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TERM LOAN AND SECURITY AGREEMENT
BETWEEN
ECOGEN INC.
AND
THE BERKSHIRE BANK
DATED AS OF DECEMBER 23, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE 1. DEFINITIONS.......................................................1
1.01. Defined Terms.................................................1
1.02. Accounting Terms..............................................7
1.03. UCC Terms.....................................................7
ARTICLE 2. THE LOAN..........................................................8
2.01. General Terms.................................................8
2.02. The Note......................................................8
2.03. Repayment of the Loan.........................................8
2.04. Payment of Interest...........................................8
2.05. Lawful Interest...............................................8
2.06. Facility Fee..................................................8
2.07. Closing Expenses..............................................8
2.08. Optional Prepayment of the Loan...............................9
2.09. Payments to the Bank..........................................9
2.10. Interest on Overdue Obligations...............................9
ARTICLE 3. CONDITIONS PRECEDENT..............................................9
3.01. Conditions Precedent to the Closing...........................9
3.02. Additional Conditions Precedent to the Loan..................12
3.03. Closing Fees.................................................13
3.04. Post Closing Conditions......................................13
ARTICLE 4. COLLATERAL SECURITY..............................................13
4.01. Composition of the Collateral................................13
4.02. Security Agreement...........................................13
4.03. Perfection and Maintenance of Security Interest..............14
4.04. Provisions Relating to Receivables...........................15
4.05. Provisions Relating to Inventory.............................15
4.06. Provisions Relating to Machinery and Equipment...............16
4.07. Provisions Relating to Intellectual Property.................16
4.08. Provisions Relating to the Monsanto Royalty..................16
4.09. Priority of Security Interests...............................17
ARTICLE 5. REPRESENTATIONS AND WARRANTIES...................................17
5.01. Inducing Representations and Warranties......................17
5.02. Survival.....................................................21
ARTICLE 6. RESERVED.........................................................21
ARTICLE 7. FINANCIAL REPORTING..............................................21
7.01. Financial Statements.........................................21
7.02. GAAP Reporting...............................................22
7.03. Communications with Accountants..............................22
ARTICLE 8. COVENANTS........................................................22
8.01. Affirmative Covenants........................................22
8.02. Negative Covenants...........................................26
ARTICLE 9. DEFAULT..........................................................28
9.01. Events of Default............................................28
9.02. Remedies.....................................................30
9.03. UCC Remedies.................................................30
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9.04. Right of Set-off.............................................31
9.05. Discretion to Apply the Collateral...........................32
9.06. Rights and Remedies Cumulative; Waivers......................32
9.07. Injunctive Relief............................................32
9.08. Loan by Bank for Borrower Expenses...........................32
9.09. Power of Attorney............................................33
9.10. Actions......................................................33
ARTICLE 10. MISCELLANEOUS...................................................33
10.01. Construction..............................................33
10.02. Further Assurances........................................34
10.03. Preferences...............................................34
10.04. Indemnification...........................................34
10.05. Reimbursement for Bank Expenses...........................34
10.06. Strict Enforcement by the Bank............................35
10.07. Notices...................................................35
10.08. Bank Participations.......................................35
10.09. Assignments by the Borrower...............................36
10.10. Continuing Obligation.....................................36
10.11. Superseding Agreement.....................................36
10.12. Amendments and Waivers in Writing.........................36
10.13. Severability..............................................36
10.14. Governing Law.............................................36
10.15. Consent to Jurisdiction; Waiver of Trial by Jury..........36
10.16. Headings..................................................37
10.17. Counterparts..............................................37
Exhibit A Form of Note
Exhibit B Form of Guarantee
Exhibit C Form of Intercreditor Agreement
Exhibit D Locations of Inventory
Exhibit E Locations of Machinery and Equipment
Exhibit F Places of Business
Exhibit G Consents and Approvals
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TERM LOAN AND SECURITY AGREEMENT
THIS TERM LOAN AND SECURITY AGREEMENT, dated as of December 23, 1999, between
ECOGEN INC., a Delaware corporation (the "BORROWER"), and THE BERKSHIRE BANK, a
New York banking corporation (the "BANK"),
WITNESSETH:
In consideration of the mutual covenants made herein and other good and
valuable consideration, receipt of which is hereby acknowledged, and intending
to be legally bound hereby, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS.
1.01. DEFINED TERMS. As used herein:
"ADJUSTED BASE RATE" shall mean a fluctuating rate of interest equal to
the Base Rate plus two percent (2%) per annum; provided, however, that upon the
occurrence and during the continuation of an Event of Default, such rate shall
be equal to the Base Rate plus six percent (6%) per annum.
"AFFILIATE" shall mean, with respect to any Person, any other Person
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, said Person. For the purposes of
this Agreement, the term "CONTROL" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management and
policies of a Person, whether through ownership of common stock, by contract or
otherwise.
"AGREEMENT" shall mean this Term Loan and Security Agreement, as the
same may, from time to time, be amended or supplemented.
"BANK" shall mean The Berkshire Bank, a bank organized under the laws
of the State of New York, and its successors and assigns.
"BASE RATE" shall mean a fluctuating interest rate per annum which for
each day shall equal the rate of interest announced publicly by the Bank, from
time to time, as the Bank's base rate (it being understood and agreed that such
rate shall not necessarily be the lowest rate of interest available to the most
preferred customers of the Bank), with each change in such rate to be effective
for purposes hereof on the day on which such change is so reported, and if not
so reported, as determined by the Bank in good faith by the best means available
to it.
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"BANKING DAY" shall mean any day other than a Saturday, a Sunday or any
other day in which commercial banks in New York City and Pennsylvania are
required or authorized to be closed.
"BORROWER" shall mean Ecogen Inc., a Delaware corporation, and its
successors and assigns.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
day in which commercial banks in New York City and Pennsylvania are required or
authorized to be closed.
"CLOSING" has the meaning given to such term in Section 3.01 hereof.
"CLOSING DATE" shall mean the date of the Closing.
"COLLATERAL" has the meaning given to such term in Section 4.01 hereof.
"COMMITMENT" shall mean $1,500,000.
"DEFAULT" shall mean the occurrence of any of the events set forth in
Section 9.01 hereof which after the giving of notice, the passage of time, or
both, would become an Event of Default.
"EVENT OF DEFAULT" has the meaning provided in Section 9.01 hereof.
"LOAN" shall have the meaning set forth in Section 2.01 hereof.
"GAAP" shall mean United States generally accepted accounting
principles consistently applied and maintained throughout the period indicated
and consistent with the prior financial practice of the Borrower and any
predecessor, as reflected on the historical and pro-forma financial statements
referred to in Article 7 hereof, except for changes mandated by the Financial
Accounting Standards Board or any similar accounting authority of comparable
standing and except for changes concurred with by a firm of independent
certified public accountants reasonably acceptable to the Bank.
"GENERAL INTANGIBLES" shall mean and include all of the general
intangibles of the Borrower, whether now existing or hereafter acquired or
arising or in which the Borrower now has or hereafter acquires any rights,
including, without limitation, all choses in action, causes of action, corporate
or other business records, inventions, designs, patents, patent applications,
trademarks, trademark applications, trade names, trade secrets, goodwill,
registrations, copyrights, licenses, franchises, customer lists, tax refunds,
tax refund claims, rights and claims against carriers and shippers, leases,
rights to indemnification and all other intangible personal property of every
kind and nature (other than Receivables).
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"GOVERNMENTAL AUTHORITY" shall mean the United States, the States of
Delaware and Pennsylvania, or any other political subdivision in which the
Borrower owns any property or conducts any business, or any other political
subdivision, agency, authority, board, bureau, commission, court, arbitrator or
arbitration board, department, or instrumentality properly exercising
jurisdiction over the Borrower.
"GUARANTEE" means the Guarantee, dated as of the date hereof, executed
by the Guarantor , in substantially the form of Exhibit B hereto.
"GUARANTOR" means Momar Corporation, a Maryland corporation.
"INDEBTEDNESS" shall mean without duplication:
(a) all indebtedness of such Person for borrowed money, but
excluding obligations to trade creditors incurred in the ordinary
course of business that are not overdue by more than six (6) months
unless being contested in good faith;
(b) all reimbursement and other obligations with respect to
letters of credit, bankers' acceptances and surety bonds, whether or
not matured;
(c) all obligations evidenced by notes, bonds, debentures or
similar instruments;
(d) all indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default is
limited to repossession or sale of such property);
(e) all Indebtedness referred to above secured by (or for
which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in property or other
assets (including accounts and contract rights) owned by such Person
even though such Person has not assumed or become liable for the
payment of such Indebtedness;
(f) intercompany loans with Subsidiaries (other than the
Principal Subsidiaries) made in the normal course of business;
(g) All indebtedness guaranteed, directly or indirectly, in
any manner, or endorsed (other than for collection or deposit in the
ordinary course of business) or discounted with recourse by the
Borrower;
(h) All indebtedness guaranteed by the Borrower, directly or
indirectly, through agreements, contingent or otherwise: (1) to
purchase such indebtedness; or (2) to purchase, sell, or lease (as
lessee or lessor) property, products, materials, or supplies or to
purchase or sell services, primarily for the
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purpose of enabling the debtor to make payment of such indebtedness or
to insure the owner of the indebtedness against loss; or (3) to supply
funds to, or in any other manner invest in, the debtor;
(i) All indebtedness secured by (or for which the holder of
such indebtedness has a right, contingent or otherwise, to be secured
by) any mortgage, deed of trust, pledge, lien, security interest, or
other charge or encumbrance upon property owned or acquired subject
thereto whether or not the liabilities secured thereby have been
assumed; and
(j) the Obligations.
"INTERCREDITOR AGREEMENT" shall mean the Intercreditor Agreement, dated
as of the date hereof, among the Borrower, the Bank and Congress Financial
Corporation, in substantially the form attached hereto as Exhibit C.
"INTELLECTUAL PROPERTY" means (i) all patents, patent applications,
patent rights, inventions and improvements, shop rights, processes and formulae,
trade secrets, proprietary technical information, technology and know-how, (ii)
all trademarks, service marks, trade names, label designs and other trade dress
(including the goodwill of the business associated therewith) and copyrights and
(iii) all transferable rights under license agreements with respect to any of
the foregoing.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
"INVENTORY" shall mean and include all of the inventory of the
Borrower, whether now existing or hereafter acquired or arising or in which the
Borrower now has or hereafter acquires any rights, (i) including, without
limitation, goods held by the Borrower for sale or lease or to be furnished
under any contract of service, or so furnished by the Borrower, and all raw
materials, work in process, finished goods and materials and supplies of any
kind, nature or description which are or might be used or consumed in the
business of the Borrower or are or might be used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
all returned or repossessed goods now, or at any time or times hereafter, in the
possession or under the control of the Borrower or the Bank, and all documents
of title or documents representing the same, and (ii) excluding any of such
items as set forth in (i) herein to the extent the Borrower does not have an
ownership interest in such items.
"LAWS" shall mean all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any government or political subdivision or
agency thereof, or any court or similar entity established by any thereof.
"LOAN" shall mean the loan under the Loan by the Bank to or for the
account of the Borrower pursuant to Article 2 hereof.
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"MACHINERY AND EQUIPMENT" shall mean and include all of the equipment
and fixtures of the Borrower, whether now existing or hereafter acquired or
arising or in which the Borrower now has or hereafter acquires any rights,
including, without limitation, furniture, machinery, vehicles (but excluding
titled vehicles) and trade fixtures, together with any and all accessories,
accessions, parts and appurtenances thereto, substitutions therefor and
replacements thereof.
"MATERIAL ADVERSE EFFECT" has the meaning set forth in Section 5.01(d)
hereof.
"MATURITY DATE" shall mean June 23, 2001.
