EXHIBIT 10.23
FORBEARANCE AGREEMENT
---------------------
This Forbearance Agreement (hereinafter, the "Agreement") is made this
_19th__ day of August, 1998 by and among:
FLEET BANK-N.H., a banking and trust company organized under the laws
of New Hampshire ("Fleet");
MELLON BANK, N.A., a national banking association ("Mellon"); and
IGI, INC., a Delaware corporation ("IGI"), IGEN, INC., a Delaware
corporation ("IGEN"); IMMUNOGENETICS, INC., a Delaware corporation
("Immunogenetics"); and BLOOD CELLS, INC., a Delaware corporation
("BCI").
Fleet and Mellon are hereinafter sometimes individually referred to as a
"Lender" and collectively referred to as the "Lenders", and IGI, IGEN,
Immunogenetics, BCI, and each of their subsidiaries as set forth on Exhibit "A"
annexed hereto and specifically incorporated by reference herein, are
hereinafter sometimes individually referred to as a "Borrower" and collectively
referred to as the "Borrowers".
BACKGROUND
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Reference is made to certain Loan Arrangements (hereinafter, the "Loan
Arrangements") entered into by and between the Lenders and the Borrowers
evidenced by, among other things, the following documents, instruments, and
agreements (hereinafter, singly and collectively, the "Loan Documents"):
(a) Fourth Amended and Restated Line of Credit Note dated September 30,
1997 in the original principal amount of $6,600,000.00 made by the Borrowers
payable to Fleet (the "Fleet Line of Credit Note");
(b) Fourth Amended and Restated Line of Credit Note dated September 30,
1997 in the original principal amount of $5,400,000.00 made by the Borrowers
payable to Mellon (the "Mellon Line of Credit Note");
(c) Third Amended and Restated Revolving Credit Note dated March 27, 1997
in the original principal amount of $6,171,428.40 made by the Borrowers payable
to Fleet (the "Fleet Term Note");
(d) Third Amended and Restated Revolving Credit Note dated March 27, 1997
in the original principal amount of $4,114,285.60 made by the Borrowers payable
to Mellon (the "Mellon Term Note");
(e) Second Amended and Restated Loan Agreement dated December 13, 1995 by
and among the Lenders and the Borrowers, as amended by a certain First Amendment
to Second Amended and Restated Loan Agreement dated March 27, 1996, a certain
Second Amendment to Second Amended and Restated Loan Agreement dated as of June
26, 1996, a certain Third Amendment to Second Amended and Restated Loan
Agreement dated August 13, 1996, a certain Fourth Amendment to Second Amended
and Restated Loan Agreement dated as of November 13, 1996, a certain Fifth
Amendment to Second Amended and Restated Loan Agreement dated March 27, 1997, a
certain Sixth Amendment to Second Amended and Restated Loan Agreement dated June
30, 1997, a certain Seventh Amendment to Second Amended and Restated Loan
Agreement dated July 31, 1997, and a certain Eighth Amendment to Second Amended
and Restated Loan Agreement dated as of September 30, 1997 (hereinafter, as
amended and in effect, the "Loan Agreement");
(f) A certain Security Agreement granted by, among others, IGI, IGEN and
Immunogenetics, in favor of Fleet dated December 20, 1990;
(g) A certain Security Agreement - Intellectual Property granted by, among
others, IGI, IGEN and Immunogenetics in favor of Fleet dated December 20, 1990;
(h) A certain Security Documents Modification Agreement entered into by,
among others, the Borrowers and the Lenders dated as of December 13, 1995;
(i) A certain Joinder, Assumption and Security Documents Modification
Agreement dated as of May 12, 1992 entered into by, among others, the Borrowers,
and Fleet;
(j) A certain Mortgage granted by Immunogenetics in favor of Fleet dated
December 20, 1990 encumbering certain property located in the borough of Buena,
Atlantic County, New Jersey;
(k) A certain Mortgage granted by Immunogenetics in favor of Fleet dated
May 12, 1992 encumbering certain property located in the township of Buena
Vista, Atlantic County, New Jersey;
(l) A certain Mortgage granted by Immunogenetics in favor of Fleet dated
December 20, 1990 encumbering certain property located in the city of Vineland,
Cumberland County, New Jersey;
(m) A certain Collateral Assignment of Lessee's Interest in Leases executed
by, among others, Immunogenetics in favor of Fleet dated December 20, 1990;
(n) A certain Stock Pledge Agreement executed by, among others, IGI and
IGEN in favor of Fleet dated December 20, 1990; and
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(o) A certain Conditional Assignment of Contracts granted by, among others,
IGI, IGEN and Immunogenetics in favor of Fleet dated December 20, 1990.
(p) A certain Extension Agreement dated April 29, 1998 (the "Extension
Agreement").
