EXHIBIT 10.83
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AGREEMENT is entered into as of March 29, 2002 by and between STAAR
SURGICAL COMPANY, a Delaware corporation ("Borrower"), and XXXXX FARGO BANK,
NATIONAL ASSOCIATION, a national banking association ("Bank").
Recitals
A. Borrower is currently indebted to Bank pursuant to the terms and
conditions of a letter agreement dated as of October 31, 2000, as amended by a
letter amendment dated December 22, 2000, a letter amendment dated April 1,
2001, two letter amendments dated July 1, 2001, a Fifth Amendment to Credit
Agreement dated October 1, 2001, a Sixth Amendment to Credit Agreement dated
December 20, 2001 and a Seventh Amendment to Credit Agreement dated February 1,
2002 (said letter agreement, as so amended, herein called the "Prior Credit
Agreement").
B. Pursuant to the Prior Credit Agreement, Borrower remains indebted to
Bank under a line of credit in the maximum principal amount of $7,000,000 (the
"Prior Line of Credit"), which is evidenced by a Revolving Line of Credit Note
dated October 31, 2000, as amended by the letter amendment dated April 1, 2001
referred to above, one of the letter amendments dated July 1, 2001 referred to
above, the Fifth Amendment to Credit Agreement referred to above, the Sixth
Amendment to Credit Agreement referred to above and the Seventh Amendment to
Credit Agreement referred to above (said Note, as so amended, herein called the
"Prior Line of Credit Note"). The Prior Line of Credit Note matures on March 29,
2001, and the outstanding balance under the Prior Line of Credit as of March 29,
2002 is $4,789,151.75 in principal, plus accrued but unpaid interest.
C. Borrower has requested that Bank extend the maturity date of and
restructure the Prior Line of Credit, and Bank has agreed to do so subject to
the terms and conditions contained herein.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrower and Bank hereby agree that all of the
terms and conditions of the Prior Credit Agreement and the Prior Line of Credit
Note shall be and hereby are amended, restated and superseded by the terms and
conditions of this Agreement; provided, however, that (1) nothing herein shall
terminate any security interest in favor of Bank, and all such security
interests shall remain in full force and effect, and (2) upon the Effective Date
(as defined below), all references in the Loan Documents (as defined below) to
the Prior Credit Agreement shall be deemed to be references to this Agreement.
Borrower and Bank further agree as set forth below.
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ARTICLE I
CREDIT TERMS
SECTION 1.1. LINE OF CREDIT.
(a) Line of Credit. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time up
to and including March 31, 2003, not to exceed at any time the aggregate
principal amount of $7,000,000 (the "Line of Credit"), the proceeds of which
shall be used for Borrower's general corporate purposes, including, without
limitation, for lending to direct or indirect subsidiaries (each a "Subsidiary")
of Borrower for their general corporate purposes. Borrower's obligation to repay
advances under the Line of Credit shall be evidenced by a promissory note
substantially in the form of Exhibit A attached hereto (the "Line of Credit
Note"), all terms of which are incorporated herein by this reference. Advances
outstanding under the Prior Line of Credit as of the Effective Date (as defined
in Section 3.1 below) of this Agreement shall be deemed to be advances
outstanding under the Line of Credit.
(b) Borrowing and Repayment. Borrower may from time to time during the
term of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided, however,
that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above.
SECTION 1.2. INTEREST/FEES.
(a) Interest. The outstanding principal balance of each advance
hereunder shall bear interest at a rate per annum equal at all times to the sum
of the Prime Rate in effect from time to time plus the Applicable Interest
Margin, as such terms are defined below.
(b) Prime Rate. The term "Prime Rate" shall mean at any time the rate
of interest most recently announced within Bank at its principal office as its
"prime rate," with the understanding that such "prime rate" is one of Bank's
base rates, serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto and is evidenced by the
recording thereof in such internal publication or publications as Bank may
designate. Each change in the rate of interest shall become effective on the
date each Prime Rate change is announced within Bank.
(c) Applicable Interest Margin. The term "Applicable Interest Margin"
shall mean, as of any date, the applicable margin set forth below based on the
ratio of Funded Debt to 12-month EBITDA determined by means of the Pricing
Certificate to be delivered by Borrower to Bank pursuant to Section 4.3(d)
hereof from time to time.
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Level Funded Debt to EBITDA Ratio Applicable Interest Margin
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1 *2.00:1.00 1.00% per annum
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2 # or =2.00:1.00 but *4.00:1.00 2.00% per annum
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3 # or =4.00:1.00 but *6.00:1.00 3.00% per annum
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4 # or =6.00:1.00 4.00% per annum
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* Less than
# Greater than
-2-
The Applicable Interest Margin shall adjust, if applicable, each time Bank
receives a Pricing Certificate pursuant to Section 4.3(d), on the third business
day after such receipt, and the adjusted Applicable Interest Margin shall apply
to each advance then outstanding or thereafter made by Bank under the Line of
Credit until the Applicable Interest Margin is readjusted thereafter; provided,
however, that (i) from and including the date hereof to but excluding the third
business day after the day on which Bank receives a Pricing Certificate for the
period ending on September 27, 2002 (EBITDA for which period shall be calculated
by annualizing EBITDA for the nine fiscal months ending on that date), the
Applicable Interest Margin shall be 4.00% per annum and (ii) if at any time
Borrower fails to deliver a Pricing Certificate as required by Section 4.3(d),
the Applicable Interest Margin shall be 4.00% per annum until Borrower delivers
a Pricing Certificate as so required.
(d) Computation and Payment. Interest shall be computed on the basis
of a 360-day year and actual days elapsed. Interest shall be payable at the
times and place set forth in each promissory note or other instrument required
hereby.
(e) Unused-Commitment Fee. Borrower shall pay Bank a fee at the
Applicable Fee Rate (as defined below, computed on the basis of a 360-day year
and actual days elapsed) on the average daily unused amount of the Line of
Credit, from the date hereof until the maturity date of the Line of Credit,
payable monthly in arrears on the first business day of each calendar month,
commencing on May 1, 2002, and on the maturity date of the Line of Credit.
(f) Applicable Fee Rate. The term "Applicable Fee Rate" shall mean, as
of any date, the applicable rate set forth below based on the ratio of Funded
Debt to 12-month EBITDA determined by means of the Pricing Certificate to be
delivered by Borrower to Bank pursuant to Section 4.3(d) hereof from time to
time.
