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EXHIBIT 10.13
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement"), dated as of the 25th day of September,
1995, is made and entered into on the terms and conditions hereinafter set
forth, by and between HORIZON MEDICAL PRODUCTS, INC., a Georgia corporation
("Borrower"), SIRROM CAPITAL CORPORATION, a Tennessee corporation ("Lender") and
CARDIAC MEDICAL, INC., a Georgia corporation ("Guarantor").
RECITALS:
WHEREAS, Borrower has requested that Lender make available to Borrower a
term loan in the original principal amount of One Million Five Hundred Thousand
and No/100ths Dollars ($1,500,000) (the "Loan") on the terms and conditions
hereinafter set forth, and for the purpose(s) hereinafter set forth; and
WHEREAS, in order to induce Lender to make the Loan to Borrower, Borrower
has made certain representations to Lender; and
WHEREAS, Lender, in reliance upon the representations and inducements of
Borrower, has agreed to make the Loan upon the terms and conditions hereinafter
set forth; and
WHEREAS, as a condition to the making of the Loan, Guarantor has agreed to
guarantee the obligations of Borrower under this Agreement pursuant to a
Guaranty Agreement of even date herewith (together with all amendments thereto,
and replacements thereof, the "Guaranty");
NOW, THEREFORE, in consideration of the agreement of Lender to make the
Loan, the mutual covenants and agreements hereinafter set forth, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower, the Guarantor and Lender hereby agree as follows:
AGREEMENT:
ARTICLE 1
THE LOAN
1.1 Evidence of Loan Indebtedness and Repayment. Subject to the terms and
conditions hereof, the Lender shall make the Loan to Borrower by wire transfer
in immediately available funds. The Loan shall be evidenced by a Secured
Promissory Note in the original
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principal amount of One Million Five Hundred Thousand and No/100ths Dollars
($1,500,000), substantially in the form of Exhibit A attached hereto and
incorporated herein by this reference (the "Note"), dated as of the date hereof,
executed by Borrower, in favor of Lender. The Loan shall be payable in
accordance with the terms of the Note. The Note, this Agreement, the Guaranty
and any other instruments and documents, now or hereafter evidencing, securing
or in any way related to the indebtedness evidenced by the Note are herein
individually referred to as a "Loan Document" and collectively referred to as
the "Loan Documents."
1.2 Processing Fee. Borrower shall pay Lender a processing fee of Thirty
Seven Thousand Five Hundred Dollars ($37,500) on the date the Loan is funded.
1.3 Partial Prepayment. Borrower may prepay the indebtedness evidenced by
the Note in whole or in part at any time and from time to time.
1.4 Purpose. The purpose of the Loan shall be to finance the acquisition by
Borrower of Neostar Medical Technologies, Inc. ("Neostar"), to refinance certain
existing indebtedness of Borrower and to provide working capital.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Borrower's Representations. Borrower, and as to subsections (g), (h)
and (i), the Guarantor, hereby represent and warrant to Lender as follows:
(a) Corporate Status. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia; and
has the corporate power to own and operate its properties, to carry on its
business as now conducted and to enter into and to perform its obligations
under this Agreement and the other Loan Documents to which it is a party.
Borrower is duly qualified to do business and in good standing in each
state in which a failure to be so qualified would have a material adverse
effect on Borrower's financial position or its ability to conduct its
business in the manner now conducted.
(b) Subsidiaries. Borrower neither owns nor has an interest in,
directly or indirectly, any other corporation, partnership, joint venture
or other business organization ("Subsidiaries").
(c) Authorization. Borrower has full legal right, power and authority
to conduct its business and affairs. Borrower has full legal right, power
and authority to enter into and perform its obligations hereunder, without
the consent or approval of any other person, firm, governmental agency or
other legal entity. The execution and delivery of this Agreement, the
borrowing hereunder, the execution and delivery of each Loan Document to
which Borrower is a party, and the performance by Borrower of its
obligations thereunder are within the corporate powers of Borrower and have
been duly
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authorized by all necessary corporate action properly taken, have received
all necessary governmental approvals, if any were required, and do not and
will not contravene or conflict with any provision of law, any applicable
judgment, ordinance, regulation or order of any court or governmental
agency, the charter or bylaws of Borrower, or any agreement binding upon
Borrower or its properties. The officer(s) executing this Agreement, the
Note and all of the other Loan Documents to which Borrower is a party are
duly authorized to act on behalf of Borrower.
(d) Validity and Binding Effect. This Agreement and the other Loan
Documents are the legal, valid and binding obligations of the Borrower,
enforceable in accordance with their respective terms, subject to
limitations imposed by bankruptcy, insolvency, moratorium or other similar
laws affecting the rights of creditors generally or the application of
general equitable principles.
(e) Capitalization. The authorized capital stock of Borrower consists
solely of 1,000,000 shares of common stock, $.001 par value per share
("Common Stock"), of which 101,000 shares (the "Shares") are issued and
outstanding. All of the Shares are duly authorized, validly issued and
outstanding and fully paid and nonassessable and free of preemptive rights.
Except for the Shares, there are no shares of capital stock or other
securities of Borrower issued or outstanding. Except as described on
Schedule 2.1(e), there are no outstanding options, warrants or rights to
purchase or acquire from Borrower any securities of Borrower, and there are
no contracts, commitments, agreements, understandings, arrangements or
restrictions as to which Borrower is a party or by which it is bound
relating to any shares of capital stock or other securities of Borrower
(including the Shares), whether or not outstanding.
