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EXHIBIT 10.7
NOTE MODIFICATION AGREEMENT
THIS NOTE MODIFICATION AGREEMENT (this "Agreement") is made this 31st
day of October, 1997, by and among BIORELIANCE CORPORATION, a corporation
organized and in good standing under the laws of the State of Delaware,
successor in interest to Microbiological Associates, Inc. (the "Company"), MA
BIOSERVICES, INC., a corporation organized and in good standing under the laws
of the State of Delaware ("MA BioServices"), MAGENTA CORPORATION., a
corporation organized and in good standing under the laws of the State of
Delaware ("Magenta") and MAGENTA VIRAL PRODUCTION, INC., a corporation
organized and in good standing under the laws of the State of Delaware
("Magenta Viral"; together with the Company and MA BioServices, each a
"Borrower" and collectively, the "Borrowers") and NATIONSBANK, N.A., successor
in interest to Maryland National Bank, each a national banking association, its
successors and assigns, (the "Lender").
INTRODUCTORY STATEMENT
A. The Lender has made a loan (the "Loan") in the original
principal amount of One Million Eight Hundred Thousand Dollars ($1,800,000),
which Loan is evidenced by that certain Promissory Note dated June 27, 1996,
from the Company, BioReliance, Limited, a corporation organized and existing
under the laws of Scotland, formerly known as Microbiological Associates
Limited, Microbiological Associates International Limited and ("MAL"), Magenta
Corporation ("Magenta"), and Magenta Services, Ltd., a corporation organized
and existing under the laws of Scotland ("Magenta Services") in favor of the
Lender, and which Promissory Note was amended and restated in its entirety
pursuant to the provisions of that certain Amended and Restated Promissory Note
dated September 19, 1996 in the principal amount of One Million Eight Hundred
Thousand Dollars ($1,800,000), from the Company, MAL, Magenta and Magenta
Services in favor of the Lender (the Promissory Note as amended and restated in
its entirety is hereinafter called, the "Note");
B. The Loan is currently governed by the provisions of that
certain First Amended and Restated Loan Agreement (the "Original Loan
Agreement") dated December 1, 1994, by and among the Company, MAL, Magenta,
Magenta Services and the Lender, which Original Loan Agreement was amended by
that certain Modification of Loan Agreement dated April 25, 1995, by and among
the Company, MAL, Magenta, Magenta Services and the Lender, which Original Loan
Agreement was further amended by that certain Modification of Loan Agreement
dated August 7, 1995 by and among the Company, MAL, Magenta, Magenta Services
and the Lender, which Original Loan Agreement was further amended by that
certain Modification of Loan Agreement dated January 18, 1996, by and among the
Company, MAL, Magenta, Magenta Services and the Lender, which Original Loan
Agreement was further amended by that certain Modification of Loan Agreement
dated May 31, 1996 by and among the Company, MAL, Magenta, Magenta Services and
the Lender, and which Original Loan Agreement was further modified by that
certain Second Modification of Loan Agreement dated June 27, 1996, by and among
the Company, MAL, Magenta, Magenta Services and the Lender, which among other
things, obligated the Company to cause MA Holding, GmbH, a German Company ("MA
Holding") to become an additional maker on the Loan (the Original Loan
Agreement, as thereafter amended, is hereinafter called the "Loan Agreement").
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EXHIBIT 10.7
C. The Loan was secured by, among other things, the collateral
described in that certain Security Agreement dated December 17, 1993, by and
among the Company, MAL and the Lender, as amended by the First Loan
Modification Agreement, which among other things, added Magenta and Magenta
Services as parties to the Security Agreement and encumbered their respective
assets as provided for therein (the Security Agreement as the same may be
amended from time to time is hereinafter called the "Security Agreement").
