Exhibit 99.1
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT dated as of March 29, 2005 (the
"Agreement"), is executed by and between ROCKWELL MEDICAL TECHNOLOGIES, INC., a
Michigan corporation (the "Borrower"), which has its chief executive office
located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and STANDARD FEDERAL BANK
NATIONAL ASSOCIATION, a national banking association (the "Bank"), whose address
is ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
R E C I T A L S:
A. The Borrower desires to borrow funds and obtain other financial
accommodations from the Bank.
B. Pursuant to the Borrower's request, the Bank is willing to extend such
financial accommodations to the Borrower under the terms and conditions set
forth herein.
NOW THEREFORE, in consideration of the premises, and the mutual covenants
and agreements set forth herein, the Borrower agrees to borrow from the Bank,
and the Bank agrees to lend to the Borrower, subject to and upon the following
terms and conditions:
A G R E E M E N T S:
SECTION 1 DEFINITIONS.
1.1 Defined Terms. For the purposes of this Agreement, the following
capitalized words and phrases shall have the meanings set forth below.
"Affiliate" of any Person shall mean (a) any other Person which, directly
or indirectly, controls or is controlled by or is under common control with such
Person, (b) any officer or director of such Person, and (c) with respect to the
Bank, any entity administered or managed by the Bank, or an Affiliate or
investment advisor thereof and which is engaged in making, purchasing, holding
or otherwise investing in commercial loans. A Person shall be deemed to be
"controlled by" any other Person if such Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of such Person whether by contract, ownership of voting securities,
membership interests or otherwise. An Affiliate shall not include a director of
the Borrower or an entity for which such person is also an equity holder,
officer or director provided that any dealings between the Borrower and such
director or entity are made on an independent arms-length basis in the normal
course of business.
"Applicable Margin" shall mean the rate per annum added to the Prime Rate
to determine the Revolving Interest Rate. The applicable Margin is seventy-five
basis points (0.75%) for Prime Loans.
"Asset Disposition" shall mean the sale, lease, assignment or other
transfer for value (each a "Disposition") by the Borrower or any Subsidiary to
any Person (other than the
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Borrower or any Subsidiary) of any asset or right of the Borrower or any
Subsidiary (including, the loss, destruction or damage of any thereof or any
actual or threatened (in writing to the Borrower or such Subsidiary)
condemnation, confiscation, requisition, seizure or taking thereof), other than
(a) the Disposition of any asset which is to be replaced, and is in fact
replaced, within thirty (30) days with another asset performing the same or a
similar function, (b) the sale or lease of inventory in the ordinary course of
business, or (c) the Disposition of damaged or obsolete equipment that is not
replaced.
"Bank Product Agreements" shall mean those certain agreements entered into
from time to time by the Borrower or any Subsidiary with the Bank or any
Affiliate of the Bank concerning Bank Products.
"Bank Product Obligations" shall mean all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by the Borrower
or any Subsidiary to the Bank or any Affiliate of the Bank pursuant to or
evidenced by the Bank Product Agreements and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising.
"Bank Products" shall mean any service or facility extended to the Borrower
or any Subsidiary by the Bank or any Affiliate of the Bank, including: (a)
credit cards, (b) credit card processing services, (c) debit cards, (d) purchase
cards, (e) ACH Transactions, (f) cash management, including controlled
disbursement, accounts or services, or (g) Hedging Agreements.
"Bankruptcy Code" shall mean the United States Bankruptcy Code, as now
existing or hereafter amended.
"Borrowing Base Amount" shall mean:
(a) an amount equal to eighty percent (80%) of the net amount (after
deduction of such reasonable reserves and allowances as the Bank deems
proper and necessary) of all Eligible Accounts, plus
(b) the lesser of (i) an amount equal to forty percent (40%) of the
lower of cost or market value (after deduction of such reasonable reserves
and allowances as the Bank deems proper and necessary) of all Eligible
Inventory, and (ii) Six Hundred Thousand and 00/100 Dollars ($600,000.00),
minus
(c) an availability reserve equal to twenty percent (20%) of all
outstanding lease obligations between the Bank and the Borrower when the
Company, at any time, does not exhibit a Fixed Charge Coverage Ratio (as
defined in Section 10.5 hereof) of greater than 1.50 to 1.00 for two (2)
consecutive quarters (based on a trailing twelve- (12-) month calculation).
"Borrowing Base Certificate" shall mean a certificate to be signed by the
Borrower certifying to the accuracy of the Borrowing Base Amount in form and
substance satisfactory to the Bank.
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"Business Day" shall mean any day other than a Saturday, Sunday or a legal
holiday on which banks are authorized or required to be closed for the conduct
of commercial banking business in Troy, Michigan.
"Capital Expenditures" shall mean all expenditures (including Capitalized
Lease Obligations) which, in accordance with GAAP, would be required to be
capitalized and shown on the consolidated balance sheet of the Borrower, but
excluding expenditures made in connection with the replacement, substitution or
restoration of assets to the extent financed (i) from insurance proceeds (or
other similar recoveries) paid on account of the loss of or damage to the assets
being replaced or restored or (ii) with awards of compensation arising from the
taking by eminent domain or condemnation of the assets being replaced.
"Capital Lease" shall mean, as to any Person, a lease of any interest in
any kind of property or asset, whether real, personal or mixed, or tangible or
intangible, by such Person, as lessee, that is, or should be, in accordance with
Financial Accounting Standards Board Statement No. 13, as amended from time to
time, or, if such statement is not then in effect, such statement of GAAP as may
be applicable, recorded as a "capital lease" on the financial statements of such
Person prepared in accordance with GAAP.
"Capital Securities" shall mean, with respect to any Person, all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's capital, whether now outstanding or
issued or acquired after the date hereof, including common shares, preferred
shares, membership interests in a limited liability company, limited or general
partnership interests in a partnership or any other equivalent of such ownership
interest.
"Capitalized Lease Obligations" shall mean, as to any Person, all rental
obligations of such Person, as lessee under a Capital Lease which are or will be
required to be capitalized on the books of such Person.
"Cash Equivalent Investment" shall mean, at any time, (a) any evidence of
Debt, maturing not more than one year after such time, issued or guaranteed by
the United States government or any agency thereof, (b) commercial paper,
maturing not more than one year from the date of issue, or corporate demand
notes, in each case (unless issued by the Bank or its holding company) rated at
least A-l by Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. or P-l by ▇▇▇▇▇'▇ Investors Service, Inc., (c) any certificate
of deposit, time deposit or banker's acceptance, maturing not more than one year
after such time, or any overnight Federal Funds transaction that is issued or
sold by the Bank or its holding company (or by a commercial banking institution
that is a member of the Federal Reserve System and has a combined capital and
surplus and undivided profits of not less than $500,000,000), (d) any repurchase
agreement entered into with the Bank, or other commercial banking institution of
the nature referred to in clause (c), which (i) is secured by a fully perfected
security interest in any obligation of the type described in any of clauses (a)
through (c) above, and (ii) has a market value at the time such repurchase
agreement is entered into of not less than one hundred percent (100%) of the
repurchase obligation of the Bank, or other commercial banking institution,
thereunder, (e) money market accounts or mutual funds which invest exclusively
in assets satisfying
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the foregoing requirements, and (f) other short term liquid investments approved
in writing by the Bank.
"Collateral" shall have the meaning set forth in Section 6.1 hereof.
"Collateral Access Agreement" shall mean an agreement in form and substance
reasonably satisfactory to the Bank pursuant to which a mortgagee or lessor of
real property on which Collateral is stored or otherwise located, or a
warehouseman, processor or other bailee of Inventory or other property owned by
the Borrower of any Subsidiary, acknowledges the Liens of the Bank and waives
any Liens held by such Person on such property, and, in the case of any such
agreement with a mortgagee or lessor, permits the Bank reasonable access to and
use of such real property following the occurrence and during the continuance of
an Event of Default to assemble, complete and sell any collateral stored or
otherwise located thereon.
"Contingent Liability" and "Contingent Liabilities" shall mean,
respectively, each obligation and liability of the Borrower and all such
obligations and liabilities of the Borrower incurred pursuant to any agreement,
undertaking or arrangement by which the Borrower: (a) guarantees, endorses or
otherwise becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment, to supply
funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor
against loss) the indebtedness, dividend, obligation or other liability of any
other Person in any manner (other than by endorsement of instruments in the
course of collection), including without limitation, any indebtedness, dividend
or other obligation which may be issued or incurred at some future time; (b)
guarantees the payment of dividends or other distributions upon the shares or
ownership interest of any other Person; (c) undertakes or agrees (whether
contingently or otherwise): (i) to purchase, repurchase, or otherwise acquire
any indebtedness, obligation or liability of any other Person or any property or
assets constituting security therefor, (ii) to advance or provide funds for the
payment or discharge of any indebtedness, obligation or liability of any other
Person (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or to maintain solvency, assets, level of income,
working capital or other financial condition of any other Person, or (iii) to
make payment to any other Person other than for value received; (d) agrees to
lease property or to purchase securities, property or services from such other
Person with the purpose or intent of assuring the owner of such indebtedness or
obligation of the ability of such other Person to make payment of the
indebtedness or obligation; (e) to induce the issuance of, or in connection with
the issuance of, any letter of credit for the benefit of such other Person; or
(f) undertakes or agrees otherwise to assure a creditor against loss. The amount
of any Contingent Liability shall (subject to any limitation set forth herein)
be deemed to be the outstanding principal amount (or maximum permitted principal
amount, if larger) of the indebtedness, obligation or other liability guaranteed
or supported thereby.
"Daily Rate" shall mean an interest rate equal to LIBOR for a one month
Interest Period, as determined by the Bank for each calendar day. The Daily Rate
for any day that is not a Business Day will be the Daily Rate for the most
recent preceding Business Day.
"Debt" shall mean, as to any Person, without duplication, (a) all
indebtedness of such Person; (b) all borrowed money of such Person (including
principal, interest, fees and
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charges), whether or not evidenced by bonds, debentures, notes or similar
instruments; (c) all obligations to pay the deferred purchase price of property
or services; (d) all obligations, contingent or otherwise, with respect to the
maximum face amount of all letters of credit (whether or not drawn), bankers'
acceptances and similar obligations issued for the account of such Person
(including the Letters of Credit), and all unpaid drawings in respect of such
letters of credit, bankers' acceptances and similar obligations; (e) all
indebtedness secured by any Lien on any property owned by such Person, whether
or not such indebtedness has been assumed by such Person (provided, however, if
such Person has not assumed or otherwise become liable in respect of such
indebtedness, such indebtedness shall be deemed to be in an amount equal to the
fair market value of the property subject to such Lien at the time of
determination); (f) the aggregate amount of all Capitalized Lease Obligations of
such Person; (g) all Contingent Liabilities of such Person, whether or not
reflected on its balance sheet; (h) all Hedging Obligations of such Person; (i)
all Debt of any partnership of which such Person is a general partner; and (j)
all monetary obligations of such Person under (i) a so-called synthetic,
off-balance sheet or tax retention lease, or (ii) an agreement for the use or
possession of property creating obligations that do not appear on the balance
sheet of such Person but which, upon the insolvency or bankruptcy of such
Person, would be characterized as the indebtedness of such Person (without
regard to accounting treatment). Notwithstanding the foregoing, Debt shall not
include trade payables and accrued expenses incurred by such Person in
accordance with customary practices and in the ordinary course of business of
such Person.
"Default Rate" shall mean a per annum rate of interest equal to the Prime
Rate plus Two and Three-Quarters percent (2.75%).
"Depreciation" shall mean the total amounts added to depreciation,
amortization, obsolescence, valuation and other proper reserves, as reflected on
the Borrower's financial statements and determined in accordance with GAAP.
"EBITDA" shall mean, for any period, (a) the sum for such period of: (i)
Net Income, plus (ii) Interest Charges, plus (iii) federal and state income
taxes, plus (iv) Depreciation, plus (v) Amortization, plus (vi) research and
development costs that has been financed by the issuance of equity interests,
minus (b) income or loss attributable to equity in any Affiliate or Subsidiary),
in each case to the extent included in determining Net Income for such period.
All such amounts may be verified by the Bank at its discretion and shall be
determined acceptable to Bank.
"Eligible Account" and "Eligible Accounts" shall mean each Account and all
such Accounts (exclusive of sales, excise or other similar taxes) owing to the
Borrower which meets each of the following requirements:
(a) it is genuine in all respects and has arisen in the ordinary
course of the Borrower's business from (i) the performance of services by
the Borrower, which services have been fully performed, acknowledged and
accepted by the Account Debtor or (ii) the sale or lease of Goods by the
Borrower, including C.O.D. sales, which Goods have been completed in
accordance with the Account Debtor's specifications (if any) and delivered
to and accepted by the Account Debtor, and the Borrower has possession of,
or has
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delivered to the Bank at the Bank's request, shipping and delivery receipts
evidencing such delivery;
(b) it is subject to a perfected, first priority Lien in favor of the
Bank and is not subject to any other assignment, claim or Lien;
(c) it is the valid, legally enforceable and unconditional obligation
of the Account Debtor with respect thereto, and is not subject to the
fulfillment of any condition whatsoever or any counterclaim, credit (except
as provided in subsection (h) of this definition), trade or volume
discount, allowance, discount, rebate or adjustment by the Account Debtor
with respect thereto, or to any claim by such Account Debtor denying
liability thereunder in whole or in part and the Account Debtor has not
refused to accept and/or has not returned or offered to return any of the
Goods or services which are the subject of such Account;
(d) the Account Debtor with respect thereto is a resident or citizen
of, and is located within, the United States, unless the sale of goods or
services giving rise to such Account is on letter of credit, banker's
acceptance or other credit support terms reasonably satisfactory to the
Bank;
(e) it is not an Account arising from a "sale on approval," "sale or
return," "consignment," "guaranteed sale" or "▇▇▇▇ and hold", or are
subject to any other repurchase or return agreement;
(f) it is not an Account with respect to which possession and/or
control of the goods sold giving rise thereto is held, maintained or
retained by the Borrower or any Subsidiary (or by any agent or custodian of
the Borrower or any Subsidiary) for the account of, or subject to, further
and/or future direction from the Account Debtor with respect thereto;
(g) it has not arisen out of contracts with the United States or any
department, agency or instrumentality thereof, unless the Borrower has
assigned its right to payment of such Account to the Bank pursuant to the
Assignment of Claims Act of 1940, and evidence (satisfactory to the Bank)
of such assignment has been delivered to the Bank, or any state, county,
city or other governmental body, or any department, agency or
instrumentality thereof;
(h) Intentionally omitted;
(i) if the Account is evidenced by chattel paper or an instrument, the
originals of such chattel paper or instrument shall have been endorsed
and/or assigned and delivered to the Bank or, in the case of electronic
chattel paper, shall be in the control of the Bank, in each case in a
manner satisfactory to the Bank;
(j) such Account is evidenced by an invoice delivered to the related
Account Debtor and is not more than (i) sixty (60) days past the due date
thereof, or (ii) ninety (90)
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days past the original invoice date thereof, in each case according to the
original terms of sale;
(k) it is not an Account with respect to an Account Debtor that is
located in any jurisdiction which has adopted a statute or other
requirement with respect to which any Person that obtains business from
within such jurisdiction must file a notice of business activities report
or make any other required filings in a timely manner in order to enforce
its claims in such jurisdiction's courts unless (i) such notice of business
activities report has been duly and timely filed or the Borrower is exempt
from filing such report and has provided the Bank with satisfactory
evidence of such exemption or (ii) the failure to make such filings may be
cured retroactively by the Borrower for a nominal fee;
(l) the Account Debtor with respect thereto is not an Affiliate of the
Borrower;
(m) such Account does not arise out of a contract or order which, by
its terms, forbids or makes void or unenforceable the assignment thereof by
the Borrower to the Bank and is not unassignable to the Bank for any other
reason;
(n) there is no bankruptcy, insolvency or liquidation proceeding
pending by or against the Account Debtor with respect thereto, nor has the
Account Debtor suspended business, made a general assignment for the
benefit of creditors or failed to pay its debts generally as they come due,
and/or no condition or event has occurred having a Material Adverse Effect
on the Account Debtor which would require the Accounts of such Account
Debtor to be deemed uncollectible in accordance with GAAP;
(o) it is not owed by an Account Debtor with respect to which
twenty-five percent (25.00%) or more of the aggregate amount of outstanding
Accounts owed at such time by such Account Debtor is classified as
ineligible under clause (j) of this definition;
(p) Intentionally omitted; and
(q) it does not violate the negative covenants and does satisfy the
affirmative covenants of the Borrower contained in this Agreement.
An Account which is at any time an Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be an
Eligible Account. Further, with respect to any Account, if the Bank at any time
hereafter determines in its reasonable discretion that the prospect of payment
or performance by the Account Debtor with respect thereto is materially impaired
for any reason whatsoever, such Account shall cease to be an Eligible Account
after notice of such determination is given to the Borrower.