(f) Trademarks, Patents, Etc. Schedule 2.1 (f) is an accurate and
complete list of all patents, trademarks, tradenames, trademark
registrations, service names, service marks, copyrights, licenses, formulas
and applications therefor owned by Borrower or used or required by Borrower
in the operation of Borrower's business, title to each of which is, except
as set forth in Schedule 2.1(f) hereto, held by Borrower free and clear of
all adverse claims, liens, security agreements, restrictions or other
encumbrances. There is no infringement action, lawsuit, claim or complaint
which asserts that Borrower's operations violate or infringe the rights or
the trade names, trademarks, trademark registration, service name, service
xxxx or copyright of others with respect to any apparatus or method of
Borrower or any adversely held trademark, trade name, trademark
registration, service name, service xxxx or copyright, and Borrower is not
in any way making use of any confidential information or trade secrets of
any person except with the consent of such person.
(g) No Conflicts. Consummation of the transactions hereby contemplated
and the performance of the obligations of Borrower and the Guarantor under
and by virtue of the Loan Documents and the Guaranty, as the case may be,
will not result in any breach of, or constitute a default under, any
mortgage, security deed or agreement, deed of trust, lease, bank loan or
credit agreement, corporate charter or bylaws, agreement or certificate
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of limited partnership, partnership agreement, license, franchise or any
other instrument or agreement to which Borrower or the Guarantor is a party
or by which Borrower or the Guarantor, or their respective properties may
be bound or affected or to which Borrower or the Guarantor has not obtained
an effective waiver.
(h) Litigation. There are no actions, suits or proceedings pending, or,
to the knowledge of Borrower, or the Guarantor, threatened, against or
affecting Borrower or the Guarantor or involving the validity or
enforceability of any of the Loan Documents or the Guaranty at law or in
equity, or before any governmental or administrative agency; and to
Borrower's and the Guarantor's knowledge, neither Borrower nor the
Guarantor is in default with respect to any order, writ, injunction, decree
or demand of any court or any governmental authority.
(i) Financial Statements. The financial statements of Borrower dated
July 31, 1995, and the financial statements of the Guarantor dated July 31,
1995, each of which is attached hereto as Schedule 2.1(i)(A), are true and
correct in all material respects have been prepared on the basis of
accounting principles consistently applied, and fairly present the
financial condition of the Borrower and the Guarantor, as the case may be,
as of the date(s) thereof. No material adverse change has occurred in the
financial condition of Borrower or the Guarantor since the date(s) thereof,
and no additional borrowings have been made by Borrower or the Guarantor
since the date(s) thereof other than as set forth on Schedule 2.1(i)(B).
(g) Other Agreements; No Defaults. Borrower is not a party to any
indenture, loan or credit agreement, lease or other agreement or
instrument, or subject to any charter or corporate restriction, that could
have a material adverse effect on the business, properties, assets,
operations or conditions, financial or otherwise, of the Borrower, or the
ability of the Borrower to carry out its obligations under the Loan
Documents to which it is a party. Borrower is not in default in any respect
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument material
to its business to which it is a party, including but not limited to this
Agreement and the other Loan Documents, and no other default or event has
occurred and is continuing that with notice or the passage of time or both
would constitute a default or event of default under any of same.
(h) Compliance With Law. Borrower has obtained all necessary licenses,
permits and approvals and authorizations necessary or required in order to
conduct its business and affairs as heretofore conducted and as hereafter
intended to be conducted. To Borrower's knowledge, Borrower is in
compliance with all laws, regulations, decrees and orders applicable to it
(including but not limited to laws, regulations, decrees and orders
relating to environmental, occupational and health standards and controls,
antitrust, monopoly, restraint of trade or unfair competition), to the
extent that noncompliance, in the aggregate, cannot reasonably be expected
to have a material adverse effect on its
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respective business, operations, property or financial condition and will
not materially adversely affect Borrower's ability to perform its
obligations under the Loan Documents.
(i) Debt. Schedule 2.1(1) is a complete and correct list of all credit
agreements, indentures, purchase agreements, promissory notes and other
evidences of indebtedness, guaranties, capital leases and other
instruments, agreements and arrangements presently in effect providing for
or relating to extensions of credit (including agreements and arrangements
for the issuance of letters of credit or for acceptance financing) in
respect of which the Borrower or any of the properties thereof is in any
manner directly or contingently obligated; and the maximum principal or
face amounts of the credit in question that are outstanding and that can be
outstanding are correctly stated, and all liens of any nature given or
agreed to be given as security therefore are correctly described or
indicated in such Schedule.
(j) Taxes. Borrower has filed or caused to be filed all tax returns
that to its knowledge are required to be filed (except for returns that
have been appropriately extended), and has paid, or will pay when due, all
taxes shown to be due and payable on said returns and all other taxes,
impositions, assessments, fees or other charges imposed on them by any
governmental authority, agency or instrumentality, prior to any delinquency
with respect thereto (other than taxes, impositions, assessments, fees and
charges currently being contested in good faith by appropriate proceedings,
for which appropriate amounts have been reserved). No tax liens have been
filed against Borrower or any of the property thereof.
(k) Small Business Concern. Borrower, together with its "affiliates"
(as that term is defined in Title 13, Code of Federal Regulations, ss.
121.401), is a "small business concern" within the meaning of the Small
Business Investment Act of 1958, as amended, and the regulations
promulgated thereunder. The information set forth in the Small Business
Administration Forms 480, 652 and Part A of Form 1031 regarding Borrower
upon delivery, pursuant to Section 4.1 hereof, will be accurate and
complete. Borrower does not presently engage in, and it will not hereafter
engage in, any activities, and Borrower will not use directly or
indirectly, the proceeds from the Loan, for any purpose for which a Small
Business Investment Company is prohibited from providing funds by the Small
Business Investment Act and the regulations thereunder, including Title 13,
Code of Federal Regulations ss.107.901.
