of the same general type as conducted by it on the date of this
Agreement; maintain in full force and effect, its franchises, and all licenses,
patents, trademarks, tradenames, contracts, permits, approvals and other rights
necessary to the profitable conduct of its business; and comply in all material
respects with all applicable laws, rules, regulations and orders, except for
noncompliance which is not reasonably expected to have any adverse effect on
Borrower.
Section 5.05. Maintenance of Insurance. Maintain insurance,
including the fire insurance and flood insurance policies described in Section
3.01(9) above, naming Bank as Lender Loss Payee, with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies engaged in the same or a similar
business and similar situated, which insurance may provide for reasonable
deductibility from coverage thereof.
Section 5.06. Payment of Debt; Payment of Taxes, Etc.
Promptly pay and discharge:
(1) All of its Debt in accordance with the terms
thereof;
(2) All taxes, assessments, and governmental charges
or levies imposed upon it or upon its income and profits, upon any of its
property, real, personal or mixed, or upon any part thereof, before the same
shall become in default;
(3) All lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, might become a lien or charge upon such
property or any part thereof;
provided, however, that so long as the Borrower first notifies the Bank of its
intention to do so, the Borrower shall not be required to pay and discharge any
such Debt, tax, assessment, charge, levy or claim so long as the failure to so
pay or discharge does not constitute or result in a Default or an Event of
Default under Section 7.01(7) and so long as no foreclosure or other similar
proceeding shall have been commenced against such property or any part thereof
and so long as the validity thereof shall be contested in good faith by
appropriate proceedings diligently pursued and it shall have set aside on its
books adequate reserves with respect thereto.
Section 5.07. Right of Inspection. At any reasonable time and
from time to time, during normal business hours and with reasonable prior
notice, permit the Bank or any agent or representative thereof (a) to examine
and make copies of and abstracts from the records and books of account of, and
visit the properties of, the Borrower and the Guarantors, and to inspect and
verify all inventory of Borrower, and (b) to discuss the affairs, finances, and
accounts of the Borrower and the Guarantors, with any of its officers and
directors and the Borrower's independent accountants. Borrower shall pay all
costs assessed by Bank for such inspections, or field examinations.
-15-
<PAGE>
Section 5.08. Reporting Requirements. Furnish to the Bank:
(1) Within sixty (60) days after the end of each
fiscal quarter of the Borrower and the Guarantors, internally prepared financial
statements of the Borrower and the Guarantors, including a balance sheet and
related statements of income and shareholders' equity together with Borrower's
Form 10-Q, as filed;
(2) Within one hundred twenty (120) days after the
close of each fiscal year of the Borrower and the Guarantors, financial
statements of the Borrower and the Guarantors, including a balance sheet and
related statements of income, shareholders' equity, and changes in financial
position together with Borrower's Form 10-K, as filed, all in reasonable detail,
together with all supporting schedules and notes, and prepared on an audited
basis by independent certified public accountants satisfactory to the Bank in
its reasonable discretion. Bank will, on an annual basis, review with Borrower
the quality of the work produced by Borrower's accountants;
(3) Within thirty (30) days after the end of each
fiscal quarter of the Borrower, updated cash flow projections for the current
quarter;
(4) Within fifteen (15) days after the end of each
month, accounts receivables and accounts payable agings; and
(5) Such other information respecting the condition
or operations, financial or otherwise, of the Borrower as the Bank may from time
to time reasonably request, including but not limited to financial projections
tax returns, and listings of assets.
Section 5.09. Financial Covenants. Maintain a debt to worth
ratio not to exceed 1.25 to 1 and a minimum current ratio of 1.5 to 1. For
purposes of calculation of the minimum current ratio, the entire outstanding
balance under this Agreement shall be shown as a current liability. These ratios
will be measured and reviewed annually after receipt of the audited annual
financial statements.
Section 5.10. Further Assurances. Do such further acts and
things and execute and deliver to the Bank such additional assignments,
agreements, powers and instruments, as the Bank may reasonably require or
reasonably deem advisable to carry into effect the purposes of this Agreement or
to better assure and confirm unto the Bank its rights, powers and remedies
hereunder.
Section 5.11. Cross-Default and Cross-Collateralization. Agree
that all existing and future loan obligations of Borrower shall be
cross-collateralized and cross-defaulted.
-16-
<PAGE>
ARTICLE VI
NEGATIVE COVENANTS
So long as the Note shall remain unpaid or this Agreement
shall remain in effect, the Borrower will not:
Section 6.01. Liens. Create, incur, assume, or suffer to
exist, any Lien upon or with respect to any of its properties, now owned or
hereafter acquired, except:
(l) Liens in favor of the Bank;
(2) Liens for taxes or assessments or other
government charges or levies if not yet due and payable or, if due and payable,
if they are being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted and for which appropriate reserves are
maintained and so long as no foreclosure, distraint, sale or other similar
proceedings shall have been commenced with respect thereto;
(3) Deposits, or pledges to secure the performance
of bids, tenders, contracts (other than contracts for the payment of money),
leases (permitted under the terms of this Agreement), or public or statutory
obligations; surety, indemnity, performance, or other similar bonds; or other
similar obligations, all arising in the ordinary course of business.
(4) Existing purchase money Liens on equipment and
vehicles so long as each such Lien (i) exists upon the same terms as those
existing on the date hereof and (ii) does not secure indebtedness in a principal
amount greater than that outstanding on the date hereof and no additional assets
are furnished as Collateral to secure such Liens.
(5) Liens securing Debt permitted under Section 6.02
of this Agreement.
Section 6.02. Debt. Create, incur, assume, or suffer to exist
any Debt, except:
(l) Bank Debt under this Agreement, the Note, the
other Loan Documents or under any other document, instrument or agreement
between the Borrower and the Bank, including a Term Loan to Borrower dated even
date herewith in the amount of One Million Eight Hundred Thousand Dollars
($1,800,000.00);
(2) Current accounts payable, accrued expenses and
other current items arising out of transactions (other than borrowings) in the
ordinary course of business;
(3) Indebtedness secured by purchase money security
interests and capitalized leases of equipment and vehicles, provided that the
total aggregate principal amount
-17-
<PAGE>
(including Capitalized Lease Obligations) of all such indebtedness incurred
during each calendar year shall not exceed Two Hundred Fifty Thousand Dollars
($250,000.00) and provided that the liens and security interests securing such
indebtedness i) are limited to the specific identified asset purchased with such
indebtedness, and ii) except for the priority obtained as a result of its
classification as a purchase money security interest, shall in no way affect or
impair the existing liens and security interests in favor of Bank; and
(4) Indebtedness hereafter incurred in connection
with a Lien permitted in Section 6.01 above, including debt for existing
purchase money obligations.
Section 6.03. Mergers, Etc. Merge or consolidate with, or
sell, assign, lease, or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person, or acquire all or substantially all
of the assets or the business of any Person, except that Bank shall permit the
acquisition of the assets of TSA Systems, Ltd. and a division of Teledyne
Corporation and the Measurement Dynamics LLC transactions.
Section 6.04. Dividends. Declare or pay any dividends; or
purchase, redeem, retire, or otherwise acquire for value any of its capital
stock now or hereafter outstanding; or make any distribution of assets to its
shareholders as such whether in cash, assets or obligations of the Borrower; or
allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption, or retirement of, any shares
of its capital stock; or make any other distribution by reduction of capital or
otherwise in respect of any shares of its capital stock, if such dividend, stock
purchase, or other action described in this paragraph would cause or result in
the occurrence of an Event of Default as defined herein.
Section 6.05. Sale of Assets. Sell, lease, assign, transfer,
or otherwise dispose of any of its now owned or hereafter acquired assets
except: (a) for inventory disposed of in the ordinary course of business; (b)
the sale or other disposition of assets no longer used or useful in the conduct
of its business; and (c) the sale or other disposition of assets provided the
proceeds of sale are used either to pay down existing term loans owed by
Borrower to Bank or to purchase substantially similar replacement assets.
Section 6.06. Guaranties, Etc. Assume, guarantee, endorse, or
otherwise be or become directly or contingently responsible or liable,
(including, but not limited to, an agreement to purchase any obligation, stock,
assets, goods, or services, or to supply or advance any funds, assets, goods, or
services, or to maintain or cause such Person to maintain a minimum working
capital or net worth, or otherwise to assure the creditors of any Person against
loss) for obligations of any Person, except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business.
Section 6.07. Hazardous Materials; Indemnification. Use,
generate, treat, store, dispose of or otherwise introduce any Hazardous
Materials into or on any real property owned or leased by it, except in an
environmentally safe manner through methods meet in all material
-18-
<PAGE>
respects all of the standards of the Federal Environmental Protection Agency and
any other federal, state or local agency with authority to enforce Environmental
Laws. The Borrower hereby agrees to indemnify, reimburse, defend and hold
harmless the Bank and its director's, officers, agents and employees
("Indemnified Parties") for, from and against all demands, liabilities, damages,
costs, claims, suits, actions, legal or administrative proceedings, interest,
losses, expenses and reasonable attorney's fees (including any such fees and
expenses incurred in enforcing this indemnity) asserted against, imposed on or
incurred by any of the Indemnified Parties, directly or indirectly pursuant to
or in connection with the application of any Environmental Law to acts or
omissions occurring at any time on or in connection with any real estate owned
or leased by the Borrower or any business conducted thereon, except for acts or
omissions of Bank, its employees or authorized agents. None of the aforesaid
shall in any way limit or restrict the right of Borrower to defend claims
asserted against it or any of the Indemnified Parties.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. Events of Default. If any of the following
events ("Events of Default") shall occur:
(1) The Borrower shall fail to pay the principal of,
or interest on, the Note or any amount of a commitment fee or any other amount
due hereunder, if such failure is not cured within fifteen (15) days after
written notice thereof has been given to Borrower by Bank;
(2) Any representation or warranty made or deemed
made by the Borrower in this Agreement or the Security Agreements which are
contained in any certificate, document, opinion, or financial or other statement
furnished at any time under or in connection with any Loan Documents shall prove
to have been incorrect in any material respect on or as of the date made or
deemed made and the Borrower shall not have cured the effect of such false or
misleading statements within fifteen (15) days after it occurs;
(3) The Borrower shall fail to perform or observe
any term, covenant, or agreement contained in any Loan Document to which it is a
party on its part to be performed or observed, where such failure to perform or
observe is not cured within thirty (30) days after written notice thereof has
been given to the Borrower by the Bank;
(4) A default in the payment or performance of any
obligation of the Borrower to the Bank other than under this Agreement or the
Note and such default shall have continued uncured after the giving of any
required notice or past the expiration of any applicable grace or cure period;
-19-
<PAGE>
(5) The Borrower shall (a) fail to pay any
indebtedness of the Borrower, the principal face amount of which exceeds Two
Hundred Fifty Thousand Dollars ($250,000.00), (other than indebtedness to Bank),
or any interest or premium thereon, within fifteen (15) days of its due date
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise), or (b) fail to perform or observe any term, covenant, or condition
on its part to be performed or observed under any agreement or instrument
relating to any such indebtedness, when required to be performed or observed, if
the effect of such failure to pay or perform or observe is to accelerate, or to
permit the acceleration after the giving of notice or passage of time, or both,
of the maturity of such indebtedness, unless such failure to perform or observe
shall be waived by the holder of such indebtedness; or any such indebtedness
shall be declared to be due and payable, or required to be prepaid (other than
by a regularly scheduled required prepayment), prior to the stated maturity
thereof;
(6) The Borrower (a) shall generally not, or shall
be unable to, or shall admit in writing its inability to pay its debts as such
debts become due; or (b) shall make an assignment for the benefit of creditors,
petition or apply to any tribunal for the appointment of a custodian, receiver,
or trustee for it or a substantial part of its assets; or (c) shall commence any
proceeding under any bankruptcy, reorganization, arrangements, readjustment of
debt, dissolution, or liquidation law or statute of any jurisdiction, whether
now or hereafter in effect; (d) shall have any such petition or application
filed or any such proceeding commenced against it, in which an order for relief
is entered or adjudication or appointment is made and which remains undismissed
for a period of thirty (30) days or more; or (e) by any act or omission shall
indicate its consent to, approval of, or acquiescence in any such petition,
application, or proceeding, or order for relief, or the appointment of a
custodian, receiver, or trustee for all or any substantial part of its
properties; or (f) shall suffer any such custodianship, receivership, or
trusteeship to continue undischarged for a period of thirty (30) days or more;
(7) One or more judgments, decrees, or orders for
the payment of money in excess of Twenty-Five Thousand Dollars ($25,000.00)
shall be rendered against the Borrower, and such judgments, decrees, or orders
shall continue unsatisfied and in effect for a period of fifteen (15)
consecutive days without being vacated, discharged, satisfied or stayed or
bonded pending appeal;
(8) Any of the following events occur or exist with
respect to the Borrower or any ERISA Affiliate: (a) any Prohibited Transaction
involving any Plan; (b) any Reportable Event with respect to any Plan; (c) the
filing under Section 4041 of ERISA of a notice of intent to terminate any Plan
or the termination of any Plan; (d) any event or circumstance that might
constitute grounds entitling the PBGC to institute proceedings under Section
4042 of ERISA for the termination of, or for the appointment of a trustee to
administer, any Plan, or the institution by the PBGC of any such proceedings;
(e) complete or partial withdrawal under Section 4201 or 4204 of ERISA from a
Multiemployer Plan or the reorganization, insolvency, or termination of any
Multiemployer Plan; and in each case above, such event or condition, together
with all other events or conditions, if any, could in the opinion of the Bank
subject the Borrower to any tax, penalty, or other liability to a Plan, a
Multiemployer
-20-
<PAGE>
Plan, the PBGC, or otherwise (or any combination thereof) which in the
reasonable determination of the Bank is reasonably likely to have a material
adverse effect on the financial condition, properties or operations of the
Borrower;
then, and in any such event, the Agreement shall terminate and the entire
amounts outstanding under the Loans and all interest thereon and all other
amounts payable under this Agreement shall become and be immediately due and
payable; provided that upon the happening of a Default specified in Section
7.01(6), this Agreement shall terminate and the outstanding Note and all
interest thereon and all other amounts payable thereunder shall be immediately
due and payable without declaration or other prior notice to the Borrower.
