Exhibit 10.31
LOAN AGREEMENT
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THIS AGREEMENT is made as of the l7th day of April, 2001, by and between
REGENERATION TECHNOLOGIES, INC. (the "Borrower"), a Delaware corporation, and
BANK OF AMERICA, N.A. (the "Bank").
Recitals
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The Borrower wishes to obtain credit from the Bank on the terms and
conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the parties agree as
follows:
ARTICLE I
BORROWING AND PAYMENT
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1.01 Revolving Line of Credit.
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(a) The Bank hereby establishes in favor of the Borrower a revolving
line of credit (the "Line of Credit"). The Borrower shall be entitled to
borrow, repay and reborrow funds from the Bank in accordance with the terms
hereof so long as the total principal amount owed to the Bank under the
revolving line of credit does not exceed $10,000,000 (or such lesser amount
as is set forth herein) during the Revolving Period (as defined herein).
The Bank's obligation to make advances hereunder shall terminate at the
expiration of the Revolving Period or such earlier date as is set forth
herein.
(b) The Borrower's indebtedness under the Line of Credit shall be
evidenced by a Renewal Promissory Note (as amended, extended or renewed
from time to time, the "Note") of even date herewith executed by the
Borrower in favor of the Bank in the principal amount of $10,000,000.00.
The Note shall bear interest at the rate set forth therein and shall be
payable as set forth therein.
(c) The Bank shall make each advance under the Line of Credit upon
written or telephonic notice from the Borrower to the Bank requesting an
advance. The notice shall specify the date for which the advance is
requested (which must be a Business Day) and the amount of the advance. The
Bank must receive the notice prior to 12:00 noon (Eastern time) on the
Business Day of the advance. Alternatively, the Borrower may request
advances by drawing checks on a deposit account that is linked to the
credit facility hereunder in accordance with disbursement arrangements that
are mutually satisfactory to the parties. The Bank will make each requested
advance available to the Borrower not later than the close of business on
the Business Day of the request by crediting the Borrower's account
maintained with the Bank in the amount of the advance if as of such time:
(i) the Bank's obligation to make advances hereunder has not terminated or
expired; (ii) a Default or Event of Default has not occurred; and (iii) all
conditions to the advance set forth herein or in any other Loan Documents
have been
satisfied. The Bank may rely upon any written or telephonic notice given
by any Person that the Bank in good faith believes is an authorized
representative of the Borrower without the necessity of any independent
investigation. If any telephonic notice conflicts with a written
confirmation, the telephonic notice shall govern if the Bank has acted in
reliance thereon.
(d) For purposes hereof, the "Revolving Period" shall mean a
period commencing on the date hereof and ending on April 24, 2002.
Notwithstanding the foregoing, the Revolving Period shall be automatically
extended on April 24, 2002, and on each April 24 thereafter through April
24, 2003 (each such date, including April 24, 2002, an "Extension Date")
for a one-year period commencing on each such Extension Date and continuing
until the next April 24 thereafter unless the Bank in its sole discretion
elects not to extend the Revolving Period in accordance with the terms
hereof. If the Bank elects not to extend the Revolving Period, it shall
provide written notice of such election to the Borrower at least 15 days
prior to the next scheduled Extension Date. If the Bank provides such
notice, then: (i) the Revolving Period shall terminate on the next
scheduled Extension Date; and (ii) the Revolving Period shall not be
further extended beyond such Extension Date. The Bank's election shall be
final and binding, and the Bank may elect not to extend the Revolving
Period whether or not a Default or Event of Default (as defined herein) has
occurred. The Bank may condition any extension of the Revolving Period on
such terms as it may deem appropriate (including, without limitation,
payment of such fee as the Bank may require). Notwithstanding any contrary
provision set forth herein, the Revolving Period shall not in any event
extend beyond April 24, 2004.
1.02 Borrowing Base.
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(a) Notwithstanding any contrary provision set forth herein or
in any other Loan Document, the Borrower agrees that the outstanding
principal balance under the Note shall not at any time exceed the lesser
of: (i) $10,000,000; or (ii) the Borrowing Base (as defined herein) then in
effect.
(b) For purposes hereof, the "Borrowing Base" shall mean 80% of
the face amount of Eligible Receivables. For purposes hereof, "Eligible
Receivables" shall mean all accounts receivable then outstanding for
services and for goods, merchandise and other items of tangible Property
(collectively, "Products") sold in the ordinary course of business by the
Borrower. However, Eligible Receivables shall not include any account
receivable with respect to which: (i) a final invoice has not been issued;
(ii) delivery of the Products or performance of the services has not been
completed; (iii) the invoice is conditional, permits returns or restricts
collection rights or assignments in any respect (except, however, that the
invoice may permit returns in the ordinary course of business); (iv) the
invoice permits payment: (aa) more than 30 days after the invoice date;
(bb) in any currency other than United States Dollars; or (cc) at any
location outside the United States; (v) the obligation to pay is evidenced
by chattel paper or any note or other instrument (unless duly endorsed and
delivered to the Bank); (vi) the Products or services
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have been rejected, returned or disputed in any way, whether in whole
or in part, in which event the receivable shall be ineligible to the extent
of such rejection, return or dispute; (vii) the customer has attempted to
renegotiate the invoiced price or asserted any right of reduction, set-off,
recoupment, counterclaim or defense; (viii) the account is outstanding 90
days or more after the invoice date; (ix) the account is 60 days or more
past due from the due date; (x) the obliger under the receivable is also a
creditor or supplier of the Borrower (in which case the amount of the
receivable shall be reduced, for eligibility purposes, by the amount owed
by the Borrower to such obligor); (xi) the collection of the receivable is
doubtful or will be delayed by reason of the customer's financial
condition; (xii) the Bank does not have a perfected first priority security
interest in the receivable; (xiii) the invoice or corresponding account
receivable is the subject of any financing statement, Lien or other
encumbrance other than in favor of the Bank and other than Permitted Liens
that are subordinate to the Bank's Lien; (xiv) the customer and its
Affiliates account for more than 20% of all of the Borrower's accounts
receivable then outstanding (in which case the amount in excess of 20%
shall be deemed ineligible); (xv) the customer is an officer, director,
employee or other Affiliate of the Borrower; (xvi) the customer is any
United States governmental authority (except to the extent that the
Borrower has complied with the federal Assignment of Claims Act); (xvii)
the customer is located outside the continental United States unless the
sale is on letter of credit, guaranty or other terms reasonably
satisfactory in each case to the Bank; (xviii) the account receivable is
owed by a customer who is 90 days or more past due on 50% or more of its
obligations owed to the Borrower (in which event all receivables owed by
the customer to the Borrower shall be deemed ineligible); or (xix) the Bank
otherwise determines in its discretion that the receivable is ineligible
hereunder.
(c) The Bank has the right to deem any receivable as ineligible for
lending purposes if it is not in the Bank's judgment adequately documented
by the Borrower's books and records or if the Bank otherwise deems such
receivable as ineligible for any reason. If at any time the outstanding
principal balance under the Note exceeds the Borrowing Base then in effect,
the Borrower shall immediately pay to the Bank the amount of such excess.
The Borrower authorizes the Bank to charge any deposit account of the
Borrower with the Bank for the amount of any such excess. The Borrower
shall not be entitled to obtain any advance under the Note if the advance
would result in a violation of the lending limits set forth herein. The
Borrower shall deliver a borrowing base certificate to the Bank
demonstrating compliance with the lending limits set forth herein: (i) not
later than 30 days after the end of each calendar month (based upon the
then outstanding balance of the Note as a percentage of Eligible
Receivables as of the end of the immediately preceding calendar month); and
(ii) at such other times as the Bank may request.
(d) The Borrower acknowledges that the Borrowing Base may be monitored
by the Bank's asset based lending group (the "ABL Group"). The Borrower
shall: (i) fully cooperate with the Bank and the ABL Group in connection
with any audit or review of the Borrower's receivables; (ii) permit the
Bank and the ABL Group to have such access to the Borrower's books, records
and premises as the Bank or the ABL Group may require
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in connection with any such audit or review; and (iii) instruct and permit
its customers and vendors to provide such information to the Bank and the
ABL Group as the Bank or the ABL Group may require in connection with any
such audit or review (and the Borrower hereby consents to any inquiries
that the Bank or the ABL Group may make of such customers and vendors in
connection with any such audit or inquiry). The Borrower shall pay all such
fees as the Bank or the ABL Group may from time to time assess, in addition
to any other fees set forth herein or in any other Loan Documents, in
connection with any such review or audit.
