EXHIBIT 10.31

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ROSENTHAL & ROSENTHAL, INC.

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Financing Agreement

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AGREEMENT dated December 29, 2016 between eMagin Corporation (sometimes known as
“Emagin Corporation”) (“Borrower”), a corporation duly organized and presently
existing in good standing under the laws of the State of Delaware whose chief
executive office is at 2070 Route 52, Hopewell Junction, NY , and ROSENTHAL &
ROSENTHAL, INC. (“Lender”), a New York corporation with an address at 1370
Broadway, New York NY 10018.

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Borrower desires to obtain loans and other financial accommodations from Lender
on a revolving basis upon the security of the Collateral (as herein defined).
Now, therefore, Borrower and Lender agree as follows.

 

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1.

DEFINITIONS

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As used in this Agreement, these terms shall have the following meanings which
shall be applicable to both the singular and plural forms of such terms.

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1.1. “Account Debtor” shall mean the account debtor with respect to a Receivable
and any other person who is obligated on such Receivable.

1.2. “Affiliate” of a party shall mean any entity controlling, controlled by, or
under common control with, the party, and the term "controlling" and such
variations thereof shall mean ownership of a majority of the voting power of a
party.

1.3.  “Business Day” shall mean a day on which Lender and major banks in New
York City are open for the regular transaction of business.

1.4. “Certifying Officers” shall mean, respectively, and/or collectively,
Jeffrey P. Lucas and Andrew Sculley, each of whom has concurrently hereto
executed and delivered a certificate in form and substance satisfactory to
Lender, and any replacement Certifying Officer, satisfactory to Lender.

1.5. “Closing Date” shall mean the date set forth in the first paragraph of this
Agreement.

1.6. “Collateral” shall have the meaning given in Section 4 hereof.

1.7. “Collateral Documents” shall mean any and all security agreements, deposit
account control agreements and other documents executed and delivered to Lender
to secure the Obligations.

1.8. “Current Assets” shall mean, at a particular date, all amounts which would,
in conformity with GAAP, be included under current assets on a balance sheet of
Borrower, as at such date, including but not limited to (i) cash and cash
equivalents, (ii) accounts, (iii) inventory; and (iv) prepaid current assets of
Borrower provided however, that such amounts shall not include any amounts for
any indebtedness owing by any Affiliate to Borrower.

1.9. “Current Liabilities” shall mean, at a particular date, all amounts which
would, in conformity with GAAP, be included under current liabilities on a
balance sheet of Borrower, as at such date, but in any event including, without
duplications, the amounts of (a) all indebtedness payable on demand, or at the
option of the person or entity to whom such indebtedness is owed, not more than
twelve

 

 

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(12) months after such date, (b) any payments in respect of any indebtedness
(whether installment, serial maturity, sinking fund payment or otherwise)
required to be made not more than twelve (12) months after such date, (c) all
reserves in respect of liabilities or indebtedness payable on demand or, at the
option of the person or entity to whom such indebtedness is owed, not more than
twelve (12) months after such date, the validity which is not contested to such
date, and (d) all accruals for federal or other taxes measured by income payable
within twelve (12) months of such date.

1.10. “Event(s) of Default” shall have the meaning provided in Section 9.1
hereof.

1.11. “Effective Rate” shall have the meaning provided in Section 3.1 hereof.

1.12. “Eligible Inventory” shall mean Inventory consisting of only finished
goods owned by Borrower in the ordinary course of its business in which Lender
holds a perfected security interest pursuant to the terms hereof, ranking prior
to and free and clear of all interests, claims and rights of others, and has
received agreements executed by any landlords and bailees where such Inventory
may be located in accordance with Section 6.15 hereof, and which is and at all
times shall continue to be acceptable to Lender in all respects. Standards of
eligibility may be fixed and revised from time to time solely by Lender in its
exclusive judgment. In determining eligibility, Lender may, but need not, rely
on certificates of inventory and reports furnished by Borrower, but reliance
thereon by Lender from time to time shall not be deemed to limit Lender's right
to revise standards of eligibility at any time. In general, Inventory shall not
be deemed eligible unless it complies in all respects with the representations,
covenants and warranties hereinafter set forth, made by Borrower with respect
thereto and meets all standards imposed by any governmental agency or authority.

1.13. “Eligible Receivables” shall mean Receivables created by Borrower in the
ordinary course of its business which have been validly assigned to Lender as
security and in which Lender holds a perfected security interest pursuant to the
terms hereof ranking prior to and free and clear of all interests, claims, and
rights of others and which are and at all times shall continue to be acceptable
to Lender in all other respects. Standards of eligibility may be fixed and
revised from time to time solely by Lender in its exclusive judgment. In
determining eligibility Lender may, but need not, rely on ageings, reports and
schedules of Receivables furnished by Borrower, but reliance thereon by Lender
from time to time shall not be deemed to limit Lender's right to revise
standards of eligibility at any time. In general, a Receivable shall not be
deemed eligible unless the Receivable complies with the Minimum Receivable
Eligibility Requirements and the Account Debtor on such Receivable is and at all
times continues to be acceptable to Lender and unless each Receivable complies
in all respects with the representations, covenants and warranties hereinafter
set forth and in the event such Receivable arises from the sale of goods and
services, such goods and services meet all standards imposed by any governmental
agency or authority; provided, however, that any Receivables owing to Borrower
by Rockwell Collins, Inc., whether now existing or hereafter created shall not
be “Eligible Receivables” at any time they are subject to a lien in favor of
Citibank, N.A., as evidenced by a Uniform Commercial Code UCC-1 Financing
Statement filed with the Delaware Department of State, filing number
20101331523.

1.14. “Equipment” shall mean equipment as now or hereafter defined in Article 9
of the UCC.

1.15. “ERISA” shall mean the Employee Retirement Income Security Act.

1.16. “GAAP” shall mean generally accepted accounting principles in the United
States of America as in effect from time to time as set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and the elements and pronouncements of the
Financial Accounting Standards Board which are applicable to the circumstances
as of the date of determination consistently applied.

 

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1.17. “Inventory” shall mean inventory as now or hereafter defined in Article 9
of the UCC.

1.18. INTENTIONALLY OMITTED

1.19. “Lease” and “Leased Premises” shall have the meanings given in Section 9.1
hereof.

1.20. “Loan Account” shall mean the Loan Account as described in Section 2.2
hereof.

1.21. “Loan Availability” shall have the meaning given in Section 2.1 hereof.

1.22. “Loan Documents” shall mean, collectively, this Agreement, the Collateral
Documents, and each guaranty, certificate, agreement, or document now or
hereafter executed by Borrower, Certifying Officers or any future guarantors and
delivered to Lender in connection with the foregoing, or as they may be amended.

1.23. “Margin” shall mean three percent (3%) per annum.

1.24. “Material Adverse Effect”  shall mean a fact, occurrence, act or omission
pending or applying to the Borrower, any subsidiary of the Borrower or any of
their assets, or which in the opinion of Lender, if adversely determined, could
have a material adverse effect on the business, operations, results of
operations, assets, liabilities or condition (financial or otherwise) of the
Borrower, the impairment of the Borrower’s ability to perform its obligations
under this Agreement or any loan document to which it is a party, the ability of
the Lender to enforce the Obligations or realize upon the Collateral, or would
have a material adverse effect on the value of the Collateral or the amount that
Lender would likely to receive (after giving consideration to delays in payment
and costs of enforcement) in the liquidation of the Collateral.

1.25. “Maximum Credit Facility” shall mean $5,000,000.

1.26. “Maximum Rate” shall have the meaning provided in Section 10.2 hereof.

1.27. “Minimum Receivable Eligibility Requirements” shall have the meaning given
in Section 2.3 hereof.

1.28. “Net Amount of Eligible Receivables” shall mean the gross amount of
Eligible Receivables less sales, excise or similar taxes, returns, discounts,
claims, credits and allowances of any nature at any time issued, owing, granted,
outstanding or claimed, and less (without duplication) all amounts payable by
any Account Debtor on Eligible Receivables of such Account Debtor that are
unpaid (i) more than 90 days following its invoice date arising from sales made
to domestic or foreign customers; and (ii) more than 50 days following its
invoice date arising from sales made to contract research and development
customers.

1.29. “Obligations” shall mean all obligations, liabilities and indebtedness of
Borrower to Lender or an Affiliate of Lender, however evidenced, arising under
this Agreement, any other Loan Document (whether by reason of extension of
credit, guaranty, indemnity or otherwise), or under any other or supplemental
financing provided to Borrower by Lender or an Affiliate of Lender, or
independent hereof or thereof, whether now existing or incurred from time to
time hereafter and whether before or after termination hereof, absolute or
contingent, joint or several, matured or unmatured, direct or indirect, primary
or secondary, liquidated or unliquidated, and whether arising directly or
acquired from others (whether acquired outright, by assignment unconditionally
or as collateral security from another and including participations or interest
of Lender in obligations of Borrower to others), and including (without
limitation) all of Lender's charges, commissions, fees, interest, expenses,
costs and reasonable attorneys' fees, whether incurred by in-house or outside
counsel chargeable to Borrower in connection therewith.

 

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1.30. “Over-advance” shall mean any portion of all loans and advances which on
any day exceeds the Loan Availability.

1.31. “Permitted Liens” means the liens of Lender granted under the Loan
Documents and any other liens, if any, described on the attached Exhibit A.

1.32. “Person” shall mean any person, firm, corporation, partnership, limited
liability company, association, company, trust, estate, custodian, nominee or
other individual or entity.

1.33. “Prime Rate” shall mean the prime rate from time to time publicly
announced in New York City by JPMorgan Chase Bank.