"Eligible Inventory" shall mean all Inventory of the Borrower which meets
each of the following requirements:
(a) it is subject to a perfected, first priority Lien in favor of the
Bank and is not subject to any other assignment, claim or Lien;
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(b) it is salable and not slow-moving, obsolete or discontinued, as
reasonably determined by the Bank;
(c) it is in the possession and control of the Borrower and it is
stored and held in facilities owned by the Borrower or, if such facilities
are not so owned by the Borrower, the Bank is in possession of a Collateral
Access Agreement with respect thereto;
(d) it is not Inventory produced in violation of the Fair Labor
Standards Act and subject to the "hot goods" provisions contained in Title
29 U.S.C. Section 215;
(e) it is not subject to any agreement or license which would restrict
the Bank's ability to sell or otherwise dispose of such Inventory;
(f) it is located in the United States or in any territory or
possession of the United States that has adopted Article 9 of the Uniform
Commercial Code;
(g) it is not "in transit" to the Borrower or held by the Borrower on
consignment;
(h) it is not "work-in-progress" Inventory;
(i) it is not supply items, packaging or any other similar materials;
(j) it is not identified to any purchase order or contract to the
extent progress or advance payments are received with respect to such
Inventory;
(k) it does not breach any of the representations, warranties or
covenants pertaining to Inventory set forth in the Loan Documents; and
(l) the Bank shall not have determined in its reasonable discretion
that it is unacceptable due to age, type, category, quality, quantity
and/or any other reason whatsoever.
Inventory which is at any time Eligible Inventory but which subsequently fails
to meet any of the foregoing requirements shall forthwith cease to be Eligible
Inventory.
"Employee Plan" includes any pension, stock bonus, employee stock ownership
plan, retirement, profit sharing, deferred compensation, stock option, bonus or
other incentive plan, whether qualified or nonqualified, or any disability,
medical, dental or other health plan, life insurance or other death benefit
plan, vacation benefit plan, severance plan or other employee benefit plan or
arrangement, including, without limitation, those pension, profit-sharing and
retirement plans of the Borrower described from time to time in the financial
statements of the Borrower and any pension plan, welfare plan, Defined Benefit
Pension Plans (as defined in ERISA) or any multi-employer plan, maintained or
administered by the Borrower or to which the Borrower is a party or may have any
liability or by which the Borrower is bound.
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"Environmental Laws" shall mean all present or future federal, state or
local laws, statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative or judicial orders, consent agreements,
directed duties, requests, licenses, authorizations and permits of, and
agreements with, any governmental authority, in each case relating to any matter
arising out of or relating to public health and safety, or pollution or
protection of the environment or workplace, including any of the foregoing
relating to the presence, use, production, generation, handling, transport,
treatment, storage, disposal, distribution, discharge, emission, release,
threatened release, control or cleanup of any Hazardous Substance.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" shall mean any of the events or conditions which are set
forth in Section 11 hereof.
"Federal Funds Rate" shall mean, for any day, a fluctuating interest rate
equal for each day during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Bank from three Federal funds brokers of recognized standing
selected by the Bank. The Bank's determination of such rate shall be binding and
conclusive absent manifest error.
"Funded Debt" shall mean, as to any Person, all Debt of such Person that
matures more than one year from the date of its creation (or is renewable or
extendible, at the option of such Person, to a date more than one year from such
date).
"GAAP" shall mean generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination, provided, however, that interim financial statements or reports
shall be deemed in compliance with GAAP despite the absence of footnotes and
fiscal year-end adjustments as required by GAAP.
"Guarantor" and "Guarantors" shall mean, respectively, each of and
collectively, the following Person: Rockwell Transportation, Inc.
"Guaranty" shall have the meaning set forth in Section 3.1 hereof.
"Hazardous Substances" shall mean (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, dielectric fluid containing levels of
polychlorinated biphenyls, radon gas and mold; (b) any chemicals, materials,
pollutant or substances defined as or included in the defini-
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tion of "hazardous substances", "hazardous waste", "hazardous materials",
"extremely hazardous substances", "restricted hazardous waste", "toxic
substances", "toxic pollutants", "contaminants", "pollutants" or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, the exposure to, or release of which is
prohibited, limited or regulated by any governmental authority or for which any
duty or standard of care is imposed pursuant to, any Environmental Law.
"Hedging Agreements" shall mean any interest rate, currency or commodity
swap agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices.
"Hedging Obligation" shall mean, with respect to any Person, any liability
of such Person under any Hedging Agreement.
"Indemnified Party" and "Indemnified Parties" shall mean, respectively,
each of the Bank and any parent corporations, Affiliate or Subsidiary of the
Bank, and each of their respective officers, directors, employees, attorneys and
agents, and all of such parties and entities.
"Intellectual Property" shall mean the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, patents, service marks and trademarks, and all registrations and
applications for registration therefor and all licensees thereof, trade names,
domain names, technology, know-how and processes, and all rights to ▇▇▇ at law
or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.
"Interest Charges" shall mean, for any period, the sum of: (a) all
interest, charges and related expenses payable with respect to that fiscal
period to a lender in connection with borrowed money or the deferred purchase
price of assets that are treated as interest in accordance with GAAP, plus (b)
the portion of Capitalized Lease Obligations with respect to that fiscal period
that should be treated as interest in accordance with GAAP, plus (c) all charges
paid or payable (without duplication) during that period with respect to any
Hedging Agreements.
"Interest Period" shall mean successive one, two, three or six month
periods, beginning and ending as provided in this Agreement.
"Investment" shall mean, with respect to any Person, any investment in
another Person, whether by acquisition of any debt or equity security, by making
any loan or advance, by becoming obligated with respect to a Contingent
Liability in respect of obligations of such other Person (other than travel and
similar advances to employees in the ordinary course of business).
"Letter of Credit" and "Letters of Credit" shall mean, respectively, a
letter of credit and all such letters of credit issued by the Bank, in its sole
discretion, upon the execution and delivery by the Borrower and the acceptance
by the Bank of a Master Letter of Credit Agreement and a Letter of Credit
Application, as set forth in Section 2.7 of this Agreement.
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"Letter of Credit Application" shall mean, with respect to any request for
the issuance of a Letter of Credit, a letter of credit application in the form
being used by the Bank at the time of such request for the type of Letter of
Credit requested.
"Letter of Credit Commitment" shall mean, at any time, an amount equal to
One Million and 00/100 Dollars ($1,000,000.00).
"Letter of Credit Maturity Date" shall mean the date twelve (12) months
after the issue date, and in any case March 30, 2007.
"Letter of Credit Obligations" shall mean, at any time, an amount equal to
the aggregate of the original face amounts of all Letters of Credit minus the
sum of (i) the amount of any reductions in the original face amount of any
Letter of Credit which did not result from a draw thereunder, (ii) the amount of
any payments made by the Bank with respect to any draws made under a Letter of
Credit for which the Borrower has reimbursed the Bank, (iii) the amount of any
payments made by the Bank with respect to any draws made under a Letter of
Credit which have been converted to a Revolving Loan as set forth in Section
2.7, and (iv) the portion of any issued but expired Letter of Credit which has
not been drawn by the beneficiary thereunder. For purposes of determining the
outstanding Letter of Credit Obligations at any time, the Bank's acceptance of a
draft drawn on the Bank pursuant to a Letter of Credit shall constitute a draw
on the applicable Letter of Credit at the time of such acceptance.
"Liabilities" shall mean at all times all liabilities of the Borrower that
would be shown as such on a balance sheet of the Borrower prepared in accordance
with GAAP.
"Lien" shall mean, with respect to any Person, any interest granted by such
Person in any real or personal property, asset or other right owned or being
purchased or acquired by such Person (including, without limitation, an interest
in respect of a Capital Lease) which secures payment or performance of any
obligation and shall include any mortgage, lien, encumbrance, title retention
lien, charge or other security interest of any kind, whether arising by
contract, as a matter of law, by judicial process or otherwise.
"Loans" shall mean, collectively, all Revolving Loans made by the Bank to
the Borrower and all Letter of Credit Obligations, under and pursuant to this
Agreement.
"Loan Documents" shall mean each of the agreements, documents, instruments
and certificates set forth in Section 3.1 hereof, and any and all such other
instruments, documents, certificates and agreements from time to time executed
and delivered by the Borrower, the Guarantor or any of their Subsidiaries for
the benefit of the Bank pursuant to any of the foregoing, and all amendments,
restatements, supplements and other modifications thereto.
"Master Letter of Credit Agreement" shall mean, at any time, with respect
to the issuance of Letters of Credit, a Master Letter of Credit Agreement in the
form being used by the Bank at such time.
"Material Adverse Effect" shall mean (a) a material adverse change in, or a
material adverse effect upon, the assets, business, properties, condition
(financial or otherwise) or
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results of operations of the Borrower and its Subsidiaries taken as a whole, (b)
a material impairment of the ability of the Borrower and its Subsidiaries to
perform any of the Obligations under any of the Loan Documents, or (c) a
material adverse effect on (i) any substantial portion of the Collateral, (ii)
the legality, validity, binding effect or enforceability against the Borrower
and its Subsidiaries of any of the Loan Documents, (iii) the perfection or
priority of any Lien granted to the Bank under any Loan Document, or (iv) the
rights or remedies of the Bank under any Loan Document.
"Net Cash Proceeds" shall mean:
(a) with respect to any Asset Disposition, the aggregate cash proceeds
(including cash proceeds received pursuant to policies of insurance or by
way of deferred payment of principal pursuant to a note, installment
receivable or otherwise, but only as and when received) received by the
Borrower pursuant to such Asset Disposition net of (i) the direct costs
relating to such sale, transfer or other disposition (including sales
commissions and legal, accounting and investment banking fees), (ii) taxes
paid or reasonably estimated by the Borrower to be payable as a result
thereof (after taking into account any available tax credits or deductions
and any tax sharing arrangements), and (iii) amounts required to be applied
to the repayment of any Debt secured by a Lien on the asset subject to such
Asset Disposition (other than the Loans);
(b) with respect to any issuance of Capital Securities, the aggregate
cash proceeds received by the Borrower pursuant to such issuance, net of
the direct costs relating to such issuance (including sales and
underwriters' commissions; and
(c) with respect to any issuance of Debt, the aggregate cash proceeds
received by the Borrower pursuant to such issuance, net of the direct costs
of such issuance (including up-front, underwriters' and placement fees).
"Net Income" shall mean, with respect to the Borrower and its Subsidiaries
for any period, the consolidated net income (or loss) of the Borrower and its
Subsidiaries for such period as determined in accordance with GAAP, excluding
any gains from Asset Dispositions, any extraordinary gains and any gains from
discontinued operations.
"Non-Excluded Taxes" shall have the meaning set forth in Section 2.8(a)
hereof.
"Note" shall mean the Revolving Note.
"Obligations" shall mean the Loans, as evidenced by any Note, all interest
accrued thereon (including interest which would be payable as post-petition in
connection with any bankruptcy or similar proceeding, whether or not permitted
as a claim thereunder), any fees due the Bank hereunder, any expenses incurred
by the Bank hereunder and any and all other liabilities and obligations of the
Borrower to the Bank under this Agreement and any other Loan Document, including
any reimbursement obligations of the Borrower in respect of Letters of Credit
and surety bonds, all Hedging Obligations of the Borrower which are owed to the
Bank or any Affiliate of the Bank, and all Bank Product Obligations of the
Borrower, all in each case
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howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due, together with
any and all renewals or extensions thereof.
"Obligor" shall mean the Borrower, any Guarantor, accommodation endorser,
third party pledgor, or any other party liable with respect to the Obligations.
"Organizational Identification Number" means, with respect to Borrower, the
organizational identification number assigned to Borrower by the applicable
governmental unit or agency of the jurisdiction of organization of the Borrower.
"Other Taxes" shall mean any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which arise
from the execution, delivery, enforcement or registration of, or otherwise with
respect to, this Agreement or any of the other Loan Documents.
"Permitted Liens" shall mean (a) Liens for Taxes, assessments or other
governmental charges not at the time delinquent or thereafter payable without
penalty or being contested in good faith by appropriate proceedings and, in each
case, for which it maintains adequate reserves in accordance with GAAP and in
respect of which no Lien has been filed; (b) Liens arising in the ordinary
course of business (such as (i) Liens of carriers, warehousemen, mechanics and
materialmen and other similar Liens imposed by law, and (ii) Liens in the form
of deposits or pledges incurred in connection with worker's compensation,
unemployment compensation and other types of social security (excluding Liens
arising under ERISA) or in connection with surety bonds, bids, performance bonds
and similar obligations) for sums not overdue or being contested in good faith
by appropriate proceedings and not involving any advances or borrowed money or
the deferred purchase price of property or services, which do not in the
aggregate materially detract from the value of the property or assets of the
Borrower or materially impair the use thereof in the operation of the Borrower's
business and, in each case, for which it maintains adequate reserves in
accordance with GAAP and in respect of which no Lien has been filed; (c) Liens
described on Schedule 9.2 as of the Closing Date; (d) attachments, appeal bonds,
judgments and other similar Liens, for sums not exceeding Fifty Thousand and
00/100 Dollars ($50,000.00) arising in connection with court proceedings,
provided the execution or other enforcement of such Liens is effectively stayed
and the claims secured thereby are being actively contested in good faith and by
appropriate proceedings and to the extent such judgments or awards do not
constitute an Event of Default under Section 11.8 hereof; (e) easements, rights
of way, restrictions, minor defects or irregularities in title and other similar
Liens not interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries; (f) subject to the
limitation set forth in Section 9.1(g), if any, Liens arising in connection with
Capitalized Lease Obligations (and attaching only to the property being leased);
(g) subject to the limitation set forth in Section 9.1(h), Liens that constitute
purchase money security interests on any property securing Debt incurred for the
purpose of financing all or any part of the cost of acquiring such property,
provided that any such Lien attaches to such property within twenty (20) days of
the acquisition thereof and attaches solely to the property so acquired; and (h)
Liens granted to the Bank hereunder and under the Loan Documents.
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"Person" shall mean any natural person, partnership, limited liability
company, corporation, trust, joint venture, joint stock company, association,
unincorporated organization, government or agency or political subdivision
thereof, or other entity, whether acting in an individual, fiduciary or other
capacity.
"Prime Loan" or "Prime Loans" shall mean that portion, and collectively,
those portions of the aggregate outstanding principal balance of the Loans that
bear interest at the Prime Rate plus Three-Quarters percent (0.75%) per annum.
"Prime Rate" shall mean the floating per annum rate of interest which at
any time, and from time to time, shall be most recently announced by the Bank as
its Prime Rate, which is not intended to be the Bank's lowest or most favorable
rate of interest at any one time. The effective date of any change in the Prime
Rate shall for purposes hereof be the date the Prime Rate is changed by the
Bank. The Bank shall not be obligated to give notice of any change in the Prime
Rate.
"Regulatory Change" shall mean the introduction of, or any change in any
applicable law, treaty, rule, regulation or guideline or in the interpretation
or administration thereof by any governmental authority or any central bank or
other fiscal, monetary or other authority having jurisdiction over the Bank or
its lending office.
"Revolving Interest Rate" shall mean a floating per annum rate of interest
equal to the Prime Rate plus Three-Quarters percent (0.75%).
"Revolving Loan" and "Revolving Loans" shall mean, respectively, each
direct advance and the aggregate of all such direct advances made by the Bank to
the Borrower under and pursuant to this Agreement, as set forth in Section 2.1
of this Agreement.
"Revolving Loan Availability" shall mean, at any time, an amount equal to
the lesser of (a) the Revolving Loan Commitment minus the Letter of Credit
Obligations, or (b) the Borrowing Base Amount minus the Letter of Credit
Obligations.
"Revolving Loan Commitment" shall mean Two Million Seven Hundred Fifty
Thousand and 00/100 Dollars ($2,750,000.00).
"Revolving Loan Maturity Date" shall mean March 31, 2006, unless extended
by the Bank pursuant to any modification, extension or renewal note executed by
the Borrower and accepted by the Bank in its sole and absolute discretion in
substitution for the Revolving Note.
"Revolving Loan Mandatory Prepayment" shall have the meaning set forth in
Section 2.1(d)(ii) hereof.
"Revolving Note" shall mean a revolving note in the form prepared by and
acceptable to the Bank, dated as of the date hereof, in the amount of the
Revolving Loan Commitment and maturing on the Revolving Loan Maturity Date, duly
executed by the Borrower and payable to the order of the Bank, together with any
and all renewal, extension, modification
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or replacement notes executed by the Borrower and delivered to the Bank and
given in substitution therefor.
"Senior Debt" shall mean all Debt of the Borrower and its Subsidiaries
other than Subordinated Debt.
"Subordinated Debt" shall mean that portion of the Debt of the Borrower
which is subordinated to the Obligations in a manner satisfactory to the Bank,
including right and time of payment of principal and interest.
"Subsidiary" and "Subsidiaries" shall mean, respectively, with respect to
any Person, each and all such corporations, partnerships, limited partnerships,
limited liability companies, limited liability partnerships, joint ventures or
other entities of which or in which such Person owns, directly or indirectly,
such number of outstanding Capital Securities as have more than fifty percent
(50.00%) of the ordinary voting power for the election of directors or other
managers of such corporation, partnership, limited liability company or other
entity. Unless the context otherwise requires, each reference to Subsidiaries
herein shall be a reference to Subsidiaries of the Borrower.
"Tangible Assets" shall mean the total of all assets appearing on a balance
sheet of the Borrower prepared in accordance with GAAP (with Inventory being
valued at the lower of cost or market), after deducting all proper reserves
(including reserves for Depreciation) minus the sum of (i) goodwill, patents,
trademarks, prepaid expenses, deposits, deferred charges and other personal
property which is classified as intangible property in accordance with GAAP, and
(ii) any amounts due from shareholders, Affiliates, officers or employees of the
Borrower.
"Tangible Net Worth" shall mean at any time the total of Tangible Assets
minus Liabilities plus Subordinated Debt.
"Taxes" shall mean any and all present and future taxes, duties, levies,
imposts, assessments, charges or withholdings, and any and all liabilities
(including interest and penalties and other additions to taxes) with respect to
the foregoing.