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Level Funded Debt to EBITDA Ratio Applicable Fee Rate
----- --------------------------- -------------------
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1 *2.00:1.00 0.25% per annum
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2 # or =2.00:1.00 but *4.00:1.00 0.50% per annum
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3 # or =4.00:1.00 but *6.00:1.00 0.75% per annum
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4 # or =6.00:1.00 1.00% per annum
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The Applicable Fee Rate shall adjust, if applicable, each time Bank receives a
Pricing Certificate pursuant to Section 4.3(d), on the third business day after
such receipt, and the adjusted Applicable Fee Rate shall apply until the
Applicable Fee Rate is readjusted thereafter; provided, however, that (i) from
and including the date hereof to but excluding the third business day after the
day on which Bank receives a Pricing Certificate for the period ending on
September 27, 2002 (EBITDA for which period shall be calculated by annualizing
EBITDA for the nine fiscal months ending on that date), the Applicable Fee Rate
shall be 1.00% per annum and (ii) if at any time Borrower fails to deliver a
Pricing Certificate as required by Section 4.3(d), the Applicable Fee Rate shall
be 1.00% per annum until Borrower delivers a Pricing Certificate as so required.
SECTION 1.3. COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect
all principal, interest and fees due hereunder by charging Borrower's deposit
account number 4159-251172 with Bank, or any other deposit account maintained by
Borrower with Bank, for the full amount thereof. Should there be insufficient
funds in any such deposit account to pay all
* Less than
# Greater than
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such sums when due, the full amount of such deficiency shall be immediately due
and payable by Borrower.
SECTION 1.4. MANDATORY PREPAYMENT.
(a) Application of Proceeds. Borrower will, on each date of receipt by
Borrower, or by any Subsidiary of Borrower, of (i) Net Cash Proceeds (as defined
below) from the sale, lease, transfer or other disposition of any asset of
Borrower or any Subsidiary thereof that is prohibited by Section 5.5(d), (ii)
Net Cash Proceeds from the sale or issuance of any equity interests in Borrower
or any Subsidiary thereof, or any warrants, options or other rights to acquire
any such equity interests, (iii) Net Cash Proceeds from the incurrence by
Borrower or any Subsidiary thereof of any indebtedness not permitted by Section
5.4 or (iv) insurance or condemnation proceeds from any casualty or condemnation
in respect of any asset of Borrower or any Subsidiary thereof (except to the
extent that any such proceeds in respect of a single casualty or condemnation do
not exceed $10,000 (or the equivalent in one or more currencies) in the
aggregate), prepay an aggregate principal amount of the advances outstanding
hereunder equal to the amount of such Net Cash Proceeds or insurance or
condemnation proceeds. All prepayments pursuant to this Section 1.4(a) shall be
made together with accrued interest to the date of such prepayment on the
principal amount prepaid. Whether or not the applicable Net Cash Proceeds or
insurance or condemnation proceeds exceed the aggregate principal amount of
advances then outstanding hereunder in any case in which a prepayment is
required hereunder, the Line of Credit shall be automatically and permanently
reduced by the amount equal to such Net Cash Proceeds or insurance or
condemnation proceeds.
(b) Net Cash Proceeds. As used herein, "Net Cash Proceeds" means (a)
with respect to any sale, lease, transfer or other disposition of any asset by
any entity, the difference between (i) the aggregate amount received by such
entity in cash or cash equivalents (including, without limitation, any cash or
cash equivalents received by way of deferred payment pursuant to a note
receivable, other noncash consideration or otherwise, but only as and when such
cash or cash equivalents are so received) in connection with such transaction,
minus (ii) the sum of (A) the reasonable and customary fees, commissions and
other out-of-pocket expenses incurred by such entity in connection with such
transaction (other than amounts payable to affiliates of such entity), (B)
indebtedness (other than the advances hereunder) required to be paid as a result
of such transaction and (C) federal, state and local taxes incurred and paid in
connection with such transaction; (b) with respect to any sale or issuance of
any equity interests (including, without limitation, stock, member interests or
partnership interests) in any entity, or any warrants, options or other rights
to acquire such equity interests (including, without limitation, any convertible
securities), by any entity, the amount equal to the difference between (i) the
aggregate amount received by such entity in cash or cash equivalents (including,
without limitation, any cash or cash equivalents received by way of deferred
payment pursuant to a note receivable, other noncash consideration or otherwise,
but only as and when such cash or cash equivalents are so received) in
connection with such transaction, minus (ii) the reasonable and customary fees,
commissions and other out-of-pocket expenses incurred by such entity in
connection with such transaction (other than amounts payable to affiliates of
such entity); and (c) with respect to any incurrence of indebtedness by any
entity, the difference between (i) the aggregate amount received by such entity
in cash or cash equivalents in connection with such transaction, minus (ii) the
sum of (A) the reasonable and customary fees, commissions and other
out-of-pocket expenses incurred and paid or payable by such entity in connection
with such transaction (other than amounts payable to affiliates of such entity)
and (B) indebtedness (other than the advances hereunder) required to be paid as
a result of such transaction.
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SECTION 1.5 COLLATERAL. As security for all indebtedness of Borrower to
Bank subject hereto, Borrower hereby grants to Bank security interests of first
priority in all of Borrower's right, title and interest in and to the following,
whether now owned or hereafter acquired, whether now or hereafter existing, and
wherever located: all accounts, rights to payment, general intangibles, patents,
copyrights, trademarks, deposit accounts, chattel paper, instruments, documents,
inventory, equipment, investment property (including, without limitation, all
stock of, and other equity interests in, Borrower's Subsidiaries),
letter-of-credit rights, letters of credit and money. All of the foregoing shall
be further evidenced by and subject to the terms of such further security
agreements, financing statements and other documents as Bank shall reasonably
require, all in form and substance satisfactory to Bank, including, without
limitation, a Continuing Security Agreement--Rights to Payment and Inventory
dated as of January 13, 2000 and a Stock Pledge Agreement dated as of March 14,
2002. Borrower shall reimburse Bank immediately upon demand for all costs and
expenses incurred by Bank in connection with any of the foregoing security,
including, without limitation, filing and recording fees and costs of
appraisals, audits (including, without limitation, pursuant to Section 4.2
hereof) and title insurance.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this Agreement.
SECTION 2.1. LEGAL STATUS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of the State of Delaware and is
qualified or licensed to do business (and is in good standing as a foreign
corporation, if applicable) in all jurisdictions in which such qualification or
licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower.
SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement and each promissory
note, security agreement, contract, instrument and other document required
hereby or at any time hereafter delivered to Bank in connection herewith
(collectively the "Loan Documents") have been duly authorized and, upon their
execution and delivery in accordance with the provisions hereof, will constitute
legal, valid and binding agreements and obligations of Borrower or the party
which executes the same, enforceable in accordance with their respective terms.
SECTION 2.3. NO VIOLATION. The execution, delivery and performance by
Borrower of each of the Loan Documents do not violate any provision of any law
or regulation, or contravene any provision of the Certificate of Incorporation
or Bylaws of Borrower, or result in any breach of or default under any contract,
obligation, indenture or other instrument to which Borrower is a party or by
which Borrower may be bound.