1.03 Loan Documents. The Obligations (the "Obligations") now or hereafter
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evidenced by the Note shall be secured by a first priority lien pursuant to the
Security Agreement (as amended or restated from time to time, the "Security
Agreement") of even date herewith executed by the Borrower in favor of the Bank
covering the Borrowers inventory, accounts receivable, general intangibles and
other assets described therein. The Borrower shall execute and deliver such
financing statements and other documents as the Bank may reasonably request to
perfect and continue perfection of the Bank's liens.
1.04 Facility Fees.
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(a) The Borrower shall pay the Bank a non-refundable closing fee of
$35,000 on the date hereof.
(b) The Borrower shall also pay the Bank a fee equal to 0.25% per
annum (calculated on the basis of a 360 day year) of the daily average
unused amount of the Line of Credit. The unused amount of the Line of
Credit shall be calculated without giving effect to any borrowing base
limitations, The Borrower shall pay the fee: (i) quarterly in arrears
within 15days after each fiscal quarter end (commencing on July 15, 2001);
and (ii) on the termination or expiration of the Line of Credit.
1.05 Interpretation.
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(a) Certain terms used herein shall have the meanings ascribed
thereto in Appendix I attached hereto.
(b) The definitions set forth in Appendix I attached hereto are
equally applicable to both the singular and plural forms of the terms
defined. The words "hereof', "herein" and "hereunder" when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. Where the character or amount of
any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required
to be made for the purposes of this Agreement, it shall be done in
accordance with GAAP except where such principles are inconsistent with the
specific provisions of this Agreement.
(c) The Borrower shall cause its Subsidiaries to comply with all
covenants and agreements imposed upon the Subsidiaries herein. Each
provision set forth herein
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obligating (or purportedly obligating) any Subsidiary to take, or refrain
from taking, any action shall obligate the Borrower to cause such
Subsidiary to take, or refrain from taking, such action.
ARTICLE II
CONDITIONS
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2.01 Conditions to Initial Advance. The Bank shall have no obligation to
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make the initial advance under the Line of Credit unless the Bank shall have
received on or before the date hereof and the date of such advance in form
reasonably satisfactory to it: (a) the duly executed Loan Documents; (b) such
evidence of corporate authorization from the Borrower and each Subsidiary as the
Bank may reasonably require; (c) good standing certificates indicating that the
Borrower and each Subsidiary are in good standing in their respective states of
incorporation and in any other states where they are required to qualify to do
business (except where the failure to be so qualified would not have a Material
Adverse Effect); and (d) certified articles of incorporation, bylaws or other
applicable organizational documents of the Borrower and each Subsidiary.
2.02. Conditions to Advances. The obligation, if any, of the Bank to make
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any advances hereunder or under the Note is subject, without limitation, to
satisfaction of the following additional conditions precedent:
(a) The representations and warranties of the Borrower and each
Subsidiary set forth in this Agreement and in the Loan Documents shall be
true and correct in all material respects on and as of the date of each
such advance.
(b) On the date of each such advance, the Borrower shall be in
compliance with all the material terms and provisions set forth in this
Agreement on its part to be observed or performed, and no Default or Event
of Default shall be continuing hereunder.
2.03 Other Documents. The Bank shall have received on or before the date
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hereof or the date of any advance or credit extension hereunder such other
documents or items as the Bank may reasonably request.
ARTICLE III
AFFIRMATIVE COVENANTS
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3.01 Financial Statements. The Borrower will deliver to the Bank the
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following:
(a) Within forty five days after the end of each quarter of the
Borrower's fiscal year, the Borrower's financial statements as of the end
of and for such period in reasonable detail, setting forth in consolidated
and comparative form the corresponding figures for that date and period and
for the corresponding date and accounting period in the preceding fiscal
year, certified by the Borrower's chief financial officer.
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(b) Within one hundred twenty days after the end of each fiscal
year of the Borrower, the Borrower's financial statements as of the end of
and for such year of the Borrower in reasonable detail, setting forth in
consolidated and comparative form the corresponding figures for that date
and period and for the corresponding date and period in the preceding
fiscal year, audited and certified by independent certified public
accountants of recognized standing selected by the Borrower and acceptable
to the Bank, whose certificate shall be satisfactory to the Bank in scope
and substance.
(c) Not later than 15 days after the end of each calendar month, an
accounts receivable aging report certified to the Bank by the Borrower's
chief financial officer.
(d) Promptly upon receipt thereof, copies of all other detailed
reports (if any) (including, without limitation, any management letters)
submitted to the Borrower by independent certified public accountants in
connection with each annual or interim audit or review of the books of the
Borrower by such accountants.
(e) With each delivery required under subparagraphs (a) and (b)
above, a compliance certificate in form approved by the Bank executed by an
executive officer of the Borrower demonstrating compliance with the Loan
Documents.
(f) Promptly upon the occurrence of any Default, a notice thereof,
specifying the nature thereof; and promptly upon the occurrence of any
event or discovery of any fact which might affect or indicate a material
adverse change in the Borrower's financial condition, notice thereof
specifying the nature thereof.
(g) Promptly upon becoming available, upon request of the Bank, a
copy of all: (i) reports, registration statements and other materials filed
by the Borrower with the Securities and Exchange Commission; (ii.) offering
circulars made in connection with any distribution or sale of the Borrowers
securities; and (iii) notices, proxy statements and other materials mailed
or distributed to the Borrower's shareholders.
(h) Such other material information as the Bank may from time to
time reasonably request.
3.02 Financial Information. All financial information submitted by the
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Borrower hereunder shall be prepared in accordance with GAAP as in effect on the
date of this Agreement on a basis consistently applied. The Borrower and its
Subsidiaries will maintain books of account in accordance with GAAP. The books
of account shall disclose the information necessary for determining whether the
Borrower has satisfied any provisions or requirements of this Agreement.
3.03 Taxes and Other Charges. The Borrower and its Subsidiaries will pay
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and discharge or cause to be paid and discharged all taxes, charges, liabilities
or claims of any type at any time assessed against or incurred by the Borrower
or any of its Subsidiaries, or which could become a lien against the Borrower
and its Subsidiaries or any of their respective properties.
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Nothing in this subsection shall require the payment of any such sum if the
Borrower promptly notifies the Bank and by appropriate proceedings contests the
same in good faith and so long as the Borrower, if so requested by the Bank,
creates a funded reserve equal to the amount so claimed or assessed.
3.04 Maintenance of Existence. Each of the Borrower and its Subsidiaries
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will do or cause to be done all things necessary to preserve and keep in full
force and effect its existence, franchises, rights and privileges as a
corporation under the laws of its state of organization and any other
jurisdiction where, in the opinion of the Borrower's counsel, the Borrower or
any such Subsidiary should be qualified to do business. Each of the Borrower and
its Subsidiaries will do or cause to be done all things necessary to preserve
and keep in full force and effect its right to own Property and to operate all
aspects of its business in a manner not less favorable to it than those now in
existence.
3.05 Officers. The Borrower will use its reasonable efforts to cause its
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current chief executive officer and chief operating officer to remain engaged in
the active management of the Borrower and to perform duties substantially
similar to those presently performed by such officers. In the event the
retirement, termination or death of any of such Person, such Person shall be
replaced by a Person having similar business experience and expertise.
