1
EXHIBIT 10(oo)
AMENDED AND RESTATED 1998 LOAN AGREEMENT
First Union National Bank
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
(Hereinafter referred to as the "Bank")
Novametrix Medical Systems Inc.
0 Xxxxxxxxxx Xxxxx, X.X. Xxx 000
Xxxxxxxxxxx, Xxxxxxxxxxx 00000
NTC Technology, Inc.
0 Xxxxxxxxxx Xxxxx, X.X. Xxx 000
Xxxxxxxxxxx, Xxxxxxxxxxx 00000
(Individually and collectively "Borrower")
This Amended and Restated 1998 Loan Agreement ("Agreement") is entered into as
of October 9, 1998, by and between Bank and Borrower, a Corporation organized
under the laws of Delaware.
RECITALS
Bank is the holder of a 1998 Promissory Note executed and delivered by Borrower,
dated as of August 1, 1998, in the original principal amount of up to
$3,500,000.00, as modified by Allonge No. 1 to 1998 Promissory Note of even date
herewith, the effect of which is to increase the original principal amount to up
to $5,000,000.00 (the 1998 Promissory Note as modified by Allonge No. 1 to the
1998 Promissory Note is hereinafter referred to as the "Note"); and certain
other Loan Documents, including a 1998 Loan Agreement, dated as of August 1,
1998 (the "Original Loan Agreement"); and
E-18
2
Borrower and Bank have agreed to modify the terms of the Original Loan Agreement
by replacing the original Loan Agreement with this Agreement.
In consideration of Bank's continued extension of credit and the agreements
contained herein, the parties agree as follows:
Borrower has applied to the Bank for a loan or loans (individually and
collectively, the "Loan") evidenced by the Note as follows:
LINE OF CREDIT - in the principal amount of $5,000,000.00 (the "Principal
Amount") which is evidenced by the 1998 Promissory Note dated as of even date
herewith ("Line of Credit Note"), under which Borrower may borrow, repay, and
reborrow, from time to time, so long as the total indebtedness outstanding at
any one time does not exceed the Principal Amount minus the sum of (i) the
amount available to be drawn plus (ii) the amount of unreimbursed drawings under
all letters of credit issued by Bank for the account of Borrower plus (iii) the
aggregate outstanding amount arising out of foreign exchange services provided
to the Borrower by the Bank as reasonably established by the Bank. The Loan
proceeds are to be used by Borrower solely for working capital. Bank's
obligation to advance or readvance under the Line of Credit Note shall terminate
if Borrower is in Default under the Line of Credit Note.
SUBLIMITS. (i) Standby Letters of Credit. The Bank shall issue standby letters
of credit for the account of the Borrower ("New Standby L/Cs") only when,
combined with any standby or commercial letters of credit outstanding and issued
by the Bank for the account of the Borrower ("Outstanding L/Cs"), the aggregate
available undrawn amount and the drawn but unreimbursed amount of the New
Standby L/Cs and Outstanding L/Cs will not exceed $200,000. The Bank shall not
issue Commercial L/Cs pursuant to this Agreement or the Line of Credit Note.
Subject to the foregoing limitations, the Bank shall issue New Standby L/Cs only
after the Borrower has executed such documentation and paid such fees as the
Bank may require. (ii) Foreign Exchange. The Borrower may utilize foreign
currency exchange services provided by the Bank up to a maximum credit
E-19
3
exposure of $150,000 in the aggregate to be outstanding at any time, provided,
however, that forward contracts shall be limited to $125,000 and the maximum
daily settlement limit shall be $25,000.
This Agreement amends, restates and replaces in its entirety that certain 1998
Loan Agreement dated as of August 1, 1998.
This Agreement applies to the Loan and all Loan Documents. The terms "Loan
Documents" and "Obligations" as used in this Agreement, are defined in the Note.
The term "Borrower" shall include its Subsidiaries and Affiliates. As used in
this Agreement as to Borrower, "Subsidiary" shall mean any corporation of which
more than 50% of the issued and outstanding voting stock is owned directly or
indirectly by Borrower. As to Borrower, "Affiliate" shall have the meaning as
defined in 11 U.S.C. Section 101, except that the term "debtor" therein shall be
substituted by the term "Borrower" herein.