(l) Certain Transactions. Except as set forth on Schedule 2.1(o)
hereto, Borrower is not indebted, directly or indirectly, to any of its
officers or directors or to their respective spouses or children, in any
amount whatsoever; none of said officers or directors or any members of
their immediate families, are indebted to Borrower or have any direct or
indirect ownership interest in any firm or corporation with which Borrower
has a business relationship (other than the Guarantor), or any firm or
corporation which competes with Borrower, except that officers and/or
directors of Borrower may own no more than 4.9% of outstanding stock of
publicly traded companies which may compete with Borrower. No officer or
director or any member of their immediate families, is,
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directly or indirectly, interested in any material contract with Borrower.
Except as set forth on Schedule 2.1(o) hereto, Borrower is not a guarantor
or indemnitor of any indebtedness of any other person, firm or corporation.
(m) Statements Not False or Misleading. No representation or warranty
given as of the date hereof by Borrower contained in this Agreement or any
schedule attached hereto or any statement in any document, certificate or
other instrument furnished or to be furnished to Lender pursuant hereto,
taken as a whole, contains or will (as of the time so furnished) contain
any untrue statement of a material fact, or omits or will (as of the time
so furnished) omit to state any material fact which is necessary in order
to make the statements contained therein not misleading.
(n) Margin Regulations. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock. No
proceeds received pursuant to this Agreement will be used to purchase or
carry any equity security of a class which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended.
(o) Significant Contracts. Schedule 2.1(r) is a complete and correct
list of all contracts, agreements and other documents pursuant to which
Borrower receives revenues in excess of $25,000. Each such contract,
agreement and other document is in full force and effect as of the date
hereof and Borrower knows of no reason why such contracts, agreements and
other documents would not remain in full force and effect pursuant to the
terms thereof.
(p) Environment. Borrower has duly complied with, and its business,
operations, assets, equipment, property, leaseholds or other facilities are
in compliance with, the provisions of all federal, state and local
environmental, health, and safety laws, codes and ordinances, and all rules
and regulations promulgated thereunder. Borrower has been issued and will
maintain all required federal, state and local permits, licenses,
certificates and approvals relating to (1) air emissions; (2) discharges to
surface water or groundwater; (3) noise emissions; (4) solid or liquid
waste disposal; (5) the use, generation, storage, transportation or
disposal of toxic or hazardous substances or wastes (which shall include
any and all such materials listed in any federal, state or local law, code
or ordinance and all rules and regulations promulgated thereunder as
hazardous or potentially hazardous); or (6) other environmental, health or
safety matters. Borrower has not received notice of, or knows of, or
suspects facts which might constitute any violations of any federal, state
or local environmental, health or safety laws, codes or ordinances, and any
rules or regulations promulgated thereunder with respect to its businesses,
operations, assets, equipment, property, leaseholds, or other facilities.
Except in accordance with a valid governmental permit, license, certificate
or approval, there has been no emission, spill, release or discharge into
or upon (1) the air; (2) soils, or any improvements located thereon; (3)
surface water or groundwater; or (4) the sewer, septic system or waste
treatment, storage or disposal system servicing the premises, of any toxic
or hazardous substances or wastes at or from the premises; and accordingly
the premises
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of Borrower are free of all such toxic or hazardous substances or wastes.
There has been no complaint, order, directive, claim, citation or notice by
any governmental authority or any person or entity with respect to (1) air
emissions; (2) spills, releases or discharges to soils or improvements
located thereon, surface water, groundwater or the sewer, septic system or
waste treatment, storage or disposal systems servicing the premises; (3)
noise emissions; (4) solid or liquid waste disposal; (5) the use,
generation, storage, transportation or disposal of toxic or hazardous
substances or waste; or (6) other environmental, health or safety matters
affecting Borrower or its business, operations, assets, equipment,
property, leaseholds or other facilities. Borrower does not have any
indebtedness, obligation or liability (absolute or contingent, matured or
not matured), with respect to the storage, treatment, cleanup or disposal
of any solid wastes, hazardous wastes or other toxic or hazardous
substances (including without limitation any such indebtedness, obligation,
or liability with respect to any current regulation, law or statute
regarding such storage, treatment, cleanup or disposal).
ARTICLE 3
COVENANTS AND AGREEMENTS
Borrower and Guarantor covenant and agree that during the term of this
Agreement:
3.1 Payment of Obligations. Borrower shall pay the indebtedness evidenced
by the Note according to the terms thereof, and shall timely pay or perform, as
the case may be, all of the other obligations of Borrower to Lender, direct or
contingent, however evidenced or denominated, and however and whenever incurred,
including but not limited to indebtedness incurred pursuant to any present or
future commitment of Lender to Borrower, together with interest thereon, and any
extensions, modifications, consolidations and/or renewals thereof and any notes
given in payment thereof.