The Borrowers acknowledge and agree that (i) the Borrowers are in default
of the terms and conditions of the Loan Documents (ii)all amounts outstanding
under the Loan Documents are due and owing in full, and (iii) the Lenders have
no obligation to make any advances under the Loan Documents. The Borrowers have
requested that the Lenders forbear from enforcing their rights and remedies
under the Loan Documents upon default and the Lenders have agreed, but only upon
the terms and conditions set forth herein.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and among
the Lenders and the Borrowers as follows:
ACKNOWLEDGMENT OF INDEBTEDNESS
------------------------------
1. (a) The Borrowers hereby acknowledge and agree that they are
jointly and severally liable to the Lenders for the following amounts which are
outstanding under the Loan Documents as of August 18, 1998:
Fleet Line of Credit Note:
-------------------------
Principal $6,600,000.00
-------------
Interest $ 35,841.67
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Subtotal $6,635,841.67
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Mellon Line of Credit Note:
--------------------------
Principal $5,400,000.00
-------------
Interest $ 29,325.00
-------------
Subtotal $5,429,325.00
Fleet Term Note:
---------------
Principal $3,994,285.20
Interest $ 21,691.19
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Subtotal $4,015,976.39
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Mellon Term Note:
-----------------
Principal $ 2,662,856.80
Interest $ 14,460.79
--------------
Subtotal $ 2,677,317.59
TOTAL................ $18,758,460.65
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(b) The Borrowers further acknowledge and agree that they are each
jointly and severally liable to the Lenders for all interest accruing under the
Loan Documents from and after April 23, 1998, and for all late fees, costs,
expenses, and costs of collection (including attorneys' fees) heretofore or
hereafter incurred by the Lenders in connection herewith. (Hereinafter, all
amounts due as set forth in this Paragraph 1 shall be referred to collectively
as the "Obligations").
REPAYMENT OF DEBT
-----------------
2. (a) Fleet Line of Credit Note and Mellon Line of Credit Note.
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(i) From and after the execution of this Agreement, on the 1st day of
each month, the Borrowers shall pay to the Lenders a monthly interest
payment equal to the cash portion of all accrued interest on the
principal balance of the Fleet Line of Credit Note and the Mellon Line
of Credit Note, with the cash portion of the interest calculated at a
floating rate equal to the aggregate of Fleet's Prime Rate (as such
Prime Rate may be announced by Fleet from time to time) plus the
following percentages scheduled under "cash portion"for the time
periods set forth below each calculated on a per annum basis:
Time Period Cash Portion Accrued Portion Total Interest
------------ ------------- ---------------- ---------------
From 8/1/98 Prime Rate 1.0% Prime Plus
through 9/30/98 plus 2.50% 3.5%
From 10/1/98 Prime Rate 2.0% Prime Plus
through 11/30/98 plus 2.50% 4.5%
From 12/1/98 Prime Rate 3.0% Prime Plus
through 1/31/99 plus 2.50% 5.5%
Additional interest shall accrue on the principal balance of the
Fleet Line of Credit Note and the Mellon Line of Credit Note at the
rate scheduled above under "accrued portion" on a per annum basis.
The "accrued portion" of the interest charges shall be paid by the
Borrowers upon the earlier of (x) satisfaction of the Obligations, in
their entirety, or, (y) the Termination Date. In the event the
Borrowers have delivered to the Lenders a commitment letter on or
before
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September 30, 1998 reasonably satisfactory to the Lenders, in their
discretion, contemplating satisfaction of all obligations due and
owing to the Lenders under the Loan Documents on or before October 31,
1998, which commitment letter is issued by a financial institution
and/or other party reasonably acceptable to the Lenders and is subject
only to documentation and no further contingencies other than such
contingencies acceptable to the Lenders as are ordinary and necessary
in transactions of similar type, the interest rate increase scheduled
for October 1, 1998 shall be deferred. In the event that the Borrowers
do not satisfy their entire outstanding obligations to the Lenders
under the Loan Documents on or before October 31, 1998, the October 1,
1998 scheduled interest rate increase to the Prime Rate plus 4.5%
shall be effective retroactive to October 1, 1998. In the event that
the Borrowers do satisfy their entire outstanding obligations to the
Lenders under the Loan Documents on or before October 31, 1998, the
October 1, 1998 scheduled interest rate increase shall be waived.
Similarly if such commitment letter is received by the Lenders on
or before November 30, 1998 contemplating satisfaction of all
obligations due and owing to the Lenders under the Loan Documents on
or before December 31, 1998, the interest rate increase scheduled for
December 1, 1998 shall be deferred. In the event that the Borrowers
do satisfy their entire outstanding obligations to the Lenders under
the Loan Documents on or before December 31, 1998, the December 1,
1998 scheduled interest rate increase shall be waived. In the event
the Borrowers do not satisfy their entire outstanding obligations to
the Lenders under the Loan Documents on or before December 31, 1998,
the December 1, 1998 scheduled interest rate increase to the Prime
Rate plus 5.5 % shall be effective retroactive to December 1, 1998.
(ii) Any amounts paid to cure the financial covenant default
pursuant to Paragraph 12(a)(iii) of the Extension Agreement, shall be
applied on a pro rata basis in reduction of the principal balance of
the Fleet Line of Credit Note and the Mellon Line of Credit Note.
(iii) The entire principal balance, interest (accrued and
hereafter accruing), costs, expenses, and other charges due in
connection therewith shall be paid in full by the Borrowers on or
before 5:00 P.M. eastern standard time on January 31, 1999, it being
expressly acknowledged and agreed that TIME IS OF THE ESSENCE.
