LOAN AGREEMENT
Exhibit
10.1
THIS
AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO THE FEDERAL ARBITRATION ACT
AND
IF THE FEDERAL ARBITRATION ACT IS INAPPLICABLE, THE SOUTH CAROLINA UNIFORM
ARBITRATION ACT, § 15-48-10, ET. SEQ., CODE OF LAWS OF SOUTH CAROLINA (1976), AS
AMENDED.
THIS
LOAN
AGREEMENT (the “Loan
Agreement”
or
“Agreement”)
is
made and entered into on the 5th
day of
June, 2007, by and between Carolina
First Bank, a
South
Carolina banking corporation (“Lender”),
and
Span-America
Medical Systems, Inc.,
a South
Carolina corporation (“Borrower”)
(collectively, the “Parties”
and
each a “Party”).
Background
Statement
Borrower
has requested a revolving line of credit from Bank to be used for the purpose
of: (a) a one time cash dividend not to exceed $5.00 per share plus one regular
quarterly dividend of $0.08 per share; (b) working capital; (c) capital
expenditures; and (d) other general corporate purposes.
NOW,
THEREFORE, in consideration of Lender making a loan in the principal amount
of
Ten Million and no/100 Dollars ($10,000,000.00), to Borrower for the purpose
set
forth in Section
2.2,
as
evidenced by the Note (as defined below), Lender and Borrower enter into this
Loan Agreement and agree as follows:
1. Definitions.
For the
purposes hereof:
1.1 “Affiliate”
means,
with respect to a named Person, (a) any Person directly or
indirectly owning five percent (5%) or more of the voting stock or rights in
such named Person or of which the named Person owns five percent (5%) or more
of
such voting stock or rights; (b) any Person controlling or controlled by or
under common control with such named Person; (c) any officer, director or
managing employee or agent of such named Person or any Affiliate of the named
Person; and (d) any immediate family member of the named Person or any Affiliate
of such named Person.
1.2 “Business
Day” means any day the Lender is open for business.
1.3 “Closing”
or “Closing Date” means June 5, 2007.
1.4 “Code”
means the Uniform Commercial Code as in effect under the laws of the State
of
South Carolina from time to time, as the same may be amended.
1.5 “EBITDA”
means net income, less income or plus loss from discontinued operations and
extraordinary items, plus income taxes, plus interest expense, plus depreciation
and amortization expense.
1.6 “Environmental
Laws” means applicable state, federal or local environmental laws or
regulations, including but not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C. § 9601 et seq.; the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 1101
et seq.;
the
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act, 42 U.S.C. § 6901 et seq.;
the
Hazardous Materials Transportation Act of 1974, 49 U.S.C. § 1801 et seq.;
the
Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.;
the
Clean Air Act, 42 U.S.C. § 7401 et seq.;
the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. § 136 et seq.;
the
Safe Drinking Water Act, 42 U.S.C. § 300f et seq.;
the
Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.;
the
Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.;
the
Endangered Species Act, 16 U.S.C. 1531 et seq.;
any
laws regulating the use of biological agents or substances including medical
or
infectious wastes, each as amended or supplemented, and any applicable and
analogous future or present local, state, and federal statutes, regulations,
and
ordinances promulgated pursuant thereto.
1.7 “Event
of Default” shall have the meaning set forth in Article
6.
1.8 “Funded
Debt” means all outstanding indebtedness for borrowed money and other
interest-bearing indebtedness, including current and long term
indebtedness.
1.9 “GAAP”
means generally accepted accounting principles and practices as in effect from
time to time and recognized as such by the American Institute of Certified
Public Accountants, consistently applied.
1.10 “Indebtedness”
means, collectively, all liabilities (including, without limitation, capital
lease obligations) of the subject Person, whether owing by such Person alone
or
with one or more others in a joint, several, or joint and several capacity,
whether now owing or hereafter arising, whether owing absolutely or
contingently, whether created by loan, overdraft, guaranty of payment, or other
contract or by quasi-contract or tort, statute or other operation of law or
otherwise.
1.11 “Lien”
means any interest in property (real, personal or mixed, and tangible or
intangible) securing an obligation owed to, or a claim by, a Person other than
the owner of the property, whether such interest is based on common law,
statute, or contract, and including, but not limited to, the security interest,
security title or Lien arising from a security agreement, mortgage, deed of
trust, deed to secure debt, encumbrance, pledge, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes. The term
“Lien” shall include covenants, conditions, restrictions and other encumbrances
affecting any property. For the purpose of this Agreement, Borrower shall be
deemed to be the owner of any property which it has acquired or holds subject
to
a conditional sale agreement or other arrangement pursuant to which title of
the
property has been retained by or vested in some other Person for security
purposes.
1.12 “Loan
Documents” means this Loan Agreement, the Note, Negative Pledge Agreement,
consents and all other documents, instruments, certificates and agreements
executed and/or delivered by Borrower and/or Guarantors, or any third party,
in
favor of Lender in connection with the Loan.
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1.13 “Loan”
means the revolving loan more particularly described in Section
2.1.
1.14 “Leverage
Ratio” shall mean, as of the end of each fiscal quarter of the Borrower, for the
Borrower and its Subsidiaries on a consolidated basis for the four consecutive
fiscal quarters ending on such date, the ratio of (i) Funded Debt of the
Borrower and its Subsidiaries on the last day of such period to (ii) EBITDA,
as
calculated for the Borrower’s then most-recently ended four fiscal
quarters.
1.15 “Material
Adverse Change” means the occurrence of events or circumstances which, if
unchanged, would materially impair Borrower’s or any Guarantor’s: (i) financial
condition, (ii) ability to meet its financial obligations as they become due,
or
(iii) ability to conduct its business as presently conducted.
1.16 “Maturity
Date” means June 5, 2012.
1.17 “Negative
Pledge Agreement" means the Negative Pledge Agreement of Borrower covering
all
of Borrower’s assets dated the date hereof.
1.18 “Note”
means the promissory note of Borrower in favor of Lender dated of even date
herewith in the amount of the Loan as set forth in Section
2.1
(substantially in the form of Exhibit
1.18
attached
hereto), as well as any promissory note or notes issued by Borrower in
substitution, replacement, extension, amendment or renewal of any such
promissory note or notes.
