EXHIBIT 10.14
LOAN AGREEMENT
First Union National Bank
000 Xxxxxxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
(Hereinafter referred to as the "Bank")
LipoMed, Inc.
0000 Xxx Xxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
(Hereinafter referred to as the "Borrower")
This Loan Agreement ("Agreement") is entered into October 6, 2000, by and
between Bank and Borrower, a corporation (for profit) organized under the laws
of North Carolina.
Borrower has applied to Bank for a line of credit up to $2,000,000 to be
evidenced by that certain promissory note of even date herewith for use by
Borrower for its working capital needs.
Relying upon the covenants, agreements, representations and warranties contained
in this Agreement, Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions set forth herein, and Bank and Borrower agree as
follows:
LOAN. Bank hereby agrees to make available to Borrower a revolving line of
credit in the aggregate principal face amount of $2,000,000.00 (the "Loan")
under which Borrower may, from time to time, borrow, repay, and re-borrow,
subject to the borrowing limitation set forth below. The obligation to repay the
Loan is evidenced by a promissory note dated September 29, 2000 (the promissory
note together with any and all renewals, extensions or rearrangements thereof
being hereafter collectively referred to as the "Note") having the repayment
terms and interest rate as set forth in the Note. Disbursements of amounts under
the Loan shall be made to Borrower upon Bank's receipt of proper requests for
advances on forms(s) required by Bank; provided that Bank shall have no
obligation to make a disbursement following May 31, 2001, unless Bank agrees
otherwise in writing in its sole discretion.
This Agreement applies to the Loan and all Loan Documents. The terms "Loan
Documents" and "Obligations," as used in this Agreement, are defined in the
Note. The term "Borrower" shall include its Subsidiaries and Affiliates. As used
in this Agreement as to Borrower, "Subsidiary" shall mean any corporation of
which more than 50% of the issued and outstanding voting stock is owned directly
or indirectly by Borrower. As to Borrower, "Affiliate" shall have the meaning as
defined in 11 U.S.C. (S)101, except that the term "debtor" therein shall be
substituted by the term "Borrower" herein.
Use of Proceeds. The Loan proceeds shall be used by Borrower solely for the
working capital needs of Borrower. The Loan proceeds shall not be used for any
other purpose without the prior, express written consent of Bank.
Borrowing Limitation. The maximum aggregate principal balance of cash advances
that Borrower may borrow from time to time shall not exceed the lesser of (i)
the maximum principal amount stated in the Note or (ii) the Borrowing Base
(defined below).
The "Borrowing Base" shall be an amount equal to 75% of the net amount of
Eligible Accounts.
"Eligible Account" refers to an account receivable not more than 120 days from
the date of the original invoice that arises in the ordinary course of
Borrower's business and meets the following eligibility requirements: (a) the
sale of goods or services reflected in such account is final and such goods and
services have been delivered or provided and accepted by the account debtor and
payment for such is owing; (b) the invoices comprising an account are not
subject to any claims, returns or disputes of any kind; (c) the account debtor
is not insolvent; (d) the account debtor has its principal place of business in
the United States; (e) the account debtor is not an affiliate of Borrower and is
not a supplier to Borrower and the account is not otherwise exposed to risk of
set-off; (f) not more than thirty percent of the other invoices owing Borrower
by the account debtor are more than one hundred twenty days from the date of the
original invoice; and (g) the account is not subject to any lien prior to the
lien of Bank. "Eligible Account" excludes all government receivables, including,
without limitation, Medicaid and Medicare, and all receivables from individual
patients.
Required Reports. Borrower shall certify to Bank by the tenth day of each month,
the amount of Eligible Accounts as of the first day of each month, on forms
approved by Bank together with all detail and supporting documents requested by
Bank (the "Borrowing Base Certificate"). Bank may at any time and from time to
time, during Bank's normal business hours, and upon reasonable prior notice
enter upon any business premises of Borrower and audit Borrower's accounts and
inventory and other collateral. Bank's determination of the amount of Eligible
Accounts shall at all times be indisputable and deemed correct. The Borrower, at
all times, shall cooperate with Bank without limitation by providing Bank
information and access to Borrower's premises and business records and shall be
courteous to Bank's agents.
Continuing Representations. Borrower warrants and represents as a continuing
warranty, that so long as principal is outstanding under the Note, the
outstanding principal balance shall not exceed the lesser of the Borrowing Base
or the maximum principal amount stated in the Note (the "Borrowing Limit").
