CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and entered into as of August 22, 1997,
by and between LECTEC CORPORATION, a Minnesota corporation (the "Borrower"),
whose address is 00000 Xxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxx 00000, and FIRST
BANK NATIONAL ASSOCIATION, a national banking association (the "Lender"), whose
address is 000 Xxxxxxx Xxxxxx Xxxxx, Xxxx Xxxxxxx, Xxxxxxxxx 00000.
RECITALS
FIRST: Pursuant to one or more agreements ("Prior Loan Agreements"),
the Lender has made available to the Borrower a revolving line of credit ("Line
of Credit") in the maximum principal amount of One Million and No/100 Dollars
($1,000,000.00) evidenced by a promissory note dated May 1, 1996 made by the
Borrower payable to the order of the Lender ("Prior Revolver").
SECOND: The Prior Revolver has expired by its terms and has been
terminated by the Lender. The Borrower has requested that the Lender reinstate
the Line of Credit and make certain modifications thereto, and the Lender has
indicated its willingness to accommodate such request, subject, however, to
certain terms and conditions.
NOW, THEREFORE, for and in consideration of the loans and advances to
be made by the Lender to the Borrower hereunder, the mutual covenants, promises
and agreements contained herein, and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the Borrower and the
Lender agree as follows:
The following terms when used in this Credit Agreement shall, except
where the context otherwise requires, have the following meanings both in the
singular and plural forms thereof:
1. DEFINITIONS
"Account" means any right of the Borrower to payment for goods sold or
services rendered.
"Advance" means any advance by the Lender made under the Revolving
Credit Commitment. The face amount of any Letter of Credit shall be deemed an
Advance hereunder.
"Affiliate" means any corporation, association, partnership, joint
venture or other business entity directly or indirectly controlling or
controlled by, or under direct or indirect common control of, the Borrower or
any of its Subsidiaries.
"Borrower" means LecTec Corporation, a Minnesota corporation.
"Business Day" means any day (other than a Saturday, Sunday or legal
holiday in the State of Minnesota) on which national banks are permitted to be
open in Minneapolis, Minnesota and, with respect to Advances to bear interest at
the Eurodollar Rate, a day on which dealings in United States dollars may be
carried on by the Lender in the interbank eurodollar market.
"Credit Agreement" means this Credit Agreement, as originally executed
and as may be amended, modified, supplemented, or restated from time to time by
written agreement between the Borrower and the Lender.
"Current Assets" means, at any date, the aggregate amount of all assets
of the Borrower that are classified as current assets in accordance with GAAP.
"Current Liabilities" means, at any time, the aggregate amount of all
liabilities of the Borrower that are classified as current liabilities in
accordance with GAAP (including taxes and other proper accruals and the matured
portion of any indebtedness).
"Current Ratio" means, at any date, the ratio of the Borrower's Current
Assets to its Current Liabilities.
"Daily Eurodollar Advance" means an Advance designated as such in a
notice of borrowing under Section 2.5(a) or a notice of continuation or
conversion under Section 2.5(b).
"Debt" means (i) all items of indebtedness or liability that, in
accordance with GAAP, would be included in determining total liabilities as
shown on the liabilities side of a balance sheet as at the date of which Debt is
to be determined; (ii) indebtedness secured by any mortgage, pledge, lien or
security interest existing on property owned by the Person whose Debt is being
determined, whether or not the indebtedness secured thereby shall have been
assumed; and (iii) guaranties, endorsements (other than for purposes of
collection in the ordinary course of business) and other contingent obligations
in respect of, or to purchase or otherwise acquire indebtedness of others.
"Default" means any event which if continued uncured would, with notice
or lapse of time or both, constitute an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and as may be further amended from time to time, and the rules and
regulations promulgated thereunder by any governmental agency or authority, as
from time to time in effect.
"ERISA Affiliate" means, with respect to any person, any entity
(whether or not incorporated) which is a member of a Controlled Group, within
the meaning of Section 412(n) of the Internal Revenue Code, as amended from time
to time, and the regulations promulgated and ruling issued thereunder, of which
such person is a member.
"ERISA Event" means (i) a "reportable event," as such term is described
in Section 4043 of ERISA (other than a "reportable event" not subject to the
provision for a thirty (30) day notice to the PBGC), or an event described in
Section 4068(f) of ERISA, or (ii) the withdrawal of Borrower or any ERISA
Affiliate thereof from a multiple employer plan during a plan year in which it
was a "substantial employer," as such term is defined in Section 4001(a)(2) of
ERISA, or the incurrence of liability by Borrower or any ERISA Affiliate thereof
under Section 4064 of ERISA upon the termination of a multiple employer plan, or
(iii) the distribution of a notice of intent to terminate a Plan pursuant to
Section 4041(a)(2) of ERISA or the treatment of a plan amendment as a
termination under Section 4041 of ERISA, or (iv) the institution of proceedings
to terminate a Plan by the PBGC under Section 4042 of ERISA, or (v) any other
event or condition which is reasonably likely to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.
"Eurocurrency Reserve Percentage" means the aggregate maximum reserve
requirements, including all basic, supplemental, marginal and other reserves
(expressed as a decimal) for such interest determination date prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining reserve requirements applicable to "Eurocurrency liabilities"
pursuant to Regulation D or any other applicable regulation of the Board of
Governors which prescribes such reserve requirements or is applicable to
extensions of credit by the Lender, the rate of interest on which is determined
with regard to rates applicable to "Eurocurrency liabilities," and the amount
outstanding under the Revolving Credit Note shall be deemed to be a
"Eurocurrency liability" as defined in Regulation D. Without limiting the
generality of the foregoing, the Eurocurrency Reserve Percentage shall reflect
any reserves required to be maintained by the Lender against (i) any category of
liabilities that includes deposits by reference to which the Eurodollar Rate is
to be determined or (ii) any category of extensions of credit or other assets
that includes Eurodollar advances. The Eurocurrency Reserve Percentage shall be
the reserve requirement percentage for the "computation period" in which the
interest determination date
falls, as reflected in a publication of the Board of Governors of the Federal
Reserve System (or any successor thereto).
"Eurodollar Advance" means an Advance designated as such in a notice of
borrowing under Section 2.5(a) or a notice of continuation or conversion under
Section 2.5(b).
"Eurodollar Interbank Rate" means the offered rate for deposits in
United States Dollars (rounded upward, if necessary, to the nearest 1/16 of 1%)
for delivery of such deposits on the first day of an Interest Period of a
Eurodollar Advance, for the number of days comprised therein which appears on
the Reuters Screen LIBO Page as of 11:00 a.m. London time, on a day that is two
Business Days preceding the first day of the Interest Period of such Eurodollar
Advance. If at least two rates appear on the Reuters Screen LIBO Page, the rate
for such Interest Period shall be the arithmetic mean of such rates (rounded as
provided above). If fewer than two rates appear, the rate for each Interest
Period shall be determined by the Lender based on rates offered to the Lender
for United States Dollar deposits in the interbank eurodollar market.
