LOAN AND SECURITY AGREEMENT
[EXECUTION COPY]
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
dated March 2, 2001
by and among
LUXTEC CORPORATION,
FIBER IMAGING TECHNOLOGIES, INC.,
CATHTEC INCORPORATED, CARDIODYNE, INC.
and
ARK CLO 2000-1, LIMITED
Exhibit 1.01(A) Borrowing Base Certificate
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Exhibit 1.01(B) Guarantor
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Exhibit 1.01(C) Guaranty
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Exhibit 1.01(D) Landlord's Consent and Waiver
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Exhibit 1.01(E) Lease Assignment
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Exhibit 1.01(F)(1) Assignment of Patents
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Exhibit 1.01(F)(2) Assignment of Trademarks
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Exhibit 1.01(G) Existing Liens
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Exhibit 2.04(A) Amended and Restated
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Equipment Note
Exhibit 2.04(B) Amended and Restated Revolving Credit Note
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Exhibit 2.04 (C) Amended and Restated Term Note
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Exhibit 3.01(M) Opinion of Xxxxxxx Xxxx LLP
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Exhibit 3.01(O) Warrant
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Exhibit 3.01(P) Registration Rights Agreement
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Exhibit 3.01(Q) Tax Sharing Agreement
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Exhibit 5.01(A) Subsidiaries
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Exhibit 5.01(F) Pending Litigation
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Exhibit 5.01(N) Existing Indebtedness
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Exhibit 5.01(O) Material Leases, Contract and Commitments
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Exhibit 5.01(T) Environmental Matters
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Exhibit 6.01(B) Compliance Certificate
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Page
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DEFINED TERMS.....................................................................................................7
Section 1. Definitions.....................................................................................7
Section 2. Accounting.....................................................................................17
Section 3. The Revolving Credit Loan......................................................................17
Section 4. Term Loan......................................................................................19
Section 5. The Notes......................................................................................20
Section 6. Facility Fee...................................................................................20
Section 7. Interest Rates and Payments of Interest........................................................20
Section 8. Payment to the Lender..........................................................................22
Section 9. Closing Fee....................................................................................22
Section 10. Existing Warrant...............................................................................22
CONDITIONS PRECEDENT.............................................................................................22
Section 11. Documents Required for the Closing.............................................................22
Section 12. Certain Events.................................................................................24
COLLATERAL SECURITY..............................................................................................25
Section 13. Composition of the Collateral..................................................................25
Section 14. Rights in Property Held by the Lender..........................................................25
Section 15. Rights in Property Held by the Borrower, the Guarantors or the Lender..........................25
Section 16. Priority of Liens..............................................................................27
Section 17. UCC Financing Statements.......................................................................27
Section 18. Mortgagees, Landlords', and Warehousemen's Waiver..............................................27
REPRESENTATIONS AND WARRANTIES...................................................................................28
Section 19. Original.......................................................................................28
Section 20. Survival.......................................................................................33
COVENANTS OF THE BORROWER........................................................................................33
Section 21. Affirmative Covenants..........................................................................33
Section 22. Negative Covenants.............................................................................40
DEFAULT..........................................................................................................43
Section 23. Events of Default..............................................................................43
Section 24. Acceleration...................................................................................45
THE LENDER'S RIGHTS AND REMEDIES.................................................................................46
Section 25. The Lender's Rights Upon Default...............................................................46
Section 26. Account Debtors................................................................................46
Section 27. Possession and Foreclosure of Collateral.......................................................46
Section 28. Use of Intellectual Property...................................................................47
Section 29. Notification of Default to Third Parties.......................................................47
Section 30. Assembly of Collateral.........................................................................47
Section 31. Right of Set-Off...............................................................................48
Section 32. Exercise of Other Remedies.....................................................................48
Section 33. Cumulative Rights and Remedies.................................................................48
ATTORNEY-IN-FACT.................................................................................................48
Section 34. Attorney-In-Fact...............................................................................48
Section MISCELLANEOUS..........................................................................................49
Section 35. Construction...................................................................................49
Section 36. Further Assurances.............................................................................49
Section 37. Enforcement and Waiver by the Lender...........................................................49
Section 38. Expenses of the Lender.........................................................................49
Section 39. Notices........................................................................................50
Section 40. Waiver and Indemnification by the Borrower and the Guarantors..................................51
Section 41. Participation..................................................................................51
Section 42. Waiver of Jury Trial...........................................................................51
Section 43. Applicable Law; Consent to Jurisdiction........................................................52
Section 44. Binding Effect, Assignment, and Entire Agreement...............................................52
Section 45. Severability...................................................................................52
Section 46. Counterparts...................................................................................52
.........THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated as of March 2, 2001, is by and among LUXTEC CORPORATION, a Massachusetts corporation with its principal office at 00 Xxxxxxxx Xxxxxx, Xxxx Xxxxxxxx, Xxxxxxxxxxxxx (the "Borrower"), FIBER IMAGING TECHNOLOGIES, INC., a Massachusetts corporation with its principal office at 00 Xxxxxxxx Xxxxxx, Xxxx Xxxxxxxx, Xxxxxxxxxxxxx, CATHTEC INCORPORATED, a Massachusetts corporation with its principal office at 00 Xxxxxxxx Xxxxxx, Xxxx Xxxxxxxx, Xxxxxxxxxxxxx, CARDIODYNE, INC., a Massachusetts corporation (together with Fiber Imaging Technologies, Inc. and Cathtec Incorporated, the "Guarantors") and ARK CLO 2000-1, LIMITED, c/o Patriarch Partners, LLC, 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (as assignee of The First National Bank of Boston) (the "Lender"). RECITAL ------- .........A. The Borrower and the Guarantors are parties to that certain Loan and Security Agreement, dated as of October 24, 1995 among the Borrower, the Guarantors and The First National Bank of Boston, as amended by Amendment No. 1 dated as of November 20, 1995, Amendment No. 2 dated as of January 31, 1996, Amendment No. 3 dated as of March 13, 1996, Amendment No. 4 dated as of April 30, 1996, Amendment No. 5 dated March 31, 1997, Amendment No. 6 dated as of July 31, 1997, Amendment No. 7 dated as of June 30, 1998, Amendment No. 8 dated as of January 9, 1999 and Amendment No. 9 dated as of May 22, 1999 (together, the "Existing Credit Agreement"). .........B. The Borrowers and the Guarantors have requested that the Existing Credit Agreement be amended and restated to accommodate the Merger (as defined herein). .........C. The Lender is willing to amend and restate the Existing Credit Agreement under the terms and conditions set forth below. AGREEMENT --------- .........In consideration of the premises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
47.1.... Definitions.
.........As used herein, the terms set forth below shall have the following meanings:
Accounts, Chattel Paper, Contracts, Documents, Equipment, Fixtures, General Intangibles, Goods, Instruments, and Inventory:
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shall have the same respective meanings as are given to those terms in the Uniform Commercial Code as presently adopted and
in effect in the State of New York.
Affiliate: means, as to any Person, each other Person that directly, or indirectly through one or more intermediaries,
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controls, or is controlled by, or under common control with, such Person.
Agreement: means this Amended and Restated Loan and Security Agreement, as the same may from time to time be amended or
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supplemented. This Agreement amends and restates the Existing Credit Agreement.
Amended and Restated Equipment Note: means the Amended and Restated Equipment Note referred to in Section 2.04 hereof.
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Amended and Restated Revolving Credit Note: means the Amended and Restated Revolving Credit Note referred to in Section
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2.04 hereof.
Amended and Restated Term Note: means the Amended and Restated Term Note referred to in Section 2.04 hereof.
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Applicable Margin: means with respect to the Equipment Loan 1%, with respect to the Term Loan 0.50%, and with respect to
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Revolving Credit Loan 2%.
Borrowing Base: means, at any time, the amount computed on the Borrowing Base Certificate most recently delivered to, and
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accepted by, the Lender in accordance with this Agreement and equal to the lesser of:
(i) $2,500,000.00; or
(ii) The aggregate of (1) eighty percent (80%) of Eligible Accounts of the Borrower and the Guarantors;
plus (2) thirty percent (30%) of the book value of Inventory of the Borrower and the Guarantors as determined by the
Lender in its reasonable business judgment; comprised of raw materials; and plus (3) forty percent (40%) of the book
value of Inventory of the Borrower and the Guarantors comprised of work in process and finished goods as determined
by the Lender in its reasonable business judgment; provided, however, that the Lender may exclude from the Borrowing
Base all or a proportionate part of any particular portion of the Inventory of the Borrower or any Guarantor which
the Lender reasonably deems ineligible because its market value has declined or because the Lender otherwise
reasonably considers the collateral value thereof to the Lender to be impaired or its ability to realize such value
to be insecure.
Borrowing Base Certificate: means a fully completed certificate in the form of Exhibit 1.01(A) to this Agreement, certified
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by the chief financial officer of the Borrower to be correct and delivered to, and accepted by, the Lender pursuant to
Section 3.01(n) or Section 6.01(b)(iv).
Business Day: means a day other than a Saturday, a Sunday, or a day on which commercial banks in New York, New York are
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authorized to close.
Capital Expenditures: means expenditures which are properly chargeable property, plant or equipment (including leases and
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research and development expenses which are capitalized) in accordance with generally accepted accounting principles.
Closing: has the meaning given to such term in Section 3.01.
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Collateral: has the meaning given to such term in Section 4.01.
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Collateral Documents: means the Lease Assignment, the Landlord's Consent and Waiver, the Guarantees specified in Section
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3.01(d), the Patent and Trademark Assignments, UCC Financing Statements specified in Section 3.01(e), and the documents,
whether deliverable at or after the Closing, required under Section 4.0.
Current Assets: means all cash, account receivable, and inventory of the Borrower and the Guarantors, on a consolidated
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basis.
Current Liabilities: means all accounts payable, all accruals and all amounts outstanding under the Revolving Credit Loans
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of the Borrower and the Guarantors, on a consolidated basis.
Domestic Account: means an Account arising from the sale of goods to or services performed for an account debtor located
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within the United States of America or Canada;
EBITDA: shall mean for any period the total of (a) the consolidated net income of the Borrower and the Guarantors, plus (b)
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amounts paid by the Borrower and the Guarantors in respect of taxes, plus (c) to the extent deducted in calculating net
income, the consolidated interest, depreciation and amortization expense of the Borrower and the Guarantors, plus (d) to the
extent deducted in calculating net income, extraordinary losses, non-recurring losses and non-cash losses.
Eligible Account: means, at any time, an Account that conforms and continues to conform to the following conditions:
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(i) The Account arose from a bona fide outright sale of Goods by the Borrower or from services performed by the
Borrower, and such Goods have been shipped to the appropriate account debtors or their designees (or the sale has
otherwise been consummated), or the services have been performed for the appropriate account debtors;
(ii) The Account is based upon an enforceable order or contract, written or oral, for Goods shipped or held or for
services performed, and the same were shipped, held, or performed in accordance with such order or contract;
(iii) The title of the Borrower to the Account is absolute and is not subject to any prior assignment, claim, lien,
or security interest, except Permitted Liens;
(iv) The amount shown on the books of the Borrower and on any invoice or statement delivered to the Lender is owing
to the Borrower, less any partial payment that has been made thereon by anyone;
(v) The Account shall be eligible only to the extent that it is not subject to any claim of reduction,
counterclaim, set-off, contras, recoupment, or any claim for credits, allowances, or adjustments by the account
debtor because of returned, inferior, or damaged Goods or unsatisfactory services, or for any other reason, except
for customary discounts, not to exceed two percent (2.0%) allowed for prompt payment;
(vi) The account debtor has not returned or refused to retain, or otherwise notified the Borrower of any dispute
concerning, or claimed nonconformity of, any of the Goods or services from the sale of which the Account arose;
(vii) The Account is (1) a Domestic Account and is due and payable not more than ninety (90) days from the date of
the invoice therefor, or (2) a Foreign Account and is due and payable not more then ninety (90) days from the date
of the invoice therefor;
(viii) The Account is not (1) a Domestic Account of an account debtor which has outstanding, at any time, thirty
percent (30%) or more of its accounts on an aggregate basis for a period of ninety (90) days from the date of the
invoice therefor, or (2) a Foreign Account of an account debtor which has outstanding, at any time, thirty percent
(30%) or more of its accounts on an aggregate basis for a period of ninety (90) days from the date of the invoice
therefor;
(ix) The Borrower has not received any note, trade acceptance, draft, or other Instrument with respect to, or in
payment of, the Account, nor any Chattel Paper with respect to the Goods giving rise to the Account, unless, if any
such Instrument or Chattel Paper has been received, the Borrower immediately notifies the Lender and, at the
latter's request, endorses or assigns and delivers the same to the Lender;
(x) The Borrower has not received any notice of the death of the account debtor or a partner thereof; nor of the
dissolution, termination of existence, insolvency, business failure, appointment of a receiver for any part of the
property of, assignment for the benefit of creditors by, or the filing of a petition in bankruptcy or the
commencement of any proceeding under any bankruptcy or insolvency laws by or against, the account debtor. Upon the
receipt by the Borrower of any such notice, it will immediately give the Lender written advice thereof;
(xi) The account debtor is not a Subsidiary or other Affiliate of the Borrower; and
(xii) The Lender has not deemed such Account ineligible because of uncertainty about the creditworthiness of the
account debtor or because the Lender otherwise reasonably considers the collateral value thereof to the Lender to be
impaired or its ability to realize such value to be insecure.
covering Goods which have, within the preceding forty-five (45) days, been damaged or destroyed by fire or other direct casualty
loss, provided that a claim therefor has been made in compliance with such insurance policy, to the extent that such claim has not
been in any way denied or contested by the insurer and provided that such insurer, if such insurer were an account debtor of the
Borrower, would be a qualified account debtor under this section.
