EXHIBIT 10.19
[Merrill Lynch Logo Appears here] WCMA* LOAN AGREEMENT
WCMA LOAN AGREEMENT NO. 740-07K27 ("Loan Agreement") dated as of May 10, 2001,
between FARO TECHNOLOGIES, INC., a corporation organized and existing under the
laws of the State of Florida having its principal office at 125 Technology
Park, Lake Mary, FL 32746 ("Customer"), and MERRILL LYNCH BUSINESS FINANCIAL
SERVICES INC., a corporation organized and existing under the laws of the State
of Delaware having its principal office at 222 North LaSalle Street, Chicago,
IL 60601 ("MLBFS").
In accordance with that certain WORKING CAPITAL MANAGEMENT ACCOUNT AGREEMENT
NO. 740-07K27 ("WCMA Agreement") between Customer and MLBFS' affiliate, MERRILL
LYNCH, PIERCE, FENNER & SMITH INCORPORATED ("MLPF&S"), Customer has subscribed
to the WCMA Program described in the WCMA Agreement. The WCMA Agreement is by
this reference incorporated as a part hereof. In conjunction therewith and as
part of the WCMA Program, Customer has requested that MLBFS provide, and
subject to the terms and conditions herein set forth MLBFS has agreed to
provide, a commercial line of credit for Customer (the "WCMA Line of Credit").
Accordingly, and in consideration of the premises and of the mutual covenants
of the parties hereto, Customer and MLBFS hereby agree as follows:
ARTICLE I. DEFINITIONS
1.1 Specific Terms. in addition to terms defined elsewhere In this Loan
Agreement, when used herein the following terms shall have the following
meanings:
(a) "Activation Date" shall mean the date upon which MLBFS shall cause the WCMA
Line of Credit to be fully activated under MLPF&S' computer system as part of
the WCMA Program.
(b) "Additional Agreements" shall mean all agreements, instruments, documents
and opinions other than this Loan Agreement, whether with or from Customer or
any other party, which are contemplated hereby or otherwise reasonably required
by MLBFS in connection herewith, or which evidence the creation, guaranty or
collateralization of any of the Obligations or the granting or perfection of
liens or security interests upon any collateral for the Obligations.
(c) "Bankruptcy Event" shall mean any of the following: (i) a proceeding under
any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt
or receivership law or statute shall be filed or consented to by Customer; or
(ii) any such proceeding shall be filed against Customer and shall not be
dismissed or withdrawn within sixty (60) days after filing; or (iii) Customer
shall make a general assignment for the benefit of creditors; or (iv) Customer
shall generally fail to pay or admit in writing its inability to pay its debts
as they become due; or (v) Customer shall be adjudicated a bankrupt or
insolvent.
(d) "Business Day" shall mean any day other than a Saturday, Sunday, federal
holiday or other day on which the New York Stock Exchange is regularly closed.
(e) "Commitment Expiration Date" shall mean June 9, 2001.
(f) "Default" shall mean either an "Event of Default" as defined in Section 3.4
hereof, or an event which with the giving of notice, passage of time, or both,
would constitute such an Event of Default,
(g) "Default Interest Rate" shall mean a rate equal to the sum of the "Interest
Rate", as determined below, plus two percent (2%) per annum.
(h) "General Funding Conditions" shall mean each of the following conditions to
any WCMA Loan by MLBFS hereunder: (i) no Default shall have occurred and be
continuing or would result from the making of any WCMA Loan hereunder by MLBFS;
(ii) there shall not have occurred and be continuing any material adverse
change in the business or financial condition of Customer; (iii) all
representations and warranties of Customer herein or in any Additional
Agreements shall then be true and correct in all material respects; (iv) MLBFS
shall have received this Loan Agreement and all of the Additional Agreements,
duly executed and filed or recorded where applicable, all of which shall be in
form and substance reasonably satisfactory to MLBFS; (v) MLBFS shall have
received evidence reasonably satisfactory to it as to the ownership of and the
perfection and priority of MLBFS' liens and security interests on any
collateral for the Obligations fumished pursuant to any of the Additional
Agreements; and (vii) any additional conditions specified in the "WCMA Line of
Credit Approval" letter executed by MLBFS with respect to the transactions
contemplated hereby shall have been met to the reasonable satisfaction of
MLBFS.
(i) "Initial Maturity Date" shall mean the first date upon which the WCMA Line
of Credit will expire (subject to renewal in accordance with the terms hereof);
to wit: May 31, 2002.
(j) "Interest Due Date" shall mean the last Business Day of each calendar month
during the term hereof (or, if Customer makes special arrangements with MLPF&S,
the last Friday of each calendar month during the term hereof.)
(k) "Interest Rate" shall mean a variable per annum rate of interest equal to
the sum of 2,75% and the 30-day Dealer Commercial Paper Rate. The "30-day
Dealer Commercial Paper Rate" shall mean, as of the date of any determination,
the interest rate from time to time published In the "Money Rates" section of
The Wall Street Journal as the "Dealer Commercial Paper" rate for 30-day
high-grade unsecured notes sold through dealers by major corporations. The
Interest Rate will change as of the date of publication in The Wall Street
Journal of a 30-day Dealer Commercial Paper Rate that is different from that
published on the preceding Business Day. In the event that The Wall Street
Journal shall, for any reason, fail or cease to publish the 30-day Dealer
Commercial Paper Rate, MLBFS will choose a reasonably comparable index or
source to use as the basis for the Interest Rate. Upon the occurrence and
during the continuance of a Default, the Interest Rate with respect the WCMA
Line of Credit may be increased to the "Default Interest Rate", as herein
provided.
(l) "Line Fee" shall mean a fee of $7,500.00 payable periodically by Customer
to MLBFS in accordance with the provisions of Section 2.2 (k) hereof.
(m) "Maturity Date" shall mean the date of expiration of the WCMA Line of
Credit.
