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EXHIBIT 10.15
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THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
BETWEEN
QUEST MEDICAL, INC.
AND
NATIONSBANK OF TEXAS, N.A.
Dated as of March 3, 1997
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS
1.1 Definitions ................................. 1
1.2 Accounting and Other Terms .................. 16
ARTICLE II. ADVANCES
2.1 (a) Facility A Advances ................... 17
2.2 Manner of Borrowing ......................... 17
2.3 Evidence of Indebtedness .................... 18
2.4 Fees ........................................ 18
2.5 Prepayments ................................. 19
2.6 Repayment ................................... 19
2.7 Reduction of Commitments .................... 20
2.8 Interest .................................... 20
2.9 Default Interest ............................ 21
2.10 Continuation and Conversion Elections ....... 21
2.11 Maximum Amount of Interest .................. 22
2.12 Computations ................................ 23
2.13 Taxes ....................................... 23
2.14 Capital Adequacy; Increased Costs ........... 23
ARTICLE III. CONDITIONS PRECEDENT TO ADVANCES.
3.1 Conditions Precedent to Advances ............ 25
3.2 Conditions Precedent to All Advances ........ 28
3.3 Legal Details ............................... 28
ARTICLE IV. AFFIRMATIVE COVENANTS
4.1 Books, Records and Properties ............... 28
4.2 Financial Statements and Reports ............ 28
4.3 Maintenance of Existence .................... 30
4.4 Insurance ................................... 30
4.5 Compliance with Applicable Laws ............. 30
4.6 Other Information and Documents ............. 30
4.7 Default ..................................... 30
4.8 Taxes ....................................... 30
(i)
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4.9 Further Assurances .......................... 30
4.10 Filings ..................................... 31
4.11 Maintenance ................................. 31
4.12 ERISA Compliance ............................ 31
4.13 Indemnity by Borrower ....................... 31
ARTICLE V. NEGATIVE COVENANTS
5.1 Liens ....................................... 32
5.2 Transfer of Assets .......................... 32
5.3 New Industry ................................ 32
5.4 Restricted Investments ...................... 33
5.5 Transactions with Affiliates ................ 33
5.6 Fixed Charges Coverage Ratio ................ 33
5.7 Margin Ratio ................................ 33
5.8 Total Liabilities to Tangible Worth Ratio ... 33
5.9 Capital Expenditures ........................ 33
5.10 Merger and Consolidation .................... 33
5.11 Debt ........................................ 33
5.12 Distributions ............................... 34
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
6.1 Organization; Qualification; Authority ...... 34
6.2 Financial Statements ........................ 34
6.3 Conflicting Agreements and Other Matters .... 34
6.4 Governmental Consent ........................ 35
6.5 Enforceability .............................. 35
6.6 Actions Pending ............................. 35
6.7 Outstanding Debt ............................ 35
6.8 Title to Properties ......................... 35
6.9 Taxes ....................................... 36
6.10 Regulation G, etc ........................... 36
6.11 ERISA ....................................... 36
6.12 Disclosure .................................. 36
6.13 Environmental Matters ....................... 36
6.14 Sufficiency of Capital ...................... 37
6.15 Affiliates .................................. 37
6.16 Intellectual Property ....................... 37
ARTICLE VII. DEFAULT
(ii)
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7.1 Events of Default ........................... 37
7.2 Remedies Upon Default ....................... 39
7.3 Performance by Lender ....................... 40
7.4 Lender Not in Control ....................... 40
7.5 Waivers ..................................... 40
7.6 Cumulative Rights ........................... 41
7.7 Expenditures by Lender ...................... 41
ARTICLE VIII. MISCELLANEOUS
8.1 Money ....................................... 41
8.2 Headings .................................... 41
8.3 Articles, Sections, and Exhibits ............ 41
8.4 Notices and Deliveries ...................... 41
8.5 Place of Payment ............................ 43
8.6 Survival of Agreements ...................... 43
8.7 Parties in Interest ......................... 43
8.8 Expenses .................................... 43
8.9 Governing Law ............................... 43
8.10 MANDATORY ARBITRATION ....................... 43
8.11 WAIVER OF JURY TRIAL ........................ 44
8.12 Maximum Amount Limitation ................... 45
8.13 Severability ................................ 45
8.14 Amendment ................................... 45
8.15 Exceptions to Covenants ..................... 46
8.16 Counterparts ................................ 46
8.17 Restatement ................................. 46
8.18 ENTIRE AGREEMENT ............................ 46
(iii)
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EXHIBITS
Exhibit A Facility A Note
Exhibit B Facility B Note
Exhibit C Intentionally Deleted
Exhibit D Security Agreement
Exhibit E Intellectual Property Security Agreement
Exhibit F License Agreement
Exhibit G Compliance Certificate
Exhibit H Guaranty Agreement
Exhibit I Borrowing Notice
Exhibit J Conversion or Continuation Notice
Exhibit K Borrowing Base Certificate
Exhibit L Pledge Agreement
Exhibit M Deed of Trust
Exhibit N Subordination Agreement
SCHEDULES
Schedule 1 Affiliates
Schedule 2 ▇▇▇▇▇ Property
Schedule 3 Litigation
Schedule 4 Intellectual Property
(iv)
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THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") dated as of
March 3, 1997, between QUEST MEDICAL, INC., a Texas corporation, having its
principal office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Borrower"), and
NATIONSBANK OF TEXAS, N.A., a national banking association, having its
principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Lender").
BACKGROUND
Borrower and Lender have entered into (1) the Credit Agreement dated as of
October 22, 1993, (2) the First Amended and Restated Credit Agreement dated as
of March 31, 1995 (as amended, the "First Restated Credit Agreement") providing
for a line of credit in the maximum principal amount of $5,000,000 ("Existing
Facility A"), the proceeds of which are to be used for working capital
purposes, and a $15,000,000 term facility ("Existing Facility B"), the proceeds
of which were used to acquire all capital stock of Neuromed, Inc., a Florida
corporation and (3) the Second Amended and Restated Credit Agreement dated as
of February 9, 1996 (as amended, the "Second Restated Credit Agreement") which
renewed Existing Facility A and restated Existing Facility B. Borrower has
requested that Lender renew Existing Facility A and provide a new term
facility, the proceeds of which will be used to provide for the working capital
needs of Borrower and to make certain arbitration payments, subject to the
terms of this Agreement.
In consideration of the mutual covenants and agreements contained herein,
and other good and valuable consideration, receipt of which is acknowledged by
all parties hereto, the parties agree as follows:
AGREEMENT.
ARTICLE I. DEFINITIONS
1.1 Definitions. The terms defined in this Article I (except as otherwise
expressly provided in this Agreement) for all purposes shall have the following
meanings:
"Account" has the meaning assigned to such term in the UCC.
"Additional Costs" has the meaning set forth in Section 2.14.
"Advance" means an advance by Lender to Borrower pursuant to Article II,
and refers to a Facility A Advance or a Facility B Advance.
"Affiliate" means any Person that directly or indirectly through one or
more Persons Controls, or is Controlled By or Under Common Control with,
Borrower or a Person who Controls or is Controlled by, Borrower.
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"▇▇▇▇▇ Property" means the real property described on Schedule 2, together
with all improvements and equipment located thereon.
"ANS" means Advanced Neuromodulation Systems, Inc., a Texas corporation.
"Applicable Law" means the Laws of the United States of America applicable
to contracts made or performed in the State of Texas, including, without
limitation, 12 USC Section Section 85 and 86 as amended to the date hereof and
as the same may be amended at any time and from time to time hereafter and any
other statute of the United States of America now or at any time hereafter
prescribing maximum rates of interest on loans and extensions of credit, and
the Laws of the State of Texas, including, without limitation, Articles
5069-l.04 and 5069-l.07 (a), Title 79, Revised Civil Statutes of Texas, 1925,
as amended at any time and from time to time hereafter and any other statute of
the State of Texas now or at any time hereafter prescribing maximum rates of
interest on loans and extensions of credit ("Art. l.04").
"Applicable Margin" means (a) with respect to Prime Advances, 1.00% per
annum, (b) with respect to LIBOR Advances, 2.75% per annum, and with respect to
the Facility B Advance, 2.25% per annum.
"Art. 1.04" has the meaning given to such term in the definition of
Applicable Law in Article I.
"▇▇▇▇▇▇ Debt" means the "Subordinated Obligations", as defined in the
▇▇▇▇▇▇ Subordination Agreement.
"▇▇▇▇▇▇ Subordination Agreement" means the Subordination Agreement date
March 3, 1997, among ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Borrower and Lender.
"Borrowing" means a borrowing under Facility A or Facility B of the same
Type made on the same day.
"Borrowing Base" means, at the time in question, an amount equal to the
sum of (a) 80% of Eligible Accounts, plus (b) 25% of Eligible Inventory
composed of raw materials and MPS finished goods, plus (c) 50% of Eligible
Inventory composed of non-MPS finished goods.
"Borrowing Base Certificate" means a certificate, signed by a duly
authorized officer of Borrower, in the form of Exhibit K, appropriately
completed.
"Borrowing Notice" has the meaning set forth in Section 2.2(a).
"Business Day" means a day on which banks are open for the transaction of
business as required by this Agreement in Dallas, Texas and New York, New York
and, with respect to any LIBOR Advance, a domestic business day in London,
England and a day on which commercial
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banks are open for international business in London, England (including
dealings in United States dollar deposits), and as otherwise relevant to the
determination to be made or the action to be taken.
"Capital Leases" means capital leases and subleases, as defined in the
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 13, dated November 1976, as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means that property of Borrower or any other Person in which
Lender shall have Liens to secure payment and performance of the Obligation.
"Collateral Documents" means all security agreements, pledge agreements
and any other agreements or documents executed or delivered to secure repayment
of the Obligation or part thereof.
"Compliance Certificate" means a certificate, signed by a duly authorized
officer of Borrower, in the form of Exhibit G, appropriately completed.
"Consequential Loss" means with respect to (a) Borrower's payment of all
or any portion of the then-outstanding principal amount of a LIBOR Advance on a
day other than the last day of the related Interest Period, including, without
limitation, payments made as a result of the acceleration of the maturity of a
Note pursuant to Section 7.2, and (b) any of the circumstances specified in
Sections 2.2(e), 2.5, 2.7 and 2.14 on which a Consequential Loss may be
incurred, any loss, cost or expense incurred by Lender as a result of the
timing of the payment of the Advance or in liquidating, redepositing,
redeploying or reinvesting the principal amount so paid or affected by the
timing of the Advance or the circumstances described in Sections 2.2(e), 2.5,
2.7 and 2.14, which amount shall be the sum of (i) the interest that, but for
the timing of the payment of the Advance, Lender would have earned in respect
of that principal amount, reduced, if Lender is able to redeposit, redeploy, or
reinvest the principal amount, by the interest earned by Lender as a result of
redepositing, redeploying or reinvesting the principal amount plus (ii) any
expense or penalty incurred by such Lender by reason of liquidating,
redepositing, redeploying or reinvesting the principal amount. Each
determination by Lender of any Consequential Loss is, in the absence of
manifest error, conclusive and binding.
"Continue," "Continuation" and "Continued" each refer to the continuation
pursuant to Section 2.10 of a LIBOR Advance from one Interest Period to the
next Interest Period.
"Control" or "Controlled By" or "Under Common Control" mean possession,
direct or indirect, of power to direct or cause the direction of management or
policies (whether through ownership of voting securities, by contract or
otherwise); provided that, in any event (a) any Person which beneficially owns
20% or more (in number of votes) of the securities having
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ordinary voting power for the election of directors of a corporation shall
be presumed to control such corporation, and (b) no Person shall be deemed to
be an Affiliate of a corporation solely by reason of his being an officer or
director of such corporation.
"Conversion or Continuance Notice" has the meaning set forth in Section
2.10.
"Debt" means, with respect to any Person, all debt, obligations and
liabilities of such Person, including without limitation, (a) all "liabilities"
which would be reflected on a balance sheet of such Person, prepared in
accordance with GAAP, (b) all obligations of such Person in respect of any
Guaranty, (c) all obligations of such Person in respect of any Capital Lease,
(d) all obligations, debt and liabilities secured by any Lien on any property
or assets of such Person and (e) all obligations of such Person in respect of
letters of credit, acceptances or similar obligations issued or created for the
account of such Person.
"Debt for Borrowed Money" means, as to any Person, at any date, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (c) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable arising
in the ordinary course of business, (d) all obligations of such Person in
respect of any Guaranty, (e) all obligations of such Person in respect of any
Capital Lease, and (f) all obligations, debt and liabilities secured by any
Lien on any property or assets of such Person.
"Debtor Relief Laws" means any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, fraudulent conveyance, insolvency,
reorganization or similar debtor relief Laws relating to the enforcement of
creditors' rights generally from time to time in effect.
"Default" means any of the events specified in Section 7.1, whether or not
there has been satisfied any requirement in connection with such event for the
giving of notice, or the lapse of time, or the happening of any further
condition, event or act.
"Device" has the meaning set forth in the FDA Act.
"Distribution" means, as to any Person, (a) any declaration or payment of
any distribution or dividend (other than a stock dividend) on, or the making of
any pro rata distribution, loan, advance, or investment to or in any holder (in
its capacity as a partner, shareholder or other equity holder) of, any
partnership interest or shares of capital stock or other equity interest of
such Person, or (b) any purchase, redemption, or other acquisition or
retirement for value of any shares of partnership interest or capital stock or
other equity interest of such Person.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Drug" has the meaning set forth in the FDA Act.
