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EXHIBIT 10.4
BUSINESS LOAN AGREEMENT
dated
October 28, 1999
among
GENOMIC SOLUTIONS, INC.
"Parent"
and
GENOMIC SOLUTIONS, LTD.
GENOMIC SOLUTIONS, K.K.
"Subsidiaries"
and
WHITE PINES LIMITED PARTNERSHIP I
PACIFIC CAPITAL, X.X.
XXXXX VENTURE CAPITAL ASSOCIATES, L.P.
AMERICAN HEALTHCARE FUND II
IAN R. N. BUND
XXXXX CONSULTING ASSOCIATES, INC.
VOLUNTEER HEALTHCARE ASSOCIATES, L.L.C
J. XXXXXXX XXXXXXXXX
XXXXXX X. XXXXXXX
XXXX X. XXXXXXXXX
GROVE INVESTMENT PARTNERS
XXXXXX X. XXXXXX LIVING TRUST U/A/D SEPTEMBER 9, 1997
McDONALD INVESTMENTS INC. CUSTODIAN FBO XXXXXX X. XXXXX
XXX ROLLOVER ACCOUNT #00000000
XXXXXXX AND ASSOCIATES PROFIT SHARING PLAN
X/X/X XXXXXXX 0, 0000
XXXXXXX X. XXXXXXXX
XXXXXXXX X. XXXX
XXXXXXX X. XXXXXXXX
XXXXX X. XXXXX
XXXXXX X. XXXXXXXXX
XXXXXXX X. XXXXX
XXXXXX X. XXXXXXXXXX
"Lenders"
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TABLE OF CONTENTS
Page
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1. LOAN AGREEMENT 2
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(a) Present Loan 2
(b) Conditions - Present Loan 3
(c) Future Loan 3
(d) Additional Loan to Satisfy
Preemptive Rights 4
2. EXECUTION OF NOTES 4
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3. EQUITY - INITIAL ISSUANCE 4
-------------------------
(a) Warrants - Noncancellable 4
(b) Warrants - Cancellable Upon $5.00
Liquidity Event 5
(c) Warrants - Cancellable Upon Premium
Liquidity Event 5
4. INTENTIONALLY OMITTED 6
5. SECURITY, ASSURANCES AND INSURANCE 6
----------------------------------
(a) Collateral 6
(b) Pledge 7
(c) Subsidiaries' Security 7
(d) Insurance - Property 7
(e) Insurance - Life 7
(f) Further Assurances 8
6. CONDITIONS OF LOAN 8
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(a) Approval of Lender's Counsel 8
(b) Representations and warranties 8
(c) Compliance 8
(d) Evidence of Corporate Action 8
(e) Opinion of Borrower's Counsel 8
(f) SBA Forms 9
(g) Certificates 9
(h) Bylaws 9
(i) Insurance 9
(j) Due Diligence 9
(k) intentionally ommitted 9
(1) Subordination 9
(m) Receipt of Executed Documents 9
(n) Consents 10
7. REPRESENTATIONS AND WARRANTIES 10
------------------------------
(a) Organization and Standing; Charter
and Bylaws 11
(b) Capitalization 11
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Page
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(c) Corporate Power; Authorization 12
(d) Validity of Securities 13
(e) Consents and Waivers 13
(f) Litigation 13
(g) Shareholder Lists and Agreements;
Officers and Directors 13
(h) Subsidiaries 14
(i) Financial Statements 14
(j) Absence of Undisclosed Liabilities 15
(k) Absence of Certain Developments 15
(1) Title to Assets 15
(m) Real Property 16
(n) Tax Matters 16
(o) Contracts and Commitments 16
(p) Proprietary Rights; Employee Restriction 17
(q) Effect of Transactions 18
(r) Insurance 18
(s) Securities Act Registration 18
(t) Business; Compliance with Laws 18
(u) Books and Records 18
(v) Employee Benefit Plans 19
(w) Small Business Matters 19
(x) Information Suppied to the Lenders 19
(y) Employees 20
(z) Business Operations 20
(aa)Collectibility of Accounts Receivable 20
(bb)Inventory 20
8. AFFIRMATIVE COVENANTS 20
---------------------
(a) Financial Statements 20
(b) Payment of Taxes 21
(c) Insurance 21
(d) Notice of Adverse Events 22
(e) Maintenance 22
(f) Board of Directors 22
(g) Environmental Compliance/Notices/Indemnity 22
(h) Maintain Corporate Existence and
Due Qualification 23
(i) Compliance With All Laws 23
(j) Information From Senior Lender 23
(k) Reports 23
(1) Compliance Certificate 23
(m) Use of Proceeds 23
(n) Compliance with ERISA 24
(o) Patent Applications 24
(p) Disclosure 24
(q) Reinstatement of Security Interests 24
9. NEGATIVE COVENANTS 25
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(a) Financial Covenants 25
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Page
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(b) Liens and Indebtedness 25
(c) Dividends, Distributions; Capital Structure 26
(d) Stock 26
(e) Leases 26
(f) Environmental 26
(g) Transations with Insiders or Related
Companies 26
(h) Nature of Business 27
(i) Change In Management 27
00.XXXXXX OF DEFAULT 27
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(a) Failure to Pay Amounts Due 27
(b) Misrepresentation; False Financial
Information 27
(c) Noncompliance with Lender Agreements 27
(d) Other Creditor Events 27
(e) Judgments; Attachments; Tax Liens 27
(f) Indictment 28
(g) Business Suspension, Bankruptcy 28
(h) Material Adverse Change 28
(i) Hazardous Material 28
(j) Use Of Proceeds 28
11.REMEDIES ON DEFAULT 29
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(a) Acceleration 29
(b) Remedies Cumulative 29
(c) No Waiver 29
12.OTHER CONSIDERATION TO LENDERS 29
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(a) Closing Fee 29
(b) Expenses 29
(c) Repurchase of Securities Upon
Declination of Sale of Borrower 30
(d) Exchange of Securities 30
13.REPRESENTATIONS AND WARRANTIES OF LENDER 31
----------------------------------------
(a) Investment 31
(b) Transfers 31
(c) Accredited Investor 31
(d) Restrictive Legend 32
(e) Sophistication 32
(f) Legal Investment 32
14.MISCELLANEOUS 32
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(a) Rights Cumulative; Waivers 32
(b) Notices 32
(c) Reimbursement For Expenses 34
(d) Binding Effect 34
(e) Generally Accepted Accounting Principles 34
(f) No Partnership Or Joint Venture Established 35
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(g) Governing Law; Jurisdiction 35
(h) Further Action 35
(i) Writings Constitute Entire Agreement;
Modifications Only In Writing 35
(j) Survival Of Terms, Representations
and Warranties 36
(k) Jury Trial Waivers 36
(1) Indemnification 36
(m) Lender's Assignment 36
(n) Brokers 37
(o) Counsel for Certain Lenders 37
00.XXXXXXXXXXXX AND INTERPRETATION 37
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EXHIBITS
--------
Exhibit Description of First Referred to
No. Exhibit in Section
--- ------- ----------
A Promissory Note 2
B-1 Warrants (Noncancellable) 3(a)
B-2 Warrants (Cancellable @ $5.00) 3(b)
B-3 Warrants (Cancellable > $5.00) 3(c)
C Security Agreement 5(a)
D Subordination Agreement 5(a)
E Opinion of Borrower's Counsel 6(e)
F Amendment to Registration
Rights Agreement 6(m)(iii)
G Amendment to Shareholders Agreement 6(m)(iv)
H Assignment and Pledge Agreement 5(b)
SCHEDULES
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Schedule
No. Description of Schedule
--- -----------------------
7(b) Agreements Relating to Capital Stock
7(f) Litigation
7(g) Shareholders, Officers and Directors
7(h) Subsidiaries
7(i) Financial Statements
7(k) Recent Developments
7(l) Liens and Encumbrances
7(o) Contracts
7(p) Intellectual Property Rights
7(x) Business Plan
7(z) Business Names; Addresses
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BUSINESS LOAN AGREEMENT
Agreement made and entered into this 28th day of October, 1999, by and
among Genomic Solutions, Inc., a Delaware corporation, 0000 Xxxxxxx Xxxxx, Xxxxx
X, Xxx Xxxxx, Xxxxxxxx 00000 (hereinafter referred to as "Parent"), Genomic
Solutions, Ltd., a United Kingdom corporation, Xxxx 0, Xxxxx Xxxxx, Xxxxxx Xxx
Xxxx, Xxxxx Socon, St. Neots, Cambridgshire, England PE193TP (sometimes
hereinafter referred to as "Genomic UK") , Genomic Solutions, K.K., a Japanese
corporation, Gotanda Chuo Xxxx. 0X, 0-0, Xxxxxxxxxxxxxx 0-xxxxx, Xxxxxxxxx-xx,
Xxxxx 000-0000, Xxxxx (sometimes hereinafter referred to as "Genomic Japan")
(Genomic UK and Genomic Japan each sometimes hereinafter being referred to as a
"Subsidiary" and sometimes hereinafter collectively referred to as the
"Subsidiaries", and each of Parent, Genomic UK and Genomic Japan sometimes
hereinafter referred to as "Borrower", a "Borrower" or the "Borrower" and
collectively sometimes referred to as the "Borrowers"), White Pines Limited
Partnership I, a Michigan limited partnership, 0000 Xxxxxxxx Xxxx, Xxxxx X, Xxx
Xxxxx, Xxxxxxxx 00000 (hereinafter referred to as "WPLP"), Pacific Capital,
L.P., a Delaware limited partnership, 0000 Xxxxxxxx Xxxx, Xxxxx X, Xxx Xxxxx,
Xxxxxxxx 00000 (hereinafter referred to as "Pacific"), Chase Venture Capital
Associates, L.P., a California limited partnership, 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (hereinfter referred to as "Chase"), American
Healthcare Fund II, a Delaware limited partnership, 0000 Xxxxxxxx Xxxxxx, Xxxxx
000, Xxxxxxx, Xxxxxxxx 00000 (hereinafter referred to as "American"), Ian R. N.
Bund, 0000 Xxxxxxxx Xxxx, Xxxxx X, Xxx Xxxxx, Xxxxxxxx 00000 (hereinafter
referred to as "Bund"), Xxxxx Consulting Associates, Inc., an Ohio corporation,
0000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxx 00000 (hereinafter referred to as "Xxxxx"),
Volunteer Healthcare Associates, L.L.C., a Tennessee limited liability company,
0 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx 00000 (hereinafter referred to
as "Volunteer"), J. Xxxxxxx Xxxxxxxxx, 000 Xxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000 (hereinafter referred to as "Xxxxxxxxx-CA"), Xxxxxx
X. Xxxxxxx, 000 Xxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
(hereinafter referred to as "Xxxxxxx"), Xxxx X. Xxxxxxxxx, 0000 Xxxxxxxx Xxxx,
Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000 (hereinafter referred to as "Xxxxxxxxx-FL"),
Grove Investment Partners, an Illinois partnership, 000 Xxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxx 00000 (hereinafter referred to as "Grove") Xxxxxx X. Xxxxxx Living
Trust u/a/d September 9, 1997, 000 Xxxxx Xxx Xxxxx, #0000, Xxx Xxxxxxxx, Xxxxxxx
00000 (hereinafter referred to as "Xxxxxx"), McDonald Investments Inc. Custodian
FBO Xxxxxx X. Xxxxx XXX Rollover Account #00000000, 0000 Xxx Xxxxxx Xxxx, Xxxxx
000, Xxxxxxxxxx Xxxxx, Xxxx 00000 (hereinafter referred to as "Xxxxx"), Xxxxxxx
and Associates Profit Sharing Plan u/a/d January 1, 1991, 000 Xxxxxxx Xxxx.,
Xxxxx 0X, Xxx Xxxxx, Xxxxxxxx 00000 (hereinafter referred to as "Xxxxxxx"),
Xxxxxxx X. Xxxxxxxx, 00000 Xxxxxxxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000
(hereinafter referred to as "Xxxxxxxx"), Xxxxxxxx X. Xxxx, 000 X. Xxxxxxxxx
Xxx., Xxxxx, Xxxxxxxxxxxx 00000 (hereinafter referred
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to as "Kent") , Xxxxxxx X. Xxxxxxxx, 0000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000
(hereinafter referred to as "JWilliams"), Xxxxx X. Xxxxx, 00 Xxxxxxxxxx Xxxx,
Xxxxxxxxxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxxx XX00 0XX (hereinafter referred to as
"Auton") , Xxxxxx X. Xxxxxxxxx, 0000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000
(hereinafter "Jakimcius") , Xxxxxxx X. Xxxxx, 0000 Xxxxxxx Xxxx, Xxx Xxxxx,
Xxxxxxxx 00000 (hereinafter referred to as "Xxxxx") and Xxxxxx X. Xxxxxxxxxx,
00000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000 (hereinafter referred to as
"Xxxxxxxxxx") (WPLP, Pacific, Chase, American, Bund, Xxxxx, Volunteer,
Xxxxxxxxx-CA, Xxxxxxx, Xxxxxxxxx-FL, Grove, Kalish, Boyle, Kantner, Williams,
Kent, JWilliams, Auton, Jakimcius, Xxxxx and Xxxxxxxxxx each being sometimes
hereinafter referred to as "Lender", a "Lender" or the "Lender" and collectively
as "Lenders").
