US SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8 - K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): FEBRUARY 15,2000
MEASUREMENT SPECIALTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 0-16085 22-2378738
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(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
80 LITTLE FALLS ROAD, FAIRFIELD, NEW JERSEY 07004(ADDRESS OF PRINCIPAL EXECUTIVE
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(973) 808-1819
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(ISSUER'S TELEPHONE NUMBER)
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 15, 2000 (the "Closing Date") Measurement Specialties, Inc. (the
"Registrant") acquired 100% of the common stock of IC Sensors, Inc. from
PerkinElmer, Inc. A total of $12 million was paid in cash to PerkinElmer
utilizing cash and the proceeds from a $10.0 million term loan issued on
February 15, 2000 and discussed further in Item 5 (other events). A copy of the
press release announcing the acquisition is attached as Exhibit 2000.1 and the
Asset purchase agreement between the Registrant and PerkinElmer, Inc. is
attached as Exhibit 2000.2.
ITEM 5. OTHER EVENTS.
On February 15, 2000, Measurement Specialties, Inc. (the "Registrant") entered
into a amended and restated its Revolving credit, term loan and Security
agreement with PNC Bank, National Association (PNC). The agreement provides for
a six year, $10.0 million term loan bearing interest at the Eurodollar Rate plus
3.25%, which shall be reduced to no lower than the Eurodollar Rate plus 2.75%
based upon earning before interest, taxes, depreciation and amortization and
$10.0 million revolving credit facility. The revolving credit facility bears
interest at the Eurodollar Rate plus 2.75% (which shall be reduced to no lower
than the Eurodollar Rate plus 2.00% based upon earning before interest, taxes,
depreciation and amortization). The availability under the revolving credit
facility expires February 2003. The agreement requires the Registrant to
maintain minimum interest coverage ratios, maximum leverage ratios, limits
capital expenditures and advances to Subsidiaries and requires consent for the
payment of dividends. A copy of the Revolving credit, term loan and Security
agreement is attached as Exhibit 2000.3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The Registrant will file the required financial statements of business
acquired within 60 days of the last date on which this Report of Form 8-K
was required to be filed.
(b) Pro Forma Financial Information.
The Registrant will file the required pro forma financial information
within 60 days of the last date on which this Report of Form 8-K was
required to be filed.
(c) Exhibits.
2000.1 Press release regarding the acquisition dated February 16, 2000.
2000.2 Stock Purchase Agreement dated as of February 11, 2000 between the
Registrant and PerkinElmer.
2000.3 Amended and Restated Revolving credit, term loan and Security
agreement dated February 15, 2000 between Registrant and PNC Bank,
National Association (PNC).
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MEASUREMENT SPECIALTIES, INC.
(Registrant)
/s/ Kirk J. Dischino
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Date: March 1, 2000 Kirk J. Dischino
Chief Financial Officer
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EXHIBIT 2000.1
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Contact: Joseph R. Mallon, Jr., CEO
Kirk J. Dischino, CFO
973 808-1819
Boutcher & Boutcher, Investor Relations
Aimee Boutcher
973 239-2878
FOR IMMEDIATE RELEASE
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MEASUREMENT SPECIALTIES ACQUIRES IC SENSORS
CONTINUES EXPANSION OF SENSOR PRODUCTS
Fairfield, NJ, February 16, 2000 - Measurement Specialties, Inc. (AMEX: MSS)
announced today it has acquired IC Sensors, Inc. from PerkinElmer, Inc (NYSE:
PKI).
IC Sensors, with calendar 1999 sales of approximately $14 million, designs,
manufactures, and markets micromachined silicon pressure sensors,
accelerometers, and microstructures. A world recognized pioneer in microsensor
technology, IC Sensors serves industrial, medical, and aerospace customers. It
employs approximately 125 people in Milpitas, Ca, and 112 manufacturing people
in a PerkinElmer facility in Batam, Indonesia. The purchase price of $12
million was financed with senior debt extended by the Company's existing primary
lender.
Joseph R. Mallon Jr, CEO, said, "This acquisition fits perfectly with our
strategic and business model. It is a business we understand in depth. IC
Sensors products and technology complement and broaden our OEM-sensor product
offerings, fits well with existing distribution channels, and will benefit from
our low cost Asian manufacturing capability."
Mr. Mallon continued "IC Sensors is an exciting company in the Silicon
Valley tradition with outstanding people, and world class technology. It has
been impacted by declining revenues, and losses associated with an unsuccessful
initiative into automotive accelerometers. Plans are to immediately begin
transferring Batam manufacturing to Measurement Specialties' facilities in
Shenzen, China, and to subsequently transfer additional Milpitas manufacturing
operations. Leveraging our infrastructure and taking advantage of the many
synergies with our existing sensor business, we expect to quickly make IC
Sensors significantly profitable. During the next several quarters, we expect
short term losses at IC Sensors to be more than offset by strength in our
existing sensor and consumer businesses.
We continue to remain active in identifying and negotiating with possible
acquisition candidates both in the USA and Europe. We anticipate closing on one
or more of these opportunities during the next Fiscal Year. Targeted companies
have revenues ranging from $10 million to $40 million."
Kirk J. Dischino, Chief Financial Officer, said, "Our strong financial
performance allowed us to finance the transaction with senior debt, and no
shareholder dilution. PNC Bank NA,our primary lending institution was responsive
to our need to complete the transaction quickly and cost effectively. The
purchase was funded with cash, and a six-year, $10 million term note.
Additionally, our revolving credit facility was increased from $5 million to $10
million."
Measurement Specialties, Inc., designs, develops, produces and sells
electronic sensors, and sensor-based consumer products. The Company's products
include sensors for high volume industrial applications, body-weight, kitchen,
and postal scales, electronic tire pressure gauges, parking aids, and distance
estimators.
PerkinElmer, Inc is a $1.6 billion high technology company based in Boston,
Massachusetts, operating in four businesses - Life Sciences, Fluid Sciences,
Optoelectronics, and Analytical Instruments. PerkinElmer, Inc has operations in
over 100 countries, and is a component of the S&P 500 Index. Additional
information is available at www.perkinelmer.com or at 1877-PKI-NYSE.
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This release includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
and Exchange Act of 1934, as amended. Forward looking statements may be
identified by such words or phases as "will likely result", "are expected to",
"will continue", "is anticipated", "estimated", "projected", "may", or similar
expressions. The forward-looking statements above involve a number of risks and
uncertainties. Factors that might cause actual results to differ materially
include: conditions in the general economy and in the markets served by the
Company; competitive factors, such as price pressures and the potential
emergence of rival technologies; interruptions of suppliers' operations
affecting availability of component materials at reasonable prices; timely
development and market acceptance, and warranty performance of new products;
success in identifying, financing and integrating acquisition candidates;
changes in product mix, costs and yields, fluctuations in foreign currency
exchange rates; uncertainties related to doing business in Hong Kong and China;
and the risk factors listed from time to time in the Company's SEC reports. The
Company is involved in an announced active acquisition program. Actual results
may differ materially. The Company assumes no obligation to update the
information in this issue.
CONFERENCE CALL
A conference call discussing the acquisition will be held Thursday, February 17,
2000 beginning at 11:00 AM (Eastern). To participate, please dial 1-800-553-0288
prior to start time. A recording of the call will be available for 30 days by
dialing 1-800-475-6701, and entering access code 503450. The call will be
simultaneously broadcast over the Internet and available for 90 days thereafter
at http://www.vcall.com.
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EXHIBIT 2000.2
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STOCK PURCHASE AGREEMENT
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This Stock Purchase Agreement ("Agreement") is made as of February 11, 2000, by
and among:
PerkinElmer, Inc., a Massachusetts corporation headquartered in
Wellesley, Massachusetts (the "Seller");
and
Measurement Specialties, Inc., a corporation organized and existing
under the laws of the State of New Jersey with its principal place of
business in Fairfield, New Jersey (the "Buyer").
R E C I T A L S
A. Seller owns all the issued and outstanding shares of common stock of IC
Sensors, Inc. (formerly EG&G IC Sensors), a California corporation with its
principal place of business in Milpitas, California (the "Company") (the
"Shares"); and
B. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, the Shares upon the terms and conditions hereinafter set forth; and
C. in consideration of the premises and of the mutual agreements
hereinafter contained, the parties hereto do hereby agree as follows:
ARTICLE I - DEFINITIONS
The following terms shall have the meaning set forth below for the purposes
of this Agreement:
"Affiliate" has the meaning set forth in Rule 405 of the Securities Act of 1933,
as amended, and is intended to include the officers, directors, employees,
representatives and agents of any Person.
"Balance Sheet" - as defined in Section 3.9.
"Batam Property" - as defined in Section 3.27.
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"Business" means the design, production and sale of micromachined sensors and
microstructures business conducted by the Company.
"Buyer" - as defined in the first paragraph of this Agreement.
"Closing" - as defined in Section 2.3.
"Closing Date" - the date and time as of which the Closing actually takes place.
"Company" - as defined in the Recitals of this Agreement.
"Contemplated Transactions" - all of the transactions contemplated by this
Agreement including: the sale of the Shares by Seller to Buyer in consideration
of the Purchase Price; the execution, delivery, and performance of any related
documents as described in this Agreement; the performance by Buyer and Seller of
their respective covenants and obligations under this Agreement; and Buyer's
acquisition and ownership of the Shares and exercise of control over the
Company.
"Environment" shall mean air, land, surface soil, subsurface soil,sediment,
surface water and groundwater.
"Environmental Conditions" shall mean any environmental contamination or
pollution or threatened contamination or pollution of, or the Release or
threatened Release of Hazardous Substances into, the Environment.
"Environmental Laws" shall mean all federal, regional, state, county or
local laws, statutes, ordinances, decisional law, rules, regulations, codes,
orders, decrees, directives and judgments relating to public health or safety,
pollution, damage to or protection of the Environment, Environmental Conditions,
Releases or threatened Releases of Hazardous Substances into the Environment or
the use, manufacture, processing, distribution, treatment, storage, generation,
disposal, transport or handling of Hazardous Substances, whether existing in the
past or present or hereafter enacted, rendered, adopted or promulgated.
Environmental Laws shall include, but are not limited to, the following laws,
and the regulations promulgated thereunder, as the same may be amended from time
to time: the Comprehensive Environmental Response Compensation and Liability Act
(42 U.S.C. 9601 et seq.) ("CERCLA"); the Resource Conservation and Recovery Act
(42 U.S.C. 6901 et seq.) ("RCRA"); the Clean Air Act (42 U.S.C. 7401 et seq.);
the Clean Water Act (33 U.S.C. 1251 et seq.); and the Occupational Safety and
Health Act (29 U.S.C. 651 et seq.) ("OSHA").
"Environmental Permits" shall mean all permits, authorizations,
registrations, certificates, licenses, approvals or consents required under or
issued pursuant to Environmental Laws.
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"Former Facilities" shall mean any plants, offices, land, manufacturing,
warehousing or other facilities formerly owned, operated, leased, managed, used,
controlled or occupied by Seller in connection with the Company's business or by
any current or former subsidiary of Seller or any predecessors-in-interest of
Seller.
"Governmental Entity" shall mean any nation or government, any state, city,
locality, municipality or political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, any government
authority, agency, department, board, commission or instrumentality of the
United States, any State, city, locality, municipality of the United States or
any political subdivision, thereof, and any tribunal or arbitrators of competent
jurisdiction, and any self-regulatory organization.
"Hazardous Substances" shall mean any toxic or hazardous substance,
material or waste and any pollutant or contaminant, or infectious or radioactive
substance or material, or any substances, materials and wastes defined or
regulated under any Environmental Laws, including without limitation, petroleum,
polychlorinated byphenyls and urea formaldehyde.
"Legal Requirement" - any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Liens" - as defined in Section 3.8.
"Losses" - as defined in Section 10.1.
"material" shall refer to matters involving $25,000 or more.
"material adverse effect" means a material adverse effect on the business,
operations, liabilities, properties, assets or financial condition of a Person.
"Ordinary Course of Business" - an action taken by a Person will be deemed to
have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority); and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"Person" - any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
governmental agency.
"Release" shall mean any intentional or unintentional release, discharge,
spill, leaking, pumping, pouring, emitting, emptying, injection, disposal or
dumping.
"Representative" - with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
"Securities Act" - the Securities Act of 1933, as amended or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"Seller" - as defined in the first paragraph of this Agreement.
"Shares" - as defined in the Recitals of this Agreement.
ARTICLE II - SALE AND TRANSFER OF SHARES; CLOSING
2.1 Shares
Subject to the terms and conditions of this Agreement, at the Closing,
Seller will sell and transfer the Shares to Buyer, and Buyer will purchase the
Shares from Seller.
2.2 Purchase Price
The purchase price (the "Purchase Price") for the Shares will be
Twelve Million Dollars ($12,000,000). At the Closing, (1) the Purchase Price
will be paid by Buyer to the order of Seller via wire transfer in immediately
available funds to such bank and account as has been specified by Seller, and
(2) Seller shall deliver to Buyer certificates for the Shares duly endorsed in
blank or with duly executed stock powers attached in proper form for transfer.
2.3 Closing
The closing of the purchase and sale contemplated by this Agreement
(the "Closing") will take place at the offices of McCarter & English LLP, 100
Mulbery Street, Newark, New Jersey at 10:00 a.m. local time on February 11, 2000
or at such other time and place as the parties may mutually agree. Subject to
the provisions of Article IX, failure to consummate the purchase and sale
provided for in this Agreement on the date and time and at the place determined
pursuant to this Section 2.3 will not result in the termination of this
Agreement and will not relieve any party of any obligation under this Agreement.
2.4 Excluded Liabilities
At or before the Closing, Seller shall assume and/or discharge on
behalf of the Company the following liabilities ("Excluded Liabilities")
<PAGE>
Liabilities arising under Environmental Laws or in respect of Environmental
Conditions, as described in Section 10.1(c);any indebtedness or other liability
to Seller or any Affiliate of Seller (including, without limitation, any
inter-company loans, corporate charges, overhead allocations or product sale
expenses) except as described in Section 5.6; retention bonus payment
obligations to employees of the Company, all of which obligations are set forth
on Schedule 2.4; and federal, state and local income taxes incurred in
connection with the operation of the Company prior to the Closing Date.
ARTICLE III -REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
3.1 Title to Shares
Seller (a) is the owner, free and clear of any liens, pledges,
encumbrances, options, restrictions, charges, agreements or claims, of the
Shares, and (b) will sell, transfer, assign and deliver good and valid title to
the Shares at the closing as provided in this Agreement, free and clear of any
liens, pledges, encumbrances, options, restrictions, charges, agreements or
claims other than those resulting from Buyer's actions.
3.2 Capitalization of the Company
The authorized capital stock and issued and outstanding shares of the
Company are set forth in Schedule 3.2. Such issued and outstanding Shares are
duly authorized, validly issued, fully paid and nonassessable. Except for
rights granted to Buyer under this Agreement there are no outstanding "phantom"
stock rights, options, warrants or rights of first refusal, preemptive,
subordination or similar rights or other rights to purchase, obtain or acquire,
or any outstanding securities or obligations convertible into or exchangeable
for, or any voting or other agreements with respect to, any shares of capital
stock of the Company, or any other securities of the Company and the Company is
not obligated, now or in the future, contingently or otherwise, to issue,
purchase or redeem capital stock or any other securities to or from any person
or entity. There are no Shares of the capital stock of the Company held in the
Company's treasury. Copies of the charter documents and by-laws and corporate
minute books of the Company have been made available to Buyer and are true,
correct and complete in all material respects as of the date hereof. There are
no outstanding bonds, debentures, notes or other indebtedness having the right
to vote on any matters on which stockholders of the Company may vote.
3.3 Subsidiaries
The Company is a wholly-owned subsidiary of Seller. The Company does
not own, directly or indirectly, any capital stock or other equity securities of
any corporation.
3.4 Organization
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California with full corporate
power and authority to carry on its business as presently conducted by it and to
own, lease and operate its properties in the places where it maintains offices
and where its properties are owned, leased or operated.
<PAGE>
3.5 Due Authorization of Seller; Binding Obligation
Seller has full corporate power and authority to execute and deliver
this Agreement and the other agreements to be executed and delivered by Seller
at the Closing and to perform its obligations hereunder and thereunder, and the
execution, delivery and performance of this Agreement and such other agreements
by Seller have been duly authorized by all necessary corporate and stockholder
actions on the part of Seller. This Agreement is the valid and binding
obligation of Seller, enforceable in accordance with its terms, subject to the
qualification, however, that enforcement of the rights and remedies created
hereby is subject to bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws affecting the enforcement of
creditors' rights in general, or by general principles of equity.
3.6 Non-Contravention
The execution, delivery and performance of this Agreement by Seller
and the consummation of the Contemplated Transactions do not and will not, with
or without the giving of written notice or the lapse of time, or both, violate,
conflict with, result in the breach of, require a consent under, or accelerate
the performance required by any of the terms, conditions or provisions of the
charter documents or by-laws or other governing documents of the Company or
Seller or any material covenant, agreement or understanding to which the Company
or Seller is a party or any order, ruling, decree, judgment, arbitration award,
law, rule, regulation or stipulation to which the Company or Seller is subject
or constitute a default thereunder or result in the creation of any lien, charge
or encumbrance upon any of the properties or assets of the Company or upon the
Shares.
3.7 Books and Records
The books of account, minute books, stock record books, and other
records of the Company, copies of all of which have been made available to
Buyer, are current, complete and correct in all material respects and have been
maintained in accordance with sound business practices. The minute books of the
Company contain accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders and the Board of Directors of the
Company, and no meeting of any such stockholders or Board of Directors has been
held for which minutes have not been prepared and are not contained in such
minute books.
3.8 Title to Properties
Schedule 3.8 attached hereto contains a complete and accurate list and
description of all real property owned, leased or occupied by the Company (the
"Real Property"). Seller has heretofore made available to Buyer a complete list
of all material tangible personal property owned by the Company as of December
31, 1999, all of which personal property will be owned by the Company on the
Closing Date other than inventory sold in the Ordinary Course of Business. The
Company has good and marketable title to the real and personal property owned by
<PAGE>
it, free and clear of all mortgages, liens, pledges, encumbrances, charges,
agreements, claims, restrictions and defects of title, (collectively, "Liens")
except (a) as set forth or provided for in Schedule 3.8; (b) mechanics',
carriers', workers' and other similar liens arising in the Ordinary Course of
Business and consistent with past practice; (c) liens of taxes not yet due and
payable or being contested in good faith by appropriate proceedings; (d) with
respect to real property, (i) imperfections of title, none of which is
substantial in amount, materially detracts from the value or impairs the use of
the property subject thereto, or impairs the operations of the Company, and (ii)
zoning laws and other land use restrictions that do not impair the present or
anticipated use of the property subject thereto (collectively, the "Permitted
Liens"); and (e) those that do not impair the current use or diminish the value
of the property affected to any material extent. The Company has a valid
leasehold interest in all real estate leased by it. There are no breaches of
any such lease by the Company or, to the Company's knowledge, any other party to
any such lease.
3.9 Financial Statements.
Set forth in Schedule 3.9 is the balance sheet for the Company as of
December 31, 1999, 1998 and 1997 and the Profit and Loss Statements for the
years then ended (the "Financial Statements"). The Financial Statements fairly
present the financial condition of the Company as of the date thereof. The
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied with the past practices of the
Seller. There has been no material adverse change in the assets, liabilities,
operations or Business of the Company since December 31, 1999. For purposes of
this Agreement, the balance sheet dated December 31, 1999 is referred to herein
as the "Balance Sheet" and December 31, 1999 is referred to herein as the
"Balance Sheet Date".
3.10 Material Liabilities.
The Company has no material liabilities or obligations, absolute or
contingent or otherwise, except (a) as set forth in the Balance Sheet or in this
Agreement, (b) liabilities and obligations incurred subsequent to the Balance
Sheet Date in the Ordinary Course of Business.
3.11 Inventories, Accounts Receivable and Accounts Payable
(a) Inventories. Schedule 3.11(a) is a list of all inventories,
supplies, products, and materials that are sold in the Ordinary Course of
Business, as of the Balance Sheet Date. All inventory is salable in the
Ordinary Course of Business.
(b) Accounts Receivable. Schedule 3.11(b) is a list by customer
of all accounts receivable of the Company as of February 6, 2000. The accounts
receivable have arisen in bona fide arm's length transactions in the Ordinary
Course of Business and, to Seller's Knowledge, are valid and binding obligations
of the account debtors. The accounts receivable of the Company on the Closing
Date will, subject to the allowance for doubtful accounts reflected in the
account of the accounts receivables shown on the Financial Statements be
collectible in the Ordinary Course of Business, without resort to litigation or
other usual collection practices.
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(c) Accounts Payable. Schedule 3.11(c) is a list by vendor of all
accounts payable to the Business as of February 6, 2000. The accounts payable
with respect to the Business have arisen in bona-fide arm's length transactions
in the Ordinary Course of Business and have been and will continue to be paid by
the Seller in the Ordinary Course of Business consistent with past practice.
3.12 Patents, Trademarks, Copyrights and Trade Secrets
(a) Schedule 3.12 contains a complete list of all United States
and foreign patents and patent applications, invention disclosures, trademarks
(whether registered or as to which registration has been applied for), trade
names, trademarks, service marks and copyrights ("Protected Material") owned by
or licensed to Company as of the date hereof that are material to the current
operations of the Company. There has not been any infringement, misuse or
misappropriation, actual or claimed, by Company of any Protected Material owned
by others, or to the knowledge of Company, by others of any Protected Material
owned by or licensed to Company. All Protected Material, processes, designs,
formulae, inventions, know-how, ideas or concepts which are necessary to, or are
being used in, the manufacturing, processing, fabricating, assembling,
advertising or sale by Company of the products now being produced by it are as
of the date hereof either owned by Company, free and clear of any material title
defects, and, to Company's knowledge, adverse claims of ownership by any third
party, or are the subject to an appropriate license or agreement pursuant to
which Company is granted the right to make such uses thereof.
(b) No transfer, license or grant of rights to the tradename,
service mark and/or trademarks "PerkinElmer," "EG&G," the EG&G logo or the
PerkinElmer logo, either separately or in conjunction with "IC Sensors" is made
or is to be implied by any provision of this Agreement.
3.13 Contracts.
Schedule 3.13(a) is a list of all written agreements, leases, contracts, and
commitments relating to the Business to which Seller or the Company is a party
as of the date of this Agreement which (i) provide for a period of performance
which extends beyond twelvemonths from the date of this Agreement or involves a
payment or receipt after the date of this Agreement of more than $50,000 and
(ii) any other material agreement, contract, or commitment relating to the
Business not listed elsewhere in this Agreement. The Seller or the Company has
and, to the best of Seller's knowledge, each of the other parties to the
Contracts has, in all material respects, performed all the obliga-tions required
to be performed by it to date thereunder, except as indicated to the contrary in
Schedule 3.13(b). Seller and the Company do not know of nor have they received
written notice of the intention of any party to terminate any Contract, except
as indicated to the contrary in Schedule 3.13(b). Except as otherwise indicated
in Schedule 3.13(c), each Contract (a) was entered into in the Ordinary Course
of Business, (b) is valid, binding, and enforceable in accordance with its terms
(subject to any applicable bankruptcy, insolvency, or similar laws affecting
generally the enforcement of creditors' rights and to rules of law governing
<PAGE>
injunctive relief, specific performance, and other equitable remedies), (c) is
in full force and effect with no default or dispute existing or, to Seller's
knowledge, threatened with respect thereto, and (d) except as contemplated by
this Agreement, will not be terminated or otherwise affected by the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
3.14 Taxes.
The Company has filed all tax returns that are or were required to be filed on a
timely basis.
The charges, accruals, and reserves with respect to taxes of the Company are
adequate and at least equal to the Company's liability for taxes. All federal,
state, and other taxes that the Company is or was required to withhold or
collect have been duly withheld and collected and to the extent required, have
been paid to the proper governmental agency.
The Company has no deficiencies outstanding pursuant to an audit of the
Company's federal and state income tax returns or if such deficiencies exist,
they are being contested in good faith and the appropriate reserves are provided
for on the balance sheet.
All tax returns filed by the Company are materially true, correct and complete.
There are no tax sharing agreements that will require any payment by the Company
after the date of this agreement.
All federal income tax returns filed by or which include the company have been
audited or are closed by the applicable statute of limitations for all taxable
years through September 30, 1994.
All state income tax returns filed by or which include the Company have been
audited or are closed by the applicable statute of limitations for all taxable
years through December 31, 1994.
3.15 Governmental Approvals.
No consent, approval, order, or authorization of, or registration, declaration,
or filing with, any Governmental Entity, is required by or with respect to
Seller, the Company or the Business in connection with the execution and
delivery of this Agreement by Seller, the consummation by Seller of the
transactions contemplated hereby, or the operation of the Business by Buyer in
the same manner as presently operated by Seller (but excluding licenses or
permits relating solely to Buyer, such as business licenses and qualifications).
3.16 Litigation.
Schedule 3.16 is a description of all actions, suits, proceedings,
inves-tigations, orders, rulings, and decrees in or by or before any
Governmental Entity, domestic or foreign, or before any arbitrator of any kind,
pending against the Company, known by the Company or Seller to be threatened
against the Company, or to which the Company has, since January 1, 1997, been a
party relating to or affecting the Company, its Assets or the Business.
<PAGE>
3.17 Employees.
Schedule 3.17 is (a) a complete and correct list of the names, job titles and
dates of hire of all employees of the Company or the Business, and (b) a
complete and correct list of the rate of compensation for each such person as of
the date of this Agreement. Seller has paid in full to all employees all wages,
salaries, commissions, bonuses, and other direct compensation due and payable
for all services performed by employees involved solely or predominantly in the
Business. Seller is in compliance in all material respects with all laws and
regulations respecting employment and employment practices, terms, conditions,
wages, hours, benefits, and taxes relating to employees involved solely or
predominantly in the Business.
3.18 Employee Benefit Plans.
(a) Schedule 3.18 is a complete and correct list of all "employee
pension benefit plans" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), "employee welfare benefit
plans" (as defined in Section 3(1) of ERISA)("Welfare Plans") and each other
material plan, arrangement, or policy relating to bonuses, stock options, stock
purchases, incentive or deferred compensation, supplemental retirement, retiree
medical benefits, severance, other separation benefits, change in control and
other employee fringe benefits currently maintained, sponsored, or contributed
to by the Company for the benefit of any employee of the Company, or by Seller
or any of its affiliates or subsidiaries (as defined in Section 4001 of ERISA
and the rules and regulations thereunder and/or Section 414 of the Code) (
"ERISA Affiliate") for the benefit of any employee or former employee of the
Company employed in the United States (all the foregoing being herein called
"Employee Benefit Plans").
(b) Seller has provided Buyer complete and correct copies, if
applicable, of: the document embodying or establishing each written Employee
Benefit Plan (including amendments thereto); a description of each unwritten
Employee Benefit Plan; all trust agreements, insurance contracts or other
funding arrangements; the two most recent actuarial and trust reports; the two
most recent Forms 5500 and all schedules related thereto; the most recent
Internal Revenue Service ("IRS") determination letter; the current summary plan
descriptions; the two most recent summary annual reports, all summaries of
material modifications; all material communications received from or sent to the
IRS, including a request for a compliance certificate under the IRS Voluntary
Compliance Program (or similar program), or an application under the IRS Closing
Agreement Programs with respect to any of the Employee Benefit Plans, (including
a written description of any oral communication); and all amendments and
modifications to any such document.
(c) Each of the Employee Benefit Plans that is intended to meet
the requirements of Section 401(a) and, where applicable, Section 401(k) of the
Code, now meets, and since its inception has met, the requirements for
qualification under Section 401(a), and, where applicable, Section 401(k) of the
Code and its related trust is now, and since its inception has been, exempt from
taxation under Section 501(a) of the Code. Each Employee Benefit Plan intended
<PAGE>
to qualify under the Code has received a favorable determination letter as to
its qualification under the Code (or such a letter has been or will be applied
for prior to expiration of the applicable remedial amendment period), no such
determination letter has been revoked and, to the Seller's knowledge nothing has
occurred, whether action or failure to act, which would cause the loss of such
qualification or which would result in material costs to the Company under the
IRS' Closing Agreement Program, Voluntary Compliance Resolution Program or
Administrative Policy Regarding Self Correction.
(d) Compliance; Liability.
(i) Neither the Seller, the Company nor any ERISA Affiliate
maintains, sponsors, or contributes to any single employer plan withi the
meaning of Section 4001(a)(15) of ERISA and no Employee Benefit Plan is or has
been subject to section 412 of the Code or section 302 or Title IV of ERISA.
(ii) No material liability has been or is expected to be incurred
by Seller, the Company or any ERISA Affiliate (either directly or ndirectly,
including as a result of an indemnification obligation)under or pursuant to
ERISA or the penalty, excise tax or joint and several liability provisions of
the Code relating to the Employee Benefit Plans that could, following the
Closing, become or remain a liability of the Company or become a liability of
Buyer or of any employee benefit plan established or contributed to by Buyer
and, to Seller's knowledge, no event, transaction or condition has occurred or
exists that could reasonably be expected to result in any such liability
to the Company or, following the Closing, the Buyer.
(iii) Each of the Employee Benefit Plans has been operated and
administered in all respects in compliance with all applicable laws and the
provisions of each Plan, except for any failure so to comply that, individually
or together with all other such failures, has not and will not result in a
material liability or obligation on the part of the Company, or, following the
Closing, the Buyer. There are no material pending or, to the Seller's
knowledge, threatened claims, lawsuits, arbitrations or other action by or on
behalf of any of the Employee Benefit Plans, by any employee of the Company or
otherwise involving any such plan or the assets of any such plan (other than
routine claims for benefits).
(iv) Except as set forth in Schedule 3.18, all contributions to, and
payments from, the Employee Benefit Plans that may have been required to be made
in accordance with the Employee Benefit Plans have been timely made.
(v) No Employee Benefit Plan is or is under audit or investigation by the
IRS, or any other governmental authority and no such completed audit, if any,
has resulted in the imposition of any material tax or penalty. No "reportable
event" within the meaning of Section 4043 of ERISA has occurred with respect to
any Employee Benefit Plan.
<PAGE>
(e) There is no, nor has there ever been any multiemployer plan
(as defined in ERISA Section 3(37)) covering employees of the Company or a past
or present withdrawal therefrom.
(f) Neither the Company nor the Seller is in violation of any
workers compensation or similar laws. All workers compensation claims filed
against the Company are set forth and described in Schedule 3.18(f).
(g) Except as set forth in Schedule 3.18, no "prohibited
transaction" (as defined in Section 4975 of the Code or Section 406 of ERISA)
has occurred that involves the assets of any Employee Benefit Plan and that is
reasonably likely to subject the Company, the Buyer or any of their employees to
material tax or penalty on prohibited transactions imposed by Section 4975 of
ERISA or the sanctions imposed under Title I of ERISA.
(h) Neither the Seller nor the Company has announced to employees,
former employees, consultants or directors an intention to create, or otherwise
created, a legally binding commitment to adopt any additional employee benefit
plan which is intended to cover employees or former employees of the Company or
to amend or modify any existing Employee Benefit Plan which covers or has
covered employees or former employees of the Company, except as required by
applicable law.
3.19 Labor Union.
Seller is not insofar as it pertains to the Company, and the Company is not a
party to or bound by any collective bargaining agreement or other union contract
and has not, within the last three (3) years, experienced any strike, lockout or
any other material labor difficulty.
3.20 Compliance with Laws.
Seller and the Company have complied with, and are not in violation of, any
Legal Requirement applicable to the Company, the Business or any of the Real
Property.
3.21 Insurance
Schedule 3.21 contains a complete list as of the date hereof of all
currently effective insurance policies or binders of insurance or programs of
self-insurance maintained by the Company. The coverage under each such policy
and binder is as of the date hereof in full force and effect, and as of the date
hereof no notice of cancellation or nonrenewal has been received by Seller. Any
insurance coverage provided under policies maintained by Seller for the benefit
of Company will be terminated as of the Closing, and Buyer will be responsible
for providing insurance coverage for the Company as of the Closing Date forward.
<PAGE>
3.22 Condition and Sufficiency of Assets. To the best of Seller's knowledge
the buildings, plants, structures, and equipment of the Company are structurally
sound, are in good operating condition and repair, are adequate for the uses to
which they are being put and, together with the Batam Property, constitute all
of the assets necessary to conduct the Business in the manner presently
conducted by the Company. None of such buildings, plants, structures, or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost. The Business is
conducted exclusively by the Company. Except for the Batam Property, the Company
does not, in the conduct of the Business, use any property, assets or resources
of the Seller or any Affiliate of the Seller, except pursuant to written
agreements that will continue in full force and effect after the Closing.
3.23 No Material Adverse Change. Sinc the Balance Sheet Date, there has
not been any material adverse change in the business, operations, properties,
assets, or financial condition of the Company, and no event has occurred or
circumstance exists that may result in such a material adverse change. It is
understood however that the Seller is not leaving any cash in the Company at
Closing and that the Company has continued to experience losses in January 2000
as has been disclosed to Buyer.
3.24 Absence of Certain Changes and Events. Since the Balance Sheet Date,
the Company has conducted the Business only in the Ordinary Course of Business
and there has not been any:
(a) amendment to the Organizational Documents of the Company;
(b) except as disclosed on Exhibit 3.24(b), payment or increase of any
bonuses, salaries, or other compensation to any stockholder, director, officer,
or (except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(c) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan;
(d) damage to or destruction or loss of any asset or property, whether
or not covered by insurance, materially and adversely affecting the properties,
assets, business, financial condition, or prospects of the Company;
(e) entry into, termination of, or receipt of notice of termination of
any contract or transac-tion involving a total remaining commitment by or to the
Company of at least $50,000;
(f) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property or mortgage,
pledge, or imposition of any lien or other encumbrance on any material asset or
property;
(g) agreement, whether oral or written, to do any of the foregoing.
<PAGE>
3.25 Brokers and Finders. Other than fees payable to KPMG LLP, Seller and
the Company agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement.
3.26 Environmental Matters.
(a) Permits. Seller possesses all Environmental Permits necessary
to conduct the Company's business as it is now being conducted; a true and
complete copy of each Environmental Permit issued to Seller has been delivered
to Buyer; each Environmental Permit issued to the Company is in full force and
effect; Seller is in compliance with all requirements, terms and provisions of
the Environmental Permits issued to the Company, except for such non-compliance
as would not have a material adverse effect and has filed on a timely basis (and
updated as required) all reports, notices, applications or other documents
required to be filed pursuant to the Environmental Permits. Schedule 3.26 (a)
lists all of the Environmental Permits issued to or held by the Company which by
their terms or by operation of law will expire or otherwise become ineffective
on or before the Closing Date. Seller shall comply with its obligations under
Environmental Laws to have such Environmental Permits transferred, renewed or
reissued in Buyer's name prior to the Closing Date so as to allow Buyer to
continue the Company's business without interruption after the Closing Date and,
as reasonably requested by Buyer, shall assist Buyer with its obligations under
Environmental Laws with respect to the same.
(b) Compliance with Environmental Laws. The Company's business
is, and at all times has been, in compliance with all Environmental Permits and
Environmental Laws applicable to the Company's business, the Former Facilities
or any of the Real Property, except for such non-compliance as would not have a
material adverse effect.