(b) Fleet Term Note and Mellon Term Note.
------------------------------------
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(i) From and after the execution of this Agreement, on the 1st
day of each month, the Borrowers shall pay to the Lenders a monthly
interest payment equal to the cash portion of the interest on the
principal balance of the Fleet Term Note and the Mellon Term Note,
with the cash portion of the interest calculated at a floating rate
equal to the aggregate of Fleet's Prime Rate (as such Prime Rate may
be announced by Fleet from time to time) plus the following
percentages for the time period set forth below each calculated on a
per annum basis:
Time Period Cash Portion Accrued Portion Total Interest
----------- ------------ --------------- -- ------------
From 8/1/98 Prime Rate 1.0% Prime Plus
through 9/30/98 plus 2.50% 3.5%
From 10/1/98 Prime Rate 2.0% Prime Plus
through 11/30/98 plus 2.50% 4.5%
From 12/1/98 Prime Rate 3.0% Prime Plus
through 1/31/99 plus 2.50% 5.5%
Additional interest shall accrue on the principal balance of the
Fleet Term Note and the Mellon Term Note at the rate scheduled above
under "accrued Portion" on a per annum basis. The "accrued portion"
of the interest charges shall be paid by the Borrowers upon the
earlier of (x) satisfaction of the Obligations, in their entirety, or,
(y) the Termination Date. In the event the Borrowers have delivered
to the Lenders a commitment letter on or before September 30, 1998
reasonably satisfactory to the Lenders, in their discretion,
contemplating satisfaction of all obligations due and owing to the
Lenders under the Loan Documents on or before October 31, 1998, which
commitment letter is issued by a financial institution and/or other
party reasonably acceptable to the Lenders and is subject only to
documentation and no further contingencies other than such
contingencies acceptable to the Lenders as are ordinary and necessary
in transactions of similar type, the interest rate increase scheduled
for October 1, 1998 shall be deferred. In the event that the
Borrowers do not satisfy their entire outstanding obligations to the
Lenders under the Loan Documents on or before October 31, 1998, the
October 1, 1998 scheduled interest rate increase to the Prime Rate
plus 4.5% shall be effective retroactive to October 1, 1998. In the
event that the Borrowers do satisfy their entire outstanding
obligations to the Lenders under the Loan Documents on or before
October 31, 1998, the October 1, 1998 scheduled interest rate
increase shall be waived.
Similarly if such commitment letter is received by the Lenders on
or before November 30, 1998 contemplating satisfaction of all
obligations due and
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owing to the Lenders under the Loan Documents on or before December
31, 1998, the interest rate increase scheduled for December 1, 1998
shall be deferred. In the event that the Borrowers do satisfy their
entire outstanding obligations to the Lenders under the Loan Documents
on or before December 31, 1998, the December 1, 1998 scheduled
interest rate increase shall be waived. In the event the Borrowers do
not satisfy their entire outstanding obligations to the Lenders under
the Loan Documents on or before December 31, 1998, the December 1,
1998 scheduled interest rate increase to the Prime Rate plus 5.5 %
shall be effective retroactive to December 1, 1998.
(ii) The entire principal balance, interest (accrued and
hereafter accruing), costs and expenses, and other charges due in
connection therewith shall be paid in full by the Borrowers on or
before 5:00 P.M. eastern standard time on January 31, 1999, it being
expressly acknowledged and agreed that TIME IS OF THE ESSENCE.
(iii) Any amounts paid or prepaid on account of the Fleet Term
Note or the Mellon Term Note, whether pursuant to this Agreement or
otherwise, shall not be available for reborrowing.
REQUEST FOR ADVANCES UNDER FLEET LINE OF CREDIT NOTE
-----------------------------------------------------
AND MELLON LINE OF CREDIT NOTE
------------------------------
3. From and after the date of this Agreement, all requests for advances
under the Fleet Line of Credit Note and/or the Mellon Line of Credit Note shall
be submitted directly to Xx. Xxxxxx X. Xxxxxx, Vice President of Fleet, on
behalf of the Lenders, for approval and shall be accompanied by a Borrowing Base
Certificate in the form of Exhibit "B" and a Covenant Compliance Certificate in
the form of Exhibit "C", each as annexed hereto and specifically incorporated by
reference herein. The Borrowers acknowledge and agree that (i) the Lenders
have no obligation to make any advances under the Loan Documents, (ii) any
determination to make any advance shall be solely in the discretion of the
Lenders, (iii) the determination by the Lender to make any advance shall not
result in any obligation to make any further advances, and (iv) any advance made
by the Lenders in the discretion of the Lenders shall be secured by and governed
by the terms of the Loan Documents.