"MONSANTO ACCOUNT" has the meaning set forth in Section 4.08 hereof.
"MONSANTO INSTRUCTIONS" has the meaning set forth in Section 4.08
hereof.
"MONSANTO ROYALTY" shall mean all Gene Success Fees and
Commercialization Success Fees payable at any time to Borrower or any of its
subsidiaries by Monsanto Company pursuant to the Technology Assignment Agreement
dated as of January 24, 1996, as amended, by and among Monsanto Company,
Borrower, and Ecogen-Bio, Inc.
"NOTE" shall mean the promissory note referred to in Section 2.02
hereof.
"OBLIGATIONS" shall mean:
(a) the obligations of the Borrower to pay the principal of,
and interest on, the Note in accordance with the terms thereof and to
satisfy all of its other liabilities to the Bank hereunder, under the
Note, and under any of the other Related Documents, whether now
existing or hereafter incurred, matured or unmatured, direct or
contingent, joint or several, including any extensions, modifications,
renewals thereof, and substitutions therefor;
(b) the obligations of the Borrower to repay to the Bank
hereunder, under the Note and under any of the other Related Documents,
all amounts advanced by the Bank on behalf of the Borrower, including,
but without limitation, advances for principal or interest payments to
prior secured parties, mortgagees, or lienors, or for taxes, levies,
insurance, rent, or repairs to, or maintenance of the Collateral;
(c) all advances, liabilities, obligations, covenants and
duties, of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, which are owing by
the Borrower to the Bank and arise under this Agreement or any Related
Document, whether or not for the payment of money, whether direct or
indirect, absolute or contingent, or due or to become due; and
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(d) the obligations of the Borrower to reimburse the Bank on
demand, for all of the Bank's out-of-pocket expenses and costs,
including the reasonable fees and expenses of its counsel, in
connection with the preparation, amendment, modification, or
enforcement of this Agreement and the documents required hereunder, and
in connection with any proceeding brought, or threatened, to enforce
payment of any of the obligations referred to in the foregoing
paragraphs (a), (b) and (c).
"OBLIGOR" shall mean any Person that is an obligor on a Receivable.
"OUTSTANDING AMOUNT" shall mean, from time to time, the principal
amount outstanding under the Loan.
"PARTICIPATING BANK" shall mean any participating or co-lending bank
with which, pursuant to Section 10.08 hereof, the Bank may enter into a
participation or co-lending agreement.
"PERMITTED ENCUMBRANCES" shall mean (A) the security interest of
Congress Financial Corporation granted pursuant to the Loan and Security
Agreement, dated August 20, 1998, as amended, between Congress Financial
Corporation and the Borrower, (B) liens for taxes not yet subject to penalties
or which are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provision (in the
opinion of an authorized financial officer of the Bank) shall have been
established on the books of the Borrower, (C) pledges or deposits made under
workmen's compensation, unemployment insurance, social security and similar
legislation, or in connection with appeal or surety bonds incident to
litigation, or to secure statutory obligations, (D) mechanics', repairmen's,
materialmen's, warehousemen's, and other like liens with respect to liabilities
which are not yet due or which are being contested in good faith, (E)
encumbrances on assets that are not Collateral and are not used to secure any
Indebtedness of the Borrower, (F) purchase money security interests in Machinery
and Equipment (including capital leases) not to exceed $925,000 in the aggregate
at any time outstanding so long as such security interests do not apply to any
property of the Borrower or any of its Subsidiaries other than the Machinery and
Equipment so acquired and the Indebtedness secured thereby does not exceed the
cost of the Machinery and Equipment so acquired and the Indebtedness secured,
(G) liens and security interests of the Bank and (H) such other minor defects of
title which in the opinion of counsel acceptable to the Bank will not materially
impair the value of, or the Bank's security interest in, the Collateral for any
reasonable use or the ability of the Bank to realize the value of, or its
security interest in, the Collateral.
"PERSON" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, court, or government or political subdivision or agency thereof.
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"PREFERRED DIVIDENDS" shall mean the dividends provided under the
Series 1999A Convertible Preferred Stock and the Series 1998C Convertible
Preferred Shares.
"PRINCIPAL SUBSIDIARIES" shall mean Ecogen-Bio Inc., Ecogen Investments
Inc., Ecogen Technologies I Incorporated, Ecosearch Mildew I Inc., Ecoresearch
Harvest Rot II Inc., Ecoresearch Corn Borer III Inc., Ecoresearch Nematodes IV
Inc., Ecoresearch Rootworm V Inc. and Ecoresearch Turf VI Inc.
"RECEIVABLES" shall mean and include, with respect to the Borrower, all
of the accounts, contract rights, chattel paper and instruments of the Borrower,
whether now existing or hereafter acquired or arising or in which the Borrower
now has or hereafter acquires any rights, including, without limitation, all
present and future rights to payments for goods, merchandise or Inventory sold
or leased or for services rendered, whether or not represented by instruments or
chattel paper, and whether or not earned by performance; proceeds of any letter
of credit on which the Borrower is beneficiary; and all forms of obligations
whatsoever owing to the Borrower, together with all instruments and documents of
title representing any of the foregoing, all rights in any goods, merchandise or
Inventory which any of the foregoing may represent, all rights in any returned
or repossessed goods, merchandise or Inventory, and all rights, security and
guaranties with respect to each of the foregoing, including, without limitation,
any right of stoppage in transit.
"RECORDS" shall mean correspondence, memoranda, tapes, discs, papers,
books, and other documents, or transcribed information of any type, whether
expressed in ordinary or machine language, wheresoever the same may be located,
and whether or not the same are in the possession of the Borrower or another
Person.
"RELATED DOCUMENTS" shall mean the documents, whether deliverable at or
after the Closing, required under Section 3.01 hereof.
"SUBSIDIARY" shall mean, with respect to the Borrower, any corporation
of which more than 50% of the outstanding stock having ordinary voting power to
elect a majority of the board of directors of such corporation is at the time
directly or indirectly owned or controlled by the Borrower or by one or more
Subsidiaries.
"TRANSACTION DOCUMENTS" has the meaning set forth in Section 5.01(b)
hereof.
1.02. ACCOUNTING TERMS. Accounting terms used and not otherwise defined
in this Agreement have the meanings determined by GAAP, and all calculations
with respect to accounting or financial matters unless otherwise provided herein
shall be computed in accordance with GAAP.
1.03. UCC TERMS. All terms used herein that are defined in the Uniform
Commercial Code of the applicable jurisdiction (the "UCC") and are not otherwise
defined herein shall have the meanings assigned to such terms in the UCC.
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ARTICLE 2.
THE LOAN.
2.01. GENERAL TERMS. Subject to the provisions of this Agreement, the
Bank hereby establishes a term loan facility for the account of the Borrower,
under which the Bank agrees to make a term loan to the Borrower (the "LOAN") on
the Closing Date in a principal amount equal to the Commitment.
2.02. THE NOTE. On the Closing Date, the Borrower shall execute and
deliver a promissory note to the Bank (the "NOTE"), which Note shall be in the
form of Exhibit A hereto. The Note shall be in the principal amount of the
Commitment.
2.03. REPAYMENT OF THE LOAN. An amount of principal on the Loan equal
to $500,000 shall be due and payable on June 23, 2000 and the Outstanding Amount
shall be due and payable on the Maturity Date.
2.04. PAYMENT OF INTEREST. Interest for the Loan shall be payable by
the Borrower at the Adjusted Base Rate monthly in arrears on the first day of
each month, calculated on the basis of a 360-day year for actual days elapsed.
2.05. LAWFUL INTEREST. Nothing contained in this Agreement or in the
Note or in any other agreement or instrument evidencing or relating to the
Obligations shall be construed to permit the Bank to receive at any time
interest, fees or other charges in excess of the amounts which the Bank is
legally entitled to charge and receive under any law to which such interest,
fees or charges are subject. In no contingency or event whatsoever shall the
compensation payable to the Bank by the Borrower, howsoever characterized or
computed, hereunder or under the Note or under any other agreement or instrument
evidencing or relating to the Obligations exceed the highest rate permissible
under any law to which such compensation is subject. There is no intention that
the Bank shall contract for, charge or receive compensation in excess of the
highest lawful rate, and, in the event it should be determined that the Bank has
contracted for any rate of interest in excess of the highest lawful rate, then
ipso facto such rate shall be reduced to the highest lawful rate so that no
amounts shall be charged which are in excess thereof, and, in the event it
should be determined that any excess over such highest lawful rate has been
charged or received, the Bank shall promptly refund such excess to the Borrower;
provided, however, that, if lawful, any such excess shall be paid by the
Borrower to the Bank as additional interest (accruing at a rate equal to the
maximum legal rate minus the rate provided for hereunder) during any subsequent
period when regular interest is accruing hereunder at less than the maximum
legal rate.
2.06. FACILITY FEE. On the Closing Date, the Borrower shall pay to the
Bank a facility fee in the amount of $7,500.
2.07. CLOSING EXPENSES. On the Closing Date, the Borrower shall
reimburse the Bank for the reasonable fees and disbursements of counsel to the
Bank, and all other
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out-of-pocket fees and expenses incurred by the Bank referred to in Section
10.05 hereof relating to the Loan.
2.08. OPTIONAL PREPAYMENT OF THE LOAN. Upon one (1) Business Day's
notice to the Bank, or upon same day notice received by the Bank prior to 12:00
noon (New York time), the Borrower may prepay the Outstanding Amount of the Loan
in whole or, from time to time, in part, without premium or penalty, any partial
payment to be made in integral multiples of $100,000; provided, however, that
any such prepayment shall be applied solely to principal due under the Loan.
2.09. PAYMENTS TO THE BANK. (a) All payments of interest on, and
principal of, the Loan, all fees, and all other sums payable to the Bank shall
be paid directly to the Bank, at its address set forth in Section 10.07 hereof,
or such other place as the Bank shall by written notice to the Borrower
designate, in immediately available funds on the dates specified hereunder, or
if any such date is not a Business Day, then on the next succeeding Business
Day, in such currency of the United States of America as is, at the time of
payment, legal tender for the payment of public and private debts. Except as
otherwise provided in this Agreement, the Bank shall send the Borrower
statements of all amounts due hereunder for interest, principal, and fees, which
statements shall be considered correct and presumptively binding on the Borrower
unless the Borrower notifies the Bank to the contrary within thirty (30) days of
its receipt of any statement which it deems to be incorrect.
(b) All payments made by the Borrower under this Agreement shall be
made free and clear of, and without reduction for or on account of, any present
or future stamp or other taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, restrictions or conditions of any nature whatsoever
now or hereafter imposed, levied, collected, withheld or assessed by any country
(or by any political subdivision or taxing authority thereof or therein)
excluding income and franchise taxes now or hereafter imposed on the Bank.
2.10. INTEREST ON OVERDUE OBLIGATIONS. Except as otherwise expressly
provided herein, the Borrower agrees to pay to the Bank interest at the Adjusted
Base Rate on all Obligations which are due hereunder and unpaid from the due
date to the date of payment by the Borrower.
ARTICLE 3.
CONDITIONS PRECEDENT.
