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EXHIBIT 10(pp)
SECOND 1998 AMENDED AND RESTATED LOAN AGREEMENT
First Union National Bank
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
(Hereinafter referred to as the "Bank")
Novametrix Medical Systems Inc.
0 Xxxxxxxxxx Xxxxx, X.X. Xxx 000
Xxxxxxxxxxx, Xxxxxxxxxxx 00000
NTC Technology, Inc.
0 Xxxxxxxxxx Xxxxx, X.X. Xxx 000
Xxxxxxxxxxx, Xxxxxxxxxxx 00000
(Individually and collectively "Borrower")
This Second 1998 Amended and Restated Loan Agreement ("Agreement") is entered
into as of December 11, 1998, by and between Bank and Borrower, each of which
are corporations organized under the laws of Delaware.
RECITALS
Bank is the holder of a 1998 Promissory Note executed and delivered by Borrower,
dated as of August 1, 1998, in the original principal amount of up to
$3,500,000.00, as modified by Allonge No. 1 to 1998 Promissory Note dated as of
October , 1998, the effect of which is to increase the principal amount to up to
$5,000,000.00 (the 1998 Promissory Note as modified by Allonge No. 1 to the 1998
Promissory Note is hereinafter referred to as the "Line of Credit Note"); and
certain other Loan Documents, including the Amended and Restated 1998 Loan
Agreement, dated as of October 9, 1998 (the " Amended and Restated Loan
Agreement"); and
Borrower and Bank have agreed to modify the terms of the Original Loan Agreement
by replacing the Amended and Restated Loan Agreement with this Agreement.
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In consideration of Bank's continued extension of credit and the agreements
contained herein, the parties agree as follows:
Borrower has applied to the Bank for a loan or loans (individually and
collectively, the "Loan") as follows:
TERM LOAN - in the principal amount of $3,000,000.00 which is evidenced by the
1998 Promissory Term Note dated as of even date herewith (the "1998 Term Note").
The Loan proceeds are to be used by Borrower solely to refinance existing
borrowings under the Line of Credit.
LINE OF CREDIT - in the principal amount of up to $5,000,000.00 (the "Principal
Amount") which is evidenced by the Line of Credit Note, under which Borrower may
borrow, repay, and reborrow, from time to time, so long as the total
indebtedness outstanding at any one time does not exceed the Principal Amount
minus the sum of (i) the amount available to be drawn plus (ii) the amount of
unreimbursed drawings under all letters of credit issued by Bank for the account
of Borrower plus (iii) the aggregate outstanding amount arising out of foreign
exchange services provided to the Borrower by the Bank as reasonably established
by the Bank. The Loan proceeds are to be used by Borrower solely for working
capital. Bank's obligation to advance or readvance under the Line of Credit Note
shall terminate if Borrower is in Default under the Line of Credit Note.
SUBLIMITS. (i) Letters of Credit. The Bank shall issue commercial and/or standby
letters of credit for the account of the Borrower ("New L/Cs") only when,
combined with any standby or commercial letters of credit outstanding and issued
by the Bank for the account of the Borrower ("Outstanding L/Cs"), the aggregate
available undrawn amount and the drawn but unreimbursed amount of the New L/Cs
and Outstanding L/Cs will not exceed $200,000. Subject to the foregoing
limitations, the Bank shall issue New L/Cs only after the Borrower has executed
such documentation and paid such fees as the Bank may require. (ii) Foreign
Exchange. The Borrower may utilize foreign currency exchange services provided
by the Bank up to a maximum
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credit exposure of $150,000 in the aggregate to be outstanding at any time,
provided, however, that forward contracts shall be limited to $125,000 and the
maximum daily settlement limit shall be $25,000.
This Agreement amends, restates and replaces in its entirety that certain
Amended and Restated 1998 Loan Agreement dated as of October 9, 1998.
This Agreement applies to the Loan and all Loan Documents. The terms "Loan
Documents" and "Obligations" as used in this Agreement shall have the collective
meanings of such terms as defined in the Term Note and the Line of Credit Note
(collectively, the "Notes"). The term "Borrower" shall include its Subsidiaries
and Affiliates. As used in this Agreement as to Borrower, "Subsidiary" shall
mean any corporation of which more than 50% of the issued and outstanding voting
stock is owned directly or indirectly by Borrower. As to Borrower, "Affiliate"
shall have the meaning as defined in 11 U.S.C. Section 101, except that the term
"debtor" therein shall be substituted by the term "Borrower" herein.