Borrower agrees to pay any advances in excess of the Borrowing Limit immediately
upon receipt by Borrower of written notice that the Borrowing Limit has been
exceeded.
SECURITY. The Loan and the Note shall be secured by a security interest in
certain of Borrower's tangible and intangible personal property as set forth in
a Security Agreement of even date herewith (the "Collateral").
REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations: Accurate Information. All
information now and hereafter furnished to Bank is and will be true, correct and
complete in all material respects.
2
Any such information relating to Borrower's financial condition will accurately
reflect in all material respects Borrower's financial condition as of the
date(s) thereof, (including all contingent liabilities of every type), and
Borrower further represents that its financial condition has not changed
materially or adversely since the date(s) of such documents. Authorization;
Non-Contravention. The execution, delivery and performance by Borrower and any
guarantor, as applicable, of this Agreement and other Loan Documents to which it
is a party are within its power, have been duly authorized by all necessary
action taken by the duly authorized officers of Borrower and any guarantors and,
if necessary, by making appropriate filings with any governmental agency or unit
and are the legal, binding, valid and enforceable obligations of Borrower and
any guarantors; and do not (i) contravene, or constitute (with or without the
giving of notice or lapse of time or both) a violation of any provision of
applicable law, a violation of the organizational documents of Borrower or any
guarantor, or a default under any agreement, judgment, injunction, order, decree
or other instrument binding upon or affecting Borrower or any guarantor, (ii)
result in the creation or imposition of any lien (other than the lien(s) created
by the Loan Documents) on any of Borrower's or guarantor's assets, or (iii) give
cause for the acceleration of any obligations of Borrower or any guarantor to
any other creditor. Asset Ownership. Except as disclosed on Schedule A attached
----------
hereto, Borrower has good and marketable title to all of the properties and
assets reflected on the balance sheets and financial statements supplied Bank by
Borrower, and all such properties and assets are free and clear of mortgages,
security deeds, pledges, liens, charges, and all other encumbrances, except as
otherwise disclosed to Bank by Borrower on Schedule A attached hereto or
----------
otherwise in writing ("Permitted Liens"). To Borrower's knowledge, no default
has occurred under any Permitted Liens and no claims or interests adverse to
Borrower's present rights in its properties and assets have arisen. Discharge of
Liens and Taxes. Borrower has duly filed, paid and/or, obtained appropriate
extensions within which to file and/or pay, or discharged all taxes or other
claims which may become a lien on any of its property or assets, except to the
extent that such items are being appropriately contested in good faith and an
adequate reserve for the payment thereof is being maintained. Sufficiency of
Capital. Borrower is not, and after consummation of this Agreement and after
giving effect to all indebtedness incurred and liens created by Borrower in
connection with the Loan, will not be, insolvent within the meaning of 11 U.S.C.
ss. 101(32). Compliance with Laws. Borrower is in compliance in all material
respects with all federal, state and local laws, rules and regulations
applicable to its properties, operations, business and finances, including,
without limitation, all applicable federal, state and local laws and regulations
intended to protect the environment, the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), if applicable, and/or any commercial crimes.
Organization and Authority. Borrower and any guarantor, as applicable, is duly
created, validly existing and in good standing under the laws of the state of
its organization, and has all powers, governmental licenses, authorizations,
consents and approvals required to operate its business as now conducted.
Borrower and any guarantor, if any, is duly qualified, licensed and in good
standing in each jurisdiction where qualification or licensing is required by
the nature of its business or the character and location of its property,
business or customers, and in which the failure to so qualify or be licensed, as
the case may be, in the aggregate, could have a material adverse effect on the
business, financial position, results of operations, properties or prospects of
Borrower or any such guarantor. No Litigation. There are no pending or, to
Borrower's knowledge, threatened suits, claims or demands against Borrower or
any guarantor that have not been disclosed to Bank by Borrower in writing.
Regulation U. None of the proceeds of the Loan made pursuant to this Agreement
shall be used directly or indirectly for the purpose of purchasing or carrying
any margin stock in violation of any of the provisions of Regulation U of
3
the Board of Governors of the Federal Reserve System ("Regulation U"), or for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry margin stock or for any other purchase which might
render the Loan a "Purpose Credit" within the meaning of Regulation U. ERISA.