The obligation of the Bank to make the Loan is subject to the
following:
3.01. CONDITIONS PRECEDENT TO THE CLOSING. The Borrower shall have
delivered to the Bank, prior to December 23, 1999 (the date upon which all of
the following have been delivered to the Bank to be defined as the "CLOSING
DATE"), the following:
(a) the Note, duly executed by the Borrower;
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(b) the Guarantee, duly executed by the Guarantor;
(c) the Intercreditor Agreement, duly executed by the Borrower
and Congress Financial Corporation;
(d) a list of insurance policies complying with Section
8.01(k) hereof and a copy of the certificate of insurance with respect
to each such policy, and, with respect to casualty insurance policies,
loss payable endorsements naming the Bank as loss payee, together with
evidence that all premiums that are due have been paid on each such
policy;
(e) the written consent of Congress Financial Corporation to
this Agreement and the transactions contemplated hereby;
(f) such Uniform Commercial Code filings as are necessary in
the Commonwealth of Pennsylvania to perfect the security interests of
the Bank in the Collateral;
(g) a copy of the certificate of incorporation of the
Borrower, certified as of a current date by the Secretary of State of
Delaware;
(h) a good standing certificate for the Borrower, issued as of
a current date by the Secretary of State of Delaware;
(i) a certificate or certificates issued as of a current date
by the Secretary of Commonwealth of Pennsylvania, or other evidence
acceptable to the Bank in its sole discretion, stating that the
Borrower is qualified to do business in, and is in good standing as a
foreign corporation doing business in, the Commonwealth of
Pennsylvania;
(j) a certificate of the secretary of the Borrower certifying
(i) that attached thereto is a true and complete copy of the bylaws of
the Borrower as in effect on the date of such certification, (ii) that
attached thereto is a true and complete copy of resolutions adopted by
the board of directors of the Borrower authorizing the execution,
delivery and performance of this Agreement and each of the other
Related Documents to which it is a party, and (iii) as to the
incumbency and genuineness of the signature of each officer of the
Borrower executing this Agreement;
(k) a certificate signed by the president of the Borrower
attesting to such factual matters as shall be requested by the Bank,
including that (i) the representations and warranties set forth in
Article 5 hereof (as they relate solely to the transactions
contemplated by the Closing) are true and correct in all material
respects on and as of such date with the same effect as though made on
and as of such date, (ii) the Borrower is on such date in compliance
with all the terms and
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provisions set forth in this Agreement and the other Related Documents
(each, as they relate solely to the transactions contemplated by the
Closing) on its part to be observed or performed, and (iii) on such
date, and after giving effect to the consummation of the transactions
contemplated by this Agreement, no Default or Event of Default nor any
event or condition which with the making of the Loan, the consummation
of such transactions or any combination thereof would constitute such a
Default or Event of Default, has occurred and is continuing;
(l) a written opinion of Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
LLP, counsel to the Borrower, dated the Closing Date and addressed to
the Bank, in form satisfactory to the Bank, to the effect that:
(1) the Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware, and has the power to own its assets and to
transact the business in which it is engaged,
(2) the Borrower has the power to execute, deliver
and perform the Borrower's obligations under the Transaction
Documents and the shareholders and the board of directors of
the Borrower have taken all necessary action required under
the certificate of incorporation and bylaws of the Borrower to
authorize the execution and delivery by the Borrower of, and
performance of the Borrower's obligations under, the
Transaction Documents,
(3) the execution and delivery by the Borrower of,
and performance by the Borrower of the Borrower's obligations
under, the Transaction Documents (i) will not violate any
provision of any applicable law (including laws relating to
usury) or regulation or of any order, writ, judgment,
injunction or decree of any governmental authority, (ii) will
not violate any provision of the certificate of incorporation
or bylaws of the Borrower and (iii) will not violate any
provision of, or constitute a default under, or result in the
creation or imposition of any prohibited lien on any asset of
the Borrower pursuant to the provisions of, any mortgage,
indenture, contract, agreement or other undertaking known to
such counsel to which the Borrower is a party or which is
binding upon the Borrower or upon any of its assets,
(4) the Transaction Documents have been duly executed
and delivered by the Borrower, and constitute the legal, valid
and binding obligations of the Borrower, subject to
bankruptcy, insolvency, moratorium, or other similar laws
affecting creditors' rights generally and to principles of
equity,
(5) with respect to the Commonwealth of Pennsylvania,
all financing statements necessary or desirable to be filed in
connection with
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the perfection of the security interests in the Collateral
granted hereunder and under the Related Documents have been
duly filed and no other filing or recording is required (other
than that, prior to the expiration of five years from the date
of the initial filing, the filing of continuation statements
shall be required) and the foregoing are effective to create a
valid and perfected security interest in the Collateral in
favor of the Bank securing the Obligations, and
(6) to the knowledge of such counsel, there is no
action, suit, proceeding, inquiry or investigation, at law or
in equity, before or by any court, public board or body
pending or threatened in writing against or affecting the
Borrower wherein an unfavorable decision, ruling or finding
would materially, adversely affect the transactions
contemplated by this Agreement or any of the obligations of
the Borrower;
(m) a copy of the Monsanto Instructions with evidence of the
mailing thereof to Monsanto Company by certified mail; and
(n) such other documents, instruments, agreements and opinions
as the Bank may reasonably request.
In addition, the Borrower shall have delivered or caused the Guarantor
to deliver to the Bank, prior to the Closing Date:
(i) a copy of the certificate of incorporation of the
Guarantor, certified as of a current date by the Secretary of State of
Maryland;
(ii) a good standing certificate for the Guarantor, issued as
of a current date by the Secretary of State of Maryland; and
(iii) a certificate of the president of the Guarantor
certifying (i) that attached thereto is a true and complete copy of the
bylaws of the Guarantor as in effect on the date of such certification,
(ii) that attached thereto is a true and complete copy of resolutions
adopted by the board of directors of the Guarantor authorizing the
execution, delivery and performance of the Guarantee, and (iii) as to
the incumbency and genuineness of the signature of each officer of the
Guarantor executing the Guarantee.
3.02. ADDITIONAL CONDITIONS PRECEDENT TO THE LOAN. Notwithstanding any
other provision of this Agreement, the Bank shall have no obligation to make the
Loan unless and until the following conditions have been met with respect to the
Borrower:
(a) Immediately before and after the Loan, no Event of Default
(other than as set forth in Section 5.01(o) hereof) shall have occurred
and be continuing; and
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(b) The representations and warranties of the Borrower
contained in this Agreement shall be true as if made on and as of the
date of the Loan.
3.03. CLOSING FEES. In addition to the conditions set forth in Sections
3.01 and 3.02 hereof, it shall be a condition precedent to the Closing that the
Borrower shall have paid to the Bank the facility fee provided for in Section
2.06 hereof plus the fees and expenses of the Bank related to the Closing which
are provided for in Section 2.07 hereof.
3.04. POST CLOSING CONDITIONS. The Borrower shall deliver to the Bank,
prior to January 17, 1999, the following:
(a) a UCC search report reflecting that such personal property
security interests constitute valid and perfected first priority
security interests (except for Permitted Encumbrances), duly recorded
in the appropriate recording or filing offices with all recording or
filing fees and taxes, if any, paid thereof; and
(b) termination statements executed by any creditors holding
security interests, if any, which are not Permitted Encumbrances in any
of the Collateral.
ARTICLE 4.
COLLATERAL SECURITY.
4.01. COMPOSITION OF THE COLLATERAL. The property in which a security
interest is granted pursuant to the provisions of Section 4.02 is herein
collectively called the "COLLATERAL." The Collateral, together with all other
property of the Borrower of any kind held by the Bank shall stand as one
general, continuing collateral security for all Obligations and may be retained
by the Bank as collateral security until all Obligations have been satisfied in
full.
4.02. SECURITY AGREEMENT. As security for all Obligations, the Borrower
grants to the Bank (in addition to any collateral security in which a security
interest is granted pursuant to any of the other Related Documents) a security
interest (subject to Permitted Encumbrances) in and assignment of:
(a) all of the Borrower's Receivables;
(b) all of the Borrower's Machinery and Equipment;
(c) all of the right, title and interest of the Borrower in
and to any agreements or contracts for the sale of goods and services,
and other miscellaneous agreements and contracts as such agreements may
be amended or otherwise modified from time to time herein including
without limitation: (i) all rights of the Borrower to receive moneys
due and to become due under or pursuant to such agreements or
contracts, (ii) all rights of the Borrower to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the
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agreements or contracts, (iii) claims of the Borrower for damages
arising out of or for breach of or default under the agreements or
contracts and (iv) the right of the Borrower to terminate the
agreements or contracts, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder.
(d) all of the Borrower's General Intangibles;
(e) all of the Borrower's Inventory;
(f) all of the Borrower's goods, chattels, business Records,
contracts, documents of title, fixtures, insurance policies and
proceeds, licenses, licensing fees, permits, approvals, consents,
certificates, stock, surveys, engineering reports, tools, landscaping,
all other equipment and machinery, furniture, furnishings, business
machines, appliances, deposits, security deposits, money, securities,
claims, demands, causes of action, refunds, rebates, income and all
other tangible and intangible real, personal or mixed property whether
now owned or hereafter acquired; and
(g) all proceeds, products, additions to, replacements of,
substitutions for and accessions of any and all Collateral described in
subparagraphs (a), (b), (c), (d), (e) and (f) above.
4.03. PERFECTION AND MAINTENANCE OF SECURITY INTEREST. Until all
Obligations have been fully satisfied, the Bank's security interest in the
Collateral, and all products and proceeds thereof, whether such goods and rights
are now owned or hereafter acquired, shall continue in full force and effect.
The Borrower shall perform or cause to be performed any and all steps requested
by the Bank to perfect, maintain and protect the Bank's security interest in the
Collateral, including, without limitation, executing and filing financing or
continuation statements, or amendments thereof, in form and substance
satisfactory to the Bank, maintaining a perpetual inventory and complete and
accurate stock records, delivering to the Bank any warehouse receipts not
pledged to a secured party under any Permitted Encumbrance covering that portion
of the Collateral, if any, located in warehouses or storage facilities and for
which negotiable warehouse receipts are issued, or taking such other steps as
are deemed necessary by the Bank to maintain the Bank's control of the
Inventory. The Bank may file one or more financing statements disclosing the
Bank's security interest under this Agreement without the Borrower's signature
appearing thereon or may execute any such financing statement on behalf of the
Borrower and the Borrower shall pay the reasonable costs of, or incidental to,
any recording or filing of any financing statements concerning the Collateral;
provided, however, that the Bank shall give prompt notice in writing to the
Borrower of any such action. Upon the occurrence and during the continuance of
an Event of Default, the Borrower shall, upon the Bank's Request, perform or
cause to be performed the transferring of Inventory to warehouses or storage
facilities designated by the Bank. If any Inventory is in the possession or
control of any warehouseman or of the agents or bailees of the Borrower, the
Borrower shall notify such agents or bailees of the Bank's security interest in
such Inventory and, upon the occurrence and during the continuance
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of an Event of Default, instruct them to hold all such Inventory for the Bank's
account and subject to the Bank's instructions. From time to time, the Borrower
shall, upon the Bank's request, execute and deliver or cause to be executed and
delivered confirmatory written instruments pledging to the Bank the Inventory
described in any such written instruments or otherwise; provided, however, that
no failure of the Borrower to execute and deliver such confirmatory instruments
shall affect or limit the Bank's security interest or other rights in and to the
Inventory.
4.04. PROVISIONS RELATING TO RECEIVABLES. The following provisions
relating to Receivables shall be applicable to the Borrower during the term
hereof:
(a) Without the prior written consent of the Bank, which will
not be unreasonably withheld, in each case, the Borrower will not
redate any invoice or sale or make sales on extended dating beyond that
customary in its industry or materially change the terms of sale
customarily offered to its customers.
(b) If the Borrower becomes aware of anything materially
detrimental to the credit of any Obligor that owes the Borrower more
than $100,000, it will promptly advise the Bank thereof.
(c) During the term of this Agreement, the Borrower shall not
sell or assign or grant any security interest in any Receivables to
anyone other than the Bank or to holders of Permitted Encumbrances.
(d) The Bank may, at all times after the occurrence and during
the continuance of an Event of Default, settle or adjust disputes and
claims directly with the Obligors for amounts and upon terms which the
Bank considers advisable, subject to the consent of holders of
Permitted Encumbrances.