Thereupon Bank shall have all of the rights and remedies available to it under
the Loan Documents or otherwise at law or in equity. The Borrower expressly
waive any presentment, demand, protest or further notice of any kind. With
respect to all Loans payable on demand, the Bank's rights to demand payable
shall not be restricted or impaired by the absence, non-occurrence or waiver of
a default, and it is understood that the Bank may demand payment at any time.
ARTICLE VIII
TERMINATION
Section 8.01. So long as no default which is continuing has
occurred hereunder, this Agreement shall remain in full force and effect until
either Borrower gives notice of termination to the Bank or the Bank gives notice
of termination to Borrower (in either case, a "Termination Notice"), which must
be given and confirmed in writing. Upon the giving of a Termination Notice, the
outstanding principal of all Loans plus accrued interest to the date of
repayment outstanding under the terms of this Agreement shall be immediately due
and payable.
ARTICLE IX
CONFESSION OF JUDGMENT
Section 9.01. Upon the occurrence of any default not cured
within the applicable grace period, Borrower irrevocably authorizes and empowers
any attorney or any clerk of any court of record to appear for and confess
judgment against Borrower for such sums as are due and owing on this Line of
Credit Agreement and the Master Demand Note, with or without declaration, with
costs of suit, without stay of execution and with reasonable attorneys' fees
added for collection fees. If a copy of this Agreement and the Master Demand
Note, verified by affidavit by or on behalf of the Bank, shall have been filed
in such action, it shall not be necessary to file the original of this Agreement
and the Master Demand Note. The authority granted hereby shall not be exhausted
by the initial exercise thereof and may be exercised by the Bank from time to
time until all sums payable by Borrower have been paid in full.
-21-
<PAGE>
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendments, Etc. No amendment, modification,
termination, or waiver of any provision of any Loan Document to which the
Borrower is a party, nor consent to any departure by the Borrower from any Loan
Document to which it is a party, shall in any event be effective unless the same
shall be in writing and signed by the Bank, (and, if an amendment, modification
or termination, also by Borrower), and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section 10.02. Notices, Etc. All notices and other
communications provided for under this Agreement and under the other Loan
Documents to which the Borrower is a party shall be in writing (including
telegraphic and telex transmissions and facsimile transmissions, if subject to
pre-established verification procedures) and mailed or transmitted and
delivered,
if to the Borrower, at:
Nuclear Research Corporation
125 Titus Avenue
Warrington, PA 18976
Attention: Mark Pollock
if to CoreStates Bank, N.A. at:
CoreStates Bank, N.A.
4259 Swamp Road, Suite 410
Fourth Floor
Doylestown, PA 18901
Attention: Edward F. Mulligan,
Vice President
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section 10.02.
Section 10.03. No Waiver; Remedies. No failure on the part of
the Bank to exercise, and no delay in exercising, any right, power, or remedy
under any Loan Documents shall operate as a waiver thereof; nor shall any single
or partial exercise of any right under any Loan Documents preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in the Loan Documents are cumulative and not exclusive of any remedies
provided by law.
-22-
<PAGE>
Section 10.04. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Borrower and the Bank and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights under any Loan Document to which the Borrower is a
party without the prior written consent of the Bank.
Section 10.05. Costs, Expenses, and Taxes. The Borrower agrees
to pay (a) all costs and expenses in connection with the preparation, execution,
delivery, filing, recording of any of the Loan Documents including but not
limited to the reasonable fees and out-of-pocket expenses of counsel for the
Bank, and local counsel who may be retained by said counsel, with respect
thereto and with respect to advising the Bank as to its rights and
responsibilities under any of the Loan Documents; and (b) all costs and
expenses, if any, in connection with the enforcement of any of the Loan
Documents including but not limited to the reasonable fees and out-of-pocket
expenses of counsel for the Bank and local counsel who may be retained by said
counsel incurred by the Bank in connection with the enforcement and collection
of the Loans and the Loan Documents and with respect to advising the Bank as to
its rights and responsibilities under any of the Loan Documents. In addition,
the Borrower shall pay any and all stamp and similar taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing, and
recording of any of the Loan Documents and the other documents to be delivered
under any such Loan Documents, and agrees to save the Bank harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees, so long as such delay or omission
is not caused by Bank.
Section 10.06. Right of Setoff. The Bank are hereby authorized
at any time and from time to time, without notice to the Borrower (any such
notice being expressly waived by the Borrower), to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Bank to or for the credit
or the account of the Borrower against any and all of the obligations of the
Borrower now or hereafter existing under this Agreement or the Note or any other
Loan Document, irrespective of whether or not the Bank shall have made any
demand under this Agreement or the Note or such other Loan Document and although
such obligations may be unmatured. The Bank agree promptly to notify the
Borrower after any such setoff and application, provided that the failure to
give such notice shall not affect the validity of such setoff and application.
The rights of the Bank under this Section 8.06 are in addition to other rights
and remedies (including, without limitation, other rights of setoff) which the
Bank may have.
Section 10.07 Governing Law. This Agreement and the Note shall
be governed by, and construed in accordance with, the laws of the Commonwealth
of Pennsylvania.
Section 10.08. Severability of Provisions. Any provision of
any Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions of such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.
-23-
<PAGE>
Section 10.9. Survival of Agreement. All covenants,
agreements, representations and warranties made herein and in the certificates
delivered pursuant hereto shall survive the making by the Bank of the Loan and
the execution and delivery to the Bank of the Note and shall continue in full
force and effect so long as the Note or any amounts due hereunder are
outstanding and unpaid.
Section 10.10. Headings. Article and Section headings in the
Loan Documents are included in such Loan Documents for the convenience of
reference only and shall not constitute a part of the applicable Loan Documents
for any other purpose.
Section 10.11. JURISDICTION AND VENUE. IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER, THE
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED IN ANY COUNTY IN THE COMMONWEALTH OF PENNSYLVANIA
WHERE BANK OR BORROWER MAINTAIN AN OFFICE AND AGREES NOT TO RAISE ANY OBJECTION
TO SUCH JURISDICTION OR TO THE LAYING OR MAINTAINING OF THE VENUE OF ANY SUCH
PROCEEDING IN SUCH COUNTY.
Section 10.12. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK TO ENTER INTO
THIS AGREEMENT.
IN WITNESS WHEREOF, INTENDING TO BE LEGALLY BOUND HEREBY,
the parties have caused this Agreement to be executed by their respective
officers thereunto duly authorized, as of the date first above written.
"Borrower" NUCLEAR RESEARCH CORPORATION
By: /s/ Earl M. Pollock
------------------------- (SEAL)
Name: Earl M. Pollock
Title: President
"Bank" CORESTATES BANK, N.A.
By: /s/ Edward F. Mulligan
------------------------- (SEAL)
Name: Edward F. Mulligan
Title: Vice President
-24-
<PAGE>
EXHIBIT 10(e)
CORESTATES BANK, N.A.
MASTER DEMAND NOTE
$5,500,000.00 January 14, 1997
FOR VALUE RECEIVED, each of the undersigned, jointly and severally if more than
one (hereinafter collectively referred to as "Borrower"), promises to pay to the
order of CoreStates Bank, N.A., a national banking association (the "Bank"), at
any of its banking offices in Pennsylvania, the principal amount of FIVE MILLION
FIVE HUNDRED THOUSAND DOLLARS ($5,500,000.00) in lawful money of the United
States, or, if less, the outstanding principal balance on all loans and advances
made by Bank evidenced by this Note ("Loans"), plus interest. Said principal and
interest shall be payable ON DEMAND.
Interest shall accrue at Bank's Prime Rate, such rate to change each time the
Prime Rate changes, effective on and as of the date of the change.
INTEREST - Interest shall be calculated on the basis of a three hundred
sixty-five (365) day year and shall be charged for the actual number of days
elapsed. Accrued interest shall be payable monthly. Accrued interest shall also
be payable on demand and when the entire principal balance of this Note is paid
to Bank. The term "Prime Rate" is defined as the rate of interest for loans
established by Bank from time to time as its prime rate. Interest shall accrue
on each disbursement hereunder from the date such disbursement is made by Bank,
provided, however, that to the extent this Note represents a replacement,
substitution, renewal or refinancing of existing indebtedness, interest shall
accrue from the date hereof. Interest shall accrue on the unpaid balance hereof
at the rate provided for in this Note until the entire unpaid balance has been
paid in full, notwithstanding the entry of any judgment against Borrower.
LATE CHARGE - If any monthly payment of interest which is to be made hereunder
is not paid within fifteen (15) days after the date when due, the borrower shall
pay to the Lender a late charge of five cents ($0.05) for each dollar which is
so overdue for the purpose of defraying the expense incident to handling such
delinquency. This provision shall not be deemed to affect or lengthen the time
to cure any default hereunder.
BANK'S LOAN RECORDS - The actual amount due and owing from time to time under
this Note shall be evidenced by Bank's books and records of receipts and
disbursements hereunder. Banks shall set up and establish an account on the
books of Bank in which will be recorded Loans evidenced hereby, payments on such
Loans and other appropriate debits and credits as provided herein, including any
Loans which represent reborrowings of amounts previously
-1-
<PAGE>
repaid. Bank shall also record, in accordance with customary accounting
practice, all other interest, charges, expenses and other items properly
chargeable to Borrower hereunder, and other appropriate debits and credits. Such
books and records of Bank shall be presumed to be complete and accurate and
shall be deemed correct, except to the extent shown by Borrower to be erroneous.
NOTE NOT A COMMITMENT TO LEND - Borrower acknowledges and agrees that no
provision hereof, and no course of dealing by Bank in connection herewith, shall
be deemed to create or shall imply the existence of any commitment or obligation
on the part of Bank to make Loans. Except as otherwise provided in a currently
effective written agreement by Bank to make Loans, each Loan shall be made
solely at Bank's discretion.
PREPAYMENT - Borrower may at its option prepay all or any portion of the
principal balance of any Loans at any time without premium or penalty.
COLLATERAL - As security for all indebtedness to Bank now or hereafter incurred
by Borrower, under this Note or otherwise, Borrower grants Bank a lien upon and
security interest in any securities, instruments or other personal property of
Borrower now or hereafter in Bank's possession and in any deposit balances now
or hereafter held by Bank for Borrower's account and in all proceeds of any such
personal property or deposit balances. Such liens and security interests shall
be independent of Bank's right of setoff. This Note and the indebtedness
evidenced hereby shall be additionally secured by any lien or security interest
evidenced by a writing (whether now existing or hereafter executed) which
contains a provision to the effect that such lien or security interest is
intended to secure (a) this Note or indebtedness evidenced hereby or (b) any
category of liabilities, obligations or the indebtedness of Borrower to Bank
which includes this Note or the indebtedness evidenced hereby, and all property
subject to any such lien or security interest shall be collateral for this Note.
CONFESSION OF JUDGMENT - Upon the occurrence of any default not cured within the
applicable grace period, Borrower irrevocably authorizes and empowers any
attorney or any clerk of any court of record to appear for and confess judgment
against Borrower for such sums as are due and owing on this Note, with or
without declaration, with costs of suit, without stay of execution and with
reasonable attorneys' fees added for collection fees. If a copy of this Note,
verified by affidavit by or on behalf of Bank, shall have been filed in such
action, it shall not be necessary to file the original of this Note. The
authority granted hereby shall not be exhausted by the initial exercise thereof
and may be exercised by Bank from time to time. There shall be excluded from the
lien of any judgment obtained solely pursuant to this paragraph all improved
real estate in any area identified under regulations promulgated under the Flood
Disaster Protection Act of 1973, as having special flood hazards if the
community in which such area is located is participating in the National Flood
Insurance Program. Any such exclusion shall not affect any lien upon property
not so excluded.
-2-
<PAGE>
DEMAND NOTE - This Note is and shall be construed as a "demand instrument" under
the Uniform Commercial Code. Bank may demand payment of the indebtedness
outstanding under this Note or any portion thereof at any time.
BANK'S REMEDIES - In the event that any payment hereunder is not made within
fifteen (15) days after written notice has been given to Borrower that the same
is due or is demanded hereunder, Bank may, immediately or any time thereafter,
exercise any or all of its rights hereunder or under any agreement or otherwise
under applicable law against Borrower, against any person liable, either
absolutely or contingently, for payment of any indebtedness evidenced hereby,
and in any collateral, and such rights may be exercised in any order and shall
not be prejudiced by any delay in Bank's exercise thereof. At any time after
such non-payment, Bank may, at its option and upon five days written notice to
Borrower, begin accruing interest on this Note at a rate not to exceed two
percent (2%) per annum in excess of the rate of interest provided for above on
the unpaid principal balance hereof; provided, however, that no such interest
shall accrue hereunder in excess of the maximum rate permitted by law. All such
additional interest shall be payable upon demand.
NOTICE TO BORROWER - Any notice required to be given by Bank under the
provisions of this Note shall be effective as to each Borrower given in the
manner provided in the Line of Credit Agreement dated even date herewith between
Bank and Borrower.
DISBURSEMENTS AND PAYMENTS - The proceeds of any Loan may be credited by Bank to
the deposit account of Borrower or disbursed in any other manner requested by
Borrower and approved by Bank. All payments due under this Note are to be made
in immediately available funds. If Bank accepts payment in any other form, such
payment shall not be deemed to have been made until the funds comprising such
payment have actually been received by or made available to Bank.