SECTION 2.4. LITIGATION. There are no pending or, to the best of Borrower's
knowledge, threatened actions, claims, investigations, suits or proceedings by
or before any governmental authority, referee, arbitrator, court or
administrative agency which could have a
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material adverse effect on the financial condition or operation of Borrower,
other than those disclosed by Borrower to Bank in writing prior to the date
hereof.
SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENTS. The financial statements
of Borrower dated January 25, 2002, a true copy of which has been delivered by
Borrower to Bank prior to the date hereof, (a) are complete and correct and
present fairly the financial condition of Borrower, (b) disclose all liabilities
of Borrower that are required to be reflected or reserved against under
generally accepted accounting principles, whether liquidated or unliquidated,
fixed or contingent, and (c) have been prepared in accordance with generally
accepted accounting principles consistently applied. Since the date of such
financial statements there has been no material adverse change in the financial
condition of Borrower, nor has Borrower mortgaged, pledged, granted a security
interest in or otherwise encumbered any of its assets or properties, except in
favor of Bank or as otherwise permitted by Bank in writing.
SECTION 2.6. INCOME-TAX RETURNS. Borrower has no knowledge of any pending
assessments or adjustments of its income tax payable with respect to any year.
SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture, contract
or instrument to which Borrower is a party or by which Borrower may be bound
that requires the subordination in right of payment of any of Borrower's
obligations subject to this Agreement to any other obligation of Borrower.
SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter
possess, any and all permits, consents, approvals, franchises and licenses
required, and any and all rights to trademarks, trade names, patents, copyrights
and fictitious names necessary, to enable it to conduct the business in which it
is now engaged, in compliance with applicable law.
SECTION 2.9. ERISA. Borrower is in compliance in all material respects with
all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended or recodified from time to time ("ERISA"). Borrower has not
violated any provision of any defined employee pension benefit plan (as defined
in ERISA) maintained or contributed to by Borrower (each, a "Plan"). No
Reportable Event as defined in ERISA has occurred and is continuing with respect
to any Plan initiated by Borrower. Borrower has met its minimum funding
requirements under ERISA with respect to each Plan. Each Plan will be able to
fulfill its benefit obligations as they come due in accordance with the Plan
documents therefor and under generally accepted accounting principles.
SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in default on any
obligation for borrowed money, any purchase-money obligation or any other
material lease, commitment, contract, instrument or obligation.
SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to
Bank in writing prior to the date hereof, Borrower is in compliance in all
material respects with all applicable federal and state environmental,
hazardous-waste, health and safety statutes, and any and all rules or
regulations adopted pursuant thereto, which govern or affect any of Borrower's
operations and/or properties, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Resource Conservation
and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any
of the same may be amended, modified or supplemented from time to time. None of
the operations of Borrower is the subject of any federal or state investigation
evaluating whether any remedial action involving a material
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expenditure is needed to respond to a release of any toxic or hazardous waste or
substance into the environment. Borrower has no material contingent liability in
connection with any release of any toxic or hazardous waste or substance into
the environment.
SECTION 2.12. PATENTS. No patent has been issued in the United States to or
for the benefit of, and no patent application has been filed in the United
States by or on behalf of, Borrower or any Subsidiary thereof, except as listed
in Schedule 1 attached hereto or as otherwise disclosed to Bank in writing from
time to time.
SECTION 2.13 CREDIT FACILITIES. Since September 30, 2001, no credit
facility has been available to Borrower or any Subsidiary thereof except for (a)
the credit facility made available to Borrower by Bank pursuant to this
Agreement or the Prior Credit Agreement, (b) the credit facility made available
to Staar Surgical AG, a Swiss corporation ("Swiss Sub"), by UBS AG, copies of
all legal documentation related to which have been delivered to Bank, (c) a
credit facility made available to Domilens GmbH, a German corporation
("Domilens"), in an amount not exceeding $500,000 (or the equivalent in one or
more currencies) and (d) such other credit facilities (including, without
limitation, the principal terms thereof) as disclosed by Borrower to Bank in
writing from time to time.
ARTICLE III
CONDITIONS
SECTION 3.1. CONDITIONS TO EFFECTIVENESS. This Agreement shall become
effective on the date (the "Effective Date") on which all of the conditions
specified below have been fulfilled to Bank's satisfaction.
(a) Approval of Bank Counsel. All legal matters incidental to the
effectiveness of this Agreement shall be satisfactory to Bank's counsel.
(b) Documentation. Bank shall have received, in form and substance
satisfactory to Bank, each of the following, duly executed by the parties
thereto (other than Bank):
(i) this Agreement and the Line of Credit Note;
(ii) an amended and restated Patent Security Agreement, a
Trademark Security Agreement and a Copyright Security Agreement;
(iii) a Perfection Certificate;
(iv) a certificate of the President or Chief Financial Officer
of Borrower and the Secretary of Borrower certifying (A) that there has been no
amendment to Borrower's charter documents since the date of the certification
with respect thereto referred to in Section 3.1(b)(vii), (B) that the copy of
Borrower's bylaws attached to such certificate is correct and complete and that
such bylaws are in full force and effect, (C) that Borrower is in good standing
in the States of Delaware and California, (D) that the representations and
warranties of Borrower contained in the Loan Documents are correct on and as of
the Effective Date as though made on and as of such date and (E) that no Event
of Default (as defined in Section 6.1 hereof) or event that, with the giving of
notice or the passage of time or both, would constitute
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an Event of Default has occurred and is continuing or would be caused by the
effectiveness of this Agreement;
(v) one or more certificates from the State of Delaware
certifying that (A) the copy of Borrower's charter documents, including, without
limitation, all amendments, attached to such certificate is correct and
complete, (B) Borrower has paid all franchise taxes to the date of such
certificate and (C) Borrower is duly incorporated and in good standing under the
laws of the State of Delaware;
(vi) a good-standing certificate and a tax-status certificate
with respect to Borrower from the State of California;
(vii) a chart showing all of Borrower's Subsidiaries as of March
29, 2002; and
(viii) such other documents as Bank may require.
(c) Financial Condition. There shall have been no material adverse
change, as determined by Bank, in the financial condition or business of
Borrower.
(d) Insurance. Borrower shall have delivered to Bank evidence of
insurance coverage on all of Borrower's property, in form, substance, amounts,
covering risks and issued by companies satisfactory to Bank and, where required
by Bank, with loss-payable endorsements in favor of Bank.
(e) Fee, Etc. Borrower shall have paid to Bank, by Bank's debiting of
one or more of Borrower's deposit accounts with Bank, (i) a restructuring and
extension fee of $35,000.00 and (ii) all other amounts payable to Bank pursuant
to this Agreement or otherwise, to the extent that a statement for the same has
been delivered to Borrower.
SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank
to make each extension of credit requested by Borrower hereunder shall be
subject to the fulfillment to Bank's satisfaction of each of the conditions set
forth below.
(a) Compliance. The representations and warranties contained herein
and in each of the other Loan Documents shall be true on and as of the date of
the signing of this Agreement and on the date of each extension of credit by
Bank pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date no
Event of Default, and no condition, event or act which, with the giving of
notice or the passage of time or both, would constitute an Event of Default,
shall have occurred and be continuing or shall exist.
(b) Documentation. Bank shall have received all additional documents
which may be required thereby in connection with such extension of credit.
ARTICLE IV
AFFIRMATIVE COVENANTS
Borrower covenants that, so long as Bank remains committed to extend credit
to Borrower pursuant hereto or any liabilities (whether direct or contingent,
liquidated or
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unliquidated) of Borrower to Bank under any of the Loan Documents remain
outstanding, and until payment in full of all obligations of Borrower subject
hereto, Borrower shall, unless Bank otherwise consents in writing, observe all
of the affirmative covenants set forth below.
SECTION 4.1. PUNCTUAL PAYMENTS. Borrower shall punctually pay all
principal, interest, fees and other liabilities due under the Loan Documents at
the applicable time and place, and in the manner, specified therein.
SECTION 4.2. ACCOUNTING RECORDS. Borrower shall maintain adequate books and
records in accordance with generally accepted accounting principles consistently
applied and shall permit any representative of Bank, at any reasonable time, to
inspect, audit and examine such books and records, to make copies of the same
and to inspect the properties of Borrower, including, without limitation, for
the purpose of (a) conducting collateral audits, either by Bank or an outsider
auditor retained thereby, at least semiannually with the first such audit to be
performed in June of 2002, and (b) conducting patent audit updates, by Ernst &
Young LLP or another outside auditor retained by Bank, to update, among other
things, the reports previously prepared concerning the market value and orderly
liquidation value of the patents of Borrower and its Subsidiaries.
SECTION 4.3. FINANCIAL STATEMENTS AND OTHER INFORMATION. Borrower shall
provide to Bank all of the following, in form and detail satisfactory to Bank:
(a) as soon as available and in any event within 90 days after the end
of each fiscal year of Borrower, the consolidated balance sheet of Borrower and
its consolidated Subsidiaries as of the end of such year and the related
consolidated statements of income, cash flows and shareholders' equity of
Borrower and its consolidated Subsidiaries for such year, setting forth in each
case in comparative form the corresponding figures for the preceding fiscal
year, together in each case with (i) an unqualified opinion thereon of
independent public accountants acceptable to Bank stating that such financial
statements present fairly, in all material respects, the consolidated financial
condition and results of operations of Borrower and its consolidated
Subsidiaries in conformity with generally accepted accounting principles as of
the end of, and for, the period presented and (ii) a copy of any letter of such
accountants to the management of Borrower in connection with such financial
statements;
(b) as soon as available and in any event within 45 days after the end
of each of the first three quarterly fiscal periods of each fiscal year of
Borrower, the unaudited consolidated balance sheet of Borrower and its
consolidated Subsidiaries as of the end of such period and the related unaudited
consolidated statements of income and cash flows of Borrower and its
consolidated Subsidiaries for the three, six or nine months then ended, as set
forth in Borrower's quarterly reports on Form 10-Q, together in each case with a
certificate of the Chief Financial Officer of Borrower stating that such
financial statements present fairly, in all material respects, the consolidated
financial position and results of operations of Borrower and its consolidated
Subsidiaries in conformity with generally accepted accounting principles as of
the end of, and for, the period presented (subject to normal year-end audit
adjustments and the absence of footnotes);
(c) promptly upon Borrower's filing thereof with the United States
Securities and Exchange Commission, a copy of each document so filed by Borrower
pursuant to the Securities Exchange Act of 1934;
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(d) together in each case with the financial statements to be
delivered by Borrower to Bank pursuant to Sections 4.3(a) and (b) hereof,
commencing with the financial statements for the fiscal period ending on
September 27, 2002, a duly completed certificate of the Chief Financial Officer
of Borrower substantially in the form of Exhibit B hereto or otherwise in form
and scope acceptable to Bank (a "Pricing Certificate");
(e) within 45 days after the end of each fiscal month, unaudited
consolidated and consolidating balance sheets of Borrower as of the end of such
month and unaudited consolidated and consolidating statements of income and cash
flows of Borrower for the period commencing at the end of the preceding fiscal
year and ending with the end of such month, all in form, scope and detail
satisfactory to Bank and duly certified by the Chief Financial Officer of
Borrower as having been prepared in accordance with generally accepted
accounting principles (subject to normal year-end audit adjustments and the
absence of footnotes), together in each case with (i) a narrative discussion and
analysis by such officer concerning the financial performance of Borrower, and
any variance of more than 10% from Borrower's projections attached hereto as
Schedule 2, evidenced by such financial statements and (ii) a duly completed
Compliance Certificate executed by the Chief Financial Officer of Borrower
substantially in the form of Exhibit C hereto or otherwise in form and scope
acceptable to Bank;
(f) not later than Friday of each calendar week, (i) a projection of
the consolidated cash flow of Borrower, detailing cash receipts and cash
disbursements, for the 13-week period commencing on such Friday and (ii) a
comparison of Borrower's actual consolidated cash flow for the immediately
preceding week to the projection of such cash flow, together with a written
explanation of any variance exceeding 10%, in each case in form, scope and
detail satisfactory to Bank and duly certified by an officer of Borrower, and in
a manner, acceptable to Bank;
(g) within 45 days after the end of each semiannual fiscal period of
Borrower, commencing with such period ending on June 28, 2002, an aged listing
of the United States domestic accounts receivable and United States domestic
accounts payable of Borrower and its United States domestic Subsidiaries as of
the last day of such period, in form, scope and detail satisfactory to Bank and
duly certified by an officer of Borrower, and in a manner, acceptable to Bank;
(h) promptly (i) upon Borrower's becoming aware of the same, notice of
any declination by UBS AG to extend its credit facility for Swiss Sub and (ii)
upon execution of the same, copies of (A) all amendments or restatements of the
loan agreement between Swiss Sub and UBS AG and (B) all other documents executed
by Swiss Sub, Borrower or any affiliate of either thereof in connection with
such loan agreement; and
(i) promptly upon request by Bank, such other information concerning
the business, condition (financial or otherwise), operations, performance,
properties or prospects of Borrower or any Subsidiary thereof as Bank may from
time to time reasonably request (including, without limitation, any information
described above on a more frequent basis).
