Document:

LEASE

 

This Lease Agreement is made and entered into between Brook Industrial Park, LLC, a New Jersey limited liability corporation, referred to in this lease as Lessor, and Cyalume Specialty Products, Inc., a Delaware corporation, referred to in this lease as Lessee.

 

In consideration of the mutual covenants and agreements set forth in this lease, and other good and valuable consideration, Lessor leases to Lessee, and Lessee leases from Lessor, various industrial spaces comprising of approximately 63,986 square feet of industrial use building space, along with an associated yard space, loading docks and common area space of approximately 49,516  located on the 1st and second  floor of Brook Industrial Park, 100 West Main St, Bound Brook, NJ , and more particularly described in Exhibit A attached to this lease. These premises are referred to in this lease as “the premises” or “the leased premises.”

 

ARTICLE 1

TERM

 

Term of Lease

 

1.01        The initial term of this lease shall be five years, commencing on September 1, 2011  and ending on August 31, 2016, unless terminated sooner as provided in this lease.

 

Option to Extend Term

 

1.02        Lessee has the right to extend this lease beyond the expiration date provided in Paragraph 1.01 on the following terms and conditions:

 

(a)           Lessee may extend the term of this lease for a period of three years, with the extended term to begin on the day following the expiration date of the lease term specified in Paragraph 1.01, and for three additional periods of the same length, each to commence on the day following the expiration date of the immediately preceding extended term. However, if at the date of expiration of the original term or any extended term, Lessee is in default beyond any grace period provided in this lease in the performance of any of the terms or provisions of this lease, the remaining option or options shall be null and void. All the terms, covenants, and provisions of the original lease term shall apply to all extended lease terms.

 

(b)           Lessee may exercise each option to extend this lease by giving Lessor notice of its intention to do so not later than three months prior to the expiration of the lease term in the case of the initial option to extend, or prior to the expiration of the extended lease term in the case of successive options to extend. To constitute effective notice of an intention to exercise an option under this lease, the notice must be sent by certified or registered mail to Lessor at the address provided in Paragraph 15.02 of this lease and must be postmarked no later than the latest date provided in this section for Lessee’s exercise of the option.

  

  

  

 

Holdover

 

1.03        If Lessee holds over and continues in possession of the leased premises after expiration of the term of this lease or any extension of that term, other than as provided in Paragraph 1.02, Lessee will be deemed to be occupying the premises on the basis of a month-to-month tenancy, subject to all of the terms and conditions of this lease.

 

ARTICLE 2

RENT

 

Basic Rent

 

2.01        Lessee will pay to Lessor the “basic rent” in advance on the 1st day of each month. Rent for any fractional month at the beginning or end of the lease term shall be prorated on a per diem basis. For the first two years of the initial lease term the basic rent will remain fixed for every year thereafter, for the last three years of each term the rent will be adjusted to reflect the changes of average cost per square foot as reported  by Newmark Knight and Frank in their 2nd Quarter New Jersey Industrial Market Report (“Newmark Report”), Average Asking Rate for Somerset County.  The basic rent for the first lease term is described in Exhibit A, the most recent Newmark Report is enclosed in Exhibit B. 

 

Increased Operating Costs

 

2.02        If the Newmark Report is no longer published, the parties agree to use a similar report that will accurately describe the market conditions of Somerset County, New Jersey for similar leased space.

 

2.03        Notwithstanding section 2.02, if Lessor’s cost for sewerage utility costs increases above $15,000 per year, Lessee will be responsible for any overage to the extent that said overage is due to Lessee’s use of the sewer.

 

2.04        As described in Exhibit A, Lessee will be entitled to an 8% discount from the normal rent rate provided that Lessee allows Lessor to utilize certain administrative management services including use of copy and fax machines, use of internet access, and assistance with rent collection and accounting services. The initial rent on Exhibit A is net of the discount.

  

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ARTICLE 3

USE OF PREMISES

 

Permitted Use

 

3.01        Lessee will use the leased premises only for manufacturing and warehousing materials, laboratory and for office purposes, unless Lessor shall give Lessee prior written consent for a different use.

 

3.02        Lessee shall not use the leased premises or permit them to be used in any manner that will cause a cancellation of, or an increase in the existing rates for, fire, liability, or other insurance policies insuring the premises or any improvements on the premises, or insuring the landlord for any liability in connection with ownership of the premises.  Lessor confirms that use of the leased premises as permitted in Section 3.01 will not cause a cancellation of any of Lessor’s insurance policies or cause insurance rates to increase. Lessor further confirms that Lessee’s current operations are permitted.

 

3.03        Lessee shall not use the leased premises or permit them to be used in any manner that results in waste of the leased premises or constitutes a nuisance. Lessee shall not use the leased premises or permit them to be used for any illegal purpose. Lessee at its own expense will comply, and will cause its officers, employees, agents, and invitees to comply, with all applicable laws and ordinances, and with all applicable rules and regulations of governmental agencies concerning the use of the leased premises; provided, however, that Lessee shall not be obligated to make or bear the expense of any alterations made to comply with law.

 

3.04        Lessor represents that building is in substantial compliance with all material laws and ordinance and is free from hazardous materials.

 

Use of Common Areas

 

3.05        The front entrance area, parking lots and loading docks and all other common areas of the Building are for the joint use of Lessee and the other tenants of the Building. Lessee and its officers, employees, agents, and invitees will use such common areas in a reasonable, orderly, and sanitary manner in cooperation with all other tenants and their officers, employees, agents, and invitees.

 

Consideration for Other Tenants

 

3.06        Lessee will conduct itself, and will cause its officers, employees, agents, and invitees to conduct themselves, with full regard for the rights, convenience, and welfare of all other tenants in the Building.

  

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ARTICLE 4

SERVICES, MAINTENANCE, AND SURRENDER

 

Services and Maintenance by Lessor

 

4.01        Lessor shall furnish the leased premises with the following services and maintenance at Lessor’s sole expense:

 

(a)           Common Use Elevator: Lessor shall have sole responsibility for the freight elevator service on the west side of the Building for the use of all tenants and occupants of the Building, and the invitees of the tenants and occupants.

