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EXHIBIT 10.1
ASPECT MEDICAL SYSTEMS, INC.
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
May 16, 2001
Fleet National Bank
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Gentlemen:
This letter agreement will set forth certain understandings between Aspect
Medical Systems, Inc., a Delaware corporation (the "Borrower") and Fleet
National Bank (the "Bank") with respect to Revolving Loans (hereinafter defined)
to be made by the Bank to the Borrower and Letters of Credit (hereinafter
defined) to be issued by the Bank on behalf of the Borrower. In consideration of
the mutual promises contained herein and in the other documents referred to
below, and for other good and valuable consideration, receipt and sufficiency of
which are hereby acknowledged, the Borrower and the Bank agree as follows:
I. AMOUNTS AND TERMS
1.1. REFERENCES TO DOCUMENTS. Reference is made to (i) that certain
$5,000,000 face principal amount promissory note (the "Revolving Note") of even
date herewith made by the Borrower and payable to the order of the Bank and (ii)
that certain Pledge Agreement (the "Pledge Agreement") of even date herewith
from the Borrower to the Bank. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to them in ss.7.1 hereof.
1.2. THE BORROWING; REVOLVING NOTE. Subject to the terms and conditions
hereinafter set forth, the Bank will make loans ("Revolving Loans") to the
Borrower, in such amounts as the Borrower may request, on any Business Day prior
to the first to occur of (i) the Expiration Date or (ii) the termination of the
within-described revolving financing arrangements pursuant to ss.5.2(b) or
ss.6.4(b); provided, however, that the aggregate principal amount of Revolving
Loans outstanding shall at no time exceed the Available Commitment. Within such
limit, and subject to the terms and conditions hereof, the Borrower may obtain
Revolving Loans, repay Revolving Loans and obtain Revolving Loans again on one
or more occasions. The Revolving Loans shall be evidenced by the Revolving Note.
The Borrower hereby irrevocably authorizes the Bank to make or cause to be made,
on a schedule attached to the Revolving Note or on the books of the Bank, at or
following the time of making each Revolving Loan and of receiving any payment of
principal, an appropriate notation reflecting such transaction and the then
aggregate unpaid principal balance of the Revolving Loans. The amount so noted
shall constitute presumptive evidence as to the amount owed by the Borrower with
respect to principal of the Revolving Loans. Failure of the Bank to make any
such notation shall not, however, affect any obligation of the Borrower or any
right of the Bank hereunder or under the Revolving Note.
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1.3. REPAYMENT; PREPAYMENT; RENEWAL. (a) The Borrower shall repay in full
all Revolving Loans and all interest thereon upon the first to occur of: (i) the
Expiration Date or (ii) an acceleration under ss.5.2(a) and termination of the
within-described revolving financing arrangements pursuant to ss.5.2(b)
following an Event of Default.
(b) The Borrower may be required to prepay Revolving Loans from time to
time in accordance with the terms of the Pledge Agreement. In addition, if at
any time the Available Commitment is in an amount which is less than the
principal amount of all Revolving Loans then outstanding, the Borrower will
forthwith prepay so much of the Revolving Loans as may be required so that the
principal amount of all Revolving Loans then outstanding will not exceed the
Available Commitment.
(c) The Borrower may prepay, at any time, without penalty or premium, the
whole or any portion of any Floating Rate Loan; provided that on the date of
such prepayment the Borrower pays all interest on such Floating Rate Loan (or
portion thereof) so prepaid accrued to the date of such prepayment.
(d) Subject to ss.1.9, the Borrower may prepay the whole or any portion of
any LIBOR Loan; provided that (i) the Borrower gives the Bank not less than
three (3) Business Days' prior written notice of its intent so to prepay, (ii)
the Borrower pays all interest on each LIBOR Loan (or portion thereof) so
prepaid accrued to the date of such prepayment, (iii) any voluntary prepayment
with respect to a LIBOR Loan (if less than the entire principal amount of such
LIBOR Loan) shall be in a principal amount which is an integral multiple of
$100,000 (provided that, in any event, no LIBOR Loan will remain outstanding in
a principal amount of less than $250,000), and (iv) if the Borrower for any
reason makes any prepayment of a LIBOR Loan prior to the last day of the
Interest Period applicable thereto, the Borrower shall forthwith pay all amounts
owing to the Bank pursuant to the provisions of ss.1.9 with respect to such
LIBOR Loan.
(e) The Bank may, upon the written request of the Borrower, at the Bank's
sole discretion, renew the financing arrangements described in this letter
agreement by extending the Expiration Date in a writing signed by the Bank and
accepted by the Borrower. Neither the inclusion in this letter agreement or
elsewhere of covenants relating to periods of time after the Expiration Date,
nor any other provision hereof, nor any action (except a written extension
pursuant to the immediately preceding sentence), non-action or course of dealing
on the part of the Bank will be deemed an extension of, or agreement on the part
of the Bank to extend, the Expiration Date.
1.4. ELECTION OF INTEREST RATE FOR REVOLVING LOANS. (a) Except as otherwise
provided below in this ss.1.4, interest on the Revolving Loans will be payable
at a fluctuating rate per annum (the "Floating Rate") which shall at all times
be equal to the Alternate Base Rate, with a change in such rate of interest to
become effective on each day when any change in the Federal Funds Effective Rate
is effective or any change in the Prime Rate is effective, as the case may be.
Interest on any Floating Rate Loan shall be payable at the Floating Rate.
(b) Subject to the conditions set forth herein, the Borrower may elect (in
accordance with subsection (c) below) that any Revolving Loan to be made under
ss.1.2 will be made at a fixed
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rate per annum as a LIBOR Loan. The rate of interest per annum payable on any
LIBOR Loan will be equal to the sum of (x) the LIBOR Rate applicable thereto,
plus (y) the LIBOR Rate Increment, with a change in such rate of interest to
become effective on each day when any change in the Reserve Percentage is
effective.
(c) The election by the Borrower of a LIBOR Loan shall be made by the
Borrower giving to the Bank a written notice received by the Bank within the
time period and containing the information described in the next following
sentence (a "LIBOR Borrowing Notice"). The LIBOR Borrowing Notice must be
received by the Bank no later than 1:00 p.m. (Boston time) on that day which is
three (3) Business Days prior to the date of the proposed borrowing, must state
that a LIBOR Loan is being requested and state the amount of the LIBOR Loan
requested (which shall be $250,000 or an integral multiple of $100,000 in excess
of $250,000) and must specify the proposed commencement date of the relevant
Interest Period and the duration of the proposed Interest Period. In no event
will more than five (5) Interest Periods be in effect at any one time. Any LIBOR
Borrowing Notice shall, upon receipt by the Bank, become irrevocable and binding
on the Borrower, and the Borrower shall, upon demand and receipt of a Bank
Certificate with respect thereto, forthwith indemnify the Bank against any loss
or expense incurred by the Bank as a result of any failure by the Borrower to
obtain or maintain any requested LIBOR Loan, including, without limitation, any
loss or expense incurred by reason of the liquidation or redeployment of
deposits or other funds acquired by the Bank to fund or maintain such LIBOR
Loan. The Borrower shall have no right to convert any LIBOR Loan to a Floating
Rate Loan prior to the end of the Interest Period applicable to such LIBOR Loan.
(d) Each LIBOR Loan shall be due and payable in full (if not required to be
repaid earlier pursuant to the terms of this letter agreement) on the last day
of the Interest Period applicable thereto. The principal amount of each LIBOR
Loan so repaid may be reborrowed as a new LIBOR Loan to the extent and on the
terms and conditions contained in this letter agreement by delivery to the Bank
of a new LIBOR Borrowing Notice conforming to the requirements set forth above
in this ss.1.4 (and any LIBOR Loan not repaid and not so reborrowed as a new
LIBOR Loan will be deemed to have been reborrowed as a Floating Rate Loan).
Notwithstanding any other provision of this letter agreement, the Bank need not
make any LIBOR Loan at any time when there exists any Event of Default.
(e) Notwithstanding the foregoing, after the occurrence and during the
continuance of any Event of Default, interest on the Revolving Loans will, at
the option of the Bank, accrue and be payable at a fluctuating rate per annum
which at all times shall be equal to the sum of (i) four (4%) percent per annum
plus (ii) the Prime Rate (but in no event in excess of the maximum rate
permitted by then applicable law).
1.5. INTEREST PAYMENTS. The Borrower will pay interest on the principal
amount of the Revolving Loans outstanding from time to time, from the date
hereof until payment of the Revolving Loans and the Revolving Note in full and
the termination of this letter agreement. Interest on Floating Rate Loans will
be payable monthly in arrears on the first day of each month. Interest on each
LIBOR Loan will be payable in arrears on each applicable Interest Payment Date.
In any event, interest shall also be payable on the date of payment of the
Revolving Loans in full.
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1.6 LETTERS OF CREDIT. (a) Subject to the execution and delivery by the
Borrower of a letter of credit application and any other related documents on
the Bank's customary forms in effect from time to time (collectively, the
"Letter of Credit Documents") and in reliance upon the representations and
warranties of the Borrower contained herein, the Bank agrees from time to time
until the first to occur of (i) the Expiration Date or (ii) the termination of
the within-described revolving financing arrangements pursuant to ss.5.2(b) or
ss.6.4(b), to issue, extend and renew for the account of the Borrower one or
more standby letters of credit (each individually, a "Letter of Credit"), in
such form as may be requested from time to time by the Borrower and agreed to by
the Bank. In the event and to the extent that any provision of any Letter of
Credit Document shall be inconsistent with or covered by any provision of this
letter agreement, then the provisions of this letter agreement shall govern.
(b) (i) The obligation of the Bank to issue, extend or renew any Letter of
Credit hereunder shall be subject to the conditions for Revolving Loans set
forth in Section 3 and to the following additional conditions:
(A) Such Letter of Credit shall expire by its terms no later
than 90 days after the Expiration Date or as may be otherwise
agreed to in writing by the Bank;
(B) After giving effect to such issuance, extension or
renewal, (1) the aggregate outstanding principal amount of the
Revolving Loans shall not exceed the Available Commitment and (2)
the LC Exposure Amount shall not exceed $1,500,000;
(C) The form and terms of each Letter of Credit and the
related Letter of Credit Documents shall be acceptable to the
Bank; and
(D) Each Letter of Credit shall be issued to support
obligations of the Borrower incurred in the ordinary course of
its business.
(ii) Whenever the Borrower desires to have a Letter of Credit
issued, extended or renewed, the Borrower will furnish to the Bank a
written application therefor which shall (A) be received by the Bank
not less than three Business Days prior to the proposed date of
issuance, extension or renewal and (B) specify (1) such proposed
issuance date (which must be a Business Day), (2) the expiration date
of such Letter of Credit, (3) the name and address of the beneficiary
of the Letter of Credit, (4) the amount of such Letter of Credit, and
(5) the purpose and proposed form of such Letter of Credit. Each
Letter of Credit shall be subject to the International Standby
Practices (1998) and, to the extent not inconsistent therewith, the
laws of The Commonwealth of Massachusetts.
(c) In order to induce the Bank to issue, extend and renew each Letter of
Credit, the Borrower hereby agrees to reimburse or pay to the Bank on the
Business Day immediately following each date that any draft presented under such
Letter of Credit is honored by the Bank or the Bank otherwise makes a payment
with respect thereto, as indicated in the notice thereof from the Bank to the
Borrower (A) the amount paid by the Bank under or with respect to such Letter of
Credit, and (B) the amount of any taxes, fees, charges or other reasonable costs
and
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expenses whatsoever incurred by the Bank in connection with any payment made by
the Bank under or with respect to such Letter of Credit. Interest shall accrue
on any and all amounts remaining unpaid by the Borrower under this ss.1.6 from
the date of any draw under a Letter of Credit until the Business Day immediately
following such draw at the rate specified in ss.1.4(a) for principal on the
Revolving Loans and, thereafter, until payment in full (whether before or after
judgment) at the default rate set forth in ss.1.4(e), and shall be payable to
the Bank on demand.
