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EXHIBIT 10.4.46
REVOLVING CREDIT LOAN AGREEMENT
THIS REVOLVING CREDIT LOAN AGREEMENT (the "Agreement"), dated as of
January 26, 2001, is made and entered into by and between Neoprobe Corporation,
a Delaware corporation , and Firstar Bank, N.A., a national banking association.
Capitalized terms used herein are defined in Article I hereof.
BACKGROUND INFORMATION
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The Borrower has requested that the Bank provide revolving credit loans
to the Borrower, and the Bank has agreed to provide such revolving credit loans
upon and subject to the terms and conditions as hereinafter set forth.
PROVISIONS
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NOW, THEREFORE, in consideration of the provision of such revolving
credit loans, the agreements and covenants hereinafter contained, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Bank and the Borrower do hereby agree as follows:
ARTICLE I
DEFINITIONS
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SECTION 1.1 DEFINITIONS. As used herein, in any certificate, document
or report delivered pursuant to this Agreement (except as otherwise defined
herein or in such certificate, document or report), the following terms shall
have the following meanings:
"ACCOUNTS RECEIVABLE" shall mean, at any date, the total of
all accounts which would be properly classified in accordance with GAAP as
accounts receivable on the balance sheet of the Borrower, at such date.
"AFFILIATE" shall mean any Person which, directly or
indirectly, is in Control of, is Controlled by, or is under common Control with,
another Person.
"AGREEMENT" shall mean this Revolving Credit Loan Agreement,
as the same may be amended, modified, supplemented, extended, restated or
replaced from time to time.
"ASSIGNEE" shall mean any Person, now or at any time
hereafter, to which the Bank has assigned any part of its interest in Loans to
the Borrower or the Commitment.
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"AVAILABLE COMMITMENT" shall mean, at any particular time, an
amount equal to the excess, if any, of (i) the Commitment over (ii) the
aggregate unpaid principal amount at such time of all Loans made by the Bank to
the Borrower pursuant to the terms hereof.
"AUTHORIZED OFFICER" shall mean the chief executive officer or
vice president of finance of the Borrower.
"BANK" shall mean Firstar Bank, N.A. and its successors and
assigns.
"BASE RATE" shall mean, for any Base Rate Loan for any day,
the rate per annum equal to the "prime rate" established by the Bank from time
to time based on its consideration of economic, money market, business and
competitive factors, and it is not necessarily the Bank's most favored rate. In
the event the Bank shall abolish or abandon the practice of establishing its
prime rate or should the same be unascertainable, the Bank shall designate a
comparable reference rate which shall be deemed to be the Base Rate under this
Agreement and the other Loan Documents. For purposes of determining the Base
Rate for any day, the Base Rate shall change automatically without notice to the
Borrower immediately on each Business Day with each change in the Base Rate,
with any change thereto effective as of the opening of business on the day of
the change.
"BORROWER" shall mean Neoprobe Corporation, a Delaware
corporation, and its permitted successors and assigns.
"BORROWING BASE" shall mean the sum of (i) 80% of the amount
of Eligible Accounts Receivable, plus (ii) 25% of the amount of Eligible
Inventory, provided that the portion of the Borrowing Base allocable to Eligible
Inventory shall not exceed the lesser of (x) the amount equal to fifty percent
(50%) of outstanding Loans at any time, and (ii) $500,000.
"BORROWING BASE CERTIFICATE" shall have the meaning set forth
in Section 5.2(c), and be substantially in the form of Exhibit C attached
hereto.
"BORROWING DATE" shall have the meaning set forth in Section
2.3(a).
"BUSINESS DAY" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday or any day that
shall be in the City of Columbus, Ohio or New York, New York a legal holiday or
a day on which banking institutions are authorized by law or a Governmental
Authority to close, and (ii) with respect to all determinations and notices in
connection with, and payments of principal and interest on, LIBOR Rate Loans,
any day that is a Business Day described in clause (i) above and that is also a
day for trading by and between banks in Dollar deposits in the London interbank
market.
"CAPITAL EXPENDITURES" shall mean, without duplication, any
expenditures for any purchase or other acquisition of any asset which would be
classified as a fixed or capital asset on a consolidated balance sheet of the
Borrower and its Subsidiaries prepared in accordance with GAAP excluding (i) the
cost of assets acquired with Capitalized Lease Obligations, (ii) expenditures of
insurance proceeds to rebuild or replace any asset after a casualty loss, and
(iii) leasehold
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improvement expenditures for which the Borrower or a Subsidiary is reimbursed
promptly by the lessor.
"CAPITALIZED LEASE" of a Person shall mean any lease of
Property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATIONS" of a Person shall mean the
amount of the obligations of such Person under Capitalized Leases which would be
shown as a liability on a balance sheet of such Person prepared in accordance
with GAAP.
"CHANGE IN CONTROL" means the acquisition by any Person, or
two or more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 15% or more of the outstanding shares of
voting stock of the Borrower.
"CLOSING DATE" shall mean the date on or after the Effective
Date on which the Bank shall have received the documents specified in or
pursuant to Section 3.1.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"COLLATERAL" shall have the meaning set forth in the Security
Agreement.
"COMMITMENT" shall mean the commitment of the Bank to make
Loans to the Borrower up to the maximum aggregate amount of $1.5 million,
subject to the terms and conditions of this Agreement.
"COMMITMENT PERIOD" shall mean the period of time commencing
on the Effective Date ending on January 25, 2002.
"COMPLIANCE CERTIFICATE" shall have the meaning set forth in
Section 5.2(a), and be substantially in the form of Exhibit B attached hereto.
"CONSOLIDATED CAPITAL EXPENDITURES" shall mean, with reference
to any period, the Capital Expenditures of the Borrower and its Subsidiaries
calculated on a consolidated basis for such period.
"CONSOLIDATED CURRENT ASSETS" shall mean, at any time, the
Current Assets of the Borrower and its Subsidiaries calculated on a consolidated
basis at such time.
"CONSOLIDATED CURRENT LIABILITIES" shall mean, at any time,
the Current Liabilities of the Borrower and its Subsidiaries calculated on a
consolidated basis at such time.
"CONSOLIDATED EBIDA" shall mean Consolidated Net Income plus,
to the extent deducted from revenues in determining Consolidated Net Income, (i)
Consolidated Interest Expense,
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(ii) depreciation, (iii) amortization, and (iv)extraordinary losses incurred
other than in the ordinary course of business, minus, to the extent included in
Consolidated Net Income, extraordinary gains realized other than in the ordinary
course of business, all calculated for the Borrower and its Subsidiaries on a
consolidated basis.
"CONSOLIDATED INTEREST EXPENSE" shall mean, with reference to
any period, the interest expense of the Borrower and its Subsidiaries calculated
on a consolidated basis for such period.
"CONSOLIDATED NET INCOME" shall mean, with reference to any
period, the net income (or loss) of the Borrower and its Subsidiaries calculated
on a consolidated basis for such period.
"CONSOLIDATED RENTALS" shall mean, with reference to any
period, the Rentals of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.
"CONTINGENT OBLIGATION" of any Person shall mean any
reimbursement obligations of such Person in respect of drafts that may be drawn
under letters of credit and any obligation of such Person guaranteeing or in
effect guaranteeing any Debt, leases, dividends or other obligations primarily
to pay money ("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR")
in any manner, whether directly or indirectly, including without limitation any
obligation of such Person, whether or not contingent, (a) to purchase or to
provide funds for the payment or discharge of any such primary obligation or any
Property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation, or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase Property, securities or services primarily for the purpose of assuring
the obligee under any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, (d) to make payment for any
products, materials or supplies or for any transportation or service regardless
of the nondelivery or nonfurnishing thereof, in any such case if the purpose or
intent of such agreement is to provide assurance that any such primary
obligation will be paid or discharged, or that any agreement relating thereto
will be complied with, or that the holders of any such primary obligations will
be protected against loss in respect thereof, (e) with respect to any such
primary obligation, whether or not for borrowed money, which is secured by any
mortgage, pledge, security interest, lien or conditional sale or other title
retention agreement existing on any Property owned or held by such Person
subject thereto, and for which such Person has any personal liability, and (f)
otherwise to assure or hold harmless the obligee under such primary obligation
against loss in respect thereof; provided, however, that the term "CONTINGENT
OBLIGATION" shall not include endorsements of instruments for deposit or
collection in the ordinary course of business.
"CONTRACTUAL OBLIGATION" shall mean, as to any Person, any
provision of any security issued by such Person or of any agreement, instrument
or undertaking to which such Person is a party or by which it or any of its
Property is bound.
"CONTROL" (including the terms "controlling", "in control of",
"controlled by" or "under common control with") shall mean the possession,
directly or indirectly, of the power to
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direct or cause the direction of management or policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
"CURRENT ASSETS" of any Person shall mean the amount of assets
of such Person which would be shown as current assets on a balance sheet of such
Person prepared in accordance with GAAP.
"CURRENT LIABILITIES" of any Person shall mean the amount of
liabilities of such Person which would be shown as current liabilities on a
balance sheet of such Person prepared in accordance with GAAP.
"DEBT" of any Person shall mean at any date, without
duplication (a) any indebtedness for borrowed money (including without
limitation capital leases (in accordance with GAAP)) which such Person directly
or indirectly created, incurred, assumed, endorsed (other than for collection in
the ordinary course of business), discounted with recourse or in respect of
which such Person is otherwise directly liable; (b) any indebtedness, whether or
not for borrowed money, which any Person has incurred, assumed or with respect
to which such Person has become directly liable and which represents or has been
incurred to finance the purchase price of any Property or business, whether by
purchase, consolidation, merger or otherwise; and (c) any indebtedness, whether
or not for borrowed money, which is secured by any mortgage, pledge, security
interest, lien or conditional sale or other title retention agreement existing
on any Property owned or held by any Person subject thereto, for which such
Person has personal liability for any such indebtedness.
"DEFAULT" shall mean an event or condition which would
constitute an Event of Default with the giving of notice or lapse of time, or
otherwise.
"DEFAULT RATE" shall mean, with respect to any Loan at any
time, the highest Interest Rate for any Loan at such time PLUS 300 basis points.
"DOLLAR" and the sign "$" shall mean lawful money of the
United States.
"EFFECTIVE DATE" shall mean the date this Agreement becomes
effective in accordance with Section 9.5.
"ELIGIBLE ACCOUNTS RECEIVABLE" shall mean, at any date, the
total of all Accounts Receivable of the Borrower at such date in which the Bank
has a perfected first priority security interest and which are not encumbered by
any other Liens, but excluding Accounts Receivable which (i) are unpaid more
than 90 days past the date of the applicable invoice, and (ii) are otherwise
unacceptable to the Bank in the exercise of its reasonable discretion.
