Exhibit 2.2
AMENDED AND RESTATED
REVOLVING CREDIT
AND TERM LOAN AGREEMENT
DATED AS OF JANUARY 21, 0000
XXXXXXX
XXXXX XXXXXX BANK AND TRUST COMPANY, AS LENDER
AND
AMBI INC.
AND
NUTRITION 21
AS CO-BORROWERS
THIS AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT
dated as of January 21, 1999 between STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company (the "Lender"), AMBI Inc. (formerly known as Applied
Micro Biology, Inc.), a New York corporation ("AMBI"), and Nutrition 21, a
California limited partnership ("N21"), as co-borrowers (each a "Borrower" and
collectively, the "Borrowers").
WHEREAS, the Borrowers entered into that certain Revolving Credit and
Term Loan Agreement dated as of August 11, 1997, as amended by that certain
Amended and Restated Revolving Credit and Term Loan Agreement dated as of
December 31, 1997 (the "Loan Agreement"), pursuant to which the Lender has
agreed to make certain revolving and term loans to the Borrowers;
WHEREAS, simultaneously herewith, AMBI has acquired the assets of OLI
(as hereinafter defined);
WHEREAS, the Borrowers desire to extend the maturity date of the
revolving loans and to refinance the existing term loan and the Lender has
agreed to the foregoing, upon the terms and conditions set forth herein; and
WHEREAS, all negotiations between the Lender and the Borrowers and
their respective agents and representatives have occurred, for all purposes, in
the Commonwealth of Massachusetts;
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
DEFINITIONS; CONSTRUCTION
Section 1.01. Definitions. As used herein, the following terms shall
have the meanings herein specified (to be equally applicable to both the
singular and plural forms of the terms defined):
"Accounts Payable" shall mean all accounts due and owing by the
Borrowers and their Subsidiaries on open account to trade creditors for goods or
services, and any accruals thereon, as determined on a consolidated basis.
"Acquisition" shall mean the acquisition of all of the assets of OLI in
accordance with the terms of that certain Agreement of Purchase and Sale of
Assets dated January __, 1999 among AMBI, OLI, and the individuals named
therein.
"Adjusted EBITDA" shall mean, for any period, Net Income, increased by
the sum of (i) Interest Expense for such period, (ii) Income Tax Expense for
such period, (iii) Depreciation Expense for such period, and (iv) Amortization
Expense for such period, as shown on the
consolidated and consolidating balance sheet of the Borrowers and their
Subsidiaries in accordance with GAAP.
"Affiliate" shall mean, with respect to any Person, any other Person
which, directly or indirectly controls or is controlled by or is under common
control with such Person and, without limiting the generality of the foregoing,
includes (i) any Person which beneficially owns or holds 5% or more of any class
of voting securities of such Person or 5% or more of the equity interest in such
Person, (ii) any Person of which such Person beneficially owns or holds 5% or
more of any class of voting securities or in which such Person beneficially owns
or holds 5% or more of the equity interest and (iii) any director, officer or
employee of such Person. For the purposes of this definition, the term "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"Agreement" shall mean this Amended and Restated Revolving Credit and
Term Loan Agreement, as amended, restated, supplemented or modified from time to
time in accordance with its terms.
"Amortization Expense" shall mean, for any period, the amortization
expense of the Borrowers and their Subsidiaries determined on a consolidated
basis in accordance with GAAP as of such date.
"Board" shall mean the Board of Governors of the Federal Reserve
System.
"Borrowers" shall have the meaning set forth in the preamble hereof.
"Borrowing Base Certificate" shall have the meaning set forth in
subsection 8.01(i) hereof.
"Borrowing Base" shall mean, at the relevant time of reference thereto,
an amount which is equal to (i) 85% of the aggregate Net Amount of Eligible
Accounts of Customers of N21 and AMBI's OLI division who are located within the
United States, plus (ii) 70% of the aggregate Net Amount of Eligible Inventory
of N21, plus (iii) one hundred percent (100%) of any money market instruments
pledged by the Borrowers to the Lender, all as determined by the Lender by
reference to the most recent Borrowing Base Certificate delivered to the Lender
pursuant to subsection 8.01(i) hereof.
"Xxxxx Xxxxx" shall mean Xxxxx Xxxxx, Inc.
"Business Day" shall mean any day excluding Saturday, Sunday and any
other day on which the Lender is required or authorized to close in Boston,
Massachusetts.
"Capital Expenditures" shall mean, for any period, amounts paid or
indebtedness incurred by the Borrowers and their Subsidiaries determined on a
consolidated basis in connection with the acquisition, purchase, lease,
construction, improvement or replacement by the Borrowers and their Subsidiaries
of fixed assets, both tangible (such as land, buildings, fixtures, machinery and
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equipment) and intangible (such as leaseholds, patents, copyrights, trademarks,
franchises and goodwill), that would be required to be capitalized and shown on
the consolidated and consolidating balance sheet of the Borrowers and their
Subsidiaries in accordance with GAAP, provided that Capital Expenditures shall
not include any item customarily charged directly to expense or depreciated over
a useful life of twelve (12) months or less in accordance with GAAP.
"Closing Date" shall mean the date that all of the conditions precedent
set forth in Section 6.01 hereof have been met and the initial Loans have been
advanced hereunder.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall have the meaning set forth in Section 5.05 hereof.
"Commitment" shall mean the Lender's obligation under this Agreement to
make Revolving Loans to the Borrowers up to the Revolving Commitment Amount
pursuant to Article II hereof.
"Computing Devices" shall have the meaning set forth in Section 7.19
hereof.
"Consolidated or consolidated" shall mean those terms as applied to the
accounts of the Borrowers and their Subsidiaries, consolidated in accordance
with GAAP.
"Customer" shall mean and include the account debtor or obligor with
respect to any of the Receivables and/or the prospective purchaser with respect
to any contract right, and/or any Person who enters into or proposes to enter
into any contract or other arrangement with the Borrowers or their Subsidiaries.
"Depreciation Expense" shall mean, for any period, the depreciation
expense of the Borrowers and their Subsidiaries determined on a consolidated
basis in accordance with GAAP as of such date.
"Debt" shall mean all liabilities of the Borrowers and their
Subsidiaries as shown on the consolidated and consolidating balance sheet of the
Borrowers and their Subsidiaries in accordance with GAAP.
"Default" shall mean any condition, act or event which, with notice or
lapse of time or both, would constitute an Event of Default.
"Dollar" and the sign "$" shall mean lawful money of the United States
of America.
"Eligible Accounts" shall mean (without duplication of accounts falling
into more than one of the following categories) the aggregate of the unpaid
portion of Receivables created by N21 and AMBI's OLI Division in the ordinary
course of business arising out of the sale of products by the Borrowers, and as
to which appropriate Uniform Commercial Code financing statements showing the
Borrowers, as the debtor and the Lender as the secured party with a first
priority security interest have been filed in the proper filing offices. Without
limiting the
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generality of the foregoing, a Receivable shall in no event be deemed to be an
Eligible Account unless: (i) such Receivable continues to be in full conformity
with the representations and warranties made by the Borrowers to the Lender with
respect thereto; (ii) no more than 60 days have elapsed from the invoice date
from US domiciled companies (subject to clause (iii) below); (iii) the Lender
has not notified the Borrowers that Lender is not satisfied with the credit
standing of the Customer with respect thereto in relation to the amount of
credit extended and the Customer as to which the Receivable relates is not known
by the Borrowers to be insolvent or involved in any case of proceeding, whether
voluntary or involuntary, under any bankruptcy, reorganization, arrangement,
insolvency, liquidation or similar law of any jurisdiction; (iv) the Customer
with respect thereto which is not an Affiliate of the Borrowers; (v) the
obligation is not subject to any pledge, restriction, security interest or other
Lien or encumbrance other than those created by the Loan Documents; (vi) the
Customer is a US domiciled business; and (vii) the Borrowers are selling such
product upon the same terms as of the date of such borrowing under the Revolving
Loans as they were at the time the Receivable evidencing unpaid indebtedness for
such product arose. In addition, in the event that 20% or more of amounts due
from any Customer are more than 90 days past the invoice date, then the entire
amount of Receivables owing from such Customer shall be excluded from any
calculation of Eligible Accounts hereunder. The Lender may in its sole
discretion if so requested by the Borrowers consider allowing certain amounts
due from any such Customer and certain other Receivables of AMBI to be included
as Eligible Accounts.
Notwithstanding the foregoing, eligibility of any account receivable of the
Borrowers shall be determined by the Lender in its sole discretion.
"Eligible Inventory" shall mean the gross book value, as reflected on
the Borrower's books in accordance with generally accepted accounting
principles, of all goods held for sale or lease or furnished or to be furnished
under contracts of service by N21 which in the reasonable opinion of the Lender
are merchantable and fit for the purpose for which they were procured, located
either at (a) N21's chief executive offices in California or (b) Useful
Products, Inc. in Goodland, Indiana, as to which N21 has furnished reasonably
detailed information in a Borrower's Certificate and which at all times shall
continue to be acceptable to the Lender in all respects, excluding inventory
which is (i) stale, obsolete or unmerchantable, (ii) held on consignment, (iii)
located at vendor sites (unless the Lender has received a waiver from such
vendor in form and substance satisfactory to the Lender) or against which
vendors have a right of offset, (iv) not otherwise owned by N21, (v) of a type
no longer used by X00, (xx) has been returned by a customer or is damaged, (vii)
is subject to any Lien, (viii) not in the possession of N21, (ix) held by the
N21 on leased property with respect to which the Lender has not received a
waiver from the lessor and sublessor (if any) in form and substance satisfactory
to the Lender or (x) which is not located within the United States.
"Employee Plan" shall have the meaning set forth in Section 7.13(b)
hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Event of Default" shall have the meaning set forth in Article X
hereof.
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"Excess Cash Flow" shall mean Net Income plus Depreciation Expense plus
Amortization Expense minus the scheduled principal payments made under the Term
Loan minus the N21 Scheduled Contingency Payments minus one hundred percent
(100%) of the OLI Scheduled Contingency Payments for Fiscal Year 1999 minus
fifty percent (50%) of the OLI Scheduled Contingency Payments for Fiscal Year
2000 and Fiscal Year 2001 minus Permitted Capital Expenditures determined on a
consolidated basis. For purposes of the foregoing, Excess Cash Flow shall
include (i) thirty-five percent (35%) of the Net Cash Proceeds (including any
future performance-based or milestone payments) received from the sale of or
joint venture (or similar transaction) involving AMBI's Pharmaceutical Business
to any Person after the date hereof, and (ii) twenty-five percent (25%) of the
cash proceeds received by AMBI upon the issuance of newly- created additional
AMBI stock for an additional Two Million Dollars ($2,000,000) to American Home
Products, acting through its Whitehall-Robins Healthcare division (`AHP"), in
connection with AHP's rights to license certain Option Products and Additional
Products, as defined in and in accordance with that certain License, Option and
Marketing Agreement dated October 8, 1998 by and between AMBI and AHP.
Notwithstanding the foregoing, in the event that total indebtedness of the
Borrowers outstanding under the Revolving Loans and the Term Loan shall be less
than $1,500,000, the Lender may consider in its sole discretion the possible
amendment of the foregoing definition of Excess Cash Flow, if so requested in
writing by the Borrowers.
"FDA" shall mean the Food and Drug Administration.
"FTC" shall mean the Federal Trade Commission.
"FTC Order" shall mean that certain Decision and Order issued by the
FTC against N21, Selene and Xxxxxxx X. Xxxxxxx dated July 11, 1997 relating to
certain advertising and promotional claims made by N21 with respect to chromium
picolonate.
"GAAP" or "Generally Accepted Accounting Principles" shall mean, (a)
when used in Section 9.01 hereof, whether directly or indirectly through a
capitalized term used therein, principles which are (i) consistent with the
principles promulgated or adopted by the Financial Accounting Standards Board
and the Accounting Principles Board of the American Institute of Certified
Public Accountants, all as in effect for the most recently ended fiscal year of
the Borrowers, and (ii) to the extent consistent with such principles, the
accounting practices of the Borrowers reflected in the Financial Statements; and
(b) when used in general, other than as provided above, principles which are (i)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and the Accounting Principles Board of the American
Institute of Certified Public Accountants, as in effect from time to time, and
(ii) consistently applied with past financial statements of the Borrowers.
"General Partner" shall mean Selene Systems, Inc., a California
corporation.
"Indebtedness" of any Person shall mean (without duplication of
obligations falling into more than one of the following categories):
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(i) all obligations of such Person, contingent or otherwise, which in
accordance with GAAP should be shown on the balance sheet of such Person as a
liability or to which reference should be made by footnotes thereto, including,
without limitation: (a) all debt and similar monetary obligations, whether
direct or indirect; (b) all liabilities secured by any mortgage, pledge,
security interest, lien, charge or other encumbrance existing on property owned
or acquired subject thereto, whether or not the liability secured thereby shall
have been assumed; (c) all guarantees (direct or indirect), endorsements (other
than those as to checks and other similar negotiable instruments in the ordinary
course of business) and other contingent obligations whether direct or indirect
in respect of indebtedness of others; (d) all rental obligations of such Person
under leases required to be capitalized under GAAP; and (e) all obligations to
reimburse the issuer in respect of any letters of credit; and (ii) Indebtedness
of others secured by any lien upon property owned by such Person, whether or not
assumed.
"Income Tax Expense" shall mean, for any period, the aggregate of all
taxes paid or accrued based upon income and franchise tax expense of the
Borrowers and their Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP as of such date.
"Interest Expense" shall mean, for any period, the aggregate of all
Interest Expense paid or accrued on account of all Indebtedness of the Borrowers
and their Subsidiaries, determined on a consolidated basis in accordance with
GAAP as of such date.
"JBE" shall mean J. Bie Enterprises, Inc.
"Lender" shall have the meaning set forth in the preamble hereof.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien, charge or deposit arrangement or other arrangement or condition having the
practical effect of any of the foregoing and shall include the interest of a
vendor or lessor under any conditional sale agreement, capitalized lease or
other title retention agreement.
"Loan Documents" shall mean and include this Agreement, the Notes, the
Security Documents, the Borrowing Base Certificates and all other agreements,
instruments and documents now and hereafter executed and/or delivered pursuant
hereto or thereto.
"Loans" shall mean and include the Revolving Loans and the Term Loan.
"Maintenance Fee" shall have the meaning set forth in Section 2.07
hereof.
"Margin Stock" shall have the meaning provided in Regulations G and U
of the Board.
"Multiemployer Plan" shall have the meaning set forth in Section
7.13(d) hereof.
"N21 Scheduled Contingency Payments" shall mean any scheduled
contingency payments incurred in connection with the acquisition of N21 and made
in accordance with that certain Stock and Partnership Interest Purchase
Agreement dated August 11, 1997 among AMBI, N21, Selene Systems, JBE and the
individuals named therein.
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"Napa Documents" shall have the meaning set forth in Section 6.01(t)
hereof.
"NASDAQ" shall mean the NASDAQ Stock Market.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Net Amount of Eligible Accounts" for the Borrowers, shall mean, at any
time, the aggregate gross amount of outstanding Eligible Accounts of the
Borrower, at such time, less taxes or other amounts due to any third parties,
and less discounts, claims, credits, rebates, allowances, offsets, holdbacks or
other adjustments of any nature at any time issued, owing, granted, outstanding,
available or claimed thereunder.
"Net Amount of Eligible Inventory" for the Borrowers, shall mean the
aggregate gross amount of outstanding Eligible Inventory of the Borrower at such
time, less taxes or other amounts due to any third parties, and less discounts,
rebates, allowances, offsets, reserves for obsolete inventory, holdbacks or
other adjustments of any nature at any time issued, owing, granted, outstanding,
available or claimed thereunder.