 

(b)           Maintenance of exterior building structure: Lessor shall have sole responsibility for maintenance of the exterior structure of the Building, specifically the roof, exterior walls  and foundation.

 

(c)           Pump and Treat System: Lessor shall have sole responsibility for owning, maintaining, and financing all institutional controls required by the consent decree entered into between Brook Industrial Park and the Environmental Protection Agency or made necessary by acts of Lessor prior to the date hereof.  Without limitation, these institutional controls shall include the costs for maintaining all asphalt caps, the overburden aquifer pump and treat system within the leased premises and the bedrock aquifer groundwater pumping system that is used to generate water for non-contact cooling.  Lessee shall have the right to use the water generated from said pump and treat systems for the purposes of non-contact cooling of its operating equipment.  Lessor shall maintain MCUA Permit No. 01168 and be responsible for compliance with its discharge limitations, including monitoring and reporting.  Lessee shall only be responsible for addressing exceedances detected at discharge point 004 to the extent such exceedances are attributable to the production operations of Lessee.

 

Maintenance and Surrender by Lessee

 

4.02        Except as provided in Paragraph 4.01, Lessee shall maintain all other leased premises throughout the lease term and any extensions of that term, and keep them free from waste or nuisance.

 

(a)           Maintenance of interior structure: Lessee shall maintain the leased premises and keep the same in good condition.

 

(b)           Dedicated Elevator: Lessee shall have sole responsibility for the freight elevator service on the east side of the Building for the dedicated use specifically by Lessee.

 

(c)           In no event shall Lessee be obligated to return the leased premises to Lessor in a condition better than the condition on the date hereof.

 

In the event Lessee should neglect to reasonably maintain the leased premises, Lessor shall have the right after reasonable notice to Lessee, but not the obligation, to cause repairs or corrections to be made, and any reasonable costs incurred for such repairs or corrections for which Lessee is responsible under this section shall be payable by Lessee to Lessor as additional rental on the next rental installment date.

  

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ARTICLE 5

TAXES ON LESSEE’S PROPERTY

 

5.01        Lessee shall be liable for all taxes levied or assessed against personal property, furniture, or fixtures placed by Lessee in or on the premises. If any such taxes for which Lessee is liable are levied or assessed against Lessor or Lessor’s property, and if Lessor elects to pay the same, or if the assessed value of Lessor’s property is increased by inclusion of personal property, furniture, or fixtures placed by Lessee in the premises, and Lessor elects to pay the taxes based on such increase, Lessee shall pay to Lessor on demand that part of such taxes for which Lessee is primarily liable under this article.

 

ARTICLE 6

ALTERATIONS, ADDITIONS, IMPROVEMENTS AND FIXTURES

 

Consent of Lessor

 

6.01        Lessee shall not make any alterations, additions, or improvements to the leased premises without the prior written consent of Lessor. Consent for nonstructural alterations, additions, or improvements shall not be unreasonably withheld by Lessor.

 

Property of Lessor

 

6.02        All alterations, additions or improvements made by Lessee shall become the property of Lessor at the termination of this lease.  Lessee shall be permitted to remove its personal property from the Lease Premises, including business machinery.

 

Trade Fixtures

 

6.03        Lessee shall have the right at all times to erect or install furniture and fixtures, provided that Lessee complies with all applicable governmental laws, ordinances, and regulations. Lessee shall have the right to remove such items at the termination of this lease, provided Lessee is not in default at that time and the fixtures can be removed without structural damage to the premises. Prior to the termination of this lease, Lessee must repair any damage caused by removal of any fixtures. Any furniture or fixtures that have not been removed by Lessee at the termination of this lease shall be deemed abandoned by Lessee and shall automatically become the property of Lessor.

  

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ARTICLE 7

DAMAGE OR DESTRUCTION

 

Notice to Lessor

 

7.01        If the leased premises, or any structures or improvements on the leased premises, should be damaged or destroyed by fire, flood, or other casualty, Lessee shall give immediate written notice of the damage or destruction to Lessor, including a description of the damage and, as far as known to Lessee, the cause of the damage.

 

Total Destruction

 

7.02        If the leased premises are totally destroyed by fire, flood, or other casualty not the fault of Lessee or any person in or about the leased premises with the express or implied consent of Lessee, or if it should be so damaged by such a cause that rebuilding or repairs cannot be completed within 100 working days and at a cost not to exceed $ 250,000, this lease shall terminate, and rent shall be abated for the unexpired portion of this lease, effective as of the date of written notification as provided in Paragraph 7.01.

 

Partial Destruction

 

7.03        If the leased premises are damaged by fire, flood, or other casualty not the fault of Lessee or any person in or about the leased premises with the express or implied consent of Lessee, but not to such an extent that rebuilding or repairs cannot reasonably be completed within 100 working days and at a cost not to exceed $ 250,000 this lease shall not terminate except as provided in subsections (a) and (b) of this Paragraph.

 

(a)           If the partial destruction of the leased premises occurs prior to the final 6   months of the lease term, Lessor shall, at its sole cost and risk, proceed immediately to rebuild or repair the damaged buildings and improvements to substantially the condition in which they existed prior to such damage. If the leased premises are untenantable in whole or in part following such damage, the rent payable during the period in which they are untenantable shall be adjusted equitably. In the event that Lessor should fail to complete such rebuilding or repairs within 100 working days from the date of written notification by Lessee to Lessor of the occurrence of the damage or a contractor reasonably approved by Lessor determines that rebuilding and repair will not be complete within 100 days, Lessee may terminate this lease by written notification to Lessor. Upon such notification, all rights and obligations under this lease shall cease.

 

(b)           If partial destruction of the leased premises occurs in the final 6 months of the lease term, Lessor need not rebuild or repair the premises. If Lessor elects not to rebuild or repair the premises and the leased premises are untenantable in whole or in part following such damage, Lessee may elect to terminate the lease or to continue the lease with the rent for the remainder of the lease period adjusted equitably.