"ELIGIBLE INVENTORY" shall mean, at any date, the total of all
Inventory of the Borrower consisting of finished goods, at such date in which
the Bank has a perfected first priority security interest and which are not
encumbered by any other Liens, but excluding Inventory which (i) the Bank, in
its reasonable discretion, deems to be obsolete, unsalable, damaged, defective
or unfit, (ii) has been returned or rejected, (iii) is held by Persons on
consignment, sale on approval or
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otherwise not in the Borrower's physical possession, except upon the written
consent of the Bank, (iv) is located outside of the United States, or (v) is
otherwise unacceptable to the Bank in the exercise of its reasonable discretion.
"ENVIRONMENTAL LAWS" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
ss.9601, et seq., the Toxic Substances Control Act, 15 U.S.C. ss.2601, et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. ss.6901, et seq., the
Water Quality Act of 1987, 33 U.S.C. ss.1251, et seq., the Clean Air Act, 42
U.S.C. ss.7401, et seq., and any other federal, state or local statute,
ordinance, law, code, rule, regulation or order regulating or imposing liability
(including strict liability) or standards of conduct regarding Hazardous
Substances.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may from time to time be supplemented or amended and any
successor statute.
"ERISA EVENT" shall mean, with respect to any Person, (a) a
Reportable Event (other than a Reportable Event not subject to the provision for
30-day notice to the PBGC under regulations issued under Section 4043 of ERISA),
(b) the withdrawal of any member of the ERISA Group from a Plan during a plan
year in which it was a "substantial employer" as defined in Section 4001(a)(2)
of ERISA if such withdrawal would have a adverse effect on such Person, (c) the
filing by such Person of a notice of intent to terminate a Plan under a distress
termination or the treatment of a Plan amendment as a distress termination under
Section 4041(c) of ERISA, (d) the institution of proceedings against such Person
to terminate a Plan by the PBGC under Section 4042 of ERISA, (e) the failure to
make required contributions that would result in the imposition of a lien under
Section 412 of the Code or Section 302 of ERISA, (f) any Prohibited Transaction
involving any Plan, and (g) any other event or condition which might reasonably
be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.
"ERISA GROUP" of any Person shall mean such Person, any
Subsidiary and all members of a controlled group of corporations and all trades
or business (whether or not incorporated) under common Control which, together
with the Borrower, are treated as a single employer under Section 414 of the
Code.
"ETHICON AGREEMENT" shall mean the Distribution Agreement
between the Borrower and Ethicon Endo-Surgery, Inc., dated effective September
28, 1999, together with all other agreements in connection therewith, including
without limitation the Patent, Computer Software, and Mask Work License
Agreement attached thereto as Appendix A.
"EVENT OF DEFAULT" shall have the meaning set forth in Section
7.1.
"FINANCING STATEMENTS" shall mean financing statements under
the Uniform Commercial Code and all other filings necessary to perfect the
security interests granted pursuant to the Security Agreement.
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"FISCAL MONTH" shall mean, as to the Borrower or any
Subsidiary, any monthly period ending on the appropriate day based upon the
Fiscal Year of the Borrower or each Subsidiary, as applicable.
"FISCAL QUARTER" shall mean, as to the Borrower or any
Subsidiary, any period of three consecutive Fiscal Months ending on the last day
of each of the Borrower's or any Subsidiary's March, June, September and
December Fiscal Month.
"FISCAL YEAR" shall mean, as to the Borrower or any
Subsidiary, any period of twelve consecutive Fiscal Months ending on December
31.
"GAAP" shall mean generally accepted accounting principles in
the United States in effect at the time any determination is made or financial
statement is required hereunder as promulgated by the American Institute of
Certified Public Accountants, the Accounting Principles Board, the Financial
Accounting Standards Board or other body existing from time to time which is
authorized to establish or interpret such principles.
"GOVERNMENTAL AUTHORITY" shall mean the United States
government, any state, province or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"HAZARDOUS SUBSTANCES" shall mean and include all hazardous
and toxic substances, wastes, materials, compounds, pollutants and contaminants
(including, without limitation, asbestos, polychlorinated biphenyls, and
petroleum products) which are included under or regulated by Environmental Laws.
"INTEREST PAYMENT DATE" shall mean, with respect to each Loan,
the fifth day of each calendar month, beginning with March 5, 2001 and
continuing on the fifth day of each calendar month thereafter, and on the
Termination Date.
"INTEREST RATE" shall mean the rate of interest in effect at
any time with respect to a Loan.
"INVENTORY" shall mean at any date the total of all accounts
which would be properly classified in accordance with GAAP as inventory on the
balance sheet of the Borrower at such date.
"INVESTMENT" shall mean any investment in any Person, whether
by means of share purchase, capital contribution, loan, time deposit or
otherwise (but not including any demand deposit).
"LIEN" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest, preference, priority or other security agreement, including
without limitation, any conditional sale or other title retention agreement, and
the filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction in respect of any of the foregoing.
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"LOAN DOCUMENTS" shall mean this Agreement, the Note, the
Security Agreement, the Financing Statements and any and all other documents
evidencing, securing or relating to the Loans, as such documents may be amended,
modified, supplemented, extended, restated or replaced from time to time.
"LOANS" shall mean revolving credit loans made by the Bank in
Dollars to the Borrower pursuant to this Agreement, and "LOAN" shall mean any
one of such loans.
"MATERIAL ADVERSE EFFECT" shall mean, relative to any
occurrence of whatever nature (including any determination in litigation,
arbitration or governmental proceeding or investigation), which the Bank
determines, in its reasonable judgment, will have a materially adverse effect
on:
(a) the assets, business, profits, properties, condition
(financial or otherwise), operations or foreseeable financial prospects
of the Borrower; or
(b) the ability of the Borrower to perform any of its payment
or other obligations under this Agreement, the Note and any other Loan
Documents or the transactions contemplated hereby and thereby.
"NOTE" shall mean the Revolving Credit Loan Note of the
Borrower in the form of Exhibit A attached hereto, evidencing the obligation of
the Borrower to repay the Loans, as the same may be amended, modified,
supplemented, extended, restated or replaced from time to time.
"NOTICE OF BORROWING" shall have the meaning set forth in
Section 2.3(a).
"OPERATING LEASE" of a Person shall mean any lease of Property
(other than a Capitalized Lease) by such Person as lessee which has an original
term (including any required renewals and any renewals effective at the option
of the lessor) of one year or more.
"PARTICIPANT" shall mean any Person, now or at any time
hereafter, participating with the Bank in Loans to the Borrower.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA, or any entity
succeeding to any or all of its functions under ERISA.
"PERSON" shall mean an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or other
entity of whatever nature.
"PLAN" shall mean any employee benefit plan or other plan
maintained for employees covered by Title 10 of ERISA.
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"PROHIBITED TRANSACTION" shall mean a transaction described in
Section 406 of ERISA which is not the subject of an exemption pursuant to
Section 408 of ERISA.
"PROPERTY" of a Person shall mean any and all property,
whether real, personal, tangible, intangible, or mixed, of such Person, or other
assets owned, leased or operated by such Person.
"REAL PROPERTY" shall have the meaning set forth in Section
4.16(a).
"RENTALS" of a Person shall mean the aggregate fixed amounts
payable by such Person under any Operating Lease.
"REPORTABLE EVENT" shall have the meaning given such term in
Section 4043(b) of ERISA.
"REQUIRED PROPERTY INSURANCE COVERAGE" shall mean at any time
business interruption insurance, workers' compensation insurance and insurance
insuring all Property of the Borrower against loss or damage by fire,
lightening, vandalism and malicious mischief and all other perils covered by
standard "extended coverage" or "all-risk" insurance in amounts, and deductibles
from the loss payable for any casualty, satisfactory to the Bank at any time and
from time to time. If any insurance policies with respect to Required Property
Insurance Coverage is written on a co-insurance basis, such policy must contain
an agreed amount endorsement as evidence that the coverage is in an amount
sufficient to insure the full amount of such Property.
"REQUIRED PUBLIC LIABILITY INSURANCE COVERAGE" shall mean
comprehensive general accident and public liability insurance (including
coverage for elevators and escalators, if any, on Property owned or leased by
the Borrower) against injury, loss and/or damage to Persons and Property in
amounts satisfactory to the Bank at any time and from time to time.
"REQUIREMENTS OF LAW" shall mean as to any Person, the
articles (certificate) of incorporation or formation, code of regulations
(by-laws), operating agreement or other organizational agreements or other
governing documents of such Person, and any law, statute, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
Property or to which such Person or any of its Property is subject.
"RESTRICTED PAYMENT" shall mean (i) any dividend or other
distribution on any shares of a Person's capital stock (except dividends payable
solely in shares of its capital stock) or (ii) any payment on account of the
purchase, redemption, retirement or acquisition of (x) any shares of a Person's
capital stock, or (y) any option, warrant or other right to acquire shares of a
Person's capital stock (but not including payments of principal, premium (if
any) or interest made pursuant to the terms of convertible debt securities prior
to conversion).
"SECURITY AGREEMENT" shall mean the Continuing Security
Agreement between the Bank and the Borrower of even date herewith, securing the
obligations of the Borrower under this
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Agreement, the Note and the other Loan Documents, as the same may be amended,
modified, supplemented, extended, restated or replaced from time to time.
"SETOFF OBLIGATION" shall mean and include all Debt of the
Borrower to the Bank, including, but not limited to, the Debt of the Borrower
arising under the Note or any other document, instrument or agreement referred
to herein.
"SUBSIDIARY" of a Person shall mean (i) any corporation more
than 50% of the outstanding securities having ordinary voting power of which
shall at the time be owned or controlled, directly or indirectly, by such Person
or by one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, limited liability company, association,
joint venture or similar business organization more than 50% of the ownership
interests having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.
"TERMINATION DATE" shall mean the date upon which the
Commitment Period ends.
"UNIFORM COMMERCIAL CODE" shall mean Chapters 1301 through
1310, inclusive, Ohio Revised Code, as from time to time amended.
"UNITED STATES" shall mean the United States of America,
including the States and the District of Columbia, but excluding its territories
and possessions.
SECTION 1.2 USE OF TERMS. Unless otherwise defined or the context
otherwise requires, terms for which meanings are provided in this Agreement
shall have such meanings when used in the exhibits and schedules hereto, the
other Loan Documents and any other communications delivered from time to time in
connection with this Agreement. Terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa, unless otherwise
defined in the plural.
SECTION 1.3 CROSS REFERENCES; HEADINGS. The words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement or in
any of the other Loan Documents shall refer to this Agreement or such Loan
Documents as a whole and not to any particular provision of this Agreement or
such Loan Documents. Section, article, schedule and exhibit references contained
in this Agreement are references to sections, articles, schedules and exhibits
in or to this Agreement unless otherwise specified. Any reference in any section
or definition to any clause is, unless otherwise specified, to such clause of
such section or definition. The various headings in this Agreement and the other
Loan Documents are inserted for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement or the other Loan
Documents or any provision hereof or thereof.