1.19 “Obligations”
means (a) all principal and/or interest which may be due under the Note, and
all
other present and future Indebtedness, obligations and liabilities of Borrower
to Lender arising pursuant to this Agreement and/or any other Loan Document,
regardless of whether such Indebtedness, obligations or liabilities are direct,
indirect, fixed, contingent, joint or joint and several (including any interest,
fees and other charges under this Agreement or any other Loan Document, which
would accrue but for the filing of a bankruptcy or insolvency action, whether
or
not such claim is allowed in such bankruptcy or insolvency action); (b) all
other obligations or liabilities of Borrower owing to Lender, from time to
time,
whether now existing or hereafter arising, regardless of how incurred; and
(c)
all renewals, extensions and modifications of any of the foregoing, or any
part
thereof. The term also includes, without limitation, all Indebtedness,
liabilities or obligations of Borrower which may at any time become due under
any rate swap agreement, basis swap, forward rate agreement, commodity swap,
commodity option, equity or equity index swap, bond option, interest rate
option, foreign exchange agreement, rate cap agreement, rate floor agreement,
rate collar agreement, currency swap agreement, cross-currency swap agreement,
currency option or any other similar agreement entered into between Borrower
and
Lender, or any Affiliate of Lender. The term “Obligations” further includes any
of the foregoing that arise after the filing of a petition by or against
Borrower under the United States Bankruptcy Code, even if the obligations do
not
accrue because of the automatic stay under United States Bankruptcy Code Section
362 or otherwise.
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1.20 “Permitted
Indebtedness” means those matters specified in Section
4.2(g)
hereof.
1.21 “Permitted
Liens” means any Lien of any kind specified in Section
4.2(c) hereof.
1.22 “Person”
means an individual person, corporation, limited liability company, trust,
joint
venture, limited or general partnership, any government or agency or political
subdivision of any government, or any other entity or organization.
1.23 “Solvent”
means, as to any Person, such Person (i) owns property, real, personal, and
mixed, whose aggregate fair saleable value is greater than the amount required
to pay all of such Person’s Indebtedness (including contingent debt), and (ii)
is able to pay all of its Indebtedness as such Indebtedness matures, and (iii)
has capital sufficient to carry on its business and transactions and all
business and transactions in which it is about to engage.
1.24 “Subsidiary”
means
any corporation, partnership or other entity in which any
Person, directly or indirectly, owns fifty percent (50%) or more of the stock,
capital or other interests (legal or beneficial) which is effectively
controlled, directly or indirectly, by such Person.
1.25 “Substances”
shall have the meaning as defined in Section
3.8
hereof.
1.26 “Intercompany
Transaction” means any Account, Chattel Paper, General Intangible, Instrument,
Document or other Indebtedness or obligation arising from business done with
or
for, or Indebtedness owed between or among, Borrower and any Subsidiary or
Affiliate thereof.
1.27 “Tangible
Net Worth” means (i) the aggregate amount of assets shown on the balance sheet
of a Person at any particular date (not including capitalized interest, debt
discount and expense, goodwill, patents, trademarks, copyrights, franchises,
licenses, and such other assets as are properly classified “intangible assets”
under GAAP) less
(ii)
liabilities (including capitalized leases, subordinated debt, reserves for
deferred taxes and other deferred sums appearing on the liabilities side of
such
Person’s balance sheet), all computed in accordance with GAAP.
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2.
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The
Loan.
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(i) Subject
to all terms set forth herein for so long as no Event of Default exists, Lender
agrees, from time to time and on the terms hereinafter set forth, to loan to
Borrower, when requested by Borrower, principal amounts aggregating up to Ten
Million and no/100 Dollars ($10,000,000.00). Within the aforesaid limits,
Borrower may borrow, make payments, and reborrow under this Agreement, subject
to the provisions hereof.
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(ii) The
obligation to repay the Note shall be evidenced by the Note and shall mature
upon the Maturity Date.
(iii) In
addition, as an accommodation to Borrower, Lender may permit telephonic requests
for loans and electronic transmittal of instructions, authorizations, agreements
or reports to Lender by Borrower. Unless Borrower specifically directs Lender
in
writing not to accept or act upon telephonic or electronic communications from
Borrower, Lender shall have no liability to Borrower for any loss or damage
suffered by Borrower as a result of Lender’s honoring of any requests, execution
of any instructions, authorizations or agreements or reliance on any reports
communicated to Lender telephonically or electronically and purporting to have
been sent to Lender by Borrower and Lender shall have no duty to verify the
origin of any such communication or the authority of the person sending
it.
(iv) If
the
outstanding principal amount of the Note at any time exceeds Ten Million and
no/100 Dollars ($10,000,000.00), Borrower shall immediately pay the Lender
an
amount equal to such excess as a payment on the principal amount of the Note.
(b) Notice
and Manner of Borrowing.
For
advances under the Note, Borrower shall give Lender notice of a request for
an
advance not later than 2:00 p.m. Greenville, South Carolina time on the Business
Day immediately preceding the date of the requested advance, specifying the
date
and amount thereof. Any such notice (including, but not limited to, telephonic
notice) which Lender believes in good faith to have been given by a duly
authorized officer of Borrower shall be deemed given by Borrower.
(c) Zero
Balance Program and Transaction Clearing Services.
Notwithstanding anything to the contrary in this Section 2, if Borrower
subscribes to Lender’s Carolina First Agreement for Transaction Clearing
Services and if and for so long as Lender in its discretion permits such
services to be applicable to the Loan, the terms of such services, as set forth
in the Carolina First Agreement for Transaction Clearing Services and/or the
Deposit Account Agreement applicable to Borrower’s Deposit Accounts at Lender,
shall control matters related to such services, including but not limited to
the
manner in which advances under the Loan are made and repaid by credit or debit
to the Borrower’s Deposit Account. Lender shall have the right in its discretion
to terminate the application of such treasury services to the Loan at any time.
2.2 Purpose.
The
proceeds of the Loan shall be used by Borrower for: (a) a one time cash dividend
not to exceed $5.00 per share plus one regular quarterly dividend of $0.08
per
share; (b) working capital; (c) capital expenditures; and (d) other general
corporate purposes.
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2.3 Conditions
Precedent.