(d) Except as otherwise provided herein, the Borrower may elect to satisfy
any LC Draw Obligation arising under paragraph (c) of this ss.1.6 by borrowing a
Floating Rate Loan in the amount thereof and applying the proceeds thereto,
provided that (i) all conditions to such Revolving Loan set forth in Section 3
shall have been satisfied in full and (ii) after giving effect to such Revolving
Loan and the application of proceeds thereof, the Revolving Loans will not
exceed the Available Commitment.
(e) The Borrower assumes all risks in connection with the Letters of
Credit. The Borrower's obligations under this ss.1.6 shall be absolute and
unconditional under any and all circumstances and irrespective of the occurrence
of any Default or any condition precedent whatsoever or any setoff, counterclaim
or defense to payment which the Borrower may have or have had against the Bank
or any beneficiary of a Letter of Credit. The Borrower also agrees that the Bank
shall not be responsible for, and the Borrower's LC Draw Obligations shall not
be affected by, among other things, (i) the validity, genuineness or
enforceability of documents or of any endorsements thereon if reasonably
believed by the Bank to be valid, genuine and enforceable, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient (provided all such documents conform on their face), fraudulent or
forged, or (ii) any dispute between or among the Borrower, any of its
Subsidiaries, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of the Borrower or any of its Subsidiaries
against the beneficiary of any Letter of Credit or any such transferee. The Bank
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit unless caused by the gross
negligence, willful misconduct or bad faith of the Bank. The Borrower agrees
that any action taken or omitted to be taken by the Bank under or in connection
with each Letter of Credit and the related drafts and documents, if done in good
faith without gross negligence or willful misconduct, shall be binding upon the
Borrower and shall not subject the Bank to any liability.
(f) The Bank shall be entitled to rely, and shall be fully protected in
relying upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telecopy, telex or teletype message,
statement, order or other document reasonably believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person and upon
advice and statements of legal counsel, independent accountants and other
experts selected by the Bank.
(g) In order to induce the Bank to issue, extend and renew each Letter of
Credit, the Borrower hereby agrees to pay to the Bank with respect to each such
issuance, extension and renewal a fee (in each case, a "Letter of Credit Fee")
on the stated amount of such Letter of
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Credit at a rate per annum equal to one and one-half percent (1.50%) each year
payable quarterly in arrears on the last day of each calendar quarter. In
addition, the Borrower shall pay to the Bank any and all standard charges
customarily made by the Bank in connection with such issuance, extension or
renewal.
1.7 RESERVED.
1.8 LIBOR RATE DETERMINATION PROTECTION. In the event that:
(i) the Bank shall determine, in its reasonable business judgment,
that, by reason of circumstances affecting the London interbank market
or otherwise, adequate and reasonable methods do not exist for
ascertaining the LIBOR Rate which would otherwise be applicable during
any Interest Period, or
(ii) the Bank shall determine, in its reasonable business judgment,
that:
(A) the making or continuation of any LIBOR Loan has been made
impracticable or unlawful by (1) the occurrence of any
contingency that materially and adversely affects the London
interbank market or (2) compliance by the Bank with any
applicable law or governmental regulation, guideline or order or
interpretation or change thereof by any governmental authority
charged with the interpretation or administration thereof or with
any request or directive of any such governmental authority; or
(B) the LIBOR Rate will not, in the reasonable determination of
the Bank, adequately and fairly reflect the cost to the Bank of
funding the LIBOR Loans for such Interest Period,
then the Bank shall forthwith give written notice of such determination (which
notice shall provide an explanation of such determination and which
determination shall be deemed presumptively correct). In such event the
obligations of the Bank to make LIBOR Loans shall be suspended until the Bank
determines that the circumstances giving rise to such suspension no longer
exist, whereupon the Bank shall notify the Borrower.
1.9 PREPAYMENT OF LIBOR LOANS. The following provisions of this ss.1.9
shall be effective only with respect to LIBOR Loans: If, due to acceleration of
the Revolving Note or due to voluntary prepayment or mandatory repayment or
prepayment or due to any other reason, the Bank receives payment of any
principal of a LIBOR Loan on any date prior to the last day of the relevant
Interest Period or if for any reason any LIBOR Loan is converted to a Floating
Rate Loan prior to the expiration of the relevant Interest Period, the Borrower
shall, upon demand and receipt of a Bank Certificate from the Bank with respect
thereto, pay forthwith to the Bank a yield maintenance fee in an amount computed
as follows: The current rate for United States Treasury securities (bills on a
discounted basis shall be converted to a bond equivalent) with a maturity date
closest to the last day of the Interest Period applicable to the affected LIBOR
Loan shall be subtracted from the LIBOR Rate in effect with respect to the
relevant LIBOR Loan at
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the date of such prepayment or conversion. If the result is zero or a negative
number, there shall be no yield maintenance fee. If the result is a positive
number, then the resulting percentage shall be multiplied by the amount of the
principal balance of the LIBOR loan being prepaid. The resulting amount shall be
divided by 360 and multiplied by the number of days remaining in the relevant
Interest Period. Said amount shall be reduced to present value calculated by
using the number of days remaining in the relevant Interest Period and by using
the above-referenced bond equivalent of the United States Treasury securities
rate as the discount rate. The resulting amount shall be the yield maintenance
fee due to the Bank upon prepayment or conversion of the applicable LIBOR Loan.
Any acceleration of a LIBOR Loan due to an Event of Default will give rise to a
yield maintenance fee calculated with the respect to such LIBOR Loan on the date
of such acceleration in the same manner as though the Borrower had exercised a
right of prepayment at that date, such yield maintenance fee being due and
payable at that date.
1.10. INCREASED COSTS; CAPITAL ADEQUACY.
(i) If the adoption, effectiveness or phase-in, after the date
hereof, of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or
compliance by the Bank with any directive of any such authority,
central bank or comparable agency:
(A) shall subject the Bank to any Imposition with respect to any
LIBOR Loan, the Revolving Note or the Bank's agreement to make
LIBOR Loans, or shall change the basis of taxation of payments to
the Bank of the principal of or interest on any LIBOR Loan or any
other amounts due under this letter agreement in respect of LIBOR
Loans or the Bank's agreement to make LIBOR Loans (except for
changes in the rate of tax on the over-all net income of the
Bank); or
(B) shall impose, modify or deem applicable any reserve, special
deposit, deposit insurance or similar requirement (including,
without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding, with
respect to any LIBOR Loan, any such requirement already included
in the applicable Reserve Rate) against assets of, deposits with
or for the account of, or credit extended by, the Bank or shall
impose on the Bank or on the London interbank market any other
condition affecting any LIBOR Loans, the Revolving Note or the
Bank's agreement to make LIBOR Loans
and the result of any of the foregoing is to increase the cost to the
Bank of making or maintaining any LIBOR Loan or to reduce the amount
of any sum received or receivable by the Bank under this letter
agreement or under the Revolving Note with respect to any LIBOR Loan
by an amount reasonably deemed by the Bank to be material, then, upon
demand by the Bank and receipt of a Bank Certificate from the Bank
with respect thereto, the Borrower shall pay to the Bank such
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additional amount or amounts as the Bank certifies to be necessary to
compensate the Bank for such increased cost or reduction in amount
received or receivable.
(ii) If the Bank shall have determined, in its reasonable business
judgment, that the adoption, effectiveness or phase-in after the date
hereof of any applicable law, rule or regulation regarding capital
requirements for banks or bank holding companies, or any change
therein after the date hereof, or any change after the date hereof in
the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank
with any directive of such entity regarding capital adequacy has or
would have the effect of reducing the return on the Bank's capital
with respect to its agreement hereunder to make Revolving Loans or
with respect to any Revolving Loan (whether or not then subject to any
LIBOR Rate) to a level below that which the Bank could have achieved
(taking into consideration the Bank's policies and practices with
respect to capital adequacy immediately before such adoption,
effectiveness, phase-in, change or compliance and assuming that the
Bank's capital was then fully utilized) by any amount reasonably
deemed by the Bank to be material: (A) the Bank shall promptly after
its determination of such occurrence deliver a Bank Certificate with
respect thereto to the Borrower; and (B) the Borrower shall pay to the
Bank as an additional fee from time to time on demand such amount as
the Bank certifies to be the amount that will compensate it for such
reduction; provided; however, the Bank shall not be entitled to any
such fee under this ss.1.10(ii) attributable to any period prior to 90
days before the Bank delivers any such Bank Certificate to the
Borrower.
(iii) A Bank Certificate of the Bank claiming compensation under this
ss.1.10 shall be deemed presumptively correct. Such certificate shall
set forth the nature of the occurrence giving rise to such
compensation, the additional amount or amounts to be paid to the Bank
hereunder and the method by which such amounts are determined. In
determining any such amount, the Bank may use any reasonable averaging
and attribution methods.
(iv) No failure on the part of the Bank to demand compensation on any
one occasion shall constitute a waiver of its right to demand such
compensation on any other occasion and no failure on the part of the
Bank to deliver any Bank Certificate in a timely manner shall in any
way reduce any obligation of the Borrower to the Bank under this
ss.1.10 but such obligation shall not be due and payable until after
such Bank Certificate shall have been received.
(v) Notwithstanding anything in this letter agreement or elsewhere to
the contrary, (A) in no event shall the operation of this ss.1.10 be
less favorable to the Borrower than the application of any similar
provision applicable to any other borrower of the Bank which other
borrower is roughly comparable to the Borrower and (B) this ss.1.10
shall apply, if at all, only to Revolving Loans
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outstanding and Revolving Loans to be made in the future; it shall
not apply to any Revolving Loans made and repaid or prepaid.
1.11. ILLEGALITY OR IMPOSSIBILITY. Notwithstanding any other provision of
this letter agreement, if the introduction of or any change in or in the
interpretation or administration of any law or regulation applicable to the Bank
or the Bank's activities in the London interbank market shall make it unlawful,
or any central bank or other governmental authority having jurisdiction over the
Bank or the Bank's activities in the London interbank market shall assert that
it is unlawful, or otherwise make it impossible, for the Bank to perform its
obligations hereunder to make LIBOR Loans or to continue to fund or maintain
LIBOR Loans, then on notice thereof and demand therefore by the Bank to the
Borrower, (i) the obligation of the Bank to fund LIBOR Loans shall terminate and
(ii) all affected LIBOR Loans shall be deemed to have been converted into
Floating Rate Loans (with the Borrower to be responsible for any amount payable
under ss.1.9 as a consequence of such conversion) at the last day on which such
LIBOR Loans may legally remain outstanding. Except as expressly provided in the
immediately preceding sentence, no LIBOR Loan may be converted into a Floating
Rate Loan prior to the end of the Interest Period applicable to such LIBOR Loan.
1.12. ADVANCES AND PAYMENTS. (a) The proceeds of all Revolving Loans shall
be credited by the Bank to a general deposit account maintained by the Borrower
with the Bank. The proceeds of each Revolving Loan will be used by the Borrower
solely for (i) repayment of existing Indebtedness listed on item 1.12 of the
attached Disclosure Schedule, (ii) working capital and general corporate
purposes and (iii) funding LC Draw Obligations.