3.06 Notice of Litigation. Promptly after the commencement thereof, the
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Borrower shall furnish the Bank notice of all material actions, suits and
proceedings before any court or govenmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting the Borrower
or any of its Subsidiaries
3.07 Notice of ERISA Requirements. As soon as possible and in any event
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within thirty (30) days after the Borrower knows or has reason to know that any
reportable event, accumulated funding deficiency, prohibited transaction,
disqualification or termination (as such terms are defined in the ERISA) with
respect to any Plan has occurred, the Borrower shall furnish the Bank with the
statement of the chief financial officer of the Borrower setting forth details
as to such event and the action which the Borrower proposes to take with respect
thereto, together with a copy of the notice of such event to the PBGC. For
purposes of this Agreement, "Plan" shall mean any employee benefit plan
maintained in whole or in part for employees of the Borrower or any of its
Subsidiaries which is subject to the provisions of Title IV of the ERISA, or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code of 1986, as amended from time to time.
3.08 Other Events. The Borrower shall promptly notify the Bank of any
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default under or violation of any agreement, law or regulation to which the
Borrower or any of its Subsidiaries is a party or by which it is bound. Each of
the Borrower and its Subsidiaries shall promptly perform all of its obligations
under any agreements to which it is a party and shall use its best efforts to
ensure compliance by other parties with such agreements.
3.09 Compliance with Laws. Each of the Borrower and its Subsidiaries shall
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comply at all times with all statutes, regulations, orders and judgments to
which it is subject.
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3.10 Access. The Bank (by any of its officers. employees or agents) shall
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have the right, exercisable as frequently as the Bank reasonably determines to
be appropriate, to inspect, audit and make extracts from all of the records.
files and books of account of the Borrower and each of its Subsidiaries. All
costs, fees and expenses incurred by the Bank, or for which the Bank has become
obligated, in connection with any such inspection, audit and verification shall
be payable by the Bank. Each of the Borrower and its Subsidiaries shall instruct
its banking and other financial institutions to make available to the Bank such
information and records as the Bank may reasonably request.
3.11 Deposits. Each of the Borrower and its Subsidiaries shall maintain
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its primary deposit accounts with the Bank.
3.12 Further Assurances. If at any time counsel for the Bank is of the
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reasonable opinion that any portion of the Obligations is not secured or will or
may not be secured by a first priority lien on the Property described in the
Security Agreement, or as contemplated herein, subject only to exceptions
described in the Security Agreement, as the case may be, then the Borrower
shall, after written notice of such opinion from the Bank, do all things and
matters necessary to assure to the reasonable satisfaction of counsel for the
Bank that any part of the Obligations then existing or thereafter to be created
is secured or will be secured as contemplated by this Agreement.
ARTICLE 4
NEGATIVE COVENANTS
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4.01 Liens. Neither the Borrower nor any Subsidiary will create, incur,
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assume or suffer to exist any mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of the assets of the Borrower or any
Subsidiary now or hereafter owned, or enter into or suffer to exist any
conditional sales contracts dr other title retention agreements except for
Permitted Liens. For purposes hereof, Permitted Liens shall mean:
(a) liens in favor of the Bank;
(b) the lien of ad valorem and other taxes and assessments not yet
due and payable;
(c) Liens on equipment and other assets to secure indebtedness
permitted hereunder to finance the acquisition thereof;
(d) liens arising out of pledges, deposits, or other amounts owed
under worker's compensation laws, unemployment insurance, old age pensions
or other social security or retirement benefits, or similar legislation,
or to secure payment of premiums for insurance purchased in the usual
course of operations or in Connection with self-insurance or to secure the
performance of bids, tenders or trade contracts incurred in the ordinary
course of operations and not in connection with the borrowing of money;
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(e) deposits for indemnity bonds and other bonds required in the
ordinary course of the Borrower's or any Subsidiary's business, and not in
connection with borrowed money;
(f) inchoate materialmen's, suppliers', operators', mechanics',
workmen's, repairmen's, employees', carriers', warehousemen's or attorneys'
liens or other like statutory liens arising in the ordinary course of
business and securing obligations (i) which are not delinquent or (ii) the
amounts or validity of which are being contested in good faith as to which
the Borrower or any Subsidiary has established appropriate funded reserves
to the extent required by GAAP;
(g) deposits made by the Borrower or any Subsidiary in the ordinary
course of business;
(h) liens of financial institutions arising in the ordinary process of
collection of instruments; and
(i) statutory landlord's liens so long as amounts secured thereby
are not past due bv more than 30 days.
4.02 Obligations.
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(a) Neither the Borrower nor any Subsidiary is or will become directly
or indirectly obligated in any way for any obligation for borrowed money or
Capital Leases except for Permitted Obligations, For purposes hereof,
Permitted Obligations shall mean:
(i) any and all obligations now or hereafter owed by the Borrower
or any Subsidiary to the Bank;
(ii) customer deposits in the ordinary course of business;
(iii) obligations subordinated to the Obligations pursuant to
subordination agreements acceptable to the Bank; and
(iv) other obligations in an aggregate principal amount, on a
combined basis as to all such other obligations, not exceeding
$250,000.
(b) Notwithstanding any contrary provision herein, the Borrower and
such Subsidiaries shall be entitled to incur and maintain Capital Leases
and purchase money indebtedness, in addition to existing amounts permitted
under the foregoing subparagraph (a), to finance the Borrower's or any
Subsidiary's acquisition or lease of equipment or other assets so long as
the aggregate principal amount of such purchase money obligations and
Capital Lease obligations, on a combined basis, incurred during each
fiscal year will not exceed $250,000.
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(c) Neither the Borrower nor any Subsidiary shall: (i) guarantee or
purchase any obligations of any other Person; (ii) enter into any credit
support, financial maintenance, credit enhancement or similar arrangement
in favor of any Person; or (iii) enter into any other transaction which is
intended to assure performance of the obligations of any other Person.
4.03 Merger: Consolidation; Sale of Substantial Assets. Neither the
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Borrower nor any Subsidiary will merge into or with, consolidate with, or sell
all or a substantial part of its assets to, any other Person.
4.04 Loans and Investments.
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(a) Neither the Borrower nor any Subsidiary shall purchase any
stock, securities or evidence of indebtedness, or make or permit to exist
any loans or advances to, or make any investment or acquire any interest
in, any other Person (except, however, that the Borrower and its
Subsidiaries shall be entitled to make acquisitions in accordance with the
terms of subparagraph (b) below). Neither the Borrower nor any Subsidiary
shall, without the Bank's prior written consent, enter into partnership or
joint venture agreements with any other Person (except, however, that the
Borrower and its Subsidiaries shall be entitled to enter into such
agreements so long as the aggregate investment of the Borrower and its
Subsidiaries in such partnerships and joint ventures, on a combined basis,
does not exceed S250,000). Notwithstanding the foregoing: (i) the Borrower
and its Subsidiaries may sell inventory on credit in the ordinary course of
business; (ii) the Borrower and its Subsidiaries may extend credit and make
advances (including, without limitation, advances to officers) in the
ordinary course of business so long as the total outstanding amount of such
credit and advances, on a combined basis under this subparagraph (ii), does
not exceed $10,000 at any time; and (iii) the Borrower and its
Subsidiaries may invest in Eligible Securities. For purposes hereof,
Eligible Securities" shall mean: (i) direct obligations of the United
States of America or any agency or instrumentality thereof whose
obligations constitute the full faith and credit of the United States of
America so long as all such obligations mature within one year of the date
of issuance thereof; (ii) commercial paper rated P-1 or better by Moody's
and maturing within one year of the date of issuance thereof; (iii)
certificates of deposit issued by any United States commercial bank having
capital and surplus of not less than $100,000,000; (iv) repurchase
obligations with a term of not more than seven days for underlying
securities of the types described in the foregoing clause (i) entered into
with a United States commercial bank having capital and surplus of not less
than $100,000,000; and (v) other investments contemplated in the Borrower's
investment policy approved from time to time by the Borrower's board of
directors.
(b) The Borrower and its Subsidiaries shall be entitled to acquire
businesses through stock acquisitions, asset purchases or mergers upon
satisfaction of the following conditions:
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(i) Each such acquisition shall be made on arms' length terms.
The Borrower and its Subsidiaries shall, after consummation of the
acquisition, own and control not less than 100% of the outstanding
equity and voting rigts in any Person acquired by the Borrower
or any such Subsidiary in connection with the acquisition.
(ii) The Person acquired, or the business acquired, must be in
the same or a related line of business as the Borrower.