"Eurodollar Rate" means a rate per annum (rounded upward, if necessary,
to the nearest 1/16 of 1%) determined on each interest determination date
pursuant to the following formula:
Eurodollar Rate = [ LIBOR Rate ]
[------------------------------------]
[ 1.00 - Eurocurrency Reserve]
Percentage
In such formula, capitalized terms have the meanings provided in the
other definitions in this Agreement.
"Eurodollar Rate (Reserve Adjusted)" means a rate per annum (rounded
upward, if necessary, to the nearest 1/16 of 1%) calculated for the Interest
Period of a Eurodollar Advance in accordance with the following formula:
ERRA = Eurodollar Interbank Rate
-------------------------
1.00 - ERR
in such formula, "ERR" means "Eurodollar Reserve Rate" and "ERRA" means
"Eurodollar Rate (Reserve Adjusted)", in each instance as determined by the
Lender for the applicable Interest Period. The Lender's determination of all
such rates for any Interest Period shall be conclusive in the absence of
manifest error.
"Eurodollar Reserve Rate" means a percentage equal to the daily average
during such Interest Period for the aggregate maximum reserve requirements
(including all basic, supplemental, marginal and other reserves), as specified
under Regulation D of the Federal Reserve Board or any other applicable
regulation applying generally to all banks of the same type and classification
as the Lender or any Person controlling the Lender that prescribes reserve
requirements applicable to Eurocurrency liabilities (as presently defined in
Regulation D) or applicable to extensions of credit by the Lender the rate of
interest on which is determined with regard to rates applicable to Eurocurrency
liabilities. Without limiting the generality of the foregoing, the Eurodollar
Reserve Rate shall reflect any reserves required to be maintained by the Lender
against (i) any category of liabilities that includes deposits by reference to
which the LIBOR Rate is to be determined, or (ii) any category of extensions of
credit or other assets that includes Daily Eurodollar Advances.
"Event of Default" means any event of default described in Section 8.1
hereof.
"GAAP" means the generally accepted accounting principles in the United
States in effect from time to time including, but not limited to, Financial
Accounting Standards Board (FASB) Standards and Interpretations, Accounting
Principles Board (APB) Opinions and Interpretations, Committee on
Accounting Procedure (CAP) Accounting Research Bulletins, and certain other
accounting principles which have substantial authoritative support.
"Interest Period" means, for any Eurodollar Advance, the period
commencing on the borrowing date of such Eurodollar Advance or the date a
Reference Rate Advance or Daily Eurodollar Advance is converted into such
Eurodollar Advance, or the last day of the preceding Interest Period for such
Eurodollar Advance as the case may be and ending on the numerically
corresponding day which is thirty (30), sixty (60) or ninety (90) days
thereafter, as selected by the Borrower pursuant to Section 2.5(a) or Section
2.5(b), provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business
Day unless such next succeeding Business Day falls in another calendar
month, in which case such Interest Period shall end on the next
preceding Business Day; and
(b) any Interest Period which begins on the last Business Day
of a calendar month (or a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the
end of such Interest Period; and
(c) no Interest Period shall extend beyond the Maturity of the
Revolving Credit Note.
"Lender" means First Bank National Association, a national banking
association, its successors and assigns.
"Letter of Credit" means any letter of credit issued by the Lender for
the account of the Borrower, together with all amendments, modifications,
replacements or restatements thereof.
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%), on the interest determination date for a period of one
month, as such offered rate appears on the Reuters Screen LIBO Page as of 11:00
a.m., London time, on the interest determination date. If at least two rates
appear on the Reuters Screen LIBO Page, the rate for the interest determination
date shall be the arithmetic mean of such rates (rounded as provided above). If
fewer than two rates appear, the rate for such interest determination date shall
be determined by the Lender based on rates offered to the Lender for United
States Dollar deposits in the interbank eurodollar market.
"Lien" means any lien, security interest, pledge, mortgage, statutory
or tax lien, or other encumbrance of any kind whatsoever (including without
limitation, the lien or retained security title of a conditional vendor),
whether arising under a security instrument or as a matter of law, judicial
process or otherwise or by an agreement of the Borrower to grant any lien or
security interest or to pledge, mortgage or otherwise encumber any of its
assets.
"Loan Documents" means this Credit Agreement, the Notes and such other
documents as the Lender may reasonably require as security for, or otherwise
executed in connection with, any loan hereunder, all as originally executed and
as may be amended, modified or supplemented from time to time by written
agreement between the parties thereto.
"Material Adverse Occurrence" means any occurrence which materially
adversely affects the present or prospective financial condition or operations
of the Borrower, or which impairs, or may impair the ability of the Borrower to
perform its obligations under the Loan Documents.
"Maturity" of the Revolving Credit Note means the earlier of (a) the
date on which the Revolving Credit Note becomes due and payable upon the
occurrence of an Event of Default; or (b) the Termination Date.
"Net Worth" means the aggregate of capital and surplus (and
Subordinated Debt) of the Borrower, all determined in accordance with GAAP.
"Note(s)" means the Revolving Credit Note and any and all promissory
notes and other evidences of indebtedness and repayment obligations of the
Borrower to the Lender delivered in connection with a Letter of Credit, in each
case as originally executed and as may be amended, modified, restated or
replaced pursuant to written agreement signed by the Lender.
"Person" means any natural person, corporation, firm, association,
government, governmental agency or any other entity, whether acting in an
individual fiduciary or other capacity.
"Reference Rate" means the rate of interest established and publicly
announced by the Lender from time to time as its "reference rate". The Lender
may lend to its customers at rates that are at, above or below the Reference
Rate.
"Reference Rate Advance" means an Advance designated as such in a
notice of borrowing under Section 2.5(a) or a notice of continuation or
conversion under Section 2.5(b).
"Regulatory Change" means any change after the date hereof in any (or
the adoption after the date hereof of any new) (a) Federal or state law or
foreign law applying to the Lender; or (b) regulation, interpretation, directive
or request (whether or not having the force of law) applying or in the
reasonable opinion of the Lender applicable to, the Lender of any court or
governmental authority charged with the interpretation or administration of any
law referred to in clause (a) of this definition or of any fiscal, monetary, or
other authority having jurisdiction over the Lender.
"Resetting Eurodollar Rate" means, for each day that any amount is
outstanding under the Revolving Credit Note (each such day being an "interest
determination date"), a rate per annum at all times equal to the Eurodollar Rate
for such interest determination date, plus two hundred fifty (250) basis points.
The Resetting Eurodollar Rate shall be adjusted automatically each Business Day.
"Reuters Screen LIBO Page" means the display designated as page "LIBO"
on the Reuter Monitor Money Rates Service (or such other page as may replace the
LIBO Page on that service for the purpose of displaying London interbank offered
rates of major banks for United States dollar deposits).
"Revolving Credit Commitment" means the sum of One Million and No/100
Dollars ($1,000,000.00) or the Lender's obligation to extend Advances to the
Borrower under Section 2, as the context may require.