In the event of any dispute, under the foregoing criteria, about whether an Account is or has ceased to be an Eligible
Account, the decision of the Lender shall control.
Equipment Loan: has the meaning given to such term in Section 2.01.
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Event of Default: has the meaning provided in Section 7.01.
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Existing Credit Agreement: has the meaning given to such term in Recital A.
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Existing Warrant: The Warrant dated March 31, 1997 issued to the Lender, as assignee of The First National Bank of Boston,
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exercisable into 44,000 shares of the Borrowers' common stock.
Financial Statements: means the consolidated balance sheets of the Borrower and the Guarantors as of October 31, 1999 and
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2000, and consolidated statements of income, stockholders' equity, and changes in cash flow, and notes thereto, of the
Borrower and the Guarantors for the years ended on such dates, certified by Xxxxxx Xxxxxxxx LLP to present fairly the
consolidated financial position and results of operations of the Borrower and the Guarantors at such dates and for such
periods in accordance with GAAP.
Foreign Account: means an Account arising from the sale of goods to or services performed for an account debtor located
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outside the United States of America or Canada and within such foreign countries as are acceptable to the Lender from time
to time in the Lender's sole discretion.
GAAP: means generally accepted accounting principles applied consistently as was done in the preparation of the Financial
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Statements, with such changes or modifications thereto as may be approved in writing by the Lender.
Guarantor: has the meaning set forth in the Preamble and as set forth on Exhibit 1.01(B).
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Guaranty: means with respect to a Guarantor, a duly authorized and executed Guaranty in the form of Exhibit 1.01(C),
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attached hereto and made a part hereof.
Indebtedness: means, as to the Borrower or any Guarantor, all items of indebtedness, obligation or liability whether
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matured or unmatured, liquidated or unliquidated, direct or contingent, joint or several, including, but without limitation:
(i) All indebtedness guaranteed, directly or indirectly, in any manner, or endorsed (other than for
collection or deposit in the ordinary course of business or pursuant to the Limited Guaranty, dated as of March 2,
2001 by the Borrower in favor of Citizens Bank of Massachusetts) or discounted with recourse;
(ii) All indebtedness in effect guaranteed, directly or indirectly, through agreements, contingent or otherwise:
(1) to purchase such indebtedness; or (2) to purchase, sell, or lease (as lessee or lessor) property, products,
materials, or supplies or to purchase or sell services, primarily for the purpose of enabling the debtor to make
payment of such indebtedness or to insure the owner of the indebtedness against loss; or (3) to supply funds to, or
in any other manner invest in, the debtor;
(iii) All indebtedness secured by (or for which the holder of such indebtedness has a right, contingent or
otherwise, to be secured by) any mortgage, deed of trust, pledge, lien, security interest, or other charge or
encumbrance upon property owned or acquired subject thereto, whether or not the liabilities secured thereby have
been assumed (other than pursuant to the pledge of capital stock in PrimeSource Surgical, Inc., in connection with
the Limited Guaranty, dated as of March 2, 2001 by the Borrower in favor of Citizens Bank of Massachusetts); and
(iv) All indebtedness incurred as the lessee of goods or services under leases (operating or capitalized).
Intellectual Property: means trademarks, service marks, trade names, trade styles, logos, goodwill, trade secrets, patents,
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and licenses acquired under any statutory, common law or registration process in any state or nation at any time, or under
any agreement executed with any person or entity at any time. The term "license" refers not only to rights granted by
agreement from the owner of patents, trade marks, service marks and the like, but also to rights granted by a franchisor
under a franchise or similar agreement. The foregoing enumeration is not intended as a limitation of the meaning of the word
"license".
Landlord's Consent and Waiver: means with respect to each premises on which property of the Borrower is located, the duly
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authorized and executed Landlord's Consent and Waiver by and among the proper parties attached hereto as Exhibit 1.01 (D),
and made a part hereof.
Laws: means all ordinances, statutes, rules, regulations, orders, injunctions, writs, or decrees of any government or
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political subdivision or agency thereof, or of any court or similar entity established by any thereof.
Lease: means the Lease by and between the Borrower and Chapel Point Associates dated September 19, 2000, as extended, with
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respect to the property located at 00 Xxxxxxxx Xxxxxx, Xxxx Xxxxxxxx, Xxxxxxxxxxxxx.
Lease Assignment: means the duly authorized and executed Assignment of Lease by and between the Borrower and Ark CLO
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2000-1, Limited, as lender under this Agreement with respect to the Lease attached hereto as Exhibit 1.01 (E) and made a
part hereof.
Lien: shall mean, with respect to any property, any mortgage, deed of trust, lien, pledge, claim, charge, assignment,
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hypothecation, security interest or encumbrance of any kind, any other type of preferential arrangement in respect of such
property or any filing of any financing statement under the UCC or any other similar notice of Lien under any similar notice
or recording statute of any governmental body, (federal, state, local, foreign or otherwise), in each of the foregoing case
whether voluntary or imposed by law.
Loan Termination Date: shall have the meaning ascribed to such term in Section 2.02(a) of this Agreement.
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Loans: means the Revolving Credit Loan, the Equipment Loan and the Term Loan, collectively.
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Merger: means the merger of PrimeSource Surgical, Inc. with Laser Merger Sub, Inc., a wholly-owned subsidiary of the
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Borrower, pursuant to the Agreement and Plan of Merger, dated as of November 27, 2000 as amended by Amendment No. 1 dated as
of February 8, 2001.
Net Worth: means the Required Payment plus the cumulative consolidated net income or net loss of the Borrower and the
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Guarantors from March 1, 2001 to the date of determination.
Notes: means the Amended and Restated Revolving Credit Note, the Amended and Restated Equipment Note and the Amended and
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Restated Term Note, collectively.
Obligations: is intended to be used in its most comprehensive sense and means all the obligations of the Borrower and each
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Guarantor to the Lender of every kind and description relating to this Agreement and the Notes, whether direct or indirect,
absolute or contingent, primary or secondary, joint or several, due or to be come due, now existing or hereafter arising or
acquired and whether by way of loan, discount, letter of credit or otherwise, including without limitation, the following
obligations:
(i) To pay the principal of, and interest on, the Notes in accordance with the terms thereof and to satisfy all
other liabilities to the Lender arising hereunder, whether now existing or hereafter incurred, matured or unmatured,
direct or contingent, joint or several, including any extensions, modifications, renewals thereof and substitutions
therefor;
(ii) To repay to the Lender all amounts advanced by the Lender hereunder or otherwise on behalf of the Borrower or
any Guarantor, including, but without limitation, advances for principal or interest payments to prior secured
parties, mortgagees, or lienors, or for taxes, levies, insurance, rent, or repairs to, or maintenance or storage of,
any of the Collateral;
(iii) To perform and observe all covenants, agreements and undertakings of the Borrower or any Guarantor pursuant
to the terms and conditions of this Agreement, the Collateral Documents or any other agreement or instrument now or
hereafter delivered to the Lender by the Borrower or any Guarantor; and
(iv) To reimburse the Lender, on demand, for all of the Lender's expenses and costs, including without limitation
the reasonable fees and expenses of its counsel, in connection with the preparation, administration, amendment,
modification, or enforcement of this Agreement and the documents required hereunder, including, without limitation,
any proceeding brought, or threatened, to enforce payment or performance of any of the obligations referred to in
the foregoing Paragraphs (i), (ii) and (iii).
Patent and Trademark Assignment: means with respect to each patent or trademark of the Borrower and each Guarantor a duly
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executed and authorized Assignment of Patent and/or a duly executed Assignment of Trademark by the proper parties attached
hereto as Exhibit 1.01(F) (1) and Exhibit 1.01(F)(2), respectively, and made a part hereof.
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Permitted Liens: means:
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(i) Liens for taxes, assessments, or similar charges, incurred in the ordinary course of business, that are not yet
due and payable;
(ii) Pledges or deposits made in the ordinary course of business to secure payment of worker's compensation, or to
participate in any fund in connection with worker's compensation, unemployment insurance, old-age pensions, or other
social security programs;
(iii) Liens of mechanics, materialmen, warehousemen, carriers, or other like liens, securing obligations incurred
in the ordinary course of business that are not yet due and payable;
(iv) Good faith pledges or deposits made in the ordinary course of business to secure performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases, not in excess of twenty percent (20%) of the
aggregate amount due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance, or
other similar bonds required in the ordinary course of business;
(v) Encumbrances consisting of zoning restrictions, easements, or other restrictions on the use of real property,
none of which materially impairs the use of such property by the Borrower in the operation of its business, and none
of which is violated in any material respect by existing or proposed structures or land use;
(vi) Liens in favor of the Lender;
(vii) Existing liens set forth or described on Exhibit 1.01(G), attached hereto and made a part hereof;
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(viii) Purchase money security interests granted to secure not more than one hundred percent (100%) of the purchase
price of assets, the purchase of which does not violate this Agreement or any instrument required hereunder; and
(ix) The following, if the validity or amount thereof is being contested in good faith by appropriate and lawful
proceedings, so long as levy and execution thereon have been stayed and continued to be stayed and they do not, in
the aggregate, materially detract from the value of the property of the Borrower or any Guarantor, or materially
impair the use thereof in the operation of its business:
(A) Claims or liens for taxes, assessments, or charges due and payable and subject to interest or penalty;
(B) Claims, liens and encumbrances upon, and defects of title to, real or personal property, including any
attachment of personal or real property or other legal process prior to adjudication of a dispute on the
merits;
(C) Claims or liens of mechanics, materialmen, warehousemen, carriers, or other like liens; and
(D) Adverse judgments on appeal.
(x) Any interests in leases (to the extent permitted hereunder).
Person: means any individual, corporation, partnership, association, joint-stock company, trust, unincorporated
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organization, joint venture, court, or government or political subdivision or agency thereof.
Prime Rate: means the Prime Rate of interest as published, from time to time, in the Eastern edition of The Wall Street
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Journal.
Records: means correspondence, memoranda, tapes, discs, papers, books and other documents, or transcribed information of
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any type, whether expressed in ordinary or machine readable language.
Required Payment: On the date of the Closing, the repayment by the Borrower to the Lender of $1,250,000.00 of outstanding
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principal Revolving Credit Loan plus all accrued and unpaid interest thereon.
Revolving Credit Loans: has the meaning given to such term in Section 2.02(a).
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Solvent and Solvency: shall mean, for any Person on a particular date, that on such date (a) the fair value of the assets
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of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of
such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be
required to pay the liability of such Person on its debts as they become absolute and matured, (c) such Person is not
engaged in a business or a transaction for which such Person's assets would constitute an unreasonably small capital and (d)
such Person is able to pay its debts as they become due and payable. The amount of contingent liabilities at any time shall
be computed as the amount that, in the light of all the facts and circumstances existing as such time, represents the amount
that can reasonably be expected to become an actual or matured liability.