Relying upon the covenants, agreements, representations and warranties contained
in this Agreement, Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions set forth herein, and Bank and Borrower agree as
follows:
REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations: ACCURATE INFORMATION. All
information now and hereafter furnished to Bank is and will be true, correct and
complete. Any such information relating to Borrower's financial condition will
accurately reflect Borrower's financial condition as of the date(s) thereof
(including all contingent liabilities of every type), and Borrower further
represents that its financial condition has not changed materially or adversely
since the date(s) of such documents. AUTHORIZATION; NON-CONTRAVENTION. The
execution, delivery and performance by Borrower and any guarantor, as
applicable, of this Agreement and other Loan Documents to which it is a party
are within its power, have been duly authorized by all necessary action taken by
the duly authorized officers of Borrower and any guarantors and, if necessary,
by making appropriate filings with any governmental agency or unit and are the
legal, binding, valid and enforceable
E-20
4
obligations of Borrower and any guarantors; and do not (i) contravene, or
constitute (with or without the giving of notice or lapse of time or both) a
violation of any provision of applicable law, a violation of the organizational
documents of Borrower or any guarantor, or a default under any agreement,
judgment, injunction, order, decree or other instrument binding upon or
affecting Borrower or any guarantor, (ii) result in the creation or imposition
of any lien (other than the lien(s) created by the Loan Documents) on any of
Borrower's or guarantor's assets, or (iii) give cause for the acceleration of
any obligations of Borrower or any guarantor to any other creditor. ASSET
OWNERSHIP. Borrower has good and marketable title to all of the properties and
assets reflected on the balance sheets and financial statements supplied to Bank
by Borrower, and all such properties and assets are free and clear of mortgages,
security deeds, pledges, liens, charges, and all other encumbrances, except as
otherwise disclosed to Bank by Borrower in writing ("Permitted Liens"). To
Borrower's knowledge, no default has occurred under any Permitted Liens and no
claims or interests adverse to Borrower's present rights in its properties and
assets have arisen. DISCHARGE OF LIENS AND TAXES. Borrower has duly filed, paid
and/or discharged all taxes or other claims which may become a lien on any of
its property or assets, except to the extent that such items are being
appropriately contested in good faith and an adequate reserve for the payment
thereof is being maintained. SUFFICIENCY OF CAPITAL. Borrower is not, and after
consummation of this Agreement and after giving effect to all indebtedness
incurred and liens created by Borrower in connection with the Loan, will not be,
insolvent within the meaning of 11 U.S.C. Section 101(32). COMPLIANCE WITH LAWS.
Borrower is in compliance in all respects with all federal, state and local
laws, rules and regulations applicable to its properties, operations, business,
and finances, including, without limitation, any federal or state laws relating
to liquor (including 18 U.S.C. Section 3617, et seq.) or narcotics (including 21
U.S.C.Section 801, et seq.) and/or any commercial crimes; all applicable
federal, state and local laws and regulations intended to protect the
environment; and the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), if applicable. ORGANIZATION AND AUTHORITY. Each Borrower is duly
created, validly existing and in good standing
E-21
5
under the laws of the state of its organization, and has all powers,
governmental licenses, authorizations, consents and approvals required to
operate its business as now conducted. Each Borrower is duly qualified, licensed
and in good standing in each jurisdiction where qualification or licensing is
required by the nature of its business or the character and location of its
property, business or customers, and in which the failure to so qualify or be
licensed, as the case may be, in the aggregate, could have a material adverse
effect on the business, financial position, results of operations, properties or
prospects of Borrower or any such guarantor. NO LITIGATION. There are no pending
or threatened suits, claims or demands against Borrower or any guarantor that
have not been disclosed to Bank by Borrower in writing. REGULATION U. None of
the proceeds of the Loan made pursuant to this Agreement shall be used directly
or indirectly for the purpose of purchasing or carrying any margin stock in
violation of any of the provisions of Regulation U of the Board of Governors of
the Federal Reserve System ("Regulation U"), or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry
margin stock or for any other purchase which might render the Loan a "Purpose
Credit" within the meaning of Regulation U. ERISA. Each employee pension benefit
plan, as defined in ERISA, maintained by Borrower meets, as of the date hereof,
the minimum funding standards of ERISA and all applicable regulations thereto
and requirements thereof, and of the Internal Revenue Code of 1954, as amended.