PAYMENT OF COSTS - In addition to the principal and interest and other sums
payable hereunder, Borrower agrees to pay Bank promptly after demand, all costs
and expenses (including reasonably attorneys' fees and disbursements) which may
be incurred by Bank in the collection of this Note or the enforcement of Bank's
rights and remedies hereunder.
WAIVERS, ETC. - Borrower and each additional obligor on this Note waive
presentment, dishonor, notice of dishonor, protest and notice of protest.
Neither the failure nor any delay on the part of Bank to exercise any right,
remedy, power or privilege hereunder shall operate as a waiver or modification
thereof. No consent, waiver or modification of the terms of this Note shall be
effective unless set forth in a writing signed by Bank. All rights and remedies
of Bank are cumulative and concurrent and no single or partial exercise of any
power or privilege shall preclude any other or further exercise of any right,
power or privilege.
MISCELLANEOUS - This Note is the unconditional obligation of Borrower, and
Borrower agrees that Bank shall not be required to exercise any of its rights or
remedies against any collateral in which it holds a lien or security interest,
or against which it has right of setoff, or
-3-
<PAGE>
against any particular obligor. All. representations, warranties and agreements
herein are made jointly and severally by each Borrower. If any provision of this
Note shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision hereof. To the extent that this Note
represents a replacement, substitution, renewal or refinancing of a pre-existing
note or other evidence of indebtedness, the indebtedness represented by such
pre-existing note or other instrument shall not be deemed to have been
extinguished hereby. This Note has been delivered in and shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to the law of conflicts. In the event any due date specified or
otherwise provided for in this Note shall fall on a day which Bank is not open
for business, such due date shall be postponed until the next banking day, and
interest and any fees or similar charges shall continue to accrue during such
period of postponement. This Note shall be binding upon each Borrower and each
additional Obligor and upon their personal representatives, heirs, successors
and assigns, and shall benefit Bank and its successors and assigns.
CONSENT TO JURISDICTION AND VENUE - IN ANY LEGAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE OR THE
RELATIONSHIP EVIDENCED HEREBY, EACH UNDERSIGNED PARTY HEREBY IRREVOCABLY SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN ANY
COUNTY IN THE COMMONWEALTH OF PENNSYLVANIA WHERE BANK MAINTAINS AN OFFICE AND
AGREES NOT TO RAISE ANY OBJECTION TO SUCH JURISDICTION OR TO THE LAYING OR
MAINTAINING OF THE VENUE OF ANY SUCH PROCEEDING IN SUCH COURT.
WAIVER OF JURY TRIAL - EACH UNDERSIGNED PARTY HEREBY WAIVES, AND BANK BY ITS
ACCEPTANCE HEREOF THEREBY WAIVES, TRIAL BY JURY IN ANY LEGAL PROCEEDING
INVOLVING DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT
OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE OR THE
RELATIONSHIP EVIDENCED HEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK
TO ENTER INTO, ACCEPT OR RELY UPON THIS NOTE.
IN WITNESS WHEREOF, Borrower intending this to be a sealed instrument and
intending to be legally bound hereby, has executed and delivered this Note as of
the day and year first above written.
NUCLEAR RESEARCH CORPORATION
By: /s/ Earl M. Pollock
--------------------------------
Name: Earl M. Pollock
Title: President
-4-
<PAGE>
EXHIBIT 10(f)
OPEN-END
MORTGAGE
THIS MORTGAGE SECURES FUTURE ADVANCES
THIS MORTGAGE is made on January 14, 1997 by NUCLEAR RESEARCH
CORPORATION, a Pennsylvania corporation, 125 Titus Avenue, Warrington,
Pennsylvania, 18976 ("Borrower") in favor of CORESTATES BANK, N.A., a national
banking association, 4259 West Swamp Road, Doylestown, Pennsylvania, 18901
("Lender"). INTENDING TO BE LEGALLY BOUND, Borrower agrees as follows:
1. LOAN TERMS -
(a) This is an open-end Mortgage that secures future
advances under a line of credit extended by Lender to Borrower. The maximum
amount of the loan secured by this Mortgage is FIVE MILLION FIVE HUNDRED
THOUSAND DOLLARS ($5,500,000.00) ("Principal Sum"). This Mortgage shall have the
full force, effect and benefit of a Mortgage to secure advances of money, the
lien for which shall relate back to the date of the Mortgage.
(b) Borrower has executed and delivered to Lender
this Mortgage and a Demand Note ("Note") of even date herewith, which is hereby
incorporated herein by reference, to secure repayment of the Principal Sum,
interest and all unpaid balances of advances made with respect to the Mortgaged
Premises for the payment of taxes, assessments, maintenance charges, insurance
premiums and costs incurred for the protection of the Mortgaged Premises, as
defined herein, or the lien of the Mortgage, expenses incurred by the Lender by
reason of default by the Borrower under the Mortgage and advances made under a
construction loan to enable completion of the improvements for which the
construction loan was originally made, if applicable, all of which are included
in and called "Entire Indebtedness". This Mortgage secures the Note and any
extension, modification or renewal thereof.
2. LENDER'S INSPECTION - Any right or privilege given Lender to
inspect the Mortgaged Premises, whether under this Mortgage, the Note, any
construction loan agreement, mortgage application, or otherwise, and any actual
inspection made by the Lender, its agents, servants, employees, appraisers,
engineers, or architects, shall be deemed to be made for the sole and exclusive
benefit of the Lender. The Borrower, the Borrower's heirs, successors and
assigns, and the Borrower's tenants, agents, servants, employees, visitors and
all other parties shall not be deemed to be beneficiaries for any purpose of any
such inspection. Any approval of the Mortgaged Premises or of any construction
of improvements thereon as the result of any such inspection by Lender or others
acting on behalf of Lender shall not be deemed any kind of
-1-
<PAGE>
warranty of fitness for any purpose. Lender shall have no liability of any kind
to any party as a result of any inspection or investigation of the Mortgaged
Premises or otherwise.
3. MORTGAGED PREMISES - To secure the payment of the Entire
Indebtedness and in consideration of the loan from Lender to Borrower, Borrower
does hereby grant and convey unto Lender the premises herein called "Mortgaged
Premises", consisting of:
ALL THAT CERTAIN lot or piece of ground, with
buildings and improvements now thereon erected, if any, and to be erected,
situate and bounded and described as is more particularly set forth in the legal
description attached hereto, made a part thereof, and marked Exhibit "A".
TOGETHER WITH:
(a) All the right, title and interest of Borrower in
and to all the rights, covenants, privileges and appurtenances thereunto
belonging or in any wise appertaining, and together with all buildings and
improvements presently thereon and hereafter constructed thereon; and
(b) Borrower's fixtures, machinery, improvements,
including but not limited to all furnaces, boilers, elevators, heaters,
switchboards, electrical equipment, heating, plumbing, refrigerating,
ventilating, air-cooling and air-conditioning apparatus and systems, electrical
and all other mechanical systems, gas and electrical fixtures, fittings,
machinery, fire protection equipment, and all other building service equipment
used in connection with the operation and maintenance of the buildings and
improvements; and
(c) Any and all tenements, hereditaments and
appurtenances belonging to the real estate or any part thereof hereby mortgaged
or intended so to be, or in any way appertaining thereto, and all streets,
alleys, passages, ways, water courses and all easements and covenants now
existing or hereafter created for the benefit of the Borrower or any subsequent
owner or tenant of the Mortgaged Premises over ground adjoining the Mortgaged
Premises and all rights to enforce the maintenance thereof, and all other
rights, liberties and privileges of whatsoever kind or character, and the
reversions and remainders, income, rents, issues and profits arising therefrom,
and all the estate, right, title, interest, property, possession, claim and
demand whatsoever, at law or in equity, of the Borrower in and to the Mortgaged
Premises or any part thereof. (All of the above-mentioned Mortgaged Premises,
buildings, improvements, fixtures, machinery, equipment, tenements,
hereditaments and appurtenances, and other property interest are sometimes
collectively referred to herein as the "Mortgaged Property".)
TO HAVE AND TO HOLD the Mortgaged Property hereby
conveyed or mentioned and intended so to be, unto Lender, to its own use
forever.
-2-
<PAGE>
PROVIDED ALWAYS, and this instrument is upon the
express condition that, if Borrower pays to Lender the Principal Sum mentioned
in the Note, the interest thereon and all other sums payable by Borrower to
Lender as are secured hereby, in accordance with the provisions of the Note and
this Mortgage, at the times and in the manner specified, without deduction,
fraud or delay, and Borrower performs and complies with all the agreements,
conditions, covenants, provisions and stipulations contained herein and in the
Note, then this Mortgage, and the estate hereby granted shall cease and become
void.
4. BORROWER WARRANTS. COVENANTS AND AGREES
(a) That Borrower has good and valid title to the
Mortgaged Premises and that it has the right, full power and lawful authority to
grant, bargain, sell, convey, assign, transfer, mortgage, pledge, set over and
confirm the same to the Lender in the manner and form herein accomplished. The
Mortgaged Premises are free and clear of all encumbrances except as set forth
herein and in the title search obtained by Lender in connection with this
Mortgage with this Mortgage. The Lender, its successors and assigns will quietly
enjoy and possess the Mortgaged Premises to the extent provided in this
Mortgage, and Borrower will warrant and defend the rights or title of the Lender
to the Mortgaged Premises against all lawful claims not herein specifically
excepted;
(b) That all financial statements presented to
Lender are true and correct, and no adverse change in the financial
circumstances of Borrower has occurred since the foregoing were presented to
Lender. Borrower shall give written notice to Lender of any adverse change in
the financial circumstances of Borrower;
(c) To pay all installments of interest and
principal to Lender and the Entire Indebtedness as set forth herein;
(d) To pay when due and payable and before interest
or penalties are due thereon all taxes, local, state and federal, water and
sewer rents, assessments and all other charges or claims which may be assessed
or levied or a lien on the Mortgaged Premises, and to produce to Lender at or
before the last day upon which they may be paid without penalty or interest,
receipts of the current year proving payment of all such taxes, water and sewer
rents, assessments, charges and claims; provided that, if Borrower shall have
deposited with Lender before the due date thereof sums sufficient to pay such
taxes, water and sewer rents, assessments, charges or claims, the same shall be
paid by Lender;
(e) To maintain insurance on the Mortgaged Premises
of such kinds, in such amounts, and in such companies as are satisfactory to
Lender, and if this insurance or any part thereof shall expire, or be withdrawn,
or become void by breach of any condition thereof by Borrower, or become void or
unsafe by reason of the failure, or impairment of the capital of any company in
which said insurance may then be, or if for any other reason whatsoever this
insurance shall become unsatisfactory to Lender, to effect new insurance on said
Mortgaged Premises satisfactory to Lender; and to pay as they shall become due
all premiums
-3-
<PAGE>
for such insurance; and to lodge with Lender, as further security for said
indebtedness, all policies therefor, with loss payable clauses attached in favor
of and acceptable to Lender. In the event of loss, Borrower will give immediate
notice by mail to Lender, and Lender may make proof of loss if not made promptly
by Borrower. Borrower hereby directs any insurance company concerned to pay
directly to Lender any moneys not in excess of the unpaid balance of the Entire
Indebtedness which may become payable under such insurance, including return of
unearned premiums, such moneys, or any part thereof, to be applied at the option
of Lender to said unpaid balance or to the repair of the property damaged; and
Borrower appoints Lender as attorney-in-fact to endorse any draft therefor. In
the event of foreclosure of the Mortgage or other transfer of title to the
Mortgaged Premises, all right, title and interest of Borrower to any insurance
policies then in force covering the Mortgaged Premises shall pass to the
transferee of the Mortgaged Premises. All policies shall be maintained in full
force and effect, shall be assigned and delivered to Lender with premiums
prepaid as collateral security for the payment of the indebtedness secured
hereby, shall be endorsed with a standard mortgagee and loss payee clause in
favor of Lender, not subject to contribution, and shall provide for at least
twenty (20) days notice of cancellation to Lender. If the insurance, or any part
thereof, shall expire, or be withdrawn, or become void by Borrower's breach of
any condition thereof, or become void or unsafe by reason of the failure or
impairment of the capital of any company in which the insurance may then be
carried, or if for any reason whatsoever the insurance shall be unsatisfactory
to Lender, Borrower shall place new insurance on the Mortgaged Property,
satisfactory to Lender. All renewal policies, with premiums paid, shall be
delivered to Lender at least twenty (20) days before expiration of the old
policies.