 

ARTICLE 8

CONDEMNATION

 

Total Condemnation

 

8.01        If during the term of this lease or any extension or renewal of it, all of the leased premises should be taken for any public or quasi-public use under any governmental law, ordinance, or regulation, or by right of eminent domain, or should be sold to the condemning authority under condemnation, this lease shall terminate, and the rent shall be abated during the unexpired portion of this lease, effective as of the date of the taking of the premises by the condemning authority.

  

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Partial Condemnation

 

8.02        If less than all, but more than fifty percent, of the leased premises is taken for any public or quasi-public use under any governmental law, ordinance, or regulation, or by right of eminent domain, or is sold to the condemning authority under threat of condemnation, either party may terminate the lease by giving written notice to the other party within sixty days after possession of the condemned portion is taken by the entity exercising the power of condemnation.

 

If the leased premises are partially condemned and neither party elects to terminate the lease or, if less than fifty percent of the leased premises is condemned, this lease shall not terminate, but the rent shall be adjusted equitably during the unexpired portion of this lease.

 

Condemnation Award

 

8.03        Lessor shall receive the entire award from any condemnation, and Lessee shall have no claim to that award or for the value of any unexpired term of this lease.  Nothing contained herein shall prohibit Lessee from making a claim for relocation costs directly to the eminent domain authority.

 

ARTICLE 9

RULES AND REGULATIONS

 

9.01        Lessee and Lessee’s officers, employees, agents, and invitees will comply fully with all of the rules and regulations of the Building and related facilities. These rules and regulations are attached to this lease as Exhibit A, and are made a part of the lease as though fully set out in the lease. Lessor shall at all times have the right to make reasonable changes, additions, or deletions to these rules and regulations for the purpose of ensuring or enhancing the safety, care, cleanliness, maintenance, or preservation of the Building and related facilities and premises, as well as for the purpose of preserving good order in and on the Building and its related facilities and premises. Lessee and its officers, employees, agents, and invitees will be bound by any such changes, additions, or deletions to the rules and regulations on receipt by Lessee of written notice from Lessor setting forth the changes, additions, or deletions. Lessee shall be responsible for the compliance of its officers, employees, and invitees with all such rules and regulations.

 

ARTICLE 10

INSPECTION BY LESSOR

 

10.01      Lessor and its officers, agents, employees, and representatives shall have the right to enter into and on any and all parts of the leased premises at all reasonable hours after reasonable notice for purposes of inspection, cleaning, maintenance, repairs, alterations, or additions as Lessor may deem necessary (but without any obligation to perform any of these functions except as expressly provided in this lease), or to show the premises to prospective tenants, purchasers, or lender. Lessee shall not be entitled to any abatement or reduction of rent by reason of the entry of Lessor or any of its officers, agents, representatives, or employees pursuant to this article, nor shall such entry be deemed an actual or constructive eviction.

  

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ARTICLE 11

MECHANIC’S LIENS

 

11.01      Lessee will not permit any mechanic’s lien or liens to be placed on the leased premises or on improvements on the premises. If a mechanic’s lien is filed on the leased premises or on improvements on the leased premises, Lessee will promptly pay the lien. If default in payment of the lien continues for 30 days after written notice from Lessor to Lessee, Lessor may, at its option and after reasonable notice to Lessee, pay the lien or any portion of it without inquiry as to its validity. Any amounts paid by Lessor to remove a mechanic’s lien caused to be filed against the premises or against improvements on the premises by Lessee, including expenses and interest, shall be due from Lessee to Lessor and shall be repaid to Lessor immediately on rendition of notice, together with interest at 5 percent per annum until repaid.

 

ARTICLE 12

INDEMNITY AND INSURANCE

 

12.01      Lessee agrees to indemnify and hold Lessor harmless against any and all claims, demands, damages, costs, and expenses including reasonable attorneys’ fees for the defense of such claims and demands arising from the conduct or management of Lessee’s business on the leased premises or its use of the leased premises, or from any breach on the part of Lessee of any conditions of this lease, or from any act or negligence of Lessee, its officers, agents, contractors, employees, subtenants, or invitees in or about the leased premises. In case of any action or proceeding brought against Lessor by reason of any such claim, Lessee, on notice from Lessor, agrees to defend the action or proceeding by counsel acceptable to Lessor.  This indemnity shall exclude acts by James G. Schleck, while serving as President of Cyalume Specialty Products, Inc (Lessee).

 

12.02      Lessor agrees to indemnify and hold Lessee harmless against any and all claims, demands, damages, costs, and expenses including reasonable attorneys’ fees for the defense of such claims and demands arising from the conduct or management of Lessor’s business on the leased premises or its use of the leased premises, or from any breach on the part of Lessor of any conditions of this lease, or from any act or negligence of Lessor, its officers, agents, contractors, employees, subtenants, or invitees in or about the leased premises. In case of any action or proceeding brought against Lessee by reason of any such claim, Lessor, on notice from Lessee, agrees to defend the action or proceeding by counsel acceptable to Lessee.

 

12.03      Lessee, at its expense, shall maintain insurance including bodily injury and property damage insuring Lessee and Lessor with minimum coverage of $5,000,000 per occurrence. Lessee shall provide the Lessor with a Certificate of Insurance showing Lessor as additional named insured. The certificate shall provide for a ten-day written notice to Lessor in the event of cancellation or material change of coverage. To maximum extent permitted by insurance policies, which may be owned by Lessor or Lessee, Lessee or Lessor, for the benefit of each other, waive any and all rights of subrogation, which might otherwise exist.

  

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12.04      Lessor, at its expense, shall maintain insurance including bodily injury and property damage insuring Lessor with minimum coverage of $1,000,000 per occurrence. To maximum extent permitted by insurance policies, which may be owned by Lessor or Lessee, Lessee or Lessor, for the benefit of each other, waive any and all rights of subrogation, which might otherwise exist.

 

ARTICLE 13

ASSIGNMENT AND SUBLEASE

 

Assignment and Subletting by Lessee

 

13.01      Lessee shall have the right, but only with the prior written consent of Lessor, to assign this lease, and any interest in the lease, and to sublet the leased premises, or any part of them, or any right or privilege pertinent to the lease or the leased premises, provided each assignee assumes in writing all of Lessee’s obligations under this lease and Lessee shall remain liable for each and every obligation under this lease. Lessor’s consent under this subsection will not be arbitrarily or unreasonably withheld, conditioned or delayed.