Lender
shall disburse the proceeds of the Loan to Borrower in accordance with the
terms
hereof, and the terms of the Note. In no event shall Lender be obligated to
advance any sum to Borrower until all matters, documents, papers and
certificates required hereunder have been furnished to Lender’s satisfaction or
so long as any Event of Default has occurred and is continuing. In addition
to
other matters set forth herein, the following documents and matters shall be
required to be executed or performed by Borrower and Guarantors at or before
the
Closing Date:
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(a)
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This
Loan Agreement, duly executed and
delivered;
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(b)
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The
Note, duly executed and delivered;
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(c)
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The
Negative Pledge Agreement;
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(d)
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Borrowing
resolutions and a certificate from the secretary of Borrower exhibiting,
among other things, true copies of Borrower’s current articles of
incorporation and bylaws, in form and substance satisfactory to Lender,
authorizing the execution, delivery and performance of all Loan Documents,
on behalf of Borrower;
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(e)
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Certificate
of existence for Borrower from the South Carolina Secretary of State
and
satisfactory evidence of Borrower’s qualification to do business in any
applicable foreign jurisdictions;
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(f)
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In
a form reasonably acceptable to Lender, an opinion of Borrower’s counsel
opining, among other things, as to the due authorization and execution
of
the Loan Documents and the enforceability of the Loan Documents in
accordance with the terms thereof. To the extent required by the
execution
of any Loan Documents provided subsequent to the Closing Date,
supplemental opinions shall be required of a tenor satisfactory to
Lender;
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(g)
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Evidence,
to the satisfaction of Lender, of Borrower’s compliance with Environmental
Laws;
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(h)
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Certification
from Borrower that its Leverage Ratio (taken as a whole) will not
exceed
3.00:1.0 as of the Closing Date;
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(i)
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Payment
of all fees and closing costs required hereunder and under the Loan
Documents;
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(j)
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Certificates
of insurance required under Section
4.1(e)
hereof;
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(k)
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Such
other matters as Lender may reasonably
require.
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2.4 Fees.
(a) Borrower
shall pay a facility fee of $5,000.00 due and payable upon the closing date
and
Borrower shall pay all fees associated with the drafting and negotiation of
this
Agreement and ancillary documents hereto, including, but not limited to
reasonable attorney’s fees.
3. Representations
and Warranties.
To
induce Lender to make the Loan, Borrower makes the following representations
and
warranties, which shall survive the execution and delivery of the Note and
other
Loan Documents:
3.1 Good
Standing.
Borrower is duly organized, validly existing, and in good standing under the
laws of the State of South Carolina, and has the power and authority to own
its
property and to carry on its business in each jurisdiction in which it does
business.
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3.2 Authority
and Compliance.
Borrower has full power and authority to execute and deliver the Loan Documents
and to incur and perform the Obligations provided for therein, all of which
have
been duly authorized by all proper and necessary corporate action. To Borrower’s
knowledge, no consent or approval of any public authority or other third party
is required as a condition to the validity of any of the Loan Documents, and
Borrower is in material compliance with all laws and regulatory
requirements.
3.3 Binding
Agreement.
This
Loan Agreement and the other Loan Documents executed by Borrower constitute
valid and legally binding obligations of Borrower, enforceable in accordance
with their terms except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance or similar laws affecting the enforcement of creditors’ rights
generally and subject to general principles of equity (regardless of whether
such enforcement is considered in a proceeding at law or in equity) and the
discretion of any tribunal before which enforceability may be
considered.
3.4 Litigation.
There
is no proceeding litigation, bankruptcy or insolvency involving Borrower or
any
of its Subsidiaries pending or, to the knowledge of Borrower, threatened, before
any court or governmental authority, agency or arbitration authority that may,
individually or collectively, result in a Material Adverse Change.
3.5 No
Conflicting Agreements.
There
is no charter, bylaw, stockholders agreement, stock provision, or other document
pertaining to the organization, power, or authority of Borrower and no provision
of any existing material agreement, mortgage, indenture or contract binding
on
Borrower or affecting its properties, which would conflict with or in any way
prevent the execution, delivery, or carrying out of the terms of this Loan
Agreement and the other Loan Documents.
3.6 Ownership
of Assets.
The
Borrower has good title to its assets free and clear of all judgments, liens,
and encumbrances except for Permitted Liens.
3.7 Taxes.
All
taxes and assessments due and payable by Borrower have been paid other than
taxes being contested in good faith.
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3.9 Compliance
with Laws.
Borrower is in material compliance with all federal, state, and local laws,
regulations and governmental requirements applicable to it or to any of its
property, business operations, employees, and transactions including, but not
limited to, Environmental Laws.
3.10 Accurate
Financial Information.
The
financial information furnished to Lender by Borrower is complete and accurate
in all material respects and neither Borrower nor any of its Subsidiaries has
any undisclosed direct or material contingent liabilities. The financial
information provided by Borrower and its Subsidiaries, in connection with
Borrower’s application to Lender for the Loan, remains substantially accurate in
all material respects and no Material Adverse Change has occurred in the
financial condition of any of the reporting entities since such information
was
furnished.
3.11 Solvency.
(i)
Borrower is Solvent; (ii) Borrower has made adequate provision for the payment
of all of its creditors other than Lender; and (iii) Borrower has not entered
into this transaction to provide preferential treatment to Lender or any other
creditor of Borrower in anticipation of seeking relief under federal or state
bankruptcy or insolvency laws.
3.12 ERISA.
No
employee benefit plan established or maintained, or to which contributions
have
been made, by Borrower or any parent, subsidiary or Affiliate thereof, which
is
subject to Part 3 of Subtitle 13 of Title I of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), had an “accumulated funding
deficiency” (as such term is defined in Section 302 of ERISA) as of the last day
of the most recent fiscal year of such plan ended prior to the date hereof,
or
would have had such an accumulated funding deficiency on such day if such year
were the first year of such plan to which such Part 3 applied; and no material
liability to the Pension Benefit Guaranty Corporation has been incurred with
respect to any such plan by such party.
Each
respective employee benefit plan of Borrower materially complies and will
materially comply with all applicable requirements of ERISA and of the Internal
Revenue Code of 1986 as amended (“Code”) and with all applicable rulings and
regulations issued under the provisions of ERISA and the Code. This Loan
Agreement and the consummation of the transactions contemplated herein will
not
involve any prohibited transaction within the scope of ERISA or Section 4975
of
the Code.
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3.13 Place
of Business.
Borrower’s chief executive office is located at 00 Xxxxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxx Xxxxxxxx 00000.
3.14 Name.
Borrower has not changed its name or been known by any other name other than
“New Products, Inc. and “Span-America, Inc.” since it filed Articles of
Incorporation with the South Carolina Secretary of State on September 21, 1970
nor has it been the surviving corporation in a merger. Borrower does not now
use
nor has Borrower ever used any trade or fictitious name in the conduct of its
business.
3.15 No
Subordination.
The
Obligations of Borrower under the Loan Documents are not subordinated, and
will
not be subordinated, in right of payment to any other obligations of any party
except for Permitted Liens.
3.16 Event
of Default.
No
event has occurred and is continuing which is or which, with the giving of
notice or lapse of time or both, would be an Event of Default.
3.17 Regulation
U.
Borrower is not engaged principally, or as one of its important activities,
in
the business of extending credit for the purchasing or carrying of margin stock,
nor is Borrower an “investment” company as classified in the Investment Company
Act of 1940.
