1
EXHIBIT 10.39
THIRD DEED OF TRUST NOTE MODIFICATION AGREEMENT
THIS THIRD DEED OF TRUST NOTE MODIFICATION AGREEMENT (this "Agreement")
is made this 30th day of November, 1999, 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"), BIORELIANCE TESTING AND DEVELOPMENT, INC., formerly known as MA
BioServices, Inc., a corporation organized and in good standing under the laws
of the State of Delaware ("MA BioServices"), BIORELIANCE MANUFACTURING, INC.,
formerly known as 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 BANK OF
AMERICA, N.A., successor in interest to Nationsbank, N.A., 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 Three Million Dollars ($3,000,000) to the Company and Microbiological
Associates International Limited, which changed its name to BioReliance Limited
("MAL") pursuant to the terms of a Deed of Trust Note dated December 17, 1993
from the Borrower and MAL, which Deed of Trust Note was amended by that certain
First Loan Modification Agreement (the "First Loan Modification Agreement")
dated May 31, 1994 by and among the Lender, the Company, MAL, Magenta and
Magenta Services, which among other things added Magenta and Magenta Services as
joint and several co-makers to the Deed of Trust Note, which Deed of Trust Note
was further amended by that certain Second Loan Modification Agreement dated
September 30, 1994 by and among the Company, MAL, Magenta, Magenta Services and
the Lender, which Deed of Trust Note was amended and restated in its entirety
pursuant to the provisions of that certain Third Loan Modification Agreement
dated as of December 1, 1994, by and among the Company, MAL, Magenta, Magenta
Services and the Lender, which among other things, increased the maximum
principal amount of the Loan from Three Million Dollars ($3,000,000) to Four
Million Three Hundred Thousand Dollars ($4,300,000) and which Deed of Trust Note
was further modified pursuant to that certain Deed of Trust Note Modification
Agreement dated as of October 31, 1997 by and among the Borrowers and the Lender
(the Deed of Trust Note as amended and restated from time to time, is
hereinafter called, the "Note"); and
B. The Loan is currently governed by the provisions of that certain
Amended and Restated Replacement Loan Agreement 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").
C. The Loan is secured by, among other things, the Company's leasehold
interest in the property described (the "Property") in that certain Leasehold
Deed of Trust and Security Agreement dated December 17, 1993 from the Company to
the trustees named therein for the benefit of the Lender, which Leasehold Deed
of Trust and Security Agreement was recorded
1
2
EXHIBIT 10.39
December 20, 1993, among the Land Records for Xxxxxxxxxx County, Maryland in
Liber 12140, at folio 779, and which Leasehold Deed of Trust and Security
Agreement was amended by that certain Modification Agreement-Leasehold Deed of
Trust and Security Agreement dated December 1, 1994 by and among the Company,
the trustees named therein and the Lender (the Leasehold Deed of Trust and
Security Agreement as amended is hereinafter called the "Deed of Trust").
D. The Borrowers have requested and the Lender has agreed to extend the
maturity date of the Loan.
E. On this date the Company continues to be the leasehold owner of the
Property and the Borrowers acknowledge and agree that the Deed of Trust
constitutes a valid and subsisting first lien on the Company's leasehold
interest in the Property for the entire outstanding principal balance of the
Note and interest thereon, all in accordance with the terms, covenants,
conditions and warranties of the Deed of Trust and the Note secured thereby, and
that all of the other provisions of the same are in full force and effect.
F. In order to induce the Lender to extend the maturity date of the
Loan and upon the express condition that the lien of the Deed of Trust remains a
valid and subsisting first lien on the Company's leasehold interest in the
Property and that the execution and delivery of this Agreement shall not impair
the lien thereof, 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
$2,538,194.51 (the "Principal Sum"), (b) that interest on the unpaid principal
balance of the Note has been paid through November 29, 1999, 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. Confirmation of Lien. The Borrowers hereby acknowledge and agree
that the Property is and shall remain in all respects subject to the lien,
charge and encumbrance of the Deed of Trust, and nothing herein contained, and
nothing done pursuant hereto, shall adversely affect or be construed to
adversely affect the lien, charge or encumbrance of, or warranty of title
2
3
EXHIBIT 10.39
in, or conveyance effected by the Deed of Trust, or the priority thereof over
other liens, charges, encumbrances or conveyances, or to release or adversely
affect the liability of any party or parties whomsoever who may now or hereafter
be liable under or on account of the Loan or any of the Loan Documents (as
hereinafter defined), nor shall anything herein contained or done in pursuance
hereof adversely affect or be construed to adversely affect any other security
or instrument held by the Lender as security for or evidence of the indebtedness
evidenced and secured thereby.