No "Prohibited Transaction" or "Reportable Event" (as both terms are defined by
ERISA) has occurred with respect to any such plan.
AFFIRMATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will: BUSINESS CONTINUITY. Conduct its business in
substantially the same manner and locations as such business is now and has
previously been conducted. MAINTAIN PROPERTIES. Maintain, preserve and keep its
property in good repair, working order and condition, making all needed
replacements, additions and improvements thereto, to the extent allowed by this
Agreement. ACCESS TO BOOKS & RECORDS. Allow Bank, or its
E-22
6
agents, during normal business hours, access to the books, records and such
other documents of Borrower as Bank shall reasonably require, and allow Bank to
make copies thereof at Bank's expense. INSURANCE. Maintain adequate insurance
coverage with respect to its properties and business against loss or damage of
the kinds and in the amounts customarily insured against by companies of
established reputation engaged in the same or similar businesses including,
without limitation, commercial general liability insurance, workers compensation
insurance, and business interruption insurance; all acquired in such amounts and
from such companies as Bank may reasonably require. NOTICE OF DEFAULT AND OTHER
NOTICES. (a) Notice of Default. Furnish to Bank immediately upon becoming aware
of the existence of any condition or event which constitutes a Default (as
defined in the Loan Documents) or any event which, upon the giving of notice or
lapse of time or both, may become a Default, written notice specifying the
nature and period of existence thereof and the action which Borrower is taking
or proposes to take with respect thereto. (b) Other Notices. Promptly notify
Bank in writing of (i) any material adverse change in its financial condition or
its business; (ii) any default under any material agreement, contract or other
instrument to which it is a party or by which any of its properties are bound,
or any acceleration of the maturity of any indebtedness owing by Borrower; (iii)
any material adverse claim against or affecting Borrower or any part of its
properties; (iv) the commencement of, and any material determination in, any
litigation with any third party or any proceeding before any governmental agency
or unit affecting Borrower; and (v) at least 30 days prior thereto, any change
in Borrower's name or address as shown above, and/or any change in Borrower's
structure. COMPLIANCE WITH OTHER AGREEMENTS. Comply with all terms and
conditions contained in this Agreement, and any other Loan Documents, and swap
agreements, if applicable, as defined in the Note. PAYMENT OF DEBTS. Pay and
discharge when due, and before subject to penalty or further charge, and
otherwise satisfy before maturity or delinquency, all obligations, debts, taxes,
and liabilities of whatever nature or amount, except those which Borrower in
good faith disputes. REPORTS AND PROXIES. Deliver to Bank, promptly, a copy of
all financial statements, reports, notices, and proxy statements, sent by
Borrower to stockholders, and all
E-23
7
regular or periodic reports required to be filed by Borrower with any
governmental agency or authority. OTHER FINANCIAL INFORMATION. Deliver promptly
such other information regarding the operation, business affairs, and financial
condition of Borrower which Bank may reasonably request. NON-DEFAULT CERTIFICATE
FROM BORROWER. Deliver to Bank, with the Financial Statements required herein, a
certificate signed by Borrower, if Borrower is an individual, or by a principal
financial officer of Borrower warranting that no "Default" as specified in the
Loan Documents nor any event which, upon the giving of notice or lapse of time
or both, would constitute such a Default, has occurred. ESTOPPEL CERTIFICATE.
Furnish, within 15 days after request by Bank, a written statement duly
acknowledged of the amount due under the Loan and whether offsets or defenses
exist against the Obligations.
NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will not: DEFAULT ON OTHER CONTRACTS OR
OBLIGATIONS. Default on any material contract with or obligation when due to a
third party or default in the performance of any obligation to a third party
incurred for money borrowed in an amount in excess of $25,000.00. JUDGMENT
ENTERED. Permit the entry of any monetary judgment or the assessment against,
the filing of any tax lien against, or the issuance of any writ of garnishment
or attachment against any property of or debts due Borrower in an amount in
excess of $25,000.00 and that is not discharged or execution is not stayed
within Thirty (30) days of entry. GOVERNMENT INTERVENTION. Permit the assertion
or making of any seizure, vesting or intervention by or under authority of any
government by which the management of Borrower or any guarantor is displaced of
its authority in the conduct of its respective business or such business is
curtailed or materially impaired. PREPAYMENT OF OTHER DEBT. Retire any long-term
debt entered into prior to the date of this Agreement at a date in advance of
its legal obligation to do so. RETIRE OR REPURCHASE CAPITAL STOCK. Without prior
written consent of the Bank, expend more than $6,000,000 in the aggregate during
the term of this Agreement to retire or otherwise acquire any of its capital
stock. CHANGE OF CONTROL. Borrower shall not make a material
E-24
8
change in executive management without prior written consent of the Bank. CHANGE
IN FISCAL YEAR. Borrower or guarantor shall not change its fiscal year without
prior written notice to Bank. GUARANTEES. Guarantee or otherwise become
responsible for obligations of any other person other than the endorsement of
checks and drafts for collection in the ordinary course of business.