"Total Debt" shall mean all Debt of the Borrower, determined on a
consolidated basis, excluding (i) Contingent Liabilities (except to the extent
constituting Contingent Liabilities in respect of the Debt of a Person other
than the Borrower or any Subsidiaries), (ii) Hedging Obligations and (iii) Debt
of the Borrower to Subsidiaries and Debt of Subsidiaries to the Borrower or to
other Subsidiaries, and (iv) contingent obligations in respect of undrawn
Letters of Credit.
"UCC" shall mean the Uniform Commercial Code in effect in the state of
Michigan from time to time.
"Unmatured Event of Default" shall mean any event which, with the giving of
notice, the passage of time or both, would constitute an Event of Default.
"Voidable Transfer" shall have the meaning set forth in Section 13.21
hereof.
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"Wholly-Owned Subsidiary" shall mean any Subsidiary of which or in which
the Borrower owns, directly or indirectly, one hundred percent (100%) of the
Capital Securities of such Subsidiary.
"Working Capital" shall mean the total of cash on hand, cash equivalents,
marketable securities, Accounts minus adequate reserves for doubtful Accounts,
and readily salable Inventory at the lower of cost or market value, minus the
total of all liabilities payable within one year, all as determined in
accordance with GAAP.
1.2 Accounting Terms. Any accounting terms used in this Agreement which are
not specifically defined herein shall have the meanings customarily given them
in accordance with GAAP. Calculations and determinations of financial and
accounting terms used and not otherwise specifically defined hereunder and the
preparation of financial statements to be furnished to the Bank pursuant hereto
shall be made and prepared, both as to classification of items and as to amount,
in accordance with sound accounting practices and GAAP as used in the
preparation of the financial statements of the Borrower on the date of this
Agreement. If any changes in accounting principles or practices from those used
in the preparation of the financial statements are hereafter occasioned by the
promulgation of rules, regulations, pronouncements and opinions by or required
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants (or any successor thereto or agencies with similar
functions), which results in a material change in the method of accounting in
the financial statements required to be furnished to the Bank hereunder or in
the calculation of financial covenants, standards or terms contained in this
Agreement, the parties hereto agree to enter into good faith negotiations to
amend such provisions so as equitably to reflect such changes to the end that
the criteria for evaluating the financial condition and performance of the
Borrower will be the same after such changes as they were before such changes;
and if the parties fail to agree on the amendment of such provisions, the
Borrower will furnish financial statements in accordance with such changes, but
shall provide calculations, which are reviewed and certified by the Borrower's
accountants, for all financial covenants, shall perform all financial covenants
and shall otherwise observe all financial standards and terms in accordance with
applicable accounting principles and practices in effect immediately prior to
such changes. Calculations with respect to financial covenants required to be
stated in accordance with applicable accounting principles and practices in
effect immediately prior to such changes shall be reviewed and certified by the
Borrower's accountants.
1.3 Other Terms Defined in UCC. All other capitalized words and phrases
used herein and not otherwise specifically defined herein shall have the
respective meanings assigned to such terms in the UCC, to the extent the same
are used or defined therein.
1.4 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms. Whenever the context so
requires, the neuter gender includes the masculine and feminine, the single
number includes the plural, and vice versa, and in particular the word
"Borrower" shall be so construed.
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(b) Section and Schedule references are to this Agreement unless
otherwise specified. The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement
(c) The term "including" is not limiting, and means "including,
without limitation".
(d) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding", and the word "through" means
"to and including".
(e) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement and the other Loan Documents) and
other contractual instruments shall be deemed to include all subsequent
amendments, restatements, supplements and other modifications thereto, but
only to the extent such amendments, restatements, supplements and other
modifications are not prohibited by the terms of any Loan Document, and
(ii) references to any statute or regulation shall be construed as
including all statutory and regulatory provisions amending, replacing,
supplementing or interpreting such statute or regulation.
(f) To the extent any of the provisions of the other Loan Documents
are inconsistent with the terms of this Agreement, the provisions of this
Agreement shall govern.
(g) This Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are
cumulative and each shall be performed in accordance with its terms.
SECTION 2 COMMITMENT OF THE BANK.
2.1 Revolving Loans.
(a) Revolving Loan Commitment. Subject to the terms and conditions of
this Agreement and the other Loan Documents, and in reliance upon the
representations and warranties of the Borrower set forth herein and in the
other Loan Documents, the Bank agrees to make such Revolving Loans at such
times as the Borrower may from time to time request until, but not
including, the Revolving Loan Maturity Date, and in such amounts as the
Borrower may from time to time request, provided, however, that the
aggregate principal balance of all Revolving Loans outstanding at any time
shall not exceed the Revolving Loan Availability. Revolving Loans made by
the Bank may be repaid and, subject to the terms and conditions hereof,
borrowed again up to, but not including the Revolving Loan Maturity Date
unless the Revolving Loans are otherwise accelerated, terminated or
extended as provided in this Agreement. The Revolving Loans shall be used
by the Borrower for the purpose of working capital.
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(b) Revolving Loan Interest and Payments. Intentionally omitted.
(c) Revolving Loan Interest and Payments. Except as otherwise provided
in this Section 2.1(c), the principal amount of the Revolving Loans
outstanding from time to time shall bear interest at the applicable
Revolving Interest Rate. Accrued and unpaid interest on the unpaid
principal balance of all Revolving Loans outstanding from time to time
which are Prime Loans, shall be due and payable monthly, in arrears,
commencing on April 1, 2005 and continuing on the 1st day of each calendar
month thereafter, and on the Revolving Loan Maturity Date. Any amount of
principal or interest on the Revolving Loans which is not paid when due,
whether at stated maturity, by acceleration or otherwise, shall bear
interest payable on demand at the Default Rate.
(d) Revolving Loan Principal Payments.
(i) Revolving Loan Mandatory Payments. All Revolving Loans
hereunder shall be repaid by the Borrower on the Revolving Loan
Maturity Date, unless payable sooner pursuant to the provisions of
this Agreement. In the event the aggregate outstanding principal
balance of all Revolving Loans and Letter of Credit Obligations
hereunder exceeds the Revolving Loan Availability, the Borrower shall,
without notice or demand of any kind, immediately make such repayments
of the Revolving Loans or take such other actions as are satisfactory
to the Bank as shall be necessary to eliminate such excess.
(ii) Mandatory [Clean-Up / Clean-Down]. Intentionally omitted.
(iii) Optional Prepayments. The Borrower may from time to time
prepay the Revolving Loans which are Prime Loans, in whole or in part,
without any prepayment penalty whatsoever, provided that any
prepayment of the entire principal balance of the Prime Loans shall
include accrued interest on such Prime Loans to the date of such
prepayment.
2.2 Term Loan. Intentionally omitted.
2.3 Capex Loans. Intentionally omitted.
2.4 Additional LIBOR Loan Provisions. Intentionally omitted.
2.5 Interest and Fee Computation; Collection of Funds. Except as otherwise
set forth herein, all interest and fees shall be calculated on the basis of a
year consisting of 360 days and shall be paid for the actual number of days
elapsed. Principal payments submitted in funds not immediately available shall
continue to bear interest until collected. If any payment to be made by the
Borrower hereunder or under any Note shall become due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day and
such extension of time shall be included in computing any interest in respect of
such payment. Notwithstanding anything to the contrary contained herein, the
final payment due under any of the Loans must be made by wire transfer or other
immediately available funds. All payments made by the Borrower hereunder or
under any of the Loan Documents shall be made without setoff, counterclaim, or
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other defense. To the extent permitted by applicable law, all payments hereunder
or under any of the Loan Documents (including any payment of principal,
interest, or fees) to, or for the benefit, of any Person shall be made by the
Borrower free and clear of, and without deduction or withholding for, or account
of, any taxes now or hereinafter imposed by any taxing authority.
2.6 Late Charge. If any payment of interest or principal due hereunder is
not made within ten (10) days after such payment is due in accordance with the
terms hereof, then, in addition to the payment of the amount so due, the
Borrower shall pay to the Bank a "late charge" of five cents for each whole
dollar so overdue to defray part of the cost of collection and handling such
late payment. The Borrower agrees that the damages to be sustained by the Bank
for the detriment caused by any late payment are extremely difficult and
impractical to ascertain, and that the amount of five cents for each one dollar
due is a reasonable estimate of such damages, does not constitute interest, and
is not a penalty.
2.7 Letters of Credit. Subject to the terms and conditions of this
Agreement and upon (i) the execution by the Borrower and the Bank of a Master
Letter of Credit Agreement in form and substance acceptable to the Bank
(together with all amendments, modifications and restatements thereof, the
"Master Letter of Credit Agreement") and, (ii) the execution and delivery by the
Borrower, and the acceptance by the Bank, in its sole and absolute discretion,
of a Letter of Credit Application, the Bank agrees to issue for the account of
the Borrower such Letters of Credit in the standard form of the Bank and
otherwise in form and substance acceptable to the Bank, from time to time during
the term of this Agreement, provided that the Letter of Credit Obligations may
not at any time exceed the Letter of Credit Commitment and provided further,
that no Letter of Credit shall have an expiration date later than the Letter of
Credit Maturity Date. The amount of any payments made by the Bank with respect
to draws made by a beneficiary under a Letter of Credit for which the Borrower
has failed to reimburse the Bank upon the earlier of (i) the Bank's demand for
repayment, or (ii) five (5) days from the date of such payment to such
beneficiary by the Bank, shall be deemed to have been converted to a Revolving
Loan as of the date such payment was made by the Bank to such beneficiary. Upon
the occurrence of an Event of a Default and at the option of the Bank, all
Letter of Credit Obligations shall be converted to Revolving Loans consisting of
Prime Loans, all without demand, presentment, protest or notice of any kind, all
of which are hereby waived by the Borrower. To the extent the provisions of the
Master Letter of Credit Agreement differ from, or are inconsistent with, the
terms of this Agreement, the provisions of this Agreement shall govern.
2.8 Taxes.
(a) All payments made by the Borrower under this Agreement shall be
made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any
governmental authority, excluding net income taxes and franchise taxes
(imposed in lieu of net income taxes) imposed on the Bank as a result of a
present or former connection between the Bank and the jurisdiction of the
governmental authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from the Bank having executed, delivered or performed its
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obligations or received a payment under, or enforced, this Agreement or any
other Loan Document). If any such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions or withholdings (collectively,
"Non-Excluded Taxes") or Other Taxes are required to be withheld from any
amounts payable to the Bank hereunder, the amounts so payable to the Bank
shall be increased to the extent necessary to yield to the Bank (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in
this Agreement, provided, however, that the Borrower shall not be required
to increase any such amounts payable to the Bank with respect to any
Non-Excluded Taxes that are attributable to the Bank's failure to comply
with the requirements of subsection (c).
(b) The Borrower shall pay any Other Taxes to the relevant
governmental authority in accordance with applicable law.
(c) At the request of the Borrower and at the Borrower's sole cost,
the Bank shall take reasonable steps to (i) contest its liability for any
Non-Excluded Taxes or Other Taxes that have not been paid, or (ii) seek a
refund of any Non-Excluded Taxes or Other Taxes that have been paid.
(d) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Bank a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Bank the required receipts or other
required documentary evidence or if any governmental authority seeks to
collect a Non-Excluded Tax or Other Tax directly from the Bank for any
other reason, the Borrower shall indemnify the Bank on an after-tax basis
for any incremental taxes, interest or penalties that may become payable by
the Bank.
(e) The agreements in this Section shall survive the satisfaction and
payment of the Obligations and the termination of this Agreement.
2.9 All Loans to Constitute Single Obligation. The Loans shall constitute
one general obligation of the Borrower, and shall be secured by Bank's priority
security interest in and Lien upon all of the Collateral and by all other
security interests, Liens, claims and encumbrances heretofore, now or at any
time or times hereafter granted by the Borrower to Bank.
SECTION 3 CONDITIONS OF BORROWING.
Notwithstanding any other provision of this Agreement, the Bank shall not
be required to disburse, make or continue all or any portion of the Loans, if
any of the following conditions shall have occurred.
3.1 Loan Documents. The Borrower shall have failed to execute and deliver
to the Bank any of the following Loan Documents, all of which must be
satisfactory to the Bank and the Bank's counsel in form, substance and
execution:
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(a) Loan Agreement. Two copies of this Agreement duly executed by the
Borrower.
(b) Revolving Note. A Revolving Note duly executed by the Borrower, in
the form prepared by and acceptable to the Bank.
(c) Term Note. Intentionally omitted.
(d) Capex Note. Intentionally omitted.
(e) Master Letter of Credit Agreement. A Master Letter of Credit
Agreement prepared by and acceptable to the Bank duly executed by the
Borrower in favor of the Bank.
(f) Guaranty. A Continuing Unconditional Guaranty dated as of the date
of this Agreement, executed by the Guarantor to and for the benefit of the
Bank, in the form prepared by and acceptable to the Bank (the "Guaranty").
(g) Guaranties. Intentionally omitted.
(h) Pledge Agreement. Intentionally omitted.
(i) Subordination Agreement. Intentionally omitted.
(j) Collateral Access Agreement. Collateral Access Agreements dated
effective as of the date of this Agreement, from the owner, lessor or
mortgagee, as the case may be, of any real estate whereon any Collateral is
stored or otherwise located, in the form prepared by and acceptable to the
Bank.
(i) Real Estate Documents. Intentionally omitted.
(k) Borrowing Base Certificate. A Borrowing Base Certificate in the
form prepared by the Bank, certified as accurate by the Borrower and
acceptable to the Bank in its sole discretion.
(l) Search Results; Lien Terminations. Copies of UCC search reports
dated such a date as is reasonably acceptable to the Bank, listing all
effective financing statements which name the Borrower and any of its
Subsidiaries, under their present names and any previous names, as debtors,
together with (i) copies of such financing statements, (ii) payoff letters
evidencing repayment in full of all existing Debt to be repaid with the
Loans, the termination of all agreements relating thereto and the release
of all Liens granted in connection therewith, with UCC or other appropriate
termination statements and documents effective to evidence the foregoing
(other than Permitted Liens), and (iii) such other UCC termination
statements as the Bank may reasonably request.
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(m) Organizational and Authorization Document. Certified copies of (i)
Articles of Incorporation and Bylaws of the Borrower and each of its
Subsidiaries, (ii) good standing certificates in the state of incorporation
of the Borrower and each of its Subsidiaries and in each other state
requested by the Bank, (iii) resolutions of the board of directors of the
Borrower and each of its Subsidiaries approving and authorizing such
Person's execution, delivery and performance of the Loan Documents to which
it is party and the transactions contemplated thereby, and (iv) signature
and incumbency certificates of the officers of the Borrower and each of its
Subsidiaries, executing any of the Loan Documents, it being understood that
the Bank may conclusively rely on each such certificate until formally
advised by a like certificate of any changes therein), all certified by its
secretary or an assistant secretary (or similar officer) as being in full
force and effect without modification.
(n) Insurance. Evidence satisfactory to the Bank of the existence of
insurance required to be maintained pursuant to Section 8.6, together with
evidence that the Bank has been named as a lender's loss payee.
(o) Lockbox Agreement. Intentionally omitted.
(p) Additional Documents. Such other certificates, financial
statements, schedules, resolutions, opinions of counsel, notes and other
documents which are provided for hereunder or which the Bank shall require.
3.2 Event of Default. Any Event of Default or Unmatured Event of Default
shall have occurred and be continuing.
3.3 Material Adverse Effect. The occurrence of any event having a Material
Adverse Effect upon the Borrower.
3.4 Litigation. Any litigation or governmental proceeding shall have been
instituted against the Borrower or any of its officers or shareholders having a
Materially Adverse Effect upon the Borrower.
3.5 Representations and Warranties. Any representation or warranty of the
Borrower contained herein or in any Loan Document shall be untrue or incorrect
in any material respect as of the date of any Loan as though made on such date,
except to the extent such representation or warranty expressly relates to an
earlier date.
3.6 Commitment Fee. The Borrower shall have failed to pay to the Bank a
commitment fee in the amount of One-Half percent (0.5%) of the commitment amount
and a facility fee in the amount of One-Quarter percent (0.25%) of the
commitment amount, payable on or before the execution of this Agreement by the
Bank.
SECTION 4 NOTES EVIDENCING LOANS.
4.1 Revolving Note. The Revolving Loans and the Letter of Credit
Obligations shall be evidenced by the Revolving Note. At the time of the initial
disbursement of a Revolving Loan
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and at each time any additional Revolving Loan shall be requested hereunder or a
repayment made in whole or in part thereon, a notation thereof shall be made on
the books and records of the Bank. All amounts recorded shall be, absent
manifest error, conclusive and binding evidence of (i) the principal amount of
the Revolving Loans advanced hereunder and the amount of all Letter of Credit
Obligations, (ii) any accrued and unpaid interest owing on the Revolving Loans,
and (iii) all amounts repaid on the Revolving Loans or the Letter of Credit
Obligations. The failure to record any such amount or any error in recording
such amounts shall not, however, limit or otherwise affect the obligations of
the Borrower under the Revolving Note to repay the principal amount of the
Revolving Loans, together with all interest accruing thereon.
4.2 Term Note. Intentionally omitted.
4.3 Capex Note. Intentionally omitted.
SECTION 5 MANNER OF BORROWING.