FORBEARANCE FROM ACTION BASED ON SPECIFIC COVENANT DEFAULTS
-----------------------------------------------------------
4. During the term of this Agreement, the Lenders hereby agree to forbear
from exercising their rights and remedies under the Loan Documents arising from
the following specific covenant defaults which have occurred under the terms and
conditions of the Extension Agreement prior to the execution of this Agreement:
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(a) Section 2(b)(ii) - $500,000.00 and $200,000.00 principal payments due on
July 15, 1998 and August 15, 1998 not paid;
(b) Section 12(a) - Minimum Eligible Accounts and Minimum Eligible Inventory
levels not met;
(c) Sections 12(b)- Minimum Fixed Charge Coverage Ratio of 1.00 to 1.00 not
met;
(d) Section 12(c) - Minimum Net Worth not met;
(e) Section 13(d) - Submission of final, original, audited financial statements
for fiscal year ended December 31, 1997, together with certified public
accountant's unqualified opinion and management letter not delivered by May 15,
1998 and without material adverse change from the 1997 draft financial statement
previously delivered to the Lenders;
(f) Section 13(f) - Business Plan/Refinancing not met; and
(g) Section 15 - Additional Documents (failure to obtain foreign credit
insurance on behalf of Lenders or failure to coordinate arrangement to factor
receivables by May 31, 1998.
Nothing contained in this Paragraph 5 is intended to be, nor shall it be
construed as, a waiver of any default or Event of Default nor shall anything
contained herein be deemed to constitute an agreement on the part of the Lenders
to forbear from exercising their rights and remedies under the Loan Documents
based upon the occurrence of any default or Event of Default occurring or
continuing after the execution of this Agreement, other than the specific
defaults referenced above through the date of this Agreement.
COVENANT AMENDMENTS
-------------------
5. (a) The Loan Agreement is hereby amended as follows:
(i) The Loan Agreement is hereby amended to add to the
definition of "Management Group" Xx. Xxxx Xxxxxxx, President and Chief
Operating Officer, and Xx. Xxxx X. Xxxx, Chief Financial Officer of
IGI, Inc.
(ii) Section 5.18 of the Loan Agreement is hereby amended to add
as "senior executive officers" of IGI, Inc. Xx. Xxxx Xxxxxxx and Xx.
Xxxx X. Xxxx.
(b) The Extension Agreement is hereby amended as follows:
(i) Section 8 of the Extension Agreement is hereby deleted in
its entirety;
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(ii) During the term of this Agreement, the Borrowers shall not
be required to make payments required pursuant to Sections 2(b)(ii)
and 2(b)(iii) of the Extension Agreement.
WARRANTS
--------
6. (a) In the event the Obligations are paid in full in their entirety
on or before October 31, 1998, the Unconditional Warrants (as defined in Section
9 of the Extension Agreement) shall be returned to the Borrowers.
(b) In the event the Obligations are paid in full in their entirety
on or before December 24, 1998, the Conditional Warrants (as defined in Section
9 of the Extension Agreement) shall be returned to the Borrowers.
FORBEARANCE FEE
---------------
7. In consideration of the Lenders' agreement to enter into this
Agreement, the Borrowers shall pay to Fleet, as agent on behalf of the Lenders,
an incremental forbearance fee (the "Forbearance Fee") in the sum of $140,000.00
by bank cashiers' check, certified check, federal funds wire transfer, or direct
debit from the General Account or the Collection Account as follows:
(a) $20,000.00 on or before the execution of this Agreement;
(b) $30,000.00 on or before September 15, 1998; and
(c) $40,000.00 on or before December 15, 1998;
(d) $50,000.00 on or before January 15, 1999.
Each portion of the Forbearance Fee shall be fully earned as of its due date and
shall be distributed to the Lenders on a pro rata basis as a fee and not applied
to the Obligations. In the event the Obligations have been paid in their
entirety prior to a specified Forbearance Fee payment date, all subsequent
fee(s) shall be waived. The Forbearance Fee shall be in addition to, and not in
replacement of, the Extension Fee set forth in Section 10 of the Extension
Agreement.
Notwithstanding the foregoing, payment of the portion of the Forbearance
Fee due on September 15, 1998 shall be deferred in the event the Borrowers have
delivered to the Lenders on or before September 15, 1998, a commitment letter
reasonably satisfactory to the Lenders, in their discretion, contemplating
payment in full of all outstanding obligations under the Loan Documents on or
before October 15, 1998, which commitment letter is issued by a financial
9
institution and/or other party reasonably acceptable to the Lenders and is
subject only to documentation with no further contingencies other than such
contingencies acceptable to the Lenders as are ordinary and necessary in
transactions of similar type. If the Borrowers satisfy their outstanding
obligations to the Bank under the Loan Documents in full on or before October
15, 1998, the portion of the Forbearance Fee payable on September 15, 1998,
December 15, 1998, and January 15, 1999 shall be waived. If the Borrowers fail
to satisfy their outstanding obligations to the Lenders under the Loan Documents
in full on or before October 15, 1998, the portion of the Forbearance Fee
otherwise payable on September 15, 1998 shall be due and payable in full on
October 15, 1998, and the portion of the Forbearance Fee due and payable on
December 15, 1998 and on January 15, 1999 shall remain due and payable in full
on December 15, 1998 and January 15, 1999, respectively.
