EXHIBIT 10.1
TERM LOAN AND SECURITY
AGREEMENT
This Agreement is made as of this
10 th day of June, 2005, by and between
Micronetics, Inc. , a Delaware corporation with an address
of 26 Hampshire Drive, Hudson, New Hampshire 03051 (the
“Debtor”), and TD Banknorth, N.A. , a national
banking association, with its principal New Hampshire office at 300
Franklin Street, Manchester, New Hampshire and a mailing address of
P.O. Box 600, Manchester, New Hampshire 03105-0600 (the
“Secured Party”).
WITNESSETH:
WHEREAS, the Debtor desires to
borrow from the Secured Party the sum of Six Million and No/100ths
Dollars ($6,000,000.00) to assist in the financing of the
acquisition of all of the shares of stock of Stealth Microwave,
Inc., a New Jersey corporation; and
WHEREAS, the Secured Party is
willing to lend to the Debtor up to Six Million and No/100ths
Dollars ($6,000,000.00) subject to the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of
the covenants set forth herein, the loan made hereunder, and other
good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
I. LOAN : The Secured Party
agrees that it will lend to the Debtor, the sum of Six Million and
No/100ths Dollars ($6,000,000.00), to be evidenced by a Term Note
of even date in the form satisfactory to Secured Party. The note
delivered hereunder shall hereinafter be referred to as the
“Term Note”.
II. AFFIRMATIVE COVENANTS :
The Debtor agrees that:
A. It will pay to Secured Party the
principal amounts and interest as provided in the Term Note
according to its tenor.
B. It will promptly reimburse the
Secured Party for all reasonable charges and expenses incurred by
the Secured Party in connection with the making of this Agreement
and all reasonable legal fees incurred by the Secured Party in
connection with the making of this Agreement.
C. It will promptly reimburse the
Secured Party for (i) all damages sustained by any breach of
warranty or covenant of the Debtor herein; and (ii) all fees, court
costs, collection charges, reasonable attorneys’ fees,
reasonable accountants’ fees, and all other costs and
expenses which may be incurred by the Secured Party to enforce any
provisions of this Agreement, as against the Debtor, or in the
prosecution of any proceeding arising from the efforts of the
Secured Party to recover money or other things of value, or the
enforcement of rights or remedies under this Agreement, as the same
may from time to time be amended, unless the enforcement of such
provision is held unlawful by a Court of competent
jurisdiction.
D. It will deliver, at its expense,
(i) annually, within one hundred twenty (120) days after its fiscal
year end the audited financial statements of the Debtor and all of
the Debtor’s subsidiaries, prepared by a certified public
accountant satisfactory to the Lender,
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and (ii) quarterly, within forty-five (45) days
after the end of each fiscal quarter, (a) company prepared
financial statements of the Debtor, (b) copy of 10Q report, and (c)
accounts receivable aging, all in form satisfactory to Lender. All
of the foregoing financial statements and reports shall be signed
by a duly authorized representative of the Debtor.
E. It will, at all reasonable times,
and upon reasonable notice, allow Secured Party, by or through any
of its officers, agents, attorneys or accountants, or such other
persons, associations or corporations that Secured Party in its
sole discretion should deem acceptable, to inspect the Collateral
(as hereinafter defined), to examine or make extracts from the
books and records of the Debtor, and to arrange for the
verification of accounts receivable under reasonable procedures
directly with account debtors or by other methods, provided,
however, that the Secured Party shall give reasonable notification
to the Debtor prior to contacting account debtors for such
verification. It will furnish to the Secured Party upon request
additional statements of any accounts receivable, together with all
notes or other papers evidencing the same, and any guaranties,
securities or other documents or information relating thereto.
Secured Party will protect the confidentiality of accounts
receivable customer lists and other books and records of the Debtor
in connection with the verification of same. The Secured Party
acknowledges that portions of the Collateral and Debtor’s
facilities are classified and may be subject to certain
confidentiality and security requirements as imposed by the federal
government of the United States of America, and the enforcement of
this Term Loan and Security Agreement may be subject to the terms
of such confidentiality and security requirements.
F. It will promptly and from time to
time pay and discharge all taxes, charges and assessments which may
be or shall be levied, charged or assessed on or against it or any
of its property, or any part thereof, or on or against the income
and profits therefrom, before they become delinquent. Debtor shall
have the right, however, to contest by legal proceeding the
validity or amount of any tax, charge or assessment, and Debtor
need not pay any amount of such tax, charge or assessment under
dispute if the proceedings shall operate to prevent or stay the
collection of such tax, charge or assessment.
G. It will provide and maintain
hazard insurance, fire and extended coverage, on all of its
property including the Collateral, in such amounts and for such
other coverages as shall be satisfactory in all respects to the
Secured Party, naming the Secured Party as loss payee, as its
interests may appear. It will provide the Secured Party with a
schedule of all insurance policies annually, at the time it submits
its annual financial statements as herein required.
III. SECURITY INTEREST : The
Debtor, to secure (i) the payment of the Term Note, (ii) all sums
required by, and the performance of all covenants contained in this
Agreement, and (iii) payment and performance by Debtor of all
obligations under any ISDA Master Agreement which Debtor and
Secured Party may hereafter enter into (the “Interest Rate
Swap Agreement”), hereby grants to the Secured Party a
security interest in all of the Debtor’s fixtures, goods,
equipment, inventory, accounts, chattel paper (tangible and
electronic), documents (negotiable and nonnegotiable) instruments
(including promissory notes), investment property, securities,
general intangibles, commercial tort claims, deposits accounts and
letter of credit rights, now in existence or hereafter arising and
all proceeds therefrom ( the “Collateral”).
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IV. FINANCING STATEMENTS, FILING,
AND DELIVERY: Debtor hereby authorizes the Secured Party to
file financing statements covering the Collateral in which
perfection may be made by filing, and will assist the Secured Party
in obtaining possession and/or control of the Collateral in which
perfection is made by possession or control. The Debtor shall
deliver herewith, all of the outstanding shares of the corporate
stock of Stealth Microwave, Inc. (which are agreed to be
“securities” within the meaning of NHRSA 382-A:8-102),
together with stock powers in blank, into the possession of the
Secured Party.
V. WAIVER : Other than as
provided in Article X hereinbelow, the Debtor hereby expressly
waives presentment, demand, protest, notice of default, nonpayment,
partial payment and all other notices and formalities, consents to
and waives notice of granting indulgence or extensions of time of
payment, the taking or releasing of security, the addition or
release of persons primarily or secondarily liable on any of the
assigned accounts receivable, the acceptance of partial payments
thereon and/or the settlement, compromising or compounding of any
thereof, all in such manner and at such time or times as the
Secured Party may deem advisable. The Secured Party shall not be
required to enforce or resort to any security, liens, collateral,
guaranty, or other remedies before calling on the Debtor for
payment, nor shall any act or omission of the Secured Party in any
way impair or affect any of