5.1 Borrowing Procedures. Each Loan shall be made available to the Borrower
upon any written, verbal, electronic, telephonic or telecopy loan request which
the Bank in good faith believes to emanate from a properly authorized
representative of the Borrower, whether or not that is in fact the case. Each
such request shall be effective upon receipt by the Bank, shall be irrevocable,
and shall specify the date, amount and type of borrowing. A request for a direct
advance must be received by the Bank no later than 11:00 a.m. Troy, Michigan
time, on the day it is to be funded. The proceeds of each direct advance shall
be made available at the office of the Bank by credit to the account of the
Borrower. The Borrower does hereby irrevocably confirm, ratify and approve all
such advances by the Bank and does hereby indemnify the Bank against losses and
expenses (including court costs, attorneys' and paralegals' fees) and shall hold
the Bank harmless with respect thereto.
5.2 Borrowing Procedures. Intentionally omitted.
5.3 LIBOR Conversion and Continuation Procedures. Intentionally omitted.
5.4 LIBOR Conversion and Continuation Procedures. Intentionally omitted.
5.5 Letters of Credit. All Letters of Credit shall bear such application,
issuance, renewal, negotiation and other fees and charges, and bear such
interest as charged by the Bank or otherwise payable pursuant to the Master
Letter of Credit Agreement or this Agreement. In addition to the foregoing, all
standby Letters of Credit issued under and pursuant to this Agreement shall bear
an annual issuance fee equal to three and three-quarters percent (3.75%) of the
face amount of such standby Letter of Credit, payable by the Borrower quarterly,
in arrears, until (i) such Letter of Credit has expired or has been returned to
the Bank, or (ii) the Bank has paid the beneficiary thereunder the full face
amount of such Letter of Credit.
5.6 Automatic Debit. In order to effectuate the timely payment of any of
the Obligations when due, the Borrower hereby authorizes and directs the Bank,
at the Bank's option, to (a) debit the amount of the Obligations to any ordinary
deposit account of the Borrower, or (b) make a Revolving Loan hereunder to pay
the amount of the Obligations.
-23-
5.7 Discretionary Disbursements. The Bank, in its sole and absolute
discretion, may immediately upon notice to the Borrower, disburse any or all
proceeds of the Loans made or available to the Borrower pursuant to this
Agreement to pay any fees, costs, expenses or other amounts required to be paid
by the Borrower hereunder and not so paid. All monies so disbursed shall be a
part of the Obligations, payable by the Borrower on demand from the Bank.
SECTION 6 SECURITY FOR THE OBLIGATIONS.
6.1 Security for Obligations. As security for the payment and performance
of the Obligations, the Borrower does hereby pledge, assign, transfer, deliver
and grant to the Bank, for its own benefit and as agent for its Affiliates, a
continuing and unconditional first priority security interest, or to the extent
a first priority security interest is unavailable as a result of the items
listed in Schedule 9.2 then a security interest with the highest available
priority, in and to any and all property of the Borrower, of any kind or
description, tangible or intangible, wheresoever located and whether now
existing or hereafter arising or acquired, including the following (all of which
property, along with the products and proceeds therefrom, are individually and
collectively referred to as the "Collateral"):
(a) all property of, or for the account of, the Borrower now or
hereafter coming into the possession, control or custody of, or in transit
to, the Bank or any agent or bailee for the Bank or any parent, Affiliate
or Subsidiary of the Bank or any participant with the Bank in the Loans
(whether for safekeeping, deposit, collection, custody, pledge,
transmission or otherwise), including all earnings, dividends, interest, or
other rights in connection therewith and the products and proceeds
therefrom, including the proceeds of insurance thereon; and
(b) the additional property of the Borrower, whether now existing or
hereafter arising or acquired, and wherever now or hereafter located,
together with all additions and accessions thereto, substitutions,
betterments and replacements therefor, products and Proceeds therefrom, and
all of the Borrower's books and records and recorded data relating thereto
(regardless of the medium of recording or storage), together with all of
the Borrower's right, title and interest in and to all computer software
required to utilize, create, maintain and process any such records or data
on electronic media, identified and set forth as follows:
(i) All Accounts and all Goods whose sale, lease or other
disposition by the Borrower has given rise to Accounts and have been
returned to, or repossessed or stopped in transit by, the Borrower, or
rejected or refused by an Account Debtor;
(ii) All Inventory, including, without limitation, raw materials,
work-in-process and finished goods;
(iii) All Goods (other than Inventory), including, without
limitation, embedded software, Equipment, vehicles, furniture and
Fixtures;
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(iv) All Software, computer programs, and intellectual property;
(v) All Securities, Investment Property, Financial Assets and
Deposit Accounts;
(vi) All Chattel Paper, Electronic Chattel Paper, Instruments,
Documents, Letter of Credit Rights, all proceeds of letters of credit,
Health-Care-Insurance Receivables, Supporting Obligations, notes
secured by real estate, Commercial Tort Claims and General
Intangibles, including Payment Intangibles; and
(vii) All Proceeds (whether Cash Proceeds or Noncash Proceeds) of
the foregoing property, including, without limitation, all insurance
policies and proceeds of insurance payable by reason of loss or damage
to the foregoing property, including unearned premiums, and of eminent
domain or condemnation awards.
Notwithstanding the foregoing, the Collateral shall not include the
intellectual property related solely to the DIALYSATE Iron product.
6.2 Other Collateral. Intentionally omitted.
6.3 Possession and Transfer of Collateral. Until an Event of Default has
occurred hereunder, the Borrower shall be entitled to possession or use of the
Collateral (other than Instruments or Documents, Tangible Chattel Paper,
Investment Property consisting of certificated securities and other Collateral
required to be delivered to the Bank pursuant to this Section 6). The
cancellation or surrender of any Note, upon payment or otherwise, shall not
affect the right of the Bank to retain the Collateral for any other of the
Obligations. The Borrower shall not sell, assign (by operation of law or
otherwise), license, lease or otherwise dispose of, or grant any option with
respect to any of the Collateral, except that the Borrower may sell Inventory in
the ordinary course of business.
6.4 Financing Statements. The Borrower shall, at the Bank's request, at any
time and from time to time, execute and deliver to the Bank such financing
statements, amendments and other documents and do such acts as the Bank deems
necessary in order to establish and maintain valid, attached and perfected first
priority security interests in the Collateral in favor of the Bank, for its own
benefit and as agent for its Affiliates, free and clear of all Liens and claims
and rights of third parties whatsoever, except Permitted Liens. The Borrower
hereby irrevocably authorizes the Bank at any time, and from time to time while
any Obligations are outstanding, the Bank has a duty to lend under this
Agreement or any Letters of Credit hereunder, to file in any jurisdiction any
initial financing statements and amendments thereto without the signature of the
Borrower that (a) indicate the Collateral (i) is comprised of all assets (except
excluded assets) of the Borrower or words of similar effect, regardless of
whether any particular asset comprising a part of the Collateral falls within
the scope of Article 9 of the Uniform Commercial Code of the jurisdiction
wherein such financing statement or amendment is filed, or (ii) as being of an
equal or lesser scope or within greater detail as the grant of the security
interest set forth herein, and (b)
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contain any other information required by Section 5 of Article 9 of the Uniform
Commercial Code of the jurisdiction wherein such financing statement or
amendment is filed regarding the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether the Borrower is an
organization, the type of organization and any Organizational Identification
Number issued to the Borrower, and (ii) in the case of a financing statement
filed as a fixture filing or indicating Collateral as as-extracted collateral or
timber to be cut, a sufficient description of the real property to which the
Collateral relates. The Borrower hereby agrees that a photocopy or other
reproduction of this Agreement is sufficient for filing as a financing statement
and the Borrower authorizes the Bank to file this Agreement as a financing
statement in any jurisdiction. The Borrower agrees to furnish any such
information to the Bank promptly upon request. The Borrower further ratifies and
affirms its authorization for any financing statements and/or amendments
thereto, executed and filed by the Bank in any jurisdiction prior to the date of
this Agreement. In addition, the Borrower shall make appropriate entries on its
books and records disclosing the security interests of the Bank, for its own
benefit and as agent for its Affiliates, in the Collateral.
6.5 Additional Collateral. The Borrower shall deliver to the Bank
immediately upon its demand, such other collateral as the Bank may from time to
time request, should the value of the Collateral, in the Bank's reasonable sole
and absolute discretion, decline, deteriorate, depreciate or become impaired,
and does hereby grant to the Bank, for its own benefit and as agent for its
Affiliates, a continuing security interest in such other collateral, which, when
pledged, assigned and transferred to the Bank shall be and become part of the
Collateral. The security interests of the Bank, for its own benefit and as agent
for its Affiliates, in each of the foregoing Collateral shall be valid, complete
and perfected whether or not covered by a specific assignment.
6.6 Preservation of the Collateral. The Bank may, but is not required, to
take such actions from time to time as the Bank deems appropriate to maintain or
protect the Collateral. The Bank shall have exercised reasonable care in the
custody and preservation of the Collateral if the Bank takes such action as the
Borrower shall reasonably request in writing which is not inconsistent with the
Bank's status as a secured party, but the failure of the Bank to comply with any
such request shall not be deemed a failure to exercise reasonable care;
provided, however, the Bank's responsibility for the safekeeping of the
Collateral shall (i) be deemed reasonable if such Collateral is accorded
treatment substantially equal to that which the Bank accords its own property,
and (ii) not extend to matters beyond the control of the Bank, including,
without limitation, acts of God, war, insurrection, riot or governmental
actions. In addition, any failure of the Bank to preserve or protect any rights
with respect to the Collateral against prior or third parties, or to do any act
with respect to preservation of the Collateral, not so requested by the
Borrower, shall not be deemed a failure to exercise reasonable care in the
custody or preservation of the Collateral. The Borrower shall have the sole
responsibility for taking such action as may be necessary, from time to time, to
preserve all rights of the Borrower and the Bank in the Collateral against prior
or third parties. Without limiting the generality of the foregoing, where
Collateral consists in whole or in part of securities, the Borrower represents
to, and covenants with, the Bank that the Borrower has made arrangements for
keeping informed of changes or potential changes affecting the securities
(including rights to convert or subscribe, payment of dividends, reorganization
or other exchanges, tender offers and voting rights), and the Borrower
-26-
agrees that the Bank shall have no responsibility or liability for informing the
Borrower of any such or other changes or potential changes or for taking any
action or omitting to take any action with respect thereto.
6.7 Other Actions as to any and all Collateral. The Borrower further agrees
to take any other action reasonably requested by the Bank to ensure the
attachment, perfection and first priority of, and the ability of the Bank to
enforce, the security interest of the Bank, for its own benefit and as agent for
its Affiliates, in any and all of the Collateral including, without limitation,
(a) causing the Bank's name to be noted as secured party on any certificate of
title for a titled good if such notation is a condition to attachment,
perfection or priority of, or ability of the bank to enforce, the security
interest of the Bank, for its own benefit and as agent for its Affiliates, in
such Collateral, (b) complying with any provision of any statute, regulation or
treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability of
the Bank to enforce, the security interest of the Bank, for its own benefit and
as agent for its Affiliates, in such Collateral, (c) obtaining governmental and
other third party consents and approvals, including without limitation any
consent of any licensor, lessor or other Person obligated on Collateral, (d)
obtaining waivers from mortgagees and landlords in form and substance
satisfactory to the Bank, and (e) taking all actions required by the UCC in
effect from time to time or by other law, as applicable in any relevant UCC
jurisdiction, or by other law as applicable in any foreign jurisdiction. The
Borrower further agrees to indemnify and hold the Bank harmless against claims
of any Persons not a party to this Agreement concerning disputes arising over
the Collateral.
6.8 Collateral in the Possession of a Warehouseman or Bailee. If any of the
Collateral at any time is in the possession of a warehouseman or bailee, the
Borrower shall promptly notify the Bank thereof, and shall promptly obtain a
Collateral Access Agreement. The Bank agrees with the Borrower that the Bank
shall not give any instructions to such warehouseman or bailee pursuant to such
Collateral Access Agreement unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by the Borrower
with respect to the warehouseman or bailee.
6.9 Lockbox Arrangement. Intentionally omitted.
6.10 Letter-of-Credit Rights. If the Borrower at any time is a beneficiary
under a letter of credit now or hereafter issued in favor of the Borrower, the
Borrower shall promptly notify the Bank thereof and, at the request and option
of the Bank, the Borrower shall, pursuant to an agreement in form and substance
satisfactory to the Bank, either (i) arrange for the issuer and any confirmer of
such letter of credit to consent to an assignment to the Bank, for its own
benefit and as agent for its Affiliates, of the proceeds of any drawing under
the letter of credit, or (ii) arrange for the Bank, for its own benefit and as
agent for its Affiliates, to become the transferee beneficiary of the letter of
credit, with the Bank agreeing, in each case, that the proceeds of any drawing
under the letter of credit are to be applied as provided in this Agreement.
6.11 Commercial Tort Claims. If the Borrower shall at any time hold or
acquire a Commercial Tort Claim, the Borrower shall immediately notify the Bank
in writing signed by the Borrower of the details thereof and grant to the Bank,
for its own benefit and as agent for its
-27-
Affiliates, in such writing a security interest therein and in the proceeds
thereof, all upon the terms of this Agreement, in each case in form and
substance satisfactory to the Bank, and shall execute any amendments hereto
deemed reasonably necessary by the Bank to perfect the security interest of the
Bank, for its own benefit and as agent for its Affiliates, in such Commercial
Tort Claim.
6.12 Electronic Chattel Paper and Transferable Records. If the Borrower at
any time holds or acquires an interest in any electronic chattel paper or any
"transferable record", as that term is defined in Section 201 of the federal
Electronic Signatures in Global and National Commerce Act, or in Section 16 of
the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, the Borrower shall promptly notify the Bank thereof and, at the
request of the Bank, shall take such action as the Bank may reasonably request
to vest in the Bank control under Section 9-105 of the UCC of such electronic
chattel paper or control under Section 201 of the federal Electronic Signatures
in Global and National Commerce Act or, as the case may be, Section 16 of the
Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of
such transferable record. The Bank agrees with the Borrower that the Bank will
arrange, pursuant to procedures satisfactory to the Bank and so long as such
procedures will not result in the Bank's loss of control, for the Borrower to
make alterations to the electronic chattel paper or transferable record
permitted under Section 9-105 of the UCC or, as the case may be, Section 201 of
the federal Electronic Signatures in Global and National Commerce Act or Section
16 of the Uniform Electronic Transactions Act for a party in control to make
without loss of control.
SECTION 7 REPRESENTATIONS AND WARRANTIES.
To induce the Bank to make the Loans, the Borrower makes the following
representations and warranties to the Bank, each of which shall survive the
execution and delivery of this Agreement:
7.1 Borrower Organization and Name. The Borrower is a corporation duly
organized, existing and in good standing under the laws of the State of
Michigan, with full and adequate power to carry on and conduct its business as
presently conducted and each Subsidiary is validly existing and in good standing
under the laws of the jurisdiction of its organization. The Borrower and each
Subsidiary is duly licensed or qualified in all foreign jurisdictions wherein
the nature of its activities require such qualification or licensing, except for
such jurisdictions where the failure to so qualify would not have a Material
Adverse Effect. The Borrower's Organizational Identification Number is 427745.
The exact legal name of the Borrower is as set forth in the first paragraph of
this Agreement, and the Borrower currently does not conduct, nor has it during
the last five (5) years conducted, business under any other name or trade name.
7.2 Authorization. The Borrower has full right, power and authority to
enter into this Agreement, to make the borrowings and execute and deliver the
Loan Documents as provided herein and to perform all of its duties and
obligations under this Agreement and the other Loan Documents. The execution and
delivery of this Agreement and the other Loan Documents will not, nor will the
observance or performance of any of the matters and things herein or therein set
forth, violate or contravene any provision of law or of the articles of
incorporation or bylaws of
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the Borrower. All necessary and appropriate action has been taken on the part of
the Borrower to authorize the execution and delivery of this Agreement and the
Loan Documents.
7.3 Validity and Binding Nature. This Agreement and the other Loan
Documents are the legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their terms, subject to
bankruptcy, insolvency and similar laws affecting the enforceability of
creditors' rights generally and to general principles of equity.
7.4 Consent; Absence of Breach. The execution, delivery and performance of
this Agreement, the other Loan Documents and any other documents or instruments
to be executed and delivered by the Borrower in connection with the Loans, and
the borrowings by the Borrower hereunder, do not and will not (a) require any
consent, approval, authorization, or filings with, notice to or other act by or
in respect of, any governmental authority or any other Person (other than any
consent or approval which has been obtained and is in full force and effect);
(b) conflict with (i) any provision of law or any applicable regulation, order,
writ, injunction or decree of any court or governmental authority, (ii) the
articles of incorporation or bylaws of the Borrower or any of its Subsidiaries,
or (iii) any material agreement, indenture, instrument or other document, or any
judgment, order or decree, which is binding upon the Borrower or any of its
Subsidiaries or any of their respective properties or assets; or (c) require, or
result in, the creation or imposition of any Lien on any asset of Borrower or
any of its Subsidiaries, other than Liens in favor of the Bank created pursuant
to this Agreement.
7.5 Ownership of Properties; Liens. The Borrower is the sole owner or has
other rights in all of its properties and assets, real and personal, tangible
and intangible, of any nature whatsoever (including patents, trademarks, trade
names, service marks and copyrights), free and clear of all Liens, charges and
claims (including infringement claims with respect to patents, trademarks,
service marks, copyrights and the like), other than Permitted Liens.
7.6 Equity Ownership. Intentionally omitted.
7.7 Intellectual Property. The Borrower owns and possesses or has a license
or other right to use all Intellectual Property as are necessary for the conduct
of the businesses of the Borrower, without any infringement upon rights of
others which could reasonably be expected to have a Material Adverse Effect upon
the Borrower, and no material claim has been asserted and is pending by any
Person challenging or questioning the use of any Intellectual Property or the
validity or effectiveness of any Intellectual Property nor does the Borrower
know of any valid basis for any such claim.