 

Assignment by Lessor

 

13.02      Lessor is expressly given the right to assign any or all of its interest under the terms of this lease.

 

ARTICLE 14

DEFAULT

 

Lessee’s Default

 

14.01      The following events shall be deemed to be events of default by Lessee under this lease:

 

(1)           Lessee fails to pay any installment of rent due under this lease and the failure continues for a period of ten days.

 

(2)           Lessee fails to comply with any term, provision, or covenant of this lease, other than the payment of rent, and does not cure the failure within ninety days after written notice of the failure to Lessee.

 

(3)           Lessee makes an assignment for the benefit of creditors.

 

(4)           Lessee deserts or vacates any substantial portion of the premises for a period of thirty or more days.

  

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Remedies for Default

 

14.02      On the occurrence of any event of default specified in Paragraph 14.01, Lessor shall have the option to pursue any one or more of the following remedies:

 

(a)           Lessor may terminate this lease after at least fourteen days’ written notice, in which event Lessee shall immediately surrender the premises to Lessor. Lessor may, to the extent permitted by law, without prejudice to any other remedy that it may have for possession or arrearages in rent, enter on and take possession of the premises and remove all persons and property without being deemed guilty of any manner of trespass, and may re-let the premises, or any part of the premises, for all or any part of the remainder of the lease term to a party satisfactory to Lessor at such monthly rental as Lessor with reasonable diligence is able to secure. Lessee agrees to pay Lessor on demand the amount of all loss and damage that Lessor suffers by reason of such termination, whether through inability to re-let the premises on satisfactory terms or otherwise.

 

(b)           Lessor may enter on and take possession of the premises, after at least fourteen days’ written notice, and re-let the premises for the benefit of Lessee on such terms as Lessor deems advisable, and receive the rent for the re-letting. Lessee agrees to pay Lessor on demand any deficiency that may arise by reason of such re-letting.

 

(c)           To the extent permitted by law, Lessor may enter on the premises, without being liable for prosecution or any claim for damages for such entry, and do whatever Lessee is obligated to do under the terms of this lease to correct a failure by Lessee to maintain leased premises. Lessee agrees to reimburse Lessor on demand for any expenses that Lessor may incur in effecting compliance with Lessee’s obligations under this lease in this manner, and Lessee further agrees that Lessor shall not be liable for any damages resulting to Lessee from such action.

 

No reentry or taking possession of the premises by Lessor shall be construed as an election on its part to terminate this lease, unless a written notice of such intention be given to Lessee. Notwithstanding any such re-letting or reentry or taking possession, Lessor may at any time thereafter elect to terminate this lease for a previous default. The loss or damage that Lessor may suffer by reason of termination of this lease, or the deficiency from any re-letting as provided for above, shall include the expense of repossession.

 

Lessor’s Default

 

14.03      If Lessor defaults in the performance of any term, covenant, or condition required to be performed by it under this agreement, Lessee may elect to do either one of the following:

 

(a)           After not less than thirty days’ notice to Lessor, Lessee may remedy such default by any necessary action and, in connection with such remedy, may pay expenses and employ counsel. All sums expended or obligations incurred by Lessee in connection with remedying Lessor’s default shall be paid by Lessor to Lessee on demand and, on failure of such reimbursement, Lessee may, in addition to any other right or remedy that Lessee may have, deduct these costs and expenses from rent subsequently becoming due under this lease.

  

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(b)           Lessee may terminate this lease on giving at least thirty days’ notice to Lessor of such intention. In the event Lessee elects this option, the lease will be terminated on the date designated in Lessee’s notice, unless Lessor has cured the default prior to expiration of the thirty day period.

 

Cumulative Remedies

 

14.04      Pursuit of any of the remedies provided in this lease by either Lessor or Lessee shall not preclude pursuit of any of the other remedies provided in this lease or by law. Pursuit of any remedy provided in this lease or by law by either party shall not constitute a forfeiture or waiver of any damages accruing to either party by reason of the violation of any of the terms, provisions, and covenants contained in this lease. Nor shall pursuit of any remedies provided in this lease by Lessor constitute a waiver or forfeiture of any rent due to Lessor under this lease.

 

Waiver of Default

 

14.05      No waiver by either party of any default or violation or breach of any of the terms, provision, or covenants contained in this lease shall be deemed or construed to constitute a waiver of any other violation or breach of any of the terms, provisions, and covenants of the lease. Forbearance by either party to enforce one or more of the remedies provided in this lease or by law on an event of default shall not be deemed or construed to constitute a waiver of such default. Lessor’s acceptance of rent following an event of default under this lease shall not be construed as Lessor’s waiver of the default.

 

Surrender of Premises

 

14.06      No act or thing done by Lessor or its agents during the lease term shall be deemed an acceptance of a surrender of the premises, and no agreement to accept a surrender of the premises shall be valid unless the same is in writing and subscribed by Lessor.

 

ARTICLE 15

MISCELLANEOUS

 

Mortgages

 

15.01      Lessee accepts this lease subject to any deeds of trust, security interests, or mortgages that might now or later constitute a lien on the Building or on improvements in the Building or on the leased premises. Lessee must, on demand, execute any instruments, releases, or other documents that are required by any mortgagee for the purpose of subjecting and subordinating this lease to the lien of any such deed of trust, security interest, or mortgage. With respect to any deed of trust, security interest, or mortgage constituting a lien on the Building or improvements in the Building or the leased premises, Lessor has the right to waive the applicability of this section so that this lease will not be subject and subordinate to any such deed of trust, security interest, or mortgage.

  

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Notices and Addresses

 

15.02      All notices to be given under this agreement shall be given by certified mail or registered mail, addressed to the proper party, at the following addresses:

 

Lessor

 

Brook Industrial Park

PO Box 266

Bound Brook NJ, 08805

ATTN: James Schleck

 

Lessee

 

Cyalume Specialty Products

96 Windsor Ave

West Springfield, MA 01089

 

Either party may change the address to which notices are to be sent by giving the other party notice of the new address in the manner provided in this section.