ENCUMBRANCES. Create, assume, or permit to exist any mortgage, security deed,
deed of trust, pledge, lien, charge or other encumbrance on any of its assets,
whether now owned or hereafter acquired, other than: (i) liens for taxes
contested in good faith; (ii) liens accruing by law for employee benefits; or
(iii) Permitted Liens.
FINANCIAL COVENANTS. Borrower agrees to the following provisions, all of which
shall be on a consolidated basis, from the date hereof until final payment in
full of the Obligations, unless Bank shall otherwise consent in writing: FIXED
CHARGE COVERAGE RATIO. Borrower shall, at each fiscal year-end, maintain a Fixed
Charge Coverage Ratio of not less than 3.00 to 1.00. "Fixed Charge Coverage"
shall mean the sum of net profit plus taxes, depreciation, amortization, and
interest expense less capital expenditures divided by the sum of interest
expense and current maturities of long term debt and capital lease obligations
from the prior fiscal year. WORKING CAPITAL. Borrower shall, at all times,
maintain Working Capital of at least $11,000,000. "Working Capital" shall mean
cash, accounts receivable, and inventory minus current liabilities including
borrowings under this Agreement and the Note. TANGIBLE NET WORTH. Borrower
shall, at all times, maintain a Tangible Net Worth of at least $20,000,000.00.
Tangible Net Worth shall increase annually, as of the last day of each fiscal
year of the Borrower, by not less than fifty percent (50%) of net income plus
one hundred percent (100%) of additions to paid in capital realized in such
fiscal year. "Tangible Net Worth" shall mean the total assets minus total
liabilities. For purposes of this computation, the aggregate amount of any
intangible assets of Borrower including, without limitation, goodwill,
franchises, licenses, patents, trademarks, trade names, copyrights, service
marks, and brand names, shall be subtracted from total assets, and total
liabilities shall include fully subordinated debt. TOTAL LIABILITIES TO TANGIBLE
NET WORTH RATIO. Borrower shall, at
E-25
9
all times, maintain a ratio of Total Liabilities, including fully subordinated
debt, divided by Tangible Net Worth of not more than 1.00 to 1.00. For purposes
of this computation, "Total Liabilities" shall mean all liabilities of Borrower,
including capitalized leases and all reserves for deferred taxes and other
deferred sums appearing on the liabilities side of a balance sheet of Borrower,
in accordance with generally accepted accounting principles applied on a
consistent basis. DEPOSIT RELATIONSHIP. Borrower shall maintain its primary
depository account and cash management account with Bank. LIMITATION ON DEBT.
Borrower shall not, directly or indirectly, create, incur, assume or become
liable for, any debt, contingent or direct, if, giving effect to such additional
debt on a pro forma basis, causes the aggregate amount of Borrower's debt,
including obligations to Bank, to exceed $6,500,000.00.
ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 90 days
after the close of each fiscal year, audited financial statements reflecting its
operations during such fiscal year, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules; all on a consolidated and consolidating basis and in reasonable
detail, prepared in conformity with generally accepted accounting principles,
applied on a basis consistent with that of the preceding year. All such
statements shall be examined by an independent certified public accountant
acceptable to Bank. The opinion of such independent certified public accountant
shall not be acceptable to Bank if qualified due to any limitations in scope
imposed by Borrower or its Subsidiaries, if any. Any other qualification of the
opinion by the accountant shall render the acceptability of the financial
statements subject to Bank's approval.