(f) To maintain the Mortgaged Premises in good
repair, order and condition; not to remove, demolish or materially alter the
Mortgaged Premises; not to remove from the Mortgaged Premises fixtures,
appliances and equipment of any nature covered by the lien of the Mortgage
without having obtained the prior written consent of Lender; and Borrower will
not make, install, or permit to be made or installed, any alterations,
additions, improvements, fixtures, appliances or equipment of any nature to or
in the Mortgaged Premises without obtaining the prior written consent of Lender,
which consent Lender hereby reserves the right to refuse to grant;
(g) To comply with all laws, ordinances, regulations
and orders relating to the Mortgaged Premises by all federal, state, municipal
and other authorities, including by way of example but not in limitation, zoning
and subdivision ordinances, building codes and Board of Health regulations;
(h) To notify Lender promptly of commencement of any
proceedings for condemnation of Mortgaged Premises and to permit Lender to
participate in such proceedings and to receive the proceeds of the condemnation
up to the amount of the Entire Indebtedness;
(i) If requested, to furnish Lender within one
hundred twenty (120) of the close of each fiscal year financial statements in
form and detail satisfactory to Lender;
-4-
<PAGE>
(j) To pay, when due and payable and before interest
and penalties are due thereon, all taxes owing by Borrower to the United States
of America, the Commonwealth of Pennsylvania, and any political or municipal
subdivisions thereof, including income taxes, individual, partnership,
corporation or other entity income or other taxes, estate, inheritance and real
estate taxes and any other taxes, and to, produce to Lender, on or before
September 1 of each year, copies of all tax returns filed and tax bills issued
or received during the previous twelve (12) months and receipts evidencing the
full payment of all amounts known to be due on such returns, and, within twenty
(20) days of receipt thereof, all settlements, notices of deficiency or
overassessment and any other notices pertaining to Borrower's tax liability
(except, in the event any tax is being disputed in good faith, payment need not
be made until the contest is finally determined, provided there is deposited
with Lender security if and as required by Lender to protect Lender against
delay and nonpayment of the tax);
(k) To perform every obligation of the lessor and to
enforce every obligation of the lessee in every lease that is assigned to Lender
or any tenancy in which the rents are assigned to Lender, and not to modify,
alter, waive or cancel any such lease or any part thereof, nor anticipate for
more than one month any rents that may be collectible under such lease or that
may have been assigned to Lender; nor assign any such lease or any such rents;
(l) If Lender shall become a party, by intervention
or otherwise, to any action or proceeding, including insolvency or bankruptcy
proceedings, affecting the Mortgaged Premises or the title thereto or Lender's
interest under this Mortgage, or if Lender employs an attorney to collect any of
the indebtedness or to enforce performance of the obligations, covenants and
agreements secured hereby, Borrower shall reimburse Lender, forthwith upon
written notice and without further demand, for all reasonable costs, charges and
counsel fees incurred by Lender, in any such case, whether or not suit be
commenced, and the same shall be secured hereby as a further charge and lien
upon the Mortgaged Premises;
(m) In the event of default, to pay to Lender, on
demand, all costs and expenses incurred by Lender in connection with the curing
of any such default or the collection of sums secured hereby, including but not
limited to cost of any title search and reasonable attorneys' fees;
(n) To permit Lender, or any persons authorized by
Lender, to enter and inspect the Mortgaged Premises at all reasonable times,
and, in the event of any default by Borrower under the terms of this Mortgage or
accompanying Note, to employ for duration of default as managing agent of the
Mortgaged Premises the person or persons designated by Lender;
(o) To restore, repair or rebuild promptly any part
of Mortgaged Premises damaged by fire or any other casualty;
-5-
<PAGE>
(p) Not to initiate, join in or consent to any
change in any private restrictive covenant, easement, right of way, zoning
ordinance, or other public or private restrictions relating to use of Mortgaged
Premises or any part thereof;
(q) Not to permit any writ of any execution process
to be levied against the Mortgaged Premises and not to permit any judicial sale
thereof; not to make any assignment for the benefit of creditors;
(r) Not to permit the appointment of a receiver,
liquidator or trustee of the Borrower or of any of the property of Borrower,
insolvency of the Borrower or the adjudication of Borrower as a bankrupt, or the
filing of any petition for the bankruptcy, reorganization or arrangement of
Borrower pursuant to the Federal Bankruptcy Act or any similar statute, or the
institution of any proceeding for the dissolution or liquidation of Borrower;
(s) That Borrower will warrant and defend the lien
of this instrument to be at all times a fifth lien on the Mortgaged Premises,
subject only to easements and agreements of record prior to the recording of
this Mortgage and under and subject to the following existing mortgages in favor
of Lender: (i) $1,160,000.00 dated May 21, 1993; (ii) $300,000.00 dated August
21, 1995; (iii) $300,000.00 dated February 21, 1992; and (iv) $1,800,000.00
dated even date herewith.
5. HAZARDOUS SUBSTANCES; WASTES -
(a) To Borrower's knowledge, after due inquiry, no
Hazardous Substances have been disposed of on or in the Mortgaged Premises
through any means at any time prior to Borrower's ownership thereof and Borrower
is aware of no condition on or affecting the Mortgaged Premises which
constitutes or might constitute an environmental health hazard.
(b) "Hazardous Substances" shall mean hazardous
wastes, hazardous substances, hazardous materials, toxic substances, hazardous
air pollutants or toxic pollutants, as those terms are used in any law,
guideline, regulation or ruling of any governmental body and petroleum products,
including gasoline, diesel fuel, motor oil, waste or used oil and heating oil
which are not permitted to be located on the premises by any requirement of any
governmental body or in excess of that which is normally used in the operation
of the Borrower's business.
(c) Borrower hereby represents and warrants that
Borrower has substantially complied with, is currently in substantial compliance
with, has not been charged with, has not received any notice of, and is not
under investigation for the failure to substantially comply with any and all
laws of any governmental body relating to environmental protection matters, and,
specifically, there relating to Hazardous Substances.
-6-
<PAGE>
(d) Borrower covenants to the Lender that Borrower
shall use all reasonable efforts to prevent the deposit, storage, emission,
discharge or release by Borrower of any Hazardous Substances on its properties
unless such deposit, storage, emission, discharge or release is authorized by
and in full compliance with a duly issued permit, license, authorization or
other approval of a governmental body. Borrower shall notify Lender promptly of
any significant or material environmental event, circumstance or condition
relating to its properties. Borrower hereby indemnifies, defends and holds
harmless Lender from and against any claim, demand, loss or liability,
including, but not limited to, costs of remedial action, response costs,
personal injury and property damage,' directly or indirectly arising out of or
attributable to the use, generation, deposit, storage, release, threatened
release, discharge, disposal, burial, dumping, spilling, leaking or other
presence of Hazardous Substances on, under or about the Mortgaged Premises.
(e) If an event of default under this Mortgage shall
occur, then Borrower shall, upon reasonable notice and at all reasonable times,
permit such visitation of such persons as the Lender may select in connection
with the Lender's consideration of enforcement or preservation of rights under
this Mortgage, any Note or any related documents, to visit its properties and
perform such reasonable environmental site investigations and assessments on its
properties for the purposes of determining whether there exists on its
properties any environmental condition which could result in any liability, cost
or expense to the owner or occupier thereof relating to Hazardous Substances.
Borrower will supply to the Lender's representatives such historical and
operational information, including the results of all samples sent for analysis,
correspondence with governmental bodies and previous environmental audits or
environmental reviews regarding its properties as are within its possession,
custody or control or which are reasonably available to it and which may be
reasonably requested by the Lender to facilitate Lender's assessment of any
environmental violations on the properties of Borrower.
(f) Borrower shall defend, indemnify, and hold
harmless Lender and its directors, officers, agents and employees, from any and
all liabilities (including strict liability), actions, demands, penalties,
losses, costs, or expenses (including without limitation attorneys' fees and
expenses, and remedial costs), suits, costs of any settlement or judgment, and
claims of any and every kind whatsoever which may now or in the future (whether
before or after the satisfaction of this Mortgage) be paid, incurred, or
suffered by or asserted against Lender by any person or entity or governmental
agency for, with respect to, or as a direct or indirect result of, the presence
on or under, or the escape, seepage, leakage, spillage, discharge, emission, or
release from the Premises of any Hazardous Substances or arise out of or result
from the environmental condition of the premises or the violation of any
Environmental Laws regardless of whether or not caused by or within the control
of Borrower or Lender except for acts or omissions of Bank, its employees or
authorized agents. The representations, covenants, warranties, and
indemnifications contained in this paragraph shall survive the satisfaction and
payment in full of this Mortgage.
6. EVENTS OF DEFAULT - This is a demand loan. Lender has the
right to demand repayment of the Entire Indebtedness at any time. In addition,
upon the happening of
-7-
<PAGE>
any of the following events, each of which shall constitute a default hereunder,
all liabilities of Borrower to Lender, at the option of Lender, shall become
immediately due and payable:
(a) Failure of Borrower to pay the principal or
interest on the Note when due or on any renewal, extension or other modification
of the Note or failure to pay when due any interest or installment on any other
obligation of any nature whatsoever owing to Lender within fifteen (15) days
after the same shall become due and owing;
(b) Failure of Borrower to perform any obligation
owing to Lender under the Note, this Mortgage or any agreement with Lender not
cured within thirty (30) days after notice thereof is given by Lender to
Borrower or material breach of any representation, warranty, covenant or
agreement herein contained or contained in the Note or in any other agreement
now or hereafter entered into between Borrower and Lender;
(c) The filing of bankruptcy, receivership or
insolvency proceedings of any kind by or against Borrower or the making by
Borrower of an assignment for the benefit of creditors;
(d) Any execution shall have been levied against the
Mortgaged Premises or against any other property of the Borrower, on account of
a judgment in excess of Twenty-Five Thousand Dollars ($25,000.00) and shall
continue unstayed and in effect for a period of ten (10) days;
(e) The furnishing of materially false information
heretofore or hereafter by Borrower to Lender or the refusal by Borrower to
provide material information hereafter;
(f) Any change in the financial condition of
Borrower which causes Lender in good faith to believe that performance of the
obligations herein is impaired or doubtful;
(g) The occurrence of any event of default as
defined in the Note or the Loan Agreement;
(h) The dissolution, merger, consolidation or
reorganization of Borrower corporation;
(i) Any change occurs in the control of Borrower
unless the new control person(s) are reasonably satisfactory to Lender.
7. REMEDIES UPON DEFAULT - In the event of any default of
Borrower or in the event of condemnation of all or part of the Mortgaged
Premises, unless the Lender agrees otherwise, in addition to all other rights
and remedies of the Lender given by the Note,
-8-
<PAGE>
Line of Credit Agreement and by law, Lender shall have the following rights,
privileges and remedies:
(a) The Entire Indebtedness shall, at the option of
Lender and without notice or demand to Borrower, become due and payable
immediately. Payment of the same may be enforced and recovered in whole or in
part at any time and from time to time by one or more of the remedies in this
Mortgage or the Note, or both.
(b) Lender may recover as part of the Entire
Indebtedness all costs of suit, including the cost of title searches, attorneys'
fees, appraisal fees, inspections and all "out-of-pocket" expenses, and, in
addition thereto, reasonable attorneys' fees.
(c) Lender may institute an action of mortgage
foreclosure, or take such other action, as the law may allow, at law or in
equity, for the enforcement thereof and realization on the mortgage security or
any other security which is herein or elsewhere provided for, and proceed
thereon to final judgment and execution thereon for the Entire Indebtedness,
with interest at the rate stipulated in the Note to the date of default and
thereafter at a rate not less than two percent (2%) per annum above the rate
extant on the date of such default, together with all other sums secured by this
Mortgage, all costs of suit, interest at not less than two percent (2%) per
annum above the rate extant on the date of such default, on any judgment
obtained by Lender from and after the date of any Sheriff's sale of the
Mortgaged Premises until actual payment is made by the Sheriff of the full
amount due Lender. Borrower hereby authorizes and empowers any attorney or
attorneys or the Prothonotary or Clerk of any Court of the Commonwealth of
Pennsylvania to appear for Borrower in any such Court in any appropriate action
there or elsewhere brought at the suit of Lender with or without declaration
filed, as of any term, and to confess or enter judgment, or both, against
Borrower for the Entire Indebtedness due under this Mortgage and the Note, with
the cost of suit, and for so doing this Mortgage or a copy hereof verified by
affidavit shall be sufficient warrant. Any attorney authorized to act for
Borrower to confess judgment against Borrower may also act for and on behalf of
Lender. Borrower executes this authorization for confession of judgment
KNOWINGLY, UNDERSTANDINGLY AND VOLUNTARILY. Borrower waives the requirement for
any further explanation of Borrower's rights.
(d) Lender may enter into possession of the
Mortgaged Premises, and, in addition to its other rights and remedies, exercise
the general rights of a Lender in possession, with or without legal action, and
by force if necessary, collect all rentals therefrom and, after deducting all
costs of collection and administration expense, apply the net rentals to the
payment of taxes, water and sewer rents, charges and claims, insurance premiums
and all other carrying charges, and to the maintenance, repair or restoration of
the Mortgaged Premises, or on account and in reduction of the principal or
interest hereby secured, in such order and amounts as Lender, in Lender's sole
discretion, may elect; and for said purpose, Borrower hereby assigns to Lender
all rentals due and to become due under any lease or leases of the Mortgaged
Premises, whether now existing or hereafter created, as well as all rights and
remedies provided in such lease or leases for the collection of said rents; and
Borrower hereby authorizes and empowers any
-9-
<PAGE>
attorney or attorneys of any Court of the Commonwealth of Pennsylvania or
elsewhere to appear for Borrower and as attorney for Borrower to sign an
agreement for entering an amicable action of ejectment for possession of the
Mortgaged Premises, and to confess judgment therein against Borrower and all
others claiming under or through Borrower, in favor of Lender, whereupon a writ
of possession may immediately issue for the possession of the Mortgaged
Premises, without any prior writ or proceeding whatsoever; and for so doing,
this Mortgage or a copy hereof verified by affidavit shall be a sufficient
warrant. Lender may bring such amicable action in ejectment before or after the
institution of foreclosure proceedings upon this Mortgage, or after judgment
thereon or on the Note, or after a Sheriff's or any Judicial Sale of the
Mortgaged Premises. If for any reason after such action has been commenced it
shall be discontinued, or possession of the Mortgaged Property shall remain in
or be restored to Borrower, Lender shall have the right for the same default or
any subsequent default to bring one or more further amicable actions as above
provided to recover possession of the Mortgaged Premises. Lender may bring an
amicable action in ejectment and confess judgment therein before or after the
institution of proceedings to foreclose this Mortgage or to enforce the Note, or
after entry of judgment therein or on the Note, or after a Sheriff's Sale of the
Mortgaged Property in which Lender is the successful bidder, it being the
understanding of the parties that the authorization to pursue such proceedings
for obtaining possession and confessing judgment therein is an essential part of
the remedies for enforcement of the Mortgage and the Note, and shall survive any
execution sale to Lender.