SECTION 1.4 ACCOUNTING TERMS. Any accounting term used in this
Agreement and in the other Loan Documents and any certificate or other document
made or delivered pursuant hereto or thereto that is not specifically defined
shall have the meaning customarily given in accordance with GAAP; provided,
however, that in the event that changes in GAAP shall be mandated by the
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Financial Accounting Standards Board, or any similar accounting body of
comparable standing, and to the extent that such changes would modify or could
modify such accounting terms or the interpretation or computation thereof, such
changes shall be followed in defining such accounting terms only from and after
the date the Borrower and the Bank shall have amended this Agreement to the
extent necessary to reflect any such changes in the financial covenants and
other terms and conditions of this Agreement. All calculations and
determinations made with respect to financial covenants set forth herein shall
be calculated and determined in Dollars.
ARTICLE II
AMOUNT AND TERMS OF COMMITMENT AND REVOLVING CREDIT LOANS
SECTION 2.1 COMMITMENT.
(a) Subject to the terms and conditions of this Agreement, the
Bank agrees to make Loans to the Borrower from time to time during the
Commitment Period up to a maximum amount of the Commitment; provided, however,
the total amount of outstanding Loans shall at no time exceed the lesser of (x)
the Commitment and (y) the Borrowing Base. Each borrowing for a Loan must be in
a Dollar amount of at least $25,000.00.
(b) During the Commitment Period, within the limits of the
Commitment and subject to the terms and conditions of this Agreement and the
other Loan Documents, the Borrower may use its Commitment by borrowing, repaying
the Loans, in whole or in part, and reborrowing.
SECTION 2.2 NOTE.
(a) The Loans made by the Bank to the Borrower pursuant hereto
shall be evidenced by the Note payable to the order of the Bank in an aggregate
amount equal to the Commitment.
(b) The Note shall (i) be dated as of the date hereof, (ii) be
in a principal amount corresponding to the aggregate amount of the Commitment,
(iii) bear interest as determined pursuant to this Agreement, (iv) mature on the
Termination Date, and (v) require accrued interest to be paid on the applicable
Interest Payment Date and at maturity in accordance with the terms of this
Agreement.
(c) The Bank is hereby authorized to record electronically or
otherwise (i) the date and amount of each Loan disbursement made by the Bank,
(ii) the date and amount of each payment or repayment of principal thereof, and
(iii) such other information as it deems necessary or appropriate, and may, if
the Bank so elects in connection with any transfer or enforcement of the Note,
endorse on a schedule forming a part thereof appropriate notation to evidence
the foregoing information with respect to each such Loan then outstanding. Such
recordation or endorsement shall constitute PRIMA FACIE evidence of the accuracy
of the information so recorded or endorsed; provided, however, the failure of
the Bank to make any such recordation(s) or endorsement(s) shall not affect
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the obligation of the Borrower to repay outstanding principal, interest or any
other amount due hereunder or under such Note in accordance with the terms
hereof and thereof.
SECTION 2.3 NOTICE OF LOAN BORROWING; FUNDING OF LOANS.
(a) When the Borrower desires to borrow hereunder, the
Borrower shall give to the Bank a notice (a "Notice of Borrowing"), which (i)
shall be irrevocable, and (ii) must be received by the Bank prior to 2:00 p.m.,
Columbus time, on the proposed date of the borrowing, which date shall be a
Business Day (a "Borrowing Date"). Each such Notice of Borrowing shall specify
(i) the amount to be borrowed, and (ii) the requested Borrowing Date.
(c) Unless the Bank determines that any applicable condition
specified in Article III has not been satisfied prior to 2:00 p.m., Columbus
time, on the applicable Borrowing Date, the Bank shall make funds in the amount
of the Loan available to the Borrower.
SECTION 2.4 TERMINATION OF COMMITMENT. The Commitment shall terminate
on the Termination Date and any Loans then outstanding, together with all
accrued interest thereon and all other outstanding fees, charges and expenses
payable hereunder and under the other Loan Documents shall be due and payable
immediately.
SECTION 2.5 INTEREST ON LOANS. Each Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such Loan is
made and continuing while outstanding and unpaid, at a rate equal to the Base
Rate. Accrued interest shall be payable on each Interest Payment Date. The Base
Rate shall be adjusted automatically and as of the effective date of any change
in the Base Rate. Interest on Loans shall be calculated on the basis of a year
of 360 days for the actual number of days elapsed. Any overdue principal of, and
to the extent permitted by applicable law, overdue interest on, any Base Rate
Loan shall bear interest, payable on demand, for each day until paid at a rate
equal to the Default Rate for such day. The Bank shall determine each Interest
Rate applicable to the Loans hereunder and its determination shall be conclusive
in the absence of manifest error.
SECTION 2.6 FEES. During the Commitment Period, the Borrower shall pay
to the Bank a commitment fee at a rate of 1/4% per annum of the daily average
Available Commitment (calculated on the basis of a 360-day year for the actual
number of days elapsed). Such commitment fee shall accrue on the Available
Commitment beginning on the Effective Date and shall continue to accrue
thereafter through the Termination Date. Such accrued commitment fees shall be
payable (i) quarterly in arrears on the last day of each calendar quarter
(beginning with the calendar quarter ending on March 31, 2001, and (ii) on the
Termination Date.
SECTION 2.7 PREPAYMENTS.
(a) The Borrower may prepay any Loan at any time without
premium or penalty.
(b) Upon notice to the Borrower by the Bank, the Borrower
shall prepay its Loans on each such date as and to the extent the outstanding
balance of all Loans to the Borrower
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exceeds the Borrowing Base. Each such mandatory prepayment shall be applied to
prepay such Loans.
SECTION 2.8 GENERAL PROVISIONS AS TO THE LOANS AND PAYMENTS AND
FUNDING OF LOANS.
(a) The Borrower shall make each payment of principal of, and
interest on, the Loans and the Bank's fees hereunder not later than 11:00 a.m.
Columbus time, on the date when due, in federal or other funds immediately
available at the place where payment is due, to the Bank at the Bank's address
set forth in Section 9.4. The Borrower authorizes the Bank to electronically
debit all such payments and fees from the account(s) of the Borrower maintained
with the Bank.
(b) Except as otherwise provided herein, whenever any payment
of principal of, or interest on, any Loan or of such fees shall be due on a day
which is not a Business Day, the day for payment thereof shall be extended to
the next succeeding Business Day. If the date for any payment of principal is so
extended or is extended by operation of law or otherwise, interest thereon shall
be payable for such extended time period.
(c) For the purpose of computing the Available Commitment, the
Bank shall have the right, in its sole discretion, to treat as outstanding Loans
under this Agreement the unpaid amount of any interest, fees, costs or expenses
otherwise then due and payable hereunder and under the Note and the other Loan
Documents; provided, however, that such interest, fees, costs or expenses shall
not be deemed to be outstanding Loans for purposes of Section 2.6.
(d) All payments under the Loan Documents by the Borrower with
respect to principal of, interest on, and any other amount relating to the Loans
(including the commitment fee set forth in Section 2.6 in connection with the
Available Commitment with respect to the Commitment), shall be made in Dollars.
SECTION 2.9 USE OF PROCEEDS. The Borrower represents, warrants and
agrees that the proceeds of the Loans made hereunder shall be used by the
Borrower only for working capital and general corporate purposes.
SECTION 2.10 LOAN ADMINISTRATION. The Bank shall have no obligation to
advance or re-advance any sums or make any Loan pursuant to terms of this
Agreement at any time when a Default or an Event of Default exists.
ARTICLE III
CONDITIONS OF LENDING
---------------------
SECTION 3.1 CONDITIONS TO INITIAL LOAN. The agreement of the Bank to
make the initial Loan hereunder on any Borrowing Date is subject to the
satisfaction of the following conditions precedent as of such Borrowing Date:
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(a) LOAN DOCUMENTS. The Bank shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of the Borrower,
(ii) the Note, conforming to the requirements hereof and executed and delivered
by a duly authorized officer of the Borrower, and (iii) each of the other Loan
Documents, conforming to the requirements hereof and executed and delivered by a
duly authorized officer or representative of each party thereto.
(b) CONSENTS. The Bank shall have received true copies (in
each case certified as to authenticity on such date by such Person as may be
appropriate or may be reasonably required by the Bank) of all documents and
instruments, including all consents, authorizations and filings, required or
advisable under any Requirements of Law or by any Contractual Obligation in
connection with the execution, delivery, performance, validity and
enforceability of this Agreement, the Note and the other Loan Documents, and
such consents, authorizations and filings shall be reasonably satisfactory in
form and substance to the Bank and its counsel and be in full force and effect.
(c) CORPORATE/ENTITY DOCUMENTS. The Bank shall have received
true and complete certified copies of the Borrower's articles (certificate) of
incorporation (formation), code of regulations (by-laws), operating agreement or
other governing documents, and a copy of the resolutions (in form and substance
satisfactory to the Bank) of the Board of Directors (or other governing Person)
of the Borrower authorizing (i) the execution, delivery and performance of this
Agreement, the Note and the other Loan Documents, as applicable, (ii) the
consummation of the transactions contemplated hereby and thereby, (iii) the
borrowing and other financial transactions provided for herein, and (iv) the
documents provided for in this Agreement, certified by the secretary or an
assistant secretary (or other appropriate officer) of the Borrower. Such
certificate shall state that the resolutions set forth therein have not been
amended, modified, revoked or rescinded as of the date hereof.
(d) GOOD STANDING CERTIFICATES. The Bank shall have received
copies of certificates dated as of a recent date from the Secretary of State, or
other appropriate authority of such jurisdiction, evidencing the good standing
(or comparable status) of the Borrower in the jurisdiction of its incorporation
(formation) and the jurisdiction of where its chief executive office is located.
(e) INCUMBENCY CERTIFICATES. The Bank shall have received a
certificate of the secretary or an assistant secretary (or other appropriate
officer) of the Borrower as to the incumbency and signature of the officer(s) of
the Borrower executing this Agreement, the Note, the other Loan Documents and
any certificate or other documents to be delivered pursuant hereto or thereto.
(f) SEARCHES; RELEASE OF EXISTING LIENS. The Bank shall have
received (i) appropriate security interest and lien searches and tax and
judgement lien searches undertaken at all appropriate offices of Governmental
Authorities which name the Borrower (and any predecessor name of the Borrower
within the previous 5 years), as a "debtor"; and (ii) all filing receipts,
acknowledgments or other evidence satisfactory to it evidencing any recordation
or filing necessary to release all Liens (except Liens permitted hereby).
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(g) FINANCIAL INFORMATION. The Bank shall have received a copy
of each of the financial statements referred to in Section 4.7.
(h) NO LITIGATION. No suit, action, investigation, inquiry or
other proceeding (including, without limitation, the enactment or promulgation
of a statute or rule) by or before any arbitrator or any Governmental Authority
shall be pending and no preliminary or permanent injunction or order by a state
or federal court shall have been entered (i) in connection with this Agreement,
the Note, the other Loan Documents or any of the transactions contemplated
hereby or thereby, or (ii) which, in the reasonable judgment of the Bank, would
have a Material Adverse Effect.
(i) NO VIOLATION. The consummation of the transactions
contemplated hereby and by the Note and the other Loan Documents shall not
contravene, violate or conflict with, nor involve the Bank in a violation of,
any Requirement of Law.
