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Exhibit 10.12
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ASPECT MEDICAL SYSTEMS, INC.
LOAN AND SECURITY AGREEMENT
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This LOAN AND SECURITY AGREEMENT is entered into as of December 10,
1999, by and between IMPERIAL BANK ("Bank") and ASPECT MEDICAL SYSTEMS, INC.
("Borrower").
RECITALS
Borrower wishes to obtain credit from time to time from Bank, and Bank
desires to extend credit to Borrower. This Agreement sets forth the terms on
which Bank will advance credit to Borrower, and Borrower will repay the amounts
owing to Bank.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following
terms shall have the following definitions:
"Accounts" means all presently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by
Borrower, whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.
"Affiliate" means, with respect to any Person, any Person that
owns or controls directly or indirectly such Person, any Person that controls or
is controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors, and partners.
"AFI" means Americorp Financial, Inc.
"Bank Expenses" means all: reasonable costs or expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
the preparation, negotiation, administration, and enforcement of the Loan
Documents; reasonable Collateral audit fees, not to exceed $1,500 per annum as
long as an Event of Default has not occurred; and Bank's reasonable attorneys'
fees and expenses incurred in amending, enforcing or defending the Loan
Documents (including fees and expenses of appeal), incurred before, during and
after an Insolvency Proceeding, whether or not suit is brought.
"Borrower" means Aspect Medical Systems, Inc. This term does
not include any Subsidiaries.
"Borrower's Books" means all of Borrower's books and records
including: ledgers; records concerning Borrower's assets or liabilities, the
Collateral, business operations or financial condition; and all computer
programs, or tape files, and the equipment, containing such information.
"Borrowing Base" means an amount equal to the eighteen (18)
month rolling value of the sensor portion of Eligible Contracts, as determined
by Bank with reference to the most recent Borrowing Base Certificate delivered
by Borrower.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which banks in the State of California or the Commonwealth of
Massachusetts are authorized or required to close.
"Closing Date" means the date of this Agreement.
"Code" means the California Uniform Commercial Code.
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"Collateral" means the property described on EXHIBIT A
attached hereto.
"Committed SBLC Line" means a credit extension of up to Five
Hundred Thousand Dollars ($500,000).
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term "Contingent Obligation" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.
"Copyrights" means any and all copyright rights, copyright
applications, copyright registrations and like protections in each work or
authorship and derivative work thereof, whether published or unpublished and
whether or not the same also constitutes a trade secret, now or hereafter
existing, created, acquired or held.
"Credit Extension" means each SBLC Advance, Equipment Advance,
Reducing Revolving Advance, Letter of Credit, HP Letter of Credit, or any other
extension of credit by Bank for the benefit of Borrower hereunder.
"Daily Balance" means the amount of the Obligations owed at
the end of a given day.
"Eligible Contracts" means those usage agreements entered into
by Borrower from time to time in the ordinary course of business in a form
reasonably acceptable to Bank in connection with the sale of its (BISsystem)
products produced by Borrower, excluding usage agreements transferred to AFI.
Such usage agreements shall in all cases have a term of at least two (2) years,
shall have been entered into on or after January 1, 1998 and before December 10,
1999, and shall not permit deferral or other postponement of payment obligations
or cancellation before the stated term thereof. Any agreement on which a
customer is behind in its minimum contractual sensor purchase commitments for a
period of more than ninety (90) days shall not be an Eligible Contract.
Standards of eligibility may be fixed and revised from time to time by Bank as a
consequence of any Collateral audits done pursuant to Section 6.3 in Bank's
reasonable judgment and upon notification thereof to Borrower in accordance with
the provisions hereof. No contract which was not an Eligible Contract on the
Closing Date may be counted as an Eligible Contract after such date. Unless
otherwise agreed to by Bank, Eligible Contracts shall not include the following:
(a) Contracts on which the customer is more than 90 days
behind in its minimum monthly purchase commitment;
(b) Contracts with respect to a customer twenty-five percent
(25%) of whose invoiced amounts the account debtor has failed to pay within
ninety (90) days of invoice date;
(c) Contracts with respect to which the customer is an
officer, employee, or agent of Borrower;
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(d) Contracts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, xxxx and hold,
or other terms by reason of which the payment by the account debtor may be
conditional;
(e) Contracts with respect to which the customer is an
Affiliate of Borrower;
(f) Contracts with respect to which the customer does not have
its principal place of business in the United States;
(g) Contracts with respect to which the customer is the United
States or any department, agency, or instrumentality of the United States;
(h) Contracts with respect to which Borrower is liable to the
customer for goods sold or services rendered by the customer to Borrower, but
only to the extent of any amounts owing to the account debtor against amounts
owed to Borrower;
(i) Contracts with respect to a customer, including
Subsidiaries and Affiliates, whose total obligations to Borrower exceed
twenty-five percent (25%) of all Accounts, to the extent such obligations exceed
the aforementioned percentage, except as approved in writing by Bank;
(j) Contracts with respect to which the customer disputes
liability or makes any claim with respect thereto as to which Bank believes, in
its sole discretion, that there may be a basis for dispute (but only to the
extent of the amount subject to such dispute or claim), or is subject to any
Insolvency Proceeding, or becomes insolvent, or goes out of business;
(k) Contracts all or any portion of which have been
transferred to AFI or to any other Person who enters into an Intercreditor
Agreement in form and substance acceptable to Bank; and
(l) After investigation and due consideration, Contracts the
collection of which Bank reasonably determines to be doubtful (which Contracts
Bank shall discuss with Borrower prior to exclusion, and provide Borrower with
information supporting the decision to exclude from Eligible Contracts).
"Equipment" means all present and future machinery, equipment,
tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments
in which Borrower has any interest.
"Equipment Advance" has the meaning set forth in Section
2.1(d).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"Event of Default" has the meaning assigned in Article 8.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"Indebtedness" means (a) all indebtedness for borrowed money
or the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.
"Initial Public Offering" means the closing by Borrower of an
underwritten public offering pursuant to a registration statement under the
Securities Act of 1933, as amended.
"Insolvency Proceeding" means any proceeding commenced by or
against any person or entity under any provision of the United States Bankruptcy
Code, as amended, or under any other bankruptcy or
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insolvency law, including assignments for the benefit of creditors, formal or
informal moratoria, compositions, extension generally with its creditors, or
proceedings seeking reorganization, arrangement, or other relief.
"Intellectual Property Collateral" means all of Borrower's
right, title, and interest in and to the following:
(a) Copyrights, Trademarks and Patents;
(b) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
(c) Any and all design rights which may be available to
Borrower now or hereafter existing, created, acquired or held;
(d) Any and all claims for damages by way of past, present and
future infringement of any of the rights included above, with the right, but not
the obligation, to xxx for and collect such damages for said use or infringement
of the intellectual property rights identified above;
(e) All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights;
(f) All amendments, renewals and extensions of any of the
Copyrights, Trademarks or Patents; and
(g) All proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.
"Inventory" means all present and future inventory in which
Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above, and Borrower's Books relating
to any of the foregoing. "Investment" means any beneficial ownership of
(including stock, partnership interest or other securities) any Person, or any
loan, advance or capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.
"Lien" means any mortgage, lien, deed of trust, charge,
pledge, security interest or other encumbrance.
"Loan Documents" means, collectively, this Agreement, any note
or notes executed by Borrower, and any other agreement entered into between
Borrower and Bank in connection with this Agreement, all as amended or extended
from time to time.
"Material Adverse Effect" means a material adverse effect on
(i) the business operations or condition (financial or otherwise) of Borrower
and its Subsidiaries taken as a whole or (ii) the ability of Borrower to repay
the Obligations or otherwise perform its obligations under the Loan Documents.
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"Negotiable Collateral" means all of Borrower's present and
future letters of credit of which it is a beneficiary, notes, drafts,
instruments, securities, documents of title, and chattel paper, and Borrower's
Books relating to any of the foregoing.
"Obligations" means all debt, principal, interest, Bank
Expenses and other amounts owed to Bank by Borrower pursuant to this Agreement
or any other agreement, whether absolute or contingent, due or to become due,
now existing or hereafter arising, including any interest that accrues after the
commencement of an Insolvency Proceeding and including any debt, liability, or
obligation owing from Borrower to others that Bank may have obtained by
assignment or otherwise.
"Patents" means all patents, patent applications and like
protections including without limitation improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same.
"Periodic Payments" means all installments or similar
recurring payments that Borrower may now or hereafter become obligated to pay to
Bank pursuant to the terms and provisions of any instrument, or agreement now or
hereafter in existence between Borrower and Bank.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Bank arising under
this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed in
the Schedule;
(c) Indebtedness secured by a lien described in clause (c) of
the defined term "Permitted Liens," provided such Indebtedness does not exceed
the lesser of the cost or fair market value of the equipment financed with such
Indebtedness;
(d) Subordinated Debt; and
(e) Indebtedness incurred in connection with the funding of
Borrower's contracts by AFI and other transfers that are substantially similar
to the transfers made by Borrower to AFI and which transferees have entered into
an Intercreditor Agreement with Bank in form and substance acceptable to Bank.
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed in the
Schedule;
(b) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one (1) year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one (1) year from the date of
creation thereof and currently having rating of at least A-2 or P-2 from either
Standard & Poor's Corporation or Xxxxx'x Investors Service, (iii) certificates
of deposit maturing no more than one (1) year from the date of investment
therein issued by Bank and (iv) Bank's money market accounts;
(c) Investments in Borrower's Subsidiaries, which shall not
exceed $250,000 in the aggregate in any given year, plus any management service
charges from any Subsidiary to the Borrower at the end of any fiscal period
which are made in the ordinary course of business, are on fair and reasonable
terms that are no less favorable to Borrower than would be obtained in an
arms-length transaction from a non-affiliated Person, and are consistent with
Borrower's practice as of the Closing Date;
(d) Investments approved by Borrower's Board of Directors
according to Borrower's investment policy in the form submitted to Bank as of
the Closing Date; and
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(e) Investments made in the ordinary course of business,
consistent with prior practice, and approved by the Board of Directors, in the
form of loans and advances to officers and employees of the Borrower including
loans made in connection with the exercise of stock options by officers and
employees of Borrower made pursuant to plans approved by the Board of Directors
of Borrower so long as an Event of Default does not exist prior to such
Investments and would not exist after making such Investments.
"Permitted Liens" means the following:
(a) Any Liens existing on the Closing Date and disclosed in
the Schedule or arising under this Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, provided the same have no priority over any of Bank's
security interests;
(c) Liens (i) upon or in any equipment acquired or held by
Borrower or any of its Subsidiaries to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the time of
its acquisition, provided that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment;
(d) Liens incurred in connection with the extension, renewal
or refinancing of the indebtedness secured by Liens of the type described in
clauses (a) through (c) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase; and
(e) Liens incurred in connection with the financing of
Borrower's Contracts by AFI and other transfers that are substantially similar
to the transfers made by Borrower to AFI and which transferees have entered into
an Intercreditor Agreement with Bank in form and substance acceptable to Bank.
"Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or governmental agency.
"Prime Rate" means the variable rate of interest, per annum,
most recently announced by Bank, as its "prime rate," whether or not such
announced rate is the lowest rate available from Bank.
"Reducing Revolving Advance" has the meaning set forth in
Section 2.1(b).
"Reducing Revolving Line" means a credit extension of up to
Four Million Two Hundred Fifty Thousand Dollars ($4,250,000).
"Reducing Revolving Maturity Date" means December 10, 2002.
"Responsible Officer" means each of the Chief Executive
Officer, the Chief Operating Officer, the Chief Financial Officer and the
Controller of Borrower.
"SBLC Advance" or "SBLC Advances" means a payment on a Letter
of Credit under the SBLC Facility.
"SBLC Facility" means the facility under which Borrower may
request Bank to issue Letters of Credit, as specified in Section 2.1(a) hereof.
"SBLC Maturity Date" means December 9, 2000.
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"Schedule" means the schedule of exceptions attached hereto,
if any.
"Subordinated Debt" means any debt incurred by Borrower that
is subordinated to the debt owing by Borrower to Bank on terms reasonably
acceptable to Bank (and identified as being such by Borrower and Bank).
"Subsidiary" means any corporation or partnership in which (i)
any general partnership interest or (ii) more than 50% of the stock of which by
the terms thereof ordinary voting power to elect the Board of Directors,
managers or trustees of the entity, at the time as of which any determination is
being made, is owned by Borrower, either directly or through an Affiliate.
"Trademarks" means any trademark and servicemark rights,
whether registered or not, applications to register and registrations of the
same and like protections, and the entire goodwill of the business of Borrower
connected with and symbolized by such trademarks.
1.2 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all calculations
made hereunder shall be made in accordance with GAAP. When used herein, the
terms "financial statements" shall include the notes and schedules thereto.
2. LOAN AND TERMS OF PAYMENT.
2.1 CREDIT EXTENSIONS.
Borrower promises to pay to the order of Bank, in lawful money
of the United States of America, the aggregate unpaid principal amount of all
Credit Extensions made by Bank to Borrower hereunder. Borrower shall also pay
interest on the unpaid principal amount of such Credit Extensions at rates in
accordance with the terms hereof.
(a) LETTERS OF CREDIT.
(i) Subject to the terms and conditions of this
Agreement, Bank agrees to issue or cause to be issued letters of credit for the
account of Borrower (each, a "Letter of Credit" and collectively, the "Letters
of Credit") in an aggregate outstanding face amount not to exceed the
availability under the Committed SBLC Line minus the then outstanding principal
balance of the SBLC Advances. All Letters of Credit shall be, in form and
substance acceptable to Bank in its sole discretion and shall be subject to the
terms and conditions of Bank's form of standard application and letter of credit
agreement, including Bank's fee equal to one percent (1%) of the face amount of
each Letter of Credit. No Letter of Credit may have an expiration date later
than the SBLC Maturity Date.
(ii) The obligation of Borrower to immediately
reimburse Bank for drawings made under Letters of Credit shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement and such Letters of Credit, under all
circumstances whatsoever. Without limiting the foregoing, on any drawn but
unreimbursed Letter of Credit, the unreimbursed amount shall deemed a SBLC
Advance and shall bear interest at the rate specified in Section 2.3. Borrower
shall indemnify, defend, protect, and hold Bank harmless from any loss, cost,
expense or liability, including, without limitation, reasonable attorneys' fees,
arising out of or in connection with any Letters of Credit, except for expenses
caused by Bank's gross negligence or willful misconduct.
(b) REDUCING REVOLVING ADVANCES.
(i) Subject to and upon the terms and conditions of
this Agreement, Bank agrees to make an initial advance (a "Reducing Revolving
Advance") to Borrower in the amount of the lesser of the Borrowing Base and
either (i) the Reducing Revolving Line if Borrower does not request Bank to
issue the HP Letter of Credit under Section 2.1(c) or (ii) $3,250,000 if
Borrower does request that Bank issue the HP Letter of Credit under Section
2.1(c). If the Reducing Revolving Advance is for more than $3,250,000, Borrower
may no
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longer request Bank to issue the HP Letter of Credit. In no event shall the face
amount of the HP Letter of Credit PLUS the amount of the initial Reducing
Revolving Advance exceed the lesser of the Reducing Revolving Line and the
Borrowing Base. The initial Reducing Revolving Advance shall be used to pay in
full all Obligations under Section 1 of that certain Loan Agreement between Bank
and Borrower dated as of June 22, 1998 (the "Original Loan Agreement") and under
that certain Promissory Note (Revolving Loans) issued by Borrower to Bank on
June 22, 1998 (collectively, the Original Agreements), and after such
Obligations are paid in full, the Original Agreements shall have no further
force and effect. Subject to the terms and conditions of this Agreement, Bank
agrees to make an additional Reducing Revolving Advance to Borrower (i) after
the termination or expiration of the HP Letter of Credit and (ii) after any
usage agreement which was previously ineligible becomes an Eligible Contract,
PROVIDED that, in either case, such additional Reducing Revolving Advance may
not bring the aggregate Reducing Revolving Advances up to an outstanding amount
which is greater than the then applicable limit for the Reducing Revolving
Advances set forth in the amortization schedule attached hereto as EXHIBIT D (if
Bank has issued the HP Letter of Credit) or EXHIBIT E (if Bank has not issued
the HP Letter of Credit).
(ii) Interest shall accrue from the date of each
Reducing Revolving Advance at the rate specified in Section 2.3(a), and shall be
payable on January 10, 1999. Any Reducing Revolving Advances that are
outstanding on January 10, 2000 shall be payable in thirty-six (36) equal
monthly installments of principal, plus all accrued interest, beginning on
January 31, 2000, and continuing on the last day of each month thereafter
through the Reducing Revolving Maturity Date, at which time all amounts due
under this Section 2.1(b) and any other amounts due under this Agreement shall
be immediately due and payable. If further Reducing Revolving Advances are made
after cancellation or expiration of the HP Letter of Credit, such monthly
payments shall be proportionately increased to accommodate additional advances.