Stockholders' Equity: means the sum of the following accounts set forth on a consolidated balance sheet of the Borrower and
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the Guarantors prepared in accordance with GAAP: (A) the par or stated value of all outstanding capital stock; (B) capital
surplus; and (C) retained earnings.
Subsidiary: means after giving effect to the Merger with respect to the Borrower or any Guarantor, any corporation,
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limited liability corporation, partnership or other business entity of which more than 50% of the total voting capital stock
(or equivalent ownership or controlling interest or options to acquire) entitled to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or indirectly, by the Borrower or any Guarantor.
Term Loan: has the meaning given to such term in Section 2.03.
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Total Liabilities: means the sum of all liabilities of the Borrower and the Guarantors, on a consolidated basis, determined
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in accordance with generally accepted accounting principles.
Warrant: has the meaning given to such term in Section 3.01(o).
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Accounting terms used and not otherwise defined in this Agreement have the meanings determined by, and all calculations with
respect to accounting or financial matters unless otherwise provided herein shall be computed in accordance with, GAAP.
Section 48. THE LOANS
48.1 The Equipment Loan.
(a) The Lender has advanced sums pursuant to the Existing Credit Agreement which had been utilized by the Borrower to acquire
Equipment (the "Equipment Loan"). The terms of the Equipment Loan are hereby amended and restated by this Section 2 and the
Amended and Restated Equipment Note, the form of which is attached hereto as Exhibit 2.04(A). This Section 2 and the
Amended and Restated Equipment Note shall not be deemed to extinguish the existing Equipment Loan. No additional advances
shall be made by the Lender as an Equipment Loan.
(b) Unless accelerated pursuant to Section 8 hereof, the principal amount of the Equipment Loan shall be repaid in monthly
installments of $8,333.33 commencing on March 31, 2001, payable in arrears with the remaining balance due, owing and payable
on June 30, 2002.
48.2 The Revolving Credit Loan .
(a) The terms of the Revolving Credit Loans are hereby amended and restated by this Section 2 and the Amended and Restated
Revolving Credit Note, the form of which is attached hereto as Exhibit 2.4(B). This Section 2 and the Amended and Restated
Revolving Credit Note shall not be deemed to extinguish the existing Revolving Credit Loans. Subject to the terms hereof,
the Lender shall lend the Borrower from time to time until March 31, 2005 (the "Loan Termination Date") , such sums as the
Borrower may request in accordance with Section 2.02 (b) (each a "Revolving Credit Advance") which shall not exceed, in the
aggregate principal amount at any one time outstanding, $2,500,000.00 (the "Revolving Credit Loans"). The Borrower may
borrow, repay without penalty or premium and reborrow hereunder, from the date of this Agreement until the Loan Termination
Date, the full amount then due under the Amended and Restated Revolving Credit Note. It is the intention of the parties that
the outstanding principal amount of the Revolving Credit Loan shall at no time exceed the amount of the then existing
Borrowing Base, and if, at any time, an excess shall for any reason exist, the full amount of such excess, together with
accrued and unpaid interest thereon as herein provided, shall be immediately due and payable in full. The existing
Revolving Credit Loans (after application of the Required Payment) in the principal amount of $1,250,000.00 under the
Existing Credit Agreement shall be deemed to be a Revolving Credit Loan hereunder. The initial Revolving Credit Advance
after the closing shall be subject to the results (in the reasonable discretion of the Lender) of an audit of the Borrower's
Accounts and Inventory, such audit shall be performed by Lender or Lender's designee at the expense of the Borrower.
(b) Each Revolving Credit Advance shall be made on the day on which the Lender receives notice from the Borrower or, if such
day is not a Business Day, on the next succeeding Business Day, provided the Lender receives notice from the Borrower prior
to 1:00 p.m. New York time on such Business Day. Each request for a Revolving Credit Advance shall be made to the Lender in
writing (including by telecopy) or by telephone by a duly authorized representative of the Borrower (promptly followed by a
request in writing), and the Lender may rely upon any telephone request which it reasonably believes is made by such a
representative. The Borrower agrees to indemnify and hold the Lender harmless for any action, including the making of
Revolving Credit Advances hereunder, or loss or expense, taken or incurred by the Lender in good faith reliance upon such
telephone request absent the Lender's gross negligence, willful misconduct or breach of this Agreement. At the time of the
initial request for a Revolving Credit Advance made under this Section 2.02(b), the Borrower shall have provided the Lender
with a Borrowing Base Certificate. The Borrower hereby agrees (i) that the Lender shall be entitled to rely upon the most
recent Borrowing Base Certificate in its possession until it is superseded by another Borrowing Base Certificate, and (ii)
that each request for a Revolving Credit Advance, whether by telephone or in writing or otherwise, shall constitute a
confirmation of the representations and warranties contained in the most recent Borrowing Base Certificate then in the
Lender's possession. At the time of, any disbursement of any part of the Revolving Credit Loan to be made by the Lender
subsequent to the Closing, the Borrower and the Guarantors shall be deemed to represent and warrant that the following is
true and correct:
(i) As of the date thereof, no Event of Default has occurred and is continuing, and no event has occurred and is continuing
that, but for the giving of notice or passage of time or both, would be an Event of Default;
(ii) No material adverse change has occurred in the business prospects, financial condition, or results of operations of the
Borrower and the Guarantors since October 31, 2000; and
(iii) Each of the representations and warranties contained in Section 5.01 is true and correct in all material respects as if
made on and as of the date of such disbursement, except to the extent that any such representation or warranty relates to an
earlier date.
48.3 Term Loan .
(a) The Lender has advanced sums under the Existing Credit Agreement as a term loan (the "Term Loan"). The terms of the Term
Loan are hereby amended and restated by this Section 2 and the Amended and Restated Term Note, the form of which is attached
hereto as Exhibit 2.04(C). This Section 2 and the Amended and Restated Term note shall not be deemed to extinguish the
existing Term Loan. No additional advances will be made by the Lender as a Term Loan.
(b) Unless accelerated pursuant to Article 8 hereof, the principal amount of the Term Loan shall be repaid in monthly
installments of $10,000.00 commencing on March 31, 2001, payable in arrears with the remaining balance due, owing and
payable on March 31, 2002.
48.4 The Notes .
The Borrower shall execute and deliver to the Lender the Amended and Restated Equipment Note, Amended and Restated Revolving
Credit Note and Amended and Restated Term Note in the forms attached hereto as Exhibit 2.04 (A) and Exhibit 2.04(B) and Exhibit
-------- ---------------- --------
2.04(C) respectively. The Borrower may repay any or all amounts owing under the Loans at any time without penalty or premium. Upon
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the delivery of the Notes to the Lender, the original Equipment Note, Revolving Credit Note and Term Note (collectively, "Original
---------
Notes") executed and delivered in connection with the Existing Credit Agreement shall be deemed cancelled and shall have no further
-----
force and effect and the Lender shall use commercially reasonable good faith efforts to deliver the Original Notes to the Borrower.
48.5 Facility Fee .
From and after the date hereof, until the Loan Termination Date, the Borrower shall pay a facility fee of one percent
(1.00%) per annum on the average daily undisbursed amount of the Revolving Credit Loans during each quarterly period or portion
thereof. This facility fee shall be payable quarterly in arrears, on the last day of each February, May, August and November,
commencing on March 31, 2001.
48.6 Interest Rates and Payments of Interest .
(a) Interest on the principal balances of the Loans from time to time outstanding shall accrue at the respective interest
rates (a "Note Rate") and in the manner set forth in the Notes. The Loans shall bear interest prior to the occurrence of an
Event of Default or maturity (computed on the basis of the actual days elapsed over a 360-day year) at a fluctuating rate
per annum equal to the Prime Rate plus the Applicable Margin. From and after the occurrence of an Event of Default or
maturity (whether by demand, acceleration or otherwise) the unpaid principal balance of the Loans shall bear interest at a
fluctuating rate per annum equal to seven percent (7%) above the Prime Rate. Interest on the Loans shall be payable monthly
in arrears on the first day of each month commencing March 1, 2001. The effective rate of interest shall change on each
date on which the Prime Rate shall change. All payments and prepayments of principal and interest due under the Notes and
of fees due hereunder shall be made by the Borrower to the Lender in immediately available funds. Payments received by the
Lender after 1:00 p.m. New York time shall be deemed received on the next succeeding Business Day. All payments of
principal, interest or fees to be made to the Lender may be effected by the Lender debiting accounts of the Borrower with
the Lender and sending notice thereof to the Borrower.
(b) It is the intention of the parties hereto to conform strictly to applicable usury laws as in effect, from time to time,
during the term of the Loans. Accordingly, if any transaction or transactions contemplated hereby would be usurious under
applicable law (including the laws of the United States of America, or of any other jurisdiction whose laws may be
applicable), then, in that event, notwithstanding anything to the contrary in this Agreement or any other agreement entered
into in connection with this Agreement, it is agreed as follows: (i) the provisions of this Section 2.06(b) shall govern and
control; (ii) the aggregate of all interest under applicable law that is contracted for, charged, or received under this
Agreement or under any of the other aforesaid agreements or otherwise in connection with this Agreement shall under no
circumstances exceed the maximum amount of interest allowed by applicable law, and any excess shall be promptly credited to
the Borrower by the Lender (or, if such consideration shall have been paid in full, such excess shall be promptly refunded
to the Borrower by the Lender); (iii) neither the Borrower nor any person or entity now or hereafter liable in connection
with this Agreement shall be obligated to pay the amount of such interest to the extent that it is in excess of the maximum
interest permitted by the applicable usury laws; and (iv) the effective rate of interest shall be ipso facto reduced to the
Highest Lawful Rate hereinafter defined. All sums paid, or agreed to be paid, to the Lender for the use, forbearance, and
detention of the indebtedness of the Borrower to the Lender shall, to the extent permitted by applicable law, be amortized,
pro rated, allocated, and spread throughout the full term of the Notes until payment is made in full so that the actual rate
of interest does not exceed the Highest Lawful Rate in effect at any particular time during the full term thereof. The
maximum lawful interest rate, if any, referred to in this Section 2.06(b) that may accrue pursuant to this Agreement is
referred to herein as the "Highest Lawful Rate". If at any time a Note Rate exceeds the Highest Lawful Rate, the rate of
interest to accrue pursuant to this Agreement shall be limited, notwithstanding anything to the contrary in this Agreement,
to the Highest Lawful Rate, but any subsequent reductions in the applicable Note Rate shall not reduce the interest to
accrue pursuant to this Agreement below the Highest Lawful Rate until the total amount of interest accrued pursuant to this
Agreement equals the amount of interest that would have accrued if a varying rate per annum equal to the Highest Lawful Rate
had at all times been in effect. If the total amount of interest paid or accrued pursuant to this Agreement under the
foregoing provisions is less than the total amount of interest that would have accrued if a varying rate per annum equal to
the applicable Note Rate had at all times been in effect, then the Borrower agrees to pay to the Lender an amount equal to
the difference between (a) the lesser of (i) the amount of interest that would have accrued if the Highest Lawful Rate had
at all times been in effect, or (ii) the amount of interest that would have accrued if a varying rate per annum equal to the
applicable Note Rate had at all times been in effect, and (b) the amount of interest accrued in accordance with the other
provisions of this Agreement.
48.7 Payment to the Lender .
The Lender shall send the Borrower statements of all amounts due with respect to the Loans, which statements shall be
considered correct and presumptively binding on the Borrower unless the Borrower notifies the Lender to the contrary within thirty
(30) days of its receipt of any statement that it deems to be incorrect.
48.8 Closing Fee .
The Borrower shall pay Lender a Closing Fee of $50,000.00; $25,000 of which shall be paid on the Closing and the balance
shall be paid in three equal monthly installments of $8,333.33 commencing on the one month anniversary date of the Closing.
48.9 Existing Warrant .
Upon the delivery of the Warrant to the Lender, the Existing Warrant and the related Registered Rights Agreement dated as of
March 31, 1997 shall be deemed cancelled and shall have no further force and effect and the Lender shall use commercially reasonable
good faith efforts to deliver the Existing Warrant to the Borrower.
