EXHIBIT 10.23
BUSINESS LOAN AGREEMENT
===============================================================================
Borrower: STAAR SURGICAL COMPANY Lender: First Interstate Bank of California
0000 Xxxxxx Xxxxxx Xxx Xxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000 0000 X. Xxxxxx Xxx. Xxxxx, Xxx. 000
Xxxx Xxxxxx, XX 00000
===============================================================================
THIS BUSINESS LOAN AGREEMENT between STAAR SURGICAL COMPANY ("Borrower") and
First Interstate Bank of California ("Lender") is made and executed on the
following terms and conditions. Borrower has received prior commercial loans
from Lender or has applied to Lender for a commercial loan or loans and other
financial accommodations, including those which may be described on any exhibit
or schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations
from Lender to Borrower, are referred to in this Agreement individually as the
"Loan" and collectively as the "Loans." Borrower understands and agrees that:
(a) in granting, renewing, or extending any Loan, Lender is relying upon
Borrower's representations, warranties, and agreements, as set forth in this
Agreement; (b) the granting, renewing, or extending of any Loan by Lender at
all times shall be subject to Lender's sole judgment and discretion; and (c)
all such Loans shall be and shall remain subject to the following terms and
conditions of this Agreement.
TERM. This Agreement shall be effective as of February 15, 1996, and shall
continue thereafter until all indebtedness of Borrower to Lender has been
performed in full or until February 15, 1997, whichever is later.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
Agreement. The word "Agreement" means this Business Loan Agreement, as this
Business Loan Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Business Loan
Agreement from time to time.
Borrower. The word "Borrower" means STAAR SURGICAL COMPANY. The word
"Borrower" also includes, as applicable, all subsidiaries and affiliates of
Borrower as provided below in the paragraph titled "Subsidiaries and
Affiliates."
CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
Cash Flow. The words "Cash Flow" mean net income after taxes, and exclusive
of extraordinary gains and income, plus depreciation and amortization.
Collateral. The word "Collateral" means and includes without limitation all
property and assets granted as collateral security for a Loan, whether real
or personal property, whether granted directly or indirectly, whether
granted now or in the future, and whether granted in the form of a security
interest, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien, charge, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise.
Debt. The word "Debt" means all of Borrower's liabilities excluding
Subordinated Debt.
ERISA. The word "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "EVENTS OF DEFAULT."
Grantor. The word "Grantor" means and includes without limitation each and
all of the persons or entities granting a Security interest in any
Collateral for the indebtedness, including without limitation all Borrowers
granting such a Security Interest.
Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in
connection with any indebtedness.
Indebtedness. The word "Indebtedness" means and includes without limitation
all Loans, together with all other obligations, debts and liabilities of
Borrower to Lender, or any one or more of them, as well as all claims by
Lender against Borrower, or any one or more of them; whether now or
hereafter existing, voluntary or involuntary, due or not due, absolute or
contingent, liquidated or unliquidated; whether Borrower may be liable
individually or jointly with others; whether Borrower may be obligated as a
guarantor, surely, or otherwise; whether recovery upon such indebtedness
may be or hereafter may become barred by an statute of limitations; and
whether such indebtedness may be or hereafter may become otherwise
unenforceable.
Lender. The word "Lender" means First Interstate Bank of California, its
successors and assigns.
Liquid Assets. The words "Liquid Assets" means Borrower's cash on hand plus
Borrower's receivables.
Loan. The word "Loan" or "Loans" means and includes without limitation any
and all commercial loans and financial accommodations from Lender to
Borrower, whether now or hereafter existing, and however evidenced,
including without limitation those loans and financial accommodations
described herein or described on any exhibit or schedule attached to this
Agreement from time to time .
Note. The word "Note" means and includes without limitation Borrower's
promissory note or notes, if any, evidencing Borrower's Loan obligations in
favor of Lender, as well as any substitute, replacement or refinancing note
or notes therefor.
Permitted Liens. The words "Permitted Liens" mean: (a) liens and security
interests securing indebtedness owed by Borrower to Lender; (b) liens for
taxes, assessments, or similar charges either not yet due or being
contested in good faith; (c) liens of materialmen, mechanics, warehousemen,
or carriers, or other like liens arising in the ordinary course of business
and securing obligations which are not yet delinquent; (d) purchase money
liens or purchase money security interests upon or in any property acquired
or held by Borrower in the ordinary course of business to secure
indebtedness outstanding on the date of this Agreement or permitted to be
incurred under the paragraph of this Agreement titled "Indebtedness and
Liens"; (e) liens and security interests which, as of the date of this
Agreement, have been disclosed to and approved by the Lender in writing;
and (f) those liens and security interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to
the net value of Borrower's assets.
Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan
02-15-1996 BUSINESS LOAN AGREEMENT Page 2
(Continued)
================================================================================
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with
the indebtedness.
Security Agreement. The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
interest.
Security interest. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.
XXXX. The word "XXXX" means the Superfund Amendments and Reauthorization
Act of 1986 as now or hereafter amended.
Subordinated Debt. The words "Subordinated Debt" mean indebtedness and
liabilities of Borrower which have been subordinated by written agreement
to indebtedness owed by Borrower to Lender in form and substance acceptable
to Lender.
Tangible Net Worth. The words "Tangible Net Worth" mean Borrower's total
assets excluding all intangible assets (i.e., goodwill, trademarks,
patents, copyrights, organizational expenses, and similar intangible items,
but including leaseholds and leasehold improvements) less total Debt.
Working Capital. The words "Working Capital" mean Borrower's current
assets, excluding prepaid expenses, less Borrower's current liabilities.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all the conditions set
forth in this Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender in form satisfactory to
Lender the following documents for the loan: (a) the Note, (b) Security
Agreements granting to Lender security interests in the Collateral, (c)
Financing Statements perfecting Lender's Security interests; (d)
evidence of insurance as required below; and (e) any other documents
required under this Agreement or by Lender or its counsel.
Borrower's Authorization. Borrower shall have provided in form and
substance to Lender properly certified resolutions, duly authorizing the
execution and delivery of this Agreement, the Note and the Related
Documents, and such other authorizations and other documents and
instruments as Lender or its counsel, in their sole discretion, may
require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in
this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
No Event of Default. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any indebtedness exists:
Organization. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the law of the State of Delaware and
is validly existing and in good standing in all states in which Borrower is
doing business. Borrower has the full power and authority to own its
properties and to transact the businesses in which it is presently engaged
or presently proposes to engage. Borrower also is duly qualified as a
foreign corporation and is in good standing in all states in which the
failure to so qualify would have a material adverse effect on its business
or financial condition.
Authorization. The execution, delivery, and performance of this Agreement
and all Related Documents by Borrower, to the extent to be executed,
delivered or performed by Borrower, have been duly authorized by all
necessary action by Borrower, do not require the consent or approval of any
other person, regulatory authority or governmental body; and do not
conflict with, result in a violation of, or constitute a default under
(a) any provision of its articles of incorporation or organization, or
bylaws, or any agreement or other instrument binding upon Borrower or
(b) any law, governmental regulation, court decree, or order applicable
to Borrower.
Financial information. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not
presently due and payable. Borrower owns and has good title to all of
Borrower's properties free and clear of all Security interest, and has not
executed any security documents or financing statements relating to such
properties. All of Borrower's properties are titled in Borrower's legal
name, and Borrower has not used, or filed a financing statement under, any
other name for at least the last five (5) years.
Hazardous Substances. The term "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Agreement,
shall have the same meanings as set forth in the "CERCLA," "XXXX," the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,
the Resource Conservation and Recovery Act, 49 U.S.C. Section 6901, et
seq., Chapters 6.5 through 7.7 of Division 20 of the California Health and
Safety Code, Section 25100, et seq., or other applicable state or Federal
Laws, rules, or regulations adopted pursuant to any of the foregoing.
Except as disclosed to and approved by Lender in writing, Borrower
represents and warrants that (a) During the period of Borrower's ownership
of the properties, there has been no use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any hazardous waste
or substance by any person on, under, or about any of the properties. (b)
Borrower has no knowledge of, or reason to believe that there has been (i)
any use, generation, manufacture, storage, treatment, disposal, release, or
threatened release of any hazardous waste or substance by any prior owners
or occupants of any of the properties, or (ii) any actual or threatened
litigation or claims of any kind by any person relating to such matters.
(c) Neither Borrower nor any tenant, agent or other authorized user of any
of the properties shall use, generate, manufacture, store, treat, dispose
of, or release any hazardous waste or substance on, under, or about any of
the properties; and any such activity shall be conducted in compliance with
all applicable federal, state, and local laws, regulations, and ordinances,
including without limitation those laws, regulations and ordinances
described above. Borrower authorizes Lender and its agents to enter upon
the properties to make such inspections and tests as Lender may deem
appropriate to determine compliance of the properties with this section of
the Agreement. Any inspections or tests made by Lender shall be at
Borrower's expense and for Lender's purpose only and shall not be construed
to create any responsibility or liability on the part of Lender to Borrower
or to any other person. The representations and warranties contained herein
are based on Borrower's due diligence in investigating the properties for
hazardous waste. Borrower hereby (a) releases and waives any
02-15-1996 BUSINESS LOAN AGREEMENT Page 3
(Continued)
================================================================================
future claims against Lender for indemnity or contribution in the event
Borrower becomes liable for cleanup or other costs under any such laws, and
(b) agrees to indemnify and hold harmless Lender against any and all
claims, losses, liabilities, damages, penalties, and expenses which Lender
may directly or indirectly sustain or suffer resulting from a breach of
this section of the Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release occurring
prior to Borrower's ownership or interest in the properties, whether or not
the same was or should have been known to Borrower. The provisions of this
section of the Agreement, including the obligation to indemnify, shall
survive the payment of the indebtedness and the termination or expiration
of this Agreement and shall not be affected by Lender's acquisition of any
interest in any of the properties, whether by foreclosure or otherwise.
