LOAN AGREEMENT
by and between
BIOSYNTECH CANADA INC.
-and-
BUSINESS DEVELOPMENT BANK OF CANADA
--------------------------------------------------------------------------------
$2,500,000 LOAN
--------------------------------------------------------------------------------
Dated as of June 26th, 2002
TABLE OF CONTENTS
Page
--------------------------------------------------------------------------------
1. INTERPRETATION...................................................3
2. THE LOAN.........................................................5
3. INTEREST.........................................................5
4. REPAYMENTS.......................................................5
5. SECURITY AND GUARANTEES..........................................6
6. REPRESENTATIONS AND WARRANTIES...................................7
7. AFFIRMATIVE COVENANTS............................................9
8. NEGATIVE COVENANTS..............................................11
9. REPORTING REQUIREMENTS..........................................12
10. DEFAULTS........................................................13
11. DECISIONS, WAIVERS AND AMENDMENTS...............................14
12. MISCELLANEOUS...................................................14
13. NOTICES.........................................................16
INTERVENTION OF THE GUARANTORS..............................................19
LOAN AGREEMENT entered into as of June 26th, 2002 at Montreal, Quebec
AMONG: BIOSYNTECH CANADA INC., a corporation
incorporated under the Canada Business
Corporations Act and having its head office at
000 Xxxxxx-Xxxxxxxx Xxxx., Xxxxx, Xxxxxxxx xx
Xxxxxx, X0X 0X0,
(the "Borrower"),
AND: BUSINESS DEVELOPMENT BANK OF CANADA, a
corporation incorporated under the Business
Development Bank of Canada Act having a place an
office at 0 Xxxxx Xxxxx Xxxxx, xxxxx 0000,
Xxxxxxxx, Xxxxxxxx of Quebec, H3B 5E7,
(the "Lender");
WHEREAS the Borrower has requested that the Lender provide to the Borrower a
loan in the amount of $2,500,000 in Canadian Dollars; and
WHEREAS the Lender has agreed to provide said loan to the Borrower subject to
the terms and conditions of this Agreement;
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. INTERPRETATION
1.1 Definitions
-----------
In this Agreement, unless the context otherwise requires,
1.1.1 "Business" means the business presently and heretofore
carried on by the Borrower, BSC and BSE, including
research and development in the field of biomaterials
related to tissue engineering, therapeutic delivery and
instrumentation;
1.1.2 "Business Day" means a day, other than a Saturday or
Sunday, on which Canadian chartered banks are open for
business in Montreal;
1.1.3 "Dollar" and the symbol "$" mean lawful money of Canada;
1.1.4 "Loan Maturity Date" means 12:01 AM on February 15, 2006;
3
1.1.5 "Default" means any event or circumstance which
constitutes an event of default under Section 10.1 or
which, upon lapse of time or the giving of a notice or
both, would constitute such an event of default;
1.1.6 "Guarantee" means any obligation, contingent or not,
directly or indirectly guaranteeing any liability or
indebtedness of any person or protecting a creditor of
such person from a loss in respect of any such liability
or indebtedness;
1.1.7 "Guarantors" means any person that has provided a
Guarantee or Lien as security for the obligations of the
Borrower as required by this Agreement;
1.1.8 "Intellectual Property" means all the know-how, data,
biological materials, inventions, other proprietary
information and technology, trade secrets, copyright,
service marks, trade names, trade marks, patents, patent
applications, both domestic and foreign, whether licensed
or owned, used in whole or in part in or required for the
proper carrying on of the Business as it is presently
being carried on;
1.1.9 "Lender" means the Business Development Bank of Canada
that is a signatory to this Agreement and any other person
which becomes a Lender by way of an assignment made
pursuant to Section 12.7;
1.1.10 "Lien" means any priority, right of preference, lien,
hypothec, security interest, mortgage, security trust
(including any deemed or statutory trust), title retention
agreement, sale with right of redemption, leasing
agreement, assignment by way of security and any other
agreement (regardless of form) which is intended to secure
the payment of an obligation;
1.1.11 "Material Adverse Change" means a change in the financial
condition, Business, operations or prospects of the
Borrower, BSI or BSE that would reasonably be expected to
have a material adverse effect on the ability of the
Borrower to perform its obligations hereunder;
1.1.12 "Person(s)" includes any individual, natural person, sole
proprietorship, partnership, limited partnership,
unincorporated association, unincorporated syndicate,
unincorporated organisation, trust, body corporate, and a
natural person in his or her capacity as trustee,
executor, administrator, or other legal representative;
1.1.13 "Security" means the security, Guarantees and
subordinations granted or to be granted to or for the
benefit of the Lender pursuant to this Agreement and
"Security Document" means any document evidencing any of
the foregoing;
4
1.1.14 "Subsidiary" means an entity controlled by another entity,
it being understood that (i) an entity is deemed to
control a legal person if such entity (or such entity
together with another entity affiliated with it) holds
outstanding shares of the legal person carrying votes in
sufficient number to elect a majority of the board of
directors of the legal person, (ii) an entity is deemed to
control a partnership if such entity (or such entity
together with another entity affiliated with it) holds
more than 50% in value of the equity of the partnership,
and (iii) a subsidiary of an entity which is itself a
subsidiary of another entity is deemed to be a subsidiary
of that other entity.