(n) "Maximum WCMA Line of Credit" shall mean $1,500,000.00.
(o) "Obligations" shall mean all liabilities, indebtedness and other
obligations of Customer to MLBFS, howsoever created, arising or evidenced,
whether now existing or hereafter arising, whether direct or indirect, absolute
or contingent, due or to become due, primary or secondary or joint or several,
and, without limiting the foregoing, shall include interest accruing after the
filing of any petition in bankruptcy, and all present and future liabilities,
indebtedness and obligations of Customer under this Loan Agreement.
(p)
(q) "Renewal Year" shall mean and refer to the 12-monih period immediately
following the Initial Maturity Date and each 12-month period thereafter.
(r) "WCMA Account" shall mean and refer to the Working Capital Management
Account of Customer with MLPF&S identified as Account No. 740-07K27 and any
successor Working Capital Management Account of Customer with MLPF&S.
(s) "WCMA Loan" shall mean each advance made by MLBFS pursuant to this Loan
Agreement.
(t) "WCMA Loan Balance" shall mean an amount equal to the aggregate unpaid
principal amount of all WCMA Loans.
1.2 Other Terms. Except as otherwise defined herein: (i) all terms used in
this Loan Agreement which are defined in the Uniform Commercial Code of
Illinois ("UCC") shall have the meanings set forth in the UCC, and (ii)
capitalized terms used herein which are defined in the WCMA Agreement shall
have the meanings set forth in the WCMA Agreement.
ARTICLE II. THE WCMA LINE OF CREDIT
2.1 WCMA PROMISSORY NOTE. FOR VALUE RECEIVED, Customer hereby promises to pay
to the order of MLBFS, at the times and in the manner set forth in this Loan
Agreement, or in such other manner and at such place as MLBFS may hereafter
designate in writing, the following: (a) on the Maturity Date, or if earlier,
on the date of termination of the WCMA Line of Credit, the WCMA Loan Balance;
(b) interest at the Interest Rate (or, if applicable, at the Default Interest
Rate) on the outstanding WCMA Loan Balance, from and including the date on
which the initial WCMA Loan is made until the date of payment of all WCMA Loans
In full; and (c) on demand, all other sums payable pursuant to this Loan
Agreement, including, but not limited to, the periodic Line Fee. Except as
otherwise expressly set forth herein, Customer hereby waives presentment,
demand for payment, protest and notice of protest, notice of dishonor, notice
of acceleration, notice of intent to accelerate and all other notices and
formalities in connection with this WCMA Promissory Note and this Loan
Agreement.
2.2 WCMA LOANS
(a) Activation Date. Provided that: (i) the Commitment Expiration Date shall
not then have occurred, and (ii) Customer shall have subscribed to the WCMA
Program and its subscription to the WCMA Program shall then be in effect, the
Activation Date shall occur on or promptly after the date, following the
acceptance of this Loan Agreement by MLBFS at its office in Chicago, Illinois,
upon which each of the General Funding Conditions shall have been met or
satisfied to the reasonable satisfaction of MLBFS. No activation by MLBFS of
the WCMA Line of Credit for a nominal amount shall be deemed evidence of the
satisfaction of any of the conditions herein set forth, or a waiver of any of
the terms or conditions hereof.
(b) WCMA Loans.Subject to the terms and conditions hereof, during the period
from and after the Activation Date to the first to occur of the Maturity Date
or the date of termination of the WCMA Line of Credit pursuant to the terms
hereof, and in addition to WCMA Loans automatically made to pay accrued
interest, as hereafter provided: (i) MLBFS will make WCMA Loans to Customer in
such amounts as Customer may from time to time request in accordance with the
terms hereof, up to an aggregate outstanding amount not to exceed the Maximum
WCMA Line of Credit, and (ii) Customer may repay any WCMA Loans in whole or in
part at any time, and request a re-borrowing of amounts repaid on a revolving
basis. Customer may request such WCMA Loans by use of WCMA Checks, FTS, Visa(R)
charges, wire transfers, or such other means of access to the WCMA Line of
Credit as may be permitted by MLBFS from time to time; it being understood that
so long as the WCMA Line of Credit shall be in effect, any charge or debit to
the WCMA Account which but for the WCMA Line of Credit would under the terms of
the WCMA Agreement result in an overdraft, shall be deemed a request by
Customer for a WCMA Loan.
(c) Conditions of WCMA Loans. Notwithstanding the foregoing, MLBFS shall not be
obligated to make any WCMA Loan, and may without notice refuse to honor any
such request by Customer, if at the time of receipt by MLBFS of Customer's
request: (i) the making of such WCMA Loan would cause the Maximum WCMA Line of
Credit to be exceeded; or (ii) the Maturity Date shall have occurred, or the
WCMA Line of Credit shall have otherwise been terminated in accordance with the
terms hereof; or (iii) Customer's subscription to the WCMA Program shall have
been terminated; or (iv) an event shall have occurred and be continuing which
shall have caused any of the General Funding Conditions to not then be met or
satisfied to the reasonable satisfaction of MLBFS. The making by MLBFS of any
WCMA Loan at a time when any one or more of said conditions shall not have been
met shall not in
any event be construed as a waiver of said condition or conditions or of any
Default, and shall not prevent MLBFS at any time thereafter while any condition
shall not have been met from refusing to honor any request by Customer for a
WCMA Loan.
(d) Limitation of Liability. MLBFS shall not be responsible, and shall have no
liability to Customer or any other party, for any delay or failure of MLBFS to
honor any request of Customer for a WCMA Loan or any other act or omission of
MLBFS, MLPF&S or any of their affiliates due to or resulting from any system
failure, error or delay in posting or other clerical error, loss of power,
fire, Act of God or other cause beyond the reasonable control of MLBFS, MLPF&S
or any of their affiliates unless directly arising out of the willful wrongful
act or active gross negligence of MLBFS. In no event shall MLBFS be liable to
Customer or any other party for any incidental or consequential damages arising
from any act or omission by MLBFS, MLPF&S or any of their affiliates in
connection with the WCMA Line of Credit or this Loan Agreement.