Similarly, payment of the portion of the Forbearance Fee due on December
15, 1998 shall be deferred in the event the Borrowers have delivered to the
Lenders on or before December 15, 1998, a commitment letter reasonably
satisfactory to the Lenders, in their discretion, contemplating payment in full
of all outstanding obligations under the Loan Documents on or before January 15,
1999, which commitment letter is issued by a financial institution and/or other
party reasonably acceptable to the Lenders and is subject only to documentation
with no further contingencies other than such contingencies acceptable to the
Lenders as are ordinary and necessary in transactions of similar type. If the
Borrowers satisfy their outstanding obligations to the Lenders under the Loan
Documents in full on or before January 15, 1999, the portion of the Forbearance
Fee payable on December 15, 1998, and January 15, 1999 shall be waived. If the
Borrowers fail to satisfy their outstanding obligations to the Lenders under the
Loan Documents in full on or before January 15, 1999, the portion of the
Forbearance Fee otherwise payable on December 15, 1998 shall be due and payable
in full on January 24, 1999, and the portion of the Forbearance Fee due and
payable on January 15, 1999 shall remain due and payable in full on January 15,
1999.
AGENT'S FEE
-----------
7. In consideration of Fleet's agreement to enter into this Agreement and
to continue to administer the Loan Arrangements as agent on behalf of the
Lenders, the Borrowers shall continue to pay to Fleet a monthly $5,000.00
agent's fee on the 1st day of each month during the term of this Agreement. The
agent's fee for each month shall be fully earned as of the first (1st) day of
that month, and shall be retained by Fleet as a fee and shall not be applied in
reduction of the Obligations.
FINANCIAL COVENANTS
-------------------
8. In addition to all other covenants contained in the Loan Documents,
during the term of this Agreement, the Borrowers shall at all times comply with
the following covenants:
(a) Minimum Eligible Accounts Receivable and Minimum Eligible
---------------------------------------------------------
Inventory: The Borrowers shall maintain, at month end, combined "Minimum
---------
Eligible Accounts
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Receivable" and "Minimum Eligible Inventory" of $9,750,000.00. From and after
the date of this Agreement, any and all reference to "$11,000,000.00 in Section
12(a) of the Extension Agreement shall mean and refer to $9,750,000.00.
(b) Minimum Fixed Charge Coverage Ratio: During the Term of this
-----------------------------------
Agreement, the Borrowers shall not be required to comply with the terms of
Section 12(b) of the Extension Agreement.
(c) Minimum Net Worth: The Borrowers shall maintain, at all times, a
-----------------
minimum "Net Worth" (as defined in accordance with generally accepted accounting
principles) in the following amounts as of the last day of each month:
Dates Amount
----- ------
7/31/98 $6,870,000.00
8/31/98 $6,581,000.00
9/30/98 $6,103,000.00
10/31/98 $5,871,000.00
11/30/98 $5,637,000.00
12/31/98 $5,363,000.00
1/31/99 $5,128,000.00
INVESTMENT BANKER
-----------------
9. On or before August 31, 1998, the Borrower shall enter into a
retention agreement (the "Investment Banker Retention Agreement") with a
nationally-recognized investment banker acceptable to the Lenders in their
reasonable discretion for the purpose of formulating alternative business
strategies on behalf of the Borrowers and to coordinate to orderly satisfaction
of the Obligations. On or before August 31, 1998, the Borrowers shall furnish
the Bank with a fully executed copy of the Investment Banker Retention
Agreement. The investment banker referenced in the Investment Banker Retention
Agreement shall furnish the Lenders with monthly written progress reports and
periodic verbal reports commencing on September 8, 1998 and continuing on the
last Tuesday of each month during the term of this Agreement.
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ADDITIONAL DOCUMENTS
--------------------
4. Upon the execution of this Agreement, and at any time thereafter, the
Borrowers shall also execute and deliver to the Lenders such additional
documentation as the Lenders in their discretion may reasonably require in order
to grant and/or perfect the Lenders' security interest in all assets of the
Borrowers, including, without limitation, all (i) motor vehicles, (ii)
intellectual property including, without limitation, all patents and/or
trademarks, and (iii) license agreements. The Borrowers represent that all
locations where inventory is located and all patents or other intellectual
property in which the Borrowers have an interest are listed, respectively, on
Exhibit "D" and Exhibit "E" each as annexed hereto and specifically incorporated
by reference herein. On or before August 31, 1998 the Borrowers shall (i)
obtain for the benefit of the Lenders foreign credit insurance in form and
substance reasonably satisfactory to the Lenders, wherein the Lenders shall be
named as Loss Payee, or (ii) enter into an arrangement to factor the Borrowers'
foreign accounts receivable, upon such terms and conditions as are reasonably
satisfactory to the Lenders.
COMPLIANCE CERTIFICATE
----------------------
5. Upon or before the execution of this Agreement, and within forty five
(45) days of each month end during the term of this Agreement, the Borrowers
shall deliver to each of the Lenders, a covenant compliance certificate in the
form of Exhibit C setting forth the Borrowers' compliance with each of the
financial covenants referenced in the Loan Documents.