(e) The Borrower agrees, represents and warrants that each
Receivable will be owned by the Borrower free and clear of any liens,
claims or encumbrances except in favor of the Bank and the holders of
Permitted Encumbrances and will cover a bona fide sale and delivery of
Inventory usually dealt in by the Borrower, or the provision by the
Borrower of services to the Obligors in the ordinary course of
business.
(f) Upon the occurrence and during the continuance of an Event
of Default, the Bank or its designee may notify the Obligors at any
time that Receivables have been assigned to the Bank or of the Bank's
security interest therein, collect them directly and charge the
collection costs and expenses to the Borrower's loan account.
4.05. PROVISIONS RELATING TO INVENTORY. The Borrower represents,
warrants and covenants that all the Inventory is and will be owned by the
Borrower free of all liens and encumbrances other than the Bank's security
interest hereunder and except for Permitted Encumbrances, and shall be kept by
the Borrower at the locations set forth on Exhibit D
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hereto, and that the Borrower shall not (without the Bank's prior written
approval) remove the Inventory therefrom except for the purposes of sale in the
regular course of its business and except as required by the holders of
Permitted Encumbrances. Except for sales of Inventory made in the ordinary
course of business, the Borrower shall not sell, encumber or dispose of or
permit the sale, encumbrance or disposal of any Inventory without the Bank's
prior written consent.
4.06. PROVISIONS RELATING TO MACHINERY AND EQUIPMENT. The Borrower
shall keep and maintain its Machinery and Equipment in good operating condition
and repair and shall make all necessary replacements thereof so that the value
and operating efficiency thereof shall at all times be maintained and preserved,
and shall not permit any such items to become a fixture to real estate or
accession to other personal property unless the Bank has a security interest in
such real estate or other personal property subject only to Permitted
Encumbrances. The Borrower shall, immediately on demand therefor by the Bank,
deliver to the Bank any and all evidence of ownership of any of the Machinery
and Equipment. The Machinery and Equipment shall be maintained at locations
specified in Exhibit E hereto. The Borrower shall not sell, lease, grant a
security interest in or otherwise dispose of or encumber the Machinery and
Equipment, or any part thereof (except that the Borrower may sell and replace
obsolete Machinery and Equipment in the ordinary course of business), other than
with Permitted Encumbrances.
4.07. PROVISIONS RELATING TO INTELLECTUAL PROPERTY. The Borrower and
each Subsidiary has good and valid title to, or has all necessary rights to use,
all patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, licenses and other intellectual property rights
(collectively, the "Intellectual Property Rights") which the Borrower reasonably
believes are necessary for use in connection with its business and the business
of each Subsidiary, and which the failure to so have would have a Material
Adverse Effect. To the best knowledge of the Borrower, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights that is reasonably likely to
have a Material Adverse Effect.
4.08. PROVISIONS RELATING TO THE MONSANTO ROYALTY. The Borrower shall
establish an account with the Bank (the "MONSANTO ACCOUNT") which shall be used
for the sole purpose of receiving payments on the Monsanto Royalty. The Borrower
shall instruct Monsanto Company in writing (the "MONSANTO INSTRUCTIONS") to make
all payments on the Monsanto Royalty to the Bank for deposit into the Monsanto
Account, which instructions shall provide that the Monsanto Instructions may not
be modified or rescinded without the written consent of the Bank. Amounts on
deposit in the Monsanto Account may be applied, during the continuance of an
Event of Default, to the payment of regularly scheduled payments of principal
and interest on the Loan. Any amounts on deposit in the Monsanto Account not
currently required to make payments on the Loan as aforesaid shall be paid to
the Borrower, but only with the consent of the Bank, which consent shall not be
unreasonably withheld; provided, however, that the Bank shall not withhold its
consent with respect to any amounts in excess of the unpaid principal balance of
the Loan.
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4.09. PRIORITY OF SECURITY INTERESTS. The Borrower warrants that the
security interests of the Bank in the Collateral shall be perfected security
interests, subject only to Permitted Encumbrances.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES.
5.01. INDUCING REPRESENTATIONS AND WARRANTIES. In order to induce the
Bank to enter into this Agreement and to make the Loan, the Borrower represents
and warrants to the Bank that (where appropriate, giving effect to the
consummation of the transactions contemplated by this Agreement) as of the
Closing Date:
(a) Organization and Qualification. The Borrower and each
Subsidiary (as defined below) is a corporation, duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware, with the requisite corporate power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. Ecogen Investments Inc., a Delaware corporation
("E-Investments"), Ecogen-Bio Inc., a Delaware corporation ("E-Bio")
and Ecogen Technologies I Incorporated, a Delaware corporation
("Etech"), comprise all of the entities which would be deemed
"significant subsidiaries" of the Borrower, as such term is defined in
Rule 1-02(w) of Regulation S-X promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Borrower is
the owner of all of the issued and outstanding capital stock of
E-Investments and E-Bio, and is the owner of no less than 70% of the
issued and outstanding common stock of Etech, free and clear of any and
all liens, charges or encumbrances or rights of first refusal of any
nature whatsoever.
(b) Authority. The Borrower has the requisite corporate power
and authority to enter into and to consummate the transactions
contemplated by each of this Agreement and the other agreements and
instruments executed and delivered by it pursuant hereto (collectively,
the "Transaction Documents") and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Borrower and the consummation by it of the
transactions contemplated thereby have been duly authorized by all
necessary action on the part of the Borrower and no further action is
required by the Borrower. Each of the Transaction Documents has been
duly executed by the Borrower and, when delivered (or filed, as the
case may be) in accordance with the terms hereof, will constitute the
valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms. Neither the Borrower nor any
Subsidiary is in violation of any of the provisions of its respective
certificate of incorporation, by-laws or other charter documents.
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(c) Due Authorization. The execution, delivery and performance
of this Agreement and each of the other Related Documents to which the
Borrower is a party and the creation of the security interests and
liens provided for under this Agreement have been duly authorized by
all necessary or proper action on the part of the Borrower, including
the consent of its shareholders where required.
(d) Noncontravention. The execution, delivery and performance
of the Transaction Documents by the Borrower and the consummation by
the Borrower of the transactions contemplated thereby do not and will
not (i) conflict with or violate any provision of its certificate of
incorporation, bylaws or other charter documents (each as amended
through the date hereof), or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in a loss of
contractual benefits under any agreement, credit facility, indenture or
instrument (evidencing a Borrower debt or otherwise) to which the
Borrower or any Subsidiary is party or by which any property or asset
of the Borrower or any Subsidiary is bound or affected, or (iii) result
in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or Governmental
Authority to which the Borrower or any Subsidiary is subject or by
which any property or asset of the Borrower or any Subsidiary is bound
or affected, except in the case of each of clauses (ii) and (iii), as
is not reasonably likely to, individually or in the aggregate, (x) have
or result in a material adverse effect on the business, operations,
property, assets, liabilities (financial or otherwise) or prospects of
the Borrower and the Subsidiaries, taken as a whole, or (y) adversely
impair the Borrower's ability to perform fully on a timely basis its
obligations under any of the Transaction Documents (any of (x) or (y),
being a "Material Adverse Effect").
(e) Valid and Binding Obligations. This Agreement, the Note
and each of the other Related Documents to which the Borrower is a
party are, or upon delivery thereof to the Borrower will be, the legal,
valid and binding obligations of the Borrower, enforceable against the
Borrower in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency and other
similar laws affecting creditors' rights generally and to principles of
equity affecting the enforcement of contractual obligations generally.
(f) Corporate and Fictitious Names. During the five (5) years
preceding the date of this Agreement, neither the Borrower nor any
predecessor of the Borrower has been known as or used any corporate or
fictitious name other than its current corporate name.
(g) Places of Business. The Borrower's chief executive offices
and principal place of business, and the place where the Borrower
maintains all records relating to the Collateral, is at the address set
forth in Section 10.07
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hereof. The Borrower has no other place of business, except as
specified in Exhibit F hereto and the Borrower maintains Collateral at
no other locations, except as specified in Exhibits D, E and F hereto.
(h) Title to Assets. The Borrower has good, indefeasible, and
merchantable title to and ownership of the Collateral, free and clear
of all liens, claims, security interests and encumbrances other than
Permitted Encumbrances.
(i) Governmental Authorizations to Conduct Business. Each of
the Borrower and its Subsidiaries possesses all permits and other
governmental authorizations that are material to the conduct of its
business. Such licenses, permits and other governmental authorizations
are valid and sufficient for the business presently carried on by the
Borrower and its Subsidiaries, and neither the execution, delivery or
performance of this Agreement or the Related Documents nor the
consummation of the transactions contemplated hereby will affect the
validity thereof or require consent with respect thereto, and, to the
best of the knowledge of the Borrower, there is no threat of suspension
or cancellation of any such license, permit or governmental
authorization. Neither the business of the Borrower or any of its
Subsidiaries is being conducted in violation of any law, ordinance or
regulation of any Governmental Authority, including any filing
requirement in respect thereof, except for violations which,
individually or in the aggregate, do not and will not have Material
Adverse Effect.
(j) Consents and Approvals. Except as specifically set forth
in Exhibit G neither the Borrower nor any Subsidiary is required to
obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other
Federal, state, local or governmental authority or other Person in
connection with the execution, delivery and performance by the Borrower
of the Transaction Documents.
(k) Legal Proceedings. There is no action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any
governmental authority pending or, to the best of the Borrower's
knowledge, threatened against or affecting the Borrower or any
Subsidiary (and to the best of the Borrower's knowledge, there is no
basis therefor) (i) wherein an unfavorable decision, ruling or finding
would have a Material Adverse Effect.
(l) Taxes. Each of the Borrower and its Subsidiaries has filed
all federal, state and local tax returns which are required to be
filed, and has paid, or made provision for the payment of, all taxes
which have become due pursuant to said returns or pursuant to any
statement, it any, received by the Borrower or any Subsidiary. The
income tax returns filed by each of the Borrower and its Subsidiaries
properly reflect the income and taxes of the Borrower and its
Subsidiaries and for the periods covered thereby, subject only to
reasonable adjustments required by the Internal Revenue Service or
other applicable tax authority upon audit, and having no Material
Adverse Effect.
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(m) SEC Documents; Financial Statements. The Borrower has
previously furnished the Purchaser with true and correct copies of all
documents which have been filed by the Borrower with the Commission
pursuant to the Exchange Act since October 31, 1998 (collectively, the
"SEC Documents"). The SEC Documents constitute all reports and other
documents the Borrower was required to file under the Exchange Act
since October 31, 1998. At the time of filing with the Commission, the
SEC Documents were prepared in all material respects in accordance with
the applicable requirements of the Exchange Act and the rules and
regulations thereunder, did not contain any untrue statement of a
material fact, and did not omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
audited and unaudited consolidated financial statements contained in
the SEC Documents present fairly the consolidated financial condition
and results of operations and changes in stockholders' equity and cash
flows of the Borrower and its consolidated subsidiaries as of the dates
and for the periods indicated, in each case in accordance with GAAP
consistently applied during the periods presented, except as may
otherwise be stated in such financial statements. For purposes of this
Agreement, all financial statements of the Borrower shall be deemed to
include the notes to such financial statements. Neither the Borrower
nor any Subsidiary has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on, or reserved against in, a consolidated
balance sheet of the Borrower or in the notes thereto, prepared in
accordance with GAAP consistently applied except for (A) liabilities or
obligations that were reserved on or reflected in the consolidated
balance sheet of the Borrower at October 31, 1998 (and notes thereto)
included in the SEC Documents, (B) liabilities or obligations arising
in the ordinary course of business since October 31, 1998, (C)
liabilities or obligations which are not, individually or in the
aggregate, material to the Borrower and its Subsidiaries taken as a
whole, or (D) liabilities and obligations described in the SEC
Documents. Except as described in the SEC Documents, since October 31,
1998, there has not been any material adverse change in the condition
(financial or otherwise) results of operations, business, assets,
liabilities or prospects of the Borrower and the Subsidiaries, taken as
a whole.