1. LOAN AGREEMENT.
(a) Present Loan. Borrowers agree to borrow from each Lender, and each
Lender agrees to lend to the Borrowers on the date hereof, subject to the terms
and conditions set forth in this Agreement and all exhibits attached hereto
(hereinafter collectively "Loan Documents"), the amount set forth below opposite
the name of such Lender:
Lender Amount
------ ------
WPLP $ 492,000
Pacific 708,000
Chase 1,500,000
American 150,000
Bund 17,800
Xxxxx 5,000
Volunteer 7,500
Xxxxxxxxx-CA 175,681
Xxxxxxx 5,000
Xxxxxxxxx-FL 12,748
Grove 175,680
Xxxxxx 10,000
Xxxxx 2,500
Xxxxxxx 4,700
Xxxxxxxx 2,711
Kent 175,680
JWilliams 19,000
Auton 9,500
Jakimcius 7,000
Kurek 10,500
Xxxxxxxxxx 9,000
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$3,500,000
(each of the above amounts as to each respective Lender together with such
additional amount, if any, as may hereafter be borrowed from each Lender in
accordance with Section 1(c) below is hereinafter referred to as the "Loan").
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(b) Conditions - Present Loan. The obligation of Lender to advance any
sum pursuant to "(a)" is contingent upon, since the date of this Agreement until
the date of any advance; (1) no material adverse change shall have occurred in
the financial condition of Borrowers or in the physical condition of the assets
serving as collateral; (2) no event shall have occurred or condition exist which
constitutes or with the passage of time or the giving of notice would
constitute, any event of default; and (3) Lender's receipt of a certificate
dated the date of the request for advance, and signed by the President of Parent
stating that: a) the Borrowers have complied and are then in compliance with all
the terms and covenants of this Agreement which are binding upon them; b) there
exists no event of default as defined herein and no event which, with the giving
of notice or the lapse of time, or both, would constitute such an event of
default; and c) the representations and warranties contained herein are true
with the same effect as though such representations and warranties were made at
the time of request for advance.
(c) Future Loan. At any time hereafter prior to January 27, 2000,
Lenders owning not less than eighty percent (80%) of the Warrants (or shares of
common stock of Parent issued upon exercise of the warrants) issued pursuant to
this Agreement shall have the right at Lenders' sole option to lend additional
funds to Borrowers upon all the same terms and provisions applicable under the
provisions of the Loan Documents (including the issuance of additional Warrants
in amounts proportional to and upon the same terms and provisions as provided in
Section 3 hereof with respect to the portion of the Loan contemplated by Section
1(a) hereof) except that the holders of the Warrants issued by Parent as part of
the April 1999 Loan Documents (as hereinafter defined) shall not be required to
waive the provisions of subsection F of such Warrants and the holders of the
Preferred Stock of Parent shall not be required to waive the provisions of
Article V, Section C(3) (e) of the Certificate of Incorporation of Parent with
respect to the issuance of such additional Warrants, provided that (i) Lenders
shall not have the right to lend to Borrowers more than $3,500,000 pursuant to
this Section 1(c), (ii) the amount of additional funds Lenders shall have the
right to lend to Borrowers pursuant to this Section 1(c) shall be reduced by any
additional funds received by Borrowers for the issuance of securities of Parent
upon terms more favorable to Borrowers than those contained in this Agreement,
and (iii) Lenders may not lend additional funds to Borrowers pursuant to this
Section 1(c) from and after such date as Parent shall execute a letter of intent
providing for the merger or consolidation of Parent or the sale of substantially
all of the assets of Parent, provided further that if the transaction
contemplated by the letter of intent referred to in "(iii)" shall not be
consummated, then the Lenders shall have the right at Lenders' sole option to
lend additional funds to Borrowers pursuant to this Section 1(c) for a period of
90 days after termination of such letter of intent or definitive agreement
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relating to the transaction contemplated thereby. Without limiting in any manner
Lenders' right to assign their rights under the Loan Documents, Lenders may
separately assign their rights under this Section 1(c).
(d) Additional Loan to Satisfy Preemptive Rights. Borrowers and Lenders
acknowledge that certain holders of Parent's equity securities have a preemptive
right to participate, on a pro rata basis, in the transactions contemplated by
this Agreement, which right, to the extent not waived, will expire after the
date hereof. The parties agree that if any such holder properly exercises such
preemptive right, as described in the preceding sentence, then Borrowers shall
borrow from such holder an amount determined by such holder, which amount shall
not exceed such holder's pro rata share of all amounts borrowed by Borrowers
under Section 1(a) and this Section 1(d), all upon the terms and conditions set
forth in the Loan Documents. If the aggregate amount loaned to Borrowers under
Section 1(a) and this Section 1(d) of this Agreement exceeds $3,750,000, then
the warrants issued by Parent in respect of the excess (i) shall not be treated
as Excluded Stock under Article V, Section 3e(v) of Parent's Certificate of
Incorporation, as amended, and (ii) shall constitute "Additional Shares of
Common Stock" for purposes of subsection G of the Warrants issued pursuant to
Section 3 of this Agreement. The parties shall amend the Loan Documents or
execute and deliver additional documents as necessary to reflect any such
additional loans to Borrowers pursuant to this Section 1(d).
2. EXECUTION OF NOTES. The obligation to repay the Loan of each Lender
shall be evidenced by Borrowers' Promissory Note in the form set forth in
Exhibit A attached hereto (each Promissory Note executed and delivered to a
Lender hereinafter being referred to as a "Note" and collectively as the
"Notes").
3. EQUITY-INITIAL ISSUANCE.
(a) Warrants-Non-Cancellable. Parent shall issue to each Lender at the
time of closing the Loan, in consideration for the granting of the Loan, and
payment by Lenders concurrently with execution and delivery of this Agreement of
$.0001 per share of common stock, negotiable Warrants to acquire the following
shares of common stock of Parent:
Lender Warrants
------ --------
WPLP 72,816
Pacific 104,784
Chase 222,000
American 22,200
Bund 2,634
Xxxxx 740
Volunteer 1,110
Xxxxxxxxx-CA 26,001
Xxxxxxx 740
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Xxxxxxxxx-FL 1,887
Grove 26,001
Xxxxxx 1,480
Xxxxx 370
Xxxxxxx 696
Xxxxxxxx 401
Kent 26,001
JWilliams 2,812
Auton 1,406
Jakimcius 1,036
Xxxxx 1,553
Xxxxxxxxxx 1,332
The Warrants issued shall be in the form set forth in Exhibit B-1 attached
hereto.
(b) Warrants-Cancellable Upon $5.00 Liquidity Event. Parent shall
issue to each Lender at the time of closing the Loan, in consideration for the
granting of the Loan, and payment by Lenders concurrently with execution and
delivery of this Agreement of $.0001 per share of common stock, negotiable
Warrants, subject to cancellation and surrender in accordance with the terms
thereof, to acquire the following shares of common stock of Parent:
Lender Warrants
------ --------
WPLP 85,959
Pacific 123,698
Chase 262,071
American 26,207
Bund 3,110
Xxxxx 874
Volunteer 1,310
Xxxxxxxxx-CA 30,694
Xxxxxxx 874
Xxxxxxxxx-FL 2,227
Grove 30,694
Xxxxxx 1,747
Xxxxx 437
Xxxxxxx 821
Xxxxxxxx 474
Kent 30,694
JWilliams 3,320
Auton 1,660
Jakimcius 1,223
Xxxxx 1,834
Xxxxxxxxxx 1,572
The Warrants issued shall be in the form set forth in Exhibit B-2 attached
hereto.
(c) Warrants-Cancellable Upon Premium Liquidity Event. Parent shall
issue to each Lender at the time of closing the Loan, in consideration for the
granting of the Loan, and payment
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by Lenders concurrently with execution and delivery of this Agreement of $.0001
per share of common stock, negotiable Warrants, subject to cancellation and
surrender in accordance with the terms thereof, to acquire the following shares
of common stock of Parent:
Lender Warrants
------ --------
WPLP 13,425
Pacific 19,318
Chase 40,929
American 4,093
Bund 486
Xxxxx 136
Volunteer 205
Xxxxxxxxx-CA 4,793
Xxxxxxx 136
Xxxxxxxxx-FL 348
Grove 4,793
Xxxxx 68
Xxxxxx 273
Xxxxxxx 128
Xxxxxxxx 74
Kent 4,793
JWilliams 518
Auton 259
Jakimcius 191
Xxxxx 288
Xxxxxxxxxx 246
The Warrants issued shall be in the form set forth in Exhibit B-3 attached
hereto.
4. There is no Section 4.
5. SECURITY, ASSURANCES AND INSURANCE. To secure the faithful performance
of this Agreement and the repayment of the indebtedness created hereunder,
Borrowers shall do the following:
(a) Collateral. Parent gives, assigns, and conveys to each Lender, as
collateral, a security interest pursuant to the Security Agreement in the form
set forth in Exhibit C attached hereto in all accounts receivable, inventory,
equipment, furniture, fixtures, notes receivable, and all other tangible and
intangible assets and after-acquired property (all assets) of Parent subject
only to a (i) prior security interest of Comerica Bank and the terms of a
subordination agreement satisfactory to Lender, or of a successor bank which
replaces Comerica Bank under similar credit facilities, provided that any such
successor enters into a subordination agreement substantially in the form of the
Subordination Agreement attached hereto as Exhibit D (Comerica Bank and any such
successor bank each being sometimes hereinafter referred to as the "Senior
Lender"), and (ii) the security interest granted to the parties to the Business
Loan Agreement dated April 23, 1999 (which Business Loan Agreement,
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together with all other materials referred to therein as "Loan Documents" are
hereinafter sometimes collectively referred to as the "April 1999 Loan
Documents").
(b) Pledge. Parent shall pledge all of its right, title and interest in
its 100%. ownership interest in the Subsidiaries pursuant to the Pledge
Agreement in the form attached hereto as Exhibit H.
(c) Subsidiaries' Security Each Subsidiary with property located in any
state of the United States gives, assigns, and conveys to each Lender, as
collateral, a security interest pursuant to the Security Agreement in the form
set forth in Exhibit C attached hereto in all accounts receivable, inventory,
equipment, furniture, fixtures, notes receivable, and all other tangible and
intangible assets and after-acquired property (all assets) of such Subsidiary
subject only to a prior security interest of the Senior Lender. Each Subsidiary
with property located outside the United States shall execute such documentation
as may be necessary to grant to Lenders an interest equivalent to a security
interest or chattel mortgage as may be possible under the laws of each
jurisdiction in which any property of such Subsidiary may be located.
(d) Insurance-Property. Each Borrower shall maintain, without expense
to Lenders, a policy or policies of insurance with respect to the collateral, in
an amount which is at least equal to the fair market value thereof, naming the
Lender as an insured party as its interest may appear and said policy shall
contain a provision requiring that the insurer provide at least thirty (30) days
notice to the Lender prior to cancellation of said insurance. The Borrower shall
deliver a certificate of such insurance to the Lender.
(e) Insurance-Life. Borrowers shall maintain, without expense to
Lenders, $3,500,000 term life insurance on the life of Xxxxxxx X. Xxxxxxxx with
Lenders as irrevocable beneficiaries. Borrowers shall apply for additional
amounts of such insurance on the lives of Xxxxxxx X. Xxxxxxxx, Xxxxxx X.
Xxxxxxxxxx, Xxxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxx (in such amount on the life
of each such individual as may hereafter be agreed by Lenders and Borrowers, or
in the absence of such agreement, in equal amounts on the life of each such
individual) prior to closing of any portion of the Loan contemplated by Section
1(c) hereof in an amount equal to such additional portion of the Loan, and shall
deliver such additional policy or policies of insurance to Lenders when issued.
Any insurance proceeds shall be applied in payment of the Notes and any other
amounts which may be due Lenders under the Loan Documents. If any insurance
proceeds remain after payment of the Notes and any other amounts due Lenders
under the Loan Documents, Lenders shall promptly pay over such remaining amount
of insurance proceeds to Borrower.
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(f) Further Assurances. On demand of the Lender, the Borrowers shall
furnish further assurances of title, execute any written agreement, or do any
other acts, execute any instrument or statement required by law or otherwise, in
order to perfect and continue the security interest of the Lender in the
collateral, including without limitation, that Parent shall amend the Pledge
Agreement contemplated by Section 5(b) above to subject to the terms and
provisions of such Pledge Agreement any interest Parent may hereafter acquire in
any corporation, partnership, limited liability company or other entity, and
cause any such corporation, partnership, limited liability company or other
entity in which Parent has a majority interest to comply with the provisions of
Section 5(c) hereof.
6. CONDITIONS OF LOAN. The obligation of each Lender to make the Loan is
subject to the following conditions precedent:
(a) Approval Of Lender's Counsel. All legal matters incident to the
Loan shall be satisfactory to all counsel for the Lender.
(b) Representations And Warranties. All representations and warranties
by the Borrowers which are contained in this Agreement and the statements
contained in the Exhibits, Schedules and Loan Documents or any instrument, list,
certificate or writing delivered to the Lender pursuant to this Agreement shall
be, in all respects, true and correct on and as of the loan closing date as
though such representations and warranties were made at and as of the loan
closing date, and the Lender shall have not discovered any material misstatement
or omission in the representations and warranties made in this Agreement.
(c) Compliance. Borrowers shall have performed and complied in all
material respects with all of their obligations under this Agreement which are
to be performed or complied with by the Borrowers prior to or on the Loan
closing date.
(d) Evidence Of Corporate Action. The Lender shall have received
certified copies of all corporate or other required action taken by each
Borrower to authorize this Agreement, the Loan Documents and the borrowing
hereunder, and such other documents as the Lender may reasonably require
relating to the existence of the Borrowers, the authority for and the validity
of this Agreement, the Note and the Warrants, and any other matters relevant
hereto, all in form and substance satisfactory to Lender's counsel, and
indicating the name and title of the officer or officers of each Borrower
authorized to sign this Agreement and the Loan Documents.