 

Parties Bound

 

15.03      This agreement shall be binding on, and inure to the benefit of, the parties to the agreement and their respective heirs, executors, administrators, legal representatives, successors, and assigns when permitted by this agreement.

 

New Jersey Law to Apply

 

15.04      This agreement shall be construed under, and in accordance with, the laws of the State of New Jersey, and all obligations of the parties created by this agreement are performable in Somerset County, New Jersey.

 

Legal Construction

 

15.05      In case any one or more of the provisions contained in this agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of the agreement, and this agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been included in the agreement.

 

Prior Agreements Superseded

 

15.06      This agreement constitutes the sole and only agreement of the parties to the agreement and supersedes any prior understandings or written or oral agreements between the parties respecting the subject matter of this agreement.

  

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Amendment

 

15.07      No amendment, modification, or alteration of the terms of this agreement shall be binding unless the same is in writing, dated subsequent to the date of this agreement, and duly executed by the parties to this agreement.

 

Joint and Several Liability

 

15.08      If there is more than one Lessee, the obligations imposed on Lessees by virtue of this lease shall be joint and several. If there is a guarantor of Lessee’s obligations under this lease, the obligations imposed on Lessee shall be the joint and several obligations of Lessee and the guarantor. Lessor need not first proceed against Lessee before proceeding against the guarantor, nor shall any such guarantor be released from its guaranty for any reason whatsoever.

 

Attorneys’ Fees and Costs

 

15.09      If, as a result of a breach of this agreement by either party, the other party employs an attorney or attorneys to enforce its rights under this lease, then the breaching or defaulting party agrees to pay the other party the reasonable attorneys’ fees and costs incurred to enforce the lease.

 

Force Majeure

 

15.10      Neither Lessor nor Lessee shall be required to perform any term, condition, or covenant in this lease so long as such performance is delayed or prevented by force majeure, which shall mean acts of God, strikes, lockouts, material or labor restrictions by any governmental authority, civil riot, floods, and any other cause not reasonably within the control of Lessor or Lessee and which by the exercise of due diligence Lessor or Lessee is unable, wholly or in part, to prevent or overcome.

 

Time of Essence

 

15.11      Time is of the essence of this agreement.

 

The undersigned Lessor and Lessee execute this agreement on ___________________ [date]     , at ___________________ [city]     , ___________________ County, New Jersey.

 

LESSOR

 

By ______________________ [signature]

[typed name and title]

 

LESSEE

 

By ______________________ [signature]

[typed name and title]

  

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Exhibit A- Rent Schedule

 

September 2011 – August 2013: $24,000 per month

 

September 2013 – August 2014: As per rate published in the Newmark Report

 

After the initial term the rent is calculated based on applying the Newmark cost per square foot times the industrial use building space and excluding the common area space.

  

14Unassociated Document

AMENDMENT TO LOAN AND SECURITY AGREEMENT

This AMENDMENT to Loan and Security Agreement (this “Amendment”) is entered into this 31st day of October 2011, by and between Silicon Valley Bank (“Bank”) and Derycz Scientific, Inc., a Nevada corporation, Reprints Desk, Inc., a Delaware corporation and Pools Press, Inc., an Illinois corporation (jointly and severally, the “Borrower”).

Recitals

 

A.           Bank and Borrower have entered into that certain Loan and Security Agreement dated as of July 23, 2010 (as the same may from time to time be amended, modified, supplemented or restated, the “Loan Agreement”).  Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.

 

B.           Borrower has requested that Bank amend the Loan Agreement, as herein set forth, and Bank has agreed to do the same, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.

 

Agreement

 

Now, Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

 

1.           Definitions.  Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.

 

2.           Amendment.  The Loan Agreement is amended as follows, effective as of October 22, 2011:

 

2.1         Modified Letters of Credit Sublimit.  Section 2.1.2 of the Loan Agreement is hereby amended in its entirety to read as follows:

 

2.1.2           Letters of Credit Sublimit.  [Omitted].

2.2         Modified Foreign Exchange Sublimit.  Section 2.1.3 of the Loan Agreement is hereby amended in its entirety to read as follows:

 

2.1.3           Foreign Exchange Sublimit.  [Omitted].

2.3         Modified Cash Management Services Sublimit.  Section 2.1.4 of the Loan Agreement is hereby amended in its entirety to read as follows:

 

2.1.4           Cash Management Services Sublimit.  [Omitted].

  

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2.4         Modified Overadvances.  Section 2.2 of the Loan Agreement is hereby amended in its entirety to read as follows:

 

2.2           Overadvances.  If, at any time, the outstanding principal amount of any Advances exceeds the lesser of either the Maximum Dollar Amount or the Borrowing Base (such excess being an “Overadvance”), Borrower shall immediately pay to Bank in cash such Overadvance.  Without limiting Borrower’s obligation to repay Bank any amount of the Overadvance, Borrower agrees to pay Bank interest on the outstanding amount of any Overadvance, on demand, at the Default Rate.

2.5         Modified Letter of Credit Fees.  Section 2.4(b) of the Loan Agreement is hereby amended in its entirety to read as follows:

 

(b)           Letter of Credit Fee.  [Omitted]; and

2.6         Modified Grant of Security Interest.  Section 4.1 of the Loan Agreement is hereby amended in its entirety to read as follows:

 

4.1           Grant of Security Interest. Each Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.  Borrower acknowledges that it previously has entered, and/or may in the future enter, into Bank Services Agreements with Bank.  Regardless of the terms of any Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to be Obligations hereunder and that it is the intent of Borrower and Bank to have all such Obligations secured by the first priority perfected security interest in the Collateral granted herein (subject only to Permitted Liens that may have superior priority to Bank’s Lien in this Agreement).  Borrower agrees that, unless otherwise agreed in a writing signed by Bank and Borrower, (a) the security interest granted herein by Borrower shall survive the termination of this Agreement and shall terminate only upon the termination of all Bank Services Agreements, and (b) if, on the effective date of the termination of this Agreement, there are any outstanding Letters of Credit, then on such date Borrower shall provide to Bank cash collateral in an amount equal to 110% of the Dollar Equivalent of the face amount of all such Letters of Credit plus all interest, fees and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment), to secure all of the Obligations relating to such Letters of Credit.