3.2 Financial Statements and Reports. Borrower and Guarantor shall furnish
to Lender (i) as soon as practicable and in any event within one hundred eighty
(180) days after the end of each fiscal year of Borrower and Guarantor, an
audited (unaudited with respect to Guarantor) balance sheet of Borrower and
Guarantor as of the close of such fiscal year, an audited (unaudited with
respect to Guarantor) statement of earnings and retained earnings of Borrower
and Guarantor as of the close of such fiscal year and an audited (unaudited with
respect to Guarantor) statement of cash flows for Borrower and Guarantor for
such fiscal year, prepared in accordance with generally accepted accounting
principles consistently applied and accompanied by an unqualified audit report
prepared by the accounting firm of Coopers & Xxxxxxx or an independent certified
public accountant selected by Borrower and acceptable to Lender showing the
financial condition of Borrower at the close of such year and the results of its
operations during such year and accompanied by a certificate of the President of
Borrower and Guarantor, stating that to the best of the knowledge of such
officer, Borrower and Guarantor has kept, observed, performed and fulfilled each
covenant, term and condition of this Agreement and the other Loan Documents
during the preceding fiscal year and that no Event of Default has occurred and
is continuing (or if an Event of Default has occurred and is continuing,
specifying the nature of same, the period
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of existence of same and the action Borrower and Guarantor proposes to take in
connection therewith), (ii) within twenty (20) days of the end of each calendar
month, a status report indicating the financial performance of Borrower during
such month and the financial position of Borrower as of the end of such month,
(iii) within thirty (30) days of the end of each quarter, a balance sheet of
Borrower and Guarantor as of the close of such quarter and a statement of
earnings and retained earnings of Borrower and Guarantor as of the close of such
quarter, all in reasonable detail, and prepared substantially in accordance with
generally accepted accounting principles consistently applied (except for the
absence of footnotes and subject to year-end adjustments), and (iv) with
reasonable promptness, such other financial data as Lender may reasonably
request.
3.3 Maintenance of Books and Records; Inspection. Borrower shall maintain
its books, accounts and records in accordance with generally accepted accounting
principles consistently applied, and permit Lender, its officers and employees
and any professionals designated by Lender in writing, at Lender's expense, to
visit and inspect any of its properties, corporate books and financial records,
and to discuss its accounts, affairs and finances with Borrower or the principal
officers of Borrower during reasonable business hours, all at such times as
Lender may reasonably request; provided that no such inspection shall materially
interfere with the conduct of Borrower's business.
3.4 Insurance. Without limiting any of the requirements of any of the other
Loan Documents, Borrower shall maintain, in amounts customary for entities
engaged in comparable business activities, (i) to the extent required by
applicable law, worker's compensation insurance (or maintain a legally
sufficient amount of self insurance against worker's compensation liabilities,
with adequate reserves, under a plan approved by Lender, such approval not to be
unreasonably withheld or delayed), and (ii) fire and "all risk" casualty
insurance on its properties against such hazards and in at least such amounts as
are customary in Borrower's business. Borrower will make reasonable efforts to
obtain and maintain public liability insurance in an amount, and at a cost,
deemed reasonable to the Borrower's Board of Directors. At the request of
Lender, Borrower will deliver forthwith a certificate specifying the details of
such insurance in effect.
3.5 Taxes and Assessments. Borrower shall (i) file all tax returns and
appropriate schedules thereto that are required to be filed under applicable
law, prior to the date of delinquency, (ii) pay and discharge all taxes,
assessments and governmental charges or levies imposed upon Borrower upon its
income and profits or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and (iii) pay all taxes, assessments and
governmental charges or levies that, if unpaid, might become a lien or charge
upon any of its properties; provided, however, that Borrower in good faith may
contest any such tax, assessment, governmental charge or levy described in the
foregoing clauses (ii) and (iii) so long as appropriate reserves are maintained
with respect thereto.
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3.6 Corporate Existence. Borrower shall maintain its corporate existence
and good standing in the state of its incorporation, and its qualification and
good standing as a foreign corporation in each jurisdiction in which such
qualification is necessary pursuant to applicable law.
3.7 Compliance with Law and Other Agreements. Except where the failure to
do so would not materially adversely affect Borrower's operations or its ability
to fulfill its obligations under the Loan Documents, Borrower shall maintain its
business operations and property owned or used in connection therewith in
compliance with (i) all applicable federal, state and local laws, regulations
and ordinances governing such business operations and the use and ownership of
such property, and (ii) all agreements, licenses, franchises, indentures and
mortgages to which Borrower is a party or by which Borrower or any of its
properties is bound. Without limiting the foregoing, Borrower shall pay all of
its indebtedness promptly in accordance with the terms thereof.
3.8 Notice of Default. Borrower shall give written notice to Lender of the
occurrence of any default, event of default or Event of Default under this
Agreement or any other Loan Document promptly upon the occurrence thereof.
3.9 Notice of Litigation. Borrower shall give notice, in writing, to Lender
of (i) any actions, suits or proceedings wherein the amount at issue is in
excess of Twenty-Five Thousand and No/100ths Dollars ($25,000.00) instituted by
any persons whomsoever against Borrower or affecting any of the assets of
Borrower, and (ii) any dispute, not resolved within sixty (60) days of the
commencement thereof, between Borrower on the one hand and any governmental
regulatory body on the other hand, which dispute might materially interfere with
the normal operations of Borrower.
3.10 Conduct of Business. Borrower will continue to engage in a business of
the same general type and manner as conducted by it on the date of this
Agreement.
3.11 ERISA Plan. If Borrower has in effect, or hereafter institutes, a
pension plan that is subject to the requirements of Title IV of the Employee
Retirement Income Security Act of 1974, Pub. L. No. 93-406, September 2, 1974,
00 Xxxx. 000, 00 X.X.X.X. ss. 1001 et seq. (1975), as amended from time to time
("ERISA"), then the following warranty and covenants shall be applicable during
such period as any such plan (the "Plan") shall be in effect: (i) Borrower
hereby warrants that no fact that might constitute grounds for the involuntary
termination of the Plan, or for the appointment by the appropriate United States
District Court of a trustee to administer the Plan, exists at the time of
execution of this Agreement, (ii) Borrower hereby covenants that throughout the
existence of the Plan, Borrower's contributions under the Plan will meet the
minimum funding standards required by ERISA and Borrower will not institute a
distress termination of the Plan, and (iii) Borrower covenants that it will send
to Lender a copy of any notice of a reportable event (as defined in ERISA)
required by ERISA to be filed with the Labor Department or the Pension Benefit
Guaranty Corporation, at the time that such notice is so filed.