(e) Opinion Of Borrower's Counsel. The Lender shall have received a
favorable written opinion of counsel for the Borrowers, dated the date of the
Loan in the form of Exhibit E which is attached hereto.
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(f) SBA Forms. Parent shall have executed and delivered to Lenders SBA
Form 1031, PART A of which shall have been completed by Parent, and SBA Forms
652-D and 480.
(g) Certificates. The Lender shall have received from each Borrower a
certificate of good standing and a certified copy of the Articles or Certificate
of Incorporation for such Borrower (as amended). All shall be certified by the
appropriate governmental agency as being true, correct and complete as of the
date of such certification.
(h) Bylaws. The Lender shall have received from each Borrower a copy of
the Bylaws of such Borrower and all amendments thereto, certified by the
Secretary of such Borrower as being true, correct and complete as of the date of
such certification.
(i) Insurance. Evidence satisfactory to the Lender that the Borrowers
have obtained the insurance policies required by the Lender including but not
limited to liability insurance and worker's compensation insurance with limits
and carriers reasonably satisfactory to the Lender, and the life insurance
contemplated by Section 5(e) hereof.
(j) Due Diligence. Lender has reached no adverse findings as a result
of their continued due diligence investigation of each Borrower, its management,
its future financing needs, and its industry, or any environmental review as of
the closing date.
(k) There is no Section 6(k).
(1) Subordination. Any stock redemption agreements between Parent and
any of its shareholders shall be subordinate to all obligations created pursuant
to this Loan Agreement including, but not limited to the Note and the Warrants
and such subordination shall be consented to by the shareholders of Parent. Any
debt owed by any Borrower to any of its shareholders (other than by Subsidiaries
to Parent), directors, or officers including all future indebtedness shall be
subordinated to all obligations created by the Loan documents including but not
limited to the Note and Warrants, pursuant to a subordination agreement
reasonably satisfactory to Lenders.
(m) Receipt Of Executed Documents. The Lender shall have received each
of the following, in form and substance satisfactory to the Lender and its
respective counsel:
(i) the Note duly executed by the Borrowers and the Warrants duly
executed by Parent;
(ii) the Security Agreement duly executed by Parent, and as
applicable, each Subsidiary, together with:
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(a) evidence of the due execution and delivery of, and the
recordation, filing and other action in such jurisdictions as the Lender may
deem necessary or appropriate with respect to the Security Agreement, Financing
Statements and similar documents which the Lender deems necessary or desirable
to create, preserve or perfect the liens, security interests and other rights
intended to be granted to the Lender thereunder.
(b) a schedule setting forth all real property owned or
leased by any Borrower, together with copies of the related leases, certified as
true and correct as of the effective date by a duly authorized officer of
Borrower.
(iii) an amendment to the Registration Rights Agreement dated
April 23, 1999 duly executed by Parent in the form of Exhibit F which is
attached hereto;
(iv) an amendment to the Shareholders Agreement dated December
24, 1997, as amended May 27, 1998 and April 23, 1999 (the "Shareholders
Agreement"), duly executed by appropriate shareholders and Parent in the form of
Exhibit G which is attached hereto;
(v) Acceptable subordination agreements executed by appropriate
shareholders, directors, officers and Borrowers;
(vi) Satisfactory Uniform Commercial Code search;
(vii) the Pledge Agreement duly executed by Parent;
(viii) Acceptable nondisclosure agreements executed by such key
management, operating and technical personnel as Lenders may reasonably require;
(ix) each Borrower shall execute and deliver such other
instruments and certificates as the Lender may reasonably request to effect the
closing.
(n) Consents. All consents, approvals, permits, licenses,
authorizations, agreements and other items required, or deemed by the Lender to
be required for the carrying out of the transactions contemplated in this
Agreement, shall have been obtained in form and substance reasonably
satisfactory to the Lender.
7. REPRESENTATIONS AND WARRANTIES. Each Borrower, jointly and severally,
represents and warrants to Lender, all of which representations and warranties
shall be continuing and shall survive the execution of this Agreement until all
of the indebtedness is fully paid to Lender and Borrowers' obligations under
this Agreement and the related documents are fully performed as follows:
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(a) Organization and Standing; Charter and Bylaws. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and Parent is authorized to exercise all of its
corporate powers, rights and privileges. Genomic UK is a corporation duly
organized, validly existing and in good standing under the laws of the United
Kingdom, and Genomic UK is authorized to exercise all of its corporate powers,
rights and privileges. Genomic Japan is a corporation duly organized, validly
existing and in good standing under the laws of Japan, and Genomic Japan is
authorized to exercise all of its corporate powers, rights and privileges. Each
Borrower has all required corporate power and authority to own its property and
to carry on its business as presently conducted or contemplated. True and
accurate copies of the Articles or Certificate of Incorporation and the Bylaws
of each Borrower, as in effect on the date hereof, have been delivered to the
Lenders.
(b) Capitalization. The authorized capital stock of Parent on the date
hereof consists of 40,000,000 shares of Common Stock, par value $.001 per share
("Common Stock") and 10,000,000 shares of Preferred Stock, par value $.001 per
share (the "Preferred Stock"). On the date hereof, 3,012,509 shares of Common
Stock are outstanding. Of the authorized Preferred Stock, 1,100,000 shares have
been designated Series D Preferred Stock, 4,070,339 shares have been designated
Series C Preferred Stock, 1,680,880 shares have been designated Series B
Preferred Stock and 50,000 have been designated Series M Preferred Stock. On the
date hereof, 1,100,000 shares of Series D Preferred Stock are outstanding,
4,070,339 shares of Series C Preferred Stock are outstanding, 1,680,880 shares
of Series B Preferred stock are outstanding and 50,000 shares of Series M
Preferred Stock are outstanding. The several classes and series of capital stock
have the rights, preferences and privileges set forth in the Certificate of
Incorporation. Parent has reserved 1,100,000 shares of Common Stock for issuance
upon conversion of the Series D Preferred Stock, 4,070,339 shares of Common
Stock for issuance upon conversion of the Series C Preferred Stock, 5,093,576
shares of Common Stock for issuance upon conversion of the Series B Preferred
Stock, 270,027 shares of Common Stock for issuance upon conversion of the Series
M Preferred Stock, and 1,400,000 shares of Common Stock for issuance upon
exercise of Warrants issued pursuant to the April 1999 Loan Documents. As of the
date of this Agreement, the Conversion Price of the Series B Preferred Stock is
$.33 per share of common stock, the Conversion Price of the Series C Preferred
Stock is $1.75 per share of common stock, the Conversion Price of the Series D
Preferred Stock is $6.00 per share of common stock and the Conversion Price of
the Series M Preferred Stock is $1.111 per share of common stock, and there has
been no event, including the issuance of any shares of common stock of Parent,
or securities convertible into or exercisable for shares of common stock of
Parent, which could result in any adjustment in any of the foregoing Conversion
Prices pursuant to the provisions of the Certificate of Incorporation of Parent
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except as to the Series M Preferred Stock, the transactions provided for in the
April 1999 Loan Documents and the Loan Documents, and the issuance of shares of
common stock or options to acquire common stock pursuant to any option or
incentive plan approved by the Board of Directors of Parent. As a result of
Parent's merger with B.I. Systems Corporation, a Delaware corporation ("BISC"),
Parent assumed the 1994 Omnibus Equity Incentive Plan of BISC (the "BISC
Plan"), which was adopted by the Board of Directors and shareholders of BISC in
July 1994 and amended in April 1997. On January 15, 1998, Parent's Board of
Directors adopted the Genomic Solutions Inc. Non-Employee Stock Option Plan (the
"Non-Employee Plan") and the 1998 Genomic Solutions Inc. Stock Option Plan (the
"Employee Plan"). On the date of the Closing, options to acquire 710,438 shares
of Common Stock are outstanding pursuant to the BISC Plan, options to acquire
1,111,450 shares of Common Stock are outstanding pursuant to the Employee Plan
and options to acquire 245,000 shares of Common Stock are outstanding pursuant
to the Non-Employee Plan. Parent has reserved 2,066,888 shares of Common Stock
for issuance upon exercise of these options. Except as set forth herein and in
Schedule 7(b), there are no outstanding rights, options, warrants, preemptive
rights, conversion rights or agreements for the purchase, acquisition or receipt
from Parent of any shares of capital stock or any other securities of Parent.
Parent is not a party to any existing agreement with any person or entity which
requires Parent to purchase from such person or entity any of its capital stock,
any securities convertible into or exchangeable or exercisable for any of its
capital stock, or any right, options or warrants for its capital stock. All
outstanding securities of Parent, including the Notes and Warrants, have been
issued in accordance with all applicable state and Federal securities laws.
(c) Corporate Power; Authorization. Parent has all requisite legal and
corporate power to enter into this Agreement, to issue and sell the Notes and
Warrants as provided hereunder, and to carry out and perform its obligations
under the terms of the Loan Documents. Each Subsidiary has all requisite legal
and corporate power to enter into this Agreement, to issue and sell the Notes as
provided hereunder, and to carry out and perform its obligations under the terms
of this Agreement. All corporate action on the part of each Borrower and its
officers, directors and shareholders that is necessary for the authorization,
execution and delivery of this Agreement and the Loan Documents by such
Borrower, for the performance of the Borrower's obligations thereunder and for
the issuance and delivery of the Notes, and as to Parent the Warrants, has been
taken; and this Agreement, the Notes, Warrants, Security Agreement, Pledge
Agreement and all other Loan Documents constitute a legal and binding obligation
of each Borrower a party thereto, enforceable against each Borrower in
accordance with its terms subject to: (i) judicial principles respecting or
limiting the availability of specific performance, injunctive relief and other
equitable remedies; and (ii) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect generally relating to or
affecting creditors' rights. No Borrower is in violation of any term of its
Articles or Certificate of Incorporation or Bylaws, or in violation of any
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term of any judgment, decree, order, statute, rule or government regulation
applicable to such Borrower or to which the Borrower is a party. No Borrower is
in violation of any term of any agreement or instrument applicable to such
Borrower or to which the Borrower is a party where such violation is likely to
be materially adverse to such Borrower's financial condition, business or
operations.
(d) Validity of Securities. The Notes and Warrants, when issued, sold
and delivered in accordance with the terms of this Agreement, will be duly and
validly issued, and will be free and clear of any liens, encumbrances or
restrictions of any kind; provided, however, that the Notes and Warrants may be
subject to restrictions on transfer under state and federal securities laws and
the Warrants are subject to the Shareholders Agreement among the Parent and the
Shareholders (as defined therein). The Common Stock issuable upon exercise of
the Warrants has been duly and validly reserved and, upon issuance in accordance
with the terms of the Warrants, will be duly and validly issued, fully paid and
non-assessable and will be free and clear of any liens, encumbrances or
restrictions of any kind; provided, however, that the Common Stock may be
subject to restrictions on transfer under state and federal securities laws and
the Shareholders Agreement.
(e) Consents and Waivers. Each Borrower has obtained any and all
consents, permits and waivers and made all filings necessary or appropriate
for consummation of the transactions contemplated by this Agreement.
(f) Litigation. Except as set forth in Schedule 7(f), there is no
action, suit or proceeding pending or, to the knowledge of any Borrower,
threatened against any Borrower or related to the business conducted by such
Borrower. No Borrower is a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by any
Borrower currently pending or which any Borrower intends to initiate.
(g) Shareholder Lists and Agreements; Officers and Directors. Set forth
on Schedule 7(g) is a true and complete list of all shareholders of Parent and
persons holding options or warrants to acquire shares of Parent, showing the
number of shares of capital stock held, or acquirable upon exercise of the
option or warrant, by each such person in each case as of the date of this
Agreement. Schedule 7(g) also sets forth the names of the officers and directors
of each Borrower and all indebtedness of the officers, directors, shareholders
and any of their respective close relatives, to the Borrowers. Except as set
forth on Schedule 7(g), none of the officers or directors or significant
employees of any Borrower or their respective close relatives, owns directly or
indirectly, individually or collectively, any interest in any entity which is a
competitor, customer or supplier of (or has any existing contractual
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relationship with) any Borrower other than ownership of less than one percent
(1%) of any publicly traded securities of any entity or of an interest in any
entity through ownership of publicly traded shares of any mutual fund.
(h) Subsidiaries. Except as set forth on Schedule 7(h), Parent has no
subsidiaries and does not own, directly or indirectly, any interest in any
corporation, association or business entity. All outstanding shares of capital
stock of each class of each Subsidiary is owned beneficially and of record by
Parent.
(i) Financial Statements.
(a) Schedule 7(i) attached hereto contains true, correct and
complete copies of:
(i) the audited consolidated and consolidating balance sheet
of the Borrowers, as of December 31, 1998, and the related statements of
operations, stockholders, equity (deficit) and cash flows of the Borrowers for
the period covered thereby, including the footnotes thereto (all of foregoing
being hereinafter collectively called the "Annual Financial Statements"); and
(ii) the interim unaudited consolidated and consolidating
balance sheet of the Borrowers (the "Interim Balance Sheet") as of August 31,
1999 (the "Interim Balance Sheet Date"), and the interim statements of
operations of the Borrowers for the eight (8) month period then ended (all of
the foregoing, including the Interim Balance Sheet, being hereinafter
collectively referred to as the "Interim Financial Statements" and together with
the Annual Financial Statements collectively, the "Financial Statements").