Each employee pension benefit plan, as defined in ERISA, maintained by Borrower
meets, as of the date hereof, the minimum funding standards of ERISA and all
applicable regulations thereto and requirements thereof, and of the Internal
Revenue Code of 1954, as amended. No "Prohibited Transaction" or "Reportable
Event" (as both terms are defined by ERISA) has occurred with respect to any
such plan. Continuation of Representations. All representations made under this
Agreement shall be deemed made at and as of the date hereof and at and as of the
date of any advance under the Loan.
AFFIRMATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will: Business Continuity. Conduct its business in
substantially the same manner and locations as such business is now and has
previously been conducted. Maintain Properties. Maintain, preserve and keep its
property in good repair, working order and condition, making all needed
replacements, additions and improvements thereto, to the extent allowed by this
Agreement. Access to Books & Records. Allow Bank, or its agents, during normal
business hours and upon reasonable prior notice, access to the books, records
and such other documents of Borrower as Bank shall reasonably require, and allow
Bank to make copies thereof at Bank's expense. Insurance. Maintain adequate
insurance coverage with respect to its properties and business against loss or
damage of the kinds and in the amounts customarily insured against by companies
of established reputation engaged in the same or similar businesses including,
without limitation, commercial general liability insurance, workers compensation
insurance, and business interruption insurance; all acquired in such amounts and
from such companies as Bank may reasonably require. Notice of Default and Other
Notices. (a) Notice of Default. Furnish to Bank immediately upon becoming aware
of the existence of any condition or event which constitutes a Default (as
defined in the Loan Documents) or any event which, upon the giving of notice or
lapse of time or both, may become a Default, written notice specifying the
nature and period of existence thereof and the action which Borrower is taking
or proposes to take with respect thereto. (b) Other Notices. Promptly notify
Bank in writing of (i) any material adverse change in its financial condition or
its business; (ii) any default under any material agreement, contract or other
instrument to which it is a party or by which any of its properties are bound
which is not cured within the applicable cure period, if any, or any
acceleration of the maturity of any indebtedness owing by Borrower; (iii) any
material adverse claim against or affecting Borrower or any part of its
properties; (iv) the commencement of, and any material determination in, any
litigation with any third party or any proceeding before any governmental agency
or unit affecting Borrower; and (v) at least 30 days prior thereto, any change
in Borrower's name or address as shown above, and/or any change in Borrower's
structure. Compliance with Other Agreements. Comply with all terms and
conditions contained in this Agreement and any other Loan Documents. Payment of
Debts. Pay and discharge when due, and before subject to penalty or further
charge, and otherwise satisfy before maturity or delinquency, all obligations,
debts, taxes and liabilities of whatever nature or amount, except those which
Borrower in good faith disputes. Reports and Proxies. Deliver to Bank, promptly,
a copy of all financial statements, reports, material notices and proxy
statements, sent by Borrower to stockholders, and all regular or periodic
reports required to be filed by Borrower with any governmental agency or
authority. Other Financial Information. Deliver promptly such other information
regarding the operation, business affairs, and financial condition of
4
Borrower which Bank may reasonably request. Full Compliance Certificate From
Borrower. Deliver to Bank, with the Financial Statements required herein, a
certificate signed by the President of Borrower warranting that neither a
"Default" as specified in the Loan Documents nor any event which, upon the
giving of notice or lapse of time or both, would constitute such a Default, has
occurred and that Borrower is in full compliance with all Loan Documents.
Estoppel Certificate. Furnish, within 15 days after request by Bank, a written
statement duly acknowledged of the amount due under the Loan and whether offsets
or defenses exist against the Obligations. Deposit Account. Establish and
maintain with Bank its primary depository account and cash management account.
NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will not: Default on Other Contracts or
Obligations. Default on any material contract with or obligation when due to a
third party or default in the performance of any obligation to a third party
incurred for money borrowed. Judgment Entered. Permit the entry of any monetary
judgment or the assessment against, the filing of any tax lien against, or the
issuance of any writ of garnishment or attachment against any property of or
debts due Borrower. Government Intervention. Permit the assertion or making of
any seizure, vesting or intervention by or under authority of any government by
which the management of Borrower or any guarantor is displaced of its authority
in the conduct of its respective business or such business is curtailed or
materially impaired. Prepayment of Other Debt. Retire any long-term debt at a
date in advance of its legal obligation to do so. Change of Control. Make or
suffer a change of ownership that effectively changes control of Borrower.