(b) The Bank may charge any general deposit account of the Borrower at the
Bank with the amount of all payments of interest, principal and other sums due,
from time to time, under this letter agreement and/or the Revolving Note; and
will promptly thereafter notify the Borrower of the amount so charged. The
failure of the Bank so to charge any account or to give any such notice shall
not affect the obligation of the Borrower to pay interest, principal or other
sums as provided herein or in the Revolving Note.
(c) Whenever any payment to be made to the Bank hereunder, under the
Revolving Note or as to any Letter of Credit shall be stated to be due on a day
which is not a Business Day, such payment may be made on the next succeeding
Business Day, and interest payable on each such date shall include the amount
thereof which shall accrue during the period of such extension of time. All
payments by the Borrower hereunder, in respect of the Revolving Note or in
respect of any Letter of Credit shall be made without reduction for any
Impositions or taxes and without deduction, set-off or counterclaim,
notwithstanding any claim which the Borrower may now or at any time hereafter
have against the Bank. All payments of interest, principal and any other sum
payable hereunder, under the Revolving Note and/or as to any Letter of Credit
shall be made to the Bank, in lawful money of the United States in immediately
available funds, at its office at 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000 or to
such other address as the Bank may from time to time direct. All payments
received by the Bank after 2:00 p.m. on any day shall be deemed received as of
the next succeeding Business Day. All monies received by the Bank shall be
applied first to fees, charges, costs and expenses then due and payable to the
Bank under this letter agreement, the Revolving Note and/or any of the other
Loan Documents, next to interest
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then accrued on account of any Revolving Loans and only thereafter to principal
of the Floating Rate Loans, then to the principal of LIBOR Loans and then to LC
Draw Obligations.
(d) If the entire amount of any required payment of principal and/or
interest on the Revolving Loans or any LC Draw Obligation is not paid within ten
(10) days after the same is due, the Borrower shall pay to the Bank a late fee
equal to five percent (5%) of the required payment; provided, that this
ss.1.12(d) shall not apply to any amount whose maturity shall have been
accelerated or to the principal balance of the Revolving Loans outstanding as of
the Expiration Date.
1.13. SECURITY AND GUARANTIES. The Obligations, whether arising under this
letter agreement, the Revolving Note, any Letter of Credit Documents, the other
Loan Documents or otherwise, shall be secured at all times by a first priority
perfected security interest in the Pledged Collateral subject to no Liens other
than Permitted Liens. The Borrower agrees to take such actions as the Bank may
reasonably request from time to time in order to cause the Bank to be secured at
all times as described in this ss.1.13.
1.14. CONDITIONS TO ADVANCE. Prior to the making of the initial Revolving
Loan, the Borrower shall deliver to the Bank duly executed copies of this letter
agreement, the Pledge Agreement, the Revolving Note and the documents and other
items listed on the Closing Agenda delivered herewith by the Bank to the
Borrower, all of which, as well as all legal matters incident to the
transactions contemplated hereby, shall be satisfactory in form and substance to
the Bank and its counsel.
Without limiting the foregoing, each request by the Borrower for any
Revolving Loan or any Letter of Credit and each acceptance by the Borrower of
the proceeds of any Revolving Loan or of the issuance of such Letter of Credit,
will be deemed a representation and warranty by the Borrower that at the date of
such Revolving Loan or issuance of such Letter of Credit and after giving effect
thereto all of the conditions set forth in the following clauses (a)-(d) of this
ss.1.14 will be satisfied.
(a) All statements, representations and warranties of the Borrower made in
this letter agreement and/or in the Pledge Agreement shall continue to be
correct in all material respects as of the date of such request or such
Revolving Loan or Letter of Credit, as the case may be, except those made as of
a specific date or end of a period which were correct as of such date or as of
the end of such period.
(b) All covenants and agreements of the Borrower contained herein and/or in
any of the other Loan Documents shall have been complied with in all material
respects on and as of the date of such request or such Revolving Loan or Letter
of Credit as the case maybe, including, without limitation, Section 5(a)(i) of
the Pledge Agreement.
(c) No Default or Event of Default shall have occurred and be continuing.
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(d) No material adverse change shall have occurred in the financial
condition of the Borrower from that disclosed in the financial statements then
most recently furnished to the Bank.
II. REPRESENTATIONS AND WARRANTIES
2.1. REPRESENTATIONS AND WARRANTIES. In order to induce the Bank to enter
into this letter agreement and to make Revolving Loans and to issue Letters of
Credit hereunder, the Borrower warrants and represents to the Bank as follows:
(a) The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Borrower has full
corporate power to own its property and conduct its business as now conducted
and as proposed to be conducted, to grant the security interests contemplated by
the Pledge Agreement and to enter into and perform this letter agreement and the
other Loan Documents. The Borrower is duly qualified to do business in
Massachusetts and each other jurisdiction where the failure so to qualify could
reasonably be expected (singly or in the aggregate with all other such failures)
to have a material adverse effect on the financial condition or business of the
Borrower, all such jurisdictions where the Borrower is so qualified as of the
date hereof being listed on item 2.1(a) of the attached Disclosure Schedule. At
the date hereof, the Borrower has no Subsidiaries, except as shown on said item
2.1(a). The Borrower is not a member of any partnership or joint venture.
(b) The execution and delivery by the Borrower of this letter agreement,
the Pledge Agreement and each of the other Loan Documents and performance by the
Borrower of its obligations thereunder have been duly authorized by all
necessary corporate and other action and do not and will not:
(i) violate any material provision of, or require as a prerequisite to
effectiveness any filing (other than filing of Uniform Commercial Code Financing
Statements), registration, consent or approval under, any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award presently in
effect having applicability to the Borrower;
(ii) violate any provision of the charter or by-laws of the Borrower,
or result in a breach of or constitute a default or require any waiver or
consent under any material indenture or loan or credit agreement or any other
material agreement, lease or instrument to which the Borrower is a party or by
which the Borrower or any of its properties may be bound or affected or require
any other consent of any Person; or
(iii) result in, or require, the creation or imposition of any lien,
security interest or other encumbrance (other than in favor of the Bank), upon
or with respect to any of the properties now owned or hereafter acquired by the
Borrower.
(c) This letter agreement and each of the other Loan Documents has been
duly executed and delivered by the Borrower and each is a legal, valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its respective terms.
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(d) Except as described on item 2.1(d) of the attached Disclosure Schedule,
there are no actions, suits, proceedings or investigations pending or, to the
knowledge of the Borrower, threatened by or against the Borrower before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which could reasonably be expected to
hinder or prevent the consummation of the transactions contemplated hereby or
call into question the validity of this letter agreement or any of the other
Loan Documents or any action taken or to be taken in connection with the
transactions contemplated hereby or thereby or which in any single case or in
the aggregate may reasonably be expected to result in any material adverse
change in the business or financial condition of the Borrower.
(e) The Borrower is not in violation of any term of its charter or by-laws
as now in effect. The Borrower is not in material violation of any term of any
mortgage, indenture or judgment, decree or order, or any other material
instrument, contract or agreement to which it is a party or by which any of its
property is bound.
(f) The Borrower has filed all federal, foreign, state and local tax
returns, reports and estimates, which in the Borrower's reasonable business
judgment, are required to be filed by the Borrower. All such filed returns,
reports and estimates are proper and accurate and the Borrower has paid all
taxes, assessments, impositions, fees and other governmental charges required to
be paid in respect of the periods covered by such returns, reports or estimates
except those which are being contested in good faith. No material deficiencies
for any tax, assessment or governmental charge have been asserted or assessed,
and the Borrower knows of no material tax liability or basis therefor.
(g) The Borrower is in compliance in all material respects with all
requirements of law, federal, foreign, state and local, and all requirements of
all governmental bodies or agencies having jurisdiction over it, the conduct of
its business, the use of its properties and assets, and all premises occupied by
it, failure to comply with any of which could reasonably be expected to (singly
or in the aggregate with all other such failures) have a material adverse effect
upon the business or financial condition of the Borrower. Without limiting the
foregoing, the Borrower has all the material franchises, licenses, leases,
permits, certificates and authorizations needed for the conduct of its business
and the use of its properties and all premises occupied by it, as now conducted,
owned and used.
(h) The audited annual financial statements of the Borrower as at December
31, 2000 and the interim financial statements of the Borrower as at March 31,
2001, each heretofore delivered to the Bank, are complete and accurate and
fairly present the financial condition of the Borrower as at the dates thereof
and for the periods covered thereby, except that such interim statements do not
have footnotes and thus do not present the information which would normally be
contained in footnotes to financial statements and are subject to year-end
adjustments The Borrower does not have any liability, contingent or otherwise,
not disclosed in the aforesaid financial statements or in any notes thereto that
could reasonably be expected to materially affect the financial condition of the
Borrower. Since December 31, 2000, there has been no material adverse
development in the business or financial condition of the Borrower.
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(i) The principal place of business and chief executive offices of the
Borrower are located at 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000. The books and
records of the Borrower are located at said address.
(j) To its knowledge, the Borrower owns or has a valid right to use all of
the patents, licenses, copyrights, trademarks, trade names, know-how, trade
secrets and other intellectual property necessary to conduct its business. The
conduct of the Borrower's business as now operated does not, to the Borrower's
knowledge, conflict in any material respect with valid patents, copyrights,
trademarks, trade names, know-how, trade secrets or other intellectual property
of others in any manner that could reasonably be expected to materially
adversely affect the business or financial condition of the Borrower.
III. AFFIRMATIVE COVENANTS AND REPORTING REQUIREMENTS
Without limitation of any other covenants and agreements contained herein
or elsewhere, the Borrower agrees that so long as the financing arrangements
contemplated hereby are in effect or all or any portion of any Revolving Loan,
any Letter of Credit or any of the other Obligations shall be outstanding:
3.1. LEGAL EXISTENCE; QUALIFICATION; COMPLIANCE. The Borrower will maintain
its corporate existence and good standing in the jurisdiction of its
organization. The Borrower will qualify to do business and will remain qualified
and in good standing in Massachusetts and in each other jurisdiction where the
failure so to qualify could reasonably be expected to (singly or in the
aggregate with all other such failures) have a material adverse effect on the
financial condition or business of the Borrower. The Borrower will comply in all
material respects with its charter documents and by-laws. The Borrower will
comply in all material respects with all applicable laws, rules and regulations
(including, without limitation, ERISA and those relating to environmental
protection) other than (i) laws, rules or regulations the validity or
applicability of which the Borrower shall be contesting in good faith by
proceedings which serve as a matter of law to stay the enforcement thereof and
(ii) those laws, rules and regulations the failure to comply with any of which
could not reasonably be expected to (singly or in the aggregate) have a material
adverse effect on the financial condition or business of the Borrower.
3.2. INSURANCE. The Borrower will maintain insurance with respect to its
property and business against such liabilities, casualties and contingencies and
of such types and in such amounts as may from time to time be customary for
companies conducting a business similar to that of the Borrower in similar
locales.
3.3. PAYMENT OF TAXES AND CHARGES. The Borrower will pay and discharge all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or property, including, without limitation, taxes, assessments,
charges or levies relating to real and personal property, franchises, income,
unemployment, old age benefits, withholding, or sales or use, and all lawful
claims (whether for any of the foregoing or otherwise) which, if unpaid, might
reasonably be expected to give rise to a lien upon any property of the Borrower,
except any of the foregoing which is being contested in good faith and by
appropriate proceedings and for
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which the Borrower has established and is maintaining adequate reserves. The
Borrower will maintain in full force and effect, and comply with the terms and
conditions of, all permits, permissions and licenses necessary for its business.
3.4. ACCOUNTS. The Borrower will maintain its principal operating accounts
with the Bank.