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3.12 Dividends, Stock Rights, etc. Except as set forth on Schedule 3.12
hereto, Borrower shall not declare or pay any dividend of any kind (other than
stock dividends payable to all holders of any class of capital stock), in cash
or in property, on any class of the capital stock of Borrower, or purchase,
redeem, retire or otherwise acquire for value any shares of such stock, nor make
any distribution of any kind in cash or property in respect thereof, nor make
any return of capital of shareholders, nor make any payments in cash or property
in respect of any stock options, stock bonus or similar plan (except as required
or permitted hereunder), nor grant any preemptive rights with respect to the
capital stock of Borrower, without the prior written consent of Lender.
3.13 Guaranties; Loans; Payment of Debt. Except as set forth on Schedule
3.13 hereto, Borrower shall not, without Lender's prior express written consent,
guarantee nor be liable in any manner, whether directly or indirectly, or become
contingently liable after the date of this Agreement in connection with the
obligations or indebtedness of any person or entity whatsoever, except for the
endorsement of negotiable instruments payable to Borrower for deposit or
collection in the ordinary course of business. Borrower shall not, without
Lender's prior express written consent, which shall not be unreasonably
withheld, (i) make any loan, advance or extension of credit to any person other
than in the normal course of its business, or (ii) make any payment on any
subordinated debt.
3.14 Debt. Without the express prior written consent of Lender, Borrower
shall not create, incur, assume or suffer to exist indebtedness of any
description whatsoever (excluding the indebtedness evidenced by the Note, the
endorsement of negotiable instruments payable to Borrower for deposit or
collection in the ordinary course of business, trade payables incurred in the
ordinary course of business and the indebtedness listed on Schedule 2.1(1)
hereto).
3.15 No Liens. Borrower shall not create, incur, assume or suffer to exist
any lien, security interest, security title, mortgage, deed of trust or other
encumbrance upon or with respect to any of its properties, now owned or
hereafter acquired, except:
(a) liens in favor of Lender;
(b) liens for taxes or assessments or other governmental charges or
levies if not yet due and payable;
(c) liens in connection with the leasing of equipment in favor of the
Lessor of such equipment;
(d) liens described on Schedule 2.1(1) hereto.
3.16 Mergers, Consolidations, Acquisitions and Sales. Without the prior
written consent of Lender, Borrower shall not (a) be a party to any merger,
consolidation or corporate reorganization, nor (b) purchase or otherwise acquire
all or substantially all of the assets or stock of, or any partnership or joint
venture interest in, any other person, firm or entity, nor (c) sell, transfer,
convey, grant a security interest in or lease all or any substantial part of its
assets, nor (d) create any
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Subsidiaries nor convey any of its assets to any Subsidiary. Notwithstanding the
foregoing, Borrower may purchase substantially all of the assets of Neostar
pursuant to the terms and provisions of that certain Letter of Intent dated July
20, 1995 from the Company to Neostar.
3.17 Transactions With Affiliates. Borrower shall not enter into any
transaction, including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of Borrower's
business and upon fair and reasonable terms no less favorable to Borrower than
Borrower would obtain in a comparable arm's length transaction with a person not
an affiliate. For the purposes of this Section 3.17, "affiliate" shall mean a
person, corporation, partnership or other entity controlling, controlled by or
under common control with Borrower.
3.18 Environment. Borrower shall be and remain in compliance with the
provisions of all federal, state and local environmental, health, and safety
laws, codes and ordinances, and all rules and regulations issued thereunder;
notify Lender immediately of any notice of a hazardous discharge or
environmental complaint received from any governmental agency or any other
party; notify Lender immediately of any hazardous discharge from or affecting
its premises; immediately contain and remove the same, in compliance with all
applicable laws; promptly pay any fine or penalty assessed in connection
therewith; permit Lender to inspect the premises, to conduct tests thereon, and
to inspect all books, correspondence, and records pertaining thereto; and at
Lender's request, and at Borrower's expense, provide a report of a qualified
environmental engineer, satisfactory in scope, form, and content to Lender, and
such other and further assurances reasonably satisfactory to Lender that the
condition has been corrected.
3.19 Agreement Regarding Financial Covenants. In the event that Borrower
enters into any Senior Indebtedness (as hereinafter defined) after the date
hereof, this Agreement shall automatically be deemed to be amended to include
any financial covenants that may be included in the documents or agreements
evidencing, securing or otherwise relating to such Senior Indebtedness (without
giving effect to any subsequent amendment(s) to such financial covenants).
Without limiting the effect of the preceding sentence, upon Lender's request,
Borrower shall enter into any amendments to this Agreement that Lender may
request to cause such financial covenants to be included within this Agreement.
ARTICLE 4
CONDITIONS TO CLOSING
4.1 Closing of the Loan. The obligation of Lender to fund the Loan on the
date hereof (the "Closing Date") is subject to the fulfillment, on or prior to
the Closing Date, of each of the following conditions:
(a) Borrower shall have performed and complied in all material respects
with all of the covenants, agreements, obligations and conditions required
by this Agreement.
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(b) Lender shall have received an opinion of the Borrower's counsel,
Xxxxxxxxx & Virgin, dated the Closing Date, in form and substance
satisfactory to Lender's counsel, Bass, Xxxxx & Xxxx.
(c) Borrower shall have delivered to Lender a Note executed by
Borrower, substantially in the form of Exhibit A attached hereto and
incorporated herein by this reference.
(d) Borrower shall have delivered to Lender a Stock Purchase Warrant
executed by Borrower, substantially in the form of Exhibit B attached
hereto and incorporated herein by this reference.
(e) Borrower shall have delivered to Lender a Security Agreement
executed by Borrower and a related UCC-1 Financing Statement executed by
Borrower, each of which is substantially in the form of Exhibit C attached
hereto and incorporated herein by this reference.