"Revolving Credit Loan" means, at any date, the aggregate amount of all
Advances made by the Lender to the Borrower pursuant to Section 2 hereof.
"Revolving Credit Note" means the Revolving Credit Note of even date
herewith in the original principal amount of One Million and No/100 Dollars
($1,000,000.00) made by the Borrower payable to the order of the Lender,
together with all extensions, renewals, modifications, substitutions and changes
in form thereof effected by written agreement between the Borrower and the
Lender.
"Subsidiary" means any corporation of which more than fifty percent
(50%) of the outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether,
at the time, stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time, directly or indirectly, owned by the Borrower and/or one or more
Subsidiary or Affiliate.
"Tangible Net Worth" shall have the meaning ascribed to such term under
GAAP (and shall be reduced by all proper reserves) except that in no event shall
it include any receivables due from officers, directors, shareholders, partners,
or entities affiliated with the Borrower, any leasehold improvements,
patents, copyrights, or trademarks, any goodwill, or any organizational costs,
nor shall it include any prepaid expenses or any investment by the Borrower in
Natus, LLC.
"Termination Date" means the earlier of (a) September 1, 1998; or (b)
the date upon which the obligation of the Lender to make Advances is terminated
pursuant to Section 2.8.
"Working Capital" means, as of any date of determination the Borrower's
Current Assets minus its Current Liabilities.
2. THE REVOLVING CREDIT LOAN
2.1. Commitment for Revolving Credit. Subject to the Conditions of
Lending set forth in Section 4 hereof and as long as no Event of Default has
occurred hereunder, the Lender agrees to make Advances to the Borrower from time
to time from the date of this Credit Agreement through the Termination Date,
provided, however, that the Lender shall not be obligated to make any Advance,
if after giving effect to such Advance, the aggregate outstanding principal
amount of all Advances would exceed the Revolving Credit Commitment. Within the
limits set forth above, the Borrower may borrow, repay and reborrow amounts
under the Revolving Credit Note.
2.2. Purpose of Loan/Use of Proceeds. The Borrower will use the
proceeds of any Advance hereunder and any Letters of Credit issued hereunder for
the Borrower's general corporate purposes.
2.3. The Revolving Credit Note. All Advances shall be evidenced by, and
the Borrower shall repay such Advances to the Lender in accordance with, the
terms of the Revolving Credit Note, including without limitation the provision
of the Revolving Credit Note that the principal amount payable thereunder at any
time shall not exceed the then unpaid principal amount of all Advances made by
the Lender.
2.4. Records of Advances and Payments. The Borrower hereby irrevocably
authorizes the Lender to make or cause to be made, at or about the time each
Advance is made by the Lender, an appropriate notation on the Lender's records
of the principal amount of such Advance and the Lender shall make or cause to be
made, on or about the time a payment of any principal or interest of the
Revolving Credit Note is received an appropriate notation of such payment on its
records. The aggregate amount of all unpaid Advances set forth on the records of
the Lender shall be rebuttable presumptive evidence of the principal amount
owing and unpaid on the Revolving Credit Note.
2.5. Interest on the Revolving Credit Note. The Borrower agrees to pay
interest on the unpaid balance of the Revolving Credit Note outstanding from
time to time at the following rates: (i) the Reference Rate as to all Reference
Rate Advances; (ii) the Resetting Eurodollar Rate, as to all Daily Eurodollar
Advances; and (iii) the Eurodollar Rate (Reserve Adjusted) plus 250 basis points
as to all Eurodollar Advances, all in accordance with the terms of this Credit
Agreement. All Advances outstanding under the Revolving Credit Note shall be
deemed Daily Eurodollar Advances, unless the Borrower elects to designate,
continue or convert such Advances to Reference Rate Advances or Eurodollar
Advances pursuant to procedures outlined in Section 2.6 below. Upon the
occurrence and continuation of an Event of Default interest shall accrue on all
amounts outstanding under the Revolving Credit Note at an annual rate equal to
the greater of (i) the rate applicable prior to such Event of Default plus two
hundred (200) basis points, or (ii) the Reference Rate plus two hundred (200)
basis points.
2.6. Borrowing, Continuing or Converting Advances.
(a) Manner of Borrowing. Any request by the Borrower for an
Advance shall be by telephone (or, in the case of all Eurodollar
Advances, in writing or by telephone promptly confirmed in writing) and
must be given so as to be received by the Lender not later than:
(1) 1:00 p.m. (Minneapolis time) on the date of the
requested Advance if the Advance shall be a Reference
Rate Advance or Daily Eurodollar Advance; or
(2) 9:30 a.m. (Minneapolis time) two (2) Business Days
prior to the date of the requested Advance, if the
Advance shall be a Eurodollar Advance.
Each request for an Advance shall specify: (i) the borrowing date
(which shall be a Business Day), (ii) the amount of the Advance and the
type of Advance, subject to the limitations elsewhere in this Credit
Agreement, and (iii) if the Advance is to be a Eurodollar Advance, the
Interest Period for such Advance. Unless the Lender determines that
conditions set forth in this Credit Agreement have not been satisfied,
each Advance shall be deposited into the Borrower's account number
1-801-2060-0150 with the Lender.
(b) Manner of Continuation or Conversion. The Borrower may
elect to (i) continue any outstanding Eurodollar Advance from one
Interest Period into a subsequent Interest Period to begin on the last
day of the earlier Interest Period, or (ii) convert any outstanding
Advance into another type of Advance (on the last day of an Interest
Period only, in the instance of a Eurodollar Advance), by giving the
Lender notice by telephone (or, in the case of continuations of or
conversions to Eurodollar Advances, in writing or by telephone promptly
confirmed in writing) given so as to be received by the Lender not
later than:
(1) 1:00 p.m. (Minneapolis time) on the date of the
requested continuation or conversion if the continuing or
converted shall be a Reference Rate Advance or Daily
Eurodollar Advance; or
(2) 9:30 a.m. (Minneapolis time) two (2) Business
Days prior to the date of the requested continuation or
conversion, if the continuing or converted Advance shall be a
Eurodollar Advance.
Each notice of continuation or conversion of an Advance shall specify:
(i) the effective date of the continuation or conversion (which shall
be a Business Day), (ii) the amount and the type or types of Advances
following such continuation or conversion (subject to limitations
contained elsewhere in this Credit Agreement), and (iii) for
continuation as, or conversion into, Eurodollar Advances, the Interest
Periods for such Advances. Absent timely notice of continuation or
conversion, each Eurodollar Advance shall automatically convert into a
Daily Eurodollar Advance on the last day of an applicable Interest
Period, unless paid in full on such last day. No Advance shall be
continued as, or converted into, a Eurodollar Advance if the shortest
Interest Period for such Advance may not transpire prior to the
Maturity of the Revolving Credit Note or if a Default or Event of
Default shall exist.