3.5. CONDUCT OF BUSINESS. The Borrower will conduct, in the ordinary
course, the business in which it is presently engaged. The Borrower will not,
without the prior written consent of the Bank, directly or indirectly enter into
any other lines of business, businesses or ventures which are not reasonably
related to the business in which the Borrower is presently engaged.
3.6. REPORTING REQUIREMENTS. The Borrower will furnish to the Bank:
(i) Within 90 days after the end of each fiscal year of the Borrower,
a copy of the annual audit report for such fiscal year for the Borrower,
including therein consolidated balance sheets of the Borrower and
Subsidiaries as at the end of such fiscal year and related consolidated
statements of income, stockholders' equity and cash flow for the fiscal
year then ended. The annual consolidated financial statements shall be
certified by independent public accountants selected by the Borrower and
reasonably acceptable to the Bank, such certification to be in such form as
is generally recognized as "unqualified". The Borrower will also deliver to
the Bank, within 60 days after the commencement of each fiscal year, a
budget (including balance sheet and income and cash flow statement
projections) for the Borrower for such fiscal year, prepared by the
Borrower's management and approved by the Borrower's Board of Directors,
such budget to be in such detail as is reasonably satisfactory to the Bank.
(ii) Within 45 days after the end of each fiscal quarter of the
Borrower, consolidated balance sheets of the Borrower and Subsidiaries and
related consolidated statements of income and cash flow, unaudited but
prepared in accordance with generally accepted accounting principles
consistently applied fairly presenting the financial condition of the
Borrower and Subsidiaries as at the dates thereof and for the periods
covered thereby (except that such quarterly statements need not contain
notes to the financial statements) and certified as complete by the chief
financial officer of the Borrower, such balance sheets to be as at the end
of such fiscal quarter and such statements of income and cash flow to be
for such fiscal quarter and for the fiscal year to date, in each case
together with a comparison to the results for the corresponding fiscal
period of the immediately prior fiscal year.
(iii) At the time of delivery of each annual or quarterly report or
financial statement of the Borrower, a certificate executed by the chief
financial officer of the Borrower stating that he or she has reviewed this
letter agreement and the other Loan Documents and has no knowledge of any
Event of Default or, if he or she has such knowledge, specifying each such
Event of Default and the nature thereof. Each such
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certificate given as at the end of any fiscal quarter of the Borrower will
set forth the calculations necessary to evidence compliance with ss.ss.3.7
and 3.8.
(iv) As soon as possible and in any event within five Business Days
after the Borrower has actual knowledge of the occurrence of any Event of
Default, the statement of the Borrower setting forth details of each such
Event of Default and the action which the Borrower proposes to take with
respect thereto.
(v) Promptly after the commencement thereof, notice of all material
actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
to which the Borrower is a party.
(vi) Promptly upon filing any registration statement or listing
application (or any supplement or amendment to any registration statement
or listing application) with the Securities and Exchange Commission ("SEC")
or any successor agency or with any stock exchange or with the National
Association of Securities Dealers quotations system, a copy of same.
(vii) A copy of each periodic or current report of the Borrower filed
with the SEC or any successor agency, of each press release or other
communication disseminated to the public generally, and of each annual
report, proxy statement and other communication sent by the Borrower to
shareholders or other securityholders generally, such copy to be provided
to the Bank promptly upon such filing with the SEC, such public
dissemination or such communication with shareholders or securityholders,
as the case may be.
(viii) Within 5 days after receipt by the Borrower, a copy of the
monthly statement of the Account (as defined in the Pledge Agreement).
(ix) Promptly upon request, such other information respecting the
financial condition and operation of the Borrower as the Bank may from time
to time reasonably request.
3.7. MINIMUM READY ASSET BALANCE. The Borrower will maintain at all times
an aggregate amount of Ready Assets with a net equity value (determined in
accordance with ss.5(a)(iii) of the Pledge Agreement) in excess of $30,000,000.
3.8. MINIMUM TANGIBLE NET WORTH. The Borrower will maintain, at all times,
a Tangible Net Worth in excess of $41,000,000.
3.9. BOOKS AND RECORDS. The Borrower will maintain complete and accurate
books, records and accounts which will at all times accurately and fairly
reflect all of its transactions in accordance with generally accepted accounting
principles consistently applied. The Borrower will, at any reasonable time and
from time to time upon reasonable notice and during normal business hours (and
without any necessity for notice following the occurrence of an Event of
Default), permit the Bank, and any agents or representatives thereof, to examine
and make copies
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of and take abstracts from the records and books of account of, and visit the
properties of the Borrower, and to discuss its affairs, finances and accounts
with its officers, directors and/or independent accountants, all of whom are
hereby authorized and directed to cooperate with the Bank in carrying out the
intent of this ss.3.9. Each financial statement of the Borrower hereafter
delivered pursuant to this letter agreement will be complete and accurate and
will fairly present the financial condition of the Borrower as at the date
thereof and for the periods covered thereby; provided, as to interim statements,
that footnotes and the information normally contained therein are not included
and that such statements are subject to year-end adjustments.
IV. NEGATIVE COVENANTS
Without limitation of any other covenants and agreements contained herein
or elsewhere, the Borrower agrees that so long as the financing arrangements
contemplated hereby are in effect or all or any portion of any Revolving Loan,
any Letter of Credit or any of the other Obligations shall be outstanding:
4.1. LIENS. The Borrower will not create, incur, assume or suffer to exist
any mortgage, deed of trust, pledge, lien, security interest, or other charge or
encumbrance (including the lien or retained security title of a conditional
vendor) of any nature (collectively, "Liens"), upon or with respect to any of
the Pledged Collateral, now owned or hereafter acquired, except that the
foregoing restrictions shall not apply to Permitted Liens.
4.2. DIVIDENDS. The Borrower will not make any distributions to its
shareholders, pay any dividends (other than dividends payable solely in capital
stock of the Borrower) or redeem, purchase or otherwise acquire, directly or
indirectly any of its capital stock unless (i) the Borrower has previously
delivered to the Bank the audited financial statements required under ss.3.6(i)
and the certificate required under ss.3.6(iii), above, and (ii) no Default then
exists or would arise after giving effect to such dividend, distribution,
redemption or purchase.
4.3. CHANGE OF ADDRESS, ETC. The Borrower will not change its corporate
name or legal structure, nor will the Borrower change its chief executive office
from the premises described in ss.2.1(j) without, in each instance, giving the
Bank prompt written notice of same and providing all such financing statements,
certificates and other documentation as the Bank may request in order to
maintain the perfection and priority of the security interests granted or
intended to be granted pursuant to the Pledge Agreement. The Borrower will not
change its fiscal year or materially change its methods of financial reporting
(except as required by generally accepted accounting principles) unless, in each
instance, prior written notice of such change is given to the Bank and prior to
such change the Borrower enters into amendments to this letter agreement in form
and substance reasonably satisfactory to the Bank in order to preserve
unimpaired the rights of the Bank and the obligations of the Borrower hereunder.
4.4. NO MARGIN STOCK. No proceeds of any Revolving Loan shall be used
directly or indirectly to purchase or carry any margin security.
V. DEFAULT AND REMEDIES
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5.1. EVENTS OF DEFAULT. The occurrence of any one of the following events
shall constitute an Event of Default hereunder:
(a) The Borrower shall (i) fail to make any payment of interest on the
Revolving Note within three (3) days of the date when due or (ii) fail to make
any payment of principal of the Revolving Note or any LC Draw Obligation on or
before the date when due; or
(b) Any representation or warranty of the Borrower contained herein shall
at any time prove to have been incorrect in any material respect when made or
any representation or warranty made by the Borrower in connection with any
Revolving Loan or Letter of Credit shall at any time prove to have been
incorrect in any material respect when made; or
(c) The Borrower shall default in the performance or observance of any
agreement or obligation under ss.ss.3.1, 3.7, 3.8 and 4.1; or
(d) The Borrower shall default in the performance of any other term,
covenant or agreement contained in this letter agreement and such default shall
continue unremedied for 30 days after written notice thereof shall have been
given to the Borrower; or
(e) Any default on the part of the Borrower shall exist, and shall remain
unwaived or uncured beyond the expiration of any applicable notice and/or grace
period, under any other contract, agreement (including, without limitation, the
Pledge Agreement) or undertaking now existing or hereafter entered into with or
for the benefit of the Bank in connection with this letter agreement;
(f) Any other Indebtedness of the Borrower or obligations of the Borrower
representing the deferred purchase price of the property, each in excess of
$500,000 in aggregate principal amount or with respect to any instrument
evidencing, guaranteeing, securing or otherwise relating to any such
Indebtedness or obligation, as the case may be, shall have been declared to be
due and payable prior to its stated maturity or shall not have been paid at the
stated maturity thereof; or
(g) The Borrower shall be dissolved, or the Borrower shall become insolvent
or bankrupt or shall cease paying its debts as they mature or shall make an
assignment for the benefit of creditors, or a trustee, receiver or liquidator
shall be appointed for the Borrower or for a substantial part of the property of
the Borrower, or bankruptcy, reorganization, arrangement, insolvency or similar
proceedings shall be instituted by or against the Borrower under the laws of any
jurisdiction (except for an involuntary proceeding filed against the Borrower
which is dismissed within 90 days following the institution thereof); or
(h) Any execution or similar process shall be issued or levied against any
Pledged Collateral; or
(i) Any final uninsured judgment in excess of $500,000 shall be entered
against the Borrower by any court of competent jurisdiction and shall remain
unpaid, unbonded or unstayed for a period of 60 days; or
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(j) The Borrower shall fail to meet its minimum funding requirements under
ERISA with respect to any employee benefit plan (or other class of benefit which
the PBGC has elected to insure) or any such plan shall be the subject of
termination proceedings (whether voluntary or involuntary) and there shall
result from such termination proceedings a liability of the Borrower to the PBGC
which, in each case, could reasonable be expected to have a material adverse
effect upon the financial condition of the Borrower; or
(k) The Pledge Agreement or any other Loan Document shall for any reason
(other than due to payment in full of all amounts secured or evidenced thereby
or due to discharge in writing by the Bank) not remain in full force and effect;
or
(l) The Liens of the Bank in and on any of the Pledged Collateral covered
by the Pledge Agreement shall for any reason (other than release by the Bank or
the gross negligence of the Bank) not be fully perfected; or
(m) If, at any time, a Change of Control shall occur.
5.2. RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of any Event of
Default, in addition to any other rights and remedies available to the Bank
hereunder or otherwise, the Bank may exercise any one or more of the following
rights and remedies (all of which shall be cumulative):
(a) Declare the entire unpaid principal amount of the Revolving Note then
outstanding, all interest accrued and unpaid thereon, any LC Draw Obligations
and all other amounts payable under this letter agreement, and all other
Indebtedness of the Borrower to the Bank, to be forthwith due and payable,
whereupon the same shall become forthwith due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived
by the Borrower.
(b) Terminate the arrangements for Revolving Loans and Letters of Credit
provided for by this letter agreement.
(c) Exercise all rights and remedies hereunder, under the Pledge Agreement,
under the Revolving Note and under each and any other agreement with the Bank;
and exercise all other rights and remedies which the Bank may have under
applicable law.