SECTION 4.4. COMPLIANCE. Borrower shall, and shall cause each Subsidiary
thereof to, (a) preserve and maintain all licenses, permits, governmental
approvals, rights, privileges and franchises necessary for the conduct of its
business and (b) comply with the provisions of all documents pursuant to which
it is organized and/or which govern its continued existence and with the
requirements of all laws, rules, regulations and orders of any governmental
authority applicable to it and/or its business.
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SECTION 4.5. INSURANCE. Borrower shall, and shall cause each Subsidiary
thereof to, (a) maintain and keep in force insurance of the types and in amounts
customarily carried in lines of business similar to that of Borrower or such
Subsidiary, as applicable, including, without limitation, fire,
extended-coverage, public-liability, flood, property-damage and workers'-
compensation insurance, with all such insurance carried with companies and in
amounts satisfactory to Bank, and (b) deliver to Bank from time to time at
Bank's request schedules setting forth all such insurance then in effect.
SECTION 4.6. FACILITIES. Borrower shall, and shall cause each Subsidiary
thereof to, (a) keep all properties useful or necessary to its business in good
repair and condition and (b) from time to time make necessary repairs, renewals
and replacements thereto so that such properties shall be fully and efficiently
preserved and maintained.
SECTION 4.7. TAXES AND OTHER LIABILITIES. Borrower shall, and shall cause
each Subsidiary thereof to, pay and discharge when due any and all indebtedness,
obligations, assessments and taxes, both real and personal, including, without
limitation, federal and state income taxes and state and local property taxes
and assessments, except such (a) as Borrower may in good faith contest or as to
which a bona fide dispute may arise and (b) for which Borrower has made
provision, to Bank's satisfaction, for eventual payment thereof in the event
Borrower is obligated to make such payment.
SECTION 4.8. LITIGATION. Borrower shall promptly give notice in writing to
Bank of any litigation pending or threatened against Borrower or any Subsidiary
thereof with a claim in excess of $500,000 (or the equivalent in one or more
currencies).
SECTION 4.9. FINANCIAL CONDITION. Borrower shall maintain the consolidated
financial condition of it and its consolidated Subsidiaries as follows, using
generally accepted accounting principles consistently applied and used
consistently with prior practices (except to the extent modified by the
definitions herein):
(a) Current Ratio not less than 1.10 to 1.00, tested as of the last
day of each fiscal month commencing with April of 2002, with "Current Ratio"
being defined as total current assets divided by total current liabilities;
(b) Tangible Net Worth, tested as of the last day of each fiscal month
commencing with April of 2002, not less than (i) as of the last day of March,
April, May and June of 2002, $28,250,000 and (ii) as of the last day of each
fiscal month thereafter, the sum of $28,250,000 plus 50% of positive net income
earned after June 28, 2002, with "Tangible Net Worth" being defined as the
aggregate of total stockholders' equity plus subordinated debt less any
intangible assets;
(c) operating cash flow (as defined in accordance with Financial
Accounting Standards Board Statement No. 95 ("FASB 95")) for each period of two
consecutive fiscal months to be greater than the sum of required lease payments
plus required debt repayments plus capital expenditures (as defined in
accordance with FASB 95) for such months, tested as of the last day of each
fiscal month commencing with April of 2002;
(d) negative variance from projected revenues (based on the monthly
and quarterly projections attached hereto as Schedule 2) for each period of
three consecutive fiscal
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months to be less than 15%, tested as of the last day of each fiscal month
commencing with April of 2002;
(e) negative variance from projected net operating income or loss
(based on the monthly and quarterly projections attached hereto as Schedule 2)
for each period of three consecutive fiscal months to be less than $250,000 in
the aggregate for such months, tested as of the last day of each fiscal month
commencing with April of 2002, with "net operating income or loss" being defined
as income or loss before interest income or expense, equity in earnings of any
unconsolidated affiliate, currency-exchange gains or losses, other income or
expenses, taxes and minority interests in affiliates;
(f) EBITDA for each fiscal month to be greater than the sum of
interest expense plus required lease payments plus required debt repayments plus
capital expenditures (as defined in accordance with FASB 95) for such month,
tested as of the last day of each fiscal month commencing with July of 2002;
provided, however, that, if Borrower fails to comply with the foregoing covenant
in respect of any fiscal month, then such failure shall not constitute a default
of such covenant unless Borrower fails to comply with such covenant when applied
to such fiscal month combined with the preceding fiscal month;
(g) EBITDA not less than $2,100,000 for any period of 12 consecutive
fiscal months, tested as of the last day of each fiscal month commencing with
December of 2002, with "EBITDA" being defined as operating earnings before
interest expense (net of capitalized interest expense), taxes, depreciation
expense, amortization expense, noncash nonrecurring charges, and gains or losses
on sales of assets; and
(h) ratio of Funded Debt to EBITDA (as defined above for any period of
12 consecutive fiscal months) not more than 3.75 to 1.00, tested as of the last
day of each fiscal month commencing with December of 2002, with "Funded Debt"
being defined as all indebtedness, including, without limitation, in respect of
capitalized leases, standby letters of credit and guaranteed obligations.
SECTION 4.10. NOTICES TO BANK. Borrower shall promptly (but in no event
more than five (5) days after the occurrence of each event or matter described
below) give written notice to Bank in reasonable detail of (a) the occurrence of
any Event of Default or any condition, event or act which, with the giving of
notice or the passage of time or both, would constitute an Event of Default, (b)
any change in the name or organizational structure of Borrower, (c) the
occurrence and nature of any Reportable Event or Prohibited Transaction, each as
defined in ERISA, or any funding deficiency with respect to any Plan, (d) any
termination or cancellation of any insurance policy which Borrower is required
to maintain, (e) any uninsured or partially uninsured loss through liability or
property damage (including, without limitation, from fire, theft or any other
cause affecting Borrower's property) in excess of an aggregate of $500,000 (or
the equivalent in one or more currencies) and (f) the filing of any application
by or on behalf of Borrower or any Subsidiary thereof with the United States
Patent and Trademark Office, the United States Copyright Office or any other
office with respect to, or the acquisition by Borrower or any Subsidiary thereof
of any interest in (including, without limitation, any interest as exclusive
licensee), any patent, trademark, copyright or other intellectual property,
together with a copy of such application or the documentation concerning such
acquisition, as applicable.
SECTION 4.11. LIQUIDITY. Borrower shall maintain unencumbered (except for a
lien in favor of Bank) liquid assets (defined as cash, cash equivalents and/or
publicly traded or quoted
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marketable securities acceptable to Bank) with Bank having an aggregate
fair-market value of at least $2,000,000.