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"EBITDA" means, as of any date of determination, the sum of Borrower's and
its Subsidiaries' (a) pre-tax income or deficit, as the case may be (excluding
extraordinary items and income from the sale of assets other than in the
ordinary course of business), plus (b) cash interest expense paid; amortization
of Debt discounts; any payments or fees with respect to letters of credit,
bankers' acceptances or similar facilities; fees and expenses with respect to
interest rate swap or similar agreements or foreign currency hedge, exchange or
similar agreements, plus (c) consolidated depreciation and amortization
expense, all calculated on a consolidated basis in accordance with GAAP,
determined for the four fiscal quarters preceding the date of calculation.
"Effective Date" means March 3, 1997.
"Eligible Accounts" means at the time of any determination thereof, the
lesser of (a) $3,000,000 and (b) each Account as to which the following
requirements have been fulfilled to the satisfaction of Lender:
(a) Borrower or a Subsidiary of Borrower has lawful and absolute
title to such Account;
(b) Such Account is a valid, legally enforceable obligation of the
Person who is obligated under such Account (the "account debtor") for
goods or services delivered or rendered to such Person;
(c) There has been excluded from such Account any portion that is
subject to any dispute, offset, counterclaim or other claim or defense on
the part of the account debtor or to any claim on the part of the account
debtor denying liability under such Account;
(d) Borrower or a Subsidiary of Borrower has full and unqualified
right to assign and grant a security interest in such Account to Lender
as security for the Obligation;
(e) Such Account is payable in Dollars and is evidenced by an
invoice rendered to the account debtor and such Account is not evidenced
by any chattel paper, promissory note or other instrument;
(f) Such Account is subject to a fully perfected first priority
security interest in favor of Lender pursuant to the Loan Papers, prior
to the rights of, and enforceable as such against, any other Person
(including holders of a purchase money security interest);
(g) If the account debtor in respect of such Account is either
located outside the United States of America or primarily conducts
business in a jurisdiction outside the
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United States of America, or if the goods or services sold giving rise to
such Account are to be delivered or performed outside of the United
States of America, (i) the account debtor is located in a province of the
Dominion of Canada in which all actions necessary to perfect a first
priority security interest in all Collateral in favor of Lender have
occurred, (ii) the entire amount of the payment obligation represented by
such Account is secured by either (A) an irrevocable Dollar-denominated
commercial letter of credit issued or confirmed by a financial
institution (1) the short-term debt obligations of which have the same or
higher rating, as established by either Standard & Poor's Corporation or
▇▇▇▇▇'▇ Investors Service, Inc., as comparable obligations of Lender, (2)
the short-term obligations of the holding company of such financial
institution have the same or higher rating, as established by Standard &
Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc., as comparable
obligations of NationsBank Corporation (if either or both of such
financial institution and Lender do not have outstanding comparable
short-term obligations or such obligations are not rated), or (3)
acceptable to Lender (if (A) either or both of such financial institution
and Lender and (B) either or both of the holding company of such
financial institution and NationsBank Corporation do not have outstanding
comparable short-term obligations or such obligations are not rated), the
proceeds of which letter of credit have been assigned to Lender or which
letter of credit shall specifically provide that payment thereunder shall
be made solely to an account maintained by Borrower at Lender (which
account and all property on deposit therein has been assigned to Lender),
or (B) a receivables insurance policy issued by ExImBank or a private
insurance company acceptable to Lender and ExImBank, in either case, the
proceeds of which policy have been assigned to Lender;
(h) Such Account is not subject to any Lien in favor of any Person
other than the Lien of Lender pursuant to the Loan Papers;
(i) Such Account has not been due and payable for more than 90 days
from the invoice date; and
(j) No account debtor in respect of such Account is (i) any
Tribunal, domestic or foreign; provided, for purposes of determining
"Eligible Account", "Tribunal" shall not include any government or
university, medical department of any government or university or
hospital associated with any government or university located in the
United States of America, (ii) the subject of a proceeding under any
Debtor Relief Laws, or (iii) the United States of America or any state;
provided, that, unless Lender agrees otherwise, no Accounts payable by an
account debtor shall constitute Eligible Accounts if 10% or more of the
aggregate dollar amount of all Accounts owed to Borrower by such account debtor
have been due and payable for 91 days or more from their respective invoice
dates.
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"Eligible Inventory" means, at the time of any determination thereof, the
lesser of (a) $2,650,000, reduced by $90,000 each calendar month commencing
April 1, 1997, and (b) each item of Inventory (excluding work-in-progress)
valued at the lower of cost or market value, as to which the following
requirements have been fulfilled to the satisfaction of Lender:
(i) Borrower or a Subsidiary of Borrower has lawful and absolute
title to such Inventory;
(ii) Such Inventory is subject to a fully perfected first priority
security interest in favor of Lender pursuant to the Loan Papers, prior
to the rights of, and enforceable as such against, any other Person
(including holders of a purchase money security interest);
(iii) Such Inventory is (A) neither adulterated nor misbranded, (B)
not the subject of any pending or threatened proceeding or action by FDA
or other Tribunal seeking the recall, seizure or condemnation or the
prohibition of the sale, use or distribution of such Inventory, (C)
properly registered with FDA (if such registration is required), (D)
produced at an Establishment registered with FDA (if such registration is
required), (E) not subject to any restriction on the distribution, sale
or use by Lender or any purchaser at any foreclosure sale or other
realization on the Collateral and (F) not a Drug;
(iv) Such Inventory was produced in compliance with the FDA Act and
the Fair Labor Standards Act and related rules and regulations;
(v) Such Inventory is located at 2930-G and ▇▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ or ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Establishment" has the meaning set forth in 21 CFR Section 807.3.
"Event of Default" means the occurrence of any of the events specified in
Section 7.1, provided there has been satisfied any requirement in connection
with such event for the giving of notice, or the lapse of time, or the
happening of any further condition, event or act.
"ExImBank" means Export-Import Bank of the United States, an agency of the
United States of America, and any successor entity.
"Existing Facility A" has the meaning set forth in the Background section.
"Existing Facility B" has the meaning set forth in the Background section.
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"Facility A Advance" means an Advance described in Section 2.1(a) to be
made from time to time by Lender to Borrower.
"Facility A Commitment" means $5,650,000, as the same may be reduced or
terminated pursuant to Sections 2.7.
"Facility A Commitment Fee" has the meaning set forth in Section 2.4(a).
"Facility A Note" means the promissory note of Borrower payable to the
order of Lender, in substantially the form of Exhibit A, and any and all
renewals, extensions, modifications and amendments thereof and substitutions
therefor.
"Facility A Termination Date" means January 31, 1998, or such earlier date
that the Facility A Commitment is terminated.
"Facility B Advance" means the Advance described in Section 2.1(b) to be
made on the Effective Date by Lender to Borrower.
"Facility B Commitment" means $350,000.
"Facility B Interest Rate" means, with respect to the Facility B Advance,
a rate per annum equal to the lesser of (a) the sum of (i) the LIBOR Rate, plus
(ii) the Applicable Margin and (b) the Highest Lawful Rate.
"Facility B Note" means the promissory note of Borrower payable to the
order of Lender, in substantially the form of Exhibit B, and any and all
renewals, extensions, modifications and amendments thereof and substitutions
therefor.
"Facility B Termination Date" means January 31, 1998, or such earlier date
that the Facility B Commitment is terminated.
"FDA" means the Food and Drug Administration and any successor.
"FDA Act" means the Federal Food, Drug and Cosmetic Act, 21 USC Section
301, et seq, and all amendments and successors thereto.
"Financial Statements" means with respect to Borrower and its
Subsidiaries, consolidated and consolidating balance sheets, consolidated and
consolidating profit and loss statements, reconciliation of capital and surplus
(prepared as to fiscal quarters and fiscal years, only), and statements of cash
flow.
"First Restated Credit Agreement" has the meaning specified in the
Background section.
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"Fixed Charges" means the sum of, for Borrower and its Subsidiaries,
determined in accordance with GAAP on a consolidated basis, (a) interest
expense (including interest expense pursuant to Capital Leases), plus (b) lease
expense payable for Operating Leases, determined for the four fiscal quarters
preceding the date of calculation.
"Fixed Charges Coverage Ratio" means the ratio of Net Earnings Available
for Fixed Charges to Fixed Charges.
"GAAP" means generally accepted accounting principles applied on a
consistent basis, set forth in the Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in statements
of the Financial Accounting Standards Board, which are applicable in the
circumstances as of the date in question, and the requirement that such
principles be applied on a consistent basis shall mean that the accounting
principles observed in a current period are comparable in all material respects
to those applied in a preceding period. Unless otherwise indicated herein, all
accounting terms will be defined according to GAAP.
"Government Securities" means direct obligations of the United States of
America or any agency thereof, or obligations fully guaranteed by the United
States of America or any agency thereof.
"Guaranty" of any Person means any contract, agreement or understanding of
such Person pursuant to which such Person guarantees, or in effect guarantees,
any Debt of any other Person in any manner, whether directly or indirectly;
except that "Guaranty" shall not include the endorsement by such Person in the
ordinary course of business of negotiable instruments or documents for deposit
or collection.
"Guaranty Agreement" means a Guaranty Agreement in the form of Exhibit H,
or, if executed in connection with the First Restated Credit Agreement or the
Second Restated Credit Agreement, a Guaranty Agreement (as that term is defined
in the such credit agreement).
"hereof", "hereto", "hereunder" and similar terms refer to this Agreement
and not to any particular section or provision of this Agreement.
"Highest Lawful Rate" means at the particular time in question the maximum
rate of interest which, under Applicable Law, Lender is then permitted to
charge on the Obligation. If the maximum rate of interest which, under
Applicable Law, Lender is permitted to charge on the Obligation shall change
after the date hereof, the Highest Lawful Rate shall be automatically increased
or decreased, as the case may be, from time to time as of the effective time of
each change in the Highest Lawful Rate without notice to Borrower. For purposes
of determining the Highest Lawful Rate under the Applicable Law of the State of
Texas, the applicable rate ceiling shall be (a) the indicated rate ceiling
described in and computed in accordance with the provisions of Section (a)(l)
of Art. l.04; or (b) provided notice is given as required in Section (h)(1) of
said Art. l.04, the quarterly ceiling computed pursuant to Section (d) of said
Art. l.04;
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provided, however, that at any time the indicated rate ceiling, the
annualized ceiling or the quarterly ceiling, as applicable, shall be less than
18% per annum or more than 24% per annum, the provisions of Sections (b)(1) and
(2) of said Art. l.04 shall control for purposes of such determination, as
applicable.
"Indemnitee" has the meaning set forth in Section 4.13.
"Interest Period" means, with respect to any LIBOR Advance, the period
beginning on the date the Advance is made or continued as a LIBOR Advance and
ending one, two, three or six months thereafter (as Borrower shall select);
provided, however, that:
(a) Borrower may not select any Interest Period that ends after any
principal repayment date (including the Facility A Termination Date and
the Facility B Termination Date) unless, after giving effect to such
selection, the aggregate principal amount of LIBOR Advances having
Interest Periods that end on or prior to such principal repayment date,
shall be at least equal to the principal amount of Advances due and
payable on and prior to such date;
(b) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business Day;
provided, however, that if such extension would cause the last day of
such Interest Period to occur in the next following calendar month, the
last day of such Interest Period shall occur on the next preceding
Business Day;
(c) no Interest Period for a Facility A Advance may extend beyond
the Facility A Termination Date; and
(d) no Interest Period for the Facility B Advance may extend beyond
the Facility B Termination Date.
"Inventory" has the meaning assigned to such term in the UCC.
"Investment" in any Person means any investment, whether by means of share
purchase, loan, advance, extension of credit, capital contribution or
otherwise, in or to such Person, the Guaranty of Debt of such Person or the
subordination of any claim against such Person to other Debt of such Person.
"Laws" means all statutes, laws, ordinances, regulations, orders, writs,
injunctions, or decrees of the United States, any state or commonwealth, any
municipality, any foreign country, any territory or possession, or any
Tribunal.
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"Lending Office" means, with respect to Lender, its branch or affiliate,
(i) initially, the office of Lender, branch or affiliate identified as such in
Section 8.4(b), and (ii) subsequently, such other office of Lender, branch or
affiliate as Lender may designate to Borrower as the office from which the
Advances of Lender will be made and maintained and for the account of which all
payments of principal and interest on the Advances and the Commitment Fee will
thereafter be made. Lender may have more than one Lending Office for the
purpose of making Prime Advances and LIBOR Advances.
"LIBOR Advance" means an Advance bearing interest at the LIBOR Rate.
"LIBOR Rate" means a simple per annum interest rate equal to the lesser of
(a) the Highest Lawful Rate, and (b) sum of the Applicable Margin plus the
LIBOR Rate Basis. The LIBOR Rate shall, with respect to LIBOR Advances subject
to reserve or deposit requirements under any Law, be subject to premiums
assessed therefor by each Lender, which are payable directly to each Lender in
an amount sufficient to compensate such Lender for any increased cost or
reduced rate of return attributable to such reserve deposit requirements. Any
calculation by a Lender of such increased cost or reduced rate of return which
is in reasonable detail and submitted to Borrower shall, in the absence of
manifest error, be presumptive evidence of the validity of such claim. Once
determined for any LIBOR Advance, the LIBOR Rate shall remain unchanged during
the applicable Interest Period.