Relying upon the covenants, agreements, representations and warranties contained
in this Agreement, Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions set forth herein, and Bank and Borrower agree as
follows:
REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations: ACCURATE INFORMATION. All
information now and hereafter furnished to Bank is and will be true, correct and
complete. Any such information relating to Borrower's financial condition will
accurately reflect Borrower's financial condition as of the date(s) thereof
(including all contingent liabilities of every type), and Borrower further
represents that its financial condition has not changed materially or adversely
since the date(s) of such documents. AUTHORIZATION; NON-CONTRAVENTION. The
execution, delivery and performance by Borrower and any guarantor, as
applicable, of this Agreement and other Loan
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Documents to which it is a party are within its power, have been duly authorized
by all necessary action taken by the duly authorized officers of Borrower and
any guarantors and, if necessary, by making appropriate filings with any
governmental agency or unit and are the legal, binding, valid and enforceable
obligations of Borrower and any guarantors; and do not (i) contravene, or
constitute (with or without the giving of notice or lapse of time or both) a
violation of any provision of applicable law, a violation of the organizational
documents of Borrower or any guarantor, or a default under any agreement,
judgment, injunction, order, decree or other instrument binding upon or
affecting Borrower or any guarantor, (ii) result in the creation or imposition
of any lien (other than the lien(s) created by the Loan Documents) on any of
Borrower's or guarantor's assets, or (iii) give cause for the acceleration of
any obligations of Borrower or any guarantor to any other creditor. ASSET
OWNERSHIP. Borrower has good and marketable title to all of the properties and
assets reflected on the balance sheets and financial statements supplied to Bank
by Borrower, and all such properties and assets are free and clear of mortgages,
security deeds, pledges, liens, charges, and all other encumbrances, except as
otherwise disclosed to Bank by Borrower in writing ("Permitted Liens"). To
Borrower's knowledge, no default has occurred under any Permitted Liens and no
claims or interests adverse to Borrower's present rights in its properties and
assets have arisen. DISCHARGE OF LIENS AND TAXES. Borrower has duly filed, paid
and/or discharged all taxes or other claims which may become a lien on any of
its property or assets, except to the extent that such items are being
appropriately contested in good faith and an adequate reserve for the payment
thereof is being maintained. SUFFICIENCY OF CAPITAL. Borrower is not, and after
consummation of this Agreement and after giving effect to all indebtedness
incurred and liens created by Borrower in connection with the Loan, will not be,
insolvent within the meaning of 11 U.S.C. Section 101(32). COMPLIANCE WITH LAWS.
Borrower is in compliance in all respects with all federal, state and local
laws, rules and regulations applicable to its properties, operations, business,
and finances, including, without limitation, any federal or state laws relating
to liquor (including 18 U.S.C. Section 3617, et seq.) or narcotics (including 21
U.S.C.Section 801, et seq.) and/or
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any commercial crimes; all applicable federal, state and local laws and
regulations intended to protect the environment; and the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), if applicable. ORGANIZATION
AND AUTHORITY. Each Borrower is duly created, validly existing and in good
standing under the laws of the state of its organization, and has all powers,
governmental licenses, authorizations, consents and approvals required to
operate its business as now conducted. Each Borrower is duly qualified, licensed
and in good standing in each jurisdiction where qualification or licensing is
required by the nature of its business or the character and location of its
property, business or customers, and in which the failure to so qualify or be
licensed, as the case may be, in the aggregate, could have a material adverse
effect on the business, financial position, results of operations, properties or
prospects of Borrower or any such guarantor. NO LITIGATION. There are no pending
or threatened suits, claims or demands against Borrower or any guarantor that
have not been disclosed to Bank by Borrower in writing. REGULATION U. None of
the proceeds of the Loan made pursuant to this Agreement shall be used directly
or indirectly for the purpose of purchasing or carrying any margin stock in
violation of any of the provisions of Regulation U of the Board of Governors of
the Federal Reserve System ("Regulation U"), or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry
margin stock or for any other purchase which might render the Loan a "Purpose
Credit" within the meaning of Regulation U. ERISA. Each employee pension benefit
plan, as defined in ERISA, maintained by Borrower meets, as of the date hereof,
the minimum funding standards of ERISA and all applicable regulations thereto
and requirements thereof, and of the Internal Revenue Code of 1954, as amended.