Change in Fiscal Year. Borrower or guarantor shall not change its fiscal year
without the consent of Bank. Guarantees. Guarantee or otherwise become
responsible for obligations of any other person or entity, other than the
endorsement of checks and drafts for collection in the ordinary course of
business. Encumbrances. Create, assume or permit to exist any mortgage, security
deed, deed of trust, pledge, lien, charge or other encumbrance on any of the
Collateral or Debtor Intellectual Property (as defined in the Security Agreement
dated October 6, 2000), whether now owned or hereafter acquired, other than: (i)
security interests required by the Loan Documents; (ii) liens for taxes
contested in good faith; (iii) liens accruing by law for employee benefits; or
(iv) Permitted Liens. Change in License Agreements. Amend, modify, sublicense,
assign, transfer or terminate any existing or future license agreements to which
Borrower is a licensee, including without limitation the current license
agreements with Siemens Medical Systems, Inc. and North Carolina State
University, or cause or permit any circumstance that would allow the licensor to
terminate any license agreement to which Borrower is a licensee.
FINANCIAL COVENANTS. Borrower agrees to the following provisions from the date
hereof until final payment in full of the Obligations, unless Bank shall
otherwise consent in writing: Working Capital. Borrower shall, at all times,
maintain Working Capital of at least $2,000,000.00. "Working Capital" shall mean
the excess of the current assets over the current liabilities, determined in
accordance with generally accepted accounting principles. Liquid Assets.
Borrower shall, at all times, maintain unencumbered Liquid Assets of not less
than $1,000,000.00. "Liquid Assets" shall mean the sum of cash, time deposits,
and marketable securities. Loans and Advances. Borrower shall not, during any
fiscal year, make loans or advances, excepting ordinary course of business
travel and expense advances, to any person or entity. Dividends. Borrower shall
not, during any fiscal year, declare or pay dividends or make other
distributions to shareholders. In no event shall Borrower declare or pay a
dividend or make
5
other distributions to shareholders if there shall exist a Default or a
condition which, upon the giving of notice or lapse of time or both, would
become a Default under the Loan Documents.
ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 90 days
after the close of each fiscal year, audited financial statements reflecting its
operations during such fiscal year, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules; all on a consolidated and consolidating basis and in reasonable
detail, prepared in conformity with generally accepted accounting principles,
applied on a basis consistent with that of the preceding year. All such
statements shall be examined by an independent certified public accountant
acceptable to Bank. The opinion of such independent certified public accountant
shall not be acceptable to Bank if qualified due to any limitations in scope
imposed by Borrower or its Subsidiaries, if any. Any other qualification of the
opinion by the accountant shall render the acceptability of the financial
statements subject to Bank's approval.
PERIODIC FINANCIAL STATEMENTS. In addition to the monthly Borrowing Base
Certificate required above, Borrower shall deliver to Bank unaudited ,
management-prepared quarterly financial statements, including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules, as soon as available and in any event within
30 days after the close of each such period; all in reasonable detail and
prepared in conformity with generally accepted accounting principles, applied on
a basis consistent with that of the preceding quarter. Such statements shall be
certified as to their correctness by a principal financial officer of Borrower
and in each case, if audited statements are required, subject to audit and
year-end adjustments.
ACCOUNTS RECEIVABLE AGING REPORTS. Borrower shall deliver to Bank unaudited,
management-prepared monthly detailed receivables reports including, without
limitation, totals, customer names and addresses, a reconciliation statement and
the original date of invoice, as soon as available and in any event within 10
business days after the close of each month; all in reasonable detail and
prepared in conformity with generally accepted accounting principles, applied on
a basis consistent with that of the preceding month. Such reports shall be
certified as to their correctness by a principal financial officer of Borrower.
TAX RETURNS. Borrower shall deliver to Bank, within 30 days of filing, complete
copies of federal and state tax returns, as applicable, each of which shall be
signed and certified by Borrower to be true and complete copies of such returns.
In the event an extension is filed, Borrower shall deliver a copy of the
extension within 30 days of filing.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete and accurate.