2. THE LOAN
--------
2.1 Loan
----
The Lender hereby agrees, subject to the terms and conditions hereof, to provide
to the Borrower a loan in the amount of $2,500,000 (the "Loan"), the
disbursement of which shall be conditional to the prior execution and
publication of the Security. The obligation of the Borrower to repay the Loan is
further evidenced by the promissory note attached hereto as Exhibit "A".
2.2 Purpose of the Loan
-------------------
The Borrower shall use the Loan exclusively to acquit expenses related to its
clinical development efforts and for its working capital.
3. INTEREST
--------
3.1 Interest on Loan
----------------
The Loan shall bear interest until repayment at a rate of ten percent (10%) per
annum, compounded monthly and calculated daily on the basis of a 365-day year.
The Borrower shall pay all accrued interest on the Loan Maturity Date.
3.2 Interest on Arrears
-------------------
Any amount (including principal or interest) which is not paid when due shall
bear interest at twenty five percent (25%) per annum, compounded monthly and
payable on demand.
4. REPAYMENTS
----------
4.1 Repayment of the Loan
---------------------
The Borrower shall repay the Loan in its entirety on the Loan Maturity Date.
5
4.2 Optional Repayment
------------------
The Borrower may at any time make full or partial repayment of the Loan prior to
the Loan Maturity Date without incurring any penalty. Any partial repayments
will be: (i) made on the first day of any month; (ii) in amounts of no less than
one hundred thousand dollars ($100,000); and (iii) applied first to interest and
fees and then to the capital.
4.3 Place of payment
----------------
Unless otherwise specified, all payments to be made by the Borrower shall be
made to the Lender at 0 Xxxxx Xxxxx Xxxxx, xxxxx 0000, Xxxxxxxx, Xxxxxxxx of
Quebec, H3B 5E7, in funds which are immediately available.
4.4 Currency
--------
All amounts payable under this Agreement shall be paid in Canadian Dollars.
4.5 Payments Net of Taxes
---------------------
If, due to the existence of any tax, the Lender is compelled by law to make any
withholding or deduction in respect of any payment due or made by the Borrower,
the latter shall pay to the Lender such additional amount as shall be necessary
in order that the payment actually received is equal to the payment which would
otherwise have been received in the absence of such withholding or deduction.
5. SECURITY AND GUARANTEES
-----------------------
5.1 Security by the Borrower BSI and BSE
------------------------------------
To secure the obligations of the Borrower under the Loan, the following Persons
shall provide for the Benefit of the Lender the security described hereinafter:
5.1.1 the Borrower has granted Lender a hypothec on the
universality of its present and future moveable and
immovable property excluding patents;
5.1.2 the Borrower has granted Lender a first ranking hypothec
on the immovable consisting of the land and building
bearing civic address 000 Xxxxxx-Xxxxxxxx Xxxx., Xxxxx,
Xxxxxx;
5.1.3 the Borrower has granted Lender a hypothec on the
universality of its moveable property, including
machinery, equipment, furniture and fixtures, subject to
the encumbrances listed in Schedule "A" totalling two
hundred forty thousand dollars ($226,000); and
6
5.1.4 the Borrower has granted Lender a moveable hypothec on its
present and future accounts receivable, subject to the
prior rank of the National Bank of Canada described in
Schedule "A".
Such security shall consist of hypothecs or equivalent security in jurisdictions
other than Quebec.
5.2 Guarantees
----------
5.2.1 BioSyntech, Inc. ("BSI") and Bio Syntech Europe S.A.R.L.
("BSE") have jointly and severally guaranteed each and
every obligation of the Borrower pursuant to the present
Agreement and such Guarantee shall be for an unlimited
amount or for such lower amount as permitted under
applicable law and as agreed upon by the Lender acting
reasonably; and
5.2.2 Dr. Amine Selmani ("Selmani") has granted a personal
guarantee of each and every obligation of the Borrower
pursuant to the present Agreement and such Guarantee shall
be for a maximum amount of two hundred fifty thousand
dollars ($250,000).
5.3 Validity, Perfection and Priority of the Security
-------------------------------------------------
The Borrower covenants that the Security shall at all times be valid, perfected
and first ranking, except for Liens specifically permitted hereunder and listed
in Schedule "A", and that the Guarantees in favour of the Lender shall at all
times be valid and enforceable against the Guarantors. The Borrower shall do all
things required in order that the Security constantly affects the property
intended to be covered thereby.
5.4 Evidence of the Security
------------------------
The Security Documents shall be on terms and conditions satisfactory to the
Lender and shall be accompanied by evidence of the perfection of any security
and by legal opinions satisfactory to the Lender.
6. REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower, BSI and BSE each represent and warrant together with Selmani, the
latter representing and warranting to his knowledge, that:
6.1 Good Standing
-------------
The Borrower is a duly incorporated corporation, in good standing under all
applicable laws and regulations, and holds all permits and authorisations
required for the conduct of its Business and the use of its property (including
permits and authorizations required under environmental laws and regulations),
except to the extent that a failure to be in good standing under a law or
7
regulation or to hold a permit or an authorization would not materially and
adversely affect their financial condition, their ability to conduct their
Business or the ability of the Borrower to perform its obligations under this
Agreement.
6.2 Defaults
--------
The Borrower is not in default under the contracts to which it is a party and is
not in violation of any law or regulation applicable to its property or to the
conduct of its Business (including environmental laws and regulations) nor are
they in violation of the conditions of the permits and authorizations referred
to in Section 6.1, save for defaults or violations which would not materially
and adversely affect its financial condition, its ability to conduct its
Business or its ability to perform its obligations under this Agreement. This
Agreement constitutes valid and enforceable obligations of the Borrower. Neither
the execution and delivery of this Agreement nor the compliance with the terms
and provisions hereof will violate any law or regulation applicable to the
Borrower, any of the articles or by-laws of the Borrower or will result in a
breach of any of the terms, conditions or provisions of any contract to which it
is a party or by which it is bound.
6.3 Litigation
----------
There is no litigation, legal proceeding, claim or labour dispute involving the
Borrower or any of its Subsidiaries or their property which could materially and
adversely affect the financial condition of the Borrower, its ability to conduct
its Business or its ability to perform its obligations under this Agreement.
6.4 Environment
-----------
The Borrower is not aware of any fact or event which could give rise to any
environmental liability by the Borrower or any of its Subsidiaries which would
materially and adversely affect its financial condition, its ability to conduct
its Business or its ability to perform its obligations under this Agreement.
6.5 Intellectual Property
---------------------
The Borrower BSI and BSE own, or hold licences in respect of, all Intellectual
Property, whether owned by, or licensed in favour of, the Borrower BSI or BSE.
6.6 Title to Assets
---------------
The assets of the Borrower are not subject to any title defect or restriction
which could materially and adversely affect their value or prevent their normal
use.
6.7 Liens
-----
The assets of the Borrower, BSI and BSE are free and clear of any Lien, save for
Liens specifically permitted hereunder and listed in Schedule "A".
8
6.8 Tax Returns
-----------
Each of the Borrower BSI and BSE has filed in a timely fashion all tax returns
which were required to be filed under fiscal laws and such returns have been
prepared in compliance with applicable laws, regulations and accounting
principles. Each of the Borrower BSI and BSE has paid all taxes owed and has
made adequate provisions for the payment of taxes not yet due.
6.9 Financial Information
---------------------
The last financial statements dated December 31. 2001 of the Borrower truly and
accurately reflect financial condition of the Borrower, BSI and BSE as of the
date they were made and they have been prepared in accordance with generally
accepted accounting principles; no event or circumstance has occurred since the
date of said financial statements which could adversely affect the financial
condition of the Borrower and which has not been disclosed to the Lender. The
information delivered by the Borrower to the Lender to induce them to make the
Loan available to the Borrower is true and complete in all material respects and
did not omit to state any material fact necessary to keep the statements
contained therein from being misleading.
6.10 Fiscal Year
-----------
The fiscal year of the Borrower ends on March 31 of each year.
6.11 Corporate Structure and Location of Assets
------------------------------------------
As at the date hereof, (i) the corporate structure of the Borrower, BSI and BSE,
(ii) the addresses of the registered and chief executive offices of the
Borrower, BSI and BSE and (iii) the location of their respective assets are as
specified in Schedule "B".
7. AFFIRMATIVE COVENANTS
---------------------
7.1 Corporation existence and mergers
---------------------------------
Each of the Borrower, BSI and BSE shall maintain its corporate existence, shall
not effect any amalgamation or merger nor undertake any dissolution or
winding-up procedures and it shall cause each of its Subsidiaries to do
likewise, the whole without the prior written authorization of the Lender.
7.2 Compliance with Laws and Regulations
------------------------------------
Each of the Borrower, BSI and BSE shall comply with all laws and regulations
applicable to it and its Business and assets including environmental laws and
regulations and shall file all returns, financial statements and reports
required under said laws and regulations.
9
7.3 Conduct of Business and Property
--------------------------------
Each of the Borrower, BSI and BSE shall conduct its Business and own and manage
its property in a prudent and efficient manner and in compliance with applicable
laws and regulations (including environmental laws and regulations) and shall
pay all salaries, taxes (including GST and PST), assessments, deductions at
source and all other government imposed fees or charges as they become due.
7.4 Insurance
---------
Each of the Borrower, BSI and BSE shall insure and keep insured its property and
its Business for their full insurable value and shall hold civil liability
insurance, as would a prudent administrator of a company such as the Borrower,
with similar assets and activities and acceptable to the Lender. The Lender
shall be named as the loss payee on all insurance policies relating to the
property covered by the Security and shall also cause such policies to include a
mortgage clause.