(e) Interest. (i) An amount equal to accrued interest on The WCMA Loan Balance
shall be payable by Customer monthly on each Interest Due Date, commencing with
the Interest Due Date occurring in the calendar month in which the Activation
Date shall occur. Unless otherwise hereafter directed in writing by MLBFS on or
after the first to occur of the Maturity Date or the date of termination of the
WCMA Line of Credit, pursuant to the terms hereof, such interest will be
automatically charged to the WCMA Account on the applicable Interest Due Date,
and, to the extent not paid with free credit balances or the proceeds of sales
of any Money Accounts then in the WCMA Account, as hereafter provided, paid by
a WCMA Loan and added to The WCMA Loan Balance. All interest shall be computed
for the actual number of days elapsed on the basis of a year consisting of 360
days.
(ii) Upon the occurrence and during the continuance of any Default, but without
limiting the rights and remedies otherwise available to MLBFS hereunder or
waiving such Default, the interest payable by Customer hereunder shall at the
option of MLBFS accrue and be payable at the Default Interest Rate. The DefauIt
Interest Rate, once implemented, shall continue to apply to the Obligations
under this Loan Agreement and be payable by Customer until the date such
Default is either cured or waived in writing by MLBFS.
(iii) Notwithstanding any provision to the contrary in this Agreement or any of
the Additional Agreements, no provision of this Agreement or any of
the Additional Agreements shall require the payment or permit the collection of
any amount in excess of the maximum amount of interest permitted to be charged
by law ("Excess Interest"). If any Excess Interest is provided for, or is
adjudicated as being provided for, in this Agreement or any of the Additional
Agreements, then: (A) Customer shall not be obligated to pay any Excess
Interest; and (B) any Excess Interest that MLBFS may have received hereunder or
under any of the Additional Agreements shall, at the option of MLBFS, be: (1)
applied as a credit against the then unpaid WCMA Loan Balance, (2) refunded to
the payer thereof, or (3) any combination of the foregoing.
(f) Payments. All payments required or permitted to be made pursuant to this
Loan Agreement shall be made in lawful money of the United States. Unless
otherwise directed by MLBFS, payments on account of the WCMA Loan Balance may
be made by the delivery of checks (other than WCMA Checks), or by means of FTS
or wire transfer of funds (other than funds from the WCMA Line of Credit) to
MLPF&S for credit to Customers WCMA Account. Notwithstanding anything in the
WCMA Agreement to the contrary, Customer hereby irrevocably authorizes and
directs MLPF&S to apply available free credit balances in the WCMA Account to
the repayment of the WCMA Loan Balance prior to application for any other
purpose. Payments to MLBFS from funds in the WCMA Account shall be deemed to be
made by Customer upon the same basis and schedule as funds are made available
for investment in the Money Accounts in accordance with the terms of the WCMA
Agreement. All funds received by MLBFS from MLPF&S pursuant to the aforesaid
authorization shall be applied by MLBFS to repayment of the WCMA Loan Balance.
The acceptance by or on behalf of MLBFS of a check or other payment for a
lesser amount than shall be due from Customer, regardless of any endorsement or
statement thereon or transmitted therewith, shall not be deemed an accord and
satisfaction or anything other than a payment on account, and MLBFS or anyone
acting on behalf of MLBFS may accept such check or other payment without
prejudice to the rights of MLBFS to recover the balance actually due or to
pursue any other remedy under this Loan Agreement or applicable law for such
balance. All checks accepted by or on behalf of MLBFS in connection with the
WCMA Line of Credit are subject to final collection.
(g) Irrevocable Instructions to MLPF&S. In order to minimize the WCMA Loan
Balance, Customer hereby irrevocably authorizes and directs MLPF&S, effective
on the Activation Date and continuing thereafter so long as this Agreement
shall be in effect; (i) to immediately and prior to application for any other
purpose pay to MLBFS to the extent of any WCMA Loan Balance or other amounts
payable by Customer hereunder all available free credit balances from time to
time in the WCMA Account; and (ii) if such available free credit balances are
insufficient to pay the WCMA Loan Balance and such other amounts, and there are
in the WCMA Account at any time any investments in Money Accounts (other than
any investments constituting any Minimum Money Accounts Balance under the WCMA
Directed Reserve Program), to immediately liquidate such investments and pay to
MLBFS to the extent of any WCMA Loan Balance and such other amounts the
available proceeds from the liquidation of any such Money Accounts.
(h) Statements. MLPF&S will include in each monthly statement it issues under
the WCMA Program information with respect to WCMA Loans and the WCMA Loan
Balance. Any questions that Customer may have with respect to such information
should be directed to MLBFS; and any questions with respect to any other matter
in such statements or about or affecting the WCMA Program should be directed to
MLPF&S
(i) Use of WCMA Loan Proceeds. The proceeds of each WCMA Loan initiated by
Customer shall be used by Customer solely for working capital in the ordinary
course of its business, or, with the prior written consent of MLBFS, for other
lawful business purposes of Customer not prohibited hereby. Customer agrees
that under no circumstances will the proceeds of any WCMA Loan be used: (i) for
personal, family or household purposes of any person whatsoever, or (ii) to
purchase, carry or trade in securities, or repay debt incurred to purchase,
carry or trade in securities, whether in or in connection with the WCMA
Account, another account of Customer with MLPF&S or an account of Customer at
any other broker or dealer in securities, or (iii) unless otherwise consented
to in writing by MLBFS, to pay any amount to Merrill Lynch and Co., Inc. or any
of its subsidiaries, other than Merrill Lynch Bank USA, Merrill Lynch Bank &
Trust Co. or any subsidiary of either of them (including MLBFS and Merrill
Lynch Credit Corporation).