"Net Cash Proceeds" with respect to the sale of or joint venture (or
similar transaction) involving AMBI's Pharmaceutical Business shall mean the
up-front cash proceeds received by AMBI upon any such sale plus any future
performance-based or milestone payments minus reasonable cash costs associated
with the severance of employees within the pharmaceutical division and
reasonable cash costs associated with the cancellation of AMBI's current
manufacturing contract with respect to its "Wipe-Out" product line.
"Net Income" shall mean, for any Person and for any period, the
consolidated net income or consolidated net (loss) of such Person for such
period, determined in accordance with GAAP as of such date.
"Notes" shall mean and include the Revolving Note and the Term Note.
"Notice of Borrowing" shall have the meaning set forth in Section
2.04(a) hereof.
"NSK" shall mean Azwell, Inc., formerly known as Nippon Shoji Kaisha,
Ltd.
"OLI Scheduled Contingency Payments" shall mean the scheduled
contingency payments made to the sellers of OLI in accordance with that certain
Agreement of Purchase and Sale of Assets dated January __, 1999 by and among
OLI, AMBI and the individuals named therein.
"Obligations" shall mean all obligations, liabilities and indebtedness
of the Borrowers and their Subsidiaries to the Lender, whether now existing or
hereafter created, joint or several, direct or indirect, arising out of contract
or tort (as limited by Section 11.12), due or not, whether created directly or
acquired by assignment or otherwise, including, without limitation, all
obligations, liabilities and indebtedness with respect to the principal of and
interest on the Loans and the payment or performance of all other obligations,
liabilities, and indebtedness of the
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Borrowers and their Subsidiaries to the Lender hereunder, under any one or more
of the other Loan Documents or with respect to the Loans, including, without
limitation, all fees, costs, expenses and indemnity obligations.
"OLI" shall mean Optimum Lifestyle, Inc., a California corporation.
"Oriola" shall mean Oriola oy, a Finnish corporation.
"OSHA" shall mean the Occupational Safety and Health Act, as amended
from time to time.
"Payment Office" shall mean the Lender's office located at 000 Xxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Pension Benefit Plan" shall have the meaning set forth in Section
7.13(a) hereof.
"Permitted Capital Expenditures" shall mean those capital expenditures
of the Borrower determined on a consolidated basis which are permitted under
Section 9.01E hereof.
"Person" shall mean any individual, partnership, firm, corporation,
association, joint venture, trust or other entity, or any government or
political subdivision or agency, department or instrumentality thereof.
"Pharmaceutical Business" shall mean the portion of AMBI's business
which relates to the sale of animal or human Nisin or Nisin-related products or
technology, including, without limitation, its "Wipe-Out" product line.
"Prepayment Premium" shall have the meaning set forth in Section 2.08
hereof.
"Prime Rate" shall mean the rate of interest which the Lender announces
from time to time in Boston as its "Prime Rate", as in effect from time to time.
"Quick Ratio" for the Borrowers shall mean all cash plus all accounts
due and payable to the Borrowers plus all inventory of the Borrowers divided by
the sum of the then outstanding advances made to the Borrowers under the
Revolving Loans plus outstanding accounts payable.
"Receivables" shall mean and include all accounts, contract rights,
instruments, documents, chattel paper, certificated and uncertificated
securities and general intangibles, whether secured or unsecured, now existing
or hereafter created, owned by the Borrowers, whether or not specifically sold
or assigned to the Lender, including, without limitation, all rights of the
Borrower, to payment for goods sold in the ordinary course of business and all
sums of money or other proceeds due thereon pursuant to transactions with
account debtors, except for that portion of the sums of money or other proceeds
due thereon that relate to sales, use or property taxes or amounts due to other
third parties in conjunction with such transactions,
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recorded on books of account in accordance with GAAP.
"Revolving Commitment Amount" shall mean $4,000,000, as such amount may
be reduced pursuant to Section 2.04 hereof.
"Revolving Loans" shall mean, collectively, the loans made or to be
made by the Lender to the Borrowers pursuant to Article II hereof; and
"Revolving Loan" shall mean any one of the Revolving Loans.
"Revolving Loan Termination Date" shall mean February 1, 2002, subject
to Section 2.06 hereof.
"Revolving Note" shall have the meaning set forth in Section 2.03
hereof.
"SEC" shall mean the Securities and Exchange Commission.
"Security Agreements" shall have the meaning set forth in Section 5.01
hereof.
"Security Documents" shall mean, collectively, the instruments and
documents required to be delivered pursuant to Sections 5.01, 5.02, 5.03, 5.04
and 6.01(k) and (l) hereof or pursuant to the instruments and documents referred
to in Sections 5.01, 5.02, 5.03, 5.04 and 6.01(k) and (l) hereof, including,
without limitation, the Security Agreements, the Collateral Assignment of
Licenses and the Pledge of Partnership Interests of N21.
"Selene Systems" shall mean Selene Systems, Inc., the sole general
partner of N21.
"Subordinated Indebtedness" shall mean any Indebtedness which is
subordinated to the Indebtedness to the Lender.
"Subsidiary" of any Person shall mean a corporation of which a majority
of the outstanding shares of stock of each class having ordinary voting power is
owned by such Person, by one or more Subsidiaries of such Person, or by such
Person and one or more of its Subsidiaries.
"Term Loan" shall mean the loan made or to be made by the Lender to the
Borrowers pursuant to Article III hereof.
"Term Loan Commitment Amount" shall have the meaning set forth in
Section 3.01 hereof.
"Term Loan Maturity Date" shall have the meaning set forth in Section
3.02 hereof.
"Term Note" shall have the meaning set forth in Section 3.02 hereof.
"USDA" shall mean the United States Department of Agriculture.
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"Year 2000 Problem" shall have the meaning set forth in Section 7.19
hereof.
Section 1.02. Accounting Terms and Determinations. Unless otherwise
defined or specified herein, all accounting terms shall be construed herein, all
accounting determinations hereunder shall be made, all financial statements
required to be delivered hereunder shall be prepared and all financial records
shall be maintained in accordance with GAAP and shall be determined on a
consolidated basis. All terms not specifically defined herein which are defined
in the Uniform Commercial Code as in effect in the Commonwealth of Massachusetts
shall have the same meanings herein as therein.
Section 1.03. Other Definitional Terms. (a) The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Article, section, schedule, exhibit and like references are
to this Agreement unless otherwise specified.
(b) Each reference herein to a particular Person shall include
a reference to such Person's successors and permitted assigns.
(c) Any defined term which relates to a document, instrument
or agreement shall include within its definition any amendments, modifications,
renewals, restatements, extensions, supplements or substitutions which may have
been heretofore or may be hereafter executed in accordance with the terms hereof
and thereof.
ARTICLE II
REVOLVING LOANS
Section 2.01. Commitment to Lend. The Lender agrees, on the terms and
conditions hereinafter set forth, to make Revolving Loans to the Borrowers from
time to time on any Business Day during the period from the Closing Date to, but
not including, the Revolving Loan Termination Date, as requested by the
Borrowers, in an aggregate amount not to exceed at any one time outstanding the
lesser of (i) the Revolving Commitment Amount and (ii) the Borrowing Base.
Subject to the limitations set forth herein, each Revolving Loan made by the
Lender shall be in a principal amount equal to the principal amount of the
Revolving Loan requested on each occasion. The Borrowers may borrow Revolving
Loans no more than twice per week. Each request for a Revolving Loan shall
constitute a representation by the Borrowers that the conditions set forth in
Section 6.01 (if such request is for the initial Revolving Loan) and Section
6.02 have been satisfied on and as of the date of such request. Within the
limits of the provisions of this Section 2.01, and provided that no Event of
Default has occurred and is continuing, the Borrowers may borrow, prepay
pursuant to Section 2.06 and reborrow under this Section 2.01.
Section 2.02. Termination of Commitment. The commitment under this
Article II will terminate in full at 11:00 a.m., Boston time, on the Revolving
Loan Termination Date, unless earlier terminated as provided in this Agreement.
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Section 2.03. The Revolving Note. The Revolving Loans shall be
evidenced by a promissory note of the Borrowers, in substantially the form of
Exhibit A hereto (the "Revolving Note"), dated the Closing Date and with
appropriate insertions. The Revolving Note shall be payable to the order of the
Lender in a principal amount equal to the Revolving Commitment Amount and shall
represent the obligation of the Borrowers to pay to the Bank the amount of the
Revolving Commitment Amount or, if less, the outstanding amount of the Revolving
Loans to the Borrowers, plus interest accrued thereon, as set forth below plus
any fees, costs of collection and other amounts due hereunder. The Lender will
xxxx on the Revolving Note, or enter in a record pertaining thereto, all
Revolving Loans made thereunder and repayments thereof, provided that the
failure by the Lender to make any such notation, or any error made in so doing,
shall not limit or otherwise affect the unconditional obligation of the Borrower
hereunder or under the Revolving Note to make payments of principal and interest
on the Revolving Note as and when due. The Revolving Note shall mature and be
due and payable (subject to earlier acceleration as herein provided) on the
Revolving Loan Termination Date.
Section 2.04. Making the Revolving Loans.
(a) Each borrowing of a Revolving Loan shall be made on
telephonic notice (immediately confirmed in writing) given to the Lender by the
Borrowers not later than 11:00 a.m., Boston time, on the Business Day of the
proposed borrowing. Each such notice of a borrowing (a "Notice of Borrowing")
shall be irrevocable and shall specify (A) the requested date of such borrowing
and (B) the amount of such borrowing, which shall be in an amount equal to
$10,000 or an integral multiple thereof. A Notice of Borrowing shall be deemed
to have been made upon presentation to the Lender of a check drawn on the
Borrowers' account(s) at the Lender (a "Check Request").
(b) Without in any way limiting the Borrowers' obligation to
confirm in writing any Notice of Borrowing, the Lender may act without liability
upon the basis of telephonic notice believed by the Lender in good faith to be
from the Borrowers prior to receipt of written confirmation thereof. In each
such case, the Borrowers hereby waive the right to dispute the Lender's record
of the terms of such telephonic Notice of Borrowing, except for the Lender's
manifest error.
(c) The Lender will make available each requested Revolving
Loan to the Borrower by crediting the proceeds thereof to the Borrowers'
operating account at the Payment Office on the date and in the amount set forth
in the applicable Notice of Borrowing or Check Request.
Section 2.05. Interest on Revolving Loans. Except as otherwise provided
in Section 4.03 hereof, the unpaid principal amount of Revolving Loans
outstanding from time to time shall bear interest from the Closing Date until
repayment thereof in full (whether by acceleration or otherwise) at a rate per
annum which shall be equal to the Prime Rate plus one percent (1%). Interest on
the Revolving Loans shall be payable monthly in arrears, as provided in the
Revolving Note.
Section 2.06. Repayments and Prepayments of Revolving Loans.
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(a) The Borrowers shall repay in full the Revolving Loans on
the Revolving Loan Termination Date. Such repayment shall be accompanied by all
accrued and unpaid interest on the Revolving Loans to the date of such repayment
and all accrued and unpaid fees and other amounts payable hereunder.
(b) The Borrowers shall prepay, from time to time, on demand
the amount by which the aggregate unpaid principal amount of the Revolving Loans
exceeds the limitations set forth in Section 2.01 hereof.
(c) The Borrowers shall have the right at any time and from
time to time, to prepay the Revolving Loans made to the Borrower hereunder, in
whole or in part, without premium or penalty, upon three (3) Business Days'
prior written or telephone notice to the Lender, subject to Section 2.08 hereof.
(d) The Borrowers shall, from time to time, cause all amounts
received by it in payment of or otherwise on account of Receivables to be
applied to the payment of the Revolving Loans of the Borrowers in accordance
with the procedures set forth in Article XI. Such amounts shall be credited by
the Lender to the Revolving Loans upon collection.
(e) Upon each repayment or prepayment of any principal of the
Revolving Loans made to the Borrowers pursuant to any of the provisions of this
Agreement or the Revolving Note, the Borrowers hereby absolutely and
unconditionally promise to pay to the Lender, and there shall become absolutely
due and payable on the date of each such repayment or prepayment, all of the
unpaid interest accrued to such date on the amount of the principal of the
Revolving Loans being repaid or prepaid on such date. Whenever any interest on
and any principal of the Revolving Loans are paid simultaneously hereunder, the
whole amount paid shall be applied first to interest then due and payable.
(f) Prior to the Revolving Loan Termination Date, the
Borrowers may reborrow amounts paid and prepaid under subsection 2.06(d),
subject to the terms and conditions hereof, including, without limitation, the
requirements of Section 2.01 hereof.
Section 2.07. Fees. In addition to all other amounts due hereunder, the
Borrowers hereby agree to pay to the Lender: (i) a non-refundable commitment fee
of Seventy-Five Thousand Dollars ($75,000), (ii) a fee of one half of one
percent (.50%) per annum on the unused portion of the Revolving Facility based
upon the difference between the Borrowing Base and the average outstanding
principal balance under the Loans (the "Maintenance Fee"), payable quarterly in
arrears, (iii) all out-of-pocket travel and related expenses incurred by the
Lender and its auditors in connection with the administration of the Loans, and
(iv) all legal fees incurred by counsel to the Lender in connection with the
Loans, together with any other customary fees associated with the Revolving
Facility.
Section 2.08 Prepayment Payment. Notwithstanding anything to the
contrary set forth herein, in the event that any prepayment of the Revolving
Loans and the Term Loan occurs, (i) on or prior to the first anniversary of the
date hereof, the Borrowers agree to pay to the Lender a
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prepayment fee in the amount of $100,000 in connection with the Revolving
Commitment Amount and the Term Loan Commitment Amount or (ii) after the first
anniversary of the date hereof and on or prior to the second anniversary of the
date hereof, the Company hereby agrees to pay to the Lender a prepayment fee in
the amount of $45,000 in connection with the Revolving Commitment Amount and the
Term Loan Commitment Amount (the "Prepayment Premium").
ARTICLE III
TERM LOAN
Section 3.01. Commitment to Lend. Subject to the terms and conditions
set forth in this Agreement, the Lender agrees to lend to the Borrowers on the
Closing Date the principal amount of $5,500,000 (the "Term Loan"). The Lender
shall advance the entire principal amount of the Term Loan (the "Term Loan
Commitment Amount") to the Borrowers on the Closing Date.
Section 3.02. The Term Note. The Term Loan shall be evidenced by an
amended and restated promissory note of the Borrowers, in substantially the form
of Exhibit B hereto (the "Term Note"), dated the Closing Date and with
appropriate insertions. The Term Note shall be payable to the order of the
Lender in a principal amount equal to the original principal amount of the Term
Loan and shall represent the obligation of the Borrowers to pay to the Lender at
such times as are provided herein the original principal amount of the Term Loan
to the Borrowers, plus interest accrued thereon, as set forth below. The Lender
will xxxx on the Term Note, or enter in a record pertaining thereto, the
original principal amount of the Term Loan made thereunder and repayments
thereof, provided that the failure by the Lender to make any such notation, or
any error made in so doing, shall not limit or otherwise affect the
unconditional obligation of the Borrowers hereunder or under the Term Note to
make payments of principal and interest on the Term Note as and when due. The
Term Note shall mature and be due and payable (subject to earlier acceleration
as herein provided) on February 1, 2002 (the "Term Loan Maturity Date").