7.5 Obligations under Contracts
---------------------------
Each of the Borrower, BSI and BSE shall perform all its obligations under any
contract to which it is a party and which is material to the operation of its
Business or the ownership of its property as well as acquit all its debts as
they become due.
7.6 Books and Records
-----------------
Each of the Borrower, BSI and BSE shall keep and maintain such books of account
and other accounting records necessary for the conduct of its Business, as would
a prudent administrator.
7.7 Approvals
---------
Each of the Borrower, BSI and BSE shall, at all times, hold all permits,
authorizations and approvals necessary for the conduct of its Business and the
ownership of its property.
7.8 Pension Funds
-------------
Each of the Borrower, BSI and BSE shall perform its obligations under pension
plans and ensure that each such plan is fully funded on an ongoing and
termination basis.
7.9 Utilization of the Loan
-----------------------
The Borrower shall use the Loan for the purposes for which they have been
granted, and for no other purpose.
10
7.10 Representations and Warranties
------------------------------
Each of the Borrower, BSI and BSE shall use its best efforts to ensure that all
representations and warranties made in Article 5 remain true and accurate during
the whole term of this Agreement and shall promptly notify the Lender of any
event or circumstances which would result in such representations ceasing to be
true and accurate and of the steps taken to remedy same.
8. NEGATIVE COVENANTS
------------------
8.1 Negative Pledge
---------------
Each of the Borrower, BSI and BSE shall not create or permit any Lien to exist
on any of its present and future property without obtaining the prior written
approval of the Lender, which shall not be unreasonably withheld. However, such
prohibition does not apply to the Security and to the following Liens:
8.1.1 A Lien arising by operation of law, to the extent that
such Lien has not become enforceable; and
8.1.2 The Liens identified in Schedule "A".
Furthermore, each of the Borrower, BSI and BSE shall not enter into or change
the terms of any agreement or transaction related to the sale, transfer,
assignment, hypothecation, mortgaging, pledging, charging, encumbering or
licensing of Intellectual Property or distribution rights thereof, any of which
is either (i) outside the normal course of business, (ii) not approved by the
Board, or (iii) is not with a party at arm's length, without obtaining the prior
written approval of the Lender, which shall not be unreasonably withheld.
8.2 Acquisitions and Investments
----------------------------
Except with the consent of the Lender, which shall not be unreasonably withheld,
each of the Borrower, BSI and BSE shall not make, any acquisition, either by way
of a purchase of assets or of shares or by way of an amalgamation or merger or
otherwise, nor shall each of the Borrower, BSI and BSE make any investment in
any other person or entity, whether by way of purchasing or subscribing
securities or by way of loans or in any other manner.
8.3 Capital Expenditures
--------------------
Each of the Borrower, BSI and BSE shall not make tangible capital expenditures
nor enter into or execute any contract or transaction constituting a capital
expenditure in excess of seventy-five thousand dollars ($75,000) without the
prior written approval of the Lender, which shall not be unreasonably withheld,
except as pre-approved by the board in the annual business plan of the Borrower
or if, in the opinion of the BDC, such expenditure has been properly financed.
11
8.4 Dispositions or Displacement of Assets
--------------------------------------
Each of the Borrower, BSI and BSE shall not sell, transfer, lease or dispose of
any of their property (otherwise than inventory in the ordinary course of
business) without the prior written approval of the Lender, which shall not be
unreasonably withheld. Should any of the Borrower, BSC or BSE displace any of
the assets identified in Schedule "B" to a location other than that identified
in Schedule "B" as the location of the asset, the Borrower, BSC and BSE shall
immediately notify the Lender by specifying what assets were displaced and to
what exact location they have been transferred to.
8.5 Indebtedness
------------
The Borrower BSI and BSE shall not incur any debt other than the Loan or the
indebtedness secured by a Lien identified in Schedule "A" without obtaining the
prior written consent of the Lender, which shall not be unreasonably withheld.
8.6 Dividends and Distributions
Each of the Borrower, BSI and BSE shall not redeem, purchase or repurchase for
cancellation or retirement of any of their securities, or the enter into any
agreement or make any offer or grant any right capable of becoming an agreement
to issue, redeem or repurchase their securities or declare or pay any dividend,
distribution, or repayment of capital, whether in cash, in stock or otherwise,
on any of their securities.
8.7 Nature of the Operations
------------------------
Each of the Borrower, BSI and BSE shall not change the nature of its Business.