5.3. SET-OFF. Borrower hereby grants to Bank, a continuing lien, security
interest and right of setoff as security for all liabilities and obligations to
Bank, whether now existing or hereafter arising, upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of FleetBoston
Financial Corporation and its successors and assigns or in transit to any of
them. At any time, without demand or notice (any such notice being expressly
waived by Borrower), after the occurrence of an Event of Default and during the
continuance thereof, the Bank may setoff the same or any part thereof and apply
the same to any liability or obligation of Borrower even though unmatured and
regardless of the adequacy of any other collateral securing the Revolving
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Loans. ANY AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES ANY OF THE OBLIGATIONS PRIOR
TO THE EXERCISE BY THE BANK OF ITS RIGHT OF SET-OFF UNDER THIS SECTION ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
5.4. LETTERS OF CREDIT. Without limitation of any other right or remedy of
the Bank, (i) if an Event of Default shall have occurred and the Bank shall have
accelerated the Revolving Loans or (ii) if this letter agreement and/or the
revolving financing arrangements described herein shall have expired or shall
have been earlier terminated by either the Bank or the Borrower for any reason,
the Borrower will forthwith deposit with the Bank in cash a sum equal to 105% of
the total of all then undrawn amounts of all outstanding letters of credit
issued by the Bank for the account of the Borrower, such sum (which shall be
inclusive of any amounts contained in the Pledged Collateral) to be pledged to
secure the Borrower's reimbursement obligations.
VI. MISCELLANEOUS
6.1. COSTS AND EXPENSES. The Borrower agrees to pay, on demand, all
reasonable costs and expenses (including, without limitation, reasonable legal
fees not to exceed $10,000) of the Bank in connection with the preparation,
execution and delivery of this letter agreement, the Pledge Agreement, the
Revolving Note, any Letter of Credit Documents and all other instruments and
documents to be delivered in connection with any Revolving Loan and any
amendments or modifications of any of the foregoing, as well as the reasonable
costs and expenses (including, without limitation, the reasonable fees and
expenses of legal counsel) incurred by the Bank in connection with preserving,
enforcing or exercising, upon default, any rights or remedies under this letter
agreement, the Pledge Agreement, the Revolving Note, any Letter of Credit
Documents and all other instruments and documents delivered or to be delivered
hereunder or in connection herewith, all whether or not legal action is
instituted. In addition, the Borrower shall be obligated to pay any and all
stamp and other taxes payable or determined to be payable in connection with the
execution and delivery of this letter agreement, the Pledge Agreement, the
Revolving Note, any Letter of Credit Documents and all other instruments and
documents to be delivered in connection with any Obligation. Any fees, expenses
or other charges which the Bank is entitled to receive from the Borrower under
this Section shall bear interest from the date of any demand therefor until the
date when paid at a rate per annum equal to the sum of (i) four (4%) percent per
annum plus (ii) the Prime Rate (but in no event in excess of the maximum rate
permitted by then applicable law).
6.2. OTHER AGREEMENTS. The provisions of this letter agreement are not in
derogation or limitation of any obligations, liabilities or duties of the
Borrower under any of the other Loan Documents or any other agreement with or
for the benefit of the Bank. No inconsistency in default provisions between this
letter agreement and any of the other Loan Documents or any such other agreement
will be deemed to create any additional grace period or otherwise derogate from
the express terms of each such default provision herein and therein. No
covenant, agreement or obligation of the Borrower contained herein, nor any
right or remedy of the Bank contained herein, shall in any respect be limited by
or be deemed in limitation of any inconsistent
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or additional provisions contained in any of the other Loan Documents or any
such other agreement. In the event and to the extent that any provision of such
other Loan Document or any such other agreement shall be inconsistent with any
provision of this letter agreement, then the provisions of this letter agreement
shall govern.
6.3. ADDRESSES FOR NOTICES, ETC. All notices, requests, demands and other
communications provided for hereunder shall be in writing and shall be mailed or
delivered to the applicable party at the address indicated below:
If to the Borrower:
Aspect Medical Systems, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Controller
If to the Bank:
Fleet National Bank
Mail Code: XX XX 00000X
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Li-Xxx Xxxx, Vice President
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the other party complying as to delivery with
the terms of this Section. All such notices, requests, demands and other
communications shall be deemed delivered on the earlier of (i) the date received
or (ii) the date of delivery, refusal or non-delivery indicated on the return
receipt if deposited in the United States mails, sent postage prepaid, certified
or registered mail, return receipt requested, addressed as aforesaid. If any
such notice, request, demand or other communication is hand-delivered, same
shall be effective upon receipted delivery.
6.4. BINDING EFFECT; ASSIGNMENT; TERMINATION. (a) This letter agreement
shall be binding upon the Borrower and the Bank and their successors and assigns
and shall inure to the benefit of the Borrower and the Bank and their respective
permitted successors and assigns. The Borrower may not assign this letter
agreement or any rights hereunder without the express written consent of the
Bank. The Bank may, in accordance with applicable law, from time to time assign
or grant participations in this letter agreement, the Revolving Loans, the
Revolving Note and/or any Letter of Credit (but not to a competitor of the
Borrower). Without limitation of the foregoing generality,
(i) The Bank may at any time pledge all or any portion of its rights
under the Loan Documents (including any portion of the Revolving Note) to
any of the 12 Federal Reserve Banks organized under Section 4 of the
Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or the
enforcement thereof shall release the Bank from its obligations under any
of the Loan Documents.
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(ii) The Bank shall have the unrestricted right at any time or from
time to time, and without the consent of or notice to the Borrower, to
assign all or any portion of its rights and obligations hereunder to one or
more banks or other financial institutions (each, an "Assignee"), and the
Borrower agrees that at no cost to itself it shall execute, or cause to be
executed, such documents, including, without limitation, amendments to any
documents, instruments and agreements executed in connection herewith, as
the Bank shall reasonably deem necessary to effect the foregoing. In
addition, at the request of the Bank and any such Assignee, the Borrower at
no cost to itself shall issue one or more new promissory notes, as
applicable, to any such Assignee and, if the Bank has retained any of its
rights and obligations hereunder following such assignment, to the Bank,
which new promissory notes shall be issued in replacement of, but not in
discharge of, the liability evidenced by the promissory note held by the
Bank prior to such assignment and shall reflect the amount of the
respective commitments and loans held by such Assignee and the Bank after
giving effect to such assignment. Upon the execution and delivery of
appropriate assignment documentation, amendments and any other
documentation required by the Bank in connection with such assignment, and
the payment by the Assignee of the purchase price agreed to by the Bank and
such Assignee, such Assignee shall be a party to this letter agreement and
shall have all of the rights and obligations of the Bank hereunder (and
under any and all other guaranties, documents, instruments and agreements
executed in connection herewith) to the extent that such rights and
obligations have been assigned by the Bank pursuant to the assignment
documentation between the Bank and such Assignee, and the Bank shall be
released from its obligations hereunder and thereunder to a corresponding
extent.
(iii) The Bank shall have the unrestricted right at any time and from
time to time, and without the consent of or notice to the Borrower, to
grant to one or more banks or other financial institutions (each, a
"Participant") participating interests in the Bank's obligation to lend
hereunder and/or any or all of the Loans held by the Bank hereunder. In the
event of any such grant by the Bank of a participating interest to a
Participant, whether or not upon notice to the Borrower, the Bank shall
remain responsible for the performance of its obligations hereunder and the
Borrower shall continue to deal solely and directly with the Bank in
connection with the Bank's rights and obligations hereunder. The Bank may
furnish any information concerning the Borrower in its possession from time
to time to prospective Assignees and Participants; provided that the Bank
shall require any such prospective Assignee or Participant to agree in
writing to maintain the confidentiality of such information to the same
extent as the Bank would be required to maintain such confidentiality.
(b) The Borrower may terminate this letter agreement and the financing
arrangements made herein by giving written notice of such termination to the
Bank; provided that no such termination will release or waive any of the Bank's
rights or remedies or any of the Borrower's obligations under this letter
agreement or any of the other Loan Documents unless and until the Borrower has
paid in full the Revolving Loans, all Letters of Credit have expired or been
returned to the Bank and the Borrower has paid in full all interest and all fees
and charges payable in connection herewith.
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22
(c) This letter agreement may be executed by the parties hereto in several
counterparts hereof and by the different parties hereto on separate counterparts
hereof, all of which counterparts shall together constitute one and the same
agreement.
(d) This letter agreement is intended by the parties as the final, complete
and exclusive statement of the transactions evidenced by this letter agreement.
All prior or contemporaneous promises, agreements and understandings, whether
oral or written, are deemed to be superseded by this letter agreement, and no
party is relying on any promise, agreement or understanding not set forth in
this letter agreement. This letter agreement may not be amended or modified
except by a written instrument describing such amendment or modification
executed by the Borrower and the Bank.
6.5. CONSENT TO JURISDICTION. The Borrower irrevocably submits to the
non-exclusive jurisdiction of any Massachusetts court or any federal court
sitting within The Commonwealth of Massachusetts over any suit, action or
proceeding arising out of or relating to this letter agreement and/or the
Revolving Note and/or any Letter of Credit. The Borrower irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of venue of any such suit, action or proceeding brought in
such a court and any claim that any such suit, action or proceeding has been
brought in an inconvenient forum. The Borrower agrees that final judgment in any
such suit, action or proceeding brought in such a court shall be enforced in any
court of proper jurisdiction by a suit upon such judgment, provided that service
of process in such action, suit or proceeding shall have been effected upon the
Borrower as permitted by law.
6.6. SEVERABILITY. In the event that any provision of this letter agreement
or the application thereof to any Person, property or circumstances shall be
held to any extent to be invalid or unenforceable, the remainder of this letter
agreement, and the application of such provision to Persons, properties or
circumstances other than those as to which it has been held invalid and
unenforceable, shall not be affected thereby, and each provision of this letter
agreement shall be valid and enforced to the fullest extent permitted by law.
6.7. GOVERNING LAW. This letter agreement and the Revolving Note shall be
governed by, and construed and enforced in accordance with, the laws of The
Commonwealth of Massachusetts.
6.8. REPLACEMENT NOTE. Upon receipt of an affidavit of an officer of the
Bank as to the loss, theft, destruction or mutilation of the Revolving Note or
of any other Loan Document which is not of public record and, in the case of any
such mutilation, upon surrender and cancellation of the Revolving Note or other
Loan Document, the Borrower will issue, in lieu thereof, a replacement Revolving
Note or other Loan Document in the same principal amount (as to the Revolving
Note) and in any event of like tenor.
6.9. USURY. All agreements between the Borrower and the Bank are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the Revolving Note or otherwise, shall the
amount paid or agreed to be paid to the
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Bank for the use or the forbearance of the Indebtedness represented by the
Revolving Note exceed the maximum permissible under applicable law. In this
regard, it is expressly agreed that it is the intent of the Borrower and the
Bank, in the execution, delivery and acceptance of the Revolving Note, to
contract in strict compliance with the laws of The Commonwealth of
Massachusetts. If, under any circumstances whatsoever, performance or
fulfillment of any provision of the Revolving Note or any of the other Loan
Documents at the time such provision is to be performed or fulfilled shall
involve exceeding the limit of validity prescribed by applicable law, then the
obligation so to be performed or fulfilled shall be reduced automatically to the
limits of such validity, and if under any circumstances whatsoever the Bank
should ever receive as interest an amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall be applied to the
reduction of the principal balance evidenced by the Revolving Note and not to
the payment of interest. The provisions of this ss.6.9 shall control every other
provision of this letter agreement and of the Revolving Note.
6.10. WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY MUTUALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS LETTER AGREEMENT, THE REVOLVING NOTE OR ANY OTHER LOAN DOCUMENTS OR OUT OF
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE
BANK TO ENTER INTO THIS LETTER AGREEMENT AND TO MAKE REVOLVING LOANS AS
CONTEMPLATED HEREIN.