"LIBOR Rate Basis" shall mean, for any LIBOR Advance for any Interest
Period therefore, the rate per annum (rounded upwards, if necessary, to the
nearest one-one hundredth (1/100th) of one percent (1%)) appearing on Telerate
Page 3750 (or any successor page) as the London interbank offered rate for
deposits in United States dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period. If for any
reason such rate is not available, the term "LIBOR Rate" shall mean, for any
LIBOR Advance for any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest one-one hundredth (1/100th) of one
percent (1%)) appearing on Reuters Screen LIBO page as the London interbank
offered rate for deposits in United States dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give or not to give any of the
foregoing), any conditional sale or other title retention agreement, any lease
in the nature thereof, and the filing of or agreement to give any financing
statement.
"Listed Debt" means any debt security (the issuer of which is a
corporation organized under the laws of any of the United States of America)
rated, at any date of determination, any one of the three highest ratings by
Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc., each
regularly traded on the New York Stock Exchange or the American Stock Exchange.
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17
"Listed Securities" means any equity security regularly traded on the New
York Stock Exchange or the American Stock Exchange.
"Litigation" means any proceeding, claim, lawsuit and/or investigation
conducted or, to the knowledge of Borrower, threatened by or before any
Tribunal, including, but not limited to, proceedings, claims, lawsuits, and/or
investigations under or pursuant to any environmental, occupational, safety and
health, antitrust, unfair competition, securities, Tax, or other Law, or under
or pursuant to any contract, agreement or other instrument.
"Loan Papers" means this Agreement, the Notes, the ▇▇▇▇▇▇ Subordination
Agreement, the ▇▇▇▇▇▇▇ Subordination Agreement, any agreement securing or
assuring performance of the Obligation and all other agreements, certificates
and documents delivered by Borrower hereunder or any other Person pursuant
hereto.
"Margin Ratio" means the ratio, as at any date of determination, of (a)
the sum of the aggregate unpaid principal of all outstanding Advances, plus all
accrued, unpaid interest on all Advances, plus the amount of all other
Obligations, to (b) EBITDA.
"Material Adverse Change or Effect" means any act or circumstance which
(a) would be material and adverse to the combined financial condition, business
operations or prospects of Borrower and its Subsidiaries or any other Obligor,
(b) in any material manner whatsoever would adversely affect the validity or
enforceability of any of the Loan Papers or (c) in any material manner impairs
the value of any material portion of the Collateral.
"Maximum Amount" means the maximum amount of interest which, under
Applicable Law, Lender is permitted to charge on the Obligation.
"NationsBank" means NationsBank of Texas, N.A., a national banking
association.
"Net Earnings Available for Fixed Charges" means, for Borrower and its
Subsidiaries, determined in accordance with GAAP on a consolidated basis, (a)
Net Income before Taxes, plus (b) extraordinary non-cash charges, plus (c)
interest expense (including interest expense pursuant to Capital Leases), plus
(d) lease expense pursuant to Operating Leases, determined for the fiscal
quarter preceding the date of calculation.
"Net Income" means, for Borrower and its Subsidiaries, determined in
accordance with GAAP on a consolidated basis, net profit or loss.
"Neuromed" means Neuromed, Inc., a Florida corporation.
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"Neuromed Agreement" means the Agreement for the Purchase and Sale of All
of the Issued Capital Stock of Neuromed, Inc. dated February 10, 1995, between
Borrower and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
"Note" or "Notes" means the Facility A Note and the Facility B Note.
"Obligations" means all present and future obligations, indebtedness and
liabilities, and all renewals and extensions of all or any part thereof, of
Borrower and each Obligor to Lender arising from, by virtue of, or pursuant to
this Agreement, any of the other Loan Papers and any and all renewals and
extensions thereof or any part thereof, or future amendments thereto, all
interest accruing on all or any part thereof and reasonable attorneys' fees
incurred by Lender for the administration, execution of waivers, amendments and
consents, and in connection with any restructuring, workouts or in the
enforcement or the collection of all or any part thereof, whether such
obligations, indebtedness and liabilities are direct, indirect, fixed,
contingent, joint, several or joint and several. Without limiting the
generality of the foregoing, "Obligations" includes all amounts would be owed
by Borrower, each other Obligor and any other Person (other than Lender) to
Lender under any Loan Paper, but for the fact that they are unenforceable or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving Borrower, any other Obligor or any other Person (including
all such amounts which would become due or would be secured but for the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding of Borrower, any other Obligor or any other
Person under any Debtor Relief Law).
"Obligor" means (a) Borrower, (b) each other Person (other than Lender)
liable for performance of any of the obligations under the Loan Papers and (c)
each other Person the property of which secures the performance of any of the
obligations under the Loan Papers.
"Operating Leases" means operating leases, as defined in the Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 13,
dated November 1976, as amended.
"PBGC" means the Pension Benefit Guaranty Corporation, and any successor
to all or any of the Pension Benefit Guaranty Corporation's functions under
ERISA.
"Permitted Investments" means Government Securities, Listed Debt, Listed
Securities and State Securities; provided Investments in Listed Securities of a
single issuer shall not exceed 25% of the outstanding equity having voting
rights of such issuer.
"Permitted Liens" means: (a) Liens granted to Lender to secure the
Obligation, (b) Liens in assets of Borrower or a Subsidiary of Borrower which
assets are not required by the Loan Papers to be subject to a Lien in favor of
Lender or which are not required by the Loan Papers to not be subject to a Lien
in favor of any Person, (c) Liens in the ▇▇▇▇▇ Property to the extent such
Liens do not cover or purport to cover any asset of Borrower which is subject
to a Lien in
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favor of Lender, (d) pledges or deposits made to secure payment of worker's
compensation or occupational injury insurance (or to participate in any fund in
connection with worker's compensation or occupational injury insurance),
unemployment insurance, pensions or social security programs or to secure
performance of bids, tenders, contracts or leases, or to secure statutory
obligations, surety or appeal bonds, or indemnity, performance or similar bonds
in the ordinary course of business, (e) Liens imposed by mandatory provisions
of law such as for materialmen's, mechanics', warehousemen's and other like
Liens arising in the ordinary course of business, securing indebtedness whose
payment is not yet due or which are being contested in good faith and as to
which adequate cash reserves established in accordance with GAAP have been
provided, (f) Liens for taxes, assessments and governmental charges or levies
imposed upon a Person or upon such Person's income or profits or property, if
the same are not yet due and payable or if the same are being contested in good
faith and as to which adequate cash reserves have been provided, (g) Liens in
favor of MetLife Capital Corporation or its affiliates upon the ▇▇▇▇▇ Property
in existence and of record on March 31, 1995, provided such Liens do not secure
Debt in excess of the amount of such Debt on March 31, 1995, as reduced by
payments on and after March 31, 1995, (h) Liens to secure Borrower's or any
Subsidiary's of Borrower obligations under lease agreements related to the real
property and improvements located at 2930-G and ▇▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, or any reasonably comparable lease agreements entered into as
replacements for or expansion of such lease agreements, or (i) Liens permitted
by and subject to the ▇▇▇▇▇▇ Subordination Agreement and the ▇▇▇▇▇▇▇
Subordination Agreement.
"Person" means and includes an individual, a partnership, a joint venture,
a corporation, a limited liability company, a trust, an unincorporated
organization, and a government or any department, Tribunal, agency or political
subdivision thereof.
"Plan" means an employee benefit plan or other plan maintained by Borrower
for employees of Borrower covered by Title IV of ERISA, or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code of
1986, as amended ("Code").
"Prime Advance" means an Advance bearing interest at the Prime Rate.
"Prime Base Rate" means the prime interest rate charged by NationsBank as
announced or published by NationsBank from time to time as its prime rate, and
which may not be the lowest interest rate charged by NationsBank.
"Prime Rate" means, with respect to each Prime Advance, a rate per annum
equal to the lesser of (a) the sum of (i) the Prime Base Rate, plus (ii) the
Applicable Margin and (b) the Highest Lawful Rate.
"Principal Office" means the principal office of Lender located at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
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20
"Quarterly Date" means March 31, June 30, September 30 and December 31.
"Refinancing Advance" means an Advance which is used to pay the principal
of an existing Advance at the end of its Interest Period and which, after
giving effect to such application, does not result in an increase in the
aggregate outstanding amount of Advances.
"Regulatory Modification" has the meaning set forth in Section 2.14.
"Reportable Event" has the meaning specified in Title IV of ERISA.
"Rights" means rights, remedies, powers and privileges.
"Second Restated Credit Agreement" has the meaning specified in the
Background section.
"Solvent" means, with respect to a particular date, that on such date (a)
the fair value of the property of a Person is greater than the total amount of
liabilities, including, without limitation, contingent liabilities, of such
Person, (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured, (c) such Person
is able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal
course of business, (d) such Person does not intend to, or believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature, and (e) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which
such Person is engaged. In computing the amount of contingent liabilities at
any time, it is intended that such liabilities will be computed at the amount
which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
material liability.
"Special Counsel" means the law firm of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.,
Dallas, Texas, Special Counsel to Lender, and each other attorney or law firm
representing Lender.
"State Securities" means direct obligations of any state or political
subdivision thereof, rated, at any date of determination, A-1 or P-1 by
Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.
"Subsidiary" of any Person means any corporation, limited liability
company, partnership, joint venture, trust or estate of which (or in which)
more than 50% of: (a) the outstanding capital stock having voting power to
elect a majority of the Board of Directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency), (b)
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the interest in the capital or profits of such partnership or joint venture, or
(c) the beneficial interest of such trust or estate, is at the time directly or
indirectly owned by such Person, by such Person and one or more of its
Subsidiaries or by one or more of such Person's Subsidiaries.
"▇▇▇▇▇▇▇ Debt" means the "Subordinated Obligations", as defined in the
▇▇▇▇▇▇▇ Subordination Agreement.
"▇▇▇▇▇▇▇ Subordination Agreement" means the Subordination Agreement date
March 3, 1997, among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Borrower and Lender.
"Tangible Net Worth" means, with respect to Borrower, shareholders'
equity, as shown on a balance sheet prepared in accordance with GAAP on a
consolidated basis, less the aggregate book value of intangible assets shown on
such balance sheet (provided, goodwill shall not be used in any determination
of "Tangible Net Worth" if goodwill is shown on the balance sheet as a negative
number, provided further that goodwill shown on the balance sheet as a positive
number shall be deducted in determining "Tangible Net Worth").
"Taxes" means all taxes, assessments, fees or other charges from time to
time or at any time imposed by any Laws or by any Tribunal.
"Term Debt" means debt for borrowed money the original scheduled maturity
of the last installment of which was more than twelve months after the date
borrowed.
"Total Liabilities" means all liabilities of Borrower which would be
classified as total liabilities on a balance sheet prepared in accordance with
GAAP on a consolidated basis.
"Tribunal" means any state, commonwealth, federal, foreign, territorial,
or other court or governmental department, commission, board, bureau, agency or
instrumentality.
"Type" refers to the distinction between Advances bearing interest at the
Prime Rate and LIBOR Rate.
"UCC" means the Uniform Commercial Code of Texas, as amended.
"Unrestricted Cash" means all cash, Government Securities, Listed Debt,
Listed Securities and State Securities owned by Borrower which are not subject
to any Lien.
1.2 Accounting and Other Terms. All accounting terms used in this
Agreement which are not otherwise defined herein shall be construed in
accordance with GAAP consistently applied on a consolidated basis for Borrower
and its Subsidiaries, unless otherwise expressly stated herein. If after the
Effective Date any change in GAAP applicable to Borrower or its Subsidiaries
results in a change in the manner of any calculation under the Loan Papers,
Borrower and Lender shall negotiate amendments to the Loan Papers to
accommodate such
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changes in GAAP. References herein to one gender shall be deemed to include all
other genders. Except where the context otherwise requires, (a) definitions
imparting the singular shall include the plural and vice versa and (b) all
references to time are deemed to refer to Dallas time.
ARTICLE II. ADVANCES
2.1 (a) Facility A Advances. Lender agrees, upon the terms and subject
to the conditions of this Agreement, to make Facility A Advances to Borrower
from time to time from the Effective Date to the Facility A Termination Date;
provided, however, that immediately after giving effect to each Facility A
Advance pursuant to this Section 2.1(a), the aggregate principal amount of the
Facility A Advances shall at no time exceed the lesser of (a) the Facility A
Commitment and (b) the Borrowing Base.
(b) Facility B Advance. Lender agrees, upon the terms and subject
to the conditions of this Agreement, to make the Facility B Advance to Borrower
on the Effective Date.