(n) Violations of Law. The Borrower is not in violation of any
applicable statute, regulation or ordinance of any Governmental
Authority, in any respect materially and adversely affecting the
Collateral or the business, property, assets, operations or condition
of the Borrower, financial or otherwise.
(o) No Default or Violation. Neither the Borrower nor any
Subsidiary (i) is in default under or in violation of (and no event has
occurred which has not been waived which, with notice or lapse of time
or both, would result in a default by the Borrower or any Subsidiary
under), nor has the Borrower or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any
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indenture, loan or credit agreement or any other material agreement or
instrument to which it is a party or by which it or any of its
properties is bound, except that the Borrower is in default of the
provisions contained in Sections 9.14 and 9.15 of the Loan and Security
Agreement, dated August 20, 1998, between the Borrower and Congress
Financial Corporation (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is in violation of any
statute, rule or regulation of any governmental authority, except as is
not reasonably likely, individually or in the aggregate, to have or
result in a Material Adverse Effect.
(p) Certain Fees. No fees or commissions will be payable by
the Borrower to any broker, financial advisor or consultant, finder,
placement agent, investment banker, or bank with respect to the
transactions contemplated by this Agreement.
(q) Delivery of Information. Neither any Related Document nor
any document, report, notice, lease, operating agreement, schedule,
certificate, statement or other writing (collectively, the "DOCUMENTS")
furnished or caused to be furnished by the Borrower to the Bank
contains, to the best of the Borrower's knowledge, any untrue statement
of a material fact or omits to state a material fact necessary to make
the statements made therein not misleading in light of the
circumstances under which they were made. To the best of the Borrower's
knowledge, there is no fact which could materially adversely affect the
Borrower or its ability to meet its obligations under this Agreement or
any Related Document. To the best of the Borrower's knowledge, since
the furnishing of the Documents, there has been no change or any
development or event involving a prospective change with respect to the
Borrower which would render any of the Documents untrue or misleading
in any material respect.
(r) Investment Company. The Borrower is not, and is not an
Affiliate (as defined in Rule 405 under the Securities Act) of, an
"investment company" within the meaning of the investment Company Act
of 1940, as amended.
5.02. SURVIVAL. All of the representations and warranties set forth in
Section 5.01 shall survive until all Obligations are satisfied in full, and
there remain no outstanding commitments hereunder.
ARTICLE 6.
RESERVED.
ARTICLE 7.
FINANCIAL REPORTING.
7.01. FINANCIAL STATEMENTS. During the term of this Agreement, the
Borrower shall deliver to the Bank:
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(a) Quarterly Statements. Within fifty (50) days after the end
of each of the first three fiscal quarters, a copy of the unaudited
consolidated quarterly financial statements of the Borrower, consisting
of a balance sheet and statements of income for the quarter and
year-to-date period then ended, prepared by the Borrower (subject to
normal year-end audit adjustments); and
(b) Annual Audit Report. Within one-hundred five (105) days
after the close of each fiscal year of the Borrower, (i) a copy of the
consolidated annual financial statements of the Borrower, consisting of
a balance sheet and statements of income and cash flows for the fiscal
year then ended, accompanied by the unqualified report of the
independent certified public accountants regularly retained by the
Borrower and acceptable to the Bank (the "Annual Audit Report").
7.02. GAAP REPORTING. All financial information required to be
furnished to the Bank under this Article 7 shall be prepared in accordance with
GAAP.
7.03. COMMUNICATIONS WITH ACCOUNTANTS. In the event that the Bank
determines that it has not received the Annual Audit Report from the Borrower,
the Borrower authorizes the Bank to communicate directly with its independent
public accountants, and authorizes those accountants to disclose to the Bank any
and all financial statements and other information of any kind that they may
have with respect to the Borrower and its Subsidiaries and their respective
businesses and financial affairs. The Borrower shall upon the request of the
Bank deliver a letter addressed to such accountants instructing them to comply
with the provisions of this paragraph upon request therefor by the Bank.
ARTICLE 8.
COVENANTS.
8.01. AFFIRMATIVE COVENANTS. The Borrower hereby covenants and agrees
with the Bank that, so long as any of the Obligations remain unsatisfied or any
commitments hereunder remain outstanding, it will comply at all times with the
following affirmative covenants unless the Bank shall have otherwise agreed in
writing:
(a) Use of Proceeds. The proceeds of the Loan will be used by
the Borrower only for working capital;
(b) Reports and Notices. The Borrower shall furnish to the
Bank:
(1) Place of Business. Promptly, notice of any change
in the location of the Borrower's principal place of business
or chief executive office or of any change in the location or
the Borrower's books and Records;
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(2) Events of Default. As soon as possible and in any
event within ten (10) days after the Borrower obtains actual
knowledge of the occurrence and continuance of any Default,
Event of Default or any event of default under the Loan and
Security Agreement, dated August 20, 1998, between the
Borrower and Congress Financial Corporation, as amended,
modified, supplemented, extended, renewed, restated or
replaced, a statement setting forth details of such default
and the action which the Borrower proposes to take with
respect thereto, other than those defaults disclosed in
Section 5.01(o) hereof;
(3) Litigation and Labor Disputes. Immediately,
notice of (1) any litigation or proceeding in which the
Borrower is a party if an adverse decision therein would
require it to pay more than $50,000 or deliver assets the
value of which could have a Material Adverse Effect (whether
or not the claim is considered to be covered by insurance);
(2) the institution of any other suit or proceeding involving
the Borrower that might materially and adversely affect its
operations, financial condition, property or business
prospects; and (3) any labor dispute to which the Borrower may
become a party which may, if unfavorably resolved, have a
material financial impact on it, any strikes, walkouts or work
stoppages having a duration of more than one week, and the
expiration of any labor contract to which it is a party or by
which it is bound;
(4) Material Adverse Changes. Immediately, notice of
any material adverse change in the business prospects,
financial condition or results of operations of the Borrower
of which it becomes aware;
(5) Bankruptcy Proceedings. Immediately, notice of
the commencement of any proceedings by or against the Borrower
under any applicable bankruptcy, reorganization, liquidation,
insolvency or other similar law now or hereafter in effect or
of any proceeding in which a receiver, liquidator, trustee or
other similar official is sought to be appointed for the
Borrower;
(6) Regulatory Supervision or Penalty. Immediately,
notice of the receipt of notice from any agency or
governmental body having authority over the conduct of the
Borrower's business that (A) the Borrower is being placed
under regulatory supervision if such regulatory supervision is
likely to, in the aggregate, have a material adverse effect on
the business, operations, property, assets, condition
(financial or otherwise) or prospects of the Borrower taken as
a whole, (B) any license, permit, charter, membership or
registration material to the conduct of the Borrower's
business is to be suspended or revoked, or (C) the Borrower is
to cease and desist any practice, procedure or policy employed
by the Borrower in the conduct of its business, and such
cessation would have a material adverse effect upon the value
of the Collateral or upon the
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Borrower's ability to perform its obligations under this
Agreement or any Related Document; and
(7) Other Information. Promptly upon the request of
the Bank, such other documents and information with respect to
the Collateral, to the Borrower and the compliance by the
Borrower with the requirements of the Transaction Documents as
the Bank may from time to time reasonably request.
Each notice given pursuant to this subsection (B) shall be accompanied
by a statement of the Borrower setting forth details of the occurrence
referred to therein and stating what action, if any, the Borrower
proposes to take with respect thereto;
(c) Financial Records. The Borrower shall keep adequate
Records and books of account with respect to its business activities in
which proper entries are made and all Annual Audit Reports required to
be furnished to the Bank shall be prepared in accordance with GAAP
reflecting all its financial transactions;
(d) Asset Records. The Borrower shall keep accurate and
complete Records of its Receivables, Inventory, Machinery and
Equipment, and General Intangibles consistent with sound business
practices;
(e) Access to Premises and Records. The Bank may at all times
have access to, inspect, audit and make extracts from all of the books
and Records of the Borrower. Such inspections shall be conducted upon
reasonable notice during normal business hours and shall not
unreasonably disrupt the business of the Borrower;
(f) Taxes. The Borrower shall file all federal, state and
local tax returns and other reports as the Borrower is required by law
to file, maintain adequate reserves for the payment of all taxes,
assessments, governmental charges, and levies imposed upon it, its
income, or its profits, or upon any property belonging to it, and pay
and discharge all such taxes, assessments, governmental charges and
levies prior to the date on which penalties attach thereto, except
where the same may be contested in good faith by appropriate
proceedings and appropriate reserves have been established with respect
thereto; provided, however, that the Borrower shall pay or cause to be
paid all such taxes, assessments, charges, or levies forthwith whenever
foreclosure on any lien that may have attached (or security therefor)
appears imminent;
(g) Observance of Laws. The Borrower shall duly observe and
conform to all laws, rules and regulations made by any Governmental
Authority, and all valid requirements of any regulatory body which may
acquire jurisdiction, which apply to the Borrower, including, without
limitation, any environmental, pollution or toxic or hazardous waste
law, except where the failure to duly
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observe and conform is not reasonably likely to, in the aggregate, have
a material adverse effect on the business, operations, property,
assets, condition (financial or otherwise) or prospects of the Borrower
taken as a whole;
(h) Maintain Corporate Existence, Etc. The Borrower shall
preserve and maintain its separate corporate existence and all rights,
privileges, and franchises in connection therewith, and maintain its
qualification and good standing in all states in which such
qualification is necessary in order for the Borrower to conduct its
business in such states;
(i) Maintain Licenses. The Borrower shall maintain in full
force and effect all licenses, permits, charters and registrations
which are material to the conduct of its business;
(j) Maintenance. The Borrower shall keep and maintain or cause
to be kept and maintained its inventory, equipment, fixtures and all
buildings, structures and improvements in good repair, working order
and condition;
(k) Insurance. The Borrower shall keep all of its property
insured by insurance companies licensed to do business in the State of
New York and the states in which such property is located against loss
or damage by fire, flood or other risk usually insured against under
extended coverage endorsement and theft, burglary and pilferage, and
such other hazards, each as shall be customary in the Borrower's
industry and location, in amounts reasonably satisfactory to the Bank.
The Borrower shall deliver to the Bank, on or before the Closing Date,
and annually thereafter on the anniversary thereof, a list of all such
insurance policies in effect and certificates of insurance with respect
to all such policies. All insurance shall contain endorsements, in form
reasonably satisfactory to the Bank, providing that the insurance shall
not be cancelable, except upon thirty (30) days prior written notice to
the Bank (unless such insurance policies are cancelled for nonpayment
of premium, in which case the Bank shall receive ten (10) days prior
written notice) and showing the Bank as a loss payee, subordinate to
any holders of any Permitted Encumbrances. The Borrower agrees to make
all such policies of insurance available for inspection by the Bank at
any time during regular business hours;
(l) Payment of Indebtedness. The Borrower shall pay when due
(or within applicable grace periods) all of its other Indebtedness due
third Persons, except when the amount thereof is being contested in
good faith by appropriate proceedings and with adequate reserves
therefor being set aside on its books; and
(m) Further Assurances. The Borrower, at the request of the
Bank, shall provide and, if necessary, execute, deliver and file such
further instruments, and shall take such further actions as may be
reasonably necessary in the Bank's reasonable judgment to effectuate
the provisions of the Transaction Documents.