6.11 CLOSING FEE. The Borrower is paying to the Bank, at the date of
execution and delivery of this letter agreement, a non-refundable closing fee in
the amount of $12,500. The fees described in this Section are in addition to any
balances and fees required by the Bank or any of its affiliates in connection
with any other services now or hereafter made available to the Borrower.
VII. DEFINED TERMS
7.1. DEFINITIONS. In addition to terms defined elsewhere in this letter
agreement, as used in this letter agreement, the following terms have the
following respective meanings:
"Affiliate" - Any Person which, directly or indirectly, controls or is
controlled by or is under common control with the Borrower; any officer or
director of the Borrower; any Person owning of record or beneficially, directly
or indirectly, 5% or more of any class of capital stock of the Borrower or 5% or
more of any class of capital stock or other equity interest having voting power
(under ordinary circumstances) of any of the other Persons described above; and
any member of the immediate family of any of the foregoing.
"Alternate Base Rate" - The greater of (A) (i) the sum of one-half of one
percent (0.50%) per annum, plus (ii) the Federal Funds Effective Rate or (B) the
Prime Rate as in effect from time to time.
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"Available Commitment" - At any time, an amount equal to (i) the Commitment
at such time, minus (ii) the LC Exposure Amount.
"Bank Certificate" - A certificate signed by an officer of the Bank setting
forth any additional amount required to be paid by the Borrower to the Bank
pursuant to ss.1.4, ss.1.7 or ss.1.8 of this letter agreement, which certificate
shall be submitted by the Bank to the Borrower in connection with each demand
made at any time by the Bank upon the Borrower with respect to any such
additional amount, and each such certificate shall, save for manifest error,
constitute presumptive evidence of the additional amount required to be paid by
the Borrower to the Bank upon each demand. A claim by the Bank for all or any
part of any additional amount required to be paid by the Borrower may be made
before and/or after the end of the period to which such claim relates or during
which such claim has arisen and before and/or after any payment hereunder to
which such claim relates. Each Bank Certificate shall set forth in reasonable
detail the basis for and the calculation of the claim to which it relates.
"Business Day" - Any day which is not a Saturday, nor a Sunday nor another
day on which banks in Boston, Massachusetts are authorized or directed to close;
provided however that if the applicable provision relates to a LIBOR Loan, then
the term "Business Day" shall not include any day on which dealings are not
carried on in the London interbank market or on which banks are not open for
business in London.
"Cash Equivalents" - All cash equivalents as determined in accordance with
generally accepted accounting principles.
"CERCLA" - The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601 et seq., as amended by the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. Xx. 00-000, 000
Xxxx. 0000.
"Change of Control" - For any reason (a) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934) is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934, except that a Person shall be deemed
to have "beneficial ownership" of all securities that such Person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total
outstanding capital stock (on a fully-diluted basis) of the Borrower entitled to
vote in the election of directors; or (b) during any period of up to 24
consecutive months, commencing after the date of this letter agreement,
individuals who at the beginning of such 24 month period were directors of the
Borrower (together with any new director whose election by its Board of
Directors or whose nomination for election by its shareholders was approved by a
vote of the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
directors of the Borrower then in office.
"Commitment" - $5,000,000.
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"Control" - Possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of any Person, whether through
ownership of voting equity, by contract or otherwise.
"Default" - Any event or circumstance which, with the passage of time or
the giving of notice or both, could become an Event of Default.
"ERISA" - The Employee Retirement Income Security Act of 1974, as amended.
"Event of Default" - As defined in ss.5.1.
"Expiration Date" - May 14, 2002, unless extended by the Bank which
extension may be given or withheld by the Bank in its sole discretion.
"Federal Funds Effective Rate" -- For any day, a fluctuating interest rate
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by the Bank
from three Federal funds brokers of recognized standing selected by the Bank.
"Floating Rate" - As defined in ss.1.4.
"Floating Rate Loan" - All or any portion of any Revolving Loan which bears
interest at a rate calculated with reference to the Alternate Base Rate.
"Impositions" - All present and future taxes, levies, duties, impositions,
deductions, charges and withholdings applicable to the Bank with respect to any
LIBOR Loan, excluding, however, any taxes imposed directly on the Bank's income
and any franchise taxes imposed on it by the jurisdiction under the laws of
which the Bank is organized or any political subdivision thereof or where the
Bank does business.
"Indebtedness" - All obligations of a Person, whether current or long-term,
senior or subordinated, for money borrowed.
"Interest Payment Date(s)" - As to each LIBOR Loan, the last day of the
Interest Period applicable to such LIBOR Loan; provided that if such Interest
Period is longer than three months, then there shall be multiple Interest
Payment Dates for such LIBOR Loan, the first Interest Payment Date to occur
three months from the beginning of the Interest Period and subsequent Interest
Payment Dates to occur at three months intervals thereafter, with the final
Interest Payment Date in each Interest Period being the last day of the Interest
Period.
"Interest Period" - As to each LIBOR Loan, the period commencing with the
date of the making of such LIBOR Loan and ending one month, two months, three
months or six months thereafter (as the Borrower may select pursuant to ss.1.4);
provided that (A) any such Interest
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Period which would otherwise end on a day which is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day occurs in
a new calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day, (B) any such Interest Period which begins on
a day for which there is no numerically corresponding day in the calendar month
during which such Interest Period is to end shall end on the last Business Day
of such calendar month, and (C) no Interest Period may be selected as to any
Revolving Loan which would end after the Expiration Date.
"LC Draw Obligation" - The Borrower's obligation to reimburse the Bank on
account of any drawing under any Letter of Credit as provided in ss.1.6(c).
"LC Exposure Amount" - At any time, the sum of (i) the aggregate undrawn
stated amount of all Letters of Credit outstanding at such time, plus (ii) the
aggregate amount of all drawings under Letters of Credit for which the Bank
shall not have received reimbursement by the Borrower as provided in ss.1.6(c).
"LIBOR Rate" - With respect to each Interest Period for a LIBOR Loan, the
rate per annum as determined on the basis of the offered rates for deposits in
U.S. Dollars, for a period of time comparable to such LIBOR Loan which appears
on the Telerate page 3750 as of 11:00 a.m. London time on the day that is two
Business Days preceding the first day of such LIBOR Loan; provided, however, if
the rate described above does not appear on the Telerate System on any
applicable interest determination date, the LIBO Rate shall be the rate (rounded
upward, if necessary, to the nearest one hundred-thousandth of a percentage
point), determined on the basis of the offered rates for deposits in U.S.
dollars for a period of time comparable to such LIBOR Loan which are offered by
four major banks in the London interbank market at approximately 11:00 a.m.
London time, on the day that is two (2) Business Days preceding the first day of
such LIBOR Loan as selected by Bank. The principal London office of each of the
four major London banks will be requested to provide a quotation of its U.S.
Dollar deposit offered rate. If at least two such quotations are provided, the
rate for that date will be the arithmetic mean of the quotations. If fewer than
two quotations are provided as requested, the rate for that date will be
determined on the basis of the rates quoted for loans in U.S. dollars to leading
European banks for a period of time comparable to such LIBOR Loan offered by
major banks in New York City at approximately 11:00 a.m. New York City time, on
the day that is two Business Days preceding the first day of such LIBOR Loan. In
the event that Bank is unable to obtain any such quotation as provided above, it
will be deemed that the LIBOR Rate pursuant to a LIBOR Loan cannot be
determined. In the event that the Board of Governors of the Federal Reserve
System shall impose a Reserve Percentage with respect to the LIBOR Rate deposits
of Bank, then for any period during which such Reserve Percentage shall apply,
the LIBOR Rate shall be equal to the amount determined above divided by an
amount equal to 1 minus the Reserve Percentage. "Reserve Percentage" shall mean
the maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed on member banks of the Federal
Reserve System against "Euro-currency Liabilities" as defined in Regulation D.
"LIBOR Loan" - All or any portion of a Revolving Loan which bears interest
at a rate based on the LIBOR Rate.
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"LIBOR Rate Increment" - Two and one-quarter percent (2.25%) per annum.
"Liens" - As defined in ss.4.1.
"Loan Documents" - Each of this letter agreement, the Revolving Note, the
Pledge Agreement and each other instrument, document or agreement evidencing,
securing, guaranteeing or relating in any way to any of the Revolving Loans, all
whether now existing or hereafter arising or entered into.
"London" - The City of London in England.
"Marketable Securities" - All investment property which, but for the fact
that such investment property has a maturity greater than 91 days would be "Cash
Equivalents" (as defined herein) and all other investment property constituting
an "Eligible Investment" under the Borrower's investment policy set forth on the
attached Exhibit A.
"Net Income" (or "Net Loss") - The book net income (or book net loss, as
the case may be) of a Person for any period, after all taxes actually paid or
accrued and all expenses and other charges determined in accordance with
generally accepted accounting principles consistently applied.
"Obligations" - All Indebtedness, covenants, agreements, liabilities and
obligations, now existing or hereafter arising, made by the Borrower with or for
the benefit of the Bank or owed by the Borrower to the Bank in connection with
the Loan Documents.
"PBGC" - The Pension Benefit Guaranty Corporation or any successor thereto.
"Permitted Liens" - Liens for taxes, assessments or governmental charges or
levies on the Pledged Collateral if the same are being contested in good faith
and by appropriate proceedings which serve as a matter of law to stay the
enforcement thereof and as to which adequate reserves are maintained; Liens
imposed by law arising in the ordinary course of business for sums not yet due
or which are being contested in good faith and by appropriate proceedings which
serve as a matter of law to stay the enforcement thereof and as to which
adequate reserves are maintained; Liens under workmen's compensation laws,
unemployment insurance, social security, retirement benefits or similar
legislation; and Liens in favor of the Bank.
"Person" - An individual, corporation, partnership, limited partnership,
limited liability company, joint venture, trust or unincorporated organization,
or a government or any agency or political subdivision thereof.
"Pledged Collateral" - All property now or hereafter owned by the Borrower
or in which the Borrower now or hereafter has any interest which is described as
"Collateral" in the Pledge Agreement.
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"Prime Rate" - That variable rate of interest per annum designated by the
Bank, from time to time, as being its prime rate, it being understood that such
rate is merely a reference rate and does not necessarily represent the lowest or
best rate being charged to any customer.
"Ready Assets" - Cash, Cash Equivalents and Marketable Securities.
"Subsidiary" - Any corporation or other entity of which a Person and/or any
of its Subsidiaries, directly or indirectly, owns, or has the right to control
or direct the voting of, fifty (50%) percent or more of the outstanding capital
stock or other ownership interest having general voting power (under ordinary
circumstances).
"Tangible Net Worth" - An amount equal to the total consolidated assets of
any Person (excluding (i) the total intangible assets of such Person and (ii)
any minority interests in Subsidiaries) minus the total consolidated liabilities
of such Person. Total intangible assets shall be deemed to include, but shall
not be limited to, the excess of cost over book value of acquired businesses
accounted for by the purchase method, formulae, trademarks, trade names,
patents, patent rights and deferred expenses (including, but not limited to,
unamortized debt discount and expense, organizational expense, capitalized
software costs and experimental and development expenses).
"Total Liabilities" - The aggregate amount of consolidated liabilities of a
Person determined in accordance with generally accepted accounting principles
consistently applied.
Any defined term used in the plural preceded by the definite article shall
be taken to encompass all members of the relevant class. Any defined term used
in the singular preceded by "any" shall be taken to indicate any number of the
members of the relevant class.
**THE BALANCE OF THIS PAGE IS LEFT BLANK INTENTIONALLY**
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This letter agreement is executed, as an instrument under seal, as of the
day and year first above written.