9. REPORTING REQUIREMENTS
----------------------
The Borrower shall deliver forthwith to the Lender: (i) within ninety (90) days
of its financial year end, one copy of the audited annual financial statements
which shall be prepared on a consolidated basis by its auditors, including the
preparation of a balance sheet and statements of income, retained earnings and
changes in financial position, together with all supporting schedules, as well
as an auditor's report with respect to any non-arm's length transactions (ii)
within forty-five (45) days of the end of each quarter, one copy of the internal
financial statements on a consolidated and non-consolidated basis (including the
balance sheets, the statement of earnings and the statement of changes in the
financial position) and the president's detailed report on the operations; (iii)
within thirty (30) days of the beginning of each fiscal year, a copy of its
annual business plan which will include cash flow projections, detailed pro
forma balance sheets, income statements and statements of changes in financial
position for the Borrower prepared in accordance with generally accepted
accounting principles on a consolidated basis together with such explanations,
notes and information which in the reasonable opinion of the Borrower explains
and supplements the information so provided, as well as a research and
development plan and budget, a capital expenditure budget and an annual
operating expenditure budgets; and (iv) any other financial or other information
12
concerning the affairs of the Borrower or its Subsidiaries which the Lender may
reasonably request;
10. DEFAULTS
--------
10.1 Events of Default
-----------------
Each of the following events or circumstances shall constitute an event of
default:
10.1.1 if the Borrower fails to pay when due any amount payable
pursuant to this Agreement and, in respect of an amount
payable as interest or fee, if such failure continues for
three Business Days;
10.1.2 if any of the Borrower, BSI or BSE ceases to carry on its
Business or becomes insolvent or bankrupt, or if a
liquidator is appointed in respect of any of the Borrower,
BSI or BSE;
10.1.3 if any Guarantor attempts to terminate its Guarantee;
10.1.4 if any of the representations and warranties made in this
Agreement, or if a document supplied by any of the
Borrower, BSI or BSE in connection with this Agreement
proved to be erroneous in any material respect;
10.1.5 if any of the Borrower or the Guarantors otherwise fails
to fulfill any of its obligations under this Agreement,
any Security Document, the Warrant Subscription Agreement
intervened the date hereof by and between BSI and the
Lender, the Investor Rights Agreement Rights Agreement
intervened the date hereof by and between the Lender, the
Borrower and other related parties, or the Undertaking
Agreement intervened the date hereof by and between the
Lender, the Borrower and other related parties, and if
such failure is not remedied within ten (10) Business Days
after a notice of such failure is given by the Lender;
10.1.6 if any person or group of persons acting in concert were
to acquire shares of the Borrower carrying sufficient
votes to elect a majority of the board of directors of the
Borrower except if the Lender consents to such
acquisition;
10.1.7 if Selmani and/or 0000-0000 Xxxxxx Inc. sell, assign,
transfer or in any other way alienate or encumber more
than twenty percent (20%) of the shares of BSI which they
hold or control in the aggregate;
10.1.8 if Selmani and/or any officer of the Borrower, BSI or BSE
is charged with any professional misconduct or indictable
offence, or any act of fraud or theft with respect to the
Borrower, BSI or BSE; or
13
10.1.9 if any of the Borrower, BSI or BSE are charged with any
penal offence, act of fraud or unethical behaviour.
10.2 Remedies
--------
Upon the occurrence of an event of default, the Lender may, upon giving a notice
to the Borrower:
10.2.1 declare all indebtedness of the Borrower hereunder to be
immediately payable and demand immediate payment of the
whole or part of same; and
10.2.2 exercise all of the rights and remedies of the Lender,
including their rights and remedies under the Security.
11. DECISIONS, WAIVERS AND AMENDMENTS
---------------------------------
11.1 Amendments and Waivers with the Approval of the Lender
------------------------------------------------------
Subject to the other provisions of this Article, the provisions of this
Agreement and of any Security Document may only be amended or waived, and
consent may only be given by an instrument in writing signed by the Lender.
12. MISCELLANEOUS
-------------
12.1 Time
----
Except where otherwise indicated in this Agreement, any reference to time shall
mean local time in the City of Montreal, province of Quebec.
12.2 Headings and Table of Contents
------------------------------
The headings and the Table of Contents are inserted for convenience of reference
only and shall not affect the construction or interpretation of this Agreement.
12.3 Governing Law
-------------
This Agreement shall be governed by and construed in accordance with laws of the
province of Quebec and the laws of Canada applicable therein.
12.4 Previous Agreements
-------------------
This Agreement supersedes any previous agreement in connection with the Loan.
12.5 Books and Accounts
------------------
The Lender shall keep books and accounts evidencing the transactions made
pursuant to this Agreement. Absent manifest error, such books and accounts shall
be deemed to represent accurately such transactions and the indebtedness of the
Borrower under the Loan.
14
12.6 Unassignability
---------------
The Borrower may not assign its rights or the amounts to be received by it under
this Agreement.
12.7 Assignments and Participations
------------------------------
12.7.1 The Lender (the "Assignor") may assign, in whole or in
part, its Commitment to any other financial institution
(the "Assignee"). Upon such assignment becoming effective,
the Assignee shall become a Lender and shall benefit from
the rights and be liable for the obligations of the
Assignor, proportionally to the assigned Commitment, and,
to the same extent, the Assignor shall be released from
its obligations. The Assignor and the Assignee shall be
liable for all expenses incurred by the Lender in
connection with such assignment.
