Document:

EX-10.15

 

Exhibit 10.15

SECOND AMENDMENT TO THE

RECEIVABLES FINANCING AGREEMENT

     THIS
SECOND AMENDMENT TO THE RECEIVABLES FINANCING AGREEMENT, dated as of December 27, 2007
(this “Amendment”), is entered into by and among PALISADES ACQUISITION XVI, LLC, a Delaware
limited liability company (the “Borrower”), PALISADES COLLECTION, L.L.C., a Delaware
limited liability company (the “Servicer”), FAIRWAY FINANCE COMPANY, LLC ( the
“Lender”), BMO CAPITAL MARKETS CORP. (“BMO CM”), as Administrator for the Lender
(in such capacity, the “Administrator”) and as collateral agent for the Secured Parties (in
such capacity, the “Collateral Agent”), and BANK OF MONTREAL (“BMO”), as liquidity
agent for the Liquidity Providers (in such capacity, the “Liquidity Agent”). Capitalized
terms used and not otherwise defined herein are used as defined in the Receivables Financing
Agreement, dated as of March 2, 2007 (as amended, supplemented or otherwise modified, the
“Receivables Financing Agreement”), among the Borrower, the Servicer, the Lender, the
Administrator, the Collateral Agent and the Liquidity Agent.

     WHEREAS, the parties hereto desire to amend the Receivables Financing Agreement in certain
respects as provided herein;

     NOW THEREFORE, in consideration of the premises and other material covenants contained herein,
the parties hereto agree as follows:

     SECTION 1. Amendments. The Receivables Financing Agreement is hereby amended as
follows:

     1.1 The definition of “Collection Rate” as set forth in Section 1.1 of the Receivables
Financing Agreement is hereby amended and restated in its entirety to read as follow:

     “Collection Rate” means, for any Pool as of the last day of any
Collection Period, the quotient (expressed as a percentage) of (i) the cumulative
Collections for such Pool (net of the corresponding Servicing Fees) received from
January 1, 2008 through such date, divided by (ii) the Expected Pool Collections for
such Pool from January 1, 2008 through such date.

     1.2 The definition of “Expected Pool Collections” as set forth in Section 1.1 of the
Receivables Financing Agreement is hereby amended and restated in its entirety to read as follow:

     “Expected Pool Collections” means, as of any date of determination and
for any Pool, the amount of collections expected to be received on such Pool through
such date (net of the corresponding expected Servicing Fees) in accordance with the
“cumulative collection curve” provided to the Administrator
on December 27, 2007 (or
any reduced, but not increased, “cumulative collection

 

 

curve” (prepared in the event of an accounting impairment taken with respect to
such Pool) required to be subsequently provided to the Administrator).

     1.3 The definition of “Rolling Collection Rate” is hereby added to Section 1.1 of the
Receivables Financing Agreement in alphabetical order as follows:

     “Rolling Collection Rate” means, as of the last day of any specified
Collection Periods, the quotient (expressed as a percentage) of (i) the Collections
for all Pools (net of the corresponding Servicing Fees) during such Collection
Periods, divided by (ii) the Expected Collections for all Pools (based on the
“cumulative collection curve” provided to the Administrator
on December 27, 2007)
for such Collection Periods.

     1.4 The definition of “Program Fee” as set forth in Section 1.1 of the Receivables
Financing Agreement is hereby amended and restated in its entirety to read as follows:

     “Program Fee” has the meaning set forth in the Fee Letter, plus, with
respect to the Distribution Date occurring on January 10, 2008, $475,000, payable on
January 10, 2008.

     1.5 Section 10.1 is hereby amended by adding a new paragraph at the end thereof to be
and to read as follows:

     10.1.14 Rolling Collection Rate. The Rolling Collection Rate (i) for
any two consecutive Collection Periods (commencing with the January and February
2008 Collection Periods), is less than 85% or (ii) for any three consecutive
Collection Periods (commencing with the January, February and March 2008 Collection
Periods), is less than 95%.

     SECTION 2. Receivables Financing Agreement in Full Force and Effect as Amended.

     Except as specifically amended hereby, the Receivables Financing Agreement shall remain in
full force and effect. All references to the Receivables Financing Agreement shall be deemed to
mean the Receivables Financing Agreement as modified hereby. This Amendment shall not constitute a
novation of the Receivables Financing Agreement, but shall constitute an amendment thereof. The
parties hereto agree to be bound by the terms and conditions of the Receivables Financing
Agreement, as amended by this Amendment, as though such terms and conditions were set forth herein.