Section 3.03. Interest on Term Loan. Except as otherwise provided in
Section 4.02 hereof, the unpaid principal amount of the Term Loan outstanding
from time to time shall bear interest from the Closing Date until repayment
thereof in full (whether by acceleration or otherwise) at a rate per annum which
shall equal the Prime Rate plus one percent (1%). Interest on the Term Loan
shall be payable monthly in arrears, as provided in the Term Note.
Section 3.04. Repayments and Prepayments of Term Loan.
(a) The Borrowers promise to pay to the Lender the entire
unpaid principal amount of the Term Loan in thirty-seven (37) consecutive
monthly installments as follows: (i) the first through the thirty-sixth monthly
installments shall be each in the amount of $125,000, and (ii) the
thirty-seventh and final installment which shall be due and payable on the Term
Loan Maturity Date shall be in an amount equal to the unpaid principal balance
of the Term Loan. Interest on the Term Loan shall be payable monthly in arrears
commencing February 1, 1999, on the Term Loan Maturity Date, and thereafter on
demand. Amounts repaid under the Term Loan
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may not be reborrowed.
(b) The Borrowers shall have the right, at any time and from
time to time, to prepay the Term Loan made to the Borrowers hereunder, in whole
or in part, without premium or penalty, upon three (3) Business Days' prior
written or telephonic notice to the Lender, subject to Section 2.08 hereof. Any
partial prepayment of the Term Loan shall be in an amount equal to $10,000 or an
integral multiple thereof and shall be applied to the remaining principal
installments of the Term Loan in the inverse order of maturity. No optional
prepayment of a portion of the Term Loan shall relieve the Borrower from its
obligation to make any other payment hereunder.
(c) Upon each repayment or prepayment of any principal of the
Term Loan made to the Borrowers pursuant to any of the provisions of this
Agreement or the Term Note, the Borrowers hereby absolutely and unconditionally
promise to pay to the Lender, and there shall become absolutely due and payable
on the date of each such repayment or prepayment, all of the unpaid interest
accrued to such date on the amount of the principal of the Term Loan being
repaid or prepaid on such date. Whenever any interest on and any principal of
the Term Loan are paid simultaneously hereunder, the whole amount paid shall be
applied first to interest then due and payable.
ARTICLE IV
DEFAULT INTEREST; LATE PAYMENT FEE;
PAYMENT FROM INSURANCE PROCEEDS;
CERTAIN GENERAL PROVISIONS
Section 4.01. Default Interest. During the occurrence or continuance of
any Event of Default, and regardless of whether the Lender has given written
notice of default to the Borrower, the outstanding amounts of Revolving Loans
and the Term Loan shall bear interest, payable on demand, to the extent
permitted by law, compounded monthly at an interest rate equal to four percent
(4%) above the Prime Rate. Notwithstanding the foregoing provisions of this
Section 4.01, it is the intention of the Borrowers and the Lender that under no
circumstances shall the Borrowers pay more than the maximum amount of interest
permitted under applicable law on Loans made hereunder.
Section 4.02. Payment from Insurance and Condemnation Proceeds. Until
payment in full of the Loans and the termination of this Agreement, upon receipt
by the Borrowers of (a) any payment of proceeds of any insurance required to be
maintained pursuant to Section 8.06 hereof on account of each separate loss,
damage or injury to any tangible property subject to the Lender's Lien or (b)
any payment of proceeds of any condemnation or eminent domain proceedings in
respect of any such property, the Borrowers shall pay all such proceeds to the
Lender to be applied in the Lender's sole discretion to the Obligations in such
order as the Lender shall choose in its sole discretion. Notwithstanding the
foregoing, in the event that the insurance or condemnation proceeds resulting
from any individual loss of the Borrowers are no greater than $50,000 and so
long as no Event of Default shall have occurred hereunder or under any of the
other Loan Documents, Lender agrees to apply such proceeds to reimburse the
Borrowers for the
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reasonable costs incurred in the restoration, repair or replacement of such
property, all on such terms as the Lender shall reasonably require.
Section 4.03. Place and Mode of Payments; Computations.
(a) Each payment made or caused to be made by the Borrowers to
the Lender under this Agreement or the Notes shall be made directly to the
Lender in lawful money of the United States of America at the Payment Office of
the Lender, not later than 2:00 p.m., Boston time, on the due date of such
payment, and in immediately available and freely transferable funds.
(b) If any sum would, but for the provisions of this
subsection 4.03(b), become due and payable to the Lender by the Borrowers under
this Agreement or the Notes on any day which is not a Business Day, then such
sum shall become due and payable on the Business Day next succeeding the day on
which such sum would otherwise have become due and payable hereunder or
thereunder, and interest payable to the Lender under this Agreement or the Notes
shall be adjusted by the Lender accordingly.
(c) All computations of interest and fees payable under this
Agreement or the Notes shall be made by the Lender on the basis of actual days
elapsed over a 360-day year. Each determination of an interest rate or fee by
the Lender pursuant to this Agreement or the Notes shall, except for manifest
error, be final, conclusive and binding for all purposes.
(d) The Lender will determine the Prime Rate in effect from
time to time. Any change in the Prime Rate shall, for all purposes of this
Agreement and the Notes, become effective on, and from the beginning of the day
on which such change shall first be announced by the Lender in accordance with
the Lender's customary banking practices.
(e) Each payment which shall become due and payable by the
Borrowers under this Agreement or the Notes shall be made without set-off and
free and clear of and without deduction or withholding of any kind.
Section 4.04. Use of Proceeds. The Borrowers agrees that the proceeds
of the Term Loan and the Initial Revolving Loans made on the Closing Date shall
be used by the Borrowers first to refinance the existing term loan in the
original principal amount of $2,800,000, then to finance the acquisition of OLI,
and then for general corporate purposes and working capital of the Borrowers.
ARTICLE V
SECURITY
Section 5.01. Amended and Restated Security Agreements. The Borrowers
shall duly execute and deliver to the Lender as security for its obligations
under the Notes, one or more amended and restated security agreements,
including, without limitation, such amended and restated intellectual property
security agreements relating to the patents, trademarks, copyrights and other
intellectual property rights of the Borrowers, including, without limitation,
those
15
relating to OLI, as the Lender shall deem necessary (collectively, the "Security
Agreements"), all consents of third parties necessary to permit the effective
granting of the liens created in such security agreements, together with
financing statements, pursuant to the Uniform Commercial Code and such other
security documents, including, but not limited to, such filing notices with the
U.S. Patent and Trademark Office, all in form and substance satisfactory to the
Lender, as may be required by the Lender to grant and/or to confirm the prior
grant to the Lender of a valid, perfected and enforceable first priority lien on
and security interest in (subject only to the Liens permitted under Section 9.03
hereof) all present and future property and assets of the Borrowers, including,
without limitation, those of OLI, of material value wherever located and whether
now owned or hereafter created or acquired, including, without limitation, all
accounts, Receivables, goods, inventory, documents, instruments, general
intangibles (including, without limitation, tax refunds, trademarks, copyrights
and patents (chooses in action), chattel paper, machinery, equipment (excluding
leased equipment), fixtures, real property (both owned and leased) and all
improvements thereon, and all proceeds and products of all of the foregoing.
Section 5.02. Negative Pledge of USDA License. The Borrowers shall
covenant and agree with the Lender that they shall not at any time, for as long
as any of the Loans are outstanding to the Lender, convey an assignment of the
license rights maintained by the Borrowers with the USDA (the "Negative
Pledge").
Section 5.03. Confirmation of Collateral Assignment of Stock and
Partnership Interests. The Borrowers shall cause to be executed and delivered to
the Lender a confirmation of pledge of all of the issued and outstanding general
and limited partnership interests of N21 and the capital stock of Selene and
JBE.
Section 5.04. Consents. The Borrowers shall cause to be executed and
delivered to the Lender any and all necessary consents and waivers of third
parties, including, without limitation, the landlord's waivers referred to in
Section 8.14, and all necessary consents and waivers and estoppels, in
connection with any other agreement or arrangement to which the Borrowers are a
party or by which they are bound, all as the Lender shall require, and in form
and substance satisfactory to the Lender. In connection with the foregoing, the
Borrowers acknowledge and agree that any inventory which would otherwise qualify
as Eligible Inventory but which is located with vendors shall not be deemed
eligible until such time as such vendors have executed and delivered to the
Lender a waiver and estoppel in form and substance satisfactory to the Lender.
Section 5.05. Filing and Recording. The Borrowers shall, at their sole
cost and expense, cause all instruments and documents given as evidence of
security pursuant to this Agreement to be duly recorded and/or filed or
otherwise perfected in all places necessary, in the opinion of the Lender, and
take such other actions as the Lender may request, in order to perfect, protect
and/or confirm the prior perfection of Liens or security interests of the Lender
in the property in which a Lien is granted pursuant to the documents referred to
in this Article V, together with all other property in which the Borrowers
and/or their Subsidiaries have now granted or will hereafter xxxxx x Xxxx in
favor of the Lender (except for property subject to a purchase money security
interest permitted under Section 9.03 below) (collectively, the "Collateral").
The Borrowers, to the extent permitted by law, hereby authorize the Lender to
file any financing statement or notice
16
with the U.S Patent and Trademark Office in respect of any Lien created pursuant
to such security agreements which may at any time be required or which, in the
opinion of the Lender, may at any time be desirable although the same may have
been executed only by the Lender or, at the option of the Lender, to sign such
financing statements and/or notices on behalf of the Borrowers and their
Subsidiaries and file the same, and the Borrowers hereby irrevocably designate
the Lender, its agents, representatives and designees as its agent and
attorney-in-fact for the Borrowers and their Subsidiaries for this purpose. In
the event that any re-recording or refiling thereof (or the filing of any
statements of continuation or assignment of any financing statement) is required
to protect and preserve such Lien or security interest, the Borrowers shall, at
the Borrowers' cost and expense, cause the same to be re-recorded and/or refiled
at the time and in the manner requested by the Lender.
Section 5.06. Additional Collateral. The Borrowers acknowledge that it
is their intention to provide the Lender with a Lien on all property of the
Borrowers (personal, real and mixed), whether now owned (or, as to real
property, leased) or hereafter acquired, subject only to Liens permitted under
Section 9.03 hereof. Without limiting the foregoing, in the event the Borrowers
acquire any assets or capital stock of any other Person (in accordance with
Article IX hereof), all assets and/or stock so acquired, including, without
limitation, all franchise rights, shall be assigned and transferred to the
Lender as collateral security for the Obligations. The Borrowers shall, from
time to time, promptly notify the Lender of the acquisition by the Borrowers of
any property in which the Lender does not then hold a Lien, or the creation or
existence of any such property, and the Borrowers shall, upon request by the
Lender, promptly execute and deliver to the Lender or cause to be executed and
delivered to the Lender such security agreements, pledge agreements, assignments
or other like agreements with respect to such property, together with such other
documents, certificates, opinions of counsel and the like as the Lender shall
request in connection therewith, in form and substance satisfactory to the
Lender, such that the Lender shall receive valid and perfected security
interests in and Liens on all such property.
ARTICLE VI
CONDITIONS TO BORROWINGS
Section 6.01. Conditions Precedent to Initial Loans. The obligation of
the Lender to make the Term Loan and the initial Revolving Loan hereunder on the
Closing Date shall be subject to the satisfaction, prior thereto or concurrently
therewith, of each of the following conditions precedent:
(a) Loan Documents, etc. Each of the Loan Documents shall have
been duly and properly authorized, executed and delivered by the
respective party or parties thereto and shall be in full force and
effect on and as of the Closing Date. Executed original counterparts of
each of the Loan Documents shall have been furnished to the Lender.
(b) Security Documents. The Security Agreements and the other
Security Documents and the appropriate financing statements, notices
and other documents in respect thereof and necessary to enable the
Lender to perfect or confirm the prior
17
perfection of its security interest thereunder, shall have been duly
executed by the Borrowers and/or their Subsidiaries, as the case may
be, and shall have been filed or recorded, as applicable, in all
appropriate filing and recording offices, registries or other locations
necessary for the perfection of the Lender's security interests
therein, and all other actions necessary for the perfection of such
security interests shall have been duly taken, such evidence to be in
form satisfactory to the Lender.
(c) Lien Searches; Perfection Certificates. The Lender shall
have received the results of lien searches in the name of the Borrowers
and OLI and to the extent applicable, their Subsidiaries, in form and
substance satisfactory to the Lender, in each respective jurisdiction
where the Borrowers and OLI and/or their Subsidiaries engage or engaged
in the five years prior to the Closing Date in business or owns or
owned, as the case may be, property or assets of any kind and such lien
searches shall reveal no Liens on the assets of the Borrowers and OLI
and/or their Subsidiaries other than Liens permitted under Section 9.03
hereof. The Borrowers shall have executed and delivered and shall have
caused their Subsidiaries to execute and deliver to the Lender
perfection certificates, in form and substance satisfactory to the
Lender evidencing the jurisdiction or jurisdictions in which the
Borrowers and OLI and their Subsidiaries have engaged in business or
own or have owned property or assets of any kind, as provided herein.
(d) Opinions of New York, California and General Counsel. The
Lender shall have received from each of (i) Xxxxx X. Xxxxxx, Esquire,
New York counsel to the Borrowers, (ii) Xxxxxxxx Xxxxx, general counsel
of the Borrowers, and (iii) Xxxxxx Godward LLP, California counsel to
OLI an opinion addressed to the Lender, dated the Closing Date, which
opinions shall be in form and substance satisfactory to the Lender.
(e) Proceedings; Receipt of Documents. All requisite corporate
action and proceedings on the part of the Borrowers and their
Subsidiaries in connection with the borrowings, the Loan Documents and
the Acquisition, as the case may be, shall be satisfactory in form and
substance to the Lender and its counsel, and the Lender and its counsel
shall have received all information and certified copies of all
documents, including, without limitation, records of requisite
corporate action and proceedings which the Lender or its counsel may
have requested in connection therewith, such documents where requested
by the Lender or its counsel to be certified by appropriate persons or
governmental authorities. All conditions to the effectiveness of any
documents required to be executed or delivered pursuant to this Article
VI, including, without limitation, the delivery of documents required
in connection therewith, shall be completed to the satisfaction of the
Lender at or prior to such execution or delivery.
(f) Organizational Documents. The Borrowers shall have
furnished and shall have caused their Subsidiaries and in the case of
N21, its General Partner, to furnish to the Lender certified copies of
all of the organizational documents, including charters and by-laws or
partnership documents, in form and substance satisfactory to the
Lender.
(g) Certificates of Legal Existence, Good Standing and Tax
Good Standing. The Borrowers shall have delivered and shall have caused
OLI and their respective Subsidiaries
18
to deliver, to the Lender certificates from the appropriate
governmental officials evidencing their respective legal existence and
to the extent applicable, corporate and tax good standing as of the
most recent practicable date, as applicable.
(h) Incumbency Certificates. The Lender shall have received
from the Borrowers and each of their Subsidiaries and in the case of
N21, of its General Partner, incumbency certificates, dated the Closing
Date, signed by a duly authorized officer of each of the Borrowers, and
giving the name and bearing a specimen signature of each individual who
shall be authorized: (i) to sign, in the name and on behalf of the
Borrowers or their Subsidiaries each of the Loan Documents to which it
is or is to become a party; (ii) to make application for Loans; and
(iii) to give notices and to take other action on the behalf of the
Borrowers and their Subsidiaries under the Loan Documents.
(i) Examination of Books. The Lender shall have had the
opportunity, if the Lender chooses, during normal business hours and
upon reasonable notice provided that no Event of Default has occurred,
to examine the books of account and other records and files of the
Borrowers, OLI and their Subsidiaries and to make copies thereof, and
the results of such examination shall have been satisfactory to the
Lender in all respects.