(b) The Financial Statements taken as a whole (A) fairly present
in all material respects (subject, in the case of the Interim Financial
Statements, to normal, recurring year-end adjustments which are not material
individually or in the aggregate) the financial position of the Borrowers as of
the dates indicated and the results of operations of the Borrowers for the
periods indicated, (B)(x) have been prepared in accordance with Generally
Accepted Accounting Principles ("GAAP") consistently applied throughout the
periods covered thereby (subject, in the case of the Interim Financial
Statements, to normal, recurring year-end adjustments which are not material
individually or in the aggregate) or (y) to the extent not prepared in
accordance with GAAP, then footnotes to the Financial Statements will be
provided describing in reasonable detail the differences, if any, between the
accounting principles pursuant to which such Financial Statements were in fact
prepared and GAAP and (C) are in accordance with the books and records of the
Borrowers which have been maintained in a manner consistent with
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historical practice. All reserves established and set forth in the
Interim Balance Sheet are reasonable and adequate.
(j) Absence of Undisclosed Liabilities. The Borrowers have no
liabilities or obligations of any nature, whether matured or unmatured, known or
unknown, or fixed or contingent, except (a) to the extent expressly reflected or
reserved against on the Interim Balance Sheet or expressly disclosed in the
notes thereto; and (b) liabilities and obligations arising since the Interim
Balance Sheet Date in the ordinary course of business consistent with past
practice (other than any such liability or obligation arising from breach of
contract, breach of warranty, tort, infringement, or violation of any legal
requirement).
(k) Absence of Certain Developments. Except as reflected in the
Financial Statements or in Schedule 7(k), since the Interim Balance Sheet Date,
there has been (i) no material adverse change in the condition (financial or
otherwise) of the Borrowers or in the assets, liabilities, or properties of the
Borrowers; (ii) no declaration, setting aside or payment of any dividend or
other distribution with respect to, or any direct or indirect redemption or
acquisition of, any of the capital stock of Parent; (iii) no waiver of any
valuable right of the Borrowers or cancellation of any debt or claim held by the
Borrowers; (iv) no loan by any Borrower to any officer, director, employee or
shareholder of a Borrower, or any agreement or commitment therefor; (v) no
increase, direct or indirect, in the compensation paid or payable to any
officer, director, employee or agent of any Borrower; (vi) no material loss,
destruction or damage to any property of a Borrower, whether or not insured;
(vii) no labor disputes involving a Borrower and no material change in the
personnel of a Borrower or the terms and conditions of their employment; and
(viii) no acquisition or disposition of any assets (or any contract or
arrangement therefor), nor any other transaction by a Borrower otherwise than
for fair value in the ordinary course of business.
(1) Title to Assets. Each Borrower has good and marketable title to all
of the assets reflected as being owned by such Borrower on the Interim Balance
Sheet or acquired subsequent thereto (except for inventory sold or otherwise
disposed of in the ordinary course of business for fair value and accounts and
notes receivable paid in full since the date of the Interim Balance Sheet), free
and clear of all encumbrances, except for those encumbrances set forth on
Schedule 7(l) and Permitted Liens. Such assets are in good operating condition
and repair (normal wear and tear excepted), are adequate and suitable for the
uses for which they are used in such Borrower's business, are not subject to any
condition which interferes with the economic value or use thereof, and
constitute all assets necessary to permit each Borrower to carry on its business
after the consummation of the transactions contemplated by this Agreement as
generally conducted by such Borrower prior thereto. The term "Permitted Liens"
means (i) liens arising by operation of law in
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the ordinary course of business that, individually and in the aggregate, do not
in any material respect interfere with the use of any of the assets subject
thereto; (ii) minor imperfections of title which do not materially detract from
the value of the property affected or materially impair the operations of any
Borrower; (iii) liens for taxes not yet due and payable; and (iv) landlords
liens, if any, relating to leases.
(m) Real Property. Borrowers do not own directly or indirectly any real
property.
(n) Tax Matters. Each Borrower has filed all federal, state and local
income, excise or franchise tax returns, real estate and personal property tax
returns, sales and use tax returns and other tax returns required to be filed by
it and has paid all taxes owed by it, except taxes which have not yet accrued or
otherwise become due or for which adequate provision has been made in the
pertinent Financial Statements. The provision for taxes on the Interim Balance
Sheet is sufficient as of its date for the payment of all accrued and unpaid
federal, state, county and local taxes of any nature of each Borrower whether or
not assessed or disputed. All taxes and other assessments and levies which any
Borrower is required to withhold or collect have been withheld and collected and
have been paid over when due to the proper governmental authorities. With regard
to the income tax returns of the Borrowers, no Borrower has received notice of
any audit or of any proposed deficiencies from any taxing authority and no
controversy with respect to taxes of any type is pending or, to the knowledge of
any Borrower, threatened. There are in effect no waivers of applicable statutes
of limitations with respect to any taxes owed by any Borrower for any year.
(o) Contracts and Commitments. Except as set forth in Schedule 7(o),
no Borrower (i) is a party to any contract, obligation or commitment which
involves a potential commitment in excess of $100,000 or which is otherwise
material and not entered into in the ordinary course of business; and (ii) has
any employment contracts; stock redemption or purchase agreements; financing
agreements; licenses; distributor or sales representative agreements;
agreements with officers, directors, employees or shareholders of such Borrower
(other than between Parent and a Subsidiary) or persons or organizations related
to or affiliated with any such persons; leases; agreements relating to product
development; or pension, profit-sharing, retirement or stock option plans. Each
agreement or understanding set forth on Schedule 7(o) is in full force and
effect and constitutes a valid and binding obligation of the Borrower and to the
best knowledge of such Borrower, the other party thereto. Each Borrower has in
all material respects performed the obligations required to be performed by it
except for obligations not yet due to be performed and each Borrower is and has
not been in default or received notices that it is in default in any material
respect under any such agreement or understanding. There exists no known
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event or condition which, after notice or lapse of time, or both, would
constitute such a default. There are no material defaults by any other party to
any such agreement or understanding as to which any notice of default has been
given. Each Borrower has made available to the Lenders correct and complete
copies of all documents set forth on such Schedule.
(p) Proprietary Rights; Employee Restriction. Borrowers have disclosed
on Schedule 7(p), all copyright registrations, trademark registrations and
applications for registration, patents and patent applications, trademarks,
trade secrets or other proprietary rights (collectively, "Intellectual Property
Rights") used or, to the best of Borrowers' knowledge, to be used in Borrowers'
business as presently conducted or contemplated and all licenses, assignments
and leases relating to Intellectual Property Rights of others embodied in
products of the Borrowers. Borrowers have exclusive ownership of or license to
use, all Intellectual Property Rights identified in Schedule 7(p) and, to the
best knowledge of Borrowers have obtained any licenses, releases or assignments
to use all third parties' Intellectual Property Rights embodied in products of
the Borrowers. To the best knowledge of the Borrowers, neither the present nor
contemplated business activities or products of the Borrowers infringe any
Intellectual Property Rights of others. No Borrower has received any notice or
other claim from any person asserting that any of such Borrower's present or
contemplated activities infringe or may infringe any Intellectual Property
Rights of such person. Each Borrower has the right to use, free and clear of
claims or rights of others, all trade secrets, customer lists, manufacturing
processes, hardware designs, programming processes, software and other
information required for or incident to its products or its business as
presently conducted or contemplated. Each Borrower has taken all commercially
reasonable steps to establish and preserve its ownership of all copyright, trade
secret and other proprietary rights with respect to its products and technology,
except such rights as such Borrower has reasonably determined are not material
to such Borrower's continuing business operations. No Borrower is aware of any
infringement by others of its copyrights or other Intellectual Property Rights
to which it has exclusive use in any of its products, technology or services, or
any violation of the confidentiality of any of its proprietary information. No
Borrower is making unlawful use of any confidential information or trade secrets
of any past or present employees of such Borrower. Except as set forth in
Schedule 7(p), neither any Borrower nor, to each Borrower's knowledge, any of
the key employees of such Borrower have any agreements or arrangements with
former employers of such employees relating to confidential information or trade
secrets of such employers. The activities of each Borrower's employees on behalf
of such Borrower do not violate any agreements or arrangements known to such
Borrower which any such employees have with former employers.
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(q) Effect of Transactions. The execution, delivery and performance by
Borrowers of this Agreement and the documents executed and delivered in
connection therewith will not conflict with or result in any default under any
material contract obligation or commitment of any Borrower, or any charter
provision, bylaw or corporate restriction of any Borrower, or the creation of
any lien, charge or encumbrance of any nature upon any of the properties or
assets of any Borrower, except pursuant to this Agreement. Each Borrower's
execution and delivery of this Agreement and the documents executed and
delivered in connection therewith and its performance of the transactions
contemplated thereby will not violate any instrument, agreement, judgment,
decree, order, statute, rule or regulation of any federal, state or local
government or agency applicable to such Borrower.
(r) Insurance. Each Borrower maintains valid and effective insurance
policies, issued by financially sound and reputable insurers, to insure it
against all risks usually insured against by persons or entities conducting
businesses similar to that of such Borrower in the locality in which such
businesses are conducted. Each Borrower has paid all due premiums with respect
to all policies of insurance currently maintained by such Borrower.
(s) Securities Act Registration. Assuming that the representations and
warranties of the Lenders contained herein are true, the offer, sale and
delivery of the Notes and Warrants in the manner contemplated by this Agreement
are each exempt from registration under the Securities Act and are exempt or
will be exempt under applicable state securities or Blue Sky laws regulating the
issuance or sale of securities upon the timely filing of notices with the
appropriate states.
(t) Business; Compliance with Laws. Each Borrower (i) is in compliance
with, in all respects all legal requirements applicable to it and its business
and (ii) has all material federal, state, local and foreign governmental
licenses and permits (collectively, "Permits") used or necessary in the conduct
of its business. Such Permits are in full force and effect, no violations with
respect to any thereof are recorded, no legal proceeding is pending or, to the
best knowledge of each Borrower, threatened to revoke or limit any thereof.
(u) Books and Records. The minute books of each Borrower contain
complete and accurate records of all meetings and other corporate actions of its
shareholders and its board of directors (the board of directors of Parent being
herein referred to as the "Board of Directors") and committees thereof. The
stock ledger of Parent is complete and reflects all issuances, transfers,
repurchases and cancellations of shares of capital stock of Parent.
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(v) Employee Benefit Plans. Each employee benefit plan, program,
arrangement, practice or contract, whether formal or informal, maintained or
contributed to by any Borrower providing current or retirement benefits or
compensation to or on behalf of employees or former employees of such Borrower
(the "Benefits Plans"), are in compliance in all material respects with the
presently applicable laws.
(w) Small Business Matters. Parent (including the Subsidiaries) is a
"small business concern" within the meaning of the Small Business Investment Act
of 1958 and the regulations thereunder (the "SBIC Act"), including Title 13,
Code of Federal Regulations, ss.121.301. The information set forth in the Small
Business Administration Forms 480, 652 and Sections A and B of Form 1031, which
have been delivered on or prior to the date hereof to the Lenders regarding the
Borrowers is accurate and complete. Parent does not presently engage in, and it
shall not hereafter engage in, any activities, nor shall Parent use directly or
indirectly the proceeds from the sale of the Notes and Warrants for any purpose
for which a Small Business Investment Corporation is prohibited from providing
funds by the SBIC Act, including Title 13, Code of Federal Regulations,
ss.107.720. Parent acknowledges that it has been declared by each of WPLP,
Pacific and Chase that each such entity is a federal licensee under the SBIC
Act.
(x) Information Supplied to the Lenders.
(i) Neither this Agreement, or the Schedules and Exhibits
attached hereto, nor any written document (including the Business Plan attached
hereto as Schedule 7(x)), certificate, projection or statement furnished to the
Lenders by or on behalf of the Borrowers pursuant to this Agreement contains any
untrue statement of a material fact, and none of this Agreement, the Schedules
and Exhibits attached hereto or such other written documents, projections,
certificates and statements omits to state a material fact necessary in order to
make the statements contained herein or therein not misleading. There is no
material fact relating to the business, prospects, operations, affairs or
conditions of the Borrowers which adversely affects or in the future may, in the
reasonable business judgment of the Borrowers, adversely affect the same which
has not been set forth in this Agreement or in the Schedules or Exhibits
attached hereto or other materials delivered pursuant to this Agreement.
(ii) The projections contained in the Business Plan are based
upon assumptions believed by Borrowers to be reasonable as of the date hereof,
however Borrowers give no assurance that the actual operations of Borrowers will
conform to such projections.
(iii) Any disclosure contained in any of the Schedules delivered
hereunder, which on its face is clearly and
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unequivocally applicable to another Schedule to this Agreement, shall be deemed
made with respect to such other Schedule.
(y) Employees. No Borrower has a collective bargaining agreement with
any of its employees. There is no labor union organizing activity pending nor,
to the best knowledge of any Borrower, threatened with respect to such Borrower.
No Borrower is aware that any officer or key employee intends to terminate his
or her relationship with such Borrower, nor does any Borrower have any present
intention of terminating the employment of any officer or key employee.
(z) Business operations. Borrowers represent and warrant that Borrowers
design, develop, manufacture, and market integrated, high-throughput biochip and
proteomic systems and services for analyzing and quantifying biomolecules, such
as DNA, RNA, and proteins. Except as set forth on Schedule 7(z) hereto,
Borrowers have not, during the five years preceding the date of this Agreement,
been known as or used any other corporate, trade or fictitious name, nor
acquired all or substantially all of the assets, capital stock or operating
units of any person, nor had a business location at any address other than the
addresses set forth in the heading of this Agreement.