2.7. Payments. All principal outstanding under the Revolving Credit
Note shall be due and payable on the Maturity thereof. The Borrower shall pay
interest accrued on amounts outstanding under the Revolving Credit Note as
follows:
(a) as to Reference Rate Advances and Daily Eurodollar
Advances, accrued interest shall be due and payable on the first day of
each month, beginning September 1, 1997, and at Maturity; and
(b) as to Eurodollar Advances, accrued interest shall be due
and payable on the last day of each Interest Period.
Any other provision of this Credit Agreement to the contrary notwithstanding,
the Borrower shall make all payments of interest on and principal of the
Revolving Credit Note in immediately available funds to the Lender at its office
shown on the first page hereof. The Borrower authorizes the Lender to charge
from
time to time against the Borrower's account no. 1-801-2060-0150 with the Lender
any payments on the Revolving Credit Note when due.
2.8. Termination. The obligation of the Lender to make Advances shall
terminate:
(a) Upon receipt by the Lender of three (3) days' written
notice of termination from the Borrower given at any time when no
amount is outstanding under the Revolving Credit Note;
(b) Immediately and without further action upon the occurrence
of an Event of Default of the nature referred to in Subsection 8.1(c)
or
(c) Immediately when any Event of Default (other than of the
nature specified in Subsection 8.1(c) shall have occurred and be
continuing and either (i) the Lender shall have demanded payment of the
Revolving Credit Note or (ii) the Lender shall so elect to terminate
its obligation to make Advances by giving notice to Borrower.
2.9. Additional Terms Regarding Eurodollar Advances. No portion of the
principal outstanding under the Revolving Credit Note may be designated as,
converted into, or continued as, a Eurodollar Advance unless such portion is in
increments of $100,000.00. No Advance to be designated as, converted into, or
continued as, a Eurodollar Advance shall include principal to be paid under the
terms of the Revolving Credit Note during the Interest Period applicable to such
Advance. Notwithstanding anything to the contrary contained in this Credit
Agreement, the Borrower may only designate, convert to or continue Eurodollar
Advances for Interest Periods of thirty (30), sixty (60) or ninety (90) days.
2.10. Voluntary Repayments of Reference Rate Advances and Daily
Eurodollar Advances. The Borrower may, at any time, repay all or any part of any
Reference Rate Advance or Daily Eurodollar Advance. The Borrower may also, upon
at least two (2) Business Days prior written or telephonic notice received by
the Lender, repay the total outstanding principal of one or more Eurodollar
Advances, subject to the provisions of Section 2.11 of this Credit Agreement.
Any repayment of principal outstanding under the Revolving Credit Loan shall be
accompanied by the interest accrued thereon through such date, together with any
additional amounts due under Section 2.11.
2.11. Funding Losses. The Borrower will indemnify the Lender upon
demand against any loss or expense which the Lender may sustain or incur
(including, without limitation, any loss or expense sustained or incurred in
obtaining, liquidating or employing deposits or other funds acquired to effect,
fund or maintain any Advance) as a consequence of (i) any failure of the
Borrower to make any payment when due of any amount due hereunder or under the
Revolving Credit Note, (ii) any failure by the Borrower to borrow, continue or
convert an Advance on a date specified therefor in a notice thereof, or (iii)
any payment (including without limitation any payment pursuant to Section 2.10),
prepayment or conversion of any Eurodollar Advance on a date other than the last
day of the Interest Period for such Advance. Determinations by the Lender for
purposes of this Section 2.11 of the amount required to indemnify the Lender
shall be conclusive in the absence of manifest error.
3. ADDITIONAL PROVISIONS REGARDING EURODOLLAR ADVANCES
3.1. Funding.
(a) Discretion of the Bank as to Manner of Funding.
Notwithstanding any provision of this Credit Agreement to the contrary,
the Bank shall be entitled to fund and maintain its funding of all or
any part of the Advances in any manner it elects; it being understood,
however, that for purposes of this Credit Agreement, all determinations
hereunder shall be made as if the Bank had actually funded and
maintained each Eurodollar Advances during the Interest Period
applicable to such Advance through the purchase of deposits having a
term corresponding to such Interest Period and bearing an interest rate
equal to the Eurodollar Interbank Rate for such Interest Period
(whether or not the Bank shall have granted any participations in any
such Advances).
(b) Funding Through the Sale of Participations.
Notwithstanding any provision of this Credit Agreement to the contrary,
the Company acknowledges that the Bank may fund all or any part of the
Advances by sales of participations to various participants and agrees
that the Bank may, in invoking its rights under Article 2 and
specifically including Section 2.11, demand and receive payment for
costs and other amounts incurred by, or allocable to, any such
participant, or take any other action arising from circumstances
applicable to any such participant, to the same extent that such
participant could demand and receive payments or take any other action
under such Section 2.11 or otherwise under Article 2 if such
participant were the Bank under this Credit Agreement.
(c) Funding Through Branch or Affiliate. At the Bank's sole
option it may fulfill its commitment to make Eurodollar Advances by
causing a foreign branch or an affiliate to make or continue such
Eurodollar Advances; provided, that in such instance such Eurodollar
Advances shall be deemed for purposes of this Credit Agreement to have
been made by the Bank and the obligation of the Company to repay such
Eurodollar Advances shall be to the Bank and shall be deemed held by
the Bank for the account of such branch or affiliate.
3.2. Increased Costs. If, as a result of any law, rule, regulation,
treaty or directive, or any change therein or in the interpretation or
administration thereof, or compliance by the Bank with any request or directive
(whether or not having the force of law) from any court, central bank,
governmental authority, agency or instrumentality, or comparable agency:
(a) any tax, duty or other charge with respect to any Advance,
the Revolving Credit Note, or the Revolving Credit Commitment is
imposed, modified or deemed applicable, or the basis of taxation of
payments to the Bank of interest or principal of the Advances or any
fees with respect to the Revolving Credit Commitment (other than taxes
imposed on the overall net income of the Bank by any applicable
governmental authority) is changed;
(b) any reserve, special deposit, special assessment or
similar requirement against assets of, deposits with or for the account
of, or credit extended by, the Bank is imposed, modified or deemed
applicable;
(c) any increase in the amount of capital required or expected
to be maintained by the Bank or any Person controlling the Bank is
imposed, modified or deemed applicable; or
(d) any other condition affecting this Credit Agreement or the
Revolving Credit Commitment is imposed on the Bank or the relevant
funding markets;
and the Bank determines that, by reason thereof, the cost to the Bank of making
or maintaining the Advances or the Revolving Credit Commitments is increased, or
the amount of any sum receivable by the Bank hereunder or under the Revolving
Credit Note is reduced; then the Company shall pay to the Bank upon demand such
additional amount or amounts as will compensate the Bank (or the controlling
Person in the instance of (c) above) for such additional costs or reduction
(provided that the Bank has not been compensated for such additional cost ore
reduction in the calculation of the Eurodollar Reserve Rate or the Eurocurrency
Reserve percentage). Determinations by the Bank for purposes of this Section of
the additional amounts required to compensate the Bank shall be conclusive in
the absence of manifest error. In determining such amounts, the Bank may use any
reasonable averaging, attribution and allocation methods.