Litigation and Claims. No litigation, claims, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and not other event has occurred which
my materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any, that
have been disclosed to and approved by Lender in writing.
Taxes. To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all
taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good faith
in the ordinary course of business and for which adequate reserves have
been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may in any way be
superior to Lender's Security Interests and rights in and to such
Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements directly
or indirectly securing repayment of Borrower's Loan and Note and all of the
Related Documents are binding upon Borrower as well as upon Borrower's
successors, representatives and assigns, and are legally enforceable in
accordance with their respective terms.
Commercial Purposes. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.
Employee Benefit Plans. Each employee benefit plan as to which Borrower may
have any liability compiles in all material respects with all applicable
requirements of law and regulations, and (i) no Reportable Event nor
Prohibited Transaction (as defined in ERISA) has occurred with respect to
any such plan, (ii) Borrower has not withdrawn from any such plan or
initiated steps to do so, and (iii) no steps have been taken to terminate
any such plan.
Location of Borrower's Offices and Records. Borrower's place of business,
or Borrower's Chief executive office, if Borrower has more than one place
of business, is located at 0000 Xxxxxx Xxxxxx, Xxxxxxxx, XX 00000. Unless
Borrower has designated otherwise in writing this location is also the
office or offices where Borrower keeps its records concerning the
Collateral.
Information. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender will
be, true and accurate in every material respect on the date as of which
such information is dated or certified; and none of such information is or
will be incomplete by omitting to state any material fact necessary to make
such information not misleading.
Survival of Representations and Warranties. Borrower understands and agrees
that Lender, without independent investigation, is relying upon the above
representations and warranties in extending Loan Advances to Borrower.
Borrower further agrees that the foregoing representations and warranties
shall be continuing in nature and shall remain in full force and effect
until such time as Borrower's indebtedness shall be paid in full, or until
this Agreement shall be terminated in the manner provided above, whichever
is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings
or similar actions affecting Borrower or any Guarantor which could
materially affect the financial condition of Borrower or the financial
condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis and
permit Lender to examine and audit Borrower's books and records at all
reasonable times.
Financial Statements. Furnish Lender with, as soon as available, but in no
event later than one hundred twenty (120) days after the end of each fiscal
year, Borrower's balance sheet and income statement for the year ended,
audited by a certified public accountant satisfactory to Lender, and, as
soon as available, but in no event later than sixty (60) days after the end
of each fiscal quarter, Borrower's balance sheet and profit and loss
statement for the period ended, prepared and certified as correct to the
best knowledge and belief by Borrower's chief financial officer or other
officer or person acceptable to Lender. All financial reports required to
be provided under this Agreement shall be prepared in accordance with
generally accepted accounting principles, applied on a consistent basis,
and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and statements,
lists of assets and liabilities, agings of receivables and payables,
inventory schedules, budgets, forecasts, tax returns, and other reports
with respect to Borrower's financial condition and business operations as
Lender may request from time to time.
Financial Covenants and Ratios. Comply with the following covenants and
ratios.
Working Capital. Maintain Working Capital in excess of $11,000.00.
Except as provided above, all computations made to determine
compliance with the requirements contained in this paragraph shall be
made in accordance with generally accepted accounting principles,
applied on a consistent basis, and certified by Borrower as being
true and correct.
Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with
respect to Borrower's properties and operations, in form, amounts,
coverages and with insurance companies reasonably acceptable to
Lender. Borrower, upon request of Lender, will deliver to Lender from
time to time the policies or certificates of insurance in form
satisfactory to Lender, including stipulations that coverages will
not be cancelled or diminished without at least ten (10) days' prior
written notice to Lender. Each insurance policy also shall include an
endorsement providing that coverage in favor of Lender will not be
impaired in any way by any act, omission or default of Borrower or
any other person. In connection with all policies covering assets in
which Lender holds or is offered a security interest for the Loans,
Borrower will provide Lender with such loss payable or other
endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the
name of the issuer; (b) the risks insured; (c) the amount of the policy;
(d) the properties insured; (e) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (f) the expiration date of the policy. In addition, upon
request of Lender (however not more often than annually), Borrower will
have an independent appraiser satisfactory to Lender determine, as
applicable, the actual cash value or replacement cost of any Collateral.