Reducing Revolving Advances, once repaid, may not be reborrowed. Borrower may
prepay any Reducing Revolving Advances without penalty or premium.
(iii) When Borrower desires to obtain a Reducing
Revolving Advance, Borrower shall notify Bank (which notice shall be
irrevocable) by facsimile transmission to be received no later than 5:00 p.m.
Eastern time one (1) Business Day before the day on which the Reducing Revolving
Advance is to be made. Such notice shall be substantially in the form of EXHIBIT
B. The notice shall be signed by a Responsible Officer or its designee.
(c) HP LETTER OF CREDIT.
(i) Subject to the terms and conditions of this
Agreement, upon Borrower's request at any time on or after the Closing Date,
Bank agrees to issue or cause to be issued a letter of credit for the account of
Borrower (the "HP Letter of Credit") in favor of Hewlett Packard in an aggregate
outstanding face amount of $1,000,000, provided that the face amount of the HP
Letter of Credit PLUS the amount of the initial Reducing Revolving Advance shall
not exceed the lesser of the Reducing Revolving Line and the Borrowing Base. The
HP Letter of Credit shall be, in form and substance acceptable to Bank in its
sole discretion and shall be subject to the terms and conditions of Bank's form
of standard application and letter of credit agreement, including Bank's fee
equal to one percent (1%) of the face amount of each Letter of Credit. On any
drawn but unreimbursed Letter of Credit, the unreimbursed amount shall be deemed
a Reducing Revolving Advance under Section 2.1(b), and shall be amortized in
equal monthly installments of principal plus accrued interest for complete
repayment on or before the Reducing Revolving Maturity Date. The HP Letter of
Credit may have an expiration date no later than October 31, 2001.
(ii) The obligation of Borrower to reimburse Bank for
drawings made under the HP Letter of Credit shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement and the HP Letter of Credit, under all circumstances whatsoever.
Borrower shall indemnify, defend, protect, and hold Bank harmless from any loss,
cost, expense or liability, including, without limitation, reasonable attorneys'
fees, arising out of or in connection with the HP Letter of Credit, except for
expenses caused by Bank's gross negligence or willful misconduct.
(d) EQUIPMENT ADVANCES. There are currently, as of
December 10, 1999, outstanding Equipment Advances in an aggregate principal
amount equal to One Million Five Hundred One Thousand Three Hundred Ninety-Five
Dollars ($1,501,395) outstanding under Section 2 of the Original Loan
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Agreement and under that certain Promissory Note (Equipment Loans) issued by
Borrower to Bank on June 22, 1998 (the "Original Equipment Note"). Borrower
shall not request or receive any further Equipment Advances. Interest shall
continue to accrue on the Equipment Advances at the rate specified in Section
2.3(a). Principal payments on the Equipment Advances shall continue to be made
on the last day of each month in the amount of $60,055.80, plus all accrued
interest, through December 31, 2001, at which time all amounts due under this
Section 2.1(d) shall be immediately due and payable. Equipment Advances, once
repaid, may not be reborrowed. Borrower may prepay any Equipment Advances
without penalty or premium. The Original Loan Agreement and the Original
Equipment Note shall have no further force and effect once all Obligations under
Section 1 of the Original Agreement are paid in full, as provided in Section
2.1(b) hereof.
(e) LOCK BOX ACCOUNT. After the occurrence of an Event of
Default, at Bank's request in its sole discretion, Borrower shall open and
maintain with Bank an account (the "Lock Box Account") into which all funds
received by Borrower from any source other than on account of Contracts sold to
AFI (and other transfers that are substantially similar to the transfers made by
Borrower to AFI and which transferees have entered into an Intercreditor
Agreement with Bank in form and substance acceptable to Bank) shall be deposited
or transferred from other accounts in Borrower's name. After the occurrence of
an Event of Default, at the request of Bank, Borrower shall direct all customers
to mail or deliver all checks or other forms of payment for amounts owing to
Borrower to a post office box designated by Bank, over which Bank shall have
exclusive and unrestricted access. After the occurrence of an Event of Default,
Bank shall collect the mail delivered to such post office box, open such mail,
and endorse and credit all items to the Lock Box Account. After the occurrence
of an Event of Default, Borrower shall direct all customers or other persons
owing money to Borrower who make payments by electronic transfer of funds to
wire such funds directly to the Lock Box Account. After the occurrence of an
Event of Default, Borrower shall hold in trust for Bank all amounts that
Borrower receives despite the directions to make payments to the post office box
or Lock Box Account. After the occurrence of an Event of Default, Borrower shall
immediately deliver such payments to Bank in their original form as received
from the customer, with proper endorsements for deposit into the Lock Box
Account. After the occurrence of an Event of Default, Borrower irrevocably
authorizes Bank to transfer to the Lock Box Account any funds that have been
deposited into any other accounts or that Bank has otherwise received. After the
occurrence of an Event of Default, Borrower shall not establish or maintain any
accounts with any Person other than Bank except for accounts opened in the
ordinary course of business from which all funds are transferred on a daily
basis to the Lock Box Account. After the occurrence of an Event of Default, Bank
shall have all right, title and interest in all of the items from time to time
in the Lock Box Account and their proceeds. After the occurrence of an Event of
Default, neither Borrower nor any person claiming through Borrower shall have
any right or control over the use of, or any right to withdraw any amount from,
the Lock Box Account, which shall be under the sole control of Bank.
2.2 OVERADVANCES. If Borrower has requested that Bank issue
the HP Letter of Credit and if, at any time, the aggregate amount of the
outstanding Reducing Revolving Advances PLUS the amount of the HP Letter of
Credit, including drawn but unreimbursed amounts outstanding under such letter
of credit, exceeds the lesser of (i) the Borrowing Base and (ii) the then
applicable limit for the Reducing Revolving Advances set forth in the
amortization schedule attached hereto as EXHIBIT D, Borrower shall immediately
pay to Bank, in cash, the amount of such excess. If Borrower has not requested
that Bank issue the HP Letter of Credit and if, at any time, the aggregate
amount of the outstanding Reducing Revolving Advances exceeds the lesser of (i)
the Borrowing Base and (ii) the then applicable limit for the Reducing Revolving
Advances set forth in the amortization schedule attached hereto as EXHIBIT E,
Borrower shall immediately pay to Bank, in cash, the amount of such excess.
2.3 INTEREST RATES, PAYMENTS, AND CALCULATIONS.
(a) INTEREST RATES. Except as set forth in Section 2.3(b), the
Equipment Advances, the Reducing Revolving Advances, and the SBLC Advances shall
bear interest, on the outstanding daily balance thereof, at a rate equal to one
percent (1.0%) above the Prime Rate, provided that after the Initial Public
Offering, except as set forth in Section 2.3(b), the Equipment Advances, the
Reducing Revolving Advances, and the SBLC Advances shall bear interest, on the
outstanding daily balance thereof, at a rate equal to one half percent (0.5%)
above the Prime Rate
(b) LATE FEE; DEFAULT RATE. If any payment is not made within
ten (10) days after the date of written notice that such payment is due,
Borrower shall pay Bank a late fee equal to the lesser of (i) five
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percent (5%) of the amount of such unpaid amount or (ii) the maximum amount
permitted to be charged under applicable law. All Obligations shall bear
interest, from and after the occurrence and during the continuance of an Event
of Default, at a rate equal to five (5) percentage points above the interest
rate applicable immediately prior to the occurrence of the Event of Default.
(c) PAYMENTS. Interest hereunder shall be due and payable on
the last calendar day of each month during the term hereof. Bank shall charge
such interest, all Bank Expenses, and all Periodic Payments first against any of
Borrower's deposit accounts and second against the Reducing Revolving Line, in
which case those amounts shall thereafter accrue interest at the rate then
applicable hereunder. Any interest not paid when due shall be compounded by
becoming a part of the Obligations, and such interest shall thereafter accrue
interest at the rate then applicable hereunder.
(d) COMPUTATION. In the event the Prime Rate is changed from
time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased, effective as of the day the Prime Rate is changed, by an
amount equal to such change in the Prime Rate. All interest chargeable under the
Loan Documents shall be computed on the basis of a three hundred sixty (360) day
year for the actual number of days elapsed.
2.4 CREDITING PAYMENTS. Prior to the occurrence of an Event of
Default, Bank shall credit a wire transfer of funds, check or other item of
payment to such deposit account or Obligation as Borrower specifies. After the
occurrence of an Event of Default, the receipt by Bank of any wire transfer of
funds, check, or other item of payment shall be immediately applied to
conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment. Notwithstanding anything to the contrary contained herein, any wire
transfer or payment received by Bank after 3:00 p.m. Eastern time shall be
deemed to have been received by Bank as of the opening of business on the
immediately following Business Day. Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.
2.5 FEES. Borrower shall pay to Bank the following:
(a) FACILITY FEE. On the Closing Date, a Facility Fee equal to
Seven Thousand Five Hundred Dollars ($7,500), which shall be nonrefundable;
(b) BANK EXPENSES. On the Closing Date, all Bank Expenses
incurred through the Closing Date, including reasonable attorneys' fees and
expenses and, after the Closing Date, all Bank Expenses, including reasonable
attorneys' fees and expenses, as and when they become due.
2.6 ADDITIONAL COSTS. In case any change in any law,
regulation, treaty or official directive or the interpretation or application
thereof by any court or any governmental authority charged with the
administration thereof or the compliance with any guideline or request of any
central bank or other governmental authority (whether or not having the force of
law):
(a) subjects Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by Borrower or
otherwise with respect to the transactions contemplated hereby (except for taxes
on the overall net income of Bank imposed by the United States of America or any
political subdivision thereof);
(b) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against assets held
by, or deposits in or for the account of, or loans by, Bank; or
(c) imposes upon Bank any other condition with respect to its
performance under this Agreement,
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and the result of any of the foregoing is to increase the cost to Bank, reduce
the income receivable by Bank or impose any expense upon Bank with respect to
the Obligations, Bank shall notify Borrower thereof. Borrower agrees to pay to
Bank the amount of such increase in cost, reduction in income or additional
expense as and when such cost, reduction or expense is incurred or determined,
upon presentation by Bank of a statement of the amount and setting forth Bank's
calculation thereof, all in reasonable detail, which statement shall be deemed
true and correct absent manifest error.
2.7 TERM. This Agreement shall become effective on the Closing
Date and, subject to Section 12.7, shall continue in full force and effect for a
term ending on the Term Maturity Date. Notwithstanding the foregoing, Bank shall
have the right to terminate its obligation to make Credit Extensions under this
Agreement immediately and without notice upon the occurrence and during the
continuance of an Event of Default. Notwithstanding termination, Bank's Lien on
the Collateral shall remain in effect for so long as any Obligations are
outstanding.
3. CONDITIONS OF LOANS.
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION. The
obligation of Bank to make the initial Credit Extension is subject to the
condition precedent that Bank shall have received, in form and substance
satisfactory to Bank, the following:
(a) this Agreement;
(b) a certificate of the Secretary of Borrower with respect to
incumbency and resolutions authorizing the execution and delivery of this
Agreement;
(c) two financing statements (Form UCC-1);
(d) an intellectual property security agreement;
(e) agreement to provide insurance;
(f) a control agreement;
(g) payment of the fees and Bank Expenses then due specified
in Section 2.5 hereof;
(h) a report on the Collateral, the results of which shall be
satisfactory to Bank; and
(i) such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. The
obligation of Bank to make each Credit Extension, including the initial Credit
Extension, is further subject to the following conditions:
(a) timely receipt by Bank of the Payment/Advance Form as
provided in Section 2.1; and
(b) the representations and warranties contained in Section 5
shall be true and correct in all material respects on and as of the date of such
Payment/Advance Form and on the effective date of each Credit Extension as
though made at and as of each such date, and no Event of Default shall have
occurred and be continuing, or would exist after giving effect to such Credit
Extension (provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date). The making of each Credit Extension shall be
deemed to be a representation and warranty by Borrower on the date of such
Credit Extension as to the accuracy of the facts referred to in this Section
3.2(b).
4. CREATION OF SECURITY INTEREST.
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4.1 GRANT OF SECURITY INTEREST. Borrower grants and pledges to
Bank a continuing security interest in all presently existing and hereafter
acquired or arising Collateral in order to secure prompt repayment of any and
all Obligations and in order to secure prompt performance by Borrower of each of
its covenants and duties under the Loan Documents. Except as set forth in the
Schedule, such security interest constitutes a valid, first priority security
interest in the presently existing Collateral, and will constitute a valid,
first priority security interest in Collateral acquired after the date hereof.
4.2 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Borrower
shall from time to time execute and deliver to Bank, at the request of Bank, all
Negotiable Collateral, all financing statements and other documents that Bank
may reasonably request, in form satisfactory to Bank, to perfect and continue
perfected Bank's security interests in the Collateral and in order to fully
consummate all of the transactions contemplated under the Loan Documents.
4.3 RIGHT TO INSPECT. Bank (through any of its officers,
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower's usual business hours but no more than once every
six months (unless an Event of Default has occurred and is continuing), to
inspect Borrower's Books and to make copies thereof and to check, test, and
appraise the Collateral in order to verify Borrower's financial condition or the
amount, condition of, or any other matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND QUALIFICATION. Borrower and each
Subsidiary is a corporation duly existing under the laws of its state of
incorporation and qualified and licensed to do business in any state in which
the conduct of its business or its ownership of property requires that it be so
qualified.
5.2 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery,
and performance of the Loan Documents are within Borrower's powers, have been
duly authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Articles of Incorporation or Bylaws, nor will
they constitute an event of default under any material agreement to which
Borrower is a party or by which Borrower is bound. Borrower is not in default
under any agreement to which it is a party or by which it is bound, which
default could have a Material Adverse Effect.
5.3 NO PRIOR ENCUMBRANCES. Borrower has good and indefeasible
title to the Collateral, free and clear of Liens, except for Permitted Liens.
5.4 BONA FIDE ELIGIBLE CONTRACTS. The Eligible Contracts are
in the form presented to Bank prior to the Closing Date and are unconditional,
non-cancelable and non-deferrable bona fide existing obligations of the parties
to each Eligible Contract. Each Eligible Contract has an original minimum term
of two (2) years, and was entered into on or after January 1, 1998 but not later
than December 10, 1999. No customer who is a party to an Eligible Contract is
more than 90 days behind in its minimum monthly purchase commitment.
5.5 MERCHANTABLE INVENTORY. All Inventory is in all material
respects of good and marketable quality, free from all material defects, except
for Inventory for which adequate reserves have been made.
5.6 INTELLECTUAL PROPERTY COLLATERAL. Borrower is the sole
owner of, or has rights to use, the Intellectual Property Collateral, except for
non-exclusive licenses granted by Borrower to its customers in the ordinary
course of business. Each of the Patents is valid and enforceable, and no part of
the Intellectual Property Collateral has been judged invalid or unenforceable,
in whole or in part, and no claim has been made that any part of the
Intellectual Property Collateral violates the rights of any third party.
5.7 NAME; LOCATION OF CHIEF EXECUTIVE OFFICE. Except as
disclosed in the Schedule, Borrower has not done business under any name other
than that specified on the signature page hereof. The chief executive office of
Borrower is located at the address indicated in Section 10 hereof.
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5.8 LITIGATION. Except as set forth in the Schedule, there are
no actions or proceedings pending by or against Borrower or any Subsidiary
before any court or administrative agency in which an adverse decision could
have a Material Adverse Effect, or a material adverse effect on Borrower's
interest or Bank's security interest in the Collateral.
5.9 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All
consolidated and consolidating financial statements related to Borrower and any
Subsidiary that are delivered by Borrower to Bank fairly present in all material
respects Borrower's financial condition as of the date thereof and Borrower's
results of operations for the period then ended. There has not been a material
adverse change in the financial condition of Borrower since the date of the most
recent of such financial statements submitted to Bank.
5.10 SOLVENCY, PAYMENT OF DEBTS. Borrower is solvent and able
to pay its debts (including trade debts) as they mature.
5.11 REGULATORY COMPLIANCE. Borrower and each Subsidiary have
met the minimum funding requirements of ERISA with respect to any employee
benefit plans subject to ERISA. No event has occurred resulting from Borrower's
failure to comply with ERISA that is reasonably likely to result in Borrower's
incurring any liability that could have a Material Adverse Effect. Borrower is
not an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940. Borrower is not
engaged principally, or as one of the important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations T and U of the Board of Governors of the Federal
Reserve System). Borrower has complied with all the provisions of the Federal
Fair Labor Standards Act. Borrower has not violated any statutes, laws,
ordinances or rules applicable to it, violation of which could have a Material
Adverse Effect.