ARTICLE V
NEGATIVE COVENANTS
Borrower covenants that, so long as Bank remains committed to extend credit
to Borrower pursuant hereto or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing,
observe all of the negative covenants set forth below.
SECTION 5.1. USE OF FUNDS. Borrower shall not, and shall not permit any
Subsidiary thereof to, use any of the proceeds of any credit extended hereunder
except for the purposes stated in Article I hereof.
SECTION 5.2. CAPITAL EXPENDITURES. Borrower shall not, and shall not permit
any Subsidiary thereof to, make any capital expenditure (as defined in
accordance with FASB 95) in excess of $2,000,000 (or the equivalent in one or
more currencies) in the aggregate for Borrower and its Subsidiaries in any
fiscal year.
SECTION 5.3. LEASE EXPENDITURES. Borrower shall not, and shall not permit
any Subsidiary thereof to, incur any operating lease expense in excess of
$1,000,000 (or the equivalent in one or more currencies) in the aggregate for
Borrower and its Subsidiaries in any fiscal year.
SECTION 5.4. OTHER INDEBTEDNESS. Borrower shall not, and shall not permit
any Subsidiary thereof to, create, incur, assume or permit to exist any
indebtedness or liabilities resulting from borrowings, loans, advances,
capitalized leases or purchase-money indebtedness, whether secured or unsecured,
matured or unmatured, liquidated or unliquidated, joint or several, except for
(a) liabilities of Borrower to Bank, (b) liabilities of Swiss Sub to UBS AG not
exceeding Swiss Francs 5,000,000, (c) liabilities of Domilens to any financial
institution not exceeding $500,000 (or the equivalent in one or more
currencies), (d) purchase-money indebtedness and capitalized leases of Borrower
or any Subsidiary thereof incurred in connection with the purchase or lease of
equipment, so long as the outstanding principal amount of indebtedness incurred
in connection with such purchase or lease of equipment, whether before or after
the date hereof, at no time exceeds $1,000,000 (or the equivalent in one or more
currencies) in the aggregate, (e) liabilities permitted by Section 5.7 hereof
and (f) any other liabilities of Borrower or any Subsidiary thereof existing as
of, and disclosed to Bank prior to, the date hereof.
SECTION 5.5. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Borrower shall not,
and shall not permit any Subsidiary thereof to, (a) merge into or consolidate
with any other entity, (b) make any substantial change in the nature of its
business as conducted as of the date hereof, (c) acquire all or substantially
all of the assets of any other entity or (d) sell, lease, transfer or otherwise
dispose of all or a substantial or material portion of its assets, except in the
ordinary course of its business.
SECTION 5.6. GUARANTIES. Borrower shall not, and shall not permit any
Subsidiary thereof to, guarantee or become liable in any way as surety, endorser
(other than as endorser of
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negotiable instruments for deposit or collection in the ordinary course of
business), accommodation endorser or otherwise for, or pledge or hypothecate any
assets thereof as security for, any liabilities or obligations of any other
person or entity, except any of the foregoing in favor of Bank.
SECTION 5.7. LOANS, ADVANCES, INVESTMENTS. Borrower shall not, and shall
not permit any Subsidiary thereof to, make any loan, advance or other extension
of credit (including, without limitation, for products sold) to, or investment
in, any person or entity, except for (a) loans, advances and other extensions of
credit by Borrower to its foreign Subsidiaries not exceeding $8,500,000 (or the
equivalent in one or more currencies) in the aggregate at any time outstanding,
(b) loans, advances and other extensions of credit by Swiss Sub or any
Subsidiary of Swiss Sub to Swiss Sub or any other Subsidiary of Swiss Sub, (c)
loans, advances and other extensions of credit to Borrower by any Subsidiary
thereof and (d) investments by Borrower in any Subsidiary thereof, and
investments by any Subsidiary of Borrower in any Subsidiary of such Subsidiary,
to the extent such investments are existing as of, and disclosed to Bank prior
to, the date hereof.
SECTION 5.8. DIVIDENDS, DISTRIBUTIONS. Borrower shall not, and shall not
permit any Subsidiary thereof to, (a) declare or pay any dividend or
distribution either in cash, stock or any other property or (b) redeem, retire,
repurchase or otherwise acquire any shares of any class of stock or Borrower or
any Subsidiary thereof; provided, however, that any Subsidiary of Borrower may
pay dividends to Borrower, and any Subsidiary of Borrower may pay dividends to
any other Subsidiary of Borrower if and to the extent that such dividends are
used to pay dividends to Borrower.
SECTION 5.9. PLEDGE OF ASSETS. Borrower shall not, and shall not permit any
of its Subsidiaries to, mortgage, pledge or grant or permit to exist a security
interest in, or lien upon, all or any portion of Borrower's or such Subsidiary's
assets now owned or hereafter acquired (including, without limitation, all or
any part of the shares of any direct or indirect Subsidiary of Borrower), except
any of the foregoing in favor of Bank or which are existing as of, and disclosed
to Bank in writing prior to, the date hereof.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement:
(a) Borrower fails to pay any principal, interest, fee or other amount
when due hereunder or under any other Loan Document;
(b) any financial statement or certificate furnished to Bank in
connection with, or any representation or warranty made by Borrower or any other
party under, this Agreement or any other Loan Document proves to be incorrect,
false or misleading in any material respect when furnished or made;
(c) Borrower defaults in the performance of or compliance with any
obligation, agreement or other provision contained herein or in any other Loan
Document (other than those referred to in subsections (a) and (b) above);
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(d) Borrower defaults in the payment or performance of any obligation,
or any defined event of default occurs, under the terms of any contract or
instrument (other than any of the Loan Documents) pursuant to which Borrower has
incurred any debt or other liability to any person or entity, including, without
limitation, Bank;
(e) a notice of judgment lien is filed against Borrower; an abstract
of judgment is recorded against Borrower in any county in which Borrower has an
interest in real property; a notice of levy and/or of a writ of attachment or
execution, or other like process, is served against the assets of Borrower; or a
judgment is entered against Borrower;
(f) Borrower becomes insolvent, suffers or consents to, or applies for
the appointment of, a receiver, trustee, custodian or liquidator for itself or
any of its property, generally fails to pay its debts as they become due or
makes a general assignment for the benefit of creditors; Borrower files a
voluntary petition in bankruptcy, or seeking reorganization, in order to effect
a plan or other arrangement with creditors or any other relief under the
Bankruptcy Reform Act, Title 11 of the United States Code, as amended or
recodified from time to time (the "Bankruptcy Code"), or under any other state
or federal law granting relief to debtors, whether now or hereafter in effect;
any involuntary petition or proceeding pursuant to the Bankruptcy Code or any
other applicable state or federal law relating to bankruptcy, reorganization or
other relief for debtors is filed or commenced against Borrower, or Borrower
files an answer admitting the jurisdiction of the court and the material
allegations of any involuntary petition; Borrower is adjudicated a bankrupt; or
an order for relief is entered against Borrower by any court of competent
jurisdiction under the Bankruptcy Code or any other applicable state or federal
law relating to bankruptcy, reorganization or other relief for debtors;
(g) any event occurs or condition exists which Bank in good faith
believes impairs, or is substantially likely to impair, the prospect of payment
or performance by Borrower of its obligations under any of the Loan Documents;
or
(h) Borrower is dissolved or liquidated; or Borrower or any of its
directors, stockholders or members takes action seeking to effect the
dissolution or liquidation of Borrower.