(aa) Collectibility of Accounts Receivable. The accounts receivable of
Borrowers which are shown on the August 31, 1999 balance sheet or thereafter
acquired by Borrowers are good and collectible at the aggregate recorded amounts
thereof (subject to no defense, counterclaim or set-off) except to the extent of
the reserves provided for such receivables on such balance sheet and all such
accounts receivable arose in the normal course of the business of Borrowers.
(bb) Inventory. All inventories reflected in the Interim Financial
Statements or acquired thereafter (the "Inventories") of each Borrower are
usable in the ordinary course of its business, have been recorded in amounts not
in excess of the cost for such items and consist solely of inventories of the
kind and quality regularly used in the Borrower's business. On the closing date,
such Inventories shall be in amounts reasonably related to the normal
requirements of the Borrower's business and will be usable and the finished
goods Inventories will be readily saleable all in the ordinary course of the
Borrower's business.
8. AFFIRMATIVE COVENANTS. As of the date of this Agreement and continuing
until Borrowers' obligations under this Agreement, the Notes, the Warrants, and
all Loan Documents are fully performed, including that the Notes are fully paid
to Lender, Borrowers shall at all times:
(a) Financial Statements. Furnish to the Lender the following
consolidated and consolidating balance sheets and statements of income and
retained earnings of the Borrowers prepared on the accrual basis according to
generally accepted
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accounting principles consistently applied: (1) monthly financial statements
containing at a minimum a balance sheet and income statement together with
analyses of variances from the annual operating Budget and Business Plan, and
such further detail as shall be reasonably requested by Lender from time to
time, no later than thirty (30) days after the end of each month, certified as
true and correct by an officer of Parent; (2) copies of monthly aging of
accounts receivable and/or accounts payable in the form and at the time
furnished to the Senior Lender; (3) audited annual financial statements
containing balance sheet, statement of earnings, statement of cash flows and
notes to financial statements within ninety (90) days of the end of Parent's
fiscal year prepared by a big five accounting firm or its successor or an
accounting firm which is satisfactory to the Lender accompanied by (i) an
unqualified opinion of such firm, and (ii) a certificate from such accounting
firm, addressed to the Parent's Board of Directors, stating that in the course
of its examination, nothing came to its attention that caused it to believe that
there was any default by any Borrower in the fulfillment of or compliance with
any of the terms, covenants, provisions or conditions of this Agreement or any
other material agreement to which any Borrower is a party; (4) such additional
information, reports, budgets or statements as the Lender may from time to time
reasonably request in connection with this Agreement; and (5) permit, upon
reasonable notice, a representative of the Lender to inspect the books, records,
budgets, and documents received by the Board of Directors or properties of the
Borrowers at reasonable times and to make copies and abstracts of such books and
records and any documents relating to such properties, and to discuss the
Borrowers' affairs, finances, and accounts with its officers. Borrowers shall
also provide to Lenders within five (5) days of request all such information
required by Lenders to report to the Small Business Administration the economic
impact of Lender's loan to Borrowers. Without Lender's prior written consent,
Borrowers shall not modify or change any accounting policies or procedures in
effect on the date hereof.
(b) Payment Of Taxes. Promptly pay all taxes, levies and assessments,
and governmental charges upon it, its income, and its properties, due to all
local, state and federal agencies. Except to the extent that a Borrower has
established a cash reserve and is actively pursuing a tax dispute or appeal, any
failure by a Borrower to promptly pay any taxes, levies and assessments due,
shall be an event of default.
(c) Insurance. Maintain adequate fire and extended risk coverage,
business interruption, workers disability compensation, public liability,
environmental, flood, and such other insurance coverages as may be required by
law or as is customary and adequate among businesses in Borrowers' industry
engaged in the same or similar activities. All insurance policies shall be in
such amounts, upon such terms, in form, and carried with insurers with a "best
rating" of B or better or such
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insurers as are acceptable to Lender. Each Borrower shall provide evidence
satisfactory to Lender of all insurance coverages and that the policies are in
full force and effect, and for all insurance coverages upon any property which
is collateral, the insurance policy shall be endorsed to provide Lender with a
standard loss payable clause with not less than thirty (30) days advance written
notice to Lender by the insurer of any cancellation or modification of coverage.
Any failure by a Borrower to maintain insurance as provided in this Agreement
shall be an event of default and Lender may obtain insurance, without obligation
to do so, and all amounts so expended by Lender shall be added to the
indebtedness or shall be payable on demand, at Lender's option.
(d) Notice of Adverse Events. Promptly notify the Lender of any
actions, suits, proceedings or claims before any court, governmental department,
commission, board, bureau, agency or instrumentality, commenced or threatened
against the Borrowers involving Twenty-Five Thousand Dollars ($25,000.00) or
more or which could otherwise affect the conduct of its business.
(e) Maintenance. Maintain, preserve, and keep its properties and
equipment, whether leased or owned, in good repair and working order and
condition, ordinary wear and tear excepted, and will from time to time make all
needed and proper repairs, renewals, replacements, additions and betterments
thereto so that at all times the efficiency thereof shall be fully preserved and
maintained, and comply with all the federal, state and local laws and
regulations including environmental law.
(f) Board of Directors. Parent shall forward to the Lender copies of
all documents given by Parent to its board of directors and shall allow a
representative of the Lenders, designated by White Pines Management, L.L.C., to
observe the board meetings and provide the Lender with at least seven (7) days
notice (one (1) day for special meetings) prior to each and every board meeting.
Parent's board of directors must approve the Borrowers' annual operating budget
and five year Business Plan and Borrowers shall provide the Lender with a copy
of said annual operating budget and five year Business Plan as soon as available
and in no event less than five (5) days prior to the beginning of each fiscal
year.
(g) Environmental Compliance/Notices/Indemnity. Strictly comply with
all environmental laws applicable to Borrowers' business. Borrowers agree to
notify Lender not later than ten (10) days after Borrowers' receipt, of any
summons, notice, lawsuit, citation, letter, or other advice received by a
Borrower from any Federal, State, or local agency or unit of government or other
person, which asserts that a Borrower is in violation of any environmental laws.
Borrowers agree to indemnify and hold Lender harmless from all violations by
Borrowers of any environmental laws, which indemnity shall include all costs and
expenses incurred by Lender, including actual legal fees, which
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are related to any violation by Borrowers of any environmental laws, whether or
not the Loan has been paid at the time any such proceeding, claim, or action is
instituted against Lender.
(h) Maintain Corporate Existence and Due Qualification. Parent shall
preserve and maintain its corporate existence and good standing in the State of
Delaware and qualify and remain qualified as a foreign corporation in each
jurisdiction in which such qualification is required. Each Subsidiary shall
preserve and maintain its corporate existence and good standing under the laws
of the jurisdiction of its incorporation.
(i) Compliance With All Laws. Comply with all laws, rules and
regulations in effect or hereinafter promulgated by any foreign, federal, state
or local government, including without limitation all laws pertaining to
Borrowers' employees, the violation of which could have a material adverse
effect on the business of such Borrower.
(j) Information From Senior Lender. Provide the Lender (i) within three
(3) days of receipt thereof, copies of any or all notices or information
received from the Borrowers' Senior Lender exercising, terminating or
accelerating any rights or obligations of Senior Lender or any Borrower
contained in any agreements between such parties or expressing the intention or
consideration of the Senior Lender to take any such action, and (ii) with the
financial statements furnished pursuant to Section 8(a)(1), a summary of any
written or oral requests made to the Senior Lender for any waivers, and the
response thereto received from the Senior Lender.
(k) Reports.
(i) Provide Lender promptly after the sending or filing thereof,
copies of all reports, proxy statements and financial statements, if any, which
Parent sends to or files with any of its security holders or any securities
exchange or the Securities and Exchange Commission or any successor agency
thereof.
(ii) Provide Lender promptly in any event within ten (10) days
after receipt, a copy of any management letter or comparable analysis in the
event such letter or analysis is prepared by the auditors for the Borrowers.
(1) Compliance Certificate. Provide the Lender with appropriate
certification on an annual basis that the Borrowers are in compliance with all
the terms and conditions of this Agreement and that an Event of Default pursuant
to Section 10 hereof has not occurred.
(m) Use of Proceeds. The Borrowers shall use the proceeds of the Loan
for working capital and expenses of the transactions contemplated by this
Agreement, provided that none
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of the proceeds of the Loan will be used to repay any existing indebtedness of
Borrowers. Borrowers shall give Lenders access to their records to confirm that
Borrowers have used the proceeds of the Loan solely for the foregoing purposes.
Without limiting the generality of the foregoing, Borrowers shall permit Lenders
to conduct a post-closing review within 90 days after the date hereof to assure
that the proceeds of the Loan were used for the intended purposes.
(n) Compliance With ERISA. Comply in all material respects with the
Employee Retirement Income Security Act of 1974, as amended and the Internal
Revenue Code of 1986, as amended with respect to each of its federally insured
pension plans.
(o) Patent Applications. Promptly file with appropriate governmental
authorities all applications for patents and patent rights as each Borrower in
its reasonable discretion, deems necessary or appropriate for the operation of
such Borrower's business as now conducted and proposed to be conducted.
(p) Disclosure. No representation or warranty by Borrowers in any
statement, schedule, or certificate to be furnished to the Lender pursuant to
this Agreement or the other Loan Documents, or in connection with the
transactions contemplated hereby or thereby, will contain any untrue statement
of a material fact or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
(q) Reinstatement of Security Interests. Any secured indebtedness of
any Borrower other than to the Senior Lender shall require the holder of such
indebtedness to subordinate such indebtedness and the rights under any mortgage,
pledge, security interest or other collateral rights securing repayment of such
indebtedness, to the obligations of Parent to Lenders under the terms of the
Warrants immediately upon notice to Parent of the exercise of the Lender's
rights under subsection (K) of the Warrants, including without limitation, such
indebtedness as may be evidenced by Promissory Notes issued in accordance with
the provisions of subsection (L) of the Warrants. If the Security Agreement
and/or the Pledge Agreement have terminated in accordance with their respective
terms prior to notice to Borrower of the exercise of Lender's rights under
subsection (K) of the Warrants, the effectiveness of such Security Agreement and
Pledge Agreement shall automatically continue or be reinstated with respect to
all amounts payable in accordance with the terms of the Warrants immediately
upon notice to Borrower of the exercise of Lender's rights under subsection (K)
of the Warrants. In the event of continuation or reinstatement of such Security
Agreement and Pledge Agreement, Borrowers agree, within three days after demand
by Lenders (i) to execute and deliver to Lenders those documents which Lenders
determine are appropriate to further evidence (in the public records or
otherwise) such
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continuation or reinstatement (although the failure of Borrowers to do so shall
not affect in any way the reinstatement or continuation), and (ii) to cause any
secured creditor to execute and deliver to Lenders a subordination agreement
reasonably acceptable to Lenders as required by this Section 8(q) . The
provisions of this Section 8(q) do not modify in any respect whatsoever the
rights of Lenders contained in Section 9(b) of this Agreement.
9. NEGATIVE COVENANTS. Until the payment in full of the Notes, the
Borrowers shall not, except with the prior written consent of the Lender:
(a) Financial Covenants.
(i) allow consolidated Tangible Net Worth to be less than
negative $5,750,000 during 1999, to be less than negative $7,500,000 at any time
during 2000 or at any time thereafter, to be less than negative $6,500,000 as of
December 31, 2001 or at any time thereafter, to be less than negative
$2,750,000 as of December 31, 2002 or at any time thereafter, or to be less than
$1,250,000 as of December 31, 2003 or at any time thereafter, provided that each
of the foregoing amounts shall be decreased by the amount of interest paid in
cash (net of any tax savings) on additional funds, if any, loaned to the
Borrowers by Lenders pursuant to Section 1(c) of this Agreement. "Tangible Net
Worth" shall mean Net Worth less intangible assets. Intangible assets include
goodwill, patents, copyrights, development expenses, computer software, mailing
lists, trademarks, bond discount and underwriting expenses, organization
expenses, and all other intangibles.
(ii) allow consolidated Long-Term Debt to be greater than
$15,500,000 at any time during 1999, to be greater than $16,500,000 at any time
during 2000, to be greater than $17,500,000 at any time during 2001, to be
greater than $21,500,000 at any time during 2002 or 2003, or to be greater than
$18,500,000 as of December 31, 2003 or at any time thereafter, provided that
each of the foregoing amounts shall be increased by the amount, if any, of
additional funds loaned to Borrowers by Lenders pursuant to Section 1(c) of this
Agreement. "Long-Term Debt" shall mean the sum of (x) all bank debt, (y) all
liabilities classified as long-term in accordance with generally accepted
accounting principles, and (z) the current portion of any liabilities
encompassed by "(y)"
(b) Liens and Indebtedness. Pledge, mortgage or otherwise encumber, or
subject to or permit to exist upon or be subjected to any lien, security
interest or charge, any asset or any property of any kind or character at any
time owned by the Borrowers, except: (1) liens for taxes not yet due which are
being contested; (2) purchase money security interests incidental to the conduct
of its business, and (3) liens and encumbrances granted to Borrowers' Senior
Lender.
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(c) Dividends, Distributions; Capital Structure. Parent shall not
purchase or retire any of its shares without Lender's prior written consent.
Parent shall not declare any dividends on, or make any other distributions with
respect to, any shares of its capital stock or apply any of its property or
assets to the purchase, redemption, or other retirement of any shares of any
class of its capital stock, or set apart any sum for any such payments.