7.8 Financial Statements. All financial statements submitted to the Bank
have been prepared in accordance with sound accounting practices and GAAP on a
basis, except as otherwise noted therein, consistent with the previous fiscal
year and present fairly the financial condition of the Borrower and the results
of the operations for the Borrower as of such date and for the periods
indicated. Since the date of the most recent financial statement submitted by
the Borrower to the Bank, there has been no change in the financial condition or
in the assets or liabilities of the Borrower having a Material Adverse Effect on
the Borrower.
-29-
7.9 Litigation and Contingent Liabilities. There is no litigation,
arbitration proceeding, demand, charge, claim, petition or governmental
investigation or proceeding pending, or to the knowledge of the Borrower,
threatened, against the Borrower, which, if adversely determined, which might
reasonably be expected to have a Material Adverse Effect upon the Borrower,
except as set forth in Schedule 7.9. Other than any liability incident to such
litigation or proceedings, the Borrower has no material guarantee obligations,
contingent liabilities, liabilities for taxes, or any long-term leases or
unusual forward or long-term commitments, including any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, that are not fully-reflected or fully reserved for in the most
recent audited financial statements delivered pursuant to subsection 8.8(a) or
fully-reflected or fully reserved for in the most recent quarterly financial
statements delivered pursuant to subsection 8.8(b) and not permitted by Section
9.1.
7.10 Event of Default. As of the date of this Agreement, no Event of
Default or Unmatured Event of Default exists or would result from the incurrence
by the Borrower of any of the Obligations hereunder or under any of the other
Loan Document, and the Borrower is not in default (without regard to grace or
cure periods) under any other contract or agreement to which it is a party, the
effect of which would have a Material Adverse Effect upon the Borrower.
7.11 Adverse Circumstances. No condition, circumstance, event, agreement,
document, instrument, restriction, litigation or proceeding (or threatened
litigation or proceeding or basis therefor) exists which (a) would have a
Material Adverse Effect upon the Borrower, or (b) would constitute an Event of
Default.
7.12 Environmental Laws and Hazardous Substances. The Borrower has not
generated, used, stored, treated, transported, manufactured, handled, produced
or disposed of any Hazardous Substances, on or off any of the premises of the
Borrower (whether or not owned by it) in any manner which at any time violates
any Environmental Law or any license, permit, certificate, approval or similar
authorization thereunder. The Borrower shall comply in all material respects
with all Environmental Laws and will obtain all licenses, permits, certificates,
approvals and similar authorizations thereunder. There has been no
investigation, proceeding, complaint, order, directive, claim, citation or
notice by any governmental authority or any other Person, nor is any pending or,
to the best of the Borrower's knowledge, threatened, and the Borrower shall
immediately notify the Bank upon becoming aware of any such investigation,
proceeding, complaint, order, directive, claim, citation or notice, and shall
take prompt and appropriate actions to respond thereto, with respect to any
non-compliance with, or violation of, the requirements of any Environmental Law
by the Borrower or the release, spill or discharge, threatened or actual, of any
Hazardous Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Material or any
other environmental, health or safety matter, which affects the Borrower or its
business, operations or assets or any properties at which the Borrower has
transported, stored or disposed of any Hazardous Substances. The Borrower has no
material liability, contingent or otherwise, in connection with a release, spill
or discharge, threatened or actual, of any Hazardous Substances or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Material. The Borrower further agrees to
allow the Bank or its agent access to the properties of the Borrower and its
Subsidiaries to confirm compliance with all
-30-
Environmental Laws, and the Borrower shall, following determination by the Bank
that there is non-compliance, or any condition which requires any action by or
on behalf of the Borrower in order to avoid any non-compliance, with any
Environmental Law, at the Borrower's sole expense, cause an independent
environmental engineer acceptable to the Bank to conduct such tests of the
relevant site as are appropriate, and prepare and deliver a report setting forth
the result of such tests, a proposed plan for remediation and an estimate of the
costs thereof.
7.13 Solvency, etc. As of the date hereof, and immediately prior to and
after giving effect to the issuance of each Letter of Credit and each Loan
hereunder and the use of the proceeds thereof, (a) the fair value of the
Borrower's assets is greater than the amount of its liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated as required under the ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Bankruptcy Code, (b) the present fair saleable value of the Borrower's assets is
not less than the amount that will be required to pay the probable liability on
its debts as they become absolute and matured, (c) the Borrower is able to
realize upon its assets and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the normal
course of business, (d) the Borrower does not intend to, and does not believe
that it will, incur debts or liabilities beyond its ability to pay as such debts
and liabilities mature, and (e) the Borrower is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
its property would constitute unreasonably small capital.
7.14 ERISA Obligations. All Employee Plans of the Borrower meet the minimum
funding standards of Section 302 of ERISA and 412 of the Internal Revenue Code
where applicable, and each such Employee Plan that is intended to be qualified
within the meaning of Section 401 of the Internal Revenue Code of 1986 is
qualified. No withdrawal liability has been incurred under any such Employee
Plans and no "Reportable Event" or "Prohibited Transaction" (as such terms are
defined in ERISA), has occurred with respect to any such Employee Plans, unless
approved by the appropriate governmental agencies. The Borrower has promptly
paid and discharged all obligations and liabilities arising under the Employee
Retirement Income Security Act of 1974 ("ERISA") of a character which if unpaid
or unperformed might result in the imposition of a Lien against any of its
properties or assets.
7.15 Labor Relations. Except as could not reasonably be expected to have a
Material Adverse Effect, (i) there are no strikes, lockouts or other labor
disputes against the Borrower or, to the best knowledge of the Borrower,
threatened, (ii) hours worked by and payment made to employees of the Borrower
have not been in violation of the Fair Labor Standards Act or any other
applicable law, and (ii) no unfair labor practice complaint is pending against
the Borrower or, to the best knowledge of the Borrower, threatened before any
governmental authority.
7.16 Security Interest. This Agreement creates a valid security interest in
favor of the Bank in the Collateral and, when properly perfected by filing in
the appropriate jurisdictions, or by possession or Control of such Collateral by
the Bank or delivery of such Collateral to the Bank, shall constitute a valid,
perfected, first-priority security interest in such Collateral.
7.17 Lending Relationship. The relationship hereby created between the
Borrower and the Bank is and has been conducted on an open and arm's length
basis in which no fiduciary
-31-
relationship exists and that the Borrower has not relied and is not relying on
any such fiduciary relationship in executing this Agreement and in consummating
the Loans. The Bank represents that it will receive any Note payable to its
order as evidence of a bank loan.
7.18 Business Loan. The Loans, including interest rate, fees and charges as
contemplated hereby, (i) are extensions of credit to a business entity within
the purview of MCL 438.61, as amended from time to time, (ii) are an exempted
transaction under the Truth In Lending Act, 12 U.S.C. 1601 et seq., as amended
from time to time, and (iii) do not, and when disbursed shall not, violate the
provisions of the Michigan usury laws, any consumer credit laws or the usury
laws of any state which may have jurisdiction over this transaction, the
Borrower or any property securing the Loans.
7.19 Taxes. The Borrower has timely filed all tax returns and reports
required by law to have been filed by it and has paid all taxes, governmental
charges and assessments due and payable with respect to such returns, except any
such taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books, are insured against or bonded over to
the satisfaction of the Bank and the contesting of such payment does not create
a Lien on the Collateral which is not a Permitted Lien. There is no controversy
or objection pending, or to the knowledge of the Borrower, threatened in respect
of any tax returns of the Borrower. The Borrower has made adequate reserves on
its books and records in accordance with GAAP for all taxes that have accrued
but which are not yet due and payable.
7.20 Compliance with Regulation U. No portion of the proceeds of the Loans
shall be used by the Borrower, or any Affiliates of the Borrower, either
directly or indirectly, for the purpose of purchasing or carrying any margin
stock, within the meaning of Regulation U as adopted by the Board of Governors
of the Federal Reserve System or any successor thereto.
7.21 Governmental Regulation. The Borrower, its Subsidiaries and any of the
Guarantors are not, or after giving effect to any loan, will not be, subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the ICC Termination Act of 1995 or the Investment Company Act of 1940
or to any federal or state statute or regulation limiting its ability to incur
indebtedness for borrowed money.
7.22 Bank Accounts. All Deposit Accounts and operating bank accounts of the
Borrower and its Subsidiaries are located at the Bank and the Borrower has no
other Deposit Accounts except those listed on Schedule 7.22 attached hereto.
7.23 Place of Business. The principal place of business and books and
records of the Borrower is set forth in the preamble to this Agreement, and the
location of all Collateral, if other than at such principal place of business,
is as set forth on Schedule 7.23 attached hereto and made a part hereof, and the
Borrower shall promptly notify the Bank of any change in such locations. The
Borrower will not remove or permit the Collateral to be removed from such
locations without the prior written consent of the Bank, except for Inventory
sold in the usual and ordinary course of the Borrower's business.
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7.24 Complete Information. This Agreement and all financial statements,
schedules, certificates, confirmations, agreements, contracts, and other
materials and information heretofore or contemporaneously herewith furnished in
writing by the Borrower to the Bank for purposes of, or in connection with, this
Agreement and the transactions contemplated hereby is, and all written
information hereafter furnished by or on behalf of the Borrower to the Bank
pursuant hereto or in connection herewith will be, true and accurate in every
material respect on the date as of which such information is dated or certified,
and none of such information is or will be incomplete by omitting to state any
material fact necessary to make such information not misleading in light of the
circumstances under which made (it being recognized by the Bank that any
projections and forecasts provided by the Borrower are based on good faith
estimates and assumptions believed by the Borrower to be reasonable as of the
date of the applicable projections or assumptions and that actual results during
the period or periods covered by any such projections and forecasts may differ
from projected or forecasted results).
7.25 Subordinated Debt. Intentionally omitted.
7.26 Internal Controls. From an after the closing of an initial public
offering of the capital stock of the Borrower:
(a) The Borrower has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the U.S.
Securities Exchange Act or 1934, as amended (the "Exchange Act")), which
(i) are designed to ensure that material information relating to the
Borrower is made known to the Borrower's principal executive officer and
its principal financial offer or persons performing similar functions by
others within those entities, particularly during the periods in which the
periodic reports required under the Exchange Act are being prepared; (ii)
have been evaluated for effectiveness as a date within ninety (90) days
prior to the filing of the Borrower's most recent annual or quarterly
report filed with the Securities Exchange Commission; and (iii) are
effective in all material respects to perform he functions for which they
were established;
(b) Based on the evaluation of its disclosure controls and procedures,
the Borrower is not aware of (i) any significant deficiency in the design
or operation of internal controls which could adversely affect the
Borrower's ability to record, process, summarize and report financial data
or any material weaknesses in internal controls or (ii) any fraud, whether
or not material, that involves management or other employees who have a
significant role in the Borrower's internal controls; and
(c) Since the date of the most recent evaluation of such disclosure
controls and procedures, there have been no significant changes in internal
controls or in other factors that could significantly affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.
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SECTION 8 AFFIRMATIVE COVENANTS.
8.1 Compliance with Bank Regulatory Requirements; Increased Costs. If the
Bank shall reasonably determine that any Regulatory Change, or compliance by the
Bank or any Person controlling the Bank with any request or directive (whether
or not having the force of law) of any governmental authority, central bank or
comparable agency has or would have the effect of reducing the rate of return on
the Bank's or such controlling Person's capital as a consequence of the Bank's
obligations hereunder or under any Letter of Credit to a level below that which
the Bank or such controlling Person could have achieved but for such Regulatory
Change or compliance (taking into consideration the Bank's or such controlling
Person's policies with respect to capital adequacy) by an amount deemed by the
Bank or such controlling Person to be material or would otherwise reduce the
amount of any sum received or receivable by the Bank under this Agreement or
under any Note with respect thereto, then from time to time, upon demand by the
Bank (which demand shall be accompanied by a statement setting forth the basis
for such demand and a calculation of the amount thereof in reasonable detail),
the Borrower shall pay directly to the Bank or such controlling Person such
additional amount as will compensate the Bank for such increased cost or such
reduction, so long as such amounts have accrued on or after the day which is one
hundred eighty days (180) days prior to the date on which the Bank first made
demand therefor. For purposes of this Section 8.1, Bank agrees that it will
treat the Borrower similarly to all other borrowers of the Bank similarly
situated.
8.2 Borrower Existence. The Borrower shall at all times preserve and
maintain its (a) its existence and good standing in the jurisdiction of its
organization, and (b) its qualification to do business and good standing in each
jurisdiction where the nature of its business makes such qualification necessary
(other than such jurisdictions in which the failure to be qualified or in good
standing could not reasonably be expected to have a Material Adverse Effect),
and shall at all times continue as a going concern in the business which the
Borrower is presently conducting. If the Borrower does not have an
Organizational Identification Number and later obtains one, the Borrower shall
promptly notify the Bank of such Organizational Identification Number.
8.3 Compliance With Laws. The Borrower shall use the proceeds of the Loans
for working capital and other general corporate or business purposes not in
contravention of any requirements of law and not in violation of this Agreement,
and shall comply, and cause each Subsidiary to comply, in all respects,
including the conduct of its business and operations and the use of its
properties and assets, with all applicable laws, rules, regulations, decrees,
orders, judgments, licenses and permits, except where failure to comply could
not reasonably be expected to have a Material Adverse Effect. In addition, and
without limiting the foregoing sentence, the Borrower shall (a) ensure, and
cause each Subsidiary to ensure, that no person who owns a controlling interest
in or otherwise controls the Borrower or any Subsidiary is or shall be listed on
the Specially Designated Nationals and Blocked Person List or other similar
lists maintained by the Office of Foreign Assets Control ("OFAC"), the
Department of the Treasury or included in any Executive Orders, (b) not use or
permit the use of the proceeds of the Loans to violate any of the foreign asset
control regulations of OFAC or any enabling statute or Executive Order relating
thereto, and (c) comply, and cause each Subsidiary to comply, with all
applicable Bank Secrecy Act laws and regulations, as amended.
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8.4 Payment of Taxes and Liabilities. The Borrower shall pay, and cause
each Subsidiary to pay, and discharge, prior to delinquency and before penalties
accrue thereon, all property and other taxes, and all governmental charges or
levies against it or any of the Collateral, as well as claims of any kind which,
if unpaid, could become a Lien on any of its property; provided that the
foregoing shall not require the Borrower or any Subsidiary to pay any such tax
or charge so long as it shall contest the validity thereof in good faith by
appropriate proceedings and shall set aside on its books adequate reserves with
respect thereto in accordance with GAAP and, in the case of a claim which could
become a Lien on any of the Collateral, such contest proceedings stay the
foreclosure of such Lien or the sale of any portion of the Collateral to satisfy
such claim.
8.5 Maintain Property. The Borrower shall at all times maintain, preserve
and keep its plant, properties and Equipment, including any Collateral, in good
repair, working order and condition, normal wear and tear excepted, and shall
from time to time make all needful and proper repairs, renewals, replacements,
and additions thereto so that at all times the efficiency thereof shall be fully
preserved and maintained. The Borrower shall permit the Bank to examine and
inspect such plant, properties and Equipment, including any Collateral, at all
reasonable times.
8.6 Maintain Insurance. The Borrower shall at all times maintain, and cause
each Subsidiary to maintain, with insurance companies reasonably acceptable to
the Bank, such insurance coverage as may be required by any law or governmental
regulation or court decree or order applicable to it and such other insurance,
to such extent and against such hazards and liabilities, including employers',
public and professional liability risks, as is customarily maintained by
companies similarly situated, and shall have insured amounts no less than, and
deductibles no higher than, are reasonably acceptable to the Bank. The Borrower
shall furnish to the Bank a certificate setting forth in reasonable detail the
nature and extent of all insurance maintained by the Borrower, which shall be
reasonably acceptable in all respects to the Bank. The Borrower shall cause each
issuer of an insurance policy to provide the Bank with an endorsement (i)
showing the Bank as loss payee with respect to each policy of property or
casualty insurance; and (ii) providing that thirty (30) days notice will be
given to the Bank prior to any cancellation of, material reduction or change in
coverage provided by or other material modification to such policy. The Borrower
shall execute and deliver to the Bank a collateral assignment, in form and
substance satisfactory to the Bank, of each business interruption insurance
policy maintained by the Borrower.
In the event the Borrower either fails to provide the Bank with evidence of
the insurance coverage required by this Section or at any time hereafter shall
fail to obtain or maintain any of the policies of insurance required above, or
to pay any premium in whole or in part relating thereto, then the Bank, without
waiving or releasing any obligation or default by the Borrower hereunder, may at
any time (but shall be under no obligation to so act), obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto, which the Bank deems advisable. This insurance coverage (a)
may, but need not, protect the Borrower's interests in such property, including
the Collateral, and (b) may not pay any claim made by, or against, the Borrower
in connection with such property, including the Collateral. The Borrower may
later cancel any such insurance purchased by the Bank, but only after
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providing the Bank with evidence that the Borrower has obtained the insurance
coverage required by this Section. If the Bank purchases insurance for the
Collateral, the Borrower will be responsible for the costs of that insurance,
including interest and any other charges that may be imposed with the placement
of the insurance, until the effective date of the cancellation or expiration of
the insurance. The costs of the insurance may be added to the principal amount
of the Loans owing hereunder. The costs of the insurance may be more than the
cost of the insurance the Borrower may be able to obtain on its own.