(e) The remedies of Lender as provided herein, or in
said Note, and all warrants herein and in said Note contained, and all remedies
provided in the Loan Agreement and any and all other remedies otherwise provided
by law shall be cumulative and concurrent, and may be pursued singly,
successively or together at the sole discretion of Lender, and such warrants
shall not be exhausted by any exercise thereof but may be exercised as often as
occasion therefor shall occur; and the failure to exercise any such right or
remedy shall in no event be construed as a waiver or release of the same.
(f) In the event Borrower should fail to pay any
tax, claim, lien or encumbrance which shall be or become prior in lien to this
Mortgage, or to pay any insurance premium for insurance required under this
Mortgage, or to keep the Mortgaged Premises in repair, or commits or permits
waste, then Lender, at its option, may pay said claim, lien, encumbrance, tax
assessment or premium with right of subrogation thereunder, may make such
repairs and take such steps as it deems advisable to prevent or cure such waste,
and may appear in any action or proceeding with respect to any of the foregoing
and retain counsel therein, and take such action therein as Lender deems
advisable, and for any of said purposes Lender may advance such sums of money as
it deems necessary. All such sums advanced shall be added to and become a part
of the Entire Indebtedness secured hereby, and repayment thereof, with interest
thereon at the interest rates set forth in the Note from the dates of the
respective expenditures, may be enforced by Lender against Borrower at any time.
(g) Lender shall have the right, from time to time,
to bring an appropriate action to recover any sums required to be paid by
Borrower under the terms of this
-10-
<PAGE>
Mortgage, as they become due, without regard to whether or not the Principal Sum
or any other sums secured by the Note and this Mortgage shall be due, and
without prejudice to the right of Lender thereafter to bring an action of
Mortgage foreclosure, or any other action, for any default by Borrower existing
at the time the earlier action was commenced.
(h) Any real estate sold pursuant to any writ of
execution issued on a judgment obtained by virtue of the Note or this Mortgage,
or pursuant to any other judicial proceedings under the Mortgage, may be sold in
one parcel, as an entirety, or in such parcels and in such manner or order as
Lender, in its sole discretion, may elect.
8. WAIVERS -
(a) Borrower hereby waives and releases (1) all
errors, defects and imperfections in any proceeding instituted by Lender under
this Mortgage; (2) all benefit that might accrue to Borrower by virtue of any
present or future laws exempting the Mortgaged Premises, or any part of the
proceeds arising from any sale thereof, from attachment, levy or sale under
execution, or providing for any stay of execution, exemption from civil process,
or extension of time for payment; and (3) all notices not otherwise herein
specifically required of Borrower's default or of Lender's exercise, or election
to exercise, any option under this Mortgage.
(b) Lender shall not by any act of omission or
commission be deemed to waive any of its rights or remedies hereunder unless
such waiver be in writing and signed by Lender and then only to the extent
specifically set forth therein; a waiver on one event shall not be construed as
continuing or as a bar to or waiver of such right or remedy on a subsequent
event.
9. SECURITY AGREEMENT - This Mortgage constitutes a security
agreement under the Uniform Commercial Code and creates a security interest in
the machinery and equipment essential to the operation of the building owned by
Borrower included in the Mortgaged Property. Borrower shall execute, deliver,
file and refile any financing statements or other security agreements Lender may
require from time to time to confirm the lien of this Mortgage with respect to
such property. Without limiting the foregoing, Borrower hereby irrevocably
appoints Lender attorney-in-fact for Borrower to execute, deliver and file such
instruments for and on behalf of Borrower.
10. DECLARATION OF NO SET-OFF - Within one week after requested
to do so by Lender, Borrower shall certify to Lender or to any proposed assignee
of this Mortgage, in a writing duly acknowledged, the amount of principal,
interest and other charges then owing on the obligation secured by this Mortgage
and whether there are any set-offs or defenses against it.
-11-
<PAGE>
11. REQUIRED NOTICES - Borrower shall notify Lender promptly
of the occurrence of any of the following:
(a) A fire or other casualty causing damage to the
Mortgaged Premises;
(b) Receipt of notice of condemnation of Mortgaged
Premises;
(c) Receipt of notice from any governmental
authority relating to the structure, use or occupancy of the Mortgaged Premises;
(d) Substantial change in the occupancy of the
Mortgaged Premises;
(e) Threat or commencement of any litigation
affecting the Mortgaged Premises. 12. CONDEMNATION - In the event of any
condemnation or taking of any part of the Mortgaged Premises by eminent domain,
alteration of the grade of any street, or other injury to or decrease in the
value of the Mortgaged Premises by any public or quasi-public authority or
corporation, all proceeds (that is, the award or agreed compensation for the
damages sustained) shall be applicable first to payment of the indebtedness
secured hereby. No settlement for the damages sustained shall be made by
Borrower without Lender's prior written approval. Borrower shall continue to pay
the installments of principal, interest and other charges until payment of the
proceeds shall have been received by the Lender. All the proceeds shall be
applied in the order and in the amounts that Lender, in Lender's sole
discretion, may elect, to the payment of principal (whether or not then due and
payable), interest or any sums secured by this Mortgage, or toward payment to
the Borrower, on such terms as the Lender may specify, to be used for the sole
purpose of altering, restoring or rebuilding any part of the Mortgaged Property
which may have been altered, damaged or destroyed as result of the taking,
alteration of grade or other injury to the Mortgaged Premises. Nothing in this
Mortgage shall Limit rights otherwise available at law to Lender, including, but
not limited to, rights to intervene as a party to any condemnation proceeding.
13. RESTRICTIONS ON TRANSFER - Without the prior written consent
of Lender, Borrower will not sell or transfer, or permit or suffer to be sold or
transferred, voluntarily or by operation of law (other than by death or by
execution on the Note) all or any of its interest in the Mortgaged Premises, nor
permit issuance or transfer of stock in Borrower if Borrower is a corporation,
nor permit any creation or transfer of partnership interests if Borrower is a
partnership. Any consent of Lender to a sale or transfer of all or part of the
interests of Borrower in the Mortgaged Premises or an issuance or transfer of
stock or of any other interests
-12-
<PAGE>
in Borrower shall pertain to the referenced sale, transfer or issuance only and
shall not constitute, or obligate Lender to approve, any further sale, transfer
or issuance or relieve any person of any liability hereunder or under the Note.
Any violation of or failure to comply with the provisions of this section shall
constitute an immediate Event of Default hereunder and under the Note.
14. RIGHTS AND REMEDIES CUMULATIVE -
(a) The rights and remedies of Lender as provided in
the Note, in this Mortgage and in the warrants contained in both, shall be
cumulative and concurrent, may be pursued separately, successively or together
against Borrower or against the Mortgaged Property, or both, at the sole
discretion of Lender, and may be exercised as often as occasion therefor shall
arise. The failure to exercise any such right or remedy shall in no event be
construed as a waiver or release thereof.
(b) Any failure by Lender to insist upon strict
performance by Borrower of any of the terms and provisions of this Mortgage or
of the Note shall not be deemed to be a waiver of any of the terms or provisions
of the Mortgage and Note, and Lender shall have the right thereafter to insist
upon strict performance by the Borrower of any and all of them.
(c) Lender may release, regardless of consideration,
any part of the security held for the indebtedness secured by this Mortgage
without, as to the remainder of the security, in any way impairing or affecting
the lien of this Mortgage or its priority over any subordinate lien.
(d) For payment of the indebtedness secured hereby,
Lender may resort to any other security therefor held by Lender in such order
and manner as Lender may elect.
15. AMENDMENT - This Mortgage cannot be changed or amended
except by agreement in writing signed by the party against whom enforcement of
the change is sought.
16. APPLICABLE LAW - This Mortgage shall be governed by and
construed according to the law of the Commonwealth of Pennsylvania.
17. CONSTRUCTION - Whenever used in this Mortgage, unless the
context clearly indicated a contrary intent:
(a) The word "Borrower" shall mean the person who
executes this Mortgage and any subsequent owner of the Mortgaged Property and
his respective heirs, executors, administrators, successors and assigns;
(b) The word "Lender" shall mean the person
specifically named herein as "Lender" or any subsequent holder of this Mortgage;
-13-
<PAGE>
(c) The word "person" shall mean individual,
corporation, partnership or unincorporated association;
(d) The use of any gender shall include all genders;
(e) The singular number shall include the plural and
the plural the singular as the context may require.
18. CAPTIONS - The captions preceding the text of the paragraphs
or subparagraphs of this Mortgage are inserted only for convenience of reference
and shall not constitute a part of this Mortgage, nor shall they in any way
affect its meaning, constitution or effect.
19. NOTICES - All communications or notices to be given by
either party to the other hereunder shall be sent certified mail addressed to
the Lender, CORESTATES BANK, N.A., 4259 West Swamp Road, Doylestown,
Pennsylvania 18901, or to such other address as the Lender may specify in a
written notice to the Borrower, 125 Titus Avenue, Warrington, Pennsylvania
18976, or to such other address as the Borrower may specify in a written notice
approved and accepted by Lender.
20. CONSENT TO JURISDICTION AND VENUE - IN ANY LEGAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS
MORTGAGE OR THE RELATIONSHIP EVIDENCED HEREBY, EACH UNDERSIGNED PARTY HEREBY
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED IN ANY COUNTY IN THE COMMONWEALTH OF PENNSYLVANIA WHERE LENDER
MAINTAINS AN OFFICE AND AGREES NOT TO RAISE ANY OBJECTION TO SUCH JURISDICTION
OR TO THE LAYING OR MAINTAINING OF THE VENUE OF ANY SUCH PROCEEDING IN SUCH
COUNTY.
21. WAIVER OF JURY TRIAL - THE UNDERSIGNED PARTY HEREBY WAIVES,
AND LENDER BY ITS ACCEPTANCE HEREOF THEREBY WAIVES, TRIAL BY JURY IN ANY LEGAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS
MORTGAGE OR THE RELATIONSHIP EVIDENCED HEREBY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR LENDER TO ENTER INTO, ACCEPT OR RELY UPON THIS MORTGAGE.
-14-
<PAGE>
EXECUTED by Borrower under seal the day and year first above
written.
NUCLEAR RESEARCH CORPORATION
By: /s/ Earl M. Pollock
---------------------------(SEAL)
Name: Earl M. Pollock
Attest: /s/ Mark S. Pollock
COMMONWEALTH OF PENNSYLVANIA :
: ss.
COUNTY OF BUCKS :
On January 14, 1997, before me, the undersigned officer,
personally appeared Earl M. Pollock, who acknowledged himself to be the officer,
being authorized so to do, executed the foregoing instrument for the purposes
therein contained by signing the name of said corporation by himself as such
officer.
ON WITNESS WHEREOF, I have hereunto set my hand and official
seal.
/s/ Jeannette M. Hannay-Janowski
------------------------------- (SEAL)
Notary Public
[Notarial Seal]
I hereby certify that the principal office and complete post
office address of the within-named Lender and person entitled to interest on
this Mortgage is 4259 West Swamp Road, Doylestown, Pennsylvania 18901
/s/ Edward F. Mulligan
-------------------------------
Edward F. Mulligan
-15-
<PAGE>
EXHIBIT "A"
ALL THAT CERTAIN tract of land as shown on a plan of survey
for Nuclear Research Corporation as made by Surveying Services, Inc., 71 Ashland
Street, Doylestown, Pennsylvania, situate in Warrington Township, Bucks County,
Pennsylvania, bounded and described, as follows:
BEGINNING at a point, a hub set, on the Southeasterly side of
Titus Road, said point being located eight hundred seventy-four and thirty-five
hundredths feet (874.35 ft.) Northeasterly from the centerline of County Line
Road and a corner of lands now or formerly of the Telford Industrial Development
Authority; (1) thence along the Southeasterly side of Titus Road North
thirty-seven degrees twenty-five minutes East two hundred forty-three and
seventeen hundredths feet (N. 37 deg. 25 min. E. 243.17 ft.) to a hub set, a
corner of lands now or formerly of the Crane Company; (2) thence along lands of
the Crane Company South fifty- two degrees eighteen minutes East five hundred
thirty-five and seventeen hundredths feet (S. 52 deg. 18 min. E. 535.17 ft.) to
a concrete monument found, a corner of lands of the Crane Company, land now or
formerly of Joseph H. and Mary Penrose and lands now or formerly of Joseph
LaRocca; (3) thence along lands of LaRocca South thirty-seven degrees
twenty-five minutes West two hundred forty-three and seventeen hundredths feet
(S. 37 deg. 25 min. W. 243.17 ft.) to an iron pin found, a corner of lands of
LaRocca, and other lands now or formerly of the Crane Company; (4) thence along
lands of the Crane Company and lands now or formerly of the Telford Industrial
Development Authority North fifty-two degrees eighteen minutes West five hundred
thirty-five and seventeen hundredths feet (N. 52 deg. 18 min. W. 535.17 ft.) to
the first mentioned point and place of BEGINNING.
CONTAINING two and nine hundred eighty-eight thousandths acres
(2.988 ac.).
BEING THE SAME PREMISES which the Bucks County Industrial
Development Authority, a body corporate and politic organized and existing under
the laws of the Commonwealth of Pennsylvania, by Deed dated August 7, 1990 and
recorded December 16, 1992 in the Office for the Recorder of Deeds of Bucks
County at Land Record Book 585 Page 1993, granted and conveyed unto Nuclear
Research Corporation, a corporation organized and existing under the laws of the
Commonwealth of Pennsylvania.
BEING TAX PARCEL No. 50-31-28-13.
-16-
<PAGE>
EXHIBIT 10(g)
CORESTATES BANK, N.A.
SECURITY AGREEMENT
THIS AGREEMENT is made this 14th day of January, 1997, between
CoreStates Bank, N.A., a national banking association (the "Bank"), and NUCLEAR
RESEARCH CORPORATION (the "Debtor")
1. Definitions. As used herein and in any separate agreement
between the Bank and the Debtor in connection with this Agreement:
(a) "Account" means any right to payment for goods sold
or leased or for services rendered which is not evidenced by an Instrument or
Chattel Paper, whether or not it has been earned by performance including all
rights to payment under a charter or other contract involving the use or hire of
a vessel and all rights incident to such charter or contract.