(j) Renewal at Option of MLBFS; Right of Customer to Terminate. MLBFS may at
any time, in its sole discretion and at its sole option, renew the WCMA
Line of Credit for one or more Renewal Years; it being understood, however,
that no such renewal shall be effective unless set forth in a writing
executed by
a duly authorized representative of MLBFS and delivered to Customer. Unless any
such renewal is accompanied by a proposed change in the terms of the WCMA Line
of Credit (other than the extension of the Maturity Date), no such renewal
shall require Customer's approval. Customer shall, however, have the right to
terminate the WCMA Line of Credit at any time upon written notice to MLBFS.
(k) Line Fees. (i) in consideration of the extension of the WCMA Line of Credit
by MLBFS to Customer during the period from the Activation Date to the Initial
Maturity Date, Customer has paid or shall pay the Line Fee to MLBFS. If the
Line Fee has not heretofore been paid by Customer, Customer hereby authorizes
MLBFS, at its option, to either cause the Line Fee to be paid on the Activation
Date with a WCMA Loan, or invoice Customer for such Line Fee (in which event
Customer shall pay said fee within 5 Business Days after receipt of such
invoice). No delay in the Activation Date, howsoever caused, shall entitle
Customer to any rebate or reduction in the Line Fee or to any extension of the
Initial Maturity Date.
(ii) Customer shall pay an additional line Fee for each Renewal Year. In
connection therewith, Customer hereby authorizes MLBFS, at its option, to
either cause each such additional Line Fee to be paid with a WCMA Loan on or at
any time after the first Business Day of such Renewal Year or invoiced to
Customer at such time (in which event Customer shall pay such Line Fee within 5
Business Days after receipt of such invoice). Each Line Fee shall be deemed
fully earned by MLBFS on the date payable by Customer, and no termination of
the WCMA Line of Credit, howsoever caused, shall entitle Customer to any rebate
or refund of any portion of such Line Fee; provided, however, that if Customer
shall terminate the WCMA Line of Credit not later than 5 Business Days after
the receipt by Customer of notice from MLBFS of a renewal of the WCMA Line of
Credit, Customer shall be entitled to a refund of any Line Fee charged by MLBFS
for the ensuing Renewal Year.
ARTICLE III. GENERAL PROVISIONS
3.1 REPRESENTATIONS AND WARRANTIES
Customer represents and warrants to MLBFS that:
(a) Organization and Existence. Customer is a corporation, duly organized and
validly existing in good standing under the laws of the State of Florida and is
qualified to do business and in good standing in each other state where the
nature of its business or the property owned by it make such qualification
necessary.
(b) Execution, Delivery and Performance. The execution, delivery and
performance by Customer of this Loan Agreement and such of the Additional
Agreements to which it is a party: (i) have been duly authorized by all
requisite action, (ii) do not and will not violate or conflict with any law or
other governmental requirement, or any of the agreements, instruments or
documents which formed or govern Customer, and (iii) do not and will not breach
or violate any of the provisions of, and will not result In a default by
Customer under, any other agreement, instrument or document to which it is a
party or by which it or its properties are bound.
(c) Notices and Approvals. Except as may have been given or obtained, no notice
to or consent or approval of any governmental body or authority or other third
party whatsoever (including, without limitation, any other creditor) is
required in connection with the execution, delivery or performance by
Customer of such of this Loan Agreement and the Additional Agreements to which
it is a party.
(d) Enforceability. This Loan Agreement and such of the Additional Agreements
to which Customer is a party are the legal, valid and binding obligations of
Customer, enforceable against it in accordance with their respective terms,
except as enforceability may be limited by bankruptcy and other similar laws
affecting the rights of creditors generally or by general principles of equity.
(e) Financial Statements. Except as expressly set forth in Customer's financial
statements, all financial statements of Customer furnished to MLBFS have been
prepared in conformity with generally accepted accounting principles,
consistently applied, are true and correct in all material respects, and fairly
present the financial condition of it as at such dates and the results of its
operations for the periods then ended (subject, in the case of interim
unaudited financial statements, to normal year-end adjustments); and since the
most recent date covered by such financial statements, there has been no
material adverse change in any such financial condition or operation.
(f) Litigation. No litigation, arbitration administrative or governmental
proceedings are pending or, to the knowledge of Customer, threatened against
Customer, which would, if adversely determined, materially and adversely affect
the liens and security interests of MLBFS hereunder or under any of the
Additional Agreements, the financial condition of Customer or the continued
operations of Customer.
(g) Tax Returns. All federal, state and local tax returns, reports and
statements required to be filed by Customer have been filed with the
appropriate governmental agencies and all taxes due and payable by Customer
have been timely paid (except to the extent that any such failure to file or
pay will not materially and adversely affect either the liens and
security interests of MLBFS hereunder or under any of the Additional
Agreements, the financial condition of Customer, or the continued operations
of Customer).
(h) No Outside Broker. Except for employees of MLBFS, MLPF&S or one of their
affiliates, Customer has not in connection with the transactions contemplated
hereby directly or indirectly engaged or dealt with, and was not introduced or
referred to MLBFS by, any broker or other loan arranger.
Each of the foregoing representations and warranties: (i) has been and will be
relied upon as an inducement to MLBFS to provide the WCMA Line of Credit, and
(ii) is continuing and shall be deemed remade by Customer concurrently with
each request for a WCMA Loan.
3.2 FINANCIAL AND OTHER INFORMATION
(a) Customer shall furnish or cause to be furnished to MLBFS during the term of
this Loan Agreement all of the following:
(i) Annual Financial Statements. Within 120 days after the close of each fiscal
year of Customer, a copy of the annual audited financial statements of
Customer, including in reasonable detail, a balance sheet and statement of
retained earnings as at the close of such fiscal year and statements of profit
and loss and cash flow for such fiscal year;
(ii) Interim Financial Statements. Within 45 days after the close of each
fiscal quarter of Customer, a copy of the interim financial statements of
Customer for such fiscal quarter (including in reasonable detail both a balance
sheet as of the close of such fiscal period, and statement of profit and loss
for the applicable fiscal period); and
(iii) Other Information. Such other information as MLBFS may from time to time
reasonably request relating to Customer.