5.12 ENVIRONMENTAL CONDITION. Except as disclosed in the
Schedule, none of Borrower's or any Subsidiary's properties or assets has ever
been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge,
by previous owners or operators, in the disposal of, or to produce, store,
handle, treat, release, or transport, any hazardous waste or hazardous substance
other than in accordance with applicable law; to the best of Borrower's
knowledge, none of Borrower's properties or assets has ever been designated or
identified in any manner pursuant to any environmental protection statute as a
hazardous waste or hazardous substance disposal site, or a candidate for closure
pursuant to any environmental protection statute; no lien arising under any
environmental protection statute has attached to any revenues or to any real or
personal property owned by Borrower or any Subsidiary; and neither Borrower nor
any Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste
or hazardous substances into the environment, which if adversely determined
could reasonably be expected to have a Material Adverse Effect.
5.13 TAXES. Borrower and each Subsidiary have filed or caused
to be filed all tax returns required to be filed, and have paid, or have made
adequate provision for the payment of, all taxes reflected therein.
5.14 SUBSIDIARIES. Borrower does not own any stock,
partnership interest or other equity securities of any Person, except for
Permitted Investments.
5.15 GOVERNMENT CONSENTS. Borrower and each Subsidiary have
obtained all consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all governmental authorities that are
necessary for the continued operation of Borrower's business as currently
conducted, the failure to obtain which could have a Material Adverse Effect.
5.16 YEAR 2000. Borrower and its Subsidiaries have reviewed
the areas within their operations and business which could be adversely affected
by, and have developed or are developing a program to address on a timely basis,
the Year 2000 Problem and have made related appropriate inquiry of material
suppliers and vendors, and based on such review and program, the Year 2000
Problem will not have a Material Adverse Effect upon its financial condition,
operations or business as now conducted. "Year 2000 Problem" means the
possibility that any
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computer applications or equipment used by Borrower may be unable to recognize
and properly perform date sensitive functions involving certain dates prior to
and any dates on or after December 31, 1999.
5.17 FULL DISCLOSURE. No representation, warranty or other
statement made by Borrower in any certificate or written statement furnished to
Bank contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained in such
certificates or statements not misleading.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, until payment in full of
all outstanding Obligations, and for so long as Bank may have any commitment to
make a Credit Extension hereunder, Borrower shall do all of the following:
6.1 GOOD STANDING. Borrower shall maintain its and each of its
Subsidiaries' corporate existence in its jurisdiction of incorporation and
maintain qualification in each jurisdiction in which the failure to so qualify
could have a Material Adverse Effect. Borrower shall maintain, and shall cause
each of its Subsidiaries to maintain, in force all licenses, approvals and
agreements, the loss of which could have a Material Adverse Effect.
6.2 GOVERNMENT COMPLIANCE. Borrower shall meet, and shall
cause each Subsidiary to meet, the minimum funding requirements of ERISA with
respect to any employee benefit plans subject to ERISA. Borrower shall comply,
and shall cause each Subsidiary to comply, with all statutes, laws, ordinances
and government rules and regulations to which it is subject, noncompliance with
which could have a Material Adverse Effect, or a material adverse effect on the
Collateral or the priority of Bank's Lien on the Collateral.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrower
shall deliver to Bank: (a) as soon as available, but in any event within thirty
(30) days after the end of each calendar month, a company prepared consolidated
and consolidating balance sheet and income statement covering Borrower's
consolidated and consolidating operations during such period, in a form
acceptable to Bank and certified by a Responsible Officer; (b) as soon as
available, but in any event within one hundred twenty (120) days after the end
of Borrower's fiscal year, audited consolidated financial statements of Borrower
prepared in accordance with GAAP, consistently applied, together with an
unqualified opinion on such financial statements of an independent certified
public accounting firm reasonably acceptable to Bank; (c) if applicable, copies
of all statements, reports and notices sent or made available generally by
Borrower to its security holders or to any holders of Subordinated Debt and all
reports on Forms 10-K and 10-Q filed with the Securities and Exchange
Commission; (d) promptly upon receipt of notice thereof, a report of any legal
actions pending or threatened against Borrower or any Subsidiary that could
result in damages or costs to Borrower or any Subsidiary of Fifty Thousand
Dollars ($50,000) or more in excess of insurance coverage that has not been
taken by Borrower's insurance company subject to any reservation; (e) within
thirty (30) days after the end of each month, Borrower shall deliver to Bank a
report in substantially the same form that was presented to Bank as of the
Closing Date on the pool of Eligible Contracts and actual sensor units shipped
measured against the number contracted for and sensor revenue by fee-for-usage
contracts; (f) such budgets, sales projections, operating plans or other
financial information as Bank may reasonably request from time to time generally
prepared by Borrower in the ordinary course of business; and (g) within thirty
(30) days of the last day of each fiscal quarter, a report signed by Borrower,
in form reasonably acceptable to Bank, listing any applications or registrations
that Borrower has made or filed in respect of any Patents, Copyrights or
Trademarks and the status of any outstanding applications or registrations, as
well as any material change in Borrower's intellectual property, including but
not limited to any subsequent ownership right of Borrower in or to any Trademark
or Patent not specified in EXHIBITS A, B, and C of the Intellectual Property
Security Agreement delivered to Bank by Borrower in connection with this
Agreement.
Within thirty (30) days after the last day of each month, Borrower
shall deliver to Bank a Borrowing Base Certificate signed by a Responsible
Officer in substantially the form of the usage agreement report submitted to the
Bank as of the Closing Date.
Borrower shall deliver to Bank with the monthly financial statements a
Compliance Certificate signed by a Responsible Officer in substantially the form
of EXHIBIT C hereto.
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Bank shall have a right from time to time hereafter to audit the
Collateral, including fee-for-usage contracts and fee-for-usage schedules, at
Borrower's expense (such expense not to exceed $1,500 in any given year unless
an Event of Default has occurred), provided that such audits will be conducted
no more often than every six (6) months unless an Event of Default has occurred
and is continuing.
6.4 INVENTORY; RETURNS. Borrower shall keep all Inventory in
good and marketable condition, free from all material defects except for
Inventory for which adequate reserves have been made. Returns and allowances, if
any, as between Borrower and its account debtors shall be on the same basis and
in accordance with the usual customary practices of Borrower, as they exist at
the time of the execution and delivery of this Agreement.
6.5 TAXES. Borrower shall make, and shall cause each
Subsidiary to make, due and timely payment or deposit of all material federal,
state, and local taxes, assessments, or contributions required of it by law, and
will execute and deliver to Bank, on demand, appropriate certificates attesting
to the payment or deposit thereof; and Borrower will make, and will cause each
Subsidiary to make, timely payment or deposit of all material tax payments and
withholding taxes required of it by applicable laws, including, but not limited
to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, and federal income taxes, and will, upon request, furnish Bank with proof
satisfactory to Bank indicating that Borrower or a Subsidiary has made such
payments or deposits; provided that Borrower or a Subsidiary need not make any
payment if the amount or validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by GAAP)
by Borrower.
6.6 INSURANCE.
(a) Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as ordinarily insured against by
other owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain insurance
relating to Borrower's ownership and use of the Collateral in amounts and of a
type that are customary to businesses similar to Borrower's.
(b) All such policies of insurance shall be in such form, with
such companies, and in such amounts as reasonably satisfactory to Bank. All such
policies of property insurance shall contain a lender's loss payable
endorsement, in a form satisfactory to Bank, showing Bank as an additional loss
payee thereof, and all liability insurance policies shall show the Bank as an
additional insured and shall specify that the insurer must give at least twenty
(20) days notice to Bank before canceling its policy for any reason. Upon Bank's
request, Borrower shall deliver to Bank a certificate summarizing such policies
of insurance and evidence of the payments of all premiums therefor. After the
occurrence of an Event of Default, all proceeds payable under any such policy
shall, at the option of Bank, be payable to Bank to be applied on account of the
Obligations.
6.7 YEAR 2000 COMPLIANCE. Borrower shall perform all acts
reasonably necessary to ensure that (a) Borrower and any business in which
Borrower holds a substantial interest, and (b) all customers, suppliers and
vendors that are material to Borrower's business, become Year 2000 Compliant in
a timely manner. Such acts shall include, without limitation, performing a
comprehensive review and assessment of all Borrower's systems and adopting a
detailed plan, with itemized budget, for the remediation, monitoring and testing
of such systems. As used in this paragraph, "Year 2000 Compliant" shall mean, in
regard to any entity, that all software, hardware, firmware, equipment, goods or
systems utilized by or material to the business operations or financial
condition of such entity, will properly perform date sensitive functions before,
during and after the year 2000. Borrower shall, immediately upon request,
provide to Bank such certifications or other evidence of Borrower's compliance
with the terms of this paragraph as Bank may from time to time require.
6.8 PRINCIPAL DEPOSITORY. Borrower shall maintain a minimum of
One Hundred Thousand Dollars ($100,000) in its principal, depository, operating
and overnight investment accounts with Bank; provided that Borrower need not
maintain such accounts if Bank's rates or services cease to be competitive.
6.9 ADJUSTED LIQUIDITY RATIO. Borrower shall maintain, as of
the last day of each calendar month, a ratio of (i) unrestricted cash, cash
equivalents, and marketable securities plus eighty percent (80%) of
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domestic Accounts satisfactory to Bank to (ii) outstanding Credit Extensions,
including drawn and undrawn Letters of Credit, of not less than 1.50 to 1.00.
6.10 CASH BURN. Borrower shall maintain, as of the last day of
each calendar month, a balance of unrestricted cash, cash equivalents and
marketable securities which is at least five (5) times Borrower's Monthly Cash
Burn. "Monthly Cash Burn" means Borrower's average monthly negative operating
cash flow plus capital expenditures for the three months immediately prior to
the date of measurement.
6.11 INSTALLED BASE. The number of monitors and modules placed
with Persons who have executed usage agreements in substantially the form
presented to the Bank at the Closing Date, measured as of the last day of the
quarter, shall increase each quarter.
6.12 CONTRACT STATUS. The Eligible Contracts which fall behind
in their minimum monthly orders by more than three months shall not represent
more than 20% of the aggregate value, measured on an eighteen (18) month rolling
average basis, of the sensor portion of the pool of all Eligible Contracts.
Borrower shall enforce all of its rights under the Eligible Contracts and shall
neither amend nor waive any payments affecting the payments due thereunder
without Bank's prior consent, except for waivers and modifications in the
ordinary course of business which do not cause Eligible Contracts to become
ineligible.
6.13 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.
(a) Borrower shall register or cause to be registered on an
expedited basis (to the extent not already registered) with the United States
Patent and Trademark Office or the United States Copyright Office, as applicable
those intellectual property rights listed on EXHIBITS A, B and C to the
Intellectual Property Security Agreement delivered to Bank by Borrower in
connection with this Agreement, within thirty (30) days of the date of this
Agreement. Borrower shall give Bank notice of all applications or registrations
filed with the Untied States Patent and Trademark Office or the United States
Copyright Office within thirty (30) days after the application date, and
Borrower shall execute and deliver such additional instruments and documents
from time to time as Bank shall reasonably request to perfect Bank's security
interest in such additional Intellectual Property Collateral. Notwithstanding
the foregoing, upon the occurrence and during the continuance of an Event of
Default, if so requested by Bank, Borrower shall register, on an expedited
basis, any registerable intellectual property rights which Borrower has
previously failed to register.
(b) Borrower shall (i) protect, defend and maintain the
validity and enforceability of the Trademarks, Patents and Copyrights, (ii) use
its best efforts to detect infringements of the Trademarks, Patents and
Copyrights and promptly advise Bank in writing of material infringements
detected and (iii) not allow any material Trademarks, Patents or Copyrights to
be abandoned, forfeited or dedicated to the public without the written consent
of Bank, which shall not be unreasonably withheld. Notwithstanding the
foregoing, Borrower shall not be required to take any action under this Section
6.13(b) if Borrower's Board of Directors determines that, in its good faith
judgment, any such Copyright, Trademark, or Patent is of immaterial value.
(c) Bank may audit Borrower's Intellectual Property Collateral
to confirm compliance with this Section 6.13, provided such audit may not occur
more often than once per year, unless an Event of Default has occurred and is
continuing. Bank shall have the right, but not the obligation, to take, at
Borrower's sole expense, any actions that Borrower is required under this
Section 6.13 to take but which Borrower fails to take, after fifteen (15) days'
notice to Borrower. Borrower shall reimburse and indemnify Bank for all
reasonable costs and reasonable expenses incurred in the reasonable exercise of
its rights under this Section 6.13.
6.14 FURTHER ASSURANCES. At any time and from time to time
Borrower shall execute and deliver such further instruments and take such
further action as may reasonably be requested by Bank to effect the purposes of
this Agreement.
7. NEGATIVE COVENANTS.
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Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until payment in full of the outstanding
Obligations or for so long as Bank may have any commitment to make any Credit
Extensions, Borrower will not do any of the following:
7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise
dispose of (collectively, a "Transfer"), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, other than: (i) Transfers
of Inventory in the ordinary course of business; (ii) Transfers of non-exclusive
licenses and similar arrangements for the use of the property of Borrower or its
Subsidiaries; or (iii) Transfers of surplus, worn-out or obsolete Equipment.
Notwithstanding the foregoing, Borrower may transfer and encumber assets for the
benefit of Americorp Financial, Inc. and such other Persons as may enter into
intercreditor agreements acceptable to Bank from time to time.
7.2 CHANGE IN BUSINESS. Engage in any business, or permit any
of its Subsidiaries to engage in any business, other than the businesses
currently engaged in by Borrower and any business substantially similar or
related thereto (or incidental thereto). Borrower will not, without thirty (30)
days prior written notification to Bank, relocate its chief executive office.
7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit
any of its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person, in each
case, without the consent of the Bank, which consent will not be unreasonably
withheld.
7.4 INDEBTEDNESS. Create, incur, assume or be or remain liable
with respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.
7.5 ENCUMBRANCES. Create, incur, assume or suffer to exist any
Lien with respect to any of its property, or assign or otherwise convey any
right to receive income, including the sale of any Accounts, or permit any of
its Subsidiaries so to do, except for (i) Permitted Liens and (ii) Liens
incurred in connection with the financing of Borrower's Contracts by AFI and
other transfers that are substantially similar to the transfers made by Borrower
to AFI and which transferees have entered into an Intercreditor Agreement with
Bank in form and substance acceptable to Bank.
7.6 DISTRIBUTIONS. Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock, except that Borrower may repurchase the stock of former
employees pursuant to stock repurchase agreements as long as an Event of Default
does not exist prior to such repurchase or would not exist after giving effect
to such repurchase.
7.7 INVESTMENTS. Directly or indirectly acquire or own, or
make any Investment in or to any Person, or permit any of its Subsidiaries so to
do, other than Permitted Investments.
7.8 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter
into or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a non-affiliated Person.
7.9 SUBORDINATED DEBT. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Bank's prior written consent.
7.10 INVENTORY AND EQUIPMENT. Store the Inventory or the
Equipment with a bailee, warehouseman, or similar party that may have a Lien or
other interest in the Inventory or Equipment, unless either (i) Bank has
received a pledge of the warehouse receipt covering such Inventory or (ii)
Borrower owes no more than Twenty-Five Thousand Dollars ($25,000) to such
warehouseman at any given time; provided, however, that Borrower may deposit
software code in escrow for customers in the ordinary course of business. Except
for
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Inventory sold in the ordinary course of business and except for such other
locations as Bank may approve in writing, Borrower shall keep the Inventory and
Equipment only at the location set forth in Section 10 hereof and such other
locations of which Borrower gives Bank prior written notice and as to which
Borrower signs and files a financing statement where needed to perfect Bank's
security interest.
7.11 COMPLIANCE. Become an "investment company" or be
controlled by an "investment company," within the meaning of the Investment
Company Act of 1940, or become principally engaged in, or undertake as one of
its important activities, the business of extending credit for the purpose of
purchasing or carrying margin stock, or use the proceeds of any Credit Extension
for such purpose. Fail to meet the minimum funding requirements of ERISA, permit
a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur,
fail to comply with the Federal Fair Labor Standards Act or violate any law or
regulation, which violation could have a Material Adverse Effect, or a material
adverse effect on the Collateral or the priority of Bank's Lien on the
Collateral, or permit any of its Subsidiaries to do any of the foregoing.