(b) "Qualified Account" means any Account meeting all of
the following specifications: (i) it is lawfully owned by the Debtor and subject
to no lien, security interest or prior assignment, and the Debtor has the right
of assignment thereof and the power to grant a security interest therein; (ii)
it is a valid and enforceable Account, representing the undisputed indebtedness
of an Account Debtor to the Debtor; (iii) it is not subject to any defense,
set-off, counterclaim, credit, allowance or adjustment; (iv) no substantial part
of any goods, the sale of which has given rise to the Account, has been
returned, rejected, lost or damaged; (v) if it arises from the sale of goods by
the Debtor, such sale was an absolute sale and not on consignment or on approval
or on a sale or return basis nor subject to any other repurchase or return
agreement, and such goods have been shipped to the Account Debtor; (vi) if it
arises from the performance of services, such services have actually been
performed; (vii) it arose in the ordinary course of the Debtor's business;
(viii) no notice of the Bankruptcy, receivership, reorganization, insolvency, or
financial embarrassment of the Account Debtor has been received; (ix) the
Account Debtor is not a subsidiary or affiliate of the Debtor, does not control
the Debtor, and is not under the control or under common control with the
Debtor; and (x) the Account meets such other specifications and requirements
which may from time to time be established by the Bank.
(c) "Account Debtor" means the Person who is obligated
on an Account or General Intangible.
(d) "Chattel Paper" means a writing or writings which
evidence both a monetary obligation and a security interest in or a lease of
specific goods.
(e) "Collateral" means (i) all of the Debtor's Inventory
now owned or hereafter acquired; (ii) all of the Debtor's Documents of Title now
owned or hereafter acquired; (iii) all of the
-1-
<PAGE>
Debtor's Accounts now existing or hereafter arising; (iv) all of the Debtor's
Farm Products now existing or hereafter arising; (v) all of the Debtor's General
Intangibles, Chattel Paper and Instruments now existing or hereafter acquired or
arising; (vi) all guarantees of the Debtor's existing and future Accounts and
General Intangibles and all other security held by the Debtor for the payment or
satisfaction thereof; (vii) the goods or the services, the sale or lease or
performance of which give rise to any Account or General Intangible of the
Debtor, including any returned goods; (viii) all of the Debtor's Equipment now
owned or hereafter acquired; (ix) any balance or share belong to the Debtor of
any deposit, agency or other account with any bank and any other amounts which
may be owing form time to time by any bank to the Debtor; (x) all property of
any nature whatsoever of the Debtor now or hereafter in the possession of or
assigned or hypothecated to the Bank for any purpose; and (xi) all Proceeds of
all of the foregoing, including all Proceeds of other Proceeds. Notwithstanding
the foregoing or anything to the contrary contained in this Agreement, i) Debtor
shall not be required to give a perfected security interest in any of its motor
vehicles unless Bank finances the purchase or acquisition of any such motor
vehicles; ii) Collateral shall not include any of Debtor's rights as lessee
under leases for the rental of real estate to the extent that the assignment of
Debtor's rights thereunder is not permitted by the terms of such lease; and iii)
Collateral shall not, while such purchase money financing is outstanding,
include equipment purchased by Debtor pursuant to the purchase money financing
permitted under the Line of Credit Agreement or Term Loan Agreement, or any
other Security Agreement with Bank to the extent that the terms of such purchase
money financing do not permit the granting of a lien on the equipment purchased
to any party other than the purchase money financier, provided that such
Equipment shall be included as Collateral under this Security Agreement upon i)
payoff of the purchase money financing or ii) upon sale of the Equipment, for
any reason or by any party, to the extent there are proceeds received upon such
sale in excess of the payoff of the purchase money security interest.
(f) "Debtor" means the Person who executes this
Agreement as such. The Debtor may be either a borrower from the Bank or a
guarantor of the indebtedness of another to the Bank, and in either case is the
Person obligated to pay the Liabilities secured hereby.
(g) "Document of Title" means a bill of lading, dock
warrant, dock receipt, warehouse receipt or order for the delivery of goods, and
also any other document which in the regular course of business or financing is
treated as adequately evidencing that the Person in possession of it is entitled
to receive, hold and dispose of the document and the goods it covers.
(h) "'Farm Products" means crops or livestock or
supplies used or produced in farming operations or products of crops or
livestock in their unmanufactured states (such as ginned cotton, woolclip, maple
syrup, milk and eggs), if they are in the possession of a Debtor engaged in
raising, fattening, grazing or other farming operations.
(i) "Equipment" means tangible personal property held by
the Debtor for use primarily in business and includes equipment, machinery,
furniture, fixtures, dies, tools, and all accessories and parts now or hereafter
affixed thereto.
-2-
<PAGE>
(j) "General Intangibles" means all personal property of
every kind and description of Debtor other than goods, Accounts, Chattel Paper,
Documents of Title, Instruments and money, and includes without limitation
choses in action, books, records, customer lists, tax, insurance and other kinds
of refunds, patents, trademarks, copyrights, trade names, plans, licenses and
other rights in personal property.
(k) "Instrument" means a negotiable instrument or a
security or any other writing which evidences a right to the payment of money
and is not itself a security agreement or lease and is of a type which is, in
ordinary course of business, transferred by delivery with any necessary
endorsement or assignment.
(l) "Inventory" means tangible personal property held by
the Debtor for sale or lease or to be furnished under contracts of service,
tangible personal property which the Debtor has so leased or furnished, and raw
materials, work in process and materials used, produced or consumed in Debtor's
business, and shall include tangible personal property returned to the Debtor by
the purchaser following a sale thereof by the Debtor and tangible personal
property represented by Documents of Title. All equipment, accessories and parts
at any time attached or added to items of Inventory or used in connection
therewith shall be deemed to be part of the Inventory.
(m) "Liabilities" means all existing and hereafter
incurred or arising indebtedness, obligations and liabilities of the Debtor to
the Bank, whether absolute or contingent, direct or indirect and out of whatever
transactions arising, and includes without limitation, all matured and unmatured
indebtedness, obligations and liabilities of the Debtor under or in connection
with existing and future loans and advances evidenced by promissory notes or
otherwise, letters of credit, acceptances, all other extensions of credit,
repurchase agreements, security agreements, mortgages, overdrafts, foreign
exchange contracts and all other contracts for payment or performance,
indemnities, and all indebtedness, obligations and liabilities under any
guaranty or surety agreement, or as co-maker or co-obligor with any person for
any of the foregoing, including without limitation all interest, expenses, costs
(including collection costs) and fees (including reasonable attorney's fees and
prepayment fees) incurred, arising or accruing (whether prior or subsequent to
the filing of any bankruptcy petition by or against any Debtor) under or in
connection with any of the foregoing, and further including all such
indebtedness, obligations and liabilities of the Debtor (i) to others which the
Bank may have obtained by assignment, participation, subrogation, merger or
otherwise, and (ii) to subsidiaries of the Bank.
(n) "Line of Credit Agreement" means the Line of Credit
Agreement dated even date herewith in connection with a Line of Credit to
Borrower in the maximum amount of Five Million Five Hundred Thousand Dollars
($5,500,000.00).
(o) "Person" means an individual, a corporation, a
government or governmental subdivision or agency or instrumentality, a business
trust, an estate, a trust, a partnership, a cooperative, an association, two or
more Persons having a joint or common interest, or any other legal or commercial
entity.
-3-
<PAGE>
(p) "Proceeds" means whatever is received when
Collateral is sold, exchanged, collected or otherwise disposed of, including
without limitation insurance proceeds.
(q) "Term Loan Agreement" means the Term Loan Agreement
dated even date herewith in connection with a Term Loan to Borrower in the
maximum amount of One Million Eight Hundred Thousand Dollars ($1,800,000.00).
2. Security Interest in Collateral. As Security for the payment
of the Liabilities the Debtor hereby assigns to the Bank and grants to the Bank
a lien upon and security interest in the Collateral. Except for liens permitted
under the Line of Credit Agreement, the Term Loan Agreement or any other loan
agreement or loan document with Bank, without the written consent of the Bank,
the Debtor will not create, incur, assume or suffer to exist any other liens or
security interests in the Collateral.
3. Collection of Accounts. The Bank hereby authorizes the
Debtor to collect all Accounts from the Account Debtors. The Proceeds of
Accounts so collected by the Debtor shall be received and held by the Debtor in
trust for the Bank. Unless otherwise agreed by the Bank, but only in the event
Debtor is in default under the Line of Credit Agreement, the Term Loan
Agreement, this Agreement or any other loan agreement or loan document with
Bank, the Debtor shall deliver to the Bank within one day of the receipt thereof
by the Debtor all Proceeds in the form of cash, checks, drafts, notes and other
remittances received in payment of or on account of any of the Debtor's
Accounts. Such Proceeds shall be deposited in a special non-interest bearing
bank account (the "Cash Collateral Account") maintained with the Bank over which
the Bank alone shall have power of withdrawal. All Proceeds other than cash
shall be deposited in precisely the form in which received, except for the
addition thereto of the endorsement of the Debtor when necessary to permit
collection of the items, which endorsement the Debtor agrees to make. The Debtor
will not commingle any such Proceeds with any of the Debtor's other funds or
property but will hold them separate and apart from any other funds or property
and upon an express trust for the Bank until deposit thereof is made in the Cash
Collateral Account. Periodically, at the Bank's discretion, the Bank will apply
all or any part of the collected Proceeds of Accounts on deposit in the Cash
Collateral Account to the payment in full or in part of such of the Liabilities
and in such order as the Bank may elect. The authority hereby given to the
Debtor to collect the Proceeds of Accounts in trust for the Bank may be
terminated by the Bank at any time. The Bank shall have the right at any time,
acting if it so chooses in the Debtor's name, to collect the Debtor's Accounts
itself, to sell, assign, compromise, discharge or extend the time for payment of
any Account, to institute legal action for the collection of any Account, and to
do all acts and things necessary or incidental thereto. The Debtor hereby
ratifies all that the Bank shall do by virtue hereof. The Bank may at any time,
without notice to the Debtor, notify any Account Debtor that the Account payable
by such Account Debtor has been assigned to the Bank and is to be paid directly
to the Bank. At the Bank's request the Debtor shall so notify Account Debtors
and shall indicate on all billings to Account Debtors that payments thereon are
to be made to the Bank. Without the written consent of the Bank, the Debtor
shall not compromise, discharge, extend the time for payment of or otherwise
grant any indulgence or allowance with respect to any Account. Notwithstanding
anything in this paragraph to the contrary, the rights of Bank under this
paragraph shall arise only in the event Debtor is in default
-4-
<PAGE>
under the Line of Credit Agreement, the Term Loan Agreement or any other loan
agreement or loan document with Bank.
4. Processing and Sales of Inventory. So long as the Debtor is
not in default under the Line of Credit Agreement, the Term Loan Agreement, this
Agreement or any other loan agreement or loan document with Bank, the Debtor
shall have the right, in the regular course of its business, to process and sell
its Inventory.
5. Other Agreements of Debtor.
(a) The Debtor shall keep complete and accurate books
and records and make all necessary entries therein to reflect the quantities,
costs, values and location of its Inventory and Equipment, and the transactions
and facts giving rise to its Accounts and General Intangibles and all payments,
credits and adjustments applicable thereto. The Debtor shall keep the Bank fully
and accurately informed as to the location of all such books and records
pertaining to the Collateral and shall permit the Bank's agents to have access
to all such books and records and any other records pertaining to the Debtor's
business which the Bank may request and, if deemed necessary by the Bank, but
only if Debtor is in default under the Line of Credit Agreement, the Term Loan
Agreement, this Agreement or any other loan agreement or loan document with
Bank, to remove them from the Debtor's place of business or any other place
where the same may be found for the purpose of examining, auditing and copying
the same. Any of the Debtor's books and records so removed by the Bank's agents
shall be returned to the Debtor by the Bank as soon as the Bank shall have
completed its inspection, audit or copying thereof. The Bank shall have the
right to communicate with Account Debtors and Debtor's accountant to the extent
reasonably necessary to verify account balances and any information provided by
the Debtor. The Bank's right to take possession of the Debtor's books and
records pertaining to the Collateral shall be enforceable at law by action of
replevin or by any other appropriate remedy at law or in equity, only after
Debtor is in default under any the Line of Credit Agreement, Term Loan agreement
or any other loan agreement or loan document with Bank, and the Debtor consents
to the entry of judicial orders or injunctions enforcing such right without any
notice to the Debtor or any opportunity to be heard.
(b) In the event that any lien, assessment or tax
liability against the Debtor shall arise, whether or not entitled to priority
over the security interest of the Bank created hereby, the Debtor shall give
prompt notice thereof in writing to the Bank. The Bank shall have the right (but
shall be under no obligation) to pay any tax or other liability of the Debtor
deemed by the Bank to affect its interest. The Debtor shall repay to the Bank
any sums which the Banks shall have so paid, together with interest thereon at
the rate payable by the Debtor, at the time of payment by the Bank, with respect
to the Liabilities (or the highest such rate, if there be more than one), but in
no event less than six percent (6%) per annum and the Debtor's liability to the
Bank for such repayment with interest shall be included in the Liabilities. In
addition, the Bank shall be subrogated to the extent of the payment made by it
to all rights of the recipient of such payment against the assets of the Debtor.