No "Prohibited Transaction" or "Reportable Event" (as both terms are defined by
ERISA) has occurred with respect to any such plan.
AFFIRMATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will: BUSINESS CONTINUITY. Conduct its business in
substantially the same manner and locations as such business is now and has
previously been conducted. MAINTAIN PROPERTIES.
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Maintain, preserve and keep its property in good repair, working order and
condition, making all needed replacements, additions and improvements thereto,
to the extent allowed by this Agreement. ACCESS TO BOOKS & RECORDS. Allow Bank,
or its agents, during normal business hours, access to the books, records and
such other documents of Borrower as Bank shall reasonably require, and allow
Bank to make copies thereof at Bank's expense. INSURANCE. Maintain adequate
insurance coverage with respect to its properties and business against loss or
damage of the kinds and in the amounts customarily insured against by companies
of established reputation engaged in the same or similar businesses including,
without limitation, commercial general liability insurance, workers compensation
insurance, and business interruption insurance; all acquired in such amounts and
from such companies as Bank may reasonably require. NOTICE OF DEFAULT AND OTHER
NOTICES. (a) Notice of Default. Furnish to Bank immediately upon becoming aware
of the existence of any condition or event which constitutes a Default (as
defined in the Loan Documents) or any event which, upon the giving of notice or
lapse of time or both, may become a Default, written notice specifying the
nature and period of existence thereof and the action which Borrower is taking
or proposes to take with respect thereto. (b) Other Notices. Promptly notify
Bank in writing of (i) any material adverse change in its financial condition or
its business; (ii) any default under any material agreement, contract or other
instrument to which it is a party or by which any of its properties are bound,
or any acceleration of the maturity of any indebtedness owing by Borrower; (iii)
any material adverse claim against or affecting Borrower or any part of its
properties; (iv) the commencement of, and any material determination in, any
litigation with any third party or any proceeding before any governmental agency
or unit affecting Borrower; and (v) at least 30 days prior thereto, any change
in Borrower's name or address as shown above, and/or any change in Borrower's
structure. COMPLIANCE WITH OTHER AGREEMENTS. Comply with all terms and
conditions contained in this Agreement, and any other Loan Documents, and swap
agreements, if applicable, as defined in the Notes. PAYMENT OF DEBTS. Pay and
discharge when due, and before subject to penalty or further charge, and
otherwise satisfy before maturity or delinquency, all obligations, debts, taxes,
and liabilities
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of whatever nature or amount, except those which Borrower in good faith
disputes. REPORTS AND PROXIES. Deliver to Bank, promptly, a copy of all
financial statements, reports, notices, and proxy statements, sent by Borrower
to stockholders, and all regular or periodic reports required to be filed by
Borrower with any governmental agency or authority. OTHER FINANCIAL INFORMATION.
Deliver promptly such other information regarding the operation, business
affairs, and financial condition of Borrower which Bank may reasonably request.
NON-DEFAULT CERTIFICATE FROM BORROWER. Deliver to Bank, with the Financial
Statements required herein, a certificate signed by Borrower, if Borrower is an
individual, or by a principal financial officer of Borrower warranting that no
"Default" as specified in the Loan Documents nor any event which, upon the
giving of notice or lapse of time or both, would constitute such a Default, has
occurred. ESTOPPEL CERTIFICATE. Furnish, within 15 days after request by Bank, a
written statement duly acknowledged of the amount due under the Loan and whether
offsets or defenses exist against the Obligations.
NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will not: DEFAULT ON OTHER CONTRACTS OR
OBLIGATIONS. Default on any material contract with or obligation when due to a
third party or default in the performance of any obligation to a third party
incurred for money borrowed in an amount in excess of $25,000.00. JUDGMENT
ENTERED. Permit the entry of any monetary judgment or the assessment against,
the filing of any tax lien against, or the issuance of any writ of garnishment
or attachment against any property of or debts due Borrower in an amount in
excess of $25,000.00 and that is not discharged or execution is not stayed
within Thirty (30) days of entry. GOVERNMENT INTERVENTION. Permit the assertion
or making of any seizure, vesting or intervention by or under authority of any
government by which the management of Borrower or any guarantor is displaced of
its authority in the conduct of its respective business or such business is
curtailed or materially impaired. PREPAYMENT OF OTHER DEBT. Retire any long-term
debt entered into prior to the date of this Agreement at a date in advance of
its legal obligation to do so. RETIRE OR REPURCHASE CAPITAL
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STOCK. Without prior written consent of the Bank, expend more than $6,000,000 in
the aggregate during the term of this Agreement to retire or otherwise acquire
any of its capital stock. CHANGE OF CONTROL. Borrower shall not make a material
change in executive management without prior written consent of the Bank. CHANGE
IN FISCAL YEAR. Borrower or guarantor shall not change its fiscal year without
prior written notice to Bank. GUARANTEES. Guarantee or otherwise become
responsible for obligations of any other person other than the endorsement of
checks and drafts for collection in the ordinary course of business.