The cost of such appraisal shall be paid by Borrower.
Other Agreements. Comply with all terms and conditions of all other
agreements, whether nor or hereafter existing, between Borrower and any
02-15-1996 BUSINESS LOAN AGREEMENT Page 4
(Continued)
================================================================================
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
Loan Fees and Charges. In addition to all other agreed upon fees and
charges, pay the following: Borrower agrees to pay Lender, prior to or
contemporaneously with the initial advance of Loan proceeds, a
nonrefundable loan fee in the amount of twelve-thousand five-hundred
dollars ($12,500.00).
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to the
date on which penalties would attach, and all lawful claims that, if
unpaid, might become a lien or charge upon any of Borrower's properties,
income, or profits. Provided however, Borrower will not be required to pay
and discharge any such assessment, tax charge, xxxx, xxxx or claim so long
as (a) the legality of the same shall be contested in good faith by
appropriate proceedings, and (b) Borrower shall have established on its
books adequate reserves with respect to such contested assessment, tax,
charge, levy, lien, or claim in accordance with generally accepted
accounting practices. Borrower, upon demand of Lender, will furnish to
Lender evidence of payment of the assessments, taxes, charges, levies,
liens and claims and will authorize the appropriate governmental official
to deliver to Lender at any time a written statement of any assessments,
taxes, charges, levies, liens and claims against Borrower's properties,
income, or profits.
Performance. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely
manner, and promptly notify Lender if Borrower learns of the occurrence of
any event which constitutes an Event of Default under this Agreement or
under any of the Related Documents.
Operations. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change
in executive and management personnel; conduct its business affairs in a
reasonable and prudent manner and in compliance with all applicable
federal, state and municipal laws, ordinances, rules and regulations
respecting its properties, charters, businesses and operations, including
without limitation, compliance with the Americans With Disabilities Act and
with all minimum funding standards and other requirements of ERISA and
other laws applicable to Borrower's employee benefit plans.
Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) in the possession of
a third party, Borrower, upon request of Lender, shall notify such party to
permit Lender free access to such records at all reasonable times and to
provide Lender with copies of any records it may request, all at Borrower's
expense.
Environmental Compliance and Reports. Borrower shall comply in all respects
with all environmental protection federal, state and local laws, statutes,
regulations and ordinances; not cause to permit to exist, as a result of an
unintentional action or omission on its part or on the part of any third
party, on property owned and/or occupied by Borrower, any environmental
activity where damage may result to the environment, unless such
environmental activity is pursuant to and in compliance with the conditions
of a permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within
thirty (30) days after receipt thereof a copy of any notice, summons, lien,
citation, letter or other communication from any governmental agency or
instrumentality concerning any intentional or unintentional action or
omission of Borrower's part in connection with any environmental activity
whether or not there is damage to the environment and/or other natural
resources.
Additional Assurances. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing
statements, instruments, documents and other agreements as Lender or its
attorneys may reasonably request to evidence and secure the Loans and to
perfect all Security Interests.
RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law,
rule, regulation or guideline, or the interpretation or application of any
thereof by any court or administrative or governmental authority (including any
request or policy not having the force of law) shall impose, modify or make
applicable any taxes (except U.S. federal, state or local income or
franchise taxes imposed on Lender), reserve requirements, capital adequacy
requirements or other obligations which would (a) increase the cost to Lender
for extending of maintaining the credit facilities to which this Agreement
relates, (b) reduce the amounts payable to Lender under this Agreement or the
Related Documents, or (c) reduce the rate of return on Lender's capital as a
consequence of Lender's obligations with respect to the credit facilities to
which this Agreement relates, then Borrower agrees to pay Lender such
additional amounts as will compensate Lender therefor, within five (5) days
after Lender's written demand for such payment, which demand shall be
accompanied by an explanation of such imposition or charge and a calculation
in reasonable detail of the
additional amounts payable by Borrower, which explanation and calculations shall
be conclusive in the absence of manifest error.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while the
Agreement is in effect, Borrower shall not, without the prior written consent
of Lender:
Indebtedness and Liens. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (b) except as allowed as a Permitted Lien, sell,
transfer, mortgage, assign, pledge, lease, grant a security interest in, or
encumber any of Borrower's assets, or (c) sell with recourse any of
Borrower's accounts, except to Lender.