8.7 ERISA Liabilities; Employee Plans. The Borrower shall (i) keep in full
force and effect any and all Employee Plans which are presently in existence or
may, from time to time, come into existence under ERISA, and not withdraw from
any such Employee Plans, unless such withdrawal can be effected or such Employee
Plans can be terminated without liability to the Borrower; (ii) make
contributions to all of such Employee Plans in a timely manner and in a
sufficient amount to comply with the standards of ERISA; including the minimum
funding standards of ERISA; (iii) comply with all material requirements of ERISA
which relate to such Employee Plans; (iv) notify the Bank immediately upon
receipt by the Borrower of any notice concerning the imposition of any
withdrawal liability or of the institution of any proceeding or other action
which may result in the termination of any such Employee Plans or the
appointment of a trustee to administer such Employee Plans; (v) promptly advise
the Bank of the occurrence of any "Reportable Event" or "Prohibited Transaction"
(as such terms are defined in ERISA), with respect to any such Employee Plans;
and (vi) amend any Employee Plan that is intended to be qualified within the
meaning of Section 401 of the Internal Revenue Code of 1986 to the extent
necessary to keep the Employee Plan qualified, and to cause the Employee Plan to
be administered and operated in a manner that does not cause the Employee Plan
to lose its qualified status.
8.8 Financial Statements. The Borrower shall at all times maintain a
standard and modern system of accounting, on the accrual basis of accounting and
in all respects in accordance with GAAP, and shall furnish to the Bank or its
authorized representatives such information regarding the business affairs,
operations and financial condition of the Borrower, including:
(a) promptly when available, and in any event, within one hundred
twenty (120) days after the close of each of its fiscal years, a copy of
(i) the annual audited financial statements of the Borrower and its
Subsidiaries, including consolidated balance sheet, statement of income and
retained earnings, statement of cash flows for the fiscal year then ended
and such other information (including nonfinancial information) as the Bank
may reasonably request, in reasonable detail, prepared and certified
without adverse reference to going concern value and without qualification
by an independent auditor of recognized standing, selected by the Borrower
and reasonably acceptable to the Bank and (ii) a consolidating balance
sheet of the Borrower and its Subsidiaries as of the end of each of its
fiscal years and consolidating statements of earnings and cash flows for
the Borrower and its Subsidiaries for each of its fiscal years, certified
as true and correct by the Borrower's treasurer or chief financial officer;
and
(b) promptly when available, and in any event, within sixty (60) days
following the end of each fiscal quarter, a copy of the consolidated and
consolidating
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financial statements of the Borrower and its Subsidiaries regarding such
fiscal quarter, including balance sheet, statement of income and retained
earnings, statement of cash flows for the fiscal quarter then ended and
such other information (including nonfinancial information) as the Bank may
request, in reasonable detail, prepared and certified as true and correct
by the Borrower's treasurer or chief financial officer.
No change with respect to such accounting principles shall be made by the
Borrower without giving prior notification to the Bank. The Borrower represents
and warrants to the Bank that the financial statements delivered to the Bank at
or prior to the execution and delivery of this Agreement and to be delivered at
all times thereafter accurately reflect and will accurately reflect the
financial condition of the Borrower. The Bank shall have the right at all times
during business hours to inspect the books and records of the Borrower and make
extracts therefrom.
8.9 Guarantor Financial Statements. Intentionally omitted.
8.10 Supplemental Financial Statements. The Borrower shall immediately upon
receipt thereof, provide to the Bank copies of interim and supplemental reports
if any, submitted to the Borrower by independent accountants in connection with
any interim audit or review of the books of the Borrower.
8.11 Borrowing Base Certificate. The Borrower shall, within twenty (20)
days after the end of each month, deliver to the Bank a Borrowing Base
Certificate dated as of the last Business Day of such month, certified as true
and correct by an authorized representative of the Borrower and acceptable to
the Bank in its sole and absolute discretion, provided, however, at any time an
Event of Default exists, the Bank may require the Borrower to deliver Borrowing
Base Certificates more frequently.
8.12 Aged Accounts Schedule. The Borrower shall, within twenty (20) days
after the end of each month, deliver to the Bank an aged schedule of the
Accounts of the Borrower, listing the name and amount due from each Account
Debtor and showing the aggregate amounts due from (a) 0-30 days, (b) 31-60 days,
(c) 61-90 days and (d) more than 90 days, and certified as accurate by the
Borrower's treasurer or chief financial officer.
8.13 Inventory Reports. The Borrower shall, within twenty (20) days after
the end of each month, deliver to the Bank an inventory report, certified as
accurate by the Borrower's treasurer or chief financial officer, and within such
time as the Bank may specify, such other schedules and reports as the Bank may
require.
8.14 Covenant Compliance Certificate. The Borrower shall, contemporaneously
with the furnishing of the financial statements pursuant to Section 8.8, deliver
to the Bank a duly completed compliance certificate, dated the date of such
financial statements and certified as true and correct by an appropriate officer
of the Borrower, containing a computation of each of the financial covenants set
forth in Section 10 and stating that the Borrower has not become aware of any
Event of Default or Unmatured Event of Default that has occurred and is
continuing or, if there is any such Event of Default or Unmatured Event of
Default describing it and the steps, if any, being taken to cure it.
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8.15 Field Audits. The Borrower shall permit the Bank to inspect the
Inventory, other tangible assets and/or other business operations of the
Borrower and each Subsidiary, to perform appraisals of the Equipment of the
Borrower and each Subsidiary, and to inspect, audit, check and make copies of,
and extracts from, the books, records, computer data, computer programs,
journals, orders, receipts, correspondence and other data relating to Inventory,
Accounts and any other Collateral, the results of which must be satisfactory to
the Bank in the Bank's sole and absolute discretion. All such inspections or
audits by the Bank shall be at the Borrower's sole expense, provided, however,
so long as no Event of Default or Unmatured Event of Default exists, the
Borrower shall not be required to reimburse the Bank for inspections or audits
more frequently than twice each Fiscal Year.
8.16 Other Reports. The Borrower shall, within such period of time as the
Bank may specify, deliver to the Bank such other schedules and reports as the
Bank may require.
8.17 Collateral Records. The Borrower shall keep full and accurate books
and records relating to the Collateral and shall ▇▇▇▇ such books and records to
indicate the Bank's Lien in the Collateral.
8.18 Intellectual Property. The Borrower shall maintain, preserve and renew
all Intellectual Property necessary for the conduct of its business as and where
the same is currently located as heretofore or as hereafter conducted by it.
8.19 Notice of Proceedings. The Borrower, promptly upon becoming aware,
shall give written notice to the Bank of any litigation, arbitration or
governmental investigation or proceeding not previously disclosed by the
Borrower to the Bank which has been instituted or, to the knowledge of the
Borrower, is threatened against the Borrower or any of its Subsidiaries or to
which any of their respective properties is subject which might reasonably be
expected to have a Material Adverse Effect.
8.20 Notice of Event of Default or Material Adverse Effect. The Borrower
shall, immediately after the commencement thereof, give notice to the Bank in
writing of the occurrence of any Event of Default or any Unmatured Event of
Default, or the occurrence of any condition or event having a Material Adverse
Effect.
8.21 Environmental Matters. If any release or threatened release or other
disposal of Hazardous Substances shall occur or shall have occurred on any real
property or any other assets of the Borrower, the Borrower shall cause the
prompt containment and removal of such Hazardous Substances and the remediation
of such real property or other assets as necessary to comply with all
Environmental Laws and to preserve the value of such real property or other
assets. Without limiting the generality of the foregoing, the Borrower shall
comply with any Federal or state judicial or administrative order requiring the
performance at any real property of the Borrower of activities in response to
the release or threatened release of a Hazardous Substance. To the extent that
the transportation of Hazardous Substances is permitted by this Agreement, the
Borrower shall dispose of such Hazardous Substances, or of any other wastes,
only at licensed disposal facilities operating in compliance with Environmental
Laws.
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8.22 Further Assurances. The Borrower shall take and cause each Subsidiary
to take, such actions as are necessary or as the Bank may reasonably request
from time to time to ensure that the Obligations under the Loan Documents are
secured by substantially all of the assets of the Borrower and its Subsidiaries,
in each case as the Bank may determine, including (a) the execution and delivery
of security agreements, pledge agreements, mortgages, deeds of trust, financing
statements and other documents, and the filing or recording of any of the
foregoing, and (b) the delivery of certificated securities and other collateral
with respect to which perfection is obtained by possession.
8.23 Banking Relationship. The Borrower covenants and agrees, at all times
during the term of this Agreement, to utilize the Bank as its primary bank of
account and depository for all financial services, including all receipts,
disbursements, cash management and related service.
8.24 Non-Utilization Fee. Intentionally omitted.
8.25 Interest Rate Protection. Intentionally omitted.
SECTION 9 NEGATIVE COVENANTS.
9.1 Debt. The Borrower shall not, either directly or indirectly, create,
assume, incur or have outstanding any Debt (including purchase money
indebtedness), or become liable, whether as endorser, guarantor, surety or
otherwise, for any debt or obligation of any other Person, except:
(a) the Obligations under this Agreement and the other Loan Documents;
(b) obligations of the Borrower for Taxes, assessments, municipal or
other governmental charges;
(c) obligations of the Borrower for accounts payable, other than for
money borrowed, incurred in the ordinary course of business;
(d) Intentionally omitted;
(e) Subordinated Debt;
(f) Hedging Obligations incurred in favor of the Bank or an Affiliate
thereof for bona fide hedging purposes and not for speculation;
(g) Capitalized Lease Obligations (CLO) incurred in favor of the Bank;
CLO that are each less than Fifteen Thousand Dollars ($15,000) incurred in
favor of persons or entities other than the Bank; and CLO that are each
equal to or in excess of Fifteen Thousand Dollars ($15,000), provided that,
for each CLO proposed to be incurred in favor of persons or entities other
than the Bank which are equal to or in excess of Fifteen Thousand Dollars
($15,000), Borrower shall give Bank the first right of refusal to provide
equivalent terms and conditions for such CLO, and if the Bank does not
agree in writing to such equivalent terms and conditions with five (5)
business days after Borrower has
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provided notice of such CLO to the Bank, then Borrower may enter into such
CLO with such other person or entity provided that (i) there is no Event of
Default and (ii) in the reasonable discretion and opinion of the Bank, such
CLO would not cause an Event of Default.
(h) Intentionally omitted;
(i) Debt described on Schedule 9.1 and any extension, renewal or
refinancing thereof so long as the principal amount thereof is not
increased;
(j) Intentionally omitted.
9.2 Encumbrances. The Borrower shall not, either directly or indirectly,
create, assume, incur or suffer or permit to exist any Lien or charge of any
kind or character upon any asset of the Borrower, whether owned at the date
hereof or hereafter acquired, except for Permitted Liens.
9.3 Investments. The Borrower shall not, either directly or indirectly,
make or have outstanding any Investment, except:
(a) contributions by the Borrower to the capital of any Subsidiary
which have granted a first perfected security interest in all of its/their
assets in favor of the Bank, or by any Subsidiary to the capital of any
other domestic Wholly-Owned Subsidiary;
(b) Investments constituting Debt permitted by Section 9.1;
(c) Contingent Liabilities constituting Debt permitted by Section 9.1
or Liens permitted by Section 9.2;
(d) Cash Equivalent Investments;
(e) bank deposits in the ordinary course of business;
(f) Investments in securities of Account Debtors received pursuant to
any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of such account debtors; and
(g) Investments listed on Schedule 9.3 as of the Closing Date.
provided, however, that (i) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent Investment" may
continue to be held notwithstanding that such Investment if made thereafter
would not comply with such requirements; and (ii) no Investment otherwise
permitted by subsections (b) or (c) shall be permitted to be made if,
immediately before or after giving effect thereto, any Event of Default or
Unmatured Event of Default exists.
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9.4 Transfer; Merger; Sales. The Borrower shall not and not permit any
Subsidiary to, whether in one transaction or a series of related transactions,
(a) be a party to any merger or consolidation, or purchase or otherwise acquire
all or substantially all of the assets or any Capital Securities of any class
of, or any partnership or joint venture interest in, any other Person, except
for (i) any such merger, consolidation, sale, transfer, conveyance, lease or
assignment of or by any Wholly-Owned Subsidiary into the Borrower or into any
other domestic Wholly-Owned Subsidiary; (ii) any such purchase or other
acquisition by the Borrower or any domestic Wholly-Owned Subsidiary of the
assets or equity interests of any Wholly-Owned Subsidiary, (b) sell, transfer,
convey or lease all or any substantial part of its assets or Capital Securities
(including the sale of Capital Securities of any Subsidiary), except for sales
of Inventory in the ordinary course of business, or (c) sell or assign, with or
without recourse, any receivables.
9.5 Issuance of Capital Securities. Intentionally omitted.
9.6 Distributions. The Borrower shall not (a) make any distribution or
dividend (other than stock dividends), whether in cash or otherwise, to any of
its equityholders, (b) purchase or redeem any of its equity interests or any
warrants, options or other rights in respect thereof for cash, (c) pay any
management fees or similar fees to any of its equityholders or any Affiliate
thereof, (d) pay or prepay interest on, principal of, premium, if any,
redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund
or any other payment in respect of any Subordinated Debt, or (e) set aside funds
for any of the foregoing. Notwithstanding the foregoing, (i) any Subsidiary may
pay dividends or make other distributions to the Borrower or to a domestic
Wholly-Owned Subsidiary; and (ii) so long as no Event of Default or Unmatured
Event of Default exists or would result therefrom, the Borrower may make
regularly scheduled payments of interest in respect of Subordinated Debt to the
extent permitted under the subordination provisions thereof.
9.7 Transactions with Affiliates. The Borrower shall not, directly or
indirectly, enter into or permit to exist any transaction with any of its
Affiliates or with any director, officer or employee of the Borrower other than
transactions in the ordinary course of, and pursuant to the reasonable
requirements of, the business of the Borrower and upon fair and reasonable terms
which are fully disclosed to the Bank and are no less favorable to the Borrower
than would be obtained in a comparable arm's length transaction with a Person
that is not an Affiliate of the Borrower.
9.8 Unconditional Purchase Obligations. The Borrower shall not and shall
not permit any Subsidiary to enter into or be a party to any contract for the
purchase of materials, supplies or other property or services if such contract
requires that payment be made by it regardless of whether delivery is ever made
of such materials, supplies or other property or services.
9.9 Cancellation of Debt. The Borrower shall not, and not permit any
Subsidiary to, cancel any claim or debt owing to it, except for reasonable
consideration or in the ordinary course of business.
9.10 Inconsistent Agreements. The Borrower shall not and shall not permit
any Subsidiary to enter into any agreement containing any provision which would
(a) be violated or
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breached by any borrowing by the Borrower hereunder or by the performance by the
Borrower or any Subsidiary of any of its Obligations hereunder or under any
other Loan Document, (b) prohibit the Borrower or any Subsidiary from granting
to the Bank a Lien on any of its assets or (c) create or permit to exist or
become effective any encumbrance or restriction on the ability of any Subsidiary
to (i) pay dividends or make other distributions to the Borrower or any other
Subsidiary, or pay any Debt owed to the Borrower or any other Subsidiary, (ii)
make loans or advances to the Borrower or any other Subsidiary, or (iii)
transfer any of its assets or properties to the Borrower or any other
Subsidiary, other than (A) customary restrictions and conditions contained in
agreements relating to the sale of all or a substantial part of the assets of
any Subsidiary pending such sale, provided that such restrictions and conditions
apply only to the Subsidiary to be sold and such sale is permitted hereunder,
(B) restrictions or conditions imposed by any agreement relating to purchase
money Debt, Capital Leases and other secured Debt permitted by this Agreement if
such restrictions or conditions apply only to the property or assets securing
such Debt, and (C) customary provisions in leases and other contracts
restricting the assignment thereof.
9.11 Use of Proceeds. Neither the Borrower nor any of its Subsidiaries or
Affiliates shall use any portion of the proceeds of the Loans, either directly
or indirectly, for the purpose of purchasing any securities underwritten by ABN
AMRO Incorporated, an Affiliate of the Bank.
9.12 Bank Accounts. The Borrower shall not establish any new Deposit
Accounts or other bank accounts, other than Deposit Accounts or other bank
accounts established at or with the Bank without the prior written consent of
the Bank.
9.13 Business Activities; Change of Legal Status and Organizational
Documents. The Borrower shall not and shall not permit any Subsidiary to (a)
engage in any line of business other than the businesses engaged in on the date
hereof and businesses reasonably related thereto, (b) change its name, its
Organizational Identification Number, if it has one, its type of organization,
its jurisdiction of organization or other legal structure, or (b) permit its
charter, bylaws or other organizational documents to be amended or modified in
any way which could reasonably be expected to materially adversely affect the
interests of the Bank.
SECTION 10 FINANCIAL COVENANTS.
10.1 Tangible Net Worth. As of the end of each of its fiscal quarters, the
Borrower shall maintain consolidated Tangible Net Worth in an amount not less
than One Million Five Hundred Thousand and 00/100 Dollars ($1,500,000.00), plus
fifty percent (50.00%) of the aggregate consolidated Net Income earned by the
Borrower and its Subsidiaries during all previous fiscal quarters, commencing
with the fiscal quarter ending on June 30, 2005, provided, however, that net
losses incurred in any fiscal quarter of the Borrower or its Subsidiaries shall
not be subtracted in the determination of Tangible Net Worth.