(b) General Agreements With Respect to Financial Information. Customer agrees
that except as otherwise specified herein or otherwise agreed to in writing by
MLBFS: (i) all annual financial statements required to be furnished by Customer
to MLBFS hereunder will be prepared by either the current independent
accountants for Customer or other independent accountants reasonably acceptable
to MLBFS, and (ii) all other financial information required to be furnished by
Customer to MLBFS hereunder will be certified as correct in all material
respects by the party who has prepared such information, and, in the case of
internally prepared information with respect to Customer, certified as correct
by its chief financial officer.
3.3 OTHER COVENANTS
Customer further covenants and agrees during the term of this Loan Agreement
that:
(a) Financial Records; Inspection. Customer will: (i) maintain at its principal
place of business complete and accurate books and records, and maintain all of
its financial records in a manner consistent with the financial statements
heretofore furnished to MLBFS, or prepared on such other basis as may be
approved in writing by MLBFS; and (ii) permit MLBFS or its duly authorized
representatives, upon reasonable notice and at reasonable times, to inspect its
properties (both real and personal), operations, books and records,
(b) Taxes. Customer will pay when due all taxes, assessments and other
governmental charges, howsoever designated, and all other liabilities and
obligations, except to the extent that any such failure to pay will not
materially and adversely affect either any liens and security interests of
MLBFS under any Additional Agreements, the financial condition of Customer or
the continued operations of Customer.
(c) Compliance With Laws and Agreements. Customer will not violate any law,
regulation or other governmental requirement, any judgment or order of any
court or governmental agency or authority, or any agreement, instrument or
document to which it is a party or by which it is bound, if any such violation
will materially and adversely affect either any liens and security interests of
MLBFS under any Additional Agreements, or the financial condition or the
continued operations of Customer.
(d) No Use of Merrill Lynch Name. Customer will not directly or indirectly
publish, disclose or otherwise use In any advertising or promotional material,
or press release or interview, the name, logo or any trademark of MLBFS,
MLPF&S, Merrill Lynch and Co., Incorporated or any of their affiliates.
(e) Notification By Customer. Customer shall provide MLBFS with prompt written
notification of: (i) any Default; (ii) any materially adverse change in the
business, financial condition or operations of Customer, (iii) any information
which indicates that any financial statements of Customer fail in any material
respect to present fairly the financial condition and results of operations
purported to be presented in such statements; and (iv) any change in Customer's
outside accountants. Each notification by Customer pursuant hereto shall
specify the event or information causing such notification, and, to the extent
applicable, shall specify the steps being taken to rectify or remedy such event
or information.
(f) Notice of Change. Customer shall give MLBFS not less than 30 days prior
written notice of any change in the name (including any fictitious name) or
principal place of business or residence of Customer.
(g) Continuity. Except upon the prior written consent of MLBFS, which consent
will not be unreasonably withheld: (i) Customer shall not be a party to any
merger or consolidation with, or purchase or otherwise acquire all or
substantially all of the assets of, or any material stock, partnership, joint
venture or other equity interest in, any person or entity, or sell, transfer or
lease all or any substantial part of its assets, if any such action would
result in either: (A) a material change in the principal business, ownership or
control of Customer, or (B) a material adverse change in the financial
condition or operations of Customer; (ii) Customer shall preserve its existence
and good standing in the jurisdiction(s) of establishment and operation; (iii)
Customer shall not engage in any material business substantially different from
its business in effect as of the date of application by Customer for credit
from MLBFS, or cease operating any such material business; (iv) Customer shall
not cause or permit any other person or entity to assume or succeed to any
material business or operations of Customer; and (v) Customer shall not cause
or permit any material change in its controlling ownership.
3.4 EVENTS OF DEFAULT
The occurrence of any of the following events shall constitute an "Event of
Default" under this Loan Agreement:
(a) Exceeding the Maximum WCMA Line of Credit. If the WCMA Loan Balance shall
at any time exceed the Maximum WCMA Line of Credit and Customer shall fail to
deposit sufficient funds into the WCMA Account to reduce the WCMA Loan Balance
below the Maximum WCMA Line of Credit within five (5) Business Days after
written notice thereof shall have been given by MLBFS to Customer.
(b) Other Failure to Pay. Customer shall fail to pay to MLBFS or deposit into
the WCMA Account when due any other amount owing or required to be paid or
deposited by Customer under this Loan Agreement, or shall fail to pay when due
any other Obligations, and any such failure shall continue for more than five
(5) Business Days after written notice thereof shall have been given by MLBFS
to Customer.
(c) Failure to Perform. Customer shall default in the performance or observance
of any covenant or agreement on its part to be performed or observed under this
Loan Agreement or any of the Additional Agreements (not constituting an Event
of Default under any other clause of this Section), and such default shall
continue unremedied for ten (10) Business Days after written notice thereof
shall have been given by MLBFS to Customer.
(d) Breach of Warranty. Any representation or warranty made by Customer
contained in this Loan Agreement or any of the Additional Agreements shall at
any time prove to have been incorrect in any material respect when made.
(e) Default Under Other Agreement A default or Event of Default by Customer or
any other party providing collateral for the Obligations shall occur under the
terms of any other agreement, instrument or document with or intended for the
benefit of MLBFS, MLPF&S or any of their affiliates, and any required notice
shall have been given and required passage of time shall have elapsed.
(f) Bankruptcy Event. Any Bankruptcy Event shall occur.