(j) LEGAL OPINION. If requested by the Bank, the Bank shall
have received the executed legal opinion of legal counsel to the Borrower, in
form and substance satisfactory to the Bank with respect to the Borrower, the
transactions contemplated hereby and such other matters as the Bank may
reasonably request.
(k) INSURANCE CERTIFICATES. The Bank shall have received the
certificates of insurance referred to in Section 5.8.
SECTION 3.2 CONDITIONS TO EACH LOAN.
(a) The agreement of the Bank to make any Loan (including the
initial Loan) hereunder on any Borrowing Date is subject to the satisfaction of
the following conditions precedent as of such Borrowing Date:
(i) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Borrower in or pursuant to
this Agreement, the Note or any other Loan Document delivered in
connection herewith or therewith shall be true and correct in all
material respects on and as of such date as if made on and as of such
date.
(ii) NO DEFAULT. No Event of Default nor Default shall
have occurred and be continuing on such date or after giving effect to
the Loan requested by the Borrower to be made on such date.
(iii) NO LITIGATION. No litigation, investigation or
proceeding before or by any arbitrator or Governmental Authority shall
be continuing or threatened against the Borrower questioning the
enforceability of or the Borrower's authority to enter into this
Agreement, the Note or the other Loan Documents.
(iv) ADDITIONAL DOCUMENTS. The Bank shall have received
each additional document, instrument or item of information reasonably
requested by the Bank.
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(v) ADDITIONAL MATTERS. All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Agreement, the
Note and the other Loan Documents shall be reasonably satisfactory in
form and substance to the Bank.
(b) Each Notice of Borrowing submitted by the Borrower
hereunder shall constitute a representation and warranty by the Borrower to the
Bank as of the date of such transaction that the conditions contained in this
Section 3.2 have been satisfied.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants to the Bank that:
SECTION 4.1 GOOD STANDING AND QUALIFICATION. The Borrower (i) is duly
organized, validly existing and in good standing (or comparable status) under
the laws of the jurisdiction of its incorporation or formation, (ii) has all
requisite power and authority to own and operate its properties and to carry on
its business as presently conducted, (iii) is duly qualified as a foreign
corporation (or other entity) to do business in and is in good standing (or
comparable status) under the laws of each jurisdiction where, by the nature of
its business or because of the character of the properties owned or leased by it
or the transaction of its business, failure to be so qualified would have a
Material Adverse Effect or where failure to qualify would affect the ability of
the Borrower to enforce any of its material rights, and (iv) is in compliance
with all Requirements of Law except to the extent that the failure to comply
therewith would not, in the aggregate, have a Material Adverse Effect.
SECTION 4.2 AUTHORITY. The Borrower has full power and authority (i) to
enter into this Agreement and all other Loan Documents to which each is a party,
(ii) to make the borrowings contemplated by this Agreement, (iii) to execute,
deliver and perform this Agreement, the Note and the other Loan Documents and to
incur the obligations provided for herein and therein, all of which have been
duly authorized by all necessary and proper corporate action. No consent, waiver
or authorization of, or filing with, any Person (including without limitation
any Governmental Authority), is required to be made or obtained by the Borrower
in connection with the borrowings hereunder or the execution, delivery,
performance, validity or enforceability of this Agreement and all other Loan
Documents, other than the filing of Financing Statements.
SECTION 4.3 BINDING AGREEMENTS. This Agreement and all other Loan
Documents constitute, and the Note, when executed and delivered pursuant hereto
for value received, shall constitute, the valid and legally binding obligations
of the Borrower, enforceable in accordance with their respective terms, except
as enforcement of such terms may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or similar laws affecting
creditors' rights generally, provided, however, that the Borrower represents and
warrants that no such limitations currently exist as of the date of this
Agreement, or (ii) equitable principles which may limit the availability of the
remedy of specific performance or other equitable remedies.
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SECTION 4.4 LITIGATION. There are no actions, suits, investigations or
administrative proceedings of or before any court, arbitrator or Governmental
Authority, pending or, to the knowledge of the Borrower, threatened against the
Borrower or any of its properties or assets which: (i) either in any case or in
the aggregate, if adversely determined, would have a Material Adverse Effect; or
(ii) question the validity of this Agreement or any other Loan Documents or any
action to be taken in connection with the transactions contemplated hereby and
thereby.
SECTION 4.5 NO CONFLICTING LAW OR AGREEMENTS. The execution, delivery
and performance by and of the Borrower of this Agreement and all other Loan
Documents to which it is a party: (i) do not and will not violate any
Requirement of Law; (ii) do not and will not violate any order, decree or
judgment by which the Borrower is bound; (iii) do not and will not violate or
conflict with, result in a breach of or constitute (with notice, lapse of time,
or otherwise) a default under any material agreement, mortgage, indenture or
contract to which the Borrower is a party, or by which the Borrower's properties
are bound; or (iv) do not and will not result in the creation or imposition of
any lien, security interest, charge or encumbrance of any nature whatsoever upon
any Property of the Borrower, other than in favor of the Bank.
SECTION 4.6 TAXES. With respect to all taxable periods, the Borrower
has filed all tax returns which are required to be filed and all federal, state,
provincial, municipal, franchise and other taxes shown to be due and payable on
such filed returns have been paid or have been reserved against, as required by
GAAP, and the Borrower knows of no unpaid assessment against the Borrower.
SECTION 4.7 FINANCIAL STATEMENTS. The Borrower has heretofore delivered
to the Bank (i) the audited annual consolidated balance sheet of the Borrower
and its Subsidiaries as of December 31, 1999, and the related consolidated
statements of income, shareholders' equity and cash flows for the Fiscal Year
then ended; and (ii) the unaudited consolidated balance sheet of the Borrower
and its Subsidiaries as of September 30, 2000, and the related unaudited
consolidated statements of income and cash flows for the nine (9) Fiscal Months
then ended. Such financial statements, with accompanying footnotes (if any),
fairly present the financial condition, results of operations and cash flows of
the Borrower and its Subsidiaries, as of the dates and for the periods referred
to and have been prepared in accordance with GAAP consistently applied by the
Borrower and its Subsidiaries throughout the periods involved. The financial
statements referred to in this Section 4.7 do not, nor does this Agreement or
any written statement furnished by the Borrower to the Bank in connection
herewith, contain any untrue statement of a material fact or omit a material
fact necessary to make the statements contained therein or herein not
misleading.
SECTION 4.8 ADVERSE DEVELOPMENTS. Since the date of the financial
statements most recently furnished to the Bank, there has been no change in the
business, prospects, operations or condition, financial or otherwise, of the
Borrower or its properties or assets which would have a Material Adverse Effect.
SECTION 4.9 EXISTENCE OF ASSETS AND TITLE THERETO. The Borrower has
good and marketable title to its properties and assets, including the properties
and assets reflected in the
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financial statements referred to herein. Such properties and assets are not
subject to any Lien except as expressly permitted under the terms of this
Agreement.
SECTION 4.10 REGULATIONS S,T,U OR X. The Borrower is not engaged, nor
will the Borrower engage, principally or as one of its important activities, in
the business of extending credit for the purpose of "purchasing" or "carrying"
any "margin stock" under Regulation U of the Board of Governors of the Federal
Reserve System as now or from time to time in effect. No part of the proceeds of
the borrowings hereunder will be used, directly or indirectly, for the purpose
of "purchasing" or "carrying" any "margin stock". The terms "purchasing,"
"carrying" and "margin stock" shall be as defined in Regulation U promulgated by
the Board of Governors of the Federal Reserve System. No part of the proceeds of
the borrowings hereunder will be used, directly or indirectly, for any purpose
which violates, or which is inconsistent with, the provisions of Regulations S,
T, U or X of said Board of Governors. If requested by the Bank, the Borrower
shall furnish to the Bank a statement in conformity with the requirements of
Federal Reserve Form U-1 referred to in said Regulation U to the foregoing
effect.
SECTION 4.11 COMPLIANCE. No Default or Event of Default has occurred or
is existing. The Borrower is not in default with respect to any order, writ,
injunction or decree of any court or of any federal, state, municipal or other
Governmental Authority or in violation of any Requirement of Law to which it or
its properties are subject, which default or violation might have a Material
Adverse Effect. The Borrower is not in default in the payment or performance of
any of its obligations or in the performance of any Contractual Obligation to
which it is a party or by which it or any of its assets or properties may be
bound, which default might have a Material Adverse Effect. The Borrower has not
failed to obtain any licenses, permits, franchises or other governmental or
environmental authorizations necessary to the ownership of its properties or to
the conduct of its businesses, which violation or failure might have a Material
Adverse Effect.
SECTION 4.12 LEASES. The Borrower enjoys quiet and undisturbed
possession under all leases under which it is operating, and all such leases are
valid and subsisting, and not in default.
SECTION 4.13 PENSION PLANS. No ERISA Event has occurred with respect to
any Plan of the Borrower or any member of its ERISA Group. The PBGC has not made
a determination that, with respect to any Plan of the Borrower or any member of
its ERISA Group, an event or condition has occurred which constitutes grounds
under Section 4042 of ERISA for the termination of, or for the appointment of a
trustee to administer, any such Plan. Neither the Borrower nor any member of its
ERISA Group is in violation of any laws, ordinances, governmental rules or
regulations to which it is subject, including without limitation any laws,
rulings or regulations relating to ERISA or Section 4975 of the Code, which
violation might have a Material Adverse Effect.
SECTION 4.14 INVESTMENT COMPANY; HOLDING COMPANY. The Borrower is not
(i) an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, (ii) a
"holding company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended, or (iii) subject to any regulatory scheme which restricts
its ability to incur Debt.
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SECTION 4.15 NO INSOLVENCY.
(a) Immediately after the consummation of the transactions to
occur on the date hereof and immediately following the making of each Loan, if
any, made on the date hereof and after giving effect to the application of the
proceeds of such Loans, (i) the fair value of the assets of the Borrower and its
Subsidiaries on a consolidated basis, at a fair valuation, will exceed the debts
and liabilities, subordinated, contingent or otherwise, of the Borrower and its
Subsidiaries on a consolidated basis; (ii) the present fair saleable value of
the Property of the Borrower and its Subsidiaries on a consolidated basis will
be greater than the amount that will be required to pay the probable liability
of the Borrower and its Subsidiaries on a consolidated basis on their debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) the Borrower and its
Subsidiaries on a consolidated basis will be able to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (iv) the Borrower and its
Subsidiaries on a consolidated basis will not have unreasonably small capital
with which to conduct the businesses in which they are engaged as such
businesses are now conducted and are proposed to be conducted after the date
hereof.
(b) The Borrower does not intend to, or to permit any of its
Subsidiaries to, and does not believe that it or any of its Subsidiaries will,
incur debts beyond its ability to pay such debts as they mature, taking into
account the timing of and amounts of cash to be received by it or any such
Subsidiary and the timing of the amounts of cash to be payable on or in respect
of its Indebtedness or the Indebtedness of any such Subsidiary.