1.34. “Receivables” shall mean all obligations to Borrower for the payment of
money arising out of the sale of goods or services by Borrower, now existing or
hereafter arising, however evidenced, including all accounts, contract rights,
general intangibles (but shall exclude tradenames, trademarks, tradestyles,
service marks, copyrights and patents) documents, chattel paper and instruments
(as each of such terms is now or hereafter defined in the UCC).

1.35. INTENTIONALLY OMITTED

1.36. “Tangible Net Worth” shall mean, at a particular date (a) the aggregate
amount of all assets of Borrower as may be properly classified as such in
accordance with GAAP consistently applied excluding such other assets as are
properly classified as intangible assets under GAAP, less (b) the aggregate
amount of all liabilities of Borrower (excluding subordinated liabilities to
Lender) determined in accordance with GAAP. 

1.37. “Working Capital” shall mean the excess, if any, of Current Assets less
Current Liabilities.

1.38. “UCC” shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York, provided, however, that in the event by reason of
mandatory provisions of law, any of the attachment, perfection, or priority of
Lender’s security interest in any of the Collateral is governed by the Uniform
Commercial Code as in effect in any jurisdiction other than the State of New
York, the term “UCC” shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.

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2.

LOANS; Eligibility of Receivables

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2.1. Subject to the terms and conditions of this Agreement, Lender shall make
loans to Borrower from time to time, at Borrower's request, which loans in the
aggregate shall not exceed the lesser of (A) the Maximum Credit Facility; or (B)
the Loan Availability, (the “Loan Availability”) which means the sum of (i) up
to eighty-five percent (85%) of the Net Amount of Eligible Receivables arising
from sales made by Borrower to customers located in the United States; plus (ii)
the lesser of (x) up to eighty-five percent (85%) of the Net Amount of Eligible
Receivables arising from sales made by Borrower to customers located outside of
the United States, provided that such Receivables are subject to credit
insurance acceptable and assigned to Lender and (y) $2,000,000; plus (iii) the
lesser of (x) up to eighty five percent (85%) of the Net Amount of Eligible
Receivables arising from contract research and development and (y) $700,000,
plus (iv) the lesser of (x) up to fifty percent (50%) of the lower of cost or
market value of Eligible Inventory; and (y) $2,000,000, minus such reserves as
Lender may deem, in its sole discretion, to be necessary from time to time in
good faith thereby reducing the amount of advances which would otherwise be
available to Borrower hereunder to reflect events, conditions, contingencies or
risks which, as determined by Lender

 

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(XX) would have or could reasonably be expected to result in a Material Adverse
Effect, or (YY) to reflect Lender’s good faith belief that any Collateral report
or financial information furnished by or on behalf of Borrower to Lender is or
may have been incomplete, inaccurate or misleading in any material respect or
(ZZ) in respect of any state of facts that Lender determines in good faith
constitutes an Event of Default or may, with notice or passage of time or both,
constitute an Event of Default.  The Loan Availability may be reduced as Lender
may deem in its discretion to be necessary from time to time to the extent that
Lender determines in good faith that (AA) the dilution with respect to the
Receivables for any period (based on the ratio of (a) the aggregate amount of
reductions in Receivables other than as a result of payments in cash to (b) the
aggregate amount of total sales) has increased in any material respect or may be
reasonably anticipated to increase in any material respect above historical
levels, or (BB) the general creditworthiness of any Account Debtors has
declined, or  (CC) the number of days of the turnover of the Inventory for any
period has changed in any material respect, or (DD) the liquidation value of the
Eligible Inventory, or any category thereof, has decreased, or (EE) the nature
and quality of the Inventory has deteriorated.

2.2. The making of any loan in excess of the percentages set forth above shall
not be deemed to modify such percentages or create any obligation to make any
further such loan. All loans (and all other amounts chargeable to Borrower under
this Agreement or any supplement hereto) shall be charged to a Loan Account (the
“Loan Account”) in Borrower's name on Lender's books. Lender shall render to
Borrower each month a statement of the Loan Account (and all credits and charges
thereto) which shall be considered correct and accepted by Borrower and
conclusively binding upon Borrower as an account stated except for manifest
error to the extent that Lender receives a written notice by registered mail of
Borrower's exceptions within 30 days after such statement has been rendered to
Borrower.

2.3. A Receivable meets the Minimum Receivable Eligibility Requirements (the
“Minimum Eligibility Requirements”) if the Receivable arose from bona fide
completed transactions and has not remained unpaid for more than the number of
days after the invoice date set forth in Section 1.28;   the amount of the
Receivable reported to Lender is absolutely owing to Borrower and payment is not
conditional or contingent, (such as consignments, guaranteed sales or right of
return or other similar terms); the Account Debtor's chief executive office or
principal place of business is located in the United States; and if outside the
United States, the Receivable is subject to credit insurance on such terms and
conditions as Lender shall require;  the Receivable did not arise from progress
billings (other than progress billings arising from contract research and
development), retainages or bill and hold sales; there are no contra
relationships, setoffs, counterclaims or disputes existing with respect thereto
and there are no other facts existing or threatened which would impair or delay
the collectability of all or any portion thereof, except, in each such case, as
disclosed to Lender and deducted from the amount of the Receivable; the goods
giving rise thereto were not at the time of the sale subject to any liens except
those permitted in this Agreement; the Account Debtor is not an Affiliate of
Borrower;  there has been compliance with the Assignment of Claims Act or
similar State or local law, if applicable, if the Account Debtor is the United
States or any domestic governmental unit; Borrower has delivered to Lender such
documents as Lender may have requested pursuant to Section 4.1 hereof in
connection with such Receivable and Lender shall have received verifications of
such Receivable, satisfactory to it, if sent to the Account Debtor or any other
obligors or any bailees; there are no facts existing or threatened which might
result in any adverse change in the Account Debtor's financial condition; not
more than 50% of the Receivables of the Account Debtor or its Affiliates owed to
Borrower are more than (x) 90 days past their invoice date, for Receivables
arising from sales made to domestic or foreign customers and (y) 50 days past
their invoice date, for Receivables arising from sales made to contract research
and development customers; the total indebtedness to Borrower of the Account
Debtor does not exceed the amount of any customer credit limits as reasonably
established from time to time on notice to Borrower; the Account Debtor is
deemed

 

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creditworthy at all times by Lender; and all representations and warranties in
this Agreement or any other Loan Document with respect to such Receivable are
true and correct.

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3.

LENDER'S CHARGES

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3.1. Borrower agrees to pay to Lender each month interest (computed on the basis
of the actual number of days elapsed over a year of 360 days) (a) on that
portion of the average daily balances in the Loan Account during the preceding
month that does not exceed the Loan Availability at a rate per annum (the
“Effective Rate”) equal to the Prime Rate plus the Margin and (b) on the amount
of Over-advances, if any, at a rate of 3% per annum in excess of the Effective
Rate. Any change in the effective interest rates due to a change in the Prime
Rate shall take effect on the date of such change in the Prime Rate provided,
that, with respect to Lender’s charges, no decrease in the Prime Rate below 3.5%
per annum shall be given any effect.

3.2. Borrower shall pay a facility fee payable (i) on the Closing Date to
Lender, in the amount of two percent (2%) of the Maximum Credit Facility (of
which, half will be remitted by Lender to Michael Nedder); and (ii) on the
anniversary of such date in each succeeding year, in the amount of one percent
(1%) of the Maximum Credit Facility.

3.3. Borrower shall pay to Lender monthly an administration fee of $1,000
payable in arrears on the first day of each month with respect to the prior
month for the stated term of this Agreement.

3.4. A statement of all of Lender's charges shall accompany each monthly
statement of the Loan Account and such charges shall be payable by Borrower
within 5 days after receipt of such statement. In lieu of the separate payment
of charges, Lender at its option, shall have the right to debit the amount of
such charges to Borrower's Loan Account, which charges shall be deemed to be
first paid by amounts subsequently credited to the Loan Account. Borrower agrees
that the minimum charges payable by Borrower to Lender each month under Section
3.1 hereof shall be $2,000.  As more fully provided in Section 10.2 hereof, in
no event shall the interest charges hereunder exceed the Maximum Rate.

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4.

SECURITY INTEREST IN COLLATERAL

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As security for the prompt performance, observance and payment in full of all of
the Obligations, Borrower grants to Lender a security interest in, a continuing
lien upon and a right of setoff against, and Borrower hereby assigns, transfers,
pledges and sets over to Lender as security (collectively, including any other
assets of Borrower in which Lender may be granted a security interest under any
Loan Document, the “Collateral”): (i) all Receivables (whether or not Eligible
Receivables and whether or not specifically listed on any schedules, assignments
or reports furnished to Lender) (ii) all of Borrower's property, and the
proceeds thereof, now or hereafter held or received by or in transit to Lender
or held by others for Lender's account, including any and all deposits,
balances, sums and credits of Borrower with, and any and all claims of Borrower
against, Lender, at any time existing, (iii) all credit insurance policies, and
all other insurance and all guarantees relating to the Receivables or other
Collateral, (iv) all books, records and other general intangibles evidencing or
relating to Receivables or other Collateral and the computer hardware and
software and media containing such books and records; all deposits, or other
security for the obligation of any person under or relating to Receivables, all
of the Borrower's rights and remedies of whatever kind or nature it may hold or
acquire for the purpose of securing or enforcing Receivables; all right, title
and interest of the Borrower in and to all goods relating to, or which by sale
have resulted in, Receivables, including goods returned by or reclaimed or
repossessed from Account Debtors and all goods described in copies of invoices
delivered by Borrower to Lender; all rights of stoppage in transit, replevin,
repossession and

 

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reclamation and all other rights and remedies of an unpaid vendor or lienor, and
all proceeds of any Letter of Credit naming Borrower as beneficiary and which
provides for, guarantees or assures the payment of any Receivable; (v) all
accounts, instruments, chattel paper, documents, general intangibles (but
excluding all rights in intellectual property, including all rights in
tradenames, trademarks, tradestyles, service marks, know how copyrights and
patents and applications therefor), deposit accounts, investment property and
letter of credit rights, whether or not arising out of the sale of goods or
rendition of services, and including choses in action, causes of action, tax
refunds (and claims), and reversions from terminated pension plans; (vi) all of
Borrower’s Inventory and Equipment; and (vii) all proceeds of such Collateral,
in any form, including cash, non-cash items, checks, notes, drafts and other
instruments for the payment of money. Such security interest in favor of Lender
shall continue during the term of this Agreement and until indefeasible payment
in full of all Obligations, whether or not this Agreement shall have sooner
terminated.