7.12 INTELLECTUAL PROPERTY AGREEMENTS. Borrower shall not
permit the inclusion in any material contract to which it becomes a party of any
provisions that could or might in any way prevent the creation of a security
interest in Borrower's rights and interests in any property included within the
definition of the Intellectual Property Collateral acquired under such
contracts, except to the extent that (i) any such contract is determined in the
good faith judgment of Borrower's Board of Directors to be necessary to
Borrower's business, (ii) Borrower uses reasonable efforts to obtain the consent
of, or waiver by, any person whose consent or waiver is necessary for Bank to
have a security interest in any such contract, and (iii) Borrower gives Bank
notice of any such contract within a reasonable period of time after its
execution.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
Event of Default by Borrower under this Agreement:
8.1 PAYMENT DEFAULT. If Borrower fails to pay, when due, any
of the Obligations;
8.2 COVENANT DEFAULT. If Borrower fails to perform any
obligation under Article 6 or violates any of the covenants contained in Article
7 of this Agreement, or fails or neglects to perform, keep, or observe any other
material term, provision, condition, covenant, or agreement contained in this
Agreement, in any of the Loan Documents, or in any other present or future
agreement between Borrower and Bank and as to any default under such other term,
provision, condition, covenant or agreement that can be cured, has failed to
cure such default within ten (10) days after Borrower receives written notice
thereof or any officer of Borrower becomes aware thereof; provided, however,
that if the default cannot by its nature be cured within the ten (10) day period
or cannot after diligent attempts by Borrower be cured within such ten (10) day
period, and such default is likely to be cured within a reasonable time, then
Borrower shall have an additional reasonable period (which shall not in any case
exceed thirty (30) days) to attempt to cure such default, and within such
reasonable time period the failure to have cured such default shall not be
deemed an Event of Default (provided that no Credit Extensions will be required
to be made during such cure period);
8.3 MATERIAL ADVERSE CHANGE. If there occurs a material
adverse change in Borrower's business or financial condition, or if there is a
material impairment of the prospect of repayment of any portion of the
Obligations or a material impairment of the value or priority of Bank's security
interests in the Collateral;
8.4 ATTACHMENT. If any material portion of Borrower's assets
is attached, seized, subjected to a writ or distress warrant, or is levied upon,
or comes into the possession of any trustee, receiver or person acting in a
similar capacity and such attachment, seizure, writ or distress warrant or levy
has not been removed, discharged or rescinded within ten (10) days, or if
Borrower is enjoined, restrained, or in any way prevented by court order from
continuing to conduct all or any material part of its business affairs, or if a
judgment or other claim becomes a lien or encumbrance upon any material portion
of Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of
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Default where such action or event is stayed or an adequate bond has been posted
pending a good faith contest by Borrower (provided that no Credit Extensions
will be required to be made during such cure period);
8.5 INSOLVENCY. If Borrower becomes insolvent, or if an
Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding
is commenced against Borrower and is not dismissed or stayed within thirty (30)
days (provided that no Credit Extensions will be made prior to the dismissal of
such Insolvency Proceeding);
8.6 OTHER AGREEMENTS. If there is a default in any agreement
to which Borrower is a party with a third party or parties resulting in a right
by such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of One Hundred Thousand
Dollars ($100,000) or that could have a Material Adverse Effect;
8.7 SUBORDINATED DEBT. If Borrower makes any payment on
account of Subordinated Debt, except to the extent such payment is allowed under
any subordination agreement entered into with Bank;
8.8 JUDGMENTS. If a judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least Fifty Thousand
Dollars ($50,000) in excess of available insurance coverage that has not been
taken by Borrower's insurance company subject to any reservation shall be
rendered against Borrower and shall remain unsatisfied and unstayed for a period
of ten (10) days (provided that no Credit Extensions will be made prior to the
satisfaction or stay of such judgment);
8.9 MISREPRESENTATIONS. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Bank by any Responsible
Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document; or
8.10 CONTRACT DELINQUENCIES. If Eligible Contracts consisting
of twenty percent (20%) or more of the 18-month rolling value of the total pool
of Eligible Contracts as of the Closing Date become past due by more than three
months.
9. BANK'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence and during the
continuance of an Event of Default, Bank may, at its election, without notice of
its election and without demand, do any one or more of the following, all of
which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
Section 8.5, all Obligations shall become immediately due and payable without
any action by Bank);
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement or under any other agreement between
Borrower and Bank;
(c) Settle or adjust disputes and claims directly with account
debtors for amounts, upon terms and in whatever order that Bank reasonably
considers advisable;
(d) Make such payments and do such acts as Bank considers
necessary or reasonable to protect its security interest in the Collateral.
Borrower agrees to assemble the Collateral if Bank so requires, and to make the
Collateral available to Bank as Bank may designate. Borrower authorizes Bank to
enter the premises where the Collateral is located, to take and maintain
possession of the Collateral, or any part of it, and to pay, purchase, contest,
or compromise any encumbrance, charge, or lien which in Bank's determination
appears to be prior or superior to its security interest and to pay all expenses
incurred in connection therewith. With respect to any of Borrower's owned
premises, Borrower hereby grants Bank a license to enter into possession of such
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premises and to occupy the same, without charge, in order to exercise any of
Bank's rights or remedies provided herein, at law, in equity, or otherwise;
(e) Set off and apply to the Obligations any and all (i)
balances and deposits of Borrower held by Bank, or (ii) indebtedness at any time
owing to or for the credit or the account of Borrower held by Bank;
(f) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Bank is hereby granted a license or other right, solely
pursuant to the provisions of this Section 9.1, to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section 9.1, Borrower's
rights under all licenses and all franchise agreements shall inure to Bank's
benefit;
(g) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrower's premises) as Bank
determines is commercially reasonable, and apply any proceeds to the Obligations
in whatever manner or order Bank deems appropriate;
(h) Bank may credit bid and purchase at any public sale; and
(i) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.
9.2 POWER OF ATTORNEY. Effective only upon the occurrence and
during the continuance of an Event of Default, Borrower hereby irrevocably
appoints Bank (and any of Bank's designated officers, or employees) as
Borrower's true and lawful attorney to: (a) send requests for verification of
Accounts or notify account debtors of Bank's security interest in the Accounts;
(b) endorse Borrower's name on any checks or other forms of payment or security
that may come into Bank's possession; (c) sign Borrower's name on any invoice or
xxxx of lading relating to any Account, drafts against account debtors,
schedules and assignments of Accounts, verifications of Accounts, and notices to
account debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all
claims under and decisions with respect to Borrower's policies of insurance; (f)
settle and adjust disputes and claims respecting the accounts directly with
account debtors, for amounts and upon terms which Bank determines to be
reasonable; (g) to modify, in its sole discretion, any intellectual property
security agreement entered into between Borrower and Bank without first
obtaining Borrower's approval of or signature to such modification by amending
EXHIBITS A, B, and C, thereof, as appropriate, to include reference to any
right, title or interest in any Copyrights, Patents or Trademarks acquired by
Borrower after the execution hereof or to delete any reference to any right,
title or interest in any Copyrights, Patents or Trademarks in which Borrower no
longer has or claims to have any right, title or interest; (h) to file, in its
sole discretion, one or more financing or continuation statements and amendments
thereto, relative to any of the Collateral without the signature of Borrower
where permitted by law; and (i) to transfer the Intellectual Property Collateral
into the name of Bank or a third party to the extent permitted under the
California Uniform Commercial Code; provided Bank may exercise such power of
attorney to sign the name of Borrower on any of the documents described in
Section 4.2 regardless of whether an Event of Default has occurred so long as
Bank has requested in writing that Borrower sign its name on any such document
and Borrower has not done so by the tenth day after receiving such notice. The
appointment of Bank as Borrower's attorney in fact, and each and every one of
Bank's rights and powers, being coupled with an interest, is irrevocable until
all of the Obligations have been fully repaid and performed and Bank's
obligation to provide advances hereunder is terminated.
9.3 ACCOUNTS COLLECTION. After the occurrence and during the
continuation of an Event of Default, Bank may notify any Person owing funds to
Borrower of Bank's security interest in such funds and verify the amount of such
Account. Borrower shall collect all amounts owing to Borrower for Bank, receive
in trust all payments as Bank's trustee, and immediately deliver such payments
to Bank in their original form as received from the account debtor, with proper
endorsements for deposit.
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9.4 BANK EXPENSES. If Borrower fails to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Bank may do any or all of the
following after reasonable written notice to Borrower: (a) make payment of the
same or any part thereof; (b) set up such reserves under the SBLC Facility as
Bank deems necessary to protect Bank from the exposure created by such failure;
or (c) obtain and maintain insurance policies of the type discussed in Section
6.6 of this Agreement, and take any action with respect to such policies as Bank
deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank
Expenses, shall be immediately due and payable, and shall bear interest at the
then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by Bank shall not constitute an agreement by Bank
to make similar payments in the future or a waiver by Bank of any Event of
Default under this Agreement.
9.5 BANK'S LIABILITY FOR COLLATERAL. So long as Bank complies
with reasonable banking practices, Bank shall not in any way or manner be liable
or responsible for: (a) the safekeeping of the Collateral; (b) any loss or
damage thereto occurring or arising in any manner or fashion from any cause; (c)
any diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person whomsoever. All risk of
loss, damage or destruction of the Collateral shall be borne by Borrower.
9.6 REMEDIES CUMULATIVE. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Bank of one right
or remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election, or acquiescence by it. No waiver by Bank
shall be effective unless made in a written document signed on behalf of Bank
and then shall be effective only in the specific instance and for the specific
purpose for which it was given.
9.7 DEMAND; PROTEST. Except as otherwise provided in this
Agreement, Borrower waives demand, protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment, notice of any default, nonpayment
at maturity, release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees at any time held by Bank
on which Borrower may in any way be liable.
10. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized
overnight delivery service, certified mail, postage prepaid, return receipt
requested, or by telefacsimile to Borrower or to Bank, as the case may be, at
its addresses set forth below:
If to Borrower: Aspect Medical Systems, Inc.
0 Xxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxxxxx
FAX: (000) 000-0000
If to Bank: Imperial Bank
000 Xxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Corporate Banking Center
FAX: (000) 000-0000
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with a copy to: Imperial Bank
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx / Xxxxx Xxxx
FAX: (000)000-0000
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California, without regard to
principles of conflicts of law. Each of Borrower and Bank hereby submits to the
exclusive jurisdiction of the state and Federal courts located in the County of
Santa Xxxxx, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
12. GENERAL PROVISIONS.
12.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and
inure to the benefit of the respective successors and permitted assigns of each
of the parties; provided, however, that neither this Agreement nor any rights
hereunder may be assigned by Borrower without Bank's prior written consent,
which consent may be granted or withheld in Bank's sole discretion. Bank shall
have the right with the consent of the Borrower, not to be unreasonably
withheld, to sell, transfer or negotiate all or any part of, or any interest in,
Bank's obligations, rights and benefits hereunder. Bank shall have the right
without the consent of or notice to Borrower to grant participation in all or
any part of, or any interest in, Bank's obligations, rights and benefits
hereunder.
12.2 INDEMNIFICATION. Borrower shall defend, indemnify and
hold harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank
as a result of or in any way arising out of, following, or consequential to
transactions between Bank and Borrower whether under this Agreement, or
otherwise (including without limitation reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE. Time is of the essence for the
performance of all obligations set forth in this Agreement.
12.4 SEVERABILITY OF PROVISIONS. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION. This Agreement cannot
be amended or terminated orally. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement and the Loan Documents.
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12.6 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement.
12.7 SURVIVAL. All covenants, representations and warranties
made in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described
in Section 12.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Bank have run.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
ASPECT MEDICAL SYSTEMS, INC.
By: /s/ J. Xxxx Xxxxxxxxx
Title: Vice President and
Chief Financial Officer
IMPERIAL BANK
By: /s/ Xxxxx Xxxx
Title: Vice President
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EXHIBIT A
COLLATERAL DESCRIPTION ATTACHMENT
TO LOAN AND SECURITY AGREEMENT
All personal property of Borrower (herein referred to as "Borrower" or
"Debtor") whether presently existing or hereafter created, written, produced or
acquired, including, but not limited to:
(a) all accounts receivable, accounts, chattel paper, contract
rights (including, without limitation, royalty agreements, license agreements
and distribution agreements), documents, instruments, money, deposit accounts
and general intangibles, including, without limitation, returns, repossessions,
books and records relating thereto, and equipment containing said books and
records, all investment property, including securities and securities
entitlements;
(b) all software, computer source codes and other computer
programs (collectively, the "Software Products"), and all common law and
statutory copyrights and copyright registrations, applications for registration,
now existing or hereafter arising, United States of America and foreign,
obtained or to be obtained on or in connection with the Software Products, or
any parts thereof or any underlying or component elements of the Software
Products together with the right to copyright and all rights to renew or extend
such copyrights and the right (but not the obligation) of Bank (herein referred
to as "Bank" or "Secured Party") to xxx in its own name and/or the name of the
Debtor for past, present and future infringements of copyright;
(c) all goods, including, without limitation, equipment and
inventory (including, without limitation, all export inventory);
(d) all guarantees and other security therefor;
(e) all trademarks, service marks, trade names and service
names and the goodwill associated therewith;
(f) (a) all patents and patent applications filed in the
United States Patent and Trademark Office or any similar office of any foreign
jurisdiction, and interests under patent license agreements, including, without
limitation, the inventions and improvements described and claimed therein, (b)
licenses pertaining to any patent whether Debtor is licensor or licensee, (c)
all income, royalties, damages, payments, accounts and accounts receivable now
or hereafter due and/or payable under and with respect thereto, including,
without limitation, damages and payments for past, present or future
infringements thereof, (d) the right (but not the obligation) to xxx for past,
present and future infringements thereof, (e) all rights corresponding thereto
throughout the world in all jurisdictions in which such patents have been issued
or applied for, and (f) the reissues, divisions, continuations, renewals,
extensions and continuations-in-part with any of the foregoing (all of the
foregoing patents and applications and interests under patent license
agreements, together with the items described in clauses (a) through (f) in this
paragraph are sometimes herein individually and collectively referred to as the
"Patents"); and
(g) all products and proceeds, including, without limitation,
insurance proceeds, of any of the foregoing.
Notwithstanding the foregoing, "Collateral" shall not include (i)
Contracts and rights thereunder transferred to Americorp Financial, Inc., (ii)
Borrower's equipment and other related general intangibles to the extent that
the same are subject to a lease or financing arrangement permitted under the
Loan and Security Agreement between Bank and Borrower dated as of December 10,
1999, which financing arrangement includes a valid and enforceable prohibition
on further encumbrances ("Excluded Equipment") and (iii) additions, attachments,
accessories and accessions to, substitutions, replacements and exchanges for,
and proceeds of the Excluded Equipment.
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EXHIBIT B
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 5:00 P.M., EASTERN TIME
TO: EMERGING GROWTH INDUSTRIES DATE: _______________
FAX #: 000-000-0000 TIME: _______________
--------------------------------------------------------------------------------
FROM: Aspect Medical Systems, Inc.
------------------------------------------------------------------------
CLIENT NAME (BORROWER)
REQUESTED BY:
----------------------------------------------------------------
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:
--------------------------------------------------------
PHONE NUMBER:
----------------------------------------------------------------
FROM ACCOUNT # TO ACCOUNT #
---------------------- ----------------------
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
-------------------------- ---------------------
$________________________________
PRINCIPAL INCREASE (ADVANCE) $________________________________
PRINCIPAL PAYMENT (ONLY) $________________________________
INTEREST PAYMENT (ONLY) $________________________________
PRINCIPAL AND INTEREST (PAYMENT) $________________________________
OTHER INSTRUCTIONS:
----------------------------------------------------------
------------------------------------------------------------------------------
All representations and warranties of Borrower stated in the Loan
Agreement are true, correct and complete in all material respects as of the date
of the telephone request for and Advance confirmed by this Borrowing
Certificate; provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BANK USE ONLY
TELEPHONE REQUEST:
------------------
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
------------------------------------------------ ------------------------------
Authorized Requester Phone #
------------------------------------------------ ------------------------------
Received By (Bank) Phone #
---------------------------------------------
Authorized Signature (Bank)
--------------------------------------------------------------------------------
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EXHIBIT C
COMPLIANCE CERTIFICATE
TO: IMPERIAL BANK
FROM: Aspect Medical Systems, Inc.
The undersigned authorized officer of Aspect Medical Systems, Inc.