(d) Stock. Except for (i) the shares issuable upon conversion of
outstanding shares of preferred stock of Parent, and (ii) the shares presently
subject to existing employee and director stock option plans, issue or sell any
additional shares of capital stock, whether common or preferred, either directly
or indirectly to any affiliate, shareholder, director, officer, employee or any
close relative thereof. "Close relative" means parent, child, sibling, spouse,
father-in-law, mother-in-law, son in-law, brother-in-law, daughter-in-law, or
sister-in-law.
(e) Leases. Enter into any arrangement providing for the leasing by a
Borrower of any real or personal property previously owned by such Borrower if
any portion of the lease obligation does not constitute "Long-Term Debt" for
purposes of Section 9(a)(ii) hereof.
(f) Environmental. Allow the real property owned or leased by a
Borrower to be used to store, use, or otherwise handle any hazardous or toxic
substance or other contaminants, except in the ordinary course of Borrower's
business, nor shall any Borrower allow any oil or gas tanks to be placed on any
of its real property, whether owned or leased, or any other similar activities
which might result in the raising of environmental issues regarding the
property, nor shall any Borrower handle, arrange for transport, deliver for
disposal or dispose of (directly or indirectly) any hazardous waste or hazardous
substances so as to contaminate any property or give rise to any remediation,
clean-up or damage obligation under any statute, rule, regulation, ordinance or
other common law.
(g) Transactions With Insiders Or Related Companies. Other than
transactions between or among Parent and Subsidiaries, no Borrower shall,
directly or indirectly:
(i) enter into any transaction, agreement or arrangement with any
shareholder, director, employee, officer or affiliate of a Borrower, or any
close relative of any shareholder, director, officer or affiliate of a Borrower,
on terms and conditions any less favorable to such Borrower than those which
could have been obtained from a party which was not such a shareholder,
director, officer or affiliate or close relative; or
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(ii) make any advance or loan which exceeds Ten Thousand and
00/100 ($10,000) Dollars or which extends for a period longer than one (1) year,
to any affiliate, or any shareholder, director, officer or employee thereof, or
to any close relative of the foregoing, or to any trust of which any of the
foregoing is a beneficiary, or guaranty any indebtedness for any of the
foregoing, provided that the foregoing shall not preclude the execution and
delivery by employees of their promissory notes for the purchase price of shares
of common stock upon exercise of options under the stock option plans of Parent.
(h) Nature Of Business. Engage in any business other than those which
Borrowers currently conduct or as contemplated by the Business Plan.
(i) Change In Management. Cause or permit Xxxxxxx X. Xxxxxxxx to cease
serving as President and Chief Executive Officer of Parent.
10. EVENTS OF DEFAULT. The occurrence of any of the following events
which shall not be cured by Borrowers within fifteen (15) days after notice to
Borrowers from Lender of such event shall constitute an "Event of Default" under
this Agreement; provided that no such notice shall be required with respect to
subparagraph "(a)" below, Failure To Pay Amounts Due.
(a) Failure To Pay Amounts Due. Any fees or any principal or interest
on any indebtedness to Lender is not paid within two business days of when due;
(b) Misrepresentation; False Financial Information. Any warranty or
representation of Borrowers in connection with or contained in this Agreement,
the Loan Documents, any certificate, document or financial or other statement
now or hereafter furnished to the Lender by or on behalf of the Borrowers, is
false or misleading in any material respect.
(c) Noncompliance With Lender Agreements. Borrowers shall fail to
perform in any material respect any of their obligations, covenants, and
agreements under this Agreement, or any other agreement with Lender, including
but not limited to the Loan Documents attached hereto as Exhibits.
(d) Other Creditor Events. Any non-Lender indebtedness of Borrower is
declared to be due and payable prior to the stated maturity thereof or the
Senior Lender shall give a default notice or effect a standstill period under
the terms of any subordination agreement.
(e) Judgments; Attachments; Tax Liens. There shall be entered against
a Borrower or any guarantor, any judgment which materially affects such
Borrower's or any guarantor's business, property or financial condition, or if
any tax lien, levy, attachment, forfeiture, seizure, garnishment, execution or
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similar writ or process shall be issued against the Collateral or which
materially affects such Borrower's business, property or financial condition,
and which remains unpaid, unstayed on appeal, undischarged, unbonded, or
undismissed for a period of thirty (30) days after the date thereof.
(f) Indictment. The institution of any criminal proceeding wherein
forfeiture of a material amount of the Borrower's property is a potential
penalty.
(g) Business Suspension, Bankruptcy. Any Borrower or any other obligor
shall voluntarily suspend transaction of its business; shall generally not pay
debts as they mature; shall make a general assignment for the benefit of
creditors; shall file or have filed against such Borrower any reorganization or
liquidation under the Bankruptcy Code or under any other State or Federal law
for the relief of debtors, or a receiver, trustee or custodian shall be
appointed for a Borrower or any other obligor or guarantor for any portion of
such Borrower's or other obligor's or guarantor's property, which is not
discharged within thirty (30) days after filing.
(h) Material Adverse Change. Any material adverse change in
Borrowers' business, property or financial condition has occurred or is
imminent, or if the Collateral value or Lender's rights therein are materially
impaired in any way.
(i) Hazardous Material. Any Borrower handles, uses, stores, delivers
for disposal, disposes of, transports or arranges for the transportation of any
waste, whether hazardous or not, in any manner which is not in compliance with
applicable laws, rules, regulations, ordinances or the common law, or which
contaminates any property or gives rise to any remediation or clean-up
obligation under any law, rule, regulation, ordinance or the common law; or a
Borrower contaminates any real property owned by it or any other property, or
its real property is used to handle, treat or store, or become contaminated
(including without limitation contamination of soil, ground water and service
water located on, in or under the real property) with, pollutants or any other
substances which handling, treatment, storage or contamination may give rise to
remediation or clean up obligation with respect to its real property or the
property of others under any law, rule, regulation, ordinance or the common law;
or its real property or any property to which a Borrower delivers for disposal,
disposes of, transports or arranges for transport (directly or indirectly) any
waste is listed on the National Priority List or any state listing which
identifies sites for remedial cleanup or investigatory action.
(j) Use Of Proceeds. Any diversion by Borrowers of the proceeds of
Lenders' Loan from the uses specified in Section 8(m) without Lenders' prior
written consent.
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11. REMEDIES ON DEFAULT.
(a) Acceleration. Upon the occurrence of any Event of Default, the
Loan (with accrued interest thereon), and all other amounts owing to the Lender
under this Agreement and the Note, and all other indebtedness to Lender may, at
the option of Lender, and without demand or notice of any kind, be declared to
be immediately due and payable.
(b) Remedies Cumulative. The remedies provided for in this Agreement
are cumulative and not exclusive, and Lender may exercise any remedies available
to it at law or in equity, and as are provided in this Agreement, the Loan
Documents, and any other agreement between any Borrower and Lender.
(c) No Waiver. No delay or failure of Lender in exercising any right,
remedy, power or privilege hereunder shall affect that right, remedy, power or
privilege, nor shall any single or partial exercise thereof preclude the
exercise of any other right, remedy, power or privilege. No delay or failure of
Lender to demand strict adherence to the terms of this Agreement shall be deemed
to constitute a course of conduct inconsistent with the Lender's right to at any
time, before or after any Event of Default, demand strict adherence to the terms
of this Agreement and the related documents.
12. OTHER CONSIDERATION TO LENDERS.
(a) Closing Fee. Upon closing the portion of the Loan provided for in
Section 1(a) hereof, Borrower shall pay to Lenders a closing fee in the amount
of $61,250. Upon closing any portion of the Loan provided for in Section 1(c)
hereof, Borrower shall pay to Lenders a closing fee equal to one and three
quarters (1-3/4%) percent of such additional amount of the Loan.
(b) Expenses. Borrowers agree to pay on demand all out-of-pocket
expenses of the Lenders incurred in connection with making the Loan, including
the actual reasonable fees and expenses of its counsel, expenses incurred in due
diligence activities, lien searches and credit reviews, in connection with the
preparation of this Agreement and the supporting documentation, provided that
the amount of such expenses which Borrowers shall be required to reimburse shall
not exceed (i) $2,500 of expenses of Lenders, (ii) $15,000 of fees and expenses
payable to third parties by Lenders, and (iii) legal counsel fees incurred in
connection with (x) any change in the terms and provisions of the transaction as
compared to those set forth in the letter of intent dated September 23, 1999
(including any such changes or additions required by any of the "Other
Investors" referred to in the letter of intent), and (y) any changes to or
additional provisions in the April 1999 Loan Documents other than those required
as a direct consequence of the transaction contemplated by and under the terms
specified in such letter of intent.
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(c) Repurchase of Securities Upon Declination of Sale of Borrower. If
at any time following April 23, 2004, Borrowers or any of the shareholders,
officers, directors, employees, or agents of Parent receive a bona-fide offer
from any third party for (i) the purchase of all or substantially all of the
assets and properties of Parent, (ii) the purchase of 50% or more of the
outstanding common stock of Parent, or (iii) the merger or consolidation of
Parent with another person or persons (collectively, the "Offer"), Borrowers
shall give Lenders prompt written notice of the Offer and its terms and the
identity of the person making such Offer. Borrowers shall also advise the
Lenders whether Parent, or shareholders owning a majority of the outstanding
common stock of Parent, as the case may be, intend to accept such Offer. Within
30 days after receipt of such notice, each Lender may notify Parent that it is
requesting that Parent, or shareholders owning a majority of the outstanding
common stock of Parent, as the case may be, accept, or cause Parent to accept,
such Offer. If Parent, or shareholders owning a majority of the outstanding
common stock of Parent, as the case may be, does not accept the Offer and close
the transaction contemplated thereby, each Lender may, within 180 days after
such Offer shall have terminated or been revoked, or the transaction
contemplated thereby terminated or abandoned, give Parent written notice of
demand by such Lenders that Borrowers promptly purchase all of the Warrants or
shares of common stock issued upon exercise of the Warrants, and any other
securities of Parent acquired by Lenders pursuant to this Agreement, held by
such Lender, and Borrowers shall purchase such securities within 30 days after
the date of such demand. The consideration that the Borrowers shall pay to the
Lender for the repurchased securities shall be each Lender's prorata part of the
total consideration presented as part of the Offer, provided, however, that if
the Offer included consideration other than cash or promissory notes payable in
cash, Borrowers shall pay each Lender in cash the fair market value of each
Lender's prorata part of such non-cash consideration, with such fair market
value to be determined by an appraiser selected by Parent and acceptable, in
their sole discretion, to a majority of the Lenders who made such demand.
Borrowers shall pay the costs and fees of the appraiser.
(d) Exchange of Securities. If at any time, or from time to time,
hereafter and prior to November 1, 2000, Parent shall issue any equity
securities having an aggregate purchase price in excess of $5,000,000 (exclusive
of any securities issued to Lenders pursuant to Section 1(c) hereof) , then
each Lender which shall not have exercised its Warrants in whole or in part, at
such Lender's sole option and discretion, shall have the right to require Parent
to issue to such Lender the type and amount of securities which would have been
issued to such Lender had the Loan of such Lender instead been a part of the
transaction, or the transaction of such Lender's choice if there was more than
one transaction, pursuant to which Parent issued such equity securities.
Concurrently with delivery to such Lender of such
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securities, the Lender shall deliver to Parent its Note marked as "paid" and its
Warrants marked as "cancelled". Any Lender may exercise its rights under this
Section 12(d) by notice to Parent given on or prior to the latest of (i) the
closing date of the transaction as a result of which the aggregate purchase
price of equity securities issued by Parent subsequent to the date hereof
(exclusive of any securities issued to Lenders pursuant to Section 1(c) hereof)
shall first exceed $5,000,000, (ii) twenty (20) days after Parent shall have
delivered to Lenders the letter of intent, if any, relating to the proposed
transaction and a draft of the proposed definitive agreement, and (iii) five (5)
days after Parent shall have delivered to Lender (x) the final form of
definitive agreement (including all schedules and exhibits thereto) to be
executed to implement such transaction, and (y) the most recent available
financial statements of Parent.
13. REPRESENTATIONS AND WARRANTIES OF LENDER. Each Lender represents and
warrants to Parent, only as to itself, as follows:
(a) Investment. The Lender is acquiring the Note and Warrants for its
own account, for investment purposes, without a view to or for resale in
connection with, any distribution thereof.
(b) Transfers. The Lender understands that since the Note, Warrants
and shares of common stock purchaseable upon exercise of the Warrants have not
been registered under the Securities Act of 1933 (the "Securities Act") or
applicable state securities laws, the Lender must bear the economic risk of an
investment in such securities for an indefinite period of time unless they are
subsequently registered under the Securities Act and applicable state securities
laws or an exemption from such registration is available. In that regard, the
Lender has been advised that:
(i) Parent's obligations to register such securities under the
Securities Act or any Blue Sky Laws are limited as set forth in the Registration
Rights Agreement dated April 23, 1999, as amended.
(ii) Parent is not subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended, and Rule 144 is not presently
available for public release of the securities. It acknowledges that the
securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
It has been advised or is aware of the provisions of Rule 144 promulgated under
the Securities Act, which permits limited resale of securities purchased in a
private placement subject to the satisfaction of certain conditions.
(c) Accredited Investor. Lender is an "Accredited Investor", as that
term is defined in Rule 501 of Regulation D promulgated under the Securities
Act.
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(d) Restrictive Legend. The Lender agrees that the documents
representing the securities will bear the following restrictive legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO EFFECTUATE
SUCH TRANSACTION.