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4.1. At Lender's request, Borrower will provide Lender with confirmatory
assignment schedules in form  reasonably satisfactory to Lender, copies of
customers' invoices, evidence of shipment or delivery, and such further
information as Lender may reasonably require. Borrower will take any and all
steps and observe such formalities as Lender may reasonably request from time to
time to create and maintain in Lender's favor a valid and first lien upon,
security interest in and pledge of all of Borrower's Receivables and all other
Collateral, including executing all documents that may be requested by Lender to
maintain such security interest in and pledge of the Collateral. Borrower hereby
authorizes Lender to file any Financing Statements under the UCC, and renewals
and amendments thereof, whether before or after an Event of Default, naming
Borrower as debtor that are necessary to perfect and maintain the perfection of
Lender’s security interest in the Collateral.  Borrower agrees to take all steps
necessary to allow Lender to comply with any Federal or state statute, which, in
Lender’s judgment, if not complied with, might afford to any Person an interest
in the Collateral that would be superior to Lender’s security interest in the
Collateral.

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5.

CUSTODY AND INSPECTION OF COLLATERAL AND RECORDS;

COLLECTION AND HANDLING OF COLLATERAL

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5.1. Borrower shall instruct all customers to remit payments on Receivables to a
lockbox controlled by Lender and maintained at Borrower’s expense. Borrower will
execute and deliver six (6) originals of the notice in the form of Annex A on
its letterhead to be used by Lender as set forth in Section 8.1(d)
hereof.  Borrower will, at its own expense and on Lender's behalf, collect as
Lender's Collateral and in trust for Lender all payments and prepayments on
Receivables which for any reason are not remitted by customers to the lockbox,
and shall not commingle such collections with Borrower's own funds. As to all
moneys so collected, including all prepayments by customers, Borrower shall on
the day received remit all such collections to Lender in the form received by
depositing such collections into the lockbox. All amounts collected on
Receivables when received by Lender shall be credited to Borrower's Loan
Account, adding one (1) Business Day for collection and clearance of remittances
sent by wire transfer and three (3) Business Days for collection and clearance
of all other remittances. Such credits shall be conditional upon final payment
to Lender. Nothing contained in this Section 5.1, or otherwise in this
Agreement, shall be deemed to limit Lender's rights and powers pursuant to
Section 8 of this Agreement.

5.2. All records, ledger sheets, correspondence, contracts, documentation and
computer hardware and software and media relating to or evidencing Receivables
or containing information relating to the Receivables shall, until delivered to
Lender or removed by Lender from Borrower's premises, be kept on Borrower's
premises, without cost to Lender, in appropriate containers in safe places.
Lender shall at all reasonable times have full access to and the right to
examine and make copies of Borrower's books and

 

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records, and shall have full access to Borrower’s computer information systems,
to confirm and verify all Receivables assigned to Lender and to do whatever else
Lender deems necessary to protect its interest. Lender may at any time after and
during the continuance of any Event of Default remove from Borrower's premises,
or require Borrower to deliver any contracts, documentation, files and records
relating to Receivables, and any computer hardware, software and media
containing information relating to the Receivables or Lender may, without cost
or expense to Lender, use such of Borrower's personnel, supplies, computer
information systems and space at Borrower's places of business as may be
reasonably necessary for collection of Receivables.

5.3. Borrower will promptly following obtaining knowledge thereof report to
Lender all reclaimed, repossessed or returned merchandise, Account Debtor claims
and any other matter, which in any case affects the value, enforceability or
collectability of Receivables. Any merchandise reclaimed or repossessed by or
returned to Borrower, after the occurrence and during the continuation of an
Event of Default will, at the cost and expense of Borrower, be set aside marked
with the name of the Lender and will be held by Borrower for the account of
Lender and subject to Lender's security interest. All claims and disputes
relating to Receivables are to be promptly adjusted by Borrower within a
reasonable time, at its own cost and expense. Lender may, at its option, after
the occurrence and during the continuance of an Event of Default, settle, adjust
or compromise claims and disputes relating to Receivables which are not adjusted
by Borrower within a reasonable time.  Following the occurrence and during the
continuance of an Event of Default, Lender may, at its option, revoke Borrower’s
authority to settle or adjust disputes or to further communicate with Account
Debtors.

5.4. Borrower shall reimburse Lender on demand for all costs of collection
incurred by Lender in efforts to enforce payment of Receivables, recovery of or
realization upon any other Collateral, including reasonable attorneys' fees
(whether incurred by in-house or outside counsel) and the fees and commissions
of collection agencies. All and any fees, costs and expenses, of whatever kind
and nature, including taxes of any kind, which Lender may incur in filing public
notices, obtaining appraisals of the Collateral, and the reasonable charges of
any attorney (whether incurred by in-house or outside counsel) whom Lender may
engage in preparing and filing documents, making title or lien examinations and
rendering opinion letters, as well as all fees, costs and expenses incurred by
Lender (including all reasonable attorneys' fees and including Lender's out of
pocket expenses in conducting reasonable periodic field examinations of Borrower
and the Collateral (including any costs of third-party examiners) plus Lender's
prevailing per diem charge for each of its examiners in the field and office,
now $950 per person per day), in administering this Agreement, protecting,
preserving, enforcing or foreclosing any security interests or rights granted to
Lender hereunder, whether through judicial proceedings or otherwise (including
advertising costs), enforcing or collecting the Receivables, or Loan Documents,
recovery of or realization upon any other Collateral, or in defending or
prosecuting any actions or proceedings arising out of or related to its
transactions with Borrower, including actions or proceedings that may involve
any person asserting a priority or claim with respect to the Collateral, shall
be borne and paid for by Borrower on demand, shall constitute part of the
Obligations and may at Lender's option be charged to Borrower's Loan Account.
Borrower’s obligations under this section shall survive termination of this
Agreement for any reason.

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6.

REPRESENTATIONS, COVENANTS AND WARRANTIES

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As an inducement to Lender to enter into this Agreement, Borrower represents,
covenants and warrants (which shall survive the execution and delivery of this
Agreement) that:

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6.1. Borrower is and at all times during the term of this Agreement shall be a
Corporation duly organized and presently existing in good standing under the
laws of the State of Delaware;  At all times

 

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during the term of this Agreement Borrower shall be duly qualified and existing
in good standing in every other state in which the nature of Borrower's business
requires it to be qualified, except where the failure to be so qualified would
not have a Material Adverse Effect.  Borrower is not aware, and will upon
becoming aware promptly notify Lender, of any person organized under its name in
another state.

6.2. The execution, delivery and performance of this Agreement are within the
corporate powers of Borrower, have been duly authorized by appropriate corporate
action and are not in contravention of the terms of Borrower's charter or
by-laws or of any indenture, agreement or undertaking to which Borrower is a
party or by which it may be bound. Borrower is not now the subject of any
pending governmental investigation or proceeding which could reasonably be
expected to have a Material Adverse Effect or of any insolvency proceeding. No
receiver or custodian has been appointed for any of the property of Borrower. No
consent, approval or authorization of any person, including stockholders of
Borrower or any governmental or regulatory authority, that has not been
obtained, is required in connection with the execution, delivery and performance
by Borrower of this Agreement. Borrower warrants that all financial statements
and other reports provided to Lender prior to the Closing Date are true and
correct in all material respects.

6.3. There are no pending suits which could reasonably be expected to have a
Material Adverse Effect, or any Federal or state tax liens, or judgment liens
against Borrower or affecting its assets, except for Permitted Liens. No assets
of Borrower are subject to any liens or encumbrances except for Permitted Liens.
Borrower has no employee benefit plans subject to ERISA that have accumulated
funding deficiencies or liquidity shortfalls as defined and calculated under
ERISA or with respect to which Borrower presently has withdrawal liability.

6.4. Borrower is and shall be, with respect to all Inventory, Equipment,
intellectual property collateral, cash collateral and other Collateral, the
owner thereof free from any lien, security interest or encumbrance of any kind,
except for Permitted Liens.  No Receivable or any other Collateral has been or
shall hereafter be assigned, pledged or transferred to any person other than the
Lender or in any way encumbered or subject to a security interest except to
Lender, and except for Permitted Liens, and Borrower shall defend the same
against the claims of all persons.

6.5. Borrower's books and records relating to the Receivables and Collateral are
and shall be maintained at the office referred to in Section 11 below (except
for certain books and records located at the Borrower’s office at 11747 NE First
Street, Suite 320, Bellevue, WA through March 31, 2017, which books and records
are being moved to 2070 Route 52, Hopewell Junction, NY). Except as otherwise
stated below, the principal executive office of Borrower is located at such
address and has been so located on a continuous basis for not less than six
months. Borrower shall not change such location without Lender's prior written
consent, and, upon making any such change, Lender shall be authorized to file
any additional financing statements or other documents or notices which may be
necessary under the UCC or other applicable law and Borrower shall execute and
deliver to Lender any such documents requiring Borrower’s signature, failing
which Lender shall be authorized to sign such documents on behalf of Borrower as
Borrower’s attorney-in-fact. The listing of offices on Schedule 6.5 hereto
represents all of Borrower’s domestic places of business.  Borrower shall notify
Lender of the existence of any additional domestic places of business within
five (5) Business Days after any such place of business is established.