FINANCIAL CONSULTANT; APPRAISALS; FIELD EXAMINATIONS
----------------------------------------------------
6. The Borrowers agree to cooperate with the Lenders and any financial
consultant retained on behalf of the Lenders to enable the Lenders to obtain
updated appraisals of all real estate and personal property owned by the
Borrowers and to conduct independent field examinations of the Borrowers' books
and records which cooperation shall include, without limitation, providing the
Lenders and/or their appraisers, examiners and/or other representatives,
reasonable access to such property and shall make available such financial
and/or other information regarding the property, books and records, and other
assets of the Borrowers as may be reasonably requested by the Lenders in their
discretion. The Borrowers shall reimburse the Lenders for all reasonable out of
pocket costs and expenses of independent third parties incurred by the Lenders
in connection with such appraisals and field examinations.
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WAIVER OF CLAIMS
----------------
7. The Borrowers hereby acknowledge and agree that they have no offsets,
defenses, claims, or counterclaims against the Lenders or the Lenders' officers,
directors, employees, attorneys, representatives, parent, predecessors,
affiliates, successors, and assigns with respect to the Obligations, or
otherwise, and that if the Borrowers now have, or ever did have, any offsets,
defenses, claims, or counterclaims against the Lenders or the Lenders' officers,
directors, employees, attorneys, representatives, parent, predecessors,
affiliates, successors, and assigns, whether known or unknown, at law or in
equity, from the beginning of the world through this date and through the time
of execution of this Agreement, all of them are hereby expressly WAIVED, and the
Borrowers each hereby RELEASE the Lenders and the Lenders' officers, directors,
employees, attorneys, representatives, parents, predecessors, affiliates,
successors, and assigns from any liability therefor, to the extent allowed by
applicable laws.
FORBEARANCE BY BANK
-------------------
8. In consideration of the Borrowers' performance in accordance with this
Agreement, the Lenders shall forbear from enforcing the Lenders' rights and
remedies as a result of the Borrowers' defaults, until the occurrence of an
Event of Default, as defined in Paragraph 16, below. Notwithstanding the
foregoing, nothing contained in this Agreement shall constitute a waiver by the
Lenders of any Event of Default, whether now existing or hereafter arising.
This Agreement shall only constitute an agreement by the Lenders to forbear from
enforcing their rights and remedies upon the terms and conditions set forth
herein.
RATIFICATION OF LOAN DOCUMENTS; FURTHER ASSURANCES
--------------------------------------------------
9. (a) THE BORROWERS HEREBY RATIFY, CONFIRM, AND REAFFIRM ALL AND
SINGULAR THE TERMS AND CONDITIONS OF THE LOAN DOCUMENTS, AND SPECIFICALLY
RATIFY, CONFIRM, AND REAFFIRM THEIR AUTHORITY TO EXECUTE SAME. THE BORROWERS
FURTHER ACKNOWLEDGE AND AGREE THAT, EXCEPT AS SPECIFICALLY MODIFIED IN THIS
AGREEMENT, ALL TERMS AND CONDITIONS OF THOSE DOCUMENTS, INSTRUMENTS, AND
AGREEMENTS SHALL REMAIN IN FULL FORCE AND EFFECT.
(b) THE BORROWERS SHALL, FROM AND AFTER THE EXECUTION OF THIS
AGREEMENT, EXECUTE AND DELIVER TO THE LENDERS WHATEVER ADDITIONAL DOCUMENTS,
INSTRUMENTS, AND AGREEMENTS THAT THE LENDERS MAY REASONABLY REQUIRE IN ORDER TO
VEST OR PERFECT THE LOAN DOCUMENTS AND THE COLLATERAL GRANTED THEREIN MORE
SECURELY IN THE LENDERS AND TO OTHERWISE GIVE EFFECT TO THE TERMS AND CONDITIONS
OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, A COMPLETE AMENDMENT AND
RESTATEMENT OF THE LOAN DOCUMENTS WITHIN THIRTY (30) DAYS OF ANY REQUEST BY THE
LENDERS FOR ANY SUCH ADDITIONAL DOCUMENTATION.
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EVENTS OF DEFAULT
-----------------
10. The occurrence of any one or more of the following events shall
constitute an event of default (hereinafter, an "Event of Default") under this
Agreement:
(a) The failure of the Borrowers to pay or deposit any amounts due
hereunder or under any of the Loan Documents as and when due;
(b) The failure of the Borrowers to comply with any other term or
condition of this Agreement (which default, other than a default under Paragraph
12(a) of the Extension Agreement, may be cured within three (3) days in
connection with any non-monetary default capable of being cured);
(c) The filing of a petition for relief by or against any one or more
of the Borrowers under the United States Bankruptcy Code;
(d) The occurrence of any event or circumstances, including, without
limitation, the existence or issuance of any directive or action by either the
United States Department of Agriculture or Office of the Inspector General of
the United States, or any other governing body, which materially adversely
impact the Borrowers' ability to manufacture, sell, or ship products, or
otherwise have a Material Adverse Effect (defined below) on the Borrowers'
financial condition or with the passage of time could have a material adverse
impact on the Borrowers' financial condition, assets, operating status, or
projected financial condition. For the purposes of this Agreement, "Material
Adverse Effect" shall be defined as any material adverse effect as reasonably
determined by the Lenders, on the Borrowers' financial condition, assets,
operating status or projected financial condition or any fact or circumstance
that, singly or in the aggregate with any fact or circumstance, has a reasonable
likelihood of resulting in or leading to the inability of the Borrowers to
perform in any material respect their obligations under this Agreement or under
any Loan Document or the inability of Agent and/or Lenders to enforce in any
material respect the rights purported to be granted to them under this Agreement
or any Loan Document or which have a reasonable likelihood of having a material
adverse effect on the ability of the Borrowers to effectuate (including
hindering or unduly delaying) the transactions contemplated by this Agreement
and the Loan Documents on the terms contemplated hereby and thereby.