ENCUMBRANCES. Create, assume, or permit to exist any mortgage, security deed,
deed of trust, pledge, lien, charge or other encumbrance on any of its assets,
whether now owned or hereafter acquired, other than: (i) liens for taxes
contested in good faith; (ii) liens accruing by law for employee benefits; or
(iii) Permitted Liens.
FINANCIAL COVENANTS. Borrower agrees to the following provisions, all of which
shall be on a consolidated basis, from the date hereof until final payment in
full of the Obligations, unless Bank shall otherwise consent in writing: FIXED
CHARGE COVERAGE RATIO. Borrower shall, on a rolling four quarter basis, maintain
a Fixed Charge Coverage Ratio of not less than 3.00 to 1.00. "Fixed Charge
Coverage" shall mean the sum of net profit plus taxes, depreciation,
amortization, and interest expense less capital expenditures divided by the sum
of interest expense and amounts repaid on long term debt and capital lease
obligations during the prior four fiscal quarters. WORKING CAPITAL. Borrower
shall, at all times, maintain Working Capital of at least $11,000,000. "Working
Capital" shall mean current assets minus current liabilities including
borrowings under the Line of Credit Note. TANGIBLE NET WORTH. Borrower shall,
beginning January 31, 1999, maintain a Tangible Net Worth of at least
$16,000,000.00. Tangible Net Worth shall increase quarterly, as of the last day
of each fiscal quarter of the Borrower, by not less than fifty percent (50%) of
net income plus one hundred percent (100%) of additions to paid in capital
realized in such fiscal quarter. "Tangible Net Worth" shall mean the total
assets minus total liabilities. For purposes of this computation, the aggregate
amount of any intangible assets of Borrower including, without limitation,
goodwill, franchises,
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licenses, patents, trademarks, trade names, copyrights, service marks, and brand
names, shall be subtracted from total assets, and total liabilities shall
include fully subordinated debt. TOTAL LIABILITIES TO TANGIBLE NET WORTH RATIO.
Borrower shall, at all times, maintain a ratio of Total Liabilities, including
fully subordinated debt, divided by Tangible Net Worth of not more than 1.00 to
1.00. For purposes of this computation, "Total Liabilities" shall mean all
liabilities of Borrower, including capitalized leases and all reserves for
deferred taxes and other deferred sums appearing on the liabilities side of a
balance sheet of Borrower, in accordance with generally accepted accounting
principles applied on a consistent basis. DEPOSIT RELATIONSHIP. Borrower shall
maintain its primary depository account and cash management account with Bank.
LIMITATION ON DEBT. Borrower shall not, directly or indirectly, create, incur,
assume or become liable for, any debt, contingent or direct, if, giving effect
to such additional debt on a pro forma basis, causes the aggregate amount of
Borrower's debt, including obligations to Bank, to exceed $8,000,000.00.
ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 90 days
after the close of each fiscal year, audited financial statements reflecting its
operations during such fiscal year, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules; all on a consolidated and consolidating basis and in reasonable
detail, prepared in conformity with generally accepted accounting principles,
applied on a basis consistent with that of the preceding year. All such
statements shall be examined by an independent certified public accountant
acceptable to Bank. The opinion of such independent certified public accountant
shall not be acceptable to Bank if qualified due to any limitations in scope
imposed by Borrower or its Subsidiaries, if any. Any other qualification of the
opinion by the accountant shall render the acceptability of the financial
statements subject to Bank's approval.
PERIODIC FINANCIAL STATEMENTS. Borrower shall deliver to Bank unaudited
management-prepared quarterly financial statements, including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting
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schedules, as soon as available and in any event within 45 days after the close
of each such period; all in reasonable detail and prepared in conformity with
generally accepted accounting principles, applied on a basis consistent with
that of the preceding year. Such statements shall be certified as to their
correctness by a principal financial officer of Borrower.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete, and accurate.