(g) Material Impairment. Any event shall occur which shall reasonably cause
MLBFS to in good faith believe that the prospect of full payment or performance
by Customer of its liabilities or obligations under this Loan Agreement or any
of the Additional Agreements to which Customer is a party has been materially
impaired. The existence of such a material impairment shall be determined in a
manner consistent with the intent of Section 1-208 of the UCC.
(h) Acceleration of Debt to Other Creditors. Any event shall occur which
results in the acceleration of the maturity of any indebtedness of $100,000.00
or more of Customer to another creditor under any indenture, agreement,
undertaking, or otherwise.
3.5 REMEDIES
(a) Remedies Upon Default. Upon the occurrence and during the continuance of
any Event of Default, MLBFS may at its sole option do any one or more or all of
the following, at such time and in such order as MLBFS may in its sole
discretion choose:
(i) Termination. MLBFS may without notice terminate the WCMA Line of Credit and
all obligations to provide the WCMA Line of Credit or otherwise extend any
credit to or for the benefit of Customer (it being understood, however, that
upon the occurrence of any Bankruptcy Event the WCMA Line of Credit and all
such obligations shall automatically terminate without any action on the part
of MLBFS); and upon any such termination MLBFS shall be relieved of all such
obligations.
(ii) Acceleration. MLBFS may declare the principal of and interest on the WCMA
Loan Balance, and all other Obligations to be forthwith due and payable,
whereupon all such amounts shall be immediately due and payable, without
presentment, demand for payment, protest and notice of protest, notice of
dishonor, notice of acceleration, notice of intent to accelerate or other
notice or formality of any kind, all of which are hereby expressly waived;
provided, however, that upon the occurrence of any Bankruptcy Event all such
principal, interest and other Obligations shall automatically become due and
payable without any action on the part of MLBFS.
(b) Set-Off. MLBFS shall have the further right upon the occurrence and during
the continuance of an Event of Default to set-off, appropriate and apply toward
payment of any of the Obligations, in such order of application as MLBFS may
from time to time and at any time elect, any cash, credit, deposits, accounts,
financial assets, investment property, securities and any other property of
Customer which is in transit to or in the possession, custody or control of
MLBFS, MLPF&S or any agent, bailee, or affiliate of MLBFS or MLPF&S. Customer
hereby collaterally assigns and grants to MLBFS a continuing security interest
in all such property as additional security for the Obligations. Upon the
occurrence and during the continuance of an Event of Default, MLBFS shall have
all rights in such property available to collateral assignees and secured
parties under all applicable laws, including, without limitation, the UCC.
(c) Remedies are Severable and Cumulative. All rights and remedies of MLBFS
herein are severable and cumulative and in addition to all other rights and
remedies available in the Additional Agreements, at law or in equity, and any
one or more of such rights and remedies may be exercised simultaneously or
successively.
3.6 MISCELLANEOUS
(a) Non-Waiver. No failure or delay on the part of MLBFS in exercising any
right, power or remedy pursuant to this Loan Agreement or any of the Additional
Agreements shall operate as a waiver thereof. and no single or partial exercise
of any such right, power or remedy shall preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy. Neither any
waiver of any provision of this Loan Agreement or any of the Additional
Agreements, nor any consent to any departure by Customer therefrom, shall be
effective unless the same shall be in writing and signed by MLBFS. Any waiver
of any provision of this Loan Agreement or any of the Additional Agreements and
any consent to any departure by Customer from the terms of this Loan Agreement
or any of the Additional Agreements shall be effective only in the specific
instance and for the specific purpose for which given. Except as otherwise
expressly provided herein, no notice to or demand on Customer shall in any case
entitle Customer to any other or further notice or demand in similar or other
circumstances.
(b) Disclosure. Customer hereby irrevocably authorizes MLBFS and each of its
affiliates, including without limitation MLPF&S, to at any time (whether or not
an Event of Default shall have occurred) obtain from and disclose to each other
any and all financial and other information about Customer. In connection with
said authorization, the parties recognize that in order to provide a WCMA Line
of Credit certain information about Customer is required to be made available
on a computer network accessible by certain affiliates of MLBFS, including
MLPF&S.
(c) Communications. All notices and other communications required or permitted
hereunder shall be in writing, and shall be either delivered personally, mailed
by postage prepaid certified mail or sent by express overnight courier or by
facsimile. Such notices and communications shall be deemed to be given on the
date of personal delivery, facsimile transmission or actual delivery of
certified mail, or one Business Day after delivery to an express overnight
courier. Unless otherwise specified in a notice sent or delivered in accordance
with the terms hereof, notices and other communications in writing shall be
given to the parties hereto at their respective addresses set forth at the
beginning of this Loan Agreement, or, in the case of facsimile transmission, to
the parties at their respective regular facsimile telephone number.
(d) Fees, Expenses and Taxes. Customer shall pay or reimburse MLBFS for: (i)
all Uniform Commercial Code filing and search fees and expenses incurred by
MLBFS in connection with the verification, perfection or preservation of MLBFS'
rights hereunder or in any collateral for the Obligations; (ii) any and all
stamp, transfer and other taxes and fees payable or determined to be payable in
connection with the execution, delivery and/or recording of this Loan Agreement
or any of the Additional Agreements; and (iii) all reasonable fees and
out-of-pocket expenses (including, but not limited to, reasonable fees and
expenses of outside counsel) incurred by MLBFS in connection with the
collection of any sum payable hereunder or under any of the Additional
Agreements not paid when due, the enforcement of this Loan Agreement or any of
the Additional Agreements and the protection of MLBFS' rights hereunder or
thereunder, excluding, however, salaries and normal overhead attributable to
MLBFS' employees. Customer hereby authorizes MLBFS, at its option, to either
cause any and all such fees, expenses and taxes to be paid with a WCMA Loan, or
invoice Customer therefor (in which event Customer shall pay all such fees,
expenses and taxes within 5 Business Days after receipt of such invoice). The
obligations of Customer under this paragraph shall survive the expiration or
termination of this Loan Agreement and the discharge of the other Obligations.