3.3. Changes in Law Rendering Eurodollar Advances Unlawful. If at any
time due to the adoption of any law, rule, regulation, treaty or directive, or
any change therein or in the interpretation or administration thereof by any
court, central bank, governmental authority, agency or instrumentality, or
comparable agency charged with the interpretation or administration thereof, or
for any other reason arising subsequent to the date of this Credit Agreement, it
shall become unlawful or impossible for the Bank to fund any Daily Eurodollar
Advance or Eurodollar Advance, the obligation of the Bank to make any Advance
for Daily Eurodollar Advances or Eurodollar Advances to provide such Advance
shall, upon the
happening of such event, forthwith be suspended for the duration of such
illegality or impossibility. If any such event shall make it unlawful or
impossible for the Bank to continue any Daily Eurodollar Advance or Eurodollar
Advance previously made by it hereunder the Bank shall, upon the happening of
such event, notify the Company thereof in writing, and the Company shall, at the
time notified by the Bank, either convert such unlawful Advance to an Advance of
another type or repay such Advance in full, together with accrued interest
thereon, subject to the provisions of Section 2.11.
3.4. Interest Rate Not Ascertainable, Etc. If the Bank determines
(which determination shall be conclusive and binding on the parties hereto)
that:
(a) Deposits of the necessary amount for the relevant Interest
Period for any Eurodollar Advance are not available to the Bank in the
relevant markets or that, by reason of circumstances affecting such
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Interbank Rate or the LIBOR Rate, as the case may be, for
such Interest Period;
(b) The Eurodollar Rate (Reserve Adjusted) or Eurodollar Rate,
as the case may be, will not adequately and fairly reflect the cost to
the Bank of making or funding the Eurodollar Advances or Daily
Eurodollar Advances, as the case may be, for a relevant Interest
Period; or
(c) The making or funding of Eurodollar Advances or Daily
Eurodollar Advances, as the case may be, has become impracticable as a
result of any event occurring after the date of this Credit Agreement
which, in the opinion of the Bank, materially and adversely affects
such Advances or the Bank's Commitment to make such Advances or the
relevant market;
then the Bank shall promptly give notice of such determination to the Company
and (i) any notice of a new Eurodollar Advance or Daily Eurodollar Advance, as
the case may be, previously given by the Company and not yet borrowed or
converted shall be deemed to be a notice to make an Advance of another type, as
selected by the Company, and (ii) the Company shall be obligated to either
prepay in full any outstanding Eurodollar Advances or Daily Eurodollar Advances,
as the case may be, without premium or penalty on the last day of the current
Interest Period with respect thereto, or convert any such Advance to an Advance
of another type, as selected by the Company, on such last day.
4. CONDITIONS OF LENDING
4.1. Conditions Precedent. This Credit Agreement and the Lender's
obligations hereunder are subject to receipt by the Lender of the following,
each to be in form and substance satisfactory to the Lender, unless the Lender
waives receipt of any of the following in writing:
(a) This Credit Agreement and the Revolving Credit Note each
appropriately completed and duly executed by the Borrower;
(b) A current UCC secured transaction search, reflecting
results satisfactory to the Lender, on the Borrower from the
appropriate filing offices as required by the Lender;
(c) Certification by the Borrower's corporate secretary that
copies of the Borrower's Bylaws and Articles of Incorporation, and all
amendments to both, have been previously delivered by the Borrower to
the Lender and that neither has been further amended since such time
and that the most recent incumbency certificate delivered by the
Borrower to the Lender remains in full force and effect and the
officers listed therein remain in the offices listed and remain
authorized to execute this Credit Agreement, the Notes and all related
documents and agreements on behalf of the Borrower;
(d) A copy of the resolutions of the Board of Directors of the
Borrower authorizing or ratifying the transactions contemplated hereby,
and the execution, delivery and performance of
the Loan Documents, and designating the officers authorized to execute
the Loan Documents to which the Borrower is a party and to perform the
obligations of the Borrower thereunder; and
(e) Such other documents, information and actions as the
Lender may reasonably request.
4.2. Conditions Precedent to all Advances. The obligation of the Lender
to make any Advance hereunder, including the initial Advance, is subject to the
satisfaction of each of the following, unless waived in writing by the Lender:
(a) The representations and warranties set forth in Section 5
are true and correct in all material respects on the date hereof and on
the date of any Advance.
(b) No Default or Event of Default shall have occurred and be
continuing.
(c) No litigation, arbitration or governmental investigation
or proceeding shall be pending, or, to the knowledge of the Borrower,
threatened, against the Borrower or affecting the business or
operations of the Borrower which was not previously disclosed to the
Lender and which, if determined adversely to the Borrower, would have a
material adverse effect on the operation or financial condition of the
Borrower.
(d) No Default or Event of Default shall result from the
making of any such Advance.
(e) No Material Adverse Occurrence shall have occurred and be
continuing.
5. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender as follows:
5.1. Organization, etc. The Borrower is corporation validly organized
and existing and in good standing under the laws of the State of Minnesota, has
full power and authority to own its property and conduct its business
substantially as presently conducted by it and is duly qualified to do business
and is in good standing as a foreign corporation in each other jurisdiction
where the nature of its business makes such qualification necessary. The
Borrower has full power and authority to enter into and perform its obligations
under the Loan Documents and to obtain the loans and Advances hereunder.
5.2. Due Authorization. The execution, delivery and performance by the
Borrower of the Loan Documents have been duly authorized by all necessary
corporate action, do not require any approval or consent of, or any
registration, qualification or filing with, any governmental agency or authority
or any approval or consent of any other Person (including, without limitation,
any stockholder), do not and will not conflict with, result in any violation of
or constitute any default under, any provision of the Borrower's Articles of
Incorporation or Bylaws, any agreement binding on or applicable to the Borrower
or any of its property, or any law or governmental regulation or court decree or
order, binding upon or applicable to the Borrower or of any of its property and
will not result in the creation or imposition of any Lien on any of its property
pursuant to the provisions of any agreement binding on or applicable to the
Borrower or any of its property except pursuant to the Loan Documents.
5.3. Validity of the Loan Documents. The Loan Documents to which the
Borrower is a party are the legal, valid and binding obligations of the Borrower
and are enforceable in accordance with their terms, subject only to bankruptcy,
insolvency, reorganization, moratorium or similar laws, rulings or decisions at
the time in effect affecting the enforceability of rights of creditors generally
and to general equitable principles which may limit the right to obtain
equitable remedies.
5.4. Financial Information. The financial statements of the Borrower
furnished to the Lender have been and will be prepared in accordance with GAAP
consistently applied by the Borrower and present fairly the financial condition
of the Borrower as of the dates thereof and for the periods
covered thereby. The Borrower is not aware of any contingent liabilities or
obligations which would, upon becoming non-contingent liabilities or
obligations, be a Material Adverse Occurrence. Since the date of the most recent
such statements, neither the condition (financial or otherwise), the business
nor the properties of the Borrower have been materially and adversely affected
in any way.
