EXHIBIT 10.4
LOAN NUMBER: GP-467,719-30-10-DAL
Guaranty Loan
U.S. SMALL BUSINESS ADMINISTRATION
Dallas District Office
0000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
AUTHORIZATION AND LOAN AGREEMENT
FIRST NATIONAL BANK OF GRAPEVINE
0000 XXXXX XXXX XXXXXX
XXXXXXXXX, XXXXX 00000
Your request dated December 12, 1991 for SBA to Guarantee 85% of a Loan in the
amount of $250,000 to be made by Lender to:
NICHE PHARMACEUTICALS, INC.
000 XXXXXX XXX0 XXXXX #000
XXXXXXX, XXXXX 00000
is hereby approved pursuant to Section 7(a) of the Small Business Act
as amended.
1. The following forms are herewith enclosed:
a. The original copy of this Authorization shall be executed at
the time of first disbursement and retained in loan file by
the Lender. (A copy of the Authorization and all documents
should be given to the Borrower.) Please return a signed copy
of the Authorization to this office.
b. Three copies of SBA Note. The original executed copy must be
retained by you and one executed copy must be sent to SBA
immediately after first disbursement.
c. Copies of the SBA Settlement Sheet, Form 1050, are to be
completed and executed by Lender and Borrower to reflect each
disbursement. Prompt reporting of disbursements is necessary.
Return the first two copies ("Denver FOD" copy and "Servicing
Office" copy) to SBA.
d. Compensation Agreements, Form 159, shall be executed by
Borrower, his representative and Lender and returned to SBA if
Borrower has employed an attorney, accountant or other
representative, or if Borrower is charged fees for services by
Lender or an associate of Lender. If no such fees have
been charged, please write "None" and return the original
form, executed by the Lender and the Borrower, to SBA.
ADDITIONAL FORMS NEEDED
e. GUARANTY, SBA 148 - A sample to use in completing this form is
also enclosed. ALL BLANKS MUST BE COMPLETED PROPERLY. THIS
IS A VERY IMPORTANT DOCUMENT FOR THE COLLATERALIZATION OF THE
LOAN. Return one executed copy.
f. Resolution of Board of Directors, SBA 160 - Return executed
ORIGINAL to SBA.
g. COPIES OF THE FOLLOWING DOCUMENTS ARE NOT REQUIRED BY SBA AT
THIS TIME. The original of each must be retained in your
COLLATERAL FILE; and in the event of a request for SBA to
purchase its Guaranty at a later date, the properly executed
originals will be required.
(l) Standby Agreement, SBA Form 155.
GUARANTY FEE:
SBA's Guaranty fee is 2% of guaranteed loan amount, or $4,250.00, and paid by
the Lender within 90 days of the date of this Authorization and may be charged
to the Borrower only after Lender has paid fee and initial disbursement made.
This fee may be deducted from the loan proceeds. If initial disbursement can be
made within the 90-day period, we prefer to have the guaranty fee paid when the
closing documents are returned to the Legal Division.
2. This Authorization is subject to:
a. Provisions of the Guaranty Agreement between Lender and SBA
dated 9-21-78.
b. First disbursement of the Loan being made not later than six
(6) months, and no disbursement being made later than twelve
(12) months, from the date of this Authorization, unless such
time is extended pursuant to prior written consent by SBA.
c. Receipt by Lender of evidence satisfactory to it in its sole
discretion, that there has been no unremedied adverse change
since the date of the Application, or since any of the
preceding disbursements, in the financial or any other
condition of Borrower, which would warrant withholding or not
making any such disbursement or any further disbursement.
d. The representations made by Borrower in its loan application,
the requirements or conditions set forth in Lender's
application form, including the supporting documents thereto,
the conditions set forth herein and any future conditions
imposed by Lender (with prior SBA approval).
3. Terms of Loan:
a. Repayment terms, interest rate, and maturity
(1) Six (6) monthly payments of interest only, beginning
one (1) month(s) from date of Note, thereafter
monthly installment of $4,214.00, including principal
and interest, on the same date of each succeeding
calendar month thereafter until paid in full,
provided that all
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principal and interest not sooner paid shall become
due and payable seven (7) years from the date of
Note; with the further provision that each said
installment payment, when received, shall be applied
by the holder hereof, first to interest accrued to
the date of receipt of said payment, and the balance,
if any, on account of the principal hereof.