(iii) The aggregate acquisition consideration payable by the
Borrower and its Subsidiaries for any acquisition shall not exceed 40%
of the Borrower's consolidated Tangible Net Worth (as defined below)
(before giving effect to the acquisition) (except, however, that the
Borrower and its Subsidiaries shall be entitled to make acquisitions
for acquisition consideration in excess of such amount with the Bank's
prior written consent). The acquisition consideration payable in
connection with any such acquisition shall mean the sum of the
following items (without duplication): (aa) all cash paid by the
Borrower and its Subsidiaries in connection with the acquisition; (bb)
the fair market value transferred (including, without limitation, the
fair market value of all securities issued) by the Borrower and its
Subsidiaries in connection with the acquisition; (cc) the principal
amount of all indebtedness and other amounts payable by the Borrower
and its Subsidiaries to the sellers or other Persons in connection
with the acquisition; (dd) the principal amount of all obligations
assumed by the Borrower and its Subsidiaries in connection with any
asset acquisition; (ee) all amounts paid or payable under or with
respect to covenants not to compete or deferred compensation
agreements in connection with the acquisition; and (ff) all amounts
paid or payable under or with respect to master brokerage agreements
and similar agreements in connection with the acquisition.
(iv) The Borrower shall have given the Bank not less than
fourteen days prior notice of each acquisition. The notice shall
include: (aa) the name of the Person or business to be acquired (or,
as applicable, the name of any Person selling assets to the Borrower
or any Subsidiary); (bb) financial statements for such company or
business as of and for the end of its two most recent fiscal years
and, if available, as of and for the end of its most recent fiscal
quarter; and (cc) any projections provided to the Borrower or used by
the Borrower for the Person or business to be acquired in connection
with the acquisition. The Borrower shall thereafter provide the Bank
such additional information concerning the acquisition as the Bank may
reasonably request.
(V) The Borrower shall have prior to the consummation of the
acquisition provided the Bank with a certificate executed by the
Borrower's chief financial officer or other senior financial officer
demonstrating that the acquisition will not result in a default under
the financial and other covenants hereunder: (aa) at *the time such
acquisition is consummated after giving effect to such
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acquisition; and (bb) on a projected basis based upon reasonable
projections after giving effect to such acquisition.
(vi) The acquisition will not result in a Default under Section
4.08 hereof. In addition, the acquisition will not result in a
default under the financial and other covenants hereunder: (aa) at
the time such acquisition is consummated after giving effect to such
acquisition; and (bb) on a projected basis based upon reasonable
projections after giving effect to such acquisition.
(vii) The Borrower shall have taken, simultaneously with the
consummation of the acquisition, all such action as may be required
to cause each Subsidiary directly or indirectly acquired in
connection therewith, or resulting therefrom, to guaranty all
obligations of the Borrower under the Loan Documents pursuant to a
guaranty acceptable to the Bank.
(viii) For purposes hereof, "Tangible Net Worth" shall mean, at
any time the same is to be determined, the total shareholders'
equity (including capital stock,additional paid-in capital and
retained earnings after deducting treasury stock) that would appear
on the balance sheet of the Borrower determined on a consolidated
basis in accordance with GAAP less (aa) the aggregate book value of
all assets that would be classified as intangible assets under GAAP,
including, without limitation, goodwill, patents, trademarks, trade
names, copyrights, franchises and deferred charges (including,
without limitation, unamortized debt discount arid expense,
organization costs and deferred research and development expense)
and similar assets; (bb) the write-up of assets above cost; (cc) any
amounts owed to the Borrower or any Subsidiary by officers,
directors, employees, stockholders, or other Affiliates of such
entity (except as otherwise approved from time to time by the Bank);
and (dd) the book value of all assets of the Borrower or any
Subsidiary located outside of the United States of America.
(c) The Borrower shall not form or create any new Subsidiary on or
after the date hereof except for the sole purpose of consummating
acquisitions in accordance with the terms of subparagraph (b) above.
Notwithstanding the foregoing, for so long as no Default has occurred
hereunder, the Borrower shall be entitled to form or create new
Subsidiaries so long as each such Subsidiary guarantees all of the
Borrowers obligations under the Loan Documents pursuant to a guaranty
satisfactory to the Bank.
4.05 Sale or Pledge of Property. Neither the Borrower nor any Subsidiary
--------------------------
will sell, lease or otherwise dispose of or transfer any of its interests in any
of its assets except in the ordinary course of business.
4.06 Sale and Leaseback. Neither the Borrower nor any Subsidiary will
------------------
enter into any arrangement with any Person (other than an Affiliate of the
Borrower) providing for the leasing by the Borrower or any Subsidiary of
Property which has been sold or is to be sold or transferred by the Borrower or
any Subsidiary to such Person.
12
4.07 Pension Plan Funding Deficiency. Neither the Borrower nor any
-------------------------------
Subsidiary shall incur or suffer to exist any material accumulated funding
deficiency within the meaning of the ERISA or incur any material liability to
the PBGC (or any successor) established thereunder in connection with any Plan.
4.08 Financial Covenants. The Borrower shall comply at all times with the
-------------------
following financial covenants. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP as in effect on the date of
this Agreement on a basis consistently applied.
(a) The Borrower shall not permit its Debt Service Coverage Ratio to
be less than 1.35 to 1.0 for any consecutive four quarter period
(calculated on a rolling four quarter basis). The Debt Service Coverage
Ratio shall be the Borrower's consolidated net income, less Distributions
(as defined herein), plus (to the extent deducted in calculating net such
income) depreciation, amortization and interest expense, for the four
fiscal quarters ending as of the end of each fiscal quarter, divided by
interest expense, current maturities of long term debt and current
maturities of Capital Leases payable on a consolidated basis during such
fiscal quarters. For purposes hereof, "Distributions" shall mean all
dividends and other distributions to shareholders during any applicable
period
(b) The Borrower shall not permit its Debt Ratio to exceed 3.0 to 1 as
of the end of any fiscal quarter. For purposes hereof, the Debt Ratio shall
the ratio of: (i) the Borrower's Funded Debt as of the end of each fiscal
quarter to (ii) the Borrower's consolidated net income before income taxes
plus, to the extent deducted in calculating such net income, interest,
depreciation and amortization, for the four fiscal quarters ending on such
date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants, and so long as this Agreement is in
effect or any part of the Obligations remains unpaid, shall continue to
represent and warrant at all times, that:
5.01 The Borrower. Each of the Borrower and its Subsidiaries is a
------------
corporation duly incorporated and validly existing under and by virtue of its
state of incorporation. Each of the Borrower and its Subsidiaries is duly
licensed and qualified in all other states and jurisdictions wherein the nature
of the business transacted by it or the ownership of its properties makes such
licensing or qualification as a foreign corporation necessary, if any, except
where the failure to be so qualified would not have a Material Adverse Effect.
Each of the Borrower and its Subsidiaries: (a) holds in full force and effect
all permits, licenses and franchises necessary for it to carry out its
operations in conformity with all material applicable laws and regulations; and
(b) has full and adequate power to own its Property and conduct its business as
now conducted.
5.02 Authorization, Conflicts and Validity. The execution and delivery of
-------------------------------------
this Agreement and each of the other Loan Documents to which the Borrower is or
will be a party
13
and the performance by the Borrower of all of its obligations thereunder: (a)
have been duly authorized by all requisite corporate action; (b) will not
violate or be in conflict with (i) any material provision of applicable law
(including, without limitation, any applicable usury or similar law); (ii) any
material order, rule or regulation of any court or other governmental authority
to which the Borrower is subject; (iii) any material provision of its
certificate of incorporation or bylaws, including any amendments thereto, or any
resolution with continuing effect adopted by its Board of Directors or
shareholders; or (iv) any material provision of any shareholders agreement or
trust respecting securities of its issue or related rights; (c) will not
violate, be in conflict with, result in a breach of or constitute a default
(with or without the giving of notice or the passage of time or both) under any
material instrument, indenture, agreement or other obligation to which it is a
party or by which it or any of its assets and properties is or may be bound or
subject; and (d) except as specifically contemplated or permitted by this
Agreement or any other Loan Documents, will not result in the creation or
imposition of any lien, charge or encumbrance of any nature upon any of its
assets and properties. The Loan Documents to which the Borrower is or will be a
party when executed and delivered will be legal, valid and binding obligations
of the Borrower, enforceable in accordance with their respective terms and
provisions.