3.18 Subsidiaries. As
of the
Closing Date, Borrower has no Subsidiaries.
3.19 Material
Adverse Change.
Since
December 30, 2006, no Material Adverse Change has occurred in the business,
properties, operations or condition (financial or otherwise) of the Borrower
or
any of its Subsidiaries. Borrower’s Leverage Ratio (taken as a whole) will not
exceed 3.00:1.0 as of the Closing Date.
4. Covenants
of Parties.
4.1 Affirmative
Covenants.
During
the term of this Loan Agreement, Borrower will:
(a) Continuation
of Preclosing Conditions, Representations and Warranties.
Agree
that all conditions precedent to the making of the Loan shall remain satisfied
at all times during the term of this Loan Agreement, and that representations
and warranties made by Borrower in the Loan Documents shall be deemed to be
made
at all times during the term of this Loan Agreement except for the
representations and warranties set forth in Sections 3.4, 3.7, 3.8, 3.10, 3.12,
3.18 and 3.19.
(b) Maintenance.
Preserve and maintain all licenses, trademarks, privileges, permits, franchises,
certificates and the like necessary for the operation of its business. Borrower
shall also maintain its existence in good standing in its state of
organization.
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(c) Financial
Statements.
Furnish
or cause to be furnished to Lender (i) Borrower’s fiscal year-end audited
financial statements within one hundred and twenty (120) days after the close
of
each fiscal year, prepared on a consolidated basis by independent certified
public accountants who are satisfactory to Lender, together with an opinion
of
such accountants in form and content acceptable to Lender and accompanied by
a
certificate of compliance signed by the chief financial officer of Borrower,
affirming Borrower’s continuing compliance with the terms and conditions of this
Loan Agreement, which shall include a computation of compliance with all
financial covenants along with supporting schedules; and (ii) Borrower’s
internally-prepared monthly financial statements, prepared on a consolidated
basis, satisfactory to Lender, within twenty-five (25) days after the close
of
each fiscal month-end, and certified by the chief financial officer of Borrower
to be true, correct and complete in all material respects, and accompanied
by a
certificate of compliance signed by the chief financial officer of Borrower,
affirming Borrower’s continuing compliance with the terms and conditions of this
Loan Agreement, which shall include a computation of compliance with all
financial covenants along with supporting schedules. All financial statements
shall be prepared in accordance with GAAP, shall be in form and content
satisfactory to Lender and shall include, without limitation, an income
statement and a balance sheet.
(d) Insurance.
Maintain with financially sound and reputable insurance companies insurance
of
the kinds, covering the risks, and in the amounts reasonably comparable to
those
usually carried by entities and individuals engaged in businesses similar to
that of Borrower. Such insurance shall include, but not be limited to, liability
insurance, and comprehensive hazard/casualty insurance on buildings and contents
and all equipment and fixtures. Such insurance shall not be required to include
insurance on the non-payment of Borrower customer notes.
(e) Access
to Field Audits.
At
reasonable times and after reasonable notice to Borrower, permit any
representative or agent of Lender to have access to all financial records,
inventory and procedures of Borrower, and conduct periodic field audits at
any
one or more of Borrower’s places of business, and shall allow the Lender or its
agents access to, and to make copies of, all of the books and records of the
Borrower. The Borrower shall pay the Lender’s reasonable costs incurred in
connection with no more than two such audits per Borrower’s fiscal
year.
(f) Notification
of Environmental Claims.
If any
Substances shall be brought upon the Real Estate of Borrower, Borrower shall
maintain and/or remove them in accordance with all applicable laws. Borrower
shall promptly take all action that is needed to xxxxx any material
environmental risk or comply with any Environmental Laws on or related to the
Real Estate at its sole expense, subject to such legal and/or equitable defenses
as are available to Borrower. At Lender’s request from time to time, for
Reasonable Cause, Borrower shall obtain additional environmental audits covering
any Real Estate from experts reasonably acceptable to Lender. Borrower will
promptly inform Lender in writing of any environmental risk or violation of
any
Environmental Laws on or related to the Real Estate or the commencement of
any
proceeding against it or receipt of any notices by it concerning any alleged
violation of Environmental Laws on or related to the Real Estate. Borrower
will
permit Lender, or any person or firm designated by Lender, to conduct a
reasonable inspection of Real Estate on reasonable notice, and will immediately
advise Lender in writing of (i) any and all enforcement, cleanup, remedial,
removal, or other governmental or regulatory actions instituted, completed,
or
threatened pursuant to any applicable federal, state, or local laws, ordinances
or regulations relating to any Substances affecting its business operations;
and
(ii) all claims made or threatened by any third party against it relating to
damages, contributions, cost recovery, compensation, loss or injury resulting
from any Substances. Borrower shall immediately notify Lender of any remedial
action with respect to any environmental risk or condition taken by it with
respect to its business operations. (For purposes hereof, “Reasonable
Cause”
shall
be deemed to have occurred at any time that: (i) Borrower is obligated to
provide notice to Lender under this Paragraph 4.1(f), or (ii) Borrower shall
have received notice from any governmental agency indicating a violation or
potential violation of Environmental Laws.)
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(g) Environmental
Indemnity.
Borrower hereby indemnifies and holds Lender harmless from and against all
liability, claims, demands, causes of action, losses, damages, costs and
expenses (including reasonable attorneys’ fees and court costs), including all
foreseeable and unforeseeable consequential damages, directly or indirectly
arising out of the use, generation, storage, release, or disposal of Substances,
including, without limitation, the cost of any required or necessary inspection,
audit, clean-up, or detoxification and the preparation of any closure or other
required plans, consent orders, license applications, or the like, whether
such
action is required or necessary prior to or following transfer of title of
Borrower’s real or personal property, to the full extent that such action is
attributable, directly or indirectly, to the use, generation, storage, release
or disposal of Substances on Borrower’s real or personal property. Borrower
agrees that the indemnity obligations in this paragraph shall include
indemnifying Lender for all reasonable attorneys’ fees and expenses incurred by
Lender to enforce the terms of this paragraph 4.1(g). Borrower’s indemnity
obligations under this paragraph are exclusive of, and in addition to, any
other
insurance obligations which Borrower has under this Loan Agreement or any of
the
Loan Documents. The provisions of this Paragraph shall survive the satisfaction
or release of all Obligations and shall continue thereafter in full force and
effect.
(h) Purpose
of Loan.
Use the
proceeds of the Loan only for the purpose represented to Lender in Section
2.2.
(i) Notice
of Litigation.