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower
is in complete compliance for the period ending _______________ with all
required covenants except as noted below and (ii) all representations and
warranties of Borrower stated in the Agreement are true and correct in all
material respects as of the date hereof. Attached herewith are the required
documents supporting the above certification. The Officer further certifies that
these are prepared in accordance with Generally Accepted Accounting Principles
(GAAP) and are consistently applied from one period to the next except as
explained in an accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
Monthly financial statements Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 120 days Yes No
Eligible Contract Report(1) Monthly within 30 days Yes No
10K and 10Q (as applicable) Yes No
Borrowing Base Cert. Monthly within 30 days Yes No
Collateral Audit Semi-annual Yes No
Collateral Report Initially Yes No
IP Report Quarterly within 30 days Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
Maintain on a Monthly Basis:
Minimum Adjusted Liquidity Ratio(2) 1.50:1.00 ____:1.00 Yes No
Cash Burn 3 _________ Yes No
Minimum Installed Base4 Increase (Quarterly) 1 _________ Yes No
Contract Status 5 _________ Yes No
(1) Report on pool of Eligible Contracts & actual sensor units shipped
measured against # contracted for & sensor revenue by fee-for-usage contracts
(2) Ratio of (i) unrestricted cash and cash equivalents and marketable
securities plus eighty percent 80% of domestic Accounts satisfactory to Bank to
(ii) outstanding Credit Extensions, including both drawn and undrawn Letters of
Credit.
(3) Borrower shall maintain a balance of unrestricted cash, cash
equivalents, and marketable securities which is at least 5 times Borrower's
average monthly negative operating cash flow plus capital expenditures for the 3
months immediately prior to the date of measurement.
(4) The number of monitors and modules placed with account debtors.
(5) The Eligible Contracts which fall behind in their minimum monthly
orders by more than 3 months shall not represent more than 20% of the total
value, measured on an 18 month rolling average basis, the sensor portion of the
pool of all Eligible Contracts.
-----------------------------------
COMMENTS REGARDING EXCEPTIONS: See Attached.
BANK USE ONLY
Received by: ______________________
Sincerely, AUTHORIZED SIGNER
Date:______________________________
---------------------------------------- Verified:__________________________
SIGNATURE AUTHORIZED SIGNER
---------------------------------------- Date:______________________________
TITLE
Compliance Status Yes No
----------------------------------------
DATE -----------------------------------
26
28
EXHIBIT D
AMORTIZATION SCHEDULE WITH $1,000,000 HP LETTER OF CREDIT
27
29
EXHIBIT E
AMORTIZATION SCHEDULE IF NO HP LETTER OF CREDIT
28
30
SCHEDULE OF EXCEPTIONS
PERMITTED INDEBTEDNESS (SECTION 1.1)
1. Master Lease Agreement dated December 21, 1994 and LTI Ventures Leasing
Corp. for which certain schedules thereunder have been assigned to
Corestates Bank, N.A. and Silicon Valley Bank.
Original amount: $1,235,715
Outstanding
at 10/2/99: $ 30,731
2. Loan Agreement dated June 22, 1998 with Imperial Bank for which funds were
loaned under the Equipment Loan portion of the Agreement.
Original amount: $2,162,009
Outstanding
at 10/2/99: $1,621,507
3. Master Assignment Agreement dated July 23, 1999 and Servicing Agreement
dated July 23, 1999 with Americorp Financial, Inc. under which certain
Usage Agreement contracts are sold to Americorp Financial, Inc.
Original amount: $1,447,131*
Outstanding
at 10/2/99: $1,438,362
Availability remains under this Master Assignment Agreement and the
Company continues to sell additional Usage Agreements to Americorp
Financial, Inc. An additional draw of $404,962 has been made subsequent to
October 2, 1999.
PERMITTED LIENS (SECTION 1.1)
1. The Company granted a security interest pursuant to the Master Lease
Agreement dated December 21, 1994 with LTI Ventures Leasing Corp., for
which certain schedules thereunder have been assigned to Corestates Bank,
N.A. and Silicon Valley Bank.
2. Subordination, Non-Disturbance and Attornment Agreement between the
Company and Teachers Insurance Association of America, dated June 15, 1995.
3. The Company granted a security interest pursuant to the Loan Agreement
dated June 22, 1998 with Imperial Bank.
29
31
SCHEDULE OF EXCEPTIONS
Permitted Investments (Section 1.1)
1. Loans made to certain employees and directors in order to exercise options
to acquire a total of 1,495,470 shares of common stock. The shares of
common stock are subject to a repurchase right by the Company and the
number of shares subject to the repurchase provision decreases over time in
accordance with the vesting schedule of the original option grant. In the
event that any holder of shares of common stock which remain subject to the
repurchase provision ceases to be employed by the Company, the Company has
the right to repurchase such shares for 90 days at a price equal to the
original exercise price.
Original Investment: $336,580
Investment at
October 2, 1999 $305,324
2. Loans made to certain employees of the Company that are evidenced by
promissory notes bearing interest with rates ranging from 6.42% to
8% per annum.
Original Investment: $160,334
Investment at
October 2, 1999 $132,760
3. Investments in and inter-company loans made to wholly-owned subsidiaries
of the Company (Aspect Medical Systems International B.V., the Netherlands
and Aspect Medical Systems UK Limited, the United Kingdom).
Investment at
October 2, 1999 $983,003
4. Marketable investments at October 2, 1999:
Xxxxxx-Xxx Floating Rate Note $1,000,000
Imperial Bank
Banker's Acceptances $ 186,340
Certificates of Deposit $4,131,600
5. See attached draft Board of Directors Investment Policy
PRIOR NAMES (SECTION 5.7)
Originally incorporated under the name "Biometrak Corporation"
on October 14, 1987.
LITIGATION (SECTION 5.8)
On May 5, 1999, a former employee of the Borrower filed a complaint with the
Massachusetts Commission Against Discrimination (the "MCAD") which alleges that
the Borrower discriminated against the employee by subjecting him to sexual
harassment and retaliating against his complaint by terminating his
employment, due to his opposition to that sexual harassment. By letter dated
September 14, 1999, the former employee's counsel informed Borrower that,
despite diligent efforts, he is unable to locate the former employee. On
September 16, 1999, the Borrower sent to the MCAD an Unopposed Motion for
Administrative Closure. That motion is still pending before the MCAD.
30
32
SCHEDULE OF EXCEPTIONS
DRAFT
Aspect Medical Systems
Recommended Investment Policy Guidelines
1. Purpose
To establish policy and guidelines for investment of corporate surplus
cash. "Surplus cash" is cash in corporate accounts not immediately required for
debt repayment, working capital, capital investment, or other outstanding
near-term financial obligations.
Objectives
Conservation of capital and maintenance of liquidity until funds can be
used in business operations.
A. Preserve capital.
B. Anticipate liquidity requirements.
C. Diversify investments to minimize the risk and inappropriate
concentrations of investments with any one entity.
D. Deliver above-market returns versus the industry averages.
E. Provide fiduciary control of cash and investments by individuals
approved by the Board.
II. Liquidity Guidelines
Excess cash is invested with liquidity in mind, and without any loss of
principal. Daily liquidity is essential; restrictions on liquidity are:
At least twice the amount of the monthly burn must be available each
business day until 1:30 p.m. Eastern time with no loss of principal.
The remainder of the funds are to be invested, consistent with anticipated
cash needs, in securities with maturities no longer than 24 months.
Repositioning of these securities before their maturity, generating small gains
or losses, is permitted for managing liquidity requirements only. Any
repositioning of securities causing a gain or loss must be pre-approved by
Aspect Medical Systems' management for fiduciary control purposes.
31
33
SCHEDULE OF EXCEPTIONS
III. Investment Restrictions
Investments shall be made in the context of the following investment
guidelines:
Eligible Investments
1. Direct obligations of the U.S. Treasury, including bills, notes, and
bonds.
2. Obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government.
3. Bank obligations, including certificates of deposit, bank notes, and
bankers acceptances. Investments in these securities are limited to banks whose
long-term debt is rated "A" or higher by Moody's and Standard & Poor's and
short-term obligations are rated "P1" by Moody's and "A1" or higher by
Standard & Poor's.
4. Corporate obligations, including intermediate-term notes rated "A" or
higher by Moody's and Standard & Poor's and commercial paper rated "P1" or
higher by Moody's and "A1" or higher by Standard & Poor's.
5. Repurchase agreements collateralized at a minimum of 102% with U.S.
Treasury securities or other securities rated "AAA" or equivalent that would be
permitted by this policy.
6. Money market funds over $1 billion in assets, with a historically
constant dollar net asset value, consisting of acceptable securities as stated
above are appropriate for investing, as long as the fund's manager has been in
business over five years, has name recognition, and has performance that is
easily tracked.
7. U.S. and dollar-denominated international corporate debt of all types
is acceptable as long as the issuer meets credit rating and marketability
guidelines.
8. Derivative instruments are ineligible as investments. This would
cover all investments where the value is based on an underlying variable causing
the coupon and/or the maturity value to be unknown for the life of the security.
32
34
SCHEDULE OF EXCEPTIONS
IV. Maturities
The maximum maturity of individual securities in the portfolio may not
exceed twenty-four (24) months.
The average maturity of the portfolio may not exceed twelve (12) months.
For securities which have put dates or reset dates, the put date or reset
date will be used, instead of the final maturity date, for maturity guideline
purposes.
V. Concentration Limits/Restrictions
There is no limit to the percentage of the portfolio which may be
maintained in securities issued by the U.S. Treasury or by its agencies and
instrumentalities.
No one issuer or group of issuers from the same holding company is to
exceed 15% of the portfolio at time of purchase, with the exception of
Government securities.
No investment will be permitted in common stocks, preferred stocks,
options (put or calls), commodities, foreign securities, futures or mutual
funds whose underlying securities are ineligible investments according to this
investment policy.
VI. Credit Quality
Trends for a given company or industry must be reviewed periodically by the
investment officer and adjustments in percentage positions made accordingly.
Should any investment held in Aspect Medical Systems' portfolio fall short of
prescribed guidelines, immediate notification must be made to the individual
appointed by the Board to oversee fiduciary control.
33
35
SCHEDULE OF EXCEPTIONS
VII. Marketability
All securities are to be purchased through investment banking and
brokerage firms of high quality and reputation, with a history of making markets
for the securities in which we invest. In the unlikely event that securities
must be sold before their maturity, the securities must be easily remarketed. To
accomplish this, the securities must be conventional "products" with strong name
recognition.
VIII. Trading Guidelines
Normal investing practice is to reinvest the funds on the day a
security matures, to minimize lost interest. A daily transaction log is to be
maintained and available for review at any time. All trading firms must generate
a hard copy document for each transaction which is mailed to us on a timely
basis, and then matched to the transaction log. Quarterly summaries of our
investment holdings and cash usage are to be made available for Board review.
IX. Safekeeping
Assets are to be held in a segregated bank custody account with
separate fiduciary account documents executed by the bank. Assets shall not be
held by any investment manager or securities dealer.
X. Fiduciary Discretion
The Chief Financial Officer or other individual appointed by the Board
and his/her authorized employees are responsible for securing and managing
investments and cash for operations. These individuals have full discretion to
invest any excess capital subject to strict adherence to these guidelines. These
guidelines are to be reviewed periodically with the Chief Financial Officer or
Chief Executive Officer and revisions made consistent with objectives set forth
herein.
Date ______________ BY ___________________________________
Title
BY ___________________________________
Title
BY ___________________________________
Title
34
36
CORPORATE RESOLUTIONS TO BORROW
--------------------------------------------------------------------------------
BORROWER: Aspect Medical Systems, Inc.
--------------------------------------------------------------------------------
I, the undersigned Secretary or Assistant Secretary of Aspect Medical
Systems, Inc. (the "Corporation"), HEREBY CERTIFY that the Corporation is
organized and existing under and by virtue of the laws of the State of Delaware.
I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true
and complete copies of the Third Restated Certificate of Incorporation, as
amended, and the Restated Bylaws of the Corporation, each of which is in full
force and effect on the date hereof.
I FURTHER CERTIFY that at a meeting of the Directors of the
Corporation, duly called and held, at which a quorum was present and voting (or
by other duly authorized corporate action in lieu of a meeting), the following
resolutions were adopted.
BE IT RESOLVED, that any one (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:
NAMES POSITION ACTUAL SIGNATURES
----- -------- -----------------
J. Xxxx Xxxxxxxxx Vice President, CFO & Secretary /s/ J. Xxxx Xxxxxxxxx
_____________________ _______________________________ _____________________
Xxxxxx Xxxxxxx Corporate Controller /s/ Xxxxxx Xxxxxxx
_____________________ _______________________________ _____________________
_____________________ _______________________________ _____________________
_____________________ _______________________________ _____________________
acting for an on behalf of this Corporation and as its act and deed be, and they
hereby are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Imperial Bank ("Bank"),
on such terms as may be agreed upon between the officers, employees, or agents
and Bank, such sum or sums of money as in their judgment should be borrowed,
without limitation, including such sums as are specified in that certain Loan
and Security Agreement dated as of December 10, 1999 (the "Loan Agreement").
EXECUTE LOAN DOCUMENTS. To execute and deliver to Bank the Loan
Agreement and any other agreement entered into between Borrower and Bank in
connection with the Loan Agreement, all as amended or extended from time to time
(collectively, with the Loan Agreement, the "Loan Documents"), and also to
execute and deliver to Bank one or more renewals, extensions, modifications,
refinancings, consolidations, or substitutions for the Loan Documents, or any
portion thereof.
GRANT SECURITY. To grant a security interest to Bank in the Collateral
described in the Loan Documents, which security interest shall secure all of the
Corporation's Obligations, as described in the Loan Documents.
NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation or in which the Corporation may have an
interest, and either to receive cash for the same or to cause such proceeds to
be credited to the account of the Corporation with Bank, or to cause such other
disposition of the proceeds derived therefrom as they may deem advisable.
LETTERS OF CREDIT. To execute letters of credit applications and other
related documents pertaining to Bank's issuance of letters of credit.
FURTHER ACTS. In the case of lines of credit, to designate additional
or alternate individuals as being authorized to request advances thereunder, and
in all cases, to do and perform such other acts and things, to pay any and all
fees and costs, and to execute and deliver such other documents and agreements
as they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions.
1
37
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to
these resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full force
and effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
I FURTHER CERTIFY that the officers, employees, and agents named above
are duly elected, appointed, or employed by or for the Corporation, as the case
may be, and occupy the positions set forth opposite their respective names; that
the foregoing Resolutions now stand of record on the books of the Corporation;
and that the Resolutions are in full force and effect and have not been modified
or revoked in any manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on December 10,
1999 and attest that the signatures set opposite the names listed above are
their genuine signatures.
CERTIFIED AND ATTESTED BY:
X J. Xxxx Xxxxxxxxx
____________________________
J. Xxxx Xxxxxxxxx, Secretary
--------------------------------------------------------------------------------
2
38
IMPERIAL BANK
MEMBER FDIC
ITEMIZATION OF AMOUNT FINANCED
DISBURSEMENT INSTRUCTIONS
Name(s): Aspect Medical Systems, Inc. Date: December 10, 1999
$ paid to you directly by Cashiers Check No. _______________
$3,250,000.00 credited to deposit account No. 00000000 when Advances are
requested
$1,000,000 to be used for Hewlett Packard I./CS.
Amounts paid to others on your behalf:
$7,500 to Imperial Bank for Loan Fee - charged to acct. No.
370001031 at closing.
$ to Imperial Bank for Collateral audit (estimate)
$ to Bank counsel fees and expenses
$ to _______________
$ to _______________
$4,250,000 TOTAL (AMOUNT FINANCED)
Upon consummation of this transaction, this document will also serve as the
authorization for Imperial Bank to disburse the loan proceeds as stated above.
/s/ J. Xxxx Xxxxxxxxx
------------------------------------- -------------------------------------
Signature Signature
39
AGREEMENT TO PROVIDE INSURANCE
TO: IMPERIAL BANK Date: December 10, 1999
0000 X. Xx Xxxxxxx, Xxx. 000
Xxxxxxxxx, XX 00000 Borrower: Aspect Medical Systems, Inc.
In consideration of a loan in the amount of $6,750,000, secured by all
tangible personal property including inventory and equipment.
I/We agree to obtain adequate insurance coverage to remain in force
during the term of the loan.
I/We also agree to advise the below named agent to add Imperial Bank as
lender's loss payable on the new or existing insurance policy, and to furnish
Bank at above address with a copy of said policy/endorsements and any subsequent
renewal policies.
I/We understand that the policy must contain:
1. Fire and extended coverage in an amount sufficient to cover:
(a) The amount of the loan, OR
(b) All existing encumbrances, whichever is greater,
But not in excess of the replacement value of the improvements on the
real property.
2. Lender's "Loss Payable" Endorsement Form 438 BFU in favor of
Imperial Bank, or any other form acceptable to Bank.