(f) Borrower shall have delivered to Lender the Small Business
Administration Forms 480, 652 and 1031 (Part A) completed by Borrower.
(g) Borrower shall have delivered to Lender the Small Business
Administration Economic Impact Assessment completed by Borrower, a form of
which is attached hereto as Exhibit D and incorporated herein by this
reference.
(h) Lender shall have received the Guaranty executed by the Guarantor,
in substantially the form of Exhibit E attached hereto and incorporated
herein by this reference.
(i) Lender shall have received copies of the corporate charter and
other publicly filed organizational documents of Borrower and Guarantor,
certified by the secretary of Borrower and Guarantor, as the case may be.
(j) Lender shall have received certified (as of the date of this
Agreement) copies of all corporate action taken by Borrower and Guarantor,
including resolutions of its Board of Directors, authorizing the execution,
delivery and performance of the Loan Documents.
(k) Lender shall have received a certificate as to the legal existence
and good standing of each of the Borrower and Guarantor, issued by the
Secretary of State or other appropriate public official in the jurisdiction
in which the Borrower or Guarantor is incorporated.
(1) Lender shall have received certificates of the Secretaries of State
or other appropriate public officials as to each of Borrower's and
Guarantor's qualification to do business and good standing in each
jurisdiction in which a failure to be so qualified would have a material
adverse effect on its financial position or its ability to conduct its
business in the manner now conducted and as hereafter intended to be
conducted.
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(m) Borrower shall completely repay all of its existing indebtedness to
Xxxxxxx Capital Partners, L.P., and shall have obtained full and complete
releases of all existing liens and security interests that Xxxxxxx Capital
Partners, L.P. has in any of Borrower's assets.
(n) Borrower shall have delivered to Lender an executed Letter
Agreement regarding the acquisition of Neostar in substantially the form of
Exhibit F attached hereto.
ARTICLE 5
DEFAULT AND REMEDIES
5.1 Events of Default. The occurrence of any of the following shall
constitute an Event of Default hereunder:
(a) Default in the payment of the principal of or interest on the
indebtedness evidenced by the Note in accordance with the terms of the
Note, which default is not cured within five (5) days;
(b) Any misrepresentation by Borrower as to any material matter
hereunder or under any of the other Loan Documents, or delivery by Borrower
or Guarantor of any schedule, statement, resolution, report, certificate,
notice or writing to Lender that is untrue in any material respect on the
date as of which the facts set forth therein are stated or certified;
(c) Failure of Borrower or Guarantor to perform any of its obligations,
covenants or agreements under this Agreement, the Note or any of the other
Loan Documents;
(d) Borrower or Guarantor (i) shall generally not pay or shall be
unable to pay its debts as such debts become due; or (ii) shall make an
assignment for the benefit of creditors or petition or apply to any
tribunal for the appointment of a custodian, receiver or trustee for it or
a substantial part of its assets; or (iii) shall commence any proceeding
under any bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, whether now
or hereafter in effect; or (iv) shall have had any such petition or
application filed or any such proceeding commenced against it in which an
order for relief is entered or an adjudication or appointment is made; or
(v) shall indicate, by any act or intentional and purposeful omission, its
consent to, approval of or acquiescence in any such petition, application,
proceeding or order for relief or the appointment of a custodian, receiver
or trustee for it or a substantial part of its assets; or (vi) shall suffer
any such custodianship, receivership or trusteeship to continue un-
discharged for a period of sixty (60) days or more;
(e) Borrower or Guarantor shall be liquidated, dissolved, partitioned
or terminated, or the charter thereof shall expire or be revoked;
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(f) A default or event of default shall occur under any of the other
Loan Documents and, if subject to a cure right, such default or event of
default shall not be cured within the applicable cure period;
(g) Borrower shall default in the timely payment or performance of any
obligation now or hereafter owed to Lender in connection with any other
indebtedness of Borrower now or hereafter owed to Lender;
(h) Borrower or Guarantor shall default in the timely payment or
performance of any other indebtedness or obligation, which in the aggregate
exceeds Twenty-Five Thousand and No/l00ths Dollars ($25,000.00) or
materially adversely affects Borrower's or Guarantor's financial condition;
or
(i) A significant change in the executive staff or management of
Borrower shall occur. A significant change in the executive staff of
Borrower shall be deemed to have occurred if Xxxxxxxx X. Xxxx and Xxxxxxx
X. Xxxxxxxx, Xx. shall each cease to perform substantially the same duties,
or cease to hold the same powers, as they perform or hold as of the date
hereof.
With respect to any Event of Default described above that is capable of
being cured and that does not already provide its own cure procedure (a "Curable
Default"), the occurrence of such Curable Default shall not constitute an Event
of Default hereunder if such Curable Default is fully cured and/or corrected
within thirty (30) days (ten (10) days, if such Curable Default may be cured by
payment of a sum of money) of notice thereof to Borrower given in accordance
with the provisions hereof; provided, however, that this provision shall not
require notice to Borrower and an opportunity to cure any Curable Default of
which Borrower has had actual knowledge for the requisite number of days set
forth.
5.2 Acceleration of Maturity; Remedies. Upon the occurrence of any Event of
Default described in subsection 5.1(d), the indebtedness evidenced by the Note
as well as any and all other indebtedness of Borrower to Lender shall be
immediately due and payable in full; and upon the occurrence of any other Event
of Default described above, Lender at any time thereafter may at its option
accelerate the maturity of the indebtedness evidenced by the Note as well as any
and all other indebtedness of Borrower to Lender; all without notice of any
kind. Upon the occurrence of any such Event of Default and the acceleration of
the maturity of the indebtedness evidenced by the Note:
(a) Lender shall be immediately entitled to exercise any and all rights
and remedies possessed by Lender pursuant to the terms of the Note and all
of the other Loan Documents; and
(b) Lender shall have any and all other rights and remedies that Lender
may now or hereafter possess at law, in equity or by statute.