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8.02. NEGATIVE COVENANTS. The Borrower hereby covenants and agrees with
the Bank that, so long as any of the Obligations remain unsatisfied or any
commitments hereunder remain outstanding, it will comply at all times with the
following negative covenants, unless the Bank shall have otherwise agreed in
writing:
(a) Disposal of Assets. The Borrower shall not, and shall not
permit any Subsidiary to, sell, lease, transfer, assign, or otherwise
dispose of any of its assets, including the Collateral, other than in
the ordinary course of business; provided, however, that the Borrower
may sell Machinery and Equipment in an aggregate market value not
greater than $75,000 for all such sales in one calendar year;
(b) Liens and Encumbrances.(1) The Borrower shall not, and
shall not permit any Subsidiary to, mortgage, pledge, grant, or permit
to exist a security interest in, or a lien or encumbrance upon, any of
its assets of any kind, including the Collateral, now owned or
hereafter acquired, except for Permitted Encumbrances; (2) the Borrower
shall not enter into any other Agreement with any other Person which
shall contain a covenant substantially similar to that set forth in
clause (1) of this Section 8.02(b), except under Permitted
Encumbrances;
(d) Corporate and Fictitious Names. The Borrower shall not use
any corporate name (other than its own) or any fictitious name, except
for names disclosed in writing to the Bank prior to the use thereof;
(e) New Places of Business. The Borrower shall not transfer
its executive offices, or open new facilities, or transfer existing
facilities, or maintain Records with respect to accounts, at any
locations other than those at which the same are presently kept or
maintained except with the Bank's prior written consent (which shall
not be unreasonably withheld or delayed) and after the delivery to the
Bank of financing statements, if required by the Bank, in form
satisfactory to the Bank;
(f) Guaranties. Except for guaranties in effect on the date
hereof, the Borrower shall not, and shall not permit any Subsidiary to,
become liable directly or indirectly, as guarantor or otherwise for any
obligation of any other Person, except for endorsement for deposit or
collection in the ordinary course of the Borrower's business;
(g) Indebtedness. The Borrower shall not, and shall not permit
any Subsidiary to, incur, create, assume, or permit to exist any
Indebtedness except for (i) the Loan, (ii) Indebtedness secured by
Permitted Encumbrances, (iii) trade payables or other obligations
incurred in the ordinary course of business and (iv) intercompany debt
incurred among the Company and its Principal Subsidiaries in the
ordinary course of business consistent with past practices and pursuant
to the reasonable requirements of its business;
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(h) Mergers. The Borrower shall not merge with or into or
consolidate with any other Person unless (i) the Borrower is the
corporation surviving such consolidation or merger, or the corporation
surviving such consolidation or merger, if not the Borrower, assumes
the obligations of the Borrower hereunder in a writing acceptable to
the Bank and (ii) in each case, after giving effect thereto, no Default
shall have occurred and be continuing;
(i) Subsidiaries. The Borrower shall not create any direct or
indirect Subsidiary not currently in existence or divest itself of any
material assets by transferring them to any Subsidiary or enter into
any partnership, joint venture or similar arrangement, or make any
material change in its capital structure;
(j) Loans to Shareholders and Employees. The Borrower shall
not, and shall not permit any Subsidiary to, make any loan or advance
to any shareholder or employee of the Borrower, except (i) for business
travel and similar temporary advances in the ordinary course of
business; (ii) other loans or advances in the ordinary course of
business, not to exceed $50,000 individually or $100,000 in the
aggregate principal amount at any one time outstanding; and (iii) loans
provided for in any existing employment agreement disclosed to the
Bank;
(k) Dividends. The Borrower shall not pay any dividends,
except for Preferred Dividends, make any capital distribution, or
redeem or retire any capital stock or take any action which would have
an effect equivalent to any of the foregoing, other than (A) cash
dividends in an amount not to exceed (i) ten percent (10%) of the
Borrower's net income plus (ii) all sums required to pay in full the
federal, state and local income taxes of shareholders of the Borrower
attributable to the taxable net income of the Borrower and (B)
repurchases or redemptions of minority stock interests which would
require an expenditure by the Borrower in excess of $100,000 in the
aggregate;
(l) Transactions with Affiliates. The Borrower shall not, and
shall not permit any Subsidiary to, enter into, or be a party to, any
transaction with any of its Affiliates or enter into any partnership,
joint venture or operating management agreement with any of its
Affiliates, except for transactions that are (1) in the ordinary course
of business consistent with past practices and pursuant to the
reasonable requirements of its business or (2) upon fair and reasonable
terms which are, upon a request by the Bank to disclose all such
transactions, fully disclosed to the Bank and are no less favorable to
it than it would obtain in a comparable arm's length transaction with a
Person not its Affiliate;
(m) Loans to Affiliates. The Borrower shall not, and shall not
permit any Subsidiary to, directly or indirectly make any loan or
advance monies to any Affiliate (other than intercompany debt incurred
among the Company and its Principal Subsidiaries in the ordinary course
of business consistent with past practices and pursuant to the
reasonable requirements of its business) in a sum or sums greater than
$100,000 in the aggregate outstanding at any one time without
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the prior written consent of the Bank and any such loan or advance
consented to by the Bank shall be evidenced by a promissory note and
shall be pledged to the Bank;
(n) Investments. The Borrower shall not, and shall not permit
any Subsidiary to, make any loans to, or purchase any debt or equity
securities of, or otherwise make any investment in, any Person, and
will not purchase or otherwise invest in, directly or indirectly, any
nonoperating real estate or nonoperating assets, except (1) direct
obligations of the United States of America, or of the Bank, negotiable
certificates of deposit and overnight repurchase transactions with the
Bank or any bank satisfactory to the Bank, commercial paper rated A-1
or P-1, or other investments approved in advance in writing by the
Bank, and (2) operating assets that hereafter become nonoperating
assets;
(o) Amendments to or Waivers of Related Documents. The
Borrower shall not, and shall not permit any Subsidiary to, enter into
any contract or agreement the substance of which shall act as an
amendment to, or a waiver of any of the provisions of, any of the
Related Documents;
(p) Untrue Statements or Omissions. The Borrower shall not,
and shall not permit any Subsidiary to, willfully furnish or cause to
be furnished to the Bank any certificate or other document that will
contain any untrue statement of material fact or that will omit to
state a material fact necessary to make it not misleading in light of
the circumstances under which it was furnished; and
(q) Margin Stock. The Borrower shall not directly or
indirectly apply any part of the proceeds of the Loan to the purchasing
or carrying of any "margin stock" within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System, or any
regulations, interpretations, or rulings thereunder.
ARTICLE 9.
DEFAULT.
9.01. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events with respect to the Borrower shall constitute an Event of
Default hereunder:
(a) The Borrower shall fail to pay to the Bank when due any
principal payment on the Note or, within ten (10) days from receipt of
written notice from the Bank, any other Obligation owing from the
Borrower to the Bank, or shall fail to remit or deposit funds as
required under this Agreement within 10 days after written notice;
(b) The Borrower shall fail to observe or perform any other
obligation to be observed or performed by it hereunder or under any of
the Related Documents, and such failure shall be willful or shall
continue for twenty (20) days after (1) notice of such failure from the
Bank; or (2) the Bank is notified of
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such failure or should have been so notified pursuant to the provisions
of Section 8.01(b)(3) hereof, whichever is earlier;
(c) Any financial statement, representation, warranty, or
certificate made or furnished to the Bank by, or with respect to, the
Borrower in connection with this Agreement, or as inducement to the
Bank to enter into this Agreement, or in any separate statement or
document to be delivered to the Bank hereunder, shall be materially
false, incorrect, or incomplete when made;
(d) The Borrower or any Subsidiary shall (1) fail to make any
payment or payments, equal to or exceeding $100,000 in the aggregate,
of any Indebtedness (including any interest or premium thereon) when
due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement or
instrument relating to such indebtedness, or (2) fail to perform or
observe any term, covenant or condition on its part to be performed or
observed under any agreement or instrument (other than, prior to
February 14, 2000, a default of the provisions contained in Sections
9.14 and 9.15 of the Loan and Security Agreement, dated August 20,
1998, between the Borrower and Congress Financial Corporation), if the
effect of such failure to perform or observe is to accelerate, or to
permit the acceleration of, the maturity of any indebtedness, the
unpaid principal amount or amounts of which then equals or exceeds
$100,000 in the aggregate; provided, however, that the foregoing shall
not apply to any such failure where the Borrower is contesting the
existence of the obligation involved by appropriate proceedings, and
any reserves required in accordance with GAAP have been established;
(e) The Borrower or any Subsidiary shall (1) apply for or
consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of the Borrower or any
Subsidiary or of all or a substantial part of its property, (2) admit
in writing its inability, or be generally unable, to pay its debts as
such debts become due, (3) make a general assignment for the benefit of
its creditors, (4) commence a voluntary case under the Federal
Bankruptcy Code (as now or hereafter in effect), (5) file a petition
seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of
debts or (6) take any corrective action for the purposes of effecting
any of the foregoing;
(f) A proceeding or case shall be commenced, without the
application or consent of the Borrower or any Subsidiary, in any court
of competent jurisdiction, seeking (1) the liquidation, reorganization,
dissolution, winding-up or composition or readjustment of debts of the
Borrower or any Subsidiary, (2) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Borrower or any Subsidiary, or
of all or any substantial part of its assets, or (3) similar relief in
respect of the Borrower or any Subsidiary under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or
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adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continue unstayed and in effect,
for a period of sixty (60) days from commencement of such proceeding or
case, or an order for relief against the Borrower shall be entered in
an involuntary case under the Federal Bankruptcy Code;
(g) The Borrower or any Subsidiary shall suffer final
judgments for payment of money in excess of its insurance coverage and
shall not discharge the same within a period of thirty (30) days;
(h) A judgment creditor of the Borrower shall obtain
possession of any of the Collateral by any means, including (without
implied limitation) levy, distraint, replevin, or self-help;
(i) The loss of any license, patent, trademark or franchise
which has a Material Adverse Effect, unless such franchise was
terminated, surrendered or cancelled by the Borrower with the Bank's
consent; or
(j) The cancellation of any license, permit or other
governmental authorization required to be possessed by the Borrower
which has a Material Adverse Effect.
9.02. REMEDIES. If an Event of Default shall have occurred then, and in
any such event at any time thereafter if such Event of Default is continuing,
the Bank may, in its discretion, do any one or more of the following:
(a) by notice to the Borrower declare the Note (together with
accrued interest thereon and accrued fees) to be, and the Note shall
thereupon become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby
waived by the Borrower; provided, that in the case of any of the Events
of Default specified in Sections 9.01(e) or (f), without any notice to
the Borrower or any other act by the Bank, the Note (together with
accrued interest thereon) shall become immediately due and payable
without presentment, demand, protest, or other notice of any kind, all
of which are hereby waived by the Borrower; and
(b) exercise any and all other rights and remedies existing at
law or in equity or by statute (including, without limitation, the
right to proceed by appropriate court action, either in law or in
equity, to enforce performance by the Borrower of the applicable
representations and warranties and covenants of this Agreement or to
recover damages for the breach thereof.