12.7.2 Concurrently with any assignment in favour of an Assignee
which is not, at the time of the assignment, party to this
Agreement, each Guarantor shall reiterate its Guarantee in
favour of the Assignee.
12.8 Expenses
--------
The Borrower shall pay the professional expenses, including legal fees and
reasonable expenses, incurred by the Lender in connection with the
administration of this Agreement and any Security Document, as well as the
expenses incurred by the Lender in connection with or resulting from the
exercise of any of their rights and remedies hereunder, or thereunder, as the
case may be.
12.9 No waiver
---------
The omission by the Lender to exercise any of its rights shall not be deemed to
be a waiver by same of the exercise of any such right subsequently. The omission
by the Lender to notify the Borrower of the occurrence of a Default shall not be
deemed to be a renunciation to the rights of the Lender to avail itself of such
Default.
12.10 Notice of Default
-----------------
The Borrower shall be in default upon the occurrence of any event of default
provided in Article 10, without the need of any notice or demand, save for those
provided in said Article 10.
15
12.11 Set-off
-------
The Lender is authorized at any time to set off and to apply any and all monies
held for the Borrower, BSI or BSE against any amount owed and payable by the
Borrower under this Agreement.
12.12 Indemnification
---------------
12.12.1 If any law, regulation, administrative decision or
guideline or decision of a Court (i) increases the cost of
the Loan for the Lender or (ii) reduces the income
receivable by the Lender from the Loan (including, without
limitation, by reason of the imposition of reserves, taxes
or requirements as to the capital adequacy of the Lender),
the Lender may send to the Borrower a statement indicating
the amount of such additional cost or reduction of income;
in the absence of manifest error, this statement shall be
conclusive evidence of the amount of such additional cost
or reduction of income and the Borrower shall pay
forthwith said amount to the Lender.
12.12.2 Each of the Borrower, BSI and BSE shall indemnify the
Lender for any loss suffered and costs incurred by same as
a result of non-compliance by the Borrower, BSI or BSE
with any environmental laws and regulations.
12.13 Inconsistency
-------------
In the event of inconsistency between this Agreement and any Security Document,
the provisions of this Agreement shall prevail.
13. NOTICES
-------
13.1 Sending of notices
------------------
Unless provided otherwise, any notice to be given to a party in connection with
this Agreement or with a Guarantee shall be given in writing and shall be given
by personal delivery, by registered mail or by telecopier, addressed to the
recipient at the address indicated on the first page hereof or at such other
address as may be notified by such party to the others pursuant to this Article.
In the case of a notice to Bio Syntech Canada Inc. at:
000 Xxxxxx-Xxxxxxxx Xxxx., Xxxxx, Xxxxxxxx xx Xxxxxx, X0X 0X0
Attention of: President
Telephone number: 000 000-0000
Fax number: 000 000-0000
In the case of a notice to BioSyntech, Inc. at:
000 Xxxxxx-Xxxxxxxx Xxxx., Xxxxx, Xxxxxxxx xx Xxxxxx, X0X 0X0
Attention of: President
Telephone number: 000 000-0000
Fax number: 000 000-0000
16
In the case of a notice to Bio Syntech Europe S.A.R.L. at:
000 Xxxxxx-Xxxxxxxx Xxxx., Xxxxx, Xxxxxxxx xx Xxxxxx, X0X 0X0
Attention of: President
Telephone number: 000 000-0000
Fax number: 000 000-0000
In the case of a notice to Dr. Amine Selmani at:
000 Xxxxxx-Xxxxxxxx Xxxx., Xxxxx, Xxxxxxxx xx Xxxxxx, X0X 0X0
Attention of: Dr. Amine Selmani
Telephone number: 000 000-0000
Fax number: 000 000-0000
In the case of a notice to the Business Development Bank of Canada at:
0 Xxxxx Xxxxx-Xxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxxxx of Xxxxxx, X0X 0X0
Attention of: Xxxx Xxxxxxxxx
Telephone number: 000 000 0000
Fax number: 000 000 0000
13.2 Receipt of notices
------------------
Any notice given by personal delivery shall be conclusively deemed to have been
given upon such delivery and, if given by registered mail, on the third (3rd)
Business Day following the mailing thereof and, if given by telecopier, on the
day of transmittal if such transmission occurs before 3:00 p.m. on a Business
Day, or on the following Business Day if such transmission is effected on a day
which is not a Business Day or after 3:00 p.m. on a Business Day. If the postal
system or telecopy transmission system suffers any interruptions by way of a
strike, slow-down, a force majeure, or any other cause, the party giving the
notice shall do so by personal delivery or by other methods of communication not
affected by any difficulties, so as to ensure that such notice shall be
effectively received by its recipient.
(signatures are on following page)
17
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed as of the date and year first above written.
BIO SYNTECH CANADA INC.