Promptly notify Lender in the event that any legal action is filed against
Borrower or any subsidiary; provided however, such notice shall not be required
with respect to any matters which, if determined adversely to Borrower, would
reasonably be expected to result in less than $25,000.00 in damages when
aggregated with other then-pending litigation against Borrower.
(j) Compliance
with Law.
Materially comply with all applicable federal, state, and local laws and
regulations including, but not limited to, Environmental Laws, ERISA and laws
governing companies in the business the same as or similar to Borrower’s
business.
11
(k) Fees/Expenses.
Pay or
reimburse Lender for any out-of-pocket expenses, including attorneys’ fees,
reasonably incurred by Lender in enforcing this Agreement, the Note and the
other Loan Documents.
(l) Payment
on Note.
Duly
and punctually pay all the principal and interest on the Note, in accordance
with the terms of this Agreement and of the Note, and pay all other material
Indebtedness of Borrower reflected on the financial statements delivered to
the
Lender and referred to in Section
4.1(c)
hereof,
and all other material Indebtedness incurred after the date hereof in accordance
with the terms of such Indebtedness, unless there is a good faith dispute
regarding the same and in such case such payments shall be made into an escrow
account agreed upon by the Borrower and Lender.
(m) Notice
to Lender.
Immediately notify Lender of (i) any Event of Default or of any fact, condition
or event, that would with the giving of notice or passage of time, or both,
become an Event of Default or the failure of Borrower to observe its
undertakings hereunder; (ii) the occurrence of a Material Adverse Change; (iii)
material governmental proceedings; or (iv) the formation or acquisition of
a
Subsidiary.
(n) Taxes.
Pay all
taxes and assessments when due other than taxes being contested in good
faith.
(o) Maintenance
of Properties.
Keep
its material properties in good repair, working order and condition, reasonable
wear and tear accepted, and from time to time make all needed and proper
repairs, renewals, replacements, additions, and improvements thereto and
materially comply with the provisions of all leases to which it is a party
or
under which it occupies property so as to prevent any material loss or
forfeiture thereof or thereunder.
(p) Deposit
Relationship.
Borrower
shall maintain a depository account with Lender. All advances and payments
due
under the Note shall be deposited or automatically debited, as the case may
be,
from Borrower’s account with Lender.
4.2 Negative
Covenants.
During
the term of this Loan Agreement, Borrower will not, without the prior written
consent of Lender:
(a) Merger/Changes/Sale
of Assets.
Other
than as permitted under Section 4.2(j), enter into any merger, reorganization
or
consolidation, make any substantial change in the basic type of business now
conducted by it or sell all or substantially all of its assets outside the
ordinary course of business. This provision does not prevent the sale of
obsolete equipment in the ordinary course of business.
(b) Name;
Location of Collateral.
Change
the name, identity or corporate structure of Borrower; adopt or make use of
any
fictitious or tradename not disclosed elsewhere in this Agreement; or change
the
location of its chief executive office or the state of its incorporation or
organization.
12
(c) Liens
and Security Interests.
Create,
incur, assume, or suffer to exist any Lien of any kind on its property or
assets, now owned or hereafter acquired, except for the following (all of which
are referred to herein as “Permitted
Liens”):
(i) Liens
for
taxes not yet due or which are being contested in good faith by appropriate
proceedings and against which reserves deemed adequate by Lender have been
set
up (excluding any Lien imposed pursuant to any of the provisions of
ERISA);
(ii) Other
Liens, charges and encumbrances incidental to the conduct of its business or
the
ownership of its property and assets and created by operation of
law;
(iii) Purchase
money Liens and encumbrances created to secure the Indebtedness permitted by
Section
4.2(g)
hereof;
(iv) Liens,
charges and encumbrances in favor of the Lender; and
(v) Liens,
charges and encumbrances reflected on Exhibit
4.2(c)
to this
Agreement.
(d) Judgments,
etc.
Allow
any number of judgments for the payment of money in excess of the aggregate
sum
of $100,000.00 excluding amounts with respect to which an insurance carrier
admits full coverage (except for applicable deductibles), to remain unsatisfied
against it for a period of thirty (30) consecutive days, unless execution
thereof is stayed.
(e) Pledge
of Assets.
Pledge
any of the Borrower’s Assets or any interest therein.
(f) Loans
to Others.
Make
any material loans, advances, extensions of credit, guaranty or become surety
for, any other person or entities other than extensions of credit to customers
and prepayments to vendors and suppliers in the ordinary course of
business.
(g) Indebtedness/Guarantees.
Except
as permitted or contemplated by this Agreement, create, incur, assume or suffer
to exist any Indebtedness or obligation for money borrowed, or guarantee, or
endorse, or otherwise be or become contingently liable in connection with the
obligations of any Person (including, without limitation, any Affiliate), except
for the following (all of which are referred to herein as “Permitted
Indebtedness”):
(i) Indebtedness
for taxes not at the time due and payable or which are being actively contested
in good faith by appropriate proceedings and against which reserves deemed
adequate by Lender have been established by Borrower, but only if the
non-payment of such taxes being contested does not result in a Lien upon any
property of Borrower that has priority over the Lien held by
Lender;
(ii) Contingent
liabilities arising out of the endorsement of negotiable instruments in the
ordinary course of collection or similar transactions in the ordinary course
of
business;
13
(iii) Accounts
payable to trade creditors which are not aged more than one hundred twenty
(120)
days from billing date and current operating expenses (other than for borrowed
money) which are not more than sixty (60) days past due, in each case incurred
in the ordinary course of business and paid within such time period, unless
the
same are actively being contested in good faith and by appropriate and lawful
proceedings and Borrower shall have set aside such reserves, if any, with
respect thereto as have been recommended by independent public accountants;
(iv) Indebtedness
for deferred compensation owed to employees and former employees;
(v) Commitments
to purchase equipment and machinery entered into in the ordinary course of
business and Indebtedness related thereto; and
(vi) Indebtedness
for money borrowed from the Lender.
(h) Affiliate
Transactions.
Purchase, acquire or lease property from, or sell, transfer or lease any
Inventory, materials, Goods, Equipment, assets or property to, any Affiliate
of
Borrower, except in the ordinary course of Borrower’s business and under terms
and conditions which would apply if disinterested parties were
involved.
(i) Financing
Statements.
Permit
any financing statement to be on file with respect to the Assets of the Borrower
other than financing statement for Permitted Liens.
(j) Acquisitions.
Purchase or acquire the obligations, stock or assets of or any other interest
in
any Person, except for (i) purchases and acquisitions in an amount not in excess
of $1,000,000 in any one consecutive twelve-month period; and (ii) in addition
to clause (i) of this paragraph (j), direct obligations of the United States
of
America or certificates of deposit or other investments issued by Lender, or
by
any bank chartered under the laws of the United States or any State of the
United States.