Continuity of Operations. (a) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(b) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change ownership, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, (c) pay
any dividends on Borrower's stock (other than dividends payable in its
stock), provided, however, that notwithstanding the foregoing, but only so
long as no Event of Default has occurred and is continuing or would result
from the payment of dividends, if Borrower is a "Subchapter S Corporation"
(as defined in the Internal Revenue Code of 1986, as amended), Borrower may
pay cash dividends on its stock to its shareholders from time to time in
amounts necessary to enable the shareholders to pay income taxes and make
estimated income tax payments to satisfy their liabilities under federal
and state law which arise solely from their status as Shareholders of a
Subchapter S Corporation because of their ownership of shares of stock of
Borrower, or (d) purchase or retire any of Borrower's outstanding shares of
alter or amended Borrower's capital structure.
Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance money or
assets, (b) purchase, create or acquire any interest in any other
enterprise or anuity, or (c) incur any obligation as suety or guarnator
other than in the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender, or the occurrence of any event or condition which
after notice of time would constitute an Event of Default; (b) Borrower or any
Guarantor becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (c) there a occurs a material adverse
change in Borrower's financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing and Loan; or (d) any
Guarantor
02-15-96 BUSINESS LOAN AGREEMENT PAGE 5
(Continued)
===============================================================================
seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor's
guaranty of the Loan or any other loan with Lender.
ADDITIONAL DEFINITIONS. The following words shall have the following meanings
when used in this Agreement.
1) Effective Tangible Net Worth - The words "Effective Tangible Net Worth"
mean Borrower's net worth less patents, goodwill, intercompany receivables,
and investments in subsidiaries.
2) Quick Ratio - The words "Quick Ratio" mean Borrower's cash plus equivalents
plus trade receivables (net) divided by total Current Liabilities.
3) Times Fixed Charge Coverage - The words "Times Fixed Charge Coverage" mean
net profit plus depreciation and amortization less non cash income (net non
cash expense) plus tax adjusted interest expense plus tax adjusted rent expense
plus preferred dividends and withdrawals divided by fixed charges.
4) Current Liabilities - The words "Current Liabilities" mean all Borrower's
notes payable plus Borrower's accounts payable plus Borrower's income taxes
payable plus Borrower's accruals plus Borrower's current portion of long term
debt.
ADDITIONAL AFFIRMATIVE CONVENANTS. Borrower covenants and agrees with Lender
that, while this Agreement is in effect, Borrower will comply with the
following covenants and ratios:
1) Quick Ratio. Maintain a ratio in excess of 1.20 to 1.00.
2) Times Fixed Charge Coverage. Maintain a ratio in excess of 2.00 to 1.00.
3) Debt to Effective Tangible Net Worth. Maintain a ratio of total liabilities
to Effective Tangible Net Worth of less than 0.60 to 1.00.
4) Minimum Effective Tangible Net Worth. Maintain a minimum Effective Tangible
Net Worth of not less than $23,000.00.
ADDITIONAL AFFIRMATIVE COVENANTS (MEASURED ON AN UNCONSOLIDATED BASIS).
Borrower covenants and agrees with Lender that, while this Agreement is in
effect, Borrower will comply with the following covenants and ratios (to be
tested on an unconsolidated basis for STAAR Surgical Company (USA):
1) Quick Ratio. Maintain a ratio in excess of 0.95 to 1.00.
2) Minimum Effective Tangible Net Worth. Maintain a minimum Effective Tangible
Net Worth of not less than $18,000.00.
OUT OF DEBT PERIOD. Borrower agrees with Lender that borrower shall rest the
loan with no outstanding principal balances for a minimum of thirty (30)
consecutive days during the term of the Loan.
PROFITABILITY REQUIREMENT. Borrower and Lender agree that, while this Agreement
is in effect, Borrower will maintain annual operating profitability.
AGING AND LISTING OF ACCOUNTS RECEIVABLE. Borrower covenants and agrees with
Lender that, while this Agreement is in effect, Borrower shall deliver to
Lender within sixty (60) days after the end of each quarter, a detailed aging
of Borrower's accounts and contracts receivable as of the last day of that
quarter, together with an explanation of any adjustments made at the end of
that quarter, all in a form acceptable to Lender.
INVENTORY CERTIFICATE. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower shall deliver to Lender within sixty (60)
days after the end of each quarter, a detailed summary of the inventory of
Borrower's as of the last day of that quarter, prepared in form acceptable to
Lender.
RESTRICTION ON SPLIT BORROWING. Borrowing and Lender agree that, while this
Agreement is in effect, Borrower will have no split borrowing to any
institution except for leases, purchase money contracts, and existing credit
relationships established in support of the Borrower's foreign subsidiaries.
RESTRICTION ON GUARANTEES. Borrower and Lender agree that, while this Agreement
is in effect, Borrower will not guarantee any obligation of a subsidiary
without prior written approval of Lender, Advances and payables to, and
investments in, subsidiaries can be made within the parameters of the financial
covenants for this facility.