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5.3 Remedies Cumulative; No Waiver. No right, power or remedy conferred
upon or reserved to Lender by this Agreement or any of the other Loan Documents
is intended to be exclusive of any other right, power or remedy, but each and
every such right, power and remedy shall be cumulative and concurrent and shall
be in addition to any other right, power and remedy given hereunder, under any
of the other Loan Documents or now or hereafter existing at law, in equity or by
statute. No delay or omission by Lender to exercise any right, power or remedy
accruing upon the occurrence of any Event of Default shall exhaust or impair any
such right, power or remedy or shall be construed to be a waiver of any such
Event of Default or an acquiescence therein, and every right, power and remedy
given by this Agreement and the other Loan Documents to Lender may be exercised
from time to time and as often as may be deemed expedient by Lender.
5.4 Proceeds of Remedies. Any or all proceeds resulting from the exercise
of any or all of the foregoing remedies shall be applied as set forth in the
Loan Document(s) providing the remedy or remedies exercised; if none is
specified, or if the remedy is provided by this Agreement, then as follows:
First, to the costs and expenses, including reasonable attorney's fees,
incurred by Lender in connection with the exercise of its remedies;
Second, to the expenses of curing the default that has occurred, in the
event that Lender elects, in its sole discretion, to cure the default that
has occurred;
Third, to the payment of the obligations of Borrower under the Loan
Documents (the "Obligations"), including but not limited to the payment of
the principal of and interest on the indebtedness evidenced by the Note, in
such order of priority as Lender shall determine in its sole discretion;
and
Fourth, the remainder, if any, to Borrower or to any other person
lawfully thereunto entitled.
ARTICLE 6
TERMINATION
6.1 Termination of this Agreement. This Agreement shall remain in full
force and effect until the later of (i) the Maturity Date (as defined in the
Note), or (ii) the non-disgorgeable and indefeasible payment by Borrower of all
amounts owed to Lender, at which time Lender shall cancel the Note and deliver
it to Borrower; provided, however, that if at any time Borrower has
non-disgorgeably, indefeasibly and completely satisfied all obligations to
Lender, Borrower may terminate this Agreement by providing written notice to
Lender.
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ARTICLE 7
MISCELLANEOUS
7.1 Performance By Lender. If Borrower shall default in the payment,
performance or observance of any covenant, term or condition of this Agreement,
which default is not cured within the applicable cure period, then Lender may,
at its option, pay, perform or observe the same, and all payments made or costs
or expenses incurred by Lender in connection therewith (including but not
limited to reasonable attorney's fees), with interest thereon at the highest
default rate provided in the Note (if none, then at the maximum rate from time
to time allowed by applicable law), shall be immediately repaid to Lender by
Borrower and shall constitute a part of the Obligations. Lender shall be the
sole judge of the necessity for any such actions and of the amounts to be paid.
7.2 Successors and Assigns Included in Parties. Whenever in this Agreement
one of the parties hereto is named or referred to, the heirs, legal
representatives, successors, successors-in-title and assigns of such parties
shall be included, and all covenants and agreements contained in this Agreement
by or on behalf of Borrower or by or on behalf of Lender shall bind and inure to
the benefit of their respective heirs, legal representatives, successors-in-
title and assigns, whether so expressed or not.
7.3 Costs and Expenses. Borrower agrees to pay all reasonable costs and
expenses incurred by Lender in connection with the making of the Loan, including
but not limited to filing fees, recording taxes and reasonable attorneys' fees,
promptly upon demand of Lender. Borrower further agrees to pay all premiums for
insurance required to be maintained by Borrower pursuant to the terms of the
Loan Documents and all of the out-of-pocket costs and expenses incurred by
Lender in connection with the collection of the Loan, amendment to the Loan
Documents, or prepayment of the Loan, including but not limited to reasonable
attorneys' fees, promptly upon demand of Lender.
7.4 Assignment. The Note, this Agreement and the other Loan Documents may
be endorsed, assigned and/or transferred in whole or in part by Lender, and any
such holder and/or assignee of the same shall succeed to and be possessed of the
rights and powers of Lender under all of the same to the extent transferred and
assigned. Lender may grant participations in all or any portion of its interest
in the indebtedness evidenced by the Note, and in such event Borrower shall
continue to make payments due under the Loan Documents to Lender and Lender
shall have the sole responsibility of allocating and forwarding such payments in
the appropriate manner and amounts. Borrower shall not assign any of its rights
nor delegate any of its duties hereunder or under any of the other Loan
Documents without the prior express written consent of Lender.
7.5 Time of the Essence. Time is of the essence with respect to each and
every covenant, agreement and obligation of Borrower hereunder and under all of
the other Loan Documents.
7.6 Severability. If any provision(s) of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
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7.7 Interest and Loan Charges Not to Exceed Maximum Allowed by Law.
Anything in this Agreement, the Note or any of the other Loan Documents to the
contrary notwithstanding, in no event whatsoever, whether by reason of
advancement of proceeds of the Loan, acceleration of the maturity of the unpaid
balance of the Loan or otherwise, shall the interest and loan charges agreed to
be paid to Lender for the use of the money advanced or to be advanced hereunder
exceed the maximum amounts collectible under applicable laws in effect from time
to time. It is understood and agreed by the parties that, if for any reason
whatsoever the interest or loan charges paid or contracted to be paid by
Borrower in respect of the indebtedness evidenced by the Note shall exceed the
maximum amounts collectible under applicable laws in effect from time to time,
then ipso facto, the obligation to pay such interest and/or loan charges shall
be reduced to the maximum amounts collectible under applicable laws in effect
from time to time, and any amounts collected by Lender that exceed such maximum
amounts shall be applied to the reduction of the principal balance of the
indebtedness evidenced by the Note and/or refunded to Borrower so that at no
time shall the interest or loan charges paid or payable in respect of the
indebtedness evidenced by the Note exceed the maximum amounts permitted from
time to time by applicable law.