------------------------------------
Name:
Title:
BUSINESS DEVELOPMENT BANK OF CANADA
-------------------------------------
Name:
Title:
18
INTERVENTION OF THE GUARANTORS
Each of BSI and BSE hereby intervene to make the representations, warranties and
covenants set out in Sections 6, 7 and 8 of the present Agreement.
BIOSYNTECH, INC.
------------------------------
Name:
Title:
BIO SYNTECH EUROPE S.A.R.L.
------------------------------
Name:
Title:
EXHIBIT "A"
See Promissory Note attached hereto
EXHIBIT A
PROMISSORY NOTE
CAN$2,500,000 June 26th, 2002
10% Interest
1. For value received, BIO SYNTECH CANADA INC. (the "Borrower"), hereby
promises to pay to THE BUSINESS DEVELOPMENT BANK OF CANADA (the
"Lender"), $2,500,000 (two million five hundred thousand dollars)
with interest at a rate of ten percent (10%) per annum, compounded
monthly and calculated daily on the basis of a 365-day year
(collectively: the "Loan").
2. The Debtor shall repay the Loan at 0 Xxxxx Xxxxx Xxxxx, xxxxx 0000,
Xxxxxxxx, Xxxxxxxx xx Xxxxxx, X0X 0X0 no later than 12:01 AM on
February 15, 2006.
3. Any amount (including principal or interest) which is not paid when
due shall bear interest at twenty five percent (25%) per annum,
compounded monthly and payable on demand.
4. The parties hereto covenant and agree to sign such other papers,
cause such meetings to be held, resolutions passed and by-laws
enacted, exercise their vote and influence, do and perform and cause
to be done and performed such further and other acts and things as
may be necessary or desirable in order to give full effect to this
Agreement and every part thereof.
5. This Agreement shall be governed by the laws of the Province of
Quebec as well as the laws of Canada applicable therein.
6. The dollar amounts referred to in this Agreement shall be in
Canadian funds.
7. The division of this Promissory Note into articles, sections and
subsections are for convenience of reference only and shall not
affect the interpretation or construction hereof.
8. Except for the Loan Agreement which intervened by and between the
parties on the date hereof, this Promissory Note shall constitute
the entire agreement between the parties hereto with respect to all
of the matters herein and this Promissory Note shall not be amended
except by a memorandum in writing signed by all of the parties
hereto, and any amendment thereof shall be null and void and shall
not be binding upon any party which has not given its consent as
aforesaid.
9. The Lender is free to assign, transfer or sell its right in and
pursuant to the present Promissory Note.
10. It is at the express consent of the parties that the present
agreement be written in english although certain documents may be
written in french. C'est a la demande expresse des parties que cette
convention soit redigee en anglais quoi que certains documents
puissent etre rediges en francais.
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement at the date and place referred to above.
(Borrower) BIO SYNTECH CANADA INC.
/s/ Amine Selmani
---------------------------
Name: Amine Selmani
Title: President
(Lender) BUSINESS DEVELOPMENT BANK OF CANADA
/s/ Xxxx Xxxxxxxxx
---------------------------
Name: Xxxx Xxxxxxxxx
Title: Director
SCHEDULE A
Liens - Paragraphs 5.1, 5.3, 6.7, 6.11, 8.1.2, 8.5
-----
5.1.3 Conventional Hypothec without delivery in favour of
National Bank of Canada affecting all movable, corporeal
and incorporeal, present and future of the Borrower, in
the amount of 240 000$, including an additional hypothec
of 40 000$, published on the Register of Personal and
Movable Real Rights ("RPMRR") on July 8, 1998 under
number 00-0000000-0000.
5.1.4. A) Conventional Hypothec without delivery in favour of
National Bank of Canada affecting all claims, present
and future, of the Borrower in the amount of 900 000$,
including an additional hypothec of 150 000$ published
on the RPMRR on November 17, 1998 under number
00-0000000-0000;
B) Conventional Hypothec without delivery in favour of
National Bank of Canada affecting all claims and stock,
present and future of the Borrower, in the amount of 60
000$, including an additional hypothec of 10 000$,
published on the RPMRR on November 17, 1998 under number
00-0000000-0000, and rectified by the inscription number
00-0000000-0000.
OTHER LIENS
-----------
Hypothecs published at the RPMRR
--------------------------------
1. Conventional Hypothec without delivery in favour of National Bank of
Canada affecting sums in a specific account in the name of the
Borrower (no. 000000000000 at National Bank of Canada) or any other
account in replacement thereof, in the amount of 75 000$, published
on the RPMRR on July 28, 1999 under number 00-0000000-0000;
2. Conventional Hypothec without delivery in favour of National Bank of
Canada affecting 880 000 shares of Xxxx Disney US represented by
certificate nomber P/C 11j102 in the name of the Borrower in the
amount of 300 000$, published on the RPMRR on May 7th, 2002 under
number 00-0000000-0000;
3. Three (3) Conventional Hypothec without delivery in favour of Compaq
Financial Services on the equipment listed in schedules of the
leases entered between Compaq Financial Services and BioSyntech Inc.