  

-2-

  

 

2.7         Modified Tangible Net Worth Financial Covenant.  Section 6.9(b) of the Loan Agreement is hereby amended in its entirety to read as follows:

 

(b)           Tangible Net Worth.  A Tangible Net Worth of at least $1,500,000, increasing by (i) 50% of Net Income for the fiscal quarter ending December 31, 2011 and each fiscal quarter ending thereafter and (ii) 50% of issuances of equity after October 1, 2011 and the principal amount of Subordinated Debt.

2.8         Added Event of Default Regarding Guarantors.  Section 8.11 is hereby added to the Loan Agreement and shall read as follows:

 

8.11           Guaranty.  (a) Any guaranty of any Obligations terminates or ceases for any reason to be in full force and effect; (b) any Guarantor does not perform any obligation or covenant under any guaranty of the Obligations; (c) any circumstance described in Sections 8.3, 8.4, 8.5, 8.7, or 8.8. occurs with respect to any Guarantor, or (d) the death, liquidation, winding up, or termination of existence of any Guarantor; or (e) (i) a material impairment in the perfection or priority of Bank’s Lien in the collateral provided by Guarantor or in the value of such collateral or (ii) a material adverse change in the general affairs, management, results of operation, condition (financial or otherwise) or the prospect of repayment of the Obligations occurs with respect to any Guarantor.

2.9         Modified Remedy Regarding Letters of Credit.  Section 9.1(c) of the Loan Agreement is hereby amended in its entirety to read as follows:

 

(c)           for any Letters of Credit, demand that Borrower (i) deposit cash with Bank in an amount equal to 110% of the Dollar Equivalent of the aggregate face amount of all Letters of Credit remaining undrawn (plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment)), to secure all of the Obligations relating to such Letters of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid or payable over the remaining term of any Letters of Credit;

 

  

-3-

  

2.10       Modified Remedy Regarding FX Contracts.  Section 9.1(d) of the Loan Agreement is hereby amended in its entirety to read as follows:

 

(d)           terminate any FX Contracts;

 

2.11       Modified Early Termination Provision.  Section 12.1 of the Loan Agreement is hereby amended in its entirety to read as follows:

 

12.1           Termination Prior to Revolving Line Maturity Date.  This Agreement may be terminated prior to the Revolving Line Maturity Date by Borrowers, effective three (3) Business Days after written notice of termination is given to Bank.  Notwithstanding any such termination, Bank’s lien and security interest in the Collateral and all of Bank’s rights and remedies under this Agreement shall continue until Borrowers fully satisfies their Obligations.  If such termination is at any Borrower’s election, Borrowers shall pay to Bank, in addition to the payment of any other expenses or fees then-owing, a termination fee in an amount equal to the following:  (i) two percent (2.0%) of the Maximum Dollar Amount if any such termination occurs on or before October 26, 2012 and (ii) one percent (1.0%) of the Maximum Dollar Amount if any such termination arises after October 26, 2012, provided that no termination fee shall be charged if the credit facility hereunder is replaced with a new facility from another division of Bank.

12.12     Modified Survival Provision.  Section 12.9 of the Loan Agreement is hereby amended in its entirety to read as follows:

 

12.9           Survival.  All covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms and all Obligations (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) have been paid in full and satisfied.  The grant of security interest by Borrower in Section 4.1 shall survive until the termination of all Bank Services Agreements, and the obligation of Borrower in Section 12.3 to indemnify the Indemnified Persons shall survive until all statutes of limitation with respect to the Claims, losses and expenses for which indemnity is given shall have run.

  

-4-

  

 

2.13       Addition of Guarantor.  The definition of “Guarantor” is hereby added to Section 13.1 of the Loan Agreement and shall read as follows:

 

“Guarantor” is any present or future guarantor of the Obligations.

 

2.14       Addition of Maximum Dollar Amount.  The definition of “Maximum Dollar Amount” is hereby added to Section 13.1 of the Loan Agreement and shall read as follows:

 

“Maximum Dollar Amount” is $4,000,000.

 

2.15       Addition of Net Income.  The definition of “Net Income” is hereby added to Section 13.1 of the Loan Agreement and shall read as follows:

 

“Net Income” means, as calculated on a consolidated basis for Borrower and its Subsidiaries for any period as at any date of determination, the net profit (or loss), after provision for taxes, of Borrower and its Subsidiaries for such period taken as a single accounting period.

 

2.16       Modified Permitted Investments.  The following subclauses (j) and (k) are hereby added at the end of the definition of “Permitted Investments” set forth in Section 13.1 of the Loan Agreement and shall read as follows:

 

(j)           Investments by Borrower into any Subsidiary not to exceed an aggregate amount of $50,000 in any one fiscal year for all such Subsidiaries combined exclusive of any intercompany invoices for printing services to European Union customers; and

(k)           A one-time cash Investment of $500,000 to TAAG, Borrower’s French Subsidiary, provided that (i) no Event of Default has occurred and is continuing and (ii) Borrower has received at least $2,000,000 in net cash proceeds from the issuance of equity securities of Borrower from the equity financing transaction with TriPoint Global Equities, LLC as placement agent or other equity transaction closing after October 1, 2011.

2.17       Modified Revolving Line.  The definition of “Revolving Line” set forth in Section 13.1 of the Loan Agreement is hereby modified to read as follows:

 

“Revolving Line” is an Advance or Advances in an aggregate amount of up to the Maximum Dollar Amount outstanding at any time.

 

  

-5-

  

 

2.18       Modified Revolving Line Maturity Date.  The definition of “Revolving Line Maturity Date” set forth in Section 13.1 of the Loan Agreement is hereby modified to read as follows:

 

“Revolving Line Maturity Date” is October 26, 2013.