CONDITIONS PRECEDENT. The obligations of Bank to make the Loan and any advances
pursuant to this Agreement are subject to the following conditions precedent:
Deposit Account. Borrower has established with Bank a deposit account into which
advances of the Loan may be credited and from which monthly payments can be
deducted automatically. Payment of Facility Fee. Receipt by Bank of the $15,000
facility fee. Payment of Closing Costs. Receipt by Bank
6
of Borrower's payment of all costs, expenses and fees associated with the Loan
incurred by Bank up to a maximum of $10,000 provided that no significant
unforeseen circumstances arise. Warrant Agreement. Receipt by Bank of a
duly-executed warrant agreement granting to Bank warrants to purchase shares of
Borrower's common stock in accordance with Borrower's Commitment Letter dated
September 13, 2000. Additional Documents. Receipt by Bank of such additional
supporting documents as Bank or its counsel may reasonably request, including,
without limitation, Borrower's organizational documents, certificate(s) of good
standing, and Borrower's certificate of incumbency. Opinion of Counsel. On or
prior to the date of execution of this Agreement, Bank shall have received a
written opinion of the counsel of Borrower acceptable to Bank that includes
confirmation of the following: (a) The accuracy of the representations set forth
in this Agreement in the Representations Subparagraphs entitled "Authorization;
Non-Contravention"; "Compliance with Laws", and "Organization and Authority".
(b) This Agreement and other Loan Documents have been duly executed and
delivered by Borrower and constitute the legal, valid and binding obligations of
Borrower, enforceable in accordance with their terms. (c) No registration with,
consent of, approval of, or other action by, any federal, state or other
governmental authority or regulatory body to the execution and delivery of this
Agreement, the borrowing under this Agreement or other Loan Documents, is
required by law, or, if so required, such registration has been made, and
consent or approval given or such other appropriate action taken. (d) The Loan
is not usurious. (e) Based upon counsel's review of the public record, the Loan
Documents create a valid security interest in the Collateral (as defined in the
Loan Documents) that may be perfected by filing UCC financing statements.
MISCELLANEOUS. (i) Amendments and Waivers. Except for waivers provided by Bank,
no amendment or modification of any provision of this Security Agreement shall
be valid unless in writing and signed by an officer of both parties. Neither the
failure of, nor any delay by, Bank in exercising any right, power or privilege
granted pursuant to this Agreement shall operate as a waiver thereof, nor shall
a single or partial exercise thereof preclude any other or further exercise of
any other right, power or privilege. Borrower agrees to pay to Bank a
modification fee of $200.00 at any time that any of the Loan Documents is
modified, amended or supplemented; (ii) Assignment. All rights of Bank hereunder
are freely assignable, in whole or in part, and shall inure to the benefit of
and be enforceable by Bank, its successors, assigns and affiliates. Borrower
shall not assign its rights and interest hereunder without the prior written
consent of Bank, and any attempt by Borrower to assign without Bank's prior
written consent is null and void. This Agreement shall be binding upon Borrower,
and the successors and assigns of Borrower. (iii) Applicable Law; Conflict
Between Documents. This Agreement shall be governed by and construed under the
law of the State of North Carolina without regard to that state's conflict of
laws principles. (iv) Jurisdiction. Borrower irrevocably agrees to non-exclusive
personal jurisdiction in the State of North Carolina. (v) Severability. If any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective but only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement. (vi) Notices. Any notices to
Borrower shall be sufficiently given, if in writing and mailed or delivered
personally or by overnight courier to the address of Borrower shown above or
such other address as provided hereunder; and to Bank, if in writing and mailed
or delivered personally or by overnight courier to Bank's office address shown
above or such other address as Bank may specify in writing from time to time. In
the event that the Borrower changes Borrower's mailing address at any time prior
to the date the Loan is paid in full, Borrower agrees to promptly give written
7
notice of said change of address by registered or certified mail, return receipt
requested, or by overnight courier, all charges prepaid. (vii) Captions. The
captions contained herein are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or any provision hereof. The use
of the plural shall also mean the singular, and vice versa. (viii) Opportunity
to Participate in Future Financing. Borrower hereby agrees that it shall notify
Bank in advance of any and all rounds of capital financing of Borrower up to and
but excluding an initial public offering of Borrower's equity and that Bank
shall have the option to participate in such round of capital financing on terms
equivalent to other investors and to an extent proportionate to the amount of
(x) Bank's warrant shares granted as a condition precedent to the Loan as to (y)
shares of Borrower's common stock outstanding as on the date of this Agreement.
IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written above,
have caused this Agreement to be executed.