(e) Sophistication. By reason of the Lender's or the Lender's offeree
representative's knowledge and experience in financial and business matters in
general, and investments of this type in particular, the Lender is capable of
evaluating the merits and risks of any investment in the Notes and Warrants.
(f) Legal Investment. Subject to the accuracy of the representations
and warranties of Borrowers set forth in this Agreement, each Lender's purchase
of the Note and Warrants hereunder will, at the time of the Closing, be legally
permitted by all laws and regulations to which such Lender is subject.
14. MISCELLANEOUS. The following miscellaneous provisions shall apply:
(a) Rights Cumulative; Waivers. This Agreement and all of the
covenants, warranties, and representations of the Borrowers and all of the
powers and rights of the Lender hereunder shall be in addition to and cumulative
of all other covenants, representations, and warranties of the Borrowers, and
all other rights and powers of the Lender contained in, or provided for in, any
other instrument or document now or hereafter executed and delivered by the
Borrowers to or in favor of the Lender. No waiver or consent shall be effective
as against the Lenders unless the same is in writing and signed by Lenders
owning not less than two-thirds of the Warrants (or shares of common stock of
Parent issued upon exercise of the Warrants) issued pursuant to this Agreement.
Any waiver or consent effected in accordance with this Section 14(a), including
any waiver of an Event of Default, shall be binding upon each Lender. No such
waiver or consent shall extend to or affect any obligation or right except to
the extent expressly provided for therein.
(b) Notices. Any and all notices provided for in this Agreement shall
be given in writing by registered or certified mail, return receipt requested
and shall be deemed to have been given when mailed, and shall be addressed as
follows:
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As to WPLP:
White Pines Limited Partnership I
0000 Xxxxxxxx Xxxx, Xxxxx X
Xxx Xxxxx, XX 00000
As to Pacific:
Pacific Capital, L.P.
0000 Xxxxxxxx Xxxx, Xxxxx X
Xxx Xxxxx, XX 00000
As to Bund, Xxxxx, Volunteer,
Kalish, Boyle, Xxxxxxx and
Xxxxxxxx
White Pines Management, L.L.C.
0000 Xxxxxxxx Xxxx, Xxxxx X
Xxx Xxxxx, XX 00000
and with a copy to:
Xx. Xxxxx X. Xxxxxxx
Xxxxxxx and Associates
000 Xxxxxxx Xxxx., Xxxxx 0X
Xxx Xxxxx, XX 00000
As to Borrowers:
Genomic Solutions, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx X
Xxx Xxxxx, XX 00000
As to Chase:
Chase Venture Capital
Associates, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
As to American:
American Healthcare Fund II
0000 Xxxxxxxx Xxxxxx, Xxx. 000
Xxxxxxx, XX 00000
As to Xxxxxxxxx-CA:
J. Xxxxxxx Xxxxxxxxx
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
As to Xxxxxxx:
Xxxxxx X. Xxxxxxx
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
As to Xxxxxxxxx-FL
Xxxx X. Xxxxxxxxx
0000 Xxxxxxxx Xxxx
Xxxxx Xxxxx Xxxxx, XX 00000
As to Grove:
Grove Investment Partners
000 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
As to Kent:
Xxxxxxxx X. Xxxx
000 X. Xxxxxxxxx Xxx.
Xxxxx, XX 00000
As to JWilliams:
Xxxxxxx X. Xxxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
33
39
As to Auton:
Xxxxx X. Xxxxx
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxxx
XX00 0XX
As to Jakimcius:
Xxxxxx X. Xxxxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
As to Xxxxx:
Xxxxxxx X. Xxxxx
0000 Xxxxxxx Xxxx
Xxx Xxxxx, XX 00000
As to Xxxxxxxxxx:
Xxxxxx X. Xxxxxxxxxx
00000 Xxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
(c) Reimbursement For Expenses. Borrowers agree to pay and reimburse
the Lender upon demand for all expenses and costs paid or incurred by the Lender
of any nature, whether incurred in or out of court, and whether incurred before
or after all sums due pursuant to this Agreement shall become due, at their
maturity date or otherwise, including but not limited to reasonable actual
attorneys fees and costs, which Lender may deem necessary or proper in
connection with the administration or satisfaction of the indebtedness,
including the amending of this Agreement or the Loan Documents or providing any
consent, or waiving any provision contained herein or therein, or the
supervision, preservation, protection of (including but not limited to, the
maintenance of adequate insurance) or the realization upon the Collateral, or
incurred in any bankruptcy, arrangement, or reorganization proceeding involving
any Borrower. Any and all indebtedness owing by the Lender to the Borrowers may
at any time without notice or demand be offset and applied to any indebtedness
or liability of the Borrowers to the Lender, whether or not then due.
(d) Binding Effect. This Agreement shall be binding upon the Borrowers
and their respective successors, and legal representatives, provided however,
that Borrowers cannot assign or transfer their rights or obligations under this
Agreement without Lender's prior written consent. This Agreement shall inure to
the benefit of the Lenders and to the benefit of their respective heirs, legal
representatives, successors and assigns including any subsequent holder or
holders of the Note, the Warrants or any interest therein.
(e) Generally Accepted Accounting Principles. All computations and
determinations of the income, assets and
34
40
liabilities of the Borrowers for the purpose of this Agreement shall be made in
accordance with United States generally accepted principles of accounting
consistently applied, except as may be otherwise specifically provided herein.
(f) No Partnership Or Joint Venture Established. Nothing contained in
this Agreement or any other Loan Document, and no action taken by the Lender
pursuant hereto or thereto shall be deemed to create a partnership, joint
venture or other entity or business relationship between the Lender and the
Borrowers except that created in a conventional commercial loan transaction. It
is acknowledged by the Borrowers that the Lender asserts no dominion or control
over the business operations of the Borrowers other than for purposes of
monitoring its business operations to protect their interest in the Collateral
as a secured creditor of the Borrowers.
(g) Governing Law; Jurisdiction. This Agreement and the related
documents shall be interpreted and the rights of the parties determined under
the laws of the State of Michigan without regard to its conflict of law
principles. Each Borrower expressly submits to the jurisdiction and venue in the
Federal or state courts of the State of Michigan by process served by mail on
such Borrower at the address set forth above. Should any part, term or provision
of this Agreement be judged illegal or conflict with any applicable law, the
validity of the remaining portion or provisions of this Agreement shall not be
affected.
(h) Further Action. Each Borrower agrees, from time to time, upon
Lender's request, to make, execute, acknowledge, and deliver to Lender such
further and additional instruments, documents and agreements, to take such
further action as reasonably may be required to carry out the intent and purpose
of this Agreement and repayment of the loans.
(i) Writings Constitute Entire Agreement; Modifications Only In
Writing. This Agreement, the related documents and all other written agreements
between Borrowers and Lender, constitute the entire Agreement of the parties,
and there are no other agreements, express or implied. This Agreement supersedes
any and all commitment letters or term sheets heretofore issued in connection
with this Loan. None of the parties shall be bound by anything not expressed in
writing, and neither this Agreement, the related documents, nor any other
agreement can be modified except by a writing executed by Borrowers and by
Lenders owning not less than two-thirds of the Warrants (or shares of common
stock of Parent issued upon exercise of the Warrants) issued pursuant to this
Agreement. Any
35
41
modification effected in accordance with this Section 14(i) shall be binding
upon each Lender.
(j) Survival Of Terms, Representations And Warranties. The terms and
conditions of this Agreement as well as the Representations and Warranties
contained herein shall survive the closing of this financing transaction.
(k) Jury Trial Waivers. Each Borrower does knowingly, voluntarily and
intelligently waive its constitutional right to a trial by jury with respect to
any claim, dispute, conflict, or contention, if any, as may arise under
this Agreement or under the related documents, and agree that any litigation
between the parties concerning this Agreement and the related documents shall be
heard by a court of competent jurisdiction sitting without a jury. Each Borrower
does hereby confirm to Lender that it has reviewed the effect of this waiver of
jury trial with competent legal counsel of its choice, or been afforded the
opportunity to do so, prior to signing this Agreement and the related documents,
and each acknowledge and agree that Lender is relying upon this waiver in
extending the Loans to Borrowers.
(1) Indemnification. Each Borrower hereby agrees to indemnify and hold
harmless the Lenders and their affiliates and their respective partners,
officers, directors, employees, agents and representatives against any loss,
liability, demand, claim, action, cause of action, cost, damage, deficiency,
tax, penalty, fine or expense (including reasonable legal and accounting fees
and expenses related thereto or incurred in enforcing this Section 14(l), but
excluding punitive damages) arising from the untruth, inaccuracy or breach of
any of the representations, warranties, covenants or agreements of the Borrowers
contained in this Agreement or any Loan Documents or any facts or circumstances
constituting any such untruth, inaccuracy or breach, or any such breach
resulting from the Borrowers' operation of its business.
(m) Lender's Assignment. The rights of Lender and its assigns
hereunder shall not be impaired by Lender's sale, hypothecation or
rehypothecation of any Note of the Borrowers or any item of the collateral or by
any indulgence, including but not limited to (a) any renewal, extension, or
modification which Lender may grant with respect to the indebtedness or any part
thereof or (b) any surrender, compromise, release, renewal, extension, exchange
or substitution which Lender may grant in respect to the collateral, or (c) any
indulgence granted in respect of any endorser, guarantor, or surety. The
purchaser assignee, transferee or pledgee of this Agreement, the Note, the
Warrants, the Security Agreement, Subordination Agreements, Financing
Statements, Collateral, and any other document (or any of them), sold, assigned,
transferred, pledged or repledged, shall forthwith become vested with and
entitled to exercise all the powers and rights given by this Agreement as if
said
36
42
purchaser, assignee, transferee, or pledgee were originally named as Lender in
said documents.
(n) Brokers. No Borrower has made any commitment or otherwise incurred
any obligation to pay any commission to any broker or finder in connection with
the transaction provided for in this Agreement.
(o) Counsel for Certain Lenders. Each of Chase, American,
Xxxxxxxxx-CA, Xxxxxxx, Xxxxxxxxx-FL, Xxxxx, Xxxx, JWilliams, Auton, Jakimcius,
Xxxxx and Xxxxxxxxxx hereby confirms that it has reviewed this Agreement and the
Loan Documents with competent legal counsel of its choice, or been afforded the
opportunity to do so, prior to signing this Agreement and the related documents,
and each acknowledge and agree that such Lender is not relying upon Xxxxxxx and
Associates as its counsel in connection with this Agreement.
15. CONSTRUCTION AND INTERPRETATION. Should any provision of this Agreement
require judicial interpretation, the parties hereto agree that the court
interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against one party by reason of
the rule of construction that a document is to be more strictly construed
against the party that itself or through its agent prepared the same, it being
agreed that the Lenders, Borrowers and their respective agents have participated
in the preparation hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
LENDERS: BORROWERS:
WHITE PINES LIMITED PARTNERSHIP I GENOMIC SOLUTIONS, INC.
By: White Pines G.P., L.L.C.,
its general partner
By: /s/ Xxxxxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------- -----------------------
Xxxxxxxxx X. Xxxxx, Chairman Xxxxxxx X. Xxxxxxxx
President
PACIFIC CAPITAL, L.P.
By: WP Pacific G.P., L.L.C. GENOMIC SOLUTIONS, LTD.
a general partner
By: /s/ Xxxxxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------- -----------------------------
Xxxxxxxxx X. Xxxxx, Chairman
43
IAN R. N. BUND GENOMIC SOLUTIONS, X.X.
XXXXX CONSULTING ASSOCIATES, INC.
VOLUNTEER HEALTHCARE ASSOCIATES, L.L.C.
XXXXXX X. XXXXXX LIVING TRUST U/A/D By: Xxxxxxx X. Xxxxxxxx
SEPTEMBER 9, 1997 ------------------------
McDONALD INVESTMENTS INC. CUSTODIAN
FBO XXXXXX X. XXXXX XXX ROLLOVER
ACCOUNT #00000000
XXXXXXX AND ASSOCIATES PROFIT SHARING
PLAN X/X/X XXXXXXX 0, 0000
XXXXXXX X. XXXXXXXX
By: White Pines Management, L.L.C.
a Michigan limited liability
company, attorney-in-fact
By: /s/ Xxxxxxxxx X. Xxxxx
-------------------------------
Xxxxxxxxx X. Xxxxx Chairman
CHASE VENTURE CAPITAL ASSOCIATES, L.P.
By: /s/ Xxxxxx Xxxxxx
-------------------------------
AMERICAN HEALTHCARE FUND II, L.P.