Section 49. CONDITIONS PRECEDENT
The obligation of the Lender to make the Loans is subject to the following conditions precedent:
49.1 Documents Required for the Closing .
The Borrower shall have duly authorized, executed and delivered or caused to be duly authorized, executed and delivered to
the Lender on March 2, 2001, (the "Closing"), the following:
(a) The Amended and Restated Equipment Note in the form attached hereto as Exhibit 2.04(A);
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(b) The Amended and Restated Revolving Credit Note in the form attached hereto as Exhibit 2.04(B);
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(c) The Amended and Restated Term Note in the form attached hereto as Exhibit 2.04 (C);
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(d) A duly executed Guaranty by each of the Guarantors;
(e) The UCC financing statements and other instruments required by Section 4.0;
(f) The Financial Statements;
(g) A copy, certified as of the date of the Closing, of resolutions of the board of directors of the Borrower and each
Guarantor, authorizing the execution, delivery, and performance of this Agreement, the Notes, the Collateral Documents, and
each other document to be delivered pursuant hereto;
(h) A copy, certified as of the date of the Closing, of the bylaws of the Borrower and each Guarantor;
(i) A certificate, dated the date of the Closing, of a corporate officer of the Borrower and each Guarantor as to the
incumbency and signatures of the officers of the Borrower and each Guarantor, as applicable, signing this Agreement, the
Notes, the Collateral Documents, and each other document to be delivered pursuant hereto;
(j) A copy, certified as of the most recent date practicable by the Secretary of the Commonwealth of Massachusetts, of the
Articles of organization of the Borrower and each Guarantor, and all amendments thereto, together with a certificate (dated
the date of the Closing) of the corporate clerk or assistant clerk of the Borrower and each Guarantor to the effect that
such Articles of Organization have not been further amended since the date of the aforesaid certification of the Secretary
of the Commonwealth of Massachusetts;
(k) A certificate of good standing dated as of the most recent date practicable, issued by the Secretary of the Commonwealth
of Massachusetts as to the legal existence, Articles of Organization and good legal standing of the Borrower and each
Guarantor;
(l) [INTENTIONALLY LEFT BLANK]
(m) A written opinion of the law firm of Xxxxxxx Xxxx LLP, legal counsel for the Borrower and the Guarantors, dated the date
of the Closing and addressed to the Lender, in form satisfactory to the Lender, and attached hereto as Exhibit 3.01(M);
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(n) A duly executed Borrowing Base Certificate as of a date not earlier than February 28, 2001, acceptable to the Lender and
certifying a Borrowing Base in an amount sufficient to support the initial $1,250,000.00 outstanding principal amount of the
Revolving Credit Loans.
(o) A warrant, in the form of Exhibit 3.01(O), to purchase 100,000 shares of the Borrower's common stock (the "Warrant");
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(p) A Registration Rights Agreement in the form of Exhibit 3.01(P) regarding the registration of the common stock issuable
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upon the exercise of the Warrant;
(q) A Tax Sharing Agreement among the Borrower, the Guarantor and the other Subsidiaries in the form of Exhibit 3.01(Q);
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(r) A certificate, dated the date of the closing, of a corporate officer of the Borrower certifying attached to the
certificate is the true and correct copy of the Amended and Restated Credit Agreement by and among PrimeSource Surgical,
Inc., Bimeco, Inc., Medical Companies Alliance, Inc., Xxxxxxx Medical, Inc. and Citizens Bank of Massachusetts (assignee of
State Street Bank and Trust Company), as amended as of the date of the closing;
(s) [INTENTIONALLY LEFT BLANK]
(t) An executed Landlord's Consent and Waiver and Lease Assignment; and
(u) Such other documents and the completion of such other matters as counsel to the Lender may deem necessary or appropriate.
49.2 Certain Events .
At the time of, and as a condition to, the Closing and each disbursement of any part of the Loans to be made by the Lender
at or subsequent to the Closing:
(a) No Event of Default shall have occurred and be continuing, and no event shall have occurred and be continuing that, with
the giving of notice or passage of time or both, would be an Event of Default;
(b) All of the Collateral Documents shall have remained in full force and effect;
(c) Receipt by the Lender of the Required Payment, reimbursement of all reasonable expenses and fees incurred by the Lender in
connection with this Agreement and the Closing Fee required by Section 2.08; and
(d) Effectiveness of the Merger.
49.3 Legal Matters.
At the time of the Closing and each subsequent disbursement, all legal matters incidental thereto shall be satisfactory to
Xxxxxxxx Xxxxxx Xxxxx and Xxxx, legal counsel to the Lender.
Section 50. COLLATERAL SECURITY
50.1 Composition of the Collateral .
The property in which a security interest is granted pursuant to the provisions of Sections 4.02 and 4.03 hereof, the Lease
Assignment and the Patent and Trademark Assignments are herein collectively called the "Collateral". The Collateral, together with
all other property of the Borrower and each of the Guarantors of any kind held by the Lender, shall stand as one general, continuing
collateral security for all Obligations and may be retained by the Lender until all Obligations have been satisfied in full.
50.2 Rights in Property Held by the Lender .
As security for the prompt satisfaction of all obligations, the Borrower and each Guarantor hereby assign, transfer, and set
over to the Lender all of their respective right, title, and interest in and to, and grant the Lender a lien on and a security
interest in, all amounts that may be owing, from time to time, by the Lender to the Borrower or any Guarantor in any capacity,
including, but without limitation, any balance or share belonging to the Borrower or any Guarantor, or any deposit or other account
with the Lender, which lien and security interest shall be independent of, and in addition to, any right of set-off that the Lender
has under Section 8.07 or otherwise.
50.3 Rights in Property Held by the Borrower, the Guarantors or the Lender .
As further security for the prompt satisfaction of all Obligations, the Borrower and each Guarantor hereby assign to the
Lender all of their respective right, title and interest in and to, and grants the Lender a lien upon and a continuing security
interest in, all of the following (other than the capital stock of PrimeSource Surgical, Inc.), wherever located, whether now owned
or hereafter acquired, together with all replacements therefor and proceeds (including, but without limitation, insurance proceeds)
and products thereof:
(a) All Inventory;
(b) All Accounts, Contracts, accounts receivable, contract rights, and Chattel Paper, regardless of whether or not they
constitute proceeds of other Collateral;
(c) All General Intangibles (other than the capital stock of PrimeSource Surgical, Inc.), regardless of whether or not they
constitute proceeds of other Collateral, including, without limitation, all the rights of the Borrower or any Guarantor
(which the Lender may exercise or not as it in its sole discretion may determine) to acquire or obtain Goods and/or services
with respect to the manufacture, processing, storage, sale, shipment, delivery or installation of any of the Inventory of
the Borrower or any Guarantor or other Collateral;
(d) All products of and accessions to any of the Collateral;
(e) All liens, guaranties, securities, rights, remedies and privileges pertaining to any of the Collateral, including the
right of stoppage in transit;
(f) All obligations owing to the Borrower or any Guarantor of every kind and nature, and all choses in action;
(g) All tax refunds of every kind and nature to which the Borrower or any Guarantor is now or hereafter may become entitled no
matter however arising, including, without limitation, loss carry back refunds;
(h) All Intellectual Property, goodwill, trade secrets, computer programs, customer lists, trade names, trademarks and patents;
(i) All Chattel Paper, Documents and Instruments (whether negotiable or non-negotiable, and regardless of their being attached
to Chattel Paper);
(j) All Equipment, including without limitation machinery, furniture, motor vehicles, Fixtures and all other goods used in the
conduct of the business of the Borrower or any Guarantor;
(k) All proceeds of Collateral of every kind and nature and in whatever form, including, without limitation, both cash and
non-cash proceeds resulting or arising from the rendering of services by the Borrower or any Guarantor or the sale or other
disposition by the Borrower or any Guarantor of the Inventory or other Collateral;
(l) All books, records, computer discs, electronic data and other information relating to the conduct of the business of the
Borrower or any Guarantor including, without in any way limiting the generality of the foregoing, those relating to its
Accounts;
(m) All deposit accounts maintained by the Borrower or any Guarantor with any bank, trust company, investment firm or fund, or
any similar institution or organization; and
(n) All property of the Borrower or any Guarantor in the possession of the Lender.
50.4 Priority of Liens .
By virtue of the Existing Credit Agreement and this Agreement, the foregoing liens shall be first and prior liens except for
Permitted Liens.
50.5 UCC Financing Statements .
The Borrower and each Guarantor will:
(a) Execute such UCC financing statements (including amendments thereto and continuation statements thereof) in form
satisfactory to the Lender as the Lender, from time to time, may specify;
(b) Pay, or reimburse the Lender for paying, all costs and taxes of filing or recording the same in such public offices as the
Lender may designate; and
(c) Take such other steps as the Lender, from time to time, may direct, including the noting of the Lender's lien on the
Collateral and on any certificates of title therefor, all to perfect to the satisfaction of the Lender the Lender's interest
in the Collateral.
In addition to the foregoing, and not in limitation thereof:
(i) A carbon, photographic, or other reproduction of this Agreement shall be sufficient as a UCC
financing statement and may be filed in any appropriate office in lieu thereof; and
(ii) To the extent lawful, the Borrower and each Guarantor hereby appoint the Lender as its
attorney-in-fact (without requiring the Lender to act as such) to execute any UCC financing statement in
the name of the Borrower or any Guarantor, and to perform all other acts that the Lender deems appropriate
to perfect and continue its security interest in, and to protect and preserve, the Collateral.
The Borrower and each Guarantor will, within twenty (20) days after any request of the Lender, cause any mortgagee of real
estate owned by the Borrower or any Guarantor, any landlord of premises leased by the Borrower or any Guarantor, and any warehouseman
or other bailee on whose premises any of the Collateral may be located to execute and deliver to the Lender instruments, in form and
substance satisfactory to the Lender, by which such mortgagee, landlord or warehouseman or other bailee waives its rights, if any, in
and to all Goods composing a part of the Collateral.
50.7 Release of Collateral.
Upon any sale, lease transfer or other disposition of any item of Collateral of the Borrower or any Guarantor (solely with
respect to this Section 4.07, a "Grantor") with the prior written consent of the Lender, such consent may be withheld in the Lender's
sole discretion (other than sales of Inventory in the ordinary course of business), the Lender will execute and deliver to such
Grantor such documents (including UCC termination statements) as such Grantor shall reasonably request and will file such instruments
with the United States Patent and Trademark Office as may be deemed necessary to such Grantor to evidence the release of such item of
Collateral from the assignment and security interest granted hereby. Upon the payment in full of the Obligations (other than
contingent indemnifications and reimbursement obligations not then due and payable), the pledge, assignment and security interest
granted hereby shall terminate and all rights to the Collateral shall revert to the appropriate Grantor. Upon any such termination,
the Lender will promptly execute and deliver to such Grantor such documents as such Grantor shall reasonably request (prepared by and
at the expense of the Borrower) to evidence such termination and will deliver any Collateral in the possession of the Lender to the
appropriate Grantor.