(c) Reports, Disclosures and Notifications. The Company has filed
on a timely basis (and updated as required) all reports, disclosures,
notifications, applications, pollution prevention, stormwater prevention or
discharge prevention or response plans or other emergency or contingency plans
required to be filed under Environmental Laws with respect to the Company's
business.
(d) Notices. Neither Seller nor the Company has received any
notice that Seller, the Company, any of the Real Property or any of the Former
Facilities: (i) is in violation of the requirements of any Environmental Permit
or Environmental Laws; (ii) is the subject of any suit, claim, proceeding,
demand, order, investigation or request or demand for information arising under
any Environmental Permit or Environmental Laws; or (iii) has actual or potential
liability under any Environmental Laws, including without limitation, CERCLA,
RCRA, or any comparable state or local Environmental Laws.
(e) No Reporting or Remediation Obligations. To the best of
Seller's knowledge, there are no Environmental Conditions or other facts,
circumstances or activities arising out of or relating to the Company's
business, the Company, or the use, operation or occupancy by the Company of any
of the Real Property or, to the knowledge of Seller, the Former Facilities that
<PAGE>
result or reasonably could be expected to result in (i) any obligation of Seller
or the Company to file any report or notice, to conduct any investigation,
sampling or monitoring or to effect any environmental cleanup or remediation,
whether on-site or offsite; or (ii) liability, either to a Governmental Entity
or third parties, for damages (whether to person, property or natural
resources), cleanup costs or remedial costs of any kind or nature whatsoever.
(f) Liens and Encumbrances. No Governmental Entity has obtained
or asserted an encumbrance or lien upon any of the Real Property or any other
property of Seller or the Company or, to the knowledge of Seller after diligent
inquiry, any of the Former Facilities as a result of any Release, use or cleanup
of any Hazardous Substance for which Seller or the Company is legally
responsible, nor has any such Release, use or cleanup occurred which could
result in the assertion or creation of such a lien or encumbrance.
(g) Storage, Transport or Disposal of Hazardous Substances.
(i) Neither the Seller nor the Company has transported for storage,
treatment or disposal, by contract, agreement or otherwise, or arranged for the
transportation, storage, treatment or disposal, of any Hazardous Substances at
or to any location which is listed on the National Priorities List ("NPL") or
the Comprehensive Environmental Response, Compensation and Liability Information
System ("CERCLIS), or listed for possible inclusion on the NPL or CERCLIS, or
listed on any comparable state list.
(ii) There is not now nor has there ever been located on any
of the Real Property any areas or vessels used or intended for the treatment,
storage or disposal of Hazardous Substances, including, but not limited to, drum
storage areas, surface impoundments, incinerators, landfills, tanks, lagoons,
ponds, waste piles or deep well injection systems; except for short term storage
and accumulation of Hazardous Substances by the Company as permitted by, and in
compliance with, Environmental Laws in the areas and/or vessels identified on
Schedule 3.26(g).
(h) Future Laws. There are no Environmental Laws currently
enacted or promulgated, as to which compliance is currently specified but not
yet required, that would require either Seller, the Company or Buyer to take any
action at any of the Real Property, including without limitation any work,
repair, construction or capital expenditure, within three (3) years from the
effective date of this Agreement in order to bring the Company's business, the
Company or the operations at any of the Real Property as currently conducted
into compliance with such Environmental Laws.
3.27 Batam Property. The property listed on Schedule 3.27 constitutes all
of the property or assets owned by Seller or any Affiliate of Seller and
utilized in the conduct of the Business (the "Batam Property"). All of the
Batam Property is located in Seller's facility in Batam, Indonesia and will be
in place on the Closing Date and conveyed by one or more Bills of Sale from
PerkinElmer Singapore Pte Ltd or P.T. EG&G Heimann Optoelectronics (both
wholly-owned subsidiaries of Seller or its Affiliates) to such legal entity as
shall be designated by Buyer to receive the Batam Property on the Closing Date.
<PAGE>
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization.
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of New Jersey and has all necessary
corporate power and authority to own and lease all of its properties and assets
and to carry on its businesses as now being conducted. Buyer pos-sesses all
licenses, franchises, rights, and privileges material to the conduct of its
business.
4.2 Authority.
Buyer has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Buyer and the consummation by Buyer
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes a valid and binding obligation
of Buyer, enforce-able in accordance with its terms except as enforcement may be
limited by bankruptcy, insolvency, or other similar laws affecting the
enforcement of creditors' rights generally, and subject to rules of law
governing specific performance, injunctive relief, and other equitable remedies.
4.3 Effect of Agreement.
The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a loss of a material benefit under, any provision of the Articles of
Incorporation or Bylaws of Buyer or any loan or credit agreement, note, bond,
mortgage, indenture, lease, agreement, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule, or
regulation appli-cable to Buyer or its properties or assets, other than any such
conflicts, violations, defaults, or losses that individually or in the aggregate
do not have a material adverse effect on Buyer.
4.4 Governmental Approvals.
No consent, approval, order, or authorization of, or registration,
declaration, or filing with, any Governmental Entity, domestic or foreign, is
required by or with respect to Buyer in connection with the execution and
delivery of this Agreement by Buyer or the consummation by Buyer of the
transactions contemplated hereby.
4.5 Litigation Affecting Agreement.
There are no actions, suits, proceedings, investigations, orders,
rulings, or decrees in or by or before any Governmental Entity, domestic or
<PAGE>
foreign, or before any arbitrator of any kind, pending or known by Buyer to be
threatened, relating to or affecting the transactions contemplated by this
Agreement.
4.6 Compliance with Laws.
Buyer has materially complied with, is not in material violation of,
and has not received any notice of violation with respect to, any federal,
state, or local statute, law, rule, or regulation with respect to the conduct of
its business or the ownership or operation of its business or properties.
4.7 Brokers or Finders.
Buyer is not obligated, directly or indirectly, to any person for any
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the transactions contemplated by this Agreement.
4.8 Funding
Buyer has available sufficient cash to enable it to consummate the
Contemplated Transactions.
4.9 Investment Intent
Buyer is acquiring the Shares for its own account and not with a view
to their distribution within the meaning of Section 2(11) of the Securities Act
of 1933.
ARTICLE V - COVENANTS OF SELLER
5.1 Access and Investigation
Between the date of this Agreement and the Closing Date, Seller will,
and will cause its Representatives to, (a) afford Buyer and its Representatives
including, without limitation, any environmental consultants or contractors and
prospective lenders and their Representatives (collectively, "Buyer's Advisors")
reasonable access during normal business hours to the Company's personnel,
properties, contracts, books and records, and other documents and data, (b)
furnish Buyer and Buyer's Advisors with such additional financial, operating,
and other data and information as Buyer may reasonably request; provided, that
such investigation will not interfere unnecessarily with normal business
operations.
5.2 Operation of the Businesses
Between the date of this Agreement and the Closing Date, Seller will,
and will cause the Company to:
(a) conduct the business of the Company in the Ordinary Course of
Business and not sell, distribute or otherwise dispose of any assets of the
Company other than sales of inventory in the Ordinary Course of Business;
<PAGE>
(b) use its best efforts to preserve intact the current business
organization of such the Company, and maintain the relations and goodwill with
suppliers, customers, landlords, employees, agents, and others having business
relationships with the Company;
(c) keep Buyer reasonably informed regarding the status of the
business, operations, and finances of the Company.
5.3 Notification
Between the date of this Agreement and the Closing Date, Seller will
promptly notify Buyer in writing if Seller or the Company becomes aware of any
fact or condition that causes or constitutes a material breach of any of
Seller's representations and warranties as of the date of this Agreement.
5.4 No Negotiation
Until such time, if any, as this Agreement is terminated pursuant to
Article IX, Seller will not, and will cause the Company and each of their
Representatives not to, solicit any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, any Person (other than
Buyer) relating to any transaction involving the sale of the business or assets
(other than in the Ordinary Course of Business) of the Company, or the Shares,
or any merger, consolidation, business combination, or similar transaction
involving the Company.
5.5 Best Efforts
Between the date of this Agreement and the Closing Date, Seller will
use its best efforts to cause the conditions in Articles VII and VIII to be
satisfied.
<PAGE>
5.6 Settlement of Intercompany Accounts
Except as set forth in Schedule 5.6, effective immediately prior to
the Closing, all amounts then payable (i) by the Company to Seller or any of its
Affiliates or (ii) by Seller or any of its Affiliates to the Company shall be
paid (via a "net balance due" payment from Company to Seller, or vice versa, as
appropriate) and, accordingly, the Company shall have no further obligation to
make any payments in respect thereof to Seller or any of its Affiliates.
5.7 Audit. After the Closing, Seller will reasonably cooperate with Buyer, at
Buyers expense, in order to enable Buyer and its auditors to prepare audited
financial statements for the Company.
ARTICLE VI - COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 Best Efforts
Between the date of this Agreement and the Closing Date, Buyer will
use its best efforts to cause the conditions in Article VIII to be satisfied.
6.2 Insurance
Buyer shall be responsible for obtaining and maintaining all of the
insurance coverages relating to the Company from and after the Closing Date.
6.3 Commitment to Employees
(a) On or prior to the Closing Date, Buyer shall offer continuing
employment with the Company, as an employee-at-will, at the same location as the
individual's place of employment immediately prior to the Closing Date, to each
individual who is employed by the Company and who are actively at work as of the
Closing Date ("Employees"). No such offer need be made to employees not
actively at work, on disability, or on a paid or unpaid absence of leave who do
not return to within 180 days of the Closing). Such offers of employment shall
be on terms and conditions of employment, including job responsibilities and
compensation levels (including salary or wages, commission, bonus and other cash
compensations), no less favorable in the aggregate than the terms and conditions
in effect for each such Employee immediately prior to the Closing Date, and with
employee benefits not less favorable in the aggregate than employee benefits
provided to comparable employees of Buyer.
(b) Buyer shall cause the Company to establish and maintain, or
shall establish and maintain, for a period of not less than one year after the
Closing Date, a termination policy for Employees (the "Termination Policy") with
terms no less favorable than the Seller's Termination Policy described on
Schedule 3.18, as in effect immediately prior to the Closing Date. Buyer shall
indemnify Seller for any liabilities Seller incurs as a result of a failure by
the Company to fulfill its obligations under the Termination Policy during such
one-year period.
<PAGE>
(c) To the extent reasonably permitted under Buyer's employee
benefit plans Buyer shall grant all Employees credit under all of Buyer's
existing or subsequently established Employee Benefit Plans, programs and
arrangements (including, without limitation, vacation and sick day accruals) for
all service with the Company and the Company's Affiliates (and their respective
predecessors) prior to the Closing Date for all purposes for which such service
was recognized by the Company and the Company's Affiliates, other than for
calculating benefit accruals under any defined benefit plan. To the extent
reasonably permitted under Buyer's employee benefit plans, Buyer shall grant to
Employees credit under Buyer's Employee Benefit Plans for all deductible and
out-of-pocket payments made by Employees under Company's Employee Benefit Plans
during the current plan year for such plans, and such payments made by Employees
shall apply toward any deductible and out-of-pocket maximum amounts that apply
under Buyer's Employee Benefit Plans. Employees participating under Company
Employee Benefit Plans at the Closing Date shall, to the extent reasonably
permitted under Buyer's employee benefit plans, not be subject to any waiting
periods for participation or pre-existing condition limitations in Buyer's
corresponding Employee Benefit Plans.
6.4 Employee Benefit Matters
(a) Except for the Company's 401(k) Plan, a copy of which is
attached hereto as Schedule 6.4(a), Buyer shall not assume any liability or
obligation with respect to any Employee Benefit Plans, or any claims related
thereto, which occurred on or before the Closing Date.
(b) Coverage for Employees under Welfare Plans contributed to or
maintained by the Company or the Seller, shall continue until the Closing Date.
Coverage under the Welfare Plans for any employee who is retired or terminated
from the Seller on or before the Closing Date, or who is on disability leave
before the Closing Date, shall remain the responsibility of the Seller unless
the employee returns to work within 180 days of the Closing. Seller shall in
all events be responsible for the payments of benefits under the Welfare Plans
based on occurrences on or before the Closing Date. Any expenses for health
care claims incurred by any employee of the Company (or a covered dependent of
such employee) for a covered sickness or any injury that occurred on or before
the Closing Date shall be the responsibility of Seller's group health plan,
provided that such claim is submitted for reimbursement to the Seller's group
health plan within the 180-day period immediately following the Closing Date.
Seller's group health plan, in which the Company is and will be a participating
employer up to the Closing Date, shall provide health care continuation coverage
required by Section 4980B of the Code and Sections 601 through 608 of ERISA
("COBRA") to qualified beneficiaries who incur a qualifying event under Seller's
group health plan on or before the Closing Date. Effective as of the day
following the Closing Date, Buyer shall be responsible for providing COBRA
continuation coverage to Employees and other qualified beneficiaries who incur
qualifying events under Buyer's group health plan after the Closing Date.
<PAGE>
(c) Seller shall retain and assume and indemnify and hold Buyer
harmless from and against all obligations and liabilities to each Employee or
Former Employee of the Company or Seller which obligations and liabilities have
accrued on or before the Closing Date, arising out of their employment or former
employment with the Company or Seller, (i) under each Employee Benefit Plan
(including, but not limited to, all liabilities for all claims incurred, whether
or not reported, on or before the Closing Date under all Welfare Plans), and
(ii) for compensation.
ARTICLE VII - CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
7.1 Accuracy of Representations and Warranties
The representations and warranties of Seller set forth in Article III
hereof shall be true and correct in all material respects on the date hereof and
on the Closing Date with the same effect as though such representations and
warranties had been made on and as of each such date, and Seller shall have
delivered to Buyer a certificate to that effect, dated the Closing Date, and
signed by a duly authorized officer of Seller.
7.2 Performance of Covenants
Each and all of the covenants and agreements of Seller to be performed
or complied with prior to or on the Closing Date shall have been duly performed
or complied with by Seller, and Seller shall have delivered to Buyer a
certificate to that effect, dated the Closing Date, and signed by a duly
authorized officer of Seller.
7.3 No Legal Proceedings
On the Closing Date, no litigation, arbitration, investigation or
other proceeding, or injunction or final judgment relating thereto, shall be in
force, pending or threatened (in circumstances Buyer reasonably believes to be
credible), before any court or governmental or regulatory official, body or
authority relating to the Company or that could have a material impact on the
ability of Buyer and Seller to consummate the Contemplated Transactions or a
material adverse effect on the Business.
7.4 Stock Certificates
Seller shall have delivered to Buyer certificates representing the
Shares duly endorsed in blank, or accompanied by appropriate stock powers in
proper form for transfer.
7.5 No Claim Regarding Ownership of Shares or Sale Proceeds
There must not have been made or threatened by any Person any claim
asserting that such Person (i) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of the Company or the
Shares or (ii) is entitled to all or any portion of the Purchase Price payable
for the Shares.
<PAGE>
7.6 No Prohibition
Neither the consummation nor the performance of any of the
Contemplated Transactions will materially contravene, or result in a material
violation of any applicable Legal Requirement.
7.7 Resignations
Buyer shall have received resignations and releases of all officers
and directors of the Company and all trustees of the Company's 401(k) Plan
holding office immediately prior to Closing, unless otherwise directed.
7.8 Consents. Any consents necessary for the consummation by Seller of
the Contemplated Transactions shall have been obtained, or other arrangements
acceptable to Buyer shall have been entered into giving Buyer the same economic
benefits of ownership of the Business as if all consents had been obtained. In
the event any consent shall not have been obtained prior to the scheduled
Closing, the parties shall cooperate to enter into reasonable arrangements to
confer upon Buyer all economic benefits of the Business as if such consent had
been obtained (including without limitation, appropriate indemnification
agreements) in order to effect a Closing; and the parties shall thereafter
cooperate to obtain formal consent and extinguish or terminate the alternative
arrangements effected in lieu of such consent.
7.9 Transfer of Batam Property At the Closing, Seller shall have delivered
to Buyer one or more Bills of Sale in
a form acceptable to Buyer's counsel transferring and conveying title to the
Batam Property to Buyer or an entity designated by Buyer.
7.10 Financing. Buyer shall have obtained financing for the Contemplated
Transactions on terms satisfactory to Buyer in its sole discretion.
7.11 Transition Services Agreement. Buyer and Seller shall have entered
into a Transition Services Agreement on terms satisfactory to Buyer in its sole
discretion.
ARTICLE VIII - CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Shares and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Seller, in whole or in part):
8.1 Accuracy of Representations and Warranties
The representations and warranties of Buyer set forth in Article IV
hereof shall be true and correct in all material respects on the date hereof and
on the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date, and Buyer shall have delivered
to Seller a certificate to that effect, dated the Closing Date, and signed by a
duly authorized officer of Buyer.
<PAGE>
8.2 Performance of Covenants
Each and all of the covenants and agreements of Buyer to be performed
or complied with prior to or on the Closing Date shall have been duly performed
or complied with by Buyer, and Buyer shall have delivered to Seller a
certificate to that effect, dated the Closing Date, and signed by a duly
authorized officer of Buyer.
8.3 No Legal Proceedings
On the Closing Date, no litigation, arbitration, investigation or
other proceeding or injunction or final judgment relating thereto, shall be in
force, pending or threatened (in circumstances Seller reasonably believes to be
credible), before any court or governmental or regulatory official, body or
authority relating to the Company or that could have a material impact on the
ability of Buyer and Seller to consummate the Contemplated Transactions.
8.4 Payment of Purchase Price
Buyer shall have delivered to Seller, and Seller shall have received,
the Purchase Price pursuant to Section 2.2 above.
8.5 No Claim Regarding Stock Ownership or Sale Proceeds
There must not have been made or threatened by any Person any claim
asserting that such Person (i) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of the Company or (ii) is
entitled to all or any portion of the Purchase Price payable for the Shares.
8.6 No Prohibition
Neither the consummation nor the performance of any of the
Contemplated Transactions will materially contravene, or result in a material
violation of any applicable Legal Requirement.
ARTICLE IX - TERMINATION
9.1 Termination Events
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by either Buyer or Seller if a material breach of any
provision of this Agreement has been committed by the other party and such
Breach has not been cured (or is not capable of being cured) within a reasonable
time or waived;
(b) (i) by Buyer if any of the material conditions in Article VII
has not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Buyer to
comply with its obligations under this Agreement) and Buyer has not waived such
condition on or before the Closing Date; or (ii) by Seller, if any of the
material conditions in Article VIII has not been satisfied as of the Closing
Date or if satisfaction of such a condition is or becomes impossible (other than
<PAGE>
through the failure of Seller to comply with its obligations under this
Agreement) and Seller have not waived such condition on or before the Closing
Date;
(c) by either Buyer or Seller if any court or governmental agency
shall have issued an order, judgment or decree or taken any other action
materially challenging, prohibiting or invalidating the consummation of any of
the Contemplated Transactions;
(d) by mutual consent of Buyer and Seller; or
(e) by either Buyer or Seller if the closing has not occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) on or before February
11, 2000, or such later date as the parties may agree upon.
ARTICLE X - INDEMNIFICATION
10.1 Indemnification by the Seller.
Upon Closing, the Seller shall indemnify, defend (with counsel
reasonably acceptable to the Buyer) and hold harmless the Buyer and its
officers, directors, shareholders, affiliates, employees, agents, advisors, and
representatives, and their respective successors, assigns and heirs (the "Buyer
Indemnities") from and against any payment, loss, liability, judgement, award,
fine, obligation, damage, penalty, claim, suit, demand, cost, or expense
(including, without limitation, sampling, monitoring and remediation costs,
reasonable fees and expenses of attorneys, consultants, accountants and
investigators, engineering fees and disbursements, costs of effecting compliance
with Environmental Laws required in order to satisfy Seller's indemnification
obligations in Section 10.1(b) and costs of defense and interest) (collectively,
the "Losses") incurred or sustained by Buyer which arise out of or result from:
(a) any breach of any representation, warranty or covenant of the
Seller in this Agreement, of which the Seller is notified in writing by the
Buyer on or before the expiration of the time period set forth in Section 10.5;
(b) any Excluded Liability, or
(c) (i) Environmental Conditions on, at, under or emanating from the
Former Facilities or the Real Property occurring or existing on or before the
Closing Date; (ii) failure by the Company or agents, servants, employees or
contractors of the Company to comply with Environmental Laws applicable to the
Company's business or any of the Former Facilities or the Real Property prior to
the Closing Date; (iii) treatment, storage, disposal or Release at any location
of Hazardous Substances used, generated, handled, stored, manufactured,
originating at or transported from any of the Former Facilities or the Real
Property or in connection with the Company's business prior to the Closing Date;
(iv) claims of third parties alleging damages arising from personal injury,
property damage or damage to natural resources arising from or related in any
way to Environmental Conditions on, at, under or emanating from the Former
Facilities or the Real Property or the conduct of the Company's business prior
to the Closing Date; and (v) breach of any of the representations and warranties
set forth in Section 3.26 hereof.
<PAGE>
10.2 Indemnification by the Buyer.
Upon Closing, the Buyer shall indemnify, defend (with counsel
reasonably acceptable to the Seller) and hold harmless the Seller and its
officers, directors, shareholders, affiliates, employees, agents, advisors, and
representatives, and their respective successors, assigns and heirs from and
against the Losses relating to the Business and arising out of any of:
(a) any breach of any representation, warranty or covenant of
the Buyer in this Agreement, or the Schedules and certificates delivered
pursuant to this Agreement, of which the Buyer is notified in writing by the
Seller on or before the expiration of the time period set forth in Section 10.5;
or
(b) federal, state and local taxes incurred in connection with the
operation of the Corporation from and after the Closing Date.
10.3 Claims for Indemnification.
Whenever any claim shall arise for indemnification under this Article
X (a "Claim"), the Buyer or the Seller, as the case may be, seeking
indemnification (the "Indemnified Party"), shall promptly notify the party (the
"Indemnifying Party") from whom indemnification is sought of the claim and, when
known, the facts constituting the basis for such claim. In the event of any
such claim for indemnification hereunder resulting from or in connection with
any claim or legal proceedings by a third party, the notice shall specify, if
known, the amount or an estimate of the amount of the liability arising
therefrom. The Indemnified Party shall not settle or compromise any claim by a
third party for which it is entitled to indemnification hereunder without the
prior written consent of the Indemnifying Party; provided, however, that if suit
shall have been instituted against the Indemnified Party and the Indemnifying
Party shall not have taken control of such suit after notification thereof as
provided in this Agreement, the Indemnified Party shall have the right to settle
or compromise such claim upon giving notice to the Indemnifying Party as
provided in Section 10.4.
10.4 Defense by the Indemnifying Party.
In connection with any claim which may give rise to indemnity
hereunder resulting from or arising out of any claim or legal proceeding by a
person other than the Indemnified Party, the Indemnifying Party, at its sole
cost and expense, may, upon written notice to the Indemnified Party, assume the
defense of any such claim or legal proceeding. If the Indemnifying Party
assumes the defense of any such claim or legal proceeding, the Indemnifying
Party shall select counsel in its discretion to conduct the defense of such
claims or legal proceedings and at the sole cost and expense of the Indemnifying
Party shall take all steps necessary in the defense or settlement thereof. The
Indemnifying Party shall have the right to settle any such claim, provided that
a provision of such settlement includes a full release of the Indemnified Party.
<PAGE>
The Indemnified Party shall be entitled to participate in (but not control) the
defense of any such action, with its own counsel and at its own expense. If the
Indemnifying Party does not assume the defense of any such claim or litigation
resulting therefrom within 30 days after the date such claim is made: (a) the
Indemnified Party may defend against such claim or litigation in such manner as
it may deem appropriate, including, but not limited to, settling such claim or
litigation, after giving notice of same to the Indemnifying Party, on such terms
as the Indemnified Party may deem appropriate, and (b) the Indemnifying Party
shall be entitled to participate in (but not control) the defense of such
action, with its counsel and at its own expense. If the Indemnifying Party
thereafter seeks to question the manner in which the Indemnified Party defended
such third party claim or the amount or nature of any such settlement, the
Indemnifying Party shall have the burden to prove by a preponderance of the
evidence that the Indemnified Party did not defend or settle such third party
claim in a reasonably prudent manner.
10.5 Limitations on Indemnification Obligations.
(a) Notwithstanding anything contained in this Agreement to the
contrary, the Seller shall be liable under Section 10.1 (a) above, only to the
extent (i) the total amount of Losses suffered by Buyer pursuant to such
Section shall exceed $250,000 in the aggregate. (For clarity, the parties agree
that liability shall not relate back to the first dollar of damages so incurred,
but will, as set forth above, begin at the $250,000 figure.) In no event shall
either party's aggregate liability to the other hereunder exceed the Purchase
Price, except in the event of Losses arising under Section 10.1(b) or Section
10.1(c).
(b) The representations and warranties contained herein and the
obligations of the parties under the indemnity agreements in Sections 10.1(a)
and 10.2(a)shall survive the Closing Date for a period of eighteen months from
the Closing Date, Provided, however, that the representations and warranties
contained in Section 3.1 shall survive without limitation as to time, the
representations and warranties contained in Section 3.12 shall survive for the
life of each patent referred to therein and the representations and warranties
contained in Sections 3.14, 3.18 and 3.26 shall survive for the applicable
period of any statute of limitations and the indemnification obligation in
respect of such representations and warranties shall survive for a like period;
and further provided, however that a representation or warranty and
indemnification obligation related to any claim asserted in writing within such
period shall survive until such claim shall be resolved.
(c) Except in the case of fraud, the sole and exclusive remedies
of any party to this Agreement for any claim hereunder against any other party
hereto shall be the indemnification provided in this Section 10, and each party
agrees that it will not pursue any other remedy with respect thereto, except
with respect to claims arising pursuant to Article X. All indemnification
payments made under this Section 10 shall be treated for tax purposes as
adjustments to the Purchase Price. In the event that one party shall be
<PAGE>
obligated to indemnify an Indemnified Person pursuant to this Article X, the
Indemnifying Party shall, upon payment of such indemnity in full, be subrogated
to all rights of the Indemnified Party with respect to such Loss.
ARTICLE XI - GENERAL PROVISIONS
11.1 Expenses
Whether or not the Contemplated Transactions shall be consummated,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. Seller will pay all amounts payable
to KPMG, LLP in connection with this Agreement and the Contemplated
Transactions. In the event litigation is maintained by any party to this
Agreement against any other party to enforce or interpret any of the terms of
this Agreement, or to seek any remedy for any breach of this Agreement, the
party prevailing in such litigation shall be entitled to recover from the
non-prevailing party reasonable attorney's fees and costs of suit.
11.2 Public Announcements
From the date of this Agreement until the Closing Date, neither Seller
nor Buyer shall make, or permit its Affiliates to make, any public statement
with respect to the transactions contemplated hereby without the prior consent
of the other; provided that such consent will not be unreasonably withheld in
any case and that nothing herein shall prevent any party from making any such
disclosures or statements as may, in the opinion of counsel for the disclosing
Person be required by law, regulation or rule of any governmental entity or of
any stock exchange; provided further, that any party required by law, regulation
or rule of any governmental entity or of any stock exchange to make any such
disclosure or statement shall make a good faith effort to inform the other party
of such requirement as soon as is practicable (whether such time is before or
after such disclosure or statement).
11.3 Confidentiality
From the date of this Agreement until the Closing Date, Buyer and
Seller will maintain in confidence, and will cause their Affiliates to maintain
in confidence and not use to the detriment of another party any oral or written
information obtained from another party in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or such information becomes publicly available through no fault of such
party, (b) the use of such information is necessary or appropriate in making any
filing or obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such information is
required by legal proceedings. If the Contemplated Transactions are not
consummated, each party will return or destroy such written information as
requested by the other party.
11.4 Notices
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
<PAGE>
delivered by hand (with written confirmation of receipt), (b) sent via facsimile
(with written confirmation of receipt), or (c) received by the addressee, if
sent by a nationally recognized overnight delivery in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate by notice to the other
parties):
Seller: PerkinElmer, Inc.
45 William Street
Wellesley, MA 02181
Attention: General Counsel
Facsimile No. (781) 431-4115
Company: IC Sensors
1701 McCarthy Boulevard
Milpitas, CA 95035
Attention: President
Facsimile No. (408) 434-6687
Buyer: Measurement Specialties, Inc.
80 little Falls Rd.
Fairfield, NJ 07004
Attn: Chairman
Tel: 973.808.1819
Fax: 973.808.1787
with a copy to:
McCarter & English LLP
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07101-0652
Attn: Kenneth E. Thompson, Esq.
Tel: 973.622.4444
Fax: 973.624.7070
and
John D. Arnold, Esq
The Offices of John D. Arnold
104 Highland Terrace
Woodside, CA 94062
<PAGE>
11.5 Jurisdiction; Service of Process
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Delaware, or, if it has or can acquire
jurisdiction, in the United States District Court for the District of Delaware,
and each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. The parties also waive and release their
rights to seek a jury trial with respect to disputes arising out of this
Agreement or the transactions contemplated hereby. Process in any action or
proceeding referred to in the preceding sentence may be served on any party
anywhere in the world. Each of the parties agrees that a judgment in any such
proceeding may be enforced in other jurisdictions by suit on the judgment or in
any other manner provided by law.
11.6 Further Assurances
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
11.7 Waiver
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
11.8 Entire Agreement and Modification
This Agreement supersedes all prior agreements between the parties
with respect to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. No
amendment, modification, or addition hereto shall have effect or be binding
unless in writing and executed by all of the parties, or their duly authorized
representative.
11.9 Assignment, Successors, and No Third-Party Rights
Neither party may assign any of its rights under this Agreement
without the prior consent of the other parties which will not be unreasonably
withheld. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the successors and
<PAGE>
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement and all of its provisions
and conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
11.10 Severability
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
11.11 Article and Section Headings, Construction
The headings of Articles and Sections in this Agreement are provided
for convenience only and will not affect its construction or interpretation.
All references to "Article" or "Section" refer to the corresponding Article or
Section of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Information or
documents disclosed pursuant to any Section attached hereto will be deemed to
have been disclosed pursuant to any other applicable Section, without the need
for cross-referencing.
11.12 Time of Essence
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
11.13 Survival
The representations and warranties set forth in this Agreement shall
survive the Closing Date and shall remain in full force and effect as set forth
in Section 10.4.
11.14 Governing Law
This Agreement will be governed by the laws of the State of Delaware
without regard to conflicts of laws principles.
11.15 Counterparts
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
11.16 Mutual Cooperation with Respect to Taxes
Each of Buyer and Seller will provide the other with such assistance
as may reasonably be requested by either of them in connection with the
preparation of any tax return, any audit or other examination by any taxing or
other governmental authority, or any judicial or administrative proceedings
relating to taxes or other governmental matters relating to the Contemplated
Transactions. Each party will provide the other with the opportunity to make
<PAGE>
copies of any records or information which may be relevant to such return, audit
or examination, proceedings or determination. Such assistance shall include
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder and shall include
providing copies of any relevant tax returns and supporting work schedules.
11.17 Cooperation in Litigation
In the event that, after the Closing Date, Seller or Buyer shall
reasonably require the participation of officers and employees by each other to
aid in the defense or prosecution of litigation or claims, and so long as there
exists no unwaived conflict of interest between the parties, each of Seller and
Buyer shall make such officers and employees reasonably available to participate
in such defense or prosecution provided that, except as required pursuant to the
provisions of Article X, the party requiring the participation of such officers
or employees shall pay all reasonable out-of-pocket costs, charges and expenses
arising from such participation.
11.18 Transfer Taxes
Any transfer, purchase, sales, use or similar tax under the laws of
any nation, state or any country, city, or political subdivision thereof arising
out of the Contemplated Transactions and any filing or recording fees payable in
connection with this Agreement shall be shared equally by Buyer and Seller.
11.19 Tax Elections
Buyer agrees it will not make any decision with regard to the Company
pursuant to 338 of the Internal Revenue Code.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement by their duly authorized officers as of the date first written above.
PerkinElmer, Inc Measurement Specialties, Inc.
By:__________________ By:____________________
Name:_______________ Name:_________________
Its:__________________ Title:__________________
<PAGE>
EXHIBIT 2000.3
- ---------------
AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN
AND
SECURITY AGREEMENT
PNC BANK, NATIONAL ASSOCIATION,
AS LENDER AND AGENT FOR THE LENDERS AND PARTY HERETO
WITH
MEASUREMENT SPECIALTIES, INC.
Dated as of February 15, 2000
<PAGE>
AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN
AND
SECURITY AGREEMENT
------------------
Amended and Restated Revolving Credit, Term Loan and Security Agreement
dated as of February 15, 2000 among MEASUREMENT SPECIALTIES, INC., a
corporation organized under the laws of the State of New Jersey ("Borrower"),
the Lenders (as hereinafter defined) and PNC BANK, NATIONAL ASSOCIATION
("Lender" and "Agent").
A. PNC Bank, National Association and Borrower have previously entered
into a commercial lending relationship in accordance with the terms and
conditions of a Revolving Credit, Term Loan and Security Agreement dated as of
August 1, 1998, as amended by the First Amendment of Revolving Credit Term Loan
and Security Agreement dated as of November 23, 1998, by Second Amendment of
Revolving Credit, Term Loan and Security Agreement dated as of March 31, 1999,
and by the Third Amendment of Revolving Credit, Term Loan and Security Agreement
dated as of April 1, 1999 (the "Original Credit Agreement"), and as amended,
supplemented or otherwise modified from time to time (collectively, the
"Agreement") pursuant to which Agent agreed to make certain extensions of credit
to Borrower on a secured basis and Borrower has agreed to repay same, all upon
the terms and subject to the conditions set forth in the Agreement and herein;
B. The parties hereto desire to amend and restate the Original Credit
Agreement, upon the terms and subject to the conditions set forth below in this
Amended and Restated Revolving Credit, Term Loan and Security Agreement (as
further amended, supplemented or otherwise modified from time to time, this
"Agreement").
IN CONSIDERATION of the mutual covenants and undertakings herein contained,
the parties hereto and Lender hereby agree as follows:
DEFINITIONS.
- -----------
Accounting Terms . As used in this Agreement, the Notes, or any
-----------------
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
--------
however, whenever such accounting terms are used for the purposes of determining
- -------
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP as applied in preparation of the
audited financial statements of Borrower for the fiscal year ended March 31,
1999.
<PAGE>
General Terms. For purposes of this Agreement the following terms shall
--------------
have the following meanings:
"Accountants" shall have the meaning set forth in Section 9.7 hereof.
-----------
"Acquisition Agreement" shall mean the Asset Purchase Agreement
----------------------
including all exhibits and schedules thereto dated as of August 14, 1998 between
AMP Incorporated, a Pennsylvania corporation, ("Seller") as seller and Borrower,
as buyer.
"Advances" shall mean and include the Revolving Advances, the Term
--------
Loan and the Letters of Credit.
"Advance Rates" shall mean, collectively, the Receivables Advance
--------------
Rate, the Canadian Receivables Advance Rate, and the Inventory Advance Rate .
"Affiliate" of any Person shall mean (a) any Person (other than a
---------
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote 5% or
more of the securities having ordinary voting power for the election of
directors of such Person, or (y) to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.
"Agent" shall have the meaning set forth in the preamble to this
-----
Agreement and shall extend to all successor and assigns of such Person.
"Agent's Fee" shall have the meaning assigned to that term in Section
------------
13.15.
"Agent's Letter"shall have the meaning assigned to that term in
---------------
Section13.15.
"Amended and Restated Assignment of Trademarks" shall mean the amended
---------------------------------------------
and restated assignment of trademarks executed by Borrower to the Agent.