DEPOSIT ACCOUNTS. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all XXX, Xxxxx, and trust
accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
Default on indebtedness. Failure of Borrower to make any payment when due
on the Loans.
Other Defaults. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents, or failure
of Borrower to comply with or to perform any other term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
Default in Favor of Third Parties. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective
obligations under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under this
Agreement or the Related Documents is false or misleading in any material
respect at the time made or furnished, or becomes false or misleading at
any time thereafter.
Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any Security
Agreement to create a valid and perfected Security interest) at any time
and for any reason.
Insolvency. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, any creditor
of any Grantor against any collateral securing the indebtedness, or by any
governmental agency. This includes a garnishment, attachment, or levy on or
of any of Borrower's deposit accounts with Lender.
Events Affecting Guarantor. Any of the preceding events occurs with respect
to any Guarantor of any of the indebtedness or any Guarantor dies or
becomes incompetent, or revokes or disputes the validity of, or liability
under, any Guaranty of the indebtedness.
Change in Ownership. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect payment or
02-15-1996 BUSINESS LOAN AGREEMENT Page 6
(Continued)
================================================================================
performance of the indebtedness is impaired.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except
where otherwise provided in this Agreement of the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make Loan Advances or disbursements), and, at Lender's option, all
Loans immediately will become due and payable, all without notice of any kind to
Borrower, except that in the case of an Event of Default of the type described
in the "Insolvency" subsection above, such acceleration shall be automatic and
not optional. In addition, Lender shall have all the rights and remedies
provided in the Related Documents or available at law, in equity, or otherwise.
Except as may be prohibited by applicable law, all of Lender's rights and
remedies shall be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an
obligation of Borrower or of any Grantor shall not affect Lender's right to
declare a default and to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender in the State of California. If there is a lawsuit, Borrower agrees
upon Lender's request to submit to the jurisdiction of the courts of Los
Angeles County, the State of California. Subject to the provisions on
arbitration, this Agreement shall be governed by and construed in
accordance with the laws of the State of California.
Arbitration.
Binding Arbitration. Upon the demand of any part ("Party/Parties"),
to a Document (as defined below), whether made before the institution
of any judicial proceeding or not more than 60 days after service of
a complaint, third party complaint, cross-claim or counterclaim or
any answer thereto or any amendment to any of the above, any Dispute
(as defined below) shall be resolved by binding arbitration in
accordance with the terms of this arbitration program ("Arbitration
Program"). A "Dispute" shall include any action, dispute, claim or
controversy of any kind, whether founded in contract, tort, statutory
or common law, equity, or otherwise, now existing or hereafter
arising between any of the Parties arising out of, pertaining to or
in connection with any agreement, document or instrument to which
this Arbitration Program is attached or in which it appears or is
referenced or any related agreements, documents, or instruments
("Documents"). Any Party who fails to submit to binding arbitration
following a lawful demand by another Party shall bear all costs and
expenses, including reasonable attorneys' fees (including those
incurred in any trial, bankruptcy proceeding or on appeal), incurred
by the other Party in obtaining a stay of any pending judicial
proceeding and compelling arbitration of any Dispute. The Parties
agree that any agreement, document or instrument which includes,
attaches to or incorporates this Arbitration Program represents a
transaction involving commerce as that term is used in the Federal
Arbitration Act, Title 9 United States Code ("FAA"). THE PARTIES
UNDERSTAND THAT BY THIS AGREEMENT THEY HAVE DECIDED THAT THEIR
DISPUTES SHALL BE RESOLVED BY BINDING ARBITRATION RATHER THAN IN
COURT, AND ONCE DECIDED BY ARBITRATION NO DISPUTE CAN LATER BE
BROUGHT, FILED OR PURSUED IN COURT.
Governing Rules. Arbitrations conducted pursuant to this Arbitration
Program shall be administered by the American Arbitration Association
("AAA"), or other mutually agreeable administrator ("Administrator")
in accordance with the terms of this Arbitration Program and the
Commercial Arbitration Rules of the AAA. Proceedings hereunder shall
be governed by the provisions of the FAA. The arbitrator(s) shall
resolve all Disputes in accordance with the applicable substantive
law designated in the Documents. Judgement upon any award rendered
hereunder may be entered in any court having jurisdiction; provided,
however, that nothing herein shall be construed to be a waiver by any
Party that is a bank of the protections afforded pursuant to 12
U.S.C.91 or any similar applicable state law.