Section 51. REPRESENTATIONS AND WARRANTIES
51.1 Original .
To induce the Lender to enter into this Agreement, the Borrower and each Guarantor individually and collectively represent
and warrant to the Lender as follows:
(a) The Borrower and the Guarantors are corporations duly organized, validly existing, and in good standing under the Laws of
the Commonwealth of Massachusetts; the Borrower and the Guarantors have no Subsidiaries other than the Subsidiaries named in
Exhibit 5.01(A); each Subsidiary is a corporation duly organized, validly existing, and in good standing under the Laws of
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its state of incorporation, all as set forth in Exhibit 5.01(A); the Borrower, the Guarantors and the Subsidiaries have the
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lawful power to own their properties and to engage in the businesses they conduct, and each is duly qualified and in good
standing as a foreign corporation in the jurisdictions wherein the nature of the business transacted by it or property owned
by it makes such qualification necessary; the states in which the Borrower and each Guarantor and Subsidiary are qualified
to do business are set forth in Exhibit 5.01(A) or otherwise disclosed to the Lender in writing; the percentage of ownership
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of the Borrower and each Guarantor of the outstanding stock of each Subsidiary is as listed in Exhibit 5.01(A); the
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addresses of all places of business of the Borrower and each Guarantor and Subsidiary are as set forth in Exhibit 5.01(A);
----------------
except for Laser Merger Sub, Inc. in connection with the Merger, no Borrower, Guarantor or Subsidiary has changed its name,
been the surviving corporation in a merger, acquired any business, or changed its principal executive office within five (5)
years and one (1) month prior to the date hereof except as set forth in Exhibit 5.01(A); and all of the authorized, issued,
----------------
and outstanding shares of capital stock of each Subsidiary are owned by the Borrower, a Guarantor or another Subsidiary,
except as set forth in Exhibit 5.01(A);
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(b) No Borrower, Guarantor or Subsidiary is directly or indirectly controlled by, or acting on behalf of, any Person which is
an "Investment Company", within the meaning of the Investment Company Act of 1940, as amended;
(c) No Borrower, Guarantor or Subsidiary is in default with respect to any of its existing Indebtedness, and the making and
performance of this Agreement, the Notes, and the Collateral Documents will not and did not (immediately or with the passage
of time, the giving of notice, or both):
(i) Violate the Articles of organization or by-laws of any Borrower, Guarantor or Subsidiary, or violate any Laws or result in
a default under any contract, agreement, or instrument to which the Borrower or any Subsidiary is a party or by
which Borrower, any Guarantor or Subsidiary or its property is bound; or
(ii) Result in the creation or imposition of any security interest in, or lien or encumbrance upon, any of the assets of the
Borrower, any Guarantor or Subsidiary except in favor of the Lender;
(d) The Borrower and each Guarantor, to the extent applicable to it, has the power and authority to enter into and perform
this Agreement, the Notes, and the Collateral Documents, and to incur the obligations herein and therein provided for, and
has taken all actions necessary to authorize the execution, delivery, and performance of this Agreement, the Notes, and the
Collateral Documents;
(e) This Agreement, the Notes, and the Collateral Documents are, or when delivered will be, valid, binding, and enforceable in
accordance with their respective terms subject to applicable bankruptcy, insolvency, reorganization or similar laws
affecting the rights and remedies of creditors and secured parties;
(f) Except as disclosed in Exhibit 5.01(F) hereto, there is no pending order, notice, claim, litigation, proceeding, or
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investigation against or affecting the Borrower or any Guarantor, whether or not covered by insurance, that would in the
aggregate involve the payment of $50,000.00 or more or would otherwise materially or adversely affect the financial
condition or business prospects of the Borrower or any Guarantor if adversely determined;
(g) The Borrower and each Guarantor have good and marketable title to all of their assets, none of which is subject to any
security interest, encumbrance or lien, or claim of any third Person except for Permitted Liens. Other than the Lease, the
Borrower does not rent, lease, own or use any real estate, or buildings or have an office at any other location;
(h) The Financial Statements, including any schedules and notes pertaining thereto, have been prepared in accordance with
GAAP, and fully and fairly present the financial condition of the Borrower and the Guarantors at the dates thereof and the
results of operations for the periods covered thereby, and there have been no material adverse changes in the consolidated
financial condition or business of the Borrower and the Guarantors from October 31, 2000, to the date hereof. Since the
date of the Financial Statements there has been no material adverse change in the business, assets, operation, or condition
(financial or otherwise) of the Borrower and the Guarantors taken as a whole;
(i) As of the date hereof, the Borrower and the Guarantors have no material Indebtedness of any nature, including, but without
limitation, liabilities for taxes past due and any interest or penalties relating thereto except to the extent reflected (in
a footnote or otherwise) and reserved against in the consolidated balance sheet dated October 31, 2000 included in the
Financial Statements or as disclosed in, or permitted by, this Agreement; and neither the Borrower nor any Guarantor knows
or has reasonable ground to know of any basis for the assertion against any of them of any claim or litigation related to
such Indebtedness as of the date of the Closing except as disclosed on Exhibit 5.01(F) or otherwise disclosed to the Lender
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in writing;
(j) Except as otherwise permitted herein, the Borrower and each Guarantor and Subsidiary have filed all federal, state, and
local tax returns and other reports required by any applicable Laws to have been filed prior to the date hereof, has paid or
caused to be paid all taxes, assessments, and other governmental charges that are due and payable prior to the date hereof,
and has made adequate provision for the payment of such taxes, assessments, or other charges accruing but not yet payable;
neither the Borrower nor any Guarantor or any Subsidiary has any knowledge of any deficiency or additional assessment in a
materially important amount in connection with any taxes, assessments, or charges not provided for on their books;
(k) Except to the extent that the failure to comply would not materially interfere with the conduct of the business of the
Borrower, any Guarantor or Subsidiary, the Borrower and each Guarantor and Subsidiary have each complied with all applicable
Laws with respect to (1) any restrictions, specifications, or other requirements pertaining to products that it manufactures
or sells or to the services it performs; (2) the conduct of its business; and (3) the use, maintenance, and operation of the
real and personal properties owned or leased by it in the conduct of its business;
(l) No representation or warranty by or with respect to the Borrower, any Guarantor or Subsidiary contained herein or in any
certificate or other document furnished by the Borrower, any Guarantor or Subsidiary pursuant hereto contains any untrue
statement of a material fact or omits to state a 'material fact necessary to make such representation or warranty not
misleading in light of the circumstances under which it was made;
(m) Each consent, approval or authorization of, or filing, registration or qualification with, any Person required to be
obtained or effected by the Borrower, any Guarantor or Subsidiary in connection with the execution and delivery of this
Agreement, the Notes, and the Collateral Documents or the undertaking or performance of any obligation hereunder or
thereunder has been duly obtained or effected;
(n) All existing Indebtedness of the Borrower, any Guarantor or subsidiary: (1) for money borrowed, or (2) under any security
agreement, mortgage or agreement covering the lease by the Borrower, any Guarantor or Subsidiary as lessee of real or
personal property is described in Exhibit 5.01(N). As of the Closing Date, the outstanding principal amount of the
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Equipment Loan, the Term Loan and the Revolving Credit Loan (after giving effect to the Required Payment) is $300,000.00,
$131,000.00 and $1,250,000.00, respectively. No interest is accrued and unpaid on the Loans for any period prior to
February 28, 2001;
(o) Except as described in Exhibit 5.01(O), attached hereto, or otherwise disclosed to the Lender in writing, (a) no Borrower
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or Guarantor has any material leases, contracts, or commitments of any kind, the loss of which would have a material adverse
effect on the business, financial condition or results of operations of the Borrower and the Guarantor taken as a whole
(including, without limitation, employment agreements; collective bargaining agreements; powers of attorney; distribution
arrangements; licenses, patents, trademarks, service marks or license agreements; contracts for future purchase or delivery
of goods or rendering of services; bonuses, pension, and retirement plans; or accrued vacation pay, insurance, and welfare
agreements); (b) to the best knowledge of the Borrower and the Guarantors, all parties to all such material leases,
contracts, and other commitments to which the Borrower or any Guarantor is a party have complied with the provisions of such
leases, contracts, and other commitments; and (c) to the best of the Borrower's knowledge, no party is in default under any
thereof and no event has occurred which, but for the giving of notice or the passage of time, or both, would constitute a
default thereunder;
(p) Neither the Borrower nor any Guarantor has made any agreement or taken any action which may cause anyone to become
entitled to a commission or finder's fee as a result of or in connection with the making of the Loans;
(q) The consolidated federal tax returns of the Borrower and the Guarantors for all years of operation, including the year
ended October 31, 2000, have been filed with the Internal Revenue Service and have not been challenged;
(r) Any Employee Pension Benefit Plans, as defined in the Employee Retirement Income security Act of 1974, as amended
"ERISA"), of the Borrower and each Subsidiary meet, as of the date hereof, the minimum funding standards of 29 U.S.C.A.para
1082 (Section 302 of ERISA), and no Reportable Event or Prohibited Transaction, as defined in ERISA, has occurred with
respect to any Employee Benefit Plans, as defined in ERISA, of the Borrower or any Guarantor or Subsidiary; and
(s) The Liens and security interests created pursuant to Sections 4.02 and 4.03 are in all cases first and prior Liens except
for Permitted Liens and are superior to and prior to the rights of all third persons other than the holder of Permitted
Liens. Except with respect to Permitted Liens and the Liens created by the Collateral Documents, there is no currently
effective financing statement, security agreement, chattel mortgage, real estate mortgage or other document filed or
recorded with any filing records, registry, or other public office, that purports to cover, affect or give notice of any
present or possible future Lien on, or security interest in, any assets or property of the Borrower.
(t) Except as set forth in Exhibit 5.01(T), neither of the Borrower nor any of its Subsidiaries has generated, stored or
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disposed of any oil, hazardous substance or hazardous material as defined in the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 42 U.S.C. para 9601, et seq., applicable state or federal laws, or regulations
adopted pursuant thereto, in violation of applicable law: and, except as set forth on Exhibit 5.01(T), to the best of the
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Borrower's knowledge there has been no generation, storage, or disposal of any such materials by anyone else on the property
owned or leased by the Borrower or the Subsidiaries, nor have any such materials been present on such property.
(u) Neither Borrower nor the Guarantor or any of their Subsidiaries have any claims, counterclaims, causes of actions,
set-offs, defenses or any other rights (collectively, "Defenses") against the Lender and the Borrower, each Guarantor and
their Subsidiaries release and waiver any Defenses against the Lender as of the date hereof.
(v) As of the Closing Date immediately prior to and immediately following the consummation of the transactions contemplated
hereby and the extensions of credit to occur on such date the Borrower and its Subsidiaries are and will be Solvent on a
consolidated basis. The Borrower believes that no reasonably anticipated final judgment in a pending proceeding or, to its
knowledge, any threatened proceeding for money damages will be rendered at a time when, or in an amount such that, the
Borrower, each Guarantor and its Subsidiaries will be unable to satisfy such judgment promptly in accordance with their
terms (taking into account the maximum reasonable amount thereof, the earliest reasonable time at which such judgment might
be rendered and any insurance proceeds applicable to such judgement). The Borrower, each Guarantor and its Subsidiaries is
not contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a substantial portion of its property, and the Borrower, each Guarantor and their Subsidiaries has no
knowledge of any Person contemplating the filing of any such petition against the Borrower, each Guarantor and their
Subsidiaries.
All of the representations and warranties set forth in Section 5.01 shall survive until all Obligations are satisfied in
full and there remain no outstanding commitments hereunder.
Section 52. COVENANTS OF THE BORROWER
52.1 Affirmative Covenants .
The Borrower and each Guarantor do hereby individually and collectively covenant and agree with the Lender that, so long as
any of the obligations remain unsatisfied or any commitments hereunder remain outstanding, they will comply, or if appropriate cause
the Subsidiaries to comply, at all times with the following affirmative covenants:
(a) The Borrower will use the proceeds of the Revolving Credit Loans only for working capital and general corporate purposes,
and will furnish the Lender such evidence as it may reasonably require with respect to such use. The Borrower will make all
payments of principal, interest and other amounts in connection with the Notes and this Agreement in accordance with the
terms hereof and thereof, and will observe, perform and comply with each and every one of the covenants, terms and
conditions contained herein, in the Notes or in any other Credit Document to be observed, performed or complied with by it;
(b) The Borrower and the Guarantors will furnish the Lender:
(i) As soon as available and in any event within one hundred and twenty (120) days after the end of each fiscal year,
consolidated and consolidating audited financial statements of the Borrower and the Guarantors, together with all
notes and supplements thereto, prepared in reasonable detail and in accordance with generally accepted accounting
principles consistently applied, such statements to be duly certified by a certified, independent public accounting
firm selected by the Borrower and acceptable to the Lender ("CPA"), and consolidated audited financial statements
with audited supplemental consolidating financial information of the Borrower, the Guarantors and the Subsidiaries,
together with all notes and supplements thereto, prepared in reasonable detail and in accordance with generally
accepted accounting principles consistently applied, such statements to be duly certified by the CPA and which
statements shall be accompanied by an (A) unqualified opinion on the financial statements of the Borrower, the
Guarantors and the Subsidiaries, taken as a whole by the CPA, and (B) a statement executed by the Borrower's
President or Chief Financial Officer that to the best of his or her knowledge, following diligent inquiry, he or she
does not know of any condition or event which constitutes an Event of Default under this Agreement or which, after
notice, or lapse of time or both, would constitute such an Event of Default, or a statement specifying the nature
and period of existence of any such condition or event.