"Assignment and Assumption Agreement" shall mean an Assignment and
--------------------------------------
Assumption Agreement by and among a Purchasing Lender, a Transferor Lender and
the Agent, as Agent and on behalf of the remaining Lenders, substantially in the
form of Exhibit 1.1(A), as amended, supplemented or otherwise modified from time
--------------
to time.
"Authority" shall have the meaning set forth in Section 4.19(d).
---------
<PAGE>
"Base Rate" shall mean the base commercial lending rate of Agent as
----------
publicly announced to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate.
This rate of interest is determined from time to time by Agent as a means of
pricing some loans to its customers and is neither tied to any external rate of
interest or index nor does it necessarily reflect the lowest rate of interest
actually charged by Agent to any particular class or category of customers of
Agent.
"Blocked Accounts" shall have the meaning set forth in Section
-----------------
4.15(h).
"Borrower" shall have the meaning set forth in the preamble to this
--------
Agreement and shall extend to all permitted successors and assigns of such
Persons.
"Borrower's Account" shall have the meaning set forth in Section 2.9.
-------------------
"Borrowing Base Certificate" shall have the meaning set forth in
----------------------------
Section 2.1(b) hereto.
"Business Day" shall mean with respect to Eurodollar Rate Loans, any
-------------
day on which commercial banks are open for domestic and international business,
including dealings in Dollar deposits in London, England and New York, New York
and with respect to all other matters, any day other than a day on which
commercial banks in New York are authorized or required by law to close.
"Canadian Eligible Receivable" shall mean any Eligible Receivable in
------------------------------
which the Customer is located in Canada.
"CERCLA" shall mean the Comprehensive Environmental Response,
------
Compensation and Liability Act of 1980, as amended, 42 U.S.C. ''9601 et seq.
------
"Change of Control" shall mean any merger or consolidation of or with
------------------
Borrower or Guarantor or sale of all or substantially all of the property or
assets of Borrower or Guarantor. For purposes of this definition, "control of
Borrower" shall mean the power, direct or indirect (x) to vote 50% or more of
the securities having ordinary voting power for the election of directors of
Borrower or (y) to direct or cause the direction of the management and policies
of Borrower by contract or otherwise.
"Charges" shall mean all taxes, charges, fees, imposts, levies or
-------
other assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation and property
<PAGE>
taxes, custom duties, fees, assessments, liens, claims and charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other authority, domestic or
foreign (including, without limitation, the Pension Benefit Guaranty Corporation
or any environmental agency or superfund), upon the Collateral, any Guarantor
Collateral, Borrower or any of its Affiliates.
"Closing Date" shall mean February 15, 2000 or such other date as may
-------------
be agreed to by the parties hereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
----
time to time and the regulations promulgated thereunder.
"Collateral" shall mean and include:
----------
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Leasehold Interests;
(f) all of Borrower's right, title and interest in and to
(i) its respective goods and other property including, but not limited to, all
merchandise returned or rejected by Customers, relating to or securing any of
the Receivables and any and all Pledged Stock under the Stock Pledge Agreement
and the Amended and Restated Pledge Agreement; (ii) all of Borrower's rights as
a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lien or,
including stoppage in transit, setoff, detinue, replevin, reclamation and
repurchase; (iii) all additional amounts due to Borrower from any Customer
relating to the Receivables; (iv) other property, including warranty claims,
relating to any goods securing this Agreement; (v) all of Borrower's contract
rights, rights of payment which have been earned under a contract right,
instruments, documents, chattel paper, warehouse receipts, deposit accounts,
money, securities and investment property, including all indemnity and other
rights for the benefit of Borrower with respect to the Stock Purchase Agreement;
(vi) if and when obtained by Borrower, all real and personal property of third
parties in which Borrower has been granted a lien or security interest as
security for the payment or enforcement of Receivables; and (vii) any other
goods, personal property or real property now owned or hereafter acquired in
which Borrower has expressly granted a security interest or may in the future
grant a security interest to Agent, for the benefit of Lenders hereunder, or in
any amendment or supplement hereto or thereto, or under any other agreement
between Agent or any Lender and Borrower;
<PAGE>
(g) all of Borrower's ledger sheets, ledger cards, files,
correspondence, records, books of account, business papers, computers, computer
software (owned by any Borrower or in which it has an interest), computer
programs, tapes, disks and documents relating to (a), (b), (c), (d), (e), or (f)
of this Paragraph; and
(h) all proceeds and products of (a), (b), (c), (d), (e),
(f), and (g) in whatever form, including, but not limited to: cash, deposit
accounts (whether or not comprised solely of proceeds), certificates of deposit,
insurance proceeds (including hazard, flood and credit insurance), negotiable
instruments and other instruments for the payment of money, chattel paper,
security agreements, documents, eminent domain proceeds, condemnation proceeds
and tort claim proceeds.
"Commitment" shall mean as to any Lender the aggregate of its
----------
Revolving Credit Commitment and Term Loan Commitment, and Commitments shall mean
-----------
the aggregate of the Revolving Credit Commitment and Tern Loan Commitments of
all of the Lenders.
"Consents" shall mean all filings and all licenses, permits, consents,
--------
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties, domestic or foreign, necessary to carry on Borrower's
or Guarantor's business, including, without limitation, any Consents required
under all applicable federal, state or other applicable law.
"Contract Rate" shall mean, as applicable, the Revolving Interest Rate
-------------
or the Term Loan Rate.
"Controlled Group" shall mean all members of a controlled group of
-----------------
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Borrower or Guarantor, are treated as a
single employer under Section 414 of the Code.
"Customer" shall mean and include the account debtor with respect to
--------
any Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with Borrower or
Guarantor, pursuant to which Borrower or Guarantor is to deliver any personal
property or perform any services.
"Default" shall mean an event which, with the giving of notice or
-------
passage of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 3.1 hereof.
------------
<PAGE>
"Depository Accounts" shall have the meaning set forth in Section
--------------------
4.15(h) hereof.
"Documents" shall have the meaning set forth in Section 8.1(c) hereof.
---------
"Dollar" and the sign "$" shall mean lawful money of the United States
------
of America.
"Domestic Rate Loan" shall mean any Advance that bears interest based
-------------------
upon the Base Rate.
"Earnings Before Interest and Taxes" shall mean for any period (except
----------------------------------
in the case of the Guarantor prior to the Closing Date) the sum of (i) net
income (or loss) of Borrower and Guarantor for such period (excluding
extraordinary gains), plus (ii) all interest expense of such period, plus (iii)
---- ----
all charges against income of Borrower and Guarantor for such period for
federal, state and local income taxes.
"EBITDA" shall mean for any period the sum of (i) Earnings Before
------
Interest and Taxes for such period plus (ii) depreciation expenses for such
----
period, plus (iii) amortization expenses for such period.
----
"Eligible Inventory" shall mean and include Inventory, with respect to
------------------
Borrower and Guarantor valued at the lower of cost or market value, determined
on a first-in-first-out basis, which shall be for finished goods as certified by
Borrower and Guarantor, which is not, in Agent's opinion, obsolete, slow moving
or unmerchantable and which Agent, in its sole discretion, shall not deem
ineligible Inventory, based on such considerations as Agent may from time to
time deem appropriate including, without limitation, whether the Inventory is
subject to a perfected, first priority security interest in favor of Agent and
whether the Inventory conforms to all standards imposed by any governmental
agency, division or department thereof which has regulatory authority over such
goods or the use or sale thereof.
"Eligible Receivables" shall mean and include with respect to Borrower
--------------------
and Guarantor, each Receivable of Borrower or Guarantor arising in the ordinary
course of Borrower's or Guarantor's respective business and which Agent, in its
sole credit judgment, shall deem to be an Eligible Receivable, based on such
considerations as Agent may from time to time deem appropriate. A Receivable
shall not be deemed eligible unless such Receivable is subject to Agent's first
priority perfected security interest and no other Lien (other than Permitted
Encumbrances), and is evidenced by an invoice or other documentary evidence
satisfactory to Agent. In addition, no Receivable shall be an Eligible
Receivable if:
(a) it arises out of a sale made by Borrower or Guarantor to an
Affiliate of Borrower or Guarantor or to a Person controlled by an Affiliate of
Borrower;
<PAGE>
(b) it is due or unpaid more than sixty (60) days after the
original due date or greater than one hundred twenty (120) days after original
invoice date;
(c) fifty percent (50%) or more of the aggregate amount of all
amounts owed by a particular Customer are overdue more than sixty (60) days from
the due date unless extended payment terms are granted, in which case not more
than fifty percent (50%) of the aggregate amount of all amounts owed by a
particular Customer are more than one hundred twenty (120) days from the
original invoice date, or Borrower or Guarantor has not received any notice nor
has it any knowledge of any facts which adversely affect the credit of such
Customer. Such percentage may, in Agent's sole discretion, be increased or
decreased from time to time;
(d) any covenant, representation or warranty contained in this
Agreement with respect to such Receivable has been breached;
(e) the Customer shall (i) apply for, suffer, or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property or call
a meeting of its creditors, (ii) admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business, (iii) make a general assignment for the benefit of creditors, (iv)
commence a voluntary case under any state or federal bankruptcy laws (as now or
hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is
filed against it in any involuntary case under such bankruptcy laws, or (viii)
take any action for the purpose of effecting any of the foregoing;
(f) the sale is to a Customer outside the continental United
States of America, unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Agent in its sole discretion and
unless the sale qualifies as a Canadian Eligible Receivable;
(g) the sale to the Customer is on a bill-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or any other repurchase or
return basis or is evidenced by chattel paper;
(h) Agent believes, in its sole judgment, that collection of such
Receivable is insecure or that such Receivable may not be paid by reason of the
Customer's financial inability to pay;
(i) the Customer is the United States of America, any state or any
department, agency or instrumentality of any of them, unless Borrower or
Guarantor, as the case maybe, assigns its respective right to payment of such
Receivable to Agent pursuant to the Assignment of Claims Act of 1940, as amended
(31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has
-- --- -- ---
otherwise complied with other applicable statutes or ordinances;
<PAGE>
(j) the goods giving rise to such Receivable have not been shipped
and delivered to and accepted by the Customer or the services giving rise to
such Receivable have not been performed by the Borrower or Guarantor and
accepted by the Customer or the Receivable otherwise does not represent a final
sale;
(k) the Receivables of the Customer exceed a credit limit
determined by Agent, in its sole discretion, to the extent such Receivable
exceeds such limit;
(l) the Receivable is subject to any offset, deduction, defense,
dispute, or counterclaim, the Customer is also a creditor or supplier of
Borrower or Guarantor or the Receivable is contingent in any respect or for any
reason;
(m) Borrower or Guarantor has made any agreement with any Customer
for any deduction therefrom, except for discounts or allowances made in the
ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each respective
invoice related thereto;
(n) shipment of the merchandise or the rendition of services has
not been completed;
(o) any return, rejection or repossession of the merchandise has
occurred;
(p) such Receivable is not payable to Borrower or Guarantor; or
(q) such Receivable is not otherwise satisfactory to Agent as
determined in good faith by Agent in the exercise of its discretion in a
reasonable manner.
"Environmental Complaint" shall have the meaning set forth in Section
------------------------
4.19(d) hereof.
"Environmental Laws" shall mean all federal, state and local
-------------------
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
<PAGE>
"Equipment" shall mean and include all of Borrower's and Guarantor's
---------
goods (other than Inventory) whether now owned or hereafter acquired and
wherever located including, without limitation, all equipment, machinery,
apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts,
accessories and all replacements and substitutions therefor or accessions
thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time and the rules and regulations promulgated
thereunder.
"Eurodollar Rate" shall mean for any Eurodollar Rate Loan for the then
---------------
current Interest Period relating thereto the interest rate per annum determined
by Agent by dividing (the resulting quotient rounded upwards, if necessary, to
the nearest 1/100th of 1% per annum) (i) the rate of interest determined by
Agent in accordance with its usual procedures (which determination shall be
conclusive absent manifest error) to be the average of the London interbank
offered rates for U.S. Dollars quoted by the British Bankers' Association a set
forth on Dow Jones Markets Service (formerly known as Telerate) display page
3750 (or appropriate successor or if the British Bankers' Association or its
successor ceases to provide such quotes, a comparable replacement determined by
the Agent) two (2) Business Days prior to the first day of such Interest Period
for an amount comparable to such Eurodollar Rate Loan and having a borrowing
date and a maturity comparable to such Interest Period by (ii) a number equal to
1.00 minus the Reserve Percentage.
"Eurodollar Rate Loan" shall mean an Advance at any time that bears
----------------------
interest based on the Eurodollar Rate.
"Event of Default" shall mean the occurrence of any of the events set
----------------
forth in Article X hereof.
"Excess Cash Flow" shall be computed as of the close of each fiscal
------------------
year by taking the difference between EBITDA and Fixed Charges. All
determinations of Excess Cash Flow shall be based on the immediately preceding
fiscal year and shall be made following the delivery by the Borrower to the
Agent of the Borrower's audited financial statements for such preceding year.
"Expiration Date" shall mean with respect to the Revolving Advances,
----------------
February 14, 2003.
"Federal Funds Rate" shall mean, for any day, the weighted average of
-------------------
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or if such rate is not so published for any
day which is a Business Day, the average of quotations for such day on such
transactions received by Agent from three Federal funds brokers of recognized
standing selected by Lender.
"Fixed Charge Coverage Ratio" shall mean and include, with respect to
----------------------------
any fiscal period, the ratio of (a) EBITDA minus capitalized expenditures made
-----
during such period to (b) all Senior Debt Payments plus taxes plus dividends
during such period.
"Fixed Charges" shall mean for any period of determination the sum of
--------------
interest expense, income taxes, scheduled principal installments of Indebtedness
(as adjusted for prepayments), capital expenditures and dividends.
"Formula Amount" shall have the meaning set forth in Section 2.1(a).
---------------
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America in effect from time to time.
"General Intangibles" shall mean and include all of Borrower's and
--------------------
Guarantor's general intangibles, whether now owned or hereafter acquired
including, without limitation, all choses in action, causes of action, corporate
or other business records, inventions, designs, patents, patent applications,
equipment formulations, manufacturing procedures, quality control procedures,
trademarks, tradenames, service marks, trade secrets, goodwill, copyrights,
design rights, registrations, licenses, franchises, customer lists, tax refunds,
tax refund claims, computer programs, all claims under guaranties, security
interests or other security held by or granted to Borrower to secure payment of
any of the Receivables by a Customer all rights of indemnification and all other
intangible property of every kind and nature (other than Receivables).
"Guaranty" shall mean the guaranty executed by the Guarantor in favor
--------
of Agent and Lenders, as amended, supplemented or modified from time to time.
"Guarantor" shall mean IC Sensors, Inc., a California corporation, a
---------
wholly-owned subsidiary of Borrower.
"Guarantor Collateral" shall mean "Collateral" as defined in the
---------------------
Guarantor Security Agreement.
"Guarantor Security Agreement" shall mean the security agreement
------------------------------
assigning, pledging and granting to Agent for the ratable benefit of Lenders a
continuing security interest in and to all of Guarantor's Collateral.
"Hazardous Discharge" shall have the meaning set forth in Section
--------------------
4.19(d) hereof.
<PAGE>
"Hazardous Substance" shall mean, without limitation, any flammable
--------------------
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), or any other applicable
-------
Environmental Law of the State of New Jersey, Commonwealth of Pennsylvania and
State of California and in the regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all waste materials subject to
-----------------
regulation under CERCLA, RCRA or applicable state law, and any other applicable
Federal and state laws now in force or hereafter enacted relating to hazardous
waste disposal.
"Indebtedness" of a Person at a particular date shall mean all
------------
obligations of such Person which in accordance with GAAP would be classified
upon a balance sheet as liabilities (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration, shall
include all indebtedness, debt and other similar monetary obligations of such
Person whether direct or guaranteed, and all premiums, if any, due at the
required prepayment dates of such indebtedness, and all indebtedness secured by
a Lien on assets owned by such Person, whether or not such indebtedness actually
shall have been created, assumed or incurred by such Person. Any indebtedness
of such Person resulting from the acquisition by such Person of any assets
subject to any Lien shall be deemed, for the purposes hereof, to be the
equivalent of the creation, assumption and incurring of the indebtedness secured
thereby, whether or not actually so created, assumed or incurred.
"Insolvency Proceeding" shall mean, with respect to any Person, (a) a
----------------------
case, action or proceeding with respect to such Person (i) before any court or
any other Official Body under any bankruptcy, insolvency, reorganization or
other similar Law now or hereafter in effect, or (ii) for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or similar official) of Borrower or Guarantor or otherwise relating to the
liquidation, dissolution, winding-up or relief of such Person, or (b) any
general assignment for the benefit of creditors, composition, marshaling of
assets for creditors, or other, similar arrangement in respect of such Person's
creditors generally or any substantial portion of its creditors; undertaken
under any Law.
"Interest Period" shall mean the interest period provided for any
----------------
Eurodollar Rate Loan.
"Interest Rate Protection" shall mean rate protected loans, options,
--------------------------
customary yield protection and prepayment cost recovery agreement, with terms
and conditions reasonably acceptable to Agent and Borrower.
<PAGE>
"Inventory" shall mean and include all of Borrower's and Guarantor's
---------
now owned or hereafter acquired goods, merchandise and other personal property,
wherever located, to be furnished under any contract of service or held for sale
or lease, all raw materials, work in process, finished goods and materials and
supplies of any kind, nature or description which are or might be used or
consumed in Borrower's and Guarantor's business or used in selling or furnishing
such goods, merchandise and other personal property, and all documents of title
or other documents representing them.
"Inventory Advance Rate" shall have the meaning set forth in Section
------------------------
2.1(a)(y)(ii) hereof.
"Law" shall mean any law (including common law), constitution,
---
statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order
injunction, writ, decree or award of any Official Body.
"Leasehold Interests" shall mean all of each Borrower's and
--------------------
Guarantor's right, title and interest in and to the premises located on Schedule
--------
1.2(a).
- ------
"Lenders" shall mean the financial institutions named on Schedule
------- --------
1.1(B) and their respective successors, assigns and transferees as permitted
--
hereunder, each of which is referred to herein as a Lender.
"Letter of Credit" or "Letters of Credit" shall have the meaning
------------------ -------------------
assigned to that term in Section 2.14.
"Letter of Credit Borrowing" shall mean an extension of credit
-----------------------------
resulting from a drawing under any Letter of Credit which shall not have been
reimbursed on the date when made and shall not have been converted into a
Revolving Advances under Section 2.15(d).
"Letter of Credit Fee" shall have the meaning assigned to that term in
--------------------
Section 2.14(b).
"Letters of Credit Outstanding" shall mean at any time the sum of (i)
------------------------------
the aggregate undrawn face amount of outstanding Letters of Credit and (ii) the
aggregate amount of all unpaid and outstanding Reimbursement Obligations.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
----
assignment, security interest, lien (whether statutory or otherwise), Charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including, without limitation, any conditional sale or other
title retention agreement, any lease having substantially the same economic
<PAGE>
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction.
"Material Adverse Effect" shall mean a material adverse effect on (a)
------------------------
the condition, operations, assets, business or prospects of the Borrower and
Guarantor taken as a whole, (b) Borrower's and Guarantor's ability to pay the
Obligations in accordance with the terms thereof, (c) the value of the
Collateral and the Guarantor Collateral or Agent's Liens on the Collateral and
the Guarantor Collateral or the priority of any such Lien or (d) the practical
realization of the benefits of Agent's rights and remedies under this Agreement
and the Other Documents.
"Maximum Leverage Ratio" shall mean and include, with respect to any
------------------------
fiscal period, the ratio of (a) all Indebtedness to (b) EBITDA.
"Maximum Revolving Advance Amount" shall mean $10,000,000, including a
--------------------------------
$1,000,000 sublimit for the issuance of documentary letters of credit.
"Minimum Interest Coverage" shall mean and include, with respect to
---------------------------
any fiscal period, the ratio of (a) EBITDA to (b) the sum of interest expense on
Indebtedness.
"Monthly Advances" shall have the meaning set forth in Section 3.1
-----------------
hereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
-------------------
Sections 3(37) and 4001(a)(3) of ERISA.
"Note" or "Notes" shall mean collectively, the Term Note and the
---- -----
Revolving Credit Note.
"Obligations" shall mean and include any and all of Borrower's
-----------
Indebtedness and/or liabilities to Agent or any of the Lenders, including but
not limited to a $300,000 foreign exchange exposure provided to Borrower by any
Lender or any corporation that directly or indirectly controls or is controlled
by or is under common control with Agent or any of the Lenders of every kind,
nature and description, direct or indirect, secured or unsecured, joint,
several, joint and several, absolute or con-tingent, due or to become due, now
existing or hereafter arising, contractual or tortious, liquidated or
unliquidated, which may arise out of, under or in connection with this
Agreement, any Interest Rate Protection with any Lender or the Other Documents,
and all obligations of Borrower to Agent or any Lender hereunder or thereunder
to perform acts or refrain from taking any action.
"Official Body" shall mean any national, federal, state, local or
--------------
other government or political subdivision or any agency, authority, bureau,
central bank, commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
<PAGE>
"Other Documents" shall mean the Notes, Stock Pledge Agreement,
----------------
Amended and Restated Pledge Agreement, Assignment of Patents, Amended and
Restated Assignment of Trademarks, Guaranty, Guarantor Security Agreement, any
and all Agreements relating to Interest Rate Protection and any and all other
agreements, instruments and documents, including, without limitation,
guaranties, pledges, powers of attorney, consents, and all other writings
heretofore, now or hereafter executed by Borrower or Guarantor and/or delivered
to Agent and/or any Lender in respect of the transactions contemplated by this
Agreement.
"Parent" of any Person shall mean a corporation or other entity
------
owning, directly or indirectly at least 50% of the shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
directors of the Person, or other Persons performing similar functions for any
such Person.
"Participant" shall mean each Person who shall be granted the right by
-----------
Agent to participate in any of the Advances and who shall have entered into an
Assignment and Assumption Agreement in form and substance satisfactory to Agent.
"Participation Advance" shall mean, with respect to any Lender's
----------------------
payment in respect of its participation in a Letter of Credit Borrowing
according to its Ratable Share pursuant to Section 2.15.
"Payment Office" shall mean initially 1 Garret Mountain Plaza, West
---------------
Paterson, New Jersey 07424; thereafter, such other office of Agent, if any,
which it may designate by notice to Borrower to be the Payment Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
----
"Permitted Encumbrances" shall mean (a) Liens in favor of Agent for
-----------------------
the benefit of Lenders; (b) Liens for taxes, assessments or other governmental
charges not delinquent or being contested in good faith and by appropriate
proceedings and with respect to which proper reserves have been taken by
Borrower or by Guarantor; provided, that, the Lien shall have no effect on the
-------- ----
priority of the Liens in favor of Agent for the benefit of Lenders or the value
of the assets in which Agent has such a Lien and a stay of enforcement of any
such Lien shall be in effect; (c) Liens disclosed in the financial statements
referred to in Section 5.5, the existence of which Agent has consented to in
writing; (d) deposits or pledges to secure obligations under worker's
compensation, social security or similar laws, or under unemployment insurance;
(e) deposits or pledges to secure bids, tenders, contracts (other than contracts
for the payment of money), leases, statutory obligations, surety and appeal
bonds and other obligations of like nature arising in the ordinary course of
Borrower's or Guarantor's business; (f) judgment Liens that have been stayed
<PAGE>
within 30 days of being entered or bonded and mechanics', workers',
materialmen's or other like Liens arising in the ordinary course of Borrower's
or Guarantor's business with respect to obligations which are not due or which
are being contested in good faith by Borrower or Guarantor; (g) Liens placed
upon fixed assets hereafter acquired to secure a portion of the purchase price
thereof, provided that (x) any such lien shall not encumber any other property
of the Borrower or Guarantor and (y) the aggregate amount of Indebtedness
secured by such Liens incurred as a result of such purchases during any fiscal
year shall not exceed the amount provided for in Section 7.6; and (h) Liens
disclosed on Schedule 1.2(b).
----------------
"Person" shall mean any individual, sole proprietorship, partnership,
------
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether Federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning of
----
Section 3(3) of ERISA, maintained for employees of Borrower or any member of the
Controlled Group or any such Plan to which any Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"Pro Forma Balance Sheet" shall have the meaning set forth in Section
------------------------
5.5(a) hereof.
"Pro Forma Financial Statements" shall have the meaning set forth in
--------------------------------
Section 5.5(b) hereof.
"Projections" shall have the meaning set forth in Section 5.5(b)
-----------
hereof.
"Purchasing Lender" shall mean the purchasing Lender pursuant to an
------------------
Assignment and Assumption Agreement.
"Ratable Share" shall mean the proportion that a Lender's Commitment
--------------
bears to the Commitments of all of the Lenders.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42
----
U.S.C. '' 6901 et seq., as same may be amended from time to time.
-------
"Real Property" shall mean all of Borrower's and Guarantor's right,
--------------
title and interest in and to the owned and leased premises identified on
Schedule 4.19 hereto.
-------
"Receivables" shall mean and include all of Borrower's and
-----------
Guarantor's accounts, contract rights, instruments (including those evidencing
indebtedness owed to Borrower or Guarantor by their respective Affiliates),
documents, chattel paper, general intangibles relating to accounts, drafts and
<PAGE>
acceptances, and all other forms of obligations owing to Borrower or Guarantor
arising out of or in connection with the sale or lease of Inventory or the
rendition of services, all guarantees and other security therefor, whether
secured or unsecured, now existing or hereafter created, and whether or not
specifically sold or assigned to Agent hereunder.
"Receivables Advance Rate" shall have the meaning set forth in Section
------------------------
2.1(a)(y)(i) hereof.
"Reimbursement Obligation" shall have the meaning assigned to such
-------------------------
term in Section 2.15.
"Release" shall have the meaning set forth in Section 5.7(c)(i)
-------
hereof.
"Reportable Event" shall mean a reportable event described in Section
-----------------
4043(b) of ERISA or the regulations promulgated thereunder.
"Required Lenders" shall mean
-----------------
(i) if there are no Advances or Obligations outstanding, Lenders
whose Commitment aggregate at least sixty-six and two-thirds percent (66 2/3%)
of the Commitments of all of the Lenders.
(ii) Lenders holding at least sixty-six and two-thirds percent (66
2/3%) of the Advances at such time.
"Reserve Percentage" shall mean the maximum effective percentage in
-------------------
effect on any day as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the reserve requirements (including,
without limitation, supplemental, marginal and emergency reserve requirements)
with respect to euroccurency funding.
"Revolving Advances" shall mean Advances made other than the Term
-------------------
Loan.
"Revolving Credit Commitment" shall mean as to any Lender at any time,
---------------------------
the amount initially set forth opposite its name on Schedule1.1(B) in the column
--------------
labeled "Amount of Commitment for Revolving Credit Loans," and thereafter on
Schedule I to the most recent Assignment and Assumption Agreement, "Revolving
---------
Credit Commitments" shall mean the aggregate Revolving Credit Commitments of all
----------------
of the Lenders.
"Revolving Credit Note" shall mean, collectively, the promissory
-----------------------
notes referred to in Section 2.1(a) hereof.
<PAGE>
"Revolving Interest Rate" shall mean the Eurodollar Rate plus two and
-----------------------
three quarters percent (2.75%) per annum or the Base Rate, plus one percent
(1%), for the initial six month period following the Closing Date, to be
adjusted thereafter, provided a step down of one grid at a time shall be
permitted for the initial twelve (12) month period, and thereafter, a
fluctuating interest rate per annum based on the last twelve (12) months of
EBITDA, (as adjusted quarterly based upon Borrower's consolidated financial
statements provided to Agent), as follows:
<TABLE>
<CAPTION>
Indebtedness/EBITDA Eurodollar Rate Base Rate Plus
- ------------------- ---------------- ---------------
<S> <C> <C>
Less than 1.25:1.00 2.00% .25%
Less than 1.50:1.00 but greater than or equal to 1.25:1.00 2.25% .50%
Less than 1.75:1.00 but greater than or equal to 1.50:1.00 2.50% .75%
Less than 2.00:1.00 but greater than or equal to 1.75:1.00 2.75% 1.00%
</TABLE>
"Seller" shall mean Perkin Elmer, Inc., a Massachusetts corporation.
------
"Senior Debt" shall mean the sum of the outstanding balance of the
------------
Term Loan, the Revolving Advances, including any and all letters of credit and
any other debt due and owing by the Borrower to any of the Lenders.
"Senior Debt Payments" shall mean and include all cash actually
----------------------
expended by Borrower to make (a) interest payments on any Advances hereunder,
plus, (b) scheduled principal payments on the Term Loan, plus (c) payments for
-- ----
all fees, commissions and charges set forth herein and with respect to any
Advances, plus (d) capitalized lease payments, plus (e) payments with respect to
---- ----
any other Indebtedness for borrowed money.
"Settlement Date" shall mean the Closing Date and thereafter Wednesday
---------------
of each week unless such day is not a Business Day in which case it shall be the
next succeeding Business Day.
"Stock Pledge" shall mean the assignment executed and delivered by
-------------
Borrower to Agent of the Subsidiary Stock.
"Stock Pledge Agreement" shall mean the pledge agreement executed by
------------------------
Borrower, pledging all of Guarantor's issued and outstanding stock to the Agent.
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement
--------------------------
including all exhibits and schedules thereto dated as of February 11, 2000
between Perkin Elmer, Inc. a Massachusetts corporation, as Seller and Borrower,
as Buyer whereby Borrower is purchasing from Seller all of the issued and
outstanding shares of common stock of IC Sensors, Inc., a California
corporation.
<PAGE>
"Subsidiary" shall mean a corporation or other entity of whose shares
----------
of stock or other ownership interests having ordinary voting power (other than
stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"Subsidiary Stock" shall mean sixty-five percent (65%) of the issued
-----------------
and outstanding shares of stock owned by Measurement LTD, a Hong Kong
corporation and all of the issued and outstanding shares of stock of IC Sensors,
Inc., a California corporation.
"Term" shall have the meaning set forth in Section 14.1 hereof.
----
"Term Loan" shall mean the Advances made pursuant to Section 2.5
----------
hereof.
"Term Loan Commitment" shall mean, as to any Lender at any time, the
----------------------
amount initially set forth opposite the name of Schedule 1.1(B) in the column
---------------
labeled "Amount of Commitment for Term Loans," and thereafter on Schedule I to
the most recent Assignment and Assumption Agreement, and Term Loan Commitments
---------------------
shall mean the aggregate Term Loan Commitments of all of the Lenders.
"Term Loan Rate" shall mean the Eurodollar Rate plus three and
----------------
one-quarter percent (3.25%) or the Base Rate plus one percent (1.00%), for the
initial six month period following the Closing Date, to be adjusted monthly
thereafter, provided a step down of one grid at a time shall be permitted for
the initial twelve (12) month period, and thereafter a fluctuating interest rate
per annum based on the last twelve (12) months of EBITDA (adjusted quarterly
based upon Borrower's consolidated financial statements provided to Agent as
follows:
<TABLE>
<CAPTION>
Indebtedness/EBITDA Eurodollar Rate Plus Base Rate Plus
- ------------------- ---------------------- ---------------
<S> <C> <C>
Less than 1.25:1.00 2.75% 1.00%
Less than 1.50:100 but greater than or equal to 1.25:1.00 2.75% 1.00%
Less than 1.75:1.00 but greater than or equal to 1.50:1.00 3.00% 1.25%
Less than 2.00:1.00 but greater than or equal to 1.75:1.00 3.25% 1.50%
</TABLE>
<PAGE>
"Term Note" shall mean the promissory note described in Section 2.5
----------
hereof.
"Termination Event" shall mean (i) a Reportable Event with respect to
------------------
any Plan or Multiemployer Plan; (ii) the withdrawal of Borrower, Guarantor or
any member of the Controlled Group from a Plan or Multiemployer Plan during a
plan year in which such entity was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to
terminate a Plan in a distress termination described in Section 4041(c) of
ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or
Multiemployer Plan; (v) any event or condition (a) which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may
result in termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA, of Borrower, Guarantor or any member of the Controlled
Group from a Multiemployer Plan.
"Toxic Substance" shall mean and include any material present on the
----------------
Real Property or the Leasehold Interests which has been shown to have
significant adverse effect on human health or which is subject to regulation
under the Toxic Substances Control Act (TSCA), 15 U.S.C. '' 2601 et seq.,
------
applicable state law, or any other applicable Federal or state laws now in force
or hereafter enacted relating to toxic substances. "Toxic Substance" includes
but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based
paints.
"Transactions" shall have the meaning set forth in Section 5.5 hereof.
------------
"Transferee" shall have the meaning set forth in Section 14.3(b)
----------
hereof.
"Transferor Lender" shall mean the selling Lender pursuant to an
------------------
Assignment and Assumption Agreement.
"Undrawn Availability" at a particular date shall mean an amount equal
--------------------
to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving
Advance Amount, minus (b) the sum of (i) the outstanding amount of Advances
-----
(other than the Term Loan) plus (ii) outstanding Letters of Credit, fees and
----
expenses for which Borrower is liable but which have not been paid or charged to
Borrower's Account.
"Week" shall mean the time period commencing with the opening of
----
business on a Wednesday and ending on the end of business the following Tuesday.
Uniform Commercial Code Terms . All terms used herein and defined in
------------------------------
the Uniform Commercial Code as adopted in the State of New Jersey shall have the
meaning given therein unless otherwise defined herein.
<PAGE>
Certain Matters of Construction. The terms "herein", "hereof" and
----------------------------------
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context,
terms used herein in the singular also include the plural and vice versa. All
---- -----
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. Unless otherwise provided, all
references to any instruments or agreements to which Lender is a party,
including, without limitation, references to any of the Other Documents, shall
include any and all modifications or amendments thereto and any and all
extensions or renewals thereof.
Agent's Discretion and Consent. Whenever the Agent or the Lenders
---------------------------------
are granted the
right herein to act in its or their sole discretion or to grant or withhold
consent such right shall be exercised in good faith.
ADVANCES, PAYMENTS.
- -------------------
(a) Revolving Advances . Subject to the terms and conditions set forth
------------------
in this Agreement, each Lender, will severally make on a ratable basis according
to the Commitment Percentage of each Lender, Revolving Advances to Borrower in
aggregate term amounts outstanding at any time equal to the lesser of (x) the
Maximum Revolving Advance Amount or (y) an amount equal to the sum of:
(i) up to 85%, subject to the provisions of Section 2.1(c) hereof
("Receivables Advance Rate"), of Eligible Receivables, plus
(ii) up to 60%, subject to the provisions of Section 2.1(c) hereof
("Canadian Receivables Advance Rate"), of Canadian Eligible Receivables;
(iii) up to 60%, subject to the provisions of Section 2.1(c)
hereof in an amount outstanding not to exceed $4,000,000 ("Inventory Advance
Rate"), of the value of the Eligible Inventory minus
(iv) reserves (calculated after applying such reduction
percentages set forth above as further described in Exhibit 2.1(b) determined by
Agent for advertising allowances, warranty claims and other contingencies plus
the full face amount of any and all outstanding letters of credit issued by the
Agent or any of the Lenders for the account of the Borrower and such other
reserves as Agent may reasonably deem proper and necessary from time to time.