(j) Material Litigation. There shall be no pending or, to the
best knowledge of the Borrowers, OLI and their respective Subsidiaries,
threatened litigation with respect to the Borrowers and their
Subsidiaries before any court, arbitrator or governmental or
administrative body or agency which challenges or relates to the
transactions contemplated hereby, or which may reasonably be expected
to have a material adverse effect on the business, operations,
properties, assets, liabilities or condition, financial or otherwise,
of the Borrowers, OLI and/or their respective Subsidiaries.
(k) Negative Pledge. The Borrowers shall have covenanted and
agreed that they shall not grant any assignment of the license rights
with the USDA referred to in Section 5.02.
(l) Confirmation of Pledge of Stock and Partnership Interests.
The Lender shall have received a confirmation of pledge of the stock
and partnership interests referred to in Section 5.03.
(m) Insurance. The Lender shall have received evidence, in
form and substance satisfactory to the Lender, of the insurance
coverage required pursuant to Section 8.06 hereof.
(n) Borrowing Base Certificate. The Borrowers shall have duly
executed and delivered to the Lender a Borrowing Base Certificate dated
the Closing Date which after giving effect to the Acquisition,
including all estimated expenses and assuming normal payable and
accrued expense levels, shall demonstrate excess availability under the
Borrowing Base as of such date of no less than $3,000,000 and cash on
hand of no less than $2,800,000.
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(o) Aging of Receivables, etc. The Borrowers shall have
delivered to the Lender a current aging of Receivables, inventory
listing and a current aging of payables for each Borrower dated the
Closing Date.
(p) Disbursement Authorization Letter. The Borrowers shall
have executed and delivered to the Lender a disbursement authorization
letter with respect to the disbursement of the proceeds of the Loans
made on the Closing Date, in form and substance satisfactory to the
Lender.
(q) Payment of Fees and Disbursements. Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., counsel to the Lender, shall have
received payment in full for all legal fees charged, and all costs and
expenses incurred by such counsel through the Closing Date in
connection with the transactions contemplated under this Agreement and
the other Loan Documents.
(r) First Amendment to Warrant Purchase Agreement and Warrant.
AMBI shall have executed and delivered to the Lender a certain First
Amendment to Warrant Purchase Agreement and First Amendment to Warrant
(collectively, the "Warrants") and reserved adequate shares of its
Common Stock for issuance upon the exercise thereof.
(s) Consummation of the Acquisition. AMBI shall have provided
satisfactory evidence to the Lender of the consummation of the
Acquisition of OLI and the Borrowers shall have provided the Lender
with copies of all of the documents and instruments entered into in
connection with the Acquisition, including, but not limited to, the
Agreement of Purchase and Sale of Assets, the Xxxx of Sale,
Registration Rights and Restricted Resale Agreement, the Consulting
Agreements and Non-Competition Agreements with Xxxx Xxxxxxxx and Xxxxxx
Xxxxxxxx, and the Sales Representative Agreement with Xxxxxx X.
Xxxxx all in form and substance satisfactory to the Lender.
(t) Compliance with U.S. Law. The Borrowers shall have
furnished, to the Lender satisfactory evidence of the compliance of the
Acquisition, the financing contemplated hereby, the related grant of
the security interests described herein and the operation of the
business of the Borrowers, OLI and their Subsidiaries with all
applicable laws of the U.S., including, but not limited to, with
respect to all applicable regulatory requirements imposed by the SEC,
the FDA, the FTC, the NASD, NASDAQ or any other listing exchange, and
any other regulatory authorities, including, without limitation, those
imposed under that certain Final Judgment Pursuant to Stipulation
relating to Napa County Superior Court Action No. 26-03997 and the
related documents (collectively, the "Napa Documents").
(u) Monthly Financial Statements. The Borrowers shall have
furnished monthly financial statements from the commencement of the
Borrowers' current fiscal year to date, in form and substance
satisfactory to the Lender.
(v) Opening Balance Sheet. The Borrowers shall have furnished
a consolidated and consolidating opening balance sheet of the Borrowers
and their
20
Subsidiaries as of the Closing Date, in form and substance satisfactory
to the Lender.
(w) Solvency Certificate. The Lender shall have received from
the Borrowers an Officers' Certificate dated as of the Closing Date as
to the solvency of the Borrowers and their Subsidiaries following the
consummation of the Acquisition and the transactions contemplated
hereby, in form and substance satisfactory to the Lender.
(x) Assignment of Asset Purchase Agreement Rights. AMBI shall
have assigned to the Lender its rights and remedies under the Agreement
of Purchase and Sale of Assets relating to OLI, which assignment shall
have been consented to by the selling parties of OLI and shall be in
form and substance satisfactory to the Lender.
(y) Landlord's Waivers. The Lender shall have received from
the Borrowers such landlord's waivers and confirmations of such other
landlord waiver's previously provided to the Lender as the Lender may
request.
(z) Additional Waivers and Consents. The Lender shall have
received from the Borrower such additional waivers and consents of such
third parties, including, without limitation, Five Star Brands, Inc. of
Grand Rapids, Michigan and Useful Products, Inc. of Goodland, Indiana,
and such other vendors as may be reasonably required by the Lender with
respect to the Collateral.
Section 6.02. Conditions Precedent to All Loans. The obligation of the
Lender to make each Revolving Loan on and after the Closing Date shall be
subject to the following conditions precedent being met to the satisfaction of
the Lender in each instance:
(a) Legality of Transactions. No change in applicable law
shall have occurred as a consequence of which it shall have become and
continue to be unlawful (i) for the Lender to perform any of its
material agreements or obligations under any of the Loan Documents or
Subordination Agreements to which it is a party, or (ii) for the
Borrowers and their Subsidiaries to perform any of their material
agreements or obligations under any of the Loan Documents to which any
of them is a party or for any other party thereto to perform its
agreements and obligations thereunder.
(b) Correctness of Warranties. All representations and
warranties contained herein (except, for purposes of Loans made after
the Closing Date, those representations and warranties which
specifically relate solely to facts in existence or actions to be taken
on the Closing Date), or otherwise made in any Loan Document, any
Borrowing Base Certificate or any agreement, instrument, certificate,
document or other writing delivered to the Lender in connection
herewith or therewith, shall be true and correct with the same effect
as though such representations and warranties had been made on and as
of the date of such Loan.
(c) No Default or Event of Default. There shall exist no
Default or Event of Default.
21
(d) Notice of Borrowing; Borrowing Base Certificate. The
Lender shall have received from the Borrowers in form and substance
satisfactory to the Lender (i) a Notice of Borrowing as required by
subsection 2.04(a), and (ii) the most recent Borrowing Base Certificate
required to be delivered to the Lender in accordance with subsection
8.01(i); provided; that the Borrowers shall notify the Lender of any
material deviation from the value of the Borrowing Base as reflected in
such Borrowing Base Certificate and as in effect at the time of such
borrowing.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to make
the Loans as herein provided for, the Borrowers jointly and severally make the
following representations and warranties, all of which shall survive the
execution and delivery of this Agreement and the making of the Loans and shall,
except to the extent such representations and warranties relate solely to facts
in existence or actions to be taken on the Closing Date, be deemed to be
incorporated in each Borrowing Base Certificate and be deemed repeated and
confirmed with respect to each borrowing hereunder as of the time of such
borrowing.
Section 7.01. Corporate and Partnership Status. Each of AMBI and its
Subsidiaries is a duly organized and validly existing corporation in good
standing under the laws of its respective jurisdiction of incorporation, with
perpetual corporate existence, and has the corporate power and authority to own
its respective properties and to transact the business in which it is engaged or
presently proposes to engage. N21 is a duly organized and validly existing
limited partnership under the laws of its jurisdiction of incorporation, with
perpetual partnership existence and has the partnership power and authority to
own its respective properties and to transact the business in which it is
engaged or presently proposes to engage. Each of the Borrowers and their
Subsidiaries is duly qualified as a foreign corporation or partnership and in
good standing in all jurisdictions where the failure to so qualify would have a
material adverse effect on the operations, properties, business or financial
condition of the Borrowers or their Subsidiaries.
Section 7.02. Corporate and Partnership Power and Authority. Each of
the Borrowers has the corporate or partnership power and authority to borrow and
to execute, deliver and carry out the terms and provisions of this Agreement,
the other Loan Documents executed and delivered by such parties and the
Borrowers and their Subsidiaries have taken or caused to be taken all necessary
corporate or partnership action (including, without limitation, the obtaining of
any consent of any stockholder or partner of such Borrowers and their
Subsidiaries required by law or their respective charters or by-laws or
partnership agreement), to authorize the execution, delivery and performance of
this Agreement, the borrowings hereunder, and the execution, delivery and
performance of the other Loan Documents executed and/or delivered by it. This
Agreement and each of the other Loan Documents executed and delivered by the
Borrowers and their Subsidiaries constitutes the legal, valid and binding
obligations of the Borrowers and their Subsidiaries and are enforceable in
accordance with their respective terms.
22
Section 7.03. No Violation of Agreements. Neither the Borrowers nor
their Subsidiaries are in material default under any indenture, mortgage, deed
of trust, agreement or other instrument to which any of them is a party or by
which they or any of their properties may be bound. Neither the execution and
delivery of this Agreement, or any of the other Loan Documents by the Borrowers
or any Subsidiary nor the consummation of the transactions herein and therein
contemplated, nor compliance with the provisions hereof or thereof will violate
any provision of the charter or by-laws of the Borrowers or any Subsidiary, or
any law, statute or regulation, or any order or decree of any court or
governmental instrumentality, or will conflict with, or result in the breach of,
or constitute a material default under, any indenture, mortgage, deed of trust,
agreement or other instrument to which the Borrowers or their Subsidiaries are a
party or by which they or any of their properties is bound, or, except as
contemplated under this Agreement, result in the creation or imposition of any
Lien upon any property of the Borrowers or their Subsidiaries.
Section 7.04. No Burdensome Agreements. Neither the Borrowers nor their
Subsidiaries is a party to any agreement or instrument or subject to any
restriction (including any restriction set forth in its charter or by-laws)
materially and adversely affecting their operations, properties, business or
condition, financial or otherwise.
Section 7.05. No Litigation. Except as set forth in Schedule 7.05,
there are no actions, suits or proceedings pending (nor, to the best knowledge
of the Borrowers and their Subsidiaries, is there any basis therefor) or, to the
best knowledge of the Borrowers and their Subsidiaries, threatened against or
affecting the Borrowers, OLI or any Subsidiary before any court, arbitrator or
governmental or administrative body or agency which challenges the validity or
propriety of the transactions contemplated under this Agreement or the other
Loan Documents or which is pending or threatened as of the date of this
Agreement and which is reasonably likely to result in any material adverse
change in the operations, properties, business, assets, liabilities or
condition, financial or otherwise, of the Borrowers, OLI or any Subsidiary. As
of the date of this Agreement, neither the Borrowers, OLI nor any Subsidiary is
a defendant in any action for money damages brought in any court, and no
unsatisfied judgment in connection with any such action has been docketed
against the Borrowers, OLI or any Subsidiary. The Borrowers nor OLI are in
default under any applicable statute, rule, order, decree or regulation of any
court, arbitrator or governmental body or agency having jurisdiction over the
Borrowers, OLI or any Subsidiary which default is reasonably likely to result in
a material adverse effect on the Borrowers, OLI or any Subsidiary or any of
their assets or properties.
Section 7.06. Financial Condition. AMBI has delivered to the Lender the
audited consolidated and consolidating balance sheet of AMBI and its
Subsidiaries as at June 30, 1998 and June 30, 1997 and the unaudited balance
sheet of OLI as at November 30, 1998 and December 31, 1997, and the related
statements of income, stockholders' equity and changes in cash flows for the
fiscal years then ended. Such financial statements described above have been
prepared in accordance with generally accepted accounting principles, are all
true and correct and present fairly the financial condition of the Borrowers and
its Subsidiaries as of the dates thereof. The Borrowers, OLI and their
Subsidiaries had no direct or contingent liabilities as of such dates which are
required to be reflected or reserved for in such financial statements or the
footnotes thereto which are not so reflected or reserved for therein. There has
been no material adverse
23
change in the assets, liabilities, properties, business and condition, financial
or otherwise, of the Borrowers, OLI and their Subsidiaries since June 30, 1998.
The Borrowers represent that as of the date hereof, the remaining outstanding
principal balance under that certain Promissory Note dated March 18, 1996 issued
by AMBI in favor of NSK does not exceed [$2,000,000].
Section 7.07. Good Title to Properties. The Borrowers, OLI and their
Subsidiaries have good and marketable title to their respective properties and
assets, including, without limitation, the Collateral, subject to no Liens of
any kind, except such as are permitted under Section 9.03 hereof.
Section 7.08. Trademarks, Patents, etc. The Borrowers, OLI and their
Subsidiaries possess all the trademarks, trade names, copyrights, patents,
licenses, or rights in any thereof, adequate for the conduct of their respective
businesses as now conducted and presently proposed to be conducted, without any
conflict known to the Borrowers or such Subsidiaries with the rights or, as of
the date hereof, claimed rights of others.
Section 7.09. Tax Liability. The Borrowers, OLI and their Subsidiaries
have filed all tax returns which are required to be filed and paid all taxes
prior to delinquency which have become due pursuant to such returns or pursuant
to any assessment received by them.
Section 7.10. Governmental Action. No action of, or filing with, any
governmental or public body or authority (other than normal reporting
requirements or filings under the provisions of Article VI) is required to
authorize, or is otherwise required in connection with, the execution, delivery
and performance of this Agreement and the other Loan Documents.
Section 7.11. Disclosure. Neither the Schedules nor Exhibits hereto,
nor any certificate, statement, report or other document furnished to the Lender
by or on behalf of the Borrowers and their Subsidiaries in connection herewith
or in connection with any transaction contemplated hereby, nor this Agreement,
nor any other Loan Document, contains, at the time furnished, any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements contained therein not misleading.
Section 7.12. Regulations G, U and X. Neither the Borrowers, OLI nor
any Subsidiary own any "margin stock" as such term is defined in Regulations G
and U, as amended, of the Board. The proceeds of the borrowings made pursuant to
Articles II, III, IV and V hereof will be used by the Borrowers only for the
purposes set forth in Section 4.04 hereof. None of such proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
stock or for the purpose of reducing or retiring any Indebtedness which was
originally incurred to purchase or carry margin stock or for any other purpose
which might constitute any of the Loans under this Agreement a "purpose credit"
within the meaning of said Regulations G and U or Regulation X of the Board.
Neither the Borrowers nor any Subsidiary have taken and none of them will take
any action which would be reasonably likely to cause this Agreement or any of
the other Loan Documents to violate any regulation of the Board or any state
securities laws, in each case as in effect on the date hereof, and neither the
Borrowers nor any Subsidiary have a class of securities registered under the
Securities Exchange Act of 1934.
24
Section 7.13. Employee Benefit Plans. (a) No "reportable event" (as
defined in Section 4043(b) of ERISA) (whether or not waived) has occurred or is
continuing with respect to any "employee pension benefit plan" (as defined in
Section 3(2) of ERISA) maintained for employees of the Borrowers, OLI or their
Subsidiaries (a "Pension Benefit Plan").
(b) No prohibited transaction (within the meaning of Section
406 of ERISA) has occurred with respect to any Pension Benefit Plan or any other
"employee benefit plan" (as defined in Section 3(3) of ERISA) (together with a
Pension Benefit Plan, an "Employee Plan") maintained for employees of the
Borrowers or their Subsidiaries and covered by Part 4 of the Subtitle B of Title
I of ERISA.