(e) Right to Perform Obligations. If Customer shall fail to do any act or thing
which it has covenanted to do under this Loan Agreement or any representation
or warranty on the part of Customer contained in this Loan Agreement shall be
breached, MLBFS may, in its sole discretion, after 5 Business Days written
notice is sent to Customer (or such lesser notice, including no notice, as is
reasonable under the circumstances), do the same or cause it to be done or
remedy any such breach, and may expend its funds for such purpose. Any and all
reasonable amounts so expended by MLBFS shall be repayable to MLBFS by Customer
upon demand, with interest at the Interest Rate during the period from and
including the date funds are so expended by MLBFS to the date of repayment, and
all such amounts shall be additional Obligations. The payment or performance by
MLBFS of any of Customer's obligations hereunder shall not relieve Customer of
said obligations or of the consequences of having failed to pay or perform the
same, and shall not waive or be deemed a cure of any Default.
(f) Further Assurances. Customer agrees to do such further acts and things and
to execute and deliver to MLBFS such additional agreements, instruments and
documents as MLBFS may reasonably require or deem advisable to effectuate the
purposes of this Loan Agreement or any of the Additional Agreements.
(g) Binding Effect. This Loan Agreement and the Additional Agreements shall be
binding upon, and shall inure to the benefit of MLBFS, Customer and their
respective successors and assigns. Customer shall not assign any of its rights
or delegate any of its obligations under this Loan Agreement or any of the
Additional Agreements without the prior written consent of MLBFS. Unless
otherwise expressly agreed to in a writing signed by MLBFS, no such consent
shall in any event relieve Customer of any of its obligations under this Loan
Agreement or the Additional Agreements.
(h) Headings. Captions and section and paragraph headings in this Loan
Agreement are inserted only as a matter of convenience, and shall not affect
the interpretation hereof.
(i) Governing Law. This Loan Agreement, and, unless otherwise expressly
provided therein, each of the Additional Agreements, shall be governed in all
respects by the laws of the State of Illinois.
(j) Severability of Provisions. Whenever possible, each provision of this Loan
Agreement and the Additional Agreements shall be interpreted in such manner as
to be effective and valid under applicable law. Any provision of this Loan
Agreement or any of the Additional Agreements which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Loan Agreement and the Additional
Agreements or affecting the validity or enforceability of such provision in any
other jurisdiction.
(k) Term. This Loan Agreement shall become effective on the date accepted by
MLBFS at its office in Chicago, Illinois, and, subject to the terms hereof,
shall continue in effect so long thereafter as the WCMA Line of Credit shall be
in effect or there shall be any Obligations outstanding.
(l) Counterparts. This Loan Agreement may be executed in one or more
counterparts which, when taken together, constitute one and the same agreement.
(m) Jurisdiction; Waiver. CUSTOMER ACKNOWLEDGES THAT THIS LOAN AGREEMENT IS
BEING ACCEPTED BY MLBFS IN PARTIAL CONSIDERATION OF MLBFS' RIGHT AND OPTION, IN
ITS SOLE DISCRETION, TO ENFORCE THIS LOAN AGREEMENT (INCLUDING THE WCMA NOTE
SET FORTH HEREIN) AND THE ADDITIONAL AGREEMENTS IN EITHER THE STATE OF ILLINOIS
OR IN ANY OTHER JURISDICTION WHERE CUSTOMER OR ANY COLLATERAL FOR THE
OBLIGATIONS MAY BE LOCATED. CUSTOMER IRREVOCABLY SUBMITS ITSELF TO JURISDICTION
IN THE STATE OF ILLINOIS AND VENUE IN ANY STATE OR FEDERAL COURT IN THE COUNTY
OF COOK FOR SUCH PURPOSES, AND CUSTOMER WAIVES ANY AND ALL RIGHTS TO CONTEST
SAID JURISDICTION AND VENUE AND THE CONVENIENCE OF ANY SUCH FORUM, AND ANY AND
ALL RIGHTS TO REMOVE SUCH ACTION FROM STATE TO FEDERAL COURT. CUSTOMER FURTHER
WAIVES ANY
RIGHTS TO COMMENCE ANY ACTION AGAINST MLBFS IN ANY JURISDICTION EXCEPT IN THE
COUNTY OF COOK AND STATE OF ILLINOIS. MLBFS AND CUSTOMER HEREBY EACH EXPRESSLY
WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES AGAINST THE OTHER PARTY WITH
RESPECT TO ANY MATTER RELATING TO, ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THE WCMA LINE OF CREDIT, THIS LOAN AGREEMENT, ANY ADDITIONAL AGREEMENTS AND/OR
ANY OF THE TRANSACTIONS WHICH ARE THE SUBJECT MATTER OF THIS LOAN AGREEMENT.
CUSTOMER FURTHER WAIVES THE RIGHT TO BRING ANY NON-COMPULSORY COUNTERCLAIMS.