D. The Borrowers have requested and the Lender has agreed to (i)
release MAL, MA Holding, and Magenta Services (the "Released Parties") from
joint and several liability under the Note, (ii) add MA BioServices and
Magenta Viral as joint and several makers to the Note, (iii) release the
collateral described in the Security Agreement, and (iv) amend and restate in
its entirety the Loan Agreement upon the terms and subject to the conditions
set forth in that certain Amended and Restated Replacement Loan of even date
herewith by and among the Borrowers and the Lender (as the same may be amended
from time to time, the "Restated Loan Agreement").
E. In order to induce the Lender to enter into the Restated Loan
Agreement, the parties hereto have agreed to execute and deliver this Agreement
to modify the terms of repayment of the Loan as hereinafter more particularly
set forth.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and for the sum of
One Dollar ($1.00) and other good and valuable consideration, the receipt and
sufficiency whereof are hereby acknowledged, the parties hereto, for
themselves, their respective heirs, personal representatives, successors and
assigns do hereby mutually covenant and agree as follows:
1. Incorporation of Recitals. The parties hereto acknowledge and
agree that the recitals hereinabove set forth are true and correct in all
respects and that the same are incorporated herein and made a part hereof.
2. Outstanding Obligations. The parties hereto acknowledge and
agree (a) that the outstanding principal balance of the Note as of the date
hereof is $_______________ (the "Principal Sum"), (b) that interest on the
unpaid principal balance of the Note has been paid through _____________, 1997,
and (c) that the unpaid principal balance of the Note, together with accrued
and unpaid interest thereon, is due and owing subject to the terms of repayment
hereinafter set forth, without defense or offset.
3. Continuation of Loan Terms. Except as otherwise expressly set
forth below, the outstanding principal balance of the Note shall continue to
bear interest and to be repaid on the terms and subject to the conditions set
forth in the Note and the other documents evidencing and securing the Loan
(this Agreement, the Note, the Restated Loan Agreement and all such other
documents, whether currently existing or hereafter executed, and all
modifications thereto, extensions or renewals thereof and substitutions
therefor being hereinafter collectively referred to as the "Loan Documents").
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EXHIBIT 10.7
All capitalized terms used but not defined in this Agreement shall have the
meaning given to such terms in the Loan Documents.
4. Interest. Commencing as of the _____ day of November, 1997,
until all sums due under the Loan shall be repaid in full, the unpaid principal
balance of the Note shall bear interest at a rate which is at all times equal
to the fluctuating at the LIBOR Rate (as hereinafter defined), plus the
applicable LIBOR Rate Additional Percentage (the "LIBOR Rate Option").
(1) For purposes hereof, the "LIBOR Rate Additional
Percentage" shall mean the percentages applicable to the Loan in accordance
with the following:
(i) If the ratio of Funded Debt divided
by EBITDA is equal to or greater than 2.5 to 1.0, the LIBOR Rate
Additional Percentage shall be two percent (2.00%);
(ii) If the ratio of Funded Debt divided
by EBITDA is less than 2.5 to 1.0, but equal to or greater than 2.0 to
1.0, the LIBOR Rate Additional Percentage shall be one and three
quarters percent (1.75%);
(iii) If the ratio of Funded Debt divided
by EBITDA is less than 2.0 to 1.0, but equal to or greater than 1.5 to
1.0 the LIBOR Rate Additional Percentage shall be one and one half
percent (1.5%); and
(iv) If the ratio of Funded Debt divided
by EBITDA is less than 1.5 to 1.0, the LIBOR Rate Additional
Percentage shall be one and one quarter percent (1.25%)
(2) The initial the LIBOR Rate Additional Percentage
shall be one and one-quarter percent (1.25%). Thereafter, the applicable LIBOR
Rate Additional Percentage for all Advances shall be calculated and adjusted
quarterly, based on the quarterly financial statements of the Borrowers
required to be submitted to the Lender pursuant to Section 5.1(c) of the
Restated Loan Agreement, commencing with the statements for the quarter ending
September 30, 1997. Such quarterly changes shall be effective commencing five
(5) Banking Days after submission by the Borrowers of the required financial
statements; it being understood, however, that in the event the quarterly
financial statements are not submitted when due, the LIBOR Rate Additional
Percentage shall be two percent (2.00%), until such financial statements are
submitted as required, at which time, the LIBOR Rate Additional Percentage (for
the balance of the quarterly period) shall be determined as set forth above.