PERIODIC FINANCIAL STATEMENTS. Borrower shall deliver to Bank unaudited
management-prepared quarterly financial statements, including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules, as soon as available and in any event within
45 days after the close of each such period; all in reasonable detail and
prepared in conformity with generally accepted accounting principles, applied on
a basis consistent with that of the
E-26
10
preceding year. Such statements shall be certified as to their correctness by a
principal financial officer of Borrower.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete, and accurate.
E-27
11
YEAR 2000 COMPATIBILITY. Borrower shall take all action necessary to assure that
Borrower's computer based systems are able to operate and effectively process
data including dates on and after January 1, 2000. At the request of Bank,
Borrower shall provide Bank assurance acceptable to Bank of Borrower's Year 2000
compatibility.
CONDITIONS PRECEDENT. The obligations of Bank to make the Loan and any advances
pursuant to this Agreement are subject to the following conditions precedent:
ADDITIONAL DOCUMENTS. Receipt by Bank of such additional supporting documents as
Bank or its counsel may reasonably request. PAYMENT OF COMMITMENT FEE. Borrower
shall have paid to the Bank the commitment fee of $3,750. AVAILABILITY FEE.
Borrower shall pay to Bank quarterly, on the 1st day of each October, January,
April and July, an availability fee at a rate equal to 0.125% per annum on the
average daily unused available principal under the Note for the preceding
calendar quarter or portion thereof. OPINION OF COUNSEL. On or prior to the date
of any borrowing hereunder, Bank shall have received a written opinion of the
counsel of Borrower acceptable to Bank that includes confirmation of the
following: (a) The accuracy of the representations set forth in this Agreement
in the Representations Subparagraphs entitled "Authorization;
Non-Contravention"; "Compliance with Laws", and "Organization and Authority".
(b) This Agreement and other Loan Documents have been duly executed and
delivered by Borrower and constitute the legal, valid and binding obligations of
Borrower, enforceable in accordance with their terms. (c) No registration with,
consent of, approval of, or other action by, any federal, state or other
governmental authority or regulatory body to the execution and delivery of this
Agreement, the borrowing under this Agreement or other Loan Documents, is
required by law, or, if so required, such registration has been made, and
consent or approval given or such other appropriate action taken. (d) The Loan
is not usurious.
JOINT AND SEVERAL OBLIGATIONS. The obligations of the Borrower hereunder and
under the Note shall be joint and several.
MISCELLANEOUS. This Agreement shall be construed in accordance with and governed
by the laws of the State of Connecticut
E-28
12
without reference to conflicts of laws principles. This Agreement and the other
Loan Documents constitute the sole agreement of the parties with respect to the
subject matter thereof and supersede all oral negotiations and prior writings
with respect to the subject matter thereof. No amendment of this Agreement, and
no waiver of any one or more of the provisions hereof shall be effective unless
set forth in writing and signed by the parties hereto. The illegality,
unenforceability or inconsistency of any provision of this Agreement shall not
in any way affect or impair the legality, enforceability or consistency of the
remaining provisions of this Agreement or the other Loan Documents. This
Agreement and the other Loan Documents are intended to be consistent. However,
in the event of any inconsistencies among this Agreement and any of the Loan
Documents, the terms of the Note, and then this Agreement, shall control. This
Agreement may be executed in any number of counterparts and by the different
parties on separate counterparts. Each such counterpart shall be deemed an
original, but all such counterparts shall together constitute one and the same
agreement. Terms used in this Agreement which are capitalized and not otherwise
defined herein shall have the meanings ascribed to such terms in the Loan
Documents.
CONNECTICUT PREJUDGMENT REMEDY WAIVER. EACH BORROWER ACKNOWLEDGES THAT THE
TRANSACTIONS REPRESENTED BY THIS AGREEMENT ARE COMMERCIAL TRANSACTIONS AND
HEREBY VOLUNTARILY AND KNOWINGLY WAIVES ANY RIGHTS TO NOTICE OF AND HEARING ON
PREJUDGMENT REMEDIES UNDER CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES OR
OTHER STATUTES AFFECTING PREJUDGMENT REMEDIES, AND AUTHORIZES THE BANK'S
ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED
THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER.
E-29
13
IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written above,
have caused this Agreement to be executed under seal.
NOVAMETRIX MEDICAL SYSTEMS INC.
By:_____________________________
name:
title:
NTC TECHNOLOGY, INC.
By:_____________________________
name:
title:
FIRST UNION NATIONAL BANK
By:______________________________
name:
title:
E-30