9.03. UCC REMEDIES. Further, upon the occurrence and during the
continuance of an Event of Default the Bank shall have, in addition to all other
rights provided herein and in each of the Related Documents, the rights and
remedies of a secured party under
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the Uniform Commercial Code of each state in which any of the Collateral is
located, and further, the Bank may, without demand and without advertisement,
notice or legal process of any kind (except as may be required by law), all of
which the Borrower waives, at any time or times, take physical possession of the
Collateral, and maintain such possession on the Borrower's premises, without
cost to the Bank, or remove the Collateral, or any part thereof, to such other
place or places as the Bank may desire, and the Bank may sell and deliver any or
all of the Collateral held by or for the Bank at public or private sale, for
cash, upon credit or otherwise, at such prices and upon such terms as the Bank
deems advisable, at its sole discretion. The Bank or any Affiliate of the Bank
may be the purchaser at any such sale, if it is public, free from any right of
redemption after such sale, which the Borrower also waives. The Bank may, if it
deems it reasonable, postpone or adjourn any sale of the Collateral from time to
time by an announcement at the time and place of such postponed or adjourned
sale, without being required to give a new notice of sale. The Borrower agrees
that the Bank has no obligation to preserve rights to the Collateral against
prior parties or to ▇▇▇▇▇▇▇▇ any Collateral for the benefit of any Person. The
Bank is hereby granted a license or other right to use, without charge, the
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks and advertising matter, or any property of a
similar nature as it pertains to the Collateral, and all of the Borrower's
licenses and franchise agreements shall inure to the Bank's benefit, for the
purposes of completing production or processing of, advertising for sale, and
selling any Collateral in the exercise of the Bank's rights and remedies
hereunder. In addition thereto, the Borrower further agrees that (a) in the
event that notice is necessary under applicable law, written notice mailed to
the Borrower in the manner specified in Section 10.07 hereof ten (10) Business
Days prior to the date of public sale of any of the Collateral subject to the
security interest created herein or prior to the date after which private sale
or any other disposition of said Collateral will be made shall constitute
reasonable notice, but notice given in any other reasonable manner or at any
other time shall be sufficient if actually received; (b) without precluding any
other method of sale, the sale of the Collateral shall have been made in a
commercially reasonable manner if conducted in conformity with reasonable
commercial practices of asset-based lenders disposing of similar property, but
in any event the Bank may sell on such terms as the Bank may choose without
assuming any credit risk and without any obligation to advertise or give notice
of any kind; and (c) the Bank may require the Borrower to assemble the
Collateral, taking all necessary or appropriate action to preserve and keep it
in good condition, and make such available to the Bank at a place and time
convenient to the Borrower and the Bank, all at the Borrower's expense. The
proceeds of any such sale or disposition shall be applied first to the
satisfaction of the Bank's reasonable attorneys' fees, legal expenses, and other
costs and expenses incurred in connection with the taking, re-taking, holding,
preparing for sale and selling of the Collateral and second to the payment (in
whatever order the Bank elects) of all Obligations. After the application of all
such proceeds as aforesaid, the Bank will return any excess to the Borrower. The
Borrower shall remain liable to the Bank for any deficiency.
9.04. RIGHT OF SET-OFF. Upon the occurrence and during the continuance
of any Event of Default, the Bank may, and is hereby authorized by the Borrower,
at any time
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and from time to time, to the fullest extent permitted by applicable Laws,
without advance notice to the Borrower (any such notice being expressly waived
by the Borrower), set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and any other
indebtedness at any time owing by the Bank to or for the credit or the account
of, the Borrower against any or all of the Obligations of the Borrower now or
hereafter existing, whether or not such Obligations have matured and
irrespective of whether the Bank has exercised any other rights which it has or
may have with respect to such Obligations, including, without limitation, any
acceleration rights. The Bank agrees promptly to notify the Borrower after any
such set-off and application, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the
Bank under this Section 9.04 are in addition to the other rights and remedies
(including, without limitation, other rights of set-off) that the Bank may have.
9.05. DISCRETION TO APPLY THE COLLATERAL. The Bank may, in its sole
discretion, (i) exchange, enforce, waive or release any security or portion of
the Collateral, (ii) apply such security or any proceeds thereof and direct the
order or manner of sale thereof as the Bank may, from time to time, determine,
and (iii) settle, compromise, collect or otherwise liquidate any such security
for the Obligations in any manner following the occurrence and during the
continuance of an Event of Default without affecting or impairing the Bank's
right to take any other further action with respect to any security for the
Obligations or any part thereof.
9.06. RIGHTS AND REMEDIES CUMULATIVE; WAIVERS. The Bank's rights and
remedies under this Agreement shall be cumulative and not exclusive of any other
right or remedy which the Bank may have. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient. A waiver of one default or Event of Default shall not be
construed to be a waiver of any subsequent default or Event of Default or impair
any remedy, right or power consequent thereon.
9.07. INJUNCTIVE RELIEF. The Borrower recognizes that, in the event the
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy of law may prove to be inadequate
relief to the Bank; therefore, the Borrower agrees that the Bank, if the Bank so
requests, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
9.08. LOAN BY BANK FOR BORROWER EXPENSES. If the Borrower or any
co-tenant of the Borrower fails to pay any taxes, assessments or governmental
charges levied or assessed or imposed upon or with respect to it or upon its
income or profits, or upon any of its property, or otherwise incurs any lien or
encumbrance (other than a Permitted Encumbrance) with respect to any of its
property or fails to discharge when due and payable any Indebtedness secured by
any encumbrance (whether or not a Permitted Lien) or fails to pay any insurance
premium when due, or otherwise fails to pay any amount
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36
necessary for the protection and preservation of the Collateral and such event
is an Event of Default, the Bank may pay the same, at the Bank's option,
together with interest and penalty, and the Borrower agrees to immediately
reimburse the Bank for amounts so paid. Additionally, in order to protect any
security interest which the Bank is granted hereunder, upon the occurrence and
continuation of an Event of Default, the Bank may, in its sole discretion,
maintain guards, pay any service bureau or warehouseman, obtain bonds, obtain
any record and take any other action which shall be necessary or appropriate, in
the Bank's sole discretion, for the protection and preservation of the
Collateral and the Borrower agrees to immediately reimburse the Bank upon demand
for amounts so paid.
9.09. POWER OF ATTORNEY. The Borrower on behalf of the Borrower hereby
appoints the Bank or any other Person whom the Bank may designate as its
attorney, with power, following the occurrence and during the continuance of an
Event of Default: (a) to endorse the Borrower's name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security that may
come into the Bank's possession; (b) to sign the Borrower's name on any invoice
or ▇▇▇▇ of lading relating to any accounts, on drafts against customers, on
schedules and assignments of accounts, on notices of assignment, financing
statements and other public records, on verifications of accounts and on notices
to customers; (c) to notify the post office authorities to change the address
for delivery of the Borrower's mail to an address designated by the Bank; and to
receive, open and remove documents relating to the Collateral from all mail
addressed to the Borrower (with all other mail to be returned promptly to the
Borrower); (d) to send requests for verification of accounts to customers or
account debtors; and (e) to do all things necessary to carry out this Agreement.
The Borrower ratifies and approves all acts of such attorney. Neither the Bank
nor the attorney will be liable for any acts or omissions or for any error of
judgment or mistake of fact or law. This power, being coupled with an interest,
is irrevocable until the Obligations have been fully satisfied.
9.10. ACTIONS. Following the occurrence and during the continuance of
an Event of Default, the Bank may (but shall not be obligated to) commence,
appear in, or defend any action or proceeding purporting to affect the Borrower,
the Collateral or the respective rights and obligations of the Bank and the
Borrower pursuant hereto or to any Related Document. The Bank may (but shall not
be obligated to) pay all necessary expenses, including reasonable attorneys'
fees and expenses incurred in connection with such proceedings or actions, which
the Borrower agrees to repay to the Bank upon demand.
ARTICLE 10.
MISCELLANEOUS.
10.01. CONSTRUCTION. The provisions of this Agreement shall be in
addition to those of the Related Documents, all of which shall be construed as
complementary to each other. Nothing herein contained shall prevent the Bank
from enforcing any or all the Related Documents in accordance with their
respective terms. In the event of any conflict
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between the terms and provisions of this Agreement and the terms and provisions
of any of the Related Documents, the terms and provisions of this Agreement
shall prevail.
10.02. FURTHER ASSURANCES. From time to time, the Borrower shall
promptly execute and deliver to the Bank such additional documents and will
provide such additional information as the Bank may reasonably require to carry
out the terms of this Agreement and be informed of the status and affairs of the
Borrower.
10.03. PREFERENCES. The Bank shall have the continuing and exclusive
right to apply or reverse and re-apply any and all payments to any portion of
the Obligations. To the extent that the Borrower makes a payment or payments to
the Bank or the Bank receives any payment or proceeds of the Collateral for the
Borrower's benefit, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the Obligations or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment or proceeds had not been received by the Bank.
10.04. INDEMNIFICATION. The Borrower hereby agrees to indemnify and
hold harmless the Bank from and against any and all claims, damages, losses,
liabilities, reasonable out-of-pocket costs or expenses whatsoever which the
Bank may incur (or which may be claimed against the Bank by any person or entity
whatsoever) by reason of or in connection with the occurrence of an Event of
Default or the pursuit by the Bank of any remedy in connection with an Event of
Default; provided, however, that the Borrower shall not be required to indemnify
the Bank for claims, damages, losses, liabilities, costs or expenses, to the
extent, but only to the extent caused by the willful misconduct or the gross
negligence of the Bank.
10.05. REIMBURSEMENT FOR BANK EXPENSES. The Borrower shall reimburse
the Bank on demand for all of the reasonable out-of-pocket expenses incurred by
the Bank in connection with the negotiation, preparation, execution, delivery,
modification and administration of this Agreement, and the Related Documents,
including, without limitation, searches, search fees, title insurance premiums,
fees for title abstracts, filings, filing fees and taxes, consulting fees,
printing expenses, closing costs, recording charges, brokerage fees,
compensation and commissions, and the fees and disbursements of counsel to the
Bank, ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, and any other counsel retained by the Bank,
all printing expenses, communication, closing and publicity expenses, and all
reasonable out-of-pocket expenses incurred by the Bank (including, without
limitation, reasonable attorney's fees and disbursements) to: (i) commence,
defend or intervene in any court proceeding relating to the Collateral or the
Related Documents; (ii) file a petition, complaint, answer, motion or other
pleadings, or to take any other action in or with respect to any suit or
proceeding (bankruptcy or otherwise) relating to the Collateral or the Related
Documents; (iii) protect, collect, lease, sell, take possession of, or liquidate
any of the Collateral; (iv) attempt to enforce any lien or security interest in
any of the Collateral; (v) cure defaults of the Borrower, perform any covenants
of the Borrower, and
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protect the rights of the Bank under the Related Documents; and (vi) enforce or
seek legal advice with respect to the Bank's rights under this Agreement, or any
of the Related Documents or any other remedies with respect to collecting the
Obligations. The Borrower also agrees to pay, and to save harmless the Bank from
any delay in paying, any intangibles, documentary stamp and other taxes, if any,
which may be payable in connection with the execution and delivery of any of the
Related Documents, or the recording of filing of any thereof, or any
modification thereof, except that the Borrower shall not be required to pay any
such tax which the Borrower is prohibited from paying under applicable law.
10.06. STRICT ENFORCEMENT BY THE BANK. The Bank shall have the right at
all times to enforce the provisions of the Transaction Documents in strict
accordance with the terms hereof and thereof, notwithstanding any conduct or
custom on the part of the Bank in refraining from so doing at any time or times.
The failure of the Bank at any time or times to enforce its rights under such
provisions, strictly in accordance with the same, shall not be construed as
having created a custom in any way or manner contrary to specific provisions of
this Agreement or as having in any way or manner modified or waived the same.
10.07. NOTICES. Any notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed delivered (i) if delivered in
person, when so delivered, (ii) if sent by telecopy, when so sent and confirmed
as received by the receiving telecopier, and (iii) if sent by registered mail,
postage prepaid, return receipt requested, three (3) Business Days after being
sent, as follows, unless such address is changed by written notice hereunder:
(A) If to the Borrower:
Ecogen Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy: 215-757-3339
(B) If to the Bank:
The Berkshire Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
10.08. BANK PARTICIPATIONS. Notwithstanding any other provision of this
Agreement, the Borrower understands that the Bank may, at its own cost and
expense, at any time enter into participation or co-lending agreements with one
or more banks or other institutions (each a "PARTICIPATING BANK") whereby the
Bank may allocate certain
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39
percentages of its commitment to them or allow such Banks to fund a portion of
the Loan, but only so long as the Bank remains the servicing agent for the Loan.