5.5. Litigation, Other Proceedings. Except as previously disclosed to
and approved of in writing by the Lender, there is no action, suit or proceeding
at law or equity, or before or by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, pending or, to
the knowledge of the Borrower, threatened, against the Borrower or any of its
property, which, if determined adversely would be a Material Adverse Occurrence;
and the Borrower is not in default with respect to any final judgment, writ,
injunction, decree, rule or regulation of any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, where
such default would be a Material Adverse Occurrence.
5.6. Title to Assets. Except for Liens permitted by Section 7.2, the
Borrower has good and marketable title to all of its assets, real and personal.
5.7. Guarantees and Indebtedness. Except as disclosed on financial
statements of the Borrower furnished to the Lender, the Borrower is not a party
to any contract of guaranty or suretyship and none of its assets is subject to
any contract of that nature and the Borrower is not indebted to any other party,
except the Lender.
5.8. Margin Stock. No part of any loan or Advance hereunder shall be
used at any time by the Borrower to purchase or carry margin stock (within the
meaning of Regulation U promulgated by the Board of Governors of the Federal
Reserve System) or to extend credit to others for the purpose of purchasing or
carrying any margin stock. The Borrower is not engaged principally, or as one of
its important activities, in the business of extending credit for the purposes
of purchasing or carrying any such margin stock. No part of the proceeds of any
loan or Advance hereunder will be used by the Borrower for any purpose which
violates, or which is inconsistent with, any regulations promulgated by the
Board of Governors of the Federal Reserve System.
5.9. Taxes. The Borrower has filed all federal, state and other income
tax returns which are required to be filed through the date of this Credit
Agreement and has paid all taxes as shown on said returns, and all taxes due or
payable without returns and all assessments received to the extent such taxes
and assessments have become due. All tax liabilities of the Borrower are
adequately provided for on its books, including interest and penalties. No
income tax liability of a material nature has been asserted by taxing
authorities for taxes in excess of those already paid. The Borrower has made all
required withholding deposits.
5.10. Accuracy of Information. All factual information furnished by or
on behalf of the Borrower to the Lender for purposes of or in connection with
this Credit Agreement or any transaction contemplated by this Credit Agreement
is, and all other such factual information furnished by or on behalf of the
Borrower to the Lender in the future, will be true and accurate in every
material respect on the date as of which such information is dated or certified.
No such information contains any material misstatement of fact or omits any
material fact or any fact necessary to prevent such information from being
misleading.
5.11. Material Agreements. The Borrower is not a party to any agreement
or instrument or subject to any restriction that materially and adversely
affects its business, property or assets, operations or condition (financial or
otherwise).
5.12. Defaults. The Borrower is not in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any: (a) agreement to which such entity is a party, which default
might have a material adverse effect on the business, properties or assets,
operations, or condition (financial or otherwise) of the Borrower; or (b)
instrument evidencing any indebtedness or under any agreement relating to such
indebtedness.
5.13. ERISA. (a) No Reportable Event has occurred and is continuing
with respect to any Plan; (b) the Pension Benefit Guaranty Corporation or any
successor entity has not instituted proceedings to terminate any Plan; and (c)
each Plan of the Borrower has been maintained and funded in all material
respects in accordance with its terms and with ERISA. All undefined capitalized
terms used in this Section shall have the meanings ascribed to them in ERISA.
5.14. Financial Status. The Borrower is not insolvent (as such term is
defined in Section 101(29) of the United States Bankruptcy Code of 1978, as
amended or Minnesota Statutes Section 513.42, as amended) and will not be
rendered insolvent (as such term is defined in Section 101(29) of the United
States Bankruptcy Code of 1978, as amended or Minnesota Statutes Section 513.42,
as amended) by execution of this Credit Agreement or any other of the Loan
Documents, or consummation of the transactions contemplated thereby.
5.15. Survival of Representations. All representations and warranties
contained in this Section 5 shall survive the delivery of the Notes and the
making of the loans and Advances evidenced thereby and any investigation at any
time made by or on behalf of Lender shall not diminish its rights to rely
thereon.
6. AFFIRMATIVE COVENANTS
As long as there remains any amount outstanding under the Notes or the
Lender has any obligation to make Advances under the Revolving Loan Commitment,
the Borrower shall, unless waived in writing by the Lender:
6.1. Financial Statements and Reports. Furnish to the Lender, at the
times set forth below, the following financial statements, reports and
information:
(a) As soon as available, but in any event within one hundred
twenty (120) days after each fiscal year end, audited financial
statements of the Borrower including without limitation a balance
sheet, income statement and sources of income certified by certified
public accountants satisfactory to the Lender to have been prepared in
accordance with GAAP consistently applied;
(b) As soon as available but in any event within one hundred
twenty (120) days after each fiscal year end a copy of the form 10K
Report filed for such year by the Borrower with the Securities and
Exchange Commission or other governmental entity;
(c) As soon as available, but in any event within sixty (60)
days after the last day of each quarterly fiscal period a copy of the
form 10-Q Report for such quarter filed by the Borrower with the
Securities and Exchange Commission or other governmental entity;
(d) With the year-end report delivered pursuant to 6.1(b)
above and with the quarterly financial report delivered pursuant to
6.1(c) above, a compliance certificate executed by the Chief Financial
Officer of the Borrower in the form of Exhibit A hereto, whereby the
Borrower demonstrates its compliance with its covenants and
undertakings under this Credit Agreement;
(e) With the year-end report delivered pursuant to 6.1(b)
above and with the quarterly financial report delivered pursuant to
6.1(c) above, a copy of any and all shareholder reports delivered in
connection therewith; and
(f) Such other information concerning the business, operations
and condition (financial or otherwise) of the Borrower as the Lender
may reasonably request.
6.2. Maintenance of Corporate Existence. Maintain and preserve its
corporate existence.
6.3. Taxes. Pay and discharge as the same shall become due and payable,
all taxes, assessments and other governmental charges and levies against or on
any of its property, as well as
claims of any kind which, if unpaid, might become a Lien upon any of its
properties, unless such tax, levy, charge assessment or Lien is being contested
in good faith by the Borrower and is supported by an adequate book reserve. The
Borrower shall make all required withholding deposits.
6.4. Notices. As soon as practicable, give notice to the Lender of:
(a) The commencement of any litigation relating to the
Borrower involving claimed damages in excess of $100,000.00 or relating
to the transactions contemplated by this Credit Agreement;
(b) The commencement of any material arbitration or
governmental proceeding or investigation not previously disclosed to
the Lender which has been instituted or, to the knowledge of the
Borrower, is threatened against the Borrower or its property which, if
determined adversely to the Borrower, would have a material adverse
effect on the business, operations or condition (financial or
otherwise) of the Borrower;
(c) Any Reportable Event or "prohibited transaction" or the
imposition of a Withdrawal Liability, within the meaning of ERISA, in
connection with any Plan and, when known, any action taken by the
Internal Revenue Service, Department of Labor or Pension Benefit
Guaranty Corporation with respect thereto, and any adverse development
which occurs in any litigation, arbitration or governmental
investigation or proceeding previously disclosed to the Lender which if
determined adversely to the Borrower would constitute a Material
Adverse Occurrence; and
(d) Any Default or Event of Default under this Credit
Agreement.