SECTION 6.2. REMEDIES. Upon the occurrence of any Event of Default: (a) all
indebtedness of Borrower under each of the Loan Documents, any term thereof to
the contrary notwithstanding, shall at Bank's option and without notice become
immediately due and payable without presentment, demand, protest or notice of
dishonor, all of which are hereby expressly waived by Borrower; (b) the
obligation, if any, of Bank to extend any further credit under any of the Loan
Documents shall immediately cease and terminate; and (c) Bank shall have all
rights, powers and remedies available under each of the Loan Documents, or
accorded by law, including, without limitation, the right to resort to any or
all security for any credit subject hereto and to exercise any or all of the
rights of a beneficiary or secured party pursuant to applicable law. All rights,
powers and remedies of Bank may be exercised at any time by Bank and from time
to time after the occurrence of an Event of Default, are cumulative and not
exclusive, and shall be in addition to any other rights, powers or remedies
provided by law or equity.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, consent or approval of any kind by
Bank of any breach of or default under any of the Loan Documents must be in
writing and shall be effective only to the extent set forth in such writing.
SECTION 7.2. NOTICES. All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:
Borrower: Staar Surgical Company
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Bank: Xxxxx Fargo Bank, National Association
000 Xxxxx Xxxxx Xxxxxx, 0xx Floor
MAC X0000-000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxx
or to such other address as either party may designate by written notice to the
other party. Each such notice, request and demand shall be deemed given or made
as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail,
upon the earlier of the date of receipt or three (3) days after deposit into the
U.S. mail, first-class postage prepaid; and (c) if sent by telecopy, upon
receipt.
SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to
Bank immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including, without limitation, reasonable attorneys' fees
(to include, without limitation, outside counsel fees and all allocated costs of
Bank's in-house counsel), expended or incurred by Bank in connection with (a)
the negotiation and preparation of this Agreement and the other Loan Documents,
Bank's continued administration hereof and thereof, and the preparation of any
amendments and waivers hereto and thereto, (b) the enforcement of Bank's rights
and/or the collection of any amounts which become due to Bank under any of the
Loan Documents, and (c) the prosecution or defense of any action in any way
related to any of the Loan Documents, including without limitation, any action
for declaratory relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including, without limitation, any of
the foregoing incurred in connection with any bankruptcy proceeding (including,
without limitation, any adversary proceeding, contested matter or motion brought
by Bank or any other person) relating to Borrower or any other person or entity.
SECTION 7.4. INDEMNITY. Borrower agrees to indemnify and hold harmless Bank
and its directors, officers, employees, agents and advisors (each of the
foregoing an "Indemnified Party") from and against any and all claims, demands,
actions, damages (including, without limitation, all foreseeable and
unforeseeable consequential damages),
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losses, assessments, liabilities, costs and expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of, or in connection with the preparation for
a defense of, any investigation, litigation or proceeding arising out of,
related to or in connection with (a) the actual or proposed use of the proceeds
of any advance hereunder, any of the Loan Documents or any of the transactions
contemplated by any of the Loan Documents, (b) the actual or alleged presence of
any hazardous material in, on or under (i) any property owned or operated by
Borrower or any Subsidiary thereof, (ii) any property to which any hazardous
material has migrated from any property owned or operated by Borrower or any
Subsidiary thereof or (iii) any property at which Borrower or any Subsidiary
thereof has disposed of any hazardous material (whether or not legal at the time
of such disposal) or (c) any environmental proceeding relating in any way to
Borrower or any Subsidiary thereof, in any case whether or not such
investigation, litigation or proceeding is brought by Borrower, any Subsidiary
thereof, any of their respective directors, shareholders or creditors or an
Indemnified Party, whether or not any Indemnified Party is otherwise a party
thereto and whether or not the transactions contemplated hereby are consummated;
provided, however, that Borrower shall not be liable to the extent that any such
claim, demand, action, damage, loss, assessment, liability or expense is found
in a final, nonappealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
SECTION 7.5. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon,
and inure to the benefit of, the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided, however, that
Borrower may not assign or transfer its interest hereunder without Bank's prior
written consent. Bank reserves the right to sell, assign, transfer, negotiate or
grant participations in all or any part of, or any interest in, Bank's rights
and benefits under each of the Loan Documents. In connection therewith, Bank may
disclose all documents and information which Bank now has or may hereafter
acquire relating to any credit subject hereto, Borrower or its business, or any
collateral required hereunder.
SECTION 7.6. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other Loan
Documents constitute the entire agreement between Borrower and Bank with respect
to each credit subject hereto and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Agreement may be amended or otherwise modified only in a writing
signed by each party to be bound by such amendment or modification.
SECTION 7.7. NO THIRD-PARTY BENEFICIARIES. This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third-party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.
SECTION 7.8. TIME. Time is of the essence of each and every provision of
this Agreement and each other of the Loan Documents.
SECTION 7.9. SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.
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SECTION 7.10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement.
SECTION 7.11. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
SECTION 7.12. RELEASE OF CLAIMS. Borrower represents and warrants to Bank
that it has diligently and thoroughly investigated the existence of any Claim
(as defined below) and that, to its knowledge and belief, no Claim exists and no
facts exist that could give rise to or support a Claim. As additional
consideration for Bank's entering into this Agreement, Borrower and each of its
agents, employees, directors, officers, attorneys, affiliates, subsidiaries,
successors and assigns (each a "Releasing Party") hereby release and forever
discharge Bank and each of its agents, direct and indirect shareholders,
employees, directors, officers, attorneys, branches, affiliates, subsidiaries,
successors and assigns (each a "Released Party") from any and all damages,
losses, claims, demands, liabilities, obligations, actions and causes of action
whatsoever (collectively "Claims") that the Releasing Parties or any of them
may, as of the effective date of this Agreement, have or claim to have against
any or all of the Released Parties, in each case whether currently known or
unknown or with respect to which the facts are currently known or unknown, in
any way relating to, arising out of or based upon any Loan Document (including,
without limitation, the Prior Credit Agreement), any amendment, waiver or other
modification with respect thereto, the negotiation or documentation hereof or
thereof, any of the transactions contemplated hereby or thereby, or any act or
omission in connection with any of the foregoing, including, without limitation,
all such Claims heretofore sustained or that may arise as a consequence of the
dealings between the parties up to the effective date of this Agreement in
connection with or in any way related to any Loan Document or any amendment,
waiver or other modification with respect thereto. Each Releasing Party further
represents and warrants that it has not heretofore assigned, and covenants and
agrees that it will not hereafter xxx any Released Party upon, any Claim
released or purported to be released under this section. Each Releasing Party
will indemnify and hold harmless the Released Parties against any loss or
liability on account of any actions brought by any Releasing Party or its
assigns or prosecuted on behalf of any Releasing Party and relating to any Claim
released or purported to be released under this section. It is further
understood and agreed that any and all rights under the provisions of Section
1542 of the California Civil Code are expressly waived by each of the Releasing
Parties. Section 1542 of the California Civil Code provides as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his
settlement with the debtor."