(n) Integration. THIS LOAN AGREEMENT, TOGETHER WITH THE ADDITIONAL AGREEMENTS,
CONSTITUTES THE ENTIRE UNDERSTANDING AND REPRESENTS THE FULL AND FINAL
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF, AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR WRITTEN AGREEMENTS OR PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES. WITHOUT LIMITING THE FOREGOING,
CUSTOMER ACKNOWLEDGES THAT EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN: (I)
NO PROMISE OR COMMITMENT HAS BEEN MADE TO IT BY MLBFS, MLPF&S OR ANY OF THEIR
RESPECTIVE EMPLOYEES, AGENTS OR REPRESENTATIVES TO EXTEND THE AVAILABILITY OF
THE WCMA LINE OF CREDIT OR THE MATURITY DATE, OR TO INCREASE THE MAXIMUM WCMA
LINE OF CREDIT, OR OTHERWISE EXTEND ANY OTHER CREDIT TO CUSTOMER OR ANY OTHER
PARTY; (II) NO PURPORTED EXTENSION OF THE MATURITY DATE, INCREASE IN THE
MAXIMUM WCMA LINE OF CREDIT OR OTHER EXTENSION OR AGREEMENT TO EXTEND CREDIT
SHALL BE VALID OR BINDING UNLESS EXPRESSLY SET FORTH IN A WRITTEN INSTRUMENT
SIGNED BY MLBFS; AND (III) THIS LOAN AGREEMENT SUPERSEDES AND REPLACES ANY AND
ALL PROPOSALS, LETTERS OF INTENT AND APPROVAL AND COMMITMENT LETTERS FROM MLBFS
TO CUSTOMER, NONE OF WHICH SHALL BE CONSIDERED AN ADDITIONAL AGREEMENT. NO
AMENDMENT OR MODIFICATION OF THIS AGREEMENT OR ANY OF THE ADDITIONAL AGREEMENTS
TO WHICH CUSTOMER IS A PARTY SHALL BE EFFECTIVE UNLESS IN A WRITING SIGNED BY
BOTH MLBFS AND CUSTOMER.
IN WITNESS WHEREOF, this Loan Agreement has been executed as of the day and
year first above written.
FARO TECHNOLOGIES, INC.
By: /s/ Simon Raab /s/ Gregory A. Fraser
------------------------- ------------------------------
Signature (1) Signature (2)
/s/ Simon Raab /s/ Gregory A. Fraser
-----------------------------------------------------------------------
Printed Name Printed Name
CEO EVP
-----------------------------------------------------------------------
Title Title
STATE OF FLORIDA )
------- )
COUNTY OF SEMINOLE )SS.
-------- )
The foregoing instrument was acknowledged before me this day of 21 May AD, 2001
------
by Simon Raab of FARO TECHNOLOGIES, INC., a Florida corporation, on behalf of
----------
the corporation. Said person is personally known to me or has produced
- ---------------- as identification.
/s/ Sharon G. Trowbridge
-----------------------------
NOTARY PUBLIC
/s/ Sharon G. Trowbridge
------------------------------
PRINTED NAME OF NOTARY PUBLIC
--------------------------------
My Commission Expires: 3/25/04 OFFICIAL NOTARY SEAL
SHARON G TROWBRIDGE
------------------------------ [SEAL] COMMISSION NUMBER
[S E A L] CC915886
MY COMMISSION EXPIRES
MAR. 25, 2004
--------------------------------
Accepted at Chicago, Illinois:
MERRILL LYNCH BUSINESS FINANCIAL
SERVICES INC.
By:
----------------------------------------------------
[LOGO] Merrill Lynch SECRETARY'S CERTIFICATE
-------------------------------------------------------------------------------
The undersigned hereby certifies to MERRILL LYNCH BUSINESS FINANCIAL SERVICES
INC. that the undersigned is the duly appointed and acting Secretary (or
Assistant Secretary) of FARO TECHNOLOGIES, INC., a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida;
and that the following is a true, accurate and compared transcript of
resolutions duly, validly and lawfully adopted on the 21 day of May, 2001
-- ---
by the Board of Directors of said Corporation acting in accordance with the
laws of the state of incorporation and the charter and by-laws of said
Corporation:
"RESOLVED, that this Corporation is authorized and empowered, now and from time
to time hereafter, to borrow and/or obtain credit from, and/or enter into other
financial arrangements with, MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC.
("MLBFS"), and in connection therewith to grant to MLBFS liens and security
interests on any or all property belonging to this Corporation; all such
transactions to be on such terms and conditions as may be mutually agreed from
time to time between this Corporation and MLBFS; and
"FURTHER RESOLVED, that the President, any Vice President, Treasurer, Secretary
or other officer of this Corporation, or any one or more of them, be and each
of them hereby is authorized and empowered to: (a) execute and deliver to MLBFS
on behalf of this Corporation any and all loan agreements, promissory notes,
security agreements, pledge agreements, financing statements, mortgages, deeds
of trust, leases and/or all other agreements, instruments and documents
required by MLBFS in connection therewith, and any present or future
extensions, amendments, supplements, modifications and restatements thereof;
all in such form as any such officer shall approve, as conclusively evidenced
by his or her signature thereon, and (b) do and perform all such acts and
things deemed by any such officer to be necessary or advisable to carry out and
perform the undertakings and agreements of this Corporation in connection
therewith; and any and all prior acts of each of said officers in these
premises are hereby ratified and confirmed in all respects; and
"FURTHER RESOLVED, that MLBFS is authorized to rely upon the foregoing
resolutions until it receives written notice of any change or revocation from
an authorized officer of this Corporation, which change or revocation shall not
in any event affect the obligations of this Corporation with respect to any
transaction conditionally agreed or committed to by MLBFS or having its
inception prior to the receipt of such notice by MLBFS."
The undersigned further certifies that: (a) the foregoing resolutions have not
been rescinded, modified or repealed in any manner, are not in conflict with
any agreement of said Corporation and are in full force and effect as of the
date of this Certificate, and (b) the following individuals are now the duly
elected and acting officers of said Corporation and the signatures set forth
below are the true signatures of said officers:
President: Simon Raab
---------------------------------------------
Vice President:
---------------------------------------
Treasurer: Gregory A. Fraser
---------------------------------------------
Secretary: Gregory A. Fraser
---------------------------------------------
EVP, SEC-TREASURER
--------------------------------------------------------
Additional Title
IN WITNESS WHEREOF, the undersigned has executed this Certificate and has
affixed the seal of said Corporation hereto, pursuant to due authorization,
all as of this 21 day of May, 2001.
-- ---
Sharon G. Trowbridge
(Corporate Seal) ----------------------------------
Secretary
Printed Name: Sharon G. Trowbridge
----------------------------------