2.2 Manner of Borrowing.
(a) Each Borrowing of Advances shall be made upon the written notice of
Borrower, received by Lender (i) not later than 12:00 noon three Business Days
prior to the date of the proposed Borrowing, in the case of LIBOR Advances; and
(ii) not later than 11:00 a.m. on the date of such Borrowing, in the case of
Prime Advances. Each such notice of a Borrowing (a "Borrowing Notice") shall
be by telecopy or telex, promptly confirmed by letter, in substantially the
form of Exhibit I specifying therein:
(i) the date of such proposed Borrowing, which shall be a Business
Day;
(ii) the amount of such proposed Borrowing which, (A) shall not
exceed the unused portion of the Facility A Commitment, (B) shall not,
when added to the aggregate principal of outstanding Facility A Advances,
exceed the Borrowing Base, (C) shall, in the case of a Borrowing of LIBOR
Advances, be in an amount of not less than $50,000 or an integral
multiple of $50,000 in excess thereof and (D) in the case of a Borrowing
of Prime Advances, be in an amount of not less than $50,000 or an
integral multiple of $10,000 in excess thereof;
(iii) the Type of Advances of which the Borrowing is to be
comprised; and
(iv) if the Borrowing is to be comprised of LIBOR Advances, the
duration of the initial Interest Period applicable to such Advances.
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If the Borrowing Notice fails to specify the duration of the initial
Interest Period for any Borrowing comprised of LIBOR Advances, such Interest
Period shall be one month.
(b) Provided that all conditions precedent to the making of such Advance
have been satisfied, Lender shall on the date of such Advance (other than a
Refinancing Advance) deposit the funds so requested in the deposit account no.
1291792407 of Borrower with Lender.
(c) After giving effect to any Borrowing, there shall not be more than
five different Interest Periods in effect.
(d) No Interest Period for a Borrowing under Facility A or Facility B
shall extend beyond the Facility A Termination Date or Facility B Termination
Date, respectively.
(e) Borrower shall indemnify Lender against any Consequential Loss
incurred by Lender as a result of (i) any failure to fulfill, on or before the
date specified for the Advance, the conditions to the Advance set forth herein
or (ii) Borrower's requesting that an Advance not be made on the date specified
in the Borrowing Notice.
2.3 Evidence of Indebtedness.
(a) Facility A Advances shall be evidenced by the Facility A Note in the
amount of the Facility A Commitment in effect on the Effective Date. The
Facility B Advance shall be evidenced by the Facility B Note in the amount of
the Facility B Commitment in effect on the Effective Date.
(b) Absent manifest error, Lender's records shall be prima facie evidence
as to amounts owed Lender under the Notes and this Agreement.
2.4 Fees.
(a) Facility A Commitment Fee. Subject to the provisions of Section 8.12,
Borrower shall pay to Lender a commitment fee ("Facility A Commitment Fee") at
the rate of 3/8% per annum on the average daily unused portion of the Facility
A Commitment. The Facility A Commitment Fee shall be payable in arrears (i) on
each Quarterly Date, commencing March 31, 1997 and (ii) on the Facility A
Termination Date.
(b) Origination Fee. Subject to the provisions of Section 8.12, Borrower
shall pay to Lender an origination fee of $10,000 with respect to the Facility
A Commitment and Facility B Commitment.
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2.5 Prepayments.
(a) Borrower may, upon at least three Business Days prior written notice
to Lender stating the proposed date and aggregate principal amount of the
prepayment, prepay the outstanding principal amount of any Advances in whole or
in part, together with accrued interest to the date of such prepayment on the
principal amount prepaid without premium or penalty other than any
Consequential Loss; provided, however, that in the case of a prepayment of a
Prime Advance, the notice of prepayment may be given by telephone by 11:00 a.m.
on the date of prepayment. Each partial prepayment shall, in the case of LIBOR
Advances, be in an aggregate principal amount of not less than $50,000 or an
integral multiple of $50,000 in excess thereof and, in the case of Prime
Advances, be in an aggregate principal amount of not less than $50,000 or an
integral multiple of $10,000 in excess thereof. No prepayment of the Facility
B Advance can reduce the outstanding principal of the Facility B Advance to
less than $50,000 unless the entire outstanding principal of the Facility B
Advance is prepaid. If any notice of prepayment is given, the principal amount
stated therein, together with accrued interest on the amount prepaid and the
amount, if any, due under Section 2.14, shall be due and payable on the date
specified in such notice.
(b) If at any time the aggregate principal of outstanding Facility A
Advances exceeds the lesser of (a) the Facility A Commitment and (b) the
Borrowing Base, Borrower shall immediately prepay Facility A Advances then
outstanding in the aggregate amount equal to such excess, together with accrued
interest to the date of such prepayment on the principal amount prepaid without
premium or penalty other than any Consequential Loss. If at any time the
aggregate principal of outstanding Facility B Advances exceeds the Facility B
Commitment, Borrower shall immediately prepay the Facility B Advance then
outstanding in the aggregate amount equal to such excess, together with accrued
interest to the date of such prepayment on the principal amount prepaid without
premium or penalty other than any Consequential Loss.
(c) Unless otherwise specified by Borrower, any prepayment of Advances
pursuant to this Section 2.5 shall be applied first to Prime Advances, if any,
then outstanding, and second to LIBOR Advances with the shortest remaining
Interest Periods outstanding.
(d) No prepayments of Facility A Advances made solely pursuant to this
Section 2.5 shall cause the Facility A Commitment to be reduced.
(e) Any prepayments of the Facility B Advance made solely pursuant to this
Section 2.5 shall cause the Facility B Commitment to be reduced by the amount
of such prepayment.
2.6 Repayment.
(a) Facility A. Borrower shall repay to Lender the outstanding principal
amount of the Facility A Advances on the Facility A Termination Date.
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(b) Facility B. Borrower shall repay to Lender the outstanding principal
amount of the Facility B Advance on the Facility B Termination Date.
(c) General. The principal amount of each LIBOR Advance is due and
payable on the last day of the applicable Interest Period, which principal
payment may be made by means of a Refinancing Advance (subject to the other
provisions of this Agreement). On the date of a reduction of the Facility A
Commitment or Facility B Commitment pursuant to Section 2.7, the aggregate
amount of the applicable Advances outstanding on the date of reduction in
excess of the Facility A Commitment or Facility B Commitment as reduced shall
be due and payable, which principal payment may not be made by means of a
Refinancing Advance.
2.7 Reduction of Commitments.
(a) Mandatory. The Facility A Commitment shall reduce by $90,000 on
the first day of each calendar month, commencing on April 1, 1997.
(b) Optional. Borrower shall have the right at any time and from
time to time upon not less than three Business Days' notice to Lender not
later than 12:00 noon (if telephonic, to be confirmed by telex or in
writing on or before the date of reduction or termination), to terminate
or reduce the Facility A Commitment or the Facility B Commitment, in whole
or in part, provided that each partial termination shall be in an
aggregate amount which is an integral multiple of $50,000; provided, any
reduction of the Facility B Commitment to less than $50,000 must reduce
the Facility B Commitment to zero. Once reduced or terminated, neither
the Facility A Commitment nor the Facility B Commitment may be increased
or reinstated. On the date of any such reduction, Borrower shall repay
such principal amount (together with accrued interest thereon and any
Consequential Loss) of outstanding Advances as may be necessary so that
after such repayment, the aggregate unpaid principal amount of Advances
does not exceed the amount of the Facility A Commitment or the Facility B
Commitment, as appropriate, as then reduced.
2.8 Interest. Subject to Sections 2.09 and 8.12, Borrower shall pay
interest on the unpaid principal amount of each Advance from the date of such
Advance until such principal shall be paid in full, at the following rates per
annum:
(a) Prime Advances. Prime Advances shall bear interest at a rate
per annum equal to the Prime Rate as in effect from time to time. The
Facility B Advance may not be a Prime Advance.
(b) LIBOR Advances. LIBOR Advances shall bear interest at the rate
per annum equal to the LIBOR Rate applicable to such Advance, which at no
time shall exceed the Highest Lawful Rate.
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(c) Payment Dates. Accrued and unpaid interest on Prime Advances
shall be paid in arrears on each Quarterly Date, on the Facility A
Termination Date. Accrued and unpaid interest in respect of each LIBOR
Advance shall be paid on the last day of the appropriate Interest Period
and on the date of any prepayment or repayment of such Advance; provided,
however, that if any Interest Period for a LIBOR Advance exceeds three
months, interest shall also be paid on the date which falls three months
after the beginning of such Interest Period.
(d) Index. Reference to any particular index or reference rate for
determining any applicable interest rate under this Agreement is for
purposes of calculating the interest due and is not intended as and shall
not be construed as requiring Lender to actually obtain its funds used to
make any Advance at any particular index or reference rate.
2.9 Default Interest. During the continuation of any Event of Default,
Borrower shall pay, on demand, interest (after as well as before judgment to
the extent permitted by Law) on the principal amount of all Advances
outstanding and on all other Obligations due and unpaid hereunder for each
Advance equal to the Highest Lawful Rate.
2.10 Continuation and Conversion Elections
(a) Borrower may upon irrevocable written notice to Lender and subject to
the terms of this Agreement:
(i) elect to convert, on any Business Day, all or any portion of
outstanding Prime Advances (in an aggregate amount not less than $50,000
or an integral multiple of $50,000 in excess thereof) into LIBOR
Advances; or
(ii) elect to convert, at the end of any Interest Period therefor,
all or any portion of outstanding LIBOR Advances comprised in the same
Borrowing (in an aggregate amount not less than $50,000 or an integral
multiple of $10,000 in excess thereof), into Prime Advances; or
(iii) elect to continue, at the end of any Interest Period
therefor, any LIBOR Advances;
provided, however, that if the aggregate amount of outstanding LIBOR
Advances comprised in the same Borrowing shall have been reduced as a result of
any payment, prepayment or conversion of part thereof to an amount less than
$50,000, the LIBOR Advances comprised in such Borrowing shall automatically
convert into Prime Advances at the end of each respective Interest Period;
provided, further, that if the aggregate amount of outstanding LIBOR Advances
outstanding under Facility B shall have been reduced as a result of any
payment, prepayment or conversion of part thereof to an amount less than
$50,000, all outstanding
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principal of the Facility B Advance shall be due and payable at the end of each
respective Interest Period and the Facility B Commitment shall terminate on the
end of the last Interest Period.
(b) Borrower shall deliver a notice of conversion or continuation (a
"Conversion or Continuation Notice"), in substantially the form of Exhibit J,
to Lender not later than (i) 12:00 noon three Business Days prior to the
proposed date of conversion or continuation, if the Advances or any portion
thereof are to be converted into or continued as LIBOR Advances; and (ii) 10:00
a.m. on the Business Day of the proposed conversion, if the Advances or any
portion thereof are to be converted into Prime Advances.
Each such Conversion or Continuation Notice shall be by telecopy or telex,
promptly confirmed by letter, specifying therein:
(i) the Note to which the proposed conversion or continuation
relates;
(ii) the proposed date of conversion or continuation;
(iii) the aggregate amount of Advances to be converted or
continued;
(iv) the nature of the proposed conversion or continuation; and
(v) the duration of the applicable Interest Period.
(c) If, upon the expiration of any Interest Period applicable to LIBOR
Advances, Borrower shall have failed to select a new Interest Period to be
applicable to such LIBOR Advances or if an Event of Default shall then have
occurred and be continuing, Borrower shall be deemed to have elected to convert
such LIBOR Advances into Prime Advances effective as of the expiration date of
such current Interest Period.
(d) Notwithstanding any other provision contained in this Agreement, after
giving effect to any conversion or continuation of any Advances, there shall
not be outstanding Advances with more than five different Interest Periods.
2.11 Maximum Amount of Interest. In no event shall any interest rate
charged hereunder exceed the Highest Lawful Rate. If the amount of interest
payable for the account of Lender on any Quarterly Date in respect of the
immediately preceding interest computation period would exceed the Maximum
Amount, the amount of interest payable on such Quarterly Date shall be
automatically reduced to the Maximum Amount. If the amount of interest payable
for the account of Lender in respect of any interest computation period is
reduced pursuant to the immediately preceding sentence and the amount of
interest payable for its account in respect of any subsequent interest
computation period would be less than the Maximum Amount, then the amount of
interest payable for its account in respect of such subsequent interest
computation period shall be automatically increased to such Maximum Amount;
provided that at no time shall
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the aggregate amount by which interest paid for the account of Lender has been
increased pursuant to this sentence exceed the aggregate amount by which
interest paid for its account has theretofore been reduced pursuant to the
immediately preceding sentence.
2.12 Computations. Subject to the provisions of Section 8.12 of this
Agreement, interest on all Advances as well as computation of the Facility A
Commitment Fee shall be calculated on the basis of actual days elapsed, but
computed as if each year consisted of 360 days. All LIBOR Advances shall bear
interest from and including the first day of the applicable Interest Period to
(but not including) the last day of such Interest Period. All Prime Advances
shall bear interest from and including each Quarterly Date to (but not
including) the next Quarterly Date.
2.13 Taxes. All payments made by Borrower under this Agreement shall be
made free and clear of and without deduction for or on account of any present
or future income, stamp or other Taxes (excluding, however, Taxes imposed on
the overall net income of Lender or any franchise Taxes).