(2) The interest rate as of the date of Note is eight and
three-quarters percent (8.75%) per annum.
(3) Undersigned further agrees that, upon expiration of
the calendar year in which first disbursement is
made, the rate of interest herein shall increase or
decrease to become a rate of two and one-quarter
percent (2.25%) per annum over the minimum prime
lending rate for large U.S. money center commercial
banks as published in the Money Rates Section of the
Wall Street Journal. The change of the rate of
interest herein shall be determined and become
effective as of the first day of each such period, as
appropriate, of each calendar year. Holder shall give
written notice to the undersigned of each increase or
decrease in the interest rate within thirty days
after effective date of change. If the undersigned
shall be in default in payment due on the
indebtedness therein, and the SBA purchases its
guaranteed portion of said indebtedness, the rate of
interest on the guaranteed and unguaranteed portion
therein shall become fixed at the rate in effect as
of the initial date of default. If the undersigned
shall not be in default in payment, the guaranteed
and unguaranteed portion therein shall be fixed at
the rate in effect as of the date of purchase by SBA.
Lender has the right to raise or lower the monthly
payment to assure such payment will amortize the note
within the bounds of the stated maturity.
(4) Notwithstanding rate of interest provided herein, the
interest rate shall not exceed the maximum rate
permitted under applicable law.
(5) Note (SBA Form 147) to state the Borrower shall
provide Lender with written notice of intent to repay
part or all of the loan at least three (3) weeks
prior to the anticipated prepayment date. A
prepayment is any payment made ahead of schedule that
exceeds twenty (20) percent of the then outstanding
principal balance. If Borrower makes a prepayment and
fails to give at least three weeks advance notice of
intent to prepay, then, notwithstanding any other
provision to the contrary in this Note or other
document, Borrower shall be required to pay Lender
three weeks interest on the unpaid principal as of
the date of such prepayment.
b. Use of Proceeds
(1) Approximately $75,000 to purchase inventory.
(2) Approximately $175,000 for working capital to be
disbursed as deemed necessary by Lender.
(3) Proceeds not expended for purposes indicated above
may be disbursed as additional working capital
provided it does not exceed $10,000.
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Any balance in excess of the amount stated above
shall be applied to the loan in the inverse order of
maturity and SBA notified.
c. Collateral
(1) First security interest lien on:
(a) equipment excluding titled motor vehicles;
(b) inventory;
(c) accounts;
(d) fixtures (Fixtures Financing Statement
(UCC-l) to be filed in the Deed of Trust
Records of the county where the fixtures
are located and must contain the name of
the record owner of the real estate, a
legal description of the real estate and the
street address where the fixtures are
located);
(e) general intangibles;
(f) Assignment with U.S. Patent and Trademark
Office, Washington, D.C. of all patent
rights currently owned or hereafter
acquired, foreign or domestic (including but
not limited to U.S. Patent #5,002,774).
(g) All now owned and hereafter acquired
(including but not limited to goods
described in Exhibit B, bank and SBA loan
case files).
(2) Prior to first disbursement, the appropriate UCC lien
searches must be made to determine Lender's priority
of lien. Certificate of Search must be obtained from
County Clerk and Secretary of State, including search
of the Federal Tax Lien Records, State Tax Lien
Records, and Judgement Lien Records.
(3) Pledge to Lender by Xxxxxxx X. Xxxxxxx of all his
shares of stock in Niche Pharmaceuticals. Inc.
(representing 89% of shares outstanding). Lender is
to retain stock certificates in its possession until
pledge is reassigned or released.