(c) With respect to each Pension Benefit Plan, the amount for
which the Borrowers, OLI or their Subsidiaries would be liable pursuant to the
provisions of Sections 4062, 4063 or 4064 of ERISA would be zero if such Plans
had terminated as of the Closing Date.
(d) Neither the Borrowers, OLI nor their Subsidiaries are now,
nor have been during the preceding five years, a contributing employer to a
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) (a
"Multiemployer Plan"). Neither the Borrowers, OLI nor their Subsidiaries have
(i) ceased operations at a facility so as to become subject to the provisions of
Section 4062(f) of ERISA, (ii) withdrawn as a substantial employer so as to
become subject to the provisions of Section 4063 of ERISA, (iii) ceased making
contributions on or before the Closing Date to any Pension Benefit Plan subject
to the provisions of Section 4064(a) of ERISA to which the Borrowers, OLI and
their Subsidiaries made contributions during any of the five years prior to the
Closing Date, (iv) incurred or caused to occur a "complete withdrawal" (within
the meaning of Section 4203 of ERISA) or a "partial withdrawal" (within the
meaning of Section 4205 of ERISA) from a Multiemployer Plan that is a Pension
Benefit Plan so as to incur withdrawal liability under Section 4201 of ERISA
(without regard to subsequent reduction or waiver of such liability under
Sections 4207 or 4208 of ERISA), or (v) been a party to any transaction or
agreement under which the provisions of Section 4204 of ERISA were applicable.
(e) No notice of intent to terminate a Pension Benefit Plan
has been filed, nor has any Plan been terminated, pursuant to the provisions of
Section 4041(f) of ERISA.
(f) The PBGC has not instituted proceedings to terminate (or
appoint a trustee to administer) a Pension Benefit Plan and no event has
occurred or condition exists which might constitute grounds under the provisions
of Section 4042 of ERISA for the termination of (or the appointment of a trustee
to administer) any such Plan.
(g) With respect to each Pension Benefit Plan that is subject
to the provisions of Title I, Subtitle B, Part 3 of ERISA, the funding method
used in connection with such Plan is acceptable under ERISA, and the actuarial
assumptions used in connection with funding such Pension Benefit Plan are, in
the aggregate, reasonable. The assets of each such Pension Benefit Plan (other
than the Multiemployer Plans) are at least equal to the present value of the
greater of (i) accrued benefits (both vested and non-vested) under such Plan, or
(ii) "benefit commitments" (within the meaning of Section 4001(a)(16) of ERISA)
under such Plan, in each case as of the latest actuarial valuation date for such
Plan (determined in accordance with the same actuarial
25
assumptions and methods as those used by the Borrowers', OLI's and their
Subsidiaries actuaries in their valuation of such Plan as of such valuation
date). No such Pension Benefit Plan has incurred any "accumulated funding
deficiency" (as defined in Section 412 of the Code), whether or not waived.
(h) There are no actions, suits or claims pending (other than
routine claims for benefits) or, to the knowledge of the Borrowers, OLI or their
Subsidiaries, which could reasonably be expected to be asserted, against any
Employee Plan or the assets of any such plan. No civil or criminal action
brought pursuant to the provisions of Title I, Subtitle B, Part 5 of ERISA is
pending or, to the best of the Borrowers' knowledge, threatened against any
fiduciary of any Employee Plan. None of the Employee Plans or any fiduciary
thereof has been the direct or indirect subject of an audit, investigation or
examination by any governmental or quasi-governmental agency other than routine
audits or examinations.
(i) All of the Employee Plans comply currently, and have
complied in the past, both as to form and operation, with their terms and with
the provisions of ERISA and the Code, and all other applicable laws, rules and
regulations (including, but not limited to, each of the (1) Tax Equity and
Fiscal Responsibility Act of 1982, (2) Deficit Reduction Act of 1984, (3)
Retirement Equity Act of 1984, and (4) Consolidated Omnibus Budget
Reconciliation Act of 1985); all necessary governmental approvals for the
Employee Plans have been obtained and a favorable determination as to the
qualification under Section 401(a) of the Code of each of the Pension Benefit
Plans and each amendment thereto has been made by the Internal Revenue Service
and a recognition of exemption from federal income taxation under Section 501(a)
of the Code of each of the funded welfare benefit plans (within the meaning of
Section 3(1) of ERISA) has been made by the Internal Revenue Service, and
nothing has occurred since the date of each such determination or recognition
letter that would adversely affect such qualification.
(j) For purposes of all Sections of this Agreement dealing
with ERISA, the term "Borrowers, OLI and their Subsidiaries" shall include each
trade or business (whether or not incorporated) which together with the
Borrowers, OLI and their Subsidiaries would be treated as a single employer
under the provisions of Title I or IV of ERISA.
Section 7.14. Subsidiaries. Except as set forth on Schedule 7.14, AMBI
has no Subsidiaries. N21 has no subsidiaries.
Section 7.15. Permits, etc. Each of the Borrowers and their
Subsidiaries possesses all licenses, approvals and consents of Federal, state
and local governments and regulatory authorities as required to conduct properly
its business.
Section 7.16. Solvency. Each of the Borrowers and its Subsidiaries,
both before and after giving effect to the transactions contemplated hereby, are
solvent, and has assets with a fair salable value in excess of the amount
required to pay its probable liabilities on existing debts as they become
absolute and matured. Each of the Borrowers and its Subsidiaries has, and will
have, access to adequate capital for the conduct of its business and the ability
to pay its debts from time to time incurred in connection therewith as such
debts mature.
26
Section 7.17. Environmental Matters. (a) Except as set forth on
Schedule 7.17, neither the Borrowers, OLI nor their Subsidiaries has ever owned,
occupied or operated a site or vessel on which any hazardous material or oil was
or is stored without compliance with all statutes, regulations, ordinances,
directives and orders of every federal, state, municipal and other governmental
authority with jurisdiction relative thereto, or disposed of, transported, or
arranged for the transport of any hazardous material or oil without compliance
with all such statutes, regulations, ordinances, directives and orders, or
caused or been legally responsible for any release of any hazardous material or
oil; (b) the Borrowers, OLI and their Subsidiaries shall not dispose of any
hazardous material or oil on any site or vessel owned, occupied or operated by
the Borrowers, OLI and their Subsidiaries, nor store on any site or vessel
owned, occupied or operated by the Borrowers, OLI and their Subsidiaries, nor
transport or arrange for the transport of, any hazardous material or oil except
if such storage or transport is in the ordinary course of the Borrowers', OLI's
and Subsidiaries' business, and is in compliance with all such statutes,
regulations, ordinances, directives and orders and shall take all such action
(including, without limitation, engineering tests) as Lender may from time to
time reasonably require to confirm that there has been no release of any
hazardous material or oil on any site or vessel owned, occupied or operated by
the Borrower, OLI and their Subsidiaries; (c) the Borrowers shall indemnify, and
shall cause their Subsidiaries to indemnify, and hold the Lender harmless from
all loss, cost or expense (including reasonable attorneys' fees and expenses)
suffered by the Lender as a result of any claim brought against the Lender by
any governmental agency or authority or any other person on account of the
release of hazardous materials or oil on or from any site or vessel owned,
occupied or operated by the Borrowers, OLI or their Subsidiaries, or the failure
by the Borrowers, OLI or their Subsidiaries to comply with any environmental,
health, safety or sanitation law, code, ordinance, rule or regulation (each of
which may be defended, compromised, settled or pursued by the Lender in its
reasonable judgment with counsel of the Lender's selection, but at the expense
of the Borrowers, OLI or their Subsidiaries). Such indemnification shall survive
payment of the Obligations. As used herein the terms "site," "vessel" and
"hazardous material" shall have the meanings given to such terms in Chapter 21E
of the General Laws of Massachusetts.
Section 7.18. Ownership of the Borrowers. [To be updated] The
authorized capital stock of AMBI consists of 65,000,000 shares of Common Stock,
$.005 par value per share, and 5,000,000 shares of Preferred Stock, $.01 par
value, 100,000 shares have been designated Series D Preferred Stock, 1,500
shares have been designated Series E Preferred Stock, and 575 shares have been
designated Series F Preferred Stock and 5,000 shares have been designated Series
G Preferred Stock. As of the date hereof, 27,397,493 shares of Common Stock, 0
shares of Series D Preferred Stock, 1,500 shares of Series E Preferred Stock,
and 0 shares of Series G Preferred Stock have been issued on a fully diluted
basis. In addition, 5,500,000 shares of Common Stock are reserved for issuance
pursuant to AMBI's stock option and purchase plans and 2,500,000 shares of
Common Stock are issuable and reserved for issuance pursuant to securities
(other than the Preferred Shares and the shares of Series F Stock) exercisable
or exchangeable for, or convertible into, shares of Common Stock and 633,000
shares of Common Stock are reserved for issuance upon conversion of the Series F
Preferred Stock and 1,500,000 shares of Common Stock are reserved for payment to
NSK. The authorized capital stock of Selene consists of 75,000 shares of Common
Stock, no par value, of which as of the date hereof, 50,000 shares have been
issued on a fully diluted basis. The authorized capital stock of JBE consists of
100 shares of
27
Common Stock, no par value per share, of which as of the date hereof, 100 shares
have been issued on a fully diluted basis. All of the foregoing shares have been
duly and properly issued and are outstanding and are fully paid-up and
non-assessable. N21 is wholly owned by AMBI. All of the partnership interests of
N21 and the stock of Selene and JBE are owned and held free and clear of all
mortgages, liens, pledges, charges, security interests and other encumbrances of
every kind whatever.
(b) Except as disclosed on Schedule 7.18, there are no
outstanding commitments, options, warrants, calls or other agreements or
obligations (whether written or oral) binding on the Borrowers, Selene and/or
JBE which require or could require the Borrowers, Selene and/or JBE to issue,
sell, grant, transfer, assign, mortgage, pledge or otherwise dispose of (i) any
shares of any class in the capital of the Borrowers, (ii) any securities
exchangeable for or convertible into or carrying any rights to acquire any
shares of any class in the capital of the Borrowers, Selene and/or JBE or (iii)
any options, warrants or any other rights to acquire any shares of any class in
the capital of the Borrowers, Selene and/or JBE.
(c) Except as described on Schedule 7.18, no shares of any
class in the capital of the Borrowers, Selene and/or JBE are subject to (i) any
restrictions on transfer pursuant to any charter or incorporation documents or
by-laws, or (ii) any shareholder agreements, voting agreements, voting trusts,
trust agreements, trust deeds, irrevocable proxies or any other similar
agreements or instruments (whether written or oral).
Section 7.19 Year 2000 Compliance. The Borrowers have made a
comprehensive review and assessment of their computers and similar devices,
including embedded microchips in non-computing devices (collectively, "Computing
Devices"), and have made inquiry of their material suppliers, vendors and
customers with respect to their Computing Devices concerning the possibility
that such Computing Devices may not properly perform date-sensitive functions on
and after December 31, 1999 or with respect to dates occurring on and after
December 31, 1999 (the "Year 2000 Problem"). Based on such review and
assessment, and upon such inquiries, the Borrowers believe that either (i) the
Year 2000 Problem will not affect such Computing Devices, or (ii) the Year 2000
Problem, including any costs of remediation, could not reasonably be expected to
result in an Event of Default or a material adverse change in the Borrrower's
business, operations, financial condition or prospects. The Borrowers have
developed feasible contingency plans adequate to ensure uninterrupted and
unimpaired business operation in the event of failure of its own or a third
party's Computing Devices due to the Year 2000 Problem, as well as in the event
of a general failure of or interruption in their communications and delivery
infrastructure.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until the Obligations are paid and satisfied in full and this Agreement
has been terminated, the Borrowers covenant and agree that they will:
Section 8.01. Financial Statements and Other Information. Furnish to
the Lender:
28
(a) as soon as practicable, and in any event within 90 days
after the close of each fiscal year of the Borrowers thereafter, an audited
consolidated and consolidating balance sheet of the Borrowers and their
Subsidiaries, and a related audited consolidated and consolidating statement of
income and an audited consolidated and consolidating statement of cash flow of
the Borrowers, as at the end of and for the fiscal year just closed, setting
forth the corresponding figures of the previous fiscal year in comparative form,
all in reasonable detail and certified without any qualification or exception by
KPMG Peat Marwick, together with appropriate notes thereto, provided that within
75 days of the date hereof, the Borrowers shall furnish to the Lender audited
statements of income and cash flows of N21 for the prior three fiscal years all
in reasonable detail and certified, without any qualification or exception by
KPMG Peat Marwick, in accordance with the terms above;
(b) as soon as practicable, and in any event within 20 days
after the close of each calendar month, an unaudited consolidated and
consolidating balance sheet of the Borrowers and their Subsidiaries and a
related unaudited consolidated and consolidating statement of income and an
unaudited consolidated and consolidating statement of cash flows of the
Borrowers and their Subsidiaries, (i) as at the end of and for the period
commencing at the end of the previous month and ending with such month just
closed, and (ii) as at the end of and for the period commencing at the end of
the immediately preceding fiscal year and ending with such month just closed, in
each case prepared by the management of the Borrowers, all in reasonable detail
and certified by the Chairman, chief executive or financial officer(s) of the
Borrowers to be true and correct and fairly present the financial position of
the Borrowers and their Subsidiaries on such date and for such period, subject
to normal recurring year-end audit adjustments and the addition of year-end
notes and schedules and to have been prepared in accordance with generally
accepted accounting principles, such unaudited financial statements to set forth
in comparative form, the corresponding figures if any for the appropriate period
of the preceding fiscal year;
(c) promptly upon receipt thereof, copies of all final
financial reports (including, without limitation, management letters), if any,
submitted to the Borrowers and their Subsidiaries by their auditors, in
connection with each annual or interim audit or review of their books by such
auditors;
(d) promptly upon the issuance thereof, copies of all reports
to the Securities and Exchange Commission, NASDAQ or any other securities
exchange, including, but not limited to, Form 10-Q's, Form 10-K's and Form 8-K's
and any registration statements, and all reports, notices or statements sent by
the Borrowers or their Subsidiaries to the holders of any Indebtedness for
borrowed money of the Borrowers or their Subsidiaries or to the trustee under
any indenture under which the same is issued;
(e) (i) concurrently with the delivery of the financial
statements required to be furnished pursuant to subsection 8.01(a) hereof, and
those of the financial statements required to be furnished pursuant to
subsection 8.01(b) hereof, the Borrowing Base Certificate delivered pursuant to
subsection (i) hereof;
(f) promptly upon the commencement thereof, written notice of
any claim,
29
litigation, including arbitrations, and of any proceedings before any
governmental agency, in each case to which either of the Borrowers or any
Subsidiary is a party or by which either the Borrowers or any Subsidiary or
their respective properties may be bound, which would, if successful, materially
and adversely affect either of the Borrowers or any Subsidiary or where the
amount involved exceeds $25,000;
(g) with reasonable promptness, such other information
respecting the business, operations and financial condition of the Borrowers and
their Subsidiaries as the Lender may from time to time reasonably request;
(h) immediately upon becoming aware of any development or
other information which is reasonably likely to materially and adversely affect
the properties, business, prospects, profits or condition (financial or
otherwise) of the Borrowers or their Subsidiaries or the ability of the
Borrowers or their Subsidiaries to perform or comply with the Loan Documents or
to pay any of the Obligations, telephonic or telecopy notice specifying the
nature of such development or information and such anticipated effect;
(i) at the time of the first borrowing hereunder and monthly
thereafter by no later than the twentieth (20th) day of each month, a
certificate (a "Borrowing Base Certificate") dated such date substantially in
the form of Exhibit C hereto, such certificate to be signed by the chief
executive officer, chief financial officer or another duly authorized officer(s)
of the Borrowers, which shall include an updated inventory list and a then
current aging of Receivables of the Borrowers by date and upon request by the
Lender, a credit history thereof;
(j) from time to time when available and in any event at least
one month prior to the beginning of each fiscal year of the Borrowers and their
Subsidiaries, a summary of business plans and financial operating projections
and borrowing bases for such fiscal year (including monthly balance sheets,
statements of income and statements of cash flow) for the Borrowers and their
Subsidiaries in form and detail satisfactory to the Lender;
(k) monthly, an aging of accounts payable and an analysis by
date in form and detail satisfactory to the Lender;
(l) monthly, by no later than the twentieth (20th) day of each
month, a certificate signed by the chief executive officer or chief financial
officer(s) of the Borrowers evidencing whether the Borrowers are then in
compliance with the financial covenants set forth in Section 9.01 hereof (the
"Compliance Certificate");
(m) at such times as the Lender may request, information
adequate to identify Receivables and the account debtors relating thereto and to
identify and value inventory in form and substance as may be requested by the
Lender, and, if the Lender so requests after the occurrence of an Event of
Default, pledges of inventory or assignments of Receivables in form and
substance satisfactory to the Lender which pledges and assignments shall give
the Lender full power to collect, compromise or otherwise deal with the assigned
Receivables and pledged inventory as the sole owner thereof; and
30
All nonpublic information obtained by the Lender pursuant to this
Section 8.01 shall be treated as confidential by the Lender and its internal and
external auditors and legal advisors. Notwithstanding the above, the Lender is
hereby authorized to deliver a copy of any financial statement or any other
information relating to the business, operations or financial condition of the
Borrowers and their Subsidiaries which may be furnished to it hereunder or
otherwise, to any court, regulatory body or agency having jurisdiction over the
Lender or to any Person which shall, or shall have any right or obligation to,
succeed to all or any part of the Lender's interest in any of the Loans, this
Agreement, the other Loan Documents or any Collateral.