SECTION 4.16 ENVIRONMENTAL MATTERS.
(a) The Borrower has not used Hazardous Materials on, from or
affecting any real property owned, leased or used by the Borrower (the "Real
Property") in any manner which violates any Environmental Laws governing the
use, storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials, which violation would have a
Material Adverse Effect, and, to the best knowledge of the Borrower, no present
or prior owner of the Real Property or any tenant, subtenant, occupant, prior
tenant, prior subtenant or prior occupant has used Hazardous Materials on, from
or affecting the Real Property in any manner which violates any Environmental
Laws governing the use, storage, treatment, transportation, manufacture,
refinement, handling, production or disposal of Hazardous Materials.
(b) The Borrower has not received any notice of any violation
of any Environmental Laws governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production or disposal of Hazardous
Materials, and there have been no actions commenced or, to the best knowledge of
the Borrower, threatened by any party for noncompliance therewith.
SECTION 4.17 ACCURACY OF INFORMATION. All information, reports and
other papers and data (including without limitation, copies of all filings made
with all Governmental Authorities) furnished heretofore or contemporaneously
herewith by or on behalf of the Borrower to the Bank or any Person furnishing an
opinion required to be delivered hereunder for purposes of or in connection with
this Agreement and the other Loan Documents and the transactions contemplated
hereby and thereby,
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is, and all other such information hereafter furnished by or on behalf of the
Borrower to the Bank or any Person furnishing an opinion required to be
delivered hereunder will be, true and accurate in every material respect on the
date as of which such information is dated or certified and not incomplete by
omitting to state any material fact necessary to make such information not
misleading and the Borrower has notified the Bank of all events that have
occurred since such date that would render such information incomplete or
misleading.
SECTION 4.18 ASSETS FOR CONDUCT OF BUSINESS. The Borrower possesses
adequate assets, patents, patent applications, copyrights, trademarks,
servicemarks and trade names, or licenses thereto, to continue to conduct its
business as heretofore conducted, without any material conflict with the rights
of others, except that the failure to possess such asset or assets, in the
aggregate, would not have a Material Adverse Effect.
SECTION 4.19 TRADE RELATIONS. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship of the Borrower with any customer or any group of
customers whose purchases individually or in the aggregate are material to the
business of the Borrower which would have a Material Adverse Effect, and there
exists no present condition or state of facts or circumstances known to the
Borrower that would have a Material Adverse Effect or prevent the Borrower from
conducting its business after the consummation of the transactions contemplated
by this Agreement in substantially the same manner in which such business has
heretofore been conducted.
SECTION 4.20 CONTINGENT OBLIGATIONS. The Borrower does not have any
Contingent Obligations other than those set forth on Schedule 4.20.
SECTION 4.21 SUBSIDIARIES. Schedule 4.21 contains an accurate list of
all Subsidiaries of the Borrower as of the date of this Agreement, setting forth
their respective jurisdictions of organization and the percentage of their
respective capital stock or other ownership interests owned by the Borrower or
other Subsidiaries. All of the issued and outstanding shares of capital stock or
other ownership interests of such Subsidiaries have been (to the extent such
concepts are relevant with respect to such ownership interests) duly authorized
and issued and are fully paid and non-assessable.
ARTICLE V
AFFIRMATIVE COVENANTS
---------------------
So long as the Borrower may borrow under this Agreement and until
payment in full of the Note and all other amounts and obligations owing to the
Bank hereunder and under the other Loan Documents, the Borrower shall, unless
the Bank otherwise consents in writing:
SECTION 5.1 FINANCIAL STATEMENTS. Furnish to the Bank:
(a) as soon as available, but in any event within 90 days
after the end of each Fiscal Year of the Borrower, a copy of the audited
consolidated balance sheet of the Borrower and
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its Subsidiaries as at the end of such Fiscal Year and the related audited
consolidated statements of income, shareholders' equity and cash flows for such
Fiscal Year, setting forth in each case in comparative form the figures for the
previous year, together with the opinion of independent certified public
accountants of nationally recognized standing, which opinion shall not contain a
"going concern" or like qualification or exception, or qualification arising out
of the scope of the audit or qualification which would affect the computation of
financial covenants contained herein other than a qualification for consistency
due to a change in the application of GAAP with which the Borrower's and its
Subsidiaries' independent certified public accountants concur; and
(b) as soon as available, but in any event within 30 days
after the end of each Fiscal Month of the Borrower, a copy of the unaudited
consolidated internally prepared balance sheet of the Borrower and its
Subsidiaries as at the end of such Fiscal Month and the related unaudited
consolidated internally prepared statements of income, shareholders' equity and
cash flows for such Fiscal Month and for the portion of the Borrower's and its
Subsidiaries' Fiscal Year ended at the end of such Fiscal Month, setting forth
in each case in comparative form the figures for the corresponding Fiscal Month
and corresponding portion of the Borrower's and its Subsidiaries' previous
Fiscal Year, all certified (subject to normal year-end adjustments) as to
fairness of presentation, GAAP and consistency by an Authorized Officer.
SECTION 5.2 CERTIFICATES; OTHER INFORMATION. Furnish to the Bank:
(a) concurrently with the delivery of each annual financial
statement of the Borrower and its Subsidiaries referred to in Section 5.1(a) and
each monthly financial statement of the Borrower and its Subsidiaries referred
to in Section 5.1(b), a certificate in form and substance satisfactory to the
Bank (a "Compliance Certificate"), certified by an Authorized Officer of the
Borrower as true and correct and stated to have been made after due examination
by such Authorized Officer (i) stating whether any Default or Event of Default
exists on the date of such certificate and, if any Default or Event of Default
then exists, setting forth the details thereof and the action which the Borrower
is taking or proposes to take with respect thereto, (ii) setting forth in detail
the calculations required to establish whether the Borrower was in compliance
with the financial covenants set forth in Section 6.19 on the date of such
financial statements, and (iii) stating that the representations and warranties
expressed in Article IV are true, correct and complete in all material respects
on and as of the date of such certificate and, if any such representation or
warranty is not so true, correct and complete, setting forth the details
thereof;
(b) promptly after the same are prepared, a copy of each
annual business plan, budget and financial forecast prepared by management of
the Borrower for each Fiscal Year;
(c) as soon as available, but in any event within 30 days
after the last day of each Fiscal Month of the Borrower, or such other time, and
from time to time, as may be requested by the Bank, a certificate in form and
substance satisfactory to the Bank (a "Borrowing Base Certificate"), certified
by an Authorized Officer of the Borrower as true and correct, setting forth all
information required to calculate the Borrowing Base for the Borrower, including
the amount of Eligible Accounts Receivable and Eligible Inventory, in each case
as of the last Business Day of said Fiscal Month;
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(d) as soon as available, but in any event within 30 days
after the end of each Fiscal Month, accounts payable aging reports and accounts
receivable aging reports; and
(e) promptly, on reasonable notice to the Borrower, such
additional financial and other information concerning the Borrower as the Bank
may from time to time reasonably request.
SECTION 5.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise
satisfy, at or before maturity or before they become delinquent, as the case may
be, all its Debt, including without limitation all amounts due under the Note
and hereunder, and other material obligations of whatever nature, except for any
Debt or other obligations (including any obligations for taxes), when the amount
or validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower.
SECTION 5.4 COMPLIANCE WITH LAW; MAINTENANCE OF RIGHTS, PERMITS, ETC.
Comply with all Requirements of Law; and (x) preserve, renew and keep in full
force and effect all, (y) take all reasonable action to maintain all, and (z)
not sell, transfer or otherwise dispose of any, rights, privileges, contracts,
licenses, permits, copyrights, patents, trademarks, trade names and franchises
necessary or desirable in the normal conduct of its business.
SECTION 5.5 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
Keep proper books of record and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities, subject in
the case of interim statements to year-end audit adjustments; and permit
representatives of the Bank (at the Borrower's expense) to (i) visit and inspect
any of its properties, undertake audits of the Collateral and examine and make
abstracts from any of the books and records at any reasonable time and as often
as may reasonably be requested in writing, and (ii) discuss the business,
operations, properties and financial and other condition of the Borrower and, if
notice thereof is given to the Borrower prior to the date of such discussions
and provided the Borrower shall be entitled to participate in such discussions,
with its independent certified public accountants.
SECTION 5.6 NOTICES. Promptly give notice to the Bank:
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default under any loan, letter of credit
agreement or acceptance agreement, (ii) default under any other Contractual
Obligations that would enable the obligee of such obligations to compel the
Borrower to immediately pay all amounts owing thereunder or otherwise accelerate
payments thereunder and which would have a Material Adverse Effect, or (iii)
litigation, investigation or proceeding which may exist at any time between the
Borrower and any Governmental Authority, which, if adversely determined, would
have a Material Adverse Effect;
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(c) of any litigation or proceeding affecting or threatened
against the Borrower (i) in which the amount involved is $100,000 or more, or
(ii) in which injunctive or similar relief is sought;
(d) of the following events, as soon as possible and in any
event within 30 days after the occurrence thereof: (i) the occurrence of any
Reportable Event with respect to any Plan of the Borrower or any member of its
ERISA Group with respect to which the PBGC has not waived the 30 day reporting
requirement, or (ii) the institution of proceedings or the taking or expected
taking of any other action by PBGC or the Borrower or any member of its ERISA
Group to terminate or withdraw or partially withdraw from any Plan under
circumstances which could lead to material liability to the PBGC or, with
respect to a Multiemployer Plan, the Reorganization or Insolvency (as each such
terms are defined in ERISA) of the Plan and in addition to such notice, deliver
to the Bank whichever of the following may be applicable: (A) a certificate of
an appropriate officer of the Borrower setting forth details as to such
Reportable Event and the action the Borrower proposes to take with respect
thereto, together with a copy of any notice of such Reportable Event that may be
required to be filed with PBGC, or (B) any notice delivered by PBGC evidencing
its intent to institute such proceedings or any notice to PBGC that such Plan is
to be terminated, as the case may be;
(e) of any change relating to the business, operations,
Property or financial or other condition of the Borrower which would have a
Material Adverse Effect;
(f) of any proposed sale, disposal or issuance of any security,
debt or equity, or options for any of the foregoing, of the Borrower (excluding
stock options and restricted stock awards under the Borrower's compensation
plans) to any Person prior to any such sale, disposal or issuance; and
(g) of any notice of default with respect to the Ethicon
Agreement.
Each notice pursuant to this Section 5.6 shall be accompanied by a
statement of an Authorized Officer setting forth details of the occurrence
referred to therein and stating what action the Borrower proposes to take with
respect thereto.
SECTION 5.7 TAXES. Pay and discharge all taxes, assessments,
governmental charges and levies upon, or collected by, the Borrower as and when
they become due and payable, unless, and only to the extent that, such taxes,
assessments, governmental charges and levies shall be contested in good faith by
appropriate proceedings and shall have been reserved against as required by
GAAP, by the Borrower.