5.03 Consents. No consent, approval or authorization of, or registration,
--------
declaration or filing with, any governmental authority or other Person
(including, without limitation, the shareholders of the Borrower) (other than
the filing of any required financing statements to perfect the Bank's security
interest in collateral) is required as a condition precedent, concurrent or
subsequent to or in connection with the due and valid execution, delivery and
performance by the Borrower of this Agreement or any other Loan Document to
which it is or will be a party, or the legality, validity, binding effect or
enforceability of any of the respective representations, warranties, covenants
and other terms and provisions thereof. Each franchise, license, certificate,
authorization, approval or consent from any governmental authority material to
the present conduct of the business and operations of the Borrower, or required
for the acquisition, ownership, improvement, operation or maintenance by it of
any material portion of the assets and properties it now owns, operates or
maintains, has been obtained and validly granted, is in full force and effect
and constitutes valid and sufficient authorization therefor.
5.04 Financial Statements. The Borrower made available to the Bank
--------------------
financial statements as of and for the fiscal year ending December 31, 1999, and
the period ending September 30, 2000. Those financial statements fairly present
the financial condition of the Borrower and the results of its operations as of
the dates thereof, Those financial statements have been prepared in accordance
with GAAP consistently applied throughout the periods involved, except for
changes, if any, stated in any related accountants reports. The Borrower does
not have any contingent liabilities that are material to it other than as
indicated on such financial statements.
5.05 Changes in Financial Condition. Since September 30, 2000, there has
------------------------------
been no material adverse change in the assets, the financial condition or
business prospects of the Borrower from that set forth or reflected in the
financial statements as of that date. The Borrower is current in the payment of
all of its debts and performance of all of its material obligations.
14
5.06 Legal or Administrative Proceedings. There are no material actions,
-----------------------------------
suits, investigations or proceedings by any Person pending or, to the best
knowledge of the Borrower, threatened against the Borrower or any Subsidiary or
to which any of them is a party involving the possibility of any material
adverse judgment or liability not fully covered by insurance or by adequate
reserves set up on the books of the Borrower or any Subsidiary.
5.07 Assets. The Borrower and its Subsidiaries have good and marketable
------
title to (or valid leasehold interests in) all of their assets reflected in the
financial statements dated September 30, 2000, and such assets are free and
clear of all Liens and charges except for Permitted Liens.
5.08 Trademarks, Franchises and Licenses. Each of the Borrower and its
-----------------------------------
Subsidiaries owns, possesses or has the right to use all necessary patents,
licenses, software, franchises, trademarks, trade names, trade styles,
copyrights, trade secrets, know how and confidential commercial and proprietary
information to conduct its businesses as now conducted, without known conflict
with any patent, license, franchise, trademark, trade name, trade style,
copyright or other proprietary right of any other Person.
5.09 Losses. Since September 30, 2000, no material loss, damage,
------
destruction or talking of any of the physical properties of the Borrower or any
Subsidiary has occurred that has not been fully restored or replaced, or that is
not fully covered by insurance, and neither the Property nor business of the
Borrower or any Subsidiary has been adversely affected in any substantial way
as the result of any accident, strike, lockout, combination of workmen, embargo,
riot, war, act of God or public enemy. Neither the Borrower nor any of its
officers is aware of any material adverse fact concerning the conditions or
future prospects of the Borrower or any Subsidiary that has not been fully
disclosed in writing to the Bank.
5.10 Corporate Restrictions. The Borrower is not a party to any contract or
----------------------
subject to any charter or other corporate restriction that would materially and
adversely affect its Property or business, or its ability to perform its
obligations under the Loan Documents.
5.11 Taxes. The Borrower has filed all federal and state tax returns that
-----
are required to be filed, and has paid all taxes as shown on the returns and on
all assessments received by it to the extent that the taxes have become due.
Proper and, in the Borrower's judgment, accurate amounts have been withheld by
the Borrower from its employees for all periods in full and complete compliance
with the tax, social security and unemployment withholding provisions of
applicable federal, state, local and foreign law and such withholdings have been
timely paid to the respective governmental agencies.
5.12 Default. There exists as of the date hereof no Default.
-------
5.13 Other Representations. All warranties and representations of the
---------------------
Borrower contained in any of the Loan Documents are true and accurate in all
material respects.
15
5.14 ERISA. The Borrower has fulfilled its obligations under the minimum
-----
funding standards of and is in compliance in all material respects with ERISA
and the Code to the extent applicable to it. The Borrower has not incurred any
liability to the PBGC or a Plan under Title IV of ERISA other than a liability
to the PBGC for premiums under Section 4007 of ERISA. The Borrower does not have
any contingent liabilities with respect to any post-retirement benefits under
any Plan or Welfare Plan, other than liability for continuation coverage
described in Article 6 of Title I of ERISA.
5.15 Compliance with Laws. Each of the Borrower and its Subsidiaries is
--------------------
in compliance with the requirements of all federal, state and local laws, rules
and regulations applicable to or pertaining to its Property or business
operations (including, without limitation, the Occupational Safety and Health
Act of 1970, the Americans with Disabilities Act of 1990, and laws and
regulations establishing quality criteria and standards for air, water, land and
toxic or hazardous wastes and substances), non-compliance with which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. The Borrower and its Subsidiaries have not received any
notice to the effect that their operations are not in compliance with any of the
requirements of applicable federal, state or local environmental, health
and safety statutes and regulations or are the subject of any governmental
investigation evaluating whether any remedial actions needed to respond to a
release of any toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
5.16 Purpose of the Borrower. The Borrower does not own any "margin
-----------------------
security" within the meaning of Regulation U (12 CFR Part 221) of the Board of
Governors of the Federal Reserve System. None of the proceeds of the loan by the
Bank to the Borrower will be used for the purpose of purchasing or carrying any
margin security or for the purpose of reducing or retiring any indebtedness
that was originally incurred to purchase or carry a margin security or for any
other purpose that might constitute this transaction a "purpose credit" within
the meaning of Regulation U, as now in effect or as it may hereafter be amended.
Neither the Borrower nor any agent acting on its behalf has taken or will take
any action that might cause this Agreement or any Loan Document to violate
Regulation U or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Securities Exchange Act of 1934, in each case
as in effect now or as the same may hereafter be amended.
5.17 Payment of Loan Proceeds. The Bank is authorized to disburse all
------------------------
proceeds of any loan to the Borrower hereunder directly to or upon the order of
any officer of the Borrower without looking into the use of those proceeds.
5.18 Solvency. After giving effect to the full funding of the loans
--------
contemplated herein, the Borrower will be solvent. "Solvent" shall mean, when
used with respect to any Person, that: (a) such Person does not intend to incur,
and does not believe and has no reason to believe that it will incur, debts
beyond its ability to pay as they become due; (b) the sum of such Person's
assets is greater than all of such Person's liabilities at a fair valuation; (c)
such Person has sufficient cash flow to enable it to pay its debts as they
become due; and (d) such Person does not have unreasonably small capital to
carry on such Person's business as theretofore operated
16
and all businesses in which such Person is about to engage. "Fair valuation" is
intended to mean that value that can be obtained if the assets are sold within a
reasonable time in arms-length transactions in an existing and not theoretical
market.
5.19 Federal Acts. The Borrower is not an "investment company" or a company
------------
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "public utility holding company" within
the meaning of the Public Utility Holding Company Act.
5.20 Affiliate Transactions. The Borrower is not a party to any contracts
----------------------
or agreements with any of its Affiliates on terms and conditions that are less
favorable to the Borrower than would be usual and customary in similar contracts
or agreements between Persons not affiliated with one another.