     SECTION 3. Miscellaneous.

          A. On and as of the date hereof, the Borrower hereby confirms, reaffirms and restates the
representations and warranties set forth in Section 8.1 of the Receivables Financing Agreement
mutatis mutandis, except to the extent that such representations and warranties
expressly relate to a specific earlier date in which case the Borrower hereby confirms, reaffirms
and restates such representations and warranties as of such earlier date.

2

 

          B. This Amendment may be executed in any number of counterparts, and by the different parties
hereto on the same or separate counterparts, each of which when so executed and delivered shall be
deemed to be an original instrument but all of which together shall constitute one and the same
agreement. The effectiveness of this Amendment is subject to the condition precedent that the
Administrator shall have received counterparts of this Amendment, duly executed by all parties
hereto.

          C. The descriptive headings of the various sections of this Amendment are inserted for
convenience of reference only and shall not be deemed to affect the meaning or construction of any
of the provisions hereof.

          D. This Amendment may not be amended or otherwise modified except as provided in the
Receivables Financing Agreement.

          E. Each of the Administrator and the Lender do not waive and have not waived, and hereby
expressly reserve, its right at any time to take any and all actions, and to exercise any and all
remedies, authorized or permitted under the Receivables Financing Agreement, as amended, or any of
the other Transaction Documents, or available at law or equity or otherwise.

          F. The Borrower agrees to pay and reimburse the Administrator for all its reasonable costs and
out-of-pocket expenses incurred in connection with the preparation and delivery of this Amendment,
including, without limitation, the reasonable fees and disbursements of counsel to the
Administrator.

          G. Any provision in this Amendment which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

          H. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY OTHERWISE APPLICABLE CONFLICTS OF LAW
PRINCIPLES (OTHER THAN THOSE SET FORTH IN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK).

[Signature Pages Follow]

3

 

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered by their proper and duly authorized officers as of the 27th of December, 2007.

	 	 	 	 	 
	 	PALISADES ACQUISITION XVI, LLC, as Borrower

 	 
	 	By:  	/s/
Gary Stern
 	 
	 	 	Name:  	Gary Stern 	 
	 	 	Title:  	Manager 	 
	 
	 	BMO CAPITAL MARKET CORP., as Administrator and as Collateral Agent

 	 
	 	By:  	/s/  John Pappano
 	 
	 	 	Name:  	John Pappano 	 
	 	 	Title:  	Managing Director 	 
	 

S-1

 

	 	 	 	 	 
	 	FAIRWAY FINANCE COMPANY, LLC, as Lender

 	 
	 	By:  	/s/ Orlando Figueroa
 	 
	 	 	Name:  	Orlando Figueroa	 
	 	 	Title:  	Vice President 	 
	 

S-2

 

	 	 	 	 	 
	 	PALISADES COLLECTION, L.L.C, as Servicer

 	 
	 	By:  	/s/ Gary Stern
 	 
	 	 	Name:  	Gary Stern	 
	 	 	Title:  	Manager 	 
	 

S-3

 

	 	 	 	 	 
	 	BANK OF MONTREAL, as Liquidity Agent

 	 
	 	By:  	/s/ Gary Herron
 	 
	 	 	Name:  	Gary Herron 	 
	 	 	Title:  	Vice President 	 
	 

S-4FIRST AMENDMENT AGREEMENT

     This First Amendment Agreement (the "Agreement"), dated as of December 27,
2007, is by and among Electronic Sensor Technology, Inc., a Nevada corporation
(the "Company") and the investors signatory hereto (each, a "Purchaser" and
collectively, the "Purchasers"). Capitalized terms not defined in this Agreement
shall have the meanings ascribed to such terms in the Purchase Agreement (as
defined below).

     WHEREAS, pursuant to a securities purchase agreement dated December 7, 2005
among the Company and the Purchasers (the "Purchase Agreement"), the Purchasers
were issued 8% convertible debentures with an original aggregate principal
amount of $7,000,000 and warrants to purchase shares of Common Stock; and

     WHEREAS, the parties wish to amend certain terms of the Transaction
Documents.

     NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for good and valuable consideration the receipt and adequacy of
which are hereby acknowledged, the Purchasers and the Company agree as follows:

     1. Extension of Quarterly Redemption. The Purchasers hereby agree to extend
the initial Quarterly Redemption Date from January 1, 2008 until April 1, 2008.