LipoMed, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, President
First Union National Bank
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxx, Vice President
8
RENEWAL AGREEMENT
Date: July 17, 2001
BORROWER
Name: LipoMed, Inc.
Address: 000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Renewal. First Union National Bank (hereinafter "Bank") and Borrower hereby
extend the maturity of a promissory note dated October 6, 2000 in the original
principal amount of $2,000,000.00 made by Borrower and delivered to Bank (the
"Note") to June 30, 2002 when all outstanding principal and accrued interest
shall be due and payable.
Modification. Effective with this Renewal Agreement, the FINANCIAL COVENANT
section of the October 6, 2000 Loan Agreement is modified as follows:
Working Capital. This covenant will be deleted in its entirety.
Liquid Assets. Borrower shall, at all times, maintain unencumbered Liquid
Assets of not less than $2,000,000.00.
-------------
Affirmations of Borrower. Borrower affirms and represents that the most recent
Commercial Loan Invoice received by Borrower with respect to the Obligations is
correct, that the Note, as modified hereby, and other Loan Documents are in full
force and effect, that Borrower has no defense to payment or performance of the
Obligations, that no setoffs against the Obligations exist, and that Borrower
has no counterclaims against Bank. Borrower ratifies and confirms all provisions
of the Note and other Loan Documents, and affirms that the maturity date and
liquid assets financial covenant are the only provisions of the Loan Documents
that have been modified.
Miscellaneous. This Agreement and the other Loan Documents constitute the sole
agreement of the parties and supersede all oral negotiations and prior writings
with respect to the subject matter thereof. This Agreement may be signed in
counterparts. Terms used in this Agreement which are capitalized shall have the
meaning ascribed to such terms in the Note.
IN WITNESS WHEREOF, the undersigned have signed and sealed the Agreement the day
and year first above written.
Place of Execution and Delivery. Borrower hereby certifies that this Agreement
was executed in the State of North Carolina and delivered to Bank in the State
of North Carolina.
LIPOMED, INC.
Taxpayer Identification Number: 00-0000000
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, President
FIRST UNION NATIONAL BANK
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Xxxxx Xxxxxxxxx, Senior Vice President
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT made this 19 day of December, 2001
is to that certain Loan Agreement dated October 6, 2000 by and between LIPOMED,
INC., a North Carolina corporation (the "Borrower") and FIRST UNION NATIONAL
BANK, N.A., a national banking association with offices in Raleigh, North
Carolina, (the "Bank").
RECITALS:
--------
A. The Bank and the Borrower entered into the Loan Agreement providing
for a loan to the Borrower evidenced by a Promissory Note dated October 6, 2000
in the principal amount of $2,000,000.00, as amended by Modification and
Estoppel Agreement dated of even date herewith (the "Note") and secured by a
Security Agreement dated October 6, 2000, as amended by First Amendment to
Security Agreement dated of even date herewith (the "Security Agreement").
B. The Bank and the Borrower entered into a Renewal Agreement dated July
17, 2001 (the "Renewal Agreement").
C. The Borrower has requested that the Bank make available irrevocable
standby letters of credit from time to time at the request of the Borrower.
D. The Bank has agreed to the Borrower's request upon the condition that
the Loan Agreement be amended as provided herein.
NOW, THEREFORE, the parties agree that the Loan Agreement is amended as
follows:
1. The section entitled "Loan" is hereby modified to provide that Bank
shall have no obligation to make a disbursement following June 30, 2002 unless
Bank agrees otherwise in writing in its sole discretion.
2. The first sentence of the section of the Loan Agreement entitled
"Borrowing Limitation" is hereby amended to read in its entirety as follows:
The maximum aggregate principal balance of cash advances that Borrower
may borrow from time to time shall not exceed the lesser of (i) the
maximum principal amount stated in the Note less the aggregate face
amount of all issued and outstanding letters of credit previously
issued by Bank for the account of Borrower under this Loan Agreement,
or (ii) the Borrowing Base (defined below) less the aggregate face
amount of all issued and outstanding letters of credit previously
issued by Bank for the account of Borrower under this Loan Agreement.
3. A new section is hereby added to the Loan Agreement as follows:
MATURITY DATE. The principal balance of the Loan, plus all
accrued interest shall be due and payable on or before June 30, 2002.