The Debtor shall furnish to the Bank at such times as the Bank may require proof
satisfactory to the Bank of the making of payments or deposits required by
applicable law with respect to amounts withheld by the Debtor from wages and
salaries of employees and amounts
-5-
<PAGE>
contributed by the Debtor on account of federal and other income or wage taxes
and amounts due under the Federal Insurance Contributions Act. The Debtor
represents, warrants and agrees that, in respect to all employee pension or
other benefit plans maintained by the Debtor or any of its subsidiaries, the
Debtor is in compliance in all material respects, and will continue to comply
fully, with the Employee Retirement Income Security Act of 1974, as amended and
all rules and regulations adopted thereunder or pursuant thereto. The Debtor
continuously represents and warrants to the Bank that all Collateral consisting
of goods has been and will continue to be produced in compliance with the
requirements of the Fair Labor Standards Act, including Sections 206 and 207
thereof and will immediately notify Bank if Debtor has any reason to believe
otherwise.
(c) If any of the Debtor's Accounts or General
Intangibles in excess of Five Hundred Thousand Dollars ($500,000.00) arises out
of a contract with the United States or any department, agency or
instrumentality thereof, the Debtor will immediately notify the Bank thereof in
writing and execute any instruments and take any steps required by the Bank in
order that the security interest of the Bank hereunder in the Debtor's General
Intangibles under such contract and all Accounts arising thereunder and in the
Proceeds thereof shall be perfected under the provisions of the Federal
Assignment of Claims Act.
(d) If any of the Debtor's Accounts is or becomes
evidenced by a promissory note, a trade acceptance or any other instrument for
the payment of money, the Debtor will promptly deliver such instrument to the
Bank appropriately endorsed to the Bank's order. Regardless of the form of such
endorsement, the Debtor hereby waives presentment, demand, notice of dishonor,
protest and notice of protest and all other notices with respect thereto.
(e) The Debtor will keep its Inventory and Equipment
insured against such casualties and in such amounts as the Bank shall reasonably
require. All insurance policies shall be written for the benefit of the Debtor
as the insured, and shall name the Bank as loss payee, and such policies shall
be delivered to and held by the Bank. All such policies of insurance shall
provide for at least ten days' advance notice in writing to the Bank of any
cancellation thereof, and shall insure Bank notwithstanding the act or neglect
to act of Debtor. If the Debtor fails to pay the premiums on any such insurance,
the Bank shall have the right (but shall be under no obligation) to pay such
premiums for the Debtor's account. The Debtor shall repay to the Bank any sums
which the Bank shall have so paid, together with interest thereon at the rate
payable by the Debtor, at the time of payment by the Bank, with respect to the
Liabilities (or the highest such rate, if there be more than one), but in no
event less than six percent (6%) per annum and the Debtor's liability to the
Bank for such repayment with interest shall be included in the Liabilities. The
Debtor hereby assigns to the Bank any return or unearned premium which may be
due upon cancellation of any such policies for any reason whatsoever and directs
the insurers to pay to the Bank any amounts so due. The Debtor's rights to
receive payment of such return or unearned premiums and the proceeds of any such
insurance are included in the Accounts and General Intangibles which are hereby
subject to a security interest.
-6-
<PAGE>
(f) The Debtor will maintain the Equipment in good
condition and repair, and will pay the cost of repairs to or maintenance of the
same and will not permit anything to be done that may impair the value of the
Equipment.
(g) The Bank shall have the right to take possession of
any Inventory and the Debtor hereby assigns to the Bank its right of stoppage in
transit with respect to any Inventory. All costs of transportation , packing,
storage and insurance of any Inventory which the Bank make take into its
possession shall be promptly repaid to the Bank by the Debtor, together with
interest thereon at the rate payable by the Debtor, at the time of payment by
the Bank, with respect to the Liabilities (or the highest such rate, if there be
more than one), but in no event less than six percent (6%) per annum and the
Debtor's liability to the Bank for such repayment with interest shall be
included in the Liabilities. If any of the Debtor's Inventory is or becomes
represented by a Document of Title, the Bank may require that such Document of
Title be in such form as to permit the Bank or anyone to whom the Bank may
negotiate the same to obtain delivery of the Inventory represented thereby, and
that it be delivered into the possession of the Bank.
(h) At such intervals as the Bank may reasonably
require, the Debtor shall submit to the Bank a schedule reflecting in form and
detail satisfactory to the Bank the quantities, cost and value of its Inventory
and Equipment. The amounts of all outstanding Accounts and the amount of the
Accounts which are Qualified Accounts and the value of all its General
Intangibles shall be submitted monthly. The Bank may also require the Debtor to
submit to the Bank copies of the invoices pertaining to all or any of its
Accounts and evidence of shipment of the Inventory the sale or leasing of which
have given rise to such Accounts.
(i) The Debtor shall promptly notify the Bank of any
event causing material deterioration, loss or depreciation in value of any
substantial portion of the Debtor's Inventory or Equipment and the amount of
such loss or depreciation. The Debtor shall permit the Bank's agents to have
access to its Inventory and Equipment from time to time, as reasonably requested
by the Bank, for purposes of examination, inspection, and appraisal thereof and
verification of the Debtor's records pertaining thereto. After the occurrence of
an event of default by Debtor under the Line of Credit Agreement, the Term Loan
Agreement, this Agreement or any other loan agreement or loan document with
Bank, the Debtor shall assemble the Inventory and Equipment and make them
available to the Bank at such place as may be designated by the Bank which is
reasonably convenient to both parties. At the request of the Bank, the Debtor
shall lease warehousing space in the Debtor's own premises to the Bank for the
purpose of taking any Inventory into the custody of the Bank without removal
thereof from such premises and will erect such structures and post such signs as
the Bank may require in order to place such Inventory under the exclusive
control of the Bank.
(j) The Debtor will promptly notify the Bank of any
material adverse change in the Debtor's financial condition or in the financial
condition of any Account Debtor or in the collectibility of any of its Accounts.
-7-
<PAGE>
(k) The Debtor warrants that the Debtor's chief
executive office and all of its offices where it keeps its records concerning
the Collateral, all locations at which it keeps its Inventory and Equipment and
all locations at which it maintains a place of business are listed in Section 18
hereof. Debtor further warrants that Debtor has no plans for the removal of the
Collateral to any location not set forth in Section 18. The Debtor shall
promptly notify the Bank in writing of any change in the Debtor's name, chief
executive office or the location of the Debtor's records, of any change in the
location of the Collateral, of any change in the location of any place of
business and of the establishment of any new place of business. If any of the
collateral or any of the Debtor's records concerning the Collateral are at any
time to be located on premises leased by the Debtor or on premises owned by the
Debtor, subject to a mortgage or other lien, the Debtor shall request and, if
obtained, deliver to the Bank, prior to the delivery of any Collateral or
records concerning the Collateral to said premises, an agreement in form
satisfactory to the Bank, waiving the landlord's, mortgagee's or lienholder's
rights to enforce any claim against the Debtor for moneys due under the lease,
mortgage or other lien by levy of distraint or other similar proceedings against
the Collateral or the Debtor's records concerning the collateral and assuring
the Bank's ability to have access to the Collateral and the Debtor's records
concerning the Collateral in order to exercise its rights hereunder to take
possession thereof.
(l) The Debtor shall pay to the Bank on demand, with
interest at the rate payable by the Debtor, at the time of payment by the Bank,
with respect to the Liabilities (or the highest such rate, if there be more than
one), but in no event less than six percent (6%) per annum, any and all expenses
(including reasonable attorney's fees and legal expenses, filing fees, searches,
and termination costs), which may have been incurred by the Bank (i) to enforce
payment of any Account or to enforce any General Intangibles or to enforce any
of the Liabilities, whether as against an Account Debtor, the Debtor or any
guarantor or surety of any Account Debtor or of the Debtor; or (ii) in the
enforcement, prosecution or defense of any action growing out of or connected
with the subject matter of this Agreement, the Liabilities, the Collateral or
any of the Bank's rights therein or thereto; or (iii) in connection with the
custody, preservation, use, operation, [preparation for sale or sale of any
Collateral; or (iv) in connection with preparation and completion of this
Agreement and any and all related agreements and consummation of the financing
arrangement described herein and any modification or extension hereof; or (v)
with respect to the enforcement, protection or preservation from time to time of
the Bank's rights under this Agreement or with respect to the Collateral. The
Debtor's liability to the Bank for such repayment with interest shall be
included in the Liabilities and is secured by the Collateral.
(m) The Debtor further covenants and agrees to execute
form time to time any and all agreements and documents (including financing
statements) which the Bank may request in order to perfect its lien on the
Collateral and otherwise carry out the provisions of this Agreement. The Debtor
further authorizes the Bank to file a carbon, photographic or other reproduction
of this Agreement or a financing statement previously filed under this Agreement
as a financing statement in any jurisdiction. If certificates of title are
issued or outstanding with respect to any of the Collateral, the Debtor will
cause the security interest of the Bank to be properly noted thereon and will
promptly deliver such certificates to the Bank.
-8-
<PAGE>
(n) Without the prior written consent of the Bank, the
Debtor shall not sell or otherwise dispose of its Equipment, except obsolete
equipment and equipment replaced by other equipment, and, except in the ordinary
course of business, the Debtor shall not sell or dispose of its Inventory.
6. Environmental Matters.
(a) As used in this Agreement, the following terms shall
have the following meanings: (i) "Environmental Laws" means any and all
applicable federal, state and local environmental laws, rules and regulations
whether now existing or hereafter enacted together with all amendments,
modifications and supplements thereof; and (ii) "Hazardous Materials" means any
contaminants, hazardous substances, regulated substances, or hazardous wastes
which may be the subject of liability pursuant to any Environmental Law.
(b) The Debtor represents and warrants that no property
owned or leased by the Debtor or any subsidiary of the Debtor is in material
violation of any Environmental Laws, no Hazardous Materials are present on said
property in material violation of such law and neither the Debtor nor any
subsidiary of the Debtor has been identified in any litigation, administrative
proceedings or investigation as a responsible party for any liability under any
Environmental Laws.
(c) The Debtor shall not use, generate, treat, store,
dispose of or otherwise introduce, or permit any subsidiary to use, generate,
treat, store, dispose of or otherwise introduce, any Hazardous Materials into or
on any property owned or leased by the Debtor, and will not, and will not permit
any subsidiary to, cause, suffer, allow or permit anyone else to do so, except
in an environmentally safe manner through methods which have been approved by
and meet all of the standards of the federal Environmental Protection Agency and
any other federal, state or local agency with authority to enforce Environmental
Laws. The Debtor hereby agrees to indemnify, reimburse, defend and hold harmless
the Bank and its directors, officers, agents and employees ("Indemnified
Parties") for, from and against all demands, liabilities, damages, costs,
claims, suits, actions, legal or administrative proceedings, interest, losses,
expenses and reasonable attorney's fees (including any such fees and expenses
incurred in enforcing this indemnity) asserted against, imposed on or incurred
by any of the Indemnified Parties, directly or indirectly pursuant to or in
connection with the application of any Environmental Law, relating to acts or
omissions occurring at any time on or in connection with any property owned or
leased by the Debtor or any subsidiary of the Debtor or any business conducted
thereon. Bank shall give Debtor notice of all claims asserted against Bank by
any third party in connection herewith and Debtor shall have the right to enter
a defense thereto.
7. Default. The Debtor shall be in default hereunder upon the
occurrence of any Default or Event of Default under the Line of Credit
Agreement, the Term Loan Agreement or any other loan agreement or loan document
with Bank.
8. Acceleration and Enforcement Rights. Whenever the Debtor
shall be in default as aforesaid, subject to all applicable grace periods and
the expiration of any cure periods,
-9-
<PAGE>
(i) the Bank may declare the entire unpaid amount of such of the Liabilities as
are not then due and payable to become immediately due and payable without
notice to or demand on any Obligor; and (ii) the Bank may at its option exercise
from time to time any or all rights and remedies available to it under the
Uniform Commercial Code or otherwise available to it, including the right to
collect, receipt for, settle, compromise, adjust, sue for, foreclose or
otherwise realize upon any of the Collateral and to dispose of any of the
Collateral at public or private sale(s) or other proceedings, with or without
advertisement, and the Debtor agrees that the Bank or its nominee may become the
purchaser at any such sale(s). Bank shall have the unconditional right to retain
and obtain the full benefit of all Collateral until all Liabilities of the
Debtor to the Bank are paid and satisfied in full. If any notification of
intended disposition of the collateral is required by law, such notice shall be
deemed reasonable if mailed at least ten (10) days before such disposition
addressed to the Debtor at its Address shown herein. If any Note secured hereby
is payable on demand, Bank's right to require payment shall not be restricted or
impaired by the absence, non-occurrence or waiver of an Event of Default, and it
is understood that if such Note is payable on demand, the Bank may require
payment at any time.
9. Application of Collateral. The Proceeds of any Collateral
received by the Bank at any time after a default by Debtor under the Line of
Credit Agreement, the Term Loan Agreement or any other loan agreement or loan
document with Bank, whether from sale of Collateral or otherwise, may be applied
to the payment in full or in part of such of the Liabilities and in such order
as the Bank may elect. The Debtor, to the extent that it has any right, title or
interest in any of the Collateral, authorizes Bank to proceed against the
Collateral in any order that Bank may determine and waives and releases any
right to require the Bank to collect any of the Liabilities from any source
other than from the Collateral under any theory of marshaling of assets, or
otherwise, and specifically authorizes the Bank to proceed against any of the
Collateral in which the Debtor has a right, title or interest with respect to
any of the Liabilities in any manner that the Bank may determine.
10. Power of Attorney. The Debtor does hereby appoint any
officer or agent of the Bank as the Debtor's true and lawful attorney-in-fact,
with power to endorse the name of the Debtor upon any notes, checks, drafts,
money orders, or other instruments of payment or Collateral that may come into
possession of Bank; to sign and endorse the name of the Debtor upon any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against Account Debtors, assignments, verifications and notices
in connection with Accounts, and any instruments or documents relating thereto
or to the Debtor's rights therein; and after a default by Debtor under the Line
of Credit Agreement, the Term Loan Agreement, this Agreement or any other loan
agreement or loan document with Bank, to give written notice to such office and
officials of the United States Postal Service to effect such change or changes
of address so that all mail addressed to the Debtor may be delivered directly to
Bank (Bank will return all mail not related to the Liabilities or the
Collateral); granting unto Debtor's said attorney full power to do any and all
things necessary to be done with respect to the above transactions as fully and
effectually as Debtor might or could do, and hereby ratifying all that said
attorney shall lawfully do or cause to be done by virtue hereof. This power of
attorney shall be irrevocable for the term of this Agreement and all
transactions hereunder.