     2. Amendments to Section 1 of the Debenture.

        a) The definition of "Quarterly Redemption Amount" set forth in
     Section 1 of the Debentures is hereby amended such that the Quarterly
     Redemption Amount for each Quarterly Redemption as to a Purchaser shall
     equal the amounts set forth on Schedule 1 attached hereto.

        b) The definition of "Quarterly Redemption Date" set forth in Section 1
     of the Debentures is hereby amended and restated as follows:

        "Quarterly Redemption Date" means each January 1, April 1, July 1 and
        October 1, commencing on April 1, 2008 and ending upon the full
        redemption of this Debenture.

     3. Effect on Purchase Agreement. The foregoing amendments are given solely
in respect of the transactions described herein. Except as expressly set forth
herein, all of the terms and conditions of the Transaction Documents, as
amended, shall continue in full force and effect after the execution of this
Agreement, and shall not be in any way changed, modified or superseded by the
terms set forth herein. This Agreement shall not constitute a novation or
satisfaction and accord of any Transaction Document.

     4. Filing of Form 8-K. Within 2 Trading Days of the effective date of this
Agreement, the Company shall issue a Current Report on Form 8-K, reasonably
acceptable to each Purchaser disclosing the material terms of the transactions
contemplated hereby, which

                                       1
<PAGE>
shall include this Agreement as an attachment thereto. In addition, within 2
Trading Days of the date hereof, the Company shall file prospectus supplements
under Rule 424 under the Securities Act to registration statement number
333-130900 and registration statement number 333-138977 (collectively, the
"Registration Statements"), disclosing the terms of the transactions hereunder.

     5. Conditions to Purchasers Obligations. The respective obligations of the
Purchasers hereunder in connection with the Closing are subject to the following
conditions being met:

        a) the accuracy in all material respects on the date of the Closing of
     the representations and warranties of the Company contained herein;

        b) all obligations, covenants and agreements of the Company required
     to be performed at or prior to the Closing shall have been performed;

        c) all Purchasers parties to the Purchase Agreement shall have agreed
     to the terms and conditions of this Agreement;

        d) there shall have been no Material Adverse Effect with respect to
     the Company since the date hereof; and

        e) from the date hereof to the Closing, trading in the Common Stock
     shall not have been suspended by the Commission (except for any suspension
     of trading of limited duration agreed to by the Company, which suspension
     shall be terminated prior to the Closing), and, at any time prior to the
     Closing, trading in securities generally as reported by Bloomberg Financial
     Markets shall not have been suspended or limited, or minimum prices shall
     not have been established on securities whose trades are reported by such
     service, or on any Trading Market, nor shall a banking moratorium have been
     declared either by the United States or New York State authorities nor
     shall there have occurred any material outbreak or escalation of
     hostilities or other national or international calamity of such magnitude
     in its effect on, or any material adverse change in, any financial market
     which, in each case, in the reasonable judgment of each Purchaser, makes it
     impracticable or inadvisable to consummate the transactions hereunder.

     6. Representations and Warranties of the Company. The Company hereby makes
the representations and warranties set forth below to the Purchasers that as of
the date of its execution of this Agreement:

        a) Authorization; Enforcement. The Company has the requisite corporate
     power and authority to enter into and to consummate the transactions
     contemplated by this Agreement and otherwise to carry out its obligations
     hereunder and thereunder. The execution and delivery of this Agreement by
     the Company and the consummation by it of the transactions contemplated
     hereby have been duly authorized by all necessary action on the part of
     such Company and no further action is required by such Company, its board
     of directors or its stockholders in connection therewith. This Agreement
     has been duly executed by the Company and, when delivered in accordance
     with the terms hereof

                                       2
<PAGE>
     will constitute the valid and binding obligation of the Company
     enforceable against the Company in accordance with its terms except (i) as
     limited by general equitable principles and applicable bankruptcy,
     insolvency, reorganization, moratorium and other laws of general
     application affecting enforcement of creditors' rights generally, (ii) as
     limited by laws relating to the availability of specific performance,
     injunctive relief or other equitable remedies and (iii) insofar as
     indemnification and contribution provisions may be limited by applicable
     law.

        b) No Conflicts. The execution, delivery and performance of this
     Agreement by the Company and the consummation by the Company of the
     transactions contemplated hereby do not and will not: (i) conflict with or
     violate any provision of the Company's certificate or articles of
     incorporation, bylaws or other organizational or charter documents, or
     (ii)conflict with, or constitute a default (or an event that with notice or
     lapse of time or both would become a default) under, result in the creation
     of any lien upon any of the properties or assets of the Company, or give to
     others any rights of termination, amendment, acceleration or cancellation
     (with or without notice, lapse of time or both) of, any material agreement,
     credit facility, debt or other material instrument (evidencing Company debt
     or otherwise) or other material understanding to which the Company is a
     party or by which any property or asset of the Company is bound or
     affected, or (iii) conflict with or result in a violation of any law, rule,
     regulation, order, judgment, injunction, decree or other restriction of any
     court or governmental authority to which the Company is subject (including
     federal and state securities laws and regulations), or by which any
     property or asset of the Company is bound or affected.