2.14 Capital Adequacy; Increased Costs.
(a) If Lender shall have determined that any change after the Effective
Date in any applicable Law or guideline regarding capital adequacy, capital
maintenance or similar requirements against loan commitments made by Lender
(including any such applicable Law or guideline which may be adopted before the
date of this Agreement but which requirements are phased in over a period of
time), or any change therein, or any change in the interpretation or
administration thereof by any Tribunal, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
Lender (or any Lending Office of Lender) or any corporation controlling Lender
with any request or directive regarding capital adequacy, capital maintenance
or similar requirements against loan commitments, whether or not having the
force of law (each such adoptions or modification and each interpretation or
administration being herein called a "Regulatory Modification"), has or would
have the effect of increasing the cost of Lender with respect to this Agreement
as a result of reducing the rate of return on Lender's or such corporation's
capital as a consequence of its obligations hereunder ("Additional Costs") to a
level below that which Lender or such corporation could have achieved but for
such adoption, change or compliance (taking into consideration Lender's or such
corporation's policies with respect to such capital impositions) by an amount
deemed by Lender to be material, then from time to time, Borrower shall pay to
Lender such Additional Costs as will compensate Lender for such reduction. No
failure by Lender to immediately demand payment of Additional Costs payable
hereunder shall constitute a waiver of Lender's right to demand payment of such
Additional Costs at any subsequent time. Determinations by Lender for purposes
of this Section 2.14 shall be presumed correct, provided that such
determinations are made reasonably and in good faith. Nothing contained herein
shall be construed or so operate as to require Borrower to pay any interest,
fees, costs or charges greater than as permitted by Applicable Law.
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(b) If, after the date hereof, any Tribunal, central bank or other
comparable authority, shall at any time impose, modify or deem applicable any
reserve (including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System), special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, Lender,
or shall impose on Lender other conditions affecting a LIBOR Advance, the
Notes, or its obligation to make a LIBOR Advance; and the result of any of the
foregoing is to increase the cost to Lender of making or maintaining LIBOR
Advances, or to reduce the amount of any sum received or receivable by Lender
under this Agreement or under the Notes by an amount deemed by Lender to be
material, then, within five days after demand by Lender, Borrower shall pay to
Lender the additional amount or amounts as will compensate Lender for the
increased cost or reduction. A certificate of Lender claiming compensation
under this Section 2.14 and setting forth in reasonable detail the calculation
of the additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. If Lender demands compensation
under this Section 2.14, Borrower may at any time, upon at least five Business
Days' prior notice to Lender either (i) repay in full the then outstanding
principal amount of LIBOR Advances, together with accrued interest thereon, or
(ii) convert such LIBOR Advances to Prime Advances in accordance with the
provisions of this Agreement; provided, however, that Borrower shall be liable
for any Consequential Loss arising pursuant to such actions.
(c) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation or administration of
any Law shall make it unlawful, or any central bank or other Tribunal shall
assert that it is unlawful, for Lender to perform its obligations hereunder to
make LIBOR Advances or to continue to fund or maintain LIBOR Advances
hereunder, then, on notice thereof and demand therefor by Lender to Borrower,
(i) each LIBOR Advance will automatically, upon such demand, convert into a
Prime Advance and (ii) the obligation of Lender to make, or to convert into or
Continue Advances as, LIBOR Advances shall be suspended until Lender notifies
Borrower that Lender has determined that the circumstances causing such
suspension no longer exist.
(d) Upon the occurrence and during the continuance of any Default or Event
of Default, (i) each LIBOR Advance will automatically, on the last day of the
then existing Interest Period therefor, convert into a Prime Advance and (ii)
the obligation of Lender to make, or to convert into or Continue Advance as,
LIBOR Advances shall be suspended.
(e) Failure on the part of Lender to demand compensation for any increased
costs, increased capital or reduction in amounts received or receivable or
reduction in return on capital pursuant to this Section 2.14 with respect to
any period shall not constitute a waiver of Lender's right to demand
compensation with respect to such period or any other period.
(f) The obligations of Borrower under this Section 2.14 shall survive any
termination of this Agreement; provided that at no time may Lender demand any
compensation under Sections 2.14(a) or (b) for any amount with respect to any
period prior to the date which is six
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months prior to the date of the notice or certificate delivered by Lender
pursuant to either Section 2.14(a) or (b); provided further that Lender shall
not demand any compensation under Section 2.14(a) or (b) except in accordance
with Lender's normal policies for administering loans with similar provisions.
(g) Determinations by Lender for purposes of this Section 2.14 shall be
conclusive, absent manifest error. Any certificate delivered to Borrower by
Lender pursuant to this Section 2.14 shall include in reasonable detail the
basis for Lender's demand for additional compensation.
ARTICLE III. CONDITIONS PRECEDENT TO ADVANCES.
3.1 Conditions Precedent to Advances. The obligation of Lender to make
the first Advance to be made by it hereunder is subject to the satisfaction of
the following conditions:
(a) Laws. The making of the Facility A Commitment and the Facility B
Commitment shall not contravene any Law applicable to Lender.
(b) No Default. (i) No Material Adverse Change, as determined by Lender,
shall have occurred and be continuing since September 30, 1996, and (ii) there
shall not be a Default or Event of Default existing.
(c) Representations and Warranties. The representations and warranties
in Article VI and the other Loan Papers shall be true and correct in all
material respects.
(d) Certificate. Borrower shall have delivered to Lender an officer's
certificate for each Obligor, executed by authorized officers of such Obligor,
dated the Effective Date, certifying (A) that attached thereto is a copy of its
certificate or articles of incorporation certified by the Secretary of State
(or other appropriate officer) of the jurisdiction of its incorporation, which
is true and complete, and in full force and effect, without amendment except as
shown, (B) that attached thereto is a copy of its bylaws, which is true and
complete, and in full force and effect, without amendment except as shown, (C)
that attached thereto is a copy of the resolutions of the board of directors of
such Obligor authorizing execution, delivery and performance of this Agreement
and all other Loan Papers, which are true and complete, are in full force and
effect, were duly adopted, have not been amended, modified, or revoked, and
constitute all resolutions of such Obligor adopted with respect to this loan
transaction, (D) that attached thereto are certificates of good standing and
certificates of existence for such Obligor issued not more than ten days prior
to the Effective Date, issued by the appropriate officer of the jurisdiction of
organization of such Obligor and of each jurisdiction in which the nature of
such Obligor's business or properties require such qualification, (E) with
respect to Borrower, that the pledged interests in ANS have been issued and are
outstanding and a description of the ownership of the pledged interests in ANS,
(F) with respect to each Obligor other than Borrower, a description of the
ownership of all authorized, issued and outstanding equity interests of such
Obligor and
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(G) to the incumbency, name, and signature of each officer authorized to sign
this Agreement and any other Loan Paper on its behalf. Lender may conclusively
rely on each certificate delivered pursuant to this Section 3.1(d) until it
receives notice from Borrower in writing to the contrary.
(e) Proceedings. All corporate proceedings of each Obligor taken in
connection with the transactions contemplated by this Agreement and all
documents incidental thereto shall be satisfactory in form and substance to
Lender and Special Counsel; and Lender shall have received, as of the Effective
Date, copies of all documents or other evidence which Lender or Special Counsel
may reasonably request in connection with said transactions.
(f) Loan Papers. Each Obligor shall have delivered to Lender the Loan
Papers to be executed by such Obligor, dated as of the Effective Date,
appropriately completed.
(g) Existing Facility A. Borrower shall have paid to Lender and Lender
shall have received all accrued unpaid interest on and fees (including
commitment fees) in respect of advances under Existing Facility A. All
outstanding, unpaid principal of advances under Existing Facility A shall be
renewed and restated and evidenced by the Facility A Note.
(h) Origination Fee. Borrower shall have paid to Lender and Lender shall
have received the fee described in Section 2.4(b).
(i) Documents. Borrower shall have delivered to Lender the following (in
the number of counterpart requested by Lender), all in form and substance
satisfactory to Lender:
(i) The results of UCC and other Lien searches against the assets
of each Obligor, and evidence satisfactory to Lender that all Liens
(other than Permitted Liens) in favor of any Person against assets of any
Obligor shall have been released and any credit facility related to any
of the above shall have been terminated.
(ii) Evidence satisfactory to Lender of the perfection and
priority of the Liens in the Collateral.
(iii) If requested by Lender, reasonable evidence that any
Obligor is the rightful owner and has good title to its Collateral, as
applicable.
(iv) A certificate computed after giving effect to the Initial
Advance, but demonstrating compliance on the Effective Date with all
financial ratios described in Sections 5.6, 5.7, 5.8 and 5.9 (determined
on a pro forma basis as of the Effective Date, based on the unaudited
financial statements of Borrower as of December 31, 1996).
(v) Copies of insurance binders or certificates covering the
assets of each Obligor indicating Lender as a loss payee.
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(vi) Payment of all fees (including attorneys' fees) incurred by
Lender.
(vii) Copies of all documentation relating to debt owed by
Borrower and each other Obligor to any Person, including without
limitation, all credit agreements, notes, collateral documents, bonds,
instruments and other documentation in connection with any extension of
credit.
(viii) Certificates for all of the outstanding capital stock of
each Subsidiary of Borrower and stop transfer and Article 8 letters in
favor of Lender.
(ix) Stock and other powers for all shares of the outstanding
capital stock of each Subsidiary of Borrower.
(x) Executed UCC financing statements with respect to all
furniture, equipment, inventory and stock certificates with respect to
the Borrower and each Subsidiary of Borrower.
(xi) Executed Pledge Agreement in the form of Exhibit L with
respect to all capital stock of Borrower's Subsidiaries, all marketable
securities and a $350,000 certificate of deposit or time deposit at
NationsBank together with the delivery of such capital stock, securities
(excluding certificates evidencing marketable securities), certificate of
deposit or time deposit.
(xii) The ▇▇▇▇▇▇ Subordination Agreement and the ▇▇▇▇▇▇
Subordination Agreement, together with copies of each agreement
evidencing or securing the Subordinated Obligations (as that term is
defined in each such Subordination Agreement).
(j) Financial Condition Certificate. Lender shall have received a
certificate of each Obligor to the effect that: (i) the fair and saleable value
of the assets of such Obligor, after giving effect to this Agreement, the Notes
and the other Loan Papers, will exceed amounts that will be required to be paid
by such Obligor on or in respect of its existing debts (including contingent
liabilities) as they mature; (ii) such Obligor will not have unreasonably small
capital to carry out its business as now conducted or as proposed to be
conducted, and (iii) such Obligor has not incurred debts beyond its ability to
pay such debts as they mature.
(k) Opinion of Counsel. Lender shall have received an opinion of ▇▇▇▇▇▇ &
▇▇▇▇ L.L.P. acceptable to Lender and Special Counsel.
(l) Further Documents. As of the Effective Date, Lender shall have
received, in form and substance satisfactory to Lender and Special Counsel,
such other documents
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and instruments as Lender may reasonably require to evidence the status,
organization or authority of Borrower, and to evidence payment of the
Obligation.
3.2 Conditions Precedent to All Advances. Lender shall not be obligated
to make any Advance, if (a) there is in existence at such time a Default under
Section 4.2, 5.6, 5.7, 5.8, or 5.9; (b) an Event of Default has occurred and is
continuing; (c) if any representations and warranties contained in Article VI
of this Agreement shall be false or untrue in any material respect on the date
of such Advance, as if made on such date except for representations and
warranties that are by their express terms limited to a specific date; or (d)
any Subsidiary of Borrower has not executed and delivered to Lender a Guaranty
Agreement. Each request by Borrower for an Advance shall constitute a
representation by Borrower that it is in compliance with the provisions of this
Section 3.2.
3.3 Legal Details. All documents executed or submitted pursuant hereto
by Borrower shall be satisfactory in form and substance to Lender and Special
Counsel. Lender and Special Counsel shall receive all information, and such
counterpart originals or certified or other copies of and such materials, as
Lender or Special Counsel may reasonably request. All legal matters incident
to the transactions contemplated by this Agreement (including, without
limitation, matters arising from time to time as a result of changes occurring
with respect to any Laws) shall be satisfactory to Special Counsel.
ARTICLE IV. AFFIRMATIVE COVENANTS
From the date hereof, and so long as this Agreement is in effect and until
final payment in full of the Obligation and the performance of all other
obligations of Borrower under this Agreement and the other Loan Papers,
Borrower agrees and covenants that it shall, and shall cause each Subsidiary of
Borrower to, observe, perform, comply and fulfill each and every covenant, term
and provision set forth below:
4.1 Books, Records and Properties. Borrower shall, and shall cause each
Subsidiary of Borrower to, maintain its books and records in accordance with
GAAP. Borrower during normal business hours and after reasonable notice by
Lender shall, and shall cause each Subsidiary of Borrower to, permit any of
Lender's agents or representatives to have access to and examine its books and
records, including statements and schedules with respect to the Collateral, and
to copy and make abstracts therefrom, and to inspect any of the properties of
Borrower and each Subsidiaries of Borrower to, at any time(s) hereafter during
normal business hours; provided, that any such access or inspection shall not
disrupt Borrower's operations.
4.2 Financial Statements and Reports. Borrower shall furnish or cause
to be furnished to Lender the following Financial Statements and reports:
(a) Accounting Period Statements. As soon as practicable after the end
of each fiscal quarter of Borrower and in any event within 45 days after the
end of each fiscal quarter of
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Borrower, copies of Financial Statements as of the end of such quarter, all in
reasonable detail and certified as complete and correct in all material
respects, subject to changes resulting from year-end adjustment, by a financial
officer of Borrower or any other Person acceptable to Lender;
(b) Annual Statements. As soon as practicable after the end of each
fiscal year of Borrower and in any event within 90 days thereafter, copies of
annual Financial Statements, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and accompanied
by an unqualified opinion of independent certified public accountants approved
by Borrower's board of directors, which opinion shall state that the Financial
Statements have been prepared in accordance with GAAP, that their examination
has been made in accordance with generally accepted auditing standards and that
said financial statements present fairly the consolidated financial position of
Borrower and its Subsidiaries and their results of operations;
(c) Compliance Certificate and related reports. Within 45 days after the
end of each fiscal quarter, the Compliance Certificate for the last day of such
quarter.