6.5. Compliance with Laws. Carry on its business activities in
substantial compliance with all applicable federal or state laws and all
applicable rules, regulations and orders of all governmental bodies and offices
having power to regulate or supervise its business activities. The Borrower
shall maintain all material rights, liens, franchises, permits, certificates of
compliance or grants of authority required in the conduct of its business.
6.6. Books and Records. Keep books and records reflecting all of its
business affairs and transactions in accordance with GAAP consistently applied
and permit the Lender, and its representatives, at reasonable times and
intervals, to visit all of its offices, discuss its financial matters with
officers of the Borrower and its independent public accountants (and by this
provision the Borrower authorizes its independent public accountants to
participate in such discussions) and examine any of its books and other
corporate records.
6.7. Insurance. The Borrower shall keep its business adequately insured
and maintain the insurance coverages required under any document securing the
Notes or this Credit Agreement.
6.8. Conduct of Business. Continue to engage primarily in the business
being conducted on the date of this Credit Agreement.
6.9. Working Capital. Maintain at all times Working Capital of not less
than Three Million and No/100 Dollars ($3,000,000.00).
6.10. Tangible Net Worth; Net Worth. Maintain at all times Tangible Net
Worth in an amount not less than Eight Million Dollars ($8,000,000) and maintain
at all times Net Worth in an amount not less than Eight Million Five Hundred
Thousand Dollars ($8,500,000).
6.11. Current Ratio. Maintain at all times a Current Ratio of not less
than 2.5 to 1.0.
6.12. Debt to Tangible Net Worth Ratio. Maintain at all times a ratio
of its Debt to its Tangible Net Worth of not more than .50 to 1.0.
6.13. Zero Balance. Maintain a zero balance under the Revolving Credit
Note for at least thirty (30) days during the term thereof.
6.14. Further Assurances. The Borrower agrees upon reasonable request
by the Lender to execute and deliver such further instruments, deeds and
assurances, and do such further acts as may be necessary or proper to carry out
more effectively the purposes of this Credit Agreement and the other Loan
Documents.
6.15. ERISA Compliance. Comply at all times with all applicable
provisions of ERISA and the regulations and published interpretations
thereunder.
6.16. Letters of Credit. The Borrower agrees that if it wishes from
time to time to have the Lender issue for the Borrower's account one or more
Letters of Credit, the Lender shall only be obligated to issue any such Letter
of Credit upon completion of all applications, agreements for repayment and
other documentation deemed necessary by the Lender for such Letter of Credit in
accordance with its standard practices. The Borrower further agrees that (i) any
repayment agreement or other evidence of the Borrower's obligation to repay
amounts outstanding under a Letter of Credit will be deemed one of the "Notes"
for purposes of this Credit Agreement; (ii) the Borrower will pay to the Lender
in connection with Letters of Credit all fees and costs in accordance with the
Lender's customary and standard practices for letters of credit of the same type
and amount and interest accrued on amounts advanced thereunder at the rate or
rates described in the documents executed in connection with each such Letter of
Credit; and (iii) no Letter of Credit shall expire later than the maturity date
of the Revolving Credit Note stated thereon.
7. NEGATIVE COVENANTS
As long as there remains any amount outstanding under the Notes or the
Lender has any obligation to make Advances under the Revolving Loan Commitment,
the Borrower shall not, unless waived in writing by the Lender:
7.1. Consolidation; Merger; Sale of Assets; Acquisitions. Consolidate
with or merge into or with any other entity; or sell (other than sales of
inventory in the ordinary course of business), transfer, lease or otherwise
dispose of all or a substantial part of its assets; or acquire a substantial
interest in another Person either through the purchase of all or substantially
all of the assets of that Person or the purchase of a controlling equity
interest in that Person.
7.2. Liens. Create, incur, assume or suffer to exist any Lien on any of
its property, real or personal, except (a) Liens in favor of the Lender; (b)
Liens disclosed to and approved of in writing by the Lender; (c) Liens for
current taxes and assessments which are not yet due and payable; and (d)
purchase money security interests to secure the indebtedness permitted under
Section 7.3(d) below.
7.3. Additional Indebtedness. Create, incur, assume or suffer to exist
any indebtedness except: (a) indebtedness in favor of the Lender; (b) current
liabilities incurred in the ordinary course of business; (c) indebtedness
existing on the date of this Credit Agreement and disclosed to and approved of
in writing by the Lender; and (d) purchase money indebtedness incurred in
connection with the acquisition of fixed assets not to exceed $350,000.00 in the
aggregate during any fiscal year of the Borrower.
7.4. Guaranties. Assume, guarantee, endorse or otherwise become liable
in connection with the indebtedness of any other person or entity except
endorsements of negotiable instruments for deposit or collection in the ordinary
course of business.
7.5. Change in Ownership. Permit a material change in the ownership or
management of the Borrower as in effect on the date of this Credit Agreement.
8. EVENTS OF DEFAULT AND REMEDIES
8.1. Events of Default. The term "Event of Default" shall mean any of
the following events:
(a) The Borrower shall default in the payment when due, or if
payable on demand, upon demand, of any principal or interest on any of
the Notes; or
(b) The Borrower shall default (other than a default in
payment under subsection (a) above) in the due performance and
observance of any of the covenants contained in any of the Loan
Documents and such default shall continue unremedied for a period of
fifteen (15) days after notice from the Lender to the Borrower thereof;
or
(c) The Borrower shall become insolvent or generally fail to
pay or admit in writing its inability to pay its debts as they become
due; or the Borrower shall apply for, consent to, or acquiesce in the
appointment of a trustee, receiver or other custodian for itself or any
of its property, or make a general assignment for the benefit of its
creditors; or trustee, receiver or other custodian shall otherwise be
appointed for the Borrower or any of its assets; or any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation
proceeding shall be commenced by or against the Borrower or the
Borrower shall take any corporate action to authorize, or in
furtherance of, any of the foregoing; or
(d) Any judgments, writs, warrants of attachment, executions
or similar process (not undisputedly covered by insurance) in an
aggregate amount in excess of $25,000.00 shall be issued or levied
against the Borrower or any of its assets and shall not be released,
vacated or fully bonded prior to any sale and in any event within
forty-five (45) days after its issue or levy; or
(e) Any garnishment summons, writ of attachment, or other
legal paper referring to the Borrower or any Guarantor shall be served
on the Lender; or
(f) Any representation or warranty set forth in this Credit
Agreement or any other Loan Document shall be untrue in any material
respect on the date as of which the facts set forth are stated or
certified; or
(g) The occurrence of any Material Adverse Occurrence; or
(h) A Reportable Event (as defined under ERISA) shall have
occurred.