<PAGE>
The amount derived from the sum of (x) Sections 2.1(a)(y)(i), (ii) and
(iii) minus (y) Section 2.1 (a)(y) (iv) at any time and from time to time shall
-----
be referred to as the "Formula Amount" or the "Borrowing Base". The Revolving
-------------- --------------
Advances shall be evidenced by the secured promissory note ("Revolving Credit
Note") substantially in the form attached hereto as Exhibit 2.1(a).
---------------
(b) "Borrowing Base Certificate". On the date hereof, and
----------------------------
thereafter within twenty (20) days after the end of each month, Borrower shall
furnish to Agent a certificate (a "Borrowing Base Certificate") substantially in
the form attached hereto as Exhibit 2.1(b), executed by the Chief Financial
Officer of Borrower setting forth the Borrowing Base and the other information
required therein as of the Borrower's close of business on the last day of the
immediately preceding month together with such other information with respect to
Eligible Receivables and Eligible Inventory of the Borrower as Agent may
reasonably request including, but not limited to, an accounts receivable aging
and an accounts payable aging.
(c) Discretionary Rights. The Advance Rates may be increased or
---------------------
decreased by Agent at any time and from time to time in the exercise of its
reasonable discretion upon the finding that such reduction is reasonably
necessary to protect the Agent's position. Borrower consents to any such
increases or decreases and acknowledges that decreasing the Advance Rates or
increasing the reserves may limit or restrict Advances requested by Borrower.
(d) Nature of Lenders' Obligations with Respect to Revolving
--------------------------------------------------------------
Advances.
---
The aggregate of each Lender's Revolving Advances outstanding hereunder to the
Borrower at any time shall never exceed its Revolving Credit Commitment. The
obligations of each Lender hereunder are several. The failure of any Lender to
perform its obligations hereunder shall not affect the Obligations o the
Borrower to any other party nor shall any other party be liable for the failure
of such Lender to perform its obligations hereunder. The Lender shall have no
obligations to make Revolving Advances hereunder on or after the Expiration
Date.
2.2 Procedure for Revolving Advances Borrowing.
----------------------------------------------
(a) Borrower may notify Agent prior to 11:00 a.m. on a Business
Day of Borrower's request to incur, on that day, a Revolving Advance hereunder.
Should any amount required to be paid as interest hereunder, or as fees or other
charges under this Agreement or any other agreement with Agent, or with respect
to any other Obligation, become due, same shall be deemed a request for a
Revolving Advance as of the date such payment is due, in the amount required to
pay in full such interest, fee, charge or Obligation under this Agreement or any
other agreement with Agent or any of the Lenders, and such request shall be
irrevocable.
(b) Notwithstanding the provisions of (a) above, in the event
Borrower desires to obtain a Eurodollar Rate Loan, Borrower shall give Agent at
least three (3) Business Days' prior written notice, specifying (i) the date of
the proposed borrowing (which shall be a Business Day), (ii) the type of
borrowing and the amount on the date of such Advance to be borrowed, which
amount shall be in minimum amounts of $300,000 and additional increments of
<PAGE>
$50,000, and (iii) the duration of the first Interest Period therefor. Interest
Periods for Eurodollar Rate Loans shall be for one, two, or three months;
provided, if an Interest Period would end on a day that is not a Business Day,
---
it shall end on the next succeeding Business Day unless such day falls in the
next succeeding calendar month in which case the Interest Period shall end on
the next preceding Business Day. No Eurodollar Rate Loan shall be made
available to Borrower during the continuance of a Default or an Event of
Default.
(c) Each Interest Period of a Eurodollar Rate Loan shall commence
on the date such Eurodollar Rate Loan is made and shall end on such date as
Borrower may elect as set forth in (b)(iii) above provided that the exact length
of each Interest Period shall be determined in accordance with the practice of
the interbank market for offshore Dollar deposits and no Interest Period shall
end after the last day of the Expiration Date or the Term as the case may be.
Borrower shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section
2.2(d), as the case may be. Borrower shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not less than three (3) Business Days prior to the last day of the then
current Interest Period applicable to such Eurodollar Rate Loan. If Agent does
not receive timely notice of the Interest Period elected by Borrower, Borrower
shall be deemed to have elected to convert to a Domestic Rate Loan subject to
Section 2.2(d) hereinbelow.
(d) Provided that no Event of Default shall have occurred and be
continuing, Borrower may, on the last Business Day of the then current Interest
Period applicable to any outstanding Eurodollar Rate Loan, or on any Business
Day with respect to Domestic Rate Loans, convert any such loan into a loan of
another type in the same aggregate principal amount provided that any conversion
of a Eurodollar Rate Loan shall be made only on the last Business Day of the
then current Interest Period applicable to such Eurodollar Rate Loan. If
Borrower desires to convert a loan, Borrower shall give Agent not less than
three (3) Business Days' prior written notice to convert from a Domestic Rate
Loan to a Eurodollar Rate Loan or one (1) Business Day's prior written notice
to convert from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying the
date of such conversion, the loans to be converted and if the conversion is from
a Domestic Rate Loan to any other type of loan, the duration of the first
Interest Period therefor. After giving effect to each such conversion, there
shall not be outstanding more than six (6) Eurodollar Rate Loans or Domestic
Rate Loans, in the aggregate.
(e) At its option and upon three (3) Business Days' prior written
notice, Borrower may prepay the Eurodollar Rate Loans in whole at any time or
in part from time to time, without premium or penalty, but with accrued interest
on the principal being prepaid to the date of such repayment. Borrower shall
specify the date of prepayment of Advances which are Eurodollar Rate Loans and
<PAGE>
the amount of such prepayment. In the event that any prepayment of a
Eurodollar Rate Loan is required or permitted on a date other than the last
Business Day of the then current Interest Period with respect thereto, Borrower
shall indemnify each Lender therefor in accordance with Section 2.2(f) hereof.
(f) Borrower shall indemnify each Lender and hold each Lender
harmless from and against any and all losses or expenses that such Lender may
sustain or incur as a consequence of any prepayment, conversion of or any
default by Borrower in the payment of the principal of or interest on any
Eurodollar Rate Loan or failure by Borrower to complete a borrowing of, a
prepayment of or conversion of or to a Eurodollar Rate Loan after notice
thereof has been given, including, but not limited to, any interest payable by
such Lenders to lenders of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans hereunder. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by such Lender to Borrower
shall be conclusive absent manifest error.
(g) Notwithstanding any other provision hereof, if any applicable
law, treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for any Lender
(for purposes of this subsection (g), the term "Lender" shall include any Lender
and the office or branch where any Lender or any corporation or bank controlling
such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain
its Eurodollar Rate Loans, the obligation of such Lender to make Eurodollar Rate
Loans hereunder, shall forthwith be canceled and Borrower shall, if any affected
Eurodollar Rate Loans are then outstanding, promptly upon request from such
Lender, either pay all such affected Eurodollar Rate Loans or convert such
affected Eurodollar Rate Loans into loans of another type. If any such payment
or conversion of any Eurodollar Rate Loan is made on a day that is not the last
day of the Interest Period applicable to such Eurodollar Rate Loan, Borrower
shall pay such Lender, upon Lender's request, such amount or amounts as may be
necessary to compensate such Lender for any loss or expense sustained or
incurred by such Lender in respect of such Eurodollar Rate Loan as a result of
such payment or conversion, including (but not limited to) any interest or other
amounts payable by such Lender to lenders of funds obtained by such Lender in
order to make or maintain such Eurodollar Rate Loan. A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by such
Lender to Borrower shall be conclusive absent manifest error.
2.3. Disbursement of Advance Proceeds . All Advances shall be
-----------------------------------
disbursed from whichever office or other place Agent may designate from time to
time and, together with any and all other Obligations of Borrower to Agent and
Lenders, shall be charged to Borrower's Account on Agent's books. Prior to the
Expiration Date, Borrower may use the Revolving Advances by borrowing, prepaying
and reborrowing, all in accordance with the terms and conditions hereof. The
proceeds of each Revolving Advance requested by Borrower or deemed to have been
<PAGE>
requested by Borrower under Section 2.2(a) hereof shall, with respect to
requested Revolving Advances to the extent Lenders make such Revolving Advances,
be made available to the Borrower on the day so requested by way of credit to
Borrower's operating account at the Agent, in immediately available federal
funds or other immediately available funds or, with respect to Revolving
Advances deemed to have been requested by Borrower, be disbursed to Agent to be
applied to the outstanding Obligations giving rise to such deemed request.
2.4. Making Revolving Advances. The Agent shall, promptly after
---------------------------
receipt by it of a
request for a Revolving Advance pursuant to Section 2.2, notify the Lenders of
its receipt of such request specifying: (i) the date of the proposed borrowing
and the time and method of disbursement of the Revolving Advance requested
thereby; (ii) the amount and type of each such Revolving Advance and the
applicable Interest Period (if any); and (iii) the apportionment among the
Lenders of such Revolving Advance as determined by the Agent in accordance with
Section 2.1(d). Each Lender shall remit the principal amount of each Revolving
Advance to the Agent such that the Agent is able to, and Agent shall, to the
extent the Lenders have made funds available to it for such purpose, fund such
Revolving Advances to the Borrower in U.S. Dollars and immediately available
funds at the Principal Office prior to 2:00 p.m., on the applicable Borrowing
date provided that if any Lender fails to remit such funds to the Agent in a
--------
timely manner, the Agent may elect in its sole discretion to fund with its own
funds the Revolving Advances of such Lender on such Borrowing date, and such
Lender shall be subject to the repayment obligation in Section 13.16. If any
Lender so notified fails to make available to the Agent for the account of the
Agent the amount of such Lender's portion of the Revolving Advance no later than
2:00 p.m., on the applicable Borrowing date, then interest shall accrue on such
Lender's obligation to make such payment, from the applicable Borrowing date to
the date on which such Lender makes such payment (i) at a rate per annum equal
to the Federal Funds Rate during the first thee days following the applicable
Borrowing date and (ii) at a rate per annum equal to the rate applicable to
Revolving Advances at Domestic Rate Loans on and after the fourth day following
the applicable Borrowing Date.
2.5. Term Loan . Pursuant to the Original Agreement, on the date
----------
hereof, there is outstanding a Term Loan in the principal amount of $3,250,000,
which shall be repaid in full together with any and all accrued interest.
Subject to the terms and con-ditions of this Agreement, Lenders, will make a
Term Loan to Borrower in the sum of $10,000,000. The Term Loan shall be
advanced on the Closing Date and shall be, with respect to principal, payable as
follows, subject to acceleration upon the occurrence of an Event of Default
under this Agreement or termination of this Agreement:
(a) The principal portion of the Term Loan plus interest shall be
payable as follows on the first Business Day of each calendar quarter,
commencing on May 1, 2000, and each August 1, November 1, February 1 and May 1
thereafter, provided, however that the last such installment shall be in the
amount necessary to repay in full the unpaid principal amount of the Term Loan;
as follows:
Year after Closing Date Quarterly Amortization Amount
-------------------------- -----------------------------
Year 1 $250,000
Year 2 $333,325
Year 3 $416,750
Year 4 $500,000
Year 5 $500,000
Year 6 $500,000
(b) In addition to the Term Loan payment set forth in Section 2.4
(a), Borrower shall pay, as additional principal payments on the Term Loan,
fifty (50%) percent of Excess Cash Flow in accordance with Section 2.11(b)).
The Term Loan shall be evidenced by a secured promissory note, ("Term Note") in
substantially the form attached hereto as Exhibit 2.4.
------------
(c) The obligations of each Lender to make Term Loans to the
Borrower shall be
in the proportion that such Lender's Term Loan Commitment bears to the Term Loan
Commitments of all Lenders to the Borrower, but each Lender's Term Loan to the
Borrower shall never exceed its Term Loan Commitment. The failure of any Lender
to make a Term Loan shall not relieve any other Lender of its obligations to
make a Term Loan nor shall it impose any additional liability on any other
Lender hereunder. The Lenders shall have no obligation to make Term Loans
hereunder after the Closing Date. The Term Loan Commitments are not revolving
credit commitments and the Borrower shall not have the right to borrow, repay
and reborrow under this Section 2.5.
2.6 Maximum Advances . The aggregate balance of Revolving Advances
-----------------
outstanding at any time shall not exceed the lesser of (a) Maximum Revolving
Advance Amount or (b) the Formula Amount.
2.7. Repayment of Advances .
-----------------------
(a) The Revolving Advances shall be due and payable in full on the
last day of the Expiration Date subject to earlier prepayment as herein
provided. The Term Loan shall be due and payable as provided in Section 2.4
hereof and in the Term Note.
<PAGE>
(b) All payments of principal, interest and other amounts payable
hereunder, or under any of the Other Documents shall be made to Agent at the
Payment Office not later than 2:00 P.M. (New York Time) on the due date therefor
in lawful money of the United States of America in federal funds or other funds
immediately available to Agent. Agent shall have the right to effectuate
payment on any and all Obligations due and owing hereunder by charging
Borrower's Account or by making Advances as provided in Section 2.2 hereof.
(c) Borrower shall pay principal, interest, and all other amounts
payable hereunder, or under any Other Documents, without any deduction
whatsoever, including, but not limited to, any deduction for any setoff or
counterclaim.
2.8. Repayment of Excess Advances. The aggregate balance of Advances
-----------------------------
outstanding at any time in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without the necessity of any
demand, at the Payment Office, whether or not a Default or Event of Default has
occurred.
2.9. Statement of Account. Agent shall maintain, in accordance with
----------------------
its customary procedures, a loan account ("Borrower's Account") in the name of
Borrower in which shall be recorded the date and amount of each Advance made by
each Lender and the date and amount of each payment in respect thereof;
provided, however, the failure by Agent to record the date and amount of any
-------
Advance shall not adversely affect Agent or any Lenders. Each month, Agent
shall send to Borrower a statement showing the accounting for the Advances made,
payments made or credited in respect thereof, and other transactions between
Agent or Lenders and Borrower, during such month. The monthly statements shall
be deemed correct and binding upon Borrower in the absence of manifest error and
shall constitute an account stated between Agent, Lenders and Borrower unless
Agent receives a written statement of Borrower's specific exceptions thereto
within thirty (30) days after such statement is received by Borrower. The
records of Agent with respect to the loan account shall be conclusive evidence
absent manifest error of the amounts of Advances and other charges thereto and
of payments applicable thereto.
2.10. Additional Payments. Any sums expended by Agent or any Lender
--------------------
due to Borrower's or Guarantor's failure to perform or comply with its
obligations under this Agreement or any Other Document including, without
limitation, Borrower's obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14
and 6.1 hereof, may be charged to Borrower's Account as a Revolving Advance and
added to the Obligations.
2.11. Mandatory Prepayments.
----------------------
(a) When Borrower or Guarantor sells or otherwise disposes of any
Collateral or Guarantor Collateral, as the case may be, other than Inventory or
collection of Receivables in the ordinary course of business, Borrower shall,
except as otherwise permitted under Section 4.3, repay the Advances in an amount
equal to the net proceeds of such sale (i.e., gross proceeds less the reasonable
costs of such sales or other dispositions), such repayments to be made promptly
<PAGE>
but in no event more than one (1) Business Day following receipt of such net
proceeds, and until the date of payment, such proceeds shall be held in trust
for Agent and Lenders. The foregoing shall not be deemed to be implied consent
to any such sale otherwise prohibited by the terms and conditions hereof. Such
repayments shall be applied first, ratably to the outstanding principal
installments on the Term Loan in the order of the maturities thereof and,
second, to the remaining Advances in such order as Agent may determine, subject
to Borrower's ability to reborrow Revolving Advances in accordance with the
terms hereof.
(b) Borrower shall prepay the outstanding amount of the Term Loan
in an amount equal to 50% of Excess Cash Flow for each fiscal year commencing on
or after April 1, 2000, payable upon delivery of the financial statements to
Agent referred to in and required by Section 9.7 for such fiscal year, but in
any event not later than ninety (90) days after the end of each such fiscal
year, which amount shall be applied first, ratably to the outstanding principal
installments in the inverse order of the maturities thereof and, second, to the
remaining Advances in such order as Agent determine subject to Borrower's
ability to reborrow Revolving Advances in accordance with the terms hereof,
provided, however after the outstanding amount of the Term Loan is reduced to
less than $5,000,000, the requirements of this Section 2.11(b) shall no longer
apply. In the event that the financial statements are not so delivered, then a
calculation based upon estimated amounts shall be made by Agent upon which
calculation Borrower shall make the prepayment required by this Section 2.11(b),
subject to adjustment when the financial statements are delivered to Agent as
required hereby. The calculation made by Agent shall not be deemed a waiver of
any rights Agent may have as a result of the failure by Borrower to deliver such
financial statement.
2.12. Optional Prepayment. Borrower shall have the right, upon
--------------------
fifteen (15) days prior written notice to the Agent, to prepay the Term Loan, in
compliance with the terms of this Agreement, in whole or in part, plus accrued
interest to the date of prepayment. In the event that any prepayment of portion
of the Term Loan that is a Eurodollar Rate Loan is required or permitted under
Sections 2.11 or 2.12 on a date other than the last Business Day of then current
Interest Period with respect hereto, Borrower shall indemnify each Lender
therefor in accordance with Section 2.2(f) hereof.
2.13. Use of Proceeds. Borrower shall apply the proceeds of Advances
----------------
to (i) partially fund the acquisition by Borrower of the common stock of IC
Sensors from Seller, (ii) pay fees and expenses relating to this transaction in
an amount not to exceed $1,000,000 and (iii) to provide for its working capital
needs.
2.14. Letter of Credit Sublimit.
----------------------------
<PAGE>
(a) Borrower may request the issuance of a Letter of Credit by
delivering to the Agent a completed application and agreement for letters of
credit in such form as the Agent may specify from time to time by no later than
10:00 a.m., New York time, at least three (3) Business Days, or such shorter
period as may be agreed to by the Agent, in advance of the proposed date of
issuance. Each Letter of Credit shall be either a standby Letter of Credit or a
commercial Letter of Credit. Subject to the terms and conditions hereof and in
reliance on the agreements of the Lenders set forth in this Section 2.14, the
Agent will issue a Letter of Credit provided that each Letter of Credit shall
(A) have a maximum maturity of twelve (12) months from the date of issuance, and
(B) in no event expire later than ten (10) Business Days prior to the Expiration
Date and providing that in no event shall (i) the face amount of Letters of
Credit outstanding exceed, at any one time, $1,000,000, or (ii) the sum of the
face amount of Letters of Credit outstanding plus the outstanding Revolving
Advances exceed the Maximum Revolving Advance Amount.
(b) The Borrower shall pay (i) to the Agent for the ratable
account of the Lenders fee (the "Letter of Credit Fee") equal to the applicable
margin for Eurodollar Rate Loans; (ii) to the Agent for its own account for
standby Letters of Credit a fronting fee equal to .25% per annum (computed on
the basis of a year of 360 days and actual days elapsed) which fees shall be
computed on the daily average Letters of Credit Outstanding and shall be payable
quarterly in arrears commencing with the first Business Day of each February,
May, August and November following issuance of each standby Letter of Credit and
on the Expiration Date; and (iii) to the Agent for its own account for
commercial Letters of Credit, a fee equal to .25% per annum (computed on the
basis of a year of 360 days and actual days elapsed), which fee shall be payable
on the Drawing Date. The Borrower shall also pay to the Agent for the Agent's
sole account the Agent's then in effect customary fees and administrative
expenses payable with respect to the Letter of Credit as the Agent may generally
charge or incur from time to time in connection with the issuance, maintenance,
modification (if any), assignment or transfer (if any), negotiation, and
administration of Letters of Credit.
2.15 Disbursements, Reimbursement.
-----------------------------
(a) Immediately upon the issuance of each Letter of Credit, each
Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Agent a participation in such Letter of Credit and each
drawing thereunder in an amount equal to such Lender's Ratable Share of the
maximum amount available to be drawn under such Letter of Credit and the amount
of such drawing, respectively.
(b) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Agent will promptly notify
the Borrower. Provided that it shall have received such notice, the Borrower
shall reimburse (such obligation to reimburse the Agent shall sometimes be
referred to as a "Reimbursement Obligation") the Agent prior to 12:00 noon, on
each date that an amount is paid by the Agent under any Letter of Credit (each
such date, a "Drawing Date") in an amount equal to the amount so paid by the
<PAGE>
Agent. In the event the Borrower fails to reimburse the Agent for the full
amount of any drawing under any Letter of Credit by 12:00 noon, on the Drawing
Date, the Agent will promptly notify each Lender thereof, and the Borrower shall
be deemed to have requested that Revolving Advances of Domestic Rate Loans be
made by the Lenders to be disbursed on the Drawing Date under such Letter of
Credit, subject to the amount of the unutilized portion of the Revolving Credit
Commitment and subject to the conditions set forth in Section 8.2 other than any
notice requirements. Any notice given by the Agent pursuant to this Section
2.15(b) may be oral if immediately confirmed in writing; provided that the lack
of such an immediate confirmation shall not affect the conclusiveness or binding
effect of such notice.
(c) Each Lender shall upon any notice pursuant to Section 2.15(b)
make available to the Agent an amount in immediately available funds equal to
its Domestic Rate Loan, Ratable Share of the amount of the drawing, whereupon
the participating Lenders shall (subject to Section 2.15 (d) each be deemed to
have made a Revolving Advance of a Domestic Rate Loan to the Borrower in that
amount. If any Lender so notified fails to make available to the Agent for the
account of the Agent the amount of such Lender's Ratable Share of such amount by
no later than 2:00 p.m., on the Drawing Date, then interest shall accrue on such
Lender's obligation to make such payment, from the Drawing Date to the date on
which such Lender makes such payment (i) at a rate per annum equal to the
Federal Funds Rate during the first three days following the Drawing Date and
(ii) at a rate per annum equal to the rate applicable to Advances of Domestic
Rate Loan, on and after the fourth day following the Drawing Date. The Agent
will promptly give notice of the occurrence of the Drawing Date, but failure of
the Agent to give any such notice on the Drawing Date or in sufficient time to
enable any Bank to effect such payment on such date shall not relieve such
Lender from its obligation under this Section 2.15(c).
(d) With respect to any unreimbursed drawing that is not
converted into Revolving Advances of Domestic Rate Loans to the Borrower in
whole or in part as contemplated by Section 2.15(b), because of the Borrower's
failure to satisfy the conditions set forth in this Agreement other than any
notice requirements or for any other reason, the Borrower shall be deemed to
have incurred from the Agent a Letter of Credit Borrowing in the amount of such
drawing. Such Letter of Credit Borrowing shall be due and payable on demand
(together with interest) and shall bear interest at the rate per annum
applicable to the Revolving Advances of Domestic Rate Loans. Each Lender's
payment to the Agent pursuant to Section 2.15(c) shall be deemed to be a payment
in respect of its participation in such Letter of Credit Borrowing and shall
constitute a Participation Advance from such Lender in satisfaction of its
participation obligation under this Section 2.15.
2.16 Repayment of Participation Advances.
--------------------------------------
<PAGE>
(a) Upon (and only upon) receipt by the Agent for its account of
immediately available funds from the Borrower (i) in reimbursement of any
payment made by the Agent under the Letter of Credit with respect to which any
Lender has made a Participation Advance to the Agent, or (ii) in payment of
interest on such a payment made by the Agent under such a Letter of Credit, the
Agent will pay to each Lender, in the same funds as those received by the Agent,
the amount of such Lender's Ratable Share of such funds, except the Agent shall
retain the amount of the Ratable Share of such funds of any Lender that did not
make a Participation Advance in respect of such payment by Agent.
(b) If the Agent is required at any time to return to Borrower,
or to a trustee, receiver, liquidator, custodian, or any official in any
Insolvency Proceeding, any portion of the payments made by any Borrower to the
Agent pursuant to Section 2.16(a) in reimbursement of a payment made under the
Letter of Credit or interest or fee thereon, each Lender shall, on demand of the
Agent, forthwith return to the Agent the amount of its Ratable Share of any
amounts so returned by the Agent plus interest thereon from the date such demand
is made to the date such amounts are returned by such Lender to the Agent, at a
rate per annum equal to the Federal Funds Rate in effect from time to time.
2.17 Documentation.
-------------
Borrower agrees to be bound by the terms of the Agent's application
and agreement for letters of credit and the Agent's written regulations and
customary practices relating to letters of credit, though such interpretation
may be different from the Borrower's own. In the event of a conflict between
such application or agreement and this Agreement, this Agreement shall govern.
It is understood and agreed that, except in the case of gross negligence or
willful misconduct, the Agent shall not be liable for any error, negligence
and/or mistakes, whether of omission or commission, in following any Borrower's
instructions or those contained in the Letters of Credit or any modifications,
amendments or supplements thereto.
2.18 Determinations to Honor Drawing Requests.
--------------------------------------------
(a) In determining whether to honor any request for drawing
under any Letter of Credit by the beneficiary thereof, the Agent shall be
responsible only to determine that the documents and certificates required to be
delivered under such Letter of Credit have been delivered and that they comply
on their face with the requirements of such Letter of Credit.
2.19 Nature of Participation and Reimbursement Obligations. Each
----------------------------------------------------------
Lender's obligation in accordance with this Agreement to make the Revolving
Credit Advances or Participation Advances, as contemplated by Section 2.15, as a
result of a drawing under a Letter of Credit, and the Obligations of the
<PAGE>
Borrower to reimburse the Agent upon a draw under a Letter of Credit, shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Section 2.19 under all circumstances,
including the following circumstances:
(i) any set-off, counterclaim, recoupment, defense or other
right which such Bank may have against the Agent, the Borrower or any other
Person for any reason whatsoever;
(ii) the failure of Borrower or any other Person to comply,
in connection with a Letter of Credit Borrowing, with the conditions set forth
in Section 2.1, 2.2, 2.3, or 2.4 or as otherwise set forth in this Agreement for
the making of a Revolving Credit Advance, it being acknowledged that such
conditions are not required for the making of a Letter of Credit Borrowing and
the obligation of the Lenders to make Participation Advances under Section 2.15;
(iii) any lack of validity or enforceability of any Letter of
Credit;
(iv) the existence of any claim, set-off, defense or other
right which Borrower or any Lender may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), the Agent or any Lender or any other Person or,
whether in connection with this Agreement, the transactions contemplated herein
or any unrelated transaction (including any underlying transaction between
Lender or Subsidiaries of a Borrower and the beneficiary for which any Letter of
Credit was procured);
(v) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect even if the Agent has been notified thereof;
(vi) payment by the Agent under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit;
(vii) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Borrower,
Guarantor or Subsidiaries of Borrower or Guarantor;
(viii) any breach of this Agreement or any Other Document by
any party thereto;
<PAGE>
(ix) the occurrence or continuance of an Insolvency
Proceeding with respect to Borrower or Guarantor;
(x) the fact that an Event of Default shall have
occurred and be continuing;
(xi) the fact that the Term shall have passed or this
Agreement or the Commitments hereunder shall have been terminated; and
(xii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing.
2.20. Indemnity.
---------
In addition to amounts payable as provided in Section 13.5, the
Borrower hereby agrees to protect, indemnify, pay and save harmless the Agent
from and against any and all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including reasonable fees, expenses and
disbursements of counsel and allocated costs of internal counsel) which the
Agent may incur or be subject to as a consequence, direct or indirect, of (i)
the issuance of any Letter of Credit, other than as a result of (A) the gross
negligence or willful misconduct of the Agent as determined by a final judgment
of a court of competent jurisdiction or (B) subject to the following clause
(ii), the wrongful dishonor by the Agent of a proper demand for payment made
under any Letter of Credit, or (ii) the failure of the Agent to honor a drawing
under any such Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions herein called "Governmental
Acts").
2.21. Liability for Acts and Omissions.
------------------------------------
As between any Borrower and the Agent, Borrower assumes all risks
of the acts and omissions of, or misuse of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, the Agent shall not be responsible for: (i) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for an
issuance of any such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged
(even if the Agent shall have been notified thereof); (ii) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the beneficiary of
any such Letter of Credit, or any other party to which such Letter of Credit may
<PAGE>
be transferred, to comply fully with any conditions required in order to draw
upon such Letter of Credit or any other claim of Borrower against any
beneficiary of such Letter of Credit, or any such transferee, or any dispute
between or among Borrower and any beneficiary of any Letter of Credit or any
such transferee; (iv) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (v) errors in interpretation of technical
terms; (vi) any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any such Letter of Credit or of the
proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter
of Credit of the proceeds of any drawing under such Letter of Credit; or (viii)
any consequences arising from causes beyond the control of the Agent, including
any Governmental Acts, and none of the above shall affect or impair, or prevent
the vesting of, any of the Agent's rights or powers hereunder. Nothing in the
preceding sentence shall relieve the Agent from liability for the Agent's gross
negligence or willful misconduct in connection with actions or omissions
described in such clauses(i) through (viii) of such sentence.
In furtherance and extension and not in limitation of the
specific provisions set forth above, any action taken or omitted by the Agent
under or in connection with the Letters of Credit issued by it or any documents
and certificates delivered thereunder, if taken or omitted in good faith, shall
not put the Agent under any resulting liability to the Borrower or any Lender.
2.22. Pro Rata Treatment of Lenders.
---------------------------------
Each borrowing shall be allocated to each Lender according to its
Ratable Share, and each selection of, conversion to or renewal of any interest
rate and each payment or prepayment by the Borrower with respect to principal,
interest, Commitment Fees, Facility Fees, Letter of Credit Fees, or other fees
(except for the Agent's Fee) or amounts due from the Borrower hereunder to the
Lenders with respect to the Advances, shall (except as provided in Section 3.9
in the case of an event specified in Section 3.7, 2.16 or 3.8) be made in
proportion to the applicable Advances outstanding from each Lender and, if no
such Advances are then outstanding, in proportion to the Ratable Share of each
Lender.
2.23. Replacement of a Lender.
--------------------------
In the event any Lender (i) gives notice under Section 3.7 or Section
3.6, (ii) does not fund Revolving Advances because the making of such Advances
would contravene any Law applicable to such Lender, (iii) does not approve any
action as to which consent of the Required Lenders is requested by the Borrower
and obtained hereunder, or (iv) becomes subject to the control of an Official
Body (other than normal and customary supervision), then the Borrower shall have
the right at its option, with the consent of the Agent, which shall not be
unreasonably withheld, to prepay the Advances of such Lender in whole, together
<PAGE>
with all interest accrued thereon, and terminate such Lender's Commitment within
ninety (90) days after (w) receipt of such Lender's notice under Section 3.7 or
3.6, (x) the date such Lender has failed to fund Revolving Advances because the
making of such Advances would contravene Law applicable to such Lender, (y) the
date of obtaining the consent which such Lender has not approved, or (z) the
date such Lender became subject to the control of an Official Body, as
applicable; provided that the Borrower shall also pay to such Lender at the time
--------
of such prepayment any amounts required under Section 2.2(f) and 3.6 and any
accrued interest due on such amount and any related fees; provided, however,
--------
that the Commitment and any Term Loan of such Lender shall be provided by one or
more of the remaining Lenders (at their option) or a replacement bank acceptable
to the Agent; provided, further, the remaining Lenders shall have no obligation
--------
hereunder to increase their Commitments. Notwithstanding the foregoing, the
Agent may only be replaced subject to the requirements of Section 13.14 and
provided that all Letters of Credit have expired or been terminated or replaced.
- --------
III. INTEREST AND FEES.
-------------------
3.1. Interest. Interest on Advances shall be payable in arrears on the
--------
first day of each month with respect to Domestic Rate Loans and, with respect to
Eurodollar Rate Loans , at the end of each Interest Period. Interest charges
shall be computed on the actual principal amount of Advances outstanding during
the month (the "Monthly Advances") at a rate per annum equal to (i) with respect
to Revolving Advances, the applicable Revolving Interest Rate and (ii) with
respect to the Term Loan, the Term Loan Rate (as applicable, the "Contract
Rate"). Whenever, subsequent to the date of this Agreement, the Base Rate is
increased or decreased, the applicable Contract Rate for Domestic Rate Loans
shall be similarly changed without notice or demand of any kind by an amount
equal to the amount of such change in the Base Rate during the time such change
or changes remain in effect. The Eurodollar Rate shall be adjusted with respect
to Eurodollar Rate Loans without notice or demand of any kind on the effective
date of any change in the Reserve Percentage as of such effective date. Upon
and after the occurrence of an Event of Default, and during the continuation
thereof, the Obligations shall bear interest at the applicable Contract Rate
plus two (2%) percent per annum (the "Default Rate").
3.2. Commitment Fee. If, for any month during the Term, the average
---------------
daily unpaid balance of the Revolving Advances for each day of such month does
not equal the Maximum Revolving Advance Amount, then Borrower shall pay to
Agent, for the benefit of Lenders, a fee at a rate equal to three-eighths of one
percent (3/8%) per annum on the amount by which the Maximum Revolving Advance
Amount exceeds such average daily unpaid balance. Such fee shall be payable to
Agent in arrears on the last day of each quarter.
[3.3 INTENTIONALLY LEFT BLANK]
--------------------------
3.4. Computation of Interest and Fees. Interest and fees hereunder
-----------------------------------
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed. If any payment to be made hereunder becomes due and payable on
a day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the
applicable Contract Rate during such extension.
<PAGE>
3.5. Maximum Charges. In no event whatsoever shall interest and other
---------------
charges charged hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first applied
to any unpaid principal balance owed by Borrower, and if the then remaining
excess amount is greater than the previously unpaid principal balance, Lender
shall promptly refund such excess amount to Borrower and the provisions hereof
shall be deemed amended to provide for such permissible rate.
3.6. Increased Costs. In the event that any applicable law, treaty or
---------------
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender and the office or branch where
Agent or any Lender makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
(a) subject Agent or such Lender to any tax of any kind whatsoever
with respect to this Agreement or any Other Document or change the basis of
taxation of payments to Agent or such Lender of principal, fees, interest or any
other amount payable hereunder or under any Other Documents (except for changes
in the rate of tax on the overall net income of Agent or such Lender by the
jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special
deposit, assessment or similar requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office of Agent or such Lender, including (without limitation) pursuant to
Regulation D of the Board of Governors of the Federal Reserve System; or
(c) impose on Agent or such Lender or the London interbank
Eurodollar market any other condition with respect to this Agreement or any
Other Document; and the result of any of the foregoing is to increase the cost
to Agent or such Lender of making, renewing or maintaining its Advances
hereunder by an amount that Agent or such Lender deems to be material or to
reduce the amount of any payment (whether of principal, interest or otherwise)
in respect of any of the Advances by an amount that Agent or such Lender deems
to be material, then, in any case Borrower shall promptly pay Agent or such
Lender, upon its demand, such additional amount as will compensate Agent or such
Lender for such additional cost or such reduction, as the case may be. Lender
shall certify the amount of such additional cost or reduced amount to Borrower,
and such certification shall be conclusive absent manifest error.
3.7. Basis For Determining Interest Rate Inadequate or Unfair. In the
--------------------------------------------------------
event that Agent or a any Lender shall have determined that:
<PAGE>
(a) reasonable means do not exist for ascertaining the Eurodollar
Rate applicable pursuant to Section 2.2 hereof for any Interest Period; or
(b) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank Eurodollar market, with
respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan,
or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan
then each affected Lender shall give Agent, and Agent shall give Borrower,
prompt written, telephonic or telegraphic notice of such determination. If such
notice is given, (i) any such requested Eurodollar Rate Loan shall be made as a
Domestic Rate Loan, unless Borrower shall notify Agent no later than 10:00 a.m.
