This Participation Agreement (the "Agreement") is made and executed this
13th day of April, 2001 by and between PNC BANK, NATIONAL ASSOCIATION ("Lender")
with an office at 1600 Market Street, Philadelphia, Pennsylvania 19103, Attn:
Frank Devine, Assistant Vice President, and FARO TECHNOLOGIES, INC., with an
office at 125 Technology Park, Lake Mary, FL 32746, Attn: Dr. Simon Raab,
President and CEO ("Participant").
A. Pursuant to the terms and conditions of a certain Loan
Agreement ("Loan Agreement") dated January 28, 1998 and related agreements,
instruments and documents, all as amended from time to time (collectively called
the "Credit Documents"), Lender has made loans, advances, and extensions of
credit ("Line of Credit") to Spatialmetrix Corporation ("Borrower") up to a
current maximum principal outstanding amount of $2,300,000 at any one time.
B. Participant acknowledges receipt of copies of the Credit
Documents. All capitalized terms used herein without definition shall have the
respective meanings ascribed thereto in the Credit Documents.
C. Contemporaneously herewith, Lender is increasing the
maximum principal amount of the Line of Credit to Three Million Eight Hundred
Thousand ($3,800,000) Dollars. Participant has agreed to purchase and accept and
Lender is willing to sell and transfer to Participant a participating interest
in the Line of Credit subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, with the foregoing Background deemed
incorporated herein and made a part hereof, for good and valuable consideration
the receipt of which is hereby acknowledged, and intending to be legally bound,
the parties hereby covenant and agree as follows:
1. Pursuant and subject to the terms hereof, Lender hereby
sells, extends and transfers to Participant and Participant hereby purchases and
accepts from Lender an undivided participating interest in the Line of Credit
("Participation Share") in an amount equal to the lesser of: (i) thirty-nine and
forty-seven one hundredths percent (39.47%) ("Participation Percentage") of the
principal amount of the Line of Credit outstanding on the books of Lender, or
(ii) $1,500,000. Participant's Participation Share shall be sold on a "last out"
basis, meaning the Participant's Participation Share shall only be paid after
Lender's share of the Line of Credit is paid and satisfied in full.
2. INTENTIONALLY DELETED.
3. Lender shall pay over to Participant from and promptly
after payment to Lender of, the interest actually received by Lender from
Borrower, a sum equal to interest calculated on Participant's actual outstanding
daily Participation Share of the Line of Credit for the period covered by the
interest payment at one quarter percent (.25%) less than the rate(s) per annum
set forth in the Credit Documents. Participant shall not share in any prepayment
premiums or fees set forth in the Loan Agreement. If Lender should, for any
reason, receive less than the full amount of interest or other compensation due
under the Credit Documents, Participant's share of such interest or compensation
set forth herein shall abate ratably.
4. Except as set forth in Section 3 hereof, all amounts paid
to and credited by Lender to the outstanding balance of the Line of Credit
including, without limitation, principal, interest and expenses and including
the proceeds or collections resulting from the realization from or disposition
of any Collateral Security for the Line of Credit shall be applied first (to be
applied to principal, interest and expenses in such order as Lender may elect)
for the benefit of Lender and then second, to Participant. The term "Collateral
Security" as used herein includes Lender's lien on or security interest in all
of Borrower's Collateral (as defined in the Credit Documents) and the amounts
payable under and the proceeds of all other agreements under which any party
other than Borrower becomes liable in any capacity in connection with the Line
of Credit; balances in any bank account (including proceeds of any setoff), or
loss reserve account or other reserve account of Borrower which Lender or
Participant appropriates and applies to or toward the satisfaction of any
liability of Borrower to Lender; and all other property, real or personal,
tangible or intangible, of Borrower or any third party which secures payment of