For purposes of the Note, "Funded Debt" and "EBITDA" shall each be determined
based on the consolidated quarterly financial statements of the Borrowers and
shall have the meanings set forth in the Restated Loan Agreement.
(3) For purposes hereof, the "LIBOR Rate" shall mean a
fluctuating rate equal to the daily London Interbank Offered Rate for thirty
(30) day U.S. Dollar deposits as quoted by the Lender as of 11:00 A.M.
(Washington, D.C. time), which rate shall be adjusted for any Federal Reserve
Board reserve requirements imposed upon the Lender from time to time.
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EXHIBIT 10.7
(4) The Borrowers shall pay to the Lender, as additional
interest, the following sums, at the time and in the manner hereinafter set
forth:
i) if, due to either: (i) the
introduction of or any change (including, without limitation, any change by way
of imposition or increase of reserve requirements) in or in the interpretation
of any law or regulation or (ii) the compliance by the Lender with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to the Lender of agreeing to make or making, funding or maintaining
advances of all or a portion of the Principal Sum, then the Borrowers shall
from time to time, upon demand by the Lender, pay to the Lender additional
amounts to indemnify the Lender against any such increased costs. A
certificate as to the amount of such increased costs submitted to the Borrowers
by the Lender shall be conclusive. It shall be deemed, for purposes of
computing any increased costs pursuant to this Section, that (i) the making and
maintaining of advances of the Principal Sum which accrue interest based on the
LIBOR Rate have been made by the Lender from its office in London, England and
(ii) the funding of each Advance of the Principal Sum by the Lender which
accrues interest based on the LIBOR Rate has been made through the London
Interbank Market. Such additional cost shall be payable hereunder at the time
and in the manner that interest is payable hereunder for such costs incurred
since the last interest payment;
ii) the Borrowers shall also pay to the
Lender at the time and in the manner that interest is payable hereunder for
each advance, the cost since the last interest payment date, as determined in
good faith by the Lender, of complying, in connection with such advance during
such interest period, with any reserve, special deposit or similar requirement
(including but not limited to reserve requirements under Federal Reserve
Regulation D) imposed or deemed applicable against any assets held by or
deposits or accounts in or with or credit extended by the Lender, or the office
of the Lender in London, England, by any United States governmental authority
charged with the administration of such requirements. Each notification as to
the amount of such cost, delivered to the Borrowers by the Lender shall, in the
absence of manifest error, be conclusive as to the amount of such cost. It
shall be deemed for purposes of computing cost pursuant to the above provision
that the making and maintaining of each advance which accrues interest based on
the LIBOR Rate has been made by the Lender through its office in London,
England.
(5) In respect to any interest rate election hereunder
and any transactions contemplated hereby, the Borrowers authorize the Lender to
accept, rely upon, act upon and comply with, any verbal or written
instructions, requests, confirmations and orders of _______________ or
_______________ on behalf of the Borrowers. The Borrowers acknowledge and
agree that the transmission between the Borrowers and the Lender of any such
instructions, requests, confirmations and orders involves the possibility of
errors, omissions, mistakes and discrepancies and agrees to adopt such internal
measures and operational procedures to protect its interests. By reason
thereof, the Borrowers hereby assume all risk of loss and responsibility for,
releases and discharges the Lender from any and all responsibility or liability
for, and agrees to indemnify, reimburse on demand and hold the Lender harmless
from, any and all claims, actions, damages, losses, liability and expenses by
reason of, arising out of or in any way connected with or related to, (i) the
Lender's
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EXHIBIT 10.7
acceptance, reliance and actions upon, compliance with or observation of any
such instructions, requests, confirmations or orders, and (ii) any such errors,
omissions, mistakes and discrepancies, except those caused by the Lender's
gross negligence or willful misconduct.
(6) All interest payable under the terms of the Note
shall be calculated on the basis of a 360-day year and the actual number of
days elapsed.