INSURANCE INFORMATION
Insurance Co./Agent Telephone No.:
Agent's Address:
Signature of Obligor: /s/ Xxxxxx Xxxxxxx, Controller
Signature of Obligor:____________________________________
--------------------------------------------------------------------------------
-------------------------------------------------------------
FOR BANK USE ONLY
INSURANCE VERIFICATION: Date:_______________________________
Person Spoken to:___________________________________________
Policy Number:______________________________________________
Effective From:_____________ To:____________________________
Verified by: _______________________________________________
-------------------------------------------------------------
40
--------------------------------------------------------------------------------
IMPERIAL BANK
CALIFORNIA'S BUSINESS BANKS AUTOMATIC DEBIT AUTHORIZATION
MEMBER FDIC
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
To: IMPERIAL BANK
Re: LOAN # 00000000 (New)
You are hereby authorized and instructed to charge account No. 00000000
in the name of Aspect Medical Systems, Inc.
--------------------------------------------------------------------------------
for principal and interest payments due on above referenced loan as set forth
below and credit the loan referenced above.
____ Debit each interest payment as it becomes due according to the terms
of the note and any renewals or amendments thereof.
____ Debit each principal payment is at becomes due according to the terms
of the note and any renewals or amendments thereof.
This Authorization is to remain in full force and effect until revoked in
writing.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Borrower Signature Date
----------------------------------------------------- --------------------------
/s/ Xxxxxx Xxxxxxx 12-13-99
----------------------------------------------------- --------------------------
--------------------------------------------------------------------------------
41
[IMPERIAL BANK LOGO]
IMPERIAL BANK/BOSTON OFFICE
Phone: (000) 000-0000 CLIENT AUTHORIZATION
Fax (000) 000-0000
--------------------------------------------------------------------------------
GENERAL AUTHORIZATION
I hereby authorize Imperial Bank to use my company name, logo, and information
relating to our banking relationship in its marketing and advertising campaigns
which is intended for Imperial Bank's customers, prospects and shareholders.
Imperial Bank will forward any advertising or article including client for prior
review and approval.
/s/ J. Xxxx Xxxxxxxxx
-------------------------------------------------------------------
Signature
J. Xxxx Xxxxxxxxx Vice President & CFO
-------------------------------------------------------------------
Printed Name Title
Aspect Medical Systems, Inc.
-------------------------------------------------------------------
Company
0 Xxxxxx Xxxxx
-------------------------------------------------------------------
Mailing Address
Xxxxxx, XX 00000
-------------------------------------------------------------------
City, State, Zip Code
000-000-0000
-------------------------------------------------------------------
Phone Number
000-000-0000
-------------------------------------------------------------------
Fax Number
xxxxxxxxxx@xxxxxxxx.xxx
-------------------------------------------------------------------
E-Mail
December 10, 1999
-------------------------------------------------------------------
Date
42
YEAR 2000 QUESTIONNAIRE
FOR CUSTOMERS OF IMPERIAL BANK
Customer Name: Aspect Medical Systems, Inc. Date: December 10, 1999
Relationship Manager: Xxxxx Xxxx
Please complete the questionnaire based on responses from the customer. If
necessary, comment in the space provided or attach additional information to
this form. Any "NO" responses require appropriate follow-up with the customer on
a periodic basis. Please retain a copy of this form in the credit file.
--------------------------------------------------------------------------------
YES NO N/A
--- -------------------------------------------------------- ------ ----- ------
1. Has the company developed a comprehensive plan for
Year 2000 compliance? X
--- -------------------------------------------------------- ------ ----- ------
2. Is someone in the company specifically responsible for
managing the Year 2000 plan: Name: Phone: X
--- -------------------------------------------------------- ------ ----- ------
3. Has senior management and the Board of Directors
reviewed and approved the plan? X
--- -------------------------------------------------------- ------ ----- ------
4. Has the company completely inventoried its software,
hardware and telecommunications? X
--- -------------------------------------------------------- ------ ----- ------
5. Has the company identified all equipment with
date-sensitive operating controls such as elevators,
HVAC, security systems, manufacturing equipment, etc.? X
--- -------------------------------------------------------- ------ ----- ------
6. Has the company verified that vendor-supplied systems
will be Year 2000 compliant? X
--- -------------------------------------------------------- ------ ----- ------
7. Has the company verified Year 2000 compliance of
outside data-processing companies and established a
testing time frame? X
--- -------------------------------------------------------- ------ ----- ------
8. Has the company budgeted sufficient resources (both
financial and personnel) to accomplish its Year 2000
mission? X
--- -------------------------------------------------------- ------ ----- ------
9. Has the plan been reviewed by the company's external
auditors? x
--- -------------------------------------------------------- ------ ----- ------
10. Does the company's plan call for remediation and
preliminary testing of critical systems to be largely
completed by 12/31/99? X
--- -------------------------------------------------------- ------ ----- ------
11. Will the company have contingency plans for mission
critical systems in place by 12/31/99? X
--- -------------------------------------------------------- ------ ----- ------
12. Does the company have any ongoing or long-term
contracts that could subject it to liability if it
failed to perform as a result of Year 2000 compliance
failure? X
--- -------------------------------------------------------- ------ ----- ------
13. Has the company discussed potential legal
ramifications or expenses with its attorney? X
--- -------------------------------------------------------- ------ ----- ------
14. Has the company discussed potential losses from Year
2000 problems with insurers to determine coverage of
any losses? X
--------------------------------------------------------------------------------
Comments:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
43
DEBTOR: ASPECT MEDICAL SYSTEMS, INC.
SECURED PARTY: IMPERIAL BANK
EXHIBIT A
All personal property of Borrower (herein referred to as "Borrower" or
"Debtor") whether presently existing or hereafter created, written, produced or
acquired, including, but not limited to:
(i) all accounts receivable, accounts, chattel paper, contract
rights (including, without limitation, royalty agreements, license agreements
and distribution agreements), documents, instruments, money, deposit accounts
and general intangibles, including, without limitation, returns, repossessions,
books and records relating thereto, and equipment containing said books and
records, all investment property, including securities and securities
entitlements;
(ii) all software, computer source codes and other computer
programs (collectively, the "Software Products"), and all common law and
statutory copyrights and copyright registrations, applications for registration,
now existing or hereafter arising, United States of America and foreign,
obtained or to be obtained on or in connection with the Software Products, or
any parts thereof or any underlying or component elements of the Software
Products together with the right to copyright and all rights to renew or extend
such copyrights and the right (but not the obligation) of Bank (herein referred
to as "Bank" or "Secured Party") to xxx in its own name and/or the name of the
Debtor for past, present and future infringements of copyright;
(iii) all goods, including, without limitation, equipment and
inventory (including, without limitation, all export inventory);
(iv) all guarantees and other security therefor;
(v) all trademarks, service marks, trade names and service
names and the goodwill associated therewith;
(vi) (a) all patents and patent applications filed in the
United States Patent and Trademark Office or any similar office of any foreign
jurisdiction, and interests under patent license agreements, including, without
limitation, the inventions and improvements described and claimed therein, (b)
licenses pertaining to any patent whether Debtor is licensor or licensee, (c)
all income, royalties, damages, payments, accounts and accounts receivable now
or hereafter due and/or payable under and with respect thereto, including,
without limitation, damages and payments for past, present or future
infringements thereof, (d) the right (but not the obligation) to xxx for past,
present and future infringements thereof, (e) all rights corresponding thereto
throughout the world in all jurisdictions in which such patents have been issued
or applied for, and (f) the reissues, divisions, continuations, renewals,
extensions and continuations-in-part with any of the foregoing (all of the
foregoing patents and applications and interests under patent license
agreements, together with the items described in clauses (a) through (f) in this
paragraph are sometimes herein individually and collectively referred to as the
"Patents"); and
(vii) all products and proceeds, including, without
limitation, insurance proceeds, of any of the foregoing.
Notwithstanding the foregoing, "Collateral" shall not include (i)
Contracts and rights thereunder transferred to Americorp Financial, Inc., (ii)
Borrower's equipment and other related general intangibles to the extent that
the same are subject to a lease or financing arrangement permitted under the
Loan and Security Agreement between Bank and Borrower dated as of December 10,
1999, which financing arrangement includes a valid and enforceable prohibition
on further encumbrances ("Excluded Equipment") and (iii) additions, attachments,
accessories and accessions to, substitutions, replacements and exchanges for,
and proceeds of the Excluded Equipment.
44
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This Intellectual Property Security Agreement is entered into as of
December 10, 1999 by and between IMPERIAL BANK ("Bank") and ASPECT MEDICAL
SYSTEMS, INC., a Delaware corporation ("Grantor").
RECITALS
A. Bank has agreed to make certain advances of money and to extend
certain financial accommodation to Grantor (the "Loans") in the amounts and
manner set forth in that certain Loan and Security Agreement by and between Bank
and Grantor dated of even date herewith (as the same may be amended, modified or
supplemented from time to time, the "Loan Agreement"; capitalized terms used
herein are used as defined in the Loan Agreement).
B. Bank is willing to make the Loans to Grantor, but only upon the
condition, among others, that Grantor shall grant to Bank a security interest in
certain Copyrights, Trademarks and Patents to secure the obligations of Grantor
under the Loan Agreement.
C. Pursuant to the terms of the Loan Agreement, Grantor has granted to
Bank a security interest in all of Grantor's right, title and interest, whether
presently existing or hereafter acquired, in, to and under all of the
Collateral.
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, and intending to be legally bound, as collateral
security for the prompt and complete payment when due of its obligations under
the Loan Agreement and all other agreements now existing or hereafter arising
between Grantor and Bank, Grantor hereby represents, warrants, covenants and
agrees as follows:
AGREEMENT
To secure its obligations under the Loan Agreement and under any other
agreement now existing or hereafter arising between Bank and Grantor, Grantor
grants and pledges to Bank a security interest in all of Grantor's right, title
and interest in, to and under its Intellectual Property Collateral (including
without limitation those Copyrights, Patents and Trademarks listed on Schedules
A, B and C hereto), and including without limitation all proceeds thereof (such
as, by way of example but not by way of limitation, license royalties and
proceeds of infringement suits), the right to xxx for past, present and future
infringements, all rights corresponding thereto throughout the world and all
re-issues, divisions continuations, renewals, extensions and
continuations-in-part thereof.
This security interest is granted in conjunction with the security
interest granted to Bank under the Loan Agreement. The rights and remedies of
Bank with respect to the security interest granted hereby are in addition to
those set forth in the Loan Agreement and the other Loan Documents, and those
which are now or hereafter available to Bank as a matter of law or equity. Each
right, power and remedy of Bank provided for herein or in the Loan Agreement or
any of the Loan Documents, or now or hereafter existing at law or in equity
shall be cumulative and concurrent and shall be in addition to every right,
power or remedy provided for herein and the exercise by Bank of any one or more
of the rights, powers or remedies provided for in this Intellectual Property
Security Agreement, the Loan Agreement or any of the other Loan Documents, or
now or hereafter existing at law or in equity, shall not preclude the
simultaneous or later exercise by any person, including Bank, of any or all
other rights, powers or remedies.
Grantor represents and warrants that Exhibits A, B, and C attached
hereto set forth any and all intellectual property rights in connection to which
Grantor has registered or filed an application with either the United States
Patent and Trademark Office or the United States Copyright Office, as
applicable.
1
45
IN WITNESS WHEREOF, the parties have caused this Intellectual Property
Security Agreement to be duly executed by its officers thereunto duly authorized
as of the first date written above.
GRANTOR:
Address of Grantor: ASPECT MEDICAL SYSTEMS, INC.
0 Xxxxxx Xxxxx
Xxxxxx, XX 00000-0000 By: /s/ J. Xxxx Xxxxxxxxx
___________________________________
Title: VP & CFO
________________________________
Attn: Xxxx Xxxxxxxxx
BANK:
IMPERIAL BANK
Address of Bank:
000 Xxxxxxx Xxxxxxx By: /s/ Xxxxx Xxxx
Xxx Xxxx, XX 00000-0000 ___________________________________
Title: Vice President
________________________________
Attn: Corporate Banking Center
2
46
EXHIBIT A
Copyrights
Registration Registration
Description Number Date
----------- ------ ----
47
EXHIBIT B
Patents
Registration/ Registration/
Application Application
Description Number Date
----------- ------ ----
Electrode connector system 5,813,404 09/29/98
Method and system for the extraction of cardiac 5,792,069 08/11/98
artifacts from eeg signals
Cerebral biopotential analysis system and method 5,458,117 10/17/95
Monitor and method for acquiring and processing 5,381,804 01/17/95
electrical signals relating to bodily functions
Monitor and method for acquiring and processing 5,368,041 11/29/94
electrical signals relating to bodily functions
Cerebral biopotential analysis system and method 5,320,109 06/14/94
Disposable, pre-gelled, self-prepping electrode 5,305,746 04/26/94
08/320,191 10/07/94
08/730,638 10/11/96
09/016,104 01/30/98
Cerebral biopotential analysis system and method 4,907,597 03/13/90
Cardiac biopotential analysis system and method 4,924,875 05/15/90
Cerebral biopotential analysis system and method 5,010,891 04/30/91
Cardiac biopotential analysis system and method 5,020,540 06/04/91
Electrode for measuring Electrophysiological 09/100,290 06/19/98
signals using liquid electrolytic gel with
a high salt concentration
System and method for facilitating clinical 09/135,931 08/18/98
decision making
Electrode connector system 09/162,025 09/28/98
A smart electrophysiological sensor system with 09/328/945 06/09/99
automatic authentication and validation
48
ASPECT MEDICAL SYSTEMS, INC. PATENTS
PATENT ISSUE COUNTRY TITLE
NUMBER DATE
653318 03/13/90 AUSTRALIA CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
638708 03/13/90 AUSTRALIA CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
678176 09/23/93 AUSTRALIA DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE
0468999 03/13/90 AUSTRIA CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0489010 03/13/90 AUSTRIA CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0610365 10/23/92 AUSTRIA CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0898234 09/24/98 AUSTRIA METHOD AND SYSTEM FOR GENERATING A DIAGNOSTIC INDEX
0468999 03/13/90 BELGIUM CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0489010 3/13/90 BELGIUM CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0610365 10/23/92 BELGIUM CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0898234 09/24/98 BELGIUM METHOD AND SYSTEM FOR GENERATING A DIAGNOSTIC INDEX
2064791 03/13/90 CANADA CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0468999 03/13/90 FRANCE CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0489010 03/13/90 FRANCE CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0610365 10/23/92 FRANCE CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0898234 09/24/98 FRANCE METHOD AND SYSTEM FOR GENERATING A DIAGNOSTIC INDEX
DE 69031118 03/13/90 GERMANY CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
(0468999)
49
PATENT ISSUE COUNTRY TITLE
NUMBER DATE
DE 69032771 03/13/90 GERMANY CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
(0489010)
DE_________ 10/23/92 GERMANY CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
(0610365)
0898234 09/24/98 GERMANY METHOD AND SYSTEM FOR GENERATING A DIAGNOSTIC INDEX
0468999 03/13/90 GREAT BRITAIN CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0489010 03/13/90 GREAT BRITAIN CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0610365 10/23/92 GREAT BRITAIN CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0898234 09/24/98 GREAT BRITAIN METHOD AND SYSTEM FOR GENERATING A DIAGNOSTIC INDEX
0468999 03/13/90 SWITZERLAND CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0489010 3/13/90 SWITZERLAND CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0610365 10/23/92 SWITZERLAND CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
0898234 09/24/98 SWITZERLAND METHOD AND SYSTEM FOR GENERATING A DIAGNOSTIC INDEX
4907597+ 03/13/90 UNITED STATES CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
4924875+ 05/15/90 UNITED STATES CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
5010891+ 04/30/91 UNITED STATES CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
5020540+ 06/04/91 UNITED STATES CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
5320109 06/14/94 UNITED STATES CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
5381804 01/17/95 UNITED STATES MONITOR AND METHOD FOR ACQUIRING AND PROCESSING
ELECTRICAL SIGNALS RELATING TO BODILY FUNCTIONS
50
PATENT ISSUE COUNTRY TITLE
NUMBER DATE
5305746 04/26/94 UNITED STATES DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE
5368041* 11/29/94 UNITED STATES MONITOR AND METHOD FOR ACQUIRING AND PROCESSING
ELECTRICAL SIGNALS RELATING TO BODILY FUNCTIONS
5458117 10/17/95 UNITED STATES CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
5792069 08/11/98 UNITED STATES METHOD AND SYSTEM FOR THE EXTRACTION OF CARDIAC
ARTIFACTS FROM EEG SIGNALS
5813404 09/29/98 UNITED STATES ELECTRODE CONNECTOR SYSTEM
-------------------------------------
+ Xxxxx Xxxxx has alleged that he should be listed as an inventor on one or
more of these patents. The Company is currently investigating these
allegations.
* Licensed to Aspect Medical Systems, Inc. from Siemens Medical Systems, Inc.