(4) Personal guaranty on SBA Form 148 executed by Xxxxxxx
X. Xxxxxxx and Xxxxxxx X. Xxxxxxx.
4. To further induce Lender to make and SBA to guarantee this Loan, Lender
and SBA impose the following conditions:
a. Execution of all documents required in Item 1 above.
b. Reimbursable Expenses. Borrower will, on demand, reimburse
Lender for any and all expenses incurred, or which may be
hereafter incurred, by Lender from time to time in connection
with or by reason of Borrower's application for, and the
making and administration of the Loan.
c. Books, Records, and Reports. Borrower will at all times keep
proper books of account in a manner satisfactory to Lender
and/or SBA. Borrower hereby authorizes Lender or SBA to make
or cause to be made at Borrower's expense and in such manner
and at such times as Lender or SBA may require, (a)
inspections and audits of any books, records and papers in the
custody or control of Borrower or others, relating to
Borrower's financial or business conditions, including the
making of copies thereof and extracts
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therefrom, and (b) inspections and appraisals of any of
Borrower's assets. Borrower will furnish to Lender and SBA for
the 3 month period ending 3-31-92 and quarterly thereafter (no
later than 2 months following the expiration of any such
period) and at such other times and in such form as Lender may
prescribe, Borrower's financial and operating statements.
Borrower hereby authorizes all Federal, State and municipal
authorities to furnish reports of examinations, records, and
other information relating to the conditions and affairs of
Borrower and any desired information from reports, returns,
files, and records of such authorities upon request therefor
by Lender or SBA.
d. Borrower shall not execute any contracts for management
consulting services without prior approval of Lender and SBA.
e. Distributions and Compensations. Borrower will not, without
the prior written consent of Lender or SBA (a) if Borrower is
a corporation, declare or pay any dividend or make any
distribution upon its capital stock, or purchase or retire any
of its capital stock, or consolidate, or merge with
any other company, or give any preferential treatment, make
any advance, directly or indirectly, other than reasonable
compensation for services, by way of loan, gift, bonus, or
otherwise, to any company directly or indirectly controlling
or affiliated with or controlled by Borrower, or any other
company, or to any officer, director, or employee of Borrower,
or of any such company (b) if Borrower is a partnership or
individual, make any distribution of assets of the business of
Borrower, other than reasonable compensation for services, or
give any preferential treatment, make any advance, directly or
indirectly, by way of loan, gift, bonus, or otherwise, to any
partner or any of its employees or to any company directly or
indirectly controlling or affiliated with or controlled by
Borrower, or any other company.
f. Other Provisions
(1) Note (SBA Form 147) and all loan documents to be
executed by corporate officers authorized in a
Resolution of Board of Directors.
(2) Assignment of life insurance on Xxxxxxx X. Xxxxxxx in
the amount of $250,000 which shall be decreasing term
unless SBA approves an assignment of existing
permanent type insurance. No additional life
insurance is to be purchased from business income or
assets without prior written approval of SBA.
Disbursement must be made upon receipt of evidence
from insurance company or its agent that the named
insured has applied for insurance in at least the
indicated amount and has paid the first month
premium.
(3) Fire and extended coverage insurance on all insurable
property that id pledged as collateral for this loan
in the maximum amount available, up to and including
the amount of this loan, with a New York Standard
Mortgage Clause. The "New York Standard Mortgage
Clause" should, in effect, state that the insurance
as to the interest of the Lender shall not be
invalidated by any act or neglect of the mortgagor or
owner of the property (including arson or a related
act); by foreclosure or other proceedings relating to
the property; by any change in the title or ownership
of the property;
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nor by the occupation of the premises for purposes
more hazardous than those permitted by this policy.
(4) The Borrower agrees to obtain Federal Flood Insurance
if any proceeds of this loan will be used to improve
property located, or to be located, in a presently
classified Special Flood Hazard Area or if any
collateral securing this loan is located or is to be
located in such area. The amount of required flood
insurance is the lesser of (1) the insurable value of
the property, or (2) the maximum amount of insurance
available.
(5) Written subordination of landlord's lien on premises
located at 000 Xxxxxx Xxxx Xxxxx #000 - Xxxxxx Xxxx,
Xxxxx.
(6) Prior to first disbursement, Borrower must furnish to
Lender a copy of lease indicating a term for at least
the term of the loan (options for renewal are
acceptable).
(7) Standby Agreement covering all of Borrower's
indebtedness to Xxxxxxx X. Xxxxxxx, stated to be
$386,839.00, and all accrued and future interest
thereon (provided that Borrower may pay interest not
exceeding 10% per annum so long as there is no
default on this SBA guaranty loan).