10.2 Total Debt to Tangible Net Worth. Intentionally omitted.
10.3 EBITDA. Intentionally omitted.
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10.4 Total Debt to EBITDA. As of the end of each of its fiscal quarters,
the Borrower shall maintain a ratio of consolidated Total Debt to consolidated
EBITDA for such fiscal quarter, of not greater than 3.25 to 1.00, on a trailing
twelve (12) month basis.
10.5 Fixed Charge Coverage. As of the end of each of its fiscal quarters,
the Borrower and its Subsidiaries shall maintain a ratio of (a) the total for
such fiscal quarter of EBITDA minus the sum of all income taxes paid in cash by
the Borrower and its Subsidiaries and all Capital Expenditures which are not
financed with Funded Debt, generated over the preceding twelve (12) months to
(b) the sum for such fiscal quarter of (i) Interest Charges plus (ii) required
payments of principal of Funded Debt paid over the preceding twelve (12) months,
of not less than 1.15 to 1.00.
10.6 Debt Service Coverage. Intentionally omitted.
10.7 Interest Coverage Ratio. Intentionally omitted.
10.8 Profitability. Intentionally omitted.
10.9 Leverage. Intentionally omitted.
10.10 Capital Expenditures. Intentionally omitted.
10.11 Working Capital. Intentionally omitted.
10.12 Current Ratio. Intentionally omitted.
SECTION 11 EVENTS OF DEFAULT.
The Borrower, without notice or demand of any kind except as provided
herein, shall be in default under this Agreement upon the occurrence of any of
the following events (each an "Event of Default").
11.1 Nonpayment of Obligations. Any amount due and owing on any Note or any
of the Obligations, whether by its terms or as otherwise provided herein, is not
paid within five (5) days after notice from the Bank that such amount was not
paid when due.
11.2 Misrepresentation. Any written warranty, representation, certificate
or statement of any Obligor in this Agreement, the other Loan Documents or any
other agreement with the Bank shall be false in any material respect when made
or at any time thereafter, or if any financial data or any other information now
or hereafter furnished to the Bank by or on behalf of any Obligor shall prove to
be false, inaccurate or misleading in any material respect; and, if capable of
being cured, such failure to perform or default in performance
misrepresentation, false or misleading information continues for a period of
thirty (30) days after the Borrower receives notice or knowledge from any source
of such failure to perform or default in performance, or in the other Loan
Documents or any other agreement with the Bank and such failure to perform or
default in performance continues beyond any applicable grace or cure period.
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11.3 Nonperformance. Any failure to perform or default in the performance
of any covenant, condition or agreement contained in this Agreement and, if
capable of being cured, such failure to perform or default in performance
continues for a period of thirty (30) days after the Borrower receives notice or
knowledge from any source of such failure to perform or default in performance,
or in the other Loan Documents or any other agreement with the Bank and such
failure to perform or default in performance continues beyond any applicable
grace or cure period.
11.4 Default under Loan Documents. A default under any of the other Loan
Documents, all of which covenants, conditions and agreements contained therein
are hereby incorporated in this Agreement by express reference, shall be and
constitute an Event of Default under this Agreement and any other of the
Obligations.
11.5 Default under Other Debt. Any default by any Obligor in the payment of
any Debt for any other obligation beyond any period of grace provided with
respect thereto or in the performance of any other term, condition or covenant
contained in any agreement (including any capital or operating lease or any
agreement in connection with the deferred purchase price of property) under
which any such obligation is created, the effect of which default is to cause or
permit the holder of such obligation (or the other party to such other
agreement) to cause such obligation to become due prior to its stated maturity
or terminate such other agreement and such default might reasonably be expected
to have a Material Adverse Effect on the Borrower.
11.6 Other Material Obligations. Any default in the payment when due, or in
the performance or observance of, any material obligation of, or condition
agreed to by, any Obligor with respect to any material purchase or lease of
goods or services where such default, singly or in the aggregate with all other
such defaults, might reasonably be expected to have a Material Adverse Effect.
11.7 Bankruptcy, Insolvency, etc. Any Obligor becomes insolvent or
generally fails to pay, or admits in writing its inability or refusal to pay,
debts as they become due; or any Obligor applies for, consents to, or acquiesces
in the appointment of a trustee, receiver or other custodian for such Obligor or
any property thereof, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for any Obligor or for a
substantial part of the property of any thereof and is not discharged within
sixty (60) days; or any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is commenced in respect of any Obligor, and if such case
or proceeding is not commenced by such Obligor, it is consented to or acquiesced
in by such Obligor, or remains undismissed for sixty (60) days; or any Obligor
takes any action to authorize, or in furtherance of, any of the foregoing.
11.8 Judgments. The entry of any final judgment, decree, levy, attachment,
garnishment or other process, or the filing of any Lien against any Obligor
which is not fully covered by insurance, and which judgment or other process
would have a Material Adverse Effect on the Borrower or any Obligor.
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11.9 Change in Control. Intentionally omitted.
11.10 Collateral Impairment. The entry of any judgment, decree, levy,
attachment, garnishment or other process, or the filing of any Lien against, any
of the Collateral or any collateral under a separate security agreement securing
any of the Obligations and such judgment or other process shall not have been,
within thirty (30) days from the entry thereof, (i) bonded over to the
satisfaction of the Bank and appealed, (ii) vacated, or (iii) discharged, or the
loss, theft, destruction, seizure or forfeiture, or the occurrence of any
material deterioration or impairment of any of the Collateral or any of the
collateral under any security agreement securing any of the Obligations, or any
material decline or depreciation in the value or market price thereof (whether
actual or reasonably anticipated), which causes the Collateral, in the sole
opinion of the Bank acting in good faith, to become unsatisfactory as to value
or character, or which causes the Bank to reasonably believe that it is insecure
and that the likelihood for repayment of the Obligations is or will soon be
impaired, time being of the essence. The cause of such deterioration,
impairment, decline or depreciation shall include, but is not limited to, the
failure by the Borrower to do any act deemed reasonably necessary by the Bank to
preserve and maintain the value and collectability of the Collateral.
11.11 Material Adverse Effect. The occurrence of any event which has a
Material Adverse Effect on the Borrower.
11.12 Guaranty. There is a discontinuance by the Guarantor of the Guaranty
or the Guarantor shall contest the validity of such Guaranty.
11.13 Subordinated Debt. Intentionally omitted
11.14 Death of Individual. Intentionally omitted.
SECTION 12 REMEDIES.
Upon the occurrence and during the continuance of an Event of Default, the
Bank shall have all rights, powers and remedies set forth in the Loan Documents,
in any written agreement or instrument (other than this Agreement or the Loan
Documents) relating to any of the Obligations or any security therefor, as a
secured party under the UCC or as otherwise provided at law or in equity.
Without limiting the generality of the foregoing, the Bank may, at its option
upon the occurrence and during the continuance of an Event of Default, declare
its commitments to the Borrower to be terminated and all Obligations to be
immediately due and payable, provided, however, that upon the occurrence and
during the continuance of an Event of Default under Section 11.7, all
commitments of the Bank to the Borrower shall immediately terminate and all
Obligations shall be automatically due and payable, all without demand, notice
or further action of any kind required on the part of the Bank. The Borrower
hereby waives any and all presentment, demand, notice of dishonor, protest, and
all other notices and demands in connection with the enforcement of Bank's
rights under the Loan Documents, and hereby consents to, and waives notice of
release, with or without consideration, of any Collateral, notwithstanding
anything contained herein or in the Loan Documents to the contrary. In addition
to the foregoing:
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12.1 Possession and Assembly of Collateral. The Bank may, without notice,
demand or legal process of any kind, take possession of any or all of the
Collateral (in addition to Collateral of which the Bank already has possession),
wherever it may be found, and for that purpose may pursue the same wherever it
may be found, and may at any time enter into any of the Borrower's premises
where any of the Collateral may be or is supposed to be, and search for, take
possession of, remove, keep and store any of the Collateral until the same shall
be sold or otherwise disposed of and the Bank shall have the right to store and
conduct a sale of the same in any of the Borrower's premises without cost to the
Bank. At the Bank's request, the Borrower will, at the Borrower's sole expense,
assemble the Collateral and make it available to the Bank at a place or places
to be designated by the Bank which is reasonably convenient to the Bank and the
Borrower.
12.2 Sale of Collateral. The Bank may sell any or all of the Collateral at
public or private sale, upon such terms and conditions as the Bank may deem
proper, and the Bank may purchase any or all of the Collateral at any such sale.
The Borrower acknowledges that the Bank may be unable to effect a public sale of
all or any portion of the Collateral because of certain legal and/or practical
restrictions and provisions which may be applicable to the Collateral and,
therefore, may be compelled to resort to one or more private sales to a
restricted group of offerees and purchasers. The Borrower consents to any such
private sale so made even though at places and upon terms less favorable than if
the Collateral were sold at public sale. The Bank shall have no obligation to
clean-up or otherwise prepare the Collateral for sale. The Bank may apply the
net proceeds, after deducting all costs, expenses, attorneys' and paralegals'
fees incurred or paid at any time in the collection, protection and sale of the
Collateral and the Obligations, to the payment of any Note and/or any of the
other Obligations, returning the excess proceeds, if any, to the Borrower. The
Borrower shall remain liable for any amount remaining unpaid after such
application, with interest at the Default Rate. Any notification of intended
disposition of the Collateral required by law shall be conclusively deemed
reasonably and properly given if given by the Bank at least ten (10) calendar
days before the date of such disposition. The Borrower hereby confirms, approves
and ratifies all acts and deeds of the Bank relating to the foregoing, and each
part thereof, and expressly waives any and all claims of any nature, kind or
description which it has or may hereafter have against the Bank or its
representatives, by reason of taking, selling or collecting any portion of the
Collateral. The Borrower consents to releases of the Collateral at any time
(including prior to default) and to sales of the Collateral in groups, parcels
or portions, or as an entirety, as the Bank shall deem appropriate. The Borrower
expressly absolves the Bank from any loss or decline in market value of any
Collateral by reason of delay in the enforcement or assertion or nonenforcement
of any rights or remedies under this Agreement.
12.3 Standards for Exercising Remedies. To the extent that applicable law
imposes duties on the Bank to exercise remedies in a commercially reasonable
manner, the Borrower acknowledges and agrees that it is not commercially
unreasonable for the Bank (a) to fail to incur expenses reasonably deemed
significant by the Bank to prepare Collateral for disposition or otherwise to
complete raw material or work-in-process into finished goods or other finished
products for disposition, (b) to fail to obtain third party consents for access
to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (c) to
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fail to exercise collection remedies against Account Debtors or other Persons
obligated on Collateral or to remove liens or encumbrances on or any adverse
claims against Collateral, (d) to exercise collection remedies against Account
Debtors and other Persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (f) to contact other
Persons, whether or not in the same business as the Borrower, for expressions of
interest in acquiring all or any portion of the Collateral, (g) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (h) to dispose of
Collateral by utilizing internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
including, without limitation, any warranties of title, (k) to purchase
insurance or credit enhancements to insure the Bank against risks of loss,
collection or disposition of Collateral or to provide to the Bank a guaranteed
return from the collection or disposition of Collateral, or (l) to the extent
deemed appropriate by the Bank, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist the Bank in
the collection or disposition of any of the Collateral. The Borrower
acknowledges that the purpose of this section is to provide non-exhaustive
indications of what actions or omissions by the Bank would not be commercially
unreasonable in the Bank's exercise of remedies against the Collateral and that
other actions or omissions by the Bank shall not be deemed commercially
unreasonable solely on account of not being indicated in this section. Without
limitation upon the foregoing, nothing contained in this section shall be
construed to grant any rights to the Borrower or to impose any duties on the
Bank that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this section.
12.4 UCC and Offset Rights. The Bank may exercise, from time to time, any
and all rights and remedies available to it under the UCC or under any other
applicable law in addition to, and not in lieu of, any rights and remedies
expressly granted in this Agreement or in any other agreements between any
Obligor and the Bank, and may, without demand or notice of any kind, appropriate
and apply toward the payment of such of the Obligations, whether matured or
unmatured, including costs of collection and attorneys' and paralegals' fees,
and in such order of application as the Bank may, from time to time, elect, any
indebtedness of the Bank to any Obligor, however created or arising, including
balances, credits, deposits, accounts or moneys of such Obligor in the
possession, control or custody of, or in transit to the Bank. The Borrower, on
behalf of itself and each Obligor, hereby waives the benefit of any law that
would otherwise restrict or limit the Bank in the exercise of its right, which
is hereby acknowledged, to appropriate at any time hereafter any such
indebtedness owing from the Bank to any Obligor.
12.5 Additional Remedies. The Bank shall have the right and power to:
(a) instruct the Borrower, at its own expense, to notify any parties
obligated on any of the Collateral, including any Account Debtors, to make
payment directly to the Bank of any amounts due or to become due
thereunder, or the Bank may directly notify such obligors of the security
interest of the Bank, and/or of the assignment to the Bank of the
Collateral and direct such obligors to make payment to the Bank of any
amounts due
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or to become due with respect thereto, and thereafter, collect any such
amounts due on the Collateral directly from such Persons obligated thereon;
(b) enforce collection of any of the Collateral, including any
Accounts, by suit or otherwise, or make any compromise or settlement with
respect to any of the Collateral, or surrender, release or exchange all or
any part thereof, or compromise, extend or renew for any period (whether or
not longer than the original period) any indebtedness thereunder;
(c) take possession or control of any proceeds and products of any of
the Collateral, including the proceeds of insurance thereon;
(d) extend, renew or modify for one or more periods (whether or not
longer than the original period) any Note, any other of the Obligations,
any obligation of any nature of any other Obligor with respect to any Note
or any of the Obligations;
(e) grant releases, compromises or indulgences with respect to any
Note, any of the Obligations, any extension or renewal of any of the
Obligations, any security therefor, or to any other Obligor with respect to
any Note or any of the Obligations;
(f) transfer the whole or any part of securities which may constitute
Collateral into the name of the Bank or the Bank's nominee without
disclosing, if the Bank so desires, that such securities so transferred are
subject to the security interest of the Bank, and any corporation,
association, or any of the managers or trustees of any trust issuing any of
such securities, or any transfer agent, shall not be bound to inquire, in
the event that the Bank or such nominee makes any further transfer of such
securities, or any portion thereof, as to whether the Bank or such nominee
has the right to make such further transfer, and shall not be liable for
transferring the same;
(g) vote the Collateral;
(h) make an election with respect to the Collateral under Section 1111
of the Bankruptcy Code or take action under Section 364 or any other
section of the Bankruptcy Code; provided, however, that any such action of
the Bank as set forth herein shall not, in any manner whatsoever, impair or
affect the liability of the Borrower hereunder, nor prejudice, waive, nor
be construed to impair, affect, prejudice or waive the Bank's rights and
remedies at law, in equity or by statute, nor release, discharge, nor be
construed to release or discharge, the Borrower, any guarantor or other
Person liable to the Bank for the Obligations; and
(i) at any time, and from time to time, accept additions to, releases,
reductions, exchanges or substitution of the Collateral, without in any way
altering, impairing, diminishing or affecting the provisions of this
Agreement, the Loan Documents, or any of the other Obligations, or the
Bank's rights hereunder, under any Note or under any of the other
Obligations.
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The Borrower hereby ratifies and confirms whatever the Bank may do with respect
to the Collateral and agrees that the Bank shall not be liable for any error of
judgment or mistakes of fact or law with respect to actions taken in connection
with the Collateral.
12.6 Attorney-in-Fact. The Borrower hereby irrevocably makes, constitutes
and appoints the Bank (and any officer of the Bank or any Person designated by
the Bank for that purpose) as the Borrower's true and lawful proxy and
attorney-in-fact (and agent-in-fact) in the Borrower's name, place and stead,
with full power of substitution, to (i) take such actions as are permitted in
this Agreement, (ii) execute such financing statements and other documents and
to do such other acts as the Bank may require to perfect and preserve the Bank's
security interest in, and to enforce such interests in the Collateral, and (iii)
carry out any remedy provided for in this Agreement, including, without
limitation, endorsing the Borrower's name to checks, drafts, instruments and
other items of payment, and proceeds of the Collateral, executing change of
address forms with the postmaster of the United States Post Office serving the
address of the Borrower, changing the address of the Borrower to that of the
Bank, opening all envelopes addressed to the Borrower and applying any payments
contained therein to the Obligations. The Borrower hereby acknowledges that the
constitution and appointment of such proxy and attorney-in-fact are coupled with
an interest and are irrevocable. The Borrower hereby ratifies and confirms all
that such attorney-in-fact may do or cause to be done by virtue of any provision
of this Agreement.
12.7 No Marshaling. The Bank shall not be required to marshal any present
or future collateral security (including this Agreement and the Collateral) for,
or other assurances of payment of, the Obligations or any of them or to resort
to such collateral security or other assurances of payment in any particular
order. To the extent that it lawfully may, the Borrower hereby agrees that it
will not invoke any law relating to the marshaling of collateral which might
cause delay in or impede the enforcement of the Bank's rights under this
Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, the Borrower hereby irrevocably waives the
benefits of all such laws.
12.8 Application of Proceeds. The Bank will within three (3) Business Days
after receipt of cash or solvent credits from collection of items of payment,
proceeds of Collateral or any other source, apply the whole or any part thereof
against the Obligations secured hereby. The Bank shall further have the
exclusive right to determine how, when and what application of such payments and
such credits shall be made on the Obligations, and such determination shall be
conclusive upon the Borrower. Any proceeds of any disposition by the Bank of all
or any part of the Collateral may be first applied by the Bank to the payment of
expenses incurred by the Bank in connection with the Collateral, including
attorneys' fees and legal expenses as provided for in Section 13 hereof.