5.21 Full Disclosure. The statements and information furnished to the Bank
---------------
in connection with the negotiation of this Agreement and the other Loan
Documents and the commitment by the Bank to provide all or part of the financing
contemplated hereby do not contain any untrue statements of a material fact or
omit a material fact necessary to make material statements contained herein or
therein not misleading. The Bank acknowledges that as to any projections
furnished to the Bank, the Borrower only represents that the same were prepared
on the basis of information and estimates that the Borrower believed to be
reasonable.
5.22 Subsidiaries. As of the date hereof, the Borrower owns no Subsidiaries
------------
other than: (a) Alabama Tissue Center, Inc.; (b) Georgia Tissue Bank, Inc.; and
(c) any other subsidiary listed on Exhibit 21 to the Borrower's Registration
Statement on Form S-l filed prior to the date hereof with the Securities and
Exchange Commission under file number 333-35756.
ARTICLE VI
EVENTS OF DEFAULT
-----------------
6.01 Events of Default. Each of the following events shall constitute an
-----------------
"Event of Default" hereunder:
(a) if the Borrower defaults in the payment of any principal, interest
or other amount under the Note, either by the terms thereof or otherwise as
provided herein and such default continues for a period of five days
thereafter; or
(b) if the Borrower or any Subsidiary defaults: (i) in any payment of
principal of or interest on any other obligation in an amount exceeding
$25,000 beyond any period of grace provided with respect thereto or (ii) in
the performance or observance of any other agreement, term, or condition
contained in any agreement under which any such obligation is created if
the effect of such default is to cause, or permit the holder or holders of
such obligation (or trustee on behalf of such holder or holders) to cause,
such obligation to become due prior to its stated maturity; or
17
(c) if any statement, representation or warranty made by the Borrower or
any Subsidiary herein or in any writing now or hereafter furnished in connection
with or pursuant to the Loan Documents or in connection with any audit shall be
false in any material respect; or if the Borrower or any Subsidiary omits or
fails to disclose within 10 days any substantial contingent or liquidated
liabilities, or any material adverse change in facts previously disclosed by any
statement, representation, certificate or warranty to the Bank; or
(d) if the Borrower or any Subsidiary defaults in the performance or
observance of any covenants contained in Sections 4.08 hereof; or
(e) (i) if any Event of Default occurs under any Loan Document; or (ii)
if the Borrower or any Subsidiary defaults in the performance or observance of
any other agreement, covenant, term or condition contained herein or in any
other Loan-Document and such default shall not have been remedied within 30 days
after written notice thereof is sent by the Bank to the Borrower except,
however, that an Event of Default shall not be deemed to have occurred if the
Borrower or the Subsidiary, as the case may be, commences, to cure such default
within such 30-day period and the Borrower, or such Subsidiary, as the case may
be, completes such cure within 60 days after such notice; or
(f) if the Borrower or any Subsidiary makes an assignment for the benefit
of creditors or is generally not paying its debts as they become due; or
(g) if any order, judgment or decree is entered under the bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction adjudicating the
Borrower or any Subsidiary, bankrupt or insolvent; or
(h) if the Borrower or any Subsidiary petitions or applies to any tribunal
for, or consents to, the appointment of a trustee, receiver, custodian,
liquidator, or similar official, of the Borrower or any Subsidiary or of any
substantial part of the assets of the Borrower or any Subsidiary, or commences a
voluntary case under the Bankruptcy Code of the United States or any proceedings
relating to the Borrower or any Subsidiary, under the bankruptcy, insolvency, or
moratorium law of any other jurisdiction, whether now or hereafter in effect; or
(i) if any such petition or application is filed, or any such proceedings
are commenced, against the Borrower or any Subsidiary and if the Borrower or the
Subsidiary by any act indicates its approval thereof, consent thereto, or
acquiescence therein, or an order is entered in an involuntary case under the
Bankruptcy Code of the United States, or an order, judgment or decree is entered
appointing any such trustee, receiver, custodian, liquidator, or similar
official, or approving the petition in any proceedings, and such order remains
unstayed and in effect for more than 60 days; or
18
(j) if any order is entered in any proceedings against the Borrower or
any Subsidiary decreeing the dissolution or split-up of the Borrower or any
Subsidiary or if the Borrower or any Subsidiary dissolves (or is dissolved
or its existence is terminated; or
(k) if any judgment or judgments are entered against the Borrower or
any Subsidiary, or against the Property of any such Person, in an aggregate
amount in excess of $50,000 that remains unvacated, unbonded, unstayed or
unsatisfied for a period of 45 days; or
(1) if any Default or Event of Default occurs under that certain
Construction Loan Agreement (as amended or restated from time to time, the
"Construction Loan Agreement") dated April 2, 2001, as amended or restated
from time to time, by and between the Bank and the Borrower.
6.02 Default. A "Default" shall be deemed to have occurred hereunder if any
-------
event or condition occurs that would constitute an Event of Default hereunder
upon the satisfaction of any requirement for notice or passage of time in
connection with such event or condition
6.03 Remedies. If any Default shall occur, any obligation of the Bank to
--------
make advances hereunder or under any Loan Document shall be terminated without
notice to the Borrower. In addition, if any Event of Default shall occur, the
Bank may by notice to the Borrower, effective upon dispatch, declare the entire
unpaid principal amount then outstanding under the Loan Documents, all interest
accrued and unpaid under the Loan Documents and all other Indebtedness of the
Borrower to the Bank under this Agreement or any of the other Loan Documents to
be forthwith due and payable. Thereupon, the then outstanding principal amount
under the Loan Documents, all such accrued interest and all such other
Obligations shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower, and the Bank may immediately enforce payment of all such
amounts and exercise any or all of the rights and remedies of the Bank under
this Agreement and other Loan Documents, including without limitation the right
to resort to any or all collateral securing any obligations under the Loan
Documents and exercise any or all of the rights of a secured party pursuant to
the Uniform Commercial Code of Florida and other applicable similar statutes in
other jurisdictions.
6.04 Termination of Rights to Advances; Automatic Acceleration.
---------------------------------------------------------
Notwithstanding anything herein to the contrary, (a) the Borrower's right, if
any, to obtain any additional advances or credit under the Loan Documents shall
automatically terminate upon the initiation against the Borrower or any
Subsidiary of any proceeding under the Federal Bankruptcy Code, or upon the
occurrence of any Event of Default described in subparagraphs (f), (g), (h), (i)
or (j) of Section 6.01, and (b) all Obligations shall automatically be and
become immediately due and payable upon the occurrence of any Event of Default
described in subparagraphs (g), (h) or (i) of Section 6.01,
19
6.05 Additional Rights of Bank.
-------------------------
(a) The Borrower acknowledges that its timely and complete
compliance with all of the terms and conditions contained in the Loan
Documents is a material consideration for the Bank's extension of the
credit facilities evidenced by the Note. In addition To all other rights
and remedies that the Bank has upon the occurrence of an Event of Default,
the Bank, in its sole discretion, may: (i) waive its rights resulting from
such Event of Default; and (ii) charge the Borrower a fee for such waiver.
(b) The Borrower acknowledges that the Bank's ability to monitor the
loans evidenced by the Note is dependent upon the Borrower's providing all
financial statements and other information required in Section 3.01 hereof
within the time periods set forth in such section. In addition to all other
rights and remedies that the Bank has upon the occurrence of an Event of
Default, the Bank may by notice to the Borrower assess the Borrower a late
fee upon each failure by the Borrower to deliver financial statements or
information within the time periods set forth in Section 3.01 hereof
(whether or not such failure constitutes a Default or an Event of Default
hereunder). The amount of such late fee shall equal the greater of: (i)
$500.00; or (ii) 0.10% of the face amount of the Note. The Borrower shall
pay such fee no later than ten days after the Bank has notified the
Borrower of such assessment. The Bank may assess the late fee on successive
occasions based upon any successive failures to deliver financial
statements or financial information within the periods required herein. The
Bank's assessment of any such fee, and the Borrower's payment of the same,
shall not be deemed to be a waiver of the Borrower's continuing obligation
to provide financial statements and other information required hereunder.
6.06 Cross Default. The Borrower agrees than any Event of Default
-------------
hereunder shall also constitute a Default under the Construction Loan Agreement.