(k) Dividends.
During
any fiscal year, declare any dividends on any shares of any class of Borrower’s
stock, or apply any of Borrower’s property or assets to the purchase, redemption
or other retirement of, or set apart any sum for the payment of any dividends
on, or make any other distribution by reduction of capital or otherwise in
respect of, any shares of any class of stock of Borrower, the aggregate value
of
which exceeds 50% of the sum of (i) the Company’s income from continuing
operations for such fiscal year plus (ii) the absolute value of the aggregate
after-tax non-cash and extraordinary losses of the Company for such fiscal
year.
Notwithstanding the foregoing, the Company may declare and pay aggregate
non-extraordinary quarterly dividends in any fiscal quarter in an amount not
in
excess of the aggregate non-extraordinary quarterly dividends paid in the
immediately preceding fiscal quarter so long as after giving effect to the
payment of such dividends, the Company remains in compliance with the financial
covenants set forth in Section 4.3 of this Agreement.
(l) Lease
Transactions.
Enter
into any sale and lease-back arrangement, either directly or
indirectly.
14
(m) Subsidiary
Divestiture.
Transfer, sell, pledge, encumber, or otherwise assign any shares of stock or
other interest in any Subsidiary or permit any Subsidiary to sell or otherwise
dispose of substantially all of its assets.
(n) Partnerships
or Joint Ventures.
Become
or agree to become a general or limited partner in any material general or
limited partnership or joint venturer in any joint venture.
(o) Capital
Expenditures.
Make,
without Lender’s written consent, spend or incur obligations (including the
total amount of capital leases) of more than $1,500,000 in any fiscal
year.
(p) Prepayment
of Debt.
Prepay
any outstanding debt (other than debt to Lender).
(q) Safety
Catheter Impairment Permitted.
Notwithstanding any other provision of this Agreement or any of the Loan
Documents to the contrary, the Borrower shall be permitted to take or engage
in
any action which may result in the total or partial impairment of the assets
included in its safety catheter financial reporting segment, and any such action
shall not constitute a default or Event of Default hereunder or give rise to
any
rights of Lender arising in connection with or as a result of a default or
Event
of Default hereunder, provided Borrower at all times complies with the financial
covenants set forth in 4.3.
4.3 Financial
Covenants.
During
the term of this Loan Agreement, Borrower will, at all times, maintain the
following, all on a consolidated basis:
(a) Tangible
Net Worth.
At all
times, Tangible Net Worth of not less than the then applicable Tangible Net
Worth Threshold. The “Tangible Net Worth Threshold” shall initially be
$6,500,000, and on the 120th
day of
each fiscal year of the Company occurring during the term of this Agreement,
the
Threshold Tangible Net Worth shall be increased by an amount equal to one-half
of the Company’s consolidated net income for the most recently-completed full
fiscal year reported in the Company’s fiscal year-end audited financial
statements required to be provided by the Company to the Lender by clause (i)
of
Paragraph 4.1(c) of this Agreement.
(b) Leverage
Ratio.
A
Leverage Ratio of not more than 3.00 to 1.00 at all times.
Unless
otherwise agreed to by Lender, in writing or as otherwise set forth herein,
Borrower’s compliance with the foregoing financial covenants shall be determined
in accordance with GAAP, after eliminations for Intercompany
Transactions.
5. [Reserved].
6. Events
of Default.
The
occurrence of any of the following shall constitute an event of default
(“Event
of Default”):
6.1 Payment.
Any
payment of principal, interest, or other sum owed to Lender under the Loan
Documents or otherwise due from Borrower to Lender is not made when due, whether
at stated maturity, upon acceleration, or otherwise and such breach continues
for twenty (20) days after the due date thereof.
15
6.2 Additional
Defaults.
Any
provision or covenant of any Loan Document is materially breached, or any
warranty, representation, or statement made or furnished to Lender by Borrower
in writing in connection with the Loan and the Loan Documents (including any
warranty, representation, or statement in Borrower’s financial statements) or to
induce Lender to make the Loan, is untrue or misleading in any material respect
and such breach or falsity is not cured within thirty (30) days after written
notice thereof is given by Lender to Borrower.
6.3 Cross-Default.
Any
material default by Borrower that occurs under any agreement for indebtedness
with Lender or any third party which default is not corrected within the cure
period provided in such agreement, if any.
6.4 Dissolution
or Bankruptcy.
Dissolution or termination or liquidation of existence of Borrower or
insolvency, business failure, appointment of a receiver of any part of the
property of, assignment for the benefit of creditors by, or the commencement
of
any proceeding under state or federal bankruptcy laws or other insolvency laws
by Borrower or the commencement of an involuntary proceeding against Borrower
under state or federal bankruptcy laws which is not dismissed within thirty
(30)
days after such commencement, or a merger or consolidation or sale of Borrower’s
assets other than as permitted hereunder.
6.5 Adverse
Changes.
Any
Material Adverse Change in the condition of Borrower which Lender reasonably
determines will materially affect the ability of Borrower to meet its
obligations under this Loan Agreement.
6.6 Business
Disruption; Condemnation.
There
shall occur a cessation of a substantial part of the business of Borrower for
a
period which significantly affects Borrower’s capacity to continue its business,
on a profitable basis; or Borrower shall suffer the loss or revocation of any
license or permit now held or hereafter acquired by it which is necessary to
the
continued or lawful operation of its business; or Borrower shall be enjoined,
restrained or in any way prevented by court, governmental or administrative
order from conducting all or any material part of its business
affairs.
6.7
Invalidity of Loan Documents.
Assertion or actual invalidity of any Loan Document.
6.8 Sale
of Assets.
Borrower
shall sell all or substantially all of its assets not in the ordinary course
of
business.
7.1 Acceleration.
Upon
the occurrence of an Event of Default, Lender shall have the option to declare
the entire unpaid principal amount of the Loans, accrued interest and all other
Obligations immediately due and payable, without presentment, demand, or notice
of any kind.
16
7.2 Remedies.
Upon
the occurrence of an Event of Default, Lender shall be entitled to pursue all
rights and remedies available under each of the Loan Documents, as well as
all
rights and remedies available at law, or in equity, and such rights and remedies
shall be cumulative. Without in any way limiting the generality of the
foregoing, Lender shall also have the following non-exclusive
rights:
(a) Set-off.
To
exercise any and all rights of set-off which Lender may have against any
account, fund, or property of any kind, tangible or intangible, belonging to
Borrower which shall be in Lender’s possession or under its
control;
(b) Cure.
To cure
any Event of Default in such manner as deemed appropriate by
Lender;
(c) Foreclosure.