Arbitrator Powers and Qualifications; Awards. The Parties agree to
select a neutral qualified arbitrator or a panel of three qualified
arbitrators to resolve any Dispute hereunder. "Qualified" means a
retired judge or practicing attorney, with not less than 10 years
practice in commercial law, licensed to practice in the state of the
applicable substantive law designated in the Documents. A Dispute in
which the claims or amounts in controversy do not exceed $1,000,000,
shall be decided by a single arbitrator. A single arbitrator shall
have authority to render an award up to but not to exceed
$1,000,000.00 including all damages of any kind whatsoever, costs,
fees, attorneys' fees and expenses. Submission to a single arbitrator
shall be a waiver of all Parties' claims to recover more than
$1,000,000.00. A Dispute involving claims or amounts in controversy
exceeding $1,000,000.00 shall be decided by a majority vote of a
panel of three qualified arbitrators. All three arbitrators on the
arbitration panel must actively participate in all hearings and
deliberations. The arbitrator(s) shall be empowered to, at the
written request of any Party in any Dispute, (a) to consolidate in a
single proceeding any multiple party claims that are substantially
identical or based upon the same underlying transaction; (b) to
consolidate any claims and Disputes between other Parties which arise
out of or relate to the subject matter hereof, including all claims
by or against borrowers, guarantors, sureties and/or owners of
collateral; and (c) to administer multiple arbitrations claims as
class actions in accordance with Rule 23 of the Federal Rules of
Civil Procedure. In any consolidated proceeding the first
arbitrator(s) selected in any proceeding shall conduct the
consolidated proceeding unless disqualified due to conflict of
interest. The arbitrator(s) shall be empowered to resolve any dispute
regarding the terms of this arbitration clause, including questions
about the arbitrability of any Dispute, but shall have no power to
change or alter the terms of the Arbitration Program. The prevailing
Party in any Dispute shall be entitled to recover its reasonable
attorney's fees in any arbitration, and the arbitrator(s) shall have
the power to award such fees. The award of the arbitrator(s) shall be
in writing and shall set forth the factual and legal basis for the
award.
Real Property Collateral. Notwithstanding the provisions of the
preceding paragraphs concerning arbitration, no Dispute shall be
submitted to arbitration without the consent of all Parties if, at
the time of the proposed submission, such Dispute arises from or
relates to an obligation which is secured directly or indirectly and
in whole or in part by real property collateral. If all Parties do
not consent to submission of such a Dispute to arbitration, the
Dispute shall be determined as provided in the paragraph below
entitled "Judicial Reference".
Judicial Reference. At the request of any Party, a Dispute which is
not submitted to arbitration as provided and limited in the preceding
paragraphs concerning arbitration shall be determined by a reference
in accordance with California Code of Civil Procedure Section 538 et
seq. If such an election is made, the Parties shall designate to the
court a referee or referees selected under the auspices of the AAA,
unless otherwise agreed to in writing by all parties. With respect to
a Dispute in which the amounts in controversy do not exceed
$1,000,000, a single referee shall be chosen and shall resolve the
Dispute. The referee shall have authority to render an award up to
but not to exceed $1,000,000, including all damages of any kind
whatsoever, including costs, fees and expenses. A Dispute involving
amounts in controversy exceeding $1,000,000 shall be decided by a
majority vote of a panel of three referees (a "Referee Panel"),
provided, however, that all three referees on the Referee Panel must
actively participate in all hearings and deliberations. Referees,
including any Referee Panel, may grant any remedy of relief deemed
just and equitable and within the scope of this Arbitration Program
and may also grant such ancillary relief as is necessary to make
effective any award. The presiding referee of the Referee Panel, or
the referee if there is a single referee, shall be a retired judge.
Judgement upon the award rendered by such referee(s) shall be entered
in the court in which such proceeding was commenced in accordance
with California Code of Civil Procedure Sections 644 and 645.
Determinations and awards by a referee or Referee Panel shall be
binding on all Parties and shall not be subject to further review or
appeal except as allowed by applicable law.
Preservation of Remedies. No provision of, nor the excise of any
rights under, this Arbitration Program shall limit the right of any
Party to:
02-15-1996 BUSINESS LOAN AGREEMENT Page 7
(Continued)
================================================================================
(a) foreclose against and/or sale of any real personal property
collateral or other security, or obtain a personal or deficiency
award: (b) exercise self-help remedies (including/repossession and
setoff rights); or (c) obtain provisional or ancillary remedies such
as injunctive relief, sequestration, attachment, replevin,
garnishment, or the appointment of a receiver from a court having
jurisdiction. Such rights can be exercised at any time except to the
extent such action is contrary to a final award or decision in any
arbitration proceeding. The institution and maintenance of an action
as described above shall not constitute a waiver of the right of any
Party to submit the Dispute to arbitration, nor render inapplicable
the compulsory exercise of any self-help, ancillary or other rights
under this paragraph shall be a Dispute hereunder.