12.9 No Waiver. No Event of Default shall be waived by the Bank except in
writing. No failure or delay on the part of the Bank in exercising any right,
power or remedy hereunder shall operate as a waiver of the exercise of the same
or any other right at any other time; nor shall any single or partial exercise
of any such right, power or remedy preclude any other or further
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exercise thereof or the exercise of any other right, power or remedy hereunder.
There shall be no obligation on the part of the Bank to exercise any remedy
available to the Bank in any order. The remedies provided for herein are
cumulative and not exclusive of any remedies provided at law or in equity. The
Borrower agrees that in the event that the Borrower fails to perform, observe or
discharge any of its Obligations or liabilities under this Agreement or any
other agreements with the Bank, no remedy of law will provide adequate relief to
the Bank, and further agrees that the Bank shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
12.10 Letters of Credit. With respect to all Letters of Credit for which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to this Section 12, the Borrower shall at such time deposit in a cash
collateral account opened by the Bank an amount equal to the Letter of Credit
Obligations then outstanding. Amounts held in such cash collateral account shall
be applied by the Bank to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay the
Obligations, in such order of application as the Bank may, in its sole
discretion, from time to time elect. After all such Letters of Credit shall have
expired or been fully drawn upon, all commitments to make Loans hereunder have
terminated and all other Obligations have been indefeasibly satisfied and paid
in full in cash, the balance, if any, in such cash collateral account shall be
returned to the Borrower or such other Person as may be lawfully entitled
thereto.
SECTION 13 MISCELLANEOUS.
13.1 Obligations Absolute. None of the following shall affect the
Obligations of the Borrower to the Bank under this
Agreement or the Bank's rights with respect to the Collateral:
(a) acceptance or retention by the Bank of other property or any
interest in property as security for the Obligations;
(b) release by the Bank of all or any part of the Collateral or of any
party liable with respect to the Obligations;
(c) release, extension, renewal, modification or substitution by the
Bank of any Note, or any note evidencing any of the Obligations, or the
compromise of the liability of the Guarantor of the Obligations; or
(d) failure of the Bank to resort to any other security or to pursue
the Borrower or any other obligor liable for any of the Obligations before
resorting to remedies against the Collateral.
13.2 Entire Agreement. This Agreement and the other Loan Documents (i) are
valid, binding and enforceable against the Borrower and the Bank in accordance
with their respective provisions and no conditions exist as to their legal
effectiveness; (ii) constitute the entire agreement between the parties with
respect to the subject matter hereof and thereof; and (iii) are the final
expression of the intentions of the Borrower and the Bank. No promises, either
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expressed or implied, exist between the Borrower and the Bank, unless contained
herein or therein. This Agreement, together with the other Loan Documents,
supersedes all negotiations, representations, warranties, commitments, term
sheets, discussions, negotiations, offers or contracts (of any kind or nature,
whether oral or written) prior to or contemporaneous with the execution hereof
with respect to any matter, directly or indirectly related to the terms of this
Agreement and the other Loan Documents. This Agreement and the other Loan
Documents are the result of negotiations among the Bank, the Borrower and the
other parties thereto, and have been reviewed (or have had the opportunity to be
reviewed) by counsel to all such parties, and are the products of all parties.
Accordingly, this Agreement and the other Loan Documents shall not be construed
more strictly against the Bank merely because of the Bank's involvement in their
preparation.
13.3 Amendments; Waivers. No delay on the part of the Bank in the exercise
of any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise by the Bank of any right, power or remedy preclude
other or further exercise thereof, or the exercise of any other right, power or
remedy. No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement or the other Loan Documents shall in any event be
effective unless the same shall be in writing and acknowledged by the Bank, and
then any such amendment, modification, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
13.4 WAIVER OF DEFENSES. THE BORROWER, ON BEHALF OF ITSELF AND ANY
GUARANTOR OF ANY OF THE OBLIGATIONS, WAIVES EVERY PRESENT AND FUTURE DEFENSE,
CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH THE BORROWER MAY NOW HAVE OR
HEREAFTER MAY HAVE TO ANY ACTION BY THE BANK IN ENFORCING THIS AGREEMENT.
PROVIDED THE BANK ACTS IN GOOD FAITH, THE BORROWER RATIFIES AND CONFIRMS
WHATEVER THE BANK MAY DO PURSUANT TO THE TERMS OF THIS AGREEMENT. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR THE BANK GRANTING ANY FINANCIAL ACCOMMODATION TO
THE BORROWER.
13.5 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF MICHIGAN OR IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN
DISTRICT OF MICHIGAN; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE THE BANK FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN
ANY OTHER JURISDICTION. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF MICHIGAN AND OF THE UNITED STATES
DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF MICHIGAN. THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES,
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TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH
COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
13.6 WAIVER OF JURY TRIAL. THE BANK AND THE BORROWER, AFTER CONSULTING OR
HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE,
ANY OTHER LOAN DOCUMENT, ANY OF THE OTHER OBLIGATIONS, THE COLLATERAL, OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, OR ANY
COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE BANK AND THE BORROWER ARE
ADVERSE PARTIES, AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE BANK GRANTING ANY FINANCIAL ACCOMMODATION TO THE BORROWER.
13.7 Assignability. The Bank may at any time assign the Bank's rights in
this Agreement, the other Loan Documents, the Obligations, or any part thereof
and transfer the Bank's rights in any or all of the Collateral, and the Bank
thereafter shall be relieved from all liability with respect to such Collateral.
In addition, the Bank may at any time sell one or more participations in the
Loans. The Borrower may not sell or assign this Agreement, or any other
agreement with the Bank or any portion thereof, either voluntarily or by
operation of law, without the prior written consent of the Bank. This Agreement
shall be binding upon the Bank and the Borrower and their respective legal
representatives and successors. All references herein to the Borrower shall be
deemed to include any successors, whether immediate or remote. In the case of a
joint venture or partnership, the term "Borrower" shall be deemed to include all
joint venturers or partners thereof, who shall be jointly and severally liable
hereunder.
13.8 Confirmations. The Borrower and the Bank agree from time to time, upon
written request received by it from the other, to confirm to the other in
writing the aggregate unpaid principal amount of the Loans then outstanding
under such Note.
13.9 Confidentiality. The Bank agrees to use commercially reasonable
efforts (equivalent to the efforts the Bank applies to maintain the
confidentiality of its own confidential information) to maintain as confidential
all information provided to them by the Borrower and designated as confidential,
except that the Bank may disclose such information (a) to Persons employed or
engaged by the Bank in evaluating, approving, structuring or administering the
Loans; (b) to any assignee or participant or potential assignee or participant
that has agreed to comply with the covenant contained in this Section 13.9 (and
any such assignee or participant or potential assignee or participant may
disclose such information to Persons employed or engaged by them as described in
clause (a) above); (c) as required or requested by any federal or state
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regulatory authority or examiner, or any insurance industry association, or as
reasonably believed by the Bank to be compelled by any court decree, subpoena or
legal or administrative order or process; (d) as, on the advice of the Bank's
counsel, is required by law; (e) in connection with the exercise of any right or
remedy under the Loan Documents or in connection with any litigation to which
the Bank is a party; (f) to any nationally recognized rating agency that
requires access to information about the Bank's investment portfolio in
connection with ratings issued with respect to the Bank; (g) to any Affiliate of
the Bank who may provide Bank Products to the Borrower or any Subsidiary, or (h)
that ceases to be confidential through no fault of the Bank.
13.10 Binding Effect. This Agreement shall become effective upon execution
by the Borrower and the Bank. If this Agreement is not dated or contains any
blanks when executed by the Borrower, the Bank is hereby authorized, without
notice to the Borrower, to date this Agreement as of the date when it was
executed by the Borrower, and to complete any such blanks according to the terms
upon which this Agreement is executed.
13.11 Governing Law. This Agreement, the Loan Documents and any Note shall
be delivered and accepted in and shall be deemed to be contracts made under and
governed by the internal laws of the State of Michigan (but giving effect to
federal laws applicable to national banks) applicable to contracts made and to
be performed entirely within such state, without regard to conflict of laws
principles.
13.12 Enforceability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by,
unenforceable or invalid under any jurisdiction, such provision shall as to such
jurisdiction, be severable and be ineffective to the extent of such prohibition
or invalidity, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
13.13 Survival of Borrower Representations. All covenants, agreements,
representations and warranties made by the Borrower herein shall,
notwithstanding any investigation by the Bank, be deemed material and relied
upon by the Bank and shall survive the making and execution of this Agreement
and the Loan Documents and the issuance of any Note, and shall be deemed to be
continuing representations and warranties until such time as the Borrower has
fulfilled all of its Obligations to the Bank, and the Bank has been indefeasibly
paid in full in cash. The Bank, in extending financial accommodations to the
Borrower, is expressly acting and relying on the aforesaid representations and
warranties.
13.14 Extensions of Bank's Commitment. This Agreement shall secure and
govern the terms of (i) any extensions or renewals of the Bank's commitment
hereunder, and (ii) any replacement note executed by the Borrower and accepted
by the Bank in its sole and absolute discretion in substitution for any Note.
13.15 Time of Essence. Time is of the essence in making payments of all
amounts due the Bank under this Agreement and in the performance and observance
by the Borrower of each covenant, agreement, provision and term of this
Agreement.
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13.16 Counterparts; Facsimile Signatures. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same Agreement.
Receipt of an executed signature page to this Agreement by facsimile or other
electronic transmission shall constitute effective delivery thereof. Electronic
records of executed Loan Documents maintained by the Bank shall be deemed to be
originals thereof.
13.17 Notices. Except as otherwise provided herein, the Borrower waives all
notices and demands in connection with the enforcement of the Bank's rights
hereunder. All notices, requests, demands and other communications provided for
hereunder shall be in writing and addressed as follows:
If to the Borrower: Rockwell Medical Technologies, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Bank: Standard Federal Bank National Association
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party complying as to delivery with the terms
of this subsection. All notices addressed as above shall be deemed to have been
properly given (i) if served in person, upon acceptance or refusal of delivery;
(ii) if mailed by certified or registered mail, return receipt requested,
postage prepaid, on the third (3rd) day following the day such notice is
deposited in any post office station or letter box; or (iii) if sent by
recognized overnight courier, on the first (1st) day following the day such
notice is delivered to such carrier. No notice to or demand on the Borrower in
any case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances.
13.18 Release of Claims Against Bank. In consideration of the Bank making
the Loans, the Borrower and all other Obligors do each hereby release and
discharge the Bank of and from any and all claims, harm, injury, and damage of
any and every kind, known or unknown, legal or equitable, which any Obligor may
have against the Bank from the date of their respective first contact with the
Bank until the date of this Agreement including any claim arising from any
reports (environmental reports, surveys, appraisals, etc.) prepared by any
parties hired or recommended by the Bank. The Borrower and all other Obligors
confirm to Bank that they have reviewed the effect of this release with
competent legal counsel of their choice, or have been afforded the opportunity
to do so, prior to execution of this Agreement and the Loan Documents and do
each acknowledge and agree that the Bank is relying upon this release in
extending the Loans to the Borrower.
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13.19 Costs, Fees and Expenses. The Borrower shall pay or reimburse the
Bank for all reasonable costs, fees and expenses incurred by the Bank or for
which the Bank becomes obligated in connection with the negotiation,
preparation, consummation, collection of the Obligations or enforcement of this
Agreement, the other Loan Documents and all other documents provided for herein
or delivered or to be delivered hereunder or in connection herewith (including
any amendment, supplement or waiver to any Loan Document), or during any
workout, restructuring or negotiations in respect thereof, including, without
limitation, reasonable consultants' fees and attorneys' fees and time charges of
counsel to the Bank, which shall also include attorneys' fees and time charges
of attorneys who may be employees of the Bank or any Affiliate of the Bank, plus
costs and expenses of such attorneys or of the Bank; search fees, costs and
expenses; and all taxes payable in connection with this Agreement or the other
Loan Documents, whether or not the transaction contemplated hereby shall be
consummated. In furtherance of the foregoing, the Borrower shall pay any and all
stamp and other taxes, UCC search fees, filing fees and other costs and expenses
in connection with the execution and delivery of this Agreement, any Note and
the other Loan Documents to be delivered hereunder, and agrees to save and hold
the Bank harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such costs and expenses.
That portion of the Obligations consisting of costs, expenses or advances to be
reimbursed by the Borrower to the Bank pursuant to this Agreement or the other
Loan Documents which are not paid on or prior to the date hereof shall be
payable by the Borrower to the Bank on demand. If at any time or times hereafter
the Bank: (a) employs counsel for advice or other representation (i) with
respect to this Agreement or the other Loan Documents, (ii) to represent the
Bank in any litigation, contest, dispute, suit or proceeding or to commence,
defend, or intervene or to take any other action in or with respect to any
litigation, contest, dispute, suit, or proceeding (whether instituted by the
Bank, the Borrower, or any other Person) in any way or respect relating to this
Agreement, the other Loan Documents or the Borrower's business or affairs, or
(iii) to enforce any rights of the Bank against the Borrower or any other Person
that may be obligated to the Bank by virtue of this Agreement or the other Loan
Documents; (b) takes any action to protect, collect, sell, liquidate, or
otherwise dispose of any of the Collateral; and/or (c) attempts to or enforces
any of the Bank's rights or remedies under the Agreement or the other Loan
Documents, the costs and expenses incurred by the Bank in any manner or way with
respect to the foregoing, shall be part of the Obligations, payable by the
Borrower to the Bank on demand.
13.20 Indemnification. The Borrower agrees to defend (with counsel
satisfactory to the Bank), protect, indemnify, exonerate and hold harmless each
Indemnified Party from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
distributions of any kind or nature (including, without limitation, the
disbursements and the reasonable fees of counsel for each Indemnified Party
thereto, which shall also include, without limitation, reasonable attorneys'
fees and time charges of attorneys who may be employees of any Indemnified
Party), which may be imposed on, incurred by, or asserted against, any
Indemnified Party (whether direct, indirect or consequential and whether based
on any federal, state or local laws or regulations, including, without
limitation, securities laws, Environmental Laws, commercial laws and
regulations, under common law or in equity, or based on contract or otherwise)
in any manner relating to or arising out of this Agreement or any of the
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Loan Documents, or any act, event or transaction related or attendant thereto,
the preparation, execution and delivery of this Agreement and the Loan
Documents, including the making or issuance and management of the Loans, the use
or intended use of the proceeds of the Loans, the enforcement of the Bank's
rights and remedies under this Agreement, the Loan Documents, any Note, any
other instruments and documents delivered hereunder, or under any other
agreement between the Borrower and the Bank; provided, however, that the
Borrower shall not have any obligations hereunder to any Indemnified Party with
respect to matters determined by a court of competent jurisdiction by final and
nonappealable judgment to have been caused by or resulting from the willful
misconduct or gross negligence of such Indemnified Party. To the extent that the
undertaking to indemnify set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, the Borrower shall
satisfy such undertaking to the maximum extent permitted by applicable law. Any
liability, obligation, loss, damage, penalty, cost or expense covered by this
indemnity shall be paid to each Indemnified Party on demand, and failing prompt
payment, together with interest thereon at the Default Rate from the date
incurred by each Indemnified Party until paid by the Borrower, shall be added to
the Obligations of the Borrower and be secured by the Collateral. The provisions
of this Section 13.20 shall survive the satisfaction and payment of the other
Obligations and the termination of this Agreement.
13.21 Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by any Obligor or the transfer to the Bank of any
property should for any reason subsequently be declared to be void or voidable
under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if the Bank is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that the Bank is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys fees of the
Bank, the Obligations shall automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
13.22 Customer Identification - USA PATRIOT Act Notice. The Bank hereby
notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act
(Title III of Pub. L. 107-56, signed into law October 26, 2001) (the "Act"), and
the Bank's policies and practices, the Bank is required to obtain, verify and
record certain information and documentation that identifies the Borrower, which
information includes the name and address of the Borrower and such other
information that will allow the Bank to identify the Borrower in accordance with
the Act.
13.23 Satisfaction of Obligations. Upon full satisfaction of all
Obligations to the Bank by Borrower, and the Bank not having any further duty to
lend to the Borrower and all Letter of Credit Obligations having been satisfied,
and the Collateral does not secure any other outstanding obligations to the
Bank, the Bank will promptly execute a release of its lien on the Collateral.
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[Signatures On Following Page]
-57-
IN WITNESS WHEREOF, the Borrower and the Bank have executed this Loan and
Security Agreement as of the date first above written.
BORROWER:
ROCKWELL MEDICAL TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CHIEF FINANCIAL OFFICER
ATTEST:
By:
-----------------------
Name:
-----------------------
Title:
-----------------------
Agreed and accepted:
BANK:
STANDARD FEDERAL BANK
NATIONAL ASSOCIATION, a national
banking association
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: VICE-PRESIDENT
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Schedule 7.22
List of Bank Accounts Open
Comerica Bank
Rockwell Medical Technologies, Inc. Checking A/C #▇▇▇▇-▇▇▇-▇▇▇
Rockwell Transportation, Inc. Checking A/C# ▇▇▇▇-▇▇▇-▇▇▇
Schedule 7.23
Locations
Rockwell Medical Technologies, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
SCHEDULE 7.9
None.
9.1 Schedule of Debt
1) GE Healthcare Finance
2) GE Capital
3) Nova Financial Services
4) Citicorp
5) Citicapital
6) Dell Financial Services
7) Michigan Leasing
8) Pentech Financial Services
9) ▇▇▇▇▇▇ Leasing
10) CIT Technology Financial Services
11) Ryder
12) Winmark Capital
SCHEDULE 9.3
None.