2.19       Modified Tangible Net Worth.  The definition of “Tangible Net Worth” set forth in Section 13.1 of the Loan Agreement is hereby modified to read as follows:

 

“Tangible Net Worth” is, on any date, the consolidated total assets of Borrower and its Subsidiaries minus (a) any amounts attributable to (i) goodwill and (ii) intangible items including unamortized debt discount and expense, Patents, Trademarks, Copyrights, and research and development expenses except prepaid expenses, minus (b) Total Liabilities, plus (c) Subordinated Debt.

2.20       Modified or Added Definitions Pertaining to Deletion of Letters of Credit Sublimit, Foreign Exchange Sublimit and Cash Management Services Sublimit.  The following definitions are hereby modified in, or added to, Section 13.1 of the Loan Agreement and shall read as follows:

 

“Availability Amount” is (a) the lesser of (i) the Maximum Dollar Amount or (ii) the amount available under the Borrowing Base minus (b) the outstanding principal balance of any Advances.

 

“Bank Services” are any products, credit services, and/or financial accommodations previously, now, or hereafter provided to Borrower or any of its Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any letters of credit, cash management services (including, without limitation, merchant services, direct deposit of payroll, business credit cards, and check cashing services), interest rate swap arrangements, and foreign exchange services as any such products or services may be identified in Bank’s various agreements related thereto (each, a “Bank Services Agreement”).

“Credit Extension” is any Advance or any other extension of credit by Bank for Borrower’s benefit.

  

“FX Contract” is any foreign exchange contract by and between Borrower and Bank under which Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency on a specified date.

 

  

-6-

  

 

“Letter of Credit” is a standby or commercial letter of credit issued by Bank upon request of Borrower based upon an application, guarantee, indemnity, or similar agreement.

 

“Loan Documents” are, collectively, this Agreement, the Perfection Certificate, the IP Agreements, any Bank Services Agreement, any note, or notes or guaranties executed by Borrower or any Guarantor, and any other present or future agreement by Borrower and/or any Guarantor with or for the benefit of Bank, all as amended, restated, or otherwise modified.

 

“Obligations” are Borrower’s obligation to pay when due any debts, principal, interest, Bank Expenses, and other amounts Borrower owes Bank now or later, whether under this Agreement, the Loan Documents, or otherwise, including, without limitation, any interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and the performance of Borrower’s duties under the Loan Documents.

2.21       Deleted Definitions Pertaining to Deletion of Letters of Credit Sublimit, Foreign Exchange Sublimit and Cash Management Services Sublimit.  The following defined terms, set forth in Section 13.1 of the Loan Agreement, are hereby deleted:

 

“Cash Management Services”

 

“FX Business Day”

 

“FX Forward Contract”

 

“FX Reduction Amount”

 

“FX Reserve”

 

“Letter of Credit Application”

 

“Letter of Credit Reserve”

 

“Settlement Date”

 

2.22       Anniversary Fee.  Borrower hereby agrees that in addition to the fee set forth in Section 6 hereof, on October 26, 2012, Borrower shall pay Bank a fully earned, non-refundable anniversary fee in the amount of $30,000.

 

2.23       Cross-Corporate Continuing Guaranty.  Each Borrower shall concurrently herewith execute and deliver to Bank a Cross-Corporate Continuing Guaranty and related documents, on Bank’s standard forms thereof, guaranteeing the Obligations of the other Borrowers under the Loan Agreement.

 

  

-7-

  

 

2.24       TAAG.  The Borrower acknowledges and agrees that its Subsidiary, TAAG, will not be a party to the Loan Agreement nor will TAAG’s Accounts be included in the definition of Eligible Accounts.  Bank will not, at this point in time, require Borrower to execute a stock pledge agreement in favor of Bank with regard to Borrower’s equity interests in TAAG, nor will Bank, at this time, require TAAG to execute such documents as Bank deems necessary in order for TAAG to be made a co-Borrower under the Loan Agreement.

 

 

2.25       Modified Compliance Certificate.  The form of Compliance Certificate, attached as Exhibit C to the Loan Agreement, is amended in its entirety to read as set forth on Exhibit C attached hereto.

 

3.           Limitation of Amendments.

 

3.1         The amendments set forth in Section 2, above, are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.

 

3.2         This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

 

4.           Representations and Warranties.  To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:

 

4.1         Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default has occurred and is continuing;

 

4.2         Borrower has the power and due authority to execute and deliver this Amendment; and

 

4.3         The organizational documents of Borrower delivered to Bank on the Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect.

 

4.4         The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;

 

4.5         The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;

 

  

-8-

  

 

4.6         The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on either Borrower, except as already has been obtained or made; and

 

4.7         This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

5.           Counterparts.  This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

 

6.           Effectiveness.  This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of this Amendment by each party hereto and (b) Borrower’s payment of an amendment fee in an amount equal to $30,000.

 

7.           Governing Law.  This Amendment and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the laws of the State of California.

 

[Signature page follows.]

 

  

-9-

  

 

In Witness Whereof, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.

	

BANK

	 	 	

BORROWER

	 
	 	 	 	 	 
	

Silicon Valley Bank

	 	 	

Derycz Scientific, Inc.

	 
	 	 	 	 	 
	
By: ____________________________

	 	 	

By: ____________________________

	 
	
Name: __________________________

	 	 	

Name: __________________________

	 
	
Title: ___________________________

	 	 	

Title: ___________________________

	 
	 	 	 	 	 
	 	 	 	

BORROWER

	 
	 	 	 	 	 
	 	 	 	

Reprints Desk, Inc.

	 
	 	 	 	 	 
	 	 	 	

By: ____________________________

	 
	 	 	 	

Name: __________________________

	 
	 	 	 	

Title: ___________________________

	 
	 	 	 	 	 
	 	 	 	

BORROWER

	 
	 	 	 	 	 
	 	 	 	

Pools Press, Inc.