Very truly yours,
ASPECT MEDICAL SYSTEMS, INC.
By /s/ J. Xxxx Xxxxxxxxx
--------------------------------
J. Xxxx Xxxxxxxxx
Vice President,
Chief Financial Officer and
Treasurer
Accepted and agreed:
FLEET NATIONAL BANK
By /s/ Li-Xxx Xxxx
----------------------------------
Li-Xxx Xxxx, Vice President
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DISCLOSURE SCHEDULE
Item 1.12 Use of Proceeds
Obligations owed to Imperial Bank.]
Item 2.1(a) Jurisdictions in which the Borrower is qualified; Subsidiaries
Jurisdiction in which the Borrower is qualified: Massachusetts
and Delaware
Subsidiaries of the Borrower Jurisdiction of Incorporation
----------------------------------------- -----------------------------
Aspect Medical Systems International B.V. The Netherlands
Aspect Medical Systems UK Limited United Kingdom
Item 2.1(d) Litigation
None
-30-
31
PLEDGE AGREEMENT
This PLEDGE AGREEMENT is made as of May 16, 2001, between ASPECT MEDICAL
SYSTEMS, INC. (the "PLEDGOR"), and FLEET NATIONAL BANK (the "BANK").
WHEREAS, the Pledgor has entered into a letter agreement dated as of the
date hereof (as amended and in effect from time to time, the "LOAN AGREEMENT")
with the Bank, pursuant to which the Bank, made a loan to the Pledgor;
WHEREAS, it is a condition precedent to the Bank making loans available
under that the Pledgor execute and deliver to the Bank a pledge agreement in
substantially the form hereof; and
WHEREAS, the Pledgor wishes to grant pledges, assignments and security
interests in favor of the Bank as herein provided;
NOW, THEREFORE, in consideration of the premises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SS.1. DEFINITIONS. Capitalized terms used herein without definition shall
have the respective meanings provided therefor in the Loan Agreement. Terms used
herein and not defined in the Loan Agreement or otherwise defined herein that
are defined in the Uniform Commercial Code of The Commonwealth of Massachusetts
have such defined meanings herein. In addition, the term "Collateral" shall mean
the property at any time assigned or pledged to the Bank hereunder (whether
described herein or not) and all income therefrom, increases therein and
proceeds thereof.
SS.2. PLEDGE OF COLLATERAL. The Pledgor hereby pledges, grants a security
interest in, and delivers to the Bank the following collateral: Securities
Account No. DE0916 (the "ACCOUNT") maintained by Pledgor with State Street Bank
and Trust Company and all Investment Property in connection with the Account,
together with instructions to or approvals by brokers or other securities
intermediaries or other book-entry custodians or other instructions or
confirmations as may have been reasonably requested by the Bank as necessary for
the Bank's security interest in such collateral to attach, become perfected,
achieve priority over competing claimants and otherwise be preserved.
SS.3. SECURITY FOR OBLIGATIONS. This Pledge Agreement and the security
interest in and pledge of the Collateral hereunder are made with and granted to
the Bank as security for the payment and performance in full of all the
Obligations.
SS.4. INTEREST, DIVIDENDS, ETC. Subject to the provisions of ss.5 hereof,
any sums or other property paid or distributed upon or with respect to the
Collateral, whether by dividend, interest
32
or redemption or upon the liquidation or dissolution of the issuer thereof or
otherwise, shall be retained in the Account and reinvested in accordance with
Entitlement Orders given by the Pledgor or the Bank, as the case may be.
SS.5. COVENANTS AND REPRESENTATIONS. (a) (i) The Pledgor covenants and
agrees to maintain the net equity value of the Account (after taking into
account any outstanding margin indebtedness applicable thereto) so that the net
equity value of the Account at all times equals or exceeds 102% of the
Commitment (the "COLLATERAL MAINTENANCE REQUIREMENT").
(ii) In the event that at any time the Pledgor is not in compliance with
the Collateral Maintenance Requirement, upon two (2) business days' written
notice from the Bank, the Pledgor shall, at the option of the Pledgor, either
(i) immediately make a payment to the Bank in immediately available funds for
application to the Obligations, or (ii) immediately deposit into the Account
additional cash, Cash Equivalents and/or Marketable Securities, in any case in
an amount sufficient to eliminate any shortfall in the Collateral Maintenance
Requirement.
(iii) To determine the net equity value of the Account (A) cash shall be
valued at 100% of the face amount thereof and (B) Investment Property shall be
valued at the applicable percentage set forth on Schedule A attached hereto of
the then current market value thereof (as reasonably determined by the Bank).
(b) Notwithstanding anything herein to the contrary, the Pledgor may
give Entitlement Orders with respect to the Collateral. The Pledgor further
covenants that the Bank may also give Entitlement Orders regarding the
Collateral; PROVIDED, HOWEVER, that the Bank agrees that it will exercise such
right only after the occurrence of an Event of Default and during the
continuance thereof.
(c) So long as no Event of Default then exists, the Borrower may
request a Permitted Distribution (as defined below) from the Account. Except for
Permitted Distributions and as otherwise provided herein, no distributions of
any kind whatsoever, whether cash and/or securities, are to be made from the
Account without the prior written consent of the Bank. The term "PERMITTED
DISTRIBUTION" shall mean a distribution of cash, Cash Equivalents, Marketable
Securities and/or other Investment Property from the Account to the Pledgor,
upon the written request of Pledgor, which request shall (i) demonstrate
compliance (after giving effect to the requested distribution) with the
Collateral Maintenance Requirement and (ii) be signed by the Pledgor and the
Bank.
(d) The Pledgor hereby represents and warrants that the Pledgor has
good and marketable title to the Collateral described in ss.1, subject to no
pledges, liens, security interests, charges, options, restrictions or other
encumbrances or other adverse claims except Permitted Liens.
(e) The Pledgor covenants that, so long as the financing arrangements
contemplated by the Loan Agreement are in effect or all or any portion of any
Revolving Loan, any Letter of Credit or any of the other Obligations shall be
outstanding, the Pledgor will defend
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33
the Bank's rights and security interest in the Collateral against the claims and
demands of all persons whomsoever. The Pledgor further covenants that the
Pledgor will have the like title to and right to pledge and grant a security
interest in the Collateral hereafter pledged or in which a security interest is
granted to the Bank hereunder and will likewise defend the Bank's rights,
pledge, and security interest thereof and therein.
SS.6. REMEDIES.
(a) If an Event of Default shall have occurred and be continuing, the
Bank shall thereafter have the following rights and remedies in addition to the
rights and remedies of a secured party under the Uniform Commercial Code of
Massachusetts, all such rights and remedies being cumulative, not exclusive, and
enforceable alternatively, successively or concurrently, at such time or times
as the Bank deems expedient:
(i) the Bank may give Entitlement Orders, demand, xxx for,
collect or make any compromise or settlement the Bank deems suitable
in respect of any of the Collateral;
(ii) the Bank may sell, resell, assign or deliver or otherwise
dispose of any or all of the Collateral, for cash or credit or both
and upon such terms at such place or places, at such time or times and
to such entities or other persons as the Bank thinks expedient, all
without demand for performance by the Pledgor or any notice or
advertisement whatsoever except as expressly provided herein or as may
otherwise be required by law;
(iii) the Bank may cause all or any part of the Collateral to be
transferred into its name or the name of its nominee or nominees and,
for such purpose, without limitation upon any other rights or remedies
available to the Bank, may give instructions to such effect to any
issuer of any of the Collateral or any broker or other financial
intermediary or book-entry custodian in possession of any of the
Collateral or upon whose books any of the Collateral is then
registered; and
(iv) the Bank may set off or otherwise apply against any of the
Obligations any and all sums deposited with it or held by it, in
deposit accounts.
(b) In the event of any disposition of any of the Collateral as
provided in clause (ii) of ss.6(a), the Bank shall give to the Pledgor at least
ten (10) Business Days' prior written notice of the time and place of any public
sale of such Collateral or of the time after which any private sale or any other
intended disposition is to be made. The Pledgor hereby acknowledges that ten
(10) Business Days' prior written notice of such sale or other disposition shall
be reasonable notice. The Bank may enforce its rights hereunder without any
other notice and without compliance with any other condition precedent now or
hereunder imposed by statute, rule of law or otherwise (all of which are hereby
expressly waived by the Pledgor, to the fullest extent permitted by law). The
Bank may buy any part or all of the Collateral at any public sale and if any
part or all of the Collateral is of a type customarily sold in a recognized
market or is of
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34
the type which is the subject of widely-distributed standard price quotations,
the Bank may buy at private sale and may make payments thereof by any means.
(c) The Bank may apply the cash proceeds actually received from any sale or
other disposition or collection of any of the Collateral to the reasonable
expenses of retaking, holding, preparing for sale, selling and the like,
including breakage costs or early withdrawal penalties relating to any time
deposits or certificates of deposit, to reasonable attorneys' fees, travel and
all other reasonable expenses which may be incurred by the Bank in attempting to
collect any of the Obligations or to enforce this Pledge Agreement or in the
prosecution or defense of any action or proceeding related to the subject matter
of this Pledge Agreement, and then to the Obligations in such order or
preference as the Bank may determine after proper allowance for any Obligations
not then due. Only after such applications and the Obligations have been paid in
full in cash, and after payment by the Bank of any amount required by
ss.9-504(1)(c) of the Uniform Commercial Code of the Commonwealth of
Massachusetts, need the Bank account to the Pledgor for any surplus.
SS.7. MARSHALLING. The Bank shall not be required to marshal any present or
future collateral security for (including but not limited to this Pledge
Agreement and the Collateral), or other assurances of payment of, the
Obligations or any of them, or to resort to such collateral security or other
assurances of payment in any particular order. All of the Bank's rights and
remedies hereunder and in respect of such security and other assurances of
payment shall be cumulative and in addition to all other rights, however
existing or arising. To the extent that the Pledgor lawfully may, the Pledgor
hereby agrees that the Pledgor will not invoke any law relating to the
marshalling of collateral that might cause delay in or impede the enforcement of
the Bank's rights under this Pledge Agreement or under any other instrument
evidencing any of the Obligations or under which any of the Obligations is
outstanding or by which any of the Obligations is secured or payment thereof is
otherwise assured, and to the extent that it lawfully may the Pledgor hereby
irrevocably waives the benefits of all such laws.
SS.8. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of the Pledgor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any exercise or nonexercise, or any waiver, by the Bank of
any right, remedy, power or privilege under or in respect of any of the
Obligations or any collateral security therefor (including this Pledge
Agreement); (b) any amendment to or modification of the Loan Agreement, any of
the Loan Documents (as defined in the Loan Agreement) or any of the Obligations;
(c) any amendment to or modification of any instrument (other than this Pledge
Agreement) securing any of the Obligations; or (d) the taking of additional
security for, or any other assurances of payment of, any of the Obligations or
the release or discharge or termination of any security or other assurances of
payment or performance for any of the Obligations or the liability of the
Borrower therefor; whether or not the Pledgor shall have notice or knowledge of
any of the foregoing.
SS.9. TRANSFER, ETC. BY PLEDGOR. Except as provided in ss.5, without the
prior written consent of the Bank, the Pledgor will not sell, assign, transfer
or otherwise dispose of, grant any option with respect to, or pledge or grant
any security interest in or otherwise encumber any of the Collateral or any
interest therein, except for Permitted Liens.