(d) Borrowing Base Certificate and related reports. Within 15 days after
the end of each month:
(i) The Borrowing Base Certificate for the last day of such month;
(ii) A schedule showing for such month an aging of Accounts of
Borrower in categories of current, 30 days past due, 60 days past due and
91 or more days past due; and
(iii) A schedule showing for such month Accounts payable by each
account debtor of which 10% or more of the aggregate dollar amount of all
Accounts owed to Borrower by such account debtor have been due and
payable for 91 days or more from their respective invoice dates;
(e) Contingent Liabilities Report. Promptly upon becoming aware, written
notice of any actual or potential contingent liabilities, including Litigation,
against Borrower or any Subsidiary of Borrower involving liability in an amount
which must be disclosed in either Borrower's financial statements or filings
with the Securities and Exchange Commission.
(f) FDA Reports. Promptly upon receipt from FDA, a copy of each
inspection report received from FDA and responses from and to FDA.
(g) SEC Filings. As soon as filed with the Securities and Exchange
Commission, copies of each of Borrower's forms 10-Q, 10-K and 8-K.
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4.3 Maintenance of Existence. Borrower shall cause to be done all
things necessary to preserve and keep in full force and effect Borrower's and
each of Borrower's Subsidiaries' existence as a corporation; provided, (a) any
Subsidiary of Borrower may merge with and into Borrower if Borrower is the
surviving entity and (b) any Subsidiary of Borrower may merge with and into
another Subsidiary of Borrower.
4.4 Insurance. Borrower shall maintain, and shall cause each Subsidiary
of Borrower to, in force with financially sound and reputable insurers, the
insurance policies required pursuant to the Loan Papers in accordance with the
provisions thereof and such other policies with respect to its respective
property and business against such casualties and contingencies (including
fire, worker's compensation or occupational injury insurance, business
interruption and public liability) and in such amounts as is customary in the
lines of business of comparable size and financial strength, with a loss payee
endorsement for casualty insurance in favor of Lender and noncancelable without
30 days prior notice to Lender. Borrower shall supply evidence of such
insurance to Lender.
4.5 Compliance with Applicable Laws. Borrower shall, and shall cause
each Subsidiary of Borrower to, comply with the requirements of all applicable
Laws and orders (including but not limited to the FDA Act, ERISA and
environmental laws) of Tribunals or other governmental authorizations necessary
to the ownership of Borrower's and each of Subsidiary's of Borrower properties
or to the conduct of its business if the result of failure to so comply would
have a Material Adverse Effect.
4.6 Other Information and Documents. Borrower shall, and shall cause
each Subsidiary of Borrower to, promptly deliver to Lender such information,
certificates and documents in addition to those herein mentioned as Lender may
from time to time reasonably request.
4.7 Default. Borrower shall report to Lender immediately any Default or
Event of Default, and any notice of any claimed default under any other Debt
agreement, specifying the default and steps taken or to be taken to cure.
4.8 Taxes. Borrower shall pay any stamp, loan, transaction or similar
taxes that may be imposed on this Agreement, the Advances hereunder, the Notes,
or any of the transactions hereunder, and shall pay, and shall cause each
Subsidiary of Borrower to, all income, ad valorem, and other taxes of Borrower
or such Subsidiary before they become delinquent except taxes being contested
by appropriate means and in good faith and the levy and execution of which have
been stayed and continued to be stayed. Any such taxes must be paid before
their nonpayment causes a Lien (other than a Permitted Lien) to be filed on any
of the Collateral.
4.9 Further Assurances. Borrower will, and will cause each other
Obligor to, on request of Lender, promptly correct any defect, error or
omission which may be discovered in the contents of any of the Loan Papers or
in the execution or acknowledgment thereof, and will
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execute, acknowledge and deliver such further instruments and do such further
acts as may be necessary or as may be requested by Lender to carry out more
effectively the purposes of this Agreement and the Loan Papers and to subject
to the Liens any of Borrower's or any other Obligor's properties, rights or
interests covered or intended to be covered thereby, and to perfect and
maintain all Liens at any time securing all or any part of the debt hereunder.
4.10 Filings. Borrower will pay all expenses incurred in connection with
the filing of any of the Loan Papers and every other instrument in addition or
supplemental to any thereof that shall be required by Law in order to perfect
and maintain the validity and effectiveness of Liens at any time securing all
or any part of the debt hereunder.
4.11 Maintenance. Borrower will, and shall cause each Subsidiary of
Borrower to, maintain all of Borrower's and such Subsidiary's material property
in good condition and repair (wear and tear excepted) and make all necessary
replacements thereof, and preserve and maintain all material leases, licenses,
privileges, franchises, certificates and the like used in the operation of
Borrower's and such Subsidiary's business (other than with respect to any such
lease, license, privilege, franchise and certificate which the Board of
Directors of Borrower or such Subsidiary of Borrower has determined that the
expiration or termination of which is in the best interest of Borrower or such
Subsidiary of Borrower, respectively).
4.12 ERISA Compliance. Borrower shall, and shall cause each Subsidiary of
Borrower to, (a) at all times, make prompt payment of all contributions
required under all Plans and required to meet the minimum funding standard set
forth in ERISA with respect to its Plans, (b) notify Lender immediately of any
fact, including, but not limited to, any Reportable Event arising in connection
with any of its Plans, which might constitute grounds for termination thereof
by the PBGC or for the appointment by the appropriate United States District
Court of a trustee to administer such Plan, together with a statement, if
requested by Lender as to the reason therefor and the action, if any, proposed
to be taken with respect thereto, and (c) furnish to Lender, upon its request,
such additional information concerning any of its Plans as may be reasonably
requested.
4.13 Indemnity by Borrower. Borrower shall indemnify, save, and hold
harmless Lender and its shareholders, directors, officers, agents, attorneys,
and employees (collectively, the "Indemnitees") from and against: (a) any and
all claims, demands, actions, or causes of action that are asserted by any
Person other than Borrower, its shareholders, directors, officers, agents,
attorneys, and employees against any Indemnitee if the claim, demand, action or
cause of action relates to the Obligations, the use of proceeds of any Advance,
or the relationship of Borrower and Lender under this Agreement or any
transaction contemplated pursuant to this Agreement or any other Loan Paper,
(b) any proceeding or any administrative, investigative or arbitration
proceeding by or before any Tribunal or arbitral directly or indirectly related
to (i) a claim, demand, action or cause of action described in clause (a) above
or (ii) any claim, demand, proceeding, action or cause of action involving
Borrower or any Affiliate (including any shareholder) of Borrower in which any
Indemnitee incurs costs and expenses as a result of any
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requirement that such Indemnitee testify or produce records therein (other than
as a result of any Litigation commenced by an Indemnitee or Borrower in which
such Indemnitee is not a prevailing party), and (c) any and all liabilities,
losses, costs, or expenses (including attorneys' fees and disbursements) that
any Indemnitee suffers or incurs as a result of any of the foregoing (other
than as a result of any Litigation commenced by an Indemnitee or Borrower in
which such Indemnitee is not the prevailing party); provided, however, that
Borrower shall not have any obligation under this Section 4.13 to a particular
Indemnitee or with respect to any of the foregoing arising out of the
negligence or willful misconduct of such Indemnitee. If any claim, demand,
action or cause of action is asserted against any Indemnitee, such Indemnitee
shall promptly notify Borrower, but the failure to so promptly notify Borrower
shall not affect Borrower's obligations under this Section 4.13 except to the
extent such failure materially impairs Borrower's ability to defend any such
claim, demand, action or cause of action. Any obligation or liability of
Borrower to any Indemnitee under this Section 4.13 shall survive the expiration
or termination of this Agreement and the repayment of the Obligation.
ARTICLE V. NEGATIVE COVENANTS
From the date hereof and so long as this Agreement is in effect and until
final payment in full of the Obligation, and the performance of all other
obligations of Borrower under this Agreement and the other Loan Papers,
Borrower agrees and covenants that it shall, and shall cause each of its
Subsidiaries to, observe, perform, comply and fulfill each and every covenant,
term and provision set forth below:
5.1 Liens. Borrower shall not, and shall not permit any Subsidiary of
Borrower to, grant, permit or suffer to exist any Lien on any of its property
or assets, except (a) Permitted Liens, and (b) Liens granted under the Loan
Papers.
5.2 Transfer of Assets. Borrower shall not, and shall not permit any
Subsidiary of Borrower to, sell, lease, transfer, or otherwise dispose of
assets of Borrower or such Subsidiary, except (a) payments of business expenses
of Borrower or such Subsidiary in the ordinary course of business, (b)
Inventory and Investments in the ordinary course of business and for full and
fair consideration, (c) assets which Borrower or such Subsidiary determines in
good faith are worthless or obsolete, (d) assets not subject to a Lien or
license in favor of Lender the value of which, individually and in the
aggregate, does not exceed 5% of the gross revenue of Borrower and its
Subsidiaries (determined on or consolidated basis) during the preceding fiscal
year from operations, or (e) in connection with Investments permitted pursuant
to Section 5.4.
5.3 New Industry. Borrower shall not, and shall not permit any
Subsidiary of Borrower to, enter any industry or type of business which is not
directly related to the research, design, development, manufacture and/or
marketing of Devices.
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5.4 Restricted Investments. Borrower shall not make or have outstanding
any Investments, except for Permitted Investments.
5.5 Transactions with Affiliates. Borrower shall not, and shall not
permit any Subsidiary of Borrower to, enter into any transaction with any
Affiliate, except in the ordinary course of the business of Borrower or such
Subsidiary, and on fair and reasonable terms no less favorable to Borrower or
such Subsidiary than it would obtain in a comparable arm's length transaction
with a Person not an Affiliate.
5.6 Fixed Charges Coverage Ratio. Borrower shall not permit the Fixed
Charges Coverage Ratio to be less than the following ratios for the fiscal
quarters ending as follows:
December 31, 1996 0.70 to 1.00
March 31, 1997 1.00 to 1.00
June 30, 1997 1.20 to 1.00
September 30, 1997 1.50 to 1.00
December 31, 1997 1.75 to 1.00
5.7 Margin Ratio. Borrower shall not permit the Margin Ratio to be
greater than the following ratios for the fiscal quarters ending as follows:
March 31, 1997 2.00 to 1.00
June 30, 1997 1.85 to 1.00
September 30, 1997 1.75 to 1.00
December 31, 1997 1.65 to 1.00
5.8 Total Liabilities to Tangible Worth Ratio. Borrower shall not
permit the ratio of Total Liabilities to Tangible Net Worth to be greater than
as indicated below, (a) as at the end of each fiscal quarter of Borrower,
ending during the period indicated or (b) on the date indicated:
Effective Date through December 31, 1996 2.50 to 1.00
March 31, 1997 and thereafter 1.75 to 1.00
5.9 Capital Expenditures. Borrower shall not permit the aggregate
amount of Capital Expenditures incurred or paid during calendar year 1997 to
exceed $1,500,000.
5.10 Merger and Consolidation. Borrower shall not, and shall not permit
any Subsidiary of Borrower to, merge or consolidate with any other Person or
allow any other Person to merge or consolidate with it.
5.11 Debt. Borrower shall not, and shall not permit any Subsidiary of
Borrower to, create, incur, assume, become or be liable in any manner in
respect of, or suffer to exist, any Debt for Borrowed Money, except (a) Debt
under the Loan Papers, (b) obligations in respect of
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trade payables (i) incurred by Borrower or a Subsidiary of Borrower in the
ordinary course of business, and (ii) not in excess of $250,000 in the
aggregate, (c) Debt the proceeds of which was used solely for the acquisition
and construction of the ▇▇▇▇▇ Property not in excess of the amount of such Debt
on the Effective Date, as reduced by payments on and after the Effective Date,
(d) Debt payable to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ pursuant to Section 1.2(iii) of the Neuromed
Agreement and the ▇▇▇▇▇▇ Debt, and (e) the ▇▇▇▇▇▇▇ Debt; provided, the
aggregate amount of the ▇▇▇▇▇▇ Debt and the ▇▇▇▇▇▇▇ Debt shall not exceed
$3,000,000.
5.12 Distributions. Borrower shall not declare, pay, make or become
liable for any Distribution.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
6.1 Organization; Qualification; Authority. Borrower and each
Subsidiary of Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the state indicated on Schedule 1. Borrower
and each Subsidiary of Borrower has the power to own its properties and to
carry on its businesses as now being conducted. The Board of Directors of
Borrower has duly authorized the execution, delivery and performance of the
Loan Papers to be executed by Borrower. No consent of the shareholders of
Borrower is required as a prerequisite to the validity and enforceability of
any Loan Papers or any other document contemplated hereby. Borrower has full
legal right and corporate power, and authority to execute, deliver, and perform
its obligations under the Loan Papers to be executed and delivered by it.