	 
	 	 	 	 	 
	 	 	 	

By: ____________________________

	 
	 	 	 	

Name: __________________________

	 
	 	 	 	

Title: ___________________________

	 

 

  

-10-

  

 

EXHIBIT C

COMPLIANCE CERTIFICATE

 

TO: SILICON VALLEY BANK                                                                                               Date: _______________ 

FROM:  DERYCZ SCIENTIFIC, INC. on behalf of itself and the other Borrowers

The undersigned authorized officer of DERYCZ SCIENTIFIC, INC. (“Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrowers and Bank (the “Agreement”):

 

(1) Borrowers are in complete compliance for the period ending _______________ with all required covenants except as noted below; (2) there are no Events of Default; (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; (4) Borrowers, and each of their Subsidiaries, has timely filed all required tax returns and reports, and Borrowers have timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrowers except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement; and (5) no Liens have been levied or claims made against any Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrowers have not previously provided written notification to Bank.

Attached are the required documents supporting the certification.  The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes.  The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrowers are not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.  Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

 

	
Please indicate compliance status by circling Yes/No under “Complies” column.

	  
	
Reporting Covenant

	 	
Required

	 	
Complies

	  	 	  	 	  
	
Monthly financial statements with

Compliance Certificate

	 	
Monthly within 30 days

	 	
Yes   No

	
Annual projections

	 	
FYE within 30 days

	 	
Yes   No

	
10-Q, 10-K and 8-K

	 	
Within 5 days after filing with SEC

	 	
Yes   No

	
A/R & A/P Agings

	 	
Monthly within 20 days

	 	
Yes   No

	
Transaction Report

	 	
Weekly when not on Streamline,

Monthly within 20 days when on Streamline

and with each Advance request

	 	
Yes   No

	  
	
The following Intellectual Property was registered (or a registration application submitted) after the Effective Date

(if no registrations, state “None”)

___________________________________________________________________________________________

___________________________________________________________________________________________

 

	
Financial Covenant

	 	
Required

	 	
Actual

	 	
Complies

	  	 	  	 	  	 	  
	
Maintain on a Monthly Basis:

	 	  	 	  	 	  
	
Minimum Quick Ratio

	 	
0.80:1.0

	 	
_____:1.0

	 	
Yes   No

	
Minimum Tangible Net Worth

	 	
*

	 	
$_________

	 	
Yes   No

 

	
*at least One Million Five Hundred Thousand Dollars ($1,500,000) increasing by (i) fifty percent (50%) of quarterly Net Income and (ii) fifty percent (50%) of issuances of equity and Subordinated Debt after October 1, 2011.

 

  

  

  

 

	 	 	

Streamline Period

	 	

Applies

	  	 	  	 	  
	
Net Cash at least $800,000 at all times

	 	
Streamline Period in Effect

	 	
Yes   No

	
Net Cash less than $800,000 at any time

	 	
Streamline Period not in Effect

	 	
Yes   No

The following financial covenant analyses and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

 

The following are the exceptions with respect to the certification above:  (If no exceptions exist, state “No exceptions to note.”)

___________________________________________________________________________________________

___________________________________________________________________________________________

 

	
DERYCZ SCIENTIFIC, INC. on behalf of itself and the other Borrowers

 

 

By: ________________________ 

Name: ______________________ 

Title: _______________________ 

 

	
BANK USE ONLY

 

Received by: _____________________

authorized signer

Date: _________________________

 

Verified: ________________________

authorized signer

Date: _________________________

 

Compliance Status:                  Yes     No

  

  

  

 

Schedule 1 to Compliance Certificate

Financial Covenants of Borrowers

 

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.

 

Dated: ____________________

I.           Quick Ratio (Section 6.7(a))

 

Required:                      0.80:1.00

Actual:

 

	A.	 	
Aggregate value of the unrestricted cash of Borrowers

	 	$	 	 
	 	 	 	 	 	 	 
	B.	 	
Aggregate value of the net billed accounts receivable of Borrowers

	 	$	 	 
	 	 	 	 	 	 	 
	C.	 	
Quick Assets (the sum of lines A and B)

	 	$	 	 
	 	 	 	 	 	 	 
	D.	 	
Aggregate value of Obligations to Bank

	 	$	 	 
	 	 	 	 	 	 	 
	E.	 	
Aggregate value of liabilities that should, under GAAP, be classified as liabilities on Borrowers’ consolidated balance sheet, including all Indebtedness, and not otherwise reflected in line D above that matures within one (1) year

	 	$	 	 
	 	 	 	 	 	 	 
	F.	 	
Current Liabilities (the sum of lines D and E)

	 	$	 	 
	 	 	 	 	 	 	 
	G.	 	
Quick Ratio (line C divided by line F)

	 	  	   	 

 

Is line G equal to or greater than 0.80:1:00?

_______ No, not in compliance                                                                                      _______ Yes, in compliance

  

  

  

II.           Tangible Net Worth (Section 6.7(b))

Required: One Million Five Hundred Thousand Dollars ($1,500,000) increasing by (i) fifty percent (50%) of quarterly Net Income plus (ii) fifty percent (50%) of issuances of equity and Subordinated Debt after the Effective Date.

Actual:

	A.	 	
Aggregate value of total assets of Borrower and its Subsidiaries

	 	$	  	 
	 	 	 	 	 	 	 
	B.	 	
Aggregate value of goodwill of Borrower and its Subsidiaries

	 	$	  	 
	 	 	 	 	 	 	 
	C.	 	
Aggregate value of intangible assets of Borrower and its Subsidiaries

	 	$	  	 
	 	 	 	 	 	 	 
	D.	 	
Aggregate value of liabilities that should, under GAAP, be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness

	 	$	  	 
	 	 	 	 	 	 	 
	E.	 	
Aggregate value of Indebtedness of Borrower subordinated to Borrower’s Indebtedness to Bank

	 	$	  	 
	 	 	 	 	 	 	 
	F.	 	
Tangible Net Worth (line A minus line B minus line C minus line D plus line E)

	 	$	  	 

 

Is line F equal to or greater than at least One Million Five Hundred Thousand Dollars ($1,500,000) increasing by (i) fifty percent (50%) of quarterly Net Income plus (ii) fifty percent (50%) of issuances of equity and Subordinated Debt after the Effective Date?

_______  No, not in compliance                                                                                      _______ Yes, in compliance

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