8.2. Remedies. If an Event of Default described in Section 8.1(c) shall
occur, the full unpaid balance of the Notes (outstanding balance plus accrued
interest) and all other obligations of the Borrower to the Lender shall
automatically be due and payable without declaration, notice, presentment,
protest or demand of any kind (all of which are hereby expressly waived) and the
obligation of the Lender to make additional Advances shall automatically
terminate. If any other Event of Default shall occur and be continuing, the
Lender may terminate its obligation to make additional Advances and may declare
the outstanding balance of the Notes and all other obligations of the Borrower
to the Lender to be due and payable without further notice, presentment, protest
or demand of any kind (all of which are hereby expressly waived), whereupon the
full unpaid amount of Notes and all other obligations of the Borrower to the
Lender shall become immediately due and payable. Upon any Event of Default, the
Lender shall be entitled to exercise any and all rights and remedies available
under any of the Loan Documents or otherwise available at law or in equity to
collect Notes and all other obligations of the Borrower to the Lender and to
realize upon or otherwise pursue any and all Collateral and other security
(including without limitation any and all guarantees) for the loans under this
Credit Agreement.
9. MISCELLANEOUS
9.1. Waivers, Amendments. The provisions of the Loan Documents may from
time to time be amended, modified, or waived, if such amendment, modification or
waiver is in writing and signed by the Lender. No failure or delay on the part
of the Lender or the holder(s) of the Notes in exercising any power or right
under any of the Loan Documents shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No notice
to or demand on the Borrower in any case shall entitle it to any notice or
demand in similar or other circumstances.
9.2. Notices. All communications and notices provided under this Credit
Agreement shall be in writing and addressed or delivered to the Borrower or the
Lender at their respective addresses shown on the first page hereof, or to any
party at such other address as may be designated by such party in a written
notice to the other parties. Such notices shall be delivered by any of the
following means: (i) mailing through the United States Postal Service, postage
prepaid, by registered or certified mail, return receipt requested; (ii)
delivery by reputable overnight delivery service including without limitation,
and by way of example only: Federal Express, DHL, Airborne Express and Express
Mail; or (iii) delivery by reputable private personal delivery service. Notices
delivered in accordance with (i) above shall be deemed delivered the second
Business Day after deposit in the mail; notices delivered in accordance with
(ii) above shall be deemed delivered the first Business Day after delivery to
the delivery service; and notices delivered in accordance with (iii) above shall
be deemed delivered the same Business Day as that specified by the notifying
party to the delivery service.
9.3. Costs and Expenses. The Borrower agrees to pay all expenses for
the preparation of this Credit Agreement, including exhibits, and any amendments
to this Credit Agreement as may from time to time hereafter be required, and the
reasonable attorneys fees and legal expenses of counsel for the Lender, from
time to time incurred in connection with the preparation and execution of this
Credit Agreement and any document relevant to this Credit Agreement, any
amendments hereto or thereto, and the consideration of legal questions relevant
hereto and thereto. The Borrower agrees to reimburse Lender upon demand for, all
reasonable out-of-pocket expenses (including attorneys fees and legal expenses)
in connection with the Lender's enforcement of the obligations of the Borrower
hereunder or under the Note or any other of the Loan Documents, whether or not
suit is commenced including, without limitation, attorneys fees, and legal
expenses in connection with any appeal of a lower court's order or judgment. The
obligations of the Borrower under this Section 9.3 shall survive any termination
of this Credit Agreement.
9.4. Interest Limitation. All agreements between the Borrower and the
Lender are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the indebtedness
evidenced or secured thereby or otherwise, shall the rate of interest charged or
agreed to be paid to the Lender for the use, forbearance, loaning or detention
of such indebtedness exceed the maximum permissible interest rate under
applicable law ("Maximum Rate"). If for any reason or in any circumstance
whatsoever fulfillment of any provision of this Credit Agreement and/or the
Notes, any document securing or executed in connection herewith or therewith, or
any other agreement between the Borrower and the Lender, at any time shall
require or permit the interest rate applied thereunder to exceed the Maximum
Rate, then the interest rate shall automatically be reduced to the Maximum Rate,
and if the Lender should ever receive interest at a rate that would exceed the
Maximum Rate, the amount of interest received which would be in excess of the
amount receivable after applying the Maximum Rate to the balance of the
outstanding obligation shall be applied to the reduction of the principal
balance of the outstanding obligation for which the amount was paid and not to
the payment of interest thereunder. This provision shall control every other
provision of any and all agreements between the Borrower and the Lender and
shall also be binding upon and applicable to any subsequent holder of the Notes.
9.5. Severability. Any provision of this Credit Agreement or any other
of the Loan Documents executed pursuant hereto which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such portion or unenforceability without invalidating the
remaining provisions of this Credit Agreement or such Loan Document or affecting
the validity or enforceability of such provisions in any other jurisdiction.
9.6. Cross-References. References in this Credit Agreement or in any
other of the Loan Documents executed pursuant hereto to any Section are, unless
otherwise specified, to such Section of this Credit Agreement or such Loan
Document, as the case may be.
9.7. Headings. The various headings of this Credit Agreement or of any
other of the Loan Documents executed pursuant hereto are inserted for
convenience only and shall not affect the meaning or interpretation of this
Credit Agreement or such Loan Document or any provisions hereof or thereof.
9.8. Governing Law; Venue. Each of the Loan Documents shall be deemed
to be a contract made under and governed by the laws of the State of Minnesota.
The Borrower hereby consents to the personal jurisdiction of the state and
federal courts located in the State of Minnesota in connection with any
controversy related to this Credit Agreement and any other of the Loan
Documents, waives any argument that venue in such forums is not convenient and
agrees that any litigation instigated by the Borrower against the Lender in
connection herewith or therewith shall be venued in the federal or state court
that has jurisdiction over matters arising in Minneapolis, Minnesota.
9.9. Successors and Assigns. This Credit Agreement shall be binding
upon and shall inure to the benefit of the parities hereto and their respective
successors and assigns, except that Borrower may not assign or transfer its
rights hereunder without the prior written consent of Lender.
9.10. Recitals Incorporated. The recitals to this Credit Agreement are
incorporated into and constitute an integral part of this Credit Agreement.
9.11. Multiple Counterparts. This Credit Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original and
all of which shall constitute one and the same instrument.
9.12. Prior Loan Agreements Superseded. This Credit Agreement amends,
restates, and supersedes in their entirety the Prior Loan Agreements and all
obligations, liabilities and indebtedness of the Borrower incurred or arising
thereunder shall be deemed to have been incurred and arising hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
LECTEC CORPORATION,
A MINNESOTA CORPORATION
By: /s/Xxxxxxx X. Xxxxx
---------------------------------
Its: Chief Financial Officer
---------------------------------
FIRST BANK NATIONAL ASSOCIATION,
A NATIONAL BANKING ASSOCIATION
By: /s/Xxxxx Xxxxxxxxx
---------------------------------
Its: Assistant Vice President
---------------------------------