SECTION 5.8 MAINTENANCE OF PROPERTY; INSURANCE.
(a) Keep all of its Property useful in and necessary to its
business in good working order and condition;
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(b) Maintain and keep in full force and effect Required
Property Insurance Coverage and Required Public Liability Insurance Coverage.
All such insurance shall be obtained and maintained either by means of policies
with generally recognized, responsible insurance companies qualified to do
business in the jurisdiction where such Property is located or pursuant to other
arrangements satisfactory to the Bank. The insurance to be provided may be by
blanket policy. Each policy of insurance shall be written so as not to be
subject to cancellation or substantial modification upon less than 30 days
advance written notice to the Borrower, and the Borrower shall so inform the
Bank of the receipt, and contents, of any such notice. The Borrower shall
deposit with the Bank certificates or other evidence satisfactory to it that (i)
the insurance required hereby has been obtained and is in full force and effect,
and (ii) all premiums thereon have been paid in full. Prior to the expiration of
any such insurance, the Borrower shall furnish the Bank with evidence
satisfactory to it that such insurance has been renewed or replaced and that all
premiums thereon have been paid in full. In the event the Borrower fails to
provide, maintain and keep in force the policies of insurance required by this
Section 5.8, the Bank may procure such insurance or single-interest insurance
for such risk covering the Bank's interest and the Borrower shall pay all
premiums thereon promptly upon demand by the Bank, together with interest
thereon at the highest rate then in effect under the Note. Any proceeds of
policies providing Required Property Insurance Coverage shall be applied as set
forth in the Security Agreement; any proceeds of policies providing Required
Public Liability Insurance Coverage shall be applied toward the extinguishment
or satisfaction of the liability with respect to which such insurance proceeds
have been paid.
(c) Maintain such other insurance, including any necessary
flood insurance, in such amounts and pursuant to policies in form and substance
satisfactory to the Bank, as the Bank may require at any time and from time to
time.
SECTION 5.9 ERISA FUNDING REQUIREMENTS. Comply, and cause each member
of its ERISA Group to comply, with all funding requirements of ERISA with
respect to any Plan of each and/or any member of its ERISA Group.
SECTION 5.10 INDEMNIFICATION. Defend, indemnify and hold the Bank and
any of its officers, directors, agents and employees harmless against any and
all loss, cost, expense (including the reasonable fees and expenses of counsel),
claims or actions relating to or arising out of this Agreement, the Note and the
other Loan Documents, or any actual or proposed use of proceeds of the Loans,
regardless of whether or not the disbursement of any Loans shall actually occur,
unless any such loss, cost, expense, claim or action are due to the gross
negligence or willful misconduct of the Bank. The provisions of this Section
5.10 shall survive the termination of this Agreement.
If any claim, action or proceeding is made or brought against the Bank
or any such officers, directors, agents and employees in respect of which
indemnity may be sought hereunder, the Bank shall give notice to the Borrower of
the claim, action or proceeding and upon such notice, at the option of the Bank,
(i) the Borrower shall assume, at the Borrower's expense, the defense of the
action or proceeding with legal counsel reasonably satisfactory to the Bank,
(ii) the Borrower shall so assume the defense of the action or proceeding with
the participation of the Bank, at the Borrower's expense, in such defense, or
(iii) the Bank shall assume the defense of the claim, action or proceeding, at
the Borrower's expense; provided that the failure of the Bank to give such
notice
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shall not relieve the Borrower from any of its obligations under this Section
5.10 unless the failure prejudices the defense by the Borrower of the claim,
action or proceeding.
SECTION 5.11 PERFORMANCE UNDER LOAN DOCUMENTS. Perform all obligations
required to be performed by it under the terms of this Agreement and the other
Loan Documents and any other agreements now or hereafter existing or entered
into between the Borrower and the Bank.
SECTION 5.12 CORPORATE EXISTENCE; FOREIGN QUALIFICATION. Do or cause to
be done at all times all things necessary to: (i) maintain and preserve its
corporate existence; (ii) be duly qualified to do business and be in good
standing as a foreign corporation in each jurisdiction where failure to do so
will have a Material Adverse Effect; and (iii) comply with all Contractual
Obligations where failure to do so will have a Material Adverse Effect.
SECTION 5.13 MAINTENANCE OF BUSINESS. Maintain the general character of
the business of the Borrower as presently conducted.
SECTION 5.14 ENVIRONMENTAL MATTERS.
(a) Keep or cause the Real Property to be free of Hazardous
Materials except to the extent that such Hazardous Materials are stored and/or
used in material compliance with all applicable Environmental Laws; and, without
limiting the foregoing, the Borrower shall not cause or permit the Real Property
to be used to generate, manufacture, refine, transport, treat, store, handle,
dispose of, transfer, produce or process Hazardous Materials, except in material
compliance with all applicable Environmental Laws, nor shall the Borrower
knowingly cause or permit, as a result of any intentional or negligent act or
omission on the part of the Borrower, or any tenant, subtenant or occupant, a
material release of Hazardous Materials onto the Real Property; and
(b) (x) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions necessary to
clean up and remove any Hazardous Materials on, under, from or affecting the
Real Property in accordance with all applicable Environmental Laws, to the
satisfaction of the Bank and in accordance with the orders and directives of all
Governmental Authorities and (y) defend, indemnify and hold harmless the Bank
and its employees, agents, officers and directors, from and against any claims,
demands, penalties, fines, liabilities, settlements, damages, costs or expenses
of whatsoever kind or nature, known or unknown, contingent or otherwise, arising
out of, or in any way relating to (A) the presence, disposal, release or
threatened release of any Hazardous Materials on, over and under, from or
affecting the Real Property or the soil, water, vegetation, buildings, personal
Property, persons or animals thereon; and (B) any personal injury (including
wrongful death) or property damage (real or personal) arising out of or relating
to such Hazardous Materials including, without limitation, attorneys' and
consultants' fees, investigation and laboratory fees, court costs and litigation
expenses.
(c) The provisions of this Section 5.14 shall be in addition
to any and all other obligations and liabilities the Borrower may have to the
Bank at common law and shall survive (i) the repayment of all sums due under the
Note and any other Loan Document and (ii) the satisfaction of all other
obligations of the Borrower hereunder and under the other Loan Documents.
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SECTION 5.15 PRIMARY DEPOSITORY. Maintain its primary banking and
depository accounts with the Bank or its Affiliates, with a minimum compensating
balance of $250,000 at all times.
ARTICLE VI
NEGATIVE COVENANTS
------------------
So long as the Borrower may borrow under this Agreement and until
payment in full of the Note and all other amounts and obligations owing to the
Bank hereunder and under the other Loan Documents, the Borrower shall not,
unless the Bank shall otherwise consent in writing (which consent shall not be
unreasonably withheld):
SECTION 6.1 MORTGAGES AND PLEDGES. Create, incur, assume or suffer to
exist (x) any Lien upon or in any of its Property, whether now owned or
hereafter acquired, or (y) an agreement with any Person (other than the Bank)
which prohibits or restricts the granting of any such Lien in favor of the Bank,
except:
(a) Liens securing taxes, assessments, fees or other
governmental charges or levies, or the claims of materialmen, mechanics,
carriers, warehousemen, landlords and other similar Persons;
(b) Liens incurred or deposits made in the ordinary course of
business (i) in connection with worker's compensation, unemployment insurance,
social security and other similar laws, (ii) to secure the performance of bids,
tenders, sales, contracts, public or statutory obligations, customs, appeal and
performance bonds, or (iii) other similar obligations not incurred in connection
with the borrowing of money, the obtaining of advances or the payment of the
deferred purchase price of Property;
(c) reservations, exceptions, encroachments, easements, rights
of way, covenants, conditions, restrictions, leases and other similar title
exceptions or encumbrances affecting Real Property, provided they do not in the
aggregate materially detract from the value of such properties or materially
interfere with their use in the ordinary conduct of the Borrower's business;
(d) Liens in favor of the Bank;
(e) Liens in respect of judgements or awards with respect to
which the Borrower is, in good faith, prosecuting an appeal or proceeding for
review and with respect to which a stay of execution upon such appeal or
proceeding for review has been granted;
(f) notice filing by any creditor/lessor in respect of any
operating leases;
(g) Liens on intangibles in favor of Ethicon Endo-Surgery,
Inc. pursuant to the Ethicon Agreement; and
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(h) Liens securing purchase money Debt which does not exceed,
when aggregated with Capitalized Lease Obligations permitted by Section 6.15,
$50,000.
SECTION 6.2 MERGER, CONSOLIDATION, SALE AND ACQUISITION OF ASSETS.
(a) Enter into any transaction of merger or consolidation;
(b) Suffer or permit any liquidation or dissolution;
(c) Sell, lease or otherwise transfer all or any material part
of its business or assets, whether now owned or hereafter acquired (with
materiality being determined by Bank in its reasonable discretion);
(d) Make any material change in the method by which it
conducts business; or
(e) Acquire all or any material part of the business assets of
any Person.
SECTION 6.3 CONTINGENT OBLIGATIONS. Except for Contingent Obligations
set forth on Schedule 4.20, assume, guarantee, endorse, sell with recourse,
contingently agree to purchase, discount, or otherwise become or remain liable
with respect to any Contingent Obligations or enter into any agreement for the
purchase or other acquisition of any product, materials or supplies, or for
transportation or for the payment for services, if in any such case payment
therefor is to be made regardless of the non-delivery of the product, materials
or supplies or the non-furnishing of the transportation or services.
SECTION 6.4 TRANSACTIONS WITH AFFILIATES AND SUBSIDIARIES.
(a) Enter into any transactions, including without limitation,
the purchase, sale or exchange of Property or the rendering of any service, with
any Affiliate, except (i) in the ordinary course of, and pursuant to the
reasonable requirements of, its business and upon fair and reasonable terms no
less favorable to the Borrower as would be obtained in an arm's length
transaction with a Person not an Affiliate, and (ii) sales of goods to an
Affiliate for an amount equal to the sum of (x) the cost of such goods, PLUS (y)
2% of the cost of such goods.
(b) Make any loans or advances to its Affiliates or
Subsidiaries.
(c) Transfer any funds, monies or any other Property to its
Subsidiaries.
SECTION 6.5 COMPLIANCE WITH ERISA.
(a) Allow or suffer to exist any Prohibited Transaction
involving any Plan of the Borrower or any member of its ERISA Group;
(b) incur or suffer to exist any accumulated funding
deficiency, whether or not waived, involving any such Plan; or
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(c) allow any occurrence of or suffer to exist any ERISA
Event, or any other event or condition, that presents a material risk of
termination of any such Plan by the PBGC, if such Prohibited Transaction,
accumulated funding deficiency or ERISA Event would result in a liability of the
Borrower or any member of its ERISA Group to the PBGC which would have a
Material Adverse Effect.
SECTION 6.6 DEBT RESTRICTION. Incur, assume, guarantee or otherwise
create any Debt other than (i) the Loans provided for pursuant to this Agreement
and (ii) purchase money Debt which does not exceed, when aggregated with
Capitalized Lease Obligations permitted by Section 6.15, $50,000.