-10-
<PAGE>
11. Term. The terms of this Agreement shall commence with the
date hereof and end on the date when, after receipt of written notice of the
termination of this Agreement from either party to the other, which notice may
be given by either party at any time, there shall be no Liabilities outstanding.
12. Successors and Assigns. All provisions herein shall inure
to, and become binding upon, the heirs, executors, administrators, successors,
representatives, receivers, trustees and assigns of the parties, provided,
however, that this Agreement shall not be assignable by the Debtor without the
prior written approval of the Bank.
13. The Debtor's Authority and Capacity, Etc. The Debtor
represents and warrants that the Bank is obtaining and shall maintain at all
times a first lien on all of the Collateral subject to those liens permitted
under the Line of Credit Agreement, the Term Loan Agreement or any other loan
agreement or loan document with Bank. If the Debtor is a corporation, the Debtor
further represents and warrants that it is duly organized, validly in existence
and in good standing in its state of incorporation and any other state where the
nature or extent of its business requires qualification, where the failure to
qualify would materially adversely affect Debtor, that the execution and
performance by the Debtor of this Agreement and any related agreements is
authorized by the Debtor's Board of Directors and does not violate the Articles
of Incorporation or By-Laws of the Debtor or any other Agreement or contract by
which the Debtor is bound. The Debtor represents and warrants that this
Agreement is the legal, valid and binding obligation of the Debtor enforceable
against the Debtor in accordance with its terms, subject to bankruptcy,
insolvency and other similar laws.
14. CONSENT TO JURISDICTION AND VENUE. IN ANY LEGAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER, EACH UNDERSIGNED PARTY
HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED IN ANY COUNTY IN THE COMMONWEALTH OF PENNSYLVANIA HERE THE
BANK MAINTAINS AN OFFICE AND AGREES NOT TO RAISE ANY OBJECTION TO SUCH
JURISDICTION OR TO THE LAYING OR MAINTAINING OF THE VENUE OF ANY SUCH PROCEEDING
IN SUCH COUNTY.
15. WAIVER OF JURY TRIAL. EACH UNDERSIGNED PARTY HEREBY WAIVES,
AND THE BANK BY ITS ACCEPTANCE HEREOF THEREBY WAIVES, TRIAL BY JURY IN ANY LEGAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE BANK TO ENTER INTO, ACCEPT OR RELY UPON THIS
AGREEMENT.
-11-
<PAGE>
16. Miscellaneous. The construction and interpretation of this
Agreement and all agreements shall be governed by the laws of the Commonwealth
of Pennsylvania. No modification hereof shall be binding or enforceable unless
in writing and signed by the party against whom enforcement is sought. If any
provision of this Agreement is determined to be unenforceable or invalid, such
determination shall not affect or impair the remaining provisions of this
Agreement. No rights are intended to be created hereunder for the benefit of any
third party beneficiary hereof. The individual signatory(ies) on behalf of the
Debtor represents that he (they) is (are) authorized to execute this Agreement
on behalf of the Debtor. This Agreement supplements the Debtor's obligations
under any promissory notes or separate agreements with the Bank.
17. Locations of Debtor. The Debtor represents and warrants that
the following addresses (together with any additional addresses which may be
shown on any attached schedule) correctly set forth all of the locations where
the Debtor maintains a place of business, its records or the Collateral.
Chief Executive Office: 125 Titus Avenue,
Warrington, Pennsylvania, 18976.
Other Locations: 58 Richboynton Road,
Dover, New Jersey, 07801.
18. Name of Debtor. The Debtor represents and warrants that the
name of the Debtor shown on this Agreement is the correct, full legal name of
the Debtor and that the Debtor has not at any time changed its name, identity or
corporate structure, been the surviving corporation in a merger, acquired any
other business, or engaged in business under an assumed name or trade name
except as set forth below.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto under seal and intending to be legally bound on the day and
year first above written.
CORESTATES BANK, N.A.
By: /s/ Edward F. Mulligan
---------------------------
Name: Edward F. Mulligan
Title: Vice President
Address: Corestates Bank, N.A.
4259 W. Swamp Road
Suite 410 FC:3-244-4-41
Doylestown, PA 18901
NUCLEAR RESEARCH CORPORATION
By: /s/ Earl M. Pollock
---------------------------
Name: Earl M. Pollock
Title: President
-12-
<PAGE>
EXHIBIT 10(h)
CORESTATES BANK, N.A.
GENERAL ASSIGNMENT OF GOVERNMENT CONTRACTS
AND THE PROCEEDS THEREOF
INTENDING TO BE LEGALLY BOUND, NUCLEAR RESEARCH CORPORATION
("BORROWER") hereby agrees as follows:
1. In consideration for a line of credit in the amount of Five
Million Five Hundred Thousand Dollars ($5,500,000.00) and a term loan in the
amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) (the
"Loans") granted or to be granted even date herewith by CoreStates Bank, N.A.
("Lender") to BORROWER and to induce Lender to make these Loans and as
additional security for these Loans, BORROWER does hereby absolutely and
unconditionally assign, transfer, and set over to Lender and grant to Lender a
security interest in all of its rights, but not its obligations, under all
Contracts hereafter in existence for the furnishing of goods and services by
BORROWER to the United States Government, its agencies, departments or units as
purchaser ("Purchaser"), where the individual amount of any such Contract
exceeds Five Hundred Thousand Dollars ($500,000.00) (the "Contracts"), including
a security interest in any and all monies, proceeds and lease payments due or to
become due under any of such Contracts, and in any renewals, extensions and
modifications thereof in accordance with the terms set forth below.
2. BORROWER hereby agrees to authorize and direct the purchaser
under any of such Contracts to make all payments as they become due under said
Contract directly to Lender in the event that Lender shall so direct BORROWER in
writing. Lender agrees, however, that so long as there has been no event of
default under the documents securing any of the Loans owed by BORROWER to
Lender, BORROWER may collect and receive all payments due under the Contracts.
If any such event of default shall occur and be continuing, then Lender may
collect directly from the Purchaser all payments due under the Contracts and
exercise all other rights thereunder.
3. This Assignment shall be a continuing one and shall be
effective for any renewals, modifications or extensions of the Loans referred to
above until the same are entirely paid.
4. BORROWER agrees to deliver to Lender copies of the original
Contracts referred to above promptly after such Contracts are executed and
delivered to BORROWER. BORROWER further agrees to execute, upon the request of
Lender, UCC-1 Financing Statements covering the Contracts and perfecting
Lender's security interest in the Contracts and proceeds thereof, which
Financing Statements shall be filed by Lender at its discretion.
5. So long as either or both of the Loans are outstanding,
BORROWER will not, without the prior written consent of Lender, grant any
security interests in any of the Contracts or
-1-
<PAGE>
contract rights set forth above to any person or entity except Lender or permit
any lien or encumbrance to attach to any of the Contracts or contract rights or
permit any levy to be made thereon or permit any statement, except Lender's
financing statement, to be on file with respect thereto.
6. BORROWER covenants that BORROWER will keep the Contracts and
contract rights free of all liens and encumbrances except for Lender's security
interest hereunder.
7. The security interest granted herein shall be considered an
interest in property granted pursuant to Article IX of the Uniform Commercial
Code which secures payment or performance of an obligation. BORROWER represents
that the office or offices where it keeps its records concerning all of its
Contracts and contract rights is at the address specified at the end of this
Agreement. BORROWER will immediately advise Lender in writing of the opening of
any new place of business or the closing of any of its existing places of
business and of any change in the location of the places where its records
concerning its contract rights are kept.
8. Any breach of the warranties, representations and covenants
in this Assignment shall constitute an event of default under the loans secured
by this Assignment and shall entitle Lender to pursue all remedies provided
under the documentation for such loans or otherwise available.
9. This Assignment shall inure to the benefit of the Lender,
its successors, assignees, endorsees and any person or persons, including any
banking institution or institutions, to whom the Lender may grant any interest
in the instruments evidencing the loan secured hereby.
10. BORROWER'S address is as follows: 125 Titus Avenue,
Warrington, Pennsylvania, 18976.
EXECUTED on the 14th day of January, 1997.
NUCLEAR RESEARCH CORPORATION
By: /s/ Earl M. Pollock
---------------------------(SEAL)
Name: Earl M. Pollock
Title: President
-2-
<PAGE>
EXHIBIT 10(i)
CORESTATES BANK, N.A.
ASSIGNMENT OF PROCEEDS OF LETTER OF CREDIT
INTENDING TO BE LEGALLY BOUND, Nuclear Research
Corporation, 125 Titus Avenue, Warrington, Pennsylvania 18976 ("Borrower")
agrees as follows:
1. In consideration for a $5,500,000.00 line of credit, the
proceeds of which will be used for working capital purposes, and a term loan in
the amount of $1,500, 000.00, the proceeds of which will be used for (i) the
acquisition of the assets (through a merger) of TSA Systems, Ltd. and the assets
of a division of Teledyne Corporation and (ii) the restructuring of fund
transfers to Measurement Dynamics LLC, (jointly and severally the "Obligations")
granted or to be granted by CoreStates Bank, N.A. ("Lender") to Borrower,
including all modifications, supplements, renewals and extensions thereto, and
to induce Lender to make these loans and as additional security for these loans,
Borrower does hereby collaterally assign to Lender Borrower's rights to the
proceeds from a Letter of Credit ("LC") dated November 16, 1994 in the original
face amount of $6,471,090.95 issued by Korea Exchange Bank in favor of Borrower,
a copy of which is attached hereto.
2. After the occurrence and during the continuance of an Event
of Default as defined in the various documents executed by Borrower in
connection with the Obligations, Lender may enforce this Assignment by notifying
Borrower that an event of default has occurred and thereafter at any time during
the continuance of such event of default any proceeds received from the LC shall
be immediately turned over to Lender and may be used by Lender to apply against
the Obligations in repayment thereof until (i) the Obligations have been paid in
full, or (ii) if earlier, until the default under the Obligations is fully
cured, at which time all excess proceeds shall be promptly turned over by Lender
to Borrower.
3. Subject to the provisions of this Assignment, this
Assignment may be enforced from time to time by Lender at its discretion, with
or without order of any court and with or without appointment of a receiver, as
Lender shall determine. Lender may also at any time cease to enforce this
Assignment. Any failure on the part of Lender promptly to exercise any right,
power or remedy hereby given or reserved shall not prevent the exercise of any
such right, power or remedy at any time thereafter. Lender may pursue and
enforce any rights, powers or remedies accorded it herein independently of, in
conjunction or concurrently with, or subsequent to, its pursuit and enforcement
of any remedy or remedies which it may have under the Obligations.
4. Borrower warrants and represents that:
-1-
<PAGE>
(a) It has the right to execute and deliver this
Assignment;
(b) It: has made no prior assignment of the LC, other
than to Lender;
(c) To the' best of Borrower's knowledge and belief,
after due inquiry, all documents constituting the LC are in full force and
effect on the date hereof, subject to no defenses, setoffs or counterclaims
whatsoever except the conditions set forth therein; and
(d) There exists no event, condition or occurrence which
constitutes, or which with notice or the passage of time would constitute, a
breach by Borrower of, or default by Borrower under, any term or condition of
the LC. Borrower also hereby covenants and agrees not to do any act which would
destroy or impair the security of the Lender of this Assignment.
5. This Assignment shall be governed by the laws of the
Commonwealth of Pennsylvania.
EXECUTED on the 14th day of January, 1997.
"Borrower" Nuclear Research Corporation
By: /s/ Earl M. Pollock
------------------------ (SEAL)
Name: Earl M. Pollock
Title: President
-2-
<PAGE>
NUCLEAR RESEARCH CORPORATION AND SUBSIDIARIES
EXHIBIT 11
CALCULATIONS OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended March 31, Nine Months Ended March 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income (Loss) $(312,275) $771,297 $(654,142) $1,347,787
Average shares issued 31,873 31,873 31,873 31,873
Average net effect of
dilutive stock options-
based on the treasury stock
method 6,642 6,704 6,642 6,704
Less: average treasury
stock (3,698) (3,698) (3,698) (3,698)
------- ------- ------- -------
Total stock and
stock equivalents 34,817 34,879 34,817 34,879
======= ======= ======== =======
Primary Earnings (Loss)
per share $(8.98) $22.11 $(18.79) $38.64
======= ======= ======== =======
</TABLE>
21
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000073296
<NAME> NUCLEAR RESEARCH CORPORATION
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 81,519
<SECURITIES> 0
<RECEIVABLES> 2,634,162
<ALLOWANCES> 0
<INVENTORY> 4,811,623
<CURRENT-ASSETS> 8,377,096
<PP&E> 5,440,850
<DEPRECIATION> (3,101,331)
<TOTAL-ASSETS> 11,319,418
<CURRENT-LIABILITIES> 4,126,883
<BONDS> 0
0
0
<COMMON> 159,365
<OTHER-SE> 6,687,697
<TOTAL-LIABILITY-AND-EQUITY> 11,319,418
<SALES> 10,163,277
<TOTAL-REVENUES> 10,163,277
<CGS> 8,085,415
<TOTAL-COSTS> 8,786,732
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 144,003
<INCOME-PRETAX> (991,123)
<INCOME-TAX> (336,981)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (336,981)
<EPS-PRIMARY> (18.79)
<EPS-DILUTED> (18.79)
</TABLE>