Section 8.02. Corporate Existence, etc. Preserve and maintain, and
cause their Subsidiaries to preserve and maintain, their corporate existence,
rights and franchises.
Section 8.03. Compliance with Laws, etc. Comply, and cause their
Subsidiaries to comply, with all applicable laws, rules, regulations and orders,
and duly observe, all valid requirements of governmental authorities (including,
without limitation, ERISA and the rules and regulations promulgated thereunder),
and all applicable statutes, rules, regulations and orders relating to
environmental protection and to public and employee health and safety
(including, without limitation, OSHA and the rules and regulations promulgated
thereunder).
Section 8.04. Payment of Taxes and Claims, etc. Pay, and cause their
Subsidiaries to pay, (i) all taxes, assessments and governmental charges imposed
upon it or upon their property and (ii) all material claims (including, without
limitation, claims for labor, materials, supplies or services) which might, if
unpaid, become a Lien upon their property prior to becoming delinquent;
provided, however, that any such tax, assessment, charge or claim need not be
paid if the validity or amount thereof is being contested in good faith by
appropriate proceedings and if the Borrowers and their Subsidiaries have
established adequate reserves with respect thereto; and provided, further that
the Borrowers and their Subsidiaries shall pay all such taxes, assessments,
charges and claims forthwith upon the attachment of any Lien to the Collateral
or any portion thereof, which Lien shall not have been released within five days
of its attachment.
Section 8.05. Keeping of Books, Visitation, Inspection, etc.
(a) Keep, and cause their Subsidiaries to keep, proper books
of record and account, containing complete and accurate entries of all financial
and business transactions and such other information as may be necessary to
prepare the financial statements described in Section 8.01 hereof.
(b) Permit any representative of the Lender to visit and
inspect any of the Borrowers' property and that of their Subsidiaries, to
examine their books and records and to make copies and take extracts therefrom,
and to discuss their affairs, finances and accounts with its officers, all at
such times and as often as the Lender may request during normal business hours
upon reasonable prior notice to the Borrowers and their Subsidiaries provided no
Event of Default has occurred.
Section 8.06. Insurance. (a) (i) Keep, and cause their Subsidiaries to
keep, all of their properties adequately insured, at all times, with insurance
carriers satisfactory to the Lender, in
31
amounts and pursuant to insurance policies reasonably acceptable to the Lender,
against loss or damage by fire and other hazards, (ii) maintain, and cause their
Subsidiaries to maintain, adequate insurance, at all times with insurance
carriers reasonably satisfactory to the Lender, in amounts and pursuant to
insurance policies reasonably acceptable to the Lender against liability on
account of damage to persons and property and under all applicable workers'
compensation laws, and (iii) maintain, and cause their Subsidiaries to maintain,
adequate insurance, covering such other risks as the Lender may reasonably
request. All insurance premiums shall be paid as they become due or as may be
permitted either through existing plans or through such payment plans as are
hereafter reviewed and approved by the Lender in its sole discretion. All
insurance covering tangible property subject to a Lien in favor of the Lender
granted pursuant to this Agreement or under any other Loan Document shall
provide that, in the case of each separate loss, the full amount of insurance
proceeds with respect thereto shall be payable to the Lender as secured party or
otherwise as its interests may appear, to be applied in accordance with Section
4.02 hereof, and shall further (w) provide for at least 30 days' prior written
notice to the Lender of the cancellation or substantial modification thereof,
(x) provide that, in respect of the interests of the Lender and the Borrowers or
any Person, such insurance shall not be invalidated by any action or inaction of
the Borrowers or any other Person, (y) insure the Lender's interests regardless
of any breach of or violation by the Borrowers or any other Person of any
warranties, declarations, or conditions contained in such insurance, and (z)
provide that the Lender shall have the right (but not the obligation) to cure
any default by the Borrowers or any Person under such insurance. Each liability
policy required pursuant to this Section 8.06 shall name the Lender as an
additional insured and loss payee and shall be primary without right of
contribution from any other insurance which is carried by the Lender to the
extent that such other insurance provides the Lender with contingent and/or
excess liability insurance with respect to its interest as such in the
Collateral and shall expressly provide that all of the provisions thereof,
except the limits of liability (which shall be applicable to all insureds as a
group) and except liability for premiums (which shall be solely a liability of
the Borrowers or such Subsidiary), shall operate in the same manner as if there
were a separate policy covering each insured.
(b) From time to time upon request of the Lender, promptly
furnish or cause to be furnished to the Lender evidence, in form and substance
satisfactory to the Lender, of the maintenance of all insurance required to be
maintained by Section 8.06(a) hereof, including, but not limited to, such
originals or copies as the Lender may request of policies, certificates of
insurance, riders and endorsements relating to such insurance and proof of
premium payments.
(c) Immediately upon receipt thereof, provide to the Lender a
copy of any notice of cancellation or suspension of any insurance coverage.
Section 8.07. Properties in Good Condition. Keep, and cause their
Subsidiaries to keep, their leased properties in good repair, working order and
condition and, from time to time, make all needed and proper repairs, renewals,
replacements, additions and improvements thereto, in accordance with the terms
of the applicable leases so that the business carried on by the Borrowers and
their Subsidiaries may be properly and advantageously conducted at all times in
accordance with prudent business management.
Section 8.08. Maintenance of Liens. Except for the filing of
continuation statements and
32
the making of other filings by the Lender as secured party or assignee, at all
times take all action necessary, and cause their Subsidiaries to take all action
necessary, to maintain the Liens and security interests provided for under or
pursuant to this Agreement or the other Loan Documents as valid and perfected
first Liens on the property intended to be covered thereby (subject only to
Liens expressly permitted hereunder) and supply all information to the Lender
necessary for such maintenance.
Section 8.09. Notice of Default. Notify, and cause their Subsidiaries
to notify the Lender in writing promptly upon becoming aware of any default or
event, condition or occurrence which with notice or lapse of time, or both,
would constitute a default under any agreement for borrowed money to which the
Borrowers or any Subsidiary are parties or by which any of their assets are
bound or under any lease agreement to which the Borrowers or any Subsidiary are
parties.
Section 8.10. Further Assurances. At the expense of the Borrowers, upon
request of the Lender, duly execute and deliver, or cause to be duly executed
and delivered to the Lender such further instruments and take and cause to be
taken such further actions as may be necessary or proper in the reasonable
opinion of the Lender to carry out more effectually the provisions and purposes
of this Agreement and the other Loan Documents.
Section 8.11. ERISA.
(a) Pay and discharge, and cause their Subsidiaries to pay and
discharge promptly any liability imposed upon it pursuant to the provisions of
the Code and Title IV of ERISA; provided, however, that neither the Borrowers
nor any Subsidiary shall be required to pay any such liability if (1) the
amount, applicability or validity thereof shall be diligently contested in good
faith by appropriate proceedings and (2) the Borrowers or their Subsidiaries
shall have set aside on their books reserves which, in the opinion of the
Borrowers' independent certified public accountants, are adequate with respect
thereto.
(b) Deliver, and cause their Subsidiary to deliver to the
Lender promptly and in any event within 10 days, after (i) the occurrence of any
"reportable event" (within the meaning of Section 4043(b) of ERISA) with respect
to any Pension Benefit Plan, a copy of the materials that are filed with the
PBGC, or the materials that would have been required to be filed if the 30-day
notice requirement to the PBGC was not waived, (ii) the Borrowers or their
Subsidiaries or an administrator of any Pension Benefit Plan files with
participants, beneficiaries or the PBGC a notice of intent to terminate any such
Plan, a copy of any such notice, (iii) the receipt of notice by the Borrowers or
their Subsidiaries or an administrator of any Pension Benefit Plan from the PBGC
of the PBGC's intention to terminate any Pension Benefit Plan or to appoint a
trustee to administer any such Plan, a copy of such notice, (iv) the filing
thereof with the Internal Revenue Service, copies of each annual report that is
filed on Treasury Form 5500 with respect to any Pension Benefit Plan or Employee
Plan, together with certified financial statements (if any) for the Plan and any
actuarial statements on Schedule B to such Form 5500, (v) the Borrowers or their
Subsidiaries know or have reason to know of any event or condition which might
constitute grounds under the provisions of Section 4042 of ERISA for the
termination of (or the appointment of a trustee to administer) any Pension
Benefit Plan, an
33
explanation of such event or condition, (vi) the receipt by the Borrowers of an
assessment of withdrawal liability under Section 4201 of ERISA from a
Multiemployer Plan, a copy of such assessment, or (vii) the Borrowers or their
Subsidiaries know or have reason to know that an application is to be, or has
been made to the Secretary of the Treasury for a waiver of the minimum funding
standard under the provisions of Section 412 of the Code, a copy of such
application, in each case together with a statement signed by the treasurer or
controller of the Borrowers or such Subsidiary setting forth details as to such
reportable event, notice, event or condition and the action which the Borrowers
or their Subsidiaries propose to take with respect thereto.
Section 8.12. Appraisals. Upon the reasonable request of the Lender no
more than once annually provided that no Event of Default shall have occurred,
deliver appraisals on all property owned and operated by the Borrowers and their
Subsidiaries, which appraisals shall be prepared by appraisers reasonably
satisfactory to the Lender at the expense of the Borrowers and shall be in form
reasonably satisfactory to the Lender.
Section 8.13. Maintenance of Accounts. Maintain their primary operating
accounts including, without limitation, cash management accounts, control
accounts, disbursement and distribution accounts and demand deposit accounts,
with the Lender.
Section 8.14. Excess Cash Flow. Apply fifty percent (50%) of any Excess
Cash Flow generated during each of Fiscal Year 1999, Fiscal Year 2000 and Fiscal
Year 2001 to the reduction of the outstanding principal balance of the Term
Loan, such amounts to be applied in the inverse order of maturity. Excess Cash
Flow, for purposes of the foregoing, shall be calculated on an annual basis
based on the audited financial statements for Fiscal Year 1999, Fiscal Year 2000
and Fiscal Year 2001, respectively and shall be due within no more than one
hundred and twenty (120) days after completion of such audited financial
statements.
Section 8.15 Assignment of Life Insurance. In the event that the
Borrowers obtain life insurance policies on the life of Xxxxxx Xxxxx at any time
after the Closing Date, the Borrowers shall within thirty (30) days of the
issuance of any such policies assign such policies in favor of the Lender, such
assignment(s) to be in form satisfactory to the Lender.
Section 8.16 Landlord's Waivers. In the event that the Borrowers enter
into a lease with Harbor Drive Associates or any other landlord with respect to
any premises leased by the Borrowers, the Borrowers shall, concurrently upon
entering into such lease, obtain a waiver of such landlord's rights to the
Collateral in a form satisfactory to the Lender.
ARTICLE IX
NEGATIVE COVENANTS
Until the Obligations are paid and satisfied in full and this Agreement
has been terminated, the Borrowers covenant and agree that they will not:
Section 9.01. Financial Covenants.
34
A. Minimum Consolidated Quick Ratio. Permit Consolidated Quick
Ratio at any time, measured quarterly to be less than the amounts set forth
below:
Fiscal Quarter Ended Amount
-------------------- ------
December 31, 1998 N/A
March 31, 1999 4.00:1.00
June 30, 1999 4.50:1.00
September 30, 1999 4.00:1.00
December 31, 1999 4.50:1.00
March 31, 2000 5.00:1.00
June 30, 2000 5.50:1.00
September 30, 2000 5.00:1.00
December 31, 2000 5.50:1.00
March 31, 2001 5.50:1.00
June 30, 2001 6.00:1.00
September 30, 2001 5.50:1.00
December 31, 2001 6.50:1.00
B. Minimum Consolidated Adjusted EBITDA. Permit Consolidated
Adjusted EBITDA at any time, measured quarterly and including at the end of each
fiscal year of the Borrowers to be less than the following:
Fiscal Quarter Ended Amount
-------------------- ------
December 31, 1998 $1,500,000
March 31, 1999 $1,800,000
June 30, 1999 $1,900,000
September 30, 1999 $2,100,000
Thereafter $2,300,000
C. Minimum Stockholders' Equity. Permit stockholders' equity
to be less than the following, measured quarterly:
Fiscal Quarter Ended Amount
-------------------- ------
December 31, 1998 $16,193,000
March 31, 1999 $18,193,000
June 30, 1999 $18,693,000
September 30, 1999 $19,193,000
December 31, 1999 $19,693,000
March 31, 2000 $20,193,000
June 30, 2000 $20,693,000
September 30, 2000 $21,193,000
35
December 31, 2000 $21,693,000
March 31, 2001 $22,193,000
June 30, 2001 $22,693,000
September 30, 2001 $23,193,000
December 31, 2001 $23,693,000
E. Maximum Consolidated Capital Expenditures. Permit
Consolidated Capital Expenditures at any time to exceed (i) $250,000 for Fiscal
Year 1999, (ii) $300,000 for Fiscal Year 2000, and (iii) $350,000 for Fiscal
Year 2001, measured annually.
Section 9.02. Indebtedness. Create, incur, assume or suffer to exist,
or permit their Subsidiaries to create, incur, assume or suffer contingently or
otherwise, any Indebtedness, other than:
(a) Indebtedness to the Lender hereunder and under the Notes;
(b) unsecured Consolidated Current Liabilities (not the result
of borrowing) incurred in the ordinary course of business and not represented by
any note, bond, debenture or other evidence of Indebtedness;
(c) Indebtedness outstanding on the date hereof which is set
forth in Schedule 9.02 hereto, including Indebtedness to NSK but not the
increase, modification, refunding or extension of maturity thereof, in whole or
in part;
(d) purchase money Indebtedness secured by purchase money
security interests permitted by subsection 9.03(b);
(e) Indebtedness in respect of taxes, assessments and
governmental charges to the extent that payment therefor shall not at the time
be required to be made in accordance with the provisions of Section 8.04 hereof,
and Indebtedness secured by Liens of carriers, warehousemen, mechanics,
materialmen, and repairmen permitted under subsection 9.03(c) hereof; or
(f) Indebtedness for leased equipment and vehicles in amounts
not exceeding amounts currently shown on the Borrowers' financial statements as
of the Closing Date.