(8) Standby Agreement covering all of Borrower's
indebtedness to Xxxx X. Xxxxxx, stated to be
$37,500.00, and all accrued and future interest t h e
r e o n (provided that Borrower may pay interest not
exceeding 10% per annum so long as there is no
default on this SBA guaranty loan).
(9) Standby Agreement covering all of Borrower's
indebtedness to Xxxxxx X. Xxxx, stated to be
$37,500.00, and all accrued and future interest
thereon (provided that Borrower may pay interest not
exceeding 10% per annum so long as there is no
default on this SBA guaranty loan).
(10) Standby Agreement covering all of Borrower's
indebtedness to Xxxxxx X. Xxxxxxxx, M.D., stated to
be $37,500.00, and all accrued and future interest
thereon (provided that Borrower may pay interest not
exceeding 10% per annum so long as there is no
default on this SBA guaranty loan).
(11) Borrower will not incur any debt or liability
except (a) normal trade obligations which are
unsecured, or (b) with prior permission of Lender.
This includes, but is not limited to, leased
equipment.
(12) Prior to disbursement, Lender to have evidence of
corporate good standing with Texas Secretary of
State's Office.
(13) Borrower, if an unincorporated business or
profession (proprietorship/partnership), to file in
the office of the County Clerk in which the business
operates, an assumed name certificate, before
disbursement, and furnish the Lender a photocopy of
said certificate. If a corporation, the assumed
name must be registered with the Texas Secretary of
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State, and with the County Clerk of the County in
which the registered office of the corporation is
located; and, if applicable, the County Clerk of the
County(ies) in which the company with the assumed
name operates. (Refer to Section 36.01 et seq.,
V.T.C.A. Business and Commerce Code, relating to
filing of assumed name certificates).
(14) Prior to first disbursement, Lender is to be in
receipt of evidence of injection of at least $112,500
by Principals for use solely in business.
(15) Prior to first disbursement, Borrower shall furnish
to Lender an Employer Identification Number issued
by Internal Revenue Service.
(16) While the outstanding principal balance of the
loan is $100,000.00 or more, annual year end
financial statements will be furnished Lender
containing as a minimum an accountant's review as
defined by the American Institute of Certified
Public Accountants as follows:
Review of financial statement. Performing inquiry
and analytical procedures that provide the
accountant with a reasonable basis for expressing
limited assurance that there are no material
modifications that should be made to the
statements in order for them to be in conformity
with generally accepted accounting
principles or, if applicable, with another
comprehensive basis of accounting.
(17) Borrower agrees that he shall make monthly progress
reports to Lender.
(18) If SBA or Lender receives notification that another
party intends to perfect a purchase money security
interest in inventory, SBA or Lender, with SBA
written approval, may accelerate the payment of any
or all of the obligations of the Borrower to Lender
or SBA. Lender shall notify SBA in writing within
five (5) days of receipt of any notification of an
intent to perfect a purchase money security
interest in inventory.
(19) Prior to first disbursement, Borrower shall
execute an affidavit (SBA Form 1624) certifying that
the Borrower is not debarred, suspended, proposed for
debarment, declared ineligible or voluntarily
excluded from participation in this transaction by
any federal department or agency.
(20) Prior to disbursement, Lender will make reasonable
inquiry to insure that Borrower is current on all
Federal and State taxes, including, but not limited
to, income taxes, payroll taxes, real estate taxes
and sales taxes. Borrower to execute an affidavit
certifying that all taxes are current and future
taxes will be paid when due.
(21) Lender agrees that, in the event of a default by the
Borrower, it will execute any right of off-set
available to it. All funds received are to be placed
against the outstanding loan balance prior to the
bank requesting that SBA honor its guaranty.
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(22) By execution of this Agreement, Borrower certifies
that the financial information contained in the Loan
Application upon which this Authorization & Loan
Agreement is predicated, represents an accurate
statement of its assets and liabilities as of this
date. Those persons executing this Agreement
acknowledge both in their representative capacity
and as individual obligors that the Lender and SBA's
approval of this loan is given in reasonable reliance
on the accuracy of all financial information
contained in said Application.