in the respective amounts of 49 083,45$, 41 574,95$ and 10 411,75$
published on the RPMRR on October 19, 2001 under numbers
00-0000000-0000, 00-0000000-0000 and 00-0000000-0000;
4. Conventional Hypothec without delivery in favour of National Bank of
Canada affecting the universality of equipment, tools, furniture,
etc. of the Borrower in the amount of 270 000$, including an
additional hypothec of 45 000$ published on the RPMRR on July 8,
1998 under number 00-0000000-0000; TO BE RADIATED - UNDERTAKING FROM
THE NATIONAL BANK OF CANADA
5. Conventional Hypothec without delivery in favour of National Bank of
Canada affecting the universality of the Borrower's movable, in the
amount of 240 000$, including an additional hypothec of 40 000$
published on the RPMRR on July 28, 1999 under number
00-0000000-0000; TO BE RADIATED - UNDERTAKING FROM THE NATIONAL BANK
OF CANADA
6. Conventional Hypothec without delivery in favour of Multivesco Inc.
granted by SURFACE TECH INC. affecting 225,000 common shares of
Lumenon Innovative Lightwave Tehcnologie Inc. for which the Borrower
is the debtor, in the amount of 750 000$, including an additional
hypothec of 125 000$ published on the RPMRR on June 9, 1999 under
number 00-0000000-0000;
Assets on lease hold Supplier Term
--------------------------------------------------------------------------------
Lab equipment Agilent Financial Services August 2002
Lab equipment Agilent Financial Services July 2002
Lab equipment Agilent Financial Services April 2004
Lab equipment Citicorp Vendor Finance July 2005
Lab equipment Citicorp Vendor Finance Dec 2004
Copier Pitney Xxxxx Leasing October 2004
Computers Services Financiers Compaq July 2003
Computers Services Financiers Compaq October 2003
Furniture National Leasing Group April 2004
Published at RPMRR
No. 00-0000000-0000
Expiration: March 21, 2005
Purification System Fidelity Leasing Group Published at RPMRR
No. 00-0000000-0000
Expiration : August 30, 2005
Telephone System Citicorp Vendor Finance Ltd Published at RPMRR
No. 00-0000000-0000
Expiration January 3, 2005
Car Daimlerchrysler (Debis) Canada Published at RPMRR
No. 00-0000000-0000
Expiration July 19, 2004
Lab Services Financiers Image Inc. Published at RPMRR
No. 00-0000000-0000
Expiration March 23 2004
Equipment Hewlett-Packard (Canada) Ltd Published at RPMRR
No. 00-0000000-0000
Expiration August 1, 2004
Equipment Hewlett-Packard (Canada) Ltd Published at RPMRR
No. 00-0000000-0000
Expiration August 1, 2004
Equipment Hewlett-Packard (Canada) Ltd Published at RPMRR
No. 00-0000000-0000
Expiration June 29, 2002
Charges published against the property bearing no. 000, Xxxxxx Xxxxxxxx, Xxxxx
-------------------------------------------------------------------------------
At the Registry Office of Laval
-------------------------------
A right of first refusal in favour of the City of Laval for any part of vacant
land forming part of the property (in conformity with the law " Loi sur les
immeubles industriels"). This right of first refusal does not apply in the event
of the sale of the whole property (land and buildings). This right is contained
in deed of sale by Ville de Laval unto 0000-0000 Xxxxxx inc. received before
Mtre Martial Xxxxxxxx, notary, on February 3, 1999, and published at the Land
Registry Office of Laval under number 0955967.
SCHEDULE B
CORPORATE STRUCTURE AND LOCATION OF ASSETS - Paragraph 6.11 and 8.4
BIOSYNTECH CANADA INC.
----------------------
Jurisdiction of incorporation: Quebec
Address of registered office: 000 Xxxxxx Xxxxxxxx Xxxx.
Xxxxx (Xxxxxx) X0X 0X0
Location of immovable assets : 000 Xxxxxx Xxxxxxxx Xxxx.
Xxxxx (Xxxxxx) X0X 0X0
Location of movable assets : 000 Xxxxxx Xxxxxxxx Xxxx.
Xxxxx (Xxxxxx) X0X 0X0
BIOSYNTECH, INC.
Jurisdiction of incorporation : Nevada
Address of registered office: 000 Xxxxxx Xxxxxxxx Xxxx.
Xxxxx (Xxxxxx) X0X 0X0
Location of immovable assets : N/A
Location of movable assets: 000 Xxxxxx Xxxxxxxx Xxxx.
Xxxxx (Xxxxxx) X0X 0X0
BIOSYNTECH EUROPE S.A.R.L.
--------------------------
Jurisdiction of incorporation : France
Address of registered office: 00, Xxxxxxx xx Xxxxxxx
00000,
Xxxxxxx, Xxxxxx
Location of immovable assets: N/A
Location of movable assets: N/A