51
ASPECT MEDICAL SYSTEMS, INC. PATENT APPLICATIONS
SERIAL FILING COUNTRY TITLE
NUMBER DATE
75171/96 10/18/96 AUSTRALIA ELECTRODE CONNECTOR SYSTEM
49082/97 10/10/97 AUSTRALIA ELECTRODE ARRAY SYSTEM FOR MEASURING
ELECTROPHYSIOLOGICAL SIGNALS
56150/98 12/19/97 AUSTRALIA SYSTEM FOR THE EXTRACTION OF CARDIAC ARTIFACTS FROM EEG
SIGNALS
________ 01/25/99 AUSTRALIA SYSTEM AND METHOD FOR ENHANCING AND SEPARATING
BIOPOTENTIAL SIGNALS
2123807 09/23/93 CANADA DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE
2122032 10/23/92 CANADA CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
2146979 10/13/93 CANADA MONITOR AND METHOD FOR ACQUIRING AND PROCESSING
ELECTRICAL SIGNALS RELATING TO BODILY FUNCTIONS
2051683 03/13/90 CANADA CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
2191594 06/08/95 CANADA CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
2235317 10/18/96 CANADA ELECTRODE CONNECTOR SYSTEM
2268483 10/10/97 CANADA ELECTRODE ARRAY SYSTEM FOR MEASURING
ELECTROPHYSIOLOGICAL SIGNALS
2275901 12/19/97 CANADA SYSTEM FOR THE EXTRACTION OF CARDIAC ARTIFACTS FROM EEG
SIGNALS
2285354 01/25/99 CANADA SYSTEM AND METHOD FOR ENHANCING AND SEPARATING
BIOPOTENTIAL SIGNALS
92922952.4 10/23/92 EPO CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
93921721.2 09/23/93 EPO DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE
93923860.6 10/13/93 EPO MONITOR AND METHOD FOR ACQUIRING AND PROCESSING
ELECTRICAL SIGNALS RELATING TO BODILY FUNCTIONS
52
SERIAL FILING COUNTRY TITLE
NUMBER DATE
95922265.4 06/08/95 EPO CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
96110142.5 10/13/93 EPO MONITOR AND METHOD FOR ACQUIRING AND PROCESSING
ELECTRICAL SIGNALS RELATING TO BODILY FUNCTIONS
96937692.0 10/18/96 EPO ELECTRODE CONNECTOR SYSTEM
97911789.2 10/10/97 EPO ELECTRODE ARRAY SYSTEM FOR MEASURING
ELECTROPHYSIOLOGICAL SIGNALS
97952570.6 12/19/97 EPO SYSTEM FOR THE EXTRACTION OF CARDIAC ARTIFACTS FROM EEG
SIGNALS
99903375.6 01/25/99 EPO SYSTEM AND METHOD FOR ENHANCING AND SEPARATING
BIOPOTENTIAL SIGNALS
06-509165 09/23/93 JAPAN DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE
8-501313 06/08/95 JAPAN CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
02-504848 03/13/90 JAPAN CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
05-507930 10/23/92 JAPAN CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
02-505692 03/13/90 JAPAN CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
09-515970 10/18/96 JAPAN ELECTRODE CONNECTOR SYSTEM
10-518626 10/10/97 JAPAN ELECTRODE ARRAY SYSTEM FOR MEASURING
ELECTROPHYSIOLOGICAL SIGNALS
10-529004 12/19/97 JAPAN SYSTEM FOR THE EXTRACTION OF CARDIAC ARTIFACTS FROM EEG
SIGNALS
_________ 01/25/99 JAPAN SYSTEM AND METHOD FOR ENHANCING AND SEPARATING
BIOPOTENTIAL SIGNALS
US92/09074 10/23/92 PCT CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
US90/01378 03/13/90 PCT CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
US90/01385 03/13/90 PCT CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
53
SERIAL FILING COUNTRY TITLE
NUMBER DATE
US93/09029 09/23/93 PCT DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE
US93/09763 10/13/93 PCT MONITOR AND METHOD FOR ACQUIRING AND PROCESSING
ELECTRICAL SIGNALS RELATING TO BODILY FUNCTIONS
US95/07310 06/08/95 PCT CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD
US96/16596 10/18/96 PCT ELECTRODE CONNECTOR SYSTEM
US97/18833 10/10/97 PCT ELECTRODE ARRAY SYSTEM FOR MEASURING
ELECTROPHYSIOLOGICAL SIGNALS
US97/23624 12/19/97 PCT SYSTEM FOR THE EXTRACTION OF CARDIAC ARTIFACTS FROM EEG
SIGNALS
US99/01544 01/25/99 PCT SYSTEM AND METHOD FOR ENHANCING AND SEPARATING
BIOPOTENTIAL SIGNALS
US99/13849 06/18/99 PCT ELECTRODE FOR MEASURING ELECTRO-PHYSIOLOGICAL SIGNALS
USING LIQUID ELECTROLYTIC GEL WITH A HIGH SALT
CONCENTRATION
US99/17688 08/04/99 PCT SYSTEM AND METHOD FOR FACILITATING CLINICAL DECISION
MAKING
08/730638 10/11/96 UNITED STATES ELECTRODE ARRAY SYSTEM FOR MEASURING
ELECTROPHYSIOLOGICAL SIGNALS
09/100290 06/19/98 UNITED STATES ELECTRODE FOR MEASURING ELECTROPHYSIOLOGICAL SIGNALS
USING LIQUID ELECTROLYTIC GEL WITH A HIGH SALT
CONCENTRATION
09/016104 01/30/98 UNITED STATES SYSTEM AND METHOD FOR ENHANCING AND SEPARATING
BIOPOTENTIAL SIGNALS
09/135931 08/18/98 UNITED STATES SYSTEM AND METHOD FOR FACILITATING CLINICAL DECISION
MAKING
09/162025 09/28/98 UNITED STATES ELECTRODE CONNECTOR SYSTEM
09/328945 06/09/99 UNITED STATES A SMART ELECTROPHYSIOLOGICAL SENSOR SYSTEM WITH
AUTOMATIC AUTHENTICATION AND VALIDATION
54
EXHIBIT C
Trademarks
Registration/Application Registration/Application
Description Number Date
----------- ------ ----
BIS 2,229,390 03/02/99
BIS 2,226,559 02/23/99
BIS 2,226,557 02/23/99
BIS 2,229,392 03/02/99
Bispectral Index 2,226,558 02/23/99
Bispectral Index 2,229,389 03/02/99
Aspect 1,932,423 11/07/95
Zipprep 2,032,419 01/21/97
Bis Plus (and Design) 75/712,953 05/24/99
55
TRADEMARKS OWNED BY ASPECT MEDICAL SYSTEMS, INC.
AS OF NOVEMBER 1999
XXXX SERIAL NO. FILING DATE COUNTRY
---- ---------- ----------- -------
BIS 841586 04/08/97 Canada
BIS 970077905 07/28/97 China
BIS 754929 04/10/97 India
BIS 754928 04/10/97 India
BIS 9-104830 04/08/97 Japan
BIS 291654 04/08/97 Mexico
BIS and design 841588 04/08/97 Canada
BIS and design 970077907 07/28/97 China
BIS and design 504332 04/08/97 European Community
BIS and design 754931 04/10/97 India
BIS and design 754930 04/10/97 India
BIS and design 9-104831 04/08/97 Japan
BIS PLUS logo 10/22/99 European Community
BIS PLUS logo 11/02/99 Japan
BIS PLUS logo 75/712953 05/24/99 United States
BISPECTRAL INDEX 791834 04/21/99 Australia
BISPECTRAL INDEX 841587 04/08/97 Canada
BISPECTRAL INDEX 754932 04/10/97 India
BISPECTRAL INDEX 754933 04/10/97 India
ZIPPREP 633985 07/15/94 India
56
TRADEMARKS OWNED BY ASPECT MEDICAL SYSTEMS, INC.
AS OF NOVEMBER 1999
XXXX XXXXX. NO. REGIS. DATE COUNTRY
---- ---------- ----------- -------
ASPECT * 1932423 11/07/95 Xxxxxx Xxxxxx
XXX 000000 04/08/97 Australia
BIS 1237474 01/07/99 China
BIS 504340 10/29/98 European Community
BIS 559963 09/30/97 Mexico
BIS 428/51 03/08/98 Saudi Arabia
BIS 428/52 03/08/98 Saudi Arabia
BIS 2229390 03/02/99 United States
BIS 2226559 02/23/99 United States
BIS and design 731546 10/08/96 Australia
BIS and design 1237475 01/07/99 China
BIS and design 556233 08/27/97 Mexico
BIS and design 558374 09/22/97 Mexico
BIS and design 428/53 04/09/97 Saudi Arabia
BIS and design 428/54 04/09/97 Saudi Arabia
BIS and design 2229392 03/02/99 United States
BIS and design 2226557 02/23/99 United States
BISPECTRAL INDEX 1229054 12/7/98 China
BISPECTRAL INDEX 1219345 10/28/98 China
BISPECTRAL INDEX 504233 04/08/97 European Community
--------
* Trademark owned by Aspect Electronics, Inc. and licensed to Aspect Medical
Systems.
57
TRADEMARKS OWNED BY ASPECT MEDICAL SYSTEMS, INC.
as of November 1999
XXXX XXXXX. NO. REGIS. DATE COUNTRY
---- ---------- ----------- -------
BISPECTRAL INDEX 4181898 04/28/98 Japan
BISPECTRAL INDEX 599964 09/30/97 Mexico
BISPECTRAL INDEX 599965 09/30/97 Mexico
BISPECTRAL INDEX 428/50 03/08/98 Saudi Arabia
BISPECTRAL INDEX 2226558 02/23/99 United States
BISPECTRAL INDEX 2229389 03/02/99 United States
ZIPPREP A633957 07/04/94 Australia
ZIPPREP 555286 06/22/94 Benelux
ZIPPREP 818036346 09/10/96 Brazil
ZIPPREP 505106 12/4/98 Canada
ZIPPREP 872161 09/21/96 China
ZIPPREP 297853 12/3/98 European Community
ZIPPREP 94525823 06/22/94 France
ZIPPREP 2095913 05/09/95 Germany
ZIPPREP 3310703 05/23/97 Japan
ZIPPREP 501063 06/29/94 Mexico
ZIPPREP 332/43 02/20/95 Saudi Arabia
ZIPPREP 1912152 07/05/95 Spain
ZIPPREP 265621 03/31/95 Sweden
ZIPPREP 1575989 06/21/94 United Kingdom
58
TRADEMARKS OWNED BY ASPECT MEDICAL SYSTEMS, INC.
as of November 1999
XXXX XXXXX. NO. REGIS. DATE COUNTRY
---- ---------- ----------- -------
ZIPPREP 2032419 01/21/97 United States
59
Copyrights owned by Aspect Medical Systems, Inc.
as of November 1999
TITLE REGISTRATION NUMBER REGISTRATION DATE
----- ------------------- -----------------
BIS MONTAGE submitted on
05/36/99
BIS RANGE GUIDELINES TX 0-000-000 12/04/98
BIS RANGE GUIDELINES AND USING BIS booklet submitted on
09/08/99
60
TRADEMARKS OWNED BY ASPECT MEDICAL SYSTEMS, INC.
AS OF NOVEMBER 1999
XXXX SERIAL FILING DATE COUNTRY GOODS STATUS
---- NO. ----------- ------- ----- ------
-------
BIS 841586 04/08/97 Canada Corresponds to United Response to Office Action
States registrations due 12/29/99
2229390 and 2226559
BIS 970077905 07/28/97 China Corresponds to United Pending
States registration
2229390
BIS 754929 04/10/97 India Corresponds to United First official report from
States registration Indian Trademark Office
2226559 expected 04/2002
BIS 754928 04/10/97 India Corresponds to United First official report from
States registration Indian Trademark Office
2229390 expected 04/2002
BIS 9-104830 04/08/97 Japan Corresponds to United Pending
States registrations
2229390 and 2226559
BIS 291654 04/08/97 Mexico Corresponds to United Pending
States registration
2229390
BIS and design 841588 04/08/97 Canada Corresponds to United Response to Office Action
States registrations due 12/29/99
2226557 and 2229392
BIS and design 970077907 07/28/97 China Corresponds to United Pending
States registration
2226557
BIS and design 504332 04/08/97 European Corresponds to United Approved for Registration
Community States registrations
2226557 and 2229392
BIS and design 754931 04/10/97 India Corresponds to United First official report from
States registration Indian Trademark Office
2226557 expected 04/2002
61
TRADEMARKS OWNED BY ASPECT MEDICAL SYSTEMS, INC.
as of November 1999
XXXX SERIAL FILING DATE COUNTRY GOODS STATUS
---- NO. ----------- ------- ----- ------
------
BIS and design 754930 04/10/97 India Corresponds to United First official report from
States registration Indian Trademark Office
2229392 expected 04/2002
BIS and design 9-104831 04/08/97 Japan Corresponds to United Pending
States registrations
2226557 and 2229392
BIS PLUS logo 10/22/99 European Corresponds to United Pending
Community States application
75/712953
BIS PLUS logo 11/02/99 Japan Corresponds to United Pending
States application
75/712953
BIS PLUS logo 75/712953 05/24/99 United States Print material in the Newly filed application
field of anesthesia
technology
BISPECTRAL INDEX 791834 04/21/99 Australia computer programs for Pending
use in monitoring and
processing
electroencephalograph
signals
BISPECTRAL INDEX 841587 04/08/97 Canada Corresponds to United Response to Office Action
States registrations due 01/10/2000
2226558 and 2229389
BISPECTRAL INDEX 754932 04/10/97 India Corresponds to United First official report from
States registration Indian Trademark Office
2226558 expected 04/2002
BISPECTRAL INDEX 754933 04/10/97 India Corresponds to United First official report from
States registration Indian Trademark Office
2229389 expected 04/2002
ZIPPREP 633985 07/15/94 India Corresponds to United First official report from
States registration Indian Trademark Office
2032419 expected 01/2000
62
TRADEMARKS OWNED BY ASPECT MEDICAL SYSTEMS, INC.
AS OF NOVEMBER 1999
XXXX XXXXX. REGIS. DATE COUNTRY GOODS STATUS
---- NO. ----------- ------- ----- ------
------
ASPECT * 1932423 11/07/95 United States Electroencephalograph Section 8
analysis instrument; Affidavit due
namely a cerebral 11/07/2001
phenomena detector and
diagnostic index
generator used for a
quantifying cerebral
phenomena; electrodes for
electroencephalograph
BIS 731547 04/08/97 Australia Corresponds to United Renewal due
States registrations 04/08/2007
2229390 and 2226559
BIS 1237474 01/07/99 China Corresponds to United Renewal due
States registration 01/06/2009
2226559
BIS 504340 10/29/98 European Community Corresponds to United Renewal due
States registrations 04/08/2007
2229390 and 2226559
BIS 559963 09/30/97 Mexico Corresponds to United Renewal due
States registration 09/30/2007
2226559
BIS 428/51 03/08/98 Saudi Arabia Corresponds to United Renewal due
States registration 11/18/2007
2226559
BIS 428/52 03/08/98 Saudi Arabia Corresponds to United Renewal due
States registration 11/18/2007
2229390
BIS 2229390 03/02/99 United States Computer programs for use Section 8
in monitoring and Affidavit due
processing 03/02/2005
electroencephalograph
signals
--------
* Trademark owned by Aspect Electronics, Inc. and licensed to Aspect Medical
Systems.