        c) Capitalization. The Company is a duly organized and validly
     existing corporation in good standing under the laws of the State of
     Nevada. The capitalization of the Company is as set forth on Schedule 6(c).
     There are 56,756,098 shares of Common Stock issued and outstanding, all of
     which are validly issued, fully paid and nonassessable. Except (i) as set
     forth on the Disclosure Schedules to the Purchase Agreement, (ii) as set
     forth in the sections of the Registration Statements captioned "Security
     Ownership of Certain Beneficial Owners and Management" and (iii) for
     options granted to the Company's employees pursuant to its broad based
     stock option plan, there are no issued or outstanding securities and no
     issued or outstanding options, warrants or other rights, or commitments or
     agreements of any kind, contingent or otherwise, to purchase or otherwise
     acquire shares of Common Stock or any issued or outstanding securities of
     any nature convertible into shares of Common Stock. There is no proxy or
     any other agreement, arrangement or understanding of any kind authorized,
     effective or outstanding which restricts, limits or otherwise affects the
     right to vote any shares of Common Stock.

     7. Representation and Warranty of the Purchasers. The Purchasers severally
and not jointly hereby make the representation and warranty set forth below to
the Company that as of the date of its execution of this Agreement, such
Purchaser represents and warrants that (a) the execution and delivery of this
Agreement by it and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary action on its behalf and (b)
this Agreement has been duly executed and delivered by such Purchaser and
constitutes the valid and

                                       3
<PAGE>
binding obligation of such Purchaser, enforceable against it in accordance with
its terms except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

     8. Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be made in accordance with
the provisions of the Purchase Agreement.

     9. Survival. All warranties and representations (as of the date such
warranties and representations were made) made herein or in any certificate or
other instrument delivered by it or on its behalf under this Agreement shall be
considered to have been relied upon by the parties hereto. This Agreement shall
inure to the benefit of and be binding upon the successors and permitted assigns
of each of the parties; provided however that no party may assign this Agreement
or the obligations and rights of such party hereunder without the prior written
consent of the other parties hereto.

     10. Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

     11. Severability. If any provision of this Agreement is held to be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

     12. Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined pursuant to
the Governing Law provision of the Purchase Agreement.

     13. Entire Agreement. The Agreement, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

     14. Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

                                       4
<PAGE>
The language used in this Agreement will be deemed to be the language chosen by
the parties to express their mutual intent, and no rules of strict construction
will be applied against any party.

     15. Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder are several and not joint with the
obligations of any other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. Each
Purchaser shall be entitled to protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.

     16. Termination. This Agreement may be terminated by any Purchaser, as to
such Purchaser's obligations hereunder, by written notice to the other parties,
if the Closing has not been consummated on or before December 31, 2007.

     17. Fees and Expenses. Each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement.

                             ***********************

                                       5
<PAGE>
     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized signatories as of the date first
indicated above.

                                              ELECTRONIC SENSOR TECHNOLOGY, INC.

                                              By: /s/ Philip Yee
                                                  ------------------------------
                                              Name: Philip Yee
                                              Title: Secretary, Treasurer and
                                                     Chief Financial Officer

                                       6
<PAGE>
         [PURCHASER SIGNATURE PAGES TO ESNR SECOND AMENDMENT AGREEMENT]

     IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

Name of Purchaser: Midsummer Investment Ltd.
Signature of Authorized Signatory of Purchaser: /s/ Scott Kaufman
Name of Authorized Signatory: Scott Kaufman
Title of Authorized Signatory: MD of Midsummer Capital as investment advisor to
                               Midsummer Investment
Email Address of Purchaser: sk@misdummercapital.com

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as above):

                                       7
<PAGE>
                                   Schedule 1

                              Quarterly Redemption  Final Quarterly Redemption
Investor                       Amount                Amount
---------------------------   --------------------  ---------------------------
Midsummer Investment, Ltd.    $500,000              $1,000,000
Islandia L.P.                 $277,777.78           $555,555.56

                                       8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00134-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00134-of-00352.parquet"}]]