(New York City time) two (2) Business Days prior to the date of such proposed
borrowing, that its request for such borrowing shall be canceled or made as an
unaffected type of Eurodollar Rate Loan, (ii) any Domestic Rate Loan or
Eurodollar Rate Loan which was to have been converted to an affected type of
Eurodollar Rate Loan shall be continued as or converted into a Domestic Rate
Loan, or, if Borrower shall notify Agent, no later than 10:00 a.m. (New York
City time) two (2) Business Days prior to the proposed conversion, shall be
maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any
outstanding affected Eurodollar Rate Loans shall be converted into a Domestic
Rate Loan, or, if Borrower shall notify Agent, no later than 10:00 a.m. (New
York City time) two (2) Business Days prior to the last Business Day of the then
current Interest Period applicable to such affected Eurodollar Rate Loan, shall
be converted into an unaffected type of Eurodollar Rate Loan, on the last
Business Day of the then current Interest Period for such affected Eurodollar
Rate Loans. Until such notice has been withdrawn, Lenders shall have no
obligation to make an affected type of Eurodollar Rate Loan or maintain
outstanding affected Eurodollar Rate Loans and Borrower shall not have the right
to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan
into an affected type of Eurodollar Rate Loan.
3.8. Capital Adequacy.
-----------------
(a) In the event that Agent or any Lender shall have determined
that any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Agent or Lender and the office or branch where such Agent or Lender makes or
maintains any Eurodollar Rate Loans with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on Agent's or such Lender's capital as a consequence of its
obligations hereunder to a level below that which Agent or such Lender could
have achieved but for such adoption, change or compliance (taking into
consideration Agent's or such Lender's policies with respect to capital
adequacy) by an amount deemed by Agent or such Lender to be material, then, from
time to time, Borrower shall pay upon demand to Agent or such Lender such
<PAGE>
additional amount or amounts as will compensate Agent or such Lender for such
reduction. In determining such amount or amounts, Lender may use any reasonable
averaging or attribution methods. The protection of this Section 3.8 shall be
available to Agent and Lenders regardless of any possible contention of
invalidity or inapplicability with respect to the applicable law, regulation or
condition.
(b) A certificate of such Lender setting forth such amount or
amounts as shall be necessary to compensate Agent or such Lender with respect to
Section 3.8(a) hereof when delivered to Borrower shall be conclusive absent
manifest error.
IV. COLLATERAL: GENERAL TERMS
---------------------------
4.1. Security Interest in the Collateral. To secure the prompt
---------------------------------------
payment and performance to Agent and Lenders of the Obligations, Borrower
hereby assigns, pledges and grants to Agent for the ratable benefit of Lenders a
continuing security interest in and to all of the Collateral, whether now owned
or existing or hereafter acquired or arising and wheresoever located. Borrower
shall mark its books and records as may be necessary or appropriate to evidence,
protect and perfect Agent's security interest and shall cause its financial
statements to reflect such security interest.
4.2. Perfection of Security Interest . Borrower shall take all action
-------------------------------
that may be necessary or desirable, or that Agent may request, so as at all
times to maintain the validity, perfection, enforceability and priority of
Agent's security interest in the Collateral or to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to, (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining landlords' or mortgagees' lien waivers, (iii)
delivering to Agent, endorsed or accompanied by such instruments of assignment
as Agent may specify, and stamping or marking, in such manner as Agent may
specify, any and all chattel paper, instruments, letters of credits and advices
thereof and documents evidencing or forming a part of the Collateral, (iv)
entering into warehousing, lockbox and other custodial arrangements satisfactory
to Agent, and (v) executing and delivering financing statements, instruments of
pledge, mortgages, notices and assignments, in each case in form and substance
satisfactory to Agent, relating to the creation, validity, perfection,
maintenance or continuation of Agent's security interest under the Uniform
Commercial Code or other applicable law. All charges, expenses and fees Agent
and/or Lenders may incur in doing any of the foregoing, and any local taxes
relating thereto, shall be charged to Borrower's Account as a Revolving Advance
of a Domestic Rate Loan and added to the Obligations, or, at Agent's or such
Lender's option, shall be paid to Agent or such Lender immediately upon demand.
4.3. Disposition of Collateral. Borrower will safeguard and protect
---------------------------
all Collateral for Agent's general account and make no disposition thereof
whether by sale, lease or otherwise except (a) the sale of Inventory in the
ordinary course of business and (b) the disposition or transfer of obsolete and
<PAGE>
worn-out Equipment in the ordinary course of business during any fiscal year
having an aggregate fair market value of not more than $100,000 and only to the
extent that (i) the proceeds of any such disposition are used to acquire
replacement Equipment which is subject to Agent's first priority security
interest or (ii) the proceeds of which are remitted to Agent, for the account of
Lenders as a prepayment on the Term Loan.
4.4. Preservation of Collateral . In addition to the rights and
----------------------------
remedies set forth in Section 11.1 hereof, Agent: (a) may at any time take such
steps as Agent deems necessary to protect Agents's and each Lender's interest in
and to preserve the Collateral, including the hiring of such security guards or
the placing of other security protection measures as Agent may deem appropriate;
(b) may employ and maintain at any of Borrower's premises a custodian who shall
have full authority to do all acts necessary to protect Agent's and each
Lender's interests in the Collateral; (c) may lease warehouse facilities to
which Agent may move all or part of the Collateral; (d) may use any of
Borrower's owned or leased lifts, hoists, trucks and other facilities or
equipment for handling or removing the Collateral; and (e) shall have, and is
hereby granted, a right of ingress and egress to the places where the Collateral
is located, and may proceed over and through any of Borrower's owned or leased
property. Borrower shall cooperate fully with all of Agent's efforts to preserve
the Collateral and will take such actions to preserve the Collateral as Agent
may direct. All of Agent's and or any Lender's expenses of preserving the
Collateral, including any expenses relating to the bonding of a custodian, shall
be charged to Borrower's Account as a Revolving Advance of a Domestic Rate Loan
and added to the Obligations.
4.5. Ownership of Collateral . With respect to the Collateral, at the
------------------------
time the Collateral becomes subject to Agent's security interest: (a) Borrower
shall be the sole owner of and fully authorized and able to sell, transfer,
pledge and/or grant a first priority security interest in each and every item of
the Collateral to Agent; and, except for Permitted Encumbrances the Collateral
shall be free and clear of all Liens and encumbrances whatsoever; (b) each
document and agreement executed by Borrower or delivered to Agent and/or any
Lender in connection with this Agreement shall be true and correct in all
respects; (c) all signatures and endorsements of Borrower that appear on such
documents and agreements shall be genuine and Borrower shall have full capacity
to execute same; and (d) Borrower's Equipment and Inventory shall be located as
set forth on Schedule 4.5 and shall not be removed from such location(s) without
------------
the prior written consent of Agent except with respect to the sale of Inventory
in the ordinary course of business and Equipment to the extent permitted in
Section 4.3 hereof.
4.6. Defense of Agent's and each Lender's Interests . Until (a)
----------------------------------------------------
payment and performance in full of all of the Obligations and (b) termination of
this Agreement, Agent's and each Lender's interests in the Collateral shall
continue in full force and effect. During such period Borrower shall not,
without Agent's prior written consent, pledge, sell (except Inventory in the
ordinary course of business and Equipment to the extent permitted in Section 4.3
hereof), assign, transfer, create or suffer to exist a Lien upon or encumber or
allow or suffer to be encumbered in any way except for Permitted Encumbrances,
any part of the Collateral. Borrower shall defend Agent's and each Lender's
interests in the Collateral against any and all Persons whatsoever. At any time
<PAGE>
following demand by Agent and/or any Lender for payment of all Obligations,
Agent shall have the right to take possession of the indicia of the Collateral
and the Collateral in whatever physical form contained, including without
limitation: labels, stationery, documents, instruments and advertising
materials. If Agent exercises this right to take possession of the Collateral,
Borrower shall, upon demand, assemble it in the best manner possible and make it
available to Agent at a place reasonably convenient to Agent. In addition, with
respect to all Collateral, Agent shall be entitled to all of the rights and
remedies set forth herein and further provided by the Uniform Commercial Code or
other applicable law. Borrower shall, and Agent may, at its option, instruct
all suppliers, carriers, forwarders, warehouses or others receiving or holding
cash, checks, Inventory, documents or instruments in which Agent holds a
security interest to deliver same to Agent and/or subject to Agent's order and
if they shall come into Borrower's possession, they, and each of them, shall be
held by Borrower in trust as Agent's trustee, and Borrower will immediately
deliver them to Agent Lender in their original form together with any necessary
endorsement.
4.7. Books and Records . Borrower shall (a) keep proper books of
-------------------
record and account in which full, true and correct entries will be made of all
dealings or transactions of or in relation to its business and affairs; (b) set
up on its books accruals with respect to all taxes, assessments, charges, levies
and claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including without limitation by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties), which
should be set aside from such earnings in connection with its business. All
determinations pursuant to this subsection shall be made in accordance with, or
as required by, GAAP consistently applied in the opinion of such independent
public accountant as shall then be regularly engaged by Borrower.
4.8. Financial Disclosure . Borrower hereby irrevocably authorizes and
--------------------
directs all accountants and auditors employed by Borrower at any time during the
Term to exhibit and deliver to Agent and Lenders copies of any of Borrower's
financial statements, trial balances or other accounting records of any sort in
the accountant's or auditor's possession, and to disclose to Agent and Lenders
any information such accountants may have concerning Borrower's financial
status and business operations. Borrower hereby authorizes all federal, state
and municipal authorities to furnish to Agent and Lenders copies of reports or
examinations relating to Borrower, whether made by Borrower or otherwise;
however, Agent and Lenders will attempt to obtain such information or materials
directly from Borrower prior to obtaining such information or materials from
such accountants or such authorities.
<PAGE>
4.9. Compliance with Laws. Borrower shall comply with all acts,
----------------------
rules, regulations and orders of any legislative, administrative or judicial
body or official applicable to the Collateral or any part thereof or to the
operation of Borrower's business the non-compliance with which could reasonably
be expected to have a Material Adverse Effect. The Collateral at all times
shall be maintained in accordance with the requirements of all insurance
carriers which provide insurance with respect to the Collateral so that such
insurance shall remain in full force and effect.
4.10. Inspection of Premises . At all reasonable times and upon
------------------------
reasonable advance notice Agent shall have full access to and the right to
audit, check, inspect and make abstracts and copies from Borrower's books,
records, audits, correspondence and all other papers relating to the Collateral
and the operation of Borrower's business. Agent, may enter upon any of
Borrower's premises at any time during business hours and at any other
reasonable time, and from time to time, for the purpose of inspecting the
Collateral and any and all records pertaining thereto and the operation of
Borrower's business. Agent may conduct one field exam of Borrower and of
Guarantor each year, at the expense of Borrower, provided Agent shall conduct a
field exam of Guarantor prior to December 31, 2000, at Guarantor's expense.
4.11. Insurance . Borrower shall bear the full risk of any loss of
---------
any nature whatsoever with respect to the Collateral. At Borrower's own cost
and expense in amounts and with carriers acceptable to Agent, Borrower shall
(a) keep all its insurable properties and properties in which Borrower has an
interest insured against the hazards of fire, flood, sprinkler leakage, those
hazards covered by extended coverage insurance and such other hazards, and for
such amounts, as is customary in the case of companies engaged in businesses
similar to Borrower's including, without limitation, business interruption
insurance;, (b) maintain a bond in such amounts as is customary in the case of
companies engaged in businesses similar to Borrower insuring against larceny,
embezzlement or other criminal misappropriation of insured's officers and
employees who may either singly or jointly with others at any time have access
to the assets or funds of Borrower either directly or through authority to draw
upon such funds or to direct generally the disposition of such assets; (c)
maintain public and product liability insurance against claims for personal
injury, death or property damage suffered by others; (d) maintain all such
worker's compensation or similar insurance as may be required under the laws of
any state or jurisdiction in which Borrower is engaged in business; (e) furnish
Agent with (i) copies of all policies and evidence of the maintenance of such
policies by the renewal thereof at least thirty (30) days before any expiration
date, and (ii) appropriate loss payable endorsements in form and substance
satisfactory to Agent, naming Agent as a co-insured and loss payee as its
interests may appear with respect to all insurance coverage referred to in
clauses (a), and (c) and (e) above, and providing (A) that all proceeds
thereunder shall be payable to Agent, (B) no such insurance shall be affected by
any act or neglect of the insured or owner of the property described in such
policy, and (C) that such policy and loss payable clauses may not be canceled,
amended or terminated unless at least thirty (30) days' prior written notice is
given to Agent. In the event of any loss thereunder, the carriers named therein
hereby are directed by Agent and the Borrower to make payment for such loss to
<PAGE>
Agent and not to Borrower and Agent jointly. If any insurance losses are paid
by check, draft or other instrument payable to Borrower and Agent jointly,
Agent may endorse Borrower's name thereon and do such other things as Agent may
deem advisable to reduce the same to cash. Agent is hereby authorized to adjust
and compromise claims under insurance coverage referred to in clauses (a), and
(b) and (e) above. All loss recoveries received by Agent upon any such
insurance may be applied to the Obligations, in such order as Agent in its sole
discretion shall determine. Any surplus shall be paid by Agent to Borrower or
applied as may be otherwise required by law. Any deficiency thereon shall be
paid by Borrower to Agent, on demand.
4.12. Failure to Pay Insurance . If Borrower fails to obtain insurance
------------------------
as hereinabove provided, or to keep the same in force, Agent, if Agent so
elects, may obtain such insurance and pay the premium therefor on behalf of
Borrower, and charge Borrower's Account therefor as a Revolving Advance of a
Domestic Rate Loan and such expenses so paid shall be part of the Obligations.
4.13. Payment of Taxes . Borrower will pay, when due, all taxes,
------------------
assessments and other Charges lawfully levied or assessed upon Borrower or any
of the Collateral including, without limitation, real and personal property
taxes, assessments and charges and all franchise, income, employment, social
security benefits, withholding, and sales taxes. If any tax by any governmental
authority is or may be imposed on or as a result of any transaction between
Borrower and Agent and/or any Lender which Agent and/or any Lender may be
required to withhold or pay or if any taxes, assessments, or other Charges
remain unpaid after the date fixed for their payment, or if any claim shall be
made which, in Agent's or any Lender's opinion, may possibly create a valid Lien
on the Collateral, Agent may without notice to Borrower pay the taxes,
assessments or other Charges and Borrower hereby indemnifies and holds Agent and
each Lender harmless in respect thereof. The amount of any payment by Agent
under this Section 4.13 shall be charged to Borrower's Account as a Revolving
Advance and added to the Obligations and, until Borrower shall furnish Agent
with an indemnity therefor (or supply Agent with evidence satisfactory to Agent
that due provision for the payment thereof has been made), Agent may hold
without interest any balance standing to Borrower's credit and Agent shall
retain its security interest in any and all Collateral held by Agent.
4.14. Payment of Leasehold Obligations . Borrower shall at all times
---------------------------------
pay, when and as due, its rental obligations under all leases under which it is
a tenant, and shall otherwise comply, in all material respects, with all other
terms of such leases and keep them in full force and effect and, at Agent's
request will provide evidence of having done so.
4.15. Receivables.
-----------
<PAGE>
(a) Nature of Receivables. Each of the Receivables shall be a
-----------------------
bona fide and valid account representing a bona fide indebtedness incurred by
the Customer therein named, for a fixed sum as set forth in the invoice relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of Borrower, or work, labor or services theretofore
rendered by Borrower as of the date each Receivable is created. Same shall be
due and owing in accordance with the Borrower's standard terms of sale without
dispute, setoff or counterclaim except as may be stated on the accounts
receivable schedules delivered by Borrower to Agent.
(b) Solvency of Customers. Each Customer, to the best of
-----------------------
Borrower's knowledge, as of the date each Receivable is created, is and will be
solvent and able to pay all Receivables on which the Customer is obligated in
full when due or with respect to such Customers of Borrower who are not solvent
Borrower has set up on its books and in its financial records bad debt reserves
adequate to cover such Receivables.
(c) Locations of Borrower . Borrower's chief executive office is
----------------------
located at 80 Little Falls Road, Fairfield, New Jersey 07004. Until written
notice is given to Agent by Borrower of any other office at which Borrower
keeps its records pertaining to Receivables, all such records shall be kept at
such executive office.
(d) Collection of Receivables . Until Borrower's authority to do
-------------------------
so is terminated by Agent (which notice Agent may give at any time following the
occurrence of an Event of Default or a Default or when Agent in its sole
discretion deems it to be in Agent's and each Lenders' best interest to do so),
Borrower will, at Borrower's sole cost and expense, but on Agent's behalf and
for Agent's account, collect as Lender's property and in trust for Lenders all
amounts received on Receivables, and shall not commingle such collections with
Borrower's funds or use the same except to pay Obligations. Borrower shall,
upon request, deliver to Agent, or deposit in the Blocked Account, in original
form and on the date of receipt thereof, all checks, drafts, notes, money
orders, acceptances, cash and other evidences of Indebtedness.
(e) Notification of Assignment of Receivables . At any time
---------------------------------------------
following the occurrence of an Event of Default or a Default, Agent shall have
the right to send notice of the assignment of, and Agent's security interest in,
the Receivables to any and all Customers or any third party holding or otherwise
concerned with any of the Collateral. Thereafter, Agent shall have the sole
right to collect the Receivables, take possession of the Collateral, or both.
Agent's actual collection expenses, including, but not limited to, stationery
and postage, telephone and telegraph, secretarial and clerical expenses and the
salaries of any collection personnel used for collection, may be charged to
Borrower's Account and added to the Obligations.
(f) Power of Agent to Act on Borrower's Behalf . Agent shall have
------------------------------------------
the right to receive, endorse, assign and/or deliver in the name of Agent or
Borrower any and all checks, drafts and other instruments for the payment of
money relating to the Receivables, and Borrower hereby waives notice of
presentment, protest and non-payment of any instrument so endorsed. Borrower
hereby constitutes Agent or Agent's designee as Borrower's attorney with power
<PAGE>
(i) to endorse Borrower's name upon any notes, acceptances, checks, drafts,
money orders or other evidences of payment or Collateral; (ii) to sign
Borrower's name on any invoice or bill of lading relating to any of the
Receivables, drafts against Customers, assignments and verifications of
Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to
sign Borrower's name on all financing statements or any other documents or
instruments deemed necessary or appropriate by Agent to preserve, protect, or
perfect Agent's interest in the Collateral and to file same; (v) to demand
payment of the Receivables; (vi) to enforce payment of the Receivables by legal
proceedings or otherwise; (vii) to exercise all of Borrower's rights and
remedies with respect to the collection of the Receivables and any other
Collateral; (viii) to settle, adjust, compromise, extend or renew the
Receivables; (ix) to settle, adjust or compromise any legal proceedings brought
to collect Receivables; (x) to prepare, file and sign Borrower's name on a
proof of claim in bankruptcy or similar document against any Customer; (xi) to
prepare, file and sign Borrower's name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables; and
(xii) to do all other acts and things necessary to carry out this Agreement.
All acts of said attorney or designee are hereby ratified and approved, and said
attorney or designee shall not be liable for any acts of omission or commission
nor for any error of judgment or mistake of fact or of law, unless done
maliciously or with gross (not mere) negligence; this power being coupled with
an interest is irrevocable while any of the Obligations remain unpaid. Agent
shall have the right at any time following the occurrence of an Event of Default
or Default, to change the address for delivery of mail addressed to Borrower to
such address as Agent may designate and to receive, open and dispose of all mail
addressed to Borrower.
(g) No Liability. Neither Agent nor any Lender shall, under any
-------------
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument received in payment thereof, or for
any damage resulting therefrom. Following the occurrence of an Event of Default
or Default Agent may, without notice or consent from Borrower, sue upon or
otherwise collect, extend the time of payment of, compromise or settle for cash,
credit or upon any terms any of the Receivables or any other securities,
instruments or insurance applicable thereto and/or release any obligor thereof.
Agent is authorized and empowered to accept following the occurrence of an Event
of Default or Default the return of the goods represented by any of the
Receivables, without notice to or consent by Borrower, all without discharging
or in any way affecting Borrower's liability hereunder.
(h) Establishment of a Lockbox Account, Dominion Account. All
-------------------------------------------------------
proceeds of Collateral shall, at the direction of Agent, be deposited by
Borrower into a lockbox account, dominion account or such other "blocked
account" ("Blocked Accounts") as Agent may require. All funds deposited in
<PAGE>
such "blocked account" shall immediately become the property of Agent for the
benefit of Lenders. Agent does not assume any responsibility for such "blocked
account" arrangement, including without limitation, any claim of accord and
satisfaction or release with respect to deposits accepted by any bank
thereunder. Alternatively, Agent may establish depository accounts ("Depository
Accounts") in the name of Agent for the deposit of such funds and Borrower shall
deposit all proceeds of Collateral or cause same to be deposited, in kind, in
such Depository Accounts of Agent in lieu of depositing same to the Blocked
Accounts.
(i) Adjustments. Borrower will not, without Agent's consent,
-----------
compromise or adjust any material amount of the Receivables (or extend the time
for payment thereof) or accept any material returns of merchandise or grant any
additional discounts, allowances or credits thereon except for those
compromises, adjustments, returns, discounts, credits and allowances as have
been heretofore customary in the business of Borrower.
4.16. Inventory. To the extent Inventory held for sale or lease has
---------
been produced by Borrower, it has been and will be produced by Borrower in
accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations and orders thereunder.
4.17. Maintenance of Equipment . Except for obsolete Equipment, the
--------------------------
Equipment shall be maintained in good operating condition and repair (reasonable
wear and tear excepted) and all necessary replacements of and repairs thereto
shall be made so that the value and operating efficiency of the Equipment shall
be maintained and preserved. Borrower shall not use or operate the Equipment in
violation of any law, statute, ordinance, code, rule or regulation. Borrower
shall have the right to sell Equipment to the extent set forth in Section 4.3
hereof.
4.18. Exculpation of Liability . Neither Agent nor any Lender shall be
------------------------
responsible or liable for any shortage, discrepancy, damage, loss or destruction
of any part of the Collateral wherever the same may be located and regardless of
the cause thereof, except for willful misconduct or gross negligence. Agent,
whether by anything herein or in any assignment or otherwise, shall not assume
any of Borrower's obligations under any contract or agreement assigned to Agent,
and Agent shall not be responsible in any way for the performance by Borrower of
any of the terms and conditions thereof.
4.19. Environmental Matters . (a) Borrower shall ensure that the Real
---------------------
Property remains in compliance with all Environmental Laws and they shall not
place or permit to be placed any Hazardous Substances on any Real Property
except as not prohibited by applicable law or appropriate governmental
authorities.
(b) Borrower shall establish and maintain a system to assure and
monitor continued compliance with all applicable Environmental Laws which system
shall include periodic reviews of such compliance.
<PAGE>
(c) Borrower shall (i) employ in connection with the use of the
Real Property appropriate technology necessary to maintain compliance with any
applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste
generated at the Real Property only at facilities and with carriers that
maintain valid permits under RCRA and any other applicable Environmental Laws.
Borrower shall use their best efforts to obtain certificates of disposal, such
as hazardous waste manifest receipts, from all treatment, transport, storage or
disposal facilities or operators employed by Borrower in connection with the
transport or disposal of any Hazardous Waste generated at the Real Property.
(d) In the event Borrower obtains, gives or receives notice of any
Release or threat of Release of a reportable quantity of any Hazardous
Substances at the Real Property (any such event being hereinafter referred to as
a "Hazardous Discharge") or receives any notice of violation, request for
information or notification that it is potentially responsible for investigation
or cleanup of environmental conditions at the Real Property, demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of Environmental Laws affecting the Real Property or any
Borrower's interest therein (any of the foregoing is referred to herein as an
"Environmental Complaint") from any Person, including any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the "Authority"), then Borrower
shall, within five (5) Business Days, give written notice of same to Agent
detailing facts and circumstances of which Borrower is aware giving rise to the
Hazardous Discharge or Environmental Complaint. Such information is to be
provided to allow Agent to protect its security interest in the Real Property
and is not intended to create nor shall it create any obligation upon Agent or
any Lenders with respect thereto.
(e) Borrower shall promptly forward to Agent copies of any request
for information, notification of potential liability, demand letter relating to
potential responsibility with respect to the investigation or cleanup of
Hazardous Substances at any other site owned, operated or used by Borrower to
dispose of Hazardous Substances and shall continue to forward copies of
correspondence between Borrower and the Authority regarding such claims to
Agent until the claim is settled. Borrower shall promptly forward to Agent
copies of all documents and reports concerning a Hazardous Discharge at the Real
Property that Borrower is required to file under any Environmental Laws. Such
information is to be provided solely to allow Agent to protect Agent's security
interest in the Real Property and the Collateral.
(f) Borrower shall respond promptly to any Hazardous Discharge or
Environmental Complaint and take all necessary action in order to safeguard the
health of any Person and to avoid subjecting the Collateral or Real Property to
any Lien. If Borrower shall fail to respond promptly to any Hazardous
Discharge or Environmental Complaint or Borrower shall fail to comply with any
of the requirements of any Environmental Laws, Agent on behalf of Lenders may,
but without the obligation to do so, for the sole purpose of protecting Agent's
<PAGE>
interest in Collateral: (A) give such notices or (B) enter onto the Real
Property (or authorize third parties to enter onto the Real Property) and take
such actions as Agent (or such third parties as directed by Agent) deem
reasonably necessary or advisable, to clean up, remove, mitigate or otherwise
deal with any such Hazardous Discharge or Environmental Complaint. All
reasonable costs and expenses incurred by Agent and Lenders (or such third
parties) in the exercise of any such rights, including any sums paid in
connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Domestic Rate Loans constituting Revolving Advances shall
be paid upon demand by Borrower, and until paid shall be added to and become a
part of the Obligations secured by the Liens created by the terms of this
Agreement or any other agreement between Agent, any Lenders and Borrower.
(g) Promptly upon the written request of Agent from time to time,
based on the Agent's reasonable determination that such an assessment is
reasonable, Borrower shall provide Agent, at Borrower's expense, with an
environmental site assessment or environmental audit report prepared by an
environmental engineering firm acceptable in the reasonable opinion of Agent, to
assess with a reasonable degree of certainty the existence of a Hazardous
Discharge and the potential costs in connection with abatement, cleanup and
removal of any Hazardous Substances found on, under, at or within the Real
Property. Any report or investigation of such Hazardous Discharge proposed and
acceptable to an appropriate Authority that is charged to oversee the clean-up
of such Hazardous Discharge shall be acceptable to Agent. If such estimates,
individually or in the aggregate, exceed $100,000, Agent shall have the right to
require Borrower to post a bond, letter of credit or other security reasonably
satisfactory to Agent to secure payment of these costs and expenses.
(h) Borrower shall defend and indemnify Agent and Lenders and hold
Agent, Lenders and their respective employees, directors and officers harmless
from and against all loss, liability, damage and expense, claims, costs, fines
and penalties, including attorney's fees, suffered or incurred by Agent or
Lenders under or on account of any violation of Environmental Laws related to
the Real Property, including, without limitation, the assertion of any Lien
thereunder, with respect to any Hazardous Discharge, the presence of any
Hazardous Substances affecting the Real Property, whether or not the same
originates or emerges from the Real Property or any contiguous real estate,
including any loss of value of the Real Property as a result of the foregoing
except to the extent such loss, liability, damage and expense is attributable to
any Hazardous Discharge resulting from actions on the part of Agent or any
Lender. Borrower's obligations under this Section 4.19 shall arise upon the
discovery of the presence of any Hazardous Substances at the Real Property,
whether or not any federal, state, or local environmental agency has taken or
threatened any action in connection with the presence of any Hazardous
Substances. Borrower's obligation and the indemnifications hereunder shall
survive the termination of this Agreement.
<PAGE>
(i) For purposes of Section 4.19 and 5.7, all references to Real
Property shall be deemed to include all of Borrower's and Guarantor's right,
title and interest in and to its owned and leased premises.
4.20. Financing Statements . Except as respects the financing
---------------------
statements filed by Agent and the financing statements described on Schedule
--------
1.2, no financing statement covering any of the Collateral or any proceeds
thereof is on file in any public office.
V. REPRESENTATIONS AND WARRANTIES.
--------------------------------
Borrower represents and warrants as follows:
5.1. Authority . Borrower and Guarantor each has full power, authority
---------
and legal right to enter into this Agreement and the Other Documents and to
perform all its respective Obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and of the Other Documents
(a) are within Borrower's and Guarantor's respective corporate powers, have been
duly authorized, are not in contravention of law or the terms of Borrower's and
Guarantor's respective by-laws, certificate of incorporation or other
appli-cable documents relating to Borrower's and Guarantor's respective
incorporation or to the conduct of Borrower's or Guarantor's business or of any
material agreement or undertaking to which Borrower or Guarantor is a party or
by which Borrower or Guarantor is bound, and (b) will not conflict with nor
result in any breach in any of the provisions of or constitute a default under
or result in the creation of any Lien except Permitted Encumbrances upon any
asset of Borrower or Guarantor under the provisions of any agreement, charter
document, instrument, by-law, or other instrument to which Borrower or
Guarantor or its respective property is a party or by which it may be bound.
5.2. Incorporation and Qualification. (a) Borrower and Guarantor
---------------------------------
have each been duly incorporated as a corporation and is in good standing under
the laws of the state listed on Schedule 5.2(a) and each is qualified to do
---------------
business and is in good standing in the states listed on Schedule 5.2(a) which
---------------
constitute all states in which qualification and good standing are necessary for
Borrower and Guarantor to conduct its respective business and own its respective
property and where the failure to so qualify could reasonably be expected to
have a Material Adverse Effect. Borrower and Guarantor have each delivered to
Agent true and complete copies of its certificate of --incorporation and by-laws
and will promptly notify Agent of any amendment or changes thereto.
(b) Except as set forth on Schedule 5.2(b), Borrower has no
Subsidiaries.
<PAGE>
5.3. Survival of Representations and Warranties . All representations
-------------------------------------------
and warranties of Borrower and of Guarantor contained in this Agreement and the
Other Documents shall be true at the time of Borrower's and Guarantor's, as the
case maybe, execution of this Agreement and the Other Documents, and shall
survive the execution, delivery and acceptance thereof by the parties thereto
and the closing of the transactions described therein or related thereto.
5.4. Tax Returns . Borrower's and Guarantor's federal tax
------------
identification number is set forth on Schedule 5.4. Borrower and Guarantor have
------------
filed all federal, state and local tax returns and other reports each is
required by law to file and has paid all taxes, assessments, fees and other
governmental charges that are due and payable. Federal, state and local income
tax returns of Borrower and Guarantor have been examined and reported upon by
the appropriate taxing authority or closed by applicable statute and satisfied
for all fiscal years prior to and including the fiscal year ending March 31,
1991. The provision for taxes on the books of Borrower and of Guarantor are
adequate for all years not closed by applicable statutes, and for its current
fiscal year, and Borrower and Guarantor have no knowledge of any deficiency or
additional assessment in connection therewith not provided for on its respective
books.
5.5. Financial Statements .
---------------------
(a) The pro forma balance sheet of Borrower (the "Pro Forma
Balance Sheet") furnished to Agent and each Lender on the Closing Date reflects
the consummation of the transactions contemplated by the Stock Purchase
Agreement and under this Agreement (the "Transactions") and fairly reflects the
financial condition of Borrower as of the Closing Date after giving effect to
the Transactions, and has been prepared in good faith by the Borrower. The Pro
Forma Balance Sheet has been certified as accurate, complete and correct in all
material respects by the Chief Financial Officer of Borrower as having been
prepared in good faith.
(b) The twelve-month cash flow projections of the Borrower and
their projected balance sheets as of the Closing Date, copies of which are
annexed hereto as Exhibit 5.5(b) (the "Projections") were prepared by the Chief
--------------
Financial Officer of Borrower, are based on underlying assumptions which provide
a reasonable basis for the projections contained therein and reflect Borrower's
judgment based on present circumstances of the most likely set of conditions and
course of action for the projected period. The cash flow Projections together
with the Pro Forma Balance Sheet, are referred to as the "Pro Forma Financial
Statements".
5.6. Corporate Name. Neither Borrower nor Guarantor have been known
---------------
by any other corporate name in the past five years and does not sell Inventory
under any other name except as set forth on Schedule 5.6, nor, except as set
------------
forth on Schedule 5.6, has Borrower or Guarantor been the surviving corporation
------------
of a merger or consolidation or acquired all or substantially all of the assets
of any Person during the preceding five (5) years.
<PAGE>
5.7. O.S.H.A. and Environmental Compliance.
----------------------------------------
(a) To the best of its knowledge, Borrower has duly complied with,
and its facilities, business, assets, property, leaseholds and Equipment are in
compliance in all material respects with, the provisions of the Federal
Occupational Safety and Health Act, the Environmental Protection Act, RCRA and
all other Environmental Laws; to the best of its knowledge, there have been no
outstanding citations, notices or orders of non-compliance issued to Borrower
or Guarantor or relating to its business, assets, property, leaseholds or
Equipment under any such laws, rules or regulations.
(b) Borrower and Guarantor have been issued all required federal,
state and local licenses, certificates or permits relating to all applicable
Environmental Laws.
(c) (i) There are no visible signs of releases, spills,
discharges, leaks or disposal (collectively referred to as "Releases") of
Hazardous Substances at, upon, under or within any Real Property or any premises
leased by Borrower; (ii) there are no underground storage tanks or
polychlorinated biphenyls on the Real Property or any premises leased by
Borrower; (iii) neither the Real Property nor any premises leased by Borrower
has ever been used as a treatment, storage or disposal facility of Hazardous
Waste; and (iv) no Hazardous Substances are present on the Real Property or any
premises leased by Borrower, excepting such quantities as are handled in
accordance with all applicable manufacturer's instructions and governmental
regulations and in proper storage containers and as are necessary for the
operation of the commercial business of Borrower or Guarantor or of its
tenants.
5.8. Solvency; No Litigation, Violation, Indebted-ness or Default .
----------------------------------------------------------------
(a) After giving effect to the Transactions, Borrower and
Guarantor will be solvent, able to pay its debts as they mature, has capital
sufficient to carry on their business and all businesses in which they are about
to engage, and (i) as of the Closing Date, the fair present saleable value of
its assets, calculated on a going concern basis, is in excess of the amount of
its liabilities and (ii) subsequent to the Closing Date, the fair saleable value
of its assets (calculated on a going concern basis) will be in excess of the
amount of its liabilities.
(b) Except as disclosed in Schedule 5.8(b), Borrower does not
---------------
have (i) any pending or threatened litigation, arbitration, actions or
proceedings which involve the possibility of having a Material Adverse Effect on
Borrower, and (ii) any liabilities nor indebt-edness for borrowed money other
than the Obligations.
(c) Borrower is not in violation of any applicable statute,
regulation or ordinance in any respect which could reasonably be expected to
have a Material Adverse Effect on Borrower, nor is Borrower in violation of
any order of any court, governmental authority or arbitration board or tribunal.