To
foreclose pursuant to the terms of any Loan Document, or at law or in
equity.
7.3 Advances/Reimbursements.
All
amounts due Lender as a result of expenditures made by Lender or losses suffered
by Lender not paid within twenty (20) days of presentment to Borrower shall
bear
interest at the rate applicable to past due principal as specified in the Note
or herein from the date demanded until paid in full. Unless otherwise specified
in the Loan Documents, such advances and other sums, together with accrued
interest, shall be due and payable on demand.
7.4 Default
Rate of Interest.
Notwithstanding anything contained in the Note, upon an Event of Default,
interest shall accrue on the entire outstanding principal of the Loan from
and
after such date until and including the date on which the default is cured
at
the rates accruing under the Note, plus an additional four percent (4%) per
annum (400 basis points). The increase of such interest rate shall not affect
or
otherwise limit or apply in lieu of any other remedy available to Lender as
provided for herein.
7.5 Late
Charge.
If
Borrower shall fail to make any installment of principal or interest within
twenty (20) days from the due date therefore, whether by acceleration or
otherwise, Borrower agrees to pay to Lender a late charge equal to one percent
(1%) of the overdue installment.
7.6 Marshalling
of Assets; Payments Set Aside.
Lender
shall be under no obligation to marshal any assets or securities in favor of
Borrower or any other Person or against or in payment of any or all of the
Obligations. To the extent that any sum credited against the Obligations is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receivor or any other party under any
bankruptcy law, state of federal law, common law or equitable cause, then to
the
extent of such recovery, the Obligations or such part thereof originally
intended to be satisfied, and all Liens, rights and remedies therefore, shall
be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or set-off had not occurred.
17
8. Miscellaneous.
8.1 Notice.
All
notices, demands, or other communications given hereunder or under the Loan
Documents shall be in writing, and shall be sent via overnight courier or mailed
to the address of each party as set forth below, said mailing to be certified
United States government mail to the address set forth below, with notice in
each case to be deemed served and effective upon the earlier of (i) when
received, (ii) when recorded as being delivered by the overnight courier service
or (iii) three (3) business days after having been deposited in the United
States mail as indicated above. Either party must provide written direction
to
the other in order to change the address to which said notice shall be
sent.
If
to
Lender, to Carolina
First Bank
000
Xxxxx
Xxxx Xxxxxx
Xxxxxxxxxx,
Xxxxx Xxxxxxxx 00000
Attn:
Xxxxx X. Short
With
copy, to: Xxxxxx
Xxxxx, LLC
000
X.
XxXxx Xxx., Xxx. 000
Xxxxxxxxxx,
Xxxxx Xxxxxxxx 00000
Attn:
Xxxxx Xxxxxxx, Esq.
If
to
Borrower, to Span-America
Medical Systems, Inc.
00
Xxxxxxxx Xxxxxx
Xxxxxxxxxx,
Xxxxx Xxxxxxxx 00000
Attn:
Xxxxxxx Xxxxxxx
With
copy, to
Wyche,
Burgess, Xxxxxxx & Xxxxxx, P.A.
00
X.
Xxxxxxxxxx Xxx (29601)
Xxxx
Xxxxxx Xxx 000
Xxxxxxxxxx,
Xxxxx Xxxxxxxx 00000
Attn:
Xxxx X. Xxxxxx, Esq.
8.2 Waiver.
No
failure or delay on the part of Lender in exercising any power or right
hereunder, and no failure of Lender to give Borrower notice of an Event of
Default, shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power preclude any other or further exercise
thereof or the exercise of any other right or power hereunder. No modification
or waiver of any provision of any Loan Document or consent to any departure
by
Borrower from any Loan Document shall in any event be effective unless the
same
shall be in writing, signed by Lender and Borrower, and such waiver or consent
shall be effective only in the specific instance and for the particular purpose
for which it was given.
8.3 Benefit.
The
Loan Documents shall be binding upon and shall inure to the benefit of Borrower
and Lender and their respective successors and assigns.
18
8.4 Governing
Law and Jurisdiction.
The
Loan Documents and this Loan Agreement, unless otherwise specifically provided
therein, and all matters relating thereto, shall be governed by and construed
and interpreted in accordance with the laws of the State of South Carolina;
PROVIDED
HOWEVER,
to the
extent that the creation, validity, perfection, enforceability or priority
of
any lien or security interest, or the rights and remedies with respect to any
lien or security interest are governed by the laws of a jurisdiction other
than
the State of South Carolina, then the laws of such jurisdiction shall govern,
except as superseded by applicable United States Federal Law.
8.5 Assignment.
Borrower may
not
assign the Loan Documents or any interest therein without Lender’s prior written
consent.
8.6 Severability.
Invalidity of any one or more of the terms, conditions or provisions of this
Loan Agreement shall in no way affect the balance hereof, which shall remain
in
full force and effect.
8.7 Construction.
Whenever the context and construction so require, all words used in the singular
number herein shall be deemed to have been used in the plural, and vice versa,
and the masculine gender shall include the feminine and neuter and the neuter
shall include the masculine and feminine. All references to Sections shall
mean
Sections of the Loan Document. The terms “herein,” “hereinbelow,” “hereunder,”
and similar terms are references to the particular Loan Document in its entirety
and not merely the particular Article, Section, or Exhibit in which any such
term appears. Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of the Loan Document
or the intent of any provision thereof. All references to any Loan Document
shall include all amendments, extensions, renewals, restatements or replacements
of the same. The terms “include”, “including” and similar terms shall be
construed as if followed by the phrase “without being limited to” and “Real
Estate” and “Collateral” shall be construed as if followed by the phrase “or any
part thereof”. No inference in favor of or against any party shall be drawn from
the fact that such party has drafted any portion of the Loan Document.
8.8 Headings.
Any
headings used in the Loan Documents are solely for the convenience of the
Parties, and are not part of the agreement between the Parties, and shall not
be
construed as such.
8.9 Execution
in Counterparts.
All
Loan Documents may be executed in two or more counterparts, each of which shall
be deemed to be an original, but all of which shall constitute one and the
same
instrument, and in making proof of the Loan Document, it shall not be necessary
to produce or account for more than one such counterpart.
8.10 Examinations/Communications.
Lender’s examinations, inspections, or receipt of information pertaining to the
matters set forth in the Loan Documents shall not in any way be deemed to reduce
the full scope and protection of the Loan Documents or the Obligations of
Borrower related to the Loan Documents.
19
8.11 No
Third Party Beneficiaries.