(ii) As soon as available, and in any event within thirty (30) days after the end of each monthly accounting period in each
fiscal year during the term of this Agreement, consolidated unaudited financial statements of the Borrower and the
Guarantors prepared in reasonable detail and in accordance with generally accepted accounting principles
consistently applied, certified by the President or Chief Financial Officer of the Borrower, which statements shall
contain balance sheets as of the end of such accounting period, statements of profit and loss and cash flow for the
period from the beginning of such fiscal year to the end of such accounting period.
(iii) With the annual financial statements furnished pursuant to subsections (a) hereof and within thirty (30) days after the
end of each other fiscal quarter, an officer's certificate substantially in the form of Exhibit 6.01(B) hereto
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certified by the President or Chief Financial Officer of the Borrower (the "Compliance Certificate"), and such other
reports as the Lender may reasonably request.
(iv) The Borrower shall furnish to the Lender not later than twenty (20) days following the end of each monthly accounting
period a "Borrowing Base Certificate" in the form of Exhibit 1.01 (A) attached hereto, completed and signed by the
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Borrower's Chief Financial Officer. The Borrowing Base shown on such certificate shall be of the last day of said
monthly accounting period. The Lender shall be under no obligation to make any further Revolving Credit Advances if
a Borrowing Base Certificate is not delivered within the specified period.
(v) Promptly after receipt by the Borrower, copies of the management letter, if any, provided by its independent certified
public accountants who audit the annual financial statements.
(vi) Promptly, copies of all reports and financial statements which the Borrower sends to its stockholders, in their capacity
as stockholders, as a class or which the Borrower files with the Securities and Exchange Commission or any other
public body.
(vii) Reports furnished to the Lender under this Agreement shall be prepared in accordance with generally accepted accounting
principles consistently applied, except that unaudited statements need not contain notes thereto and shall be
subject to normal year end adjustments. Compliance with the covenants set forth in this Agreement will be
determined in accordance with generally accepted accounting principles consistently applied.
(viii) Promptly after the sending or making available or filing of the same, copies of all reports, proxy statements, and
financial statements that the Borrower sends or makes available to its stockholders and all registration statements
and reports that the Borrower or any Guarantor files with the Securities and Exchange Commission or any successor
Person.
(ix) Upon the Lender's reasonable request, from time to time, copies of any or all agreements, contracts, or commitments
referred to in Section 5.01(o) hereof to the extent such agreements, contracts or commitments are not subject to
confidentiality requirements.
(x) Within 30 days from the Closing deliver to the Lender a pledge agreement, in form satisfactory to the Lender, which
pledges all of the Guarantors' capital stock owned by the Borrower, accompanied by executed UCC statements
reflecting such pledges, in form satisfactory to the Lender, and all stock certificates representing such capital
stock duly endorsed by the Borrower in blank.
(c) The Borrower and each Guarantor will maintain their Inventory, Equipment, real estate, and other properties in good
condition and repair (normal wear and tear excepted), and will pay and discharge or cause to be paid and discharged, when
due, the cost of repairs to, or maintenance of, the same, and will pay or cause to be paid in a timely manner all rental or
mortgage payments due on such real estate. The Borrower and each Guarantor hereby agree that, in the event any of them fails
to pay or cause to be paid any such payment, it will promptly notify the Lender thereof, and the Lender may, in its
discretion, do so and on demand be reimbursed therefor by the Borrower or the Guarantors;
(d) The Borrower and the Guarantors will maintain, or cause to be maintained, public liability insurance (subject to a maximum
of $5,000.00 in deductibles for each entity) and fire and extended coverage insurance on all assets that are of a character
usually insured by corporations engaged in the same or similar businesses, all in form and amount sufficient to indemnify
the Borrower or any Guarantor for 100% of the appraised value of any such asset lost or damaged (subject to any deductible
customary in the industry of the Borrower or any Guarantor) or in an amount consistent with the amount of insurance
generally carried on comparable assets within the industry and with such insurers as may be satisfactory to the Lender. The
Borrower or the Guarantors will cause all such insurance policies to contain a standard loss payee clause and to be payable
to the Lender as its interest may appear, to deliver the policies of insurance to the Lender. The Borrower will furnish to
the Lender such evidence of insurance as the Lender may require. The Borrower hereby agrees that, in the event it or any
Guarantor fails to pay or cause to be paid the premium on any such insurance when due, the Lender, in its discretion, may do
so and be reimbursed by the Borrower therefor. The Borrower and each Guarantor hereby assign to the Lender any returned or
unearned premiums that may be due the Borrower or any Guarantor upon cancellation by the insurer of any such policy for any
reason whatsoever and direct any such insurer to pay the Lender any amounts so due; provided, however, that the Lender will
pay to the Borrower or the appropriate Guarantor any such returned or unearned premiums within five (5) days after the
receipt thereof if there has not occurred and be continuing an Event of Default hereunder. The Lender is hereby appointed
the attorney-in-fact of the Borrower and each Guarantor (without requiring the Lender to act as such) to endorse any check
which may be payable to the Borrower or any Guarantor to collect any premiums or the proceeds of such insurance (other than
proceeds of public liability insurance), and any amount so collected may be applied by the Lender toward satisfaction of any
of the Obligations if an Event of Default has occurred and is continuing. If the Lender receives any proceeds from insurance
in the absence of an Event of Default, it shall remit such proceeds to the Borrower or such Guarantor within ten (10)
Business Days after the Lender's receipt of such proceeds, provided that immediately prior to any such remittance the Lender
is provided with a Borrowing Base Certificate reflecting a current Borrowing Base not less than the amount of the Revolving
Credit Loan then outstanding;
(e) The Borrower and the Guarantors will each pay or cause to be paid when due, all taxes, assessments, and charges or levies
imposed upon it or on any of its property or which it is required to withhold and pay except where contested in good faith
by appropriate proceedings with adequate reserves therefor having been set aside on its books; provided, however, that the
Borrower and each Guarantor or Subsidiary shall pay or cause to be paid all such taxes, assessments, charges or levies
forthwith whenever foreclosure on any lien that may have attached(or security therefor) appears imminent;
(f) The ratio of (a) the Borrower's Total Liabilities to (b) Net Worth shall be, as of the last day of each fiscal quarter,
commencing on March 31, 2001, equal to or less than the ratio of 2 to 1.
(g) EBITDA of the Borrower and the Guarantors on a consolidated basis shall for the three month period ending on the last
day of each quarter indicated below, shall equal or exceed the amount set forth opposite such period:
on the Following Quarter Ends Minimum EBITDA
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March 31, 2001 N/A
June 30, 2001 $100,000
September 30, 2001 $150,000
December 31, 2001 $175,000
Each quarter thereafter in the following years:
2002 $200,000
2003 $225,000
2004 $250,000
2005 $250,000
1. Capital Expenditures made or incurred by the Borrower and the Guarantors on a consolidated basis, shall not exceed
$300,000 without prior written consent of the Lender for each fiscal year of the Borrower.
2. The ratio of the Borrower's Current Assets to Current Liabilities shall at all times be equal to or exceed 1 to 1
3. The ratio of the (a) EBITDA of the Borrower and the Guarantors for the immediately preceding three month period set forth
below to (b) the sum of (i) fees and principal amortization on the Credit, plus (ii) consolidated interest expense for such
period, plus (iii) Capital Expenditures for such period, plus (iv) cash income taxes of the Borrower and its Subsidiaries
for the immediately preceding three month period, shall, as the last day of each fiscal quarter equal or exceed the ratio
indicated:
Quarter Ended Ratio
------------- -----
September 30, 2001 1.00
December 31, 2001 1.00
Each quarter end thereafter 1.05
| representatives of the Lender any of its books and records and will furnish the Lender any information regarding its business affairs and financial condition reasonably requested by the Lender within a reasonable time after written request therefor; |
| 2. | _________ The Borrower and the Guarantors will each take all necessary steps to preserve its corporate existence and franchises and comply with all present and future Laws applicable to it in the operation of its business, and all material agreements to which it is subject; |
3. The Borrower and the Guarantors will each collect its Accounts and sell its Inventory only in the ordinary course of business; 4. The Borrower and the Guarantors will each keep accurate and complete Records of its Accounts, Inventory, and Equipment consistent with sound business practices;
| 5. | _________ The Borrower and the Guarantors will each give immediate notice to the Lender of (1) any litigation or proceeding in which it is a party if an adverse decision therein would require it to pay more than $25,000.00, or deliver assets the value of which exceeds such sum (whether or not the claim is considered to be covered by insurance); and (2) the institution of any other suit or proceeding involving it that might materially and adversely affect its operations, financial condition, property, or business prospects; |
6. Within ten (10) days after the filing thereof, the Borrower and the Guarantors will furnish the Lender upon request with copies of federal income tax returns filed by the Borrower or any Guarantor;
| 7. | _________ The Borrower and the Guarantors will each pay when due (or within applicable grace periods) all of its other Indebtedness due third Persons except when the amount thereof is being contested in good faith by appropriate proceedings and with adequate reserves therefor being set aside on its books. If default be made by the Borrower or any Guarantor in the payment of any principal (or installment thereof) of, or interest on, any such Indebtedness, the Lender shall have the right, in its discretion, to pay such interest or principal for the account of the Borrower or such Guarantor and be reimbursed by the Borrower or such Guarantor therefor; |
| 8. | _________ The Borrower and the Guarantors will each notify the Lender immediately if it becomes aware of the occurrence of any Event of Default or of any fact, condition, or event that only with the giving of notice or passage of time or both, would become an Event of Default or if it becomes aware of any material adverse change in the business prospects, financial condition (including, without limitation, proceedings in bankruptcy, insolvency, reorganization, or the appointment of a receiver or trustee), or results of operations of the Borrower or any Guarantor or of the failure of the Borrower or any Guarantor to observe any of their respective undertakings hereunder or under the Collateral Documents; |
9. The Borrower and the Guarantors will each notify the Lender thirty (30) days in advance of any change in the location of any of its places of business or of the establishment of any new, or the discontinuance of any existing, place of business;
| 10. | ________ The Borrower and the Guarantors will each (1) fund any of its Employee Pension Benefit Plans in accordance with no less than the minimum funding standards of 29 U.S.C.A.§ 1082 (Section 302 of ERISA); (2) furnish the Lender, promptly after the filing of the same, with copies of any reports or other statements filed with the United States Department of Labor or the Internal Revenue Service with respect to any such Plan; and (3) promptly advise the Lender of the occurrence of any Reportable Event or Prohibited Transaction with respect to any Employee Benefit Plan; |
11. The Borrower and the Guarantors shall each maintain their primary operating accounts, to the extent in existence, with Fleet Bank N.A. until such time as the Loans are paid in full; and
| 12. | ________ The Borrower and the Guarantors shall each permit the Lender and its agents to conduct periodic audits and account debtor inquiries with respect to outstanding balances of Accounts and field audits on any premises occupied by the Borrower or on which any Collateral is located and shall pay to the Lender its reasonable costs and expenses related to each such audit on an annual basis not to exceed $25,000.00; |