6.6. All loans and advances requested by Borrower under this Agreement shall be
used for the general corporate and business purposes of Borrower and in no event
shall Borrower request Lender to remit a loan or advance to an account of
Borrower that is used for the specific purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Federal Reserve Board); or to
extend credit to others for the purpose of purchasing or carrying any such
margin stock in contravention of

 

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Regulation T, U or X of the Federal Reserve Board; or to the extent that any
loans and advances requested by Borrower under this Agreement shall be used for
paying wages of the employees of Borrower, Borrower hereby represents and
warrants that it shall withhold and pay over to the applicable tax authorities
any amount thereof as it shall be so required by applicable law.

6.7. Borrower shall maintain its shipping forms, invoices and other related
documents in a form reasonably satisfactory to Lender and shall maintain its
books, records and accounts in accordance with sound accounting practice.
Borrower shall furnish to Lender accounts receivable and accounts payable
ageings, accounts receivable roll forward reports (in the form attached hereto
as Exhibit B) and reconciliations of accounts receivable collateral and the loan
balance on the monthly statements provided by Lender to Borrower’s records and
inventory designations, monthly, not later than ten (10) Business Days after the
end of each month, for accounts receivable reconciliations/loan balances and ten
(10) Business Days after the end of each month for Inventory designations
covering the previous month.  Borrower shall furnish to Lender such other
information regarding the business affairs and financial condition of Borrower
as Lender may, from time to time, reasonably request, including (a) audited
financial statements as at the end of and for each fiscal year of Borrower, as
soon as practical and in any event within ninety (90) days after the end of each
such fiscal year, in such detail and scope as Lender may require including a
balance sheet, a statement of income, a statement of cash flows and notes,
audited by RSM US LLP or other Independent Registered Public Accounting Firm
reasonably acceptable to Lender, and (b) financial statements prepared
internally as at the end of and for each of the first, second and third fiscal
quarterly period of Borrower, as soon as practical and in any event within sixty
(60) days after the end of each such fiscal quarter of Borrower, in such detail
and scope as Lender may require including without limitation, a balance sheet, a
statement of income, a statement of cash flows and notes, certified by the Chief
Financial Officer of Borrower (“CFO”); and concurrently with such financial
statements, a written statement signed by the CFO to the effect that, (i) CFO
has not obtained any knowledge of the existence of any Event of Default, or (ii)
if such CFO has obtained from such examination any such knowledge, such
CFO shall disclose in such written statement the Event of Default and the nature
thereof.  Borrower shall also furnish to Lender such other information regarding
the business affairs and financial condition of Borrower and Certifying Officers
as Lender may, from time to time, request.   All such statements and information
shall fairly present the financial condition of Borrower, and the results of its
operations as of the dates and for the periods, for which the same are
furnished, subject in the case of quarterly statements to year-end adjustments
and the lack of footnotes.

6.8. Borrower shall duly pay and discharge all federal and all material state
taxes, assessments, contributions and governmental charges upon or against it or
its properties or assets prior to the date on which penalties attach thereto.
Borrower shall be liable for any tax (excluding a tax imposed on the overall net
income of Lender) imposed upon any transaction under this Agreement or giving
rise to the Receivables or which Lender may be required to withhold or pay for
any reason and Borrower agrees to indemnify and hold Lender harmless with
respect thereto, and to repay Lender on demand the amount thereof.  Until paid
by Borrower, Borrower’s liability under this paragraph shall be added to the
Obligations secured hereunder, and may at Lender's option be charged to
Borrower's Loan Account but shall nonetheless be independent hereof and continue
notwithstanding any termination hereof.

6.9. With respect to each Receivable, Borrower hereby represents and warrants
that: each Receivable represents a valid and legally enforceable indebtedness
based upon an actual and bona fide sale and delivery of property in the ordinary
course of Borrower's business which has been completed and finally accepted by
the Account Debtor and for which the Account Debtor is unconditionally liable to
make payment of the amount stated in each invoice, document or instrument
evidencing the Receivable in accordance with the terms thereof, without offset,
defense or counterclaim; each Receivable is required to

 

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be paid in full at maturity; no Receivables have arisen from sales on bill and
hold terms; all statements made and all unpaid balances appearing in any
invoices, documents, instruments and statements of account describing or
evidencing the Receivables are true and correct and are in all respects what
they purport to be and all signatures and endorsements that appear thereon are
genuine and all signatories and endorsers have full capacity to contract; the
Account Debtor owing the Receivable and each guarantor, endorser or surety of
such Receivable is, to Borrower’s knowledge, solvent and financially able to pay
in full the Receivable when it matures; and all recording, filing and other
requirements of giving public notice of such Receivable under any applicable law
have been duly complied with.

6.10. Borrower shall until payment in full of all Obligations to Lender and
termination of this Agreement cause to be maintained at the end of each of its
fiscal quarters, Tangible Net Worth in an amount not less than $13,000,000 and
Working Capital of not less than $4,000,000. 

6.11. Prior to the making of the initial loans hereunder: Lender shall have
received an opinion of Borrower’s counsel in the form, and as to the matters,
reasonably required by Lender; Lender shall have received good-standing
certificates and other certifications with respect to Borrower and any other
Person liable on the Obligations from such governmental authorities as Lender
shall require; Lender or its agents shall have completed such examinations and
appraisals of the Collateral and such searches with regard to Borrower and its
assets, as Lender shall require, all at Borrower’s expense; Lender shall have
received from Borrower evidence of termination of the lien in favor of Access
Business Finance, LLC as evidenced by a Uniform Commercial Code UCC-1 Financing
Statement filed with the Department of State, filing number 20092012760, and any
other evidence Lender may require that on the Closing Date there shall be no
liens on the Collateral other than Permitted Liens; a lockbox and deposit
account complying with Section 5.1 shall have been established which is
satisfactory to Lender; Lender shall have received evidence, in form
satisfactory to Lender, that Borrower has obtained such casualty insurance
policies meeting the requirements of Section 7 hereof; the Loan Availability
shall be in an amount equal to or greater than $500,000 plus the sum of all
amounts required to be disbursed at closing for the purpose of paying Lender’s
expenses and attorneys’ fees chargeable to Borrower hereunder and all amounts
required to be paid to creditors to induce them to release any liens in the
Collateral that are not Permitted Liens; and,   Lender shall have received
evidence that it has a perfected first and only security interest in all
Collateral.

6.12. During the term of this Agreement, Borrower shall not make any sales to
customers by accepting a credit card issued to such customers, except for sales
not to exceed $50,000 per month unless Borrower has prior thereto entered into a
merchant agreement with a processor, relating to sales made using such credit
card, on terms that are acceptable to Lender, and such processor has agreed to
remit the proceeds of such sales to an account of Borrower with respect to which
Lender has control in accordance with Section 9-104 of the UCC.

6.13. Attached as Exhibit C is a listing of all of Borrower’s patents,
trademarks, copyrights and domain names. So long as any Obligations remain
outstanding, Lender is hereby irrevocably authorized to use any of Borrower’s
patents, trademarks, copyrights and domain names for the purpose of enforcing
Lender’s security interest in the Collateral and disposing of any of the
Collateral.

6.14. So long as any Obligations remain outstanding, Borrower shall (i) advise
Lender of the existence of any commercial tort claims in favor of and asserted
by Borrower, which advice shall be given to Lender in writing no later than 10
days after Borrower asserts such a claim in its favor; (ii) within 5 Business
Days after Lender’s request therefor, provide Lender with a listing of all
deposit accounts and securities accounts maintained by Borrower and a listing of
all letters of credit issued and outstanding in favor of Borrower as beneficiary
and, if requested by Lender, arrange for the execution by each depository bank
and financial intermediary of a control agreement in Lender’s favor with respect
to such accounts, and

 

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by each letter of credit issuer of a consent to an assignment of the proceeds of
such letter of credit to Lender, in each case in form and content satisfactory
to Lender; (iii) maintain in effect in favor of Lender, agreements (in form
satisfactory to Lender) executed by the landlords of Borrower’s places of
business where its books and records are maintained (excluding the Bellevue, WA
office) and the bailees of its property in the United States, pursuant to which
Lender is granted access to such places of business and such bailees are
directed to honor Lender’s instructions with respect to the disposition of such
property.

6.15. Until indefeasible payment in full of the Obligations, Borrower shall not
(i) make any loans or advances to officers, directors, shareholders or
Affiliates; (ii) engage in any other transactions with Affiliates except on
terms similar to those that would be in effect in transactions between unrelated
parties (iii) incur or repay indebtedness for borrowed money (except
indebtedness to CIT Technology Financing SRVC Inc. (“CIT”) to finance Borrower’s
insurance premiums) or guaranty the obligations of Affiliates or other Persons;
(iv) sell, transfer or otherwise dispose of any assets except for sales of
Inventory in the normal course and dispositions of old or obsolete assets or
assets no longer used or useable by Borrower; (v) declare any dividends, redeem
or repurchase any stock, or make any other distributions in respect of its
stock; or (vi) enter into any agreements to buy or sell goods on consignment
terms; or (vi) merge with or into any entity or undergo any other restructuring
or reorganization including reorganizations that would result in Borrower being
organized under the laws of a state other than Delaware.