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35
SS.10. FURTHER ASSURANCES. The Pledgor will do all such acts, and will
furnish to the Bank all such financing statements, certificates, legal opinions
and other documents and will obtain all such governmental consents and corporate
or other approvals and will do or cause to be done all such other things as the
Bank may reasonably request from time to time in order to give full effect to
this Pledge Agreement and to secure, preserve and protect the rights of the Bank
hereunder, all without any cost or expense to the Bank. If the Bank so elects, a
photocopy of this Pledge Agreement may at any time and from time to time be
transmitted to any issuer of any of the Collateral or any broker or other
securities intermediary or book-entry custodian in possession of any of the
Collateral or on whose books any of the Collateral is registered or be filed by
the Bank as a financing statement in any recording office in any jurisdiction.
SS.11. BANK'S EXONERATION. Under no circumstances shall the Bank be deemed
to assume any responsibility for or obligation or duty with respect to any part
or all of the Collateral of any nature or kind or any matter or proceedings
arising out of or relating thereto. The Bank shall not be required to take any
action of any kind to collect, preserve or protect its or the Pledgor's rights
in any of the Collateral or against other parties thereto. The Bank's prior
recourse to any part or all of the Collateral shall not constitute a condition
of any demand, suit or proceeding for payment or collection of any of the
Obligations.
SS.12. NO WAIVER, ETC. Neither this Pledge Agreement nor any term hereof
may be changed, waived, discharged or terminated except by a written instrument
expressly referring to this Pledge Agreement and to the provisions so modified
or limited, and executed by the party to be charged. No act, failure or delay by
the Bank shall constitute a waiver of its rights and remedies hereunder or
otherwise. No single or partial waiver by the Bank of any default or right or
remedy that it may have shall operate as a waiver of any other default, right or
remedy or of the same default, right or remedy on a future occasion. The Pledgor
hereby waives acceptance and notice of acceptance of this Pledge Agreement and
presentment, notice of dishonor and protest of all instruments, included in or
evidencing any of the Obligations or any of the Collateral, and any and all
other notices and demands whatsoever (except as expressly provided in the Loan
Agreement).
SS.13. NOTICE, ETC. All notices, requests and other communications
hereunder shall be made in the manner set forth in the Loan Agreement.
SS.14. TERMINATION. Upon final payment and performance in full in cash of
all of the Obligations, this Pledge Agreement shall terminate and the Bank
shall, at the Pledgor's request and expense, return such Collateral in the
possession or control of the Bank as has not theretofore been disposed of
pursuant to the provisions hereof, together with any moneys and other property
at the time held by the Bank hereunder.
SS.15. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
Pledgor hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest set forth in
ss. 1.4(e) of the Loan Agreement.
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36
SS.16. GOVERNING LAW; CONSENT TO JURISDICTIONS. THIS PLEDGE AGREEMENT IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The
Pledgor irrevocably submits to the non-exclusive jurisdiction of any
Massachusetts court or any federal court sitting within The Commonwealth of
Massachusetts over any suit, action or proceeding arising out of or relating to
this Pledge Agreement. The Pledgor irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any such suit, action or proceeding brought in such a court and any
claim that any such suit, action or proceeding has been brought in an
inconvenient forum. The Pledgor agrees that final judgment in any such suit,
action or proceeding brought in such a court shall be enforced in any court of
proper jurisdiction by a suit upon such judgment, provided that service of
process in such action, suit or proceeding shall have been effected upon the
Pledgor as permitted by law.
SS.17. WAIVER OF JURY TRIAL. THE PLEDGOR AND THE BANK HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY MUTUALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS PLEDGE AGREEMENT OR ANY OTHER LOAN DOCUMENTS OR OUT OF ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
ANY PARTY. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE BANK TO ENTER
INTO THIS PLEDGE AGREEMENT AND TO MAKE LOANS AS CONTEMPLATED IN THE LOAN
AGREEMENT. Except as prohibited by law, the Pledgor waives any right which the
Pledgor may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. The Pledgor (a)
certifies that neither the Bank nor any representative, agent or attorney of the
Bank has represented, expressly or otherwise, that the Bank would not, in the
event of litigation, seek to enforce the foregoing waivers and (b) acknowledges
that, in entering into the Loan Agreement, the Bank is relying upon, among other
things, the waivers and certifications contained in this ss.17.
SS.18. MISCELLANEOUS. The headings of each section of this Pledge Agreement
are for convenience only and shall noT define or limit the provisions thereof.
This Pledge Agreement and all rights and obligations hereunder shall be binding
upon the Pledgor and the Pledgor's respective heirs, representatives, successors
and assigns, and shall inure to the benefit of the Bank and its successors and
assigns. If any term of this Pledge Agreement shall be held to be invalid,
illegal or unenforceable, the validity of all other terms hereof shall be in no
way affected thereby, and this Pledge Agreement shall be construed and be
enforceable as if such invalid, illegal or unenforceable term had not been
included herein.
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37
IN WITNESS WHEREOF, intending to be legally bound, the Pledgor and the Bank
have caused this Pledge Agreement to be executed as of the date first above
written.
ASPECT MEDICAL SYSTEMS, INC.
By: /s/ J. Xxxx Xxxxxxxxx
-------------------------------------
J. Xxxx Xxxxxxxxx, Vice President,
Chief Financial Officer and Treasurer
FLEET NATIONAL BANK
By: /s/ Li-Xxx Xxxx
-------------------------------------
Li-Xxx Xxxx, Vice President
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SCHEDULE A
----------------------------------------------------------------------------------------
TYPES OF INVESTMENT PROPERTY PERCENTAGE
----------------------------------------------------------------------------------------
U.S. Treasury Obligations (bills, notes and bonds) 90%
----------------------------------------------------------------------------------------
Investment Grade Commercial Paper 80%
----------------------------------------------------------------------------------------
Federal Government or Quasi-Government Agency Securities, to 80%
include those issued by GNMA, FNMA, or FHLMC
----------------------------------------------------------------------------------------
Municipal Bonds 80%
----------------------------------------------------------------------------------------
Investment Grade Bonds (Xxxxx'x Aaa down through Baa3; S&P AAA 70%
down through down through BBB-)
----------------------------------------------------------------------------------------
All other Investment Property 0%
----------------------------------------------------------------------------------------
39
PROMISSORY NOTE
$5,000,000.00 Boston, Massachusetts
May 16, 2001
FOR VALUE RECEIVED, ASPECT MEDICAL SYSTEMS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of FLEET NATIONAL BANK
(the "Bank") the principal amount of Five Million ($5,000,000.00) Dollars or
such portion thereof as may be advanced by the Bank pursuant to ss.1.2 of that
certain letter agreement of even date herewitH between the Bank and the Borrower
(the "Loan Agreement") and remains outstanding from time to time hereunder
("Principal"), with interest, at the rate hereinafter set forth, on the unpaid
Principal balance, from the date hereof until payment in full of all Principal
and interest hereunder.
Interest on all unpaid Principal shall be due and payable monthly in
arrears, on the first day of each month, commencing on the first such date after
the advance of any Principal and continuing on the first day of each month
thereafter and on the date of payment of this note in full, at a fluctuating
rate per annum (computed on the basis of a year of three hundred sixty (360)
days for the actual number of days elapsed) which shall at all times (except as
described in the next sentence) be equal to the Alternate Base Rate (as defined
below), as in effect from time to time (but in no event in excess of the maximum
rate permitted by then applicable law), with a change in the aforesaid rate of
interest to become effective on the same day on which any change in the
Alternate Base Rate is effective; provided, however, that if all or any portion
of outstanding Principal is represented by a LIBOR Loan (as defined in the Loan
Agreement) for any Interest Period (as defined in the Loan Agreement), then
interest for such Interest Period on such LIBOR Loan shall be payable at a rate
per annum equal to the sum of (x) the applicable LIBOR Rate (determined as
provided in the Loan Agreement), PLUS (y) the LIBOR Rate Increment (as defined
in the Loan Agreement) then in effect, on the Interest Payment Date (as defined
in the Loan Agreement) applicable to such Interest Period. After the occurrence
and during the continuance of any Event of Default, interest under this note
will, at the option of the Bank, accrue and be payable at a fluctuating rate per
annum which at all times shall be equal to the sum of (i) four (4%) percent per
annum PLUS (ii) the Prime Rate (but in no event in excess of the maximum rate
permitted by then applicable law). As used herein, "Alternate Base Rate" and
"Prime Rate" shall have the meanings given such terms in the Loan Agreement. If
the entire amount of any required Principal and/or interest is not paid within
ten (10) days after the same is due, the Borrower shall pay to the Bank a late
fee equal to five percent (5%) of the required payment; provided, that such late
fee shall not apply to any amount whose maturity shall have been accelerated or
to the principal balance of this note outstanding as of the Expiration Date (as
defined in the Loan Agreement).
All outstanding Principal and all interest accrued thereon shall be due and
payable in full on the first to occur of: (i) an acceleration under ss.5.2(b) of
the Loan Agreement or (ii) the Expiration Date. The Borrower may at any time and
from time to time prepay all or any portion
40
of said Principal, without premium or penalty, but, as to LIBOR Loans, only at
the times and in the manner, and with the yield maintenance fee (if any),
provided for in the Loan Agreement. Under certain circumstances set forth in the
Loan Agreement, prepayments of Principal may be required.
Payments of both Principal and interest shall be made, in lawful money of
the United States in immediately available funds, at the office of the Bank
located at 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000, or at such other address as the
Bank may from time to time designate.
The undersigned Borrower irrevocably authorizes the Bank to make or cause
to be made, on a schedule attached to this note or on the books of the Bank, at
or following the time of making any Revolving Loan (as defined in the Loan
Agreement) and of receiving any payment of Principal, an appropriate notation
reflecting such transaction and the then aggregate unpaid balance of Principal.
Failure of the Bank to make any such notation shall not, however, affect any
obligation of the Borrower hereunder or under the Loan Agreement. The unpaid
Principal amount of this note, as recorded by the Bank from time to time on such
schedule or on such books, shall constitute presumptive evidence of the
aggregate unpaid principal amount of the Revolving Loans.
The Borrower hereby (a) waives notice of and consents to any and all
advances, settlements, compromises, favors and indulgences (including, without
limitation, any extension or postponement of the time for payment), any and all
receipts, substitutions, additions, exchanges and releases of collateral, and
any and all additions, substitutions and releases of any person primarily or
secondarily liable, (b) waives presentment, demand, notice, protest and all
other demands and notices generally in connection with the delivery, acceptance,
performance, default or enforcement of or under this note, and (c) agrees to pay
all reasonable costs and expenses, including, without limitation, reasonable
attorneys' fees, incurred or paid by the Bank in enforcing this note and any
collateral or security therefor, all whether or not litigation is commenced.
This note is the Revolving Note referred to in the Loan Agreement. This
note is secured by, and is entitled to the benefits of, the Pledge Agreement (as
defined in the Loan Agreement). This note is subject to prepayment (with a yield
maintenance fee consequent thereon in certain cases, as more fully described in
the Loan Agreement) as set forth in the Loan Agreement and in the Pledge
Agreement. The maturity of this note may be accelerated upon the occurrence of
an Event of Default, as provided in the Loan Agreement.
THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE
RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED ON THIS NOTE OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY RELATED DOCUMENTS OR OUT OF
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF ANY PERSON. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE
BANK TO ACCEPT THIS NOTE AND TO MAKE LOANS AS CONTEMPLATED IN THE LOAN
AGREEMENT.
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Executed, as an instrument under seal, as of the day and year first above
written.
ASPECT MEDICAL SYSTEMS, INC.
/s/ Xxxxxx Xxxxxxx By: /s/ J. Xxxx Xxxxxxxxx
-------------------------- ------------------------------------
WITNESS J. Xxxx Xxxxxxxxx,
Vice President, Chief Financial
Officer and Treasurer
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