B. Negative Covenants .
The Borrower and the Guarantors do hereby individually and collectively covenant and agree with the Lender that, so long as any of the obligations remain unsatisfied or any commitments hereunder remain outstanding, they will comply, or if appropriate cause the Subsidiaries to comply, at all times with the following negative covenants, unless otherwise indicated herein or the Lender shall otherwise have agreed in writing:
| 1. | _________ Except in connection with the transactions contemplated by the Merger, neither the Borrower nor any Guarantor or Subsidiary will enter into any merger, consolidation, reorganization or recapitalization, or reclassify its capital stock nor will the Borrower nor any Guarantor or Subsidiary change its name without thirty days, prior written notice to the Lender; |
2. Except in connection with the transactions contemplated by the Merger, neither the Borrower nor any Guarantor will sell, transfer, lease, or otherwise dispose of all or (except in the ordinary course of business) any part of its assets;
| 3. | _________ Neither the Borrower nor any Guarantor will sell, lease, transfer, assign, or otherwise dispose of any of the Collateral (excluding only Collateral which is obsolete and not used in the operation of their businesses) except in the ordinary course of business; |
4. Neither the Borrower nor any Guarantor will sell or otherwise dispose of, or for any reason cease operating, any of its divisions, franchises, or lines of business;
| 5. | _________ Neither the Borrower nor any Guarantor will mortgage, pledge, grant, or permit to exist a security interest in, or a lien upon, any of its assets of any kind, now owned or hereafter acquired, except for Permitted Liens, liens of the Collateral Documents, the pledge of the capital stock of PrimeSource Surgical, Inc. and existing liens listed on Exhibit 1.01(G) to the extent shown on such Exhibit 1.01(G) to be permitted to exist after the Closing; |
| 6. | _________ Neither the Borrower nor any Guarantor will become liable, directly or indirectly, as guarantor or otherwise for any obligation of any other Persons, including but not limited to any Subsidiary other than any Guarantor, except for (i) the Guaranties, (ii) the endorsement of commercial paper for deposit or collection in the ordinary course of business and (iii) the Limited Guaranty, dated as of March 2, 2001 by the Borrower in favor of Citizens Bank of Massachusetts; |
| 7. | _________ Neither the Borrower nor any Guarantor will incur, create, assume, or permit to exist any Indebtedness except: (1) the Obligations; (2) existing Indebtedness listed on Exhibit 1.01(G) to the extent shown on such Exhibit 1.01(G) to be permitted to exist after the Closing; (3) trade indebtedness incurred in the ordinary course of business (provided, however, that neither the Borrower nor any Guarantor may acquire inventory other than for cash or on open account except as expressly approved in writing and in advance by the Lender); (4) contingent Indebtedness permitted by Section 6.02(f); (5) lease obligations (capitalized or operating) in an amount in excess of $250,000 outstanding at any one time; (6) Indebtedness secured by Permitted Liens; (7) Indebtedness permitted pursuant to Section 6.01(k); (8) Indebtedness in respect of judgments or awards that have been in force for less than the applicable period for taking an appeal so long as execution is not levied thereunder or in respect of which the Borrower or such Guarantor shall at the time in good faith be prosecuting an appeal or proceedings for review and in respect of which a stay of execution shall have been obtained pending such appeal or review; and (9) Indebtedness pursuant to warranties of products or services issued in the ordinary course of business of the Borrower or any Guarantor. |
| 8. | _________ Neither the Borrower nor any Guarantor (other than a wholly owned Subsidiary of the Borrower) will declare or pay any dividends, or make any other payment or distribution on account of its capital stock nor make any assignment or transfer of Accounts (except to the Lender); |
| 9. | _________ Neither the Borrower nor any Guarantor will form, directly or indirectly, any subsidiary, make any investment in (including any assignment of Inventory or other property), or make any loan in the nature of an investment to, any Person, which shall exceed the aggregate amount of $50,000, other than investments of the Borrower in the Subsidiaries listed on Exhibit 5.01(A) and investments or loans (which loans must be subordinated to the Loans and approved by the Lender in writing in advance) made after the date hereof in the Borrower or any Guarantor; |
10. Neither the Borrower nor any Guarantor will make any loan or advance to any officer, shareholder, director, or employee of the Borrower or any Guarantor, except for business travel and similar temporary advances in the ordinary course of business; 11. Neither the Borrower nor any Guarantor shall have outstanding at any one time Indebtedness exceeding the aggregate amount of $250,000.00 in connection with the purchase or lease of fixed assets;
| 12. | _________ Except in connection with the transactions contemplated by the Merger, neither the Borrower nor any Guarantor or Subsidiary will purchase or otherwise invest in or hold securities, nonoperating real estate, or other nonoperating assets except: (1) direct obligations of the United States of America, or of a bank with assets of not less than $20,000,000,000.00 or other investments approved in advance in writing by the Lender; (2) the present investment in any such assets held as of October 31, 2000 and reflected in the Financial Statements; and (3) operating assets that hereafter become nonoperating assets or investments permitted under this Section 6.02; |
| 13. | ________ Except in connection with the transactions contemplated by the Merger, neither the Borrower nor any Guarantor or Subsidiary will redeem, purchase, or retire any of its capital stock or purchase or retire for any consideration, any warrant, right, or option pertaining thereto or other security convertible into any of the foregoing, or permit (i) with respect to the stock of the Borrower, any redemption or retirement of the outstanding capital stock of the Borrower, or (ii) with respect to the stock of any Guarantor or Subsidiary, any transfer, sale, redemption or retirement in the ownership of the outstanding capital stock of any Guarantor or Subsidiary; provided that this Section 6.02(m) shall not prohibit any exchange of capital stock in the Borrower or any of its Subsidiaries (other than those Subsidiaries which are also Guarantors) for other capital stock in the Borrower or any of its Subsidiaries (other than those Subsidiaries which are also Guarantors); |
| 14. | ________ Neither the Borrower nor any Guarantor will prepay Indebtedness for borrowed money except the Obligations, or Indebtedness secured by any of its assets (except the Obligations), or enter into or modify any agreement as a result of which the terms of payment of any of the foregoing Indebtedness are waived or modified; |
15. Neither the Borrower nor any Guarantor or subsidiary will enter into any sale-leaseback transaction;
| 16. | ________ Except in connection with the transactions contemplated by the Merger, neither the Borrower nor any Guarantor or Subsidiary will acquire or agree to acquire any stock in, or all or substantially all of the assets of, any Person other than the Borrower and subject to the provisions of Section 6.02(1) hereof; |
| 17. | ________ Neither the Borrower nor any Guarantor or subsidiary will furnish the Lender any certificate or other document that will contain any untrue statement of material fact or that will omit to state a material fact necessary to make it not misleading in light of the circumstances under which it was furnished; and |
| 18. | ________ Neither the Borrower nor any Guarantor or Subsidiary will directly or indirectly apply any part of the proceeds of the Loans to the purchasing or carrying of any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, or any regulations, interpretations, or rulings thereunder. |
| 19. | ________ Neither the Borrower or any Guarantor shall sell, assign, transfer or otherwise engage in any transaction or business, including but not limited to the sale, assignment or transfer of Inventory, (collectively a “Transaction”) with any Subsidiary or affiliate except in the ordinary course of business, on a bona fide arms length basis and on terms no less favorable to the Borrower or any Guarantor than if the Transaction was entered into with any third (unrelated) Person. |
| 20. | ________ The Borrower will neither terminate the Tax Sharing Agreement nor amend, supplement, discharge or waive any provision of the Tax Sharing Agreement without the prior written consent of the Lender which consent shall not be unreasonably withheld. |
Section 53. DEFAULT 53.1 Events of Default .
The occurrence of any one or more of the following events shall constitute an Event of Default hereunder:
(a) The Borrower or any Guarantor shall fail to pay when due any of its obligations to pay money to the Lender;| (b) | ________ The Borrower or any Guarantor shall fail to observe or perform any of its Obligations other than payment of money to be observed or performed by it hereunder, under any of the Collateral Documents or otherwise, and such failure shall continue for fifteen (15) days after (1) notice of such failure from the Lender; or (2) the Lender is notified of such failure or should have been so notified pursuant to the provisions of section 6.01(0), whichever is earlier; |
| (c) | ________ The Borrower or any Guarantor shall fail to pay any Indebtedness exceeding the aggregate amount of $25,000.00 due any third Persons, and such failure shall continue beyond any applicable grace period, or the Borrower or any Guarantor shall suffer to exist any other event of default under any agreement evidencing Indebtedness exceeding the aggregate amount of 25,000.00 binding upon the Borrower or any Guarantor or Subsidiary and such event of default shall permit the holders thereof to accelerate the maturity thereof; |
| (d) | ________ Any financial statement, representation, warranty, or certificate made or furnished by or with respect to the Borrower or any Guarantor to the Lender in connection with this Agreement, or in any separate statement or document to be delivered to the Lender hereunder, shall be materially false, incorrect, or incomplete when made; |
(e) The Borrower or any Guarantor shall admit its inability to pay its debts as they mature or shall make an assignment for the benefit of itself or any of its creditors;
| (f) | ________ Proceedings in bankruptcy, or for reorganization of the Borrower or any Guarantor, or for the readjustment of any of their respective debts under the Bankruptcy Code, as amended, or any part thereof, or under any other Laws, whether state or federal, for the relief of debtors, now or hereafter existing, shall be commenced against or by the Borrower or any Guarantor and, except with respect to any such proceedings instituted by the Borrower or any Guarantor, shall not be discharged within sixty (60) days of their commencement; |
| (g) | ________ A receiver or trustee shall be appointed for the Borrower or any Guarantor for any substantial part of their respective assets, or any proceedings shall be instituted for the dissolution or the full or partial liquidation of the Borrower or any Guarantor, and except with respect to any such appointments requested or instituted by the Borrower or any Guarantor, such receiver or trustee shall not be discharged within sixty (60) days of his appointment, and except with respect to any such proceedings instituted by the Borrower or any Guarantor, such proceedings shall not be discharged within sixty (60) days of their commencement, or the Borrower or any Guarantor shall discontinue business or materially change the nature of its business, or the Collateral becomes, in the reasonable judgment of the Lender, insufficient in value to satisfy the Obligations, or the Lender otherwise reasonably finds itself insecure as to the prompt and punctual payment and discharge of the Obligations; |
| (h) | ________ The Borrower or any Guarantor shall suffer final judgments for payment of money aggregating in excess of $50,000.00 and shall not discharge the same within a period of thirty (30) days unless, pending further proceedings, execution has not been commenced or, if commenced, has been effectively stayed; |
| (i) | ________ A judgment creditor of the Borrower or any Guarantor shall obtain possession of any of the Collateral by any means, including (without implied limitation) levy, distraint, replevin, or self-help; |
(j) Any Guarantor shall fail to comply fully with the requirements of, or shall terminate or attempt to terminate, any Guaranty; (k) An Event of Default (as defined therein) has occurred and is continuing under the Amended and Restated Credit Agreement dated June 14, 1999 by and among PrimeSource Surgical, Inc., Bimeco, Inc., Medical Companies Alliance, Inc., Xxxxxxx Medical Inc. and State Street Bank and Trust Company, as amended; (l) The Borrower's failure to pledge the Guarantors' capital stock owned by the Borrower in accordance with the provisions of Section 6.01(b)(x); (m) The Borrower failing to deliver by April 2, 2001 an executed Form UCC-3 Termination Statement in form satisfactory to the Lender terminating all Liens of Rockford Industries Inc. against the Borrower. 53.2 Acceleration .
At its option, and at any time upon the occurrence of any Event of Default, the Lender may, whether immediately or otherwise, declare all obligations of the Borrower or any Guarantor to be immediately due and payable without further action of any kind without notice, demand or presentment and in the case of an Event of Default referred to in clause (f) and (g) of this Section 7 with respect to the Borrower or any Guarantor, the Obligation of the Lenders to honor a Revolving Credit Advance shall automatically be terminated and the principal amount then outstanding of, and the accrued interest on, Loans and all other amounts payable by Borrower and the Guarantors hereunder and the Notes shall automatically become immediately due and payable without presentment, demand, protests on other formalities of any kind, all of which are hereby expressly waived by Borrower and the Guarantors.
Section 54. THE LENDER'S RIGHTS AND REMEDIES 54.1 The Lender's Rights Upon Default .Upon the occurrence of an Event of Default and at any time thereafter, the Lender, without presentment, demand, notice, protest or advertisement of any kind, will have the following rights:
54.2 Account Debtors .Upon the occurrence of an Event of Default and at any time thereafter, the Lender may institute a lockbox for the collection of payments and/or notify account debtors, at the Borrower’s expense, that the Collateral has been assigned to the Lender and that payments shall be made directly to the Lender. Upon request of the Lender, the Borrower will enter into an agreement establishing such a lockbox and/or notify such account debtors that their accounts must be paid to the Lender. Upon the occurrence of an Event of Default and at all times thereafter, the Borrower will hold all checks, drafts, cash and other remittances in trust for the Lender and deliver them in kind to the Lender. The Lender shall have full power to collect, compromise, endorse, sell or otherwise deal with the Collateral or proceeds thereof in its own name or in the name of the Borrower.