4. 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 Deed of Trust, 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"). All
capitalized terms used but not defined in this Agreement shall have the meaning
given to such terms in the Loan Documents.
5. Interest. Commencing as of the 1st day of December, 1999, 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").
(a) 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 2.75 to 1.0, the LIBOR Rate Additional
Percentage shall be two and 15/100 percent (2.15%);
(ii) If the ratio of Funded Debt divided by EBITDA is
less than 2.75 to 1.0, but equal to or greater than 2.0 to 1.0, the
LIBOR Rate Additional Percentage shall be one and nine tenths percent
(1.90%);
(iii) If the ratio of Funded Debt divided by EBITDA
is less than 2.0 to 1.0, but equal to or greater than 1.25 to 1.0 the
LIBOR Rate Additional Percentage shall be one and four tenths percent
(1.40%); and
(iv) If the ratio of Funded Debt divided by EBITDA is
less than 1.25 to 1.0, the LIBOR Rate Additional Percentage shall be
one percent (1.0%)
(b) The initial the LIBOR Rate Additional Percentage shall be
two and 15/100 percent (2.15%). 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, 1999. Such quarterly
changes shall be effective commencing five (5) Banking Days after submission by
the
3
4
EXHIBIT 10.39
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 and 15/100 percent (2.15%),
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.
(c) 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.
(d) 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
4
5
EXHIBIT 10.39
which accrues interest based on the LIBOR Rate has been made by the Lender
through its office in London, England.
(e) 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 Capers X. XxXxxxxx, President and CEO or
Xxxxxxx X. Xxxxxx, CFO, or their successors in office 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 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.
(f) 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.
6. Payments and Maturity. The unpaid principal balance of the Note,
together with interest thereon at the rate or rates provided above, shall be
payable as follows:
(a) Commencing on the 1st day of January 2000 and continuing
on the same day of each and every month thereafter, to and including November 1,
2009, principal shall be due and payable in equal installments of $10,575.81,
plus all accrued and unpaid interest on the outstanding balance of the Principal
Sum; and
(b) Unless sooner paid, the unpaid principal balance of the
Loan, together with interest accrued and unpaid thereon, shall be due and
payable in full on November 1, 2009.
7. Releases. The Lender, for itself, its successors and assigns hereby
releases each of 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.
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
5
6
EXHIBIT 10.39
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.
(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
6
7
EXHIBIT 10.39
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 and the Deed of Trust, 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:
(a) The Borrowers shall fail to make any payment of principal
or interest when due on the Note, or on any other promissory note or other
obligation payable by any of the Borrowers to the Lender and such failure
remains uncured for five (5) days after notice thereof;
(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 and/or the Property 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, the Deed of Trust 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 of the Restated Loan Agreement 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, the Deed of Trust and/or the other Loan Documents and that
the existing indebtedness of the Borrowers to the
7
8
EXHIBIT 10.39
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.
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.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
8
9
EXHIBIT 10.39
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first above written.
WITNESS/ATTEST: BIORELIANCE CORPORATION
s/Xxxxxx X. Xxxxxx By: s/Xxxxxxx X. Xxxxxx (SEAL)
--------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President, Finance & CFO
WITNESS/ATTEST: BIORELIANCE TESTING AND
DEVELOPMENT, INC.
s/Xxxxxx X. Xxxxxx By: s/Xxxxxxx X. Xxxxxx (SEAL)
--------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President, Finance & CFO
WITNESS/ATTEST: BIORELIANCE MANUFACTURING, INC.
s/Xxxxxx X. Xxxxxx By: s/Xxxxxxx X. Xxxxxx (SEAL)
--------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President, Finance & CFO
WITNESS/ATTEST: MAGENTA VIRAL PRODUCTION, INC.
s/Xxxxxx X. Xxxxxx By: s/Xxxxxxx X. Xxxxxx (SEAL)
--------------------------- -------------------------------
Name: atrick X. Xxxxxx
Title: Vice President, Finance & CFO
WITNESS: BANK OF AMERICA, N.A.
By: s/Xxxxxxxxx X. Xxxxx (SEAL)
--------------------------- -------------------------------
Xxxxxxxxx X. Xxxxx
Senior Vice President
9