ARTICLE VII
MISCELLANEOUS
-------------
7.01 Expenses. The Borrower agrees to pay, and save the Bank harmless
--------
against liability for the payment of, all reasonable out-of-pocket expenses
arising in connection with this transaction (including any renewals or
modifications relating hereto), including any state documentary stamp taxes or
other taxes (including interest and penalties, if any) that may be determined to
be payable in connection with the execution and delivery of any Loan Document or
any renewal or modification of any Loan Document, and the reasonable fees and
expenses of the Bank's counsel. The Borrower acknowledges that it has
participated with the Bank in establishing the structure of this transaction and
that it has independently determined the amount of documentary stamp and other
taxes due in connection herewith. The Borrower has not relied upon
representations of the Bank or its counsel in calculating the amount of such
taxes, and the Borrower shall be liable for any additional taxes (including
interest and penalties) that may be due in connection with this transaction or
any renewals hereof. If an Event of Default shall occur, the Borrower shall also
pay all of the Banks costs of collection including reasonable Bank
20
employee travel expenses, court costs and reasonable fees of attorneys and
legal assistants (whether incurred in connection with trial or appellate
proceedings). The Borrower authorizes the Bank to make advances under the Notes
and to debit its deposit accounts to pay all expenses and all other amounts now
or hereafter due under any Loan Document.
7.02 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties contained herein or made in writing by the Borrower in connection
herewith shall survive the execution and delivery of the Loan Documents.
7.03 Successors and Assigns. All covenants and agreements in this Agreement
----------------------
contained by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. The Borrower shall not be entitled to assign its
rights hereunder. The Bank may, without the Borrower's consent, assign all or
part of its rights hereunder or grant participations herein. The Bank may
disclose to any such assignee or participant (or any prospective assignee or
participant) such information concerning the Borrower and its Affiliates as the
Bank deems appropriate. The Borrower acknowledges that the Bank currently
intends to sell or assign a 40% interest in the Loan Documents to one, or more
participating financial institutions. If the Bank is unable to sell or assign a
40% interest in the Loan Documents, then the Borrower shall upon request of the
Bank, after consultation with the Bank, agree to such modifications in the
pricing, structure and other terms governing the Line of Credit as the Bank may
require to facilitate a sale or assignment of such interest.
7.04 No Third Party Beneficiaries. There are no third party beneficiaries
----------------------------
to this Loan Agreement.
7.05 Notices. All communications, notices or demands provided for hereunder
-------
or under any other Loan Document to which the Borrower is a party shall be sent
by first class mail, by courier, by hand or by certified mail as follows or to
such other address with respect to any party as such party shall notify the
others in writing:
To the Bank: Bank of America, N.A.
0000 Xxxxxxxxx Xxxx., Xxxx. 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Commercial Loan Administration
To the Borrower: Regeneration Technologies, Inc.
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: President
Except as otherwise specifically set forth herein, each such communication,
notice or demand shall be deemed given: (i) when deposited in the mail with
proper postage affixed if sent by mail; or (ii) when actually delivered to the
appropriate address if sent by courier or by hand.
21
7.06 Applicable Law. This Agreement shall be construed and enforced in
--------------
accordance with the laws of the State of Florida.
7.07 Headings. The descriptive section headings herein have been inserted
--------
for convenience only and shall not be deemed to limit or otherwise affect the
construction of any provisions hereof.
7.08 Counterparts. This Agreement may be executed simultaneously in
------------
several counterparts. Each counterpart shall be deemed an original.
7.09 Remedies Cumulative. All rights and remedies of the Bank hereunder
-------------------
are cumulative and in addition to any rights and remedies that the Bank may have
under the laws of Florida. The Bank's exercise of any one right or remedy
against one party hereto will not deprive the Bank of any right or remedy
against that party or any other parties hereto. No right, power or remedy
conferred upon or reserved to the Bank under this Agreement or any other of the
Loan Documents is exclusive of any other tight, power or remedy in any of the
Loan Documents, but each and every such right, power and remedy shall be
cumulative and concurrent and shall be in addition to any other right, power and
remedy given hereunder or under any other Loan Documents; or now hereafter
existing at law, in equity or by statute.
7.10 Delay or Omission. No delay or omission of the Bank to exercise any
-----------------
right, power or remedy under any of the Loan Documents or accruing upon any
Event of Default shall exhaust or impair any such right, power or remedy or
shall be construed to waive any such Event of Default or to constitute
acquiescence therein, Every right, power and remedy given to the Bank under any
of the Loan Documents may be exercised from time to time and as often as may be
deemed expedient by the Bank.
7.11 No Waiver of One Default to Affect Another. No waiver of any Default
------------------------------------------
or Event of Default hereunder shall extend to or affect any subsequent Default
or Event of Default or any other Default or Event of Default then existing, or
impair any rights, powers or remedies consequent thereon.
7.12 Changes. No term of any Loan Document may be changed, waived,
-------
discharged or terminated orally, or by any action or inaction, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
7.13 Severability. If any portion of any Loan Document is declared void
------------
by any court as illegal or against public policy, the remainder of the Loan
Documents in question shall continue in full effect.
7.14 Lost or Damaged Note. Upon receipt by the Borrower of evidence
--------------------
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
the Note (the "Lost Note") and of an indemnity agreement reasonably satisfactory
to the Borrower, the Borrower will make and deliver to the Bank a new Note of
like tenor, date and principal amount in lieu of the Lost Note.
22
7.15 Merger. This Agreement supersedes and replaces any commitment letter
------
relating to the Obligations. Except as "otherwise expressly provided for in the
Loan Documents no termination or cancellation (regardless of cause or procedure)
of the financing under this Agreement shall in any way affect or impair the
obligations, duties, and liabilities of the Borrower or the rights of the Bank
relating to any transaction or event occurring prior to such termination. All
undertakings, agreements, indemnifications, covenants, warranties and
representations contained in the Loan Documents shall survive such termination
or cancellation.
7.16 Arbitration. The parties agree to the following arbitration
-----------
provisions:
(a) This Section 7.16 governs the resolution of any controversies or
claims between the Borrower and the Bank, whether arising in contract, tort
or by statute, including but not limited to controversies or claims
(collectively, a "Claim") that arise out of or relate to: (i) this Loan
Agreement (including any renewals, restatements, extensions or
modifications hereof); or (ii) any document related to this Loan Agreement.
(b) At the request of the Borrower or the Bank, any Claim shall be
resolved by binding arbitration in accordance with the Federal Arbitration
Act (Title 9, U.S. Code) (the "Act").The Act will apply even though this
Loan Agreement provides that it is governed by the law of a specified
state. Arbitration proceedings will be determined in & accordance with the
Act, the rules and procedures for the arbitration of financial services
disputes of JAMS/Endispute or any successor thereof ("JAMS"), and the terms
of this Section. In the event of any inconsistency, the terms of this
Section shall control. The arbitration shall be administered by JAMS and
conducted in any United States state where real or tangible personal
Property collateral for this credit is located or if there is no such
collateral, in Florida. All Claims shall be determined by one arbitrator.
However, if Claims exceed $5,000,000, upon the request of any party, the
Claims shall be decided by three arbitrators. All arbitration hearings
shall commence within 90 days of the demand for arbitration and close
within 90 days of commencement and the award of the arbitrator or
arbitrators, as the case may be, shall be issued within 30 days of the
close of the hearing. However, the arbitrator or arbitrators, as the case
may be, upon a showing of good cause, may extend the commencement of the
hearing for up to an additional 60 days. The arbitrator or arbitrators, as
the case may be, shall provide a concise written statement of reasons for
the award. The arbitration award may be submitted to any court having
jurisdiction to be confirmed and enforced.
(c) The arbitrator(s) will have the authority to decide whether any
Claim is barred by the statute of limitations and, if so, to dismiss the
arbitration on that basis. For purposes of the application of the statute
of limitations, the service on JAMS under applicable JAMS rules of a notice
of Claim is the equivalent of the filing of a lawsuit. Any dispute
concerning this arbitration provision or whether a Claim is arbitrable
shall be determined by the arbitrator(s). The arbitrator(s) shall have the
power to award legal fees pursuant to the termsof this Loan Agreement.