54.3 Possession and Foreclosure of Collateral .Upon the occurrence of an Event of Default and at any time thereafter, to the extent that the Borrower or any Guarantor could legally do so, (i) the Lender may enter onto, occupy and use any premises owned by the Borrower or any Guarantor or in which the Borrower or any Guarantor has any interest, (ii) the Lender may take possession of all Collateral, (iii) in the Lender’s sole discretion, the Lender may operate and use the Borrower’s or any Guarantor’s equipment, complete work in process and sell inventory without being liable to the Borrower on account of any losses, damage or depreciation that may occur as a result thereof (so long as the Lender acts in good faith), (iv) the Lender may lease or license the Collateral to any Person for such purposes (v) in any event, the Lender may sell, lease, assign and deliver the whole or any part of the Collateral, at public or private sale, for cash, upon credit or for future delivery, at such prices and upon such terms as the Lender deems advisable and (vi) the Lender may sell or lease Collateral alone or in conjunction with other property, real or personal, and allocate the sale proceeds or leases among the items of Collateral sold without the necessity of the Collateral being present at any such sale, or in view of prospective purchasers thereof. If notice of such sale is legally required, the Borrower and the Guarantors agree that ten (10) days written notice shall be deemed reasonable. Upon such sale, the Lender may become the purchaser of the whole or any part of the Collateral sold, discharged from all claims and free from any right of redemption. In case of any such sale by the Lender of all or any of the Collateral on credit, or for future delivery, such Collateral so sold may be retained by the Lender until the selling price is paid by the purchaser. The Lender shall incur no liability in case of the failure of the purchaser to take possession and pay for the Collateral so sold. In case of any such failure, the said Collateral may be resold. Any Collateral remaining unsold after being offered at public auction may be abandoned or disposed of for no consideration in such manner as the Lender deems appropriate.
In any event, at any time and from time to time the Lender may abandon the Collateral or any part thereof. The Borrower and the Guarantors agree immediately upon demand to take possession of any and all abandoned Collateral and to remove it from any location in the possession of or under the control of the Lender.
54.4 Use of Intellectual Property .Upon the occurrence of an Event of Default and at any time thereafter, the Lender may use all or any part of the Borrower’s or any Guarantor’s Intellectual Property which the Borrower or any Guarantor now has or may hereafter acquire. The Lender may license such Intellectual Property to third parties, seek registration of such Intellectual Property in any state or nation or prosecute pending applications for patent, trademark, or service marks in the Borrower’s or any Guarantor’s name in any state or nation.
54.5 Notification of Default to Third Parties .Upon the occurrence of an Event of Default and at any time thereafter, the Lender may notify the Borrower’s or any Guarantor’s suppliers, account debtors and other third parties of the default and of any and all decisions made and actions taken by the Lender with respect to this Agreement, the Obligations or the Collateral, without liability of any kind.
54.6 Assembly of Collateral .Upon the occurrence of an Event of Default and at any time thereafter, the Lender may require the Borrower to assemble the Collateral in a single location at a place to be designated by the Lender and make the Collateral at all times secure and available to the Lender.
54.7 Right of Set-Off .Upon the occurrence of an Event of Default and at any time thereafter, the Lender may, and is hereby authorized by the Borrower and the each Guarantor, at any time and from time to time, to the fullest extent permitted by applicable Laws, without advance notice to the Borrower or any Guarantor (any such notice being expressly waived by the Borrower and each Guarantor), set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and any other indebtedness at any time owing by the Lender to, or for the credit or the account of, the Borrower or any Guarantor against any or all of the Obligations of the Borrower or any Guarantor, now or hereafter existing, whether or not such obligations have matured and irrespective of whether the Lender has exercised any other rights that it has or may have with respect to such Obligations, including without limitation any acceleration rights. The Lender agrees promptly to notify the Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Lender under this Section 8.07 are in addition to the other rights and remedies (including, without limitation, other rights of set-off) which the Lender may have.
54.8 Exercise of Other Remedies .Upon the occurrence of any Event of Default and at any time thereafter, the Lender may exercise the remedies of a Lender afforded by the Uniform Commercial Code and other applicable law or by the terms of any agreement between the Borrower, any or all of the Guarantors and the Lender.
54.9 Cumulative Rights and Remedies .All rights and remedies of the Lender, whether provided for herein or in other agreements, instruments or documents or conferred by law, are cumulative and may be exercised alone or simultaneously.
Section 55. ATTORNEY-IN-FACT 55.1 Attorney-In-Fact .Upon the occurrence and during the continuance of an Event of Default, the Borrower and the Guarantors hereby irrevocably appoint the Lender, or its designee, as the Borrower’s and the Guarantors’ true and lawful attorney-in-fact, with full power as follows: (1) to endorse the name of the Borrower and the Guarantors on any assignments, notes, checks, drafts, money orders, or other instruments of payment for Collateral; (2) to sign or endorse the name of the Borrower and the Guarantors on any negotiable instrument, invoice, freight or express xxxx, xxxx of lading, storage or warehouse receipts, drafts, assignments, verifications and notices in connection with Accounts; (3) to obtain, adjust, settle and cancel, in the Borrower’s and the Guarantors’ names, insurance policies as required by Section 6.01(D) and to sign the Borrower’s and the Guarantors’ names on settlement checks or drafts; (4) in the Borrower’s and the Guarantors’ names, to do any act which this Agreement requires Borrower and the Guarantors to do, and, (5) to give notice to the United States Post Office to effect changes of address so that mail addressed to the Borrower and the Guarantors may be delivered directly to the Lender. In exercising this power-of-attorney, the Lender shall not be liable to the extent that it acts in good faith.
Section 56. MISCELLANEOUS 56.1 Construction .The provisions of this Agreement shall be in addition to those of any guaranty, pledge or security agreement, note, or other evidence of liability now or hereafter held by the Lender, all of which shall be construed as complementary to each other. Nothing herein contained shall prevent the Lender from enforcing any or all other guaranty, pledge or security agreements, notes, or other evidences of liability in accordance with their respective terms.
56.2 Further Assurances .From time to time, the Borrower and each Guarantor will execute and deliver to the Lender such additional documents and will provide such additional information as the Lender may reasonably require to carry out the terms of this Agreement and be informed of the status and affairs of the Borrower and each Guarantor.
56.3 Enforcement and Waiver by the Lender .The Lender shall have the right at all times to enforce the provisions of this Agreement and the Collateral Documents in strict accordance with the terms hereof and thereof, notwithstanding any conduct or custom on the part of the Lender in refraining from so doing at any time or times. The failure of the Lender at any time or times to enforce its rights under such provisions, strictly in accordance with the same, shall not be construed as having created a custom in any way or manner contrary to specific provisions of this Agreement or as having in any way or manner modified or waived the same. All rights and remedies of the Lender are cumulative and concurrent and the exercise of one right or remedy shall not be deemed a waiver or release of any other right or remedy.
56.4 Expenses of the Lender .The Borrower and each Guarantor will, on demand, reimburse the Lender for all expenses, including the reasonable fees and expenses of legal counsel for the Lender, incurred by the Lender in connection with the preparation, administration, amendment, modification, or enforcement of this Agreement and the Collateral Documents and the collection or attempted collection of any of the Obligations.
56.5 Notices .Any notices or consents required or permitted by this Agreement shall be in writing and shall be deemed delivered if delivered in person or if sent by certified mail, postage prepaid, return receipt requested, facsimile or telegraph, as follows, unless such address is changed by written notice hereunder:
or any Guarantor: c/o Prime Source Surgical
0000 X. Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
With a copy to: Luxtec Corporation
00 Xxxxxxxx Xxxxxx
Xxxx Xxxxxxxx, XX 00000
Attention: Xxx Xxxxx
(B) If to the Lender: ARK CLO 2000-1, LIMITED
c/o Patriarch Partners, LLC
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx
Xxxxxx Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Xxxxxxxx Xxxxxx Xxxxx and Xxxx
Xxx Xxxxx Xxxxxxxxx Xxxxx,
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
To the maximum extent permitted by applicable Laws, the Borrower and the Guarantors:
(a) Waive (1) except as the same may herein be specifically granted, notice of acceleration and of intention to accelerate;
and (2) notice and opportunity to be heard, after acceleration in the manner provided in Section 7.02, before exercise by
the Lender of the remedies of self-help, set-off, or of other summary procedures permitted by any applicable Laws or by any
agreement with the Borrower or any Guarantor, and, except where required hereby or by any applicable Laws, notice of any
other action taken by the Lender; and
(b) Indemnify the Lender and its officers, attorneys, agents, and employees from all claims for loss or damage related to this
Agreement, the Loans, the Collateral Documents, the transactions contemplated thereby, the Lender's enforcement of its
rights with respect thereto or the relationship by and among the Lender, the Borrower and each Guarantor caused by any act
or omission on the part of any of them except willful misconduct or gross negligence.
56.7 Participation .
Notwithstanding any other provision of this Agreement, the Borrower and each Guarantor understands that the Lender may at
any time enter into participation agreements with one or more participating banks whereby the Lender will allocate certain
percentages of its commitment to them. The Borrower and each Guarantor acknowledge that, for the convenience of all parties, this
Agreement is being entered into with the Lender only and that its obligations under this Agreement are undertaken for the benefit of,
and as an inducement to, any such participating bank as well as the Lender, and the Borrower and each Guarantor hereby grant to each
such participating bank, to the extent of its participation in the Loans, the right to set off deposit accounts maintained by the
Borrower and the each Guarantor with such bank. Notwithstanding any participation contemplated hereunder, the Borrower shall deal
exclusively with the Lender. Failure of a participating bank to fund its portion of any Loans required to be funded pursuant to this
Agreement shall not excuse the Lender of its obligations to fund such Loans.
56.8 Waiver of Jury Trial .
THE BORROWER, EACH GUARANTOR AND THE LENDER WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY, WITH RESPECT TO ANY SUIT,
ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT OR INSTITUTED BY ANY PARTY TO THIS AGREEMENT OR ANY OF THEIR SUCCESSORS
AND ASSIGNS, WHICH RELATES DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE LOANS, THE COLLATERAL DOCUMENTS OR THE RELATIONSHIP BY AND
AMONG THE LENDER, THE BORROWER AND/OR THE ANY OR ALL OF THE GUARANTORS.
56.9 Applicable Law; Consent to Jurisdiction .
This Agreement shall be subject to and construed and enforced in accordance with the laws of the State of New York. The
Borrower, the Lender and each Guarantor irrevocably consents and submits to the exclusive jurisdiction of the United States District
Court for the Southern District of New York, located in the County of New York or the Courts of the State of New York located in the
county of New York in connection with any action, proceeding or claim arising out of or relating to this Agreement or other document
executed in connection with this Agreement. In any such litigation, the Borrower, the Lender and each Guarantor waive personal
service and agree that service may be made by certified mail directed, in the case of the Borrower and the Lender, to the location
specified for notices under this Agreement and, in the case of each Guarantor, to its last known address.
56.10 Binding Effect, Assignment, and Entire Agreement .
This Agreement shall inure to the benefit of, and shall be binding upon, the respective successors and permitted assigns of
the parties hereto. Neither the Borrower nor any Guarantor has any right to assign any of its rights or obligations hereunder without
the prior written consent of the Lender. The Lender may assign all or a portion of its interests, rights and obligations under the
Loans, the Notes and this Agreement held by it upon the consent of the Borrower (not to be unreasonable withheld or delayed) to any
other person or entity provided however, that no such consent will be required upon the occurrence and continuance of an Event of
Default under this Agreement. This Agreement, including the Exhibits hereto, all of which are hereby incorporated herein by
reference, and the documents executed and delivered pursuant hereto, constitute the entire agreement between the parties hereto and
may be amended only by a writing signed on behalf of each such party.
56.11 Severability .
If any provision of this Agreement shall be held invalid under any applicable Laws, such invalidity shall not affect any
other provision of this Agreement that can be given effect without the invalid provision, and, to this end, the provisions hereof are
severable.
56.12 Counterparts .
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute but one and the same instrument. Delivery by fax of an executed counterpart of a signature page to
this Agreement shall be effective as delivery of an original executed counterpart of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as a sealed instrument as of the day and year first
above written.
By: /s/ Xxxxxx X. Stein________________
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
FIBER IMAGING TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Stein________________
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
CATHTEC INCORPORATED
By /s/ Xxxxxx X. Stein________________
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
CARDIODYNE, INC.
By: /s/ Xxxxxx X. Stein________________
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
ARK CLO 2000-1, LIMITED
By: PATRIARCH PARTNERS, LLC,
its Collateral Manager
By: /s/ Xxxxxx Dolan__________________
Name: Xxxxxx Xxxxx
Title: Principal