6.16. Borrower shall not (i) conduct any business or engage in any transaction
or dealing with any Blocked Person (as hereafter defined), including the making
or receiving of any contribution of funds, goods or services to or for the
benefit of any Blocked Person; (ii) deal in, or otherwise engage in any
transaction relating to any property or interests in property blocked pursuant
to Executive Order No. 13224; or (iii) engage in or conspire to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in Executive Order No.
13224, the USA Patriot Act or any other Anti-Terrorism Law.  Borrower shall
deliver to Lender any certification or other evidence requested from time to
time by Lender in its sole discretion, confirming Borrower’s compliance with
this Section.  Borrower is not in violation of any Anti-Terrorism Law  and
Borrower is not a Person (a “Blocked Person”) that (a) is listed in the annex
to, or is otherwise subject to the provisions of, Executive Order No. 13224; (b)
is owned or controlled by, or acting for or on behalf of, any Person that is
listed in the annex to, or is otherwise subject to the provisions of, Executive
Order No. 13224; (c) any financial institution is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law; (d) commits,
threatens or conspires to commit or supports “terrorism” as defined in Executive
Order No. 13224; (e) is named as a “specially designated national” on the most
current list published by the U.S. Treasury Department Office of Foreign Asset
Control at its official website or any replacement website or other replacement
official publication of such list, or is affiliated or associated with a person
or entity listed above;  (f) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of
any Blocked Person, or deals in, or otherwise engages in any transaction
relating to, any property or interests in property blocked pursuant to Executive
Order No. 13224.

For purposes of this Section 6.16, (i) “Anti-Terrorism Laws” shall mean any
laws, regulations, rules, orders and directives relating to terrorism or money
laundering, including Executive Order No. 13224, the USA Patriot Act, the Laws
comprising or implementing the Bank Secrecy Act, and the Law administered by the
United States Treasury Department’s Office of Foreign Asset Control (as any of
the foregoing laws, regulations, rules, orders and directives may from time to
time be amended, renewed, extended, or replaced); (ii) “Executive Order No.
13224” shall mean Executive Order No. 13224 on Terrorist Financing, effective
September 24, 2001, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced; and (iii) “USA Patriot Act” shall mean the
Uniting and Strengthening

 

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America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall
hereafter be, renewed, extended, amended or replaced.

6.17. Borrower shall deliver to Lender within 5 days of any of Borrower’s senior
officers obtaining knowledge of any condition or event which constitutes, or
might reasonably be expected to constitute, an Event of Default or that any
Person has given notice to Borrower or any Affiliates of Borrower or taken any
other action with respect to a claimed Event of Default, Borrower shall deliver
to Lender an officer’s certificate describing the same and the period of
existence thereof and specifying what action Borrower has taken, are taking and
propose to take with respect thereto

7.

BORROWER’S INSURANCE

﻿

7.1. Borrower covenants and agrees that, on and after the date hereof, until
payment in full of the Obligations and termination of this Agreement, Borrower
shall obtain and maintain in effect, at Borrower’s sole expense, policies of
casualty insurance as more specifically set forth on Exhibit D annexed hereto,
in form and substance satisfactory to Lender, each of which shall have ratings
of at least “A-VIII” by A.M. Best Company, and shall otherwise be approved by
Lender.

7.2. Subject to the provisions of Section 7.3 allowing Borrower to collect and
apply certain insurance proceeds, Borrower hereby directs all insurers under
such policies of casualty insurance to pay all proceeds of casualty insurance
policies directly to Lender as herein provided.  Borrower irrevocably makes,
constitutes and appoints Lender (and each officer, employee or agent designated
by Lender) as Borrower’s true and lawful attorney-in-fact for the purpose of (i)
making, settling and adjusting such claims under all such policies of casualty
insurance if Borrower fails to make such claim within fifteen (15) days after
any casualty or fails to diligently prosecute such claim, (ii) endorsing the
name of Borrower on any check, draft, instrument or other item of payment
pertaining to the Collateral received by Borrower or Lender pursuant to any such
policies of casualty insurance, and (iii) making all determinations and
decisions with respect to such policies of casualty insurance as they relate to
the Collateral.  Borrower agrees to provide Lender with prompt written notice of
any change, amendment or modification to any casualty insurance policy.

7.3. Lender is authorized to collect all such casualty insurance proceeds and,
at Lender’s option:  (i) apply (A) such proceeds against the outstanding
principal amount of the Obligations, or (ii) allow Borrower to use such
proceeds, or a part thereof, to repair any damage or restore, replace or rebuild
the Collateral that was the subject of such proceeds; provided, however, that in
the absence of an Event of Default, if the proceeds of insurance are less than
$75,000,  Borrower may collect such proceeds and shall use the proceeds to
repair or replace the subject Collateral and shall provide notice thereof to
Lender.  Notwithstanding anything herein to the contrary, at any time when an
Event of Default has occurred and is continuing, if Lender receives proceeds of
casualty insurance or is holding proceeds of casualty insurance theretofore
received by Lender, Lender may apply the same to the Obligations at any time and
from time to time as it may determine in its discretion.  If no Event of Default
has occurred and is continuing and Borrower has been permitted to apply casualty
insurance proceeds to repair, restore, replace or rebuild property, then Lender
will return any casualty insurance proceeds to Borrower which Lender continues
to hold after any such repair, restoration, replacement or rebuilding of such
property is completed to Lender’s satisfaction as determined in its discretion.

7.4. If Borrower fails to provide Lender with evidence of the casualty insurance
coverage required by this Agreement, Lender may purchase casualty insurance, at
Borrower’s expense, to protect Lender’s interests in the Collateral.  This
casualty insurance may, but need not, protect the interests of Borrower.  The
coverage that Lender purchases may not pay any claim that Borrower may make or
any

 

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claim that is made against Borrower in connection with the Collateral.  Borrower
may later cancel any casualty insurance purchased by Lender, but only after
providing Lender with evidence that Borrower has obtained casualty insurance as
required by this Agreement.  If Lender purchases casualty insurance for the
Collateral, Borrower will be responsible for the costs of that casualty
insurance, including interest and any other charges that may be imposed in
connection with the placement of the casualty insurance, until the effective
date of the cancellation or expiration of the casualty insurance.  The costs of
the casualty insurance shall be added to the Obligations.  The costs of the
casualty insurance may be more than the cost of casualty insurance that Borrower
may be able to obtain on its own.

8.

SPECIFIC POWERS OF LENDER

﻿

8.1. Borrower hereby constitutes Lender or its agent, or any other person whom
Lender may designate, as Borrower's attorney, at Borrower's own cost and expense
to exercise at any time all or any of the following powers which, being coupled
with an interest, shall be irrevocable until all Obligations have been paid in
full: (a) to receive, take, endorse, assign, deliver, accept and deposit, in
Lender's or Borrower's name, any and all checks, notes, drafts, remittances and
other instruments and documents relating to Receivables and proceeds thereof;
(b) to receive, open and dispose of all mail addressed to Borrower and to
notify, following the occurrence and during the continuation of an Event of
Default, postal authorities to change the address for delivery thereof to such
address as Lender may designate; (c) following the occurrence and during the
continuation of an Event of Default, to transmit to Account Debtors indebted on
Receivables notice of Lender's interest therein and to request from such Account
Debtors at any time, in Borrower's name or in Lender's or that of Lender's
designee, information concerning the Receivables and the amounts owing thereon;
(d) following the occurrence and during the continuation of an Event of Default,
to notify Account Debtors to make payment directly to Lender, including by
sending the letter attached hereto as Annex A; and (e)following the occurrence
and during the continuation of an Event of Default, to take or bring, in
Borrower's name or Lender's, all steps, actions, suits or proceedings deemed by
Lender necessary or desirable to effect collection of the Receivables. In
addition, to the extent permitted by law, Lender may file one or more financing
statements, naming Borrower as debtor and Lender as secured party and indicating
therein the types or describing the items of Collateral. Without limitation of
any of the powers enumerated above, Lender is hereby authorized to accept and to
deposit all collections in any form, relating to Receivables, received from or
for the account of Account Debtors (whether such collections are remitted
directly to Lender by Account Debtors or are forwarded to Lender by Borrower),
including remittances  which may reflect deductions taken by Account Debtors,
regardless of amount, the Loan Account of Borrower to be credited only with
amounts actually collected on Receivables in accordance with Section 5.1.
Borrower hereby releases (i) any bank, trust company or other firm receiving or
accepting such collections in any form, and (ii) Lender and its officers,
employees and designees, from any liability arising from any act or acts
hereunder or in furtherance hereof, whether of omission or commission, and
whether based upon any error of judgment or mistake of law or fact, except for
Lender’s gross negligence or willful misconduct.

9.

LENDER'S REMEDIES

﻿

9.1. Borrower agrees that all of the loans and advances made by Lender under the
terms of this Agreement, together with all Obligations of Borrower as defined
herein (unless otherwise provided in any instrument evidencing the same or
agreement relating thereto), shall be payable by Borrower at Lender's demand at
the office of Lender in New York, New York. In addition, all Obligations shall
be, at Lender's option, due and payable without notice or demand upon
termination of this Agreement or upon the occurrence of any one or more of the
following “Event(s) of Default”: ( if Borrower shall fail to pay to Lender when
due any amounts owing to Lender under any Obligation, or if there shall occur
any Event of

 