6.2 Financial Statements. The unaudited financial statements for the
fiscal year ended December 31, 1996 and the unaudited financial statements for
the nine months ended September 30, 1996 and for the most recent fiscal quarter
(including any related schedules and/or notes) are true and correct in all
material respects (subject, as to interim statements, to charges resulting from
audits and year-end adjustments) have been prepared in accordance with GAAP
(except, as to interim statements, for notes and year-end adjustments)
consistently followed throughout the periods specified, and fairly present in
accordance with GAAP the financial condition and results of operations of
Borrower as at the dates thereof and for the periods indicated. There has been
no material adverse change in the business, condition or operations (financial
or otherwise) of Borrower since September 30, 1996.
6.3 Conflicting Agreements and Other Matters. Neither Borrower nor any
Subsidiary of Borrower is a party to any contract or agreement or subject to
any restriction which materially and adversely affects the ability of Borrower
to perform its obligations under the Loan Papers. Neither the execution nor
delivery of this Agreement, the Notes, or the other Loan Papers, nor
fulfillment of nor compliance with the terms and provisions of this Agreement,
the Notes or the other Loan Papers will conflict with, or result in a breach of
the terms, conditions or provisions
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of, or constitute a default under, or result in any violation of, or result in
the creation of any Lien (except for Liens created by the Loan Papers) upon any
of the properties or assets of Borrower or any Subsidiary of Borrower pursuant
to the articles of incorporation of Borrower or such Subsidiary, any award of
any arbitrator or any agreement, instrument, order, judgment, decree, statute,
law, rule or regulation to which Borrower or such Subsidiary is subject.
Neither Borrower nor any Subsidiary of Borrower is a party to, or otherwise
subject to any provision contained in, any instrument evidencing indebtedness
of Borrower or such Subsidiary, any agreement relating thereto or any other
contract or agreement which limits the amount of, or otherwise imposes
restrictions on the incurring of, Debt of Borrower of the type to be evidenced
by the Notes.
6.4 Governmental Consent. Neither the nature of Borrower or any
Subsidiary of Borrower, its businesses or properties, nor any relationship
between Borrower, any Subsidiary of Borrower and any other Person, nor any
circumstance in connection with the execution, delivery and performance of this
Agreement, the Loan Papers or the Notes is such as to require any
authorization, consent, approval, exemption of other action by or notice to or
filing with any court or Tribunal (other than routine filings and recordings to
perfect Liens) in connection with the execution and delivery of this Agreement,
the Notes, the other Loan Papers, or fulfillment of or compliance with the
terms and provisions hereof, of the Notes or of the other Loan Papers.
6.5 Enforceability. This Agreement is, the other Loan Papers are and
the Notes when delivered will be legal, valid and binding obligations of
Borrower enforceable against Borrower in accordance with their terms, except as
limited by Debtor Relief Laws.
6.6 Actions Pending. Other than as described on Schedule 3, there is no
Litigation pending or, to the knowledge of Borrower, threatened against
Borrower or any Subsidiary of Borrower, or any properties or rights of Borrower
or any Subsidiary of Borrower, by or before any court, arbitrator or Tribunal
which may reasonably be expected to result in any Material Adverse Effect.
There is no Litigation pending or, to the knowledge of Borrower, threatened
against Borrower or any Subsidiary of Borrower which purports to affect the
validity or enforceability of this Agreement, either Note or any of the other
Loan Papers.
6.7 Outstanding Debt. Neither Borrower nor any Subsidiary of Borrower
has any outstanding Debt except (a) as described on the balance sheet of
Borrower for the nine months ended September 30, 1996, (b) trade payables
incurred in the ordinary course of business, (c) Debt for Borrowed Money owed
to Lender, (d) Debt of Borrower to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as described in and subject
to the ▇▇▇▇▇▇ Security Agreement, and (e) Debt of Borrower to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as
described in and subject to the ▇▇▇▇▇▇▇ Security Agreement. There exists no
default under the provisions of any instrument evidencing such Debt or of any
material agreement relating thereto.
6.8 Title to Properties. Borrower and each Subsidiary of Borrower has
good and indefeasible title to its respective real properties (other than
properties which it leases) and good
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title to all of its other material properties and assets used in the operations
of its business, subject to no Lien of any kind except Liens permitted by
Section 5.1. All leases necessary in any material respect for the conduct of
the respective businesses of Borrower are valid and subsisting and are in full
force and effect.
6.9 Taxes. Borrower and each Subsidiary of Borrower has paid all taxes
and assessments owed by it to the extent that such taxes and assessments have
become due, except such taxes as are being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP.
6.10 Regulation G, etc. Neither Borrower nor any Subsidiary of Borrower
owns or has any present intention of acquiring any "margin stock" as defined in
Regulation G (12 CFR Part 207) of the Board of Governors of the Federal Reserve
System (herein called "margin stock"). None of the proceeds of any Advance
will be used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any margin stock or for the
purpose of maintaining, reducing or retiring any indebtedness which was
originally incurred to purchase or carry any stock that is currently a margin
stock or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of such Regulation G. Neither Borrower
nor any agent acting on its behalf has taken or will take any action which
might cause this Agreement or the Notes to violate Regulation G, Regulation T,
Regulation X or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Securities Exchange Act of 1934, as amended,
in each case as in effect now or as the same may hereafter be in effect.
6.11 ERISA. No accumulated funding deficiency (as defined in section 302
of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan. No liability to the PBGC has been or is expected by
Borrower or any Subsidiary of Borrower to be incurred with respect to any Plan
by Borrower or any Subsidiary of Borrower which is or would be materially
adverse to Borrower or any Subsidiary of Borrower. Neither Borrower nor any
Subsidiary of Borrower has incurred or presently expects to incur any
withdrawal liability under Title IV of ERISA with respect to any Multiemployer
Plan which is or would be materially adverse to Borrower.
6.12 Disclosure. Neither this Agreement or any other document,
certificate or statement furnished, or to be furnished, to Lender by or on
behalf of Borrower or any other Obligor in connection herewith or therewith
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein not
misleading in any material respect.
6.13 Environmental Matters. Borrower, each Subsidiary of Borrower, the
plants and sites each owns, and to the best of Borrower's knowledge after due
inquiry of the owners of leased property the plants and sites which each leases
have complied with all federal, state, local and regional statutes, ordinances,
orders, judgments, rulings and regulations relating to any
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matters of pollution or of environmental regulation or control except, in any
such case, where such failure to comply would not result in a Material Adverse
Effect. Without limiting the generality of the preceding sentence, neither
Borrower nor any Subsidiary of Borrower has received notice of and does not
have actual knowledge of any actual or claimed or asserted failure so to comply
which alone or together with any other such failure is material and would
result in a Material Adverse Effect. During periods of use, ownership,
occupancy or operation by Borrower and each Subsidiary of Borrower, none of
Borrower, any Subsidiary of Borrower, or their respective plants or sites have
managed, generated, released or disposed of, any hazardous wastes, hazardous
substances, hazardous materials, toxic substances or toxic pollutants, as those
terms are used or defined in the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response Compensation and Liability Act, the
Hazardous Materials Transportation Act, the Toxic Substance Control Act, the
Clean Air Act and the Clean Water Act, in material violation of or in a manner
which would result in liability under such statutes or any regulations
promulgated pursuant thereto or any other applicable law, except where such
noncompliance or liability would not result in a Material Adverse Effect.
6.14 Sufficiency of Capital. Borrower and each Subsidiary of Borrower
are, and after consummation of this Agreement and after giving effect to the
Obligation incurred and Liens created by Borrower and each Subsidiary of
Borrower in connection herewith will be, Solvent.
6.15 Affiliates. No Affiliate of Borrower exists, except as identified
on Schedule 1.
6.16 Intellectual Property. Except as identified on Schedule 4 hereto or
patents, trademarks or copyrights for which neither the Borrower nor any
Affiliate of Borrower has applied for a copyright registration, trademark
registration or patent and no copyright, trademark or patent has been issued or
registered on behalf of Borrower or an Affiliate of Borrower, neither Borrower
nor any Affiliate of Borrower owns or has any right or interest in any
intellectual property, including but not limited to patents, trademarks and
copyrights.
ARTICLE VII. DEFAULT
7.1 Events of Default. The term "Event of Default" as used herein,
means the occurrence and continuance of any one or more of the following events
(including the passage of time, if any, specified therefor):
(a) Borrower shall fail to pay any amount, whether principal, interest or
other amounts, payable hereunder or under the Notes when due and such failure
shall continue for three days from the date due; or
(b) (i) Any representation or warranty made by Borrower or any other
Obligor under or in connection with any Loan Paper shall prove to have been
incorrect in any material respect when made or (ii) (A) a breach of any
representation or warranty made by any party thereto (other than Borrower)
under or in connection with any Acquisition Document is discovered, (B)
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Lender makes a determination that such breach has caused or will cause a
Material Adverse Change or Effect and gives notice thereof to Borrower, and (C)
such breach has not already been cured or paid for by such party, or,
alternatively, Borrower or such party does not cure such breach or the
situation giving rise thereto to the complete satisfaction of Lender within 30
days after receipt of such notice from Lender; or
(c) Borrower shall fail to perform or observe any term, covenant or
agreement contained in Sections 5.6, 5.7, 5.8, or 5.9 and such failure shall
continue for two consecutive months or any other provision of Article V of this
Agreement; or
(d) Borrower or any other Obligor shall fail to perform or observe any
term, covenant or agreement contained in any Loan Paper on its part to be
performed or observed, other than described in Section 7.1(a), (b), or (c), and
such default has continued for a period of 30 days; or
(e) Borrower, any Subsidiary of Borrower or any other Obligor shall fail
to pay any Debt (other than under the Loan Papers) which is, singly or in the
aggregate, in an amount equal to or greater than $100,000, or any interest or
premium thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt; or any other default under any agreement or instrument
relating to any such Debt, or any other event, shall occur and shall continue
after the applicable grace or cure period, if any, specified in such agreement
or instrument, if the effect of such default or event is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or any such Debt shall
be declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated maturity thereof;
or
(f) Borrower, any Subsidiary of Borrower or any other Obligor shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or
against Borrower, any Subsidiary of Borrower or any other Obligor seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding-up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any Debtor Relief Laws, or seeking the entry of an order
for relief or the appointment of a receiver, trustee, or other similar official
for it or for any substantial part of its property; or Borrower, any Subsidiary
of Borrower or any other Obligor shall take any action to authorize any of the
actions set forth above in this Section 7.1(f); or
(g) Any judgment or order for the payment of money in excess of 10% of
Unrestricted Cash (calculated as at the date of entry of the judgment or order)
shall be rendered against Borrower, any Subsidiary of Borrower or any other
Obligor and either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii)
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there shall be any period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(h) Lender for any reason shall cease to have a valid and perfected first
priority security interest in any material portion (as reasonably determined by
Lender) of the Collateral purported to be covered thereby; or
(i) FDA or any Tribunal shall issue any order resulting in the banning,
recall or seizure of any Device of Borrower or any Subsidiary of Borrower the
sales of which Device constituted 5% or more of gross sales revenue of Borrower
(determined on a consolidated basis) for the twelve months preceding the date
such order is issued; or
(j) Any Inventory of Borrower or any Subsidiary of Borrower produced in
the United States of America is not produced in compliance with the Fair Labor
Standards Act and such failure results in the banning, recall or seizure of
Inventory constituting 5% or more of the value (valued at the greater of market
or book value without giving effect to such ban, recall or seizure or any other
write down is the value of such Inventory) of all Inventory of Borrower or such
Subsidiary, respectively; or
(k) Any material provision of the Loan Papers shall at any time for any
reason cease to be valid and binding on Borrower or any other Obligor or shall
be declared to be null and void, or the validity or enforceability thereof
shall be contested by Borrower or any other Obligor, or a proceeding shall be
commenced by any Tribunal having jurisdiction over Borrower, any other Obligor
or any Collateral, seeking to establish the invalidity or unenforceability
thereof and such proceeding (if commenced by a Person other than Borrower or
any other Obligor) shall remain undismissed or unstayed for a period of 30
days, or Borrower or any other Obligor shall deny that it has any or further
liability or obligation thereunder; or
(l) The occurrence of a default or event of default (howsoever
designated) contained in any other Loan Paper and such default or event of
default shall continue beyond any applicable grace or cure period.
7.2 Remedies Upon Default. If an Event of Default specified in Section
7.1(f) shall occur and be continuing, the aggregate unpaid principal balance of
and accrued interest on the Obligation shall thereupon become due and payable
and the Facility A Commitment shall immediately terminate concurrently
therewith, without any action by Lender and without diligence, presentment,
demand, protest, notice of protest or intent to accelerate, or notice of any
other kind, all of which are hereby expressly waived. Should any other Event
of Default occur and be continuing, Lender may do any one or more of the
following:
(a) Acceleration. Declare the entire unpaid balance of the Obligation,
or any part thereof, immediately due and payable, whereupon it shall be due and
payable without any action
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by Lender and without diligence, presentment, demand, protest, notice of
protest or intent to accelerate or notice of any other kind, all of which are
hereby expressly waived.
(b) Termination. Terminate the Facility A Commitment.
(c) Judgment. Reduce any claim to judgment.
(d) Rights. Exercise any and all Rights afforded by the Laws of the
State of Texas or any other jurisdiction, including, but not limited to, the
UCC, or by any other Loan Papers, or by Law or equity, or otherwise.