Borrower acknowledges that it has had the opportunity to be advised by legal
counsel in respect of the negotiation, execution and delivery of this Agreement,
including, without limitation, this release of claims.
SECTION 7.13. ARBITRATION.
(a) Arbitration. The parties hereto agree, upon demand by either
party, to submit to binding arbitration all claims, disputes and controversies
between them (and their respective employees, officers, directors, attorneys and
other agents), whether arising in tort,
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contract or otherwise arising out of or relating to in any way (i) any advance
under this Agreement, any Loan Document or the negotiation, execution,
collateralization, administration, repayment, modification, extension,
substitution, formation, inducement, enforcement, default or termination of any
Loan Document or (ii) any request for additional credit.
(b) Governing Rules. Any arbitration proceeding will (i) proceed at a
location in California selected by the American Arbitration Association (the
"AAA"); (ii) be governed by the Federal Arbitration Act (Title 9 of the United
States Code), notwithstanding any conflicting choice-of-law provision in any of
the documents between the parties; and (iii) be conducted by the AAA, or such
other administrator as the parties shall mutually agree upon, in accordance with
the AAA's commercial dispute resolution procedures, unless the claim or
counterclaim is at least $1,000,000 (or the equivalent in one or more
currencies) exclusive of claimed interest, arbitration fees and costs, in which
case the arbitration shall be conducted in accordance with the AAA's optional
procedures for large, complex commercial disputes (the commercial dispute
resolution procedures or the optional procedures for large, complex commercial
disputes to be referred to, as applicable, as the "Rules"). If there is any
inconsistency between the terms hereof and the Rules, the terms and procedures
set forth herein shall control. Any party that fails or refuses to submit to
arbitration following a demand by any other party shall bear all costs and
expenses incurred by such other party in compelling arbitration of any dispute.
Nothing contained herein shall be deemed to be a waiver by any party that is a
bank of the protections afforded to it under 12 U.S.C. ss.91 or any similar
applicable state law.
(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including, without limitation. those arising
from the exercise of the actions detailed in sections (i), (ii) and (iii) of
this paragraph.
(d) Arbitrator Qualifications and Powers. Any arbitration proceeding
in which the amount in controversy is $5,000,000 (or the equivalent in one or
more currencies) or less will be decided by a single arbitrator selected
according to the Rules, who shall not render an award greater than $5,000,000
(or the equivalent in one or more currencies). Any dispute in which the amount
in controversy exceeds $5,000,000 (or the equivalent in one or more currencies)
will be decided by majority vote of a panel of three arbitrators; provided,
however, that all three arbitrators must actively participate in all hearings
and deliberations. The arbitrator will be a neutral attorney licensed in the
State of California or a neutral retired judge of the state or federal judiciary
of California, in either case with a minimum of ten years experience in the
substantive law applicable to the subject matter of the dispute to be
arbitrated. The arbitrator will determine whether or not an issue is
arbitratable and will give effect to the statutes of limitation in determining
any claim. In any arbitration proceeding the arbitrator will decide (by
documents only or with a hearing at the arbitrator's discretion) any pre-hearing
motions which are similar to motions to dismiss for failure to state a claim or
motions for summary adjudication. The arbitrator shall resolve all disputes in
accordance with the substantive law of California and may grant any remedy or
relief that a court of such state could order or grant within the scope hereof
and such ancillary relief as is necessary to make effective any award. The
arbitrator shall also have the power to award recovery of all costs and fees, to
impose sanctions and to take such other action as the arbitrator deems necessary
to the same extent a judge could
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pursuant to the Federal Rules of Civil Procedure, the California Rules of Civil
Procedure or other applicable law. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction. The institution and
maintenance of an action for judicial relief or pursuit of a provisional or
ancillary remedy shall not constitute a waiver of the right of any party,
including, without limitation, the plaintiff, to submit the controversy or claim
to arbitration if any other party contests such action for judicial relief.
(e) Discovery. In any arbitration proceeding discovery will be
permitted in accordance with the Rules. All discovery shall be expressly limited
to matters directly relevant to the dispute being arbitrated and must be
completed not later than 20 days before the hearing date and within 180 days of
the filing of the dispute with the AAA. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party's presentation and that no alternative means for
obtaining information is available.
(f) Class Proceedings and Consolidations. The resolution of any
dispute arising pursuant to the terms of this Agreement shall be determined by a
separate arbitration proceeding, and such dispute shall not be consolidated with
other disputes or included in any class proceeding.
(g) Payment of Arbitration Costs and Fees. The arbitrator shall award
all costs and expenses of the arbitration proceeding.
(h) Real Property Collateral; Judicial Reference. Notwithstanding
anything herein to the contrary, no dispute shall be submitted to arbitration if
the dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single-action rule of California,
thereby agreeing that all indebtedness and obligations of the parties, and all
mortgages, liens and security interests securing such indebtedness and
obligations, shall remain fully valid and enforceable. If any such dispute is
not submitted to arbitration, the dispute shall be referred to a referee in
accordance with California Code of Civil Procedure Section 638 et seq., and this
general reference agreement is intended to be specifically enforceable in
accordance with said Section 638. A referee with the qualifications required
herein for arbitrators shall be selected pursuant to the AAA's selection
procedures. Judgment upon the decision rendered by a referee shall be entered in
the court in which such proceeding was commenced in accordance with California
Code of Civil Procedure Sections 644 and 645.
(i) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Loan Documents or any relationship between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first written above.
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XXXXX SURGICAL COMPANY
By: /s/ Xxxx Xxxx
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Name: Xxxx Xxxx
-----------------------------
Title: Chief Financial Officer
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XXXXX FARGO BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxx
-------------------------------
Name: Xxxxx X. Xxx
-----------------------------
Title: Vice President
----------------------------
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