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Default or breach by Borrower, any Affiliate of Borrower or Certifying Officers
of any of the terms, covenants, conditions or provisions of this Agreement, Loan
Documents or any other agreement by and among Borrower,  any of its Affiliates
or Certifying Officers and Lender or any of its Affiliates or if Borrower shall
fail to pay when due any indebtedness for borrowed money in an amount exceeding
$100,000 beyond any applicable grace period; ( if any Certifying Officers,
guarantor, endorser or other person liable on the Obligations or who has pledged
or granted collateral security for the Obligations, shall die, terminate or
attempt to terminate its Certificate (unless a replacement satisfactory to
Lender is provided prior to the effective date of such termination) or pledge
agreement or shall breach any of the terms, covenants, conditions or provisions
of any guarantee, endorsement or other agreement of such person with, or in
favor of, Lender or if a material portion of any tangible Collateral for the
Obligations is destroyed or lost or rendered valueless or no longer subject to
insurance; ( if any representation, warranty, or statement of fact made to
Lender or an Affiliate of Lender at any time by or on behalf of Borrower or an
Affiliate of Borrower or Certifying Officers is or becomes false or misleading
in any material respect; ( if Borrower shall become insolvent, generally unable
to pay debts as they mature, files or has filed against it a petition in
bankruptcy (subject to the provisions of the last sentence hereof), liquidation
or reorganization, or if a judgment, levy, attachment or distraint against
Borrower remains unpaid, unstayed or undismissed for a period of more than
thirty days, or if Borrower discontinues doing business for any reason, or if a
custodian, receiver or trustee of any kind is appointed for it or any of its
property; ( [Reserved]; ( if at any time, Lender shall, in its sole discretion,
reasonably exercised, consider the Obligations insecure or any part of the
Receivables unsafe, insecure or insufficient and Borrower shall not on demand
furnish other collateral or make payment on account, reasonably satisfactory to
Lender; (7) if (x) Borrower shall default under or breach the terms of any
present or future lease (each a “Lease”) of any premises now or hereafter leased
by Borrower (“Leased Premises”) or (y) Lender shall receive notice from any
lessor of any Leased Premises that a default has occurred under any Lease, or
that any Lease has been terminated; (8) any employee benefit plan of Borrower
subject to ERISA is completely or partially terminated or the Pension Benefit
Guaranty Corporation commences proceedings for the purpose of effecting any such
termination or an event or circumstance occurs which could result in any such
termination; or (9) if a claim is made or threatened, or a proceeding is
commenced, by any governmental agency or authority against Borrower or any
Affiliate of Borrower under any environmental protection laws. Upon the
occurrence of any Event of Default, (i) Borrower shall pay to Lender, as
liquidated damages and as part of the Obligations, in addition to amounts
payable under Section 10.1 hereof, a charge at the rate of three (3%) percent
per annum above the interest rate payable on Overadvances set forth in Section
3.1(b) upon the outstanding balance of the Obligations from the date of Event of
Default until the date of full payment of the Obligations, in addition to
compensation payable under Section 3.1 from such date; provided, that in no
event shall such rate exceed the Maximum Rate and (ii) Lender shall have the
right (in addition to any other rights Lender may have under this Agreement or
otherwise) without further notice or demand to Borrower, to enforce payment of
any Collateral, to settle, compromise, or release in whole or in part, any
amounts owing on Collateral, to prosecute any action, suit or proceeding with
respect to Collateral, to extend the time of payment of any and all Collateral,
to make allowances and adjustments with respect thereto, to issue credits in
Lender's name or Borrower's, to sell, assign and deliver the Collateral (or any
part thereof) and any returned, reclaimed or repossessed merchandise or other
property held by Lender or by Borrower for Lender's account, at public or
private sale, at broker's board, for cash, upon credit or otherwise, at Lender's
sole option and discretion, and Lender may bid or become purchaser at any such
sale if public, free from any right of redemption which is hereby expressly
waived. Borrower agrees that the giving of ten days' notice by Lender, sent by
ordinary mail, postage prepaid, to the mailing address of Borrower set forth in
this Agreement, designating the place and time of any public sale or the time
after which any private sale or other intended disposition of the Collateral or
any other security held by Lender is to be made, shall be

 

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deemed to be reasonable notice thereof and Borrower waives any other notice with
respect thereto. The net cash proceeds resulting from the exercise of any of the
foregoing rights or remedies shall be applied by Lender to the payment of the
Obligations in such order as Lender may elect, and Borrower shall remain liable
to Lender for any deficiency. Notwithstanding anything to the contrary contained
in this section, (i) to the extent that an event or occurrence described in this
section consists of Borrower’s failure to take, do or perform an act or action,
then such failure shall not constitute an Event of Default if no other Event of
Default has occurred and if such act or action is taken, done or performed by
Borrower within 5 Business Days after Borrower’s receipt of written notice from
Lender that the act or action is required to be taken, done or performed by
Borrower and has not been taken, done or performed; and (ii) to the extent that
an event or occurrence described in this section consists of the commencement of
a proceeding against Borrower under Federal or state law or the appointment of a
receiver or custodian under Federal or state law, then the commencement of such
proceeding or the appointment of such receiver or custodian shall not constitute
an Event of Default if no other Event of Default has occurred and if such
proceeding or appointment is contested by Borrower within the time period and in
the manner required by law and is dismissed, terminated or vacated within sixty
(60) Business Days after such commencement or appointment.

9.2. The enumeration of the foregoing rights and remedies is not intended to be
exhaustive, and such rights and remedies are in addition to and not by way of
limitation of any other rights or remedies Lender may have under the UCC or
other applicable law. Lender shall have the right, in its sole discretion, to
determine which rights and remedies, and in which order any of the same, are to
be exercised, and to determine which Collateral is to be proceeded against and
in which order, and the exercise of any right or remedy shall not preclude the
exercise of any others, all of which shall be cumulative. No act, failure or
delay by Lender shall constitute a waiver of any of its rights and remedies. No
single or partial waiver by Lender of any provision of this Agreement, or breach
or default thereunder, or of any right or remedy which Lender may have shall
operate as a waiver of any other provision, breach, default, right or remedy or
of the same provision, breach, default, right or remedy on a future occasion.
Borrower waives presentment, notice of dishonor, protest and notice of protest
of all instruments included in or evidencing any of the Obligations or the
Collateral and any and all notices or demands whatsoever (except as expressly
provided herein). Lender may, at all times, proceed directly against Borrower to
enforce payment of the Obligations and any of its other rights and remedies
under the Loan Documents and shall not be required to first enforce its rights
in the Collateral or any other security granted to it. Lender shall not be
required to take any action of any kind to preserve, collect or protect its or
Borrower's rights in the Collateral or any other security granted to it.

9.3. EACH OF BORROWER AND LENDER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN
THE EVENT OF ANY LITIGATION WITH RESPECT TO ANY MATTER CONNECTED WITH THIS
AGREEMENT, THE OBLIGATIONS, THE RECEIVABLES, OR ANY OTHER TRANSACTION BETWEEN
THE PARTIES AND EACH OF BORROWER AND LENDER HEREBY IRREVOCABLY CONSENTS TO THE
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF ANY FEDERAL
COURT LOCATED IN SUCH STATE IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, OR THE OBLIGATIONS. IN ANY SUCH LITIGATION
BORROWER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND
AGREES THAT SERVICE THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED
TO BORROWER AT ITS PLACE OF BUSINESS SET FORTH ABOVE.

9.4. Borrower hereby agrees to indemnify Lender and hold Lender harmless from
and against any liability, loss, damage, suit or proceeding ever suffered or
incurred by Lender (including attorneys’ fee

 

16

 

--------------------------------------------------------------------------------

 

whether incurred by in-house or outside counsel) as a result of Borrower’s
failure to observe, perform or discharge Borrower’s duties hereunder or as a
result of Borrower’s breach of any of the representations, warranties and
covenants of this Agreement. This indemnity shall survive termination of this
Agreement for any reason.

﻿

10.

EFFECTIVE DATE, CONTROLLING LAW AND TERMINATION

﻿

10.1. This Agreement shall become effective upon acceptance by Lender at its
office in the State of New York, and shall continue in full force and effect
until December 31, 2019 (the “Renewal Date”) and from year to year thereafter,
unless (a) sooner terminated as herein provided, or (b) as otherwise agreed by
both Lender and Borrower in writing.  Following the Renewal Date and in addition
to its rights following and during the continuance of an Event of Default,
Lender shall have the right to terminate this Agreement at any time by giving
Borrower sixty (60) days’ prior written notice.  Borrower may terminate this
Agreement on the Renewal Date or on the anniversary of the Renewal Date in any
year by giving Lender not less than sixty (60) days' prior written notice by
registered or certified mail, return receipt requested (which notice may be
rescinded by a notice given in the same manner prior to the expiration of the
applicable sixty day period).  Should an Event of  Default occur and be
continuing hereunder, this Agreement will be terminable by Lender at any time
and Borrower shall, upon any such termination by Lender, or upon termination of
this Agreement effective prior to the end of its current term for any reason
other than termination by Lender in the absence of an Event of Default or
termination by the Borrower as provided in the previous sentence, pay to Lender,
as part of the Obligations, in addition to amounts payable under Section 9.1
hereof, an amount equal to (a) two percent (2%) of the Maximum Credit Facility
then in effect, if such termination occurs on or prior to the first anniversary
of the Closing Date; and (b) one half percent (0.5%) of the Maximum Credit
Facility then in effect, if such termination occurs after the first anniversary
of the Closing Date. In the event that Borrower terminates other than as
provided herein, as a condition to such termination, Borrower shall pay to
Lender the foregoing amounts in addition to performance of any other conditions
to such termination.  No termination of this Agreement, however, shall relieve
or discharge Borrower of its duties, obligations and covenants hereunder until
such time as all Obligations have been paid in full, and the continuing security
interest in Receivables and other Collateral granted to Lender hereunder or
under any other agreement shall remain in effect until such Obligations have
been indefeasibly paid and performed in full and any provision hereof that by
its terms survives termination of this Agreement shall survive pursuant to such
terms. No provision hereof shall be modified or amended orally or by course of
conduct but only by a written instrument expressly referring hereto signed by
both parties. This Agreement and the Loan Documents embody the entire agreement
between Lender and Borrower as to the subject matter hereof and supersede all
prior agreements (whether oral or written) as to the subject matter
hereof.  This Agreement shall be binding upon and inure to the benefit of
Borrower and Lender and their respective heirs, executors, administrators,
successors and assigns, provided, however, that neither Lender nor Borrower may
assign this Agreement or its rights hereunder without the prior written consent
of the other party hereto.  Borrower consents to Lender’s sale of participations
in the loans made under this Agreement, as long as Lender remains obligated as
the lender hereunder and retains all rights of the Lender hereunder.