7.8 Article and Section Headings; Defined Terms. Numbered and titled
article and section headings and defined terms are for convenience only and
shall not be construed as amplifying or limiting any of the provisions of this
Agreement.
7.9 Notices. Any and all notices, elections or demands permitted or
required to be made under this Agreement shall be in writing, signed by the
party giving such notice, election or demand and shall be delivered personally,
telecopied, telexed, or sent by certified mail or overnight via nationally
recognized courier service (such as Federal Express), to the other party at the
address set forth below, or at such other address as may be supplied in writing
and of which receipt has been acknowledged in writing. The date of personal
delivery, telecopy or telex or two (2) business days after the date of mailing
(or the next business day after delivery to such courier service), as the case
may be, shall be the date of such notice, election or demand. For the purposes
of this Agreement:
The Address of Lender is: Sirrom Capital Corporation
Suite 200
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
with a copy to: Bass, Xxxxx & Xxxx
First Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx-Xxxx Xxxxxxxx, Esq.
The Address of Borrower is: Horizon Medical Products, Inc.
Seven North Parkway Square
0000 Xxxxxxxxx Xxxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx X. Xxxx or Xxxxxxx X. Xxxxxxxx, Xx.
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with a copy to: Xxxxxxxxx & Virgin
Xxxxx 0000
000 Xxxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxxxxx III, Esq.
7.10 Entire Agreement. This Agreement and the other written agreements
between Borrower and Lender represent the entire agreement between the parties
concerning the subject matter hereof, and all oral discussions and prior
agreements are merged herein; provided, if there is a conflict between this
Agreement and any other document executed contemporaneously herewith with
respect to the Obligations, the provision of this Agreement shall control. The
execution and delivery of this Agreement and the other Loan Documents by the
Borrower were not based upon any fact or material provided by Lender, nor was
the Borrower induced or influenced to enter into this Agreement or the other
Loan Documents by any representation, statement, analysis or promise by Lender.
7.11 Governing Law and Amendments. This Agreement shall be construed and
enforced under the laws of the State of Tennessee applicable to contracts to be
wholly performed in such State. No amendment or modification hereof shall be
effective except in a writing executed by each of the parties hereto.
7.12 Survival of Representations and Warranties. All representations and
warranties contained herein or made by or furnished on behalf of the Borrower in
connection herewith shall survive the execution and delivery of this Agreement
and all other Loan Documents.
7.13 Jurisdiction and Venue. Borrower hereby consents to the jurisdiction
of the courts of the State of Tennessee and the United States District Court for
the Middle District of Tennessee, as well as to the jurisdiction of all courts
from which an appeal may be taken from such courts, for the purpose of any suit,
action or other proceeding arising out of any of its obligations arising under
this Agreement or any other Loan Documents or with respect to the transactions
contemplated hereby, and expressly waives any and all objections it may have as
to venue in any of such courts.
7.14 Waiver of Trial by Jury. LENDER AND BORROWER HEREBY WAIVE TRIAL BY
JURY IN ANY ACTION, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT
OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS
AGREEMENT OR THE LOAN DOCUMENTS.
7.15 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.
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7.16 Construction and Interpretation. Should any provision of this
Agreement require judicial interpretation, the parties hereto agree that the
court interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against one party by reason of the
rule of construction that a document is to be more strictly construed against
the party that itself or through its agent prepared the same, it being agreed
that the Borrower, Lender and their respective agents have participated in the
preparation hereof.
7.17 Lender's Limited Agreement to Subordinate. Upon the Borrower's written
election (which may be exercised only once), Lender shall subordinate its liens
and security interests in Borrower's assets to the liens and security interests
of the holders of Senior Indebtedness; provided, however, that (i) the form,
scope and substance of any agreement evidencing such subordination shall be
reasonably acceptable to Lender, (ii) the principal amount of such Senior
Indebtedness shall not exceed $2,000,000 in principal plus interest and expenses
accrued thereon, (iii) the terms of the Senior Indebtedness are commercially
reasonable; (iv) such subordination shall not apply to the assets of Neostar to
be acquired by Borrower or the proceeds thereof (including any accounts or
inventory arising from, or relating to, Neostar's business after Borrower's
acquisition thereof), and (v) Borrower shall have complied with the provisions
of Section 3.19 of this Agreement. As used herein, the term "Senior
Indebtedness" shall refer to the principal of, and all accrued interest on, all
secured indebtedness for borrowed money of Borrower owing to a bank(s) or
financial institution(s); provided, that the aggregate amount of Senior
Indebtedness shall under no circumstances exceed $2,000,000 in principal amount
plus accrued interest and expenses thereon.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this Agreement to be executed by their duly authorized officers, as
of the day and year first above written.
LENDER:
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SIRROM CAPITAL CORPORATION, a Tennessee
corporation
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Title: CEO
-------------------------------------
BORROWER:
---------
HORIZON MEDICAL PRODUCTS, INC.
a Georgia corporation
By: /s/ unreadable
----------------------------------------
Title: CEO
-------------------------------------
GUARANTOR:
----------
CARDIAC MEDICAL, INC.
a Georgia corporation
By: /s/ Xxx Xxxxxxx Xx.
----------------------------------------
Title: President
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