SECTION 6.7 INVESTMENTS. Hold, make or acquire any Investment in any
Person other than (i) Investments existing as of the Effective Date, and (ii)
those Investments set forth on Schedule 4.21.
SECTION 6.8 SALE OF SECURITIES. Sell, dispose or issue, or agree to
sell, dispose or issue, any security, debt or equity, or options for any of the
foregoing, of the Borrower to any Person if any such sale, disposal or issuance
would result in a Change of Control.
SECTION 6.9 LIMITATION ON SUBSIDIARIES. Create any Subsidiaries after
the Effective Date.
SECTION 6.10 CHANGE IN FISCAL YEAR. Change its Fiscal Year.
SECTION 6.11 CHANGE IN GOVERNING DOCUMENTS. Restate, replace or
otherwise change, amend or modify, nor permit any restatement, replacement,
change, amendment or modification of, any organizational and governing documents
of the Borrower.
SECTION 6.12 CHANGE IN ACCOUNTING PRACTICES. Permit any changes in its
accounting practices in effect as of the Effective Date.
SECTION 6.13 SALE AND LEASEBACK. Enter into any arrangements whereby
the Borrower shall sell or transfer any of its Property and then or within one
year thereafter, as lessee, rent or lease such Property which require, in the
aggregate, rent and lease payments in excess of $100,000 in any Fiscal Year.
SECTION 6.14 DISPOSING OF NOTES/ACCOUNTS RECEIVABLE. Discount, sell or
otherwise dispose of its notes or accounts receivable.
SECTION 6.15 OBLIGATIONS AS LESSEE. Enter into any arrangements as
lessee under Capitalized Leases which require lease payments in any Fiscal Year
which, when aggregated with outstanding purchase money Debt permitted by Section
6.6, exceed $50,000.
SECTION 6.16 RESTRICTED PAYMENTS. Declare or make any Restricted
Payment.
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SECTION 6.17 ETHICON AGREEMENT. Amend, modify, supplement, revise,
waive any provision of, or otherwise change any provision of the Ethicon
Agreement.
SECTION 6.18 MANAGEMENT. Permit any material change in the key
management of the Borrower.
SECTION 6.19 FINANCIAL COVENANTS.
(a) FIXED CHARGE COVERAGE RATIO. Permit the ratio, determined
as of the end of each Fiscal Quarter for the then most-recently ended two Fiscal
Quarters, of (i) Consolidated EBIDA plus Consolidated Rentals minus Consolidated
Capital Expenditures (including any capitalized research and development
expenditures) and plus or minus, as applicable, changes in deferred revenue, to
(ii) Consolidated Interest Expense, plus Consolidated Rentals, plus required
principal payments of non-revolving Debt, all calculated for the Borrower and
its Subsidiaries on a consolidated basis, to be less than 1.2 to 1.0.
(b) MINIMUM CURRENT RATIO. Permit the ratio of Consolidated
Current Assets to Consolidated Current Liabilities, all calculated for the
Borrower and its Subsidiaries on a consolidated basis, to be less than 1.7 to
1.0 at any time.
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES
---------------------------
SECTION 7.1 EVENTS OF DEFAULT; REMEDIES.
(a) The occurrence of any of the following shall constitute an
"Event of Default" hereunder:
(i) the Borrower fails to pay any principal, interest,
fees or any other amount payable under the Note, under this Agreement
or under any other Loan Document in accordance with the terms thereof
and hereof when due;
(ii) the Borrower (A) fails to observe or perform any
other term of the Note, this Agreement or any other Loan Document and
such failure shall not have been cured within 30 days; provided,
however, that such 30 day cure period shall not apply to (x) any
failure which in the good faith opinion of the Bank is incapable of
cure, (y) any failure which has previously occurred, or (z) any failure
to maintain and keep in effect any insurance required by the Loan
Documents; (B) makes any materially incorrect or misleading
representation, warranty, or certificate to the Bank; or (C) makes any
materially incorrect or misleading representation in any financial
statement or other information delivered to the Bank;
(iii) any event or condition occurs which results in the
acceleration of the maturity of any Debt of the Borrower or enables
(or, with the giving of notice, lapse of time
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or otherwise, would enable) the holder of such Debt or any Person
acting on such holder's behalf to accelerate the maturity thereof;
(iv) a Reportable Event occurs that would permit the PBGC
to terminate any employee benefit plan of the Borrower or any member of
its ERISA Group, or the occurrence of an ERISA Event which shall not
have been cured within 60 days;
(v) the Borrower becomes insolvent or unable to pay its
debts as they become due;
(vi) the Borrower (A) makes an assignment for the benefit
of creditors; (B) consents to the appointment of a custodian, receiver,
or trustee for itself or for a substantial part of its assets; or (C)
commences or consents to any proceeding under any bankruptcy,
reorganization, liquidation, insolvency or similar laws of any
jurisdiction,, whether now or hereafter in effect;
(vii) a custodian, receiver or trustee is appointed for
the Borrower or for a substantial part of its assets without the
Borrower's consent and is not removed within 90 days after such
appointment;
(viii) proceedings are commenced against the Borrower
under any bankruptcy, reorganization, liquidation, or similar laws of
any jurisdiction, and such proceedings remain undismissed for 90 days
after commencement;
(ix) Any judgment is entered against the Borrower, or any
attachment, levy or garnishment is issued against any Property of the
Borrower, in excess of $100,000, and which judgment, attachment, levy
or garnishment has not been discharged or stayed within 30 days after
issuance;
(x) there is a substantial change in the existing or
prospective financial condition of the Borrower which the Bank in good
faith determines to have a Material Adverse Effect;
(xi) the Ethicon Agreement is terminated or cancelled;
(xii) the Borrower defaults under any of its obligations
under the Ethicon Agreement; or
(xiii) a Change in Control occurs.
(b) Upon the happening of any Event of Default, (i) the Commitment
shall terminate and all obligations of the Bank to make further Loans hereunder
shall terminate, (ii) all amounts owing under the Note, this Agreement and all
other Loan Documents shall become immediately due and payable without
presentment, demand, protest, or other notice of any kind, all of which are
hereby waived by the Borrower, and (iii) the Bank shall have all of the rights
and remedies provided by any
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law or agreement. The Borrower, shall be liable to the Bank for all reasonable
costs and expenses of every kind incurred in the making or collection of amounts
due hereunder and under the Note and the other Loan Documents, including,
without limitation, reasonable attorneys' fees and court costs. These costs and
expenses shall include, without limitation, any costs or expenses incurred by
the Bank in any bankruptcy, reorganization, insolvency or other similar
proceeding. The Borrower shall be liable for any deficiency remaining after
disposition of the Collateral securing the Note and all other obligations under
the Loan Documents.
SECTION 7.2 APPLICATION OF PROCEEDS. Any moneys received by the Bank
pursuant to the exercise of any remedies provided herein or in the other Loan
Documents or by law shall be applied in the following order of priority:
First: the payment of the Bank for all moneys reasonably advanced by it
for taxes, assessments, insurance, costs incurred for the protection of
any Property of the Borrower and costs incurred in the collection
thereof (including, without limitation, reasonable attorneys' fees and
expenses);
Second: the payment to the Bank of all unpaid interest, fees and other
sums and/or charges (other than the principal of the Loans) owing to
the Bank hereunder and the other Loan Documents;
Third: the payment to the Bank of all unpaid principal of Loans; and
Fourth: to, or at the direction of, the Borrower, or as a court of
competent jurisdiction otherwise directs.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
-----------------------
SECTION 8.1 INCREASED COST AND REDUCED RETURN.
(a) In the event that any applicable law, treaty, rule or
regulation (whether domestic or foreign) now or hereafter in effect and whether
or not presently applicable to the Bank, or any interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance by the Bank with any guideline, request or
directive of any such authority (whether or not having the force of law), shall
(i) affect the basis of taxation of payments to the Bank of any amounts payable
by the Borrower under this Agreement or any other Loan Document (other than
taxes imposed on the overall net income of the Bank by the jurisdiction, or by
any political subdivision or taxing authority of such jurisdiction, in which the
Bank has its principal office), or (ii) impose, modify or deem applicable any
reserve, special deposit, insurance assessment or similar requirement against
assets of, deposits with or for the account of, or credit extended by, the Bank,
or (iii) impose on the Bank any other condition affecting the Loans, the Note or
the Bank's obligation to make Loans and the result of any of the foregoing is to
increase the cost to the Bank of making, funding or maintaining any Loan, or to
reduce the amount of any
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sum received or receivable by the Bank under this Agreement or under the Note
with respect thereto, by any amount deemed by the Bank in good faith to be
material, then, within 15 days after submission by the Bank to the Borrower of a
written demand therefor, the Borrower shall pay to the Bank such additional
amount or amounts as will compensate the Bank for such increased cost or
reduction. The Bank's written demand to the Borrower for compensation shall set
forth in reasonable detail the computation of any additional amounts payable to
the Bank by the Borrower, and such demand and computation shall be conclusive in
the absence of manifest error.
(b) In the event that any applicable law, treaty, rule or
regulation (whether domestic or foreign) now or hereafter in effect and whether
or not presently applicable to the Bank or any interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance by the Bank with any guideline, request or
directive of any such authority (whether or not having the force of law),
including any risk-based capital guidelines, affects or would affect the amount
of capital required or expected to be maintained by the Bank (or any corporation
controlling the Bank) and the Bank determines that the amount of such capital is
increased by or based upon the existence of the Bank's obligations hereunder and
such increase has the effect of reducing the rate of return on the Bank's (or
such controlling corporation's) capital as a consequence of such obligations
hereunder to a level below that which the Bank (or such controlling corporation)
could have achieved but for such circumstances (taking into consideration its
policies with respect to capital adequacy) by an amount deemed by the Bank to be
material, then, within 15 days after submission by the Bank to the Borrower of a
written demand therefor, the Borrower shall pay to the Bank such additional
amount or amounts as will compensate the Bank for such reduction. The Bank's
written demand to the Borrower for compensation shall set forth in reasonable
detail the computation of any additional amounts payable to the Bank by the
Borrower, and such demand and computation shall be conclusive in the absence of
manifest error.
(c) The Bank shall promptly notify the Borrower of any event
of which it has knowledge, occurring after the date hereof, which will entitle
the Bank to compensation pursuant to this Section 8.1. A certificate of the Bank
claiming compensation under this Section 8.1 and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive and binding for
all purposes, absent manifest error. In determining such amount, the Bank may
use any reasonable averaging and attribution methods.
(d) Notwithstanding the foregoing provisions of this Section
8.1, the Borrower shall not be under any obligation to compensate the Bank under
this Section 8.1 with respect to increased costs or reductions to the extent
that the Bank is compensated therefor in the computation of the Interest Rates
applicable to the Loans; nor shall the Borrower shall be under any obligation to
so compensate the Bank to the extent that such increased costs or reductions
arise from any period prior to a date that is three months prior to the date of
any demand for compensation by Bank, if the Bank knew or could reasonably have
been expected to be aware of the circumstances giving rise to such increased
costs or reductions and of the fact that such circumstances would in fact result
in a claim for increased compensation by reason of such increased costs or
reductions. The Bank represents to the Borrower that, as of the date hereof, it
is not aware of any fact or circumstance that would give rise to a claim for
compensation under this Section 8.1.