10.2. ALL LOANS SHALL BE DISBURSED BY LENDER FROM ITS OFFICE IN THE STATE OF NEW
YORK, SHALL BE PAYABLE BY BORROWER AT SUCH OFFICE, AND THIS AGREEMENT AND ALL
TRANSACTIONS THEREUNDER SHALL BE DEEMED TO BE CONSUMMATED IN SUCH STATE AND
SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THAT
STATE.  If any part or provision of this Agreement is invalid or in
contravention of the applicable laws or regulations of any controlling
jurisdiction, such part or

 

17

 

--------------------------------------------------------------------------------

 

provision shall be severable without affecting the validity of any other part or
provision of this Agreement. Notwithstanding any provision herein or in any
related document, Lender shall never be entitled to receive, collect, or apply,
as interest on the Loan Account, any amount in excess of the maximum rate of
interest (“Maximum Rate”) permitted to be charged from time to time by
applicable law (if such law imposes any maximum rate), and in the event Lender
ever receives, collects, or applies as interest, any amount in excess of the
Maximum Rate, such amount shall be deemed and treated as a partial prepayment of
the principal of the Loan Account; and, if the principal of the Loan Account and
all other of Lender's charges other than interest are paid in full, any
remaining excess shall be paid to Borrower.

11.

MISCELLANEOUS

﻿

11.1. Unless otherwise specifically provided in this Agreement, any notices,
requests, demands or other communications permitted or required to be given
under this Agreement shall be in writing and shall be sent by facsimile, hand
delivery or by a nationally recognized overnight delivery service, to the
addresses and facsimile numbers of the parties set forth below (or to such other
address or facsimile number as a party may hereafter designate by a notice to
the other that complies with this section) and shall be deemed given (a) in the
case of a notice sent by facsimile, when received by the recipient if the
sending party receives a confirmation of delivery from its own facsimile
machine;  and (b) in the case of a notice that is hand delivered or sent by such
overnight courier, when delivered (provided that the sending party retains a
confirmation of delivery).  Any notice which, pursuant to the terms hereof must
be sent by Borrower by certified or registered mail shall be deemed given and
effective when received by Lender, or Borrower, as the case may be.

﻿

 

﻿

 

If to Lender

If to Borrower

ROSENTHAL & ROSENTHAL, INC.

1370 Broadway

New York NY 10018

Attn: Michael Wenger, Esq., with a copy to Robert Miller, EVP

Facsimile: (212) 356-3364

eMagin Corporation

2070 Route 52

Hopewell Junction, NY

Attn: Jeffrey P. Lucas, CFO

Facsimile: [______________________]

﻿

11.2. Nothing contained herein shall impose on Lender any liability for any
contracts, undertakings or other obligations of Borrower to others, including
obligations of Borrower to any Account Debtor for breach of the terms of any
contract of sale between Borrower and the Account Debtor.

11.3. Wherever in this Agreement unless otherwise provided (i) the term
“including” appears, such term shall be deemed to mean “including without
limitation”; (ii) the term “satisfactory” or “acceptable” to Lender appears,
such terms shall be deemed to mean “acceptable” or “satisfactory” to Lender and
its counsel in their sole  and absolute discretion; and (iii) the terms “in the
opinion” or “in the judgment” of Lender appear, such terms shall be deemed to
mean “in the sole opinion, reasonably exercised”,  and “in the sole judgment,
reasonably exercised” of Lender and its counsel.

11.4. Terms used in this Agreement that are not defined in this Agreement but
are defined in the UCC shall have the meanings given in the UCC.

11.5. DRAFTING PRESUMPTION. In the event of any ambiguity or dispute regarding
the definition or meaning of any word, phrase, or other verbiage, or the
construction of any provision in this Agreement, there shall be no presumption
favoring the definition, meaning or construction propounded by

 

18

 

--------------------------------------------------------------------------------

 

a particular party based upon which party (or which party's attorney) drafted
the word, verbiage or provision at issue, and same will be deemed mutually
drafted.

﻿

﻿

[Remainder of Page Left Intentionally Blank- Signature Page Follows]

﻿

 

 

19

 

--------------------------------------------------------------------------------

 

﻿

IN WITNESS WHEREOF, Lender and Borrower have caused this Agreement to be
executed by their respective corporate officers thereto duly authorized as of
the day and year first above written.

﻿

 

Witness:

 

 

___________________________

Name:
Title:

eMagin Corporation

 

 

By:________________________________

         Jeffrey P. Lucas

         Chief Financial Officer

 

 

﻿

﻿

﻿

﻿

 

Accepted:

 

ROSENTHAL & ROSENTHAL, INC.

 

 

 

By:_______________________________

               Robert L. Martucci
                Senior Vice President

﻿

﻿

﻿

﻿

﻿

﻿

﻿

﻿

﻿

﻿

﻿

﻿

﻿

﻿

﻿

﻿

﻿

﻿

﻿

﻿

﻿

[Signature Page to Financing Agreement]

﻿

 

--------------------------------------------------------------------------------

 

Exhibit A

﻿

PERMITTED LIENS

﻿

(a) the security interests and liens of Lender;

﻿

(b) liens securing the payment of taxes, assessments or other governmental
charges or levies either not yet overdue or the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Borrower, or Guarantor or Subsidiary, as the case may be and
with respect to which adequate reserves have been set aside on its books;

﻿

(c) non-consensual statutory liens (other than liens securing the payment of
taxes) arising in the ordinary course of such Borrower's or  Guarantor’s
business to the extent: (i) such liens secure indebtedness which is not overdue
or (ii) such liens secure indebtedness relating to claims or liabilities which
are fully insured and being defended at the sole cost and expense and at the
sole risk of the insurer or being contested in good faith by appropriate
proceedings diligently pursued and available to such Borrower or Guarantor, in
each case prior to the commencement of foreclosure or other similar proceedings
and with respect to which adequate reserves have been set aside on its books;

﻿

(d) zoning restrictions, easements, licenses, covenants and other restrictions
affecting the use of real property which do not interfere in any material
respect with the use of such real property or ordinary conduct of the business
of such Borrower as presently conducted thereon or materially impair the value
of the real property which may be subject thereto;

﻿

(e) purchase money security interests in machinery and equipment (including
capital leases where the landlord has signed a subordination agreement/waiver
acceptable to Lender);

﻿

(f) pledges and deposits of cash by any Borrower or Guarantor after the date
hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of such Borrower or Guarantor as of the
date hereof;

﻿

(g) pledges and deposits of cash by Borrower after the date hereof to secure the
performance of tenders, bids, leases, trade contracts (other than for the
repayment of indebtedness), statutory obligations and other similar obligations
in each case in the ordinary course of business consistent with the current
practices of Borrower as of the date hereof; provided, that, in connection with
any performance bonds issued by a surety or other person, the issuer of such
bond shall have waived in writing any rights in or to, or other interest in, any
of the Collateral in an agreement, in form and substance satisfactory to Lender;

﻿

(h) liens arising from (i) operating leases and the precautionary UCC financing
statement filings (satisfactory to Lender) in respect thereof and (ii) equipment
or other materials which are not owned by Borrower located on the premises of
the Borrower (but not in connection with, or as part of, the financing thereof)
from time to time in the ordinary course of business and consistent with current
practices of the Borrower and the precautionary UCC financing statement filings

 

--------------------------------------------------------------------------------

 

(satisfactory to Lender) in respect thereof;

﻿

(i) judgments and other similar liens arising in connection with court
proceedings that do not constitute an Event of Default, provided, that, (i) such
liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefor, and (iii) a stay of
enforcement of any such liens is in effect; and

﻿

(j) liens on proceeds of insurance in favor of CIT securing payment of the
Borrower’s premiums for insurance.

 

--------------------------------------------------------------------------------

 

Schedule 6.3

﻿

Litigation

﻿

﻿

    NONE

﻿

﻿

 

--------------------------------------------------------------------------------

 

Schedule 6.5

﻿

Other locations of Borrower

﻿

﻿

11747 NE First Street, Suite 320

Bellevue, WA 98005

﻿

UPS Supply Chain Solutions, Inc.

1201 C Street NW

Auburn, WA  98001

﻿

2070 Route 52

Hopewell Junction, NY 12533

Dutchess County

﻿

1405 130th Avenue NE

Bellevue, WA 98005

King County

﻿

16429 20th Ave W

Lynnwood, WA 98037

Snohomish County

﻿

3080 Olcott Street, Suite C100

Santa Clara, CA 95054

Santa Clara County

﻿

 

--------------------------------------------------------------------------------

 

ANNEX A

﻿

﻿

TO ALL CUSTOMERS OF:  eMagin Corporation

﻿

﻿

Attention: Accounts Payable Supervisor

﻿

All accounts receivables of eMagin Corporation have been assigned and are
payable to Rosenthal & Rosenthal, Inc.  Accordingly, payment of all accounts
receivables arising from sales made or services rendered by eMagin Corporation
to you whether now existing or hereafter arising are to be made directly and
only to:

﻿

Rosenthal & Rosenthal, Inc.

1370 Broadway

﻿New York,  NY 10018

Attn:

﻿

or pursuant to such other instructions as Rosenthal & Rosenthal, Inc. may
hereafter provide.

﻿

This notification of assignment of accounts receivables is being given to you in
accordance with the provisions of the Uniform Commercial Code.  If you should
make payment to eMagin Corporation or anyone else other than Rosenthal &
Rosenthal, Inc., unless otherwise instructed by Rosenthal & Rosenthal, Inc.
hereafter such payment will not constitute payment of the account receivable,
and may subject you to double liability for the sums due in connection
therewith.