Section 9.03. Liens. Create, incur, assume or suffer to exist, or
permit their Subsidiaries to create, incur, assume or suffer to exist, any Lien
on any of their respective property or assets now owned or hereafter acquired,
other than:
(a) Liens existing on the date hereof and disclosed in
Schedule 9.03 hereto, but not any extension, renewal or increase in the amount
thereof;
(b) Purchase money mortgages or other purchase money Liens
(including, without limitation, finance leases) upon any fixed or capital assets
hereafter acquired, or Liens
36
(including, without limitation, finance leases) on any such assets hereafter
acquired or existing at the time of acquisition of such assets, whether or not
assumed, so long as (w) any such Lien does not extend to or cover any other
asset of the Borrowers or their Subsidiaries (except with respect to proceeds of
such asset), (x) such Lien secures the obligation to pay the purchase price of
such asset (or the obligation under such finance lease) only, (y) the principal
amount secured by each such Lien does not exceed the unpaid purchase price for
such asset and (z) the aggregate amount of Indebtedness secured by such purchase
money Liens shall not exceed $25,000 at any time;
(c) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, or other like Liens arising in the ordinary course of business
securing sums which are not overdue;
(d) pledges or deposits to secure obligations under worker's
compensation laws or similar legislation;
(e) pledges or deposits to secure performance in connection
with bids, tenders, contracts (other than contracts for the payment of money) or
leases made in the ordinary course of business by the Borrower, as lessee;
(f) deposits to secure public or statutory obligations of the
Borrowers or their Subsidiaries;
(g) Liens in favor of the Lender.
Section 9.04. Mergers, etc. Merge or consolidate, or permit their
Subsidiaries to merge or consolidate, into or with any other Person, or change
the nature of its business, or change its name, or wind up, liquidate or
dissolve, or agree to do any of the foregoing.
Section 9.05. Sale of Assets, etc. Assign, transfer, sell, lease or
otherwise dispose of, or permit their Subsidiaries to assign, transfer, sell,
lease or otherwise dispose of, all or any part of their property or assets, or
any stock, to any other Person, other than (i) sales of inventory in the
ordinary course of business, (ii) dispositions of obsolete equipment the
aggregate value of which shall not exceed $25,000 in any fiscal year of the
Borrowers and their Subsidiaries and (iii) vehicles disposed of in the ordinary
course of business, without the Lender's consent which may be withheld in its
sole discretion.
Section 9.06. Dividends, etc. Declare or pay, or permit their
Subsidiaries to declare or pay, any dividend on their capital stock now or
hereafter outstanding, or make any payment to purchase, redeem, retire or
acquire any of their capital stock or any option, warrant (other than certain
warrants issued to the Lender), or other right to acquire such capital stock, or
apply or set apart any of its assets therefor, or make any other distribution in
respect of any such shares, or make any principal payment or prepayment on
account of, or purchase, redeem or defease any Subordinated Indebtedness (other
than prepayments and payments permitted under the Subordination Agreements) or
agree, to do any of the foregoing, without the Lender's consent which may be
withheld in its sole discretion.
Section 9.07. Investments, Acquisitions, Loans, etc. Lend or advance
money, credit or
37
property to any Person, or invest in (by capital contribution, creation of
subsidiaries or otherwise), or purchase or repurchase the stock or Indebtedness,
or all or a substantial part of the assets or properties, of any Person (or any
division or subunit of any Person), or enter into any exchange of securities
with any Person, or guarantee, assume, endorse or otherwise become responsible
for (directly or indirectly or by any instrument having the effect of assuring
any person's payment or performance or capability) the Indebtedness,
performance, obligations, stock or dividends of any Person, or agree to do any
of the foregoing or permit any Subsidiary to do or agree to do any of the
foregoing (collectively, "Restricted Payments"), without the Lender's prior
written consent which may be withheld in its sole discretion, except
endorsements of negotiable instruments for deposit or collections in the
ordinary course of business or investments in money market or cash equivalent
instruments.
Section 9.08. Lease-Backs. Enter, or permit their Subsidiaries to
enter, into any arrangements, directly or indirectly, with any Person, whereby
the Borrowers or their Subsidiaries shall sell or transfer any property, whether
now owned or hereafter acquired, used or useful in its business, in connection
with the rental or lease of the property so sold or transferred or of other
property which the Borrowers or their Subsidiaries intend to use for
substantially the same purpose or purposes as the property so sold or
transferred.
Section 9.09. Compromise of Receivables. Compromise or adjust, or
permit their Subsidiaries to compromise or adjust, any of the Receivables (or
extend the time for payment thereof) or grant any discounts, allowances or
credits thereon, in each case other than in the normal course of business.
Section 9.10. Transactions with Affiliates and Agents. Directly or
indirectly purchase, acquire or lease any property from, or sell, transfer or
lease any property to, loan or advance any money or credit to, or sell any
product or provide any service on more favorable terms than would be provided to
any third-party in an arm's length transaction or enter into any other
transaction with, any stockholder, officer, Affiliate or agent of the Borrowers,
or any relative thereof, or permit their Subsidiaries to do any of the
foregoing.
Section 9.11. Compliance with ERISA.
(a) Engage, or permit their Subsidiaries to engage, in any
transaction in connection with which the Borrowers or their Subsidiaries could
be subject to either a material civil penalty assessed pursuant to the
provisions of Section 502 of ERISA or a material tax imposed under the
provisions of Section 4975 of the Code; or
(b) Terminate, or permit their Subsidiaries to terminate, any
Pension Benefit Plan in a "distress termination" under Section 4041 of ERISA, or
take any other action which could result in a material liability of the
Borrowers to participants, beneficiaries or the PBGC; or
(c) Fail to make, or permit their Subsidiaries to fail to
make, payment when due of all amounts which, under the provisions of any Pension
Benefit Plan or Employee Plan, the Borrowers are required to pay as
contributions thereto, or, with respect to any Pension Benefit Plan, permit to
exist any material "accumulated funding deficiency" (within the meaning
38
of Section 302 of ERISA and Section 412 of the Code), whether or not waived,
with respect thereto.
Section 9.12. Fiscal Year. Have, or permit their Subsidiaries to have,
a fiscal year ending other than June 30 in any year.
Section 9.13. No Guarantees. Neither the Borrowers nor any Subsidiary
shall enter into any guarantee of indebtedness of any Person.
Section 9.14. Arrangements between Borrowers and Xxxxx Xxxxx. Borrow
any amounts under its existing revolving credit facility with Xxxxx Xxxxx.
Section 9.15. Subsidiaries. Acquire or create, or permit their
Subsidiaries to acquire and create, any Subsidiaries.
Section 9.16. License Arrangements. During the period in which the Term
Loan is outstanding, the Borrowers shall not sublicense any of their respective
licenses, and shall not license any patent, trademark, copyright or other
intangible asset, without the approval of the Borrower's Board of Directors (in
the case of AMBI) or partners (in the case of N21). If the outstanding principal
amount of the Term Loan is greater than $1,500,000 and a license includes any
payments during the life of the Term Loan, the Lender shall have the right to
have 50% of the payments applied by the Borrowers to reduce the principal amount
of the Term Loan.
Section 9.17 NSK Arrangements. Agree to reduce the principal amount of
the existing indebtedness to NSK (i) in the case of the first $1,000,000
principal payment due, other than solely by payment in AMBI stock, and (ii) in
the case of payment of the remaining principal amount of $1,000,000 due to NSK,
other than solely by payment in cash or stock, provided that in no event shall
the Borrowers make any agreement as to repayments, subordination or other terms
of repayment or make any other agreement with NSK (or other third party)
relating thereto, including, without limitation, any agreement to sell its
Pharmaceutical Business, without the Lender's prior written consent in its sole
discretion in each instance.
ARTICLE X
EVENTS OF DEFAULT
Section 10.01. Events of Default. If any one or more of the following
events (herein called "Events of Default") shall occur for any reason whatsoever
(and whether such occurrence shall be voluntary or involuntary or come about or
be effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body), that is to say:
(a) if default shall be made in the due and punctual payment
of the principal of or interest on any of the Loans or in the due and punctual
payment of any fees (including the Maintenance fees) or other amounts payable
hereunder when and as the same shall become due and payable (whether at
maturity, by acceleration or otherwise) and such default shall continue
39
unremedied for a period of five (5) or more days; or
(b) if (i) a default shall be made in the performance or
observance of, or shall occur under, any material covenant, agreement or
provision contained in this Agreement, any other Loan Document, and such default
shall continue unremedied for a period of thirty (30) or more days after written
notice thereof is given from the Lender to the Borrowers or any Subsidiary, or
(ii) this Agreement, or any other Loan Document, shall terminate or be
terminated or become void or unenforceable for any reason whatsoever without the
prior written consent of the Lender; or
(c) if a default, taking into consideration any applicable
grace or notice period, shall occur (i) in the payment of any principal,
interest or premium with respect to any Indebtedness for borrowed money of the
Borrowers or any Subsidiary or (ii) under any agreement or instrument under or
pursuant to which any such Indebtedness may have been issued, created, assumed,
guaranteed or secured by the Borrowers and such default shall not have been
expressly waived in writing, shall permit (assuming the giving of appropriate
notice if required) the acceleration of such Indebtedness (without giving effect
to any standstill or acceleration blockage period) or if any such Indebtedness
shall be declared due and payable prior to the stated maturity thereof or shall
not be paid in full at the stated maturity thereof; or
(d) if any representation, warranty or other statement of fact
given herein, in any other Loan Document of the Borrowers, or any Subsidiary, or
in any writing, certificate, report or statement at any time furnished to the
Lender pursuant to or in connection with this Agreement, or any Loan Document,
or otherwise, shall be false or misleading in any material respect when given;
or
(e) if the Borrowers or any Subsidiary shall be unable to pay
its or their respective debts generally as they become due; file a petition to
take advantage of any insolvency act; make an assignment for the benefit of its
or their creditors; commence a proceeding for the appointment of a receiver,
trustee, liquidator or conservator of itself or of the whole or any substantial
part of its property; file a petition or answer seeking reorganization or
arrangement or similar relief under the federal bankruptcy laws or any other
applicable law or statute of the United States of America, any state thereof or
any foreign country; or
(f) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of the Borrowers or any Subsidiary, or of the whole or any
substantial part of their respective properties, or approve a petition filed
against the Borrowers or any Subsidiary, seeking reorganization or arrangement
or similar relief under the Federal bankruptcy laws or any other applicable law
or statute of the United States of America, any state thereof or any foreign
country; or if, under the provisions of any other law for the relief or aid of
debtors, a court of competent jurisdiction shall assume custody or control of
the Borrowers or any Subsidiary or of the whole or any substantial part of their
respective properties; or if there is commenced against the Borrowers or any
Subsidiary any proceeding for any of the foregoing relief and such proceeding
continues for a period of sixty (60) days, whether or not consecutive; or if the
Borrowers or any Subsidiary, by any act, indicates its or their consent to or
approval of any such proceeding or petition; or
40
(g) if (i) any final and unappealable judgment in excess of
$100,000 is rendered against the Borrowers or any Subsidiary, (ii) there is any
injunction, attachment or execution against any of the properties of the
Borrowers or any Subsidiary for any amount in excess of $100,000, and such
judgment, attachment or execution remains unsatisfied, unstayed or undischarged
for any period of thirty (30) consecutive days unless contested by the Borrowers
in good faith and bonded over; or
(h) if (i) a reportable event (within the meaning of Section
4043(b) of ERISA) (whether or not waived) shall have occurred with respect to a
Pension Benefit Plan which could, in the opinion of the Lender, have a material
adverse effect on the financial condition of the Borrowers or any Subsidiary;
(ii) the Borrowers or any Subsidiary or an administrator of any Pension Benefit
Plan shall file a notice of intent to terminate such a Plan in a "distress
termination" under the provisions of Section 4041 of ERISA; (iii) the Borrowers
or any Subsidiary or an administrator of a Pension Benefit Plan shall receive
notice that the PBGC has instituted proceedings to terminate (or appoint a
trustee to administer) such a Plan; (iv) any other event or condition exists
which might, in the opinion of the Lender, constitute grounds under the
provisions of Section 4042 of ERISA for the termination of (or the appointment
of a trustee to administer) any Pension Benefit Plan by the PBGC; (v) a Pension
Benefit Plan shall fail to maintain the minimum funding standard required by
Section 412 of the Code for any plan year or a waiver of such standard is sought
or granted under the provisions of Section 412(d) of the Code which could, in
the opinion of the Lender, have a material adverse effect on the financial
condition of the Borrowers or any Subsidiary; or (vi) the Borrowers or any
Subsidiary has incurred, or is likely to incur, a liability under the provisions
of Sections 4062, 4063, 4064 or 4201 of ERISA which could, in the opinion of the
Lender, have an adverse effect on the financial condition of the Borrowers or
any Subsidiary; or
(i) if there shall occur any issuance or transfer of any
partnership interests of N21 or capital stock of any Subsidiary or any other
change in the legal or beneficial ownership of N21 or any Subsidiary from that
existing on the Closing Date without the prior written consent in each case of
the Lender, except for transfers of the outstanding shares of Common Stock of
the Borrowers or any Subsidiary to existing shareholders; or
(j) if the Lender shall be served with a writ of levy or
attachment, or named as defendant in a trustee process action for the Borrowers
or any Subsidiary, or of any other similar process of attachment;
(k) if there shall occur any default under any other
obligation of the Borrowers or any Subsidiary to the Lender or any other third
party lender;
(l) if AMBI shall agree to reduce the remaining principal
balance of its existing indebtedness to NSK or make any scheduled payment
thereunder, other than by (i) paying the first $1,000,000 of such indebtedness
to NSK solely in AMBI stock, and (ii) by paying the remaining $1,000,000 due to
NSK solely in cash or stock, or if AMBI shall enter into any agreement as to
such repayment terms, or if AMBI shall enter into any other agreement with NSK
or any other third party in connection therewith, including any agreement to
sell its
41
Pharmaceutical Business without the prior written consent of the Lender
in its sole discretion as to the terms thereof in each instance;
(m) if the Borrower shall borrow funds from Xxxxx Xxxxx;
(n) if AMBI and its subsidiaries shall own less than 100% of
the issued and outstanding partnership interests of N21 or less than 100% of
the issued and outstanding stock of Selene or JBE or shall hold a lesser
economic interest in the business and assets of N21, Selene or JBE than it
currently maintains;
(o) except as permitted in this Agreement, if either of the
Borrowers shall either sublicense any of their respective intellectual property
rights to any third party or shall license any of their respective intellectual
property, without the prior written consent of the Lender (exclusive of certain
existing license arrangements with the USDA and Oriola in effect as of the date
of this Agreement);
(p) if AMBI shall fail to file any required securities filings
with the SEC, NASDAQ or other exchange on which its securities are then listed
on a timely basis;
(q) if AMBI shall fail to provide the Lender with prompt
notice of any NASD or similar regulatory proceedings or inquiries, whether
written or oral;
(r) any delisting of AMBI's securities;
(s) any violation by AMBI or any of its officers, employees,
consultants or directors or agents of the FTC Order or the Napa Settlement or if
the FTC or any other pharmaceutical agency or state or municipality or persons
shall obtain a judgment for unfair and deceptive trade practices or any
settlement requiring payment by AMBI or any other Borrower in excess of $50,000
or injunctive relief resulting in substantial interference with the Borrowers
ability to do business; or
(t) if AMBI shall make any payment under the Napa Documents,
then, and in any such event and at any time thereafter, if such or any other
Event of Default shall then be continuing,
(A) either or both of the following actions may be taken: (i)
the Lender may declare any obligation to lend hereunder terminated whereupon the
obligation of the Lender to make further Loans hereunder shall terminate
immediately, and/or (ii) the Lender may declare any or all of the Obligations to
be due and payable, and the same, all interest accrued thereon and all other
obligations of the Borrowers to the Lender hereunder and under the Loan
Documents shall immediately become due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything contained herein or in any instrument evidencing the Obligations to the
contrary notwithstanding; provided, however, that notwithstanding the above, if
there shall occur an Event of Default under clauses (e) or (f) above, then the
obligation of the Lender to lend hereunder shall automatically terminate and any
and all
42
of the Obligations shall be immediately due and payable without any necessary
action or notice by the Lender;
(B) the Lender shall have all of the rights and remedies
available to it hereunder, under the other Loan Documents, at law and in equity;
and
(C) the Lender may determine which rights, security, Liens,
security interests or remedies at any time shall be pursued, relinquished,
subordinated, modified or what other action shall be taken with respect thereto,
without in any way modifying or affecting any of them or any of the Lender's
rights hereunder; and any moneys, deposits, Receivables, balances, or other
property of the Borrowers which may come into the Lender's hands at any time or
in any manner, may be retained by the Lender and applied to any of the
Obligations.