For purposes of servicing the Loan, the Borrower shall only be required to
respond to and communicate with the Bank. The Borrower hereby agrees to execute
such other documents as the Bank reasonably may require to facilitate the
execution and delivery of, and performance under any participation or co-lending
agreements. The Borrower acknowledges that, for the convenience of all parties,
this Agreement is being entered into with the Bank only and that the Obligations
are undertaken for the benefit of, and as an inducement to, any such
Participating Bank as well as the Bank, and the Borrower hereby grants to each
such Participating Bank, to the extent of its participation in or funding of the
Loan and, to the extent permitted by applicable law, the right to set off
deposit accounts maintained by the Borrower with such bank.
10.09. ASSIGNMENTS BY THE BORROWER. The Borrower shall not have the
right to assign this Agreement or any interest therein, and hereby agree that no
Person other than the Borrower shall have any interest in this Agreement or the
proceeds of the Loan.
10.10. CONTINUING OBLIGATION. This Agreement is a continuing obligation
and shall be binding upon the Borrower, its successors and assigns and inure to
the benefit of and be enforceable by the Bank and its successors, transferees
and assigns until all the Obligations shall have been paid in full, whereupon
this Agreement shall terminate; provided, however, that the indemnification
obligations of the Borrower pursuant to Sections 2.09(b), 10.04 and 10.05 hereof
shall survive the termination of this Agreement.
10.11. SUPERSEDING AGREEMENT. This Agreement supersedes any commitment
letters or other agreements between the Bank and the Borrower prior to the date
hereof relating to the subject matter hereof.
10.12. AMENDMENTS AND WAIVERS IN WRITING. No amendment of this
Agreement or waiver of any of the provisions hereof shall be effective unless it
is in writing and signed by the party against whom enforcement of such amendment
or waiver is sought, and then only to the extent specifically stated.
10.13. SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
10.14. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, except to the
extent that personal property security interests in the Collateral are governed
by the law of other jurisdictions.
10.15. CONSENT TO JURISDICTION; WAIVER OF TRIAL BY JURY. THE BORROWER
IRREVOCABLY AND UNCONDITIONALLY (I) AGREES THAT ANY SUIT, ACTION OR OTHER
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LEGAL PROCEEDING ARISING OUT OF THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF
RECORD OF THE STATE OF NEW YORK OR THE COURTS OF THE UNITED STATES LOCATED IN
THE STATE OF NEW YORK; (II) CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF EACH
SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING; AND (III) WAIVES ANY
OBJECTION WHICH IT MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING IN ANY OF SUCH COURTS; AND IN ANY ACTION HEREUNDER THE BORROWER AND
THE BANK WAIVE THE RIGHT TO DEMAND A TRIAL BY JURY.
10.16. HEADINGS. Article and Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
10.17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.
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41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
ECOGEN INC.
By:__________________________
Name:
Title: President
THE BERKSHIRE BANK
By:__________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
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ACKNOWLEDGEMENT
STATE OF NEW YORK |
| SS:
COUNTY OF NEW YORK |
On December __, 1999, before me, the undersigned, a Notary Public in
and for said State, personally appeared ______________________________________,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
______________________________________
Notary Public
My commission expires: ______________
43
EXHIBIT A
This instrument and the obligations evidenced hereby are subordinated, in the
manner and to the extent set forth in an Intercreditor and Subordination
Agreement (the "Subordination Agreement") dated as of December 23, 1999 by and
between Congress Financial Corporation and the Payee of this instrument, and the
holder of this instrument, by such holder's acceptance hereof, agrees (i) to be
bound by the terms of the Subordination Agreement, and (ii) in the event that
any conflict exists between the terms of this instrument or any document
executed in connection with the delivery of this instrument and the terms of the
Subordination Agreement, the terms of such Subordination Agreement shall govern
and be controlling.
TERM LOAN PROMISSORY NOTE
$1,500,000 December 23, 1999
FOR VALUE RECEIVED, the undersigned, ECOGEN INC., a Delaware
corporation, with an office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), promises to pay to the order of THE
BERKSHIRE BANK, a New York banking corporation, with an office at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as the "Bank"; the
Bank, and any subsequent holder(s) hereof, being hereinafter referred to
collectively as the "Holder"), as set forth below, at the above office of the
Bank, or at such other place as the Holder may designate to the Borrower in
writing from time to time, such sums as the Holder may advance to the Borrower
hereunder, up to the principal sum of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS
($1,500,000) in lawful money of the United States of America which shall at the
time of payment be legal tender in payment of all debts and dues, public and
private, and to pay interest on the unpaid balance of said principal sums from
time to time outstanding from the date hereof until payment in full, whether
before or after maturity, in like funds and money at said office, payable and
computed as provided in the Term Loan and Security Agreement (hereinafter
defined), such interest to be payable monthly in arrears on the last day of each
month, commencing on January 31, 2000, and on the date the principal of this
Note shall be due (at stated maturity, on acceleration, or otherwise).
An amount of principal on this Note equal to $500,000 shall be due and
payable on June 23, 2000 and the outstanding principal balance of this Note
shall be due and payable on June 23, 2001.
The unpaid balance of this Note at any time shall be the total amounts
loaned or advanced by the Holder hereof, less the amount of payments or
prepayments of principal made hereon by or for the account of the Borrower. All
payments or prepayments made hereunder on account of principal or interest may
be endorsed by the Holder hereof on the Schedule attached hereto and made a part
hereof for all purposes. Additional Schedule pages may be attached hereto from
time to time by the Holder hereof if more space is necessary.
B-1
44
This Note may be prepaid in whole or in part at any time as provided in
the Term Loan and Security Agreement.
All payments hereon shall be credited first to accrued interest, next
to any other sums due hereunder and the remainder to the unpaid principal
balance, until all funds due hereunder have been paid in full.
Without limiting the right of the Holder to bring any action or
proceeding against property of the Borrower arising out of or relating to this
Note (an "Action") in the courts of other jurisdictions, the Borrower hereby
irrevocably submits to the jurisdiction of any court of New York State or any
court of the United States of America sitting in New York City, and the Borrower
hereby irrevocably agrees that any Action may be heard and determined in such
New York State court or in such United States court. The Borrower hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of any Action in any jurisdiction.
The Borrower hereby irrevocably agrees that the summons and complaint or any
other process in any Action in any jurisdiction may be served by mailing to the
address of the Borrower set forth in the Term Loan and Security Agreement or by
hand delivery to a person of suitable age and discretion at such address. Such
service will be complete on the date such process is so mailed or delivered, and
the Borrower will have thirty days from such completion of service in which to
respond in the manner provided by law. The Borrower may also be served in any
other manner permitted by law, in which event the Borrower's time to respond
shall be the time provided by law.
Both the Borrower and the Holder hereby irrevocably waive all right to
trial by jury in any action, proceeding or counterclaim arising out of or
relating to any obligation under this Note.
In the event this Note or any part thereof is collected by or through
an attorney at law, the Borrower agrees to pay all costs of collection,
including but not limited to, reasonable attorney's fees and court costs
actually incurred.
Time is of the essence of this Note. Presentment for payment, demand,
notice of dishonor, protest and all other notices other than as set forth herein
or in the Term Loan and Security Agreement and Related Documents are hereby
waived by the Borrower. No failure to accelerate the debt evidenced hereby by
reason of default hereunder, acceptance of a past due installment, or
indulgences granted from time to time shall be construed (i) as a novation of
this Note or as a reinstatement of the indebtedness evidenced hereby or as a
waiver of such right of acceleration or of the right of the Holder thereafter to
insist upon strict compliance with the terms of this Note, or (ii) to prevent
the exercise of such right of acceleration or any other right granted hereunder
or by the laws of the State of New York; and the Borrower hereby expressly
waives the benefit of any statute or rule of law or equity now provided, or
which may hereafter be provided, which would produce a result contrary to or in
conflict with the foregoing. No extension of time for the payment of this Note
or any installment due hereunder, made by agreement with any person now
B-2
45
or hereafter liable for the payment of this Note shall operate to release,
discharge, modify, change or affect the original liability of the Borrower under
this Note, either in whole or in part unless the Holder agrees otherwise in
writing. This Note may not be changed orally, but only in writing signed by the
party against whom enforcement of any waiver, change, modification or discharge
is sought.
The Borrower hereby waives and renounces for itself, its successors and
assigns, all rights to the benefits of any statute of limitations and any
moratorium, reinstatement, marshalling, forbearance, valuation, stay, extension,
redemption, appraisement, exemption and homestead now provided, or which may
hereafter be provided by the Constitution and laws of the United States of
America and of any state thereof, both as to itself and in and to all of its
property, real and personal, against the enforcement and collection of the
obligations evidenced by this Note.
This Note is issued pursuant to that certain Term Loan and Security
Agreement, dated as of December 23, 1999 (the "Term Loan and Security
Agreement"), between the Borrower and the Bank, and is one of the Note as
defined in the Term Loan and Security Agreement.
It is the intention of the parties hereto to conform strictly to
applicable usury laws as in effect from time to time. Accordingly, if any
transactions contemplated hereby would be usurious under applicable law
(including the laws of the United States of America, or of any other
jurisdiction whose laws may be mandatorily applicable), then, in that event,
notwithstanding anything to the contrary in this Note, or any other agreement
entered into in connection with this Note, it is agreed that the aggregate of
all consideration that constitutes interest under applicable law that is
contracted for, charged, or received under this Note, or under any of the other
aforesaid agreements or otherwise in connection with this Note shall under no
circumstances exceed the maximum amount of interest allowed by applicable law,
and any excess shall be credited to the Borrower by the Holder that has
contracted for, charged, or received such excess interest (or, if such
consideration shall have been paid in full, such excess refunded to the Borrower
by the Holder). All sums paid, or agreed to be paid, to the Holder for the use,
forbearance, and detention of the indebtedness of the Borrower by the Holder
shall, to the extent permitted by applicable law, be amortized, pro rated,
allocated, and spread throughout the full term of such indebtedness until
payment in full so that the actual rate of interest is uniform, but does not
exceed the highest lawful rate, throughout the full term thereof. In the event
it should be determined that the Bank has contracted for any rate of interest in
excess of the highest lawful rate, then ipso facto such rate shall be reduced to
the highest lawful rate so that no amounts shall be charged which are in excess
thereof, and, in the event it should be determined that any excess over such
highest lawful rate has been charged or received, the Bank shall promptly refund
such excess to the Borrower; provided, however, that, if lawful, any such excess
shall be paid by the Borrower to the Bank as additional interest (accruing at a
rate equal to the maximum legal rate minus the rate provided for hereunder)
during any subsequent period when regular interest is accruing hereunder at less
than the maximum legal rate.
B-3
46
Wherever possible, each provision of this instrument shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this instrument shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this instrument.
As used herein the terms "Borrower", "Bank" and "Holder" shall be
deemed to include their respective heirs, successors, legal representatives and
assigns, whether by voluntary action of the parties or by operation of law.
IN WITNESS WHEREOF, the Borrower has executed this Note on the date
first above written.
ECOGEN INC.
By:__________________________
Name:
Title:
▇-▇
▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ LOAN PAYMENTS OF PRINCIPAL
PRINCIPAL REPAID PRINCIPAL BALANCE REPAYMENT DATE NOTATION BY
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▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ |
| SS:
COUNTY OF NEW YORK |
On December __, 1999, before me, the undersigned, a Notary Public in
and for said State, personally appeared ______________________________________,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
______________________________________
Notary Public
My commission expires: ______________
B-6