<PAGE>
(d) Neither Borrower nor any member of the Controlled Group
maintains or contributes to any Plan other than those listed on Schedule 5.8(d)
---------------
hereto. Except as set forth in Schedule 5.8(d), (i) no Plan has incurred any
---------------
"accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Code, whether or not waived, and Borrower and each member
of the Controlled Group has met all applicable minimum funding require-ments
under Section 302 of ERISA in respect of each Plan, (ii) each Plan which is
intended to be a qualified plan under Section 401(a) of the Code as currently in
effect has been determined by the Internal Revenue Service to be qualified under
Section 401(a) of the Code and the trust related thereto is exempt from federal
income tax under Section 501(a) of the Code, (iii) neither Borrower nor any
member of the Controlled Group has incurred any liability to the PBGC other than
for the payment of premiums, and there are no premium payments which have become
due which are unpaid, (iv) no Plan has been terminated by the plan administrator
thereof nor by the PBGC, and there is no occurrence which would cause the PBGC
to institute proceedings under Title IV of ERISA to terminate any Plan, (v) at
this time, the current value of the assets of each Plan exceeds the present
value of the accrued benefits and other liabilities of such Plan and neither
Borrower nor any member of the Controlled Group knows of any facts or
circumstances which would materially change the value of such assets and accrued
benefits and other liabili-ties, (vi) neither Borrower nor any member of the
Controlled Group has breached any of the responsibil-i-ties, obligations or
duties imposed on it by ERISA with respect to any Plan, (vii) neither Borrower
nor any member of a Controlled Group has incurred any liability for any excise
tax arising under Section 4972 or 4980B of the Code, and no fact exists which
could give rise to any such liability, (viii) neither Borrower nor any member of
the Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has
engaged in a "prohibit-ed transaction" described in Section 406 of the ERISA or
Section 4975 of the Code nor taken any action which would consti-tute or result
in a Termination Event with respect to any such Plan which is subject to ERISA,
(ix) Borrower and each member of the Controlled Group has made all
contribu-tions due and payable with respect to each Plan, (x) there exists no
event described in Section 4043(b) of ERISA, for which the thirty (30) day
notice period contained in 29 CFR '2615.3 has not been waived, (xi) neither
Borrower nor any member of the Controlled Group has any fiduciary responsibility
for investments with respect to any plan existing for the benefit of persons
other than employees or former employees of Borrower and any member of the
Controlled Group, and (xii) neither Borrower nor any member of the Controlled
Group has withdrawn, completely or partially, from any Multiemployer Plan so as
to incur liability under the Multiemployer Pension Plan Amendments Act of 1980.
5.9. Patents, Trademarks, Copyrights and Licenses . All patents,
------------------------------------------------
patent applications, trademarks, trademark applica-tions, service marks, service
mark applications, copyrights, copyright applications, design rights,
tradenames, assumed names, trade secrets and licenses owned or utilized by
Borrower are set forth on Schedule 5.9, are valid and have, where required, been
------------
duly registered or filed with all appropriate governmental authorities and
constitute all of the intellectual property rights which are necessary for the
<PAGE>
operation of its business; there is no objection to or pending challenge to the
validity of any such material patent, trademark, copyright, design right,
tradename, trade secret or license and Borrower is not aware of any grounds for
any challenge, except as set forth in Schedule 5.9 hereto. Each patent, patent
------------
application, patent license, trademark, trademark application, trademark
license, service mark, service mark application, service mark license,
copyright, copyright application and copyright license owned or held by
Borrower and all trade secrets used by Borrower consist of original material or
property developed by Borrower or was lawfully acquired by Borrower from the
proper and lawful owner thereof. Each of such items has been maintained so as
to preserve the value thereof from the date of creation or acquisition thereof.
With respect to all software used by Borrower, Borrower is in possession of all
source and object codes related to each piece of software or is the beneficiary
of a source code escrow agreement, each such source code escrow agreement being
listed on Schedule 5.9 hereto.
-------------
5.10. Licenses and Permits . Except as set forth in Schedule 5.10,
---------------------- -------------
Borrower (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal, state
or local law or regulation for the operation of its business in each
jurisdiction wherein it is now conducting or proposes to conduct business and
where the failure to procure such licenses or permits could have a Material
Adverse Effect.
5.11. Default of Indebtedness. Borrower is not in default in the
-------------------------
payment of the principal of or interest on any Indebtedness in excess of $25,000
or under any instrument or agreement under or subject to which any Indebtedness
has been issued and no event has occurred under the provisions of any such
instrument or agreement which with or without the lapse of time or the giving of
notice, or both, constitutes or would constitute an event of default thereunder.
5.12. No Default . Borrower is not in default in the payment or
-----------
performance of any of its material contractual obligations and no Default has
occurred.
5.13. No Burdensome Restrictions. Neither Borrower nor Guarantor is a
---------------------------
party to any contract or agreement the performance of which could have a
Material Adverse Effect. Borrower nor Guarantor has agreed or consented to
cause or permit in the future (upon the happening of a contingency or otherwise)
any of its property, whether now owned or hereafter acquired, to be subject to a
Lien which is not a Permitted Encumbrance.
5.14 No Labor Disputes . Neither Borrower nor Guarantor is involved in
-----------------
any labor dispute; there are no strikes or walkouts or union organization of
Borrower's or of Guarantor's employees threatened or in existence and no labor
contract is scheduled to expire during the Term other than as set forth on
Schedule 5.14 hereto.
---------
<PAGE>
5.15. Margin Regulations . Neither Borrower nor Guarantor is
-------------------
engaged, nor will it engage, principally or as one of its important activities,
in the business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U or Regulation G of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect. No
part of the proceeds of any Advance will be used for "purchasing" or "carrying"
"margin stock" as defined in Regulation U of such Board of Governors.
5.16. Investment Company Act . Neither Borrower nor Guarantor is an
------------------------
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, nor is it controlled by such a
company.
5.17. Disclosure . No representation or warranty made by Borrower in
----------
this Agreement or in the Stock Purchase Agreement, or in any financial
statement, report, certificate or any other document furnished in connection
herewith or therewith contains any untrue statement of a material fact or omits
to state any material fact necessary to make the statements herein or therein
not misleading. There is no fact known to Borrower or which reasonably should
be known to Borrower which Borrower has not disclosed to Lender in writing with
respect to the transactions contemplated by the Stock Purchase Agreement, or
this Agreement which could reasonably be expected to have a Material Adverse
Effect.
5.18. Delivery of Stock Purchase Agreement . Agent has received
----------------------------------------
complete copies of the Stock Purchase Agreement (including all exhibits,
schedules and disclosure letters referred to therein or delivered pursuant
thereto, if any) and all amendments thereto, waivers relating thereto and other
side letters or agreements affecting the terms thereof. None of such documents
and agreements has been amended or supplemented, nor have any of the provisions
thereof been waived, except pursuant to a written agreement or instrument which
has heretofore been delivered to Agent.
5.19. [INTENTIONALLY LEFT BLANK]
----------------------------
5.20. Conflicting Agreements . No provision of any mortgage,
-----------------------
indenture, contract, agreement, judgment, decree or order binding on Borrower
or on Guarantor or affecting the Collateral or the Guarantor Collateral
conflicts with, or requires any Consent which has not already been obtained to,
or would in any way prevent the execution, delivery or performance of, the terms
of this Agreement or the Other Documents.
5.21. Application of Certain Laws and Regulations . Neither Borrower,
--------------------------------------------
Guarantor nor any Affiliate of Borrower is subject to any statute, rule or
regulation which regulates the incurrence of any Indebtedness, including without
limitation, statutes or regulations relative to common or interstate carriers or
<PAGE>
to the sale of electricity, gas, steam, water, telephone, telegraph or other
public utility services.
5.22 Year 2000. Borrower and Guarantor have reviewed the areas within
---------
its business and operations which could be adversely affected by, and have
developed or are developing a program to address on a timely basis, the risk
that certain computer applications used by Borrower or Guarantor (or any of its
respective material suppliers, customers or vendors) may be unable to recognize
and perform properly date-sensitive functions involving dates prior to and after
December 31, 1999 (the "Year 2000 Problem"). The Year 2000 Problem will not
result in any Material Adverse Effect.
VI. AFFIRMATIVE COVENANTS.
----------------------
Borrower shall and shall cause Guarantor, until payment in full of the
Obligations and termination of this Agreement:
6.1. Payment of Fees. Pay to Agent and to Lenders on demand all usual
---------------
and customary fees and expenses which Agent and any Lender incurs in connection
with (a) the forwarding of Advance proceeds and (b) the establishment and
maintenance of any Blocked Accounts or Depository Accounts as provided for in
Section 4.15(h). Agent may, without making demand, charge Borrower's Account
for all such fees and expenses.
6.2. Conduct of Business and Maintenance of Exis-tence and Assets.
----------------------------------------------------------------
(a) Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this
Agreement), including, without limitation, all licenses, patents, copyrights,
design rights, tradenames, trade secrets and trademarks and take all actions
necessary to enforce and protect the validity of any intellectual property right
or other right included in the Collateral; (b) keep in full force and effect its
existence and comply in all material respects with the laws and regulations
governing the conduct of its business where the failure to do so could
reasonably be expected to have a Material Adverse Effect; and (c) make all such
reports and pay all such franchise and other taxes and license fees and do all
such other acts and things as may be lawfully required to maintain its rights,
licenses, leases, powers and franchises under the laws of the United States or
any political subdivision thereof.
6.3. Violations . Promptly notify Agent in writing of any violation of
----------
any law, statute, regulation or ordinance of any Official Body, or of any agency
thereof, applicable to Borrower or Guarantor which could reasonably be expected
to have a Material Adverse Effect on Borrower or Guarantor.
<PAGE>
6.4. Government Receivables . When requested by Agent to do so, take
-----------------------
all steps necessary to protect Agent's and Lenders' interest in the Collateral
and the Guarantor Collateral under the Federal Assignment of Claims Act or other
applicable state or local statutes or ordinances and deliver to Agent
appropriately endorsed, any instrument or chattel paper connected with any
Receivable arising out of contracts between Borrower (or accounts receivable
arising out of contracts between Guarantor) and the United States, any state or
any department, agency or instrumentality of any of them.
6.5. Minimum Fixed Charge Coverage. Maintain at all times on a
--------------------------------
consolidated basis a ratio of Minimum Fixed Charge Coverage of greater than 1.20
to 1 for any period of four (4) consecutive fiscal quarters.
6.6. Minimum Interest Coverage. Cause or permit the Minimum Interest
--------------------------
Coverage for any period of four (4) consecutive fiscal quarters of the Borrower
on a consolidated basis to be greater than the ratio of 4.0 to 1.
6.7. Maximum Leverage Ratio. Cause or permit the Maximum Leverage
------------------------
Ratio for any period of four (4) consecutive fiscal quarters of the Borrower to
be less than the ratio of 2.0 to 1.
6.8. Execution of Supplemental Instruments. Execute and deliver to
----------------------------------------
Agent from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral or the Guarantor Collateral, and such other instruments as Agent may
request, in order that the full intent of this Agreement may be carried into
effect.
6.9. Payment of Indebtedness; Taxes. Pay, discharge or otherwise
---------------------------------
satisfy at or before maturity (subject, where applicable, to specified grace
periods and, in the case of the trade payables, to normal payment practices) all
its obligations and liabilities of whatever nature, including but not limited to
federal, state and local taxes except when the failure to do so could not
reasonably be expected to have a Material Adverse Effect or when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and Borrower or Guarantor shall have provided for such reserves as
Agent may reasonably deem proper and necessary, subject at all times to any
applicable subordination arrangement in favor of Agent and/or Lenders.
6.10. Standards of Financial Statements. Cause all financial
------------------------------------
statements referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, and 9.13 as
to which GAAP is applicable to be complete and correct in all material respects
(subject, in the case of interim financial statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except as
concurred in by such reporting accountants or officer, as the case may be, and
disclosed therein).
<PAGE>
6.11. Exercise of Rights . Enforce all of its rights under the Stock
--------------------
Purchase Agreement including, but not limited to, all indemnification rights
and pursue all remedies available to it with diligence and in good faith in
connection with the enforcement of any such rights.
6.12 Interest Rate Protection. Within sixty (60) days of the Closing
-------------------------
Date, obtain
Interest Rate Protection on terms and conditions reasonably acceptable to Agent
and Borrower.
6.13 Key Man Life Insurance. Use its best efforts, within ninety
-------------------------
(90) days of the
Closing Date, to obtain evidence of key man life insurance on Joseph R. Mallon,
Jr. and Damon Germantown in such amounts as are reasonably acceptable to Agent
and Borrower.
VII. NEGATIVE COVENANTS.
-------------------
Borrower shall not and shall cause Guarantor not to, until satisfaction in
full of the Obligations and termination of this Agreement:
7.1. Merger, Consolidation, Acquisition and Sale of Assets .
-----------------------------------------------------------
(a) Enter into any merger, consolidation or other reorganization
with or into any other Person or acquire all or a substantial portion of the
assets or stock of any Person or permit any other Person to consolidate with or
merge with it.
(b) Sell, lease, transfer or otherwise dispose of any Collateral
(except as permitted hereunder) or, in the case of Guarantor, Guarantor
Collateral (except as permitted under the Guarantor Security Agreement), or, in
the case of Measurement LTD., Jingliang Electronics Co., LTD., any of their
properties or assets, except in the ordinary course of their business.
7.2. Creation of Liens. Create or suffer to exist any Lien or
-------------------
transfer upon or against any of its property or assets or the properties or
assets of Measurement LTD., Jingliang Electronics Co., LTD or IC Sensors, Inc.
now owned or hereafter acquired, except Permitted Encumbrances.
7.3. Guarantees. Become liable upon the obligations of any Person by
----------
assumption, endorsement or guaranty thereof or otherwise (other than to Agent
and/or Lenders) except the endorsement of checks in the ordinary course of
business.
<PAGE>
7.4. Investments. Except as permitted pursuant to Section 7.12(c)
-----------
purchase or acquire obligations or stock of, or any other interest in, any
Person including, without limitation, capital contributions to the Guarantor,
except (a) obligations issued or guaranteed by the United States of America or
any agency thereof, (b) commercial paper with maturities of not more than 180
days and a published rating of not less than A-1 or P-1 (or the equivalent
rating), (c) certificates of time deposit and bankers' acceptances having
maturities of not more than 180 days and repurchase agreements backed by United
States government securities of a commercial bank if (i) such bank has a
combined capital and surplus of at least $500,000,000, or (ii) its debt
obligations, or those of a holding company of which it is a Subsidiary, are
rated not less than A (or the equivalent rating) by a nationally recognized
investment rating agency, and (d) U.S. money market funds that invest solely in
obligations issued or guaranteed by the United States of America or an agency
thereof.
7.5. Loan. Except as permitted pursuant to Section 7.12(c), make
-----
advances, loans or extensions of credit to any Person, including without
limitation, any Parent, Subsidiary or Affiliate.
7.6. Capital Expenditures. Contract for, purchase or make any
---------------------
expenditure or commitments for fixed or capital assets (including capitalized
leases) in any fiscal year in an aggregate amount in excess of $3,500,000.
7.7. Dividends. Declare, pay or make any dividend or distribution on
---------
any shares of the common stock or preferred stock of Borrower (other than
dividends or distributions payable in its stock or split-ups or
reclassifications of its stock or membership interests) or apply any of its
funds, property or assets to the purchase, redemption or other retirement of any
common or preferred stock, or of any options to purchase or acquire any such
shares of common or preferred stock of Borrower or of Guarantor.
7.8. Indebtedness. Create, incur, assume or suffer to exist any
------------
Indebtedness (exclusive of trade debt) except in respect of Indebtedness to
Lenders; Indebtedness incurred for capital expenditures permitted under Section
7.6 hereof; and Indebtedness assumed under the Acquisition Agreement and the
Stock Purchase Agreement; provided, however, that the maximum aggregate amount
-------- -------
outstanding at any time of such Indebtedness shall not exceed $250,000.
7.9. Nature of Business. Substantially change the nature of the
--------------------
business in which it is presently engaged, nor except as specifically permitted
hereby purchase or invest, directly or indirectly, in any assets or property
other than in the ordinary course of business for assets or property which are
useful in, necessary for and are to be used in its business as presently
conducted.
<PAGE>
7.10. Transactions with Affiliates. Except for transactions between
------------------------------
the Borrower and its Subsidiaries, directly or indirectly, purchase, acquire or
lease any property from, or sell, transfer or lease any property to, or
otherwise deal with, any Affiliate of Borrower or of Guarantor.
7.11. Leases. Enter as lessee into any lease arrangement not
------
currently existing for real or personal property (unless capitalized and
permitted under Section 7.6 hereof) if after giving effect thereto, aggregate
annual rental payments for all additional leased property would exceed $250,000
in any one fiscal year.
7.12. Subsidiaries.
------------
(a) Form any Subsidiary unless (i) such Subsidiary expressly joins
in this Agreement as a borrower and becomes jointly and severally liable for the
obligations of Borrower hereunder, under the Note, and under any other agreement
between Borrower and Agent and/or any Lender and (ii) Agent shall have received
all documents, including legal opinions, it may reasonably require to establish
compliance with each of the foregoing conditions.
(b) Enter into any partnership, joint venture or similar
arrangement.
(c) Permit investment in or cash due to Borrower from all of
Borrower's foreign and domestic subsidiaries in an amount at any time
outstanding aggregating in excess of $3,000,000 during any fiscal year of
Borrower outstanding at any time, to be determined quarterly, provided, however,
at all times advances to Guarantor shall be limited to Guarantor's own Borrowing
Base.
7.13. Fiscal Year and Accounting Changes . Change its fiscal year from
----------------------------------
March 31 or make any change (i) in accounting treatment and reporting practices
except as required by GAAP or (ii) in tax reporting treatment except as required
by law.
7.14. Pledge of Credit . Now or hereafter pledge Lender's credit on
------------------
any purchases or for any purpose whatsoever or use any portion of any Advance in
or for any business other than Borrower's business as conducted on the date of
this Agreement.
7.15. Amendment of Certificate of Incorporation , By-Laws . Amend,
-------------------------------------------------------
modify or waive any term or material provision of its Certificate of
Incorporation or By-Laws unless required by law.
7.16. Compliance with ERISA . (i) (x) Maintain, or permit any member
-----------------------
of the Controlled Group to maintain, or (y) become obligated to contribute, or
permit any member of the Controlled Group to become obligated to contribute, to
any Plan, other than those Plans disclosed on Schedule 5.8(d), (ii) engage, or
---------------
<PAGE>
permit any member of the Controlled Group to engage, in any non-exempt
"prohibited transaction", as that term is defined in section 406 of ERISA and
Section 4975 of the Code, (iii) incur, or permit any member of the Controlled
Group to incur, any "accumulated funding deficiency", as that term is defined in
Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any
member of the Controlled Group to terminate, any Plan where such event could
result in any liability of Borrower, Guarantor or any member of the Controlled
Group or the imposition of a lien on the property of Borrower, Guarantor or any
member of the Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or
permit any member of the Controlled Group to assume, any obligation to
contribute to any Multiemployer Plan not disclosed on Schedule 5.8(d), (vi)
---------------
incur, or permit any member of the Controlled Group to incur, any withdrawal
liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of the
occurrence of any Termination Event, (viii) fail to comply, or permit a member
of the Con-trolled Group to fail to comply, with the requirements of ERISA or
the Code or other applicable laws in respect of any Plan, (ix) fail to meet, or
permit any member of the Controlled Group to fail to meet, all minimum funding
requirements under ERISA or the Code or postpone or delay or allow any member of
the Controlled Group to postpone or delay any funding requirement with respect
of any Plan.
7.17. Prepayment of Indebtedness . At any time, directly or
----------------------------
indirectly, prepay any Indebtedness (other than to Lenders), or repurchase,
redeem, retire or otherwise acquire any Indebtedness of Borrower or Guarantor.
7.18. Other Agreements . Enter into any material amendment, waiver or
-----------------
modification of the Acquisition Agreement, the Stock Purchase Agreement or any
related agreements.
VIII. CONDITIONS PRECEDENT.
---------------------
8.1. Conditions to Initial Advances . The agreement of Agent and
---------------------------------
Lenders to make the initial Advances requested to be made on the Closing Date is
subject to the satisfaction, or waiver by Lenders, immediately prior to or
concurrently with the making of such Advances, of the following conditions
precedent:
(a) Note . Agent shall have received the Note duly executed and
----
delivered by an authorized officer of Borrower;
(b) Filings, Registrations and Recordings . Each document
----------------------------------------
(including, without limitation, any Uniform Commercial Code financing statement)
required by this Agreement, any related agreement or under law or reasonably
requested by the Agent to be filed, registered or recorded in order to create,
in favor of Agent, a perfected security interest in or lien upon the Collateral
<PAGE>
and the Guarantor Collateral shall have been properly filed, registered or
recorded in each jurisdiction in which the filing, registration or recordation
thereof is so required or requested, and Agent shall have received an
acknowledgment copy, or other evidence satisfactory to it, of each such filing,
registration or recordation and satisfactory evidence of the payment of any
necessary fee, tax or expense relating thereto;
(c) Corporate Proceedings of Borrower and Guarantor . Agent shall
-----------------------------------------------
have received a copy of the resolutions in form and substance reasonably
satisfactory to Agent, of the Board of Directors and of Guarantor of Borrower
and of Guarantor authorizing (i) the execution, delivery and performance of this
Agreement, the Notes, any related agreements, the Acquisition Agreement and the
Stock Purchase Agreement (collectively the "Documents") and (ii) the granting by
Borrower or by the Guarantor, as the case may be, of the security interests in
and liens upon the Collateral or the Guarantor Collateral certified by the
Secretary or an Assistant Secretary or other authorized representative of
Borrower or Guarantor, as the case may be, as of the Closing Date; and, such
certificate shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded as of the date of such certificate;
(d) Incumbency Certificates of Borrower and Guarantor . Agent
-----------------------------------------------------
shall have received a certificate of the Secretary or an Assistant Secretary or
other authorized representative of Borrower or of Guarantor, dated the Closing
Date, as to the incumbency and signature of the officers of Borrower or of
Guarantor, as the case maybe, executing this Agreement, any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary or other authorized
representative of the Borrower or of the Guarantor, as the case may be;
(e) Certificates . Agent shall have received a copy of the
------------
Certificate of Incorporation of Borrower and Guarantor, and all amendments
thereto, certified by the Secretary of State or other appropriate official of
its jurisdiction of formation together with copies of the By-Laws of Borrower
and of Guarantor certified as accurate and complete by the Secretary or other
authorized representative of Borrower or of Guarantor, as the case may be;
(f) Good Standing Certificates . Agent shall have received good
----------------------------
standing certificates for Borrower and for Guarantor dated not more than 10 days
prior to the Closing Date, issued by the Secretary of State or other appropriate
official of Borrower's or of Guarantor's jurisdiction of incorporation and each
jurisdiction where the conduct of Borrower's or of Guarantor's business
activities or the ownership of its properties necessitates qualification;
(g) Legal Opinions . Agent shall have received the executed legal
--------------
opinions of John D. Arnold, Esq. and McCarter & English in form and substance
satisfactory to Agent which shall cover such matters incident to the
transactions contemplated by this Agreement, the Note, and related agreements as
Agent reasonably require and Borrower hereby authorizes and directs such counsel
to deliver such opinions to Agent and Lenders.
<PAGE>
(h) No Litigation . No litigation, in-vestiga-tion or
--------------
proceeding before or by any arbitrator or Official Body shall be continuing or
threatened against Borrower or Guarantor, or against the members, officers or
directors of Borrower or Guarantor or against the Seller or its officers and
directors (A) in connection with the Other Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of Agent, is deemed
material or (B) which could, in the reasonable opinion of Agent have a Material
Adverse Effect; and no injunction, writ, restrain-ing order or other order of
any nature materially adverse to Borrower, Guarantor or Seller or the conduct
of its business or inconsistent with the due consummation of the Transactions
shall have been issued by any Official Body;
(i) Financial Condition Certificates . Agent shall have received
---------------------------------
an executed Financial Condition Certificate in the form of Exhibit 8.1(i).
--------------
(j) Collateral Examination . Grant Thornton shall have completed
-----------------------
an independent financial review of IC Sensors, Inc. (including field audits) and
received appraisals, the results of which shall be satisfactory in form and
substance to Agent, of the Receiv-ables, Inventory, General Intangibles, Real
Property , Leasehold Interests and Equipment of Borrower, Guarantor and Seller
and all books and records in connection therewith;
(k) Fees. Agent shall have received all fees payable to Agent
----
and Lenders on or prior to the Closing Date pursuant to Article III hereof ;
(l) Pro Forma Financial Statements. Agent shall have received a
-------------------------------
copy of the Pro Forma Financial Statements which shall be satisfactory in all
respects to Lenders; an independent due diligence examination on the books or
records (including Guarantor Collateral), by Grant Thornton;
(m) Stock Purchase Documents. Agent shall have received final
--------------------------
executed copies of the Stock Purchase Agreement and all related agreements,
documents and instruments as in effect on the Closing Date and the transactions
contemplated by such documenta-tion shall be consummated prior to the making of
the initial Advance.
(n) Capital Structure. Agent shall have received a certificate
------------------
signed by the Chief Financial Officer of the Borrower, in form and substance
satisfactory to Agent, which shall set forth in reasonable detail the capital
structure of the Borrower as at the Closing Date.
(o) Insurance. Agent shall have received in form and substance
---------
satisfactory to Agent, certified copies of Borrower's and Guarantor's casualty
insurance policies, together with loss payable endorsements on Agent's standard
form of loss payee endorsement naming Lender as loss payee, and certified copies
of Borrower's and Guarantor's liability insurance policies, together with
endorsements naming Agent as a co-insured;
<PAGE>
(p) Stock Pledge Agreement, Other Documents. Agent shall have
------------------------------------------
received executed Stock Pledge Agreement, Assignment of Patents and all Other
Documents, each in form and substance satisfactory to Lenders;
(q) Environmental Reports. Agent shall have received all
----------------------
environmental studies and reports prepared by independent environmental
engineering firms with respect to all Real Property owned or leased by Borrower;
(r) Payment Instructions. Agent shall have received written
---------------------
instructions from Borrower directing the application of proceeds of the initial
Advances made pursuant to this Agreement;
(s) Blocked Accounts. Agent shall have received duly executed
-----------------
agreements establishing the Blocked Accounts or Depository Accounts with
financial institutions acceptable to Lender for the collection or servicing of
the Receivables and proceeds of the Collateral;
(t) Consents. Agent shall have received any and all Consents
--------
necessary to permit the effectuation of the transactions contemplated by this
Agreement and the Other Documents; and, Agent shall have received such Consents
and waivers of such third parties as might assert claims with respect to the
Collateral and the Guarantor Collateral, as Agent and its counsel shall deem
necessary;
(u) No Adverse Material Change. (i) since December 31, 1999,
-----------------------------
there shall not have occurred any event, condition or state of facts which could
reasonably be expected to have a Material Adverse Effect and (ii) no
representations made or information supplied to Agent shall have been proven to
be inaccurate or misleading in any material respect;
(v) Leasehold Agreements. Agent shall have received landlord,
---------------------
mortgagee or warehouseman agreements satisfactory to Agent with respect to all
premises leased by Borrower or by Guarantor at which Inventory is located;
(w) Contract Review. Agent shall have reviewed all material
----------------
contracts of Borrower, Guarantor, and Seller including, without limitation,
leases, union contracts, labor contracts, vendor supply contracts, license
agreements and distributorship agreements and such contracts and agreements
shall be satisfactory in all respects to Agent;
(x) Closing Certificate. Agent shall have received a closing
--------------------
certificate signed by the Chief Financial Officer of Borrower and of Guarantor
dated as of the date hereof, stating that (i) all representations and warranties
set forth in this Agreement and the Other Documents are true and correct on and
as of such date, (ii) Borrower an Guarantor is on such date in compliance with
all the terms and provisions set forth in this Agreement and the Other
Documents, (iii) Borrower and Guarantor is on such date in compliance with all
applicable laws, statutes, rules and regulations of any applicable Official
Body, and (iv) on such date no Default or Event of Default has occurred or is
continuing;
<PAGE>
(y) Borrowing Base. Agent shall have received evidence from
---------------
Borrower and Guarantor that the aggregate amount of Eligible Receivables and
Eligible Inventory is sufficient in value and amount to support Advances in the
amount requested by Borrower and evidence from Borrower there exists Undrawn
Availability under the Revolving Advances of $2,500,000 on the Closing Date;
(z) Guaranty, Guarantor Security Agreement. Agent shall have
----------------------------------------
received the
Guaranty and the Guarantor Security Agreement, duly executed by an authorized
officer of Guarantor.
(aa) Agent shall have received evidence from Borrower that the
Borrower has contributed at least $2,000,000 of its own funds to acquire the
stock of IC Sensors, Inc.
(bb) Other. All corporate and other proceedings, and all
-----
documents, instruments and other legal matters in connec-tion with the
Transactions shall be satisfactory in form and substance to Agent and its
counsel.
8.2. Conditions to Each Advance. The agreement of Agent and Lenders
----------------------------
to make any Advance requested to be made on any date (including, without
limitation, the initial Advance), is subject to the satisfaction of the
following conditions precedent as of the date such Advance is made:
(a) Representations and Warranties. Each of the representations
-------------------------------
and warranties made by Borrower an by the Guarantor in or pursuant to this
Agreement and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and as of such date;
(b) No Default. No Event of Default or Default shall have
-----------
occurred and be continuing on such date, or would exist after giving effect to
the Advances requested to be made, on such date and, in the case of the initial
Advance, after giving effect to the consummation of the transac-tions
contemplated by the Stock Purchase Agreement; provided, however that Lenders, in
-------- -------
their sole discretion, may continue to make Advances notwithstanding the
existence of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default; and
(c) Maximum Advances. In the case of any Advances requested to
-----------------
be made, after giving effect thereto, the aggregate Advances shall not exceed
the maximum amount of Advances permitted under Section 2.1 hereof.
Each request for an Advance by Borrower hereunder shall constitute a
representation and warranty by Borrower as of the date of such Advance that the
conditions contained in this subsection shall have been satisfied.
<PAGE>
IX. INFORMATION AS TO BORROWER AND GUARANTOR.
---------------------------------------------
Borrower shall and shall cause Guarantor to, until satisfaction in full of
the Obligations and the termination of this Agreement:
9.1. Disclosure of Material Matters. Immediately upon learning
---------------------------------
thereof, report to Agent all matters materially affecting the value,
enforceability or collectibility of any portion of the Collateral or Guarantor's
Collateral, including, without limitation, Borrower's or Guarantor's
reclamation or repossession of, or the return to Borrower or to Guarantor of, a
material amount of goods or claims or disputes asserted by any Customer or other
obligor.
9.2. Schedules . Deliver to Agent on or before the twentieth (20th)
---------
day of each month as and for the prior month (a) accounts receivable ageings,
(b) accounts payable schedules and (c) Inventory reports. In addition, Borrower
and Guarantor will deliver to Agent at such intervals as Agent may require: (i)
confirmatory assignment schedules, (ii) copies of Customer's invoices, (iii)
evidence of shipment or delivery, and (iv) such further schedules, documents
and/or information regarding the Collateral or Guarantor Collateral as Agent may
require including, without limitation, trial balances and test verifications.
Agent shall have the right to confirm and verify all Receivables by any manner
and through any medium it considers advisable and do whatever it may deem
reason-ably necessary to protect its interests hereunder. The items to be
provided under this Section are to be in form satisfactory to Agent and executed
by Borrower or by Guarantor, as the case may be and delivered to Agent from time
to time solely for Agent's convenience in main-taining records of the Collateral
and the Guarantor Collateral, and Borrower's failure to deliver any of such
items to Agent shall not affect, terminate, modify or otherwise limit Lender's
Lien with respect to the Collateral or Guarantor Collateral.
9.3. Environmental Reports . Furnish Agent, concurrently with the
----------------------
delivery of the financial statements referred to in Sections 9.7 and 9.8, with a
certificate signed by the President or Manager of Borrower stating, to the best
of his knowledge, that Borrower and Guarantor is in compliance in all material
respects with all federal, state and local laws relating to environmental
protection and control and occupational safety and health. To the extent
Borrower or Guarantor is not in compliance with the foregoing laws, the
certificate shall set forth with specificity all areas of non-compliance and the
proposed action Borrower or Guarantor will implement in order to achieve full
compliance.
9.4. Litigation . Promptly notify Agent in writing of any litigation,
----------
suit or administrative proceeding affecting Borrower or Guarantor, whether or
not the claim is covered by insurance, and of any suit or administrative
proceeding, which in any such case could reasonably be expected to have a
Material Adverse Effect.
<PAGE>
9.5. Material Occurrences . Promptly notify Agent in writing upon the
---------------------
occurrence of (a) any Event of Default or Default; (b) any event, development or
circumstance whereby any financial statements or other reports furnished to
Agent fail in any material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating results of Borrower
as of the date of such statements; (c) any accumulated retirement plan funding
deficiency which, if such deficiency continued for two plan years and was not
corrected as provided in Section 4971 of the Code, could subject Borrower or
Guarantor to a tax imposed by Section 4971 of the Code; (d) each and every
default by Borrower or Guarantor which might result in the acceleration of the
maturity of any Indebtedness, including the names and addresses of the holders
of such Indebtedness with respect to which there is a default existing or with
respect to which the maturity has been or could be accelerated, and the amount
of such Indebtedness; and (e) any other development in the business or affairs
of Borrower or Guarantor which could reasonably be expected to have a Material
Adverse Effect; in each case describing the nature thereof and the action
Borrower or Guarantor, as the case may be, proposes to take with respect
thereto.
9.6. Government Receivables . Notify Agent immediately if any of its
-----------------------
Receivables (or accounts receivable, in the case of the Guarantor arise out of
contracts between Borrower (or Guarantor) and the United States, any state, or
any department, agency or instrumentality of any of them.
9.7. Annual Financial Statements . Furnish Agent and each Lender
-----------------------------
within ninety (90) days after the end of each fiscal year of Borrower on a
consolidated basis, financial statements of Borrower including, but not limited
to, statements of income and stockholders' or members' equity and cash flow from
the beginning of the current fiscal year to the end of such fiscal year and the
balance sheet as at the end of such fiscal year, all prepared in accordance with
GAAP applied on a basis consistent with prior practices, and in reasonable
detail and reported upon without qualification by an independent certified
public accounting firm selected by Borrower and satisfactory to Agent (the
"Accountants") together with the Borrower's annual 10k audit and internally
prepared annual consolidating statements. The report of the Accountants shall
be accompanied by a statement of the Accountants certifying that (i) they have
caused the Loan Agreement to be reviewed, (ii) in making the examination upon
which such report was based either no information came to their attention which
to their knowledge constituted an Event of Default or a Default under this
Agreement or any related agreement or, if such information came to their
attention, specifying any such Default or Event of Default, its nature, when it
occurred and whether it is continuing, and such report shall contain or have
appended thereto calculations which set forth Borrower's compliance with the
requirements or restrictions imposed by Sections 6.5, 6.6, 6.7, 6.8, 7.6 and
7.11 hereof. In addition, the reports shall be accompanied by a certificate of
Borrower's Chief Financial Officer which shall state that, based on an
examination sufficient to permit him to make an informed statement, no Default
or Event of Default exists, or, if such is not the case, specifying such Default
or Event of Default, its nature, when it occurred, whether it is continuing and
the steps being taken by Borrower with respect to such event, and such
certificate shall have appended thereto calculations which set forth Borrower's
compliance with the requirements or restrictions imposed by Sections 6.5, 6.6,
6.7, 6.8, 7.6 and 7.11 hereof.