5. Assumption of Obligations. MA BioServices and Magenta Viral
each promises and agrees to perform each and all of the covenants, agreements
and obligations in the Note, to be performed by the Company and Magenta at the
times, in the manner and in all respects as provided therein, and to be bound
by each and all of the terms and provisions of the Loan Documents including,
but not limited to the Note, as though each Loan Document had originally been
jointly and severally made by the Company, Magenta, MA BioServices and Magenta
Viral. All of the Borrowers shall remain jointly and severally liable for the
performance of each and all of the covenants, agreements and obligations in the
Loan Documents to be performed by the Borrowers. All references in the Note to
the "Undersigned" or to the "Borrower" or the "Borrowers" shall hereafter be
deemed to include MA BioServices and Magenta Viral.
6. Releases. The Lender, for itself, its successors and assigns
hereby releases each of the Released Parties from any and all liability on
account of the Loan, the Note and the Loan Documents. This release shall be
binding upon the Lender and its successors and assigns and shall inure to the
benefit of the Released Parties and their respective present and former
employees, agents, successors and assigns.
7. Confession of Judgment. All provisions in the Note providing
for confession of judgment against the Borrowers are hereby deleted in their
entirety.
8. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE
PARTIES HERETO INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF THIS
AGREEMENT, THE LOAN DOCUMENTS OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR ARBITRATION OF COMMERCIAL DISPUTES OF ENDISPUTE, INC., D/B/A
J.A.M.S./ENDISPUTE ("J.A.M.S.") AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF AN INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY
PARTY TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING ANY ACTION, INCLUDING
A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS INSTRUMENT, AGREEMENT OR DOCUMENT RELATES IN ANY COURT
HAVING JURISDICTION OVER SUCH ACTION.
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EXHIBIT 10.7
(A) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN
XXXXXXXXXX COUNTY, MARYLAND AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
ARBITRATOR. IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN NINETY (90) DAYS OF THE DEMAND
FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE,
BE PERMITTED TO EXTEND THE COMMENCING OF SUCH HEARING FOR AN ADDITIONAL SIXTY
(60) DAYS.
(B) RESERVATION OF RIGHTS. NOTHING IN THIS INSTRUMENT, AGREEMENT
OR DOCUMENT SHALL BE DEEMED TO: (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE
APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS
INSTRUMENT, AGREEMENT OR DOCUMENT; OR (II) BE A WAIVER BY THE LENDER OF THE
PROTECTION AFFORDED TO IT BY 12 U.S.C. Section 91 OR ANY SUBSTANTIALLY
EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE LENDER: (A) TO EXERCISE
SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B) TO FORECLOSE
AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT
PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE
RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE LENDER MAY
EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH
PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS INSTRUMENT, AGREEMENT OR
DOCUMENT. NEITHER THE EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR
MAINTENANCE OF ANY ACTION FOR FORECLOSURE OR FOR PROVISIONAL OR ANCILLARY
REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE
CLAIMANT IN SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM
OCCASIONING RESORT TO SUCH REMEDIES.
9. Expenses. In consideration of the Lender's agreement to
modify the Loan, the Borrowers covenant and agree to pay all other reasonable
fees, costs, charges and expenses incurred by the Lender in connection with the
preparation of this Agreement and the modification of the Loan, including
without limitation, the Lender's reasonable attorneys fees and all recording
costs.
10. Events of Default. The events of default specifically
enumerated in the Note are hereby amended and replaced with the following
enumerated events of default, and the occurrence of any of the following events
shall constitute an event of default and shall entitle the Lender to exercise
all rights and remedies provided in the Note, as well as all other rights and
remedies provided to the Lender under the terms of any of the other Loan
Documents as a result of the occurrence of the same:
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EXHIBIT 10.7
(a) The Borrowers shall fail to make any payment of
principal or interest within fifteen (15) Banking Days of when due on the Note,
or on any other promissory note or other obligation payable by any of the
Borrowers to the Lender;
(b) The Borrowers shall fail to comply with the terms of
any covenant or agreement contained herein and such failure remains uncured for
thirty (30) days after notice thereof; or
(c) An event of default (as described or defined therein)
shall occur under any of the Loan Documents, and such event of default is not
cured within any applicable grace period provided therein.