4. A new section is hereby added to the Loan Agreement as follows:
LETTERS OF CREDIT. From time to time, upon the request of
Borrower, Bank shall make available to Borrower various irrevocable
standby letters of credit made for the account of Borrower payable to
the Beneficiary designated by Borrower. In the event Borrower desires
to have a letter of credit issued on its account, it shall notify Bank
of the amount of the letter of credit needed and the beneficiary and
it shall execute such documents as may be reasonably requested by
Bank, including without limitation, an agreement to reimburse Bank for
any amount drawn under the letter of credit and shall pay to Bank a
letter of credit fee equal to one percent (1%) of the face amount of
the letter of credit plus a One Hundred Dollar ($100.00) issuance fee.
The letter of credit may be outstanding for a period of up to one (1)
year and Borrower shall be required to pay an additional fee of one
percent (1%) of the face amount of the letter of credit to renew the
letter of credit for an additional year. The maximum amount of any
letter of credit issued shall not exceed the lesser of (a) Two Million
Dollars ($2,000,000.00) less the principal amount outstanding under
the Loan, less the aggregate face amount of all issued and outstanding
letters of credit previously issued by Bank for the account of
Borrower under this Loan Agreement, or (b) the Borrowing Base, as
defined in the Loan Agreement, less the principal amount outstanding
under the Loan, less the aggregate face amount of all issued and
outstanding letters of credit previously issued by Bank for the
account of Borrower under this Loan Agreement.
5. The Borrower hereby agrees to pay all pre- and post-closing expenses
incurred by the Bank or the Borrower in connection with this modification,
including without limitation, such legal fees in a reasonable amount incurred by
the Bank in connection with the modification of the Loan and the enforcement of
the Bank's rights under the Loan Documents. Any such amounts paid initially by
the Bank shall be reimbursed to the Bank upon demand.
6. Borrower represents and confirms to Bank that (i) to the best of its
knowledge there are no defenses, set-offs, counterclaims, actions or equities in
favor of Borrower to or against the enforcement of the Note or Loan Agreement or
Security Agreement; (ii) there are no agreements, oral or otherwise, that have
been made by any of Bank's employees, agents, officers or directors to further
extend the Note; (iii) to the best of its knowledge Bank has in no way defaulted
or performed any act or omission which would give rise to any actions, causes of
action, suits, damages, claims, expenses or demands, at law or in equity by
Borrower, against Bank; (iv) except as set forth on Exhibit A there have been no
---------
changes in the organizational documents of Borrower since the date of the
original loan closing, and Borrower and the president of Borrower, on behalf of
Borrower, are duly authorized to enter into this First Amendment to Loan
Agreement and to the transactions contemplated therein; and (v) Borrower is not
aware of any claim, action, suit, demand, cost, expense or liability of any kind
of or against
11
Bank, relating in any way to the making of the loan or the administration
thereof or the communications and business dealings between Bank and Borrower
through the date hereof.
7. Borrower hereby represents and warrants to the best of its knowledge
that it is in compliance with all covenants and agreements contained in the Loan
Agreement and that, to the best of its knowledge, all representations contained
therein are true and accurate as of the date of this First Amendment.
8. Borrower further represents and warrants that the Borrower is not
in default under the terms of any Loan Documents executed in connection with the
Loan.
9. Except as hereby modified, the Loan Agreement remains in full force
and effect.
[SIGNATURES ON THE FOLLOWING PAGE]
12
IN WITNESS WHEREOF, the parties have duly executed this First Amendment
to Loan Agreement under seal as of the day and year first above written.
LIPOMED, INC.
By: /s/ F. Xxxxxx Xxxxxxx
------------------------------------
F. Xxxxxx Xxxxxxx, President
FIRST UNION NATIONAL BANK, N.A.
By: /s/ C. Xxxxxxxx Xxxxxx
------------------------------------
Title: C. Xxxxxxxx Xxxxxx
---------------------------------
Senior Vice President
13
Exhibit A
Changes to Corporate Organizational Documents
Certificate of Designation filed December 22, 2000, designating 2,873,563 shares
of Series D Convertible Preferred Stock (the "Series D Stock") of the
Corporation and setting forth the rights and preferences thereof.
Certificate of Increase filed January 22, 2001, increasing the number of shares
of Series D Stock to 3,544,062.
Amendment to Certificate of Designation filed August 8, 2001, amending certain
rights of the Series D Stock.
Certificate of Amendment of Certificate of Incorporation filed August 22, 2001,
providing for the 1.5-for-1 Common Stock split.
14