By: Capital Health Venture Partners
Its General Partners
By: /s/ Xxx X. Xxxxxxxx
-------------------------------
Xxx X. Xxxxxxxx
General Partner
/s/ J. Xxxxxxx Xxxxxxxxx
------------------------------------
J. XXXXXXX XXXXXXXXX
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
XXXXXX X. XXXXXXX
Xxxx X. Xxxxxxxxx
------------------------------------
XXXX X. XXXXXXXXX
GROVE INVESTMENT PARTNERS
By: /s/ Xxxx X. Xxxx
--------------------------------
/s/ Xxxxxxxx X. Xxxx
------------------------------------
XXXXXXXX X. XXXX
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
XXXXXXX X. XXXXXXXX
/s/ Xxxxx X. Xxxxx
------------------------------------
XXXXX X. XXXXX
37
44
/s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------
XXXXXX X. XXXXXXXXX
/s/ Xxxxxxx X. Xxxxx
--------------------------------------
XXXXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxxxxxxx
--------------------------------------
XXXXXX X. XXXXXXXXXX
45
AMENDMENT NO. 1 TO BUSINESS LOAN AGREEMENT
THIS AMENDMENT NO. 1 TO BUSINESS LOAN AGREEMENT is made this 28th day
of October 1999 by and among Genomic Solutions, Inc., a Delaware corporation,
0000 Xxxxxxx Xxxxx, Xxxxx X, Xxx Xxxxx, Xxxxxxxx 00000 (hereinafter referred to
as "Parent"), Genomic Solutions, Ltd., a United Kingdom corporation, Xxxx 0,
Xxxxx Xxxxx, Xxxxxx Xxx Xxxx, Xxxxx Socon, St. Neots, Cambridgshire, England
PE193TP (sometimes hereinafter referred to as "Genomic UK"), Genomic Solutions,
K.K., a Japanese corporation, Gotanda Chuo Xxxx. 0X, 0-0, Xxxxxxxxxxxxxx
0--xxxxx, Xxxxxxxxx-xx, Xxxxx 000-0000, Xxxxx (sometimes hereinafter referred to
as "Genomic Japan") (Genomic UK and Genomic Japan each sometimes hereinafter
being referred to as a "Subsidiary" and sometimes hereinafter collectively
referred to as the "Subsidiaries", and each of Parent, Genomic UK and Genomic
Japan sometimes hereinafter referred to as "Borrower", a "Borrower" or the
"Borrower" and collectively sometimes referred to as the "Borrowers"), White
Pines Limited Partnership I, a Michigan limited partnership, 0000 Xxxxxxxx Xxxx,
Xxxxx X, Xxx Xxxxx, Xxxxxxxx 00000 (hereinafter referred to as "WPLP"), Pacific
Capital, L.P., a Delaware limited partnership, 0000 Xxxxxxxx Xxxx, Xxxxx X, Xxx
Xxxxx, Xxxxxxxx 00000 (hereinafter referred to as "Pacific"), Chase Venture
Capital Associates, L.P., a California limited partnership, 000 Xxxxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (hereinafter referred to as "Chase"),
American Healthcare Fund II, a Delaware limited partnership, 0000 Xxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 (hereinafter referred to as
"American"), Ian R. N. Bund Xxxxx Xxxxxx Prototype PS Plan Account
#000-00000-00000, X.X. Xxx 0000, Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000 (hereinafter
referred to as "Bund"), Xxxxx Consulting Associates, Inc., an Ohio corporation,
0000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxx 00000 (hereinafter referred to as "Xxxxx"),
Volunteer Healthcare Associates, L.L.C., a Tennessee limited liability company,
0 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx 00000 (hereinafter referred to
as "Volunteer"), McDonald Investments Inc. Custodian FBO S. Xxxxxxxx XxXxxxxx
III XXX Rollover Account #00000000, 0000 Xxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx
Xxxxx, Xxxx 00000 (hereinafter referred to as "XxXxxxxx"), J. Xxxxxxx Xxxxxxxxx,
000 Xxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 (hereinafter
referred to as "Xxxxxxxxx-CA"), XXXXXX X. Xxxxxxx, 000 Xxxx Xxxxxx, Xxxxx 000,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 (hereinafter referred to as "Xxxxxxx"), Xxxx X.
Xxxxxxxxx, 0000 Xxxxxxxx Xxxx, Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000 (hereinafter
referred to as "Xxxxxxxxx-FL"), Grove Investment Partners, an Illinois
partnership, 000 Xxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000 (hereinafter referred to
as "Grove") Xxxxxx X. Xxxxxx Living Trust u/a/d September 9, 1997, 445 Grand Bay
46
Drive, #1009, Key Xxxxxxxx, Xxxxxxx 00000 (hereinafter referred to as "Xxxxxx"),
Xxxx X. Xxxxxx, 00000 Xxx Xxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000 (hereinafter
referred to as "Xxxxxx"), McDonald Investments Inc. Custodian FBO Xxxxxx X.
Xxxxx XXX Rollover Account #00000000, 0000 Xxx Xxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx Xxxxx, Xxxx 00000 (hereinafter referred to as "Xxxxx"), National City
Bank of MI/IL, Custodian FBO Xxxxxxx X. Xxxxxx XXX Rollover Account dated June
12, 1991 Account #MI-1491-00-4, 101 National City Bank, 000 X. Xxxx Xxxxxx, Xxx
Xxxxx, Xxxxxxxx 00000 (hereinafter referred to as "Xxxxxx"), Xxxxxxx and
Associates Profit Sharing Plan u/a/d January 1, 1991, 000 Xxxx Xxxxxxx Xxxxxx,
Xxx Xxxxx, Xxxxxxxx 00000 (hereinafter referred to as "Xxxxxxx") and Xxxxxxx X.
Xxxxxxxx, 00000 Xxxxxxxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000 (hereinafter
referred to as "Xxxxxxxx") (WPLP, Pacific, Chase, American, Bund, Xxxxx,
Volunteer, XxXxxxxx, Xxxxxxxxx-CA, Xxxxxxx, Xxxxxxxxx-FL, Grove, Kalish, Marler,
Boyle, Amster, Xxxxxxx and Xxxxxxxx each being sometimes hereinafter referred to
as "Lender", a "Lender" or the "Lender" and collectively as "Lenders").
RECITALS
1. Borrowers and Lenders entered into the Business Loan Agreement dated
April 23, 1999 (hereinafter referred to as the "Agreement").
2. Borrowers, certain Lenders and others are entering into a Business
Loan Agreement of even date herewith (hereinafter referred to as the "October
1999 Loan Agreement").
3. All capitalized terms used herein not otherwise defined shall have the
meanings set forth in the Agreement or the October 1999 Loan Agreement.
4. Borrowers and Lenders wish to amend the Agreement solely in the
respects hereinafter expressly set forth.
NOW THEREFORE, in consideration of the original execution of the Agreement
and of the mutual covenants and agreements hereinafter set forth, Borrowers and
Lenders agree that the Agreement is hereby amended in the following respects:
1. Lenders acknowledge that the requirements of Section 3(d) of the
Agreement have been satisfied such that no amendment of the Warrants shall be
made provided that:
a) Parent shall continue to use its best efforts to obtain from the
holder of the Series M Preferred Stock a
2
47
declaration that the shares of common stock described in subsection G(i) of the
Warrants are "Excluded Stock" for purposes of determining whether any adjustment
shall be made to the conversion price of the Series M Preferred Stock by reason
of the issuance of additional securities of Parent, and
b) if such declaration is not obtained from the holder of the shares
of Series M Preferred Stock, then any additional shares of common stock of
Parent issued to the holder of the Series M Preferred Stock upon conversion
thereof by reason of an adjustment to the conversion price of the Series M
Preferred Stock resulting from the issuance of any of the additional
securities of Parent described in subsection G(i) of the Warrants shall be
considered "Additional Shares of Common Stock" issued without consideration
for purposes of subsection F of the Warrants.
2. Section 9(a) is hereby amended to read in its entirety
as follows:
(a) Financial Covenants.
(i) allow consolidated Tangible Net Worth to be less than
negative $5,750,000 during 1999, to be less than negative $7,500,000 at any time
during 2000 or at any time thereafter, to be less than negative $6,500,000 as of
December 31, 2001 or at any time thereafter, to be less than negative $2,750,000
as of December 31, 2002 or at any time thereafter, or to be less than $1,250,000
as of December 31, 2003 or at any time thereafter, provided that each of the
foregoing amounts shall be decreased by the amount of interest paid in cash (net
of any tax savings) on additional funds, if any, loaned to the Borrowers
pursuant to Section l(c) of the October 1999 Loan Agreement. "Tangible Net
Worth" shall mean Net Worth less intangible assets. Intangible assets include
goodwill, patents, copyrights, development expenses, computer software, mailing
lists, trademarks, bond discount and underwriting expenses, organization
expenses, and all other intangibles.
(ii) allow consolidated Long-Term Debt to be greater than
$15,500,000 at any time during 1999, to be greater than $16,500,000 at any time
during 2000, to be greater than 17,500,000 at any time during 2001, to be
greater than $21,500,000 at any time during 2002 or 2003, or to be greater than
$18,500,000 as of December 31, 2003 or at any time thereafter, provided that
each of the foregoing amounts shall be increased by the amount, if any, of
additional funds loaned to Borrowers pursuant to Section l(c) of the October
1999 Loan Agreement. "Long-Term Debt" shall mean the sum of (x) all bank
3
48
debt, (y) all liabilities classified as long-term in accordance with generally
accepted accounting principles, and (z) the current portion of any liabilities
encompassed by "(y)".
3. The following is hereby added as a new Section 12(d) to the Agreement:
(d) Exchange of Securities. If at any time, or from time to time,
hereafter and prior to November 1, 2000, Parent shall issue any equity
securities having an aggregate purchase price in excess of $5,000,000 (exclusive
of any securities issued to the parties to the October 1999 Loan Agreement
pursuant to Section l(c) thereof), then each Lender which shall not have
exercised its Warrants in whole or in part, at such Lender's sole option and
discretion, shall have the right to require Parent to issue to such Lender the
type and amount of securities which would have been issued to such Lender had
the Loan of such Lender instead been a part of the transaction, or the
transaction of such Lender's choice if there was more than one transaction,
pursuant to which Parent issued such equity securities. Concurrently with
delivery to such Lender of such securities, the Lender shall deliver to Parent
its Note marked as "paid" and its Warrants marked as "cancelled". Any Lender may
exercise its rights under this Section 12(d) by notice to Parent given on or
prior to the latest of (i) the closing date of the transaction as a result of
which the aggregate purchase price of equity securities issued by Parent
subsequent to the date hereof (exclusive of any securities issued to the parties
to the October 1999 Loan Agreement pursuant to Section l(c) thereof) shall first
exceed $5,000,000, (ii) twenty (20) days after Parent shall have delivered to
Lenders the letter of intent, if any, relating to the proposed transaction and a
draft of the proposed definitive agreement, and (iii) five (5) days after
Parent shall have delivered to Lender (x) the final form of definitive agreement
(including all schedules and exhibits thereto) to be executed to implement such
transaction, and (y) the most recent available financial statements of Parent.
4. The date "February 28, 1998" which appears in Section 7(i)(a)(ii) of
the Agreement is hereby corrected to be "February 28, 1999".
5. Except as expressly set forth herein, the Agreement remains in full
force and effect and shall not be affected in any manner whatsoever by this
Amendment No. 1.
4
49
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to
Business Loan Agreement as of the day and year first written above.
LENDERS: BORROWERS:
WHITE PINES LIMITED PARTNERSHIP I GENOMIC SOLUTIONS, INC.
By: White Pines G.P., L.L.C.,
its general partner
By: Xxxxxxxxx X. Xxxxx By: Xxxxxxx X. Xxxxxxxx
------------------------------ -----------------------------
Xxxxxxxxx X. Xxxxx, Chairman Xxxxxxx X. Xxxxxxxx
President
PACIFIC CAPITAL, L.P. GENOMIC SOLUTIONS, LTD.
By: WP Pacific G.P., L.L.C.,
a general partner
By: Xxxxxxxxx X. Xxxxx By: Xxxxxxx X. Xxxxxxxx
------------------------------ -----------------------------
Xxxxxxxxx X. Xxxxx, Chairman
IAN R. N. BUND XXXXX XXXXXX
PROTOTYPE PS PLAN ACCOUNT
#000-00000-00000 GENOMIC SOLUTIONS, X.X.
XXXXX CONSULTING ASSOCIATES, INC.
VOLUNTEER HEALTHCARE ASSOCIATES, L.L.C
MCDONALD INVESTMENTS INC. CUSTODIAN
FBO S. XXXXXXXX XXXXXXXX III XXX
ROLLOVER ACCOUNT #00000000 By: Xxxxxxx X. Xxxxxxxx
XXXXXX X. XXXXXX LIVING TRUST U/A/D -----------------------------
SEPTEMBER 9, 1997
XXXX X. XXXXXX
MCDONALD INVESTMENTS INC. CUSTODIAN
FBO XXXXXX X. XXXXX XXX
ROLLOVER ACCOUNT #00000000
NATIONAL CITY BANK OF MI/IL CUSTODIAN
FBO XXXXXXX X. XXXXXX XXX
ROLLOVER ACCOUNT DATED JUNE 12, 1991
#MI-1491-00-4
XXXXXXX AND ASSOCIATES PROFIT SHARING
PLAN X/X/X XXXXXXX 0, 0000
XXXXXXX X. XXXXXXXX
By: White Pines Management, L.L.C.,
a Michigan limited liability
company, attorney-in-fact
By: Xxxxxxxxx X. Xxxxx
------------------------------
Xxxxxxxxx X. Xxxxx, Chairman
5
50
CHASE VENTURE CAPITAL ASSOCIATES, L.P.
By:/s/ Xxxxxx X. Xxxxxx
--------------------------------
AMERICAN HEALTHCARE FUND II, LP
By:Capital Health Venture Partners
Its General Partner
/s/ Xxx X. Xxxxxxxx
--------------------------------
Xxx X. Xxxxxxxx
General Partner
/s/ J. Xxxxxxx Xxxxxxxxx
-----------------------------------
J. XXXXXXX XXXXXXXXX
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
XXXXXX X. XXXXXXX
/s/ Xxxx X. Xxxxxxxxx
-----------------------------------
XXXX X. XXXXXXXXX
GROVE INVESTMENT PARTNERS
By:/s/ Xxxx X. Xxxx
--------------------------------