63
TRADEMARKS OWNED BY ASPECT MEDICAL SYSTEMS, INC.
as of November 1999
XXXX XXXXX. REGIS. DATE COUNTRY GOODS STATUS
---- NO. ----------- ------- ----- ------
------
BIS 2226559 02/23/99 United States Electroencephalograph Section 8
monitors and sensors Affidavit due
02/23/2005
BIS and design 731546 10/08/96 Australia Corresponds to United Renewal due
States registrations 04/08/2007
2226557 and 2229392
BIS and design 1237475 01/07/99 China Corresponds to United Renewal due
States registration 01/06/2009
2229392
BIS and design 556233 08/27/97 Mexico Corresponds to United Renewal due
States registration 08/27/2007
2226557
BIS and design 558374 09/22/97 Mexico Corresponds to United Renewal due
States registration 09/22/2007
2229392
BIS and design 428/53 04/09/97 Saudi Arabia Corresponds to United Renewal due
States registration 11/18/2008
2226557
BIS and design 428/54 04/09/97 Saudi Arabia Corresponds to United Renewal due
States registration 11/18/2007
2226557
BIS and design 2229392 03/02/99 United States Electroencephalograph Section 8
monitors and sensors Affidavit due
03/02/2005
BIS and design 2226557 02/23/99 United States Computer programs for use Section 8
in monitoring and Affidavit due
processing 02/23/2005
electroencephalograph
signals
64
XXXX SERIAL FILING DATE COUNTRY GOODS STATUS
---- NO. ----------- ------- ----- ------
------
BISPECTRAL INDEX 1229054 12/7/98 China Corresponds to United Renewal due
States registration 12/06/2008
2226558
BISPECTRAL INDEX 1219345 10/28/98 China Corresponds to United Renewal due
States registration 10/27/2008
2229389
BISPECTRAL INDEX 504233 04/08/97 European Community Corresponds to United Renewal due
States registrations 04/08/2007
2226558 and 2229389
BISPECTRAL INDEX 4181898 04/28/98 Japan Corresponds to United Renewal due
States registrations 08/28/2008
2226558 and 2229389
BISPECTRAL INDEX 599964 09/30/97 Mexico Corresponds to United Renewal due
States registration 09/30/2007
2226558
BISPECTRAL INDEX 599965 09/30/97 Mexico Corresponds to United Renewal due
States registration 09/30/2007
2229389
BISPECTRAL INDEX 428/50 03/08/98 Saudi Arabia Corresponds to United Renewal due
States registration 05/18/2007
2226558
BISPECTRAL INDEX 2226558 02/23/99 United States Computer programs for use Section 8
in monitoring and Affidavit due
processing 02/23/2005
electroencephalograph
signals
BISPECTRAL INDEX 2229389 03/02/99 United States Electroencephalograph Section 8
monitors and sensors Affidavit due
03/02/2005
Page 5 of 9
65
TRADEMARKS OWNED BY ASPECT MEDICAL SYSTEMS, INC.
as of November 1999
XXXX XXXXX. REGIS. DATE COUNTRY GOODS STATUS
---- NO. ----------- ------- ----- ------
------
ZIPPREP A633957 07/04/94 Australia EEG and ECG electrodes Renewal due
and sensors 07/04/2001
ZIPPREP 555286 06/22/94 Benelux EEG and ECG electrodes Renewal due
and sensors 06/22/2004
ZIPPREP 818036346 09/10/96 Brazil EEG and ECG electrodes Renewal due
and sensors and all other 09/10/2006
goods in Class 10
ZIPPREP 505106 12/4/98 Canada EEG electrodes Renewal due
12/04/2013
ZIPPREP 872161 09/21/96 China EEG and ECG electrodes Renewal due
and sensors 09/20/2006
ZIPPREP 297853 12/3/98 European Community Corresponds to United Renewal due
States registration 6/27/2006
2032419
ZIPPREP 94525823 06/22/94 France Corresponds to United Renewal due
States registration 06/21/2004
2032419
ZIPPREP 2095913 05/09/95 Germany Medical and veterinary Renewal due
instruments and 07/31/2004
apparatus; electro
encephalographs and
electro cardiographs as
well as electrodes and
sensors for use therewith
ZIPPREP 3310703 05/23/97 Japan EEG and ECG electrodes Renewal due
and sensors 05/23/2007
66
TRADEMARKS OWNED BY ASPECT MEDICAL SYSTEMS, INC.
as of November 1999
XXXX XXXXX. REGIS. DATE COUNTRY GOODS STATUS
---- NO. ----------- ------- ----- ------
------
ZIPPREP 501063 06/29/94 Mexico Corresponds to United Renewal due
States registration 06/29/2004
2032419
ZIPPREP 332/43 02/20/95 Saudi Arabia EEG and ECG electrodes Renewal due
and sensors 03/15/2004
ZIPPREP 1912152 07/05/95 Spain EEG and ECG electrodes Renewal due
and sensors 07/05/2004
ZIPPREP 265621 03/31/95 Sweden EEG and ECG electrodes Renewal due
and sensors 03/31/2005
ZIPPREP 1575989 06/21/94 United Kingdom Medical apparatus and Renewal due
instruments; 06/21/2001
electroencephalographs
and electrocardiographs;
electrodes and sensors
for
electroencephalographs
and electrocardiographs;
parts and fittings for
all the aforesaid goods
ZIPPREP 2032419 01/21/97 United States EEG electrodes Declaration of Use
due 01/21/2003
TITLE REGISTRATION NUMBER REGISTRATION DATE
----- ------------------- -----------------
BIS MONTAGE submitted on
05/36/99
67
Copyrights owned by Aspect Medical Systems, Inc.
as of November 0000
XXX XXXXX XXXXXXXXXX XX 0-000-000 12/04/98
BIS RANGE GUIDELINES AND USING BIS booklet submitted on
09/08/99
68
INACTIVE TRADEMARKS
BISPECTRAL INDEX 731545 04/08/97 Australia Corresponds to United States Abandoned
registrations 2226558 and 2229389
69
SECURITIES ACCOUNT CONTROL AGREEMENT
This Securities Account Control Agreement is made as of December 14,
1999, by and among Imperial Bank ("Creditor"), Aspect Medical Systems, Inc.
("Pledgor" or "Customer"), and State Street Bank and Trust Company, a
Massachusetts trust company ("Bank"). Capitalized terms used without other
definition herein shall have the respective meanings assigned to such terms in
Division 8 or 9, as applicable, of the Uniform Commercial Code as enacted and in
effect in the Commonwealth of Massachusetts on the date hereof (the "UCC").
PREAMBLE
1. Bank has established a securities account in the name of Pledgor
(the "Account"). Bank and Pledgor have entered into a Customer Agreement (as in
effect on the date hereof, the "Customer Agreement") with respect to the
Account, pursuant to which Bank has agreed to maintain the Account and to act as
Pledgor's agent to execute transactions therein at Pledgor's direction.
2. Pledgor has granted Creditor a security interest in the Account and
the investment property held therein pursuant to that certain Loan and Security
Agreement dated as of December 10, 1999 (as amended from time to time, the
"Pledge Agreement") to secure certain obligations of Pledgor to Creditor under
the Pledge Agreement.
3. The parties are entering into this Agreement to provide for control
by Creditor of the Account and the other Investment Property (as defined below)
and to perfect the security interest of Creditor therein.
In consideration of the foregoing premises, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Creditor, Pledgor and Bank hereby agree as follows:
TERMS
SECTION 1. ESTABLISHMENT OF THE ACCOUNT; REPRESENTATIONS OF BANK. The
Account has been established in the name of Pledgor as recited above. The
Account and all investment property, securities (certificated and
uncertificated), securities entitlements, and all other financial assets from
time to time held therein or credited thereto, including any free credit
balance, all of such property, together with any proceeds, profits and products
thereof, and dividends and distributions, and all books and records relating
thereto, collectively, are referred to as the "Investment Property".
Bank hereby represents and warrants to Creditor that except for the
respective claims and interests of Creditor, Pledgor and Bank in and to the
Account and the other Investment Property, Bank is not aware of any claim to or
interest in the Account or any other Investment Property. In particular, Bank
has not agreed to honor entitlement orders relating to the Investment Property
from any person or entity other than Pledgor and the Creditor.
SECTION 2. PRIORITY OF LIEN. Pledgor hereby grants to Creditor a
security interest in the Investment Property and agrees that the Account and
other Investment Property constitute Collateral under the Pledge Agreement. Bank
hereby acknowledges the security interest granted to Creditor by Pledgor. Except
for the Bank's lien of a Securities Intermediary under the UCC (as defined
therein), Bank hereby waives and releases all liens, encumbrances, claims and
rights of setoff it may have against the Investment Property and agrees that it
will not assert any such lien, encumbrance, claim or right against any
Investment Property or any interest therein. Pledgor, however shall pay on
demand all of Bank's costs and expenses relating to performance of its
obligations hereunder, including expenses relating to sale or transfer of any
Investment Property and legal costs in the event of a dispute with respect to
the Bank's obligations hereunder, and the Bank is authorized by Pledgor and
Creditor to set off against amounts in the Account for payment of such costs and
expenses prior to remitting amounts in the Account to Creditor. Bank will not
agree with any third party to comply with entitlement orders concerning the
Account or any other Investment Property originated by such third party without
the prior written consent of Creditor and Pledgor.
CONTROL. Bank will comply with entitlement orders originated by
Creditor concerning the Account without any further consent by Pledgor. In
furtherance and not in limitation of the foregoing, Bank shall execute
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transactions in the Investment Property at the direction of Pledgor, or its
authorized representatives and agents, including, without limitation, any
entitlement orders withdrawing financial assets from the Account or directing
delivery of Investment Property or other assets to the Pledgor, unless and until
Bank receives from Creditor a written Notice of Exclusive Control in
substantially the form of EXHIBIT A hereto (a "Notice of Exclusive Control"),
which Creditor shall only give if an Event of Default (as defined in the Pledge
Agreement) has occurred and is continuing under the Pledge Agreement. Upon
receipt of a Notice of Exclusive Control, Bank will immediately cease complying
with entitlement orders or other directions concerning the Investment Property
originated by Pledgor or its representatives or agents, and shall comply only
with the directions of Bank.
BANK. Notwithstanding anything to the contrary in this Agreement, the
Pledgor and Creditor acknowledge and agree that Bank shall not be held
responsible for any market decline in the value of the Investment Property or to
notify Pledgor or Creditor of any such decline in the market value of the
Investment Property or to take any action with regard to such Investment
Property except upon the specific written direction stated herein. Further, the
Bank shall have no liability for any Investment Property that is delivered out
of the Account and is not replaced, or if such Investment Property matures and
is not replaced.
SECTION 3. [Intentionally omitted.]
SECTION 4. STATEMENTS, CONFIRMATIONS AND NOTICES OF ADVERSE CLAIMS.
After receipt of a Notice of Exclusive Control, Bank will send copies of all
statements, confirmations and other correspondence concerning the Account and
the other Investment Property simultaneously to Pledgor and Creditor at their
respective addresses set forth in Paragraph 16 of this Agreement. If the Bank is
aware of any person asserting any lien, encumbrance or adverse claim against the
Account or in any financial asset carried therein, Bank will promptly notify
Creditor and Pledgor thereof.
SECTION 5. RESPONSIBILITY OF BANK. Except for losses, liabilities or
damages caused by Bank's gross negligence or willful misconduct, Bank shall have
no responsibility or liability to Creditor for executing transactions in the
Investment Property at the direction of Pledgor, or Pledgor's authorized
representatives, or complying with entitlement orders concerning the Investment
Property from Pledgor or its authorized representatives, which are received by
Bank before Bank receives a Notice of Exclusive Control. Bank shall have no
responsibility or liability to Pledgor for complying with a Notice of Exclusive
Control or complying with entitlement orders concerning the Investment Property
originated by Creditor. Bank may rely on a Notice of Exclusive Control
purportedly signed by Creditor and shall have no duty to investigate or make any
determination as to the validity, genuineness or propriety thereof, or the facts
giving rise thereto. This Agreement does not create or impose any obligation or
duty upon Bank other than those expressly set forth herein. Pledgor hereby
agrees to indemnify and hold Bank harmless from all liabilities, obligations,
losses or claims which may be asserted against Bank arising out of this
Agreement or performance of Bank's duties hereunder other than as the same may
relate to Bank's gross negligence or willful misconduct. This indemnification
shall survive termination of this Agreement and Creditor's interest in the
Account.
SECTION 6. TAX REPORTING. All items of income, gain, expense and loss
recognized in the Account shall be reported to the Internal Revenue Service and
all state and local taxing authorities under the name and taxpayer
identification number of Pledgor.
SECTION 7. TERMINATION. The rights and powers granted herein to
Creditor have been granted in order to perfect its security interest in the
Investment Property, are powers coupled with an interest and will neither be
affected by the dissolution or bankruptcy of Pledgor nor by the lapse of time.
Bank acknowledges that Pledgor shall have no right to terminate the Account
without the prior written consent of Creditor.
SECTION 8. WAIVER AND INDEMNIFICATION. Creditor shall not be liable to
Pledgor or Bank for any acts or omissions of Creditor in connection with this
Agreement and the Customer Agreement, including without limitation, the delivery
of entitlement orders and all other transactions regarding the Investment
Property, except for Creditor's gross negligence or willful misconduct. Other
than losses caused by the Creditor's gross negligence or willful misconduct,
Pledgor shall indemnify, defend and hold harmless Creditor, and its respective
agents, representatives, successors and assigns, from and against any and all
claims, judgments, damage, demands, losses, expenses, costs or liability arising
in connection with this Agreement and the Customer Agreement, and from any
breach or default by
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Pledgor in the performance of any obligation on the part of Pledgor to be
performed under the terms of this Agreement and the Customer Agreement. Pledgor
agrees to defend all such indemnification claims against Creditor on behalf of
Creditor, with counsel reasonably acceptable to Creditor. The obligations of
Pledgor under this Section 8 shall survive the expiration of this Agreement, or
sooner termination thereof.
SECTION 9. AMENDMENTS. No amendment, modification or termination of
this Agreement or waiver of any right hereunder shall be binding on any party
hereto unless it is in writing and is signed by the party to be charged.
SECTION 10. SEVERABILITY. If any term or provision set forth in this
Agreement shall be invalid or unenforceable, the remainder of this Agreement, or
the application of such terms or provisions to persons or circumstances, other
than those to which it is held invalid or unenforceable, shall be construed in
all respects as if such invalid or unenforceable term or provision were omitted.
SECTION 11. SUCCESSORS AND ASSIGNS. The terms of this Agreement shall
be binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns.
SECTION 12. RULES OF CONSTRUCTION. Words in the singular number include
the plural, and in the plural include the singular; words of the masculine
gender include the feminine and the neuter, and when the context requires words
of the neuter gender may refer to any gender and the word "or" is disjunctive
but not exclusive. The captions and section numbers appearing in this Agreement
are inserted only as a matter of convenience and do not define, limit or
describe the scope or intent of the provisions of this Agreement. References to
any statute or regulation shall mean the same as amended and in effect from time
to time, and shall include any successor statute or regulation governing the
same subject matter.
SECTION 13. NOTICES. Any notice, request or other communication
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been properly given when delivered in person, or when
sent by telecopy or other electronic means and electronic confirmation of error
free receipt is received or upon actual receipt or refusal of delivery when sent
by certified or registered United States mail, return receipt requested, postage
prepaid, addressed to the party at the addresses set forth next such parties'
name below. Any party may change its address for notices in the manner set forth
above.
Creditor: Imperial Bank
000 Xxxxxxxx Xxxxxx, Xxx. 0000
Xxxxxx, XX 00000
Attn: Xxxxx Xxxx
FAX: 000-000-0000
Pledgor: Aspect Medical Systems, Inc.
0 Xxxxxx Xxxxx
Xxxxxx, XX 00000-0000
FAX: 000-000-0000
Bank: State Street Bank and Trust Company
Xxx Xxxxxxxxxx Building
000 Xxxxxx Xxxxxx
X. Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
FAX: 000-000-0000
SECTION 14. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which shall constitute but one and the same instrument.
To make proof of this Agreement, it shall only be necessary to produce one such
counterpart (or a copy thereof if no such counterpart is available).
SECTION 15. CHOICE OF LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of The Commonwealth of Massachusetts,
without giving effect to the conflict of laws provisions thereof. The
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72
parties hereby consent and submit to the jurisdiction of the courts of
Massachusetts and the federal courts sitting in Massachusetts in connection with
any proceedings or actions relating to the performance of the duties and
obligations as set forth herein.
IN WITNESS WHEREOF, each of the undersigned has duly executed and
delivered this Agreement to take effect as of the date first herein above
written
"CREDITOR"
IMPERIAL BANK
By: __________________________________
Title: _______________________________
"PLEDGOR"
ASPECT MEDICAL SYSTEMS, INC.
By: /s/ J. Xxxx Xxxxxxxxx
----------------------------------
Title: VP & CFO
-------------------------------
"BANK"
STATE STREET BANK AND TRUST COMPANY
By: __________________________________
Title: _______________________________
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EXHIBIT A
NOTICE OF EXCLUSIVE CONTROL
State Street Bank and Trust Company
Xxx Xxxxxxxxxx Building
000 Xxxxxx Xxxxxx
X. Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Re: Aspect Medical Systems, Inc.
Account No. ______________
Ladies and Gentlemen:
Reference is made to the Securities Account Control Agreement dated as
of _______________________ (the "Control Agreement") by and among you, the
undersigned, and Aspect Medical Systems, Inc. Terms defined in the Control
Agreement and used without other definition herein shall have the respective
meanings herein assigned to such terms in the Control Agreement.
Pursuant to Section 4 of the Control Agreement, you are hereby
directed, from and after the date hereof, to execute only entitlement orders
originated by Creditor, and not to accept for execution any further entitlement
orders originated by Pledgor.
Very truly yours,
IMPERIAL BANK
By: __________________________________
Title: _______________________________