﻿

﻿

Very truly yours,

﻿

eMagin Corporation

﻿

﻿

By: ________________________

Name:

Title:

﻿

﻿

 

--------------------------------------------------------------------------------

 

Exhibit B

﻿

MONTHLY ACCOUNTS RECEIVABLE ROLLFORWARD REPORT

﻿

SAMPLE FORM

﻿

 

 

+

-

-

-

+

-

+

 

Date

Beginning

Gross 

(Credits)

(Net 

(Discounts)

Debit

(Credit 

Non A/R

Ending

 

Balance

Sales

 

Collections)

 

Adj

Adj)

Cash

Balance

﻿

 

 

 

 

  Enter opening aging balance here

 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

﻿

0.00 

 

 

 

 

 

 

 

0.00 

 

0.00 

 

 

 

 

 

 

 

0.00 

﻿

 

 

 

 

 

 

 

 

 

﻿

 

 

 

 

 

 

Balance per Aging

 

﻿

 

 

 

 

 

 

Calculated balance

0.00 

﻿

 

 

 

 

 

 

 

Variance

0.00 

﻿

﻿

EXHIBIT C

 

--------------------------------------------------------------------------------

 

﻿

PATENTS, TRADEMARKS AND COPYRIGHTS

﻿

Trademarks in the United States

﻿

﻿

 

 

 

﻿

Trademark

Serial No.

Registration No.

﻿

DPD

87141997

 

﻿

EMAGIN

75856770

2825413

﻿

﻿

﻿

Patents in United States

﻿

﻿

 

Patent No./ Publication No.

Title

9,142,779 

Patterning of OLED Materials

8,975,832 

Stacked, Non-Inverted Dielectrically Isolated, Organic Light Emitting Diode
Display Formed On A Silicon-On-Insulator Based Substrate And Method Of Same

8,974,263 

Method Of Manufacturing Organic Light Emitting Diode Arrays And System For
Eliminating Defects In Organic Light Emitting Diode Arrays

8,961,254 

Method Of Manufacturing Organic Light Emitting Diode Arrays And System For
Eliminating Defects In Organic Light Emitting Diode Arrays

8,944,873 

Method Of Manufacturing Organic Light Emitting Diode Arrays And System For
Eliminating Defects In Organic Light Emitting Diode Arrays

8,883,553 

Independently Controlled Stacked Inverted Organic Light Emitting Diodes And A
Method Of Manufacturing Same

8,766,883 

Dual-Mode Amoled Pixel Driver, A System Using A Dual-Mode Amoled Pixel Driver,
And A Method Of Operating A Dual-Mode Amoled Pixel Driver

RE44,941

Method of Clearing Electrical Contact Pads in Thin Film Sealed OLED Devices

8,564,187 

Color Organic Light-Emitting Diode Display Device

 

--------------------------------------------------------------------------------

 

8,423,309 

Method for performing quality control on an organic light emitting diode device
and a method for determining current leakage in an OLED sub-pixel

8,232,931 

Auto-Calibrating Gamma Correction Circuit For Amoled Pixel Display Driver

7,745,340 

Method Of Clearing Electrical Contact Pads In Thin Film Sealed Oled Devices

7,233,026 

Light Extraction From Color Changing Medium Layers In Organic Light Emitting
Diode Devices

6,657,224 

Organic Light Emitting Diode Devices Using Thermostable Hole-Injection and
Hole-Transport Compounds

6,608,283 

Apparatus and Method for Solder-Sealing an active Matrix Organic Light Emitting
Diode

6,608,439 

Inorganic-Based Color Conversion Matrix Element for Organic Color Display
Devices and Method of Fabrication

6,278,237 

Laterally Structured High Resolution Multicolor Organic Electroluminescence
Display Device

6,265,820 

Heat Removal System for use in Organic Light Emitting Diode Displays Having High
Brightness

6,023,259 

OLED Active Matrix Using a Single Transistor Current Mode Pixel Design

6,016,033 

Electrode Structure For High Resolution Organic Light-Emitting Diode Displays
And Method For Making The Same

5,920,080 

Emissive Display Using Organic Light Emitting Diodes

5,866,978 

Matrix Getter for Residual Gas in Vacuum Sealed Panels

5,867,817 

Speech Recognition Manager

6,005,720 

Reflective Micro-Display System

8,749,456 

METHOD OF DRIVING AN ORGANIC LIGHT EMITTING DIODE (OLED) PIXEL, A SYSTEM FOR
DRIVING AN OLED PIXEL AND A COMPUTER-READABLE MEDIUM

9,385,323 

Patterning of OLED materials

9,366,871 

Microdisplay Based Immersive Headset

 

--------------------------------------------------------------------------------

 

9,443,913 

METHOD OF TUNING DISPLAY CHROMATICITY BY MIXING COLOR FILTER MATERIALS AND
DEVICE HAVING MIXED COLOR FILTER MATERIALS

9,489,887 

AMOLED MICRODISPLAY DEVICE WITH ACTIVE TEMPERATURE CONTROL

﻿

Copyrights in United States

﻿

NONE

 

--------------------------------------------------------------------------------

 

EXHIBIT D

﻿

﻿

A. Specific Insurance Requirements.

﻿

(i)Property Insurance - An all risks property insurance policy, including
coverage for fire, theft, collision, burglary, pilferage, loss in transit,
explosion, spoilage, wind, hail, collapse, sinkhole and terrorism (domestic and
foreign), for an amount not less than one hundred percent (100%) of the
replacement cost of the Collateral (exclusive of costs for foundations,
underground utilities and footings for any Collateral consisting of real
property, if applicable) without deduction for physical depreciation.  “All
risks” shall provide coverage for all direct damage to property except as
specifically excluded by the policy.  Such all-risks property insurance policy
shall contain a 438 BFU endorsement, or an equivalent New York Standard
Mortgagee (if applicable) and Lenders Loss Payable Endorsement (CG 12 18 06 95
provision “C” or its equivalent, and:  (A) no coinsurance provision or an agreed
amount endorsement waiving any coinsurance provisions; (B) a deductible not to
exceed $50,000; (C) if applicable, ordinance or law coverage including (1) loss
in value to the undamaged portion of the building(s) to full replacement value,
(2) demolition costs with a limit per loss of ten percent (10%) of the value of
the building(s) affected by loss, and (3) increased costs of construction with a
limit per loss of ten percent (10%) of the value of the building(s) affected by
loss; (D) if applicable, equipment breakdown coverage including, but not limited
to, loss or damage from electrical injury, machinery and equipment breakdown,
and explosion of steam boilers, air conditioning equipment, high pressure
piping, pressure vessels or similar apparatus; and (E) business income and/or
loss of rents coverage, if applicable, in amount equal to the estimated net
operating income and continuing expenses for the property for a period of twelve
(12) months, which may be increased from time to time by Lender, with a 180 Day
Extended Period of Indemnity (or such other period of time as may be needed, in
Lender’s discretion, to return to normal operating levels);

(ii)Liability Insurance – (A) a commercial general liability policy insuring
against claims for personal injury, bodily injury, death or property damage
occurring upon, in or about Borrower’s premises, to be on an “occurrence” form,
with limits not less than $1,000,000 per occurrence and $2,000,000 general
aggregate; (B) if applicable, a business automobile liability policy with symbol
1 with limits not less than $1,000,000 per accident; and (C) if applicable, a
workers compensation policy with limits not less than statutory requirements for
workers compensation and an employer’s liability limit of not less than
$1,000,000 each accident and $1,000,000 per employee and policy aggregate for
bodily injury by disease.  Each commercial general liability policy shall
contain a per location general aggregate if covering multiple locations; (D) if
applicable, Products Recall expense and indemnity policy with a limit not less
than $5,000,000 per occurrence and annual aggregate, and (E) such additional
liability coverages as deemed necessary during the lender’s loan due diligence
process.

(iii)Umbrella or Excess Liability Insurance –A commercial umbrella or excess
liability policy with limits not less than $5,000,000 which, at a minimum, shall
schedule the following policies as “underlying”:  commercial general & products
liability, business automobile liability and employer’s liability.

(iv)   if applicable, a “Blanket Crime” policy including employee dishonesty,
forgery or alteration, theft, disappearance and destruction, robbery and safe
burglary, property, and computer fraud coverage.

﻿

﻿

﻿

﻿

B. General Insurance Requirements.

﻿

 

--------------------------------------------------------------------------------

 

(i)All insurance premiums on all policies must be paid as and when due and
payable, consistent with the past practices of Borrower.  All outstanding
premiums for the current policy term are to be paid prior to the effective date
of such policy;

(ii)No insurance policy required hereunder shall be permitted to provide for
premium assessments to be made against Lender;

(iii)Borrower shall provide the following prior to the effective date of such
policy:  (i) an ACORD 25 or equivalent certificate of liability insurance and
(ii) an ACORD 28 or equivalent certificate of property insurance;

(iv)Prior to the renewal date of each insurance policy required hereunder,
Borrower shall provide certificates of insurance providing evidence that the
policies have been renewed on forms ACORD 28 and ACORD 25;

(v)Borrower shall provide promptly upon Lender’s request complete copies of the
insurance policies providing the coverage required hereunder;

(vi)Each property policy and to the extent possible, each liability policy shall
contain a provision providing not less than thirty (30) days’ prior written
notice to Lender of cancellation and not less than ten (10) days’ prior written
notice to Lender of cancellation for non-payment of premium;

(vii)Lender is to be named (A) the first mortgagee (if applicable) and first
lender loss payee with respect to the property insurance coverage, and (B) an
additional insured with respect to general liability and umbrella or excess
liability insurances, as follows:  Rosenthal & Rosenthal, Inc., 1370 Broadway,
New York, NY 10018.

(viii)A waiver of subrogation shall be provided on all liability policies of
insurance waiving rights of recovery against Lender; and

(ix)The limits of insurance contained herein are minimum limits established by
Lender and shall not be construed to mean that Lender represents or warrants
that the required limits contained herein are adequate for protection to
Borrower, nor limit the liability of Borrower to the limits stated herein.

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#8822423.1

#8905656.1

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