(e) The occurrence of any further event of default under, and as
defined in, any of the Loan Documents.
(f) Failure to pay all obligations in full on or before January 31,
1999 (the "Termination Date").
14
RIGHTS UPON DEFAULT
-------------------
11. Upon the occurrence of any Event of Default, the Lenders may
immediately commence enforcing their rights and remedies pursuant to the Loan
Documents and otherwise. Further, upon the occurrence of an Event of Default,
interest shall accrue on the outstanding principal balance of the Obligations at
the default rate of interest set forth in the Loan Documents. The Borrowers
expressly waive demand, notice and protest with respect to the Obligations.
REIMBURSEMENT OF COSTS AND EXPENSES
-----------------------------------
12. Upon the execution of this Agreement, the Borrowers shall pay to the
Lenders an amount equal to any and all reasonable attorneys' fees and expenses
incurred in connection with this matter through the date of this Agreement. In
addition, upon Demand, or upon the occurrence of any Event of Default, as
defined in Paragraph 16, above, the Borrowers shall reimburse the Lenders for
any and all reasonable costs and expenses, including, without limitation, all
reasonable costs, expenses and fees of all accountants, appraisers, auditors and
other representatives of the Lenders, and costs of collection (including
attorneys' fees and allocated costs of Lenders' staff counsel) hereafter
incurred by the Lenders in connection with the clarification, modification,
protection, preservation, and enforcement by the Lenders of their rights and
remedies.
NOTICES
-------
13. Any notices required to be sent to the Lenders and the Borrowers shall
be forwarded via recognized overnight courier, addressed as follows:
If to the Lenders: Fleet National Bank
00 Xxxxxxxxxxx Xxxxxx
Mail Code: RI OP XX0X
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxx, Vice President
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxx, Esquire
Xxxxxx & Xxxxxxxxxx
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
00
Xxxxxx Xxxx
Xxxxxx Bank Center
0000 Xxxxxx Xxxxxx, X.X. Xxx 0000
Xxxxxxxxxxxx, XX 00000-0000
Telephone: 000-000-0000
Fax: 000-000-0000
Attn: Xxxxx X. Xxxxx
Senior Vice President
With a copy to: Xxxxx Xxxxxxxxxx, Esquire
Blank, Rome and Xxxxxxx
Woodland Falls Corporate Park
000 Xxxx Xxxxx Xxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Telephone: 000-000-0000
Fax: 000-000-0000
If to the Borrowers: IGI, Inc.
IGEN, Inc.
Immunogenetics, Inc.
Blood Cells, Inc.
Xxxxx Xxxx xxx Xxxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx Xxxxxxx, Treasurer
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Xxxx Xxxxxxxx, Esquire
Xxxx and Xxxx, LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
WAIVERS
-------
14. Non-Interference. From and after the occurrence of any Event of
----------------
Default, the Borrowers agree not to interfere with the exercise by the Lenders
of any of their rights and remedies. The Borrowers further agree that they
shall not seek to distrain or otherwise hinder, delay, or impair the Lenders'
lawful efforts to realize upon the Collateral, or otherwise to enforce
16
their rights and remedies pursuant to the Loan Documents. This provision shall
be specifically enforceable by the Lenders.
15. Automatic Stay. The Borrowers agree that upon the filing of any
--------------
Petition for Relief by or against any one or more of the Borrowers under the
United States Bankruptcy Code, the Lenders shall be entitled to file a motion
for immediate and complete relief from the automatic stay, and the Lenders shall
be permitted to proceed to protect and enforce their rights and remedies under
applicable law.
16. Jury Trial. The Borrowers hereby make the following waiver knowingly,
----------
voluntarily, and intentionally, and understand that the Lenders, in entering
into this Agreement or making any financial accommodations to the Borrowers,
whether now or in the future, are relying on such waiver: TO THE EXTENT ALLOWED
BY APPLICABLE LAW, THE BORROWERS HEREBY IRREVOCABLY WAIVE ANY PRESENT OR FUTURE
RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN WHICH THE LENDERS
BECOME A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST THE
LENDERS OR IN WHICH THE LENDERS ARE JOINED AS A PARTY LITIGANT), WHICH CASE OR
CONTROVERSY ARISES OUT OF, OR IS IN RESPECT OF, ANY RELATIONSHIP BETWEEN THE
BORROWERS, OR ANY OTHER PERSON, AND THE LENDERS.