The
Loan Documents are entered into for the sole benefit of Borrower, its successors
and assigns, and no third party shall be deemed to have any privity of contract
nor any right to rely on any Loan Document to any extent or for any purpose
whatsoever, nor shall any other person have any right of action of any kind
hereof or be deemed to be a party beneficiary.
8.12 No
Participation.
Nothing
in the Loan Documents, and no action or inaction whatsoever on the part of
Lender undertaken in connection with the Loan, shall be deemed to make Lender
a
partner or joint venturer with Borrower, and Borrower indemnifies and holds
Lender harmless from and against any and all claims, losses, causes of action,
expenses (including attorneys’ fees) and damages arising from the relationship
between Lender and Borrower being construed as or related to be anything other
than that of lender and borrower. This provision shall survive the termination
of all Loan Documents.
8.13 Notice
of Conduct.
Borrower agrees to use commercially reasonable efforts to give Lender written
notice of any action or inaction, to the extent that any such Party has actual
knowledge thereof, by Lender or any agent or attorney of Lender in connection
with the Loan Documents or the Obligations of any party under the Loan Documents
that Borrower reasonably believes may be actionable against Lender or any agent
or attorney of Lender or a defense to payment of any Obligations of Borrower,
including commission of a tort or violation of any contractual duty implied
by
law, and a reasonable opportunity to cure or correct such action or inaction.
Upon request of Lender from time to time, Borrower shall also confirm in writing
the status of the Loan, and the Obligations, and provide other information
reasonably requested by Lender.
8.14 Costs,
Expenses and Attorneys’ Fees.
Borrower shall pay to Lender immediately upon demand the full amount of all
reasonable out-of-pocket costs and expenses, including reasonable attorneys’
fees, costs of experts and all other expenses, incurred by Lender (a) upon
the
occurrence of an Event of Default, or of circumstances which, if left uncured,
would result in an Event of Default, the costs of additional appraisals,
environmental studies, title insurance, survey updates and legal reviews; (b)
the perfection, preservation, protection and continuation of the liens and
security interest granted Lender and the custody, preservation, protection,
repair and operation of any collateral, (c) the pursuit by Lender of its rights
and remedies under the Loan Documents and applicable law, and (d) defending
any
counterclaim, cross-claim or other action, or participating in any bankruptcy
proceeding, mediation, arbitration, litigation or dispute resolution of any
other nature involving Lender or Borrower, except to the extent Lender has
been
adjudicated to have engaged in culpable conduct.
8.15 Further
Assurances.
At any
time after the date hereof, Borrower, at the request of Lender, shall execute
and deliver such further documents and agreements and take such further actions
as Lender reasonably deems necessary or appropriate to permit each transaction
contemplated by the Loan Documents to be consummated in accordance with the
provisions thereof and to perfect, preserve, protect and continue all liens,
security interests and rights of Lender under the Loan Documents, security
agreements, financing statements, continuation statements, a new or replacement
Note, and/or agreements supplementing, extending or otherwise modifying the
Note, this Loan Agreement, and/or security agreement, and certificates as to
the
amount of the indebtedness evidenced by the Note. Upon Borrower’s payment in
full of all amounts outstanding under the Loan, Lender shall return to Borrower
for cancellation the original Note and any extensions, replacements or renewals
thereof.
20
8.16 Integration.
To the
extent only of any conflict between the terms of this Loan Agreement and any
other Loan Document (other than the Note), the terms of this Loan Agreement
shall prevail. To the extent only of any conflict between the terms of this
Loan
Agreement and the Note, the terms of the Note shall prevail.
8.17 Time
of the Essence.
Time is
of the essence to all Loan Documents.
8.18 Arbitration.
ANY
CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING BUT NOT
LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS INSTRUMENT, AGREEMENT,
OR
DOCUMENT 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 UNIFORM ARBITRATION ACT, § 15-48-10, ET. SEQ., CODE OF LAWS OF
SOUTH CAROLINA (1976), AS AMENDED), THE RULES OF PRACTICE AND PROCEDURE FOR
THE
ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR ANY SUCCESSOR
THEREOF (“J.A.M.S.”), AND THE “SPECIAL RULES” SET FORTH BELOW. IN THE EVENT OF
ANY 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 AN ACTION, INCLUDING A SUMMARY
OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM
TO
WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
A. SPECIAL
RULES.
THE ARBITRATION SHALL BE CONDUCTED IN GREENVILLE, SOUTH CAROLINA AND
ADMINISTERED BY J.A.M.S. 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 90 DAYS OF THE DEMAND
FOR ARBITRATION FURTHER, THE ARBITRATOR(S) SHALL ONLY, UPON A SHOWING OF CAUSE,
BE PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL
60 DAYS.
21
B.
RESERVATION
OF RIGHTS.
NOTHING IN THIS ARBITRATION PROVISION 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 LENDER OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE BANK HERETO
(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; OR
(III)
IMPAIR OR CONSTITUTE A WAIVER OF ANY RIGHT OF BORROWER TO THE PROTECTION OF
BANKRUPTCY PROCEEDINGS IN THE U.S. BANKRUPTCY COURTS OR SIMILAR INSOLVENCY
PROCEEDINGS UNDER STATE LAW IN ANY STATE COURT. LENDER MAY EXERCISE SUCH SELF
HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR
ANCILLARY REMEDIES AND BORROWER MAY SEEK SUCH BANKRUPTCY OR INSOLVENCY
PROTECTION IN ANY FEDERAL OR STATE COURT BEFORE, DURING, OR AFTER THE PENDENCY
OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS INSTRUMENT, AGREEMENT,
OR
DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR
MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES
SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT
IN
ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING
RESORT TO SUCH REMEDIES.
9. Additional
Provisions.
Riders,
schedules and exhibits attached hereto, if any, are hereby incorporated into
this Loan Agreement as if set forth verbatim.
[Signature
Page Follows]
22
IN
WITNESS WHEREOF, the parties hereto have executed this Loan Agreement as of
the
date first above written.
|
BORROWER:
Span-America Medical Systems, Inc. |
||
| |
|
|
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
|
Its:
Chief Financial Officer
|
||
|
LENDER:
Carolina First Bank |
||
| |
|
|
| By: | /s/ Xxxxx X. Short | |
|
Xxxxx X. Short Its:
Vice President
|
||
23
List
of Exhibits and Schedules
Exhibits
& Schedules
Exhibit
1.18 Note
Exhibit
4.2(c) Liens,
Charges and Encumbrances
24
EXHIBIT
1.18
FORM
OF
NOTE
(See
Attached)
25
EXHIBIT
4.2(C)
LIENS,
CHARGES AND ENCUMBRANCES
None.
26
EXHIBIT
4.2(F)
PERMITTED
INDEBTEDNESS
None.
27