<PAGE>
9.8. Monthly and Quarterly Financial Statements. (a) For the first
---------------------------------------------
six (6) months following the Closing Date furnish Agent and each Lender within
thirty (30) days after the end of each calendar month, the Borrower's financial
statements, consisting of a monthly profit and loss statement on a consolidating
basis as of the end of such month for the month then ended and the fiscal year
through that date, all in reasonable detail and certified (subject to normal
year-end adjustments) by the Chief Financial Officer of the Borrower as having
been prepared in accordance with GAAP, consistently applied, and setting forth
in comparative form the respective financial statements for the corresponding
date and period in the previous fiscal year.
(b) Furnish Agent and each Lender on a consolidated basis within
60 days after the end of each fiscal quarter, an unaudited balance sheet of
Borrower and unaudited statements of income and stockholders' or members' equity
and cash flow of Borrower reflecting results of operations from the beginning of
the fiscal year to the end of such quarter and for such quarter, prepared on a
basis consistent with prior practices and complete and correct in all material
respects, subject to normal year end adjustments, internally prepared quarterly
consolidating statements for each of the three quarters of June, September and
December and fiscal year end March, together with Borrower's quarterly 10-Q
report. The reports shall be accompanied by a certificate signed by the Chief
Financial Officer of Borrower, which shall state that, based on an examination
sufficient to permit him to make an informed statement, no Default or Event of
Default exists, or, if such is not the case, specifying such Default or Event of
Default, its nature, when it occurred, whether it is continuing and the steps
being taken by Borrower with respect to such default and, such certificate shall
have appended thereto calculations which set forth Borrower's compliance with
the requirements or restrictions imposed by Sections 6.5, 6.6, 6.7, 6.8, 7.6 and
7.11 hereof.
9.9. Other Reports . Furnish Agent and each Lender on a consolidated
--------------
basis as soon as available, but in any event within ten (10) days after the
issuance thereof, with copies of such financial statements, reports and returns
as Borrower or Guarantor shall send to its stockholders. Furnish Lender with
two (2) years of audited fiscal statements and interim results through the
Closing Date of IC Sensors, Inc. prepared by a certified public accountant
reasonably acceptable to Agent within ninety (90) days of the Closing Date.
Furnish Agent and each Lender within one hundred fifty (150) days after the end
of each fiscal year of Borrower, consolidated and consolidating financial
projections of the Borrower's operations on a monthly basis for each fiscal
year, all in reasonable detail and in such form as the Agent may require and
prepared by the Borrower's Chief Financial Officer.
9.10. Additional Information . Furnish Agent and each Lender with such
----------------------
additional information as Agent shall reasonably request in order to enable
Agent to determine whether the terms, covenants, provisions and conditions of
this Agreement and the Notes have been complied with by Borrower including,
<PAGE>
without limitation and without the necessity of any request by Agent, (a) copies
of all environmental audits and reviews, (b) at least thirty (30) days prior
thereto, notice of Borrower's opening of any new office or place of business or
Borrower's or Guarantor's closing of any existing office or place of business,
and (c) promptly upon Borrower's or Guarantor's learning thereof, notice of any
labor dispute to which Borrower or Guarantor may become a party, any strikes or
walkouts relating to any of its plants or other facilities, and the expiration
of any labor contract to which Borrower or Guarantor is a party or by which
Borrower or Guarantor is bound.
9.11. Notice of Suits, Adverse Events . Furnish Agent with prompt
-----------------------------------
notice of (i) any lapse or other termination of any Consent issued to Borrower
or to Guarantor by any Official Body or any other Person that is material to the
operation of Borrower's or of Guarantor business, (ii) any refusal by any
Official Body or any other Person to renew or extend any such Consent; (iii)
copies of any periodic or special reports filed by Borrower or Guarantor with
any Official Body or Person, if such reports indicate any material change in the
business, operations, affairs or condition of Borrower or Guarantor, or if
copies thereof are requested by Agent, and (iv) copies of any material notices
and other communications from any Official Body or Person which specifically
relate to Borrower or to Guarantor.
9.12. ERISA Notices and Requests . Furnish Agent with immediate
-----------------------------
written notice in the event that (i) Borrower or any member of the Controlled
Group knows or has reason to know that a Termination Event has occurred,
together with a written statement describing such Termination Event and the
action, if any, which Borrower or member of the Controlled Group has taken, is
taking, or proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, Department of Labor or PBGC
with respect thereto, (ii) Borrower or any member of the Controlled Group knows
or has reason to know that a prohibited transaction (as defined in Sections 406
of ERISA and 4975 of the Code) has occurred together with a written statement
describing such transaction and the action which such Borrower or any member of
the Controlled Group has taken, is taking or proposes to take with respect
thereto, (iii) a funding waiver request has been filed with respect to any Plan
together with all communications received by Borrower or any member of the
Controlled Group with respect to such request, (iv) any increase in the benefits
of any existing Plan or the establish-ment of any new Plan or the commence-ment
of contributions to any Plan to which Borrower or any member of the Controlled
Group was not previously contributing shall occur, (v) Borrower or any member of
the Controlled Group shall receive from the PBGC a notice of intention to
terminate a Plan or to have a trustee appointed to administer a Plan, together
with copies of each such notice, (vi) Borrower or any member of the Controlled
Group shall receive any favorable or unfavorable determination letter from the
Internal Revenue Service regarding the qualifica-tion of a Plan under Section
401(a) of the Code, together with copies of each such letter; (vii) Borrower or
any member of the Controlled Group shall receive a notice regarding the
<PAGE>
imposition of withdrawal liability, together with copies of each such notice;
(viii) Borrower or any member of the Controlled Group shall fail to make a
required installment or any other required payment under Section 412 of the Code
on or before the due date for such install-ment or payment; (ix) Borrower or any
member of the Controlled Group knows that (a) a Multiemployer Plan has been
terminated, (b) the administrator or plan sponsor of a Multiemploy-er Plan
intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan.
9.13. Additional Documents . Execute and deliver to Agent, upon
---------------------
request, such documents and agreements as Agent may, from time to time,
reasonably request to carry out the purposes, terms or conditions of this
Agreement.
X. EVENTS OF DEFAULT.
-------------------
The occurrence of any one or more of the following events shall constitute
an "Event of Default":
10.1. Failure by Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein when due or in any Other Document;
10.2. Any representation or warranty made or deemed made by Borrower or
by Guarantor in this Agreement or any related agreement or in any certificate,
document or financial or other statement furnished at any time in connection
herewith or therewith shall prove to have been misleading in any material
respect on the date when made or deemed to have been made;
10.3. Failure by Borrower to (i) furnish financial information when
due or when requested which is unremedied for a period of fifteen (15) days, or
(ii) permit the inspection of its books or records;
10.4. Issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of Borrower's or Guarantor's property
which is not stayed or lifted within forty (40) days;
10.5. Except as otherwise provided for in Sections 10.1 and 10.3,
failure or neglect of Borrower or of Guarantor to perform, keep or observe any
term, provision, condition, covenant herein contained, or contained in any other
agreement or arrangement, now or hereafter entered into between Borrower or
Guarantor, on the one hand, and Agent or any Lender, on the other hand, except
for a failure or neglect of Borrower or of Guarantor to perform, keep or observe
any term, provision, condition or covenant, contained in Sections 4.6, 4.7, 4.9,
4.11, 6.1, 6.3, 6.4, 9.4 or 9.6 hereof which is cured within 30 days from the
occurrence of such failure or neglect;
<PAGE>
10.6. Any judgment or judgments are rendered or judgment liens filed
against Borrower and/or Guarantor for an aggregate amount in excess of
$150,000 unless such are contested in good faith, Borrower and/or Guarantor has
established adequate reserves in the judgment of the Agent and the Lenders and
which within forty (40) days of such rendering or filing is not either
satisfied, stayed or discharged of record;
10.7. Borrower or Guarantor shall (i) apply for, consent to or suffer
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, liquidator or similar fiduciary of itself or of all or a substantial
part of its property, (ii) make a general assignment for the benefit of
creditors, (iii) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or
insolvent, (v) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vi) acquiesce to, or fail to have
dismissed, within sixty (60) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (vii) take any action for the
purpose of effecting any of the foregoing;
10.8. Borrower or Guarantor shall admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business;
10.9. Any Affiliate or any Subsidiary of Borrower, shall (i) apply
for, consent to or suffer the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property, (ii) admit in writing its inability,
or be generally unable, to pay its debts as they become due or cease operations
of its present business, (iii) make a general assignment for the benefit of
creditors, (iv) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
10.10. Any change in Borrower's or in Guarantor's condition or affairs
(financial or otherwise) which in Agent's opinion has a Material Adverse Effect;
10.11. Any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to be or is not a valid and perfected
Lien having a first priority interest;
10.12. A default of the obligations of Borrower or Guarantor under any
other agreement to which it is a party shall occur which adversely affects its
condition, affairs or prospects (financial or otherwise) which default is not
cured within any applicable grace period;
<PAGE>
10.13. Any Change of Control shall occur;
10.14. Any material provision of this Agreement shall, for any reason,
cease to be valid and binding on Borrower or Guarantor, or Borrower or Guarantor
shall so claim in writing to Agent;
10.15. any Official Body shall (A) revoke, terminate, suspend or
adversely modify any license, permit, patent trademark or tradename of Borrower
or Guarantor, or (B) commence proceedings to suspend, revoke, terminate or
adversely modify any such license, permit, trademark, tradename or patent and
such proceedings shall not be dismissed or discharged within sixty (60) days, or
(c) schedule or conduct a hearing on the renewal of any license, permit,
trademark, tradename or patent necessary for the continuation of Borrower's or
of Guarantor's business and the staff of such Official Body issues a report
recommending the termination, revocation, suspension or material, adverse
modification of such license, permit, trademark, tradename or patent and any
such revocation, termination or other action would reasonably be expected to
have a Material Adverse Effect;
10.16 any agreement which is necessary or material to the operation of
Borrower's or of Guarantor's business shall be revoked or terminated and not
replaced by a substitute acceptable to Agent within thirty (30) days after the
date of such revocation or termination, and such revocation or termination and
non-replacement would reasonably be expected to have a Material Adverse Effect;
10.17. Any portion of the Collateral or Guarantor Collateral shall be
seized or taken by a Official Body, or Borrower or Guarantor or the title and
rights of Borrower or Guarantor shall have become the subject matter of
litigation which might, in the opinion of Agent, upon final determination,
result in impairment or loss of the security provided by this Agreement or the
Other Documents;
10.18. An event or condition specified in Sections 7.16 or 9.15 hereof
shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, Borrower or any
member of the Controlled Group shall incur, or in the opinion of Agent be
reasonably likely to incur, a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Agent, would have a Material Adverse Effect on
Borrower;
10.19 Termination of the Guaranty, or if Guarantor attempts to
terminate, challenges the validity of, or its liability under the Guaranty.
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
-----------------------------------------------
<PAGE>
11.1. Rights and Remedies . Upon the occurrence of (i) an Event of
---------------------
Default pursuant to Section 10.7 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Agent and Lenders to make
Advances shall be deemed terminated; and, (ii) any of the other Events of
Default and at any time thereafter (such default not having previously been
cured), at the option of Required Lenders all Obligations shall be immediately
due and payable and the Required Lenders shall have the right to terminate this
Agreement and to terminate the obligation of Agent and Lenders to make Advances
and (iii) a filing of a petition against Borrower in any involuntary case under
any state or federal bankruptcy laws, the obligation of Agent and Lenders to
make Advances hereunder shall be terminated other than as may be required by an
appropriate order of the bankruptcy court having jurisdiction over Borrower.
Upon the occurrence of any Event of Default, Agent shall have the right to
exercise any and all other rights and remedies provided for herein, under the
Uniform Commercial Code and at law or equity generally, including, without
limitation, the right to foreclose the security interests granted herein and to
realize upon any Collateral or any Guarantor Collateral by any available
judicial procedure and/or to take possession of and sell any or all of the
Collateral or Guarantor Collateral with or without judicial process. Agent may
enter any of Borrower's premises or other premises without legal process and
without incurring liability to Borrower therefor, and Agent may thereupon, or
at any time thereafter, in its discretion without notice or demand, take the
Collateral or Guarantor Collateral and remove the same to such place as Agent
may deem advisable and Agent may require Borrower to make the Collateral or
Guarantor Collateral available to Agent at a convenient place. With or without
having the Collateral or Guarantor Collateral at the time or place of sale,
Agent may sell the Collateral or Guarantor Collateral, or any part thereof, at
public or private sale, at any time or place, in one or more sales, at such
price or prices, and upon such terms, either for cash, credit or future
delivery, as Agent may elect. Except as to that part of the Collateral or
Guarantor Collateral which is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market, Agent shall give
Borrower reasonable notification of such sale or sales, it being agreed that in
all events written notice mailed to Borrower at least five (5) days prior to
such sale or sales is reasonable notification. At any public sale Agent may
bid for and become the purchaser, and Agent or any other purchaser at any such
sale thereafter shall hold the Collateral and the Guarantee Collateral sold
absolutely free from any claim or right of whatsoever kind, including any equity
of redemption and such right and equity are hereby expressly waived and released
by Borrower or Guarantor, as the case may be. In connection with the exercise
of the foregoing remedies, Agent is granted permission to use all of Borrower's
and Guarantor's trademarks, trade styles, trade names, patents, patent
applications, licenses, franchises and other proprietary rights which are used
in connection with (a) Inventory for the purpose of disposing of such Inventory
and (b) Equipment for the purpose of completing the manufacture of unfinished
goods. The proceeds realized from the sale of any Collateral and any Guarantor
Collateral shall be applied as follows: first, to the reasonable costs, expenses
and attorneys' fees and expenses incurred by Agent and each Lender for
collection and for acquisition, completion, protection, removal, storage, sale
and delivery of the Collateral and Guarantor Collateral; second, to interest due
upon any of the Obligations and any fees payable under this Agreement; and,
third, to the principal of the Obligations. If any deficiency shall arise,
Borrower shall remain liable to Agent and Lenders therefor.
<PAGE>
11.2. Agent's Discretion . Agent shall have the right in its sole
-------------------
discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any
other action with respect thereto and such determination will not in any way
modify or affect any of Agent's or any Lender's rights hereunder.
11.3. Setoff . In addition to any other rights which Agent and Lenders
------
may have under applicable law, upon the occurrence of an Event of Default
hereunder, Agent and Lenders shall have a right to apply Borrower's or
Guarantor's property held by Agent and such Lender to reduce the Obligations.
11.4 Rights and Remedies not Exclusive . The enumera-tion of the
-------------------------------------
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedies provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
-----------------------------------
12.1. Waiver of Notice . Borrower hereby waives notice of non-payment
----------------
of any of the Receivables, demand, present-ment, protest and notice thereof with
respect to any and all in-struments, notice of acceptance hereof, notice of
loans or advances made, credit extended, Collateral or Guarantor Collateral
received or delivered, or any other action taken in reliance hereon, and all
other demands and notices of any description, except such as are expressly
provided for herein.
12.2 Delay . No delay or omission on Agent's or any Lender's part in
-----
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3 Jury Waiver . EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
------------
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
<PAGE>
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY
HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
XIII. THE AGENT
----------
13.1 Appointment. Each Lender hereby irrevocably designates,
-----------
appoints and authorizes PNC to act as Agent for such Lender under this Agreement
and to execute and deliver or accept on behalf of each of the Lenders the other
Loan Documents. Each Lender hereby irrevocably authorizes, and each holder of
any Note by the acceptance of a Note shall be deemed irrevocably to authorize,
the Agent to take such action on its behalf under the provisions of this
Agreement and the Other Documents and any other instruments and agreements
referred to herein, and to exercise such powers and to perform such duties
hereunder as are specifically delegated to or required of the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. PNC
Bank agrees to act as the Agent on behalf of the Lenders to the extent provided
in this Agreement.
13.2 Delegation of Duties. The Agent may perform any of its duties
---------------------
hereunder by or through agents or employees (provided such delegation does not
--------
constitute a relinquishment of its duties as Agent) and, subject to Sections
13.5 and 13.6, shall be entitled to engage and pay for the advice or services of
any attorneys, accountants or other experts concerning all matters pertaining to
its duties hereunder and to rely upon any advice so obtained.
13.3 Nature of Duties; Independent Credit Investigation. The Agent
---------------------------------------------------
shall have no duties or responsibilities except those expressly set forth in
this Agreement and no implied covenants, functions, responsibilities, duties,
obligations, or liabilities shall be read into this Agreement or otherwise
exist. The duties of the Agent shall be mechanical and administrative in
nature; the Agent shall not have by reason of this Agreement a fiduciary or
trust relationship in respect of any Lender; and nothing in this Agreement,
expressed or implied, is intended to or shall be so construed as to impose upon
the Agent any obligations in respect of this Agreement except as expressly set
forth herein. Without limiting the generality of the foregoing, the use of the
term "agent" in this Agreement with reference to the Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties. Each
Lender expressly acknowledges (i) that the Agent has not made any
representations or warranties to it and that no act by the Agent hereafter
taken, including any review of the affairs of the Borrower or of the Guarantor,
shall be deemed to constitute any representation or warranty by the Agent to any
Lender; (ii) that it has made and will continue to make, without reliance upon
<PAGE>
the Agent, its own independent investigation of the financial condition and
affairs and its own appraisal of the creditworthiness of the Borrower or of the
Guarantor in connection with this Agreement and the making and continuance of
the Advances hereunder; and (iii) except as expressly provided herein, that the
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of any Advance or
at any time or times thereafter.
13.4 Actions in Discretion of Agent; Instructions From the Lenders.
-----------------------------------------------------------------
The Agent agrees, upon the written request of the Required Lenders, to take or
refrain from taking any action of the type specified as being within the Agent's
rights, powers or discretion herein, provided that the Agent shall not be
--------
required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement or any Other Document or applicable law. In
the absence of a request by the Required Lenders, the Agent shall have
authority, in its sole discretion, to take or not to take any such action,
unless this Agreement specifically requires the consent of the Required Lenders
or all of the Lenders. Any action taken or failure to act pursuant to such
instructions or discretion shall be binding on the Lenders, subject to Section
13.6. Subject to the provisions of Section 13.6, no Lender shall have any right
of action whatsoever against the Agent as a result of the Agent acting or
refraining from acting hereunder in accordance with the instructions of the
Required Lenders, or in the absence of such instructions, in the absolute
discretion of the Agent.
13.5 Reimbursement and Indemnification of Agent by the Borrower.
-----------------------------------------------------------------
The Borrower unconditionally agrees to pay or reimburse the Agent and hold the
Agent harmless against (a) liability for the payment of all reasonable
out-of-pocket costs, expenses and disbursements, including fees and expenses of
counsel (including the allocated costs of staff counsel), appraisers and
environmental consultants, incurred by the Agent (i) in connection with the
development, negotiation, preparation, printing, execution, administration,
syndication, interpretation and performance of this Agreement and the Other
Documents, (ii) relating to any requested amendments, waivers or consents
pursuant to the provisions hereof, (iii) in connection with the enforcement of
this Agreement or any Other Document or collection of amounts due hereunder or
thereunder or the proof and allowability of any claim arising under this
Agreement or any Other Document, whether in bankruptcy or receivership
proceedings or otherwise, and (iv) in any workout or restructuring or in
connection with the protection, preservation, exercise or enforcement of any of
the terms hereof or of any rights hereunder or under any Other Document or in
connection with any foreclosure, collection or bankruptcy proceedings, and (b)
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against the Agent, in its capacity as
such, in any way relating to or arising out of this Agreement or any Other
Documents or any action taken or omitted by the Agent hereunder or thereunder,
provided that the Borrower shall not be liable for any portion of such
-------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
-------
costs, expenses or disbursements if the same results from the Agent's gross
<PAGE>
negligence or willful misconduct, or if the Borrower was not given notice of the
subject claim and the opportunity to participate in the defense thereof, at its
expense (except that the Borrower shall remain liable to the extent such failure
to give notice does not result in a loss to the Borrower), or if the same
results from a compromise or settlement agreement entered into without the
consent of the Borrower, which shall not be unreasonably withheld. In addition,
the Borrower agrees to reimburse and pay all reasonable out-of-pocket expenses
of the Agent's regular employees and agents engaged periodically to perform
audits of the Borrower's books, records and business properties.
13.6 Exculpatory Provisions; Limitation of Liability. Neither the
-------------------------------------------------
Agent nor any of its directors, officers, employees, agents, attorneys or
Affiliates shall (a) be liable to any Lender for any action taken or omitted to
be taken by it or them hereunder, or in connection herewith including pursuant
to any Other Document, unless caused by its or their own gross negligence or
willful misconduct, (b) be responsible in any manner to any of the Lenders for
the effectiveness, enforceability, genuineness, validity or the due execution of
this Agreement or any Other Documents or for any recital, representation,
warranty, document, certificate, report or statement herein or made or furnished
under or in connection with this Agreement or any Other Documents, or (c) be
under any obligation to any of the Lenders to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions hereof or
thereof on the part of the Borrower or of the Guarantor, or the financial
condition of the Borrower or of the Guarantor, or the existence or possible
existence of any Event of Default. No claim may be made by any Borrower, the
Guarantor, any Lender, the Agent or any of their respective Subsidiaries against
the Agent, any Lender or any of their respective directors, officers, employees,
agents, attorneys or Affiliates, or any of them, for any special, indirect or
consequential damages or, to the fullest extent permitted by law, for any
punitive damages in respect of any claim or cause of action (whether based on
contract, tort, statutory liability, or any other ground) based on, arising out
of or related to this Agreement or any Other Document or the transactions
contemplated hereby or any act, omission or event occurring in connection
herewith or therewith, including the negotiation, documentation, administration
or collection of the Advances, and the Borrower (for itself and on behalf of
each of its Subsidiaries), the Agent and each Lender hereby or thereby waive,
releases and agree never to sue upon any claim for any such damages, whether
such claim now exists or hereafter arises and whether or not it is now known or
suspected to exist in its favor. Each Lender agrees that, except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Agent hereunder or given to the Agent for the account of or with copies for
the Lenders, the Agent and each of its directors, officers, employees, agents,
<PAGE>
attorneys or Affiliates shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower or of the Guarantor which may come into the possession of the Agent
or any of its directors, officers, employees, agents, attorneys or Affiliates.
13.7 Reimbursement and Indemnification of Agent by Lenders. Each
--------------------------------------------------------
Lender agrees to reimburse and indemnify the Agent (to the extent not reimbursed
by the Borrower and without limiting the Obligation of the Borrower to do so) in
proportion to its Ratable Share from and against all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements, including attorneys' fees and disbursements (including the
allocated costs of staff counsel), and costs of appraisers and environmental
consultants, of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent, in its capacity as such, in any way relating
to or arising out of this Agreement or any Other Documents or any action taken
or omitted by the Agent hereunder or thereunder, provided that no Lender shall
--------
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements (a) if
the same results from the Agent's gross negligence or willful misconduct, or (b)
if such Lender was not given notice of the subject claim and the opportunity to
participate in the defense thereof, at its expense (except that such Lender
shall remain liable to the extent such failure to give notice does not result in
a loss to the Lender), or (c) if the same results from a compromise and
settlement agreement entered into without the consent of such Lender, which
shall not be unreasonably withheld. In addition, each Lender agrees promptly
upon demand to reimburse the Agent (to the extent not reimbursed by the Borrower
and without limiting the Obligation of the Borrower to do so) in proportion to
its Ratable Share for all amounts due and payable by the Borrower to the Agent
in connection with the Agent's periodic audit of the Borrower's books, records
and business properties.
13.8 Reliance by Agent. The Agent shall be entitled to rely upon
-------------------
any writing, telegram, telex or teletype message, resolution, notice, consent,
certificate, letter, cablegram, statement, order or other document or
conversation by telephone or otherwise believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons, and upon
the advice and opinions of counsel and other professional advisers selected by
the Agent. The Agent shall be fully justified in failing or refusing to take
any action hereunder unless it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
13.9 Notice of Default. The Agent shall not be deemed to have
-------------------
knowledge or notice of the occurrence of any Default or Event of Default unless
the Agent has received written notice from a Lender or the Borrower referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default."
<PAGE>
13.10 Notices. The Agent shall send to each Lender a copy of all
-------
notices received from the Borrower pursuant to the provisions of this Agreement
or the Other Documents promptly after receipt thereof. The Agent shall promptly
notify the Borrower and the other Lenders of each change in the Base Rate and
the effective date thereof.
13.11 Lenders in Their Individual Capacities. With respect to its
----------------------------------------
Revolving Credit Commitment, the Revolving Advances, the Term Loan Commitment
and the Term Loan made by it and any other rights and powers given to it as a
Lender hereunder or under any of the Other Documents, the Agent shall have the
same rights and powers hereunder as any other Lender and may exercise the same
as though it were not the Agent, and the term "Lenders" shall, unless the
context otherwise indicates, include the Agent in its individual capacity. PNC
Bank and its Affiliates and each of the Lenders and their respective Affiliates
may, without liability to account, except as prohibited herein, make loans to,
accept deposits from, discount drafts for, act as trustee under indentures of,
and generally engage in any kind of banking or trust business with, the Borrower
and its Affiliates, in the case of the Agent, as though it were not acting as
Agent hereunder and in the case of each Lender, as though such Lender were not a
Lender hereunder. The Lenders acknowledge that, pursuant to such activities,
the Agent or its Affiliates may (i) receive information regarding the Borrower
(including information that may be subject to confidentiality obligations in
favor of the Borrower) and acknowledge that the Agent shall be under no
obligation to provide such information to them, and (ii) accept fees and other
consideration from the Borrower for services in connection with this Agreement
and otherwise without having to account for the same to the Lenders.
13.12 Holders of Notes. The Agent may deem and treat any payee of
------------------
any Note as the owner thereof for all purposes hereof unless and until written
notice of the assignment or transfer thereof shall have been filed with the
Agent. Any request, authority or consent of any Person who at the time of
making such request or giving such authority or consent is the holder of any
Note shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
13.13 Equalization of Lenders. The Lenders and the holders of any
-------------------------
participations in any Notes agree among themselves that, with respect to all
amounts received by any Lender or any such holder for application on any
Obligation hereunder or under any Note or under any such participation, whether
received by voluntary payment, by realization upon security, by the exercise of
the right of set-off or banker's lien, by counterclaim or by any other non-pro
rata source, equitable adjustment will be made in the manner stated in the
following sentence so that, in effect, all such excess amounts will be shared
ratably among the Lenders and such holders in proportion to their interests in
payments under the Notes, except as otherwise provided in Sections 2.16 or in
<PAGE>
Article III. The Lenders or any such holder receiving any such amount shall
purchase for cash from each of the other Lenders an interest in such Lender's
Advances in such amount as shall result in a ratable participation by the
Lenders and each such holder in the aggregate unpaid amount under the Notes,
provided that if all or any portion of such excess amount is thereafter
- --------
recovered from the Lender or the holder making such purchase, such purchase
shall be rescinded and the purchase price restored to the extent of such
recovery, together with interest or other amounts, if any, required by law
(including court order) to be paid by the Lender or the holder making such
purchase.
13.14 Successor Agent. The Agent (i) may resign as Agent or (ii)
----------------
shall resign if such resignation is requested by the Required Lenders (if the
Agent is a Lender, the Agent's Advances and its Commitment shall be considered
in determining whether the Required Lenders have requested such resignation) or
required by Section 2.16, in either case of (i) or (ii) by giving not less than
thirty (30) days' prior written notice to the Borrower. If the Agent shall
resign under this Agreement, then either (a) the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders, subject to the consent
of the Borrower, such consent not to be unreasonably withheld, or (b) if a
successor agent shall not be so appointed and approved within the thirty (30)
day period following the Agent's notice to the Lenders of its resignation, then
the Agent shall appoint, with the consent of the Borrower, such consent not to
be unreasonably withheld, a successor agent who shall serve as Agent until such
time as the Required Lenders appoint and the Borrower consents to the
appointment of a successor agent. Upon its appointment pursuant to either
clause (a) or (b) above, such successor agent shall succeed to the rights,
powers and duties of the Agent, and the term "Agent" shall mean such successor
agent, effective upon its appointment, and the former Agent's rights, powers and
duties as Agent shall be terminated without any other or further act or deed on
the part of such former Agent or any of the parties to this Agreement. After
the resignation of any Agent hereunder, the provisions of this Article XIII
shall inure to the benefit of such former Agent and such former Agent shall not
by reason of such resignation be deemed to be released from liability for any
actions taken or not taken by it while it was an Agent under this Agreement.
13.15 Availability of Funds. The Agent may assume that each Lender
----------------------
has made or will make the proceeds of an Advance available to the Agent unless
the Agent shall have been notified by such Lender on or before the later of (1)
the close of business on the Business Day preceding the date of Borrowing with
respect to such Advance or two (2) hours before the time on which the Agent
actually funds the proceeds of such Advance to the Borrower (whether using its
own funds pursuant to this Section 13.15 or using proceeds deposited with the
Agent by the Lenders and whether such funding occurs before or after the time on
which Lenders are required to deposit the proceeds of such Advance with the
Agent). The Agent may, in reliance upon such assumption (but shall not be
required to), make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by such Lender,
<PAGE>
the Agent shall be entitled to recover such amount on demand from such Lender
(or, if such Lender fails to pay such amount forthwith upon such demand from the
Borrower) together with interest thereon, in respect of each day during the
period commencing on the date such amount was made available to the Borrower and
ending on the date the Agent recovers such amount, at a rate per annum equal to
(i) the Federal Funds Rate during the first three (3) days after such interest
shall begin to accrue and (ii) the applicable interest rate in respect of such
Advance after the end of such three-day period.
13.16 Calculations. In the absence of gross negligence or willful
------------
misconduct, the Agent shall not be liable for any error in computing the amount
payable to any Lender whether in respect of the Advances, fees or any other
amounts due to the Lenders under this Agreement or any Other Document. In the
event an error in computing any amount payable to any Lender is made, the Agent,
the Borrower and each affected Lender shall, forthwith upon discovery of such
error, make such adjustments as shall be required to correct such error, and any
compensation therefor will be calculated at the Federal Funds Rate.
13.17 Beneficiaries. Except as expressly provided herein, the
-------------
provisions of this Article XIII are solely for the benefit of the Agent and the
Lenders, and the Borrower shall not have any rights to rely on or enforce any of
the provisions hereof. In performing its functions and duties under this
Agreement, the Agent shall act solely as agent of the Lenders and does not
assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for the Borrower.
XIV. EFFECTIVE DATE AND TERMINATION.
---------------------------------
14.1. Term. This Agreement, which shall inure to the benefit of and
----
shall be binding upon the respective successors and permitted assigns of
Borrower, Agent and Lenders, shall become effective on the date hereof and shall
continue in full force and effect until February 14, 2006 (the "Term") unless
sooner terminated as herein provided. Borrower may terminate this Agreement at
any time upon payment in full of the Obligations.
14.2. Termination. The termination of the Agreement shall not affect
-----------
Borrower's, any of Lender's or Agent's rights or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and/or Lenders hereunder and the financing statements filed
hereunder shall continue in full force and effect, notwithstanding the
termination of this Agreement or the fact that Borrower's Account may from time
to time be temporarily in a zero or credit position, until all of the
Obligations of Borrower have been paid or performed in full after the
termination of this Agreement or Borrower has furnished Agent and/or Lenders
with an indemnification satisfactory to Lenders with respect thereto.
Accordingly, Borrower waives any rights which it may have under Section 9-404(1)
of the Uniform Commercial Code to demand the filing of termination statements
with respect to the Collateral, and Agent and/or Lenders shall not be required
<PAGE>
to send such termination statements to Borrower, or to file them with any
filing office, unless and until this Agreement shall have been terminated in
accordance with its terms and all Obligations paid in full in immediately
available funds. All representations, warranties, covenants, waivers and
agreements contained herein shall survive termination hereof until all
Obligations are paid or performed in full.
XV. MISCELLANEOUS
-------------
15.1 Modifications, Amendments or Waivers. With the written consent
------------------------------------
of the Required Lenders, the Agent, acting on behalf of all the Lenders, and the
Borrower may from time to time enter into written agreements amending or
changing any provision of this Agreement or any Other Document or the rights of
the Lenders or the Borrower hereunder or thereunder, or may grant written
waivers or consents to a departure from the due performance of the Obligations
of the Borrower hereunder or thereunder. Any such agreement, waiver or consent
made with such written consent shall be effective to bind all the Lenders and
the Borrower; provided, that, without the written consent of all the Lenders, no
--------
such agreement, waiver or consent may be made which will:
(a) Increase the amount of the Revolving Credit Commitment or Term
Loan Commitment of any Lender hereunder or extend the Expiration Date;
(b) Whether or not any Revolving Advance or Term Loan are
outstanding, extend the time for payment of principal or interest of any
Revolving Advance or Term Loan (excluding the due date of any mandatory
prepayment of an Advance or any mandatory Commitment reduction in connection
with such a mandatory prepayment hereunder except for mandatory reductions of
the Commitments on the Expiration Date), the Commitment Fee or any other fee
payable to any Lender, or reduce the principal amount of or the rate of interest
borne by any Advance or reduce the Commitment Fee or any other fee payable to
any Lender, or otherwise affect the terms of payment of the principal of or
interest of any Advance, the Commitment Fee or any other fee payable to any
Lender; or
(c) increase the Advance Rates above the Advance Rates effective
on the Closing Date; or
(d) Except for sales of assets permitted by Section 7.1(b),
release any Collateral or any Guarantor Collateral during any calendar year
having an aggregate value in excess of five hundred thousand dollars ($500,000);
or consisting of capital stock or other ownership interests of Borrower,
Guarantor or its Subsidiary or substantially all of the assets of Borrower,
Guarantor or any other security for any of the Borrower's Obligations; or
<PAGE>
(e) Miscellaneous
-------------
Amend Sections 2.15, 13.6, 13.13 or this Section 15.1(e), alter
any provision regarding the pro rata treatment of the Lenders, change the
definition of Required Lenders, or change any requirement providing for the
Lenders or the Required Lenders to authorize the taking of any action hereunder;
provided, further, that no agreement, waiver or consent which would modify the
- --------
interests, rights or obligations of the Agent in its capacity as Agent or the
issuance of Letters of Credit shall be effective without the written consent of
the Agent.
15.2 No Implied Waivers; Cumulative Remedies; Writing Required. No
----------------------------------------------------------
course of dealing and no delay or failure of the Agent or any Lender in
exercising any right, power, remedy or privilege under this Agreement or any
Other Document shall affect any other or future exercise thereof or operate as a
waiver thereof, nor shall any single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power, remedy or
privilege preclude any further exercise thereof or of any other right, power,
remedy or privilege. The rights and remedies of the Agent and the Lenders under
this Agreement and any Other Documents are cumulative and not exclusive of any
rights or remedies which they would otherwise have. Any waiver, permit, consent
or approval of any kind or character on the part of any Lender of any breach or
default under this Agreement or any such waiver of any provision or condition of
this Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing.