(e) Offset. Exercise the Rights of offset and/or banker's Lien against
the interest of Borrower and each other Obligor in and to every account and
other property of Borrower and each other Obligor which is in the possession of
Lender, to the extent of the full amount of the Obligation.
7.3 Performance by Lender. Should any covenant, duty or agreement of
Borrower fail to be performed in all material respects in accordance with the
terms of this Agreement or the Collateral Documents, Lender may, at its option,
perform, or attempt to perform, such covenant, duty or agreement on behalf of
Borrower. In such event, Borrower shall, at the request of Lender, promptly pay
any amount expended by Lender in such performance or attempted performance to
Lender at Lender's Principal Office, together with interest thereon at the
lesser of (a) the Prime Rate plus 3% and (b) the Highest Lawful Rate from the
date of such expenditure by Lender until paid. Notwithstanding the foregoing,
it is expressly understood that Lender shall not have any liability or
responsibility for the performance of any duties of Borrower hereunder.
7.4 Lender Not in Control. None of the covenants or other provisions
contained in this Agreement shall, or shall be deemed to, give Lender the
Rights or power to exercise control over the affairs management of Borrower,
the power of Lender being limited to the Right to exercise the remedies
provided in this Article VII; provided that, if Lender becomes the owner of any
interest in Borrower, whether through foreclosure or otherwise, Lender shall be
entitled to exercise such legal Rights as it may have by being an owner of such
interest in Borrower.
7.5 Waivers. The acceptance by Lender at any time and from time to time
of part payment on the Obligation shall not be deemed to be a waiver of any
Event of Default or Default then existing. No waiver by Lender of any
particular Event of Default or Default shall be deemed to be a waiver of any
Event of Default or Default other than said particular Event of Default or
Default. No delay or omission by Lender in exercising any Right under any Loan
Papers shall impair such Right or be construed as a waiver thereof or an
acquiescence therein, nor shall any single or partial exercise of any such
Right preclude other or further exercise thereof, or the exercise of any other
Right under the Loan Papers or otherwise.
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7.6 Cumulative Rights. All Rights available to Lender under the Loan
Papers shall be cumulative of and in addition to all other Rights granted to
Lender at Law or in equity, whether or not the Obligation be due and payable
and whether or not Lender shall have instituted any suit for collection or
other action in connection with any Loan Paper.
7.7 Expenditures by Lender. Any sums, including reasonable attorneys'
fees, spent by Lender pursuant to the exercise of any Right provided in this
Article VII shall become part of the Obligation and shall bear interest at a
rate per annum equal to the lesser of (a) the Prime Rate plus 3% and (b) the
Highest Lawful Rate from the date spent until the date repaid by Borrower.
ARTICLE VIII. MISCELLANEOUS
8.1 Money. Unless stipulated otherwise, all references herein to
"Dollars", "money", "payments", or other similar financial or monetary terms,
are references to currency of the United States of America.
8.2 Headings. The headings, captions and arrangements used in this
Agreement and the other Loan Papers are, unless specified otherwise, for
convenience only and shall not be deemed to limit, amplify or modify the terms
of any Loan Paper, nor affect the meaning thereof.
8.3 Articles, Sections, and Exhibits. All references to "Article",
"Sections", "subparagraphs" or "subsections" contained herein are, unless
specifically indicated otherwise, references to articles, sections,
subparagraphs and subsections of this Agreement. All references to "Exhibits"
and "Schedules" contained herein are references to exhibits and schedules
attached hereto, all of which are made a part hereof for all purposes, the same
as if set forth herein verbatim. If any exhibit or schedule attached hereto
which is to be executed and delivered contains blanks or is otherwise required
to be updated from time to time, it shall be completed correctly and in
accordance with the terms and provisions contained and as contemplated herein
prior to, at the time of or after the execution and delivery thereof.
8.4 Notices and Deliveries.
(a) Manner of Delivery. All notices, communications and materials
(including all Information) to be given or delivered pursuant to this Agreement
shall, except in those cases where giving notice by telephone is expressly
permitted, be given or delivered in writing. All written notices,
communications and materials shall be sent by registered or certified mail,
postage prepaid, return receipt requested, by telecopier, or delivered by hand.
In the event of a discrepancy between any telephonic notice and any written
confirmation thereof, such written confirmation shall be deemed the effective
notice except to the extent Lender or Borrower has acted in reliance on such
telephonic notice.
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(b) Addresses. All notices, communications and materials to be given or
delivered pursuant to this Agreement shall be given or delivered at the
following respective addresses and telecopier and telephone numbers and to the
attention of the following individuals or departments:
(i) if to Borrower, to it at:
Quest Medical, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: F. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III
(ii) if to Lender, to it at:
NationsBank of Texas, N.A.
NationsBank Plaza
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Commercial Banking
or at such other address, telecopier or telephone number or to the attention of
such other individual or department as the party to which such information
pertains may hereafter specify for the purpose in a notice to the other
specifically captioned "Notice of Change of Address".
(c) Effectiveness. Each notice, communication and any material to be
given or delivered to Lender or Borrower pursuant to this Agreement shall be
effective or deemed delivered or furnished (i) if sent by certified mail,
return receipt requested, on the fifth Business Day after such notice,
communication or material is deposited in the mail, addressed as above
provided, (ii) if sent by telecopier, when such notice, communication or
material is transmitted to the appropriate number determined as above provided
in this Section 8.4 and the appropriate receipt is received or acknowledged,
(iii) if sent by hand delivery or overnight courier, when left at the address
of the addressee addressed as above provided and the appropriate receipt is
received or acknowledged, and (iv) if given by telephone, when communicated to
the individual or any member of the department specified as the individual or
department to whose attention
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notices, communications and materials are to be given or delivered except that
notices of a change of address, telecopier or telephone number or individual or
department to whose attention notices, communications and materials are to be
given or delivered shall not be effective until received.
8.5 Place of Payment. All sums payable to Lender hereunder shall be
paid to Lender at either Lender's Principal Office or at a branch of Lender
within Dallas or Collin Counties, Texas, not later than noon, Dallas time, on
the date due, in immediately available funds. Except as provided in Article
II, if any payment falls due on other than a Business Day, then such due date
shall be extended to the next succeeding Business Day, and interest on such
amount (if applicable) shall be payable in respect to such extension.
8.6 Survival of Agreements. All covenants, agreements, representations
and warranties made herein shall survive the execution and the delivery of this
Agreement, the Notes and the other Loan Papers.
8.7 Parties in Interest. All covenants and agreements contained in the
Loan Papers shall bind and inure to the benefit of the respective successors
and assigns of the parties hereto, except that Borrower may not assign its
rights hereunder without the prior written consent of Lender.
8.8 Expenses. Borrower agrees (a) to pay all out-of-pocket expenses of
Lender in connection with the negotiation and preparation of this Agreement,
including exhibits and amendments, consents and waivers to any of the other
Loan Papers as may from time to time hereafter be requested or required, and
the reasonable fees and expenses of Special Counsel from time to time in
connection with the negotiation, preparation and execution of the Loan Papers,
and (b) to pay or reimburse Lender for all reasonable costs and expenses,
including reasonable fees and expenses of counsel to Lender, incurred in
connection with the enforcement or preservation of any rights under or the
collection of any amounts due pursuant to any of the Loan Papers. The
obligations of Borrower under this Section 8.8 shall survive any termination of
this Agreement.
8.9 Governing Law. This Agreement and all other Loan Papers shall be
deemed contracts made under the Laws of Texas and shall be construed and
enforced in accordance with and governed by the Laws of Texas, except to the
extent federal Laws govern the validity, construction, enforcement and
interpretation of all or any part of the Loan Papers. Without excluding any
other jurisdiction, Borrower agrees that the courts of Texas will have
jurisdiction over proceedings in connection herewith. Borrower and Lender
hereby agree that the provisions of Art. 5069-15.01 et seq. of the Revised
Civil Statutes of Texas, 1925, as amended, shall not apply to this Agreement
and the Notes.
8.10 MANDATORY ARBITRATION. (A) ANY CONTROVERSY OR CLAIM BETWEEN OR
AMONG THE PARTIES HERETO INCLUDING BUT NOT LIMITED
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TO THOSE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY RELATED AGREEMENTS
OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT,
SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF
PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF JUDICIAL
ARBITRATION AND MEDIATION SERVICES, INC. ("JAMS"), AND THE "SPECIAL RULES" SET
FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL
CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER
SUCH ACTION.
(a) Special Rules. The arbitration shall be conducted in Dallas, Texas
and administered by JAMS who will appoint an arbitrator; if JAMS is unable or
legally precluded from administering the arbitration, then the American
Arbitration Association will serve. All arbitration hearings will be commenced
within ninety days of the demand for arbitration; further, the arbitrator shall
only, upon a showing of cause, be permitted to extend the commencement of such
hearing for up to an additional sixty days.
(b) Reservations of Rights. Nothing in this Agreement or any other Loan
Paper shall be deemed to (i) limit the applicability of any otherwise
applicable statutes of limitation or repose and any waivers contained in this
Agreement; or (ii) be a waiver by Lender of the protection afforded to it by 12
U.S.C. Section 91 or any substantially equivalent state law; or (iii) limit
the right of Lender hereto (A) to exercise self help remedies such as (but not
limited to) setoff, or (B) to foreclose against any real or personal property
collateral, or (C) to obtain from a court provisional or ancillary remedies
such as (but not limited to) injunctive relief or the appointment of a
receiver. Lender may exercise such self help rights, foreclose upon such
property, or obtain such provisional or ancillary remedies before, during or
after the pendency of any arbitration proceeding brought pursuant to this
Agreement. At Lender's option, foreclosure under a deed of trust or mortgage
may be accomplished by any of the following: the exercise of a power of sale
under the deed of trust or mortgage, or by judicial sale under the deed of
trust or mortgage, or by judicial foreclosure. Neither this exercise of self
help remedies nor the institution or maintenance of an action for foreclosure
or provisional or ancillary remedies shall constitute a waiver of the right of
any party, including the claimant in any such action, to arbitrate the merits
of the controversy or claim occasioning resort to such remedies.
8.11 WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
BORROWER HEREBY WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY OF ANY
DISPUTE (WHETHER A CLAIM IN TORT, CONTRACT,
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EQUITY, OR OTHERWISE) ARISING UNDER OR RELATING TO THIS AGREEMENT, THE OTHER
LOAN PAPERS, OR ANY RELATED MATTERS, AND AGREES THAT ANY SUCH DISPUTE SHALL BE
TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
8.12 Maximum Amount Limitation. It is not the intention of any of the
parties to this Agreement to make an agreement violative of the Laws of any
applicable jurisdiction relating to usury. Regardless of any provision in this
Agreement, the Notes or any other Loan Paper, Lender shall never be entitled to
receive, collect or apply, as interest on the Obligation, any amount in excess
of the Maximum Amount. If Lender ever receives, collects or applies, as
interest, any such excess, such amount which would be excessive interest shall
be deemed a partial repayment of principal and treated hereunder as such; and
if principal is paid in full, any remaining excess shall be paid to Borrower.
In determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Maximum Amount, Borrower and Lender shall, to the
maximum extent permitted under Applicable Laws, (a) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effect thereof, and (c) amortize,
prorate, allocate and spread in equal parts, the total amount of interest
throughout the entire contemplated term of the Obligation so that the interest
rate is uniform throughout the entire term of the Obligation; provided that if
the Obligation is paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period
of existence thereof exceeds the Maximum Amount, Lender shall refund to
Borrower the amount of such excess or credit the amount of such excess against
the total principal amount owing, and, in such event, Lender shall not be
subject to any penalties provided by any Laws for contracting for, charging or
receiving interest in excess of the Maximum Amount. This Section 8.12 shall
control every other provision of all agreements among the parties to this
Agreement pertaining to the transactions contemplated by or contained in the
Notes and the other Loan Papers.
8.13 Severability. If any provision of this Agreement or any other Loan
Paper is held to be illegal, invalid or unenforceable under present or future
Laws during the term thereof, such provision shall be fully severable, the
appropriate agreement or instrument shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part thereof,
and the remaining provisions thereof shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance therefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision there shall be added automatically as a part of such
agreement or instrument a provision as similar in terms to the illegal, invalid
or unenforceable provision as may be possible and legal, valid and enforceable.
8.14 Amendment. The provisions of this Agreement and each other Loan
Paper may not be amended, modified or waived except by the written agreement of
Borrower and Lender. This Agreement embodies the entire agreement among the
parties, supersedes all prior agreements and understandings, if any, relating
to the subject matter hereof, and may be amended only as provided above.
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8.15 Exceptions to Covenants. Borrower shall not be deemed to be
permitted to take any action or fail to take any action which is permitted as
an exception to any of the covenants contained herein or which is within the
permissible limits of any of the covenants contained herein if such action or
omission would result in the breach of any other covenant contained herein.
8.16 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, but in making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
8.17 Restatement. This Agreement restates in its entirety the Second
Restated Credit Agreement. All obligations of each Obligor pursuant to the
Second Restated Credit Agreement are amended and restated by this Agreement,
which is not intended as a release or novation of any such obligation.
8.18 ENTIRE AGREEMENT. THIS AGREEMENT AND THE LOAN PAPERS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
QUEST MEDICAL, INC.
By: /s/ F. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III
F. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III, Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President
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