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SECTION 8.2 TAXES.
(a) For the purposes of this Section 8.2, the following terms
have the following meanings:
"TAXES" shall mean any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings with respect to any
payment by the Borrower pursuant to this Agreement or under the Note, and all
liabilities with respect thereto, excluding, in the case of the Bank, taxes
imposed on its income, and franchise or similar taxes imposed on it, by a
jurisdiction under the laws of which the Bank is organized or in which its
principal executive office is located.
"OTHER TAXES" shall mean any present or future stamp or
documentary taxes and any other excise or property taxes, or similar charges or
levies, which arise from any payment made pursuant to this Agreement or under
the Note or from the execution or delivery of, or otherwise with respect to,
this Agreement or, the Note or any other Loan Document.
(b) Any and all payments by the Borrower to or for the account
of the Bank hereunder or under the Note or other Loan Document shall be made
without deduction for any Taxes or Other Taxes; provided that, if the Borrower
shall be required by law to deduct any Taxes or Other Taxes from any such
payments, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 8.2) the Bank receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions, (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other Governmental Authority in
accordance with applicable law, and (iv) the Borrower shall furnish to the Bank
the original or a certified copy of a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify the Bank for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 8.2) paid by the Bank and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto. This
indemnification provided for in this subsection (c) shall be paid within 15 days
after the Bank makes demand therefor.
ARTICLE IX
MISCELLANEOUS
-------------
SECTION 9.1 EXPENSES. Whether or not the transactions herein
contemplated shall be consummated, the Borrower agrees to pay all out-of-pocket
expenses (including reasonable fees and expenses of counsel) of the Bank
incurred in connection with the preparation of this Agreement, the Note and the
other Loan Documents and any amendments, modifications or supplements hereto or
thereto or restatements or replacements hereof or thereof, any audit, appraisal
or other such service deemed necessary or desirable by the Bank for the
preparation of the Agreement, underwriting
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documents or enforcing the Bank's rights hereunder, and all out-of-pocket
expenses (including reasonable fees and expenses of its counsel) incidental to
the enforcement of the rights of the Bank under any provisions of this
Agreement, the Note and any other Loan Document.
SECTION 9.2 COVENANTS TO SURVIVE, BINDING AGREEMENT. This Agreement
shall be binding upon and inure to the benefit of the Bank, the Borrower and
their respective successors or assigns; provided, however, that the Borrower may
not assign or otherwise dispose of any of its rights or obligations hereunder.
All covenants, agreements, warranties and representations made herein, and in
all certificates and documents delivered in connection with this Agreement by or
on behalf of the Borrower shall survive the execution and delivery hereof and
thereof, and all such covenants, agreements, representations and warranties
shall inure to the respective successors and assigns of the Bank whether or not
so expressed.
SECTION 9.3 WAIVERS. No failure on the part of the Bank to exercise and
no delay in exercising any right or remedy hereunder or under the Note or any
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise by the Bank of any right, remedy or power hereunder thereunder
preclude any other right, remedy or power. The rights, remedies and powers
provided herein, in the Note and the other Loan Documents are cumulative and not
exclusive of any other rights, remedies or powers which Bank, or any holder of
the Note, would otherwise have. Notice to or demand on the Borrower in any
circumstance in which the terms of this Agreement, the Note or the other Loan
Documents do not require notice or demand to be given shall not entitle the
Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Bank, or the holder of
the Note, to take any other further action in any circumstances without notice
or demand.
SECTION 9.4 NOTICES.
(a) Except as provided below in subsection (b) of this Section
9.4, notice from one party to another relating to this Agreement shall be deemed
effective if made in writing and delivered to the recipient's address set forth
below (or to such other address as such party shall give notice) by any of the
following means: (i) hand delivery, (ii) registered or certified mail, postage
prepaid, with return receipt requested, or (iii) Federal Express, Airborne
Express or like overnight courier service. Notice made in accordance with this
Section 9.4 shall be deemed delivered on receipt if delivered by hand, on the
third business day after mailing if mailed by registered or certified mail, or
the next Business Day after mailing or deposit with an overnight courier service
if delivered by overnight courier for next day delivery.
If to the Bank: Firstar Bank, N.A.
Commercial Banking
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: J. Xxxx Xxxxx, Vice President
Telecopier number: (000) 000-0000
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If to the Borrower: Neoprobe Corporation
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, Chief Financial Officer
Telecopier number: (000) 000-0000
(b) In addition to the procedures for notice set forth above
in subsection (a) of this Section 9.4, a Notice of Borrowing may be given and
shall be deemed effective if made in writing via telecopy with request for
assurance of receipt in a manner typical with respect to telecommunications of
that type and delivered to the recipient's telecopy number set forth above in
such subsection (a) (or to such other number as such party shall give notice).
Notice made in accordance with this subsection (b) shall be deemed delivered on
receipt of any such telecopy transmission.
SECTION 9.5 SEVERABILITY, ENTIRE AGREEMENT, EFFECTIVENESS. Every
provision of this Agreement, the Note and the other Loan Documents is intended
to be severable; if any term or provision of this Agreement, the Note or other
Loan Document shall be invalid, illegal or unenforceable for any reason
whatsoever, the validity, legality and enforceability of the remaining
provisions hereof or thereof shall not in any way be affected or impaired
thereby. All exhibits and schedules to this Agreement shall be annexed hereto
and shall be deemed to be part of this Agreement. This Agreement and the
exhibits and schedules attached hereto and the other Loan Documents embody the
entire agreement and understanding between the Borrower and the Bank and
supersede all prior agreements and understandings relating to the subject matter
hereof. This Agreement shall become effective upon receipt by the Bank of
counterparts hereof signed by the Borrower and shall remain in effect until (i)
all obligations, financial and otherwise, of the Borrower hereunder and under
all other Loan Documents shall have been fully performed, and (ii) the Bank
shall no obligation to make any additional Loans hereunder.
SECTION 9.6 GOVERNING LAW; VENUE. This Agreement, the Note and all
other Loan Documents shall be governed by and construed in accordance with the
law of the State of Ohio. The Borrower hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
Ohio and of any Ohio state court sitting in Franklin County, Ohio for purposes
of all legal proceedings arising out of or relating to this Agreement, the Note
and all other Loan Documents or the transactions contemplated hereby and
thereby. The Borrower irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
SECTION 9.7 SECURITY AND RIGHT OF SETOFF. The Borrower hereby grants to
the Bank a right of setoff for all Setoff Obligations of the Borrower to the
Bank hereunder in and to any and all moneys of the Borrower and the proceeds
thereof now or hereafter held or received by or in transit to the Bank from or
for the account of the Borrower, whether for safekeeping, pledge, transmission,
collection or otherwise, and also upon any and all deposits (general and
special), account balances and credits of the Borrower with the Bank at any time
existing. The Bank is hereby expressly and irrevocably authorized by the
Borrower at any time and from time to time upon or after the
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occurrence of an Event of Default, without notifying the Borrower, to setoff,
appropriate and apply any and all items hereinbefore referred to in this Section
9.7 against all Setoff Obligations of the Borrower to the Bank and the Borrower
shall continue to be liable to the Bank for any deficiency with interest at the
applicable rates. The Borrower hereby irrevocably consents that the Bank shall
have the right of possessing, setting-off, appropriating and applying such items
for the benefit of the Bank and paying or delivering over to the Bank any of
such items for application in accordance with the provisions hereof.
SECTION 9.8 AMENDMENTS AND WAIVERS. Any provision of this Agreement,
the Note or any other Loan Document may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed by the Borrower and the
Bank.
SECTION 9.9 TAXES AND FEES. Should any tax (other than a tax based upon
the net income of the Bank) or any recording or filing fees become payable in
respect of this Agreement, the Note or any other Loan Document or any amendment,
modification or supplement hereof or thereof, the Borrower agrees to pay the
same together with any interest or penalties thereon and agree to hold the Bank
harmless with respect thereof.
SECTION 9.10 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original and all of which shall
constitute one agreement. It shall not be necessary in making proof of this
Agreement or of any document required to be executed and delivered in connection
herewith to produce or account for more than one counterpart.
SECTION 9.11 EFFECTIVE DATE. This Agreement shall be effective at such
time as executed counterparts of this Agreement have been delivered by the
Borrower to the Bank.
SECTION 9.12 WAIVER OF JURY TRIAL. THE BANK AND THE BORROWER, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER OF THEM MAY HAVE TO A TRIAL
BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE NOTE,
THE OTHER LOAN DOCUMENTS, OR ANY RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREBY, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF EITHER OF THEM. NEITHER THE BANK NOR
THE BORROWER SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION
IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO
HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE BANK OR THE BORROWER
EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY BOTH OF THEM.
SECTION 9.13 ASSIGNMENTS AND PARTICIPATIONS. The Bank may at any time
assign to one or more Assignees all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Note, and such Assignee
shall assume such rights and obligations. The Bank may sell participations to
one or more Participants in or to all or a portion of its rights and obligations
under
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this Agreement, including all or a portion of its Commitment and Loans. The Bank
is hereby authorized to disclose any financial and other information about the
Borrower to any such prospective Assignee or Participant.
SECTION 9.14 WARRANT OF ATTORNEY. The Borrower hereby irrevocably
authorizes any attorney-at-law, including any attorney-at-law employed or
retained by the Bank, to appear for it in any action on the Note or with respect
to payment of commitment fees under this Agreement payable pursuant to Section
2.6 at any time after the same becomes due as provided herein or therein, in any
court of record situated in Franklin County, Ohio (which the Borrower
acknowledges to be the place where this Agreement and the Note were executed),
in the county where the Borrower then resides or can be found, to waive the
issuing and service of process, and confess a judgment in favor of Bank or any
other holder hereof or thereof against the Borrower, for the amount that may
then be due, with interest at the rate provided for herein and therein, together
with the costs of suit, and to waive and release all errors in said proceedings
and the right to appeal from the judgment rendered. The Borrower consents to the
jurisdiction and venue of such court. The Borrower waives any conflict of
interest that any attorney-at-law employed or retained by the Bank may have in
confessing judgment hereunder and consents to the payment of a legal fee to any
attorney-at-law confessing judgment hereunder.
[Balance of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first written above.
BANK:
Firstar Bank, N.A.,
a national banking association
By: /s/ J. Xxxx Xxxxx
-----------------------------
J. Xxxx Xxxxx, Vice President
BORROWER:
Neoprobe Corporation,
a Delaware corporation
By: /s/ Xxxxx Xxxx
-----------------------------
Name: Xxxxx Xxxx
-----------------------------
Title: President, CEO
----------------------------
WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
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