(23) THE WRITTEN LOAN AGREEMENTS REPRESENT THE FINAL
AGREEMENTS BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
5. Parties Affected:
This agreement shall be binding upon Borrower and Borrower's successors
and assigns. No Provision stated herein shall be waived without the
prior written consent of SBA. The Loan shall be administered as
provided in the Guaranty Agreement.
XXXXXXXX XXXXX, Administrator
BY: /S/ W. Xxxxx Xxxx January 9, 1992
W. Xxxxx Xxxx, Chief FD Date of Authorization
Borrower and Lender hereby agrees to the conditions imposed herein, and further
acknowledges that this Authorization and Loan Agreement does not create a
commitment by Lender to disburse any funds pursuant hereto:
ATTEST: NICHE PHARMACEUTICALS, INC.
/s/ Xxxxx X. Xxxxx 4/8/92 BY: /s/ Xxxxxxx X. Xxxxxxx 4/8/92
Xxxxx X. Xxxxx, Secretary Date Xxxxxxx X. Xxxxxxx, President Date
ATTEST: First National Bank of Grapevine
(Name of Lender)
/s/ Xxxxxxx X. XxXxxxxx 4/8/92 BY:/s/ Xxx X. Xxxxxxx 4/8/92
Xxxxxxx X. XxXxxxxx, Vice President Date Xxx X. Xxxxxxx, President Date
NOTE: Corporate borrowers must execute this Authorization, in corporate name
by duly authorized officer indicating office held; partnership
borrowers must execute in firm name, together with signature of all
general partners.
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SECTION ll--PERSONAL PROPERTY
All items listed herein must show manufacturer or make, model, year, and serial
number. Items with no serial number must be clearly identified (use additional
sheet if more space is required).
Description - Show Manufacturer, Year Original Market Current Lien Name of
Model, Serial No. Acquired Cost Value Balance Lienholder
----------------- -------- ---- ----- ------- ----------
SEE ATTACHED
"Schedule A"
All product rights for MagTab SR, including any patent rights; tradenames and
trademarks; copyrights; tool and die equipment; advertising, promotional
educational and training material; clinical and medical studies; and all
targeted sales data including customer, physician and distributor lists.
All information contained herein is TRUE and CORRECT to the best of my
knowledge. I understand that FALSE statements may result in forfeiture of
benefits and possible fine and prosecution by the U.S. Attorney General
(Ref. 18 U.S.C. 100).
/s/ Xxxxxxx X. Xxxxxxx Date 10/1/91
---------------------- ---- -------
Date
---------------------- ----
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SCHEDULE "A"
Collateral
Current Receivables $ 38,759
Inventory (MagTab(R)SR 60's & lOO's) $ 200,000
at selling price (31,000 bottles
Samples, Literature & Promotional Items $ 68,200
* 136,064 pieces of literature
* 2,303 - Tic-Tac's
* 2,288 - Roller pens
* 13,279 - Yellow highliters
MagTab(R)SR Cash Flow Marketable $2,500,000
Value 5 x 1992 Cash Flow
Machinery & Equipment $ 16,859
* 1 Novel System
3 Servers
3 Monitors
* 1 IBM Clone PC
* 1 Mitsubishi monitor
* 1 Epson laser printer
* 1 Epson dot-matrix printer
* 1 Panasonic FAX
* 1 Atlas II phone system
* 1 Xerox copying machine
* 1 Xxxxx-Xxxxxx memory typewriter
* 2 sets tool & dye equipment
upper & lower punches for MagTab(R)SR
Furniture & Fixtures $ 17,340
Reception Area
1 Secretarial desk
1 Lateral file cabinet
1 Computer table
1 Brass lamp
1 Secretarial chair
2 Reception chairs
1 Lamp table
Work Room
1 work station
1 chair
Office #1
1 Oak desk
1 Oak credenza
1 Swivel chair
2 Chairs
1 Lamp table
1 Brass lamp
Office #2
1 Conference table
4 Chairs
1 Bookcase
Office #3
1 Executive desk
1 Credenza
2 Bookcases
1 Leather couch
2 Side chairs
1 Lamp table
1 Brass lamp
Supply Room
1 File cabinet
2 Lateral file cabinets
1 Literature cabinet
1 Supply cabinet
1 Small Sanyo refrigerator
1 Kenmore microwave
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