Miscellaneous. All statues of limitation applicable to any Dispute
shall apply to any proceeding in accordance with this Arbitration
Program. The Parties agree, to the maximum extent practicable, to
take any action necessary to conclude an arbitration hereunder within
180 days of the filing of a Dispute with the Administrator. The
arbitrator(s) shall be empowered to impose sanctions for any Party's
failure to proceed within the times established herein. Arbitrations
shall be conducted in the state of the applicable substantive law
designated in the Documents. The provisions of this Arbitration
Program shall service a termination, amendment, or expiration hereof
or of the Documents unless the Parties otherwise, expressly agree in
writing. Each Party agrees to keep all Disputes and arbitration
proceedings strictly confidential, except for disclosures of
information required in the ordinary course of business of the
Parties or as required by applicable law or regulation. If any
provision of this Arbitration Program is declared invalid by any
court, the remaining provisions shall not be affected thereby and
shall remain fully enforceable.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
Multiple Parties; Corporate Authority. All obligations of Borrower under
this Agreement shall be joint and several, and all references to Borrower
shall mean each and every Borrower. This means that each of the Borrowers
signing below is responsible for all obligations in this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lander's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated or unrelated to Lender. Lender may provide, without any
limitation whatsoever, to any one or more purchasers, or potential
purchasers, any information or knowledge Lender may have about Borrower or
about any other matter relating to the Loan, and Borrower hereby waives any
rights to privacy it may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation interests,
as well as all notices of any repurchase of such participation interests.
Borrower also agrees that the purchasers of any such participation
interests will be considered as the absolute owners of such interests in
the Loans and will have all the rights granted under the participation
agreement or agreements covering the sale of such participation interests.
Borrower further waives all rights of offset or counterclaim that it may
have now or later against Lender or against any purchaser of such a
participation interest and unconditionally agrees that either Lender or
such purchaser may enforce Borrower's obligation under the Loans
irrespective of the failure or insolvency of any holder of any interest in
the Loans. Borrower further agrees that the purchase of any such
participation interests may enforce its interests irrespective of any
personal claims or defenses that Borrower may have against Lender.
Costs and Expenses. Borrower agrees to pay upon demand all of Lander's
allocated costs of in-house counsel and expenses, including without
limitation attorneys' fees, incurred in connection with the preparation,
execution, enforcement, modification and collection of this Agreement or in
connection with the Loans made pursuant to this Agreement. Lender may pay
someone else to help collect the Loans and to enforce this Agreement, and
Borrower will pay that amount. This includes, subject to any limits under
applicable law, Lender's attorneys' fees, and Lender's legal expenses,
whether or not there is a lawsuit, including attorneys' fees for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection
services. Borrower also will pay any court costs in addition in all other
sums provided by law.
Notices. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimille, and shall be effective
when actually delivered or when deposited with a nationally recognized
overnight courier or deposited in the United States mail, first class,
postage prepaid, addressed to the party to whom the notice is to be given
at the address shown above. Any party may change its address for notices
under this Agreement by giving formal written notice to the other parties,
specifying that the purpose of the notice is to change the party's address.
To the extent permitted by applicable law, if there is more than one
Borrower, notice will constitute notice to all Borrowers. For notice
purposes, Borrower agrees to keep Lender informed at all times of
Borrower's current address(es).
Severability. If a court of competant jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the provision cannot be
so modified, it shall be stricken and all other provisions of this
Agreement in all other respects shall remain valid and enforceable.
Subsidiaries and Affiliates of Borrower. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower" as
used herein shall include all subsidiaries and affiliates of Borrower.
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Lender to make any loan or other
financial accommodation to any subsidiary or affiliate of Borrower.
Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure to
the benefit of Lender, its successors and assigns. Borrower shall not
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
Survival. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the loan and delivery
to Lender of the Related Documents, regardless of any investigation made by
Lender or on Lender's behalf.
Time is of the Essence. Time is of the essence in the performance of this
Agreement.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in Exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Borrower or between Lender and any
Grantor, shall constitute a waiver of any of Lender's rights or of any
obligations of Borrower or of any Grantor as to any future transactions.
Whenever the consent of Lander is required under this Agreement, the
granting of such consent by Lender in any instance shall not constitute
continuing consent in subsequent instances where such consent is required,
and in all cases such consent may be granted or withheld in the sole
discretion of Lender.
02-15-1996 BUSINESS LOAN AGREEMENT Page 8
(Continued)
================================================================================
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
FEBRUARY 15, 1996.
BORROWER:
STAAR SURGICAL COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------------------------
Xxxxxxx X. Xxxxxxxxxx, Chief Financial Officer
LENDER:
First Interstate Bank of California
By: [Signature Appears Here]
----------------------------------------------
Authorized Officer Vice President
================================================================================