11. Release of Claims. The Borrowers for themselves and for each
of their respective successors and assigns, hereby release and waive any and
all claims and/or defenses they now may have against the Lender and its
successors and assigns on account of any occurrence relating to the Loan, the
Loan Documents which accrued prior to the date hereof, including, but not
limited to, any claim that the Lender (a) breached any obligation to the
Borrowers in connection with the Loan, (b) was or is in any way involved with
the Borrowers as a partner, joint venturer, or in any other capacity whatsoever
other than as a lender, (c) failed to fund any portion of the Loan or any other
sums as required under any document or agreement in reference thereto, or (d)
failed to timely respond to any offers to cure any defaults under any document
or agreement executed by the Borrowers, or any third party or parties in favor
of the Lender. This release and waiver shall be effective as of the date of
this Agreement and shall be binding upon the Borrowers and each of their
respective successors and assigns, and shall inure to the benefit of the Lender
and its successors and assigns. The term "Lender" as used herein shall
include, but shall not be limited to, its present and former officers,
directors, employees, agents and attorneys.
12. Continuing Agreements; Novation. Except as expressly modified
hereby, the parties hereto ratify and confirm each and every provision of the
Note and each of the other Loan Documents as if the same were set forth herein.
In the event that any of the terms and conditions in the Note or in any of the
other Loan Documents conflict in any way with the terms and provisions hereof,
the terms and provisions hereof shall prevail. The parties hereto covenant and
agree that the execution of this Agreement is not intended to and shall not
cause or result in a novation with regard to the Note and/or the other Loan
Documents and that the existing indebtedness of the Borrowers to the Lender
evidenced by the Note is continuing, without interruption, and has not been
discharged by a new agreement.
13. Entire Agreement. NO STATEMENTS, AGREEMENTS OR
REPRESENTATIONS, ORAL OR WRITTEN, WHICH MAY HAVE BEEN MADE TO ANY OF THE
BORROWERS OR TO ANY EMPLOYEE OR AGENT OF ANY OF THE BORROWERS, EITHER BY THE
LENDER OR BY ANY EMPLOYEE, AGENT OR BROKER ACTING ON THE LENDER'S BEHALF, WITH
RESPECT TO THE MODIFICATION OF THE LOAN, SHALL BE OF ANY FORCE OR EFFECT,
EXCEPT TO THE EXTENT STATED IN THIS AGREEMENT, AND ALL PRIOR AGREEMENTS AND
REPRESENTATIONS WITH RESPECT TO THE MODIFICATION OF THE LOAN ARE MERGED HEREIN.
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EXHIBIT 10.7
14. Captions. The captions herein set forth are for convenience
only and shall not be deemed to define, limit or describe the scope or intent
of this Agreement.
15. Governing Law. The provisions of this Agreement shall be
construed, interpreted and enforced in accordance with the laws of the State of
Maryland as the same may be in effect from time to time.
16. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original. It
shall not be necessary that the signature of, or on behalf of, each party, or
that the signatures of the persons required to bind any party, appear on more
than one counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement under
seal as of the date first above written.
WITNESS/ATTEST: BIORELIANCE CORPORATION
By: (SEAL)
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Name:
Title:
WITNESS/ATTEST: MA BIOSERVICES, INC.
By: (SEAL)
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Name:
Title:
WITNESS/ATTEST: MAGENTA CORPORATION
By: (SEAL)
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Name:
Title:
WITNESS/ATTEST: MAGENTA VIRAL PRODUCTION, INC.
By: (SEAL)
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Name:
Title:
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EXHIBIT 10.7
WITNESS: NATIONSBANK, N.A.
By: (SEAL)
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Xxxxxxxxx X. Xxxxx
Vice President
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