15.3 Reimbursement and Indemnification of Lenders by the Borrower;
------------------------------------------------------------------
Taxes. The Borrower agrees unconditionally upon demand to pay or reimburse
-
to each Lender (other than the Agent, as to which the Borrower's Obligations are
set forth in Section 13.5) and to save such Lender harmless against (i)
liability for the payment of all reasonable out-of-pocket costs, expenses and
disbursements (including fees and expenses of counsel (including allocated costs
of staff counsel) for each Lender except with respect to (a) and (b) below),
incurred by such Lender (a) in connection with the administration and
interpretation of this Agreement, and other instruments and documents to be
delivered hereunder, (b) relating to any amendments, waivers or consents
pursuant to the provisions hereof, (c) in connection with the enforcement of
this Agreement or any Other Document, or collection of amounts due hereunder or
thereunder or the proof and allowability of any claim arising under this
Agreement or any Other Document, whether in bankruptcy or receivership
proceedings or otherwise, and (d) in any workout or restructuring or in
connection with the protection, preservation, exercise or enforcement of any of
the terms hereof or of any rights hereunder or under any Other Document or in
<PAGE>
connection with any foreclosure, collection or bankruptcy proceedings, or (ii)
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against such Lender, in its capacity
as such, in any way relating to or arising out of this Agreement or any Other
Documents or any action taken or omitted by such Lender hereunder or thereunder,
provided that the Borrower shall not be liable for any portion of such
- --------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements (A) if the same results from such Lender's
gross negligence or willful misconduct, or (B) if the Borrower was not given
notice of the subject claim and the opportunity to participate in the defense
thereof, at its expense (except that the Borrower shall remain liable to the
extent such failure to give notice does not result in a loss to the Borrower),
or (C) if the same results from a compromise or settlement agreement entered
into without the consent of the Borrower, which shall not be unreasonably
withheld. The Lenders will attempt to minimize the fees and expenses of legal
counsel for the Lenders which are subject to reimbursement by the Borrower
hereunder by considering the usage of one law firm to represent the Lenders and
the Agent if appropriate under the circumstances. The Borrower agrees
unconditionally to pay all stamp, document, transfer, recording or filing taxes
or fees and similar impositions now or hereafter determined by the Agent or any
Lender to be payable in connection with this Agreement or any Other Document,
and the Borrower agrees unconditionally to save the Agent and the Lenders
harmless from and against any and all present or future claims, liabilities or
losses with respect to or resulting from any omission to pay or delay in paying
any such taxes, fees or impositions.
15.4 Holidays. Whenever payment of an Advance to be made or taken
--------
hereunder shall be due on a day which is not a Business Day such payment shall
be due on the next Business Day and such extension of time shall be included in
computing interest and fees, except that the Revolving Advance and the Term Loan
shall be due on the Business Day preceding the Expiration Date if the Expiration
Date is not a Business Day. Whenever any payment or action to be made or taken
hereunder (other than payment of the Revolving Advance and the Term Loan) shall
be stated to be due on a day which is not a Business Day, such payment or action
shall be made or taken on the next following Business Day (except as provided
with respect to Interest Periods under the Eurodollar Rate Loans), and such
extension of time shall not be included in computing interest or fees, if any,
in connection with such payment or action.
15.5 Funding by Branch, Subsidiary or Affiliate.
-----------------------------------------------
(a) Each Lender shall have the right from time to time, without
notice to the Borrower, to deem any branch, Subsidiary or Affiliate (which for
the purposes of this Section 15.5 shall mean any corporation or association
which is directly or indirectly controlled by or is under direct or indirect
common control with any corporation or association which directly or indirectly
controls such Lender) of such Lender to have made, maintained or funded any
Eurodollar Rate Loan at any time, provided that immediately following (on the
--------
assumption that a payment were then due from the Borrower to such other office),
and as a result of such change, the Borrower would not be under any greater
financial obligation pursuant to Sections 2.1(f), 3.6 and 3.8 than it would have
been in the absence of such change. Notional funding offices may be selected by
<PAGE>
each Lender without regard to such Lender's actual methods of making,
maintaining or funding the Advances or any sources of funding actually used by
or available to such Lender. " \l 3 (b) Each Lender shall have the
right from time to time to make or maintain any Advance by arranging for a
branch, Subsidiary or Affiliate of such Lender to make or maintain such Advance
subject to the last sentence of this Section 15.5(b). If any Lender causes a
branch, Subsidiary or Affiliate to make or maintain any part of the Advances
hereunder, all terms and conditions of this Agreement shall, except where the
context clearly requires otherwise, be applicable to such part of the Advances
to the same extent as if such Advances were made or maintained by such Lender,
but in no event shall any Lender's use of such a branch, Subsidiary or Affiliate
to make or maintain any part of the Advances hereunder cause such Lender or such
branch, Subsidiary or Affiliate to incur any cost or expenses payable by the
Borrower hereunder or require the Borrower to pay any other compensation to any
Lender (including any expenses incurred or payable pursuant to Sections 2.1(f),
3.6 and 3.8) which would otherwise not be incurred.
15.6. Governing Law . This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of New Jersey, without giving
effect to the principles of conflicts of law. Any judicial proceeding brought
by or against Borrower with respect to any of the Obligations, this Agreement
or any Other Document may be brought in any court of competent jurisdiction in
the State of New Jersey, United States of America, and, by execution and
delivery of this Agreement, Borrower accepts for itself and in connection with
its properties, generally and unconditionally, the non-exclusive jurisdiction of
the aforesaid courts, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement. Borrower hereby waives
personal service of any and all process upon it and consents that all such
service of process may be made by registered mail (return receipt requested)
directed to Borrower at its address set forth in Schedule 15.10 and service so
made shall be deemed completed five (5) days after the same shall have been so
deposited in the mails of the United States of America. Nothing herein shall
affect the right to serve process in any manner permitted by law or shall limit
the right of Agent or any Lender to bring proceedings against Borrower in the
courts of any other jurisdiction. Borrower waives any objection to jurisdiction
and venue of any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon forum non conveniens. Any
--------------------
judicial proceeding by Borrower against Agent or Lenders involving, directly or
indirectly, any matter or claim in any way arising out of, related to or
connected with this Agreement or any related agreement, shall be brought only in
a federal or state court located in the State of New Jersey.
Each Letter of Credit and Section 2.14 shall be subject to the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500, as the same may be revised or amended
from time to time, and to the extent not inconsistent therewith, the internal
laws of the State of New Jersey without regard to its conflict of laws
<PAGE>
principles and the balance of this Agreement shall be deemed to be a contract
under the Laws of the State of New Jersey and for all purposes shall be governed
by and construed and enforced in accordance with the internal laws of the State
of New Jersey without regard to its conflict of laws principles.
15.7. Entire Understanding . This Agreement and the documents executed
---------------------
concurrently herewith contain the entire understanding among Borrower, Agent and
Lenders and supersedes all prior agreements and understandings, if any,
relating to the subject matter hereof. Any promises, representations,
warranties or guarantees not herein contained and hereinafter made shall have no
force and effect unless in writing, signed by Borrower, Agent and Lender's
respective officers. Neither this Agreement nor any portion or provisions
hereof may be changed, modified, amended, waived, supplemented, discharged,
canceled or terminated orally or by any course of dealing, or in any manner
other than by an agreement in writing, signed by the party to be charged.
Borrower acknowledges that it has been advised by counsel in connection with the
execution of this Agreement and Other Documents and is not relying upon oral
representations or statements inconsistent with the terms and provisions of this
Agreement.
15.8 Successors and Assigns; Participations; New Lenders.
--------------------------------------------------------
(a) This Agreement shall be binding upon and shall inure to
the benefit of the Lenders, the Agent, the Borrower and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights and Obligations hereunder or any interest herein. Each Lender
may, at its own cost, make assignments of or sell participations in all or any
part of its Commitments and the Advances made by it to one or more banks or
other entities, subject to the consent of the Borrower and the Agent with
respect to any assignee, such consent not to be unreasonably withheld, provided
--------
that (1) no consent of the Borrower shall be required (A) if an Event of Default
exists and is continuing, or (B) in the case of an assignment by a Lender to an
Affiliate of such Lender, and (2) any assignment by a Lender to a Person other
than an Affiliate of such Lender may not be made in amounts less than the lesser
of $5,000,000 or the amount of the assigning Lender's Commitment. In the case
of an assignment, upon receipt by the Agent of the Assignment and Assumption
Agreement, the assignee shall have, to the extent of such assignment (unless
otherwise provided therein), the same rights, benefits and obligations as it
would have if it had been a signatory Lender hereunder, the Commitments shall be
adjusted accordingly, and upon surrender of any Revolving Credit Note or Term
Note subject to such assignment, the Borrower shall execute and deliver a new
Note to the assignee in an amount equal to the amount of the Revolving Credit
Commitment or Term Loan assumed by it and a new Revolving Credit Note or Term
Note to the assigning Lender in an amount equal to the Revolving Credit
Commitment or Term Loan retained by it hereunder. Any Lender which assigns any
or all of its Commitment or Loans to a Person other than an Affiliate of such
Lender shall pay to the Agent a service fee in the amount of $3,000 for each
assignment. In the case of a participation, the participant shall only have the
rights specified in Section 11.3 (the participant's rights against such Lender
in respect of such participation to be those set forth in the agreement executed
<PAGE>
by such Lender in favor of the participant relating thereto and not to include
any voting rights except with respect to changes of the type referenced in
Section 15.1. all of such Lender's obligations under this Agreement or any Other
Document shall remain unchanged, and all amounts payable by Borrower hereunder
or thereunder shall be determined as if such Lender had not sold such
participation.
(b) Any assignee or participant which is not incorporated
under the Laws of the United States of America or a state thereof shall deliver
to the Borrower and the Agent the form of certificate described in Section 15.21
relating to federal income tax withholding. Each Lender may furnish any
publicly available information concerning Borrower or its Subsidiaries and any
other information concerning Borrower or its Subsidiaries in the possession of
such Lender from time to time to assignees and participants (including
prospective assignees or participants), provided that such assignees and
--------
participants agree to be bound by the provisions of Section 15.19.
(c) Notwithstanding any other provision in this Agreement,
any Lender may at any time pledge or grant a security interest in all or any
portion of its rights under this Agreement, its Note and the Other Documents to
any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR Section 203.14 without notice to or consent of the
Borrower or the Agent. No such pledge or grant of a security interest shall
release the transferor Lender of its obligations hereunder or under any Other
Document.
15.9 Notices. Any notice, request, demand, direction or other
-------
communication (for purposes of this Section 15.9 only, a "Notice") to be given
to or made upon any party hereto under any provision of this Agreement shall be
given or made by telephone or in writing (which includes by means of electronic
transmission (i.e., "e-mail") or facsimile or facsimile transmission or by
setting forth such Notice on a site on the World Wide Web (a "Website Posting")
if Notice of such Website Posting (including the information necessary to access
such site) has previously been delivered to the applicable parties hereto by
another means set forth in this Section 15.9) in accordance with this Section
15.9. Any such Notice must be delivered to the applicable parties hereto at the
addresses and numbers set forth under this respective names on Schedule 15.10(A)
hereof or in accordance with any subsequent unrevoked Notice from any such party
that is given in accordance with this Section 15.9. Any Notice shall be
effective:
(a) In the case of hand-delivery, when delivered;
(b) If given by mail, four days after such Notice is deposited
with the United
States Postal Service, with first-class postage prepaid, return receipt
requested;
(c) In the case of a telephonic Notice, when a party is contacted
by telephone, if delivery of such telephone Notice is confirmed no later than
the next Business Day by hand delivery, a facsimile or electronic transmission,
a Website Posting or an overnight courier delivery of a confirmatory Notice
(received at or before noon on such next Business Day);
<PAGE>
(d) In the case of a facsimile transmission, when sent to the
applicable party's
facsimile machine' telephone number, if the party sending such Notice receives
confirmation of the delivery thereof from its own facsimile machine;
(e) In the case of electronic transmission, when actually
received;
(f) In the case of a Website Posting, upon delivery of a Notice of
such posting
(including the information necessary to access such site) by another means set
forth in this Section 15.9 and
(g) If given by any other means (including by overnight courier),
when
actually received
Any Lender giving a Notice to Borrower shall concurrently send a copy thereof to
the Agent, and the Agent shall promptly notify the other Lenders of is receipt
of such Notice.
15.10. Survival. The obligations of Borrower under Sections
--------
2.2(e), 2.2(f), 2.12, 2.14, 3.6, 3.7, 3.8, 4.19(h), 13.5, 13.6, 13.7 and 15.9
shall survive termination of this Agreement and the Other Documents and payment
in full of the Obligations.
15.11. Severability. If any part of this Agreement is contrary to,
------------
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
15.12. Injunctive Relief. Borrower recognizes that, in the event
------------------
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to Agent or Lender; therefore, Agent or Lender, if Agent or Lender so
requests, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving that actual damages are not an
adequate remedy.
15.13. Captions. The captions at various places in this Agreement are
--------
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
15.14. Counterparts; Telecopied Signatures . This Agreement may be
-------------------------------------
executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any
signature delivered by a party by facsimile transmission shall be deemed to be
an original signature hereto.
<PAGE>
15.15. Construction . The parties acknowledge that each party and its
------------
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
15.16. Confidentiality; Sharing Information . (a) Agent, each Lender
-------------------------------------
and each assignee of a Lender shall hold all non-public information obtained by
Agent, such Lender, or such assignee pursuant to the requirements of this
Agreement in accordance with Agent's, such Lender's and such assignee's
customary procedures for handling confidential information of this nature;
provided, however, Agent, Lender and each assignee of a Lender may disclose such
--- -------
confidential information (a) to its examiners, affiliates, outside auditors,
counsel and other professional advisors, (b) to Agent, to Lender or to any
prospective assignee of a Lender or participant in any Advance, and (c) as
required or requested by any Official Body or representative thereof or pursuant
to legal process; provided, further that (i) unless specifically prohibited by
-------- -------
applicable law or court order, Agent, Lender and each assignee of a Lender shall
use its best efforts prior to disclosure thereof, to notify the Borrower of the
applicable request for disclosure of such non-public information (A) by a
Official Body or representative thereof (other than any such request in
connection with an examination of the financial condition of a Lender or a
Transferee by such Official Body) or (B) pursuant to legal process and (ii) in
no event shall Lender, any Lender or any assignee of a Lender be obligated to
return any materials furnished by Borrower other than those documents and
instruments in possession of Agent or any Lender in order to perfect its Lien on
the Collateral once the Obligations have been paid in full and this Agreement
has been terminated.
(b) Borrower acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
Borrower or one or more of its Affiliates (in connection with this Agreement or
otherwise) by Agent and Lenders or by one or more Subsidiaries or Affiliates of
Agent and Lenders and Borrower hereby authorizes gent and Lenders to share any
information delivered to Agent and Lenders by Borrower and its Subsidiaries
pursuant to this Agreement, or in connection with the decision of Lender to
enter into this Agreement, to any such Subsidiary or Affiliate of Agent and
Lender, it being understood that any such Subsidiary or Affiliate of Agent and
Lender receiving such information shall be bound by the provision of this
Section 15.16 as if it were a Lender hereunder. Such authorization shall
survive the repayment of the other Obligations and the termination of the
Agreement.
15.17. Publicity . Borrower hereby authorizes Agent to make
---------
appropriate announcements, with prior notice to Borrower, of the financial
arrangement entered into between Borrower, Agent and Lenders, including, without
limitation, announcements which are commonly known as tombstones, in such
publications and to such selected parties as Agent shall in its sole and
absolute discretion deem appropriate.
<PAGE>
15.18. Tax Withholding Clause . Each Lender or assignee or
------------------------
participant of a Lender that is not incorporated under the Laws of the United
States of America or a state thereof agrees that it will deliver to the Borrower
and the Agent two (2) duly completed copies of the following: (i) Internal
Revenue Service Form W-9, 4224 or 1001, or other applicable form prescribed by
the Internal Revenue Service, certifying that such Lender, assignee or
participant is entitled to receive payments under this Agreement and the Other
Documents without deduction or withholding of any United States federal income
taxes, or is subject to such tax at a reduced rate under an applicable tax
treaty, or (ii) Internal Revenue Service Form W-8 or other applicable form or a
certificate of such Lender, assignee or participant indicating that such
exemption or reduced rate is allowable with respect to such payments. Each
Lender, assignee or participant required to deliver to the Borrower and the
Agent a form or certificate pursuant to the preceding sentence shall deliver
such form or certificate as follows: (A) each Lender which is a party hereto on
the Closing Date shall deliver such form or certificate at least five (5)
Business Days prior to the first date on which any interest or fees are payable
by the Borrower hereunder for the account of such Lender; (B) each assignee or
participant shall deliver such form or certificate at least five (5) Business
Days before the effective date of such assignment or participation (unless the
Agent in its sole discretion shall permit such assignee or participant to
deliver such form or certificate less than five (5) Business Days before such
date in which case it shall be due on the date specified by the Agent). Each
Lender, assignee or participant which so delivers a Form W-8, W-9, 4224 or 1001
further undertakes to deliver to each of the Borrower and the Agent two (2)
additional copies of such form (or a successor form) on or before the date that
such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, either certifying that such Lender,
assignee or participant is entitled to receive payments under this Agreement and
the Other Documents without deduction or withholding of any United States
federal income taxes or is subject to such tax at a reduced rate under an
applicable tax treaty or stating that no such exemption or reduced rate is
allowable. The Agent shall be entitled to withhold United States federal income
taxes at the full withholding rate unless the Lender, assignee or participant
establishes an exemption or that it is subject to a reduced rate as established
pursuant to the above provisions.
15.19 Application of Payments . Agent shall have the continuing and
-----------------------
exclusive right to apply or reverse and re-apply any payment and any and all
proceeds of Collateral and the Guarantor Collateral to any portion of the
Obliga-tions. To the extent that Borrower makes a payment or Agent or any
Lender receives any payment or proceeds of the Collateral or the Guarantor
Collateral for Borrower's or for Guarantor's benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver, custodian or any other
<PAGE>
party under any bankruptcy law, common law or equitable cause, then, to such
extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.
Each of the parties has signed this Agreement as of the day and year first
above written.
[SEAL] MEASUREMENT SPECIALTIES, INC.
ATTEST:
By:_______________________________
________________________ Name: Joseph R. Mallon, Jr.
Kirk Dischino Title: Chief Executive Officer
Assistant Secretary
PNC BANK, NATIONAL ASSOCIATION, as Lender
By:_______________________________
Name: Paul E. Kelleman
Title: Vice President
<PAGE>
List of Exhibits and Schedules
- ----------------------------------
Exhibits
Exhibit 2.1(a) Revolving Credit Note
Exhibit 2.1(b) Borrowing Base Certificate
Exhibit 2.4 Term Note
Exhibit 5.5(b) Financial Projections
Exhibit 8.1(i) Financial Condition Certificate
Schedules
Schedule 1.2(a) Leasehold Interests
Schedule 1.2 (b) Permitted Encumbrances
Schedule 3.3 Registration Rights
Schedule 4.5 Equipment and Inventory Locations
Schedule 4.15(c) Location of Executive Offices
Schedule 4.19 Real Property
Schedule 5.2(a) States of Qualification and Good Standing
Schedule 5.2(b) Subsidiaries
Schedule 5.4 Federal Tax Identification Number
Schedule 5.6 Prior Names
Schedule 5.7 Environmental
Schedule 5.8(b) Litigation
Schedule 5.8(d) Plans
Schedule 5.9 Intellectual Property, Source Code Escrow Agreements
Schedule 5.10 Licenses and Permits
Schedule 5.14 Labor Disputes
<PAGE>
SCHEDULE 1.2
- -------------
(A) SCHEDULE OF LEASEHOLD INTERESTS
----------------------------------
(B) SCHEDULE OF PERMITTED ENCUMBRANCES
-------------------------------------
<PAGE>
SCHEDULE 1.2A
- --------------
ORIGINAL OWNERS
- ----------------
<PAGE>
SCHEDULE 4.5
- -------------
EQUIPMENT AND INVENTORY LOCATIONS
- ------------------------------------
<PAGE>
SCHEDULE 4.15(C)
- -----------------
LOCATION OF EXECUTIVE OFFICES
- --------------------------------
<PAGE>
SCHEDULE 4.19
- --------------
REAL PROPERTY
- --------------
<PAGE>
SCHEDULE 5.2(A)
- ----------------
STATES OF QUALIFICATION AND GOOD STANDING
- ----------------------------------------------
<PAGE>
SCHEDULE 5.2(B)
- ----------------
SUBSIDIARIES
- ------------
<PAGE>
SCHEDULE 5.4
- -------------
FEDERAL TAX IDENTIFICATION NUMBER
- ------------------------------------
<PAGE>
SCHEDULE 5.6
- -------------
PRIOR NAMES
- ------------
<PAGE>
SCHEDULE 5.8(B)
- ----------------
LITIGATION
- ----------
<PAGE>
SCHEDULE 5.8(D)
- ----------------
PLANS
- -----
<PAGE>
SCHEDULE 5.9
- -------------
INTELLECTUAL PROPERTY
- ----------------------
<PAGE>
SCHEDULE 5.10
- --------------
LICENSES AND PERMITS
- ----------------------
<PAGE>
SCHEDULE 5.14
- --------------
LABOR DISPUTES
- ---------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE NO.
---------
<S> <C> <C>
I. DEFINITIONS -1-
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1.1. Accounting Terms -1-
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1.2. General Terms. -1-
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1.3. Uniform Commercial Code Terms -17-
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1.4. Certain Matters of Construction -17-
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1.5. Agent's Discretion and Consent. -18-
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II. ADVANCES, PAYMENTS -18-
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2.1. (a) Revolving Advances -18-
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(b) "Borrowing Base Certificate". -18-
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(c) Discretionary Rights. -19-
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(d) Nature of Lenders' Obligations with Respect to Revolving Advances. -19-
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2.2 Procedure for Revolving Advances Borrowing. -19-
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2.3. Disbursement of Advance Proceeds -21-
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2.4. Making Revolving Advances. -21-
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2.5. Term Loan -22-
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2.6 Maximum Advances -23-
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2.7. Repayment of Advances -23-
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2.8. Repayment of Excess Advances -23-
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2.9. Statement of Account -23-
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2.10. Additional Payments -23-
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2.11. Mandatory Prepayments -24-
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2.12. Optional Prepayment. -24-
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2.13. Use of Proceeds. -24-
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2.14. Letter of Credit Sublimit. -25-
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2.15 Disbursements, Reimbursement. -25-
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2.16 Repayment of Participation Advances. -26-
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2.17 Documentation. -27-
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2.18 Determinations to Honor Drawing Requests. -27-
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2.19 Nature of Participation and Reimbursement Obligations. -27-
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2.20. Indemnity. -28-
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2.21. Liability for Acts and Omissions. -29-
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2.22. Pro Rata Treatment of Lenders. -29-
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2.23. Replacement of a Lender. -30-
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III. INTEREST AND FEES -30-
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3.1. Interest. -30-
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3.2. Commitment Fee. -31-
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[3.3 INTENTIONALLY LEFT BLANK] -31-
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3.4. Computation of Interest and Fees. -31-
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3.5. Maximum Charges. -31-
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3.6. Increased Costs. -31-
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3.7. Basis For Determining Interest Rate Inadequate or Unfair. -32-
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3.8. Capital Adequacy. -32-
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IV. COLLATERAL: GENERAL TERMS -33-
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4.1. Security Interest in the Collateral. -33-
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4.2. Perfection of Security Interest -33-
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4.3. Disposition of Collateral. -34-
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4.4. Preservation of Collateral -34-
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4.5. Ownership of Collateral -34-
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4.6. Defense of Agent's and each Lender's Interests -34-
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4.7. Books and Records -35-
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4.8. Financial Disclosure -35-
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4.9. Compliance with Laws. -35-
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4.10. Inspection of Premises -36-
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4.11. Insurance -36-
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4.12. Failure to Pay Insurance -37-
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4.13. Payment of Taxes -37-
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4.14. Payment of Leasehold Obligations -37-
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4.15. Receivables -37-
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(a) Nature of Receivables. -37-
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(b) Solvency of Customers. -37-
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(c) Locations of Borrower -38-
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(d) Collection of Receivables -38-
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(e) Notification of Assignment of Receivables -38-
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(f) Power of Agent to Act on Borrower's Behalf -38-
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(g) No Liability -39-
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(h) Establishment of a Lockbox Account, Dominion Account -39-
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(i) Adjustments. -39-
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4.16. Inventory. -39-
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4.17. Maintenance of Equipment -40-
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4.18. Exculpation of Liability -40-
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4.19. Environmental Matters -40-
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4.20. Financing Statements -42-
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V. REPRESENTATIONS AND WARRANTIES -42-
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5.1. Authority -42-
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5.2. Incorporation and Qualification. -42-
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5.3. Survival of Representations and Warranties -43-
---------------------------------------------------------------------
5.4. Tax Returns -43-
---------------------------------------------------------------------
5.5. Financial Statements -43-
---------------------------------------------------------------------
5.6. Corporate Name -44-
---------------------------------------------------------------------
5.7. O.S.H.A. and Environmental Compliance -44-
---------------------------------------------------------------------
5.8. Solvency; No Litigation, Violation, Indebtedness or Default -44-
---------------------------------------------------------------------
5.9. Patents, Trademarks, Copyrights and Licenses -45-
---------------------------------------------------------------------
5.10. Licenses and Permits -46-
---------------------------------------------------------------------
5.11. Default of Indebtedness. -46-
---------------------------------------------------------------------
5.12. No Default -46-
---------------------------------------------------------------------
5.13. No Burdensome Restrictions. -46-
---------------------------------------------------------------------
5.14 No Labor Disputes -46-
---------------------------------------------------------------------
5.15. Margin Regulations -46-
---------------------------------------------------------------------
5.16. Investment Company Act -47-
---------------------------------------------------------------------
5.17. Disclosure -47-
---------------------------------------------------------------------
5.18. Delivery of Stock Purchase Agreement -47-
---------------------------------------------------------------------
5.19. [INTENTIONALLY LEFT BLANK] -47-
---------------------------------------------------------------------
5.20. Conflicting Agreements -47-
---------------------------------------------------------------------
5.21. Application of Certain Laws and Regulations -47-
---------------------------------------------------------------------
5.22 Year 2000. -47-
---------------------------------------------------------------------
VI. AFFIRMATIVE COVENANTS -48-
---------------------------------------------------------------------
6.1. Payment of Fees. -48-
---------------------------------------------------------------------
6.2. Conduct of Business and Maintenance of Existence and Assets -48-
---------------------------------------------------------------------
6.3. Violations -48-
---------------------------------------------------------------------
6.4. Government Receivables -48-
---------------------------------------------------------------------
6.5. Minimum Fixed Charge Coverage -48-
---------------------------------------------------------------------
6.6. Minimum Interest Coverage. -49-
---------------------------------------------------------------------
6.7. Maximum Leverage Ratio. -49-
---------------------------------------------------------------------
6.8. Execution of Supplemental Instruments. -49-
---------------------------------------------------------------------
6.9. Payment of Indebtedness; Taxes -49-
---------------------------------------------------------------------
6.10. Standards of Financial Statements -49-
---------------------------------------------------------------------
6.11. Exercise of Rights -49-
---------------------------------------------------------------------
6.12 Interest Rate Protection. -49-
---------------------------------------------------------------------
6.13 Key Man Life Insurance. -49-
---------------------------------------------------------------------
VII. NEGATIVE COVENANTS -50-
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7.1. Merger, Consolidation, Acquisition and Sale of Assets -50-
---------------------------------------------------------------------
7.2. Creation of Liens. -50-
---------------------------------------------------------------------
7.3. Guarantees -50-
---------------------------------------------------------------------
7.4. Investments -50-
---------------------------------------------------------------------
7.5. Loans -50-
---------------------------------------------------------------------
7.6. Capital Expenditures -51-
---------------------------------------------------------------------
7.7. Dividends -51-
---------------------------------------------------------------------
7.8. Indebtedness -51-
---------------------------------------------------------------------
7.9. Nature of Business -51-
---------------------------------------------------------------------
7.10. Transactions with Affiliates -51-
---------------------------------------------------------------------
7.11. Leases. -51-
---------------------------------------------------------------------
7.12. Subsidiaries -51-
---------------------------------------------------------------------
7.13. Fiscal Year and Accounting Changes -52-
---------------------------------------------------------------------
7.14. Pledge of Credit -52-
---------------------------------------------------------------------
7.15. Amendment of Certificate of Incorporation , By-Laws -52-
---------------------------------------------------------------------
7.16. Compliance with ERISA -52-
---------------------------------------------------------------------
7.17. Prepayment of Indebtedness -52-
---------------------------------------------------------------------
7.18. Other Agreements -52-
---------------------------------------------------------------------
VIII. CONDITIONS PRECEDENT. -53-
---------------------------------------------------------------------
8.1. Conditions to Initial Advances -53-
---------------------------------------------------------------------
(a) Note -53-
---------------------------------------------------------------------
(b) Filings, Registrations and Recordings -53-
---------------------------------------------------------------------
(c) Corporate Proceedings of Borrower and Guarantor -53-
---------------------------------------------------------------------
(d) Incumbency Certificates of Borrower and Guarantor -53-
---------------------------------------------------------------------
(e) Certificates -53-
---------------------------------------------------------------------
(f) Good Standing Certificates -54-
---------------------------------------------------------------------
(g) Legal Opinions -54-
---------------------------------------------------------------------
(h) No Litigation -54-
---------------------------------------------------------------------
(i) Financial Condition Certificates -54-
---------------------------------------------------------------------
(j) Collateral Examination -54-
---------------------------------------------------------------------
(k) Fees. -54-
---------------------------------------------------------------------
(l) Pro Forma Financial Statements. -54-
---------------------------------------------------------------------
(m) Stock Purchase Documents. -54-
---------------------------------------------------------------------
(n) Capital Structure. -55-
---------------------------------------------------------------------
(o) Insurance. -55-
---------------------------------------------------------------------
(p) Stock Pledge Agreement, Other Documents. -55-
---------------------------------------------------------------------
(q) Environmental Reports. -55-
---------------------------------------------------------------------
(r) Payment Instructions. -55-
---------------------------------------------------------------------
[(s) Blocked Accounts. -55-
---------------------------------------------------------------------
(t) Consents. -55-
---------------------------------------------------------------------
(u) No Adverse Material Change. -55-
---------------------------------------------------------------------
(v) Leasehold Agreements. -55-
---------------------------------------------------------------------
(w) Contract Review. -55-
---------------------------------------------------------------------
(x) Closing Certificate. -56-
---------------------------------------------------------------------
(y) Borrowing Base. -56-
---------------------------------------------------------------------
(z) Guaranty, Guarantor Security Agreement. -56-
---------------------------------------------------------------------
(aa) -56-
(bb) Other. -56-
---------------------------------------------------------------------
8.2. Conditions to Each Advance. -56-
---------------------------------------------------------------------
(a) Representations and Warranties -56-
---------------------------------------------------------------------
(b) No Default. -56-
---------------------------------------------------------------------
(c) Maximum Advances -57-
---------------------------------------------------------------------
IX. INFORMATION AS TO BORROWER AND GUARANTOR -58-
---------------------------------------------------------------------
9.1. Disclosure of Material Matters. -58-
---------------------------------------------------------------------
9.2. Schedules -58-
---------------------------------------------------------------------
9.3. Environmental Reports -58-
---------------------------------------------------------------------
9.4. Litigation -58-
---------------------------------------------------------------------
9.5. Material Occurrences -58-
---------------------------------------------------------------------
9.6. Government Receivables -59-
---------------------------------------------------------------------
9.7. Annual Financial Statements -59-
---------------------------------------------------------------------
9.8. Monthly and Quarterly Financial Statements -59-
---------------------------------------------------------------------
9.9. Other Reports -60-
---------------------------------------------------------------------
9.10. Additional Information -60-
---------------------------------------------------------------------
9.11. Notice of Suits, Adverse Events -61-
---------------------------------------------------------------------
9.12. ERISA Notices and Requests -61-
---------------------------------------------------------------------
9.13. Additional Documents -61-
---------------------------------------------------------------------
X. EVENTS OF DEFAULT -62-
---------------------------------------------------------------------
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT. -64-
---------------------------------------------------------------------
11.1. Rights and Remedies -64-
---------------------------------------------------------------------
11.2. Agent's Discretion -65-
---------------------------------------------------------------------
11.3. Setoff -65-
---------------------------------------------------------------------
11.4 Rights and Remedies not Exclusive -65-
---------------------------------------------------------------------
XII. WAIVERS AND JUDICIAL PROCEEDINGS -65-
---------------------------------------------------------------------
12.1. Waiver of Notice -65-
---------------------------------------------------------------------
12.2 Delay -66-
---------------------------------------------------------------------
12.3 Jury Waiver -66-
---------------------------------------------------------------------
XIII. THE AGENT -66-
---------------------------------------------------------------------
13.1 Appointment. -66-
---------------------------------------------------------------------
13.2 Delegation of Duties. -66-
---------------------------------------------------------------------
13.3 Nature of Duties; Independent Credit Investigation. -66-
---------------------------------------------------------------------
13.4 Actions in Discretion of Agent; Instructions From the Lenders. -67-
---------------------------------------------------------------------
13.5 Reimbursement and Indemnification of Agent by the Borrower. -67-
---------------------------------------------------------------------
13.6 Exculpatory Provisions; Limitation of Liability. -68-
---------------------------------------------------------------------
13.7 Reimbursement and Indemnification of Agent by Lenders. -69-
---------------------------------------------------------------------
13.8 Reliance by Agent. -69-
---------------------------------------------------------------------
13.9 Notice of Default. -69-
---------------------------------------------------------------------
13.10 Notices. -69-
---------------------------------------------------------------------
13.11 Lenders in Their Individual Capacities. -70-
---------------------------------------------------------------------
13.12 Holders of Notes. -70-
---------------------------------------------------------------------
13.13 Equalization of Lenders. -70-
---------------------------------------------------------------------
13.14 Successor Agent. -70-
---------------------------------------------------------------------
13.15 Availability of Funds. -71-
---------------------------------------------------------------------
13.16 Calculations. -71-
---------------------------------------------------------------------
13.17 Beneficiaries. -72-
---------------------------------------------------------------------
XIV. EFFECTIVE DATE AND TERMINATION. -72-
---------------------------------------------------------------------
14.1. Term. -72-
---------------------------------------------------------------------
14.2. Termination. -72-
---------------------------------------------------------------------
XV. MISCELLANEOUS -72-
---------------------------------------------------------------------
15.1 Modifications, Amendments or Waivers. -72-
---------------------------------------------------------------------
15.2 No Implied Waivers; Cumulative Remedies; Writing Required. -73-
---------------------------------------------------------------------
15.3 Reimbursement and Indemnification of Lenders by the Borrower; Taxes. -74-
---------------------------------------------------------------------
15.4 Holidays. -74-
---------------------------------------------------------------------
15.5 Funding by Branch, Subsidiary or Affiliate. -75-
---------------------------------------------------------------------
15.6. Governing Law -75-
---------------------------------------------------------------------
15.7. Entire Understanding -76-
---------------------------------------------------------------------
15.8 Successors and Assigns; Participations; New Lenders. -76-
---------------------------------------------------------------------
15.9 Notices. -77-
---------------------------------------------------------------------
15.10. Survival -78-
---------------------------------------------------------------------
15.11. Severability -78-
---------------------------------------------------------------------
15.12. Injunctive Relief -78-
---------------------------------------------------------------------
15.13. Captions -79-
---------------------------------------------------------------------
15.14. Counterparts; Telecopied Signatures -79-
---------------------------------------------------------------------
15.15. Construction -79-
---------------------------------------------------------------------
15.16. Confidentiality; Sharing Information -79-
---------------------------------------------------------------------
15.17. Publicity -80-
---------------------------------------------------------------------
15.18. Tax Withholding Clause -80-
---------------------------------------------------------------------
15.19 Application of Payments -80-
---------------------------------------------------------------------
</TABLE>