Section 10.02. Suits For Enforcement. In case any one or more Events of
Default shall occur and be continuing, the Lender may proceed to protect and
enforce its rights or remedies either by suit in equity or by action at law, or
both, whether for the specific performance of any covenant, agreement or other
provision contained herein or in any document or instrument delivered in
connection with or pursuant to this Agreement, or to enforce the payment of the
Obligations or any other legal or equitable right or remedy.
Section 10.03. Rights and Remedies Cumulative. No right or remedy
herein conferred upon the Lender is intended to be exclusive of any other right
or remedy contained herein or in any instrument or document delivered in
connection with or pursuant to this Agreement, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
Section 10.04. Right of Setoff. In addition to and not in limitation of
all rights of offset that the Lender may have under applicable law, the Lender
shall, upon the occurrence and during the continuance of any Event of Default
and whether or not the Lender has made any demand or any Obligations are
matured, have the right to appropriate and apply to the payment of the
Obligations, all deposits (general or special, time or demand, provisional or
final) then or thereafter held by and other indebtedness or property then or
thereafter owing to the Borrowers by the Lender, whether or not related to this
Agreement, the other Loan Documents or any transaction hereunder regardless of
the existence or sufficiency of any other Collateral therefor.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Notices. All notices, requests and other communications
to any party hereunder or under any of the Loan Documents shall be in writing
(except for telephonic Notices of Borrowing) and shall be personally delivered
or sent by certified mail, postage prepaid, return receipt requested, or by a
reputable courier delivery service and shall be given,
43
if to the Borrowers: AMBI Inc.
0 Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
with a copy to: AMBI Inc.
000 Xxx Xxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
Vice President and General Counsel
Xxxxx X. Xxxxxx, Esquire
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
if to the Lender: State Street Bank and Trust Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Assistant Vice President
with a copy to: Xxxxxx X. Xxxxxxxxx, Esquire
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
or such other address as such party may hereafter specify by notice to the
Lender and the Borrower. Each such notice, request or other communication shall
be effective (i) if given by certified mail, 72 hours after such communication
is deposited with the post office, addressed as aforesaid or (ii) if given by
any other means (including, without limitation, by air courier), when delivered
at the address specified in this Section.
Section 11.02. Amendments, etc. No amendment or waiver of any provision
of this Agreement or any other Loan Document, nor consent to any departure by
the Borrowers or any Subsidiary therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Lender and the Borrowers
or such Subsidiary, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Section 11.03. No Waiver. No failure or delay on the part of the Lender
in exercising any right, power or remedy hereunder or under any other Loan
Document and no course of dealing between the Borrowers or any Subsidiary and
the Lender shall operate as a waiver of any thereof, nor shall any single or
partial exercise of any right, power or remedy hereunder or under any other Loan
Document or any abandonment or discontinuance of steps to enforce any such
right, power or remedy preclude any other or further exercise thereof or the
exercise of any other right, power or remedy hereunder. No notice to or demand
on the Borrowers or any Subsidiary not required hereunder or under any other
Loan Document in any case shall entitle the Borrowers or
44
any Subsidiary to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Lender to any other or
further action in any circumstances without notice or demand.
Section 11.04. Payment of Expenses, Indemnity, etc. The Borrowers
shall:
(a) except as specifically limited herein, whether or not the
transactions hereby contemplated are consummated, pay all out-of-pocket costs
and expenses of the Lender in the administration (both before and after the
execution hereof and including advice of counsel as to the rights and duties of
the Lender with respect thereto) of, and in connection with the preparation,
execution and delivery of, preservation of rights under, enforcement of, and
refinancing, renegotiation or restructuring of, this Agreement, the Notes, the
other Loan Documents and the documents and instruments referred to herein and
therein and any amendment, waiver or consent relating thereto (including,
without limitation, the fees and disbursements of counsel for the Lender in each
instance and all reasonable travel, lodging and related costs of Lender in
connection with any periodic site visits to the Borrowers during the term of the
Loans in connection with its review of the Borrowers' business);
(b) pay and hold the Lender harmless from and against any and
all present and future stamp and other similar taxes with respect to the
foregoing matters and hold the Lender harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to pay such
taxes;
(c) indemnify, defend and hold harmless the Lender and its
directors, officers, agents, employees and counsel from and against any and all
losses, claims, damages, liabilities, deficiencies, judgments or expenses
incurred by any of them (except to the extent that it is finally judicially
determined to have resulted from their own gross negligence or willful
misconduct) arising out of or by reason of any litigations, investigations,
claims or proceedings, pending or threatened, which arise out of or are in any
way related to (i) any actual or proposed use by the Borrowers of the proceeds
of the Loans or (ii) the Lender's entering into this Agreement, any of the other
Loan Documents including, without limitation, amounts paid in settlement, court
costs and the fees and disbursements of counsel incurred in connection with any
such litigation, investigation, claim or proceeding.
If and to the extent that the obligations of the Borrowers under this
Section 11.04 are unenforceable for any reason, the Borrowers hereby agree to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law. The Borrowers'
obligations under this Section 11.04 shall survive any termination of this
Agreement and the payment in full of the Obligations.
Section 11.05. Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, provided that the Borrowers may
not assign or transfer any of their interest hereunder without the prior written
consent of the Lender.
(b) The Lender may make, carry or transfer Loans at, to or for
the account of,
45
any of its branch offices or the office of an Affiliate of the Lender.
(c) (i) The Lender may assign its rights, but may not delegate
its obligations, under this Agreement and further may assign, or sell
participations in, all or any part of any Loan or Loans made by it or any other
interest herein or in its Notes to another bank or insurance company or pension
fund, in which event (A) in the case of an assignment, upon notice thereof by
the Lender to the Borrowers, the assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights and benefits as
it would have if it were the Lender hereunder and the holder of a Note, and (B)
in the case of a participation, the participant shall not have any rights under
this Agreement or any Note or any other Loan Document, except as set forth in
this Section 11.05(c) (the participant's rights against the Lender in respect of
such participation to be those set forth in the agreement executed by the Lender
in favor of the participant relating thereto). The Lender may furnish any
information concerning the Borrowers in the possession of the Lender from time
to time to assignees and participants (including prospective assignees and
participants). In the event that the Lender assigns or sells a participation in
all or any part of the Notes or the Loans or any interest in the Collateral in
connection therewith to any Person other than an Affiliate of the Lender, the
Lender shall endeavor to give the Borrowers prompt notice thereof, provided that
the failure of the Lender to give such notice shall not result in any liability
to the Lender.
(ii) The Borrowers hereby grant to each participant in the
Loans, and each such participant shall have and is hereby given, a continuing
lien on and security interest in any and all monies, securities, and other
property of the Borrowers and the proceeds thereof, now or hereafter held or
received by such participant, and also upon any and all deposits (general or
special) and credits of the Borrowers with, and any and all claims of the
Borrowers against, such participant, at any time existing, including the right
of setoff, to the extent of such participant's participation in the Loans, and
such participant shall be deemed to have, the same right of setoff to the extent
of such participant's participation in the Loans as it would if it were a direct
lender.
Section 11.06. Governing Law, Submission to Jurisdiction, etc.
(a) This Agreement and the rights and obligations of the
parties hereunder and under the Notes shall be construed in accordance with and
be governed by the laws of the Commonwealth of Massachusetts (without giving
effect to the conflict of law principles thereof).
(b) Any legal action or proceeding with respect to this
Agreement or the Notes or any other Loan Document may be brought in the courts
of The Commonwealth of Massachusetts or of the United States of America for the
District of Massachusetts, and, by execution and delivery of this Agreement, the
Borrowers hereby accept for itself and their Subsidiaries and in respect of
their respective property, generally and unconditionally, the jurisdiction of
the aforesaid courts.
(c) The Borrowers hereby irrevocably waive, in connection with
any such action or proceeding, (i) any objection, including, without limitation,
any objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in such respective jurisdictions, (ii) the right to
46
interpose any setoff, non-compulsory counterclaim or cross-claim and (iii) to
the maximum extent not prohibited by law, the Borrowers, and the Lender each
hereby knowingly, voluntarily and intentionally waive any right they may have to
a trial by jury in respect of any litigation directly or indirectly arising out
of, under or in connection with this Agreement, the other Loan Documents, or the
transactions contemplated hereby or thereby.
(d) The Borrowers irrevocably consent to the service of
process of any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by registered or certified mail, postage prepaid,
to the Borrowers at their address set forth in Section 11.01 hereof.
(e) Nothing herein shall affect the right of the Lender to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrowers in any other
jurisdiction.
Section 11.07. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same agreement.
Section 11.08. Collection Costs. In the event that the Lender shall
retain an attorney or attorneys to collect, enforce, protect, maintain, preserve
or foreclose its interests with respect to this Agreement, the Loans, the Notes,
any other Loan Document, any Obligations, any Receivable, or the lien or
security interest in any Collateral or any other security for the Obligations or
under any instrument or document delivered pursuant to this Agreement, or in
connection with any Obligations, or to protect the rights of any holder or
holders with respect thereto, the Borrowers shall pay all of the reasonable
costs and expenses actually incurred of such collection, enforcement or
protection, including, without limitation, reasonable attorneys' fees, which
amounts shall be part of the Obligations, and the Lender may take judgment for
all such amounts.
Section 11.09. Termination of Agreement. (a) The Borrowers may
terminate this Agreement at any time upon (i) the delivery to the Lender of
irrevocable notice of its intention to terminate this Agreement and (ii) payment
of all Obligations of the Borrowers to the Lender under or in respect of this
Agreement, the Notes and the other Loan Documents, including, without
limitation, the principal amount of all Loans outstanding as of the date of such
payment, all interest accrued thereon through the date of such payment, and all
fees and expenses accrued and unpaid through the date of such payment.
(b) The Lender may terminate this Agreement immediately, at
any time during the continuance of an Event of Default under Article X;
provided, however, that this Agreement shall automatically terminate if there
shall occur an Event of Default under Section 10.01(e) or 10.01(f) hereof.
(c) The termination of this Agreement shall not affect any
rights of the Borrowers or the Lender arising prior to the effective date of
such termination, and the provisions
47
hereof shall continue to be fully operative until all transactions entered into,
rights created or Obligations incurred prior to such termination have been fully
disposed of, concluded or liquidated. Upon the termination of this Agreement,
all Obligations (including, without limitation, the Loans) shall be due and
payable without notice or demand. The security interests, liens and rights
granted to the Lender hereunder and under the Loan Documents shall continue in
full force and effect, notwithstanding the termination of this Agreement or the
fact that the Borrowers' accounts may from time to time be temporarily in a
credit position, until all of the Obligations have been paid in full after the
termination hereof. All representations, warranties, covenants, waivers and
agreements contained herein shall survive termination hereof unless otherwise
provided. Notwithstanding the foregoing, if after receipt of any payment of all
or any part of the Obligations, the Lender is for any reason compelled to
surrender such payment to any Person or entity because such payment is
determined to be void or voidable as a preference, impermissible setoff, a
diversion of trust funds or for any other reason, this Agreement shall continue
in full force and the Borrowers shall be liable to, and shall indemnify and hold
the Lender harmless for, the amount of such payment surrendered until the Lender
shall have been finally and irrevocably paid in full. The provisions of the
foregoing sentence shall be and remain effective notwithstanding any contrary
action which may have been taken by the Lender in reliance upon such payment,
and any such contrary action so taken shall be without prejudice to the Lender's
rights under this Agreement and shall be deemed to have been conditioned upon
such payment having become final and irrevocable.
Section 11.10. Headings Descriptive. The headings of the several
articles and sections of this Agreement, and the Table of Contents, are inserted
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Agreement.
Section 11.11. Entire Agreement. This Agreement, together with the
other Loan Documents and the Subordination Agreements, embodies the entire
agreement and understanding among the parties relating to the subject matter
hereof and supersedes all prior proposals, negotiations, agreements and
understandings relating to such subject matter. Each of the Borrowers certifies
that it is relying on no statement, representation, warranty, covenant or
agreement of any kind except for those set forth in this Agreement and the other
Loan Documents.
Section 11.12. Waiver of Rights Related to Damages. To the maximum
extent not prohibited by law, the Borrowers and the Lender each hereby
knowingly, voluntarily and intentionally waives any right it may have to claim
or recover in any litigation directly or indirectly arising out of, under or in
connection with this Agreement, the other Loan Documents, or the transactions
contemplated hereby or thereby any special, exemplary, punitive or consequential
damages or any damages other than, or in addition to, actual damages, unless
such claim is with respect to the willful misconduct or gross negligence of the
Lender.
Section 11.13. Certifications. The Borrowers and the Lender each hereby
certifies that neither any representative or agent of the Lender nor the
Lender's counsel has represented, expressly or otherwise, or implied that the
Lender would not, in the event of litigation, seek to enforce the waivers set
forth in subsection 11.06(c) and Section 11.12 hereof. The Borrowers and the
Lender each acknowledge that they have been induced to enter into this Agreement
by,
48
among other things, the mutual waivers and certifications herein.
Section 11.14. Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Agreement shall be unreasonable or unenforceable in any
respect, then such provision shall be deemed limited to the extent that such
court deems it reasonable and enforceable, and as so limited shall remain in
full force and effect. In the event that such court shall deem any such
provision, or portion thereof, wholly unenforceable, the remaining provisions of
this Agreement shall nevertheless remain in full force and effect.
49
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed by its duly authorized officer as an instrument
under seal in The Commonwealth of Massachusetts as of the day and year first
above written.
AMBI INC., a New York corporation
(formerly known as Applied Micro Biology, Inc.)
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Title: Vice President
----------------------------------------------
hereunder duly authorized
NUTRITION 21, a California limited partnership
By: SELENE SYSTEMS, INC., a California
corporation, its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Title: Vice President
----------------------------------------------
hereunder duly authorized
STATE STREET BANK AND TRUST COMPANY
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------------
Xxxxx X. Xxxxxxx, Assistant Vice President