23
(d) This Section 7.16 does not limit the right of the Borrower or
the Bank to: (i) exercise self-help remedies, such as but not limited to,
setoff; (ii) initiate judicial or nonjudicial foreclosure against any real
or personal Property collateral; (iii) exercise any judicial or power of
sale rights, or (iv) act in a court of law to obtain an interim remedy,
such as but not limited to, injunctive relief, writ of possession or
appointment of a receiver, or additional or supplementary remedies.
(e) By agreeing to binding arbitration, the Borrower and the Bank
irrevocably and voluntarily waive any right they may have to a trial by
jury in respect of any Claim. Furthermore, without intending in any way to
limit this Loan Agreement to arbitrate, to the extent any Claim is not
arbitrated, the parties irrevocably and voluntarily waive any right they
may have to a trial by jury in respect of such Claim. This provision is a
material inducement for the Borrower's executing, and the Bank's accepting,
this Loan Agreement. No provision in this Loan Agreement or in any document
related hereto regarding submission to jurisdiction or venue in any court
is intended or shall be construed to be in derogation of the provisions of
this Loan Agreement or in any such other document for arbitration of any
controversy or claim.
7.17 Amended and Restated Agreement. This Agreement amends and restates
------------------------------
that certain Loan Agreement dated September 24, 1999, by and between the Bank
and the Borrower.
7.18. NOTICE OF FINAL AGREEMENT. THIS WRITTEN LOAN AGREEMENT REPRESENTS
-------------------------
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
Agreement on the day and year first above written.
REGENERATION TECHNOLOGIES,INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Its: CFO/Sec/Treas
-----------------------------
BANK OF AMERICA, N.A.
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
-----------------------------
Its: Asst. Vice President
-----------------------------
00
XXXXX XX XXXXXXX
XXXXXX XX XXXXXX
The foregoing instrument was executed, acknowledged and delivered before me
this 17th day of April, 2001, by Xxxxxxx X Xxxxx the CFO/SEC/TREAS of
Regeneration Technologies, Inc., on behalf of the corporation, in Camden County,
Georgia.
/s/ XXXXXXX X. XXXX
---------------------------------------------------
Notary Public, State and County
Aforesaid
Print Name: XXXXXXX X. XXXX
----------------------------------------
My commission expires: Notary Public, Camden
-----------------------------
County, Georgia
-----------------------------
My commission number: My Commission Expires
------------------------------
Aug. 21, 2004
------------------------------
(NOTARIAL SEAL)
25
APPENDIX I
The following terms when used in the Loan Agreement shall have the
following meanings;
"Affiliate" means any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by conduct or otherwise.
"Bank" is defined in the introductory paragraph of the Loan Agreement.
"Borrower" is defined in the introductory paragraph of the Loan Agreement.
"Borrowing Base" is defined in Section 1.02(b) of the Loan Agreement.
"Business Day" means each day other than a Saturday, a Sunday or any
holiday on which commercial banks in Jacksonville, Florida are closed for
business.
"Capital Lease" means any lease of Property which in accordance with GAAP
is required to be capitalized on the balance sheet of the lessee.
"Capital Lease Obligation" means the amount of the liability shown on the
balance sheet of any Person in respect of a Capital Lease determined in
accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
"Collateral" means all properties, rights, interests and privileges from
time to time subject, or intended to be subject, to the Liens granted to the
Bank by the Collateral Documents.
"Collateral Documents" means the Security Agreement and all other
mortgages, deeds of trust, security agreements, assignments, financing
statements and other documents as shall from time to time secure the Obligations
or any guaranty thereof.
"Construction Loan Agreement" is defined in Section 6.01(a) of the Loan
Agreement.
"Debt" means for any Person (without duplication): (a) all indebtedness of
such Person for borrowed money, whether current or funded, or secured or
unsecured, (b) all indebtedness for the deferred purchase price of Property or
services, (c) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to Property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the
event of a default are limited to repossession or sale of such Property), (d)
all indebtedness secured by a purchase money mortgage or other Lien to secure
all or part of the purchase price of Property subject to such mortgage or Lien,
(e) all obligations under leases that shall have been or must be, in accordance
with GAAP, recorded as Capital Leases with respect to which such Person is
liable as lessee, (f) any liability in respect of banker's acceptances or
letters of credit, (g) any indebtedness, whether or not assumed, secured by
Liens on Property acquired by such Person at the time of acquisition thereof,
(h) all indebtedness, whether or not for borrowed money, represented by notes,
drafts, bonds, debentures and similar instruments, and (i) all indebtedness
referred to in clause (a), (b), (c), (d), (e), (f), (g) or (h) above which is
directly or indirectly guaranteed by such Person or which such Person has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which any of them have otherwise assured a creditor against loss. Debt shall
not, however, include trade payables arising in the ordinary course of business
that are not more than 90 days past due.
"Debt Ratio " is defined in Section 4.08(b) of the Loan Agreement.
"Debt Service Coverage Ratio " is defined in Section 4.08(a) of the Loan
Agreement.
"Default" is defined in Section 6.02 of the Loan Agreement.
"Distributions" is defined in Section 4.08(a) of the Loan Agreement.
"Eligible Receivables " is defined in Section 1.02(b) of the Loan
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.
"Event of Default" means any event or condition identified as such in
Section 6.01 of the Loan Agreement.
"Extension Date " is defined in Section 1.01(d) of the Loan Agreement.
"Funded Debt" means, at any time, the aggregate principal amount of all
Debt of a Person that is outstanding at such time.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"Lien" means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of and Property, including the interests of a
vendor or lessor under any conditional sale, Cap&l Lease 0; other title
retention arrangement.
2
"Line of Credit" is defined in Section 1.01(a) of the Loan Agreement.
"Loan Agreement" or "this Agreement" shall mean the Loan Agreement to which
this Appendix is attached as such agreement may be amended or restated from time
to time.
"Loan Documents" shall mean and include this Agreement (as amended from
time to time), the Note, the Security Agreement, all other Collateral Documents
and all documents related to the foregoing documents. Loan Documents shall also
include all documents executed by any Subsidiary on or after the date hereof.
"Lost Note" is defined in Section 7.14 of the Loan Agreement.
"Material Adverse Effect" means (a) a material adverse change in, or
material adverse effect upon, the operations, business, Property, condition
(financial or otherwise) or prospects of the Borrower or of the Borrower and the
Subsidiaries taken as a whole, (b) a material impairment of the ability of the
Borrower or any Subsidiary to perform its obligations under any Loan Document,
or (c) a material adverse effect upon (i) the legality, validity, binding
effect or enforceability against the Borrower or any Subsidiary of any Loan
Document or the rights and remedies of the Bank thereunder or (ii) the
perfection or priority of any Lien granted under any Collateral Document.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Note" is defined in Section 1.01(b) of the Loan Agreement.
"Obligations" is defined in Section 1.03 of the Loan Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"Permitted Liens" is defined in Section 4.01 of the Loan Agreement.
"Permitted Obligations" is defined in Section 4.02(a) of the Loan
Agreement.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof.
"Plan" means any employee pension benefit plan covered by Title IV of ERISA
or subject to the minimum funding standards under Section 412 of the Code that
either (a) is maintained by the Borrower or any Subsidiary for employees of any
such Person or (b) is maintained pursuant to a collective bargaining agreement
or any other arrangement under which more than one employer makes contributions
and to which the Borrower or any Subsidiary is
3
then making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Revolving Period" is defined in Section 1.01(d) of the Loan Agreement.
"Security Agreement" is defined in Section 1.03 of the Loan Agreement.
"Solvent" is defined in Section 5.18 of the Loan Agreement.
"Subsidiary" means any corporation or other Person more than 50% of the
outstanding ordinary voting shares or other equity interests of which is at the
time directly or indirectly owned by the Borrower, by one or more of its
Subsidiaries, or by the Borrower and one or more of its Subsidiaries.
"Tangible Net Worth" is defined in Section 4.04(b)(viii) of
the Loan Agreement
"Welfare Plan" means a "welfare plan" as defined in Section 3(l) of ERISA.
4