ENTIRE AGREEMENT
----------------
17. This Agreement shall be binding upon the Borrowers and the Borrowers'
officers, directors, employees, representatives, successors, and assigns, and
shall inure to the benefit of the Lenders and the Lenders' successors and
assigns. This Agreement and the Loan Documents and all documents, instruments,
and agreements executed in connection herewith or therewith incorporate all of
the discussions and negotiations between the Borrowers and the Lenders, either
expressed or implied, concerning the matters included herein and in such other
documents, instruments and agreements, any statute, custom, or usage to the
contrary notwithstanding. No such discussions or negotiations shall limit,
modify, or otherwise affect the provisions hereof. No modification, amendment,
or waiver of any provision of this Agreement, or any provision of any other
document, instrument, or agreement between the Borrowers and the Lenders shall
be effective unless executed in writing by the party to be charged with such
modification, amendment, or waiver, and if such party be the Lenders, then by a
duly authorized officer thereof.
CONSTRUCTION OF AGREEMENT
-------------------------
17
18. (a) This Agreement and all other documents, instruments, and
agreements incidental hereto and all rights and obligations hereunder and
thereunder, including matters of construction, validity, and performance, shall
be governed by and construed in accordance with the law of the State of New
Hampshire and are intended to take effect as sealed instruments. The Borrowers
hereby consent to the jurisdiction of the Courts of the State of New Hampshire
for all purposes with respect to this Agreement and the Obligations. The
captions of this Agreement are for convenience purposes only, and shall not be
used in construing the intent of the Lenders and the Borrowers under this
Agreement. In the event of any inconsistency between the provisions of this
Agreement and any other document, instruments, or agreement entered into by and
between the Lenders and the Borrowers, the provisions of this Agreement shall
govern and control.
(b) The Borrowers further acknowledge and agree that the Lenders and
the Borrowers have prepared this Agreement and all documents, instruments, and
agreements incidental hereto and with the aid and assistance of their respective
counsel. Accordingly, when interpreting this Agreement and all such other
documents, instruments, and agreements, each of them shall be deemed to have
been drafted by the Lenders and the Borrowers and shall not be construed against
either the Lenders or the Borrowers.
ILLEGALITY OR UNENFORCEABILITY
------------------------------
19. Any determination that any provision or application of this Agreement
is invalid, illegal, or unenforceable in any respect, or in any instance, shall
not effect the validity, legality, or enforceability of any such provision in
any other instance, or the validity, legality, or enforceability of any other
provision of this Agreement.
COMPREHENSIVE AGREEMENT
-----------------------
20. The Borrowers warrant and represent to the Lenders that the Borrowers:
(i) have read and understand all of the terms and conditions of this Agreement,
(ii) intend to be bound by the terms and conditions of this Agreement, (iii) are
executing this Agreement freely and voluntarily, without duress, after
consultation with independent counsel of their own selection.
IN WITNESS WHEREOF, this Agreement has been executed this 19 day of
August, 1998.
FLEET BANK-N.H. IGI, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxx
-------------------------------- ------------------------------
Title: Vice President Title: Treasurer
----------------------------- ----------------------------
MELLON BANK IGEN, INC.
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxxxx X. Xxxxxx, Xx.
-------------------------------- -------------------------------
18
Title: Vice President Title: Secretary
--------------------------- --------------------------
IMMUNOGENETICS, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Title: Treasurer
----------------------------
BLOOD CELLS, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Title: Treasurer
----------------------------
[ADDITIONAL SUBSIDIARIES]
STATE OF RHODE ISLAND
______________, ss August ____, 1998
Then personally appeared the above named ___________________, the
_______________ of Fleet Bank- N.H. and acknowledged the foregoing to be the
free act and deed of Fleet Bank- N.H., before me,
_________________________
Notary Public
My Commission Expires:
STATE OF ___________
______________, ss August ____, 1998
Then personally appeared the above named ________________ , the
____________ of Mellon Bank, N.A. and acknowledged the foregoing to be the free
act and deed of Mellon Bank, N.A., before me,
_________________________
Notary Public
My Commission Expires:
STATE OF ________________
_____________, ss August ____, 1998
19
Then personally appeared the above named __________________________, the
________________ of IGI, Inc. and acknowledged the foregoing to be the free act
and deed of IGI, Inc., before me,
_________________________
Notary Public
My Commission Expires:
STATE OF ________________
_____________, ss August ____, 1998
Then personally appeared the above named __________________________, the
________________ of IGEN, Inc. and acknowledged the foregoing to be the free act
and deed of IGEN, Inc., before me,
_________________________
Notary Public
My Commission Expires:
STATE OF ________________
_____________, ss August ____, 1998
Then personally appeared the above named __________________________, the
________________ of Immunogenetics, Inc. and acknowledged the foregoing to be
the free act and deed of Immunogenetics, Inc., before me,
_________________________
Notary Public
My Commission Expires:
STATE OF ________________
_____________, ss August ____, 1998
20
Then personally appeared the above named __________________________, the
________________ of Immunogenetics, Inc. and acknowledged the foregoing to be
the free act and deed of Immunogenetics, Inc., before me,
_________________________
Notary Public
My Commission Expires:
21