YEAR 2000 COMPATIBILITY. Borrower shall take all action necessary to assure that
Borrower's computer based systems are able to operate and effectively process
data including dates on and after January 1, 2000. At the request of Bank,
Borrower shall provide Bank assurance acceptable to Bank of Borrower's Year 2000
compatibility.
CONDITIONS PRECEDENT. The obligations of Bank to make the Loan and any advances
pursuant to this Agreement are subject to the following conditions precedent:
ADDITIONAL DOCUMENTS. Receipt by Bank of such additional supporting documents as
Bank or its counsel may reasonably request. PAYMENT OF COMMITMENT FEE. Borrower
shall have paid to the Bank a one time commitment fee of $3,750 for the Line of
Credit and a one time commitment fee of $3,750 for the Term Loan. AVAILABILITY
FEE. Borrower shall pay to Bank quarterly, on the 1st day of each October,
January, April and July, an availability fee at a rate equal to 0.125% per annum
on the average daily unused available principal under the Line of Credit Note
for the preceding calendar quarter or portion thereof. OPINION OF COUNSEL. On or
prior to the date of any borrowing hereunder, Bank shall have received a written
opinion of the counsel of Borrower acceptable to Bank that includes confirmation
of the following: (a) The accuracy of the representations set forth in this
Agreement in the Representations Subparagraphs entitled "Authorization;
Non-Contravention"; "Compliance with Laws", and "Organization and Authority".
(b) This Agreement and other Loan Documents have been duly executed and
delivered by Borrower and constitute
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the legal, valid and binding obligations of Borrower, enforceable in accordance
with their terms. (c) No registration with, consent of, approval of, or other
action by, any federal, state or other governmental authority or regulatory body
to the execution and delivery of this Agreement, the borrowing under this
Agreement or other Loan Documents, is required by law, or, if so required, such
registration has been made, and consent or approval given or such other
appropriate action taken. (d) The Loan is not usurious.
JOINT AND SEVERAL OBLIGATIONS. The obligations of the Borrower hereunder and
under the Notes shall be joint and several.
MISCELLANEOUS. This Agreement shall be construed in accordance with and governed
by the laws of the State of Connecticut without reference to conflicts of laws
principles. This Agreement and the other Loan Documents constitute the sole
agreement of the parties with respect to the subject matter thereof and
supersede all oral negotiations and prior writings with respect to the subject
matter thereof. No amendment of this Agreement, and no waiver of any one or more
of the provisions hereof shall be effective unless set forth in writing and
signed by the parties hereto. The illegality, unenforceability or inconsistency
of any provision of this Agreement shall not in any way affect or impair the
legality, enforceability or consistency of the remaining provisions of this
Agreement or the other Loan Documents. This Agreement and the other Loan
Documents are intended to be consistent. However, in the event of any
inconsistencies among this Agreement and any of the Loan Documents, the terms of
the Notes, and then this Agreement, shall control. This Agreement may be
executed in any number of counterparts and by the different parties on separate
counterparts. Each such counterpart shall be deemed an original, but all such
counterparts shall together constitute one and the same agreement. Terms used in
this Agreement which are capitalized and not otherwise defined herein shall have
the meanings ascribed to such terms in the Loan Documents.
CONNECTICUT PREJUDGMENT REMEDY WAIVER. EACH BORROWER ACKNOWLEDGES THAT THE
TRANSACTIONS REPRESENTED BY THIS AGREEMENT ARE COMMERCIAL TRANSACTIONS AND
HEREBY VOLUNTARILY AND KNOWINGLY
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WAIVES ANY RIGHTS TO NOTICE OF AND HEARING ON PREJUDGMENT REMEDIES UNDER CHAPTER
903A OF THE CONNECTICUT GENERAL STATUTES OR OTHER STATUTES AFFECTING PREJUDGMENT
REMEDIES, AND AUTHORIZES THE BANK'S ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT
REMEDY WITHOUT COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF
THIS WAIVER.
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IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written above,
have caused this Agreement to be executed under seal.
NOVAMETRIX MEDICAL SYSTEMS INC.
By:_____________________________
name:
title:
NTC TECHNOLOGY, INC.
By:_____________________________
name:
title:
FIRST UNION NATIONAL BANK
By:______________________________
name:
title:
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